Cross posted from The Stars Hollow Gazette

The Foreclosure Fraud Settlement documents were filed in federal court and released to the public. There is a lot to wade through but the intrepid David Dayen at FDL News Desk breaks them down in a series of four articles that highlight just how easy these banks are getting off and what they are getting away with. Some of it will really make your blood boil:

Foreclosure Fraud Settlement Docs (I): Ally’s Side Deal

What accounts for this? Probably this little nugget buried in a Reuters article on the settlement:

  Some banks negotiated separate requirements.

   Ally Financial, for example, negotiated a steep discount on the fine part of its settlement, based on an inability to pay it, according to people familiar with the matter.

   It was expected to pay some $250 million, but the Justice Department cut it to around $110 million, these people said.

   In exchange, it committed to solicit all borrowers in its own loan portfolios and to offer to cut principal for delinquent borrowers down to 105 percent of the home’s value. It also offered to refinance underwater borrowers who are current on their payments.

Gee, I didn’t know that federal and state civil penalties had a “pay what you can” quality to them. [..]

About those state funds: there is nothing to stop state AGs from using them in any way they see fit. Note the weasel words in this language (which I’ve bolded):

Each State Attorney General shall designate the uses of the funds set forth in the attached Exhibit B-1. To the extent practicable, such funds shall be used for purposes intended to avoid preventable foreclosures, to ameliorate the effects of the foreclosure crisis, to enhance law enforcement efforts to prevent and prosecute financial fraud, or unfair or deceptive acts or practices and to compensate the States for costs resulting from the alleged unlawful conduct of the Defendants.

   No more than ten percent of the aggregate amount paid to the State Parties under this paragraph 1(b) may be designated as a civil penalty, fine, or similar payment. The remainder of the payments is intended to remediate the harms to the States and their communities resulting from the alleged unlawful conduct of the Defendant and to facilitate the implementation of the Borrower Payment Fund and consumer relief.

You have that strong word “shall” competing with “to the extent practicable.” And indeed, several states have already made clear that they will be diverting much of the settlement into their state budgets. More make it clear in the settlement docs, more on that later.

Foreclosure Fraud Settlement Docs (II): Giving Homes to Charity as a Penalty

Another part of the document explains that any modification under any government housing program can qualify under the settlement credits:

   Eligible modifications include any modification that is made on or after Servicer’s Start Date, including:

   i. Write-offs made to allow for refinancing under the FHA Short Refinance Program;

   ii. Modifications under the Making Home Affordable Program (including the Home Affordable Modification Program (“HAMP”) Tier 1 or Tier 2) or the Housing Finance Agency Hardest Hit Fund (“HFA Hardest Hit Fund”) (or any other federal program) where principal is forgiven, except to the extent that state or federal funds paid to Servicer in its capacity as an investor are the source of a Servicer’s credit claim.

   iii. Modifications under other proprietary or other government modification programs, provided that such modifications meet the guidelines set forth herein.

Presumably those programs weren’t all going to shut down. So banks doing what they’ve been doing, meeting the minimum requirements of those other programs, will help them complete the settlement requirements.

Foreclosure Fraud Settlement Docs (III): “Internal Review Group”

Page E-3 details the “internal review group”:

   Servicer will designate an internal quality control group that is independent from the line of business whose performance is being measured (the “Internal Review Group”) to perform compliance reviews each calendar quarter (“Quarter”) in accordance with the terms and conditions of the Work Plan (the “Compliance Reviews”) and satisfaction of the Consumer Relief Requirements after the (A) end of each calendar year (and, in the discretion of the Servicer, any Quarter) and (B) earlier of the Servicer assertion that it has satisfied its obligations thereunder and the third anniversary of the Start Date (the “Satisfaction Review”). For the purposes of this provision, a group that is independent from the line of business shall be one that does not perform operational work on mortgage servicing, and ultimately reports to a Chief Risk Officer, Chief Audit Executive, Chief Compliance Officer, or another employee or manager who has no direct operational responsibility for mortgage servicing.

So the bank can take their own employees out of another part of the bank and have them conduct a quarterly review, which then gets passed to the monitors and becomes the initial basis for enforcement. Even if you believe these will be “independent” internal reviews, we’ve seen with the OCC foreclosure reviews that those independent reviewers paid for and hired by the banks typically write bank-friendly reports. In fact, a later note indicates that “The Internal Review Group may include non-employee consultants or contractors working at Servicer’s direction.”

Foreclosure Fraud Settlement Docs (IV): Association of Mortgage Investors Planning to Challenge in Court

At any rate, if there’s one group who does not agree with HUD that investors won’t end up footing the bill for a substantial portion of the settlement, it’s… the Association of Mortgage Investors. The trade group representing investors in mortgage-backed securities fully believes they will be on the hook for losses, and so they will challenge the settlement in federal court.

   As the federal court reviews the final settlement, AMI asks that the following changes be made on behalf of all investors:

   Transparency. The NPV (net present value) model incorporated into the settlement must consider all of a borrower’s debts, be national in scope, transparent, and publicly disclosed; the NPV model must be developed by an independent third-party. An incorrect NPV model likely will lead to further re-defaults and further harm distressed homeowners.

   Monetary Cap to Protect Public Institutions. As intended, the settlement causes financial loss to the abusers (the bank servicers and their affiliates). Unfortunately, the settlement is expected to also draw billions of dollars from those not a party to the settlement, including public institutions, unions, and individual investors. It places first and second lien priority in conflict with its original construct thereby increasing future homeowner mortgage credit costs. It is unfair to settle claims against the robosigners with other people’s funds. While we request that it not be done, at a minimum we request that a meaningful cap be placed on the dollar amount of the settlement satisfied by innocent parties. Again, restitution should come from those who are settling these claims, and

   Public Reporting. We ask that the settlement Administrator be required to make reports public and available on a monthly basis, reporting progress on clearly defined benchmarks and detailing on both a dollar and percentage basis whether the mortgages modified are owned by the mortgage servicers or the general public.

Over at naked capitalism, Yves Smith points out The Legal Lie at the Heart of the $8.5 Billion Bank of America and Federal/State Mortgage Settlements

HUD Secretary Donovan, the propagandist in chief for the Federal/state mortgage pact, has claimed he has investor approval to do the mortgage modifications that are a significant portion of the value of the settlement. We’ll eventually see what is actually in the settlement, but the early PR was that “no less than $10 billion” of the $25 billion headline total was to come from principal reductions. Modifications of mortgages not owned by banks, meaning in securitized trusts, are counted only 50% and before Donovan realized he was committing a faux pas, he said he expected 85% of the mods to be from securitizations, so that means $17 billion. [..]

But what about this investor approval that Donovan says he has? He has told both journalists and mortgage investors directly that the bulk of the mods will come from Countrywide deals and he has consent via the $8.5 billion Bank of America/Bank of New York settlement. Huh? First, it seems more that a bit cheeky to rely on a major piece of a program via a deal that has not yet gone through (the Bank of America settlement was removed to Federal court and has now been sent back to state court, and there will be discovery in the state court process, so approval is not imminent).

But second and more important, investors approved nothing. Bank of New York is trying to act well outside its authority as trustee for the 530 Countrywide trusts in the settlement. It’s tantamount to having a friend that you gave a medical power of attorney claim that it gave him the authority to sell your car and write checks on your account.

The terms of Countrywide PSAs vary, but all appear to restrict mods. The prohibitions varied by credit quality of the deal. Alt-A and early vintage (2004 and earlier) deals often barred mods completely; subprime and later vintage deals generally allowed for a higher limit on mods, with 5% the top amount across these deals. The idea was that some mods were expected in the dreckier mortgage pools. Nevertheless, all of them, as well as the few that had no caps, also required Bank of America to buy the modified loans back at par. That is something the battered Charlotte bank would be very keen to avoid doing.

This comment by Synoia sums it all up pretty nicely:

The Banks won’t be held accountable

The Banks won’t fix their past behavior

The Banks won’t change their behavior

The Banks won’t stop bribing our politicians

The Banks won’t stop gouging consumers

The Banks won’t tell the truth about any facet of their business

The Banks won’t stop taking enormous risks with other people’s money

The Banks won’t stop paying their worthless executives too much money

Need one continue?

And this settlement won’t change a thing.

Thank you, President Obama

Cross posted from The Stars Hollow Gazette

This is your morning Open Thread. Pour your favorite beverage and review the past and comment on the future.

Find the past “On This Day in History” here.

March 14 is the 73rd day of the year (74th in leap years) in the Gregorian calendar. There are 292 days remaining until the end of the year.

On this day in 1885, The Mikado a light opera by W.S. Gilbert and Arthur Sullivan, had its first public performance in London.

The Mikado, or, The Town of Titipu is a comic opera in two acts, with music by Arthur Sullivan and libretto by W. S. Gilbert, their ninth of fourteen operatic collaborations. It opened in London, where it ran at the Savoy Theatre for 672 performances, which was the second longest run for any work of musical theatre and one of the longest runs of any theatre piece up to that time. Before the end of 1885, it was estimated that, in Europe and America, at least 150 companies were producing the opera. The Mikado remains the most frequently performed Savoy Opera, and it is especially popular with amateur and school productions. The work has been translated into numerous languages and is one of the most frequently played musical theatre pieces in history.

Setting the opera in Japan, an exotic locale far away from Britain, allowed Gilbert to satirise British politics and institutions more freely by disguising them as Japanese. Gilbert used foreign or fictional locales in several operas, including The Mikado, Princess Ida, The Gondoliers, Utopia, Limited and The Grand Duke, to soften the impact of his pointed satire of British institutions.

The Mikado is a comedy that deals with themes of death and cruelty. This works only because Gilbert treats these themes as trivial, even lighthearted issues. For instance, in Pish-Tush’s song “Our great Mikado, virtuous man”, he sings: “The youth who winked a roving eye/ Or breathed a non-connubial sigh/ Was thereupon condemned to die / He usually objected.” The term for this rhetorical technique is meiosis, a drastic understatement of the situation. Other examples of this are when self-decapitation is described as “an extremely difficult, not to say dangerous, thing to attempt”, and also as merely “awkward”. When a discussion occurs of Nanki-Poo’s life being “cut short in a month”, the tone remains comic and only mock-melancholy. Burial alive is described as “a stuffy death”. Finally, execution by boiling oil or by melted lead is described by the Mikado as a “humorous but lingering” punishment.

Death is treated as a businesslike event in Gilbert’s Topsy-Turvy world. Pooh-Bah calls Ko-Ko, the Lord High Executioner, an “industrious mechanic”. Ko-Ko also treats his bloody office as a profession, saying, “I can’t consent to embark on a professional operation unless I see my way to a successful result.” Of course, joking about death does not originate with The Mikado. The plot conceit that Nanki-Poo may marry Yum-Yum if he agrees to die at the end of the month was used in A Wife for a Month, a 17th century play by John Fletcher. Ko-Ko’s final speech affirms that death has been, throughout the opera, a fiction, a matter of words that can be dispelled with a phrase or two: being dead and being “as good as dead” are equated. In a review of the original production of The Mikado, after praising the show generally, the critic noted that the show’s humour nevertheless depends on

“unsparing exposure of human weaknesses and follies-things grave and even horrible invested with a ridiculous aspect-all the motives prompting our actions traced back to inexhaustible sources of selfishness and cowardice…. Decapitation, disembowelment, immersion in boiling oil or molten lead are the eventualities upon which (the characters’) attention (and that of the audience) is kept fixed with gruesome persistence…. (Gilbert) has unquestionably succeeded in imbuing society with his own quaint, scornful, inverted philosophy; and has thereby established a solid claim to rank amongst the foremost of those latter-day Englishmen who have exercised a distinct psychical influence upon their contemporaries.”

Cross posted from The Stars Hollow Gazette

Wages have not matched inflation, unemployment for those without work for more than six months is topping 40% while real unemployment (U-6) sits at 14.9%, the housing market continues to tumble. The cost of housing, food, health care, education, transportation has gone up while wages have gone in the other direction.

That is the reality of the US economy and it does not bode well for a sustainable recovery, not without a boost from the government. Nobel Economist Joseph E. Stiglitz writes that “the labor market is a shambles” and it’s not going to improve anytime soon without a boost from the government:

Let’s assume that job creation continues at the rate of 225,000 jobs a month. That is only about 100,000 beyond the number required to provide jobs for the average monthly number of new entrants into the labour force. At that pace, it would take 150 months to reach full employment – 13 years, some time around 2025. The independent Congressional Budget Office is more optimistic, forecasting the return of full employment by 2018. [..]

Before the crisis, 40 per cent of all investment was in property. We had a housing bubble that left a legacy of excess capacity. Continuing weakness in the property sector is reflected in high foreclosure rates and low home prices. [..]

Finally, US states and local governments are constrained, to a large extent, by having to balance their budgets. They depend heavily on property taxes, so both revenues and expenditures have plummeted. This is why there are a million fewer public employees than before the crisis. Government as a whole is being procyclical, not countercyclical. [..]

Unfortunately, little has been done about the underlying structural problems. Indeed, the downturn, during which wages have not kept pace with inflation, has in many ways made US inequality worse.

Today the American economy faces three big risks. First, a steeper European downturn, as a result of the excessive austerity and the euro crisis. Second, complacency that the economy will recover quickly without government support. Though every downturn comes to an end, that should not be of much comfort. Third, that we accept that an unemployment rate above 7 per cent is inevitable.

If my Cassandra forecast turns out to be wrong, stimulus can be cut. But if it turns out to be right, and we do too little, we will live to regret it.

We need Congress and the President to stop listening to “Washington Consensus” and the “main stream” economists that are preaching “austerity” that will only prolong the economic decline and increase poverty.

Cross posted from The Stars Hollow Gazette

Besides the $700 billion from TARP and $17.7 trillion from the Federal Reserve the “Too Big To Fail” financial entities are still getting bailouts with tax payer dollars via tax breaks on losses. 90% of the insurance giant, American International Group Inc.’s (AIG), fourth quarter profits from 2011 were “because of an inappropriate tax break the government-owned insurance company continues to receive, according to four former members of the watchdog panel that oversaw the financial crisis bailouts“:

The break allows AIG to count its past net operating losses against future taxes. That amounts to a “stealth bailout” of a company that received about $125 billion in taxpayer money, said the former appointees to the Congressional Oversight Panel for the $700 billion Troubled Asset Relief Program.

“It’s been more than three years since AIG lost its reckless bet on mortgage-backed securities, yet today AIG continues to get special tax breaks that last quarter accounted for 90% of its profits,” the panel’s former chairwoman, Elizabeth Warren, told reporters Monday on a conference call. “We think it’s time for Congress to end the special tax break.”

Warren, who is running as a Democrat for the U.S. Senate in Massachusetts, was joined by former panel members Damon Silvers, Mark McWatters and Kenneth Troske in saying the tax break gives the illusion of significant profitability at the company.

The profits benefit AIG’s private stockholders and allow the company to pay higher executive compensation, the TARP panel members said.

“By doing it this way….billions of dollars leak out to the benefits of private parties, who really should not be benefiting from public policy in this way,” Silvers said.

The special tax exemption that AIG and other struggling companies received allows it to deduct its past losses against future tax bills thus showing a net profit. It allowed for AIG to hand out generous executive compensation and benefit private shareholders.

Just last week, Matt Stoller at naked capitalism reported that almost half the banks that had paid back TARP did so with funds from other government programs:

The Government Accountability Office continues its subtle war on the talking point used by Treasury that “TARP made money”. Here’s the GAO, with a report out today.

   As of January 31, 2012, 341 institutions had exited CPP, almost half by repaying CPP with funds from other federal programs. Institutions continue to exit CPP, but the number of institutions missing scheduled dividend or interest payments has increased.

Much of the government-supplied TARP funding (to small banks) was replaced by the Small Business Lending Fund passed in 2010, which Republicans called “TARP 2.0″.  The larger banks, however, where much of the bank-based credit creation in the economy takes place, didn’t use this program.  Instead, they got an implicit subsidy of between $6B (pdf) and $300B a year from the widespread belief that the government will not let their bondholders lose money…

You can take a stand with Ms. Warren and sign her petition:

Cross posted from The Stars Hollow Gazette

President Obama assured influential leaders attending American Israel Public Affairs Committee (AIPAC) last week that the Unites States has Israel’s back fighting efforts made  to delegitimize the state. But how will America be positioned against Iran’s potential nuclear threat to Israel? The Up with Chris Hayes panel Rula Jebreal (@rulajebreal), contributing writer at Newsweek; Jeremy Ben-Ami (@jeremybenami), founder & president of J Street; Leila Hilal, Middle East analyst at the New America Foundation; and Jennifer Laszlo Mizrahi, founder & president of The Israel Project discuss the contentious relationship between Israel and Iran.

The discussion that took place on Up with Chris went a long way to dispelling some myths about Iran’s nuclear energy program and the rhetoric of its alleged quest for a nuclear weapon. Chris Hayes pointed out early that “the big contest” was over whether President Obama would say “nuclear Iran” or “the capability for a nuclear weapon” in his speech to AIPAC, he went with the later. That did not stop the panelists continued false equation with a “nuclear Iran” and an Iran with a nuclear weapon. There is gaping difference between the two. “Capability” has become the code word for “the bomb”. The reality is that capability can also mean peaceful uses for nuclear energy that includes electricity and medical research.

No one, not even Hayes, mentioned that the ruling Ayatollahs have condemned nuclear weapons, as well as, chemical/biological weapons, based on religious and moral grounds. Nor did anyone mention that Iran has signed the Nuclear Weapons Non-Proliferation Treaty. Israel has not nor has Israel ever allowed inspection of its nuclear facilities by the IAEA and no one has dared demand it.

It was, however, good that Rula Jebreal the misstatements by Jennifer Mizrahi, founder of The Israel Project about Iran’s cooperation with inspections. Middle East analyst Leila Hilal and Mr. Hayes joined Ms. Jebeal had to correct her hyperbolic statements that the Iranians are “different” and not “rational actors” and stop her racist generalization of the Iranians. Ms. Hilal rightfully noted that there is conflation of Islamists saying that Hamas and the Iranians, because they’re Muslims, are going to act to attack Israel. In fact, it’s not Hamas or Iran but the Islamic Jihad and the Palestinian Resistance that has been calling for Israel’s destruction and, however lightly, it was mentioned that Iranian President Mahmoud Ahmadinejad has become isolated from the ruling Ayatollahs and increasingly unpopular with Iranians.

It was Jeremy Ben-Ami, founder & president of J Street who made the best observation that the premise of Iran dropping an atomic bomb on Israel, then be wiped out itself, is ridiculous on its face. Yet, here we are with the President of the United States saying that while he wants diplomacy to work but still saying that he has “Israel’s back” and talking about “nuclear capabilty” while Benjamin Netanyahu continues to threaten bombing Iran and right wing US politicians demand it.

The discussion held by Chis Hayes was a step in the right direction to dispel myths and blatant lies and put the facts and reality on the table. The conversation still has a long way to go.

Cross posted from The Stars Hollow Gazette

The claim by the US government that the latest massacre of Afghan civilians by a “lone gunman” may have some credibility gaps. The current version is:

An American soldier walked off his base in a remote southern Afghan village shortly before dawn Sunday and opened fire on civilians inside their homes, killing at least 16, including nine children, Afghan officials said. [..]

Officials shed no light on the motive or state of mind of the staff sergeant who was taken into custody shortly after the alleged massacre.

“It appears he walked off post and later returned and turned himself in,” said Lt. Cmdr. James Williams, a military spokesman.

U.S. military officials stressed that the shooting was carried out by a lone, rogue soldier, differentiating it from past instances of civilians killed accidentally during military operations.

Witnesses told Reuters that they observed a group of laughing, drunk American soldiers in the village around 2 AM:

KANDAHAR, Afghanistan, March 11 (Reuters) – Western forces shot dead 16 civilians including nine children in southern Kandahar province on Sunday, Afghan officials said, in a rampage that witnesses said was carried out by American soldiers who were laughing and appeared drunk.

One Afghan father who said his children were killed in the shooting spree accused soldiers of later burning the bodies.

Witnesses told Reuters they saw a group of U.S. soldiers arrive at their village in Kandahar’s Panjwayi district at around 2 am, enter homes and open fire. [..]

Haji Samad said 11 of his relatives were killed in one house, including his children. Pictures showed blood-splattered walls where the children were killed.

“They (Americans) poured chemicals over their dead bodies and burned them,” a weeping Samad told Reuters at the scene.

“I saw that all 11 of my relatives were killed, including my children and grandchildren,” said Samad, who had left the home a day earlier.

Neighbours said they awoke to crackling gunfire from American soldiers, whom they described as laughing and drunk.

“They were all drunk and shooting all over the place,” said neighbour Agha Lala, who visited one of the homes where the incident took place. “Their bodies were riddled with bullets.”

The BBC has a similar account:

   Most villagers expressed scepticism that this was simply the work of a soldier who had lost control. One woman described how she was woken at 02:00 by the sound of helicopters. Others spoke of seeing computerised equipment in the area.

   Whatever the true chronology of events, this incident is being seen as yet another black mark in the catalogue of deadly Nato operations.

   “I saw one person come to our home, I told my son: ‘You have to be quiet and calm because maybe this is a night raid’,” said one woman.

   An hour after gunfire erupted, she went to her brother’s home and saw that corpses from his family had been set ablaze. She screamed for help.

Lambert Strether writing at naked capitalism asks:

What do we know now that we didn’t know in 2011, 2010, or 2009? And remind me who was President in 2011, 2010, and 2009? Was it that same guy who courageously opposed “dumb wars” back in 2008?

Of course, the military is rejecting these accounts and sticking with their story. The whole issue will be “handled” by the military in the same way they “handled” the 2006 Haitha massacre in Iraq, six years from now everyone involved, including those who covered up the real story, will walk off free and without any serious penalty. Not exactly the way to “win the hearts and minds” of the Afghan people.

Cross posted from The Stars Hollow Gazette

This is your morning Open Thread. Pour your favorite beverage and review the past and comment on the future.

Find the past “On This Day in History” here.

March 13 is the 72nd day of the year (73rd in leap years) in the Gregorian calendar. There are 293 days remaining until the end of the year.

On this day in 1881. Czar Alexander II, the ruler of Russia since 1855, is killed in the streets of St. Petersburg by a bomb thrown by a member of the revolutionary “People’s Will” group. The People’s Will, organized in 1879, employed terrorism and assassination in their attempt to overthrow Russia’s czarist autocracy. They murdered officials and made several attempts on the czar’s life before finally assassinating him on March 13, 1881.

Alexander II succeeded to the throne upon the death of his father in 1855. The first year of his reign was devoted to the prosecution of the Crimean War and, after the fall of Sevastopol, to negotiations for peace, led by his trusted counsellor Prince Gorchakov. The country had been exhausted and humiliated by the war. Bribe-taking, theft and corruption were everywhere. Encouraged by public opinion he began a period of radical reforms, including an attempt to not to depend on a landed aristocracy controlling the poor, a move to developing Russia’s natural resources and to thoroughly reform all branches of the administration.

Emancipation of the serfs

In spite of his obstinacy in playing the Russian autocrat, Alexander II acted willfully for several years, somewhat like a constitutional sovereign of the continental type. Soon after the conclusion of peace, important changes were made in legislation concerning industry and commerce, and the new freedom thus afforded produced a large number of limited liability companies. Plans were formed for building a great network of railways-partly for the purpose of developing the natural resources of the country, and partly for the purpose of increasing its power for defence and attack.

The existence of serfdom was tackled boldly, taking advantage of a petition presented by the Polish landed proprietors of the Lithuanian provinces and, hoping that their relations with the serfs might be regulated in a more satisfactory way (meaning in a way more satisfactory for the proprietors), he authorised the formation of committees “for ameliorating the condition of the peasants”, and laid down the principles on which the amelioration was to be effected.

This step was followed by one still more significant. Without consulting his ordinary advisers, Alexander ordered the Minister of the Interior to send a circular to the provincial governors of European Russia, containing a copy of the instructions forwarded to the governor-general of Lithuania, praising the supposed generous, patriotic intentions of the Lithuanian landed proprietors, and suggesting that perhaps the landed proprietors of other provinces might express a similar desire. The hint was taken: in all provinces where serfdom existed, emancipation committees were formed.

But the emancipation was not merely a humanitarian question capable of being solved instantaneously by imperial ukase. It contained very complicated problems, deeply affecting the economic, social and political future of the nation.

Alexander had to choose between the different measures recommended to him. Should the serfs become agricultural labourers dependent economically and administratively on the landlords, or should they be transformed into a class of independent communal proprietors?

The emperor gave his support to the latter project, and the Russian peasantry became one of the last groups of peasants in Europe to shake off serfdom.

The architects of the emancipation manifesto were Alexander’s brother Konstantin, Yakov Rostovtsev, and Nikolay Milyutin.

On 3 March 1861, 6 years after his accession, the emancipation law was signed and published.

Cross posted from The Stars Hollow Gazette

This is your morning Open Thread. Pour your favorite beverage and review the past and comment on the future.

Find the past “On This Day in History” here.

March 12 is the 71st day of the year (72nd in leap years) in the Gregorian calendar. There are 294 days remaining until the end of the year.

On this day in 1947, in a dramatic speech to a joint session of Congress, President Harry S. Truman asks for U.S. assistance for Greece and Turkey to forestall communist domination of the two nations. Historians have often cited Truman’s address, which came to be known as the Truman Doctrine, as the official declaration of the Cold War.

In February 1947, the British government informed the United States that it could no longer furnish the economic and military assistance it had been providing to Greece and Turkey since the end of World War II. The Truman administration believed that both nations were threatened by communism and it jumped at the chance to take a tough stance against the Soviet Union. In Greece, leftist forces had been battling the Greek royal government since the end of World War II. In Turkey, the Soviets were demanding some manner of control over the Dardanelles, territory from which Turkey was able to dominate the strategic waterway from the Black Sea to the Mediterranean.

Truman stated the Doctrine would be “the policy of the United States to support free peoples who are resisting attempted subjugation by armed minorities or by outside pressures.” Truman reasoned, because these “totalitarian regimes” coerced “free peoples,” they represented a threat to international peace and the national security of the United States. Truman made the plea amid the crisis of the Greek Civil War (1946-1949). He argued that if Greece and Turkey did not receive the aid that they urgently needed, they would inevitably fall to communism with grave consequences throughout the region.

The policy won the support of Republicans who controlled Congress and involved sending $400 million in American money, but no military forces, to the region. The effect was to end the Communist threat, and in 1952 both countries joined NATO, a military alliance that guaranteed their protection.

The Doctrine was informally extended to become the basis of American Cold War policy throughout Europe and around the world. It shifted American foreign policy toward the Soviet Union from détente (friendship) to, as George F. Kennan phrased it, a policy of containment of Soviet expansion. Historians often use its announcement to mark the starting date of the Cold War.

Long-term policy and metaphor

The Truman Doctrine underpinned American Cold War policy in Europe and around the world. The doctrine endured because it addressed a broader cultural insecurity regarding modern life in a globalized world. It dealt with Washington’s concern over communism’s domino effect, it enabled a media-sensitive presentation of the doctrine that won bipartisan support, and it mobilized American economic power to modernize and stabilize unstable regions without direct military intervention. It brought nation-building activities and modernization programs to the forefront of foreign policy.

The Truman Doctrine became a metaphor for emergency aid to keep a nation from communist influence. Truman used disease imagery not only to communicate a sense of impending disaster in the spread of communism but also to create a “rhetorical vision” of containing it by extending a protective shield around non-communist countries throughout the world. It echoed the “http://en.wikipedia.org/wiki/Quarantine_Speech quarantine the aggressor]” policy Franklin Delano Roosevelt sought to impose to contain German and Japanese expansion in 1937. The medical metaphor extended beyond the immediate aims of the Truman Doctrine in that the imagery combined with fire and flood imagery evocative of disaster provided the United States with an easy transition to direct military confrontation in later years with communist forces in Korea and Vietnam. By presenting ideological differences in life or death terms, Truman was able to garner support for this communism-containing policy.