At NewDeal2.0, Lindsey Snyder writes, Twenty-Something Turmoil: A Tale of Unemployment From a Would-be Young Professional:

Twenty-somethings with a sense of entitlement, high expectations, and a stalled economy have to learn to become entrepreneurial. But how?

Being jobless in the Great Recession is about much more than making ends meet. While we struggle to pay every bill, we — the freshly minted unemployed — carry around psyches that have come undone in ways that we never expected. I should know. I am in my twenties. Educated. Hard-working. Intellectually proactive. And unable to find a job.

I often find solace playing the blame game: If it weren’t for those baby boomers and their Great Society, I never would have been convinced that if I did everything I was supposed to do in life and played by (most of) the rules, one day I would be successful — or at least employed. In high school, I woke up early, did my homework, studied for exams and participated in extracurriculars I wasn’t always very good at, following a grueling schedule that was exhausting and not always rewarding. I remember justifying my heavy schedule because I wanted to get into a good college. I enjoyed college, but I still worked hard and did plenty of things I didn’t want to because in the back of my mind lingered the self-righteous idea that someone like me would naturally be rewarded with a good job.

But here I am, three years after graduation, and it seems that I was wrong.

After months and months of job interviews, I’ve gone from the jobless-can-be-liberating phase into the feeling-bad-for-myself/coping phase. Which leads me back to the baby boomers. I confess that I’m torn up by the idea that my generation has taken a giant step back from what that previous generation was able to expect and achieve in life. Those of us that are fortunate enough to have jobs will never, it seems, have the same opportunities our parents did. Our salaries will never be as high, despite the higher cost of living. If we get jobs at all. ...

Really it is an excellent time to be an entrepreneur at anything. As the New York Times recently put it, “The enthusiasm for social networking and mobile apps has venture capitalists clamoring to give money to young companies. The exuberance has given rise to an elite club of start-ups — all younger than seven years and all worth billions.”

Now I just wish I knew how to be entrepreneurial. The problem is — no one ever taught me that. I don’t believe that the word ever came up formally in any component of my education, which was so geared toward standardized testing that it was rare that I was challenged to think outside the box. The academic environment has grown so obsessed with testing that it is as if passing a test is the only reason to learn anything. The teach-to-the-test syndrome is the ultimate antithesis of being entrepreneurial.

• • • • •

At Daily Kos on this date in 2006:

The New York Times has a story on yet another report the government has kept under wraps for a substantial period of time (in this case over a year).  The Interior Department has a study showing that "inducements" offered to oil companies could allow drilling companies in the Gulf of Mexico to escape tens of billions of dollars in royalties that they would otherwise pay the government for oil and gas produced in areas that belong to American taxpayers.

But the study predicts that the inducements would cause only a tiny increase in production even if they were offered without some of the limitations now in place.

It also suggests that the cost of that additional oil could be as much as $80 a barrel, far more than the government would have to pay if it simply bought the oil on its own.

• • • • •

Tonight's poll uses dates that not everyone agrees on regarding Generations X and Y. Some authors start as early as 1961 for Generation X and end in the late '70s. Others make the choice seen in the poll, 1965-1981. Likewise, Generation Y has been variously described as starting in the late '70s or early '80s and ending anywhere from the late '90s to 2001. The poll has been set at 1982-2001. (The poll does not include Generation Z, the "Net Generation." If you were born in 2002 or later, you should be in bed.) Generations are artificial constructs. While there is some value to such distinctions, generationism - like racism, sexism, heterosexism and ableism - makes bad assumptions. E.g., Boomers are self-indulgent sell-outs; Xers are slackers. While there are obvious similarities and some shared experiences within generations, there are as many differences among some members of a generational cohort as there are among the cohorts themselves.

As one commenter at YouTube put it: "I've seen this about a dozen times and I still get teary-eyed each time! It gives me hope that if a few dedicated artists can bring together absolute strangers in such a joyful way, we might survive these darkest of times."

Open thread below....

Tonight's Rescue Rangers are Alfonso Nevarez, ItsJessMe, rexymeteorite, sunspark says, grog, and vcmvo2 as reader and editor.

The diaries up for rescue are:

• Taking a slightly different approach than most of us professional lefties take on the subject, Tom Joad and his Traveling Road Show asks What's wrong with an activist Court? (grog)
• Rimjob reports on the state of our roads in Which Cities Have the Worst Roads & Traffic? (vcmvo2)
• "If network neutrality were a health care plan, it would simply outlaw getting sick" says K S LaVida in explaining The FCC's network neutrality farce. (ItsJessMe)
• mos1133 appeals to the people of DailyKos that My Little Sister Needs Our Help!!! to save a friend.(sunspark says)
• Moving Toward an Egalitarian Work Place may not be an option available to everyone, but leftyparent discusses some of the elements in her workplace that could establish a model. (Alfonso Nevarez)
• Karen Hedwig Backman writes of a recent Georgia prison strike and the need for us all to be more aware of the horrific failure in the area of American Prisoners' Rights. (sunspark says)
• iTeachQ identifies a group of experts who have formed a National commission to study teaching profession. (Alfonso Nevarez)
• stevej talks about the tricks of Photography - Flaming Christmas Pudding. (sunspark says)

jotter brings us High Impact Diaries: December 21, 2010.

asimbagirl brings tonight's Top Comments: What a Week to Take a Political Break!

Enjoy and please rescue your own favorite diary from the past twenty-four hours in this Open Thread!

Genre: The RamonesTitle: Merry Christmas (I Don't Want To Fight Tonight)

Three more days. Nothing gets one in the Xmas spirit like The Ramones!

Merry Christmas (I Don't Want To Fight Tonight) Price: $0.99 (As of 12/22/10 03:29 pm details)

The unitary executive lives on in an executive order the administration has drafted for the indefinte detention of Guanatanmo Bay detainees.

The White House is preparing an Executive Order on indefinite detention that will provide periodic reviews of evidence against dozens of prisoners held at Guantanamo Bay, according to several administration officials.

The draft order, a version of which was first considered nearly 18 months ago, is expected to be signed by President Obama early in the New Year. The order allows for the possibility that detainees from countries like Yemen might be released if circumstances there change.

But the order establishes indefinite detention as a long-term Obama administration policy and makes clear that the White House alone will manage a review process for those it chooses to hold without charge or trial.

Nearly two years after Obama's pledge to close the prison at Guantanamo, more inmates there are formally facing the prospect of lifelong detention and fewer are facing charges than the day Obama was elected.

That is in part because Congress has made it difficult to move detainees to the United States for trial. But it also stems from the president's embrace of indefinite detention and his assertion that the congressional authorization for military force, passed after the 2001 terrorist attacks, allows for such detention.

The administration was also going to work with Congress to develop a system of military commissions that the president said "failed to establish a legitimate legal framework and undermined our capability to ensure swift and certain justice against those detainees that we were holding at the time."  He continued:

Today, the Department of Defense will be seeking additional continuances in several pending military commission proceedings.  We will seek more time to allow us time to reform the military commission process.  The Secretary of Defense will notify the Congress of several changes to the rules governing the commissions. The rule changes will ensure that: First, statements that have been obtained from detainees using cruel, inhuman and degrading interrogation methods will no longer be admitted as evidence at trial. Second, the use of hearsay will be limited, so that the burden will no longer be on the party who objects to hearsay to disprove its reliability. Third, the accused will have greater latitude in selecting their counsel. Fourth, basic protections will be provided for those who refuse to testify. And fifth, military commission judges may establish the jurisdiction of their own courts.

Unfortunately, the trial of Omar Khadr proved those reforms were not implemented. Greenwald:

The Obama administration's claim that the commissions are now improved to the point that they provide a forum of real justice is being put to the test -- and blatantly failing -- with the first such commission to be held under Obama:  that of Omar Khadr, accused of throwing a grenade in 2002 which killed an American solider in Afghanistan, when Khadr was 15 years old.  This is the first trial of a child soldier held since World War II, explained a U.N. official who condemned these proceedings.   The commission has already ruled that confessions made by Khadr which were clearly obtained through coercion, abuse and torture will be admitted as evidence against him.  Prior to the commencement of Khadr's "trial," the commission ruled in another case that the sentence imposed on a Sudanese detainee Ibrahim al-Qosi -- convicted as part of a plea bargain of the dastardly crime of being Osama bin Laden's "cook" -- will be kept secret until he is released.  What kind of country has secret sentences? 

Apparently, the U.S. is the kind of country that has secret sentences. But, hey. The detainees' lawyers get to complain about it, at least, and get to have "periodic reviews of evidence."

The Guantanamo prison is a problem with no solution. On the one hand, Congress has stripped all funds to relocate detainees to U.S. prisons. On the other, diplomatic efforts to relocate them to other countries has been an abysmal failure. Despite the administration's best efforts to find an answer to an increasingly frustrating situation, there doesn't appear to be one.

Therefore, we can expect a new executive order allowing indefinite detention of prisoners with periodic reviews. A solution that's no solution at all for a problem with no clear answer.

ProPublica:

The draft order, a version of which was first considered nearly 18 months ago, is expected to be signed by President Obama early in the New Year. The order allows for the possibility that detainees from countries like Yemen might be released if circumstances there change.

But the order establishes indefinite detention as a long-term Obama administration policy and makes clear that the White House alone will manage a review process for those it chooses to hold without charge or trial.

Nearly two years after Obama's pledge to close the prison at Guantanamo, more inmates there are formally facing the prospect of lifelong detention and fewer are facing charges than the day Obama was elected.

That is in part because Congress has made it difficult to move detainees to the United States for trial. But it also stems from the president's embrace of indefinite detention and his assertion that the congressional authorization for military force, passed after the 2001 terrorist attacks, allows for such detention.

After taking office, the Obama administration reviewed the detainee population at Guantanamo Bay and chose 48 prisoners for indefinite detention. Officials, who spoke on the condition of anonymity, said that number will likely increase in coming months as some detainees are moved from a transfer category to a continued detention category.

The White House confirmed that an order is being drafted:

A White House official, who asked to speak on the condition of anonymity, later confirmed that the draft order has not yet been given to the president. The official had few details but said the order “would set up periodic review of the detention status of those detainees who cannot be tried,” in either military commissions or federal courts.

In 2008, Guantanamo detainees won the right to challenge the lawfulness of their detention in court. The executive order aims to create an executive branch review which would occur separately from the court review and would weigh the necessity of the detention, rather than its lawfulness, officials said.

"Perhaps the dangerousness of the detainee's country of origin could change, or the group that the detainee is affiliated with could cease to exist," one official explained.

Any way you cut it, it's bad, and likely to get worse. This is one of those situations where there's no clear pathway to an end that will satisfy the Constitution and people. On the one hand, it's crazy to think that there are no bad guys in the world. On the other, there's no guarantee these people held at Guantanamo are the bad guys, despite internal reviews and the like.

What do you think should be done about them?

The lack of balance in the media and Village discussions when it comes to Social Security is a common topic among us DFH bloggers, but we're not the only ones who've noticed it. So has Columbia Journalism Review.

It’s reasonable for people to debate the merits of ways to slice the deficit or to fix Social Security’s shortfall, but it is not reasonable for the press to serve up one-sided, shallow reporting, which has been the norm from too many news outlets. As Social Security expert Alicia Munnell told Campaign Desk in late October: “We haven’t really had a debate.” And yet, a few weeks later, a headline in The Washington Post announced “Consensus is forming on what steps to take in cutting the deficit.” A consensus of elites, maybe, but not necessarily of the general public, who indicated in poll after poll they do not want to cut Social Security to reduce the deficit or achieve the long-term fiscal balance in the Social Security trust funds.  

But stories asking what the public thinks or probing how ordinary citizens will be helped or hurt by proposed changes have been absent this year. CNN aired segments about why people take early retirement benefits, but stories like that were rare. That omission prompted me to travel to Champaign-Urbana, Illinois, and report in our series, “Social Security in the Heartland,” how people would fare in a different kind of system. In my admittedly unscientific sample, no one was in favor of the changes advocated by political elites and the press. One businessman who called himself a conservative and favors privatization did not like raising the retirement age because he said it would hurt some people financially. “It’s a violation of the original contract. I should get what the system was set up to give me,” he explained.

From the beginning of the deficit commission’s work early last year, the press passed along comments, even offensive ones, from co-chair Alan Simpson, famous for saying “this country is gonna go to the bow-wows unless we deal with entitlements, Social Security and Medicare,” and “we’re trying to take care of the lesser people in society,” and likening Social Security to “a milk cow with 310 million tits.” The president did not fire Simpson, and so his comments set the premise for the public discourse that followed.

Simpson and other advocates for reform talked a lot about the need to save Social Security for their grandchildren. “Erskine [Erskine Bowles, the commission’s co-chair] and I are in this one for our grandchildren,” Simpson said. “Somebody said they’re stalking-horses for taxes. I’m not a stalking horse for taxes. I’m a stalking horse for my grandchildren.” If the retirement income of future generations were the issue, we should have gotten critical analysis from the media about the looming crisis in retirement income. How do skimpy personal savings and the decline of good employer-sponsored pension plans mesh with cuts to Social Security? Never mind the grandchildren. About half of American households are at risk for being unable to maintain their pre-retirement income. News outlets, however, were more interested in the deficit crisis as defined by a narrow group of economic experts.

....

This is not the first time the press has flubbed in covering Social Security. In the mid-1990s, the National Academy of Social Insurance commissioned a study by two well-known academics who examined coverage by major media outlets between 1977 and 1994. Lawrence Jacobs of the University of Minnesota and Robert Y. Shapiro of Columbia concluded that the media have delivered “a consistent message” to the public:  “Social Security is very difficult to sustain without constant doctoring.” That is not a correct assessment of the program’s status, they said. Their study also found that the media turn to sources who might be expected to be critical of Social Security rather than people who support the program, who themselves could provide balance.  

Sound familiar? Yale professor emeritus Theodore Marmor once told me:  “Social insurance programs in the U.S. are widely popular in a superficial way. You have popularity without understanding.” The media bear much responsibility for this.

The traditional media has been incredibly lazy on this story, which isn't a tremendous surprise--they're lazy on just about every story. But in this case, it's not just the media. Far too many of our Democratic leaders, including President Obama find it easier to spout conventional wisdom than the refute it with the facts. Back in the old days, politicians used to get heat for governing according to the polls. On the issue of the Social Security, they appear to be governing according to the Village. On this one, they should be listening to the people.

Click here to view this media

It's not the first time Fox News has flubbed an on-screen graphic but it may be the worst.

When Fox News host Gretchen Carlson interviewed Holocaust survivor Elie Wiesel in mid-December, the conservative network made the unfortunate mistake of identifying him as a "Holocaust Winner" on the lower-third portion of the screen.

The graphics department most likely accidentally combined "Holocaust Survivor" and "Nobel Prize Winner."

The glaring mistake comes at about 35 seconds into the above video.

Wiesel was awarded the Nobel Prize in 1986 for his "practical work in the cause of peace." He is also the author of 57 books.

Most recently, Wiesel has agreed to act as honorary chair of the Canadian Institute of the Study of Antisemitism (CISA).

The Fox News graphics department has a history of identifying scandal-ridden Republicans as Democrats. The blog Down with Tyranny notes that they've done it with Mark Foley, Larry Craig, John Ensign, and Mark Sanford.

Liberal watchdog group Media Matters has a treasure trove of Fox News chyron screw-ups.

For example, in 2009, they labeled Democratic strategist Michael Brown as the former head of Homeland Security's Federal Emergency Management Agency (FEMA).

In June, they mistakenly identified Rep. Trent Franks (R-AZ) as a senator. Earlier in the year, an on-screen graphic misspelled "president" as "presiddent."

Apparently frustrated by all the mistakes, in 2009, the network announced a zero tolerance policy for errors.

"Effective immediately, there is zero tolerance for on-screen errors," according to a memo released by Fox News management. "Mistakes by any member of the show team that end up on air may result in immediate disciplinary action against those who played significant roles in the 'mistake chain,' and those who supervise them."

As much as I opposed the tax cut deal, I think President Obama's press conference this afternoon provided yet more evidence that he is not aiming to become triangulator-in-chief, at least not in the classic sense.

Sure, he said he wanted to work with Republicans, but he didn't say they had the right ideas. Instead, he recognized the reality that they were going to run one of the chambers of Congress next year and said he was open to compromising with them on areas where we could make progress. Sometimes those compromises will be distasteful, but whether you agree with making the compromises or not, Obama isn't adopting conservative positions and claiming them as his own.

For example, when the topic of tax cuts and next year's budget came up during the press conference, President Obama didn't suddenly sing the virtues of tax cuts for the wealthy -- he said he continued to oppose them because the revenue they cost would be better spent on investing in America. Perhaps he should have fought harder against the GOP's ransom demands, but unlike the Blue Dog Democrats who blocked the House from voting on tax cuts before the election, President Obama has never conceded that the GOP was right.

Similarly, while Obama has at times been frustratingly cautious on issues like immigration and DADT repeal, he hasn't embraced GOP positions on those issues. In fact, today, he not only celebrated the repeal of DADT, but he also opened the door to embracing marriage equality. Moreover, he skewered opponents of immigration reform, particularly on the DREAM Act, while pledging not just to keep on fighting but to actually get something done.

I'm not trying to say President Obama walks on water. Clearly, he doesn't. Often, he's far too willing to take a step backwards in the hopes of setting up a flanking maneuver down the line. I'd much rather he charge straight ahead instead of avoiding conflict that will inevitably come.

But while I don't always agree with his approach, I don't think he's on the prowl for a Sistah Souljah moment. it would be a different story if he'd told his critics on the left that they were "sanctimonious" because they were too mean to rich people. But that's not what he said -- he said his critics on the left were sanctimonious because they weren't happy with him even though he felt he had gotten the best deal he could. Basically, he was pleading with them to get off his back.

Of course, that's not going to happen. The Democratic Party isn't for people who like to quietly fall in line. We believe that pressure from below leads leads to better results from the top. And even though it might be frustrating, a vocal, demanding left ultimately will strengthen President Obama's hand when he's dealing with Republicans. Given that John Boehner is about to become Speaker, that's something we should all be happy about.

Sign the petition--make the filibuster a real filibuster!

This is a big frakking deal. All 53 members of the Democratic Senate caucus who will be in the Senate next year have signed a letter calling for Senate rules concerning the filibuster to be reformed:

All Democratic senators returning next year have signed a letter to Senate Majority Leader Harry Reid, D-Nev., urging him to consider action to change long-sacrosanct filibuster rules.

The letter, delivered this week, expresses general frustration with what Democrats consider unprecedented obstruction and asks Reid to take steps to end those abuses. While it does not urge a specific solution, Democrats said it demonstrates increased backing in the majority for a proposal, championed by Sen. Tom Udall, D-N.M., and others, weaken the minority’s ability to tie the Senate calendar into parliamentary knots.

Among the chief revisions that Democrats say will likely be offered: Senators could not initiate a filibuster unless they first muster 40 votes in support of it, and they would have to remain on the floor to sustain it. That is a change from current rules, which require the majority leader to file a cloture motion to overcome an anonymous objection to a motion to proceed, and then wait 30 hours for a vote on it.

With all 53 Democrats signing on, the question now is not if Senate rules will be reformed, but how they will be reformed. As the article above states, while this letter (which has not been released to the public) urges that the rules be changes, it does not actually list specific changes that everyone supports.

On our end, the reform we are pushing hardest is to make the filibuster a real filibuster--that is, Senators have to stay on the floor and give a talk-a-thon to sustain a filibuster. We’re joining with Senators Jeff Merkely and Tom Udall to help make this happen.

Sign our petition to make the filibuster a real filibuster. Tom Udall and Jeff Merkley will use it to help make the for the real filibuster case to their colleagues.

We appear to have won the fought in support of Senate rules reform. Now, we must win the fight for the right kind of rules reform.

Transcript below the fold.

There's always got to be the kids who are naughty and naughtier at Christmas. This year it's John McCain, Lindsey Graham and Tom Coburn. They're playing games with the lame duck in an attempt to stall as much as possible, but some of them are downright mean.

First, we have Lindsey Graham whining for his jammies and tea because he's tired. Poor guy. It must be rough sitting on everything all year long, blocking it as much as possible only to have to stay late and maybe miss hanging his balls on his Christmas tree. Or maybe he's a little nervous over the possibility of being outed. Whatever the case, he threw the first hissy fit today over all the work he's still got to do. After he was done with that hissy, he went on to apologize to Senator John Kyl for the Senate ratifying the new START treaty with the full co-operation of Republicans.

"I stand here very disappointed in the fact that our lead negotiator on the Republican side... basically is going to have his work product ignored and the treaty jammed through in the lame duck. How as Republicans we justify that I do not know," Graham said. "To Senator Kyl, I want to apologize to you for the way you've been treated by your colleagues."

Oops, Lindsey. No goodies for you this year. You've got to do better than that.

Meanwhile, we have John McCain playing the role of Scrooge McGrumpy in a petulant, whiny sort of way. In a last-ditch effort to scuttle the DADT repeal, McCain came to the floor tonight ready to bring the Defense Appropriations bill up for a vote. Of course, he was ready to do that because he and his bitch Mitch McConnell had inserted a poison pill amendment that would have undone the actual repeal.

Joe Lieberman, on the other hand, probably just earned an extra package under the tree for blocking their pathetic bigoted attempt to shoot holes in something the President is set to sign at 9:15 am today.

The amendment was on John McCain's wish list this year. But he's been naughty, so no amendments for him!

Finally, we have Tom Coburn, who may qualify for the Ebenezer-Unredeemed-Scrooge-Forever award for his random block on Harry Reid's effort to resurrect the 9-11 responders bill. In what could be one of the most cynical moves ever, Coburn claims the bill was never debated in committee. Chris Hayes, sitting in for Keith Olbermann, reminds us all that yes, it was debated. It's just that Coburn ditched the committee that day. I'm guessing he ditched to bloviate on the Senate floor about how horrible the Affordable Care Act was. Or he was out fundraising with his tea party buddies.

Either way, Coburn wins the prize for being the meanest, most selfish, cynical, ugly SOB in the Senate. If I were Santa, I wouldn't even bother with coal. I'd pick up after the dog and put it in his stocking.

Remember Joe Miller?  Bearded guy, said funny things about the Constitution, somehow managed to become the Republican nominee for the United States Senate from Alaska?  And then he lost by over 10,000 votes to someone running as a write-in who had to hand out Livestrong-esque rubber bracelets to make sure everyone remembered out to spell her name?

Yeah, it seems like ages ago to me too.

Today, the Alaska Supreme Court concluded its review of the election, turning aside Miller's remaining challenge and unanimously holding that there was no reason for the result not to be certified in Lisa Murkowski's favor.

Why?  Because voter intent is paramount, and quibbling over handwriting and spelling is not how we honor each citizen's right to participate in the process:

Joe Miller seeks an interpretation of election statute AS 15.15.360 that would disqualify any write-in votes that misspell the candidate’s name. We do not  interpret the statute to require perfection  in the manner that the candidate’s name is written on the ballot. Our prior decisions clearly hold that a voter’s intention is paramount.  In light of our strong and consistently applied policy of construing statutes in order to effectuate voter intent, we hold that abbreviations, misspellings, or other minor variations in the form of the name of a candidate will be disregarded in determining the validity of the ballot, so long as the intention of the voter can be ascertained.....

As we have recognized, “a true democracy must seek to make each citizen’s vote as meaningful as every other vote to ensure the equality of all people under the law.” In order to ensure that each citizen’s vote is as meaningful as every other vote, we must interpret the election statute to preserve a voter’s clear choice rather than to disenfranchise that voter.  The State characterizes the standard urged by Miller as the “perfection standard,” and we agree that such a standard would tend to disenfranchise many Alaskans on the basis of “technical errors.”

Alaskan voters arrive at their polling places with a vast array of backgrounds and capabilities. Some Alaskans were not raised with English as their first language. Some Alaskans who speak English do not write it as well.  Some Alaskans have physical or learning disabilities that hinder their ability to write clearly or spell correctly. Yet none of these issues should take away a voter’s right to decide which candidate to elect to govern.

The Court further found that the manual recount method did not violate the Equal Protection Clause and waved away Miller's claims of voter fraud as being "pure speculation [in search of] a fishing expedition."  At the same time, the Court also denied Murkowski's efforts to have counted ballots which wrote in her name but without a filled-in oval next to it.

Miller now has 48 hours to raise any remaining constitutional issues in federal court but his campaign is, as the article puts it, "on life support" right now.

In the meantime, Sen. Lisa Murkowski was the only Republican Senator to vote for DADT repeal, for cloture on the DREAM Act and for the START Treaty, for which I can only say (and may never be able to say again) thank you, Sarah Palin.  You have no idea what you've unleashed.

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Now that the 9/11 first responders' health bill has passed the Senate, Jon Stewart and the Daily Show obviously deserve a round of applause for stepping up and playing a critical role in getting it done.

That really seemed to stick in the craws of the crew at Fox & Friends this morning. Check out this exchange between Gretchen Carlson (who I think is just still mad at Stewart for calling her out on the dumb-blonde schtick), Steve Doocy and Brian Kilmeade, culminating with this:

Carlson: I think it's interesting when you have Jon Stewart, who apparently decided to get really serious on this topic, have a serious show about it. That's like mixing apples and oranges, c'mon! I mean, people already think that his show is real news, which is a problem.

So then when you have comedy and then one day you decide to just get totally serious --

Doocy: He's an activist.

Carlson: But I don't know if that works in the mind of the -- mind of the American people.

You know what's an even bigger problem, Gretchen? That people already think every show on Fox News other than Shep Smith's is real news. When in fact, it's demonstrably little more than lying, smearing, fearmongering propaganda. Now THAT'S a problem.

On Fox & Friends, co-host Brian Kilmeade falsely suggested that if environmentalists have their way, North Carolina's Cape Hatteras "could be just left to the birds, or maybe some turtles." In fact, environmental groups do not seek to have all Cape Hatteras beaches closed, and regulations in place to protect endangered species allow significant access to Cape Hatteras beaches for both pedestrians and off-road vehicles.

Fox & Friends Falsely Suggests All Cape Hatteras Beaches May Be Closed

Kilmeade: "One Of The Foremost Vacation Spots In The World ... Could Be Just Left To The Birds, Or Maybe Some Turtles." From the December 20 edition of Fox News' Fox & Friends:

KILMEADE: Business owners in Cape Hatteras, North Carolina -- Steve, that is the subject. They depend on the beach to attract tourists to make a living and they are losing their livelihoods, all because of this bird. The bird is endangered, evidently, and the government has closed down the parts of beach-- And since then, 50 businesses have closed, 400 homes have been foreclosed. Is this fair? Joining us right now is a local business owner affected directly, John Couch. John, what business do you have and how have you been affected?

JOHN COUCH: My business is called the Red Drum. We have an auto parts store, a repair center, a tackle shop, and a food mart. These closures have absolutely stifled my business during the summertime, and typically I lose about $30,000 because of these buffer zones that are so restrictive. And it pretty well closes off the beach and makes it hard for our visitors that come here to find out what is open on a daily basis.

KILMEADE: It's all because of this bird, which seems nice. It's called the piping plover. About 20 of them, and evidently they're endangered. But are they at the point now where they're more important than all the small business people who have thrived there for decades?

COUCH: Well, protecting the environment and protecting these birds are important.

KILMEADE: Right.

COUCH: We can all grab our hands and wrap around this. But these birds there, they have such mammoth protections. If this can be the bird nest, a thousand meters in all directions -- which is a mile and a quarter across -- closes down the beach. And there's only about 6 to 12 pairs of these birds. But as the birds -- these nesting areas -- they just choke off access. And then for the beach during the heart of the summertime when we make our money -- we're sitting there not being able to make a living in the summertime.

KILMEADE: John, it's absolutely beautiful there. It's one of the foremost vacation spots in the country and now it could be just left to the birds or maybe some turtles that want to nest. Here's the statement from the Audubon Society, from the Environmental Law Center. They say this: "The consent decree does not directly close any beaches to or use by or may require that beaches be closed or use i threatened piping plovers or other targeted shorebirds are attempting to nest in the are. All bird species appear to be benefitting from the lack of disturbances, increasing in numbers and fledgling more chicks." [Fox News, Fox & Friends, 12/20/10]

In Fact, The Regulation Only Applies To Certain Areas Of The Cape Hatteras National Seashore For Certain Periods Of Time. From National Park Service's Frequently Asked Questions document regarding beach access at the Cape Hatteras National Seashore:

3. I was planning a vacation to the Outer Banks this (spring, summer, fall), but I've heard that all your beaches are closed ("everything is closed"). Is that true?

That is absolutely NOT true! You have received bad information. While temporary resource closures to protect nesting shorebirds and sea turtles are expected to occur between mid-March and mid- to late-August, including at some popular sites, there will be many, many miles of beach open to both pedestrian and ORV access on any given day of any given week during those months. For example, on July 8, 2009, there were approximately 22 miles of beach open to ORVs and pedestrians, another 26 miles open to only pedestrians (that was a total of 48 miles of open beach!), while 19 miles of beach were closed or impractical to access due to resource protection closures in place at the time. By late August, most of the resource closures had been lifted. [National Park Service Frequently Asked Questions: Beach Access, accessed 12/22/10]

Environmental Coalition Seeks To Protect Threatened Species, But Does Not Intend To Ban All Vehicles. Preserve Hatteras, the coalition seeking restrictions on off-road vehicles at the Cape Hatteras National Seashore, says:

Do conservation groups want to ban vehicles from the Seashore?

No. Our goal continues to be and always has been to work out a solution based on law and science that protects threatened wildlife in balance with the responsible use and enjoyment of the park by all visitors.  Everyone deserves a safe space on the national seashore - birds and turtles, as well as anglers, bird watchers, surfers, swimmers and those who just enjoy the serenity of one of the East Coast's most dramatic areas. [PreserveHatteras.org, accessed 12/22/10]

With Temporary Regulations In Place, Visitors To Cape Hatteras Actually Increased. In a November 16 press release, Defenders of Wildlife stated:

2010 was a record-breaking year at Cape Hatteras for wildlife and visitor occupancy under similar, temporary rules for off-road vehicle use within Cape Hatteras National Seashore.  Those rules were implemented in April 2008, and include wildlife protections similar to the ones proposed today by the National Park Service. 

[...]

At the same time, Dare County's visitor occupancy through August 2010 exceeded prior years for the same period.  In addition, according to press reports, the Outer Banks Visitors Bureau reported that Hatteras Island visitors spent a record-setting $27.8 million on lodging during the month of July, which was an 18.5 percent increase over July 2009 and exceeded all preceding years.

"Numbers since 2008 demonstrate that under science-based wildlife management, nesting birds and turtles can rebound, tourism can thrive, and wildlife and people can share the beach at Cape Hatteras," said Walker Golder, acting executive director of Audubon North Carolina. "The park service's plan currently falls short of providing adequate science-based, year-round protections for the seashore's natural resources."  [Defenders.org, 11/16/10]

NPS's Proposed Plan "Allows [Off-Road Vehicle] Use On The Majority Of The Seashore" And "Proposes New Parking Facilities, ORV Ramps, And Water Shuttles To Increase Visitor Access." From a November 16 press release issued by the Defenders of Wildlife:

"The park service's final rules must provide adequate vehicle-free space and protections for both pedestrians and wildlife, while still allowing responsible beach driving in some areas," said Julie Youngman, senior attorney, Southern Environmental Law Center. "We look forward to working with the park service to build on the success of this record-breaking year."

The park service's preferred plan in today's statement allows ORV use on the majority of the seashore. Twenty-eight of the seashore's 67 miles are set aside as year-round ORV routes, with only 26 miles designated as year-round vehicle-free areas for pedestrians, families, and wildlife. The remaining 13 miles of seashore are seasonally open to ORVs.  The plan also proposes new parking facilities, ORV ramps, and water shuttles to increase visitor access.

"As demonstrated by record numbers of visitors and wildlife this year, it is entirely possible for Cape Hatteras to be responsibly shared and enjoyed," said Jason Rylander, attorney for Defenders of Wildlife.  "We hope the park service's final plan will strike an appropriate balance that meets the needs of the Seashore's many users." [Defenders.org, 11/16/10]

Fox Blames "Environmentalists' Crusade" For Hatteras Regulations, But Bush Administration Agreed To Them

Fox & Friends: "Environmentalists' Crusade Closing Beaches & Hurting Livelihood." During the same segment, on-screen text read: "Environmentalists' Crusade Closing Beaches & Hurting Livelihood."

[Fox News, Fox & Friends, 12/20/10]

Nixon Signed Executive Order In 1972 Requiring Federal Land Managers To Develop Plans and Regulations To Manage ORV Use On Public Lands. From a Defenders of Wildlife brief seeking a preliminary injunction:

As a result of the growth in ORV [Off-Road Vehicle] recreation on federally protected lands, President Nixon signed Executive Order 11644 on February 8, 1972; in that Order he noted that the "popularity [of ORV driving on public lands]  continues to increase rapidly. The widespread use of such vehicles on the public lands - often for legitimate purposes but also in frequent conflict with wise land and resource management practices, environmental values, and other types of recreational activity - has demonstrated the need for a unified Federal policy toward the use of such vehicles on the public lands." [Defenders.org, accessed 12/22/10]

Bush Administration's Park Service Agreed To Consent Decree Managing Off-Road Vehicles On Cape Hatteras Beaches. According to the National Park Service:

In October 2007, Defenders of Wildlife and the National Audubon Society, represented by the Southern Environmental Law Center (plaintiffs) filed a lawsuit against the NPS alleging inadequacies in management of protected species at Cape Hatteras National Seashore and failure of the park to comply with the requirements of the ORV executive order and NPS regulations regarding ORV use.

The species identified for protection included: the piping plover (federally-listed threatened), several species of colonial waterbirds (state-listed threatened and Species of Special Concern), the American oystercatcher (state-listed Species of Special Concern), and several species of sea turtles (federally-listed threatened and endangered).

In April 2008, a U.S. District Court Judge signed a consent decree to settle the lawsuit. The consent decree was agreed to by the plaintiffs and the NPS; and by Dare and Hyde Counties and a coalition of local ORV and fishing groups (Cape Hatteras Access Preservation Alliance) which participated in the lawsuit as intervenors. The consent decree, which is enforceable by the court, provides for specific species protection measures and requires the NPS to complete the ORV plan and required special regulation by Dec. 31, 2010 and April 11, 2011 respectively. [NPS.gov, accessed 12/22/10]

Reagan-Appointed Judge Approved Consent Decree Regarding Off-Road Vehicle Regulation At Cape Hatteras. According to a May 1, 2008, press release issued by the National Park Service:

Superintendent Mike Murray announced today that, under the Consent Decree signed on April 30, 2008 by U.S. District Court Judge Terrence Boyle, a new seasonal restriction on nighttime beach driving will go into effect immediately on the beaches of Cape Hatteras National Seashore. Beginning May 1, 2008, all Seashore beaches are closed to off-road vehicles (ORVs) between the hours of 10 p.m. to 6 a.m. [NPS.gov, 5/1/08]

• Boyle Was Appointed By President Reagan In 1984 With Jesse Helms' Support. As reported by a May 1, 2006, Salon.com article: "President Ronald Reagan appointed Boyle to be a federal district judge in 1984, with a push from former Sen. Jesse Helms, who once employed him briefly. President George H.W. Bush nominated Boyle to the appellate bench in 1991, but Boyle never made it to a Senate vote. He remains a favorite of conservatives, and currently holds a unanimous well-qualified rating from the American Bar Association. But Democrats and liberal advocacy groups have vigorously criticized him for his numerous rulings on disability, gender and racial discrimination cases." [Salon.com, 5/1/06]

For the hundreds of netroots activists who were in that ballroom in Vegas last July, this feels like closing a circle.

I talked with Dan this afternoon and asked him what message he had for the netroots today. He talked about what he thought, leaving Las Vegas last summer, that maybe, just maybe, he had done something that could change the debate over "Don't Ask, Don't Tell." But instead of dwelling on this achievement, he's thinking ahead.

"This is only the beginning.... Sitting there watching the President talking about 'We're all created equal under the law,' ... but at the same time I can't get married, there's a moral discrepancy.

Today we congratulate the President, because we know if he wasn't the voice behind it, it never would have happened, but tomorrow we still have work to do....

You can fight in war and sacrifice for your neighbor's families, you should be able to fight for love...That's full citizenship....

Change is hard work, it's a choice we make that we have to constantly work at it. A lot of people kept saying 'Just wait, it's going to happen.' But it's not going to happen just by you saying it.... The government will do everything it can to not do the right thing. You have to make it happen."

Or, as he put it more succinctly:

At the same time, though, Dan said that what he's taking from today, personally, is a "restored the faith, the hope in government that it could work."

On a personal note, I'm deeply honored to have been the conduit for this exchange, and re-exchange, of such a salient symbol of this fight. That ring symbolized what's supposed to be a guiding principle of the military--integrity. Now that American men and women won't have to lie about who they are in order to serve their country, that personal integrity is restored, along with Dan's ring.

Mr. Tom 'Miami is a Third World Country' Tancredo went on radio and just brought up what he feels is a relevant question about the repealing of DADT: That is, can the military segregate the troops based on sexual preferences? What a guy. People like him openly foment hostility, the kind that usually leads to violence.

Political Correction:

Unsurprisingly, Tancredo, who has made his anti-immigrant views well known, isn't in favor of the DREAM Act (which, he claimed, will give special affirmative action treatment to tons of people sneaking in from Latin America and Africa). He was also skeptical about the "political" repeal of "Don't Ask, Don't Tell," but fortunately for the large majorities of Americans and military personnel who wanted DADT to go away, Tancredo isn't in charge; President Obama signed repeal into law this morning.

Yet, knowing what was coming, Tancredo clung to hope that our combat troops might be saved from actually having to serve in close quarters with those scary gays. "I wonder," he mused, "to what extent this ruling allows the military to segregate within their own ranks."

TANCREDO: I have a feeling there may be other problems that develop. Certainly those kinds of things have been expressed by the head of the — by the common head of the Marine Corps. And I would — among other things I wonder to what extent this ruling allows the military to segregate within their own ranks. That is to say, it's okay, just as we said that it was ok to have females in the military but we would segregate them into non-combative roles, then would this be — I wonder if we could do the same thing in this situation, saying that just the environment in combat does not lend itself to having these other pressures on the people that we ask to do the fighting. I don't know. I'm just asking a question. I do not know if that was part of the bill that was passed today by the Senate, whether it really went into that kind of detail. I doubt it. Usually these things go over to the military and you know the military is just simply told, "implement."

Tancredo is already well-established as a vicious nativist who always takes the low road, so what do you expect from him? No wonder he's a Tea Party favorite.

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In this clip Alan Colmes tells Tancredo that Jeb Bush called him a "nut" because he called Miami a 'third world country'. Tom's response was to of course equate being called a nut was like being called the "N" word if you're African American.

Tancredo: Did he use the "N" word? We got into an argument into what it means to be a third world country.

Here's a few of his other greatest hits.

Tom Tancredo to the Tea Partiers: Lack of 'civics literacy test' meant illiterates put 'a committed socialist' in White House

Tom Tancredo Calls La R aza a "Latino KKK Without the Hoods or Nooses"

Tom Tancredo calls Sonia Sotomayor a racist

Tom Tancredo boycotts Univision/Spanish Debate: Attacks their entire viewership

And let's not forget his "bombing Mecca," statements either.

Closing out the most accomplished Congress in decades, President Obama is holding a year-end news conference at the White House before heading to Hawaii for a brief vacation with his family. You can watch the press conference here and add your thoughts in the comments as we blog it live.

Update: President Obama opened with a statement saluting the fact that despite predictions of gridlock, this lame duck session of Congress managed to accomplish a tremendous amount, including START, DADT, the 9/11 bill, and his tax cut deal. Additional update: President Obama highlighted the unemployment insurance and Social Security payroll tax holiday provisions of the tax cut deal. He also flagged the food safety bill.

Update: President Obama called this Congress the most productive in generations, but did say he was deeply disappointed it did not pass the DREAM Act so kids don't get punished for the actions of their parents. He also expressed frustration that his budget was not passed. But he said the productivity of the post-election session shows that despite differences, it's still possible to get things done.

Update: Obama closed his opening statement by thanking those serving the nation overseas and in the military.

Update: First question is whether President Obama is ready to call himself the comeback kid, and whether he thinks Congress will be as productive in 2011. Avoiding the urge to laugh out loud at the incredible stupidity of the question, President Obama pointed out that he doesn't believe the victories of the lame duck session are victories for himself -- they are victories for the public. He also said there will be serious debates in 2011, especially about the cuts that Republicans want to make with the budget, but that if the next Congress takes the same approach as this one, he was confident it could make progress.

Update: First question is from Tapper about DADT about the challenge of dealing with those in the military who are not happy with the passage of DADT, and whether opposition to marriage equality is consistent with the idea that gays and lesbians should be allowed to serve in the military. President Obama said he was confident the military could implement DADT retail. On the question of marriage equality, President Obama said he struggled with the issue, and that while his baseline was supporting a strong civil union law, his views are continually evolving. I suspect people will interpret his remarks as opening the door to gay marriage.

Update: Next question is from Dan Lothian about where President Obama thinks the economy is today and what the road ahead looks like. President Obama said things were heading the right way, but that there was still much work to be done, and that Democrats and Republicans, conservatives and liberals need to work together and be flexible and focus on what works. He pointed to the auto bailout as an example where an unconventional policy was warranted. Lothian had also asked Obama whether with the election Republicans were now in control of economic policy. Obama pointed out that ultimately it's the public that's in charge.

Update: Mark Knoll of CBS asks President Obama whether he understands the outrage that Democrats felt about the tax cuts for the wealthy, and whether his rhetoric criticizing the tax cuts was partially responsible for the outrage. President Obama said he did understand not just why Democrats oppose those cuts, but also why some Republicans oppose them, saying that when the next Congress convenes, and the budget takes center stage, we're not only going to need to cut programs that don't work, but also pay for the things that are important -- and that's going to require revenue. While he did talk about the possibility of some budget cuts, the bulk of his answer focused on investments America needs to make, and the fact that in two years we're going to have to choose between making those investments and giving those tax cuts to wealthy people. President Obama pointed out that middle-class incomes haven't increased in a decade, while people in the top 1%, top 0.1%, and top 0.01% have a larger share of income wealth since the 1920s. Obama said America's great strength is a "thriving middle-class" and that rebuilding that thriving middle-class should be our goal as a nation. He was careful to say he wasn't against people like Steve Jobs becoming wealthy when they build great products, but he said the backbone of the country must be strong, and that it needed to be a part of the conversation over the next two years.

Update: The next question was on the failure to pass immigration reform. President Obama said his biggest disappointment was the failure of the DREAM Act vote which was blocked be Republicans and a handful of Democrats in the Senate. He said kids who grew up in America, kids who are willing to fight for America, who just want an education, should not be at risk for deportation. "It's heartbreaking. That can't be who we are...They didn't break a law. They were kids." President Obama said his administration was taking border security and cracking down on illegal employers seriously, but that we need to reform immigration -- at minimum passing the DREAM Act. "I'm going to go back at it," he said. "We've got to change the politics" in which Republicans who know better still block the DREAM Act for fear of electoral blowback. "One thing I hope people have seen during this lame duck, I am persistent. If I believe strongly in something I stay on it. And I believe strongly in this. ... I think about those kids and I want to do right by them."

Update: Fox asks about Guantanamo. Obama says the reason why he wants to close Guantanamo is that it's become the top recruitment tool for Al Qaeda -- that its very existence poses a threat to America because it fuels terrorist propaganda. Fox wanted him to comment on the ongoing Guantanamo review process, but Obama declined to comment because he hasn't received the review.

President Obama closed the press conference wishing the press corps a merry Christmas, happy holidays, and happy New Year.

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At least one Fox News host is willing to hold Republicans accountable for blocking a bill that would provide health benefits to 9/11 first responders.

Fox News' Shepard Smith called out Republicans by name Monday, placing individual responsibility for their successful filibuster of the bill and refusals to come on his show to talk about it.

While Smith noted that they blocked the bill "in lockstep."

"We called a lot of Republicans today, who are in office at the moment," he said. "These are the one who told us no: Sens. Alexander, Barrasso, Cornyn, Crapo, DeMint, Grassley, Kyl, McConnell, Sessions, Baucus, Gregg, and Inhofe."

In addition, Sens. Bunning, Coburn, Ensign, Graham, Hatch, and McCain failed to respond to his request at all.

"I'm not really surprised, but what is your take? Why does no one want to talk about this?" Smith asked former Republican Gov. of New York George Pataki.

"I can't tell you why they didn't come on and talk about it but I do believe that it's important that the Senate act and I hope they act before they break," Pataki said.

House Resolution 847, the James Zadroga 9/11 Health and Compensation Act of 2010, would provide $7 billion in benefits to workers that responded to the terrorist attacks of Sept. 11, 2001. Many of those workers are now experiencing health problems such as cancer, heart disease and respiratory disease.

For his part, Smith seems to be the exception at Fox News, where only one other personality has gotten angry about the 9/11 first responders bill -- but he neglected to mention that Republicans were the reason for its failure.

"Shame, embarrassment, outrage, anger, all are proper reactions to the conduct of our Senators, who will now find one excuse after another to explain away the fact that they have turned their back on American heroes," Peter Johnson Jr. said last week. "Heroes whose only sin was to expect nothing for their service and were then promised the world by politicians who couldn't take enough pictures with them."

While other mainstream media outlets have yet to cover 9/11 responders during their nightly news coverage of the lame duck session, Comedy Central's Jon Stewart devoted his final show of the year to the subject.

Stewart noted that the only network that fully covered the topic was Al-Jazeera.

"Our networks were scooped with a sympathetic Zadroga Bill story by the same network Osama bin Laden sends his mix-tapes to!" he exclaimed. "This is insane!"
--------------------------------------------------------------------------------------------------------------------------------

Edit: Today Shep Smith called out Tom Coburn (R-OK) for vowing to block the bill until the next session, for no real reason other than personal pique.

SHEPARD SMITH: He is the man who is vowing to slow this down or block it, so that the necessary funding for the illnesses of the first responders who made it to Ground Zero to try to save lives on the day that America changed -- remember? This is the Senator who is vowing to block it so that it doesn't make it through. Sen. Tom Coburn, Republican of Oklahoma.

by Jake Bernstein and Jesse Eisinger

Two years before the financial crisis hit, Merrill Lynch confronted a serious problem. No one, not even the bank's own traders, wanted to buy the supposedly safe portions of the mortgage-backed securities Merrill was creating.

Bank executives came up with a fix that had short-term benefits and long-term consequences. They formed a new group within Merrill, which took on the bank's money-losing securities. But how to get the group to accept deals that were otherwise unprofitable? They paid them. The division creating the securities passed portions of their bonuses to the new group, according to two former Merrill executives with detailed knowledge of the arrangement.

The executives said this group, which earned millions in bonuses, played a crucial role in keeping the money machine moving long after it should have ground to a halt.

"It was uneconomic for the traders" -- that is, buyers at Merrill -- "to take these things," says one former Merrill executive with knowledge of how it worked.

Within Merrill Lynch, some traders called it a "million for a billion" -- meaning a million dollars in bonus money for every billion taken on in Merrill mortgage securities. Others referred to it as "the subsidy." One former executive called it bribery. The group was being compensated for how much it took, not whether it made money.

The group, created in 2006, accepted tens of billions of dollars of Merrill's Triple A-rated mortgage-backed assets, with disastrous results. The value of the securities fell to pennies on the dollar and helped to sink the iconic firm. Merrill was sold to Bank of America, which was in turn bailed out by taxpayers.

What became of the bankers who created this arrangement and the traders who took the now-toxic assets? They walked away with millions. Some still hold senior positions at prominent financial firms.

Washington is now grappling with new rules about how to limit Wall Street bonuses in order to better align bankers' behavior with the long-term health of their bank. Merrill's arrangement, known only to a small number of executives at the firm, shows just how damaging the misaligned incentives could be.

ProPublica has published a series of articles throughout the year about how Wall Street kept the money machine spinning. Our examination has shown that as banks faced diminishing demand for every part of the complex securities known as collateralized debt obligations, or CDOs, Merrill and other firms found ways to circumvent the market's clear signals.

The mortgage securities business was supposed to have a firewall against this sort of conflict of interest.

Banks like Merrill bought pools of mortgages and bundled them into securities, eventually making them into CDOs. Merrill paid upfront for the mortgages, but this outlay was quickly repaid as the bank made the securities and sold them to investors. The bankers doing these deals had a saying: We're in the moving business, not the storage business.

Executives producing the securities were not allowed to buy much of their own product; their pay was calculated by the revenues they generated. For this reason, decisions to hold a Merrill-created security for the long term were made by independent traders who determined, in essence, that the Merrill product was as good or better than what was available in the market.

By creating more CDOs, banks prolonged the boom. Ultimately the global banking system was saddled with hundreds of billions of dollars worth of toxic assets, triggering the 2008 implosion and throwing millions of people out of work and sending the global economy into a tailspin from which it has not yet recovered.

Executives who oversaw Merrill's CDO buying group dispute aspects of this account. One executive involved acknowledges that fees were shared, but says it was not a "formalized arrangement" and was instead done on a "case-by-case basis." Calling the arrangement bribery "is ridiculous," he says.

The executives also say the new group didn't drive Merrill's CDO production. In fact, they say the group was part of a plan to reduce risk by consolidating the unwanted assets into one place. The traders simply provided a place to put them. "We were managing and booking risk that was already in the firm and couldn't be sold," says one person who worked in the group.

A month before the group was created, Merrill Lynch owned $7.2 billion of the seemingly safe investments, according to an internal risk management report. By the time the CDO losses started mounting in July 2007, that figure had skyrocketed to $32.2 billion, most of which was held by the new group.

The origins of Merrill's crisis came at the beginning of 2006, when the bank's biggest customer for the supposedly safe assets -- the giant insurer AIG -- decided to stop buying the assets, known as "super-senior," after becoming worried that perhaps they weren't so safe after all.

The super-senior was the top portion of CDOs, meaning investors who owned it were the first to be compensated as homeowners paid their mortgages, and last in line to take losses should people become delinquent. By the fall of 2006, the housing market was dipping, and big insurance companies, pension funds and other institutional investors were turning away from any investments tied to mortgages.

Until that point, Merrill's own traders had been making money on purchases of super-senior debt. The traders were careful about their purchases. They would buy at prices they regarded as attractive and then make side bets -- what are known as hedges -- that would pay off if the value of the securities fell. This approach allowed the traders to make money for Merrill while minimizing the bank's risk.

It also was personally profitable. Annual bonuses for traders -- which can make up more than 75 percent of total compensation -- are largely based on how much money each individual makes for the firm.

By the middle of 2006, the Merrill traders who bought mortgage securities were often clashing with the powerful division, run by Harin De Silva and Ken Margolis, which created and sold the CDOs. At least three traders began to refuse to buy CDO pieces created by De Silva and Margolis' division, according to several former Merrill employees. (De Silva and Margolis didn't respond to requests for comment.)

In late September, Merrill created a $1.5 billion CDO called Octans, named after a constellation in the southern sky. It had been built at the behest of a hedge fund, Magnetar, and filled will some of the riskier mortgage-backed securities and CDOs. (As we reported in April with Chicago Public Radio's This American Life and NPR's Planet Money, Magnetar had helped create more than $40 billion worth of CDOs with a variety of banks, and bet against many of those CDOs as part of a strategy to profit from the decline in the housing market.)

In an incident reported by the Wall Street Journal ($) in April 2008, a Merrill trader looked over the contents of Octans and refused to buy the super-senior, believing that he should not be buying what no one else wanted. The trader was sidelined and eventually fired. (The same Journal article also reported that the new group had taken the majority of Merrill's super-seniors.)

The difficulty in finding buyers should have been a warning signal: If the market won't buy a product, maybe the bank should stop making it.

Instead, a Merrill executive, Dale Lattanzio, called a meeting, attended by among others the heads of the CDO sales group -- Margolis and De Silva -- and a trader, Ranodeb Roy. According to a person who attended the meeting, they discussed creating a special group under Roy to accept super-senior slices. (Lattanzio didn't respond to requests for comment.)

The head of the new group, Roy, had arrived in the U.S. early in the year, having spent his whole career in Asia. He had little experience either with the American capital markets or mortgages. His new unit was staffed with three junior people drawn from various places in the bank. The three didn't have the stature within the firm to refuse a purchase, and, more troubling, had little expertise in evaluating CDOs, former Merrill employees say.

Roy had reservations about purchasing the super-senior pieces. In August 2006, he sent a memo to Lattanzio warning that Merrill's CDO business was flawed. He wrote that holding super-senior positions disregarded the "systemic risk" involved.

When younger traders complained to him, Roy agreed it was unwise to retain the position. But he also told these traders that it was good for one's career to try to get along with people at Merrill, according to a former employee.

But Roy and his team needed to be paid. As they were setting up the trading group, Roy raised the issue of compensation. "The CDO guys said this helps our business and said don't worry about it -- we will take care of it," recalls a person involved in the discussions.

The agreement, according to a former executive with direct knowledge of it, generally worked like this: Each time Merrill's CDO salesmen created a deal, they shared part of the fee they generated with the special group that had been created to "buy" some of the CDO. A billion-dollar CDO generated about $7 million in fees for Merrill's CDO sales group. The new group that bought the CDO would usually be credited with a profit between $2 million and $3 million -- despite the fact that the trade often lost money.

Sharing the bonus money for a deal or trade is common on Wall Street, arrangements known as "soft P&L," for "profit and loss." But it is not typical, or desirable, to pay a group to do something against their financial interests or those of the bank.

Roy made about $6 million for 2006, according to former Merrill executives. He was promoted out of the group in May 2007, but then fired in November of that year. He now is a high-level executive for Morgan Stanley in Asia. The co-heads of Merrill's CDO sales group, Ken Margolis and Harin De Silva, pulled down about $7 million each in 2006, according to those executives. De Silva is now at the investment firm PIMCO.

By early summer 2007, many former executives now realize, Merrill was a dead firm walking. As the mortgage securities market imploded, high-level executives embarked on an internal investigation to get to the bottom of what had happened. It did not take them long to discover the subsidy arrangement.

Executives made a sweep of the firm to see if there were other similar deals. We "made a lot of noise" about the Roy subsidy to root out any other similarly troublesome arrangements, said one of the executives involved in the internal investigation. "I'd never seen it before and have never seen it again," he says.

In early October 2007, Merrill began to purge executives and, slowly, to reveal its losses. The heads of Merrill's fixed income group, including Dale Lattanzio, were fired.

Days later, the bank announced it would write down $5.5 billion worth of CDO assets. Less than three weeks after that, Merrill raised the estimate to $8.4 billion. Days later, the board fired Merrill's CEO, Stan O'Neal.

Eventually, Merrill would write down about $26 billion worth of CDOs, including most of the assets that Ranodeb Roy and his team had taken from De Silva and Margolis.

After Merrill revised its estimate of losses in October 2007, the Securities and Exchange Commission began an investigation to discover if the firm's executives had committed securities fraud or misrepresented the state of its business to investors.

But then the financial crisis began in earnest. By March 2008, Bear Stearns had collapsed. By the fall of 2008, Merrill was sold to Bank of America. In a controversial move, Merrill paid bonuses out to its top executives despite its precarious state. The SEC turned its focus on Merrill and BofA's bonuses and sued, alleging failures to properly disclose the payments.

As for the original SEC probe into Merrill Lynch's CDO business in 2007, nothing ever came of it.

ProPublica research director Lisa Schwartz and Karen Weise contributed reporting to this story.