Thursday, April 29, 2010

Inside the D.C. Tea Party

Click to listen to the audio By Baynard Woods Giant screens projected the face of Christopher Monkton, 3rd Viscount Monkton of Brenchley, across the National Mall. It was the big Tax Day Tea Party Rally put on by the Freedom Works Foundation, which calls the British Monkton “Lord.”  It was supposed to be a populist affair. “Global Warming?” the Lord asked. “False!” the crowd cried. A little mob was forming near where I stood. I walked over. A couple stood silently with a sign that read “Defend Obama: Outlaw White Supremacy.” They would not give their names or answer questions. They were surrounded by Tea Partiers. “We’re surrounding them,” a woman explained. “Is there a reason for that?” I asked. “Because that’s offensive.” “What is offensive about it?” I wondered “They don’t belong here.” A blond woman named Cozette Westerberger approached me. “I can’t find a white supremacist, can you? Let’s go find one,” she said and grabbed my arm. “Come on, come on, let’s go.” “Hold on, hold on,” I said. “Let go of me please.”  I was trying to be polite, but my voice sounds embarrassingly high-pitched on tape. People jostled around us. I pulled my arm out of her grasp. “Let’s go find a white supremacist,” she said. “Hold on,” I said. “Hold on. Come here.” “Let’s go find one. Do you know one? Do you know one?” I asked if you had to know a crack smoker to outlaw crack. “Do you smoke it?” she asked. “Have you been drinking? You’ve been drinking,” she announced, delighted. “You’ve been drinking. How much did you have before you came down here?” People chanted “U.S.A.! U.S.A!” But, the flags they had bought that afternoon were laying all over the ground. “You been drinking haven’t you buddy?” Perhaps that was my mission that day, to ensure that the Tea Partiers were right about at least one thing: I had been drinking. There were five hours between the afternoon rally at Freedom Plaza and the evening rally on the Mall. I went with a buddy to the circular bar in the Willard hotel—where, rumor has it, Abraham Lincoln and Jefferson Davis shared Mint Juleps prepared according to Henry Clay’s recipe back before the War. We had a couple and thought about how the rich guys still get away with pretending to be populists. Then we went to eat oysters and drink beer up the road. People were yelling at me. “Did you beat your wife before you came here today?” one guy asked. Others were pointing arrow shaped signs that read “Infiltrator!” at the couple with the “Outlaw White Supremacy” banner and yelling at them. Westerberger was focused on me. “Let me show you a picture of my grandchild,” she repeated now, over and over again as she dug into her purse. “Look!” She pulled out a picture. “He is cute,” I said—though I hate looking at baby pictures. “He’s black!” she cried. “Isn’t he cute? He’s black. Isn’t that great? My grandson is black.” “And that means what?” I asked. “That means I’m not a white supremacist.” It’s not that they’re white supremacists. It’s that Obama is a black supremacist. That’s the logic. Earlier that day, I had talked to a man named John Lucas from Pennsylvania. He told me that he was ready for the next Revolution. “I firmly believe that the guy in the White House is a Muslim. He hates America, I think he hates whitey. He’s a self-loathing piece of shit.” When I asked Lucas what his post-revolution world would look like, he said, “It would look like me.” He was a white guy with white tennis shoes, a baseball cap and a gold chain. According to a CBS/New York Times Poll eighty-nine percent of Tea Partiers are white. But almost as striking, seventy-five percent are over forty-five.  At the rally, this made perfect sense. At the Tea Party, everybody wanted to cut taxes, almost nobody wanted to cut Social Security or Medicare. They were all boomers. The Baby Boomer generation has been the center of attention all of their lives. They even managed to make the 2004 election about the Sixties. In 2008, for the first time in their lives, the boomers were not the center of attention. Now they are throwing a nationwide tantrum. The over-inflation of boomer importance explains the disproportionate news coverage the Tea Party has gotten. The events were miniscule in comparison with the inauguration and the anti-war protests in 2003. At the afternoon tax rally, it seemed like there were nearly as many reporters as protesters. The evening rally seemed to have about the same number of people as an outdoor showing of “Super Man” at the same spot on the Mall a couple years ago. Like Super Man, it was all dress-up. The original Tea Partiers pretended to be Indians: these pretend to be Patriots. It was all about the costume. One of the speakers that night said that the Tea Party was going to insure that the Baby Boomers were not the only generation in American history to leave the country worse than it found it. They think that in November, they can finally have their Revolution. As I walked around listening to them, I felt a kinship with my grandparents, shaking my head at the crazy antics and utopian dreams of one whacked out generation.

The Magnetar Trade

by Jesse Eisinger and Jake Bernstein, ProPublica

How one hedge fund helped keep the bubble going

In late 2005, the booming U.S. housing market seemed to be slowing. The Federal Reserve had begun raising interest rates. Subprime mortgage company shares were falling. Investors began to balk at buying complex mortgage securities. The housing bubble, which had propelled a historic growth in home prices, seemed poised to deflate. And if it had, the great financial crisis of 2008, which produced the Great Recession of 2008-09, might have come sooner and been less severe.
At just that moment, a few savvy financial engineers at a suburban Chicago hedge fund helped revive the Wall Street money machine, spawning billions of dollars of securities ultimately backed by home mortgages.

When the crash came, nearly all of these securities became worthless, a loss of an estimated $40 billion paid by investors, the investment banks who helped bring them into the world, and, eventually, American taxpayers.
Yet the hedge fund, named Magnetar for the super-magnetic field created by the last moments of a dying star, earned outsized returns in the year the financial crisis began.

How Magnetar pulled this off is one of the untold stories of the meltdown. Only a small group of Wall Street insiders was privy to what became known as the Magnetar Trade. Nearly all of those approached by ProPublica declined to talk on the record, fearing their careers would be hurt if they spoke publicly. But interviews with participants, e-mails, thousands of pages of documents and details about the securities that until now have not been publicly disclosed shed light on an arcane, secretive corner of Wall Street.

According to bankers and others involved, the Magnetar Trade worked this way: The hedge fund bought the riskiest portion of a kind of securities known as collateralized debt obligations -- CDOs. If housing prices kept rising, this would provide a solid return for many years. But that’s not what hedge funds are after. They want outsized gains, the sooner the better, and Magnetar set itself up for a huge win: It placed bets that portions of its own deals would fail.

[caption id="attachment_1521" align="alignleft" width="300" caption="Magnetar partnered with Lehman Brothers on the CDO named after the constellation Libra, which closed in October 2006. A banker who worked on the CDO remembers that ‘there was a back-and-forth fight about’ assets between Lehman and Magnetar, with the hedge fund pushing for riskier assets. (Chris Hondros/Getty Images)"][/caption]

Along the way, it did something to enhance the chances of that happening, according to several people with direct knowledge of the deals. They say Magnetar pressed to include riskier assets in their CDOs that would make the investments more vulnerable to failure. The hedge fund acknowledges it bet against its own deals but says the majority of its short positions, as they are known on Wall Street, involved similar CDOs that it did not own. Magnetar says it never selected the assets that went into its CDOs.

Magnetar says it was “market neutral,” meaning it would make money whether housing rose or fell. (Read their full statement.  Dozens of Wall Street professionals, including many who had direct dealings with Magnetar, are skeptical of that assertion. They understood the Magnetar Trade as a bet against the subprime mortgage securities market. Why else, they ask, would a hedge fund sponsor tens of billions of dollars of new CDOs at a time of rising uncertainty about housing?

Key details of the Magnetar Trade remain shrouded in secrecy and the fund declined to respond to most of our questions. Magnetar invested in 30 CDOs from the spring of 2006 to the summer of 2007, though it declined to name them. ProPublica has identified 26 .

An independent analysis commissioned by ProPublica shows that these deals defaulted faster and at a higher rate compared to other similar CDOs. According to the analysis, 96 percent of the Magnetar deals were in default by the end of 2008, compared with 68 percent for comparable CDOs. The study was conducted by PF2 Securities Evaluations, a CDO valuation firm. (Magnetar says defaults don’t necessarily indicate the quality of the underlying CDO assets.)
From what we’ve learned, there was nothing illegal in what Magnetar did; it was playing by the rules in place at the time. And the hedge fund didn’t cause the housing bubble or the financial crisis. But the Magnetar Trade does illustrate the perverse incentives and reckless behavior that characterized the last days of the boom.

At least nine banks helped Magnetar hatch deals. Merrill Lynch, Citigroup and UBS all did multiple deals with Magnetar. JPMorgan Chase, often lauded for having avoided the worst of the CDO craze, actually ended up doing one of the riskiest deals with Magnetar, in May 2007, nearly a year after housing prices started to decline. According to marketing material and prospectuses, the banks didn’t disclose to CDO investors the role Magnetar played.

Many of the bankers who worked on these deals personally benefited, earning millions in annual bonuses. The banks booked profits at the outset. But those gains were fleeting. As it turned out, the banks that assembled and marketed the Magnetar CDOs had trouble selling them. And when the crash came, they were among the biggest losers.

Some bankers involved in the Magnetar Trade now regret what they did. We showed one of the many people fired as a result of the CDO collapse a list of unusually risky mortgage bonds included in a Magnetar deal he had worked on. The deal was a disaster. He shook his head at being reminded of the details and said: “After looking at this, I deserved to lose my job.”

Magnetar wasn’t the only market player to come up with clever ways to bet against housing. Many articles and books, including a bestseller by Michael Lewis, have recounted how a few investors saw trouble coming and bet big. Such short bets can be helpful; they can serve as a counterweight to manias and keep bubbles from expanding.
Magnetar’s approach had the opposite effect -- by helping create investments it also bet against, the hedge fund was actually fueling the market. Magnetar wasn’t alone in that: A few other hedge funds also created CDOs they bet against. And, as the New York Times has reported, Goldman Sachs did too. But Magnetar industrialized the process, creating more and bigger CDOs.

Several journalists have alluded to the Magnetar Trade in recent years, but until now none has assembled a full narrative. Yves Smith, a prominent financial blogger who has reported on aspects of the Magnetar Trade, writes in her new book, “Econned,” that “Magnetar went into the business of creating subprime CDOs on an unheard of scale. If the world had been spared their cunning, the insanity of 2006-2007 would have been less extreme and the unwinding milder.”

Magnetar Gets Started


The guiding force behind Magnetar was Alec Litowitz, a triathlete, astronomy buff and rising star in the investing world. In 2003, Litowitz retired from a Chicago-based hedge fund, Citadel, one of the most successful in the world, where he had spent most of his career and became a top executive. He promised to stay out of the business for two years.

As he waited for his non-compete agreement to expire, Litowitz and his wife traveled through Europe collecting antiques to stock a big house they were building on the shores of Lake Michigan.

By spring 2005, Litowitz’s wait was over. Then 38 years old, Litowitz quickly raised money to start his own hedge fund. The fund, Magnetar, attracted $1.7 billion from investors and opened in April.

Litowitz, who declined to be interviewed, had an approach to investing that emphasized scale and simplicity. He told those he hired: “Figure out a way to make money and figure out how to repeat it and do it over and over again,” according to a former employee. The firm handed out T-shirts emblazoned with a confident slogan: “Very Bright, Very Magnetic.” Employees privately joked about working for a fund named after something like a black hole.
Litowitz brought on board David Snyderman. A New Yorker with a serious mien, Snyderman, in his mid-30s, began hunting for investment opportunities in Wall Street’s burgeoning market in mortgage-backed securities.

It didn’t take them long to find something promising.

Snyderman and Magnetar focused on Wall Street’s mortgage assembly line, which had been super-charged during Litowitz’s time away from the business. Banks bundled pools of mortgages into large bonds, which they combined to create even larger investments. These were the now-infamous collateralized debt obligations. Each month, homeowners paid their mortgages. Each month, payments flowed to investors. (Here is an excellent video explaining CDOs.)

[caption id="attachment_1522" align="alignright" width="300" caption="Led by Alex Rekeda, who had worked on previous Magnetar deals, one of Japan’s biggest banks Mizuho teamed up with the hedge fund on Tigris, a CDO squared which tied together $902 million of Magnetar’s risky assets. (Andy Rain/Bloomberg via Getty Images)"][/caption]

Large investors across the globe snapped up the CDOs, which took the hottest investment around -- the U.S. housing market -- and transformed it into something that supposedly had little or no risk. Wall Street preached that the risk had been diluted because it was spread out over such large collections of mortgage bonds. (CDOs can also be based on side bets that rise and fall with the value of other mortgage bonds. These are known as “synthetic” CDOs. Magnetar‚Äôs deals were largely synthetic.)

Just as they did with mortgage-backed securities, investment banks divided CDOs into different layers, called tranches. As the mortgages were paid, money flowed to investors holding the top tranche. Since they were the first to get paid, and thus took the least amount of risk, they earned low interest rates. Next came the middle levels -- the so-called mezzanine tranches.

Last in line for money were investors in what’s known as the equity. In return for being at the bottom, equity investors got the highest returns, sometimes 20 percent interest -- money they would receive only as long as the vast majority of mortgage holders made their payments.

Even back then, Wall Street insiders called the equity “toxic waste,” and as anxiety built in late 2005 that the housing boom was over, investment banks struggled to find takers.

To Magnetar, the toxic waste was an opportunity.

At a time when fewer investors were stepping up to buy equity, the little-known hedge fund put out the word that it wanted lots and lots of it. Magnetar concentrated in a particularly risky corner of the CDO world: deals that were made up of the middle, or mezzanine, slice of subprime mortgage-backed bonds. Magnetar CDOs were big, averaging $1.5 billion, about three times the size of earlier deals built on subprime mortgages.

Magnetar’s purchases solved a crucial problem for the banks. Since the equity was so risky and thus difficult to sell, banks didn’t like to create new CDOs unless someone committed to buy them. Indeed, such buyers were so crucial that Wall Street referred to them as the CDOs’ “sponsors.”

Without sponsors, Wall Street’s mortgage bond assembly line could grind to a halt, and with it bank profits and banker bonuses. A top CDO banker could earn $3 million to $4 million annually on the CDOs he created and sold.

Usually, investment banks had to go out and find buyers of the equity. With Magnetar, the buyer came right to the bank’s doorstep. Wall Street was overjoyed.
“It seemed like a miracle,” says one mortgage market investment banker, because “no one” had been buying equity.
“By the end of 2005, the general sense was that the CDO market would slow down. These trades continued to fuel the fire,” says Bill Tomljanovic, who worked for a firm that helped build a Magnetar CDO. Magnetar was “a driving force in the market.”

According to JPMorgan data, Magnetar’s deals amounted to somewhere between a third and half the total volume in the particularly risky corner of the subprime market on which the fund focused.

Outsiders thought Magnetar was piling in at exactly the wrong time. A March2007 Business Week article  titled “Who Will Get Shredded?” would later put Magnetar near the top of its list. The hedge fund, said the magazine, “showed bad timing.”
How could Magnetar hope to make money on such risky stuff? It had a second bet that was known only to insiders.
At the same time it was investing in the equity, the fund placed bets that many of the same CDOs it had helped create would actually blow up. It did that using one of the most opaque corners of the investment world: credit default swaps, which function as a kind of insurance on CDOs and other types of bonds.
Credit default swaps work roughly like an insurance policy: You pay a small premium regularly, on any bond you want -- whether you own it or not -- and if it goes bust, you get paid off in full.
Nobody but Magnetar knows the full extent of its bets. Hedge funds are private and they don’t disclose the details of their trades. Also, credit default swaps are mostly unregulated and not publicly disclosed. Magnetar says it didn’t bet only against its own CDOs. The majority of its credit default swaps, says Magnetar, were on other CDOs.
Since it was the sponsor, Magnetar had privileges. Placing the risky equity was so important to banks that they typically gave those who bought it a say in how the deal was structured. Like all investors, equity buyers had to weigh risk and reward, the goal being to maximize returns while minimizing the chances that your investment will blow up.
But people involved in Magnetar’s deals say the hedge fund took a different tack, pushing for riskier bonds to go inside its CDOs. Doing that would make it more likely that Magnetar’s bets against the CDO would pay off.
The equity bought by Magnetar represented just a tiny fraction of the overall CDO. If it costs, say, $50 million, an entire CDO could be 20 times that, $1 billion. And if the CDO begins to go south and you’re smart enough to have taken out enough insurance, you can make hundreds of millions of dollars. That, of course, would take a bit of the sting out of losing your original $50 million investment in the equity.

Magnetar Does Its First Deal


As Magnetar set up its CDO shop, the hedge fund hired Jim Prusko, a smart and affable investor who had worked previously at the Boston money-manager Putnam Investments. He would shoulder much of the work of courting Wall Street bankers and managers who worked with the hedge fund. He operated out of Magnetar’s office in midtown Manhattan around the corner from Saks Fifth Avenue. In an office of 20-somethings, Prusko, then 40 years old, stood out as the “old man.”

Prusko and his boss at Magnetar, Snyderman, began approaching investment banks, offering to buy the riskiest, highest-yielding portion of CDOs. They always wanted a middleman, known as a CDO manager, on their deals. Many CDOs are operated day to day by such independent firms, who are often brought in by investment banks.

The managers also played a vital role in creating deals. When an investment bank created a CDO, it would often give what amounted to blueprints to the managers, who would then go out and find the exact bundles of bonds to fill the CDO. The managers had a fiduciary duty to represent the CDO fairly to all investors, ensuring investors got accurate and equal information.

Magnetar’s deals were numerous and big, and just like for investment banks, the bigger the deal, the larger the fee for managers.
“Prusko’s job was to butter up the CDO managers and the bankers,” said one banker who dealt with him.

By relying on a manager rather than managing the deal itself, Magnetar had no legal obligations to the CDO or others who bought it.

Magnetar completed its first deal in May 2006. In what became a habit, it named the CDO after a constellation, in this case, “Orion,” known for the trio of stars that form the mythological Greek hunter’s belt. For its maiden CDO, Magnetar enlisted a partner to buy risky equity alongside it, an internal investment fund within Deutsche Bank.

Deutsche and Magnetar didn’t reach for a Wall Street powerhouse to put the deal together. Instead the investors worked with Alex Rekeda, a young Ukrainian immigrant who was then working for Calyon, the investment banking arm of the French bank Cr√©dit Agricole.

Magnetar and Deutsche were deeply involved in creating Orion. “We want to make sure we control the deal,” a banker who worked on it recalls them emphasizing.
One person involved in Orion recalls Deutsche’s point person, Michael Henriques, and Magnetar’s Prusko pressuring the CDO manager, a division of the Dutch bank NIBC, to include specific lists of bonds in the deal.

Prusko and Henriques told this person that the investors “needed more spread in the portfolio.” More “spread” means more return and more risk.
This person recalled Magnetar asking, “Would you consider these bonds?” Their suggestions were invariably for riskier bonds. “Let’s just say we didn’t think their suggestions made a lot of sense,” the person said.

He said the CDO manager refused Magnetar’s requests to put riskier bonds in the deal. Still, it was an eye-opening experience. “I began to realize there were things you had to defend yourself against,” he said.

Magnetar and Deutsche declined to comment on Orion specifically. Magnetar says it made suggestions about the general outlines of the CDOs. But, the hedge fund says, it “did not select the underlying assets of the CDO at any time prior to or subsequent to transaction issuance.”

Other buyers of the CDO could have figured out they were getting relatively risky bonds, but they would have had to look hard at the minutiae of the deal. By this point in market history, the ratings had less and less meaning. Two sets of bonds rated AA could have very different levels of risk. Most investors chose not to dig too deeply.

[caption id="attachment_1523" align="alignleft" width="300" caption="Magnetar teamed up with Merrill Lynch on a $1.5 billion CDO named Norma that closed in March 2007. In a lawsuit filed against Merrill Lynch by the Dutch bank commonly called Rabobank on Wall Street, Rabobank alleges that ‘Merrill Lynch teamed up with one of its most prized hedge fund clients....to create Norma as a tailor-made way to bet against the mortgage-backed securities market.’ (Mario Tama/Getty Images)"][/caption]

One investor in Orion was a fund affiliated with IKB, a small German bank. Eventually, it invested in at least four more Magnetar deals. In mid-2007, because of the disastrous investments in subprime securities, the German government was forced to bail out IKB. The failure of the bank was an early warning sign of the global financial crisis.

Deutsche’s Henriques would later quit the bank and join Magnetar.
Orion lost value but never defaulted. That was better than every subsequent CDO that Magnetar helped create, according to ProPublica’s research.
Magnetar’s (Nearly) Perpetual Money Machine

By buying the risky bottom slices of CDOs, Magnetar didn’t just help create more CDOs it could bet against. Since it owned a small slice of the CDO, Magnetar also received regular payments as its investments threw off income.

With this, Magnetar solved a conundrum of those who bet against the market. An investor might be confident that things are heading south, but not know when. While the investor waits, it costs money to keep the bet going. Many a short seller has run out of cash at the gates of a big payday.

Magnetar could keep money flowing -- via its small investments in CDOs -- and could use that money to pay for its bets against CDOs.

Similar, commonly traded, assets appeared in multiple Magnetar CDOs. Experts say the benefit of that overlap to Magnetar was that when the hedge fund bet against non-Magnetar CDOs, the CDOs still had similar characteristics to the ones Magnetar had invested in.

Soon enough, bankers and CDO managers had a sense of how it worked. “Everyone knew,” said one person who managed Magnetar CDOs. “They used the equity to fund the shorts.”
Magnetar further increased its odds by insisting that the CDOs it helped create had an unusual construction. Typically, cash flowing to the last-in-line equity buyers is cut off at the first signs of trouble -- such as a rise in mortgage delinquencies. Those at the top of the CDO -- who accepted lower returns for less risk -- received that cash, leaving none for the high-risk holders.

Magnetar wanted its deals to be “triggerless,” meaning lacking these cash-flow dams. When the market turned shaky and homeowners began to default, money kept flowing down to the risky slices that Magnetar owned.

Even today, bankers and managers speak with awe at the elegance of the Magnetar Trade. Others have become famous for betting big against the housing market. But they had taken enormous risks. Meanwhile, Magnetar had created a largely self-funding bet against the market.

E-mails Give Glimpse of How Magnetar Worked
By the fall of 2006, housing prices had already peaked and Magnetar’s assembly line started producing, helping to create CDOs it would bet against. The hedge fund’s appetite seemed insatiable. The deals were the talk of CDO desks across Wall Street.

Between the end of September and the middle of December 2006, Magnetar had a hand in spawning at least 15 CDOs, worth an estimated $23 billion. Among the banks involved with those deals were Citigroup, Lehman Brothers and Merrill Lynch.
E-mails obtained by ProPublica from that time suggest Magnetar’s clout. The firm was involved at the start of deals and pushed for riskier bonds to be included.
After Magnetar expressed interest in buying the equity, the French bank Société Générale began to build the CDO, and selected a New York-based manager, Ischus Capital Management, which would choose the exact bonds to go into the CDO.
Magnetar wanted to name the CDO after a small constellation in the southern sky called Hydrus, which means “male water snake.” But by late September, Magnetar and Ischus began sparring over the composition of the deal.
Magnetar pressed Ischus to buy lower-quality assets for the deal, according to three people familiar with Hydrus. In an e-mail to bankers at Société Générale and Ischus executives, Magnetar’s CDO specialist, Jim Prusko, wrote on Sept. 29, 2006, “The original portfolio target spreadsheet that I have... had a strangely low spread target. That of course would not at all be beneficial to us. I have attached the target portfolio that I would like for this deal with target spreads.”
The portfolio Magnetar outlined didn’t list specific bonds, but executives at the CDO manager Ischus felt that they understood what Prusko wanted. A request for higher-spreading assets means more risk in the deal.

Andrew Shook, an Ischus executive, answered forcefully on Oct. 3, “We will not assemble a portfolio we are not proud of and feel strongly about in the name of a spread target.”
Prusko dialed down the pressure, responding within an hour. “Of course, the actual security selection is totally your purview,” he wrote. “I just wanted to make sure the overall portfolio characteristics worked for our strategy.”

Shook declined to comment on the e-mail exchange. Magnetar says that the deal as originally conceived wouldn’t have been profitable and that it was merely trying to get a higher return -- a higher “spread” -- to balance out the risk it was taking in owning the bottom-rated slice of the CDO.

The two sides subsequently drifted apart, partly over Ischus’s unease with Magnetar’s pressure, and the deal was never completed.

Concerns About ‘Reputational Risks’


As part of the big business Magnetar was doing in the fall of 2006, the hedge fund put together a CDO with Lehman Brothers named for the constellation Libra. John Mawe, a banker who worked on Libra, remembers that “there was a back-and-forth fight” about the assets between the bank’s CDO manager and Magnetar, with the hedge fund pushing for riskier assets.

Mawe says Lehman’s CDO in-house-management arm, which handled the deal, never put assets into Libra that it thought were bad investments.

Among the other banks that Magnetar approached during that time was Deutsche Bank, with whom it had teamed up to do its first deal months earlier. Deutsche Bank was anxious for business in order to maintain its standing as one of the top CDO banks, according to one of its bankers. Deutsche recommended CDO manager State Street Global Advisors.

The State Street managers were “highly skeptical” of doing a deal with Magnetar, according to one participant. “State Street wanted their deals to do well,” said the participant, and with Magnetar, there was “a lot of reputational risk to be concerned about.”

Hoping to close the deal, Magnetar’s master salesman Jim Prusko drove up from his home in the New York suburbs to State Street’s headquarters in Boston, to mollify executives in the management team. After the meeting, the deal went forward. As one banker explained, “there were other managers who were dying to do this deal” and get the millions in fees.

After subprime losses, State Street closed the business that managed its CDOs in late 2007. Frank Gianatasio, who worked in State Street’s CDO business says, “We were comfortable with every transaction we put into our CDOs.”

Deutsche, Magnetar and State Street called the $1.6 billion CDO they created Carina, a constellation whose name in Latin means a ship’s keel. In November 2007, Carina had the distinction of being the first subprime CDO of its kind to be forced into liquidation.

State Street and Magnetar declined to comment on their negotiations over Carina.

A Lawsuit Suggests Merrill Lynch’s Role


By early 2007, the mortgage market was falling apart. Lenders were reporting big losses , delinquencies were mounting -- and Magnetar’s business was booming.
Between late February and April, banks rolled out five Magnetar-sponsored deals, with a value of about $7.2 billion. Among them was a $1.5 billion CDO named Norma. Following Magnetar’s branding convention, Norma is a constellation in the Southern Hemisphere named for the Latin word for “normal.” This CDO was anything but.

Details about Norma, which was created by Merrill Lynch, have emerged through an ongoing lawsuit between Merrill and Dutch bank Cooperatieve Centrale Raiffeisen-Boerenleenbank, known commonly on Wall Street as Rabobank. (The Wall Street Journal had the first detailed report of Norma, in late 2007.) The dispute involves a side transaction that Rabobank made with Merrill involving Norma. Magnetar is not a party to the litigation. Yet the allegations are scathing in their depiction of how the CDO was developed.

“Merrill Lynch teamed up with one of its most prized hedge fund clients -- an infamous short seller that had helped Merrill Lynch create four other CDOs -- to create Norma as a tailor-made way to bet against the mortgage-backed securities market,” the complaint reads. (Emphasis in the original.)

“[T]o facilitate the selection of assets that would allow Norma to operate as a hedging instrument rather than an investment vehicle, Merrill Lynch hand-picked a beholden collateral manager that was willing to ignore its fiduciary duties to Norma’s investors.”

The manager for Norma was a small shop out of Long Island, N.Y., called NIR Capital Management. Run by Corey Ribotsky, the firm’s primary line of business before entering CDOs was speculating in penny stocks.

NIR brought in a team of experienced bankers to run its CDO business. The firm also had a variety of other ventures. At one point, they put money into a documentary called “American Cannibal,” that profiled the aborted launch of a reality television show in which contestant were stranded on an island and goaded into cannibalism. (The New York Times found it “absorbing.”  Ribotsky is now under investigation by federal authorities for misleading clients about its investment returns. NIR and Merrill Lynch declined to comment on dealings with Magnetar; Merrill Lynch denies liability in the litigation. Magnetar declined to comment.

Norma began to suffer setbacks even before the deal closed in March 2007. According to the lawsuit, by the time Norma was completed, its value had already declined by more than 20 percent.

JPMorgan Gets Into the Game -- And Loses


Despite the bad news in the mortgage market, Magnetar continued to find a few willing bankers to do CDOs, including a new one: JPMorgan Chase.
JPMorgan had avoided many of the complex financial transactions that decimated the banking industry. As the market grew frothier, JPMorgan pulled back from the CDO business. In 2005, the men who ran JPMorgan’s CDO unit told their bosses that they couldn’t see how to complete a CDO without sticking the bank with the large top tier, which would not appeal to investors because of its low returns. Other banks dealt with this problem by retaining these CDO layers on their books.
But by mid-2006, JPMorgan joined the herd. It hired bankers to expand its CDO team and got to work.

A few months later -- in early 2007 -- Magnetar and JPMorgan banged out a deal. Unlike the earlier CDOs it helped create, Magnetar didn’t name this one after a constellation. Opting for a more literal name, they called the deal “Squared,” after the term for a CDO that was made up of other CDOs. Squared was filled in part with other CDOs Magnetar had helped create.

According to a person familiar with how the deal came together, Magnetar committed to purchase $10 million worth of Squared’s equity. Magnetar’s purchase allowed JPMorgan to create and sell a $1.1 billion CDO. As it had on previous deals, Magnetar pushed the bankers to select riskier bonds. “They really cared about it,” said the person involved in the deal. “They wouldn’t pull punches. It was always going to be crappier.”

The hedge fund requested that Squared have slices from many Magnetar CDOs, including Auriga, Carina, Libra, Pyxis and Virgo. They all went into the deal. Magnetar also successfully pushed for Squared to include slices from one of the Abacus deals, a group of CDOs that, as the New York Times later reported, Goldman Sachs had created and bet against.

JPMorgan earned $20 million in creating Squared, according to the person involved in the deal.

JPMorgan’s sales force fanned out across the globe. It sold parts of the CDO to 17 institutional investors, according to a person familiar with the transaction. The deal closed in May 2007, nearly a year after housing prices had peaked. Within eight months, Squared dropped to a fraction of its initial value.

Just about everybody lost out, including Thrivent Financial for Lutherans, a Minnesota-based not-for-profit fraternal organization, whose $10 million investment was wiped out. Thrivent declined to comment.
Small pieces of Squared, as well as Magnetar’s CDO Norma, also ended up in mutual funds run by Morgan Keegan, a regional investment bank based in Memphis, Tenn.

The funds, advertised as conservative investments, cratered after betting on various exotic assets. Morgan Keegan was sued by individual investors who claimed that they were misled about the risks. Among the investors was former Chicago Bulls player Horace Grant, who was awarded $1.4 million in arbitration. This week, the SEC accused two Morgan Keegan employees of misleading fund investors about the value of its holdings in CDOs. Morgan Keegan called the charges “factually inaccurate” and promised to defend itself “vigorously.” Morgan Keegan did not respond to a request for comment on the specifics of the two Magnetar CDOs.

The biggest loser was JPMorgan Chase itself, which had kept the large, supposedly safe top slices of Squared on its books, without hedging itself. The bank lost about $880 million on the CDO. JPMorgan declined to comment on the details of the transaction.
Magnetar came out a winner. The fund earned about $290 million on its bet against Squared, according to a person familiar with the deal. Magnetar declined  to comment.

Magnetar’s Exit: A Deal so Bad Even a Credit-rating Agency Balked

Prusko was buoyant as Magnetar’s trades began to make money as its short bets rose in value. One friend recalls Prusko ribbing him: “What are you going to do after this blows up?” (Magnetar declined to comment on the exchange.)
In the spring of 2007, Magnetar began to have a problem: The hedge fund was sitting on hundreds of millions of dollars’ worth of CDO equity and other low-rated portions of its deals. With the decline of housing prices accelerating, off-loading these pieces would be very hard.
Magnetar needed a buyer and some deft financial engineering. It found the answer through its former partner, Alex Rekeda, who had been the banker on Magnetar’s first CDO. Rekeda now worked at Mizuho, one of Japan’s biggest banks. Mizuho was eager to get into the CDO world. It hired Rekeda in part because he could bring Magnetar’s business, according to one CDO manager who worked with him.
Rekeda and Magnetar came up with a remarkable CDO. They took their risky portions of 18 CDOs they had helped created -- and repackaged them to sell them to others. Bundling up the dregs of a CDO was rare, if not unprecedented.
This deal, Tigris, which closed in March 2007, tied together $902 million of Magnetar’s risky assets. Rekeda convinced two rating agencies, Standard & Poor’s and Fitch, to rate it. Fitch designated $259 million of it as triple A, the highest rating. S&P rated nearly $501 million as triple A. (When contacted for this article, S&P said it was comfortable rating Tigris; Fitch didn’t respond to questions about the deal.)
In a highly unusual move, the third major rating agency, Moody’s, refused to rate Tigris. Rekeda lobbied Moody’s for a rating, according to a person familiar with the deal. But Moody’s then-head of CDOs, Eric Kolchinsky, wouldn’t budge.
Magnetar got $450 million from Mizuho, which in return received income from assets in Tigris, according to several people familiar with the transaction. It was what’s known as a non-recourse loan: If things went wrong, Mizuho could only lay claim to what was in Tigris.
In response to ProPublica’s questions about this deal, Magnetar said the fund “as a matter of general practice, and as do most hedge funds, enters into non-recourse financing on specific assets in its portfolio.”
By September, just six months after Tigris had been created, Fitch downgraded most of the CDO’s slices. By the end of January 2008, the CDO had gone into default. The Japanese ended up with the paper, which was worthless. Mizuho eventually wrote Tigris off, as part of about $7 billion in total losses from its subprime missteps. Mizuho declined to comment, as did Magnetar.
Just as with a refi gone bad, when Tigris was wiped out, the hedge fund walked away from the house -- in this case its collateral. A person who worked on Tigris boasted about how innovative the deal was. If it hadn’t blown up, he says, it would have been “deal of the year.” For Magnetar, it may have been.
Records it shared with investors show Magnetar had a spectacular 2007. Founder Alec Litowitz pulled down $280 million, according to Alpha Magazine . That spring, a trade journal awarded Prusko and Snyderman “Investor of the Year” honors. The Magnetar Constellation Fund, the firm’s fund that had the most exposure to the CDO trades, was up 76 percent in 2007, according to a presentation Magnetar gave to investors in early 2009. The main fund, the Magnetar Capital Fund, was up 26 percent that year. By the end of 2007, Magnetar had $7.6 billion under management, up from the $1.7 billion it began with two years earlier. Magnetar declined  to comment on its performance.
ProPublica has learned that the SEC has been looking into how the Magnetar deals were created, but it’s not clear how much progress the investigation has been made or who might be the target. In a statement yesterday, Magnetar said:
Our understanding is that for some time, the SEC staff has been looking broadly at the sales, marketing, and structuring of CDOs. In connection with that inquiry, the SEC staff has from time to time requested information from Magnetar and other market participants, and Magnetar has been cooperating and responding to the requests. We are not aware that this inquiry is focused on any particular person or firm.

ProPublica Research Director Lisa Schwartz and researcher Kitty Bennett contributed to this story. ProPublica’s Ryan Knutson also helped with research. Finally, a big thanks to This American Life‘s Alex Blumberg.

Don't Panic!

How many civilians has the U.S. killed in the War On Terrorâ„¢?

By Andisheh Nouraee
Before I joined the SocialistLibtardIslamofascistHomo Conspiracy (aka the media), I worked for a small public relations firm.
I did PR for commercial real estate companies. I learned a lot during my tenure. I learned two-hour lunch breaks would be socially acceptable if you replaced the word «break» with «meeting.» I learned that all good strip clubs bill discreetly to your credit card. I also learned a lot of corporate buzzwords and clichés.
Most of them were silly. I heard a lot about synergy, proactivity and win-win situations. Even a decade later, I'm waiting to hear someone, somewhere describe a deal as a win-lose situation. «Man, they totally ripped us off. Definitely a win-lose situation.»
Business life wasn't all eye-rolls and bullshit bingo, though. I spent time around smart people and picked up on the way they think.
Reading several stories in the past week about civilians killed during the War on Terror™, I was reminded of one of the few management clichés I picked up during my PR years – one that actually has meaning: «You can't manage what you don't measure.»
In English, this means you can't honestly figure out if you're good or bad at something unless you have an objective measurement – money, time, widgets sold, pageviews, etc.
The Pentagon is the biggest-spending enterprise in our government and produces an endless variety of charts and spreadsheets measuring things like how much money is spent on childcare at Fort Hood, or how much it costs to maintain the shooting range at Fort Stewart.
Money isn't the only thing the Pentagon measures. The Pentagon also keeps a running count of the number of Americans killed in Iraq and Afghanistan. Regardless of what one thinks of America's foreign policy, it's generally agreed that the Pentagon has a duty to keep track of and make public the number of Americans who've died in battle. Human life is the most valuable thing we can measure.
So imagine for a second if the Pentagon refused to disclose how many American troops died in battle. Imagine instead that generals and politicians merely showed up in front of cameras every few months and insisted that, gosh darnit, America is doing its best to keep the casualty count low. End of conversation.
Americans wouldn't tolerate it. Instinctively, we'd know that if the government was refusing to disclose how many Americans died, it certainly would be because the number is very high. Government officials tend not to obscure information that makes them look good.
By that logic, the government must also keep track of how many Iraqi civilians have died in the War on Terrorâ„¢, right?
The Pentagon insists it manages civilian casualties. According to Secretary of Defense Robert Gates, «Gen. [Stanley] McChrystal is doing everything humanly possible to avoid civilian casualties.»
But the surprising truth is that the Pentagon doesn't actually measure those casualties. «We don't do body counts» is how Iraq invasion leader Gen. Tommy Franks put it in 2003.
A few people were put off by the general's bracingly literal disregard for innocent Iraqis, but not enough to ever make the government start counting – not even in our new administration. To use another business cliché, you gotta break some eggs to make an omelet. The War on Terror™ is our omelet, and Iraqis, Afghans, Yemenis and Somalis are the eggs. If that's an imperfect analogy, it's only because the Pentagon probably measures how much money it spends on eggs for omelets.
When I saw the WikiLeaks.org video of a U.S. helicopter in Iraq mowing down unarmed civilians, I was left thinking it was a common occurrence. And when I read about U.S. troops in Afghanistan killing two pregnant women and a teenage girl then covering it up – then smearing the journalist who reported it – I could only assume that kind of thing happens a lot.
Why? Because the Pentagon can't offer any objective information to the contrary. They don't measure, which means they're not managing it.
It's funny how Americans reject objective studies showing Obamacare will cut U.S. health care spending, but seem perfectly content with evidence-free declarations that we do our best to avoid killing civilians. And by funny, I mean not funny.

talkback@columbiacitypaper.com

Honeytribe at Hard Knox Friday Night

Devon Allman’s Honeytribe is fronted by the son of Gregg Allman.  As far as I know Devon has never been a member of The Allman Brothers Band, but he has sat in with his dad’s band.  Hailing from St. Louis, Missouri, Honeytribe is a blend of blues, soul, jam and rock. Think ABB and Santana playing together.  If this sounds like something you would enjoy than I suggest you check out the show.

Tickets are available in advance at Hard Knox Grill for $10.

Live Music Dates

04/29/10 Thursday
New Brookland Tavern
Horrendous
Sylis
The Dreggs
Your Chance To Die
Invoking The Abstract
Terrigen Mist

04/30/10 Friday
Colonial Life Arena
Gloriana
Kellie Pickler
Taylor Swift

Hard Knox Grill

Devon Allman's Honeytribe

New Brookland Tavern
Dance Party

05/01/10 Saturday
Cafe Strudel
Rossana Mae

Colonial Life Arena
Carrie Underwood
Craig Morgan
Sons of Sylvia

New Brookland Tavern
The Noise
Carolina Chupacabra
Sacred Conflict

Rosewood Crawfish Festival
Tonic
Utopia
Over 8 bands, see ad on page 8

The White Mule
Larry Keel and Natural Bridge
05/02/10  Sunday
New Brookland Tavern
American Aquarium
Sons of Bill

05/03/10  Monday
The White Mule
Larkin Poe (Formerly The Lovell Sisters)

New Brookland Tavern
Born Of Osiris
The Bled
Oceano
Diavolo

05/04/10 Tuesday
New Brookland Tavern
Acoustic Showcase

05/05/10 Wednesday
New Brookland Tavern
Paul Edelman
Whiskey Tango Review
The Cover Of Afternoon

Utopia
Bluegrass

05/06/10  Thursday
New Brookland Tavern
Shallow Palace
A Postwar Drama
TBA

05/07/10  Friday
Cafe Strudel
Jam Night Hosted by Stank Foot

Elbow Room
The Anonymous Band
Orange Magnolia
Dave Matthews Tribute Band

New Brookland Tavern
The Whigs
Ponderosa

Utopia
Some Time Soon

05/08/10 Saturday
Cafe Strudel
Chris Compton

Utopia
Darren Woodlief & Friends

05/11/10   Tuesday
The White Mule
Rebecca Loebe

05/12/10  Wednesday
Elbow Room
Papadosio

Utopia
Bluegrass

05/13/10  Thursday
Cafe Strudel
Irvin Brothers and Friends

El Burrito
The Packway Handle Band

Utopia
Open Mic w The Dubber

05/15/10 Saturday
Colonial Life Arena
Bill Gaither
Gaither Vocal Band

Elbow Room
Joshua Westbrook

Wild Wing Cafe
Dave Matthews Tribute Band

05/18/10 Tuesday

Elbow Room
Asleep in a Box

05/19/10  Wednesday
The White Mule
Alyse Black

Movie Times for weekend of 4-30

Movie times listed are for the weekend of April 30.

“The Big Mo”
Monetta Drive-In Theatre

Monetta SC
(803)685-7949
Gates open at 6:45 movie starts at 8:15. Cash only.
April 30, May 1 & 2
Main Screen:
Date Night
Death At a Funeral

2nd Screen
A Nightmare on Elm Street
Clash of The Titans

Regal Columbia Cinema 7
3400 Forest Drive Suite 3000, Columbia, SC 29204

The Losers NEW! (PG-13) 1:50, 4:50, 7:40, 10:25
Death at a Funeral (R)
1:30, 4:30, 7:30, 10:15
Kick-Ass (R, No Passes)
1:20, 2:00, 4:20, 5:00, 7:00, 7:50, 10:00, 10:30

The Last Song (PG)
1:40, 4:40, 7:20, 9:50

Diary of a Wimpy Kid (PG) 1:10, 4:10, 6:50, 9:40

Shutter Island (R)
1:00, 4:00 , 7:10 10:10

Carmike Wynnsong 10
5320 Forest Drive, Columbia, SC 29206
The Back-up Plan NEW! (PG-13) 1:10 3:40 6:40 9:10

Date Night (PG-13)
1:25 4:10 7:10 9:30

Letters to God (PG) 1:15 4:05 7:00 9:40

Clash of the Titans 3D (PG-13) 1:00 3:30 6:20 7:20 9:20 10:00
Tyler Perry’s Why Did I Get Married Too? (PG-13) 1:00 1:40 3:45 4:25 6:35 7:15 9:25 10:00

Hot Tub Time Machine (R) 1:30 4:00 6:45 9:15
How to Train Your Dragon 3D (PG) 1:20 1:50 3:50 4:30 6:30 9:00

Alice in Wonderland in Disney Digital 3D (PG)
1:05 3:55 6:35 9:10
AMC Dutch Square 14
800 Bush River Rd., Columbia, SC 29210

The Back-up Plan NEW! (PG-13, No Passes) 11:30am 2:05 4:45 7:15 9:50
The Losers NEW! (PG-13, No Passes) 12:45 3:10 5:35 8:00 10:25
Death at a Funeral (R, No Passes) 11:45am 12:55 2:10 3:20 4:35 5:45 7:00 8:10 9:25 10:30
Kick-Ass (R, No Passes)
12:10 1:45 3:00 4:40 6:00 7:30 9:00 10:20
Date Night (PG-13) 11:40am 12:40 1:55 2:55 4:10 5:10 6:25 7:25 8:40 9:40
Clash of the Titans (PG-13) 11:35am 2:20 5:00 7:35 10:05
Tyler Perry’s Why Did I Get Married Too? (PG-13) 1:35 4:30 7:20 10:10

The Last Song (PG) 11:20am 1:50 4:20 7:05 9:35

Hot Tub Time Machine (R) 12:25 2:50 5:20 7:50 10:15
How to Train Your Dragon (PG) 11:25am 2:00 4:25 6:55 9:20
Diary of a Wimpy Kid (PG) 11:50am 2:15 4:50

Alicein Wonderland (PG) 7:10 9:45

St. Andrews Cinema 5
527 St Andrews Road, Columbia, SC 29210

Valentine’s Day (PG-13) 4:15pm
Tooth Fairy (PG) 2:20 7:20

The Book of Eli (R) 2:25 4:40 7:15
Alvin and the Chipmunks: The Squeakquel (PG) 2:10 7:10
Avatar (PG-13)
2:00 7:00

The Blind Side (PG-13) 4:00pm

Carmike 14
122 Afton Court, Columbia, SC 29212
Furry Vengeance new! (PG)
1:00 3:15 5:30 7:40 9:50
The Losers new! (PG-13)
1:45 4:30 7:15 9:45
Oceans new! (G)
1:30 4:15 7:00 9:30
Death at a Funeral (R)
1:10 2:20 3:50 5:10 6:30 7:30 9:00 10:00
Diary of a Wimpy Kid (PG)
2:00 4:20 6:40 9:00
Green Zone (R)
1:20 4:10 7:05 9:50
She’s Out of My League (R)
1:55 4:35 7:20 9:55
Alice in Wonderland in Disney Digital 3D (PG)
Disney Digital 3D Showtimes More Info
1:15 2:15 4:00 5:15 6:35 7:50 9:15
The Crazies (R)
1:40 4:10 6:45 9:20
Percy Jackson & the Olympians: The Lightning Thief (PG)
1:10 4:05 6:50 9:35
Dear John (PG-13)
1:50 4:25 6:55 9:25
Avatar in Digital 3D (PG-13)
Digital 3D Showtimes More Info
1:25 5:00 8:30

Regal Columbiana Grande Stadium 14
1250 Bower Pkwy, Columbia, SC 29212

A Nightmare on Elm Street new! (R)
12:00 12:45 2:15 2:55 4:30 5:15 7:00 8:00 9:45 10:15

The Back-up Plan new! (PG-13)
11:30am 2:00 4:20 6:55 9:30
Kick-Ass (R)
11:45am 2:25 5:05 7:45 10:25
Date Night (PG-13)
11:55am 2:05 4:25 7:25 9:40

The Runaways (R)
12:20 2:45 5:10 7:35 10:05

Clash of the Titans (PG-13) 12:00 2:40 5:20 7:55 10:30
Clash of the Titans 3D (PG-13) 11:35am 2:10 4:45 7:20 9:55

Tyler Perry’s Why Did I Get Married Too? (PG-13) 1:50 4:55 7:50 10:35

The Last Song (PG)
11:40am 2:35 5:00 7:40 10:20

Hot Tub Time Machine (R) 12:10 2:30 4:50 7:15 9:50
How to Train Your Dragon (PG) 11:50am 2:20 4:40 7:30 10:00

How to Train Your Dragon 3D (PG)
11:25am 1:45 4:10 7:05 9:35

The Bounty Hunter (PG-13) 11:20am 1:55 4:35 7:10 10:10

Regal Sandhill Stadium 16 450 Town Center Place, Columbia, SC 29229

Furry Vengeance new! (PG)11:55am 2:15 4:35 7:10 9:40 12:00am

A Nightmare on Elm Street new! (R)
11:45am 12:15 2:00 2:30 4:30 5:00 7:00 7:30 9:30 10:00 11:45 12:15am

The Back-up Plan new! (PG-13) 11:50am 2:20 4:50 7:20 9:50 12:20am

The Losers new! (PG-13)
12:25 2:50 5:15 7:40 10:10 12:30am

Oceans new! (G)
12:10 2:35 4:55 7:05 9:20

Death at a Funeral (R)
2:45 5:25 8:00 10:25 12:05pm

Kick-Ass (R)
11:30am 2:15 5:05 7:45 10:30

Date Night (PG-13)
12:20 2:40 5:20 7:50 10:05 12:25am

Clash of the Titans (PG-13)1:40 4:20 6:55 9:35
Clash of the Titans 3D (PG-13)11:40am 2:10 4:50 7:25 10:05

Tyler Perry’s Why Did I Get Married Too? (PG-13)11:35am 2:20 7:35 11:50

The Last Song (PG)
1:30 4:00 6:50 9:25

Hot Tub Time Machine (R) 5:10 10:20

How to Train Your Dragon (PG) 11:30am 1:55 4:15 6:45 9:15
How to Train Your Dragon 3D (PG)
12:00 2:25 4:45 7:15 9:45 12:10am

City Island (PG-13)
12:30 2:55 5:30 7:55 10:15

Wednesday, April 28, 2010

More legal troubles for Pop's Pizza

By Paul Blake

Two new lawsuits against proprietors of Beys Sports Bar and Pop’s Pizza were filed on April 6, 2010.  J & J Sports Productions, Inc. alleges that on on May 5, 2007 Bey Rutherford illegally presented the WBC Light Middleweight Championship Fight: Oscar De La Hoya v. Floyd Mayweather, Jr. at his sports bar on Harden Street.  A second suit filed by Joe Hand Promotions, Inc. alleges Rutherford illegally presented Ultimate Fighting Championship: Jason MacDonald v. Rory Singer on June 16, 2007.   Both suits were filed by attorney Leonard R. Jordan, Jr. of Berry, Quackenbush and Stuart in Columbia, and seek over $150,000 in damages and compensation.

These are not the first lawsuits filed against Bey Rutherford since he moved to Columbia to open Pop’s Pizza and Beys Sports Bar.  On Feb. 12, 2009, DirecTV filed a case in federal court for unauthorized reception of cable service. The case named John P. Sankey, The Daxlam LTD, and Pop’s Pizza.
In August of 2009, City Paper reported on court records showing Rutherford owes close to $10,000 to local advertising and marketing agencies.  Those records allege that Rutherford was racking up large advertising and marketing bills and not paying the agencies for their services.   Pop’s Pizza employee’s were busted stealing City Paper bundles from racks throughout Columbia during that edition,  but the newspaper declined to press charges when it was clear Rutherford was going to allow his employees alone to take the rap.

As reported in an April 2007 City Paper investigation, Rutherford was born John Patrick Sankey, and changed his name to Madison Rutherford in late 1986.  After faking his own death in July of 1998, Rutherford was operating under the name Thomas Bey Hamilton at an investment firm in Boston.  Rutherford now calls himself “Bey Rutherford,” but he is in fact the same “Madison” Rutherford who served five years in a Connecticut prison for fraud after withdrawing his neighbors’ life savings and staging his death as part of an elaborate insurance scheme.  The body that was burned in a rental car to fake his own death was never identified.

John P. Sankey is also the name of his father, whom Rutherford used to obtain the business and liquor license to operate in Five Points.  Sankey is a Connecticut resident and appeared in Columbia the first few months when Rutherford was opening the establishments.  Multiple sources have confirmed that Rutherford “signs the paperwork” and handles day to day operations and that Sankey is a Connecticut resident.  Rutherford has previously identified himself as the owner of the bar to a local television station and other media outlets in Columbia.

In May 1996, Rutherford took out a $332,000 mortgage on an elderly woman’s home without her knowledge.  Rutherford had convinced Brigitte Beck to sign over power of attorney to manage her finances and eventually withdrew her life savings leaving her with $500, records show.
When City Paper interviewed Beck in 2007, she said: “I lost my ten-room home, which was paid for, and he knew darn well.”
It is unclear how Rutherford has continued to operate with the liquor license he helped obtain from the state of South Carolina.   State law requires: “The applicant, all employees, and all principals must be of good moral character.”

talkback@columbiacitypaper.com

Monday, April 26, 2010

Crawfish Festival This Saturday

By Shelby Sachs

The fifth annual Rosewood Crawfish Festival is right around the corner, featuring more vendors, a 5 K run, and even bigger and better live music.
Aside from the crawfish, one of the most appealing parts of this event is, of course, the live music. This year, there will be over ten bands performing on two separate stages. When checking out the line-up, you may expect the acts to be on the same caliber as that of the St. Pat’s Festival in Five Points and that assumption would be pretty accurate. Headlining this year are national bands Tonic and Marcy Playground, and Columbia favorite, Hot Lava Monster. Haley Dreis and Treadmill Trackstar are definitely a couple of other sets to put on your itinerary for the day.

Tonic- Holly Street Stage (6:00-7:30)
Known for their six Top 10 singles, over four million records sold, Grammy nominations, and the number one most-played rock song of 1998, Tonic will be performing days before releasing their long awaited new album. It’s been eight years since the release their last album, so Columbia fans will likely be some of the first in the country to hear some of the new stuff live. Definitely worth checking out.

Marcy Playground- Holly Street Stage (4:30-5:30)
One of the staple songs of the late 90’s is Marcy Playground’s “Sex and Candy.” This song also brought them fifteen consecutive weeks at number on Billboard’s U.S. Modern Rock chart. As if this was not a large enough accomplishment in itself, their self-titled album sold over 1.7 million copies. Spending most of last year recording a new album, Marcy Playground released their fourth album, Leaving Wonderland… in a fit of rage last summer. This album has gotten rave reviews and proves that although they took quite a long hiatus, they still haven’t lost their touch.

Hot Lava Monster- Woodrow Street Stage (5:00-6:00)
Hot Lava Monster are no strangers to Columbia as they have been staples of our local music scene for several years now. They instantly stood out as one of Columbia’s top rock bands, and with a large fan base, they band seems to be going in the right direction. Recently spending most of their free time in the studio, fans can expect a new album sometime this year. If their album is anything like their recent single, “Some Call It Hell,” fans can expect yet another great album that is certain to not disappoint.

Haley Dreis- Woodrow Street Stage (2:50-3:30)
If you have yet to hear about this 20-year-old singer songwriter, you undoubtedly will soon. Current USC music performance student, Haley Dreis, has been creating a buzz around Columbia since her first performance. Effortless and pure, her performances evoke a certain emotion that can only be explained as magical. Currently touring most of the Southeast with former Jump Little Children lead singer, Jay Clifford, the horizons are continuing to get broader for this young and talented musician.

Treadmill Trackstar- Holly Street Stage (2:30-3:10)
A band that has a story as unique and distinct as their sound. After being dropped from a major record label, taking a ten year break, and almost giving up on making music ever again, Treadmill, one of Columbia’s former powerhouse bands, decided to give this whole music industry thing one more go around. With no money to record an album, the members decided to ask for donations from their family, friends, and fans to help record, I Belong To Me. And $12,000 later, the album was recorded and released. Now with a whole new perspective on life, these four experienced and talented musicians are ready to start touring again and sharing their music with those people that gave them another shot.

Other bands you have to check out:

Holly Street Stage
Danielle Howle – (3:30 – 4:10)
Danielle certainly needs no introduction. Opening for the main headliners.
The Tinbenders – (1:30 – 2:10)
S-Tribe – (12:20 – 1:10)

Woodrow Street Stage
John Wesley Satterfield Band – (3:50 – 4:30)
American Gun – (1:50 – 2:30)
Hott Boxx - (12:50 – 1:30)
Tom Hall and The Plowboys - (11:50 – 12:30)
Silver Lining – 11:00 – 11:30

In addition to the great bands, this year the festival will be hosting its first ever Crawdaddy Dash 5k Run. Participants will start at 10 a.m. and will receive free entry into the festival. You can expect to see some familiar events as well such as the street vault competition, a kids area, crawfish races and more.
The festival will be held on May 1 from 11 a.m. to 8 p.m. between Woodrow and Holly Streets on Rosewood Drive.

music@columbiacitypaper.com

Thursday, April 22, 2010

Regional Briefs

AIKEN

Child makes miniature snowmen out of pollen

The blanket of pollen that has been draped over the state since March is a nuisance to most. An eleven-year-old Aiken girl considers it a medium for artistic expression.
Miranda Gay and friend, Julia Harper, spent the better part of a day collecting pollen from around her yard to construct what they call “Pollen Man” and “Pollen Girl,” according the Aiken Standard. The figurines, shaped like snowmen and completely made of pollen, stand around seven inches tall apiece.
“They filled a beach bucket about a quarter of the way up with pollen,” Miranda’s mother, Suzanne Gay, told the Standard.
“I put a little water in it, and it felt like goopy clay,” Miranda said in the report. She said she was happy with how the figurines turned out.

FLORENCE

Woman arrested for urinating on church
Police arrested a Florence woman after they say she was caught urinating against the side of a church.
According to the Florence Morning News, a police officer on routine patrol noticed the woman squatting under a street lamp and relieving herself on the New Life Church on Pine St.
According to a police report, the woman said she had to go really badly and couldn’t hold it. She was arrested for indecent exposure. So far, church officials have made no comment.

MANNING

Publisher sues entire newspaper staff following their defection to a rival paper

The entire staff of The Manning Times has reportedly resigned and formed a rival newspaper, according to the Sumter Item. Their former employer’s response: to sue each one of them.
According to the report, Barry Moore, owner of the Times, alleges in his lawsuit that employees were plotting to start a rival newspaper while still on his payroll. He also alleges that they used resources at the Times to build their newspaper, The Clarendon Citizen, while on the company dole.
According the Item, the layout of the Clarendon Citizen is similar to the Manning Times, features many of its advertisers and even ran identical ads.
Attorneys for the Times claim the plot to resign en masse was intended to cripple the Times, while “...using Manning Times trade secrets and proprietary and confidential business information to convert and steal Manning Times current and prospective advertisers.”
The Times has reportedly been in print for 125 years.

MYRTLE BEACH


Myrtle Beach may call for removal of Confederate flag at State House

A Myrtle Beach city councilman has delayed a resolution asking state legislators to remove the Confederate flag from the State House grounds, citing the importance of unanimous city council support before moving forward.
According to The Sun News, Councilman Phil Render will postpone the motion until some time next month. Render said Myrtle Beach has lost sporting and other events because of the NAACP boycott of the state over the flag issue.

ROCK HILL


Man jailed for using snake as a weapon against neighbor
A man who described himself as “deathly afraid” of reptiles was struck in the face with a six-foot long python that his neighbor at the Executive Inn was using as a weapon.
Police arrested Tony Smith, 29, and charged him with assault and battery after Jeffrey Culp, 47, accused Smith of attacking him with the snake. Culp, a resident at the inn, said he had seen Smith and the snake before.

[caption id="attachment_1481" align="alignright" width="150" caption="Tony Smith, 29, was charged with assault and battery for allegedly using a snake to hit a man in an altercation."][/caption]

“He was out there running up and down the sidewalk with it,” Culp told the Rock Hill Herald. “I told him I don’t do snakes.”
On the night of the incident, Culp said Smith and others were blaring music and racing down the hallway in chairs. According to Culp, he asked Smith to quiet down. When he went out on the balcony for a cigarette a couple of hours later, he said, Smith tapped him on the shoulder and shoved the snake in his face. The snake reportedly bit down on Culp’s lip during the struggle.
According to the media report, Culp took a three-hour long shower after the incident and had trouble sleeping.
“I almost had a heart attack,” Culp told the Herald. “I dropped to my knees and actually crawled back into my room.”

A House Divided

By Todd Morehead

Every residential neighborhood in Columbia bears an individual flavor as varied as the folks who call it home, be it the Bohemian flare of Olympia, the stately old South feel of Elmwood Park, or the laid back charm of Rosewood. Though each neighborhood is as distinct as the next, the majority of them currently share one trait: they are dotted with “for sale” signs. Meanwhile, city-subsidized housing developments, resembling modern suburbs, are popping up around the city. While some of these neighborhoods are quickly colonized, others have sat virtually empty, giving the acres of new homes the feel of an abandoned movie set.
According to the Columbia Multiple Listing Service, used by licensed realtors to monitor overall property inventory, at press time there are 583 houses for sale in the downtown Columbia area under the $150,000 mark. And that number does not include “for sale by owner” listings.
Some are beginning to question the efficacy of new city-subsidized development in the name of affordable housing, citing a glut of existing homes already on the market and concern that new publicly-funded projects are competing against low to moderate income property owners who could use those monies to revamp existing neighborhoods. Yet, proponents of affordable housing say the development projects are key to revitalizing neglected neighborhoods and ensuring a stable downtown housing market in the long run.

“It really depends on the project, developer, the need, and the finished product,” says Howard Hunt, Broker-in-Charge, at Front Porch Realty in Columbia. “I don’t think [the development projects] have hurt my business as a realtor, but it has hurt other developers. If I was trying to sell a home as a home owner, then I would see it as flooding the market, which hurts sale prices.
Still, Hunt says he believes such development can be a plus, if it is successful.
“A new development adds a new tax base to the city if it is a successful development,” he says. “If it is not, the city loses money.”

[caption id="attachment_1476" align="alignright" width="265" caption="The city committed $3.5 million to infrastructure costs for The Columbia Housing Authority development project, Rosewood Hills. The homes are listed between $156,000 to $227,000. Photo by Todd Morehead"][/caption]

It is a gamble to be sure. A new tax base, in theory at least, can generate the needed tax dollars to further improve the greater area. Another school of thought is that the city could hedge that bet and improve the greater area right away.
Chris Barczak, a local realtor and former member of the city’s board of zoning appeals, wholly supports the need for affordable housing in Columbia, but says the city can foster it –and neighborhood revitalization, to boot—by supporting properties and property owners that are already here.

“Government should allocate monies towards infrastructure development such as street lights, water, sewer, and police,” Barczak suggests. “This will entice neighborhood renewal and public enterprise will follow it.”

Julia Prater, Deputy for Affordable Housing at the Columbia Housing Authority, says she believes the new developments are healthy for the city.
“I think the city’s investment in our [CHA-affiliated] developments was smart and important to the revitalization of residential neighborhoods,” Prater said. “I call it an investment, because as we demolish obsolete barracks style public housing that has never been on the tax rolls and develop a mix of housing that includes owner occupied homes, we are putting homes on the tax rolls and stabilizing neighborhoods.”

Tackling Affordable Housing


The generally accepted definition of affordability is for a household to pay no more than 30 percent of its annual income on housing. Most mortgage underwriters use a percentage near that range, as well, and will factor in other hardship variables. According to HUD statistics for 2009, the median income for a moderate- to low-income family of three in Columbia was $33,540 (or 60 percent of the median income for Richland County). Thirty percent of that total –or what percentage of the family should spend on housing—comes out to around $838 maximum per month. Using the current 5 percent mortgage rate, a moderate- to low-income family could pay as much as $1,107 per month for a $140,000 house, without the aid of a specialized loan program.

The Columbia Housing Authority development project, Rosewood Hills, lists homes generally between $156,000 and $227,000. That project seeks to mix affordable housing units with market rate units and the City of Columbia offers specialized loans to low-income buyers through the City Living program to help with the affordable housing component.

In June 2006, the City of Columbia created an Affordable Housing Task Force made up of members of the banking community, affordable housing advocates, developers, lawyers, neighborhood leaders and others. Their task: to study housing issues facing low-income residents.  According to a 2007 release by the group, Columbia enjoyed “a respectable amount of affordable housing” at the time of the report’s release. They found that, overall, the city was doing a good job on the affordable housing front.

[caption id="attachment_1477" align="alignleft" width="300" caption="Some developers can cash out big by utilizing city and government grants under the banner of building affordable housing. In 2006, Steve Benjamin, as the registered agent of the Village at Rivers Edge, LLC, pitched a plan to city council to implement an urban renewal development project. The City of Columbia committed $1.6 million to help defray infrastructure costs for the project and the Columbia Housing Authority secured a $10,000,000 HUD grant to help with the affordable housing component."][/caption]

“The National Association of Homebuilders (NAHB) Housing Opportunity Index released on August 22, 2006 ranks Columbia 34th in the nation in the availability of affordable housing and 4th in our region,” the task force release stated. Columbia’s ranking, coupled with the City Living low-interest mortgage loan program and the creation of city-affiliated development corporations, insured that two-thirds of the neighborhoods in Columbia are affordable places to live, they said.
Speaking to the demolishing of the Saxon Homes and Hendley Homes housing projects, the task force recommended the construction of new multifamily rental units in their place. Unlike their predecessors, these housing sites would be available on the open market and would “allow low-income families to access private-market multifamily units, by... imposing conditions on the sale of property owned by the city or its affiliated development corporations.”
The task force brought up the interesting factor of zoning, specifically “inclusionary zoning,” which requires developers to include a certain percentage of affordable housing in their development projects. The task force didn’t believe that mandatory inclusionary zoning would withstand the scrutiny of a court if challenged, so it recommended that the city adopt a policy of “voluntary inclusionary zoning” in targeted development areas. They suggested sweetening the deal for developers with incentives like increased density (more bang for the buck per acre); reduction of parking requirements; a rebate of a portion of water and sewer tap fees; rebates on permit fees and expedited reviews of plans, required hearings, etc.

The Village at Rivers Edge project, off River Drive, is a good example of an incentive deal, as the city granted a PUD-LS zoning variance to increase density and also agreed to finance the construction of its utility infrastructure.
Detractors of inclusionary zoning say it levies an indirect tax on developers, shifting the burden of affordable housing away from local government and onto the development community. Free market advocates question the practice of giving the aforementioned density incentive because it could create a glut of housing that burdens local government.

To analyze the overall housing market, the task force compiled and analyzed a huge amount of data, including population changes, outlying areas of residential growth, building permit data, the sale of existing homes, median home price, and income. They determined at the time of their report that although there has been rapid growth in the region at large, growth in the city had remained stagnate and showed that population growth had actually shifted away from the city center and towards outlying areas like Lexington. They determined that “the city does not need to encourage the development of more housing, but it does need to consider ways that it could encourage developers in the future to include a mix of income levels within their proposed developments.”

Julia Prater says her agency’s numbers echo the findings of the task force in terms of the demographic shift toward the suburbs.

“Median income buyers in recent years have been pretty much pushed out to the suburbs,” she says, “because new developments could offer much more affordable housing. This is because developers’ land and site costs were much more reasonable in suburban areas.”

At the time of the 2007 report, Rosewood Hills and the Village At River’s Edge were already moving forward.  It is important to note that the task force report was done prior to the worst of the economic downturn and resulting housing crisis. The housing inventory undoubtedly went up as homeowners went upside down on mortgages and banks foreclosed.

Enter the Developers


The City of Columbia has created four nonprofit development corporations to provide affordable housing and economic development opportunities in the city. The Federal Dept. of Housing and Urban Development (HUD) doles out funding for city development projects through a number of grant programs. These development corporations use funds allocated through one such program, HOME funds, as lines of credit. The development corporations can solicit funds from the city general fund, private funders, and other avenues.

A good example of a project green lighted and subsidized by the city under the affordable housing banner (in conjunction with the Columbia Housing Authority) is the Village at River’s Edge. Currently a 24-acre tract of undeveloped land off River Drive near the Broad River, the city approved Phase One of the project last month and granted the development a high-density zoning variance at its March 1 meeting.

The City of Columbia wanted to beautify and renovate pockets of low-income housing as part of the North Main Master Plan (circa 2005). The Roosevelt Village apartments, on what is now the Village at Rivers Edge, site was one of the areas in question. In 2006, Steve Benjamin, as the registered agent of the Village at Rivers Edge, LLC, pitched a plan to city council to implement an urban renewal development project on that land. His project would feature 128 single-family homes, 100 town homes and 66 condos/apartments. He asked for the city to help defray the cost of the development.

The city approved the project at a September, 2006 meeting so long as 50 percent of dwellings were for buyers at 80 percent of the Area Median Income (AMI) and 50 percent were for folks at 80 to 120 percent the AMI. The city agreed to help with the design and cost of infrastructure.

In September 2009, the city issued Resolution R-2009-075, which officially committed $1.6 million to its overall funding obligation. The agreement states that the city must “repay the funds back to the Section 108/EDI funds administered by the City of Columbia’s Community Development Department.”

The funds will be used for streets and storm water management, according to the   Columbia Housing Authority.

Benjamin removed himself from the Village at River’s Edge, LLC after he announced his run for mayor. He reportedly sold his share for around $492,000.

If the Village at River’s Edge is an example of an affordable housing project in its infancy, the Rosewood Hills development is an example of such a project when it comes out the other side.

According to the Columbia Housing Authority, the development boasts 60 single-family homes, 32 town homes, and 22 duplex units, as well as a 52 unit senior apartment complex. The rental units are a mix of affordable and market rentals.  Of the 60 homes, 41 were planned to be sold to the public at market rate and the remaining 19 would be set aside for affordable housing units for homebuyers at 80 percent of AMI ($49,700 for a family of four). The city committed $3.5 million to infrastructure for that project, according to the Columbia Housing Authority.
The neighborhood, completed at the apex of the housing crises, sat mostly empty for months on end. Sales in the neighborhood appear to be on the upswing, however, and Russell and Jeffcoat Realtors recently took over the contract to market the homes.
City Paper inquired about the sales figures coming out of Rosewood Hills to a Russell and Jeffcoat realtor involved with sales there, but has not received a response at press time.
A homeowner in Rosewood Hills who asked not to be named, said it seems to him like home sales are on the rise in his once deserted neighborhood since Russell and Jeffcoat took over.
“I’m not a realtor, but from a consumer standpoint, Russell Jeffcoat [sic] is a recognizable ‘brand.’ They probably have more of a customer base to pull from, which is why they’re selling these homes so quickly,” he said. “Of course, it could also be that the market is finally taking a turn.”

Regardless of your opinion on the development projects, the homes are built and they are here to stay. Whether realtors can continue to fill them all remains to be seen and until the housing market fully rebounds, the argument over continued development will carry on.
“[The CHA] has been able to partner with the city due to a few unique opportunities of significant in-town parcels of land and significant HUD Capital Fund Grant monies we were able to bring to the table,” says Prater. “Those stars don’t align very often and there aren’t many large open parcels of land left in the city, so I don’t know that it is a model that could continue to be replicated.  I think the developments that have been done are sustainable and successful.”
Howard Hunt suggests that those concerned with new development and how it affects their property should take a proactive stance.
“A neighborhood with a new project coming in should get involved and see who is charge, what roles the city is taking on, and what it could do to existing home values and sales... the impact on schools and utilities, and its economic sense,” he said. “We cannot assume the city is doing this for us.”

talkback@columbiacitypaper.com

Dear Tea Party militia groups,

Dear “anti-government,” right wing nut jobs,
Can you please give a class on public relations to the anti-government, left wing nut jobs? Short of the WTO riot in Seattle, leftist protesters received little to no real media attention during the reign of the Bush Administration, unarguably the slimiest gaggle of perverts to ever befoul Capitol Hill. How did the left blow that?
Meanwhile, you guys have some idiot doctor who posts a sign in his office refusing to treat people who voted for Obama and viola! He’s having a serious discussion with Anderson Cooper. You hold absurd roadside vigils in powdered wigs: Instant media circus. It’s uncanny. That type coverage is giving you dipshits a false sense of legitimacy, without fairly giving a false sense of legitimacy to other dipshits who, say, sing to trees or protest soap. We’d just like to see some balance is all we’re saying.
Columbia City Paper

Dear Mayor Bob,
We can’t believe you’re moving out, man! Dang... the ‘Hall won’t be the same. Well, listen, throw in a twelve pack and couple of pizzas and we’ll bring over the van to help you move. Maybe have a few laughs and top shelf the mayor-elect on our way out the door. Oh, and let us know if you decide to put that foldout couch and your shoebox full of ska cassettes on the curb. We’ll take ‘em.
Columbia City Paper

Seasons Greetings All,
We’ve been dreaming of a yellow spring! Laughing gaily as we fall back to make pollen angels in the front yard; yelling and sneezing through fluffy pollen ball fights in the park; steaming mugs of warm Benadryl by the hearth, our eyes swollen red slits, while itchy tears cut clear rivulets down our cracked and dusty yellow faces....
Just kill me, man. Please.
Columbia City Paper

Dear Tea Party militia groups,
Well, you’ve all gathered here with your firearms and muskets to fend off the evils of an overreaching federal government that wants to… keep large insurance corporations from swindling you. And, this is all about the Second Amendment and individual freedom, right? Now, before you lay siege to your local federal building, all of you who are or were Republican voters within in the last decade, please raise your hands. All of you? Interesting.
Since this militia is, as you say, based on protecting freedom and the Constitution, why didn’t you arm yourselves when the Republican president you elected started illegally wire tapping your phones and repealed Habeas Corpus, your basic human right to not be detained by the government without a trial? From where I’m sitting, a president who actually repealed the cornerstone of the Fifth Amendment and essentially reestablished 13th Century law in a modern Western country has infringed on your individual freedom and, I daresay, wiped his ass with the Bill of Rights. You guys seemed pretty cool with that at the time.
Just something to chew on while you morons are playing your flutes and drums and marching in time toward Washington.
Columbia City Paper

Don't Panic!



Are Barack Obama’s nuclear policies making the U.S. safer?

By Andisheh Nouraee
If I were one of Barack Obama’s secret Muslim handlers, I’d be angry.
Their diabolical secret Muslim plan seemed foolproof; win the War On Terrorâ„¢ by sneaking a charming, telegenic Kenyanesian member of their brotherhood into the White House! Genius!
So what if Hopey al-Changeypants wasn’t born the U.S. We’ll build a time machine that takes us to Hawaii in 1961 where we’ll stick “evidence” of Obama’s American “birth” into hospital files and local newspapers. Allah provides!
And just to be safe, we’ll sneak someone onto Straight Talk Express where we’ll whisper the worst possible campaign advice into John McCain’s ear while he naps. “Pick Palin and you’ll win over the all-important ‘f**ktard hockey MILF and the dudes who want to bone them’ demographic.
The plan very nearly worked. Obama won. But instead of moving the White House to Mecca and replacing the “Star Spangled Banner” with some Cat Stevens song like he promised his handlers he would, Obama started acting all American-like.
He not only helped keep us out of another Great Depression, but he re-engineered our healthcare system in a way that will cover more people while saving money over the long-term. And don’t even get them started on the way he conducts his personal life. Instead of wearing traditional Muslim garb, he sports a suit and tie most places. His most recent physical revealed he drinks beer and smokes cigarettes. And his wife walks around without sleeves on everywhere she goes? What the hell kind of Muslim extremist is this guy? He’s clearly gone native. Maybe he even has Stockholm Syndrome.
More than anything, I bet his handlers are quadruple ticked-off at Obama’s foreign policy shenanigans. The guy sent here to lose the War On Terror™ is doing way more to actually win it than his predecessor did.
He initiated the biggest anti-Taliban offensive in Afghanistan since Bush lost his focus there in 2001. He also strong-armed Pakistan into launching its biggest-ever offensive against Talibandits in its own country.
And if that wasn’t enough to make Obama the worst foreign-born radical Muslim secret agent in the history of the U.S. Presidency, now the jerk is going out of his way to try to reduce the threat of nuclear war against the United States.
First Obama reached a deal with Russia to reduce our nuclear weapons arsenals from 2,200 warheads to 1,550 warheads within seven years. The 650 warheads we’re giving up won’t reduce the ability of the U.S. to wage war at all – we still have the strongest nuclear and conventional military in the world, by far. But the deal accomplishes three big things for us. 1. It reduces the numbers of nukes pointing at us. Pretty great. 2. It gets us one-step closer to the next big arms deal with Russia, where we hope to get them scrap a lot of their small, so-called tactical nukes – the kind that are most likely to be stolen and sold on the black market. 3. It’s a diplomatic tool. It’s easier to get other nations to join your non-proliferation efforts when you yourself are shrinking your stockpile.
Of the three items on that list, the diplomacy bit is the one paying the quickest dividends. Obama just hosted leaders from 47 nations in Washington, D.C. where they not only talked, but actually did stuff to reduce the threat of nuclear war. Ukraine announced at the conference it was giving up all of the highly enriched uranium it has sitting around. HEU is the key ingredient for making nuclear weapons. Chile and Mexico also announced that they’re going to hand over nuclear materials from research reactors
Conference participants also pledged to secure all loose nuclear materials in their countries within four years. The goal may not be met, but every bit of nuclear material secured between now and then is one fewer source of bomb material for terrorists. Remember, it only takes a grapefruit sized hunk of uranium to build a bomb.
It’s as if Obama actually loves the United States or something. Creepy, I know.
talkback@columbiacitypaper.com

Appetite For Destruction at NBT Friday

Axel Rose is out of his prime and Slash has gone on to put together an album full of less than memorable guitar-fronted songs with celebrity-of-the-week guest vocals.  Don’t let that sully your dreams of seeing a memorable performance of Welcome to the Jungle or belting out Sweet Child O’ Mine in a concert atmosphere.  Rejoice my long-haired, bandana-wearing friends, because Appetite For Destruction comes to the New Brookland Tavern on April 23rd.
AFD are a group of tour-seasoned and well-regarded tribute artists out of Raleigh, NC.  For diehards and casual fans alike, AFD offers an accurate representation of the legendary rock band in the era spanning the heart of their career (1987-1993.)
Foo Fighters cover band, Colour and the Shape will also be on the bill.  Their performance was likely the highlight of the New Brookland Tavern’s annual New Year’s Eve cover show earlier this year.  It’s no small wonder the venue invited them back for a follow-up show.
With Colour and the Shape in tow, AFD is primed for a memorable performance.  Make sure you get your best pre-grunge rock duds out of the attic and memorize the verses from Nightrain before you make your way down to the New Brookland Tavern, April 23rd.

Soundboard

Fri 04/23/10

New Brookland Tavern
Appetite For Destruction - Trib. To Guns N' Roses (NC)

Utopia
Coolie G & Lion Soul Reggae Band

White Mule
Bess Rogers

Newberry Opera House
Firefall

Sat 04/24/10

Jillians
Papa Roach

New Brookland Tavern
Austin Crane
The Rocketboys
The Patient
Brandon Kean

Utopia
Jackaroe

White Mule
Patrick Davis

Sun 04/25/10

New Brookland Tavern
Obraskai
His Name Was Iron
Ma'at
Normal Bias

White Mule
Ellis Paul

Mon 04/26/10

New Brookland Tavern
We Sail At Dawn
Ninjaloot
City Under Flames
Enemy Within

Tue 04/27/10

Elbow Room
Breathe Electric
We Are The In Crowd         You Me And Everyone We Know

New Brookland Tavern
Murder By Death
Ha Ha Tonka
Linfinity

Wed 04/28/10

New Brookland Tavern
I In The Sky
Mouse Fire
Pity Rally
The Sea Wolf Mutiny
Utopia
Bluegrass Night w
Total Denial

Thursday 04/29/10

New Brookland Tavern
Horrendous
Sylis
The Dreggs
Your Chance To Die
Invoking The Abstract
Terrigen Mist

Utopia
The Dubber's CD Release Party

Fri 04/30/10

Colonial Life Arena
Taylor Swift
Gloriana
Kellie Pickler

New Brookland Tavern
End of School Dance Party
Sat 05/01/10

A Rocket To The Moon     TBA

Colonial Life Arena
Carrie Underwood
Craig Morgan
Sons Of Sylvia

White Mule
Larry Keel And Natural Bridge

«Rosewood Crawfish Festival»