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"Los 40.000 hijos de Radiohead" Translation [Excerpt]

Posted by Vanessa Risti on July 15, 2012 at 12:00am

The 40,000 Sons of Radiohead, by Dario Prieto

Bilbao - Spirited and dancing, Thom Yorke's band played through their most famous songs and tracks from their newest album in Bilbao.

"We know that you are having problems in Spain, with more and more financial cutbacks leaving you without any money. I think you should take to the streets, because someone has robbed you." Thom Yorke talks a little. He has a 'lazy eye' and a strange inner world that materializes through his songs, revealing a timid man that has been known to rise above a number of difficulties in order to relate to a strange and dehumanized world by means of music and social conscience.

His band, Radiohead, performed this past Friday on the grasslands of Kobeta Mountain in Bilbao before a gigantic sea of fans, who are capable of following a group that is beyond the good and the bad of a mountain that is difficult to climb (The ascent of packed buses and steep hikes had grown to epic proportions). This is all so they could see the band and what their unique show in Spain would be like. Even the chance of rain, which had finally fallen in the form of a drizzle by the end of the concert, was not an problem for approximately 40,000 people that cheered on a show dedicated to songs from the band's latest album, The King of Limbs, and their most recent works. The set list also featured some of their more popular songs, though none of the songs played that night were too awarding of the term "Greatest Hits".

Opening with "Bloom", the first track off their newest album, Radiohead gave a concert to the public that was saturated not only in color, but also in music. With a modest arrangement of lights and panels that highlighted the musicians on stage (Ed O'Brien in his bowler hat, Colin Greenwood below him, the hands of his brother Jonny at the keyboards, Phil Selway's drumsticks, and Thom Yorke wagging a ponytail that sat on top of his head), the band appeared to be spirited at moments and dancing in others. Even the great dancing glory of Thom Yorke grew during these numbers since the music video for "Lotus Flower".

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Source: http://www.elmundo.es/elmundo/2012/07/14/cultura/1342230775.html

The Lost Years & Last Days of David Foster Wallace

Posted by SubSickAlien on May 30, 2009 at 6:05pm

He was the greatest writer of his generation - and also its most tormented. In the wake of his tragic suicide, his friends and family reveal the lifelong struggle of a beautiful mind.

Having only known of David Foster Wallace for being the genius behind Infinite Jest, I finally had the opportunity to see the human side of a very tormented soul.-SSAHe was six-feet-two, and on a good day he weighed 200 pounds. He wore granny glasses with a head scarf, points knotted at the back, a look that was both pirate-like and housewife-ish. He always wore his hair long. He had dark eyes, soft voice, caveman chin, a lovely, peak-lipped mouth that was his best feature. He walked with an ex-athlete's saunter, a roll from the heels, as if anything physical was a pleasure. David Foster Wallace worked surprising turns on nearly everything: novels, journalism, vacation. His life was an information hunt, collecting hows and whys. "I received 500,000 discrete bits of information today," he once said, "of which maybe 25 are important. My job is to make some sense of it." He wanted to write "stuff about what it feels like to live. Instead of being a relief from what it feels like to live." Readers curled up in the nooks and clearings of his style: his comedy, his brilliance, his humaneness.His life was a map that ends at the wrong destination. Wallace was an A student through high school, he played football, he played tennis, he wrote a philosophy thesis and a novel before he graduated from Amherst, he went to writing school, published the novel, made a city of squalling, bruising, kneecapping editors and writers fall moony-eyed in love with him. He published a thousand-page novel, received the only award you get in the nation for being a genius, wrote essays providing the best feel anywhere of what it means to be alive in the contemporary world, accepted a special chair at California's Pomona College to teach writing, married, published another book and, last month, hanged himself at age 46."The one thing that really should be said about David Foster Wallace is that this was a once-in-a-century talent," says his friend and former editor Colin Harrison. "We may never see a guy like this again in our lifetimes — that I will shout out. He was like a comet flying by at ground level."His 1996 novel, Infinite Jest, was Bible-size and spawned books of interpretation and commentary, like Understanding David Foster Wallace — a book his friends might have tried to write and would have lined up to buy. He was clinically depressed for decades, information he limited to family and his closest friends. "I don't think that he ever lost the feeling that there was something shameful about this," his father says. "His instinct was to hide it."After he died on September 12th, readers crowded the Web with tributes to his generosity, his intelligence. "But he wasn't Saint Dave," says Jonathan Franzen, Wallace's best friend and the author of The Corrections. "This is the paradox of Dave: The closer you get, the darker the picture, but the more genuinely lovable he was. It was only when you knew him better that you had a true appreciation of what a heroic struggle it was for him not merely to get along in the world, but to produce wonderful writing."David grew up in Champaign, Illinois. His father, Jim, taught philosophy at the University of Illinois. His mother, Sally, taught English at a local community college. It was an academic household — poised, considerate — language games in the car, the rooms tidy, the bookcase the hero. "I have these weird early memories," Wallace told me during a series of interviews in 1996. "I remember my parents reading Ulysses out loud to each other in bed, holding hands and both lovin' something really fiercely." Sally hated to get angry — it took her days to recover from a shout. So the family developed a sort of interoffice conflict mail. When his mother had something stern to say, she'd write it up in a letter. When David wanted something badly — raised allowance, more liberal bedtime — he'd slide a letter under his parents' door.David was one of those eerie, perfect combinations of two parents' skills. The titles of his father's books — Ethical Norms, Particular Cases — have the sound of Wallace short-story titles. The tone of his mother's speaking voice contains echoes of Wallace's writing voice: Her textbook, Practically Painless English, sounds like a Wallace joke. She uses phrases like "perishing hot" for very hot, "snoof" for talking in your sleep, "heave your skeleton" for go to bed. "David and I both owe a huge debt to my mother," says his sister, Amy, two years younger. "She has a way of talking that I've never heard anywhere else."David was, from an early age, "very fragile," as he put it. He loved TV, and would get incredibly excited watching a program like Batman or The Wild Wild West. (His parents rationed the "rough" shows. One per week.) David could memorize whole shows of dialogue and predict, like a kind of plot weatherman, when the story was going to turn, where characters would end up. No one saw or treated him as a genius, but at age 14, when he asked what his father did, Jim sat David down and walked him through a Socratic dialogue. "I was astonished by how sophisticated his understanding was," Jim says. "At that point, I figured out that he really, really was extraordinarily bright."David was a big-built kid; he played football — quarterback — until he was 12 or 13, and would always speak like an athlete, the disappearing G's, "wudn't," "dudn't" and "idn't" and "sumpin'." "The big thing I was when I was little was a really serious jock," Wallace told me. "I mean, I had no artistic ambition. I played citywide football. And I was really good. Then I got to junior high, and there were two guys in the city who were better quarterbacks than me. And people started hitting each other a lot harder, and I discovered that I didn't really love to hit people. That was a huge disappointment." After his first day of football practice at Urbana High School, he came home and chucked it. He offered two explanations to his parents: They expected him to practice every day, and the coaches did too much cursing.He had also picked up a racket. "I discovered tennis on my own," Wallace said, "taking public-park lessons. For five years, I was seriously gonna be a pro tennis player. I didn't look that good, but I was almost impossible to beat. I know that sounds arrogant. It's true." On court, he was a bit of a hustler: Before a match, he'd tell his opponent, "Thank you for being here, but you're just going to cream me."By the time he was 14, he felt he could have made nationals. "Really be in the junior show. But just at the point it became important to me, I began to choke. The more scared you get, the worse you play." Plus it was the Seventies — Pink Floyd, bongs. "I started to smoke a lot of pot when I was 15 or 16, and it's hard to train." He laughed. "You don't have that much energy."It was around this time that the Wallaces noticed something strange about David. He would voice surprising requests, like wanting to paint his bedroom black. He was constantly angry at his sister. When he was 16, he refused to go to her birthday party. "Why would I want to celebrate her birthday?" he told his parents."David began to have anxiety attacks in high school," his father recalls. "I noticed the symptoms, but I was just so unsophisticated about these matters. The depression seemed to take the form of an evil spirit that just haunted David." Sally came to call it the "black hole with teeth." David withdrew. "He spent a lot of time throwing up junior year," his sister remembers. One wall of his bedroom was lined with cork, for magazine photos of tennis stars. David pinned an article about Kafka to the wall, with the headline THE DISEASE WAS LIFE ITSELF."I hated seeing those words," his sister tells me, and starts to cry. "They seemed to sum up his existence. We couldn't understand why he was acting the way he was, and so of course my parents were exasperated, lovingly exasperated."David graduated high school with perfect grades. Whatever his personal hurricane was, it had scattered trees and moved on. He decided to go to Amherst, which is where his father had gone, too. His parents told him he would enjoy the Berkshire autumn. Instead, he missed home — the farms and flat horizons, roads stretching contentedly nowhere. "It's fall," David wrote back. "The mountains are pretty, but the landscape isn't beautiful the way Illinois is."Wallace had lugged his bags into Amherst the fall of 1980 — Reagan coming in, the Seventies capsized, preppies everywhere. He brought a suit to campus. "It was kind of a Sears suit, with this Scotch-plaid tie," says his college roommate and close friend Mark Costello, who went on to become a successful novelist himself. "Guys who went to Amherst, who came from five prep schools, they always dress a notch down. No one's bringing a suit. That was just the Wallace sense that going East is a big deal, and you have to not embarrass us. My first impression was that he was really very out of step."Costello came from working-class Massachusetts, seven kids, Irish-Catholic household. He and Wallace connected. "Neither of us fit into the Gatsby-ite mold," Costello says. At Amherst David perfected the style he would wear for the rest of his life: turtleneck, hoodie, big basketball shoes. The look of parking-lot kids who in Illinois were called Dirt Bombs. "A slightly tough, slightly waste-product-y, tennis-playing persona," Costello says. Wallace was also amazingly fast and good company, even just on a walk across campus. "I'd always wanted to be an impressionist," Wallace said, "but I just didn't have an agile enough vocal and facial register to do it." Crossing a green, it was The Dave Show. He would recount how people walked, talked, held their heads, pictured their lives. "Just very connected to people," Costello recalls. "Dave had this ability to be inside someone else's skin."Observing people from afar, of course, can be a way of avoiding them up close. "I was a complete just total banzai weenie studier in college," Wallace recalled. "I was really just scared of people. For instance, I would brave the TV pit — the central TV room — to watch Hill Street Blues, 'cause that was a really important show to me."One afternoon, April of sophomore year, Costello came back to the dorm they shared and found Wallace seated in his chair. Desk clean, bags packed, even his typewriter, which weighed as much as the clothes put together."Dave, what's going on?" Costello asked."I'm sorry, I'm so sorry," Wallace said. "I know I'm really screwing you."He was pulling out of college. Costello drove him to the airport. "He wasn't able to talk about it," Costello recalls. "He was crying, he was mortified. Panicky. He couldn't control his thoughts. It was mental incontinence, the equivalent of wetting his pants.""I wasn't very happy there," Wallace told me later. "I felt kind of inadequate. There was a lot of stuff I wanted to read that wasn't part of any class. And Mom and Dad were just totally cool."Wallace went home to hospitalization, explanations to his parents, a job. For a while, he drove a school bus. "Here he was, a guy who was really shaky, kind of Holden Caulfield, driving a school bus through lightning storms," Costello recalls. "He wrote me a letter all outraged, about the poor screening procedures for school-bus drivers in central Illinois."Wallace would visit his dad's philosophy classes. "The classes would turn into a dialogue between David and me," his father remembers. "The students would just sit looking around, 'Who is this guy?' " Wallace devoured novels — "pretty much everything I've read was read during that year." He also told his parents how he'd felt at school. "He would talk about just being very sad, and lonely," Sally says. "It didn't have anything to do with being loved. He just was very lonely inside himself."He returned to Amherst in the fall, to room with Costello, shaky but hardened. "Certain things had been destroyed in his head," Costello says. "In the first half of his Amherst career, he was trying to be a regular person. He was on the debate team, the sort of guy who knows he's going to be a success." Wallace had talked about going into politics; Costello recalls him joking, "No one is going to vote for somebody who's been in a nuthouse." Having his life fall apart narrowed his sense of what his options were — and the possibilities that were left became more real to him. In a letter to Costello, he wrote, "I want to write books that people will read 100 years from now."Back at school junior year, he never talked much about his breakdown. "It was embarrassing and personal," Costello says. "A zone of no jokes." Wallace regarded it as a failure, something he should have been able to control. He routinized his life. He'd be the first tray at the dining hall for supper, he'd eat, drink coffee dipped with tea bags, library study till 11, head back to the room, turn on Hawaii Five-O, then a midnight gulp from a scotch bottle. When he couldn't turn his mind off, he'd say, "You know what? I think this is a two-shot night," slam another and sleep.In 1984, Costello left for Yale Law School; Wallace was alone senior year. He double-majored — English and philosophy, which meant two big writing projects. In philosophy, he took on modal logic. "It looked really hard, and I was really scared about it," he said. "So I thought I'd do this kind of jaunty, hundred-page novel." He wrote it in five months, and it clocked in at 700 pages. He called it The Broom of the System.Wallace published stories in the Amherst literary magazine. One was about depression and a tricyclic anti-anxiety medication he had been on for two months. The medication "made me feel like I was stoned and in hell," he told me. The story dealt with the in-hell parts:You are the sickness yourself.... You realize all this...when you look at the black hole and it's wearing your face. That's when the Bad Thing just absolutely eats you up, or rather when you just eat yourself up. When you kill yourself. All this business about people committing suicide when they're "severely depressed;" we say, "Holy cow, we must do something to stop them from killing themselves!" That's wrong. Because all these people have, you see, by this time already killed themselves, where it really counts.... When they "commit suicide," they're just being orderly.It wasn't just writing the novel that made Wallace realize his future would lie in fiction. He also helped out friends by writing their papers. In a comic book, this would be his origin story, the part where he's bombarded with gamma rays, bitten by the spider. "I remember realizing at the time, 'Man, I'm really good at this. I'm a weird kind of forger. I can sound kind of like anybody.' "Grad school was next. Philosophy would be an obvious choice. "My dad would have limbs removed without anesthetic before ever pushing his kids about anything," Wallace said. "But I knew I was gonna have to go to grad school. I applied to these English programs instead, and I didn't tell anybody. Writing The Broom of the System, I felt like I was using 97 percent of me, whereas philosophy was using 50 percent."After Amherst, Wallace went to the University of Arizona for an MFA. It was where he picked up the bandanna: "I started wearing them in Tucson because it was a hundred degrees all the time, and I would perspire so much I would drip on the page." The woman he was dating thought the bandanna was a wise move. "She was like a Sixties lady, a Sufi Muslim. She said there were various chakras, and one of the big ones she called the spout hole, at the very top of your cranium. Then I began thinking about the phrase 'Keeping your head together.' It makes me feel kind of creepy that people view it as a trademark or something — it's more a recognition of a weakness, which is that I'm just kind of worried that my head's gonna explode."Arizona was a strange experience: the first classrooms where people weren't happy to see him. He wanted to write the way he wanted to write — funny and overstuffed and nonlinear and strange. The teachers were all "hardass realists." That was the first problem. Problem two was Wallace. "I think I was kind of a prick," he said. "I was just unteachable. I had that look — 'If there were any justice, I'd be teaching this class' — that makes you want to slap a student." One of his stories, "Here and There," went on to win a 1989 O. Henry Prize after it was published in a literary magazine. When he turned it in to his professor, he received a chilly note back: "I hope this isn't representative of the work you're hoping to do for us. We'd hate to lose you.""What I hated was how disingenuous it was," Wallace recalled. "'We'd hate to lose you.' You know, if you're gonna threaten, say that."Wallace sent his thesis project out to agents. He got a lot of letters back: "Best of luck in your janitorial career." Bonnie Nadell was 25, working a first job at San Francisco's Frederick Hill Agency. She opened a letter from Wallace, read a chapter from his book. "I loved it so much," Nadell says. It turned out there was a writer named David Rains Wallace. Hill and Nadell agreed that David should insert his mother's maiden name, which is how he became David Foster Wallace. She remained his agent for the rest of his life. "I have this thing, the nearest Jewish mother, I will simply put my arms around her skirt and just attach myself," Wallace said. "I don't know what it means. Maybe sort of WASP deprivation."Viking won the auction for the novel, "with something like a handful of trading stamps." Word spread; professors turned nice. "I went from borderline ready-to-get-kicked-out to all these tight-smiled guys being, 'Glad to see you, we're proud of you, you'll have to come over for dinner.' It was so delicious: I felt kind of embarrassed for them, they didn't even have integrity about their hatred."Wallace went to New York to meet his editor, Gerry Howard, wearing a U2 T-shirt. "He seemed like a very young 24," Howard says. The shirt impressed him. "U2 wasn't really huge then. And there's a hypersincerity to U2, which I think David was in tune with — or that he really wanted to be sincere, even though his brain kept turning him in the direction of the ironic." Wallace kept calling Howard — who was only 36 — "Mr. Howard," never "Gerry." It would become his business style: a kind of mock formality. People often suspected it was a put-on. What it was was Midwestern politeness, the burnout in the parking lot still nodding "sir" to the vice principal. "There was kind of this hum of superintelligence behind the 'aw, shucks' manner," Howard recalls.The Broom of the System was published in January of 1987, Wallace's second and last year at Arizona. The title referred to something his mother's grandmother used to say, as in, "Here, Sally, have an apple, it's the broom of the system." "I wasn't aware David had picked up on that," his mother says. "I was thrilled that a family expression became the title of his book."The novel hit. "Everything you could hope for," Howard says. "Critics praised it, it sold quite well, and David was off to the races."His first brush with fame was a kind of gateway experience. Wallace would open The Wall Street Journal, see his face transmuted into a dot-cartoon. "Some article like 'Hotshot's Weird New Novel,' " he said. "I'd feel really good, really cool, for exactly 10 seconds. Probably not unlike a crack high, you know? I was living an incredibly American life: 'Boy, if I could just achieve X, Y and Z, everything would be OK.' " Howard bought Wallace's second book, Girl With Curious Hair, a collection of the stories he was finishing up at Arizona. But something in Wallace worried him. "I have never encountered a mind like David's," he says. "It functioned at such an amazingly high level, he clearly lived in a hyperalert state. But on the other hand, I felt that David's emotional life lagged far behind his mental life. And I think he could get lost in the gap between the two."Wallace was already drifting into the gap. He won a Whiting Writers' Award — stood on a stage with Eudora Welty — graduated Arizona, went to an artists' colony, met famous writers, knew the famous writers were seeing his name in more magazines ("absolutely exhilarating and really scary at the same time"), finished the stories. And then he was out of ideas. He tried to write in a cabin in Tucson for a while, then returned home to write — Mom and Dad doing the grocery shopping. He accepted a one-year slot teaching philosophy at Amherst, which was strange: Sophomores he had known were now his students. In the acknowledgments for the book he was completing, he thanks "The Mr. and Mrs. Wallace Fund for Aimless Children."He was balled up, tied up. "I started hating everything I did," he said. "Worse than stuff I'd done in college. Hopelessly confused, unbelievably bad. I was really in a panic, I didn't think I was going to be able to write anymore. And I got this idea: I'd flourished in an academic environment — my first two books had sort of been written under professors." He applied to graduate programs in philosophy, thinking he could write fiction in his spare time. Harvard offered a full scholarship. The last thing he needed to reproduce his college years was to reactivate Mark Costello."So he comes up with this whole cockamamie plan," Costello recalls. "He says, 'OK, you're going to go back to Boston, practice law, and I'm going to go to Harvard. We'll live together — it'll be just like the house we had at Amherst.' It all ended up being a train wreck."They found an apartment in Somerville. Student ghetto: rickety buildings, outdoor staircases. Costello would come home with his briefcase, click up the back stairs, David would call out, "Hi, honey, how was your day?" But Wallace wasn't writing fiction. He had thought course work would be a sideline; but professors expected actual work.Not writing was the kind of symptom that presents a problem of its own. "He could get himself into places where he was pretty helpless," Costello says. "Basically it was the same symptoms all along: this incredible sense of inadequacy, panic. He once said to me that he wanted to write to shut up the babble in his head. He said when you're writing well, you establish a voice in your head, and it shuts up the other voices. The ones that are saying, 'You're not good enough, you're a fraud.' ""Harvard was just unbelievably bleak," Wallace said. It became a substance marathon: drinking, parties, drugs. "I didn't want to feel it," he said. "It was the only time in my life that I'd gone to bars, picked up women I didn't know." Then for weeks, he would quit drinking, start mornings with a 10-mile run. "You know, this kind of very American sports training — I will fix this by taking radical action." Schwarzenegger voice: "If there's a problem, I will train myself out of it. I will work harder."Various delays were holding up the publication of his short-story collection Girl With Curious Hair. He started to feel spooked. "I'm this genius writer," he remembered. "Everything I do's gotta be ingenious, blah, blah, blah, blah." The five-year clock was ticking again. He'd played football for five years. Then he'd played high-level tennis for five years. Now he'd been writing for five years. "What I saw was, 'Jesus, it's the same thing all over again.' I'd started late, showed tremendous promise — and the minute I felt the implications of that promise, it caved in. Because see, by this time, my ego's all invested in the writing. It's the only thing I've gotten food pellets from the universe for. So I feel trapped: 'Uh-oh, my five years is up, I've gotta move on.' But I didn't want to move on."Costello watched while Wallace slipped into a depressive crisis. "He was hanging out with women who were pretty heavily into drugs — that was kind of alluring to Dave — skanking around Somerville, drinking himself blotto."It was the worst period Wallace had ever gone through. "It may have been what in the old days was called a spiritual crisis," he said. "It was just feeling as though every axiom of your life turned out to be false. And there was nothing, and you were nothing — it was all a delusion. But you were better than everyone else because you saw that it was a delusion, and yet you were worse because you couldn't function."By November, the anxieties had become locked and fixed. "I got really worried I was going to kill myself. And I knew, that if anybody was fated to fuck up a suicide attempt, it was me." He walked across campus to Health Services and told a psychiatrist, "Look, there's this issue. I don't feel real safe.""It was a big deal for me, because I was so embarrassed," Wallace said. "But it was the first time I ever treated myself like I was worth something."By making his announcement, Wallace had activated a protocol: Police were notified, he had to withdraw from school. He was sent to McLean, which, as psychiatric hospitals go, is pedigreed: Robert Lowell, Sylvia Plath, Anne Sexton all put in residences there; it's the setting for the memoir Girl, Interrupted. Wallace spent his first day on suicide watch. Locked ward, pink room, no furniture, drain in the floor, observation slot in the door. "When that happens to you," David said, smiling, "you get unprecedentedly willing to examine other alternatives for how to live."Wallace spent eight days in McLean. He was diagnosed as a clinical depressive and was prescribed a drug, called Nardil, developed in the 1950s. He would have to take it from then on. "We had a brief, maybe three-minute audience with the psychopharmacologist," his mother says. Wallace would have to quit drinking, and there was a long list of foods — certain cheeses, pickles, cured meats — he would have to stay away from.He started to clean up. He found a way to get sober, worked very hard at it, and wouldn't drink for the rest of his life. Girl With Curious Hair finally appeared in 1989. Wallace gave a reading in Cambridge; 13 people showed up, including a schizophrenic woman who shrieked all the way through his performance. "The book's coming out seemed like a kind of shrill, jagged laugh from the universe, this thing sort of lingering behind me like a really nasty fart."What followed was a phased, deliberate return to the world. He worked as a security guard, morning shift, at Lotus Software. Polyester uniform, service baton, walking the corridors. "I liked it because I didn't have to think," he said. "Then I quit for the incredibly brave reason that I got tired of getting up so early in the morning."Next, he worked at a health club in Auburndale, Massachusetts. "Very chichi," he said. "They called me something other than a towel boy, but I was in effect a towel boy. I'm sitting there, and who should walk in to get their towel but Michael Ryan. Now, Michael Ryan had received a Whiting Writers' Award the same year I had. So I see this guy that I'd been up on the fucking rostrum with, having Eudora Welty give us this prize. It's two years later — it's the only time I've literally dived under something. He came in, and I pretended not very subtly to slip, and lay facedown, and didn't respond. I left that day, and I didn't go back."He wrote Bonnie Nadell a letter; he was done with writing. That wasn't exactly her first concern. "I was worried he wasn't going to survive," she says. He filled in Howard, too. "I contemplated the circumstance that the best young writer in America was handing out towels in a health club," Howard says. "How fucking sad."Wallace met Jonathan Franzen in the most natural way for an author: as a fan. He sent Franzen a nice letter about his first novel, The Twenty-Seventh City. Franzen wrote back, they arranged to meet in Cambridge. "He just flaked," Franzen recalls. "He didn't show up. That was a fairly substance-filled period of his life."By April of 1992, both were ready for a change. They loaded Franzen's car and headed for Syracuse to scout apartments. Franzen needed "somewhere to relocate with my wife where we could both afford to live and not have anyone tell us how screwed up our marriage was." Wallace's need was simpler: cheap space, for writing. He had been researching for months, haunting rehab facilities and halfway houses, taking quiet note of voices and stories, people who had fallen into the gaps like him. "I got very assertive research- and finagle-wise," he said. "I spent hundreds of hours at three halfway houses. It turned out you could just sit in the living room — nobody is as gregarious as somebody who has recently stopped using drugs."He and Franzen talked a lot about what writing should be for. "We had this feeling that fiction ought to be good for something," Franzen says. "Basically, we decided it was to combat loneliness." They would talk about lots of Wallace's ideas, which could abruptly sharpen into self-criticism. "I remember this being a frequent topic of conversation," Franzen says, "his notion of not having an authentic self. Of being just quick enough to construct a pleasing self for whomever he was talking to. I see now he wasn't just being funny — there was something genuinely compromised in David. At the time I thought, 'Wow, he's even more self-conscious than I am.' "Wallace spent a year writing in Syracuse. "I lived in an apartment that was seriously the size of the foyer of an average house. I really liked it. There were so many books, you couldn't move around. When I'd want to write, I'd have to put all the stuff from the desk on the bed, and when I'd want to sleep, I would have to put all the stuff on the desk."Wallace worked longhand, pages piling up. "You look at the clock and seven hours have passed and your hand is cramped," Wallace said. He'd have pens he considered hot — cheap Bic ballpoints, like batters have bats that are hot. A pen that was hot he called the orgasm pen.In the summer of 1993, he took an academic job 50 miles from his parents, at Illinois State University at Normal. The book was three-quarters done. Based on the first unruly stack of pages, Nadell had been able to sell it to Little, Brown. He had put his whole life into it — tennis, and depression, and stoner afternoons, and the precipice of rehab, and all the hours spent with Amy watching TV. The plot motor is a movie called Infinite Jest, so soothing and perfect it's impossible to switch off: You watch until you sink into your chair, spill your bladder, starve, die. "If the book's about anything," he said, "it's about the question of why am I watching so much shit? It's not about the shit. It's about me: Why am I doing it? The original title was A Failed Entertainment, and the book is structured as an entertainment that doesn't work" — characters developing and scattering, chapters disordered — "because what entertainment ultimately leads to is 'Infinite Jest,' that's the star it's steering by."Wallace held classes in his house, students nudging aside books like Compendium of Drug Therapy and The Emergence of the French Art Film, making jokes about Mount Manuscript, David's pile of novel. He had finished and collected the three years of drafts, and finally sat down and typed the whole thing. Wallace didn't really type; he input the giant thing twice, with one finger. "But a really fast finger."It came to almost 1,700 pages. "I was just terrified how long it would end up being," he said. Wallace told his editor it would be a good beach book, in the sense that people could use it for shade.It can take a year to edit a book, re-edit it, print it, publicize it, ship it, the writer all the time checking his watch. In the meantime, Wallace turned to nonfiction. Two pieces, published in Harper's, would become some of the most famous pieces of journalism of the past decade and a half.Colin Harrison, Wallace's editor at Harper's, had the idea to outfit him with a notebook and push him into perfectly American places — the Illinois State Fair, a Caribbean cruise. It would soak up the side of Wallace that was always on, always measuring himself. "There would be Dave the mimic, Dave the people-watcher," Costello says. "Asking him to actually report could get stressful and weird and complicated. Colin had this stroke of genius about what to do with David. It was a much simpler solution than anyone ever thought."In the pieces, Wallace invented a style writers have plundered for a decade. The unedited camera, the feed before the director in the van starts making choices and cuts. The voice was humane, a big, kind brain tripping over its own lumps. "The Harper's pieces were me peeling back my skull," Wallace said. "You know, welcome to my mind for 20 pages, see through my eyes, here's pretty much all the French curls and crazy circles. The trick was to have it be honest but also interesting — because most of our thoughts aren't all that interesting. To be honest with a motive." He laughed. "There's a certain persona created, that's a little stupider and schmuckier than I am."The cruise-ship piece ran in January 1996, a month before David's novel was published. People photocopied it, faxed it to each other, read it over the phone. When people tell you they're fans of David Foster Wallace, what they're often telling you is that they've read the cruise-ship piece; Wallace would make it the title essay in his first collection of journalism, A Supposedly Fun Thing I'll Never Do Again. In a way, the difference between the fiction and the nonfiction reads as the difference between Wallace's social self and his private self. The essays were endlessly charming, they were the best friend you'd ever have, spotting everything, whispering jokes, sweeping you past what was irritating or boring or awful in humane style. Wallace's fiction, especially after Infinite Jest, would turn chilly, dark, abstract. You could imagine the author of the fiction sinking into a depression. The nonfiction writer was an impervious sun.The novel came out in February of 1996. In New York Magazine, Walter Kirn wrote, "The competition has been obliterated. It's as though Paul Bunyan had joined the NFL, or Wittgenstein had gone on Jeopardy! The novel is that colossally disruptive. And that spectacularly good." He was in Newsweek, Time, Hollywood people appeared at his readings, women batted their eyelashes, men in the back rows scowled, envied. A FedEx guy rang his bell, watched David sign for delivery, asked, "How's it feel to be famous?"At the end of his book tour, I spent a week with David. He talked about the "greasy thrill of fame" and what it might mean to his writing. "When I was 25, I would've given a couple of digits off my non-use hand for this," he said. "I feel good, because I wanna be doing this for 40 more years, you know? So I've got to find some way to enjoy this that doesn't involve getting eaten by it."He was astonishingly good, quick company, making you feel both wide awake and as if your shoes had been tied together. He'd say things like, "There's good self-consciousness, and then there's toxic, paralyzing, raped-by-psychic-Bedouins self-consciousness." He talked about a kind of shyness that turned social life impossibly complicated. "I think being shy basically means being self-absorbed to the point that it makes it difficult to be around other people. For instance, if I'm hanging out with you, I can't even tell whether I like you or not because I'm too worried about whether you like me."He said one interviewer had devoted tons of energy to the genius question. "That was his whole thing, 'Are you normal?' 'Are you normal?' I think one of the true ways I've gotten smarter is that I've realized that there are ways other people are a lot smarter than me. My biggest asset as a writer is that I'm pretty much like everybody else. The parts of me that used to think I was different or smarter or whatever almost made me die."It had been difficult, during the summer, to watch his sister get married. "I'm almost 35. I would like to get married and have kids. I haven't even started to work that shit out yet. I've come close a few times, but I tend to be interested in women that I turn out to not get along very well with. I have friends who say this is something that would be worth looking into with someone that you pay."Wallace was always dating somebody. "There were a lot of relationships," Amy says. He dated in his imaginative life too: When I visited him, one wall was taped with a giant Alanis Morissette poster. "The Alanis Morissette obsession followed the Melanie Griffith obsession — a six-year obsession," he said. "It was preceded by something that I will tell you I got teased a lot for, which was a terrible Margaret Thatcher obsession. All through college: posters of Margaret Thatcher, and ruminations on Margaret Thatcher. Having her really enjoy something I said, leaning forward and covering my hand with hers."He tended to date high-strung women — another symptom of his shyness. "Say what you want about them, psychotics tend to make the first move." Owning dogs was less complicated: "You don't get the feeling you're hurting their feelings all the time."His romantic anxieties were full-spectrum, every bit of the mechanics individually examined. He told me a joke:What does a writer say after sex?Was it as good for me as it was for you?"There is, in writing, a certain blend of sincerity and manipulation, of trying always to gauge what the particular effect of something is gonna be," he said. "It's a very precious asset that really needs to be turned off sometimes. My guess is that writers probably make fun, skilled, satisfactory, and seemingly considerate partners for other people. But that the experience for them is often rather lonely."One night Wallace met the writer Elizabeth Wurtzel, whose depression memoir, Prozac Nation, had recently been published. She thought he looked scruffy — jeans and the bandanna — and very smart. Another night, Wallace walked her home from a restaurant, sat with her in her lobby, spent some time trying to talk his way upstairs. It charmed Wurtzel: "You know, he might have had this enormous brain, but at the end of the day, he still was a guy."Wallace and Wurtzel didn't really talk about the personal experience they had in common — depression, a substance history, consultations at McLean — but about their profession, about what to do with fame. Wallace, again, had set impossible standards for himself. "It really disturbed him, the possibility that success could taint you," she recalls. "He was very interested in purity, in the idea of authenticity — the way some people are into the idea of being cool. He had keeping it real down to a science."When Wallace wrote her, he was still curling through the same topic. "I go through a loop in which I notice all the ways I am self-centered and careerist and not true to standards and values that transcend my own petty interests, and feel like I'm not one of the good ones. But then I countenance the fact that at least here I am worrying about it, noticing all the ways I fall short of integrity, and I imagine that maybe people without any integrity at all don't notice or worry about it; so then I feel better about myself. It's all very confusing. I think I'm very honest and candid, but I'm also proud of how honest and candid I am — so where does that put me?"Success can be as difficult to recover from as failure. "You know the tic big-league pitchers have," his mother says, "when they know that they've pitched a marvelous game — but gee, can they do it again, so they keep flexing that arm? There was some of that. Where he said, 'OK. Good, that came out well. But can I do it again?' That was the feeling I got. There was always the shadow waiting."Wallace saw it that way too. "My big worry," he said, "is that this will just up my expectations for myself. And expectations are a very fine line. Up to a certain point they can be motivating, can be kind of a flamethrower held to your ass. Past that point they're toxic and paralyzing. I'm scared that I'll fuck up and plunge into a compressed version of what I went through before."Mark Costello was also worried. "Work got very hard. He didn't get these gifts from God anymore, he didn't get these six-week periods where he got exactly the 120 pages he needed. So he found distraction in other places." He would get engaged, then unengaged. He would call friends: "Next weekend, Saturday, you gotta be in Rochester, Minnesota, I'm getting married." But then it would be Sunday, or the next week, and he'd have called it off."He almost got married a few times," Amy says. "I think what ultimately happened is he was doing it more for the other person than himself. And he realized that wasn't doing the other person any favors."Wallace told Costello about a woman he had become involved with. "He said, 'She gets mad at me because I never want to leave the house.' 'Honey, let's go to the mall.' 'No, I want to write.' 'But you never do write.' 'But I don't know if I'm going to write. So I have to be here in case it happens.' This went on for years."In 2000, Wallace wrote a letter to his friend Evan Wright, a Rolling Stone contributor: "I know about still having trouble with relationships. (Boy oh boy, do I.) But coming to enjoy my own company more and more — most of the time. I know about some darkness every day (and some days, it's all dark for me)." He wrote about meeting a woman, having things move too easily, deciding against it. "I think whatever the pull is for me is largely composed of wanting the Big Yes, of wanting someone else to want you (Cheap Trick lives). . . . So now I don't know what to do. Probably nothing, which seems to be the Sign that the universe or its CEO is sending me."In the summer of 2001, Wallace relocated to Claremont, California, to become the Roy Edward Disney Chair in Creative Writing, at Pomona College. He published stories and essays, but was having trouble with his work. After he reported on John McCain's 2000 presidential campaign for this magazine, he wrote his agent that it would show his editor that "I'm still capable of good work (my own insecurities, I know)."Wallace had received a MacArthur "genius" award in 1997. "I don't think it did him any favors," says Franzen. "It conferred the mantle of 'genius' on him, which he had of course craved and sought and thought was his due. But I think he felt, 'Now I have to be even smarter.' " In late 2001, Costello called Wallace. "He was talking about how hard the writing was. And I said, lightheartedly, 'Dave, you're a genius.' Meaning, people aren't going to forget about you. You're not going to wind up in a Wendy's. He said, 'All that makes me think is that I've fooled you, too.'"Wallace met Karen Green a few months after moving to Claremont. Green, a painter, admired David's work. It was a sort of artistic exchange, an inter-disciplinary blind date. "She wanted to do some paintings based on some of David's stories," his mother says. "They had a mutual friend, and she thought she would ask permission.""He was totally gaga," Wright recalls. "He called, head over heels, he was talking about her as a life-changing event." Franzen met Green the following year. "I felt in about three minutes that he'd finally found somebody who was up to the task of living with Dave. She's beautiful, incredibly strong, and a real grown-up — she had a center that was not about landing the genius Dave Wallace."They made their debut as a couple with Wallace's parents in July 2003, attending the Maine culinary festival that would provide the title for his last book, Consider the Lobster. "They were both so quick," his father says. "They would get things and look at each other and laugh, without having to say what had struck them as funny." The next year, Wallace and Green flew to his parents' home in Illinois, where they were married two days after Christmas. It was a surprise wedding. David told his mother he wanted to take the family to what he called a "high-gussy" lunch. Sally Wallace assumed it was Karen's influence. "David does not do high gussy," she says. "His notion of high gussy is maybe long pants instead of shorts or a T-shirt with two holes instead of 18." Green and Wallace left the house early to "run errands," while Amy figured out a pretext to get their parents to the courthouse on the way to the lunch. "We went upstairs," Sally says, "and saw Karen with a bouquet, and David dressed up with a flower in his buttonhole, and we knew. He just looked so happy, just radiating happiness." Their reception was at an Urbana restaurant. "As we left in the snow," Sally says, "David and Karen were walking away from us. He wanted us to take pictures, and Jim did. David was jumping in the air and clicking his heels. That became the wedding announcement."According to Wallace's family and friends, the last six years — until the final one — were the best of his life. The marriage was happy, university life good, Karen and David had two dogs, Warner and Bella, they bought a lovely house. "Dave in a real house," Franzen says, laughing, "with real furniture and real style."To Franzen's eye, he was watching Wallace grow up. There had been in David a kind of purposeful avoidance of the normal. Once, they'd gone to a literary party in the city. They walked in the front door together, but by the time Franzen got to the kitchen, he realized Wallace had disappeared. "I went back and proceeded to search the whole place," Franzen recalled. "He had walked into the bathroom to lose me, then turned on his heels and walked right back out the front door."Now, that sort of thing had stopped. "He had reason to hope," Franzen said. "He had the resources to be more grown-up, a wholer person."And then there were the dogs. "He had a predilection for dogs who'd been abused, and unlikely to find other owners who were going to be patient enough for them," Franzen says. "Whether through a sense of identification or sympathy, he had a very hard time disciplining them. But you couldn't see his attentiveness to the dogs without getting a lump in your throat."Because Wallace was secure, he began to talk about going off Nardil, the antidepressant he had taken for nearly two decades. The drug had a long list of side effects, including the potential of very high blood pressure. "It had been a fixture of my morbid fear about Dave — that he would not last all that long, with the wear and tear on his heart," Franzen says. "I worried that I was going to lose him in his early 50s." Costello said that Wallace complained the drug made him feel "filtered." "He said, 'I don't want to be on this stuff for the rest of my life.' He wanted to be more a member of the human race."In June of 2007, Wallace and Green were at an Indian restaurant with David's parents in Claremont. David suddenly felt very sick — intense stomach pains. They stayed with him for days. When he went to doctors, he was told that something he'd eaten might have interacted with the Nardil. They suggested he try going off the drug and seeing if another approach might work."So at that point," says his sister Amy, with an edge in her voice, it was determined, 'Oh, well, gosh, we've made so much pharmaceutical progress in the last two decades that I'm sure we can find something that can knock out that pesky depression without all these side effects.' They had no idea that it was the only thing that was keeping him alive."Wallace would have to taper off the old drug and then taper on to a new one. "He knew it was going to be rough," says Franzen. "But he was feeling like he could finally afford a year to do the job. He figured that he was going to go on to something else, at least temporarily. He was a perfectionist, you know? He wanted to be perfect, and taking Nardil was not perfect."That summer, David began to phase out the Nardil. His doctors began prescribing other medications, none of which seemed to help. "They could find nothing," his mother says softly. "Nothing." In September, David asked Amy to forgo her annual fall-break visit. He wasn't up to it. By October, his symptoms had become bad enough to send him to the hospital. His parents didn't know what to do. "I started worrying about that," Sally says, "but then it seemed OK." He began to drop weight. By that fall, he looked like a college kid again: longish hair, eyes intense, as if he had just stepped out of an Amherst classroom.When Amy talked to him on the phone, "sometimes he was his old self," she says. "The worst question you could ask David in the last year was 'how are you?' And it's almost impossible to have a conversation with someone you don't see regularly without that question." Wallace was very honest with her. He'd answer, "I'm not all right. I'm trying to be, but I'm not all right."Despite his struggle, Wallace managed to keep teaching. He was dedicated to his students: He would write six pages of comments to a short story, joke with his class, fight them to try harder. During office hours, if there was a grammar question he couldn't answer, he'd phone his mother. "He would call me and say, 'Mom, I've got this student right here. Explain to me one more time why this is wrong.' You could hear the student sort of laughing in the background. 'Here's David Foster Wallace calling his mother.' "In early May, at the end of the school year, he sat down with some graduating seniors from his fiction class at a nearby cafe. Wallace answered their jittery writer's-future questions. "He got choked up at the end," recalls Bennett Sims, one of his students. "He started to tell us how much he would miss us, and he began to cry. And because I had never seen Dave cry, I thought he was just joking. Then, awfully, he sniffled and said, 'Go ahead and laugh — here I am crying — but I really am going to miss all of you.' "His parents were scheduled to visit the next month. In June, when Sally spoke with her son, he said, "I can't wait, it'll be wonderful, we'll have big fun." The next day, he called and said, "Mom, I have two favors to ask you. Would you please not come?" She said OK. Then Wallace asked, "Would your feelings not be hurt?"No medications had worked; the depression wouldn't lift. "After this year of absolute hell for David," Sally says, "they decided to go back to the Nardil." The doctors also administered 12 courses of electroconvulsive therapy, waiting for Wallace's medication to become effective. "Twelve," Sally repeats. "Such brutal treatments," Jim says. "It was clear then things were bad."Wallace had always been terrified of shock therapy. "It scares the shit out of me," he told me in 1996. "My brain's what I've got. But I could see that at a certain point, you might beg for it."In late June, Franzen, who was in Berlin, grew worried. "I actually woke up one night," he says. "Our communications had a rhythm, and I thought, 'It's been too long since I heard from Dave.' " When Franzen called, Karen said to come immediately: David had tried to kill himself.Franzen spent a week with Wallace in July. David had dropped 70 pounds in a year. "He was thinner than I'd ever seen him. There was a look in his eyes: terrified, terribly sad, and far away. Still, he was fun to be with, even at 10 percent strength." Franzen would sit with Wallace in the living room and play with the dogs, or step outside with David while he smoked a cigarette. "We argued about stuff. He was doing his usual line about, 'A dog's mouth is practically a disinfectant, it's so clean. Not like human saliva, dog saliva is marvelously germ-resistant.'" Before he left, Wallace thanked him for coming. "I felt grateful that he allowed me to be there," Franzen says.Six weeks later, Wallace asked his parents to come to California. The Nardil wasn't working. It can happen with an antidepressant; a patient goes off, returns, and the medication has lost its efficacy. Wallace couldn't sleep. He was afraid to leave the house. He asked, "What if I meet one of my students?" "He didn't want anyone to see him the way he was," his father says. "It was just awful to see. If a student saw him, they would have put their arms around him and hugged him, I'm sure."His parents stayed for 10 days. "He was just desperate," his mother says. "He was afraid it wasn't ever going to work. He was suffering. We just kept holding him, saying if he could just hang on, it would straighten. He was very brave for a very long time."Wallace and his parents would get up at six in the morning and walk the dogs. They watched DVDs of The Wire, talked. Sally cooked David's favorite dishes, heavy comfort foods — pot pies, casseroles, strawberries in cream. "We kept telling him we were so glad he was alive," his mother recalls. "But my feeling is that, even then, he was leaving the planet. He just couldn't take it."One afternoon before they left, David was very upset. His mother sat on the floor beside him. "I just rubbed his arm. He said he was glad I was his mom. I told him it was an honor."At the end of August, Franzen called. All summer long he had been telling David that as bad as things were, they were going to be better, and then he'd be better than he'd ever been. David would say, "Keep talking like that — it's helping." But this time it wasn't helping. "He was far away," Franzen says. A few weeks later, Karen left David alone with the dogs for a few hours. When she came home that night, he had hanged himself."I can't get the image out of my head," his sister says. "David and his dogs, and it's dark. I'm sure he kissed them on the mouth, and told them he was sorry."[From Issue 1064 -- October 30, 2008]Winner: Rolling Stone: Jann Wenner, editor and publisher; Will Dana, managing editor, for The Lost Years & Last Days of David Foster Wallace, by David Lipsky, October 30.

The Big Takeover: Wall Street Coup d'Etat

Posted by SubSickAlien on April 1, 2009 at 11:04pm

Think the big banks begging for government handouts are down and out? Think again. They're taking over the government - not the other way around. How Wall Street insiders are using the bailout to stage a revolution. The global economic crisis isn't about money - it's about power.It's over — we're officially, royally fucked. No empire can survive being rendered a permanent laughingstock, which is what happened as of a few weeks ago, when the buffoons who have been running things in this country finally went one step too far. It happened when Treasury Secretary Timothy Geithner was forced to admit that he was once again going to have to stuff billions of taxpayer dollars into a dying insurance giant called AIG, itself a profound symbol of our national decline — a corporation that got rich insuring the concrete and steel of American industry in the country's heyday, only to destroy itself chasing phantom fortunes at the Wall Street card tables, like a dissolute nobleman gambling away the family estate in the waning days of the British Empire.The latest bailout came as AIG admitted to having just posted the largest quarterly loss in American corporate history — some $61.7 billion. In the final three months of last year, the company lost more than $27 million every hour. That's $465,000 a minute, a yearly income for a median American household every six seconds, roughly $7,750 a second. And all this happened at the end of eight straight years that America devoted to frantically chasing the shadow of a terrorist threat to no avail, eight years spent stopping every citizen at every airport to search every purse, bag, crotch and briefcase for juice boxes and explosive tubes of toothpaste. Yet in the end, our government had no mechanism for searching the balance sheets of companies that held life-or-death power over our society and was unable to spot holes in the national economy the size of Libya (whose entire GDP last year was smaller than AIG's 2008 losses).So it's time to admit it: We're fools, protagonists in a kind of gruesome comedy about the marriage of greed and stupidity. And the worst part about it is that we're still in denial — we still think this is some kind of unfortunate accident, not something that was created by the group of psychopaths on Wall Street whom we allowed to gang-rape the American Dream. When Geithner announced the new $30 billion bailout, the party line was that poor AIG was just a victim of a lot of shitty luck — bad year for business, you know, what with the financial crisis and all. Edward Liddy, the company's CEO, actually compared it to catching a cold: "The marketplace is a pretty crummy place to be right now," he said. "When the world catches pneumonia, we get it too." In a pathetic attempt at name-dropping, he even whined that AIG was being "consumed by the same issues that are driving house prices down and 401K statements down and Warren Buffet's investment portfolio down."Liddy made AIG sound like an orphan begging in a soup line, hungry and sick from being left out in someone else's financial weather. He conveniently forgot to mention that AIG had spent more than a decade systematically scheming to evade U.S. and international regulators, or that one of the causes of its "pneumonia" was making colossal, world-sinking $500 billion bets with money it didn't have, in a toxic and completely unregulated derivatives market.Nor did anyone mention that when AIG finally got up from its seat at the Wall Street casino, broke and busted in the afterdawn light, it owed money all over town — and that a huge chunk of your taxpayer dollars in this particular bailout scam will be going to pay off the other high rollers at its table. Or that this was a casino unique among all casinos, one where middle-class taxpayers cover the bets of billionaires.People are pissed off about this financial crisis, and about this bailout, but they're not pissed off enough. The reality is that the worldwide economic meltdown and the bailout that followed were together a kind of revolution, a coup d'état. They cemented and formalized a political trend that has been snowballing for decades: the gradual takeover of the government by a small class of connected insiders, who used money to control elections, buy influence and systematically weaken financial regulations.The crisis was the coup de grâce: Given virtually free rein over the economy, these same insiders first wrecked the financial world, then cunningly granted themselves nearly unlimited emergency powers to clean up their own mess. And so the gambling-addict leaders of companies like AIG end up not penniless and in jail, but with an Alien-style death grip on the Treasury and the Federal Reserve — "our partners in the government," as Liddy put it with a shockingly casual matter-of-factness after the most recent bailout.The mistake most people make in looking at the financial crisis is thinking of it in terms of money, a habit that might lead you to look at the unfolding mess as a huge bonus-killing downer for the Wall Street class. But if you look at it in purely Machiavellian terms, what you see is a colossal power grab that threatens to turn the federal government into a kind of giant Enron — a huge, impenetrable black box filled with self-dealing insiders whose scheme is the securing of individual profits at the expense of an ocean of unwitting involuntary shareholders, previously known as taxpayers.I. PATIENT ZEROThe best way to understand the financial crisis is to understand the meltdown at AIG. AIG is what happens when short, bald managers of otherwise boring financial bureaucracies start seeing Brad Pitt in the mirror. This is a company that built a giant fortune across more than a century by betting on safety-conscious policyholders — people who wear seat belts and build houses on high ground — and then blew it all in a year or two by turning their entire balance sheet over to a guy who acted like making huge bets with other people's money would make his dick bigger.That guy — the Patient Zero of the global economic meltdown — was one Joseph Cassano, the head of a tiny, 400-person unit within the company called AIG Financial Products, or AIGFP. Cassano, a pudgy, balding Brooklyn College grad with beady eyes and way too much forehead, cut his teeth in the Eighties working for Mike Milken, the granddaddy of modern Wall Street debt alchemists. Milken, who pioneered the creative use of junk bonds, relied on messianic genius and a whole array of insider schemes to evade detection while wreaking financial disaster. Cassano, by contrast, was just a greedy little turd with a knack for selective accounting who ran his scam right out in the open, thanks to Washington's deregulation of the Wall Street casino. "It's all about the regulatory environment," says a government source involved with the AIG bailout. "These guys look for holes in the system, for ways they can do trades without government interference. Whatever is unregulated, all the action is going to pile into that."The mess Cassano created had its roots in an investment boom fueled in part by a relatively new type of financial instrument called a collateralized-debt obligation. A CDO is like a box full of diced-up assets. They can be anything: mortgages, corporate loans, aircraft loans, credit-card loans, even other CDOs. So as X mortgage holder pays his bill, and Y corporate debtor pays his bill, and Z credit-card debtor pays his bill, money flows into the box.The key idea behind a CDO is that there will always be at least some money in the box, regardless of how dicey the individual assets inside it are. No matter how you look at a single unemployed ex-con trying to pay the note on a six-bedroom house, he looks like a bad investment. But dump his loan in a box with a smorgasbord of auto loans, credit-card debt, corporate bonds and other crap, and you can be reasonably sure that somebody is going to pay up. Say $100 is supposed to come into the box every month. Even in an apocalypse, when $90 in payments might default, you'll still get $10. What the inventors of the CDO did is divide up the box into groups of investors and put that $10 into its own level, or "tranche." They then convinced ratings agencies like Moody's and S&P to give that top tranche the highest AAA rating — meaning it has close to zero credit risk.Suddenly, thanks to this financial seal of approval, banks had a way to turn their shittiest mortgages and other financial waste into investment-grade paper and sell them to institutional investors like pensions and insurance companies, which were forced by regulators to keep their portfolios as safe as possible. Because CDOs offered higher rates of return than truly safe products like Treasury bills, it was a win-win: Banks made a fortune selling CDOs, and big investors made much more holding them.The problem was, none of this was based on reality. "The banks knew they were selling crap," says a London-based trader from one of the bailed-out companies. To get AAA ratings, the CDOs relied not on their actual underlying assets but on crazy mathematical formulas that the banks cooked up to make the investments look safer than they really were. "They had some back room somewhere where a bunch of Indian guys who'd been doing nothing but math for God knows how many years would come up with some kind of model saying that this or that combination of debtors would only default once every 10,000 years," says one young trader who sold CDOs for a major investment bank. "It was nuts."Now that even the crappiest mortgages could be sold to conservative investors, the CDOs spurred a massive explosion of irresponsible and predatory lending. In fact, there was such a crush to underwrite CDOs that it became hard to find enough subprime mortgages — read: enough unemployed meth dealers willing to buy million-dollar homes for no money down — to fill them all. As banks and investors of all kinds took on more and more in CDOs and similar instruments, they needed some way to hedge their massive bets — some kind of insurance policy, in case the housing bubble burst and all that debt went south at the same time. This was particularly true for investment banks, many of which got stuck holding or "warehousing" CDOs when they wrote more than they could sell. And that's were Joe Cassano came in.Known for his boldness and arrogance, Cassano took over as chief of AIGFP in 2001. He was the favorite of Maurice "Hank" Greenberg, the head of AIG, who admired the younger man's hard-driving ways, even if neither he nor his successors fully understood exactly what it was that Cassano did. According to a source familiar with AIG's internal operations, Cassano basically told senior management, "You know insurance, I know investments, so you do what you do, and I'll do what I do — leave me alone." Given a free hand within the company, Cassano set out from his offices in London to sell a lucrative form of "insurance" to all those investors holding lots of CDOs. His tool of choice was another new financial instrument known as a credit-default swap, or CDS.The CDS was popularized by J.P. Morgan, in particular by a group of young, creative bankers who would later become known as the "Morgan Mafia," as many of them would go on to assume influential positions in the finance world. In 1994, in between booze and games of tennis at a resort in Boca Raton, Florida, the Morgan gang plotted a way to help boost the bank's returns. One of their goals was to find a way to lend more money, while working around regulations that required them to keep a set amount of cash in reserve to back those loans. What they came up with was an early version of the credit-default swap.In its simplest form, a CDS is just a bet on an outcome. Say Bank A writes a million-dollar mortgage to the Pope for a town house in the West Village. Bank A wants to hedge its mortgage risk in case the Pope can't make his monthly payments, so it buys CDS protection from Bank B, wherein it agrees to pay Bank B a premium of $1,000 a month for five years. In return, Bank B agrees to pay Bank A the full million-dollar value of the Pope's mortgage if he defaults. In theory, Bank A is covered if the Pope goes on a meth binge and loses his job.When Morgan presented their plans for credit swaps to regulators in the late Nineties, they argued that if they bought CDS protection for enough of the investments in their portfolio, they had effectively moved the risk off their books. Therefore, they argued, they should be allowed to lend more, without keeping more cash in reserve. A whole host of regulators — from the Federal Reserve to the Office of the Comptroller of the Currency — accepted the argument, and Morgan was allowed to put more money on the street.What Cassano did was to transform the credit swaps that Morgan popularized into the world's largest bet on the housing boom. In theory, at least, there's nothing wrong with buying a CDS to insure your investments. Investors paid a premium to AIGFP, and in return the company promised to pick up the tab if the mortgage-backed CDOs went bust. But as Cassano went on a selling spree, the deals he made differed from traditional insurance in several significant ways. First, the party selling CDS protection didn't have to post any money upfront. When a $100 corporate bond is sold, for example, someone has to show 100 actual dollars. But when you sell a $100 CDS guarantee, you don't have to show a dime. So Cassano could sell investment banks billions in guarantees without having any single asset to back it up.Secondly, Cassano was selling so-called "naked" CDS deals. In a "naked" CDS, neither party actually holds the underlying loan. In other words, Bank B not only sells CDS protection to Bank A for its mortgage on the Pope — it turns around and sells protection to Bank C for the very same mortgage. This could go on ad nauseam: You could have Banks D through Z also betting on Bank A's mortgage. Unlike traditional insurance, Cassano was offering investors an opportunity to bet that someone else's house would burn down, or take out a term life policy on the guy with AIDS down the street. It was no different from gambling, the Wall Street version of a bunch of frat brothers betting on Jay Feely to make a field goal. Cassano was taking book for every bank that bet short on the housing market, but he didn't have the cash to pay off if the kick went wide.In a span of only seven years, Cassano sold some $500 billion worth of CDS protection, with at least $64 billion of that tied to the subprime mortgage market. AIG didn't have even a fraction of that amount of cash on hand to cover its bets, but neither did it expect it would ever need any reserves. So long as defaults on the underlying securities remained a highly unlikely proposition, AIG was essentially collecting huge and steadily climbing premiums by selling insurance for the disaster it thought would never come.Initially, at least, the revenues were enormous: AIGFP's returns went from $737 million in 1999 to $3.2 billion in 2005. Over the past seven years, the subsidiary's 400 employees were paid a total of $3.5 billion; Cassano himself pocketed at least $280 million in compensation. Everyone made their money — and then it all went to shit.II. THE REGULATORSCassano's outrageous gamble wouldn't have been possible had he not had the good fortune to take over AIGFP just as Sen. Phil Gramm — a grinning, laissez-faire ideologue from Texas — had finished engineering the most dramatic deregulation of the financial industry since Emperor Hien Tsung invented paper money in 806 A.D. For years, Washington had kept a watchful eye on the nation's banks. Ever since the Great Depression, commercial banks — those that kept money on deposit for individuals and businesses — had not been allowed to double as investment banks, which raise money by issuing and selling securities. The Glass-Steagall Act, passed during the Depression, also prevented banks of any kind from getting into the insurance business.But in the late Nineties, a few years before Cassano took over AIGFP, all that changed. The Democrats, tired of getting slaughtered in the fundraising arena by Republicans, decided to throw off their old reliance on unions and interest groups and become more "business-friendly." Wall Street responded by flooding Washington with money, buying allies in both parties. In the 10-year period beginning in 1998, financial companies spent $1.7 billion on federal campaign contributions and another $3.4 billion on lobbyists. They quickly got what they paid for. In 1999, Gramm co-sponsored a bill that repealed key aspects of the Glass-Steagall Act, smoothing the way for the creation of financial megafirms like Citigroup. The move did away with the built-in protections afforded by smaller banks. In the old days, a local banker knew the people whose loans were on his balance sheet: He wasn't going to give a million-dollar mortgage to a homeless meth addict, since he would have to keep that loan on his books. But a giant merged bank might write that loan and then sell it off to some fool in China, and who cared?The very next year, Gramm compounded the problem by writing a sweeping new law called the Commodity Futures Modernization Act that made it impossible to regulate credit swaps as either gambling or securities. Commercial banks — which, thanks to Gramm, were now competing directly with investment banks for customers — were driven to buy credit swaps to loosen capital in search of higher yields. "By ruling that credit-default swaps were not gaming and not a security, the way was cleared for the growth of the market," said Eric Dinallo, head of the New York State Insurance Department.The blanket exemption meant that Joe Cassano could now sell as many CDS contracts as he wanted, building up as huge a position as he wanted, without anyone in government saying a word. "You have to remember, investment banks aren't in the business of making huge directional bets," says the government source involved in the AIG bailout. When investment banks write CDS deals, they hedge them. But insurance companies don't have to hedge. And that's what AIG did. "They just bet massively long on the housing market," says the source. "Billions and billions."In the biggest joke of all, Cassano's wheeling and dealing was regulated by the Office of Thrift Supervision, an agency that would prove to be defiantly uninterested in keeping watch over his operations. How a behemoth like AIG came to be regulated by the little-known and relatively small OTS is yet another triumph of the deregulatory instinct. Under another law passed in 1999, certain kinds of holding companies could choose the OTS as their regulator, provided they owned one or more thrifts (better known as savings-and-loans). Because the OTS was viewed as more compliant than the Fed or the Securities and Exchange Commission, companies rushed to reclassify themselves as thrifts. In 1999, AIG purchased a thrift in Delaware and managed to get approval for OTS regulation of its entire operation.Making matters even more hilarious, AIGFP — a London-based subsidiary of an American insurance company — ought to have been regulated by one of Europe's more stringent regulators, like Britain's Financial Services Authority. But the OTS managed to convince the Europeans that it had the muscle to regulate these giant companies. By 2007, the EU had conferred legitimacy to OTS supervision of three mammoth firms — GE, AIG and Ameriprise.That same year, as the subprime crisis was exploding, the Government Accountability Office criticized the OTS, noting a "disparity between the size of the agency and the diverse firms it oversees." Among other things, the GAO report noted that the entire OTS had only one insurance specialist on staff — and this despite the fact that it was the primary regulator for the world's largest insurer!"There's this notion that the regulators couldn't do anything to stop AIG," says a government official who was present during the bailout. "That's bullshit. What you have to understand is that these regulators have ultimate power. They can send you a letter and say, 'You don't exist anymore,' and that's basically that. They don't even really need due process. The OTS could have said, 'We're going to pull your charter; we're going to pull your license; we're going to sue you.' And getting sued by your primary regulator is the kiss of death."When AIG finally blew up, the OTS regulator ostensibly in charge of overseeing the insurance giant — a guy named C.K. Lee — basically admitted that he had blown it. His mistake, Lee said, was that he believed all those credit swaps in Cassano's portfolio were "fairly benign products." Why? Because the company told him so. "The judgment the company was making was that there was no big credit risk," he explained. (Lee now works as Midwest region director of the OTS; the agency declined to make him available for an interview.)In early March, after the latest bailout of AIG, Treasury Secretary Timothy Geithner took what seemed to be a thinly veiled shot at the OTS, calling AIG a "huge, complex global insurance company attached to a very complicated investment bank/hedge fund that was allowed to build up without any adult supervision." But even without that "adult supervision," AIG might have been OK had it not been for a complete lack of internal controls. For six months before its meltdown, according to insiders, the company had been searching for a full-time chief financial officer and a chief risk-assessment officer, but never got around to hiring either. That meant that the 18th-largest company in the world had no one checking to make sure its balance sheet was safe and no one keeping track of how much cash and assets the firm had on hand. The situation was so bad that when outside consultants were called in a few weeks before the bailout, senior executives were unable to answer even the most basic questions about their company — like, for instance, how much exposure the firm had to the residential-mortgage market.III. THE CRASHIronically, when reality finally caught up to Cassano, it wasn't because the housing market crapped but because of AIG itself. Before 2005, the company's debt was rated triple-A, meaning he didn't need to post much cash to sell CDS protection: The solid creditworthiness of AIG's name was guarantee enough. But the company's crummy accounting practices eventually caused its credit rating to be downgraded, triggering clauses in the CDS contracts that forced Cassano to post substantially more collateral to back his deals.By the fall of 2007, it was evident that AIGFP's portfolio had turned poisonous, but like every good Wall Street huckster, Cassano schemed to keep his insane, Earth-swallowing gamble hidden from public view. That August, balls bulging, he announced to investors on a conference call that "it is hard for us, without being flippant, to even see a scenario within any kind of realm of reason that would see us losing $1 in any of those transactions." As he spoke, his CDS portfolio was racking up $352 million in losses. When the growing credit crunch prompted senior AIG executives to re-examine its liabilities, a company accountant named Joseph St. Denis became "gravely concerned" about the CDS deals and their potential for mass destruction. Cassano responded by personally forcing the poor sap out of the firm, telling him he was "deliberately excluded" from the financial review for fear that he might "pollute the process."The following February, when AIG posted $11.5 billion in annual losses, it announced the resignation of Cassano as head of AIGFP, saying an auditor had found a "material weakness" in the CDS portfolio. But amazingly, the company not only allowed Cassano to keep $34 million in bonuses, it kept him on as a consultant for $1 million a month. In fact, Cassano remained on the payroll and kept collecting his monthly million through the end of September 2008, even after taxpayers had been forced to hand AIG $85 billion to patch up his fuck-ups. When asked in October why the company still retained Cassano at his $1 million-a-month rate despite his role in the probable downfall of Western civilization, CEO Martin Sullivan told Congress with a straight face that AIG wanted to "retain the 20-year knowledge that Mr. Cassano had." (Cassano, who is apparently hiding out in his lavish town house near Harrods in London, could not be reached for comment.)What sank AIG in the end was another credit downgrade. Cassano had written so many CDS deals that when the company was facing another downgrade to its credit rating last September, from AA to A, it needed to post billions in collateral — not only more cash than it had on its balance sheet but more cash than it could raise even if it sold off every single one of its liquid assets. Even so, management dithered for days, not believing the company was in serious trouble. AIG was a dried-up prune, sapped of any real value, and its top executives didn't even know it.On the weekend of September 13th, AIG's senior leaders were summoned to the offices of the New York Federal Reserve. Regulators from Dinallo's insurance office were there, as was Geithner, then chief of the New York Fed. Treasury Secretary Hank Paulson, who spent most of the weekend preoccupied with the collapse of Lehman Brothers, came in and out. Also present, for reasons that would emerge later, was Lloyd Blankfein, CEO of Goldman Sachs. The only relevant government office that wasn't represented was the regulator that should have been there all along: the OTS."We sat down with Paulson, Geithner and Dinallo," says a person present at the negotiations. "I didn't see the OTS even once."On September 14th, according to another person present, Treasury officials presented Blankfein and other bankers in attendance with an absurd proposal: "They basically asked them to spend a day and check to see if they could raise the money privately." The laughably short time span to complete the mammoth task made the answer a foregone conclusion. At the end of the day, the bankers came back and told the government officials, gee, we checked, but we can't raise that much. And the bailout was on.A short time later, it came out that AIG was planning to pay some $90 million in deferred compensation to former executives, and to accelerate the payout of $277 million in bonuses to others — a move the company insisted was necessary to "retain key employees." When Congress balked, AIG canceled the $90 million in payments.Then, in January 2009, the company did it again. After all those years letting Cassano run wild, and after already getting caught paying out insane bonuses while on the public till, AIG decided to pay out another $450 million in bonuses. And to whom? To the 400 or so employees in Cassano's old unit, AIGFP, which is due to go out of business shortly! Yes, that's right, an average of $1.1 million in taxpayer-backed money apiece, to the very people who spent the past decade or so punching a hole in the fabric of the universe!"We, uh, needed to keep these highly expert people in their seats," AIG spokeswoman Christina Pretto says to me in early February."But didn't these 'highly expert people' basically destroy your company?" I ask.Pretto protests, says this isn't fair. The employees at AIGFP have already taken pay cuts, she says. Not retaining them would dilute the value of the company even further, make it harder to wrap up the unit's operations in an orderly fashion.The bonuses are a nice comic touch highlighting one of the more outrageous tangents of the bailout age, namely the fact that, even with the planet in flames, some members of the Wall Street class can't even get used to the tragedy of having to fly coach. "These people need their trips to Baja, their spa treatments, their hand jobs," says an official involved in the AIG bailout, a serious look on his face, apparently not even half-kidding. "They don't function well without them."IV. THE POWER GRABSo that's the first step in wall street's power grab: making up things like credit-default swaps and collateralized-debt obligations, financial products so complex and inscrutable that ordinary American dumb people — to say nothing of federal regulators and even the CEOs of major corporations like AIG — are too intimidated to even try to understand them. That, combined with wise political investments, enabled the nation's top bankers to effectively scrap any meaningful oversight of the financial industry. In 1997 and 1998, the years leading up to the passage of Phil Gramm's fateful act that gutted Glass-Steagall, the banking, brokerage and insurance industries spent $350 million on political contributions and lobbying. Gramm alone — then the chairman of the Senate Banking Committee — collected $2.6 million in only five years. The law passed 90-8 in the Senate, with the support of 38 Democrats, including some names that might surprise you: Joe Biden, John Kerry, Tom Daschle, Dick Durbin, even John Edwards.The act helped create the too-big-to-fail financial behemoths like Citigroup, AIG and Bank of America — and in turn helped those companies slowly crush their smaller competitors, leaving the major Wall Street firms with even more money and power to lobby for further deregulatory measures. "We're moving to an oligopolistic situation," Kenneth Guenther, a top executive with the Independent Community Bankers of America, lamented after the Gramm measure was passed.The situation worsened in 2004, in an extraordinary move toward deregulation that never even got to a vote. At the time, the European Union was threatening to more strictly regulate the foreign operations of America's big investment banks if the U.S. didn't strengthen its own oversight. So the top five investment banks got together on April 28th of that year and — with the helpful assistance of then-Goldman Sachs chief and future Treasury Secretary Hank Paulson — made a pitch to George Bush's SEC chief at the time, William Donaldson, himself a former investment banker. The banks generously volunteered to submit to new rules restricting them from engaging in excessively risky activity. In exchange, they asked to be released from any lending restrictions. The discussion about the new rules lasted just 55 minutes, and there was not a single representative of a major media outlet there to record the fateful decision.Donaldson OK'd the proposal, and the new rules were enough to get the EU to drop its threat to regulate the five firms. The only catch was, neither Donaldson nor his successor, Christopher Cox, actually did any regulating of the banks. They named a commission of seven people to oversee the five companies, whose combined assets came to total more than $4 trillion. But in the last year and a half of Cox's tenure, the group had no director and did not complete a single inspection. Great deal for the banks, which originally complained about being regulated by both Europe and the SEC, and ended up being regulated by no one.Once the capital requirements were gone, those top five banks went hog-wild, jumping ass-first into the then-raging housing bubble. One of those was Bear Stearns, which used its freedom to drown itself in bad mortgage loans. In the short period between the 2004 change and Bear's collapse, the firm's debt-to-equity ratio soared from 12-1 to an insane 33-1. Another culprit was Goldman Sachs, which also had the good fortune, around then, to see its CEO, a bald-headed Frankensteinian goon named Hank Paulson (who received an estimated $200 million tax deferral by joining the government), ascend to Treasury secretary.Freed from all capital restraints, sitting pretty with its man running the Treasury, Goldman jumped into the housing craze just like everyone else on Wall Street. Although it famously scored an $11 billion coup in 2007 when one of its trading units smartly shorted the housing market, the move didn't tell the whole story. In truth, Goldman still had a huge exposure come that fateful summer of 2008 — to none other than Joe Cassano.Goldman Sachs, it turns out, was Cassano's biggest customer, with $20 billion of exposure in Cassano's CDS book. Which might explain why Goldman chief Lloyd Blankfein was in the room with ex-Goldmanite Hank Paulson that weekend of September 13th, when the federal government was supposedly bailing out AIG.When asked why Blankfein was there, one of the government officials who was in the meeting shrugs. "One might say that it's because Goldman had so much exposure to AIGFP's portfolio," he says. "You'll never prove that, but one might suppose."Market analyst Eric Salzman is more blunt. "If AIG went down," he says, "there was a good chance Goldman would not be able to collect." The AIG bailout, in effect, was Goldman bailing out Goldman.Eventually, Paulson went a step further, elevating another ex-Goldmanite named Edward Liddy to run AIG — a company whose bailout money would be coming, in part, from the newly created TARP program, administered by another Goldman banker named Neel Kashkari.V. REPO MENThere are plenty of people who have noticed, in recent years, that when they lost their homes to foreclosure or were forced into bankruptcy because of crippling credit-card debt, no one in the government was there to rescue them. But when Goldman Sachs — a company whose average employee still made more than $350,000 last year, even in the midst of a depression — was suddenly faced with the possibility of losing money on the unregulated insurance deals it bought for its insane housing bets, the government was there in an instant to patch the hole. That's the essence of the bailout: rich bankers bailing out rich bankers, using the taxpayers' credit card.The people who have spent their lives cloistered in this Wall Street community aren't much for sharing information with the great unwashed. Because all of this shit is complicated, because most of us mortals don't know what the hell LIBOR is or how a REIT works or how to use the word "zero coupon bond" in a sentence without sounding stupid — well, then, the people who do speak this idiotic language cannot under any circumstances be bothered to explain it to us and instead spend a lot of time rolling their eyes and asking us to trust them.That roll of the eyes is a key part of the psychology of Paulsonism. The state is now being asked not just to call off its regulators or give tax breaks or funnel a few contracts to connected companies; it is intervening directly in the economy, for the sole purpose of preserving the influence of the megafirms. In essence, Paulson used the bailout to transform the government into a giant bureaucracy of entitled assholedom, one that would socialize "toxic" risks but keep both the profits and the management of the bailed-out firms in private hands. Moreover, this whole process would be done in secret, away from the prying eyes of NASCAR dads, broke-ass liberals who read translations of French novels, subprime mortgage holders and other such financial losers.Some aspects of the bailout were secretive to the point of absurdity. In fact, if you look closely at just a few lines in the Federal Reserve's weekly public disclosures, you can literally see the moment where a big chunk of your money disappeared for good. The H4 report (called "Factors Affecting Reserve Balances") summarizes the activities of the Fed each week. You can find it online, and it's pretty much the only thing the Fed ever tells the world about what it does. For the week ending February 18th, the number under the heading "Repurchase Agreements" on the table is zero. It's a significant number.Why? In the pre-crisis days, the Fed used to manage the money supply by periodically buying and selling securities on the open market through so-called Repurchase Agreements, or Repos. The Fed would typically dump $25 billion or so in cash onto the market every week, buying up Treasury bills, U.S. securities and even mortgage-backed securities from institutions like Goldman Sachs and J.P. Morgan, who would then "repurchase" them in a short period of time, usually one to seven days. This was the Fed's primary mechanism for controlling interest rates: Buying up securities gives banks more money to lend, which makes interest rates go down. Selling the securities back to the banks reduces the money available for lending, which makes interest rates go if you look at the weekly H4 reports going back to the summer of 2007, you start to notice something alarming. At the start of the credit crunch, around August of that year, you see the Fed buying a few more Repos than usual — $33 billion or so. By November, as private-bank reserves were dwindling to alarmingly low levels, the Fed started injecting even more cash than usual into the economy: $48 billion. By late December, the number was up to $58 billion; by the following March, around the time of the Bear Stearns rescue, the Repo number had jumped to $77 billion. In the week of May 1st, 2008, the number was $115 billion — "out of control now," according to one congressional aide. For the rest of 2008, the numbers remained similarly in the stratosphere, the Fed pumping as much as $125 billion of these short-term loans into the economy — until suddenly, at the start of this year, the number drops to nothing. Zero.The reason the number has dropped to nothing is that the Fed had simply stopped using relatively transparent devices like repurchase agreements to pump its money into the hands of private companies. By early 2009, a whole series of new government operations had been invented to inject cash into the economy, most all of them completely secretive and with names you've never heard of. There is the Term Auction Facility, the Term Securities Lending Facility, the Primary Dealer Credit Facility, the Commercial Paper Funding Facility and a monster called the Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility (boasting the chat-room horror-show acronym ABCPMMMFLF). For good measure, there's also something called a Money Market Investor Funding Facility, plus three facilities called Maiden Lane I, II and III to aid bailout recipients like Bear Stearns and AIG.While the rest of America, and most of Congress, have been bugging out about the $700 billion bailout program called TARP, all of these newly created organisms in the Federal Reserve zoo have quietly been pumping not billions but trillions of dollars into the hands of private companies (at least $3 trillion so far in loans, with as much as $5.7 trillion more in guarantees of private investments). Although this technically isn't taxpayer money, it still affects taxpayers directly, because the activities of the Fed impact the economy as a whole. And this new, secretive activity by the Fed completely eclipses the TARP program in terms of its influence on the economy.No one knows who's getting that money or exactly how much of it is disappearing through these new holes in the hull of America's credit rating. Moreover, no one can really be sure if these new institutions are even temporary at all — or whether they are being set up as permanent, state-aided crutches to Wall Street, designed to systematically suck bad investments off the ledgers of irresponsible lenders."They're supposed to be temporary," says Paul-Martin Foss, an aide to Rep. Ron Paul. "But we keep getting notices every six months or so that they're being renewed. They just sort of quietly announce it."None other than disgraced senator Ted Stevens was the poor sap who made the unpleasant discovery that if Congress didn't like the Fed handing trillions of dollars to banks without any oversight, Congress could apparently go fuck itself — or so said the law. When Stevens asked the GAO about what authority Congress has to monitor the Fed, he got back a letter citing an obscure statute that nobody had ever heard of before: the Accounting and Auditing Act of 1950. The relevant section, 31 USC 714(b), dictated that congressional audits of the Federal Reserve may not include "deliberations, decisions and actions on monetary policy matters." The exemption, as Foss notes, "basically includes everything." According to the law, in other words, the Fed simply cannot be audited by Congress. Or by anyone else, for that matter.VI. WINNERS AND LOSERSStevens isn't the only person in Congress to be given the finger by the Fed. In January, when Rep. Alan Grayson of Florida asked Federal Reserve vice chairman Donald Kohn where all the money went — only $1.2 trillion had vanished by then — Kohn gave Grayson a classic eye roll, saying he would be "very hesitant" to name names because it might discourage banks from taking the money."Has that ever happened?" Grayson asked. "Have people ever said, 'We will not take your $100 billion because people will find out about it?'""Well, we said we would not publish the names of the borrowers, so we have no test of that," Kohn answered, visibly annoyed with Grayson's meddling.Grayson pressed on, demanding to know on what terms the Fed was lending the money. Presumably it was buying assets and making loans, but no one knew how it was pricing those assets — in other words, no one knew what kind of deal it was striking on behalf of taxpayers. So when Grayson asked if the purchased assets were "marked to market" — a methodology that assigns a concrete value to assets, based on the market rate on the day they are traded — Kohn answered, mysteriously, "The ones that have market values are marked to market." The implication was that the Fed was purchasing derivatives like credit swaps or other instruments that were basically impossible to value objectively — paying real money for God knows what."Well, how much of them don't have market values?" asked Grayson. "How much of them are worthless?""None are worthless," Kohn snapped."Then why don't you mark them to market?" Grayson demanded."Well," Kohn sighed, "we are marking the ones to market that have market values."In essence, the Fed was telling Congress to lay off and let the experts handle things. "It's like buying a car in a used-car lot without opening the hood, and saying, 'I think it's fine,'" says Dan Fuss, an analyst with the investment firm Loomis Sayles. "The salesman says, 'Don't worry about it. Trust me.' It'll probably get us out of the lot, but how much farther? None of us knows."When one considers the comparatively extensive system of congressional checks and balances that goes into the spending of every dollar in the budget via the normal appropriations process, what's happening in the Fed amounts to something truly revolutionary — a kind of shadow government with a budget many times the size of the normal federal outlay, administered dictatorially by one man, Fed chairman Ben Bernanke. "We spend hours and hours and hours arguing over $10 million amendments on the floor of the Senate, but there has been no discussion about who has been receiving this $3 trillion," says Sen. Bernie Sanders. "It is beyond comprehension."Count Sanders among those who don't buy the argument that Wall Street firms shouldn't have to face being outed as recipients of public funds, that making this information public might cause investors to panic and dump their holdings in these firms. "I guess if we made that public, they'd go on strike or something," he muses.And the Fed isn't the only arm of the bailout that has closed ranks. The Treasury, too, has maintained incredible secrecy surrounding its implementation even of the TARP program, which was mandated by Congress. To this date, no one knows exactly what criteria the Treasury Department used to determine which banks received bailout funds and which didn't — particularly the first $350 billion given out under Bush appointee Hank Paulson.The situation with the first TARP payments grew so absurd that when the Congressional Oversight Panel, charged with monitoring the bailout money, sent a query to Paulson asking how he decided whom to give money to, Treasury responded — and this isn't a joke — by directing the panel to a copy of the TARP application form on its website. Elizabeth Warren, the chair of the Congressional Oversight Panel, was struck nearly speechless by the response."Do you believe that?" she says incredulously. "That's not what we had in mind."Another member of Congress, who asked not to be named, offers his own theory about the TARP process. "I think basically if you knew Hank Paulson, you got the money," he says.This cozy arrangement created yet another opportunity for big banks to devour market share at the expense of smaller regional lenders. While all the bigwigs at Citi and Goldman and Bank of America who had Paulson on speed-dial got bailed out right away — remember that TARP was originally passed because money had to be lent right now, that day, that minute, to stave off emergency — many small banks are still waiting for help. Five months into the TARP program, some not only haven't received any funds, they haven't even gotten a call back about their applications."There's definitely a feeling among community bankers that no one up there cares much if they make it or not," says Tanya Wheeless, president of the Arizona Bankers Association.Which, of course, is exactly the opposite of what should be happening, since small, regional banks are far less guilty of the kinds of predatory lending that sank the economy. "They're not giving out subprime loans or easy credit," says Wheeless. "At the community level, it's much more bread-and-butter banking."Nonetheless, the lion's share of the bailout money has gone to the larger, so-called "systemically important" banks. "It's like Treasury is picking winners and losers," says one state banking official who asked not to be identified.This itself is a hugely important political development. In essence, the bailout accelerated the decline of regional community lenders by boosting the political power of their giant national competitors.Which, when you think about it, is insane: What had brought us to the brink of collapse in the first place was this relentless instinct for building ever-larger megacompanies, passing deregulatory measures to gradually feed all the little fish in the sea to an ever-shrinking pool of Bigger Fish. To fix this problem, the government should have slowly liquidated these monster, too-big-to-fail firms and broken them down to smaller, more manageable companies. Instead, federal regulators closed ranks and used an almost completely secret bailout process to double down on the same faulty, merger-happy thinking that got us here in the first place, creating a constellation of megafirms under government control that are even bigger, more unwieldy and more crammed to the gills with systemic risk.In essence, Paulson and his cronies turned the federal government into one gigantic, half-opaque holding company, one whose balance sheet includes the world's most appallingly large and risky hedge fund, a controlling stake in a dying insurance giant, huge investments in a group of teetering megabanks, and shares here and there in various auto-finance companies, student loans, and other failing businesses. Like AIG, this new federal holding company is a firm that has no mechanism for auditing itself and is run by leaders who have very little grasp of the daily operations of its disparate subsidiary operations.In other words, it's AIG's rip-roaringly shitty business model writ almost inconceivably massive — to echo Geithner, a huge, complex global company attached to a very complicated investment bank/hedge fund that's been allowed to build up without adult supervision. How much of what kinds of crap is actually on our balance sheet, and what did we pay for it? When exactly will the rent come due, when will the money run out? Does anyone know what the hell is going on? And on the linear spectrum of capitalism to socialism, where exactly are we now? Is there a dictionary word that even describes what we are now? It would be funny, if it weren't such a nightmare.VII. YOU DON'T GET ITThe real question from here is whether the Obama administration is going to move to bring the financial system back to a place where sanity is restored and the general public can have a say in things or whether the new financial bureaucracy will remain obscure, secretive and hopelessly complex. It might not bode well that Geithner, Obama's Treasury secretary, is one of the architects of the Paulson bailouts; as chief of the New York Fed, he helped orchestrate the Goldman-friendly AIG bailout and the secretive Maiden Lane facilities used to funnel funds to the dying company. Neither did it look good when Geithner — himself a protégé of notorious Goldman alum John Thain, the Merrill Lynch chief who paid out billions in bonuses after the state spent billions bailing out his firm — picked a former Goldman lobbyist named Mark Patterson to be his top aide.In fact, most of Geithner's early moves reek strongly of Paulsonism. He has continually talked about partnering with private investors to create a so-called "bad bank" that would systemically relieve private lenders of bad assets — the kind of massive, opaque, quasi-private bureaucratic nightmare that Paulson specialized in. Geithner even refloated a Paulson proposal to use TALF, one of the Fed's new facilities, to essentially lend cheap money to hedge funds to invest in troubled banks while practically guaranteeing them enormous profits.God knows exactly what this does for the taxpayer, but hedge-fund managers sure love the idea. "This is exactly what the financial system needs," said Andrew Feldstein, CEO of Blue Mountain Capital and one of the Morgan Mafia. Strangely, there aren't many people who don't run hedge funds who have expressed anything like that kind of enthusiasm for Geithner's ideas.As complex as all the finances are, the politics aren't hard to follow. By creating an urgent crisis that can only be solved by those fluent in a language too complex for ordinary people to understand, the Wall Street crowd has turned the vast majority of Americans into non-participants in their own political future. There is a reason it used to be a crime in the Confederate states to teach a slave to read: Literacy is power. In the age of the CDS and CDO, most of us are financial illiterates. By making an already too-complex economy even more complex, Wall Street has used the crisis to effect a historic, revolutionary change in our political system — transforming a democracy into a two-tiered state, one with plugged-in financial bureaucrats above and clueless customers below.The most galling thing about this financial crisis is that so many Wall Street types think they actually deserve not only their huge bonuses and lavish lifestyles but the awesome political power their own mistakes have left them in possession of. When challenged, they talk about how hard they work, the 90-hour weeks, the stress, the failed marriages, the hemorrhoids and gallstones they all get before they hit 40."But wait a minute," you say to them. "No one ever asked you to stay up all night eight days a week trying to get filthy rich shorting what's left of the American auto industry or selling $600 billion in toxic, irredeemable mortgages to ex-strippers on work release and Taco Bell clerks. Actually, come to think of it, why are we even giving taxpayer money to you people? Why are we not throwing your ass in jail instead?"But before you even finish saying that, they're rolling their eyes, because You Don't Get It. These people were never about anything except turning money into money, in order to get more money; valueswise they're on par with crack addicts, or obsessive sexual deviants who burgle homes to steal panties. Yet these are the people in whose hands our entire political future now rests.Good luck with that, America. And enjoy tax season.Written by Matt Taibbi[From Rolling Stone Issue 1075 — April 2, 2009]THE DIRTY DOZEN:

The EnablerALAN GREENSPANWAS: Chairman of the Federal Reserve (1987-2006)WHAT HE DID: Pushed for sweeping power to regulate Wall Street — and then failed to use it. Fueled "irrational" bubble with low interest rates.WORST MOVE: Called derivatives like CDOs "extraordinarily useful"; regulating them would be a "mistake."NOW ADMITS: He was "partially" wrong to not impose tougher oversight.

The PioneerSANDY WEILLWAS: CEO of Citigroup (1998-2003)WHAT HE DID: Created the first too-big-to-fail company, Citigroup. Led the boom in subprime mortgages.RECENTLY: Celebrated $45 billion taxpayer bailout of Citi by taking Mexican vacation on Citigroup jet, complete with $13,000 carpets, pillows made from Hermés scarves, and Baccarat crystal glassware.

The IdeologuePHIL GRAMMWAS: Senate Banking Committee chair (1995-2000)KNOWN AS: "High priest of deregulation"WHAT HE DID: Pushed repeal of Glass-Steagall Act, leading to rise of megabanks.WORST MOVE: Wrote law that exempted disastrous CDS deals from all regulation.NOW ADMITS: Nothing. Says there is "no evidence" his laws caused crash, which he dismissed as a "mental recession."

The ArsonistJOE CASSANOWAS: Chief of AIG Financial Products (2001-2008)WHAT HE DID: Blew a $500 billion hole in fabric of the universe by placing massive bet on the bubble economy with money he didn't have.WORST MOVE: In August 2007 told investors his CDS deals could not lose even "$1"; lost $352 million that quarter.NOW: Enjoying his $280 million in earnings.

The BagmanROBERT RUBINWAS: Treasury secretary (1995-1999)WHAT HE DID: Opposed regulation of credit swaps; fought to overturn Glass-Steagall Act, leading to creation of Citigroup, where he later made $115 million.WORST MOVE: Asked Treasury to pressure ratings agencies to delay downgrading Enron, a Citigroup debtor.NOW: Still on Citi's board; mentor of Treasury Secretary Geithner.

The Card SharkJIMMY CAYNEWAS: CEO of Bear Stearns (1993-2008)WHAT HE DID: Took card-playing vacations and allegedly smoked weed while Bear went bankrupt.WORST MOVE: Cashed out his $61 million share after resigning shortly before Bear's sale to J.P. Morgan Chase.NOW: SAYS Of Treasury Secretary Geithner: "The guy thinks he's got a big dick. He's got nothing, except maybe a boyfriend."

Mr. Buck PasserCHRISTOPHER COXWAS: Chairman of the SEC (2005-2009)WHAT HE DID: Gave the market a free ride, waiting until far too late to reverse the disastrous "voluntary regulation" program of 2004 and police the ratings agencies.LAME EXCUSE: Insisted it wasn't his fault, claiming deregulatory policies tied his hands.NOW SAYS: His "greatest contribution" during the crisis was staying "calm."

The PredatorANGELO MOZILOWAS: Head of Countrywide Financial (1969-2008)WHAT HE DID: Biggest provider of subprime mortgages; specialized in predatory loans that put broke people in mansions.WORST MOVE: "Friends of Angelo" program gave favorable mortgages to Sens. Chris Dodd and Kent Conrad.NOW SAYS: Called plea from homeowner facing foreclosure "disgusting."

The DecoratorJOHN THAINWAS: Chief of Merrill Lynch (2007-2009)WHAT HE DID: Concealed $15 billion hole in Merrill balance sheet until government subsidized the sale of his company. Went skiing in Vail just before revealing losses.WORST MOVE: Proposed $10 million bonus for himself as company imploded; OK'd $1.2 million office refurbishing.IS NOW: Facing class-action suit for concealing losses.

The MaestroHENRY PAULSONWAS: CEO of Goldman Sachs (1999-2006); Treasury secretary (2006-2009)WHAT HE DID: Pushed for end to debt restrictions for banks like Goldman, then arranged big bailout for Goldman.WORST MOVE: TARP proposal just three pages long; made his decisions "non-reviewable."NOW SAYS: "I don't think we've made mistakes on the major decisions."

The Big LoserDICK FULDWAS: CEO of Lehman Brothers (1993-2008)WHAT HE DID: Piloted Lehman to largest bankruptcy in U.S. history; earned $22 million the year firm went bust.WORST MOVE: Tried to avoid lawsuits by selling his $13 million Florida home to his wife for $100.NOW SAYS: Feels "horrible" about Lehman, but insists his management was "prudent and appropriate."

Mr. Too BigKEN LEWISIS: CEO of Bank of America (2001-present)WHAT HE DID: Created ultimate too-big-to-fail company, buying up Fleet, MBNA, Countrywide and Merrill Lynch.WORST MOVE: Failed to catch a $15 billion loss at Merrill before buying the firm; needed $20 billion bailout to close deal.NOW SAYS: It's a false "claim" to say "the banks that caused this mess must be held accountable."

Radiohead's Most Over/Under-Rated Songs

Posted by SubSickAlien on February 25, 2009 at 2:45am

Corey duBrowa once wrote a 1,700-word review of Hail To The Thief for the Seattle Weekly, ushering in a wave of fan mail that read like sour times at the Target returns counter. Which evidently hasn’t disqualified him from issuing the following list of the five most overrated and underrated songs in Radiohead’s lengthy, critically drooled-upon catalog.:: The Five Most Overrated Radiohead Songs1. “Creep” (1993)The one Radiohead song everybody knows and a staple of MTV’s early-’90s rotation (so ubiquitous that it prompted Beavis and Butt-head to offer up their own special brand of couchside analysis: “He’d better start rocking soon, or I’ll give him something to cry about!”). Pablo Honey’s wanna-be masterpiece of self-loathing is totally of and for the era from which it came: the same school of angst music that Clueless heroine Cher Horowitz once dismissively labeled “complaint rock.” That said, His Royal Badness, Prince, delivered a killer cover of the song to cap off last year’s Coachella festival, which makes me believe that Radiohead’s version suffers more from affected, sneering put-ons and weak performance than from substandard songwriting.2. “Electioneering” (1997)I’ll be the first to go along with the prevailing critical meme that OK Computer is one of the finest albums in modern rock and easily one of the top 25 ever released. (Rolling Stone’s “500 Greatest Albums of All Time” list has it sitting at 162, but what the hell do those fuddy-duds know about music, anyway? Pitchfork rated it the top release of the ‘90s, which is decidedly more like it.) But for as much as I’ve professed undying fealty to this record, I’ve never understood the discordant, descending-chord pigpile that is “Electioneering,” its place in the album’s running order or its inclusion on the record at all considering some of the terrific outtakes that emerged from those sessions. Hitting “skip” to “Climbing Up The Walls” always makes me inexplicably happy, which is weird, considering how creeped-out that song is.3. The entirety of Hail To The Thief, except “I Will,” which is borderline genius-lessons stuff (2003)My favorite bit from the Seattle Weekly review-cum-novella mentioned above is this summary of the album’s various flaws, which apply to pretty much every other song in its 14-track, pretentious alternatively titled running order: “This is a band caught dawdling in the fierce tailwinds of a continental drift. How else to explain a song as lovely as ‘Sail To The Moon,’ a piano ballad that would easily qualify as one of the most stunning things the group has ever recorded, if it hadn’t already done the same damn thing two years ago with Amnesiac’s ‘Pyramid Song’? Even if you tried to build a case that [Thom Yorke’s] stringing along a narrative intended to thread multiple works together—and frankly, you can’t—it just sounds lyrically lazy (if nevertheless beautiful to behold, at first listen).” So it is overstating things, huh? OK. Then let’s instead just pick on Yorke’s solotronic joint The Eraser.4. “Life In A Glasshouse” (2001)Just going on a hunch here, but I’m guessing that Amnesiac producer Nigel Godrich indulged in a bit of Method Acting stage-direction meant to inspire Radiohead during a particularly “down” moment in the studio: “Fellows, listen. On this take, I want you to play ‘Glasshouse’ as if Woody Allen got drunk, fell down a flight of stairs, plucked the clarinet out of his arse, then staggered over to the bandstand and attempted to play a new Radiohead song.” Uh, OK. Maybe the take after that can sound like “Mia Farrow chasing Woody down the street with a chainsaw, seeking revenge.” Or are they saving that one for the “guitar rock” album?5. “High And Dry” (1995)This track from The Bends had a lot to recommend it at first listen: classic chord structures, Yorke’s plaintive high-register vocals, a love-entangled lyric wrapped around the axle of a counting-it-down-to-zero love affair, a spy-themed video with a surprise car-bomb ending. Enigmatic, catchy and, ultimately (after a couple hundred times’ worth of hearing it), kinda slight. Radiohead would go on to do far better work (even on the same album; “Fake Plastic Trees” certainly fits this same mold, yet it clears a much higher quality bar), but for early fans, this song’s lovelorn mystique came to characterize Radiohead’s thinking-man’s-rock reputation. But hearing it today, you realize there isn’t as much to it as you originally thought. And they nicked the song’s title from Def Leppard (which had written about being both high and dry on a Saturday night in Sheffield more than a decade previously) or the Stones (who had done exactly the same thing, via a London filter, back in the mid-’60s).:: The Five Most Underrated Radiohead Songs1. “Punchdrunk Lovesick Singalong” (1995)You’d be hard-pressed to think of a band that has as much high-quality outtake/b-side material at its disposal as Radiohead. (Case in point: 2001’s Amnesiac is an entire official release of songs recorded during the Kid A sessions that were eventually deemed “good” enough for mass consumption.) This song comes from a 1994 EP (My Iron Lung) that may as well be a “lost” Radiohead album, given that it contains eight tracks (seven of which are unavailable anywhere else) of such consistently high quality that they certainly give those included on The Bends a run for their money. “Punchdrunk Lovesick Singalong” is anything but: a morose, layered ballad feting Yorke’s existential sadness for what seems like the umpteenth time. “A beautiful girl can turn your world into dust,” he sings, “I stood in front of her face when the first bullet was shot.” It’s perhaps the single finest thing Radiohead has recorded that didn’t merit an “official” release.2. “Blow Out” (1993)From its krautrockin’ beat to its squalling guitars (check Jonny Greenwood’s ectoplasmic six-string feedback tantrum at about the three-minute mark) to its subterranean-homesick paranoid-android lyrical bent (“Everything I touch/All wrapped up in cotton wool/All wrapped up in sugar-coated pills/Turns to stone”), Pablo Honey’s “Blow Out” neatly prefigures the latter-day alienation and experimentation of OK Computer and beyond.3. The entirety of Kid A, except “The National Anthem,” which is basically a big, lame blurt (2000)For anyone who lived through the trauma and aftermath of September 11 at close range, this is the record that most closely approximates the free-falling terror, fear and isolation of that event in musical terms. “Everything In Its Right Place,” “How To Disappear Completely” and “Optimistic” (along with its ice-cold instrumental prelude, “Treefingers”) are psychologically imbalanced mini-symphonies that may spell out Yorke’s very particular form of antisocial adaptive behavior but ultimately form the backbone of the soundtrack for the new apocalypse. (P.S.: Kid A also makes perfectly appropriate background music for watching CNBC chart the downdraft of the post-modern economy. I’m just sayin’.)4. “Lozenge Of Love” (1995)Another one from the jaw-dropping My Iron Lung EP. (Normally, I would say stop what you’re doing right now and go to eBay or Amazon or wherever and just buy the damn thing, as it’s as essential a part of this band’s catalog as anything you already have on a closet shelf or hard drive. But the EP will be included on the expanded reissue of The Bends next month, so I guess you can pick it up that way.) The fingerpicked, acoustic “Lozenge Of Love” is like finding a long-lost Nick Drake track. Make that a really good long-lost Nick Drake track.5. “Meeting In The Aisle” (1997)This glistening, shining instrumental comes from the Airbag/How Am I Driving? EP (a six-track grabbag of OK Computer outtakes) and serves as one of the band’s earliest attempts at Eno-like ambient-noise sculpture, only with real melodies, beats and identifiable song structures. There are other tracks on this EP that make it well worth the price of admission—spaced-out travelogue “A Reminder” and epic “Polyethylene (Parts 1 & 2)” both come to mind—but “Meeting In The Aisle” is the one that sold me then, and keeps me hanging on now.Written by Corey duBrowaFebruary 24, 2009Magnetmagazine.comSource Link: click here

Mexico's War On Drugs

Posted by SubSickAlien on January 6, 2009 at 3:00am

This recent Rolling Stone article opened my eyes to the current drug problem facing Mexico today. Many in the media would lead us to believe that our troops are in Iraq because they need to be fighting the "terrrorists". If you ask me the war we need to be worrying about is the one being fought just south of our border. Read on and judge for yourself...The dead policeman is found propped against a tree off a dirt road on the outskirts of the city. He is dressed like a cartoon version of a Mexican cowboy, wearing a sombrero and wrapped in a heavy woolen blanket. The murder and symbolic mutilation of policía has become almost routine in Culiacán, capital of the Mexican state of Sinaloa: Pablo Aispuro Ramírez is one of 90 cops to be killed here this year. There is a note pinned to the body, a warning to anyone who dares to oppose the powerful drug lord who ordered the execution."I'm a cop-cowboy!" the note reads. "Ahoo-ya! There are going to be more soon!"In the United States, the War on Drugs is a political slogan for a policy disaster that has cost taxpayers at least $500 billion over the past 35 years. In Mexico, it is a brutal and bewildering conflict — a multisided civil war that has taken 3,000 lives this year alone and brought the federal government to a state of near-collapse. Narcotics are now one of the largest sectors of the Mexican economy, twice the size of tourism. Most of the country's drug trade involves transporting contraband from other sources — especially cocaine from Colombia — to satisfy the nearly insatiable demand in the U.S. But Mexico's narcotraficante cartels have also gotten into the production side of the industry, manufacturing 80 percent of the crystal meth sold in America, 14 percent of the heroin and most of the marijuana. What Mexico offers the global narcotics industry is proximity to the largest market on earth.Until the Bush administration's crackdown on coca growers in Colombia began driving the drug trade further north, traffic through Mexico was relatively stable, overseen chiefly by the huge cartels based in Sinaloa. Known as "the federation," the traditional families that led Mexico's thriving narcotics business each controlled disparate areas of the U.S. border, much as the Mafia once divided up the boroughs of New York City. Perhaps the most ingenious and hardworking of these Mexican mobsters is Joaquín Guzmán Loera, better known as "El Chapo," or "Shorty." Chapo, who controls the border towns of Nogales and Mexicali, built massive underground tunnels to smuggle cocaine into Arizona. He concealed tons of cocaine in cans of chili peppers destined for California. He assembled a fleet of boats and trucks and airplanes with hidden compartments to enable them to slip past customs. To the U.S. government, he is one of the most wanted drug dealers in the world, a fugitive with a $5 million reward on his head. In Culiacán, he is more folk hero — part Pablo Escobar, part Robin Hood, part Billy the Kid."We respect him," the owner of a restaurant in the town of Altata tells me. "He grew up poor, planting corn and pot. Then he took trucks with false floors filled with pot to the United States, and speedboats from the coast to California. In Mexico we have a saying: He spread like humidity."For years, Chapo shared the drug trade with other families in the federation. The Beltrán Leyva cartel was in charge of the traffic in Monterrey, and a former federal police officer known as "El Azul" ran Guadalajara. Amado Carrillo Fuentes, the cartel leader called "the Lord of the Skies," worked the border town of Ciudad Juárez, opposite El Paso. At the peak of his power, Fuentes was said to have paid $500 million a year in protection money. It was Fuentes who pioneered the traffic in Colombian coke, and who infamously died during plastic surgery to alter his appearance. (The two doctors alleged to have botched the operation were later found entombed in cement, their arms and legs bound.)Over the past decade, however, that relatively stable structure has erupted into full-scale war — largely as the result of the unintended consequences of U.S. drug policy. When the Drug Enforcement Administration blocked cocaine shipments through the Caribbean during the 1980s, the trade simply migrated to overland routes through Mexico. Likewise, the DEA's success against the Cali and Medellín cartels in Colombia has only emboldened Mexico's narcos, driving the drug traffic ever closer to home. Newcomers on the Gulf Coast eager to break into the industry are challenging the rule of the existing cartels, sparking a bloody battle over territory and supply routes. And the Mexican government — under pressure from the United States to curb the flow of drugs — is waging an all-out campaign to destroy the cartels.Indeed, much of the current bloodshed can be traced to the special forces that Mexico trained to find and arrest drug traffickers, receiving instruction from the U.S. military on tactics, intelligence-gathering, air assault and advanced weaponry. In the late 1990s, one of the new Gulf cartels began recruiting these American-trained soldiers to work as hired guns against the Sinaloan cartels, offering vastly higher wages than the government. Known as "Los Zetas" — the Mexican police's term for a high-ranking official — these mercenaries are now the most violent force in Mexico, moving massive amounts of drugs into the U.S. while murdering journalists and police and politicians who challenge their authority. Led by Heriberto "the Executioner" Lazcano, the Zeta paramilitaries are far more sophisticated in their weaponry and combat skills than the hapless and corruption-addled policía. It is as if the Navy SEALs or an FBI SWAT team went to work for the Russian mob.Through the early part of the decade, the war steadily increased in intensity, but it was only with the inauguration of President Felipe Calderón in December 2006 that true chaos enveloped the nation. A conservative elected by a narrow margin, Calderón has made going after the drug traffickers a central part of his administration. He has deployed more than 40,000 federal soldiers across the country and imprisoned thousands of narcos, from lowly street dealers to drug lords and money launderers. But the result of Calderón's war has been catastrophe. In reply, the traffickers have directly attacked the legitimacy of the government, targeting politicians and senior law-enforcement officials. Ten days after Calderón took office, in what was seen as a message from the cartels, a cousin of his wife was killed and stuffed into the trunk of a car in Mexico City. In May, the chief of the federal police was gunned down in the capital. That same month, a village in the state of Chihuahua was overrun by 70 gunmen; the police chief and two officers were killed, the rest of the force quit in fear. In August, 12 decapitated bodies were left on the outskirts of Mérida on the Gulf Coast, the letter "Z" tattooed on their bodies, the calling card of Los Zetas. On September 15th — during a celebration of Mexican Independence Day — two fragmentation grenades exploded in the square of President Calderón's hometown of Morelia, killing eight civilians and wounding more than 100. The government's war on drugs has sparked a war on the government itself.The war has now spread to America's own border. In three days in August, 43 people were killed in drug-related murders in and around Juárez, just across the river from El Paso. Experts agree that the violence could soon pose a threat to national security in America, with the already porous border turning into a floodgate for Mexican refugees and gangs. "I worry that the country's political class won't truly act until a major figure is assassinated," says Luis Astorga, a sociologist at the Institute of Social Research in Mexico City. "But right now it's not very clear what the 'war' means. No one is sure who is fighting who. It best resembles a circular firing squad."The day I arrive in Culiacán, the front page of the local newspaper reads WORSE THAN IRAQ. Only days before, in broad daylight, a gang of gunmen had pulled up in front of the Mega 2000, an auto shop in the center of the city, and opened fire with high-caliber assault weapons — AK-47s and AR-15s. Within moments, nine were dead. As the assailants fled along Zapata Boulevard, they gunned down two police officers. Panic swept across the city as the streets echoed with the tinny pop-pop-pop of automatic-weapons fire. Businesses rolled down their steel doors, trapping customers inside. On Insurgentes Avenue, the killers opened fire on federal soldiers stationed outside a judiciary building. There was no pursuit and no arrests. It was reported that the gunmen were after a narcotraficante known as "Alligator," but even the simplest facts of the attack — as well as the attackers themselves — disappeared into the fog of war. "There are many versions of events," a local official told reporters. "But no one wants to talk."The front line of the drug war is here in Sinaloa, a small state on the Pacific coast across from the Baja Peninsula. Bordered to the east by the Sierra Madres, a line of remote and impenetrable mountains that stretches to the Arizona border, Sinaloa is part of Mexico's Golden Triangle — bandit country patrolled by sicarios (hit men), corrupt sheriffs and trigger-happy Mexican federales. The capital, Culiacán, is a drug-industry town the way Los Angeles is an entertainment town. Every business is connected, directly or indirectly, with illegal drugs. There are narco discos and narco restaurants. In the upscale malls scattered around town, high-end jewelers sell the gaudy and expensive necklaces favored by narco wives and girlfriends and hookers. Narco chic is Valentino and Moschino pants, ostrich-skin boots, a black belt with a narco nickname engraved in it and a Versace handbag big enough to hold a stash of drugs and the cash needed to pay off police.There are, on average, three drug-related murders a day in Sinaloa. Simply to walk the deserted streets of Culiacán at night is to feel the weight of fear that has descended on the city. The drug cartels have stored caches of weapons in "safe houses" scattered across town, from the poorest barrios to the most upscale neighborhoods, and thousands of federal troops garrisoned in the local baseball stadium patrol the streets day and night. But the soldiers have little or no intelligence about the drug traffickers they have been sent to stop, and the military checkpoints set up around the city have done nothing to stem the violence. A few days before I arrive, assailants killed a man driving a car in front of a mall, then doubled back through traffic to shoot his wife — a pregnant woman — in the head at point-blank range.The killing of civilians marks a turning point in the escalating conflict. "The old kind of narco was generous," says Javier Valdez, one of the few reporters in Mexico to write openly about the drug trade. "He helped people. Before, they didn't kill women or kids. Now they sell fear. Murdering that pregnant woman was sending a message. It says, 'We will stop at nothing.'" So far this year, there have been 800 ejecuciones — execution-style slayings — in Sinaloa alone. There are so many killings that Culiacán's leading tabloid has an entire pull-out section devoted to drug violence, called "The Red Note."The local police have responded to the chaos by looking the other way. Last summer, when a specially formed police squad tried to crack down on the growing number of corner stores retailing narcotics to addicts, the result was a massacre in which six officers were killed. The squad was disbanded. The nearby village of El Pozo was recently besieged by scores of armed men who murdered 11 residents and forced more than 100 to flee town. "The police are afraid," said the widow of one of the victims. "They know who the killers are, but they won't investigate. They never capture those responsible for our deaths."For all the terror, in Culiacán the drug wars also operate as a sort of ongoing soap opera starring the most powerful narcotraficantes. The leading man in this life-and-death drama is El Chapo. "He is the biggest star in the movie," says Valdez. "Chapo is the most admired, with the most money and women and weapons. When Chapo is going to 'clear the road,' which means kill people in his way, he doesn't hesitate. He is cabrón — more than macho, a real motherfucker, but also very intelligent."By any normal measure, Chapo is a killer guilty of horrendous crimes. But in the imagination of Sinaloa, he is like a god from an ancient world: kind, humble, rich, generous, mysterious. Tales of his exploits abound — his fearlessness, his taste in women, his generosity. The area has even given birth to an entire genre of popular songs known as narcocorridos, which glorifies the triumphs and travails of Chapo and his rivals. The music — which draws on old-style German polka and is sometimes punctuated by gunfire — is often performed by musicians dressed like bandits. "The narcos don't care if they die in a shootout, because they know they will get a song written about them," Valdez tells me. "They will literally die for a song."Chapo, now 53, has been involved in the drug trade for decades. As a fugitive, he lives in hiding, seldom seen in public but somehow omnipresent. Short, with dark hair and a sly smile, he is the peasant who has risen to the heights of the underworld through a combination of bravery and cunning and connection to the people of the Sierra Madres. His life is followed breathlessly in the press, his romance with an 18-year-old beauty queen named Emma covered like they are Hollywood stars. In a mountain village outside Culiacán, it is reported, Chapo held a dance for Emma to help her win a local beauty pageant, with 200 men wearing ski masks encircling the town on motorcycles, as Chapo arrived toting an AK-47 across his chest. When he and Emma married last year, it made the cover of Proceso, the leading newsweekly in Mexico, under the headline THE GREAT GANGSTER MARRIED QUEEN EMMA THE FIRST. Chapo "walks free and in love," the paper reported. "He goes to parties, he marries in public, he goes on a honeymoon." A leading narcocorrido outfit, Los Canelos de Durango, performed at the wedding, dressed as Mexican banditos and toting pistols. One of their songs is titled "El Chapo":From foot to head he is shortBut he is the biggest of the big.If you respect him, he'll respect you.If you offend him, it will get worse.If Chapo is the star of the show, his rivals in the Beltrán Leyva cartel are the antagonists. The clan is run by two brothers: Mochomo ("Red Ant") and El Barbas ("the Beard"). In their feud with Chapo, they have joined forces with the Gulf cartels and Los Zetas, moving hundreds of hit men into Culiacán from other territories, dispersed in cells of three or four to avoid attack and to inflict maximum damage. Mochomo is known as an impulsive man, prone to overreaching and a pronounced lack of self-control, even for a drug lord. According to someone close to the cartels, Mochomo and Chapo recently feuded about a huge shipment of drugs being transported through the airport in Mexico City. Mochomo's men apparently didn't treat Chapo's men with sufficient deference — the kind of insult that sparks gunfire in the narcosphere.Last January, when Mochomo was captured, his older brother Barbas wanted to stage a frontal assault on the prison. Barbas has a reputation as a man given to fits of drug-addled rage. "He's diabetic," a former police commander tells me. "When Barbas mixes cocaine and alcohol, he loses the floor" — gets high — "and has paranoid delusions." Chapo refused to take part in the far-fetched scheme, enraging Barbas. If Chapo wouldn't help break Mochomo out of prison, he was betraying his brother narcos — and that meant war.In May, Chapo's 20-year-old son was shot and killed in Culiacán during a drive-up attack by 15 gunmen, one of whom fired a bazooka. Since then, the violence has spiraled out of control. Having been allied for the past decade, the two Sinaloan cartels know everything about each other — who's sitting on caches of arms, which cops are on the payroll, where their hideouts are located. In July, four decapitated bodies from the Sierra Madres were dumped in the center of the city, accompanied by a note addressed to Chapo. "You're next, Chapo, ungrateful traitor," it read. "You're never going to change. Your chickie will be next."Three days later, three more bodies, heads and legs severed, were found in the trunk of a Nissan sedan. Among them was a former police commandante. This was taken to be Chapo's reply. Within hours, another cop was shot and killed in downtown Culiacán, along with a companion and a bystander. Within days, two more men were murdered, their heads cut off and dumped outside a dairy farm owned by another kingpin allied with Chapo — the riposte of Barbas and Mochomo."The reason for the war is that the capos are struggling for the top," a local who knows Chapo tells me. "I saw Chapo and Mochomo at a party together before the fighting began. They were good together. But since Mochomo was arrested, the balance has been broken. Mochomo was getting more power — he was growing the feathers of the bird, we say. He didn't respect Chapo. So Chapo went after him."When I arrive in Culiacán, everyone in the city is waiting for Chapo to take revenge for his son's death. I'm hoping to meet Mexico's most famous outlaw: Despite all the press coverage, no one has ever gotten an interview with him. Through connections, I am introduced to a gomero — an opium farmer — I will call Julio, who knows Chapo. In narco style, Julio wears a gold chain to match his gold teeth. He tells me Chapo is hiding in the mountains outside a town called Tamazula de Victoria. He says he can take me there. Perhaps I can talk to Chapo.As we drive inland from Culiacán, we draw stares from locals. Simply being seen with a gringo attracts attention; if it was known that Julio was leading an American journalist into narco country at the height of the conflict, he would almost certainly be killed. "If we get stopped by the narcos or the police," Julio tells me, "pretend to be a tourist." It doesn't seem to occur to him that the idea of a tourist coming to the Sierra Madres, the scene of one of the most lethal conflicts on the planet, is insane.Julio calls Chapo his padrone — the man who supplies him with the seeds for the poppies he grows. Many times, he says, he has partied with Chapo and his compadres. The men gather in the mountains and slaughter pigs and cattle and drink whiskey and snort coke and dance the night away. "Chapo is chubby and friendly, and he likes to dance to banda music," Julio says. "He drinks Buchanan's whiskey — the good kind. His favorite song is 'Crossing the Hills and Streams.' He uses the song to pick up women. All of the narcos know that they are going to die young. This is why they live so fast. They have to get all their pleasure from life right now. They are all killers. To be a narco, you have to kill. For me, I don't want to kill. Life is beautiful."The highway inland from Culiacán is dotted with large haciendas, sheltered behind 30-foot-high walls built to protect the narcos. Beyond the village of Tamazula, the road turns into a rough dirt track. From here, the mountains become impassable to an outsider, the dense and treacherous terrain obscuring fields of opium. Mexican poppies aren't known for their quality, but the mountains offer a natural hideout for a drug trafficker on the run. Locals talk of opulent residences built into caves, providing secure getaways for drug lords. Chapo has reportedly been hiding here since he broke out of federal prison in 2001 — a feat known as the "golden kilogram," for the amount of gold that legend says he used to bribe his way out. In Sinaloa, however, it is widely believed that the government actually let Chapo go, because he is the only narcotraficante brave enough to stop Los Zetas, the ex-military group that has sided with the cartels. The Zetas often dress as federales and travel in vehicles marked as police cars, making it impossible to identify them as gangsters. Contemptuous of the existing order, they openly recruit members of the police and military by hanging banners in public promising money and benefits."Chapo is up there," Julio tells me as I pull over on the road leading out of Tamazula. "This is where he came when he broke out of prison. He went to hide in the ranch of a capo named Nachito. Chapo is safe here. He supports the people, and the people support him." Julio pauses, reconsidering the reliability of any intelligence involving Chapo. "Unless he is hiding in Guatemala or Salvador," he adds.It is only noon, but Julio is already downing his third Tecate. It is 105 degrees in the shade. On the side of the road, a platoon of soldiers laze shirtless in an airport hangar. The troops are here to inspect every plane landing on the tiny dirt strip for illegal drugs. But even this token effort is useless: Scores of airstrips remain hidden throughout the Sierra Madres, tucked away in valleys and jungle clearings. "The government acts like they are looking for narcos and will tear out crops," Julio scoffs. "But they always give warning of their movements — they don't want to get in a shootout."Tamazula boasts a new school and condo developments, signs of the prosperity brought by narcotics. In the middle of the village, on a hill overlooking the valley, a mansion stands behind large black steel gates. The house belongs to one of Chapo's allies, Julio says, and the narcos stay there when they come down from the mountains, looking for the comforts of civilization. Those comforts are considerable: In one narco residence in Mexico City, the police seized $205 million — in cash. Here, at the foot of the hill, an army outpost sits directly under the gaze of the narco mansion — the kind of contradiction common in the Sierra Madres, where the fortunes of the law and outlaws are inextricably entwined.Julio ducks into a tiny office to collect the monthly subsidy he receives from the government for not growing illegal drugs — despite the fact he grows opium and pot. He has five acres of poppy, a crop he hopes will yield 10 kilograms of heroin, which he can sell for $20,000. "Chapo came to my village in a helicopter and gave out money to plant marijuana," Julio says. "He did this for the whole town. If I wanted to start a business of some kind in the city, he would provide me the money to start. He uses his money for his people, to help us progress."On the outskirts of town, however, Julio suddenly decides that we should turn around. It is unsafe to go any further, he insists. Chapo's men will kidnap us or kill us. Or we will be intercepted by gatilleros — triggermen — from the Beltrán Leyva cartel. Or Zetas. Or bandits."If you want to find Chapo, you should look near the village of La Tuna," he tells me. "I know people who can take you there."The next day, while I wait for Julio to set up the trip, I drive with my translator, Sara, to the beaches of Sinaloa, about an hour from Culiacán. Developers are hoping, bizarrely, to turn the coast here into the next Acapulco. When we stop at a restaurant, the owner boasts that Chapo visits the area often. "Chapo swims at the beach," the man says. "We protect him and make sure it is quiet for him. Here Chapo is adored. He falls in love easily. He has eyes for the women. Like with Emma, his new wife. It was love at first sight."The problem, the man says, is not Chapo, but those who emulate him. As more drugs pass through Mexico, the rate of addiction has skyrocketed, further fueling the violence. "The worse thing is the young people who try to imitate the narcos. It used to be only Americans took drugs. But now kids are stoned. For 200 pesos, a girl will fuck. The boys are copycats, and they get killed in the street. Not Chapo. Not any asshole can be Chapo. You have to be clever. As a leader, he's like Pancho Villa.""Do you know where Chapo is?" I ask.The man turns to Sara and speaks rapid-fire Spanish. They begin to argue. I ask what the disagreement is about. The man grows angrier. "Why does he come and ask questions about Chapo?" he demands.Sara explains that I am a journalist."How do you know he's not DEA or Interpol?" the man asks. "Or even the CIA?" He demands that I leave at once.That night, I drive with Sara to meet Julio again, hoping to connect with his friend who has offered to take me up into the mountains to meet Chapo. According to Julio, the man is a sheriff who is "with" Chapo. After Mexico's ruling political party, the PRI, lost its grip on power in 2000, the drug cartels have scrambled to ensure their control by bribing corrupt cops and politicians. "It used to be expensive but clear who the drug traffickers had to pay off," says Astorga, the sociologist who studies the drug trade. "Now it's cheaper but more fractured. It's not always clear who is in charge."It is dark as we pull up to the compound where Julio has told me to meet him — a classic narco fortress with high walls and a massive steel door. Pulling onto the dirt track next to the gates, we are suddenly blinded by lights. Two Humvees filled with Mexican soldiers, weapons trained on us, flash their high beams. They are followed by two pickup trucks filled with federales, who pull up in a cloud of dust. Sara and I are ordered out of the car at gunpoint."Who are you?" an officer demands."What are you doing here?" says another, brandishing his gun.Another SUV full of federales arrives. Looking for drugs or weapons, they order us to open the trunk. The air bristles with the holy trinity of war: fear, violence and stupidity. It is hot and humid, and everyone is sweating heavily. Sara fast-talks the soldiers, explaining that I am a journalist, not a drug dealer. She is careful not to mention that we are here to see Julio — a fact that could get him in serious trouble.Finally, after I show them my identification, the soldiers relent. As we drive away, Sara explains why the standoff terrified her. "You never know who you're dealing with in Culiacán," she says. "You never know what their motives are. But what was very dangerous was not the soldiers but the narcos. They could see us with the army and decide to throw some bullets at us. This could easily happen."The next day, back in Culiacán, I meet with a former senior commandante from the area. The officer, who insists that his name not be used, held very high-level positions in Mexican law enforcement and was trained in intelligence-gathering in the United States. We meet at a restaurant downtown called California. The officer — call him Edgar — sits at a table by the window, his back to the street. He is in his 30s, cleanshaven, with a precise military bearing and eyes that quietly surveil the room.For years, Edgar was the rarest of breeds in the drug trade: an effective and incorruptible investigator. Rewarded for his honesty, he was promoted to a top job in recent months. On his first day in the position, one of the officers under his command brought him an offer from the Beltrán Leyva cartel. Edgar would work for the cartel, he was told. In return, he would be provided money and protection. Edgar said no, as diplomatically as possible, telling his officer he wanted to stay neutral in the war.The next day, a leading defense attorney came to see Edgar. He had a message from Chapo. If Edgar agreed to be "with" Chapo, he would be paid handsomely. Chapo would also provide Edgar with a steady stream of criminals to "capture," so he could appear to be doing his job. The perversity of the situation — the narco offering protection to the law — wasn't lost on Edgar. Nor was the implicit threat. Edgar told the lawyer he didn't want to take sides, but the lawyer said that wasn't good enough. If "something happened" — if Chapo were attacked or captured, or a large shipment of drugs was seized — the drug lord would have to assume that Edgar had sided with his enemies.After reporting what happened to senior politicians, Edgar was offered an even higher position in the government. He talks in a quiet voice, stopping occasionally to look around the restaurant. He is convinced he could be killed at any moment, like the three police commanders who have been forced to seek asylum in America this year. The narcos have sources inside every aspect of government, he says: Chapo controls the local police, while the Gulf cartels and the Zetas have allies in the army.Given such widespread corruption, the commandante does not believe the legend that Chapo miraculously "escaped" from federal prison. Only a few basic facts are known about Chapo's incarceration. Arrested in 1993 on drug trafficking and homicide charges, the drug lord was held in Grande Puente, a maximum-security prison in Guadalajara, for eight years. He was under 23-hour-a-day lockdown, in a facility with 157 electronic gates and constant video surveillance, trapped in a cell behind concrete walls surrounded by a maze of wires and fences patrolled by armed guards and attack dogs.But Chapo had a plush suite in the prison, complete with a personal chef, plenty of Buchanan's whiskey and an endless supply of Viagra. He also had a girlfriend, an attractive ex-cop coke addict named Zulema. By 2001, faced with the prospect of extradition to the United States, Chapo was growing despondent. After he slept with Zulema, he would fall into long brooding silences. "I knew that if he escaped, they might kill him," she later told a reporter. "He knew what he was going to face. It's all your life running. It's all your life hiding. It's all your life desperate. I knew that there were many voices in his silence."At the time, President Vicente Fox had just been elected, ending decades of rule by the PRI. The Gulf cartels and the Zetas were inflicting unprecedented violence along the border to seize control of supply routes from Chapo and the Sinaloan-run cartels. The government was unable to contain the crisis. The new groups acquired enough weapons and intelligence to rival the Mexican armed forces; the Sinaloan cartels were cowed by the megaviolent Zetas.Then came the miracle. With Chapo's extradition to America only days away, suddenly, magically, deus ex machina, the bars and doors and gates of Grande Puente swung open, and the kingpin was spirited out — in a laundry van, say some, brazenly walking out the front door, say others. The feat became the latest and most audacious act in Chapo's long history of eluding the authorities. But what if his magic trick was arranged by the government? What if Chapo was set free to fight the Zetas and the other violent cartels — in the streets, to the death? What if Chapo is an unofficial instrument of government policy? This view is commonly held by political and law-enforcement elites in Mexico. The academic Luis Astorga is careful to refer to Chapo's "escape," using his hands to indicate quotation marks."Chapo is protected by the narcos and the people in the mountains," Edgar says. "But he's also protected at the federal level. The prison doors didn't just open by magic. Chapo was released by the government. They let him go so he could fight the other narcos and the Zetas. There are severe limits on how the government can fight. It is difficult for the police to raid a house, because of human and legal rights. But not for Chapo. He is very powerful. Very brave. He's not afraid of the Zetas or anyone."The notion of using one narco to counter other, more dangerous narcos makes perfect sense to Edgar. The strategy was born of necessity, he says. Chapo comes from a long line of Sinaloan cartels. He doesn't reject the state entirely or want to rule the country himself. He was in prison so prosecutors could make a deal with him, in the way informants are flipped during investigations of organized crime."Today Chapo moves from state to state, from country to country, without a problem," Edgar says. "Many people know where he is. You can't do this without federal protection. Chapo can deal his drugs and do his business, but he must respect certain limits. No women or children should be killed. Don't kidnap. Don't steal. Chapo respects the government."As we talk, the ex-commandante grows increasingly uneasy. His back is to the window; he can't see the Hummers and Escalades with tinted windows passing by outside. He asks to switch tables. Since his promotion, the only way it is possible for him to move around Culiacán is with an armed escort. But his security detail has been taken away, and he fears for his life. We shift to a table in the middle of the restaurant."Most people in Culiacán are only one or two steps away from the cartels, through a brother or a cousin," Edgar continues. "It is very common for police and prosecutors to eat with narcos, to go to their weddings. Chapo could be arrested if they want to. We in law enforcement don't have good coordination. It's all fucked up. The disorganization is huge. People don't follow orders. They don't speak to each other. Intelligence isn't working. But the priority right now is the Beltrán Leyva cartel. The police would rather get Mochomo than Chapo. Mochomo is crazy. He kills a lot of people. The same is true for his brother, Barbas.""Where do you think Chapo is?" I ask."In the mountains," says Edgar. "He's very protected there." He pauses. "Unless he's in Costa Rica.""Do you think I could get an interview with Chapo?" I ask."There is a $5 million reward out for Chapo," Edgar says. "They will think you are DEA."Searching for more leads to Chapo's whereabouts, I stop by Las Palmas, a steakhouse in Culiacán. Last November, according to Valdez, the restaurant was taken over by dozens of Chapo's armed guards, the doors barred and all cellphones confiscated. "We're going to have my boss here," a guard announced. "Don't worry — nothing is going to happen to you. And don't worry about the bill. He is going to pay for everything." Chapo entered with a group of 20 men, said good evening to the crowd, then retired to a private room.When I visit Las Palmas, I find a brightly lit place with a vaguely gangster air. An ancient waiter in a white shirt and a black vest says the story about Chapo is bullshit. He had told the police the same thing: Chapo didn't have dinner here. But then the waiter can't help himself — he needs me to know the truth. "If Chapo was going to eat a steak — if he was looking for the best steak in town — he would certainly come here," he says with a conspiratorial smile.The next morning, Julio calls. He has been trying to convince a friend to take me to another area in the Sierra Madres where Chapo is said to be hiding, but the man refused. "Not for a million pesos," he told Julio. "For no amount of money." Julio has another contact who is already up in the mountains. This man is "with" Chapo, not as a narco but as a gaucho, tending to Chapo's horses. It is agreed that Julio's friend will meet me at the edge of a town in the foothills, at a gas station. I rent a Jeep and head out with Sara. But when we reach the gas station, Julio's friend doesn't turn up. We call his cellphone. The cowboy is furious. Rumors have been traveling around Chapo's circles about me. He wants to know whose "people" I am "with."Sara explains that I am a reporter, but he doesn't believe her. He says I have to be "with" someone — an assassin sent by Barbas, a gringo hired by the Zetas, an undercover DEA agent. "This happened before," the man says. "A man who said he was a journalist went into the Sierras. He never came back. You can come. But no one will speak to you. Not about Chapo. And you might not get out."At the gas station, a local man agrees to guide me to the village of Santiago de los Caballeros, which translates as Saint of the Knights. The village is the heart of narco territory, the equivalent of Corleone for the Sicilian Mafia. A few miles along the road, we turn onto a ragged side track. The route cuts through deep jungle, across riverbeds and up mud-sloped rises. The man asks why I want to go into the mountains. As I reply, his face goes pale. Four people were massacred recently, he says. Soldiers get drunk and high and paranoid and start firing at the slightest provocation — or for no reason at all.We drive through some of the most rugged and isolated terrain in the world, high atop jagged outcrops where the clouds literally meet the earth. Below the path is a plunge of thousands of feet. The road is muddy and slippery, and there is no guardrail. After two hours of white-knuckled driving — during which we cover perhaps 10 miles — we reach the village. Three dozen houses are scattered in the valley, modest homes with gardens and clothes drying on laundry strings. A tiny airstrip for narco planes is tucked into the brush, visible only by the small red markers strung across the treetops to guide pilots. On a hilltop, in a graveyard, stands a cluster of huge, ornate mausoleums the drug traffickers have built for themselves while they're still alive. It was in these mountains that the United States introduced narcotics to Mexico, setting off the chain of events that would result in the creation of the cartels and culture in Sinaloa. During the Second World War, the American government encouraged farmers in Sinaloa to plant fields of poppy to provide morphine for wounded soldiers. As so often happens, one war has led to another.At the lone restaurant, a small gathering of men eyes us suspiciously. The driver refuses to let me get out of the vehicle. "The law doesn't work out here," he says. "It's dangerous to ask questions of these people. We don't know who they are. We must go now." This is as close as I will manage to get to Chapo and his base of operations — an airstrip in the mountains used for smuggling drugs, a graveyard filled with self-erected monuments to the narcos and their reign.Back in Culiacán, the front page of the newspaper features a street-by-street diagram of the recent beheadings and assassinations: EL MAPA DE LA MUERTE. The killings also continue apace across the nation, in border cities and resort towns and industrial centers. In the first week of October alone, at least 49 people are murdered in Tijuana. Every sign in Mexico points to a war that is only just beginning. "The confrontation is escalating," says Astorga, the sociologist. "The narcos are threatening governors, the military, mayors. Eventually the state will find a way to prevail. In the end, war is not good for business."But here in Culiacán, the defeat of the narcos doesn't appear likely anytime soon. The local leaders I meet talk about long-term solutions. Twenty-five-year plans are standard — the political euphemism for "never." "The federal government is overwhelmed, and so is the state government," a leading politician says. "If here the police feel unsafe, how are the citizens going to feel?"Of all the perversities of American drug policy, none is greater than the fact that the metaphorical War on Drugs has inflicted an actual war on some of the hemisphere's poorest people. The Bush administration's answer to the chaos in Mexico is something called the Mérida Initiative, which was signed into law this summer. The plan will provide $1.6 billion to the Mexican government, much of it for high-caliber weapons, night-vision goggles and air support — the kind of resources that the super-rich drug cartels already have in abundance. "We've had the same policy on drugs since the Nixon administration," says David Shirk, director of the Trans-Border Institute at the University of San Diego. "We ask other countries to fight the war for us. The same thing happened in Colombia. We try to export the problem by asking other countries to not sell us the goods we want to buy. Thousands are dying every year in Mexico for our war."In the end, the chaos in Mexico is the direct result of America's misguided War on Drugs — the Latin American version of blowback. Every effort to counter the cartels only serves to empower them. Cracking down on cocaine use in the United States has encouraged the Mexicans to produce more heroin and crystal meth, at the same time as they fight over the shrinking coke market. Killing the heads of the Mexican cartels has sparked a civil war, as lower-level rivals fight to replace the fallen leaders. Yet some DEA officers I speak to, who refuse to be named, ache for an even more aggressive war on drugs, the kind of force used in Iraq, with a full-frontal assault in the Sierra Madres by the United States military. Others favor supplying more aid to Mexico, as the Bush administration is doing with the Mérida Initiative. "The initiative is a step in the right direction," says Pamela Starr, the author of a recent report on Mexico for the Council on Foreign Relations. "It is designed to build Mexican law enforcement, and it is focused on the police and the judiciary."But if the past is any guide, the Mérida Initiative will prove to be yet another strategic miscalculation, increasing the very violence it seeks to curb. The result could be a failed state in Mexico on the scale of Afghanistan — a lawless society ruled by drug lords. "The violence threatens the government's ability to govern effectively," says Starr. "It threatens the oil supply. It makes Mexico a potential transit point for terrorists. The worst thing in the world that could happen to the United States is to have an unstable country on its southern border."In fact, there are already signs that the violence in Mexico is moving into the United States. In major cities like Los Angeles and Dallas, Mexican street gangs are turning up in growing numbers, as the cartels increase their reach across the border. In June, two vehicles filled with Mexican narcos disguised as U.S. policemen staged an attack in Phoenix, unloading 100 rounds of high-caliber ammunition into a dope dealer who had angered their boss. Three of the hit men were apprehended after fleeing into an alley, but the rest of the assailants escaped.The surest way to curb the violence is the one the U.S. government refuses to consider. "There is no national conversation about legalization, and we need to start doing that," says David Shirk of the Trans-Border Institute. "From the Mexican point of view, decriminalization would rob organized crime of the monopoly it now has in the black market. The monopoly is what gives the drug traffickers enormous resources. They can challenge and compromise the state in extremely dangerous ways. They use profits we're creating to undermine our efforts to fight them."In Culiacán, no one wants to discuss the decriminalization of drugs. They know that any move to legalize narcotics would devastate the local economy, even as it freed the city from the death grip of narco culture. The "war" on drugs being waged by the United States keeps the town prosperous, and residents at all levels of society have a stake in protecting Chapo and the cartels from foreign interference. When I get back to New York, my translator calls to say that my reporting has continued to cause a stir in Chapo's world. Julio and his friends are now certain that I was a DEA agent gathering intelligence on Chapo and the Sinaloan cartels. The accusation isn't nonsensical: The same month I was there, U.S. forces helped free hostages held by the rebel group FARC in the jungles of Colombia by having soldiers pose as journalists.Sara says that Julio has been threatening her, insisting that they talk face to face. Terrified that he might kill her, she agrees to meet — but only in a public place. At a restaurant, she shows him links to articles I've written. Julio angrily tells her that he is being threatened for talking to me. He is worried that he could be shot by Chapo's men."If someone has to go 'into the floor,' it will be you, not me," Julio tells her — narco shorthand for getting killed."It's so stupid," Sara says to me. "But in this war, people die for stupid reasons."Written by: Guy Lawson[From Issue 1065 — November 13, 2008]Click here for video commentary by Guy Lawson

Bitter Pill: A Special Report

Posted by SubSickAlien on January 31, 2009 at 10:25pm

From what I thought I knew to the things I discovered after reading this special report from Ben Wallace-Wells, a reporter digging deep into what goes on with the pharmaceudical industry they don't want us to know. A must read.Created to treat schizophrenia, Zyprexa wound up being used on misbehaving kids. How the pharmaceutical industry turned a flawed and dangerous drug into a $16 billion bonanza.In June 1992, not long after the place closed down, a Harvard-trained psychologist named Sergio Pirrotta walked out of Danvers State Hospital for the last time. The psychiatric facility, at this late date, was a baggy old thing, rectangled into a field just north of Boston; whole wings were barely occupied, and vandals had already begun to rip out the mantelpieces and furniture. The hospital had been slowly, incrementally shutting down for a decade, and the patients that remained were the hardest cases, mostly schizophrenics and those with disorders too dense and weird to classify. But now, as Pirrotta took a walk around the campus, even those patients were gone: released into the larger world to fend for themselves or bused to hospitals where the staffs had little psychiatric training.Pirrotta had come to Danvers in the mid-1970s to rehabilitate children whom the courts had declared insane. Back then the place was overpopulated, the halls packed with madmen who would wander around smoking cigarettes, leering and lunging at the kids. In those days, the drugs used to treat mental illness were crude and ugly things. Thorazine was the best, and it made you into a ghouled and lifeless ogre — your face seized up involuntarily, you kept shuffling around, you were an emotional drone. But gradually the medications got a little bit better, the pharmacology more precise. First there was haloperidol, similar to Thorazine but with less-vivid side effects. Then clozapine, which had at first seemed a wonder drug, before it turned out to trigger a potentially fatal immune deficiency in two cases out of a hundred.The patients at Danvers, their symptoms softened by the new medications, began to venture forth, almost miraculously, into the world beyond the hospital. Pirrotta took a group that included schizophrenics to a children's camp in New Hampshire, off-season, where they spent a week cleaning and grooming the grounds. "For most of them, it was the first time they'd been out of an institution in their adult lives," he recalls. But the state's budget crunchers had wanted to close places like Danvers for years — pills, after all, were far cheaper than hospitals — and the new drugs made the move clinically defensible. To the staff at Danvers, it seemed as if the state had abandoned its responsibilities to the mentally ill. "It felt like we'd been sold a bill of goods," Pirrotta says. "It felt like a betrayal."By 1992, when Danvers closed, something even more vivid and hopeful was looming: A whole new class of drugs, called atypical antipsychotics, were being tested in clinical trials. The atypicals held the promise of a more perfect tranquilizer, one that would calm the storms of schizophrenia while eliminating the side effects that made the older drugs so despised. Psychiatrists reserved their greatest excitement for a molecule being developed by Eli Lilly, a pharmaceutical company based in Indianapolis. The new chemical mirrored the powers of clozapine but without its fatal flaw. It was called olanzapine, and the scientists working on it believed it might be the One.Dr. William Wirshing, a UCLA psychiatrist who had a grant from Lilly to conduct clinical trials on olanzapine, was one of those enthused by the early results. He believed the hype was warranted, and Lilly was flying him around the country to brief other psychiatrists on his work and to seed excitement for the coming medication. Then one morning in 1995, as Wirshing was driving to LAX to catch a pre-dawn flight, a story came on the radio about olanzapine. Wirshing listened in astonishment as a top Lilly executive announced the company's plans for the new drug, which it was preparing to market under the name Zyprexa."He says it's got the potential to be a billion-dollar-a-year drug," Wirshing recalls. "I almost pulled off the road and crashed into the side rail." At the time, the entire market for atypical antipsychotics was only $170 million. "How the hell do you make $1 billion?" Wirshing thought. "I mean, who are we gonna give it to? It's not like we're making any more schizophrenic brains."There is a well-known feature of medical science called the placebo effect, which suggests that, in a clinical trial, patients who are told they are being medicated but are in fact given only a sugar pill will see their symptoms improve, merely out of the misplaced conviction that they are being healed. During the late 1990s, and then with increasing speed during the current decade, Wirshing and other psychiatrists watched as the market for atypical antipsychotics swelled well beyond its marked territory, far exceeding the country's supply of schizophrenic brains — past $2 billion a year, $5 billion, $10 billion, all the way to $16 billion. What had begun as niche drugs are now the third-largest class of medication in the world, their sales greater than those of the antidepressants. The mechanisms used to leverage this growth were in some ways the most modern and perfect the pharmaceutical industry had developed, but they were also, according to state and federal prosecutors, illegal. Lilly has already agreed to pay $2.6 billion to settle charges that it built the market for Zyprexa first by concealing its side effects, and then by marketing it "off-label," for diseases for which it had not been approved."It was a very clever sort of con," says Dr. Peter Tyrer, a leading psychiatric researcher at Imperial College in London who wrote in the latest issue of the respected medical journal The Lancet about a new study that debunks the effectiveness of the atypicals. "Almost the whole scientific community was conned into thinking — as a consequence of good marketing — that this was a different and better set of drugs. The evidence, as it's all added up, has shown this to be untrue."Eli Lilly insists that it has not marketed Zyprexa off-label and that it has accurately represented the drug's side effects. But some medical researchers who have studied the atypical antipsychotics say that, in the final tally, the drugs, which have already been linked to some deaths, may eventually be responsible for tens of thousands of cases of diabetes and other potentially fatal diseases. And despite their early promise for treating schizophrenia, the drugs have not even performed any better than the crude and imprecise earlier medications that preceded them. "We have been paying $16 billion a year instead of $2 billion a year for drugs that seem to be no better and might be worse," says Douglas Leslie, a researcher at the Medical University of South Carolina who contributed to an extensive federal study of the drugs. The story of how Zyprexa and other atypicals became a multibillion-dollar market suggests that the medical community — doctors, researchers, the institutions that back them — may be themselves prone to a placebo effect: the willed conviction that a new drug, presented as a breakthrough, must in fact be one, that a product sold as healing must in fact do good.FOREVER UNQUIETEDFew diseases are as haunting — and as poorly understood — as schizophrenia. Even in the psychiatric wards of major hospitals, where every patient is severely mentally ill, the schizophrenics stand out. In the depressives, the manic-depressives, the alcoholics and the addicts, you can still detect echoes of healthier people now and then; at their worst they pass in and out of episodes of insanity. But in schizophrenics, the old, familiar personality is often obliterated. The exact nature of the disease has not yet been precisely mapped, and so schizophrenia is defined by its manifestations, by the dramatic onset of psychosis, of delusions and hallucinations. Those who suffer from it can seem forever unquieted, as if by an alarm bell constantly ringing.Some schizophrenics have hallucinations that are purely auditory — a demon they are convinced loiters just behind their eyeballs; others are beset by colors and figures — religious images, or distorted body parts that disrupt their visual field. The clash of this detached and fervently received world with the actual one has unusual effects — a compulsion to lay down in traffic, a need to wear heavy jackets under the delusion that it is not really summer. Psychiatrists identify schizophrenics by clusters of symptoms, the most common being paranoid and chaotic delusions, illogical thinking and behavior, and a severe and persistent lethargy. The onset of the disease comes so suddenly and so late in life — in the teens to late 20s — that the families of schizophrenics end up watching the people they knew being rapidly submerged, like an island busily eroding. "The most disturbing part for the families is dealing with the sense of loss — the knowledge that we can't get back the way you were before," says Dr. Geoffrey Neimark, a psychiatrist who met me at Pennsylvania Hospital in Philadelphia to explain life in the mental ward.Every medical treatment has a glimpse of mystery in it, the ghost lingering in the algorithm, but psychiatry is even closer to alchemy than most. The diseases are too complex to be fully understood, and when the drugs work it can seem as if the patient has been visited by something magical and benign. In the 1950s, French scientists looking for an alternative anesthesia discovered that a chemical compound eventually marketed as Thorazine seemed to calm schizophrenics. The drug, and those that followed (what are now referred to as the "typical antipsychotics"), were crude instruments, often derived by accident and luck rather than through the process of discovering the disease's source in the brain and then refining a drug to repair it. Besides slowing down the brains of patients, the drugs had awful effects that doctors came to call "extrapyramidal" — muscular tremors, facial twitching. Patients on Thorazine were often stunned into immobility; in extreme cases, they wound up staring at the ceiling, their eyeballs locked in place. Others drifted aimlessly, a compulsion so common that it became known as the "Thorazine Shuffle."Psychiatrists had expected that the science of schizophrenia would improve, but the more they looked for the disease's source, the murkier it seemed to get. Then, in the early 1990s, Dr. Ezra Susser, an epidemiologist and psychiatrist at Columbia University, was scouring the historical record when he happened upon something amazing: the prevalence of schizophrenia in the children of the Dutch war famine. In the fall of 1944, as the German armies were holding tensely on to Holland, the Nazis found themselves fighting an uprising by the Dutch resistance. In retaliation, they imposed an embargo. It was a harsh winter, and the country's canals froze over; food could not reach the cities, and Holland suffered a sudden famine. People ate tulip bulbs to survive. The next spring, when the Allies conquered the country, the famine lifted as suddenly as it had begun. Researchers later tracked the babies born to mothers pregnant during the famine, hoping it would help them understand the effects of malnutrition in the womb. As Susser paged through the records, he noticed that the children had developed schizophrenia at a far higher rate than those born in Holland only a few months later. It was a hint that schizophrenia isn't determined solely by our genes.Schizophrenia, epidemiologists noticed, was popping up in all kinds of strange places: It was associated with children born to older fathers, with those who had suffered brain injuries in the womb, with the families of Caribbean immigrants in England. But despite their best efforts, scientists had been unable to understand what united all these disparate groups, what constituted the disease's unique, underlying cause. "The complexity of schizophrenia is very great," says Dr. Pablo Gejman, director of the Center for Psychiatric Genetics at Northwestern University. "We're probably talking about hundreds of individual factors — many genetic, some the result of environmental exposures. We actually have a profound ignorance on the specific molecular mechanisms of schizophrenia."THE MOLECULEBefore a pharmaceutical company has completed the long and labored effort of turning a biological insight into a marketable drug, the scientists who are pushing and pulling at its chemical dimensions refer to the thing, with a reverent purity, as "the Molecule." In the early 1990s, as scientists at Eli Lilly were developing the new molecule known as olanzapine, the company faced a strategic problem: Prozac, by far its best seller, would go off patent soon, and the billions it generated would largely dry up. In early reports, olanzapine looked like a promising and potentially lucrative replacement, and by 1992 company executives were searching for experts in schizophrenia willing to conduct the first clinical trials of the drug. They explained their belief in the drug, that it had replicated the successes of clozapine and excised the chemical agents that caused extrapyramidal effects. Some doctors began to wonder if they might be staring at the next Prozac, the coming revolution in mental illness. It was, Wirshing says, "exciting as hell." He signed on.The most vivid models we have of corporate deception come from the tobacco industry, where scientists working in company labs, behind sealed walls, conducted misleading experiments out of public view and then told the wider world they had found things they hadn't. But the pharmaceutical industry is immune to this kind of conspiracy. The size of clinical trials and the federal regulations that govern them mean that a company can never develop and study a molecule in-house; it relies on a platoon of contracted researchers, specialists at academic institutions, who test the molecules and then publish their findings in academic journals. The system is not perfect; studies have found that drug trials sponsored by the industry (which, since rule changes made in the Reagan administration, has meant virtually every large drug trial) are at least four times more likely to suggest that a drug is a success than trials that are independently funded. But when the system fails, the cause is often not outright deceit, but rather a web of overbright enthusiasm, the urge that researchers have to convince themselves that a drug is a little better than it actually is, that it can save lives. Pharmaceutical companies depend, in other words, on the sincere cooperation of people like Bill Wirshing.Like other psychiatrists who treated schizophrenia, Wirshing had long been convinced that the harsh side effects of the older drugs were so painful that patients simply stopped taking them, and he was excited by the promise of an alternative. Using experimental doses of Zyprexa provided by the company, he gave the drug to his least responsive patients, those who had stopped taking their other meds and seemed permanently adrift, "lost in the ether of space somewhere." As he watched the first patients on the drug, Wirshing was intrigued. It seemed to work better than the older medications. Patients got dizzy when they stood up; their hearts raced; they would get constipated. But in most patients, the most vivid side effects of the typical antipsychotics — the tics, the perpetual restlessness — seemed to vanish."Was there a magic efficacy?" Wirshing says. "The answer is no. But the thing that was really dramatic was it was devoid of the neurologic toxicity." Wirshing saw very quickly, however, that Lilly had a problem: Many of his patients taking Zyprexa were gaining a startling amount of weight. The pattern was as sudden as it was consistent. For the first few days they were on the drug, you weren't aware of any palpable difference. But by the end of the week, you could see the weight gain, almost in real time. Bellies and thighs started spreading, faces started puffing out. By the end of a year, the results were stunning. Some of his patients had gained more than 125 pounds.Clinical trials are not cheap to conduct or lightly undertaken. According to Wirshing, Lilly spent $200 million to test Zyprexa at 175 sites around the world. "They thought they had a drug that was superior," he says. "You don't spend that much money just for the hell of it. They really believed this." But when he brought his concerns about Zyprexa to executives at the company, Wirshing says, they tried to dismiss the evidence. First they told him that it was just the skinny schizophrenics who were getting fat. Wirshing re-examined his data; it wasn't true. Then they told him that it was the schizophrenia itself that was causing the weight gain, rather than the drug. Wirshing was apoplectic: "If schizophrenia causes that much weight gain, how come I've been working with schizophrenics for 20 years and didn't know that?"At one meeting of researchers who were studying the drug, Wirshing recalls, a scientist from Lilly presented the results of a trial he had conducted at Indiana University, in which a group of healthy male students were given 10 milligrams of Zyprexa a day to test the side effects. Within two weeks, the students gained five pounds more than those in a control group, who didn't take the drug. Wirshing worked out the implications: Taking 10 milligrams of Zyprexa, the study suggested, was the equivalent of eating 1,500 additional calories every day. Some of the students gained as many as 15 pounds in two weeks. "It is just un-stinkin'-believable," Wirshing says. "It is the best drug for gaining weight I've ever seen. If you and I could just put a negative in front of those weight-gain numbers, we'd make billions."In 1995, as the company was preparing to submit Zyprexa for approval to the Food and Drug Administration, Lilly convened a panel of experts to review the results of its largest study. The specialists concluded that Zyprexa produced an average weight gain of 24 pounds in a single year. One in six patients, clinical trials later revealed, gained more than 66 pounds. Such a staggering side effect, doctors knew, could elevate a patient's blood-sugar levels — an indication that the drug could cause diabetes. The government, if aware of these risks, might have slapped a strong warning label on Zyprexa, suppressing sales. But the data Lilly submitted in its application to the FDA that same year led the agency to draw a far less alarming picture of the drug. Relying on a database of 51 separate and conflicting studies provided by the company, the FDA concluded that patients taking Zyprexa for one year would have an average weight gain of only 11 pounds. "It's akin to the guys from the cigarette companies going, 'Well, it doesn't cause cancer,'Ê" Wirshing says. "It's just plain not true."Fifteen years after the Reagan administration made it a policy to gut the FDA, however, the agency lacked the staffing and clout to safeguard the public. As the process stood, the government essentially entrusted drug research to the pharmaceutical industry and, given certain protocols on the collection of data, trusted that the results were accurate. Simply put, the FDA was no longer in a position to independently evaluate the effectiveness — and risks — of a drug like Zyprexa."What's that parable about the king who goes down to the ocean and asks the waves to stop coming in?" says Paul Leber, who directed the agency's division of neuropharmacological drug products at the time Lilly sought approval for Zyprexa. "That's what we're dealing with here. Congress creates laws that nominally protect the interests of the society and then gives insufficient funds and support to the regulatory agencies to do anything about it. This is what happens."On September 30th, 1996, the FDA approved Zyprexa for the treatment of schizophrenia. Lilly was so confident of the go-ahead that it had already hired a sales force and stockpiled the drug in warehouses. The very next day, the company filled the first prescription for Zyprexa, making it the fastest drug to market in history. The label did little to warn doctors and consumers of the risk for severe weight gain or hyperglycemia, even though Lilly's own studies, internal documents would later show, raised concerns about these side effects. The FDA would eventually send a warning letter to Lilly, criticizing it for marketing Zyprexa as superior to other antipsychotics and as virtually free of side effects — claims the agency called "misleading" and "lacking in balance." But it would be nine years before a comprehensive government study would reverse many of the claims that surrounded Zyprexa and other atypical antipsychotics, and raise disturbing questions about their risks. And nine years, in the pharmaceutical industry, is a lifetime.THE SALES PITCHEvery business has its own animating vanity, its conviction of its own social good, but in pharmaceuticals, where a good product saves lives by the thousands, the vanity is closer to the surface than in most. In 1998, a young man named Shahram Ahari, a few months out of Rutgers University, took a job as a drug detailer — a salesman who visits doctors — with Lilly's neuroscience division and was sent to headquarters in Indianapolis for "sales school." The new reps were told, from the beginning, that they were part of an elite. The neuroscience division not only required the most technical sophistication, but it had responsibility for the company's two best sellers, Prozac and Zyprexa. The sales reps had been hired, in part, because of their natural charisma — doctors would like them. Most of the reps, Ahari noticed, were really attractive — the company had recruited cheerleaders and athletes, and there were a couple of girls who plausibly claimed to have been models. But when the new hires were given technical training, it slowly dawned on Ahari that none of the other sales reps seemed to have any college-level science. "I was the only one in the room who could explain a very simple process, like how two neurons communicate," Ahari says. "That was startling."Though Ahari had not known it when he applied, the company was on a kind of precipice. Its blockbuster drug, Prozac, the pill that provided nearly a third of Lilly's total revenues, was going to lose its patent protection in 2001, a date so significant that executives at Lilly referred to it, in memorandums and annual reports, as "Year X." As Lilly tried to figure out what to do, a consensus began to form around a new strategy. "The company is betting the farm on Zyprexa," one executive wrote in an internal memo in 2001. "The ability of Eli Lilly to remain independent and emerge as the fastest-growing pharma company of the decade depends solely on our ability to achieve world-class commercialization of Zyprexa."The problem, from a marketing standpoint, was that there simply weren't enough schizophrenics in the world to save Lilly's bottom line. Among the company's most natural markets for Zyprexa, in the early days, were county jails and state prisons, where many schizophrenics and other mental patients — mostly locked up for public-nuisance crimes such as trespassing or creating a disturbance — had wound up after the closing of psychiatric hospitals like Danvers. "Before deinstitutionalization, to study people with severe mental illnesses, you went to hospitals," says Linda Teplin, director of the Psycho-Legal Studies Program at Northwestern Medical School. "After deinstitutionalization, you went to jails." Those in the profession now refer to Riker's Island and the L.A. County Jail as the two largest mental hospitals in the country. Feeling the great weight of inmate numbers, some jail doctors began to prescribe antipsychotics not only to treat schizophrenia but to tranquilize misbehaving prisoners. "It appeared that people were being medicated simply to keep them pacified," says Eric Balaban, senior staff counsel for the ACLU's National Prison Project.In his new job, persuading psychiatrists to prescribe the drug, Ahari and those like him were pivotal: If Lilly hoped, one day, to break out of the circumscribed market of schizophrenia, it needed psychiatric experts to tell primary-care doctors that Zyprexa was a good drug and a safe drug. Ahari was given a $60,000 expense account and an assignment to cover Brooklyn and Long Island.Pharmaceutical sales reps think of themselves as the intellectuals of the sales world, but they spend their days in a gauzy suburban existence, driving from hospitals to private offices in big American sedans, their detailing kits and golf clubs in the trunk. They chat up receptionists to get in to see doctors, chat up residents to find out who is on a hospital's formulary committee. What was striking to Ahari, at least at the beginning, was how easy it was. Lilly had spent hundreds of millions of dollars developing Zyprexa, as well as millions more on market research, yet its campaign was built largely around the fact that the drug was newer than rival medications. "The Novel Psychotropic," they called it. Ahari had talking points and brochures that referred to the initial studies and had been trained to stress the lower rates of extrapyramidal symptoms that Zyprexa caused. But frequently the conversations didn't even get that far. "Most doctors were inclined to think that the atypicals were better," Ahari says. "That's one of the things that made selling Zyprexa so much easier. A lot of them just wanted to play with the shiny new toy."Though Zyprexa cost far more than the older drugs, which were mostly generic, neither insurance companies nor doctors seemed primarily concerned about cost, and Zyprexa was, from the beginning, a vast success. "The existing treatments were so bad that people were willing to pay a lot for the prospect of something better," says Meredith Rosenthal, an associate professor of health economics and policy at the Harvard School of Public Health who has studied the atypicals extensively.One afternoon during Ahari's first week on the job, a psychiatrist pulled him into a small room. The doctor had put some of his patients on Zyprexa, he said, and he had noticed that they were gaining a troubling amount of weight. What could the sales rep tell him about that? Ahari was "stunned." He'd spent six weeks at sales school, and though he'd been coached extensively on the beneficial features of the drugs, the company had downplayed the risk of weight gain. Ahari passed the doctor on to Lilly's science desk and then put in a query himself. Eventually, the company's reply came back. If he heard similar complaints from doctors, he was supposed to tell them to have patients drink a glass of water before taking the pill, and a glass of water afterward. Ahari started to have doubts. "This was," he says, "a ridiculous way to cope with weight gains of 20 or 30 pounds in a month."The more Ahari started to poke around, the more skeptical he became. Lilly had instructed its sales reps, if asked about weight gain, to explain that Zyprexa was not statistically worse than other antipsychotics. But this contradicted the company's own data. At this point the drug had 5 million users; a senior Lilly scientist did a quick calculation and estimated that Zyprexa had caused as many as 100,000 of those users to gain 90 pounds. The health risks of that kind of weight gain were profound. "One hundred thousand people putting on 90 pounds of weight," the scientist concluded glumly, "is a lot."Internally, Lilly's own experts were criticizing the company for covering up the link between Zyprexa and diabetes. "I do believe they made a very strong point that unless we come clean on this, it could get much more serious than we might anticipate," one Lilly executive warned in an internal e-mail in October 2000. But in hospitals and doctor's offices, the company's sales force continued to push Zyprexa as a wonder drug. In a common industry practice, Lilly persuaded leading psychiatric experts to endorse the drug and then paid them to tout it to doctors, who had little expertise when it came to antipsychotics. Ahari was struck by how perfectly the strategy worked: Most doctors, pressed for time, did not "approach the education they were getting from the industry with any skepticism at all."Nor did the experts, who were all paid to hock the drug, strike Ahari as unbiased. The first time he met a national psychiatric expert, flown in to recommend Zyprexa to local doctors, the expert pulled Ahari aside and started quizzing him about sales in his territory; he was trying to figure out, he said, when he might optimally exercise his stock options. One rep arranged to fix a doctor's swimming pool; another paid a nightclub hostess to spend time with a doctor. Some of the more attractive reps boasted about ways to "exploit sexual tension." Ahari had been taught strategies to manipulate physicians during conversations — such as providing subliminal reminders of the favors he had done for them — and he found himself using the techniques on his girlfriend.Ahari was becoming convinced that what he had been trained to do was to make a pitch that seemed scholarly and then to let that impression stand in for a flawed product. Because federal law allowed pharmaceutical companies to purchase a doctor's prescribing records, they could measure exactly how much all of this attention was buying. "There were a few doctors where it didn't make any difference, but far more frequently you could see a direct correlation," Ahari recalls. What was particularly striking, in the case of Zyprexa, was that even as more and more studies criticized the drug's side effects, it continued to win market share. The FDA didn't require that sales reps tell a doctor about every single study that had been done on a particular drug, only that what they did say was accurate."It's like a magician," says Dr. Robert Rosenheck, a professor of psychiatry at Yale University. "The magician just says, 'Look at my right hand. There's a marvelous rabbit in my right hand.' And you don't pay any attention to what's going on in their left hand. When you have such a devastating illness, and so much yearning for hope, it's easy for marketing to convert that hope into conviction."THE ALGORITHMThe pharmaceutical industry and the federal government have always had an unusually intimate relationship — the government is both the industry's watchdog and its biggest customer. The FDA regulates the development of a drug and, at least in theory, the marketing that follows its release. Because Medicaid and Medicare buy such a large portion of drugs — particularly in the case of the antipsychotics, since virtually no schizophrenics can afford private insurance — the companies lobby those agencies, and their state subsidiaries, to try to win preferences for their own medications. To make clear which drugs the government will pay for, some states issue complex medication algorithms — detailed "decision trees" that spell out precisely what a psychiatrist seeking government reimbursement should prescribe when confronted with certain symptoms. (Lilly, for its part, has lobbied extensively to keep state legislatures from favoring generics over Zyprexa.) But in 2002, an investigator in the Pennsylvania inspector general's office, a guy named Allen Jones, became convinced that another line had been crossed, and that the government itself had been enrolled in marketing the drugs.,/p>Following up on a complaint, Jones discovered that the state's chief pharmacist, Steven Fiorello, was receiving checks from drug companies — $2,000 for a speaking fee, $1,765.75 to fly in a psychiatrist for a meeting. Jones wondered if the money was buying anything else. Digging deeper, he learned that Fiorello was heading a panel that wanted to require psychiatrists in state hospitals, prisons and other institutions to prescribe newer, brand-name medications rather than older, cheaper generics. Under the new formula, the state would pay millions more to the pharmaceutical companies for antipsychotics like Zyprexa. Fiorello had touted the newer, more expensive drugs as better than the older ones. But as Jones examined the medical literature and called up experts, he noticed that the studies that Fiorello relied on were industry-sponsored; third-party studies seemed far less convinced of the merits of the atypicals. "Independent science, minus the drug-industry money, had come to a different conclusion," Jones says. "It was a big red flag."The practice of industry-paid doctors and research is so commonplace that for most medical professionals, it barely registers — it's just part of the background noise. Virtually every clinician in the country who conducts original drug research gets money from the pharmaceutical industry, because that's who pays for research. The industry currently spends 50 percent more than the government on basic medical research, a gap that has consistently widened for the past 15 years. But to Jones there was something different happening here: Fiorello was a state employee, not a university researcher. And this looked to Jones a lot like a bribe.Jones continued to probe. Fiorello's algorithm for Pennsylvania was modeled on a program called TMAP that had been developed by Dr. Steven Shon, medical director of the Texas Department of Mental Health. In all, Jones discovered, Shon and a team of researchers he worked with at the University of Texas had taken more than $2Êmillion in grant money — from atypical manufacturers and their nonprofits — to develop TMAP.When Shon's group finalized its work in 1997, the manufacturers got far more than they had paid for. The new algorithm made the more-expensive atypicals the preferred drug for doctors treating prisoners, students and poor patients covered by Medicaid. It set rules so stringent that if a doctor prescribed an older, cheaper drug instead of a newer one, they had to explain their decision in writing, making them vulnerable to malpractice lawsuits if the patient developed any problems. Influenced by the new algorithm, the state also reportedly treated the atypicals as the preferred drugs for certain mental illnesses in children, even though the FDA had not approved that use.,/p.Studies would later show that under the new guidelines, prescriptions of atypical antipsychotics in Texas increased sixfold by 2004. The government of Texas, in effect, had instituted a taxpayer-subsidized marketing scheme for the drug industry, one that gave preferential treatment to the newest and least-tested medications.The atypical makers paid Shon to fly around the country, taking more than 80 trips to talk up the merits of his new algorithm. In interviews from the period, Shon's sense of social purpose is palpable and zealous, as if he believed he were building a machine to save neglected schizophrenics. There were trips not just to Pennsylvania but to Italy and Japan. Eventually, 17 other states adopted versions of the TMAP program. It was, Jones believed, a classic bait-and-switch. "The scientific evidence didn't back the industry up," he says. "So they paid these experts like Shon and then let their opinions stand in for evidence. What's amazing is how well it worked."As Jones made progress on the case, his supervisor at the inspector general's office tried to warn him off. "Stop trying to be a salmon," his boss said. "Stop swimming against the stream." When Jones persisted, he was fired. "I could begin to see what was going on," he says now. Jones filed a suit in federal court alleging a cover-up, and his efforts eventually convinced the state of Texas to reject its own algorithm and sue the drug manufacturers for millions in damages. Fiorello was convicted of violating felony conflict-of-interest laws. Shon, who was forced to resign, ended up moving to Las Vegas. But he refuses to admit that he did anything wrong. The studies on the atypicals, he insists, indicated that they really were better drugs. "When you really look at the investigators involved and the procedures they followed," he told reporters, "they were all within what has been defined as appropriate in every medical field."In this, Shon is, more or less, right. The doctors who studied the atypicals were simply conducting business as usual. Jones, an outsider gazing in, thought he saw a basic quid pro quo, a corrupt transaction between two parties that stood to benefit. But it is possible that he missed a more complex and fundamental truth: that the system of developing and marketing drugs is so broken that it can coax corruption out of well-meaning doctors who think they are doing good. Every incremental permission that the atypical makers allowed themselves, and the regulators allowed them — structuring their studies in the most advantageous ways, omitting studies unhelpful to their cause, publicizing only the most supportive data — helped shift the medical perception of the atypicals. The companies didn't need to pay off doctors. They just needed to put the grant money out there and wait for the true believers, the Steven Shons, to walk through the door.GOING OFF-LABELIn the fall of 2000, marketing executives at Eli Lilly summoned the company's sales representatives to a meeting in Orlando, at which they planned to introduce a new strategy, one born not of nervousness but of success. Zyprexa had recently won FDA approval for treatment of bipolar disorder as well as schizophrenia, but these were limited markets. "To get beyond a certain point," says Sandra Chow, a drug-industry analyst with the research firm Decision Resources, "companies that manufactured the atypicals needed to expand into the primary-care market." The big money, in other words, lay in the offices of suburban doctors and family physicians.At the Orlando conference, Lilly edged close to self-parody, a real-life version of The Office. Someone at the company rewrote the lyrics of "Viva Las Vegas," urging sales reps to target the primary-care market: "Thousands of patients waitin' out there/The way they're livin' just ain't fair/But now you bet they can get/Some help from primary care/Viva Zyprexa! Viva Zyprexa!"But there was a problem: It was illegal for the company to suggest any "off-label" uses for Zyprexa to doctors, because no treatments other than schizophrenia and bipolar disorder had been approved by the FDA. And almost all schizophrenic and bipolar patients were being treated by psychiatrists, not by primary-care doctors. But that didn't deter Eli Lilly. The company's executives, internal documents would later show, had been planning a strategy shift for about a year, e-mailing suggestions about opportunities in the primary-care market. Some doctors, one executive wrote, might be willing to prescribe Zyprexa for depression, if they could be convinced that what they thought was depression was in fact one half of the mood swings of bipolar disorder. Another executive suggested marketing Zyprexa to treat the elderly. "Dementia should be first message," he wrote, noting that primary-care physicians "might prescribe outside of label."In Orlando, the executives detailed their plan. As part of their marketing initiative, they had compiled "profiles" for three types of patients they wanted their drug reps to suggest Zyprexa would help. One was "Donna," a single mom in her 30s who came to the doctor's office in "drab clothing," complaining that she felt anxious, irritable and in need of little sleep. The second was "Mark," a middle-aged man who experienced mood swings. The third was "Martha," a widow who had grown agitated and restless since her grown children had left home.In its marketing strategy, Lilly argued that such common, widespread symptoms actually indicated diseases for which Zyprexa was approved — bipolar disorder in the first two cases, schizophrenia in the last — though to most psychiatrists, the symptoms didn't come close to describing those disorders. The goal for sales reps, according to the Lilly's strategy document, was to "expand the market of Zyprexa by redefining how primary-care physicians help reduce mood, thought and behavioral disturbances." Other company documents, which later came to light during court proceedings, encouraged sales reps to use the term "mental disorders," which was "intentionally broad and vague, providing latitude to frame the discussion around symptoms and behaviors rather than specific indications." Other court documents accuse Lilly of pushing Zyprexa for anorexia, autism and sleep disorders, a charge the company denies.Some consultants for Lilly grew alarmed. "They were clearly pushing off-label use," says Dr. Lon S. Schneider, a psychiatrist at the University of Southern California who has served as a consultant for Lilly. The company, he says, pushed studies that supported its case while ignoring those that were negative. Schneider discovered ads in journals for geriatricians and nursing-home administrators that seemed to advocate off-label use of the drug to relieve the symptoms of dementia — even though he knew that Lilly's own studies of elderly patients with dementia had found the drug worked no better than a placebo. (In 2005, the FDA required Zyprexa's packaging to include a "black box" warning — the agency's most severe — emphasizing that the drug increases the risk of death for patients with dementia.)Rhonda Stovall, a sales rep assigned to sell Zyprexa, had helped Lilly find alternative markets for drugs before, selling a repackaged version of Prozac as a treatment for PMS. At one point, as the company tried to break into the market for general depression, it came out with a formula for what it called "treatment-resistant depression," suggesting that doctors mix Prozac and Zyprexa. Such formulations involved a sort of pharmaceutical sleight of hand: "You focus on the symptoms, that's what we were taught," Stovall says. "You don't focus on the disease." The reps told primary-care doctors that what they thought of as depression might in fact be bipolar disorder — which, conveniently, could be treated with Zyprexa. Internal call sheets from the company's sales reps in Alaska show them visiting doctors, leaving peanut-butter cups and the Donna profile. "You may have some patients who are bipolar, and you've never really thought of the problem like that," Stovall recalls telling physicians. "Let me tell you about Zyprexa, how it can help with these mood swings."Within three months, the Viva Zyprexa campaign generated 49,000 new prescriptions for Lilly, bringing in hundreds of millions of dollars in revenue. Today, a quarter of Zyprexa's sales are in off-label markets.But peddling the drug to anxious mothers and mildly depressed middle-aged men meant that Lilly was inflicting the side effects of Zyprexa on tens of thousands of unwitting patients. Dr. John Gueriguian, a retired FDA investigator who has served as an expert witness in lawsuits against Lilly, believes the company was aware of the connection between the drug and diabetes by 1998 but concealed that evidence. Lilly put "profit over concern of the consumer," he said in court testimony. But the new markets only served to amplify the drug's side effects. If schizophrenics gained more weight than they were supposed to, Stovall points out, no one really complained — schizophrenics, after all, have bigger problems to worry about. "But if you've got your soccer mom who comes in, and the doctor gives her Zyprexa, and suddenly she goes from 110 pounds to 200 pounds — well, it could be a problem."The weight gain was visible and striking. "You'd see it from one visit to the next," says Dr. John Abramson, a clinical instructor at Harvard Medical School who has studied the atypicals. "They'd come back, and they'd look like a different person. It looked like someone stuck an inflation needle in them and pumped them full of air." There were other effects, too. Patients got dizzy; they got tired; some saw their blood-sugar and cholesterol levels spike. (Lilly added strong warnings about these last two side effects in 2007, after publicity over Zyprexa's risks had mounted.) Even more worrying, as researchers examined the many studies that had been conducted on the utility of the atypicals in treating the elderly, they found that tiny, persistent differences in the rates of death between the population given the new drugs and those given a placebo began to accumulate. "There would be one death in the patients on the drug, none on placebo in one trial. Three on the drug, none on placebo in another trial," says Schneider, who conducted some of the analyses. "When we summed this up, we found there was a small but clear risk for death."Such side effects might have been more easily tolerated if the drug actually eased conditions like depression or dementia. But there was little evidence that Zyprexa did any good for off-label uses. In schizophrenics, the drug at least served a much-needed purpose, and psychiatrists, properly informed, could weigh the benefits against the side effects. But with the new conditions for which the drug was being prescribed — depression, dementia, anxiety — no one knew exactly what the benefits were, because Zyprexa's effectiveness for them had not been studied. All that was left was the side effects. "Doctors had no way of knowing if the drug worked for those indications," Abramson says.And yet the use of the atypicals continued to spread. To some psychiatrists, their success seemed the emblem of a disturbing new era. "Turn on the television and look at the commercials," says Neimark, the Pennsylvania Hospital psychiatrist. "We sell the magic pill. On one page it's like everything's stormy and downcast, and on the next page the guy's at the bowling alley, and he's the life of the party." The advertising, he says, has consequences. "Everyone comes to doctors expecting cures — but in some ways, they're fantasies."THE RUNNERBy the early 2000s, the categories of off-label users were beginning to add up: soccer moms, the elderly and now, researchers were increasingly finding, children. This was unusual. Because kids responded badly to the earlier versions of the drugs — they exhibited, as adults had, the characteristic facial distortions, the lethargy and nonfunctionality — the consensus of most psychiatrists was to find other ways to treat children. "During medical school, I remember very vividly one kid we had in the psychiatric unit who we just couldn't get under control," says Dr. Mark Olfson, a professor of clinical psychiatry at Columbia University. "He was attacking other patients on the floor. Because we were at our wits' end, I asked the nurse on duty, 'What about an antipsychotic? And she said, 'Mark we don't use these drugs for behavioral control in kids.' That was exactly the attitude."But that attitude began to change in the 1990s. The new atypicals carried with them the promise that antipsychotics would be softer and less severe, and the use of the drugs escalated dramatically. Since 1993, the number of kids on the atypicals has soared fivefold. The leap took place in categories where antipsychotics had not previously been prescribed: Children were now being given the drugs for anxiety, ADHD and a newly popular diagnosis, pediatric bipolar disorder. "If I get really mad and throw a piano bench at you, we used to call that aggressive behavior," says Dr. Gabrielle Carlson, director of child and adolescent psychiatry at the Stony Brook University School of Medicine. "Now we call that a mood swing. It's a way of labeling kids that is quite insidious."The manufacturers of the drugs were not immune to the possibilities offered by the emerging market. In 2003, a Lilly executive named John Lechleiter, who would later become the company's CEO, sent an e-mail to some of his colleagues. "We must seize the opportunity to expand our work with Zyprexa in this same child-adolescent population," he wrote. The drugs grew so prevalent that by 2006, a study found, nearly one in five children who visited a psychiatrist left the office with a prescription for an antipsychotic. "People began to think it was almost completely unethical not to give kids the atypicals," says Dr. Linmarie Sikich, an associate professor of psychiatry at the University of North Carolina. "But we didn't have any long-term studies" of the drugs' effects.The lack of science, however, didn't deter doctors from prescribing them to children. The attraction was the same as in adults: the calming influence the chemicals could have on kids who otherwise seemed uncontrollable, mad with rages and distraction. "Can I tell you what's going to happen to someone who was put on an atypical 20 years ago, between the ages of 10 and 11?" asks Carlson, the pediatric psychiatrist. "No. That's where it's hard to look someone in the eye and say, 'No sweat.' At the same time, if you have a son who is unmanageable at home and who's being offered residential treatment, and you have the choice of that or giving him this medication, what do you pick?"As the use of the atypicals overran the evidence, however, disturbing reports began to emerge. Between 2000 and 2004, the deaths of 45 children were linked to the atypicals. Some were strikingly young. An eight-year-old boy died of cardiac arrest. A four-year-old boy died of complications from diabetes. Perhaps most vivid of all was the case of a 15-year-old boy in South Florida referred to by social workers as a "runner," a kid who kept fleeing his exasperated foster parents to return to his birth mother. Admitted to a psychiatric hospital by a judge, the boy was tethered to a chair and pumped full of atypical antipsychotics, presumably to calm him. When his lawyer came to visit him, she found the boy not only sedated, but suffering from another acknowledged side effect of the atypicals: His breasts had become engorged and started to leak milk. The boy was lactating.The risks of prescribing the atypicals to children became clear last fall, when Sikich, the UNC professor, delivered the results of a study she conducted on behalf of the National Institutes of Health. Not only were the atypicals no more effective than the older, cheaper, antipsychotics, but they caused side effects that prompted more than half of the kids to drop out of the study within a year. (Earlier, industry-funded studies had claimed far lower drop-out rates.) Kids gained as much as 35 pounds in as little as eight weeks, saw their cholesterol and insulin levels rise, and experienced painful rigidity in their muscles — a side effect that the newer antipsychotics were supposed to have eradicated. In fact, Sikich concluded, the atypicals had more-severe side effects than the older antipsychotics that pediatricians had resisted using in children. "All the drugs," she says, "are dirty drugs. They act in different places in the brain, and they all have different effects — some that we want and some that we don't."LAX OVERSIGHTBy 2001, as the atypicals threatened to break $4 billion in annual domestic sales, officials at the National Institutes of Health decided to undertake the largest-ever investigation of schizophrenia. Studies had continued to appear evaluating the merits of the different types of antipsychotics, but the data was all over the place. Some concluded that the new drugs were a godsend; others said they did little. Most exasperating of all, it was almost impossible for a doctor, investigating in his spare time, to weigh the potential conflicts of interest within any individual study — virtually everyone in research psychiatry was affiliated with one drug company or another, and their findings, oftentimes, seemed to mirror their affiliations. The NIH decided to commission a comprehensive set of studies of its own, free from pharmaceutical influence, to evaluate the merits of the new drugs. Though it had for two decades entrusted drug development to industry, the government was effectively acknowledging that the data this system had produced had become so perplexing to physicians that it needed to settle things itself.As data from the studies emerged, Robert Rosenheck — the Yale psychiatrist, who helped analyze the findings for the NIH — began to see significant divergences between the government studies and those produced by the pharmaceutical companies. Again and again, the government found, the new drugs were no more effective in treating schizophrenia than the old drugs, which were far cheaper. In addition, the atypicals appeared to dramatically increase the risk for diabetes and other often fatal illnesses. The great advertisement for the new drugs — that because they didn't cause the Parkinson's-like symptoms of the older drugs, patients would stay on them for longer — turned out to be substantially exaggerated as well."What you have is both industry and opinion leaders claiming this is a breakthrough drug," Rosenheck says. "And then three large government-funded studies come out, and none of them finds evidence of a breakthrough."Puzzled by the discrepancies, Rosenheck began to work back through the original studies. What he found was not one smoking gun but a number of small manipulations. Researchers in the original Lilly study, he concluded, had not only skewed the results by concealing data that contradicted their preferred outcomes, they had also failed to administer drugs commonly used to offset the side effects of the older antipsychotics — a decision that made the older drugs perform worse in the clinical study than they did in the real world.By the time the studies were completed, however, the damage was already done: More than 20Êmillion people worldwide have now taken Zyprexa. As the problems leaked out, lawyers for consumers and states began to look carefully at the industry's atypical studies and the methods the drug companies used to promote their products. In October, Lilly agreed to pay $62 million to 32 states to settle claims that it improperly marketed Zyprexa for off-label uses. "The company's deceptive marketing practices were illegal and highly dangerous," according to Lisa Madigan, the attorney general of Illinois. Although Lilly admitted no wrongdoing, the settlement was the largest ever paid by a drug company in a state consumer-protection case. On January 15th, Lilly agreed to pay an additional $1.4 billion to settle federal charges of illegal marketing — a record settlement in a corporate whistle-blower case.But the penalties pale in comparison to the money that Zyprexa makes for the company. In 2007, the latest year for which figures are available, the drug generated $4.78 billion in sales, accounting for 25 percent of Lilly's total revenues. As Rosenheck reviewed the marketing history of the atypicals, he concluded that misleading data told only part of the story. "How did this happen?" he wondered. "How did this product that's not very advantageous wind up being marketed as a great advance?" Part of the underlying cause, he concluded, lay in the privatization that began with the Reagan revolution. "Ultimately, the conservative turn — with its faith in deregulation and the virtual infallibility of markets — are at the root of what allowed this to happen," he says.In January 2002, as the Bush administration's second-tier appointees were beginning to settle into their jobs, a former pharmaceutical lawyer named Daniel Troy, who had just been appointed the chief counsel at the FDA, was given striking new powers. The agency's medical evaluators would no longer have the authority to send a warning letter directly to a drug manufacturer engaged in questionable marketing practices — marketing like the kind that Lilly had used to sell Zyprexa. Now, FDA evaluators would have to get approval from the Office of the Chief Counsel — from Troy himself, effectively — before sending out such a letter. The shift had a remarkable chilling effect on government oversight of the drug industry: The length of time it took the FDA to issue a warning letter about deceptive advertising quintupled.For a decade, the FDA had been instituting small but significant accommodations that increased the intimacy of its relationship with the drug industry. First, in 1992, it began requiring drug companies to pay application fees when submitting new drugs for review — a move that made the agency dependent on industry for more of its budget. Throughout the 1990s, with a Republican Congress demanding a new friendliness to industry, the posture of the agency continued to shift; by the time Bush took office in 2001, the FDA's approval rate for all new drugs had jumped from 60 percent to 80 percent. The agency was so industry-friendly that even the vast and powerful pharmaceutical lobby wasn't pushing particularly hard to further weaken lax regulations. "After 2000, the companies saw that the agency was going to be very lax," says a retired senior FDA official who asked not to be identified.Bureaucracies, like fraternities, are idiosyncratic places, formed of personality, habit and tradition. In the FDA, Bush's political appointees were coaxing the agency's bureaucrats and scientists to go easy on the drug manufacturers. "What's different now is a lot of these higher-up career officers are much more industry-friendly than was the case two decades ago," says Dan Carpenter, Freed Professor of Government at Harvard and a leading scholar of the agency. By 2000, when the Los Angeles Times documented how the FDA had approved seven deadly drugs, it turned out that the agency had repeatedly ignored strenuous objections from its own experts.Under Bush, experts say, the FDA has effectively become enrolled in the erosion of its own power. Instead of supporting consumers harmed by dangerous drugs, Troy's office began filing briefs on behalf of drug companies facing lawsuits from the families of people harmed by medications. In some cases, congressional investigators found, Troy operated in concert with the pharmaceutical companies. The number of warning letters issued by the FDA, a key indicator of how vigilant the agency is at tracking violations by drug manufacturers, has now fallen to half what it had been at the end of the Clinton administration. The industry is also well connected with Republican power: Former president George H.W. Bush has served on the board of directors of Eli Lilly, and Mitch Daniels, his son's former budget director, served as the company's vice president."With the FDA where it is, the pharmaceutical companies control far too much of the process, from the trials to the marketing," says Abramson, the Harvard instructor. A decade ago, it was a few figures on the fringe of the medical profession who sensed the trouble in this, and they had the feel of people who had been gazing into the vortex too long. Now it is professors at Yale and Harvard, and, in the case of the atypicals, by implication, the government itself.BEYOND DRUGSDuring the late 1960s, the World Health Organization assigned a psychiatrist named Norman Sartorius to study schizophrenics in different parts of the world. Years later, Dr. Sartorius and his fellow researchers followed up on his patients in the initial study, to track their recovery. The researchers expected to find that patients in the West, who have far better access to modern medications than those in the Third World, live longer and participate more fully in society. But the study found precisely the opposite: Schizophrenics in the developing world, with minimal access to medication, do better than those in the West. "It was a very surprising finding," Sartorius says. It was also controversial. But as follow-up studies confirmed Sartorius' initial findings, epidemiologists began to wonder if the evidence suggested something profound and definitive about the shortcomings of antipsychotic drugs. If Egyptians and Bangladeshis did better without the drugs than Americans did with them, the thinking went, how good could the drugs be?One of the scientists who found himself fascinated by the discrepancy was William Eaton, a leading schizophrenia researcher who chairs the department of mental health at Johns Hopkins University. As he explored the ways in which schizophrenics live in the developing world, he began to think that the drugs were still crude enough that social factors might have a bigger effect on treating the disease. In the cluttered bazaar in Aswan, Egypt, Eaton met a schizophrenic man — his tongue flicking, his face bent by the tremors of Haldol — who was employed in his father's tiny shop; later he visited the man's home, where his wife had just given birth to the couple's first child. "The point is that this guy's family structure was such that he could get married because he was being protected by his father," Eaton says. "That's bound to be better than someone in the West who has to drop out of college and ends up on the street homeless."Eaton began to see similar patterns elsewhere. In the surreal destitution of India, he visited the house of a schizophrenic — a dozen relatives crammed into three rooms, a portrait of John F. Kennedy tacked to the wall — where the family rotated round-the-clock care of the sick man. In such settings, Eaton believed, lay a basic illumination about the mystery of schizophrenia: Drugs might do some good, but they still weren't as effective as a supportive, caring environment. "The medications are helpful, but they don't work for everybody, and they have lots of side effects," Eaton says. We tend to think of drugs as solving discrete problems — penicillin to eliminate bacteria, insulin to modify diabetes — but the antipsychotics are shooting at an invisible target. With schizophrenia, says Eaton, "we don't know what the hell is going on."Visiting the most celebrated mental-health centers in the United States, it is hard to conclude that, even after the innovation of the atypicals, the drugs make a decisive difference in care. In November, I spent a day with Dr. Ralph Aquila, a schizophrenia specialist at Columbia University, who works with a legendary center in New York called Fountain House. The "clubhouse model" developed there — which stresses job placement for even the most severely mentally ill, and a transition to functionality — has been widely praised and adopted; there are now 400 such centers in the United States, as well as dozens overseas. "Schizophrenia used to be synonymous with a death sentence," Aquila tells me. "I can get them paying taxes."There are cases, Aquila says, where drugs play an important role. Unlike many other psychiatrists, he still prescribes Zyprexa — believing that social workers in the closely monitored environment of Fountain House can track unwanted side effects and make any necessary adjustments. But as he spends an afternoon treating patients, it becomes clear that the challenge for those treating schizophrenics goes far beyond tinkering with dosages and medications. One long-term patient, who had been focused earlier in the day, is suddenly skittish and distracted; Aquila suspects a crack relapse. A woman on Zyprexa has gained 80 pounds and had to have her stomach stapled; Aquila checks her weight, asks about her new apartment. A young man has a new job with a messenger service; Aquila, pleased, asks him how frequently he is making it to work.This is incremental and shaky-footed work: Aquila expects his patients to have false starts and relapses, shifting, suddenly, from a medicated, functional state to more-florid and dysfunctional psychosis. Some elements of the medical establishment — at Harvard, even at Columbia — still view such efforts as social work rather than medicine. But to Aquila, the up-close contact with patients is what is essential. Many schizophrenics see a doctor only once a month, for a 15-minute consult, and Aquila believes that those psychiatrists have no chance to follow up on the things that matter most. "You don't know what the person's really about — you miss out on something that you could latch on to, to really develop a relationship," he says. "The meds are just a small part of the equation."Aquila has learned a truth like those that Eaton discovered more distantly: a feel for the enormity of the problem, and a sense that the solution lies in hard and incremental work, with frequent backsliding. He has learned, in other words, that there is only so much the drugs can do. He has come to believe that there is no magic here.Written by Ben Wallace-Wells for Rolling Stone magazine[Issue 1071 — February 5, 2009]Q&A with Ben Wallace-Wells...Contributing editor Ben Wallace-Wells takes a close look at the marketing of Zyprexa, a drug created to treat schizophrenia that wound up being used on depressed moms and misbehaving kids in "Bitter Pill." Wallace-Wells, who also wrote "How American Lost the War on Drugs" for the magazine, spoke with Rolling Stone about breaking down Big Pharma for his most recent story:How did you start reporting "Bitter Pill"?My girlfriend at the time, now my wife, was a medical student working with patients at a psychiatric hospital. I was struck by the stories that she'd come home with every night. I got the sense through her of the density of the illnesses and the imperfection of the drugs. So, I thought that that I could try to explain the ways in which the pharmaceutical industry was trying to solve a problem and the way in which its solutions were coming up short. As I was looking at all that, it happened that Eli Lilly was sued by the state of Alaska for overstaying the benefits of Zyprexa and for marketing it off-label. As I began to try to make sense of the case you just felt this awesome story looming up, where you went from a drug that had a very tiny population of users and a very specific population of users and ended up being blown up into this absolute blockbuster super drug. I was fascinated by the scientific and marketing techniques and manipulations that had to happen for that to take place.Isn't what the pharma companies were doing due to the natural function of capitalism to a certain degree? Isn't this just how corporations behave? Should we be shocked by this?I don't know that we should be shocked by it, but I think we should be disturbed. The way the pharmaceutical industry in particular operates for profit, it's always sort of running up against the point of illegality. This is particularly pronounced when it comes to this issue of off-label use. The FDA approves drugs for very particular indications. Doctors are permitted to prescribe drugs for other indications probably for good reasons, but pharmaceutical companies are not permitted to push these drugs for uses that the FDA has not approved them for. But often, particularly with psychiatric illnesses, there's this huge profit to be made in off-label use. You see it here where a drug for schizophrenia, which is a very small market — a few hundred million dollars a year — gets blown up into a many-billion dollar market. It's kind of pushing that line, and going into that gray area and, in some cases, overstepping that line. And it's not always possible for the federal government to watch the companies as closely as we'd like. The safeguards that exist for monitoring them are, in some ways, faulty.And under the Bush Administration, oversight in every area has been stripped away. Would this case have happened 10 years ago?That's one of the fascinating things about this story: You see the rot that comes with the Bush Administration very vividly. The numbers of warning letters that the FDA sends out to companies if they're overstepping just drops. And the number of staff the FDA has to devote to policing these violations is slashed. There's been a dramatic erosion of the FDA's ability to monitor drugs. And you end up with scandals and tens of thousands of people living with diabetes who wouldn't otherwise have diabetes if they hadn't been put on these drugs, that scientists hadn't properly checked out and whose marketing was over the line. That's the very real kind of real identifiable human cost of the bureaucratic rot that we have seen over the last decade.What surprised you reporting this story?What was striking about it was how regular this was for them, how normal. This is one of the biggest scandals in recent pharmaceutical history. Eli has already paid 2.6 billion dollars in fines and to settle lawsuits — just an enormous amount of money. And yet, it's a 3 or 4 billion dollar a year drug. What's most disturbing about this whole story is that as bad as all this press has been and though Eli have settled investigations by federal prosecutors and claims by people who have been hurt by using this drug for huge amounts of money, they still came out way ahead.It becomes just part of their cost of doing business.Yeah. One of the doctors I talked to who is an expert in this case said to me, "We've seen this with a number of drugs." There's a 10-year patent protection companies get when they introduce a drug. Usually, around year two or three, there'll be a lot of reports of problems with a particular drug. Obviously, this doesn't happen with every drug, but it's a consistent pattern with those drugs where something's gone wrong. For four or five years the company will fight tooth-and-nail with any scientists who say that they've cooked the books. They'll be very antagonistic to reporters who ask questions and then, around year 10 you start seeing a lot more accommodations. They start going to researchers and saying, "Well, maybe you guys were right all along." They'll start settling suits, and they'll start saying to reporters, "Yeah, maybe we did something wrong." So, right now, Eli Lilly is right on the cusp of that and they're beginning to settle suits. The difference in part is that if you're on year three of a patent, you're still hoping to goose most of your profits out of it. By year eight, there's not that much left, so you're much more open to acknowledging difficulties with the drug. There's this arc that repeats itself again and again.Do the doctors and psychiatrists who prescribe these bear some responsibility?I think they do. One of the things that you realize when you make your way through a story like this is that there are hundreds of studies that are out there that say completely contradictory things about a particular drug. Many studies have been sponsored by the industry and many others have been conducted by independent researchers. For a particular physician, particularly a physician who is not in the practice of dealing with schizophrenia drugs, to make his way all through that material, with all of these very strongly stated but completely conflicting claims is a really difficult task. So, at some level, it's a lot to expect of particular physicians to be able to sort all this out. But the way that a lot of physicians seem to deal with it is to just sort of trust the drug companies a little more than is warranted. What seem so ridiculous to us is what pharmaceutical/drug reps do, and we deal with this a little bit in the story, like leaving muffins with doctors or leaving pens with the name of their drug really work. I think that you'd prefer a medical profession that was less susceptible to such cheap pay-offs. You wish that the sales pitches were a little less successful and that's kind of a depressing part of it and that the doctors were a little more skeptical and a little more circumspect.

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