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Thursday, May 6, 2010

Read the transcript to the Thursday show

Guest: Shannon Zimmerman, James Cavanaugh

KEITH OLBERMANN, “COUNTDOWN” HOST:  And, now, ladies and gentlemen,

with another hour of excitement and fun—here is Rachel Maddow.

Good evening, Rachel.

RACHEL MADDOW, HOST:  Another hour of excitement and fun?

OLBERMANN:  Yes.

MADDOW:  I‘ve been upgraded.

               

OLBERMANN:  Well, I was referring to this hour and now you‘re another

hour, I wasn‘t—go ahead, please.

MADDOW:  Thank you very much, Keith.  Appreciate it.

(LAUGHTER)

MADDOW:  And thanks to you for staying with us for the next hour of

excitement and fun.

The U.K. election, the latest on the Times Square bombing, and the

coverage of the Times Square bombing, plus, the dramatic new news on the

B.P. oil disaster in the Gulf today—that is all still to come this hour.

But we start with this: How much would you pay for a Sam Adams right

now?  An ice cold Samuel Adams Boston Lager?  How about if I told you you

could have one for free?

Actually, scratch that.  How about if I told you you could have the

entire company for free?  For a very, very brief un-shining moment this

afternoon, Wall Street valued the entire Boston Beer Company, the company

that makes Sam Adams beer, Wall Street valued the entire company at

precisely zero dollars.

Boston Beer was a number of companies who, in the bizarre flash crash

that happened on Wall Street today, briefly saw its stock price go to zero. 

The company was worth zero dollars.

It wasn‘t the only one.  A blog at “The Wall Street Journal” today

rounded up some of the others.  Exelon, one of the largest utility

companies in the world, normally valued at about $30 billion, today was

briefly worth zero dollars.  It was free.  The stock price of Exelon was

zero.

Same goes for Accenture, the big consulting firm.  Stock price at one

point today, zero.

The utility CenterPoint Energy, also, stock price: zero.  The

specialty pharmaceutical company Impact Labs, again, stock price at one

point today, zero.

Even if you don‘t know anything about the stock market, you can see

from the stock prices and the graphs that we just put up that aside from

the huge flash drop in the middle of the afternoon, the prices of shares of

those companies was actually relatively steady today.  They all went down a

little bit from opening bell to closing bell, but nothing that would get

them on to cable news show that‘s aren‘t usually about the stock market.

Do you want to know even something weirder that happened today?  Even

weirder than all of those stocks going to zero at one point?  It wasn‘t

just stocks dropping inexplicably to zero.

“The Journal” also notes that at the same time that some companies

were becoming free, becoming valued at absolutely nothing according to Wall

Street, some other companies went off charts in the other direction.  The

auction house, Sotheby‘s, for example, which has the stock price bid, get

it, Sotheby‘s auction—Sotheby‘s started the day with its shares costing

$34 and something.

Sotheby‘s ended the day with its stock costing $33.  It‘s a drop, but

it‘s no big, right?  It goes between $34 and $33, whatever.  Until you

notice that in the middle of the day, at one point, the stock price of

Sotheby‘s shares went to $100,000 per share—which means that at some

point today, Sotheby‘s went from a company being worth $2.2 billion to

being a company worth $6.8 trillion.  Which means, for a minute, that one

company had a net worth of somewhere between the size of the entire

economies of the United States and China.

Congratulations, Sotheby‘s.  Bid high.

Even for people who don‘t watch the stock market, what happened on the

market today was nuts.  It was crazy.  And then almost as soon as it

happened, the flash crash was over.

I want you to watch this one insane minute of what happened on CNBC

during this weird crash.  It was—again, this is a very specific moment

in which this all happened this afternoon, just watch this—watch what

happened on CNBC.  We always have this on in the background of the offices

here, right?  And on CNBC during this minute, they‘re talking about Procter

& Gamble stocks.

Watch this.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE:  P&G is now down 25 percent.

UNIDENTIFIED MALE:  Well, if that‘s true, if that stock is there, you

just go and buy it.  It can‘t be there.  That is not a real price.

(CROSSTALK)

UNIDENTIFIED MALE:  Oh, just go buy Procter?

UNIDENTIFIED FEMALE:  This is unprecedented.

UNIDENTIFIED MALE:  Just go buy Procter & Gamble.  Just go buy it.

UNIDENTIFIED FEMALE:  It is liquidating.  There‘s a distress.

(CROSSTALK)

UNIDENTIFIED FEMALE:  Something else happened here.

UNIDENTIFIED MALE:  Forty-nine a quarter bid for 50,000 Procter in my

hedge fund.  I mean, this is good—

(CROSSTALK)

UNIDENTIFIED FEMALE:  -- that‘s incredible.  Nothing has changed for

Procter & Gamble in the past four minutes.  Nothing.

UNIDENTIFIED MALE:  Well, when I looked at it, it was $61 I‘m not

interested.  It‘s at $47, well, that‘s a different security entirely.  So,

what you have to do, though, you have to use limited orders because Procter

just jumped seven points because I said I liked it at $49.  So, I mean, you

got to be careful.

When Rick Santelli was saying, look, you know, this is a dangerous

market.  What I‘m saying you put in a $49 bid for 200 shares for Procter,

if you get hit, fine.

UNIDENTIFIED FEMALE:  Right.

UNIDENTIFIED MALE:  This is very much 1987, a little different from

2007.  So in 1987, there was a breakdown where Procter goes from, say, $50

to $12.  All right?  And you want to be there at $13.  I mean—

(CROSSTALK)

UNIDENTIFIED FEMALE:  Wait, wait, look.  It‘s coming up.

UNIDENTIFIED MALE:  It‘s a fast market.  It‘s a fast market.

UNIDENTIFIED FEMALE:  But the market was down 900 points, we‘re now

down 688.

UNIDENTIFIED MALE:  So, I buy 50,000 at $49.  And now, flip it at $59,

and I just made—I just made 500 Gs.

(END VIDEO CLIP)

MADDOW:  I just made 500 Gs.  Anybody who just did what I said to do

just made hundreds of thousands of dollars, millions of dollars?  Boom! 

And then it was over.

The stocks go, boink and then come back up.  The markets overall still

ended up over 300 points down today.  But at one point, they were down more

than 1,000 points.

NASDAQ and the New York Stock Exchange, ultimately, late in the day,

decided to do something kind of amazing.  They decided to cancel, to annul

all the trades that took place in that crazy moment.  They decided to annul

all of the trades between 2:40 p.m. and 3:00 p.m. Eastern, if those trades

showed a fluctuation of more than 60 percent of what they were before the

flash crash.

What on Earth happened today?

Joining us now is Shannon Zimmerman, the senior analyst at the Motley

Fool, an online investment Web site.

Shannon, thanks very much for being here and helping us make sense of

this.

SHANNON ZIMMERMAN, SENIOR ANALYST, THE MOTLEY FOOL:  Great to be here,

Rachel.

MADDOW:  What can you tell me as a person that doesn‘t follow

financial news that closely, doesn‘t know that much about markets, what can

you tell me about what happened today?

ZIMMERMAN:  Well, Boston Beer went to zero because it‘s priceless. 

You‘ve got to love Sam Adams.  Basically, market history shows if you have

a rally where you‘ve come as far and as fast as we have since the March

2009 lows.

There‘s a psychology, there‘s a psychological aspect to this, where

people are expecting a kind of correction.  And so, you have what‘s going

on in Greece, which is a serious story.  That‘s been in the atmospherics

for quite a while.

And so, people are expecting a correction.  You have Greece happening,

and then, somebody fat fingers a key.  Well, lo and behold, you have a big

crash which we had, temporarily at least today.

MADDOW:  Hold on, hold on, hold on.  Somebody fat fingers a key—

what are you talking about?

ZIMMERMAN:  Now, this is not confirmed, as I understand it.  But a

trader hit a “B” rather than “M” as in billion rather than million.  And

these were S&P future contracts and that sort of caused a cascade, a domino

effect that crashed the market.  And that was the big factor—

MADDOW:  Hold on, hold on, hold on.  Now, this is MSNBC not CNBC, and

I‘m an idiot when it comes to this stuff.  So, somebody—

ZIMMERMAN:  I don‘t believe that for a second.

MADDOW:  Somebody is buying futures, right, on a particular stock, on

the market doing a particular thing?

ZIMMERMAN:  In this case, according to reports, it‘s on the market

doing a particular thing, S&P futures contracts, and the magnitude of the

order was quite a bit larger.  Then the trader intended maybe he was using

one of the virtual keyboards on his iPad and he fat-fingered it and that

caused a big ripple effect.

MADDOW:  So, the trader is trying to buy X million futures, buy X

billion futures, and the market go—

ZIMMERMAN:  Exactly.

MADDOW:  And does the market freak out because one guy does that,

because systems are automated to follow individual large trades like that? 

Or does the market freak out because actual human beings are freaked out

because of what this guy did wrong?

ZIMMERMAN:  Well, it‘s a little bit—it‘s a little bit of both.

MADDOW:  OK.

ZIMMERMAN:  So, yes, there are machine glitches and machine rules. 

And so, certain things happen and machine trading kicks in.  But then, once

the market sees that and you can‘t—you know, it‘s an efficient market

most of the time, but you can‘t process news in real time.  And so, people

panic and I think it‘s the bad old days of late 2008, lo and behold,

they‘ve got to get out of the market and a lot of people—a lot of people

did.

It looks like a lot of those transactions that happened as a result of

the glitch are going to be rescinded.  There maybe some pushback on that

from the people who were the counterparties actually made money, but I

think that‘s probably a wise decision.

MADDOW:  So, all of this—a bunch of stocks, as we describe, go to

zero, some other stocks bizarrely go to $100,000 a share from the $30 a

share territory.  A few people who are either lucky or very quick on the

trigger make zillions of dollars off of this wild market fluctuation.  The

people who profited off it, as well as the people who lost off this

fluctuation will both expect to be made whole—both expect to be brought

back to where they were before this glitch happened because of the

canceling of the trades?

ZIMMERMAN:  Well, obviously, if you profited from the trade, you

probably don‘t want to be made whole in the reverse direction.  That‘s

going to be—that‘s going to be the rub that the exchange will have to

deal with.  You know, Sotheby‘s, they had a Picasso record I do believe. 

So, maybe that accounted for some of their pop.

MADDOW:  In terms of the glitch being corrected and in terms of trying

to figure out what went wrong, whether or not something like this could

happen to the market again, which is obviously not something that makes

people feel very confident in our financial infrastructure, there remains

the substantive issue, the non-process issue of Greece.

Why is Greece something responsible for markets actually losing

significant percentage around the globe, including our own?

ZIMMERMAN:  Right.  That‘s a good question.  So the fat finger is like

slapstick farce and what‘s happening in Greece is a real tragedy.  And so,

that‘s been hanging over the market for several days now and the bailout,

folks thought would contain that, but apparently, that‘s not the case.

And so, really, your viewers are probably readers, or many are readers

of Paul Krugman, he‘s written quite intelligently about this, and there‘s a

way in which the E.U. could come unravel.  But there‘s a forced marriage in

some respects, of very economically strong countries in absolute terms and

relative terms like Germany and U.K. and France and then weaker countries

as well.

There are not like the United States, there are disparate interests

and sometimes very much competing interests in terms of the economy.  And

so, you know, when Germany pushes back on the yield that Greece is going to

have to pay on the debt, it issues—and I know this is a bit technical—

but essentially how much interest are you going to have to pay on the money

you‘re going to borrow, well, that was sort of pre-staging the dustup that

happened.  And then Germany kind of relented.  But we‘ll see how much

longer that lasts because if you don‘t share common interest, common

economic interest as the eurozone doesn‘t always, that‘s somewhat

problematic question to answer.

MADDOW:  Enough to unsettle and agitate markets worldwide, certainly

not quite as dramatically as the guy hitting the B instead of the M key,

while trying to make that one trade.

Shannon Zimmerman, senior analyst at the Motley Fool—thanks very

much for your time tonight.  Appreciate it.

ZIMMERMAN:  Great to be with you.

MADDOW:  So, hot on the heels of the Times Square would-be bomber,

anti-terror crusader Joe Lieberman unveiled his “strip your citizenship

bill” today.  And that‘s the last we‘ll hear of it, probably.  At least

until it‘s time to do a “greatest hits” of all the worst things Joe

Lieberman has ever proposed in Congress.  Then it will be back again, with

funny music.

Later on, the inexorable political logic of “Los Suns” in Phoenix, los

fans of Los Suns, and why everyone that tells you that immigration reform

just can‘t happen is utterly, stupendously just plain wrong.  That is

coming up.

(COMMERCIAL BREAK)

MADDOW:  Senators John Kerry and Joe Lieberman say they‘re going to

introduce the climate bill next week, which is why you‘re hearing lots and

lots of people in Washington say, oh, this is such a bad time to introduce

the climate bill.  See, saying it‘s a bad time to introduce something is

just a notorious cowardly lion way of saying you‘re against it.

One might also reasonably argue that this is the best possible time to

introduce the climate bill, that nothing screams, “We need a new energy

policy,” like the images we‘ve all been looking at out of the Gulf these

past couple of weeks.  Politically, this might be an opportunity for a

timely reminder that we could stand an update of our old energy policy—

you know, the one drafted by Shell Oil and Dick Cheney and all the other

oil companies that he convened for his energy task force in secret before

9/11.

Old Beltway common wisdom used to be that you can‘t pass a new energy

policy unless it‘s got more offshore oil drilling in it.  That common

wisdom is probably due for an upgrade, too.

We‘ll have more on the day in the Gulf of Mexico oil disaster—

coming up.

(COMMERCIAL BREAK)

MADDOW:  The wait is over.  Today, Senator Joe Lieberman officially

introduced his much-hyped, highly-anticipated, almost certainly

unconstitutional “strip your citizenship” bill.

(BEGIN VIDEO CLIP)

SEN. JOE LIEBERMAN (I), CONNECTICUT:  Under the Terrorist Expatriation

Act, the State Department would be able to revoke the citizenship of an

American who affiliates with a foreign terrorist organization.

(END VIDEO CLIP)

MADDOW:  Affiliates.

What this proposal would mean is that the State Department would

decide what a terrorist organization is, right?  They would then decide

what constitutes affiliating with one.  And then if they think you‘ve done

that affiliating, they just administratively decide that you‘re no longer

an American.

We‘ll get to the due process stuff later, bucko.  I know you haven‘t

been convicted of anything but I hereby de-American you.  Now kindly get on

this plane to Guantanamo.  We‘ll talk later.

So excited that Senator Lieberman has been to promote this really

quite radical legislation, it‘s not clear who thinks is going to support

it.  Are the Democrats getting behind this?  Senator Dick Durbin, the

number two Democrat in the Senate told FOX News today, quote, “I really

believe there are ways to make this country safe without abandoning some of

our most fundamental principles.  To remove a person‘s citizenship without

some adjudication in my mind is a step too far.”

OK.  But, you know, Dick Durbin‘s a liberal.  How about more

conservative Democrats, people who do sometimes support Joe Lieberman on

some of his kookier right wing national security stuff?

(BEGIN VIDEO CLIP)

SEN. DIANNE FEINSTEIN (D), CALIFORNIA:  Senator Lieberman proposed

this once before.  I took a look at it, then, last night I read my

analysis, and my analysis was that it would not stand a constitutional test

based on law made by the Supreme Court.

(END VIDEO CLIP)

MADDOW:  OK.  So Democrats, left, right and center, not supporting Joe

Lieberman on his “strip your citizenship” thing.

Maybe the administration would support him on this.  I mean, this is

one of the biggest attempted executive power grabs ever since “Co-President

Cheney” left town.  The Obama White House has been pretty right-wing on a

lot of national security stuff.  Maybe they‘ll support him on this?

(BEGIN VIDEO CLIP)

ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY:  I have not heard anybody

inside the administration that‘s been supportive of that idea.

(END VIDEO CLIP)

MADDOW:  Aww, that was pretty blunt.  But, you know, even if the

administration won‘t support him, even if Democrats on the right and

Democrats on the left won‘t support him, there‘s still the Republican

Party.  There‘s got to be tons of support from Republicans on this, right?

(BEGIN VIDEO CLIP)

REP. JOHN BOEHNER (R-OH), MINORITY LEADER:  If they‘re a U.S. citizen

until they‘re convicted of some crime, I don‘t—I don‘t know how you

would attempt to take their citizenship away.  It‘d be pretty difficult

under the U.S. constitution.

(END VIDEO CLIP)

MADDOW:  Senator Joseph I. Lieberman, thanks for playing.

As jaw-dropping as the “strip your citizenship” legislation is, there

appears to be no substantial support for it among liberal Democrats, among

conservative Democrats, from the administration or from the Republican

leadership.  So, I think that means it‘s not going to be law.

It is, however, going to be an important thing to remember forever

about the judgment of Joe Lieberman and the three guys he got to go along

with him on this one.  Welcome to the Senate, Scott Brown.  Now you‘re

famous for something else.

Meanwhile, the reporting on the event that prompted the “strip your

citizenship” outbreak of legislative genius, the attempted Times Square

bombing continues to spin—continues to spin rather madly with very

little mooring in fact.  As far as we can tell at the show, there are no

new confirmable facts about this case today that were not known yesterday.

But if you‘re keeping track, like we are, of the things that have been

represented as facts in this case and didn‘t turn out to be facts, you‘ll

notice that that list of, “Oops, I guess that isn‘t true” things about this

case has gotten pretty long.  Once upon a time, for example, a few days

ago, the guy suspiciously taking off his shirt in Shubert Alley just off

Times Square, a white guy in his 40s—he was supposed to be a suspect,

someone who was involved in the failed bomb plot, right?  Now, of course,

we know that the real suspect is Faisal Shahzad, a 30-year-old Pakistani-

born American citizen.

Since then, the more we‘ve learned about Mr. Shahzad, the more we‘ve

gotten wrong.  Remember when he was supposed to be from Karachi and then he

was supposed to be from Kashmir and then he was supposed to be from a

little village outside Peshawar?  All facts apparently—all

simultaneously co-existing comfortably in the totally un-skeptical news

about this story.

At first, Mr. Shahzad was totally part of the Pakistani Taliban. 

Remember?  They were claiming responsibility and everything.  It was all

planned and put together by the Pakistani Taliban.  Well, then the

Pakistani Taliban said Mr. Shahzad was not actually part of their

organization although they loved what he did.

Now, we‘re hearing similarly uninformed speculation about Shahzad‘s

motivation; that he was retaliating for U.S. drone strikes in Pakistan. 

There‘s no confirmable fact that proves that‘s true but that‘s the way it‘s

being reported anyway.

It may very well be true that that was his motivation, but I don‘t

know.  And here‘s the thing.  Neither do you.  And neither does anybody who

has printed anything about it in the newspaper, as if it is fact.

Joshua Keating posted an item at the “Foreign Policy” blog today about

the fevered speculation that‘s passing for reporting on this story.  I‘m

telling you that and naming him and putting an exclamation point on it

because this one blog post at FP.com makes Joshua Keating a remarkable

outlier when it comes to keeping one‘s head straight about this case.

The lack of skepticism and the lack of reputable sourcing in the news

coverage of the failed Times Square bombing has become one of the most

interesting and certainly one of the most well documented trends to watch

as this story develops.  We will keep watching it and we will keep making

fun of people who get it wrong.

(COMMERCIAL BREAK)

MADDOW:  -- stories today about the great state of Tennessee.  And

being in Tennessee is the only thing these two stories have in common.

First, there is Nashville, and the other inundated communities along

the Cumberland River and the efforts of these communities to recover from

this week‘s devastating flooding.  Tennessee officials confirm today that

the death toll in their state has risen to 21, bringing the total number of

storm and flooding-related deaths across Tennessee, Mississippi and

Kentucky this week to 31.  At least four people still reported missing.

Nashville‘s mayor today estimated that the damage to his city alone

may top $1 billion.  To try to help the people of Nashville, as we‘ve

mentioned before on this show, you can donate to the Red Cross, including

donating by text message.  You can donate $10 to the Red Cross by texting

the word “Red Cross” to the number 90999.

Now, in completely different Tennessee news, “Talking Points Memo”

today alerted us to a situation that began unfolding about a month ago in a

Tennessee local courtroom involving a group of folks with a real hankering

a real hankering to see President Obama‘s birth certificate.  You can

find out more about them online at a Web site for the American Grand Jury.

               

The American Grand Jury folks want you to know that President Obama

was a CIA operative while he went to Columbia University.  They‘re holding

a trial about it.  Elsewhere on their site, they note that he never went to

Columbia at all.  They also want to let you know what the mainstream media

won‘t tell you which, of course, is that the Deep Horizon oil rig in the

Gulf was blown up by a North Korean torpedo, obviously.

Of course, their core belief is that President Obama is not a U.S.

citizen and their top priority is to charge him with treason and remove him

from office.

They also want to indict Congress.  Click here to help.

What they have been doing is trying to use a creative interpretation

of the power of the grand jury to harass and intimidate government

officials.  One of their members is a man named Walter Fitzpatrick in

Tennessee.  He has been trying to get an actual grand jury in Monroe

County, Tennessee, to charge President Obama with voter fraud for the 2008

election.

When that didn‘t work, Mr. Fitzgerald said then accused the local

grand jury foreman of violating state laws and decided to conduct a

citizen‘s arrest of the local grand jury foreman.  He did it on April 1st

No joke.  Mr. Fitzpatrick got some friends to come along and block the

exits to the courthouse reportedly.  They then confronted the grand jury

foreman.  And, of course, he filmed it and posted it on YouTube.

(BEGIN VIDEO CLIP)

WALTER FITZPATRICK, AMERICAN GRAND JURY:  You are under arrest.  I‘m

placing you under arrest.  You are under citizen‘s arrest.  I‘m placing you

under arrest.

UNIDENTIFIED MALE:  I‘m asking you to leave the room, sir.  I‘ve asked

you to leave the room.  (INAUDIBLE), will you escort this gentleman out of

the room?

FITZPATRICK:  Mr. Fennelly (ph), I‘m making a citizen‘s arrest.

(END VIDEO CLIP)

MADDOW:  Instead, it was Mr. Fitzgerald who got arrested.  He spent

several days in jail.  He was charged with disorderly conduct, inciting to

riot, disrupting a meeting and resisting arrest.

After Mr. Fitzgerald was arrested, one of his fellow American Grand

Jury comrades—can I call them, comrades?  He posted this rather

melodramatic plea on YouTube.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE:  He did this for us.  What do you intend to do for

him and for this country?  If we don‘t come to his assistance, if we don‘t

get to the courthouse, if we don‘t call him, if we don‘t walk and march on

that courthouse and that sheriff‘s department, we don‘t deserve the

freedoms we have.  I know what I must do.

(END VIDEO CLIP)

MADDOW:  I know what I must do.

Among those who answered that very self-important call was this

gentleman, his name is Darren Huff.  He is a member of the Oath Keepers and

was until quite recently a chaplain of the Georgia militia.  According to a

local newspaper, “The Daily Times,” Huff reportedly bragged to a local bank

manager in Georgia that eight or nine militia groups were planning to be at

that courthouse in Tennessee at Mr. Fitzpatrick‘s trial.  He said they

would, quote, “take over the city.”  The bank manager told the FBI and when

the FBI visited Mr. Fitzpatrick‘s - excuse me, Mr. Huff‘s house, he told

them he planned to show up at the courthouse with his Colt .45 and his AK-

47. 

But he reportedly said he would not commit violence unless he was

provoked.  When Mr. Huff drove into Tennessee the next day, he was stopped

by state troopers for a traffic violation.  He allegedly told them he

planned to take over the courthouse unless not enough people showed up to

help him. 

That day, officers reportedly observed, quote, “numerous

individuals in possession of openly displayed and concealed firearms in the

area around the courthouse.”  The next day, Mr. Huff appeared on a radio

show.  He said this. 

(BEGIN AUDIO CLIP)

DARREN HUFF, MEMBER, THE OATH KEEPERS:  They said, well, we just got

reports that AK-47s and stuff like that are going to show up.  And I said,

“Oh, being like the one in my toolbox?”  I said, “I‘ve got one.”  I said,

“It is legal.”  And I said, “It‘s got - I don‘t know, I probably got 300,

400 rounds in the truck.” 

(END AUDIO CLIP)

MADDOW:  When the FBI heard Mr. Huff boasting about how much he was

excited to bring his weapons to these things that he had planned to take

over by force, they reportedly decided that Mr. Huff had both the means and

the intent to carry out his repeated threats of violence. 

They arrested him.  They charged him with traveling across state

lines with a firearm with the intent of inciting a riot.  Mr. Huff is now

under house arrest.  As for Walter Fitzpatrick, “Mr. Citizens Arrest on

YouTube” guy, he‘s awaiting a grand jury in June.  Not a grand jury. 

Someone man the North Korean torpedoes. 

Joining us now is former ATF special agent in charge of the

national field division, James Cavanaugh.  During his 33 years with the

Bureau of Alcohol, Tobacco and Firearms and Explosives, Mr. Cavanaugh

worked on high profile cases including Waco, the Unabomber, Eric Rudolph

and the 1986 bombing at abortion provider George Tiller‘s clinic.  Mr.

Cavanaugh, thank you so much for coming on the show tonight. 

JAMES CAVANAUGH, FORMER ATF SPECIAL AGENT:  Thank you for having me,

Rachel. 

MADDOW:  As you can tell, I both sort of take these groups seriously

and find them scary and find them hilarious.  I wonder whether or not you

think - where you think these groups fall on the number line between funny

and scary. 

CAVANAUGH:  Well, that‘s the test for law enforcement is to sort that

out, you know, the free speech, the ridiculous speech, the crackpot speech

and these theories about U.N. invasions and government, new world order

takeovers, FEMA concentration camps, if you will - all that crazy and

lunatic talk. 

But if it leads to some violence and, you know, in the past some

of that talk has led to some violence because members spin off and, you

know, concoct a plot to bomb a federal building, attack the IRS, shoot

federal law officers or police. 

And so violence can come from the lunatic fringe, and we‘ve seen

it time and time and time again.  So it can be very dangerous movement. 

MADDOW:  In terms of the lunatic fringe organizing itself, looking at

groups like the American Grand Jury or the Oath Keepers - are these groups

novel?  I wonder if they are more easily formed because of the organizing

power social media and the Internet.  Or do we see groups like this ebb and

flow over time and there‘s always been organizations like this, whether or

not they‘ve gotten a lot of mainstream media attention? 

CAVANAUGH:  Well, you‘ve hit the nail on the head, really, because

they have ebbed and flowed.  And they used to print a lot of newsletters

back in the old days that they nailed around.  But the Web, really, has

strengthened these sort of lunatic groups and it‘s also strengthened, you

know, international terrorist groups and cells. 

It cements them together.  It makes them understand that there‘s

a population of like-minded people like them, gives them support, gives

them, you know, ways to meet.  So social media does strengthen them. 

Of course, the right-wing lunatic extremists in America that are

these violent anti-government groups, sovereign citizen groups - they‘re

sort of on a high roll now because of the things that are driving their

movement. 

The economy‘s bad - that helps them.  The immigration issue they

exploit tremendously.  The Web has driven them.  And certainly, in a

Democratic administration, they seem to pop up.  We saw them heavy in the

‘90s when President Clinton was in office. 

And now, they seem to be back pretty heavy now.  And we‘re having

a lot of activity around the country.  Just two years ago, we took off the

Alabama free militia and they were saber rattling over, you know, the U.N.

is going to invade Alabama. 

And we under-covered them while they were building hand grenades

when they were preparing for the U.N. to come.  No, the U.N. is not coming

to Alabama.  They don‘t have an army or navy.  They don‘t even have a boat

and they couldn‘t take over the senior citizens‘ home. 

And so there‘s no need to make hand grenades to prepare for the

attack of the U.N.  But these people talk amongst themselves and get so

wrapped up in these crackpot theories about FEMA concentration camps and,

you know, issuing writs and arrest warrants and grand juries that they

become dangerous. 

And really, it‘s better if you have a loved one that‘s associated

with a group like that or you are, you need to break off and try to get a

dose of reality, because that‘s really way out there on the fringe. 

MADDOW:  In terms of that last point you‘re making, though, I feel

this is something that I keep coming around to.  The more I report on

groups like this and even look at the history of them and some of the

tragic history of them, are there success stories?  Are there mitigating

factors? 

Are there instances or their patterns of behavior that lead to

instances in which responsible figures in these movements say, “I‘m OK with

our ideology but I‘m not OK with potential acts of violence” or “I‘m OK

with everybody in my group except for this guy who I think is taking this

stuff literally and is maybe going to do something that we‘re all going to

regret”? 

Are there things that these groups can be encouraged toward,

essentially, to make the more responsible members among them keep everybody

safe? 

CAVANAUGH:  Well, exactly.  I mean, you‘re talking about profiles in

leadership courage here.  I mean, there‘s been a few rays of sunlight here

recently where leaders have taken on that mantra to say, you know, there

shouldn‘t be any violence. 

There was one example of a group in New Hampshire where the

leader of the tea party said, “We‘re not going to accept any of these

bigots and hate signs and hate people here, so you need to go away.” 

So there‘s a person who stood up, you know, for the right thing. 

We saw both Speaker Pelosi and Leader Boehner condemn violence against

Congress when there were some Congressmen‘s offices vandalized during some

recent bills on the Hill. 

And I recently saw Sen. McCain on the news where he said, “We

want a revolution but we want a peaceful revolution.”  And that‘s what

America‘s about.  We can not like the way the government‘s spending the

money.  We can not like what they‘re doing and we can change them through

the ballot box. 

But when you go off into the lunatic fringe or the tassels on the

lunatic fringe who are calling for blood and the blood of tyrants and, you

know, driving their planes into the IRS or concocting a plot to bomb a

federal building, then they‘re way off the charts here. 

And really, you‘d be acting just like our foreign enemies.  It‘s

a shame that the government and the citizens have to deal with these groups

when we‘re really engaged in a couple of wars around the globe with some

really, really dangerous folks like the al-Qaeda virus that we‘re trying to

deal with in the Hindu Kush. 

So the fact that we‘ve got to spend time and energy, you know,

working cases on our own people who might, you know, do violence against

us, it‘s really, really sad.  To talk about unpatriotic - I don‘t see how

unpatriotic a person can be than to do some of these violent things against

our own government. 

In America, the government is just us.  There‘s nobody else. 

It‘s just us.  We‘re the people.  We elect them.  We‘re the government. 

MADDOW:  Former ATF special agent, James Cavanaugh, thank you so much

for your time tonight.  I hope you don‘t mind if we call you for advice and

insight on some of these other stories as they keep emerging.  I hope they

don‘t. 

CAVANAUGH:  Thank you, Rachel.

MADDOW:  Thank you very much. 

MADDOW:  Conventional wisdom says you can not pass an immigration bill

during an election year.  Well, now that the controversy over Arizona‘s

“Papers, Please” bill has grown so big that it has leaked onto the sports

pages, maybe that common wisdom is in need of an update. 

When you have a chance to make your political opponents look

really bad to a really big proportion of the population, generally

speaking, you pick that political fight.  That story‘s coming up.  

(COMMERCIAL BREAK)

MADDOW:  Oil from the BP oil spill reached shore today two weeks after

the well explosion in the Gulf of Mexico.  The oil washed up on Louisiana‘s

the Chandeleur Islands.  Shoreline clean-up crews were there to see and

assess the damage. 

Meanwhile, at the site of the massive leak where hundreds of

thousands of gallons of crude continue to gush into the gulf every day,

efforts to siphon, plug and disperse the oil continue. 

A four-story 98-ton steel box arrived at the ruptured well

earlier today.  Engineers and welders worked day and night for a week on

the structure that they hope will capture the oil and divert it to a ship

above the surface. 

Even though the cap part arrived today, the hookup to that drill

ship will not be complete until this weekend.  If successful - so best case

scenario here - the containment dome will be able to suck up about 85

percent of the oil that‘s coming out of the largest of the two remaining

two leaks. 

But there are huge 5,000-foot ifs here.  These sorts of

structures have never been used at depths even remotely like this, a mile

under water.  How the structure will behave in such cold dense water is

anyone‘s guess. 

The dome was built by a company called Wild Well Control, a

contractor that, for 35 years, has specialized in these kinds of oil spill

disasters, because crises happen so often in the oil and gas industry that

they can sustain a whole disaster sub-industry for decades. 

Also a second oil burn was successful yesterday.  A small amount

of the oil slick was rounded up with fireproof booms and set on fire by the

coast guard.  Then there‘s the proposed oil leak plug.  It‘s an idea called

a top kill.  It‘s when a heavy liquid is pumped into the well to push back

against the pressure of the oil coming up from below. 

But for now, crews are relying on the tried and true method of

chemical dispersants.  These are chemicals you‘ve seen dusted over the oil

slick.  They basically break up the slick, turning a thin sheet of oil into

tiny droplets, droplets that are more likely to sink and stay out of the

ocean off the shore. 

BP has already sprayed 160,000 gallons of dispersant on the oil

slick, not to mention the 6,000 gallons pumped down to the leak well

beneath the surface of the ocean.  That‘s more dispersant than has ever

been used on any oil spill ever. 

The dispersants do work, sort of.  But because oil spills don‘t

have good news, only less terrible news, the chemicals in the dispersants

are themselves toxic.  Probably.  We don‘t really know what‘s in them. 

The companies that manufacture dispersants consider that

information to be proprietary.  A company called Nalco makes one of the

dispersants called COREXIT 9500. 

Nalco posted a 10-page safety document about COREXIT on the spill

response Web site set up by the oil rig‘s owner, Deepwater Horizon and

warns you to not get the dispersant on your eyes, on your skin or on your

clothing and also definitely don‘t breathe in the vapor. 

Touching it may cause irritation.  160,000 gallons of that into

the Gulf of Mexico.

(COMMERCIAL BREAK)

MADDOW:  British citizens went to the polls today.  They voted for

their members of parliament.  And by default then, the prime minister, who

will come from the party that wins 326 seats.  Keep that number in mind -

326. 

The only problem?  Neither the conservatives nor labor nor the

liberal Democrats appear to have won that magic number of seats enough to

elect a prime minister.  Our British affiliate, ITN, is projecting that

David Cameron‘s Conservative Party - he‘s the guy in the middle - projected

to win 307 seats. 

Prime Minister Gordon Brown‘s labor party - he‘s the guy on the

left - projected to win 255 seats.  And the liberal Democrat, Nick Clegg -

there on the right - his party projected to win 59 seats. 

If that projection holds, it would mean nobody claiming a

majority in parliament.  It would also mean the need for one of the two

major parties to form an alliance with the liberal dems in order to

actually be in charge. 

What happens next is anybody‘s guess.  Perhaps the U.K. would

like to borrow our supreme court.  They love deciding elections.

(COMMERCIAL BREAK)

MADDOW:  If you happened to be watching the Phoenix Suns-San Antonio

Spurs NBA playoff game last night, you may have noticed a very rare bit of

politics breaking out in the lead-up to this live national sporting event. 

Check this out. 

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE:  All the people screwing it up is the politicians. 

UNIDENTIFIED MALE:  Without question. 

UNIDENTIFIED MALE:  The governor, the interim governor, I might add. 

No - J.D. Hayworth and John McCain - they don‘t want to screw this thing

up. 

I have to really take my hat off to Robert Sarver and the Suns

for taking a stance.  Now, living in Arizona for a long time, the Hispanic

community - they‘re like the fabric of the cloth, you know?  They‘re part

of our community. 

And any time you try to do any type of racial profiling or racial

discrimination, this is a federal that now - President Obama, we‘ve got to

do something, because these little lightweight politicians in Arizona don‘t

know what they‘re doing. 

UNIDENTIFIED MALE:  Everybody knows that and everybody said that on

both sides.  Something has to be done about the immigration situation there

and really the crux of this is the wording of that Senate Bill 1070.  And

so -

UNIDENTIFIED MALE:  Public enemy said it a long time ago.  By the time

I get to Arizona, I‘m not surprised.  They didn‘t even want it to be a

Martin Luther King Day when John McCain was in.  So, I mean, if you follow

history, you know that this is part of Arizona politics. 

UNIDENTIFIED MALE:  Let‘s talk basketball. 

(END VIDEO CLIP)

MADDOW:  Hey, you guys, let‘s talk basketball.  Striking to see

politics dominating the pre-game just moments before the tip-off the this

ginormous semi-final NBA playoff game.  But the Phoenix Suns showing

solidarity with the Latino community wearing their “Los Suns” jerseys

during last night‘s game. 

They said they wore them both for Cinco de Mayo and to protest

the new Arizona law.  Fans around the arena, holding up signs saying things

like “Los Fans” and “Viva Los Suns.” 

Outside the arena, some protesters against the “Papers, Please”

law marched toward the Arizona state capitol wearing “Los Suns” jerseys. 

No matter what you think about an NBA team making an overt

political statement, the new Arizona immigration law has captured the

attention of practically everyone.  And it has shown the spotlight on the

need for some sort of comprehensive federal immigration reform in this

country, which is one big problem. 

The “Papers, Please” law passed in Arizona in 2010.  2010 is

election year, and everybody knows you can‘t do immigration in an election

year.  Even Republican Senator Lindsey Graham who has been for immigration

reform in the past, says it can‘t possibly happen this year. 

Sen. Graham telling the “Washington Post,” quote, “There is just

not the appetite on either side of the aisle for this issue right now.” 

Right.  Can‘t do immigration.  Even Democrats realize that, right,

President Obama? 

(BEGIN VIDEO CLIP)

BARACK OBAMA, UNITED STATES PRESIDENT:  The way to fix our broken

immigration system is through common sense, comprehensive immigration

reform.  I want to begin work this year.  And I want Democrats and

Republicans to work with me, because we‘ve got to stay true to who we are,

a nation of laws and a nation of immigrants. 

(END VIDEO CLIP)

MADDOW:  I want to begin work this year.  Despite the beltway common

wisdom that you can‘t do immigration reform now, Democrats seem to want to

do it.  President Obama, in fact, seems really psyched to do it. 

While there is a popular political assumption that you can‘t do

something big and serious like immigration reform in an election year,

there is an even more popular political axiom about how to pick a good

political fight.  Pick fights that mostly unify your side.  Pick fights

that mostly divide the other side. 

And if you‘re really going for the gold, pick a fight that makes

the other side show off its least publicly appealing face. 

(BEGIN VIDEO CLIP)

ANDERSON COOPER, HOST, “AC 360”:  You called the president an

Indonesian Muslim-turned-welfare thug and a racist in chief. 

MARK WILLIAMS, HEAD OF THE TEA PARTY EXPRESS:  Yes. 

COOPER:  I mean, is that the kind of -

WILLIAMS:  That‘s the way he‘s behaving. 

COOPER:  But in his -

WILLIAMS:  But if he cares to be the president of the whole country -

COOPER:  Do you believe he‘s Indonesian?  Do you believe he‘s Muslim? 

Do you really believe he‘s a welfare thug? 

WILLIAMS:  He‘s certainly acting like it. 

(END VIDEO CLIP)

MADDOW:  Mark Williams, everybody, head of the Tea Party Express, the

ostensibly principled, small government conservative group that has not

only endorsed Arizona‘s biggest of all big government “Papers, Please” law. 

It‘s now taking a lead role in beating back the boycotts against the state. 

They‘re circulating a petition to support Arizona‘s crackdown on

illegal immigration.  Quote, “We at the Tea Party Express stand with those

great patriots in Arizona.  They should be applauded for having the courage

and conviction to take on this problem.”

The Tea Party Express making sure that they are way out in front

as the face of the anti-immigration right.  Democrats lining up for

immigration reform have the “Papers, Please” law to thank for the

unbelievably advantageous political line in the sand here. 

To be for immigration reform this year, this election year, is to

stand against “Papers, Please.”  To be against immigration reform - uh-oh,

Republicans - is to stand with the pro-“Papers, Please” folks.  And that in

politics is called a slam dunk.  Maybe even a three-pointer. 

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE:  In the fourth, Frye.  Puts down another three. 

Channing Frye has been a sharpshooter today with fifteen for the Phoenix

Suns.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

MADDOW:  How did we ever get along before Google Earth?  You can find

satellite images of almost anywhere on earth.  For example, here is

Rockefeller Center, where I am right now.  Here‘s Fenway Park in Boston. 

Go Sox.  Here‘s the Hoover Dam.  Do we have a Hoover Dam?  Oh, yes.  So

cool. 

Here‘s another satellite image courtesy of Google Earth.  Check

this out.  Can we put that side by side with the Hoover Dam so you can see

how big this thing is?  This is at the same scale here, this thing that‘s

actually bigger, quite a bit bigger than the Hoover Dam. 

This thing is also a dam.  Who had the resources and engineer

know-how and the sheer will to build something that big?  Was it the

Chinese, the Russians?  No, it was actually beaver.  Buck-toothed, flat-

tailed, furry beavers built a beaver dam that is twice the size of Hoover

Dam. 

The mega beaver dam located at the southern edge of Wood Buffalo

National Park in northern Alberta in Canada.  It stretches more than 2,790

feet across.  That‘s more than half a mile long, more than 1,000 feet

longer than the Hoover Dam, built by beavers. 

For comparison, the Hoover Dam used 4.4 million yards of concrete

and took about 7,000 workers, 4 ½ years to complete.  The great Canadian

beaver dam was made of sticks and rocks and mud by three-foot long, semi-

aquatic rodents.  It‘s been under construction apparently since the 1970s. 

Beaver colonies build dams to provide still deep water to protect

themselves against predators and to float food and building material.  But

they have never built one this big before that anybody knows about. 

The Canadian mega beaver dam is the biggest one ever.  Before

now, the longest one anybody knew about was found by biologists near Three

Forks, Montana.  It measured about 2,140 feet long, built by a bunch of

beavers who are now feeling slightly inadequate. 

Scientists say the beavers built the Canadian dam in an extremely

remote and inaccessible place, which means no human interference, which

means one big honking dam.  It‘s remarkable what a species can accomplish

when you‘re not killing them to make men‘s top hats. 

This dam might have gone undiscovered had an ecologist not found

it by accident while trolling Google Earth in 2007.  Voila, Beaver-topia. 

Thank you, Google Earth.  Thank you, hard-working beavers. 

One last thing to leave you with tonight that has nothing to do

with Beavers.  I mis-pointed at the leader of the conservative and the

liberal Democratic leader, David Cameron and Nick Clegg.  I got them wrong

before.  I apologize for the mistake.  This is David Cameron.  And we don‘t

have Clegg.  That‘s awesome.

“COUNTDOWN” with Keith Olbermann starts right now. 

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY

BE UPDATED.

END   

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