COSMIC-JUSTICE

2010-03-06T17:47:00.001+01:00

"It's the DEBT!"
We're Doing Something About it!Come Join the Swarm!

Mortgage Bankers Assn. Defaults on Headquarters Loan and Rep. Grayson educates Wall Street and Banksters on Capitalism

2010-02-11T16:05:00.006+01:00

By Martin Andelman 02/11/2010
Mandelman Matters.com

The CEO of the powerful Mortgage Bankers Association, John Courson, has said that underwater borrowers should keep paying on their mortgage loans and “should not walk away from lawful debts”. In an interview this past year, Courson appeared genuinely concerned adding: “What about the message they will send to their family and their kids and their friends?”

Obviously, Mr. Courson was not just speaking as a defender of financial institutions. Clearly, he was showing how much he cares for people and their personal relationships. He believes the children are our future. He thinks we should teach them well and let them lead the way. That we should show them all the beauty they posses inside. Give them a sense of pride. To make it easier… let the children’s laughter… remind us how we used to be.

Thank you John… you’re no Whitney Houston, but you’ve got me all teary eyed over here.

There’s just one little, teeny-tiny, almost insignificant smidgeon of a problem with what the Mortgage Bankers Association’s CEO was saying: He was completely full of shit.

This past week, the Co-Star Group, Inc., indicated that it had agreed to buy the MBA’s 10-story headquarters building in DC for $41.3 million. The only problem is that $41.3 million comes up a skosh shy of the $75 million first mortgage on the building that the MBA took out from PNC Financial Group way back in 2007, when they purchased the property for $79 million.

You remember 2007, don’t you John? That was the last year that all of those irresponsible homeowners, thinking real estate prices would go up forever, kept over leveraging themselves, buying properties without the traditional 20% down payment. What a bunch of irresponsible idiots, right Johnny Boy? Now that the bubble has popped, those homeowners should just be taking their medicine like men, don’t you agree John? The last thing they should do is walk away from their lawful debts, isn’t that what you said?

So I mean, what kind of message are YOU now sending to your family, your children, and your friends by walking away from your lawful $75 million debt? Are they being morally harmed by your decision to stick the bank with close to $25 million? And why aren’t you simply paying your mortgage as agreed, Mr. Courson? You’re not trying to destroy prices of commercial properties in Washington D.C. are you?

Just last year, you pointed out that defaults hurt neighborhoods by lowering property values, so borrowers would do less harm to our society were they just to repay what they owe. You know… like the responsible homeowners.

(Oh, and this just in from my favorite bankruptcy attorney and all-around thought leader, Max Gardner, the MBA also defaulted on their payments and secured a forbearance agreement, prior to the short sale. Nicely done, Johnny-O. Maybe you should open a loan mod firm and start helping homeowners.)

Well, I think I’ve got your message, Mr. Courson. I know exactly what you wanted to say to your family, your children and your friends…

Do as I say. Not as I pay.

Does that about sum it up for you, Mr. John Courson?

Yeah, I thought so.

Jackass.

Rep. Grayson educates banks on Capitalism

Visit msnbc.com for breaking news, world news, and news about the economy

Great News Only 14% of the nations 130.6 million homes are vacant.

2010-02-04T16:11:00.001+01:00

The U.S. Census Bureau reported this week that 18.9 million out of the nations 130.6 million homes are now vacant. The Obama Administration was quick to claim victory claiming that this new data represents clear proof that the president’s plan to stabilize the U.S. housing market is working beyond anyone’s expectations.

“At this rate, our banks will have successfully foreclosed on a full one third of all of the homes in the country by 2014. We didn’t think we could get this many people bankrupt and on the street during the president’s first term,” said Treasury Secretary Tim Geithner. “With this kind of success under our belt, we may even try to kill a few million more jobs this calendar year, in stead of waiting until next year as we had originally planned.”

Obama Lives, only, at the pleasure of the Military elite

2010-02-02T23:44:00.006+01:00

John Hankey is the author of the following compelling analysis that considers if President Obama is under threat to comply with US military orders for supporting war escalation (and its funding). This is part one of two.

John is the creator of the stunning and historically accurate documentary, "Dark Legacy: George Bush and the assassination of JFK." A 10-minute excerpt from the video is at the end of the article.

This documentary is the historical favorite of my history students and the single-best JFK assassination analysis that I’ve reviewed. “Dark Legacy” walks viewers through the independently verifiable evidence that has two-thirds to three-fourths of Americans conclude the US government story of President Kennedy's assassination is provably false (these polls include ABC, CBS, FOX, PBS).

John did not start out as an Obama admirer; he wrote that Obama looked hand-picked by the darkest fascist forces within our government and was surrounded by them in his campaign. John currently observes that perhaps Obama has burned them; leaving them behind when he became President.

John had an interview with veteran JFK assassination analyst and author, Jim Fetzer, to discuss this topic. Jim also interviewed me to discuss unlawful wars in Iraq, Iran, and the role of the CIA.

John's article, printed with his permission; part one of two:

The parallels between the administrations of Barack Obama and John Kennedy are stunning:

1. Both engaged in what might be called "Election Deception" During the 1960 election, Kennedy attacked Nixon for being soft on communism, particularly Cuba. In his book, 6 Crises, Nixon complained, bitterly and accurately, that this was an unscrupulous deception on Kennedy's part. Kennedy had been briefed that Nixon and the CIA were planning a full scale invasion of Cuba. So, even though he knew it wasn’t true, Kennedy attacked Nixon from the right, claiming that he, Kennedy, was more of a hawk on Cuba than Nixon. As soon as he got in, Kennedy told the CIA to forget their invasion plans; the CIA went ahead anyway at the Bay of Pigs; and Kennedy fired the top three men at CIA for disobeying his orders.*1 The military shared Nixon's perception that Kennedy was a liar and a traitor.

During the 2004 election, Obama surrounded himself with hawks like Zbigniew Brzezinski, and attacked Bush from the right, saying that he had neglected "the right war," the war in Afghanistan, and that he, Obama, would transfer troops and treasure to the effort in Afghanistan. However, once he got in, Obama brought none of the Brzezinski people with him. None of them. Not Richard Clark. Not Anthony Lake (both of whom were very active in Obama's campaign, and are very deep-cover operatives for the darkest side of the Pentagon). And, as you will see, Obama fought bitterly with the military over their desire for more troops.

2. Both Kennedy and Obama experienced a dramatic change of attitude toward the military early in their presidencies. Even if Obama did not perpetrate a deception to win the election, after he was sworn in got in, his thinking and attitude toward the military began to change dramatically, sharpen and harden against them. This directly parallels what happened to Kennedy.

I don't regard Bob Woodward as a fundamentally reliable source, but to be an effective liar he has to tell important truths sometimes. And I believe there is good reason to credit the story he tells below, inadvertently revealing the development of Obama's thinking on the war in Afghanistan. It describes a briefing given by Obama's National Security Advisor, Jim Jones, to the military commanders in Afghanistan:

During the briefing, [Marine Brigadier General] Nicholson had told Jones that he was "a little light," more than hinting that he could use more forces, probably thousands more. "We don't have enough force to go everywhere," Nicholson said.

But Jones recalled how Obama had initially decided to deploy additional forces this year. "At a table much like this," Jones said, referring to the polished wood table in the White House Situation Room, "the president's principals met and agreed to recommend 17,000 more troops for Afghanistan." The principals -- Secretary of State Hillary Rodham Clinton; Gates; Mullen; and the director of national intelligence, Dennis C. Blair -- made this recommendation in February during the first full month of the Obama administration. The president approved the deployments, which included Nicholson's Marines.

Soon after that, Jones said, the principals told the president, "oops," we need an additional 4,000 to help train the Afghan army.

"They then said, 'If you do all that, we think we can turn this around,' " Jones said, reminding the Marines here that the president had quickly approved and publicly announced the additional 4,000.

Now suppose you're the president, Jones told them, and the requests come into the White House for yet more force. How do you think Obama might look at this? Jones asked, casting his eyes around the colonels. How do you think he might feel?

Jones let the question hang in the air-conditioned, fluorescent-lighted room. Nicholson and the colonels said nothing.

Well, Jones went on, after all those additional troops, 17,000 plus 4,000 more, if there were new requests for force now, the president would quite likely have "a Whiskey Tango Foxtrot moment." Everyone in the room caught the phonetic reference to W-T-F -- which in the military and elsewhere means "What The F(expletive) ?"
-- Bob Woodward; The Washington Post; Jul 1, 2009; A.1;

My take on the above is that Obama came in somewhat open minded on Afghanistan. In his first month in office, he asked the military what they needed; they told him, and he gave them 17,000 troops without a blink. When they turned around and asked for another 4,ooo just a few months later, Obama was disconcerted. If these guys knew what they were doing, they should have been right the first time about how many troops they needed. But without a complaint, he gave them another 4 thousand men. When the generals started to press for more, Obama had his w-t-f moment, and sent Jones to straighten them out. Jones was telling the generals that requesting more troops would be showing Obama that they are clueless. Obama has tried to show his awareness that there are thousands of lives in the balance.

Kennedy had his Whiskey Tango Foxtrot moment at the Bay of Pigs, and again during the Cuban Missile Crisis*2. He came to see his military advisors and commanders as blind-to-the-point-of-insane ideologues. And the quote above I think shows that Obama's developing vision of the military has closely paralleled the development of Kennedy's vision of these professional killers.

3. Kennedy faced, and Obama faces a military full of ideologues
Curtis LeMay is the most infamous of the insanely rabid military advisors Kennedy had. LeMay, against specific orders, at the height of the Cuban missile crisis, sent a U2 spy plane flying into Russian airspace, apparently hoping that the Russians would think this was an attack and push the red button. LeMay was confident that in the full-scale nuclear exchange that would follow, the US would suffer 30 to 50 million casualties, tops, but the Russians would be wiped out. Hurray! We'd win! LeMay and his peers were livid that Kennedy was refusing to send troops to Vietnam.

For the past eight years, Bush has forced into retirement those military leaders with an objective approach to fighting "terrorism"; and he has promoted Muslim-hating Christian ideologues who seek a new-age Christian Crusade against the Muslim heretics. *22

An objective military observer must question the idea of equating "insurgents" with "terrorists": There has never been even a suggestion that the Taliban were involved in attacks on the US. The Taliban government of Afghanistan offered to hand over Osama if the US could provide evidence of his guilt. But the US invaded instead of providing evidence. In this context, the "insurgents" are, essentially and merely, patriots who oppose the domination of their country by foreign troops. This is a common view within the Obama administration:

Supporters of (Vice-President Joe) Biden's view (that no more troops should be sent) argue that adding more troops would actually make the problem worse, not better, because the Taliban draw support from the fiercely nationalist Pashtun ethnic group in Afghanistan and Pakistan, who will mobilize to resist a long-term occupation. "The real fact is, the more people we put in, the more opposition there will be," says Selig Harrison, a longtime observer of Afghanistan at the Center for International Policy. (Rolling Stone *3)

One need not agree with this view to recognize that it is reasoned and legitimate. But this viewpoint is not represented in the military that Obama inherited from Bush. Senior officers with this point of view were forced into retirement under Bush. And Obama is faced with commanders such as Lt. Gen. David Barno, a "counter-insurgency" advocate who served as commander of U.S. forces in Afghanistan: "We're going to be involved in this type of activity in a number of countries for the next 15 to 20 years." Barno does not just want to wipe out the Taliban. He wants to expand the conflict to other countries and carry it on for generations. What does Barno's plan, to kill Afghan patriots, have to do with eliminating "terrorism"?

And a more terrifying question: These trained killers from the military currently have the blood of hundreds of thousands of Muslims on their hands. They have watched at close range as 1000's of young American soldiers have been slaughtered. How do you supposed they feel about a Black president, born to a Muslim father, trained in Muslim schools, telling them they can't have any more troops for their holy war against Muslims? "Rabid" seems a likely answer.

I am not the first to see the parallels between Kennedy’s and Obama’s conflicts with the military.

The first article I saw on this topic was by Berkeley Professor Peter Dale Scott. *3 Robert Parry has written importantly on the topic (see *12).

Lawrence Wilkerson, a former top aide to Secretary of State Colin Powell, observed in the Rolling Stone article*3, "It's going to take John Kennedy-type courage to turn to his Curtis LeMay and say, 'No, we're not going to bomb Cuba’. It took a lot of courage on Kennedy's part to defy the Pentagon, defy the military — and do the right thing." I must assume that Wilkerson is not familiar with the details of how John Kennedy's conflict with the military ended. See section 8 below for some of those pertinent details. There can not be a reasonable doubt that the military killed JFK.

4. Kennedy sought out Military advisors not committed to or dominated by the Pentagon. Obama has done likewise. The "Jim Jones" from the long quote (in section 2 above), is a familiar figure; that is, he reminds me of the kind of man that Kennedy brought in to advise him. He is a former Marine general. He has impeccable "toughness" credentials. But he is not a Muslim-hating ideologue, out to wage a modern crusade against Islam, to win back the holy land, I mean the holy oil, for Jesus. So he was forced into retirement by Bush. But Obama picked him up out of retirement and made him National Security Advisor. Kennedy had such people in his administration. Roger Hillsman was a WWII hero, who Kennedy made his undersecretary for South East Asian affairs. Hillsman looked at Vietnam, and saw what Kennedy saw; and he saw what many observers of Afghanistan see today:

1) an utterly corrupt, inept, cowardly, self-interested puppet regime with no constituency among the local people;
2) a dedicated, heroic, entrenched opposition with roots 1000 years deep among the locals; and
3) an ideology-driven military willing to make ridiculous promises of success, "if only we can get just one more troop increase"; with a nearly unlimited thirst for "insurgent" blood; and with no understanding of the limits of their power.

5. The military overtly challenged Kennedy’s right as commander-in-chief to set policy. Their treatment of Obama has been similarly outrageous.
Kennedy rejected the military’s recommendation for an invasion of Cuba at the Bay of Pigs; and the military, led by the CIA, went ahead with it anyway. JFK rejected the military’s suggestion that the US should overthrow Diem, the president of South Vietnam; the military not only organized Diem’s overthrow, they assassinated him. And of course, for three years Kennedy steadfastly refused their pressure to commit combat troops to Vietnam. Obama's military has similarly challenged his right to set military policy.

After Obama sent Jim Jones to Afghanistan to let his generals know that they had gotten all the troops they were going to get (as described in section 2 above) Stanley McChrystal began a campaign for more troops that was insubordinate to the point of being illegal. The endnote below (*3) contains the full story as outlined in Rolling Stone. McChrystal responded to Jones' visit and message by writing a demand for 40,000 troops, which he immediately, and illegally, leaked it to the press. The Republican leadership demanded that McChrystal be brought before the Senate to have a national stage for his defiance of Obama's attempts to set policy. McChrystal went on 60 Minutes to complain that Obama was not listening to him; and then flew into London to publicly call Obama "shortsighted". Obama flew to Europe and ordered McChrystal to meet with him on his plane. Two days later, Jim Jones rebuked McChrystal for failing to “follow the chain of command."

But on December 1st, Obama caved in to McChrystal and committed to send an additional 30,000 troops; even though the American public, the Democratic leadership in the Congress, and his closest advisors were overwhelmingly dead set against it. What happened? Obama tried, in this speech, to maintain a shred of dignity and authority by saying that the primary role of these troops would be to win the hearts and minds of the Afghan people; and he promised that they would begin to head home in 18 months. Eight days later, he was roundly contradicted on every score, simultaneously, by a quartet of men we ought to regard as his underlings:

Hamid Karzai, the US installed, officially illegitimate "president" of Afghanistan, who owes his position, security, and daily bread to the US, overtly contradicted Obama's statements about the limits of the US commitment, telling a press conference that "Afghanistan's security forces will need U.S. support for another 15 to 20 years"*5

On the same podium, on the same day, Robert M. Gates, US Secretary of Defense (and Karzai's apparent puppet master) echoed this same affront to Obama, saying "it will be some time before Afghanistan is able to sustain its security forces entirely on its own ... whether that's 15 or 20 years".*5 (It should be noted in red letters that Gates was appointed by Bush, and carried over by Obama.)

On the same day, the LA Times reports McChrystal told the Senate, "that the U.S. needed to signal a long-term commitment in Afghanistan".*5

Such calls for a long term US commitment not only contradict the stated policy of the President, but they are overt provocations to legitimate Afghan nationalists. They not only undermine official US policy, but they serve the recruiting efforts of the "insurgents;" thereby putting the lives of American soldiers at greater risk; and not only constitute insubordination, but speeches by the military constitute an illegal and anti-democratic attempt by unelected military officials to dictate political policy, a virtual military coup of the President’s powers and duties.

6. Both Obama and JFK were faced with faced with overt threats of assassination. On November 22, 1963, Dallas was filled with wanted posters calling for Kennedy to be given the death penalty for treason. The NY Times carried an op-ed on September 29, 2009 talking about the “very dangerous” climate now in America, “the same kind of climate here that existed in Israel on the eve of the Rabin assassination.” Four days later, on October 3rd, the Wall Street Journal pointed to three overt physical threats to Obama: a poll on Facebook asking whether the president should be assassinated, a column on a conservative Web site suggesting a military coup is in the works and Rep. Trent Franks (R., Ariz.) calling Mr. Obama "an enemy of humanity." *7

JFK felt, and Obama feels, threatened by the military
JFK encouraged and assisted Hollywood in the making of "Seven Days in May," a fictional account of a military coup in the US. Kennedy wanted this story to be told. He thought the American people needed to be alerted to the threat to democracy posed by the military. No one knows what went on in his head, but it is reasonable to conclude that he felt this was a real and important threat. Robert Parry has written that Obama had a “Seven Days In May moment”, meaning that he felt the threat of a military coup, when he began trying to withdraw troops from Iraq. (This is another critically important news article. see *12)

The Rolling Stone article says that in October, "the Pentagon and top military brass were trying to make the President an offer he couldn't refuse." Now - "an offer he can't refuse" is a reference to the movie, The Godfather. In the movie, the man who receives the "offer he can't refuse" wakes up and finds that the head of his prized horse has been cut off and put in the bed next to him while he was asleep; in order to send the message: "We are brutal. We are killers. We got into your bedroom. If we had wanted to kill you, we would have. Next time we will. If you want to live, don't let there be an next time." The author of the Rolling Stone article does not have superhuman powers of perception. But he has written a detailed article on the relations between Obama and his military. And he has included this suggestion of overt threats of death made to Obama by the military. And the article goes on, "They (the generals) wanted the president to escalate the war — go all in by committing 40,000 more troops and another trillion dollars to a Vietnam-like quagmire — or face a full-scale mutiny by his generals." And what is "a full-scale mutiny"? It means a coup. That is what it means, clearly, plainly, and simply.

The insightful author of this insightful article, Robert Dreyfus, clearly feels that the military wants Obama to feel threatened.

7. Kennedy was plagued, and Obama is plagued, with a Secret Service that is grossly incompetent. If you need proof beyond Kennedy's murder, see the endnote*8 The failures of the Secret Service to protect Obama are worse. At the very least, it can be said in favor of Kennedy’s Secret Service that they did not allow the shooters onto the White House grounds. The incident of the so-called "Party Crashers," has to give Obama pause. The Salahis, the uninvited guests, the husband and wife team who walked into White House reception for the Indian Prime Minister, easily penetrated the most high-security affair to take place at the White House in recent memory. The Indian Prime Minister is regarded as a prime target for Muslim extremists, and everyone present could be considered at great risk from a security lapse. Whatever else can be said of the Salahis, they presented a starkly clear message to Obama: "you are not protected. Your Secret Service is criminally negligent, if not just criminal.”

8. Is the Military threatening to kill Obama? The evidence of the involvement of the military in the assassination of JFK is, I think, beyond dispute*9. Certainly, this evidence has given every president since Kennedy nightmares about the risks involved in taking on the military Kennedy, like Obama, was under fierce pressure to send troops to Vietnam.*10 And as you will see, the military has taken steps to make Obama feel that his life is in grave danger at their hands.

Vice president Biden, and Obama’s chief of staff Rahm Emanuel, have both been outspoken in their opposition to sending troops to Afghanistan. They are both Obama spokesmen. It may be assumed that at all times they speak for the president. And yet they spent the 10 months before the President's Dec. 1 speech, undercutting the President's final decision to send troops. *11 Does that make any sense? Two weeks before the President’s speech, Obama’s ambassador to Afghanistan wrote Obama a memo in which he warned against sending troops to support a regime so corrupt that it enjoyed no popular support. This ambassador, Karl Eikenberry, is a retired Army general and former commander of U.S. and allied forces in Afghanistan. He is one of the not-insane commanders that Bush pushed into retirement; and Obama brought back him back in. Eikenberry’s memo against sending troops was immediately leaked to the press, and showed up on the front pages of the LA Times and NY Times. There was no outcry from the White House about the leak, suggesting that Obama approved it. Does that make any sense? It appears that the President was undercutting his own position, 2 weeks before taking it? Pelosi and the other Democratic leaders have taken similar positions as Eikenberry. They might be accused of pandering to the American people, who are broadly opposed to sending more troops; but it would be unusual for congressional Democratic leaders to undercut their president in this way. The Bob Woodward article, presented in section 2 above, reveals a President with no plans to send troops, taking steps to confront those military leaders with desires for more troops, and telling them to forget it. Whiskey Tango Foxtrot?!! What happened? Why did Obama suddenly change the position that his spokesmen had been taking for nearly a year; the position that he was promoting, through his ambassador, just two weeks before; that other leading Democrats had been promoting; and that he had stated so forcefully to his commanders in the field? Why did he suddenly decide to send 30,000 troops to kill and be killed in a cause he knows to be hopeless?

This is NOT a small deal. No? It can’t have been a whimsical decision on his part. It must have been based on something. We should be able, then, to look at the events in the news and identify some major occurrence that would cause such a shift. No? Let's see. The central feature behind Biden’s and Emmanuel’s position was that the Afghan puppet regime was too corrupt to win popular support. *13 Just recently, the regime proved too corrupt to even stage an election, even after the UN ruled the last election fraudulent and illegitimate. Could this miserable failure, to stage an election, have changed Obama's mind? No. In fact, reports from Afghanistan are that the corruption and incompetence of the puppet regime have only gotten worse. *14

When you come up with an answer, for any of these questions, I would be very grateful if you would let me know. Because I don’t like my answer. But here it is:

A military coup, of sorts, has taken place. This coup, this wresting by force of power from the hands of the President was accomplished in two separate events.

The first event involves the so-called "Party Crashers." The Salahis managed, not only to enter, but they proceeded to first shake hands with the two most outspoken opponents of sending more troops: Joe Biden, and Rahm Emanuel. And the Salahis then they shook hands with Obama himself. They had gained entrance through the intercession of the Pentagon*21. Whether or not they told the President, "Send troops or die", they unquestionably told him, through their actions, "The Secret Service can’t, or won’t, protect you. Your life is over when the Pentagon says it's over." This is not speculation; or interpretation. It is clear; unequivocal; basic. No?

But wait! There's more! The Rolling Stone article is so much better than the author intended! I know that he did not mean a "coup" when he wrote that the generals were threatening a "full scale revolt". I don't think he meant a death threat when he wrote "an offer he couldn't refuse". And I don't think he grasped the import of this remark:

Even worse, the administration has to take into account the possibility of a terrorist attack, which would allow the GOP to put the blame on the White House. "All it would take is one terrorist attack, vaguely linked to Afghanistan, for the military and his opponents to pounce all over him," says Pillar.

Robert Dreyfuss, the Rolling Stone writer, is saying that Obama caved because of the threat of another "terrorist" attack. Now. The suggestion that US military was complicit in the crimes of 9/11 is similar to saying that the Secret Service was complicit in the crashing of the Obama’s White House party: it’s indisputable. The Salahis could not have entered if the White House had the Secret Service not let them in. Indisputably. And none of the planes could have hit any of the buildings on 9/11 if the US air defenses had not gone completely to sleep. The Pentagon attack is particularly egregious. The official story is that 50 minutes after the 1st plane hit the World Trade Center, US air defenses, on flaming red alert, designed to defend against supersonic missiles and jet fighters, not only failed to stop a slow moving humongous 757, they failed to get off a shot! Not a single shot in defense of the most highly defended building on the planet. The following week, Richard Meyers, who was in charge of US air defenses on 9/11, instead of being court-marshaled and shot, as he clearly ought to have been, was promoted, to the highest position in the military: Chairman of the Joint Chiefs of Staff.*15

Footnotes:
*1 Kennedy's cancellation of the invasion is not widely known; but it is documented in the US Government publication of the official investigation, a document entitled Operation Zapata.
*2 During the missile crisis, Kennedy's advisors told him that the Russian missiles in Cuba were not armed, and advised an attack and invasion. It has come out from the Russian side, that the missiles were ready, armed with nuclear warheads, and the local commanders were authorized to use them. Robert McNamara, the Secretary of Defense at the time, has made much of this his book and DVD The Fog of War.
*3 P.D. Scott: http://www.globalresearch.ca/index.php?context=va&aid=15752
Robert Parry: http://www.consortiumnews.com/2009/022009.html See also *12
The following are highlights from the Rolling Stone article depicting the efforts by McChrystal to force Obama to implement McChrystal's foreign policy, rather than Obama's:
http://www.rollingstone.com/politics/story/30493567/the_generals_revolt
The military's campaign to force Obama's hand started in earnest in September, when the Commander's Initial Assessment of the war — a highly classified report prepared by McChrystal — was leaked to The Washington Post. In the report, McChrystal paints a dire picture of the American effort in Afghanistan, concluding that a massive increase in troop levels is the only way to prevent a humiliating failure.
On Capitol Hill, hawkish GOP congressmen seized the opening to turn up the heat on Obama by demanding that he allow McChrystal and Petraeus to come to Washington to testify at high-profile hearings to ask for more troops. "It is time to listen to our commanders on the ground, not the ever-changing political winds whispering defeat in Washington," declared Sen. Kit Bond, a Republican from Missouri. Attempting to usurp Obama's authority as commander in chief, Sen. John McCain introduced an amendment to compel the two generals to come before Congress, but the measure was voted down by the Democratic majority.
As the pressure from the military and the right built, McChrystal went on 60 Minutes to complain that he had only talked to Obama once since his appointment in June. Then, upping the ante, the general flew to London for a speech, where he was asked if de-escalating the war, along the lines reportedly suggested by Vice President Joe Biden, might work. "The short answer is: no," said McChrystal, dismissing the idea as "shortsighted." His comment — which bluntly defied the American tradition that a military officer's job is to carry out policy, not make it — shocked political observers in Washington and reportedly angered the White House.
For his part, Obama moved quickly to handle the insurrection. One day after McChrystal's defiant London speech, the president unexpectedly summoned the general to a one-on-one meeting aboard an idling Air Force One in Copenhagen. No details of the discussion were released, but two days later Jim Jones, the retired Marine general who now serves as Obama's national-security adviser, publicly rebuked McChrystal, declaring that it is "better for military advice to come up through the chain of command."
"Petraeus and McChrystal have put Obama in a trick bag," says Col. Lawrence Wilkerson, a former top aide to Secretary of State Colin Powell. "We had this happen one time before, with Douglas MacArthur" — the right-wing general who was fired after he defied President Truman over the Korean War in 1951.
http://www.rollingstone.com/politics/story/30493567/the_generals_revolt
*4 Eichenberry, 18 days before Obama's Dec. 1 speech announcing 30,000 more troops, wrote a memo to Obama urging him not to send Americans to die defending a regime as utterly corrupt and worthless as the puppet regime in Afghanistan. latimes.com/news/nation-and-world/la-fg-obama-afghan12-2009nov12,0,2561752.story
*5 LA Times 12/9/09 http://www.latimes.com/news/nation-and-world/la-fg-afghan-mcchrystal9-2009dec09,0,224382.story
*6 LA Times, 12/16/09 latimes.com/news/nation-and-world/la-fg-afghan-special-forces16-2009dec16,0,2135079.story
*7 http://online.wsj.com/article/SB125452861657560895.html
*8 The secret service manual requires the planners of a motorcade to pour on extra protection when there is a sharp turn in the route, which requires that the car slow down. Agents should, therefore, have been positioned all over Dealey Plaza to insure that there were no open windows. That is standard procedure. Instead, there were no secret service agents at all on the ground in Dealey Plaza. The protective motorcycle escort was ordered to stay behind the President's vehicle. The limo is equipped with handles on the rear trunk lid, and steps built into the bumper, to accommodate agents riding on the back. The agents were waived off this position and moved into a following car. The driver should have stepped on the gas when the first shot was fired. Instead, the driver braked and slowed, for the next 6 seconds. Only after Kennedy was shot in the head did the driver take off.
*9 I've spent 40 years researching, and 10 years making a documentary that makes this point in spades. (I'll gladly provide you with a copy. It is available on Amazon if you'd like to read the reviews.) In the video, you will see a video interview with Aubrey Rike, the man who loaded Kennedy's body into a bronze casket. You will also see a video interview with Paul O,Neil, the Bethesda Naval Hospital sailor who unloaded the body from a grey shipping casket, 20 minutes before the bronze casket arrived at the facility. An FBI memo, shown in a section of the video narrated by Walter Cronkite, says that it was obvious that Kennedy's wounds had been altered. Pre-autopsy photos also show this mutilation of the body. And one of the doctors from the Dallas emergency room, in an excerpt from a NOVA special, points to an autopsy photo of the entrance wound on Kennedy's right temple and says that the photos show it was altered before the autopsy began. The military had complete control of the body and the autopsy. They, and no one else, altered the critical head wound. This was an entrance wound to Kennedy's right temple. It was fired from the so-called "grassy knoll". It exited the back leaving a gaping 4-inch hole in the rear of Kennedy's head. The wound to Kennedy’s temple was altered to disguise it’s characteristic appearance as an entrance wound. But the alterations were done at least 5 hours before Oswald was charged. The autopsy room was full of admirals and generals. These men were acting as part of the conspiracy to murder. There is no room for reasonable debate on any of these points.
*10 The movie JFK does an amazing job of making this point. The movie presents a "Mr. X." This is not a fictional character. The man's name was Fletcher Prouty. He was the Pentagon liaison to the CIA. And he was deeply and directly involved, as shown in the movie, in the dual efforts of JFK both to eliminate the CIA, and to withdraw from Vietnam.
*11 Biden:
http://latimesblogs.latimes.com/washington/2009/09/biden-begs-obama-no-more-troops-to-afghanistan.html
Emanuel: http://www.nytimes.com/2009/10/19/world/asia/19afghan.html
Eikenberry: latimes.com/news/nation-and-world/la-fg-obama-afghan12-2009nov12,0,2561752.story

*12 Robert Parry says the same things has happened to Obama's stated plans to withdraw from Iraq http://www.consortiumnews.com/2009/022009.html

*13 You can NOT win a war against an insurgency that is more popular than you. You can go on fighting forever, which is what the generals have stated is their anticipated outcome. But you can not win a peace without a government that is a just and fair and popularly supported.
*14 In fact, conditions in Afghanistan continue to deteriorate. http://news.yahoo.com/s/ap/20091211/ap_on_re_as/as_afghanistan
Dec. 11, 2009
Top UN official in Afghanistan to leave in March
Gareth Price, head of the Asia program at Chatham House, a think tank in London, said “it's clear now that the Afghan government isn't working."
*15 My favorite is a lecture given by a physics professor, Steven Jones. Jones was a tenured, admired physics professor at Brigham Young University. Jones is a devout and conservative Christian and Mormon. He voted for Bush. But his physics students asked him to explain the collapse of the buildings at the World Trade Center, particularly building 7. He enthusiastically approached the question as a teachable moment. At first he approached the question as one of basic physics: "Can the heat from jet fuel and office supplies explain the collapse of a steel structure?" He concluded, with enormous anguish, that it cannot. He was tortured by the implications for many months. And then he woke up one morning and remembered that he was a leading expert, on a world-class level, at chemical analysis. (The first time I googled his name, his published papers on his techniques for determining the chemical content of crystalline structures is what came up first.) And, having determined that the official story of airplanes and jet fuel could not account for the collapse of the buildings, he determined to use his expertise to analyze samples of dust from the World Trade Center to search for evidence of what did, in fact, bring down the buildings. He found abundant of evidence (metallic microspheres) of steel having been evaporated (such tiny microspheres are created when steel is evaporated) and also abundant samples of the military grade demolition explosive, thermate, including the wrappers for the explosive. Thermate is virtually the only way that steel can be heated to sufficiently high temperatures that it evaporates. But I have several other DVD's besides the one by Professor Jones. All of this information, including the videos, are available online.

Local perspective: Part of my professional duties as a teacher of economics and government is to produce competent adult citizenry. This includes realization that our nation’s policies and money are managed at a broad community level, and these issues have tremendous local impact. Of course, we all want human beings to be individually successful and enjoy their unique, beautiful and powerful self-expressions. Concurrently, we recognize our commitment to local success is strongly dependent upon the success of the community, and that government policy and economics are drivers.

Our status in early 21st Century human history is that we suffer from a long history in government and money of human interrelationship well-described as vicious antagonism. Governments frequently use war as a foreign policy, despite its illegality and dependent upon public ignorance, with horrific consequences.
John Hankey is the author of the following compelling analysis that considers if President Obama is under threat to comply with US military orders for supporting war escalation (and its funding). This is part two of two; for part one, click here.

John is the creator of the stunning and historically accurate documentary, "Dark Legacy: George Bush and the assassination of JFK." A 10-minute excerpt from the video is at the end of the article.

This documentary is the historical favorite of my history students and the single-best JFK assassination analysis that I’ve reviewed. “Dark Legacy” walks viewers through the independently verifiable evidence that has two-thirds to three-fourths of Americans conclude the US government story of President Kennedy's assassination is provably false (these polls include ABC, CBS, FOX, PBS).

John did not start out as an Obama admirer; he wrote that Obama looked hand-picked by the darkest fascist forces within our government and was surrounded by them in his campaign. John currently observes that perhaps Obama has burned them; leaving them behind when he became President.

John had an interview with veteran JFK assassination analyst and author, Jim Fetzer, to discuss this topic. Jim also interviewed me to discuss unlawful wars in Iraq, Iran, and the role of the CIA.

John's article, printed with his permission; part two of two. For part one, click here:

So the military, under the Bush administration, was indisputably complicit in the events of 9/11, if only by the most jaw-dropping incompetence; incompetence that was warmly rewarded by the Republican White House. So when the Republican leadership says Obama's attempts to reduce troops and spending in Iraq and Afghanistan threaten to unleash a new terrorist attack, this is a genuine threat from genuine blood-covered terrorists.

The Fort Hood shooting is this “terrorist” threat made real. There is much in the story of Malik Hasan, the Fort Hood shooter, to suggest that he was a Manchurian Candidate, that he was “programmed,” through hypnosis, to do what he did. Though such a thing can never, by it's very nature be proved. (If you have ever seen a demonstration by a professional hypnotist, you already know that anyone will do anything under hypnosis and that they will have no recollection afterward) *16. However, there are a number of things about the case of Malik Hasan that are especially persuasive that he was under military control: *17

1) Hasan had at least 13 email contacts with a radical Muslim imam. The Imam told Al JaZeera that the first of these emails, sent 11 months before the shooting, sought the Imam’s approval for Hasan’s shooting his fellow soldiers. *17b Michael McCaul, the top Republican on the House Homeland Security Committee's intelligence subcommittee, said that he has confirmed that Hasan wired money to Pakistan. *18 There has been much discussion in the “news” about the fact that the FBI took no steps to apprehend or otherwise stop Hasan. But the contents of his emails have not been released. That is highly suspicious. Can we conjecture that if the contents were innocuous, that they would have been released? Sure we can. The Imam found his house under attack within 24 hours of his publicizing the contents of those emails. But this discussion is a distraction from the flashing red light: the FBI did not even open a file on Hasan. That is not preposterous. It is very clear in its meaning. There is only one conceivable explanation, and an obvious one. If the FBI failed to take steps as basic as opening a file, it is because they were ordered not to do so; by another agency of the federal government. Again, that is hardly speculative. It should be basic common knowledge: if a drug dealer gets picked up by some police agency in possession of a bag full of drugs; and walks out the door, without being arrested, with his bag of drugs, and without a file being opened, it’s because he’s undercover. Apparently some agency of the federal government ordered Hasan to send these emails. That is speculative, but no other explanation will suffice.*19 And certainly, the FBI was ordered not to open a file. Of this there cannot be any doubt.

2) Similarly, the FBI's excuse for not opening a file, was that they discovered that Hasan was doing research on the attitudes of Muslims serving in the US military. How they made this determination, without opening a file, is a mystery to me. But let that alone for the moment. For whom was Hasan doing this research? Duh. No? But the attitude of the media to such obvious questions is “don’t ask, don’t tell.”

3) Lee Harvey Oswald had been set up by the CIA to appear to be an agent of Fidel Castro. But the FBI investigated all this evidence and determined that it was a fraud. *20 So for Hasan to have been set-up in a similar fashion would be par for the course. Fletcher Prouty (see endnote 11) was tipped off that Kennedy's murder was a military plot by the fact that Oswald's entire bio appeared in the papers in Australia, where Prouty was when he learned of the crime, before Oswald was even charged. The NY Times and Fox news were spreading the contents of the FBI's non-files / non-investigation, showing Hasan to be an Arab terrorist, while they were still reporting that he was dead, before they knew that he was still alive. That is, someone on the inside was distributing this insider knowledge about a guy who supposedly was of no interest. It seems clear as day to me that it was a set-up.

4) Now, this is my favorite part. In the 1944 detective movie, "Double Indemnity”, Edward G. Robinson, the detective, is alerted that something foul is going on because the insured dead man had an insurance policy with disability as well as death benefits; but when he broke his leg, he didn't try to use the disability benefits in his policy. Why didn't he use it? He must not have known he had an insurance policy. His wife purchased the policy behind his back, and then killed him. OK. Now answer this:
If Obama actually wanted to send troops to Afghanistan; if he actually wanted to move the American people to see the necessity of "fighting terrorism there before it becomes terrorism here;" why did he not wave the bloody shirt from the Fort Hood shooting? Why did he not claim Hasan to be a terrorist? Why did he not use him as an example of the continued threat? Obviously, then, Obama was not part of any plot to kill soldiers at Fort Hood to justify a continued war on "terror".

And now, you do the math. Add 1 + 1. Add “Party Crashers” to “programmed shooter” and what do you get? You get Nancy Pelosi as president.

But things have changed since 1963, haven’t they? The military has matured. It is not so rabid, blood thirsty, and wild, as it used to be. They wouldn’t overtly threaten to kill the President in this way, would they? The threats to which Obama caved were political threats, not physical ones. No? No. 1) Obama is a master politician. He’s not afraid of a political fight. He is more capable of winning support for his position than any of his opponents. And besides, the American people are against sending troops, so this is an easy victory. I don’t see how political threats could force him to send young men and women to their deaths, for a cause he and everyone around him knows is hopeless. Counter insurgency in support of a corrupt regime is killing for the sake of killing. 2) The military was, at the very least, complicit in the 9-11 murders of 3,000 Americans. 3) They were apparently involved in the murder of 13 soldiers at Ft. Hood. 4) So it doesn’t seem times have changed for the better. Eisenhower said that the greatest threat to our national security came from what he called “the military industrial complex” in this country; a ruling elite with enormous political power. These people had the deepest support for Hitler during WWII. And they orchestrated a performance by the media, the Secret Service, the FBI, the mafia, and the military that murdered JFK; and they have kept the truth suppressed ever since, the ridiculousness of their cove-story not withstanding. They just passed a 630 billion dollar defense budget, in a world where the primary threat is a few hundred men with hand-held weapons. What reason is there to think that they would hesitate to kill Obama? Do you suppose they like having a Black man as President?

So. Perhaps you are convinced that Obama was persuaded, by threats against his life, to send troops. If so, there is a more terrible question lurking out there. Were they threatening? Or were they practicing? Or both?

When I was first confronted with these ideas, my impulse was to see Obama as a coward, as lacking the courage that Lawrence Wilkerson suggests Obama needs to stand up to the generals (see the end of segment 3 above). But a "full scale revolt" of the generals does not merely imply the death of Obama. A military seizure of the government would entail far more deaths than his, certainly many thousands. President Johnson, in choosing not to pursue Kennedy's killers (no-doubt well known to him), faced a similar choice: the threat of a full scale revolt – that is, a military coup; civil war, death and prison camps for many thousands, if not millions. But Johnson and Obama are not the only ones confronted with difficult choices. The information presented here suggests that your democratic government has already been seized. It is not in the hands of your democratically elected President. And what are YOU going to do about it, Patriot? Are you going to be a sheep and a traitor, a collaborator? Or an insurgent?

In our political system, it is virtually a given that all politicians are corrupt. The politician wants to get elected; so he takes money from thieves; the best do small things to help the people; but they all do what they think they have to to keep the money flowing in. But people are people. They occasionally get carried away by an idea, or by the moment, and they get inspired to think that real virtue is possible, even for them. And for such people, at such times, there are other forms of coercion. Blackmail, for example. Further, all politicians know, and the media too, that to admit certain truths means, at least, political death. And on occasion, there is the real murder of an individual who thinks he can, and does, serve the interests of the people. John Kennedy was such a one. And such a murder is a great lesson to all the living about the facts of life. My point is that “coercion with the threat of death” is a real tool used by the ruling elite. Typically its use is extremely low key, I’m sure. But on occasion its use may be sufficiently high profile to be identified. And I think we can see this clearly with Obama. I believe that the evidence shows that the military has overtly threatened, at the very least, to kill Obama. I believe they are also, in preparation for the day that he stands up to them, practicing to kill him. I would ask you please to disseminate this as widely as possible, as the most practical way to oppose their ability to do this. I apologize for its length.

I’m full of misgivings about this article. It seems plausible that Obama is a Kerry-like operative, and this “threat” provides Obama a pretext to explain to people in his immediate base the reason for his actions. When I see his continuation of Bush policies at every level and in every area (I’m sure you have your own list) it disheartens me to the point of despair. But a close study of John Kennedy’s history is useful; and demonstrates that it is plausible that, like Kennedy, Obama is choosing his battles and trying to accomplish what he feels he can without throwing away the midterm elections. It is certainly the case that if this were 1963, the people who are criticizing Obama and calling him a sellout, would be criticizing Kennedy, and calling him a sellout. It is not unimportant that 40 million people who were without xxxare going to have medical insurance.

John Hankey is the author of JFKII, the Bush Connection; a 103-minute documentary detailing the evidence linking George Bush Sr. to the assassination of John Kennedy. The video is available for free on the web, at BushKilledJFK.com, and at Amazon.com. You can reach him at xjhankeyx@yahoo.com

Footnotes:

*16 The assassin of Robert Kennedy, Sirhan Sirhan, is the best example, since his case was the most thoroughly examined. The papers splashed the idea of his being a radical West-hating Palestinian across the front page. But Sirhan was a Christian. He and his family liked the Kennedys. He had no recollection of the shooting. And every eye-witness says that his gun never got with 3 feet of Kennedy’s front, while Kennedy had powder burns on the back of his head, that the coroner said were left by a shot from not more than 1 inch. Photographs showing CIA operatives, known Kennedy haters, around the Biltmore hotel that night, have been recently uncovered.

The shooters of John Lennon, George Wallace, and Ronald Reagan fit similar profiles, but their cases have not been so carefully investigated.

The CIA spent 30 years researching hypnotism, but they learned nothing and there are no files. As I said, if you’ve ever seen a hypnotist at work, you will see that a person under hypnosis can be gotten to do anything. But that not everyone is susceptible. Sirhan was hypnotized by court appointed psychiatrists. He was demonstrably susceptible.
*17 The link will take you to a stunning report on the shooter from the NY Times. You have to read through to the end to get to the most amazing quotes from his neighbors. He was, apparently, a friendly, lovable guy.
The tenants generally saw him leave early and come home late in the afternoon, usually in his fatigues. He never had visitors, they said, but he was friendly with his neighbors.
“The first day he moved in, he offered to give me a ride to work,” said Willie Bell, 51, who lived next door. “He’d give you the shoes and shirt and pants off him if you need it. Nicest guy you’d want to meet. (Boy! you sure don't find that quote in the headlines.)
“The very first day I seen him, he hugged me like, ‘My brother, how you doing?’ ”
http://www.nytimes.com/2009/11/09/us/09reconstruct.html?scp=3&sq=%22Why%20the%20War%20on%20Terror%20Is%20a%20War%20on%20Islam%22&st=cse
17b http://abcnews.go.com/print?id=9410718 “Fort Hood: Hasan Asked Awlaki If It Was Okay to Kill American Soldiers” Please note that this is ABC news online. This story has been utterly suppressed. It was never broadcast by ABC, or carried by any major newspaper. Within 24 hours of the publication of this report, Awlaki’s home was bombed by Yemeni war planes. You didn’t know Yemen had an airforce?
*18 http://www.dallasnews.com/sharedcontent/dws/dn/latestnews/stories/111309dnentcharges.4179b70.html
"I have confirmed through independent sources that there were communications and wire transfers made to Pakistan," McCaul said in a prepared statement provided by his spokesman. "This Pakistan connection just raises more red flags about this case and demonstrates why it's important for Congress to exercise its oversight authority."
*19 Curiouser and curiouser. Obama ordered the FBI to investigate themselves to determine “whiskey tango foxtrot” they were doing in this case. And the day they finished their investigation, he ordered them to do it again, only this time with outside supervision. Immediately after the shooting, Obama ordered a total clampdown on leaks of information about the case. There is clearly much more going on here than meets the eye: http://www.latimes.com/news/nation-and-world/la-na-fort-hood9-2009dec09,0,399074.story
*20 John Connally, who is implicated in the JFK assassination, called LBJ to urge him to pursue this avenue in order to justify an invasion of Cuba. The call was recorded and is available on line both in transcript and audio form. The CIA claimed to have a photo of Oswald visiting the Cuban embassy. But the photo does not remotely resemble Oswald, and the FBI investigation says Oswald was elsewhere at the time. Further, Oswald's representation of himself as a member of the genuine pro-Castro "Fair Play for Cuba Committee" (FPCC) proved to be a complete fraud. He was the only "member" of his local chapter. He set it up without authorization from the actual FPCC. The address he used on his leaflets for the FPCC was that of a CIA office run by the former head of the Chicago FBI, Guy Bannister.
*21 http://www.washingtonpost.com/wp-dyn/content/article/2009/11/30/AR2009113004420_pf.html
“People familiar with the inquiry into how the Salahis were able to attend Tuesday's gala, even though they weren't on the official guest list, said the Salahis exchanged e-mails with Michele S. Jones, special assistant to the secretary of defense and the Pentagon-based liaison to the White House. It was unclear how well the Salahis know Jones, but Jones includes the Salahis' lawyer, Paul W. Gardner, as one of her 50 friends on Facebook.
*22 Both Obama’s National Security Advisor, Jim Jones, and his ambassador to Afghanistan, Karl Eichenberry, were pulled by Obama out of retirement, where Bush had forced them. The most egregious case of the promotion of Christian ideologues is that of Lieutenant-General William "Jerry" Boykin, the Deputy Under Secretary of Defense Intelligence under Bush and a leading figure behind the prisoner abuses in Iraq and at Guantanamo.

Writing for the Los Angeles Times on October 16, 2003, columnist William Arkin pointed out that Boykin sees the "war on terror" as a religious war between Judeo-Christian civilization and Satan, with Islam of course cast in the latter role. According to Arkin, Boykin told a religious group in Oregon, in June, that radical Islamists hate the United States "because we're a Christian nation, because our foundation and our roots are Judeo-Christian ... and the enemy is a guy named Satan." He continued to say that "our spiritual enemy will only be defeated if we come against them in the name of Jesus".
Boykin, a 30-year veteran of the US Army's Delta Force, the Central Intelligence Agency and Army Special Forces, told another audience, in reference to operations he was involved in in Somalia in 1993, that "I knew that my God was bigger than his. I knew that my God was a real God and his was an idol." Arkin further reports that Boykin believes that President George W Bush was not elected to the White House by mere mortals, but chosen by God, and that he himself received his orders from God. Arkin also noted that Boykin's concept of "war on terror" is quite different from the way the US president looks at it. Boykin sees it as a war against Muslims.

Though most individuals in the military have the common sense not to speak as openly as Boykin did, the entire notion that "insurgents" need to be killed, held by all the leading brass, is fundamentally similar. That is, upon what basis do we condemn these men to death? Because they are insurgents against a foreign occupier? How can that be? There is a justification that is not stated. Clearly. And why not? Because it is racist, and/or religious.
http://www.atimes.com/atimes/Front_Page/FE11Aa04.html

That concludes John's essay. Thank you for your attention.

Local perspective: Part of my professional duties as a teacher of economics and government is to produce competent adult citizenry. This includes realization that our nation’s policies and money are managed at a broad community level, and these issues have tremendous local impact. Of course, we all want human beings to be individually successful and enjoy their unique, beautiful and powerful self-expressions. Concurrently, we recognize our commitment to local success is strongly dependent upon the success of the community, and that government policy and economics are drivers.

Our status in early 21st Century human history is that we suffer from a long history in government and money of human interrelationship well-described as vicious antagonism. Governments frequently use war as a foreign policy, despite its illegality and dependent upon public ignorance, with horrific consequences.

Indict Secretaries of The Treasury Geithner & Paulson

2010-01-21T18:29:00.002+01:00

Bad decisions or intentional economic collapse??

2010-01-21T18:04:00.000+01:00

Is The U.S. Economy Being Tanked By Mistake or By Intent?

by Bill Sardi

Recently by Bill Sardi: Who Is Left Holding the Bag on US Debt?

The government wants Americans to believe the greatest economic collapse in history was the result of ineptness and mistakes yet still have confidence in their financial institutions.

Should American bankers be let off the hook because they self-declare, before an investigational panel, that the failure of their newly invented risk swaps and other highly leveraged investment schemes was simply due to "mistakes"? Not malfeasance – just every-day mistakes? Bankers just fell asleep at the helm at a critical juncture in American history. Is that what we are being led to believe?

Oh well, it’s just 18 million American homes that now lay empty in the wake of unprecedented foreclosures, and the bankers have collected obscene bonuses for reckless lending of their depositors’ money. It’s like the captain and crew of a ship saying, not to worry, twenty-percent of the passengers were lost overboard, but this was due to unavoidable mistakes, and then being rewarded with bonuses when they reach port.

Are Americans to believe that the Federal Reserve lowered interest rates to create a false bubble in the economy, at the same time the Securities Exchange Commission allowed investment banks risky reserve ratios and exerted lax control over investment tycoons like Bernie Madoff, and in lock step, the credit rating agencies (Fitch, Moody’s and Standard & Poor’s) handed out sterling A+ credit ratings on risky mortgage-backed securities, while the US Treasury Department stood by and did nothing?

Shall Americans conclude the world’s largest economy is beyond the management skills and regulation of virtually every financial arm of government and the private sector? If so, widespread incompetence would suggest Americans had better come up with some institution or instrument of their own invention to protect their money.

Whatever or whomever did bring down the American economy, it appears to be an orchestrated effort. If one arm of the financial industry had objected or performed their job responsibly, the whole economic collapse could have been averted. The credit rating agencies alone could have put an abrupt halt to what amounts to a financial collapse of western civilization.

Lenses into the future: a planned default?

Americans cannot see the economy as the elites do. The elites have lenses into the future. They have access to information that foretells the future of our economy. They can see a better picture of when mounting debt will rise beyond the ability to repay.

They certainly can see pension funds, private and public, are under-funded and there is no way, with Baby Boomers now entering their retirement years, these obligations can be met. Medicare expenses are totally out of control with enrollees able to rack up bills in the tens of thousands of dollars beyond what they ever paid into the system.

At some point, seeing no way out, maybe a decision was made to default on our debts. There are rumblings that the world economy is being intentionally brought to its knees in order to usher in a one-world currency.

There are other hints that the US is intentionally tanking its economy.

Normally the US Patent & Trademark Office could be seen as a pathway to jump-start the economy. Some 6300 patent examiners hold the future fate of the American economy in their hands. But the patent office is backlogged. It embarrassingly has 6 years of patent applications, what amounts to over 1 million filings, waiting to be evaluated. Over $700 million of fees have been siphoned off by Congress to pay for other extraneous government projects, slowing the patent approval process to an agonizingly pace. About 7 of every 10 applicants were granted a patent in the past. But today, less than half are approved.
In the past decade there also appeared to be an effort to drive States into debt. Colorado, a State that had a mandated spending limit, was belittled for stifling its economy. Lies were told that Colorado was so bogged down with this limitation that it repealed its spending limit bill. That was far from the truth.
Another business stifling practice has been to limit the amount of large funds actually available to the economy in what is called M3 money supply. M1 is the amount of currency and traveler’s checks in circulation outside banks, along with demand deposits and other checkable deposits. M2 is M1 plus savings deposits, such as money market accounts. M3 is M2 plus large time-restricted deposits, institutional money-market funds and other large liquid assets. M3 is the best official measure of the total supply of money.
As of March 23, 2006, the M3 money supply is no longer published by the US central bank. So Americans can’t get a full view of what government is doing with the total money supply. The M3 is now estimated by two websites – ShadowStats.com and NowAndTheFuture.com. A severe contraction in the M3 money supply began to be reported in August of 2008. It appears there has been a sudden downturn in M3 funds, which could choke the economy at a critical time.

"Total money"
M3 plus credit, recent time
http://www.nowandfutures.com/key_stats.html

By plan or mistake?

It would be difficult for the American public to even contemplate the idea that their government may be intentionally tanking the economy. So we are left with the commonly-heard claim that people in government are just incompetent, there is no conspiracy of any kind. Regardless, heads should roll, and we still have the same derelict captains (Bernanke, Geithner) at the helm.

Whatever is planned for the future US economy, there certainly must be contingency plans in place to devalue the dollar, issue new currency, declare banking holidays, reappraise the value of real estate to true market value (~ 30% drop), sell off government-held real estate assets to hedge funds, confiscate guns, invoke marshal law, etc. If these events occur, they won’t be without forethought. Call it conspiracy if you will.

On November 21, 1933, President Franklin Roosevelt stated, "The real truth of the matter is, as you and I know, that a financial element in the large centers has owned the government of the United States since the days of Andrew Jackson."

Few Americans recognize the merger of state and corporate powers, with the news media also subservient to those in power. How gullible the public has been over recent decades to not see how government and business have conspired to raise the price of goods.

The oil embargo of the 1970s

I can recall the gasoline crisis/OPEC oil embargo of the 1970s. I was traveling around the US on business at the time and I noticed that shortages of gasoline were not nationwide but were actually being staged in different regions. In Seattle there was no shortage of gasoline, but there were long lines at gas stations in Los Angeles. There was no scarcity of gasoline in Atlanta, but later there were long lines at gas pumps throughout Georgia. TV screens around the nation made it falsely appear the shortage was nationwide.

The 1970s gasoline crisis was a concerted effort between government, oil producers and the news media to fool Americans into thinking there was a pervasive shortage of gasoline despite the fact OPEC, the oil-producing cartel, was founded because of an over-abundance of oil.

I recall reading an article in Fortune Magazine in 1963 how oil companies longed to find a way to raise the price of gasoline to European levels. Pre-OPEC, oil was sold at competing prices. That couldn’t be tolerated. A spot-price had to be introduced. Then one country couldn’t undersell another and prices would "stabilize." The OPEC cartel eliminated competition, except for Hugo Chavez in Venezuela in recent times. Of course, Chavez is demonized. We do not have free markets, we have controlled markets based upon contrived events.

Graph of oil prices from 1861–2007, showing a sharp increase in 1973, and again during the 1979 energy crisis. The orange line is adjusted for inflation.

Examine this map of failed banks in 2008–2009. There are over 2000 failed banks the FDIC indicates it needs to dissolve. Notice how evenly the bank failures are spread geographically across the US. The geographical locus of home foreclosures is centered in California, Nevada, Arizona and Florida. But bank closures appear to be more evenly spread, as if to create public awareness (and fear) in every geographic region that banks are in trouble. This is eerily similar to the geographically revolving gasoline shortages in the 1970s.

Tax cut or payoff to oil companies?

Another example of complicity between government and industry is the most recent run up in gasoline prices which began early in the past decade. The news media failed to note that when GW Bush passed his first tax cut in 2001, early in his first term in office, it was rapidly followed by an increase in gasoline prices at the pump. Had President Bush cut taxes in order to put money into consumers’ hands so they could then pay ghastly high gasoline bills? The tax cut appears to have been a hand-in-hand arrangement between oil producers and the federal government. Gasoline prices rose till the public began curtailing their driving. The oil companies had now determined the top price they could get for their refined oil without collapsing demand.

There is nothing wrong with companies determining the top price consumers will pay for their goods, but there is something wrong when government secretly schemes with oil companies to create false market value, as they have also done in real estate.

Looking back in recent American history, there were also shortages of coffee and bananas in the 1970s and 80s, all staged events blamed on storms in South America that ruined crops. In those days, Americans didn’t have easy access to weather maps and information via the internet. These shortages were prolonged and prices rose until usage declined. Then the barons who ruled the coffee and banana industries had found the top price they could sell their products at without dampening demand. Suddenly, the shortages disappeared. The public never imagined these shortages were all artificially created.

Just as the price of oil, bananas and coffee were covertly engineered by a hidden alliance between government, industry and news outlets, is currency being gamed in the same fashion today? If so, current economic events are not by mistake.

Since President Roosevelt banned citizens from owning gold in 1933, the people were left holding increasingly worthless pieces of paper.

Americans can’t imagine how monetary policy has eroded their purchasing power. The US was officially taken off the gold standard in 1971. Issuance of silver certificates ceased in 1964. Had the US dollar continued to be backed by gold, the rise in the value of gold would have offset recent increases in gasoline prices at the pump, a fact Ron Paul has brought to the public’s attention.

For example, a portion of the rise in oil prices in recent years is due to erosion in the value of the dollar. Had the dollar remained strong the relative price of a barrel of oil would only have been around $65 in 2007-2008. If you compare the spot price of oil to gold, there has been almost no increase. Imagine what a gold-backed currency would do for America? Again, government (the Federal Reserve) has now admitted that it has arranged gold swaps with foreign banks in a prearranged way to suppress the value of gold.

Is inflation inevitable? Or is it planned? Will the American public ever imagine the value of their money has long been manipulated just as the price of coffee, bananas, gasoline and gold have been engineered in an unholy alliance between government and bankers and corporate enterprise? Will the American public ever realize their government is working against them, plunder their wealth, in a growing fascist alliance with American corporations? The enemy is not the underpants airplane bomber as we are falsely being led to believe. The enemy is not a towelhead in Afghanistan. The enemy is not China. As Pogo once said, "we have met the enemy, and he is us."

January 19, 2010

Bill Sardi [send him mail] is a frequent writer on health and political topics. His health writings can be found at www.naturalhealthlibrarian.com. He is the author of You Don’t Have To Be Afraid Of Cancer Anymore.

Copyright © 2010 Bill Sardi Word of Knowledge Agency, San Dimas, California. This article has been written exclusively for www.LewRockwell.com and other parties who wish to refer to it should link rather than post at other URLs.

The Best of Bill Sardi

There is no genuine economic recovery happening. There will be no recovery for those who lost their jobs!!

2010-01-21T17:54:00.000+01:00

By: Julie Crawshaw

Author, investor and longtime Wall Street observer James Dale Davidson says our government is lying to us: There is no genuine economic recovery happening.

“I think what we have seen ... is a simulated recovery which has been generated by the government faking it in a lot of different ways," putting out what he calls statistical falsehoods on economic numbers "to make it seem that the economy is stronger than it is,” Davidson told Newsmax.

For example, calculations for the recently released unemployment figures released failed to include the fact that the Bureau of Labor Statistics had undercounted the number of unemployed people in 2009 by 824,000 persons.

Video — Davidson: Obama White House Is Lying to You

“They’re supposed to be doing a benchmark adjustment ... and if they do, the unemployment rate will shoot up even higher,” Davidson says.

"A lot of the supposed improvements have been faked by the government," Davidson says.

Davidson believes the government secretly used quantitative easing as an excuse to funnel money into U.S. capital markets.

“It’s not a coincidence that the market started to rally in March at the same time they announced they were going to do the quantitative easing,” he observes.

“In my view, it’s all created by the government as a hoax.”

The whole administration is based on one lie after another, he says.

As revealed in recently uncovered e-mail correspondence with AIG, Treasury Secretary Timothy Geithner effectively told the huge insurer to violate U.S. securities laws.

“I think the way he (Geithner) handled the AIG bonuses last year is a very telling story,” Davidson notes, referring to the media uproar over the bonuses that distracted the public’s attention from the billions of dollars that were being poured into AIG.

The uproar over those bonuses kept people from getting excited over the real issue, Davidson notes. Investors can get excited about only so many AIG-related scandals at once, he says.

At some point, Davidson believes that AIG’s having violated practically every securities law there is will be revealed.

“They’ve done everything they can to create a false impression of stability and strength in a rebounding economy, and I can understand that from the point of view of public policy they want people to think the economy is strong," he says.

"But if you hoax people into going out and spending money on false assumptions … a lot of people are going to lose a lot of money,” he points out.

Davidson believes all investors should hold some gold in their portfolios because the dollar is on its way out as the world’s reserve currency.

“The dollar is cooked,” he says.

“Our ratios are much worse than Brazil was 15 years ago when they had hyperinflation. When you have this kind of spending out of an empty pocket, there’s never anything good as a result. You can’t go on forever spending money you don’t have.”

“It has to stop, and when it does, you’ll be glad you have some gold.”

The heart of the matter, Davidson points out, is that there are huge, gaping holes in everyone’s balance sheets.

“We’ve lost a couple of decades of demand in the U.S. economy because of the de-leveraging that’s happened,” he says.

Americans’ debt loads are still high, and government encouragement to consumers to spend more now is a major misdirection.

As far as other investments go, Davidson feels there’s a strong case to be made for small, special situation companies.

"There’s one company called interCLICK that I like a lot,” he says, “and I’m also invested in Brazil.”

The Eurasian Strategy for America

2010-01-18T22:02:00.001+01:00

Murder at Guantanamo? The Guantánamo “Suicides”: A Camp Delta sergeant blows the whistle

2010-01-18T19:46:00.001+01:00

The Guantánamo “Suicides”: A Camp Delta sergeant blows the whistle
By Scott Horton

This is the full text of an exclusive advance feature by Scott Horton that will appear in the March 2010 Harper’s Magazine. The issue will be available on newsstands the week of February 15.
1. “Asymmetrical Warfare”
When President Barack Obama took office last year, he promised to “restore the standards of due process and the core constitutional values that have made this country great.” Toward that end, the president issued an executive order declaring that the extra-constitutional prison camp at Guantánamo “shall be closed as soon as practicable, and no later than one year from the date of this order.” Obama has failed to fulfill his promise. Some prisoners are being charged with crimes, others released, but the date for closing the camp seems to recede steadily into the future. Furthermore, new evidence now emerging may entangle Obama’s young administration with crimes that occurred during the Bush presidency, evidence that suggests the current administration failed to investigate seriously—and may even have continued—a cover-up of the possible homicides of three prisoners at Guantánamo in 2006.

Late in the evening on June 9 that year, three prisoners at Guantánamo died suddenly and violently. Salah Ahmed Al-Salami, from Yemen, was thirty-seven. Mani Shaman Al-Utaybi, from Saudi Arabia, was thirty. Yasser Talal Al-Zahrani, also from Saudi Arabia, was twenty-two, and had been imprisoned at Guantánamo since he was captured at the age of seventeen. None of the men had been charged with a crime, though all three had been engaged in hunger strikes to protest the conditions of their imprisonment. They were being held in a cell block, known as Alpha Block, reserved for particularly troublesome or high-value prisoners.

As news of the deaths emerged the following day, the camp quickly went into lockdown. The authorities ordered nearly all the reporters at Camp America to leave and those en route to turn back. The commander at Guantánamo, Rear Admiral Harry Harris, then declared the deaths “suicides.” In an unusual move, he also used the announcement to attack the dead men. “I believe this was not an act of desperation,” he said, “but an act of asymmetrical warfare waged against us.” Reporters accepted the official account, and even lawyers for the prisoners appeared to believe that they had killed themselves. Only the prisoners’ families in Saudi Arabia and Yemen rejected the notion.

Two years later, the U.S. Naval Criminal Investigative Service, which has primary investigative jurisdiction within the naval base, issued a report supporting the account originally advanced by Harris, now a vice-admiral in command of the Sixth Fleet. The Pentagon declined to make the NCIS report public, and only when pressed with Freedom of Information Act demands did it disclose parts of the report, some 1,700 pages of documents so heavily redacted as to be nearly incomprehensible. The NCIS report was carefully cross-referenced and deciphered by students and faculty at the law school of Seton Hall University in New Jersey, and their findings, released in November 2009, made clear why the Pentagon had been unwilling to make its conclusions public. The official story of the prisoners’ deaths was full of unacknowledged contradictions, and the centerpiece of the report—a reconstruction of the events—was simply unbelievable.

According to the NCIS, each prisoner had fashioned a noose from torn sheets and T-shirts and tied it to the top of his cell’s eight-foot-high steel-mesh wall. Each prisoner was able somehow to bind his own hands, and, in at least one case, his own feet, then stuff more rags deep down into his own throat. We are then asked to believe that each prisoner, even as he was choking on those rags, climbed up on his washbasin, slipped his head through the noose, tightened it, and leapt from the washbasin to hang until he asphyxiated. The NCIS report also proposes that the three prisoners, who were held in non-adjoining cells, carried out each of these actions almost simultaneously.

Al-Zahrani, according to the report, was discovered first, at 12:39 a.m., and taken by several Alpha Block guards to the camp’s detention medical clinic. No doctors could be found there, nor the phone number for one, so a clinic staffer dialed 911. During this time, other guards discovered Al-Utaybi. Still others discovered Al-Salami a few minutes later. Although rigor mortis had already set in—indicating that the men had been dead for at least two hours—the NCIS report claims that an unnamed medical officer attempted to resuscitate one of the men, and, in attempting to pry open his jaw, broke his teeth.

The fact that at least two of the prisoners also had cloth masks affixed to their faces, presumably to prevent the expulsion of the rags from their mouths, went unremarked by the NCIS, as did the fact that standard operating procedure at Camp Delta required the Navy guards on duty after midnight to “conduct a visual search” of each cell and detainee every ten minutes. The report claimed that the prisoners had hung sheets or blankets to hide their activities and shaped more sheets and pillows to look like bodies sleeping in their beds, but it did not explain where they were able to acquire so much fabric beyond their tightly controlled allotment, or why the Navy guards would allow such an obvious and immediately observable deviation from permitted behavior. Nor did the report explain how the dead men managed to hang undetected for more than two hours or why the Navy guards on duty, having for whatever reason so grievously failed in their duties, were never disciplined.

A separate report, the result of an “informal investigation” initiated by Admiral Harris, found that standard operating procedures were violated that night but concluded that disciplinary action was not warranted because of the “generally permissive environment” of the cell block and the numerous “concessions” that had been made with regard to the prisoners’ comfort, which “concessions” had resulted in a “general confusion by the guard and the JDG staff over many of the rules that applied to the guard force’s handling of the detainees.” According to Harris, even had standard operating procedures been followed, “it is possible that the detainees could have successfully committed suicide anyway.”

This is the official story, adopted by NCIS and Guantánamo command and reiterated by the Justice Department in formal pleadings, by the Defense Department in briefings and press releases, and by the State Department. Now four members of the Military Intelligence unit assigned to guard Camp Delta, including a decorated non-commissioned Army officer who was on duty as sergeant of the guard the night of June 9–10, have furnished an account dramatically at odds with the NCIS report—a report for which they were neither interviewed nor approached.

All four soldiers say they were ordered by their commanding officer not to speak out, and all four soldiers provide evidence that authorities initiated a cover-up within hours of the prisoners’ deaths. Army Staff Sergeant Joseph Hickman and men under his supervision have disclosed evidence in interviews with Harper’s Magazine that strongly suggests that the three prisoners who died on June 9 had been transported to another location prior to their deaths. The guards’ accounts also reveal the existence of a previously unreported black site at Guantánamo where the deaths, or at least the events that led directly to the deaths, most likely occurred.

Satellite photograph from Terraserver.
2. “Camp No”
The soldiers of the Maryland-based 629th Military Intelligence Battalion arrived at Guantánamo Naval Base in March 2006, assigned to provide security to Camp America, the sector of the base containing the five individual prison compounds that house the prisoners. Camp Delta was at the time the largest of these compounds, and within its walls were four smaller camps, numbered 1 through 4, which in turn were divided into cell blocks. Life at Camp America, as at all prisons, was and remains rigorously routinized for both prisoners and their jailers. Navy guards patrol the cell blocks and Army personnel control the exterior areas of the camp. All observed incidents must be logged. For the Army guards who man the towers and “sally ports” (access points), knowing who enters and leaves the camp, and exactly when, is the essence of their mission.

One of the new guards who arrived that March was Joe Hickman, then a sergeant. Hickman grew up in Baltimore and joined the Marines in 1983, at the age of nineteen. When I interviewed him in January at his home in Wisconsin, he told me he had been inspired to enlist by Ronald Reagan, “the greatest president we’ve ever had.” He worked in a military intelligence unit and was eventually tapped for Reagan’s Presidential Guard detail, an assignment reserved for model soldiers. When his four years were up, Hickman returned home, where he worked a series of security jobs—prison transport, executive protection, and eventually private investigations. After September 11 he decided to re-enlist, at thirty-seven, this time in the Army National Guard.

Hickman deployed to Guantánamo with his friend Specialist Tony Davila, who grew up outside Washington, D.C., and who had himself been a private investigator. When they arrived at Camp Delta, Davila told me, soldiers from the California National Guard unit they were relieving introduced him to some of the curiosities of the base. The most noteworthy of these was an unnamed and officially unacknowledged compound nestled out of sight between two plateaus about a mile north of Camp Delta, just outside Camp America’s perimeter. One day, while on foot patrol, Hickman and Davila came across the compound. It looked like other camps within Camp America, Davila said, only it had no guard towers and it was surrounded with concertina wire. They saw no activity, but Hickman guessed the place could house as many as eighty prisoners. One part of the compound, he said, had the same appearance as the interrogation centers at other prison camps.

The compound was not visible from the main road, and the access road was chained off. The Guardsman who told Davila about the compound had said, “This place does not exist,” and Hickman, who was frequently put in charge of security for all of Camp America, was not briefed about the site. Nevertheless, Davila said, other soldiers—many of whom were required to patrol the outside perimeter of Camp America—had seen the compound, and many speculated about its purpose. One theory was that it was being used by some of the non-uniformed government personnel who frequently showed up in the camps and were widely thought to be CIA agents.

A friend of Hickman’s had nicknamed the compound “Camp No,” the idea being that anyone who asked if it existed would be told, “No, it doesn’t.” He and Davila made a point of stopping by whenever they had the chance; once, Hickman said, he heard a “series of screams” from within the compound.

Hickman and his men also discovered that there were odd exceptions to their duties. Army guards were charged with searching and logging every vehicle that passed into and out of Camp Delta. “When John McCain came to the camp, he had to be logged in.” However, Hickman was instructed to make no record whatsoever of the movements of one vehicle in particular—a white van, dubbed the “paddy wagon,” that Navy guards used to transport heavily manacled prisoners, one at a time, into and out of Camp Delta. The van had no rear windows and contained a dog cage large enough to hold a single prisoner. Navy drivers, Hickman came to understand, would let the guards know they had a prisoner in the van by saying they were “delivering a pizza.”

The paddy wagon was used to transport prisoners to medical facilities and to meetings with their lawyers. But as Hickman monitored the paddy wagon’s movements from the guard tower at Camp Delta, he frequently saw it follow an unexpected route. When the van reached the first intersection, instead of heading right—toward the other camps or toward one of the buildings where prisoners could meet with their lawyers—it made a left. In that direction, past the perimeter checkpoint known as ACP Roosevelt, there were only two destinations. One was a beach where soldiers went to swim. The other was Camp No.

3. “Lit up”
The night the prisoners died, Hickman was on duty as sergeant of the guard for Camp America’s exterior security force. When his twelve-hour shift began, at 6 p.m., he climbed the ladder to Tower 1, which stood twenty feet above Sally Port 1, the main entrance to Camp Delta. From there he had an excellent view of the camp, and much of the exterior perimeter as well. Later he would make his rounds.

Shortly after his shift began, Hickman noticed that someone had parked the paddy wagon near Camp 1, which houses Alpha Block. A moment later, two Navy guards emerged from Camp 1, escorting a prisoner. They put the prisoner into the back of the van and then left the camp through Sally Port 1, just below Hickman. He was under standing orders not to search the paddy wagon, so he just watched it as it headed east. He assumed the guards and their charge were bound for one of the other prison camps southeast of Camp Delta. But when the van reached the first intersection, instead of making a right, toward the other camps, it made the left, toward ACP Roosevelt and Camp No.

Twenty minutes later—about the amount of time needed for the trip to Camp No and back—the paddy wagon returned. This time Hickman paid closer attention. He couldn’t see the Navy guards’ faces, but from body size and uniform they appeared to be the same men.

The guards walked into Camp 1 and soon emerged with another prisoner. They departed Camp America, again in the direction of Camp No. Twenty minutes later, the van returned. Hickman, his curiosity piqued by the unusual flurry of activity and guessing that the guards might make another excursion, left Tower 1 and drove the three quarters of a mile to ACP Roosevelt to see exactly where the paddy wagon was headed. Shortly thereafter, the van passed through the checkpoint for the third time and then went another hundred yards, whereupon it turned toward Camp No, eliminating any question in Hickman’s mind about where it was going. All three prisoners would have all reached their destination before 8 p.m.

Hickman says he saw nothing more of note until about 11:30 p.m, when he had returned to his preferred vantage at Tower 1. As he watched, the paddy wagon returned to Camp Delta. This time, however, the Navy guards did not get out of the van to enter Camp 1. Instead they backed the vehicle up to the entrance of the medical clinic, as if to unload something.

At approximately 11:45 p.m.—nearly an hour before the NCIS claims the first body was discovered—Army Specialist Christopher Penvose, preparing for a midnight shift in Tower 1, was approached by a senior Navy NCO. Penvose told me that the NCO—who, following standard operating procedures, wore no name tag—appeared to be extremely agitated. He instructed Penvose to go immediately to the Camp Delta chow hall, identify a female senior petty officer who would be dining there, and relay to her a specific code word. Penvose did as he was instructed. The officer leapt up from her seat and immediately ran out of the chow hall.

Another thirty minutes passed. Then, as Hickman and Penvose both recall, Camp Delta suddenly “lit up”—stadium-style flood lights were turned on, and the camp became the scene of frenzied activity, filling with personnel in and out of uniform. Hickman headed to the clinic, which appeared to be the center of activity, to learn the reason for the commotion. He asked a distraught medical corpsman what had happened. She said three dead prisoners had been delivered to the clinic. Hickman recalled her saying that they had died because they had rags stuffed down their throats, and that one of them was severely bruised. Davila told me he spoke to Navy guards who said the men had died as the result of having rags stuffed down their throats.

Hickman was concerned that such a serious incident could have occurred in Camp 1 on his watch. He asked his tower guards what they had seen. Penvose, from his position at Tower 1, had an unobstructed view of the walkway between Camp 1 and the medical clinic—the path by which any prisoners who died at Camp 1 would be delivered to the clinic. Penvose told Hickman, and later confirmed to me, that he saw no prisoners being moved from Camp 1 to the clinic. In Tower 4 (it should be noted that Army and Navy guard-tower designations differ), another Army specialist, David Caroll, was forty-five yards from Alpha Block, the cell block within Camp 1 that had housed the three dead men. He also had an unobstructed view of the alleyway that connected the cell block itself to the clinic. He likewise reported to Hickman, and confirmed to me, that he had seen no prisoners transferred to the clinic that night, dead or alive.

4. “He Could Not Cry out”
The fate of a fourth prisoner, a forty-two-year-old Saudi Arabian named Shaker Aamer, may be related to that of the three prisoners who died on June 9. Aamer is married to a British woman and was in the process of becoming a British subject when he was captured in Jalalabad, Afghanistan, in 2001. United States authorities insist that he carried a gun and served Osama bin Laden as an interpreter. Aamer denies this. At Guantánamo, Aamer’s fluency in English soon allowed him to play an important role in camp politics. According to both Aamer’s attorney and press accounts furnished by Army Colonel Michael Bumgarner, the Camp America commander, Aamer cooperated closely with Bumgarner in efforts to bring a 2005 hunger strike to an end. He persuaded several prisoners to break their strike for a while, but the settlement collapsed and soon afterward Aamer was sent to solitary confinement. Then, on the night of June 9, 2006, Aamer says he was the victim of an act of striking brutality.

He described the events in detail to his lawyer, Zachary Katznelson, who was permitted to speak to him several weeks later. Katznelson recorded every detail of Aamer’s account and filed an affidavit with the federal district court in Washington, setting it out:

On June 9th, 2006, [Aamer] was beaten for two and a half hours straight. Seven naval military police participated in his beating. Mr. Aamer stated he had refused to provide a retina scan and fingerprints. He reported to me that he was strapped to a chair, fully restrained at the head, arms and legs. The MPs inflicted so much pain, Mr. Aamer said he thought he was going to die. The MPs pressed on pressure points all over his body: his temples, just under his jawline, in the hollow beneath his ears. They choked him. They bent his nose repeatedly so hard to the side he thought it would break. They pinched his thighs and feet constantly. They gouged his eyes. They held his eyes open and shined a mag-lite in them for minutes on end, generating intense heat. They bent his fingers until he screamed. When he screamed, they cut off his airway, then put a mask on him so he could not cry out.

The treatment Aamer describes is noteworthy because it produces excruciating pain without leaving lasting marks. Still, the fact that Aamer had his airway cut off and a mask put over his face “so he could not cry out” is alarming. This is the same technique that appears to have been used on the three deceased prisoners.

The United Kingdom has pressed aggressively for the return of British subjects and persons of interest. Every individual requested by the British has been turned over, with one exception: Shaker Aamer. In denying this request, U.S. authorities have cited unelaborated “security” concerns. There is no suggestion that the Americans intend to charge him before a military commission, or in a federal criminal court, and, indeed, they have no meaningful evidence linking him to any crime. American authorities may be concerned that Aamer, if released, could provide evidence against them in criminal investigations. This evidence would include what he experienced on June 9, 2006, and during his 2002 detention in Afghanistan at Bagram Airfield, where he was subjected to a procedure in which his head was smashed repeatedly against a wall. This torture technique, called “walling” in CIA documents, was expressly approved at a later date by the Department of Justice.

5. “You All Know”
By dawn, the news had circulated through Camp America that three prisoners had committed suicide by swallowing rags. Colonel Bumgarner called a meeting of the guards, and at 7 a.m. at least fifty soldiers and sailors gathered at Camp America’s open-air theater.

Bumgarner was known as an eccentric commander. Hickman marveled, for instance, at the colonel’s insistence that his staff line up and salute him, to music selections that included Beethoven’s Fifth Symphony and the reggae hit “Bad Boys,” as he entered the command center. This morning, however, Hickman thought Bumgarner seemed unusually nervous and clipped.

According to independent interviews with soldiers who witnessed the speech, Bumgarner told his audience that “you all know” three prisoners in the Alpha Block at Camp 1 committed suicide during the night by swallowing rags, causing them to choke to death. This was a surprise to no one—even servicemen who had not worked the night before had heard about the rags. But then Bumgarner told those assembled that the media would report something different. It would report that the three prisoners had committed suicide by hanging themselves in their cells. It was important, he said, that servicemen make no comments or suggestions that in any way undermined the official report. He reminded the soldiers and sailors that their phone and email communications were being monitored. The meeting lasted no more than twenty minutes. (Bumgarner has not responded to requests for comment.)

That evening, Bumgarner’s boss, Admiral Harris, read a statement to reporters:

An alert, professional guard noticed something out of the ordinary in the cell of one of the detainees. The guard’s response was swift and professional to secure the area and check on the status of the detainee. When it was apparent that the detainee had hung himself, the guard force and medical teams reacted quickly to attempt to save the detainee’s life. The detainee was unresponsive and not breathing. [The] guard force began to check on the health and welfare of other detainees. Two detainees in their cells had also hung themselves.

After praising the guards and the medics, Harris—in a notable departure from traditional military decorum—launched his attack on the men who had died on his watch. “They have no regard for human life,” Harris said, “neither ours nor their own.” A Pentagon press release issued soon after described the dead men, who had been accused of no crime, as Al Qaeda or Taliban operatives. Lieutenant Commander Jeffrey Gordon, the Pentagon’s chief press officer, went still further, telling the Guardian’s David Rose, “These guys were fanatics like the Nazis, Hitlerites, or the Ku Klux Klan, the people they tried at Nuremberg.” The Pentagon was not the only U.S. government agency to participate in the assault. Colleen Graffy, a deputy assistant secretary of state, told the BBC that “taking their own lives was not necessary, but it certainly is a good P.R. move.”

The same day the three prisoners died, Fox News commentator Bill O’Reilly completed a reporting trip to the naval base, where, according to his account on The O’Reilly Factor, the Joint Army Navy Task Force “granted the Factor near total access to the prison.” Although the Pentagon began turning away reporters after news of the deaths had emerged, two reporters from the Charlotte Observer, Michael Gordon and photographer Todd Sumlin, had arrived that morning to work on a profile of Bumgarner, and the colonel invited them to shadow him as he dealt with the crisis. A Pentagon spokesman later told the Observer it had been expecting a “puff piece,” which is why, according to the Observer, “Bumgarner and his superiors on the base” had given them permission to remain.

Bumgarner quickly returned to his theatrical ways. As Gordon reported in the June 13, 2006, issue of the Observer, the colonel seemed to enjoy putting on a show. “Right now, we are at ground zero,” Bumgarner told his officer staff during a June 12 meeting. Referring to the naval base’s prisoners, he said, “There is not a trustworthy son of a bitch in the entire bunch.” In the same article, Gordon also noted what he had learned about the deaths. The suicides had occurred “in three cells on the same block,” he reported. The prisoners had “hanged themselves with strips of knotted cloth taken from clothing and sheets,” after shaping their pillows and blankets to look like sleeping bodies. “And Bumgarner said,” Gordon reported, “each had a ball of cloth in their mouth either for choking or muffling their voices.”

Something about Bumgarner’s Observer interview seemed to have set off an alarm far up the chain of command. No sooner was Gordon’s story in print than Bumgarner was called to Admiral Harris’s office. As Bumgarner would tell Gordon in a follow-up profile three months later, Harris was holding up a copy of the Observer: “This,” said the admiral to Bumgarner, “could get me relieved.” (Harris did not respond to requests for comment.) That same day, an investigation was launched to determine whether classified information had been leaked from Guantánamo. Bumgarner was suspended.

Less than a week after the appearance of the Observer stories, Davila and Hickman each heard separately from friends in the Navy and in the military police that FBI agents had raided the colonel’s quarters. The MPs understood from their FBI contacts that there was concern over the possibility that Bumgarner had taken home some classified materials and was planning to share them with the media or to use them in writing a book.

On June 27, two weeks later, Gordon’s Observer colleague Scott Dodd reported: “A brigadier general determined that ‘unclassified sensitive information’ was revealed to the public in the days after the June 10 suicides.” Harris, according to the article, had already ordered “appropriate administrative action.” Bumgarner soon left Guantánamo for a new post in Missouri. He now serves as an ROTC instructor at Virginia Tech in Blacksburg.

Bumgarner’s comments appear to be at odds with the official Pentagon narrative on only one point: that the deaths had involved cloth being stuffed into the prisoners’ mouths. The involvement of the FBI suggested that more was at issue.

6. “An Unmistakable Message”
On June 10, NCIS investigators began interviewing the Navy guards in charge of Alpha Block, but after the Pentagon committed itself to the suicide narrative, they appear to have stopped. On June 14, the interviews resumed, and the NCIS informed at least six Navy guards that they were suspected of making false statements or failing to obey direct orders. No disciplinary action ever followed.

The investigators conducted interviews with guards, medics, prisoners, and officers. As the Seton Hall researchers note, however, nothing in the NCIS report suggests that the investigators secured or reviewed the duty roster, the prisoner-transfer book, the pass-on book, the records of phone and radio communications, or footage from the camera that continuously monitored activity in the hallways, all of which could have helped them authoritatively re-construct the events of that evening.

The NCIS did, however, move swiftly to seize every piece of paper possessed by every single prisoner in Camp America, some 1,065 pounds of material, much of it privileged attorney-client correspondence. Several weeks later, authorities sought an after-the-fact justification. The Justice Department—bolstered by sworn statements from Admiral Harris and from Carol Kisthardt, the special agent in charge of the NCIS investigation—claimed in court that the seizure was appropriate because there had been a conspiracy among the prisoners to commit suicide. Justice further claimed that investigators had found suicide notes and argued that the attorney-client materials were being used to pass communications among the prisoners.

David Remes, a lawyer who opposed the Justice Department’s efforts, explained the practical effect of the government’s maneuvers. The seizure, he said, “sent an unmistakable message to the prisoners that they could not expect their communications with their lawyers to remain confidential. The Justice Department defended the massive breach of the attorney-client privilege on the account of the deaths on June 9 and the asserted need to investigate them.”

If the “suicides” were a form of warfare between the prisoners and the Bush Administration, as Admiral Harris charged, it was the latter that quickly turned the war to its advantage.

7. “Yasser Couldn’t Even Make a Sandwich!”
When I asked Talal Al-Zahrani what he thought had happened to his son, he was direct. “They snatched my seventeen-year-old son for a bounty payment,” he said. “They took him to Guantánamo and held him prisoner for five years. They tortured him. Then they killed him and returned him to me in a box, cut up.”

Al-Zahrani was a brigadier general in the Saudi police. He dismissed the Pentagon’s claims, as well as the investigation that supported them. Yasser, he said, was a young man who loved to play soccer and didn’t care for politics. The Pentagon claimed that Yasser’s frontline battle experience came from his having been a cook in a Taliban camp. Al-Zahrani said that this was preposterous: “A cook? Yasser couldn’t even make a sandwich!”

“Yasser wasn’t guilty of anything.” Al-Zahrani said. “He knew that. He firmly believed he would be heading home soon. Why would he commit suicide?” The evidence supports this argument. Hyperbolic U.S. government statements at the time of Yasser Al-Zahrani’s death masked the fact that his case had been reviewed and that he was, in fact, on a list of prisoners to be sent home. I had shown Al-Zahrani the letter that the government says was Yasser’s suicide note and asked him whether he recognized his son’s writing. He had never seen the note before, he answered, and no U.S. official had ever asked him about it. After studying the note carefully, he said, “This is a forgery.”

Also returned to Saudi Arabia was the body of Mani Al-Utaybi. Orphaned in youth, Mani grew up in his uncle’s home in the small town of Dawadmi. I spoke to one of the many cousins who shared that home, Faris Al-Utaybi. Mani, said Faris, had gone to Baluchistan—a rural, tribal area that straddles Iran, Pakistan, and Afghanistan—to do humanitarian work, and someone there had sold him to the Americans for $5,000. He said that Mani was a peaceful man who would harm no one. Indeed, U.S. authorities had decided to release Al-Utaybi and return him to Saudi Arabia. When he died, he was just a few weeks shy of his transfer.

Salah Al-Salami was seized in March 2002, when Pakistani authorities raided a residence in Karachi believed to have been used as a safe house by Abu Zubaydah and took into custody all who were living there at the time. A Yemeni, Al-Salami had quit his job and moved to Pakistan with only $400 in his pocket. The U.S. suspicions against him rested almost entirely on the fact that he had taken lodgings, with other students, in a boarding house that terrorists might at one point have used. There was no direct evidence linking him either to Al Qaeda or to the Taliban. On August 22, 2008, the Washington Post quoted from a previously secret review of his case: “There is no credible information to suggest [Al-Salami] received terrorist related training or is a member of the Al Qaeda network.” All that stood in the way of Al-Salami’s release from Guantánamo were difficult diplomatic relations between the United States and Yemen.

8. “The Removal of the Neck Organs”
Military pathologists connected with the Armed Forces Institute of Pathology arranged immediate autopsies of the three dead prisoners, without securing the permission of the men’s families. The identities and findings of the pathologists remain shrouded in extraordinary secrecy, but the timing of the autopsies suggests that medical personnel stationed at Guantánamo may have undertaken the procedure without waiting for the arrival of an experienced medical examiner from the United States. Each of the heavily redacted autopsy reports states unequivocally that “the manner of death is suicide” and, more specifically, that the prisoner died of “hanging.” Each of the reports describes ligatures that were found wrapped around the prisoner’s neck, as well as circumferential dried abrasion furrows imprinted with the very fine weave pattern of the ligature fabric and forming an inverted “V” on the back of the head. This condition, the anonymous pathologists state, is consistent with that of a hanging victim.

The pathologists place the time of death “at least a couple of hours” before the bodies were discovered, which would be sometime before 10:30 p.m. on June 9. Additionally, the autopsy of Al-Salami states that his hyoid bone was broken, a phenomenon usually associated with manual strangulation, not hanging.

The report asserts that the hyoid was broken “during the removal of the neck organs.” An odd admission, given that these are the very body parts—the larynx, the hyoid bone, and the thyroid cartilage—that would have been essential to determining whether death occurred from hanging, from strangulation, or from choking. These parts remained missing when the men’s families finally received their bodies.

All the families requested independent autopsies. The Saudi prisoners were examined by Saeed Al-Ghamdy, a pathologist based in Saudi Arabia. Al-Salami, from Yemen, was inspected by Patrice Mangin, a pathologist based in Switzerland. Both pathologists noted the removal of the structure that would have been the natural focus of the autopsy: the throat. Both pathologists contacted the Armed Forces Institute of Pathology, requesting the missing body parts and more information about the previous autopsies. The institute did not respond to their requests or queries. (It also did not respond to a series of calls I placed requesting information and comment.)

When Al-Zahrani viewed his son’s corpse, he saw evidence of a homicide. “There was a major blow to the head on the right side,” he said. “There was evidence of torture on the upper torso, and on the palms of his hand. There were needle marks on his right arm and on his left arm.” None of these details are noted in the U.S. autopsy report. “I am a law enforcement professional,” Al-Zahrani said. “I know what to look for when examining a body.”

Mangin, for his part, expressed particular concern about Al-Salami’s mouth and throat, where he saw “a blunt trauma carried out against the oral region.” The U.S. autopsy report mentions an effort at resuscitation, but this, in Mangin’s view, did not explain the severity of the injuries. He also noted that some of the marks on the neck were not those he would normally associate with hanging.

9. “I Know Some Things You Don’t”
Sergeant Joe Hickman’s tour of duty, which ended in March 2007, was distinguished: he was selected as Guantánamo’s “NCO of the Quarter” and was given a commendation medal. When he returned to the United States, he was promoted to staff sergeant and worked in Maryland as an Army recruiter before settling eventually in Wisconsin. But he could not forget what he had seen at Guantánamo. When Barack Obama became president, Hickman decided to act. “I thought that with a new administration and new ideas I could actually come forward, ” he said. “It was haunting me.”

Hickman had seen a 2006 report from Seton Hall University Law School dealing with the deaths of the three prisoners, and he followed their subsequent work. After Obama was inaugurated in January 2009, he called Mark Denbeaux, the professor who had led the Seton Hall team. “I learned something from your report,” he said, “but I know some things you don’t.”

Within two days, Hickman was in Newark, meeting with Denbeaux. Also at the meeting was Denbeaux’s son and sometime co-editor Josh, a private attorney. Josh Denbeaux agreed to represent Hickman, who was concerned that he could go to prison if he disobeyed Colonel Bumgarner’s order not to speak out, even if that order was itself illegal. Hickman did not want to speak to the press. On the other hand, he felt that “silence was just wrong.”

The two lawyers quickly made arrangements for Hickman to speak instead with authorities in Washington, D.C. On February 2, they had meetings on Capitol Hill and with the Department of Justice. The meeting with Justice was an odd one. The father-and-son legal team were met by Rita Glavin, the acting head of the Justice Department’s Criminal Division; John Morton, who was soon to become an assistant secretary at the Department of Homeland Security; and Steven Fagell, counselor to the head of the Criminal Division. Fagell had been, along with the new attorney general, Eric Holder, a partner at the elite Washington law firm of Covington & Burling, and was widely viewed as “Holder’s eyes” in the Criminal Division.

For more than an hour, the two lawyers described what Hickman had seen: the existence of Camp No, the transportation of the three prisoners, the van’s arrival at the medical clinic, the lack of evidence that any bodies had ever been removed from Alpha Block, and so on. The officials listened intently and asked many questions. The Denbeauxs said they could provide a list of witnesses who would corroborate every aspect of their account. At the end of the meeting, Mark Denbeaux recalled, the officials specifically thanked the lawyers for not speaking to reporters first and for “doing it the right way.”

Two days later, another Justice Department official, Teresa McHenry, head of the Criminal Division’s Domestic Security Section, called Mark Denbeaux and said that she was heading up an investigation and wanted to meet directly with his client. She went to New Jersey to do so. Hickman then reviewed the basic facts and furnished McHenry with the promised list of corroborating witnesses and details on how they could be contacted.

The Denbeauxs did not hear from anyone at the Justice Department for at least two months. Then, in April, an FBI agent called to say she did not have the list of contacts. She asked if this document could be provided again. It was. Shortly thereafter, Fagell and two FBI agents interviewed Davila, who had left the Army, in Columbia, South Carolina. Fagell asked Davila if he was prepared to travel to Guantánamo to identify the locations of various sites. He said he was. “It seemed like they were interested,” Davila told me. “Then I never heard from them again.”

Several more months passed, and Hickman and his lawyers became increasingly concerned that nothing was going to happen. On October 27, 2009, they resumed dealings with Congress that they had initiated on February 2 and then broken off at the Justice Department’s request; they were also in contact with ABC News. Two days later, Teresa McHenry called Mark Denbeaux and asked whether he had gone to Congress and ABC News about the matter. “I said that I had,” Denbeaux told me. He asked her, “Was there anything wrong with that?” McHenry then suggested that the investigation was finished. Denbeaux reminded her that she had yet to interview some of the corroborating witnesses. “There are a few small things to do,” Denbeaux says McHenry answered, “then it will be finished.”

Specialist Christopher Penvose told me that on October 30, the day following the conversation between Mark Denbeaux and Teresa McHenry, McHenry showed up at Penvose’s home in south Baltimore with some FBI agents. She had a “few questions,” she told him. Investigators working with her soon contacted two other witnesses.

On November 2, 2009, McHenry called Mark Denbeaux to tell him that the Justice Department’s investigation was being closed. “It was a strange conversation,” Denbeaux recalled. McHenry explained that “the gist of Sergeant Hickman’s information could not be confirmed.” But when Denbeaux asked what that “gist” actually was, McHenry declined to say. She just reiterated that Hickman’s conclusions “appeared” to be unsupported. Denbeaux asked what conclusions exactly were unsupported. McHenry refused to say.

10. “They Accomplished Nothing”
One of the most intriguing aspects of this case concerns the use of Camp No. Under George W. Bush, the CIA created an archipelago of secret detention centers that spanned the globe, and authorities at these sites deployed an array of Justice Department–sanctioned torture techniques—including waterboarding, which often entails inserting cloth into the subject’s mouth—on prisoners they deemed to be involved in terrorism. The presence of a black site at Guantánamo has long been a subject of speculation among lawyers and human-rights activists, and the experience of Sergeant Hickman and other Guantánamo guards compels us to ask whether the three prisoners who died on June 9 were being interrogated by the CIA, and whether their deaths resulted from the grueling techniques the Justice Department had approved for the agency’s use—or from other tortures lacking that sanction.

Complicating these questions is the fact that Camp No might have been controlled by another authority, the Joint Special Operations Command, which Bush’s defense secretary, Donald Rumsfeld, had hoped to transform into a Pentagon version of the CIA. Under Rumsfeld’s direction, JSOC began to take on many tasks traditionally handled by the CIA, including the housing and interrogation of prisoners at black sites around the world. The Pentagon recently acknowledged the existence of one such JSOC black site, located at Bagram Airfield in Afghanistan, and other suspected sites, such as Camp Nama in Baghdad, have been carefully documented by human-rights researchers.

In a Senate Armed Services Committee report on torture released last year, the sections about Guantánamo were significantly redacted. The position and circumstances of these deletions point to a significant JSOC interrogation program at the base. (It should be noted that Obama’s order last year to close other secret detention camps was narrowly worded to apply only to the CIA.)

Regardless of whether Camp No belonged to the CIA or JSOC, the Justice Department has plenty of its own secrets to protect. The department would seem to have been involved in the cover-up from the first days, when FBI agents stormed Colonel Bumgarner’s quarters. This was unusual for two reasons. When Pentagon officials engage in a leak investigation, they generally use military investigators. They rarely turn to the FBI, because they cannot control the actions of a civilian agency. Moreover, when the FBI does open an investigation, it nearly always does so with great discretion. The Bumgarner investigation was widely telegraphed, though, and seemed intended to send a message to the military personnel at Camp Delta: Talk about what happened at your own risk. All of which suggests it was not the Pentagon so much as the White House that hoped to suppress the truth.

In the weeks following the 2006 deaths, the Justice Department decided to use the suicide narrative as leverage against the Guantánamo prisoners and their troublesome lawyers, who were pressing the government to justify its long-term imprisonment of their clients. After the NCIS seized thousands of pages of privileged communications, the Justice Department went to court to defend the action. It argued that such steps were warranted by the extraordinary facts surrounding the June 9 “suicides.” U.S. District Court Judge James Robertson gave the Justice Department a sympathetic hearing, and he ruled in its favor, but he also noted a curious aspect of the government’s presentation: its “citations supporting the fact of the suicides” were all drawn from media accounts. Why had the Justice Department lawyers who argued the case gone to such lengths to avoid making any statement under oath about the suicides? Did they do so in order to deceive the court? If so, they could face disciplinary proceedings or disbarment.

The Justice Department also faces questions about its larger role in creating the circumstances that lead to the use of so-called enhanced interrogation and restraint techniques at Guantánamo and elsewhere. In 2006, the use of a gagging restraint had already been connected to the death on January 9, 2004, of an Iraqi prisoner, Lieutenant Colonel Abdul Jameel, in the custody of the Army Special Forces. And the bodies of the three men who died at Guantánamo showed signs of torture, including hemorrhages, needle marks, and significant bruising. The removal of their throats made it difficult to determine whether they were already dead when their bodies were suspended by a noose. The Justice Department itself had been deeply involved in the process of approving and setting the conditions for the use of torture techniques, issuing a long series of memoranda that CIA agents and others could use to defend themselves against any subsequent criminal prosecution.

Teresa McHenry, the investigator charged with accounting for the deaths of the three men at Guantánamo, has firsthand knowledge of the Justice Department’s role in auditing such techniques, having served at the Justice Department under Bush and having participated in the preparation of at least one of those memos. As a former war-crimes prosecutor, McHenry knows full well that government officials who attempt to cover up crimes perpetrated against prisoners in wartime face prosecution under the doctrine of command responsibility. (McHenry declined to clarify the role she played in drafting the memos.)

As retired Rear Admiral John Hutson, the former judge advocate general of the Navy, told me, “Filing false reports and making false statements is bad enough, but if a homicide occurs and officials up the chain of command attempt to cover it up, they face serious criminal liability. They may even be viewed as accessories after the fact in the original crime.” With command authority comes command responsibility, he said. “If the heart of the military is obeying orders down the chain of command, then its soul is accountability up the chain. You can’t demand the former without the latter.”

The Justice Department thus faced a dilemma; it could do the politically convenient thing, which was to find no justification for a thorough investigation, leave the NCIS conclusions in place, and hope that the public and the news media would obey the Obama Administration’s dictum to “look forward, not backward”; or it could pursue a course of action that would implicate the Bush Justice Department in a cover-up of possible homicides.

Nearly 200 men remain imprisoned at Guantánamo. In June 2009, six months after Barack Obama took office, one of them, a thirty-one-year-old Yemeni named Muhammed Abdallah Salih, was found dead in his cell. The exact circumstances of his death, like those of the deaths of the three men from Alpha Block, remain uncertain. Those charged with accounting for what happened—the prison command, the civilian and military investigative agencies, the Justice Department, and ultimately the attorney general himself—all face a choice between the rule of law and the expedience of political silence. Thus far, their choice has been unanimous.

Not everyone who is involved in this matter views it from a political perspective, of course. General Al-Zahrani grieves for his son, but at the end of a lengthy interview he paused and his thoughts turned elsewhere. “The truth is what matters,” he said. “They practiced every form of torture on my son and on many others as well. What was the result? What facts did they find? They found nothing. They learned nothing. They accomplished nothing.”

Long Term Capital mismanagement

2010-01-18T18:43:00.001+01:00

This posting is for humor only, not fact.

Several 20th-century Noble Prizes stretch the boundaries of WTF, starting that Prince of Peace Yasser Arafat (we won't mention Henry Kissinger here, of course) to three wall street whiz kids, economists Myron Scholes, Fischer Black and Robert Merton, who came up with the now infamous Black-Scholes Model for Equity, which allowed the geniuses of Wall Street to predict a stock's long-term value based on previous performances and on whether people are betting for or against it sort of like the Google Page Rank Algorithm. In other words, it could predict the stock market. But what the whiz kids forgot was the simple fact of the human species: people are not cold analytical computers. Their firm, Long Term Capital Management. tanked in the 90's and almost sucked down western civilization with it.

But the true outer space Nobel went to two "Being There" clones who were led by "noise" interference from a coating of pigeon shit on the new super-sensitive antenna they built for Bell At&T Telephone Labs in New Jersey to the accidental discovery of cosmic background radiation left over from the Big Bang (image above).

A hilarious Nobel Prize Dickhead Hall of Fame has been compiled by our more creative brothers at cracked.com who asked themselves how awesome would it be if you accidentally spilled Benadryl into a jar of expired tomato sauce and found the cure for cancer? Or if you fell and discovered a new species of nuclear-powered cockroach staring back at you on the floor?

A message from Transport Canada, a division of the US Dept. of Homeland Security.

2010-01-17T17:39:00.002+01:00

This is for those of you who enjoy humor, too.

Cass Sunstein, Obama's Next Supreme Court Appointee Is Against The Right To Keep And Bear Arms

2010-01-17T17:02:00.002+01:00

Cass Sunstein, the same info-czar that wants to tax dissent and infiltrate/disrupt the truth movement, argues that the US Supreme Court was wrong to interpret the Second Amendment as an individual right.

In other words, Cass Sunstein is basically attacking the entire Bill of Rights one at a time.

A True American Patriot and Hero, Lt. Col. Bo Gritz

2010-01-16T19:07:00.001+01:00

CIA Cable 'Granting Permission' to Destroy Torture Videotapes Surfaces

2010-01-16T18:53:00.001+01:00

by Jeff Kaye

A January 8 release of documents in the ACLU FOIA lawsuit seeking materials related to the CIA's destruction of videotapes of interrogators using "enhanced interrogation techniques" has revealed the first evidence of a precise instruction for the destruction of those tapes.

According to Rachel Myers at the ACLU, while there was previous evidence of requests from the "field" that the videotapes be destroyed, this is our first verification of the exact date CIA headquarters gave its approval. (Photo by webponce)According to Rachel Myers at the ACLU, while there was previous evidence of requests from the "field" that the videotapes be destroyed, this is our first verification of the exact date CIA headquarters gave its approval.

The approval came in the form of "a two-page cable discussing a proposal and granting permission to destroy the videotapes." (emphasis added) The cable was sent from "HQ" to the "Field" on November 8, 2005, the same day an earlier request was made from the "Field". Confirmation of the destruction of the tapes was already revealed in a cable "from the field to CIA headquarters, confirming the destruction of the videotapes." (11/20/2009 Vaughn Index 4).

Requests for destruction of interrogation videotapes, and discussions around such an action are documented as far back as September 2002 (11/20/2009 Vaughn Index 55). It's presumed that these requests came from the Thailand CIA black site where Abu Zubaydah had been an experimental victim of the new so-called enhanced interrogation techniques, which were based on stress inoculation torture survival schools for the military, known as SERE. Psychologists James Mitchell and Bruce Jessen, formerly of SERE and its parent agency, Joint Personnel Recovery Agency (JPRA)

The new cable has been withheld, citing numerous FOIA "exemptions," as have hundreds of other such pieces of evidence, including emails and draft memoranda, by the CIA. Its existence is revealed as part of a Vaughn index of withheld documents, wherein some description of the document is given, in addition to the reasons for withholding the document.

The "permission" cable is Document 154 in Part 6 of the latest Vaughn release/dump. It's on pg. 13 out of 35 (all doc links are PDF). A full timeline on the CIA videotape destruction actions, which has not however been updated for the latest crop of documents, has been put together by the ACLU. All the documents released thus far can be accessed here.

Emptywheel has been covering this issue from the beginning. For instance, see this relevant story, wherein EW reports that "The CIA Asked to Destroy Torture Tapes on Same Day They Claimed They Didn't Torture."

Meanwhile, the investigation into the destruction of the videotapes, with prosecutor John Durham leading, has languished for over two years now. While justice is supposed to be blind and disinterested, the investigation will probably go nowhere unless public pressure is put on the Department of Justice and the Obama administration to hold the torturers accountable.

The mystery of the vanishing NOAA and GISS weather stations

2010-01-16T18:50:00.001+01:00

Climategate goes American: NOAA, GISS and the mystery of the vanishing weather stations

By James Delingpole Politics Last updated: January 16th, 2010

For those who haven’t seen it, here’s a link to US weatherman John Coleman’s magisterial demolition of the Great AGW Scam. I particularly recommend part 4 because that’s the one with all the meat. It shows how temperature readings have been manipulated at the two key climate data centres in the United States – the NASA Goddard Science and Space Institute at Columbia University in New York and the NOAA National Climate Data Center in Ashville, North Carolina. (Hat tip: Platosays)

This is a scandal to rank with Climategate.

What it shows is that, just like in Britain at the Climatic Research Unit (CRU) temperature data records have been grotesquely distorted by activist scientists in order to exaggerate the appearance of late 20th century global warming. They achieved this – with an insouciant disregard for scientific integrity which quite beggars belief – through the simple expedient of ignoring most of those weather station sited in higher, colder places and using mainly ones in warmer spots. Then, they averaged out the temperature readings given by the warmer stations to give a global average. Et voila: exactly the scary “climate change” they needed to persuade bodies like the IPCC that AGW was a clear and present danger requiring urgent pan-governmental action.

The man who spotted all this is a computer programmer called EM Smith – aka the Chiefio. You can read the full report at his excellent blog. In the 70s, the Chiefio discovered, GISS and NOAA took their temperature data from 6,000 weather stations around the world. By 1990, though, this figure had mysteriously dropped to 1500. Even more mysteriously this 75 per cent reduction in the number of stations used had a clear bias against those at higher latitudes and elevations.

Here’s an excellent example of this: Bolivia.

Notice that nice rosy red over the top of Bolivia? Bolivia is that country near, but not on, the coast just about half way up the Pacific Ocean side. It has a patch of high cold Andes Mountains where most of the population live.

One Small Problem with the anomally map. There has not been any thermometer data for Bolivia in GHCN since 1990.

None. Nada. Zip. Zilch. Nothing. Empty Set.

So just how can it be so Hot Hot Hot! in Bolivia if there is NO data from the last 20 years?

Easy. GIStemp “makes it up” from “nearby” thermometers up to 1200 km away. So what is within 1200 km of Bolivia? The beaches of Chili, Peru and the Amazon Jungle.

Not exactly the same as snow capped peaks and high cold desert, but hey, you gotta make do with what you have, you know?

Meteorologist Joseph D’Aleo has also been on the case. You can find a link to his superb analysis of the scandal at Watts Up With That. (Sorry: I would give you a more direct link to his pdf file but I can’t work out how to do it)

In Canada the number of stations dropped from 600 to 35 in 2009. The percentage of stations in the lower elevations (below 300 feet) tripled and those at higher elevations above 3000 feet were reduced in half. Canada’s semi-permanent depicted warmth comes from interpolating from more southerly locations to fill northerly vacant grid boxes, even as a pure average of the available stations shows a COOLING. Just 1 thermometer remains for everything north of latitude 65N – that station is Eureka. Eureka according to Wikipedia has been described as “The Garden Spot of the Arctic” .

You know what this means, don’t you? It means the ragbag of eco-loons, politicians and technocrats pushing AGW can no longer plausibly deploy their main excuse about Climategate – that it was all a little local difficulty of no great importance because the HadCrut temperature data sets were independently confirmed by those at GISS and NOAA. What this story demonstrates, as many of us suspected all along, is that not just the British temperature records but those in the US too have been hijacked by political activists. I need hardly say that this breaking scandal has been almost completely ignored by the MSM.

Not unpredictably, the director of one of the two institutions implicated in this – Dr James Hansen of the Goddard Institute for Space Studies – has issued a (very carefully worded – which makes you wonder what he’s not telling us) denial of any skullduggery.

“NASA has not been involved in any manipulation of climate data used in the annual GISS global temperature analysis.”

The idea that a man of Dr Hansen’s radical persuasion should be running an organisation as important as GISS is looking increasingly absurd. To get an idea how absurd, think Tony Benn in charge of Britain’s defence policy, or – let’s get really weird – imagine if Ed Balls were in charge of Education or Gordon Brown were running the country. More on Hansen’s activist sympathies in another blog.

The more traitor bankers I know the more I like dogs.

2010-01-16T18:16:00.003+01:00

Super hero animals

Super Traitor Bankers and the Intelligence Agencies they control.
By J. Speer-Williams
1-16-10

Lynchpins hold the various elements of a complex structure together.

America's intelligence agencies are the lynchpins, used by the International Monetary/Banking Cartel to enforce their various agendas on the US government.

Decades ago, Congress lost control of our intelligence agencies, making a parody of the system of "checks and balances" envisioned by our founding fathers. Today, the foreign Monetary Cartel controls all three of our branches of government through their ownership of what has never really been "our" intelligence services.

Meanwhile, the Cartel's mass media deflects our attention away from the unconstitutional and secret powers of the underground intelligence community with petty exposes of how the K Street gang of lobbyists buy off our elected and appointed officials.

Do they really expect us to believe that what is reported on during the light of day exceeds thatwhich transpires during the dark of night?

The usual tools of enforcement used by intelligence agents on our elected officials and appointed bureaucrats are various, depending on what's needed: Fixing elections, bribes, blackmail, and assassinations are their usual instruments of forcing compliance from our national leaders.

Subvert a nation's intelligence services and you're one step from subverting a nation's government, something long ago accomplished by the International Monetary/Banking Cartel in America.

The thousands of outrageous and unconstitutional governmental orders, directives, laws, judicial interpretations, and actions taken by our federal government has made America no better than any other Banana Republic in history; for some time, we've been ruled by a self-appointed, corrupt and exceedingly small group of private financial oligarchs through their control of intelligence agencies. And as long as Americans continue to believe they live in a democracy, the longer this foreign Monetary Cartel will have their way with us.

The very first realization the majority of people must have to regain control of their respective nations is coming to know with certainty that the private Monetary/Banking Cartel, not only controls the central banks of the world, they own them. This ownership allows - probably no more than a few hundred financial capitalists - to create money, of any country, out of the thinest of airs, control all credit, and to then enforce into indebtedness all nations and peoples of the world.

Such edification, however, may prove to be difficult in a world wherein its super-power - the USA - is largely composed of people who believe the Cartel's US central bank - the Federal Reserve System - is a American federal government institution. The American government has more control over Federal Express than it does over the Federal Reserve System.

And before the American government can issue its own currency and credit (without debt), she must defang its intelligence community of sixteen bloated intelligence and security agencies, starting with the CIA, FBI, and National Security Agency; but doing so will not be easy or without danger.

Toward the end of his term as president, John F. Kennedy swore he was going to tear the CIA into a thousands pieces: He paid the ultimate price for his patriotic intention. Disempowering US intelligence agencies will not be an easy job, as they have never been more powerful.

And under the cover of the "national security" ruse, intelligence agencies have grown even more influential and authoritative, as they turn us into a rogue nation, intent on destroying all of our liberties at home, while expanding our terrorist attacks on innocent people abroad, complete with the torture of our fellow human beings. One can only hope that the majority of Americans will stop opting for security over their freedoms.

Ben Franklin wrote, "They who give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety."

But ironically, the so-called "national security" and "consumer protection" measures taken by the US government have made our country more insecure than ever before in our history. From a plummeting economy, to wide-open borders, to dangerous full-body scanners, to poisonous vaccines, to chemtrails, to GMO foods, to the loss of habeas corpus, to the bombing of women and children, to the depleted uranium poisoning of our own troops (and the entire world), Americans have never been so insecure, all thanks to the ruling moneychangers of our world and their covert use of national intelligence agencies.

Robber barons have thrown us back into the Middle Ages and into a neo-feudalism, all superimposed with poisons, radiation, and a fascistic government, largely in the name of "national security."

But if we can defang the intelligence agencies, we will have defanged the nemesis of mankind - the alien, archfiends of the International Monetary/Banking Cartel. Intelligence agencies are their Achilles' heel - perhaps a small, but a potentially mortal weakness.

J. Speer-Williams

The IMF sold Gold plated tungsten bars to India and the missing 9/11 Gold.

2010-01-15T17:24:00.009+01:00

There has not been an audit of the gold in Fort Knox since 1954. This has not been done since 1954 but is legally required to be auditied on a yearly basis. There have been numerous clues to the "salted" bars and may be one of the reason's the Federal Reserve doesn't want an audit.

Roughly 15 years ago — during the Clinton Administration [think Robert Rubin, Sir Alan Greenspan and Lawrence Summers] — between 1.3 and 1.5 million 400 oz tungsten blanks were allegedly manufactured by a very high-end, sophisticated refiner in the USA [more than 16 Thousand metric tonnes]. Subsequently, 640,000 of these tungsten blanks received their gold plating and WERE shipped to Ft. Knox and remain there to this day.

According to the Chinese investigation, the balance of this 1.3 million to 1.5 million 400 oz tungsten cache was also gold plated and then allegedly “sold” into the international market. Apparently, the global market is literally “stuffed full of 400 oz salted bars”. Perhaps as much as 600-billion dollars worth.

An obscure news item originally published in the N.Y. Post [written by Jennifer Anderson] in late Jan. 04 perhaps makes sense now.

DA investigating NYMEX executive ,Manhattan, New York, –Feb. 2, 2004.
A top executive at the New York Mercantile Exchange is being investigated by the Manhattan district attorney. Sources close to the exchange said that Stuart Smith, senior vice president of operations at the exchange, was served with a search warrant by the district attorney’s office last week. Details of the investigation have not been disclosed, but a NYMEX spokeswoman said it was unrelated to any of the exchange’s markets. She declined to comment further other than to say that charges had not been brought. A spokeswoman for the Manhattan district attorney’s office also declined comment.”

LONDON, April 14, 2004 (Reuters) -- NM Rothschild & Sons Ltd., the London-based unit of investment bank Rothschild [ROT.UL], will withdraw from trading commodities, including gold, in London as it reviews its operations, it said on Wednesday.

In a Sept. 17, 2009, letter on Federal Reserve System letterhead, Federal Reserve governor Kevin M. Warsh completely denied GATA's appeal. The entire text of this letter can be examined at http://www.gata.org/files/GATAFedResponse-09-17-2009.pdf.

The first paragraph on the third page is the most revealing.

"In connection with your appeal, I have confirmed that the information withheld under exemption 4 consists of confidential commercial or financial information relating to the operations of the Federal Reserve Banks that was obtained within the meaning of exemption 4. This includes information relating to swap arrangements with foreign banks on behalf of the Federal Reserve System and is not the type of information that is customarily disclosed to the public. This information was properly withheld from you."

1] - irregularities in the publication of the gold ETF - GLD's bar list from Sept. 25 - Oct.14 where the length of the bar list went from 1,381 pages to under 200 pages and then back up to 800 or so pages.

2] - reports of 400 oz. "good delivery" bricks of gold found gutted and filled with tungsten within the confines of LBMA approved vaults in Hong Kong.

At $20/lb, tungsten obviously is a whole lot cheaper than gold at $16,000 per pound and with a density of 19.35g/cm3 it is almost a pure match for gold at 19.32g/cm3 – making detection by standard methods impossible. (Electrical testing is very reliable and is a non-destructive method to determine the actual composition of the metals.)

Missing Gold
A King's Ransom in Precious Metals Seems to Have Disappeared

This image is found on the PBS.org website companion for the television documentary America Rebuilds under the section Uncovering Property. The page, entitled A Treasure in Silver and Gold, describes the vault as two levels of 3,000 square feet each. See the source for the full-sized image. The page credits images to Leslie E. Robertson and Associates.
The basement of 4 World Trade Center housed vaults used to store gold and silver bullion. Published articles about precious metals recovered from the World Trade Center ruins in the aftermath of the attack mention less than $300 million worth of gold. All such reports appear to refer to a removal operation conducted in late October of 2001. On Nov. 1, Mayor Rudolph Giuliani announced that "more than $230 million" worth of gold and silver bars that had been stored in a bomb-proof vault had been recovered. A New York Times article contained:

Two Brinks trucks were at ground zero on Wednesday to start hauling away the $200 million in gold and silver that the Bank of Nova Scotia had stored in a vault under the trade center ... A team of 30 firefighters and police officers are helping to move the metals, a task that can be measured practically down to the flake but that has been rounded off at 379,036 ounces of gold and 29,942,619 ounces of silver .. 1
Reports describing the contents of the vaults before the attack suggest that nearly $1 billion in precious metals was stored in the vaults. A figure of $650 million in a National Real Estate Investor article published after the attack is apparently based on pre-attack reports.

Unknown to most people at the time, $650 million in gold and silver was being kept in a special vault four floors beneath Four World Trade Center. 2
An article in the TimesOnline gives the following rundown of precious metals that were being stored in the WTC vault belonging to Comex. 3

Comex metals trading - 3,800 gold bars weighing 12 tonnes and worth more than $100 million
Comex clients - 800,000 ounces of gold with a value of about $220 million
Comex clients - 102 million ounces of silver, worth $430 million
Bank of Nova Scotia - $200 million of gold
The TimesOnline article is not clear as to whether the $200 million in gold reported by the Bank of Nova Scotia was part of the $220 million in gold held by Comex for clients. If so, the total is $750 million; otherwise $950 million.

There appear to be no reports of precious metals discovered between November of 2001 and the completion of excavation several months later. Assuming that the above reports described the value of precious metals in the vaulst before the attack, and that the $230 million mentioned by Giuliani represented the approxmiate value of metals recovered, it would seem that at least the better part of a billion dollars worth of precious metals went missing. (It is not plausible, of course, that whatever destroyed the towers vaporized gold and silver, which are dense, inert metals that are extremely unlikely to participate in chemical reactions with other materials.)

An article in The Sierra Times suggests that gold was recovered from two trucks in a tunnel under 5 World Trade Center, giving rise to suspicions that the trucks were being used to remove the gold from the vaults before the South Tower fell. 4 However, this report may have been based on an erroneous reading of other reports that describe the removal of crushed vehicles from a tunnel under 5 WTC in order to gain access to the vaults under 4 WTC to remove their contents. 5

Why is there this huge discrepancy between the value of gold and silver reported recovered, and the value reported to have been stored in the vaults? There are a number of possible explanations, from outright theft using the attack as cover, to insurance fraud. Until there is a genuine investigation that probes all the relevant facts and circumstances surrounding the attack, we can only speculate.

How to cluster F@%K and Create an angry American

2010-01-14T16:02:00.012+01:00

The Daily Show With Jon Stewart

Mon - Thurs 11p / 10c

Clusterf#@k to the Poor House - Wall Street Bonuses

www.thedailyshow.com

Daily Show
Full Episodes

Political Humor

Health Care Crisis

How To Create An Angry American from PuppetGov on Vimeo.

Tax benefit allows another tax parasite home builder, Kaufman and Broad to post a profit

2010-01-12T18:11:00.009+01:00

KB Home profits fell 27%, it's stock price also fell but the builder said cancellations slowed. The cancellation rate is down 15 percent. "We are building more homes at a loss every month" said an un-named spokesperson who is not authorized to disclose the company's actual financial future.

The Los Angeles company on Tuesday said lower sales for housing hurt total revenue as it delivered 22% fewer homes and its average selling price declined 12%. The company has been building smaller and more-affordable homes in a doomed effort to compete with bargain-priced foreclosures.

Connecting the dots, I.C.T.S.

2010-01-10T17:37:00.004+01:00

The firm in charge of security at Amsterdam’s Schiphol Airport is ICTS, International Consultants on Targeted Security. They are the same outfit responsible for all three airports used by “Muslim hijackers” on 9-11. ICTS also handled security for London’s bus system during their 7-7 “Muslim bombing,” while doing the same at Charles de Gaulle Airport when “shoe bomber” Richard Reid boarded a plane in Paris on Dec. 22, 2001.

Geithner Could Face Criminal Charges Over AIG Coverup

2010-01-10T17:19:00.002+01:00

Oh Goody!!!

Recovery will fail unless we break the financial oligarchy that is blocking essential reform.

2010-01-10T16:43:00.005+01:00

By: Simon Johnson, a professor at MIT’s Sloan School of Management, was the chief economist at the International Monetary Fund during 2007 and 2008. He blogs about the financial crisis at baselinescenario.com, along with James Kwak, who also contributed to this essay. As published in the May 2009 issue of the Atlantic.

The crash has laid bare many unpleasant truths about the United States. One of the most alarming, says a former chief economist of the International Monetary Fund, is that the finance industry has effectively captured our government—a state of affairs that more typically describes emerging markets, and is at the center of many emerging-market crises. If the IMF’s staff could speak freely about the U.S., it would tell us what it tells all countries in this situation: recovery will fail unless we break the financial oligarchy that is blocking essential reform. And if we are to prevent a true depression, we’re running out of time.

One thing you learn rather quickly when working at the International Monetary Fund is that no one is ever very happy to see you. Typically, your “clients” come in only after private capital has abandoned them, after regional trading-bloc partners have been unable to throw a strong enough lifeline, after last-ditch attempts to borrow from powerful friends like China or the European Union have fallen through. You’re never at the top of anyone’s dance card.

The reason, of course, is that the IMF specializes in telling its clients what they don’t want to hear. I should know; I pressed painful changes on many foreign officials during my time there as chief economist in 2007 and 2008. And I felt the effects of IMF pressure, at least indirectly, when I worked with governments in Eastern Europe as they struggled after 1989, and with the private sector in Asia and Latin America during the crises of the late 1990s and early 2000s. Over that time, from every vantage point, I saw firsthand the steady flow of officials—from Ukraine, Russia, Thailand, Indonesia, South Korea, and elsewhere—trudging to the fund when circumstances were dire and all else had failed.

Every crisis is different, of course. Ukraine faced hyperinflation in 1994; Russia desperately needed help when its short-term-debt rollover scheme exploded in the summer of 1998; the Indonesian rupiah plunged in 1997, nearly leveling the corporate economy; that same year, South Korea’s 30-year economic miracle ground to a halt when foreign banks suddenly refused to extend new credit.

But I must tell you, to IMF officials, all of these crises looked depressingly similar. Each country, of course, needed a loan, but more than that, each needed to make big changes so that the loan could really work. Almost always, countries in crisis need to learn to live within their means after a period of excess—exports must be increased, and imports cut—and the goal is to do this without the most horrible of recessions. Naturally, the fund’s economists spend time figuring out the policies—budget, money supply, and the like—that make sense in this context. Yet the economic solution is seldom very hard to work out.

No, the real concern of the fund’s senior staff, and the biggest obstacle to recovery, is almost invariably the politics of countries in crisis.

Typically, these countries are in a desperate economic situation for one simple reason—the powerful elites within them overreached in good times and took too many risks. Emerging-market governments and their private-sector allies commonly form a tight-knit—and, most of the time, genteel—oligarchy, running the country rather like a profit-seeking company in which they are the controlling shareholders. When a country like Indonesia or South Korea or Russia grows, so do the ambitions of its captains of industry. As masters of their mini-universe, these people make some investments that clearly benefit the broader economy, but they also start making bigger and riskier bets. They reckon—correctly, in most cases—that their political connections will allow them to push onto the government any substantial problems that arise.

In Russia, for instance, the private sector is now in serious trouble because, over the past five years or so, it borrowed at least $490 billion from global banks and investors on the assumption that the country’s energy sector could support a permanent increase in consumption throughout the economy. As Russia’s oligarchs spent this capital, acquiring other companies and embarking on ambitious investment plans that generated jobs, their importance to the political elite increased. Growing political support meant better access to lucrative contracts, tax breaks, and subsidies. And foreign investors could not have been more pleased; all other things being equal, they prefer to lend money to people who have the implicit backing of their national governments, even if that backing gives off the faint whiff of corruption.

But inevitably, emerging-market oligarchs get carried away; they waste money and build massive business empires on a mountain of debt. Local banks, sometimes pressured by the government, become too willing to extend credit to the elite and to those who depend on them. Overborrowing always ends badly, whether for an individual, a company, or a country. Sooner or later, credit conditions become tighter and no one will lend you money on anything close to affordable terms.

The downward spiral that follows is remarkably steep. Enormous companies teeter on the brink of default, and the local banks that have lent to them collapse. Yesterday’s “public-private partnerships” are relabeled “crony capitalism.” With credit unavailable, economic paralysis ensues, and conditions just get worse and worse. The government is forced to draw down its foreign-currency reserves to pay for imports, service debt, and cover private losses. But these reserves will eventually run out. If the country cannot right itself before that happens, it will default on its sovereign debt and become an economic pariah. The government, in its race to stop the bleeding, will typically need to wipe out some of the national champions—now hemorrhaging cash—and usually restructure a banking system that’s gone badly out of balance. It will, in other words, need to squeeze at least some of its oligarchs.

Squeezing the oligarchs, though, is seldom the strategy of choice among emerging-market governments. Quite the contrary: at the outset of the crisis, the oligarchs are usually among the first to get extra help from the government, such as preferential access to foreign currency, or maybe a nice tax break, or—here’s a classic Kremlin bailout technique—the assumption of private debt obligations by the government. Under duress, generosity toward old friends takes many innovative forms. Meanwhile, needing to squeeze someone, most emerging-market governments look first to ordinary working folk—at least until the riots grow too large.

Eventually, as the oligarchs in Putin’s Russia now realize, some within the elite have to lose out before recovery can begin. It’s a game of musical chairs: there just aren’t enough currency reserves to take care of everyone, and the government cannot afford to take over private-sector debt completely.

So the IMF staff looks into the eyes of the minister of finance and decides whether the government is serious yet. The fund will give even a country like Russia a loan eventually, but first it wants to make sure Prime Minister Putin is ready, willing, and able to be tough on some of his friends. If he is not ready to throw former pals to the wolves, the fund can wait. And when he is ready, the fund is happy to make helpful suggestions—particularly with regard to wresting control of the banking system from the hands of the most incompetent and avaricious “entrepreneurs.”

Of course, Putin’s ex-friends will fight back. They’ll mobilize allies, work the system, and put pressure on other parts of the government to get additional subsidies. In extreme cases, they’ll even try subversion—including calling up their contacts in the American foreign-policy establishment, as the Ukrainians did with some success in the late 1990s.

Many IMF programs “go off track” (a euphemism) precisely because the government can’t stay tough on erstwhile cronies, and the consequences are massive inflation or other disasters. A program “goes back on track” once the government prevails or powerful oligarchs sort out among themselves who will govern—and thus win or lose—under the IMF-supported plan. The real fight in Thailand and Indonesia in 1997 was about which powerful families would lose their banks. In Thailand, it was handled relatively smoothly. In Indonesia, it led to the fall of President Suharto and economic chaos.

From long years of experience, the IMF staff knows its program will succeed—stabilizing the economy and enabling growth—only if at least some of the powerful oligarchs who did so much to create the underlying problems take a hit. This is the problem of all emerging markets.

Becoming a Banana Republic

In its depth and suddenness, the U.S. economic and financial crisis is shockingly reminiscent of moments we have recently seen in emerging markets (and only in emerging markets): South Korea (1997), Malaysia (1998), Russia and Argentina (time and again). In each of those cases, global investors, afraid that the country or its financial sector wouldn’t be able to pay off mountainous debt, suddenly stopped lending. And in each case, that fear became self-fulfilling, as banks that couldn’t roll over their debt did, in fact, become unable to pay. This is precisely what drove Lehman Brothers into bankruptcy on September 15, causing all sources of funding to the U.S. financial sector to dry up overnight. Just as in emerging-market crises, the weakness in the banking system has quickly rippled out into the rest of the economy, causing a severe economic contraction and hardship for millions of people.

But there’s a deeper and more disturbing similarity: elite business interests—financiers, in the case of the U.S.—played a central role in creating the crisis, making ever-larger gambles, with the implicit backing of the government, until the inevitable collapse. More alarming, they are now using their influence to prevent precisely the sorts of reforms that are needed, and fast, to pull the economy out of its nosedive. The government seems helpless, or unwilling, to act against them.

Top investment bankers and government officials like to lay the blame for the current crisis on the lowering of U.S. interest rates after the dotcom bust or, even better—in a “buck stops somewhere else” sort of way—on the flow of savings out of China. Some on the right like to complain about Fannie Mae or Freddie Mac, or even about longer-standing efforts to promote broader homeownership. And, of course, it is axiomatic to everyone that the regulators responsible for “safety and soundness” were fast asleep at the wheel.

But these various policies—lightweight regulation, cheap money, the unwritten Chinese-American economic alliance, the promotion of homeownership—had something in common. Even though some are traditionally associated with Democrats and some with Republicans, they all benefited the financial sector. Policy changes that might have forestalled the crisis but would have limited the financial sector’s profits—such as Brooksley Born’s now-famous attempts to regulate credit-default swaps at the Commodity Futures Trading Commission, in 1998—were ignored or swept aside.

The financial industry has not always enjoyed such favored treatment. But for the past 25 years or so, finance has boomed, becoming ever more powerful. The boom began with the Reagan years, and it only gained strength with the deregulatory policies of the Clinton and George W. Bush administrations. Several other factors helped fuel the financial industry’s ascent. Paul Volcker’s monetary policy in the 1980s, and the increased volatility in interest rates that accompanied it, made bond trading much more lucrative. The invention of securitization, interest-rate swaps, and credit-default swaps greatly increased the volume of transactions that bankers could make money on. And an aging and increasingly wealthy population invested more and more money in securities, helped by the invention of the IRA and the 401(k) plan. Together, these developments vastly increased the profit opportunities in financial services.

Click the chart above for a larger view

Not surprisingly, Wall Street ran with these opportunities. From 1973 to 1985, the financial sector never earned more than 16 percent of domestic corporate profits. In 1986, that figure reached 19 percent. In the 1990s, it oscillated between 21 percent and 30 percent, higher than it had ever been in the postwar period. This decade, it reached 41 percent. Pay rose just as dramatically. From 1948 to 1982, average compensation in the financial sector ranged between 99 percent and 108 percent of the average for all domestic private industries. From 1983, it shot upward, reaching 181 percent in 2007.

The great wealth that the financial sector created and concentrated gave bankers enormous political weight—a weight not seen in the U.S. since the era of J.P. Morgan (the man). In that period, the banking panic of 1907 could be stopped only by coordination among private-sector bankers: no government entity was able to offer an effective response. But that first age of banking oligarchs came to an end with the passage of significant banking regulation in response to the Great Depression; the reemergence of an American financial oligarchy is quite recent.

Of course, the U.S. is unique. And just as we have the world’s most advanced economy, military, and technology, we also have its most advanced oligarchy.

In a primitive political system, power is transmitted through violence, or the threat of violence: military coups, private militias, and so on. In a less primitive system more typical of emerging markets, power is transmitted via money: bribes, kickbacks, and offshore bank accounts. Although lobbying and campaign contributions certainly play major roles in the American political system, old-fashioned corruption—envelopes stuffed with $100 bills—is probably a sideshow today, Jack Abramoff notwithstanding.

Instead, the American financial industry gained political power by amassing a kind of cultural capital—a belief system. Once, perhaps, what was good for General Motors was good for the country. Over the past decade, the attitude took hold that what was good for Wall Street was good for the country. The banking-and-securities industry has become one of the top contributors to political campaigns, but at the peak of its influence, it did not have to buy favors the way, for example, the tobacco companies or military contractors might have to. Instead, it benefited from the fact that Washington insiders already believed that large financial institutions and free-flowing capital markets were crucial to America’s position in the world.

One channel of influence was, of course, the flow of individuals between Wall Street and Washington. Robert Rubin, once the co-chairman of Goldman Sachs, served in Washington as Treasury secretary under Clinton, and later became chairman of Citigroup’s executive committee. Henry Paulson, CEO of Goldman Sachs during the long boom, became Treasury secretary under George W.Bush. John Snow, Paulson’s predecessor, left to become chairman of Cerberus Capital Management, a large private-equity firm that also counts Dan Quayle among its executives. Alan Greenspan, after leaving the Federal Reserve, became a consultant to Pimco, perhaps the biggest player in international bond markets.

These personal connections were multiplied many times over at the lower levels of the past three presidential administrations, strengthening the ties between Washington and Wall Street. It has become something of a tradition for Goldman Sachs employees to go into public service after they leave the firm. The flow of Goldman alumni—including Jon Corzine, now the governor of New Jersey, along with Rubin and Paulson—not only placed people with Wall Street’s worldview in the halls of power; it also helped create an image of Goldman (inside the Beltway, at least) as an institution that was itself almost a form of public service.

Wall Street is a very seductive place, imbued with an air of power. Its executives truly believe that they control the levers that make the world go round. A civil servant from Washington invited into their conference rooms, even if just for a meeting, could be forgiven for falling under their sway. Throughout my time at the IMF, I was struck by the easy access of leading financiers to the highest U.S. government officials, and the interweaving of the two career tracks. I vividly remember a meeting in early 2008—attended by top policy makers from a handful of rich countries—at which the chair casually proclaimed, to the room’s general approval, that the best preparation for becoming a central-bank governor was to work first as an investment banker.

A whole generation of policy makers has been mesmerized by Wall Street, always and utterly convinced that whatever the banks said was true. Alan Greenspan’s pronouncements in favor of unregulated financial markets are well known. Yet Greenspan was hardly alone. This is what Ben Bernanke, the man who succeeded him, said in 2006: “The management of market risk and credit risk has become increasingly sophisticated. … Banking organizations of all sizes have made substantial strides over the past two decades in their ability to measure and manage risks.”

Of course, this was mostly an illusion. Regulators, legislators, and academics almost all assumed that the managers of these banks knew what they were doing. In retrospect, they didn’t. AIG’s Financial Products division, for instance, made $2.5 billion in pretax profits in 2005, largely by selling underpriced insurance on complex, poorly understood securities. Often described as “picking up nickels in front of a steamroller,” this strategy is profitable in ordinary years, and catastrophic in bad ones. As of last fall, AIG had outstanding insurance on more than $400 billion in securities. To date, the U.S. government, in an effort to rescue the company, has committed about $180 billion in investments and loans to cover losses that AIG’s sophisticated risk modeling had said were virtually impossible.

Wall Street’s seductive power extended even (or especially) to finance and economics professors, historically confined to the cramped offices of universities and the pursuit of Nobel Prizes. As mathematical finance became more and more essential to practical finance, professors increasingly took positions as consultants or partners at financial institutions. Myron Scholes and Robert Merton, Nobel laureates both, were perhaps the most famous; they took board seats at the hedge fund Long-Term Capital Management in 1994, before the fund famously flamed out at the end of the decade. But many others beat similar paths. This migration gave the stamp of academic legitimacy (and the intimidating aura of intellectual rigor) to the burgeoning world of high finance.

As more and more of the rich made their money in finance, the cult of finance seeped into the culture at large. Works like Barbarians at the Gate, Wall Street, and Bonfire of the Vanities—all intended as cautionary tales—served only to increase Wall Street’s mystique. Michael Lewis noted in Portfolio last year that when he wrote Liar’s Poker, an insider’s account of the financial industry, in 1989, he had hoped the book might provoke outrage at Wall Street’s hubris and excess. Instead, he found himself “knee-deep in letters from students at Ohio State who wanted to know if I had any other secrets to share. … They’d read my book as a how-to manual.” Even Wall Street’s criminals, like Michael Milken and Ivan Boesky, became larger than life. In a society that celebrates the idea of making money, it was easy to infer that the interests of the financial sector were the same as the interests of the country—and that the winners in the financial sector knew better what was good for America than did the career civil servants in Washington. Faith in free financial markets grew into conventional wisdom—trumpeted on the editorial pages of The Wall Street Journal and on the floor of Congress.

From this confluence of campaign finance, personal connections, and ideology there flowed, in just the past decade, a river of deregulatory policies that is, in hindsight, astonishing:

• insistence on free movement of capital across borders;

• the repeal of Depression-era regulations separating commercial and investment banking;

• a congressional ban on the regulation of credit-default swaps;

• major increases in the amount of leverage allowed to investment banks;

• a light (dare I say invisible?) hand at the Securities and Exchange Commission in its regulatory enforcement;

• an international agreement to allow banks to measure their own riskiness;

• and an intentional failure to update regulations so as to keep up with the tremendous pace of financial innovation.

The mood that accompanied these measures in Washington seemed to swing between nonchalance and outright celebration: finance unleashed, it was thought, would continue to propel the economy to greater heights.

The oligarchy and the government policies that aided it did not alone cause the financial crisis that exploded last year. Many other factors contributed, including excessive borrowing by households and lax lending standards out on the fringes of the financial world. But major commercial and investment banks—and the hedge funds that ran alongside them—were the big beneficiaries of the twin housing and equity-market bubbles of this decade, their profits fed by an ever-increasing volume of transactions founded on a relatively small base of actual physical assets. Each time a loan was sold, packaged, securitized, and resold, banks took their transaction fees, and the hedge funds buying those securities reaped ever-larger fees as their holdings grew.

Because everyone was getting richer, and the health of the national economy depended so heavily on growth in real estate and finance, no one in Washington had any incentive to question what was going on. Instead, Fed Chairman Greenspan and President Bush insisted metronomically that the economy was fundamentally sound and that the tremendous growth in complex securities and credit-default swaps was evidence of a healthy economy where risk was distributed safely.

In the summer of 2007, signs of strain started appearing. The boom had produced so much debt that even a small economic stumble could cause major problems, and rising delinquencies in subprime mortgages proved the stumbling block. Ever since, the financial sector and the federal government have been behaving exactly the way one would expect them to, in light of past emerging-market crises.

By now, the princes of the financial world have of course been stripped naked as leaders and strategists—at least in the eyes of most Americans. But as the months have rolled by, financial elites have continued to assume that their position as the economy’s favored children is safe, despite the wreckage they have caused.

Stanley O’Neal, the CEO of Merrill Lynch, pushed his firm heavily into the mortgage-backed-securities market at its peak in 2005 and 2006; in October 2007, he acknowledged, “The bottom line is, we—I—got it wrong by being overexposed to subprime, and we suffered as a result of impaired liquidity in that market. No one is more disappointed than I am in that result.” O’Neal took home a $14 million bonus in 2006; in 2007, he walked away from Merrill with a severance package worth $162 million, although it is presumably worth much less today.

In October, John Thain, Merrill Lynch’s final CEO, reportedly lobbied his board of directors for a bonus of $30 million or more, eventually reducing his demand to $10 million in December; he withdrew the request, under a firestorm of protest, only after it was leaked to The Wall Street Journal. Merrill Lynch as a whole was no better: it moved its bonus payments, $4 billion in total, forward to December, presumably to avoid the possibility that they would be reduced by Bank of America, which would own Merrill beginning on January 1. Wall Street paid out $18 billion in year-end bonuses last year to its New York City employees, after the government disbursed $243 billion in emergency assistance to the financial sector.

In a financial panic, the government must respond with both speed and overwhelming force. The root problem is uncertainty—in our case, uncertainty about whether the major banks have sufficient assets to cover their liabilities. Half measures combined with wishful thinking and a wait-and-see attitude cannot overcome this uncertainty. And the longer the response takes, the longer the uncertainty will stymie the flow of credit, sap consumer confidence, and cripple the economy—ultimately making the problem much harder to solve. Yet the principal characteristics of the government’s response to the financial crisis have been delay, lack of transparency, and an unwillingness to upset the financial sector.

The response so far is perhaps best described as “policy by deal”: when a major financial institution gets into trouble, the Treasury Department and the Federal Reserve engineer a bailout over the weekend and announce on Monday that everything is fine. In March 2008, Bear Stearns was sold to JP Morgan Chase in what looked to many like a gift to JP Morgan. (Jamie Dimon, JP Morgan’s CEO, sits on the board of directors of the Federal Reserve Bank of New York, which, along with the Treasury Department, brokered the deal.) In September, we saw the sale of Merrill Lynch to Bank of America, the first bailout of AIG, and the takeover and immediate sale of Washington Mutual to JP Morgan—all of which were brokered by the government. In October, nine large banks were recapitalized on the same day behind closed doors in Washington. This, in turn, was followed by additional bailouts for Citigroup, AIG, Bank of America, Citigroup (again), and AIG (again).

Some of these deals may have been reasonable responses to the immediate situation. But it was never clear (and still isn’t) what combination of interests was being served, and how. Treasury and the Fed did not act according to any publicly articulated principles, but just worked out a transaction and claimed it was the best that could be done under the circumstances. This was late-night, backroom dealing, pure and simple.

Throughout the crisis, the government has taken extreme care not to upset the interests of the financial institutions, or to question the basic outlines of the system that got us here. In September 2008, Henry Paulson asked Congress for $700 billion to buy toxic assets from banks, with no strings attached and no judicial review of his purchase decisions. Many observers suspected that the purpose was to overpay for those assets and thereby take the problem off the banks’ hands—indeed, that is the only way that buying toxic assets would have helped anything. Perhaps because there was no way to make such a blatant subsidy politically acceptable, that plan was shelved.

Instead, the money was used to recapitalize banks, buying shares in them on terms that were grossly favorable to the banks themselves. As the crisis has deepened and financial institutions have needed more help, the government has gotten more and more creative in figuring out ways to provide banks with subsidies that are too complex for the general public to understand. The first AIG bailout, which was on relatively good terms for the taxpayer, was supplemented by three further bailouts whose terms were more AIG-friendly. The second Citigroup bailout and the Bank of America bailout included complex asset guarantees that provided the banks with insurance at below-market rates. The third Citigroup bailout, in late February, converted government-owned preferred stock to common stock at a price significantly higher than the market price—a subsidy that probably even most Wall Street Journal readers would miss on first reading. And the convertible preferred shares that the Treasury will buy under the new Financial Stability Plan give the conversion option (and thus the upside) to the banks, not the government.

This latest plan—which is likely to provide cheap loans to hedge funds and others so that they can buy distressed bank assets at relatively high prices—has been heavily influenced by the financial sector, and Treasury has made no secret of that. As Neel Kashkari, a senior Treasury official under both Henry Paulson and Tim Geithner (and a Goldman alum) told Congress in March, “We had received inbound unsolicited proposals from people in the private sector saying, ‘We have capital on the sidelines; we want to go after [distressed bank] assets.’” And the plan lets them do just that: “By marrying government capital—taxpayer capital—with private-sector capital and providing financing, you can enable those investors to then go after those assets at a price that makes sense for the investors and at a price that makes sense for the banks.” Kashkari didn’t mention anything about what makes sense for the third group involved: the taxpayers.

Even leaving aside fairness to taxpayers, the government’s velvet-glove approach with the banks is deeply troubling, for one simple reason: it is inadequate to change the behavior of a financial sector accustomed to doing business on its own terms, at a time when that behavior must change. As an unnamed senior bank official said to The New York Times last fall, “It doesn’t matter how much Hank Paulson gives us, no one is going to lend a nickel until the economy turns.” But there’s the rub: the economy can’t recover until the banks are healthy and willing to lend.

The Way Out

Looking just at the financial crisis (and leaving aside some problems of the larger economy), we face at least two major, interrelated problems. The first is a desperately ill banking sector that threatens to choke off any incipient recovery that the fiscal stimulus might generate. The second is a political balance of power that gives the financial sector a veto over public policy, even as that sector loses popular support.

Big banks, it seems, have only gained political strength since the crisis began. And this is not surprising. With the financial system so fragile, the damage that a major bank failure could cause—Lehman was small relative to Citigroup or Bank of America—is much greater than it would be during ordinary times. The banks have been exploiting this fear as they wring favorable deals out of Washington. Bank of America obtained its second bailout package (in January) after warning the government that it might not be able to go through with the acquisition of Merrill Lynch, a prospect that Treasury did not want to consider.

The challenges the United States faces are familiar territory to the people at the IMF. If you hid the name of the country and just showed them the numbers, there is no doubt what old IMF hands would say: nationalize troubled banks and break them up as necessary.

In some ways, of course, the government has already taken control of the banking system. It has essentially guaranteed the liabilities of the biggest banks, and it is their only plausible source of capital today. Meanwhile, the Federal Reserve has taken on a major role in providing credit to the economy—the function that the private banking sector is supposed to be performing, but isn’t. Yet there are limits to what the Fed can do on its own; consumers and businesses are still dependent on banks that lack the balance sheets and the incentives to make the loans the economy needs, and the government has no real control over who runs the banks, or over what they do.

At the root of the banks’ problems are the large losses they have undoubtedly taken on their securities and loan portfolios. But they don’t want to recognize the full extent of their losses, because that would likely expose them as insolvent. So they talk down the problem, and ask for handouts that aren’t enough to make them healthy (again, they can’t reveal the size of the handouts that would be necessary for that), but are enough to keep them upright a little longer. This behavior is corrosive: unhealthy banks either don’t lend (hoarding money to shore up reserves) or they make desperate gambles on high-risk loans and investments that could pay off big, but probably won’t pay off at all. In either case, the economy suffers further, and as it does, bank assets themselves continue to deteriorate—creating a highly destructive vicious cycle.

To break this cycle, the government must force the banks to acknowledge the scale of their problems. As the IMF understands (and as the U.S. government itself has insisted to multiple emerging-market countries in the past), the most direct way to do this is nationalization. Instead, Treasury is trying to negotiate bailouts bank by bank, and behaving as if the banks hold all the cards—contorting the terms of each deal to minimize government ownership while forswearing government influence over bank strategy or operations. Under these conditions, cleaning up bank balance sheets is impossible.

Nationalization would not imply permanent state ownership. The IMF’s advice would be, essentially: scale up the standard Federal Deposit Insurance Corporation process. An FDIC “intervention” is basically a government-managed bankruptcy procedure for banks. It would allow the government to wipe out bank shareholders, replace failed management, clean up the balance sheets, and then sell the banks back to the private sector. The main advantage is immediate recognition of the problem so that it can be solved before it grows worse.

The government needs to inspect the balance sheets and identify the banks that cannot survive a severe recession. These banks should face a choice: write down your assets to their true value and raise private capital within 30 days, or be taken over by the government. The government would write down the toxic assets of banks taken into receivership—recognizing reality—and transfer those assets to a separate government entity, which would attempt to salvage whatever value is possible for the taxpayer (as the Resolution Trust Corporation did after the savings-and-loan debacle of the 1980s). The rump banks—cleansed and able to lend safely, and hence trusted again by other lenders and investors—could then be sold off.

Cleaning up the megabanks will be complex. And it will be expensive for the taxpayer; according to the latest IMF numbers, the cleanup of the banking system would probably cost close to $1.5 trillion (or 10 percent of our GDP) in the long term. But only decisive government action—exposing the full extent of the financial rot and restoring some set of banks to publicly verifiable health—can cure the financial sector as a whole.

This may seem like strong medicine. But in fact, while necessary, it is insufficient. The second problem the U.S. faces—the power of the oligarchy—is just as important as the immediate crisis of lending. And the advice from the IMF on this front would again be simple: break the oligarchy.

Oversize institutions disproportionately influence public policy; the major banks we have today draw much of their power from being too big to fail. Nationalization and re-privatization would not change that; while the replacement of the bank executives who got us into this crisis would be just and sensible, ultimately, the swapping-out of one set of powerful managers for another would change only the names of the oligarchs.

Ideally, big banks should be sold in medium-size pieces, divided regionally or by type of business. Where this proves impractical—since we’ll want to sell the banks quickly—they could be sold whole, but with the requirement of being broken up within a short time. Banks that remain in private hands should also be subject to size limitations.

This may seem like a crude and arbitrary step, but it is the best way to limit the power of individual institutions in a sector that is essential to the economy as a whole. Of course, some people will complain about the “efficiency costs” of a more fragmented banking system, and these costs are real. But so are the costs when a bank that is too big to fail—a financial weapon of mass self-destruction—explodes. Anything that is too big to fail is too big to exist.

To ensure systematic bank breakup, and to prevent the eventual reemergence of dangerous behemoths, we also need to overhaul our antitrust legislation. Laws put in place more than 100 years ago to combat industrial monopolies were not designed to address the problem we now face. The problem in the financial sector today is not that a given firm might have enough market share to influence prices; it is that one firm or a small set of interconnected firms, by failing, can bring down the economy. The Obama administration’s fiscal stimulus evokes FDR, but what we need to imitate here is Teddy Roosevelt’s trust-busting.

Caps on executive compensation, while redolent of populism, might help restore the political balance of power and deter the emergence of a new oligarchy. Wall Street’s main attraction—to the people who work there and to the government officials who were only too happy to bask in its reflected glory—has been the astounding amount of money that could be made. Limiting that money would reduce the allure of the financial sector and make it more like any other industry.

Still, outright pay caps are clumsy, especially in the long run. And most money is now made in largely unregulated private hedge funds and private-equity firms, so lowering pay would be complicated. Regulation and taxation should be part of the solution. Over time, though, the largest part may involve more transparency and competition, which would bring financial-industry fees down. To those who say this would drive financial activities to other countries, we can now safely say: fine.

Two Paths

To paraphrase Joseph Schumpeter, the early-20th-century economist, everyone has elites; the important thing is to change them from time to time. If the U.S. were just another country, coming to the IMF with hat in hand, I might be fairly optimistic about its future. Most of the emerging-market crises that I’ve mentioned ended relatively quickly, and gave way, for the most part, to relatively strong recoveries. But this, alas, brings us to the limit of the analogy between the U.S. and emerging markets.

Emerging-market countries have only a precarious hold on wealth, and are weaklings globally. When they get into trouble, they quite literally run out of money—or at least out of foreign currency, without which they cannot survive. They must make difficult decisions; ultimately, aggressive action is baked into the cake. But the U.S., of course, is the world’s most powerful nation, rich beyond measure, and blessed with the exorbitant privilege of paying its foreign debts in its own currency, which it can print. As a result, it could very well stumble along for years—as Japan did during its lost decade—never summoning the courage to do what it needs to do, and never really recovering. A clean break with the past—involving the takeover and cleanup of major banks—hardly looks like a sure thing right now. Certainly no one at the IMF can force it.

In my view, the U.S. faces two plausible scenarios. The first involves complicated bank-by-bank deals and a continual drumbeat of (repeated) bailouts, like the ones we saw in February with Citigroup and AIG. The administration will try to muddle through, and confusion will reign.

Boris Fyodorov, the late finance minister of Russia, struggled for much of the past 20 years against oligarchs, corruption, and abuse of authority in all its forms. He liked to say that confusion and chaos were very much in the interests of the powerful—letting them take things, legally and illegally, with impunity. When inflation is high, who can say what a piece of property is really worth? When the credit system is supported by byzantine government arrangements and backroom deals, how do you know that you aren’t being fleeced?

Our future could be one in which continued tumult feeds the looting of the financial system, and we talk more and more about exactly how our oligarchs became bandits and how the economy just can’t seem to get into gear.

The second scenario begins more bleakly, and might end that way too. But it does provide at least some hope that we’ll be shaken out of our torpor. It goes like this: the global economy continues to deteriorate, the banking system in east-central Europe collapses, and—because eastern Europe’s banks are mostly owned by western European banks—justifiable fears of government insolvency spread throughout the Continent. Creditors take further hits and confidence falls further. The Asian economies that export manufactured goods are devastated, and the commodity producers in Latin America and Africa are not much better off. A dramatic worsening of the global environment forces the U.S. economy, already staggering, down onto both knees. The baseline growth rates used in the administration’s current budget are increasingly seen as unrealistic, and the rosy “stress scenario” that the U.S. Treasury is currently using to evaluate banks’ balance sheets becomes a source of great embarrassment.

Under this kind of pressure, and faced with the prospect of a national and global collapse, minds may become more concentrated.

The conventional wisdom among the elite is still that the current slump “cannot be as bad as the Great Depression.” This view is wrong. What we face now could, in fact, be worse than the Great Depression—because the world is now so much more interconnected and because the banking sector is now so big. We face a synchronized downturn in almost all countries, a weakening of confidence among individuals and firms, and major problems for government finances. If our leadership wakes up to the potential consequences, we may yet see dramatic action on the banking system and a breaking of the old elite. Let us hope it is not then too late.

2010: Giant Gathering Storm Clouds

2010-01-10T01:40:00.001+01:00

by Jim Willie, CB. Editor, Hat Trick Letter | January 6, 2010
Print
The year 2008 bore my mark as the year the system broke. A public article addressed the issues, laid out before the breakdown occurred in September of that year. The consequences for the many failures, the desperate nationalizations, the hasty scrambles to put financial sewage under USGovt ownership, the realization of TARP as a vast slush fund for illegitimate bank rescues, the official monetization plans put forth to prevent bond implosions, and much more occurred in the year 2009 as a recognized aftermath. Here we are in 2010 and the threats must again be laid out. A prelude was offered in an mid-December article entitled "Full Circle of Govt Debt Default" (CLICK HERE) where a global sovereign debt ruin in vicious circle was displayed the sequence that started in the Untied States and will end in the Untied States. Rather than make specific forecasts of extreme events, a list is presented much like a smorgasbord. The odds are 100:1 in favor at least one extreme event occurring in this current calendar year in my view. The odds are very high in favor of several events taking place this year. The key here is that a great many extremely damaging and highly disruptive events loom like giant gathering storm clouds that meet, complete with lightning displays. More terrestrial types might consider that a great many land mine explosives lie in the wide pathways ahead. At least a few extreme craters will be formed. A few financial edifices will be toppled. Great changes come, especially to the global power structures. This time around, the stakes are bigger, and entire nations will face debt failure and national realignment. The ripple effects will reshape the global financial system.

The blind, the deficient, and the compromised fail to fully appreciate and detect the meaning of the Dubai debt default or the Iceland financial failure. They actually believe these busts have been dealt with by the very strength of the capitalist system. These default failures signify a continuation of the credit market crisis that never went away. Instead, accounting fraud was legalized. Instead, bloated bank toxic balance sheets were permitted. Instead, sovereign debt finance by monetary expansion was endorsed, i.e. monetization. Instead, stock equity sales to the nitwits incapable of reading balance sheets was widespread. Instead, broader statistical gimmickry of economic data was installed. Not a single meaningful reform has taken place on US soil, which guarantees the continuation of the credit crisis is assured. No substantial reduction of US home loan balance sheets. No return of US manufacturing. No liquidation of dead US banks. No removal of Goldman Sachs from control of the USDept Treasury. No disclosure of US Federal Reserve disbursements of over $1 trillion. No steps to restore the Glass Steagall Act to create firewalls between the financial sectors. No effort to prosecute for $trillion bond fraud. No initiative to bring to light the deep criminal lace to Fannie Mae and AIG, now protected under USGovt aegis. No attempt to rein in military spending and endless wars. No movement to create a monetary system with a currency other than the current debt denominated $20 bill coupons. Instead, with much greater force, enthusiasm, and recklessness, the financial system hurtled deeper into the Weimar chambers of commerce. Worse, most steps simply apply greater doses of precisely what caused the problems with debt overload and excessive monetary expansion. Worse doubly, most reforms grant even more power to those responsible for the breakdowns and fraud perpetration. The Untied States is being recognized internationally as a rogue nation moving headlong toward communism, run by powerful syndicates, whose most prominent foreign policy is explained by military hardware.

There is no shred of the capitalist structural makeup remotely evident outside of Asia. We see cronyism systems in the West, but worse, we see syndicate systems with alleged cords of criminality. The discredit of the central bank franchise system is barely noticed by the mainstream, which applauds the printing press monetary operators without recognition of the repeat of Weimar chapters. Just today, the New York Times formally posed the question of how the US Federal Reserve can prevent the next asset bubble when it missed the last one. It actually misses all asset bubbles, creates them all, and denies the existence of each during formation. The signature signals of a failed central bank is a lasting 0% rate and heavy monetization, called euphemistically Quantitative Easing so as to make economist failure sound like some wondrous medical prescription in high falluting nomenclature. How about the US Financial Reform being called Economicus Moribundus and the vast printing of money in monetary policy being called Whisky Delugius?

Let's review a rather lengthy list of potential events. These are not wild raving pronouncements. Each has some critical mass of likelihood. Each event is presented like an ugly perverse budding shoot on the charred landscape, easily representing an element of the Paradigm Shift. The global shift is almost totally missed by the American leaders, the press networks, and the people. My interpretation is that they live inside the US Dome of Perception, and hardly ever pay attention to matters pertaining to the USDollar. They instead regard it as a constant factor, quite erroneously. The list to follow includes matters often considered sacred, due to the sanctity and inertness of sovereign governments and their debt. The event closest to the Untied States is the dreadful dismemberment of Mexico, which is Greece on steroids and cocaine with the temperature turned up and the violence turned up, where the law enforcement and military have both been compromised and infiltrated. It is a tight race between the US and Mexico as to which nation is more overrun by crime syndicates. The difference is the US has white collar crime, while Mexico violent crime.

The following events are presented as potential disasters looming, spanning the full spectrum, each with triggers in numerous arenas. These are potential disasters, not presented as forecasts, but rather as a list to beware for nasty highly disruptive eruptions. They are loaded with a geopolitical streak, in keeping with Paradigm Shift that signifies a powerful set of changes in altered power. The one common trait all the following potential events have is that they are systemic game change agents. The globe will be reshaped by each and every event that comes to pass. They are not listed in any order of likelihood, since they are all very much at risk of occurrence, and integrally interconnected to a frightening degree. Each would heap tremendous damage, disruption, and devastation, upon occurrence. One should note that if one or two events occur, then others might occur with domino effect from the chain reaction of chaos and opportunity. Note for instance, how the Dubai default resulted in Greek Govt debt downgrade, with no connection except possibly some ancient Greek statues in marble lined parlors in Dubai edifices. The ripple effects will be felt for a full year, just like Lehman, Fannie Mae, and AIG in the United States, just like Northern Rock, Royal Bank of Scotland, and Lloyds in England. The triggers have been ignited, and constant fallout comes. The process never stopped, only the perception that it had stopped. The process can only stop when liquidation and reform occur. Neither is remotely evident.

Use the following scale for grading risk and effect. The likelihood of the event happening will be shown as a percentage, with 0% the lowest and 100% a certainty. The impact for each and every stated event would indeed be huge, extreme, and dangerous. Many different sources have provided lists of extreme events for the new current year, a tradition. Much lies in common for those who choose to think ahead, instead of employing the common practice of putting a new less credible layer of deception on the current landscape. The best among all the sources seen in my view has been the Business Insider. Thanks to my own circle of colleagues and confidants, who provided at least a couple of events listed.

EXTREME WARNINGS FOR EXTREME TIMES
Saudi Royals fall: The Saudi Arabian royal family would lose government control to the Islamic Fundamentalists and is replaced. Scores of old royals escape loaded with hundreds of billion$ in assets, conjuring up memories of the Shah of Iran. Disruptions and instability spread across the entire Persian Gulf. A clampdown of fundamentalist groups in other Gulf nations invites backlash. Occupation forces in Iraq face renewed resistance. (chance: 20%)

China gains full naval military capability: The Chinese Military would attain aircraft carrier force with three carrier groups. In expert circles they call it blue water capability. With this potential, including long range strike potential, the balance of power in Asia is altered. Pressures are put as a result toward changed alliances in key nations considered loyal to the West. Certain strategic points gain attention, as focus is trained on the Mallacan Straits, the Panama Canal, the Suez Canal, the Bosporus Straits, the access routes to the Bering Sea, Australia, and South America. (chance: 30%)

Russian cuts off natural gas to Eastern Europe: Russia would enter a deep dispute with Eastern European nations, in particular Ukraine, and cuts off the flow of natural gas. Disputes center on return to the Russian fold from the independent factions encouraged by the Untied States motivated by the many Color Revolutions. Caught in the middle, at the end of the distribution lines, is Central Europe, whose ties forged by Germany to Russia remain healthy and strong. Russia later forges an alliance with Central Europe that results in some stability, as it becomes clear that Russia has come of age as a peacemaker with further ramifications in time. (chance: 50%)

Greece defaults on its debt: Great problems would result for the parent European Union, sure to fracture. Germany lets it go, does not cover the Greek debt, but employs plausible deniability on minimal offered assistance. A chain reaction begins, to reach the other vulnerable nations. Portugal, Italy, and Spain teeter upon the event, soon to suffer their own defaults, none aided. Even France suffers the ignominy of default, but is aided by Germany in the end, unlike the PIGS nations. The crux of the matter is refinance rollover of debt, which fails. The non-German EuroBonds then rise in yields, enough to force a split in the Euro currency to form the Nordic Core Euro. Default nations revert to their old former currencies and suffer massive devaluations. (chance: 80%)

Mexico fails as a state: The conditions in Mexico would become fully recognized and openly discussed. Two factors are front & center. The rise of the drug cartels in their control of the nation in numerous aspects is already global news. The unexpected net import of crude oil that ruins the nation's federal finances is not yet global news. The former has been understood, but the loss of oil exports takes the region by total surprise. Hyper-inflation then hits Mexico, which prints money to alleviate the federal budget shortfall. Chaos results on numerous levels. Supply disruption hits the US southern refineries. (chance: 70%)

Credit crisis relapse hits the US banks: The Untied States would suffer a relapse into a second round of bank failures, debt defaults, institutional liquidations, corporate deaths, and market disruptions. The proximal cause is the spread and continuation of the property decline, home foreclosures, and commercial defaults. Numerous bank analysts continue to harp on commercial mortgage loss risk after a 40% price decline, so far covered up by phony accounting rules. Impaired assets sit as bank assets. A trigger is the USFed removal from mortgage bond support, coupled with a powerful second downwave in housing prices from Option ARMortgages. A solution is put forth for wide USGovt purchase of housing inventory and the official advent of Fannie Mae as landlord. The supply chain is disrupted in extreme ways, as commercial paper grinds to a halt, and a deeper recession takes root. (chance: 40%)

The US supply chain suddenly suffers disruptions: The economic supply chain would be crippled by its two primary points of vulnerability. The finance credit lines are tied to wounded commercial paper markets. The actual tangible output supply comes from industries that struggle in credit flow, unstable prices, burdensome regulations, worker shortages, and constricted metal supply. Certain trucking firms have already shut down. Gasoline refineries are below their 1990 capacity. Mexican oil supply is soon to end. The lack of trained skilled experienced workers is chronic. (chance: 40%)

Fannie Mae is revealed as a slush fund, toxic bond haven, and object of grand criminal fraud coverup: Leaks would lead to calls for further Congressional investigations of mortgage bond fraud and past presidential pilferage. At the same time, various alerts would be given that the USGovt is harboring a black hole certain to cost over $2 trillion in additional bailouts, maybe up to $4 trillion. The prospect of wide USGovt home ownership from default sparks research reports and great scrunity, even clamor by younger members of Congress. The unlimited credit line to back USAgency debt securities has opened the door to a nasty effect on perception of USTreasury debt, as global perception of the actual USGovt debt ramps up 50%. Discussion of default rises. (chance: 40%)

The real 911 story comes out: The full seamy story would be revealed with many participants named. No further comment except that nation then would become deeply divided in reaction, and international isolation would result. The beneficiaries become the object of scrunity, criticism, and investigation. Attention turns to the swine flu vaccination and global Cap & Trade green taxes, each of which faces the harsh eye of investigation in Europe. (chance: 20%)

Iran is attacked: Great controversy would result from the direct attack of its nuclear facilities and other targets. Controversy would stir from scattered unconfirmed reports of involvement by various nations. Retaliation by Russia and China, long promised, then comes in hidden ways not fully understood. In the aftermath, the banks in the Mideast region are subjected to great scrutiny by several global players, especially one US ally nation. (chance: 10%)

Japan suffers a financial & economic crisis: A recession would take grip, spreading to its financial markets. Reduced export trade eliminated the trade surplus long ago. The Japanese Govt Bond then jumps higher by 2% or 3% in bond yield. The rising Yen currency consequently runs up 20% to 30% from the reverse of the Yen Carry Trade. Their export trade grinds to a near halt, and major conglomerate banks announce insolvency. Then China steps in. (chance: 40%)

UKGovt suffers a debt downgrade: The United Kingdom would be the first major industrialized nation to lose its high credit rating. The UKGilt bond yields then rise above 6% without pause. The threat of sovereign debt default is debated. The British Pound currency falls, which perversely aids the USDollar. Shock waves extend to the Wall Street financial center. Later, scrutiny comes to the USTreasury for its own downgrade and default risk. (chance: 50%)

Talk swirls for eliminating some central banks: Debate would focus on the central bank role as cause for asset bubbles, and extensions to the faulty nature of money itself. Analysts would cite money free from anchors of asset backing. However, awareness rises of the impracticality of central bank elimination, since debt liquidation and cleared decks cannot occur without global depression. In the background is rampant discussion of syndicate involvement and the risks of retaliation by the secretive banker organizations. (chance: 10%)

China faces a degree of chaos: Falling export trade, faltering bank reserves, empty commercial buildings, rising unemployment, idle factories, stalled construction projects, and restive population would contribute to a national crisis that struggles to be told amidst press controls. Armed with a $2500 billion war chest of reserves, China begins to convert assets into tangible rescues, aid, and welfare. The Chinese crisis then ignites a global sale of USTreasurys. As an offshoot to the chaos, the colonization of America then begins, as China cashes in on its USAgency Mortgage Bonds. It exploits it cut deal of Eminent Domain conversion of bonds into property. (chance: 20%)

Food prices soar in the US: The divergence between official crop forecasts would clash with the reality of crop failures and profound shortages this summer. Being the greatest food production source, the US crisis spreads globally. The deCarbonnel threat is realized, as foreign nations sell US$-based assets in order to finance food supply purchases. China enters the fray as a buyer of distressed farm property, amidst accusations of carpetbagger. (chance: 80%)

JPMorgan is object of persistent rumors of gigantic credit derivative losses: The slowly rising USTreasury Bond long-term yield would cause deep painful losses to JPMorgan. Their abuse of Interest Rate Swap contracts becomes a topic of debate. The monetization of USTreasurys becomes a topic of debate. The ability for the USGovt to control its deficits and auxiliary (hidden) losses becomes a topic of debate. Even bond fraud within JPM hallowed halls becomes a topic of debate. To cover the losses, monetary inflation grows out of control, and a USDollar decline ensues, taking the DX dollar index below the 70 level. (chance: 40%)

London metals exchange shuts down: The venerable London Bullion Market Assn would close, unable to fulfill gold orders. The varied stories continue regarding unorthodox practices from the London metals exchange in the month of December, like redemption of gold contracts in cash, like outsized demands for gold delivery mainly by Chinese entities but increasingly by the Swiss, like satisfaction of gold contracts with Street Tracks GLD shares, and much more. Scrutiny with assays upon high volume delivery have been standard since the tungsten gold story emerged, an indirect confirmation often ignored. The supply chain with intermediaries suddenly halts, as they too have no gold bullion to supply the LBMA. Companies shut down. Lawsuits result. Prosecutions begin. Midlevel officials are arrested. Some turn state's evidence. The gold price enters a state of extreme confusion, with vast discrepancies between paper gold price and physical gold price. (chance: 70%)

GOLD & SILVER START A NEW YEAR
Like after a stormy night, the new year has arrived much like a new market with fresh perspectives. The end of tax loss selling, accompanied by tax gain offsets, has come. The beneficial effect is equally shared between gold and silver, although the percentage gain from the recent reversals this week is larger for silver. Not shown in the two graphs is the upward jump in today's prices. They extended gains, with gold reaching the 1135 level, and silver reaching the 18.1 level. The most important factors to keep in clear focus are why gold is rising in a powerful upward trend in the first place. They have not changed. There is no end in government spending, from the Untied States, the UK, Europe, and Japan. There is no meaningful reform of any kind, surely no remedy unless one considers padding banker balance sheets with taxpayer funds as pre-requisite for remedy. There is only a rampant rabid race to grow the money supply, to produce federal deficits, to expand the central bank balance sheets. The real adjusted cost of money is negative after price inflation. The 0% official rates have become fixtures, as central banks look increasingly incompetent in justifying their continuation.

Notice the sharp reversals since the new January month began. Long-term moving averages remain in the uptrend, despite the orchestrated December correction. Investment demand is skyrocketing, a story barely told in the Western press. The wide band for the silver price hints of a strong price rise toward the 20 level on the next upswing. It has already begun. The tumultuous 2010 year, identified by at least a few key critical events listed above, will send the gold & silver prices soaring. Those who believe the hype in the previous month by the mainstream biased press will regret not climbing aboard. This will be the year of magnificent crises that change the face of the global financial structures. Debt will be dumped like a broken Vegas gambler. Paper money will be discarded like yesterday's newspaper. With the crude oil price at almost $83 per barrel, where are the Deflation Knuckleheads now? They led some gold investors to exit before the push from $900 to $1200. They remain legends only to the image in their own mirrors. The crude oil price might actually come down somewhat in the coming month or two, from scads of vessels loaded and sitting at sea. But gold & silver are set to continue a powerful upward thrust in price, as the perversion of money has become a desperate broad global pursuit. Most major currencies face serious debasement. This is a great opportunity to join the Precious Metals Locomotive after a pit stop. Targets are gold at $1375 and silver at $22.25 per ounce.

Copyright © 2010 Jim Willie, CB

Housing Bubble still exists, second leg down to come in March 2010

2010-01-06T17:43:00.001+01:00

FROM: http://www.doctorhousingbubble.com/
Januay 6, 2010

The housing market in many areas in California is still in a solid bubble. Yes, in a speculative bubble. In the last report we looked at shadow inventory for Los Angeles County in great detail. This generated a lot of questions and hopefully shined more light on what really is going on in the housing market. People in manias have hard times judging things correctly. First, even if nationally home prices might be correcting to more reasonable levels, even in hard hit areas like the Inland Empire, many counties like Los Angeles and Orange are incredibly overpriced. In short, they are still in a bubble. Now this might seem stunning given that the median California home has fallen in price by 50 percent. But keep in mind the fall was not evenly distributed.

It helps to put the numbers in perspective:

Los Angeles County Peak Price: $550,000 May of 2007 (DataQuick)

Los Angeles County Current Price: $329,000 November of 2009 (drop of 40%)

Orange County Peak Price: $645,000 June of 2007

Orange County Current Price: $436,500 (drop of 32%)

Yet as we showed in our last report, most of the drop has occurred for two primary reasons:

[1] The bulk of home sales have come from lower priced homes thus skewing the median price lower

[2] Higher end areas have large numbers of shadow inventory because homes are not moving as fast (aka the volume of buyers is low)

Now when the MLS lists about 19,400 homes for Los Angeles County yet in total close to 100,000 properties are either on the MLS, have a notice of default filed, are scheduled for auction, or are bank owned you know something is sketchy. Plus, we have additional properties that are 90+ days late that just don’t show up anywhere. The fact of the matter is that prices are too expensive in many areas regardless of government intervention. All the government is doing is prolonging the inevitable correction while propping up the failed banking sector. Keep in mind the California unemployment rate is 12.3 percent and if we include underemployment, it goes up to 22 percent. Have people forgotten how households actually pay for the mortgage? You pay from actual income yet somehow this is all lost in the hustle of bailouts.

Today we are going to look at a zip code in Burbank to really deconstruct what is going on. Today we salute you Burbank with our Real Homes of Genius Award.

Burbank California

Let us examine the 91501 zip code of Burbank. This is one of those areas with nice homes that many professionals are looking at but prices still seem to reflect a bubble. Now many real estate agents are now buying the argument that the government has saved the housing market. Really? Let us look at the real data for this zip code in Burbank:

In the latest month of data five homes sold for this zip code. The MLS has 31 homes listed. A little over 6 months of data. On the surface this seems healthy. But look at the shadow data. 130 homes are here. Now one of the big concerns in the last report was how many homes are double counted. Not much. The 91501 has 3 foreclosures listed publicly of the 14 REOs. That is a tiny number. So in total we have 161 properties listed minus the 3 double counts (1.8 percent of the pool) and we have over 31 months of housing inventory if we use shadow inventory figures. Plus, how many homes in this area are 90+ days late with no notice of default filed? But you are skeptical. Fine. Let us run an example. In fact, let us run a fresh example (just listed on 1/5/2010):

Given the e-mails I get from readers, this is probably a sample of the most sought after “starter home” for people that read Real Homes of Genius. They’re looking for a prime city with the cache that’ll make them feel like they’ve made it. It is the same fuel that led many to over leverage but this time, you actually have to have the income to back up your bet and not go gangbusters with an Alt-A or option ARM product to leverage yourself into disaster. Yet prime mortgage defaults are now soaring because the fact that you can buy something doesn’t mean that you can afford it or that employment is still hemorrhaging.

The above home is one example of why we still have much correcting to do in many markets. This is a 4 bedrooms and 2 baths home that is listed at 3,219 square feet. A rather large sized home for a starter but a good structure for working professionals. This home is banked owned but the history of what occurred shows us that delaying the inevitable doesn’t delay a meeting with financial reality:

Let us walk through what happened here. The home was purchased in August of 2007 for $905,000. Amazing and thoughtful Countrywide thought it would be prudent to make the first and second mortgage on this property:

First Mortgage: $614,500

Second Mortgage: $200,000

Total: $814,500

So it looks like these buyers actually came in with 10 percent down ($90,500) if I’m working the numbers out correctly. So even in August of 2007 right when the market was in full implosion Countrywide decided to make a loan at peak value on a property that was “valued” at almost one million with only 10 percent down. Is it any wonder why many Alt-A loans are simply exploding on the balance sheet of banks?

So the home is now purchased. Less than one year in, the borrower is already having problems. The notice of default was filed on September of 2008:

09/04/2008: NOD Filed for $26,461

Now this is what people forget about mega California mortgages. If you miss a payment on say a home in practically any other state, you fall behind $1,000 or so a month. So after the NOD if it is filed after 3 months, you may owe somewhere around $3,000 to $4,000 depending on late fees and penalties. Catching up on that is doable. Try catching up to $26,461 when you are already struggling.

So if the NOD was filed in September of 2008, this probably means the borrowers started missing full payments back in June or July of 2008. Now here is where the process drags out and shadow inventory builds. So the NOD is put on the place in 09/2008 and the first auction is scheduled in January of 2009. Then, it looks like another auction is placed in March of 2009. When is the home finally taken over? By October of 2009. Now do you think this borrower was making payments all that time? Yet the process isn’t complete. Only on Tuesday of this week was the home listed! So let us recap the time it took from first missed payment to MLS listing:

June/July of 2008 first missed payment to January 5, 2010 MLS (18 to 19 month process)

And what is the current listing price?

List Price: $699,900

So the bank is simply writing off that second mortgage completely and hoping to recoup on the first. These kind of cases simply point to a major drawn out housing market for the state. When we consider all the option ARMs and Alt-A loans, many people are going to face similar problems.

It is troubling to see so many people eager to jump on any home even if they have to spend every hard earned penny they have saved during the bubble times (they assume the bubble has fully burst). They somehow think the market has already bottomed. It has not.

Now you might say, people in this zip code of Burbank must be making tons of money. Let us take a look:

It would take over 12 times the median annual income of this zip code to purchase this home! That is flat out bubble land to the next dimension. I mean run the numbers. Let us assume you go with an FHA insured loan with 3.5 percent down:

Down Payment: $24,365

The family looking to buy this home will need an income of $200,000 which doesn’t seem to be reflected from the income tax data pulled for this zip code. Let us run the net income numbers for someone not living in the area:

So even assuming a family with a $200,000 household income wants to buy this home, nearly 50 percent of their net pay is going to their housing payment. That is nuts! Plus, the median household income for the area is not even close to $200,000 but $56,000. This is why California is still largely facing major pocket bubbles in areas like Burbank, Culver City, and Pasadena to name a few.

Incomes do matter by the way. And one thing people forget is that over 40 years, the average 30 year fixed mortgage hovered around 9 percent. You want to run the numbers at 9 percent?

Let us assume you buy this home. In a few years, rates go up to 9 percent. A family looking to buy this home at the current price, no price adjustment, will now need an income of $263,000! And keep in mind mortgage rates can’t go any lower. The Federal Reserve has now gambled the entire security of our nation’s well being. They have purchased some $1.25 trillion in mortgage backed securities since no one else in their right mind would buy these toxic products. That game is going to end badly and rates will go up once that hits as is typical in any high risk investment. When? Who really knows but making a bet on California housing right now is a major gamble. If you feel the need to gamble go to Vegas and satisfy your need. At least there your odds in some games are close to fifty-fifty. In California housing, it is hard to see how you’ll win in many cases.

Ben Pavone, California Lawyer Refuses to Pay Bank of America Credit Card, Threatens to Sue

2010-01-05T16:40:00.003+01:00

Ben Pavone told Bank of America in a letter last week that he refuses to pay off his credit card debt until the bank lowers his interest rate. And, he added, if they try to ruin his credit, he'll sue 'em.

"They've got to have some kind of obligation to not totally extort the public," said Pavone.

The San Diego, Calif. attorney is angry about two things: his interest rate, which has gone up to 27.99 percent, and his credit limit, which has gone down to just above his balance. "I'm sure I'm going to be hit with penalties," he said.

Pavone said he got "squeezed for cash" and asked Bank of America to raise his credit limit in October. The bank responded with a two-page letter. The first page declined the request; the second told him his limit would be reduced from $32,100 to $30,400. Bank of America cited "economic trends" in both decisions.

"I consider your action an anticipatory repudiation of the contract and am treating you as in breach," he wrote in a Dec. 31 letter to the bank. "I am therefore not paying the money that is currently due on January 3, 2010 out of protest."

Pavone said he got the protest idea from Ann Minch, the Red Bluff, Calif. woman who launched a "debtors' revolt" via YouTube in September. Minch won imitators and also a reduced interest rate on her own card. Pavone, Minch et al are all asking the same question: Why is it fair for bailed-out banks to reward themselves with bonuses and at the same time to soak taxpayers who've done nothing wrong?

"For the record, I have a perfect payment history and I have a nearly perfect payment record on my credit," Pavone's letter continued. "I have no doubt that you will mark my credit in light of this default, but if you do, I will sue you. I am eager to argue to a court that your interest rates are unfair within the meaning of various state and federal statutes, and anxious to point out that you 'had' to cut my credit limit from $32,000 down to $30,000 at the same time you were borrowing billions from the federal government and paid your executive bonuses in full."

The letter concludes by asking the bank to reduce his rate to 10.99 percent, after noting that it would probably cost less to reduce the rate than to have to fight the suit.

Story continues below
Bank of America does not comment about individual customers. Regarding credit limits, a spokeswoman wrote, "In general, we monitor accounts for risk and may adjust customers' lines up or down as appropriate based on the risk profile and performance with us."

Ed Mierzwinski, program director for consumer advocacy group U.S. Public Interest Research Group, told HuffPost that Pavone's got the right idea -- it would be easier for the bank to cut a deal with Pavone than to deal with him in court, which is a distinct possibility since the bank abandoned mandatory arbitration in the fall.

"The banks respond to the squeaky wheel," wrote Mierzwinski in an email. "ANY consumer who complains has a better chance than those who do not."

As for the legal theory of Pavone's possible lawsuit, consumer law experts say he just might have a case. Pavone said a possible suit would allege unconscionability. When jacking up interest rates, credit card lenders typically provide notice and an opportunity for cardholders to refuse the higher rate and settle their accounts at the current rate -- nothing unconscionable about that. But maybe Bank of America breached good faith by reducing the limit to a level that would likely incur fees and damage Pavone's credit report.

"Banks have done really well figuring out ways to screw people without making themselves legally liable," said Ira Rheingold, director of the National Association of Consumer Advocates. "I think [the limit reduction] is another example of Bank of America's venality. Whether or not it's a successful lawsuit, I don't know. Whether I think it ought to be challenged -- absolutely."

Lawsuits against big banks are not totally unwinnable. In November a federal judge refused to dismiss a class-action claim against Chase filed by customers who said the bank acted in bad faith when it raised minimum monthly payments from 2 percent to 5 percent on fixed-rate cardholders.

Buying a home is a lousy investment: Fed Economist, Karen Pence

2010-01-05T16:34:00.006+01:00

By Jon Hilsenrath
Before the housing bust, Americans tended to think their homes were their best and most important investments –- a view promoted by Washington policy makers who made home ownership a top priority. Karen Pence, who runs the Federal Reserve’s household and real estate finance research group, argues at the American Economic Association’s meetings this week that homes are actually a terrible investment.

Putting aside the fact that home prices have fallen dramatically, she says several factors make homes a lousy investments:

It is an indivisible asset. If you own stocks and bonds and suddenly need a little cash, you can sell some of your stocks or bonds but not all. With a home, on the other hand, “you can’t just slice off your bathroom and sell it on the market.”
It is undiversified. You can buy stocks or bonds in industries or countries all over the world. A home is a bet on one single neighborhood.
Transaction costs are very high when you buy or sell a home because of real estate agent fees, mortgage fees and moving costs.
It is asymmetrically liquid, meaning it’s easy to get money out when home prices are going up. (You just take out a bigger mortgage.) But it’s hard to take money out when prices are going down because refinancing becomes more difficult. Put another way, the leverage that you have in your house with a large mortgage means your investment does well in good times but could be lousy in bad times.
It is highly correlated to the job market, meaning that home prices in a neighborhood tend to rise when the job market is improving in the area and fall when the job market is worsening. This means that your main financial asset provides the smallest cushion to you when you might need it most.
Maybe Washington policy makers shouldn’t work so hard to promote ownership with mortgage interest deductions and other federal subsidies to homeowners. Ms. Pence has been a Washington renter for many years. Ironically, though, she says she’s considering buying a house herself. The reason: Her husband wants a dog and wants to start gardening. That means moving out of the apartment.

5 times more housing inventory than publicly disclosed.

2010-01-03T17:22:00.002+01:00

Unlocking the Foreclosure Box – The Most Comprehensive Shadow Inventory Housing Analysis for Los Angeles County. Examining 269 Zip Codes and Finding 100,000 Shadow Properties while Public Views 19,000.

For the full story including great charts go to: http://www.doctorhousingbubble.com/foreclosure-box-the-most-comprehensive-shadow-inventory-housing-analysis-for-los-angeles-county-examining-269-zip-codes-and-finding-100000-shadow-properties-while-public-views-1900/#comment-43776

One resolution I had coming into 2010 was getting a better number for the shadow inventory in Southern California. It is rather clear that shadow inventory is a real factor in the current market but how big is this inventory? Can we really get an accurate figure for a large area like Los Angeles County? Well this is something I set out to do. The trouble with the current numbers is they are derived from a variety of sources. First, you need to pull MLS data for each of the 269 zip codes in Los Angeles County. This is the largest county in California with approximately 9,700,000 people living here. It provides an excellent cross section of all the ills California housing is currently experiencing. If we can get a handle on the actual shadow inventory for this area we can put together a better picture of the housing market for 2010.

The California housing market for 2010 is going to deal with the heavy flow of Alt-A and option ARM products hitting in conjunction with prime mortgages that are no longer able to remain current in this troubled economy. Let us first define shadow inventory at least how we perceive it. Some narrowly define shadow inventory as REO properties that are not on the MLS. This definition is wrong and too limited because it misses the bigger piece of the pie. That piece includes homes scheduled for auction and homes with a notice of default filed (NOD) that have yet to make it onto the MLS. Some argue that these homes are not shadow inventory because there is a chance they will become current and have no need of being on the MLS for sale. This is misguided because only 3 to 5 percent of these mortgages will be cured so the bulk will eventually end up as foreclosures and will get on the MLS at some point. This is what we can measure. Yet I would also argue that there is another layer of homes that are currently 90+ days late that have no NOD filed and these are also part of the shadow inventory.

I painstakingly over a few days pulled data on all 269 zip codes for Los Angeles County to get a better picture of what is really going on. Data was pulled from a variety of sources including the MLS, foreclosure filings, and DataQuick to name a few. Putting this together gives us a fascinating picture:

Here is the real story. The purple column is the MLS viewable data by the public. According to this data L.A. County as of the start of 2010 has approximately 19,400 homes. In November 6,257 homes sold in the county. This gives us some 3 months of inventory (a healthy amount). Yet that is probably where the normalcy ends. Let us go through each column. First, we have more homes in pre-foreclosure than the entire MLS data. These are homes that now have a notice of default filed. Next, we have homes that have an auction scheduled. These homes are deeper in the foreclosure process. This number is enormous and by itself is almost twice the size of the MLS data. Next, we have bank owned homes that is usually what some look at when they define shadow inventory. It becomes clear why some like to skew the data. Banks are lagging and when you only look at REOs, then it doesn’t look so bad. Yet this assumption falsely sits with the notion that the NOD and auction column are somehow going to miraculously cure with some programs like HAMP. Yet the data on HAMP is proving otherwise with roughly 4 percent of trial modifications becoming permanent. Add the shadow data columns up and you get a hidden inventory that is nearly 3 times the MLS data. The difference is 3 months of inventory versus nearly 14 months of inventory.

What does this mean? There is a tremendous amount of property in distress. Until this calms down the market is going to remain highly volatile. I also wanted to look at which zip codes had the largest number of shadow inventory in relation to the MLS data. As you would expect, more troubled areas have a larger number of shadow inventory but you’ll be surprised how many zip codes have more shadow inventory than MLS data:

Now this data is fascinating. Let us dig around the data to help explain what is going on. First, you’ll notice that the top 10 shadow inventory zip codes all fall around $300,000 except for one area. This would be expected since many of these areas are the most troubled. Let us use one of the examples above with Pacoima. Pacoima on the MLS has 118 properties listed. In the latest month of data 62 homes sold. So to the public, this looks like a city with less than 2 months of inventory, a very healthy market. Yet if we add up the shadow data a very different picture emerges:

NOD (318) + Auction (630) + REO (148) = 1,096 shadow inventory properties

Add in the shadow data with the MLS data and you go from below 2 months of inventory to a whopping 19.5 months of inventory. This is why this is so crucial. It is the difference in a relatively healthy market and a very unhealthy one.

As I mentioned before, I pulled data on all 269 zip codes in Los Angeles County. I wanted to get a better sense how disbursed shadow inventory really was. Some want to paint a picture that only poor areas are subject to large amounts of hidden inventory. That is not the case:

Out of 269 zip codes only 26 zip codes had less shadow inventory than what was appearing on the MLS. 206 zip codes actually have shadow inventory that is twice the size of the publicly viewable MLS data. Even more troubling 75 zip codes have shadow inventory that is five times the MLS data. This data is compelling enough to make you pause because what is being presented is not the entire picture.

Let us get a better picture of L.A. County by pulling up demographic information:

In L.A. County 1.178 million homes have a mortgage. Over 350,000 have no mortgage. Of those with a mortgage over 400,000 are underwater. This shows us a market that is in high distress. Simply looking at the MLS data and going by what the banks are telling us is really giving you a distorted picture of reality. The market is saturated with distress inventory to the point of overflowing the above charts. Over 90,000 homes with a mortgage are now 90+ days late. And here is where we jump even deeper into the rabbit hole. Of active distress properties (NOD + scheduled auction) we get roughly 60,000 homes. We’ll leave out the nearly 9,000 REOs since these are now fully categorized as “foreclosed” and are owned by the bank. So you have another 30,000 homes in L.A. County that are 90+ days late but have no notice of default filed. What is going on here? It could be that it is still early in the process. But what is more likely is that banks are simply stalling out the process. Unfortunately we do not have access to this data since this is where banks keep their Enron style accounting statements.

If you add the entire potential data:

90+ days late but not NOD + NOD filed + Auction Scheduled + REO = Approximately 100,000 homes

Los Angeles County has roughly 100,000 homes as part of the shadow inventory. This is an enormous number given that the MLS only lists 19,400 homes. In other words, the potential pool of properties in the county is five times as large as the public is currently seeing. And these are properties that are in distress. At the very minimum this is a borrower that has missed three mortgage payments. The likelihood of future foreclosure is extremely high. How many of these homes are Alt-A or option ARM connected? Hard to say but we can easily estimate that the vast majority of the shadow inventory that is also part of the Alt-A and option ARM circle is virtually assured to default.

Some areas seem to have very little shadow inventory but it is in the area where the fewest people live:

Now as you will notice the median price of all these areas is solidly above the $1 million mark. But even here, you’ll notice the large amount of inventory. A place like Beverly Hills with the iconic 90210 zip code has over 28 months of inventory if we also include the shadow data. But this isn’t uncommon in high priced areas.

Now it would be cumbersome to show all 269 zip codes here but given that I have covered Culver City, Pasadena, and Santa Monica in the past I’m sure many of you would like to see that data:

The same patterns play out in these areas. Factoring in the shadow inventory the data takes a different shape. There are many factors that are going to determine where housing will head in 2010 but the above is rather clear. Shadow inventory is large in L.A. County and I would imagine an analysis of many other counties would yield similar results.

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Noam Chomski about American style militarism

2010-01-02T02:24:00.004+01:00

C-J
I believe that Noam Chomski is a first rate intellectual, but he is basically an anarchist with tenure at MIT and he doesn't have to work. Nevertheless, he has interesting concepts that need to be publicly aired.
C-J

“Smart Power” and “Bear Traps” in the Hindu Kush

2010-01-02T02:20:00.001+01:00

By M.K. Bhadrakumar (India)

January 01, 2010 "SCF" -- The US President Barack Obama threw down the gauntlet at the regional powers with his latest Afghan strategy. The constructive ambiguity in his strategy falls in the Kissingerian tradition of negotiating tactic. In a climate of deeply polarized political opinion, he is free to advance matters of vital US interests, while retaining the prerogative to revisit unresolved questions at a date of his choice.

This leaves major regional powers – Pakistan, Iran, India, China and Russia – in some quandary. Obama taunted them to respond within 58 days when they assemble for the London conference on “Afghanisation” on January 28. That’s a tough call.

To be sure, the regional powers are placed at a disadvantage as their internecine tensions preclude scope of a regional initiative materializing. Obama’s strategy is all that is left, therefore, on the table. Pakistan and India are locked in adversarial embrace and that creates much geopolitical space for the US. No doubt, the US military presence seriously destabilized Pakistan. The latest anti-Shi’ite serial terrorist strikes in Karachi testify that in the name of the Taliban, all sorts of forces are operating inside Pakistan – ranging from the CIA to the Blackwater security firm to Wahhabi elements. Pakistan faces a stark choice – fall in line with the US geo-strategy and earn American goodwill, or face the consequences of recalcitrance.

As for the India, Washington holds out the comfort line that Obama is bent on “stabilizing” Pakistan. Washington’s noble endeavour of cleansing Pakistan of militancy pleases Delhi although there is some ennui. At any rate, Delhi is raring to contribute to the “Afghanisation” of the war. Being a natural ally, there is no choice but to cooperate with Washington’s entreaties. On top of it all, there is the larger preoccupation of “catching up” with China’s surge, which modulates the Indian mind at all hours.

Iran presents a case by itself. The US has succeeded in shaking the foundations of Iran-Russia strategic understanding, which was a historic legacy of Evgeniy Primakov’s astute diplomacy with his Iranian counterpart Ali Akbar Velayati to bring the bloody Tajik civil war to an end. The erosion of Russia-Iran understanding enables Washington to make the brazen attempt at “regime change” in Tehran. The geopolitics of the Greater Middle East hangs in the balance. Of course, Tehran withstood ferocious US assaults in the past and the revolutionary heritage is far from dissipated. Also, China’s continued support impacts on the co-relation of forces.

China’s role is immensely important also with regard to the efficacy of the US policy toward Pakistan. The US ability to “pressure” China is limited and hence Washington’s smart overture for a Sino-American joint venture in South Asia. But China remained reticent, keeping in mind the “big picture” of the security inter-linkages of Xinjiang with Central Asia, Afghanistan and Pakistan.

America keenly wanted China to wet its toes in the fight against al-Qaeda and Taliban but the latter knew a military involvement could prove to be a dangerous gambit. Pakistan presents itself as a showcase of the “collateral damage” of the US-led war. China, which was an accomplice of the Americans in the great Afghan jihad of the 1980s against the Soviet Union, would also know that the US has incredible methods of “synergizing” militant Islam – and, in the present case, Xinjiang’s stability is involved.

The US is conscious that China (and Russia) does not share its predicament of being in the crosshairs of the Islamists operating in the Hindu Kush. While it got bogged down in a security quagmire, China wisely focused on commerce. Life can be cruel at times. As the doughty scholar on Xinjiang, Frederick Starr told the New York Times, “We [US] do the heavy lifting. And they [China] pick the fruit”.

Thus, in a startling show of “smart power”, the US has presented Taiwan with an invitation to render “non-military” assistance to Afghanistan. It is an invitation that Taipei cannot spurn, as it comes alongside a huge US arms package and in the downstream it holds out the tantalising prospect that Taipei may look a rising star. Arguably, Washington is cocking a snook at Beijing for its refusal to cooperate with Obama’s Afghan (or Iranian) strategy by muddying the waters in the Taiwan Straits.

Russia’s position is equally delicate. Obama’s war is helpful for Russia to the extent that it may arrest the march of Islamism into the heart of Central Asia. Russia has provided supply routes for the NATO countries. Conceivably, Russia regards cooperation in Afghanistan to be helpful for the “reset” of its US ties. Now comes the testy part. Like with China, Washington wants Moscow to wet its toes in the Afghan war. It wants Moscow to supply weapons and to dispatch military advisors to train Afghan armed forces.

However, the fact remains that although the overall atmosphere of ties with the US has improved, the reset as such remains hostage to a range of issues – missile defence, NATO expansion, Moscow’s acquiescence with the containment strategy toward Iran, etc. Meanwhile, in bits and pieces, what emerges is also that far from lapsing into an isolationist policy, the US is searching for a robust geopolitical engagement in the post-Soviet space in Central Asia.

In effect, Washington wants Moscow to help consolidate the US military presence in Afghanistan, which would pave the way for an expansion of American influence in the Greater Middle East, including Central Asia. Unsurprisingly, Russia seems to face a dilemma somewhat similar to China’s but then, Russia-US engagement has a far more complicated history. Obama’s emphasis on “Afghanisation” is welcome. But the medium and long-term US intentions remain obscure. All evidence points toward a long-term – even open-ended – US military presence in Afghanistan. Any lingering doubt was dispelled when in front of the crème de la crème of the American Right, gathered under the canopy of the Heritage Foundation in Washington, DC, Senator McCain openly vowed to be Obama’s “ally in this effort”.

McCain is an indefatigable warrior who leaps out of Zbigniew Brzezinski’s Eurasian chessboard. McCain saw three great virtues in Obama’s Afghan strategy. First, Obama affirmed a “counterinsurgency” (as against “counterterrorist”) strategy, which was what the Pentagon passionately sought. Second, “large numbers of US combat troops will likely remain in Afghanistan long after July 2011”. Three, following from the above, the US will remain the “only actor in the region with the strength and the stake” to “check and counter” external influences that are “unhealthy” and to ensure on a long-term footing that Afghanistan ceases to be “a field of regional competition and proxy battles”.

McCain summed up with total clarity of mind that “our [US’s] regional strategy must turn military gains [in Afghanistan] into diplomatic leverage outside the country”.

In fact, the US strategy of widening the gyre of the Afghan strategy to draw in the Central Asian states, is steadily gaining momentum. A study conducted recently by the influential Center of Strategic and International Studies in Washington titled “The Northern Distribution Network and the Modern Silk Road” (co-authored by Starr) proposes the coalescing of Central Asia with the AfPak as the crucial underpinning of the entire US geo-strategy towards Greater Middle East, Russia and China.

As diplomats from the regional capitals warily trudge toward the London conference on “Afghanisation”, there will be a lot on their mind. Is “Afghanisation” a genuinely collective effort under UN leadership? Or is it a mere “bear trap” under a new rubric? There hangs a tale. The chilling reality is that Taliban, too, will be watching – having made clear it will look back in anger at foreign powers that associate with the US’s intervention in the three-decade old fratricidal war.

Copyright Strategic Culture Foundation

Are you terrorized, yet?

2009-12-30T16:06:00.006+01:00

My government assumes that I am afraid and can be terrorized. Screw them!! I want my freedoms preserved not abused by a government which is infected with people who want to control all aspects of my life. A recent study shows that 71% of our lives and freedoms are now in the grasp of a powerful centralized government. Americans have been manipulated into a fear based existence and have become easily manipulated by religious idiots, government rats and a duplicitous and compliant media.

Listen carefully to what Ron Paul says. Since he is an elected official he has to tip toe around some facts. The powerful interests behind the destruction of America would be more than willing to attack him for honestly warning America of the malefactors controlling America.

Lord Monckton reports on Pachauri’s eye opening Copenhagen presentation

2009-12-18T01:08:00.003+01:00

Thursday, Dec 17th, 2009

From The Viscount Monckton of Brenchley in Copenhagen

In the Grand Ceremonial Hall of the University of Copenhagen, a splendid Nordic classical space overlooking the Church of our Lady in the heart of the old city, rows of repellent, blue plastic chairs surrounded the podium from which no less a personage than Dr. Rajendra Pachauri, chairman of the IPCC, was to speak.

I had arrived in good time to take my seat among the dignitaries in the front row. Rapidly, the room filled with enthusiastic Greenies and enviro-zombs waiting to hear the latest from ye Holy Bookes of Ipecac, yea verily.

The official party shambled in and perched on the blue plastic chairs next to me. Pachauri was just a couple of seats away, so I gave him a letter from me and Senator Fielding of Australia, pointing out that the headline graph in the IPCC’s 2007 report, purporting to show that the rate of warming over the past 150 years had itself accelerated, was fraudulent.

Would he use the bogus graph in his lecture? I had seen him do so when he received an honorary doctorate from the University of New South Wales. I watched and waited.

Sure enough, he used the bogus graph. I decided to wait until he had finished, and ask a question then.

Pachauri then produced the now wearisome list of lies, fibs, fabrications and exaggerations that comprise the entire case for alarm about “global warming”. He delivered it in a tired, unenthusiastic voice, knowing that a growing majority of the world’s peoples – particularly in those countries where comment is free – no longer believe a word the IPCC says.

They are right not to believe. Science is not a belief system. But here is what Pachauri invited the audience in Copenhagen to believe.

1. Pachauri asked us to believe that the IPCC’s documents were “peer-reviewed”. Then he revealed the truth by saying that it was the authors of the IPCC’s climate assessments who decided whether the reviewers’ comments were acceptable. That – whatever else it is – is not peer review.

2. Pachauri said that greenhouse gases had increased by 70% between 1970 and 2004. This figure was simply nonsense. I have seen this technique used time and again by climate liars. They insert an outrageous statement early in their presentations, see whether anyone reacts and, if no one reacts, they know they will get away with the rest of the lies. I did my best not to react. I wanted to hear, and write down, the rest of the lies.

3. Next came the bogus graph, which is featured three times, large and in full color, in the IPCC’s 2007 climate assessment report. The graph is bogus not only because it relies on the made-up data from the Climate Research Unit at the University of East Anglia but also because it is overlain by four separate trend-lines, each with a start-date carefully selected to give the entirely false impression that the rate of warming over the past 150 years has itself been accelerating, especially between 1975 and 1998. The truth, however – neatly obscured by an ingenious rescaling of the graph and the superimposition of the four bogus trend lines on it – is that from 1860-1880 and again from 1910-1940 the warming rate was exactly the same as the warming rate from 1975-1998.

click to enlarge
4. Pachauri said that there had been an “acceleration” in sea-level rise from 1993. He did not say, however, that in 1993 the method of measuring sea-level rise had switched from tide-gages to satellite altimetry against a reference geoid. The apparent increase in the rate of sea-level rise is purely an artefact of this change in the method of measurement.

5. Pachauri said that Arctic temperatures would rise twice as fast as global temperatures over the next 100 years. However, he failed to point out that the Arctic was actually 1-2 Celsius degrees warmer than the present in the 1930s and early 1940s. It has become substantially cooler than it was then.

6. Pachauri said the frequency of heavy rainfall had increased. The evidence for this proposition is largely anecdotal. Since there has been no statistically-significant “global warming” for 15 years, there is no reason to suppose that any increased rainfall in recent years is attributable to “global warming”.

7. Pachauri said that the proportion of tropical cyclones that are high-intensity storms has increased in the past three decades. However, he was very careful not to point out that the total number of intense tropical cyclones has actually fallen sharply throughout the period.

8. Pachauri said that the activity of intense Atlantic hurricanes had increased since 1970. This is simply not true, but it appears to be true if – as one very bad scientific paper in 2006 did – one takes the data back only as far as that year. Take the data over the whole century, as one should, and no trend whatsoever is evident. Here, Pachauri is again using the same statistical dodge he used with the UN’s bogus “warming-is-getting-worse” graph: he is choosing a short run of data and picking his start-date with care so as falsely to show a trend that, over a longer period, is not significant.

9. Pachauri said small islands like the Maldives were vulnerable to sea-level rise. Not if they’re made of coral, which is more than capable of outgrowing any sea-level rise. Besides, as Professor Morner has established, sea level in the Maldives is no higher now than it was 1250 years ago, and has not risen for half a century.

10. Pachauri said that if the ice-sheets of Greenland or West Antarctica were to melt there would be “meters of sea-level rise”. Yes, but his own climate panel has said that that could not happen for thousands of years, and only then if global mean surface temperatures stayed at least 2 C (3.5 F) warmer than today’s.

11. Pachauri said that if temperatures rose 2 C (3.5 F) 20-30% of all species would become extinct. This, too, is simply nonsense. For most of the past 600 million years, global temperatures have been 7 C (13.5 F) warmer than today, and yet here we all are. One has only to look at the number of species living in the tropics and the number living at the Poles to work out that warmer weather will if anything increase the number and diversity of species on the planet. There is no scientific basis whatsoever for Pachauri’s assertion about mass extinctions. It is simply made up.

12. Pachauri said that “global warming” would mean “lower quantities of water”. Not so. It would mean larger quantities of water vapor in the atmosphere, hence more rain. This is long-settled science – but, then, Pachauri is a railroad engineer.

13. Pachauri said that by 2100 100 million people would be displaced by rising sea levels. Now, where did we hear that figure before? Ah, yes, from the ludicrous Al Gore and his sidekick Bob Corell. There is no truth in it at all. Pachauri said he was presenting the results of the IPCC’s fourth assessment report. It is quite plain: the maximum possible rate of sea-level rise is put at just 2 ft, with a best estimate of 1 ft 5 in. Sea level is actually rising at around 1 ft/century. That is all.

14. Pachauri said that he had seen for himself the damage done in Bangladesh by sea-level rise. Just one problem with that. There has been no sea-level rise in Bangladesh. At all. In fact, according to Professor Moerner, who visited it recently and was the only scientist on the trip to calibrate his GPS altimeter properly by taking readings at two elevations at least 10 meters apart, sea level in Bangladesh has actually fallen a little, which is why satellite images show 70,000 sq. km more land area there than 30 years ago. Pachauri may well have seen some coastal erosion: but that was caused by the imprudent removal of nine-tenths of the mangroves in the Sunderban archipelago to make way for shrimp-farms.

15. Pachauri said we could not afford to delay reducing carbon emissions even by a year, or disaster would result. So here’s the math. There are 388 ppmv of CO2 in the air today, rising at 2 ppmv/year over the past decade. So an extra year with no action at all would warm the world by just 4.7 ln(390/388) = 0.024 C, or less than a twentieth of a Fahrenheit degree. And only that much on the assumption that the UN’s sixfold exaggeration of CO2’s true warming potential is accurate, which it is not. Either way, we can afford to wait a couple of decades to see whether anything like the rate of warming predicted by the UN’s climate panel actually occurs.

16. Pachauri said that the cost of mitigating carbon emissions would be less than 3% of gross domestic product by 2030. The only economist who thinks that is Lord Stern, whose laughable report on the economics of climate change, produced for the British Government, used a near-zero discount rate so as artificially to depress the true cost of trying to mitigate “global warming”. To reduce “global warming” to nothing, one must close down the entire global economy. Any lesser reduction is a simple fraction of the entire economy. So cutting back, say, 50% of carbon emissions by 2030, which is what various extremist groups here are advocating, would cost around 50% of GDP, not 3%.

17. Pachauri said that solar and wind power provided more jobs per $1 million invested than coal. Maybe they do, but that is a measure of their relative inefficiency. The correct policy would be to raise the standard of living of the poorest by letting them burn as much fossil fuels as they need to lift them from poverty. Anything else is organized cruelty.

18. Pachauri said we could all demonstrate our commitment to Saving The Planet by eating less meat. The Catholic Church has long extolled the virtues of mortification of the flesh: we generally ate fish on Fridays in the UK, until the European Common Fisheries Policy meant there were no more fish. But the notion that going vegan will make any measurable impact on global temperatures is simply fatuous.

It is time for Railroad Engineer Pachauri to get back to his signal-box. About the climate, as they say in New York’s Jewish quarter, he knows from nothing.

Our earth has experience climate change before

2009-12-16T17:14:00.008+01:00

Climates change all the time. Temperatures vary from hour to hour, day to day, season to season, year to year, eon to eon, millennium to millennium and epoch to epoch. Climate change does not affect every place on the earth the same. Some areas will become more desirable as the climate cools or warms. Just ask a duck or goose that flies from North to South and back again every year. Or better ask a "Snow Bird" Canadian that migrates from north to south and back again every year. It was always the human condition to migrate during ancient times. Why live out the winter on top of a snow cap when the coast is warm and breezy during the winter? Cattlemen move their cattle from high country to low country grazing grounds very winter, it's the obvious thing to do. Al Gore wants to change the weather rather than adapt, adaptation is more "green" than phony climate religion.

The Mini-ice age of 1810

2009-12-14T17:53:00.003+01:00

Global warming is our current focus, but from 1810 to 1819, people worried because the planet was far colder than usual, with the planet cooling almost a full degree Fahrenheit. 1816 according to climate historians was known as "the year without a summer."

The chill of 1816 has long been blamed on an Indonesian volcano called Tambora, which erupted the year before. But why the years before Tambora's eruption were also colder than usual was a mystery. Newly uncovered evidence in the ice of Antarctica and Greenland suggests that another volcanic eruption may have contributed to the worldwide dip in temperatures.

Jihong Cole-Dai, a chemistry professor at South Dakota State University, led the expeditions to Antarctica and Greenland, told NPR's Guy Raz in an interview that volcanoes dump large quantities of ash and sulfur dioxide into the atmosphere, which acts "like a giant window shade, reflecting sunlight and lowering temperatures on the ground for years afterward."

But Cole-Dai empasizes that one eruption isn't enough to freeze an entire decade. He knew something else had to have been going on which turned out to be layers of sulfur buried in ice cores from Greenland and Antarctica that showed another volcano had erupted some time in 1809, triggering a mini ice age.

Cole-Dai said his research team isn't sure exactly where the mystery volcano is, but they suspect that it was somewhere near the equator and that it had to be large enough to blanket the planet in ash.

Casey Kazan
Source: http://www.npr.org/

Climate Change; Monckton is so articulate when speaking to people.

2009-12-13T18:29:00.003+01:00

Pertinent facts by Lord Monckton;

1: There has been climate change for the last 4 Billion years.

2: Why are you against it now?

3: The United Nations, in it's calculations, shows that over the last 20 years we (humans) could not have had any effect on climate. If so is it a very recent effect that we might have had?

4: If there has been global warming during the last 300 years, have we (humans) suddenly during the last 20 years done something that really changes the climate?

5: In the last 10 years the global temperature has decreased .05 degrees and during the last 15 years there has been no statistically significant increase. In fact we have had cooling for the last 9 years.

6: In the last 30 years there has been virtually no change in the amount of sea ice in the world. The University of Illinois which keeps all the arctic and antarctic ice records, their records show almost no change of in the last 30 years of the sea ice extent.

7: The NOAA records there has no statistically significant increase in land falling Atlantic hurricanes on the coast during the last 150 years.

8: The combined intensity, frequency and duration of all hurricanes, typhoons, and tropical cyclones around the world reached it's lowest point in 30 years just 2 months ago.

Don't believe anything before checking it out. This isn't about belief (religion) it's about science.

According to the World Meteorological Organization, Arctic sea ice has increased by 19 percent since its minimum in 2007

U.S. To Pay $3.4 Billion to Settle Native American Suit

2009-12-11T21:22:00.001+01:00

C-JThe size of the award is obviously large, what bothers me most is who stole their money? Will the perps be prosecuted for using Indian Trust funds for their own personal profit? C-J

By Ashby Jones

Associated Press
Elouise Cobell, the lead plaintiff, with Interior Secretary Ken Salazar on Tuesday. Attorney General Eric Holder is at right. Photo: Manuel Balce Ceneta/Associated Press. Federal Indian law — or the law pertaining to the land and other holdings owned by Native Americans — isn’t a typical area of coverage for us. But when a lawsuit between Native American and the U.S. government settles for $3.4 billion, well, we sit up and take serious notice.

The federal government announced on Tuesday that it intends to pay that sum to settle claims that it has mismanaged the revenue in American Indian trust funds. According to the NYT’s account, the settlement could end one of the largest and most complicated class-action lawsuits ever brought against the United States.

According to the NYT story, the Interior Department manages about 56 million acres of Indian trust land scattered across the country. The government handles leases on the land for mining, livestock grazing, timber harvesting and drilling for oil and gas. It then distributes the revenue raised by those leases to the American Indians. In the 2009 fiscal year, it collected about $298 million for more than 384,000 individual Indian accounts.

The lawsuit accuses the federal government of mismanaging that money. As a result, the Indians contend that they are owed far more than what they have been paid.

Under the settlement, the government would pay to compensate the Indians for their claims of historical accounting irregularities and any accusation that federal officials mismanaged the administration of the land itself over the years.

The lawsuit may not have been this long-running, but it did span three presidencies, generate 22 published judicial opinions, and went before a federal appeals court 10 times.

Elouise Cobell, the lead plaintiff who filed the class-action lawsuit in 1996, said she believed that the Indians were owed more, but that it was better to reach an agreement that could help impoverished trust holders than to spend more years in court. She said she had originally expected the litigation to last only two or three years.

“We are compelled to settle by the sobering realization that our class grows smaller each day as our elders die and are forever prevented from receiving just compensation,“ Cobell said.

Attorney General Eric Holder on Tuesday said: “The United States could have continued to litigate this case, at great expense to the taxpayers. It could have let all of these claims linger, and could even have let the problem of fractionated land continue to grow with each generation. But with this settlement, we are erasing these past liabilities and getting on track to eliminate them going forward.”

Amazing Christmas display

2009-12-08T16:28:00.001+01:00

Amazing Grace Techno - Computer Controlled Christmas Lights from Richard Holdman on Vimeo.

Making Home Affordable Program… Treasury Finally Admits IT’S A DUD!

2009-12-07T19:37:00.000+01:00

From Mandelman Matters

Posted: 06 Dec 2009 05:27 AM PST

Here’s what The New York Times said today about Treasury’s response to the news about the Making Home Affordable Program:

“AFTER months of playing pretend, the Treasury Department conceded last week that the Home Affordable Modification Program, its plan to aid troubled homeowners by changing the terms of their mortgages, was a dud. The 10-month-old program is going nowhere, the Treasury said, because big institutions charged with implementing it are dragging their feet.”

Gee, now there’s some breaking news for you… these guys at the Times, they’re true investigative news hounds, aren’t they? Next week I’m hoping to learn who won the Presidential Election in 2008.

Oh, and by the way, Treasury is nowhere near finished “playing pretend,” as the Times put it. Geithner is the best pretend player in the pretend business. He’s got all the banks pretending they’re solvent and profitable. He’s got them pretending they haven’t lost a dime on commercial property and that the homes they’ve foreclosed on but haven’t sold are still worth what they were when they were purchased or last refinanced.

The only problem is that all this pretending makes the banks look like they’re having a fabulous year, and so the $91 billion the banks have set aside to pay out in bonuses in just a few weeks is not being paid in pretend dollars. I wonder if I can pretend to pay my taxes next year.

The Times story then continued:

“After the government spent hundreds of billions of dollars bailing out banks, the Obama administration rolled out the $75 billion loan modification plan to show its support for beleaguered homeowners. But if the proof of the pudding is in the eating, homeowners are going hungry.”

Is that why Obama rolled out the Making Home Affordable plan? To show his support for the beleaguered homeowners? That’s fascinating. And here I had thought he rolled it out because if he didn’t all the banks would implode as prices continued to fall until everyone just started walking away, leaving the country in a depression and turning his presidency into something that would make G.W. Bush’s presidency look like FDR, Reagan, Kennedy and Clinton all rolled into one. I thought he might have done it because the people that put up the money to bail out the banks that caused this crisis are the same ones watching their homes dive off a cliff in terms of their value. No? Okay then, never mind.

The Times story then went on to point out the obvious:

“A stalled loan modification plan might not be worrisome if the foreclosure crisis were abating. Yet at the end of September, a record 14.4 percent of borrowers were either in foreclosure or delinquent on their mortgages, the Mortgage Bankers Association reported.”

Yes, I suppose that is true. If foreclosures weren’t the biggest problem in the country right now, a stalled loan modification program might be less worrisome. Thank you New York Times for pointing that out. I don’t know what I would have done with out you.

And they went on to say:

“It’s time for the government to acknowledge the flaws in its program and create one that might actually succeed. Only then will the supply of homes for sale, and the pressure on prices associated with that overhang, be reduced.”

Ya’ think? Oh what the heck, we’ve spent the last several years listening to the government not acknowledge much of anything in the way of “flaws,” so what the heck, I suppose it is time.

Personally, since my home has dropped in value by 45% over the last two years, from $900,000 to $500,000, I would have voted yes on the whole “create one that might actually succeed,” thing a tad sooner. Like maybe last year would have been nice. No problem, though… I understand that Obama’s been busy ending the Iraq War, closing Guantanamo Bay, creating millions of jobs, fixing health care, and ending the Don’t Ask, Don’t Tell policy in the military… oh yeah, and bringing home the Olympics for Chicago, don’t want to forget that major victory.

Okay, I don’t want to just sit here being sarcastic about what a monumental mess this whole rescue housing thing has been. Well, I’m not saying that it’s not fun, it is. But, I’d much prefer the government to get something right as related to housing. Just one thing would be nice.

The article talked about re-default rates being too high, which is no surprise when you consider the deflationary collapse we’ve been in for the last couple of years. But the article also pointed out another possible cause of the higher re-default rates:

“The terms of loan modifications also make them especially failure-prone because the government calculates “affordability” (how much mortgage debt a borrower can actually manage) in a highly unusual way — raising serious questions for the housing market over all and for the program’s effectiveness for borrowers.

For example, in devising what it considers an affordable mortgage payment, the program doesn’t account for all of a borrower’s debts — the first mortgage, second lien, credit card debt and automobile payments. Instead, it calculates affordability using only the borrower’s first mortgage payment, insurance and property taxes.

As a result, what may look like an affordable mortgage payment under the Treasury plan quickly becomes onerous when other debt is added. While the government may ignore a borrower’s second lien and revolving credit obligations, you can be sure the creditors that extended those loans will not. Re-defaults seem a likely result.”

Look, if I’m the only one who’s thinking what I’m about to say, would someone please email me so I can have someone put myself out of my misery? Just wait until I’m looking the other way, and smash me in the back of my head with a shovel. If you cared about me at all, you’d do it.

So, the government calculates affordability by not considering anything but the house payment, insurance and property taxes? And the Times finds this to be “highly unusual”? “Highly unusual”? And I suppose I’d be out of line here to suggest that a better phrase might be “incredibly stupid”? I’m sure. I know what you guys think… Mandelman Matters… he’s so sarcastic… he’s funny… I got such a laugh… well… check yourself, because that’s not funny and the fact that you’re not in a tearful rage and gassing up to stand in front of the White House and scream is monumentally sad. Highly unusual, my Aunt Fannie.

The Times story also discussed negative equity as being a leading cause of foreclosures. This is a view that is gaining momentum of late, and I find that both interesting and terribly important. From the very first article that I wrote on this topic, almost two years ago, I used the phrase “foreclosures breed foreclosures,” as a way to try to convey that once the dominoes start falling in the wrong direction, they feed on each other until one foreclosure becomes the proximate cause of the next.

The government, however, began by seeing the foreclosures as being caused by irresponsible sub-prime borrowers taking on too much debt as a result of lax, or even nonexistent lending standards. After a while, the word causing foreclosures was unemployment. Now… finally… our government is recognizing that it may just be negative equity that is driving the volume of foreclosures that much higher. It may have something to do with a recent study conducted at the Kellog School of Management that showed 17% of borrowers will walk away from their mortgages when they’re 45%+ underwater.

Whether negative equity or unemployment is the primary driver of today’s increasing number of foreclosures isn’t important, at least not to me. What is important is that we all come to understand that none of us is immune from being seriously harmed by the ongoing crisis in the housing market, and to the extent that it is allowed to continue to spread, there will be precious few among us that won’t look back and wish we had done more sooner.

As a nation, we don’t want to modify mortgages for the benefit of those in foreclosure, we need to modify mortgages for the benefit of those not yet in foreclosure. Or in other words, don’t modify my neighbor’s mortgage to help my neighbor, modify it to help me.

It helps to consider that mortgage modifications often are not in the best interest of the borrower, especially when the property in question is underwater by a lot. It’s easy to see that when you look at a guy with a $500,000 on a house worth $250,000. Lowering that guy’s interest rate a couple of points for five years and extending the loan out to 40 years… is not for his benefit from a financial perspective.

If you wanted to do something to benefit that borrower, tell him to stop making his payments, live in the house rent-free for as long as possible, and then hand the bank the keys and go rent a beautiful home for a couple of years, at half the amount owed now. That’s what would be in the best interests of the homeowner, not a modification in many instances.

Then there’s the issue of second mortgages and HELOCs. But, the Times story points out:

“Unfortunately, there is a $442 billion reason that wiping out second liens is not high on the government’s agenda: that is the amount of second mortgages and home equity lines of credit on the balance sheets of Bank of America, Wells Fargo, JPMorgan Chase and Citigroup.”

There are messy conflicts between banks or investors when one holds the first and another the second. But the Times story quotes the head of mortgage strategy at Amherst Securities Group, Laurie Goodman, and what she had to say on the topic of principal reductions.

“AN interesting data point: when banks do own all the mortgages on a property they seem to see the merit in principal reduction modifications. Studying second-quarter government data, the most recent available, Ms. Goodman found that when banks owned the loans, 30.5 percent of modifications reduced principal balances. When they service someone else’s loan or hold a second lien on the property, they rarely allow principal reductions.”

Good to know Ms. Goodman, I appreciate that and will look for it from now on.

Perhaps predictably, the Times story does wrap up with a brief paragraph on the perceived “moral hazard,” asking the question, “Why should someone who borrowed too much be given a reduction the amount owed, while someone else who did not act irresponsibly isn’t granted a modification?” To give you an idea of how things have changed, here’s how the story in the Times responded to the “moral hazard” point of view.

“But doing nothing also has hazards, the most obvious being continuing foreclosures, which nobody wants, and further declines in real estate prices that will hurt homeowners as well as investors.”

And, I would like to echo… CAUSE EVEN MORE FORECLOSURES, which ultimately will bankrupt the banks completely, to the point that there won’t be enough money on the planet to paper over the problem.

So, maybe the New York Times has been a tad slow catching on, but now that they’ve started the ball rolling in this regard, perhaps we’re that much closer to solving the problem.

Personally, I think it’s past time for Mr. Geithner to realize that he can’t pretend us into a recovery, and if he doesn’t soon show an understanding of that, then it’s time for the country to stop pretending and put someone into the job of Treasury Secretary that’s a realist… and will really fix what the investment bankers have destroyed.

Oh, and one more thing… sooner would be better than later.

This Little-Known Rule Could Send Gold to $10,000

2009-12-04T18:51:00.001+01:00

By Porter Stansberry
Dec 2 2009 9:10AM

www.dailywealth.com

It's one of those numbers that's so unbelievable you have to actually think about it for a while...

Within the next 12 months, the U.S. Treasury will have to refinance $2 trillion in short-term debt. And that's not counting any additional deficit spending, which is estimated to be around $1.5 trillion.

Put the two numbers together. Then ask yourself, how in the world can the Treasury borrow $3.5 trillion in only one year? That's an amount equal to nearly 30% of our entire GDP. And we're the world's biggest economy. Where will the money come from?

How did we end up with so much short-term debt? Like most entities that have far too much debt – whether subprime borrowers, GM, Fannie, or GE – the U.S. Treasury has tried to minimize its interest burden by borrowing for short durations and then "rolling over" the loans when they come due. As they say on Wall Street, "a rolling debt collects no moss."

What they mean is, as long as you can extend the debt, you have no problem. Unfortunately, that leads folks to take on ever greater amounts of debt... at ever shorter durations... at ever lower interest rates. Sooner or later, the creditors wake up and ask themselves: What are the chances I will ever actually be repaid? And that's when the trouble starts. Interest rates go up dramatically. Funding costs soar. The party is over. Bankruptcy is next.

When governments go bankrupt, it's called a "default." Currency speculators figured out how to accurately predict when a country would default. Two well-known economists – Alan Greenspan and Pablo Guidotti – published the secret formula in a 1999 academic paper. The formula is called the Greenspan-Guidotti rule.

The rule states: To avoid a default, countries should maintain hard currency reserves equal to at least 100% of their short-term foreign debt maturities. The world's largest money-management firm, PIMCO, explains the rule this way: "The minimum benchmark of reserves equal to at least 100% of short-term external debt is known as the Greenspan-Guidotti rule. Greenspan-Guidotti is perhaps the single concept of reserve adequacy that has the most adherents and empirical support."

The principle behind the rule is simple. If you can't pay off all of your foreign debts in the next 12 months, you're a terrible credit risk. Speculators are going to target your bonds and your currency, making it impossible to refinance your debts. A default is assured.

So how does America rank on the Greenspan-Guidotti scale? It's a guaranteed default.

The U.S. holds gold, oil, and foreign currency in reserve. It has 8,133.5 metric tonnes of gold (it is the world's largest holder). At current dollar values, it's worth around $300 billion. The U.S. strategic petroleum reserve shows a current total position of 725 million barrels. At current dollar prices, that's roughly $58 billion worth of oil. And according to the IMF, the U.S. has $136 billion in foreign currency reserves. So altogether... that's around $500 billion of reserves. Our short-term foreign debts are far bigger.

According to the U.S. Treasury, $2 trillion worth of debt will mature in the next 12 months. So looking only at short-term debt, we know the Treasury will have to finance at least $2 trillion worth of maturing debt in the next 12 months. That might not cause a crisis if we were still funding our national debt internally. But since 1985, we've been a net debtor to the world. Today, foreigners own 44% of all our debts, which means we owe foreign creditors at least $880 billion in the next 12 months – an amount far larger than our reserves.

Keep in mind, this only covers our existing debts. The Office of Management and Budget is predicting a $1.5 trillion budget deficit over the next year. That puts our total funding requirements on the order of $3.5 trillion over the next 12 months.

So... where will the money come from? Total domestic savings in the U.S. are only around $600 billion annually. Even if we all put every penny of our savings into U.S. Treasury debt, we're still going to come up nearly $3 trillion short. That's an annual funding requirement equal to roughly 40% of GDP.

Where is the money going to come from? From our foreign creditors? Not according to Greenspan-Guidotti. And not according to the Indian or Russian central banks, which have stopped buying Treasury bills and begun to buy enormous amounts of gold. The Indians bought 200 metric tonnes this month. Sources in Russia say the central bank there will double its gold reserves.

So where will the money come from? The printing press. The Federal Reserve has already monetized nearly $2 trillion worth of Treasury debt and mortgage debt. This weakens the value of the dollar and devalues our existing Treasury bonds. Sooner or later, our creditors will face a stark choice: Hold our bonds and continue to see the value diminish slowly, or try to escape to gold and see the value of their U.S. bonds plummet.

One thing they're not going to do is buy more of our debt. Which central banks will abandon the dollar next? Brazil, Korea, and Chile. These are the three largest central banks that own the least amount of gold. None owns even 1% of its total reserves in gold.

I examined these issues in much greater detail in the most recent issue of my newsletter, Porter Stansberry's Investment Advisory. Coincidentally, the New York Times repeated my warnings – nearly word for word – a few weeks ago. They didn't mention Greenspan-Guidotti, however... It's a real secret of international speculators.

My readers know that Greenspan-Guidotti means the U.S. is likely to have a severe currency crisis within the next two years. How high will gold go during this crisis? Nobody can say for sure. We've never been in the situation we are now. The numbers have never been so large and dangerous. But I wouldn't be surprised at all to see gold at $10,000 an ounce by 2012. Make sure you own some.

Good investing,

Porter Stansberry

Real Estate Appraiser sued because roof leaks 9 years later.

2009-12-04T17:24:00.001+01:00

Claim of the Week -- Roof Leaks 9 Years After Appraisal
By Peter Christensen
We see many frivolous claims against appraisers. No matter how accurate or careful an appraiser may be, these sorts of claims will be filed anyway.

This particular claim relates to an appraisal for a purchase loan on a single family house in a mid-western state. The home was appraised for the lender at about $60,000. The homeowner has sent a demand letter to the appraiser demanding that the appraiser pay the homeowner about $9,000 to replace the roof and remove a tree that is causing damage to the roof. The homeowner alleges the roof recently started leaking and that the appraiser should have identified this condition in the appraisal report. Here's what makes the claim standout: the appraisal was done in 2000, 9 years and countless windstorms ago. So, here we have a non-client, non-intended user complaining about a roof that started leaking 9 years after the appraisal, a report which clearly stated that the appraiser was not a home inspector and that the report was prepared for the purpose of the mortgage transaction only.

The Most Important Supreme Court Decision for Homeowners and Our Economy In Decades

2009-12-03T23:58:00.003+01:00

Originally posted by Mandelman Matters Blog.

http://mandelman.ml-implode.com/author/mandelman/

Cuomo v. Clearing House

There are some things that every single US citizen should know…

Preface

In 2003, the Office of the Comptroller of the Currency (“OCC”), proposed a regulation that would preempt essentially all state banking and financial services laws as applied to national banks and their operating subsidiaries. In other words, if a state’s governor, legislature or Attorney General didn’t like the way a bank was operating for whatever reason… tough cheese… not much could be done about it. The regulation meant that only federal agencies could do much of anything as far as the national banks were concerned.

The regulation was opposed by the National Conference of State Legislatures, which is an organization that’s supposed to make sure that state legislatures have a strong and cohesive voice in the federal system, but in this instance that “strong and cohesive” voice must have lacked strength and/or cohesiveness, because in 2004, the OCC got its way and their proposed regulation went into effect.

But that’s no way to start telling a story…

Our story begins in New York, way back in 2005…. the good old days, as it were… when, for the first time ever, the Federal Reserve released home mortgage data that included information on the race, sex and income of loan applicants. Well, New York’s then-Attorney General, Elliot Spitzer, apparently perused the Fed’s data and noticed that if a person had a high interest (read: sub-prime) mortgage, the odds were quite good that he or she was a minority.

In other words, Elliot got the idea in his head that maybe… just maybe, the banks were taking unfair advantage of inner city lower income types by forcing them into lousy loans just because they could. Crazy, I know. Where in the world would he get a wild-ass idea like that, do you suppose? Oh that’s right, from the Federal Reserve’s published data, I forgot. Anyway, Spitzer decided he’d better take a closer look into the lending practices of national banks.

Spitzer claimed authority to conduct his investigation under federal and state anti-discrimination and consumer protection laws, and sent “letters of inquiry” to the banks asking for information related to their lending practices.

Now, here’s where it starts to get weird…
In response to Spitzer’s “letter of inquiry,” the Clearing House Association (“CHA”), which can be described as a “consortium,” (or perhaps “cabal” is a better word) of national banks,” filed a lawsuit against Spitzer, asking the court to issue an injunction stopping Spitzer from issuing any subpoenas in his investigation. Not to be left out, the OCC brought a similar action and the two suits were combined into one. Obviously, somebody didn’t want the AG of NY looking at any bank lending practices.

In The National Bank Act it states: “No national bank shall be subject to any visitorial powers except as authorized by Federal law, vested in the courts of justice or such as shall be, or have been exercised or directed by Congress or by either House thereof.”

The courts agreed with the position taken by the CHA and OCC, issuing a permanent injunction against Attorney General Spitzer that prevented him from issuing any subpoenas or demanding an inspection of any national banks’ records. The New York Attorney General was not going to be allowed to take a closer look at any of the bank’s lending practices. The court held that the phrase “visitorial powers” is ambiguous, but that the OCC’s interpretation of the phrase, in that it preempted the states from enforcing state laws on national banks, was reasonable and therefore entitled to something called “Chevron deference”.

“Chevron deference” is not a new fuel additive that keeps your car’s engine clean. The term does, however, come from a U.S. Supreme Court decision involving the oil and gas company, Chevron.

Chevron deference is considered a doctrine of administrative law. It states that when a law is judged to be ambiguous, but it falls within the subject matter jurisdiction of a federal agency, then as long as the agency’s interpretation is considered reasonable, then it’s the final word on the subject. In other words, when no one can agree what a law means, and you let a federal agency decide the answer, it’s known as “Chevron deference”.

Spitzer was never one to be easily dissuaded; he appealed the decision, but lost again. And that was the end of Elliot’s go at the national banks.

Then, in 2007, a Supreme Court decision again confirmed OCC’s preemption of state laws and regulations as related to banks, when the court ruled that Wachovia Mortgage Corporation, which was a wholly owned subsidiary of Wachovia Bank, was not subject to regulation by the Michigan Office of Insurance and Financial Services.

Still with me? Hang in there… it’ll be worth it.

Cuomo v. Clearing House: This Changes Everything

Fast forward to 2009, New York’s Attorney General is now Andrew Cuomo and he’s decided to pick up where Elliot left off when he was rudely interrupted spending money on a hooker. AG Cuomo basically argued that the OCC’s interpretation so significantly altered the balance of power between state and federal governments, that it required a clear statement by Congress. He even questioned whether “visitorial powers” were involved in his actions. All he wanted to do was enforce state laws.

Cuomo also argued that the OCC’s interpretation made national banks immune from any state enforcement of consumer protection and/or antidiscrimination laws. He said that because the OCC doesn’t have the ability and expertise to emulate the roles of state attorneys general, it should not be permitted to preempt the states’ traditional role, protecting consumers’ interests.

It’s the Supreme Court we’re talking about here, so there was a fair amount of arguing back and forth, but to make a long story at least somewhat shorter, the bottom-line is that he won… Cuomo did it! The Supreme Court finally overturned their previous decisions on the OCC interpretation and as of this past June 28th ruled 5-4 that federal banking regulations did not preempt the ability of states to enforce their own fair-lending laws.

In reaching that decision, the court opened up the national banks to being investigated by state attorneys general related to violations having to do with state consumer protection laws. At that moment, the bankers knew, as the song says, that they had trouble… right here in River City.

And that, ladies and germs, is why you’ve got to love the good old judicial branch, with their lifetime appointments. It may not sound like much, but at least we know that there are five people with power in our government that don’t concern themselves with the banking lobby’s highly influential and well-funded influence peddlers.

State Attorneys General Start Your Engines…

Although the media has only recently started to catch on, the impact of the court’s decision was immediately understood by state Attorneys General across the country, many of whom have already started assigning their staffs to the exploration of how their new-found power might be used. Unquestionably, their first stop is the foreclosure crisis, although future efforts are likely to include other lending related issues such as credit cards, and the like.

Arizona’s AG, Terry Goddard, is one of the attorneys general leading the pack. Arizona continues to be one of the states hardest hit by foreclosures, and Goddard has had enough with the lip service of lenders and servicers. Foreclosures across his state now consistently exceed 7,000 a month.

Lenders and servicers have been asking Goddard to encourage homeowners to contact them directly, so that’s exactly what he’s done to-date. But the homeowners that try to contact their banks, just end up calling the AG back, basically saying they’d likely have more success obtaining a loan modification by calling a cactus.

According to a recent story in The New York Times, Goddard said: “People call and get the runaround. Their paperwork gets lost. It’s time to stop this absurd dance.”

The Times’ story quotes Goddard as saying that he and other AGs have tried to be persuasive with the lenders and servicers in an effort to get them to be a meaningful part of a solution to the crisis that they had such a large role in creating. But Goddard says: “… their waterfall of excuses, the abysmal numbers of modifications, tells us that persuasion is not working. As a result, we’re moving much closer to litigation.”

Goddard and his peers in other states are considering lawsuits accusing the banks of creating and marketing millions of bad loans, and failing to fulfill their promises related to loan modifications. Such lawsuits would have been impossible prior to June’s Supreme Court decision in Cuomo v. The Clearing House.

Every state has laws that prohibit fraud in consumer lending, and states are now exploring the idea of litigation alleging that the banks engaged in massive fraud against consumers by marketing unintelligible loans that they knew would be impossible for most people to repay. Banks did so to earn what added up to billions in short-term fee income from originating the loans, and then quickly sold the loans to government entities, like Fannie and Freddie, who then required costly taxpayer funded bailouts.

Cranky Bankers…

The banks and their powerful lobbies, it should go without saying, are none too pleased with the recent developments inspired by the Supreme Court’s decision. The Mortgage Bankers Association, one of those lobbies, declined to comment on the situation when asked by The New York Times, but spokesperson John Mechem had the unmitigated audacity to warn… or rather, threaten that consumers would be the ones that end up paying for any increased legal activity.

As quoted by the Times, Mechem said: “Lawsuits add to the patchwork of regulations that increases compliance costs to lenders, which in turn increases the cost of credit to borrowers.”

What a jackass this guy is. I mean, I don’t think I can remember hearing anyone say anything quite that offensive, since perhaps that little pocket-knife rattling moron in Iran said something about taking on the world over nuclear power. I’m not proud of what I’m about to admit, but when I read what Mechem said, all I could think of was kicking his insipid little ass all around a parking lot.

How dare you, Mr. Mechem? Who in the world do you think you are? Did you really just respond to the possibility of state lawsuits designed to right the unthinkable wrongs committed against American consumers and our society as a whole by those who write your paycheck, by saying that we better not because your guys will make us all pay? Did you think that would get us to back down and let your guys off the hook? You’re an idiot, Mechem, a real life, honest to goodness idiot.

And not only that, but did you really threaten us with increasing the cost of credit? Seriously? Seriously?

How in the world could taxpayers possibly ever pay more for the cost of credit than we’re paying NOW as a result of what the banks did over the last so many years? You mean that you’ll make us pay more than that? More than the $700 billion in TARP, and the countless TRILLIONS in free loans?

What are the banks going to do, charge 70% on credit card balances? More than 390% on hard money loans, the new limit set by the credit card reform legislation that you weakened before allowing it to pass through the legislature earlier this year? How about more than $25 for a $2.50 overdraft?

Go ahead, Mechem, go tell the bankers of this country to just try to punish us by heading down such a path, and the next time I personally borrow a nickel will be… hmmm… let’s see… perhaps when pigs fly, comes to mind, which will be roughly the same year your pals get their next zillion dollar bonus. I’d rather live in a tent under the 405 Freeway and keep my retirement savings in a Hills Brothers coffee can, then back down to your bullying threats.

The Banking Lobby Shifts Into High Gear…

Every single American should know: If the banks have anything to do with it, the American consumer’s victory won’t last long. The banks are hot and heavy lobbying Washington D.C. to make this problem go away. They want Congress to block the states from being able to take more aggressive legal action. They want Congress to preempt any state laws that are more restrictive than federal statutes.

In fact, just two weeks ago, the House Financial Services Committee voted to give the federal government the power to stop states from regulating the behavior of national banks in certain instances. The new rule says that the OCC can override the states in cases where the OCC finds that a state’s laws interfere with regulatory policies at the federal level. Not the end of the world, perhaps, but it’s sure to represent only the beginning of the bank’s efforts to dismantle any laws that attempt to level the playing field or place them at risk of being held accountable for what they’ve done or may do in the future.

When it comes to the banks, you can count on the fact that they only want to play in a game where it’s heads they win and tails we lose.

Goddard says that after the Cuomo v. Clearing House decision he had a virtual parade of bank executives coming through his offices expressing the desire to better address the 7,000 monthly foreclosures by improving the loan modification process. But, Goddard says that the bankers were unwilling or unable to provide him with any of the information he asked for, such as how many and what types of loans they have in his state.

Goddard is far from alone in his thoughts about the banks and servicers. Illinois Attorney General Lisa Madigan brought a civil rights suit against Wells Fargo. When the suit started, the Wells Fargo branches were operating under a state charter, and the bank responded to the state’s subpoena. But soon, the Illinois branches were moved and placed under control of Wells’ national bank charter and that was the end of that. Wells Fargo immediately informed the state of the change, stopped cooperating with the subpoenas, and basically said: “But thank you for playing.”

Madigan says that this sort of maneuvering has made it easy for those in the banking industry to hide misconduct and avoid prosecution for years. And Ohio’s Attorney General, Richard Cordray was quoted by the Times as saying: “For the better part of eight years, the federal regulators were not being aggressive, and at the same time we were disabled. There was nothing holding back irrational and irresponsible practices.”

Wake up, America. Or as sure as I’m writing this, defeat will be snatched from the jaws of victory…

So far this year, while most Americans have seemingly been preoccupied with other things, the banking lobby has managed to have its way with every single piece of legislation our legislature has considered or ultimately passed. The Democrats, and some Republicans, and supposedly President Obama wanted to reform the bankruptcy code to allow judges to write down mortgages on primary residences for homeowners filing bankruptcy… but the banking lobby, after spending a reported $45 million in lobbying efforts, killed the legislation… twice.

The credit card reform bill came in like a lion, but when the banking lobby was done with it, was passed into a lamb of a law. The controversial Home Valuation Code of Conduct, or HVCC, which gives the banks greater control of appraisals, and removes all the other parties to a real estate transaction from the picture, was adopted nationally without it even going though the legislative process.

H.R. 1728, which has been named the Mortgage Reform and Anti-Predatory Lending Act, neither reforms mortgages, nor does it meaningfully address what most people think of as predatory lending. Instead, this bill, which has already passed the House and is now in the Senate, limits the rules and increases the costs born by individuals when selling homes they themselves own.

And, as far as passing any legislation even remotely designed to prevent the global meltdown of our financial markets in the future by tightening up regulatory oversight of the commercial and investment banks in this country… well, we’ve done absolutely nothing in that regard. Even the creation of a new federal agency, whose purpose would be to protect consumers from the often egregious acts of banks and other financial institutions, has been moving though our legislature with the speed and grace of a wild boar moving whole, through the digestive tract of a python.

There should be no question in anyone’s mind at this point that our government is being driven by the financial oligarchy that has amassed too much legislative clout over the last thirty years of bull market. What’s in the best interests of Wall Street should no longer be seen as being in the best interests of the country as a whole. And if we don’t let our elected representatives know that we are watching and will not tolerate our elected officials blindly voting according to the wishes of the banking lobby, then our economy will not begin the recovery we’re hoping for, and frankly, we will deserve everything we collectively get.

The United States Supreme Court has decided that a state can look into and prosecute financial institutions that operate as part of our national banking system when they’re suspected of having broken the laws of that state. And that will be the law of our land, unless we say nothing, in which case I have no doubt whatsoever, that the banking lobby will persuade Congress to pass legislation that will render the court’s ruling moot and let lenders and servicers off the hook for wrong doing yet again.

It’s up to us, the voters, as we enter the coming election year, to make sure our elected representatives hear our voices loud and clear:

Vote as the banks tell you to vote and there’s not enough money in the world to get you reelected, but vote in the best interests of the people of this country, and you won’t need the banking lobby’s money to get reelected.

Iowa’s AG, Tom Miller, seemed downright thrilled with the Supreme Court’s decision, by the way. The story in the Times quoted Mr. Miller as enthusiastically saying:

“We’re back on the field. That’s really important. Certainly there will be some litigation.”

I sure hope so, Mr. Miller, I certainly do hope so.

Fed to Conduct ‘Small Scale’ Triparty Reverse Repos

2009-12-01T16:36:00.001+01:00

Nov. 30 (Bloomberg) -- The Federal Reserve said it will test one of the tools for an eventual withdrawal of the central bank’s unprecedented monetary stimulus while stressing that the trials themselves don’t represent any change in policy.

The New York Fed said it will conduct “small scale, real value” three-way reverse repurchase transactions in coming weeks. The tests are “a matter of prudent advance planning by the Federal Reserve,” the statement said, and “no inference should be drawn about the timing of any change in the stance of monetary policy in the future.”

Policy makers led by Fed Chairman Ben S. Bernanke are considering how to withdraw the more than $1 trillion they have pumped into the financial system to combat the deepest recession since the 1930s. Along with raising the overnight bank lending rate, Fed officials have said they may use reverse repos, pay interest on excess bank reserves and sell securities directly to investors to withdraw or neutralize cash in the banking system.

“We don’t think it’s any indication that they’re likely to implement an exit strategy soon, or even in the next several quarters,” said Michael Pond, an interest-rate strategist in New York at Barclays Capital Inc., one of 18 primary dealers that trade with the Fed. “It’s important for the Fed to make sure the market is aware that the tools they do have work, even if they’re not ready to use them yet.”

The Fed cut its benchmark interest rate to as low as zero last December and adopted asset purchases as its main policy tool. The Fed is buying $1.25 trillion of agency mortgage-backed securities and about $175 billion of housing agency debt. The Fed in October completed a $300 billion program of U.S. Treasury securities purchases.

Rate Outlook

The central bank probably won’t raise its benchmark interest rate above 0.25 percent until August, according to the median forecast of 45 economists surveyed by Bloomberg News.

The Fed on Nov 4. repeated it will keep interest rates near zero for “an extended period” and specified for the first time that policy will stay unchanged as long as inflation expectations are stable and unemployment fails to decline.

Payrolls in the U.S. probably fell by 120,000 workers this month, according to the median of 67 analysts surveyed by Bloomberg News ahead of a Dec. 4 Labor Department report. The unemployment rate probably held at 10.2 percent, a 26-year high.

The world’s largest economy has lost 7.3 million jobs since the recession began in December 2007. The jobless rate is projected to exceed 10 percent through the first half of next year, according to the median forecast of economists surveyed this month.

Treasury Notes

Treasury notes were little changed today. The 10-year note’s yield increased one basis point, or 0.1 percentage point, to 3.21 percent at 1:36 p.m. in New York.

The reverse repo transactions are being conducted to ensure “operational readiness” at the Fed, clearing banks and primary dealers, today’s statement said. They will have “no material impact” on the availability of reserves or on market interest rates, it said.

“You could look at it as a case of due diligence by the Fed,” said Ward McCarthy, chief financial economist at Jefferies & Co., also a primary dealer.

In a reverse repo, the Fed loans securities for a set period. At maturity, the securities are returned to the Fed, and the cash to the dealers.

Market Rates

The transactions will be conducted at current market rates, and the aggregate amount outstanding “will be very small relative to the level of excess reserves,” today’s announcement said. The results will be posted on the New York Fed’s Web site and will be listed as liabilities on the Fed’s consolidated balance sheet statements.

The New York Fed said on Oct. 19 that it was working with market participants on how it would use reverse repurchase agreements to help drain cash. It also said the central bank was considering expanding the counterparties for reverse repo operations beyond the 18 primary dealers.

UBS says "Off" balance sheet loans may boost Dubai's debt over $80 billion.

2009-11-27T18:39:00.003+01:00

By Anthony DiPaola and Chris Bourke

Nov. 27 (Bloomberg) -- Dubai, the Persian Gulf emirate whose state-run companies are seeking to defer debt payments, may owe more than the $80 billion to $90 billion in liabilities assumed by investors, UBS AG analysts said.

“Perhaps Dubai’s debt includes sizeable off-balance sheet liabilities that imply a total debt burden well above the $80 billion to $90 billion markets have estimated so far,” Dubai- based real estate analyst Saud Masud wrote in a note. “This could imply that the debt issued by Dubai in recent weeks is insufficient to meet upcoming redemptions.”

Dubai, which has said it will raise as much as $20 billion selling bonds to repay borrowings, said on Nov. 25 that state- run Dubai World, with $59 billion of liabilities, would ask creditors for a “standstill” agreement as it negotiates to extend debt maturities.

The request to delay debt repayment “came as a major shock” to investors, Masud and fellow UBS London-based analyst Reinhard Cluse told clients on a conference call today. Dubai World property unit Nakheel PJSC has $3.52 billion of Islamic bonds due Dec. 14. Dubai World may seek to negotiate all its liabilities as it reorganizes the business, Masud said.

“The Nakheel sukuk is the largest that has ever been issued,” Cluse said on the conference call. “Markets will take some time to digest this blow.”

‘Significant Sweetener’

Dubai accumulated $80 billion of debt by expanding in banking, real estate and transportation before credit markets seized up last year. The second biggest of seven sheikhdoms that make up the United Arab Emirates formed a fund to help reorganize state firms and sold $10 billion in bonds to the national central bank in February.

It borrowed an additional $5 billion from Abu Dhabi government-controlled banks Nov. 25, half the $10 billion in bonds that Dubai ruler Sheikh Mohammed Bin Rashid Al-Maktoum said he planned to raise by yearend.

Nakheel bondholders could demand a “significant sweetener” to renegotiate the debt and look to determine which of the real estate unit’s assets they may be able to claim, according to Masud.

There is growing interest from Persian Gulf investment funds in acquiring properties owned by Dubai entities, including Nakheel, which may be forced to sell assets to reduce debt, said Michael Atwell, head of Middle East operations at real estate broker Cushman & Wakefield.

‘Still Buzzing’

“We can sense it, and we’re hoping to have some transactions from several funds with buying requirements, some over $100 million,” he said. Potential buyers may be seeking stable cash flow from buildings with long leases.

“The city is still buzzing. Dubai won’t turn into a ghost town, but there’ll be some big restructuring and reorganization, without a doubt.”

Seeking a repayment delay may indicate that Abu Dhabi, the U.A.E.’s largest sheikhdom, may not want to support Dubai further financially until the smaller emirate addresses internal problems at government-run companies, Masud said.

“This could be the realization that you cannot simply buy your way out of this crisis,” Masud said.

The request could also suggest that Abu Dhabi and Dubai have decided to seek to bolster long-term confidence in the market by forcing weaker parts of government businesses to take responsibility for bad decisions and could involve defaults at some Dubai firms, Masud said.

Mortgage Defaults

Dubai property developers may be liable for an estimated $11 billion required to build 40,000 homes that they have started, said Masud in an interview yesterday. That amount represents the off-balance sheet cost, or “funding gap” required to complete and hand over the properties, on which investors are now defaulting, by the end of 2010.

Nakheel’s share of that funding gap is about $2 billion, estimated Masud. Around half of the investors in the 40,000 unfinished homes may default by the end of next year, he said.

Mortgage defaults, which stand at about 3 percent of the total in the U.A.E., may increase fivefold to “the teens,” Masud said on the call today.

U.S., Emerging Market Stocks Slide as Bonds Advance on Dubai

2009-11-27T18:33:00.000+01:00

By Mark Gilbert and Paul Sillitoe

Nov. 27 (Bloomberg) -- U.S. and emerging-market stocks slumped and commodities dropped the most since July as Dubai’s attempt to delay debt repayments unnerved investors. Treasuries and the dollar rose while credit-default swaps surged.

The Standard & Poor’s 500 Index slid 1.3 percent at 10:57 a.m. in New York and the MSCI Emerging Markets Index slipped 2.1 percent. The Chicago Board Options Exchange Volatility Index, the equity-derivatives benchmark known as the VIX, surged 18 percent to 24.07. Two-year Treasury yields fell to the lowest level since December. Oil and gold tumbled as the Dollar Index advanced. Credit-default swaps tied to debt sold by Dubai rose 134 basis points to 675, according to CMA DataVision.

“The world’s going to test now how much this means to people’s risk-taking attitude,” said Donald Ross, the Cleveland- based global strategist for Titanium Asset Management Corp., which manages $9 billion. “This is a big enough deal for people to question how far and how fast we’ve come.”

Dubai World, the government investment company burdened by $59 billion of liabilities, sought this week to delay repayment on much of its debt. The yen pared its advance after Japan’s Finance Minister Hirohisa Fujii said he may contact the U.S. and Europe to act on currencies, signaling concern that the yen’s ascent will hurt the economy by crimping exports.

U.S. stock exchanges close at 1 p.m. in New York, three hours early.

Asia, Europe Stocks

The MSCI Asia Pacific Index slid 3.2 percent, the biggest drop since March, extending a rout in Europe yesterday that sent the Dow Jones Stoxx 600 Index to its steepest one-day slump since April. The MSCI World Index fell 0.6 percent, bringing its two-day drop to 2 percent. The Dow Jones Industrial Average slid 1.2 percent, after U.S. markets were closed yesterday for Thanksgiving.

South Korea’s Kospi index slid 4.7 percent and Taiwan’s Taiex lost 3.2 percent. Samsung Engineering Co. tumbled 9.8 percent, leading declines among construction stocks in Seoul on concern orders may slow in the United Arab Emirates, the biggest overseas market for South Korean builders.

Dubai’s attempt to delay debt payments prompted investors to buy assets deemed safe and sell riskier ones. Treasury two- year notes rallied, driving their yields down 0.05 percentage point to 0.70 percent, the lowest payout in 11 months. The VIX, which tends to rise when investors are less willing to take risks, jumped as much as 27 percent in the biggest intraday gain since Oct. 30.

‘Risk Aversion’

“We’re bound to see a rise in risk aversion,” Arnab Das, the head of market research and strategy at Roubini Global Economics, said in an interview from London “The Dubai situation signifies that although the major central banks around the world have stabilized the financial system, they can’t make all the excesses simply disappear. We still have to work out those balance sheet stresses.”

The MSCI World has rallied 68 percent since March 9, and the S&P 500 has climbed 62 percent in the steepest rally since the Great Depression. The rebound came as the Federal Reserve spent, lent or guaranteed $11.6 trillion and held interest rates near zero to unlock credit markets and end the first simultaneous recessions in the U.S., Europe and Japan since World War II.

Europe’s Stoxx 600 reversed a decline of as much as 1.8 percent and gained 1.3 percent, paring its two-day decline to 1.9 percent. Royal Bank of Scotland Group Plc, which was Dubai World’s biggest loan arranger since January 2007 according to JPMorgan Chase & Co., gained 5.9 percent in London after plunging 7.8 percent yesterday.

Oil, Gold Drop

Oil fell 3.3 percent to $75.36 a barrel in New York. Gold lost 0.9 percent to $1,177.80 an ounce, falling for the first time in 10 days.

Dubai, which borrowed $80 billion in a four-year construction boom to transform its economy into a regional tourism and financial hub, suffered the world’s steepest property slump in the worst global recession since World War II. Home prices fell 50 percent from their 2008 peak, according to Deutsche Bank AG.

“If Dubai has to default, that could start a wave of defaults in other areas,” Mark Mobius, the chairman of Templeton Asset Management Ltd. who oversees $25 billion in emerging-market assets, said in an interview on Bloomberg Television from Hanoi. “This may be the trigger to allow for the market to take a rest and pull back.”

Debt Swaps

Credit-default swaps on emerging-market government and corporate bonds jumped, with contracts on Qatar adding 15 basis points to 129 and Abu Dhabi rising 24 to 184, according to CMA DataVision prices. Default swaps on DP World Ltd., the Middle East’s biggest port operator, rose 201 basis points to 810, according to CMA. Sellers also are requiring a 12 percent payment in advance. Swaps on Malaysian government bonds rose 16 basis points to 120 and those on Thailand climbed 14 to 124.

Default swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a borrower fail to adhere to its debt agreements.

The cost to protect U.S. corporate bonds from default rose to the highest in almost a month as Dubai attempts to delay debt repayments, trading in a benchmark credit derivatives index shows.

U.S. Swaps

Contracts on the Markit CDX North America Investment-Grade Index, used to speculate on the creditworthiness of 125 companies in the U.S. and Canada or to protect against losses on their debt, rose five basis points to a midprice of about 107.5 basis points as of 10:22 a.m. in New York, according to Phoenix Partners Group. The index rose to the highest since Nov. 2, according to CMA DataVision.

Dubai’s debt woes may worsen to become a “major sovereign default” that roils developing nations and cuts off capital flows to emerging markets, Bank of America Corp. said.

“One cannot rule out -- as a tail risk -- a case where this would escalate into a major sovereign default problem, which would then resonate across global emerging markets in the same way that Argentina did in the early 2000s or Russia in the late 1990s,” Bank of America strategists Benoit Anne and Daniel Tenengauzer wrote in a report.

Writedowns and losses at banks around the world have risen to more than $1.7 trillion since 2007 as the credit crisis undermined the value of assets owned by financial institutions, according to data compiled by Bloomberg.

Dollar Gains

The dollar rose against most major counterparts as Dubai’s attempt to delay debt spurred investors to sell higher-yielding assets funded with the currency.

The yen declined against the dollar after touching a 14- year high on speculation Japan will intervene after Finance Minister Hirohisa Fujii said he will contact U.S. and European officials about exchange rates if needed. The Bank of Japan checked rates at commercial banks in Tokyo, seen as a type of verbal intervention, Kyodo News Service reported. The dollar’s gain was reduced as global equity markets pared losses.

“People are scared and concerned about possible intervention,” said Yasutoshi Nagai, chief economist at Daiwa Securities SMBC Co. in Tokyo. The Bank of Japan may sell the yen “and buy Treasuries, which will be a plus for Treasuries,” he said. Central banks intervene by buying or selling their currencies after sudden movements.

The Warmers would rather change the facts than their theories.

2009-11-26T02:33:00.004+01:00

There is NO global warming, just global climate changes. It changes everywhere based on time of year, sun activity and other exogenous factors. Human activity is NOT the cause of global climate change. The most ridiculous effort made so far to promote Global Warming is the notion that the sun plays no part in global warming. Such a notion is so provably false that it is criminal fraud to propose it. The sun IS the main contributor to global climate changes and the changes cycle according to sun activity which is also assisted by other natural fators like volcanic activity.

The Warmer's hoax a global Ponzi scheme

2009-11-25T16:50:00.028+01:00

The supporters included Goldman Sachs, JP Morgan Chase Bank, and others who are financing this fraud. Enron in association with Al Gore in the mid 90's came up with a plan to create a whole new Ponzi scheme which includes a whole new type of derivatives that will enable them to buy and sell carbon credits.

The UN will employ a whole new arm of enforcement that will police the entire world. Your own State and County has an arm of enforcement "Carbon Cops" within their local government. The stick that made this possible is the REAL threat that if the local government did not create this enforcement arm the environazis would start legal actions against any local government that did not comply.

Our own local government has created a "Carbon Cop" agency that has the power to TAX any and all new residential and commercial/industrial development to pay into this agency. Most dangerously, this agency can make any "mistake" they want and the local government must support and encourage them, at tax payers expense.

House passes increased Federal Reserve transparency in an overwhelming and bipartisan vote of 43 to 26.

2009-11-21T20:22:00.003+01:00

Congressman Kevin Brady asks Treasury Secretary Timothy Geithner to step down

2009-11-19T23:50:00.002+01:00

We heed to ask that of the entire government.

(Actually, I view this effort to find a scapegoat as a sign the collapse is getting near!)

Bank of America, UBS, JPMorgan Sued Over Derivatives

2009-11-19T16:53:00.000+01:00

Joel Rosenblatt
Bloomberg News
Wednesday, November 18, 2009

Bank of America Corp., UBS AG and JPMorgan Chase & Co. were sued by a California public utility over claims they rigged sales of municipal derivatives and shared illegal profits through kickbacks.

The lawsuit, filed by the Sacramento Municipal Utility District, is based on federal and state antitrust claims. It alleges Charlotte, North Carolina-based Bank of America and more than a dozen other banks conspired to pre-select winners of municipal derivative auctions, coordinated their pricing, and accepted kickbacks disguised as fees from co-conspirators.

The allegations resemble those made by a U.S. grand jury in New York last month, according to the lawsuit filed Nov. 12 in federal court in Sacramento. CDR Financial Products Inc. founder David Rubin and two employees of the Beverly Hills, California- based company were indicted for allegedly accepting kickbacks on investments sold to local governments. CDR is also named as a defendant in the Sacramento case.

The banks engaged in “allocating customers and markets for municipal derivatives, rigging the bidding process by which municipal bond issuers acquire municipal derivatives, and conspiring to manipulate the terms that issuers received,” according to the lawsuit.

Hedge fund manager John Paulson bets $1.45bn on Citigroup’s eventual recovery.

2009-11-19T03:23:00.010+01:00

By By James Quinn, US Business Editor
Published: 12:12AM GMT 14 Nov 2009

Mr Paulson – best known for making $3.7bn from bets on the collapse of the US sub-prime mortgage market – bought the shares in the three months to the end of September, according to new regulatory filings in the US. Shares in Citigroup rose 13 cents to $4.18 in extended trading, as after-hours traders took the news as a positive sign.

At the same time, he entirely sold out of his $328m stake in Goldman Sachs, and also sold down part of the $2.2bn stake he took in Bank of America earlier in the year.

Mr Paulson, also is believed to have told investors that the new gold fund, to be run by Paulson & Co, will invest not just in gold miners but also in other investments related to the precious metal.

Although not Paulson & Co's first foray into gold, given approximately 10pc of the $30bn it has under management is in gold-related investments, it would be the firm's first pure-play gold fund.

No fund-raising cap is thought to have been set at the moment, but Mr Paulson's personal commitment is considerable and is likely to be seen as a highly attractive draw by investors.

Hedge fund investors – known as limited partners in the trade – take a great deal of comfort from managers' – known as general partners – co-investments.

Investors will inevitably question the timing of the new fund, coming at a point when gold is at an all-time high of close to $1,150 an ounce.

However, Mr Paulson is one of the most successful hedge fund managers in the US, and is known for his knack of buying assets at low prices.

As well as his sub-prime bet, he has made considerable amounts of money from betting on the financial industry and also has a recently established distressed investment fund.

Paulson & Co., Inc. had assets under management (as of June 1, 2007) of $12.5 billion (95% from institutions), which leapt to $36 billion as of November 2008. Under his direction, Paulson & Co has capitalized on the problems in the foreclosure and mortgage backed securities (MBS) markets. In 2008 he decided to start a new fund that would capitalize on Wall Street's capital problems by lending money to investment banks and other hedge funds currently feeling the pressure of the more than $345 billion of write downs resulting from under-performing assets linked to the housing market. On May 15, 2008, Paulson & Co., which bought 50 million shares of Yahoo stock during the first quarter of 2008, said it is supporting Carl Icahn on a proxy fight to replace Yahoo's board. In early 2008, the firm hired former Federal Reserve Chairman Alan Greenspan.

In September 2008, Paulson has bet against four of the five biggest British banks. His positions included a £350m bet against shares in Barclays; £292m against Royal Bank of Scotland; and £260m against Lloyds TSB. He eventually booked a profit of as much as £280m after reducing its short position in RBS in January 2009. Paulson & Co., the hedge fund run by billionaire John Paulson, may have lost out on about 218 million pounds in profit after failing to close a short position in Barclays. On August 12, 2009, Paulson purchased 2 million shares of Goldman Sachs as well as 35 million shares in Regions Financial.

John Paulson is not related to former Goldman Sachs CEO and U.S. Treasury Secretary Hank Paulson. A September 26, 2008 Wall Street Journal opinion written by John Paulson suggested an alternative to the Treasury Secretary's plan for stabilizing the markets.

Paulson is #33 on the Forbes 400 list of wealthiest Americans and is worth approximately $6.8 billion as of 2009.

US Army fighting terrorists in Salinas, CA

2009-11-18T01:03:00.001+01:00

Paul Joseph Watson
Tuesday, November 17, 2009

The U.S. military is aiding police in a California conduct “counterinsurgency” operations as part of a crack down on gang related violence in the city of Salinas, a relationship officials admit pushes the boundaries of the constitutional bar on the military operating within U.S. borders but one that should be expanded nationwide.

“Since February, combat veterans of Iraq and Afghanistan have been advising Salinas police on counterinsurgency strategy, bringing lessons from the battlefield to the meanest streets in an American city,” reports the Washington Post.

“This is our surge,” said (Mayor) Donohue, who solicited the assistance from the elite Naval Postgraduate School, 20 miles and a world away in Monterey. “When the public heard about this, they thought we were going to send the Navy SEALs into Salinas.”

The head of the program, former Special Forces career officer Col. Hy Rothstein, who oversaw counterinsurgency operations in Colombia and Central America, describes the program as a “laboratory”. The Washington Post article implies that the members of his team are retired veterans, yet later admits that the men are “mostly naval officers taking time between deployments,” meaning that they are active duty, not retired.

Another slick form of spin on behalf of the Post is the claim that the program doesn’t violate constitutional blocks on the military engaging in domestic law enforcement because Rothstein’s team are helping on a “voluntary” basis. This is completely contradicted in the second paragraph of the article when it is admitted that Mayor Dennis Donohue “affirmed his decision to seek help from an unlikely source: the U.S. military,” meaning that the program isn’t voluntary at all, the Mayor of the city instigated the military’s involvement. At the end of the article, a nationwide version of the program is also advocated.

Rothstein explains how his team employ methods used against insurgents in Iraq and Afghanistan to get the job done in Salinas, using military software that “tracks crimes and links suspects and their associates by social, geographic and family connections”.

Rothstein also admitted how part of the program utilizes military psyops tactics to thwart the public from hearing “negative messages,” suggesting control of the local media.

The Post article goes into great depth to depict the town as being under siege from dangerous Hispanic gang members in an attempt to push the justification of military involvement. At no point is it mentioned that if the police were tough enough to deal with real criminals in the first place, rather than feeding on the fat hog of the law-abiding American taxpayer, the need for army involvement would have never arisen.

How many stories do you read every week about women, people in wheelchairs, people with mental problems and other easy pray being tased by cops in comparison to gang members and drug dealers? Perhaps if the cops concentrated on going after the thugs rather than sinking their teeth into the fat, dumb and happy middle class American, then cities like Salinas wouldn’t be full of gang-banger scum.

The crucial part of the Post article is right at the end, when the trial balloon goes up for the U.S. military’s involvement in domestic law enforcement to be implemented nationwide in this context.

“The $1 trillion invested so far in Iraq and Afghanistan could pay a dividend in American streets,” states the article, before quoting Leonard A. Ferrari, provost of the Naval Postgraduate School, who states, “The idea was, not just Salinas, but is there a national model for this?”

Why is one of the biggest newspapers in America, a Bilderberg-owned publication, pushing for the nationwide use of active duty U.S. military units in domestic law enforcement, specifically to combat a “counterinsurgency” amongst U.S. citizens? Is this another progression in the preparation for martial law in response to mass civil unrest, race riots, and even a future civil war?

Or is this merely another gradual blurring of the lines between the police and the military as an ailing banana republic begins to decline into a failed state bossed by a militarized dictatorship?

"We're Opening Doors for Wall Street and Nothing More"

2009-11-18T01:00:00.000+01:00

Obama's China Junket:

By Mike Whitney

November 17, 2009 "Information Clearing House" -- Barack Obama took Hu Jintao to task this morning, scolding the dejected-looking Chinese leader at a press conference held in Beijing. Obama delivered one ferocious jab after another, claiming that China's dollar-peg has cost the US millions of high-paying manufacturing jobs while creating gigantic trade imbalances which have destabilized the global economy and thrust the world into severe economic contraction. Obama demanded that the Chinese government convert to market-oriented exchange rates immediately to preserve jobs in America and to end the de facto tariff that China applies to US goods through its persistent currency manipulation. Obama's sharply-worded prepared statement left the Chinese President gasping for air while the assembled members of the western media snapped to their feet in raucous applause.

Hard to believe, isn't it? Hard to believe that an American president would stand up for his own people and act in the national interest.

The aforementioned press conference never took place. It's a fairy tale. Barack Obama made a few innocuous comments about repricing the renimbi, but it was all just meaningless blather concocted for the American audience. US policymakers have no intention of rocking-the-boat and upsetting their Chinese benefactors. The system works just fine as it is...for the Big money guys, that is.

Do you know the real reason that Obama is in China?

Obama is carrying on the work of George W. Bush and Henry Paulson. He's trying to pry open Chinese markets to US financial services. That's right, the lavish executive junket doesn't have anything to do with human rights, climate change, or dollar/yuan rebalancing. That's all just public relations mumbo-jumbo. 100% bunkum.

True, China's dollar-peg creates an unfair advantage for China's manufactured goods, but so what? The Congress could change that in a minute by applying trade sanctions. But they won't. Because Congress is owned by Wall Street, and Wall Street thrives on the current system. Here's how it works: China sells the US cheap lead-based widgets, and then recycles the dollars into US Treasurys and "complex and utterly worthless" financial products. This provides the gargantuan investment banks with an endless flow of cheap capital to goose stocks and fatten the bottom line. Of course, the process does have it's shortcomings, like the fact that it crushes the domestic work-force, but that's how it was designed to work anyway. What economists call "unsustainable imbalances" are praised at the big brokerage houses as "windfall profits". The total destruction of the US labor movement is just an added perk for these well-heeled, flag-waving, uber-patriots.

And here's another item that might be of interest curious readers. This is an excerpt from an interview with Morgan Stanley's Stephen Roach:

Question: How big are China-based multinational corporations now and how do they factor into this issue of global imbalances?

Stephen Roach: "They're a big deal. Over 60 percent of export growth over the past twelve years has come from growth by Chinese subsidiaries of Western multinationals, but again the problem I have is that too many in the United States, especially the Congress but also Washington, focus on the bilateral trade imbalance between the United States and China. That's just a fundamental economic mistake that's being made." http://www.cfr.org/publication/20486/avoiding_a_uschina_trade_showdown.html
peter Roach

Hmmm. So, a large portion of China's industrial capacity is actually "China-based multinational corporations". Now that's interesting. So US workers are actually competing with US industries that are using sweatshop labor to enrich themselves while savaging the American middle class. Great. I wonder how many of these "industry leaders" affix the stars-n-stripes to their lapel each morning before they trundle off to work?

This just proves that the outsourcing of jobs, the off-shoring of businesses, and the "free trade" laws are mainly the work of cutthroat American corporatists not the "rascally Chinese" as the media would like everyone to believe. China is not destroying America; blue-blooded, brandy-guzzling, Harvard-educated Americans are. It's just good-old-fashioned class warfare....and our class is losing.

For those who want to know what Obama's trip is really all about; ignore Obama altogether and read Treasury Secretary Timothy Geithner's article in the Wall Street Journal, "The Road Ahead for Asia's Economies." It tells the whole story. Geithner candidly admits that US markets will remain stagnant for years to come and that other emerging nations (ie China) will have to develop their own domestic markets so that Wall Street speculators can attach themselves parasitically to a more succulent host.

Timothy Geithner: "As U.S. households save more and the U.S. reduces its fiscal deficit, others must spur greater growth of private demand in their own economies......We also must keep our sights on maximizing the potential of global markets. Both exports and imports remain critical stimulate the flow of knowledge and innovation that is enabling emerging economies to catch up with developed-world living standards....To achieve durable growth, all of our economies must have flexible labor markets."

In other words, more lowering of trade barriers, more lost jobs at home, more unemployment.

Geithner again: "Each of us has recognized the importance of strong financial regulation and fiscal balance, and is pursuing these goals in ways that reflect our own circumstances but complement each others' efforts."

Check.

The article concludes with a spirited appeal from Geithner to China to open its markets to the gaggle of financial pirates and bank-vermin who just blew up the global system and are looking for new prey.

Geithner again: "Among other things, emerging economies must strengthen their social safety nets through sustainable health and retirement-benefit schemes,(re: Wall Street) thus reducing the need for high precautionary saving that contributes to global imbalances. Regulatory frameworks conducive to competitive markets will support private enterprise, investment and innovation. (re: MBS, CDOs, CDS and other debt-backed exotica) In the emerging economies, deeper and more efficient financial markets will enable better intermediation of savings and enhance investment productivity.(re: "Please, let G-Sax and JPM hang their shingles in Tienanmen Square. We promise we won't blow up your financial system like we did ours.")

Reforms are also necessary to promote cross-border private investments, while ensuring an institutional capacity and prudent regulatory framework to enable markets to absorb capital flows ... finance ministers of our respective countries, we are keenly aware that our future prosperity will be founded on a continued commitment to globalization." (Timothy Geithner, Wall Street Journal, "The Road Ahead for Asia's Economies")

Blah, blah, blah.

Summary: Geithner and Co. see the US economy languishing in a low-grade Depression for the foreseeable future, therefore, Wall Street must progressively move its base-of-operations eastward.

This is the real reason behind Obama's trip to China. There's no truth to the rumor that US policymakers care about "currency manipulation" or the ongoing looting of the American middle class. That's rubbish. China's "dollar-peg" essentially serves the interests of the giant multinational corporations and Wall Street speculators who own the media, the courts, the congress, the White House and most of the country.

A very smll elite rule everything!!

2009-11-14T15:38:00.006+01:00

Wolf Blitzer questions why any one would defend Maj. Hasan.

Inside Britains's Israel Lobby

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Is your physical Gold actually Gold plated Tungsten?

2009-11-14T04:32:00.002+01:00

On Doing God’s Work

By: Rob Kirby

“Gold Finger - A New Take On Operation Grand Slam With A Tungsten Twist”

I’ve already reported on irregular physical gold settlements which occurred in London, England back in the first week of October, 2009. Specifically, these settlements involved the intermediation of at least one Central Bank [The Bank of England] to resolve allocated settlements on behalf of J.P. Morgan and Deutsche Bank – who DID NOT have the gold bullion that they had sold short and were contracted to deliver. At the same time I reported on two other unusual occurrences:

1] - irregularities in the publication of the gold ETF - GLD’s bar list from Sept. 25 – Oct.14 where the length of the bar list went from 1,381 pages to under 200 pages and then back up to 800 or so pages.

2] - reports of 400 oz. “good delivery” bricks of gold found gutted and filled with tungsten within the confines of LBMA approved vaults in Hong Kong.

Why Tungsten?

If anyone were contemplating creating “fake” gold bars, tungsten [at roughly $10 per pound] would be the metal of choice since it has the exact same density as gold making a fake bar salted with tungsten indistinguishable from a solid gold bar by simply weighing it.

Unfortunately, there are now more sordid details to report.

When the news of tungsten “salted” gold bars in Hong Kong first surfaced, many people who I am acquainted with automatically assumed that these bars were manufactured in China – because China is generally viewed as “the knock-off capital of the world”.

Here’s what I now understand really happened:

The amount of “salted tungsten” gold bars in question was allegedly between 5,600 and 5,700 – 400 oz – good delivery bars [roughly 60 metric tonnes].

This was apparently all highly orchestrated by an extremely well financed criminal operation. Within mere hours of this scam being identified – Chinese officials had many of the perpetrators in custody. And here’s what the Chinese allegedly uncovered:

Roughly 15 years ago – during the Clinton Administration [think Robert Rubin, Sir Alan Greenspan and Lawrence Summers] – between 1.3 and 1.5 million 400 oz tungsten blanks were allegedly manufactured by a very high-end, sophisticated refiner in the USA [more than 16 Thousand metric tonnes]. Subsequently, 640,000 of these tungsten blanks received their gold plating and WERE shipped to Ft. Knox and remain there to this day. I know folks who have copies of the original shipping docs with dates and exact weights of “tungsten” bars shipped to Ft. Knox.

The balance of this 1.3 million – 1.5 million 400 oz tungsten cache was also plated and then allegedly “sold” into the international market. Apparently, the global market is literally “stuffed full of 400 oz salted bars”.

Makes one wonder if the Indians were smart enough to assay their 200 tonne haul from the IMF?

A Slow Motion Train Wreck, Years in the Making

An obscure news item originally published in the N.Y. Post [written by Jennifer Anderson] in late Jan. 04 has always ‘stuck in my craw’:

DA investigating NYMEX executive - Manhattan, New York, district attorney's office, Stuart Smith - Melting Pot - Brief Article – Feb. 2, 2004

A top executive at the New York Mercantile Exchange is being investigated by the Manhattan district attorney. Sources close to the exchange said that Stuart Smith, senior vice president of operations at the exchange, was served with a search warrant by the district attorney's office last week. Details of the investigation have not been disclosed, but a NYMEX spokeswoman said it was unrelated to any of the exchange's markets. She declined to comment further other than to say that charges had not been brought. A spokeswoman for the Manhattan district attorney's office also declined comment.

The offices of the Senior Vice President of Operations - NYMEX – is exactly where you would go to find the records [serial number and smelter of origin] for EVERY GOLD BAR ever PHYSICALLY settled on the exchange. They are required to keep these records. These precise records would show the lineage of all the physical gold settled on the exchange and hence "prove" that the amount of gold in question could not have possibly come from the U.S. mining operations – because the amounts in question coming from U.S. smelters would undoubtedly be vastly bigger than domestic mine production.

We never have found out what happened to poor ole Stuart Smith – after his offices were "raided" – he took administrative leave from the NYMEX and he has never been heard from since. Amazingly [or perhaps not], there never was any follow up on in the media on the original story as well as ZERO developments ever stemming from D.A. Morgenthau’s office who executed the search warrant.

Are we to believe that NYMEX offices were raided, the Sr. V.P. of operations then takes leave - all for nothing?

These revelations should provide a “new filter” through which Rothschild exiting the gold market back in 2004 begins to make a little more sense:

“LONDON, April 14, 2004 (Reuters) - NM Rothschild & Sons Ltd., the London-based unit of investment bank Rothschild [ROT.UL], will withdraw from trading commodities, including gold, in London as it reviews its operations, it said on Wednesday.”

Interestingly, GATA’s Bill Murphy speculated about this back in 2004;

“Why is Rothschild leaving the gold business at this time my colleagues and I conjectured today? Just a guess on my part, but suspect:”

*SOMETHING IS AMISS. THEY KNOW A BIG GOLD SCANDAL IS COMING AND THEY WANT NO PART OF IT. …”

“ROTHSCHILD WANTS OUT BEFORE THE PROVERBIAL "S" HITS THE FAN.” BILL MURPHY, LEMETROPOLE, 4-18-2004

Coincidentally [or perhaps, not?], GLD Began Trading 11/12/2004

In light of what has occurred – regarding the Gold ETF, GLD – after reviewing their prospectus yet again, it becomes pretty clear that GLD was established to purposefully deflect investment dollars away from legitimate gold pursuits and to create a stealth, cesspool / catch-all, slush-fund and a likely destination for many of these “salted tungsten bars” where they would never see the light of day – hidden behind the following legalese “shield” from the law:

Excerpt from the GLD prospectus on page 11:

http://www.spdrgoldshares.com/media/GLD/file/SPDRGoldTrustProspectus.pdf

Gold bars allocated to the Trust in connection with the creation of a Basket may not meet the London Good Delivery Standards and, if a Basket is issued against such gold, the Trust may suffer a loss. Neither the Trustee nor the Custodian independently confirms the fineness of the gold bars allocated to the Trust in connection with the creation of a Basket. The gold bars allocated to the Trust by the Custodian may be different from the reported fineness or weight required by the LBMA’s standards for gold bars delivered in settlement of a gold trade, or the London Good Delivery Standards, the standards required by the Trust. If the Trustee nevertheless issues a Basket against such gold, and if the Custodian fails to satisfy its obligation to credit the Trust the amount of any deficiency, the Trust may suffer a loss.

The Fed Has Already Been Caught Lying Liberty Coin’s Patrick Heller recently wrote,

Earlier this year, the Gold Anti-Trust Action Committee (GATA), filed a second Freedom of Information Act (FOIA) request with the Federal Reserve System for documents from 1990 to date having to do with gold swaps, gold swapped, or proposed gold swaps.

On Aug. 5, The Federal Reserve responded to this FOIA request by adding two more documents to those disclosed to GATA in April 2008 from the earlier FOIA request. These documents totaled 173 pages, many parts of which were redacted (covered up to omit sections of text). The Fed's response also noted that there were 137 pages of documents not disclosed that were alleged to be exempt from disclosure.

GATA appealed this determination on Aug. 20. The appeal asked for more information to substantiate the legitimacy of the claimed exemptions from disclosure and an explanation on why some documents, such as one posted on the Federal Reserve Web site that discusses gold swaps, were not included in the Aug. 5 document release.

In a Sept. 17, 2009, letter on Federal Reserve System letterhead, Federal Reserve governor Kevin M. Warsh completely denied GATA's appeal. The entire text of this letter can be examined at http://www.gata.org/files/GATAFedResponse-09-17-2009.pdf.

The first paragraph on the third page is the most revealing. Warsh wrote, "In connection with your appeal, I have confirmed that the information withheld under exemption 4 consists of confidential commercial or financial information relating to the operations of the Federal Reserve Banks that was obtained within the meaning of exemption 4. This includes information relating to swap arrangements with foreign banks on behalf of the Federal Reserve System and is not the type of information that is customarily disclosed to the public. This information was properly withheld from you."

This paragraph will likely be one of the most important news stories of the year.

Though not stated in plain English, this paragraph is an admission that the Fed has in the past and may now be engaged in trading gold swaps. Warsh's letter contradicts previous Fed statements to GATA denying that it ever engaged in gold swaps during the time period between Jan. 1, 1990 and the present.

[Perhaps most importantly], this was GATA's second FOIA request to the Federal Reserve on the issue of gold swaps. The 173 pages of documents received for the 2009 FOIA request all pre-dated the 2007 FOIA request, which means they should have been released in the response to the earlier FOIA request. This establishes a likelihood that the Federal Reserve has failed to adequately search or disclose relevant documents. Further, the Fed response admitted that it had copies of relevant records that originally appeared on the Treasury Department Web site, but failed to include them in its response.

Now that Federal Reserve governor Warsh has admitted that the Fed has lied in the past about the Fed’s involvement with gold. It should now be very clear to everyone why the Fed is lying and the true nature of what they are hiding / withholding.

On Doing God’s Work

An important footnote to consider is the inter-twined-ness of the U.S. Federal Reserve and the U.S. Treasury [can anyone really tell them apart?] as well as this duopoly’s two principal agents – J.P. Morgan-Chase and Goldman Sachs. When one truly grasps the nature of these highly conflicted relationships it gives a fuller meaning to words recently uttered by Goldman head, Lloyd Blankfein, who claimed,
“I’m doing god’s work”

Does this really mean that Mr. Blankfein believes that the Federal Reserve is god? You can judge for yourself. While the Fed prints money like no one else could - except god almighty himself [or Gideon Gono, perhaps?] – I really doubt that was the intent back in 1864, when the U.S. adopted “In God We Trust” as their official motto.

And that’s my two cents worth for today.

Got [real] physical gold yet?

Rob Kirby

Hoodwinked?

2009-11-13T16:17:00.004+01:00

The latest a stunning refashioning of the events at Fort Hood may put another person in the spotlight. It has emerged that a previously unknown person may have fired shots that brought down Maj. Hasan. Kimberly Munley was the heroine America desperately sought in the hours after the massacre at the Fort Hood army base in Texas. Both shooters were armed, while on base, contrary to base policy. 2 or 3 shooters is now the re-versioned report being floated by the Army.

In this latest version a previously unknown person may in fact have fired the bullets that brought down Maj. Hasan, not Munley. A witness said it was unclear whether Munley fired off a shot before another person arrived, shooting Hasan until he fell to the ground. It is still unclear who actually shot him as both person claim to be the hero. In TV appearances, Munley and the other person have thus far failed to clear up exactly who shot him. Munley insisted that she fired at Hasan. The tale of Munley's apparent heroism roughly parallels the case of Jessica Lynch. It is becoming more plausible that Maj. Hasan was setup to be a patsy rather than an innocent hit by "friendly" fire. Until the forensic evidence is released to the special intelligence investigation no one will know the actual truth.

Contrary to all other previous claims by the Army, Hasan was born in the USA not Palestine. Maj. Hasan was born in the USA to Jordanian parents not Palestinian parents. On numerous occasions the Army has attempted to link him to Palestinian unrest, al-qaeda or other extremist groups. The links have here-to-for been floated by the Army's propaganda arm, USASOCOM have been proven to be unproductive.

In another more startling reversal for the Army. Contrary to their preposterous reports, Hasan's military personnel record indicates that he did not apply for an early discharge from the army, as a conscientious objector or for any reason as previously stated by the Army. He had never been written up for poor performance. Nearly every news item from the Army and has issued through USASOCOM has turned out to be false or misleading.

The investigation into the real circumstances surrounding the stories offered by the Army and USASOCOM are being investigated by John Brennan, an advisor on homeland security. The Intelligence investigation is being met with fierce resistance by the Army, because they claim it will interfere with the Army's criminal investigation. If it interferes with their criminal investigation, why were they constantly grandstanding in the "News Media"? Thus the intelligence investigation is being denied critical forensic evidence necessary to sort through the many versions of the Army's stories. According to "The Patriot Act" John Brennan has full authority to investigate any investigation being made by the Army. He will not be hoodwinked and he has the full faith of the Department of Homeland Security and the President and will receive all the support that he needs to ferret out the truth, irrespective of Army stonewalling.

Petraeus Says Afghan Logistics Make Buildup Difficult

2009-11-12T23:33:00.005+01:00

C-J

General Petraeus is a master of the understatement, when compared to the master of grandstanding McCrystal. McCrystal disembled infront of Congress when he talked about his part in the Pat Tillman Fraud. He should be fired and dishonorably discharged. In any profession there are 2 parts to your responsibilities: (Ethics) and (Competence) General McCrystal showed he was incompetent nd unethical when he signed the Pat Tillman Fraudulent report. General McCrystal has a 12 to 1 numerical advantage over the Taliban and Al Quaeda plus an overwhelming technological advantage. What he doesn't have is a reliable supply line and the ability to efficiently use the troops he already has.

REAL MEN LOVE LOGISTICS

If the Afghan War was ever winnable the Cheney-Bushistas (bullshistas) would have done so, because they wanted and craved the glory. They soon discovered, after a few staged and super-hyped "successes", that they couldn't win their war and were mired down. To distance themselves from the looming catastrophe, they made a name change from American Forces to NATO Forces. To escape even more embarrassment, for their reckless adventure in Afghanistan, they "ginned up" and super-hyped another war to find those "WMD's" that were here or there and maybe even everywhere. In quick succession they began appointing a series of new NATO and American Commanders in 2 "theaters" of war. (They were all American Generals) Unfortunately all these Generals in Command have adopted historically failed military strategies. They should have read "The Art of War" or the military strategies of Alexander The Great. The Cheney-Bushistas last desperate act before the 2008 elections was to download their unfinished business onto another Presidency and blame it for the loss.

Because the Cheney-Bush Presidency didn't negotiate long term leases with Kyrgyzstan, (A logistical blunder with imminent consequences) the Government of Kyrgyzstan will close the US military base in Manas to Americans. They have virtually ordered the Americans (NATO) out of their Country, shutting an indispensable supply line for America(NATO). The only remaining land supply lines are through the steep gorges and nearly indefensible high mountain passes like the Khyber Pass between Afghanistan and Pakistan. The steep and narrow valley gorges between Kyrgyzstan, Tajikistan and Afghanistan are already under siege and effectively closed. The Taliban have demonstrated they can close any high mountain pass between Afghanistan and Tajikistan or Pakistan, almost at will. America (NATO) may have to fight it's way out of Afghanistan through Pakistan. This is a Military Planer's nightmare and it could come true. Lets hope not, but the logistical odds are against us, about 10 to 1.

If the passes were cut off, then the only exit would be by expensive, cumbersome and limited airlift, leaving most of the heavy weapons and materials behind. Only a moron would deploy forces into areas without reliable logistical support. But that's exactly what the Cheney-Bush Presidency did. The 103,000 troops under McChrystal's command in Afghanistan, include 63,000 Americans, more than half of whom arrived this year as part of an escalation strategy begun under the previous Cheney-Bush Presidency. Under the Obama Presidency the force is set to rise to 110,000 including 68,000 Americans by December 2009.

If you have Google Earth I encourage you to familiarize yourself with the countries on all sides of Afghanistan and ask yourself the following question; How can I give adequate logistical support to the present forces or more forces in the future? Then take a ground eye view of the Khyber Pass and ask yourself; How could I move thousands or even 10 troops through this natural killing field? You can't and you shouldn't because these passes can close at any time for any reason. Currently all passes between Afghanistan and Pakistan are closed because of an "agriculture inspection" quarrel. These switchback passes are narrow and enclosed within steep gorges and high canyon walls. Vulnerable bridges can be closed by landslides, earthquakes, snow, rain, mud slides, flash floods, Taliban attacks or simple quarrels between neighboring tribes. Any of which can disable or wipe out infrastructure for weeks at a time. Imagine the predicament of a battalion including heavy vehicles and tanks caught between two non-existent bridges and a steep cliff on one side and a deep gorge on the other. Do you begin to see their vulnerabilities, now just add rain or snow. Would the Taliban allow them to pass without a single casualty? Even if 1 tank were simply disabled could the others continue unhindered?

All domestic costs including Congressional allocations of about a hundred or so billion dollars a year, will be between $3 to $6 trillion dollars. This is equal to 1/4 to 1/2 our Gross Domestic Production. Most if not all of our domestic programs, including Medi-Care and Social Security will become impossible. Afghanistan will be politically fatal for this and future Presidencies. All choices will end in tears. Now the logical question arises; "Should we bet the farm and go for it"? Unfortunately the Cheney-Bush Presidency already did and the farm is in jeopardy

In the background we can still hear the apoplectic Pentagon shill, Dick Cheney, shouting out his constant and reckless drivel, desperately continuing to shift the blame onto the following Presidency. He is obviously and irresponsibly defending his fabricated justifications for invading Afghanistan and Iraq. There was no meaningful reason to invade Afghanistan. I agree with George F. Will, "Only Pakistan really mattered".

In a recent article by James Cordesman he lays out his reasons for the apparent failures up to today. The main point I would make about his article is; He is fully vested in failed policies and was a prominent talking head during the cheer leading portion of the run-up to the Afghan and Iraqi wars. He also lays out the same tired and discredited view that it's ”Not our fault”. (When will they ever take responsibility for their job?) It is my recollection that during every funding request, they were given more money than they asked for and they spent it. I remember seeing pallets of money being unloaded in Baghdad and it simply disappeared without any accounting, whatsoever. Maybe Afghanistan became the stepsister of Iraq, but they had a job to do and they are now whining about not having sufficient support. Well here is the best advice that the Military/Industrial Complex can get; “Get out now and take responsibility for your failure”.

One correction is necessary. The Cheney-Bushistas knew that the recent history of Afghanistan proved a war was unwinnable and they betray their fore-knowledge by trying to make it Obama's war. President Obama was barely 100 days into his Presidency when the Military-Industrial-GOP complex named it "Obama's War". If it were winnable they would have taken the credit, instead they download their sack of manure on America and call it their patriotic duty.
C-J

By Tony Capaccio

Nov. 12 (Bloomberg) -- Afghanistan’s infrastructure makes any buildup of troops there difficult, General David Petraeus, the head of U.S. Central Command, said today.

“The reality of Afghanistan is that it’s all hard, all the time,” Petraeus said at a Bloomberg conference in Washington. He said that U.S. forces had “learned a great deal about irregular warfare” from the surge of U.S. troops in Iraq.

Former President George W. Bush’s surge aided social stability in Iraq and reduced the level of violence in the country, Petraeus said.

“The surge was really a surge of ideas as much as it was a surge of forces,” he said. War violence in Iraq is down 90 percent from the spring of 2007, he said.

Petraeus was speaking at a conference held by Bloomberg Ventures, a unit of Bloomberg LP, parent of Bloomberg News.

He said counterinsurgency steps like those used in Iraq can be applied to the conflict in Afghanistan.

“The concepts, the importance of securing and serving the population, helping Afghans with a government that can be seen as legitimate” can be applied while “implemented with a really nuanced understanding of Afghanistan,” Petraeus said.

Petraeus declined to address specifics of the Obama administration’s debate on how many troops to add in Afghanistan over the 68,000 now in place.

In Afghanistan, it would be more difficult than it was in Iraq to quickly build up U.S. forces if Obama decides to send more troops.

“It is really hard to get additional forces in, compared with what we were able to do in Iraq,” Petraeus said. Logistics in Iraq were aided by U.S. infrastructure in Kuwait, he said.

In contrast, he said “there are enormous challenges in that respect in Afghanistan, but the enemy has enormous challenges as well.”

To contact the reporter on this story: Anthony Capaccio in Washington at acapaccio@bloomberg.net

Losing Capitalism

2009-11-12T17:34:00.000+01:00

We lost capitalism a long time ago. We have become fascist, as Lenin predicted would happen as capitalism failed.

The hallmarks of a fascist economy are the privatization of profit but the socialization of losses. That's what the bailouts are doing.

Then there is the corporatism which is the political foundation of fascism (as Mussolini points out), in which corporations and government align together against the general population. That is what we are seeing with the mandatory health insurance.

Doggy day at the beach

2009-11-12T17:21:00.001+01:00

Trial of Fort Hood shooting suspect could be lengthy affair

2009-11-12T16:05:00.016+01:00

C-J

In other words, the Army's case is already starting to fall apart. I would like to see the forensics, especially the firing pin, land and groove and extractor marks on all of the "recovered" shell casings that probably would prove that there was more than 1 shooter. I would also like to see the bullet entry and paths in Maj. Hasan's body to see if they came from the exact same angle as those of a 105lb armed? private security guard and Jessica Lynch standin.

But just like the jet engine serial numbers from 9/11 they will never see the light of day. They are now a "State Secret". The Army's case is becoming more laughable everyday and they can't back down. They also allege that this trial could drag on for years depending on the "defendants" health. If he had died or if he dies they will wrap it up in a few minutes. The most likely scenario is 2 or more years of unattributed leaks from "informed" sources that will continue the slanders of Maj. Hasan.

If there is a change of venue the most probable place it will go is Fort Bragg N.C. and the home of American Military Special Operations and Psyops. (USASOCOM). Since USASOCOM is probably behind this Psyops in the first place they will have more opportunities to slander Maj. Hasan. Would the Army ever lie for political reasons? DUHH!! Two individual cases come to my mind, Jessica Lynch and Pat Tillman.

C-J

By Anthony Spangler | The Fort Worth Star-Telegram
FORT WORTH — Complicated by a federal investigation into possible terrorist ties and the prospect of mental issues, the prosecution of Maj. Nidal Malik Hasan will likely be a lengthy and intricate process, military legal experts say.

Hasan has been identified by military officials as the lone suspect in the Fort Hood shootings last week that left 13 dead and more than 30 wounded — the deadliest mass shooting at a U.S. military installation.

A former Army staff judge advocate and military law expert at Texas Tech University suggests that it could take about two years to go to the military equivalent of a trial, depending on the defendant's health. And the outcome of the case would likely end up mired in complex appeals.

"We never had a case quite like this before . . . because of pretrial publicity, it will create a lot of complications," said Richard Rosen, vice chairman of the university’s law school and former military justice attorney at Fort Hood.

Many factors will make the legal process challenging for prosecutors and defense attorneys: the number of witnesses, whether the actions were related to terrorism, mental capacity and the prospect of the death penalty. What may be the most difficult decision, military legal experts say, is whether the case will be tried at Fort Hood.

The convening authority in the case, which will be one of Hasan's commanders, could request a change of venue.

Still, Rosen said, Hasan could get a fair trial.

"There could be a lot of prejudice there and, because of the tremendous pretrial publicity, there could be pressure to move the case elsewhere," he said. "But experience has been that military jurors are an independent bunch. The military jurists are smart people. The officers will all be college-educated and people with advanced degrees."

The war between facts and beliefs

2009-11-11T16:27:00.002+01:00

An Ancient Warfare: Facts vs. Beliefs

By Jeff Gates Staff Writer fot Veterans Today
Military Veterans & Foreign Affairs Journal

In unconventional warfare, manipulated beliefs are used to displace inconvenient facts. When waging war by way of deception, false beliefs are an oft-deployed weapon. Recall Iraqi weapons of mass destruction? Iraqi ties to Al Qaeda? Iraqi mobile biological weapons laboratories?

Iraqi meetings in Prague with Al Qaeda? Iraqi purchases of yellowcake uranium from Niger? All these claims were reported as true. All were later proven false or, worse, fabricated. Yet all were widely believed. Only the yellowcake uranium was conceded as bogus before the invasion of Iraq. As the U.S. crafted its response to the provocation of a mass murder on U.S. soil, those widely shared beliefs shaped a consensus to wage war on a nation that had no hand in it.

A similar deception-traceable to the same source-is now working to expand this war to Iran. Based on fast-emerging events, the next conflict could include Pakistan.

The modern battlefield has shifted. Ground warfare is now secondary. Likewise air strikes, combat troops, naval support and even covert operations. Those physical operations are all downstream of information operations. Manipulated beliefs come first. Psyops precede bombs and bullets. Hardware ranks a distant third.

First and foremost are the consensus shapers and thought manipulators who target perceptions and opinions until a critical mass of agreement is reached. Then comes war. Those skilled at such duplicity induced coalition troops to war in Iraq. Knowledge was their target. Manipulate thought and all else was downstream.

Unconventional warfare is waged "upstream" with the assistance of those with the means, motive and opportunity to massage consensus opinion. Where are modern-day battles fought? Not on the ground nor in the air nor on the seas.

The mindset is the primary theater of operations. The first battlefield is the public's shared field of consciousness. The death and destruction come later.

Deceit is not new to warfare. What's new is the reach of the technologies-including modern media technologies-that now enable deception on a global scale

Military action remains subordinate to politics. Politics, in turn, are subordinate to those skilled at inducing consensus beliefs. Regardless whether command is civilian or military, decision-making is no better than the information on which decisions depend. That's why the Israel lobby has long targeted U.S. lawmakers as a strategic force-multiplier by the Israel lobby. [See: "How Israel Controls U.S." http://www.arabnews.com/?page=7§ion=0&article=124829&d=24&m=7&y=2009]

With lawmaking dependent on information, those skilled at the manipulation of knowledge can operate atop the chain of command. As a system of law reliant on informed choice, democracy can be dislodged in plain sight by those skilled at inducing a shared mindset-a consensus-by manipulating thought, belief and emotion.

Thus the strategic motivation for media dominance by the Masters of Deceit in the U.S., Canada, Australia, the U.K., Germany, India and other key nations that comprise the "coalition of the willing" induced to invade Iraq. Overlay media ownership with member states of this coalition and a common undisclosed bias becomes apparent.

When coordinated across four key areas, such "Information Operations" can displace informed decision-making with an undisclosed agenda. In retrospect, that systemic duplicity explains how the U.S. was deceived to lead this coalition to war in the Middle East. Here's a brief look at each area: geopolitical, strategic, operational and tactical.

Duplicity in Plain Sight

The geopolitical realm is where the "framing" of future conflicts often first emerges. The Clash of Civilizations appeared in 1993 as an article in Foreign Affairs. When this premise was published as a book in 1996, more than 100 non-governmental organizations were prepared to promote its thematic conflict-of-opposites.

That agreed-to consensus facilitated the seamless transition from the Cold War to a perpetual Global War on Terrorism. Thus the fate of the post-Cold War "peace dividend."

This widely shared mindset emerged just as A Clean Break appeared in print with its proposal for removing Saddam Hussein as part of a Colonial Zionist strategy for "securing the realm"-an expanded Greater Israel. Richard Perle, then a member of the U.S. Defense Policy Board, led the All-Ashkenazi team who prepared that 1996 report for Israeli Prime Minister Benjamin Netanyahu.

In 2001, Perle became chairman of the Pentagon's policy board. Strategically, that's a good example of working "upstream" to frame U.S national security issues around a preset agenda-for a foreign nation. Perle left the Board in February 2004 after 17 years of wielding insider influence. When your numbers are small but your ambitions large, what choice do you have but to wage war by way of deception?

Strategically, to evoke a new global war required a plausible Evil Doer linked to a credible provocation. The branding of the Taliban did not emerge in the "field" until March 2001 with their destruction of the ancient Buddhas at Bamiyan. Widely portrayed in mainstream media as a "cultural Holocaust," that high-profile deed put Afghanistan's previously obscure Taliban on a global Top-Ten list as certifiably evil.

The missing piece in marketing The Clash premise: the mass murder of September 11, 2001. Strongly provoked emotions, as with 9-11, facilitate the displacement of facts with what a targeted mindset can be induced to believe. That process was enhanced by the presence of a pre-staged Evil Doer and pre-staged intelligence that was flawed, false or outright fixed-but nevertheless widely reported as fact by mainstream media.

The capacity to succeed with such an operation is enhanced by the combined presence of: (a) evocation (images of religious extremism), (b) provocation (a mass murder), (c) association (a Doer of Evil), and (d) manipulation-as mainstream media parroted phony intelligence with virtually no investigative journalism.

This psyops campaign was facilitated by plausibly credible political leaders who dutifully read their lines from fear-evoking scripts written by this same insider network of agenda-shapers. That emotional manipulation included not only the "Axis of Evil" framing but also a widely broadcast WMD sound bite: "We don't want the smoking gun to be a mushroom cloud."

Mainstream media even reported as credible false accounts of "high-level links" between the secular Iraqi government and the religious fundamentalists of Al Qaeda. Yet anyone familiar with the region knew they despised each other. Truth was not the point. Nor facts. Informed consent was only an obstacle to overcome.

Deception on such a scale required a capacity to sustain a veneer of plausibility and credibility - i.e., believability. Thus the critical role played by mainstream media.

The Power of Association

When waging war on the public's shared mindset, the power of association is one of the most effective weapons. Thus the potent imagery of the peaceful Buddhas at Bamiyan when associated with destruction, violence and religious extremism.

Thus the ease with which evil doing Al Qaeda extremists were associated in the American mindset with the Taliban - and the evil of 9-11 with known Evil Doer Saddam Hussein even though the intelligence was proven false.

Thus too the associative impact of Secretary of State Colin Powell's February 2003 testimony before the U.N. Security Council. His credibility as a globally recognizable military leader (the Powell "brand") was deployed-as a weapon-to lend the appearance of truth to lies about Iraq's possession of mobile biological weapons.

Akin to showcasing the celebrity endorsement of a consumer product, this testimonial by a trusted military leader was broadcast worldwide in the lead-up to war. Powell was not the only "mark" in this operation. So were the U.N., the U.S. military and a global public. Both aggressor and aggrieved became casualties of this duplicitous "field-based" warfare. Meanwhile the source of this deception once again faded into the background.

Operationally, by the time the U.S. was induced to invade Iraq, 100-plus Israeli Mossad agents had been operating in Mosul for more than a decade. Soon after the invasion, several moderate clerics were murdered. Their elimination enhanced the capacity to provoke a conflict-of-opposites between long-warring Shias and Sunnis.

That conflict-within-a-conflict helped catalyze an insurgency that converted a clash into a quagmire. That result was mathematically model-able by an Israeli cadre of game theory war-planners. [See: "How Israel Wages Game Theory Warfare." http://intifada-palestine.com/2009/08/20/how-israel-wages-game-theory-warfare/ ]

As Information Operations proceed at the geopolitical, strategic and operational level, tactical deceit and misdirection provide essential support akin to reserve forces deployed on an as-needed basis. Serial provocations are required to sustain the serial conflicts essential to maintain the faux plausibility of the mega-theme: The Clash.

The recurring use of crises to catalyze and maintain instability should be of immediate concern to Islamabad. A long-standing Indo-Israel alliance may well be coordinating the frequency of violent incidents that continue to strain relationships between nuclear-armed Pakistan and its neighbor Iran.

Reflecting similar tactics, the most recent Israeli assault on Gaza was scheduled between Christmas 2008 and the January 2009 inauguration of a new U.S. commander-in-chief elected on a platform of hope and a promise of change. The timing of that murderous incursion minimized the capacity to criticize. President-elect Obama said nothing.

Meanwhile this serial agent provocateur set the stage with that assault for another delayed reaction from those brutalized by six decades of occupation. And from those in the broader Muslim community outraged at the U.S. for enabling this behavior.

When that reaction emerges-as it will-Tel Aviv will again assert the moral high ground as a perennial victim living in a hostile anti-Semitic neighborhood. By deploying U.S. weaponry, Israeli aggression will again make Americans appear guilty by association-endangering the U.S. while enhancing the plausibility of the narrative: The Clash of Civilizations.

The uncomfortable truth is that the U.S. is guilty-for continuing to condone this treachery-to its own detriment. Meanwhile the only change is in the presidency with no substantive change in U.S.-Israeli policies. And no hope for those most affected by this duplicity-including both the U.S. military and those it was induced to target.

As critics of Israeli policy in Gaza emerged in academia, the Anti-Defamation League and its international network mounted an intimidation campaign to silence a professor at the University of California at Santa Barbara. By advertising that campaign widely, the ADL silenced thoughtful academics worldwide. [See: "Treason in Plain Sight?" http://criminalstate.com/2009/07/treason-in-plain-sight/ and "Education: The Ultimate Battlefield" http://criminalstate.com/2009/08/education---the-ultimate-battlefield/]

By Way of Deception

To succeed, Information Operations require both deceit and denial of access to the facts required for informed consent. How else can anyone explain the enduring perception that Israel is a democracy? Even now, a majority of Americans believe that Israel is an ally despite more than six decades of nonstop deceit, spying, treachery and ongoing treason.

Any observer of recent events in Pakistan should be concerned at the duplicitous history of those who have an "existential" stake in sustaining The Clash storyline. With any semblance of stability, an investigation will confirm that the intelligence fixed to induce the U.S. to war originated with a transnational network of pro-Israeli operatives.

Democracy assumes that all of us collectively are smarter than any of us individually. Thus the need for an educated electorate informed by an unbiased media providing the facts required to reason together.

Thus too the strategic need to dominate mainstream media by those with an undisclosed bias who are skilled at waging war by way of deception. We now see portrayed in that opinion-shaping domain a world turned inside out where the victim is cast as aggressor and the predator as prey.

The facts in the recent Goldstone Report confirm a need to investigate dozens of Israeli war crimes in Gaza as well as crimes against humanity. Instead of following the facts wherever they lead-consistent with the rule of law-on November 3rd, the U.S. House of Representatives voted 334-36 in favor of a resolution describing the report as "irredeemably biased" and opposing any further consideration.

That resolution was proposed by Howard Berman, Ashkenazim chairman of the Foreign Relations Committee, and Congresswoman Ileana Ros-Lehtinen, senior Republican on the panel and also Ashkenazim. Meanwhile Nita Lowey, the Ashkenazim chairwoman of the State and Foreign Operations Appropriations Subcommittee warned, by implication, that her colleagues in the Congress would jeopardize funding for their projects if "further consideration" was given to the Goldstone Report.

The House vote came one day before the U.N. General Assembly discussed the report. A day later, on November 5th, a U.S. Army psychiatrist, a Muslim, killed 13 and wounded 29 preparing for deployment to Afghanistan. Within 24 hours, more than 250 media personnel appeared at Fort Hood, the nation's largest military base, to report on the event.

Many of them framed the event as confirming The Clash premise and even the on-base presence of "Islamo-fascism." Suggesting the act of a "home-grown terrorist," Jewish-Zionist Senator Joe Lieberman, chairman of the Homeland Security Committee, called for Congressional hearings into whether the U.S. military could have prevented it.

Interviewed in Palestine, the grandfather of U.S.-born and educated psychiatrist Nidal Hasan spoke of his grandson's love of the U.S. and said simply, "America made him what he is." While that comment hardly excuses this conduct, that poignant statement includes a point that Americans find difficult to contemplate. Yet we also found it uncomfortable to consider that the U.S.-Israeli relationship was a key motivation behind 9-11 and other attacks on Americans and American facilities.

The Goldstone Report called for an investigation of facts suggesting criminal conduct both by Israelis and Palestinians. Written by an eminent South African Jewish jurist, Richard Goldstone's daughter conceded that her father's findings would have been far harsher had he not been a Zionist.

Yet even the possibility that unfavorable facts could seep into the "field" required that the Israel lobby unleash its compliant Congressional forces in a litmus test of legislative loyalty-regardless of the facts. Or, indeed, because of the facts. It's difficult to imagine a vote more clearly indicative of how a pro-Israeli bias has corrupted the rule of law.

Other disturbing facts also posed a danger of gaining traction, including a November 5th report that the International Atomic Energy Agency found "nothing to be worried about" in Iran's recently revealed uranium enrichment site. That fact was preemptively displaced from the "field" the day before with reports of a well-timed Israeli boarding of a ship in international waters where weapons were found that were allegedly bound for Iran-supported Hezbollah.

When waging field-based warfare, timing is everything. That's particularly the case when, as here, a belief-manipulating adversary is faced with the greatest danger of its six decade life: facts that conflict with the narrative required to sustain The Clash storyline.

Best Story Wins

With consensus beliefs the upstream target, democracy becomes the downstream casualty. When manipulated beliefs displace facts, the rule of law degenerates into a faith-based parody of self-governance. To protect the informed consent essential to freedom requires that those waging war on the public's shared mindset become transparent so that those complicit can be made apparent.

How old is this form or warfare? Answer: How long has behavior been manipulated with beliefs? How long has faith been deployed to displace facts? The form of warfare is ancient; only the means are modern.

Upstream warfare and strategic deceit are only "unconventional" for the target. For Jewish extremists, such duplicity is business-as-usual.

This analysis describes how warfare is waged in plain sight in the Information Age. Without the complicity of mainstream media, this deceit could not have succeeded on such a scale.

In the Information Age, duplicity is how treason can be taken to scale-in plain view and, to date, with legal impunity-both in the U.S. and in the coalition member nations whose citizens were also targeted by those chronicled in this account.

The common source of this deceit remains little known either to the American public or the people in those nations the U.S. led to war. Here in the U.S., the tattered remnants of our system of informed consent are held hostage by this media-induced duplicity-and by legislators more inclined to protect their personal interests than the national interest.

There lies the strategic role for online media free of conspiracy theories that obscure the analytical clarity required to wage this battle with confidence. What's described here is warfare being waged on knowledge by an enemy within. Liberty faces no greater danger than those targeting its foundation of informed consent.

What has been made of the U.S. due to our "special relationship" with this extremist enclave is not the form of governance to which our civilian and military leaders swore their allegiance. With our civilian leadership compromised by the Israel lobby, to whom do U.S. military leaders owe their allegiance-to this latest in a series of corrupted presidencies or to the people whose freedom they took an oath to protect from all enemies, both foreign and domestic?

Despite appearances, it is not America that is at war in the Middle East but Americans loyal to this nation who were sent to war by a foreign government imbedded inside what remains of "our" government.

With trans-generational premeditation, Ashkenazim elites and extremists lured the U.S. into an entangled alliance in order to manipulate Americans to wage their expansionist wars and to secure their "realm." Only as the common source of this treason became transparent could those complicit now be held accountable.

For Americans to restore the fact-based rule of law requires sustained pressure from abroad. Our true allies will hold us accountable for what we allowed these extremists to do in our name. As the how of this treason becomes transparent, we Americans will see as our true enemies those who enabled this duplicity-to our long-term detriment. The best way to befriend us is to hold us true to the values we espouse.
--------------------------------------------------------------------------------

Jeff Gates is a Vietnam veteran, widely acclaimed author, attorney, investment banker, educator and consultant to government, corporate and union leaders worldwide; an adviser to policy-makers worldwide; former counsel to the U.S. Senate Finance Committee.

He is also the author of numerous articles and books including his latest book Guilt by Association: How Deception and Self-Deceit Took America to War.

His previous books include Democracy at Risk: Rescuing Main Street From Wall Street and The Ownership Solution: Toward a Shared Capitalism for the 21st Century.

Psyops depends on a lack of critical thinking.

2009-11-10T16:19:00.012+01:00

C-J

Michael Gaddy doesn't mention Jessica Lynch and Pat Tillman, but both of these were American Military Psyops used against America for the political purposes of Cheney/Bush. They aren't the only ones but for now these two examples are a few of the glaring examples of Military Psyops in America used against Americans.

As for 9/11 Bin Laden explicitly denied responsibility for 9/11, but right-wing war mongers and Constitution shreding pundits routinely say that Bin-Laden took responsibility for 9/11. They are liars and traitors and almost all of them work for the American Military Psyops at Fort Bragg NC. USASOCOM. Do you actually believe that a right wing pundit and idiot like Rush Linbaugh gets $27,000,000 a year from selling trinkets and viagra on his show?

100+ shots, 55 dead or wounded. 1 shooter? I think not!!

C-J

Fort Hood Mystery
By Michael Gaddy
LewRockwell.com
11-10--9

The facts as presented by the Army and the media reference the shooting at Fort Hood just don't compute. While I routinely dismiss any "facts" disseminated by the Army and the state's propaganda wing, sometimes referred to as the mainstream media, (MSM) there are some glaring inconsistencies in what has been reported about this tragedy.

First is the report the perpetrator was dead and then hours later the revelation that he was still alive. Exactly how long does it take to determine if a person is dead or alive? Could it be no one knew whom the shooter or shooters were and a story had to be concocted for public consumption? What happened to the two other "suspects" that were detained? What did they do to qualify as suspects and more importantly, what information surfaced that led to their release? One of the suspects reportedly stated he "was with the shooter."

Second is the number of victims from a single shooter. Let us not forget this shooting did not occur at the mall, it occurred on a military installation where the victims had been trained in military tactics and some were combat veterans. We are to believe they did nothing to stop a single shooter and he was allowed to reload several times and continue shooting and the only thing that stopped him was the arrival of a police officer after the gunman had gunned down over 40 people?

And how so very convenient for the state, a perpetrator who was both anti-war and a Muslim; just doesn't get any better than that. Could this be an example of following the philosophy of Rahm Emanuel on dealing with a crisis?

Third was the shutting down of communications in and around Ft. Hood for hours. While the Army and the media will explain this in various scenarios, it also provided the Army with a chance to create whatever story it was they wanted to provide the public on the terrible tragedy. Of course we all know the Army would never distort or lie about the facts involving the deaths of innocents. Well, there is that My Lai thing. People on the ground have told me cell phone towers were jammed to prevent unauthorized dissemination of information after the shooting. Again, the Army would not want any information contrary to the company line emerging from this disaster.

All too convenient for the Army was the rapid release of negative information related to the alleged shooter. It was said he received a negative evaluation report and that he had caused "red flags" to be raised some months ago concerning emails. Do we know anything this detailed about the "suspects" who were released? The caveat was added that it was unclear as to whether the suspect was the author of those emails. So, months ago, alarms were raised about emails the suspect might have sent, yet, in all those months the Army has been unable to determine who wrote them. Yeah, right. If red flags were in fact raised months ago, why did the Army do nothing? Going back to the 9/11 paradigm, we see the same evidence exhibited: the state had prior warnings but did not act on them. This proves unequivocally the government is either incompetent or complicit in both events. Yet, the state would have us all unarmed and depending on them for protection.

President Obama pledged, "to get answers to every single question about this event" but he also promised an end to signing statements, a transparent government, no more torture of detainees, and many more lies.

There has been speculation on the Internet that the shooting could have been a revolt against the Army from soldiers faced with stop-loss and multiple combat tours to Iraq and Afghanistan. While there is no evidence to support this theory, there is also no evidence to support the official Army version of events. Suicides among military personnel and veterans are at alarming levels, yet the Department of Defense does more to hide these facts than it does to deal with them.

The last thing the state can let happen is an awakening by its enforcement arm (military and LE) that they are nothing but tools of oppression and in fact, slaves to the monster they serve. While the military is trained and encouraged to kill and bomb in the name of the state, they are forbidden the means of protection for themselves and their loved ones once they are outside the killing zones designated by the state.

All is not normal inside the military community. This is not just seen in our military, instruments of oppression in other countries are revolting as well.

While it is doubtful we will ever learn the truth of exactly what happened at Fort Hood, we know with a degree of certainty the truth will never be revealed by the Army or the media. Could this have been a false flag event to divert the attention of the American public from the debates and planned demonstrations against the health care fiasco? Could it have simply been another MK Ultra event to further demonize the anti-war element in this country and to lay another crime at the current villain du jour: Muslims? Could there be a connection between this alleged shooter and his fellow Virginia Tech shooter Seung Hui Cho, other than an oblique reference to Cho having a Muslim influence?

One must always ask this question when faced with a story that is issued and controlled by the State: Cui Bono? Wonderful is it not the state is empowered with the unique ability to investigate its own lies and the power of the media and academia to demonize any who would question its veracity, and the support of Boobus, whose livelihood depends on the state's power to redistribute the wealth of the nation from producers to parasites.

November 9, 2009

Michael Gaddy an Army veteran of Vietnam, Grenada, and Beirut, lives in the Four Corners area of the American Southwest.

Copyright © 2009 by LewRockwell.com. Permission to reprint in whole or in part is gladly granted, provided full credit is given.

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