http://www.guardian.co.uk/world/2009/mar/30/afghanistan-tajikistan-obama-pakistan
US opens route to Afghanistan through Russia's backyard
American influence in former Soviet countries could make or break Obama administration's new Afghan-Pakistan strategy
Luke Harding in Nizhny Panj The Guardian, Monday 30 March 2009
The road passes a shimmering green mountain pasture, then dips steeply to a new US-built bridge. Across the languid Panj river is Afghanistan and the dusty northern town of Kunduz. On this side is Tajikistan, Afghanistan's impoverished Central Asian neighbour.
It is here, at what used to be the far boundary of the Soviet empire, that the US and Nato are planning a new operation. Soon, Nato trucks loaded with non-military supplies will start rolling into Afghanistan along this northern route, avoiding Pakistan's perilous tribal areas and the ambush-prone Khyber Pass.
This northern corridor is essential if Barack Obama's Afghan-Pakistan strategy is to work. With convoys supplying US and Nato forces regularly attacked by the Taliban on the Pakistan route, the US is again courting the former Soviet republics of Tajikistan, Uzbekistan, Kyrgyzstan, Kazakhstan and Turkmenistan.
Nato has already signed a transit deal with Tajikistan. It says it expects bilateral agreements with Uzbekistan "within days" and Kazakhstan "within weeks". Pakistan will remain the primary route. But the sleepy Tajik-Afghan border crossing at the village of Nizhny Panj will become a focal point of Obama's Afghan push.
"We used to cross the river by boat. Then the Americans built a bridge," Rasul Nematov, 35, who lives in Nizhny Panj said. Next to his front garden, past a line of washing and a trailing vine, is a Tajik sentry tower. The Pentagon has given Dushanbe, Tajikistan's attractive capital, $10m to beef up security on its mountainous border, a key conduit for Afghanistan's biggest export, heroin.
Currently, only a few dozen Afghan drivers cross the bridge every day. From here they proceed to Dushanbe, filling up their Kamaz trucks with sugar and other goods. They then head home. The route goes past fields of cotton, donkeys, small boys selling fish, and willow and poplar trees, their blossom now floating across a fragrant spring landscape.
"This road to Tajikistan is good. It's safe, quiet," Said Muhammed, 54, an Afghan truck driver from the northern city of Mazar-i-Sharif told the Guardian. He added: "The problem is with the road south from Kabul to Kandahar. I don't drive it. It's dangerous. The Taliban dragged my friend out of his truck and set it on fire."
But looming over the US's latest attempt to get a foothold in Central Asia is the region's former colonial super-power - Moscow. Formally, Russia has offered to help Obama in his attempts to deal with the deteriorating situation in Pakistan and Afghanistan, and last month it agreed the shipment of non-lethal supplies destined for Kabul across Russian territory. Informally, however, Russia has moved decisively to reassert its influence in Central Asia, a region it still regards as its backyard. In 2001 George Bush and Vladimir Putin, the US and Russia's then leaders, cut an informal deal to cooperate over the post-9/11 war in Afghanistan. Moscow allowed the US military to set up several bases in Central Asia.
Since then, though, the Kremlin sees itself as having been betrayed - by what it regards as US-engineered pro-western revolutions in Georgia and Ukraine. It has hit back by sealing backroom deals with Central Asia's democracy-averse strongmen. In 2005 Uzbekistan's president, Islam Karimov, fed up with western criticism of his dire human rights record, kicked Washington out of its military base near the border town of Termiz.
Vital supply point
Last month, meanwhile, Kyrgyzstan announced it was also shutting its US airbase in Manas, named after a legendary Kyrgyz hero who rode a winged horse and performed amazing feats. The base near the Kyrgyz capital, Bishkek, is the US's last outpost in Central Asia, and is a vital supply point for ferrying US troops and supplies to nearby Afghanistan.
Kyrgyzstan's president announced the base's closure in Moscow hours after meeting Russia's president, Dmitry Medvedev, who offered him a $2bn loan. Russia may yet allow the US to carry on using the base - but only as part of a new deal encompassing Moscow's wider strategic concerns on Nato expansion and missile defence.
Analysts say there is likely to be only one winner in Central Asia's new great game -a hackneyed phrase used to describe the romanticised 19th-century struggle between imperial Britain and tsarist Russia, played out against the backdrop of the Pamir mountains and the Hindu Kush. It won't be Washington, they predict.
"It's up and down. Since 2001 the Americans have had the upper hand in Central Asia. Now the Russians are getting back what the Americans have lost," Parviz Mullajanov, an expert in international affairs based in Dushanbe said. He added: "In reality, the US never won the game. Since the collapse of the Soviet Union, Russia has managed to preserve its leading position in Central Asia."
According to Mullajanov, Moscow has significantly boosted its military, economic and intelligence activity across the region. It has other advantages too, he says. "All post-Soviet countries live in Russian-speaking informational space. The majority of people watch Russian TV and read Russian newspapers. They see the outside world through Russian eyes. This is a very powerful tool."
The US's position, by contrast, is "very weak", Mullajanov suggests. Washington's attempts to reach out to civil society and opposition groups have got almost nowhere in Central Asia - a region run by a series of variously repressive and autocratic super-presidents, all apparently in the job for life. The US faces another headache in the shape of China, an ambitious pre-imperial contender in the neighbourhood.
Speaking at the White House on Friday, Obama made it clear that Afghanistan was his administration's top military priority. Instead of concentrating on Iraq, Obama said he intended to "disrupt, dismantle and defeat al-Qaida in Pakistan and Afghanistan". This "clear and focused goal" would require an extra 21,000 US troops, in addition to the 38,000 already there, he declared.
Some, however, wonder how wise Obama is to rely on Central Asia. In a gloomy report, the International Crisis Group recently suggested the region was little better than crisis-rocked Pakistan, describing it "as a seriously risky bet". The report's author, Paul Quinn-Judge, noted: "Its leaders are all former Soviet apparatchiks ... most of the citizens live in deep poverty, and the countries' economies are for the most part feeble and fragile."
Sliding towards meltdown
He went on: "Worst-case scenarios include state collapse, the disintegration of national infrastructure, chaotic succession struggles and Islamic insurgency." If this were not bad enough, Tajikistan and Uzbekistan - the two countries most important to the US's new logistical push - were sliding towards possible economic and social meltdown, the report claimed.
Either way, few in Tajikistan believe Obama's war in Afghanistan can be a success. "The US has already lost the war in Afghanistan. Sooner or later they will be forced to leave the country," Mullajanov said. He added: "The new administration understands very clearly that victory isn't achievable. Instead, the US is going to force the Taliban to make concessions, and to talk to them from a position of power."
Back in Nizhny Panj, Tajik border guards in dark blue uniforms cast an expert eye over another Afghan lorry. Tajikistan has agreed to allow up to 250 Nato trucks a day to cross here, a decision that will turn the riverside hamlet into a major hub. "I don't mind Nato. But what we really need here is a minibus to take our kids to school," said Nematov, a local. He pointed out: "It's 5km [three miles] away. At the moment they walk."
Mar 30, 2009
Mar 28, 2009
Jah is the king rocker
The Daily Reckoning, Friday, March 27, 2009 Born Biddable by Bill Bonner Paris, France
Mr. Timothy Geithner was the man who was on watch when the ship ran aground. His job, as head of the Federal Reserve Bank of New York, was to keep an eye on Wall Street. Now, he's come forward with a new $1 trillion plan to get the boat back on the water. He should have left it to the ship-breakers.
We almost feel sorry for him; Sisyphus had it easier. But Sisyphus was doing honest work. Besides, when Geithner's tour of duty is finished, the public will pay for his jackass bamboozles for decades, while he moves on to a cushy job at Goldman Sachs...or maybe AIG itself, if it is still in business.
Of course, we are out of harmony with mainstream opinion; but we are always out of harmony. When the USS Bubble was steaming along we fretted and warned: it was too heavily laden with debt; it was off course; the captain and his mates were all morons. Then, when it washed up, we switched to a more cheerful song, with the sound of blowtorches cutting her up...and the furnaces melting her down...as background music. Finally, capitalism was doing its job and happily whistling our tune.
But now that we are jolly, the rest of the world is full of doom and gloom. Thomas L. Friedman, writing in the New York Times, tells us that we have a "once in a century financial crisis on our hands..." We can't let capitalism do her work, he says; we have to get this wreck out of the mud and back on the cruise circuit!
So far, America's efforts to borrow its way out of debt have not gone well. The scum gets dredged up from the bottom on Wall Street. But when it is dumped onto the ship, the whole thing just sinks lower. Henry Paulson began the digging with his TARP program in September of last year. Then came TALF. Not to mention various trillion-dollar salvage operations from the Fed. How much do all these rescue efforts cost?
The last number we saw - in Barron's - was $14 trillion.
Last week, Mr. Ben Bernanke announced to the whole world that he was doing the sort of thing that people used to be ashamed of. Instead of dredging out the mud, he was going to blow hot air into the rusty hull. And on Wednesday, he began following in the footsteps of pioneers at the Bank of England, the Bank of Japan, and most importantly, the Bank of Zimbabwe. Buying U.S. Treasury debt directly, he will add trillions to the U.S. money supply. Last year, before Lehman Brothers dove in the water and never came up; the entire monetary base of the United States of America measured $850 billion. With so much gas being pumped, it will soon rise to 5 times that amount - or more than $4 trillion.
"So far, America’s efforts to borrow its way out of debt have not gone well. The scum gets dredged up from the bottom on Wall Street. But when it is dumped onto the ship, the whole thing just sinks lower."
Daily Reckoning readers may be having as hard a time keeping up with the bailouts as we are. Here, we attempt a simplification:
America still sinks under the weight of more than twice as much debt as usual. The collateral behind that debt has lost about 20% of its value - or about $10 trillion. Normally, those losses should be born by the capitalists - the reckless lenders and investors who extended loans to people who couldn't pay them back. But all of the bailouts have one thing in common: they aim to shift the losses from the people who deserve them to the people who don't...from the culpable to the gullible. Which is why they are so popular. After such a remarkable excursion, many are those who deserve to lose money - from those who bought doublewide trailers they couldn't afford...to those who lent them the money...to those who securitized the debt and passed it out all over town. That's why the biggest problem confronting the salvage workers has been to find some other group of innocents dumb enough and rich enough to pay the bills.
Mr. Bernanke's focused on shifting the burden onto dollar holders worldwide - notably the Chinese - by inflating the currency. But the Bank of China is also America's biggest creditor and has threatened to get upset if the dollar loses too much value. Besides, inflation is no sure thing. As James Ferguson points out, Japan has been trying to incite inflation for many years - with no success.
Until now, Geithner and his boss targeted the taxpayers. Private losses became public losses...as toxic assets were bought up, or backed up, by the government. But when the public got a look at what the bailouts actually paid for - million dollar bonuses, for example - it was outraged. The mob called for Geithner's head; the stingers themselves got stung. This latest plan has a fairer sound to it, but it is a bigger fraud. "The solution depends on getting private money funds to team up with the government to buy up toxic assets" wrote Mr. Friedman, anticipating the Geithner plan by only a few hours and the truth by an eternity. "The president's comprehensive plan to remove the toxic assets from our ailing banks...is the key to our economic recovery..." he continued.
Geithner has invited investors up to the trough. His plan leaves the government with 90% of the risk; investors will quickly figure out how to get 100% of the profits. The latest estimate tells us that all this salvage work will add $9.5 trillion to the U.S. national debt over the next 10 years. At the current rate, it would still take 20 years to pay it off, even if every dime of savings of every American were applied to the task. Necessarily, the debt sludge will be dumped on the next generation - who don't vote...and won't notice the smell for years. Enjoy your weekend, Bill Bonner The Daily Reckoning
************
Wahyusamputra writes: Well, folks, here we are again at "Walking in the voodoo night/While the white man's gods are dying" time. Jah is the king rocker!
And Mr. Bankfein, the current head of Goldman, Sachs was actually in the room when the AIG bailout decision was made, stamped, and sent out, that’s the Goldman, Sachs who were about to get a large pile of the cash from AIG, of course, in settlement of their obligations. Click, click, click. The system runs as though on greased wheels, which it does, of course.
And in England, an auction of government bonds "failed" - buyers didn't show up.
And the owners of all these debts are coughing quietly and saying we hope you are safeguarding our investment.
************
Here’s Bill Bonner again:
"Investment grade corporate bond indices are [still] priced for default rates of 38% in Europe; 40% in the US; and 51% in the UK - all worse than the Depression," writes John Authers in today's Financial Times.
Today's International Herald Tribune tells that "shanty-towns" are beginning to appear throughout the United States. People are setting up tent communities...shacks...and Rio-style favelas - in America. The paper shows a photo of a group of tents under a California freeway. It's not hard to understand why. Many families live paycheck to paycheck...just one week ahead of the rent payments. If the paychecks stop - even for a short time - they're in trouble.
The mobs are forming...
Give the sans-culottes a chance...and they'll turn violent. So far, two bosses have been held hostage in France. Employees wanted something the bosses either couldn't or wouldn't give.
In England, the yahoos attacked poor Sir Fred Goodwin's house. Fred ran the Royal Bank of Scotland into the ground; you'd think the rabble would be delighted.
In America, meanwhile, they organize bus tours to gawk at AIG executives' houses...and howl for blood. Apologize, resign...or commit suicide, suggested Senator Grassley.
"The corporate security business is booming," says the International Herald Tribune.
Until now, the whole bonus/executive pay/bailout spectacle was just an amusing diversion - diverting the public's attention with a trifling few million dollars, while the feds picked their pickets for trillions. But now, it's turning ugly.
Our guess is that the blood will flow...but later. It's still fairly early in the correction. Investors have lost money - lots of it. Homeowners have lost their homes. Working stiffs and Wall Street sharpies have both lost their jobs. But the violence-prone yahoos still expect something for nothing. The bailout plans will work, they believe. The government will step in and save them. They haven't figured out that the government's bailouts are just making their situation worse.
Mr. Timothy Geithner was the man who was on watch when the ship ran aground. His job, as head of the Federal Reserve Bank of New York, was to keep an eye on Wall Street. Now, he's come forward with a new $1 trillion plan to get the boat back on the water. He should have left it to the ship-breakers.
We almost feel sorry for him; Sisyphus had it easier. But Sisyphus was doing honest work. Besides, when Geithner's tour of duty is finished, the public will pay for his jackass bamboozles for decades, while he moves on to a cushy job at Goldman Sachs...or maybe AIG itself, if it is still in business.
Of course, we are out of harmony with mainstream opinion; but we are always out of harmony. When the USS Bubble was steaming along we fretted and warned: it was too heavily laden with debt; it was off course; the captain and his mates were all morons. Then, when it washed up, we switched to a more cheerful song, with the sound of blowtorches cutting her up...and the furnaces melting her down...as background music. Finally, capitalism was doing its job and happily whistling our tune.
But now that we are jolly, the rest of the world is full of doom and gloom. Thomas L. Friedman, writing in the New York Times, tells us that we have a "once in a century financial crisis on our hands..." We can't let capitalism do her work, he says; we have to get this wreck out of the mud and back on the cruise circuit!
So far, America's efforts to borrow its way out of debt have not gone well. The scum gets dredged up from the bottom on Wall Street. But when it is dumped onto the ship, the whole thing just sinks lower. Henry Paulson began the digging with his TARP program in September of last year. Then came TALF. Not to mention various trillion-dollar salvage operations from the Fed. How much do all these rescue efforts cost?
The last number we saw - in Barron's - was $14 trillion.
Last week, Mr. Ben Bernanke announced to the whole world that he was doing the sort of thing that people used to be ashamed of. Instead of dredging out the mud, he was going to blow hot air into the rusty hull. And on Wednesday, he began following in the footsteps of pioneers at the Bank of England, the Bank of Japan, and most importantly, the Bank of Zimbabwe. Buying U.S. Treasury debt directly, he will add trillions to the U.S. money supply. Last year, before Lehman Brothers dove in the water and never came up; the entire monetary base of the United States of America measured $850 billion. With so much gas being pumped, it will soon rise to 5 times that amount - or more than $4 trillion.
"So far, America’s efforts to borrow its way out of debt have not gone well. The scum gets dredged up from the bottom on Wall Street. But when it is dumped onto the ship, the whole thing just sinks lower."
Daily Reckoning readers may be having as hard a time keeping up with the bailouts as we are. Here, we attempt a simplification:
America still sinks under the weight of more than twice as much debt as usual. The collateral behind that debt has lost about 20% of its value - or about $10 trillion. Normally, those losses should be born by the capitalists - the reckless lenders and investors who extended loans to people who couldn't pay them back. But all of the bailouts have one thing in common: they aim to shift the losses from the people who deserve them to the people who don't...from the culpable to the gullible. Which is why they are so popular. After such a remarkable excursion, many are those who deserve to lose money - from those who bought doublewide trailers they couldn't afford...to those who lent them the money...to those who securitized the debt and passed it out all over town. That's why the biggest problem confronting the salvage workers has been to find some other group of innocents dumb enough and rich enough to pay the bills.
Mr. Bernanke's focused on shifting the burden onto dollar holders worldwide - notably the Chinese - by inflating the currency. But the Bank of China is also America's biggest creditor and has threatened to get upset if the dollar loses too much value. Besides, inflation is no sure thing. As James Ferguson points out, Japan has been trying to incite inflation for many years - with no success.
Until now, Geithner and his boss targeted the taxpayers. Private losses became public losses...as toxic assets were bought up, or backed up, by the government. But when the public got a look at what the bailouts actually paid for - million dollar bonuses, for example - it was outraged. The mob called for Geithner's head; the stingers themselves got stung. This latest plan has a fairer sound to it, but it is a bigger fraud. "The solution depends on getting private money funds to team up with the government to buy up toxic assets" wrote Mr. Friedman, anticipating the Geithner plan by only a few hours and the truth by an eternity. "The president's comprehensive plan to remove the toxic assets from our ailing banks...is the key to our economic recovery..." he continued.
Geithner has invited investors up to the trough. His plan leaves the government with 90% of the risk; investors will quickly figure out how to get 100% of the profits. The latest estimate tells us that all this salvage work will add $9.5 trillion to the U.S. national debt over the next 10 years. At the current rate, it would still take 20 years to pay it off, even if every dime of savings of every American were applied to the task. Necessarily, the debt sludge will be dumped on the next generation - who don't vote...and won't notice the smell for years. Enjoy your weekend, Bill Bonner The Daily Reckoning
************
Wahyusamputra writes: Well, folks, here we are again at "Walking in the voodoo night/While the white man's gods are dying" time. Jah is the king rocker!
And Mr. Bankfein, the current head of Goldman, Sachs was actually in the room when the AIG bailout decision was made, stamped, and sent out, that’s the Goldman, Sachs who were about to get a large pile of the cash from AIG, of course, in settlement of their obligations. Click, click, click. The system runs as though on greased wheels, which it does, of course.
And in England, an auction of government bonds "failed" - buyers didn't show up.
And the owners of all these debts are coughing quietly and saying we hope you are safeguarding our investment.
************
Here’s Bill Bonner again:
"Investment grade corporate bond indices are [still] priced for default rates of 38% in Europe; 40% in the US; and 51% in the UK - all worse than the Depression," writes John Authers in today's Financial Times.
Today's International Herald Tribune tells that "shanty-towns" are beginning to appear throughout the United States. People are setting up tent communities...shacks...and Rio-style favelas - in America. The paper shows a photo of a group of tents under a California freeway. It's not hard to understand why. Many families live paycheck to paycheck...just one week ahead of the rent payments. If the paychecks stop - even for a short time - they're in trouble.
The mobs are forming...
Give the sans-culottes a chance...and they'll turn violent. So far, two bosses have been held hostage in France. Employees wanted something the bosses either couldn't or wouldn't give.
In England, the yahoos attacked poor Sir Fred Goodwin's house. Fred ran the Royal Bank of Scotland into the ground; you'd think the rabble would be delighted.
In America, meanwhile, they organize bus tours to gawk at AIG executives' houses...and howl for blood. Apologize, resign...or commit suicide, suggested Senator Grassley.
"The corporate security business is booming," says the International Herald Tribune.
Until now, the whole bonus/executive pay/bailout spectacle was just an amusing diversion - diverting the public's attention with a trifling few million dollars, while the feds picked their pickets for trillions. But now, it's turning ugly.
Our guess is that the blood will flow...but later. It's still fairly early in the correction. Investors have lost money - lots of it. Homeowners have lost their homes. Working stiffs and Wall Street sharpies have both lost their jobs. But the violence-prone yahoos still expect something for nothing. The bailout plans will work, they believe. The government will step in and save them. They haven't figured out that the government's bailouts are just making their situation worse.
Mar 27, 2009
The Pillow Book of Sei Shonagon
The corporate TV news channels have gone into full throttle on the cherry blossoms, some blossoms are actually coming out, will the current cold snap discourage them, is it too early and so forth. Twenty times a day a report on the state of the buds with full color close up video. The viewing of the cherry blossoms is a central Washington DC rite.
Many years ago the Japanese government gave to the government of Washington DC a number of Japanese cherry trees. These were planted in the heart of Washington, around the tidal basin, together with the Japanese ceremony of viewing the cherry blossoms.
(But Americans do not have a lifetime of Buddhism as the Japanese do into which to put the ceremony. This is true. Nevertheless, the ceremony of viewing the cherry blossoms, has been spliced into Washington culture as firmly as a gene from a jellyfish is spliced into the DNA of a potato, and the Japanese ceremony, as understood in Washington, of viewing the cherry blossoms, is carried out every year. Opening ceremonies tomorrow, March 28, Parade, April 4, Fireworks, April 11.)
The Pillow Book of Sei Shonagon is the diary of a Japanese court lady, not at all what you might expect a pillow book to be, and coming back from a court ceremony Lady Sei views the newly fallen snow on the outlines of roofs and walls and castle battlements, thinks how beautiful it is, and writes in her diary that “Unfortunately the beautiful crisp outline of the newly fallen snow adorns the houses of the poor just as much as the dwelling of persons of distinction and significance.” A pity, she thought, but she could think of nothing to do about it; equally, getting sunshine to fall only on celebrities has so far eluded US culture.
That opposing impulses may exist even in the same culture is demonstrated by another Japanese institution, Soka Gakai International, a Japanese Buddhist group loyal to the Daishonin, who appear to take the opposite view:
“Date: Wed, 25 Mar 2009 Subject: Daily Guidance for Mar 26
President Ikeda's Guidance for Mar 26
Of foremost importance are the people-not celebrities, the powerful, the rich, scholars or others whom society deems great or praiseworthy. The purpose of all things must be the happiness of the people. Everything else should be but a means to that end. Those who fail to recognize this fundamental point and look down on the people and exploit them are thoroughly vile and contemptible; they are a hindrance to people's happiness.”
I guess the moral is that a potato with a jellyfish gene spliced into it remains a potato, even if it occasionally has strange bouts of jellyfish behavior. Or perhaps -
“The rain it falleth on the just
As well as on the unjust feller
But harder on the just because
The unjust’s got the just’s umbrella"
Many years ago the Japanese government gave to the government of Washington DC a number of Japanese cherry trees. These were planted in the heart of Washington, around the tidal basin, together with the Japanese ceremony of viewing the cherry blossoms.
(But Americans do not have a lifetime of Buddhism as the Japanese do into which to put the ceremony. This is true. Nevertheless, the ceremony of viewing the cherry blossoms, has been spliced into Washington culture as firmly as a gene from a jellyfish is spliced into the DNA of a potato, and the Japanese ceremony, as understood in Washington, of viewing the cherry blossoms, is carried out every year. Opening ceremonies tomorrow, March 28, Parade, April 4, Fireworks, April 11.)
The Pillow Book of Sei Shonagon is the diary of a Japanese court lady, not at all what you might expect a pillow book to be, and coming back from a court ceremony Lady Sei views the newly fallen snow on the outlines of roofs and walls and castle battlements, thinks how beautiful it is, and writes in her diary that “Unfortunately the beautiful crisp outline of the newly fallen snow adorns the houses of the poor just as much as the dwelling of persons of distinction and significance.” A pity, she thought, but she could think of nothing to do about it; equally, getting sunshine to fall only on celebrities has so far eluded US culture.
That opposing impulses may exist even in the same culture is demonstrated by another Japanese institution, Soka Gakai International, a Japanese Buddhist group loyal to the Daishonin, who appear to take the opposite view:
“Date: Wed, 25 Mar 2009 Subject: Daily Guidance for Mar 26
President Ikeda's Guidance for Mar 26
Of foremost importance are the people-not celebrities, the powerful, the rich, scholars or others whom society deems great or praiseworthy. The purpose of all things must be the happiness of the people. Everything else should be but a means to that end. Those who fail to recognize this fundamental point and look down on the people and exploit them are thoroughly vile and contemptible; they are a hindrance to people's happiness.”
I guess the moral is that a potato with a jellyfish gene spliced into it remains a potato, even if it occasionally has strange bouts of jellyfish behavior. Or perhaps -
“The rain it falleth on the just
As well as on the unjust feller
But harder on the just because
The unjust’s got the just’s umbrella"
Mar 23, 2009
Melasti
This March will be much of blessings and busy for us (Balinese Hindus.) Galungan will be on 18 of March, Melasti on 23-24 March, Nyepi on 26 March, and Kuningan on 28 March.
To celebrate Melasti, here is Bill Bonner in Paris, France to say “Yes we can’t.”
The Daily Reckoning, March 20, 2009
Yes We Can't! By Bill Bonner, Paris, France
Free market capitalism is the "god that failed," writes Martin Wolf. Thus does Financial Times lead off a feeble chorus of lament in its "Future of Capitalism" series. What do we do now? is the question. Can capitalism be tamed? Can it be harnessed? "Yes we can!" says America's president.
Richard Layard from the London School of Economics, offered a way forward:
"We should stop the worship of money and create a more human society," he writes. "Happiness has not risen since the 1950s in the US or Britain," he points out, despite big increases in wealth. "Modern happiness research can help find answers," he believes.
"Old fashioned socialist planning is the only coherent alternative to a collapsing capitalist economy," an alert FT reader added.
Given the depth of these insights, we decided not to dive into this discussion headfirst. Instead, we will simply mock the swimmers from the bank. Brazil's president, Lula da Silva, for example, could only come up with a campaign slogan: "The future of human beings is what really matters." But who can blame them? They want a capitalism that makes people happy...fairer, gentler, greener... they want to reform it...to housebreak it...to cut its balls off so they can safely put it on a leash and introduce it to their daughters.
But they miss the point of it altogether: we can't reform capitalism; it reforms us. Capitalism punishes mistakes and rewards virtue (or good luck) - not necessarily quickly or gently...but roughly and imperfectly, like a hanging judge in a frontier town. On paper, of course, we can do better. Imagine a world where public employees are saints and geniuses who do such a swell job of allocating capital we want for nothing. But then, when we get a chance to see them in action, we find that they are bigger rascals than the capitalists themselves.
This week, under pressure from its new proprietor - the U.S. government - AIG released a list showing who had gotten more than $100 billion of its bailout money. At the top of the list of recipients was a familiar name - Goldman Sachs. In a truly astonishing co-incidence, Goldman is the firm that had been run by the very person who headed up the AIG rescue - former Treasury Secretary Hank Paulson. And what serendipity! Lloyd Bankfein - Goldman's top man now - was actually in the room with the feds when the AIG rescue plan was put together.
"...we can’t reform capitalism; it reforms us. Capitalism punishes mistakes and rewards virtue (or good luck) – not necessarily quickly or gently...but roughly and imperfectly..."
In the room; in the deal. But the big scalawags ducked out of the press almost immediately. Instead, the headlines focused on the small fry. AIG paid bonuses of $450 million - some charged it was $1 billion - to its executives. These guys shouldn't get bonuses, came the popular outcry; they should get a firing squad.
You'll recall the story. The insurance giant AIG lost money on a series of gambles. For example, it gambled that it could insure the mortgage payments of people who couldn't afford to buy a house. During the bubble years, people bought houses at outrageous prices. They could borrow 80% of the purchase price from government-backed debt mongers Fannie Mae and Freddie Mac. Buyers were supposed to put up the other 20% themselves, giving lenders a margin of safety in case the transactions didn't work out as planned. But, if an insurance company would guarantee the other 20%, Fannie could cover 100% of this "enhanced" mortgage loan. AIG found that insuring this part of the loan was profitable - as long as nobody asked questions. But then the market price for the collateral dropped - by as much as 50% in some areas. Suddenly, people were walking away from their houses. Defaults on these "enhanced" loans ran at 5 times the rates on normal Fannie-backed mortgages.
An ordinary person would look at these facts and pronounce the same judgment as the capitalist market: AIG and Fannie both deserve to go broke. But give him enough higher education in the economics department, or a job in government, and the fool rushes in --with someone else's money.
In the theory of bailouts, an ailing firm is given a helping hand when it needs it. This gives it time to get back on its feet, and prevents it from dragging down its employees, lenders, investors and counterparties. But what actually happens is much simpler. Money is goes from the pocket of the person who earned it...to the pocket of someone who didn't...from the innocent bystander to the fellow who caused the accident. Capitalism takes money away from erring capitalists; the capitalism improvers give it back to them.
And who decides who gets the loot? Ah...as soon as you hold them up to the light, the angels' wings fall off. By and large, these are the same cherubim and seraphim - such as Hank Paulson - who were supposed to be leading...regulating...and controlling capitalism when it ran into a ditch. Not a single one raised a warning. Instead, they whooped for the free market and passed the whiskey bottle to the driver! And now, thanks to their bailouts, AIG continues writing insurance against mortgage loans. Seventy-three AIG executives continue getting $1 million bonuses. A long line of reckless counterparties goes unpunished. And Hank Paulson offers advice to Financial Times readers on how to make capitalism work better.
But that is always the problem with improving capitalism...even in the slapstick American way. The reformers promise a 'new deal,' but they've always got an ace up their sleeve somewhere.
************
http://www.lewrockwell.com/schiff/schiff9.html The Mother of All Bells by Peter Schiff, March 21, 2009
There is an old adage on Wall Street that no one rings a bell at major market tops or bottoms. That may be true in normal times, but as many have noticed, we are now completely through the looking glass. In this parallel reality, Ben Bernanke has just rung the loudest bell ever heard in the foreign exchange and government debt markets. Investors who ignore the clanging do so at their own peril. The bell’s reverberations will be felt by everyday Americans, whose lives are about to change in ways few can imagine. While nearly every facet of America’s economy has been devastated over the past six months, our national currency has thus far skipped through the carnage with nary a scratch. Ironically, the U.S. dollar has been the beneficiary of the global economic crises which the United States set in motion. As a result, our economy has thus far been spared the full force of the storm.
This week the Federal Reserve finally made clear what should have been obvious for some time – the only weapon that the Fed is willing to use to fight the economic downturn is a continuing torrent of pure, undiluted, inflation. The announcement should be seen as a game changer that redirects the fury of the financial storm directly onto our shores.
In its statement, the Fed announced its intention to purchase an additional $1 trillion worth of U.S. treasury and agency debt. The purchases, of course, will be made with money created out of thin air through the Fed’s printing presses. Few can doubt that they will persist with these operations until the economy returns to its former health. Whether or not this can ever be accomplished with a printing press alone has never been seriously considered. Bernanke himself admits that we are in uncharted waters, with no map or compass, just simply a hope that more dollars are the answer.
Rather than solving our problems, more inflation will only add to the crisis. Falling asset prices, the credit crunch, declining consumer spending, bankruptcies, foreclosures, and layoffs are all part of the necessary rebalancing of our economy. These wrenching movements, however painful, are the market’s attempts to resolve the serious problems at the root of our bubble economy. Attempts to literally paper-over these problems will lead to disaster.
Now that the Fed has recklessly shown its hand, the mad dash to get out of Treasuries and dollars should not be far off. The more the Fed prints to buy bonds the less the dollar is worth. Holders of our debt (read China and Japan) understand this dynamic. We must expect that they will not only refuse to buy new bonds, but they will look to unload those bonds they already own.
Under normal circumstances, if creditors grew concerned that inflation was eating into their returns, the Fed would raise interest rates to entice them to buy. However, the Fed will avoid this course of action as it fears higher rates are too heavy a burden for our debt-laden economy to bear. To maintain artificially low rates, the Fed will be forced to purchase trillions more debt then it expects as it becomes the only buyer in a seller’s market.
Just last week, Chinese premier Wen Jiabao voiced concern about his country’s massive investments in U.S. government debt. In the most unequivocal statement yet by the Chinese leadership on this issue, Wen made it plain that he was concerned with depreciation, not default. With his fears now officially confirmed by the Fed statement, we must wonder when the Chinese will finally change course.
There is a growing consensus that if China no longer wants to buy our bonds, we can simply print the money and buy them ourselves. This naïve view fails to consider the consequences implicit in such a change. When the Treasury sells bonds to China, no new dollars are printed. Instead, China prints yuan which it then uses to buy treasuries. This effectively allows America to export its inflation to China. However, now that we will be printing the money ourselves, the full inflationary impact will fall directly on us.
With such a policy in place, America has now become a banana republic. It won’t be too long before our living standards reflect our new status. Got Gold?
***********************
Would you buy a used economy from this man?
Note for the weaker brethren: During the Vietnam war in the nineteen seventies, (President Nixon and Mr. Kissinger in charge) a very successful poster appeared of President Nixon, unshaven and shifty looking, and the legend “Would you buy a used car from this man?” On a flight somewhere the paper had a cartoon showing President Nixon, unshaven and shifty looking, with a broken down tank labeled “Vietnam War,” held together with chicken wire, busted turret, etc, and the legend “Would you buy a second hand war from this man?”
My personal favorite was the same tank, broken turret, held together with chicken wire, labeled Vietnam War with Nixon clutching his forehead and saying “It’s a used car! And I bought it!”
************
Wahyusamputra writes: When the island of Java was taken over by Islam, the Hindus of Java left Java and settled on the neighboring island of Bali, “the island of gods and demons” as Mahatma Ghandi described it.
Balinese Hindus do not regard themselves as owners of the land that they till into those beautifully organized step fields up the side of a hill. The gods own the land, say the Balinese Hindus, and we are merely the stewards. If we do well, and are good stewards, the gods reward us with good harvests and good fortune.
Bali people think only about religion, say the Javanese, mostly Moslem, (but owing to the operation of Pancasila, some who are, or have become, Buddhists, Christians, and so on.) Bali is full of figurines and statues of major and minor gods and demons, carefully dressed in regularly changed clean cloth, and they have little woven baskets of flowers and fruit and incense in front of them. On one side of a block, you’d find three, perhaps. Nice place.
To celebrate Melasti, here is Bill Bonner in Paris, France to say “Yes we can’t.”
The Daily Reckoning, March 20, 2009
Yes We Can't! By Bill Bonner, Paris, France
Free market capitalism is the "god that failed," writes Martin Wolf. Thus does Financial Times lead off a feeble chorus of lament in its "Future of Capitalism" series. What do we do now? is the question. Can capitalism be tamed? Can it be harnessed? "Yes we can!" says America's president.
Richard Layard from the London School of Economics, offered a way forward:
"We should stop the worship of money and create a more human society," he writes. "Happiness has not risen since the 1950s in the US or Britain," he points out, despite big increases in wealth. "Modern happiness research can help find answers," he believes.
"Old fashioned socialist planning is the only coherent alternative to a collapsing capitalist economy," an alert FT reader added.
Given the depth of these insights, we decided not to dive into this discussion headfirst. Instead, we will simply mock the swimmers from the bank. Brazil's president, Lula da Silva, for example, could only come up with a campaign slogan: "The future of human beings is what really matters." But who can blame them? They want a capitalism that makes people happy...fairer, gentler, greener... they want to reform it...to housebreak it...to cut its balls off so they can safely put it on a leash and introduce it to their daughters.
But they miss the point of it altogether: we can't reform capitalism; it reforms us. Capitalism punishes mistakes and rewards virtue (or good luck) - not necessarily quickly or gently...but roughly and imperfectly, like a hanging judge in a frontier town. On paper, of course, we can do better. Imagine a world where public employees are saints and geniuses who do such a swell job of allocating capital we want for nothing. But then, when we get a chance to see them in action, we find that they are bigger rascals than the capitalists themselves.
This week, under pressure from its new proprietor - the U.S. government - AIG released a list showing who had gotten more than $100 billion of its bailout money. At the top of the list of recipients was a familiar name - Goldman Sachs. In a truly astonishing co-incidence, Goldman is the firm that had been run by the very person who headed up the AIG rescue - former Treasury Secretary Hank Paulson. And what serendipity! Lloyd Bankfein - Goldman's top man now - was actually in the room with the feds when the AIG rescue plan was put together.
"...we can’t reform capitalism; it reforms us. Capitalism punishes mistakes and rewards virtue (or good luck) – not necessarily quickly or gently...but roughly and imperfectly..."
In the room; in the deal. But the big scalawags ducked out of the press almost immediately. Instead, the headlines focused on the small fry. AIG paid bonuses of $450 million - some charged it was $1 billion - to its executives. These guys shouldn't get bonuses, came the popular outcry; they should get a firing squad.
You'll recall the story. The insurance giant AIG lost money on a series of gambles. For example, it gambled that it could insure the mortgage payments of people who couldn't afford to buy a house. During the bubble years, people bought houses at outrageous prices. They could borrow 80% of the purchase price from government-backed debt mongers Fannie Mae and Freddie Mac. Buyers were supposed to put up the other 20% themselves, giving lenders a margin of safety in case the transactions didn't work out as planned. But, if an insurance company would guarantee the other 20%, Fannie could cover 100% of this "enhanced" mortgage loan. AIG found that insuring this part of the loan was profitable - as long as nobody asked questions. But then the market price for the collateral dropped - by as much as 50% in some areas. Suddenly, people were walking away from their houses. Defaults on these "enhanced" loans ran at 5 times the rates on normal Fannie-backed mortgages.
An ordinary person would look at these facts and pronounce the same judgment as the capitalist market: AIG and Fannie both deserve to go broke. But give him enough higher education in the economics department, or a job in government, and the fool rushes in --with someone else's money.
In the theory of bailouts, an ailing firm is given a helping hand when it needs it. This gives it time to get back on its feet, and prevents it from dragging down its employees, lenders, investors and counterparties. But what actually happens is much simpler. Money is goes from the pocket of the person who earned it...to the pocket of someone who didn't...from the innocent bystander to the fellow who caused the accident. Capitalism takes money away from erring capitalists; the capitalism improvers give it back to them.
And who decides who gets the loot? Ah...as soon as you hold them up to the light, the angels' wings fall off. By and large, these are the same cherubim and seraphim - such as Hank Paulson - who were supposed to be leading...regulating...and controlling capitalism when it ran into a ditch. Not a single one raised a warning. Instead, they whooped for the free market and passed the whiskey bottle to the driver! And now, thanks to their bailouts, AIG continues writing insurance against mortgage loans. Seventy-three AIG executives continue getting $1 million bonuses. A long line of reckless counterparties goes unpunished. And Hank Paulson offers advice to Financial Times readers on how to make capitalism work better.
But that is always the problem with improving capitalism...even in the slapstick American way. The reformers promise a 'new deal,' but they've always got an ace up their sleeve somewhere.
************
http://www.lewrockwell.com/schiff/schiff9.html The Mother of All Bells by Peter Schiff, March 21, 2009
There is an old adage on Wall Street that no one rings a bell at major market tops or bottoms. That may be true in normal times, but as many have noticed, we are now completely through the looking glass. In this parallel reality, Ben Bernanke has just rung the loudest bell ever heard in the foreign exchange and government debt markets. Investors who ignore the clanging do so at their own peril. The bell’s reverberations will be felt by everyday Americans, whose lives are about to change in ways few can imagine. While nearly every facet of America’s economy has been devastated over the past six months, our national currency has thus far skipped through the carnage with nary a scratch. Ironically, the U.S. dollar has been the beneficiary of the global economic crises which the United States set in motion. As a result, our economy has thus far been spared the full force of the storm.
This week the Federal Reserve finally made clear what should have been obvious for some time – the only weapon that the Fed is willing to use to fight the economic downturn is a continuing torrent of pure, undiluted, inflation. The announcement should be seen as a game changer that redirects the fury of the financial storm directly onto our shores.
In its statement, the Fed announced its intention to purchase an additional $1 trillion worth of U.S. treasury and agency debt. The purchases, of course, will be made with money created out of thin air through the Fed’s printing presses. Few can doubt that they will persist with these operations until the economy returns to its former health. Whether or not this can ever be accomplished with a printing press alone has never been seriously considered. Bernanke himself admits that we are in uncharted waters, with no map or compass, just simply a hope that more dollars are the answer.
Rather than solving our problems, more inflation will only add to the crisis. Falling asset prices, the credit crunch, declining consumer spending, bankruptcies, foreclosures, and layoffs are all part of the necessary rebalancing of our economy. These wrenching movements, however painful, are the market’s attempts to resolve the serious problems at the root of our bubble economy. Attempts to literally paper-over these problems will lead to disaster.
Now that the Fed has recklessly shown its hand, the mad dash to get out of Treasuries and dollars should not be far off. The more the Fed prints to buy bonds the less the dollar is worth. Holders of our debt (read China and Japan) understand this dynamic. We must expect that they will not only refuse to buy new bonds, but they will look to unload those bonds they already own.
Under normal circumstances, if creditors grew concerned that inflation was eating into their returns, the Fed would raise interest rates to entice them to buy. However, the Fed will avoid this course of action as it fears higher rates are too heavy a burden for our debt-laden economy to bear. To maintain artificially low rates, the Fed will be forced to purchase trillions more debt then it expects as it becomes the only buyer in a seller’s market.
Just last week, Chinese premier Wen Jiabao voiced concern about his country’s massive investments in U.S. government debt. In the most unequivocal statement yet by the Chinese leadership on this issue, Wen made it plain that he was concerned with depreciation, not default. With his fears now officially confirmed by the Fed statement, we must wonder when the Chinese will finally change course.
There is a growing consensus that if China no longer wants to buy our bonds, we can simply print the money and buy them ourselves. This naïve view fails to consider the consequences implicit in such a change. When the Treasury sells bonds to China, no new dollars are printed. Instead, China prints yuan which it then uses to buy treasuries. This effectively allows America to export its inflation to China. However, now that we will be printing the money ourselves, the full inflationary impact will fall directly on us.
With such a policy in place, America has now become a banana republic. It won’t be too long before our living standards reflect our new status. Got Gold?
***********************
Would you buy a used economy from this man?
Note for the weaker brethren: During the Vietnam war in the nineteen seventies, (President Nixon and Mr. Kissinger in charge) a very successful poster appeared of President Nixon, unshaven and shifty looking, and the legend “Would you buy a used car from this man?” On a flight somewhere the paper had a cartoon showing President Nixon, unshaven and shifty looking, with a broken down tank labeled “Vietnam War,” held together with chicken wire, busted turret, etc, and the legend “Would you buy a second hand war from this man?”
My personal favorite was the same tank, broken turret, held together with chicken wire, labeled Vietnam War with Nixon clutching his forehead and saying “It’s a used car! And I bought it!”
************
Wahyusamputra writes: When the island of Java was taken over by Islam, the Hindus of Java left Java and settled on the neighboring island of Bali, “the island of gods and demons” as Mahatma Ghandi described it.
Balinese Hindus do not regard themselves as owners of the land that they till into those beautifully organized step fields up the side of a hill. The gods own the land, say the Balinese Hindus, and we are merely the stewards. If we do well, and are good stewards, the gods reward us with good harvests and good fortune.
Bali people think only about religion, say the Javanese, mostly Moslem, (but owing to the operation of Pancasila, some who are, or have become, Buddhists, Christians, and so on.) Bali is full of figurines and statues of major and minor gods and demons, carefully dressed in regularly changed clean cloth, and they have little woven baskets of flowers and fruit and incense in front of them. On one side of a block, you’d find three, perhaps. Nice place.
Mar 22, 2009
Obama backs Wall Street
http://atheonews.blogspot.com/2009/03/obama-maneuvers-to-protect-wall-street.html
Obama maneuvers to protect Wall Street bonuses By Barry Grey 21 March 2009
Obama is attempting to navigate between placating public anger over AIG and similar outrages by Wall Street firms that have received hundreds of billions of dollars in taxpayer funds and satisfying the demands of the financial elite, which will brook no government interference in its drive for self-enrichment.
Responding to an outpouring of public anger over the revelation that AIG, the recipient of $173 billion in government loans and cash, last week granted large bonuses, some in the millions of dollars, to executives and traders in its financial products division, the House voted 328 to 93 to impose a 90 percent surtax on bonuses given to employees with a family income of $250,000. The bill covers only firms that have received $5 billion or more in government handouts under the $700 billion Troubled Asset Relief Program (TARP) and other financial rescue programs.
The financial products division was the unit of the insurance company that sold trillions of dollars worth of credit default swaps to banks, hedge funds and other financial companies to insure their investments in collateralized debt obligations and other exotic financial instruments backed by subprime mortgages. It played a major role in erecting the financial house of cards that has come crashing down, effectively bankrupting AIG and much of the US and international financial system and plunging the world economy into the deepest recession since the 1930s.
All but six House Democrats voted for the bill and nearly half of House Republicans joined in support, defying House Minority Leader John Boehner, who opposed the measure. The bill is retroactive, covering all bonuses at affected companies granted after January 1, 2009. It thus includes the AIG bonuses that have become a focal point for public anger over the entire government bailout of Wall Street.
The House bill, in fact, covers only 13 of the more than 500 companies that have received some $250 billion in cash infusions from the US Treasury. In addition to AIG, the list includes Citigroup, JPMorgan Chase, Wells Fargo, Bank of America, Goldman Sachs, Morgan Stanley, PNC Financial Services Group, US Bancorp, General Motors, General Motors Acceptance Corporation and the mortgage finance giants Fannie Mae and Freddie Mac.
The Senate version, which could be voted on as early as next week, covers a wider range of firms—those receiving $100 million or more in government cash. It would impose a 70 percent surtax on most bonuses at these companies, half to be paid by the individual recipients and half by the firms.
The aim of the House and Senate measures, far from fundamentally reforming the financial system or requisitioning the vast fortunes of Wall Street speculators, is to mitigate public anger in order to pave the way for passage of a new round of bank bailouts being prepared by the Obama administration. This was signaled by Democratic Congressman Artur Davis of Alabama, who said, "We're eroding confidence in the way taxpayer dollars are managed and spent. And the cost of that? It's going to make it harder than ever for us to do the things that must be done to get this economy going moving forward."
Similarly, in the Senate, Democrat Max Baucus, the chairman of the Senate Finance Committee, indicated at a hearing Wednesday that the bill he coauthored was aimed at pressuring AIG to voluntarily revoke the bonuses. He told the CEO of AIG, "We're going to introduce the bill. I think it's sufficient leverage to get these paid back."
As the Wall Street Journal reported Friday, "Still, the feeling at one major bank Thursday was that the legislation would get significantly watered down, making it applicable only to AIG, or, perhaps, firms that have received more government assistance than just the initial handouts made under the TARP program..."
Nevertheless, the measures have ignited a storm of indignant protest from Wall Street and threats to refuse to participate in government financial rescue programs. Amid charges of "McCarthyism" and denunciations of the proposals as "vengeance," leading banking figures are threatening, in effect, to allow the financial system to collapse rather than accept even the most modest limits on executive pay.
Already, more than 200 banks have withdrawn their applications to receive government cash in order to avoid government limits on executive pay and restrictions on their financial operations.
The vast fortunes piled up by Wall Street executives have played a major role in the destabilization of the US and world economy. Over the past three decades, trillions have been drained from society's resources and the wealth created by the working class to sustain the lavish lifestyles of the modern robber barons. Just last year, as they were recording record losses, Wall Street firms paid more than $18.4 billion in bonuses in New York City.
The Washington Post summed up the attitude of the financial elite to the House bill in its lead editorial Friday, headlined "Washington Gone Wild." The newspaper wrote, "Yesterday, the House had the feel of a mob scene..." It went on to warn that "The effective confiscation of legally earned and contractually promised payments may well be unconstitutional..."
Needless to say, the leading newspaper of the nation's capital has expressed no similar qualms about government diktats requiring the ripping up of union contracts at auto companies and the slashing of workers' wages and benefits.
The editorial echoed the assertions of bankers that such limits on corporate compensation would "drive away the best talent" at AIG and other firms. Precisely the nature of the "talent" of executives who masterminded the collapse of the company and much of the financial system, the newspaper did not explain.
It then got to its central point: "The Obama administration reportedly intends in the next week or two to announce the details of a "private-public partnership" to buy troubled assets from ailing banks. The participation of private hedge funds, investment banks and other firms will be key to the plan's success..."
This refers to the administration's plan to entice speculators into buying bad loans from the banks by using taxpayer money to give them low-cost loans and guarantee the vast bulk of any potential losses. This is a scheme to guarantee returns of 20 percent or more to big investment firms and provide a new source of fees and profits to the banks, while offloading the banks' worthless assets onto the public.
Following the House vote, Obama issued a statement designed to appeal to popular anger while making no commitment to support the measure. He said the vote "rightly reflects the outrage that so many feel over the lavish bonuses that AIG provided its employees at the expense of the taxpayers who have kept this failed company afloat." He continued, "I look forward to receiving a final product that will serve as a strong signal to the executives who run these firms that such compensation will not be tolerated."
Appearing that evening on the "Tonight Show with Jay Leno," Obama responded to a question from the comedian on the House bill by further distancing himself from it. "I understand Congress' frustrations," he said. "They're responding to, I think, everybody's anger. But I think the best way to handle this is to make sure that you close the door before the horse gets out of the barn."
This statement sums up the hypocrisy of the administration as well as Congress. Obama, both before and after assuming office, intervened to prevent the door from being closed to AIG and other financial firms—including Merrill Lynch, Fannie Mae and Freddie Mac—that used taxpayer money to award lavish bonuses.
During the presidential campaign, candidate Obama joined with the Bush administration in opposing any serious executive pay restrictions in the original TARP bailout legislation. As president elect, he lobbied to block attempts to attach meaningful compensation limits in the congressional authorization for the second $350 billion installment of TARP funds. And his administration intervened in the final stages of congressional action on his economic stimulus bill to sanction bonuses at AIG and other firms receiving government cash by exempting bonuses agreed to before the February 11 enactment of the stimulus legislation from limits on executive compensation.
Subsequently in the Leno interview, Obama responded to a question as to whether some people should go to jail for the economic debacle by offering a virtual blanket amnesty to Wall Street. "Most of what got us into trouble was perfectly legal," he said. He sought to discredit public anger as "finger-pointing," declaring that he was seeking to "break a pattern in Washington where everybody's always looking for someone to blame."
The real attitude of the Obama administration was spelled out by the Wall Street Journal, which reported Friday that "privately, there's concern within the Obama administration that the angry political atmosphere now surrounding the federal bailout program will scare away private participants the government needs to help bolster the financial system."
The newspaper added that administration officials "are looking for ways to blunt the bill's impact if it becomes law..."
On the same day that Obama vouched for the lawfulness of the American financial aristocracy, the House Ways and Means Committee's oversight subcommittee revealed that thirteen of the largest recipients of government bailout funds failed to pay more than $220 million in federal taxes, including two firms—which the committee refused to name—that owe $113 million and $102 million.
Obama maneuvers to protect Wall Street bonuses By Barry Grey 21 March 2009
Obama is attempting to navigate between placating public anger over AIG and similar outrages by Wall Street firms that have received hundreds of billions of dollars in taxpayer funds and satisfying the demands of the financial elite, which will brook no government interference in its drive for self-enrichment.
Responding to an outpouring of public anger over the revelation that AIG, the recipient of $173 billion in government loans and cash, last week granted large bonuses, some in the millions of dollars, to executives and traders in its financial products division, the House voted 328 to 93 to impose a 90 percent surtax on bonuses given to employees with a family income of $250,000. The bill covers only firms that have received $5 billion or more in government handouts under the $700 billion Troubled Asset Relief Program (TARP) and other financial rescue programs.
The financial products division was the unit of the insurance company that sold trillions of dollars worth of credit default swaps to banks, hedge funds and other financial companies to insure their investments in collateralized debt obligations and other exotic financial instruments backed by subprime mortgages. It played a major role in erecting the financial house of cards that has come crashing down, effectively bankrupting AIG and much of the US and international financial system and plunging the world economy into the deepest recession since the 1930s.
All but six House Democrats voted for the bill and nearly half of House Republicans joined in support, defying House Minority Leader John Boehner, who opposed the measure. The bill is retroactive, covering all bonuses at affected companies granted after January 1, 2009. It thus includes the AIG bonuses that have become a focal point for public anger over the entire government bailout of Wall Street.
The House bill, in fact, covers only 13 of the more than 500 companies that have received some $250 billion in cash infusions from the US Treasury. In addition to AIG, the list includes Citigroup, JPMorgan Chase, Wells Fargo, Bank of America, Goldman Sachs, Morgan Stanley, PNC Financial Services Group, US Bancorp, General Motors, General Motors Acceptance Corporation and the mortgage finance giants Fannie Mae and Freddie Mac.
The Senate version, which could be voted on as early as next week, covers a wider range of firms—those receiving $100 million or more in government cash. It would impose a 70 percent surtax on most bonuses at these companies, half to be paid by the individual recipients and half by the firms.
The aim of the House and Senate measures, far from fundamentally reforming the financial system or requisitioning the vast fortunes of Wall Street speculators, is to mitigate public anger in order to pave the way for passage of a new round of bank bailouts being prepared by the Obama administration. This was signaled by Democratic Congressman Artur Davis of Alabama, who said, "We're eroding confidence in the way taxpayer dollars are managed and spent. And the cost of that? It's going to make it harder than ever for us to do the things that must be done to get this economy going moving forward."
Similarly, in the Senate, Democrat Max Baucus, the chairman of the Senate Finance Committee, indicated at a hearing Wednesday that the bill he coauthored was aimed at pressuring AIG to voluntarily revoke the bonuses. He told the CEO of AIG, "We're going to introduce the bill. I think it's sufficient leverage to get these paid back."
As the Wall Street Journal reported Friday, "Still, the feeling at one major bank Thursday was that the legislation would get significantly watered down, making it applicable only to AIG, or, perhaps, firms that have received more government assistance than just the initial handouts made under the TARP program..."
Nevertheless, the measures have ignited a storm of indignant protest from Wall Street and threats to refuse to participate in government financial rescue programs. Amid charges of "McCarthyism" and denunciations of the proposals as "vengeance," leading banking figures are threatening, in effect, to allow the financial system to collapse rather than accept even the most modest limits on executive pay.
Already, more than 200 banks have withdrawn their applications to receive government cash in order to avoid government limits on executive pay and restrictions on their financial operations.
The vast fortunes piled up by Wall Street executives have played a major role in the destabilization of the US and world economy. Over the past three decades, trillions have been drained from society's resources and the wealth created by the working class to sustain the lavish lifestyles of the modern robber barons. Just last year, as they were recording record losses, Wall Street firms paid more than $18.4 billion in bonuses in New York City.
The Washington Post summed up the attitude of the financial elite to the House bill in its lead editorial Friday, headlined "Washington Gone Wild." The newspaper wrote, "Yesterday, the House had the feel of a mob scene..." It went on to warn that "The effective confiscation of legally earned and contractually promised payments may well be unconstitutional..."
Needless to say, the leading newspaper of the nation's capital has expressed no similar qualms about government diktats requiring the ripping up of union contracts at auto companies and the slashing of workers' wages and benefits.
The editorial echoed the assertions of bankers that such limits on corporate compensation would "drive away the best talent" at AIG and other firms. Precisely the nature of the "talent" of executives who masterminded the collapse of the company and much of the financial system, the newspaper did not explain.
It then got to its central point: "The Obama administration reportedly intends in the next week or two to announce the details of a "private-public partnership" to buy troubled assets from ailing banks. The participation of private hedge funds, investment banks and other firms will be key to the plan's success..."
This refers to the administration's plan to entice speculators into buying bad loans from the banks by using taxpayer money to give them low-cost loans and guarantee the vast bulk of any potential losses. This is a scheme to guarantee returns of 20 percent or more to big investment firms and provide a new source of fees and profits to the banks, while offloading the banks' worthless assets onto the public.
Following the House vote, Obama issued a statement designed to appeal to popular anger while making no commitment to support the measure. He said the vote "rightly reflects the outrage that so many feel over the lavish bonuses that AIG provided its employees at the expense of the taxpayers who have kept this failed company afloat." He continued, "I look forward to receiving a final product that will serve as a strong signal to the executives who run these firms that such compensation will not be tolerated."
Appearing that evening on the "Tonight Show with Jay Leno," Obama responded to a question from the comedian on the House bill by further distancing himself from it. "I understand Congress' frustrations," he said. "They're responding to, I think, everybody's anger. But I think the best way to handle this is to make sure that you close the door before the horse gets out of the barn."
This statement sums up the hypocrisy of the administration as well as Congress. Obama, both before and after assuming office, intervened to prevent the door from being closed to AIG and other financial firms—including Merrill Lynch, Fannie Mae and Freddie Mac—that used taxpayer money to award lavish bonuses.
During the presidential campaign, candidate Obama joined with the Bush administration in opposing any serious executive pay restrictions in the original TARP bailout legislation. As president elect, he lobbied to block attempts to attach meaningful compensation limits in the congressional authorization for the second $350 billion installment of TARP funds. And his administration intervened in the final stages of congressional action on his economic stimulus bill to sanction bonuses at AIG and other firms receiving government cash by exempting bonuses agreed to before the February 11 enactment of the stimulus legislation from limits on executive compensation.
Subsequently in the Leno interview, Obama responded to a question as to whether some people should go to jail for the economic debacle by offering a virtual blanket amnesty to Wall Street. "Most of what got us into trouble was perfectly legal," he said. He sought to discredit public anger as "finger-pointing," declaring that he was seeking to "break a pattern in Washington where everybody's always looking for someone to blame."
The real attitude of the Obama administration was spelled out by the Wall Street Journal, which reported Friday that "privately, there's concern within the Obama administration that the angry political atmosphere now surrounding the federal bailout program will scare away private participants the government needs to help bolster the financial system."
The newspaper added that administration officials "are looking for ways to blunt the bill's impact if it becomes law..."
On the same day that Obama vouched for the lawfulness of the American financial aristocracy, the House Ways and Means Committee's oversight subcommittee revealed that thirteen of the largest recipients of government bailout funds failed to pay more than $220 million in federal taxes, including two firms—which the committee refused to name—that owe $113 million and $102 million.
Mar 21, 2009
State of the UK economy explained
Subject: The state of the UK economy explained
Who is the odd one out of this lot?
Lord Stevenson, former chairman, HBOS
Andy Hornby, former chief executive, HBOS
Sir Fred Goodwin, former chief executive, RBS
Sir Tom McKillop, former chairman, RBS
John McFall MP, chairman of Treasury select committee
Alistair Darling, Chancellor of the Exchequer
Sir Terry Wogan, presenter of Radio 2 breakfast show.
Answer: Sir Terry Wogan. He is the only one with a banking qualification.
Note for US readers: Terry Wogan is a highly successful BBC disk jockey, and by no means a shock jock. Urbane, humorous, always well mannered, knighted, as you can see, as a model of what we should all be like, a solid pillar of the BBC for many years. Plays good music, too.
Who is the odd one out of this lot?
Lord Stevenson, former chairman, HBOS
Andy Hornby, former chief executive, HBOS
Sir Fred Goodwin, former chief executive, RBS
Sir Tom McKillop, former chairman, RBS
John McFall MP, chairman of Treasury select committee
Alistair Darling, Chancellor of the Exchequer
Sir Terry Wogan, presenter of Radio 2 breakfast show.
Answer: Sir Terry Wogan. He is the only one with a banking qualification.
Note for US readers: Terry Wogan is a highly successful BBC disk jockey, and by no means a shock jock. Urbane, humorous, always well mannered, knighted, as you can see, as a model of what we should all be like, a solid pillar of the BBC for many years. Plays good music, too.
Mar 20, 2009
Riders on the storm
Vernal Equinox. Happy Nowruz, Persian New Year, also the Tonga volcano.
“Into this world we’re thrown
Like a dog without a bone
And after all, alone,
Riders on the storm…
“There’s a killer on the road.
His brain is squirming like a toad.
If you give this man a ride
Sweet memory will die,
Killer on the road…” Jim Morrison, the Doors, Riders on the storm
************
The Daily Reckoning of Thursday, March 19, 2009, The Collapse of '09 by Gerald Celente Rhinebeck, New York
The "Panic of '08" will be followed by "The Collapse of '09." In 2008, when the world's largest financial firms and equity markets crumbled, Wall Street's woes preoccupied the media.
In 2009, the focus will broaden to include a range of calamities that will leave no sector unscathed. Next in line is retail, which accounts for some 70 percent of consumer spending, 26 percent of which is holiday sales.
After the numbers are tallied to reveal a dismal retail Christmas, more big chain bankruptcies will follow. Besides leaving masses unemployed, defunct retailers will leave behind thousands of empty stores. Who will rent them? Nobody!
Add to these empties commercial space vacated by defunct financial firms and an array of troubled businesses, from restaurants to architectural firms, to high tech operations, to offset printers, etc., etc. The inescapable result (that we predicted over a year ago and is only now being discussed in the business media) is a commercial real estate bust that will be costlier, wreak greater havoc and prove more intractable than the residential market decline.
Because most people don't live and shop on Wall Street, the "Panic of '08" was viewed by Main Street as if from afar - even though many were losing money. But when commercial real estate crashes it will hit much closer to home. The depressive atmosphere of thinly shopped, half- vacant malls will strike emotional chords and all the senses.
In office buildings, vacant floors and empty cubicles will dampen the workday spirit of the still-employed; ever present reminders of laid- off friends and colleagues and of the fragility of employment.
Abandoned, untended business and industrial parks will highlight the already mournful scene. In cities studded with soaring towers and new construction predicated on eternal economic growth, streets lined with "For Rent/For Sale" signs will complement stilled cranes and uncompleted buildings.
As retail and commercial real estate collapse, the credit card sector and all its interrelated processing and back office support businesses will suffer and be forced to scale back. Hordes of consumers who have been living off credit cards and racking up debt to the limit will lack the funds to service their debt... much less pay it off, and they will be forced to default. Given the nearly $3 trillion in consumer debt at risk (excluding auto and mortgage) an inevitable default snowball will add momentum to the in-progress Collapse of '09.
"It was Fed finagling, Washington deregulation and Wall Street’s compulsive gambling that created the crisis. To trust or to seriously consider pronouncements, analyses and predictions made by any of these sources is an exercise in willful self-deception."
While we alone predicted the "Panic of '08" (and even took out the domain name "Panicof08.com" on 7 November 2007), we are not alone in predicting a Depression.
The "D" word is being uttered - in some cases by those who have the most to lose and whose best interests are not served by spreading gloom and doom. "The world and country are in a depression," said celebrity tycoon Donald Trump. He then later softened the blow, downgrading it to a "virtual depression."
"Virtual" to the few who will never have to worry where the next dollar will come from, it will be painfully real and hardly virtual to the multitudes who are and will be worrying. The virally proliferating Greatest Depression is the Trend of Trends for 2009.
Even so, beware! Over the course of free-falling 2009, the word from most official sources will be "recession," and from the few mainstream trophy pessimists, "deep recession."
For example, the oft-quoted naysayer, Nouriel Roubini, New York University professor of economics, forecasts a two year recession ... not Depression. On the sunnier side of Wall Street, the Federal Reserve predicts the US economy will contract only through the middle of 2009 and pledged, "In any event, the Committee agreed to take whatever steps were necessary to support the recovery.''
What "steps?" The Bernanke Two-Step? Adjust interest rates or print more money? Neither stopped the credit crisis from worsening, the real estate market from tanking or the stock markets from crashing.
It was Fed finagling, Washington deregulation and Wall Street's compulsive gambling that created the crisis. To trust or to seriously consider pronouncements, analyses and predictions made by any of these sources is an exercise in willful self-deception. Yet, with pensions, IRAs, 401ks, stocks and mutual funds evaporating, many of those most affected deny reality and take hope that forecasts made by proven incompetents will miraculously restore their losses.
Throughout the many years leading up to what we term the "Greatest Depression," The Trends Research Institute provided copious data and Globalnomic analysis to support our forecasts of economic upheaval. In the past year alone, we have provided so much hard evidence (housings starts, home sales, foreclosures, bankruptcies, bank failures, unemployment figures, stock indices, leading economic indicators, retail sales, etc.) that further elaboration should be superfluous.
Those waiting to hear the "D" word from economic experts, talking heads and TV anchors before taking action will most certainly regret their indecisiveness.
Absent from the economic scenarios ranging from second quarter recovery, deep recession and "virtual" depression are the multiplicity of social, environmental, health, political, emotional/psychological and geopolitical factors that point beyond just Depression. They point to The Decline and Fall of Empire America.
Well before Inauguration Day, Barack Obama was cast as the next Franklin Delano Roosevelt. If he follows in FDR's footsteps he could freeze deposits by declaring a "holiday" to stop a run on the banks. While FDIC insurance may cover deposits, even after banks reopen, withdrawal amounts may be restricted. (As the Argentine government did in 2001-2002.)
Author's Note: Suspicious of the soundness of the banking system, I requested to withdraw a substantial sum from our Key Bank account, leaving funds sufficient to cover ongoing business operations. First they tried to dissuade me, then they stonewalled me, and finally they turned openly hostile.
I was forced to sign a series of documents, including one acknowledging that since I was carrying a large sum I could be the target of a robbery. To enhance that possibility, the teller slammed down the bag of cash on the counter and publicly announced the sum.
Despite repeated requests in the days preceding my withdrawal to get the cash in hundreds, they gave it to me in twenties, making for a bag five times the size and more robber-friendly. When I complained to the bank manager who had processed the request, the response amounted to "take it or leave it."
This will not be an isolated event. If you attempt to withdraw a large chunk of money from your account, negotiate the details in advance and anticipate possible hassle and obstruction.
We've heard similar accounts from clients and Trends Journal subscribers who, over the past several months, tried to close out mutual funds, 401ks and assorted sinking equities. They were dissuaded, cajoled, belittled and arm-twisted by brokers desperate to keep their accounts. Many caved in under the pressure, didn't close them and lost most of what they had.
So, we leave you with a Greatest Depression consideration: How safe is your money? How sound is your bank? At the end of November, Citigroup, once America's largest bank, was on the rocks. Fifty-two thousand employees were laid off. In just three days its stock lost more than half its value. Rumors swirled that Citi was so desperate they were looking to sell or split up the company.
Is your money deposited in a local bank whose reputation you can bank on? Are you with a teetering giant or a poorly-managed regional? If either of the latter, it would be in your best interest to assess the risks.
Take some out if you think there is risk; take it all out if you think there's high risk. You may consider spreading it around and even banking abroad...after all, this is the Global Age.
Regards, Gerald Celente for The Daily Reckoning
Editor's Note: Gerald Celente is founder and director of The Trends Research Institute, author of Trends 2000 and Trend Tracking (Warner Books), and publisher of The Trends Journal. He has been forecasting trends since 1980, and recently called "The Collapse of '09." Also a Close Combat practitioner and black belt trainer, Celente has made many media appearances including Oprah, CNN, The Today Show, Good Morning America, NBC Nightly News, C-Span, and CNBC. He has been cited in the Economist, Chicago Tribune, LA Times, Entrepreneur, USA Today, and many other publications.
*************
http://english.pravda.ru/world/americas/19-03-2009/107263-usa_economy_debt-0
USA has two options to save its economy: declare default or trigger off war 19.03.2009 Source: Pravda.Ru URL: http://english.pravda.ru/world/americas/107263-usa_economy_debt-0
The United States is the largest borrower in the world. The US national debt has already exceeded the level of 11 trillion dollars as of the beginning of 2009 and continues to grow like an avalanche. Experts say that the USA has only two ways to solve the problem: to either declare default or trigger off a war.
According to experts’ estimates, the probability of default on US treasury bonds is very high at the moment. The rumors are not new at all. Moreover, experts say that the USA has already started to work on an opportunity to refuse from the dollar in order to avoid debt payments.
Dmitry Abzalov, an expert with the Center for Russia ’s Political Conjuncture, said that governments currently take on the debts of corporations. “The corporate debts crisis thus becomes the crisis of governmental debts. The US debt in the beginning of 2009 amounted to $10.6 trillion. Taking into consideration the current deficit budget of the United States , as well as the prospects for the deficit of the budget during the current year, it becomes clear that the US Treasury bond market is based on no alternative whatsoever. There is no other way for investors to invest their funds with treasury bonds being the only option,” the expert told Bigness.ru.
When the world economy recovers, investors will realize that there are plenty of other opportunities for investments, the European bonds, for example (if the European economy recovers from the crisis too, of course), or the bonds of developing countries. “The pyramid of US bonds will collapse in this case. The debt percentage grows every day, which makes the USA borrow more and more on a daily basis. America will have no chances to pay off the debt,” the expert said.
Inga Foksha, an analyst with Aton Investment Company, agrees that the US default is quite possible, although she is certain that it will not happen unless the world finds an alternative to the US dollar. The dollar will collapse immediately in case of default, which is absolutely unacceptable, because 63 percent of world reserves are saved in dollars. Their collapse will trigger the global economic collapse.
“Technically, the default of the United States may occur during three or five years, although it is too early to say that it could be possible. The USA can print new dollars to pay their debts with them,” she said.
Nevertheless, the US government bonds still enjoy investors’ support and are still considered a risk-free investment.
Dmitry Abzalov believes that the current situation with the US national debt may end with a new war. The war will destroy excessive liquidity and the current debt.
“The war in Iraq began to delay the US crisis, which started brewing in the US economy at the end of 2000,” he said.
The Americans have been trying to raise their economy with the help of military actions for decades, since the Great Depression of the 1930s. A war boosts the nation’s industry, even if a recovery is based on defense orders.
Ekaterina Yevstigneyeva
© 1999-2006. «PRAVDA.Ru». When reproducing our materials in whole or in part, hyperlink to PRAVDA.Ru should be made. The opinions and views of the authors do not always coincide with the point of view of PRAVDA.Ru's editors.
***********
http://www.prisonplanet.com/financial-times-editorial-admits-agenda-for-dictatorial-world-government.html
Financial Times Editorial Admits Agenda For Dictatorial World Government
Jaw-dropping report concedes that “global governance” is a euphemism for anti-democratic global government
Paul Joseph Watson Prison Planet.com Tuesday, December 9, 2008
The Financial Times, one of the most respected and widely read newspapers on the planet, features an editorial today that openly admits the agenda to create a world government based on anti-democratic principles and concedes that the term “global governance” is merely a euphemism for the move towards a centralized global government.
For years we were called paranoid nutcases for warning about the elite’s plans to centralize global power and destroy American sovereignty. Throughout the 1990’s people who talked about the alarming move towards global government were smeared as right-wing lunatics by popular culture and the media.
Now the agenda is out in the open and in our faces, the debunkers have no more ammunition with which to deride us.
A jaw-dropping editorial written by the Financial Times’ chief foreign affairs commentator Gideon Rachman entitled ‘And now for a world government’ lays out the plan for global government and how it is being pushed with deceptive language and euphemisms in order to prevent people from becoming alarmed.
“For the first time in my life, I think the formation of some sort of world government is plausible,” writes Rachman, citing the financial crisis, “global warming” and the “global war on terror” as three major pretexts through which it is being introduced.
Rachman writes that “global governance” could be introduced much sooner than many expect and that President elect Barack Obama has already expressed his desire to achieve that goal, making reference to Obama’s circle of advisors which includes Strobe Talbott, who in 1992 stated, “In the next century, nations as we know it will be obsolete; all states will recognize a single, global authority. National sovereignty wasn’t such a great idea after all.”
Rachman then concedes that the more abstract term “global governance,” which is often used by top globalists like David Rockefeller as a veil to offset accusations that a centralized global government is the real agenda, is merely a trick of “soothing language” that is used to prevent “people reaching for their rifles in America’s talk-radio heartland”.
“But some European thinkers think that they recognise what is going on,” says Rachman. “Jacques Attali, an adviser to President Nicolas Sarkozy of France, argues that: “Global governance is just a euphemism for global government.” As far as he is concerned, some form of global government cannot come too soon. Mr Attali believes that the “core of the international financial crisis is that we have global financial markets and no global rule of law”.
Rachman proceeds to outline what the first steps to an official world government would look like, including the creation of “A legally binding climate-change agreement negotiated under the auspices of the UN and the creation of a 50,000-strong UN peacekeeping force”.
“A “world government” would involve much more than co-operation between nations,” writes Rachman. “It would be an entity with state-like characteristics, backed by a body of laws. The European Union has already set up a continental government for 27 countries, which could be a model. The EU has a supreme court, a currency, thousands of pages of law, a large civil service and the ability to deploy military force.”
“So, it seems, everything is in place. For the first time since homo sapiens began to doodle on cave walls, there is an argument, an opportunity and a means to make serious steps towards a world government,” concludes Rachman, before acknowledging that the path to global government will be “slow and painful”.
Tellingly, Rachman concedes that “International governance tends to be effective, only when it is anti-democratic,” citing the continual rejection of EU expansion when the question is put to a vote. “In general, the Union has progressed fastest when far-reaching deals have been agreed by technocrats and politicians – and then pushed through without direct reference to the voters,” writes Rachman.
So there you have it - one of the world’s top newspapers, editorially led by chief economics commentator Martin Wolf, a top Bilderberg luminary, openly proclaiming that not only is world government the agenda, but that world government will only be achieved through dictatorial measures because the majority of the people are dead against it.
Will we still be called paranoid conspiracy theorists for warning that a system of dictatorial world government is being set up, even as one of the world’s most influential newspapers admits to the fact? Or will people finally wake up and accept that there is a globalist agenda to destroy sovereignty, any form of real democracy, and freedom itself in the pursuit of an all-powerful, self-interested, centralized, unrepresentative and dictatorial world government?
“Into this world we’re thrown
Like a dog without a bone
And after all, alone,
Riders on the storm…
“There’s a killer on the road.
His brain is squirming like a toad.
If you give this man a ride
Sweet memory will die,
Killer on the road…” Jim Morrison, the Doors, Riders on the storm
************
The Daily Reckoning of Thursday, March 19, 2009, The Collapse of '09 by Gerald Celente Rhinebeck, New York
The "Panic of '08" will be followed by "The Collapse of '09." In 2008, when the world's largest financial firms and equity markets crumbled, Wall Street's woes preoccupied the media.
In 2009, the focus will broaden to include a range of calamities that will leave no sector unscathed. Next in line is retail, which accounts for some 70 percent of consumer spending, 26 percent of which is holiday sales.
After the numbers are tallied to reveal a dismal retail Christmas, more big chain bankruptcies will follow. Besides leaving masses unemployed, defunct retailers will leave behind thousands of empty stores. Who will rent them? Nobody!
Add to these empties commercial space vacated by defunct financial firms and an array of troubled businesses, from restaurants to architectural firms, to high tech operations, to offset printers, etc., etc. The inescapable result (that we predicted over a year ago and is only now being discussed in the business media) is a commercial real estate bust that will be costlier, wreak greater havoc and prove more intractable than the residential market decline.
Because most people don't live and shop on Wall Street, the "Panic of '08" was viewed by Main Street as if from afar - even though many were losing money. But when commercial real estate crashes it will hit much closer to home. The depressive atmosphere of thinly shopped, half- vacant malls will strike emotional chords and all the senses.
In office buildings, vacant floors and empty cubicles will dampen the workday spirit of the still-employed; ever present reminders of laid- off friends and colleagues and of the fragility of employment.
Abandoned, untended business and industrial parks will highlight the already mournful scene. In cities studded with soaring towers and new construction predicated on eternal economic growth, streets lined with "For Rent/For Sale" signs will complement stilled cranes and uncompleted buildings.
As retail and commercial real estate collapse, the credit card sector and all its interrelated processing and back office support businesses will suffer and be forced to scale back. Hordes of consumers who have been living off credit cards and racking up debt to the limit will lack the funds to service their debt... much less pay it off, and they will be forced to default. Given the nearly $3 trillion in consumer debt at risk (excluding auto and mortgage) an inevitable default snowball will add momentum to the in-progress Collapse of '09.
"It was Fed finagling, Washington deregulation and Wall Street’s compulsive gambling that created the crisis. To trust or to seriously consider pronouncements, analyses and predictions made by any of these sources is an exercise in willful self-deception."
While we alone predicted the "Panic of '08" (and even took out the domain name "Panicof08.com" on 7 November 2007), we are not alone in predicting a Depression.
The "D" word is being uttered - in some cases by those who have the most to lose and whose best interests are not served by spreading gloom and doom. "The world and country are in a depression," said celebrity tycoon Donald Trump. He then later softened the blow, downgrading it to a "virtual depression."
"Virtual" to the few who will never have to worry where the next dollar will come from, it will be painfully real and hardly virtual to the multitudes who are and will be worrying. The virally proliferating Greatest Depression is the Trend of Trends for 2009.
Even so, beware! Over the course of free-falling 2009, the word from most official sources will be "recession," and from the few mainstream trophy pessimists, "deep recession."
For example, the oft-quoted naysayer, Nouriel Roubini, New York University professor of economics, forecasts a two year recession ... not Depression. On the sunnier side of Wall Street, the Federal Reserve predicts the US economy will contract only through the middle of 2009 and pledged, "In any event, the Committee agreed to take whatever steps were necessary to support the recovery.''
What "steps?" The Bernanke Two-Step? Adjust interest rates or print more money? Neither stopped the credit crisis from worsening, the real estate market from tanking or the stock markets from crashing.
It was Fed finagling, Washington deregulation and Wall Street's compulsive gambling that created the crisis. To trust or to seriously consider pronouncements, analyses and predictions made by any of these sources is an exercise in willful self-deception. Yet, with pensions, IRAs, 401ks, stocks and mutual funds evaporating, many of those most affected deny reality and take hope that forecasts made by proven incompetents will miraculously restore their losses.
Throughout the many years leading up to what we term the "Greatest Depression," The Trends Research Institute provided copious data and Globalnomic analysis to support our forecasts of economic upheaval. In the past year alone, we have provided so much hard evidence (housings starts, home sales, foreclosures, bankruptcies, bank failures, unemployment figures, stock indices, leading economic indicators, retail sales, etc.) that further elaboration should be superfluous.
Those waiting to hear the "D" word from economic experts, talking heads and TV anchors before taking action will most certainly regret their indecisiveness.
Absent from the economic scenarios ranging from second quarter recovery, deep recession and "virtual" depression are the multiplicity of social, environmental, health, political, emotional/psychological and geopolitical factors that point beyond just Depression. They point to The Decline and Fall of Empire America.
Well before Inauguration Day, Barack Obama was cast as the next Franklin Delano Roosevelt. If he follows in FDR's footsteps he could freeze deposits by declaring a "holiday" to stop a run on the banks. While FDIC insurance may cover deposits, even after banks reopen, withdrawal amounts may be restricted. (As the Argentine government did in 2001-2002.)
Author's Note: Suspicious of the soundness of the banking system, I requested to withdraw a substantial sum from our Key Bank account, leaving funds sufficient to cover ongoing business operations. First they tried to dissuade me, then they stonewalled me, and finally they turned openly hostile.
I was forced to sign a series of documents, including one acknowledging that since I was carrying a large sum I could be the target of a robbery. To enhance that possibility, the teller slammed down the bag of cash on the counter and publicly announced the sum.
Despite repeated requests in the days preceding my withdrawal to get the cash in hundreds, they gave it to me in twenties, making for a bag five times the size and more robber-friendly. When I complained to the bank manager who had processed the request, the response amounted to "take it or leave it."
This will not be an isolated event. If you attempt to withdraw a large chunk of money from your account, negotiate the details in advance and anticipate possible hassle and obstruction.
We've heard similar accounts from clients and Trends Journal subscribers who, over the past several months, tried to close out mutual funds, 401ks and assorted sinking equities. They were dissuaded, cajoled, belittled and arm-twisted by brokers desperate to keep their accounts. Many caved in under the pressure, didn't close them and lost most of what they had.
So, we leave you with a Greatest Depression consideration: How safe is your money? How sound is your bank? At the end of November, Citigroup, once America's largest bank, was on the rocks. Fifty-two thousand employees were laid off. In just three days its stock lost more than half its value. Rumors swirled that Citi was so desperate they were looking to sell or split up the company.
Is your money deposited in a local bank whose reputation you can bank on? Are you with a teetering giant or a poorly-managed regional? If either of the latter, it would be in your best interest to assess the risks.
Take some out if you think there is risk; take it all out if you think there's high risk. You may consider spreading it around and even banking abroad...after all, this is the Global Age.
Regards, Gerald Celente for The Daily Reckoning
Editor's Note: Gerald Celente is founder and director of The Trends Research Institute, author of Trends 2000 and Trend Tracking (Warner Books), and publisher of The Trends Journal. He has been forecasting trends since 1980, and recently called "The Collapse of '09." Also a Close Combat practitioner and black belt trainer, Celente has made many media appearances including Oprah, CNN, The Today Show, Good Morning America, NBC Nightly News, C-Span, and CNBC. He has been cited in the Economist, Chicago Tribune, LA Times, Entrepreneur, USA Today, and many other publications.
*************
http://english.pravda.ru/world/americas/19-03-2009/107263-usa_economy_debt-0
USA has two options to save its economy: declare default or trigger off war 19.03.2009 Source: Pravda.Ru URL: http://english.pravda.ru/world/americas/107263-usa_economy_debt-0
The United States is the largest borrower in the world. The US national debt has already exceeded the level of 11 trillion dollars as of the beginning of 2009 and continues to grow like an avalanche. Experts say that the USA has only two ways to solve the problem: to either declare default or trigger off a war.
According to experts’ estimates, the probability of default on US treasury bonds is very high at the moment. The rumors are not new at all. Moreover, experts say that the USA has already started to work on an opportunity to refuse from the dollar in order to avoid debt payments.
Dmitry Abzalov, an expert with the Center for Russia ’s Political Conjuncture, said that governments currently take on the debts of corporations. “The corporate debts crisis thus becomes the crisis of governmental debts. The US debt in the beginning of 2009 amounted to $10.6 trillion. Taking into consideration the current deficit budget of the United States , as well as the prospects for the deficit of the budget during the current year, it becomes clear that the US Treasury bond market is based on no alternative whatsoever. There is no other way for investors to invest their funds with treasury bonds being the only option,” the expert told Bigness.ru.
When the world economy recovers, investors will realize that there are plenty of other opportunities for investments, the European bonds, for example (if the European economy recovers from the crisis too, of course), or the bonds of developing countries. “The pyramid of US bonds will collapse in this case. The debt percentage grows every day, which makes the USA borrow more and more on a daily basis. America will have no chances to pay off the debt,” the expert said.
Inga Foksha, an analyst with Aton Investment Company, agrees that the US default is quite possible, although she is certain that it will not happen unless the world finds an alternative to the US dollar. The dollar will collapse immediately in case of default, which is absolutely unacceptable, because 63 percent of world reserves are saved in dollars. Their collapse will trigger the global economic collapse.
“Technically, the default of the United States may occur during three or five years, although it is too early to say that it could be possible. The USA can print new dollars to pay their debts with them,” she said.
Nevertheless, the US government bonds still enjoy investors’ support and are still considered a risk-free investment.
Dmitry Abzalov believes that the current situation with the US national debt may end with a new war. The war will destroy excessive liquidity and the current debt.
“The war in Iraq began to delay the US crisis, which started brewing in the US economy at the end of 2000,” he said.
The Americans have been trying to raise their economy with the help of military actions for decades, since the Great Depression of the 1930s. A war boosts the nation’s industry, even if a recovery is based on defense orders.
Ekaterina Yevstigneyeva
© 1999-2006. «PRAVDA.Ru». When reproducing our materials in whole or in part, hyperlink to PRAVDA.Ru should be made. The opinions and views of the authors do not always coincide with the point of view of PRAVDA.Ru's editors.
***********
http://www.prisonplanet.com/financial-times-editorial-admits-agenda-for-dictatorial-world-government.html
Financial Times Editorial Admits Agenda For Dictatorial World Government
Jaw-dropping report concedes that “global governance” is a euphemism for anti-democratic global government
Paul Joseph Watson Prison Planet.com Tuesday, December 9, 2008
The Financial Times, one of the most respected and widely read newspapers on the planet, features an editorial today that openly admits the agenda to create a world government based on anti-democratic principles and concedes that the term “global governance” is merely a euphemism for the move towards a centralized global government.
For years we were called paranoid nutcases for warning about the elite’s plans to centralize global power and destroy American sovereignty. Throughout the 1990’s people who talked about the alarming move towards global government were smeared as right-wing lunatics by popular culture and the media.
Now the agenda is out in the open and in our faces, the debunkers have no more ammunition with which to deride us.
A jaw-dropping editorial written by the Financial Times’ chief foreign affairs commentator Gideon Rachman entitled ‘And now for a world government’ lays out the plan for global government and how it is being pushed with deceptive language and euphemisms in order to prevent people from becoming alarmed.
“For the first time in my life, I think the formation of some sort of world government is plausible,” writes Rachman, citing the financial crisis, “global warming” and the “global war on terror” as three major pretexts through which it is being introduced.
Rachman writes that “global governance” could be introduced much sooner than many expect and that President elect Barack Obama has already expressed his desire to achieve that goal, making reference to Obama’s circle of advisors which includes Strobe Talbott, who in 1992 stated, “In the next century, nations as we know it will be obsolete; all states will recognize a single, global authority. National sovereignty wasn’t such a great idea after all.”
Rachman then concedes that the more abstract term “global governance,” which is often used by top globalists like David Rockefeller as a veil to offset accusations that a centralized global government is the real agenda, is merely a trick of “soothing language” that is used to prevent “people reaching for their rifles in America’s talk-radio heartland”.
“But some European thinkers think that they recognise what is going on,” says Rachman. “Jacques Attali, an adviser to President Nicolas Sarkozy of France, argues that: “Global governance is just a euphemism for global government.” As far as he is concerned, some form of global government cannot come too soon. Mr Attali believes that the “core of the international financial crisis is that we have global financial markets and no global rule of law”.
Rachman proceeds to outline what the first steps to an official world government would look like, including the creation of “A legally binding climate-change agreement negotiated under the auspices of the UN and the creation of a 50,000-strong UN peacekeeping force”.
“A “world government” would involve much more than co-operation between nations,” writes Rachman. “It would be an entity with state-like characteristics, backed by a body of laws. The European Union has already set up a continental government for 27 countries, which could be a model. The EU has a supreme court, a currency, thousands of pages of law, a large civil service and the ability to deploy military force.”
“So, it seems, everything is in place. For the first time since homo sapiens began to doodle on cave walls, there is an argument, an opportunity and a means to make serious steps towards a world government,” concludes Rachman, before acknowledging that the path to global government will be “slow and painful”.
Tellingly, Rachman concedes that “International governance tends to be effective, only when it is anti-democratic,” citing the continual rejection of EU expansion when the question is put to a vote. “In general, the Union has progressed fastest when far-reaching deals have been agreed by technocrats and politicians – and then pushed through without direct reference to the voters,” writes Rachman.
So there you have it - one of the world’s top newspapers, editorially led by chief economics commentator Martin Wolf, a top Bilderberg luminary, openly proclaiming that not only is world government the agenda, but that world government will only be achieved through dictatorial measures because the majority of the people are dead against it.
Will we still be called paranoid conspiracy theorists for warning that a system of dictatorial world government is being set up, even as one of the world’s most influential newspapers admits to the fact? Or will people finally wake up and accept that there is a globalist agenda to destroy sovereignty, any form of real democracy, and freedom itself in the pursuit of an all-powerful, self-interested, centralized, unrepresentative and dictatorial world government?
Mar 16, 2009
The Grand Design
“Who will provide the grand design
What is yours and what is mine?
There is no more new frontier
We have got to make it here.” Eagles – The Last Resort
*******
http://www.breadwithcircus.com/ March 7th, 2009
…I want to send people back to something I wrote in October. This piece may help you to get a better sense of why we're in a depression, and why it's all the fault of firms like Goldman Sachs, Citigroup, Morgan Stanley and other mafia-style organizations known as investment banks.
Explaining the Credit-Crisis: Why The Bailout Won't Work
People don't seem to understand the conditions that have led to what is being called the "Credit-Crisis. "I've been doing a lot of research on this and I think that I have a pretty good handle on what really happened here, so I'm going to try to explain it in a way that people unfamiliar with the disastrous practices of Wall Street can easily understand. It's complicated, but bear with me.
First, banks and other agencies began issuing what have been called sub-prime loans. These were mostly mortgages with really low interest rates. The loans were structured so that the people who took them out would have very low payments for the first eighteen months or two years of the agreement, but much higher payments after that. In many cases these loans were given to people who had no income, no job, no assets, and no ability to make payments once the higher rates kicked in. However, because of the time-lag between the issuing of the loans, and the day when payments would inevitably stop, firms realized that they had a brief window of opportunity to turn temporarily valuable loan papers into billions of dollars.
Enter the Collateralized Debt Obligation. (CDO) Firms would carve the sub-prime loan debts that they owned into pieces and repackage them as a product called a CDO. A CDO would have little slivers of all sorts of different loans pieced together. A CDO might consist of 1% of Mary's second mortgage on a house in San Diego, 1% of Manuel's car-loan in Atlanta, 1% of Mohammed's mortgage on a house in Kansas City, and 1% of the money that Acme Widgets Inc. borrowed when they wanted expand their factory in Pittsburgh.
Even though the firms knew that many of their loans would and could never be repaid, because of the time-lag between when the loans were good and when they went bust, the firms could temporarily list their CDO's as assets. Because of this, it was in the interest of firms to issue as many dodgy loans as possible, in order to create as many CDO's as possible, in order to hold as many assets as possible. Firms began buying and selling their CDO's and using them as collateral when taking out loans of their own.
Enter the Credit-Default Swap. (CDS) Firms holding CDO's made deals with highly-rated firms. (Companies with good credit ratings like the now nationalized AIG) The small firm would pay the bigger firm to co-sign with them on a very large loan, often from a privately owned bank called the Federal Reserve. The small firms would list the income they were making on their CDO's as collateral, and then make a payment to the large firm for their golden signature. Having a large firm with a good credit rating as co-signer, dubious firms were able to borrow at astronomical rates, in some cases at a ratio of up to 40 times of what the CDO's were (temporarily) worth.
Big firms saw windfall profits through their ability to sell their signature to smaller firms. Smaller firms borrowed tens of billions of electronic dollars at low interest rates from the Federal Reserve Bank, among others. The stocks of the firms involved in the scheme went through the roof as they were able to show massive amounts of money on their balance sheets. A handful of CEO's made billions of dollars.
Now the chain reaction. The time-lag has caught up to us, and the higher payments on the sub-prime loans have kicked in.
People can't make these payments, so one of the slivers in a CDO package, then another and another becomes worthless.
The value of the CDO is compromised, but the firm who holds it had already borrowed an astronomical amount of money against it. With nothing coming in from these now worthless CDO's, firms holding them no longer have enough income to make payments on their debts. Since the smaller firm can't meet its debt obligations, the company that co-signed the CDS deal with it has to pay. The larger firm, which has made many CDS deals finds themselves owning the debts of many smaller firms, and they have to "write-down" their profits. Stock prices dive and some firms go bankrupt while others are nationalized.
Now the final piece. These large firms are the ones who have been lending money to regular people, regular businesses, and your bank. Perhaps your RRSP or 401K has put part of your life savings into some of these firms' stock. Now the big firms can't make loans anymore, they have diverted all of their assets to making payments on the bad debts they hold. It is all that many of these firms can do to avoid going bankrupt themselves. One fails, then another, and the problem is compounded. There is very little money available now for people to get a loan to do anything at all, from buying a house, to sending their kids to college or buying new infrastructure for their businesses.
The suggested solution to this problem has been for the US treasury to give troubled firms a "bailout", but that's not even going to come close to solving the problem. With interest factored in, there are tens, or maybe even hundreds of trillions of dollars worth of bad debts out there. The bailout, if it were passed, would do very little to solve the problem, though perhaps it would delay the inevitable collapse of the credit markets until after the US election.
Personally I think that the bailout is just a scheme for Bush to loot the treasury as a parting gift to the US...he did this to the other companies he bankrupted earlier in his career. A better option than the bailout would be for the US government to nationalize the Federal Reserve Bank, but that's a discussion for another day.
Really, things are way worse than the media is letting on. Wall Street bet your house and mine, and now everybody loses.
There are some monumental days in our near future. The entire financial system is about to be re-organized. Think of the last days of the Soviet Union. It could only be a matter of weeks before the American System comes crashing down. If this happens, try to remember that the money being played with is actually an illusion, and that troubled times will pass.
On a positive note, the destructive ideologies of the "Free-Market" and "Neo-Liberalism" are about to be completely discredited. I hope that whatever financial system rises up from the ashes will be more principled, transparent, and equitable for everyone.
***************
BEIJING, China -- Sources at the United States Embassy in Beijing China have just CONFIRMED that the United States of America has tendered to China a written agreement which grants to the People's Republic of China, an option to exercise Eminent Domain within the USA, as collateral for China's continued purchase of US Treasury Notes and existing US Currency reserves.
The written agreement was brought to Beijing by Secretary of State Hillary Clinton and was formalized and agreed-to during her recent trip to China.
This means that in the event the US Government defaults on its financial obligations to China, the Communist Government of China would be permitted to physically take -- inside the USA -- land, buildings, factories, perhaps even entire cities - to satisfy the financial obligations of the US government.
http://www.rense.com/general85/give.htm
************
http://www.guardian.co.uk/world/2009/mar/13/china-us-economy
Tania Branigan in Beijing guardian.co.uk, Friday 13 March 2009 13.42 GMT
The many gestures of Chinese premier Wen Jiabao during the press conference to mark the closing session today of the annual National People's Congress at the Great Hall of the People in Beijing.
Photograph: Liu Jin/AFP/Getty Images
China is worried about its vast United States treasury holdings, premier Wen Jiabao said today, urging Washington to safeguard their value.
Wen also pledged to expand the country's stimulus package if necessary, as Beijing undertakes what he admitted was the difficult task of shoring up growth.
His remarks came ahead of the meeting of finance ministers and central bankers in London this weekend to lay the groundwork for next month's G20 summit on the global downturn.
Beijing wants to head off protectionism and pressure for further appreciation of the yuan, which would cripple its plummeting export sector. It is also pressing for restructuring of the International Monetary Fund to pay more attention to the interests of developing countries.
While relations with the US are broadly stable, there was displeasure when treasury secretary Timothy Geithner said President Barack Obama believed China was manipulating its currency. The administration subsequently rowed back from the remarks.
This week also saw a spat between the two countries when America accused the Chinese navy of harassing one of its surveillance ships in international waters in the South China Sea. Beijing alleged that the US vessel was operating illegally.
Speaking at his annual press conference at the close of China's parliament, Wen said: "We have made a huge amount of loans to the United States. Of course we are concerned about the safety of our assets. To be honest, I'm a little bit worried."
He called on Washington "to honour its words, stay a credible nation and ensure the safety of Chinese assets". China had worked to diversify its $2tn-worth of foreign exchange reserves, although it remains the single largest holder of US government debt, which accounts for about half of its stockpile.
Washington needs to continue selling treasury notes to fund its $787bn stimulus package. Last month, the secretary of state, Hillary Clinton, urged Beijing to maintain its stock as she visited China.
"They are worried about forever-rising deficits, which may devalue treasuries by pushing interest rates higher," Frank Gong, a JP Morgan economist, told Reuters. "Inside China there has been a lot of debate about whether they should continue to buy treasuries."
Any change would be gradual because abrupt action would punish the dollar – damaging the value of existing holdings and further hitting the sale of goods to the US, its biggest export market.
Wen said it would be difficult but possible to reach China's 8% growth target. Independent economists suggest the figure could be as low as 5% – enviable for most major economies, but potentially too low to keep unemployment down.
Beijing announced a 4tn yuan (about £400bn) plan in November, but Wen promised: "We have prepared enough ammunition and we can launch new economic stimulus policies at any time."
He said years of growth and prudent management had left more leeway to run a larger fiscal deficit and take on more debt. "The most direct, powerful and effective way to deal with the current financial crisis is to increase fiscal spending – the quicker the better," he said.
The premier acknowledged that unemployment was a "very serious" problem but said the country was still stable.
"I really believe we will be able to walk out of the shadow of the financial crisis at an early date," he said. "After this trial, I believe the Chinese economy will show greater vitality."
He promised to focus on job creation and give more help to smaller companies, which he said generated 90% of Chinese new employment. Many economists think the government has done too little to aid entrepreneurs.
Figures released this week show a mixed picture for the Chinese economy, with exports slumping by more than 25% in February and retail sales weakening, but a sustained surge in bank lending which some analysts believe offers hope of a recovery.
***********
Eminent Domain
According to news reports the main item on Hillary Clinton’s discussions with China was the agreement of the Chinese government to continue to support US debt which it holds. What undertakings were given by Ms. Clinton to protect the value of those holdings was not specified.
http://www.rense.com/general85/give.htm
FEDS GRANT EMINENT DOMAIN AS COLLATERAL TO CHINA FOR U.S. DEBTS
BEIJING, China -- Sources at the United States Embassy in Beijing China have just CONFIRMED that the United States of America has tendered to China a written agreement which grants to the People's Republic of China, an option to exercise Eminent Domain within the USA, as collateral for China's continued purchase of US Treasury Notes and existing US Currency reserves.
The written agreement was brought to Beijing by Secretary of State Hillary Clinton and was formalized and agreed-to during her recent trip to China.
This means that in the event the US Government defaults on its financial obligations to China, the Communist Government of China would be permitted to physically take -- inside the USA -- land, buildings, factories, perhaps even entire cities - to satisfy the financial obligations of the US government.
Put simply, the feds have now actually mortgaged the physical land and property of all citizens and businesses in the United States. They have given to a foreign power, their Constitutional power to "take" all of our property, as actual collateral for continued Chinese funding of US deficit spending and the continued carrying of US national debt…
Our federal government has now granted to China, this power to "take"our homes and businesses in the event the US Gov't defaults on its debts. Let's play this out as a worst case scenario. . . .
The US Gov't goes belly-up and China comes in and says, "they owed us $2 Trillion in Treasury Notes and another $2 Trillion in actual cash money which is now worthless. We are taking the entire state of Hawaii and the entire state of California in lieu of this bad debt. "
With the stroke of a Chinese chop stick, Hawaii and California -- all the land and buildings in those states -- are now owned by China.
*******************
“In early February nine U.S. States began the process of re- asserting their Sovereignty pursuant to the Ninth and Tenth Amendments to the US Constitution; declaring null and void any actions by Congress that violated the Constitution.
The states took action to make certain the feds couldn't give away cities or the states themselves!” Rense
Mar 9, 2009
Obama backs Bush
http://www.globalresearch.ca/index.php?context=va&aid=12610
Obama administration backs immunity for author of Bush torture memos
by Patrick Martin, Global Research, March 9, 2009
In legal arguments before a federal court in San Francisco Friday, the Obama administration stepped in to defend one of most notorious figures in the Bush administration, John Yoo, author of legal memoranda used to justify torture and indefinite detention without trial as part of the "war on terror."
The intervention makes clear that the Obama administration opposes any serious effort to shed light on the attacks against democratic rights carried out by its predecessor or to hold any officials of the previous administration accountable for their actions. Moreover, its court interventions amount to a defense of the Bush administration's assertions of quasi-dictatorial presidential powers.
Friday's court hearing before US District Judge Jeffrey White concerned a civil suit brought by Jose Padilla, the US citizen who was imprisoned without charges for more than three years in a US Navy brig after Bush designated him an "enemy combatant."
Padilla is now in federal prison, serving a 20-year sentence after being convicted on trumped-up conspiracy charges that had nothing to do with the sensationalized claims of the Bush administration that he was the leader of a plot to detonate a radioactive "dirty bomb" in an American city.
He has filed suit against numerous Bush administration officials, charging that his detention at the Navy brig, during which he was held in isolation and tortured, violated his constitutional rights. Yoo is being sued as the author of the legal opinion that upheld the arbitrary presidential authority under which Padilla was being held.
The Bush administration vigorously defended Yoo and the legal opinions he issued and sought to have the case thrown out on the grounds that US government employees cannot be sued for actions taken in the course of their official duties.
Immunity from lawsuits over official acts is an accepted US legal principle, but there is a broad exception for known criminal acts and abuses of power. Under the precedent set by the Nuremberg Trials after World War II, "just following orders" is not an adequate legal defense, particularly for those who were in a position to give the orders or define how they were to be interpreted. Yoo's position in 2001 as an attorney at the Justice Department's Office of Legal Counsel, which produces the official legal rationale for executive actions, clearly fits that description.
Padilla is not seeking either release from his current imprisonment or significant monetary damages. His claim against Yoo, for instance, is for $1, but his suit seeks a declaration from the federal government that his three-year ordeal in the Navy brig was illegal. "Plaintiffs seek to vindicate their constitutional rights," his lawyers argue, "and ensure that neither Mr. Padilla nor any other person is treated this way in the future."
Justice Department lawyers told the court Friday that despite the changeover from Bush to Obama, there would be no change in the legal position of the government in this case. Their declarations came in response to written questions issued by Judge White the day before, asking whether the position taken by Yoo's attorneys had been "fully vetted" by the new administration.
One government lawyer, Mary Mason, told Judge White that permitting the lawsuit against Yoo to go forward could make government employees unwilling to do their jobs. These employees might decide that "I'm not designating you an enemy combatant, and I'm not going to interrogate you, because I might get sued," she argued.
Several memos drafted by Yoo in 2001 and 2002 were released by the Justice Department earlier this week as part of discovery in the lawsuit. The memos include extraordinary assertions of presidential authority to override the Constitution and the Bill of Rights in the name of the "war on terror," including suspension of the First and Fourth amendments and the use of the military against civilian targets within the United States. [See “US Justice Department memos: the specter of military dictatorship,”
Judge White, appointed to the federal bench by George W. Bush, took Yoo's assertion of quasi-dictatorial presidential authority far more seriously than the Justice Department lawyers who appeared before them. He called Yoo's arguments in one 2001 memorandum "a pretty scary position," and seemed reluctant to throw out Padilla's suit, despite Mason's argument that the torture memorandums had been largely withdrawn before the end of the Bush administration.
The following exchange gives the flavor of the arguments: "We're not saying we condone torture," Mason said. But whether a government lawyer could be sued for condoning torture "is for the executive to decide, in the first instance, and for Congress to decide," not the courts.
Judge White asked, "You're not saying that if high public officials commit clearly illegal acts, a citizen subject to those acts has no remedy in this court?" Mason responded by citing the position take by the Bush Justice Department last year that the courts should not interfere in wartime decision-making by the executive branch.
Heather Metcalf, an attorney for Padilla, noted that Yoo had served on the "war council" that set Bush administration policy for the treatment of prisoners, and that one of the specific purposes of his memorandums was to shield officials from future liability for their encroachments on constitutional rights. "Defendant Yoo," she said, "must not take refuge in the legal no man's land that he helped to create."
After the court session, a Justice Department spokesman, Matt Miller, sought to downplay the political significance of the intervention. "This administration has made no secret that we disagree with many of the previous administration's legal policies on national security issues," he said. "Nevertheless, we generally defend employees or former employees of the department in litigation filed in connection with their official duties."
Yoo himself is a completely unrepentant defender of both torture and unchecked executive authority. In an interview with the Orange County Register, he said that he doesn't "think he would have made the basic decisions differently," adding that he would have polished the arguments more if he had known the memorandums would be made public. "When you are in the government, you have very little time to make very important decisions," he said. "You don't have the luxury to research every single thing and that's accelerated in war time."
Apparently his legal "research" did not include the text of the Constitution, which clearly gives Congress decision-making power over "captures" in wartime, and entirely ignored the Constitution's Bill of Rights.
The position taken by the Obama administration in the Yoo lawsuit is consistent with its efforts in a whole series of court cases involving national security and democratic rights, where the Obama Justice Department has essentially adopted the Bush administration's standpoint as its own. This includes assertion of the "state secrets" privilege to suppress lawsuits against illegal kidnappings by the CIA ("rendition") and illegal surveillance by the National Security Agency.
Last week government lawyers opposed a request for US District Judge Vaughn Walker in San Francisco to consider whether legislation passed last year by Congress goes too far in authorizing blanket legal immunity for telecommunications companies that cooperated in warrantless surveillance of US citizens. A spokesman for the Justice Department declared the 2008 legislation—for which Senator Barack Obama voted—is "the law of the land, and, as such, the Department of Justice defends it in court."
So clear is the continuity between the Bush and Obama administrations in this area that the Wall Street Journal published an editorial Friday, headlined, "Obama Channels Cheney," hailing the new administration's stand on warrantless wiretapping. "The Obama Justice Department has adopted a legal stance identical to, if not more aggressive than, the Bush version," the newspaper's right-wing editorial board gloated.
Obama administration backs immunity for author of Bush torture memos
by Patrick Martin, Global Research, March 9, 2009
In legal arguments before a federal court in San Francisco Friday, the Obama administration stepped in to defend one of most notorious figures in the Bush administration, John Yoo, author of legal memoranda used to justify torture and indefinite detention without trial as part of the "war on terror."
The intervention makes clear that the Obama administration opposes any serious effort to shed light on the attacks against democratic rights carried out by its predecessor or to hold any officials of the previous administration accountable for their actions. Moreover, its court interventions amount to a defense of the Bush administration's assertions of quasi-dictatorial presidential powers.
Friday's court hearing before US District Judge Jeffrey White concerned a civil suit brought by Jose Padilla, the US citizen who was imprisoned without charges for more than three years in a US Navy brig after Bush designated him an "enemy combatant."
Padilla is now in federal prison, serving a 20-year sentence after being convicted on trumped-up conspiracy charges that had nothing to do with the sensationalized claims of the Bush administration that he was the leader of a plot to detonate a radioactive "dirty bomb" in an American city.
He has filed suit against numerous Bush administration officials, charging that his detention at the Navy brig, during which he was held in isolation and tortured, violated his constitutional rights. Yoo is being sued as the author of the legal opinion that upheld the arbitrary presidential authority under which Padilla was being held.
The Bush administration vigorously defended Yoo and the legal opinions he issued and sought to have the case thrown out on the grounds that US government employees cannot be sued for actions taken in the course of their official duties.
Immunity from lawsuits over official acts is an accepted US legal principle, but there is a broad exception for known criminal acts and abuses of power. Under the precedent set by the Nuremberg Trials after World War II, "just following orders" is not an adequate legal defense, particularly for those who were in a position to give the orders or define how they were to be interpreted. Yoo's position in 2001 as an attorney at the Justice Department's Office of Legal Counsel, which produces the official legal rationale for executive actions, clearly fits that description.
Padilla is not seeking either release from his current imprisonment or significant monetary damages. His claim against Yoo, for instance, is for $1, but his suit seeks a declaration from the federal government that his three-year ordeal in the Navy brig was illegal. "Plaintiffs seek to vindicate their constitutional rights," his lawyers argue, "and ensure that neither Mr. Padilla nor any other person is treated this way in the future."
Justice Department lawyers told the court Friday that despite the changeover from Bush to Obama, there would be no change in the legal position of the government in this case. Their declarations came in response to written questions issued by Judge White the day before, asking whether the position taken by Yoo's attorneys had been "fully vetted" by the new administration.
One government lawyer, Mary Mason, told Judge White that permitting the lawsuit against Yoo to go forward could make government employees unwilling to do their jobs. These employees might decide that "I'm not designating you an enemy combatant, and I'm not going to interrogate you, because I might get sued," she argued.
Several memos drafted by Yoo in 2001 and 2002 were released by the Justice Department earlier this week as part of discovery in the lawsuit. The memos include extraordinary assertions of presidential authority to override the Constitution and the Bill of Rights in the name of the "war on terror," including suspension of the First and Fourth amendments and the use of the military against civilian targets within the United States. [See “US Justice Department memos: the specter of military dictatorship,”
Judge White, appointed to the federal bench by George W. Bush, took Yoo's assertion of quasi-dictatorial presidential authority far more seriously than the Justice Department lawyers who appeared before them. He called Yoo's arguments in one 2001 memorandum "a pretty scary position," and seemed reluctant to throw out Padilla's suit, despite Mason's argument that the torture memorandums had been largely withdrawn before the end of the Bush administration.
The following exchange gives the flavor of the arguments: "We're not saying we condone torture," Mason said. But whether a government lawyer could be sued for condoning torture "is for the executive to decide, in the first instance, and for Congress to decide," not the courts.
Judge White asked, "You're not saying that if high public officials commit clearly illegal acts, a citizen subject to those acts has no remedy in this court?" Mason responded by citing the position take by the Bush Justice Department last year that the courts should not interfere in wartime decision-making by the executive branch.
Heather Metcalf, an attorney for Padilla, noted that Yoo had served on the "war council" that set Bush administration policy for the treatment of prisoners, and that one of the specific purposes of his memorandums was to shield officials from future liability for their encroachments on constitutional rights. "Defendant Yoo," she said, "must not take refuge in the legal no man's land that he helped to create."
After the court session, a Justice Department spokesman, Matt Miller, sought to downplay the political significance of the intervention. "This administration has made no secret that we disagree with many of the previous administration's legal policies on national security issues," he said. "Nevertheless, we generally defend employees or former employees of the department in litigation filed in connection with their official duties."
Yoo himself is a completely unrepentant defender of both torture and unchecked executive authority. In an interview with the Orange County Register, he said that he doesn't "think he would have made the basic decisions differently," adding that he would have polished the arguments more if he had known the memorandums would be made public. "When you are in the government, you have very little time to make very important decisions," he said. "You don't have the luxury to research every single thing and that's accelerated in war time."
Apparently his legal "research" did not include the text of the Constitution, which clearly gives Congress decision-making power over "captures" in wartime, and entirely ignored the Constitution's Bill of Rights.
The position taken by the Obama administration in the Yoo lawsuit is consistent with its efforts in a whole series of court cases involving national security and democratic rights, where the Obama Justice Department has essentially adopted the Bush administration's standpoint as its own. This includes assertion of the "state secrets" privilege to suppress lawsuits against illegal kidnappings by the CIA ("rendition") and illegal surveillance by the National Security Agency.
Last week government lawyers opposed a request for US District Judge Vaughn Walker in San Francisco to consider whether legislation passed last year by Congress goes too far in authorizing blanket legal immunity for telecommunications companies that cooperated in warrantless surveillance of US citizens. A spokesman for the Justice Department declared the 2008 legislation—for which Senator Barack Obama voted—is "the law of the land, and, as such, the Department of Justice defends it in court."
So clear is the continuity between the Bush and Obama administrations in this area that the Wall Street Journal published an editorial Friday, headlined, "Obama Channels Cheney," hailing the new administration's stand on warrantless wiretapping. "The Obama Justice Department has adopted a legal stance identical to, if not more aggressive than, the Bush version," the newspaper's right-wing editorial board gloated.
Mar 8, 2009
AIG
http://www.guardian.co.uk/business/2009/mar/07/aig-insurance-us-economy
Hedge fund hotel yields up secrets• Wheeler-dealing in UK led to US insurer's record loss
'Acts of Satan' ripped black hole in financial system
Andrew Clark The Guardian, Saturday 7 March 2009
It is Mayfair's house of financial horrors. Owned by the Abu Dhabi royal family, One Curzon Street is among London's flashiest office blocks. But behind the elegant curves, polished white stone, sweeping windows and panoramic atrium lie billions of dollars in losses that have threatened the global financial system.
Popular with financial enterprises, the building is known as a hedge fund hotel. Its tenants include GLG Partners, one of the City's star funds, which has fallen on hard times, and the struggling Swiss bank UBS, but on the fifth floor can be found the most notorious of the property's troubled tenants - a formerly obscure financial products division of the sprawling American International Group (AIG).
It was in this London office of AIG that big-brained financial whiz-kids created a casino offshoot of the once-mighty insurer that spectacularly wrecked the company, racking up billions of dollars in losses on arcane derivatives, swaps and contracts. Fatally undermined by the unit's wheeler-dealing culture, AIG crashed to the US's biggest corporate loss of $61.7bn (£43bn) for the final quarter of 2008 and is limping along the brink of oblivion, saved from bankruptcy by an eye-watering $150bn of emergency aid from US taxpayers.
The Federal Reserve chairman, Ben Bernanke, wasted few words in condemning the division's antics, telling Congress this week: "This was a hedge fund, basically, that was attached to a large and stable insurance company."
The Serious Fraud Office is examining exactly what type of business took place on the fifth floor of One Curzon Street, where a team of some 225 staff were managed by a policeman's son from New York, Joseph Cassano, who boasted a degree in politics from Brooklyn College and lived in a company flat behind Harrods. He was scorned by one California congressman, Jackie Speier, as "the golden boy of the casino in London".
The division dates back to 1987, when a small group of former traders from the junk bond firm Drexel Burnham Lambert persuaded AIG's then chairman, Hank Greenberg, that there was a highly lucrative opportunity in offering insurance that would protect banks against default on debt or against fluctuations in the value of derivatives.
AIG had a sought-after selling point: a triple-A credit rating. For a fee, it would stand behind lesser institutions' credit obligations. By lending its gilt-edged rating, it could give clients' investments a higher value and make them easier to trade. Headquartered in Connecticut but largely run from London, the division transacted billions in credit default swaps (CDS) - instruments trading financial risk - which have been dubbed "acts of Satan" by a leading US credit analyst, Christopher Whalen.
"These people were deluded," says Whalen, who views the CDS as a phenomenon dreamt up by those whose obsession with the free market has caused them to lose their grip on reality. "In a world where people believe in market efficiency, in total market completion, things like CDSs make sense. It goes back to Milton Friedman."
Whalen views London's light-touch regulatory regime as enabling such ill-conceived shenanigans to run out of control: "A lot of this kind of structured product came out of London."
CDSs are priced on historical models. Lulled by rising property prices and relatively predictable economic cycles, the AIG bankers were convinced they had hit on a gold mine. Tom Savage, the financial products division's former president, told the Washington Post recently: "The models suggested that the risk was so remote that the fees were almost free money."
They were wrong. A collapse in the US property market, which began in 2007, left AIG's clients with portfolios of toxic mortgage-related securities, and calls on the insurer's guarantees against default rocketed. AIG lost its triple-A credit rating, triggering contractual requirements forcing it to provide billions of dollars in extra collateral it simply did not have. The unit exploded in a mass of red ink, recrimination and buck-passing.
So how did they misjudge the market so badly? Insiders say AIG has always pushed its people to the limit, some seeing Greenberg's legacy as part of the problem. Ron Shelp, a former AIG executive whose book, Fallen Giant, chronicles the insurer's rise and fall, describes AIG as an intense environment where staff were expected to devote much of their lives to business.
"Success bred phenomenal rewards," he says. "In general, it was a freewheeling environment - they'd look for different regulatory regimes and push it right to the edge, looking for something different."
Favoured employees were rewarded with trips to a Connecticut rural bolt hole, Morefar, and with shares held in Star International Co, an offshore company, which were often released only to those who stayed to 65. The head of every profit centre was expected to produce a 15% annual rise in profits and net worth or their position would be under threat.
Just how much AIG's senior executives knew, or understood, about the London office's activities is a moot point. "It's a damned good question," says Mark Keenan, an insurance analyst at Anderson Kill & Olick in New York. "Whatever risk controls were in place, if there even were any, the fact is that someone was not watching what was going on."
If AIG collapses, the US government fears that scores of banks on both sides of the Atlantic could be pushed over the brink. But propping up the company is proving enormously costly. Donn Vickrey, founder of the US research firm Gradient Analytics, reckons the cost to US taxpayers will reach $250bn.
"They thought they were smarter than everybody else - that they knew how to price risk and nobody else did," says Vickrey. "That's hubris. Instinct should have kicked in - the simple logic that there's no such thing as a free lunch."
AIG's new chief executive, Ed Liddy, faces a race against time to raise money by selling unaffected operations before they are fatally infected by association with Cassano's casino in London. Meanwhile, the blame game is running at full tilt. Greenberg, who was pushed out in a 2005 accounting scandal, is suing his successors for wiping out $2bn of value in his personal shareholding. His targets include the Essex-born Martin Sullivan, who began his career as an insurance clerk in London and ended up running AIG between 2005 and 2008.
Greenberg maintains that until his own departure, risk controls were robust. "It wasn't a freewheeling culture," he told CNBC television. "It was competitive, aggressive, but very, very controlled."
Sceptics point out that Greenberg himself left as a result of an accounting controversy that led to AIG restating five years' financial results - and that his regime established the financial products division and recruited its key staff.
Within AIG, the mood is said to be one of gloom and shell shock. Many have lost decades of wealth built up in AIG shares.
"The old-timers are really distressed," says Shelp, "not just about the money they've lost. One of them said to me the other day, 'I bought into the AIG dream.'"
Thanks to an outbreak of financial "innovation" that turned fatally sour, the dream has turned into a nightmare.
AIG: And It's Gone ...
2005 Hank Greenberg ousted as chairman after an accounting scandal.
2006 AIG agrees to pay $1.6bn (£920m) over alleged accounting impropriety.
2007 AIG loses $78m in mortgages. Joseph Cassano says: "It is hard for us, without being flippant, to even see a scenario within any kind of realm of reason that would see us losing $1."
Shares fall over losses in credit crunch.
2008 Auditor warns of "weak" controls. Cassano quits but hired as consultant on $1m a month. Loss of $7.8bn forces $12.5bn cash call. Government provides $85bn bailout as liquidity crisis looms.
2009 FBI and UK police start inquiries. AIG records biggest corporate loss in US history of $61.7bn for final quarter.
guardian.co.uk © Guardian News and Media Limited 2009
Hedge fund hotel yields up secrets• Wheeler-dealing in UK led to US insurer's record loss
'Acts of Satan' ripped black hole in financial system
Andrew Clark The Guardian, Saturday 7 March 2009
It is Mayfair's house of financial horrors. Owned by the Abu Dhabi royal family, One Curzon Street is among London's flashiest office blocks. But behind the elegant curves, polished white stone, sweeping windows and panoramic atrium lie billions of dollars in losses that have threatened the global financial system.
Popular with financial enterprises, the building is known as a hedge fund hotel. Its tenants include GLG Partners, one of the City's star funds, which has fallen on hard times, and the struggling Swiss bank UBS, but on the fifth floor can be found the most notorious of the property's troubled tenants - a formerly obscure financial products division of the sprawling American International Group (AIG).
It was in this London office of AIG that big-brained financial whiz-kids created a casino offshoot of the once-mighty insurer that spectacularly wrecked the company, racking up billions of dollars in losses on arcane derivatives, swaps and contracts. Fatally undermined by the unit's wheeler-dealing culture, AIG crashed to the US's biggest corporate loss of $61.7bn (£43bn) for the final quarter of 2008 and is limping along the brink of oblivion, saved from bankruptcy by an eye-watering $150bn of emergency aid from US taxpayers.
The Federal Reserve chairman, Ben Bernanke, wasted few words in condemning the division's antics, telling Congress this week: "This was a hedge fund, basically, that was attached to a large and stable insurance company."
The Serious Fraud Office is examining exactly what type of business took place on the fifth floor of One Curzon Street, where a team of some 225 staff were managed by a policeman's son from New York, Joseph Cassano, who boasted a degree in politics from Brooklyn College and lived in a company flat behind Harrods. He was scorned by one California congressman, Jackie Speier, as "the golden boy of the casino in London".
The division dates back to 1987, when a small group of former traders from the junk bond firm Drexel Burnham Lambert persuaded AIG's then chairman, Hank Greenberg, that there was a highly lucrative opportunity in offering insurance that would protect banks against default on debt or against fluctuations in the value of derivatives.
AIG had a sought-after selling point: a triple-A credit rating. For a fee, it would stand behind lesser institutions' credit obligations. By lending its gilt-edged rating, it could give clients' investments a higher value and make them easier to trade. Headquartered in Connecticut but largely run from London, the division transacted billions in credit default swaps (CDS) - instruments trading financial risk - which have been dubbed "acts of Satan" by a leading US credit analyst, Christopher Whalen.
"These people were deluded," says Whalen, who views the CDS as a phenomenon dreamt up by those whose obsession with the free market has caused them to lose their grip on reality. "In a world where people believe in market efficiency, in total market completion, things like CDSs make sense. It goes back to Milton Friedman."
Whalen views London's light-touch regulatory regime as enabling such ill-conceived shenanigans to run out of control: "A lot of this kind of structured product came out of London."
CDSs are priced on historical models. Lulled by rising property prices and relatively predictable economic cycles, the AIG bankers were convinced they had hit on a gold mine. Tom Savage, the financial products division's former president, told the Washington Post recently: "The models suggested that the risk was so remote that the fees were almost free money."
They were wrong. A collapse in the US property market, which began in 2007, left AIG's clients with portfolios of toxic mortgage-related securities, and calls on the insurer's guarantees against default rocketed. AIG lost its triple-A credit rating, triggering contractual requirements forcing it to provide billions of dollars in extra collateral it simply did not have. The unit exploded in a mass of red ink, recrimination and buck-passing.
So how did they misjudge the market so badly? Insiders say AIG has always pushed its people to the limit, some seeing Greenberg's legacy as part of the problem. Ron Shelp, a former AIG executive whose book, Fallen Giant, chronicles the insurer's rise and fall, describes AIG as an intense environment where staff were expected to devote much of their lives to business.
"Success bred phenomenal rewards," he says. "In general, it was a freewheeling environment - they'd look for different regulatory regimes and push it right to the edge, looking for something different."
Favoured employees were rewarded with trips to a Connecticut rural bolt hole, Morefar, and with shares held in Star International Co, an offshore company, which were often released only to those who stayed to 65. The head of every profit centre was expected to produce a 15% annual rise in profits and net worth or their position would be under threat.
Just how much AIG's senior executives knew, or understood, about the London office's activities is a moot point. "It's a damned good question," says Mark Keenan, an insurance analyst at Anderson Kill & Olick in New York. "Whatever risk controls were in place, if there even were any, the fact is that someone was not watching what was going on."
If AIG collapses, the US government fears that scores of banks on both sides of the Atlantic could be pushed over the brink. But propping up the company is proving enormously costly. Donn Vickrey, founder of the US research firm Gradient Analytics, reckons the cost to US taxpayers will reach $250bn.
"They thought they were smarter than everybody else - that they knew how to price risk and nobody else did," says Vickrey. "That's hubris. Instinct should have kicked in - the simple logic that there's no such thing as a free lunch."
AIG's new chief executive, Ed Liddy, faces a race against time to raise money by selling unaffected operations before they are fatally infected by association with Cassano's casino in London. Meanwhile, the blame game is running at full tilt. Greenberg, who was pushed out in a 2005 accounting scandal, is suing his successors for wiping out $2bn of value in his personal shareholding. His targets include the Essex-born Martin Sullivan, who began his career as an insurance clerk in London and ended up running AIG between 2005 and 2008.
Greenberg maintains that until his own departure, risk controls were robust. "It wasn't a freewheeling culture," he told CNBC television. "It was competitive, aggressive, but very, very controlled."
Sceptics point out that Greenberg himself left as a result of an accounting controversy that led to AIG restating five years' financial results - and that his regime established the financial products division and recruited its key staff.
Within AIG, the mood is said to be one of gloom and shell shock. Many have lost decades of wealth built up in AIG shares.
"The old-timers are really distressed," says Shelp, "not just about the money they've lost. One of them said to me the other day, 'I bought into the AIG dream.'"
Thanks to an outbreak of financial "innovation" that turned fatally sour, the dream has turned into a nightmare.
AIG: And It's Gone ...
2005 Hank Greenberg ousted as chairman after an accounting scandal.
2006 AIG agrees to pay $1.6bn (£920m) over alleged accounting impropriety.
2007 AIG loses $78m in mortgages. Joseph Cassano says: "It is hard for us, without being flippant, to even see a scenario within any kind of realm of reason that would see us losing $1."
Shares fall over losses in credit crunch.
2008 Auditor warns of "weak" controls. Cassano quits but hired as consultant on $1m a month. Loss of $7.8bn forces $12.5bn cash call. Government provides $85bn bailout as liquidity crisis looms.
2009 FBI and UK police start inquiries. AIG records biggest corporate loss in US history of $61.7bn for final quarter.
guardian.co.uk © Guardian News and Media Limited 2009
Mar 5, 2009
Umar Al Bashir
Sudanese writer comments on Al-Bashir's "last dance"
Text of commentary by Hassan Bashir entitled "Fate, destiny and the last dance of Sudan's President" in English by Paris-based Sudanese newspaper Sudan Tribune website on 5 March
Ironical as it may seem, the original candidate to lead 1989's coup d'etat was another Brigadier named Uthman Ahmad Al-Hassan, because he was the leader of the Islamist group in the Sudan Armed Forces at the time. However, he was hastily replaced just a few days before the coup, because Uthman wanted the army to have complete control over political power in the country. Nevertheless the civilian plotters had second thoughts and they selected Umar Hassan al Bashir, considering him an easygoing officer who could be effortlessly controlled and manipulated. Al Turabi used to say, "Al Bashir is a gift from God to us".
In ancient Aztec tradition the most handsome of the prisoners captured on the battlefield would be made king. Protected by guards and dressed in robes, his every need was satisfied for a whole year. Then the king was lead to the top of the temple pyramid. Here, stripped naked, he was stretched out on an altar, his torso was sliced open and his heart torn out and offered to the gods. This ritual celebrated the return of spring. These Aztec rituals now haunt the unfortunate second choice of the 1989 coup because little did he know that he would now be experiencing the pain that once was felt at the top of the temple pyramid. Following the ICC indictment, his soul has been sliced open for the entire world to see. In the Aztec case the King lost his life, in Sudan's case the leader has lost his soul and dignity.
Destiny
The unknown 45-year-old coup leader delivered his first statement in 1989 to the Sudanese people and said: "the coup was to save the country from rotten political parties. Your armed forces have come to carry out a tremendous revolution for the sake of change after suffering that has included the deterioration of everything to the extent that your lives have become paralysed". The coup was also aimed at preventing the signing of a peace treaty with John Garang's Sudan People's Liberation Movement (SPLM) in July 1989. As a result the country paid a heavy price, a million died and more millions were displaced and uprooted. Suffering had arrived in Sudan.
Umar Hassan Al Bashir was born on January 1st 1944, in Hosh Banga, a small village on the banks of the river Nile located 80kms north of Khartoum. He went to primary school in Shandi, a nearby town, and then moved with his family to Khartoum and enrolled in a secondary school there. His father was a dairy farm worker in Kafori, north of Khartoum. Hassan al Bashir struggled to feed his large family of eight boys and four girls, but working hard in his early days in Khartoum he eventually succeeded in educating his kids.
His father was regarded as a follower of the Khatmiyya sect and a committed supporter of the Democratic Unionist party. However, Umar seems to have chosen a radically different path from his father's and he joined the Muslim Brothers organization at an early age, as did many of his siblings. Young Umar also seems to have been fascinated by the military and after graduating from secondary school he joined the Sudan Military Academy and graduated in 1967.
For a period he lead an uneventful life like most of his follow citizens, and progressed normally in different military posts, including military attache in the United Arab Emirates (1975-79), garrison commander (1979-81) and head of the armoured parachute brigade in Khartoum (1981-87). In 1987 he was appointed as a commander of the 8th brigade in South Kurdufan. But his fate was changed forever in late June 1989 when he was chosen to lead an Islamist backed military coup, since then his life would never be the same.
In the 1990s he submitted to the role of merely a token head of state, while his mentor Al Turabi was the real force behind the throne. But in the late 1990s he finally got fed up with the role of a front man. He wanted to lead and he has severed his ties with Al Turabi since then. To his credit, he has yet to develop the typical megalomaniac characteristics of his predecessor Ja'far Numayri, and other regional dictators. He does lack a natural leadership charisma, although he is described by his associates as an affable, humorous and laid-back kind of person, a "true Sudanese". Sometimes he can get very emotional, in his recent visit to the River Nile state a local woman offered him her child, the childless president lost control of his emotions and cried openly.
The dance
According to his press secretary Al Bashir has an unforgiving and short temper. In many public rallies he has frequently managed to embarrass his aids with unscripted outbursts. As a reaction to the ICC in a rally last month in the state of Sinnar-South Eastern Sudan, he said, "I swear to God I will not surrender even a single cat from Sudan". Regarding the court ruling he said, "They can soak it in water and drink it". After each rally Al Bashir performs a customary dance, one of his favourite songs is a traditional Sudanese one whose lyrics go something like this: "They entered [the battlefield] and the vultures fly [over the enemy's dead bodies]". The words try to describe the horrible death of the enemy and how their bodies are left for the vultures to rip to pieces. The song conjures up a disturbing image, and if you have just been accused of war crimes and dance to such a tune, not many people will be able to distinguish between the image and the reality. There is something in the President's recent behaviour that almost makes you feel sorry for the guy. He looks like someone who has completely lost his composure. No one seems readily at hand to tell him, "Pull yourself together man!".
From his supporters' point of view, if you fast-forward 20 years, the accidental coup leader is now considered a national icon, a symbol of the country's sovereignty. The future and the destiny of the nation were linked with his fate, because he rules "through God's will". Of course, throughout human history and across cultures, rulers, monarchs, Kings and Queens have all claimed they are somehow supernaturally ordained - that they are "chosen by God to rule". Even in the USA a recent survey conducted in 2006 by Baylor University's Institute for Studies of Religion in Texas, found that 19% of Americans think that, "God favours the United States' international politics". The Shah of Iran claimed to be the Shadow of God on Earth - he was eventually deposed by the quintessential men of God. Now Al Bashir has become God's much loved being in Sudan... if you ever wondered what blasphemy means, then such an outlandish claim is the answer.
The options
Now the International Criminal Court has issued an arrest warrant for the Sudanese President for crimes against humanity and war crimes in Darfur - many observers have identified three possibilities:
Firstly: that a state of emergency may be declared; the UN Mission in Sudan (UNMIS) and the UN/African Union Hybrid Forces (UNAMID) may be expelled from Sudan; independent civil society organizations may be harassed; and the elections may be postponed while the regime declares a confrontation with the international community.
Secondly: the indictment of the president will weaken his position and will make him a liability to his own party. This may open the way for his removal in a palace coup d'etat.
Thirdly: "Nothing will happen on the Sudanese front", argued the moderate Islamist Al Tayyib Zayn Al Abidin in his article for Al Sahafah newspaper. He asserted that the government is far more pragmatic than people give it credit for. In his opinion the exaggerated claims that the government will react "impulsively" will not happen, anarchy will not engulf Darfur, the CPA implementation will continue. However, what will take place? "A few demonstrations here and there and it will die away in matter of days", says Zayn Al Abidin. "A normal life will return to Khartoum".
Many in Sudan share Zein Al Abdin's view, the government rhetoric is designed to achieve three things: (a) to appear militant in front of their local and regional followers, (b) to blackmail the international community that has invested heavily in the peace process in Sudan and, (c) to prevent the effect of the ICC ruling.
Peace and justice and arguments
On the international level many believe the government rhetoric; Julie Flint and Alex de Waal, warned the international community of the appalling consequences if an arrest warrant were issued against Al Bashir. Following the indictment of Slobodan Milosevic in 1999, Ian Black and Stephen Bates wrote an article in the Guardian on 28 May 1999 predicting that, "War crimes move dims peace hope". They also argued that, "Prospects for a negotiated solution to the Yugoslav conflict were thrown into doubt last night after Slobodan Milosevic was accused of murder". Many human rights activist also observed that, "There seems to be something approaching a universal rule that whenever a politician comes close to being charged with genocide or war crimes, someone somewhere will wring their hands and talk about the impracticality of it all, and the threat that this supposedly poses to 'peace'".
Many among the leaders of the NCP accept that crimes were committed in Darfur. Unfortunately, they have underestimated the seriousness of the international community's and Darfur victims' response to these crimes. They have made countless diplomatic blunders that ended up in the ICC. However, they are also aware of the hard realities of Sudanese and regional politics and they cannot afford to scare away the foreign investment that has been attracted to Sudan in the last five years. And they do not want to risk their own stake in the country's wealth. In short, they simply cannot afford anarchy in Sudan, let alone encourage it. And another reality, peace and justice are neither mutually exclusive nor sequential; they are more often inter-linked and simultaneous. Above all, impunity for the guilty is not an option that the victims of Darfur are willing or can afford to accept.
In retrospect
Now the naive Brigadier of 1989 is paying a high price for his role in an adventure written and composed by others. His own former mentor, Al Turabi, now cynically supporting his arrest. In retrospect, his mother was reported to have said in shock, following the news that her own son was the leader of the military coup in 1989, "What is wrong with my son Umar? This country is a river corpse [i.e. can not be resuscitated]". If he ever listened to her, maybe he would have had a different destiny. But, wait a minute, if you're a gift from God then maybe there was nothing you could have done to change your fate in any case.
Source: Sudan Tribune website, Paris in English 5 Mar 09
Text of commentary by Hassan Bashir entitled "Fate, destiny and the last dance of Sudan's President" in English by Paris-based Sudanese newspaper Sudan Tribune website on 5 March
Ironical as it may seem, the original candidate to lead 1989's coup d'etat was another Brigadier named Uthman Ahmad Al-Hassan, because he was the leader of the Islamist group in the Sudan Armed Forces at the time. However, he was hastily replaced just a few days before the coup, because Uthman wanted the army to have complete control over political power in the country. Nevertheless the civilian plotters had second thoughts and they selected Umar Hassan al Bashir, considering him an easygoing officer who could be effortlessly controlled and manipulated. Al Turabi used to say, "Al Bashir is a gift from God to us".
In ancient Aztec tradition the most handsome of the prisoners captured on the battlefield would be made king. Protected by guards and dressed in robes, his every need was satisfied for a whole year. Then the king was lead to the top of the temple pyramid. Here, stripped naked, he was stretched out on an altar, his torso was sliced open and his heart torn out and offered to the gods. This ritual celebrated the return of spring. These Aztec rituals now haunt the unfortunate second choice of the 1989 coup because little did he know that he would now be experiencing the pain that once was felt at the top of the temple pyramid. Following the ICC indictment, his soul has been sliced open for the entire world to see. In the Aztec case the King lost his life, in Sudan's case the leader has lost his soul and dignity.
Destiny
The unknown 45-year-old coup leader delivered his first statement in 1989 to the Sudanese people and said: "the coup was to save the country from rotten political parties. Your armed forces have come to carry out a tremendous revolution for the sake of change after suffering that has included the deterioration of everything to the extent that your lives have become paralysed". The coup was also aimed at preventing the signing of a peace treaty with John Garang's Sudan People's Liberation Movement (SPLM) in July 1989. As a result the country paid a heavy price, a million died and more millions were displaced and uprooted. Suffering had arrived in Sudan.
Umar Hassan Al Bashir was born on January 1st 1944, in Hosh Banga, a small village on the banks of the river Nile located 80kms north of Khartoum. He went to primary school in Shandi, a nearby town, and then moved with his family to Khartoum and enrolled in a secondary school there. His father was a dairy farm worker in Kafori, north of Khartoum. Hassan al Bashir struggled to feed his large family of eight boys and four girls, but working hard in his early days in Khartoum he eventually succeeded in educating his kids.
His father was regarded as a follower of the Khatmiyya sect and a committed supporter of the Democratic Unionist party. However, Umar seems to have chosen a radically different path from his father's and he joined the Muslim Brothers organization at an early age, as did many of his siblings. Young Umar also seems to have been fascinated by the military and after graduating from secondary school he joined the Sudan Military Academy and graduated in 1967.
For a period he lead an uneventful life like most of his follow citizens, and progressed normally in different military posts, including military attache in the United Arab Emirates (1975-79), garrison commander (1979-81) and head of the armoured parachute brigade in Khartoum (1981-87). In 1987 he was appointed as a commander of the 8th brigade in South Kurdufan. But his fate was changed forever in late June 1989 when he was chosen to lead an Islamist backed military coup, since then his life would never be the same.
In the 1990s he submitted to the role of merely a token head of state, while his mentor Al Turabi was the real force behind the throne. But in the late 1990s he finally got fed up with the role of a front man. He wanted to lead and he has severed his ties with Al Turabi since then. To his credit, he has yet to develop the typical megalomaniac characteristics of his predecessor Ja'far Numayri, and other regional dictators. He does lack a natural leadership charisma, although he is described by his associates as an affable, humorous and laid-back kind of person, a "true Sudanese". Sometimes he can get very emotional, in his recent visit to the River Nile state a local woman offered him her child, the childless president lost control of his emotions and cried openly.
The dance
According to his press secretary Al Bashir has an unforgiving and short temper. In many public rallies he has frequently managed to embarrass his aids with unscripted outbursts. As a reaction to the ICC in a rally last month in the state of Sinnar-South Eastern Sudan, he said, "I swear to God I will not surrender even a single cat from Sudan". Regarding the court ruling he said, "They can soak it in water and drink it". After each rally Al Bashir performs a customary dance, one of his favourite songs is a traditional Sudanese one whose lyrics go something like this: "They entered [the battlefield] and the vultures fly [over the enemy's dead bodies]". The words try to describe the horrible death of the enemy and how their bodies are left for the vultures to rip to pieces. The song conjures up a disturbing image, and if you have just been accused of war crimes and dance to such a tune, not many people will be able to distinguish between the image and the reality. There is something in the President's recent behaviour that almost makes you feel sorry for the guy. He looks like someone who has completely lost his composure. No one seems readily at hand to tell him, "Pull yourself together man!".
From his supporters' point of view, if you fast-forward 20 years, the accidental coup leader is now considered a national icon, a symbol of the country's sovereignty. The future and the destiny of the nation were linked with his fate, because he rules "through God's will". Of course, throughout human history and across cultures, rulers, monarchs, Kings and Queens have all claimed they are somehow supernaturally ordained - that they are "chosen by God to rule". Even in the USA a recent survey conducted in 2006 by Baylor University's Institute for Studies of Religion in Texas, found that 19% of Americans think that, "God favours the United States' international politics". The Shah of Iran claimed to be the Shadow of God on Earth - he was eventually deposed by the quintessential men of God. Now Al Bashir has become God's much loved being in Sudan... if you ever wondered what blasphemy means, then such an outlandish claim is the answer.
The options
Now the International Criminal Court has issued an arrest warrant for the Sudanese President for crimes against humanity and war crimes in Darfur - many observers have identified three possibilities:
Firstly: that a state of emergency may be declared; the UN Mission in Sudan (UNMIS) and the UN/African Union Hybrid Forces (UNAMID) may be expelled from Sudan; independent civil society organizations may be harassed; and the elections may be postponed while the regime declares a confrontation with the international community.
Secondly: the indictment of the president will weaken his position and will make him a liability to his own party. This may open the way for his removal in a palace coup d'etat.
Thirdly: "Nothing will happen on the Sudanese front", argued the moderate Islamist Al Tayyib Zayn Al Abidin in his article for Al Sahafah newspaper. He asserted that the government is far more pragmatic than people give it credit for. In his opinion the exaggerated claims that the government will react "impulsively" will not happen, anarchy will not engulf Darfur, the CPA implementation will continue. However, what will take place? "A few demonstrations here and there and it will die away in matter of days", says Zayn Al Abidin. "A normal life will return to Khartoum".
Many in Sudan share Zein Al Abdin's view, the government rhetoric is designed to achieve three things: (a) to appear militant in front of their local and regional followers, (b) to blackmail the international community that has invested heavily in the peace process in Sudan and, (c) to prevent the effect of the ICC ruling.
Peace and justice and arguments
On the international level many believe the government rhetoric; Julie Flint and Alex de Waal, warned the international community of the appalling consequences if an arrest warrant were issued against Al Bashir. Following the indictment of Slobodan Milosevic in 1999, Ian Black and Stephen Bates wrote an article in the Guardian on 28 May 1999 predicting that, "War crimes move dims peace hope". They also argued that, "Prospects for a negotiated solution to the Yugoslav conflict were thrown into doubt last night after Slobodan Milosevic was accused of murder". Many human rights activist also observed that, "There seems to be something approaching a universal rule that whenever a politician comes close to being charged with genocide or war crimes, someone somewhere will wring their hands and talk about the impracticality of it all, and the threat that this supposedly poses to 'peace'".
Many among the leaders of the NCP accept that crimes were committed in Darfur. Unfortunately, they have underestimated the seriousness of the international community's and Darfur victims' response to these crimes. They have made countless diplomatic blunders that ended up in the ICC. However, they are also aware of the hard realities of Sudanese and regional politics and they cannot afford to scare away the foreign investment that has been attracted to Sudan in the last five years. And they do not want to risk their own stake in the country's wealth. In short, they simply cannot afford anarchy in Sudan, let alone encourage it. And another reality, peace and justice are neither mutually exclusive nor sequential; they are more often inter-linked and simultaneous. Above all, impunity for the guilty is not an option that the victims of Darfur are willing or can afford to accept.
In retrospect
Now the naive Brigadier of 1989 is paying a high price for his role in an adventure written and composed by others. His own former mentor, Al Turabi, now cynically supporting his arrest. In retrospect, his mother was reported to have said in shock, following the news that her own son was the leader of the military coup in 1989, "What is wrong with my son Umar? This country is a river corpse [i.e. can not be resuscitated]". If he ever listened to her, maybe he would have had a different destiny. But, wait a minute, if you're a gift from God then maybe there was nothing you could have done to change your fate in any case.
Source: Sudan Tribune website, Paris in English 5 Mar 09
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