Friday, July 31, 2009
Former FBI Translator: Bin Laden Worked for U.S. Right Up Until 9/11
Before you hear what Sibel Edmonds has to say, you should know a little about her background.
Edmonds is a former FBI translator, who the Department of Justice's Inspector General and several senators have called extremely credible (free subscription required).
And some of Edmonds allegations' have already been confirmed by the British press.
Now, Edmonds is saying that Osama Bin Laden worked for the U.S. right up until 9/11, and that that fact is being covered up because the US outsourced terror operations to al Qaeda and the Taliban for many years.
Outrageous claim, right?
Actually, there are several lines of confirmation of Edmonds' claim.
- According to one of the most reputable French papers, CIA agents met with Bin Laden two months before 9/11, when he was already wanted for the bombing of the U.S.S. Cole.
- Two days before 9/11, Bin Laden called his stepmother and told her "In two days, you're going to hear big news and you're not going to hear from me for a while.” US officials later told CNN that “in recent years they've been able to monitor some of bin Laden's telephone communications with his [step]mother. Bin Laden at the time was using a satellite telephone, and the signals were intercepted and sometimes recorded." Indeed, before 9/11, to impress important visitors, NSA analysts would occasionally play audio tapes of bin Laden talking to his stepmother.
In other words, American forces had many opportunities to capture Bin Laden, and yet failed to do so.
Indeed, even after 9/11, the U.S. military intentionally let Bin Laden evade capture. Outrageous? Don't believe it?
See for yourself:
- The CIA commander in charge of the capture of Bin Laden during the invasion of Afghanistan said that the U.S. let Bin Laden escape from Afghanistan
- A retired Colonel and Fox News military analyst said:
"We know, with a 70 percent level of certainty — which is huge in the world of intelligence — that in August of 2007, bin Laden was in a convoy headed south from Tora Bora. We had his butt, on camera, on satellite. We were listening to his conversations. We had the world’s best hunters/killers — Seal Team 6 — nearby. We had the world class Joint Special Operations Command (JSOC) coordinating with the CIA and other agencies. We had unmanned drones overhead with missiles on their wings; we had the best Air Force on the planet, begging to drop one on the terrorist. We had him in our sights; we had done it ....Unbelievably, and in my opinion, criminally, we did not kill Usama bin Laden."
- French soldiers insist that they easily could have captured or killed Bin Laden, but that the American commanders stopped them
For background, you may wish to note that the government not only listened in on Bin Laden's calls, they also heard the hijackers' plans from their own mouths.
And the Congressional Joint Inquiry into 9/11 discovered that an FBI informant had hosted and rented a room to two hijackers in 2000 and that, when the Inquiry sought to interview the informant, the FBI refused outright, and then hid him in an unknown location, and that a high-level FBI official stated these blocking maneuvers were undertaken under orders from the White House (confirmed here by the Co-Chair of the Joint Inquiry and former Head of the Senate Intelligence Committee, Bob Graham; and see this Newsweek article).
And a key Al Qaeda trainer actually worked with the Green Berets and the CIA and was an FBI informant.
And the CIA may have helped many of the 9/11 hijackers get their visas to the U.S.
And the former director of the National Security Agency said "By any measure the US has long used terrorism. In ‘78-79 the Senate was trying to pass a law against international terrorism - in every version they produced, the lawyers said the US would be in violation" (the audio is here).
And, as documented by the New York Times, Iranians working for the C.I.A. in the 1950's posed as Communists and staged bombings in Iran in order to turn the country against its democratically-elected president (see also this essay).
Moreover, recently declassified documents show that in the 1960's, the American Joint Chiefs of Staff signed off on a plan to blow up AMERICAN airplanes (using an elaborate plan involving the switching of airplanes), and also to commit terrorist acts on American soil, and then to blame it on the Cubans in order to justify an invasion of Cuba. If you view no other links in this article, please read the following ABC news report; the official documents; and watch this interview with the former Washington Investigative Producer for ABC's World News Tonight with Peter Jennings.
And Pulitzer-prize winning investigative reporter Seymour Hersh says that the Bush administration funded terrorist groups (see confirming articles here and here).What does all this mean about Bin Laden? Make up your own mind.
Thursday, July 30, 2009
Why We Need a Truth and Reconciliation Commission
What is the end goal of the battle against Wall Street fraudsters, government officials on the take, insane torturers and other other bad guys we are fighting against? Is it to see the perpetrators tried for their crimes, and then sentenced to life in jail? Or executed?
I think that's aiming too low. That's not going far enough.
Why? Because the people who have done these criminal acts will likely be replaced by some other corrupt, ruthless folks in the future.
Meet the new boss ... same as the old boss.
If all we do is punish the perpetrators, the spin will be it was just a "handful of bad apples". This is the same angle that was used on the grunts at Abu Ghraib, even though we now know that the orders for torture in Iraq came from the very top.
Further, many American military, intelligence, financial and political folks are afraid to expose what they know for fear that it will plunge the country into chaos. As someone wrote anonymously in response to an essay I wrote:
"I think this is the key question. What would happen if this great crime were exposed and justice meted out to the many involved? How would the system be rebuilt and who would keep the broken pieces together during the healing process? Without some thought along these lines, many people will see exposing [these crimes] as stepping into the abyss."So unless we can provide a way to obtain truth and justice and save our country, many people with inside knowledge or who are in positions of power will hinder rather than help us.
Finally, even if the criminal masterminds are prosecuted, other countries will just blame it on the "crazy Americans". Who cares about other countries? Well, countries all over the world have problems with crime and corruption. So even if the American criminals are brought to justice, it is likely that the true lesson will not be learned by others.
A Different Strategy
There is an alternative strategy: a Truth and Reconciliation Commission.
As you may recall, South Africa set up a truth and reconciliation commission. The Commission granted amnesty to the people who committed brutal acts of murder and torture under the apartheid regime. I wasn't in South Africa at the time, but my impression is that the Commission helped South Africa heal its incredibly deep wounds quickly. Not only did the victims have a chance to tell their stories, but the people who carried out these horrible acts had a chance to confess in public.
Would the same work with current crimes? Maybe so.
What if the perpetrators of the financial, military, torture, and other crimes and their assistants were granted amnesty from prosecution on the condition that they fully explain how and why the crimes happened? And anyone caught consciously lying would automatically go to jail? The following might occur:
• Lower-level conspirators would probably be more likely to come forward and tell what they know
• When they come forward, they are more likely to point their finger at the real masterminds
• Seeing a way to support the truth without destroying the country, others who have knowledge of the true facts -- even if they were not direct participants -- would be more likely to work publicly for truth and justice, instead of hindering us
• People in other countries will hear the true facts, so that the same types of crimes will be somewhat less likely to be used in their countries
Less is More
Does this sound like I'm being soft on the criminals? Well, initially a Truth and Reconciliation Commission would not grant amnesty to anyone who failed to fully confess. So let's say higher-level people did not admit their role in the crimes: they would be prosecuted and punished to the full extent of the law.
Moreover, sometimes less is more.
Remember those Chinese finger cuffs you played with as a kid? If you tried to pull your finger out quickly, you got trapped ... but if you patiently pushed the ends towards the middle, you could free your finger.
Well, the current criminal situation we face in America today may be like Chinese finger cuffs. If we insist on jailing or executing all of the perpetrators, the resistance might be so great that we stay "trapped" in the current "cuff" of immobilization and resistance to the truth and magnitude of the crimes.
But if we are a little more patient and a bit more intelligent in our approach, we might be able to "free" the forces of truth and justice, and free ourselves from the nightmare in which we are currently trapped.
We need to be fierce and unrelenting in our push for truth and justice. And -- though it may seem paradoxical -- with a Truth and Reconciliation Commission as an end-game, I believe we might get there a lot quicker than if we demand the heads of all those involved in the crimes.
I am not talking about going easy on the bad guys. They've got to come totally clean or they get life in prison or worse. But I am talking about doing something that actually might work.
I'm also, frankly, talking about turning lemons into lemonade. Financial fraud and manipulation, starting the Iraq war based on false pretenses, torture, spying etc. are all acts of tremendous evil and deceit. But through the idea of a Truth and Reconciliation Commission, we might be able to use these crimes to wake up America and the world to the secret history of what's been happening behind closed doors, the true nature of governments and manipulation, and the possibilities for a better society.
We might be able to confess our sins as a nation, and to -- perhaps for the first time ever -- truly start living up to the ideals expressed by the Declaration of Independence and Constitution.
Note: Senator Leahy has proposed a truth and reconciliation commission, but it is limited to crimes under the Bush administration, and it does not include financial crimes. I believe that a T & R commission must investigate whoever broke the law - republicans or democrats - and include financial crimes, which are some of the worst crimes as far as their harm to the greatest number of people.
PhD Economist: Fed has Caused Soaring Unemployment, Millions of Foreclosures, Millions Losing Life Savings and More than $6 Trillion in Lost Output
In endorsing the bill to audit the Fed, PhD economist Dean Baker wrote last week:
The country now has almost 25 million people who are unemployed or underemployed as a result of the Fed's disastrous policies. Millions of people are losing their homes and tens of millions are losing their life savings. The country is likely to lose more than $6 trillion in output ($20,000 per person) due to the Fed's inept job performance.
He forgot trillions in unnecessary interest payments (and see this).
The 75% of Americans who support auditing the Fed are right. Those calling for the Fed to be broken up or dissolved are even more right.
Barney Frank is a Big Fat Idiot
As I have previously documented, Larry Summers is a big fat idiot.
Unfortunately, idiocy is not limited to the White House economic team.
Barney Frank - the congress member taking the laboring oar in "solving" the economic crisis - is also a big fat idiot.
Frank is calling for credit default swaps to be limited to the giant "market makers".
Given that it was the giants trading in cds which brought down the economy (see this and this), Frank's proposal would be like saying that only convicted arsonists can work on the fire department's fire suppression team.
In May, I posted the following quote in arguing that the big banks had already killed meaningful regulatory reform:
“The banks appear to wish to maintain the intra-dealer market and raise barriers to new entrants to keep the OTC business [i.e. over-the-counter credit default swaps] as compartmentalized as possible and to protect their profitable market conditions,” said Brad Hintz, an analyst at Sanford C. Bernstein & Co. in New York. “The Street’s lobbyists appear to be asking for a ‘club’ structure in OTC trading.”...Frank wants to hand the banks the cozy little club structure they've been lobbying for.
I am not a weightist: Tim Geithner is a skinny little idiot, and Ben Bernanke is a medium sized bearded idiot.
Dan Rather Slams the Corporate Media
Dan Rather slammed the corporate media in a talk Tuesday for the erosion of quality journalism, and the corporatization, politicization, and “trivialization” of news.
He also said:
A democracy and free people cannot thrive without a fiercely independent press.
This is true, of course.
An uninformed public cannot maintain a democratic republic.
But it is also true because:
The government has allowed tremendous consolidation in ownership of the airwaves during the past decade. The large media players stand to gain billions of dollars in profits if the Obama administration continues to allow monopoly ownership of the airwaves by a handful of players. The media giants know who butters their bread. So there is a spoken or tacit agreement: if the media cover the administration in a favorable light, the MSM will continue to be the receiver of the government's goodies.
Rather pointed out that “roughly 80 percent” of the media is controlled by no more than six, and possibly as few as four, corporations.
This is only newsworthy because Rather said it. This fact has been documented for years, as shown by the following must-see charts prepared by:
And check out this list of interlocking directorates of big media companies from Fairness and Accuracy in Media, and this resource from the Columbia Journalism Review to research a particular company.
This image gives a sense of the decline in diversity in media ownership over the last couple of decades:
FREE Market? Ha Ha, That's Funny!
This article won't talk about how Uncle Sam has taken majority ownership in a number of financial giants and car companies. Everyone knows about that.
There are a lot of other reasons the market is not free.
For example, Two new quotes show that Uncle Sam has replaced individual investors. As bond king Bill Gross says:
Investment conclusions? A 3% nominal GDP "new normal"means lower profit growth, permanently higher unemployment, capped consumer spending growth rates and an increasing involvement of the government sector, which substantially changes the character of the American capitalistic model.And David Rosenberg says:
The government has its hands in 40% of the economy and when public sector officials can influence how banks can value their assets, how mortgage servicers should be doing their business, who shall fail in the financial industry and who shall not; and when we have a central bank that is not just the lender but the market of last resort, even for RVs, and a government willing to run up its deficit to levels that would have made FDR blush, then perhaps we can end up seeing a recovery occur sooner than we had thought.(As I wrote last September, the government's involvement in the economy has become a lot like the movie "Weekend at Bernie's").
Then, of course, you have high-frequency program tradings which not only distort the markets, making up more than 70% of stock trades, but which also let Goldman and the other program trading giants take a sneak peak at what the real (aka “human”) traders are buying and selling, and then trade on the insider information. See this, this, this and this. (This is frontrunning, which is illegal; but it is a lot bigger than garden variety frontrunning, because the program traders are not only trading based on inside knowledge of what their own clients are doing, they are also trading based on knowledge of what all other traders are doing).
Remember, one of the assumptions of economics is that everyone has the same instant and total knowledge of prices, supply and demand as everyone else. Program trading destroys that assumption, because it gives the handful of financial giants with high-frequency trading programs insight into prices, supply and demand that no one else has.
Indeed, to the extent that banks carry out tasks for the Federal Reserve, they get insider knowledge of what the fed is doing, and which way trends will go. I'm not even talking about the Plunge Protection Team (see this and this). I'm talking about the Fed's "normal" open market operations.
And then there's Goldman admitting that its proprietary trading program can "manipulate the markets in unfair ways".
And don't forget that at least one of Matt Taibbi's claims that Goldman has manipulated every major bubble since the Great Depression has been confirmed. Specifically, the Commodity Futures Trading Commission confirms that speculators caused the oil boom last year.
And there is also the recently-unearthed Federal Reserve document from 1961 - hosted on the St. Louis Federal Reserve's website (pdf version; html version) - showing, in the words of Rob Kirby:
The Fed's . . . plans to intervene surreptitiously in the currency and gold markets to support the dollar and to conceal, obscure, and falsify U.S. government records so that the intervention would not be discovered.In the same article, Kirby also argues that bond interest rates have also been manipulated.
And then there are bear raids, naked short selling, and credit default swap holders driving companies into bankruptcy (see this and this).
Given the above manipulations, I don't know if there is anything "free" about the market whatsoever.
The above list is just what comes to mind off the bat. There are a lot of other forms of manipulation. Indeed, I am not even an insider in the financial industry. Just imagine what those guys know.
Wednesday, July 29, 2009
Even Bernanke Admits this Could be Worse than the Great Depression
As I have previously pointed out, the current economic crisis could be worse than the Great Depression. See this and this.
I have also pointed out that two economists said as recently as June that the global economic downturn was worse than the Great Depression.
But if you don't believe them, here it is from the horse's mouth . . .
Ben Bernanke said 3 days ago:
A lot of things happened, a lot came together, [and] created probably the worst financial crisis, certainly since the Great Depression and possibly even including the Great Depression.
Even Bernanke admits this could be worse than the Great Depression.
If this could be worse than the Depression, why are Bernanke, Summers and Geithner taking the status quo approach to the economy, and letting the financial giants do whatever they want?
Economists Have Acted Like Team Doctors for the Financial Giants
The New York Federal Reserve has just published a new report entitled "The Shadow Banking System: Implications for Financial Regulation".
One of the main conclusions of the report is that leverage undermines financial instability:
Securitization was intended as a way to transfer credit risk to those better able to absorb losses, but instead it increased the fragility of the entire financial system by allowing banks and other intermediaries to “leverage up” by buying one another’s securities. In the new, post-crisis financial system, the role of securitization will likely be held in check by more stringent financial regulation and by the recognition that it is important to prevent excessive leverage and maturity mismatch, both of which can undermine financial stability.
That is true.
In fact, every independent economist has said that too much leverage was one of the main causes of the current economic crisis.
However, notwithstanding the NY Fed's recommendations, the Federal Reserve and Treasury have, in fact, been encouraging massive leveraging.
As I pointed out in October, in an article entitled "In Trying to Stop the Inevitable Deleveraging Process, the Government is Only Making It Worse":
The government is reducing [banks'] cash reserve requirements so they can increase their leverage to loan money they don't have through fractional reserve banking. See also this. And - even after Greenspan confessed that derivatives were dangerous (and see this) - the government refuses to rescind them or take any other real actions to contain the nuclear fallout from such "weapons of mass destruction". Instead, the government is trying to prop up the derivatives market by various means.
By trying to put out the raging deleveraging forest fire, the government is actually fanning its flames and making it more dangerous. And even in those areas where the government appeared to put out the fire, there are hot coals just beneath the surface that are already erupting back into flame.
Unfortunately, as I've repeatedly pointed out, Summers, Bernanke, and Geithner are too wedded to an overly-leveraged, highly-securitized, derivatives-based, bubble-blown financial system. They are some of the main boosters of speculative finance. Indeed, Summers was one of the people most responsible for allowing the big financial institutions to speculate and gamble using insane amounts of leverage, and insisting that toxic derivatives be left completely unregulated.
But the blame does not solely rest with Summers, Bernanke and Geithner.
As I have previously documented, economists pushing voodoo theories justifying the tremendous increase in leverage were promoted and lionized, while those questioning such nonsense were ridiculed.
In other words, economists and financial advisors - in academia, government and elsewhere - have been subservient to the financial elites, and have trumpeted the safeness and soundness of cdos, credit default swaps, and all of the rest of the shadow economy which allowed leverage to get so out of hand that it brought the world economy to its knees.
This is no different from the promotion of sports doctors to become team doctor when they are willing to inject various painkillers and feel-good drugs into an injured football star so he can finish the game. If he is willing to justify the treatment as being safe, he is promoted. If not, he's out.
Economists have acted like team docs for the financial giants. When the football team doctor who gives the injured patient steroids and stimulants and tells him to get back in the game, it might be good for the team in the short-run, but the patient may end up severely injured for decades.
When economists have prescribed more leverage and told the banks to go trade like crazy to get the economy going again, it might be good for the banks in the short-run. But the consumer may end up being hurt for many years.
Using another analogy, this is like prescribing"hair of the dog" to the suffering alcoholic or heroin to the withdrawing junkie.
Obama's Economic Regulations Are Like a Law Which Makes Arson Illegal, But Exempts Convicted Arsonists
Obama's regulation of credit default swaps leave loopholes large enough to drive the biggest trucks through. Specifically, it forces over-the-counter credit default swap transactions to be traded through an exchange unless it is a non-standard cds. So all that the "financial innovators" who melted down the economy have to do is get a little creative in drafting their cds' - or just to tell regulators "oh no, that wasn't a standard contract", and they are excepted from the regulation.
Similarly, the Obama administration has just passed a new set of regulations "getting tough" on the naked short selling of stocks, which independent economists say can manipulate stock prices and bring down otherwise healthy companies.
But the regulation will exempt hedge funds, and allow them to continue hiding their shorts from regulators.
That's like passing a law outlawing arson to publicity and fanfare, but quietly exempting convicted arsonists from the new law.
Even the Wall Street Journal Says "Break up the Fed"
In a sign of the growing movement to end the Fed, the bastion of the economic status quo - the Wall Street Journal - published an OpEd today entitled "Let's Break Up the Fed" and subtitled "The Federal Reserve has done a terrible job at financial regulation. Why give it more power?".
Given that a new new Rasmussen poll shows that 75% of Americans want to audit the Fed, and a new Gallup poll shows that American's trust in the Fed has plummeted, and that Ron Paul's bill to audit the Fed has at least 276 co-sponsors in the House, and 19 co-sponsors in the Senate, even Bernanke's charm offensive doesn't seem to be working very well.
Poll: Do You Think the Government Will Crack Down on Fraud and Manipulation By Financial Giants?
I've posted a new poll (on the right under "Followers").
The poll asks
Do You Think the Government Will Crack Down on Fraud and Manipulation By Financial Giants?
There are 4 possible answers:
- Yes, but not until the economy recovers
- Yes, but only if Obama learns the truth of what's happening
- Yes, but ONLY if the people DEMAND it
- No, never . . . the government works hand-in-glove with the criminals in private business
Update: Here are the final poll results:
Yes, but not until the economy recovers | 1 (0%) |
Yes, but only if Obama learns the truth of what's happening | 10 (2%) |
Yes, but ONLY if the people DEMAND it | 62 (12%) |
No, never . . . the government works hand-in-glove with the criminals in private business | 432 (87%) |
Tuesday, July 28, 2009
Constitutional Expert: Government Was "Trying to Create an Atmosphere of Fear in Which the American People Would Give Them More Power”
Constitutional law expert Jonathan Turley said:
What you saw in this period was, across the board [...] this was the same period when they were ramping up the torture issue and they were ramping up enemy combatants. It was a full-court press on the Constitution. They were trying to create an atmosphere of fear in which the American people would give them more power.
What's he talking about?
Well, as I wrote in 2007:
The Bush Administration issued numerous terror alerts based on scant intelligence in order to rally people around the flag when the administration was suffering in the polls.
Says who?
Well, how about:Of course, the administration also cried wolf about Iraq's weapons of mass destruction, Iran's nuclear capabilities, Al-Qaeda's composition, strength and numbers, and a host of other things.
- Keith Olbermann (and here)
And recall that former U.S. National Security Adviser (and top foreign policy advisor) Zbigniew Brzezinski told the Senate that the war on terror is a "a mythical historical narrative".
And because false flag actions are the ultimate way to create an atmosphere of fear in which people give the government more power - as documented by examples throughout thousands of years of history - shouldn't we at least ask whether the Bush administration might have also used this ancient and well-known political trick?
“Ideas about a Struggle for Truth and Justice Are Formed by Personalities with a Paranoid Structure”: Soviet Government Psychiatrists
As Kurt Nimmo pointed out last week in a story about a German man who was sent to a psychiatric institute for protesting Obama:
In the former Soviet Union, psikhushkas — mental hospitals — were used by the state as prisons in order to isolate political prisoners, discredit their ideas, and break them physically and mentally. The Soviet state began using mental hospitals to punish dissidents in 1939 under Stalin. The Psychiatric Prison Hospital in the city of Kazan was transferred to NKVD (the secret police organization for the People’s Commissariat for Internal Affairs) control and in 1969 Yuri Andropov, the head of KGB, submitted to the Central Committee of Communist Party of the Soviet Union a plan for creating a network of psikhushkas.
According to official Soviet psychiatry and the Moscow Serbsky Institute at the time, “ideas about a struggle for truth and justice are formed by personalities with a paranoid structure.” Treatment for this special political schizophrenia included various forms of restraint, electric shocks, electromagnetic torture, radiation torture, lumbar punctures, various drugs — such as narcotics, tranquilizers, and insulin — and beatings. Anne Applebaum, author of Gulag: A History, indicates that at least 365 sane people were treated for “politically defined madness,” although she surmises there were many more.
The American establishment, including the talking heads in corporate media, is similarly trying to label everyone who questions government as "crazy". See this, this, this, this and this.
This, of course, is the opposite of the old slogan "question authority", which is so American that the Founding Fathers urged us to question what our government is doing. For example, Thomas Jefferson said:
"Dissent is the highest form of patriotism"
"All tyranny needs to gain a foothold is for people of good conscience to remain silent"
and
"The price of freedom is eternal vigilance"
What Can We Do About This Assault On Free Speech?
So what can we do about this assault on free speech?
We should certainly keep on exposing this technique through videos, radio and essays.
And I'm a big believer in getting short messages out to where people who don't get their news from the Web will see them - on buttons, stickers, freeway blogs, etc. See this and this.
So put this on a bumper sticker or other item:
Ideas about a Struggle for Truth and Justice Are Formed by Personalities with a Paranoid Structure
- Soviet Government Psychiatrists
That short quote will help wake people up to the fact that is a communist, not American, idea to label those who question their government's actions as crazy.
China's Real Debt Situation
As I have repeatedly pointed out, China is in better shape than the U.S. and many other Western countries, but all is not rosy in China.
CNN Money is now making some of these same points out for a mass audience:
But unlike the U.S., China has a much greater ability to fund its debt:On the surface, China presents a fiscal study in contrast with the United States, keeping a remarkably low ceiling on debt even as it spends its way out of the financial crisis.
But when Chinese leaders meet their U.S. counterparts this week, they should pause for reflection before venting any criticism, because hidden liabilities mean China's books are uglier -- potentially much uglier -- than at first sight.
Thanks to successive years of fast economic growth and even faster government revenue growth, the official debt-to-GDP ratio was 17.7% at the end of last year, far lower than almost any other major economy.
The trouble is that excludes local government borrowing, the current surge in loans backstopped by Beijing and bad assets cleared from the banking system but still floating about.
When all are thrown into the pot, analysts estimate that China's debt may be closer to 60% of GDP, putting it in virtually the same league as the United States, which was at 70% at the end of 2008 before it launched its massive economic stimulus program.
To be sure, Washington is now set on a path of exploding debt that Beijing will largely avoid. The United States budgeted for a federal deficit of 12.9% of GDP this year, whereas China is aiming for just 2.9%.
But China's finances are deteriorating more quickly than the government expected, fueling a rise in the stock of both explicit and disguised debt that will constrict its wriggle room.
"It is serious because, one, much of it is hidden and, two, local governments are currently doubling down on their bets," said Stephen Green, economist at Standard Chartered Bank in Shanghai. "As with all fiscal deficits, it limits space for further stimulus."...
Above and beyond that are 400 billion yuan in bad loans in banks' hands and at least 1 trillion yuan in non-performing debt hived off their books and assigned to asset management companies. The buck stops with Beijing on all of these.
The record surge in bank lending this year means that its sum of liabilities is about to swell in size.
Banks have showered money on infrastructure projects that are seen as having iron-clad government guarantees. Green said he "conservatively" estimates that Beijing's bill for covering loans issued this year alone will be 1.75 trillion yuan, enough to push its 2009 deficit to 10% of GDP...
Most troublesome of all is the potential for a "debt bomb", in the words of China's Economic Observer newspaper, at lower levels of government as officials engage in financial engineering that is both opaque and highly leveraged.
Rules prevent Chinese banks from lending to governments the equity capital which they need to obtain further loans for investment. But local officials and banks are now exploiting a vast loophole thanks to intermediaries known as trust companies.
The process is simple enough. Trusts create specially designed "wealth products", which banks sell to their clients. Banks then give the funds to the trusts and they, in turn, funnel them to governments as equity capital.
Local authorities, in short, are piling debt on top of debt. The Chinese banking regulator has started to warn trusts and banks of the growing risks, state media recently reported.
"There is so much saving and so much liquidity, so there is definitely not a problem that China will not be able to finance its deficit," said Tao Wang, UBS economist in Beijing.In other words, while China's got a lot more debt than previously disclosed, China has a lot more wiggle room than the U.S. and many other western nations, and so should be able to survive through the downturn.
Indeed, Ellen Brown argues that China has not outsourced its money-creating power to private banks because the government and private banks are really one and the same. Therefore, while China's debt might be higher than previously disclosed, the government does not have to pay huge amounts of interest to a third-party creditor - unlike the U.S. - thus putting China at an economic and competitive advantage.
Carbon Trading Giants and Big Energy Are Both Trying to Steer the Global Warming Debate Away from REAL Solutions
Goldman Sachs and the other financial giants who brought us the economic meltdown and manipulation of the economy argue that carbon trading will solve all of our problems. If we just let them make out like bandits off of carbon trading, then everything will be fine. Not only is this an awfully convenient for the banksters who conned us into an economic crash, but many environmentalists don't even buy that carbon trading is the best way to reduce carbon emissions.
On the other hand, big oil and king coal argue that keeping the status quo is best for everyone. You know, let the giant energy conglomerates produce all our energy and make out like robber barons. These energy giants buy up and then bury promising alternative energy technologies so that cheap alternatives don't challenge their monopoly on energy-production.
Microgeneration of energy could reduce our bills, decentralize power away from the giant corporations, and help protect our freedom (and see this).
Saving money and protecting freedom are bipartisan goals that everyone can rally around, whether you believe in global warming or not.
Microgeneration would also significantly reduce carbon output by substituting wind, solar and other types of clean energy for conventional energy sources, and so it would have a significant impact on reducing CO2 while empowering people at the local level, and reducing our energy bills.
So if global warming is, in fact, a threat, a major switch to microgeneration would be a lot more effective than carbon trading.
If global warming is not a threat, microgeneration can still help to break the monopoly of big energy, and return power back to the people (and a little money back into our pockets).
We all know that the powers-that-be try to divide-and-conquer us so as to make sure we don't organize for change, to keep us off-balance, and to ram through their agendas. They do this on every important issue.
They are going to continue to try to divide us on climate issues as well. We have to empower ourselves, and microgeneration is a good start.
To those who say that global warming is such a dire threat that we should "geoengineer" the earth's climate, please remember that many cures have ended up being worse than the disease. If we are to act, we must act in a smart way which has a net benefit. Microgeneration is smart.
Monday, July 27, 2009
Major New Report: Human Influences, The Sun, Volcanic Activity and El Niño ALL Affect Climate
A major new report to be published by Geophysical Research Letters, concludes that global warming will accelerate so quickly in the next 5 years - 150% of the IPCC's predictions - that it is "expected to silence global warming sceptics".
- Human influences
- The sun
- Volcanic activity
- El Niño, also called the "southern oscillation"
Whether or not the report is correct about the next 5 years, I think it is important that mainstream scientists are now admitting that climate is affected by the 3 natural conditions of the sun, volcanism and the southern oscillation, as well as human influences.
The study did not look at the affect of magnetic fields or cosmic particles on the Earth's climate. Future studies should examine these as well, to either rule them out as having an insignificant affect on climate, or else quantifying their impact.
PhD Economist: The Feds are Worse than the Mafia
Eliot Spitzer's comment that the Fed is a "ponzi scheme" is newsworthy.
But even more dramatic is PhD economist Marc Faber's comment:
The Feds are worse than the Mafia.
See this.
96% of Credit Derivative Risk Held by 5 Banks
Fitch's has found that JP Morgan Chase, Bank of America, Goldman Sachs, Citigroup, and Morgan Stanley together hold 80% of the country's derivatives risk, and 96% of the exposure to credit derivatives:
About 80% of the derivative assets and liabilities carried on the balance sheets of 100 companies reviewed by Fitch were held by five banks: JP Morgan Chase, Bank of America, Goldman Sachs, Citigroup, and Morgan Stanley.
Those five banks also account for more than 96% of the companies' exposure to credit derivatives.
As Newsweek wrote in April:
Major Wall Street players are digging in against fundamental changes...At issue is whether trading in credit default swaps and other derivatives—and the giant, too-big-to-fail firms that traded them—will be allowed to dominate the financial landscape again once the crisis passes. As things look now, that is likely to happen...
Geithner's new rules would allow the over-the-counter market to boom again, orchestrated by global giants that will continue to be "too big to fail" (they may have to be rescued again someday, in other words). And most of it will still occur largely out of sight of regulated exchanges...The old culture is reasserting itself with a vengeance. All of which runs up against the advice now being dispensed by many of the experts who were most prescient about the crash and its causes—the outsiders, in other words, as opposed to the insiders who are still running the show.
Newsweek was right. The same giants - JP Morgan, B of A, and Citigroup - are dominating the CDS market.
When I last looked at this issue, JP Morgan, B of A, and Citigroup were still the top 3 holders of derivatives in general, as well as credit derivatives.
But Goldman and Morgan weren't even on the list (granted, Wachovia has since gone bust and been purchased by a bigger bank, Wells Fargo. But Wells isn't in the top 5).
Given that Goldman bought $20 billion of credit default swaps from AIG in 2005 alone, and that Goldman received $13 billion and Morgan $1 billion from the AIG bailout, why weren't Goldman and Morgan on the earlier list?
It might simply be that Fitch's new list is not limited to any certain type of company, but includes all derivatives holders. Or it might be because Goldman and Morgan became "bank holding companies" since the list was published, and their new status made them subject to inclusion in Fitch's new list. Or it may be because Goldman and Morgan hid the data.
Banks Still Not Lending
The Wall Street Journal writes today:
Lending continues to slow as bankers and borrowers refrain from taking risks, in a bearish sign for the economy.
The total amount of loans held by 15 large U.S. banks shrank by 2.8% in the second quarter, and more than half of the loan volume in April and May came from refinancing mortgages and renewing credit to businesses, not new loans, an analysis by The Wall Street Journal shows.
The numbers underscore two related trends weighing on the economy. Financial institutions are clamping down on lending to conserve capital as a cushion against mounting loan losses. And loan demand is [decreasing, as consumers hunker down to conserve resources].
While some may be surprised by this, I have repeatedly written that - no matter how much money the government throws at them - the banks will keep hoarding cash until the economy stabilizes. Or as a senior official at a big bank put it with slight exaggeration
No one is going to lend a nickel until the economy turns.
Sunday, July 26, 2009
FDR Chickened Out from Making REAL Economic Reform
Americans are taught that Franklin Delano Roosevelt instituted massive economic reforms and regulations which tamed the banking hooligans.
True, FDR helped pass a boatload of legislation, including Glass-Steagal and many other laws which helped rein in some of the worst abuses of the robber barons of the day.
But Ellen Brown points out that FDR chickened out from making the most important, most fundamental reform: taking the power to create credit and "print" new money away from the private banksters and give it back to the federal government, as the founding fathers intended.
By way of background, remember that Milton Friedman and Ben Bernanke have both said that the Federal Reserve caused the Great Depression.
In 1932, Congressman McFadden - chair of the Banking and Currency Committee for more than 10 years, and elected to Congress on both Republican and Democratic tickets - said the following in Congress:
The Federal Reserve Board, a Government board, has cheated the Government of the United States out of enough money to pay the national debt. The depredations and the iniquities of the Federal Reserve Board and the Federal reserve banks acting together have cost this country enough money to pay the national debt several times over. This evil institution has impoverished and ruined the people of the United States; has bankrupted itself, and has practically bankrupted our Government. It has done this through defects of the law under which it operates, through the maladministration of that law by the Federal Reserve Board and through the corrupt practices of the moneyed vultures who control it ...In a Congressional address in 1933, McFadden quoted a newspaper article by the credit manager of the Atlanta Federal Reserve bank - Charles Hemphill:
From the Atlantic to the Pacific our country has been ravaged and laid waste by the evil practices of the Federal Reserve Board and the Federal reserve banks and the interests which control them ... This is an era of economic misery and for the conditions that caused that misery, the Federal Reserve Board and the Federal reserve banks are fully liable.
We are rapidly approaching a situation where the government MUST issue additional currency. It will very soon be the only move remaining. It should have been the first step in the recovery program. Immediately upon a revival of the demand that the government increase the supply of currency, we shall again be subjected to a barrage of skillfully designed and cunningly circulated propaganda by means of which a small group of international bankers have been able, for two centuries to frighten the peoples of the civilized would against issuing their own good money in sufficient quantities to carry on their necessary commerce. By this simple, but amazingly successful device these `money changers' -- parasites in a busy world intent on creating and exchanging wealth -- have been able to preserve for their private and exclusive right the monopoly of manufacturing an inferior substitute for money which they have hypnotized civilized nations into using, because of their pressing need to exchange goods and services. We shall never recover on credit. Even if it were obtainable, it is uncertain, unreliable, does not expand in accordance with demand, and contracts unexpectedly and for causes unrelated to the needs of commerce and industry...In our present situation the issue of additional currency is the only way out.And in 1933, Congressman Wright Patman asked Congress the following rhetorical question:
Why is it necessary to have Government ownership and operation of banks? Let us go back to the Constitution of the United States and follow it ... The Constitution of the United States says that Congress shall coin money and regulate its value. That does not mean ... that the Congress of the United States, composed of the duly elected representatives of the people, have a right to farm out the great privilege to the banking system, until today a few powerful bankers control the issuance and distribution of money - something that the Constitution of the United States says Congress shall do.But FDR did not heed the insights of McFadden or Patman. He kept the status quo of the Federal Reserve acting as the "central bank", even though the Fed caused the Depression.
He also maintained the Fed's power of creating money and credit, and charging the government interest on that money, even though that was contrary to the intention of the Founding Fathers and the Constitution. See this, this and this.
Because FDR chickened out, the Fed has again wrecked the economy, while the Feds member banks have raked in trillions in interest payments in financing the government debt.
In other words, the Fed's member banks have pickpocketed trillions of dollars from the American people over the years because FDR failed to make the fundamental reform which was actually needed ... returning the money-creating power to the government.
"We Don't Convict Beakers in this Country. We Prosecute, Convict or Acquit Human Beings"
You've heard that the FBI is paying scientists to study their novel theory linking Ivins with the killer anthrax.
But you may have forgotten that the FBI is simply trying to link the anthrax strain in Ivins' lab to the white powder used in the attacks. The FBI is not trying to rule out the hundreds of other people who had access to the exact same strain.
As an article today from the main paper in the Fort Detrick area - the Frederick News Post - writes:
For Ivins' family and former colleagues who have maintained his innocence, a closed case will mean the FBI is putting faith in circumstantial evidence and a scientific fact-finding process that brought investigators to a flask of anthrax spores under Ivins' control, but accessible to more than 100 people.
"We don't convict beakers in this country," said Rockville attorney Paul Kemp, who represents the Ivins family. "We prosecute, convict or acquit human beings"...
Jeff Adamovicz, head of the bacteriology division after Andrews left in 2004, said the fact that samples obtained by the FBI were voluntarily submitted weakens the case significantly.
He is also certain other labs possessed RMR-1029.
Dangerous pathogens, known as select agents, are regularly sent between both public and private labs that are registered with the Centers for Disease Control and Prevention. Shipments from USAMRIID are recorded on an internal form and with the CDC, Adamovicz said.
"The FBI knows full well the distribution of that strain," said Adamovicz, who left USAMRIID in 2007.
He said he has no evidence to suggest any specific person or entity is responsible for the attacks, but wanted the FBI to fully explain how they ruled out two sites where RMR-1029 was likely to have been produced and shipped: U.S. Army's Dugway Proving Ground in Utah and Battelle Memorial Institute in Ohio...
Indeed, there is no evidence linking the drying machines at Fort Detrick to the killer strain. As the above-linked Frederick News Post article states:
Russell Byrne, one of Ivins' former colleagues, is a former director of the bacteriology division. He likened the scenario to someone using their own gun to kill somebody and leaving it on their desk.
He said there was no genetic evidence found in any of the USAMRIID lyophilizers, a machine that would have been required to dry the spores into a powder.
Remember, it takes very high-grade military machinery and know-how to weaponize anthrax to the lethality of the killer powder that was mailed after 9/11.
As the world's top anthrax experts have pointed out, Ivins did not possess either the know-how or the equipment to weaponize the anthrax. See this and this.
And as I've previously pointed out, scientists at Ft. Detrick said that they don't have the type of equipment necessary to weaponize anthrax, but other military facilities do. Yet the FBI has refused to investigate or test the equipment at other government labs known to have produced dried, weaponized anthrax of the type used in the attacks.
Moreover, a recent test shows that the killer anthrax may have come from somewhere with a unique contamination signature.
The fact that the government is only trying to prove that a specific beaker contained the liquid form of killer anthrax - but is not offering any real evidence that it was Ivins who took the anthrax and somehow weaponized it in a way that only a handful of people in the world know how to do (and which Ivins did not know how to do) - more or less shows that the government is not even trying to prove Ivins' guilt, but is simply trying to distract people by "convicting a beaker".
And see this.
Saturday, July 25, 2009
Global Climate, Methane Burps and the 12 Mile Blob
Specifically:
During the warming period, known as the “Palaeocene-Eocene thermal maximum” (PETM), for unknown reasons, the amount of carbon in Earth's atmosphere rose rapidly. This makes the PETM one of the best ancient climate analogues for present-day Earth...
The conclusion, Dickens said, is that something other than carbon dioxide caused much of this ancient warming. "Some feedback loop or other processes that aren't accounted for in these models -- the same ones used by the Intergovernmental Panel on Climate Change for current best estimates of 21st century warming -- caused a substantial portion of the warming that occurred during the PETM
Methane Burps?
A 2006 article in the New York Times gives one possible explanation for the "feedback loop or other process" which could have caused the warming during the PETM:
Reservoirs of methane frozen at the bottom of the ocean begin to thaw, releasing bubbles that rise to the surface. Soon the ocean surface is churning and burping gas like a billion overfed infants, transforming the composition of our atmosphere.
[The above scenario is] one of the more bizarre and frightening ways in which global warming could devastate our planet — what scientists have dubbed the "methane burp"...
Methane is a greenhouse gas that is 20 times more powerful than carbon dioxide. And thousands of gigatons of methane, equivalent to the total amount of coal in the world, lie deep within the oceans in the form of ice-like solids called methane hydrates.
The big question is whether global warming ... will thaw some of these methane hydrates. If so, the methane might be released as a gargantuan oceanic burp. Once in the atmosphere, that methane would accelerate the greenhouse effect and warm the earth and raise sea levels even more...
And as long as I'm fear-mongering, there was also a better understood warming 55 million years ago, known as the Paleocene-Eocene Thermal Maximum, or PETM. That was a period when temperatures shot up by 10 degrees Fahrenheit in the tropics and by about 15 degrees in polar areas, and many scientists think it was caused by the melting of methane hydrates.
"The PETM event 55 million years ago is probably the most likely example of their impact, though there are smaller events dotted through the record," says Gavin Schmidt, a NASA expert on climate change. He emphasizes the uncertainties, but adds that since we are likely to enter a climate that hasn't been seen for a few million years, it's reasonable to worry about methane hydrates."
It is not just the Times speculating on methane burps as the main source of global warming. Many scientists have proposed that explanation (and see this). See also this ABC report, and this essay from the Baltimore Sun.
So are "methane burps" from the ocean floor the source of runaway warming during the PETM?
Well, the methane burp hypothesis has suffered a setback over the past 3 years.
As a 2006 article from Nature notes:
Methane escaping from the sea floor to the atmosphere has been a popular suspect for causing rapid climate changes during and at the end of the last ice age. But new data derived from a Greenland ice core have delivered a killer blow to the idea...
But now an isotope analysis of methane trapped in bubbles of a Greenland ice core seems to disprove the idea...
Todd Sowers, a palaeoceanographer at Pennsylvania State University in Philadelphia, measured hydrogen isotopes of atmospheric methane from three distinct warming episodes, 38,000, 14,500 and 11,500 years ago. Methane from clathrates [the rock strata that contains the methane] contains more deuterium (the heavy form of hydrogen) than methane from land-based sources...
He found no evidence whatsoever in the data for increased amounts of methane from marine clathrates. "This means that seafloor methane reservoirs must have been stable at these times, or at least that no significant amounts of methane escaped the ocean," says Sowers, whose study is published in Science this week.
"The data are convincing," says Kai-Uwe Hinrichs, a geochemist at the University of Bremen in Germany. "They won't exactly increase the attractiveness of the clathrate gun hypothesis." At least for the three periods Sowell has looked at in high resolution, they may even be a "killer argument", adds Jerome Chappellaz, a geochemist at the CNRS Laboratory of Glaciology and Geophysics of the Environment in Grenoble, France.
And as the Saint Louis-Dispatch wrote in April:
If the methane didn't come from the ocean floor, where did it come from? Expanding wetlands?And now for a little good news on the climate change front.
For years, scientists have worried that climate change could trigger a huge release of methane gas from seafloor deposits, sending planetary warming into overdrive. Fueling those concerns was a previously unexplained burp of methane that occurred about 12,000 years ago.
Scientists, however, have recently determined that ancient release of methane was likely due a large expansion of wetlands. Wetlands, which produce a large amount of methane from the breakdown of organic matter, are known to have spread during warming trends throughout history.
To reach that conclusion, scientists collected almost 15 tons of ice from a Greenland ice sheet and measured the ancient air trapped within. From those samples, they deduced that a particular isotope found in the ice did not come from seafloor methane deposits.
Maybe. But it turns out that melting permafrost also releases methane (and see this).
The Blob
As you might have heard, a mysterious blob of unknown organic material up to 12 miles long has appeared off Alaska's northern coast:
Locals say that the blob is organic in nature, and isn't a chemical spill.
The question in my mind is whether the giant blob was caused by the melting of permafrost. In other words, melting permafrost could cause fragile surrounding vegetation to lose its anchoring and protection, causing it wash into rivers and the ocean. I'm not the only one who has asked this question.
I have no idea whether it was really methane, or the sun, or something else which helped heat things up during the PETM.
I studied global warming in one of my classes at a top university several decades ago, and the professor didn't say anything about the sun's influence. It turns out, however, that the sun does play a role of the sun in global climate.
And a new peer-reviewed study indicates that the Southern Oscillation (El Niño) may play a role.
So things are more complicated than I learned at school.
I also don't know whether the giant blob came from melting permafrost.
But scientists should figure it out.
Friday, July 24, 2009
Unemployment Not Just a Problem in America ... Unemployment in Spain Forecast at 22% by Next Year
Citigroup is projecting that unemployment in Spain will rise from its current 17.9% to 22% next year.
Spain's unemployment is largely driven by the bursting of its housing bubble.
As I wrote last December:
So - unfortunately - unemployment could be a problem globally.Housing bubbles are now bursting in China, France, Spain, Ireland, the United Kingdom, Eastern Europe, and many other regions.
And the bubble in commercial real estate is also bursting world-wide. See this.
States' Projected Budget Gap: $166 Billion. AIG Bailout to Cover Gambling Debts: $180 Billion. Portion that Went to Foreign Banks: $40 Billion.
Arianna Huffington writes:
What Huffington fails to mention is that $40 billion of the AIG bailout money went to foreign banks. That is more than enough to cover the budget gap of California and several other states.America's states are facing a projected cumulative budget gap of $166 billion for fiscal 2010. Even more budget gaps are expected for fiscal 2011. Total shortfalls through 2011 are estimated at $350 billion to $370 billion -- and could be even higher if unemployment continues to rise.
These are massive numbers. But when you remember that we spent $180 billion to bail out AIG ($12.9 billion of which went straight to Goldman), you realize that that alone would be more than enough to close the 2010 budget gap in every state in the union.
Both AIG and the foreign banks (and Goldman) were paid so they could recoup their bad gambling debts - bets on credit default swaps, which add nothing to the stability of the economy but actually destabilize the economy, and which help prematurely drive companies into bankruptcy.
So - literally - the federal government covered bad gambling debts and is letting the states go bankrupt.
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