Saturday, August 1, 2009

THE ZIONIST LOBBY FOR USA IMPERIALISM, AND FOR EXPANDING THE ZIONIST EMPIRE IN THE MIDDLE EAST
by Benjamin Merhav


Except for unexplained absence of the zionist apartheid regime of Israel from her article below, the author of the article has done a very good job in exposing the current crimes of USA imperialism, as did the New Statesman by publishing it.

However, the role of the zionist diktat over the current USA administration cannot be ignored. For while Obama has been doing the demagoguery, to pacify the people inside the USA and outside it, his picked top henchmen have been busy implementing the zionist diktat on a world scale.

Thus, for example, on the deadly dangerous issue of zionist nuclear bombs production and deployment - which could easily engulf the entire humanity in a nuclear world war - not a single word was uttered by the entire Obama administration, as this is the zionist diktat, of course. Yet, in line with the zionist diktat, the ongoing campaign of threats, sanctions and subversion against Iran's nuclear program never stops, although Iran has not produced a single nuclear bomb to provide an excuse for such a campaign. Similarly is the ongoing campaign against North Korea.

The Obama administration, like the preceding Bush administration, continues to provide the zionist apartheid regime of Israel with some 4 billion USD annually - including, of course, free military assistance - and what for ? To perpetrate more war crimes and more crimes against humanity ? To perpetuate the zionist military occupation of the Golan Heights, the West Bank and the Gaza Strip, as well as keep Lebanon under the permanent threat of a zionist invasion ?

In his Cairo speech Obama pledged that the USA administration ties with the zionist apartheid regime of Israel will continue to be "unbreakable", and he does keep this pledge. Thus, for example, as part of the Obama "peace plan" ,the zionist apartheid regime of Israel had to stop exapanding the illegal zionist settlements in the West Bank (including occupied Jerusalem), but it openly refuses to do so. Obama's administration reaction has been to further promise the zionists that they need not fear any sanctions from the USA !


Here is the New Statesman article :


http://www.newstatesman.com/asia/2009/07/military-bases-world-war-iraq


Obama’s empire

by Catherine Lutz

29_obama-for-illo-6_w.jpg

The 44th president of the United States was elected amid hopes that he would roll back his country’s global dominance. Today, he is commander-in-chief of an unprecedented network of military bases that is still expanding.

July 30, 2009 "New Statesman" -- In December 2008, shortly before being sworn in as the 44th president of the United States, Barack Obama pledged his belief that, "to ensure prosperity here at home and peace abroad", it was vital to maintain "the strongest military on the planet". Unveiling his national security team, including George Bush's defence secretary, Robert Gates, he said: "We also agree the strength of our military has to be combined with the wisdom and force of diplomacy, and that we are going to be committed to rebuilding and restrengthening alliances around the world to advance American interests and American security."

Unfortunately, many of the Obama administration's diplomatic efforts are being directed towards maintaining and garnering new access for the US military across the globe. US military officials, through their Korean proxies, have completed the eviction of resistant rice farmers from their land around Camp Humphreys, South Korea, for its expansion (including a new 18-hole golf course); they are busily making back-room deals with officials in the Northern Mariana Islands to gain the use of the Pacific islands there for bombing and training purposes; and they are scrambling to express support for a regime in Kyrgyzstan that has been implicated in the murder of its political opponents but whose Manas Airbase, used to stage US military actions in Afghanistan since 2001, Obama and the Pentagon consider crucial for the expanded war there.

The global reach of the US military today is unprecedented and unparalleled. Officially, more than 190,000 troops and 115,000 civilian employees are massed in approximately 900 military facilities in 46 countries and territories (the unofficial figure is far greater). The US military owns or rents 795,000 acres of land, with 26,000 buildings and structures, valued at $146bn (£89bn). The bases bristle with an inventory of weapons whose worth is measured in the trillions and whose killing power could wipe out all life on earth several times over.

The official figures exclude the huge build-up of troops and structures in Iraq and Afghanistan over the past decade, as well as secret or unacknowledged facilities in Israel, Kuwait, the Philippines and many other places. In just three years of the Iraq and Afghanistan wars, £2bn was spent on military construction. A single facility in Iraq, Balad Airbase, houses 30,000 troops and 10,000 contractors, and extends across 16 square miles, with an additional 12 square mile "security perimeter". From the battle zones of Afghanistan and Iraq to quiet corners of CuraƧao, Korea and Britain, the US military domain consists of sprawling army bases, small listening posts, missile and artillery testing ranges and berthed aircraft carriers (moved to "trouble spots" around the world, each carrier is considered by the US navy as "four and a half acres of sovereign US territory"). While the bases are, literally speaking, barracks and weapons depots, staging areas for war-making and ship repairs, complete with golf courses and basketball courts, they are also political claims, spoils of war, arms sale showrooms and toxic industrial sites. In addition to the cultural imperialism and episodes of rape, murder, looting and land seizure that have always accompanied foreign armies, local communities are now subjected to the ear-splitting noise of jets on exercise, to the risk of helicopters and warplanes crashing into residential areas, and to exposure to the toxic materials that the military uses in its daily operations.

The global expansion of US bases - and with it the rise of the US as a world superpower - is a legacy of the Second World War. In 1938, the US had 14 military bases outside its continental borders. Seven years later, it had 30,000 installations in roughly 100 countries. While this number was projected to shrink to 2,000 by 1948 (following pressure from other nations to return bases in their own territory or colonies, and pressure at home to demobilise the 12 million-man military), the US continued to pursue access rights to land and air space around the world. It established security alliances with multiple states within Europe (NATO), the Middle East and south Asia (CENTO) and south-east Asia (SEATO), as well as bilateral agreements with Japan, Taiwan, South Korea, Australia and New Zealand. Status of Forces Agreements (SOFAS) were crafted in each country to specify what the military could do, and usually gave US soldiers broad immunity from prosecution for crimes committed and environmental damage caused. These agreements and subsequent base operations have mostly been shrouded in secrecy, helped by the National Security Act of 1947. New US bases were built in remarkable numbers in West Germany, Italy, Britain and Japan, with the defeated Axis powers hosting the most significant numbers (at one point, Japan was peppered with 3,800 US installations).

As battles become bases, so bases become battles; the sites in east Asia acquired during the Spanish-American war in 1898 and during the Second World War - such as Guam, Thailand and the Philippines - became the primary bases from which the US waged war on Vietnam. The number of raids over north and south Vietnam required tons of bombs unloaded at the naval station in Guam. The morale of ground troops based in Vietnam, as fragile as it was to become through the latter part of the 1960s, depended on R&R (rest and recreation) at bases outside the country, which allowed them to leave the war zone and yet be shipped back quickly and inexpensively for further fighting. The war also depended on the heroin the CIA was able to ship in to the troops on the battlefield in Vietnam from its secret bases in Laos. By 1967, the number of US bases had returned to 1947 levels.

Technological changes in warfare have had important effects on the configuration of US bases. Long-range missiles and the development of ships that can make much longer runs without resupply have altered the need for a line of bases to move forces forward into combat zones, as has the aerial refuelling of military jets. An arms airlift from the US to the British in the Middle East in 1941-42, for example, required a long hopscotch of bases, from Florida to Cuba, Puerto Rico, Barbados, Trinidad, British Guiana, north-east Brazil, Fernando de Noronha, Takoradi (now in Ghana), Lagos, Kano (now in Nigeria) and Khartoum, before finally making delivery in Egypt. In the early 1970s, US aircraft could make the same delivery with one stop in the Azores, and today can do so non-stop.

On the other hand, the pouring of money into military R&D (the Pentagon has spent more than $85bn in 2009), and the corporate profits to be made in the development and deployment of the resulting technologies, have been significant factors in the ever larger numbers of technical facilities on foreign soil. These include such things as missile early-warning radar, signals intelligence, satellite control and space-tracking telescopes. The will to gain military control of space, as well as gather intelligence, has led to the establishment of numerous new military bases in violation of arms-control agreements such as the 1967 Outer Space Treaty. In Colombia and Peru, and in secret and mobile locations elsewhere in Latin America, radar stations are primarily used for anti-trafficking operations.

Since 2000, with the election of George W Bush and the ascendancy to power of a group of men who believed in a more aggressive and unilateral use of military power (some of whom stood to profit handsomely from the increased military budget that would require), US imperial ambition has grown. Following the declaration of a war on terror and of the right to pre-emptive war, the number of countries into which the US inserted and based troops radically expanded. The Pentagon put into action a plan for a network of "deployment" or "forward operating" bases to increase the reach of current and future forces. The Pentagon-aligned, neoconservative think tank the Project for the New American Century stressed that "while the unresolved conflict with Iraq provides the immediate justification, the need for a substantial American force presence in the Gulf transcends the issue of the regime of ­Saddam Hussein".

The new bases are designed to operate not defensively against particular threats but as offensive, expeditionary platforms from which military capabilities can be projected quickly, anywhere. The Global Defence Posture Review of 2004 announced these changes, focusing not just on reorienting the footprint of US bases away from cold war locations, but on remaking legal arrangements that support expanded ­military activities with other allied countries and prepositioning equipment in those countries. As a recent army strategic document notes, "Military personnel can be transported to, and fall in on, prepositioned equipment significantly more quickly than the equivalent unit could be transported to the theatre, and prepositioning equipment overseas is generally less politically difficult than stationing US military personnel."

Terms such as facility, outpost or station are used for smaller bases to suggest a less permanent presence. The US department of defence currently distinguishes between three types of military facility. "Main operating bases" are those with permanent personnel, strong infrastructure, and often family housing, such as Kadena Airbase in Japan and Ramstein Airbase in Germany. "Forward operating sites" are "expandable warm facilit[ies] maintained with a limited US military support presence and possibly prepositioned equipment", such as Incirlik Airbase in Turkey and Soto Cano Airbase in Honduras. Finally, "co-operative security locations" are sites with few or no permanent US personnel, maintained by contractors or the host nation for occasional use by the US military, and often referred to as "lily pads". These are cropping up around the world, especially throughout Africa, a recent example being in Dakar, Senegal.

Moreover, these bases are the anchor - and merely the most visible aspect - of the US military's presence overseas. Every year, US forces train 100,000 soldiers in 180 countries, the presumption being that beefed-up local militaries will help to pursue US interests in local conflicts and save the US money, casualties and bad publicity when human rights abuses occur (the blowback effect of such activities has been made clear by the strength of the Taliban since 9/11). The US military presence also involves jungle, urban, desert, maritime and polar training exercises across wide swathes of landscape, which have become the pretext for substantial and permanent positioning of troops. In recent years, the US has run around 20 exercises annually on Philippine soil, which have resulted in a near-continuous presence of US soldiers in a country whose people ejected US bases in 1992 and whose constitution forbids foreign troops to be based on its territory. Finally, US personnel work every day to shape local legal codes to facilitate US access: they have lobbied, for example, to change the Philippine and Japanese constitutions to allow, respectively, foreign troop basing and a more-than-defensive military.

Asked why the US has a vast network of military bases around the world, Pentagon officials give both utilitarian and humanitarian arguments. Utilitarian arguments include the claim that bases provide security for the US by deterring attack from hostile countries and preventing or remedying unrest or military challenges; that bases serve the national economic interests of the US, ensuring access to markets and commodities needed to maintain US standards of living; and that bases are symbolic markers of US power and credibility - and so the more the better. Humanitarian arguments present bases as altruistic gifts to other nations, helping to liberate or democratise them, or offering aid relief. None of these humanitarian arguments deals with the problem that many of the bases were taken during wartime and "given" to the US by another of the war's victors.

Critics of US foreign policy have dissected and dismantled the arguments made for maintaining a global system of military basing. They have shown that the bases have often failed in their own terms: despite the Pentagon's claims that they provide security to the regions they occupy, most of the world's people feel anything but reassured by their presence. Instead of providing more safety for the US or its allies, they have ­often provoked attacks, and have made the communities around bases key targets of other nations' missiles. On the island of Belau in the Pacific, the site of sharp resistance to US attempts to instal a submarine base and jungle training centre, people describe their experience of military basing in the Second World War: "When soldiers come, war comes." On Guam, a joke among locals is that few people except for nuclear strategists in the Kremlin know where their island is.

As for the argument that bases serve the national economic interest of the US, the weapons, personnel and fossil fuels involved cost billions of dollars, most coming from US taxpayers. While bases have clearly been concentrated in countries with key strategic resources, particularly along the routes of oil and gas pipelines in central Asia, the Middle East and, increasingly, Africa, from which one-quarter of US oil imports are expected by 2015, the profits have gone first of all to the corporations that build and service them, such as Halliburton. The myth that bases are an altruistic form of "foreign aid" for locals is exploded by the substantial costs involved for host economies and polities. The immediate negative effects include levels of pollution, noise, crime and lost productive land that cannot be offset by soldiers' local spending or employment of local people. Other putative gains tend to benefit only local elites and further militarise the host nations: elaborate bilateral negotiations swap weapons, cash and trade privileges for overflight and land-use rights. Less explicitly, rice imports, immigration rights to the US or overlooking human rights abuses have been the currency of exchange.

The environmental, political, and economic impact of these bases is enormous. The social problems that accompany bases, including soldiers' violence against women and car crashes, have to be handled by local communities without compensation from the US. Some communities pay the highest price: their farmland taken for bases, their children neurologically damaged by military jet fuel in their water supplies, their neighbors imprisoned, tortured and disappeared by the autocratic regimes that survive on US military and political support given as a form of tacit rent for the bases. The US military has repeatedly interfered in the domestic affairs of nations in which it has or desires military access, operating to influence votes and undermine or change local laws that stand in the way.

Social movements have proliferated around the world in response to the empire of US bases, ever since its inception. The attempt to take the Philippines from Spain in 1898 led to a drawn-out guerrilla war for independence that required 126,000 US occupation troops to stifle. Between 1947 and 1990, the US military was asked to leave France, Yugoslavia, Iran, Ethiopia, Libya, Sudan, Saudi Arabia, Tunisia, Algeria, Vietnam, Indonesia, Peru, Mexico and Venezuela. Popular and political objection to the bases in Spain, the Philippines, Greece and Turkey in the 1980s gave those governments the grounds to negotiate ­significantly more compensation from the US. Portugal threatened to evict the US from important bases in the Azores unless it ceased its support for independence for its African colonies.

Since 1990, the US has been sent packing, most significantly, from the Philippines, Panama, Saudi Arabia, Vieques and Uzbekistan. Of its own accord, for varying reasons, it decided to leave countries from Ghana to Fiji. Persuading the US to clean up after itself - including, in Panama, more than 100,000 rounds of unexploded ordnance - is a further struggle. As in the case of the US navy's removal from Vieques in 2003, arguments about the environmental and health damage of the military's activities remain the centrepiece of resistance to bases.

Many are also concerned by other countries' overseas bases - primarily European, Russian and Chinese - and by the activities of their own militaries, but the far greater number of US bases and their weaponry has understandably been the focus. The sense that US bases represent a major injustice to the host community and nation is very strong in countries where US bases have the longest standing and are most ubiquitous. In Okinawa, polls show that 70 to 80 per cent of the island's people want the bases, or at least the marines, to leave. In 1995, the abduction and rape of a 12-year-old Okinawan girl by two US marines and one US sailor led to demands for the removal of all US bases in Japan. One family in Okinawa has built a large peace museum right up against the edge of the Futenma Airbase, with a stairway to the roof that allows busloads of schoolchildren and other visitors to view the sprawling base after looking at art depicting the horrors of war.

In Korea, the great majority of the population feels that a reduction in US presence would increase national security; in recent years, several violent deaths at the hands of US soldiers triggered vast candlelight vigils and protests across the country. And the original inhabitants of Diego Garcia, evicted from their homes between 1967 and 1973 by the British on behalf of the US for a naval base, have organised a concerted campaign for the right to return, bringing legal suit against the British government, a story told in David Vine's recent book Island of Shame. There is also resistance to the US expansion plans into new areas. In 2007, a number of African nations baulked at US attempts to secure access to sites for military bases. In eastern Europe, despite well-funded campaigns to convince Poles and Czechs of the value of US bases and much sentiment in favour of accepting them in pursuit of closer ties with Nato and the EU, and promised economic benefits, vigorous pro­tests have included hunger strikes and led the Czech government, in March, to reverse its plan to allow a US military radar base to be built in the country.

The US has responded to action against bases with a renewed emphasis on "force protection", in some cases enforcing curfews on soldiers, and cutting back on events that bring local people on to base property. The department of defence has also engaged in the time-honoured practice of renaming: clusters of soldiers, buildings and equipment have become "defence staging posts" or "forward operating locations" rather than military bases. Regulating documents become "visiting forces agreements", not "status of forces agreements", or remain entirely secret. While major reorganisation of bases is under way for a host of reasons, including a desire to create a more mobile force with greater access to the Middle East, eastern Europe and central Asia, the motives also include an attempt to prevent political momentum of the sort that ended US use of the Vieques and Philippine bases.

The attempt to gain permanent basing in Iraq foundered in 2008 on the objections of forces in both Iraq and the US. Obama, in his Cairo speech in June, may have insisted that "we pursue no bases" in either Iraq or Afghanistan, but there has been no sign of any significant dismantling of bases there, or of scaling back the US military presence in the rest of the world. The US secretary of state, Hillary Clinton, recently visited Japan to ensure that it follows through on promises to provide the US with a new airfield on Okinawa and billions of dollars to build new housing and other facilities for 8,000 marines relocating to Guam. She ignored the invitation of island activists to come and see the damage left by previous decades of US base activities. The myriad land-grabs and hundreds of billions of dollars spent to quarter troops around the world persist far beyond Iraq and Afghanistan, and too far from the headlines.

Catherine Lutz is a professor at the Watson Institute for International Studies at Brown University.

Saturday, May 16, 2009

http://countercurrents.org/roberts150509.htm

Who Rules America?

By Paul Craig Roberts

15 May, 2009
Countercurrents.org

What do you suppose it is like to be elected president of the United States only to find that your power is restricted to the service of powerful interest groups?

A president who does a good job for the ruling interest groups is paid off with remunerative corporate directorships, outrageous speaking fees, and a lucrative book contract. If he is young when he assumes office, like Bill Clinton and Obama, it means a long life of luxurious leisure.

Fighting the special interests doesn’t pay and doesn’t succeed. On April 30 the primacy of special over public interests was demonstrated yet again. The Democrats’ bill to prevent 1.7 million mortgage foreclosures and, thus, preserve $300 billion in home equity by permitting homeowners to renegotiate their mortgages, was defeated in the Senate, despite the 60-vote majority of the Democrats. The banksters were able to defeat the bill 51 to 45.

These are the same financial gangsters whose unbridled greed and utter irresponsibility have wiped out half of Americans’ retirement savings, sent the economy into a deep hole, and threatened the US dollar’s reserve currency role. It is difficult to imagine an interest group with a more damaged reputation. Yet, a majority of “the people’s representatives” voted as the discredited banksters instructed.

Hundreds of billions of public dollars have gone to bail out the banksters, but when some Democrats tried to get the Senate to do a mite for homeowners, the US Senate stuck with the banks. The Senate’s motto is: “Hundreds of billions for the banksters, not a dime for homeowners.”

If Obama was naive about well-intentioned change before the vote, he no longer has this political handicap.

Democratic Majority Whip Dick Durbin acknowledged the voters’ defeat by the discredited banksters. The banks, Durbin said, “frankly own the place.”

It is not difficult to understand why. Among those who defeated the homeowners bill are senators Jon Tester (Mont), Max Baucus (Mont), Blanche Lincoln (Ark), Ben Nelson (Neb), Many Landrieu (La), Tim Johnson (SD), and Arlan Specter (Pa). According to reports, the banksters have poured a half million dollars into Tester’s campaign funds. Baucus has received $3.5 million; Lincoln $1.3 million; Nelson $1.4 million; Landrieu $2 million; Johnson $2.5 million; Specter $4.5 million.

The same Congress that can’t find a dime for homeowners or health care appropriates hundreds of billions of dollars for the military/security complex. The week after the Senate foreclosed on American homeowners, the Obama “change” administration asked Congress for an additional $61 billion dollars for the neoconservatives’ war in Iraq and $65 billion more for the neoconservatives’ war in Afghanistan. Congress greeted this request with a rousing “Yes we can!”

The additional $126 billion comes on top of the $533.7 billion “defense” budget for this year. The $660 billion--probably a low-ball number--is ten times the military spending of China, the second most powerful country in the world.

How is it possible that “the world’s only superpower” is threatened by the likes of Iraq and Afghanistan? How can the US be a superpower if it is threatened by countries that have no military capability other than a guerilla capability to resist invaders?

These “wars” are a hoax designed to enrich the US armaments industry and to infuse the “security forces” with police powers over American citizenry.

Not a dime to prevent millions of Americans from losing their homes, but hundreds of billions of dollars to murder Muslim women and children and to create millions of refugees, many of whom will either sign up with insurgents or end up as the next wave of immigrants into America.

This is the way the American government works. And it thinks it is a “city on the hill, a light unto the world.”

Americans elected Obama because he said he would end the gratuitous criminal wars of the Bush brownshirts, wars that have destroyed America’s reputation and financial solvency and serve no public interest. But once in office Obama found that he was ruled by the military/security complex. War is not being ended, merely transferred from the unpopular war in Iraq to the more popular war in Afghanistan. Meanwhile, Obama, in violation of Pakistan’s sovereignty, continues to attack “targets” in Pakistan. In place of a war in Iraq, the military/security complex now has two wars going in much more difficult circumstances.

Viewing the promotion gravy train that results from decades of warfare, the US officer corps has responded to the “challenge to American security” from the Taliban. “We have to kill them over there before they come over here.” No member of the US government or its numerous well-paid agents has ever explained how the Taliban, which is focused on Afghanistan, could ever get to America. Yet this hyped fear is sufficient for the public to support the continuing enrichment of the military/security complex, while American homes are foreclosed by the banksters who have destroyed the retirement prospects of the US population..

According to Pentagon budget documents, by next year the cost of the war against Afghanistan will exceed the cost of the war against Iraq. According to a Nobel prize-winning economist and a budget expert at Harvard University, the war against Iraq has cost the American taxpayers $3 trillion, that is, $3,000 billion in out-of-pocket and already incurred future costs, such as caring for veterans.

If the Pentagon is correct, then by next year the US government will have squandered $6 trillion dollars on two wars, the only purpose of which is to enrich the munitions manufacturers and the “security” bureaucracy.

The human and social costs are dramatic as well and not only for the Iraqi, Afghan, and Pakistani populations ravaged by American bombs. Dahr Jamail reports that US Army psychiatrists have concluded that by their third deployment, 30 percent of American troops are mental wrecks. Among the costs that reverberate across generations of Americans are elevated rates of suicide, unemployment, divorce, child and spousal abuse, drug and alcohol addiction, homelessness and incarceration. http://www.truthout.org/051209J?n

In the Afghan “desert of death” the Obama administration is constructing a giant military base. Why? What does the internal politics of Afghanistan have to do with the US?

What is this enormous waste of resources that America does not have accomplishing besides enriching the American munitions industry?

China and to some extent India are the rising powers in the world. Russia, the largest country on earth, is armed with a nuclear arsenal as terrifying as the American one. The US dollar’s role as reserve currency, the most important source of American power, is undermined by the budget deficits that result from the munition corporations’ wars and the bankster bailouts.

Why is the US making itself impotent fighting wars that have nothing whatsoever to do with its security, wars that are, in fact, threatening its security?

The answer is that the military/security lobby, the financial gangsters, and AIPAC rule. The American people be damned.

Sunday, November 23, 2008

http://news.bbc.co.uk/
Sunday, 23 November 2008

FEATURES, VIEWS, ANALYSIS




Why the Swiss want bank bosses fed to crocodiles

(Emphasis in red added - B.M.)








Saturday, November 22, 2008

"It's time to stop tinkering with a failed system"
by Benjamin Merhav

What humanity needs is not a "plan B", as the author of the article below concludes.What we all need right now is not the continuation of the "democracy" circus, as the bosses of the USA ruling class continue to do by replacing the former circus chief clown with a new one. What we all need now is the urgent replacement of the capitalist system by a direct and participatory democracy, a genuine democracy !

POWER TO THE PEOPLE NOW, BEFORE IT IS TOO LATE !

http://www.informationclearinghouse.info/article21280.htm
This Is Not A Normal Recession

Moving on to Plan B

By Mike Whitney

November 20, 2008 "Information Clearinghouse" -- - "The Winter of 2008-2009 will prove to be the winter of global economic discontent that marks the rejection of the flawed ideology that unregulated global financial markets promote financial innovation, market efficiency, unhampered growth and endless prosperity while mitigating risk by spreading it system wide." Economists Paul Davidson and Henry C.K. Liu "Open Letter to World Leaders attending the November 15 White House Summit on Financial Markets and the World Economy" .

The global economy is being sucked into a black hole and most Americans have no idea why. The whole problem can be narrowed down to two words; "structured finance".

Structured finance is a term that designates a sector of finance where risk is transferred via complex legal and corporate entities. It's not as confusing as it sounds. Take a mortgage-backed security (MBS), for example. The mortgage is issued by a bank (the loan originator) which then sells the mortgage to a brokerage where it is chopped up into tranches (pieces of the loan) and sold in a pool of mortgages to investors that are looking for a rate that is greater than Treasurys or similar investments. The process of transforming debt ("the mortgage") into a security is called securitization. At one time, the MBS was a reasonably safe investment because the housing market was stable and there were relatively few foreclosures. Thus, the chance of losing one's investment was quite small.

In the early years of the Bush administration, Wall Street took advantage of the gigantic flow of capital coming into the country ($700 billion per year via the current account deficit) by creating more and more MBSs and selling them to foreign banks, hedge funds and insurance companies. It was real gold rush. Because the banks were merely the mortgage originators, they didn't believe their own money was at risk, so they gradually lowered lending standards and issued millions of loans to unqualified applicants who had no job, no collateral and a bad credit history. Securitization was such a hit, that by 2005, nearly 80 percent of all mortgages were securitized and the traditional criteria for getting a mortgage was abandoned altogether. Subprimes, Alt-As and ARMs flourished, while the "30 year fixed" went the way of the Dodo. Lenders were no longer constrained by "creditworthiness"; anyone with a pulse and a pen could get approved. The mortgages were then shipped off to Wall Street where they were sold to credulous investors.

The disaggregation of risk--spreading the risk to many investors via securitization--was as much of a factor in the creation of "the largest equity bubble in history", as the banks lax lending standards or Greenspan's low interest rates. By spreading risk throughout the system, securitization keeps interest rates artificially low because the real risks are not properly priced. The low interest rates, in turn, stimulate speculation which results in equity bubbles. Eventually, credit expansion leads to crisis when borrowers can no longer make the interest payments on their loans and defaults spiral out of control. This forces massive deleveraging and the fire-sale of assets in illiquid markets. As assets lose value, prices fall and the economy enters a deflationary cycle.

There are many types of of structured instruments including asset-backed securities (ABS), mortgage-backed securities (MBS), collateralized debt obligations (CDOs) and collateralized loan obligations (CLOs) all of which provide a revenue stream from loans that were chopped into tranches and turned into securities. There are many problems with these complex securities, the biggest of which is that there is no way to unravel the individual pools of loans to isolate the bad paper. That's why subprime mortgages had such a destructive affect on the secondary market, because--even though subprimes only defaulted at a rate of roughly 5 percent--MBS sales slumped nearly 90 percent. Why? Former Secretary of the Treasury Paul O'Neill explained it like this: "It's like you have 8 bottles of water and just one of them has arsenic in it. It becomes impossible to sell any of the other bottles because no one knows which one contains the poison."

Exactly right. So why weren't these structured debt-instruments "stress tested" before the markets were reworked and the financial system became so dependent on them?

Greed. Because the real purpose of these exotic investments is not to provide true value to the buyer, but to maximize profits for the seller by increasing leverage. That is the real purpose of MBS, CDOs and all the other bizarre-sounding derivatives; higher profits with less capital. It's a scam. Here's how it works: A mortgage applicant buys a house for $400,000 and puts 10 percent down. His mortgage is sold to Wall Street, chopped into pieces, and stitched together in a pool of similar loans. Now the brokerage can use the debt as if it were an asset, borrowing at ratios of 20 or 30 to 1 to fatten the bottom line. When Fannie Mae and Freddie Mac were taken into conservatorship by the government, they were leveraged at an eye-popping 100 to 1. This shows that nearly an infinite amount of debt can be precariously balanced atop a paltry amount of capital. This explains why the $4 trillion aggregate value of the 5 big investment banks and the $1.7 trillion value of the hedge funds is now vanishing more quickly than it was created. Once the mighty gears of structured finance shift into reverse, deleveraging begins with a vengeance pulling trillions into a credit vacuum.

It all started when two Bear Stearns hedge funds defaulted in July 2006 and there were no offers for their MBS and other structured investments. Panic quickly spread to every corner of Wall Street as the alchemists of modern finance began to see that their worst nightmare might be realized, that trillions of dollars of Frankenstein investments could be worth nothing at all.

Since the Bear Stearns funds fiasco, there have been huge explosions in the financial markets. Fannie Mae, Freddie Mac, Wachovia, Washington Mutual, Indybank, AIG, Lehman Bros and other industry giants have either gone under or been forced into shotgun weddings by the FDIC. The stock market has plunged over 40 percent and suffered wild gyrations not seen since the 1930s. The entire Wall Street landscape has changed completely. Investment banking is no longer a viable business model; the Big 5 have either vanished or transformed themselves into holding companies to escape short sellers. The hedge funds have been deleveraging with a ferocity that has sent sent stocks and commodities crashing. In one day last week, the stock market plunged 300 points in the morning only to bounce back 550 points a few hours later; a whopping 850 point-spread in one trading day! No one but a madman would dabble in this market. Cautious investors have pulled up stakes and moved to the safety of Treasurys. Meanwhile, the financial tsunami is roaring through the real economy where consumer confidence has plummeted, unemployment is soaring and retail sales have fallen to historic lows. The downdraft from the financial markets has flattened Main Street and set the stage for a humongous $500 billion stimulus package to be delivered in the first few months of the Obama administration. The meltdown appears to be playing out much like Henry Paulson anticipated. According to Bloomberg News : "Shortly after leaving Wall Street as Goldman Sachs' CEO, Henry Paulson was at Camp David warning the president and his staff of "over-the-counter derivatives as an example of financial innovation that could, under certain circumstances, blow up in Wall Street's face and affect the whole economy." (PAUL B. FARRELL, "30 reasons for Great Depression 2 by 2011", MarketWatch)

So far, the Federal Reserve has provided nearly $2 trillion through its lending facilities just to keep the financial system upright. The Treasury is currently distributing $700 billion to key banks and other financial institutions that are perceived to be "too big to fail". In truth, the "too big to fail" mantra is a just public relations hoax to conceal the web of counterparty deals that make it impossible for one institution to fail without dominoing through the rest of the system and wreaking havoc. That's why AIG is still on life-support with regular injections of taxpayer money; because it had roughly $4 trillion of credit default swaps (structured "hedges" that are not traded on a regulated exchange) for which AIG does not have sufficient capital reserves. In other words, the taxpayer is now paying the debts of an insurance company that didn't set aside the money to pay its claims. (As yet, No SEC indictments for securities fraud) In fact, the Fed and Treasury are now providing a backstop for the entire structured finance system which is frozen solid and shows no sign of thawing any time soon.

This is not a normal recession, which is a downturn in the business cycle and "a period of reduced economic activity" usually brought on by a mismatch between supply and demand. (that ends in two quarters of negative growth) The present situation is much more grave; it is the utter destruction of a system that was developed fairly recently and has proven to be thoroughly dysfunctional. It cannot withstand the effects of tighter credit or adverse market conditions. This is not a cyclical downturn; the structured finance system has collapsed leaving behind a multi-trillion dollar capital hole that is bringing the broader economy to its knees.

One by one, we have seen the structured instruments fail; mortgage-backed securities (MBS), collateralized debt obligations (CDOs), credit default swaps (CDS), commercial paper (CP), auction rate securities. Now we are seeing investors boycott anything related to structured investments. This is from Mish's Global Economic Trend Analysis:

"There were NO sales of bonds backed by credit-card payments in October, the first time since 1993, when the asset-backed securities market was in its infancy. Yields on top-rated credit card bonds relative to benchmark interest rates reached a record high of 525 basis points more than the London interbank offered rate, or Libor, last week, according to Bank of America Corp. data."

Wall Street has turned off the faucet for securitized investments. That market is toast. The only reason that Libor and the other gauges of interbank lending have normalized is because the Fed guaranteed money markets and commercial paper. It has nothing to do with trust between the banks themselves. There is no trust. Even so, the banks are not capable of making up for the vast amount of credit which was produced by the now-defunct investment banks and hedge funds which are constrained by losses of nearly $3.5 trillion; half of their total value. In the best case scenario, bank credit will only shrink 15 or 20 percent, which will put the US on track for a deep "18 month to 2 year" recession rather than another Great Depression.

Paulson's attempt to divert $30 billion to non-bank financial institutions to revive loan securitization when there is no appetite among investors for such structured junk is pure folly. More troubling, is that neither Paulson nor Bernanke have a Plan B; an alternate scheme for rebuilding the financial markets on a solid, sustainable foundation rather than low interest rates and pools of debt. Everything they have done so far, suggests that they are focused on one thing alone; inflating another equity bubble. "Inflate or die", as the saying goes; and Bernanke intends to achieve this objective using the same tools that brought us to the brink of catastrophe. Here's a clip from a recent speech by Bernanke which shows his determination to prop up the broken system:

"The ability of financial intermediaries to sell the mortgages they originate into the broader capital market by means of the securitization process serves two important purposes: First, it provides originators much wider sources of funding than they could obtain through conventional sources, such as retail deposits; second, it substantially reduces the originator's exposure to interest rate, credit, prepayment, and other risks associated with holding mortgages to maturity, thereby reducing the overall costs of providing mortgage credit."

Sorry, Ben, the funding has dried up and the banks have shown no interest in going back to the days of conventional "30-year fixed" mortgages. It's a dead letter. The Fed and Treasury need to stop looking for ways to reflate the bubble and work to restore confidence in the markets by increasing regulation and reducing the amount of leverage that's allowable to 12 to 1. After all, it's no coincidence that AIG, Fannie and Freddie, Lehman Bros, General Motors, General Electric have all fallen off a cliff at the very same time. They are all victims of the same low interest, easy money finance swindle which allowed them to roll over huge amounts of short-term debt at artificially low cost. When Bear blew up; lending tightened, demand weakened, and credit was flushed from the system at an unprecedented pace. Borrowing short for long-term investments is not feasible when credit becomes scarce, but it's not because the banks aren't lending. That's just another myth that keeps the public from seeing what's really going on. As Jon Hilsenrath points out in his Wall Street Journal article, "Banks Keep Lending, but that isn't easing the crisis", that is not the case:

"Banks actually are lending at record levels. Their commercial and industrial loans, at $1.6 trillion in early November, were up 15% from a year earlier and grew at a 25% annual rate during the past three months, according to weekly Federal Reserve data. Home-equity loans, at $578 billion, were up 21% from a year ago and grew at a 48% annual rate in three months....The numbers point to one of the great challenges of the crisis. The credit crunch is surely real, but it is complex and not easily managed. Banks are lending, but they're also under serious strain as they act as backstops to a larger problem -- the breakdown of securities markets..The worst of the credit crisis is being felt not in banks but in financial markets..."

The banks are not to blame. There is a generalized contraction of credit in the non-bank financial system where structured finance has blown up and taken half of Wall Street with it. It's the end of an era. Here's how economist Henry C. K. Liu sums it up in his "Open Letter to World Leaders attending the November 15 White House Summit on Financial Markets and the World Economy":

"Neoliberal economists in the last three decades have denied the possibility of a replay of the worldwide destructiveness of the Great Depression that followed the collapse of the speculative bubble created by unfettered US financial markets of the 'Roaring Twenties'. They fooled themselves into thinking that false prosperity built on debt could be sustainable with monetary indulgence. Now history is repeating itself, this time with a new, more lethal virus that has infested deregulated global financial markets with 'innovative' debt securitization, structured finance and maverick banking operations flooded with excess liquidity released by accommodative central banks. A massive structure of phantom wealth was built on the quicksand of debt manipulation. This debt bubble finally imploded in July 2007 and is now threatening to bring down the entire global financial system to cause an economic meltdown unless enlightened political leadership adopts coordinated corrective measures on a global scale."

Rome is burning. It's time to stop tinkering with a failed system and move on to "Plan B" before it's too late.

(Emphasis added - B.M.)

Tuesday, October 7, 2008

http://countercurrents.org/

America ! Be Truly Afraid

By Rand Clifford

06 October, 2008
Countercurrents.org

While compulsory lying, distractions and inane diversions reduce our fourth estate into corporate government’s fifth column, it seems omission is the key tactic so solidly embedding mainstream corporate media into an exploiter of the people. Americans remain well informed regarding celebrities, entertainment, sports and weather—but when it comes to information people need to vote intelligently, understand what corporate government is really up to, or understand environmental issues, corporate media is little more than special-interest propaganda. And when it comes to the complex relationship of the nation and its citizens to the 95% of global population that are not American...strategies such as omission perpetuate the fossilized notion of "we’re number one" being all that Americans really need to know.

So what if instead of subjugating, dividing and stupefying the the people, corporate media actually lived up to its noblest reason for being and served the peoples’ best interests? What might be some of the headlines we’d see, and the essence driving them?

Perhaps....

*

Closed-door session of the House prompts representative outrage, leaks

(March 13, 2008) The House of Representatives held only its sixth closed session since 1812, and the first since July 1983, when it secretly discussed U.S. support for the Contras in Nicaragua. The publicly stated reason for the recent closed session was for members to discuss new citizen surveillance provisions. However, conversations off the record have indicated that the meeting was primarily about nine key issues:

1) the imminent collapse of the U.S. economy to occur by September 2008

2) the imminent collapse of U.S. federal government finances by February 2009

3) the possibility of civil war inside the USA as a result of the collapses

4) advance round-ups of "insurgent U.S. citizens" (those opposing the New World Order) likely to move against the government

5) detention of those rounded-up at "REX 84"camps constructed throughout the USA

6) possibility of retaliation against members of Congress for the collapses

7) the location of "safe facilities" for members of Congress and their families to reside during expected massive civil unrest

8) the necessary and unavoidable merger of the United States with Canada (for its natural resources) and Mexico (for its pool of cheap labor)

9) the issuance of a new currency – THE AMERO – for all three nations as the proposed solution to the upcoming economic Armageddon....

*

Imagine how much the above information would help people understand the enormity of, and better navigate lies blooming around the following:

*

Constitution violated, U.S. infantry troops to be deployed on U.S. soil starting October 1

The "Raiders", First Brigade Combat Team of the Third Division, are now under the command of US Army North, the Army’s component of NorthCom—the Pentagon’s northern command, which was created after 9/11 to defend the US "homeland" and aid local, state and federal authorities. Posse Comitatus was an act passed by Congress on June 16, 1878, which prohibits federal uniformed services from being deployed on non-federal property to maintain "law and order"....

*

Under the Constitution, federal armed forces are banned from law enforcement on home soil. So much for Posse Comitatus—as with so many Constitutional protections being stripped to "protect" the people. And now, amid all the scripted and pacifying rhetoric, as from 1st BCT’s Commander, Col. Roger Cloutier, an ominous picture is forming.

"I can’t think of a more noble mission than this," said Cloutier, "...to take care of citizens at home...and depending on where an event occurred, you’re going home to take care of your hometown, your loved ones. It makes me feel good as an American to know that my country has dedicated a force to come in and help people at home." And, "I don’t know what America’s overall plan is—I just know that 24 hours a day, seven days a week, that there are soldiers, sailors, airmen and Marines that are standing by to come and help if they’re called."

"Take care of? Help?" 1st BCT, the "Raiders"—they are an elite killing force of 4000 troops, the first brigade to be deployed in Iraq three times. Fresh from kicking down doors and arresting insurgents before taking them to internment camps, they are now being trained to use the first ever nonlethal package the Army has fielded. "It’s a new modular package of nonlethal capabilities," said Cloutier, referring to crowd and traffic control devices designed to subdue the unruly and dangerous without killing them.

"Helping", "taking care of", "protecting" and more...wholesome euphemisms fogging the simple reality that Americans are FINALLY starting to wake up, and are going to need military kinds of subduing without killing them. With conditions of deepening economic crisis, the growing chasm between working Americans and the obscenely wealthy who control the government is becoming a threat to political stability that existing political framework cannot contain. Though the 1st BTC is scheduled to be deployed domestically for one year, their replacements are being groomed for permanent deployment on a larger scale.

Corporate government is demonstrating their true allegiance by so transparently maneuvering to protect the defacto ruling wealthy elite from righteous indignation of working people as the nation is destroyed from within. Does American government consider the people little more than a contemptible—and dangerous—nuisance now that the greatest transfer of public wealth up to the wealthy elite in history...is history? Consider this missing headline:

*

U.S. troops and recruits quizzed about willingness to shoot friends and family members

Soldiers recently returning from Iraq reveal that U.S. troops are being trained to conduct domestic round-ups and confiscate guns, and being quizzed about shooting American citizens—including their own friends and family members—as part of a long-standing program to prepare for the declaration of martial law....

*

For 15 years military chiefs have been assessing whether U.S. troops would be prepared to round up, disarm, an possibly shoot Americans who disobey orders during a national state of emergency. Origins of this can be traced back to an October 1994 Marine questionnaire out of the Twentynine Palms Marine Base in California. Recruits were asked 46 questions, including whether they would kill U.S. citizens who refused to surrender their firearms.

Pastors and other religious representatives are being groomed into secret police enforcers who teach their congregations to "obey the government" in the run up to martial law, property and firearm seizures, mass vaccination programs and forced relocation.

The following missing headline answers questions regarding citizen relocation:

*

Over 800 American concentration camps are fully operational and ready for prisoners

These camps are to be operated by FEMA (Federal Emergency Management Agency) following declaration of martial law (at the stroke of a Presidential pen plus the Attorney General’s signature on a warrant)....

*

While currently empty, all camps are staffed and manned by full-time guards, standing ready to receive U.S. prisoners who disagree with the government. Like Nazi extermination camps, many of the FEMA camps have Red/Blue lines:

Red List – These are enemies of the New World Order. Two weeks before martial law they could be taken from their homes and flown to camps for immediate extermination. Generally, these are people in leadership roles or other public positions.

Blue List – Also enemies of the New World Order but not necessarily leaders. After martial law these people could be rounded up for "re-programming" in the camps. Survivors will be used mostly for slave labor.

Omissions such as mentioned here—a comprehensive list would be enormous...even one covering just the last eight years. Such a list includes: obvious and repeated federal election fraud; truth about 9/11 and its coverup; truth about our illegal wars of aggression; truth about the current bankster coup and the trillion-dollar taxpayer drop in the bailout bucket which will largely go to foreign investors to avert lawsuits against fraudsters such as Secretary of the Treasury, Henry Paulson; truth about the scuttling of the United States as a sovereign nation to make way for the corporate/fascist New World Order....

The main theme in omissions always orbits crucial truth people need to know, truth the ruling elite want suppressed. As it stands now, the more truth involved, and the more important that truth to the American people, the more likely a story is to be omitted.

We’ve come far down this road to oblivion, hustled along by lies, fraud, deception, distraction, fiendish exploitation of our own pathetic gullibility...and omission. How might we shatter the gullibility?

Imagine the American people...imagine us turning around and marching back toward truth. Can we still save the Republic, still save ourselves? The Big Bailout just blew us miles further, down the road.

Rand Clifford is a writer living in Spokane, Washington, with his wife Mary Ann, and their Chesapeake Bay retriever, Mink. Rand's novels CASTLING, TIMING, VOICES OF VIRES, and PRIEST LAKE CATHEDRAL are published by StarChief Press: http://www.starchiefpress.com