Friday, December 17, 2010

Constitutional Judo

Constitutional Judo

By Giordano Bruno of Neithercorp Press via Zero Hedge

In all things, there exists a ‘point of balance’; a line that, if crossed, results in the sudden and expedient loss of our self-determinism and makes us subservient to the fickle whims of social, political, and physical gravity. We are “thrown” into the air, as it were, and the landing is rarely ever pleasant. The U.S. Constitution and the civil liberties it outlines is itself one of these historic points of balance. Its original purpose was to temper the most epic of grappling matches ever ignited; between the relentless constructs of government, and the individual freedoms of the common man. The ultimate problem inherent in this struggle is one of consistency, vigilance, and labor…

While the concept of the Democratic Republic and the Constitution was meant to remove suffocating class warfare from our political life and free us from the numerous dangers of elitism, invariably, those men who thirst for power over others find a way to insinuate themselves into any system, regardless of checks and balances, especially when the populace does not fulfill its necessary role as watchdog and tireless sentinel. Many Americans often assume that ‘the people’ derive their power from the Constitution, but the reality is actually reverse; the Constitution, in fact, derives its power from the people. Our duty (which some have forgotten) has always been to protect the rights and liberties inscribed on those pages of parchment. Not just to know those rights, or recite them, but to implement and defend them in our day-to-day existence. Without the constant nurturing cultural pulse of sound minds and courageous hearts, the Constitution dies.

Many in our society, instead of taking on the responsibility of preserving their freedoms, have instead handed it over to the trappings of government. The fatal error here is obvious; the corporatized and over-centralized political landscape of America’s government today does not hold the same values as the people it is determined to lord over. We have witnessed the parasitic possession of our system, know it to be corrupt, yet still seem to expect this bureaucratic monstrosity to cradle our liberties in good faith!

Government is a tool; a mechanical apparatus that can be used to either preserve freedom, or annihilate it. Its use depends upon those men who wield it, and the men who wield our government today certainly do not have the expansion of freedom in mind. In this article, we will examine the many points of contention (balancing points) brewing as our exceedingly globalist leaning political leaders overstep their bounds. Any one of these points, if allowed to falter by Americans, could throw the whole of our heritage into disarray…

Death By A Thousand Cuts

If you’ve been living at the center of the Earth for the past decade, or playing online games till daybreak battling for dominion of Castle Grayskull, then you may have missed out on the numerous attempts by our Government (under both major parties) to erode our freedoms one precious layer at a time. Some of these attempts have so far fallen flat, while others have been frighteningly successful. Here is just a sample of various recent actions and legislation designed specifically to swindle away your rights, if not the shirt right off your back:

Patriot Acts I & II: The Patriot Act is what I call “chameleon legislation”; it’s designed to be “open to interpretation” by officials and to be modified for whatever purpose they happen to deem fit at the moment. Ultimately, both Patriot Acts opened a terrible gateway to a world where any freedom is expendable, especially if it means stopping terrorists and “evil doers”. Of course, the manner in which terrorism is defined by proponents of the Patriot Act is wildly general. ANYONE could be defined as a terrorist, and any threat could be construed as a matter of national security. The true goal of this legislation was not to protect the public, but to untie the hands of the establishment when implementing further destructive actions, as well as to plant the fog of doubt into the minds of Americans as to the continued validity of the Constitution itself.

The Enemy Belligerents Act: The Enemy Belligerents Act is a perfect example of how the leadership caste of the Democrats and Republicans (who are neo-cons, not true conservatives) work in tandem to institute globalist policy. In this case, the act was introduced by the dastardly duo of John McCain and Joe Lieberman. To put it simply, this legislation, if fully imposed, would allow the government to label any person they choose, even an American citizen, as an enemy combatant. This means you could be arrested without being officially charged, imprisoned without a trial or legal council for an unspecified length of time, and no one, not even your family, would be told where you were. They should just re-name it the ‘Shanghai Act’, because it basically legalizes government piracy. The only problem is that this shanghai is less likely to end with tropical island adventure and more likely to end with you being tossed in a dark stinky hole in the middle of another Abu Ghraib surrounded by Blackwater mongoloids with a penchant for naked man dog-piles. Again, this is the kind of poison your government thinks up on a regular basis…

The John Warner Defense Authorization Act: A bill passed by George W. Bush in 2007 with very little initial media coverage. Allows the Federal Government at the direction of the president to subvert Posse Comitatus and use the military within the borders of the U.S. as a police force without any consent from state governments. Also gives the office of the president unprecedented powers over the National Guard. Just add any real or engineered national disaster and what you get is a perfect recipe for Hurricane Katrina deluxe. Martial Law, here we come…

Establishment Of Northcom: Northcom (United States Northern Command) is, at bottom, the teeth behind legislation like the John Warner Defense Act. If martial law is declared in the U.S., it will be Northcom and its assigned military units that will stand at the forefront. Northcom’s stated mission is to “defend the homeland”, supposedly against terrorism, however, much of Northcom’s focus in annual exercises like ‘Vigilant Shield’ has been to prepare for civil unrest and continuity of government. Meaning, they train under the assumption the YOU will be the enemy. The first person posted to command Northcom was General Ralph Eberhart, the same man who was in charge of NORAD on 9/11. Apparently, if you ignore available intelligence and fail completely in your assigned duties, you get a promotion in the upper echelons of the military today, unless I missed something, and he didn’t fail…

Presidential Directive 51: A presidential action shrouded in secrecy and general cloak and dagger spookiness. When ignorant yuppies accuse the Liberty Movement of “paranoia”, I always point out PDD 51, and ask them if they are at least intelligent enough to be concerned. This order was initiated by George W. Bush and continued by Barack Obama, and is designed to give the president virtual dictatorial powers during a state of “national emergency”. It dissolves all states rights and places the entire country under the purview of Northcom, and Homeland Security. The guise of “continuity of government” is used as a rationale. Also allows the president to declare a state of emergency for almost any reason. Members of Congress and even some members of Homeland Security who have requested to read the entire directive have been denied. The bill is apparently so disturbing that Obama doesn’t even want those with security clearance to view the full document. Though I’m sure there is some grey area that can be exploited where classified materials are concerned, as far as I can tell from my research, Obama’s withholding of information on a directive such as PDD 51 from Congress is wholly illegal.

Foreign Intelligence Surveillance Act (FISA): Supported by both Bush and Obama. The word “foreign” is highly misleading. FISA allows telecom companies to supply the personal data and communications of anyone, including Americans, to the government without threat of civil retribution (lawsuit). Under Constitutional law, any invasion of privacy by government authorities must first be approved through an individualized warrant. The person or premises to be monitored must be specified, and the reason behind the surveillance must be clearly explained. FISA does away with all of these protections to your privacy and gives free reign to government to spy on whoever they choose without any oversight whatsoever. It even allows for mass surveillance, or data collation, on entire subsections of the populace. What I find most interesting about FISA is the way in which it brazenly breaks the barrier between government and corporate power. We all know about the revolving door in Washington, but in the past, the idea of the barrier was at least somewhat maintained for appearances, if nothing else. The trick to FISA is that “technically”, it is the telecoms that are doing the actual surveillance, and not government. This is, I’m sure, the argument that will be used by the Feds if FISA is ever taken to the Supreme Court under the Fourth Amendment. The reality, though, is that the telecoms and the government are one in the same, and to treat them as two separate legal entities is to blind one’s self to the facts. Now, Mussolini’s definition of fascism (the melding of government and corporate infrastructure into a single entity with a single purpose) absolutely seems to apply to the U.S.

Big Brother Technotronic Super Villain-esqe Surveillance Grid: Ever feel like you are being watched? Get used to it, says Homeland Security! CCTV cameras have doubled in most U.S. cities over the past two years, while New York has tripled theirs in only six months. The TSA has been given invincible IRS-like goon squad status and now fondles and x-rays airport travelers at will, storing biometric data without consent and generally treating people worse than cattle. Don’t care because you don’t fly? Don’t worry! Naked body scanners are coming to bus and train stations near you! Hell, if we don’t put a stop to this horror soon, the TSA may roll scanners out on street corners.

A friend of mine was recently on a trip to Boston and went to see the U.S.S. Constitution, the oldest commissioned American war vessel still afloat. He related to me that his excitement was soon smothered when he realized visitors had to pass through metal detectors and security just to see the boat. I’m sure that the government is merely trying to prevent Al Qaeda from sneaking on board with box cutters, hijacking the ship, and sailing it into the Sears tower, causing the building to implode at near freefall speed.

The reason he was disenchanted with the experience was because he knew the metal detectors and security served little purpose, except to condition people into accepting that this was the norm. Everywhere you go, there DHS is.

Next of course would be easily tracked national ID cards, which were attempted a couple of years ago with little success under the Real ID Act. State compliance for the Real ID was postponed until May 2011, which is right around the corner. We’ll see if the states cave, or stand their ground. Finally, no surveillance society would be complete without citizen spies. Homeland Security is establishing its new “If You See Something, Say Something” campaign in your local Walmart. Yes, imagine the ghoulish face of cave troll Janet Napolitano leering down at aisle five as you attempt to save a dollar on frozen buffalo wings. She slobbers rhetoric about how you are surrounded by terrorists while you try to find that economy sized box of Count Chocula. Wouldn’t we all just feel safer?

Bailout Bills (All Variations): I find that a lot of people like to blame our current economic doomfest on one political party or the other, stumbling about in the dark in a sad attempt to trace the roots of the credit and mortgage collapse back to Obama, Bush II, Clinton, Bush I, etc. Everyone is desperate to play cheerleader for their team, not realizing that both teams are fake and almost every president since the creation of the Federal Reserve in 1913 is to blame for selling out the American people to global banks. Let’s not forget, both Obama and Bush supported bailout legislation which is now widely considered to be an abject failure. The majority of Americans according to most polls apposed these bills, and yet they were still passed. What do the bailouts have to do with the loss of Constitutional rights? When the entirety of your country’s financial future is poured into the coffers of international banking elites and your currency is subsequently debased if not destroyed, leaving you with nothing but debt and supranational centralization, it is a certainty that a total loss of your rights will soon follow.

FDA Food Safety Modernization Act S. 510: Currently being considered for passage in the House. Yet another bill written in such a way as to make it wide open for interpretation by the authorities. First of all, the FDA has never been synonymous with “safety”, considering half the products they approve end up causing cancer or shrinking your testes. They would approve rat urine for mass consumption if a company like Monsanto wanted to market it. The FDA’s true roll has been to let major corporations violate safety regulations unobstructed while ruthlessly bringing the hammer down on smaller businesses. Now, the FDA has set its aim upon not just small farms, but personal gardens!

The bill gives the FDA far reaching powers over what it terms “food production facilities”, which are defined as “any farm, ranch, orchard, vineyard, aquaculture facility, or confined animal-feeding operation”. It also places all food production under the control of Homeland Security in the event of a “national emergency” (there’s that poorly defined phrase again). I have heard some organic growers and ranchers shrug off the bill, believing that the FDA would never take advantage of the broad interpretation and bring pressure on private gardens or food trade. This kind of naivety is always astonishing to me. When has a society ever opened a door to power that its government has not taken quick advantage of? In fact, the FDA has already begun harassing the Amish, of all people, for private farm trade, even without S. 510:

These are non-commercial farms, yet the FDA believes it has the authority to dictate their food production activities. If the government is willing to set its laser guided sites on a pacifist group that still rides around in horse and buggy, then they’ll definitely have no qualms going after the rest of us.

Anti-Constitutional Arguments For Dummies

Most people enjoy the advantages of freedom and are naturally conservative towards government, whether they realize it or not. Because of the rather unsavory past actions of the neo-cons (globalists), the word “conservative” has been sullied, and is now associated with corporatism and big government. However, real conservatism has always been quite revolutionary. True conservatives believe in the principle of limited government, and individualism above collectivism, which means they usually find themselves the target of establishment fury. True conservatives are almost always in rebellion against the system, because the system is almost always operated by those who are anti-freedom. Show me a self proclaimed conservative who supports proliferation of government with a smile and I’ll show you a very confused man.

The label “Conservative” should really be interchangeable with “Constitutionalist”, and once this is understood, anti-Constitutional arguments can be viewed without the blurred distractions of the false left/right paradigm. We begin to understand that the conflict is not between Democrat and Republican, Liberal or Conservative, because those terms have been warped and their meaning eroded. The conflict we face is instead between individualists (Constitutionalists), and collectivists (globalists).

We’ve all heard the gamut of anti-Constitutional arguments in the past, but almost always through the left/right filter. Let’s set that filter aside for a moment and consider a few of them once again more objectively…

Argument 1 – The Constitution is an outdated document and is no longer practical for the modern world:

I’ve heard this argument from both sides of the aisle once again indicating that left vs. right is all fantasy. Does a good idea ever become outdated? What about inborn instincts? Can the desire for freedom ever be impractical?

The suggestion that the Constitution is “too old” is ludicrous for many reasons. First, the idea of an independent republic is painfully new compared to the long wash of human empires filled with vast stretches of feudalism and tyranny. Globalism is often touted as the next step in the cultural evolution of man, but it is really a giant leap backwards compared to Constitutionalism, representing yet another old centralist autocracy marketed in a modern way. A global feudal state is still a feudal state.

Second, the guidelines of the Constitution are built upon social necessities that have never and will never disappear. The right to speak openly one’s opinions or observations without fear of government reprisal is not a right that we will ever find ourselves too modern to appreciate. The right to bear arms and defend oneself will always be essential to a culture that wishes to prevent despotism in its various forms. The right to privacy from all people, including the government, will never be programmed out of the public entirely. Every man has an innate need to live without being examined and judged as though he were under constant suspicion. Every aspect of the Constitution is archetypal, and therefore, as much a part of us our own eyes and ears. These things do not lose their usefulness, no matter what era we live in.

Third, I have yet to see a political dynamic that is more sincere and honorable than the U.S. Constitution. I have yet to see a social concept presented as an alternative to the Constitution that does not have an ulterior motive attached. If someone, anyone, can present a new system that improves upon the Constitution while retaining the liberties described in the Constitution, I would love to see it. I hear a lot of criticism of the Constitution by globalists, but I have never seen any of them present a workable replacement that the public would respect, or willingly accept.

Argument 2 – Some rights must be given up for the greater good:

I’ll tell you a little secret; there is no “greater good”, unless you are talking about personal conscience. If your version of the “greater good” demands that you supplant your personal conscience, then it is not “greater”, and it is not “good”.

Safety is usually the catalyzing issue that leads to relinquished liberties, but safety itself is an illusion. No government can promise you true safety. Life is dangerous, and filled with the unexpected. Get over it and stop projecting your fears on the rest of us. If someone really feels that they are in immediate danger of a terrorist attack, then they should build a concrete bunker for themselves and stay in it, instead of trying to impose a collective bunker made out of unconstitutional laws and government surveillance around all of us.

Ultimately, what IS the greater good in this situation? Is it an unaccountable globalist nanny state and the dissolution of all individual and national sovereignty for the sake of a few people’s delusions of security? Maybe I’m just reckless, but I’m not buying it…

Argument 3 – National sovereignty must be removed if we are to achieve world peace:

World peace sounds very nice, I admit, but anyone who thinks removing Constitutional boundaries and bowing to globalism is the cure for war is smoking something laced with a serious amount of something. Almost every war of the past century alone has been funded, facilitated, or outright ignited by the same types of global elitists who now demand that we centralize world economic and political power into their hands to end war. This isn’t irony, it’s actually very well thought out Hegelian gaming; a sort of anti-Karma that rewards evil and punishes the respectable.

We have been led to believe that peace requires some kind of Faustian trade; freedom for harmony. But, legitimate freedom is a harbinger of peace, and nothing, not even the promise of harmony, is worth trading it away.

Argument 4 – The government could never undo Constitutional liberties because we would just vote them out:

This argument shows a serious lack of insight into how our government actually functions. As I have pointed out, most of the anti-Constitutional legislation described in this article was supported by both major parties. Therefore, it would be logical to then consider that voting out one party and replacing them with the other makes little difference as to the policies the government pursues. Unless you are voting for third party or liberty based candidates, your stop at the ballot box was a big waste of time. Sorry, that’s just reality. The people who write in Mickey Mouse have more sense than most of the voting public. The point? Elections change very little on a federal level.

The argument is also sometimes reversed by nihilists, who claim that the American public is to blame for government corruption because they voted for said politicians in the first place. Again, how the public votes has little bearing on most major elections because they have not been given a real choice. I get more excitement when deciding between Coke or Pepsi.

Argument 5 – The Founding Fathers couldn’t live up to their Constitutional ideals:

Yes, Thomas Jefferson owned slaves, and he also tried to implement a gradual emancipation for all slaves. It’s a contradiction. Jefferson, like all the Founding Fathers, was living in the midst of a revolutionary age filled with contradictions and conflict. The fact that they were able to sort through much of this and form a nation that at least aspired towards equal rights and independence is nothing short of a miracle. Washington made many mistakes, and so did Adams. In the context of the era in which they lived, they still did extraordinarily well, and this world is immensely better off because of their contributions.

This argument is perhaps the most dishonest of those I’ve heard, because it seeks to dismantle the very tangible and beneficial accomplishments of the revolutionary period by defaming men who cannot defend themselves because they are long since dead. It is successful when used to target people who know only historical events or dates but do not know more about the characters of the figures involved. That is not to say we should blindly idolize the Founding Fathers, on the contrary, we should endeavor to see them as real human beings with strengths, as well as flaws. Those flaws do not discredit what they built. What men are able to achieve in spite of their flaws is often far more meaningful and valuable than what they lose because of them.

Moral Ambiguity In Times Of Crisis

Liberty is most threatened in moments of great duress. Desperation breeds reckless abandon, and such an atmosphere is suffocating to wisdom. Each point of balance in the struggle for freedom requires considerable focus, and that focus can be twisted, flipped, and wrenched by the shock of disaster. The preservation of Constitutional rights depends greatly on our ability to maintain a sense of integrity and discipline as a culture, even when all the world seems to crumble around us.

Fear makes the insane seem reasonable. Financial collapse, war, civil unrest, all of these calamities can tempt us to silence our dissent, to do things we would not normally do, or to concede that which is precious to us. Even now, that kind of fear has led to many unfortunate compromises. The good news is, there is no freedom taken, that cannot be taken back.

The question is, how much are we willing to endure to see that our ideals survive? How hard are we willing to work? How much of our time, effort, and energy are we willing to expend? If the answer is not “all of it”, then we have failed already. What we have covered so far is the present situation, and by no means does it have to continue. When drawing a line in the sand, that line must first be drawn within. We must promise ourselves that it is here we will not bend, we will not lose balance, we will not be thrown. All liberty depends most on this.....

Monday, December 6, 2010

The new US oligarchy

The new US oligarchy
By Andy Kroll

There is a war underway. I'm not talking about Washington's bloody misadventures in Afghanistan and Iraq, but a war within the borders of the United States. It's a war fought on the airwaves, on television and radio and over the Internet, a war of words and images, of half-truth, innuendo, and raging lies.

I'm talking about a political war, pitting liberals against conservatives, Democrats against Republicans. I'm talking about a spending war, fueled by stealthy front groups and deep-pocketed anonymous donors. It's a war that's poised to topple what's left of American democracy.

The right wing won the opening battle. In the 2010 mid-term elections, shadowy outside organizations (who didn't have to disclose their donors until well after Election Day, if at all) backing Republican candidates doled out US$190 million, outspending their adversaries by a more than two-to-one margin, according to the Center for Responsive Politics.

American Action Network, operated by Republican consultant Fred Malek and former Republican Senator Norm Coleman, spent $26 million; the US Chamber of Commerce plunked down $33 million; and Karl Rove's American Crossroads and Crossroads GPS shelled out a combined $38.6 million. Their investments in conservative candidates across the country paid off: the 62 House seats and six Senate seats claimed by Republicans were the most in the postwar era - literally, a historic victory.

Knocked out of their complacency, no longer basking in the glow of Barack Obama's 2008 victory, wealthy Democrats are now plotting their response. Left-wing media mogul David Brock plans to create an outside group dubbed American Bridge in response to Rove's Crossroads outfits that will fight in the trenches of 2012 campaign spending. Many more outfits like Brock's will surely follow, as liberal and centrist Democrats brace for a promised $500 million onslaught by the Chamber of Commerce and others of its ilk.

Even the Barack Obama administration, which shunned outside groups in 2008, has opened the door to a covert spending war. The Democrats will now fight fire with fire. "Is small money better? You bet. But we're in a fucking fight," Democratic strategist and fundraiser Harold Ickes told me recently. "And if you're in a fistfight, then you're in a fistfight, and you use all legal means available."

The endgame here, of course, is non-stop war. No longer will outside groups come and go every two years. Now, such groups will be running attack ads, sending out mailers, and deploying robo-calls year-round in what is going to become a perpetual campaign to sway voters and elect friendly lawmakers. "We're definitely building a foundation," was how American Crossroads president Steven Law put it.

This is what nowadays passes for the heart and soul of American democracy. It used to be that citizens in large numbers, mobilized by labor unions or political parties or a single uniting cause, determined the course of American politics. After World War II, a swelling middle class was the most powerful voting bloc, while, in those same decades, the working and middle classes enjoyed comparatively greater economic prosperity than their wealthy counterparts. Kiss all that goodbye. We're now a country run by rich people.

Not surprisingly, political power has a way of following wealth. What that means is: you can't understand how the rich seized control of American politics, and arguably American society, without understanding how a small group of Americans got so much money in the first place.

That story begins in the late 1970s and continues through the Obama years, a period in which American policy has been so skewed toward the rich that we're now living through the worst period of income inequality in modern history. Consider the statistics: 50 years ago, the wealthiest 1% of Americans accounted for one of every 10 dollars of the nation's income; today, it's nearly one in every four. Between 1979 and 2006, the average post-tax household income (including benefits) of the wealthiest 1% increased by 256%; the poorest households saw an increase of 11%; middle-class homes, 21%, much of which was due to the arrival of two-job families.

Tax guru David Cay Johnston recently crunched new Social Security Administration data and discovered an even starker divide. On the one hand, the number of Americans earning a steady income declined by 4.5 million between 2008 and 2009, and the average wage in the US dipped by 1.2%, to $39,055. On the other hand, the average wage among Americans earning more than $50 million per year was $91 million in 2008 and $84 million in 2009.

Harvard University economist Lawrence Katz put the situation Americans now find themselves in this way:

"Think of the American economy as a large apartment block. A century ago - even 30 years ago - it was the object of envy. But in the last generation its character has changed. The penthouses at the top keep getting larger and larger. The apartments in the middle are feeling more and more squeezed and the basement has flooded. To round it off, the elevator is no longer working. That broken elevator is what gets people down the most."

Let's call those select few in the penthouse the New Oligarchy, an awesomely rich sliver of Americans raking in an outsized share of the nation's wealth. They're oil magnates and media tycoons, corporate executives and hedge-fund traders, philanthropists and entertainers.

Depending on where you want to draw the line, they're the top 1%, or the top 0.1%, or even the top 0.01% of the population. And when the Supreme Court handed down its controversial Citizens United decision in January, it broke the floodgates so that a torrent of anonymous donations from this oligarchic class could flood back down from the heights and inundate the political lands below.

The Thirty-Year War
How did we get here? How did a middle-class-heavy nation transform itself into an oligarchy? You'll find answers to these questions in Winner-Take-All Politics, a revelatory new book by political scientists Jacob Hacker and Paul Pierson. The authors treat the present figures we have on American wealth and poverty as a crime scene littered with clues and suspects, dead-ends and alibis.

Unlike so many pundits, politicians, and academics, Hacker and Pierson resist blaming the usual suspects: globalization, the rise of an information-based economy, and the demise of manufacturing. The culprit in their crime drama is American politics itself over the past three decades. The clues to understanding the rise of an American oligarchy, they believe, won't be found in New York or New Delhi, but on Capitol Hill, along Pennsylvania Avenue, and around K Street, that haven in a heartless world for Washington's lobbyists.

"Step by step and debate by debate," they write, "America's public officials have rewritten the rules of American politics and the American economy in ways that have benefited the few at the expense of the many."

Most accounts of American income inequality begin in the 1980s with the reign of president Ronald Reagan, the anti-government icon whose "Reaganomics" are commonly fingered as the catalyst for today's problems. Wrong, say Hacker and Pierson. The origins of oligarchy lay in the late 1970s and in the unlikely figure of Jimmy Carter, a Democratic president presiding over a congress controlled by Democrats. It was Carter's successes and failures, they argue, that kicked off what economist Paul Krugman has labeled “the Great Divergence".

In 1978, the Carter administration and congress took a red pen to the tax code, slashing the top rate of the capital gains tax from 48% to 28% - an enormous boon for wealthy Americans. At the same time, the most ambitious effort in decades to reform American labor law in order to make it easier to unionize died in the senate, despite a 61-vote Democratic supermajority. Likewise, a proposed Office of Consumer Representation, a $15 million advocacy agency that was to work on behalf of average Americans, was defeated by an increasingly powerful business lobby.

Ronald Reagan, you could say, simply took the baton passed to him by Carter. His 1981 Economic Recovery and Tax Act (ERTA) bundled a medley of goodies any oligarch would love, including tax cuts for corporations, ample reductions in the capital gains and estate taxes, and a 10% income tax exclusion for married couples in two-earner families. "ERTA was Ronald Reagan's greatest legislative triumph, a fundamental rewriting of the nation's tax laws in favor of winner-take-all outcomes," Hacker and Pierson conclude.
The groundwork had by then been laid for the rich to pull definitively and staggering ahead of everyone else. The momentum of the tax-cut fervor carried through the presidencies of George H W Bush and Bill Clinton, and in 2000 became the campaign trail rallying cry of George W Bush. It was Bush II, after all, who told a room full of wealthy donors at an $800-a-plate dinner - "Some people call you the elites; I call you my base" - and who pledged that his 2001 tax cuts would be a boon for all Americans. They weren't: according to Hacker and Pierson, 51% of their benefits go to the top 1% of earners.

Those cuts will be around a lot longer if the GOP has its way. Take Republican Congressman Dave Camp's word for it. On November 16, Camp, a Republican from Michigan, said the only acceptable solution when it came to the Bush-era tax cuts was not just upholding them for all earners, rich and poor, but passing more such cuts. Anything in between, any form of compromise, including President Barack Obama's proposal to extend the Bush cuts for the working and middle classes but not the wealthy, was "a terrible idea and a total non-starter".

Why should you care what Dave Camp says? Here's the answer: in January, he's set to inherit the chairman's gavel on the powerful House Ways and Means Committee, the body tasked with writing the nation's tax laws. And though most Americans wouldn't even recognize his name, Camp's message surely left America's wealthy elites breathing a long sigh of relief. You could sum it up like this: fear not, wealthy Americans, your money is safe. The policies that made you rich aren't going anywhere.

Tear down this law
Where rewriting the tax code proved too politically difficult, demolishing regulations worked almost as well. This has been especially true in the world of finance. There, a legacy of deregulation transformed banking from a relatively staid industry into a casino culture, ushering in an era of eye-popping profits, lavish bonuses, and the "financialization" of the American economy.

April 6, 1998: it's a useful starting point in the story of financial deregulation. On that day, two well-known Wall Street denizens, Citicorp and Travelers Group, agreed to a historic $140 billion merger. The deal required much lobbying, but eventually the chiefs of these banks won an exemption from the Glass-Steagall Act, the New Deal-era law walling off commercial banks from riskier investment houses. The resulting institution, dubbed Citigroup, would be the largest supermarket bank in history, a marriage of teller windows and trading desks, customer banking and high-stakes investing - all suddenly under one deregulated roof. It would prove an explosive, if not disastrous, mix.

The merger stirred visions of a future in which the US would dominate the planet financially. All that stood in the way was undue regulatory red tape. At least that's the way free marketeers like then-Republican senator Phil Gramm of Texas saw it. Gramm, who as an aide to presidential candidate John McCain infamously called America a "nation of whiners", was, in fact, the driving force behind two of the most influential pieces of deregulation in recent US history.

In 1999, president Clinton signed the Gramm-Leach-Bliley Act, a bevy of deregulatory measures that obliterated Glass-Steagall. In December the following year, Gramm quietly snuck the 262-page Commodity Futures Modernization Act into a massive $384 billion spending bill. Gramm's bill blocked regulators like the Securities and Exchange Commission (SEC) from cracking down on the shadowy "over-the-counter derivatives" market, home to billions of dollars of opaque financial instruments that would, years later, nearly demolish the American economy.

As presidents, both Bill Clinton and George W Bush wrapped their arms around financial deregulation. As a result, in a binge of financial gluttony, Wall Street grew fat in ways never previously seen. Between 1929, the year the Great Depression began, and 1988, Wall Street's profits averaged 1.2% of the nation's gross domestic product; in 2005, that figure peaked at 3.3% as industry bonuses soared ever-higher. In 2009, bad times for most Americans, bonuses hit $20 billion. So much wealth in so few hands. Nothing explains the rise of the new American oligarchy more starkly.

Of course, it's not just what politicians did that helped create today's oligarchy, but what they failed to do. A classic example: in the 1990s, the Financial Accounting Standards Board (FASB), a private American accounting regulator, set its sights on a loophole big enough to drive a financial Mack truck through.

Until then, stock options included in executives' skyrocketing pay packages - potentially worth tens of millions of dollars when exercised - were valued at zero when issued. That's right: zero, zilch, nada. When the FASB and the SEC tried to close the loophole, however, big business leapt to its defense. An avalanche of money went into the pockets of an army of K Street lobbyists and leviathan business trade associations. In the end, nothing happened. Or rather, everything continued happening. The loophole remained.

Citizen United's brave new world
Hacker and Pierson ably guide us through 30 years of "winner-take-all" policymaking, politicking, and - from the point of view of the wealthy - judicious inaction. They offer an eye-opening journey across the landscape that helped foster the New Oligarchs, but one crucial vista appeared too late for the authors to include.

No understanding of the rise of our New Oligarchs could be complete without exploring the effects of the Supreme Court's January Citizens United decision, which set their power in cement more effectively than any tax cut ever could. Before Citizens United, the rich used their wealth to subtly shape policy, woo politicians, and influence elections. Now, with so much money flowing into their hands and the contribution faucets wide open, they can simply buy American politics so long as the price is right.

There's no mistaking how, in less than a year, Citizens United has radically tilted the political playing field. Along with several other major court rulings, it ushered in American Crossroads, American Action Network, and many similar groups that now can reel in unlimited donations with pathetically few requirements to disclose their funders.

What the present Supreme Court, itself the fruit of successive tax-cutting and deregulating administrations, has ensured is this: that in an American "democracy", only the public will remain in the dark. Even for dedicated reporters, tracking down these groups is like chasing shadows: official addresses lead to PO boxes; phone calls go unreturned; doors are shut in your face.

The limited glimpse we have of the people bankrolling these shadowy outfits is a who's-who of the New Oligarchy: the billionaire Koch Brothers ($21.5 billion); financier George Soros ($11 billion); hedge-fund CEO Paul Singer (his fund, Elliott Management, is worth $17 billion); investor Harold Simmons (net worth: $4.5 billion); New York venture capitalist Kenneth Langone ($1.1 billion); and real estate tycoon Bob Perry ($600 million).

Then there's the roster of corporations who have used their largesse to influence American politics. Health insurance companies, including UnitedHealth Group and Cigna, gave a whopping $86.2 million to the US Chamber to kill the public option in the healthcare bill, funneling the money through the industry trade group America's Health Insurance Plans. And corporate titans like Goldman Sachs, Prudential Financial, and Dow Chemical have given millions more to the chamber to lobby against new financial and chemical regulations.

As a result, the central story of the 2010 midterm elections isn't Republican victory or Democratic defeat or Tea Party anger; it's this blitzkrieg of outside spending, most of which came from right-leaning groups like Rove's American Crossroads and the US Chamber of Commerce. It's a grim illustration of what happens when so much money ends up in the hands of so few. And with campaign finance reforms soundly defeated for years to come, the spending wars will only get worse.

Indeed, pundits predict that spending in the 2012 elections will smash all records. Think of it this way: in 2008, total election spending reached $5.3 billion, while the $1.8 billion spent on the presidential race alone more than doubled 2004's total. How high could we go in 2012? $7 billion? $10 billion? It looks like the sky's the limit.

We don't need to wait for 2012 to arrive, however, to know that the sheer amount of money being pumped into American politics makes a mockery out of our democracy (or what's left of it). Worse yet, few solutions exist to staunch the cash flow: the DISCLOSE Act, intended to counter the effects of Citizens United, twice failed in the senate this year; and the best option, public financing of elections, can't even get a hearing in Washington.

Until lawmakers cap the amount of money in politics, while forcing donors to reveal their identities and not hide in the shadows, the New Oligarchy will only grow in stature and influence. Left unchecked, this ultimate elite will continue to root out the few members of congress not beholden to them and their "contributions" (see Wisconsin's Russ Feingold) and will replace them with lawmakers eager to do their bidding, a congress full of obedient placeholders ready to give their donors what they want.

Never before has the United States looked so much like a country of the rich, by the rich, and for the rich.

Saturday, December 4, 2010

Wikileaks: A Tool of Psy Warfare

General Mirza Aslam Beg, Former Chief of Army Staff, Pakistan

The Wikileaks revelations confirm the obvious, more than what it informs us about the darker corners of ‘US diplomacy, cloaked in securitocracy.’ In fact, it is Cyber War, in the new game of psy-warfare, targeting individuals and countries, to cover-up the shame of defeat of war on Afghanistan, war on Iraq and 2006 Israeli war on Lebanon. The cyber war has been launched, impacting public opinion globally, and focusing on three objectives mainly:

One: To cause defamation of the countries which have had a role, direct or indirect, in the defeat of the Americans and their allies, in Iraq, Lebanon and Afghanistan, and create mistrust amongst them, so that they are not able to challenge future American plans in the region.

Two: To create conditions for a civil war in Afghanistan and out of the chaos and confusion, reduce Pakistan and Iran to subservience, something they have not been able to achieve during the last thirty years.

Three: To establish Indian hegemony over South Asia, including Afghanistan, and project American strategic interests in the region.

The technique used in making these revelations is typical of psy operations approach, of mixing truth with lies in a manner that truth tends to get submerged under the lies, as is the case here. The report has not said a word about Israel, nor it gives any disadvantage to US in the implementation of policies in Afghanistan, Pakistan, Iran and other Muslim countries, which have been particularly targeted. The Wikileaks betrays the role of a country with resources to break the secret code of US diplomatic order, because it is not possible for an individual like Julian Assange, the fugitive, to accomplish such high profile task. The report, no doubt, has created ripples around the world, but will subside as it is looked into with a deeper perspective, regarding its source, intent and purpose.

Hillary Clinton expressed concern over the Wikileaks revelations and resolved to prevent such happenings in the future. In the first place, did she not know what the ‘Wikileaks’ were upto, and why could they not be stopped in time and their website blocked, under the law of the country? It could be checked, if the US government so wanted, but did not, because, they themselves are part of the game.

Over the period, Pakistan, Iran, Turkey and Saudi Arabia have drawn closer to each other, Turkey is also looking East and a kind of Strategic Consensus is emerging. The multi-billion dollar gas pipe-line agreement has been signed with Iran, though Pakistan doesn’t have enough funds for the project but China is willing to support. Iranian generous support for the flood affected people, has been gratefully acknowledged by the people of Pakistan. Iranian President visited Riyadh, early this year and establish a new level of understanding with the Saudis and having had the bitter experience of the civil war in Afghanistan, induced by the Americans after the Soviet withdrawal in 1989, the Iranians are now opposed to any such design by the occupation forces. Wikileaks, thus is a crude attempt to create distrust, between Pakistan, Iran and Saudi Arabia in particular at this critical juncture, when the occupation forces face the dilemma of exiting from Afghanistan, without any understanding reached with the Taliban. Thus a sinister plan is emerging to divide Afghanistan in three ethnic zones and deny overall control to the Taliban, because, Taliban rule is feared by the occupation forces. The plan to divide Afghanistan has been worked out at Brussels, by the Internal Crisis Group. Its main features are:

One: A few months time has been given to Karzai to negotiate peace and evolve a plan with the Taliban and Northern Alliance. Saudi Arabia, Pakistan and Iran are expected to fully support such negotiations.

Two: If negotiations fail, the alternative is to divide Afghanistan. Thus, the constitutional framework is being prepared for the new government, envisaging the judicial system and the political structure, based on consensus of the federating units.

Three: Afghanistan is to be divided into three ethnic zones. The provinces of Badakhshan, Samangan and Saraipul will be handed over to the Tajik and Uzbek warlords, who are already in control of these areas. Provinces in the East and South East will be given under control of Taliban and other tribal leaders. Kabul, Parwan, Wardak and Lugar provinces will be retained by the Americans, supported by about 10,000 American troops, operating from four air bases in this region.

It is a vicious plan, to once again plunge Afghanistan into a civil war and the consequential fall-out on the neighbouring countries. Thus, USA its allies, India and Russia in particular, will have a field day, stoking the fire of death and destruction in Afghanistan. It was the fall-out effect of thirty years of blood-letting in Afghanistan, that countries like Pakistan, Iraq, Yemen, Somalia, Palestine and Kashmir are so radicalized. Many more countries will now be affected, in the region and beyond. Sadly, the conscience of the global community, it seems is rusted and is not moved by the death of over six million innocent Muslims, killed in Chechnya, Palestine, Iraq, Iran, Afghanistan, Somalia and Kashmir, during the last thirty years, as a result of state aggression against the Muslim countries. And now the global peace-brokers want to be the witness to more blood-letting, through state terrorism by the civilized world.

When President Obama took over the reigns of the government, some two years back, it was simple for him to demonstrate courage and launch himself in pursuit of the change he had dreamt for the American people and say: “President Bush, you have won the war in Afghanistan and it is my job now to withdraw forces and leave the people there to establish peace in the country.” That would have been a very kind gesture of deeper human sensibility, particularly for the Muslims, who, will now suffer, under the shadows of Wikileaks and the vicious plan of deceit and division of Afghanistan and the consequential chaos, confusion and disorder.

The road to peace in Afghanistan passes through Washington, where the decision makers have to follow the Rule of the Game, that is, ‘engage with the winner – the Taliban, to lay down the conditions for peace.’ History is a witness to the rule of the game, some 2336 years ago, when Porus, the ruler of the Pak-Afghan border region, was produced before Alexander, the conqueror, who asked Porus, “What treatment should be given to you”? Porus replied “You know the Rule of the Game – Treat the way a king treats another king, who is defeated.” Alexander was so impressed that he handed over the territory, he had won, to Porus, and from this territory the Maurias rose to establish an empire, under the ‘Trimurti Seal’, which now is the State emblem of India.

Washington must follow, the Rule of the Game for the sake of enduring peace in Afghanistan. Truth must be faced, as Albert Schweitzer, the French philosopher said: “Truth has no special time of its own. It’s hour is now – always.”

Saturday, November 13, 2010

Sandinista “Commander Zero” Behind Google Map Dispute Over Isla Calero, a New War Front is brewing...?

Latest Israeli propaganda: linking Iran and Venezuela to building a Nicaraguan canal.

Nicaragua latest victim of Israeli chicanery through its Costa Rican vassal state.....

[By reading the following defense of contra "freedom fighters" in Nicaragua by ultra-right-wing Congressman Jack Davis/CIA, in light with the known historical record, it becomes easy to see the new Office of Public Diplomacy/CIA front..., efforts of Ollie North and Heritage in action (SEE: Robert Parry's "Iran-Contra's 'Lost Chapter'"). By interweaving reports of known contra terrorism with false claims about the size and popularity of the militant insurgency, "news" was created and the legendary prowess of the American mercenary forces was inflated in the mind of the American people. It was always pure bullshit wrapped in a pretty package. Suggestions for creating a fake "government in exile" to legitimize the subversive illegal operations amounted to taking the terror movement mainstream, in order to authorize massive shipments of large weaponry to American proxy forces. To read the Heritage report, for all of its typos, is an exercise in dropping personal disbelief (much like going to a movie), in order to accept the new false belief that equates freedom fighters from the American Revolution with terrorists....]

13 11 2010

[The dispute is over a thin strip of land which coincidentally happens to be the shortest distance between the Pacific and Lake Nicaragua, the largest body of fresh water in all of Central America. Perhaps this is all about the US seizing the water in the region, perhaps it is something much bigger, like a new, bigger canal, to allow passage of supertankers and possibly aircraft carriers.,%20costa%20rica&sll=11.059821,-85.389862&sspn=0.776319,1.432343&ie=UTF8&t=h&ll=11.329253,-85.177002&spn=3.769636,4.669189&z=7&source=embed

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If there is a secret deal in the works to build a new canal, then it might tie-in to the recent murder of Nicaragua's consul general in New York. It would be nice to know who or what motivated the folks at Google Maps to move the border line in this area? There is way more to this story than anything that we have heard so far, some big geostrategic event. Nothing else would explain the 46 US warships coming to Costa Rica, or the Columbian/Venezuelan border escalation, in conjunction with recent bidding for oil-drilling blocks in the Caribbean. To Hell with the war in Central Asia; it looks like the big war is really coming over here.

The use of Commander Zero (Eden Pastora) suggests that this particular international incident is "neo-Soviet" in nature, since Zero was Russia/Cuba's main man, the Jesuit-trained militant who launched the Sandinista movement. This could be Putin's move to change the location of the big war (formerly known as the "pipeline wars") from Russia's back yard to our own. On the other hand, with shadowy figures like Pastora, who have worked for both East and West in Central America, it may be possible to interpret his presence as the visible proof of covert wars, but it may also be impossible to tell which side he currently represents. Maybe the "reset" with Russia covers covert wars in our hemisphere as well?

"In May 1987, Eden Pastora acknowledged publicly that the CIA had supplied war material and accused Lieutenant Colonel Oliver North, directly involved in the Irangate, of being behind the assassination attempt on Pencas in 1984."

American moves in the region were possibly made in anticipation of disrupting this FSB (new KGB) psywar with a CIA counter-psywar. But it may all be simply more extravagant stage-managing, before the real big event actually begins, with the US and Russia cynically manipulating public opinion to usher in their jointly managed New World Order.]

On 1 July 2010, Costa Rica’s Legislative Assembly authorized the U.S. military to undertake policing duties in Costa Rica

Nicaraguan Diplomat Found Dead in the Bronx

U.S. Willing To Help In Costa Rica - Nicaragua Dispute If Asked

By Adam Williams and Tim Rogers
Google responds: By no means should Google Maps be used as a reference to decide military actions between two countries.
Isla Calero Map

The Nicaragua-Costa Rica border on Google Maps and Bing Maps. Google said it plans to make changes to its map to reflect the border more accurately. Courtesy of Search Engine Land.

The Internet application Google Maps has found itself in the middle of the ongoing border dispute between Costa Rica and Nicaragua. Costa Rican media sources this week expressed outrage that the Google Maps image of the northeast border region shows Isla Calero, the disputed land between the two countries at the mouth of the Río San Juan, is in Nicaraguan territory.

The Costa Rican media alleges that former guerrilla leader Edén Pastora, who is heading Nicaragua’s river-dredging operation, used the Google Maps application as a justification for his incursion into Costa Rica territory. Pastora, however, has made no claims about relying on Google Maps to determine the border.

On the contrary, Pastora said in statements to the Nicaraguan press this week that his understanding of the border is based on the original text of the 1858 Cañas-Jerez Treaty.

“The maps are not going to tell me where the borders are; the treaties are,” Pastora said.

However, the international media has already picked up on the invented Google Maps scandal, prompting the company to respond. Daniel Helft, senior manager for public policies for Google Latin America, wrote on a public Google blog that while “Google maps are of very high quality and Google works constantly to improve and update existing information, by no means should they be used as a reference to decide military actions between two countries.”

Helft added, “In this instance Google has determined that there was an inaccuracy in the shaping of the border between Costa Rica and Nicaragua and is working to update the information as quickly as possible.”

Meanwhile, Nicaraguan Foreign Minister Samuel Santos sent his own letter to Google representatives on Nov. 4, saying that the contentious map is “absolutely correct” and that Google shouldn’t make “any modifications” to the border coordinates....,-85.220947&spn=1.886505,2.334595&z=8&source=embed

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Costa Rica Journal; In the War on Want, Is There a Military Front?

Published: July 14, 1987

LIBERIA, Costa Rica— The red clay roads, newly cut into the jungle, are still being smoothed by bulldozers. Logging trucks and farmers with their herds of cattle will not be far behind.

The tropical savanna of northern Costa Rica seems to roll on forever, but from a high point you can see it end, falling abruptly to the shore of Lake Nicaragua. There it forms a volatile frontier that has often been fought over in recent years by Nicaraguan rebel units and Sandinista patrols.

In this wilderness area, the Reagan Administration and the Costa Rican Government have carried out what appears to be one of the most successful American-backed development projects in Central America.

The project, estimated to cost $20 million, appears intended to deal with security matters while offering economic and political development for a remote area that the Costa Rican Government and American officials fear is susceptible to Sandinista influence. This concern has grown as tens of thousands of Nicaraguan refugees fleeing the war in their homeland have moved into the region.

”It’s a key area for Costa Rica,” said an American official here. ”We are doing good development work where it is needed.” Used by the Sandinistas

Although American officials do not mention it, the work also appears to offer rapid military access to frontier airports and a key stretch of border if ever hostilities with Nicaragua grow or if the United States should one day decide to invade that country.

The large area affected stretches along the border with Nicaragua from the Pacific costal highway almost to the town of Los Chiles and then south into the swampy, fertile jungle and plains of Guatuso.

In the late 1970′s, it was a center for secret Sandinista guerrilla training camps and supply lines used to attack and eventually overthrow the Somoza family dictatorship in Nicaragua. In the final push across the border, Cuban supply planes landed at night near the border laden with weapons and Cuban advisers slipped into Nicaragua with Sandinista units, according to several former Sandinistas who fought here.

As American hostility and resistance within Nicaragua to the Sandinistas’ Marxist policies grew, the border once again became a military zone. Between 1982 and 1985, the rebel leader Eden Pastora Gomez dotted the frontier with guerrilla camps, backed by the Central Intelligence Agency.

The Costa Rican Government finally closed the camps a year ago, and Mr. Pastora disbanded his force, but there is a lingering sense that this is a region where authority was imposed by men with guns and civil government is still a somewhat novel concept. Basic Services for the People

American-backed development work was planned in 1983 and the years since have been spent driving roads into the area and bringing basic services to its isolated and impoverished communities. The prime objective, according to American and Costa Rican officials, is to bring the zone under the control of the central Government and to enable Costa Rica’s paramilitary rural police to monitor it. The rural police have been trained and armed in recent years by the United States.

The region has several small airstrips and larger ones at Liberia, Upala and Los Chiles, as well as a once-secret landing field on the Pacific coast built for the contras with the help of American officials. The airstrip at Los Chiles was extended and paved in recent years and would appear to be easily able to take military planes.

American officials deny that any United States funds went into the construction, but local residents recall that the American Ambassador and the commander of American regional military forces landed at the airstrip on a visit three years ago.

There is also a deepwater port on the coast at Murcielago. The coast route south to Panama is in poor condition, but troops and equipment could probably be moved by land from the main regional American base in Panama up to the Nicaraguan border within 24 hours.

American Army engineers have built or improved at least 15 bridges in one of the worst parts of the coastal route to Panama, near the village of Dominical to the south. A spokesman for the American Embassy said the bridges were built in a ”civic action” project purely to aid impoverished Costa Rican communities in an area that in the past was cut off for days when the rainy season swelled the rivers.

But the bridges, like the development project on the northern border, appear to address both security concerns and political and social needs, offering military access if needed while satisfying local demands for long-needed improvements. A.I.D. Official Oversees Work

A key element in the success of the work along the border is that it is being overseen by an official from the Agency for International Development, the operating arm of American economic aid in developing countries.

Now that almost 100 miles of primary roads have been opened, according to the official, Harry Peacock, the next step is to build access roads to small villages and begin community development by helping in land distribution and tasks such as building wells and rural clinics. The villages are asked to contribute to and help plan what they need, a demand that they have eagerly accepted, Mr. Peacock said.

”I see a real change in local attitudes,” he said in an interview near the border. ”They want development – it’s a very significant signal when people become future oriented.”

Eighty percent of the land in the region is believed to be arable and Government officials now expect Costa Ricans to begin moving in and local young people to stay, instead of looking for work in the cities.

But there may be one lasting cost for what otherwise appears to be a highly beneficial development project. The border region contains some of the most extensive tracts of Central America’s rapidly dwindling virgin jungle.

The trees and wildlife almost certainly will not survive the easy access now offered to local lumber companies whose sawmills are already hard at work slicing giant trees that cannot be replaced into boards for the construction projects now springing up in the region.

Photo of a bridge under construction in the northern border area of Costa Rica. United States Army engineers have built or improved at least 15 bridges in one of the worst parts of coastal route to Panama, near the village of Dominical....

Secret Contra Resupply Airstrip In Costa Rica–a.k.a., “Point West”

[If you click on the above article link you will see a previous article on Google censorship of the secret Contra airstrip in Costa Rica, "Point West," identified in the Iran/Contra hearings by Admiral Poindexter, for one witness. An interesting point I somehow missed in the first posting is the strange white spot near the Contra airstrip, approximately the position given of the former "civil guard training center at Murcielago." Upon closer examination, the Google censors have attempted to white-out this very large building near the explosively controversial former site. This was another poor attempt to hide the site without actually "hiding" the site, like the previous addition of darkness to the formerly clear section of map.]

[This censoring of one of my Google map placements is outdone by the following site that I located in Colombia, that of the Barrancon Special Forces Training Base, near Meta. As you can see from the following series, the site was confirmed by Google map experts as the correct site, but, on zooming in, a white triangle appears and blots out the spot.]

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Wednesday, October 20, 2010

ALL US Mortgage Backed Securities an absolute Scam.

ALL US Mortgage Backed Securities an absolute Scam....from inception, and the USA is utterly corrupt to the core, without any hope of redemption ever.....

Pensions and other large investors may sue the banks which sold them mortgage backed securities (mbs) based upon fraudulent misrepresentation.

Indeed, as William D. Cohen and Felix Salmon point out in must-read stories, the big banks hired a company called Clayton Holdings to sample the quality of mortgages being purchased.

Clayton found very high percentages of mortgages which did not meet minimal underwriting standards.

However, instead of disclosing to the investors purchasing mbs that many of the mortgages were bad - or even that there were samples and statistical analyzes performed by Clayton and the banks - the banks simply kept it to themselves, and used that inside information about poor mortgage quality to negotiate a discount of the price that the banks paid when purchasing the loan portfolios from the folks who originated the loans.

This is like buying a used car, but having a mechanic look it over first. Once the mechanic discovered a cracked engine block, the buyer negotiates the purchase price way down, but then turns around and sells the car for a higher price without ever disclosing that there was a cracked engine block or even that a mechanic had looked it over.

Indeed, its worse ... at least with the car, there is something physical to inspect. But because many of the underlying mortgage documents have gone missing, there is nothing for the mbs buyer to investigate even if he wanted to. For example, as I've previously noted, MERS - the holder of 60% of all U.S. residential mortgages (and many commercial mortgages) - is a shell company, and many mortgage documents were forged.

But a financial insider claims (via David Kotok - chief investment officer of Cumberland Advisors - and investment adviser John Mauldin) that the entire mbs sausage-making process is a scam:

"The whole purpose of MBSs was for different investors to have their different risk appetites satiated with different bonds. Some bond customers wanted super-safe bonds with low returns, some others wanted riskier bonds with correspondingly higher rates of return.

"Therefore, as everyone knows, the loans were 'bundled' into REMICs (Real-Estate Mortgage Investment Conduits, a special vehicle designed to hold the loans for tax purposes), and then "sliced & diced"...split up and put into tranches, according to their likelihood of default, their interest rates, and other characteristics.

"This slicing and dicing created 'senior tranches,' where the loans would likely be paid in full, if the past history of mortgage loan statistics was to be believed. And it also created 'junior tranches,' where the loans might well default, again according to past history and statistics. (A whole range of tranches was created, of course, but for the purposes of this discussion we can ignore all those countless other variations.)

"These various tranches were sold to different investors, according to their risk appetite. That's why some of the MBS bonds were rated as safe as Treasury bonds, and others were rated by the ratings agencies as risky as junk bonds.

"But here's the key issue: When an MBS was first created, all the mortgages were pristine...none had defaulted yet, because they were all brand-new loans. Statistically, some would default and some others would be paid back in full...but which ones specifically would default? No one knew, of course. If I toss a coin 1,000 times, statistically, 500 tosses the coin will land heads...but what will the result be of, say, the 723rd toss? No one knows.

"Same with mortgages.

"So in fact, it wasn't that the riskier loans were in junior tranches and the safer ones were in senior tranches: rather, all the loans were in the REMIC, and if and when a mortgage in a given bundle of mortgages defaulted, the junior tranche holders would take the losses first, and the senior tranche holder last.

"But who were the owners of the junior-tranche bond and the senior-tranche bonds? Two different people. Therefore, the mortgage note was not actually signed over to the bond holder. In fact, it couldn't be signed over. Because, again, since no one knew which mortgage would default first, it was impossible to assign a specific mortgage to a specific bond.

"Therefore, how to make sure the safe mortgage loan stayed with the safe MBS tranche, and the risky and/or defaulting mortgage went to the riskier tranche?

"Enter stage right the famed MERS...the Mortgage Electronic Registration System.

"MERS was the repository of these digitized mortgage notes that the banks originated from the actual mortgage loans signed by homebuyers. MERS was jointly owned by Fannie Mae and Freddie Mac (yes, those two again ...I know, I know: like the chlamydia and the gonorrhea of the financial cure 'em, but they just keep coming back).

"The purpose of MERS was to help in the securitization process. Basically, MERS directed defaulting mortgages to the appropriate tranches of mortgage bonds. MERS was essentially where the digitized mortgage notes were sliced and diced and rearranged so as to create the mortgage-backed securities. Think of MERS as Dr. Frankenstein's operating table, where the beast got put together.

"However, legally...and this is the important part...MERS didn't hold any mortgage notes: the true owner of the mortgage notes should have been the REMICs.

"But the REMICs didn't own the notes either, because of a fluke of the ratings agencies: the REMICs had to be "bankruptcy remote," in order to get the precious ratings needed to peddle mortgage-backed Securities to institutional investors.

In other words, the author is saying that mbs buyers thought that they were buying specific tranches tied to real mortgages, but they were just getting a statistical cut of wispy, non-corporeal representations of information related to the entire universe of mortgages floating around in the digitized MERS ether.

So are all mortgage backed securities a scam?

The following 2007 chart from Janet Tavakoli might provide a hint:

See also this, this, this and this.

Bank of America alleged in a court filing this June:

It appears as though many loans and other mortgage-related assets have been double and even triple-pledged to various constituencies....

April Charney - a consumer lawyer with Jacksonville Area Legal Aid - and CNBC's Dennis Kneale noted in February 2009 that courts have found that some mortgages have been sold again and again to different trusts, when they should have only been sold once.

Kneale explained that that is the reason that two different banks sometimes try to simultaneously foreclose on the same home:

And today, Chris Whalen told CNBC's Larry Kudlow that Bear Stearns will be exposed as having sold the same loan to different investors on numerous occasions:

(6:45 into video)

As I have repeatedly pointed out, the failure of the mortgage originators and banks to prepare and record proper documentation has led to an epidemic of fraud. The pledging of the same mortgage again and again to different trusts related to mortgage backed securities is just one result.

And as long-time foreclosure investigator Nye Lavalle writes:

On thousands of occasions I stated to regulators, CEOS, banks, Fannie and Freddie that the practices of the banks were that they were double and multi-pledging assets and pledging paid off and refinance notes to securitizations. This is something April, Max and I have discussed for years now. Now, they come and admit that each of my allegations were true Without analyzing the deal, as complex as they are, you WILL NEVER KNOW IF THE FORECLOSING PARTY HAS “ANY” RIGHT TO FORECLOSE!!!

The motives I identified for the “Blank Endorsements” and missing assignments and "pre-notarized" “Blank Assignments” and “Blank Allonges” that “were placed into the “custodial/collateral” files were to be able to:

Multi-pledge collateral (Notes) so as to cook the books ....

As I've repeatedly pointed out, the big banks intentionally signed up as many borrowers as possible, even if there was no way they could repay their loans.

For example, I recently wrote:

[Professor William] Black explained that fraud by a financial company usually involves the company:

1) Growing like crazy
2) Making loans to people who are uncreditworthy, because they’ll agree to pay you more, and that’s how you grow rapidly. You can grow really fast if you loan to people who can’t you pay you back
3) Using extreme leverage.
This combination guarantees stratospheric initial profits during the expansion phase of the bubble.

But it guarantees a catastrophic subsequent failure when the bubble loses steam.

And collectively - if a lot of companies are playing this game - it produces extraordinary losses (more than all other forms of property crime combined), and a crash.

In other words, the companies intentionally make loans to people who will not be able to repay them, because - during an expanding bubble phase - they'll make huge sums of money. The top executives of these companies will make massive salaries and bonuses during the bubble (enough to live like kings even even if the companies go belly up after the bubble phase).

[Simon] Johnson confirmed that a high housing default rate was part of the banks' models. The financial giants knew they would make huge sums during the boom, and then transfer their losses to the American people during the bust.

But there might have been another reason that loaning to borrower who couldn't repay was the prevalent business model.

As foreclosure expert Neil Garfield notes, mortgages are worth a lot more if they default than if they perform.

Specifically, a mortgage worth $300,000 if the homeowner repays in full might be worth $9 million to the various owners of synthetic cdos and credit default swaps if the owner defaults.

We know - as alleged by the SEC:
Paulson & Co. effectively shorted the RMBS portfolio it helped select by entering into credit default swaps (CDS) with Goldman Sachs to buy protection on specific layers of the ABACUS capital structure.
Paulson also advised Los Angeles apartment mogul Jeff Greene to do something similar. Greene was heavily involved in the subprime market, and he bought the worst of the mortgage backed securities, and then bet against the bonds using CDS.

But Garfield says that it is broader than just a couple of investors like Paulson and Greene. He believes that was basically the business model for the entire mortgage industry.

He said that the big banks that packaged mortgage backed securities had an incentive to suck in really bad mortgages. If a certain percentage of the mortgages default, the cdo and cds side bets pay many times more than the actual mortgage could possibly pay.

The state attorneys general, Sigtarp, and other federal and state authorities investigating foreclosure fraud should determine the extent to which these incentives motivated the mbs packagers to include mortgages which did not meet underwriting standards and then hide the bad loans.

They should also investigate the extent to which these incentives motivated mortgage originators to create "liar's loans", "ninja loans", "neutron loans", and "toxic waste".

See this on how credit default swaps can be used like buying fire insurance on someone else's house and then burning down the house, and this explanation by Ellen Brown (starting about half way into video).
Last month, World Banksters snapped their fingers and Congress passed HR3808 in 24 hours without any floor debate (demonstrates Congress total corruption) but Barack Obama (AK. Barry Soros CIA agent....) pocket vetoed the legislation and sent it back to Congress. (To obvious and blatant criminality and utter corruption to the core of the USA and Israel.....)

HR3808 would have legalized World Bankster MERS title recordings and fraudulent verification signatures. Congress will take up the mortgage fraud issue after the November elections so the Justice Department will continue to sit on their hands waiting for the bankster criminals to legalize their utter fraud.....

Is this a great county, or what! Ha. Ha. Proud to be American!USA! USA! USA!

How about the CNBC commentary by the “brightest in the room” these clowns remind me of carnival barkers who are all talking at the same time.....

Bill Gross, Nouriel Roubini, Laurence Kotlikoff, Steve Keen, Michel Chossudovsky and the Wall Street Journal all say that the U.S. economy is a giant Ponzi scheme.

Virtually all independent economists and financial experts say that rampant fraud was largely responsible for the financial crisis. See this and this.

But many on Wall Street and in D.C. - and many investors - believe that we should just "go with the flow". They hope that we can restart our economy and make some more money if we just let things continue the way they are.

But the assumption that a system built on fraud can continue without crashing is false.

In fact, top economists and financial experts agree that - unless fraud is prosecuted - the economy cannot recover.

Fraud Leads to a Break Down in Trust and Instability in the Markets

As Alan Greenspan said recently:

Fraud creates very considerable instability in competitive markets. If you cannot trust your counterparties, it would not work

Similarly, leading economist Anna Schwartz - co-author of the leading book on the Great Depression with Milton Friedman - told the Wall Street journal in 2008:

"The Fed ... has gone about as if the problem is a shortage of liquidity. That is not the basic problem. The basic problem for the markets is that [uncertainty] that the balance sheets of financial firms are credible."

So even though the Fed has flooded the credit markets with cash, spreads haven't budged because banks don't know who is still solvent and who is not. This uncertainty, says Ms. Schwartz, is "the basic problem in the credit market. Lending freezes up when lenders are uncertain that would-be borrowers have the resources to repay them. So to assume that the whole problem is inadequate liquidity bypasses the real issue."


Today, the banks have a problem on the asset side of their ledgers -- "all these exotic securities that the market does not know how to value."

"Why are they 'toxic'?" Ms. Schwartz asks. "They're toxic because you cannot sell them, you don't know what they're worth, your balance sheet is not credible and the whole market freezes up. We don't know whom to lend to because we don't know who is sound. So if you could get rid of them, that would be an improvement."

And economics professor and former Secretary of Labor Robert Reich wrote in 2008:

The underlying problem isn't a liquidity problem. As I've noted elsewhere, the problem is that lenders and investors don't trust they'll get their money back because no one trusts that the numbers that purport to value securities are anything but wishful thinking. The trouble, in a nutshell, is that the financial entrepreneurship of recent years -- the derivatives, credit default swaps, collateralized debt instruments, and so on -- has undermined all notion of true value.

Robert Shiller - one of the top housing experts in the United States - said recently that failing to address the legal issues will cause Americans to lose faith in business and the government:

Shiller said the danger of foreclosuregate -- the scandal in which it has come to light that the biggest banks have routinely mishandled homeownership documents, putting the legality of foreclosures and related sales in doubt -- is a replay of the 1930s, when Americans lost faith that institutions such as business and government were dealing fairly.

Nobel prize-winning economist Joseph Stiglitz says about the failure to prosecute Wall Street fraud:

The legal system is supposed to be the codification of our norms and beliefs, things that we need to make our system work. If the legal system is seen as exploitative, then confidence in our whole system starts eroding. And that's really the problem that's going on.


I think we ought to go do what we did in the S&L [crisis] and actually put many of these guys in prison. Absolutely. These are not just white-collar crimes or little accidents. There were victims. That's the point. There were victims all over the world.


Economists focus on the whole notion of incentives.
People have an incentive sometimes to behave badly, because they can make more money if they can cheat. If our economic system is going to work then we have to make sure that what they gain when they cheat is offset by a system of penalties.

Wall Street insider and New York Times columnist Andrew Ross Sorkin writes:

“They will pick on minor misdemeanors by individual market participants,” said David Einhorn, the hedge fund manager who was among the Cassandras before the financial crisis. To Mr. Einhorn, the government is “not willing to take on significant misbehavior by sizable” firms. “But since there have been almost no big prosecutions, there’s very little evidence that it has stopped bad actors from behaving badly.”


Fraud at big corporations surely dwarfs by orders of magnitude the shareholders’ losses of $8 billion that Mr. Holder highlighted. If the government spent half the time trying to ferret out fraud at major companies that it does tracking pump-and-dump schemes, we might have been able to stop the financial crisis, or at least we’d have a fighting chance at stopping the next one.

Economics professor James Galbraith says:
There will have to be full-scale investigation and cleaning up of the residue of that, before you can have, I think, a return of confidence in the financial sector. And that's a process which needs to get underway.

No wonder Galbraith says that economists should move into the background, and "criminologists to the forefront"

Failure to Stop Fraud and Prosecute Criminals Causes a Loss of Trust in Government, Which Makes Government Less Effective

As Shiller stated in the quote above, the failure of government officials to stop fraud and prosecute the financial fraudsters has caused a lack of trust in government itself.

Indeed, polls show that people no longer trust our economic "leaders". See this and this.

A psychologist wrote an essay published by the Wharton School of Business arguing that restoring trust is the key to recovery, and that trust cannot be restored until wrongdoers are held accountable:

According to David M. Sachs, a training and supervision analyst at the Psychoanalytic Center of Philadelphia, the crisis today is not one of confidence, but one of trust. "Abusive financial practices were unchecked by personal moral controls that prohibit individual criminal behavior, as in the case of [Bernard] Madoff, and by complex financial manipulations, as in the case of AIG." The public, expecting to be protected from such abuse, has suffered a trauma of loss similar to that after 9/11. "Normal expectations of what is safe and dependable were abruptly shattered," Sachs noted. "As is typical of post-traumatic states, planning for the future could not be based on old assumptions about what is safe and what is dangerous. A radical reversal of how to be gratified occurred."

People now feel more gratified saving money than spending it, Sachs suggested. They have trouble trusting promises from the government because they feel the government has let them down.

He framed his argument with a fictional patient named Betty Q. Public, a librarian with two teenage children and a husband, John, who had recently lost his job. "She felt betrayed because she and her husband had invested conservatively and were double-crossed by dishonest, greedy businessmen, and now she distrusted the government that had failed to protect them from corporate dishonesty. Not only that, but she had little trust in things turning around soon enough to enable her and her husband to accomplish their previous goals.

"By no means a sophisticated economist, she knew ... that some people had become fantastically wealthy by misusing other people's money -- hers included," Sachs said. "In short, John and Betty had done everything right and were being punished, while the dishonest people were going unpunished."

Helping an individual recover from a traumatic experience provides a useful analogy for understanding how to help the economy recover from its own traumatic experience, Sachs pointed out. The public will need to "hold the perpetrators of the economic disaster responsible and take what actions they can to prevent them from harming the economy again." In addition, the public will have to see proof that government and business leaders can behave responsibly before they will trust them again, he argued.

Government regulators know this - or at least pay lip service to it - as well. For example, as the Director of the Securities and Exchange Commission's enforcement division told Congress:

Recovery from the fallout of the financial crisis requires important efforts on various fronts, and vigorous enforcement is an essential component, as aggressive and even-handed enforcement will meet the public's fair expectation that those whose violations of the law caused severe loss and hardship will be held accountable. And vigorous law enforcement efforts will help vindicate the principles that are fundamental to the fair and proper functioning of our markets: that no one should have an unjust advantage in our markets; that investors have a right to disclosure that complies with the federal securities laws; and that there is a level playing field for all investors.

If people don't trust their government to enforce the law, government will become more and more impotent in addressing our economic problems. If government leaders take action, the market will not necessarily respond as expected. When government leaders make optimistic statements about the economy, people will no longer believe them.

Trying to Cover Up the Truth Extends Financial Crises

Elizabeth Warren, William Black and others say that attempting to cover up the truth extended Japan's financial problems into an entire "Lost Decade".

As Joseph Stiglitz said about Wall Street fraud:

So the whole strategy of the banks has been to hide the losses, muddle through and get the government to keep interest rates really low.

As long as we keep up this strategy, it's going to be a long time before the economy recovers ....

Pam Martens - who worked on Wall Street for 21 years - writes:

The massive losses by big Wall Street firms, now topping those of the Great Depression in relative terms, have yet to be adequately explained. Wall Street power players are obfuscating and Congress is too embarrassed or frightened to ask, preferring to just throw money at the problem and hope it goes away. But as job losses and foreclosures mount and pensions and 401(k)s shrink, public policy measures to address the economic stresses require a full set of unembellished facts...

It was four years after the crash of 1929 before the major titans of Wall Street were forced to give testimony under oath to Congress and the full magnitude of the fraud emerged. That delay may well have contributed to the depth and duration of the Great Depression. The modern-day Wall Street corruption hearings in Congress ... must now resume in earnest and with sworn testimony if we are to escape a similar fate.
To the extent that the government tries to cover up - instead of openly discuss - financial fraud, it will only extend America's economic malaise.

Failing to Prosecute Fraud Encourages Financial Players to Take Bigger and More Blatantly Illegal Actions

Nobel prize winning economist George Akerlof has demonstrated that failure to punish white collar criminals - and instead bailing them out- creates incentives for more economic crimes and further destruction of the economy in the future. Joseph Stiglitz, Professor Black, and many others agree. See this, this and this.

It was largely fraud which brought down the financial system in 2008. Unless we prosecute the fraudsters, they will do even bigger, stupider and more blatantly illegal things in the future which will lead to even bigger crises.

Failure to Prosecute Fraud Exacerbates the Sovereign Debt Crisis

The governments of the world have spent trillions trying to paper over the fraud and prop up the big, insolvent banks, instead of forcing them to restructure and forcing bondholders and shareholders to take a haircut.

A study of 124 banking crises by the International Monetary Fund found that propping banks which are only pretending to be solvent drives up the costs to the country:

Existing empirical research has shown that providing assistance to banks and their borrowers can be counterproductive, resulting in increased losses to banks, which often abuse forbearance to take unproductive risks at government expense. The typical result of forbearance is a deeper hole in the net worth of banks, crippling tax burdens to finance bank bailouts, and even more severe credit supply contraction and economic decline than would have occurred in the absence of forbearance.

Cross-country analysis to date also shows that accommodative policy measures (such as substantial liquidity support, explicit government guarantee on financial institutions’ liabilities and forbearance from prudential regulations) tend to be fiscally costly and that these particular policies do not necessarily accelerate the speed of economic recovery.


All too often, central banks privilege stability over cost in the heat of the containment phase: if so, they may too liberally extend loans to an illiquid bank which is almost certain to prove insolvent anyway. Also, closure of a nonviable bank is often delayed for too long, even when there are clear signs of insolvency (Lindgren, 2003). Since bank closures face many obstacles, there is a tendency to rely instead on blanket government guarantees which, if the government’s fiscal and political position makes them credible, can work albeit at the cost of placing the burden on the budget, typically squeezing future provision of needed public services.

The American banks and government have certainly pretended that all of the big banks are solvent. As ABC wrote in October 2009:

The Treasury Department and the Federal Reserve lied to the American public last fall when they said that the first nine banks to receive government bailout funds were healthy, [the special inspector general for the Troubled Asset Relief Program] states in a new report released today.
Similarly, the stress tests were a complete and utter sham.

The government has given the giant banks huge amounts in loans and guarantees based upon their false representations about their financial health. The Fed has larded up its balance sheet with toxic assets from the banks.

Debt levels are also getting dangerously close to the level that they become a drag on the economy. See this and this. When Keynesian economists argue that debt does not harm the economy, they are talking about debt incurred to pay for stimulus and productive things for the economy. But throwing trillions at the giant banks - who are mainly using the money to gamble - is not stimulus. It helps the executives of the big banks and their shareholders and bondholders, but not the broader economy.

Indeed, attempting to prop up big, insolvent banks is preventing stimulus from getting out into the economy.

Fraud Causes Growing Inequality, Which Undermines the Economy

Growing inequality is very harmful to our economy. Indeed, if wealth is concentrated in too few hands, the "poker game" ends, as only too few fat cats are left with all of the chips. See this, this, this and this.

Fraud benefits the wealthy more than the poor, because the big banks and big companies have the inside knowledge and the resources to leverage fraud into profits. Joseph Stiglitz noted in September that giants like Goldman are using their size to manipulate the market. The giants (especially Goldman Sachs) have also used high-frequency program trading (making up between 40- 70% of all stock trades) which not only distorts the markets, but which also lets the program trading giants take a sneak peak at what the real traders are buying and selling, and then trade on the insider information. See this, this, this, this and this.

Similarly, 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. They use their dominance in the market to manipulate the market.

Fraud disproportionally benefits the big players (and helps them to become big in the first place), increasing inequality and warping the market.

Fraud Increases the Severity of Boom-Bust Cycles

More and more people - such as the Bank of International Settlements and Barons - are saying that bubbles inevitably lead to busts, thus destabilizing the economy.

Professor Black says that fraud is a large part of the mechanism through which bubbles are blown.

Without strong laws against fraud, bubble after bubble will be blown, guaranteeing that the financial system cannot be stabilized in a fundamental sense.

Failure to Prosecute Fraud Is Worsening the Housing Crisis

Finally, failure to prosecute mortgage fraud is arguably worsening the housing crisis. See this and this.