The Threat of Section 1222 By James Rothenberg

Dandelion Salad

By James Rothenberg
31/01/08 “ICH

The White House has given ever-shifting rationalizations for invading and occupying Iraq, running the gamut from a claim of self-defense to a purported mission of bringing democracy and thus freedom to the citizens of that country.

Dissenters claim that the two central tenets were instead the establishing of a permanent military presence in order to control Iraq’s oil resources.

Who’s right? The White House or its dissenters? Recently some new evidence has been uncovered. Firsthand source material.

Lets listen to Bush

“Today, I have signed into law H.R. 4986, the National Defense Authorization Act for Fiscal Year 2008… Provisions of the Act, including sections 841, 846, 1079, and 1222, purport to impose requirements that could inhibit the President’s ability to carry out his constitutional obligations to take care that the laws be faithfully executed, to protect national security, to supervise the executive branch, and to execute his authority as Commander in Chief. The executive branch shall construe such provisions in a manner consistent with the constitutional authority of the President.”

The President is claiming that Section 1222 could inhibit his ability to defend the Constitution, so he claims the right to ignore it. The drafters of the bill were also sworn to defend the Constitution. What are the requirements in 1222 that the White House finds so inhibiting?

Here is the entire text of 1222:

No funds appropriated pursuant to an authorization of appropriations in this Act may be obligated or expended for a purpose as follows:

(1) To establish any military installation or base for the purpose of providing for the permanent stationing of United States Armed Forces in Iraq.

(2) To exercise United States control of the oil resources of Iraq

No, this is not a formal confession from the White House. But it is as formal as you can get.

James Rothenberg –

FAIR USE NOTICE: This blog may contain copyrighted material. Such material is made available for educational purposes, to advance understanding of human rights, democracy, scientific, moral, ethical, and social justice issues, etc. This constitutes a ‘fair use’ of any such copyrighted material as provided for in Title 17 U.S.C. section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use’, you must obtain permission from the copyright owner.


State of Union Came With a Signing Statement + Signing Statement Silence By David Swanson

Bush Won’t Ban Permanent Bases Pushes For Iraqi Oil Law

Global Pulse: Nuclear Capitalism (video)

Dandelion Salad


See More at
January 31, 2008 – France, the U.S. and Russia are selling nuclear technology to an energy-hungry world. It’s part diplomacy, part brinksmanship – and good for business. Iran, India, Libya and Saudi Arabia are buying it. But who sells to who, and why, is partly a political calculation.

SOURCES: Press TV and Alalam, Iran; South Asia Newsline, India; TV5, France; Al Jazeera Englsih, Qatar; BBC, U.K., Russia Today, Russia.

Keith Olbermann Special Comment: FISA (video)

Dandelion Salad


January 31, 2008

Olbermann launches a scathing critique of Bush and his lies about FISA, and the fact that he wants immunity for the telecom companies that allowed him to break the law repeatedly. ihatelifejosemartine


Biden, Webb, McCain & Obama respond to Bush’s SOTU (vids)

My Interview With Representative Henry Waxman By Marc Ash (link)

Dandelion Salad

By Marc Ash
t r u t h o u t | Report

Thursday 31 January 2008

In late December, I had the opportunity to sit down with House Oversight Committee Chairman Henry Waxman. The conversation was a unique chance to talk with a legislator at the forefront of multiple investigations into malfeasance at the highest levels of American government.

Henry Waxman is a fascinating character. No legislator on Capitol Hill has done more to make public the events taking place inside the most secretive White House in US history than the congressman from California’s 30th District. He’s in a league by himself. As a member of the majority, a member of the minority or as the chairman, Henry Waxman has been flat-out relentless in pursuing documentation the Bush administration maintains under a cloak of total secrecy. Waxman is as aggressive as any member of Congress has ever been.

If you are looking for news of investigations, you’ve got that here. However, if you are looking for an indication that Congress will move forward to address evidence of violations of federal law by Bush administration officials, that was conspicuously absent.

It is a very thoughtful conversation. Take a few moments if you will.

You can send comments to Truthout Executive Director Marc Ash at:

Video link

h/t: After Downing Street

FAIR USE NOTICE: This blog may contain copyrighted material. Such material is made available for educational purposes, to advance understanding of human rights, democracy, scientific, moral, ethical, and social justice issues, etc. This constitutes a ‘fair use’ of any such copyrighted material as provided for in Title 17 U.S.C. section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use’, you must obtain permission from the copyright owner.


Impeachment: No More Investigations Please! by David Swanson


01.30.08 Uncensored News Reports From Across The Middle East (video; over 18 only)

Dandelion Salad



This video may contain images depicting the reality and horror of war and should only be viewed by a mature audience.


For more:
“Fateh & Hamas Argue Over Control of Rafah Crossing,” Al Jazeera TV, Qatar
“UN Abandons Resolution on Gaza,” Al Jazeera TV, Qatar
“Winograd Report: Grave Errors, Lack Of Strategy,” IBA TV, Israel
“With Eye on Olmert, Israel Awaits Final War Report,” Al Jazeera English, Qatar
“Displaced Iraqi Families Continue to Return Home,” Al-Iraqiya TV, Iraq
“Iraqis Voted on this Day,” Al Arabiya TV, UAE
“Going After Drug Smuggling in Yemen,” Al Arabiya TV, UAE
“Lebanese Presidential Palace Remains Empty,” Dubai TV, UAE
Produced for Link TV by Jamal Dajani.

Testimony of a US ex-marine By Rosa Miriam Elizalde

Dandelion Salad

By Rosa Miriam Elizalde
31/01/08 “ACN

“I’m 32 and I am a trained psychopathic murderer. The only things I can do are to sell youths the idea of joining the marines and kill. I am not able to keep a job. For me civilians are despicable people, mentally retarded and weak persons, a flock of sheep. I am their sheepdog. I am a predator. In the army they used to call me Jimmy, the Shark”.

That was part of the second chapter of the book Jimmy wrote three years ago, with the assistance of journalist Natasha Saulnier, and which was launched at the 2007 Caracas Book Fair. Cowboys of Hell is the most violent testimony that has been written thus far based on the experience of a former member of the Marine Corps, one of the first to arrive in Iraq during the 2003 invasion. A is determined to tell, as many times as necessary, what having been a merciless marine for twelve years meant to him and why the Iraq war changed him.

Jimmy participated as a panelist at the fair’s main workshop, which had a controversial title: “The United States, the Possible Revolution” and his testimony possibly had the strongest expected impact on the audience. He has his hair cut in the military style and wears sun glasses; he walks with martial air and he has his arms covered with tattoos. He looks just like what he used to be: a marine. But when he speaks he looks different: he is someone marked by a horrifying experience from which he tries to keep other unwary youths away. As he assures in his book, he has not been the only one to have killed people in Iraq; that was a permanent practice by his fellow men. Four years after having abandoned the war, he still feels he is being chased by his nightmares.

Q: What do all those tattoos mean?

A: I’ve got a lot of them. I was tattooed in the military. Here in my hand (he shows his thumb and his ring finger), you can see the Blackwater logo, the mercenary army founded where I was born, there in North Carolina. I had this one done in an act of resistance because marines are not allowed to tattoo the area between their wrists and their hands. One day the members of my platoon got drunk and we all had the same tattoo done: a cowboy with bloodshot eyes over several aces, representing death. It means exactly what is going on: “you killed somebody.” On the right arm is the marines’ logo with the flags of the United States and Texas, where I joined the US armed forces. On my chest, here on the left side there is a Chinese dragon ripping the skin and which means that pain is our weakness leaving our body. What kills us makes us stronger.

Q: Why did you say that you had met the worse people ever in your life in the US Marines?

A: The United States only has two ways of using the marines: to undertake humanitarian missions and to kill. Over the 12 years I was with them, I never took part in humanitarian missions.

Q: Before you went to Iraq you recruited youths for the marines. Can you describe a recruiting officer in the United States?

A: A liar. The Bush administration has forced the US youths to join the armed forces and what the government basically does –and I did too—is trying to get people through economic incentives. During three years I recruited 74 youths who never told me that they wanted to join the armed forces because they wanted to defend their country or due to any patriotic reason. They wanted to get money to go to university or get a health insurance. So, I would first tell them about all those advantages and only in the end I would tell them that they will serve our homeland. I never happened to recruit the son of a rich person. In order to keep our job, we as recruiting officers, could not think of any scruples.

Q: I understand that the Pentagon has been less demanding as to the requisites to join the army. What does that mean?

A: recruiting standards have enormously been eased, because almost nobody wants to join in. Having mental problems or a criminal record is no longer a problem. Persons that have committed felonies can join the army; that include those who have been given over-one-year sentences, which is considered a serious crime. Also accepted are youths who have not concluded high school studies; if they pass the psychological test, they can join the army.

Q: You changed after the war, but could you tell me about your feelings before that?

A: I felt just like the other soldiers who believed what they were told. However, since I began my recruiting work I felt bad about it: as a recruiting officer I had to tell lies all the time.

Q: But, you believed that your country was involved in a fair war against Iraq.

A: Yes, Intelligence reports we received read that Saddan had weapons of mass destruction. Later, we found out that everything was a lie.

Q: When did you find out you had been deceived?

A: Once in Iraq, where I arrived in March 2003. My platoon was ordered to go to the places formerly controlled by the Iraqi army and we saw thousands of thousands of ammunitions in boxes bearing the US label; they were there since the US had supported the Saddan government against Iran. I saw some boxes with the US flag on them and I even saw American tanks. My marines—I was a sergeant with E-6 category, a staff sergeant, which is a higher rank and I had 45 marines under my command— would ask me why there were US ammunitions in Iraq. They couldn’t understand it. CIA reports said that the Salmon Pac was a terrorist camp and that we would find chemical and biological weapons there, but we found nothing. In that moment I began to think that our real mission in Iraq was focused on oil.

Q: The most disturbing lines in your book are those in which you describe yourself as a psychopathic murderer. Could you explain why you said that?

A: I was a psychopathic murderer because I was trained to kill. I was not born with that mentality. It was the Marines that trained me to be a gangster in the interest of US corporations, a criminal. They trained me to fulfill, without thinking, the orders of the President of the United States and bring him what he asked for, without any moral consideration. I was a psychopath because we were trained to shoot first and ask later, as an insane person would act, not a professional soldier that is to face another soldier. If we had to kill women and children, we would do it; therefore, we were not soldiers, we were mercenaries.

Q: What specific experience of yours made you reach that conclusion?

A: Well, there were some of them. Our mission was to go to different cities and guarantee security in the roads. There was an accident in particular—and many others as well—which really put me in a serious situation. It was about a car with Iraqi civilians. All intelligence reports said that those cars had bombs and explosives on board. That was the information that we received. When those cars approached our areas we made warning shots; when they did not slow down to the speed we indicated, we would shoot at them without ceremony.

Q: You shot at them with your machineguns?

A: Yes, We expected to see explosions every time we riddle the cars with bullets; but we never heard or see an explosion. Then we opened the car and all we found was people killed or wounded, not a single weapon, not a single Al Qaeda propaganda, nothing. We only found civilians in the wrong place at the wrong time.

Q: In your book, you also described how your platoon machine-gunned peaceful demonstrators. Is that right?

A: Right. In the surroundings of the Rasheed Military Complex, South of Baghdad and near the Tigris River, there was a group of people staging a demonstration, right at the end of the street. They were youths; they had no weapons. So, when we advanced, we saw a tank parked on one side of the street, the driver told us that they were peaceful demonstrators. If those Iraqi people had had any violent intentions, they would have blown up the tank; but they did not. They were only staging a demonstration. That calmed us down because we thought that “if they were there to shoot at us, they had already had enough time to do so. ” They were standing about 200 meters from our patrol.

Q: Who gave the order to shoot at the demonstrators?

A: We were told by the high command to keep watching those civilians, because many combatants with the Republican Forces had taken off their uniforms and were wearing civilian clothes to undertake terrorist attacks against US soldiers. The intelligence reports we received were known basically by every member in the commanding chain. All marines were well aware about the structure of the commanding chain that was set up in Iraq. I think that the order to shoot at the demonstrators came from high-rank US administration officers, which included both military intelligence agencies and governmental circles.

Q: And what did you do?

A: I returned to my vehicle, my Humvee (a highly equipped jeep) and I heard the sound of a shot over my head. My marines started shooting, so did I. We were not shot back, and I had already shot 12 times. I wanted to make sure that we had killed people according to combat requirements set by the Geneva Convention and the operational proceedings established in the rules. I tried not to look at their faces, I only looked for weapons, but I found none.

Q: How did your superior officers react at that?

A: They told me that “shit happens. ”

Q: And when your marines found out that they had been deceived, what was their reaction?

A: I was second in command. My marines asked me why we were killing so many civilians. ” Can you talk to the lieutenant? “, the answer was “No”. But when they found out that it all was a lie, they were really mad.

Our first mission in Iraq was not aimed at offering humanitarian assistance, as the media said, but to secure oil fields in Bassora. In the city of Karbala, we used our artillery during 24 hours; it was the first city we attacked. I thought we were there to give the population food and medical assistance. Negative. We kept on advancing towards the oil fields.

Before arriving in Iraq we went to Kuwait. We got there in January 2003 with our vehicles loaded with food and medicines. I asked the lieutenant what we were going to do with all those supplies, since we had little room for us with so much stuff. He told me that his captain had ordered him to download everything in Kuwait. Shortly after that, we were ordered to burn everything, all the food and the medical supplies.

Q: You have also denounced the use of depleted uranium…

A: I am 35 years old and I only have 80 percent of my lung capacity left. I have been diagnosed a degenerative disease in my backbone, chronic fatigue and pains in my tendons. You know, I used to run 10 kilometers just because I liked to run, and now I can only walk between 5 and 6 kilometers every day. I am afraid of having children because of that. I got a swollen face. Look at this picture (He shows me the photo on his Book Fair credential). This photo was taken shortly after I returned from Iraq. I look like Frankenstein. I owe all that to depleted uranium, now you can imagine what is happening to the people in Iraq.

Q: And what happened when you returned to the United States?

A: They treated me as if I were crazy, as if I were a coward, a traitor.

Q: Your superior officers have said that all you have revealed is a lie.

A: There is overwhelming evidence against them. The US armed forces are finished. The longer the war, the bigger chance for my truth to be known.

Q: The book you have presented in Venezuela has been published in Spanish and French. Why haven’t you published it in the United States?

A: The publishing houses have requested the elimination of real names of the people involved and the presentation of the war in Iraq in sort of a mist that makes it less crude, and I am not willing to do that. Publishing houses like New Press, an alleged left wing entity, refused to publish the book because they fear to be involved in a dispute raised by the people described in the story.

Q: Why some media outlets like The New York Times and The Washington Post never reproduced your testimony?

A: I never echoed the official version of the facts, which says that US troops were in Iraq to help the people; I never repeated their story that civilians there died in accidents. I refused to say that. I did not see any accidental shooting against the Iraqi and I refused to lie.

Q: Have you changed that stance?

A: No. What they have done is to add opinions and books by people with conscious objections: those who are against the war in general or those who participated in the war but who did not have this kind of experience. They are still reluctant to look straight to reality.

Q: Do you have any photos or documents that may prove what you have told us?

A: No, I don’t. They stripped me of all my belongings when I was ordered to return to the United States. I returned home only with two weapons: my mind and a knife.

Q: Do you think there is a short-time solution to the war?

A: No, I don’t think so. What I see is the same policy being practiced either by democrats or republicans. They are the same thing. The war is a business for both parties, since they depend on the Military Industrial Complex. We need a third party.

Q: Which one?

A: the party of Socialism.

Q: You have participated in a workshop titled “The United States: The Revolution is Possible. ” Do you really think that a revolution could take place in the United States?

A: It has already begun to take place in the South, where I was born.

Q: But southern United States has traditionally been the most conservative zone in your country.

A: That changed after Katrina. New Orleans looks like Baghdad. The people in the South are indignant and they wonder every day how comes that Washington invests in a useless war and in Baghdad, while it has not invested in New Orleans. You must recall that the first big rebellion in the United States started in the South.

Q: Would you be willing to visit Cuba?

A: I admire Fidel and the Cuban people, and if I am invited to visit, for sure I would. I do not mind what my government might say to me. Nobody will control me.

Q: Do you know that the symbol of US imperial despise against our nation is precisely a photo depicting some marines as they urinated on the statue of Jose Marti, who is the Cuban National Independence Hero?

A: Yes, I do. In the Marine Corps they spoke of Cuba as a US colony and they taught us some history. As part of his training, a marine must learn facts about the countries he is expected to invade, as the song goes.

Q: What song, the marines’ song?

A: (singing) “From the halls of Montezuma, to the shores of Tripoli…”

Q: That means that the marines want to be in all parts of the world?

A: Their dream is to control the world…, no matter if in that effort we all are turned into murderers.


Before You Enlist (archive of posts)

Don’t Enlist by Laurence M. Vance

British Soldiers Accused of Torturing Iraqi Prisoners left Mike Gravel’s name off in their online poll (updated)

Updated: Feb 1, 2008 Obama won the endorsement, see below.

Updated: Feb 1, 2008 MoveOn replied to my message, see below.

Dandelion Salad left Mike Gravel’s name off in their online poll

Please let them know how you feel about this.

This is their reply so far to my comment about this.

Thanks for contacting

We welcome your comments and suggestions.
We get a lot feedback, so please don’t count on a personal reply.
But all mail is read and carefully considered.

Sincerely, Support


Their reply:

As we have tracked our member’s preferences over the year, Senator Gravel has never risen above a couple percentage points at any time. That, combined with the fact that he is only on the ballot in 20 states, made it obvious that MoveOn members are only considering between the two remaining national candidates.

We very much respect Senator Gravel and his lifetime of commitment to public service.

Thanks for all you do!

-Marika Shaub.

Member Service Manager,

Here’s a screenshot:


~ Lo


From an email:

Note: I took out the link to my personal ballot

Dear MoveOn Member,

We have a big decision to make. Yesterday, John Edwards left the race for president, leaving just two major Democratic candidates. And next Tuesday, over half of MoveOn’s members will go to the polls in the biggest primary day in American history.

Right now, we have an opportunity to influence who our next president is—3.2 million MoveOn members together. When we surveyed over 200,000 MoveOn members yesterday to see if we should go forward with an endorsement process, a big majority said “yes.”

So it’s time to ask the question: Who should MoveOn endorse in the Democratic primary? If two-thirds of MoveOn members support one candidate, we’ll campaign for that candidate together. Here’s your ballot—vote today:

The above link is your personal presidential endorsement ballot for the Democratic nomination—it can be used only by you. It’s important to vote immediately. Voting lasts until 11 a.m. Eastern tomorrow—Friday, February 1st. Then the ballots are counted, and we’ll announce whether anyone met the 2/3 threshold.

If we can agree on a candidate by tomorrow, our endorsement will give that candidate a significant boost going into Super Tuesday, just a few days away. In addition to mobilizing MoveOn members to vote, our endorsement would mean that we campaign actively, as a unified movement, to elect a candidate who will represent us.

Each week over the past year, randomly selected MoveOn members filled out a survey about which candidate they supported. For months, MoveOn members were divided among many candidates—and many of us were waiting to see who would take bold progressive positions on the issues. But with Edwards dropping out, it’s down to just two major candidates. And especially with Super Tuesday right around the corner, many progressives are making up their minds. Now’s the time we can band together to make a difference.

Here’s how MoveOn’s endorsement process works:

  • Everyone who is a MoveOn member as of noon Eastern on Wednesday, January 30th, and will be at least 18 years old by November 4th, 2008 gets one vote.
  • Voting lasts now through 11:00 a.m. Eastern tomorrow—Friday, February 1st. This will allow MoveOn to make an endorsement in time to make a difference on Super Tuesday.
  • MoveOn will only endorse a candidate if more than 2/3 of our members select that candidate. These are the same rules MoveOn has applied in contested Democratic congressional primaries. If MoveOn endorses a candidate, we will immediately start campaigning for that candidate.
  • If no candidate receives more than 2/3 of the votes cast, MoveOn will encourage members to vote and play an active role in the primary process, but will not endorse at this time.
  • We are taking extra security measures to protect the integrity of the vote. A random sampling of voters will get verification phone calls after voting. We’ve also ensured that each ballot is unique to one MoveOn member—so forwarding links will not allow more people to vote.

Click here to vote:

2008 will be an exciting year. Together, we have an opportunity to make a big difference.

Thanks for all you do,

–Eli, Wes, Joan, Justin, Adam G., Adam R., Ilyse, Karin, Nita, Noah, Marika, Laura, Peter, Anna, Matt, Daniel, Carrie, Tanya, and the Political Action Team
Thursday, January 31st, 2008

P.S. If you want more information about the candidates before voting, one good source is the Democratic debate on CNN tonight at 8:00 p.m. Eastern.

Support our member-driven organization: Political Action is entirely funded by our 3.2 million members. We have no corporate contributors, no foundation grants, no money from unions. Our tiny staff ensures that small contributions go a long way. If you’d like to support our work, you can give now at:

Not authorized by any candidate or candidate’s committee.

Updated: Feb 1, 2008

With hundreds of thousands of ballots cast across the country, for the first time in MoveOn’s history, we’ve voted together to endorse a presidential candidate in the primary. That candidate is Barack Obama.

FAIR USE NOTICE: This blog may contain copyrighted material. Such material is made available for educational purposes, to advance understanding of human rights, democracy, scientific, moral, ethical, and social justice issues, etc. This constitutes a ‘fair use’ of any such copyrighted material as provided for in Title 17 U.S.C. section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use’, you must obtain permission from the copyright owner.


Much Ado About Ron Paul by Grim

Seriously, it’s time to not vote in the presidential election by Lo

$700 bribe buys access to voting machines (video)

Hillary Clinton: Stealing The Election by Davis Fleetwood (video)

A 12-Step Program to Save US Democracy by Mark Crispin Miller

MoveOn Weighs Dem Endorsements

Would a Democratic President pull out of Iraq? (video)

Dandelion Salad


More info at
Tom Hayden: The media has failed to ask what will happen with the thousands of contractors in Iraq

Thursday January 31st, 2008

Hillary Clinton: Stealing The Election by Davis Fleetwood (video)

Dandelion Salad


more at:

theme music by $24K:…


$700 bribe buys access to voting machines (video)

A 12-Step Program to Save US Democracy by Mark Crispin Miller

Much Ado About Ron Paul by Grim

Seriously, it’s time to not vote in the presidential election by Lo left Mike Gravel’s name off in their online poll

America’s Teetering Banking System: Where did all our deposits go? By Mike Whitney

Dandelion Salad

By Mike Whitney
31/01/08 “ICH

Somebody goofed. When Fed chairman Ben Bernanke cut interest rates to 3% yesterday, the price of a new mortgage went up. How does that help the flagging housing industry?

About an hour after Bernanke made the announcement that the Fed Funds rate would be cut by 50 basis points the yield on the 30-year Treasury nudged up a tenth of a percent to 4.42%. The same thing happened to the 10 year Treasury which surged from a low of 3.28% to 3.73% in less than a week. That means that mortgages which are priced off long-term government bonds—will be going up, too.

Is that what Bernanke had in mind; to stick another dagger into the already-moribund real estate market?

The Fed sets short-term interest rates (The Fed Funds rate) but long-term rates are market-driven. So, when investors see slow growth and inflationary pressures building up; long-term rates start to rise. That’s bad news for the housing market.

Now, here’s the shocker: Bernanke KNEW that the price of a mortgage would increase if he slashed rates, but went ahead anyway.

How did he know?

Because 8 days ago, when he cut rates by 75 basis points, the ten-year didn’t budge from its perch at 3.64%. It just shrugged it off the cuts as meaningless. But a couple days later, when Congress passed Bush’s $150 “Stimulus Giveaway”, the ten year spiked with a vengeance—up 20 basis points on the day. In other words, the bond market doesn’t like inflation-generating government handouts.

So, why did Bernanke cut rates when he knew it would just add to the housing woes?

Some critics say that he just wanted to throw a lifeline to his fat-cat investor buddies on Wall Street by providing more liquidity for the markets. But that’s not it, at all. The fact is, Bernanke had no choice. He’s facing a challenge so huge and potentially catastrophic; that cutting rates must have seemed like the only option he had. Just look at these graphs and you’ll see what Bernanke saw before he decided to cut interest rates.


The banks are busted. 

In the first graph (Total borrowings of Depository Institutions from the Federal Reserve) shows that the banks are capital impaired” and borrowing at a rate unprecedented in history.

The second graph (Non borrowed reserves from of Depository Institutions) shows that the capital that the banks do have is quickly being depleted.

The third graph (Net Free or borrowed reserves of Depository Institutions) is best summed up by econo-blogger Mike Shedlock who says: Banks in aggregate have now burnt through all of their capital and are forced to borrow reserves from the Fed in order to keep lending. Total reserves for two weeks ending January 16 are $39.98 billion. Inquiring minds are no doubt wondering where $40 billion came from. The answer is the Fed’s Term Auction Facility. (Mish’s Global Economic Trend Analysis; So the only reserves they have is capital they borrowed from the Fed.

The forth Fed graph illustrates the steep trajectory of the ever-expanding money supply. (Monetary base)

A careful review of these graphs should convince even the most hardened skeptic that the banking system is basically underwater and insolvent. We are entering uncharted waters. The sudden and shocking depletion of bank reserves is due to the huge losses inflicted by the meltdown in subprime loans and other similar structured investments.


When US homeowners default on their mortgages en-mass, they destroy money faster than the Fed can replace it through normal channels. The result is a liquidity crisis which deflates asset prices and reduces monetized wealth, says economist Henry Liu.

The debt-securitization process is in a state of collapse. The market for structured investments� MBSs, CDOs, and Commercial Paper—has evaporated leaving the banks with astronomical losses. They are incapable of rolling over their their short-term debt or finding new revenue streams to buoy them through the hard times ahead. As the foreclosure-avalanche intensifies; bank collateral continues to be down-graded which is likely to trigger a wave of bank failures.

Henry Liu sums it up like this: Proposed government plans to bail out distressed home owners can slow down the destruction of money, but it would shift the destruction of money as expressed by falling home prices to the destruction of wealth through inflation masking falling home value. (The Road to Hyperinflation, Henry Liu, Asia Times) It’s a vicious cycle. The Fed is caught between the dual millstones of hyperinflation and mass defaults. There’s no way out.

The pace at which money is currently being destroyed will greatly accelerate as trillions of dollars in derivatives are consumed in the flames of a falling market. As GDP shrinks from diminishing liquidity, the Fed will have to create more credit and the government will have to provide more fiscal stimulus. But in a deflationary environment; public attitudes towards spending quickly change and the pool of worthy loan applicants dries up. Even at 0% interest rates, Bernanke will be stymied by the unwillingness of under-capitalized banks to lend or over-extended consumers to borrow. He’ll be frustrated in his effort to restart the sluggish consumer economy or stop the downward spiral. In fact, the slowdown has already begun and the trend is probably irreversible.

The financial markets are deteriorating at a faster pace than anyone could have imagined. Mega-billion dollar private equity deals have either been shelved or are unable to refinance. Asset-backed Commercial Paper (short-term notes backed by sketchy mortgage-backed collateral) has shrunk by $400 billion (one-third) since August. Also, the market for corporate bonds has fallen off a cliff in a matter of months. According to the Wall Street Journal, a paltry $850 million in high-yield debt has been issued for January, while in January 2007 that figure was $8.5 billion—ten times bigger. That’s a hefty loss of revenue for the banks. How will they make it up?

Judging by the Fed’s graphs; they won’t!

Bernanke’s rate cuts sent stocks climbing on Wall Street, yesterday, but by early afternoon the rally fizzled on news that Financial Guaranty, one of the nation’s biggest bond insurers, would be downgraded. The Dow lost 37 points by the closing bell. 

The plight of other major bond insurers, MBIA and Ambac, could be known as early as today, but it is reasonable to expect that they will lose their Triple A rating. According to Bloomberg:

MBIA Inc, the world’s largest bond insurer, posted its biggest-ever quarterly loss and said it is considering new ways to raise capital after a slump in the value of subprime-mortgage securities the company guarantee. The insurer lost $2.3 billion in the fourth-quarter. Its downgrading from AAA will cripple its business and throw ratings on $652 billion of debt into doubt. Many of the investment banks have assets that will get a haircut.

The New York State Insurance Department tried to work out a bailout plan but the banks could not agree on the terms (ed note: “They don’t have the money.”)

Bond insurers guarantee $2.4 trillion of debt combined and are sitting on losses of as much as $41 billion, according to JPMorgan Chase & Co. analysts. Their downgrades could force banks to write down $70 billion, Oppenheimer & Co. analyst Meredith Whitney said yesterday in a report. (Bloomberg)

The bond insurers were working the same scam as the investment banks. They found a loophole in the law that allowed them to deal in the risky world of derivatives; and they dove in headfirst. They set up shell companies called transformers, (The same way the investment banks established SIVs; structured Investment Vehicles) which they used as off balance sheets operations where they sold “credit default swaps , which are derivative instruments where one party, for a fee, assumes the risk that a bond or loan will go bad. (The Bond Transformers, Wall Street Journal) The bond insurers have written about $100 billion of these swaps in the last few years. Now they’re all blowing up at once.

Credit default swaps (CDS) have turned out to be a gold-mine for the bond insurers and they’ve given a boost to the banks too, by freeing up capital to use in other ventures. The banks profited on the interest rate difference between the CDOs (collateralized debt obligations) they bought and the payments they made to transformers…The banks sometimes booked profits UPFRONT on the streams of income they expected to receive. (WSJ)

Neat trick, eh? Who wouldn’t want to enjoy the profit from a job before they’ve done a lick of work?

Even now that the whole swindle is beginning to unravel—and tens of billions of dollars are headed for the shredder—industry spokesmen still praise credit default swaps as  financial innovation. Go figure? 


The leaders of Europe’s four largest economies (England, France, Germany, Italy) held a meeting this week where they discussed better ways to monitor the world’s markets and banks. They did not, however, push to create a new regime of oversight, regulation and punitive action that would be directed at financial fraudsters and their structured Ponzi-scams. Politicians love to talk about greater transparency and watchdog agencies, but they have no stomach for establishing the hard-fast rules and independent policing organizations that are required to keep the carpetbaggers and financial hucksters from duping gullible investors out of their life savings. That is simply beyond their pay-grade. And that is why even now—when the world is facing the most serious financial crisis since the Great Depression corporate toadies like British Prime Minister Gordon Brown merely reiterate the script prepared for them by their boardroom-paymasters:

If these agencies don’t reform themselves, the Europeans would turn to regulatory response to enforce change.

Right-o, Gordon. Right-o.

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$700 bribe buys access to voting machines (video)

Dandelion Salad


Compiled by Nancy Tobi of Election Defense Alliance; this video shows testimony to the NH legislature on what it costs to purchase access, by security expert Harri Hursti, and rebuttals by John Silvestro of LHS Associates, the firm that programs memory cards for all of New England.

Added: January 31, 2008


A 12-Step Program to Save US Democracy by Mark Crispin Miller

Kucinich Letter Cites Miscounts in NH, Requests State Carry Out ‘Complete & Accurate Recount of All Ballots’ By Brad Friedman

On the ground in NH: Recount Update by Bev Harris + video (updated)

Hacking Democracy (must see videos; 2006)

Bill Moyers Journal: Behind the NH Headlines (links)

9/11 commission head met secretly with Rove, White House by Nick Juliano

Dandelion Salad

Nick Juliano
Raw Story
Thursday January 31, 2008

Former NSC aide denies political meddling

A book to be published next month contains an explosive allegation sure to call into question the independence of the 9/11 Commission: Its executive director secretly spoke with President Bush’s close adviser Karl Rove and others within the White House while the ostensibly autonomous commission was completing its report.

Philip Zelikow, a former colleague of then-National Security Adviser Condoleeza Rice, was appointed executive director of the 9/11 Commission despite his close ties to the Bush White House, and he remained in regular contact with Rove while overseeing the commission, according to New York Times reporter Philip Shenon’s new book, The Commission: The Uncensored History of the 9/11 Investigation. Shenon’s book will not be released until Feb. 5, but author Max Holland purchased an audio copy of it at a New York bookstore and published a summary on his blog, Washington DeCoded.

read more | digg story

FAIR USE NOTICE: This blog may contain copyrighted material. Such material is made available for educational purposes, to advance understanding of human rights, democracy, scientific, moral, ethical, and social justice issues, etc. This constitutes a ‘fair use’ of any such copyrighted material as provided for in Title 17 U.S.C. section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use’, you must obtain permission from the copyright owner.