February 08, 2008 CNN Wolf Blitzer
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Day: February 8, 2008
Diligent Democrats Demonstrate Dumbness Daily By David Michael Green
By David Michael Green
08/02/08 “ICH“
Particide In Six Easy Steps
Suppose you had a political party you were trying to get rid of. How would you do it?
Would you give it some cement shoes and toss it into the bay? Would you roll it up in a carpet and drag it into the trunk of your car in the middle of the night? Would you put out a contract on it?
If the latter sounds appealing, no need to get your hands dirty messing with any nasty mob guys from Jersey. I know some very upstanding establishment folks who’ve perfected a killer formula (pun intended) for particide. They’re called Democrats, and they know how to get the job done right.
In fact, they’ve demonstrated it again for the umpteenth time just as I’m writing these words. Yesterday, that tough guy Harry Reid laid down the law for congressional Republicans thinking he wouldn’t play hardball on the much-needed economic stimulus package now working its way through Congress. He told them: “Well, I think that if they think this is a bluff, wait until we have this vote and they’ll find out if it’s a bluff. I’m not much of a bluffer.” Then, today, he completely caved into their pressure on the bill, proving – though perhaps not quite in the manner he intended – that he is in fact not much of a bluffer, after all, even if he is from Nevada. Nor, as it turns out, is he much of a negotiator either.
Yep, ladies and gentlemen, if it’s particide you’re after, Reid and his fellow Democrats would be happy to show you how it’s done. It’s pretty simple, really. There are just six easy steps that you need to follow to take out a political party that’s grown a bit, shall we say, inconvenient.
First of all, make sure it does nothing. If you’re looking for a good way to anger voters, here’s the best. Have them send you to Congress to address a host of their urgent concerns. Let them invest their full faith in you to rescue them from all the effects of a country gone completely off the rails. Let them believe and let them hope. Then do nothing. Crush their pedestrian little dreams in your blood-soaked hands by protecting corporate interests instead. Spend two years racking up not a single notable legislative accomplishment, and then go before the voters asking for another term. They’ll remember your name.
A second excellent technique is to fail to block the worst tendencies of the worst president ever, the very mission you were most entrusted with by the voters. If they hate this president’s stinking war, make sure you give him the money for it every time he asks. Send all his reactionary nominees to the Supreme Court after they mock you in bullshit hearings. Yeah, go ahead. Allow a supporter of torture and Constitution-shredding to become the highest law enforcement officer in the land. Etc., etc. Get it? Sure, you can go through the motions of opposition, but at the end of the day, be sure to bungle it so badly that you leave everybody scratching their heads and wondering which party actually controls Congress.
Next, while you’re at it, don’t do anything to make this hated president and his administration accountable for their manifold crimes of the century. Treat them as though they’ve got pictures of you in some airport men’s room somewhere that they’re threatening to release if you dare do anything remotely resembling oversight (or patriotism). Let these guys absolutely run rampant thrashing the republic in every imaginable way, while you sit on top of your congressional majority abdicating any responsibility for protecting the people who sent you there to protect them. Show the public how tough you can be by investigating the use of steroids in baseball, while lies about war and illegal phone-tapping and torture and suspension of habeas corpus go ignored. Keep your priorities straight and you’re guaranteed to score points with the voters, for sure.
Of course, not only must you fail to oppose an insane kleptocratic dictator, but it’s crucial that you also have absolutely no program or ideas of your own to offer. I mean, who can’t never not get no excitement going about nothing? Er, something like that… Anyhow, the point is that a political party without ideas is like a car without wheels. And it will go just about as far, too. If you want to get rid of your party, be sure to be about nothing whatsoever.
And yet, even while trying to be the Seinfeld of political parties, you will no doubt sometimes accidentally advance some sort of popular idea or another, despite yourself. You know, like a million monkeys at a keyboard… When these inadvertently beneficial bills are immediately destroyed by the obstructionist minority party – who continually overuse and abuse parliamentary tactics you (of course) never dreamed of all those years when you were in the minority – make sure that nobody in the voting public knows about it. You could run around screaming about them continually blocking you from doing the people’s business, but that would only increase public sympathy for you. And since you’re trying to kill your party, you surely won’t want to do that. No, like a good Democrat, you want to make sure the other guys never have to pay for their crimes.
Finally, one of the very best things you can do to destroy a political party is to avoid at all costs articulating an alternative narrative. Play ball on their turf! Let the other guys define the issues, frame the discussion, and paint you in the worst possible light – as deviants, traitors, cowards and haters of your own country! Now you’re talkin’, my friend. You want your house robbed right? Hand the door key to the thieves! You want your car crashed properly? Park it on railroad tracks! You want your party rubbed out completely? Let the other guys make the rules, fool! Heck, if you really want to make sure of your party’s demise, you can even encourage them to steal elections you’ve actually won! It worked in Florida and Ohio!
If these six steps seem like a ridiculously reliable way to destroy a political party, that’s because they are. Still, they may not be entirely infallible. This year will be the acid test.
The good folks running the Democratic Party have assiduously followed the above formula to the letter, carefully dotting every ‘i’ and crossing every ‘t’. But damned if the recalcitrant right isn’t failing to play ball! What’s up with that? Have Republicans become so intractable nowadays that they’re even blocking the Democrats’ own self-induced demise? Is destruction obstruction the latest GOP game?
Or are Republicans just following their own particide formula, which – needless to say, like everything they do – is more disciplined and effective than even this fine blueprint belonging to Dumb Dems’? It kinda looks like it, after all. Consider their prescription: Take the biggest surplus in the history of the federal government and turn it into the biggest deficit. Fight a hugely unpopular war. Get caught lying about the rationale for it. Block efforts to save the planet from a looming environmental crisis, while pretending it isn’t real. Allow religious crazies to deny effective medical treatment to suffering humans in order to protect about-to-be-destroyed blastocysts. Get caught in all manner of corruption and sexual ‘deviancy’ while interminably preaching your own holier-than-thou sanctimonious purity. Shred the Constitution in every way imaginable. Load the government up with every incompetent low-wattage political hack you can find stuck behind a church pew somewhere. Make the whole world hate us. Use the federal government to prosecute people on the basis of their party affiliation. Stand by and watch one of the country’s major cities drown. Destroy a foreign country. Destroy the middle class of your own country. Be asleep at the wheel (at best) when the country is attacked. Fail to come even close to winning a war against the people you blame for that attack. And so on…
Quite a litany, eh? Yet, for all their best efforts, Republicans still can’t seem to get the Democrats to put the GOP out of its stinking misery. Still can’t get them to investigate. Still can’t get them to impeach. Still can’t get them to win. So now Republicans have brought out the big guns, engineering what looks like a massive economic recession on top of everything else. And they’re throwing people out of their homes in droves so that Wall Street can profit even more. Right before an election, too!
Yes, indeed. These guys aren’t messing around. Democrats seeking to kill their party are going to have to work extra hard in 2008, that’s for sure! Six steps may not be enough. If Democrats want to rub themselves out this year, they may need a seventh.
Get on their knees and beg the public not to vote for them? Nah. Too subtle.
Change their name to the Socialist Party? Nah. It might actually increase their share of votes.
Have their own sex scandals? Nah. Been there, done that.
Something else is going to be required to kill the party off for sure this year.
Oh, I know! They could nominate Hillary Clinton!
David Michael Green is a professor of political science at Hofstra University in New York. He is delighted to receive readers’ reactions to his articles (dmg@regressiveantidote.net), but regrets that time constraints do not always allow him to respond. More of his work can be found at his website, www.regressiveantidote.net.
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.
Does The Brownshirt Party Have Aces Up Its Sleeve? By Paul Craig Roberts
By Paul Craig Roberts
08/02/08 “ICH“
The Brownshirt Party has chosen John “hundred year war” McCain as its presidential candidate. Except for Cheney, Norman Podhoretz, and billy kristol, McCain is America’s greatest warmonger.
In a McCain Regime, Cheney will be back in office with another stint as Secretary of War. Norman “Bomb-bomb-bomb-Iran” Podhoretz will be Undersecretary for Nuclear War with General John “Nuke them” Shalikashvili as his deputy. Rudy Giuliani will be the Minister of Interior in charge of Halliburton’s detention centers into which will be herded all critics of war and the police state. Billy Kristol will be chief White House spokesliar.
The whole gang will be back–Wolfowitz, Perle, Wurmster, Feith, Libby, Bolton. America will have a second chance to bomb the world into submission.
With the majority of voters sick of war, sick of lies, sick of fraud from the Federal Reserve and Wall Street, and sick of stagnant and falling incomes, McCain is poised to capture 20% of the vote–the Christian Zionists, the rapture evangelicals, and the diehard macho flag-waving thugs who believe America is done for unless “Islamofacists” are exterminated.
The accumulated lies, deceptions, war crimes, the shame of Abu Ghraib and Guantanamo prisons, Bush’s police state assault on civil liberty, countless numbers of Iraqi and Afghan men, women, and children murdered for the sake of American and Israeli hegemony, and the collapsing US economy indicate a political wipeout for the Brownshirt Party. In a country with an informed and humane population, the Republican Party would be reduced to such a small minority that it could never recover.
What will happen in America? Polls show that Americans have had it with Bush, and the 2006 congressional election showed that the voters have had it with Republicans. But the Republicans have seen the message and ignored it, and the people and the Democrats have continued to tolerate and to enable that which they claim to oppose.
Meanwhile Bush holds on to his determination to find a way to bomb Iran, dismissing along with the neocons the unanimous NIE report that there is no Iranian weapons program, just as Bush and the neocons dismissed the Iraq weapons inspectors who reported truthfully that Saddam Hussein had no weapons of mass destruction. What the American people and the Democrats have not understood is that a party with an agenda could care less for the facts. As Lenin declared, truth is what serves the agenda.
The Democrats are far from pure, but they lack the fervor and determination that only ideology can provide. The Democrats might have issue-specific ideologies, but they lack an over-arching ideology that makes it imperative for them, and only them, to be in power.
In contrast, the Brownshirt Party is fueled by the neocon ideology of American (and Israeli) supremacy. The neocon ideology of supremacy is more far-reaching than Hitler’s. Hitler merely aimed for sway over Europe and Russia. The neocons have targeted the entire world.
Neocons have prepared plans for war against China. They are ringing Russia with military facilities and paying millions of dollars to leaders of former constituent parts of the Soviet Union to sign up with NATO, which the neocons have turned into a mechanism for drafting Europeans to serve American Empire.
All this work, the neocon Project for a New American Century, the costly wars in Iraq and Afghanistan, the demonization of Iran, Hezbollah, and Hamas, the ghettoization of the West Bank and Gaza, the police state measures that Bush has succeeded in putting on the books, the concentration of power in the executive branch, these are successes from which the Brownshirts will not walk away.
Possibly the neocons and their Brownshirt followers are so delusional that they do not realize that their glorious aims are not shared. Maybe they are no different from Americans, maxed out on credit and unable to make mortgage payments, who believe that next week they will win the lotto.
On the other hand maybe the Brownshirts have a plan.
What could the plan be?
They can steal the election with the Diebold electronic voting machines and proprietary software that no one is allowed to check. There are now enough elections on record with significant divergences between exit polls and vote tallies that a stolen election can be explained away. The Democrats have been house trained to acquiesce to stolen elections. The voters, whose votes are stolen, dismiss the evidence as “conspiracy theories.”
Or what about a well-timed orchestrated “terrorist attack” to drive fearful Americans to the war candidate. False flag events are stock-in-trade. Hitler used the Reichstag fire to turn German democracy into a dictatorship overnight.
And what about the widespread spying on Americans? The Bush regime’s explanation for its violation of the Foreign Intelligence Surveillance Act makes no sense. Bush’s violation of the law is clearly a felony, grounds for impeachment, arrest, indictment, and a prison sentence. Moreover, no intelligence purpose was achieved by Bush’s illegal acts. The FISA law only requires the executive branch to come to a secret court to explain its purpose and obtain a warrant. The law even allows the executive branch to spy first and obtain the warrant afterward. The purpose of the warrant is to prevent an administration from spying for political purposes. The only reason for Bush to refuse to obtain warrants is that he had no valid reason for the spying.
Does this mean that during the presidential campaign we will hear from Attorney General Michael Mukasey that candidate Hillary is under investigation for a Whitewater related offense, or that candidate Obama is linked to an alleged crime figure or Islamist?
The neocons control most of the print and TV media, and the right-wing radio talk hosts are no friends of Democrats. As Americans have fallen for every other fraud perpetrated upon them, they are likely to be suckers as well for “investigations” or rumors of investigations of the Democratic candidate. Hillary is widely disliked and easy to distrust. Obama is a new face with which voters have little experience. He is partly black and has a funny name.
John McCain is a war hero, a graduate of the US Naval Academy. His father and grandfather were admirals. On his 23rd bombing mission over North Vietnam in one of America’s orchestrated wars, he was shot down and injured. A POW for 5.5 years, he was tortured by communists due in part to traitorous actions by Democrats like Jane Fonda.
McCain has been in Congress and thus in the public eye since 1983. The only scandal with which he is associated is that he was one of “the Keating five,” one of five senators associated through campaign contributions with S&L owner and real estate investor Charles Keating and alleged interveners in his behalf. Keating was framed by prosecutors, but was later exonerated by a federal judge.
Adolf Hitler never had the support of a majority of the German electorate. In the November 1932 election, he received 33.1 percent of the vote. His peak was March 6, 1933, with 43.9 percent following the Reichstag fire a few days before on February 27, blamed on the communists. Hitler’s minority support in a democracy did not prevent him from becoming dictator of Germany.
Paul Craig Roberts was Assistant Secretary of the Treasury during President Reagan’s first term. He was Associate Editor of the Wall Street Journal. He has held numerous academic appointments, including the William E. Simon Chair, Center for Strategic and International Studies, Georgetown University, and Senior Research Fellow, Hoover Institution, Stanford University. He was awarded the Legion of Honor by French President Francois Mitterrand.
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.
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h/t: IMPEACH DICK & BUSH
Financial Crisis: Asset Securitization – The Last Tango by F. William Engdahl
by F. William Engdahl
Global Research, February 8, 2008
The Financial Tsunami, Part IV.
Endgame: Unregulated Private Money Creation
What had emerged going into the new millennium after the 1999 repeal of Glass-Steagall was an awesome transformation of American credit markets into what was soon to become the world’s greatest unregulated private money creation machine.
The New Finance was built on an incestuous, interlocking, if informal, cartel of players, all reading from the script written by Alan Greenspan and his friends at J.P. Morgan, Citigroup, Goldman Sachs, and the other major financial houses of New York. Securitization was going to secure a “new” American Century and its financial domination, as its creators clearly believed on the eve of the millennium.
Key to the revolution in finance in addition to the unabashed backing of the Greenspan Fed, was the complicity of the Executive, Legislative and Judicial branches of the US Government right to the Supreme Court. In addition, to make the game work seamlessly, it required the active complicity of the two leading credit agencies in the world—Moody’s and Standard & Poors.
It required a Congress and Executive branch that would repeatedly reject rational appeals to regulate over-the-counter financial derivatives, bank-owned or financed hedge funds or any of the myriad steps to remove supervision, control, transparency that had been painstakingly built up over the previous century or more. It required that the major government-certified rating agencies give their credit AAA imprimatur to a tiny handful of poorly regulated insurance companies called Monolines, all based in New York. The monolines were another essential part of the New Finance.
The interlinks and consensus behind the massive expansion of securitization among all these institutional players was so clear and pervasive it might have been incorporated as America New Finance Inc. and its shares sold over NASDAQ.
Alan Greenspan anticipated and encouraged the process of asset securitization for years before his actual nurturing of the phenomenal real estate bubble in the beginning of the first decade of the new Century. In a pathetic attempt to deny his central role after the fall, Greenspan last year claimed that the problem was not mortgage lending to sub-prime customers but the securitization of the sub-prime credits. In April 2005, he sung a quite different hymn to sub-prime securitization. Addressing the Federal Reserve System’s Fourth Annual Community Affairs Research Conference, the Fed chairman declared,
“Innovation has brought about a multitude of new products, such as subprime loans and niche credit programs for immigrants. Such developments are representative of the market responses that have driven the financial services industry throughout the history of our country. With these advances in technology, lenders have taken advantage of credit-scoring models and other techniques for efficiently extending credit to a broader spectrum of consumers…The mortgage-backed security helped create a national and even an international market for mortgages, and market support for a wider variety of home mortgage loan products became commonplace. This led to securitization of a variety of other consumer loan products, such as auto and credit card loans.”
That 2005 speech was about the time he later claimed to have suddenly realized securitization was getting out of hand. In September 2007 once the crisis was full force, CBS’ Leslie Stahl asked why he did nothing to stop “illegal or shady practices you knew were taking place in sub-prime lending.” Greenspan replied, “Err, I had no notion of how significant these practices had become until very late. I didn’t really get it until late 2005 and 2006…” (emphasis added-w.e.)
As far back as November 1998, only weeks after the near-meltdown of the global financial system through the collapse of the LTCM hedge fund, Greenspan had told an annual meeting of the US Securities Industry Association, “Dramatic advances in computer and telecommunications technologies in recent years have enabled a broad unbundling of risks through innovative financial engineering. The financial instruments of a bygone era, common stocks and debt obligations, have been augmented by a vast array of complex hybrid financial products, which allow risks to be isolated, but which, in many cases, seemingly challenge human understanding.”
That speech was the clear signal to Wall Street to move into asset-backed securitization in a big way. After all, hadn’t Greenspan just demonstrated through the harrowing Asia crises of 1997-98 and the systemic crisis triggered by the August 1998 sovereign debt default that the Federal Reserve and its liquidity spigot stood more than ready to bailout the banks in event of any major mishap? The big banks were, after all, clearly now, Too Big To Fail—TBTF.
The Federal Reserve, the world’s largest and most powerful central bank with what was arguably the world’s most liberal market-friendly Chairman, Greenspan, would back its major banks in the bold new securitization undertaking. When Greenspan said risks “which seemingly challenge human understanding,” he signaled that he understood at least in a crude way that this was a whole new domain of financial obfuscation and complication. Central bankers traditionally were known for their pursuit of transparency among banks and conservative lending and risk management practices by member banks.
Not ‘ole Alan Greenspan.
Most significantly, Greenspan reassured his Wall Street securities underwriting friends in the Securities Industry Association audience that November of 1998 that he would do all possible to ensure that in the New Finance, the securitization of assets would remain for the banks alone to self-regulate.
Under the Greenspan Fed, the foxes would be trusted to guard the henhouse. He stated:
“The consequence (of the banks’ innovative financial engineering-w.e.) doubtless has been a far more efficient financial system…The new international financial system that has evolved as a consequence has been, despite recent setbacks, a major factor in the marked increase in living standards for those economies that have chosen to participate in it.
It is important to remember–when we contemplate the regulatory interface with the new international financial system–the system that is relevant is not solely the one we confront today. There is no evidence of which I am aware that suggests that the transition to the new advanced technology-based international financial system is now complete. Doubtless, tomorrow’s complexities will dwarf even today’s.
It is, thus, all the more important to recognize that twenty-first century financial regulation is going to increasingly have to rely on private counterparty surveillance to achieve safety and soundness. There is no credible way to envision most government financial regulation being other than oversight of process. As the complexity of financial intermediation on a worldwide scale continues to increase, the conventional regulatory examination process will become progressively obsolescent–at least for the more complex banking systems. (emphasis added-w.e.)
One might naively ask, why then surrender all those powers like Glass-Steagall to the private banks far beyond possible official regulatory purview?
Again in October 1999, amid the frenzy of the dot.com IT stock market bubble mania, a bubble which Greenspan repeatedly and stubbornly insisted he could not confirm as a bubble, he once again praised the role of financial derivatives and “new financial instruments…reallocating risk in a manner that makes risk more tolerable. Insurance, of course, is the purest form of this service. All the new financial products that have been created in recent years, financial derivatives being in the forefront, contribute economic value by unbundling risks and reallocating them in a highly calibrated manner. He was speaking of securitization on the eve of the all-but certain repeal of the Glass-Steagall Act.
The Fed’s “private counterparty surveillance” brought the entire international inter-bank trading system to a screeching halt in August 2007, as panic spread over the value of the trillions of dollars in securitized Asset Backed Commercial Paper and in fact most securitized bonds. The effects of the shock have only begun, as banks and investors slash values across the US and international financial system. But that’s getting ahead of our story.
Deregulation, TBTF and Gigantomania among banks
In the United States, between 1980 and 1994 more than 1,600 banks insured by the Federal Deposit Insurance Corporation (FDIC) were closed or received FDIC financial assistance. That was far more than in any other period since the advent of federal deposit insurance in the 1930s. It was part of a process of concentration into giant banking groups that would go into the next century.
In 1984 the largest bank insolvency in US history threatened, the failure of Chicago’s Continental Illinois National Bank, the nation’s seventh largest, and one of the world’s largest banks. To prevent that large failure, the Government through the Federal Deposit Insurance Corporation stepped in to bailout Continental Illinois by announcing 100% deposit guarantee instead of the limited guarantee FDIC insurance provided. This came to be called the doctrine of “Too Big to Fail” (TBTF). The argument was that certain very large banks, because they were so large, must not be allowed to fail for fear of the chain-reaction consequences it would have across the economy. It didn’t take long before the large banks realized that the bigger they became through mergers and takeovers, the more sure they were to qualify for TBTF treatment. So-called “Moral Hazard” was becoming a prime feature of US big banks.
That TBTF doctrine was to be extended during Greenspan’s Fed tenure to cover very large hedge funds (LTCM), very large stock markets (NYSE) and virtually every large financial entity in which the US had a strategic stake. Its consequences were to be devastating. Few outside the elite insider circles of the very large institutions of the financial community even realized the doctrine had been established.
Once the TBTF principle was made clear, the biggest banks scrambled to get even bigger. The traditional separation of banking into local S&L mortgage lenders, large international money center banks like Citibank or J.P. Morgan or Bank of America, the prohibition on banking in more than one state, one by one were dismantled. It was a sort of “level playing field” but level for the biggest banks to bulldoze over and swallow up the smaller and create cartels of finance of unprecedented scope.
By 1996 the number of independent banks had shrunk by more than one-third from the late 1970s, from more than 12,000 to fewer than 8,000. The percentage of banking assets controlled by banks with more than $100 billion doubled to one-fifth of all US banking assets. The trend was just beginning. The banks’ consolidation was a direct outgrowth of the removal of geographic restrictions on bank branching and holding company acquisitions by the individual states, formalized in the 1994 Interstate Banking and Branch Efficiency Act. Under the rubric of “more efficient banking” a Darwinian survival of the biggest ensued. They were by no means the fittest. The consolidation was to have significant consequences a decade or so later as securitization exploded in scale beyond the banks’ wildest imagination.
J.P.Morgan blazes the trail
In 1995, well into the Clinton-Rubin era, Alan Greenspan’s former bank, J.P. Morgan, introduced an innovation that was to revolutionize banking over the next decade. Blythe Masters, a 34-year old Cambridge University graduate hired by the bank, developed the first Credit Default Swaps, a financial derivative instrument that ostensibly let a bank insure against loan default; and Collateralized Debt Obligations, bonds issued against a mixed pool of assets, a kind of credit derivative giving exposure to a large number of companies in a single instrument.
Their attraction was that it was all off the bank’s own books, hence away from the Basle Accord’s 8% capital rules. The goal was to increase bank returns while eliminating the risk, a kind of “having your cake and eating it too,” something which in the real world can only be very messy.
J.P.Morgan thereby paved the way to transform US banking away from traditional commercial lenders to traders of credit, in effect, into securitizers. The new idea was to enable the banks to shift risks off their balance sheets by pooling their loans and remarketing them as securities, while buying default insurance, Credit Default Swaps, after syndicating the loans for their clients. It was to prove a staggering development, soon to hit volumes measured in the trillions for the banks. By the end of 2007 there were an estimated $45,000 billion worth of Credit Default Swap contracts out there, giving bondholders the illusion of security. That illusion, however, was built on bank risk models of default assumptions which are not public and, if like other such risk models, were wildly optimistic. Yet the mere existence of the illusion was sufficient to lead the major banks of the world, lemming-like, into buying mortgage bonds collateralized or backed by streams of mortgage payments from unknown credit quality, and to accept at face value a Moody’s or Standard & Poors AAA rating.
Just as Greenspan as new Fed chairman turned to his old cronies at J.P. Morgan when he wanted to grant a loophole to the strict Glass-Steagall Act in 1987, and as he turned to J.P. Morgan to covertly work with the Fed to buy derivatives on the Chicago MMI stock index to artificially manipulate a recovery from the October 1987 crash, so the Greenspan Fed worked with J.P. Morgan and a handful of other trusted friends on Wall Street to support the launch of securitization in the 1990’s, as it became clear what the staggering potentials were for the banks who were first and who could shape the rules of the new game, the New Finance.
It was J.P. Morgan & Co. that led the march of the big money center banks beginning 1995 away from traditional customer bank lending towards the pure trading of credit and of credit risk. The goal was to amass huge fortunes for the bank’s balance sheet without having to carry the risk on the bank’s books, an open invitation to greed, fraud and ultimate financial disaster. Almost every major bank in the world, from Deutsche Bank to UBS to Barclays to Royal Bank of Scotland to Societe Generale soon followed like eager blind lemmings.
None however came close to the handful of US banks which came to create and dominate the new world of securitization after 1995, as well as of derivatives issuance. The banks, led by J.P. Morgan, first began to shift credit risk off the bank balance sheets by pooling credits and remarketing portfolios, buying default protection after syndicating loans for clients. The era of New Finance had begun. Like every major “innovation” in finance, it began slowly.
Very soon after, the new securitizing banks such as J.P. Morgan began to create portfolios of debt securities, then to package and sell off tranches based on default probabilities. “Slice and dice” was the name of the new game, to generate revenue for the issuing underwriting bank, and to give “customized risk to return” results for investors. Soon Asset Backed Securities, Collateralized Debt Securities, even emerging market debt were being bundled and sold off in tranches.
On November 2, 1999, only ten days before Bill Clinton signed the Act repealing Glass-Steagall, thereby opening the doors for money center banks to acquire brokerage business, investment banks, insurance companies and a variety of other financial institutions without restriction, Alan Greenspan turned his attention to encouraging the process of bank securitization of home mortgages.
In an address to America’s Community Bankers, a regional banking organization, at a conference on mortgage markets, the Fed chairman stated:
The recent rise in the homeownership rate to over 67 percent in the third quarter of this year owes, in part, to the healthy economic expansion with its robust job growth. But part of the gains have also come about because innovative lenders, like you, have created a far broader spectrum of mortgage products and have increased the efficiency of loan originations and underwriting. Ongoing progress in streamlining the loan application and origination process and in tailoring mortgages to individual homebuyers is needed to continue these gains in homeownership…Community banking epitomizes the flexibility and resourcefulness required to adjust to, and exploit, demographic changes and technological breakthroughs, and to create new forms of mortgage finance that promote homeownership. As for the Federal Reserve, we are striving to assist you by providing a stable platform for business generally and for housing and mortgage activity. (emphasis mine—w.e.)
Already on March 8 of that same year, 1999, Greenspan addressed the Mortgage Bankers’ Association where he strongly pushed real estate mortgage backed securitization as the wave of the future. He told the bankers there,
“Greater stability in the supply of mortgage credit has been accompanied by the unbundling of the various aspects of the mortgage process. Some institutions act as mortgage bankers, screening applicants and originating loans. Other parties service mortgage loans, a function for which efficiencies seem to be gained by large-scale operations. Still others, mostly with stable funding bases, provide the permanent financing of mortgages through participation in mortgage pools. Beyond this, some others slice cash flows from mortgage pools into special tranches that appeal to a wider group of investors. In the process, mortgage-backed securities outstanding have grown to a staggering $2.4 trillion…, automated underwriting software is being increasingly employed to process a rapidly rising share of mortgage applications. Not only does this technology reduce the time it takes to approve a mortgage application, it also offers a consistent way of evaluating applications across a number of different attributes, and helps to ensure that the down-payment and income requirements and interest rates charged more accurately reflect credit risks. These developments enabled the industry to handle the extraordinary volume of mortgages last year with ease, especially compared to the strains that had been experienced during refinancing waves in the past. One key benefit of the new technology has been an increased ability to manage risk (sic). Looking forward, the increased use of automated underwriting and credit scoring creates the potential for low-cost, customized mortgages with risk-adjusted pricing. By tailoring mortgages to the needs of individual borrowers, the mortgage banking industry of tomorrow will be better positioned to serve all corners of the diverse mortgage market. (emphasis mine-w-e-).“
But only after the Fed punctured the dot.com stock bubble in 2000 and after the Greenspan Fed dropped Fed funds interest rates drastically to lows not seen on such a scale since the 1930’s Great Depression, did asset securitization literally explode into a multi-trillion dollar enterprise.
Securitization—the Un-Real Deal
Because the very subject of securitization was embedded with such complexity no one, not even its creators fully understood the diffusion of risk, let alone the simultaneous concentration of systemic risk.
Securitization was a process in which assets were acquired by some entity, sometimes called a Special Purpose Vehicle (SPV) or Special Investment Vehicle (SIV).
At the SIV the diverse home mortgages, let’s say, were assembled into pools or bundles as they were termed. A specific pool, say, of home mortgage receivables, now took life in the new form of a bond, an asset backed bond, in this case a mortgage backed security. The securitized bond was backed by the cash flow or value of the underlying assets.
That little step involved a complex leap of faith to grasp. It was based on illusory collateral backing whose real worth, as is now dramatically clear to all banks everywhere, was unknown and unknowable. Already at this stage of the process the legal title to the home mortgage of a specific home in the pool is legally ambiguous, as I pointed out in Part I. Who in the chain actually has in his or her physical possession the real, “wet signature” mortgage deed to the hundreds and thousands of homes in collateral? Now lawyers will have a field day for years to come sorting out Wall Street’s brilliant opacities.
Securitization usually applied to assets that were illiquid, that is ones that were not easily sold, hence it became common in real estate. And US real estate today is one of the world’s most illiquid markets. Everyone wants out and few want in, at least not at these prices.
Securitization was applied to pools of leased property, to residential mortgages, home equity loans, on student loans, credit card or other debts. In theory all assets could be securitized as long as they were associated with a steady and predictable cash flow. That was the theory. In practice, it allowed US banks to skirt tougher new Basle Capital Adequacy Rules, Basle II, designed explicitly in part to close the loophole in Basle I that let US and other banks shove loans wholesale into off-the-books special entities called Special Investment Vehicles or SIVs.
Financial Alchemy: Where the fly hits the soup
Securitization, thus, converted illiquid assets into liquid assets. It did this, in theory, by pooling, underwriting and selling the ownership claims to the payment flows, as asset-backed securities (ABS). Mortgage-backed securities were one form of ABS, the largest by far since 2001.
Here’s where the fly hit the soup.
With the US housing market beginning back in 2006 in sharp downturn and rates on Adjustable Rate Mortgages (ARMs) moving sharply higher across the United States, hundreds of thousands of homeowners were being forced to simply “walk away” from their now un-payable mortgages, or be foreclosed on by one or another party in the complex securitization chain, very often illegally, as an Ohio judge recently ruled. Home foreclosures for 2007 were 75% higher than in 2006 and the process is just beginning, in what will be a real estate disaster to rival or likely exceed that of the Great Depression. In California foreclosures were up an eye-popping 421% over the year before.
That growing process of mortgage defaults in turn left gaping holes in the underlying cash payment stream intended to back up the newly issued Mortgage Backed Securities. Because the entire system was totally opaque, no one, least of all the banks holding this paper, knew what was really the case, what asset backed security was good, or what bad. As nature abhors a vacuum, bankers and investors, especially global investors, abhor uncertainty in financial assets they hold. They treat it like toxic waste.
The architects of this New Finance, based on the securitization of home mortgages, however, found that bundling hundreds of disparate mortgages of varying credit quality from across the USA into a big MBS bond wasn’t enough. If the Wall Street MBS underwriters were to be able to sell their new MBS bonds to the well-endowed pension funds of the world, they needed some extra juice. Most pension funds are restricted to buying only bonds rated AAA, highest quality.
But how could a rating agency rate a bond which was composed of a putative spream of mortgage payments from 1,000 different home mortgages across the USA? They couldn’t send an examiner into every city to look at the home and interview its occupant. Who could stand behind the bond? Not the mortgage issuing bank. They sold the mortgage immediately, at a discount, to get it off their books. Not the Special Purpose Vehicle, they were just there to keep the transactions separate from the mortgage underwriting bank.No something else was needed. Deux Maxima! in stepped the dauntless Big Three (actually Big Two) Credit Raters, the rating agencies.
The ABS Rating Game
Never ones to despair when confronted by new obstacles, clever minds at J.P. Morgan, Morgan Stanley, Goldman Sachs, Citigroup, Merrill Lynch, Bear Stearns and a myriad of others in the game of securitizing the exploding volumes of home mortgages after 2002, turned to the Big Three rating agencies to get their prized AAA. This was necessary because, unlike issuance of a traditional corporate bond, say by GE or Ford, where a known, physical bricks ‘n mortar blue-chip company with a long-term credit history stood behind the bond, with Asset Backed Securities no corporation stood behind an ABS. Just a lot of promises on mortgage contracts across America.
The ABS or bond was, if you will, a “stand alone” artificial creation, whose legality under US law has been called into question. That meant a rating by a credit rating agency was essential to make the bond credible, or at least give it the “appearance of credibility,” as we now realize from the unraveling of the present securitization debacle.
At the very heart of the new financial architecture that was facilitated by the Greenspan Fed and successive US Administrations over the past two decades and more, was a semi-monopoly held by three de facto unregulated private companies who operated to provide credit ratings for all securitized assets, of course for very nice fees.
Three rating agencies dominated the global business of credit ratings, the largest in the world being Moody’s Investors Service. In the boom years of securitization, Moody’s regularly reported well over a 50% profit on gross rating revenues. The other two in the global rating cartel were Standard & Poor’s and Fitch Ratings. All three were American companies intimately tied into the financial sinews of Wall Street and US finance. The fact that the world’s rating business was a de facto US monopoly was no accident. It was planned that way, as a main pillar of the financial domination of New York. The control of the credit rating world was for the US global power projection almost tantamount to US domination in nuclear weapons as a power factor.
Former Secretary of Labor, economist Robert Reich, identified a core issue of the raters, their built-in conflict of interest. Reich noted, “Credit-rating agencies are paid by the same institutions that package and sell the securities the agencies are rating. If an investment bank doesn’t like the rating, it doesn’t have to pay for it. And even if it likes the rating, it pays only after the security is sold. Get it? It’s as if movie studios hired film critics to review their movies, and paid them only if the reviews were positive enough to get lots of people to see the movie.”
Reich went on, “Until the collapse, the result was great for credit-rating agencies. Profits at Moody’s more than doubled between 2002 and 2006. And it was a great ride for the issuers of mortgage-backed securities. Demand soared because the high ratings had expanded the market. Traders didn’t examine anything except the ratings…a multibillion-dollar game of musical chairs. And then the music stopped.”
That put three global rating agencies—Moody’s, S&P, and Fitch—directly under the investigative spotlight. They were de facto the only ones in the business of rating the collateralized securities—Collateralized Mortgage Obligations, Collateralized Debt Obligations, Student Loan-backed Securities, Lottery Winning-backed Securities and a myriad of others—for Wall Street and other banks.
According to an industry publication, Inside Mortgage Finance, some 25% of the $900 billion in sub-prime mortgages issued over the past two years were given top AAA marks by the rating agencies. That comes to more than $220 billion of sub-prime mortgage securities carrying the highest AAA rating by either Moody’s, Fitch or Standard & Poors. That is now coming unwound as home mortgage defaults snowball across the land.
Here the scene got ugly. Their model assumptions on which they gave their desired AAA seal of approval was a proprietary secret. “Trust us…”
According to an economist working within the US rating business, who had access to the actual model assumptions used by Moody’s, S&P and Fitch to determine whether a mortgage pool with sub-prime mortgages got a AAA or not, they used historical default rates from a period of the lowest interest rates since the Great Depression, in other words a period with abnormally low default rates, to declare by extrapolation that the sub-prime paper was and would be into the distant future of AAA quality.
The risk of default on even a sub-prime mortgage, so went the argument, “was historically almost infinitesimal.” That AAA rating from Moody’s in turn allowed the Wall Street investment houses to sell the CMOs to pension funds, or just about anybody seeking “yield enhancement” but with no risk. That was the theory.
As Oliver von Schweinitz pointed out in a very timely book, Rating Agencies: Their Business, Regulation and Liability, “Securitizations without ratings are unthinkable.” And because of the special nature of asset backed securitizations of mortgage loans, von Schweinitz points out, those ABS, “although being standardized, are one-time events, whereas other issuances (corporate bonds, government bonds) generally affect repeat players. Repeat players have less incentive to cheat than ‘one time issuers.’”
Put the other way, there is more incentive to cheat, to commit fraud with asset backed securities than with traditional bond issuance, a lot more.
Moody’s, S&P’s unique status
The top three rating agencies under US law enjoy an almost unique status. They are recognized by the Government’s Securities and Exchange Commission (SEC) as Nationally Recognized Statistical Rating Organizations (NRSROs). There exist only four in the USA today. The fourth, a far smaller Canadian rater, is Dominion Bond Rating Service Ltd. Essentially, the top three hold a quasi monopoly on the credit rating business, and that, worldwide.
The only US law regulating rating agencies, the Credit Agency Reform Act of 2006 is a toothless law, passed in the wake of the Enron collapse. Four days before the collapse of Enron, the rating agencies gave Enron an “investment grade” rating, and a shocked public called for some scrutiny of the raters. The effect of the Credit Agency Reform Act of 2006 was null on the de facto rating monopoly of S&P, Moody’s and Fitch.
The European Union, also reacting to Enron and to the similar fraud of the Italian company Parmalat, called for an investigation of whether the US rating agencies rating Parmalat has conflicts of interest, how transparent their methodologies were (not at all) and the lack of competition.
After several years of “study” and presumably a lot of behind-the-scenes from big EU banks involved in the securitization game, the EU Commission announced in 2006 it would only “continue scrutiny” (sic) of the rating agencies. Moody’s and S&P and Fitch dominate EU ratings as well. There are no competitors.
It’s a free country, ain’t it?
The raters under US law were not liable for their ratings despite the fact that investors worldwide depend often exclusively on the AAA or other rating by Moody’s or S&P as validation of creditworthiness, most especially in securitized assets. The Credit Agency Reform Act of 2006 in no way dealt with liability of the rating agencies. It was in this regard a worthless paper. It was the only law dealing with the raters at all.
As von Schweinitz pointed out, “Rule 10b-5 of the Securities and Exchange Act of 1934 is probably the most important basis for suing on the grounds of capital market fraud.” That rule stated “It shall be unlawful for any person…to make any untrue statement of a material fact.” That sounded like something concrete. But then the Supreme Court affirmed in a 2005 ruling, Dura Pharmaceuticals, ratings are not “statements of a material fact” as required under Rule 10b-5. The ratings given by Moody’s or S&P or Fitch are rather, “merely an opinion.” They are thereby protected as “privileged free speech,” under the US Constitution’s First Amendment.
Moody’s or S&P could say any damn thing about Enron or Parmalat or sub-prime securities it wanted to. It’s a free country ain’t it? Doesn’t everyone have a right to their opinion?
US courts have ruled in ruling after ruling that financial markets are “efficient” and hence, markets will detect any fraud in a company or security and price it accordingly…eventually. No need to worry about the raters then…
That was the “self-regulation” that Alan Greenspan apparently had in mind when he repeatedly intervened to oppose any regulation of the emerging asset securitization revolution.
The securitization revolution was all underwritten by a kind of “hear no evil, see no evil” US government policy that said, what is “good for the Money Trust is good for the nation.” It was a perverse twist on the already perverse saying from the 1950’s of then General Motors chief, Charles E. Wilson, “what’s good for General Motors is good for America.”
Monoline insurance: Viagra for securitization?
For those CMO sub-prime securities that fell short of AAA quality,there was also another crucial fix needed. The minds on Wall Street came up with an ingenious solution.
The issuer of the Mortgage Backed Security could take out what was known as Monoline insurance. Monoline insurance for guaranteeing against default in asset backed securities was another spin-off of the Greenspan securitization revolution.
Although monoline insurance had begun back in the early 1970’s as a guarantee for municipal bonds, it was the Greenspan securitization revolution which gave it its leap into prominence.
As their industry association stated, “The monoline structure ensures that our full attention is given to adding value to our capital market customers.” Add value they definitely did. As of December 2007, it was reliably estimated that the monoline insurers, who call themselves “financial guarantors,” eleven poorly capitalized, loosely regulated monoline insurers, all based in New York and regulated by that state’s insurance regulator, had given their insurance guarantee to enable the AAA rated securitization of over $2.4 trillion worth of Asset Backed Securities. (emphasis mine—f.w.e.).
Monoline insurance became a very essential element in the fraud-ridden Wall Street scam known as securitization. By paying a certain fee, a specialized (hence the term monoline) insurance company would insure or guarantee a pool of sub-prime mortgages in event of an economic downturn or recession in which the poor sub-prime homeowner could not service his monthly mortgage payments.
To quote from the official website of the monoline trade association, “The Association of Financial Guaranty Insurers, AFGI, is the trade association of the insurers and re-insurers of municipal bonds and asset-backed securities. A bond or other security insured by an AFGI member has the unconditional and irrevocable guarantee that interest and principal will be paid on time and in full in the event of a default.” Now they regret ever having promised that as sub-prime mortgage resets, growing recession and mortgage defaults are presenting hyperbolic insurance demands on the tiny, poorly capitalized monolines.
The main monoline insurers were hardly household names: ACA Financial Guaranty Corp., Ambac Assurance, Assured Guaranty Corp. BluePoint Re Limited, CIFG, Financial Guaranty Insurance Company, Financial Security Assurance, MBIA Insurance Corporation, PMI Guaranty Co., Radian Asset Assurance Inc., RAM Reinsurance Company and XL Capital Assurance.
A cautious reader might ask the question, “Who insures these eleven monoline insurers who have guaranteed billions indeed trillions in payment flows over the past five or so years of the ABS financial revolution?”
No one, yet, was the short answer. They state, “Eight AFGI member firms carry a Triple-A claims paying ability rating and two member firms carry a Double-A claims paying ability rating.” Moody’s, Standard & Poors and Fitch gave the AAA or AA ratings.
By having a guarantee from a bond insurer with an AAA credit rating, the cost of borrowing was less than it would normally be and the number of investors willing to buy such bonds was greater.
For the monolines, guaranteeing such bonds seemed risk-free, with average default rates running at a fraction of 1 per cent in 2003-2006. As a result, monolines leveraged their assets to build their books, and it was not being uncommon for a monoline to have insured risks 100 to 150 times the size of its capital base. Until recently, Ambac had capital of $5.7 billion against guarantees of $550 billion.
In 1998, the NY State Insurance Superintendent’s office, the only regulator of monolines, agreed to allow monolines to sell credit-default swaps (CDSs) on asset-backed securities such as mortgage backed securities. Separate shell companies would be established, through which CDSs could be issued to banks for mortgage backed securities.
The move into insuring securitized bonds was spectacularly lucrative for the monolines. MBIA’s premiums rose from $235m in 1998 to $998m in 2007. Year on year premiums last year increased 140%. Then along came the US sub-prime mortgage crisis, and the music stopped dead for the monolines, dead.
As the mortgages within bonds from the banks defaulted – sub-prime mortgages written in 2006 were already defaulting at a rate of 20 per cent by January 2008—the monolines were forced to step in and cover the payments.
On February 3, MBIA revealed $3.5 billion in writedowns and other charges in three months alone, leading to a quarterly loss of $2.3 billion. That was likely just the tip of a very cold iceberg. Insurance analyst Donald Light remarked, “The answer is no one knows,” when asked what the potential downside loss was. “I don’t think we will know to perhaps the third or fourth quarter of 2008.”
Credit ratings agencies have begun downgrading the monolines, taking away their prized AAA ratings, which means a monoline could no longer write new business, and the bonds it guarantees no longer would hold a AAA rating.
To date, the only monoline to receive downgrades from two agencies – usually required for such a move to impact on a company – is FGIC, cut by both Fitch and S&P. Ambac, the second largest monoline, has been cut to AA by Fitch, with the other monolines on a variety of different potential warnings.
The rating agencies did “computer simulated stress tests” to decide if the monolines could “pay claims at a default level comparable to that of the Great Depression.” How much could the monoline insurers handle in a real crisis? They claimed, “Our claims-paying resources available to back members’ guarantees…totals more than $34 billion.”
That $34 billion was a drop in what will rapidly over the course of 2008 appear to be a bottomless bucket. It was estimated that in the Asset Backed Securities market roughly one-third of all transactions were “wrapped” or insured by AAA monolines. Investors demanded surety wraps for volatile collateral or that without a long performance history.
According to the Securities Industry and Financial Markets Association, a US trade group, at the end of 2006 there was a total of some $3.6 trillion worth of Asset Backed Securities in the United States, including of home mortgages, prime and sub-prime, of home equity loans, credit cards, student loans, car loans, equipment leasing and the like. Fortunately not all $3.6 trillion of securitizations are likely to default, and not all at once. But the AGFI monoline insurers had insured $2.4 trillion of that mountain of asset backed securities over the past several years. Private analysts estimated by early February 2008 that the potential insurer payout risks, under optimistic assumptions, could exceed $200 billions. A taxpayer bailout of that scale in an election year would be an interesting voter sell.
Off the books
The entire securitization revolution allowed banks to move assets off their books into unregulated opaque vehicles. They sold the mortgages at a discount to underwriters such as Merrill Lynch, Bear Stearns, Citigroup, and similar financial securitizers. They then in turn sold the mortgage collateral to their own separate Special Investment Vehicle or SIV as they were known. The attraction of a stand-alone SIV was that they and their potential losses were theoretically at least, isolated from the main underwriting bank. Should things ever, God forbid, run amok with the various Asset Backed Securities held by the SIV, only the SIV would suffer, not Citigroup or Merrill Lynch.
The dubious revenue streams from sub-prime mortgages and similar low quality loans, once bundled into the new Collateralized Mortgage Obligations or similar securities, then often got an injection of Monoline insurance, a kind of financial Viagra for junk quality mortgages such as the NINA (No Income, No Assets) or “Liars’ Loans,” or so-called stated-income loans, that were commonplace during the colossal Greenspan Real Estate economy up until July 2007.
According to the Mortgage Brokers’ Association for Responsible Lending, a consumer protection group, by 2006 Liars’ Loans were a staggering 62% of all USA mortgage originations. In one independent sampling audit of stated-income mortgage loans in Virginia in 2006, the auditors found, based on IRS records that almost 60% of the stated-income loans were exaggerated by more than 50%. Those stated-income chickens are now coming home to roost or far worse. The default rates on those Liars’ Loans, which is now sweeping across the entire US real estate market, makes the waste problems of Tyson Foods factory chicken farms look like a wonderland.
None of that would have been possible without securitization, without the full backing of the Greenspan Fed, without the repeal of Glass-Steagall, without monoline insurance, without the collusion of the major rating agencies, and the selling on of that risk by the mortgage-originating banks to underwriters who bundled them, rated and insured them as all AAA.
In fact the Greenspan New Finance revolution literally opened the floodgates to fraud on every level from home mortgage brokers to lending agencies to Wall Street and London securitization banks to the credit rating agencies. Leaving oversight of the new securitized assets, hundreds of billions of dollars worth of them, to private “self-regulation” between issuing banks like Bear Stearns, Merrill Lynch or Citigroup and their rating agencies, was tantamount to pouring water on a drowning man. In Part V we discuss the consequences of the grand design in New Finance.
F. William Engdahl is the author of A Century of War: Anglo-American Oil Politics and the New World Order (Pluto Press) and Seeds of Destruction: The Hidden Agenda of Genetic Manipulation, www.globalresearch.ca.
The present series is adapted from his new book, now in writing, The Rise and Fall of the American Century: Money and Empire in Our Era. He may be contacted through his website, www.engdahl.oilgeopolitics.net.
F. William Engdahl is a frequent contributor to Global Research.
The CRG grants permission to cross-post original Global Research articles on community internet sites as long as the text & title are not modified. The source and the author’s copyright must be displayed. For publication of Global Research articles in print or other forms including commercial internet sites, contact: crgeditor@yahoo.com
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© Copyright F. William Engdahl, Global Research, 2008
The url address of this article is: www.globalresearch.ca/index.php?context=va&aid=8032
see
The Financial Tsunami: The Financial Foundations of the American Century by F. William Engdahl
The Financial Tsunami: Sub-Prime Mortgage Debt is but the Tip of the Iceberg by F. William Engdahl
“Doomsday Seed Vault” in the Arctic by F. William Engdahl (GMO)
“Seeds of Destruction, The Hidden Agenda of Genetic Manipulation” by Stephen Lendman
02.07.08 Mosaic News: World News From The Middle East (video)
Warning
.
This video may contain images depicting the reality and horror of war and should only be viewed by a mature audience.
For more: http://linktv.org/originalseries
“Final Push to Resolve Lebanese Presidential Deadlock,” Al Jazeera TV, Qatar
“Hariri Accuses Syria of Derailing Elections,” LBC TV, Lebanon
“Nassrallah Praises Winograd,” IBA TV, Israel
“7 Palestinians Killed in an Israeli Raid,” Dubai TV, UAE
“Two Million Iraqi Widows,” Syria TV, Syria
“US Has No Solution For Iraq”
“Arab Americans and the US Elections,” Al-Iraqiya TV, Iraq
“US Pressure Has No Effect on Iran,” IRIB2 TV, Iran
“Turkish Parliament Suspends Hijab Ban,” Al Arabiya TV, UAE
“Deby Warns Rebels to Stay out of Capital,” Al Jazeera English, QatarProduced for Link TV by Jamal Dajani.
Supermarket Asylum (video)
Supermarkets today are the modern forests for the new social engineering man and woman whose hunter and forager instincts have been rewired incrementally to depend on the system. Is there another way? Could there another way? As things get worse, we will naturally be asking those questions more often.
Added: February 08, 2008
‘Why Talk When You Can Shock,’ says Taser Opponent by Robyn Doolittle
by Robyn Doolittle
Commondreams.org
The Toronto Star
Thursday, February 7, 2008
TORONTO — Tasers are not a replacement for guns; they’re a replacement for talking, said author Naomi Klein at a town-hall meeting last night.
“If it happened in a cell, we would call it torture and if it happens on the street we should not be afraid to call it torture,” said Klein, who is the author of The Shock Doctrine: The Rise of Disaster Capitalism.
The discussion on the police use of shock and stun guns was held at the University of Toronto in response to Toronto police Chief Bill Blair’s request that 3,000 officers be armed with electroshock guns.
When RCMP officers used a Taser on Polish immigrant Robert Dziekanski in Vancouver International Airport last October, they did so within 25 seconds of their arrival on the scene, Klein said. Dziekanski died shortly after.
“Why talk when you can shock?” she said. “Tasers are not a replacement for guns. They’re a replacement for everything else …they’re a replacement for talking; for negotiating.”
As many as 20 people in Canada and 290 in the United States have died after being shocked by a Taser, said the chair of Toronto’s Amnesty International chapter, Andy Buxton, who also sat on the panel.
Taser International has said the weapon it manufactures is safe.
But during clinical trials, people who are zapped are in a calm, healthy state.
“That’s not how it is in real life,” Buxton said.
Of the 310 people in North American who died after being shocked with a Taser, people were often intoxicated or high on some kind of drug, such as cocaine.
The majority had been in an altercation with police, had had force used on them and many were tied up in some way.
“Something in that whole witches’ brew all together (is unsafe) and we don’t know what,” Buxton said.
“And until all the facts are on the table, (Amnesty International) is asking police in Canada and the United States to put a moratorium on the use of Tasers until we know whether or not they’re safe,” he said.
Buxton also cited statistics that show officers can become addicted to using Tasers. He used the example of the Edmonton police force, where Taser use increased from an average of once a week to once a day.
© 2008 The Toronto Star
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.
see
Interview with Naomi Klein: The Shock Doctrine (video)
Naomi Klein “The Shock Doctrine” & “No Logo” interview (must-see video)
The Shock Doctrine by Alfonso Cuarón and Naomi Klein (video; over 18 only)
Tasers, Pepper Spray, and Arrests By Bill Quigley
The Taser is going wireless by Andrew Chung
European governments arming police with “non-lethal weapons” By Julio Godoy
The Astonishing Dimensions Of U.S. Debt (video link)
Ron Paul speaks to the youth at Liberty University (videos)
February 08, 2008
INTRO ONLY by Jerry Falwell, Jr.
U.S. Congressman Ron Paul, Republican candidate for president, speaks at Friday’s convocation service in the Vines Center of Liberty University.
Intro
Speech
see
Ron Paul speech at CPAC 02.07.08 (videos)
Noam Chomsky on Anarchism (video)
Image by thelastminute via Flickr
MikeyCollie1990 on Mar 10, 2012
Noam Chomsky discusses anarchism while being interviewed by Barry Pateman.
From The Wasteland Of Arizona Politics by Guadamour
by Guadamour
Dandelion Salad
featured writer
Guadamour’s blog post
Feb. 8, 2008
I have voted in Arizona elections since the 1960s, and the state has a long history of making it easy for its citizens to vote.
There have always been plenty of polling places in Arizona, and if you were in Independent you could vote in either the Democratic or Republican primaries. You went in, gave your name and address and showed your free-of-charge voter registration card and were given a ballot and voted.
That’s the way it has always been in the state. Quite easy. That is until the primary this past Tuesday.
I live in a small border city of 19,000 and there has always been at least seven or eight polling places. This past Tuesday there were two polling places with long lines. I’ve had over five people tell me they didn’t vote because they didn’t have the time to wait.
When I voted, the woman behind me was turned away because she was an independent and “You aren’t eligible to vote.”
I ran across my friend Frank, an 85-year-old retired IBM engineer. Frank doesn’t drive anymore, and doesn’t carry any ID, because everyone in town knows him and understands he is good for whatever he says.
Frank couldn’t vote either. He told me, “I personally knew the people working at the polling place, and they still wouldn’t let me vote because I didn’t have the proper ID. Is this why I fought and was a prisoner or war in World War II, so I can’t vote?”
Arizona has a conservative Democratic governor; however, both legislative houses are controlled by conservative Republicans.
Frank asked me, “Why do conservative Republicans so fear the electorate?”
I told him, “Because the public might realize how close neo-conservatives are to fascist.”
Frank may be 85-years old, but he still has the fire of his convictions. Arizona is one of the 24 states where the citizens have the right of referendum or initiative. Frank has decided to spearhead a drive to restore the voting rights of Arizona citizens robbed by the current Neo-Fascist Republican movement.
For awhile Frank managed a plant across the line in Agua Prieta. I asked him if he had been across the border recently. He said, “No. They won’t let me back in the country if I leave. That is unless I have a passport. Have you been to AP recently?”
I tell him, “No. When I moved in from the ranch, when it was sold, I brought all my things back to town. I remember unpacking my passport, but for the life of me, I can’t find it. It’s never been a problem until now. I could always show my driver’s license and come back. Now it’s changed. I’m still hoping I will find my passport somewhere in my house. I really don’t want to spend 95 dollars for a passport when the one I have is still valid.”
Frank said, “When I got my first passport in the 70s it was only thirteen dollars.”
“I know,” I said, “Things sure have changed, and I can’t believe they are for the better.”
see
What Can Be Done To Change The Broken Political System by Guadamour
The National Initiative for Democracy (video)
Suggested Election Coverage by Lo + Super Tuesday Roundtable (video links)
The National Initiative for Democracy (video)
The National Initiative for Democracy is a proposed law developed by The Democracy Foundation, over the past decade, along with a plan to get it enacted by the people (not by the government) creating, for the first time, a government “by you, the people.”
This video is the result of many months of work by many people, in cooperation with the Democracy Foundation and its staff.
Make sure to visit http://www.ni4d.us for more information on the National Initiative.
Written by:
Michael GrantMusic (Used with Permission)
Simon Mahler
http://www.fotone.net/Voiceover:
Dan Connor
http://www.danconnor.comDirection:
Evan Strobel
http://www.youtube.com/directinglegendVideo Production:
J. Skyler McKinley
http://www.skylermckinley.comAdded: November 17, 2007
h/t: Guadamour
see
What Can Be Done To Change The Broken Political System by Guadamour
NPR’s All Things Considered left out Mike Gravel (action alert)
NPR has omitted Mike Gravel’s name in their list of presidential contenders. Please let them know that he is still in the race. ~ Lo
All Things Considered:
Vocal Impressions
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Fraud on Voters by The Nation & Chris Hayes (videos) (updated)
Mike Gravel 01.31.08 Pepperdine University (videos)
MoveOn.org left Mike Gravel’s name off in their online poll (updated)
MoveOn.org Pushes the Worst, Ignoring Gravel for President (video)
Stimulus Plan is a Scam to Benefit the Rich by Sean Olender
by Sean Olender
Global Research, February 6, 2008
San Francisco Chronicle
Higher loan limits will lead to Fannie Mae, Freddie Mac bailout
Sunday, February 3, 2008
Congress is about to sell us the biggest fraud in American history.
It’s been highly touted as an economic stimulus bill that will help millions of Americans – and has the backing of both President Bush and House Speaker Nancy Pelosi. In the coming year, individuals would receive rebates of up to $600 and families up to $1,200. There are other goodies, too, including tax write-offs for small businesses and an expansion of the child tax credit.
But, as the old adage goes, nothing comes for free. As part of the bill, Congress is set to rush through an increase in the mortgage loan limits for Fannie Mae and Freddie Mac (and Federal Housing Administration insurance, too) – from $417,000 to $729,750 – the first step toward a massive financial disaster in which taxpayers will end up paying through the nose.
Here’s how we got to this point. Domestic and international investors hold hundreds of billions of dollars in bad debt, because U.S. investment houses sold them junk securities based on often fraudulent mortgages. Many of these mortgages were sold to unqualified buyers under terms that made widespread foreclosures a certainty once the housing market began to fall.
Investment banks and bond rating agencies sat down and tried to figure out how to describe Americans with insufficient incomes and little for a down payment as great credit risks on loans too big for their incomes. The new rules focused on credit scores, because it was a good excuse to avoid looking at income and down payment, factors that would have restricted this moneymaking fiasco.
Now, thanks to Congress, junk bond investors will be able to pawn off their bad debt to Fannie and Freddie, instead of suing the big investment houses for ripping them off. This shift will certainly doom Fannie Mae and Freddie Mac, so don’t be surprised if we, the taxpayers, have to bail out poor Fannie and Freddie – to the tune of more than $1 trillion.
Why more than $1 trillion? If Goldman Sachs is correct in its recent projections that home prices in California are going to drop 35 to 40 percent, the state’s losses alone would top $2 trillion, because California has a disproportionate number of jumbo loans. The irony here is that the collapse in housing prices could make Fannie insolvent even without raising the loan limit. Increasing Fannie’s limit is like going on a spending spree with your credit cards because you know you are going to file for bankruptcy in a few months. Only here the taxpayer is left holding the bag. Our children will pay interest on this debt in perpetuity. It is our debt. It is inescapable.
In the coming months, Fannie and Freddie will buy up mortgages based on old, fraudulent appraisals and on loans with bogus inflated incomes. Unfortunately, many of these loans will still default.
But that’s just the start. Brace yourself for another wave of faxes, phone calls and junk mail urging you to refinance at only 1 percent. With zero new regulation, the same bad actors that caused this crisis can once again inflate property appraisals and begin a new cycle of fraud.
There are firms that rent assets to people to help them fraudulently qualify for a mortgage – like loaning them money to keep in their bank account for a couple months so they can fool the lender with documented savings that evaporate the day after the mortgage is signed. Another popular ruse: The borrower pays an employer to pay him a lot of money in a fake job for a month or two so he can show a fat paycheck in his loan docs. Some real estate agents and mortgage brokers actually refer buyers to these services.
Contrary to popular myth, Fannie holds a lot of subprime debt, option ARM debt and other dodgy securities. Fannie and Freddie owned or guaranteed almost 45 percent of all mortgages in America last year. BusinessWeek noted in 2007 that Fannie and Freddie have “moved more prominently into low-documentation loans, which require little or no proof of the borrower’s income.” Expansion of Fannie and Freddie’s reckless lending is exactly what Congress wants because it’s plausibly deniable. Teary-eyed lawmakers can take to the airwaves a year from now and declare: “We had no idea Fannie could go under, but we can’t cut and run now. We have to bail out Fannie and Freddie for the good of America! It’s going to be a tough slog, but you’re getting used to those, no?”
Those same lawmakers won’t mention the fact that they get paid far more by real estate lobbyists than they do from our Treasury.
I’ve spoken with borrowers who stopped making mortgage payments seven or more months ago. None has received a default notice. Defaults may be much higher than banks are letting on. The data lags are growing suspiciously long. Nobody knows what’s going on. Seven months without making a single payment! Will Fannie guarantee those loans because they aren’t in formal default yet? Nobody wants to know, because if they know, they might be called to testify next year. That’s why lawmakers want to raise the limits now and ask questions later.
This shortsighted plan poses a terrible risk to every American taxpayer, especially retirees, because Social Security money will be needed to bail out Fannie and Freddie. And even if you live in high-priced San Francisco, Los Angeles or New York – and stand to benefit from the increased loan limit – this is a horrible fraud on you, too, because raising the limit to $730,000 risks a systemic crisis that will cost far more than any temporary rebate check.
In support of the economic stimulus bill, Bush will have to face “working American families” and explain that some of their tax money is going to be spent guaranteeing $730,000 mortgages on $1 million homes. It’s like some sort of upside-down communism where the poor pay the rich welfare. Why should taxes from families earning $48,000 a year be used to support expensive mortgages in New York, Los Angeles and San Francisco? Welfare for the hungry and homeless is evil, but welfare for million-dollar homeowners facing a tough refi … well, that’s called “helping the economy.”
I can imagine the president’s radio address playing in the heartland: “We have some families with million-dollar homes on the coasts who are really hurting and so we need you, the working families of America, to stand together with them and help them avoid the kind of home price depreciation that might leave them without a new Lexus for years.”
I guess Congress’ hope is that median-income families will be too busy using their rebates to buy much-needed groceries to notice that the rich folk are getting way with a new scam.
Several months ago, economist Nouriel Roubini of New York University’s Stern School of Business suggested that the housing market has been effectively nationalized. At first it seemed crazy, but now it’s fairly obvious. In August alone, Fannie and Freddie increased their loan portfolios by $62 billion, and the Federal Home Loan Bank by $110 billion. That total of $172 billion would come to just over $2 trillion annually – not much less than the entire federal budget.
Everyone seeking a loan, securitizing a mortgage, and buying or selling a mortgage security will now be dealing, in one way or another, with the U.S. government. This type of intervention is very expensive and will eat everything in its path, including Social Security.
If we’re going to have a government-financed intervention, it should be to make sure that Social Security benefits go to those who paid for them, that the poor are fed and housed, or that the army of uninsured receive health benefits. If, as they say, we don’t have enough money for those important things, then I think we don’t have enough money to bail out banks and bond investors.
Don’t let me down, my fellow Americans. Let’s vote out anyone who dares to vote for this scam.
Sean Olender is an attorney in San Mateo.
www.globalresearch.ca contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available to our readers under the provisions of “fair use” in an effort to advance a better understanding of political, economic and social issues. The material on this site is distributed without profit to those who have expressed a prior interest in receiving it for research and educational purposes. If you wish to use copyrighted material for purposes other than “fair use” you must request permission from the copyright owner.
For media inquiries: crgeditor@yahoo.com
© Copyright Sean Olender, San Francisco Chronicle, 2008
The url address of this article is: www.globalresearch.ca/index.php?context=va&aid=8022
The FBI Deputizes Business By Matthew Rothschild
By Matthew Rothschild
Global Research, February 9, 2008
The Progressive
February 7, 2008
Today, more than 23,000 representatives of private industry are working quietly with the FBI and the Department of Homeland Security. The members of this rapidly growing group, called InfraGard, receive secret warnings of terrorist threats before the public does—and, at least on one occasion, before elected officials. In return, they provide information to the government, which alarms the ACLU. But there may be more to it than that. One business executive, who showed me his InfraGard card, told me they have permission to “shoot to kill” in the event of martial law.
InfraGard is “a child of the FBI,” says Michael Hershman, the chairman of the advisory board of the InfraGard National Members Alliance and CEO of the Fairfax Group, an international consulting firm.
InfraGard started in Cleveland back in 1996, when the private sector there cooperated with the FBI to investigate cyber threats.
“Then the FBI cloned it,” says Phyllis Schneck, chairman of the board of directors of the InfraGard National Members Alliance, and the prime mover behind the growth of InfraGard over the last several years.
InfraGard itself is still an FBI operation, with FBI agents in each state overseeing the local InfraGard chapters. (There are now eighty-six of them.) The alliance is a nonprofit organization of private sector InfraGard members.
“We are the owners, operators, and experts of our critical infrastructure, from the CEO of a large company in agriculture or high finance to the guy who turns the valve at the water utility,” says Schneck, who by day is the vice president of research integration at Secure Computing.
“At its most basic level, InfraGard is a partnership between the Federal Bureau of Investigation and the private sector,” the InfraGard website states. “InfraGard chapters are geographically linked with FBI Field Office territories.”
In November 2001, InfraGard had around 1,700 members. As of late January, InfraGard had 23,682 members, according to its website, http://www.infragard.net, which adds that “350 of our nation’s Fortune 500 have a representative in InfraGard.”
To join, each person must be sponsored by “an existing InfraGard member, chapter, or partner organization.” The FBI then vets the applicant. On the application form, prospective members are asked which aspect of the critical infrastructure their organization deals with. These include: agriculture, banking and finance, the chemical industry, defense, energy, food, information and telecommunications, law enforcement, public health, and transportation.
FBI Director Robert Mueller addressed an InfraGard convention on August 9, 2005. At that time, the group had less than half as many members as it does today. “To date, there are more than 11,000 members of InfraGard,” he said. “From our perspective that amounts to 11,000 contacts . . . and 11,000 partners in our mission to protect America.” He added a little later, “Those of you in the private sector are the first line of defense.”
He urged InfraGard members to contact the FBI if they “note suspicious activity or an unusual event.” And he said they could sic the FBI on “disgruntled employees who will use knowledge gained on the job against their employers.”
In an interview with InfraGard after the conference, which is featured prominently on the InfraGard members’ website, Mueller says: “It’s a great program.”
The ACLU is not so sanguine.
“There is evidence that InfraGard may be closer to a corporate TIPS program, turning private-sector corporations—some of which may be in a position to observe the activities of millions of individual customers—into surrogate eyes and ears for the FBI,” the ACLU warned in its August 2004 report The Surveillance-Industrial Complex: How the American Government Is Conscripting Businesses and Individuals in the Construction of a Surveillance Society.
InfraGard is not readily accessible to the general public. Its communications with the FBI and Homeland Security are beyond the reach of the Freedom of Information Act under the “trade secrets” exemption, its website says. And any conversation with the public or the media is supposed to be carefully rehearsed.
“The interests of InfraGard must be protected whenever presented to non-InfraGard members,” the website states. “During interviews with members of the press, controlling the image of InfraGard being presented can be difficult. Proper preparation for the interview will minimize the risk of embarrassment. . . . The InfraGard leadership and the local FBI representative should review the submitted questions, agree on the predilection of the answers, and identify the appropriate interviewee. . . . Tailor answers to the expected audience. . . . Questions concerning sensitive information should be avoided.”
One of the advantages of InfraGard, according to its leading members, is that the FBI gives them a heads-up on a secure portal about any threatening information related to infrastructure disruption or terrorism.
The InfraGard website advertises this. In its list of benefits of joining InfraGard, it states: “Gain access to an FBI secure communication network complete with VPN encrypted website, webmail, listservs, message boards, and much more.”
InfraGard members receive “almost daily updates” on threats “emanating from both domestic sources and overseas,” Hershman says.
“We get very easy access to secure information that only goes to InfraGard members,” Schneck says. “People are happy to be in the know.”
On November 1, 2001, the FBI had information about a potential threat to the bridges of California. The alert went out to the InfraGard membership. Enron was notified, and so, too, was Barry Davis, who worked for Morgan Stanley. He notified his brother Gray, the governor of California.
“He said his brother talked to him before the FBI,” recalls Steve Maviglio, who was Davis’s press secretary at the time. “And the governor got a lot of grief for releasing the information. In his defense, he said, ‘I was on the phone with my brother, who is an investment banker. And if he knows, why shouldn’t the public know?’ ”
Maviglio still sounds perturbed about this: “You’d think an elected official would be the first to know, not the last.”
In return for being in the know, InfraGard members cooperate with the FBI and Homeland Security. “InfraGard members have contributed to about 100 FBI cases,” Schneck says. “What InfraGard brings you is reach into the regional and local communities. We are a 22,000-member vetted body of subject-matter experts that reaches across seventeen matrixes. All the different stovepipes can connect with InfraGard.”
Schneck is proud of the relationships the InfraGard Members Alliance has built with the FBI. “If you had to call 1-800-FBI, you probably wouldn’t bother,” she says. “But if you knew Joe from a local meeting you had with him over a donut, you might call them. Either to give or to get. We want everyone to have a little black book.”
This black book may come in handy in times of an emergency. “On the back of each membership card,” Schneck says, “we have all the numbers you’d need: for Homeland Security, for the FBI, for the cyber center. And by calling up as an InfraGard member, you will be listened to.” She also says that members would have an easier time obtaining a “special telecommunications card that will enable your call to go through when others will not.”
This special status concerns the ACLU.
“The FBI should not be creating a privileged class of Americans who get special treatment,” says Jay Stanley, public education director of the ACLU’s technology and liberty program. “There’s no ‘business class’ in law enforcement. If there’s information the FBI can share with 22,000 corporate bigwigs, why don’t they just share it with the public? That’s who their real ‘special relationship’ is supposed to be with. Secrecy is not a party favor to be given out to friends. . . . This bears a disturbing resemblance to the FBI’s handing out ‘goodies’ to corporations in return for folding them into its domestic surveillance machinery.”
When the government raises its alert levels, InfraGard is in the loop. For instance, in a press release on February 7, 2003, the Secretary of Homeland Security and the Attorney General announced that the national alert level was being raised from yellow to orange. They then listed “additional steps” that agencies were taking to “increase their protective measures.” One of those steps was to “provide alert information to InfraGard program.”
“They’re very much looped into our readiness capability,” says Amy Kudwa, spokeswoman for the Department of Homeland Security. “We provide speakers, as well as do joint presentations [with the FBI]. We also train alongside them, and they have participated in readiness exercises.”
On May 9, 2007, George Bush issued National Security Presidential Directive 51 entitled “National Continuity Policy.” In it, he instructed the Secretary of Homeland Security to coordinate with “private sector owners and operators of critical infrastructure, as appropriate, in order to provide for the delivery of essential services during an emergency.”
Asked if the InfraGard National Members Alliance was involved with these plans, Schneck said it was “not directly participating at this point.” Hershman, chairman of the group’s advisory board, however, said that it was.
InfraGard members, sometimes hundreds at a time, have been used in “national emergency preparation drills,” Schneck acknowledges.
“In case something happens, everybody is ready,” says Norm Arendt, the head of the Madison, Wisconsin, chapter of InfraGard, and the safety director for the consulting firm Short Elliott Hendrickson, Inc. “There’s been lots of discussions about what happens under an emergency.”
One business owner in the United States tells me that InfraGard members are being advised on how to prepare for a martial law situation—and what their role might be. He showed me his InfraGard card, with his name and e-mail address on the front, along with the InfraGard logo and its slogan, “Partnership for Protection.” On the back of the card were the emergency numbers that Schneck mentioned.
This business owner says he attended a small InfraGard meeting where agents of the FBI and Homeland Security discussed in astonishing detail what InfraGard members may be called upon to do.
“The meeting started off innocuously enough, with the speakers talking about corporate espionage,” he says. “From there, it just progressed. All of a sudden we were knee deep in what was expected of us when martial law is declared. We were expected to share all our resources, but in return we’d be given specific benefits.” These included, he says, the ability to travel in restricted areas and to get people out.
But that’s not all.
“Then they said when—not if—martial law is declared, it was our responsibility to protect our portion of the infrastructure, and if we had to use deadly force to protect it, we couldn’t be prosecuted,” he says.
I was able to confirm that the meeting took place where he said it had, and that the FBI and Homeland Security did make presentations there. One InfraGard member who attended that meeting denies that the subject of lethal force came up. But the whistleblower is 100 percent certain of it. “I have nothing to gain by telling you this, and everything to lose,” he adds. “I’m so nervous about this, and I’m not someone who gets nervous.”
Though Schneck says that FBI and Homeland Security agents do make presentations to InfraGard, she denies that InfraGard members would have any civil patrol or law enforcement functions. “I have never heard of InfraGard members being told to use lethal force anywhere,” Schneck says.
The FBI adamantly denies it, also. “That’s ridiculous,” says Catherine Milhoan, an FBI spokesperson. “If you want to quote a businessperson saying that, knock yourself out. If that’s what you want to print, fine.”
But one other InfraGard member corroborated the whistleblower’s account, and another would not deny it.
Christine Moerke is a business continuity consultant for Alliant Energy in Madison, Wisconsin. She says she’s an InfraGard member, and she confirms that she has attended InfraGard meetings that went into the details about what kind of civil patrol function—including engaging in lethal force—that InfraGard members may be called upon to perform.
“There have been discussions like that, that I’ve heard of and participated in,” she says.
Curt Haugen is CEO of S’Curo Group, a company that does “strategic planning, business continuity planning and disaster recovery, physical and IT security, policy development, internal control, personnel selection, and travel safety,” according to its website. Haugen tells me he is a former FBI agent and that he has been an InfraGard member for many years. He is a huge booster. “It’s the only true organization where there is the public-private partnership,” he says. “It’s all who knows who. You know a face, you trust a face. That’s what makes it work.”
He says InfraGard “absolutely” does emergency preparedness exercises. When I ask about discussions the FBI and Homeland Security have had with InfraGard members about their use of lethal force, he says: “That much I cannot comment on. But as a private citizen, you have the right to use force if you feel threatened.”
“We were assured that if we were forced to kill someone to protect our infrastructure, there would be no repercussions,” the whistleblower says. “It gave me goose bumps. It chilled me to the bone.”
Matthew Rothschild is the editor of The Progressive magazine and the author of “You Have No Rights: Stories of America in an Age of Repression.” This article, “The FBI Deputizes Business,” is the cover story of the March issue of The Progressive.
h/t: The Other Katherine Harris
© Copyright Matthew Rothschild, The Progressive, 2008
The url address of this article is: www.globalresearch.ca/index.php?context=va&aid=8040
see
An Iron Fist In A Velvet Glove – How American Democracy Relies on Fascism By Ted Rall
Police State America – A Look Back and Ahead by Stephen Lendman
Homeland Security Presidential Directive/HSPD-21 by George Bush (10.18.07)
The reality of NSPD-51 is almost as bad as the paranoia. By Ron Rosenbaum
Bush Declares Himself Dictator – Presidential Directive 51 (May 2007; video link)
Bush Directive for a “Catastrophic Emergency” in America by Prof. Michel Chossudovsky (Iran)
Bush Pens Dictatorship Directive, Few Notice by Kurt Nimmo
National Security & Homeland Security Presidential Directive 51 (2007)
Bush To Be Dictator In A Catastrophic Emergency by Lee Rogers (Martial Law; Police State)
Dandelion Salad 