The Electronic Frontier: Homeland Security’s Border Spying Operations

Dandelion Salad

by Tom Burghardt
Global Research, September 28, 2008
Antifascist Calling

New documents obtained by the Electronic Frontier Foundation (EFF) and the Asian Law Caucus (ALC) revealed that the Department of Homeland Security’s (DHS) Customs and Border Protection (CBP) subunit “reversed a two-decades-old policy that restricted customs agents from reading and copying the personal papers carried by travelers, including U.S. citizens.”

After suing DHS under the Freedom of Information Act (FOIA), the civil liberties organizations received 661 pages of heavily redacted files from the department and will be seeking withheld documents as well as the blacked-out material in federal district court this fall.

Antifascist Calling has reviewed many of these files; in some cases 50% or more of the documents have been censored. One might call it DHS’ lame attempt at remaking the 1980 hit thriller Fade to Black!

In 2007, CBP quietly loosened 1986 federal guidelines restricting the examination of travelers’ documents and papers. More than 20 years earlier a lawsuit, Heidy v. U.S. Customs Service, was filed by a group of solidarity activists targeted by the government after returning from Nicaragua. Their suit, charging the state with an illegal seizure of books, documents and personal papers led to the Reagan administration guidelines.

During the 1980s Nicaragua was a target of U.S. destabilization programs and a “dirty war” waged by the CIA and their drug-dealing Contra allies against the leftist Sandinista government. Reagan-era Customs agents claimed they had a right to seize “subversive literature” at the border.

Based on dubious legal authority, agents confiscated diaries, datebooks and other personal papers and photocopied the files. U.S. Customs then shared the activists’ personal details with the FBI on the grounds that the government was engaged in a “counterintelligence operation” against a “hostile power.” According to The Washington Post,

“Essentially they were using that as a pretext to do intelligence gathering on critics of our policies on Nicaragua,” said David D. Cole, a Georgetown University law professor who was then a lawyer at the Center for Constitutional Rights, representing the activists suing the government in Heidy v. U.S. Customs Service. (Ellen Nakashima, “Expanded Powers to Search Travelers at Border Detailed,” The Washington Post, Tuesday, September 23, 2008; A02)

As the Center for Constitutional Rights documented, “Pretrial discovery revealed a broad pattern of Customs abuses, including the use of Customs authority to gather intelligence about returnees from Nicaragua and the entry of that information into a nationwide Customs computer.”

The Heidy decision, in other words, specifically barred Customs officials from rifling through travelers files in pursuit of so-called “actionable intelligence.” The state was specifically barred from sharing the spoils of these illegal searches with other federal agencies. Fast-forward 22 years. As EFF revealed,

The documents show that in 2007, Customs and Border Protection (CBP) loosened restrictions on the examination of travelers’ documents and papers that had existed since 1986. While CBP agents could previously read travelers’ documents only if they had “reasonable suspicion” that the documents would reveal violations of agency rules, in 2007 officers were given the power to “review and analyze” papers without any individualized suspicion. Furthermore, whereas CBP agents could previously copy materials only where they had “probable cause” to believe a law had been violated, in 2007 they were empowered to copy travelers’ papers without suspicion of wrongdoing and keep them for a “reasonable period of time” to conduct a border search. The new rules applied to physical documents as well as files on laptop computers, cell phones, and other electronic devices. (“Internal DHS Documents Detail Expansion to Read and Copy Travelers’ Papers,” Electronic Frontier Foundation, September 23, 2008)

In keeping with an avalanche of rule changes governing the expansive reach of America’s intelligence agencies, the “quaint” notion of “probable cause”–that a targeted individual is suspected of a crime–is now a thing of the past, replaced by the Orwellian concept of “thought crimes” where everyone is miraculously transformed into a “suspect” by securocrats.

Under the guise of “keeping America safe,” counterterrorism is the new stand-in for what covert operators once referred to as countersubversive operations that targeted left-wing political groups for destruction. As America’s constitutional guarantees circle the drain awaiting only the final flush into oblivion, the religious and political beliefs of citizens and legal residents re-entering the country are now considered “fair game” by Bushist spooks.

ALC staff attorney Shirin Sinar denounced these patently illegal moves by the administration saying, “For more than 20 years, the government implicitly recognized that reading and copying the letters, diaries, and personal papers of travelers without reason would chill Americans’ rights to free speech and free expression. But now customs officials can probe into the thoughts and lives of ordinary travelers without any suspicion at all.”

It appears that simply attempting to legally cross the border constitutes “suspicious behavior” and is an occasion for state security agencies to have access to all our personal details, regardless of their relevance to an “ongoing terrorism investigation.” Or, as is more likely in America’s “new normal” regime, border crossings now serve as a pretext for future “terrorism investigations.”

In a further move to subvert the 1986 guidelines, ALC and EFF noted that “CBP’s wide latitude to collect this data attracted significant attention from other law enforcement agencies that sought to access it.” In other words, under cover of conducting “counterterrorist” border searches, dodgy outfits such as the CIA, FBI, and the NSA are now asserting a “right” to have access to data seized from travelers’ cell phone directories, laptops, financial data or confidential business records stored in CBP databases “available” for their perusal.

DHS spokeswoman Amy Kudwa told the Post “the updating of policies reflects an effort to be more transparent.” Or cover DHS ass-ets since they were forced to release the files in the first place! The policy change according to Kudwa “reflects the realities of the post-9/11 environment,” that is, an unaccountable Executive branch that has assumed “plenary” (unlimited) powers “during a time of war” (of their own choosing).

All is not well in Homelandia, however.

As The Washington Post reported two weeks ago, “In the five years since it was created, the Department of Homeland Security has overseen roughly $15 billion worth of failed contracts for projects ranging from airport baggage-screening to trailers for Hurricane Katrina evacuees, according to congressional data.” Dana Hedgpeth wrote,

The contracts wound up over-budget, delayed or canceled after millions of dollars had already been spent, according to figures and documents prepared by the House Committee on Homeland Security. A panel of experts is to testify today before the House Subcommittee on Management, Investigations and Oversight on how to fix problems with the DHS acquisitions process. …

The experts are to talk about a series of problem projects: About $351 million was wasted and not properly overseen in the U.S. Coast Guard’s Deepwater program after ships were built and then scrapped, according to Homeland Security committee staffers and oversight agency reports. A $1.5 billion Boeing program to help secure U.S. borders with electronic sensors and other equipment is being shelved after it was over-budget, late and had technology problems. (“Congress Says DHS Oversaw $15 Billion in Failed Contracts,” The Washington Post, Wednesday, September 17, 2008; D02)

While $15 billion may seem like chump change in today’s climate of trillion dollar financial bailouts for Washington’s favorite grifters in the banking and securities industry, neither Congress nor DHS have a “fix” for these wasteful programs, unless that is, the fix is already in and taxpayers not privy to information available to various “wise men” peacefully ensconced in their “secure, undisclosed locations” remains “classified.”

But I digress…

Documents revealed that a July 11, 2007 email originating from CBP’s New York office noted the “wide interest among other government agencies in CBP’s ability to collect information.” Indeed, the nameless CBP bureaucrat wrote, “As we all know, CBP’s data collection capabilities have been widely discussed in the law enforcement community and we have been asked by many various agencies to copy and transmit documentation being carried by travelers for legitimate law enforcement reasons.”

And under current rule changes enacted in July, DHS is allowed to share data obtained at the border with other agencies if there is a “suspicion” a law is being violated. Last year, documents revealed that the Assistant Commissioner, Office of Field Operations wrote:

There may be situations where an agency or entity, in furtherance of its respective mission, wishes to retain or disseminate copies of the information provided to it by CBP for technical assistance. Any such retention and/or dissemination will be governed by that agency or entity’s existing legal authorities or policies, including periodic reviews of retained materials to evaluate and ensure continued relevance. (Memorandum for: Directors, Field Operations, Office of Field Operations. From: Assistant Commissioner, Office of Field Operations. Subject: Border Search/Examination of Documents, Papers, and Electronic Information, July 5, 2007)

What these “situations” are that might merit sharing personal information with the CIA, FBI or NSA (or the Main Core database for that matter) and what would constitute “continued relevance” is not specified by the Assistant Commissioner.

As the civil liberties groups noted, ALC received more than two dozen complaints from U.S. citizens, particularly those who were Muslim, South Asian, or Middle Eastern. Those illegally detained “were grilled about their families, religious practices, volunteer activities, political beliefs, or associations when returning to the United States from travels abroad.”

Since “traveling while Arab” is apparently an enforceable offense, these individuals had their books, hand written notes, personal photos, laptop computer files and cell phone directories scrutinized and copied. Indeed, as EFF/ALC averred “CBP appears to have no policy constraining agents from questioning travelers on their religious practices or political views, in spite of the fact that many travelers have complained about being grilled on such First Amendment-protected activities.”

Nor will CBP agents be “constrained” from violating our constitutional rights. While some will chalk it up to America’s “enhanced security environment” where Bushist cronies reap the spoils of their ill-gotten wealth, “business as usual”–as always–is standard operating procedure in post-Constitutional America.

Oh, and by the way, Welcome to the United States!

Tom Burghardt is a researcher and activist based in the San Francisco Bay Area. In addition to publishing in Covert Action Quarterly, Love & Rage and Antifa Forum, he is the editor of Police State America: U.S. Military “Civil Disturbance” Planning, distributed by AK Press.

© Copyright Tom Burghardt, Antifascist Calling, 2008

The url address of this article is:


Domestic Spying


Financial Bailout: Thanks but No Thanks – What Lincoln would have said by Ellen Brown

by Dr. Ellen Hodgson Brown
featured writer
Dandelion Salad
Ellen’s post
Sept 28, 2008

What Lincoln would have said to Paulson’s $700 Billion Ransom

“These capitalists generally act harmoniously and in concert to fleece the people, and now that they have got into a quarrel with themselves, we are called upon to appropriate the people’s money to settle the quarrel.”
– Abraham Lincoln, speech to Illinois legislature, January 1837

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Full text of the bailout bill (subject to revision) + Summary (updated)

Dandelion Salad

Updated: Oct 1, 2008

U.S. Senate Committee on Banking, Housing and Urban Affairs

Oct 1, 2008

The latest version of package legislation which includes the Emergency Economic Stabilization Act can be found here: Click link

For one-page summary of the EESA: Click link

For section-by-section analysis of the EESA: Click link


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China’s Bloodless Taking Over of The USA by Guadamour


by Guadamour
featured writer
Dandelion Salad
Guadamour’s blog post
Sept. 28, 2008

This week I made a trip to the library and picked up two titles that were displayed in the New Books Non-Fiction section.  It’s a small town, but has a very good and up-to-date library for which everyone here is grateful.

The two books I picked up and read this week are Maxed Out–Hard Times, Easy Credit, and The Era of Predatory Lenders by James D. Scurlock (Scribner 2007) and The Late Great U.S. And The Coming Merger With Mexico and Canada (World Ahead Media 2007) by Jerome R. Corsi, PhD.

At the time I picked up these two books I had no idea that they were relevant of the economic meltdown that is currently taking place and the proposed “bailout.”

In Maxed Out (which is also a documentary film) Scurlock graphically explains how large financial institutions preferred customers are sub-prime borrowers–just the type of people who can never really hope to repaid the loans that were thrust upon them.  Students are given credit cards and end up committing suicide because of the debt that these predatory lenders charge more for than pawn shops.   Homicide is also a byproduct of debt.

Through Bankruptcy “Reform” Congress whose arm was severely twisted by the banking lobby closed the one option that would allow people to reorganize their financial lives.

Scurlock shows how the banking industry has managed to get the USA and indeed much of the world addicted to debt, and how it produces nothing but more debt and a continual stream of more profits for the banking and credit card industry now that most all restrictions placed upon it after the stock market crash of 1929 and ensuing depression have been removed.

Scurlock also makes the poignant point that the USA is now the subprime borrower of the world, willing to pay more interest than any other country in the world.

Scurlock writes: “Another whopper is that the foreigners who continue to support our debt habit are expressing confidence in the strength of the united States economy.  Japan’s treasury pays about one-fifth the interest rate that we do on their national debt.  So perhaps in the global scheme of things we have simply become the planet’s most profitable sub-prime borrower, its “preferred customer.”

This is another way of saying that international banks and the banks that form the U. S. Federal Reserve can squeeze the citizens of the US for more and more money.

Without directly stating it, Scurlock makes a great argument as did the founding fathers of the United States of America for bankruptcy and starting over with a clean slate.

If the bailout goes through, it is not starting over with a clean slate, it is piling up another high interest credit card debt on top of bad already unpayable debt.   The only one that wins here are banks which charge a higher interest rate through compounding than do pawn shops or loan sharks.

Scurlock’s book is very well written, researched and very readable and is an important contribution to understanding the current economy based on debt.

Corsi’s book, The Late Great USA explores and explains how the idea of forming a Union between Canada, Mexico and the United States is already in the process of taking place to the detriment of the citizens of all three countries.

Corsi’s book gives the history of how the European Union came about slowly and incrementally over the course of fifty years.

He convincingly demonstrates how that process is taking place currently in North America, though at a much more accelerated pace.

Members of the three countries are already meeting to implement regulations for a “Security and Prosperity Partnership.”

A superhighway from Mexico across the US to Canada to be owned by foreign banks and corporations is already in the planning and initial construction stages.

This will allow more Chinese goods to enter faster and cheaper into the US, Mexico and Canada while removing good paying jobs from all three countries.

The chief beneficiary will be China, the major underwriter of the debt that the US government and its people keeping piling on.

In essence, China could take over the North America Continent with the help and collaboration of international bankers without firing a shot.   They will slowly (actually not all that slowly) strangle the continent with debt.

Corsi is not entirely pessimistic.  He writes:

“Americans can still affect the political scene.   Most congressional offices are relatively small, generally with room for only a half dozen staffers.   Even a dozen calls on a particular theme to a congressional office are typically noticed.  One hundred calls in any given day virtually tie up the congressional receptionist, threatening to throw the office into communications gridlock.”

Demanding congressional legislation that will repeal NAFTA is the surest way to bring a halt to North American integration.  If Congressional hearing can be held on the proposed legislation, the many important issues of integration will be brought into the public eye.   NAFTA passed not as a treaty, but as simple legislation, and consequently can be overturned as such.

With NAFTA and CAFTA repealed, congressional authorization for the Security and Prosperity Partnership (SPP) will be erased.   The bill repealing NAFTA and CAFTA should also include a directive that the United States withdraws from the three country “working groups” now organized under SPP.

US “free trade” agreements need to be modified to eliminate structural discrimination against US exports, such as the differential application of value added taxes by over 137nations.

Key to these modifications should be language that prohibits the abusive use of human labor.   In the aftermath of the Civil war, the United States declared that exploitation of African American (formally slaves)was morally wrong and that African Americans should receive full rights of citizenship.   America must similarly declare that exploitation of Chinese slaves or near-slaves is also morally wrong, along with the exploitation of any other workers anywhere in the world.

Withdrawing from the World Trade Organization would also make clear to globalists that the United States is going to protect its own economy first and make sure our political institutions remain sovereign.

The United States can participate in world trade without being a member of the WTO.  Rather than complying with WTO rules that impose an authority over US laws and regulations, we should seek to work with free trade partners who are willing to accept our renegotiated “fair trade” agreements.

Corsi’s book shows another way that the US can be conquered. Not by debt this time, but by willing compliance brought on by the greed of corporation that don’t manufacture anything, but desire to maximize profit.  These corporations are by and large US corporations who have shipped their manufacturing and jobs overseas while gutting the US and stripping it of jobs and the benefits that go with good jobs.  A government financed by massive borrowing from China is a willing participant.

Corsi’s very readable book needs to be studied by everyone questioning the insanity of the proposed $700 billion bailout (more money supposedly to be borrowed from China).


iTulip Interviews James Scurlock, Creator of “Maxed Out” (vid)

Dennis Kucinich: Is this the U.S. Congress or the Board of Directors at Goldman Sachs! + Sounds Like Insider Trading To Me!

Rep Burgess: We Are Under Martial Law! As Declared By The Speaker Last Night!

The Paulson-Bernanke Bank Bailout: Will the Cure be Worse than the Disease? by Michael Hudson

Tragedy in the Making in Washington and on Wall Street: The Canadian Solution

Lawmakers Reach Accord on Huge Financial Rescue

The Economy Sucks and or Collapse

Dennis Kucinich: Is this the U.S. Congress or the Board of Directors at Goldman Sachs! + Sounds Like Insider Trading To Me!

Dandelion Salad

Dennis on Democracy Now: Rep. Dennis Kucinich Rejects $700 Billion Bailout

CSPANJUNKIEdotORG September 28, 2008 C-SPAN

Vodpod videos no longer available.

more about “Is this the U.S. Congress or the Boar…“, posted with vodpod

Here’s the transcript.

Rep Kaptur: Sounds Like Insider Trading To Me!

Vodpod videos no longer available.

more about “Rep Kaptur: Sounds Like Insider Tradi…“, posted with vodpod

Rep Poe: They Say It’s Gonna Be Y2K All Over Again!


Rep. Dennis Kucinich Rejects $700 Billion Bailout

Black Monday? Global Investors vote “No” on Paulson’s Bailout

Rep Burgess: We Are Under Martial Law! As Declared By The Speaker Last Night!

Rep. Kapture: Let’s Play “Wall Street Bailout” The Rules Are…

The Paulson-Bernanke Bank Bailout: Will the Cure be Worse than the Disease? by Michael Hudson

Tragedy in the Making in Washington and on Wall Street: The Canadian Solution

Lawmakers Reach Accord on Huge Financial Rescue

Dennis Kucinich: And This Is The System We’re Saving!

Ron Paul: You Can Not Place Value Into Assets That Are Worthless!

The Economy Sucks and or Collapse

Rep Burgess: We Are Under Martial Law! As Declared By The Speaker Last Night! (updated)

Dandelion Salad

Updated: What “Martial Law” means in this case:

To report the martial law rule waiving a requirement of Clause 6(a) of Rule XIII with respect to consideration of any resolution reported from the Rules Committee, through the legislative day of September 29, 2008. It does not apply to any specific measure, but rather grants blanket authority.

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Lies, Crimes and Cover-ups By James Petras

Dandelion Salad
By James Petras
09/28/08 “

Human Rights Watch in Venezuela

Human Rights Watch, a US-based group claiming to be a non-governmental organization, but which is in fact funded by government-linked quasi-private foundations and a Congressional funded political propaganda organization, the National Endowment for Democracy, has issued a report “A Decade Under Chavez: Political Intolerance and Lost Opportunities for Advancing Human Rights in Venezuela” (9/21/2008 The publication of the “Report” directed by Jose Miguel Vivanco and sub-director Daniel Walkinson led to their expulsion from Venezuela for repeated political-partisan intervention in the internal affairs of the country.

A close reading of the “Report” reveals an astonishing number of blatant falsifications and outright fabrications, glaring deletions of essential facts, deliberate omissions of key contextual and comparative considerations and especially a cover-up of systematic long-term, large-scale security threats to Venezuelan democracy posed by Washington.

We will proceed by providing some key background facts about HRW and Vivanco in order to highlight their role and relations to US imperial power. We will then comment on their methods, data collection and exposition. We will analyze each of HRW charges and finally proceed to evaluate their truth and propaganda value.

Background on Vivanco and HRW

Jose Miguel Vivanco served as a diplomatic functionary under the bloody Chilean dictator Augusto Pinochet between 1986-1989, serving no less as the butcher’s rabid apologist before the Inter-American Commission on Human Rights. His behavior was particularly egregious during the regime’s brutal repression of a mass popular uprising in the squatter settlements of Santiago in 1986-1987. With the return of electoral politics (democracy) in Chile, Vivanco took off to Washington where he set up his own NGO, the Center for Justice and International Law, disguising his right-wing affinities and passing himself off as a ‘human rights’ advocate. In 1994 he was recruited by former US federal prosecutor, Kenneth Roth, to head up the ‘Americas Division’ of Human Rights Watch. HRW demonstrated a real capacity to provide a ‘human rights’ gloss to President Clinton’s policy of ‘humanitarian imperialism’. Roth promoted and supported Clinton’s two-month bombing, destruction and dismemberment of Yugoslavia. HRW covered up the ethnic cleansing of Serbs in Kosovo by the notorious Albanian terrorists and gangsters of the Kosovo Liberation Army and the unprecedented brutal transfer of over 200,000 ethnic Serbs from the Krajina region of Croatia. HRW backed Clinton’s sanctions against Iraq leading to the deaths of over 500,000 Iraqi children. Nowhere did the word ‘genocide’ ever appear in reference to the US Administrations massive destruction of Iraq causing hundreds of thousands of premature deaths.

HRW supported the US invasion and occupation of Afghanistan where Kenneth Roth advised the US generals on how to secure the colonial occupation by avoiding massive civilian deaths. In words and deeds, HRW has played an insidious role as backer and adviser of US imperial intervention, providing the humanitarian ideological cover while issuing harmless and inconsequential reports criticizing ‘ineffective’ excesses, which ‘undermine’ imperial dominance.

HRW most notorious intervention was its claim that Israel’s murderous destruction of the Palestinian city of Jenin was ‘not genocidal’ and thus provided the key argument for the US and Israeli blocking of a UN humanitarian mission and investigative report. As in all of its ‘research’ their report was deeply colored by selective interviews and observations which understated the brutality and killings of Palestinian civilians by the Israeli state – even while the fanatics who run the major pro-Israel organizations accused HRW of bias for even mentioning a single murdered Palestinian.


HRW currently makes a big play of its widespread interviews of a broad cross section of Venezuelan political and civic society government and opposition groups, as well as its consultation of most available documents. Yet the Report on Venezuela does not reflect anything of the sort. There is no careful, straightforward presentation of the government’s elaboration and justification for its actions, no academic critiques of the anti-democratic actions of anti-Chavez mass media; no discussion of the numerous journalists’ accounts which expose systematic US intervention. The Report simply records and reproduces uncritically the claims, arguments and charges of the principle publicists of the opposition while dismissing out of hand any documented counter-claims. In other words, Vivanco and company act as lawyers for the opposition rather than as serious and objective investigators pursuing a balanced and convincing evaluation of the status of democracy in Venezuela.

The political propaganda intent of Vivanco-HRW is evident in the timing of their ‘investigations’ and the publication of their propaganda screeds. Each and every previous HRW hostile ‘report’ has been publicized just prior to major conflicts threatening Venezuelan democratic institutions. In February 2002, barely two months before the US backed military coup against Chavez, HRW joined the chorus of coup planners in condemning the Chavez regimes for undermining the ‘separation of powers’ and calling for the intervention of the Organization of American States. After the coup was defeated through the actions of millions of Venezuelan citizens and loyalists military officers, HRW moved quickly to cover its tracks by denouncing the coup – but subsequently defended the media moguls, trade union bureaucrats and business elites who promoted the coup from prosecution, claiming the coup promoters were merely exercising their ‘human rights’. HRW provides a novel meaning to ‘human rights’ when it includes the right to violently overthrow a democratic government by a military coup d’etat.

Following the military coup in 2002 and the bosses’ lockout of 2003, HRW published a report condemning efforts to impose constitutional constraints on the mass media’s direct involvement in promoting violent actions by opposition groups or terrorists. President Chavez’ “Law for Social Responsibility in Radio and Television” provided greater constitutional guarantee for freedom of speech than most Western European capitalist democracies and was far less restrictive than the measures approved and implemented in Bush’s US Patriot Act, which HRW has never challenged, let alone mounted any campaign against.

Just prior to the political referenda in 2004 and 2007, HRW issued further propaganda broadsides which were almost identical in wording to the opposition (in fact HRW ‘Reports’ were widely published and circulated by all the leading opposition mass media). HRW defended the ‘right’ of the US National Endowment for Democracy to pour millions of dollars to fund opposition ‘NGO’s’, such as SUMATE, accusing the Chavez government of undermining ‘civil society’ organizations. Needless to say, similar activity in the US by an NGO on behalf of any foreign government (with the unique exception of Israel) would require the NGO to register as a foreign agent under very strict US Federal laws; failure to do so would lead to federal prosecution and a jail term of up to 5 years. Apparently, HRW’s self-promoted ‘credibility’ as an international ‘humanitarian’ organization protects it from being invidiously compared to an agent of imperialist propaganda.

HRW: Five Dimensional Propaganda

The HRW Report on Venezuela focuses on five areas of politics and society to make its case that democracy in Venezuela is being undermined by the Presidency of Hugo Chavez: political discrimination, the courts, the media, organized labor and civil society.

1.Political Discrimination

– The Report charges that the government has fired and blacklisted political opponents from some state agencies and from the national oil company.

– Citizen access to social programs is denied based on their political opinions.

– There is discrimination against media outlets, labor unions and civil society in response to legitimate criticism or political activity.

Between December 2002 and 2003, following the failure of the military coup of the previous April, the major business organizations, senior executives of the state oil company and sectors of the trade union bureaucracy organized a political lockout shutting down the oil industry, paralyzing production through sabotage of its computer-run operations and distribution outlets in a publicly stated effort to deny government revenues (80% of which come from oil exports) and overthrow the democratically elected government. After 3 months and over $20 billion dollars in lost revenues and hundreds of millions of dollars in damage to machinery, with the aid of the majority of production workers and technicians, the bosses ‘lockout’ was defeated. Those officials and employees engaged in the political lockout and destruction of equipment and computers were fired. The government followed normal procedures backed by the majority of oil workers, who opposed the lockout, and dismissed the executives and their supporters in order to defend the national patrimony and social and investment programs from the self-declared enemies of an elected government. No sane, competent, constitutional lawyer, international human rights lawyer, UN commissioner or the International Court official considered the action of the Venezuelan government in this matter to constitute ‘political discrimination’. Even the US State Department, at that time, did not object to the firing of their allies engaged in economic sabotage. HRW, on the other hand, is more Pope than the Pope.

Nothing captures the ludicrous extremism of the HRW than its charge that citizens are denied access to social programs. Every international organization involved in assessing and developing large social programs, including UNESCO, the World Health Organization and the UN Food and Agricultural Organization, have praised the extent and quality of the coverage of the social programs instituted by the Chavez government covering 60% of the population and almost 100% of the poor. Since approximately between 20-30% of the poor still vote for the opposition, it is clear that needy citizens critical of the government have equal access to social programs, including food subsidies, free health care and education. This social safety net is more inclusive than ever before in the history of Venezuela. In fact some of the poor suburbs of Caracas, like Catia, which voted down the 2007 referendum, are major recipients of large-scale, long-term social assistance programs.

Only scoundrels or the ill informed could be convinced of the HRW charge of discrimination against mass media outlets, labor unions and civil society groups. The opposition controls 95% of the newspapers, a majority of the television and radio outlets and frequencies, with the widest national circulation. The government has ‘broken’ the ruling class monopoly on information by funding two major TV stations and a growing number of community based radio stations.

There are more trade union members and greater trade union participation in enterprises, internal debates and free elections than ever before under previous regimes. Rival lists and intense competition for office between pro and anti-government lists are common in the trade unions confederation (UNT). The entire HRW ‘Report’ is based on complaints from the authoritarian CTV(Confederation of Venezuelan Workers/Confederacion de Trabajadores de Venezuela) bureaucrats who have lost most of their supporters and are discredited because of their role in supporting the bloody April 2002 coup. They are universally disdained; militant workers have not forgotten their corruption and gangster tactics when they collaborated with previous rightwing regimes and employers.

2. The Courts

HWR claims that President Chavez has “effectively neutralized the judiciary as an independent branch of government”. The claim that the judiciary was ‘independent’ is a new argument for HRW – because a decade earlier when Chavez’ 1999 constitution was approved by referendum, HRW decried the ‘venality, corruption and bias of the entire judicial system’. After years of releasing the leaders of the 2002 coup, postponing rulings and undermining positive legislation by elected legislative bodies and after revelations of high and lower court bribe taking, the Government finally implemented a series of democratically approved reforms, expanding and renewing the judicial system. The fact that the new court appointees do not follow the past practices of the opposition-appointed judges has evoked hysterical cries by HRW that the new reformed courts ‘threaten fundamental rights’. The most bizarre claim by HRM is that the Supreme Court did not ‘counter’ a 2007 constitutional reform package. In fact the Supreme Court approved the placing of constitutional reforms to a popular referendum in which the Chavez government was narrowly defeated. The Venezuelan Supreme Court subsequently respected the popular verdict – unlike US Supreme Court, which overturned the popular vote in the 2000 and 2004 Presidential elections, a constitutional crime against the popular will, which Kenneth Roth, Vivanco and the rest of HRW have yet to condemn.

3. The Media

Every outside media specialist has been highly critical of the advocacy of violent action (leading up to the coup) and gross falsifications and libelous ‘reports’ (including racist epithets against Hugo Chavez) propagated by the ruling class-dominated mass media. A single opposition television network just had one of its many outlets suspended for openly backing the opposition military seizure of power, an action that any Western capitalist democracy would have taken in the wake of a violent uprising. HRW did not, has not and will not condemn the arrest of dozens of US and international journalists, some brutally beaten, covering the Republican and Democratic Presidential Conventions. Nothing even remotely resembling the extraordinary powers of ‘preventive detention’ of journalists by the US Homeland Security/local and state police forces exists in Venezuela. The wanton destruction of journalists’ cameras and tape recorders by the police at the US Republican Party Convention would be un-imaginable in Venezuela today. In contrast the only offense prosecuted in Venezuela against the media is the act of supporting and advocating violence aimed at overthrowing democratic institutions. Like all countries, Venezuela has laws dealing with libel and slander; these are far weaker than any comparable statutes in the countries upholding the tradition of the Magna Carta. HRW blatantly falsifies reality by claiming state control of the print media: All one needs to do is peruse any newsstand in Venezuela to see a multiplicity of lurid anti-government headlines, or tune into the radio or television stations and view news accounts that compete for the worst anti-Chavez propaganda found in the US Fox News or CNN.

4. Organized Labor

HRW claims that the Venezuelan government has violated ‘basic principles of freedom of association’ because it requires state oversight and certification of union elections and that by denying the right to bargain collectively to non-certified unions, it undermines workers’ rights to freely join the union of their choosing and to strike. Practically every government in the West has rules and regulations regarding oversight and certification of union elections, none more onerous than the US starting with the Taft-Hartley Act of the 1940’s and the ‘Right to Work’ Laws current in many states, which have reduced the percentage of unionized workers in the private sector to less than 3%. In contrast, during the Chavez Presidency, the number of unionized workers has more than doubled, in large part because new labor legislation and labor officials have reduced employer prerogatives to arbitrarily fire unionized workers. The only union officials who have been ‘decertified’ are those who were involved in the violent coup of April 2002 and the employers lockout intended to overthrow the government, suspend the constitution and undermine the very existence of free unions. Former Pinochet official Jose Miguel Vivanco delicately overlooks the gangsterism, thuggery and fraudulent election procedures, which ran rampant under the previous rightwing Venezuelan labor confederation, CTV. It was precisely to democratize voting procedures and to break the stranglehold of the old-guard trade union bosses that the government monitors oversaw union elections, many of which had multi-tendency candidates, unfettered debates and free voting for the first time.

I attended union meetings and interviewed high level CTV trade unions officials in 1970, 1976 and 1978 and found high levels of open vote buying, government and employer interference and co-optation, collaboration with the CIA-funded American Institute of Free Labor Development and large-scale pilfering of union pension funds, none of which was denounced by HRW. I attended the founding of the new Venezuelan union confederation, Union Nacional de Trabajadores (UNT) in 2003 and a subsequent national congress. I have witness a totally different unionism, a shift from government-run ‘corporate’ business unionism to independent social movement unionism with a decidedly class oriented approach. The UNT is a multi-tendency confederation in which diverse currents compete, with varying degrees of support and opposition to the Chavez Government. There are few impediments to strikes and there is a high degree of independent political action with no inhibition to workers resorting to strikes in order to demand the ouster of pro-employer labor officials.

For example, this year, steel workers in the Argentine-owned firm SIDOR, went on strike several times protesting private sector firings (HRW, of course never discussed private sector violations of workers rights). Because the Venezuelan Labor Minister tended to take the side of the employers, the steelworkers marched into a meeting where Chavez was speaking and demanded the dismissal of his Minister. After conferring with the workers’ leaders, Chavez fired the Labor Minister, expropriated the steel plant and accepted workers demands for trade union co-management. Never in Venezuelan labor history have workers exercised this degree of labor influence in nationalized plants. There is no doubt that there are government officials who would like to ‘integrate’ labor unions closer to the state; the new unionists do spend too much time in internal debates and internecine struggles instead of organizing the informal and temporary worker sectors. But one fact stands out: Unionized and non-unionized Venezuelan workers have experienced greater social welfare payments, rising living standards, greater job protection and greater free choice in union affiliation than any previous period in their history. It is ironic that Vivanco, who never raised a word against Pinochet’s anti-labor policies, an uncritical apologist of the AFL-CIO (the declining and least effective labor confederation in the industrialized West), should launch a full-scale attack on the fastest growing, independent and militant trade union movement in the Western hemisphere. Needless to say, Vivanco avoids any comparative analysis, least of all between Venezuelan and US labor over the spread of union organizing, internal democracy and labor representation in industry, social benefits and influence over government policy. Nor does HRW refer to the positive assessment by independent international labor organizations regarding union and labor advances under the Chavez Presidency.

5. Civil Society and HRW: The Mother of All Perversities

Jose Miguel Vivanco, who kept quiet during his years as a state functionary serving the Chilean dictator Pinochet, while thousands of protestors were beaten, jailed and even tortured and killed and courageous human rights groups were routinely assaulted, shamelessly claims that President Chavez has adopted “an aggressively adversarial approach to local rights advocates and civil society organization.”

President Chavez has actively promoted a multitude of independent, democratically elected community councils with over 3 million affiliated members, mostly from the poorest half of the population. He has devolved decision-making power to the councils, bypassing the party-dominated municipal and state officials, unlike previous regimes and US AID programs, which channeled funds through loyal local bosses and clients. Never has Venezuela witnessed more intense sustained organization, mobilization and activity of civil society movements. This cuts across the political spectrum, from pro-Chavez to pro-oligarch neighborhood, civic, working class and upper class groups. Nowhere in the world are US-funded groups, engaged in overt extra-parliamentary and even violent confrontations with elected officials, tolerated to the degree that they enjoy freedom of action as in Venezuela. In the US, foreign-funded organizations (with the exception of Israeli-funded groups) are required to register and refrain from engaging in electoral campaigning, let alone in efforts to destabilize legitimately constitutional government agencies. In contrast, Venezuela asked the minimum of foreign government-funded self-styled NGOs in requiring them to register their source of funding and comply with the rules of their constitution, that is, to stay out of virulent partisan political action. Today, as yesterday, all the ‘civil society’ organizations, including these funded by the US, which routinely attack the Chavez government, can operate freely, publish, assemble and demonstrate unimpeded. Their fundamental complaint, echoed by HRW, is that the Chavez government and its supporters criticize them: According to the new HRW definition of civil society freedom,the opposition has the right to attack the government – but not the other way around; some countries can register foreign-funded organizations – but not Venezuela; and some government can jail terrorists and coup-makers and identify and criticize their accomplices – but not Venezuela. The grotesque double-standard, practiced by Human Rights Watch, reveals their political allegiances: Blind to the vices of the US as it descends into a police state and equally blind to the virtues of a growing participatory democracy in Venezuela.

The ‘Report’ contains egregious omissions. It fails to mention that Venezuela, under President Chavez, has experienced twelve internationally supervised and approved elections, including several presidential, congressional and municipal elections, referenda and recall elections. These have been the cleanest elections in Venezuelan history and certainly with more honest vote counting than one would find in the US presidential contests.

The ‘Report’ fails to report on the serious security threats including the recording of phone conversations of active and retired high military officials planning to violently seize power and assassinate President Chavez. Under the extraordinary degree of tolerance in Venezuela, not a single constitutional right has been suspended. In the US, similar terrorist actions and plans would have led to a state of emergency and the probable pre-emptive mass incarceration of thousands of government critics and activists. HRW ignores and downplays security threats to Venezuelan democracy – whether it involves armed incursions from Colombian paramilitary groups allied with the pro-US Venezuelan opposition, the assassination of the chief federal prosecutor Danilo Anderson who was investigating the role of the opposition in the bloody coup of April 2002, the US-backed secessionist movement in the state of Zulia, the collusion of the mass media with violent student mobs in assaulting Chavez supporters on campus or the economic sabotage and panic caused by the private sector’s hoarding of essential food and other commodities in the lead-up to the 2007 referendum.

One of Vivanco’s most glaring omissions is the contrast between Venezuela’s open society approach to the hundreds of thousands of undocumented immigrant workers from Colombia and the US authoritarian practice of criminalizing its undocumented laborers. While the US Homeland Security and Immigration police have implemented arbitrary mass arrests, assaults and deportation of working heads of immigrant families – leaving their wives and children vulnerable to destitution, Chavez has awarded over a million undocumented Colombian immigrant workers and family members with residency papers and the opportunity for citizenship.

HRW has yet to protest Washington’s brutal denial of human rights to its Latin American and Asian immigrant workers in recent months. HRW did not issue a single protest when US-backed local oligarch politicians, local government officials and racist gangs in Bolivia went on a rampage and slaughtered three dozen unarmed Indian peasant workers. Vivanco’s squalid selective slandering of Venezuela is only exceeded by his systematic silence when there are abuses involving US collaboraters!


The Human Rights Watch Report on Venezuela is a crude propaganda document that, even in its own terms, lacks the minimum veneer of ‘balance’, which the more sophisticated ‘humanitarian’ imperialists have put out in the past. The omissions are monumental: No mention of President Chavez’ programs which have reduced poverty over the past decade from more than 60% to less than 30%; no recognition of the universal health system which has provided health care to 16 million Venezuelan citizens and residents who were previously denied even minimal access; and no acknowledgment of the subsidized state-run grocery stores which supply the needs of 60% of the population who can now purchase food at 40% of the private retail price.

HRW’s systematic failure to mention the advances experienced by the majority of Venezuelan citizens, while peddling outright lies about civic repression , is characteristic of this mouthpiece of Empire. Its gross distortion about labor rights makes this report a model for any high school or college class on political propaganda.

The widespread coverage and uncritical promotion and citation of the ‘Report’ (and the expulsion of its US-based authors for gross intervention on behalf of the opposition) by all the major newspapers from the New York Times, to Le Monde in France, the London Times, La Stampa in Italy and El Pais in Spain gives substance to the charge that the Report was meant to bolster the US effort to isolate Venezuela rather than pursue legitimate humanitarian goals in Venezuela.

The major purpose of the HRW ‘Report’ was to intervene in the forthcoming November municipal and state elections on the side of the far-right opposition. The ‘Report’ echoes verbatim the unfounded charges and hysterical claims of the candidates supported by the far right and the Bush Administration. HRW always manages to pick the right time to issue their propaganda bromides. Their reports mysteriously coincide with US intervention in electoral processes and destabilization campaigns. In Venezuela today the Report has become one of the most widely promoted propaganda documents of the leading rightist anti-Chavez candidates.

For the partisans of democracy, human rights and self-determination, every effort should be made to expose the insidious role of HRW and its Pinochetista propagandist, Vivanco, for what they are – publicists and promoters of US-backed clients who have given ‘human rights’ a dirty name.

Professor Petras latest book Zionism, Militarism And the Decline of U.S Power (clarity press Atlanta) – August 2008

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.

Iran Resolution Shelved in Rare Defeat for Israel Lobby By Jim Lobe

Dandelion Salad

By Jim Lobe

In a significant and highly unusual defeat for the so-called ‘Israel Lobby’, the Democratic leadership of the House of Representatives has decided to shelve a long-pending, albeit non-binding, resolution that called for President George W. Bush to launch what critics called a blockade against Iran.

House Congressional Resolution (HR) 362, whose passage the powerful American Israel Public Affairs Committee (AIPAC) had made its top legislative priority this year, had been poised to pass virtually by acclamation last summer.

But an unexpectedly strong lobbying effort by a number of grassroots Iranian-American, Jewish-American, peace, and church groups effectively derailed the initiative, although AIPAC and its supporters said they would try to revive it next year or if Congress returns to Washington for a ‘lame-duck’ session after the November elections.

Congress, which may still adopt a package of new unilateral economic sanctions against Iran — some of which the administration has already imposed — over the weekend, is expected to adjourn over the next several days.

”We’ll resubmit it when Congress comes back, and we’ll have even more signatures,” the resolution’s main author, New York Democrat Rep. Gary Ackerman, told the Washington Times, adding that the resolution currently has 270 co-sponsors, or some two-thirds of the House’s entire membership.

Still, the decision by the chairman of the House Foreign Affairs Committee, Rep. Howard Berman, to shelve HR 362 marked an unusual defeat for AIPAC, according to its critics who charged that the resolution was designed to lay the groundwork for the Bush administration or any successor administration to take military action against Iran.

‘This was a joint effort by several groups to really put the focus on the dangers presented by such a resolution over the opposition of one of the most powerful lobbies in the country,’ said Trita Parsi, president of the National Iranian American Council (NIAC).

Among other provisions, the resolution declared that preventing Iran from acquiring a nuclear weapons capacity was ‘vital to the national security interests of the United States’ — language that is normally used to justify military action — and ‘demand(ed) that the President initiate an international effort to immediately and dramatically increase the economic, political and diplomatic pressure on Iran to verifiably suspend its nuclear enrichment activities…’

Among the means it called for were ‘prohibiting the export to Iran of all refined petroleum products; imposing stringent inspection requirements on all persons, vehicles, ships, planes, trains and cargo entering or departing Iran; and prohibiting the international movement of all Iranian officials not involved in negotiating the suspension of Iran’s nuclear programme.’

Although the resolution’s sponsors explicitly denied it — indeed, one clause stated that ‘nothing in this resolution shall be construed as an authorisation of the use of force against Iran’ — the resolution’s critics charged that the latter passage could be used to justify a blockade against Iran, an act of war under international law.

‘Ambiguity in the text of the resolution — whether intended by its drafters or not — has led some to see it as a de-facto approval for a land, air and sea blockade of Iran, any of which could be considered an act of war,’ according to Deborah DeLee, president of Americans for Peace Now (APN), a Zionist group that has long urged the administration to engage in direct talks with Tehran and that lobbied against the resolution.

Two key Democratic congressmen, who had initially co-sponsored the resolution, Reps. Robert Wexler and Barney Frank, unexpectedly defected in July, insisting that its language be changed to exclude any possibility that it could be used to justify war against Iran and to include new provisions urging Washington to directly engage Tehran.

The resolution was introduced last May, shortly after AIPAC’s annual meeting during which then-Israeli Prime Minister Ehud Olmert reportedly told the House Democratic leadership, including Speaker Nancy Pelosi, Berman, and Ackerman that economic sanctions against Iran had run their course and that stronger action, including a possible naval quarantine, was needed to increase pressure on Tehran to halt its nuclear programme.

The meeting also followed talks between Olmert and Bush who, despite an strongly hawkish speech before Israel’s Knesset, privately told his hosts that Washington would almost certainly not attack on Iranian nuclear facilities nor give a green light Israel to launch an attack of its own before he leaves office in January 2009, according to a recent account by London’s Guardian newspaper. The administration itself never took a position on the resolution.

At the time, the price of oil was skyrocketing, and the military brass in the Pentagon, increasingly concerned about the deteriorating situations in Afghanistan and Pakistan, was expressing its opposition to military action against Iran in unusually blunt terms.

Nonetheless, AIPAC pushed hard for adoption of the resolution, even as it, like its Congressional sponsors, insisted that it was not designed to justify military action.

Just last week, in a final push for the resolution’s passage, AIPAC drafted a letter that was circulated to House members who had not yet co-sponsored the resolution. While it denounced as ‘utter nonsense’ suggestions that the resolution could be used to justify military action, the text also stressed that Tehran’s ‘pursuit of nuclear weapons and regional hegemony’ posed ‘real and growing’ threats to ‘the vital national security interests of the United States’.

AIPAC’s failure was particularly notable given the presence at the U.N. General Assembly in New York this week of Iranian President Mahmoud Ahmadinejad, whose repeated and predictably provocative predictions about the demise of Israel and ‘the American empire’ have been used routinely by AIPAC to rally public and elite opinion against Tehran and underline the threat it allegedly poses.

In announcing that the resolution has been shelved, Berman said he shared critics’ concerns about the resolution’s working and will not bring it before his committee until his concerns were addressed. ‘If Congress is to make a statement of policy, it should encompass a strategy on how to gain consensus on multilateral sanctions to change Iran’s behaviour,” his spokesperson told the Times.

*Jim Lobe’s blog on U.S. foreign policy, and particularly the neo-conservative influence in the Bush administration, can be read at

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.


War with Iran – On, Off or Undecided? by Stephen Lendman

A Vote For Military Force Against Iran? AIPAC’s House Resolution, H. Con. Res. 362

HR 362 and the Alarming Escalation of Hostility Towards Iran

Should We Fear Iran? The Peter Principle Playoffs By Sheila Samples

Full Text of Ahmadinejad’s Speech to the UN General Assembly

Mahmoud Ahmadinejad on Larry King Live

Israel asked US for green light to bomb nuclear sites in Iran

Democracy Now!: Iranian President Mahmoud Ahmadinejad

Myth of Iran wiping Israel off the map dispelled (interview with Ahmadinejad)

Ahmadinejad DID NOT threaten to “wipe Israel off the map.”

Iranian President Ahmadinejad to Turkish TV – Interview



old blogs:

Does Iran’s President Want Israel Wiped Off The Map – Does He Deny The Holocaust?

Iranian President Ahmadinejad’s letter to the American people

Ahmadinejad: I’m not anti-Semitic by Yitzhak Benhorin

The Big Bank Job: The Insanity of the $700 Billion Giveaway by Michael Hudson

Dandelion Salad

Sent to me by Jason Miller from Thomas Paine’s Corner. Thanks, Jason.

by Michael Hudson
Simulposted with Counterpunch

The banksters’ plan now is for icing on the cake – to take Mr. Paulson’s $700 billion and run. It’s not a “bailout of the financial system.” It’s as giveaway – to insiders, to sell out all their bad bets. Companies across the board will get rid of their bad mortgages, and also their bad car loans, furniture time payments, credit-card loans, student loans – all the debts that any competent actuary could have told them never could have been paid in the first place.

This is not what Treasury Secretary Paulson is acknowledging, and shame on him for it. Last Friday, Sept., he was joined by Fed Chairman Ben Bernanke singing in unison an advertising jingle for America’s new kleptocracy that rings so false that Congress and the American public must hear the off-notes. London’s Financial Times, as well as a host of Europeans realize it. That is what has been driving the dollar’s exchange rate this week. It seems easier for foreigners to recognize the threat to turn American democracy into a rapacious kleptocracy.

This change always is sudden, arranged under emergency conditions. Those with a 12-year memory will see George Bush as playing the role of Boris Yeltsin in Russia in 1996, paying off his campaign contributors by giving them all the economic surplus that the government could expropriate in the notorious “loans for shares” plan applauded and supported by Clinton Treasury Secretary (and current Obama advisor) Robert Rubin. (The moral: do we have a Putin in our near future to lock in the anti-democratic coup?)

How ironic all this is! Back in the 1970s there was theorizing that the Russian and American economies were converging. The idea was that both were moving toward more centralized state control, state financing, state subsidy, and a military-industrial complex. Nobody expected the convergence to occur Yeltsin-style in government giveaways to insiders to create a new group of financial billionaires – the “seven bankers” under Yeltsin in 1996, and Mr. Paulson’s Crony Capitalist gang today.

Let’s look at the euphemisms as an exercise in doublethink. Mr. Paulson defended his “troubled asset relief program” (TARP) by claiming that “illiquid mortgage assets … have lost value … choking off the flow of credit that is so vitally important to our economy.” The credit that is “so vitally important” has taken the form of bad loans. Contra Mr. Paulson’s pretense, the problem is not that they are “illiquid.” If that were the problem, it would be merely temporary. The Federal Reserve banks are designed to provide liquidity – on good collateral, of course.

As Financial Times columnist Martin Wolf noted on Wednesday, Sept. 24, the problem is that the face value of mortgage loans and a raft of other bad loans far exceeds current market prices or prices that are likely to be realized this year, next year or the year after that. They are packaged into what the financial press rightly calls “toxic.” The bailout is not efficient, he writes, “because it can only deal with insolvency by buying bad assets at far above their true value, thereby guaranteeing big losses for taxpayers and providing an open-ended bail-out to the most irresponsible investors.” “The simplest way to recapitalize institutions,” He concludes, is “by forcing them to raise equity and halt dividends. If that did not work, there could be forced conversions of debt into equity. The attraction of debt-equity swaps is that they would create losses for creditors, which are essential for the long-run health of any financial system.” This is the key: if debts cannot be paid, then creditors must take losses.

These bad loans are toxic because they can only be sold at a loss – if at all, because foreign investors no longer trust the U.S. investment bankers or money managers to be honest. That is the problem that Congress is not willing to come out and face. Many of these loans are outright fraudulent. And they are being sold by crooks. Crooks who work for banks. Crooks who use accounting fraud – such as the fraud that led to the firing of Maurice Greenberg at A.I.G. and his counterparts at Fannie Mae, Freddie Mac and other companies engaging in Enron-type accounting.

This is not what the magic of compound interest promised. But it is where it had to end up, with mathematical inevitability. It was an advertising come-on for Wall Street money managers and promoters of “pension-fund capitalism” (or “peoples’ capitalism” as it was called in Chile by the Chicago Boys working for General Pinochet’s murderous regime, and Margaret Thatcher’s Conservatives in England). The promise is that if people consign these funds to individuals who make much, much more than they do but have the survival-of-the-fittest advantage of being much, much more greedy, they will receive a perpetual doubling of interest. That is how retirements for American workers are still supposed to be paid – by magic, not by direct investment. Prospective retirees are supposed to ensure a good life by investing savings in loans to corporate raiders who fire, lay off, downsize and outsource these very workers. The trick is to persuade employees to hand retirement funding over to financial managers whose idea was to make money off the economy by extracting interest and dividends off workers, homeowners and companies being bought on debt leverage. In the final analysis it is debt leverage by itself that is supposed to fuel capital gains.

This has led to madness. The maddest solution of all would be for the government to give the extractive financial sector even more money – funds that no private lenders have been willing to provide, not even vulture funds. No private firm has been able to discover what Mr. Paulson and the unfortunate Mr. Bernanke are sanctimoniously promising: that a viable deal, even an almost money-making one, can be made by buying junk now and waiting for “the economy” to make it good.

Just what is “the economy” that is supposed to perform this remarkable feat, if not its mortgage debtors and corporate debtors? The government is to do what law enforcement officials have moved to prevent Countrywide Financial and other predatory lenders from doing: squeezing exploding Adjustable Rate Mortgages and “negative equity” mortgages out of debtors, on terms that often were bait-and-switch to begin with. Private companies could be challenged and their array of penalty fees thrown out of court. But perhaps Congress can craft a law imposing these harsh terms on voters. It is not as if we live in a system where people vote their self-interest.

Promises that “taxpayers” will be able to recover a large part of this money are a fiction. If there were a hope of recovering this money, then investors abroad – foreign buyout funds, foreign banks, foreign sovereign wealth funds – would have been willing to buy Bear Stearns, Lehman Brothers, A.I.G. and other companies at some price. But they wouldn’t touch this at any price.

Why then should the U.S. Treasury pay three times as much as the Iraq War for money that will end up being lost after paying off the gamblers from their own bad bets. These are the bankers who already have placed all the risk onto their clients and, by lobbying to rewrite the bankruptcy laws, onto debtors. As matters now stand, the $700 billion is to be used to finance this year’s annual bonuses, this year’s million-dollar salaries and sales commission, and to contribute yet more to the retirement funds for the golden parachutes that financial managers have siphoned off to provide a safety net for themselves. So we are back to the basic motto these days: “You only have to make a fortune once in a lifetime.” Now is the time to make these fortunes as big as they’re going to get. Because it’s all down hill from here.

Why the banks won’t lend

Here’s why the government giveaway logic is fallacious: It’s a giveaway, not a bailout. A bailout is designed to keep the boat afloat. But the existing Wall Street boat crafted by the investment bankers seeking to unload their junk must sink. The question as it sinks is simply who will be able to grab the lifeboats, and who drowns.

There is a reason why the banks won’t lend: Housing and commercial real estate already are so heavily mortgaged that there is no rental value available (over and above operating expenses, current taxes and debt service) to pledge to the banks. It still costs more to buy a house than to rent it. No increase in the amount of credit, short of hyper-inflation can cure this. No lowering of interest rate, will lead banks to risk making a bad new loan – that is, a loan that probably will go bad and end up with the bank taking a loss after the borrower walks away or defaults.

Does Congress know what it is being told to do? Suppose that “taxpayers” are to squeeze money out of the “toxic” junk mortgages they buy from the investors that have bought these bad loans. The only way to do so would be for real estate prices to be raised to even higher levels. This means an even higher proportion of take-home pay by prospective homeowners.

Mr. Paulson realizes this. That’s why he’s directed Fannie Mae and Freddie Mac to inflate real estate prices all the more. At least, by the existing mortgage-holders to get paid off by existing debtors selling to the proverbial “greater fool.” The hope in Mr. Paulson’s plan is that there are enough “greater fools” with enough money to borrow from yet more foolish new mortgage lenders. Only Fannie Mae, Freddie Mac and the Federal Housing Agency are willing to make such foolish loans, and that is only because they are being directed to act in a foolish way by Mr. Paulson.

Here’s the problem with following Mr. Paulson’s orders and lending yet more: Every major real estate advisor on record has forecast a further drop of between 20 to 30 percent in property prices over the coming twelve months. This is now the standard forecast. It means that over and above the five million arrears and foreclosures that Mr. Paulson acknowledged already are on the books, yet more families are to give up the fight by this time next year. Is the $700 billion giveaway fund to try and recoup by evicting them too from their houses – to pay the “taxpayer” enough to bail out Countrywide, Washington Mutual and other predatory lenders for loans that state Attorneys General have accused of being fraudulent?

For the government to even begin to recover some of the value of the $700 billion in junk mortgages it has bought would force new homebuyers to pay even more of their income to the banks. And if they do that, they will have less income to spend on goods and services. The domestic market will shrink, and tax revenues will fall at the state, local and federal levels. The debt overhead will deflate the economy, causing shrinkage all down the line.

So here’s where the cognitive dissonance comes in: It is necessary, even inevitable, for the volume of debt to come down – not up – to restore equilibrium. The economy was well on its way to preparing the ground for this last week. As Alan Meltzer of the American Enterprise Institute (of all places!) explained on McNeill-Lehrer, Merrill Lynch was able to be sold at 22 cents on the dollar; and the economy survived Lehman Brothers and Bear Stearns being wiped out.

Such debt writes-offs are a precondition for writing down America’s mortgage debts to levels that are affordable. But Mr. Paulson’s plan is to fight against this tide. He wants the Wall Street to keep on raking in money at the expense of the economy at large. These are the big banks who lobbied Congress to appoint de-regulators, the banks whose officers paid themselves enormous bonuses and gave themselves enormous golden parachutes. They were the leaders in the great disinformation campaign about the magic of compound interest. And now they are to get their payoff.

The pretense is that not to pay them off would threaten “the economy.” The reality is that it only would stop their predatory behavior. Worse than that, for the economy at large a government take-over of these bad loans would prevent the debt write-down that the economy needs!

It gets worse. If Congress should be so destructive as to buy out $700 billion of bad loans (for starters), the sellers will do just what Russia’s kleptocrats did. They will take their money and move it abroad to a “hard” currency country. This will help collapse the dollar. Up will go gasoline costs and prices for other imports. America will be turned into a Russian-style post-Soviet economy, having endowed a new domestic kleptocracy of insiders, who use some of their gains to finance the campaigns of American Yeltsins such as McCain.

So let us admit that the economy has been taking a wrong track for a number of decades now. As John Kay noted : “When the dust settles, many banks and hedge funds will have lost more money on their trading activities in the past year or so than they had made in their entire history … The pursuit of shareholder value damaged both shareholder value and the business.”

I worry that Wednesday’s jump in the Dow Jones average signals that the big betters have decided that there is a good chance of the vast giveaway going through. The Republican protests seem to me to aim not so much at really stopping the measure, but on going on record that they opposed it – before they voted for it. When the public wakes up to the great giveaway, the Republicans can say, “It was a Democratic Congress that did it, not us. Read our anguished protests.” Everyone is trying to cover themselves. With good reason.

Don’t let them speak on behalf of voters and then act against the economy, claiming that they are trying to save it. A giveaway of unprecedented magnitude would cripple it for as far as the eye can see.

We have reached the point where it may finally be able to break through the membrane of cognitive dissonance that has been blinded people. The very first course in economics –starting in high school, followed up in college and then refined in graduate school – should explain to students why it is false to believe the advertisement that Wall Street has been trying to sell for the past half century: The deceptive promise that an economy can get rich off the mathematical “magic of compound interest.”

The unreality of this promise should be immediately apparent by looking at the math of exponential growth. Already at the time of the American Revolution, financial economists were popularizing the contrast that Malthus soon would imitate in his population theory: Debts grow at “geometric” rates, while the economy itself grows only “arithmetically,” in a slower and more linear way.

All that is needed is to put this idea together with the basic balance-sheet definition: One person’s savings are lent out to become other peoples’ debts. So the “magic of compound” interest to savers means an equal “magic of exploding debt” to somewhere else in the economy. And inasmuch as creditors insist on protecting themselves from inevitable default by possessing collateral, it is natural that most of the economy’s debts are owed on its largest asset: land and buildings. This explains why mortgage debts have become repayable and “gone toxic.”

The “magic of compound interest” refers to the tendency of savings to double and redouble exponentially, with a matching rise in what debtors owe on the other side of the balance sheet. These mathematics have been operated throughout history, ever since the charging of interest was invented in Sumer some time around 2750 BC. In every known society, the effect has been to concentrate wealth in the hands of people with money. In recent years, one’s own money is not even necessary to do this. The power to indebt others to oneself can be achieved by free credit creation. However, the resulting mushrooming exponential growth in indebtedness must collapse at the point where its interest and other carrying charges (now augmented by exorbitant late fees, bounced-check fees, credit-card costs and other penalties) absorb the entire economic surplus.

This is the point that has been reached – and passed – today. It has been developing for many decades. But there is a great reluctance to accept the fact that debts cannot be paid. “The poor are honest,” as one banker explained to me, and believe that “a debt is a debt” and must be paid. (This is not what Donald Trump, Bear Stearns or A.I.G. believe, but they are at the top of the economic pyramid, not its base.)

Numerous publishers turning down my proposed books on the subject over the years. As they have explained to me: “Nobody wants to read how the bubble will break – at least, not until after it bursts. Can’t you write a book on how you can make a million dollars off the coming economic collapse? That would be a winner, Prof. Hudson. But to tell people that they can’t put aside savings and pay for their retirement ‘in their sleep’ is like telling them that they will have bad sex after the age of 50. It’s a no-seller. Come back when you have good news.”

These are the words I’ve been hearing since the mid-1980s. I’ve spent much of my time looking through history to read up on how the failure to wipe out the debt overhead led to the collapse of Rome’s imperial republic, and to the Ottoman Empire as what was known as “the spoiling of Egypt” and “the ruin of Persia” toward the end of the 19th century. I’ve also published a series of four colloquia by assyriologists and archaeologists describing how earlier, from about 2500 to perhaps 300 BC, Babylonian and other Near Eastern rulers kept their citizens free and preserved their landholdings by annulling personal and agrarian debts when they took the throne – a true “tax holiday” – or when economic or military conditions warranted a general Clean Slate. (The series was funded and published by Harvard’s Peabody Museum and is now available from CDL Press.)

These Clean Slates were adopted literally, almost word for word, in the Biblical Jubilee Year of Leviticus 25. Even the same Hebrew word, deror, was used for the Babylonian andurarum proclaimed by rulers of Hammurapi’s dynasty from 2000 to 1600 BC. So it is remarkable to me that men claiming to be Christian leaders today should ignore the fact that in the very first sermon that Jesus gave, in Nazareth (Luke 4:14-30), he unrolled the scroll of Isaiah 61 and promised that he had come “to proclaim the Year of the Lord,” the Jubilee Year. That was the literal “good news” that the Bible preached, as the Dead Sea scrolls have abundantly illustrated.

Yet it is a sign of the power of creditor ideology that even the essence of this founding document of Western civilization has been ignored by a distorted view of what early Christianity, Judaism and other religions were all about. Hardly surprising. Luke’s passage on this founding sermon of Jesus concludes by pointing out that “all the people in the synagogue were furious when they heard this. They got up, drove him out of the town, and took him to the brow of the hill on which the town was built, in order to throw him down the cliff.”

Down the cliff! This is where the revolting right-wing Roman senators drove the followers of the Gracchi brothers on the Senate hill, in an exercise of political violence that prevented Rome from granting debt relief toward the end of the second century BC. Livy, Diodorus, Plutarch and other historians of the epoch attributed the prospective fall of the Roman Empire to its harsh creditor-oriented debt laws. But today, historians publish books speculating that perhaps the problem was lead piping or lead goblets for their wine, or disease, or imperial overreaching, or superstition – anything but the cause to which the Roman historians themselves pointed.

We are still living with the consequences of Rome’s oligarchic revolution. That is what makes this week’s Congressional hearings on the $700 billion giveaway so important. First with military force and then via debt bondage and serfdom, Rome bequeathed to Europe a property-based, creditor-oriented body of law. But since the 13th century, country after country has shifted the balance back to favor debtors – to save them from literal debt bondage, from debtor’s prisons, from permanent indebtedness, to give them Clean Slates on an individual level.

Handel arranged the first performance of The Messiah as a benefit to raise money to bail debtors out of Irish debtors’ prisons, and every year the oratorio was repeated for that charitable purpose. Martin Luther warned about the mathematics of compound interest as the monster Cacus, devouring all. Yet Luther’s denunciations of usury are excluded from his collected works in English, and are available in this language only in Vol. III of Marx’s Capital and Book III of his Theories of Surplus Value. The discussion of interest and banking has become so marginalized that even when I taught money and banking at the New School in New York City in the late 1960s and early ‘70s, it was not part of the core curriculum but treated as a special topic. (Fortunately, that is not the case where I am now happily situated at the University of Missouri in Kansas City. But it took a long time to get here.)

Behind this shift in legislative choice was the perception that no economy can keep up with the burden of debts growing at exponential rates faster than the economy itself is growing. No economy can grow at steady exponential rates; only debts can multiply in this way. That is why Mr. Paulson’s $700 billion giveaway to his Wall Street colleagues cannot work.

What it can do is provide a one-time transfer of wealth to insiders who already have been playing the debt-credit system and siphoning off its predatory financial proceeds to themselves. The Wall Street bankers, brokers and fund managers to whom I’ve been speaking for many decades all know this. That is why they pay themselves such large annual bonuses and large salaries each year. The idea is to take as much as you can. As the saying goes: “You only have to make a fortune once in a lifetime.” They have been salting away their fortunes year after year, mainly in hard assets: real estate (free of mortgages), fine furniture, boats and trophy art. One last $700 billion heist and they can make their getaway.

Michael Hudson is a former Wall Street economist specializing in the balance of payments and real estate at the Chase Manhattan Bank (now JPMorgan Chase & Co.), Arthur Anderson, and later at the Hudson Institute (no relation). In 1990 he helped established the world’s first sovereign debt fund for Scudder Stevens & Clark. Dr. Hudson was Dennis Kucinich’s Chief Economic Advisor in the recent Democratic primary presidential campaign, and has advised the U.S., Canadian, Mexican and Latvian governments, as well as the United Nations Institute for Training and Research (UNITAR). A Distinguished Research Professor at University of Missouri, Kansas City (UMKC), he is the author of many books, including Super Imperialism: The Economic Strategy of American Empire (new ed., Pluto Press, 2002) He can be reached at

Martin Wolf, “Paulson’s plan was not a true solution to the crisis,” Financial Times, September 24, 2008.


The Paulson-Bernanke Bank Bailout: Will the Cure be Worse than the Disease? by Michael Hudson

Tragedy in the Making in Washington and on Wall Street: The Canadian Solution

Lawmakers Reach Accord on Huge Financial Rescue

Final Bailout White Paper

Dennis Kucinich: And This Is The System We’re Saving!

Ron Paul: You Can Not Place Value Into Assets That Are Worthless!

Trouble in Banktopia By Mike Whitney

Marc Faber: Let the crisis burn itself out

Tell Congress: No to Bailout! (Action alerts)

The Economy Sucks and or Collapse

Tragedy in the Making in Washington and on Wall Street: The Canadian Solution

Dandelion Salad

by Rodrigue Tremblay

“When troubles come, they come not single spies, but in battalions.” – Shakespeare (1564-1616)

“The liberty of a democracy is not safe if the people tolerate the growth of private power to the point where it becomes stronger than the democratic state itself. That in its essence is fascism — ownership of government by an individual, by a group or any controlling private power.” – Franklin D. Roosevelt (1882-1945), 32nd US president

“Our economy is facing a moment of great challenge. … We’re in the midst of a serious financial crisis.” – George W. Bush, September 24, 2008

The Washington gridlock about finding a solution to the subprime financial crisis in the United States is turning into a tragedy, seemingly because of a fundamental lack of understanding and communication about the causes of this financial crisis and the most efficient way to solve it. The nature of the crisis, the economic consequences if it is not solved, and how it could be solved without costing the government and U.S. taxpayers a single penny has not been properly explained to Congress and to the U.S. population. Continue reading

Lawmakers Reach Accord on Huge Financial Rescue

Dandelion Salad

By Lori Montgomery and Paul Kane
Washington Post Staff Writers
Sunday, September 28, 2008; 2:56 AM

Congressional leaders and the Bush administration this morning said they had struck an accord to insert the government deeply into the nation’s financial markets, agreeing to spend up to $700 billion to relieve Wall Street of troubled assets backed by faltering home mortgages.

House and Senate negotiators from both parties emerged with Treasury Secretary Henry M. Paulson Jr. at 12:30 a.m. from a marathon session in the Capitol to announce that they had reached a tentative agreement on a proposal to give Paulson broad authority to organize one of the biggest government interventions in the private sector since the Great Depression.

Lawmakers Reach Accord on Huge Financial Rescue –

h/t: CLG

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Final Bailout White Paper

Dennis Kucinich: And This Is The System We’re Saving!

Ron Paul: You Can Not Place Value Into Assets That Are Worthless!

Trouble in Banktopia By Mike Whitney

Marc Faber: Let the crisis burn itself out

Tell Congress: No to Bailout! (Action alerts)

The Economy Sucks and or Collapse