The Journal analyzed the fortunes of CEOs from 2003 to 2007 based on executive compensation and stock sale data. Fifteen of these CEOs took home more than $100 million in cash during this period. At the high end was Charles Schwab, who made over $816 million from his self-named accounting firm, almost all of it from stock sales.

Of the 120 publicly traded firms the Journal analyzed, CEOs cashed out a total of more than $21 billion. However, data was gathered only from publicly traded companies, and thus does not include similar fortunes that have been made by “hedge fund chiefs, Wall Street traders, and executives who sold their companies outright.” Nor did it include data related to exit packages, the multimillion-dollar “golden parachutes” awarded to retiring or fired executives.

The Journal’s findings underscore the parasitism and criminality of the US financial elite. Defenders have long justified extravagant CEO pay by claiming that these were the talented “risk-takers” who generated enormous wealth for investors. But the Journal’s data shows that there is no correlation between compensation and a firm’s success. On the contrary, many CEOs rewarded themselves just as their corporations approached ruin.

These included Richard Fuld, the CEO of Lehman Brothers, who transformed his firm’s stock into well over $100 million in cash. When added to his salary and bonuses, Fuld pocketed nearly $185 million in the five years before 2008, even as he guided his 150-year-old investment bank to ruin. James Cayne of Bear Stearns did nearly as well at his investment bank, collecting over $163.2 million, the vast majority of which was garnered from selling stock that would soon be scarcely worth the paper upon which it was printed.

Maurice Greenberg of American International Group (AIG) made $132.8 million between 2003 and 2005, when he was forced to resign. Well over $100 million of this came from windfall stock sales of the giant insurer. AIG collapsed in September, but was determined to be “too big to fail” by the federal government, and was bailed out twice in less than one month to the tune of some $120 billion.

In August, the sub-prime mortgage giant Countrywide Financial Group collapsed spectacularly, and was absorbed by Bank of America. In the previous five years, however, Countrywide’s CEO, Angelo Mozilo, took home $471 million, over $400 million of which came from sales of the company’s soon-to-be-worthless stock.

A look at the sectors of the economy where these richly remunerated executives worked, moreover, demonstrates the advanced rot of the US economy as a whole. Without exception, they represented corporations that engaged in financial speculation—“industries closely tied to the financial crisis,” as the Journal puts it—and that produced no real value. These until recently “vibrant” parts of the economy functioned only to siphon off enormous social wealth and deposit it in the bank accounts of the CEOs and big investors.

One example the Journal considered is the private student loan sector, which made Daniel Meyers, the CEO of a firm called First Marblehead, a very wealthy man. Marblehead specialized in servicing loans to students who had “exhausted the cheaper government-backed variety,” and then repackaging and selling the debt to big banks such as Bank of America. Meyers earned nearly $100 million, almost all of it in the sale of company stock; together with other Marblehead insiders, $660 million was taken. The Journal notes that Meyers used $10.3 million of his fortune to buy an ocean-front property in Rhode Island—the state with the highest unemployment rate. Meyers tore down the villa that was there and has put up a 38,000-square-foot mansion he named, befitting a pirate, “Seaward.”

Another sector of the economy that has proved highly lucrative for CEOs is that of home mortgages. In addition to the aforementioned case of Angelo Mozilo and Countrywide, the Journal highlights the case of New Century Financial, the nation’s second largest subprime lender. While the lender is now bankrupt, over a period of four years its three leading executives took home a combined $74 million. The Journal also mentions the case of Herbert and Marion Sandler, who made $2 billion off selling their mortgage firm, Golden West Financial Corp., to Wachovia in 2005. This purchase likely contributed to the demise of Wachovia, which collapsed in October and was bought out by Wells Fargo.

In the field of “credit-default swaps,” Michael Gooch made $82.5 million through his firm GTI Group. Over $77 million of this came from a remarkably well-timed sale in May of 2006. Since then, GTI’s stock has lost over 90 percent of its value. Gooch owns three mansions, and boasted to the Journal that he could pay off his only debt, a $1 million mortgage, “with the spare change in my bank account.”

The Journal notes with some surprise that one of the most highly remunerative fields was that of “home-building.” The wealth accumulated by CEOs in this sector is a clear byproduct of the speculative real estate bubble that emerged over the last decade. Toll Brothers, specializing in building suburban mansions, made Robert and Bruce Toll three quarters of a billion in cash, largely in stock sales. The company has lost 74 percent of its value in the past year.

Chad Dreier, CEO of Ryland Group, made $181 million building homes in “hot markets” such as Las Vegas that have now gone bust, exposing thousands of families to foreclosure. Dwight Schar, the CEO of a building firm called NVR, took home $626 million in 2003-2007, almost all from the sale of stock. Schar spent about $86 million of this fortune in 2005 to buy the Palm Beach, Florida estate of billionaire Ronald Perelman. The Journal notes that the 11-acre oceanfront complex includes two swimming pools and a tennis court.

It is perhaps a sign of the times that the Wall Street Journal, long a mouthpiece of US finance capital, would run a prominent article that questions the enormous personal fortunes built up by CEOs through dubious means even as their corporations sailed toward disaster. Running such an article aims in part, no doubt, to appease the rage of thousands of middling investors who have lost their shirts in the economic crisis.

In any event, the criminal methods of these CEOs, who have led their companies and American capitalism as a whole to the brink of ruin, do not derive from personal greed alone. In their criminality and nearsightedness the CEOs reflect, instead, the narrowing horizon and historical decline of US capitalism, in which the accumulation of extreme wealth long ago lost whatever connection it had to the creation of real value.

Microchips as small as this one could be implanted into Aids sufferers
Legislators in the archipelago’s remote province of Papua said they supported a bill requiring some patients to be fitted with chips to monitor the disease.
Health workers and Aids activists called the plan “abhorrent”.
People with Aids aren’t animals - we have to respect their rights.
Tahi Ganyang Butarbutar, a prominent Papuan activist
But lawmaker John Manangsang defended implanting small chips beneath the skin of “sexually aggressive” patients.
He said it would help authorities identify, track and ultimately punish those who deliberately infect others with up to six months in jail or a $5,000 fine.
The technical and practical details still need to be decided but, if the proposed law gets a majority vote as expected, it will be enacted next month, Mr Manangsang said.
Indonesia is the world’s fourth most populous country and has one of Asia’s fastest growing HIV rates.
There are up to 290,000 infections out of 235 million people, fuelled mainly by intravenous drug users and prostitution.
But Papua, the country’s easternmost and poorest province with a population of about 2 million, has been hardest hit.
Its case rate of almost 61 per 100,000 is 15 times the national average, according to internationally-funded research, which blames lack of knowledge about sexually transmitted diseases.
The health situation is extraordinary, so we have to take extraordinary action.
Lawmaker Weynand Watari
Read: Aids Sufferers’ Faith In Rhino Juice
Another lawmaker, Weynand Watari, envisions radio frequency identification tags like those used to track everything from cattle to luggage.
A committee would be created to decide who should be fitted with chips and to monitor patients’ behaviour.
But it remains unclear who would be on it and how they would carry out their work, lawmakers said.

On Friday November 21, the world came within a hair’s breadth of the most colossal financial collapse in history according to bankers on the inside of events with whom we have contact. The trigger was the bank which only two years ago was America’s largest, Citigroup. The size of the US Government de facto nationalization of the $2 trillion banking institution is an indication of shocks yet to come in other major US and perhaps European banks thought to be ‘too big to fail.’

The clumsy way in which US Treasury Secretary Henry Paulson, himself not a banker but a Wall Street ‘investment banker’, whose experience has been in the quite different world of buying and selling stocks or bonds or underwriting and selling same, has handled the unfolding crisis has been worse than incompetent. It has made a grave situation into a globally alarming one.

‘Spitting into the wind’

A case in point is the secretive manner in which Paulson has used the $700 billion in taxpayer funds voted him by a labile Congress in September. Early on, Paulson put $125 billion in the nine largest banks, including $10 billion for his old firm, Goldman Sachs. However, if we compare the value of the equity share that $125 billion bought with the market price of those banks’ stock, US taxpayers have paid $125 billion for bank stock that a private investor could have bought for $62.5 billion, according to a detailed analysis from Ron W. Bloom, economist with the US United Steelworkers union, whose members as well as pension fund face devastating losses were GM to fail.

That means half of the public’s money was a gift to Paulson’s Wall Street cronies. Now, only weeks later, the Treasury is forced to intervene to de facto nationalize Citigroup. It won’t be the last.

Paulson demanded, and got from a labile US Congress, Democrat as well as Republican, sole discretion over how and where he can invest the $700 billion, to date with no effective oversight. It amounts to the Treasury Secretary in effect ‘spitting into the wind’ in terms of resolving the fundamental crisis.

It should be clear to any serious analyst by now that the September decision by Paulson to defer to rigid financial ideology and let the fourth largest US investment bank, Lehman Brothers fail, was the proximate trigger for the present global crisis. Lehman Bros.’ surprise collapse triggered the current global crisis of confidence. It was simply not clear to the rest of the banking world which US financial institution bank might be saved and which not, after the Government had earlier saved the far smaller Bear Stearns, while letting the larger, far more strategic Lehman Bros. fail.

Some Citigroup details

The most alarming aspect of the crisis is the fact that we are in an inter-regnum period when the next President has been elected but cannot act on the situation until after January 20, 2009 when he is sworn in.

Consider the details of the latest Citigroup government de facto nationalization (for ideological reasons Paulson and the Bush Administration hysterically avoid admitting they are in the process of nationalizing key banks). Citigroup has more than $2 trillion of assets, dwarfing companies such as American International Group Inc. that got some $150 billion in US taxpayer funds in the past two months. Ironically, only eight weeks before, the Government had designated Citigroup to take over the failing Wachovia Bank. Normally authorities have an ailing bank absorbed by a stronger one. In this instance the opposite seems to have been the case. Now it is clear that the Citigroup was in deeper trouble than Wachovia. In a matter of hours in the week before the US Government nationalization was announced, the stock value of Citibank plunged to $3.77 in New York, giving the company a market value of about $21 billion. The market value of Citigroup stock in December 2006 had been $247 billion. Two days before the bank nationalization the CEO, Vikram Pandit had announced a huge 52,000 job slashing plan. It did nothing to stop the slide.

The scale of the hidden losses of perhaps the twenty largest US banks is so enormous that if not before, the first Presidential decree of President Barack Obama will likely have to be declaration of a US ‘Bank Holiday’ and the full nationalization of the major banks, taking on the toxic assets and losses until the economy can again function with credit flowing to industry once more.

Citigroup and the government have identified a pool of about $306 billion in troubled assets. Citigroup will absorb the first $29 billion in losses. After that, remaining losses will be split between Citigroup and the government, with the bank absorbing 10% and the government absorbing 90%. The US Treasury Department will use its $700 billion TARP or Troubled Asset Recovery Program bailout fund, to assume up to $5 billion of losses. If necessary, the Government’s Federal Deposit Insurance Corporation (FDIC) will bear the next $10 billion of losses. Beyond that, the Federal Reserve will guarantee any additional losses. The measures are without precedent in US financial history. It’s by no means certain they will salvage the dollar system.

The situation is so intertwined, with six US major banks holding the vast bulk of worldwide financial derivatives exposure, that the failure of a single major US financial institution could result in losses to the OTC derivatives market of $300-$400 billion, a new IMF working paper finds. What’s more, since such a failure would likely cause cascading failures of other institutions. Total global financial system losses could exceed another $1,500 billion according to an IMF study by Singh and Segoviano.

The madness over a Detroit GM rescue deal

The health of Citigroup is not the only gripping crisis that must be dealt with. At this point, political and ideological bickering in the US Congress has so far prevented a simple emergency $25 billion loan extension to General Motors and other of the US Big Three automakers—Ford and Chrysler. The absurd spectacle of US Congressmen attacking the chairmen of the Big Three for flying to the emergency Congressional hearings on a rescue loan in their private company jets while largely ignoring the issue of consequences to the economy of a GM failure underscores the utter lack of touch with reality that has overwhelmed Washington in recent years.

For GM to go into bankruptcy risks a disaster of colossal proportions. Although Lehman Bros., the biggest bankruptcy in US history, appears to have had an orderly settlement of its credit defaults swaps, the disruption occurred before-hand, as protection writers had to post additional collateral prior to settlement. That was a major factor in the dramatic global market selloff in October. GM is bigger by far, meaning bigger collateral damage, and this would take place when the financial system is even weaker than when Lehman failed.

In addition, a second, and potentially far more damaging issue, has been largely ignored. The advocates of letting GM go bankrupt argue that it can go into Chapter 11 just like other big companies that get themselves in trouble. That may not happen however, and a Chapter 7 or liquidation of GM that would then result would be a tectonic event.

The problem is that under Chapter 11 US law, it takes time for the company to get the protection of a bankruptcy court. Until that time, which may be weeks or months, the company would need urgently ‘bridge financing’ to continue operating. This is known as ‘Debtor-in-Possession or DIP financing. DIP is essential for most Chapter 11 bankruptcies, as it takes time to get the plan of reorganization approved by creditors and the courts. Most companies, like GM today, go to bankruptcy court when they are at the end of their liquidity.

DIP is specifically for companies in, or on the verge of bankruptcy, and the debt is generally senior to other outstanding creditor claims. So it is actually very low risk, as the amount spent is usually not large, relatively speaking. But DIP lending is being severely curtailed right now, just when it is most needed, as healthier banks drastically cut loans in the severe credit crunch situation.

Without access to DIP bridge financing, GM would be forced into a partial, or even a full liquidation. The ramifications are horrendous. Aside from loss of 100,000 jobs at GM itself, GM is critical to keep many US auto suppliers in business. If GM failed soon most, possibly even all of the US and even foreign auto suppliers will go under. Those parts suppliers are important to other auto makers. Many foreign car factories would be forced to close due to loss of suppliers. Some analysts put 2009 job losses from a GM failure as high as 2.5 million jobs due to the follow-on effects. If the impact of that 2.5 million job loss is seen in terms of the overall losses to the economy of non-auto jobs such as services, home foreclosures caused and such, some estimate total impact would be more than 15 million jobs.

So far in the face of this staggering prospect, the members of the US Congress have chosen to focus on the fact the GM chief, Rick Wagoner, flew in his private company jet to Washington. The Congressional charade conjures up the image of Nero playing his fiddle as Rome goes up in flames. It should not be surprising that at the recent EU-Asian Summit in Beijing, Chinese officials mooted the idea of trading between the EU and Asian nations such as China in Euro, Renminbi, Yen or other national currencies other than the dollar. The Citigroup bailout and GM debacle has confirmed the death of the post-1944 Bretton Woods Dollar System.

The real truth behind Citigroup bailout

What neither Paulson nor anyone in Washington is willing to reveal is the real truth behind the Citigroup bailout. By his and the Republican Bush Administration’s adamant earlier refusal to take an initial resolute action to immediately nationalize the nine or so largest troubled banks, he has created the present debacle. By refusing on ideological grounds to instead reorganize the banks’ assets into some form of ‘good bank’ and ‘bad bank,’ similar to what the Government of Sweden did with what it called Securum, during its banking crisis in the early 1990’s, Paulson and company have created a global financial structure on the brink.

A Securum or similar temporary nationalization would have allowed the healthy banks to continue lending to the real economy so the economy could continue operating, while the State merely sat on the undervalued real estate assets of the Swedish banks for some months until the recovering economy made the assets again marketable to the private sector. Instead, Paulson and his ‘crony capitalists’ in Washington have turned a bad situation into a globally catastrophic one.

His apparent realization of the error of his initial refusal to nationalize came too late. When Paulson reversed policy on September 19 and presented the nine largest banks with an ultimatum to accept partial Government equity ownership, abandoning his original bizarre plan to merely buy up the toxic waste asset-backed securities of the banks with his $700 billion TARP taxpayer money, he never revealed why.

Under the original Paulson Plan, as Dimitri B. Papadimitriou and L. Randall Wray of the Jerome Levy Institute at Bard College in New York point out, Paulson sought to create a situation in which the US ‘Treasury would become an owner of troubled financial institutions in exchange for a capital injection—but without exercising any ownership rights, such as replacing the management that created the mess. The bailout would be used as an opportunity to consolidate control of the nation’s financial system in the hands of a few large (Wall Street) banks, with government funds subsidizing purchases of troubled banks by “healthy” ones.’

Paulson soon realized the scale of crisis, largely triggered by his inept handling of the Lehman Brothers case, had created an impossible situation. Were Paulson to use the $700 billion to buy up toxic waste ABS assets from the select banks at today’s market price, the $700 billion would be far too little to take an estimated $2 trillion ($2,000 billion) in Asset Backed Securities off the books of the banks.

The Levy Economics Institute economists state, ‘It is probable that many and perhaps most financial institutions are insolvent today — with a black hole of negative net worth that would swallow Paulson’s entire $700 billion in one gulp.’

That reality is the real reason Paulson was forced to abandon his original ‘crony bailout’ TARP plan and opt to use some of his money to buy equity shares in the nine largest banks.

That scheme as well is ‘dead on arrival’ as the latest Citigroup nationalization scheme underscores. The dilemma Paulson has created with his inept handling of the crisis is simple: If the US Government paid the true value for these nearly worthless assets, the banks would have to write down huge losses, and, as Levy economists put it, ‘announce to the world that they are insolvent.’ On the other hand, if Paulson raised the toxic waste purchase price high enough to protect the banks from losses, $700 billion ‘will buy only a tiny fraction of the ‘troubled’ assets.’ That is what the latest nationalization of Citigroup is about.

It is only the beginning. The 2009 year will be one of titanic shocks and changes to the global order of a scale perhaps not experienced in the past five centuries. This is why we should speak of the end of the American Century and its Dollar System.

How destructive that process will be to the citizens of the United States who are the prime victims of Paulson’s crony capitalists, as well as to the rest of the world depends now on the urgency and resoluteness with which heads of national Governments in Germany, the EU, China, Russia and the rest of the non-US world react. It is no time for ideological sentimentality and nostalgia of the postwar old order. That collapsed this past September along with Lehman Brothers and the Republican Presidency. Waiting for a ‘miracle’ from an Obama Presidency is no longer an option for the rest of the world.

Paul Joseph Watson
[1] Prison Planet.com
Monday, November 24, 2008

German intelligence agents have been caught staging a false flag terror attack against an EU building in Kosovo, apparently in an attempt to create a pretext for EU police to be deployed in Kosovo after government leaders rejected the UN-mandated proposal.

“Germany declined to comment on on Saturday on reports that three Germans arrested on suspicion of throwing explosives at an EU office in Kosovo were intelligence officers,” [2] reports Reuters.

“The explosive charge was thrown on Nov. 14 at the International Civilian Office (ICO), the office of EU Special Representative Pieter Feith, who oversees Kosovo’s governance.”

A police source in Kosovo told Reuters: “They are members of the BND”, but gave no further details.

German news outlet Der Spiegel named the men as BND intelligence officers.

Most reports claimed that the officers had thrown dynamite at the building, while others reported that a bomb was placed near the building.

(ARTICLE CONTINUES BELOW)

The bombing attempt happened just days after Kosovan leaders rejected a plan by U.N. Secretary General Ban Ki-moon’s for the deployment of a 2000 strong EU police and justice mission, EULEX.

A Kosovan judge has ordered that the men be detained for a further 30 days as prosecution lawyers seek terrorism charges that carry a maximum 20-year sentence.

The three men were not in Kosovo under official auspices but were working on behalf of a contractor, named by German media as Logistic Assessments.

“The alleged presence of covert intelligence operatives has led to a deterioration in the cordial relations between Germany and the newly independent Kosovo. The German foreign ministry confirmed that three German citizens had been detained in Kosovo. The BND had no comment,” reports the [3] European Voice.

The German secret service, the BND, is notorious for infiltrating extremist groups and using them for their own political ends.

In March 2003 amidst a highly publicized attempt to ban the activities of a German Neo-Nazi political party, the trial collapsed in court after it emerged that the far-right National Democratic Party (NPD) [4] was full of German intelligence officers occupying top ranking positions, including the publisher of the party’s newspaper, who were all secretly on the government’s payroll for decades.

“The case has been stalled for more than a year after it emerged that the government’s case rested, at least partly, on a network of informants in the National Democratic Party. This raised the question of whether any acted as provocateurs,” reported the Scotsman.

As many as 30 leading figures in the party were exposed as paid agents and informers for the BND.

THE french fry was “almost sacrosanct for me,” Ray Kroc, one of the founders of McDonald’s, wrote in his autobiography, “its preparation a ritual to be followed religiously.” During the chain’s early years french fries were made from scratch every day. Russet Burbank potatoes were peeled, cut into shoestrings, and fried in McDonald’s kitchens. As the chain expanded nationwide, in the mid-1960s, it sought to cut labor costs, reduce the number of suppliers, and ensure that its fries tasted the same at every restaurant. McDonald’s began switching to frozen french fries in 1966 — and few customers noticed the difference. Nevertheless, the change had a profound effect on the nation’s agriculture and diet. A familiar food had been transformed into a highly processed industrial commodity. McDonald’s fries now come from huge manufacturing plants that can peel, slice, cook, and freeze two million pounds of potatoes a day. The rapid expansion of McDonald’s and the popularity of its low-cost, mass-produced fries changed the way Americans eat. In 1960 Americans consumed an average of about eighty-one pounds of fresh potatoes and four pounds of frozen french fries. In 2000 they consumed an average of about fifty pounds of fresh potatoes and thirty pounds of frozen fries. Today McDonald’s is the largest buyer of potatoes in the United States.

The world has never been overpopulated with humans in any meaningful sense. It seems, though, that it is overpopulated with theoretical fears of overpopulation.

The appeal of the overpopulation myth is obvious—who doesn’t love a simple, easily graspable idea that seems to explain a great deal? One such idea is the central biological insight that all animals aim to turn food into offspring. When a species’ food increases, then its population grows as well; and when the food supply declines, so too do its numbers. This applies to everything from paramecia to parakeets.

Since humans are also animals that reproduce, biologists have extended that insight to us as well. This is the source of the overpopulation fears that have haunted learned experts from Thomas Robert Malthus 200 years ago to Paul Ehrlich today.

An extensive literature critiques the concept of human overpopulation. But it’s apparently an idea whose time comes again, and again, and again, in all sorts of strange places. For instance, the 1990s saw a bad novelization of the concept in Ishmael, in which a telepathic gorilla recycles Malthusianism.

The latest iteration of this two-century-old idea comes from Duke University consultant Russell Hopfenberg, in an article called “Human Carrying Capacity Is Determined by Food Availability”, in the November 2003 issue of the journal Population and Environment. Hopfenberg writes, “[T]he problem of human population growth can be feasibly addressed only if it is recognized that increases in the population of the human species, like increases in the population of all other species, is a function of increases in food availability.”

Hopfenberg backs his argument by showing that global food supplies and human numbers both rise from 1960 to 2000. In 2001, Hopfenberg, writing with Cornell University ecologist David Pimentel in Environment, Development and Sustainability, further asserts that “if food production continues to increase, the world population is projected to increase to 12 billion in the next 50 years (based on current growth rates).” Hopfenberg’s solution to skyrocketing human numbers is simple: “Cap the increases in food production and thereby halt the increases in population by means of a reduced birth rate.”

So has the Malthusian case finally been proven? No. Hopfenberg’s analysis makes the mistake of considering only global numbers. This hides a great deal of information. If we look on the regional level we see a very different picture than one of a relentlessly rising tide of human babies. Fertility does not correlate with food availability.

The countries with greatest access to food are, in fact, the countries with the lowest fertility rates. As the United Nations reports, 14 developed countries have fertility rates lower than 1.3 children per woman. (Replacement fertility is 2.1 children per woman.) The fertility rates in practically all developed countries are below the replacement rate. Clearly, food availability does not mean more children. More generally, as food security has increased around the world, instead of increasing as Hopfenberg’s theory would suggest, global average fertility rates have dropped from 6 children per woman in 1960 to 2.6 today. And the rates continue to plummet. Sadly, in Africa, which has the highest current fertility rates, food production per capita has been declining for nearly 30 years.

If food availability really determined human reproductive capacity, Illinois farmers should have the highest fertility rate in the world. Instead, they have one of the lowest. Hopfenberg would reply that excess food produced in North America and Europe fuels population growth in the rest of the world. In some sense that is trivially true, but the strictly biological model that he says applies to people does not account for such phenomena. For example, deer in Virginia don’t sacrifice their chances to produce fawns and ship their food to deer in Arkansas, nor do sparrows in New York forego nesting in order to supply food to Floridian sparrows. Individuals, not populations, reproduce.

The notion that capping food supplies will halt population growth is also trivially true, but not by the gentle means which Hopfenberg and Pimentel suggest, e.g., reducing human birth rates. Food shortages no doubt reduce fertility, but they also shrink population much more quickly by simple starvation.

Finally, Hopfenberg and Pimentel’s projection that world population will reach 12 billion by 2050 is off. They simply extrapolate current levels of fertility, yet as we’ve seen, fertility rates are rapidly declining. The 2002 revision of the United Nations’ World Population Prospects’ median variant trend projects a world population of 8.9 billion by 2050. Given the rapidly falling global fertility rates, the low variant trend is more likely—and that projects a world population topping out at 7.5 billion by 2040, then beginning to decline. Perhaps Malthusianism will finally decline along with fertility rates.

The recent meeting between Russian Prime Minister Vladimir Putin and his Chinese counterpart, Wen Jiabao, created a financial sensation. Wen said that the two nations could withstand the global financial crisis if they joined forces; Putin urged him to go farther and stop using U.S. dollars in Russian-Chinese settlements.

This idea is nothing new. Russia and China reached a “framework” agreement in November 2007, which was followed by China’s similar agreement with Belarus.

Earlier this year, Iranian President Mahmoud Ahmadinejad and Venezuelan leader Hugo Chavez turned against the dollar as well when they asked their OPEC partners to stop using the dollar for oil settlements. They argued that the “green” currency was no longer reliable and it was high time they look for a more stable and predictable alternative.

Curiously, unlike the Ahmadinejad and Chavez appeal, Putin’s proposal came as the dollar was on the rebound and even began pushing the euro. Economists even started talking in terms of a reversal of the global currency trends, rather than the temporary appreciation of the dollar.

Analysts predict that the dollar will regain its value in the next few months. They do not see anything which could hinder its steady growth.

Yet, Putin proposed that Russia and China stop using it as a settlement instrument. What is it - lack of confidence in the dollar’s prospects or a political move?

Experts differ on this count. Igor Nikolayev, chief strategic analyst at FBK private auditing firm, sounded skeptical: “I think it was a political statement rather than an economic decision. There is a dominant public sentiment that the United States is the source of all evil, so let’s stop using the dollar,” he explained.

One has to bear in mind, though, that some other currency will need to be found to replace the dollar for international settlements. China is unlikely to use the ruble, and Russia would be equally reluctant to accept the yuan.

“They could opt for the euro, but its future is uncertain, especially considering current developments on global financial markets. It is also unclear whether China would be happy to start using the euro while most of its international reserves are held in dollars,” he added.

There are more questions than answers here, Nikolayev concluded.

To be objective, one has to admit that other analysts are not as skeptical about the possibility of using other currency units between Russian and Chinese companies.

Andrei Marinchenko, director general of the Kalita-Finance company, said the idea was quite realistic. Moreover, he thinks that the ruble stands a good chance of being selected as a reserve currency, primarily because the Chinese are disappointed in the dollar but aren’t yet accustomed to the euro.

Only time will show who is right. But to stop using the dollar in Russian-Chinese settlements is too important a decision to make for purely political reasons - that much is obvious.

Suppose we do it; what will be the implications for Russian businesses, how will the new financial and political reality affect their incomes and savings?

Marinchenko is convinced of a beneficial impact. According to Marinchenko, once the ruble is recognized as a settlement unit, it will enjoy growing demand with Chinese companies and individuals. The Russian currency will consequently grow stronger and more influential globally.

Russia will also become immune to many shocks from stock market meltdowns and won’t have to fear future devaluation or revaluation of the ruble. It will happen because the role of the U.S. dollar, which has earned a reputation as an unstable and unreliable currency lately, will be much less important.

The opinions expressed in this article are the author’s and do not necessarily represent those of RIA Novosti.

By Rupert Wright

Global Research, November 8, 2008

The National (UAE)

Nobleman: Baron David de Rothschild, the head of the Rothschild bank. The Rothschilds have helped the British government since financing Wellington’s army to fight the French in 1815. Galen Clarke / The National

Among the captains of industry, spin doctors and financial advisers accompanying British prime minister Gordon Brown on his fund-raising visit to the Gulf this week, one name was surprisingly absent. This may have had something to do with the fact that the tour kicked off in Saudi Arabia. But by the time the group reached Qatar, Baron David de Rothschild was there, too, and he was also in Dubai and Abu Dhabi.

Although his office denies that he was part of the official party, it is probably no coincidence that he happened to be in the same part of the world at the right time. That is how the Rothschilds have worked for centuries: quietly, without fuss, behind the scenes.

“We have had 250 years or so of family involvement in the finance business,” says Baron Rothschild. “We provide advice on both sides of the balance sheet, and we do it globally.”

The Rothschilds have been helping the British government – and many others – out of a financial hole ever since they financed Wellington’s army and thus victory against the French at Waterloo in 1815. According to a long-standing legend, the Rothschild family owed the first millions of their fortune to Nathan Rothschild’s successful speculation about the effect of the outcome of the battle on the price of British bonds. By the 19th century, they ran a financial institution with the power and influence of a combined Merrill Lynch, JP Morgan, Morgan Stanley and perhaps even Goldman Sachs and the Bank of China today.

In the 1820s, the Rothschilds supplied enough money to the Bank of England to avert a liquidity crisis. There is not one institution that can save the system in the same way today; not even the US Federal Reserve. However, even though the Rothschilds may have lost some of that power – just as other financial institutions on that list have been emasculated in the last few months – the Rothschild dynasty has lost none of its lustre or influence. So it was no surprise to meet Baron Rothschild at the Dubai International Financial Centre. Rothschild’s opened in Dubai in 2006 with ambitious plans to build an advisory business to complement its European operations. What took so long?

The answer, as many things connected with Rothschilds, has a lot to do with history. When Baron Rothschild began his career, he joined his father’s firm in Paris. In 1982 President Francois Mitterrand nationalised all the banks, leaving him without a bank. With just US$1 million (Dh3.67m) in capital, and five employees, he built up the business, before merging the French operations with the rest of the family’s business in the 1990s.

Gradually the firm has started expanding throughout the world, including the Gulf. “There is no debate that Rothschild is a Jewish family, but we are proud to be in this region. However, it takes time to develop a global footprint,” he says.

An urbane man in his mid-60s, he says there is no single reason why the Rothschilds have been able to keep their financial business together, but offers a couple of suggestions for their longevity. “For a family business to survive, every generation needs a leader,” he says. “Then somebody has to keep the peace. Building a global firm before globalisation meant a mindset of sharing risk and responsibility. If you look at the DNA of our family, that is perhaps an element that runs through our history. Finally, don’t be complacent about giving the family jobs.”

He stresses that the Rothschild ascent has not been linear – at times, as he did in Paris, they have had to rebuild. While he was restarting their business in France, his cousin Sir Evelyn was building a British franchise. When Sir Evelyn retired, the decision was taken to merge the businesses. They are now strong in Europe, Asia especially China, India, as well as Brazil. They also get involved in bankruptcy restructurings in the US, a franchise that will no doubt see a lot more activity in the months ahead.

Does he expect governments to play a larger role in financial markets in future? “There is a huge difference in the Soviet-style mentality that occurred in Paris in 1982, and the extraordinary achievements that politicians, led by Gordon Brown and Nicolas Sarkozy, have made to save the global banking system from systemic collapse,” he says. “They moved to protect the world from billions of unemployment. In five to 10 years those banking stakes will be sold – and sold at a profit.”

Baron Rothschild shares most people’s view that there is a new world order. In his opinion, banks will deleverage and there will be a new form of global governance. “But you have to be careful of caricatures: we don’t want to go from ultra liberalism to protectionism.”

So how did the Rothschilds manage to emerge relatively unscathed from the financial meltdown? “You could say that we may have more insights than others, or you may look at the structure of our business,” he says. “As a family business, we want to limit risk. There is a natural pride in being a trusted adviser.”

It is that role as trusted adviser to both governments and companies that Rothschilds is hoping to build on in the region. “In today’s world we have a strong offering of debt and equity,” he says. “They are two arms of the same body looking for money.”

The firm has entrusted the growth of its financing advisory business in the Middle East to Paul Reynolds, a veteran of many complex corporate finance deals. “Our principal business franchise is large and mid-size companies,” says Mr Reynolds. “I have already been working in this region for two years and we offer a pretty unique proposition.

“We work in a purely advisory capacity. We don’t lend or underwrite, because that creates conflicts. We are sensitive to banking relationships. But we look to ensure financial flexibility for our clients.”

He was unwilling to discuss specific deals or clients, but says that he offers them “trusted, impartial financing advice any time day or night”. Baron Rothschilds tends to do more deals than their competitors, mainly because they are prepared to take on smaller mandates. “It’s not transactions were are interested in, it’s relationships. We are looking for good businesses and good people,” says Mr Reynolds. “Our ambition is for every company here to have a debt adviser.”

Baron Rothschild is reluctant to comment on his nephew Nat Rothschild’s public outburst against George Osborne, the British shadow Chancellor of the Exchequer. Nat Rothschild castigated Mr Osborne for revealing certain confidences gleaned during a holiday in the summer in Corfu.

In what the British press are calling “Yachtgate”, the tale involved Russia’s richest man, Oleg Deripaska, Lord Mandelson, a controversial British politician who has just returned to government, Mr Osborne and a Rothschild. Classic tabloid fodder, but one senses that Baron Rothschild frowns on such publicity. “If you are an adviser, that imposes a certain style and culture,” he says. “You should never forget that clients want to hear more about themselves than their bankers. It demands an element of being sober.”

Even when not at work, Baron Rothschild’s tastes are sober. He lives between Paris and London, is a keen family man – he has one son who is joining the business next September and three daughters – an enthusiastic golfer, and enjoys the “odd concert”. He is also involved in various charity activities, including funding research into brain disease and bone marrow disorders.

It is part of Rothschild lore that its founder sent his sons throughout Europe to set up their own interlinked offices. So where would Baron Rothschild send his children today?

“I would send one to Asia, one to Europe and one to the United States,” he said. “And if I had more children, I would send one to the UAE.”

Britain is considering joining the eurozone as a direct consequence of global financial turmoil, European Commission President Jose Manuel Barroso said Sunday.

“We are now closer than ever before. I’m not going to break the confidentiality of certain conversations, but some British politicians have already told me: ‘If we had the euro, we would have been better off’,” Barroso told a weekly French news programme, referring to the fall in the pound’s value since markets and liquidity meltdown earlier this year.

“The British have an enormous quality, one of many, that is they are pragmatic,” he said on the panel of a joint RTL-LCI radio and television broadcast. “This crisis has emphasised the importance of the euro, and also of Britain,” he added.

“I don’t mean this will happen tomorrow, I know that the majority (of British people) are still opposed, but there is a period of consideration underway and the people which matter in Britain are currently thinking about it,” the former Portuguese prime minister said.

Barroso pointed to the case of Denmark, another EU state which has so far refused to accept the euro but is now planning another referendum on the single currency. The Danish voted against joining in 2000.

AFP | Sunday, November 30, 2008

The U.S. military expects to have 20,000 uniformed troops inside the United States by 2011 trained to help state and local officials respond to a nuclear terrorist attack or other domestic catastrophe, according to Pentagon officials.

The long-planned shift in the Defense Department’s role in homeland security was recently backed with funding and troop commitments after years of prodding by Congress and outside experts, defense analysts said.

There are critics of the change, in the military and among civil liberties groups and libertarians who express concern that the new homeland emphasis threatens to strain the military and possibly undermine the Posse Comitatus Act, a 130-year-old federal law restricting the military’s role in domestic law enforcement.

But the Bush administration and some in Congress have pushed for a heightened homeland military role since the middle of this decade, saying the greatest domestic threat is terrorists exploiting the proliferation of weapons of mass destruction.

Before the terrorist attacks of Sept. 11, 2001, dedicating 20,000 troops to domestic response — a nearly sevenfold increase in five years — “would have been extraordinary to the point of unbelievable,” Paul McHale, assistant defense secretary for homeland defense, said in remarks last month at the Center for Strategic and International Studies. But the realization that civilian authorities may be overwhelmed in a catastrophe prompted “a fundamental change in military culture,” he said.

The Pentagon’s plan calls for three rapid-reaction forces to be ready for emergency response by September 2011. The first 4,700-person unit, built around an active-duty combat brigade based at Fort Stewart, Ga., was available as of Oct. 1, said Gen. Victor E. Renuart Jr., commander of the U.S. Northern Command.

If funding continues, two additional teams will join nearly 80 smaller National Guard and reserve units made up of about 6,000 troops in supporting local and state officials nationwide. All would be trained to respond to a domestic chemical, biological, radiological, nuclear, or high-yield explosive attack, or CBRNE event, as the military calls it.

Military preparations for a domestic weapon-of-mass-destruction attack have been underway since at least 1996, when the Marine Corps activated a 350-member chemical and biological incident response force and later based it in Indian Head, Md., a Washington suburb. Such efforts accelerated after the Sept. 11 attacks, and at the time Iraq was invaded in 2003, a Pentagon joint task force drew on 3,000 civil support personnel across the United States.

In 2005, a new Pentagon homeland defense strategy emphasized “preparing for multiple, simultaneous mass casualty incidents.” National security threats were not limited to adversaries who seek to grind down U.S. combat forces abroad, McHale said, but also include those who “want to inflict such brutality on our society that we give up the fight,” such as by detonating a nuclear bomb in a U.S. city.

In late 2007, Deputy Defense Secretary Gordon England signed a directive approving more than $556 million over five years to set up the three response teams, known as CBRNE Consequence Management Response Forces. Planners assume an incident could lead to thousands of casualties, more than 1 million evacuees and contamination of as many as 3,000 square miles, about the scope of damage Hurricane Katrina caused in 2005.

Last month, McHale said, authorities agreed to begin a $1.8 million pilot project funded by the Federal Emergency Management Agency through which civilian authorities in five states could tap military planners to develop disaster response plans. Hawaii, Massachusetts, South Carolina, Washington and West Virginia will each focus on a particular threat — pandemic flu, a terrorist attack, hurricane, earthquake and catastrophic chemical release, respectively — speeding up federal and state emergency planning begun in 2003.

Last Monday, Defense Secretary Robert M. Gates ordered defense officials to review whether the military, Guard and reserves can respond adequately to domestic disasters.

Gates gave commanders 25 days to propose changes and cost estimates. He cited the work of a congressionally chartered commission, which concluded in January that the Guard and reserve forces are not ready and that they lack equipment and training.

Bert B. Tussing, director of homeland defense and security issues at the U.S. Army War College’s Center for Strategic Leadership, said the new Pentagon approach “breaks the mold” by assigning an active-duty combat brigade to the Northern Command for the first time. Until now, the military required the command to rely on troops requested from other sources.

“This is a genuine recognition that this [job] isn’t something that you want to have a pickup team responsible for,” said Tussing, who has assessed the military’s homeland security strategies.

The American Civil Liberties Union and the libertarian Cato Institute are troubled by what they consider an expansion of executive authority.

Domestic emergency deployment may be “just the first example of a series of expansions in presidential and military authority,” or even an increase in domestic surveillance, said Anna Christensen of the ACLU’s National Security Project. And Cato Vice President Gene Healy warned of “a creeping militarization” of homeland security.

“There’s a notion that whenever there’s an important problem, that the thing to do is to call in the boys in green,” Healy said, “and that’s at odds with our long-standing tradition of being wary of the use of standing armies to keep the peace.”

McHale stressed that the response units will be subject to the act, that only 8 percent of their personnel will be responsible for security and that their duties will be to protect the force, not other law enforcement. For decades, the military has assigned larger units to respond to civil disturbances, such as during the Los Angeles riot in 1992.

U.S. forces are already under heavy strain, however. The first reaction force is built around the Army’s 3rd Infantry Division’s 1st Brigade Combat Team, which returned in April after 15 months in Iraq. The team includes operations, aviation and medical task forces that are to be ready to deploy at home or overseas within 48 hours, with units specializing in chemical decontamination, bomb disposal, emergency care and logistics.

The one-year domestic mission, however, does not replace the brigade’s next scheduled combat deployment in 2010. The brigade may get additional time in the United States to rest and regroup, compared with other combat units, but it may also face more training and operational requirements depending on its homeland security assignments.

Renuart said the Pentagon is accounting for the strain of fighting two wars, and the need for troops to spend time with their families. “We want to make sure the parameters are right for Iraq and Afghanistan,” he said. The 1st Brigade’s soldiers “will have some very aggressive training, but will also be home for much of that.”

Although some Pentagon leaders initially expected to build the next two response units around combat teams, they are likely to be drawn mainly from reserves and the National Guard, such as the 218th Maneuver Enhancement Brigade from South Carolina, which returned in May after more than a year in Afghanistan.

Now that Pentagon strategy gives new priority to homeland security and calls for heavier reliance on the Guard and reserves, McHale said, Washington has to figure out how to pay for it.

“It’s one thing to decide upon a course of action, and it’s something else to make it happen,” he said. “It’s time to put our money where our mouth is.”

By Joseph Winter
BBC News website

How can you hope to battle organised, rich and ruthless international drugs gangs when there is not even a proper prison in the country? This is the problem faced by the authorities in Guinea-Bissau, which some fear could be on its way to becoming Africa’s first “narco-state”.

Guinea-Bissau is the most glaring example of the increasing use of West Africa by Latin American cocaine traffickers to get their wares into Europe.

The country is wracked by poverty, coups, political unrest and has a coastline full of uninhabited islands, creeks and swamps, providing the perfect cover for smugglers.

The problems are illustrated by three incidents which would be hilarious, if they did not reveal how vulnerable poor states are to the quick hit of drug money.

‘Heroes’

In April, an estimated 2.5 metric tons of cocaine was flown into a military air-strip in Guinea-Bissau.

Two soldiers were arrested in cars packed with 635kg of the drug but the rest of the shipment got through, officials from the UN Office on Drugs and Crime (UNODC) believe, because the police did not have enough petrol in their cars to pursue the other traffickers.

Nevertheless, UNODC West Africa head Antonio Mazzitelli says the police officers involved were “heroes”.

“They risked their lives, even though they had not been paid for three months at the time,” he told the BBC News website.

Some senior officials, especially in the military, however, seem to have become involved in trafficking drugs.

In the second of Guinea-Bissau’s comedy of errors, 674kg of cocaine, worth about $39m, or 13% of the country’s total annual income, was found in the capital, Bissau, after a gun battle last year.

See map of West African cocaine seizures

For safe-keeping, it was put in the treasury vaults, where it “disappeared”.

The then Prime Minister Aristides Gomes recently sought to allay fears it had returned to drugs gangs, by saying that he had ordered it to be burnt.

But Mr Mazzitelli points out that there is no evidence that it was actually destroyed.

The third incident took place in 2005.

If Africa is not allowed to export legitimate produce, it will export drugs, prostitutes and illegal migrants Amoroso, Nairobi Send your comments

Local fishermen in Quinhamel, 30km west of Bissau, discovered strange packets of white powder floating in the sea.

With no idea of what the powder was, some used it to provide more flavour to their daily diet of rice and fish, while others thought it might help their crops grow and used it as fertiliser.

Eventually, word got out to the traffickers, who turned up in the village to buy back what was left of their cargo after their boat had sunk.

Still searching

In the past two weeks, almost 2.5 tons of cocaine has been found in neighbouring Senegal - half on board a deserted sailing boat, along with plane tickets from Brazil to Bissau.

Officials battling to stem the flow of drugs from Latin America to Europe say they have managed to reduce both direct shipments and smuggling via the Caribbean, which had been one of the main routes.

Half the Senegal haul was hidden under a villa, half on a boat

So now the smugglers have switched their operations to West Africa.

Interpol estimates that more than a third of the cocaine arriving in Europe is trafficked through West Africa.

“We’ve been fighting the drugs war for 30 years - now a new front has opened up,” a veteran international police official says.

He warns, however, that a successful way of reducing supply has not yet been found, while there is such strong demand in the West

Interpol will this week discuss doing more to help African authorities battle drug smugglers - but they are playing catch-up, while the trafficking networks are already well entrenched.

Portugal also says it will raise the issue during its six-month presidency of the European Union, which has just begun.

‘Impunity’

Large shipments - 2.5 tons seems to be a common amount - are either flown or shipped across the Atlantic Ocean.

Bags are sometimes dropped from the air onto some of Guinea-Bissau’s 70-odd uninhabited islands, where they are picked up by local smugglers on speed boats.

We have been lucky in the past six months Antonio Mazzitelli UNODC

The large shipments are then either broken into smaller quantities and taken to Europe by plane or boat, or sailed in bulk straight up the coast to Portugal and Spain.

The boat found in Senegal contained 1.2 tons of cocaine, divided into 50 bags, each containing 24kg.

After years of chronic instability and extreme poverty, some West African states hardly function.

Judges in Guinea-Bissau complain that even if a drugs smuggler is captured, taken to court and convicted - already three rare events - they are often walking the streets again within days.

After the only prison was destroyed in a civil war, there is nowhere to hold convicts.

If a cell is found somewhere, top military officials often turn up and insist they are freed, judges say.

“There is total impunity,” Nelson Moreira, head of Guinea-Bissau’s inter-ministerial commission to fight drugs, told the BBC’s Portuguese for Africa service.

Accidents

Mr Mazzitelli says that the profit on trafficking a single 600kg shipment of cocaine from Africa to Europe was about $15m in 2005.

He notes that this is about 20% of all foreign aid to the country in 2006, 14% of annual export revenues and three times the amount of foreign investment.

“This shows how vulnerable African states are,” he says.

Although there has been a dramatic increase in cocaine seizures in the region, Mr Mazzitelli points out most have been “accidents” - mostly after a plane or boat has broken down and its cargo has then been discovered.

“We have been lucky in the past six months,” he says.

The UK has tried to take preventative action by stationing anti-drugs officers and equipment in the main airport in Ghana’s capital, Accra.

Eight would-be smugglers were caught within the first six weeks of the operation at the end of last year.

As they were arrested and imprisoned in Ghana, rather than the UK, where prison care is far more expensive, the equipment paid for itself in that time, UK customs officials say.

Mr Mazzitelli says most West African countries are still reacting to events, rather than taking any pro-active measures.

But he points out that most cocaine is shipped to Africa for re-export, not for local consumption.

“Drugs are not a priority for Africa - and never will be - unless the international community makes it one,” he says.

He warns, however, that the inflow of the drugs money has a hugely corrupting influence on already weak states, which could end up as empty shells - cover for officials seeking to become rich.

He says if European countries want to stop cocaine reaching their streets via Africa, they must provide more funds to the police and judiciary - so police officers and judges are paid, they have enough petrol in their cars and prisons to lock up those convicted.

“Otherwise it is a lost battle,” he warns.

September 22, 2008 by Philip Dru

BEIJING (Reuters) - Threatened by a “financial tsunami,” the world must consider building a financial order no longer dependent on the United States, a leading Chinese state newspaper said on Wednesday.

The commentary in the overseas edition of the People’s Daily said the collapse of Lehman Brothers Holdings Inc (LEH.P: Quote, Profile, Research, Stock Buzz) “may augur an even larger impending global ‘financial tsunami’.”

The People’s Daily is the official newspaper of China’s ruling Communist Party, and the overseas edition is a smaller circulation offshoot of the main paper.

Its pronouncements do not necessarily directly reflect leadership views, but this commentary by a professor at Shanghai’s Tongji University suggested considerable official alarm at the strains buckling world financial markets.

China’s central bank earlier this week cut its lending rate for the first time in six years, a move analysts said was aimed at bolstering the economy and the battered stock market.

“The eruption of the U.S. sub-prime crisis has exposed massive loopholes in the United States’ financial oversight and supervision,” writes the commentator, Shi Jianxun.

“The world urgently needs to create a diversified currency and financial system and fair and just financial order that is not dependent on the United States.”

But Vice Premier Wang Qishan, on a visit to the United States, told U.S. trade officials in a meeting on Tuesday that China and the United States needed to maintain close economic ties with global markets going through such turbulence.

“The Chinese government is well aware of the fact that the United States, which is the world’s largest developed country, and China, which is the world’s largest developing country, should have constructive and cooperative economic and trade relations,” he said.

China is a major buyer of U.S. Treasury bonds, and through its sovereign wealth fund it has taken stakes in two large U.S. financial institutions.

In July 2005, China revalued the yuan and freed it from a dollar peg to float within managed bands. But the yuan and China’s trade remains tightly linked to the fortunes of the dollar.

The commentary suggested China must brace for grave economic fallout and look to alternatives, saying the crisis brings to mind the Great Depression of the 1930s.

“Lehman Brothers announced bankruptcy will not only have a domino effect on the global financial world, it will bring a shock to the world economy,” the front-page comment stated.

(Reporting by Chris Buckley; Editing by Ken Wills)

Reuters | Wednesday, September 17, 2008

September 23, 2008 by Philip Dru

A banking system in crisis after the collapse of a housing bubble. An economy hemorrhaging jobs. A market-oriented government struggling to stem the panic. Sound familiar?

It does to Sweden, which was so far in the hole in 1992 - after years of imprudent regulation, shortsighted macroeconomic policy and the end of its property boom - that its banking system was, for all practical purposes, insolvent.

But unlike the United States, whose Treasury has made a proposal to deal with a similar situation, Sweden did not just bail out its financial institutions by having the government take over the bad debts. It also clawed its way back by pugnaciously extracting equity from bank shareholders before the state started writing checks.

That strategy kept banks on the hook while returning profits to taxpayers from the sale of distressed assets by granting warrants that turned the government into an owner. Even the chairman of Sweden’s largest bank got a stern answer to the question of whether the state would really nationalize his bank: Yes, we will.

“If I go into a bank,” Bo Lundgren, Sweden’s finance minister at the time, said, “I’d rather get equity so that there is some upside for the taxpayer.”

The tumultuous events of the last few weeks have produced a lot of tight-lipped nods in Stockholm. And for all the differences between Sweden and the United States, Swedish officials say there are lessons to be learned from their own nightmare that Washington may be missing. Lundgren even made the rounds in New York in early September, explaining what the country did in the early 1990s.

A few American commentators have proposed that the U.S. government extract equity from banks as a price for the bailout they are likely to receive, as Sweden did. But it does not seem to be under serious consideration yet in the Bush administration or in Congress.

That’s despite the fact that the U.S. government has already swapped its sovereign guarantee for equity in Fannie Mae and Freddie Mac, the mortgage finance institutions, and American International Group, the insurance giant.

Putting taxpayers on the hook without offering anything in return could be a mistake, said Urban Backstrom, a senior Swedish Finance Ministry official at the time. “The public will not support a plan,” he said, “if you leave the former shareholders with anything.”

The Swedish crisis had strikingly similar origins to the American one. Norway and Finland went through related experiences, and they also turned to a government bailout to escape the morass that bad policy had created.

Financial deregulation in the 1980s fed a frenzy of real estate lending by Swedish banks, which spent too little time worrying whether the value of collateral might evaporate in tougher times. Property prices exploded.

The bubble deflated fast in 1991 and 1992. A vain effort to defend Sweden’s currency, the krona, resulted in an incredible spike in overnight interest rates at one point to 500 percent. The Swedish economy contracted for two years straight after a long expansion, and unemployment, at 3 percent in 1990, quadrupled in three years.

After a series of bank failures led to ad hoc solutions, the moment of truth arrived in September 1992, when the government of Prime Minister Carl Bildt opted for a clear-the-decks solution.

With the full support of the opposition center-left, Bildt’s conservative government announced that the Swedish state would guarantee all bank deposits and creditors of the nation’s 114 banks. Sweden formed an agency to supervise institutions that needed recapitalization, and another that sold off the assets, mainly real estate, that the banks held as collateral.

Sweden told its banks to write down their losses promptly before coming to the state for recapitalization. In a similar situation later in the decade, Japan made the mistake of dragging the process out, officials in Sweden and elsewhere note, delaying a solution for years.

Then came the imperative to bleed shareholders first.

Lundgren, the former finance minister, recalls a conversation with Peter Wallenberg, at the time chairman of SEB, Sweden’s largest bank. Wallenberg, the scion of the country’s most famous family and steward of large chunks of its economy, heard from the finance minister that there would be no sacred cows.

The Wallenbergs turned around and arranged a private recapitalization, obviating the need for a bailout at all. SEB turned a profit the next year, 1993.

“For every krona we put into the bank, we wanted the same influence,” Lundgren said. “That ensured that we did not have to go into certain banks at all.”

By the end of the crisis, the Swedish government had seized vast swaths of the banking sector, and the agency had mostly fulfilled its tough mandate to drain share capital before injecting cash. When markets stabilized, the Swedish state then reaped the benefits by taking the banks public again.

Indeed, more money may come into official coffers. The government still owns 19.9 percent of Nordea, a Stockholm bank that was fully nationalized and is now a highly regarded giant in Scandinavia and the Baltic Sea region.

The politics of Sweden’s crisis management were similarly tough-minded, though much quieter.

Soon after the plan was announced, the Swedish government found that international confidence returned more quickly than expected, easing pressure on its currency and bringing money back into the country. A serious credit crunch was avoided. So the center-left opposition, though wary that the government might yet let the banks off the hook, made its points about penalizing shareholders privately.

“The only thing that held back an avalanche was the hope that the system was holding,” said Leif Pagrotzky, a senior member of the opposition at the time. “In public we stuck together 100 percent but we fought behind the scenes.”

Sweden eventually shelled out 4 percent of its gross domestic product, 65 billion krona, or $10 billion, to rescue ailing banks. That is slightly less, in terms of the national economy, than the minimum of $700 billion, or about 5 percent of GDP, that the Bush administration estimates a similar move would cost in the United States.

But enough was recouped through sales of distressed assets and bank shares that were sold later, that the cost ended up being less than 2 percent of GDP. Some officials believe it was closer to zero, depending on how certain rates of return are calculated.

Looking back, Swedish official say the tough approach toward the banks paved the way for success. It eliminated “moral hazard,” the problem of relieving investors of bad decisions. And, much as it might be a shock in the United States, the demise of shareholders also underpinned the political consensus that help restore stability to financial markets even before the bailout was truly under way.

While government ownership of banks goes against the American grain, Lundgren worries that if the U.S. bailout rests on a thin reed, politically speaking, then it could fail.

The U.S. Treasury is now planning to purchase the distressed assets outright, without demanding equity. If it wants to restore the banking system’s creditworthiness, it would have to err on the side of paying too much money to the banks that caused the crisis, Lundgren said.

“If the valuation is bad, from the taxpayer’s point of view, you lose,” he said. “And that decreases the legitimacy of the plan.”

IHT | Carter Dougherty | Monday, September 22, 2008

By LARA JAKES JORDAN
Associated Press Writer

The FBI is investigating four major U.S. financial institutions whose collapse helped trigger a $700 billion bailout plan by the Bush administration, The Associated Press has learned.

Two law enforcement officials said Tuesday the FBI is looking at potential fraud by mortgage finance giants Fannie Mae and Freddie Mac, and insurer American International Group Inc. Additionally, a senior law enforcement official said Lehman Brothers Holdings Inc. also is under investigation.

The inquiries will focus on the financial institutions and the individuals that ran them, the senior law enforcement official said.

The law enforcement officials spoke on condition of anonymity because the investigations are ongoing and are in the very early stages.

Officials said the new inquiries bring to 26 the number of corporate lenders under investigation over the past year.

Spokesmen for AIG, Fannie Mae and Freddie Mac did not immediately return calls for comment Tuesday evening. A Lehman spokesman did not have an immediate comment.

Just last week, FBI Director Robert Mueller put the number of large financial firms under investigation at 24. He did not name any of the companies under investigation but said the FBI also was looking at whether any of them have misrepresented their assets.

Over the past year as the housing market cratered, the FBI has opened a wide-ranging probe of companies across the financial services industry, from mortgage lenders to investment banks that bundle home loans into securities sold to investors. Mueller has previously said the FBI’s hunt for culprits in the nation’s subprime mortgage crisis focused on accounting fraud, insider trading, and failure to disclose the value of mortgage-related securities and other investments.

The investigations revealed Tuesday come as lawmakers began considering whether to approve emergency legislation that would give the government broad power to buy up devalued assets from troubled financial firms.

The bailout proposed by the Bush administration is aimed at helping unlock credit and stabilize badly shaken markets in the United States and around the globe.

In the past two weeks, the government has taken over Fannie Mae and Freddie Mac, the country’s two biggest mortgage companies, with a bailout plan that could require the Treasury Department to put up as much as $100 billion for each of them over time if needed to keep them afloat as mortgage losses mount.

Last week, the Federal Reserve provided an emergency $85 billion loan to AIG, which teetered on the brink of bankruptcy. Lehman Brothers was forced to file for bankruptcy after attempts to engineer a private rescue fell apart. All the companies were laid low from bad bets on complex mortgage-related securities.

Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke made the joint decision last week that the only way to stop the carnage was to deal with the root cause of all the troubles, billions of dollars of bad mortgage debt sitting on the books of major financial companies. This debt has triggered the worst credit crisis in decades, causing credit markets to essentially freeze up despite the fact that the Fed joined with major central banks around the world to pump billions of dollars of reserves into the financial system.

Additionally, the FBI is investigating failed bank IndyMac Bancorp Inc. for possible fraud. Countrywide Financial Corp., formerly the nation’s largest mortgage lender and now owned by Bank of America Corp., is also under scrutiny.

Sunday, September 21, 2008
By Ansar Abbasi

ISLAMABAD: Was there a top secret and mysterious operation of the US Marines going on inside the Marriott when it was attacked on Saturday evening? No one will confirm it but circumstantial evidence is in abundance.

Witnessed by many, including a PPP MNA and his friends, a US embassy truckload of steel boxes was unloaded and shifted inside the Marriott Hotel on the same night when Admiral Mike Mullen met Prime Minister Yousuf Raza Gilani and others in Islamabad.

Both the main gates (the entrance and the exit) of the hotel were closed while no one except the US Marines were either allowed to go near the truck or get the steel boxes unloaded or shift them inside the hotel. These steel boxes were not passed through the scanners installed at the entrance of the hotel lobby and were reportedly shifted to the fourth and fifth floors of the Marriott.

Besides several others, PPP MNA Mumtaz Alam Gilani and his two friends, Sajjad Chaudhry, a PPP leader, and one Bashir Nadeem, witnessed this mysterious activity to which no one other than the PPP MNA objected and protested.

A source present there told The News that after entertaining them with refreshments at the Nadia restaurant at midnight when Mumtaz Alam, along with his friends, was to leave the hotel, he found a white US embassy truck standing right in front of the hotel’s main entrance.

Both the In-gate and the Out-gate of the hotel were closed while almost a dozen well-built US Marines in their usual fatigues were unloading the steel boxes from the truck. No one, including the hotel security men, was either allowed to go near the truck or touch the steel boxes, which were being shifted inside the hotel but without passing through the scanners.

Upon inquiry, one of the three PPP friends who was waiting for the main gates of the hotel to open to get his car in, was informed that the suspicious boxes were shifted to the fourth and fifth floors of the hotel. Mumtaz Alam was furious both at the US Marines and the hotel security not only for the delay caused to them but also for the security lapse he was witnessing.

On his protest, there was absolutely no response from the Marines and the security men he approached were found helpless. Mumtaz Alam told the hotel security official that they were going to endanger the hotel and its security. He was also heard telling his friends that he would never visit the hotel again. He also threatened to raise the issue in parliament.

One does not know whether the PPP MNA revisited the hotel after that mysterious midnight but his brother Imtiaz Alam, who is a senior journalist, was in the same hotel when the truck exploded at the main gate of the hotel. Imtiaz Alam had a lucky escape and found his way out of the hotel with great difficulty in pitch darkness.

One of the lifts he was using fell to the ground floor just after he forced the door open on the 4th floor and got out of it.

Mystery snoop-tech used in wave of assassinations

By Lewis Page

Posted in Government, 15th September 2008 14:20 GMT

A long-running background mutter has now become a loud buzz of speculation, following cryptic comments by a famous US journalist regarding a top secret new surveillance-tech “Manhattan Project” targeting terrorist and insurgent leaders in Iraq.

Bob Woodward of the Washington Post - famous for his reporting of leaks by a senior FBI official regarding the Watergate scandals of the 1970s - makes the claims in a new book, which he is currently engaged in trailing. He says that the current reduction in violence being seen in Iraq is partly, as everyone assumes, a result of visible factors - the Sunni “awakening” against al-Qaeda in Iraq, the ceasefire by important Shi’ite militias, and the US troop “surge” in which many more American soldiers have been operating on the ground outside their secure bases.

But Woodward says there has also been an unseen special-ops surveillance and assassination campaign against terrorist and insurgent leaders, large numbers of whom have been eliminated in the past year - a campaign heavily reliant on mysterious, top-secret new intelligence technology of some kind.

“It is a wonderful example of American ingenuity solving a problem in war, as we often have,” said Woodward in a recent TV interview.

“I would somewhat compare it to the Manhattan Project in World War II.”

Woodward refuses to reveal exactly what the new wonder-tech is, that has let US and allied forces track down (and then, typically, kill) so many insurgent/terrorist commanders lately. Most analysts on the death-tech beat have thus offered suggestions of their own. There are some, whose access to classified programs is perhaps even better than Woodward’s but who must cooperate even more closely with their sources, who say that in fact there is nothing new (http://www.aviationweek.com/aw/blogs/defense/index.jsp?plckController=Blog&plckScript=blogScript&plckElementId=blogDest&plckBlogPage=BlogViewPost&plckPostId=Blog%3a27ec4a53-dcc8-42d0-bd3a-01329aef79a7Post%3a4f690db0-b07f-4569-825f-e23596dbfa9e) under the sun - just old tricks being tied together more effectively.

Many others are leading with our old friend the Predator/Reaper unmanned aircraft, whose abilities as an eye in the sky are well known. It’s certain that a lot of the actual killings have been done by Predators, usually using laser-guided Hellfire missiles. Often the aerial death machines are guided in by their victims’ cell or satellite phone signatures - the phones perhaps having been meddled with in cunning ways by spooks and/or special-ops electronic warfare (EW) “knob-turners”. Generally the EW capabilities have been installed in separate aircraft rather than aboard the actual Predator weapons/camera/radar drone itself, though this is set to change.

But in fact the Predator - in the end, it’s just an aircraft - isn’t a game-changing piece of kit. Nor is the ability to track or even remotely activate phone handsets: there are credible reports - for instance in this book (http://www.amazon.co.uk/Killer-Elite-Americas-Special-Operations/dp/0297846396/sr=1-1/qid=1171365449?ie=UTF8&s=books), by respected UK defence hack and former British Army intelligence-corps operator Mick Smith - that quite amazing mobe trickery was in use by US spec-ops elements as long ago as the 1980s. It’s now common advice even among biz security types to remove mobile phone batteries during sensitive meetings, and serious criminals or terrorists would nowadays completely discard any phone that might have come to the notice of the authorities.

Credible rumours suggest that the capabilities Woodward alludes to may allow individual people (rather than items of equipment) to be tracked from afar; even inside buildings, even if the most draconian mobile-handset security protocols have been followed.

Wired magazine speculates (http://blog.wired.com/defense/2008/09/whats-the-milit.html) that what’s going on here may be an effort known to the US defence department as Continuous Clandestine Tagging, Tracking, and Locating (CTTL). Under CTTL, a variety of different techniques might be used to follow a specific person from long distances. A person might have a tiny RFID-esque device or transponder implanted in their body without their knowledge - perhaps while being held prisoner by Coalition forces. The teeny gizmo might need no battery, conceivably harvesting its power needs from body heat or ambient radio transmissions - or it might work more in the way that the radar-cavity tags in skiing jackets do, reflecting a radar pulse in a distinctive way.

Alternatively, according to a powerpoint presentation unearthed by Wired, it may be possible to distinguish a unique thermal signature for each person, as distinctive as a fingerprint or DNA signature but visible to an airborne sensor from afar.

Having remotely tracked the released Mansoor to a Taliban base across the border at Quetta in Pakistan, the US knob-turners then reportedly became interested in a particular satellite phone - the one belonging to Mullah Dadullah himself. Dadullah apparently thought this phone to be clean, but it seems that merely carrying it to a meeting with his newly freed brother was enough to flag it up. As soon as Dadullah went back across the border into Afghanistan, he could be attacked - and was. A squadron of Britain’s Special Boat Service (SBS) special forces, accompanied by Afghan troops, assaulted Dadullah’s compound at Bahram Chah in the south of Helmand province during May 2007. Dadullah was shot dead - receiving two bullets to the body (a classic special forces “double-tap”) and one to the head, hinting perhaps that nobody was especially interested in taking prisoners.

Mick Smith, telling (http://www.timesonline.co.uk/tol/news/world/asia/article1845387.ece) the story for the Times (the gaff was originally blown by the Afghan government, apparently) merely said that TF-Orange had used “sophisticated signals technology to monitor Mansoor’s movements”.

However, the website specialboatservice.co.uk - which has connections with a former SBS covert operator, mercenary and novelist who writes under the name Duncan Falconer - says (http://www.specialboatservice.co.uk/mullah-dadullah.htm):

It is speculated that the [released] Taliban had somehow been tagged with trackers, perhaps in their bodies.

This tends to suggest the more-feasible sounding miniature implant theory on the new kit, rather than unique body heat-signatures or whatever - which in any case would seem unlikely to work through walls. Teeny-tiny tracker technology has certainly been in use for some time by British secret forces, though usually placed inside cached weapons and suchlike (the slang term in Northern Ireland for this was “jarking” - with the weapons usually being sabotaged as well). Of course, it may be that the men’s clothes or other personal items were bugged rather than they themselves.

Just people-tracking might seem a little basic to be referred to as a “Manhattan Project”, unless it had some other special sauce as well. It’s surely also true that there have been new developments in mobile phone trickery, airborne surveillance and - probably even more importantly - in bringing together information from many different sources in a timely fashion. But following individuals remotely, en masse, relatively inexpensively and without needing to put large teams of followers on the ground - that might be a real game changer.

It might also be something to worry about in a civil-liberties context, if it really does operate as described.

However the new stuff works, it would seem that terrorists or other malcontents on the run from sinister US government agencies in future may soon need to don their trusty tinfoil hats, garments etc. not so much to keep out federal/alien mindcontrol rays as to keep in the transmissions from possible implanted bugs.

A case of enemies within the enemy within, as it were. Or it might just be a lot of hype.

Published on Tuesday, February 15, 2000 in the Chicago Tribune
by David Morgan 

PHILADELPHIA (Reuters) - U.S. doctors who once believed that sterilization could help rid society of mental illness and crime launched a 20th century eugenics movement that in some ways paralleled the policies of Nazi Germany, researchers said on Monday.

A Yale study tracing a once-popular movement aimed at improving society through selective breeding, indicates that state-authorized sterilizations were carried out longer and on a larger scale in the United States than previously believed, beginning with the first state eugenics law in Indiana in 1907.

Despite modern assumptions that American interest in eugenics waned during the 1920s, researchers said sterilization laws had authorized the neutering of more than 40,000 people classed as insane or “feebleminded” in 30 states by 1944.

Another 22,000 underwent sterilization from the mid-1940s to 1963, despite weakening public support and revelations of Nazi atrocities, according to the study, funded by the United States Holocaust Memorial Museum and the Merck Co. Foundation.

Forced sterilization was legal in 18 U.S. states, and most states with eugenics laws allowed people to be sterilized without their consent by leaving the decision to a third party.

“The comparative histories of the eugenical sterilization campaigns in the United States and Nazi Germany reveal important similarities of motivation, intent and strategy,” the study’s authors wrote in the Annals of Internal Medicine, a journal published by the American College of Physicians-American Society of Internal Medicine.

Eugenics sprang from the philosophy of social Darwinism, which envisioned human society in terms of natural selection and suggested that science could engineer progress by attacking supposedly hereditary problems including moral decadence, crime, venereal disease, tuberculosis and alcoholism.

“The eugenics laws in the United States were virulent, just as they were in Sweden, France and Australia,” said Art Caplan, head of the University of Pennsylvania’s Center for Bioethics.

The U.S. practice ended in the 1960s after being overwhelmed by court challenges and the civil rights movement.

German and American eugenics advocates both believed science could solve social problems, tended to measure the worth of the individual in economic terms and felt mental illness a threat to society grave enough to warrant compulsive sterilization.

And while Nazi claims of Aryan superiority are well known, researchers said U.S. advocates of sterilization worried that the survival of old-stock America was being threatened by the influx of “lower races” from southern and eastern Europe.

There was also mutual admiration, with early U.S. policies drawing glowing reviews from authorities in pre-Nazi Germany.

“Germany is perhaps the most progressive nation in restricting fecundity among the unfit,” editors of the New England Journal of Medicine wrote in 1934, a year after Hitler became chancellor.

U.S. Eugenics Movement Waned

But the study, based partly on old editorials from the New England journal and the Journal of the American Medical Association, also demonstrated how the U.S. eugenics movement gradually waned while its Nazi counterpart carried out 360,000 to 375,000 sterilizations during the 1930s and grew to encompass so-called “mercy” killings.

“In the United States, a combination of public unease, Roman Catholic opposition, federal democracy, judicial review and critical scrutiny by the medical profession reversed the momentum,” the article said.

The U.S. practice of neutering “mentally defective” individuals was backed by most leading geneticists and often justified on grounds that it would relieve the public of the cost of caring for future generations of the mentally ill.

Sterilizations also took place mainly in public mental institutions, where the poor and ethnic or racial minorities were housed in disproportionately high numbers.

“It is better for all the world, if instead of waiting to execute degenerate offspring for crime, or to let them starve for their imbecility, society can prevent those who are manifestly unfit from continuing their kind,” Supreme Court Justice Oliver Wendell Holmes wrote in the majority opinion of a landmark eugenics case in 1926.

Thu Sep 18, 2008 5:26pm EDT
By Christopher Doering

WASHINGTON (Reuters) - Genetically engineered animals moved closer to the dinner table on Thursday as the U.S. Food and Drug Administration made the process it will use to review new proposals public.

The FDA published proposed detailed guidelines that producers of genetically engineered animals would have to follow to determine whether there are any risks to humans, the environment and the animals themselves.

The guidelines bring the decades-old technology of genetic engineering for animals one step closer to the market.

Genetically modified cattle, pigs, fish and goats are being produced for a variety of uses. Some produce pharmaceuticals in their milk or blood. Others are resistant to diseases such as mad cow or produce healthier meat or milk.

“Many kinds of genetically engineered animals are in development, although none has yet been approved by the agency for marketing,” FDA Deputy Commissioner Randall Lutter said.

It was important to formalize procedures the FDA uses to regulate genetically engineered animals, Lutter said, “because the technology has evolved to a point where commercialization of these animals is no longer over the horizon.”

The agency is inviting public comment on its proposals until November 18 and could modify them before they become final.

SEVERAL QUESTIONS

Consumer groups called the FDA’s action a good first step, but said the guidelines fail to answer several important questions.

One concern is the approval process, which would be secretive to protect companies’ proprietary interests.

“It’s unclear whether FDA has the authority and expertise to address the full range of risks,” said Gregory Jaffe of the Center for Science in the Public Interest.

Foods produced from some bioengineered animals will not have to be labeled, the FDA said, also drawing some ire.

“It is incomprehensible to us that FDA does not view these animals as different from their conventional counterparts,” said Jean Halloran, director of food policy initiatives at Consumers Union.

“Consumers have a right to know if the ham, bacon or pork chops they are buying come from pigs that have been engineered with mouse genes.”

But the FDA said labeling would be required if there is a significant change in the food. For example, pork from pigs engineered to produce meat with higher levels of omega-3 fatty acids would need a label.

Producers will be required to describe what DNA they have inserted into the animal, and how it behaves in the animal, the impact on the animal’s health, and show the product is not different from traditional food.

Companies also would have to tell the FDA how they would track the animals and dispose of them when they die. If there is a high risk, the FDA might require the animals to be sterilized.

The FDA said it has the authority to regulate genetically engineered animals through the Federal Food, Drug and Cosmetic Act. The measure identifies a drug as anything that changes the “structure or function” of the person or animal.

(Reporting by Christopher Doering; Editing by Patricia Zengerle)

by Dina Temple-Raston

NPR Morning Edition, September 1, 2008 · Confidential informants are the lifeblood of law enforcement’s effort to fight crime.

But the best informants are generally very bad people — ruthless criminals — and while their information helps the FBI crack cases, the practice of using these informants is fraught with risk.

A single case in Boston changed the way agents work with these criminals.

Corrupted Agents

If you asked the FBI about their worst nightmare, it would be crooked agents being in league with a mob boss. So their nightmare came true in Boston during the 1970s.

That’s when the godfather of the city’s Irish mob, Whitey Bulger, became a confidential informant for the FBI and, in the process, he managed to corrupt two agents — John Connolly and his boss, John Morris.

Former FBI supervisor Jim Ring says that the idea that an agent could be turned shocked everyone when it was revealed. To this day, it still astounds him.

“I was asked a question at a civil trial. They asked me what my first reactions was when I heard that [supervisor] John Morris admitted taking money from them,” Ring says. “My answer was: I started to throw up.”

FBI’s Unholy Alliance

FBI agent John Connolly’s unholy alliance with Whitey Bulger all started with a “meet” at Wollaston Beach just outside of Boston. It was 1975, and he had asked Bulger to come to the beach parking lot for a chat.

It was not far from the housing projects in Southie where the two men had grown up. They had known each other as kids. It was late at night. No one was around. All that could be heard were waves slapping on the shore.

Connolly had driven there determined to convince Bulger that he should become a top echelon informant — someone who provides the FBI with firsthand information about high-level organized crime figures. Bulger had been an informant in the past, Connolly was determined to reopen him as a snitch.

Connolly didn’t expect to convince Bulger to rat out the Irish mob that he was a part of, but he did think he could get him to provide information on Italian organized-crime rivals. Eventually, Bulger agreed to do just that.

An Unspoken Agreement

That meeting at Wollaston Beach was the beginning of a relationship that would end up fundamentally changing the FBI’s confidential informant program.

From the moment Jim Ring came into the Boston field office and heard Connolly was working Bulger as an informant, he had an uncomfortable feeling. He called Connolly into his office to make sure there was no misunderstanding about how informants should be handled.

“I told him information goes one way,” Ring said. “Informants are not consultants. They are not friends, they are informants. And the agent remembers that and treats them accordingly.”

But, as he was to discover later, the information didn’t go one way. For almost 30 years, Connolly and Bulger forged an unholy alliance. Bulger provided tips that helped the FBI tackle its top priority — dismantling the Italian mob — and Connolly protected Bulger from investigations by the FBI and other agencies.

It was an unspoken agreement, apparently, but an agreement all the same. Bulger knew that Connolly wanted to keep him out of jail so that he could keep providing intelligence about the Italian mob.

Repercussions From The Bulger Case

Valerie Caproni is the current general counsel at the FBI. She says the fallout from the Whitey Bulger case still haunts the Bureau.

“I think what the Whitey Bulger case did was it really shined a light on the relationship between the Bureau and informants,” Caproni says. “They are killers, they are liars, they’re cheaters and those are the people who are informants. So I think in part the problem with the Whitey Bulger case was people looked at the relationship and were appalled.”

What is certain is that the case rocked the FBI to its core. The wave of negative publicity forced the Justice Department to take a hard look at the use of informants and how agents deal with them. That review eventually produced a set of guidelines that agents say are so strict that they practically gut the program.

“The unfortunate thing is that when you have something like this, there tends to be an overreaction,” says former FBI assistant director Barry Mawn.

Detailed FBI Guidelines

Mawn arrived in the Boston field office when a federal judge started looking into the FBI’s relationship with Bulger in 1997. The guidelines grew out of that investigation. He said the guidelines concerned him as soon as they came out.

“When you start to put a lot of guidelines and a lot more rules and make it very difficult, then the agents for that reason and some other reasons tend to shy away,” Mawn says.

The guidelines are 28 single-spaced pages of rules and regulations for FBI agents working with informants. They cover everything from monetary payments to general provisions for deactivating a confidential informant.

Jim Ring flips through the guidelines, pointing out sections he says agents find particularly onerous. Consider the FBI’s requirement that they authorize any crimes informants commit while working as a confidential informants.

Ring says the rule makes sense if you have a drug informant who needs to sell a nickel bag as part of a case. But for top echelon informants, he says, the rule seems naive.

“So if am going to have a capo as an informant in La Cosa Nostra, am I to assume he is going to say, ‘Okay I won’t commit crime?’” Ring laughs.

The whole reason top echelon informants are so valuable is precisely because they are in the middle of a criminal enterprise — crime is all around them. In most cases, they are violating racketeering statutes just for being a member of the mob. He flips to another section.

He reads a section from the guidelines:

“The United States government will strive to protect your identity but cannot promise or guarantee either that your identity will not be divulged or you will not be called to testify in a proceeding as a witness …”

Ring throws up his hands and rolls his eyes.

“Now if you were considering doing business with me — as a member of al-Qaida or a capo in La Cosa Nostra — would you want to do business with me after I told you that?”

Agents: Rules Impede FBI’s Work

More than a dozen current FBI agents echoed Ring’s remarks. They say developing confidential informants is almost impossible if they can’t protect their identities. In some cases, asking them to testify would be tantamount to giving them a death sentence. Their criminal organizations would have them killed.

The FBI’s Caproni says the complaints are just agents grousing.

“Agents sometimes like to complain, and this is something they can complain about,” Caproni says. “That the rules have changed a little bit, it is laid out much more clearly when they have to reveal a sources identity. But I think as a general rule we have a very good track record with maintaining the confidentiality of the identities of human sources.”

Ring says the guidelines are hamstringing agents. If the FBI wants to get insiders from al-Qaida or the mob to help fight crime, they need to put what happened in Boston in the past and allow agents to use their own judgment.

“They have tried by legislation to make what Morris and Connolly did impossible,” Ring says. “And I think that is impossible to do because corruption is a matter of the heart.”

New attorney general guidelines on a variety of FBI procedures are expected to be released in the next couple of weeks. In spite of agents’ complaints, Caproni says the confidential informant guidelines won’t change.

None of suspects charged with headline-grabbing plan to blow up airlines, alleged ringleader completely acquitted

Paul Joseph Watson
Prison Planet
Tuesday, September 9, 2008

The much vaunted liquid bomb “terror plot” that provoked paranoid airport security measures, an overnight change in baggage procedures, and at one point led to mothers having to drink their own breast milk, completely collapsed yesterday in court after the alleged ringleader was completely acquitted and none of the other suspects were charged with conspiracy to blow up an airliner.

“Seven men admitted plotting to cause a public nuisance. An eighth man was cleared at Woolwich Crown Court,” reports the BBC.

“But after more than 50 hours of deliberations, the jury did not find any of the defendants guilty of conspiring to target aircraft.”

“Mohammad Gulzar, 27, who Scotland Yard accused of being a ringleader in the plot, was cleared of all offenses,” adds the Register.

Despite the fact that all the suspects were cleared of charges of targeting aircraft, some quarters of the media are still bizarrely citing the verdicts as a reason to continue the inane and pointless restrictions on liquids in carry-on luggage.

Numerous airliners as well as Britain’s largest airport owner are now calling on the government to repeal the measures.

“We would expect the government to review its security regulations following the outcome of this case,” said Roger Wiltshire, chief executive of the British Air Transport Association, whose members include BA and Virgin, reports the Guardian.

BAA, the owner of Britain’s top three airports, including Heathrow, said: “Today’s verdict seems like a good opportunity for the government to consider the security measures currently in place at British airports.”

Whether the government will cave in to pressure and reverse their much cherished behavior compliance airport security measures remains to be seen, but the fact that the “liquid terror plot” was a complete fabrication became apparent from the very start.

In every single major terror bust or terror alert we have proven the evidence to be flawed and the charges to be cooked up nonsense aimed at prolonging the illusion that terror cells are lurking around every corner waiting to cause mayhem. The geopolitical agenda of the U.S., Britain and Israel depends on the proliferation phony terror threats in order to continue the farcical war on terror and take more of our innate freedoms at home to stifle dissent against the plot for worldwide hegemony.

In a series of reports following the August 10th scare, we traced the source of the alleged attack plot to Pakistani and British intelligence and were rapidly able to confirm that the story was nothing more than a manufactured ploy to frighten travelers at the height of the holiday season.

The reason being cited for the failure to convict the suspects of being behind a plot to blow up airliners is that the U.S. government wanted the men apprehended before MI5 were able to collect all the evidence against them.

In reality, as we reported at the time, an MI5 spy had infiltrated the group at an early stage which is often the case when agent provocateurs are attempting to radicalize a group and provoke them into committing acts of violence.

The announcement of the foiled plot was made on August 10th, but officials stated that they wanted to wait at least another week before busting the group, meaning August 17th or thereafter. According to the very timescale of the plot put forward by authorities, the attack was scheduled for August 16th, meaning authorities only wanted to bust the group after the attack had taken place.

Evidence that the suspects identified were mere patsies in a wider conspiracy became clear when it emerged that they didn’t even have passports and could not have boarded a transatlantic plane.

Echoing the activities of the 7/7 bombers, some of the main suspects in the case exhibited behavior that in no way suggested they were preparing to launch mid-air suicide attacks on jumbo jets. Far from preparing his last will and testament, psyching himself up for his imminent death or acquiring the necessary materials to conduct the operation, Tayib Rauf was caught on CCTV hours before the launch of the plot doing something far more mundane - he was buying cakes for his father’s confectionary business.

Former British Ambassador to Uzbekistan Craig Murray slammed the so-called foiled plot story as “propaganda” on behalf of Bush and Blair who yearn for a “new 9/11? to reinvigorate their flagging support base.

“None of the alleged terrorists had made a bomb. None had bought a plane ticket. Many did not even have passports, which given the efficiency of the UK Passport Agency would mean they couldn’t be a plane bomber for quite some time,” said Murray.

The embarrassing collapse of another government-concocted terror fairytale should immediately mandate the repeal of ridiculous measures in airports that do nothing to stop would-be terrorists and everything to hassle and inconvenience innocent travelers - but don’t expect the authorities to give up a key aspect of their prototype police state without a fight.

November 30, 2005
The Onion

LANGLEY, VA—A report released Tuesday by the CIA’s Office of the Inspector General revealed that the CIA has mistakenly obscured hundreds of thousands of pages of critical intelligence information with black highlighters.

CIA Director Porter Goss.

According to the report, sections of the documents— “almost invariably the most crucial passages”—are marred by an indelible black ink that renders the lines impossible to read, due to a top-secret highlighting policy that began at the agency’s inception in 1947.

CIA Director Porter Goss has ordered further internal investigation.

“Why did it go on for this long, and this far?” said Goss in a press conference called shortly after the report’s release. “I’m as frustrated as anyone. You can’t read a single thing that’s been highlighted. Had I been there to advise [former CIA director] Allen Dulles, I would have suggested the traditional yellow color—or pink.”

Goss added: “There was probably some really, really important information in these documents.”

When asked by a reporter if the black ink was meant to intentionally obscure, Goss countered, “Good God, why?”

Goss lamented the fact that the public will probably never know the particulars of such historic events as the Cold War, the civil-rights movement, or the growth of the international drug trade.

“I’m sure the CIA played major roles in all these things,” Goss said. “But now we’ll never know for sure.”

In addition to clouding the historical record, the use of the black highlighters, also known as “permanent markers,” may have encumbered or even prevented critical operations. CIA scholar Matthew Franks was forced to abandon work on a book about the Bay Of Pigs invasion after declassified documents proved nearly impossible to read.

“With all the highlighting in the documents I unearthed in the National Archives, it’s really no wonder that the invasion failed,” Franks said. “I don’t see how the field operatives and commandos were expected to decipher their orders.”

The inspector general’s report cited in particular the damage black highlighting did to documents concerning the assassination of John F. Kennedy, thousands of pages of which “are completely highlighted, from top to bottom margin.”

“It is unclear exactly why CIA bureaucrats sometimes chose to emphasize entire documents,” the report read. “Perhaps the documents were extremely important in every detail, or the agents, not unlike college freshmen, were overwhelmed by the reading material and got a little carried away.”

Also unclear is why black highlighters were chosen in the first place. Some blame it on the closed, elite culture of the CIA itself. A former CIA officer speaking on the condition of anonymity said highlighting documents with black pens was a common and universal practice.

“It seemed counterintuitive, but the higher-ups didn’t know what they were doing,” the ex-officer said. “I was once ordered to feed documents into a copying machine in order to make backups of some very important top-secret records, but it turned out to be some sort of device that cut the paper to shreds.”

AP | August 9, 2008

Former President Ford secretly advised the FBI that two of his fellow members on the Warren Commission doubted the FBI’s conclusion that John F. Kennedy was shot from the sixth floor of the Texas Book Depository in Dallas, according to newly released records from Ford’s FBI files.

Ford, still a congressman at the time, also told a senior FBI official about internal panel disputes over hiring staff, Chief Justice Earl Warren’s timetable for completing the final report on the assassination and what panel members said about the FBI.

In turn, Assistant FBI Director Cartha “Deke” DeLoach confidentially advised Ford of FBI Director J. Edgar Hoover’s position on panel disputes; discussed where leaks were coming from; and, with Hoover’s personal approval, loaned him a bureau briefcase with a lock so he could securely take the FBI report on the 1963 assassination with him on a ski trip.

The new details were included in 500 pages of the FBI’s large file on Ford, released in part this past week in response to requests under the Freedom of Information Act that The Associated Press and others made on the day Ford died in December 2006. The FBI intends to release additional documents about Ford in several batches, all with parts censored for law enforcement and privacy reasons.

That Ford served as the FBI’s eyes and ears inside the commission has been known for years. Long ago, the government released a 1963 FBI memo that said Ford, then a Republican congressman from Michigan, had volunteered to keep the FBI informed about the panel’s private deliberations, but only if that relationship remained confidential. The bureau agreed.

It was also well-known Ford was an outspoken proponent of the bureau’s conclusion that Lee Harvey Oswald killed Kennedy acting alone.

A newly released memorandum provides more details about Ford’s role as the FBI’s informant. DeLoach wrote on Dec. 17, 1963, to outline what Ford told him in the congressman’s office about the commission meeting the day before.

“Two members of the commission brought up the fact that they still were not convinced that the President had been shot from the sixth floor window of the Texas Book Depository,” DeLoach wrote. “These members failed to understand the trajectory of the slugs that killed the President. He stated he felt this point would be discussed further but, of course, would represent no problem.”

There was no explanation of what Ford meant by “no problem.”

Warren Commission records released in 1997 revealed that in the final report Ford changed the staff’s original description of one of Kennedy’s wounds. Ford said then he only made the description more precise. Skeptics said Ford’s wording falsely made the wound seem higher on the body to make the panel’s conclusion that one bullet hit both Kennedy and Texas Gov. John Connally more plausible.

DeLoach also wrote that Ford wanted to take the FBI’s confidential assassination report on a ski vacation but had no way to do so “in complete safety.” DeLoach recommended lending Ford a bureau briefcase with a lock. The bottom of the memo contains a handwritten “OK” over Hoover’s distinctive initial “H,” which he regularly used in commenting on memos.

Most of the newly disclosed documents describe the relationship between the FBI under Hoover and influential members of Congress or the judiciary once Hoover was convinced that they were allies.

Hoover rewarded Ford with personal notes that congratulated him on re-election and on awards, thanked Ford for publicly defending the bureau and expressed sympathy over the death of Ford’s mother. In turn, Ford responded with private and public praise for Hoover and the FBI.

Like other friendly officials, Ford was granted favors. Some Ford sought: a photo of Hoover, background checks on a maid the Fords wanted to hire and on a man with a Swedish accent seeking public office in Ford’s district but who had not answered all his neighbors’ questions about his personal background. Others were surprise gifts, such as a signed copy of Hoover’s book on communism.

Ford was elected to Congress in 1948. Hoover first congratulated him on his re-election in 1952 and thereafter. An internal FBI memo in 1965 said that, “though we did experience some difficulty with all the members of the Warren Commission, Ford was of considerable help to the Bureau.”

Many of the newly released records describe the bureau’s controversial surveillance of anti-war and civil rights protesters as the FBI reported on plans for protest demonstrations at Ford’s public appearances as a congressman, vice president and president.

Two documents provide a rare glimpse of the depth of security fears during the Cold War:

-A memo from Nov. 9, 1965, said the FBI performed a security check at Ford’s request of telephones at his home in Virginia, his line at the phone company’s central office and all points between. The FBI found no bugs, but a foreman said installation of new touch-tone dialing equipment in the area may have caused “some inadvertent noise on Mr. Ford’s line.”

-A memo from Dec. 2, 1959, showed the Navy was considering inviting Ford to a strategy conference at the Naval War College and asked the FBI - fully 11 years after Ford was first elected to Congress - whether Ford had any “subversive nature.” The famously tightlipped FBI had amassed a large file on Ford, but replied only that when Ford had applied to work for the FBI in 1942 its background investigation “revealed no pertinent derogatory information.”

PDF Links for documents:

1959 Memo Regarding Ford’s ‘Subversive Nature’

1965 Memo on Security Check on Ford’s Phone

1963 Memo: 2 Warren Commission Members Doubted FBI’s Conclusions in Kennedy Assassination

September 13, 2008 by Philip Dru

Russia’s Prime Minister Vladimir Putin said he was surprised by the power manifested by western propaganda after Georgia’s assault on South Ossetia, RIA Novosti reported from Sochi.
A foreign participant of Valdai International Debating Club asked the RF prime minister, why Russia’s troops that moved to South Ossetia acted in such a way towards Georgia.

“Your question doesn’t surprise me. I’m surprised by quite another thing - how powerful the propaganda machine of the West actually is. It is stunning, astonishing. This is out of all notch, but it is in it nevertheless,” Putin answered.

Putin reiterated that Russia’s response to Georgia’s assault on South Ossetia was adequate, as Georgia used heavy artillery against peaceful civilians.

“You’d like us to swing a penknife there? What’s the adequate application of force when the tanks and heavy artillery are used against us? Should we have catapulted? The thing to be expected was they would get the snout smashed good and proper,” the prime minister was explicitly emphatic.

Kommersant | Friday, September 12, 2008

El Centro, Tijuana; August 13, 2008.

With heavy heart, vacillating with intense rage; I stand on the corner of Revolution and Third Avenues, and watch as several hundred federal police officers block off all of 3rd Avenue, between Madero and Constitution, with huge buses. As startled tourists run for taxis and Mexican shoppers scurry away, 250 “Federales” in ominous, dark-black uniforms, carrying machine guns, automatic rifles and a few grenade launchers, spread out along the streets.

Here at this venerated intersection, where few alive remember, but the personal stories are passed down through the generations, where the truck carrying personal belongings of Ricardo Flores Magon paused, while thousands paid homage in November, 1922 to a true defender of freedom and patria. Maria Guzman, then in her 80’s, still selling trinkets on the streets, reminisced over 20 years ago to me about her father lifting her up from the dusty road so she could kiss the desk of Tijuana’s greatest hero. She, then, still lived in the Tijuana barrio of Flores Magon.

How heartrending these federal blackshirts, ready to shoot citizens, here at this junction of streets, in this city, which so long ago was the capital of a truly liberated Baja. In May, 1911, exploited pottery workers joined with oppressed indigenous peoples, aided by Mexican union members, sent south from Los Angeles by Flores Magon, and overthrew the local forces of the dictator Porfirio Diaz. For over a year, all the major cities in Baja became part of the only emancipated nation, formed in the Northern Hemisphere in the 20th Century . Led by the Partido Liberal Mexicano and Flores Magon from Los Angeles (the Mexican government had put forth a $20,000 reward for his death), Tijuana saw large estates confiscated and land distributed to the poor, workers were unionized and guaranteed decent wages, women were freed from machismo, and officials vowed to govern by “making a free and happy life for all without masters and tyrants.”

Of course, as in all history, the forces of greed and privilege won. Madero won the Mexican Revolution, which was waging at the time, and lost his life. Zapata was also assassinated, Pancho Villa brought down in a hail of bullets, and Flores Magon arrested by the United States government in 1912, in exchange for railroad rights with Mexico’s new “liberal” dictators. Sentenced to 20 years, he was murdered by federal agents in Leavenworth Prison, Kansas.

Sin as a Liberating Tradition

There is an old saying, “When the United States get’s a cold, Tijuana sneezes.” The city has always been torn between being a frontier post for North American exploitation. Whether its illusions of liberty amidst total corruption or its basement bargain image (Capitalism’s dark side, its Id, where “everyone is always selling something”); it is a place where cultures smash together, creating continuous fusion. It is Mexico’s fourth largest city; its citizen never really totally Mexican. A weak dollar, weak economy, vanishing tourists, cheap labor in the Maquiladoras; scurrying, adapting, surviving amidst Capitalism’s maze.

Standing on the corner of Avenida Revolucion and 3rd, in the heart of downtown Tijuana; I look north, toward the cheap, tin imitation of an arch strutting 1st Avenue. Between 1st and 2nd, abutting the Plaza Santa Cecilia, the old Boom-Boom Club building still stands, renamed so often, I’ve forgotten how many. Gutted by fire, neutered by American moral imperialism, it survives, like the city, a shadow of what it once was.

In its dark upstairs, a labyrinth of tapestry leading to dank rooms smelling of sweat and orgasms; my fourteen years of innocence came to a glorious end. It was the early sixties, where if you were tall enough to stand at the bar and had a dollar in your pocket you were welcomed. Young or old, black or white; Revolution Avenue was the heart of a poor person’s sin city. More affordable than Las Vegas, more real, more orgiastic, than the pomp of Mardi Gras, its chicks more accessible and down-to-earth than any coy polette along the River Seine in Paris; Tijuana was the Mecca for all who worshiped at the foot of Dionysus, the god of debauchery.

I look directly across from the intersection, where the old J.C. Penny store used to be. Now a Gigante shopping store, it is flanked by that hideous cultural clone, the Hard Rock Café. The city was also a destination of America’s working-class. My grandmother, wife of a roofer, first brought me here in the mid-1950’s. She loved to browse its shops and boutiques for little trinkets or adornments for her modest home or buy exotic candies and spicy salsas. Uncles, cousins, and distant friends of the family, would come to Tijuana to experience a “foreign country.” For most, this would be their only “brave” excursion out of the United States. Photos and souvenirs would be shown around fireplaces and wood stoves in the hollows of the Ozark Mountains or the brick houses on the Nebraska prairie for years.

“What tragic fascination continues to bring me back here to this god-forsaken city,” I ask myself, looking north again, toward the left side of Revolution, where the five-story Hotel Nelson dominates the view. Am I simply a salmon, instinct driven, returning to the spawning space; or has all the heartaches, drunken nights, love’s won, love’s lost, blood spilled on spit covered sidewalks, wild parties, orgies, arrests, street kids helped, families aided, over the many decades, made me a citizen of this tragic city. My mother and father were married in Tijuana in 1946. At sixteen, she was too young for California law. My conception, at the Nelson, overlooking this historical avenue, named after the Revolution; its smells, its noise, its pulsating energy of liberated behavior, permeated my genes.

My adopted city (or the city that has ensnared me) is failing. Dominated by American Empire and local corruption, both a battle-ground and a staging-ground; Tijuana reflects a nation torn between the illusions of freedom and the reality of a corporate-owned oligarchy which increasing requires a police state mentality and totalitarian controls.

Professor Joseph Scimecca, in his lectures on Humanist Sociology, taught me, long ago, that freedom is quite simply “the maximation of alternatives.” The more limitations the less freedom, he taught. Any look at society, any political or economic decision; he believed, must begin with the premise that “humans are free to create their social world, and that whatever impinges upon that freedom is ultimately negative and destructive.”

The determinist philosophy of corporate-owned capitalism has evolved. In Tijuana, many afternoons; American, Japanese, Chinese and Mexican CEO’s meet frequently with city officials and federal police to plot their needs. These executives then fly off to corporate headquarters, where more discussions are held with lobbyists, spin artists, politicians and other diverse crooks. A thousand laws, ordinances, regulations and decrees are issued each day, all over the globe; enabling, protecting, solidify the control of these profit driven extremists.

In olden days, they were called “Robber Barons.” Today, they have become a Taliban of economic terrorists, Jihadists for profit, backed by police, day-by-day, extort and manipulate people’s lives to give themselves more power. Meanwhile, in places like Tijuana, the urban apocalypse sees more and more violence as drug lords fight over who will buy off the politicians and police, with children, as young as 7-years-old, brutally gunned down. Kissing cousins to the world’s CEO’s, these gangsters, particularly in Mexico, create the violence that breeds and justifies the very tyranny and subjugation that the corporate masters are demanding. As 9-11 was used by Bush, Chaney and Gang to justify the destruction of the Constitution and its Bill of Rights; so, too, does Mexico’s phony war on drugs authoritate its repression and police state tactics.

Tijuana has always had drugs. And like the son of a bartender (and many a preacher), its youth always learned to handle their physic medication. During the 60’s and 70’s, marijuana was always plentiful. We poor boys, without fathers to support us, would always pick up some, after a drunken week-end, to sell to fellow students to pay for education needs. Five kilos could be had for a case of Jack Daniels. Speed, however, “Black Beauties and Cross-Tops” required cash, as did downers like “Bennies”.

It wasn’t until the CIA introduced crack cocaine into the ghettos of the United States (Reagan’s revenge for Black Panthers near his Sacramento Governor’s mansion with loaded rifles) did Mexico have a “problem” with drugs. The only land mass between the jungles of Columbia and the noses of North American youth; Mexico became a leaky conduit. Its own poor youth hooked and corrupted by cartels that depend on the Capitalist system of supply and demand. The U.S. government and its hysterical oligarchy, rather than treat its youth’s addiction, decriminalize and legalize; declared war on its own children and expected Mexico to do the same.

By 2006, Mexican legislators had had enough of the violence and repression, encouraged and funded by U.S. fanatical politicians and officials. They passed a drug de-criminalization bill which focused on personal use; the reasonable approximations of single-use or single-session amounts. Under the bill as passed by the congress, possession of up to five grams of marijuana, 25 milligrams of heroin, a half-gram of cocaine, two-tenths of a gram of speed or Ecstasy, and one-quarter gram of psychedelic mushrooms would be considered possession for personal use. And in a nod to Mexico’s indigenous population, the measure would also decriminalize the possession of up to 2.2 pounds of psychedelic peyote cactus.

Then Mexican President Vicente Fox, agreeing to sign; then cowardly refused after the U.S. Ambassador threatened economic and political sanctions. This bill would have freed up criminal justice system resources currently devoted to dealing with drug users. It also would have given the government more ammunition in the form of stiffer sentences for drug trafficking and sales offenses and it would give it more boots on the ground in the drug war in the form of 400,000 state and municipal police officers who would now be allowed to take part in drug law enforcement. Under current law, only Mexico’s roughly 100,000 federal police agents can enforce the drug laws.

So, if it is the power of the “federales” and their authoritarian support of oligarchy and foreign corporations, if it is millions of dollars from the north; then, the Conservative governments of PAN will sacrifice a whole generation of youth to appease its U.S. masters.

Profiting from “Legal” Drugs

As I stand in down-town Tijuana and watch the Mexican federal agents lock-down the city’s core, I sense that this too is staged. Perhaps a U.S. Senator is in town, or a staff member from the White House? Walking along Revolution Avenue, I ask dozens of people what is going on. No one seems to know. I wait. A half-hour, an hour. Nada. No buildings are rushed, no armored car arrives to take a druggie into custody. I finally head off to the Ranchero, before my favorite bartender leaves and the drinks rise to 25 pesos.

Three hours and five drinks later; I learn from a disgusted pharmacist, who had just belted three shots of Tequila with his Tecate beer; that the cream of the Mexican federal police were in Tijuana not to protect its citizens from violence nor apprehend its gangsters but, rather, to protect international pharmaceutical companies and their profits.

Professor Scimecca’s maximum alternatives, the foundation of freedom, was helping Tijuana’s poor, and even the U.S.’s working-class too much. Led by the Mexican Institute for the Protection of Industrial Property, an actual federal agency which protects corporate interests, the “federales” were targeting pharmacies along Revolution and a few on Third Avenue, which cater to strapped Americans trying to find lower-priced medications.

Many pharmacies in Mexico circumvent the monopoly manipulation of prices by huge drug companies by selling medication by the pill rather than in a package. Several aged U.S. citizens I know, some in their 80’s, who live in squalid tenements, near Revolution, buy their prescriptions this way. Others, especially indigenous families and single-mothers, can only afford to buy the medical samples that doctors donate to the pharmacies.

The action, by federal corporate protection agents, netted not one single offender. No citations were issued, no arrests, no pharmacies were closed. It was all show. By evening all the small mom and pop pharmacies throughout the city; in run-down buildings in the barrios, perched on canyon edges in shacks, serving the city’s poor, worried about their livelihood and service to their communities.

Today, everywhere; human beings, either individually or in associations, such as governments, are increasingly incapable of calculating possibilities because the freedom to choose is an illusion. Like shoppers on an escalator or cattle prodded through chutes, there is no room to maneuver. Behavior is no longer innovative and spontaneous because consciousness itself [to stand apart, the ability to give things meaning] is hammered into a socially determined aspect of self. In a corporate-owned world, well-paid, well-meaning, pharmacists are as trapped as poor people by the lack of options [and increasingly, the ability to even imagine options].

Human praxis, the reflective process of thought and action, becomes stunted; liberty an illusion, and the notion of individuality a cruel myth. C. Wright Mills’ warnings, decades ago, about the continuing constraints on human freedom by those who have institutional and economic power has come to pass. Political and economic tyranny, even the manipulation of truth itself, has become commonplace, with little dissent.

Just this week, the vicious bastard children of corporate-owned globalization, China’s state-owned capitalism thugs, didn’t even attempt to hide their authoritarian presence. Because smog obscured the opening of the Olympics, they merely released a computer generated fireworks show and the media puppets of the world broadcast it as news footage of the actual event. The little girl who opened the games, lip sank the words; while another, much less pretty girl sang the words. Meanwhile they arrest a human rights activist on his way to church (the same one that Bush attended while sucking up to Beijing’s wealth).

China’s Orwellian nightmare, like Freddy Krueger, is coming to a theatre (community) near you. In Helena, Arkansas, the city’s wealthier citizens have gotten the Mayor and City Council to impose a 24-hour curfew on the 10 square blocks of its poorer neighborhoods; creating de-facto apartheid based on class. The poor and working-class in this small precursor of municipal despotism are required to explain why they are on public streets and subject themselves to illegal interrogation.

Tijuana, likewise, has become a staging ground for the new fascism of a corporate-owned world. Like the Chinese fireworks, Mexico’s moves in reigning in the narcos are an illusion. The wealthy and their politicos need the drug lords as much as Bush needed Ben Laden free - bogeymen, to whip children and citizens into fear, validating oppression.

The drug trade in Mexico is the hen that lays the Golden Eggs. Billions of U.S. dollars pass into private hands as Mexico pretends to fight a war on drugs. Ludicrous, ineffective road blocks so open and announced that even tourists know where they are, arrests of the hired help, while drug kingpins become mayors and governors, filling city jails with poor street kids and orphans while drug coyotes drive by in Hummers and Escalades.

The outlook is bleak for Tijuana; it is controlled by corporate interests not its people. The corrupt political system, the U.S. dominated economy, the lack of strong unions or effective civic organizations makes fundamental change near impossible. Those who can afford to migrate, will. The wealthy will continue to wall in their homes and create no trespass zones, like in Jerusalem. Whole concentration camps for the young and poor will be built; financed with U.S. dollars.

Yet, there is always hope. What I love best about Mexico, is its people; the strength of their friendships and familial ties. Their ability to make sense and purpose of the madness and anarchy of a functioning society without much basic infrastructure, from poor roads to over-flowing toilets. The ability to laugh through hardships and never, never, taking themselves (or others) too seriously.

And, in spite of repeated stolen elections by corporate interests, they still hold a soft-spot in their hearts for revolution and democracy. Unlike the United States, where jaded, faded, manipulated images of kind old “fathers” founding a nation on parchment and with speeches, corporate washes the truth and legitimizes today’s tyrannies; Mexicans still idealize and understand the fiery integrity of Zapata and the magnificent courage of Pancho Villa. Generationally, much closer to their revolution, they still remember; family members martyred, women and children fighting with machetes and hoes.

Deep within the Mexican chest, beats the heart of a potential liberationist; a potential Flores Magon. Those furthest from the U.S. border; more so, as Marcos discovered. We can only hope that the invaluable social capital of Mexico; its Golden Standard, the bond of family and friends, will guard its people from the insanity of northern greed and selfishness that seeps south, across the border, like raw sewage.

By CHOE SANG-HUN

Published: September 19, 2008

SEOUL, South Korea — North Korea said Friday that it no longer wished to be removed from the United States’ terrorism blacklist, signaling that it is hardening its stance amid reports that its leader, Kim Jong-il, may be seriously ill.

The North Korean Foreign Ministry also confirmed what the United States and South Korea have said already: it has begun to reassemble a nuclear complex that can produce weapons-grade plutonium.

“We neither wish nor expect to be delisted as a ‘state sponsor of terrorism,’ ” the North’s state-run news agency, KCNA, quoted a ministry spokesman as saying. “We can go our own way.”

Bravado is North Korea’s common negotiating tactic. Still, the statement bodes ill for Washington’s efforts to keep the nuclear complex, Yongbyon, north of the capital, Pyongyang, disabled.

In Washington, the White House expressed concern about North Korea’s recent statements, but emphasized that the United States and its negotiating partners remained committed to the nuclear agreement and expected the North Koreans to accept a verification system of their nuclear activities.

“It’s hard to know whether their statements reflect a change in policy or simply the kind of negotiating that we’ve seen before,” Stephen J. Hadley, President Bush’s national security adviser, said in an interview with reporters.

North Korea has said that Washington agreed to remove it from its list of state sponsors of terrorism once it started disabling the Yongbyon complex and submitted a declaration of its nuclear activities, as it did last June.

But the United States says the North must first agree to a comprehensive inspection to check whether it did not leave out crucial data in its accounting.

An angry North Korea has said it would never agree to a “gangster-like” inspection and stopped disabling the nuclear complex in mid-August. Then early this month, it hauled out disabled parts from sheds and began reassembling them at their original site.

It remains a mystery whether Mr. Kim gave the instruction to restart the nuclear complex or the hard-line military was acting on his behalf, after reports surface that he had suffered a stroke.

Analysts have said the North’s actions may be a negotiating tactic to win concessions from the Bush administration as it looks for diplomatic successes to bolster its legacy. It may also be stalling until after the American presidential election.

Even though it has begun to reassemble Yongbyon, it could take the North a year to restart the nuclear complex.

Peter Fimrite, Chronicle Staff Writer
Thursday, September 8, 2005

(09-08) 17:14 PDT New Orleans (SF Chronicle) — I did not actually count the number of automatic weapons pointed at me, but there were at least five, and I was certain they were all locked and loaded, or whatever that military phrase is signifying that a gun is ready to blow a hole in somebody.

“Step out!” commanded the black-helmeted man in the middle of what appeared to be a tactical formation. He was pointing a laser-like flashlight attached to his machine gun at me.

I must have been quite a sight alone out there on the darkened New Orleans street wearing a headlamp and holding a cell phone at an odd right angle, the only way I could get it to work. I had just been placed on hold.

“I’m a journalist working for The San Francisco Chronicle,” I said quickly, trying to remain calm. “I’m out here because the signal …”

“Step out here!” he interrupted, and his tone suggested that the consequences for not stepping out into the street would be dire. I stepped out.

The encounter was a sobering look into the post-hurricane reality of New Orleans. The city has been evacuated and a 6 p.m. curfew imposed. The citizens who remain are presumed to be up to no good, especially if they are out past dark.

There are National Guard, police and Army checkpoints every few blocks. SWAT teams, soldiers and military squads from as far away as Puerto Rico patrol the downtown streets, stopping anyone they see. The units often do not appear to know what the others are doing.

It is essentially martial law in the Big Easy and being outside without a press pass can be dangerous, if not deadly. I was among 17 journalists from Hearst Corp.-owned newspapers staying at a house in an upscale neighborhood on 6016 St. Charles Place, an area that was spared by the flood.

Hearst Corp. hired six armed military contractors, led by former Navy SEAL Chris White, to protect the house and journalists, presumably from looters, but also from arrest by police or the military.

There is no electricity and only sparse telephone service in the city and the water supply is assumed to be contaminated. The journalists tramp around the flooded city by day and work by flashlight on their laptops at night, slapping at mosquitoes in the heat and sleeping on the floor.

Cell phone service is sporadic, requiring writers to move from place to place on the lawn, deck and sidewalk to find a connection. That explains my location out on the sidewalk sometime after 9 p.m. Wednesday.

As I waited, headlight shining on my notes, for the person on the line to return, I saw out of the corner of my eye shadowy figures in crouching positions moving across the street toward me.

As I looked up, they seemed to be taking firing positions, men on either flank, two more behind cars and the man in the middle shining the light. They were a New Orleans police SWAT team and their guns were pointed directly at me. I made the decision not to slap at the mosquito that was siphoning blood out of my arm.

“Do you have ID?” I was asked. I tried to explain that it was in the car and the keys were in the house. “Do you live here?” “What are you doing here?” The questions came rapid fire, under the threat of a bullet.

Just then, White and his compatriots rushed out of the house, without their guns. The SWAT team turned toward them, rushing down the street for the expected confrontation.

“Don’t point your f—— gun at me!” White shouted, and an already tense situation turned into a hair-raising standoff. I slipped back into the house while the two sides worked out their differences without, thankfully, any gunfire.

“That was totally unprofessional, pointing their guns at us like that,” White complained when he returned. “The Army has been patrolling this street for a week and they know what’s going on here. All the police had to do was ask them and they would have known everything they needed to know about this street.”

Then, as we journalists prepared for another fitful night of sleep, White commanded everyone’s attention for an announcement.

“I’m asking that nobody go out in front anymore after dark,” he said. “It’s just too dangerous.”

E-mail Peter Fimrite at pfimrite@sfchronicle.com.

Intrigue. Power. Corruption. Death. Sex. The history of oil has nothing on that of the yellow fruit.

By Katharine Mieszkowski

Apr. 19, 2008 | On a trip to Honduras, journalist Dan Koeppel caught the banana bug. Researching an article for Popular Science about attempts to breed a disease-resistant banana, the American journalist wandered the grounds of the old Chiquita compound, amid the fading colonial mansions and golf course, where he stumbled upon the cheery yellow fruit’s unsavory past.

By Chalmers Johnson, Tomdispatch.com
Posted on April 30, 2008, Printed on May 4, 2008
http://www.alternet.org/story/83910/

The RAND Corporation of Santa Monica, California, was set up immediately after World War II by the U.S. Army Air Corps (soon to become the U.S. Air Force). The Air Force generals who had the idea were trying to perpetuate the wartime relationship that had developed between the scientific and intellectual communities and the American military, as exemplified by the Manhattan Project to develop and build the atomic bomb.

Soon enough, however, RAND became a key institutional building block of the Cold War American empire. As the premier think tank for the U.S.’s role as hegemon of the Western world, RAND was instrumental in giving that empire the militaristic cast it retains to this day and in hugely enlarging official demands for atomic bombs, nuclear submarines, intercontinental ballistic missiles, and long-range bombers. Without RAND, our military-industrial complex, as well as our democracy, would look quite different.

Alex Abella, the author of Soldiers of Reason, is a Cuban-American living in Los Angeles who has written several well-received action and adventure novels set in Cuba and a less successful nonfiction account of attempted Nazi sabotage within the United States during World War II. The publisher of his latest book claims that it is “the first history of the shadowy think tank that reshaped the modern world.” Such a history is long overdue. Unfortunately, this book does not exhaust the demand. We still need a less hagiographic, more critical, more penetrating analysis of RAND’s peculiar contributions to the modern world.

Abella has nonetheless made a valiant, often revealing and original effort to uncover RAND’s internal struggles — not least of which involved the decision of analyst Daniel Ellsberg, in 1971, to leak the Department of Defense’s top secret history of the Vietnam War, known as The Pentagon Papers to Congress and the press. But Abella’s book is profoundly schizophrenic. On the one hand, the author is breathlessly captivated by RAND’s fast-talking economists, mathematicians, and thinkers-about-the-unthinkable; on the other hand, he agrees with Yale historian John Lewis Gaddis’s assessment in his book, The Cold War: A New History, that, in promoting the interests of the Air Force, RAND concocted an “unnecessary Cold War” that gave the dying Soviet empire an extra 30 years of life.

We need a study that really lives up to Abella’s subtitle and takes a more jaundiced view of RAND’s geniuses, Nobel prize winners, egghead gourmands and wine connoisseurs, Laurel Canyon swimming pool parties, and self-professed saviors of the Western world. It is likely that, after the American empire has gone the way of all previous empires, the RAND Corporation will be more accurately seen as a handmaiden of the government that was always super-cautious about speaking truth to power. Meanwhile, Soldiers of Reason is a serviceable, if often overwrought, guide to how strategy has been formulated in the post-World War II American empire.

The Air Force Creates a Think Tank

RAND was the brainchild of General H. H. “Hap” Arnold, chief of staff of the Army Air Corps from 1941 until it became the Air Force in 1947, and his chief wartime scientific adviser, the aeronautical engineer Theodore von Kármán. In the beginning, RAND was a free-standing division within the Douglas Aircraft Company which, after 1967, merged with McDonnell Aviation to form the McDonnell-Douglas Aircraft Corporation and, after 1997, was absorbed by Boeing. Its first head was Franklin R. Collbohm, a Douglas engineer and test pilot.

In May 1948, RAND was incorporated as a not-for-profit entity independent of Douglas, but it continued to receive the bulk of its funding from the Air Force. The think tank did, however, begin to accept extensive support from the Ford Foundation, marking it as a quintessential member of the American establishment.

Collbohm stayed on as chief executive officer until 1966, when he was forced out in the disputes then raging within the Pentagon between the Air Force and Secretary of Defense Robert McNamara. McNamara’s “whiz kids” were Defense intellectuals, many of whom had worked at RAND and were determined to restructure the armed forces to cut costs and curb interservice rivalries. Always loyal to the Air Force and hostile to the whiz kids, Collbohm was replaced by Henry S. Rowan, an MIT-educated engineer turned economist and strategist who was himself forced to resign during the Ellsberg-Pentagon Papers scandal.

Collbohm and other pioneer managers at Douglas gave RAND its commitment to interdisciplinary work and limited its product to written reports, avoiding applied or laboratory research, or actual manufacturing. RAND’s golden age of creativity lasted from approximately 1950 to 1970. During that period its theorists worked diligently on such new analytical techniques and inventions as systems analysis, game theory, reconnaissance satellites, the Internet, advanced computers, digital communications, missile defense, and intercontinental ballistic missiles. During the 1970s, RAND began to turn to projects in the civilian world, such as health financing systems, insurance, and urban governance.

Much of RAND’s work was always ideological, designed to support the American values of individualism and personal gratification as well as to counter Marxism, but its ideological bent was disguised in statistics and equations, which allegedly made its analyses “rational” and “scientific.” Abella writes:

“If a subject could not be measured, ranged, or classified, it was of little consequence in systems analysis, for it was not rational. Numbers were all — the human factor was a mere adjunct to the empirical.”

In my opinion, Abella here confuses numerical with empirical. Most RAND analyses were formal, deductive, and mathematical but rarely based on concrete research into actually functioning societies. RAND never devoted itself to the ethnographic and linguistic knowledge necessary to do truly empirical research on societies that its administrators and researchers, in any case, thought they already understood.

For example, RAND’s research conclusions on the Third World, limited war, and counterinsurgency during the Vietnam War were notably wrong-headed. It argued that the United States should support “military modernization” in underdeveloped countries, that military takeovers and military rule were good things, that we could work with military officers in other countries, where democracy was best honored in the breach. The result was that virtually every government in East Asia during the 1960s and 1970s was a U.S.-backed military dictatorship, including South Vietnam, South Korea, Thailand, the Philippines, Indonesia, and Taiwan.

It is also important to note that RAND’s analytical errors were not just those of commission — excessive mathematical reductionism — but also of omission. As Abella notes, “In spite of the collective brilliance of RAND there would be one area of science that would forever elude it, one whose absence would time and again expose the organization to peril: the knowledge of the human psyche.”

Following the axioms of mathematical economics, RAND researchers tended to lump all human motives under what the Canadian political scientist C. B. Macpherson called “possessive individualism” and not to analyze them further. Therefore, they often misunderstood mass political movements, failing to appreciate the strength of organizations like the Vietcong and its resistance to the RAND-conceived Vietnam War strategy of “escalated” bombing of military and civilian targets.

Similarly, RAND researchers saw Soviet motives in the blackest, most unnuanced terms, leading them to oppose the détente that President Richard Nixon and his National Security Advisor Henry Kissinger sought and, in the 1980s, vastly to overestimate the Soviet threat. Abella observes, “For a place where thinking the unthinkable was supposed to be the common coin, strangely enough there was virtually no internal RAND debate on the nature of the Soviet Union or on the validity of existing American policies to contain it. RANDites took their cues from the military’s top echelons.” A typical RAND product of those years was Nathan Leites’s The Operational Code of the Politburo (1951), a fairly mechanistic study of Soviet military strategy and doctrine and the organization and operation of the Soviet economy.

Collbohm and his colleagues recruited a truly glittering array of intellectuals for RAND, even if skewed toward mathematical economists rather than people with historical knowledge or extensive experience in other countries. Among the notables who worked for the think tank were the economists and mathematicians Kenneth Arrow, a pioneer of game theory; John Forbes Nash, Jr., later the subject of the Hollywood film A Beautiful Mind (2001); Herbert Simon, an authority on bureaucratic organization; Paul Samuelson, author of Foundations of Economic Analysis (1947); and Edmund Phelps, a specialist on economic growth. Each one became a Nobel Laureate in economics.

Other major figures were Bruno Augenstein who, according to Abella, made what is “arguably RAND’s greatest known — which is to say declassified — contribution to American national security: … the development of the ICBM as a weapon of war” (he invented the multiple independently targetable reentry vehicle, or MIRV); Paul Baran who, in studying communications systems that could survive a nuclear attack, made major contributions to the development of the Internet and digital circuits; and Charles Hitch, head of RAND’s Economics Division from 1948 to 1961 and president of the University of California from 1967 to 1975.

Among more ordinary mortals, workers in the vineyard, and hangers-on at RAND were Donald Rumsfeld, a trustee of the Rand Corporation from 1977 to 2001; Condoleezza Rice, a trustee from 1991 to 1997; Francis Fukuyama, a RAND researcher from 1979 to 1980 and again from 1983 to 1989, as well as the author of the thesis that history ended when the United States outlasted the Soviet Union; Zalmay Khalilzad, the second President Bush’s ambassador to Afghanistan, Iraq, and the United Nations; and Samuel Cohen, inventor of the neutron bomb (although the French military perfected its tactical use).

Thinking the Unthinkable

The most notorious of RAND’s writers and theorists were the nuclear war strategists, all of whom were often quoted in newspapers and some of whom were caricatured in Stanley Kubrick’s 1964 film Dr. Strangelove, Or: How I Learned to Stop Worrying and Love the Bomb. (One of them, Herman Kahn, demanded royalties from Kubrick, to which Kubrick responded, “That’s not the way it works Herman.”) RAND’S group of nuclear war strategists was dominated by Bernard Brodie, one of the earliest analysts of nuclear deterrence and author of Strategy in the Missile Age (1959); Thomas Schelling, a pioneer in the study of strategic bargaining, Nobel Laureate in economics, and author of The Strategy of Conflict (1960); James Schlesinger, Secretary of Defense from 1973 to 1975, who was fired by President Ford for insubordination; Kahn, author of On Thermonuclear War (1960); and last but not least, Albert Wohlstetter, easily the best known of all RAND researchers.

Abella calls Wohlstetter “the leading intellectual figure at RAND,” and describes him as “self-assured to the point of arrogance.” Wohlstetter, he adds, “personified the imperial ethos of the mandarins who made America the center of power and culture in the postwar Western world.”

While Abella does an excellent job ferreting out details of Wohlstetter’s background, his treatment comes across as a virtual paean to the man, including Wohlstetter’s late-in-life turn to the political right and his support for the neoconservatives. Abella believes that Wohlstetter’s “basing study,” which made both RAND and him famous (and which I discuss below), “changed history.”

Starting in 1967, I was, for a few years — my records are imprecise on this point — a consultant for RAND (although it did not consult me often) and became personally acquainted with Albert Wohlstetter. In 1967, he and I attended a meeting in New Delhi of the Institute of Strategic Studies to help promote the Nuclear Non-Proliferation Treaty (NPT), which was being opened for signature in 1968, and would be in force from 1970. There, Wohlstetter gave a display of his well-known arrogance by announcing to the delegates that he did not believe India, as a civilization, “deserved an atom bomb.” As I looked at the smoldering faces of Indian scientists and strategists around the room, I knew right then and there that India would join the nuclear club, which it did in 1974. (India remains one of four major nations that have not signed the NPT. The others are North Korea, which ratified the treaty but subsequently withdrew, Israel, and Pakistan. Some 189 nations have signed and ratified it.) My last contact with Wohlstetter was late in his life — he died in 1997 at the age of 83 — when he telephoned me to complain that I was too “soft” on the threats of communism and the former Soviet Union.

Albert Wohlstetter was born and raised in Manhattan and studied mathematics at the City College of New York and Columbia University. Like many others of that generation, he was very much on the left and, according to research by Abella, was briefly a member of a communist splinter group, the League for a Revolutionary Workers Party. He avoided being ruined in later years by Senator Joseph McCarthy and J. Edgar Hoover’s FBI because, as Daniel Ellsberg told Abella, the evidence had disappeared. In 1934, the leader of the group was moving the Party’s records to new offices and had rented a horse-drawn cart to do so. At a Manhattan intersection, the horse died, and the leader promptly fled the scene, leaving all the records to be picked up and disposed of by the New York City sanitation department.

After World War II, Wohlstetter moved to Southern California, and his wife Roberta began work on her pathbreaking RAND study, Pearl Harbor: Warning and Decision (1962), exploring why the U.S. had missed all the signs that a Japanese “surprise attack” was imminent. In 1951, he was recruited by Charles Hitch for RAND’s Mathematics Division, where he worked on methodological studies in mathematical logic until Hitch posed a question to him: “How should you base the Strategic Air Command?”

Wohlstetter then became intrigued by the many issues involved in providing airbases for Strategic Air Command (SAC) bombers, the country’s primary retaliatory force in case of nuclear attack by the Soviet Union. What he came up with was a comprehensive and theoretically sophisticated basing study. It ran directly counter to the ideas of General Curtis LeMay, then the head of SAC, who, in 1945, had encouraged the creation of RAND and was often spoken of as its “Godfather.”

In 1951, there were a total of 32 SAC bases in Europe and Asia, all located close to the borders of the Soviet Union. Wohlstetter’s team discovered that they were, for all intents and purposes, undefended — the bombers parked out in the open, without fortified hangars — and that SAC’s radar defenses could easily be circumvented by low-flying Soviet bombers. RAND calculated that the USSR would need “only” 120 tactical nuclear bombs of 40 kilotons each to destroy up to 85% of SAC’s European-based fleet. LeMay, who had long favored a preemptive attack on the Soviet Union, claimed he did not care. He reasoned that the loss of his bombers would only mean that — even in the wake of a devastating nuclear attack — they could be replaced with newer, more modern aircraft. He also believed that the appropriate retaliatory strategy for the United States involved what he called a “Sunday punch,” massive retaliation using all available American nuclear weapons. According to Abella, SAC planners proposed annihilating three-quarters of the population in each of 188 Russian cities. Total casualties would be in excess of 77 million people in the Soviet Union and Eastern Europe alone.

Wohlstetter’s answer to this holocaust was to start thinking about how a country might actually wage a nuclear war. He is credited with coming up with a number of concepts, all now accepted U.S. military doctrine. One is “second-strike capability,” meaning a capacity to retaliate even after a nuclear attack, which is considered the ultimate deterrent against an enemy nation launching a first-strike. Another is “fail-safe procedures,” or the ability to recall nuclear bombers after they have been dispatched on their missions, thereby providing some protection against accidental war. Wohlstetter also championed the idea that all retaliatory bombers should be based in the continental United States and able to carry out their missions via aerial refueling, although he did not advocate closing overseas military bases or shrinking the perimeters of the American empire. To do so, he contended, would be to abandon territory and countries to Soviet expansionism.

Wohlstetter’s ideas put an end to the strategy of terror attacks on Soviet cities in favor of a “counter-force strategy” that targeted Soviet military installations. He also promoted the dispersal and “hardening” of SAC bases to make them less susceptible to preemptive attacks and strongly supported using high-altitude reconnaissance aircraft such as the U-2 and orbiting satellites to acquire accurate intelligence on Soviet bomber and missile strength.

In selling these ideas Wohlstetter had to do an end-run around SAC’s LeMay and go directly to the Air Force chief of staff. In late 1952 and 1953, he and his team gave some 92 briefings to high-ranking Air Force officers in Washington DC. By October 1953, the Air Force had accepted most of Wohlstetter’s recommendations.

Abella believes that most of us are alive today because of Wohlstetter’s intellectually and politically difficult project to prevent a possible nuclear first strike by the Soviet Union. He writes:

“Wohlstetter’s triumphs with the basing study and fail-safe not only earned him the respect and admiration of fellow analysts at RAND but also gained him entry to the top strata of government that very few military analysts enjoyed. His work had pointed out a fatal deficiency in the nation’s war plans, and he had saved the Air Force several billion dollars in potential losses.”

A few years later, Wohlstetter wrote an updated version of the basing study and personally briefed Secretary of Defense Charles Wilson on it, with General Thomas D. White, the Air Force chief of staff, and General Nathan Twining, chairman of the Joint Chiefs of Staff, in attendance.

Despite these achievements in toning down the official Air Force doctrine of “mutually assured destruction” (MAD), few at RAND were pleased by Wohlstetter’s eminence. Bernard Brodie had always resented his influence and was forever plotting to bring him down. Still, Wohlstetter was popular compared to Herman Kahn. All the nuclear strategists were irritated by Kahn who, ultimately, left RAND and created his own think tank, the Hudson Institute, with a million-dollar grant from the Rockefeller Foundation.

RAND chief Frank Collbohm opposed Wohlstetter because his ideas ran counter to those of the Air Force, not to speak of the fact that he had backed John F. Kennedy instead of Richard Nixon for president in 1960 and then compounded his sin by backing Robert McNamara for secretary of defense over the objections of the high command. Worse yet, Wohlstetter had criticized the stultifying environment that had begun to envelop RAND.

In 1963, in a fit of pique and resentment fueled by Bernard Brodie, Collbohm called in Wohlstetter and asked for his resignation. When Wohlstetter refused, Collbohm fired him.

Wohlstetter went on to accept an appointment as a tenured professor of political science at the University of Chicago. From this secure position, he launched vitriolic campaigns against whatever administration was in office “for its obsession with Vietnam at the expense of the current Soviet threat.” He, in turn, continued to vastly overstate the threat of Soviet power and enthusiastically backed every movement that came along calling for stepped up war preparations against the USSR — from members of the Committee on the Present Danger between 1972 to 1981 to the neoconservatives in the 1990s and 2000s.

Naturally, he supported the creation of “Team B” when George H. W. Bush was head of the CIA in 1976. Team B consisted of a group of anti-Soviet professors and polemicists who were convinced that the CIA was “far too forgiving of the Soviet Union.” With that in mind, they were authorized to review all the intelligence that lay behind the CIA’s National Intelligence Estimates on Soviet military strength. Actually, Team B and similar right-wing ad hoc policy committees had their evidence exactly backwards: By the late 1970s and 1980s, the fatal sclerosis of the Soviet economy was well underway. But Team B set the stage for the Reagan administration to do what it most wanted to do, expend massive sums on arms; in return, Ronald Reagan bestowed the Presidential Medal of Freedom on Wohlstetter in November 1985.

Imperial U.

Wohlstetter’s activism on behalf of American imperialism and militarism lasted well into the 1990s. According to Abella, the rise to prominence of Ahmed Chalabi — the Iraqi exile and endless source of false intelligence to the Pentagon — “in Washington circles came about at the instigation of Albert Wohlstetter, who met Chalabi in Paul Wolfowitz’s office.” (In the incestuous world of the neocons, Wolfowitz had been Wohlstetter’s student at the University of Chicago.) In short, it is not accidental that the American Enterprise Institute, the current chief institutional manifestation of neoconservative thought in Washington, named its auditorium the “Wohlstetter Conference Center.” Albert Wohlstetter’s legacy is, to say the least, ambiguous.

Needless to say, there is much more to RAND’s work than the strategic thought of Albert Wohlstetter, and Abella’s book is an introduction to the broad range of ideas RAND has espoused — from “rational choice theory” (explaining all human behavior in terms of self-interest) to the systematic execution of Vietnamese in the CIA’s Phoenix Program during the Vietnam War. As an institution, the RAND Corporation remains one of the most potent and complex purveyors of American imperialism. A full assessment of its influence, both positive and sinister, must await the elimination of the secrecy surrounding its activities and further historical and biographical analysis of the many people who worked there.

The RAND Corporation is surely one of the world’s most unusual, Cold War-bred private organizations in the field of international relations. While it has attracted and supported some of the most distinguished analysts of war and weaponry, it has not stood for the highest standards of intellectual inquiry and debate. While RAND has an unparalleled record of providing unbiased, unblinking analyses of technical and carefully limited problems involved in waging contemporary war, its record of advice on cardinal policies involving war and peace, the protection of civilians in wartime, arms races, and decisions to resort to armed force has been abysmal.

For example, Abella credits RAND with “creating the discipline of terrorist studies,” but its analysts seem never to have noticed the phenomenon of state terrorism as it was practiced in the 1970s and 1980s in Latin America by American-backed military dictatorships. Similarly, admirers of Albert Wohlstetter’s reformulations of nuclear war ignore the fact that that these led to a “constant escalation of the nuclear arms race.” By 1967, the U.S. possessed a stockpile of 32,500 atomic and hydrogen bombs.

In Vietnam, RAND invented the theories that led two administrations to military escalation against North Vietnam — and even after the think tank’s strategy had obviously failed and the secretary of defense had disowned it, RAND never publicly acknowledged that it had been wrong. Abella comments, “RAND found itself bound by the power of the purse wielded by its patron, whether it be the Air Force or the Office of the Secretary of Defense.” And it has always relied on classifying its research to protect itself, even when no military secrets were involved.

In my opinion, these issues come to a head over one of RAND’s most unusual initiatives — its creation of an in-house, fully accredited graduate school of public policy that offers Ph.D. degrees to American and foreign students. Founded in 1970 as the RAND Graduate Institute and today known as the Frederick S. Pardee RAND Graduate School (PRGS), it had, by January 2006, awarded over 180 Ph.D.s in microeconomics, statistics, and econometrics, social and behavioral sciences, and operations research. Its faculty numbers 54 professors drawn principally from the staffs of RAND’s research units, and it has an annual student body of approximately 900. In addition to coursework, qualifying examinations, and a dissertation, PRGS students are required to spend 400 days working on RAND projects. How RAND and the Air Force can classify the research projects of foreign and American interns is unclear; nor does it seem appropriate for an open university to allow dissertation research, which will ultimately be available to the general public, to be done in the hothouse atmosphere of a secret strategic institute.

Perhaps the greatest act of political and moral courage involving RAND was Daniel Ellsberg’s release to the public of the secret record of lying by every president from Dwight D. Eisenhower to Lyndon Johnson about the U.S. involvement in Vietnam. However, RAND itself was and remains adamantly hostile to what Ellsberg did.

Abella reports that Charles Wolf, Jr., the chairman of RAND’s Economics Department from 1967 to 1982 and the first dean of the RAND Graduate School from 1970 to 1997, “dripped venom when interviewed about the [Ellsberg] incident more than thirty years after the fact.” Such behavior suggests that secrecy and toeing the line are far more important at RAND than independent intellectual inquiry and that the products of its research should be viewed with great skepticism and care.

Chalmers Johnson’s latest book is Nemesis: The Last Days of the American Republic, now available in a Holt Paperback. It is the third volume of his Blowback Trilogy. To view a short video of Johnson discussing military Keynesianism and imperial bankruptcy, click here.

By MAGGIE MICHAEL, Associated Press Writer

Osama bin Laden’s chief deputy in an audiotape Tuesday accused Shiite Iran of trying to discredit the Sunni al-Qaida terror network by spreading the conspiracy theory that Israel was behind the Sept. 11 attacks.

The comments reflected al-Qaida’s No. 2 leader Ayman al-Zawahri’s increasing criticism of Iran. Al-Zawahri has accused Iran in recent messages of seeking to extend its power in the Middle East, particularly in Iraq and through its Hezbollah allies in Lebanon.

The authenticity of the two-hour audio recording posted on an Islamic Web site could not be independently confirmed. But the voice sounded like past audiotapes from the terror leader, and the posting where it was found bore the logo of Al-Sahab, al-Qaida’s official media arm.

It was the second of two messages answering questions that were posted to Islamic militant Web sites earlier this year.

One of the questioners asked about the theory that has circulated in the Middle East and elsewhere that Israel was behind the 2001 attacks on the World Trade Center and the Pentagon.

Al-Zawahri accused Hezbollah’s Al-Manar television of starting the rumor.

“The purpose of this lie is clear — (to suggest) that there are no heroes among the Sunnis who can hurt America as no else did in history. Iranian media snapped up this lie and repeated it,” he said.

“Iran’s aim here is also clear — to cover up its involvement with America in invading the homes of Muslims in Afghanistan and Iraq,” he said.

Iran cooperated with the United States in the 2001 U.S. assault on Afghanistan that toppled al-Qaida’s allies, the Taliban.

Answering questions about Iraq in Tuesday’s tape, al-Zawahri said the insurgent umbrella group led by al-Qaida, called the Islamic State of Iraq, is “the primary force opposing the Crusaders and challenging Iranian ambitions” in Iraq, he said, referring to the Americans.

As he often does in his messages, al-Zawahri denounced the “Crusader invasion” of Iraq, but in Tuesday’s tape he paired it with a mention of “Iranian complicity” or “Iranian agents.”

In the latest tape, al-Zawahri was also asked if the terror group had further plans to attack Western countries that participated in the U.S.-led invasion of Iraq and subsequent war.

“My answer is: Yes! We think that any country that has joined aggression on Muslims must be deterred,” he replied.

In response to a question signed by the Japanese news agency Kyodo asking if Japan remains a target because it once had troops in Iraq, al-Zawahri said “Japan provided help under the banner of the crusader coalition … therefore it participated in the Crusader campaign against the lands of Islam.”

Japan deployed non-combat troops to southern Iraq in 2003 to carry out reconstruction work. It withdrew its troops from Iraq in 2006 and now conducts airlifts to help supply U.S.-led forces in that country.

Al-Zawahri spoke on a wide range of issues, even global warming, which he said reflected “how criminal, brutal and greedy the Western Crusader world is, with America at the top.”

He predicted that global warming would “make the world more sympathetic to and understanding of the Muslims’ jihad against the aggressor America.”

Asked if there are any women in al-Qaida, the terror leader answered simply: “No.” In a follow-up answer, he said: “There are no women in al-Qaida jihadi group, but the women of the mujahedeen are playing a heroic role in taking care of their houses and sons.”

In several parts of Tuesday’s audio message, Al-Zawahri claimed that the Taliban took over 95 percent of Afghanistan and is sweeping Pakistan as well.

“The Crusaders and their agents in Pakistan and Afghanistan are starting to fall,” he said.

In another answer Tuesday, al-Zawahri said it was against Islamic religious law for any Muslim to live permanently in a Western country because in doing so they would “have permanent stay there under the laws of the infidels.”

Al-Qaida’s media arm, Al-Sahab, announced in December that al-Zawahri would take questions from the public posted on Islamic militant Web sites and would respond “as soon as possible.” Queries were submitted on the main Islamist Web site until the cutoff date of Jan. 16.

Privacy a Concern as 1st Phase Links 4,500 Cameras to Central Office

By Mary Beth Sheridan
Washington Post Staff Writer
Thursday, May 1, 2008; A01

The D.C. government is launching a system today that would tie together thousands of city-owned video cameras, but authorities don’t yet have the money to complete the high-tech network or privacy rules in place to guide it.

The system will feature round-the-clock monitoring of the closed-circuit video systems run by nine city agencies. In the first phase, about 4,500 cameras trained on schools, public housing, traffic and government buildings will feed into a central office at the D.C. Homeland Security and Emergency Management Agency. Hundreds more will be added this year.

By making all those images available under one roof, officials hope to increase efficiency and improve public safety and emergency response. But civil libertarians and D.C. Council members say the network is being rushed into place without sufficient safeguards to protect privacy.

"The planning has been wholly lacking," said council member Phil Mendelson (D-At Large), chairman of the Committee on Public Safety and the Judiciary, who plans to hold a hearing on the project.

With its vast reach, the system underscores how security cameras have multiplied since the Sept. 11, 2001, terrorist attacks. By this fall, the District will have installed about 5,600 closed-circuit cameras, about triple the number it had in 2001. Tens of thousands of other cameras have popped up at monuments, banks, stores and other places.

Elsewhere, New York has announced a network of 3,000 public and private cameras to protect Lower Manhattan. Chicago’s emergency management office will soon have access to more than 6,000 cameras run by schools, police and other agencies.

The boom has been fueled by technological advances that make it easy to install cameras and search video. But U.S. cities — and D.C. government agencies — have varying rules on the cameras’ use.

The D.C. attorney general’s office is working on a policy to protect privacy rights, but it will not be completed by the system’s launch, said Darrell Darnell, head of the city’s homeland security agency. The agencies involved will follow their own rules in the meantime, he said. They vary on such matters as how long images are kept.

“We’re doing everything we can, humanly possible, to make sure we are respecting the rights and privacy concerns” of residents and visitors, Darnell said.

Civil liberties activists and some politicians worry about abuse.

"The new system is excessive in scope, with absolutely no safeguards for individual liberties," said Corey Owens of the Constitution Project, a bipartisan nonprofit group that wrote to Mayor Adrian M. Fenty (D) expressing concern.

"Just to go forward without any real thought about byproduct effects and unintended consequences, I don’t think is a good idea," said council member Mary M. Cheh (D-Ward 3).

The controversy has flared in the past. The D.C. Council drew up detailed guidelines for police security cameras after they were introduced downtown in 2001, including periodic audits of their operations.

Officials initially said the new system, Video Interoperability for Public Safety, would include the 92 D.C. police cameras. But Darnell said those cameras will stay under the control of police, who won’t be able to tap directly into the new system. If the monitoring office detects a crime occurring, it can transmit video to police.

Courts have ruled that people have no right to privacy in public spaces. But civil libertarians and even security professionals worry about who is looking through the electronic eyes and how long they store the digital footage.

"If you’re just saving it, at some point, this stuff is going to be posted to YouTube," said Frank Baitman, president of Petards Inc. of Baltimore, a developer of surveillance systems.

Problems also can occur when cameras installed for one purpose, such as crime prevention, are used for another. For example, in Tacoma, Wash., last year, there was an uproar when a high school official showed parents surveillance footage of their daughter kissing another girl.

Darnell said the city is sensitive to privacy concerns. The fact is, he said, the city has thousands of cameras in place. “Why wouldn’t we want to use them in the most efficient and best way possible?”

Under the existing system, Darnell’s office can request camera feeds from other agencies. But the procedure can be too slow in an emergency, he said.

The new system will also save money, cutting in half the $1.7 million the city spends annually to operate and monitor non-police cameras, officials say.

Currently, many of the city’s cameras are viewed on site by security guards at city facilities. Some also are monitored by personnel at central offices in the agencies. A number of those employees will work at the new monitoring center. Security guards could be given other duties, Darnell said.

“We’d like to be able to do real-time monitoring, where we could prevent something from happening or get the police there quicker,” Darnell said.

The new system will have three to five operators watching images from the cameras during each eight-hour shift, Darnell said. By year’s end, analytic software is to be installed that can alert operators to potentially dangerous situations — perhaps a fight or a person abandoning a suitcase.

Baitman, the security expert, questioned whether that size staff could prevent crime.

“There’s no way you could have someone watching 1,500 cameras, even with video analytics, and identify crimes,” he said.

The D.C. police usually assign two or three people to watch their cameras.

There is broad variation among video systems being developed in U.S. cities. New York, for example, envisions a mix of public and private cameras in its downtown system, linked to pivoting gates that could close off all or part of the financial district to block a suspicious car. Chicago’s system is focused on responding to emergencies, rather than routine monitoring, according to a spokeswoman.

The D.C. system is going ahead although it is not yet fully funded. The city has in hand $500,000 of the $9.6 million in homeland security grants it plans to use for the new network, Darnell said. He said that will be enough to get the project started, and the city is confident of receiving the other grants in coming months. They will be used for computer hardware, software and training.

The city will also kick in $886,000 a year, Darnell said.

In its start-up phase, the system will include the public schools, the D.C. Housing Authority, the Office of Property Management and the Transportation Department. By year’s end, it will expand to homeland security and the departments of Parks and Recreation, Corrections, Health and Fire and Emergency Medical Services. The schools have the largest number of cameras, about 3,600.

Workers will be cross-trained in the first 60 days to monitor various agencies’ cameras at the centralized office in Southeast Washington, Darnell said.

D.C. Police Chief Cathy L. Lanier said this year that violent crime had decreased 19 percent near each of the police crime cameras, which were installed starting in August 2006. Critics have said the cameras simply displace crime to other streets, and they question the cost-effectiveness of monitoring them.

Staff writer Lena H. Sun and staff researcher Meg Smith contributed to this report.