Brazil has overtaken the UK as the world’s sixth largest economy, an economic research group has said.

The Centre for Economics and Business Research (CEBR) said its latest World Economic League Table showed Asian countries moving up and European countries falling back.

The CEBR also predicted that the UK economy would overtake France by 2016.

It also said the eurozone economy would shrink 0.6% in 2012 “if the euro problem is solved”, or 2% if it is not.

CEBR chief executive Douglas McWilliams told BBC Radio 4’s Today programme that Brazil overtaking the UK was part of a growing trend.

“I think it’s part of the big economic change, where not only are we seeing a shift from the west to the east, but we’re also seeing that countries that produce vital commodities - food and energy and things like that - are doing very well and they’re gradually climbing up the economic league table,” he said.

A report based on International Monetary Fund data published earlier this year also said the Brazilian economy would overtake the UK in 2011.

Brazilian economy

• GDP: $2.52tn (£1.6tn); CEBR estimate for 2011
• Main exports: manufactured goods, iron ore, coffee, oranges and other agricultural produce
• Exports in 2010 totalled $201.9bn*
• Imports in 2010 of $181.6bn*
• Its main export partners are China, the US and Argentina*
• Government forecasts growth of 3.5% in 2011, compared with 7.5% in 2010

*Source: Brazilian Ministry of Development, Industry and Export

Brazil has a population of about 200 million, more than three times the population of the UK.

Brazil’s economy grew by 7.5% last year, but the government has cut its growth forecast for 2011 to 3.5% after the economy ground to a halt in the third quarter, with analysts blaming the country’s high interest rates and the worsening situation in the eurozone.

And although Brazil currently sells more to China than it imports, Brazilian manufacturers have complained that their industries are being affected by cheap mass-produced goods from the Asian giant.

The CEBR also said that Russia moved up one spot in its league table to ninth in 2011, and predicted that it would rise to fourth spot by 2020.

It predicted that India, the world’s 10th biggest economy in 2011, would become the fifth largest by 2020.

And it said European countries would drop down the table, with Germany falling from fourth in 2011 to seventh in 2020, the UK from seventh to eighth, and France from fifth to ninth.

by Jeff Berwick, Dollar Vigilante

Do you own stocks in a brokerage account?  You may be surprised to find out that you don’t.  Your brokerage owns them.

It is one of the dirtiest little secrets in the brokerage business.  And 99.9% of people have no idea it is even being done to them.  It’s called “street name registration” and it’s how the brokerage where you hold your stocks “registers” your shares.  To save money and time, and to allow your shares to be included as assets that THEY can use to do what they want with, your brokerage never actually registers you as an owner of the shares.

Even worse, street name registration allows your broker to lend your shares to short sellers, thereby driving down the price of your own stocks. Additionally, this method allows your broker to “re-hypothecate” your assets–meaning it allows your broker to borrow money against your shares and speculate in the derivatives market!

These hidden risks are planting the seeds of tomorrow’s ultimate collapse – In which there may be a system-wide collapse of broker dealers, taking down millions of investors, and ensuring permanent non-recoverable losses to an entire generation!

MF GLOBAL WAS JUST THE FIRST TO GO DOWN

MF Global investors found out first hand just how secure their funds were.  Most don’t realize it, but MF Global was a clearing house for both stocks and futures.  Like many/most brokerages, they “invest” their own funds, often on a highly leveraged basis, to earn income.  But, with the recent collapse of Greek Government bonds, and with MF Global’s highly leveraged position in them, MF Global was bankrupted in an instant.

The problem is, they tried to cover their losses with their customer’s own funds!  You see, unless your shares are registered in your own name – a process that isn’t that difficult nor costly – your brokerage considers it as assets they can use for their own needs.

Plus, once a brokerage goes bankrupt – something that will happen more and more as the financial crisis continues – if you hadn’t personally registered your shares then your shares go down as assets of the brokerage and are used to pay off their creditors.

“Several million private accounts may vanish–Brokerage accounts, Pension funds, Mutual funds, they’re all at risk. We are getting into the middle stages of implosion, where I believe the public will not wake up until at least one million private accounts are stolen, and completely vanish.” -Jim Willie, The Hat Trick Letter

THE WESTERN FINANCIAL SYSTEM IS IN A STATE OF COLLAPSE

The reason for this coming broker-dealer crisis is quite simple. The entire western financial system is built on debt… it’s an anti-capitalist system set-up to make the rich richer and the poor poorer. It started in 1913 with the founding of The Federal Reserve, it went further down the slippery slope with gold confiscation in the US in 1933 and reached the beginning of the end in 1971 with Nixon closing the gold window, turning the US dollar (officially called the Federal Reserve Note) into a completely fiat currency.

In more recent times, it was the repeal of the Glass-Steagel act that allowed Investment Banks to acquire broker-dealers, and pass the risks of 100-1 leverage downstream to all client accounts. Therefore, your stock investments are now only as safe as the speculative portfolio of your broker-dealer! Considering most Western Investment Houses are leveraged at least 40-1, this means your stocks are no safer than a 40-1 bet on European bonds! (Which most western investment banks are leveraged to the teeth with)

Some believe their stocks will be protected by the Securities Investor Protection Corporation (SIPC), which insures stocks accounts from broker collapse up to $500k for securities, and account cash balances up to $250k. But what if you have more than $250k in cash and/or more than $500k of securities in your account? What if one of the largest broker dealers in the country went bust, bringing down thousands of accounts and depleting the entire reserves of the SIPC? What if the SIPC itself goes bankrupt? What few people are aware of, is that the SIPC only carries about $1 billion in funds to cover investors! This means only one or two high profile broker dealer bankruptcies will be enough to completely wipe out the SIPC.

Some may claim the U.S. government will bail out the SIPC to whatever extent needed. But what if two major broker dealers went bust while at the same time the U.S. government suffers a major Treasury bond auction failure? This is all but a certainty in the coming years.

And the same thing applies in Canada to Canadian brokerages and Canadian stocks. The Canadian economy is intricately tied to the US. In fact, not many people are aware, but all that backs the Canadian dollar is the US dollar. The Canadian Government sold all its gold decades ago.

The entire monetary & financial system is headed for its final destination – total collapse… and 2008 was just the beginning.

“If you were lucky enough not to be a customer of MF Global … then you should view the MFG episode as a warning shot. You might not get another warning shot.” -Steven Saville, The Speculative Investor

ONE LAST BUBBLE?

But, we’ve been predicting there are still a few more years left… not 10. But maybe 2 to 3 more years… or a little more. We believe the Federal Reserve and all western central banks will print enough money to get the system through for another few years… just enough for them to get out of office and retired to their Caribbean island villas before all the western fiat currencies enter hyperinflation.

And, we believe this will create one final bubble. The tech bubble is dead. The housing bubble is dead. And the bubble in government debt is in its death throes. What will be the final bubble?  It will be in gold and silver mining stocks.

But the question remains — how can we safely invest in gold and silver mining shares and avoid the collapse brought on by the coming broker dealer crisis?

There are two methods of owning stocks your broker-dealer will never tell you about.  These two methods completely remove the broker dealer counter party risk attached to your shares – effectively removing them from “the system.”

These two methods deprive your broker dealer the abilities to sell your stocks short and to “re-hypothecate” them. Your broker dealer will never willingly tell you about these methods – because they make more money when your shares are in their hands – precisely where risks are greatest to you.

These methods are so safe, that even if your broker dealer collapsed tomorrow, and stole every penny from every client investment account you would be able to sleep safe and sound, knowing your stocks are far out of reach, and legally unavailable to access by your broker-dealer.

This means everyone – all brokers in the Unites States and Canada. If every broker collapsed tomorrow due to waves of bankruptcies, these ownership methods will protect you 100%. You will be able to sleep safe and sound at night, knowing your shares are carrying zero counter party risk.

That’s why we’ve supported Tekoa Da Silva, a bright young man and publisher of Bull Market Timing in putting together a complete research paper outlining the process to register your shares and giving you all the info you need to know to do it easily, quickly and properly.  He spent hundreds of hours dealing with broker dealers, transfer agents, public companies, and the SIPC in researching and finding out all the details on how to get your shares outside of the system.

We’ve put all his research together into a Special Report called “BulletProof Shares”.  You can get more information and purchase this report using the contact box below.

THE GREATEST BUYING OPPORTUNITY OF A GENERATION

There will be more opportunity in this crisis than in any other in the past century. But, in order to profit from the coming crisis you need to ensure that if/when your brokerage goes bankrupt you still retain ownership of your shares.  Shares are proof of ownership of a real asset and don’t depend on a stock exchange or a brokerage… as long as you make sure you register them properly.

If you are able to preserve & accumulate wealth during the collapse, you will be offered the greatest buying opportunity of our generation. Blue-chip companies may be purchased for pennies on the dollar…but the trick is to safely protect your assets until we reach that point.

We’ve been covering the ongoing collapse of the western financial system and we’ve been adamant that there are two main ways to protect yourself and profit from the collapse by owning gold and silver bullion and the miners who produce precious metals.

Owning gold and silver bullion will protect your assets… and owning shares in the miners will likely result in massive profits. However, this multi-generational profit opportunity will only present itself for those who can make it through the collapse with ownership of their shares intact.

Unless you’ve gone through the process outlined in BulletProof Shares then you don’t really own your stocks… your broker does.

Please protect yourself now and pass this along to anyone you know who owns US or Canadian traded stocks before it is too late.

By using the contact form below, you can watch the special free video and obtain your BulletProof Shares report to learn how to protect your stock in the event of bankruptcy or theft from your broker.

In a move that may prove key in the fight against organized crime, the U.S. Justice Department is reportedly working to prosecute HSBC bankers for allegedly laundering Mexican drug money.

The Justice Department investigation, still at the beginning stages, hopes to build cases against individual bankers at HSBC. “Prosecuting individuals is their number one priority,” a source close to the investigation told Reuters.

HSBC first came under scrutiny in August 2010, when the Office of the Comptroller of the Currency (OCC) criticized the bank for “highly suspicious activity” that could allow the unreported movement of dirty money. HSBC agreed to improve its procedures, and has not yet been issued with a fine.

Some reports have suggested that HSBC could face a record $500 million fine, suggesting that the Justice Department is determined to make an example of the bank.

U.S. authorities have faced heavy criticism for failing to crack down on the laundering of dirty money through the banking system. Mexico’s drug trafficking gangs may launder up to $36 billion through its northern neighbor each year, according to some estimates. The ability to move dirty money, undetected, through U.S. banks continues to fuel Mexico’s conflict, allowing drug gangs to collect their profits.

But negligent banks rarely receive more than a rap on the knuckles: they often need only pay a relatively painless fine and agree to revamp their practices.

The most well known example of this lax treatment is Wachovia. The bank has been accused of “serious and systematic” violations of banking regulations, which allowed a sum of $420 billion to pass through its accounts unmonitored. It was found to have laundered funds for the Sinaloa Cartel, one of Mexico’s biggest drug trafficking organizations, which were used in a number of cases to buy planes which smuggled drugs. Prosecutors accused the bank of “willfully failing” to implement anti-money laundering procedures between 2003 and 2008.

Wachovia — later taken over by Wells Fargo — managed to avoid prosecution altogether by paying a total of $160 million to U.S. authorities. No charges were brought against individual bankers, and the government agreed to defer prosecution of the bank itself. These charges were dropped altogether once Wachovia showed it had implemented the required reforms. The sum was made up of $110 million in forfeitures, to compensate for the $110 million the bank admitted that traffickers had laundered through its accounts, added to a $50 million fine — a paltry sum relative to the bank’s earnings.

A report on the case by British newspaper The Observer points out that the total fine paid was under two percent of the bank’s 2009 profits, which came to $12.3 billion. Such measures offer banks little financial incentive not to deal with dirty money.

At the heart of the money laundering investigations are Mexico’s “casas de cambio,” exchange houses which are often used by Mexican criminal groups to launder funds. One common practice is for drug trafficking organizations to smuggle large amounts of hard currency, collected from U.S. sales, back over the Mexican border, then deposit it into these exchange houses. The funds are then wired by these institutions into U.S. bank accounts. In the case of Wachovia, one exchange house, Casa de Cambio Puebla, used these funds to purchase a number of airplanes on behalf of the Sinaloa Cartel.

After the probe into Wachovia began, Puebla simply shifted its accounts to HSBC, according to Mexican prosecutors. Puebla was headed by Pedro Alfonso Alatorre Damy, who is accused of handling the finances of the Sinaloa Cartel.

The use of U.S. banks to launder criminal proceeds goes back many years. Citibank was censured by the Senate in 1999 for failing to stop money laundering by individuals allegedly including Raul Salinas, brother of former Mexican President Carlos Salinas, who was accused of links to drug gangs. Other banks accused of laundering Mexican drug money include American Express Bank, which paid $32 million in 1994 to avoid prosecution for charges that it laundered money for the Gulf Cartel. Two of its employees were convicted in connection to the case. The bank made a similar agreement with U.S. authorities in 2007, paying a $55 million fine and avoiding criminal charges over alleged money laundering.

Just as Mexican cartels can use their drug profits to corrupt and intimidate government officials and members of the security forces in Mexico, they can also persuade U.S. banks to look the other way as they process dirty money. One of the most important things the U.S. can do to help stop the violence erupting below its southern border is to tighten regulations and make sure violators face proper sanctions.

Mexico’s then-Attorney General Eduardo Medina Mora said in 2007 that U.S. efforts to counter money laundering by Mexican cartels, and stop the trafficking of weapons south, were more important than the $1.4 billion provided to his country through the Merida Initiative. Most funds allocated to this U.S.-funded program are targeted at boosting Mexico’s law enforcement efforts through technology and equipment, with few measures aimed specifically at the issue of money laundering.

The Justice Department’s reported determination to prosecute individuals who handle Mexican drug money could be a good step forward.

By Nathan Crooks - Jan 30, 2012 7:08 PM ET

Venezuela today received the last shipment of gold bars in an operation that repatriated 160 tons of the South American country’s reserves of the metal held abroad, said Nelson Merentes, president of the country’s central bank.

Fourteen tons of gold arrived at the Caracas airport today on a flight from Europe, Merentes said. The gold bars were transported in a caravan, broadcast on state television, to vaults at the central bank where street banners proclaimed “Mission Complete.”

“In two months, we’ve brought 160 tons of gold valued at around $9 billion back to Venezuela,” Merentes said on state television from the Caracas airport. “Today marks the last day of the mission.”

President Hugo Chavez in August ordered the central bank to repatriate the country’s gold reserves as a safeguard against instability in financial markets. The South American country, which has the 15th-largest holdings in the world, according to the World Gold Council, held 211 tons of its 365 tons of gold reserves in U.S., European and Canadian banks as of August.

Venezuela will leave about 15 percent of its reserves, or around 50 tons, outside of Venezuela for financial transactions, Merentes said today. He said on Jan. 3 that the country would leave 15 tons of gold in banks outside the country.

A central bank report released in August showed that Venezuela held gold reserves with the Bank of England, JPMorgan Chase & Co., Barclays Plc and Standard Chartered Plc among other banks.

“This was the largest type of operation to transport this type of metal in the last fifteen years,” said Merentes. “The repatriation of our gold was an act of financial prudence and sovereignty.”

To contact the reporter on this story: Nathan Crooks in Caracas at ncrooks@bloomberg.net

To contact the editor responsible for this story: Dale Crofts at dcrofts@bloomberg.net

Vaccine and drug giant GlaxoSmithKline (GSK) has been fined 400,000 pesos (around the equivalent of $93,000) by an Argentinian judge for killing 14 babies during illegal lab vaccine trials that were conducted between 2007 and 2008.

In addition to killing the children and experimenting with human beings, the judge asserted that the corporation actually falsified parental authorizations so that babies could participate without legitimate parental permission.

Judge Marcelo Aguinsky made the decision after a report was released on the subject by the National Administration of Medicine, Food and Technology (ANMAT in Spanish). Since 2007, 15,000 children below the age of one from Mendoza, San Juan, and Santiago del Estero have been participating in the illegal research. These babies were recruited by GSK from poor families that attended public hospitals. It was found that of the 14 baby deaths, 7 died in Santiago del Estero; 5 in Mendoza; and 2 in San Juan.

GSK Recruited Doctors, Pressured Illiterate Parents into Signing Over Children

Currently, it is unknown how many babies suffered serious side effects, adverse reactions, or if this is truly the total death count. As with many other vaccinations such as Gardasil, the official death count continues to rise as leaked reports from the FDA and elsewhere continue to surface.

One pediatrician working at the public hospital when GSK began recruiting babies for their illegal human trials said that not only did GSK force illiterate parents into handing over their children, but they also ‘recruited’ several doctors working at the hospital into their cause.

Ana Marchese, a pediatrician at the Eva Perón children’s public hospital in Santiago del Estero, stated:

GSK Argentina set an protocol at the hospital, and recruited several doctors working there. These doctors took advantage of many illiterate parents whom take their children for treatment by pressuring and forcing them into signing these 28-page consent forms and getting them involved in the trials.

It is quite clear that GSK has zero regard for human health, morals, and will go to any length to experiment with their latest jab regardless of the casualties. Of the 15,000 babies that were reported to be a part of the illegal trials, many may suffer from life-altering illness and serious side effects.

Amazingly, many parents had no idea they were signing over the lives of their children to GSK, as they were completely illiterate. Meanwhile, GSK sells their latest shots and pharmaceutical drugs to United States consumers, raking in record profits each year as the second-largest drugmaker.

By Bill Mann, MarketWatch

PORT TOWNSEND, Wash. (MarketWatch) — Will Iceland get loonie? asked one major Canadian business publication last week. Is that troubled, isolated nation about to shun the European Union and the euro and adopt the Canadian dollar as its currency?

Iceland’s fear of the euro collapsing has caused one of Iceland’s political parties to openly suggest the idea of going Canadian and dropping the idea of EU membership and currency. (And besides, the just-released see-through Canadian plastic bank notes are waycool.)

Ever since Canadian Business magazine broke the story of Iceland possibly adopting the loonie, the Canadian media has been having a field day with the story. It probably won’t happen, but a stable economy (the kind Iceland wants again) needs a stable currency. Like Canada’s.

The Bank of Canada, for its part, says it will be glad to sell Iceland all the Canadian notes and coins it wants. And that’s all it’ll say; it doesn’t comment on other countries’ monetary policies.

Iceland’s krona has taken a battering since the collapse of the country’s three major banks in 2007. The country is still struggling to recover from that speculative disaster, and the krona is still being called a glorified poker chip. Iceland’s economy may be off life support, but it’s still in serious condition.

The krona is roughly 40% from its 2007 peak. Capital controls put in place after the crisis restrict the flow of money into and out of Iceland and keep the currency stable. But if the controls are removed too soon, the krona could crash again, while keeping them for too long discourages foreign investment. Not a good situation.

Joining the EU, which Iceland saw as a way to attain a stable currency, doesn’t look like much of a lifeboat these days. Fellow northerner Canada looks like a viable Plan B to some in Iceland these days.

Aside from worries about EU stability, many Icelanders are concerned about the loss of autonomy that comes with joining, particularly if it means less control over their prized fishing industry.

A loonie plan?

So, adopting the Canadian dollar is what one political party in the Icelandic Parliament is suggesting openly. And given Iceland’s history of doing things unconventionally, who knows what might happen?

Ársæll Valfells, an assistant professor of business at the University of Iceland, and Magnus Skúlason, managing director at research firm Reykjavik Economics, are part of a small group of influential academics, economists and business people in Iceland pushing to explore adopting the loonie.

Iceland’s Progressive Party is also supportive. “If we are going to adopt another currency, then the Canadian dollar looks very promising,” says Progressive leader Sigmundur Gunnlaugsson. They’re not after a currency union, but a unilateral adoption similar to El Salvador’s 2001 switch to the U.S. dollar. (Iceland … a banana republic?)

After the banks — and the krona — collapsed in 2008, Icelanders then watched the euro zone threaten to fall apart. “People started to wonder, ‘Is this really a lifeboat?’” says Skulason. EU membership will eventually go to a referendum in the country of 320,000, but opinion polls show the majority of the population is opposed. Enter the loonie idea.

Adopting the British pound as the krona’s replacement is definitely out. Many Brits feel Icelanders swindled them. An Icelandic bank, Landsbanki, offered high-interest savings accounts to the Brits under a brand called Icesave, and when it collapsed in 2008, Britain rescued its citizens with a £2.35-billion payment and demanded reimbursement from Iceland, which has refused in two referendums. Former prime minister Gordon Brown even enacted anti-terrorism legislation to freeze Icelandic assets.

Iceland’s attempt to remake itself from an isolated fishing nation into an international banking heavyweight proved disastrous. So it’s back to basics.

A match made in currency heaven

There are plenty of ideas these days in Iceland for strengthening the economy for the future. One of the most-often-heard is ditching the krona. But for what? If the struggling EU and the pound are out, maybe the Canadian dollar is the solution.

The two countries have similar, commodity-based economies (including fishing), and Iceland has good relations with Canada — unlike, say, the UK. So the two commodities-dependent economies tend to move in the same business cycles, which is good for stability. .

The aforementioned group of prominent Icelanders has put together a white paper extolling the loonie’s virtues. It’s relatively stable and liquid, for starters. The two economies are, as mentioned above, based on resources and may have more in common than Iceland and the euro zone. Most of the work of a switch can be done in four weeks, the white paper says, stabilizing the economy and allowing easier access to capital. The group is appealing to hearts as well as minds, even pointing out that a wave of Icelanders once emigrated to Canada, and there is still an active community in Manitoba.

Progressive Party leader Gunnlaugsson told Canadian Business that he’s he’s hoping for an official nod of approval from Canada. “If there were some signs from Canada of willingness to look into this issue seriously, it would mean that Iceland’s government cannot ignore the idea,” he says.

Meanwhile, Iceland’s coalition government wants to complete the EU application process — even if it does eventually get shot down.

So far, all this loonie speculation is just a trial balloon. And as Maclean’s magazine reports, there may be another major anti-Canadian currency obstacle:

“One popular Icelandic blog raises a significant objection to the idea: anti-British loathing is, and will be for the foreseeable future, so strong in Iceland that the populace would be psychologically reluctant to accept notes bearing the face of the Queen.”

That may just harpoon the whole idea in the isolated whaling nation. .

Ásgeir Jónsson, an economics professor with the University of Iceland, thinks the country should complete its EU application and says there are other international currencies to consider, such as the yen and Swiss franc.

He admits he’s a bit mystified as to why the Canadian dollar is being touted. “In many ways, it has to do with Canada having a very positive image in Iceland.”

This relates to something I’ve been saying for years, that nobody hates Canadians. That counts for a lot.

In fact, Canada just may have the best popular image in the world. That’s the kind of thing money can’t buy — and it even makes its currency attractive.

Bill Mann is a MarketWatch columnist, based in Port Townsend, Wash.

By Toru Fujioka
December 26, 2011 4:55 AM EST

Japan and China will promote direct trading of the yen and yuan without using dollars and will encourage the development of a market for companies involved in the exchanges, the Japanese government said.

Japan will also apply to buy Chinese bonds next year, allowing the investment of renminbi that leaves China during the transactions, the Japanese government said in a statement after a meeting between Prime Minister Yoshihiko Noda and Chinese Premier Wen Jiabao in Beijing yesterday. Encouraging direct yen- yuan settlement should reduce currency risks and trading costs, the Japanese and Chinese governments said.

China is Japan’s biggest trading partner with 26.5 trillion yen ($340 billion) in two-way transactions last year, from 9.2 trillion yen a decade earlier. The pacts between the world’s second- and third-largest economies mirror attempts by fund managers to diversify as the two-year-old European debt crisis keeps global financial markets volatile.

“Given the huge size of the trade volume between Asia’s two biggest economies, this agreement is much more significant than any other pacts China has signed with other nations,” said Ren Xianfang, a Beijing-based economist with IHS Global Insight Ltd.

Currency Swap

China also announced a 70 billion yuan ($11 billion) currency swap agreement with Thailand last week as part of a plan outlined in October to promote the use of the yuan in the Association of Southeast Asian Nations and establish free trade zones.

Central banks from Thailand to Nigeria plan to start buying yuan assets as slowing global growth has capped interest rates in the U.S. and Europe.

The move by China and Japan to strengthen market cooperation “benefits the ease of trade and investments between the two countries,” Chinese Foreign Ministry spokesman Hong Lei said today in Beijing. “It strengthens the region’s ability to protect against risks and deal with challenges.”

The yuan traded in Hong Kong’s offshore market gained 0.5 percent offshore last week and touched 6.3324 per dollar, the strongest level since trading started in July 2010. Its discount to the exchange rate in Shanghai narrowed to 0.1 percent, from a record 1.9 percent on Sept. 23.

Yuan Gains

The yuan gained 0.05 percent in Shanghai to 6.3330 per dollar today and was little changed at 6.3450 in Hong Kong. It strengthened 4.3 percent this year, the best-performing Asian currency excluding the yen. The currency is allowed to trade 0.5 percent on either side of that rate. The yuan is a denomination of the renminbi.

Japan exported 10.8 trillion yen to China in the year through November, and imported 12 trillion yen, according to Ministry of Finance data. The deficit with China widened to 1.2 trillion yen, from 418 billion yen in January-to-November 2010. About 60 percent of the trade transactions are settled in dollars, according to Japan’s Finance Ministry.

Finance Minister Jun Azumi said Dec. 20 buying of Chinese bonds would help reveal more information about financial markets in China. Noda said in September 2010, when he was finance minister, that Japan should be able to invest in China given that its neighbor buys Japanese debt. Japan holds $1.3 trillion of foreign-currency reserves, the world’s second largest after China’s $3.2 trillion.

Chinese Debt

Investing in Chinese debt has become easier for central banks as issuance of yuan-denominated bonds in Hong Kong more than tripled to 112 billion yuan ($18 billion) this year and institutions were granted quotas to invest onshore. Japan will start to buy “a small amount” of China’s bonds, a Japanese government official said on condition of anonymity because of the ministry’s policy, without elaborating.

China sold the second-biggest net amount of Japanese debt on record in October as the yen headed for a postwar high against the dollar and benchmark yields approached their lowest levels in a year. It cut Japanese debt by 853 billion yen, Japan’s Ministry of Finance said on Dec. 8.

Separately, the Japan Bank for International Cooperation, JGC Corp., Mizuho Corporate Bank Ltd., the Export-Import Bank of China and other Chinese companies will establish a $154 million fund to invest in environment-related businesses such as recycling and energy, the Japanese government said.

To contact the reporter on this story: Toru Fujioka in Tokyo at tfujioka1@bloomberg.net

To contact the editor responsible for this story: Paul Panckhurst at ppanckhurst@bloomberg.net

By Samuel Rubenfeld

President Barack Obama signed into law over the holiday weekend a defense authorization bill containing a provision that imposes sanctions on Iran’s central bank.

Morteza Nikoubazl/Reuters

An Iranian woman stands in a currency exchange shop in northern Tehran on Jan. 3, 2012.

The law, which contains several sections unrelated to the Iran sanctions, was controversial from the start, and Obama issued a strongly worded statement along with his signature in which he said he supported the broader bill “despite having serious reservations with certain provisions” of it.

Obama said specifically that the Iran sanctions section, along with several others, could interfere “with my constitutional authority to conduct foreign relations by directing the executive to take certain positions in negotiations or discussions with foreign governments.” Should application of the provisions interfere with his authorities under the Constitution, Obama said in the statement, “I will treat the provisions as nonbinding.”

The Iran sanctions measure penalizes foreign financial institutions that do business with Iran’s central bank, Bank Markazi. The law forces anyone that does business with Bank Markazi to choose between ending that business and with being blocked from the U.S. economy.

Following Obama’s signature, Iran’s currency fell 12% against the U.S. dollar but by Tuesday it gained back 8% (sub req).

The Obama administration has some flexibility with which to enforce the legislation, which is intended to curtail the country’s ability to sell its oil. About half of Iran’s oil transactions are routed through the central bank. But a senior administration official talking to the Wall Street Journal said it intends to implement the law without harming the global economy.

“We believe we can do this,” the senior administration official said. “The president will consider his options, but our intent—our absolute intent—is to in a timed and phased way implement this legislation so it can have the impact that Congress intended and the president agrees with.”

In addition to the Journal’s report, there’s more coverage here, here, here, here, here, here, here, here and here on the law. (Lawfare Blog, NY Times, NPR, BBC, Reuters, NY Times, Reuters, Haaretz, Mother Jones)

Under the provision, certain measures begin to take effect in 60 days, including sanctions on purchases not related to oil and the sale of oil products to Iran through private banks. The toughest measures won’t go into effect for at least six months.

The president can waive the imposition of the sanctions if he determines such a waiver is in the national security interest in the U.S., and provides Congress with a justification for it that includes “any concrete cooperation” he  got — or would expect to get — as a result from the waiver.

The original Iran sanctions amendment initially passed the U.S. Senate unanimously; it survived largely intact after a House-Senate conference on the broader defense bill that followed a White House veto threat over the unrelated provisions. Administration officials had been discussing for weeks whether to impose the sanctions, but held off because of concerns about a spike in crude prices, as well as the possibility of spurning relations with Iranian youth who approve of the U.S.

Iran dismissed the sanctions, with the head of the country’s chamber of commerce being quoted as saying those involved in trade “will find other alternatives.” However, Iranian President Mahmoud Ahmadinejad condemned the measure, saying the bank was strong enough to defeat “enemy plans.”

Earlier, they threatened that crude prices would skyrocket to $200 per barrel if Obama signed the bill into law.

By Martha Rosenberg, AlterNet
Posted on January 9, 2012, Printed on April 13, 2012
http://www.alternet.org/story/153677/4_creepy_ways_big_pharma_peddles_its_drugs

(Editor’s Note: You can view the ads throughout the story and can click on the ad to enlarge it.)

It’s no secret that advertising works. Big Pharma wouldn’t spend over $4 billion a year on direct-to-consumer advertising if it didn’t mean massive profits.

What is more unknown is why drug ads that sow hypochondria, raise health fears and “sell” diseases are often the most common–and effective–even when the drugs themselves are of questionable safety.

The nation’s fourth most frequent drug ads in 2009 for were Cymbalta, making Eli Lilly $3.1 billion in one year, despite the antidepressant’s links to liver problems and suicide. Pfizer spent $157 million advertising Lyrica for fibromyalgia in 2009, despite the seizure pill’s links to life-threatening allergic reactions. The same year, it spent $107 million advertising the antidepressant Pristiq, even though it also had links to liver problems.

So, how does Pharma dupe us into using unsafe drugs? Today’s drug ads, targeted directly to consumers since 1999, seem like they sell diseases and often cast women, children, the elderly and mentally ill in a bad light. But a quick look at ads before direct-to-consumer advertising (DTC) in medical journals shows that drug ads have always done so. It’s just that patients didn’t used to see them.

Here are some of Pharma’s most offensive ad campaigns, then and now.

1. You’re Sicker Than You Think

When psychiatric drugs first became popular for use in the general population, in the late 1960s, everyday personality problems became imbued with psychiatric labels. “Lady, your anxiety is showing (over a coexisting depression),” says a 1970 ad, showing an older, wrinkly woman in a bouffant wig with gigantic sunglasses and garish jewelry. “On the visible level, this middle-aged patient dresses to look too young, exhibits a tense, continuous smile and may have bitten nails or overplucked eyebrows,” says the ad copy. “What doesn’t show as clearly is the coexisting depression.”

The ad, both sexist and ageist, suggests the woman needs the antidepressant and tranquillizer Triavil.

Another ad from 1968 shows a bored, upper-middle-class couple whose hauteur is also said to really be depression. “Do you have patients who try to hide frustration behind conformity?” says the ad for the antidepressant Aventyl HCl.

You’d think such demeaning ads would vanish with DTC advertising because people would be offended. But You’re Sicker-Than-You-Think ads are alive and well since DTC advertising and even flowering.

A three-page consumer ad in the late 2000s similarly conveys that everyday psychological traits could actually be dire mental problems that require medication. If you are “talking too fast,” “spending out of control,” “sleeping less,” “flying off the handle” and “buying things you don’t need,” you could be suffering from bipolar disorder said the ads, which appeared in magazines like People. And here you thought it was the coffee. Accompanying photos of a woman screaming into a phone and contorting her face are so extreme they could come out of the movie Halloween Part II, if the woman were holding a knife.

Psychiatric drugs are not just advertised for everyday personality problems. Pharma is pushing them for everyday pain conditions. Eli Lilly’s original depression campaign for the antidepressant Cymbalta, “Depression Hurts,” seems to anticipate its subsequent approval for pain conditions including back problems. Now ads tout Cymbalta as a “non-narcotic, once daily analgesic FDA approved for three indications across four different chronic pain conditions,” as if it does not have severe controversial psychiatric risks including the suicide of volunteers who tested it.

And seizure and epilepsy drugs, known for major allergic and psychiatric reactions, are also becoming pain franchises. “What’s causing your chronic widespread muscle pain?” asks an ad for the seizure and epilepsy drug Lyrica. “The answer may be overactive nerves,” says the ad, even though “widespread muscle pain” and “over-active nerves,” are not mentioned in the approved labeling for Lyrica, says pharmaceutical reporter John Mack. The military spent $35 million on seizure and epilepsy drugs in 2009 alone, including for migraines, headaches and pain.

And speaking of overkill, ads for genetically engineered injected drugs like Humira, approved to treat serious diseases like Crohn’s disease, psoriatic arthritis and chronic plaque psoriasis look like they are designed to sell beer or beauty treatments, not immune suppressing drugs that invite cancers and lethal infections.

DTC ads don’t just escalate everyday problems into psychiatric problems, they also escalate real psychiatric problems into irresponsible, sensationalistic stereotypes. Ads for the best-selling antipsychotic Risperdal, widely used in children, and in soldiers with PTSD, suggest that people with mental illness have hallucinatory fears about “boiling rain” and “dog women.” The “dog woman” ad, showing a half-dog, half-woman crouched on her elbows, her eyes blackened, furthers the sensationalizing of mental illness with the tagline, “Because relapses are a living nightmare.”

2. Your Kid Is Sick 

DTC ads don’t just convince people they’re in need of new drugs, but also that their kids may be, too. And it’s been going on for decades.

Long before Pharma convinced parents, teachers and clinicians that millions of US kids had attention deficit hyperactivity disorder (ADHD), kids were said to suffer from “minimal brain dysfunction” (MBD) and “hyperkinesis,” two conditions that were essentially the same as ADHD. In fact, so many kids had MBD by 1976 that an ad for the drug Cylert hailed the “Importance of single daily dose to the child, the parents and the teacher,” because kids wouldn’t have to be singled out anymore at pill time at school. (ADHD has been so huckstered, a YMCA ad spoofs it with the headline, “Before video games, before Facebook, before Ritalin, there was basketball.”)

Yet neither Cylert–whose approval the FDA withdrew in 2005 because of liver failure and deaths–or the current ADHD drugs are safe. In 2009, researchers reported that kids are more likely to die sudden deaths while taking them and the American Heart Association recommends electrocardiograms (ECGs) before kids take them. And yet, combined sales of ADHD drugs continue to grow from $4.05 billion to $7.42 billion in 2010.

Thirty years ago, it certainly looked like kids were being overmedicated. They were given the antipsychotic Thorazine for their “hyperactivity,” “hostility,” sleep problems and even for vomiting. Picky eaters and kids who wet the bed were given tranquillizers. Kids with tics, stuttering and school phobia were given the tranquillizer Miltown.  

But today, ads promoting drugs for kids continue, and now they are aimed at parents. Sometimes, it’s hard to tell the difference between ads for drugs or ads for sugary cereals! Pharma tells moms to give their kids the bubble gum-flavored ADHD med, LiquADD and the grape-flavored ADHD med, Methylin. The latter campaign, to parents, is “Give ‘em the GRAPE!”

DTC advertising has also convinced parents their kids suffer from GERD (gastroesophageal reflux disease) otherwise known as acid reflux disease, which was barely a disease in adults much less kids, before consumer advertising. “GERD Can Be a Big Problem for Little Kids,” say award-winning ads for Prevacid, which won a “RX Club” Silver award in 2004. In Europe, kids are treated for another “adult disease” and given chewable Liptitor to lower their cholesterol.

Some of Pharma’s most aggressive advertising has been designed to convince parents their children’s minor sniffles or wheezing are imminent asthma and require immediate and expensive drugs. To make the asthma drug Singulair (which also comes in a yummy chewable), the seventh most popular drug in 2010, Merck inked partnerships with the American Academy of Pediatrics and Scholastic, both of which parents consider neutral organizations and not Pharma mouthpieces. Merck also partnered with Olympic gold-medalist swimmer Peter Vanderkaay and NBA kid clubs to sell the asthma drug.

“A kid who’s got what your kid’s got is out doing what your kid’s not,” says one Singulair ad campaign. “Find out how you can help your child breathe a little easier.”

If Singulair were not harmful, the huckstering would simply be a case of wasting money and overmedicating kids. But Singulair has been linked to both pediatric suicide and to emotional, behavioral and ADHD-like symptoms in kids, the latter likely inspiring parents to give their kids “the grape.”

Of course, another kid-targeted campaign is for the vaccine against the sexually transmitted Papillomavirus or HPV, immortalized by Gov. Rick Perry and Rep. Michele Bachmann in hot exchanges this fall. Many object to the sexualizing of 9-year-olds, to government lining Pharma’s pockets by promoting the vaccine (including overseas) and to the risks of the vaccines themselves. But the ads for Gardasil and Cervarix are also offensive.

Last spring, poster-sized ads for Gardasil on Chicago’s commuter trains pretended to sell real estate in sought-after neighborhoods. A closer look revealed descriptions of women in those neighborhoods who thought they didn’t need the HPV vaccine but did, positioning HPV not only as a general risk to the population, like flu, rather than an STD but as “hip.”

HPV vaccine ads got even cooler when GSK rolled out Cervarix extravaganza TV ads and its “armed against cervical cancer” campaign with an Angelina Jolie-like model displaying a skinny arm with a Cervarix tattoo.

3. Be Like Me, and Can Your Beer Do This?

Prescription drugs may affect health, but they are still consumer products sold with the same marketing principles as toothpaste or beer. In fact, the wacky, “Can Your Beer Do This?” Miller Lite campaign of the 1990s, came back to life to sell the antidepressant Wellbutrin XR. In a glossy, color magazine ad, a young man rows his girlfriend on a scenic lake and lists the benefits of his Wellbutrin XR. “Can your medicine do all that?” he asks.

What does it say about the success of DTC advertising that people are assumed to have an antidepressant?

Experiential ads also sell prescription drugs like vintage ads for the “Kodak Moment,” “Maalox Moment” and the old cigarette ads for the “L&M Moment” did. “Lunesta Sleep. Have You Tried it?” asks a 2007 ad in Parade magazine, elevating the experience to something akin to “designer sleep.”

And just as celebrities move other consumer products, they have been deployed to sell prescription drugs. TV personality Joan Lunden and former baseball star Mike Piazza stumped for the allergy pill Claritin, ice skater Dorothy Hamill and track star Bruce Jenner for the pain pill Vioxx, and Sen. Bob Dole for Viagra. NASCAR figure Bobby Labonte also endorsed the antidepressant Wellbutrin XL in 2004. Yes, his medicine could “do all that.”

But there has been a problem with celebrity drug endorsements, unlike product endorsements in which a celebrity like Tiger Woods or Martha Stewart could taint a product, a prescription drug can taint a celebrity! Did Dorothy Hamill know that Vioxx doubled the risk of heart attacks in users when she stumped for it? Did the model Lauren Hutton know that hormone replacement therapy causes a 26 percent higher incidence of breast cancer, a 29 percent increase in heart attacks, a 41 percent increase in strokes, and a doubling of the rate of blood clots when she shilled for it? Does actress Sally Field know that bone drugs like Boniva are linked to esophageal cancer, jaw bone death and the very fractures they are supposed to prevent as she pushes them?

Of course, good product marketing includes public relations. When Pharma sells a disease with no mention of the drug it is really selling, it’s called “unbranded” advertising. Since DTC advertising, Pharma has invaded public service announcements (PSAs) that TV and radio stations confer for free, pretending their take-a-drug messages serve the public good, like messages to change smoke detector batteries or put kids in car seats.

One such “educational” “awareness” campaign called “Depression Is Real” saturated the radio air waves in 2011, funded by the National Alliance on Mental Illness, which was investigated by Congress for its Pharma funding from Wyeth, part of Pfizer, and other groups. The high-budget ads, running for free, compare depression to diabetes because it doesn’t go away and to cancer because it can be fatal.

4. One Kind of Ad You Won’t See Anymore

Animal research at drug companies and the National Institutes of Health is a great scientific iceberg of which people only see a tip. In drug development, millions of animals die to prove a drug’s “safety.” At academic and medical centers, animal study grants from NIH provide millions to researchers and labs.

As sentiment grows against animal experiments and the government’s gigantic National Primate Research Centers (new rules will limit the use of chimpanzees), the research is downplayed and even hidden. But there was a time when Pharma actually flaunted animal research.

“More than a decade of animal research on various animal species has suggested that Librium (chlordiazepozxide HCI) exerts its principal effects on certain key areas of the limbic system,” says an ad from the 1970s, showing three monkeys crouching and dangling in cages as assorted experiments are conducted.

An ad for the diet pill Pre-Sate is even worse. It says, “one of the most sophisticated comparative animal studies ever conducted demonstrates direct action on the satiety centers,” and shows five photos of cats in experiments. One shows a life-size white cat looking at the camera with a chain around its neck and invasive instrumentation embedded in its skull.

Today’s consumers, it seems, wouldn’t tolerate ads like these. (Or the experiments behind them.) Why do they tolerate derisive ads about “dog women” and ploys to market pharmaceuticals to kids as if it were candy? 

Martha Rosenberg frequently writes about the impact of the pharmaceutical, food and gun industries on public health. Her work has appeared in the Boston Globe, San Francisco Chronicle, Chicago Tribune and other outlets. Martha Rosenberg’s first book, Born With a Junk Food Deficiency: How Flaks, Quacks, and Hacks Pimp the Public Health, will be published by Prometheus Books in April.

© 2012 Independent Media Institute. All rights reserved.
View this story online at: http://www.alternet.org/story/153677/

Actions are held to be good or bad, not on their own merits, but according to who does them, and there is almost no kind of outrage - torture, the use of hostages, forced labour, mass deportations, imprisonment without trial, forgery, assassination, the bombing of civilians - which does not change its moral colour when it is committed by ‘our’ side…

George Orwell might have been describing almost exactly the Western response to the murder spree currently underway in Iran.

Last Wednesday, a motorcyclist attached a bomb to a car carrying a man called Mostafa Ahmadi Roshan, killing him instantly, and injuring his two companions.

That was merely the latest atrocity inflicted upon individuals and facilities associated with nuclear physics in that country.

In December, seven people died in an explosion in Yazd. On November 28, a bomb seems to have gone off in nuclear facilities in Isfahan. On November 12, 17 people were killed by an explosion near Tehran. On July 23, a scientist called Darioush Rezaeinejad was shot through the throat outside his daughter’s kindergarten. On November 29, 2010, Majid Shahriari was killed in the same way as Roshan, with a bomb planted in his car. Fereydoun Abbasi-Davani was also attacked, but survived. On January 12, another motorcycle bomber killed Masoud Alimohammadi.

As Glenn Greenwald explains, if words have any meaning, this is terrorism, pure and simple - the systematic infliction of deadly violence launched against civilians and their families so as to create a climate of fear among Iranian physicists and other nuclear personnel.

It’s precisely conduct that, under other circumstances, we’re told, again and again, can never be justified.

“Moral truth is the same in every culture, in every time and in every place,” explained George Bush in 2002, as he launched the War on Terror (to which Australia enthusiastically signed up).

“Targeting innocent civilians for murder is always and everywhere wrong.”

Back then, the usual right-wing leg-humpers hailed the Bush doctrine a long-overdue repudiation of ethical relativism, a reassertion of an objective morality that held the justification of terrorism to be of almost comparable evil to the crime itself.

In his final address to the UN in 2008, Bush made the argument even more forcefully.

Multilateral organizations must respond by taking an unequivocal moral stand against terrorism. No cause can justify the deliberate taking of innocent human life — and the international community is nearing universal agreement on this truth. […] The Security Council has passed resolutions declaring terror unlawful and requiring all nations to crack down on terrorist financing. And earlier this month, the Secretary General held a conference to highlight victims of terror, where he stated that terrorism can never be justified.

Other multilateral organizations have spoken clearly, as well. The G8 has declared that all terrorist acts are criminal and must be universally condemned. […] The message behind these statements is resolutely clear: Like slavery and piracy, terrorism has no place in the modern world.

The words don’t leave room for ambiguity. The murder of a civilian scientist (and the infliction of severe wounds upon those merely unfortunate enough to be travelling with him) represents precisely the paradigm Bush was condemning.

So how’s that unequivocal moral stand working out?

Let’s turn to the The Age, where the day after the killing, David Blair, chief foreign correspondent of Britain’s Daily Telegraph, opined on recent events.

“[A] bomb in Tehran has lifted the veil on a secret effort to derail Iran’s nuclear program,” Blair says.

This campaign appears to be having a real impact: Iran’s drive towards nuclear weapons capability is not progressing as quickly as Pakistan’s, for example. Sabotage has already imposed significant delays. Buying time is a respectable goal of policy …

A ‘respectable goal of policy’! Thus does Australia’s most liberal newspaper gloss political murder and terrorism.

Again, Orwell had something to say about this:

In our time, political speech and writing are largely the defense of the indefensible. […] Thus political language has to consist largely of euphemism, question-begging and sheer cloudy vagueness. […] Such phraseology is needed if one wants to name things without calling up mental pictures of them. Consider for instance some comfortable English professor defending Russian totalitarianism. He cannot say outright, “I believe in killing off your opponents when you can get good results by doing so.” Probably, therefore, he will say something like this: “While freely conceding that the Soviet regime exhibits certain features which the humanitarian may be inclined to deplore, we must, I think, agree that a certain curtailment of the right to political opposition is an unavoidable concomitant of transitional periods, and that the rigors which the Russian people have been called upon to undergo have been amply justified in the sphere of concrete achievement.

The inflated style itself is a kind of euphemism. A mass of Latin words falls upon the facts like soft snow, blurring the outline and covering up all the details.

David Blair - and there are David Blairs writing for newspapers all over the world - cannot write: “I approve of bombing cars and shooting young men in front of kindergartens”, because, as Orwell suggests, such bluntness would invoke unpalatable mental pictures of an exploding car incinerating its passengers or a bullet hitting a man’s throat. ‘Buying time’, on the other hand, sounds eminently reasonable, a prudent measure to forestall future catastrophes - and no-one need think about the AP photo showing the 30-something Roshan posing with his baby son, a child who, because of Blair’s ‘respectable policy’, no longer has a father.

Note, too, that in his capacity as a human snowstorm, Blair refuses to answer - indeed, even to ask - the most obvious question arising from Roshan’s murder: namely, who is responsible for it? Instead, like Orwell’s English professor apologising for Stalinism, he assumes his audience will read between the lines, thus avoiding the necessity to commit to paper anything so unpleasant as the identity of the murderer.

Others haven’t been so polite.

“My own confidential Israeli source,” writes Richard Silverstein, “confirms today’s murder was the work of the Mossad and MEK, as have been a number of previous operations I’ve reported here.”

Silverstein notes that IDF chief of staff Benny Gantz recently explained to the Knesset’s foreign affairs and defence committee that Israel was sabotaging Iran’s nuclear program through what he called a series of “unnatural” acts. That hearing was held only 24 hours before the most recent killing. The next day, an IDF spokesperson on Facebook quoted Brigadier General Yoav Mordechai:

“I don’t know who settled the score with the Iranian scientist, but I certainly am not shedding a tear.”

It should be recalled that defence minister Ehud Barak chortled to the media after the last missile base explosion, “May there be many more” while Spiegel Online quoted an Israeli intelligence source affirming that the murder of Darioush Rezaei was “the first serious action taken by the new Mossad chief Tamir Pardo”.

Oh, of course, Israeli responsibility cannot be absolutely proved. That’s the nature of covert operations: they are meant to leave a certain wiggle room.

But what matters more is that the vast majority of mainstream commentators believe Israel responsible for the murders - and, like Blair, they have no problem with that. Thus, the very next day, The Age ran a piece by a certain Michael Burleigh, who began by chortling: “physics is an unhealthy line of work in today’s Iran”.

Oh, they’re a laugh a minute, car bombings. Burleigh agreed that Mossad was probably behind the killings. But because the dead men worked for Iran, that was OK:

“I shall not shed any tears whenever one of these scientists encounters the unforgiving men on motorbikes, men who live in the real world rather than a laboratory or philosophy seminar.”

Again, this is textbook stuff. Osama bin Laden could not have composed a more classical apologia for terror. For if, then, the physicists of Iran are individually responsible for the policies of their regime, one presumes the scientists of the US might be held to account for the high-tech weapons used by America in Iraq. And why stop at scientist? Anyone employed by a government – whether a technician or an accountant – facilitates, in some measure, that government’s actions. No innocents, no civilians, no compunction: by Burleigh’s gangster logic, almost any terrorist atrocity can be justified.

In passing, let’s note the interview given by US Secretary of Defence Leon Panetta to Face the Nation a week or so ago, in which Panetta discussed Iran’s nuclear ambitions.

“Are they trying to develop a nuclear weapon?” he said.

No. But we know that they’re trying to develop a nuclear capability, and that’s what concerns us. And our red line to Iran is, do not develop a nuclear weapon. That’s a red line for us.

In other words, Panetta confirmed that Iran was not, as the hysterics in the opinion pages seem to think, on the cusp of launching a doomsday missile. Rather, it was developing, entirely legally, a nuclear industry, precisely as the regime has always insisted. (We might also ponder that, in other contexts, Australia - a major supplier of uranium - loudly insists that nuclear reactors should never be equated with nuclear weapons.)

In any case, nothing seems more calculated to convince the Iranians they do, in fact, require an atomic deterrent than a violent terrorist campaign conducted against them by a nuclear-armed power like Israel with the seeming complicity of the world’s largest nuclear power, the US.

“On occasion,” gloats Republican presidential hopeful Rick Santorum, “scientists working on the nuclear program in Iran turn up dead. I think that’s a wonderful thing, candidly”. With leading American politicians celebrating the murder of Iranian civilians as “wonderful”, it’s no wonder that some Iranian leaders crave the security power that comes with a nuclear warhead.

Morally, though, none of that’s relevant. Arguing about whether or not terrorist atrocities will spur or deter Iran’s nuclear program misses the central point. What Ariel Dorfman says about torture rings just as true about terrorism: every regime that uses it, does so in “the name of salvation, some superior goal, some promise of paradise”, but the invocation of good intentions doesn’t change the moral calculus involved.

Back when the Boycott, Disinvestment and Sanctions campaign held regular pickets outside Max Brenner chocolate stores, conservatives complained that Israel was being held to a higher standard than other countries. Yes, they said, Israel’s treatment of Palestinians might be, you know, a teensy bit oppressey, but Israel was, by and large, less repressive than, say, Syria. Why, then, was Israel - ‘the only democracy in the middle east’ - being singled out?

The killings in Iran provides an answer.

There are, of course, other regimes that carry out political murders. But, with the exception of the US, no other nation can so brazenly wield the assassin’s bullet and the terrorist’s bomb, and be cheered on by politicians and pundits throughout the Western world for doing so. Can you imagine, for instance, the Age turning over to its opinion page two days in a row to Syrian apologists cheerily justifying massacres in that country as ‘respectable policy’, and joking about the deaths of dissidents?

Furthermore, Israel doesn’t act alone. The US might have publicly denied responsibility for Roshan’s murder but, given the extensive defence and military ties with the Israelis, it’s inconceivable that the Americans don’t, at some level, know what’s going on.

The episode provides a neat illustration of the relationship between the two countries, with the US providing billions of dollars of military and other aid, at least in part so that Israel can carry out America’s dirty work in that part of the world.

That’s why these killings pose an ethical test for Australians, too. It’s easy to condemn terrorism when it’s carried out by official enemies. You don’t need much moral courage to stand up against Emmanuel Goldstein.

But Israel and the US are key allies of Australia, and, on almost every issue of import, our government marches in lockstep with theirs.

In the end, it comes down to a simple question: do we endorse car bombings, or not? Do we believe any of the rhetoric that’s been mouthed for the last decade (”all terrorist acts are criminal and must be universally condemned,” etc)? If so, why won’t we speak out?

Jeff Sparrow is the editor of Overland literary journal and the author of Killing: Misadventures in Violence. He Tweets @Jeff_Sparrow. See his full profile here.

January 17, 2012 in Health

Industrial salt not intended for human consumption has been sold in Iceland as food salt for 13 years by mistake, Icelandic officials said Tuesday.

“The salt is not safe because foreign entities can be found in it, for example rocks, metals and other things that are filtered out of table salt,” Reykjavik Health Protection Authority official Oskar Isfeld Sigurdsson told the daily Frettabladid.

Olgerdin Egill Skallagrimsson, a wholesale importer and beverage producer, imported the industrial salt, which is used to de-ice roads or in chemical production, from Denmark.

It has been used in food production by dozens of Icelandic meat producers, fish producers and bakeries for 13 years, Olgerdin said, but not sold directly to consumers.

The bags of salt were clearly marked as containing industrial salt, but Olgerdin chief executive Andri Thor Gudmundsson said company employees did not react.

“We were not aware that the salt was not certified for food production. We knew it was for industrial use, but thought it was for the food industry,” he told Icelandic public broadcaster RUV.

“Olgerdin and the companies that used the salt in food production have admitted negligence and mistakes because the salt was not stamped ‘food grade’ and was not certified for use for the food industry. Olgerdin apologises for that mistake,” it said in a statement issued on Monday.

MS Iceland Dairies, the country’s largest dairy producer, said it had recalled five products from stores because the salt figured among their ingredients.

Health officials said the industrial salt was “not safe and should not be on the market.”

“In the production of table salt there are requirements about the handling and storage of the product that are not required in regard to industrial salt. It is stored in different conditions and there are no requirements on checking for foreign bodies in the salt because it is not intended for human consumption,” Sigurdsson said.

(c) 2012 AFP

Belarus is headed for an economic “meltdown” and the ruble will need to depreciate another 51 percent, VTB Capital said, as locals lay siege to shops and protest price increases after the central bank devalued the currency.

The Belarusian central bank let the managed ruble weaken by 36 percent versus the dollar on May 24 as demand for dollars and euros from importers and households threatened to derail an economy already laboring under a current-account deficit equal to 16 percent of gross domestic product. Russia and other former Soviet partners last week agreed to give Belarus a $3 billion loan and urged President Aleksandr Lukashenko’s government to sell $7.5 billion of assets to replenish the state’s coffers.

Enlarge image

Belarus Headed for Economic ‘Meltdown’ VTB Capital Says

Andrey Rudakov/Bloomberg

The headquarters of VTB Capital Plc.

The headquarters of VTB Capital Plc. Photographer: Andrey Rudakov/Bloomberg

“A ‘91-style meltdown is almost inevitable,’’ said Alexei Moiseev, chief economist at VTB Capital, the investment-banking arm of Russia’s second-largest lender, referring to the country’s economic slump after the collapse of the Soviet Union. ‘‘Rapid privatization is the only way that can help avert complete disaster.”

The International Monetary Fund urged Belarus to reform its economy in March, calling on Lukashenko to rein in “unsustainable” spending and for the central bank to increase benchmark interest rates to fight inflation.

Finance ministers from former Soviet nations agreed in Minsk on May 19 to give Belarus up to $3.5 billion over three years, with the first $800 million payment expected in the week after a separate meeting on June 4, Russian Finance Minister Alexei Kudrin said in Moscow yesterday.

Restrictions

The Nationalnyi Bank Respubliki Belarus set its official dollar-ruble rate at 4,931 for today’s trading, from 3,155 on May 23, according to its web site. Trading of foreign currency between companies, banks and individuals needs to stay within a 2 percent range of the daily rate, the regulator said May 23, when it announced the devaluation and reintroduced restrictions lifted on the interbank market on April 19 and for households on May 11.

Devaluing the currency will only worsen the situation for Belarus, VTB’s Moiseev said.

“The main problem is that the economy produces goods which consist of little else than a combination of imported spare parts,” he said. “So devaluation only makes things worse.”

Belarus’s economy effectively collapsed in 1991 as the disintegration of the Soviet Union eliminated natural markets for the country’s exports of farm machinery, textiles and agricultural products.

‘Market Socialism’

Lukashenko reintroduced controls on prices and the currency and re-nationalized some companies and infrastructure after coming to power in July, 1994, on a platform of “market socialism.” The nation’s economy returned to growth in 1996, according to World Bank data.

At the Minsk Refrigerator Plant Co. shop in the capital today, about 20 people queued in drizzling rain to use their rubles to buy fridges. While the shop didn’t open on the day of the devaluation, most of the models in the store already had ‘Sold Out’ stickers on their doors.

“I came on Saturday and it was a nightmare, the store was stormed by people who wanted to spend their rubles because of rumors about the devaluation,” said Nikolay, a 74-year-old pensioner who declined to provide his last name. His entire savings of 6 million rubles now buy one fridge compared with three before the devaluation, he said.

‘Obscenities’

The ruble traded at 5,019.75 per dollar at banks and currency kiosks around the country today, according to the median mid-price of six banks compiled by Bloomberg from the lenders’ websites. That’s 1.8 percent weaker than the official rate.

The devaluation lifted the local price of automobile fuels as much as 24 percent, according to Belneftekhim, an industry group for the country’s oil sector. Last night, about 50 people protested the price increase in the car park of a Minsk hypermarket.

“I can’t describe how I feel without using obscenities, this is all our government’s fault,” said Sergey, a 32-year old attending the protest who works for a computer importer. “The whole world tells them, guys, you have economic problems, you should do something, and all they did was live off getting more and more loans.”

IMF Bailout

Both the IMF and the EBRD have blamed Lukashenko’s spending before last year’s presidential election for much of the economy’s woes. Lending was increased by 38 percent last year and public-sector salaries rose by about 50 percent, the Washington-based IMF said in a March 9 report.

Belarus got a $3.5 billion bailout loan from the IMF during the global credit crisis and the country has more than $2 billion of ruble and dollar debt outstanding. Foreign-currency reserves hit a 1 1/2-year low in March.

“The ruble is probably still too strong, but devaluation hurts the average consumer through imported inflation and deteriorating purchasing power,” Sanna Kurronen, an economist in Helsinki at Danske Bank A/S, said by e-mail yesterday. “There is really no easy way out of this economic distress and the only way is to do a major reform in the country.”

The average monthly wage in Belarus was 1.6 million rubles in April, according to the government statistician. Converted into dollars, it fell to $325 after the May 24 devaluation, from $507 a day earlier, using central bank exchange rates.

Diapers

The price of children’s diapers has “gone completely insane” in Minsk, said Natalia, a 24-year-old mother also queuing outside the refrigerator store. “I used to buy a pack for 69,000 rubles, now they cost 140,000,” or almost half the 343,260-ruble monthly child benefit paid by the government, she said.

“We have become paupers,” said Tatiana, a 70-year-old woman in the line who also declined to give her last name. “We have been squeezed into a corner by this devaluation.”

Belarus’s dollar debt has been buoyed by news of the Russian loan, with the yield on the government’s debt due 2015 dropping four basis points to 9.881 percent by 6:35 p.m. in Minsk, the lowest since March 14. Dollar-denominated notes due 2018 yielded 10.38 percent, down six basis points.

The country has raised its refinancing rate twice since April 20 to 14 percent, the highest in Europe. The central bank also stopped selling foreign currency out of its reserves in March and will continue to stay out of currency markets, spokesman Anatoly Drozdov said by phone in Minsk yesterday.

Hyperinflation

Unless Belarus heeds Russia’s call for mass privatization of state assets, it is headed for “hyperinflation, massive un- and under-employment, and a shutdown of production,” VTB’s Moiseev said. The ruble will slide to 10,000 per dollar, he added.

Unemployment was 0.7 percent in December, according to government data. Inflation accelerated to 14 percent in March, the fastest since April 2009 and more than neighboring Russia’s 9.6 percent in April. Imports into Belarus exceeded exports by $7.3 billion at the end of 2009, according to the latest annual data available.

Russian media are creating a “flurry” of speculation about the nation’s asset sales so they can “make good at our expense,” Lukashenko said today in Astana, the capital of Kazakhstan, according to comments reported by state news agency Belta. “But we will not throw anything to anybody for nothing.”

To contact the reporters on this story: Emma O’Brien in Moscow at eobrien6@bloomberg.net; Alex Kudrytski in Minsk, via the Moscow newsroom on .

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net

The flag of American forces in Iraq has been lowered in Baghdad, bringing nearly nine years of US military operations in Iraq to a formal end.

The US Defence Secretary, Leon Panetta, told troops the mission had been worth the cost in blood and dollars.

He said the years of war in Iraq had yielded to an era of opportunity in which the US was a committed partner.

Only about 4,000 US soldiers now remain in Iraq, but they are due to leave in the next two weeks.

At the peak of the operation, US forces there numbered 170,000.

And yet today, as the Americans pull down their flag and leave, some Iraqis hope that their country’s luck may be turning.

If Iraq becomes wealthy, if it can stay more or less democratic, if it can finally bring terrorism to an end, then the 40 years of horror may be over.

Its people deserve a little good luck at last.

The symbolic ceremony in Baghdad officially “cased” (retired) the US forces flag, according to army tradition.

It will now be taken back to the USA.

Mr Panetta told US soldiers they could leave Iraq with great pride.

“After a lot of blood spilled by Iraqis and Americans, the mission of an Iraq that could govern and secure itself has become real,” he said.

Iraqi Deputy Prime Minister Hussain al-Shahristani said Iraqis were glad the US troops were leaving.

“They have been difficult years,” he told the BBC.

“We have had some successes together. We had some failures. We have some mishaps.

“I think we are all happy that the American soldiers are returning home safely to their families and we are also confident that the Iraqi people and their armed forces, police, are in a position now to take care of their own security.”

Some 4,500 US soldiers and more than 100,000 Iraqis have died in the war.

The conflict, launched by the Bush administration in March 2003, soon became hugely unpopular as claims that Saddam Hussein was hiding weapons of mass destruction and supporting al-Qaeda militants turned out to be untrue.

The war has cost the US some $1tr.

Republicans have criticised the pullout citing concerns over Iraq’s stability, but a recent poll by the Pew Research Centre found that 75% of Americans backed the troop withdrawal.

‘Moment of success’President Barack Obama, who came to office pledging to bring troops home, said on Wednesday that the US left behind a “sovereign, stable and self-reliant Iraq”.

In a speech in North Carolina to troops who have just returned, Mr Obama hailed the “extraordinary achievement” of the military and said they were leaving with “heads held high”.

“Everything that American troops have done in Iraq, all the fighting and dying, bleeding and building, training and partnering, has led us to this moment of success,” he said.

Barack Obama: “You have shown why the US military is the finest fighting force in the history of the world”

“The war in Iraq will soon belong to history, and your service belongs to the ages.”

He said the war had been “a source of great controversy” but that they had helped to build “a sovereign, stable and self-reliant Iraq, with a representative government that was elected by its people”.

Mr Obama announced in October that all US troops would leave Iraq by the end of 2011, a date previously agreed by former President George W Bush in 2008.

Some 1.5 million Americans have served in Iraq since the US invasion in 2003. In addition to those who died, nearly 30,000 have been wounded.

Troop numbers peaked during the height of the so-called surge strategy in 2007, but the last combat troops left Iraq in August last year.

A small contingent of some 200 soldiers will remain in Iraq as advisers, while some 15,000 US personnel are now based at the US embassy in Baghdad - by far the world’s largest.

Timeline - US troops in Iraq

• March 2003 - Operation Iraqi Freedom begins with a “shock and awe” assault on Baghdad, which falls in under a month
• May 2003 - President George Bush declares “mission accomplished”
• Dec 2003 - Saddam Hussein captured in a bunker south of Tikrit
• April 2004 - Photos emerge showing abuse of detainees at Abu Ghraib prison
• 2005 - Suicide attacks in Iraq hit all-time high as insurgency spreads
• January 2007 - US troop “surge” begins, leading to a drop in violence by 2008
• August 2010 - Last US combat troops leave Iraq

‘Ruin and mess’

Some Iraqis have said they fear the consequences of being left to manage their own security.

Baghdad trader Malik Abed said he was grateful to the Americans for ridding Iraq of Saddam Hussein, but added: “I think now we are going to be in trouble. Maybe the terrorists will start attacking us again.”

But in the city of Falluja, a former insurgent stronghold which was the scene of major US offensives in 2004, people burned US flags on Wednesday in celebration at the withdrawal.

“No-one trusted their promises, but they said when they came to Iraq they would bring security, stability and would build our country,” Ahmed Aied, a grocer, told Reuters news agency.

“Now they are walking out, leaving behind killings, ruin and mess.”

Concerns have also been voiced in Washington that Iraq lacks robust political structures or an ability to defend its borders.

There are also fears that Iraq could be plunged back into sectarian bloodletting, or be unduly influenced by Iran.

Thursday, December 15, 2011 – by Staff Report

AUSTRALIA’S key trading region in the Asia Pacific is the most vulnerable part of the world to a sudden capital strike by global banks, a leading economic authority has warned. New research from the influential Bank for International Settlements shows emerging markets in Asia would be heavily exposed if there were a credit crunch. – Sidney Morning Herald

Dominant Social Theme: We are giving people ample warning they ought to get out of the way.

Free-market Analysis: The secretive Swiss-based Bank for International Settlements has just warned that Asia is vulnerable to a catastrophic “global credit crunch,” according to the Sidney Morning Herald (see above). We translate it thusly: The world is HEADING for an Asian financial crisis.

Yes, increasingly, as believers in directed history (conspiratorial history), we would venture that a BIS warning is something of a harbinger of catastrophic events to come. Too many people don’t pay attention to the BIS, which is perhaps the most powerful body in the world. They should.

The Asia Pacific region has proven vulnerable to financial crises in the past, most notably in the later 1990s. The reasons for the collapse, the BIS indicates, is the same as previously, during the late 1990s – the rapid withdrawal of bank investment from the region. Here’s some more from the article:

Asia Pacific is the most vulnerable part of the world to a sudden capital strike by global banks, a leading economic authority has warned. New research from the influential Bank for International Settlements shows emerging markets in Asia would be heavily exposed if there were a credit crunch …

While Australia’s trade with Europe is minimal, investors fear the domestic economy could be damaged if the euro zone crisis triggered a withdrawal from Asia by global banks, with civil unrest and a break-up of the European Union still a possibility.

In its report published today, the Bank for International Settlements says Asia’s economies obtained far more debt from foreign lenders than other regions, and a large share of it was short-term debt.

Based on these two measures, it said: ‘Asia-Pacific appears to be the region most exposed to sudden capital withdrawals.

It’s not hard to hear what the BIS is telling us, if we listen. But in the modern world, listening is hard to do. In fact, it is difficult to remind oneself of the cognitive dissonance of agencies like the BIS. These facilities are often likely set up by the Anglosphere power elite to do exactly the opposite of their stated goals and objectives.

One example is the Federal Reserve that is supposed to stabilize the dollar and “control” monetary inflation. In fact, it has done exactly the opposite, and the dollar has lost almost all its value as a result. Additionally, central banks are often considered to be “inflation fighters” generically. But in fact ,a central bank prints money and thus is an inflation PRODUCER. In the long term it seemingly cannot be otherwise.

The BIS operates in reverse, too, in our opinion. It is supposed to organize prosperity around the world through canny money power structures. But all one need do is look at the world’s current state of affairs to know that the BIS has not succeeded and is, in fact, probably a big part of the problem.

Why are power elite agencies so secretive, and why do they operate in reverse? Because the modern day elite conspiracy is aimed at creating one-world government. Thus, the elites have set up a number of facilities to create sociopolitical and economic chaos. The entire world’s financial infrastructure has been designed to crash and fail on a regular basis, it would seem. And it does.

It’s not hard to understand if one takes the proverbial step back. But most people, in the past anyway, couldn’t do this because the entire panoply of the Western world’s informational programming was aimed at informing people that Money Power was a benevolent entity.

Of course it is not. Money Power is exercised in the world today for one reason so far as we can tell: to create world government. The very nature of Money Power as exercised by the Anglosphere elites is subversive. The elites have created an almost seamless economic engine that is driving the world toward global governance. The BIS is a powerful part of this engine.

Just the other day, the BIS warned that the quantitative easing measures adopted by the central bank of England would not be sufficient. And it has also warned that central banks around the world ought to consider a kind of united easing that is probably unprecedented in central banking history. You can see our article on that here: BIS Calls for Hyperinflationary Depression?

With increasing frenetic energy, BIS officialdom seems to be issuing warnings about where the world is headed. In rapid-fire succession, BIS publications have informed us that it may be necessary for the world’s central banks to act in concert to inflate dramatically, that the Bank of England’s quantitative easing may not be sufficient and that Asia is vulnerable to the kind of financial crash that occurred in the 1990s.

Conclusion: We are reminded of the commercial: “When E.F. Hutton talks, people listen.” Only in this case, it’s the BIS, perhaps, that we should be listening to. In our humble opinion, the BIS may be busy (one way or another) organizing the very events about which it’s warning.

The Core of the Patriot Act Was Drafted in 1995 … By Joe Biden

Everyone knows that the Patriot Act was drafted before 9/11.

But few know that it was Joe Biden who drafted the core provisions which were included in that bill … in 1995.

CNET reported in 2008:

Months before the Oklahoma City bombing took place, Biden introduced another bill called the Omnibus Counterterrorism Act of 1995. It previewed the 2001 Patriot Act by allowing secret evidence to be used in prosecutions, expanding the Foreign Intelligence Surveillance Act and wiretap laws, creating a new federal crime of “terrorism” that could be invoked based on political beliefs, permitting the U.S. military to be used in civilian law enforcement, and allowing permanent detention of non-U.S. citizens without judicial review.* The Center for National Security Studies said the bill would erode “constitutional and statutory due process protections” and would “authorize the Justice Department to pick and choose crimes to investigate and prosecute based on political beliefs and associations.”

Biden himself draws parallels between his 1995 bill and its 2001 cousin. “I drafted a terrorism bill after the Oklahoma City bombing. And the bill John Ashcroft sent up was my bill,” he said when the Patriot Act was being debated, according to the New Republic, which described him as “the Democratic Party’s de facto spokesman on the war against terrorism.”

***

Biden’s proposal probably helped to lay the groundwork for the Bush administration’s Patriot Act.

The Center for National Securities reported in 1995:

On February 10, 1995, a counterterrorism bill drafted by the Clinton
Administration was introduced in the Senate as S. 390 and in the House of
Representatives as H.R. 896.

The Clinton bill is a mixture of: provisions eroding constitutional and
statutory due process protections, selective federalization — on political
grounds — of state crimes (minus state due process rules), discredited
ideas from the Reagan and Bush Administrations, and the extension of some of
the worst elements of crime bills of the recent past.

The legislation would:

1. authorize the Justice Department to pick and choose crimes to
investigate and prosecute based on political beliefs and associations;

2. repeal the ancient provision barring the U.S. military from civilian
law enforcement;

3. expand a pre-trial detention scheme that puts the burden of proof on
the accused;

4. loosen the carefully-crafted rules governing federal wiretaps, in
violation of the Fourth Amendment;

5. establish special courts that would use secret evidence to order the
deportation of persons convicted of no crimes, in violation of basic
principles of due process;

6. permit permanent detention by the Attorney General of aliens convicted
of no crimes, with no judicial review;

7. give the President unreviewable power to criminalize fund-raising for
lawful activities associated with unpopular causes;

8. renege on the Administration’s approval in the last Congress of a
provision to insure that the FBI would not investigate based on First
Amendment activities; and

9. resurrect the discredited ideological visa denial provisions of the
McCarran Walter Act to bar foreign speakers.

* Note: The CNET article contains a typographical error, using the word “detection” instead of “detention” in the sentence: “allowing permanent detection of non-U.S. citizens without judicial review”. Not only does this make no sense, but a review of the bill confirms that it provided for permanent detention.

Last fall, Condé Nast Traveler aviation correspondent Barbara S. Peterson applied to work as a Transportation Security Administration screener. Her mission: to investigate reports that despite a five-year, $20 billion overhaul of the passenger screening system, checkpoint personnel are failing at the job. Being hired was only her first surprise. Peterson’s two months at the airport revealed how this overtaxed but dedicated workforce copes with equipment shortages, budget cuts, and record numbers of (not very pleasant) passengers. Here is an unprecedented look at the reality of America’s last line of defense

By Barbara S. Peterson

March 2007

In September and October of last year, I worked for the Transportation Security Administration as an airport screener-in-training. To protect the privacy of my former co-workers, I have altered the names of the screeners mentioned in this story and have not identified the airport where I worked.

It is 6:30 a.m. on a Wednesday in October. This should be a slow day at the airport, but we are one week into the new security regime—a thicket of regulations designed to eliminate the bomb-making potential of heretofore innocent items ranging from mascara to infant formula—and things are not going smoothly. In August, authorities in London uncovered a plot by a group of terror suspects to take down half a dozen airliners using liquid explosives camouflaged in beverage containers. Immediately, all liquids were banned from flights. Now, more than a month later, the Transportation Security Administration has come up with a convoluted compromise, permitting each passenger a liquid allowance. Confusion reigns: A mass of passengers creep toward the checkpoint in stocking feet, juggling shoes, carry-ons, computers, and plastic bags containing doll-size bottles of shampoo and other toiletries.

I am manning the walk-through metal detector and simultaneously keeping an eye on what some of us mockingly refer to as “the pen,” a makeshift holding area for the unfortunates who’ve been selected for further scrutiny. I’ve learned two things about this task since I joined the ranks of TSA screeners a month ago: You can’t predict who will be picked for a more thorough inspection, and there’s no good way to break the news to them.

The author in situ during one of the two 30-minute breaks she was given during her six-hour shifts. TSA policy calls for only two 15-minute breaks.

The area where passengers are directed to await further screening is known as “the pen.” We were supposed to hang on to the boarding passes of anyone held here to keep them from bolting, but some would walk off anyway.

In spite of a media blitz on the liquids ban, many fliers had heard nothing about it during the first week. I had to ask passengers to surrender fine wines and a gallon of cooking oil, as well as empty the water from a vase of roses.

Even if it was “just between us girls,” as one passenger joked to me, the hardest part f the job was having to grope perfect strangers. “I am now coming to a sensitive area,” was the line we were told to use at a moment like this.

Every day, two million passengers pass through TSA checkpoints.

The near-ban on liquids does have some exceptions: I was allowed to let pint-sized passengers hang onto their formula, and fliers with proper documentation could carry on liquid medications.

The TSA rolled out its “simplified” 3-1-1 campaign last fall: liquids in three-ounce (or smaller) containers, all stored in a one-quart zip-top plastic bag for each flier. We still had to explain the rules.

In the freewheeling pre-TSA days, female passengers often complained about inappropriate pat-downs by male screeners. Today’s searches are even more invasive but are done by screeners of the same gender.

Before 9/11, many screeners spoke minimal English. Today, they have to pass an English-language comprehension test and are also taught communication skills such as how to defuse tense situations.

Passengers surrendered nearly 14 million prohibited items at TSA checkpoints in 2006, including 11.6 million lighters and 1.6 million knives, suggesting that few use the self-service mail kiosks at some airports.

A hand wanding won’t necessarily detect a weapon concealed behind a belt buckle or a metal fastener, so I was frequently charged with the delicate task of checking behind the waistline.

Travelers with disabilities who cannot go through the metal detector must be hand wanded or patted down. I spent a half-day in class learning how to screen disabled travelers.

The most nerve-racking part of searching a carry-on was getting all the contents back into the bag. The TSA receives more than 12,000 complaints a year about items lost, stolen, or damaged during the screening of checked and carry-on bags.

Educating passengers on the more than 80 items prohibitied on airplanes is a job shared with airlines and airports. What this sign does not say is that anything of value surrendered at checkpoints may end up being sold by local authorities on eBay.

A woman on crutches hobbles through the portal and hands me her boarding pass, which bears the dreaded code. “Ma’am,” I stammer, “you’ve been selected for, uh …additional screening.” Behind her wait her four children toting bulging backpacks, each with a boarding pass that indicates they too will need to be inspected.

“I do not believe it!” the woman shrieks at full volume, threatening me with bodily harm if I go anywhere near her children. I empathize: She and her brood are now facing a frisking, a hand wanding, and a search of their belongings, which may be tested for traces of explosives.

Reeled in by the commotion, a fellow screener tries to calm the woman down. “Actually, ma’am, the TSA didn’t select you,” he says. “The airline selected you.”

This is what we’ve been told to say to fliers who complain about this auto-da-fé; for once, we can honestly deflect the blame away from the TSA. But the excuse is in fact an admission of glaring deficiencies that persist in the way we screen passengers. We are using a minor variation on the same flawed system for identifying suspicious persons that failed on 9/11.

I wasn’t taught why certain passengers are chosen for additional screening, but I know from my years covering aviation security as a reporter that some are picked at random and others are selected because of certain red flags. Chances are that whatever computer reviewed this family’s data when they checked in saw only a group of five people traveling together on a one-way, last-minute booking. In other words, the M.O. of a terrorist cell on 9/11. I learn the real story when the woman angrily relates that her mother has just died and they are flying to the funeral. They didn’t book a return flight because they weren’t sure how long they would be staying.

I am struck by the fact that at this major urban airport, five years after the worst terrorist attack on U.S. soil, we are still relying on the same rudimentary tools that have been used for decades to detect who is a true threat: physical pat-downs and basic X-ray technology along with the out-of-date passenger pre-screening that continues to bedevil people such as the woman before me.

Mercifully, a supervisor swoops in and excuses the two youngest members of the group from a full pat-down; the others are checked and found to be weapon-free. They make their flight. A businessman who is about to miss his because of this kerfuffle looks at me and mutters, “When are you guys going to start using your brains?”

Six months earlier, I had spotted a job advertisement online for part-time airport security screeners. The posting was notable for its dry recitation of the drawbacks of the job, as if to discourage all but the most desperate from applying. “This is a very physically demanding job with unique requirements,” it read; I’d have to stand for up to four hours without a break, lift seventy-pound bags, and walk the equivalent of two miles during my shift. I would be expected to maintain my cool while dealing with constant stress from the noise, crowds, and “disruptive and angry passengers,” which I couldn’t let distract me from my ultimate objective: to ferret out what it described as “devices intended on creating massive destruction.” For this I’d be paid $13.91 an hour; I’d work weekends, holidays, and odd hours; and I’d remain on probation for two years, during which time I could be fired without warning.

As a journalist, I had followed reports of poor morale in the screener ranks and the disturbing leaked reports about screeners failing to detect bomb components in undercover tests. I was mystified by the idea that after a five-year, $20 billion investment overhauling the system, federal screeners were no better at their jobs than the poorly trained private workers they had replaced. Could it be true, as critics allege, that all we got for our money was “security theater”—a show that does little more than make us feel safer? I also knew that the TSA had been working with Israeli security experts recently to develop a smarter approach to screening which would focus on finding dangerous people rather than dangerous items. The chance to get an inside look was irresistible.

It takes two minutes to fill out the information requested on the application and press the send button. Within three weeks, I receive an e-mail saying that I’ve made it past the first round. I then report to a location I was told not to reveal, for a surprisingly arduous test of my aptitude for picking weapons out of what amounts to a lineup of X-ray images of baggage. After an hour, I leave with a throbbing headache and the conviction that I’ve failed completely. But that same day, I receive another e-mail from the TSA with an effusive opener: “Congratulations! You have passed the…test to become a transportation security officer with the TSA.”

Within a few days, I am directed by another e-mail communiqué to a TSA office at an airport. There, I am fingerprinted and consent to the expected background investigation. (I have no reason to assume it wasn’t done, but not one of the half-dozen references I gave, including people who have worked with me professionally, was contacted.)

My “interviews” are so detached and impersonal that they could have been carried out by a robot. My first face-to-face with a TSA official consists of my sitting mutely while she reads to me stiffly from a script. I am then ushered into a different office, where another interviewer asks me a series of generic questions that he reads from his computer screen (”Have you ever helped anyone in need without being asked?”). The queries offer no opportunity for probing, and never during the hiring process am I asked about my reasons for wanting this job. One assistant tells me: “We are supposed to ask everyone the same questions,” which, if correct, seems a rather literal-minded interpretation of a government-fairness policy.

When I’m contacted by phone, I get the odd feeling that I’m talking to someone in a telemarketing center. When I finally ask where the caller is located, I learn that I’m not dealing with the TSA directly but with Accenture HR Services, a division of the giant consultancy which was created out of the remains of the Arthur Andersen accounting firm. A quick check on the Internet reveals that Accenture and another recruiting firm, CPS Human Resource Services, were hired as a sort of “rent-a-personnel department” for the fledgling TSA. The contracts were valued at $776 million over five years. Although the TSA is hardly hiring at the pace it was five years ago—when some sixty thousand employees were needed to fill the ranks—the contracts with the two consultants are still in effect.

I wait for the next call, and within a few days it comes. I am asked how fast I can get to a clinic, where I can dispense with the last remaining step, a drug test and physical exam. I report to a shabby facility, where I spend several hours sitting in a crowded waiting room for what turns out to be a cursory test of my eyesight and hearing. The staff seem to be unaware which federal agency I am applying to, and I remind them that they’ll need a urine sample when they seem ready to dismiss me. The following day, I get a call from a very pleasant woman who tells me there was a “problem” with the physical and explains that the clinic forgot to test my stamina. This is a sensitive issue: screeners have one of the federal government’s highest rates of job-related injuries, according to the Occupational Safety and Health Administration, and the TSA spends more than fifty million dollars a year in disability payments. Since injuries are mainly due to hoisting checked luggage and overstuffed carry-ons, weeding out weaklings from the pool of recruits is a high priority. When I tell the woman that I fear a return trip to the clinic will set the hiring process back another few weeks, she sweetly reassures me. “Don’t worry, hon, you won’t have to go back. Are you sitting down?”

I dutifully take a seat at the kitchen table.

“Now, lift your arm. Can you bend it?”

This, then, is how I finally become a transportation security officer: sitting alone in my bathrobe in a suburban kitchen, flapping my arms around and hoping that this bizarre pantomime is not an indication of what is to come.

On a Monday morning in September, I travel to a hotel on the outskirts of the airport to be sworn in as a screener.

“This is not like being on the assembly line! It’s not like working at the mall!” a tall, ruddy-faced man standing at the front of the room roars at me and the dozens of other new screeners in the hotel banquet room. An assistant to the local federal security director, he is here to induct us into government service. We’re groggy after hours spent filling out routine forms, and this fevered peroration is a welcome diversion.

“You are the last line of defense! Your life will literally be in danger!” he continues. The young man sitting next to me is impressed. “Like, this is our boss? He’s really a cool guy.” For a few moments, we’re invited to imagine our importance on the front lines of the war on terror.

But before we can get to the action at the airport, we must undergo what we are promised will be a grueling two-week regimen of ten-hour-a-day classes—a sharp contrast to the ten hours of classroom instruction and twenty to thirty hours of on-the-job training pre-9/11 screeners got from their private employers. The intensive instruction we’re facing is one of the many reforms in the Aviation and Transportation Security Act passed by Congress two months after 9/11. The message drummed into us today is that we’re entering a boot camp from which only a few lucky aspirants will emerge.

The next morning, when we report to our classroom in a nearby office building, our numbers have already dwindled: There are twenty of us, ranging in age from early twenties to early sixties and including a retired air-traffic controller, an emergency medical technician, a former hotel concierge, and several college students and laid-off airline workers. Our diversity is largely a function of our status as part-timers—in fact, the airport hasn’t had any full-time openings in several months due to budget constraints. The part-time hiring spree that brought me and the others in was supposed to help airports fill staffing shortages after Congress cut the national full-time screener workforce from a high of sixty thousand in 2003 to forty-three thousand today. But apparently at big airports like mine, it’s not having the desired effect: Turnover among part-time screeners can be as high as fifty percent, about double the rate for screeners overall. Within a few days, I learn what could be at least part of the reason for the high turnover: Some trainees confess that they hope to use the screener post as a springboard to an easier job with better hours at another federal agency, such as the Customs Service, and that they aren’t planning a career with the TSA.

Joe, our training instructor, is an Army veteran and a former marketing executive who joined the TSA after he lost his job in the aftermath of 9/11. “It is really important for us to remember that day,” he tells us on our first day of training. “Keep it in mind when things get hard on the job. Don’t let complacency get in the way.”

This is more than a mere pep talk. I soon learn from current screeners that management has been on edge lately: The TSA’s much feared Red Team recently made an appearance, and it seems the results were less than stellar. The Red Team is a cadre of undercover inspectors who test screeners’ mettle by attempting to smuggle weapons and other illicit items past checkpoints; those who fail to spot the contraband get sent back to class for remedial training. Test results are supposed to be confidential, but dismal scores from several airports, including Newark and Orlando, were leaked to the media last year: More than half the screeners tested reportedly flunked one of the exercises.

I also learn that because of the staffing shortage, our airport has, in the words of one official who works there, “held on to bad apples probably longer than we should have.” An airport theft ring involving screeners was uncovered in the area several years ago. Now, I’m told, airport officials are pushing to rush recruits through training and on to the job so they can begin to clean house. Mass firings are rumored to be in the works.

The job seems more daunting each consecutive day, as we’re taught to navigate the uneasy nexus of security and customer service. On the wall of the training room is a constant reminder of how we’ll be expected to straddle both worlds: A slick poster bearing the I AM TSA logo and the portrait of an attractive screener—part of a new in-house campaign to humanize us—hangs beside a crudely drawn rendering of a skull and crossbones signifying our mandate to keep bomb components and terrorists off planes.

By the end of two weeks, two of my classmates have dropped out and another two have failed the battery of multiple-choice and threat-identification tests we’re given at the end of the course. But the laggards are given another chance, which I interpret as a subtle message that the TSA will do what it can to ensure that we all make our way to posts at the airport across the street. Most of us are ready: We have mastered the arcana of how to screen all manner of carry-on gear—everything from crematory urns to the service monkeys that some disabled passengers are allowed to take through security. We’re also instructed on how to spot bomb components in X-ray images, but some of the information we’re force-fed during our training is already out of date: We’re repeatedly told, “You’ll have to unlearn this when you get to the airport,” because procedures have changed. We spend hours being taught how to operate explosives-detection machines, including models that we’ll never see because our airport hasn’t acquired them. The training materials, I learn, are from another giant government contractor, Lockheed Martin. While the TSA obviously dictates the content of the materials, procedural updates apparently take a long time to move through the pipeline.

Near the end of our training, the TSA issues its new rules on liquids, which allow small amounts of shampoo, toothpaste, and other toiletries to be carried on to planes as long as they’re in containers of three ounces or less that fit into a quart-size zip-top bag. The ban on all liquids was harsh, but at least it was easy to understand. When we’re told of the new rules, we realize that it will take all the communications skills we can muster to explain the revised ban to the traveling public.

“Be happy you are not at the airport today,” we’re told by an instructor. But within days, we are.

It is 5:45 a.m., less than an hour into my first day on the job, and already I am failing miserably. I had no idea that this pre-dawn hour is considered prime time at the checkpoint where I’m working. My first assignment is to monitor the walk-through metal detector and assess the readiness of passengers to enter the portal. I am to scream the litany of instructions across the barrier so that no passengers will dare approach me wearing their shoes, coats, or other any verboten gear.

“Remove all jackets and footwear,” I recite, weakly. “If you have a laptop, take it out of its case and put it in a bin by itself….”

I feel ridiculous. Passengers on the other side of the metal detector tune me out (assuming they can even hear me) as if I were a barely intelligible train station announcer. After years of traveling through airports just like this one, I find it unnerving to be on the other side; I realize that I too was one of these distracted fliers who ignored the monotonous droning which I am now directing their way. Not long ago, a “line monitor” would have stood on the other side of the barricade to explain the rules and help passengers prepare for screening. But that post was apparently considered the most expendable of the checkpoint chores and isn’t always staffed at many airports to save money. Today, as passengers fumble with clothing and cosmetics, that decision seems questionable at best.

I soldier on, improvising, because we’re not given scripts or told precisely what to say. “No liquids, gels, or aerosols allowed unless they are…” I stumble on my words. “Uh…in travel-size containers.”

“Barbara, what is travel-size exactly?”

I’m working with Carole, a preternaturally calm former social worker, who nonetheless makes her displeasure with my performance clear.

“C’mon, Barbara, I can’t hear you,” she says in singsong. The other screeners laugh at me. I don’t even have a uniform yet: I wear the requisite navy pants and white shirt that got me through training, but I feel as out of place as a student driver in a NASCAR race. Things only get worse when a pilot comes through and, offended by my casual attire, demands to see my I.D. “Oh, great, I’m trying to make my flight and she’s being trained,” he grouses for the benefit of my colleagues.

Within an hour, two of the three lanes at our location are shut down because of possible radiation leakage from the X-ray machines—an inspection reveals that the heavy flaps which seal the compartment are defective. A co-worker who’s been on the job since before 9/11 tells me that screeners used to be given dosimeters to measure their exposure to radiation but that the devices were eliminated in a cost-cutting measure. We were told in training that OSHA has determined that our exposure levels are acceptable, and that is the last time I hear it mentioned. It takes days before the machines are back up and running.

My first day as a screener would have been trying under any circumstances, but the new rules on liquids are testing the patience of screeners and passengers alike. Not only are travelers supposed to pack permitted toiletries in a separate zip-top bag—quart-size, not gallon—but they must remove the bag from their carry-on for inspection. The definition of liquid or gel is so tortured, meanwhile, that we don’t even try to condense all of it into a manageable sound bite—and travelers invariably trip up.

What ensues is the kind of Kabuki dance that makes screeners such fodder for late-night comedy. I get a taste of this when I’m assigned to the “property search” patrol, which means that I must rifle through people’s bags in search of suspect items spotted by the X-ray operator. A typical scene goes like this: After getting the signal that there may be a bottle of something in a bag, I scurry to the conveyor belt and identify the owner, and we march over to a table alongside the checkpoint. The flier, unaware of the humiliation that awaits, is generally cooperative. Wearing the TSA’s regulation rubber gloves, I paw through the bag, pushing aside everything from underwear to adult diapers, and discover the offending item or items—usually an assortment of toiletries that exceed the three-ounce limit or that aren’t packed in the proper plastic bag. I break the news to the traveler that he’s run afoul of the rules, at which point his calm demeanor evaporates, replaced by reactions ranging from a hurt look to outrage (”I just spent twelve dollars on this stuff, and now you’re telling me I have to throw it out!”). Almost no one realizes that they are supposed to extract the plastic bag from their carry-on and put it through the X-ray separately. Some screeners are less than sympathetic; I hear one telling someone pleading ignorance, “Well, it was all over the news!” which seems beside the point, since no two-minute segment could possibly capture this edict’s byzantine complexities. And then I get scolded, too, for prefacing my search with “I’m sorry but…”

“You must never apologize,” I am told. But somehow the ritualistic disclaimer—”We don’t make the rules, we’re just doing our job”—seems inadequate under the circumstances. I try to strike a balance between officiousness and empathy. When an imposing and attractive man with a beautiful wife and two children comes through clutching two bottles of Poland Spring water, I promptly confiscate them. The man is sincerely apologetic, and my embarrassment at my role in this exercise is only made worse when one of my colleagues pulls me aside and whispers: “Hey, you just took Allen Iverson’s water!” referring to the NBA star whom I failed to recognize.

But the most common response from the public is an incredulous “Nobody told me about this!” And they have a point. Coming back from my mid-morning break, I walk to the other side of the checkpoint to see what passengers are—or aren’t—being told by the TSA, since they are getting little guidance from the airlines. Posted on either side of the checkpoint, in bureaucratic jargon and small type, are two signs detailing the rules. But they contradict each other: One sign describes the new regime, the other explains the rules that were in place in August. Aside from that, the only other guidance comes from a tattered sheet of paper hanging from the opening to the X-ray machine. It reads REMOVE ALL SHOES.

I mention this to a supervisor. She explains that there’s not much more we can do in the way of signage because of the lack of funds, although they do later cover up the out-of-date sign.

Near the end of my six-hour shift, I’m achy, unaccustomed to standing for hours and lifting bags that feel like they’re full of bricks. Just then a buzz goes through the checkpoint—Senator Hillary Clinton is on her way. We all stand as if at attention as she arrives with her secret service agents, smiling vaguely in our direction. I notice that she does not go through normal screening but enters a special lane reserved for law enforcement officers and pilots authorized to carry guns, a privilege accorded to her as a former first lady. Mere politicians must present a plastic bag like everyone else.

“If it gets past you, it’s getting on the plane.” This becomes our mantra, drummed into us during training—mainly in discussions of IEDs, or improvised explosive devices, which are the threat du jour and thus staples of the evening news. It is surprising, though, that while we are supposed to focus on spotting components of these makeshift bombs in carry-on bags or hidden on the passengers themselves, the tools we’re given are a hand wand and conventional X-ray machines that display bags only in two-dimensional images. We do, of course, have the requisite explosives-trace-detection machine to test carry-on bags for the most minute particle of explosives. At fifty thousand dollars apiece, these are marvels of technology, but only a small fraction of bags are checked with them. Not to mention the fact that the plastic swabbing wands which we’re supposed to use have been permanently misplaced and we simply make do with our hands.

Meanwhile, it seems that nearly every day the press reports on the latest dazzling security equipment which will speed up screening and detect banned items with unerring accuracy. If the hype is to be believed, all this could make many screeners’ jobs redundant. It’s clear that we could benefit from better tools—state-of-the-art X-ray machines, for instance, that use computer-based 3-D modeling and software to do some of the initial analysis. But the journey from laboratory to airport terminal is painfully slow. Because of its size and location, the airport where I work is designated by the federal government as one of the biggest terrorist targets in aviation. As such, it should logically be at the top of the priority list to receive new screening technology. But I hear from airport sources that plans to install so-called puffer devices here were called off. (These machines electronically “sniff” fliers for explosives and other contraband and can eliminate the more time-consuming manual pat-downs of passengers.) I hear that a dispute between the airlines and the airport managers over where to place the puffer devices delayed the plan for so long that the TSA finally decided to ship them elsewhere.

One day, I learn that a baggage screener at the airport has been fired. Apparently eager to go on break, he cleared a suitcase to be loaded onto a plane even though it had set off an alarm that was never resolved—a clear breach of security.

Of all the factors that motivate screeners to stay on their game—the need to pass annual recertification tests, quarterly spot checks, and occasional encounters with covert testers—the fear of causing a breach is the most serious. You can be fired summarily. A whole terminal can be shut down; it can cost the airlines millions of dollars. The really frightening thing—and a pressure all screeners labor under—is that a split-second distraction is all it takes to lose your job, or worse. Two years ago, there were about a hundred breaches at airports around the country, but the total number of lapses—most of which don’t result in a shutdown—is estimated to be far greater. Fortunately, few if any are ever determined to have been a real threat to security; most fall into the category of dumb mistakes.

A week into the job, I come close to committing a serious blunder. The checkpoint lane where I am guarding the walk-through metal detector suddenly swarms with passengers after two flights in another terminal are canceled and passengers are rerouted. People push and jostle as they approach the walk-through portal. Three passengers have been selected for additional screening, but I can’t abandon my post and no one else seems to be available to help them. One of the selected passengers tries to leave the pen, and as I turn to tell him to stop, two people hurry through the metal detector. I don’t notice that one has set off the alarm. Charles, the supervisor on duty that day, looms up in front of me, his face contorted in fury. “Did you see that!” No, I confess sheepishly. I start to mumble something about not having enough help, and he quickly stops me. “That was a breach. You know what that means.” Fortunately, the man who dashed through the metal detector is still standing there, and I, duly chastened, order him back through the portal after he relinquishes the cell phone that set off the alarm.

Unnerved, I continue at my post. I’ve been told that I’m too nice, that I’m not assertive enough. Suddenly, I hear myself screaming in a voice I hardly recognize as my own: “One at a time!”

By my second week, I get some components of my uniform, and I immediately notice the difference in how I’m treated. I detect a certain deference from the pilots and businessmen who condescended to me before, and my co-workers kid me, “You’re one of us now.”

But as the weeks roll on, I begin to feel like “one of them” in other ways: Burnout is already setting in. It is not just the early-morning hours that I’ve drawn as a shift; it’s the relentless pressure from both TSA management—which seems to be perceived as a distant bully—and the public. The occasional flare-ups from hostile passengers are a reminder that four years after the TSA formally took over the checkpoints, screeners get barely more respect than the poorly trained minimum-wage workers they replaced.

And I am starting to notice the wavering morale that, along with job turnover, is a persistent problem. Allen, one of the younger males on my shift, is going to college in the afternoons. He throws me off guard one day when he asks me point-blank: “So, you’ve been here long enough: Can I ask how you like it?” I’m flummoxed and blurt out, “No comment,” to which he laughs and says, “Yeah, join the club.” The standard and sarcastic response muttered whenever I ask about a machine that’s out of order or a procedure that’s unclear is, “Welcome to the TSA.” I’ve become sensitive to, and discouraged by, the way screeners are depicted in the media: Most of the reports are about screeners missing weapons, stealing from bags, or manhandling eighty-year-old grannies. If there are positive accounts—other than in TSA press releases—I don’t see them. Yet from what I can see, my co-workers are pros, expert at spotting prohibited items with regularity: Lighters, razor blades, and Swiss Army knives all end up in our trove of confiscated items. In fact, two of the screeners in our terminal have become local heroes for having apprehended a TSA Red Team member who had a weapon taped to his body. Most are also adept at defusing customer outrage, although everyone has a story about being pushed to the edge by a passenger who threw something at him or accused him of theft.

Many of my colleagues were hired when the TSA was created four years ago and have had to survive a series of staff cutbacks and repeated tests of their skills. Every year, I’m told, a few screeners at each terminal lose their jobs after failing these reviews.

The regulars on my shift defy easy categorization: two are former prison guards, one had worked as a private investigator for a divorce lawyer, another logged years as a legal secretary at a well-known corporate law firm. Many of them have attended college. When I probe a bit into their motives for staying, it seems many were drawn by the appeal of working for the new agency, especially in those first months after the terror attacks; now that they are within the secure confines of the federal government, with its generous benefits and pensions, it’s hard to leave.

Not surprisingly, of the forty or so of us on the early shift at the terminal, some are less diligent than others. Craig, who just joined our ranks a few months ago, is calling in sick with suspicious regularity, and the gossip is that he’s not long for the TSA. But when he is on duty, I notice that he has a sharp eye and an ingratiating way with passengers. Overall, I’m impressed with the competence of my colleagues.

Our airport is still so understaffed that security can only be maintained with generous outlays for overtime, which boosts the minimum hourly pay to twenty-one dollars and allows some screeners to raise their annual pay by as much as fifteen thousand dollars. Even so, many on the shift have second jobs. To earn enough money to put his children through college, one screener routinely works more than ninety hours a week at the terminal: When he goes off duty at the checkpoint, he changes uniforms and moonlights for one of the private security companies that still perform some routine jobs for the airlines.

It is just past five on a sunday morning. An Amazonian woman with a Teutonic accent wobbles toward me on four-inch stilettos. At first she won’t remove them, but when she sets off the alarm, she contorts herself into an exaggerated spread-eagle position and starts giggling uncontrollably. There’s a strong whiff of alcohol. It seems that many passengers, at this hour, are still up from the night before.

I also get a lot of oddball comments. “Hey, you guys really get off on this, don’t you?” a muscled young man, clad in regulation black, cracks as I paw through his carry-on and extract a jar of hair pomade that has run afoul of the three-ounce limit. Others kid me as I frisk them: “I’m getting a free massage!”

Close physical contact with total strangers is the most difficult part of a screener’s day, and how we deal with it speaks to the “customer service” side of our jobs. The TSA must strike a delicate balance, thoroughly screening passengers but not going so far as to make them frustrated or uncomfortable, lest public support evaporate and the budget be further slashed.

Maintaining this balance—and our composure—can be trying. We’re routinely accused of stealing or breaking someone’s cell phone, computer, camera, or expensive tech toy. The most difficult types of passengers fit into fairly neat categories and seem to appear at fairly neat intervals. First thing in the morning sees the arrival of the self-important business travelers and what I call “the insiders” (flight crews and some airport employees). Whether they are reserved or obnoxious, members of these groups are always impatient. Next are “the passengers from hell,” who either come roaring back after reclaiming their belongings, convinced that they’ve been robbed, or angrily yell things like “You broke my laptop!” or “You’re making me miss my flight!” Later in the morning, the level of civility rises as the level of sophistication drops: The crowds seem to be dominated by infrequent fliers, struggling with shopping bags full of tchotchkes and confusion over even the most basic security rules.

Just as there are people we’d rather not have to deal with, there is stuff we’d rather not see. I am spared such encounters, but one of my more experienced co-workers recounts incidents of cockroaches jumping out of bags and of dead fish (”at least you hope they’re dead”) and rotten meat stuffed into carry-ons. She also describes how another colleague ended up screening a dead man. “It’s true,” she tells me. “The man was in a wheelchair, and I guess he died on line at the checkpoint. She gave him the whole wanding and pat-down. I suppose she figured he was asleep.”

We joke among ourselves about the stresses of dealing with people’s eccentricities, but underneath the humor is a serious question that is not being addressed: What are we doing to better separate the true threats from the rest of this mass of humanity? In my two months on the job, no one ever mentions the Israeli behavioral profiling program announced with great fanfare by the TSA last year and currently in use at a dozen U.S. airports.

One urban legend that is quickly debunked during my tenure is the notion, often reported as fact, that the work—particularly manning the X-ray machine—is so tedious that screeners actually nod off on duty. In fact, we rotate frequently among the various duties and are too busy to doze, even though some of us have been up since 2 a.m. Breaks come regularly—once every two or three hours—and can last up to half an hour.

In fact, despite the common perception that X-ray detail is boring and repetitive, I find it far more palatable than poking and prodding elderly people in their wheelchairs. As a trainee, I am not permitted to monitor the machine unattended, even though I had hours of practice in class. When the line slows, I get a crack at it with a seasoned screener at my side and quickly learn how to spot a lighter, the most common of the prohibited items we see (at least a dozen are collected by the end of each shift). We’re also on our toes to spot images of dangerous items that the TSA briefly superimposes onto the contents of bags to catch us if we let down our guard.

In my third week, we get the news that the TSA is about to start “random” screening of airport workers, who until now have been able to access secure areas without scrutiny. Several of my co-workers mutter, “It’s about time.” We, after all, have to go through screening every time we enter the checkpoint, but an estimated 600,000 workers at U.S. airports with access to secure zones do not have to submit to screening. The absurdity of this is underlined by reports that one of the suspects in the thwarted terror attack in the United Kingdom had a job at Heathrow which allowed him to enter restricted areas. I note that the announcement makes no mention of the fact that the TSA was supposed to have rolled out a system of biometric identification for airport workers several years ago.

By the end of October, I’ve begun to recognize regular passengers: Several business travelers who fly with clocklike regularity at certain times of the week start kidding me about looking forward to the requisite groping that comes with their seemingly perpetual selection for secondary screening. “Shouldn’t there be a card for someone like me?” asks one woman. I tell her to look out for the much-delayed “registered traveler” plan, although whenever I bring it up at the checkpoint, there seems to be general pessimism about its prospects. I also recall what Congressman John Mica, a vocal critic of the TSA, has often observed: “We are spending all our resources checking the same people over and over again.”

And we screeners are instructed to resolutely resist any urges to give special treatment to VIPs. One day, I spot a nicely dressed man who is approaching with the assurance of a seasoned business traveler. I note that he has placed a Defense Department I.D. in the bin, along with his regulation zip-top plastic bag.

When Marsha, the X-ray operator, beckons to me and indicates that she’d like me to go through his gear, I proudly tell her I’ve figured out that he works at the Pentagon, hoping this will get me off the hook.

“So?” she barks. “He’s got a boarding pass just like anyone else. Check his stuff!”

Under the watchful gaze of the X-ray screener, the supervisor, and now Mr. Military Man, I gingerly pluck his plastic bag from the bin, somehow causing green mouthwash to drip all over the conveyor belt and the floor. I sheepishly offer to get him a new bag.

“No,” he says, with a cold stare. “Just clean it up.”

The reason the TSA—and my supervisors—give for searching this man is what I will come to call the “you never know” argument. As in you never know if an elderly person in a wheelchair is a dupe for a saboteur. Of course, it’s important to keep the extra screening as random as possible to avoid any patterns that a terrorist could exploit. But clearly, unless you believe that The Manchurian Candidate presents a plausible scenario, there are people who could safely be exempted without compromising security.

One day I recognize one of the passengers in line as Bob Kerrey, the former U.S. senator and presidential candidate who, it is widely known, lost part of his leg in the Vietnam War. When I try to point him out to a fellow screener who’s manning the next lane, she says, “Where’s John Kerry?” and tries vainly to spot the better-known Massachusetts senator amid the crowd. When Bob Kerrey sets off the metal detector, he is shunted off to the pen. Eventually, a male screener shows up to escort him for additional screening: He is wanded and patted down, and his shoes and prosthesis are tested for explosives.

As it happened, this was to be my last celebrity experience on the job. At the end of my shift, I walk to the operations center and formally resign. My short but enlightening career with the TSA is over.

I had hoped that stepping into a job on the other side of the metal detector would provide me with insights impossible to gain any other way. It did. Above all, I was left to conclude that the screeners have become the scapegoats for failures throughout the system.

Shortly after I resigned, I attended, as a journalist, a TSA media briefing on the new campaign to reduce confusion over the liquids rules. The TSA officials at the event proclaimed that all was well and passengers were “getting it,” and glossed over the confusion and inefficiency that I had experienced on a daily basis. Within days, a former colleague at the checkpoint called to tell me that a passenger had attacked another of my old co-workers: Apparently fed up with the checkpoint protocol, the woman threw her shoes, which landed in the screener’s face like two fastballs. Although questioned by police, the passenger was ultimately released; the airline even delayed the flight for her as a courtesy.

This incident perfectly illustrates how the abuse and hostility that screeners face every day, combined with lack of support from the TSA and law enforcement, leads to flagging morale and perhaps even poor performance. Part of the problem stems from the fact that screeners are beholden to three masters: the TSA, the public, and—unknown to most passengers—the airlines, which still manage the pre-screening process and, at many airports, control the entrance to the checkpoint where I.D.s are scrutinized. The airlines’ presence is also felt elsewhere: Screeners I met who scan checked bags for explosives often complained to me about pressure from airline managers to rush bags onto the plane to avoid delays. As one screener on my old shift put it: “People don’t understand that we’re getting it from all sides—the TSA management, the airlines, and the public, who see that they can abuse us and get away with it.” Lack of support from superiors also undermines screeners’ morale, but given the fact that the TSA has had four chiefs in almost as many years, the superiors may have morale issues of their own.

And what of the notion that screeners are incompetent—an idea fueled with distressing regularity by leaked reports about TSA personnel missing contraband carried by undercover testers? According to Cathleen Berrick, director of homeland security for the Government Accountability Office, the investigative arm of Congress, the truth is that these tests are far more difficult than those given to screeners before 9/11. The high failure rate is also due in large part to understaffing and the outdated equipment many screeners are forced to work with.

Gale Rossides, a senior TSA official who helped start the screener hiring and training program right after 9/11, concedes that morale is a problem and holds the media partly responsible. “We need to get the word out,” she says, “to talk about the heroes.” But she also acknowledges that congressional budget cuts are hampering the TSA in crucial ways, including forcing the agency to turn the job of document checker over to the airlines at many larger facilities. The TSA should take over this position, she says, because “it would close a vulnerability if you had a screener trained in behavior detection who could converse with passengers while examining their travel documents. It would give us an added layer of security, an extra set of eyes.”

That approach might go a long way toward altering the dim view many experts have of the present setup. “Our checkpoints are designed to catch the sloppy and the stupid,” says technology consultant Bruce Schneier. Real terrorists, he contends, are too patient and clever to be caught by such artless routines as a liquids ban. Whether or not Schneier is correct, it’s hard to argue with his assertion that the ultimate solution will be found in technology such as the sophisticated 3-D X-ray machines and explosives sniffers that are in place at only a handful of airports. These will take some of the pressure off TSA employees and will vastly improve the accuracy of the screening process.

My time as a screener also highlighted the urgent need to reduce the number of passengers deemed a threat. For years, the TSA has been promising to come up with a more intelligent way to identify those who merit secondary screening—but the no-fly and watch lists remain scandalously out of date. (I personally encountered fliers who have the same very common name as someone on the watch list and who are selected for additional screening every time they fly.) The private-sector registered-traveler program that was expanded late last year may be a start. And since it’s voluntary, it has excited less outrage from civil rights groups than the more sweeping proposal to pre-screen all fliers. In charging people a hundred dollars for the right to submit to a background check that allows them to speed through security with a biometric I.D., the program is rightfully criticized as elitist.

Simply creating this privileged class of traveler, however, might fire up the rest of the flying public: As they struggle out of their shoes and coats, they would see that the technology exists to make the process far more efficient but that the government is not willing to pay for it. Maybe then the blame can start to shift from the screeners to Congress, where it belongs.

As technology begins to solve the current problems, just how essential to aviation security will TSA personnel ultimately be? Very—just not as much at the checkpoint as they are today. Schneier and fellow critics make the eminently sensible argument that if we were to divert just a small fraction of the TSA’s four-billion-dollar annual budget into intelligence gathering and basic gumshoe work (as the Israelis and many Western European nations do), we’d be far better off.

The good news is that it’s already beginning to happen. In late January, I learned that one of my supervisors, a former police officer, had been chosen to be part of a crack unit of newly minted “behavior-detection officers,” who will patrol airport concourses and lobbies to look for suspicious people rather than suspicious things. This, in essence, is the kind of old-fashioned detective work that snared the would-be London bombers last August. It works. I hope it will soon be part of a smarter aviation security system for U.S. air travelers, who deserve it every bit as much.

Ways to Speed Through Security Checkpoints

DON’T tell a screener that you are about to miss your flight (it won’t win you any sympathy and could even arouse suspicion).

DON’T wear clothing with metallic objects such as buckles.

DON’T wear lots of jewelry or hairpins that can’t be easily removed.

DON’T say you “forgot” you have liquids in your bag.

DON’T try to jam everything into one bin in a misguided effort to be helpful—it’s much harder to screen.

DON’T accuse screeners of theft: Once you’re certain an item is missing, speak to a supervisor.

DON’T tell screeners “it only comes in this size” or “it’s almost empty” when asked to surrender containers of liquid larger than three ounces.

DON’T tell them how much you spent on the toiletries—it won’t make any difference if they’re the wrong size.

DON’T block traffic by repacking your belongings on the conveyor belt.

DO wear easily removable shoes.

DO keep your boarding pass in hand.

DO take the plastic bag holding liquids out of your carry-on before putting it through the X-ray machine.

DO lay your bag on its side (the upright position is much harder to “read” and may trigger a rescreening).

DO put items through the X-ray machine only when you are ready to walk through the metal detector. This minimizes the time you’re separated from your belongings.

DO make sure that you have all items before you leave the checkpoint.

By Chris Greenwood, Crime Reporter
UPDATED: 09:54 GMT, 12 December 2011

Police may be given a laser weapon that could repel rioters with a blinding wall of light.

The shoulder-mounted device, which resembles a rifle, temporarily impairs the vision of anyone looking towards it.

Developed by a former Royal Marine commando, the £25,000 laser can dazzle and incapacitate targets up to 1,640ft away by creating a 13ft wall of light.

James Bond-style: The SMU 100 temporarily impairs the vision of anyone looking towards its source with a four metre wall of light

Government scientists have been impressed by initial trials and are preparing to ask police to test it as potential weapon in a growing armoury of equipment aimed at preventing a repeat of the August riots.

The Home Office said it had to be tested further and guidelines drawn up for its use.

Paul Kerr, of Photonic Security Systems, the UK-based firm  behind it, said the effect was like looking into a low sun on a bright winter day. He added: ‘It is horrible. It makes you look away.

‘The system would give police an intimidating visual deterrent. If you can’t  look at something you can’t attack it.

‘If police spot someone trying to do something untoward, painting them with this would certainly make them think twice about it.’

Developed by a former Royal Marine commando, the £25,000 laser resembles a rifle and can dazzle and incapacitate targets up to 500m away.

Set for approval: Government scientists have been impressed by initial tests and a preparing to ask one force to trial its use

It creates a wall of light up to four metres wide and comes with an infrared  scope to spot looters in poor visibility.

Those behind the invention believe it has many uses, from deterring rioters to  aiding high-risk hostage rescues.

The Home Office has been considering new forms of non-lethal equipment since a  wave of looting and arson rocked the country.

The Metropolitan Police is considering buying three water canon at a cost of up to £4million but senior officers remain divided over how effective they would  be.

The force is also increasing the number of officers trained to fire plastic  bullets and has warned they could be used.

Fighting crime: Riot police taking charge in Tottenham, north London during the August riots

It has already deployed an imposing new portable metal fence in Whitehall  during a recent anti-cuts demonstration.

The trailer-mounted fence, complete with spy-holes and police signs, was  donated by the Government last year and is similar to those used in European  cities.

A Home Office spokesman said the technology must be tested to ensure it does  not cause any permanent ill effects and guidelines drawn up for its use.

He added: ‘Laser dazzle technology is one we have recognised as holding some  merit.

‘However, prior to any police deployment a number of things need to be done to  assess the technology’s suitability.’ 

Deterring another incident: Police are looking at ways to prevent riots happening again (hooded youths in Tottenham pictured)

Breaking the Chains of Debt by D’Arcy Craig-Milligan

Ask anyone to name the largest private company in the world and you’ll probably be surprised at the variety of answers you will receive.  Some will stumble over the word ‘private’ and go on to name public companies like Exxon, General Motors, Wal-Mart, Microsoft, or Halliburton. Others, knowing that a privately held company is one whose shares are not quoted on the Stock Market may name Bechtel, Cargill, Carlyle or Parsons. If they have joined up all the dots and understand that it’s Money Power that now writes the global agenda they will come up with Rothschild/Rockefeller/Morgan, Schiff, Kuhn Loeb, Warburg, Lehman, Salomon, Goldman, Sachs or Lazards. The majority, however, will probably shrug and wait for you to provide the answer, which is (ding!) none of the above.

Fortune 500 shows the largest publicly-quoted company as Wal-Mart with revenue of around $300 billion in 2004. Forbe’s list of the top 200 privately-owned companies in 2002 shows Cargill as having the largest turnover. They sell agricultural and industrial products in 61 different countries, with almost $60 billion in revenue.

No mention is made, however, of the DTCC (Depository Trust and Clearing Corporation), a company with shares closely held by private banks whose turnover in 2004 surpassed an almost unbelievable quadrillion (a million billion) dollars! It’s a figure so staggering (the Gross National Product of the entire world is only $40 trillion!) that it deserves to be spelled out:

$1,000,000,000,000,000

Any kind of detailed breakdown of this turnover figure is a closely guarded secret but DTCC’s 2002 Annual Accounts highlights showed that of the $917 trillion dollars in DTCC transactions that year, $540 trillion were government securities, representing massive interest-bearing debts incurred at taxpayers’ expense by federal, provincial/state and municipal governments.

In 1999, DTCC’s first year of operation (see DTCC Time Line below), it turned over an astonishing $70 trillion. In 2000 this was doubled to $140 trillion and in 2001 the value of money market and securities settled, foreign exchange dealings handled and mutual funds processed amounted to more than $360 trillion! By 2002 DTCC’s clearance and settlement processes were turning over $10 trillion every three days – an amount equal to the entire Gross National Product of the United States. That’s every three days!

The above figures are far beyond the comprehension of most mortals (it would take 32 million years to count to a quadrillion from zero, one second at a time) but by 2006, the growing diversity of financial services and the increasingly centralized nature of global finance will have pushed DTCC’s projected turnover to well beyond $1.5 quadrillion. It will be made up almost entirely of electronic debt-money produced by private banks at virtually no cost but lent out at compounding interest rates – or usury.

That would be enough money to cover the world’s entire land mass of 57 million square miles with $100 bills, if such physical money actually existed. In reality, it’s little more than a ‘blip-on-a-chip’ in the world’s greatest electronic gambling casino, but it’s clear that there’s no shortage of ‘money’ in the system.

WHO AND WHAT ARE DTCC?  more information…

DTCC’s official raison d’être is to provide clearance, settlement and information services for equities, corporate and municipal bonds, government and mortgage-backed securities and over-the-counter credit derivatives. Its depository provides custody and asset servicing for more than two million securities from the United States and 100 other countries and territories. In addition, DTCC is the leading processor of mutual funds and insurance transactions, linking funds and carriers with their distribution networks worldwide.

In simple terms, DTCC’s primary goal was to establish centralized global control over every conceivable financial service. But the international bankers’ credo is that money must never be allowed to sit idle.

There’s now evidence that world depository members of DTCC, like Canada’s CDS (Canadian Depository Securities), are collateralising funds to acquire major interests in a broad spectrum of industrial, commercial and natural resource companies from Australia and Peru to Sweden and Africa. (Equinox Minerals Ltd of Australia is a model operation involving CDS, their largest shareholder in July of 2004). It’s this bottomless purse that’s driving the global acquisition of public companies such as national airlines, railways, oil companies and telecommunication and postal services, under the clever guise of “privatisation”.

It began innocently enough. If you’ve ever borrowed money for a mortgage or car loan, arranged an insurance policy, negotiated a line of credit– or if you’ve invested in stocks, bonds, derivatives, commodities, futures, swaps or any one of an  infinite range of financial ‘instruments’ – you’ll know that there are always documents involved.

In the late 60s, with the arrival of our casino economy, the paper chaos became so severe that it threatened to sink the industry. The DTC was formed to “eliminate the movement of physical securities on Wall Street”. This was achieved by first, re-placing physical certificates with electronic “book-entries” (known in the trade as “dematerialising”) and second, by centralizing their storage. Finally, through a process called “netting”, all trades in a single security could be netted down to one obligation daily. Instead of tens of thousands of cheques being written hourly, a single net money figure was paid to or received for a bank’s, broker’s or other intermediary’s entire day’s trading. As a result, as much as 97% of all obligations were ‘netted out’ of the system and by 2002 required no exchange of payment with the clearing corporation.

The process of monetary control has a long history but in the past 40 years privately owned (‘merchant’) bankers have established an unparalleled “network of connectivity” between banks, broker/dealers, mutual funds, major insurance carriers, financial intermediaries and every level of government both domestic and foreign. How pervasive is their involvement? Well, when DTCC decided to promote first mutual funds and then ‘derivatives’ these were ‘hyped’ by every brokerage firm around the world and their subsequent poor performance destroyed millions of people’s savings while making billions for the “insiders”. When in 2003 DTCC launched an aggressive promotion for life insurance we were deluged with TV ads and promotions that continue unabated to this day, to the immense profit of the “merchants of fear”. Today, many a badly needed project fails to launch simply because the exorbitant cost of insurance makes it non-viable.

By 2002 DTCC’s private bankers were fully engaged in taking over foreign investment services and their Mission Statement predicted that they would by the end of 2005 become “the provider of choice world-wide”.  With more than 100 foreign nations from Argentina and Australia to Taiwan and the UK now under their ‘umbrella’ (including two in China), who can doubt they achieved their goal?

CANADIAN DEPOSITORY FOR SECURITIES LTD (CDS) – THE CANADIAN LINK

CDS Annual Report 2004

CDS is described as Canada’s “national securities depository, clearance and settlement hub”. As a private corporation, CDS is not required to comply with the reporting and governance requirements imposed on public companies. As a result, statistics from CDS – whose shares, like DTCC’s, are closely held by private banks and investment companies - are sketchy at best and allow no direct comparison with DTCC “due to differences in systems and processes”.

We do know that of the 62 million CDS private trades in 2004, 48 million transactions (77%) were domestic - with an estimated value of CDN$65 trillion. The dollar value of the 14 million balance in ”cross-border” US transactions (say, 20% of total transactions) is not revealed but by extrapolation would be close to CDN$20 trillion, for a private trade total of roughly CDN$85 trillion!

No detailed figures are available from CDS concerning Canadian government securities (municipal, provincial or federal) but The Public Accounts of Canada show that in 2004 the federal government’s accumulated debt exceeded  $500 billion, (‘reduced’ by creative accounting, the ‘unloading’ of Crown Corporations at fire-sale prices and the ill-publicised sales of our national gold reserves). If we add to that the province’s debts of more than $250 billion and municipal debts of about $65 billion, Canada’s all-government debt stands at $860 billion; about $835 billion (97%) of that raised on the bond markets of Canada and the US. And none of it repayable under our present debt-money system!

The total value of Canadian securities traded through DTCC in 2004 – both private and government – was therefore in the region of a staggering $86 trillion ($86,000,000,000,000); allowing for two trades in each transaction, one in and one out. That amounts to a realistic 8.6% of DTCC’s global business.

SO WHERE HAS ALL OUR MONEY GONE?

We live in a world of endless bounty if we harvest the planet’s resources intelligently. Our raw materials are provided by nature, essentially free of charge. We have the knowledge, skills, wisdom and the technology to sustain our environment and ensure everyone on the planet a good life. Yet in recent years, millions of the world’s people have lost all their savings. Billions work hard but live lives of quiet desperation, close to poverty whilst living amidst plenty. Major corporations in Canada, the US and Europe are going bankrupt, closing plants and pushing workers into unemployment as they export jobs, skills and profits to places like China, South Korea and Indonesia. Students, seniors, homeowners, businesses and corporations have gone bankrupt by the tens of thousands and social disorder is on the rise.

Governments, caught up in a “race to the bottom” have lied to us, cut services, raised taxes and sold off public assets, including most of our nations’ gold reserves, at give-away prices. (Canada’s latest standing on the list of the World’s Official Gold holders is #79, just behind Bangladesh and ahead of Aruba! We used to be in the top six)

They have allowed drinking water to become a profit-laden ‘commodity’ and given power over genetic engineering – the very building blocks of life – to the dark forces that now control our finances and our future! In fact, the major ills of our time; from environmental pollution and the escalating Iraqi War to the criminalization of dissent and the pharmaceutical drugging and ‘dumbing down’ of our children find their roots in the machinations of Money Power.

The global agenda is now being written not by our elected politicians, but by the private moneylenders represented by the IMF, World Bank, Bank for International Settlements and the NGOs they have spawned such as the Bilderbergers, Trilateral Commission, the CFR, the WTO and a host of others.

Since the early 60’s monetary reformers have been asking the question, “If every nation on the planet is in deep and un-repayable debt at the same time, where is all the money?” Simple logic dictates that it must be within the banking industry itself, but only now are we beginning to realise fully how the game is played and the extent to which our hard-earned assets, built up over many generations, have been hijacked by the money lenders.

FTT (FINANCIAL TRANSACTION TAX) —MOVING TOWARD A SIMPLE SOLUTION

more information…

Taxes were originally designed to provide governments with the funds they needed to ‘run the country’. Today, Revenue Agencies collect taxes largely to guarantee repayment schedules for accumulated public debt owed to private banks.  In common with other nations, the $36 billion spent on debt charges by Ottawa is by far the largest of all our federal government’s expenditures. The tragic irony is that this debt is made up almost entirely of electronic money created by the moneylenders, unconstitutionally, at virtually no cost.

Like a desperate debtor trying to borrow from the last credit card of a large collection that has otherwise been maxed out, our gross national debt is realistically un-repayable, yet our governments have mortgaged our and our children’s assets while following a policy of ‘sell-off, borrow, tax and spend’.

Not just a Tobin-type Foreign Exchange Tax (FET), but a simple and genuine .1% Financial Transaction Tax on every financial transaction would, in our debt-laden nation, provide all the funds necessary to revitalise our communities and restore our national economy. As a single-page piece of legislation in “non-legalese”, allowing no exceptions and no loopholes, it could eventually make redundant all other forms of taxation!

Who better equipped than the banks themselves to gather a simple Financial Transaction Tax (FTT) for remittance directly to our nation’s Treasury under open public (and CRA) scrutiny? Far less complex than current tax structures, the sophisticated technology presently being used by the banking and financial industries is well capable of handling this simple process automatically with each banking transaction. The ability to distribute these funds to communities and provinces would become an important part of our provincial and federal Finance Ministers’ mandate.

At .1% percent the proposed FTT is a tiny percentage compared to current sales taxes or corporate/personal income tax levels but, given the sheer size of the source, could yield the Canadian treasury an estimated $86 billion a year on security transactions alone. Add to that the total annual .1% FTT revenue from more than 1 billion credit card transactions, 82 million debit card transactions and 200 million on-line banking transactions for a projected gross FTT revenue approaching $100 billion and it’s possible to see how, within one year, personal and corporate income taxes, GST and all provincial sales taxes could begin to be incrementally reduced and eventually totally replaced by FTT revenue.

(See Milligan Tax)

$2 to $3 billion would be saved by reducing the size of the Canada Revenue Agency (the CRA), switching their focus to ensuring that banks and financial houses meet their legal obligations and curtailing the harassment tactics tax agencies employ to browbeat those least able to pay while the super-wealthy remain tax-free. Those speculating on the stock and bonds, derivatives, swaps and commodity futures markets (97% of participants) should simply see it for what it is—a gambling tax! Even those few who can claim genuine participation in these markets would come to appreciate the overall benefits of introducing FTT while moving toward total elimination of all other forms of taxation.

It is not the final solution, but it would stop the tragic haemorrhaging of our nation’s wealth until the right to create Canada’s money is removed from private banks with their built-in system of usury and returned to our elected government, where it constitutionally belongs.

Destiny is calling us to launch a Golden Era – an age of enlightenment like none other in the annals of human history. But first we must unshackle ourselves and our children from the chains of debt bondage!

NOTE:

Directly relevant to this study, it is important to note that world-wide “privatisation” is facilitating the process of totally centralised global control - and the world’s drinking water and gold have become major targets by supra-national companies like:

Suez, Ondeo, Vivendi, Thames Water and US Water (http://www.suez.com/groupe/english/histoire/index.php and Newmont Mining and Barrick Gold (http://www.gold.org/value/stats/statistics/gold_reserve/index.html. )

The financial paperwork for these daisy-chain connections is facilitated by private companies like CDS/DTCC.

DTCC TIME LINE—

BUILDING A QUADRILLION-DOLLAR BUSINESS

1973

DTC is formed to solve Wall Street’s “paper crisis” that resulted from a massive increase in speculative investments in the stock market.  Centralised electronic records replace paper securities.

1974    

Number of trade obligations requiring financial settlement are greatly reduced by ‘netting’.

1975

Only American Depository Receipts that “represent” foreign investments are now DTC-eligible.

1976/7

National Securities Clearing Corporation (NSCC) is incorporated. Its first move is to ‘absorb’ the New York Stock Exchange and AMEX.

1979

DTC links its computer system directly to every investment (private) bank

1980

NSCC begins processing Municipal bond trades

1982

The Boston Stock Exchange is taken over. DTC distributes first paperless Book-Entry-Only municipal bond issues, a major step in removing all paper records. .

1984

More than 1,000 municipalities join the NSCC system. A link is established with the publicity-shy Canadian Depository for Securities as the model for future cross-border clearance and settlement mechanisms

1986

The Government Securities Clearing Corporation (GSCC) is formed to facilitate settlement of US government securities. NSCC fully automates its Mutual Fund processing system and world-wide mutual fund promotions take off.

1987

DTC takes over the Pacific Stock Exchange.

1988

A program is introduced for clearing and settling all ‘cross-border’ trades. DTC can now go global!

1989

GSCC introduces an accelerated settlement system for all US Government securities

1990

DTC enters the fast-growing market in ‘commercial paper’ and takes on custody of all ‘privately placed foreign securities’ for large US institutional buyers.

1991

Payments between mutual funds and their distributors are automated.

1993

GSCC celebrates its first daily netting of $1 trillion. Transactions in all municipal and commercial bonds are fully automated. 85% of all new US Treasury debt issues are now processed by GSC.

1995

NSCC absorbs Chicago Stock Exchange (Commodity markets and Futures) and moves all operations to New York. With wide promotion ‘Commodity Futures’ become another huge gambling casino.

1997

DTC and NSCC take over the Philadelphia Stock Exchange, the last remaining independent. Insurance Services are launched to begin monopolising annuities market and link insurance brokers/dealers and banks.

1998

EMCC (Emerging Markets) incorporated to ‘facilitate control of international ‘sovereign debt instruments’.

1999

DTCC incorporated to merge DTC and NSCC and insurance industry is “revved-up” by full automation

2000

GSCC links cash markets and futures markets for US Treasury Securities, through privately controlled New York Clearing Corporation

2001

DTCC partners with Thomson Financial to create Omgeo a “global joint venture” with 6,000 customers world-wide - and converts to decimal pricing to prepare for future EU and APEC mergers and acquisitions.

2002

DTCC absorbs GSCC, MBSC and EMCC. Omgeo launches first centralised cross-border service for institutional securities world-wide.

2003

DTCC re-engineers the sale and processing of Life Insurance policies and annuities, launching a world-wide marketing campaign modelled on the success of mutual fund and derivatives markets in the mid-80s.

2004

DTCC turnover surpasses one quadrillion dollars and their Annual Report defines a quintillion, sextillion and septillion, presumably in anticipation of new ‘goals’.

2005-2006

DTCC achieves its goal of becoming “the institution of choice (?) world-wide” for the clearing, settling and electronic storage of all financial and investment instruments.

2006-2012

The prospect of a global economic collapse creates a groundswell of public outrage until Financial Transaction Tax legislation is passed, requiring banks to collect and remit to the nation’s treasury .1% of every transaction. By stages all other taxes are revoked, beginning with a 30% cut in personal income tax. Starting at the municipal level interest-free Constitutional money, issued by our publicly-owned Bank of Canada, incrementally and judiciously replaces our private debt-money system

Wednesday, June 10, 2009

Posted by Tyler Durden at 12:35 PM

CDS and option traders love to hate and hate to love the Depository Trust & Clearing Corporation (DTCC). But few aside from those who trade derivatives over-the-counter care about the DTCC. Here is a reason why you should: “Last year DTCC settled $1.88 quadrillion in securities transactions across multiple asset classes. We essentially turnover the equivalent of the U.S. GDP every three days.”

Below I present DTCC’s full testimony before the House Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises titled “Effective Regulation of the Over-the-Counter Derivatives Markets.”

Also if you have never heard of DTCC before you are excused. Taken from the testimony:

Now, many of you may not have heard of DTCC before. That’s purposeful. We have traditionally kept a low profile, given the critical nature of the role we play in U.S. financial markets.

DTCC’s depository is the largest securities depository in the world, providing custody and asset servicing for 3.5 million securities issues from the United States and 110 other countries and territories valued at $30 trillion.

Additionally if you care as to who, if anyone, has insight into the dealings of the DTCC:

We are regulated by the SEC, the Federal Reserve Board of Governors and the New York State Banking Department for many of our activities.

Oh, the same Federal Reserve that is a dead end in terms of accountability? How convenient. (We won’t even touch on the SEC’s effectiveness as a regulator, and have never even heard of the last guys). Wouldn’t make sense to have someone actually transparent regulating this most critical of financial enterprises, would it.

So what does the DTCC do:

At its core, DTCC is a huge data processing business, involving the safe transfer of securities ownership and settlement of trillions of dollars in trade obligations, under tight deadlines every day. At the same time, DTCC’s primary mission is to protect and mitigate risk for its members and to safeguard the integrity of the U.S. financial system. Mitigating risk means we not only have the capacity to handle unpredictable spikes in trading volume, but that we have the business continuity and resiliency to withstand both the “unthinkable” –and even the “unknowable.”

But according to Obama, Bernanke and Geithner the unthinkable, and even the unknowable, will never show their faces again? Am I wrong? But, I guess the DTCC is clutch - here is why:

I’d submit to you Mr. Chairman, and Members of the Subcommittee, that had DTCC not had the foresight to create this Trade Information Warehouse and load the Warehouse with all these records of CDS trades in 2007, we might still be sitting here today in 2009 trying to sort out the total exposure of trading obligations following the Lehman bankruptcy, i.e., who traded with whom, at what point in time and at what price?

Oh yeah right, the same database that one is able to download and play with only if one has an advanced degree in computer hacking.

Zero Hedge will write much more on DTCC in the coming days. However, for now it makes sense to get acquainted with this organization: after all, in their own words, without them, not even Goldman Sachs would likely exist. Much more to come.

By ROBERT MCCLURE, SEATTLE POST-INTELLIGENCER REPORTER

Updated 10:00 p.m., Tuesday, June 12, 2001

VANCOUVER, B.C. — A miner’s headlamp, a 1930s stock ticker and a picture of oil oozing from the ground in 1914 are among the memorabilia in the reception room of what was known for 93 years as the Vancouver Stock Exchange.

But perhaps the most telling exhibit is a chunk of shiny rock about the size of a cantaloupe: fool’s gold, the worthless pyrite confused with the real thing by early prospectors.

For years, the Vancouver Stock Exchange served as the financing nucleus for so-called junior mining companies. More often than not, these start-up operations raised a lot of other people’s money, spent it on unsuccessful exploration and then slipped into oblivion.

The small exploration firms commonly financed in Vancouver are considered crucial by the hard-rock mining industry because they locate many of the hard-to-find deposits that pan out.

But critics say the juniors, usually selling stock for less than $1 a share, sometimes allow fly-by-night operators to raise just enough capital to open mines that aren’t economically viable.

And when the venture collapses, the junior lacks the money to repair environmental damage — leaving American taxpayers to pay its bill.

A gold-rush mentality permeates these companies. Adrian du Plessis, a retired corporate investigator and business consultant who looked at the stock exchange intensively in the 1980s and 1990s, wrote that they are part of a “corporate carnival … a financial freak show of sorts — on occasion representing nothing better than institutionalized fraud.”

Forbes magazine in 1989 labeled the Vancouver exchange the “scam capital of the world.” Another commentator called it the financial world’s equivalent of professional wrestling.

Often, critics say, entrepreneurs form a mining company or take over a defunct one with nearly worthless stock. After some drilling to test for the presence of minerals, they promote the stock. They may even open a mine.

But mineral production is a secondary concern, they say. The goal, at this point, is to raise the value of the stock by bringing in new investors.

“With these one-mine, fly-by-night companies, you make money off the share price, not what’s in the ground,” said Tom Bartek, a Toronto minerals economist who has worked for the Canadian government, Indian tribes and environmental groups. “You mine the shareholders. Finding a deposit is extremely rare.”

Criticism about stock swindles prompted cleanup of the Vancouver exchange in the late 1990s. In 1999, the Vancouver exchange merged with the Alberta Stock Exchange — the very place, according to du Plessis and even some staff members of the new exchange, where some of the companies fleeing stricter new Vancouver rules ended up.

Now they have teamed up with two other small exchanges and are known as the Canadian Venture Exchange, or CDNX.

“Nothing has changed,” du Plessis said. “It’s all the same crap. … In a way, the Vancouver Stock Exchange today has done what most of its scam companies have done when they get discredited. It’s changed its name and is portraying itself as a new being.”

Bill Hess, president of the CDNX, has characterized it as “a safe place to make risky investments.”

Investments in small, emerging companies like those found on the CDNX — which include about 2,600 junior companies in mining, the Internet, finance, energy and other endeavors — are inherently a dicey affair, CDNX officials say.

“A lot of people say they got fleeced, but really, they lost on a risky investment,” said Angela Huxham, vice president of market regulation for the CDNX. “There’s a difference between a risky investment and a stock fraud.”

CDNX officials say they watch carefully to make sure companies are not inappropriately hyping themselves. If they discover a serious case of over-promotion, exchange officials say, they can present the offending company with a choice: Fire the person involved, or be kicked off the exchange.

Only a handful of firms have been involuntarily delisted for any reason since the CDNX was formed in 1999, records show. Officials of the exchange would not say how many people they have forced to resign.

Exchange officials say they also can refer cases to Canada’s province-level equivalent of the U.S. Securities and Exchange Commission, but won’t disclose how often this happens.

“We have been able to create the best-regulated junior market that we know of anywhere,” Huxham said. “We have a whole new beginning here. … People should never think there are not any abuses. (But) I think we have a pretty good track record with our companies.”

Defenders of the mining industry acknowledge that juniors can be get-rich-quick ventures that attract people who lose everything.

Jack McOuat, a principal in the Toronto consulting geological firm Watts, Griffis & McOuat Ltd., recalls an aunt of his who bought junior mining stocks rather than gamble on the lottery or the horse races.

“The problem with the horse race is it’s over in two minutes, whereas a junior mining stock, you can read about it every day in the paper,” he said.

McOuat and others trace the rise of Canada as the juniors’ finance center to the establishment of the U.S. Securities and Exchange Commission in 1934. The SEC requires detailed financial reporting for publicly traded companies.

In Canada, each province has its own regulatory apparatus, and critics say the B.C. and Alberta securities commissions are overwhelmed by the sheer volume of penny stocks they must regulate.

Over the years, the Western United States has proved to be a fruitful place for Vancouver-financed juniors to prospect, because the General Mining Law of 1872 leaves vast tracts of public lands open for exploration.

Victor Lazarovici, senior base-metals analyst for Nesbitt Burns, a major Canadian investment firm, acknowledged that junior companies, including mining firms, “tend to attract people who make money watching stock go up rather than by providing products.”

“The get-rich-quick, high-risk/high-reward nature of hard-rock mining is what attracts that speculative mind-set,” he said.

Occasionally, one of these juniors hits it big.

Take, for example, Barrick Gold Corp. The founder, a Hungarian war refugee who immigrated to Canada, first tried his hand at South Pacific hotels and a company that produced radios that looked nice enough to be furniture, according to a Barrick spokesman.

When that didn’t work out, Peter Munk got into the gold business. His team took an interest in a Nevada property that had been explored by a mom-and-pop company, invested $62 million in it and produced what became an astounding success, one that miners talk about in reverential tones.

About 18.6 million ounces of gold has been mined there since, providing a cash flow in 2000 alone of $315 million.

The company has been able to take over 1,945 acres of onetime federal land with a gold deposit worth billions for less than $10,000 because of the generous terms of the 1872 Mining Law.

But Barrick’s success stands in contrast to the hundreds of juniors that have come and gone — and three that became environmental disasters: Colorado’s Summitville mine, South Dakota’s Brohm mine and Montana’s Zortman-Landusky Mine.

The successful juniors typically sell out to or partner with a major company to develop a mine. An example is the Crown Jewel mine proposed at Buckhorn Mountain in north-central Washington, which is a joint venture between a subsidiary of the giant Newmont Mining Corp. of Denver and a small Canadian firm, Crown Resources Corp.

“The junior mining company plays a major and important role in the mining industry food chain,” said Laura Skaer, director of the Spokane-based Northwest Mining Association.

Her explanation for why so many are based in Canada? “The Canadian investor seems to be willing to take a greater risk-reward … whereas Wall Street is more conservative.”

Alan Young of the Environmental Mining Council of British Columbia, an environmental group, puts it differently.

“The Vancouver Stock Exchange is notorious the world over for the look-the-other-way approach of allowing venture capital to be raised for mining projects,” he said.

“The Vancouver Stock Exchange is to mining capital what Panama is to shipping — it’s a place where you can always get a flag.”

In an oddly prescient turn of events, yesterday we penned a post titled “Has The Imploding European Shadow Banking System Forced The Bundesbank To Prepare For Plan B?” in which we explained how it was not only the repo market, but the far broader and massively unregulated shadow banking system in Europe that was becoming thoroughly unhinged, and was manifesting itself in a complete “lock up in interbank liquidity” and which, we speculated, is pressuring the Bundesbank, which is well aware of what is going on behind the scenes, to slowly back away from what will soon be an “apocalyptic” event (not our words… read on). Why was this prescient? Because today, Reuters’ Christopher Elias has written the logical follow up analysis to our post, in which he explains in layman’s terms not only how but why the lock up has occurred and will get far more acute, but also why the MF Global bankruptcy, much more than merely a one-off instance of “repo-to-maturity” of sovereign bonds gone horribly wrong is a symptom of two things: i) the lax London-based unregulated and unsupervised system which has allowed such unprecedented, leveraged monsters as AIG, Lehman and now as it turns out MF Global, to flourish until they end up imploding and threatening the world’s entire financial system, and ii) an implicit construct embedded within the shadow banking model which permitted the heaping of leverage upon leverage upon leverage, probably more so than any structured finance product in the past (up to and including synthetic CDO cubeds), and certainly on par with the AIG cataclysm which saw $2.7 trillion of CDS notional sold with virtually zero margin. Simply said: when one truly digs in, MF Global exposes the 2011 equivalent of the 2008 AIG: virtually unlimited leverage via the shadow banking system, in which there are practically no hard assets backing the infinite layers of debt created above, and which when finally unwound, will create a cataclysmic collapse of all financial institutions, where every bank is daisy-chained to each other courtesy of multiple layers of “hypothecation, and re-hypothecation.” In fact, it is a link so sinister it touches every corner of modern finance up to and including such supposedly “stable” institutions as Jefferies, which as it turns out has spent weeks defending itself, however against all the wrong things,  and Canadian banks, which as it also turns out, defended themselves against Zero Hedge allegations they may well be the next shoes to drop, as being strong and vibrant (and in fact just announced soaring profits and bonuses), yet which have all the same if not far greater risk factors as MF Global. Yet nobody has called them out on it. Until now.

But first, a detour to London…

As readers will recall, the actual office that blew up the world the first time around, was not even based in the US. It was a small office located on the top floor of 1 Curzon Street in London’s Mayfair district, run by one Joe Cassano: the head of AIG Financial Products. The reason why this office of US-based AIG was in London, is so that Cassano could sell CDS as far away from the eye of Federal regulators as possible. Which he did. In fact he sold an unprecedented $2.7 trillion worth of CDS just before the firm collapsed due to one small glitch in the system - the assumption that home prices could go down as well as up. Yet the real question is why he sold so much CDS? The answer is simple - in a world of limited real assets, the only way to generate a practically limitless cash flow annuity would be to sell synthetic insurance on a virtually infinite amount of synthetic underlying. Which he did. Only when it came time to pay the claims, AIG blew up, forcing the government to bail it out, and set off the chain of events where we find ourselves now, where every day could be the developed world’s last if not for the ongoing backstops, guarantees and bailouts of the central banking regime. 

What is greatly ironic is that in the aftermath of the AIG collapse, the UK was shamed into admitting that it was its own loose, lax and unregulated system that allowed such unsupervised insanity to continue for as long as it did. As the Telegraph reminds us, “Conservative Party Treasury spokesman Philip Hammond called for a public inquiry into the FSA’s oversight of AIG Financial Products in Mayfair. “We must not allow London to become a bolthole for companies looking for a place to conduct questionable activities,” he said. “This sounds like a monumental cock-up by the FSA,” said Lib Dem shadow chancellor Vince Cable. “It is deeply ironic,” he added, that Brown was in Brussels last week calling for tougher global financial regulation just as the scandal over the FSA’s role in one of the key regulatory failures at the root of the global panic emerged as an international issue.” It is ironic because the trail in the MF Global collapse, where it is yet another infinitely leveragable product that once again comes to the fore, once again goes straight to that hub for “questionable activities” - London.

But before we explain why London is once again to blame for what was not only the immediate reason of the MF Global collapse, but could well precipitate the next global collapse, a quick look at rehypothecation.

As Reuters points out, it was not so much the act of creating “repos-to-maturity” that imperiled MF Global, but what is a secret gold mine for those privy to it - the process of re-hypothecation of collateral.

[h]ypothecation is when a borrower pledges collateral to secure a debt. The borrower retains ownership of the collateral but is “hypothetically” controlled by the creditor, who has a right to seize possession if the borrower defaults.

In the U.S., this legal right takes the form of a lien and in the UK generally in the form of a legal charge. A simple example of a hypothecation is a mortgage, in which a borrower legally owns the home, but the bank holds a right to take possession of the property if the borrower should default.

In investment banking, assets deposited with a broker will be hypothecated such that a broker may sell securities if an investor fails to keep up credit payments or if the securities drop in value and the investor fails to respond to a margin call (a request for more capital).

Re-hypothecation occurs when a bank or broker re-uses collateral posted by clients, such as hedge funds, to back the broker’s own trades and borrowings. The practice of re-hypothecation runs into the trillions of dollars and is perfectly legal. It is justified by brokers on the basis that it is a capital efficient way of financing their operations much to the chagrin of hedge funds.

So far so good, assuming there was regulation, and assuming if regulation failed, that the firms that blew up as a result of their greed would truly blow up, instead of being resurrected as TBTF zombies by a government in dire need of rent collection and lobby cash (because with or without regulation, if those who fail are not allowed to fail, then the whole point of capitalism is moot). But… there is always a snag.

Under the U.S. Federal Reserve Board’s Regulation T and SEC Rule 15c3-3, a prime broker may re-hypothecate assets to the value of 140% of the client’s liability to the prime broker. For example, assume a customer has deposited $500 in securities and has a debt deficit of $200, resulting in net equity of $300. The broker-dealer can re-hypothecate up to $280 (140 per cent. x $200) of these assets.

But in the UK, there is absolutely no statutory limit on the amount that can be re-hypothecated. In fact, brokers are free to re-hypothecate all and even more than the assets deposited by clients. Instead it is up to clients to negotiate a limit or prohibition on re-hypothecation. On the above example a UK broker could, and frequently would, re-hypothecate 100% of the pledged securities ($500).

This asymmetry of rules makes exploiting the more lax UK regime incredibly attractive to international brokerage firms such as MF Global or Lehman Brothers which can use European subsidiaries to create pools of funding for their U.S. operations, without the bother of complying with U.S. restrictions.

In fact, by 2007, re-hypothecation had grown so large that it accounted for half of the activity of the shadow banking system. Prior to Lehman Brothers collapse, the International Monetary Fund (IMF) calculated that U.S. banks were receiving $4 trillion worth of funding by re-hypothecation, much of which was sourced from the UK. With assets being re-hypothecated many times over (known as “churn”), the original collateral being used may have been as little as $1 trillion – a quarter of the financial footprint created through re-hypothecation.

So let’s see: a Prime Broker taking posted collateral, then using the same collateral as an instrument for hypothecation with a net haircut, then repeating the process again, and again… Ring a bell? If you said “fractional reserve lending” - ding ding ding. In essence what re-hypothecation, and subsequent levels thereof, especially once in the shadow banking realm, allows Prime Brokers is to become de facto banks only completely unregulated and using synthetic assets as collateral. Curiously enough it was earlier today that we also penned “ECB Confirms Shadow Banking System In Europe In Tatters” in which we explained that since ECB has to expand the eligible collateral it will accept, there is no real collateral left, meaning the re-hypothecation process in Europe has experienced terminal failure.  Yet the kicker is that the “safety haircut” only occurs in the US. Not in the UK. And therein lies the rub. In the UK, the epic failure of supervision has allowed banks to become de facto monsters of infinite shadow banking fractional reserve leverage - every bank’s wet dream! Naturally, Prime Brokers have known all about this which explains the quiet desire to conduct re-hypothecation out of London-based offices for every US-based (and Canadian) bank. Reuters explains:

Keen to get in on the action, U.S. prime brokers have been making judicious use of European subsidiaries. Because re-hypothecation is so profitable for prime brokers, many prime brokerage agreements provide for a U.S. client’s assets to be transferred to the prime broker’s UK subsidiary to circumvent U.S. rehypothecation rules.

Under subtle brokerage contractual provisions, U.S. investors can find that their assets vanish from the U.S. and appear instead in the UK, despite contact with an ostensibly American organisation.

Potentially as simple as having MF Global UK Limited, an English subsidiary, enter into a prime brokerage agreement with a customer, a U.S. based prime broker can immediately take advantage of the UK’s unrestricted re-hypothecation rules.

While we already mentioned AIG as an example of the lax UK-based regulatory regime, it is another failed bank that is perhaps the best example of levered failure but in the specific re-hypothecation context: Lehman Brothers itself.

This is exactly what Lehman Brothers did through Lehman Brothers International (Europe) (LBIE), an English subsidiary to which most U.S. hedge fund assets were transferred. Once transferred to the UK based company, assets were re-hypothecated many times over, meaning that when the debt carousel stopped, and Lehman Brothers collapsed, many U.S. funds found that their assets had simply vanished.

A prime broker need not even require that an investor (eg hedge fund) sign all agreements with a European subsidiary to take advantage of the loophole. In fact, in Lehman’s case many funds signed a prime brokerage agreement with Lehman Brothers Inc (a U.S. company) but margin-lending agreements and securities-lending agreements with LBIE in the UK (normally conducted under a Global Master Securities Lending Agreement).

These agreements permitted Lehman to transfer client assets between various affiliates without the fund’s express consent, despite the fact that the main agreement had been under U.S. law. As a result of these peripheral agreements, all or most of its clients’ assets found their way down to LBIE.

And now we get back to the topic at hand: MF Global, why and how it did precisely what Lehman did back then, why it did this in London, and why its failure is a symptom of something far more terrifying than merely investing money in collapsing PIIGS bonds.

MF Global’s Customer Agreement for trading in cash commodities, commodity futures, security futures, options, and forward contracts, securities, foreign futures and options and currencies includes the following clause:

     “7. Consent To Loan Or Pledge  You hereby grant us the right, in accordance with Applicable Law, to borrow, pledge, repledge, transfer, hypothecate, rehypothecate, loan, or invest any of the Collateral, including, without limitation, utilizing the Collateral to purchase or sell securities pursuant to repurchase agreements [repos] or reverse repurchase agreements with any party, in each case without notice to you, and we shall have no obligation to retain a like amount of similar Collateral in our possession and control.”

In its quarterly report, MF Global disclosed that by June 2011 it had repledged (re-hypothecated) $70 million, including securities received under resale agreements. With these transactions taking place off-balance sheet it is difficult to pin down the exact entity which was used to re-hypothecate such large sums of money but regulatory filings and letters from MF Global’s administrators contain some clues.

According to a letter from KPMG to MF Global clients, when MF Global collapsed, its UK subsidiary MF Global UK Limited had over 10,000 accounts. MF Global disclosed in March 2011 that it had significant credit risk from its European subsidiary from “counterparties with whom we place both our own funds or securities and those of our clients”.

It gets even worse when one considers that over the years the actual quality of good collateral declined, meaning worse and worse collateral was to be pledged in these potentially infinite recursive loops of shadow banking fractional reserve lending:

Despite the fact that there may only be a quarter of the collateral in the world to back these transactions, successive U.S. governments have softened the requirements for what can back a re-hypothecation transaction.

Beginning with Clinton-era liberalisation, rules were eased that had until 2000 limited the use of re-hypothecated funds to U.S. Treasury, state and municipal obligations. These rules were slowly cut away (from 2000-2005) so that customer money could be used to enter into repurchase agreements (repos), buy foreign bonds, money market funds and other assorted securities.

Hence, when MF Global conceived of its Eurozone repo ruse, client funds were waiting to be plundered for investment in AA rated European sovereign debt, despite the fact that many of its hedge fund clients may have been betting against the performance of those very same bonds.

At this point flashing red lights should be going though the head of anyone who lived through the AIG cataclysm: in effect the rehypothecation scenario affords the same amount of leverage, and potentially even less supervision that the CDS market. Said otherwise, the counteparty risk of daisy chaining defaults is on par with that in the case of AIG.

As well as collateral risk, re-hypothecation creates significant counterparty risk and its off-balance sheet treatment contains many hidden nasties. Even without circumventing U.S. limits on re-hypothecation, the off-balance sheet treatment means that the amount of leverage (gearing) and systemic risk created in the system by re-hypothecation is staggering.

Re-hypothecation transactions are off-balance sheet and are therefore unrestricted by balance sheet controls. Whereas on balance sheet transactions necessitate only appearing as an asset/liability on one bank’s balance sheet and not another, off-balance sheet transactions can, and frequently do, appear on multiple banks’ financial statements. What this creates is chains of counterparty risk, where multiple re-hypothecation borrowers use the same collateral over and over again. Essentially, it is a chain of debt obligations that is only as strong as its weakest link.

And the kicker:

With collateral being re-hypothecated to a factor of four (according to IMF estimates), the actual capital backing banks re-hypothecation transactions may be as little as 25%. This churning of collateral means that re-hypothecation transactions have been creating enormous amounts of liquidity, much of which has no real asset backing.

It turns out the next AIG was among us all along, only because it was hidden deep in the bowels of the unmentionable shadow banking system, out of sight (by definition) meant out of mind. Only it was not: and at last check there was $15 trillion in the shadow banking system in the US alone, where the daisy chaining of counteparty risk meant that any liquidity risk flare up would mean the AIG bankruptcy was not even a dress rehearsal for the grand finale.

But where does one look for the next AIG? Who would be stupid enough to disclose the fact that they have essentially the same risk on their off-balance sheet books as AIG had on its normal books? Once again, we turn to Reuters:

The lack of balance sheet recognition of re-hypothecation was noted in Jefferies’ recent 10Q (emphasis added):

    “Note 7. Collateralized Transactions
    We pledge securities in connection with repurchase agreements, securities lending agreements and other secured arrangements, including clearing arrangements. The pledge of our securities is in connection with our mortgage?backed securities, corporate bond, government and agency securities and equities businesses. Counterparties generally have the right to sell or repledge the collateral.Pledged securities that can be sold or repledged by the counterparty are included within Financial instruments owned and noted as Securities pledged on our Consolidated Statements of Financial Condition. We receive securities as collateral in connection with resale agreements, securities borrowings and customer margin loans. In many instances, we are permitted by contract or custom to rehypothecate securities received as collateral. These securities maybe used to secure repurchase agreements, enter into security lending or derivative transactions or cover short positions. At August 31, 2011 and November 30, 2010, the approximate fair value of securities received as collateral by us that may be sold or repledged was approximately $25.9 billion and $22.3 billion, respectively. At August 31, 2011 and November 30, 2010, a substantial portion of the securities received by us had been sold or repledged.

    We engage in securities for securities transactions in which we are the borrower of securities and provide other securities as collateral rather than cash. As no cash is provided under these types of transactions, we, as borrower, treat these as noncash transactions and do not recognize assets or liabilities on the Consolidated Statements of Financial Condition. The securities pledged as collateral under these transactions are included within the total amount of Financial instruments owned and noted as Securities pledged on our Consolidated Statements of Financial Condition.

According to Jefferies’ most recent Annual Report it had re-hypothecated $22.3 billion (in fair value) of assets in 2011 including government debt, asset backed securities, derivatives and corporate equity- that’s just $15 billion shy of Jefferies total on balance sheet assets of $37 billion.

Oh Jefferies, Jefferies, Jefferies. Barely did you manage to escape the gauntlet of accusation of untenable gross (if not net) sovereign exposure, that you will soon, potentially as early as tomorrow, have to defend your zany rehypothecation practices. One wonders: will Sean Egan downgrade you for this latest transgression as well? All the better for Leucadia though: one more million shares that Dick Handler can sell to Ian Cumming.

Yet Jefferies is just the beginning. It gets much, much worse.

With weak collateral rules and a level of leverage that would make Archimedes tremble, firms have been piling into re-hypothecation activity with startling abandon. A review of filings reveals a staggering level of activity in what may be the world’s largest ever credit bubble.

Engaging in hyper-hypothecation have been Goldman Sachs ($28.17 billion re-hypothecated in 2011), Canadian Imperial Bank of Commerce (re-pledged $72 billion in client assets), Royal Bank of Canada (re-pledged $53.8 billion of $126.7 billion available for re-pledging), Oppenheimer Holdings ($15.3 million), Credit Suisse (CHF 332 billion), Knight Capital Group ($1.17 billion),Interactive Brokers ($14.5 billion), Wells Fargo ($19.6 billion), JP Morgan($546.2 billion) and Morgan Stanley ($410 billion).

And people were wondering why looking through the balance sheet of Canadian banks revealed no alert signals. It is because all the exposure was off the books! Hundreds of billions of dollars worth. As for JPM and MS amounting to nearly a trillion in rehypothecation… well, we are confident the market will be delighted to start pricing that particular fat-tail risk as soon as tomorrow.

Yet it is Reuters’ conclusion that strikes home, and is identical to what we said last night about the liquidity lock up in Europe and what it means for the shadow banking system, although from the perspective of an inverted cause and effect:

The volume and level of re-hypothecation suggests a frightening alternative hypothesis for the current liquidity crisis being experienced by banks and for why regulators around the world decided to step in to prop up the markets recently. 

That’s precisely right: the shadow banking system, so aptly named because its death rattle can never be seen out in the open, is slowly dying. As noted yesterday. But lest we be accused of hyperventilating, this time we will leave a respected, non-fringe media to bring out the big adjective guns:

reports have been focused on how Eurozone default concerns were provoking fear in the markets and causing liquidity to dry up….Most have been focused on how a Eurozone default would result in huge losses in Eurozone bonds being felt across the world’s banks. However, re-hypothecation suggests an even greater fear. Considering that re-hypothecation may have increased the financial footprint of Eurozone bonds by at least four fold then a Eurozone sovereign default could be apocalyptic.

U.S. banks direct holding of sovereign debt is hardly negligible. According to the Bank for International Settlements (BIS), U.S. banks hold $181 billion in the sovereign debt of Greece, Ireland, Italy, Portugal and Spain. If we factor in off-balance sheet transactions such as re-hypothecations and repos, then the picture becomes frightening.

And there you have it: in this world where distraction and diversion often times is the only name of the game, while banks were pretending to have issues with their traditional liabilities, it was really the shadow liabilities where the true terrors were accumulating. Because in what has become a veritable daisy chain of linked shadow exposure, we are now back where we started with the AIG collapse, only this time the regime is decentralized, without the need for a focal, AIG-type center. What this means is that the collapse of the weakest link in the daisy-chain sets off a house of cards that eventually will crash even the biggest entity due to exponentially soaring counterparty risk: an escalation best comparable to an avalanche - where one simple snowflake can result in a deadly tsunami of snow that wipes out everything in its path. Only this time it is not something as innocuous as snow: it is the compounded effect of trillions and trillions of insolvent banks all collapsing at the same time, and wiping out the developed world and the associated 150 years of the welfare state as we know it.

In this light, it makes far more sense why, as we suggested yesterday, the sanest central bank in Europe, the German Bundesbank, is quietly making stealthy preparations to get the hell out of Dodge, as it realizes all too well, that the snowflake has arrived: MF Global’s bankruptcy has already set off a chain of events which not even all the world’s central banks can halt. Which is ironic for the Buba - what it is doing is “too little too late.” But at least it is taking proactive steps. For all the other central banks in the Eurozone, and soon the world, unfortunately the deer in headlights image is the only applicable one. And all because of unbridled greed, bribed and corrupt regulators sleeping at their job, and governments which encourage the TBTF modus operandi as the only fall back one, which in turn gave banks a carte blanche to take essentially unlimited risk.

We are all about to suffer the consequences of all three.

Wednesday, December 07, 2011

Mystery company buying up U.S. gun manufacturers … Some gun enthusiasts have claimed that the power behind the company is actually George Soros, the hedge-fund billionaire and liberal activist. Soros, these people have warned, is buying U.S. gun companies so he can dismantle the industry, Second Amendment be damned. The chatter grew so loud that the National Rifle Association issued a statement in October denying the rumors. “NRA has had contact with officials from Cerberus and Freedom Group for some time,” the NRA assured its members. “The owners and investors involved are strong supporters of the Second Amendment and are avid hunters and shooters.” Soros isn’t behind the Freedom Group, but, ultimately, another financier is: Stephen Feinberg, the chief executive of Cerberus. Cerberus is part of one of the signature Wall Street businesses of the past decade: private equity. – New York Times

Dominant Social Theme: It’s just business, nothing more to it.

Free-Market Analysis: Another subdominant social theme? It’s always the same. The Anglosphere power elite is on its way to buying up all the oil, water and farmland in the world (with or without China), or so it seems, and we are told it is the evolution of the free-market economy. Sure …

And now … guns. Not George Soros, mind you. The NRA – an elitist, Trojan Horse of an organization itself – has assured us that the folks behind the purchases are “strong supporters of the Second Amendment.” The NRA added, “We have a mighty fine bridge connecting Manhattan to Brooklyn that we’d like to sell you.”

Oh, sorry – we just made up that last part. Anyway, this is how the power elite likes to work, it seems to us. Every move to support global governance is likely cloaked and hidden. There are always justifications. If it is not a war, or a “human tragedy” that necessitates further centralization, then it is “market forces” at work. But in fact, it is always directed history …

Is it possible that Feinberg is doing the bidding of a larger and more powerful elite? We are well aware that one of the goals of the powers-that-be is to rid the US of guns. It is a major stumbling block to declaring one-world government, or so it is said by directed history observers. Here is something about Feinberg, via Wikipedia:

Stephen Feinberg was born in the Bronx, NY. At eight his family moved to Spring Valley, New York, a relatively poor suburb of New York City. His father was a steel salesman. He attended Princeton University in New Jersey, graduating with a degree in politics in 1982. While there, he captained the tennis team and joined the Reserve Officer Training Corps.

After graduating from college, Feinberg worked as a trader at Drexel Burnham and Gruntal & Co. In 1992 Feinberg teamed up with William L. Richter to found Cerberus Capital Management with just $10 million under management. Feinberg has been at the helm of the firm since its founding. Later alliances with J. Ezra Merkin were important for raising capital.

Subsequent hirings of former politicians and lobbyists John Snow, Dan Quayle and others have served as door-openers in Washington and abroad. The 2007 Cerberus purchase of Chrysler Corp. from Germany’s Daimler Benz became a major and, as of 2009, unsuccessful initiative by Feinberg into a higher-profile investment. Feinberg and others at the firm explicitly presented the investment as patriotic, but many critics ultimately questioned that characterization, especially after Chrysler had to seek and take federal aid. Chrysler now, with federal help, has been sold to Fiat.

As of 2009, Cerberus was facing major calls from its investors for redemptions, and had written down its investment in Chrysler to 19 cents on the dollar. Had there not been the federal bailout, the investment could have been worth nothing.

Well, it’s nice to know that Feinberg has friends in the federal government. Suspicious people (even more paranoid than ourselves) might suggest a quid pro quo: Feinberg gets a bailout and in return, the US gun manufacturing industry gets a roll-up. Well, on second thought, no … That’s just too darn paranoid!

Nonetheless, there is a roll-up. And the activity seems frenetic. Cerberus-controlled Freedom Group, Feinberg’s vehicle, has purchased one high profile gun manufacturer after another. The article tells us that it began with Maine-based Bushmaster before the biggest prize of all fell into its lap, Remington.

After pocketing Remington, the “Freedom Group” targeted Marlin Firearms, then DPMS Firearms, “a maker of semiautomatic, military-style rifles, as well as manufacturers of ammunition and tactical clothing.”

But there was more to come: Harrington & Richardson and L.C. Smith, and Dakota Arms – makers of rifles and something called Barnes Bullets. And more! The article mentions S&K Industries, which supplies wood and laminate for gun stocks, as well as the Advanced Armament Corp., which makes silencers.

This is a pretty hefty swath, no? The Freedom Group itself seems to think so. According to the Times article excerpted above, the Freedom Group said in a filing last year with the Securities and Exchange Commission, “We believe our scale and product breadth are unmatched within the industry.”

We are sure this is just the market at work … aren’t we? Or will there come a day in the not too distant future when the NRA announces that in order to buy a rifle you will need to be formally licensed and fingerprinted. You will need an ID or a microchip implant.

And then, perhaps, the NRA will announce that the Freedom Group, America’s number one gun owner, is firmly behind the measure! “The industry supports it,” we shall be told. “And so should you!”

Conclusion: “We fight for the independence of recreational gun owners and hunters everywhere,” the press release might continue. “And that’s why we stand side-by-side with the NRA in welcoming this most important initiative. Call your Congressperson today!” Mr. Feinberg, the wire reports inform us, could not be reached for comment …

Thousands of Twitter accounts apparently created in advance to blast automated messages are being used to drown out Tweets sent by bloggers and activists this week who are protesting the disputed parliamentary elections in Russia, security experts said.

Amid widespread reports of ballot stuffing and voting irregularities in the election, thousands of Russians have turned out in the streets to protest. Russian police arrested hundreds of protesters who had gathered in Moscow’s Triumfalnaya Square, including notable anti-corruption blogger Alexei Navalny. In response, protesters began tweeting their disgust in a Twitter hashtag #Triumfalnaya, which quickly became one of the most-tweeted hashtags on Twitter.

But according to several experts, it wasn’t long before messages sent to that hashtag were drowned out by pro-Kremlin tweets that appear to have been sent by countless Twitter bots. Maxim Goncharov, a senior threat researcher at Trend Micro, observed that “if you currently check this hash tag on twitter you’ll see a flood of 5-7 identical tweets from accounts that have been inactive for months and that only had 10-20 tweets before this day. To this point those hacked accounts have already posted 10-20 more tweets in just one hour.”

“Whether the attack was supported officially or not is not relevant, but we can now see how social media has become the battlefield of a new war for freedom of speech,” Goncharov wrote.

I’ve been working with a few security researchers inside of Russia who asked not to be named for fear of retribution by patriotic Russian hackers or the government. Since Trend’s posting, they’ve identified thousands of additional accounts (e.g., @ALanskoy, @APoluyan, @AUstickiy, @AbbotRama, @AbrahamCaldwell…a much longer list is available here) that are rapidly posting anti-protester or pro-Kremlin sentiments to more than a dozen hashtags and keywords that protesters are using to share news, including #Navalny.

A review of the 2,000 Twitter accounts linked above indicates that most of them were created at the beginning of July 2011, and have very few tweets other than those meant to counter the protesters, or to simply fill the hashtag feeds with meaningless garbage. Some of the bot messages include completely unrelated hashtags or keywords, seemingly to pollute the news stream for the protester hashtags.

In addition, almost all of the bot accounts are mostly following each other, with a handful of exceptions:  It appears that most of the auto-created accounts that are flooding the protester hashtags are following the Twitter account @master_boot, which looks like it belongs to an actual user. In fact, one of Master_boot’s 17,000+ followers recently tweeted to inquire about Twitter bots. The person behind the @master_boot account did not immediately respond to requests.

Interestingly, the Kremlin leadership appears to be using their Twitter accounts to bash those calling the recent elections a fraud. Reuters is reporting that Russian President Dmitry Medvedev caused shock and jeers on Wednesday after an obscene insult directed at political opponents appeared on his official Twitter feed. According to cached copies of the feed and a notification of the post received by a Reuters reporter, Medvedev’s tweet read:

“It has become clear that if a person writes the expression ‘party of swindlers and thieves’ in their blog then they are a stupid sheep getting f****d in the mouth .”

30th November 2011 in Tourism & Travel.

The pilot project — believed to be the first of its kind — is expected to start this month and will be introduced on “low-risk” Air Asia flights initially, before rolling out to other destinations if it proves successful. Biometric checks based on measurable biological characteristics will be used to verify the identity of passengers. According to a report in The Star, the program aims to have all passengers checked by the time they land at LCCT, therefore reducing congestion in the terminal. Passengers will not be checked again at the airport unless there are specific problems. The scheme is part of a larger plan which includes providing automatic check-in systems and groups of support personnel in an effort to improve customer experience.

The LCCT expects the volume of human traffic to increase by 20 percent over the next year; a trend mirrored in other major airports around the world. Could these checks provide a safe and speedy solution to airport congestion?

Website: www.klia.com.my
Contact: www.klia.com.my/index.php/component/content/article/159.html

Spotted by: Raymond Neo

August 30th, 2008 by Ben Goldacre

This is an extract from my new book “Bad Science“, in the Guardian today. It’s out on Monday: my recommendation is that you buy it, and give it to someone who disagrees with you.

Ben Goldacre
The Guardian
Saturday August 30 2008

Dr Andrew Wakefield is in front of the General Medical Council on charges of serious professional misconduct, his paper on 12 children with autism and bowel problems is described as “debunked” – although it never supported the conclusions ascribed to it – and journalists have convinced themselves that his £435,643 fee from legal aid proves that his research was flawed.

I will now defend the heretic Dr Andrew Wakefield.

The media are fingering the wrong man, and they know who should really take the blame: in MMR, journalists and editors have constructed their greatest hoax to date, and finally demonstrated that they can pose a serious risk to public health. But there are also many unexpected twists to learn from: the health journalists themselves were not at fault, the scale of the bias in the coverage was greater than anybody realised at the time, Leo Blair was a bigger player than Wakefield, and it all happened much later than you think.

Before we begin, it’s worth taking a moment to look at vaccine scares around the world, because I’m always struck by how circumscribed these panics are. The MMR and autism scare, for example, is practically non-existent outside Britain. But throughout the 1990s France was in the grip of a scare that hepatitis B vaccine caused multiple sclerosis.

In the US, the major vaccine fear has been around the use of a preservative called thiomersal, although somehow this hasn’t caught on here, even though that same preservative was used in Britain. In the 1970s there was a widespread concern in the UK, driven again by a single doctor, that whooping-cough vaccine was causing neurological damage.

What the diversity of these anti-vaccination panics helps to illustrate is the way in which they reflect local political and social concerns more than a genuine appraisal of the risk data, because if the vaccine for hepatitis B, or MMR, is dangerous in one country, it should be equally dangerous everywhere; and if those concerns were genuinely grounded in the evidence, especially in an age of the rapid propagation of information, you would expect the concerns to be expressed by journalists everywhere. They’re not.

In 1998 Wakefield published his paper in the Lancet. It’s surprising to see, if you go back to the original clippings, that the study and the press conference were actually covered in a fairly metered fashion, and also quite sparsely. The Guardian and the Independent reported the story on their front pages, but the Sun ignored it entirely, and the Daily Mail – home of the health scare, and now well known as vigorous campaigners against vaccination – buried their first MMR piece unobtrusively in the middle of the paper. There were only 122 articles mentioning the subject at all, in all publications, that whole year.

This was not unreasonable. The study itself was fairly trivial, a “case series report” of 12 people – essentially a collection of 12 clinical anecdotes – and such a study would only really be interesting and informative if it described a rare possible cause of a rare outcome. If everyone who went into space came back with an extra finger, say, then that would be worth noting. For things as common as MMR and autism, finding 12 people with both is entirely unspectacular.

But things were going to get much worse, and for some very interesting reasons. In 2001 and 2002 the scare began to gain momentum. Wakefield published a review paper in an obscure journal, questioning the safety of the immunisation programme, although with no new evidence. He published two papers on laboratory work using PCR (a technique used in genetic fingerprinting) which claimed to show measles virus in tissue samples from children with bowel problems and autism. These received blanket media coverage.

The coverage rapidly began to deteriorate, in ways which now feel familiar and predictable. Emotive anecdotes from distressed parents were pitted against old men in corduroy with no media training. The Royal College of General Practitioners press office not only failed to speak clearly on the evidence, it also managed to dig up anti-MMR GPs for journalists who rang in asking for quotes. Newspapers and celebrities began to use the vaccine as an opportunity to attack the government and the health service, and of course it was the perfect story, with a charismatic maverick fighting against the system, a Galileo-like figure. There were elements of risk, of awful personal tragedy, and of course, the question of blame: whose fault was autism?

But the biggest public health disaster of all – which everyone misses – was a sweet little baby called Leo. In December 2001 the Blairs were asked if their infant son had been given the MMR vaccine, and refused to answer, on the grounds that this would invade their child’s right to privacy. This stance was not entirely unreasonable, but its validity was somewhat undermined by Cherie Blair when she chose to reveal Leo’s vaccination history, in the process of promoting her autobiography, and also described the specific act of sexual intercourse which conceived him.

And while most other politicians were happy to clarify whether their children had had the vaccine, you could see how people might believe the Blairs were the kind of family not to have their children immunised: essentially, they had surrounded themselves with health cranks. There was Cherie Blair’s closest friend and aide, Carole Caplin, a new age guru and “life coach”. Cherie was reported to visit Carole’s mum, Sylvia Caplin, a spiritual guru who was viciously anti-MMR (“for a tiny child, the MMR is a ridiculous thing to do. It has definitely caused autism,” she told the Mail). They were also prominently associated with a new age healer called Jack Temple, who offered crystal dowsing, homeopathy, neolithic-circle healing in his suburban back garden, and some special breastfeeding technique which he reckoned made vaccines unnecessary.

Whatever you believe about the Blairs’ relationships, this is what the nation was thinking about when they refused to clarify whether they had given their child the MMR vaccine.

The MMR scare has created a small cottage industry of media analysis. In 2003 the Economic and Social Research Council published a paper on the media’s role in the public understanding of science, which sampled all the major science media stories from January to September 2002, the peak of the scare. It found 32% of all the stories written in that period about MMR mentioned Leo Blair, and Wakefield was only mentioned in 25%: Leo Blair was a bigger figure in this story than Wakefield.

And this was not a passing trivial moment in a 10-year-long story. 2002 was in fact the peak of the media coverage, by a very long margin. In 1998 there were only 122 articles on MMR. In 2002 there were 1,257 (from here). MMR was the biggest science story that year, the most likely science topic to be written about in opinion or editorial pieces, it produced the longest stories of any science subject, and was also by far the most likely to generate letters to the press, so people were clearly engaging with the issue. MMR was the biggest and most heavily covered science story for years.

It was also covered extremely badly, and largely by amateurs. Less than a third of broadsheet reports in 2002 referred to the overwhelming evidence that MMR is safe, and only 11% mentioned that it is regarded as safe in the 90 other countries in which it is used.

While stories on GM food, or cloning, stood a good chance of being written by specialist science reporters, with stories on MMR their knowledge was deliberately sidelined, and 80% of the coverage was by generalist reporters. Suddenly we were getting comment and advice on complex matters of immunology and epidemiology from Nigella Lawson, Libby Purves, Suzanne Moore and Carol Vorderman, to name only a few. The anti-MMR lobby, meanwhile, developed a reputation for targeting generalist journalists, feeding them stories, and actively avoiding health or science correspondents.

Journalists are used to listening with a critical ear to briefings from press officers, politicians, PR executives, salespeople, lobbyists, celebrities and gossip-mongers, and they generally display a healthy natural scepticism: but in the case of science, generalists don’t have the skills to critically appraise a piece of scientific evidence on its merits. At best, the evidence of these “experts” will only be examined in terms of who they are as people, or perhaps who they have worked for. In the case of MMR, this meant researchers were simply subjected to elaborate smear campaigns.

The actual scientific content of stories was brushed over and replaced with didactic statements from authority figures on either side of the debate, which contributed to a pervasive sense that scientific advice is somehow arbitrary, and predicated upon a social role – the “expert” – rather than on empirical evidence.

Any member of the public would have had very good reason to believe that MMR caused autism, because the media distorted the scientific evidence, reporting selectively on the evidence suggesting that MMR was risky, and repeatedly ignoring the evidence to the contrary. In the case of the PCR data, the genetic fingerprinting information on whether vaccine-strain measles virus could be found in tissue samples of children with autism and bowel problems, this bias was, until a few months ago, quite simply absolute. You will remember from earlier that Wakefield co-authored two scientific papers – known as the “Kawashima paper” and the “O’Leary paper” – claiming to have found such evidence, and received blanket media coverage for them. But you may never even have heard of the papers showing these to be probable false positives.

In the Journal of Medical Virology May March 2006 there was a paper by Afzal et al, looking for measles RNA in children with regressive autism after MMR vaccination, using tools so powerful they could detect measles RNA down to single-figure copy numbers. It found no evidence of the vaccine-strain measles RNA to implicate MMR. Nobody wrote about this study, anywhere, in the British media (except for me in my column).

This was not an isolated case. Another major paper was published in the leading academic journal Pediatrics a few months later, replicating the earlier experiments very closely, and in some respects more carefully, also tracing out the possible routes by which a false positive could have occurred. For this paper by D’Souza et al, like the Afzal paper before it, the media were united in their silence. It was covered, by my count, in only two places: my column, and a Reuters news agency report. Nowhere else (although there was a post on the lead researcher’s boyfriend’s blog where he talked about how proud he was of his girlfriend). [EDITED to disambiguate]

Journalists like to call for “more research”: here it was, and it was ignored. Did the media neglect to cover these stories because they were bored of the story? Clearly not. Because in 2006, at exactly the same time as they were unanimously refusing even to mention these studies, they were covering an identical claim, using identical experimental methodology: “US scientists back autism link to MMR” said the Telegraph. “Scientists fear MMR link to autism” squealed the Mail.

What was this frightening new data? These scare stories were based on a poster presentation, at a conference yet to occur, on research not yet completed, by a man with a well-documented track record of announcing research that never subsequently appears in an academic journal. This time Dr Arthur Krigsman was claiming he had found genetic material from vaccine-strain measles virus in some gut samples from children with autism and bowel problems. If true, this would have bolstered Wakefield’s theory, which by 2006 was lying in tatters. We might also mention that Wakefield and Krigsman are doctors together at Thoughtful House, a private autism clinic in the US.

Two years after making these claims, the study remains unpublished.

Nobody can read what Krigsman did in his experiment, what he measured, or replicate it. Should anyone be surprised by this? No. Krigsman was claiming in 2002 that he had performed colonoscopy studies on children with autism and found evidence of harm from MMR, to universal jubilation in the media, and this work remains entirely unpublished as well. Until we can see exactly what he did, we can’t see whether there may be flaws in his methods, as there are in all scientific papers, to a greater or lesser extent: maybe he didn’t select the subjects properly, maybe he measured the wrong things. If he doesn’t write it up formally, we can never know, because that is what scientists do: write papers, and pull them apart to see if their findings are robust.

Through reporting as shamelessly biased as this, British journalists have done their job extremely well. People make health decisions based on what they read in the newspapers, and MMR uptake has plummeted from 92% to 73%: there can be no doubt that the appalling state of health reporting is now a serious public health issue. We have already seen a mumps epidemic in 2005, and measles cases are at their highest levels for a decade. But these are not the most chilling consequences of their hoax, because the media are now queueing up to blame one man, Wakefield, for their own crimes.

It is madness to imagine that one single man can create a 10-year scare story. It is also dangerous to imply – even in passing – that academics should be policed not to speak their minds, no matter how poorly evidenced their claims. Individuals like Wakefield must be free to have bad ideas. The media created the MMR hoax, and they maintained it diligently for 10 years. Their failure to recognise that fact demonstrates that they have learned nothing, and until they do, journalists and editors will continue to perpetrate the very same crimes, repeatedly, with increasingly grave consequences.

· This is an edited extract from Bad Science by Ben Goldacre, published by Fourth Estate on September 1 at £12.99. To order a copy for £10.99 with free p&p, call 0870 836 0875 or visit guardianbookshop.co.uk

Or if you prefer you can buy it off Amazon

www.amazon.co.uk/Bad-Science-Ben-Goldacre/dp/0007240198/?tag=bs0b-21

CBC News

Posted: Nov 29, 2011 9:15 AM ET

Last Updated: Nov 29, 2011 10:15 PM ET

Iranian students stormed two British diplomatic sites in Tehran on Tuesday, vandalizing buildings and sparking international outrage in the process.

The students barged past police into the British Embassy in downtown Tehran and reportedly besieged a compound in the north of the city that houses British diplomatic staff, smashing windows, looting and setting at least one vehicle on fire.

British Prime Minister David Cameron called the events “outrageous and indefensible” and warned that the Iranian government would face “serious consequences” for failing to protect diplomats in line with international law.

Canada also condemned the attack on the U.K. embassy, with Foreign Affairs Minister John Baird calling on Iranian officials to fulfil their international obligations to protect all diplomatic staff in Iran.

“Iranian authorities failed to uphold their serious responsibilities under the Vienna Convention on Diplomatic Relations, namely, to safeguard diplomatic premises and ensure the safety of internationally protected persons,” he said in a statement. “My officials have summoned the Iranian chargé d’affaires to Canada to convey our displeasure directly.”

He added all Canadian diplomatic staff and facilities in Tehran are secure.

At the White House, U.S. President Barack Obama said he was “deeply disturbed” by the attacks and said it was a sign “that the Iranian government is not taking its international obligations seriously.”

The French and Russian governments also condemned the attacks.

Flag replaced

The protesters broke into the embassy after clashing with anti-riot police, The Associated Press reported. “Death to England,” some cried in the first significant assault of a foreign diplomatic area in Iran in years.

Smoke rose from some areas of the embassy grounds and the British flag was replaced with a banner in the name of seventh-century Shiite saint, Imam Hussein. Occupiers also tore down a picture of the Queen.

Iranian protesters break the windows of a British Embassy building, in Tehran, Iran, Tuesday, Nov. 29, 2011. (Vahid Salemi/The Associated Press)

The occupiers called for the closure of the embassy calling it a “spy den” — the same phrase used after militants stormed the U.S. Embassy in Tehran in 1979 and held 52 hostages for 444 days. In the early moments of the siege, protesters tossed out papers from the compound and hauled down the U.S. flag. Washington and Tehran have had no diplomatic relations since then.

The rally outside the British Embassy — on a main street in downtown Tehran — included protesters carrying photographs of nuclear scientist Majid Shahriari, who was killed last year in an attack that Iran blamed on Israeli and British spy services.

Outside the embassy, students from some universities and seminaries burned British flags and clashed with police.

Students support hard line leaders

Freelance journalist Thomas Erdbrink said from Tehran that staff may have vacated the embassy before the demonstration, which had been previously announced. But it was unclear whether diplomats remained at the compound in northern Tehran.

Britain’s Foreign Office said it was in contact with embassy officials, and had been checking on the well-being of workers and diplomats, a Foreign Office spokeswoman said on condition of anonymity.

It also warned its citizens in Iran to “stay inside and keep a low profile.”

Tensions between Iran and Britain date back to the 19th century when the Persian monarchy gave huge industrial concessions to London, which later included significant control over Iran’s oil industry.

Protesters burn a British flag taken down from the British embassy in Tehran on Nov. 29, 2011. (Raheb Homavandi/Reuters)

But they have become increasingly strained as the West accuses Iran of trying to develop nuclear weapons — a charge Tehran denies.

Last week, the United Kingdom, Canada and the United States imposed new sanctions on Iran in the wake of the latest UN report offering evidence that Iran was working on a nuclear weapon. These sanctions included restrictions on the activities of Iran’s central bank.

Dr. Massoumeh Torfeh, a London-based expert on Iran, told CBC News the attacks should be no surprise, as Iranian President Mahmoud Ahmadinejad has been fanning the flames of anti-British sentiment in his speeches for days. The demonstration outside the British compounds were advertised in the local media.

Erdbrink told CBC News that the students are supporters of Iran’s hardline leaders, and have a tradition of demonstrating at the British Embassy, even hurling rocks and petrol bombs on some occasions.

“In the years that I have been reporting from here, I have never seen them actually enter the building, take down the British flag and replace it with an Iranian one,” he said.

With files from The Associated Press

In an e-mail sent to BSD project leader Theo de Raadt, former NETSEC CTO Gregory Perry has claimed that NETSEC developers helped the FBI plant “a number of backdoors” in the OpenBSD cryptographic framework approximately a decade ago.

Perry says that his nondisclosure agreement with the FBI has expired, allowing him to finally bring the issue to the attention of OpenBSD developers. Perry also suggests that knowledge of the FBI’s backdoors played a role in DARPA’s decision to withdraw millions of dollars of grant funding from OpenBSD in 2003.

“I wanted to make you aware of the fact that the FBI implemented a number of backdoors and side channel key leaking mechanisms into the OCF, for the express purpose of monitoring the site to site VPN encryption system implemented by EOUSA, the parent organization to the FBI,” wrote Perry. “This is also probably the reason why you lost your DARPA funding, they more than likely caught wind of the fact that those backdoors were present and didn’t want to create any derivative products based upon the same.”

The e-mail became public when de Raadt forwarded it to the OpenBSD mailing list on Tuesday, with the intention of encouraging concerned parties to conduct code audits. To avoid entanglement in the alleged conspiracy, de Raadt says that he won’t be pursuing the matter himself. Several developers have begun the process of auditing the OpenBSD IPSEC stack in order to determine if Perry’s claims are true.

“It is alleged that some ex-developers (and the company they worked for) accepted US government money to put backdoors into our network stack,” de Raadt wrote. “Since we had the first IPSEC stack available for free, large parts of the code are now found in many other projects/products. Over 10 years, the IPSEC code has gone through many changes and fixes, so it is unclear what the true impact of these allegations are.”

OpenBSD developers often characterize security as one of the project’s highest priorities, citing their thorough code review practices and proactive auditing process as key factors that contribute to the platform’s reputedly superior security. If Perry’s allegations prove true, the presence of FBI backdoors that have gone undetected for a decade would be a major embarrassment for OpenBSD.

The prospect of a federal government agency paying open source developers to inject surveillance-friendly holes in operating systems is also deeply troubling. It’s possible that similar backdoors could potentially exist on other software platforms. It’s still too early to know if the claims are true, but the OpenBSD community is determined to find out if they are.

It’s not Adderall or Oxy. It’s Klonopin. And doctors are doling it out like candy, causing a surge of hellish withdrawals, overdoses and deaths.

June 1, 2011  |

You could argue that the deadliest “drug” in the world is the venom from a jellyfish known as the Sea Wasp, whose sting can kill a human being in four minutes—up to 100 humans at a time. Potassium chloride, which is used to trigger cardiac arrest and death in the 38 states of the U.S. that enforce the death penalty is also pretty deadly . But when it comes to prescription drugs that are not only able to kill you but can drag out the final reckoning for years on end, with worsening misery at every step of the way, it is hard to top the benzodiazepines. And no “benzo” has been more lethal to millions of Americans than a popular prescription drug called Klonopin.

Klonopin is the brand name for the pill known as clonazepam, which was originally brought to market in 1975 as a medication for epileptic seizures. Since then, Klonopin, along with the other drugs in this class, has become a prescription of choice for drug abusers from Hollywood to Wall Street. In the process, these Schedule III and IV substances have also earned the dubious distinction of being second only to opioid painkillers like OxyContin as our nation’s most widely abused class of drug.

Seventies-era rock star Stevie Nicks is the poster girl for the perils of Klonopin addiction. In almost every interview, the former lead singer of Fleetwood Mac makes a point of mentioning the toll her abuse of the drug has taken on her life. This month, while promoting her new solo album, In Your Dreams, she told Fox that she blamed Klonopin for the fact that she never had children. “The only thing I’d change [in my life] is walking into the office of that psychiatrist who prescribed me Klonopin. That ruined my life for eight years,” she said. “God knows, maybe I would have met someone, maybe I would have had a baby.”

Nicks checked herself into the Betty Ford Clinic in 1986 to overcome a cocaine addiction. After her release, the psychiatrist in question prescribed a series of benzos—first Valium, then Xanax, and finally Klonopin—supposedly to support her sobriety. “[Klonopin] turned me into a zombie,” she told US Weekly in 2001, according to the website Benzo.org, one of many patient-run sites on the Internet offering information about benzodiazepine addiction, withdrawal and recovery. Nicks has described the drug as a “horrible, dangerous drug,” and said that her eventual 45-day hospital detox and rehab from the drug felt like “somebody opened up a door and pushed me into hell.” Others have described Klonopin’s effects as beginning with an energized sense of euphoria but ending up with horrifying sense of anxiety and paralysis, akin to  sticking your tongue into an electric outlet, or suddenly feeling that your brain is on fire.

When benzodiazepines first came to market in the 1950s and 1960s, they were prescribed for a range of neurological disorders such as epilepsy as well as anxiety related disorders such as insomnia. But over time, a loophole in federal drug-control laws known as the “practice of medicine exception” has permitted psychiatrists and other physicians to prescribe the drugs for any perceived disorder or symptom imaginable, from panic attacks to weight control problems. Much in the same way, Valium became infamous as “mother’s little helper,” a sedative used to pacify a generation of bored and frustrated suburban housewives.

Alcoholics and drug addicts are most likely to run into Klonopin during detox, when it is used to prevent seizures and control the symptoms of acute withdrawal. Klonopin takes longer to metabolize and passes through your system more slowly than other benzos, so in theory you don’t need to take it so frequently. But if you like the high it gives you, and  keep increasing your dosage, the addictive effects of the drug accumulate quickly and can often be devastating. The drug’s label clearly specifies that it is “recommended” only for short-term use—say, seven to 10 days—but once exposed to the pill’s seductive side-effects, many patients come back for more. And not surprisingly, many doctors are happy to refill prescriptions to meet this consumer demand. In the process, countless numbers of people swap one addiction for another, often worse than the initial addiction they were trying to treat. Although benzodiazepines are rarely reported to be the cause of single-drug overdoses, they show up with great frequency in deaths from so-called combined drug intoxication, or CDI. In recent years there have been thousands of deaths caused by this lethal combination. The drug has also help hasten the death of a wide list of otherwise healthy celebrities. :

In 1996, Actress Margaux Hemingway committed suicide by overdosing on a barbiturate-benzodiazepine cocktail. Weeks later, Hollywood movie producer Don Simpson (Beverly Hills Cop) also died from an unintentional benzo-based overdose. Klonopin was one of 11 different prescription drugs—all written by the same doctor—found in the body of Playboy centerfold model Anna Nicole Smith, who OD’d in 2007. Thereafter, the well-known Los Angeles author, David Foster Wallace, who was suffering from a profound depression when a doctor prescribed him Klonopin, went into his backyard on a September evening and hanged himself with a leather belt he had nailed to an overhead beam on his patio. Klonopin has been striking down more than just troubled celebrities, however. In 2008, reports began to surface of soldiers returning from Iraq with post-traumatic stress disorder who were dying in their sleep, the victims of a psych-med cocktail of Klonopin, Paxil (an antidepressant), and Seroquel, an antipsychotic that is routinely prescribed by VA hospitals.

Hospital emergency room visits for benzodiazepine abuse now dwarf those for illegal street drugs by a more than a three-to-one margin. This trend has been increasing for at least the last five years. In 2006, the U.S. government’s Substance Abuse and Mental Health Services Administration published data showing that prescription drugs that year were the number two reason for ER admissions to hospitals for drug abuse, slightly behind illicit substances like heroin and cocaine. But a survey released by the agency earlier this year claims that benzos, opioids and other prescriptions meds are now responsible for the majority of drug-related hospital visits.

Scientists can’t say for sure what Klonopin does when ingested, except that it dramatically affects the functioning of the brain. This much we know: If your brain is on fire with electrical signals—like, say, you’re having an epileptic seizure—a dose of clonazepam will help put out the flames.  It does so by lowering the electrical activity of the brain,  specifically which electrical activities it suppresses is something that no one really seems to know for sure. And therein lies the reason why clonazepam, like nearly the entire class of benzos, causes such unpredictable reactions in people. Put simply, the brain is just too complex a structure for its owners to understand—and when you start monkeying around with the way it functions, it’s anybody’s guess what is going to happen next.

Here’s how the respected neurosurgeon Frank Vertosick, Jr., describes the brain in his book When The Air Hits Your Brain: Parables of Neurosurgery: “The human brain: a trillion nerve cells storing electrical patterns more numerous than the water molecules of the world’s oceans.” So, if clonazepam is given to a patient with a history of epileptic seizures, it is likely to bring the symptoms under control. But give the same drug to a person suffering from a completely different problem (an eating or sleeping disorder, for example), and it might actually cause an epileptic seizure.

Clonazepam has wreaked such havoc on people partly because it is so highly addictive; anyone who takes it for more than a few weeks may well develop a dependence on it. As a result, you can be prescribed Klonopin as a short-term treatment for, say, insomnia, and wind up so hooked on it that you’ll begin frantically “doctor shopping” for new prescriptions if the first physician who gave it for you refuses to renew the prescription. As with all benzos, use of Klonopin for more than a month can lead to a dangerous condition known as “benzodiazepine withdrawal syndrome,” featuring elevation of a user’s heart rate and blood pressure along with insomnia, nightmares, hallucinations, anxiety, panic, weight loss, muscular spasms or cramps, and seizures.

Along with Klonopin, here are the three other benzos that, by general agreement, have made it into the top ranks of the world’s worst and most widely abused drugs: temazepam, alprazolam, and lorazepam.

Temazepam: Sold in the U.S. under the brand name Restoril, this benzo was developed and approved in the 1960s as a short-term treatment for insomnia. It is basically what is commonly called a “knockout drop.” Taken even in relatively modest dosages, temazepam can produce a powerfully hypnotic effect that numbs users and makes them extremely compliant and susceptible to control. But thanks to the “practice of medicine exception” physicians can prescribe it for anything they want.

During the Cold War, the Soviet Union reportedly used temazepam extensively to keep political dissidents in a drugged-out state in government-run psychiatric hospitals. Both the CIA and the KGB are also said to have also used the sleeping pill in prisoner interrogations and in research into mind-control, brainwashing and social engineering.

Temazepam is sometimes referred to as a “date rape” drug, and it figures frequently in drug-related crimes of violence. In the drug world underground, where it is often sold as an alternative to heroin and crack cocaine, it goes by such street names as “tams,” “Vitamin T,” “terminators,” “big T,” “mind eraser” and “Mommy’s Big Helper.” Common side-effects include confusion, clumsiness, chronic drowsiness, impaired learning, memory and motor functions, as well as extreme euphoria, dizziness and amnesia.

Alprazolam: Brand name Xanax, this benzo now accounts for as many as 60% of all hospital admissions for drug addiction, according to some research. What’s more, violent and psychotic responses to Xanax are not limited to humans. In May 2009, a 200-lb chimpanzee being kept as a house pet by a Stamford, Conn., woman went on a rampage after being dosed with Xanax, escaping into the neighborhood and ripping off the face of a friend of its owner.

Lorazepam: Brand name Ativan, this drug has figured in an array of well-publicized homicides and suicides by those using it. Ativan surfaced in the 2000 divorce case between Washington, D.C., socialite Patricia Duff and her husband, Wall Street billionaire Ronald Perelman. In deposition testimony, Perelman acknowledged taking Ativan as an anti-anxiety drug during his separation from Duff and the commencement of divorce proceedings. The period was marked by numerous outbursts by Perelman and at least two physical assaults on Duff. In 2008, news reports revealed that Ativan was being used by the U.S. Customs Service to keep suspected terrorists sedated while deporting them to detention facilities abroad.

You can buy any of these “feel-good” drugs without a doctor’s signature by simply typing the name into any Internet search engine. Instantly, you’ll be presented with dozens of websites, both foreign and domestic, where you can make your purchase, no prescription required. (Most of the websites accept all major credit cards.)

Why has all this happened? In large measure you can thank the 47,000 members of the American psychiatric profession for this dreadful state of affairs. Neither the pharmaceutical industry nor the psychiatric profession would be anywhere near as lucrative as they are today without their mutual support system. Together they have created a marketing juggernaut that over the last 20 years has spawned a seemingly nonstop gusher of profits that is only now beginning to slow—and probably only temporarily.

The scholarly journals of the psychiatric profession were filled with early warnings, beginning almost 50 years ago, from those who could see where the encroaching influence of the drug companies was destined to lead the profession. Now, even the medical journals themselves have been corrupted by the hidden hand of Big Pharma. In 2008, the New York Times reported that a survey of the six top medical journals showed that on average almost 8% of the bylined articles published in their pages were ghostwritten by freelance writers, then published under the names of cooperating doctors and researchers to give the pro-drug messages contained in the articles the appearance of impartiality. The scheme is bankrolled, of course, by the company that makes the drug.

Consider Dr. Joseph Biederman, the world-renowned Harvard University psychiatrist and father of modern psychopharmacology for children, who, it now turns out, has been taking secret “consulting fees” from drug companies for years. Biederman is widely credited with legitimizing the concept of “bipolar disorder” as a chemical imbalance in the brain that can be corrected with psychiatric drugs. But documents uncovered by Senate investigators probing ties between the psychiatric profession and the drug industry, which have resulted in an explosion in medically approved uses for psychiatric drugs for children, show that Biederman received more than $1.6 million in undisclosed payments since 2000 from the pharmaceutical companies manufacturing the drugs he was encouraging parents to give to their children if they appeared to be “bipolar.”

No surveys that I am aware of have ever been conducted regarding the public’s impression of what psychiatrists actually do. But from pop culture media characters such as the fictional female psychiatrist Dr. Jennifer Melfi in the HBO series The Sopranos, the general belief seems to be that psychiatrists are learned and humane professionals who counsel their patients through hour-long “talk therapy” sessions in their offices once a week, and more frequently than that if necessary to help them resolve their conflicts.

In fact, many do nothing of the sort. It may be only a patient’s first session with a psychiatrist that lasts any meaningful amount of time. In this initial consultation the psychiatrist relies on the DSM manual as the diagnostic tool to decide precisely what the patient suffers from. Once that is established, the psychiatrist can begin prescribing psych meds as therapy, free of fear about the danger of a medical malpractice suit lurking down the road.

The follow-up sessions (weekly, monthly, etc.) that come after the initial consultations—that is, the sessions that are portrayed on The Sopranos as the occasions when Mafia killer Tony Soprano sits down in Dr. Melfi’s darkened office and pours out his guts about his troubled childhood—usually last as little as 15 minutes. During these so-called “med checks,” a psychiatrist typically charges $100 or more for asking the patient little more than how he or she is responding to the prescribed medication—a question that can usually be answered by a quick glance at the patient’s demeanor.

At the end of such a med-check, the psychiatrist may decide to renew the patient’s current prescription, substitute or add a new one—or even offer the patient a free sample of some new psych-med, courtesy of a sales rep from a pharmaceutical company. At four med-checks per hour, a psychiatrist with enough patients to fill up his workdays can easily make $120,000 annually from his med-check practice alone and still take a month-long summer vacation.

It’s obvious that this system incentivizes doctors financially to keep prescribing drugs in order to keep patients returning for med-checks. But Big Pharma offers a whole host of additional income opportunities. Last year, ProPublica, the Pulitzer Prize–winning public-interest investigative website, did an extensive report on the financial compensation drug companies shower on physicians. Well-titled “Dollars for Docs,” this series included a database of more than 17,000 doctors who accepted “speaker fees” and other money from eight drug companies in 2009 and 2010 totaling $320 million.

That accounting is only the tip of the iceberg, however, as most pharmaceutical companies have refused to disclose their physician payments. Not surprisingly, most doctors interviewed by ProPublica denied that their medical decisions and prescribing habits were influenced by drug company payments. The new healthcare reform bill calls for greater transparency, requiring all drug-makers to disclose all fees paid to all doctors by 2014. Until then, you can type your doctor’s name into the database to find out if he or she is on the pharma take, and for how much.

Year after year, the IMF praised Mubarak’s ‘progress’. Signing up to its $3bn loan now hardly seems a break with the past

Hosni Mubarak’s last finance minister, Youssef Boutros-Ghali, was a graduate of the IMF. Photograph: Stephen Jaffe/Reuters

News that the Egyptian interim government has struck a deal with the IMF through which the fund will hand Egypt a $3bn loan has met with differing reactions. It was greeted with relief by some, as proof of the country’s positive economic prospects in the medium and long term, and a rebuttal to those scaremongers who have been loudly warning that Egypt is on the verge of bankruptcy because of the revolution and of the continuing protests and street activities.

But many people, myself included, were unhappy with this news and the impact such a loan will have on deepening the country’s debt and mounting debt servicing burden.

And there’s a more disturbing detail – this is the IMF for God’s sake. I recall repeatedly demonstrating over the past 10 years against the Hosni Mubarak regime and chanting against the “Fund” and the “Bank”, meaning the IMF and the World Bank. “We will not be governed by the Bank, we will not be governed by imperialism”, we chanted, “and here are the terms of the Bank: poverty, hunger and rising prices.”

The IMF and the World Bank have for years been pushing the neoliberal measures implemented by Mubarak and his governments, piling praise on him for his courage and achievements.

Year after year, the international experts would commend the Egyptian economic “progress” and “performance” while the majority of Egyptians watched as their lives deteriorated and their living conditions worsened. A survey by the International Republican Institute found that 60% of the population felt their living standards had fallen over the previous year, and that this was one of the key reasons for participation in the 25 January revolution.

Year after year, we watched how the rich and powerful got richer and even more powerful. Year after year, we waited in vain for the successive economic growth to trickle down to the poor and working masses. None was forthcoming.

And while the IMF and similar international institutions called on Egypt to eliminate “waste and efficiencies” such as social measures or food subsidies, they maintained a polite silence on the outrageous corruption perpetrated by the country’s ruler, his family and their friends and cronies. Mubarak’s last finance minister, Youssef Boutros-Ghali, a graduate of the IMF who served as chair of its policy advisory committee, was sentenced to 30 years in prison for corruption related to improper use of cars impounded by Egypt’s customs service. Boutros-Ghali was sentenced in absentia as he was one of the few clever officials that left the country as soon as the protest that led to the bringing down of Mubarak’s regime started in January.

I believe that this country’s future lies not with the same highly paid, unelected, unaccountable bureaucrats of the IMF, nor with their sacred indicators of budget deficits and market economics. Our future lies with a new home-grown economics that caters for the majority of Egyptians, the schools where their children are educated, the hospitals where they receive healthcare, and the jobs that guarantee them decent and honourable living.

Our revolution, before it called for bringing down Mubarak, has called for “social justice and human dignity” and we will not stop until that is achieved.

Here is an exclusive interview with James G. Rickards, a leading practitioner in the realm of capital markets, national security and geopolitics, on inter alia “quantative easing as a success,“ the currency wars of the past and the present, and the question why you are fighting every central bank in the world in case you own gold.

By Lars Schall

James G. Rickards is Senior Managing Director of Tangent Capital Partners (http://www.tangentcapital.com/), a registered broker-dealer and merchant bank, and Senior Managing Director of Omnis, Inc. (http://www.omnisinc.com/), a research and consulting firm in McLean, Virginia, USA. He is also co-head of Omnis’ practice in Threat Finance & Market Intelligence and a member of the Board of Directors. Moreover, he serves as Principal of Global-I Advisors, LLC, an investment banking firm specializing in the intersection of capital markets and geopolitics. Mr. Rickards is a seasoned counselor, investment banker and risk manager with over thirty-five years experience in capital markets including all aspects of portfolio management, risk management, financing, regulation and operations.

Mr. Rickards’ career spans the period since 1976 during which he was a first hand participant in the formation and growth of globalized capital markets and complex derivative trading strategies. He has held senior executive positions at sell side firms (Citibank and RBS Greenwich Capital Markets) and buy side firms (Long-Term Capital Management and Caxton Associates) as well as technology firms (OptiMark). He has directly participated in the release of U.S. hostages in Teheran, Iran in 1981 as well as in the 1987 Stock Market Crash and the 1990 collapse of Drexel. He was the principal negotiator of the government-Federal Reserve Bank of New York-sponsored rescue of LTCM in 1998.

Mr. Rickards is a graduate school visiting lecturer at Northwestern University and the School of Advanced International Studies. He has delivered papers on econophysics at the Applied Physics Laboratory and the Los Alamos National Laboratory. Mr. Rickards has written articles published in academic and professional journals in the fields of strategic studies, cognitive diversity, network science and risk management. He is a member of the Business Advisory Board of Shariah Capital, Inc., an advisory firm specializing in Islamic finance and is also a member of the International Business Practices Advisory Panel to the Committee on Foreign Investment in the United States (CFIUS) Support Group of the Director of National Intelligence.

Mr. Rickards holds an LL.M. (Taxation) from the New York University School of Law; J.D. from the University of Pennsylvania Law School; M.A. in international economics from the School of Advanced International Studies, Washington DC; and a B.A. degree with honors from the School of Arts & Sciences of The Johns Hopkins University, Baltimore, MD.

His advisory clients include private investment funds, investment banks and government directorates. Mr. Rickards is licensed to practice law in New York and New Jersey and various Federal Courts and has held all major financial industry licenses. He has been a frequent speaker at conferences sponsored by bar associations and industry groups in the fields of derivatives and hedge funds and is active in the International Bar Association. He has been interviewed in The Wall Street Journal and on CNBC, Fox, CNN, NPR and C-SPAN and is an OpEd contributor to the New York Times, Financial Times and the Washington Post.

James G. Rickards lives in Connecticut, U.S.A.

In addition to the following interview, I also want to recommend a comprehensive interview that I’ve conducted with Mr. Rickards in the past, “The central banks don’t consider it manipulation, they consider it  part of their job,“ at:

http://www.larsschall.com/2010/12/12/%E2%80%9Cthe-central-banks-dont-consider-it-manipulation-they-consider-it-part-of-their-job%E2%80%9C/.

Mr. Rickards, you’ve stated not so long ago: “Quantative Easing is dead, long live Quantative Easing.“ What do you mean by that?

What I meant was that formerly the QE program by which the Federal Reserve purchases intermediate-term treasury notes in the open markets, those in the three, five, seven and ten years maturity, that program is officially over June 30th, and I did expect that it will not be continued after June 30th – this is what I meant by: “QE is dead.“ However, the Fed has been doing this for almost two years, and at this point through the program they have acquired so many assets that their balance sheet is now almost $ 3 trillion. When they started this program it was less than $ 1 trillion, it was close to $ 900 billion, but today the balance sheet will approaching at the end of June $ 3 trillion, the exact number right now is about $ 2.6 trillion, but they will be buying some more assets between now and June 30th.

The point is when your balance sheet is that large you have securities that mature over time – two years ago, if you bought a two year note, that note is maturing sometime in the next few months, and when that happens the Treasury sends you the money, and then you can keep the money. But in the case of the Fed because they create the money in the first place if the system sends money to the Fed, that money goes out of existence, it actually reduces the money supply. But the Fed can choose to go out and buy more securities by using their reinvestment buying power. So even though they will not expanding their balance sheet they will be continuing to buy securities to keep interest rates low. So that is what I meant by: “Long live QE.“ In other words, they are going to continue QE, but in a different form.

Is this perpetual, even though maybe modified QE in your view by any measure successful – or does this depend on which side of the proverbial “printing press“ one does stand?

That’s a good question. In order to define success you have first to figure out what the goal was and see if you have reached that goal. And there is a lot of misunderstanding on that point. A lot of critics of the Fed have said that their goal was to monetize the federal debt in the form of printing money. Well, that is not the goal of QE, never was. The goal of QE was to keep interest rates low, and in particular the Fed wanted to create a situation with what they call negative real interest rates. A real interest rate is simply the interest rate that you have to pay, so it’s called the nominal interest rate minus inflation. For example, if the interest rate is 2 percent, but inflation is 4 percent, then the real interest rate is negative 2 percent, or 2 – 4. And when you have negative interest rates this of course encourages people to borrow, because they can pay back the debt in cheaper dollars – not only is the borrowing cost zero, it is below zero, and therefore you can pay back the debt in cheaper dollars, so you don’t have to pay back as much as you have borrowed in the first place in real terms. So that is the Fed’s goal.

Now you have to ask yourself how does the Fed measure inflation? They don’t actually use the inflation numbers that are reported every month. They use intermediate-term inflationary expectations. This is not the inflation of today, but the inflation that consumers and borrowers think might be in existence two, three, four, five years from now, because that is the one that really matters. If you borrow money for thirty years on a mortgage or you borrow money for five years for a car loan, and you’re trying to figure out the real interest rate you don’t use today’s interest rate, you use your expected interest rate over the next five years, or in the case of the mortgage the interest rate over the next thirty years. In order to do that, the Fed looks at what they call the TIPS spread – we have an interest rate in the United States called TIPS, which is Treasury Inflation Protected Securities. Those are protected against inflation. The interest rate on TIPS is only the interest rate you need to compensate for risk, but there is no inflation element build into it. With the other treasury notes you have to worry about inflation. So the Fed looks at ten-year rates and then they look at the ten-year TIPS rate to figure out the difference, and that difference, in theory, represents intermediate-term inflationary expectations. That is sort of what they are targeting.

So the whole point of QE is to buy notes in the five to ten years spectrum, keep those nominal interest rates low and keep the TIPS spread low as a way of keeping the inflation expectations low. And in that sense the Fed has been successful. People are continually amazed given the U.S. debt situation, the U.S. money printing situation and the potential high inflation why the interest rates are as low as they are. One reason is, the Fed is buying enough securities to keep the interest rates low. They don’t have to buy them all, they don’t have to monetize the debt, they only have to buy enough. On that measure I would say yes, QE has been a success and will continue to be a success, because as I have mentioned the balance sheet is so large that the buying power by itself is enough to  buy sufficient securities to keep interest rates low.

The global commodity rally, that is now under pressure, seems largely liquidity driven via cheap borrowed money. Do you think that there’s a direct link between monetary policies in the United States and the Arab revolts via higher food and energy prices?

Two times yes. But let’s take the first part of the question: is there a link between monetary policies and higher inflation prices? I think the answer is absolutely yes. We have seen this many times in the past. For example, in the early 1930?s commodities prices collapsed around the world, and that was partly caused by too tight monetary policy, and in that case the Fed was not expanding monetary policy enough, and that too tight monetary policy was collapsing commodity prices and causing generalized deflation all over the world. In the 1970?s we saw then the opposite: we saw a very loose monetary policy. At the beginning of the 1970?s, oil was about $2 per barrel, by the end of the 1970?s it was $12 per barrel and soon on its way to $20. That was in part due to a very loose monetary policy by the Fed. There is clear evidence in this. We saw this again and again.

We see it again today. The only difference today is that we have a more globalized world, we have more economies participating in the world economy to compete with each other for exports and market share. Labor in Asia now competes with labor in the United States. All of that was not true, certainly not to that extent in the 1930?s and the 1970?s. Also, the world is on a de facto dollar standard – dollars make up 60 percent of global reserves and an even higher percentage in global trade, of course, the price of oil and other global commodities are set in dollars. When you have money printing, what is happening is that inflation is showing up, but it is not showing up in the United States at first, it is showing up all over the world – in China, Malaysia, South Korea, Thailand, Brazil and many other countries.

That is because of the exchange-rate mechanism. These countries are trying to keep their currencies low relative to the dollar, which means they have to buy dollars by printing their local currencies in their local markets. The result of that is they are creating a flood of other currencies. That is why the inflation is showing up around the world and not in the United States. Little by little that is changing. We are at a point where a lot of those countries are starting to revalue their currencies upward. This will limit the inflationary pressure in their own countries, but it means that the inflationary pressure will now come back to the United States in the form of higher import prices when we buy foreign goods. This process will take some time to play out, but it will ultimately force the inflation back into the United States. With that all said, there is no doubt that the easy monetary policy of the Fed is responsible for higher commodity prices around the globe.

Now, given that, yes, this is absolutely one of the contributing factors to the unrest in Northern Africa, the Middle East, but also in some parts of China, which haven’t grown to the extend elsewhere, but the fact that they are happening at all is significant. Sure, there are many other factors, for instance large numbers of unemployed young adults. But rising food prices is sometimes what it takes to get the people out on the streets. The longing for freedom and liberty and the unemployment situation actually have been persisting for a longer period of time, but the rising food prices may be that sort of proverbial straw that breaks the camel’s back which causes civil unrest to come alive. So the Fed is doing a lot of damage, not only to the U.S. dollar and the global economy, but I would also say that they are actually provoking a lot of unrest around the world.

Would you then also say that war and monetary policies are in general intertwined subjects or at least could be?

There is no question that they can be. Again, we saw this in the 1930?s, there was a long sort of currency war fought by the major powers from the 1920?s to the 1930?s, which had to do in part with the debt situation coming out of World War I. In Germany you had massive reparations to pay to France and Great Britain, many others had massive war debts that were used to finance the war costs by Great Britain and France to the United States, so you had a world in debt, the whole world was in debt to each other, and that was what precipitated these currency wars, these beggar thy neighbor currency devaluations of one against the other, and finally all major currencies devalued against gold, which happened in stages between 1931 and 1936. But none of the economic problems were solved, the real solution would have been just to forget about the debt, but that did not happen until very late in the process and only in stages, and by then when it did happen a lot of the damage was done in Germany with the rise of the Nazi Party, which lead directly to World War II. So that sort of currency war turned into a shooting war.

Therefore, I think that one can’t underestimate the potential for these global international economic effects to turn into actual violent warfare. That did not happen in the second currency war during the 1970?s and the early 1980?s, but there is always that potential, yes. First, you have a currency war in which the countries try to devalue their currencies against each other, but that usually doesn’t work – all advantage is only temporary in that situation. Then you go into trade wars. What the countries cannot achieve with the currency devaluation they try to do in the form of tariffs, capital controls, embargos, unfair trade practices etc. But that also tends to fail. It might protect certain industries in the short-run, but it tends to reduce world trade and growth, and that causes even more economic stress. Finally, countries will always find excuses for conflicts that can absolutely lead into military conflicts. Those are things that I think the central bankers underestimate.

Now that you’ve mentioned the “Currency Wars“ of the past, let us look at the current one of our time. Isn’t the real battle royal in that “Currency War“ the one between gold and all fiat currencies, especially the U.S. dollar?

That’s where it will end up. I agree that this is the endgame. You start out by devaluing with each other, but that ends up in failure, and so you need something to devalue against – and gold is always the last resort, because gold is the one thing that doesn’t devalue on its own. For example, if the U.S. devalues the dollar against the Chinese currency, and then the euro devalues against the dollar, U.S. exports might be helped, but the dollar devaluation could be hurt by the euro devaluation, so as I have said no one is really further ahead and you’re not getting the inflation that you want. But one way you can always get inflation is the devaluation against gold – or even maybe the devaluation against gold is the inflation. Anyway, the purpose of this is to cheapen the currency, help exports and lift commodity prices across the board.

This has happened two times, of course. In 1933 President Roosevelt devalued the dollar against gold, and in 1971 Richard Nixon did the same thing. I think it will happen again. The currency war is playing out for a while, but they don’t really get what they want and so at the end of the day they have to devalue against gold. For instance, you will see a lot of up and down between the euro and the dollar, the cycle is repeating over and over and over, back and forth, and as a trader you can make a lot of money on the swings between the euro and the dollar, but as an investor it really doesn’t matter very much. My analogy for this is that the passengers on the Titanic can go to a higher deck or to a lower deck, but they can’t go all off the ship. The life boat, if you will to pursue that metaphor, is gold. That is the one thing they can all devalue against. I think this is where it all will end up.

In 2009 you have said on air at CNBC: “When you own gold you’re fighting every central bank in the world.” What has lead you to that conclusion?

Well, there are about 160.000 tonnes of gold in existence, that would be all gold that was ever mined, whether it’s jewelry, central bank reserves, industrial applications or artistic applications, etc. That is approximately all the gold ever mined. About 30.000 tonnes of that gold is in the hand of central banks, which is not quite 20 percent of all the gold. They are able to use that to manipulate the price of gold through central bank sells, central bank releasing of gold, or not selling it, but simply holding on to it. There is good evidence that central banks have pursued all those different policies from time to time. As an investor, even as a very large investor in the area in the tens or hundred of millions, which is pretty large, or even upwards to billions for some big institutions,  those amounts are still relatively small compared to central bank gold holdings. So you’re a little bit in the short-run at the mercy what central banks choose to do.  Although fortunately right now what I see is that central banks are not unhappy with the price of gold going up.

There were times in the past when they wanted to keep the lit on the price of gold to avoid inflation. But now is not one of those times. Now is the time when the Federal Reserve in fact wants inflation because they desperately want to reduce the real value of the U.S. debt and a depreciation of the dollar is one way to do that. So they do want the price of gold go up. However, they don’t want it to go up too quickly. They want an “orderly adjustment,“ that is the exact word that they use –  orderly as opposed to disorderly. What does that mean? It means that gold goes up 10 or 15 percent a year, which it has by the way, of course, ten years in a row. If it increases that way they do not mind it, because it cheapens the dollar which is what they want. But what they don’t want is to see it maybe double in six month period or a spike, because that might cause a panic buying of gold, a panic dumping of the dollar, and that can get out of control.

My point is simply that I think gold is a very good asset to own, I think it does preserve wealth and will go up in value, although it is not really going up in value – what happens is, of course, that the dollar is going down, nevertheless you will protect yourself against the collapse of the dollar. So investors should own it to some extend and in dollar terms it will go higher, but don’t speculate that it will happen too fast because the central banks are on the other end of the trade and they don’t want that to happen.

Mr. Rickards, a  huge chunk of the foreign gold reserves located at the New York Fed belongs to Germany. What are your thoughts related to the German gold reserve in custody at the NY Fed? Let’s assume you would be the head of the Deutsche Bundesbank with the best interests of the German people in mind – and also keeping in mind that we’re heading to currencies backed by gold: what would you do then in that respect?

It depends on the German gold policy. If Germany wants to leave the monetary policy to the U.S. and is willing to accept whatever policy plans the U.S. comes up with, they should probably leave it where it is. That is a question of confidence. But if Germany wants to pursue its own policies or perhaps have a more gold backed euro or maybe even go back to a Deutsch Mark, then they should bring it to Germany and store it in secure vaults under control of the Deutsche Bundesbank. The reason for this is: as long as it is stays in the United States it is vulnerable to confiscation by the United States. So you really don’t have the control over your own monetary policy as long as your gold is in other hands. During the Cold War, given the Russian threat, I am sure it made sense and was a smart move to have the German gold in New York. But today I would rather be concerned about the Federal Reserve printing presses than about Russian tanks, and thus I would like to have it in Frankfurt.

How do you react to all that “precious metals are in a bubble“ talk? Is this rather amusing for you to observe and to hear?

Yes. It tells me that people who are making that claim are not really familiar with the gold market. It’s funny how there are a certain number of people whom I would consider as true gold experts, but most people on Wall Street, for example, may have some analytical skills, but they are not real experts in gold, they seem to go from trend to trend – one month we see them talking on TV about tech stocks, the next month they are talking about corn or ethanol, and the month after that they are talking about gold. Those people tend to flip from topic and topic. They use for that the very same analytical techniques and are not really prepared to understand that much about gold.

Having said that, I want to argue that gold is definitely not in a bubble. Here is why: First, the trade is very, very uncrowded. I talk to large institutional investors all the time, and they have zero allocation in gold or very small, maybe one percent or one and a half percent. You look at these portfolios and they have 50 percent stocks, 40 percent bonds, the rest hedge funds. To me gold is the most under allocated asset in the world. If gold would simply go up from one percent to two percent in portfolios, there is not enough gold in the world anywhere near current market prices to support that shift. There is an enormous potential to go up just on a extremely modest allocation in the direction of gold.

Secondly, there are ways to measure if gold was in a bubble. You simply take the official gold supply numbers, multiply that by the market price and compare that number with the money supply. If you do that within the United States, you would come to a result of 17 percent. But in 1980, when gold was at $850 per ounce, that number was actually over 100 percent. In other words, at that point gold was so high that every holder of a dollar could have gone to the Fed, cashed in for gold and the United States still would have gold left over. In that situation, where the market value of gold is higher than 100 percent of the money supply, that is arguably a bubble. But we are nowhere near that number today, it is not 100 percent, it is about 17 percent. The two things together tell me that we are not in a bubble.

What would be the most important signals (beyond positive real interest rates) that the end of the bull market in gold is near?

Well, I gave you two metrics to explain why gold is not in a bubble. I would watch them also when we get closer to a bubble territory. For example, gold at $7000 an ounce with the current money supply and the current supply of gold, then we would be back where we were in 1980, and that might indicate a bubble. But we have plenty of room between $1500 and $7000. And remember also: a bubble can always overshoot.

What is your opinion related to the decision of the University of Texas endowment which bought $1 billion of physical gold?

That is very significant, because obviously it is a large endowment with access to the best financial minds of the world, very well advised, and they took that decision, which I believe is a good decision, they will make money on it, and I think it will open a door. It will make it more respectable for other endowments to do the same. There is a little bit like a herding mentality among asset managers and endowment managers, and even if they think there is good case for gold they don’t want to buy it because they fear to be embarrassed or marginalized at conferences as gold nuts. But when a very well advised and respectable endowment of that size such as the University of Texas endowment buys gold it sends a signal to others that they should looking at it. That increases the trend of purchasing gold, which of course is very bullish for the price.

The most interesting story in the future for me is the point in time when the Middle East countries will no longer sell their oil and natural gas for paper money. When do think will they be paid for it with precious metals?

Well, this is all part of an evolution away from the dollar. It has a number of ways to go. I do think that what may happen is that gold will be used as a pricing mechanism. In other words, Middle Eastern and also Russian natural resource exporters may begin to price their goods in units of gold, but accept dollars, but the problem, of course, is that the amount of dollars won’t be fixed. Simple example: right now oil is, I use rounded off numbers, around $ 100 a barrel and gold is around $1500 an ounce, so it takes 15 barrels of oil to purchase one ounce of gold.

By the way, if you look at the oil to gold ratio it has been very constant for a very long period of time. Of course, the price of oil has moved between $30 per barrel and $150 per barrel, and the price of gold has moved between $200 an ounce and $1500 an ounce, but if you look at the ratio, it always hovers around that 15 or 16 to 1 ratio, and that tells you something about the real intrinsic value of commodities.

But be that as it may, you could have a situation where somebody in Saudi Arabia says: From now on a barrel of oil will be 1/15 of an ounce of gold. Now, if you want to pay me in dollars that’s fine, but you have to do the dollar-gold conversion (to figure out how many dollars you owe me in a world of an increasing gold price) that means that you have to pay more dollars for a barrel of oil. So even if they accept dollars you can still have a world where it’s priced in gold, but gold is convertible to dollars and you can pay with dollars but you have to pay a lot more.

I think that is one of a number of solutions on the table. Another one is of course the SDR. The IMF is trying to promote the use of SDR as a basket of currencies. But none of this is feasible yet. It will require some years to study, it will require a conversion process and some pre-announcement for the market. But the bottom-line on the whole thing is: the exporters of natural resources and manufactured goods in the Middle East, in Russia, China, Brazil, they all have indicated deep, deep dissatisfaction with the current international monetary system and the role of the U.S. dollar in particular, so I think you will see some shifting away from that in the years ahead.

And what are your thoughts in that regard related to the war in Libya?

I think that is a small matter within the monetary system, but very important from an energy perspective. People have underestimated the ability of Colonel Gaddafi to remain in power, and part of the reason why they have underestimated it is because they may have been unaware of the fact that he has, as the Financial Times and others have reported, over 100 tonnes of physical gold. And interestingly, his gold is not in New York, it is in Tripoli, and he is actually able to use it to pay his troops. Even though he is now out of the international financial system and his paper assets have been frozen, he still enjoys some freedom with that physical gold. 

Bitcoin—a pseudonymous cryptographic currency designed by an enigmatic, freedom-loving hacker, and currently used by the geek underground to buy and sell everything from servers to cellphone jammers. No, this isn’t a cyberpunk artifact from Snow Crash or Neuromancer; it’s a real currency currently valued several times higher than the US dollar, the British pound, and the Euro.

Bitcoin is a virtual currency, designed to allow people to buy and sell without centralized control by banks or governments, and it allows for pseudonymous transactions which aren’t tied to a real identity. In keeping with the hacker ethos, Bitcoin has no need to trust any central authority; every aspect of the currency is confirmed and secured through the use of strong cryptography.

Over the last few months, Bitcoin’s value has risen by an order of magnitude as the sagas of Wikileaks and Anonymous (among others) have highlighted the limits of a financial system which relies on centralized intermediaries. With a current estimated market capitalization of about $100 million, Bitcoin has recently graduated from a theoretical techno-anarchic project patronized by libertarians and hackers to a full-fledged currency prompting comment from technologists and economists. At the time of this writing, one Bitcoin (BTC) is worth about US$15.

So how does Bitcoin work? Is it really secure? And is it here to stay—or just another digital currency fad? Glad you asked.

Complexities of cryptographic currencies

The problem with purely digital currencies is that of double-spending. Economists in the audience will note that digital products like a movie or a text file are non-rivalrous. If you have a copy of my pseudo-trip-rock band’s new MP3 album, there’s still just as much MP3 to go around for everyone else who wants one. That’s not a problem for files, but it is a problem with currency, since the whole point is that there’s a limited supply. If you use a dollar at the grocery store today, you can’t go out and spend that same dollar at a bar tomorrow.

The usual solution to the double-spending problem is a trusted intermediary. PayPal makes sure that you can’t spend the same dollars twice by deducting them from your account before they get added to someone else’s account. Visa, MasterCard, and every other bank and payment processor do the same. However, this centralized approach is the one that enigmatic creator Satoshi Nakamoto specifically tried to avoid in the original Bitcoin design. The idea was to use cryptography to create verifiable transaction records without the need to trust anyone but your own calculations.

The Bitcoin solution uses cryptography and an open transaction register. Whenever you spend a Bitcoin, you cryptographically sign a statement saying that you have transferred the coin to a new owner and you identify the new owner by their public crypto key. Whenever they need to spend the coin, the new owner uses his private key to sign it over to some further owner. As soon as a transaction takes place, the recipient (who has a very strong incentive to ensure that you don’t spend the coin twice) publishes the transaction to the global Bitcoin network. Now every Bitcoin user has incontrovertible evidence that the coin has been spent, and users won’t accept that coin from anyone but the new owner.

Mining and make-work

As a digital currency, Bitcoin suffers from a tangibility problem. Unlike other currencies traded online, you can’t go to a bank and withdraw physical coins, so what are they? More importantly, where do they come from? Coins are essentially agreements between all the Bitcoin nodes to accept a particular coin as currency. They are created gradually according to a precise protocol in order to reward those who contribute and maintain the network, control the rate of creation of the currency, and maintain the integrity of the transaction list.

In a process known as mining, individual Bitcoin users attempt to generate new coins by checking the integrity of the transactions list. They confirm the previous transactions and attempt to solve a difficult proof-of-work problem which involves exhaustively trying different solutions. There are a very large number of such potential solutions, so the likelihood of finding the solution depends how many other people are looking for it and how much computing power you devote to the problem. The first client to find the solution announces its good fortune to the whole network and earns a little reward for itself in the form of some shiny new Bitcoins.

By finding the newest solution to the proof-of-work problem, a Bitcoin client confirms the history of previous transactions and moved the transaction register forward, allowing new debits and credits to form part of the next block that can be mined to earn more coins. Future coins can’t be mined in advance, because the computation to find the new block (and hence create new Bitcoins) relies on the the chain of previous blocks and the history of transactions since the most recent block.

The number of new coins generated per block gradually decreases over time. It started out at 50 BTC, but will dwindle to zero sometime in future when all 21 million coins have been generated. Fortunately, coins can be divided down to the eighth decimal place, which may prove increasingly useful if their value grows.

What’s a few coins between friends?

One of the difficulties with a novel currency like Bitcoin is adoption and valuation. The same was true when the greenback paper dollar was first introduced, and it’s a real problem with any means of exchange. After all, a currency is little more than something useless but rare which everyone agrees to trade for useful things, whether apples or assault rifles. National currencies have the advantage that governments demand them in taxes and require them to be accepted, which provides both a particular market and a high rate of adoption.

So, why would anyone exchange their hard-won dollars for Bitcoins, or accept Bitcoins in exchange for real products like a carton of milk or a subway ride? As a currency, Bitcoin has a number of desirable features which are not found together in any other currency. Cash has features like anonymity and eminent portability, but also comes with the downside that you have to physically move it from place to place to use it. Credit cards and other trust-based electronic currencies can be used instantly over any distance, but you have to attach your real identity to the purchase.

An anonymous Bitcoin transaction

Bitcoins combine the advantages of the two methods. Using Bitcoins, I can buy a racy t-shirt from Tibet and computer time from China without either merchant knowing who I am, or my bank knowing what I bought. This is useful not just for those purchasing questionable items (the downside of anonymous currency flows), but also for those who don’t want merchants, banks, or card companies to be able to build up detailed profiles of their life, likes, and habits.

Since they’re useful, some people want to use Bitcoins. Since some people want to use them, merchants have an incentive to accept them in order to attract the business of those customers.

This simplified economic model is not uncontested. Ars tech policy contributor Tim Lee has publicly criticized Bitcoin’s economic model, both from the point of view of external market forces and over the internal incentive structures inherent to the protocol. Tech and economic policy commentator Jerry Brito provides a counterpoint, emphasizing Bitcoin’s decentralizaion, which makes it very hard to control, but concedes that it is very hard to distinguish between a currency bubble and currency value.

Bitcoin’s anonymity has already attracted Congressional attention. Sen. Chuck Schumer (D-NY) this weekend blasted Silk Road, an online drugs outlet that allegedly relies on TOR to obfuscate Internet traffic and Bitcoins for payment. “It’s an online form of money laundering used to disguise the source of money, and to disguise who’s both selling and buying the drug,” Schumer said.

June 9, 2011 9:26 AM PDT

by Lance Whitney

Responding to a recent report from the North Atlantic Treaty Organization condemning Anonymous, the online “hacktivist” group has issued a public response warning the global organization not to challenge it.

Claiming that the NATO report singled it out as a threat to “government and the people,” Anonymous defended some of its recent actions in the name of freedom and dissent. In its message (Google cached version), it also asserted that NATO fears the group not because it’s a “threat to society,” but because it’s a “threat to the established hierarchy.”

Issued last month by Lord Joplin, general rapporteur of NATO, the report warned member nations about the rising threat of “hacktivism,” or carrying out cyberattacks for political purposes. Singling out Anonymous, NATO described several of the group’s most recent actions, including the distributed denial-of-service attacks against MasterCard, Visa, PayPal, Amazon, and others that had cut off services for WikiLeaks.

Noting that Anonymous has become more sophisticated, the NATO report cautioned that it could hack into sensitive government, military, and corporate information and described a strong response against the group.

“Today, the ad hoc international group of hackers and activists is said to have thousands of operatives and has no set rules or membership,” said the report. “It remains to be seen how much time Anonymous has for pursuing such paths. The longer these attacks persist the more likely countermeasures will be developed, implemented, the groups will be infiltrated and perpetrators persecuted.”

In its response, Anonymous tried to soften its stance in parts by saying that it doesn’t want to threaten anyone’s way of life or terrorize any nation. But it made clear its reaction to NATO’s report.

“Finally, do not make the mistake of challenging Anonymous,” warned Anonymous in its message. “Do not make the mistake of believing you can behead a headless snake. If you slice off one head of Hydra, ten more heads will grow in its place. If you cut down one Anon, ten more will join us purely out of anger at your trampling of dissent.”

NATO’s report also provided a larger look into the growing danger of cyberattacks and how governments should respond to them. In the report, Joplin asked the question of how NATO should react if one of its member nations was the victim of a cyberattack.

“Can one invoke Article 5 of the Washington Treaty after a cyber attack?” asked the report. “And what response mechanisms should the Alliance employ against the attacker? Should the retaliation be limited to cyber means only, or should conventional military strikes also be considered?

Both the U.S. and the U.K. have recently made their own positions clear–that they consider cyberwarfare another form of warfare, and one potentially subject to a response using conventional military weapons.

Anonymous has issued a response to a recent NATO report, warning NATO not to challenge it.

(Credit: Screenshot by CNET)

By Fiona Macrae
Last updated at 12:58 AM on 21st May 2011

They have long been famed for their love of lavish banquets and rich recipes.  But what is less well known is that the British royals also had a taste for human flesh.

A new book on medicinal cannibalism has revealed that possibly as recently as the end of the 18th century British royalty swallowed parts of the human body.

The author adds that this was not a practice reserved for monarchs but was widespread among the well-to-do in Europe.

Medicinal cannibalism: Both Queen Mary II and her uncle King Charles II both took distilled human skull on their deathbeds in 1698 and 1685 respectively, according to Dr Sugg

Even as they denounced the barbaric cannibals of the New World, they applied, drank, or wore powdered Egyptian mummy, human fat, flesh, bone, blood, brains and skin.

Moss taken from the skulls of dead soldiers was even used as a cure for nosebleeds, according to Dr Richard Sugg at Durham University.

Dr Sugg said: ‘The human body has been widely used as a therapeutic agent with the most popular treatments involving flesh, bone or blood.

‘Cannibalism was found not only in the New World, as often believed, but also in Europe.

‘One thing we are rarely taught at school yet is evidenced in literary and historic texts of the time is this: James I refused corpse medicine; Charles II made his own corpse medicine; and Charles I was made into corpse medicine.

‘Along with Charles II, eminent users or prescribers included Francis I, Elizabeth I’s surgeon John Banister, Elizabeth Grey, Countess of Kent, Robert Boyle, Thomas Willis, William III, and Queen Mary.’

New world: Depiction of cannibalism in the Brazilian Tupinambá tribe as described by Hans Staden in 1557. Whether true or not, the myth ignored the fact that Europeans consumed human flesh

The history of medicinal cannibalism, Dr Sugg argues, raised a number of important social questions.

He said: ‘Medicinal cannibalism used the formidable weight of European science, publishing, trade networks and educated theory.

‘Whilst corpse medicine has sometimes been presented as a medieval therapy, it was at its height during the social and scientific revolutions of early-modern Britain.

‘It survived well into the 18th century, and amongst the poor it lingered stubbornly on into the time of Queen Victoria.

‘Quite apart from the question of cannibalism, the sourcing of body parts now looks highly unethical to us.

‘In the heyday of medicinal cannibalism bodies or bones were routinely taken from Egyptian tombs and European graveyards. Not only that, but some way into the eighteenth century one of the biggest imports from Ireland into Britain was human skulls.

‘Whether or not all this was worse than the modern black market in human organs is difficult to say.’

This painting of Charles I’s execution in 1649 shows people surging forward to mop up the former king’s blood. It was thought to have healing properties

The book gives numerous vivid, often disturbing examples of the practice, ranging from the execution scaffolds of Germany and Scandinavia, through the courts and laboratories of Italy, France and Britain, to the battlefields of Holland and Ireland and on to the tribal man-eating of the Americas.

A painting showing the 1649 execution of Charles I showed people mopping up the king’s blood with handkerchiefs.

Dr Sugg said: ‘This was used to treat the “king’s evil” - a complaint more usually cured by the touch of living monarchs.

‘Over in continental Europe, where the axe fell routinely on the necks of criminals, blood was the medicine of choice for many epileptics.

‘In Denmark the young Hans Christian Andersen saw parents getting their sick child to drink blood at the scaffold. So popular was this treatment that hangmen routinely had their assistants catch the blood in cups as it spurted from the necks of dying felons.

‘Occasionally a patient might shortcut this system. At one early sixteenth-century execution in Germany, ‘a vagrant grabbed the beheaded body “before it had fallen, and drank the blood from him..”.’

The last recorded instance of this practice in Germany fell in 1865.

History: Author Dr Richard Sugg, from Durham University, delves into the dark world of medicinal cannibalism in his new book Mummies, Cannibals and Vampires

Whilst James I had refused to take human skull, his grandson Charles II liked the idea so much that he bought the recipe. Having paid perhaps £6,000 for this, he often distilled human skull himself in his private laboratory.

Dr Sugg said: ‘Accordingly known before long as “the King’s Drops”, this fluid remedy was used against epilepsy, convulsions, diseases of the head, and often as an emergency treatment for the dying.

‘It was the very first thing which Charles reached for on February 2 1685, at the start of his last illness, and was administered not only on his deathbed, but on that of Queen Mary in 1698.’

Dr Sugg’s research will be featured in a forthcoming Channel 4 documentary with Tony Robinson in which they reconstruct versions of older cannibalistic medicines with the help of pigs’ brains, blood and skull.

The book, called Mummies, Cannibals and Vampires, will be published on June 29 by Routledge and charts the largely forgotten history of European corpse medicine from the Renaissance to the Victorians.

The waters off Libya are a NATO no-fly zone, which is good news to poachers: No inspectors. No surveillance.

June 1, 2011  |

A war is raging in Libya, but it’s not the one in the news.

Its battles are set in the dazzling Mediterranean offshore. Its warriors are foreign, their motives mostly mercenary.

Their casualties? Atlantic bluefin tuna. Although it’s not an officially endangered species — with help from the Obama administration — overfishing has reduced bluefin populations by 80 percent since 1970. A single bluefin typically sells for $75,000, and that’s what will happen to those caught off Libya, unless Captain Paul Watson, armed with international law and big serrated knives, wins this war.

Two ships from the Sea Shepherd Conservation Society, a nonprofit Watson founded in 1978, nine years after cofounding Greenpeace, are now speeding toward Libyan seas. French, Spanish, German, Italian and Maltese poachers ply these waters with impunity, although the EU has outlawed all fishing here due to Libya’s civil war. It’s a NATO no-fly zone, which is good news to poachers: No inspectors. No surveillance.

Except, that is, for the Sea Shepherd’s 60-foot helicopter-mounted flagship Steve Irwin and its small, swift scout vessel.

“Any boat we find will be an illegal boat,” warns Watson, who says he liberated 800 tuna off Libya last year.

Bluefin are not killed upon being caught, but hauled live in huge underwater nets to shore stations “where they can be fattened up” like feedlot steers, Watson explains. Sea Shepherd divers slit those nets with knives.

It’s the latest in a long series of rip-roaring and highly controversial rescue missions involving blades and ballistics, fire and ice, stink-bombs and blood. Sea Shepherd vessels ram Japanese whalers, get rammed back, and rock wildly under water-cannon fire on Animal Planet’s Whale Wars and in Confessions of an Eco-Terrorist, a new documentary directed by SSCS veteran Peter Brown.

Sea Shepherd crews have scuttled — that is, sunk — at least 10 whaling vessels. Sea Shepherd ships ram whalers, foul their propellers, intercept their harpoons, block their slipways to prevent loading, and barrage them with bottles of foul-smelling butyric acid. In return, Sea Shepherd vessels have been rammed, burned, flash-grenaded, fired upon, and depth-charged — including by a Norwegian naval vessel.

Confessions of an Eco-Terrorist calls Sea Shepherd a “vigilante organization,” its members “a band of pirates” and “the world’s most wanted environmental heroes.” Watson’s many honors include the Amazon Peace Prize and inclusion among the Guardian’s “50 People Who Could Save the Planet.” He has been beaten, suffocated, immersed in icy seas, and even shot in the chest by opponents, he says. He’s been arrested in many countries and charged with many crimes, including attempted murder, but never convicted.

“We don’t do anything illegal. We target illegal operations. Everybody’s so concerned about private property. They think private property is sacred.” But if that private property is being used to flout conservation codes, all deals are apparently off.

“We’re an interventionist organization fighting against poaching on the high seas.”

Recently, Watson was appalled to learn — from Wikileaks, of all places — that Barack Obama colluded with the Japanese government to disempower the Sea Shepherd Conservation Society.

In a confidential November 2009 cable Wikileaks released this year, the Japanese government asked the US government to revoke SSCS’ tax-exempt status. This cable cited the head of Japan’s fisheries agency as saying that US action against SSCS would “positively influence Japan’s negotiating position” regarding future negotiations over the number of whales legally killed every year. Monica Medina, the Obama administration’s representative to the International Whaling Commission, replied promptly that “the USG” — United States government — “can demonstrate the group does not deserve tax exempt status based on their aggressive and harmful actions.”

“It’s illegal for the US to use the IRS as a weapon against an organization in collusion with a foreign government,” says Watson, whose group has maintained tax-exempt status since 1981. “Obama was making secret deals with Japan. No other president has done this. Every president since Reagan has stood fast on the whaling issue. This is the first administration to swerve. This president has reneged on every offer he ever made for us. I voted for him. That’s what really gets me,” says Watson, who was a Green Party candidate in Vancouver’s 1995 mayoral race.

After last year’s Deepwater Horizon oil spill, Watson “wanted to go to the gulf with a boat and clean animals. We were told, ‘If you so much as touch an animal that’s covered with oil, you’ll go to jail.’ So we couldn’t rescue a single animal, because BP owns Obama. He’s an industry guy.”

On May 27 of this year, the Obama administration officially declined to grant endangered species status to the Atlantic bluefin.

“At least Republicans are honest,” Watson says.

So he battles for tuna, cod, salmon, dolphins and the heavily overfished Chilean seabass, which Watson insists cannot be caught sustainably, no matter what their packaging says at Whole Foods. (He says the word “sustainable” is a euphemism for “business as usual.”) He battles for sea cucumbers, whose population has been decimated in the breathtakingly beautiful, mercilessly poached South Pacific. He fights for sharks, as detailed in the gory 2006 documentary Sharkwater. He fights for fur seals, although “I think we won this one. We got the EU to ban seal pelts. Seal pelts are now worthless in Europe.”

And because he fights for whales, “Japan treats Sea Shepherd like we’re a nation they’re at war with. It’s sheer arrogance. They think nobody can tell them what to do.”

In 2009, SSCS insiders went undercover at a trendy California sushi restaurant they’d heard served whale to trusted customers. Sneaked-out samples were DNA-identified as whale. The restaurant closed, its owner and chef slammed with federal charges. Last week, a Los Angeles seafood dealer pled guilty to providing the meat.

“But we know there’s still a large distribution in whale meat among sushi restaurants in America,” Watson says.

“A small group of people will pay a lot of money to eat endangered species. There’s a special thrill in ordering something it’s a federal crime to eat.”

That thrill is alive and well. Mitsubishi Corporation hoards massive quantities of frozen bluefin, hoping to cash in on the species’ collapse.

“Mitsubishi has a five-year supply of bluefin,” Watson explains. “They’d like to get a ten-year supply, because diminishment translates to scarcity and scarcity translates to higher prices. If they drive the bluefin into extinction, we’re looking at a million-dollar fish. So there’s no interest in conserving them.

“I call it the economy of extinction.”

Whale Wars‘ fourth season, which starts this Friday, “will hopefully be our last, because we’ve succeeded in driving the Japanese whaling fleet out of the Southern Ocean. They can move, but they know we will find them.”

So it’s on to Libya — and then the Faroe Islands, a North Sea Danish protectorate where thousands of pilot whales are slaughtered every year for sport. In a tradition known as “the Grind,” massive quantities of whales — entire pods at a time — are corraled into shallow bays, gaffed, slashed, and slain. The sea turns Clamato-red. The crowds rejoice.

“It’s barbaric, a big orgy of slaughter. We’ve got pictures of people ripping fetuses out of pregnant females for fun.”

Five-time Faroese prime minister Atli Dam told Watson “that it’s part of their culture and that God gave this to them. Well, you can’t use culture as a justification for destroying the planet.”

Last fall, he placed a dead baby pilot whale before the Danish Embassy in Paris. The carcass lay in a coffin, atop a European Union flag. Noting that Norway and Iceland can’t join the EU because both kill whales, yet the Faroes enjoy EU benefits through Danish subsidies, Watson demanded that Denmark stop supporting the Faroes until they outlaw the Grind.

“We speak the one language everyone understands: economics,” Watson says. “We don’t try appealing to these people’s morals or ethics, because I don’t believe they have any.”

STEVE LADURANTAYE - The Globe and Mail

Now that’s cross-border shopping: Canadians bought $9.4-billion of U.S. real estate in the last year.

Canadians were the largest foreign buyers of U.S. real estate in the 12 months ending March 31, according to the U.S. National Association of Realtors annual survey, accounting for 23 per cent of all sales to foreigners.

China moved into second place at 9 per cent, while Mexico, Britain and India tied at 7 per cent. Together, foreign buyers spent $43-billion.

From the study:

The total U.S. existing home sales market was approximately $1.07-trillion in the 12-months ending in March 2011. Foreign clients purchased an approximate $41-billion share of homes, the same as the previous year. In addition, recent immigrants (who have moved to the U.S. within the past 2 years) and individuals with visas for more than six months purchased an additional $41-billion, for $82-billion, up from $66-billion reported in 2010.

International buyers came from a total of 70 countries; the top five (Canada, Mexico, China, U.K., and India) accounted for 53 percent of transactions. Most states had at least one international transaction, but four states – Arizona, California, Florida, and Texas – accounted for 58 per cent of transactions.

Proximity to the home country, convenience of air transportation, and climate and location appear to be important considerations to purchasers.

The average price paid by international buyers was $315,000, compared to the overall U.S. average of $218,000. Comparable median prices were $200,000 and $170,000. Approximately 61 per cent of international purchasers bought single family detached homes; the comparable figure for overall U.S. sales was 88 per cent. Approximately 3 per cent of international sales involved the purchase of commercial property.

Almost 80 per cent of agents reported that the value of the U.S. dollar had an impact on international sales. U.S. home prices have declined in recent years in both dollars and euros. When the euro’s value relative to the dollar increases, the real price of a U.S. home to a euro based purchaser declines.

May 20, 2011, 10:27 AM EDT

By Caroline Alexander and Grant Smith

(Updates with council in second paragraph, analysts’ comments starting in fourth, OPEC role starting in sixth.

May 20 (Bloomberg) — The top Iranian legal authority said President Mahmoud Ahmadinejad’s assumption of control over the Oil Ministry this month violates the constitution, signaling a deepening rift in the hierarchy as Iran chairs OPEC.

The Guardian Council, partly appointed by Supreme Leader Ayatollah Ali Khamenei, said that it was “unlawful” for Ahmadinejad to have taken up the post, citing Article 135 of Iran’s constitution, state-run Fars news agency reported today.

Ahmadinejad declared himself caretaker of the Oil Ministry in a May 15 interview on state television, a day after dismissing Masoud Mir-Kazemi and two other ministers as part of a plan to combine several departments to improve efficiency.

The council’s comment “ties into a specific point of conflict,” Scott Lucas, an Iran expert at the University of Birmingham in the U.K., said in a phone interview. “It suggests the Guardian Council is pretty much on side with the supreme leader on setting the limits on what Ahmadinejad can do.”

Iran, the second-largest crude producer in the Organization of Petroleum Exporting Countries, took over the group’s one-year rotating presidency on Jan. 1. Traditionally, the OPEC president, who is the sitting oil minister of the country holding the presidency at the time, gives a public speech on behalf of the organization at the start of each ministerial conference.

OPEC Meeting

It wasn’t clear whether the council’s interpretation of the law will have an impact on Ahmadinejad’s attendance at the June 8 meeting of the 12-member bloc in Vienna. Fars reported on May 18 that he would attend the gathering. Ministers will decide whether to raise output limits for the first time since 2008 at this year’s initial OPEC meeting.

Iran is often in favor of limiting oil output to keep prices high. Saudi Arabia, the group’s largest member, typically advocates levels that don’t damp economic growth.

The Iranian president returned to work May 2 after a week- long absence that followed a conflict between him and Khamenei over Ahmadinejad’s acceptance of Intelligence Minister Heidar Moslehi’s resignation.

Today’s comments by the council show “an increasingly open power struggle,” Samuel Ciszuk of IHS Global Insight said in a telephone interview in London. “He’s challenging his conservative opponents to pretty high degree, and the conservative faction is not backing down.”

Post-Election Protests

Ahmadinejad was re-elected to a second term in June 2009 amid fraud allegations, which sparked the most widespread demonstrations in the country since the 1979 revolution that brought Shiite Muslim clerics to power. The leadership responded to the post-election dissent by authorizing the use of force, arresting thousands. Khamenei backed Ahmadinejad at the time, saying his victory was a “celebration” for the nation.

Article 135 of Iran’s constitution requires that ministers dismissed by the president remain in their position until a replacement is appointed, according to Fars. The president is allowed to select a temporary caretaker for departments without a minister, for a period of up to three months, it said. The council has yet to release its verdict on the matter.

Oil is Iran’s biggest source of foreign revenue, with the price of Iran Light crude gaining 22 percent so far this year to $108.65 a barrel. The ministry oversaw efforts to boost refinery processing to avoid shortages of gasoline following U.S. pressure to curb international sales of the motor fuel to Iran.

–Editors: Heather Langan, Philip Sanders

To contact the reporters on this story: Caroline Alexander in London at calexander1@bloomberg.net; Grant Smith in London at gsmith52@bloomberg.net.

To contact the editors responsible for this story: Andrew J. Barden at barden@bloomberg.net; Stephen Voss at sev@bloomberg.net.

By Keith Barry May 23, 2011

Update 5:30 p.m. May 24: An earlier version of this story incorrectly stated that the National Highway Traffic Safety Administration will require that all new vehicles have an event data recorder. The agency is at this point only considering such a requirement.

The National Highway Traffic Safety Administration will later this year propose a requirement that all new vehicles contain an event data recorder, known more commonly as a “black box.” The device, similar to those found in aircraft, records vehicle inputs and, in the event of a crash, provides a snapshot of the final moments before impact.

That snapshot could be viewed by law enforcement, insurance companies and automakers. The device cannot be turned off, and you’ll probably know little more about it than the legal disclosure you’ll find in the owner’s manual.

The proposal looks to some like a gross overreach of government authority, or perhaps an effort by Uncle Sam, the insurance industry and even the automakers to keep tabs on what drivers are doing. But if you’re driving a car with airbags, chances are there’s already one of these devices under your hood.

Automakers have long installed electronic data recorders in their automobiles, and the National Highway Traffic Safety Administration has since late 2006 required automakers to tell consumers about the devices. That federal rule also outlines what information is recorded and stipulates that it be used to increase vehicle safety.

Now the National Highway Traffic Safety Administration is considering a proposal that would “expand the availability and future utility of EDR data” — in other words, a possible requirement that all automobiles have the devices. The proposal is expected sometime this year. A separate discussion would outline exactly what data would be collected.

Both proposals follow rules adopted in 2006, and how they affect you depends upon where you live and what data points it records. How much it will affect you in the future may depend on a new set of standards that spell out exactly what data is collected and who can access it.

An Incomplete Record
On August 17, 2002, two teenage girls in Pembroke Pines, Florida, died when their vehicle was struck by a Pontiac Firebird Firehawk driven by Edwin Matos. The girls were backing out of their driveway; investigators accessed the vehicle’s data recorder and discovered Matos had been traveling 114 mph in a residential area moments before impact.

Matos was convicted on two counts of manslaughter, but his lawyer appealed the admission of the data recorder evidence, arguing it may have malfunctioned because the car had been extensively modified. The attorney also argued the evidence was based on an evolving technology. The Florida Supreme Court upheld the conviction, however, establishing precedent in that state that data gleaned from event data recorders is admissible in court.

There are two important facts to note in this case. First, Matos was driving in Florida, one of 37 states with no statutes barring the disclosure of such data. While car companies initially claimed ownership of the data, courts eventually ruled that it belongs to vehicle owners and lessees. No federal laws govern access to black box data, and state laws eventually clarified how much data other parties could access.

“The state statutes, starting with one in California, arose out of consumer complaints about insurance companies getting the data without the vehicle owner even knowing that the data existed or had been accessed,” said Dorothy Glancy, a lawyer and professor at Santa Clara Law with extensive experience studying issues of privacy and transportation.

In most of the 13 other states, however, Matos’ black box data still would have been available to police officers armed with a warrant.

“Law enforcement generally has access to the data,” Glancy said.

The second important fact is that, though the court denied Matos’ appeal, the question of the data’s validity remained. Most manufacturers currently use proprietary systems that require specialized interpretation, and many individual event data recorders do not survive crashes intact. Other courts have ruled against the admission of the data.

Setting a Standard

The lack of uniformity concerns Tom Kowalick. He chairs the Institute of Electrical and Electronics Engineers P1616 Standards Working Group on Motor Vehicle Event Data Recorders, one of three panels aiming to set universal standards for event data recorders (EDR).

“Until recently, there has been no industry-standard or recommended practice governing EDR format, method of retrieval, or procedure for archival,” Kowalick said. “Even for a given automaker, there may not be standardized format. This lack of standardization has been an impediment to national-level studies of vehicle and roadside crash safety.”

Standards proposed in 2008 would ensure that data once available only to automakers IS publicly accessible. The new standards would make accessibility universal and prevent data tampering such as odometer fraud.

“It also addresses concerns over privacy rights by establishing standards protecting data from misuse,” Kowalick said.

The standards also propose specific guidelines and technology to prevent the modification, removal or deactivation of an event data recorder.

Those regulations would, in theory, make black box data more reliable than what is currently collected. But they also would prevent drivers from controlling the collection of information — information that they own.

“I am not sure why consumers would want a system in their vehicles that they could not control,” Glancy said.

For What Purpose?

Before shunning new cars and buying a 1953 MG TD to avoid secret tracking devices, it helps to see how the information gleaned from event data recorders is used.

General Motors has been a leader in event data recorder technology, installing them in nearly all vehicles with airbags since the early 1990s. It currently installs Bosch EDRs in all vehicles sold in North America. The technology has evolved and now collects as many as 30 data points, said Brian Everest, GM’s senior manager of field incidents.

“In the early ’90s we could get diagnostic data, seatbelt use and crash severity,” Everest said. “Currently, we can get crash severity, buckle status, precrash data related to how many events the vehicle may have been in and brake application.”

The newest vehicles also can determine steering input and whether lane departure warning systems were turned on.

That info is invaluable in determining how a car responds in a crash. With a vehicle owner or lessee’s permission, crash investigators with access to the data pass on the EDR records to GM, which can determine whether vehicle systems or driver error contributed to an accident. They also can discover what vehicle systems and technologies prevented serious injuries or death.

“It’s about trying to understand what a particular system’s performance did before a crash,” Everest said.

In addition to helping a manufacturer prevent future crashes or injuries, it can also help in defending an automaker against claims of vehicle defects.

“In a great many cases, we can use data to understand whether it had any merit to it or not,” Everest said.

Sometimes the information vindicates an automaker, such as in the case of Toyota’s recent unintended acceleration debacle. Investigators could look directly at vehicle inputs to determine what occurred in each case. In other cases — a problem with unintended low-speed airbag deployment in a 1996 Chevrolet Cavalier, for example — the data reveals a legitimate vehicle defect and leads to a recall being issued.

Safety In The Future

While automakers might like to examine every aspect of a crash, there comes a point where too much data would overload researchers and the relatively inexpensive computers used in vehicles. The last thing car makers — or consumers — want is to increase the price of a vehicle to pay for super-sophisticated event data recorders.

“We’re definitely supportive of additional data,” Everest said. “The drawback on parameters is that you want to understand how it would affect the system,” balancing the need for data with the computing power available from a low-cost EDR.

Other concerns involve law enforcement access to enhanced electronic data recorders or whether dealers or insurance companies could use that data to deny or support claims.

“It usually depends on state law whether they need a subpoena or a warrant,” Glancy said. “Lots of data just gets accessed at the crash scene or the tow yard, as I understand actual practice.”

Whether that information was accessed and interpreted by a trained professional would determine how it held up in court. Insurance companies’ access and use of the data would again be up to state law, said Glancy.

Several insurance companies contacted by Wired.com declined to comment on the issue, but Leah Knapp, a spokesperson for Progressive Insurance, offered that company’s policy. “Our position on EDRs is that we would only use that data in a claims investigation with customer consent or if we’re required to do so by law,” she said. Knapp stressed that manufacturer-installed EDRs are different than incentive programs run by insurance companies that offer a discount for customers who voluntarily install monitoring devices on their vehicles.

Though dealers have access to EDR records, Everest said he knew of no instance where the information was used to void a warranty claim by proving that a customer abused a vehicle.

“Automakers have a duty to warn vehicle owners about safety recalls and the like,” Glancy said. “But you would have to look at the particular warranty to see what would be covered and what would not.” Still, she said she’d “expect that they would” eventually be able to access such data.

It comes down to a balancing act between an individual’s right to privacy and automakers’ need for data to determine the cause of a crash, between the need for a robust reporting system and the computing power available, between state interests in protecting consumers and insurance companies. Whether that balance tilts in favor of drivers remains to be seen — but at least EDR standards ensure a level starting point.

MAY 17–The Drug Enforcement Administration probe that has ensnared a well-known rap music manager is focusing on the shipment of kilos of cocaine from Los Angeles to New York by a narcotics ring that stashed the drug in “road cases” delivered to recording studios, The Smoking Gun has learned.

Payment for the cocaine was sent back to the West Coast in vacuum-sealed packages that were coated with mustard, the pungent smell of which was intended to conceal from drug-sniffing dogs the scent of narcotics on the currency.

To date, the ongoing investigation–which is being overseen by prosecutors in the U.S. Attorney’s Office in Brooklyn–has resulted in felony charges against about six defendants, several of whom are connected to the rap music industry.

Additionally, an arrest warrant has been issued for James Rosemond, the manager who represents the L.A. rapper The Game. The 46-year-old Rosemond, a convicted felon with a lengthy rap sheet, is pictured in the above mug shot.

In addition to representing The Game (real name: Jayceon Taylor), Rosemond’s Czar Entertainment web site lists Mike Tyson and singer Sean Kingston as clients. His “affiliated artist” roster–whatever that is–includes gangster rapper Rick Ross, R&B singer Akon, and former Haitian presidential candidate Wyclef Jean. In fact, Rosemond was traveling with Jean in Port-au-Prince in March when the performer was reportedly “shot.”

Rosemond’s brother Kesner, 49, has already pleaded guilty to a trafficking charge stemming from the DEA investigation. Kesner Rosemond, who has previously spent a combined total of 12 years in prison on gun and narcotics charges, faces a mandatory minimum of ten years in prison for his latest felony conviction. But Rosemond, pictured in the below mug shot, is likely to be hit with a more severe sentence–perhaps in excess of 15 years–when he is sentenced next month.

The DEA probe began in late-2009 when agents discovered that members of the narcotics ring were sending kilos of cocaine from L.A. to New York City via overnight delivery services like Federal Express. In return, packages of cash were being sent to Mail Boxes Etc. locations in L.A., where they were picked up by the cocaine suppliers.

At one point, federal agents seized three Federal Express boxes containing a total of $452,270 in cash that had been picked up by Maynard Coleman, an alleged member of the drug trafficking ring, at a Beverly Hills mail drop. The currency was found inside plastic bags that were “filled with yellow mustard,” according to an affidavit sworn by Agent Steven Miller.

During subsequent surveillance, Coleman was spotted driving on two different occasions to Mail Boxes Etc. with Henry Butler, whom the DEA identified as one of the ring’s principal cocaine suppliers. Miller reported that investigators last July recovered five kilos of cocaine that Butler sought to mail with the aid of Coleman (who says he works as a “producer/engineer” for Malibu Music Co.) and an unidentified woman.

As a result, Coleman and Butler were charged with drug trafficking.

Butler, who pleaded guilty in mid-March, has been cooperating with federal investigators for several months and has provided significant details about the trafficking operation (during a March 17 plea hearing, federal prosecutor Todd Kaminsky referred to a clause in Butler’s “cooperation agreement”).

While Butler, 45, is scheduled to be sentenced in late-July, that appearance will likely be postponed due to his continuing assistance to the government.

Butler’s cooperation could spell trouble for James Rosemond, whom Butler initially met through his involvement in the music industry. That relationship, a source told TSG, eventually grew to include the trafficking of cocaine.

While charges against Rosemond have not been unsealed, a close associate of his, Khalil Abdullah, was named last month in a five-count indictment charging him with narcotics distribution, cocaine possession, money laundering, and obstruction of justice. The last count stems from the 37-year-old Abdullah’s alleged attempt to pressure Butler into not cooperating with federal officials.

In a sworn affidavit, DEA Agent Arthur Tracy described how members of the narcotics ring transitioned from using Federal Express to move its cocaine to shipping narcotics “in ‘road cases’ that normally store music equipment to various music studios in New York City.” Then, once “Abdullah or his underlings retrieved the road cases from the studios and distributed the cocaine in New York, they would then transport millions of dollars of proceeds from narcotics sales in road cases to music studios in Los Angeles.”

During the course of the DEA probe, Tracy reported, “the government developed evidence demonstrating that Abdullah was one of the leaders” of the cocaine trafficking operation. Abdullah, who is being held without bail, is a convicted felon who has served time for robbery.

In a recent court filing, prosecutors noted that while Abdullah spent time inside recording studios, he “does not work in the music industry and has instead operated businesses in the security industry as well as the hair-extension industry over the past several years.”

Five years into President Felipe Calderon’s war with the drug cartels, a growing number of Mexicans are tired of shopworn excuses from a government which appears to be incapable of protecting the public from murderers and kidnappers. Life in a country which is increasingly being recognized as a “failed state” is leading more and more citizens to the realization that self-defense is the right and responsibility of every human being. That realization is leading to more and more Mexicans procuring firearms, often despite the Mexican regime’s harsh laws regulating their ownership. Angela Kocherga reports for KHOU in Houston that the growing trend toward private gun ownership in Mexico is a result of the government’s utter failure to protect the people:

Despite strict gun-control laws in Mexico, crime scenes are riddled with bullet holes. Both drug cartels and common criminals have guns.  Now more private citizens are arming themselves for protection, even if it means breaking the law.
“People are desperate,” said Rogelio “Chief” Bravo, a private investigator in El Paso who has worked for clients just across the border in Ciudad Juarez too.  “They’re telling the government, if you can’t protect us, let us protect ourselves.”

Government pronouncements regarding the regime’s seemingly-endless war against the drug cartels have taken on a surreal character. For example, Mexico’s chief law enforcement official — Public Safety Secretary Genaro Garcia Luna (pictured above) — recently declared that it would be at least another four years (and perhaps as many as seven years) before there would be any significant progress in the war against the cartels. And the secretary’s primary concern appeared to be advocacy of President Calderon’s sweeping plans for consolidating the country’s police departments. Meanwhile, the cartels often perpetrate their crimes with little concern for ever being held accountable for their actions; in the city of Apodaca, for example, the police chief and eleven of his bodyguards were recently kidnapped. (As of this date, no further information regarding the missing police officers is available.)

According to Kocherga’s report for KHOU, the people of Mexico actually have a legal right to own firearms set forth in the nation’s constitution. However, the nation’s laws have undermined that right to the point where it is virtually impossible for private citizens to own firearms in a caliber capable of use for self-defense.

Many ordinary residents in Mexico believe guns are banned.
“The Mexican constitution allows people to possess firearms,” explained John Hubert, a certified-concealed hand gun instructor in El Paso. “But over the years the government has passed so many requirements and laws and restrictions that it’s basically almost impossible.”
Hubert and his wife, who is also a certified concealed handgun instructor, own the El Paso Shooters Academy.
They’ve trained licensed gun owners in Texas who are dual Mexican citizens.
“They live here in the states and they also live over there. They’re doing it for protection,” said Kathy Hubert. “We’re kind of phasing that out, unless we know who they are.”
She recalled one family in Mexico who wanted tactical training.
“These people did have a ranch and they had guns. They were doing it for protection, coming over here for more training,” she said.
Gun owners in Mexico by law must register their weapons with the military, which is the only authorized gun dealer. Any weapon above 22 calibers is only authorized for military use.

Consider the fact that the cartels regularly equip their thugs with fully automatic, high caliber weapons, the possession of a “legal” firearm is of little use for self-defense. With a constitutional right purportedly whittled down to nothing more than a right to own a firearm suitable for “plinking,” the people of Mexico have essentially been stripped of their constitutional right to own firearms.

A year ago, President Calderon had the audacity to blame the second amendment rights of Americans for the drug-related violence in Mexico. Since that time, however, the alleged complicity of the American government in both arms and drug smuggling has fundamentally undermined any credibility which Calderon’s claims ever could have mustered.

On the other side of the border, local Texas law enforcement officials have little use for the dezinformatsia spread by Barack Hussein Obama. Obama has mocked citizens who are concerned about the flood of illegal aliens across the Mexican border, and cavalierly dismissed the reasonable fears of the residents of border states who have witnessed the Mexican violence spilling over the border. As reported by BorderlandBeat, the violence which the cartels have unleashed frequently spills over the border:

Texas officials rebuffed President Barack Obama’s claim that the U.S.-Mexico border is secure and told a congressional panel Wednesday that cartel-related crimes in this country are under-reported.
Steve McCraw, Texas Department of Public Safety director, said 22 murders, 24 assaults, 15 shootings and five kidnappings in Texas were linked to Mexican cartels since 2010.
“There are consequences when you don’t secure the border,” McCraw told the subcommittee. “There has been a proliferation of organized crime in Texas.”

For Mexicans and Americans, self-defense is both a right and a responsibility. The tragedy is that the governments that should be committed to the defense of that right are more concerned with restricting the rights of their citizens than stopping the criminals who are spreading chaos and death on both sides of the border.

Suzanne Edwards

May 17, 2011

The New Madrid Seismic Zone (NMSZ) has received a lot of media attention lately, as the area has been subject to record flooding, monster tornadoes , increased seismic activity, thousands of mysterious Red Winged Blackbird and fish deaths, sinkholes, and most recently, levees being bombed by the US Army Corps of Engineers.

Although initially when many people hear the name “New Madrid” automatically think it is located somewhere in Spain, this sleeping giant’s fault line actually lies smack dab in the middle of the Midwestern and Southern United States. The name does however share some Spanish roots, as it is named after the town of New Madrid (located in the state of Missouri). Back in 1788 when this town was part of the Louisiana territory, it had been a colony of Spain. Historically, this town is best known for notoriously being ravaged by 1000 earthquakes between 1811-1812 when the “Great Quakes” measuring magnitude 7+ rattled the region. It is from this town’s name and the infamous wrath that plagued it, that the name “New Madrid Seismic Zone”was born.

The New Madrid Fault Line runs 150 miles and lies beneath the states of: Alabama, Arkansas, Illinois, Indiana, Kentucky, Mississippi, Missouri, and Tennessee. It not only crosses 5 state lines, it also cuts the Mississippi River in three places and the Ohio River in two places.

Although hidden, the fault is active, and measures more than 200 measured events a year. Outside of the west coast, it is the highest earthquake risk in the United States. Although not as active as the San Andreas Fault in California, when this sleeping giant awakens , the destruction covers 20 times the punch because of the mere scope of the geographic area it encompasses. Recently, Arkansas was (for the most part), the area along the fault that saw the most recent seismic activity. In fact, the number of quakes Arkansas experienced in 2010 was almost equivalent to what the state experienced in the entire twentieth century.

The active faults within the NMSZ are poorly understood and cannot easily be studied like other active fault regions (like California) because they are not expressed at the ground surface. Complicating matters further, the faults are hidden beneath a couple hundred feet of thick layers of soft river deposited soils called alluvium. Since alluvium is very soft, it erodes in a very short time or may be quickly covered over by new deposits, thereby quickly hiding evidence of earthquake fault lines.

According to some scientists, the possibility of a major earthquake measuring 7.5 or greater happens every 200 years. The last time it occurred in this region was the Great New Madrid Earthquake of 1811-1812 so I guess we are right on schedule should the giant awaken from his 200 year slumber.

FEMA (Federal Emergency Management Agency) is conducting a National Level exercise within the New Madrid region. On May 16th. The purpose of this training exercise is to simulate the catastrophic nature of an earthquake of this magnitude within this region. With 2011 being the bicentennial anniversary of the great quakes of 1811-1812 holding these exercises at this time is quite fitting.

One does not have to look very long for information about the New Madrid fault line the web is a buzz with countless conspiracy theory views of how HAARP(High Frequency Active Auroral Research Program) will initiate a quake in this region. Many bloggers question why FEMA ordered emergency blankets, underwater body bags, food and water for 7 million survivors within the New Madrid Seismic region, and question why they would spend so much money on something that may happen? Other bloggers speculate that natural gas “fracking” is causing disastrous cracking in the fault line, weakening it further, and that if an earthquake does happen, the natural gas locations would blow in a domino effect like fashion one after the other. Other conspiracy Theorist warn that several nuclear facilities lay along the New Madrid Fault Line and that what recently occurred in Fukushima Japan could actually occur on US soil. Other bloggers point out the striking resemblance of geographic flooding in the NMSZ region as almost identical to that depicted in a future map of the USA (put by the US Navy) that shows the US West Coast , The New Madrid Seismic Zone area , as well as the Eastern seaboard as being all submerged under water. Others speculate that the US Geological Centre (USGC) is taking down larger scale earthquakes in the NMSZ as quickly as they prop up on their website and that there is an ever growing mass media “black out” on mysterious events that have plagued the USA.

With the active fault lines not visible to the naked eye, making it difficult for scientist to study, it may be difficult with 100% accuracy to speculate when the next “Great Quake” will occur. If it does occur within our lifetime, it is estimated that its effects would damage 20 or more states with the state of Missouri alone having sustained at least $6 billion in loss and damages. It is difficult to fathom the devastation of such an event. Something like this could literally split the US in two causing their economy to plummet further and the loss of life would be enormous. Only Mother Nature knows when “Her Giant” will awaken, but I do hope that this “Giant” will remain asleep for a very long time experiencing only dreams of awakening.

Alexa Olesen Associated Press

BEIJING — Watermelons have been bursting by the score in eastern China after farmers gave them overdoses of growth chemicals during wet weather, creating fields of “landmines” instead of the bounty of fruit they wanted.

About 20 farmers around Danyang city in Jiangsu province were affected, losing up to 45 hectares of melon, China Central TV said in an investigative report.

Prices over the past year prompted many farmers to jump into the watermelon market. All of those with exploding melons apparently were first-time users of the growth accelerator forchlorfenuron, though it has been widely available for some time, CCTV said.

The farmers used it during an overly rainy period and put it on too late in the season, causing the melons to burst open, CCTV said, citing agricultural experts.

Chinese regulations don’t forbid the drug, and it is allowed in the U.S. on kiwi fruit and grapes. But the report underscores how farmers in China are abusing both legal and illegal chemicals, with many farms misusing pesticides and fertilizers.

Farmer Liu Mingsuo ended up with three hectares of ruined fruit and told CCTV that seeing his crop splitting open was like a knife cutting his heart.

“On May 7, I came out and counted 80 (burst watermelons) but by the afternoon it was 100,” Liu said. “Two days later I didn’t bother to count anymore.”

Intact watermelons were being sold at a wholesale market in nearby Shanghai, the report said, but even those showed telltale signs of forchlorfenuron use: fibrous, misshapen fruit with mostly white instead of black seeds.

The government has voiced alarm over the widespread overuse of food additives like dyes and sweeteners that retailers hope will make food more attractive and boost sales.

Though Chinese media remain under strict government control, domestic coverage of food safety scandals has become more aggressive in recent months, an apparent sign that the government has realized it needs help policing the troubled food industry.

The CCTV report quoted Feng Shuangqing, a professor at the China Agricultural University, as saying the watermelon problem showed that China needs to clarify its farm chemical standards and supervision to protect consumer health.

The broadcaster described the watermelons as “landmines” and said they were exploding by the hectare in the Danyang area.

Many of farmers resorted to chopping up the fruit and feeding it to fish and pigs, the report said.

By MARK MAZZETTI and EMILY B. HAGER

Correction Appended

ABU DHABI, United Arab Emirates — Late one night last November, a plane carrying dozens of Colombian men touched down in this glittering seaside capital. Whisked through customs by an Emirati intelligence officer, the group boarded an unmarked bus and drove roughly 20 miles to a windswept military complex in the desert sand.

The Colombians had entered the United Arab Emirates posing as construction workers. In fact, they were soldiers for a secret American-led mercenary army being built by Erik Prince, the billionaire founder of Blackwater Worldwide, with $529 million from the oil-soaked sheikdom.

Mr. Prince, who resettled here last year after his security business faced mounting legal problems in the United States, was hired by the crown prince of Abu Dhabi to put together an 800-member battalion of foreign troops for the U.A.E., according to former employees on the project, American officials and corporate documents obtained by The New York Times.

The force is intended to conduct special operations missions inside and outside the country, defend oil pipelines and skyscrapers from terrorist attacks and put down internal revolts, the documents show. Such troops could be deployed if the Emirates faced unrest in their crowded labor camps or were challenged by pro-democracy protests like those sweeping the Arab world this year.

The U.A.E.’s rulers, viewing their own military as inadequate, also hope that the troops could blunt the regional aggression of Iran, the country’s biggest foe, the former employees said. The training camp, located on a sprawling Emirati base called Zayed Military City, is hidden behind concrete walls laced with barbed wire. Photographs show rows of identical yellow temporary buildings, used for barracks and mess halls, and a motor pool, which houses Humvees and fuel trucks. The Colombians, along with South African and other foreign troops, are trained by retired American soldiers and veterans of the German and British special operations units and the French Foreign Legion, according to the former employees and American officials.

In outsourcing critical parts of their defense to mercenaries — the soldiers of choice for medieval kings, Italian Renaissance dukes and African dictators — the Emiratis have begun a new era in the boom in wartime contracting that began after the Sept. 11, 2001, attacks. And by relying on a force largely created by Americans, they have introduced a volatile element in an already combustible region where the United States is widely viewed with suspicion.

The United Arab Emirates — an autocracy with the sheen of a progressive, modern state — are closely allied with the United States, and American officials indicated that the battalion program had some support in Washington.

“The gulf countries, and the U.A.E. in particular, don’t have a lot of military experience. It would make sense if they looked outside their borders for help,” said one Obama administration official who knew of the operation. “They might want to show that they are not to be messed with.”

Still, it is not clear whether the project has the United States’ official blessing. Legal experts and government officials said some of those involved with the battalion might be breaking federal laws that prohibit American citizens from training foreign troops if they did not secure a license from the State Department.

Mark C. Toner, a spokesman for the department, would not confirm whether Mr. Prince’s company had obtained such a license, but he said the department was investigating to see if the training effort was in violation of American laws. Mr. Toner pointed out that Blackwater (which renamed itself Xe Services ) paid $42 million in fines last year for training foreign troops in Jordan and other countries over the years.

The U.A.E.’s ambassador to Washington, Yousef al-Otaiba, declined to comment for this article. A spokesman for Mr. Prince also did not comment.

For Mr. Prince, the foreign battalion is a bold attempt at reinvention. He is hoping to build an empire in the desert, far from the trial lawyers, Congressional investigators and Justice Department officials he is convinced worked in league to portray Blackwater as reckless. He sold the company last year, but in April, a federal appeals court reopened the case against four Blackwater guards accused of killing 17 Iraqi civilians in Baghdad in 2007.

To help fulfill his ambitions, Mr. Prince’s new company, Reflex Responses, obtained another multimillion-dollar contract to protect a string of planned nuclear power plants and to provide cybersecurity. He hopes to earn billions more, the former employees said, by assembling additional battalions of Latin American troops for the Emiratis and opening a giant complex where his company can train troops for other governments.

Knowing that his ventures are magnets for controversy, Mr. Prince has masked his involvement with the mercenary battalion. His name is not included on contracts and most other corporate documents, and company insiders have at times tried to hide his identity by referring to him by the code name “Kingfish.” But three former employees, speaking on the condition of anonymity because of confidentiality agreements, and two people involved in security contracting described Mr. Prince’s central role.

The former employees said that in recruiting the Colombians and others from halfway around the world, Mr. Prince’s subordinates were following his strict rule: hire no Muslims.

Muslim soldiers, Mr. Prince warned, could not be counted on to kill fellow Muslims.

A Lucrative Deal

Last spring, as waiters in the lobby of the Park Arjaan by Rotana Hotel passed by carrying cups of Turkish coffee, a small team of Blackwater and American military veterans huddled over plans for the foreign battalion. Armed with a black suitcase stuffed with several hundred thousand dollars’ worth of dirhams, the local currency, they began paying the first bills.

The company, often called R2, was licensed last March with 51 percent local ownership, a typical arrangement in the Emirates. It received about $21 million in start-up capital from the U.A.E., the former employees said.

Mr. Prince made the deal with Sheik Mohamed bin Zayed al-Nahyan, the crown prince of Abu Dhabi and the de facto ruler of the United Arab Emirates. The two men had known each other for several years, and it was the prince’s idea to build a foreign commando force for his country.

Savvy and pro-Western, the prince was educated at the Sandhurst military academy in Britain and formed close ties with American military officials. He is also one of the region’s staunchest hawks on Iran and is skeptical that his giant neighbor across the Strait of Hormuz will give up its nuclear program.

“He sees the logic of war dominating the region, and this thinking explains his near-obsessive efforts to build up his armed forces,” said a November 2009 cable from the American Embassy in Abu Dhabi that was obtained by the anti-secrecy group WikiLeaks.

For Mr. Prince, a 41-year-old former member of the Navy Seals, the battalion was an opportunity to turn vision into reality. At Blackwater, which had collected billions of dollars in security contracts from the United States government, he had hoped to build an army for hire that could be deployed to crisis zones in Africa, Asia and the Middle East. He even had proposed that the Central Intelligence Agency use his company for special operations missions around the globe, but to no avail. In Abu Dhabi, which he praised in an Emirati newspaper interview last year for its “pro-business” climate, he got another chance.

Mr. Prince’s exploits, both real and rumored, are the subject of fevered discussions in the private security world. He has worked with the Emirati government on various ventures in the past year, including an operation using South African mercenaries to train Somalis to fight pirates. There was talk, too, that he was hatching a scheme last year to cap the Icelandic volcano then spewing ash across Northern Europe.

The team in the hotel lobby was led by Ricky Chambers, known as C. T., a former agent with the Federal Bureau of Investigation who had worked for Mr. Prince for years; most recently, he had run a program training Afghan troops for a Blackwater subsidiary called Paravant.

He was among the half-dozen or so Americans who would serve as top managers of the project, receiving nearly $300,000 in annual compensation. Mr. Chambers and Mr. Prince soon began quietly luring American contractors from Afghanistan, Iraq and other danger spots with pay packages that topped out at more than $200,000 a year, according to a budget document. Many of those who signed on as trainers — which eventually included more than 40 veteran American, European and South African commandos — did not know of Mr. Prince’s involvement, the former employees said.

Mr. Chambers did not respond to requests for comment.

He and Mr. Prince also began looking for soldiers. They lined up Thor Global Enterprises, a company on the Caribbean island of Tortola specializing in “placing foreign servicemen in private security positions overseas,” according to a contract signed last May. The recruits would be paid about $150 a day.

Within months, large tracts of desert were bulldozed and barracks constructed. The Emirates were to provide weapons and equipment for the mercenary force, supplying everything from M-16 rifles to mortars, Leatherman knives to Land Rovers. They agreed to buy parachutes, motorcycles, rucksacks — and 24,000 pairs of socks.

To keep a low profile, Mr. Prince rarely visited the camp or a cluster of luxury villas near the Abu Dhabi airport, where R2 executives and Emirati military officers fine-tune the training schedules and arrange weapons deliveries for the battalion, former employees said. He would show up, they said, in an office suite at the DAS Tower — a skyscraper just steps from Abu Dhabi’s Corniche beach, where sunbathers lounge as cigarette boats and water scooters whiz by. Staff members there manage a number of companies that the former employees say are carrying out secret work for the Emirati government.

Emirati law prohibits disclosure of incorporation records for businesses, which typically list company officers, but it does require them to post company names on offices and storefronts. Over the past year, the sign outside the suite has changed at least twice — it now says Assurance Management Consulting.

While the documents — including contracts, budget sheets and blueprints — obtained by The Times do not mention Mr. Prince, the former employees said he negotiated the U.A.E. deal. Corporate documents describe the battalion’s possible tasks: intelligence gathering, urban combat, the securing of nuclear and radioactive materials, humanitarian missions and special operations “to destroy enemy personnel and equipment.”

One document describes “crowd-control operations” where the crowd “is not armed with firearms but does pose a risk using improvised weapons (clubs and stones).”

People involved in the project and American officials said that the Emiratis were interested in deploying the battalion to respond to terrorist attacks and put down uprisings inside the country’s sprawling labor camps, which house the Pakistanis, Filipinos and other foreigners who make up the bulk of the country’s work force. The foreign military force was planned months before the so-called Arab Spring revolts that many experts believe are unlikely to spread to the U.A.E. Iran was a particular concern.

An Eye on Iran

Although there was no expectation that the mercenary troops would be used for a stealth attack on Iran, Emirati officials talked of using them for a possible maritime and air assault to reclaim a chain of islands, mostly uninhabited, in the Persian Gulf that are the subject of a dispute between Iran and the U.A.E., the former employees said. Iran has sent military forces to at least one of the islands, Abu Musa, and Emirati officials have long been eager to retake the islands and tap their potential oil reserves.

The Emirates have a small military that includes army, air force and naval units as well as a small special operations contingent, which served in Afghanistan, but over all, their forces are considered inexperienced.

In recent years, the Emirati government has showered American defense companies with billions of dollars to help strengthen the country’s security. A company run by Richard A. Clarke, a former counterterrorism adviser during the Clinton and Bush administrations, has won several lucrative contracts to advise the U.A.E. on how to protect its infrastructure.

Some security consultants believe that Mr. Prince’s efforts to bolster the Emirates’ defenses against an Iranian threat might yield some benefits for the American government, which shares the U.A.E.’s concern about creeping Iranian influence in the region.

“As much as Erik Prince is a pariah in the United States, he may be just what the doctor ordered in the U.A.E.,” said an American security consultant with knowledge of R2’s work.

The contract includes a one-paragraph legal and ethics policy noting that R2 should institute accountability and disciplinary procedures. “The overall goal,” the contract states, “is to ensure that the team members supporting this effort continuously cast the program in a professional and moral light that will hold up to a level of media scrutiny.”

But former employees said that R2’s leaders never directly grappled with some fundamental questions about the operation. International laws governing private armies and mercenaries are murky, but would the Americans overseeing the training of a foreign army on foreign soil be breaking United States law?

Susan Kovarovics, an international trade lawyer who advises companies about export controls, said that because Reflex Responses was an Emirati company it might not need State Department authorization for its activities.

But she said that any Americans working on the project might run legal risks if they did not get government approval to participate in training the foreign troops.

Basic operational issues, too, were not addressed, the former employees said. What were the battalion’s rules of engagement? What if civilians were killed during an operation? And could a Latin American commando force deployed in the Middle East really be kept a secret?

Imported Soldiers

The first waves of mercenaries began arriving last summer. Among them was a 13-year veteran of Colombia’s National Police force named Calixto Rincón, 42, who joined the operation with hopes of providing for his family and seeing a new part of the world.

“We were practically an army for the Emirates,” Mr. Rincón, now back in Bogotá, Colombia, said in an interview. “They wanted people who had a lot of experience in countries with conflicts, like Colombia.”

Mr. Rincón’s visa carried a special stamp from the U.A.E. military intelligence branch, which is overseeing the entire project, that allowed him to move through customs and immigration without being questioned.

He soon found himself in the midst of the camp’s daily routines, which mirrored those of American military training. “We would get up at 5 a.m. and we would start physical exercises,” Mr. Rincón said. His assignment included manual labor at the expanding complex, he said. Other former employees said the troops — outfitted in Emirati military uniforms — were split into companies to work on basic infantry maneuvers, learn navigation skills and practice sniper training.

R2 spends roughly $9 million per month maintaining the battalion, which includes expenditures for employee salaries, ammunition and wages for dozens of domestic workers who cook meals, wash clothes and clean the camp, a former employee said. Mr. Rincón said that he and his companions never wanted for anything, and that their American leaders even arranged to have a chef travel from Colombia to make traditional soups.

But the secrecy of the project has sometimes created a prisonlike environment. “We didn’t have permission to even look through the door,” Mr. Rincón said. “We were only allowed outside for our morning jog, and all we could see was sand everywhere.”

The Emirates wanted the troops to be ready to deploy just weeks after stepping off the plane, but it quickly became clear that the Colombians’ military skills fell far below expectations. “Some of these kids couldn’t hit the broad side of a barn,” said a former employee. Other recruits admitted to never having fired a weapon.

Rethinking Roles

As a result, the veteran American and foreign commandos training the battalion have had to rethink their roles. They had planned to act only as “advisers” during missions — meaning they would not fire weapons — but over time, they realized that they would have to fight side by side with their troops, former officials said.

Making matters worse, the recruitment pipeline began drying up. Former employees said that Thor struggled to sign up, and keep, enough men on the ground. Mr. Rincón developed a hernia and was forced to return to Colombia, while others were dismissed from the program for drug use or poor conduct.

And R2’s own corporate leadership has also been in flux. Mr. Chambers, who helped develop the project, left after several months. A handful of other top executives, some of them former Blackwater employees, have been hired, then fired within weeks.

To bolster the force, R2 recruited a platoon of South African mercenaries, including some veterans of Executive Outcomes, a South African company notorious for suppressing rebellions against African strongmen in the 1990s. The platoon was to function as a quick-reaction force, American officials and former employees said, and began training for a practice mission: a terrorist attack on the Burj Khalifa skyscraper in Dubai, the world’s tallest building. They would secure the situation before quietly handing over control to Emirati troops.

But by last November, the battalion was officially behind schedule. The original goal was for the 800-man force to be ready by March 31; recently, former employees said, the battalion’s size was reduced to about 580 men.

Emirati military officials had promised that if this first battalion was a success, they would pay for an entire brigade of several thousand men. The new contracts would be worth billions, and would help with Mr. Prince’s next big project: a desert training complex for foreign troops patterned after Blackwater’s compound in Moyock, N.C. But before moving ahead, U.A.E. military officials have insisted that the battalion prove itself in a “real world mission.”

That has yet to happen. So far, the Latin American troops have been taken off the base only to shop and for occasional entertainment.

On a recent spring night though, after months stationed in the desert, they boarded an unmarked bus and were driven to hotels in central Dubai, a former employee said. There, some R2 executives had arranged for them to spend the evening with prostitutes.

Mark Mazzetti reported from Abu Dhabi and Washington, and Emily B. Hager from New York. Jenny Carolina González and Simon Romero contributed reporting from Bogotá, Colombia. Kitty Bennett contributed research from Washington.

This article has been revised to reflect the following correction:

Correction: May 19, 2011

An article on Sunday about the creation of a mercenary battalion in the United Arab Emirates misstated the past work of Executive Outcomes, a former South African mercenary firm whose veterans have been recruited for the new battalion. Executive Outcomes was hired by several African governments during the 1990s to put down rebellions and protect oil and diamond reserves; it did not stage coup attempts. (Some former Executive Outcomes employees participated in a 2004 coup attempt against the government of Equatorial Guinea, several years after the company itself shut down.)

Correction: June 7, 2011

An article on May 15 about efforts to build a battalion of foreign mercenary troops in the United Arab Emirates referred imprecisely to the role played by Erik Prince, the founder of the security firm Blackwater Worldwide. He worked to oversee the effort and recruit troops. But Mr. Prince does not run or own the company Reflex Responses, which has a contract with the government of the U.A.E. to train and deliver the troops, according to the company president, Michael Roumi. An article on May 16 repeated the error.

By Greg Weston

The same day Canada publicly refused to join the 2003 U.S.-led invasion of Iraq, a high-ranking Canadian official was secretly promising the Americans clandestine military support for the fiercely controversial operation.

The revelation that Canadian forces may have secretly participated in the invasion of Iraq is contained in a classified U.S. diplomatic memo obtained exclusively by CBC News from the whistleblower website WikiLeaks.

On March 17, 2003, two days before U.S. warplanes launched their attack on Baghdad, prime minister Jean Chrétien told the House of Commons that Canadian forces would not be joining what the administration of then U.S. president George W. Bush dubbed the “coalition of the willing.”

Chrétien’s apparent refusal to back the Bush administration’s invasion, purportedly launched to seize weapons of mass destruction possessed by Iraqi ruler Saddam Hussein (which were never found), was hugely popular in Canada, widely hailed as nothing less than a defining moment of national sovereignty.

But even as Chrétien told the Commons that Canada wouldn’t participate in Operation Iraqi Freedom, Canadian diplomats were secretly telling their U.S. counterparts something entirely different.

The classified U.S. document obtained from WikiLeaks shows senior Canadian officials met that same day with high-ranking American and British diplomats at Foreign Affairs headquarters in Ottawa.

The confidential note, written by a U.S. diplomat at the gathering, states that Foreign Affairs official James Wright waited until after the official meeting to impart the most important news of all.

According to the U.S. account, Wright “emphasized” that contrary to public statements by the prime minister, Canadian naval and air forces could be “discreetly” put to use during the pending U.S.-led assault on Iraq and its aftermath.

At that time, Canada had warships, aircraft and over 1,200 naval personnel already in the Strait of Hormuz at the mouth of the Persian Gulf, intercepting potential militant vessels and providing safe escort to other ships as part of Operation Enduring Freedom, the post-Sept. 11, 2001, multinational war on terrorism.

‘While for domestic political reasons… [Canada] has decided not to join in a U.S. coalition,… they are also prepared to be as helpful as possible in the military margins’ —Secret U.S. diplomatic cable

The U.S. briefing note states: “Following the meeting, political director Jim Wright emphasized that, despite public statements that the Canadian assets in the Straits of Hormuz will remain in the region exclusively to support Enduring Freedom, they will also be available to provide escort services in the Straits and will otherwise be discreetly useful to the military effort.

“The two ships in the Straits now are being augmented by two more en route, and there are patrol and supply aircraft in the U.A.E. [United Arab Emirates] which are also prepared to ‘be useful.’

“This message tracks with others we have heard,” the U.S. diplomat wrote in his briefing note to State Department bosses in Washington.

“While for domestic political reasons… the GOC [Government of Canada] has decided not to join in a U.S. coalition of the willing,… they are also prepared to be as helpful as possible in the military margins.”

‘Please destroy cable’

The original U.S. briefing cable, dated the day of the meeting, was marked “unclassified.” Two days later, the U.S. Embassy in Ottawa issued an urgent internal notice to “please destroy previous cable,” replacing it with the same message but marked “confidential.”

The Canadian official involved, James Wright, is now Canada’s high commissioner in London. He declined to comment for this report.

The U.S. ambassador to Canada at the time, Paul Cellucci, says he couldn’t be at the meeting in Ottawa that day — he was stranded in a snowstorm in the U.S. — but the version of events in the leaked memo “sounds right.”

“The message from the Canadians was pretty clear,” Cellucci told CBC News. “We are not putting boots on the ground in Iraq. We will say good things about the United States and not-so-good things about Saddam Hussein.”

And finally: “We will keep our ships in the Persian Gulf helping in the war on terror — and any way else we can help.”

Exactly what that meant for the Canadian naval ships and surveillance aircraft in the Gulf region at the time — and how much they ultimately became involved in the Iraq war — remains a matter of considerable debate.

Before the invasion of Iraq, the duties of the Canadian ships had been mainly to protect other vessels from attacks by militants and to intercept craft suspected of gun-running and other potentially militant-related activities.

The issue is what, if anything, changed after the Chrétien government decreed those ships and aircraft couldn’t be involved in intercepting vessels connected to the Iraq war.

Three months before the Iraq invasion, the then Canadian defence minister John McCallum, right, met with U.S. counterpart Donald Rumsfeld, left, whose diplomats had told him to keep his expectations ‘modest’ for what Canada might contribute to the war. (CBC)

Eugene Lang, chief of staff to then defence minister John McCallum, says there was no end of internal debate over whether the Canadian Forces were being put into a mission impossible.

“How do you know if something is connected to terrorism or Iraq? When you are intercepting unknown boats, you don’t know what you have taken over until you have taken it over.”

Lang says that after “painful” consultations with federal lawyers, the Department of National Defence issued Canadian naval commanders in the Gulf clear orders not to engage in anything to do with Operation Iraqi Freedom.

“But who knows whether in fact we were doing things indirectly for Iraqi Freedom? It is quite possible.”

McCallum’s former chief recalled a bitter internal battle over whether to pull the Canadian ships out of the Gulf altogether to avoid any confusion.

“For a long time, the [Canadian] military pushed really hard not to be in Afghanistan, and instead be part of a full-blown boots-on-the-ground Iraq invasion,” Lang said.

“So the military was dead set against pulling out [of the Gulf], and in the end the government decided we would stay mainly, I think, for Canada-U.S. relations.”

Former defence minister McCallum recalls he and his officials having “extremely long and detailed meetings to make sure that we were not in fact committing to help the war in Iraq.”

“Now, what happens on the high seas is not something I can prove or disprove, but those were the orders that the military had.”

U.S. didn’t seem to care

Ironically, after all the fuss, the Americans didn’t seem to care whether Canada contributed a lot of military might to the Iraq mission.

A former senior Canadian bureaucrat said: “The Americans knew we were stretched to the limit on the military side, and they really just wanted a political endorsement of their plan to go into Iraq.”

Former U.S. ambassador Cellucci concurred: “We were looking for moral support. That’s all we were looking for.… We were looking for ‘we support the Americans.’ ”

Flight deck crew watch as a U.S. F/A-18 Hornet launches from an aircraft carrier in the Persian Gulf one week into the 2003 invasion of Iraq. Canada had two warships nearby at the time, and secretly offered to make them ‘useful’ to the U.S., a leaked American document says. (Steve Helber/Associated Press)

Then defence minister McCallum met with his counterpart, U.S. defence secretary Donald Rumsfeld, three months before the Iraq invasion. McCallum recalls Rumsfeld never even mentioned Canada’s possible military contribution to Iraq.

A U.S. diplomatic briefing note prepared for Rumsfeld prior to the meeting states: “As for what Canada might bring to the table, our expectations should be modest.”

The memo, also obtained by CBC News from WikiLeaks, goes on to say: “Canada probably would need to use assets currently devoted to Operation Enduring Freedom, including a naval task group [in the Gulf] and patrol and transport aircraft.”

If the secret U.S. memos cast doubts on Canada’s status as a refusenik of the Iraq war, the public also didn’t exactly get the whole truth about a group of Canadian soldiers the government admitted were in Iraq.

From the outset, the Chrétien government said a “few” Canadian soldiers embedded with the U.S. and British militaries as exchange officers would be allowed to remain in their positions, even if they wound up in Iraq.

While the revelation caused a ruckus in Parliament, it all sounded relatively innocuous at the time.

But Lang, defence minister McCallum’s chief of staff, says military brass were not entirely forthcoming on the issue. For instance, he says, even McCallum initially didn’t know those soldiers were helping to plan the invasion of Iraq up to the highest levels of command, including a Canadian general.

That general is Walt Natynczyk, now Canada’s chief of defence staff, who eight months after the invasion became deputy commander of 35,000 U.S. soldiers and other allied forces in Iraq. Lang says Natynczyk was also part of the team of mainly senior U.S. military brass that helped prepare for the invasion from a mobile command in Kuwait.

The Department of National Defence refused to comment on Natynczyk’s role, if any, in the invasion of Iraq.

Ever since he could remember, Ibrahim Boakye had a knack for understanding how things worked. There were things he could just do that no other kids– let alone adults– could understand. By the time he was five-years-old everyone had stopped questioning it, and neighbors were calling on him to fix their broken toasters, irons, or anything that was the least bit mechanical.By his early teens, he was getting things out of the dump and fixing them for fun. Soon after that, he was teaching himself to code. He’s made an outsized living no one in his family could have anticipated by outsmarting other people on computers ever since. It’s never been about money or even in those early days about doing good deeds around the neighborhood. He gets an intoxicating rush from solving the hardest technical problem he can find and from knowing that he’s the best.

As I sat in a hotel lobby in Lagos listening to his story, I couldn’t help being reminded of Max Levchin of PayPal and Slide fame. Levchin grew up in Soviet Russia and had the same knack, that same innate ability to understand how machines worked. He learned to code on whatever he could find– calculators, pen and paper, old Soviet microcomputers. When his family moved to America, he rebuilt things he found in dumpsters too. Watching the nightly news on a old black-and-white TV helped teach him English.

For Levchin, it was also about the thrill. He once got in trouble with the FBI for cracking video game codes for a Chicago crime boss. He didn’t really think about the fact that he was doing something illegal, he just loved the challenge. And like Boakye, he’s made an outsized living no one in his family could have anticipated by outsmarting other people on computers ever since. His rush also comes from solving the hardest technical problem he can find, and from knowing that he is the best.

But there’s a big difference between the two. Levchin immigrated to the US at 16, went to University of Illinois and was inspired by the example of Marc Andreessen. He moved to Silicon Valley at the best possible time for an aggressive, insanely-competitive coder to move to Silicon Valley. A company as complex and lasting as PayPal was hardly all luck and timing, but Levchin took advantage of being in the right place at the right time and meeting the right people, most notably PayPal co-founder Peter Thiel.

By contrast, Boakye grew up in a poor section of Lagos. In a way, his timing was also serendipitous: The Internet’s emergence in Nigeria breathed new life into an old national scam: The 419 letter. And a new generation was making hay out of the naiveté of millions of new Internet users. For Nigeria’s massive unemployed population– some fifty million people today– this was every bit the gold rush that Silicon Valley was in the 1990s. And the “entrepreneurs” concocting these schemes late night after the doors were locked in Nigeria’s Internet cafes needed a brilliant coder who was more motivated the bigger the challenge. Boakye was one of the best in the country.

Like Levchin, he took advantage of being in the right place at the right time and having the right skills. Only most would say he met the wrong kind of people. At his peak he was making as much as $50,000 per day as a freelancer hacking into bank systems, stealing social security numbers and credit cards, and exposing the Web’s deepest vulnerabilities for Nigeria’s “Yahoo boys,” called that because they were known for using Yahoo email addresses.

Boakye has since left the life of crime, he says. We met my last day in Lagos; one of nearly a dozen interviews I did with current and reformed Yahoo boys in Nigeria. I won’t detail how I got the meetings, because of the elaborate personal assurances of safety. I’ve taken pains to disguise any details about the man whose name is obviously not really Ibrahim Boakye. Appropriately, I got that name off the most recent 419 email I found in my spam folder. Some of the juiciest parts of the accounts I won’t detail here, lest it put the people who personally vouched for me at risk.

Finding Yahoo boys to talk to me was near-impossible; a big change from a few years ago. The 419 scammers used to be the rockstars of Nigeria’s underground world. “Girls wanted to date us because we were smart,” one told me. “We could get money out of white men using only our brains and a computer.” There was also the justification that this was some how a revenge for colonialism; when white men took Africa’s natural resources without consent. And– as is the case with every black market– there was the lure of all that cash. Skills were flaunted in cafes, whole organizations were built out, and even rap songs were written glorifying 419.

It’s much harder to make money today. That’s mostly because Internet companies have made it harder, through restricting mass emails and educating people not to purchase any goods from Nigeria. Most ecommerce sites block Nigerian ISPs. And consumers have gotten smarter, too, the Yahoo boys say. The Nigerian government has also made greater efforts to crack down, under International pressure and pressure from the country’s legitimate tech entrepreneurs who are furious at the Yahoo boys for globally sullying the country’s reputation. The people still doing it have been driven underground, forced to keep a low profile. They don’t talk about what they do even with friends. They can’t trust anyone. One current scammer told me he couldn’t invite friends over because of the noticeable stench in his bedroom from all the stacks of money stashed under his bed.

For most of the day, I sat transfixed listening to their stories. Of course it was impossible to know whether they were telling the truth about everything. But so many of the individual stories corresponded to one another, and the complex systems of scamming were too elaborate to have been made up on the spot. Each boy would start telling his stories shyly, but once he got going he couldn’t help but boast about his methods. Sometimes the hardest thing about committing the perfect crime can be keeping your genius to yourself.

Boakye’s sheer hacker genius was the most astounding. It’s not just technical ability– he tries to figure out how the person who set up the security system he’s trying to break thinks, and outsmart him at his own game. If he can’t crack the software, he studies the hardware and learns its vulnerabilities.

The way he described the chess match with this unknown nemesis reminded me of another entrepreneur in the Valley: Dennis Fong. Fong spent his teens as a professional gamer, better known by the name “Thresh.” He rarely lost thanks to an uncanny ability to anticipate opponents’ moves. Opponents called it “Thresh ESP,” and it earned him six-figure computing endorsement deals. The way Boakye explained how he breaks into multi-national banks was identical to Thresh’s approach. I wouldn’t be surprised if he’s hacked into at least one of my accounts by now just out of curiosity. I asked him not to do anything malicious, and he promised he wouldn’t. But we were both pretty convinced he could.

As a person, I found these meeting more terrifying than my run in with Bones and his machete men in Alaba. As a business reporter, I couldn’t stop the broad smile from spreading across my face as we spoke, even breaking out in laughter once or twice. It’s the same Cheshire cat grin I get when I meet any amazing entrepreneur, anywhere in the world. You know them after five minutes of conversation. And several of these guys just had it. Born into a different circumstance, they could be on the cover of any magazine, ringing the opening bell at the Nasdaq.

This is the darkside of what we know in Silicon Valley: That great entrepreneurs can come from anywhere in the world. Sometimes some of the best technical minds fall into a life of crime. And just like corporate giants can’t keep a hot startup from disrupting them; law enforcement can’t keep people like Boakye from accessing your information.

There weren’t just stunning personality comparisons between someone like Boakye and Fong or Levchin, there were stunning industry comparisons. Like entrepreneurs in the Valley, the industry has evolved to the point where few of them need to be hard-core techies. Today, the Nigerians focus on user experience– put a less euphemistic way, their job is to find the mark and rope him or her in. Any hardcore hacking work is outsourced to Vietnam, India or elsewhere– particularly now that Boakye has retired from crime. One Yahoo boy told me he met his Vietnamese partner online when he tried to scam him. The man wrote back, “I’m not going to fall for this, but I know what you are doing and I can help you.” The world is flat for criminals too.

Don’t let the clunky syntax on these emails fool you. The Yahoo boys I met are masters of human manipulation. The latest scam revolves around online dating. Yahoo boys find a lonely man– sometimes a single man who wants a mail-order bride; sometimes a married one with kids who wants an escape on the side. They key with 419 scams is always finding someone who wants a easy shortcut in money or love. An elaborate relationship over IM begins. One boy I met excelled at these. He says he just closes his eyes and pretends it’s a woman on the other end he’s seducing. He uses carefully constructed porn clips for video chats; other scammers hire actresses to portray the fictional girls.

This Yahoo boy carries on five to seven relationships at once, playing the dutiful girlfriend to each– down to helping them pick out their clothes for work everyday. When one suitor lost a job, he used the Web to help find him an interview and pumped up his confidence to apply. He gave him several months to get back on his feet before asking for more cash. One time, he even sent the mark cash, to show how much he — or “she”– cared. “I take care of them,” he says. “They are the people who feed me.”

He helps build them up; he listens to their problems. He makes them feel loved. He calls each an innocuous pet name, lest he accidentally type the wrong message into the wrong chat window. He asks for a little bit of money here and there, until men are sending him steady amounts from each paycheck. He says it takes exactly one month for a man to fall in love with him, and once he has a man’s heart, no woman can take it.

This isn’t a short con, this is a long term game of constant maintenance. He creates fictional Web pages to back up the fictional girl’s story, so if the man Google’s her, he finds seemingly legitimate confirmation. When he goes to church, he tells them “she’s” going to church. When he makes dinner he tells them “she’s” making dinner. He’s less a 419 scammer, and more a long-distance emotional prostitute, providing a service men appear to be happy to pay for. Like any great entrepreneur, this Yahoo boy knows his customer. “if you get their heart, you have control,” he says. “You white people have very flexible hearts. We’ve seen it. That’s why there can be no true love in Nigeria. Your closest friends rip you off here.” He continued, “I wish I could stop. I’m not into the black man power like some people. I don’t want to make someone sell their house; I don’t want to take everything. I just can’t find a job. If I had a junior brother I wouldn’t teach him. You get addicted to it.”

Just like you have people in the Valley looking to flip products and those in it for the long haul; in the 419 world you have kids who try it out for easy money, and those who commit to it. To be successful today you have to work as many hours as a Valley Internet entrepreneur and have just as long term of a focus. There’s just as much creative problem solving involved; this is something you can’t really teach. A lot of these Yahoo boys told me they’ve tried to take on apprentices, but few of them last. It’s not the glamorous, quick-money world it used to be. Today being a scammer takes smarts and stamina.

Nigeria is undoubtably one of the juiciest markets in the emerging world, and by many accounts the juiciest in all of Africa. And legitimate tech entrepreneurs will be understandably upset about Western reporters fixating on the 419 world. But if they want to stay in Nigeria, they’ll have to get used to it. These kids, the circumstances that created them, and the lasting impact of the damage they’ve done to people aren’t issues the country can shrug off no matter how much it would like to. “We use our brains to get what we want. For us it’s the only way to live and survive,” one boy said. “As long as technology keeps advancing, there is no way to stop us.”

It’s Nigeria’s central issue that it will have to face, own up to, and tackle if the country is going to play a greater role in the global economy. Ignoring it is like ignoring China’s lack of political freedom; India’s deep poverty and infrastructure problems; or the civil war going on in Brazil’s favelas between drug lords and the frequently corrupt policemen cracking down on them. The reason Westerners tend to fixate on these issues isn’t because we’re opting for easy stereotypes. It’s because they are each huge problems without easy solutions. Problems that have to be faced. And you face them by talking to the real people behind them, not by sweeping them under a rug, assuming they’re all two-dimensional villains or dismissing them as a made up stereotype.

One of the active scammers I spoke with is supporting his whole family, including several siblings he is putting through university, so they have a chance at a better life. But one of them has been out of school for years, and still can’t find a job. It’s not a ringing endorsement to go legit. This guy doesn’t feel great about what he does, but he says he has no other option. He goes to church several times a week, where he wrestles with it. He tells himself he is on God’s path, and he has faith it ends with him leaving this life behind.

He’s describing the hope of anyone who is touched by the genius and the opportunity in Nigeria, as I was during my trip. That this stunning raw talent can find a way to stop relying on bilking Westerners out of cash and start using their wily genius to create local jobs.

by Ron Ridenour / May 5th, 2011

1. Libya is Africa’s largest exporter of oil, 1.7 million tons a day, which quickly was reduced to 300-400,000 tons/day due to US-NATO bombing.

Libya exports 80% of its oil: 80% of that to several EU lands (32% Italy, 14% Germany, 10% France); 10% China; 5% USA.

2. Gaddafi has been preparing to launch a gold dinar for oil trade with all of Africa’s 200 million people and other countries interested. He has been working with this since 2002 together with Malaysia. As of recently, only South Africa and the head of the League of African States were opposed. Before the invasion of Iraq, Hussein was in agreement as was Sudan, Burney, then Indonesia and United Arab Emirates, also Iran.

French President Nickolas Sarkozy called this, “a threat for financial security of mankind”. Much of France’s wealth—more than any other colonial-imperialist power—comes from exploiting Africa.¹

3. Central Bank of Libya is 100% owned by state (since 1956) and is thus outside of multinational corporation control (BIS-Banking International Settlement rules for private interests). The state can finance its own projects and do so without interest rates, which reduce the costs by half of private banks. Libya’s central bank (with three branches in the east including Benghazi) has 144 tons of gold in its vaults, which it could use to start the gold dinar. (China, Russia, India, Iran are stocking great sums of gold rather than relying only on dollars.)

4. Gaddafi-Central Bank used $33 billion, without interest rates, to build the Great Man-Made River of 4,000 kilometers with three parallel pipelines running oil, gas and water supplying 70% of the people (4.5 of its 6 million) with clean drinking and irrigation water. This provides adequate crops for the people making it a competitive exporter of vegetables with Israel and Egypt.

The Central Bank also financed Africa’s first communication satellite with $300 million of the $377 cost. It started up for all Africa, December 26, 2007, thus saving the 45-African nations an annual fee of $500 million pocketed by Europe for use of its satellites and this means much less cost for telephones and other communication systems.

5. The opposition led by former Gaddafi ministers and some Eastern clan leaders set up a central bank in Benghazi to replace Libya’s central bank even before they have set up a government or an organized army. It was immediately recognized by Paris stock exchange and soon other Westerners. This is the first time in history rebels have set up a bank before victory or before having a government.

6. There is evidence from Gaddafi defectors (especially Nouri Mesmari), under France protection that France started preparing a Benghazi based rebellion against Gaddafi from November 2010, in order to stop his plans to switch from the dollar to a new gold currency. US politician, Rep. Dennis Kucinich confirms this.²

On December 23, 2010, Libyans Ali Ounes Mansour, Farj Charrant and Fathi Boukhris met with Mesrami and French officials in Paris. Those three are now part of the Benghazi-based leadership.

US General Wesley Clrak (ret.) told Democracy Now (2007) that ten days after September 11, 2011 another general had told him that the Bush government was planning to invade: Iraq, Libya, Syria, Lebanon, Somalia, Sudan and Iran. What they have in common is that they were not members of banks within the BIS, and most of them have lots of oil. Hussein had agreed with France President Jacques Chirac to switch from dollars to Euros in oil trading six months before Bush invaded.

7. While Gaddafi had turned much of his oil sales toward the West, inviting in many of the major oil companies for great profits (BP, EXXON Mobil, Shell, Total, etc), he did not join the US wars against Afghanistan and Iraq as did most of the oil rich Middle Eastern governments. Nor did he sign on with AFRICOM, a US-inspired pact oriented towards US economic and military benefit in Africa also oriented to isolate China from Africa’s natural resources. In fact, China has 50 major economic projects going in Libya with $18 billion investment. Before the US-NATO invasion, there were 30,000 Chinese workers on these and other projects. Much of China’s investment is destroyed.

8. Human Rights Watch (which some call an imperialist-oriented NGO) reported that there has been no civilian bloodbath by Gaddafi. In Misurata, for example, with 400,000 population (second largest city), after two months of war only 257 people were killed, including combatants. Of 949 wounded, only 22 (3%) were women.³

9. As France took the lead, along with UK, to threaten Gaddafi militarily, Gaddafi threatened (March 2) to throw western oil companies out of Libya. With more blustering from the west, Gaddafi invited (March 14) Chinese, Russian and Indian oil companies to take their place. On March 17, the US-France-UK got want they wanted for starters from the UN. Resolution 1973, calling only for a no-fly strategy and not a regime shift or troop landings, was not backed by key big powers: China, Russia, Brazil, India and Germany. Of the 28 NATO countries, only 14 are involved in the Libyan campaign and only six of those are in the air war.

Denmark is one of those six. It spent 70 million kroner ($12 million) in the first two weeks of bombing. By April 30, it had dropped 297 bombs on Libya. Denmark’s 2011 defense-war budget is $4 billion annually (22.4 billion kroner) out of $130 billion (671 billion kroner) budget. It uses more money than ever for wars: $250 million annually in Afghanistan, three times 2008 expenditures–$14 billion total in nine years. It used $½ billion in five active years at war in Iraq and continues there with less.

What the US-NATO-EU hopes to achieve is to eliminate the half-reliable partner Gaddafi and replace him with a neo-liberal oriented government that will do their bidding: sign on AFRICOM, kick China out, reverse the government central bank to a BIS private enterprise, continue using dollars of course, and have the lackey leaders join in their permanent war age throughout the Middle East and Africa.

New neo-liberal socio-economic policies would eliminate what the Gaddafi government has provided the entire population through state subsidies funded with oil export sales: the highest standard of living in Africa with free, universal health and education care, and the possibility of studying abroad at state expense; $50,000 for each new married couple to get started with; non-interest state loans; subsidized prices of cars much lower than in Europe; the cheapest gasoline and bread prices in the world (similar to Venezuela); no taxes for those working in agriculture.

This is not to say that Gaddafi is all that one would want in a leader, but he is definitely not as bad as most of US-NATO allies, such as dictators in the Middle East and some in Africa, Asia, and certainly Israel. Their friendly governments in Saudia Arabia—which sent troops to good neighbor Bahrain to murder hundreds of unarmed protesters condoned by the US—Yemen, Oman, Jordon where the governments murder hundreds of unarmed protestors. In fact, the only armed insurrection occurring in the Arabic countries is in Libya. It seems the US doesn’t like supporting non-violent demonstrators and would rather see them dead. And that is yet another, and one of the most important, reasons for US-NATO taking over Libya: to stop the progressive, dynamic uproar throughout the Arabic world. If these mostly youth-led revolts could actually win, which would mean replacing the imperialist-backed system and not just a dictator here or there, it might lead to an anti-capitalist revolution.

1. See: “The Libyan War, American Power and the Decline of the Petrodollar System” by Peter Dale Scott; “Bombing of Libya – punishment for Gaddafi for his attempt to refuse US dollar” as cited by Ellen Brown in “Libya: All About Oil, or All About Banking.” For this and other points see also: “Euro-US War on Libya: Official Lies and Misconceptions of Critics” by James Petras and Robin Eastman-Abaya; plus other articles on the subject. [?]
2. See: “French plans to topple Gaddafi on track since last November” by Franco Bechis. [?]
3. Boston Globe, April 14. [?]

During the worldwide online celebration, did you post on Facebook or tweet the happy fact that Osama Bin Laden is dead? So many people “liked” an “Osama bin Laden is Dead” page on Facebook that it went viral. But according to WikiLeaks founder Julian Assange, “Facebook in particular is the most appalling spy machine that has ever been invented.”

While talking to Russia Today about recent revolutions in the Middle East and the role of social media, Assange explained that Facebook is “the world’s most comprehensive database about people, their relationships, their names, their addresses, their locations, their communications with each other, and their relatives, all sitting within the United States, all accessible to U.S. Intelligence.”

In the interesting interview, Assange added that it’s not just Facebook, but Google and Yahoo as well as all other major U.S. organizations have developed built-in interfaces for U.S. Intelligence. It helps get around the costly and time-consuming serving of subpoenas.

Not that Facebook is run by U.S. Intelligence agencies, but instead of handing out records “one by one,” it saves Facebook time and money to have “automated the process” for spying. Assange believes that all Facebook users should understand that by adding friends, it connects the dots, builds the databases, and does “free work for United States intelligence agencies.”

The EFF previously warned that Big Brother wants to be your friend for social media surveillance. It’s no surprise that U.S. Intelligence trawls millions of websites, Twitter feeds, YouTube, and blog posts, looking for connections between people, groups, and events. That job must surely be a madhouse right now. To sort through the sea of online chatter, the DoD and U.S. Intelligence allegedly use real time search, data mining, and predictive analytics provided by Psydex. Google Ventures and In-Q-Tel, the investment arm of the CIA, both provided funding for the company Recorded Future which offers a Temporal Analytics Engine for predictive analysis, allowing people to “visualize the future, past, or present.”

Big Brother using link or predictive analysis is not new. Nor is the question of how online companies work with Intelligence. Consumer Watchdog had even questioned the relationship of Google and NSA. All intelligence agencies data mine social media. But right now, the military may not need to use its army of fake social media puppets to spread propaganda online. Just as Bin Laden’s death was a needed psychological victory for most Americans, hopefully the masses cheering the death of Bin Laden will be a huge psychological blow to terrorist networks. U.S. Secretary of State Hillary Clinton said, “Our message to the Taliban remains the same, but today, it may have even greater resonance. You cannot wait us out. You cannot defeat us, but you can make the choice to abandon al Qaeda and participate in a peaceful, political process.”

There may be lots to talk about in Assange’s revelations of built-in online surveillance, just as we could look at how SEAL Team 6 used facial recognition devices to identify the terrorists, but right or wrong, I’m too happy today.

Last night, there wasn’t much sleep for many of us, but there was an incredible swell of American pride during cheers and chants of “USA! USA! USA!” Just be wise about what you do or say online as it’s one giant tool for surveillance by U.S. Intelligence. In the same token, who knows what We the People might see? As Business Insider pointed out, it’s doubtful the U.S. will release the video that President Obama watched live of the Bin Laden raid, “but in this age of Wikileaks, anything’s possible.”

Special thanks to heroes of U.S. Navy SEAL Team 6. That Boom, head shot, was literally a “Monster Kill” heard around the world.

Yesterday, I posted the photo below of the tail section of the craft draped over a wall in Bin Laden’s compound. While it looked pretty much like a Black Hawk tail, I couldn’t for the life of me, figure out what the weird, flat piece of wreckage emerging from the tarp was. I just assumed that the airframe had been mangled badly enough that it looked weird. It could very well be some sort of shield designed to reduce the heat, noise or radar signature of the tail rotor. (The noise reduction efforts didn’t work all that well.) The possibility of a stealthy chopper being used in the raid explains why the Pakistani troops where in such a hurry to cover up all of the wreckage with blankets and cart if off so quickly. Who knows if this is the Pakistani cooperation White House officials said they received for the mission or if the PAF just scored a major tech boost. Good on Steve Trimble for spotting it and pointing out that now is the time to start speculating wildly about what type of bird this is.

Update: The Daily Mail has some additional photos of the wreckage here. The WSJ has these images. These shots appear to show that the SEALs and other American special operators were largely successful in destroying the fuselage of the chopper before Pakistani troops could secure the site. It looks like the tail section remained intact due to the fact that it was hanging over the compound wall, separated from the rest of the wreck. Oh, and check out these satellite images of the crash site. Here’s the latest image of the bird’s tail, it gives you a great sense of the overall tail assembly.

The International Monetary Fund (IMF) now predicts that the size of China’s economy will surpass America’s by 2016, far earlier than most mainstream economists have been forecasting. Some analysts ridiculed the Fund’s prediction, but others warned that it could happen even sooner.The IMF forecast calculated that in five years, using GDP figures based on “purchasing power parity,” the Chinese economy would represent just over 18 percent of the world total, up from around 14 percent right now. According to the Fund’s projections, China’s adjusted GDP will rise from about $11.2 trillion in 2011 to $19 trillion by 2016.

The $15 trillion U.S. economy, which currently accounts for almost 20 percent of global GDP, would decrease to about 17.7 percent of the international total by 2016. During the next five years, according to the IMF forecast, it will grow by a mere $3.5 trillion.

The figures were posted on the Fund’s website two weeks ago with little fanfare, but began making headlines in recent days after being discovered by a reporter. According to news reports, the forecast represents the first time that the IMF has officially put a date on the expected shift in global economic power.

Ten years ago, the U.S. economy was about three times larger than China’s, despite the fact that China has more than four times as many people. But over the last decade, the gap has been closing quickly.

The Chinese economy has been growing fast as the communist dictatorship started to allow some semblance of capitalism and markets to emerge. The regime has been engaged in a massive campaign of industrial espionage that allowed it to steal untold amounts of valuable technology and secrets from Western companies, too.

Some economists also argue that China’s policy of undervaluing its currency has helped it gain a significant competitive edge in exports, at least in the short-term. And the Chinese dictatorship, instead of waging foreign wars and doling out foreign aid, has been aggressively buying up resources, companies and raw materials around the world.

Meanwhile, the U.S. economy has become increasingly less competitive over the last decade. Burdened with growing, unsustainable government borrowing and spending; multiple undeclared foreign wars; an economy-destroying regulatory regime; never-ending bailouts; and a monetary policy that serves to transfer the people’s wealth into the hands of well-connected insiders; growth in America is lagging behind. And that trend is only accelerating.

Of course, Chinese GDP per capita still pales in comparison with American figures — the average economic output of a person in China was less than a tenth of an average American’s in 2009. And for right now, at least, the U.S. dollar and American capital markets still reign supreme in the world economy. On top of that, despite the obvious troubles plaguing the U.S. economy, China’s may be facing big problems, too.

A wide spectrum of analysts and economists believe that the Chinese economy is rushing toward disaster after an unsustainable - largely centrally planned - expansion over the last decade. Malinvestment in everything from “high-speed rail” to empty shopping malls and ghost cities is becoming increasingly apparent despite the communist regime‘s efforts to hide it.

But some analysts and media outlets are still taking the IMF forecast very seriously. Brett Arends of MarketWatch, apparently the first to pick up the story, urged readers to heed the date 2016.  “Put that in your calendar,” he wrote. “It is the end of the Age of America.” He called the IMF forecast a “bombshell.”

“It raises enormous questions about what the international security system is going to look like in just a handful of years,” Arends noted. “And it casts a deepening cloud over both the U.S. dollar and the giant Treasury market.”

He suggested the IMF’s new method of calculating the figures - using purchasing power parity instead of the “largely meaningless comparison” using exchange rates - was a better way to do it. “Exchange rates change quickly. And China’s exchange rates are phony,” he wrote, pointing to the communist regime’s market manipulation to deliberately undervalue its currency.

And the changes to come will be dramatic, Arends predicted. While the U.S. and Great Britain — the last hegemonic world power before America — theoretically live under constitutional government with respect for civil liberties and property rights, China does not.  “The Age of China will feel very different,” he warned.

And most mainstream media outlets that picked up the story, including some run by the Chinese dictatorship, took a similar stance. The Economic Times, for example, called the IMF prediction a “warning shot across America’s bow.” The Asian News International wire service stated: “The rise of the Chinese market will end the ‘Age of America’ a decade before most analysts had expected.” An anchor with Russia Today wondered if the announcement meant “free-market capitalism” was a failure.

In the U.K., the Daily Mail warned that “[t]he ramifications for the U.S. — and indeed any country that has allied itself politically and monetarily to the superpower — are unsettling.” The British paper even claimed with apparent certainty that whoever was elected president in 2012 “will have the dubious honour of presiding over the fall of the United States.”

But not everyone was quite as pessimistic. The International Business Times, for example, claimed the IMF forecast and a related prediction by the World Bank “shouldn’t be trusted at all.” The piece said the institutions’ economists “have little imagination and assume that current conditions will continue indefinitely.”

Analysts at the liberty-oriented Daily Bell said the IMF prediction was “perhaps a bit premature,” suggesting that a future China may even be even smaller than it is today following a much-anticipated downturn. “We’re not sure the IMF believes its own projections,” the report stated, noting that the economic crisis was not confined to Western nations.

“Central banking and fiat money has created a mess not just in the West but around the world, and the Chinese are struggling in that trap just as much as the West is,” the analysts pointed out. “The result in our view will be continued pressure by the elites for a one-world government and a one-world currency.”

Of course, as MarketWatch’s Arends noted, sudden changes or unforeseen events could alter the future economic outlook significantly. If, for example, China were to suddenly dump all or even some of its estimated $3 trillion in U.S. dollar holdings, both countries would suffer huge losses. But while the American economy and the U.S. dollar could be damaged beyond repair, a Chinese recovery could, theoretically at least, rely more on its domestic market and other countries.

The seriousness and urgency of the IMF forecast is hard to discern. Analysts’ opinions are all over the map. If reasonably accurate, a “New World Order” led by a cabal including communist China’s regime — as billionaire socialist George Soros advocates — could be here very soon. And considering the brutality exhibited by the Chinese dictatorship even in recent weeks, the prospect is frightening to critics.

On the other hand, the IMF is run by a self-described socialist who regularly promotes stronger world government and even a global currency managed by an international central bank. And IMF economists — instead of offering real solutions such as sound money and respect for the Constitution — urged the American government in a recent report to drastically increase taxes to alleviate obvious problems.

Analysts will continue to debate the merits of the forecast and the IMF’s methodology. But no matter when exactly the Chinese economy overtakes America’s, the communist dictatorship — probably even more than the current anti-constitutional administration in Washington waging at least three publicly acknowledged wars — represents a serious threat to freedom around the world. Communism, obviously, did not fall with the Berlin Wall.

by Shoestring    source: 9/11 Blogger   April 11, 2011

“There were a number of false reports out there. What was valid? What was a guess? We just didn’t know.”

- Colonel Robert Marr, battle commander at
NORAD’s Northeast Air Defense Sector on 9/11

Although it has been widely reported that four commercial aircraft were hijacked over the United States on September 11, 2001, what is less well known is that while the terrorist attacks were taking place and for many hours after, numerous additional aircraft gave indications that they had been hijacked or, for other reasons, were singled out as potential emergencies. More than 20 aircraft were identified as possible hijackings, according to some accounts, and other aircraft displayed signs of emergencies, such as losing radio communication with air traffic controllers or transmitting a distress signal.

Reports about these false alarms have revealed extraordinary circumstances around some of the incidents and bizarre explanations for how they arose. For example, it has been claimed that the pilots of one foreign aircraft approaching the U.S. set their plane’s transponder to transmit a code signaling they had been hijacked simply to show authorities that they were aware of what had been taking place in America that morning. [1] Another aircraft reported as transmitting a distress signal while approaching the U.S. was subsequently found to have been canceled, and still at the airport. [2]

There may be innocent explanations for some of the less serious false alarms, such as those simply involving the temporary loss of radio communication with the plane, which is a common occurrence and happens on a daily basis. [3] But, viewed in its entirety, the evidence appears highly suspicious and raises serious questions. Why, for example, were there so many false alarms on September 11? Why did so many of them involve false reports of hijackings or aircraft falsely signaling that they had been hijacked? The details of specific incidents that have been reported, which I describe below, show that these false alarms must have been something more than just the results of confusion caused by the terrorist attacks.

MILITARY EXERCISES INCLUDED SIMULATED HIJACKINGS
One possibility to consider is that some of the false alarms related to training exercises taking place on September 11. There is evidence supporting this contention. For example, shortly after 9/11, the New Yorker reported, “During the last several years, the government regularly planned for and simulated terrorist attacks, including scenarios that involved multiple plane hijackings.” [4] And we know that the North American Aerospace Defense Command (NORAD), the military organization responsible for defending U.S. airspace, was in the middle of a major exercise called Vigilant Guardian on September 11. [5] This exercise is known to have been scheduled to include at least one simulated plane hijacking on the morning of 9/11. [6] And in the week before 9/11, it included at least four simulated plane hijackings. [7]

The possibility that these false alarms were deliberate and intended to fulfill a sinister purpose needs to be seriously examined. Were they coordinated and pre-planned by rogue insiders working in the military and other U.S. government agencies, so as to ensure the attacks succeeded?

Were the false alarms that occurred at the same time as the attacks intended to cause confusion, and divert personnel and resources, thereby impairing the emergency response to the attacks? Colonel Robert Marr, the battle commander at NORAD’s Northeast Air Defense Sector (NEADS) on 9/11, has indicated that this is what they achieved. He recalled: “There were a number of false reports out there. What was valid? What was a guess? We just didn’t know.” Major General Larry Arnold, the commander of the Continental United States NORAD Region (CONR) on 9/11, similarly recalled, “A number of aircraft [were] being called possibly hijacked … there was a lot of confusion, as you can imagine.” [8]

And were the false alarms that occurred after the attacks ended intended to prevent principled and honest military or government employees from promptly assessing what had happened, and determining how, against the odds, the attacks had succeeded? As Vanity Fair reported, tape recordings of the operations floor at NEADS reveal that “there was no sense that the attack was over with the crash of United 93,” the last of the four hijacked aircraft. Instead, “the alarms go on and on. False reports of hijackings, and real responses, continue well into the afternoon. … The fighter pilots over New York and DC (and later Boston and Chicago) would spend hours darting around their respective skylines intercepting hundreds of aircraft they deemed suspicious. … No one at NEADS would go home until late on the night of the 11th.” [9]

By tying up personnel, the false alarms could also have prevented anyone from making public information that contradicted the official 9/11 story that was being put out, and that would raise questions about who was actually responsible for the attacks. By the time a person with such information was free to reveal it, after the crisis calmed down, the official story would already have been extensively promoted to the public and generally accepted as true, and so it would be too late to effectively disclose information that would cast serious doubt on that account.

UP TO 29 PLANES REPORTED AS HIJACKED
Several accounts have indicated the large number of false alarms that occurred on September 11. For example, sometime between the attack on the Pentagon and the crash of Flight 93 in rural Pennsylvania, the Federal Aviation Administration (FAA) administrator, Jane Garvey, received a call from Leo Mullin, the CEO of Delta Air Lines. Mullin complained: “We can’t find four of our planes. Four of our transponders are off.” [10] (A transponder is a device that sends an aircraft’s identifying information, speed, and altitude to air traffic controllers’ radar screens.)

After the World Trade Center was hit the second time at 9:03 a.m., the FAA told all air traffic control facilities around the U.S. to notify it of anything unusual that occurred. In response, facilities reported numerous incidents. [11] According to author Pamela Freni, “Upward to two-dozen [aircraft] were listed at one time, but ultimately the number was whittled to 11 highly suspicious cases.” The list included the third and fourth aircraft targeted in the attacks–American Airlines Flight 77 and United Airlines Flight 93–and nine false alarms. [12]

Regarding, specifically, incorrect reports of planes being hijacked, the 9/11 Commission Report stated, “During the course of the morning, there were multiple erroneous reports of hijacked aircraft.” [13] Defense Department spokeswoman Victoria Clarke, who was in the Pentagon during the attacks and for most of the rest of September 11, has recalled: “There were lots of false signals out there. There were false hijack squawks, and a great part of the challenge was sorting through what was a legitimate threat and what wasn’t.” [14] Larry Arnold has said, “By the end of the day, we had 21 aircraft identified as possible hijackings.” [15] Robert Marr recalled, “At one time I was told that across the nation there were some 29 different reports of hijackings.” [16]

I describe below details of some of the flights that were among the false alarms on September 11. Firstly, I examine nine flights that were mistakenly considered to have been hijacked. I then examine flights for which we either do not know the nature of the false alarm, due to the lack of available information (so the aircraft may have been a suspected hijacking, but this fact has not been reported), or the emergency is known to have been something other than a suspected hijacking, such as a loss of radio contact with the aircraft.

AIRCRAFT FALSELY REPORTED AS HIJACKED ON 9/11

• Flight 11 Reported as Still Airborne After Hitting WTC
The first of the “multiple erroneous reports of hijacked aircraft,” according to the 9/11 Commission, was a report that American Airlines Flight 11 was still airborne and heading toward Washington, DC, more than half an hour after this plane crashed into the World Trade Center. [17]

Colin Scoggins, the military liaison at the FAA’s Boston Center, called NEADS at 9:21 a.m. and said: “I just had a report that American 11 is still in the air, and it’s on its way towards–heading towards Washington. … It was evidently another aircraft that hit the tower.” However, Boston Center controllers were not tracking this alleged flight, heading toward Washington, on radar. Instead, according to Vanity Fair, “The plane’s course, had it continued south past New York in the direction it was flying before it dipped below radar coverage, would have had it headed on a straight course toward DC.” Scoggins has claimed he got the erroneous information about the flight from an FAA teleconference he was monitoring. He said he thought someone was overheard “trying to confirm from American [Airlines] whether American 11 was down,” and that “somewhere in the flurry of information zipping back and forth during the conference call this transmogrified into the idea that a different plane had hit the tower, and that American 11 was still hijacked and still in the air.” [18]

• United Airlines Plane Reported as Hijacked, but Still at Airport
Another early false report of a hijacking occurred at 9:25 a.m., when Marcus Arroyo, the security division manager for the FAA’s eastern region, called Mark Randol, the manager of the FAA’s Washington, DC, Civil Aviation Security Field Office, and alerted him to several hijackings. Arroyo mentioned Flight 175 and Flight 77 (the second and third aircraft actually targeted that morning), but also said, incorrectly, that another aircraft, United Airlines Flight 177, had been hijacked. Randol’s staff soon discovered that Flight 177 was still on the ground at Logan International Airport in Boston, being held at the gate there. [19] No explanation has been given for why Flight 177 was falsely reported as a hijacking.

• Delta 1989 Gave Numerous Indications of Being Hijacked
Delta Air Lines Flight 1989 was a Boeing 767 bound from Boston to Los Angeles, which repeatedly acted suspiciously and was repeatedly suspected of being hijacked. The aircraft was first suspected of being hijacked at around 9:30 a.m. when controllers at the FAA’s Cleveland Center who were monitoring it mistakenly thought the sounds of Flight 93 being hijacked, heard over radio, had come from Delta 1989. But they soon decided that Flight 93 was the source of the communications and that Delta 1989 was not hijacked. [20]

However, at around 9:40 a.m., Colin Scoggins at the FAA’s Boston Center called NEADS and said the Boston Center believed Delta 1989 was a hijacked aircraft. [21] It is unclear why Scoggins made this claim, and also why he considered it his responsibility to call NEADS about Delta 1989, since the flight was at that time being tracked by the Cleveland Center, not the Boston Center. [22] The 9/11 Commission Report suggested that Boston Center managers had noted the similarities between Delta 1989 and the two aircraft that had hit the WTC: all were 767s flying from Boston to Los Angeles, which had taken off around the same time. The managers also remembered a radio transmission the center heard, apparently made by a hijacker on Flight 11, saying, “We have some planes,” and consequently “guessed that Delta 1989 might also be hijacked.” [23]

Over the next 30 to 35 minutes, Delta 1989 repeatedly behaved strangely, creating further suspicion that it might have been hijacked. Delta Air Lines instructed the flight to land in Cleveland, but did not inform air traffic control of this. Consequently, Cleveland Center controllers became suspicious when the plane’s pilot contacted them, requesting an immediate change of course. Their level of concern increased when he failed to respond to a message as his plane descended toward Cleveland. [24] Then controllers at another facility had their suspicions of the flight increased when the pilot failed to use standard, and highly important, terminology in his radio communications with them. [25]

Delta 1989 landed at Cleveland Hopkins Airport at around 10:18 a.m. and was directed to a remote area. [26] FBI agents and a police SWAT team approached it, in case any problems arose. [27] It was about two hours after the plane landed that the passengers were allowed off, and it was around mid-afternoon before it was finally confirmed that the flight had never been hijacked. [28]

• Continental Airlines Plane Transmitted Hijack Signal Three Times
Another incident appears to have occurred at around 9:35 a.m., as it was reported at 9:36 a.m., in a phone call between John White, a manager at the FAA’s Command Center in Herndon, Virginia, and Doug Davis, the special assistant for technical operations in air traffic services at FAA headquarters. White told Davis that Continental Airlines Flight 321, which was “en route from Cleveland to Denver,” had “squawked hijack three times.” In other words, the pilot had set the plane’s transponder to transmit the code of “7500,” which signals that the flight has been hijacked. But, White added, “we have made contact with the pilot and the pilot has told us everything is okay.” Just over an hour later, White informed Davis that Flight 321 was “on the ground at Peoria,” Illinois, and the FBI was “approaching the aircraft at this time.” Although White told Davis, “We are trying to determine why he squawked hijack,” further details of this false alarm are unreported. [29]

• American Airlines 189 Sent Text Message Signaling a Hijacking
Employees at the American Airlines System Operations Control (SOC) center in Fort Worth, Texas, became concerned when they temporarily lost communication with one of their planes, and the center also received a message from that plane incorrectly signaling it had been hijacked. Radio contact was lost with the Boston-to-Seattle flight at 9:45 a.m. According to the Wall Street Journal, “Everyone in the room [at the SOC] was convinced it was a … hijacking.” [30]

Evidence indicates this aircraft was American Airlines Flight 189. [31] Donald Robinson, a dispatcher at the SOC, received what he has called a “hijack message” from Flight 189, via the ACARS text messaging system. Robinson then sent a text message back to the plane’s pilots, asking them if they were “squawking” the universal code for a hijacking. Ten minutes after communication with Flight 189 was lost, contact was restored. The problem, according to the Wall Street Journal, was due to a “radio glitch.” Though Robinson suggested that the pilots may have sent the “hijack message” accidentally, he admitted that it was “unknown why the cockpit sent this message.” [32]

• Possible Hijacked Aircraft Heading to U.S. from Canada
Around 10:00 a.m., a Canadian NORAD unit called NEADS and told it that a suspected hijacked aircraft was heading south from Canada, toward Washington, DC. [33] Few details were revealed about this plane. A member of staff at NEADS informed their colleagues that it was from an “unknown departure airport,” and they did not “know any codes or anything” else about it. [34] When someone at NEADS then called the Canadian unit for more information, the person who answered the call only said they had seen “something on the chat”–meaning NORAD’s computer chat system–about a “possible” aircraft. A few minutes later, the Canadian unit called NEADS again and said the suspected hijacking was a false alarm. The caller said the unit’s intelligence team was “not assessing that there’s an actual aircraft problem. It’s just that there could be problems from our area.” He added, “There’s no actual aircraft that we suspect as being a danger.” [35]

• Korean Airlines 85 Repeatedly Indicated it was Hijacked
One of the aircraft mistakenly suspected of being hijacked on September 11 about which most has been reported is Korean Airlines Flight 85. This plane gave several indications that it had been hijacked, was tailed by fighter jets, and was even threatened with being shot down by the military.

KAL 85 was a Boeing 747 with 215 people on board, flying from Seoul, South Korea, to New York. It had been due to land in Anchorage, Alaska, for a refueling stop when problems began. Shortly before midday, it was discovered that the plane’s pilots had sent a text message that included the letters “HJK,” the code for a hijacking. [36] Then, after KAL 85 entered their airspace at around 1:00 p.m., Anchorage air traffic controllers asked the pilots coded questions over radio to see if the plane had indeed been hijacked. But instead of giving reassurance that the plane was safe, the pilots switched their transponder to “7500,” the code signaling a hijacking. KAL 85 continued transmitting this code for the next 90 minutes, until it landed. [37] In fact, according to an official report, “There were five separate and ongoing indicators of a hijacking situation” on KAL 85, although the report did not specify what those indicators were. [38]

NORAD launched fighter jets to follow KAL 85, ordered that the plane be directed away from Anchorage, and threatened to have it shot down if it refused to change course. [39] KAL 85 was redirected to Whitehorse Airport in Canada. It was escorted there by fighters and landed without incident at 2:54 p.m. [40] Only on the following morning, after a bomb-sniffing dog searched the plane and its cargo was checked, did the Royal Canadian Mounted Police finally confirm that KAL 85 was never hijacked. [41]

KAL 85 has subsequently been treated with much secrecy. The FAA, NORAD, and Transport Canada have declined to answer questions about it. [42] Korean Airlines refused to make available a tape recording of conversations between the pilot and airline officials in Anchorage, and has not even revealed the names of the members of the plane’s flight crew on September 11. [43]

In light of the possibility that some of the false alarms on September 11 related to training exercises taking place that day, it is notable that, a few days earlier, one of those exercises included a scenario where an aircraft remarkably similar to KAL 85 was hijacked. On September 6, NORAD’s exercise Vigilant Guardian included a simulated scenario in which a plane, Korean Airlines Flight 357, was taken over by terrorists. KAL 357, like KAL 85, was a Boeing 747 flying from Seoul to Anchorage. And on September 6, similar to what it did in response to KAL 85 five days later, NORAD ordered its Alaskan region to intercept and shadow the hijacked plane, and directed fighter jets to get in a position to shoot the plane down if necessary. [44]

• San Diego to Denver Flight Suspected as Hijacked
At some unspecified time, apparently early in the afternoon, it has been reported that NORAD’s operations center in Cheyenne Mountain, Colorado, was receiving “reports of a hijacking out of San Diego, California,” that was “headed to Denver.” Eventually, the aircraft identified itself and landed uneventfully. Further details of this flight are unknown. [45]

• Possibly Hijacked U.S. Airways Flight Approaching From Spain
The last aircraft incorrectly suspected of being hijacked on September 11, according to CONR’s Larry Arnold, was a U.S. Airways flight approaching the United States from Madrid, Spain. [46] At 3:20 p.m., it was reported over an FAA teleconference that the White House was saying this flight was heading to Philadelphia International Airport, and the military was scrambling fighter jets in response to it. Accounts conflict over whether the U.S. Airways plane was Flight 930 or Flight 937. [47] Lewis Libby, Vice President Dick Cheney’s chief of staff, who was in the Presidential Emergency Operations Center below the White House, has recalled, “When we first got word [of the flight], we got word that it was only 30 minutes or so outside of U.S. airspace.” Libby indicated that the plane’s transponder had been transmitting the code for a hijacking, saying, “I think it was one of those ones where there was an actual report that it was showing hijacking through some electronic signal.” [48]

After a short time, the flight was found to be secure. Arnold has recalled that Robert Marr called him from NEADS and said, “We just talked to the airline, and that aircraft is back on the ground in Madrid.” [49] According to Libby, “It turned out that, I think, it was only 35 minutes out of Spanish airspace, not out of our airspace.” [50]

OTHER AIRCRAFT EMERGENCIES, AND UNSPECIFIED AIRCRAFT EMERGENCIES, ON 9/11

• Coast Guard Reported Three Suspicious Aircraft, but One Flight ‘Never Existed’
As previously mentioned, there were some false alarms on September 11 for which the specific nature of the emergency is unstated. These may have been suspected hijackings or they may have been something else, like the loss of radio contact or the loss of a transponder signal. An example of this is an incident that occurred shortly after 11:00 a.m., when three suspicious flights were reported as approaching the U.S.

At 11:18 a.m., it was reported on an FAA teleconference that the Coast Guard in Norfolk, Virginia, had received distress signals from Air Canada Flight 65, Continental Airlines Flight 57, and United Airlines Flight 947. Whether these distress signals were the “7500? transponder code signaling a hijacking, or something else, is unreported. The three aircraft were reported as being over the Atlantic Ocean. Jeff Griffith, the deputy director of air traffic at FAA headquarters, subsequently instructed John White at the FAA’s Command Center to alert NORAD to the aircraft, and to also notify the Air Traffic Services Cell (ATSC), an office at the Command Center manned by military reservists.

By 11:46 a.m., it was determined that the distress signals were false alarms. It was reported on the FAA teleconference that “all three aircraft … are accounted for” and “all are OK.” The United Airlines plane returned to Europe and the Continental Airlines flight landed in Gander, Canada. Remarkably, it was discovered that Air Canada 65 hadn’t even been airborne. White reported that it “landed last night and was scheduled to depart today, but the flight’s canceled.” [51] According to an ATSC chronology of the events of 9/11, this flight “never existed.” [52]

• FAA Command Center Compiled List of 11 Suspicious Aircraft
As mentioned earlier, following the second attack in New York, the FAA’s Command Center instructed air traffic control facilities to notify it of anything unusual. In response, according to Linda Schuessler, the deputy director of system operations at the Command Center, “we started getting more and more calls about bomb threats, about aircraft that we had lost communication or radar identification with.” This led to the center compiling a list of 11 aircraft “that we had gotten unusual information on, that we thought seemed worthy of keeping a closer eye on.” The list included two of the planes targeted in the terrorist attacks, Flight 77 and Flight 93. [53]

Various accounts have indicated details of the other flights singled out by the Command Center. A 9:10 a.m. entry in a chronology of events at the Command Center on September 11 mentioned seven aircraft for which the center was providing “coordination to assist in finding,” although evidence indicates that at least some of these aircraft only aroused suspicion later on than 9:10 a.m. One of the aircraft was Delta Air Lines Flight 1989 (see above). The other six, and the few details we know about them, are as follows:

- American Airlines Flight 2247: At 10:04 a.m., the FAA’s Fort Worth Center reported this flight to the Command Center. The aircraft, going from Orlando, Florida, to Shreveport, Louisiana, was “NORDO,” meaning radio contact with it had been lost. Communication was restored by 10:17 a.m.

- U.S. Airways Flight 41: The FAA’s Memphis Center reported this plane, going from Charlotte, North Carolina, to Los Angeles, to the Command Center. The reason for the report is unknown.

- Northwest Airlines Flight 197: The Command Center appears to have been alerted to this plane, en route from Lansing, Michigan, to Minneapolis, Minnesota, at 10:03 a.m. The reason for the report is unknown. Flight 197 subsequently landed in Marquette, Michigan.

- United Airlines Flight 641: United Airlines lost contact with this plane at around 10:00 a.m., but persistent attempts to communicate with it were eventually successful. The flight subsequently landed in Detroit, Michigan.

- United Airlines Flight 57: This aircraft was reported as missing sometime between 10:55 a.m. and 11:15 a.m. It appears to have been reported to the Command Center by controllers at Denver International Airport, for reasons that are unknown. It subsequently landed in Garden City, Kansas.

- U.S. Airways Flight 633: At 10:55 a.m., controllers at Philadelphia International Airport reported that they had “lost” this flight, which was heading to Las Vegas. The Command Center chronology indicated that the plane subsequently landed at the Philadelphia airport, at 11:14 a.m. [54]

Other accounts have mentioned three additional suspicious aircraft that were on the Command Center’s list. (However, if these accounts are correct, it would indicate that the list included 12 aircraft, not 11.) One of the aircraft was a U.S. Airways flight heading to Chicago that was not communicating with air traffic controllers. [55] Another was a TWA flight that was refusing to land in Pittsburgh, and instead wanted to fly on to Washington. The third was a Midwest Express flight that disappeared from radar over West Virginia. [56]

Schuessler has recalled that Command Center personnel later “continued to say [they had] a little discomfort about the information [they] received” about these suspicious flights. But, she said, “We followed up with the security people and got enough information that the specialists here felt very comfortable that they understood the situation.” [57]

• United Airlines Worker in England Received Suspicious Call from Pilot
At around 11:16 a.m. (U.S. Eastern time), a United Airlines aircraft maintenance officer at a facility in London, England, received a brief but suspicious phone call from an unidentified aircraft, in which the caller–apparently the plane’s pilot–sounded distraught, possibly as if he was being choked. The maintenance officer recognized the call as coming from a particular type of satellite phone that is available on Boeing 767s and 777s, although he believed it was most likely from a 777. He told the 9/11 Commission that the caller sounded strange, and that this was the “only phone call that he’d ever received of that nature in the 10 years he’s been on the job for United.”

The maintenance officer contacted a United Airlines maintenance facility at San Francisco International Airport to report the suspicious call, and it in turned notified the FBI. The FBI was told that the maintenance officer had said the caller from the plane “sounded as if they were being choked,” although the maintenance officer later claimed he was unsure whether this had been the case. [58]

• Other Suspicious Flights
We know of numerous other flights on September 11 that raised concern, although the reported details of these are scant. Andrew Studdert, United Airlines’ chief operating officer at the time of the attacks, told the 9/11 Commission that at around 10:00 a.m., as well as losing contact with Flight 641 (see above), United lost contact with two more of its planes, Flights 399 and 415. Studdert also said that between 10:55 a.m. and 11:15 a.m., as well as Flight 57 (see above), eight other United planes were reported as missing. These were Flights 103, 634, 1211, 1695, 2101, 2102, 2256, and 2725. All of them were eventually located at various airports. [59] Furthermore, a Secret Service timeline stated that at 10:55 a.m., United Airlines Flight 182, from Boston to Seattle, was “unaccounted for.” [60]

As previously mentioned, the temporary loss of radio contact with aircraft is a common occurrence. [61] And an order issued by the FAA at 9:45 a.m., for all aircraft over the U.S. to land at the nearest airport, presumably complicated interactions between pilots and air traffic controllers. [62] But can these factors account for a single airline losing communication with so many of its planes, all on the same day, and all within such short spaces of time? And on September 11, 2001, of all days, when two of the aircraft targeted in the terrorist attacks belonged to that particular airline?

Additionally, Studdert told the 9/11 Commission that throughout the morning of September 11, United Airlines received “a torrent of reported bomb threats; explosions are reported at two airports, and there are reports of other threats and other hijackings.” These turned out to be “misunderstandings or hoaxes,” but, Studdert commented, “the presumed threats cannot be dismissed in the high uncertainty of the moment.” [63]

It seems reasonable to assume there were other false alarms that have not yet come to light. If Larry Arnold’s claim of “21 aircraft identified as possible hijackings” or Robert Marr’s claim of “29 different reports of hijackings” are anywhere near accurate, then there must have been additional false reports of hijackings beyond what I have described.

Who or what caused these false alarms? What effect did they have on the ability of the military and other U.S. government agencies to respond to the actual attacks, and to then assess how those attacks had been able to succeed? These questions have not yet been adequately addressed, and need to be investigated thoroughly.

NOTES
[1] Lynn Spencer, Touching History: The Untold Story of the Drama That Unfolded in the Skies Over America on 9/11. New York: Free Press, 2008, p. 196.
[2] Draft: The Air Traffic Organization’s Response to the September 11th Terrorist Attack: ATC System Assessment, Shutdown, and Restoration. Federal Aviation Administration, March 21, 2002, p. S-26; “Full Transcription; Air Traffic Control System Command Center, National Traffic Management Officer, East Position; September 11, 2001.” Federal Aviation Administration, October 21, 2003.
[3] See Donald A. Robinson Jr., interview by the FBI. Federal Bureau of Investigation, September 11, 2001; “Memorandum for the Record: Staff Visit to the Boston Center, New England Region, FAA.” 9/11 Commission, September 22-24, 2003.
[4] “September 11, 2001.” New Yorker, September 24, 2001.
[5] William M. Arkin, Code Names: Deciphering U.S. Military Plans, Programs, and Operations in the 9/11 World. Hanover, NH: Steerforth Press, 2005, p. 545.
[6] Michael Bronner, “9/11 Live: The NORAD Tapes.” Vanity Fair, August 2006.
[7] “NORAD Exercises: Hijack Summary.” 9/11 Commission, n.d.
[8] Leslie Filson, Air War Over America: Sept. 11 Alters Face of Air Defense Mission. Tyndall Air Force Base, FL: 1st Air Force, 2003, p. 73.
[9] Michael Bronner, “9/11 Live.”
[10] “Memorandum for the Record: Interview With Jane Garvey.” 9/11 Commission, October 21, 2003; Lynn Spencer, Touching History, p. 186.
[11] Lynn Spencer, Touching History, pp. 125-126.
[12] Pamela Freni, Ground Stop: An Inside Look at the Federal Aviation Administration on September 11, 2001. Lincoln, NE: iUniverse, Inc., 2003, p. 65.
[13] 9/11 Commission, The 9/11 Commission Report: Final Report of the National Commission on Terrorist Attacks Upon the United States. New York: W. W. Norton & Company, 2004, p. 28.
[14] “Chilling Audio From 9/11 Hijack Played at Hearing.” Paula Zahn Now, CNN, June 17, 2004.
[15] “Conversation With Major General Larry Arnold, Commander, 1st Air Force, Tyndall AFB, Florida.” Code One, January 2002.
[16] Robert A. Baker, “Commander of 9/11 Air Defenses Retires.” Newhouse News Service, March 31, 2005.
[17] 9/11 Commission, The 9/11 Commission Report, pp. 26, 28.
[18] Ibid. p. 26; Michael Bronner, “9/11 Live.”
[19] “Memorandum for the Record: Interview With Mark Randol, Former Manager of the Civil Aviation Security Field Office in Washington, DC.” 9/11 Commission, October 8, 2003.
[20] Marilyn Adams, Alan Levin, and Blake Morrison, “Part II: No One Was Sure if Hijackers Were on Board.” USA Today, August 12, 2002; “Memorandum for the Record: Interview With John Werth, Air Traffic Controller, Area 4, Lorain Sector.” 9/11 Commission, October 1, 2003; “Memorandum for the Record: Interview With Kim Wernica, Operations Manager at Cleveland ARTCC on 9/11.” 9/11 Commission, October 2, 2003.
[21] Michael Bronner, “9/11 Live”; Untitled Chronology of FAA and NEADS Communications on September 11, 2001. 9/11 Commission, n.d.
[22] Marilyn Adams, Alan Levin, and Blake Morrison, “Part II: No One Was Sure if Hijackers Were on Board”; Alan Levin, “For Air Controller, Terror Still Vivid 7 Years Later.” USA Today, September 11, 2008.
[23] Marilyn Adams, Alan Levin, and Blake Morrison, “Part II: No One Was Sure if Hijackers Were on Board”; 9/11 Commission, The 9/11 Commission Report, pp. 27-28.
[24] Marilyn Adams, Alan Levin, and Blake Morrison, “Part II: No One Was Sure if Hijackers Were on Board”; Lynn Spencer, Touching History, pp. 167-168.
[25] “DAL 1989 Order of Events.” Federal Aviation Administration, September 16, 2001.
[26] Ibid.; Marilyn Adams, Alan Levin, and Blake Morrison, “Part II: No One Was Sure if Hijackers Were on Board.”
[27] Michael O’Mara, “9/11: ‘Fifth Plane’ Terror Alert at Cleveland Hopkins Airport.” WKYC, September 11, 2006; Lynn Spencer, Touching History, p. 270.
[28] Marilyn Adams, Alan Levin, and Blake Morrison, “Part II: No One Was Sure if Hijackers Were on Board.” For more information about Delta Airlines Flight 1989, see “Was Delta 1989 Part of a Live-Fly Hijacking Exercise on 9/11?” Shoestring 9/11, July 22, 2009.
[29] “Full Transcription; Air Traffic Control System Command Center, National Traffic Management Officer, East Position; September 11, 2001?; Miles Kara, “Transcript of East NTMO, Line 4530, Admin Line.” 9/11 Commission, November 4, 2003.
[30] Donald A. Robinson Jr. interview by the FBI; Scott McCartney and Susan Carey, “American, United Watched and Worked in Horror as Sept. 11 Hijackings Unfolded.” Wall Street Journal, October 15, 2001.
[31] For example, the Bureau of Transportation Statistics database of “Airline On-Time Data” reveals that Flight 189 was the only American Airlines plane going from Boston to Seattle that day.
[32] Donald A. Robinson Jr. interview by the FBI; Scott McCartney and Susan Carey, “American, United Watched and Worked in Horror as Sept. 11 Hijackings Unfolded.”
[33] Michael Bronner, “9/11 Live.”
[34] NEADS Audio File, Mission Crew Commander Position, Channel 2. North American Aerospace Defense Command, September 11, 2001.
[35] NEADS Audio File, Identification Technician Position, Channel 4. North American Aerospace Defense Command, September 11, 2001; “NEADS CDs.” 9/11 Commission, n.d.
[36] Alan Levin, “Korean Air Jet May Have Narrowly Missed Disaster.” USA Today, August 12, 2002; Zaz Hollander, “High Alert.” Anchorage Daily News, September 8, 2002.
[37] Alan Levin, “Korean Air Jet May Have Narrowly Missed Disaster”; Lynn Spencer, Touching History, pp. 277-278.
[38] September 11, 2001, Whitehorse International Airport Emergency: Public Findings Report. Whitehorse, Yukon: Yukon Government, November 13, 2001, p. 17.
[39] Alan Levin, “Korean Air Jet May Have Narrowly Missed Disaster”; Lynn Spencer, Touching History, p. 278.
[40] Alan Levin, “Korean Air Jet May Have Narrowly Missed Disaster”; Zaz Hollander, “High Alert.”
[41] September 11, 2001, Whitehorse International Airport Emergency, p. 18.
[42] Zaz Hollander, “False Sept. 11 Hijack Signal Put Air Force on Alert.” Anchorage Daily News, September 29, 2001; September 11, 2001, Whitehorse International Airport Emergency, p. 27; Alan Levin, “Korean Air Jet May Have Narrowly Missed Disaster.”
[43] Zaz Hollander, “False Sept. 11 Hijack Signal Put Air Force on Alert”; Stephanie Waddell, “9/11 Documentary to be Released Next Year.” Whitehorse Daily Star, December 31, 2010.
[44] “NORAD Exercises: Hijack Summary.” For more details about Korean Airlines Flight 85, see “Was Korean Airlines Flight 85 a Simulated Hijack in a 9/11 Training Exercise?” Shoestring 9/11, April 18, 2010.
[45] Rebecca Grant, The First 600 Days of Combat. Washington, DC: IRIS Press, 2004, p. 26.
[46] “Chronology of Events (All Times are Local Eastern Daylight Time).” Federal Aviation Administration, September 11, 2001; “Conversation With Major General Larry Arnold.”
[47] “ADA-30 Operations Center Activity Report, September 11-14, 2001.” Federal Aviation Administration, September 2001; “Chronology of Events (All Times are Local Eastern Daylight Time)”; “Eastern Region Operations Center Log: Chronological Events of Hijacking Crisis.” Federal Aviation Administration, January 2, 2002.
[48] Lewis Libby, interview by Newsweek magazine. White House, November 16, 2001.
[49] “Eastern Region Operations Center Log”; Leslie Filson, Air War Over America, p. 88.
[50] Lewis Libby, interview by Newsweek magazine.
[51] Draft: The Air Traffic Organization’s Response to the September 11th Terrorist Attack, pp. S-26, S-29, S-33; “Full Transcription; Air Traffic Control System Command Center, National Traffic Management Officer, East Position; September 11, 2001.”
[52] Untitled Air Traffic Services Cell Chronology of Events. U.S. Air Force, September 11, 2001.
[53] David Bond, “Crisis at Herndon: 11 Airplanes Astray.” Aviation Week & Space Technology, December 17, 2001.
[54] Untitled FAA Command Center Chronology of the Events of September 11, 2001. Federal Aviation Administration, September 11, 2001; “Statement of Andrew P. Studdert to the National Commission on Terrorist Attacks Upon the United States.” 9/11 Commission, January 27, 2004; “Suspect Aircraft of September 11, 2001.” 9/11 Commission, n.d.
[55] Lynn Spencer, Touching History, p. 126.
[56] Marilyn Adams, Alan Levin, and Blake Morrison, “Part II: No One Was Sure if Hijackers Were on Board.”
[57] David Bond, “Crisis at Herndon.”
[58] Ray Kime, interview by the FBI. Federal Bureau of Investigation, September 11, 2001; “Memorandum for the Record: Interview With Rich Belme, Manager of United Airlines SAMC in San Francisco, CA.” 9/11 Commission, November 21, 2003; “Memorandum for the Record: Interview With [Name Redacted], United Airlines.” 9/11 Commission, November 21, 2003.
[59] “Statement of Andrew P. Studdert to the National Commission on Terrorist Attacks Upon the United States.”
[60] “Secret Service Timeline, Unclassified Extract.” United States Secret Service, September 11, 2001.
[61] See Donald A. Robinson Jr., interview by the FBI; “Memorandum for the Record: Staff Visit to the Boston Center, New England Region, FAA.”
[62] U.S. Congress. House. Committee on Transportation and Infrastructure, Statement of Jane F. Garvey, Administrator, Federal Aviation Administration, Before the House Subcommittee on Aviation, Committee on Transportation and Infrastructure. 107th Cong., 1st sess., September 21, 2001; 9/11 Commission, The 9/11 Commission Report, p. 29.
[63] “Statement of Andrew P. Studdert to the National Commission on Terrorist Attacks Upon the United States.”

By Richard Chirgwin • Get more from this author

Yandex, which last week announced its intention to list on NASDAQ, says it has been forced by Russian authorities to hand over financial information about an anti-corruption blogger to Russia’s domestic security agency, the FSB.

Alexei Navalny, who operates the http://rospil.info RosPil whistle-blower Website in Russia, had complained on his blog that some financial contributors were receiving threatening telephone calls over their support for the site. Contributions through Yandex to RosPil are made using “Yandex Money”.

Yandex has now confirmed that it provided information about both Navalny and his contributors after being approached by the FSB. Chief editor Yelena Kolmanovskaya has reportedly told the Echo radio station on Moscow that Yandex is upset at the intrusion into RosPil’s affairs.

“We ourselves are unhappy about the situation and share our users’ outrage,” Kolmanovskaya said.

Yandex’s SEC filing for its IPO illustrates the thorny relationship between media and government in Russia. “The legal system in Russia and other countries in which we operate can create an uncertain environment for investment and business activity,” the filing notes.

It cites “selective enforcement of laws or regulations” as an example of such risk, stating that this is perceived as being “motivated by political or financial considerations.”

To date, RosPil’s site claims that it has reported fraud valued at more than 1.6 billion rubles, or more than US$50 million. While Navalny’s targets have included very large Russian organizations such as oil players Rosneft and Transneft, the anti-corruption Website also exposes routine small-scale dodginess across much smaller government departments.

Exposing corruption in Russia is a dangerous pastime, with the Journalists in Russia database listing more than 300 journalists to suffer “violent, unexplained or premature” death. ®

Sarah Lacy May 14, 2011

It was when they pulled out the machetes that I started to worry.I’d seen men with machetes in Africa before, but they were rusty, practical tools used for clearing away brush by the side of the highway. These were long, shiny and housed in decorative sheaths, pulled out ostensibly so the men could sit down more comfortably, but done with a clear, understated flair. They were more like sultan swords than jungle tools.

The kicking in my six-month pregnant belly had gone eerily silent since we entered the vigilante court at Alaba. I reassured myself that I’d been through things like this before. The time I went to visit Brazilian entrepreneur Marco Gomes’ hometown in the crime-ridden slums of central Brazil, comforted only by his reassurance that “No foreigner has ever died in my hometown, because no foreigner has ever been to my hometown.” And the time I was driving along the boarder between Rwanda and the Democratic Republic of Congo and armed Rwandan guards stopped our car, wordlessly got in the backseat and hitched a ride for several miles. And then there was the time we were charged by a baboon.

Looking at those beady baboon eyes rushing towards me, I was instantly convinced I was losing an arm. Now, in this Nigerian “courtroom,” my husband was looking at the machetes having the same thought. I was just hoping they didn’t realize he’d slipped the camera’s memory card in his pocket. I tried to pat my stomach as apologetically as I could. Sorry, son. Welcome to life as my kid.

Sometimes I write provocative leads that aren’t quite what they seem. Like the time I said I was in a wheelchair getting a blood transfusion in Singapore. As the second graph explained, I was actually at a hospital-themed bar where you sit in wheelchairs and drink out of IV bags. My cocktail was called a “blood transfusion.”

But this time, I’m not being hyperbolic or clever. There’s no twist coming. My husband, our unborn child and I were actually sitting in a Nigerian vigilante court being tried for– as near as I could tell– taking photos and not respecting authority. The makeshift courthouse looked like a set of a Western. The judge was named “Bones.” The police? Well, there was a station not too far from here, but the police ceded Bones authority in Alaba. They didn’t what to get involved.

It could have been a scene in a movie. That irony wasn’t lost on us, because our accusers, the people speaking for us, and the judge, jury and — well, let’s just call them the guys with the machetes– were there to protect the interests of the rough-and-tumble world of the Nigerian filmmaking. They call it Nollywood.

Nollywood sprung up a few decades ago and is the second largest film industry in the world by volume. Producers churn out

hundreds of movies a month, most shot on a shoe-string budget of about $15,000 per picture. We visited a set of a film called “The Stripers.” It reminded me of the photos in Larry Sultan’s book about low-frills porn sets, “The Valley,” sans sex and nudity of course.The film– a romantic comedy where one of Nollywood’s hottest actresses turns a gay man straight– was shot in an empty suburban house rented for a few days with a crew of no more than ten. The assistant did the hair and makeup, and the producer did most everything else.

There are few theatrical releases in Nollywood. Most of these movies– which Nigerians consume as rabidly as Brazilians devour their telenovelas–  are seen on local TV stations and sold over DVDs. And these producers move fast: Last week we saw a movie on the market called “Dead at Last: Osama Bin Laden, Complete Season One: Life and Death.”

Like most industries in emerging markets, Nollywood is developing in a very different time than Hollywood or even Bollywood developed, and that alone means it’s developing in a very different way. On the plus side, cheap modern digital production tools have made it all possible. But rampant digital piracy means there’s no honeymoon period for producers to build an industry around protected copyrights. They produce content millions of people love, but most of these scrappy street producers are constantly operating on shoe-string budgets, lucky to break even on each film.

Alaba International Market is where the producers all have their store-fronts and distribution hubs. We met dozens of them inside a long, dark cave-like hallway where each producer operated out of a cell-sized office, filled with paper records, movie posters pasted over movie posters, and spindles of thousands of DVDs.

Some of these producers are highly-educated entrepreneurs following their passion the same way the best entrepreneurs in

Silicon Valley have. We met one man named Ulzee, a Nollywood pioneer who decided to make movies after getting a science degree. (Pictured right.) His wife, trained as a lawyer, joined him along the seemingly crazy journey. His biggest hit was “Osuofia in London,” one of the first Nollywood films to get international attention. He shot it on location in London and it cost about $6,500 to make– a jaw-dropping investment for a Nollywood picture back in 2003. But it grossed more than $650,000.

Much like the 419 scam business, members of Nigeria’s 50 million-person unemployed class see the glamorous, seemingly easy money of Nollywood and have flooded into the business. Ulzee doesn’t respect many of them, saying they aren’t artists. They shoot once and release the same movie with four different covers just to make an extra buck. Of course, given the rampant piracy that’s destroyed their margins, you can understand why these producers are constantly trying to milk revenues out of the same film.

Here’s what makes the mood at the Alaba market so tense: Before you get to that hallway of producers peddling their movies in

their cell-like offices, you walk past the open air markets where the software and DVD pirates have set up shop. Unlike Hollywood where the producers  reside in glamourous offices and pirates operate the the shadows and basements of the Internet, in Alaba the content creators and those destroying their hopes of revenues reside in the same place, selling the same product side-by-side. Fire-and-brimstone evangelical preachers set up keyboards and microphones in the middle of the street to save souls, only adding to the chaos. (Video of some of this in the next post.) So I could understand why Bones and his council occasionally need some machetes to keep the peace.After 40 weeks in emerging countries, markets tend to blur together, but Alaba was unlike any place I’ve seen before. It was rawly and intensely Nigerian. Nigeria isn’t a culture based on pleasantries. A local saying painted on the backs of trucks sums it up: “No Paddy for Jungle,” or no one has friends in the jungle.

And Lagos is like a jungle. On Victoria Island– the ritzy section of Lagos– incomes are high even for a dual economy, thanks

to oil and corruption. The most basic four-star hotels cost upwards of $500 a night, and the rich buy up rooms for a whole year or more, artificially constricting supply. Plots of land cost millions and a middle-of-the-road dinner for two without drinks can run $100 or more. But on the mainland in Lagos, you see the real Nigeria, the one where one-third of the population is unemployed. I talked to people furious by the corruption in the country, and what they felt was an unfair nepotism among the rich that made it almost impossible to climb the societal ladder.Even the people I met in “easy money” businesses such as scamming and Nollywood toil entrepreneur’s hours to build their fortunes, constantly under pressure to outsmart the people out to kill their livelihoods– whether that’s law enforcement in the case of scammers or pirates in the case of Nollywood.

The tension is palpable. Stuck in traffic on the freeways, we saw fist-fights break out. Unlike some other developing countries where hawkers will smile and flatter Westerners in an attempt to sell them outrageously priced goods, Nigerians don’t play that game. They’re happy to sell you something if you show the cash. Otherwise, keep moving. They have little use for smiling, nodding and pandering. It’s not necessarily that there’s more anger, resentment or corruption in Nigeria than the rest of the emerging world; Nigerians just wear it on their sleeves.

Part of me loves that. The warm hospitality many people showed us– in both poor and rich areas of the city– was genuine. You know where you stand in these places; it’s all out in the open. But it makes walking through these markets intimidating. Look at a hawker and smile on the wrong day, and you’ll get screamed at just for being there. As one 419 scammer told me, “If I can’t even trust a man with the black flesh, why should I ever trust you?”

Our guide through Nollywood was an entrepreneur named Jason Njoku (seen on the right in this photo, haggling with producers). His parents are Nigerian, but he grew up in the United Kingdom. He became entranced with Nollywood a few years ago and was bored with London. So he moved here, stunning his family and friends. He started Iroko Partners to catalog this vast Nollywood inventory and give it a new global distribution life on the Web. It sounds like a recipe for a city boy to get fleeced, but so far that hasn’t been the case.Njoku spent weeks trolling the Alaba markets introducing himself to producers and trying to explain to them how a YouTube channel could be an answer for revenues, not simply another channel for the pirates to steal their intellectual property. Once he sold a few of the bigger ones like Ulzee, word spread and more producers piled in. Just four months in to his business, Njoku has bought the online rights to 500 movies from 100 different one-man production houses. Last month his YouTube channel had 1.1 million uniques, 8 million streams, and is on pace to do more than $1 million in revenues this year from YouTube ads. Those numbers are massive for a Nigerian-based Web company, particularly in such a short time. Facebook has one of the largest user-bases here, feeling ubiquitous in the city. And yet it has less than three million users.

Njoku is playing a long-game. Most of his traffic is from outside Nigeria, because broadband penetration is still so low there. He’s paying more than he would have to for rights; about $3,000 per film, roughly what TV stations pay. That immediately returns about one-third of the production costs, a welcome surprise for a new medium that most of these producers had never really considered before. He provides a lot of other value-added services too, like creating an IMDB-equivalent for the messy Nollywood industry, and watching all movies to strip out things like the unauthorized use of a Beyonce song. In the future, he’s going to provide French subtitles so the movies can find new audiences in surrounding West African nations.

The checks have endeared Njoku to this rag-tag community of producers. One of Njoku’s several cell phones rings constantly with producers calling him to check on contracts, release dates and when they’re getting their next checks.

And that loyalty came in handy about the time a screaming mob broke out in Alaba over the presence of two unknown Americans taking pictures. I’m still not sure if they actually thought we were spying on their business or just wanted to extort us for cash. I’m still not sure whether it was the pirates, the producers or other rabble rousers who were the instigators. The ring leader appeared to be a terrifyingly huge, enraged, bald guy wearing a tight, white muscle shirt that said “SKULL SHIT” in big letters.

We barricaded ourselves in Ulzee’s cell-like office until it died down. We didn’t have another choice. We were half way down a long, dark hallway of offices, and there was no way out without going through the mob. Ulzee’s wife, who’d been lounging on some boxes when we arrived, sprung into action, explaining to the accusers that we were their guests and welcome to do what we wanted.

Eventually, the chaos died down, we promised not to take anymore pictures and we tried to leave. But as soon as we left the office, it erupted again and the crowd encircled us. The screaming intensified, echoing through the cave-like hallway. I tried to go back into Ulzee’s office, but the doors were being locked behind me by Bones’ crew. We were trapped, and the angry faces were circling in tighter, the screaming unintelligible as it echoed from wall-to-wall.

“Trust me, it’s better that this plays out here than on the street,” Njoku said. “Half of the people yelling are on our side.”

News of the uproar reached Bones, the man entrusted to keep the peace between producers, pirates and rare interlopers like ourselves. And that’s when we were summoned to his court. A phalanx of producers escorted us through the streets making sure no more harm came to us before we got there. “Don’t worry,” Njoku whispered. “As long as I have my checkbook, they still need me alive.”

We sat on one bench. The producers sat on the other. And that’s when Bones and the machete-men strolled in. After hearing all the  evidence, our insistence that we respected his authority, the producers vouching for us, and of course, some cash changed hands, the machetes stayed sheathed and they let us go.

Njoku didn’t break a sweat. Rather than convincing me he was trying to regulate something that couldn’t possibly be regulated, the whole episode made me more bullish on his company. It was clear how much the legitimate entrepreneurs in this community valued him, the depth of his relationships after just four months, and his innate understanding for navigating crisis in a terrifying situation.

If a businesss like this were being built in the West, there’d be few barriers to entry. Someone can always just pay higher license fees. But in a country like Nigeria, these sort of relationships, this kind of trust in a place where no one trusts anyone are more solid barriers to entry than patents.

The demand is there. The supply is there. Nollywood will emerge out of this chaos as something hugely profitable. There’s suspicion, competition and chaos surrounding the market, but that’s business in emerging markets. At the end of the day the producers weren’t unreasonable. They asked that next time Njoku bring guests, he give them a heads up and they’d provide protection. They’re justifiably suspicious because their industry is finally starting to take off, and they sit next to the people trying to eroding it every day. And my bet is that when Nollywood does take off, Njoku will be one of the guys to reap the benefits.

Of course, we couldn’t leave without pressing our luck and asking to take Bones & Co.’s picture. It’s below, and he’s on the bottom right. Note: Those smiles were nowhere to be seen before the cash changed hands.

The reported location of the compound housing Osama bin Laden is 2.5 miles (4 km) northeast of the center of Abbottabad and three-quarters of a mile (1.3 km) southwest of the Pakistan Military Academy (PMA). Abbottabad is about 100 miles from the Afghanistan border, where the major searches had taken place). It is on the far eastern side of Pakistan (only about 20 miles from India). Google Earth maps show that the compound was not present in 2001, but was present on images taken in 2005.

Diagram of bin Laden compound released by the Department of Defense.

Comparison of the compound site prior to construction and after the compound’s construction released by the Department of Defense.

Photo from March 23, 2001 highlighting the lack of bin Laden’s compound.

Photo from June 15, 2005 highlighting the bin Laden Compound with smaller fencing and less fortifications.

Photo from June 15, 2005 demonstrating the proximity of bin Laden’s compound to the Pakistan Military Academy.

Photo from January 15, 2011 released by DigitalGlobe with the Bin Laden compound in the center.

Photo from May 2, 2011 with the bin Laden compound at the center released by GeoEye.

A closeup on the bin Laden compound in a post-raid photo from May 2, 2011 released by GeoEye. Notice what appear to be burn marks on the ground at the southern wall of the compound where the fuselage of the U.S. helicopter was initially located.

A photo taken by a local resident and released by the Associated Press. It shows the wreckage of the downed U.S. helicopter next to the southern wall of the compound before it was later removed. Photo originally published by Cryptome.

Apr 06, 2011 - 06:04 AM

By: Ron_Holland

Oil at $200 plus a barrel will be the least of America’s problems when the Saudi Monarchy falls.

“If something happens in Saudi Arabia it (oil) will go to $200 to $300 (a barrel). I don’t expect this for the time being, but who would have expected Tunisia?” ~ Former Saudi oil minister Sheikh Zaki Yamani 4/5/11

The most important question facing the United States today is whether the freedom revolutions sweeping the Middle East will impact the authoritarian regime of Saudi Arabia and the major oil producers surrounding this nation of major oil reserves? The second question is if the government is overthrown, will the new government continue the practice of pricing oil in depreciating dollars rather than consider new options?

The future value of the dollar and the dollar status as the world’s reserve currency depend heavily on the outcome of these two questions. This is why the price of gold could soar and the dollar move dramatically lower when the Saudi Monarchy is overthrown. I fear, the probable American military reaction to this scenario threatens what remains of our republic and may be compared by future historians as comparable in scope to Caesar’s march across the Rubicon in Roman history.

“I don’t think that what the King is doing now is sufficient to prevent an uprising. Saudi Arabia is a time bomb, but one that is constantly being reset,” ~ Jaafar Al Taie, managing director of Manaar Energy Consulting

Today, I’m warning about the risk of a dollar and Treasury bond threat which could make the real estate collapse or 2008 market meltdown mere footnotes in comparison. Today in the Middle East, either by stupidity or design, the Federal Reserve’s perpetuation of the dollar and treasury debt Ponzi schemes is now dependent on the survival of a few dictatorial regimes staying in power in the Persian Gulf while surrounded by spreading freedom revolutions.

This is the most dangerous region in the world and the focal point for conflict between Iran and America, the freedom revolution and authoritarian regimes, Sunni and Shiite, Israel and the Arab world, vast oil resources and the oil needs of the West and China, and where the decision will be made to price oil in depreciating dollars or in other currency alternatives. Of all the conflicts and threats in the region, I believe the question as to whether oil continues to be priced in dollars and the dollar remains the world’s reserve currency for now and the risk of a US dollar and debt collapse are the greatest threats facing America and the West.

The real estate bubble and financial meltdown as well as the new stock market bubble are misdemeanors in criminality compared to the Federal Reserve mistake of allowing our currency and debt to be dependent and held hostage based on the survival of a few corrupt authoritarian leaders in fake nations created by London politicians many years ago.

The Saudi Monarchy Will Fall Sooner Rather Than Later

The democracy index published by the Economist Intelligence Unit for 2010 places Libya 158th out of 167 and Saudi Arabia 160th of all nations in terms of an authoritarian government verses a democracy. I fear the oil producing nations of Saudi Arabia, Kuwait, Iraq, Qatar and the U.A.E. could eventually fall to freedom revolutions which have mutated into movements outside the control of the United States. Whether the current radical elements in the revolutionary movements will move to the forefront and possibly take control depends a lot on the current authoritarian regimes reaction to the freedom revolutions in each nation as well as future United States actions to safeguard the future of oil reserves and the dollar.

The fear of these movements sweeping the region is why the Obama Administration postponed actions which could have toppled Gaddafi weeks ago because another perceived victory there would have dramatically increased the growth and blitzkrieg effect of the revolutionary movements thus making them unstoppable and a real threat to first Bahrain and then Saudi Arabia etc. I previously discussed how the Libyan civil war is just a sideshow and deception to buy time and slow down what had been a cake walk by revolutionaries across the Middle East. The real action is in the Persian Gulf and the region is called the Persian Gulf because historically most of the region was under Persian (Iranian) influence.

Washington has successfully in the past chosen stability and tyranny in the region over the Arab people in the streets and now we are going to pay the price through the unintended consequences of our foreign policy in the region. This foreign policy failure when combined with Washington and Federal Reserve economic policies could be a lethal combination for the United States as well as the future of our children and grandchildren.

Our nation may well suffer severe economic consequences, a dollar and debt mini-collapse as well as the risk of a major war in the Persian Gulf region requiring an increasing degree of police state controls at home, the possible return of the draft and even a more authoritarian government in Washington. This is the dark future engineered by the Anglo-American monetary elites, some Washington politicians and the Federal Reserve which have put our currency at such risk.

The United States cannot allow new revolutionary governments outside our control to replace current regimes with political leaders which could threaten the dollar, our national debt and the US economy. If this becomes a risk, I fear the US military could be ordered to intervene and do whatever is necessary to either prop up or install new governments that will still continue to price oil in dollars. Frankly speaking should this situation develop, this may actually be the only way to defend a collapsing fiat dollar regardless of my personal views against military intervention.

The daily news reports continue to show the spread of revolutionary activity across the Middle East now directly impacting Syria, Jordan, Yemen and other nations around the periphery of Saudi Arabia. It appears the new social media driven freedom movements attack both US backed authoritarian regimes and enemies like Libya and Syria. What is often not recognized but apparent is the initial foreign intelligence involvement in the early birth of these revolutionary movements.

Regardless of their initial birth as engineered opposition movements by foreign intelligence, as has often been the case since the early 20th century, today these freedom movements have taken on a life of their own. They now threaten not only out of favor authoritarian leaders and enemy regimes but in the case of the United States, the modern day empire which covertly spawned the initial birth of the revolutions today.

Don Tapscott below certainly explains the situation in the region far better than I can and this is what we now face in the Middle East.

The real situation is “Revolution is not happening because of the current systems in place, it is happening despite them,” he said. “In the Middle East the old thinking has been support tyrants because they provide stability and keep the oil flowing; the young people are revolting against this very kind of thinking….Technology is enabling revolutions across the Middle East. Young people do not want to be subjects anymore. Until now revolutions have had a leader, technology has changed that,” ~ Don Tapscott, the co-author of “Macrowikinomics: Rebooting Business and the World.”

The Law of Unintended Consequences

The US should have learned from Iraq and Afghanistan how the law of unintended consequences from aggressive military, political or covert actions in a complex system like the Middle East can often create undesirable outcomes far different from what was hoped. Just as our invasion of Iraq destroyed the major bulwark against Shiite Iran and actually created another Iranian ally. Also our Afghanistan venture destabilized Pakistan, and today the freedom revolutions are slowly surrounding the House of Saud and the major Persian Gulf oil producing and US debt holding nations. We should also remember how our blind backing of the Shah of Iran and his excesses helped bring about the Iranian Revolution of 1979 and the Khomeini led Islamic state and the problems we are dealing with today.

An excellent analogy of the unintended consequences is the long-term result of Germany introducing Lenin and communism to Czarist Russia during World War One. This was successful in the near term to take Russia out of the war and end Germany’s two front war. But the long-term result was a 70 year battle between the communist system and the West which created both the Cold War and contributed to the rise of Hitler in Germany as an alternative against a communist takeover in the 1930’s. Even now, most of the fabricated nations in the Middle East were actually created in London and Paris following the Treaty of Versailles and our oil and dollar controlled foreign policies there are a direct result of fake countries and boundaries created following the First World War almost a century ago.

America’s Weakest Point is the Persian Gulf

“The importance of maneuvering so your enemy is hit in his weakest points.” ~ Sun Tzu’s, The Art of War

Although the United States is unassailable from a military standpoint in the region, the Washington dollar and Treasury debt are our weakest points and the entire world knows this.

If you have noticed, whenever Saudi Arabia is mentioned, the establishment news coverage is always followed by a comforting statement stressing how the House of Saud will somehow escape the political change in the region. The fall of the Saudi monarchy or serious unrest in the Shiite oil producing region of Saudi Arabia is the “elephant in the room” that no one wants to discuss or write about and why the threat is being ignored and going unaddressed.

The reason is all of the oil produced in the Persian Gulf region outside of Iran is currently priced in US dollars thus allowing the United States and the Federal Reserve to create more dollars at will. 87% of the oil exported out of the Persian Gulf is priced in US dollars and as I explained last week in The Great Anglo-American Gaddafi Deception, the pricing of oil in dollars is a major contributor to maintaining the dollar’s role as the world’s reserve currency.

I believe the Washington Treasury debt and US dollar Ponzi scheme would risk collapse if these five nations mentioned above should threaten or seriously consider pricing oil in gold, Euros, SDR’s or any other currency other than dollars. In addition, Israel wouldn’t survive even with its feared Samson option for more than a few months if the US should lose in the region. Therefore the existence of Israel and the economic survival of the United States, our fiat dollar and the continued rollover of our Treasury debt are very dependent on friendly governments controlled and protected by Washington maintaining power at any price in the Persian Gulf.

Thus our economic future is only guaranteed by fake monarchs and Washington backed puppet regimes staying in power in the region. These are authoritarian regimes and dictatorships because the countries are artificial nations with questionable national boundaries. These nation states only began when needed by the British colonial office almost a century ago in London. In fact, the actual delineation of national borders only started with the first oil concessions in the 1930’s as the United Kingdom needed to map the different oil deposits and this was when the European modern nation state concept was first forced on the region by European powers.

Washington’s Greatest Fear Are the Color Revolutions Sweeping the Middle East

In Libya, the rebels are called the Interim National Council (INC) and apparently run by a former Libyan colonel Khalifa Hifter, who broke with Gaddafi over 20 years ago and has lived a quiet life with no visible means of support only a few miles from CIA headquarters in Langley, Virginia.

Remember, the rebel forces were initially at the gates of Tripoli, when any kind of military or even diplomatic action would have overthrown Gaddafi but now once again they have been pushed back and cornered in Benghazi for the second time in several weeks after the use of air power.

Certainly the rebels have sadly been reduced to “dogs of war” and held on a leash by the US and allied elites in order to continue the sideshow action for entertainment and nightly news coverage as the new freedom revolutionaries are taught that victory can only be achieved by working within the confines of the Anglo-American paradigm.

What Will China Do? China can manipulate the foreign policy of the United States in the same way the United States forced the United Kingdom to withdraw its forces back during the Suez crisis. This was in 1956 when the UK, France and Israel invaded Egypt to take control over the Suez Canal. Washington threatened to dump the US Government’s Sterling Bond holdings if Great Britain didn’t withdraw troops and the invasion ended.

What Will Iran Do? – They are masters at thinking long-term and I do not believe they will take any action to provoke a wounded beast like the Washington Empire. Iran has not invaded another nation in hundreds of years while you well know America’s sordid track record of aggression, drone attacks, aerial bombing and military occupation. Why should they? Their intelligence services were behind the fake weapons of mass destruction evidence in Iraq and they provoked the Bush Administration into invading Iran and toppling their major opponent in the Middle East. They will just sit back and let us do ourselves in.

What Should Americans Do?

• First, we need to audit and eliminate the Federal Reserve which is the vehicle the monetary elites use to enslave our nation and most of the rest of the world.
• Second, follow the real news on the Middle East with alternative news sites and email letters like LewRockwell.com, The Daily Bell and the Swiss Mountain Vision newsletter for which I’m also a contributing editor.
• Third, get as much of your wealth as possible legally and following all of the new reporting requirements out of the threatened fiat dollar currently being destroyed by Washington and the Federal Reserve. Consider other investments, currencies and real estate denominated in the Euro, Swiss franc etc. as well as gold and natural resource stocks. None of your wealth will be safe inside the United States if the dollar status as the reserve currency is compromised by the fall of Saudi Arabia and other friendly governments selling oil for dollars in the region.
• Store large amounts of gold outside the US in protected and safe jurisdictions in Europe, Australia and Switzerland in secure storage programs like Global Gold located in Switzerland.
• Finally oppose all future military activities in the Middle East as the unintended long-term consequences of US control in the region have historically far outweighed any near-term military gain advocated by the Neocons or profits for a few elite controlled financial institutions and international corporations.

If the Saudi Monarchy and other Persian Gulf dictators are overthrown by the current revolutionary movements, the debate will be shifted from should we go to war and occupy the region and restore stability (which actually means they continue to rollover treasury debt and price oil in dollars) to like the trial runs of 9/11 and the Fed induced meltdown, do we choose military action or risk economic and dollar collapse. Both Congress and the American people showed their preference for stability at any price including war and loss of liberties. Therefore I fear our conditioned response is already assured.

In the final analysis, the monetary elites are probably correct that their continued survival and parasitic control over much of the West can only be assured by full occupation of the oil resources of the region rather than depending on the former strategy of authoritarian regimes now shown to be weak and subject to powerful freedom movements.

Although all efforts will be made to stay outside the Moslem Holy cities of Mecca and Medina, a new foreign occupation of the Middle East although cloaked in some UN, NATO or Arab organization agreement will still be seen by the people in the street as another crusade for oil and against the Moslem world. This will be magnified if the US and their former colonial masters also utilize the forces of Israel in this repeat version of the 1956 Suez Crisis and takeover of the Suez Canal.

This kind of action although maybe necessary for the survival of the dollar and oil supplies could begin the end of the West as we know it. But then again, maybe that is the goal of the Anglo-American elites moving toward global governance and control by a few wealthy and powerful families? Maybe they can only succeed in their goals of one world government if they world they govern has become so desperate, poverty stricken and tired of permanent war that we will accept any limitation on our wealth and liberties to just survive.

After all, in the end, most people will sacrifice freedom and liberty for stability. It worked for the Soviet Union, Nazi Germany and since the end of World War Two in the Middle East. Why would this not work in Europe and America?

I guess Benjamin Franklin was right.”They who can give up essential liberty to obtain a little temporary safety, deserve neither liberty nor safety.” We did this after the 9/11 attack, and we again allowed this to happen after the Federal Reserve created bubble and financial meltdown in 2008. I fear if history is any guide, America and the West will follow the same course of action again in the Middle East but this time straight to the slaughter house of perpetual war and the risk of economic poverty at home.

Cpl. Jeremy Morlock with Staff Sgt. David Bram

Early last year, after six hard months soldiering in Afghanistan, a group of American infantrymen reached a momentous decision: It was finally time to kill a haji.

Among the men of Bravo Company, the notion of killing an Afghan civilian had been the subject of countless conversations, during lunchtime chats and late-night bull sessions. For weeks, they had weighed the ethics of bagging “savages” and debated the probability of getting caught. Some of them agonized over the idea; others were gung-ho from the start. But not long after the New Year, as winter descended on the arid plains of Kandahar Province, they agreed to stop talking and actually pull the trigger.

Bravo Company had been stationed in the area since summer, struggling, with little success, to root out the Taliban and establish an American presence in one of the most violent and lawless regions of the country. On the morning of January 15th, the company’s 3rd Platoon – part of the 5th Stryker Brigade, based out of Tacoma, Washington – left the mini-metropolis of tents and trailers at Forward Operating Base Ramrod in a convoy of armored Stryker troop carriers. The massive, eight-wheeled trucks surged across wide, vacant stretches of desert, until they came to La Mohammad Kalay, an isolated farming village tucked away behind a few poppy fields.

To provide perimeter security, the soldiers parked the Strykers at the outskirts of the settlement, which was nothing more than a warren of mud-and-straw compounds. Then they set out on foot. Local villagers were suspected of supporting the Taliban, providing a safe haven for strikes against U.S. troops. But as the soldiers of 3rd Platoon walked through the alleys of La Mohammad Kalay, they saw no armed fighters, no evidence of enemy positions. Instead, they were greeted by a frustratingly familiar sight: destitute Afghan farmers living without electricity or running water; bearded men with poor teeth in tattered traditional clothes; young kids eager for candy and money. It was impossible to tell which, if any, of the villagers were sympathetic to the Taliban. The insurgents, for their part, preferred to stay hidden from American troops, striking from a distance with IEDs.

While the officers of 3rd Platoon peeled off to talk to a village elder inside a compound, two soldiers walked away from the unit until they reached the far edge of the village. There, in a nearby poppy field, they began looking for someone to kill. “The general consensus was, if we are going to do something that fucking crazy, no one wanted anybody around to witness it,” one of the men later told Army investigators.

The poppy plants were still low to the ground at that time of year. The two soldiers, Cpl. Jeremy Morlock and Pfc. Andrew Holmes, saw a young farmer who was working by himself among the spiky shoots. Off in the distance, a few other soldiers stood sentry. But the farmer was the only Afghan in sight. With no one around to witness, the timing was right. And just like that, they picked him for execution.

He was a smooth-faced kid, about 15 years old. Not much younger than they were: Morlock was 21, Holmes was 19. His name, they would later learn, was Gul Mudin, a common name in Afghanistan. He was wearing a little cap and a Western-style green jacket. He held nothing in his hand that could be interpreted as a weapon, not even a shovel. The expression on his face was welcoming. “He was not a threat,” Morlock later confessed.

Morlock and Holmes called to him in Pashto as he walked toward them, ordering him to stop. The boy did as he was told. He stood still.

The soldiers knelt down behind a mud-brick wall. Then Morlock tossed a grenade toward Mudin, using the wall as cover. As the grenade exploded, he and Holmes opened fire, shooting the boy repeatedly at close range with an M4 carbine and a machine gun.

Mudin buckled, went down face first onto the ground. His cap toppled off. A pool of blood congealed by his head.

The loud report of the guns echoed all around the sleepy farming village. The sound of such unexpected gunfire typically triggers an emergency response in other soldiers, sending them into full battle mode. Yet when the shots rang out, some soldiers didn’t seem especially alarmed, even when the radio began to squawk. It was Morlock, agitated, screaming that he had come under attack. On a nearby hill, Spc. Adam Winfield turned to his friend, Pfc. Ashton Moore, and explained that it probably wasn’t a real combat situation. It was more likely a staged killing, he said – a plan the guys had hatched to take out an unarmed Afghan without getting caught.

Back at the wall, soldiers arriving on the scene found the body and the bloodstains on the ground. Morlock and Holmes were crouched by the wall, looking excited. When a staff sergeant asked them what had happened, Morlock said the boy had been about to attack them with a grenade. “We had to shoot the guy,” he said.

It was an unlikely story: a lone Taliban fighter, armed with only a grenade, attempting to ambush a platoon in broad daylight, let alone in an area that offered no cover or concealment. Even the top officer on the scene, Capt. Patrick Mitchell, thought there was something strange about Morlock’s story. “I just thought it was weird that someone would come up and throw a grenade at us,” Mitchell later told investigators.

But Mitchell did not order his men to render aid to Mudin, whom he believed might still be alive, and possibly a threat. Instead, he ordered Staff Sgt. Kris Sprague to “make sure” the boy was dead. Sprague raised his rifle and fired twice.

As the soldiers milled around the body, a local elder who had been working in the poppy field came forward and accused Morlock and Holmes of murder. Pointing to Morlock, he said that the soldier, not the boy, had thrown the grenade. Morlock and the other soldiers ignored him.

To identify the body, the soldiers fetched the village elder who had been speaking to the officers that morning. But by tragic coincidence, the elder turned out to be the father of the slain boy. His moment of grief-stricken recognition, when he saw his son lying in a pool of blood, was later recounted in the flat prose of an official Army report. “The father was very upset,” the report noted.

The father’s grief did nothing to interrupt the pumped-up mood that had broken out among the soldiers. Following the routine Army procedure required after every battlefield death, they cut off the dead boy’s clothes and stripped him naked to check for identifying tattoos. Next they scanned his iris and fingerprints, using a portable biometric scanner.

Then, in a break with protocol, the soldiers began taking photographs of themselves celebrating their kill. Holding a cigarette rakishly in one hand, Holmes posed for the camera with Mudin’s bloody and half-naked corpse, grabbing the boy’s head by the hair as if it were a trophy deer. Morlock made sure to get a similar memento.

No one seemed more pleased by the kill than Staff Sgt. Calvin Gibbs, the platoon’s popular and hard-charging squad leader. “It was like another day at the office for him,” one soldier recalls. Gibbs started “messing around with the kid,” moving his arms and mouth and “acting like the kid was talking.” Then, using a pair of razor-sharp medic’s shears, he reportedly sliced off the dead boy’s pinky finger and gave it to Holmes, as a trophy for killing his first Afghan.

According to his fellow soldiers, Holmes took to carrying the finger with him in a zip-lock bag. “He wanted to keep the finger forever and wanted to dry it out,” one of his friends would later report. “He was proud of his finger.”

After the killing, the soldiers involved in Mudin’s death were not disciplined or punished in any way. Emboldened, the platoon went on a shooting spree over the next four months that claimed the lives of at least three more innocent civilians. When the killings finally became public last summer, the Army moved aggressively to frame the incidents as the work of a “rogue unit” operating completely on its own, without the knowledge of its superiors. Military prosecutors swiftly charged five low-ranking soldiers with murder, and the Pentagon clamped down on any information about the killings. Soldiers in Bravo Company were barred from giving interviews, and lawyers for the accused say their clients faced harsh treatment if they spoke to the press, including solitary confinement. No officers were charged.

But a review of internal Army records and investigative files obtained by Rolling Stone, including dozens of interviews with members of Bravo Company compiled by military investigators, indicates that the dozen infantrymen being portrayed as members of a secretive “kill team” were operating out in the open, in plain view of the rest of the company. Far from being clandestine, as the Pentagon has implied, the murders of civilians were common knowledge among the unit and understood to be illegal by “pretty much the whole platoon,” according to one soldier who complained about them. Staged killings were an open topic of conversation, and at least one soldier from another battalion in the 3,800-man Stryker Brigade participated in attacks on unarmed civilians. “The platoon has a reputation,” a whistle-blower named Pfc. Justin Stoner told the Army Criminal Investigation Command. “They have had a lot of practice staging killings and getting away with it.”

From the start, the questionable nature of the killings was on the radar of senior Army leadership. Within days of the first murder, Rolling Stone has learned, Mudin’s uncle descended on the gates of FOB Ramrod, along with 20 villagers from La Mohammad Kalay, to demand an investigation. “They were sitting at our front door,” recalls Lt. Col. David Abrahams, the battalion’s second in command. During a four-hour meeting with Mudin’s uncle, Abrahams was informed that several children in the village had seen Mudin killed by soldiers from 3rd Platoon. The battalion chief ordered the soldiers to be reinterviewed, but Abrahams found “no inconsistencies in their story,” and the matter was dropped. “It was cut and dry to us at the time,” Abrahams recalls.

Other officers were also in a position to question the murders. Neither 3rd Platoon’s commander, Capt. Matthew Quiggle, nor 1st Lt. Roman Ligsay has been held accountable for their unit’s actions, despite their repeated failure to report killings that they had ample reason to regard as suspicious. In fact, supervising the murderous platoon, or even having knowledge of the crimes, seems to have been no impediment to career advancement. Ligsay has actually been promoted to captain, and a sergeant who joined the platoon in April became a team leader even though he “found out about the murders from the beginning,” according to a soldier who cooperated with the Army investigation.

Indeed, it would have been hard not to know about the murders, given that the soldiers of 3rd Platoon took scores of photographs chronicling their kills and their time in Afghanistan. The photos, obtained by Rolling Stone, portray a front-line culture among U.S. troops in which killing Afghan civilians is less a reason for concern than a cause for celebration. “Most people within the unit disliked the Afghan people, whether it was the Afghan National Police, the Afghan National Army or locals,” one soldier explained to investigators. “Everyone would say they’re savages.” One photo shows a hand missing a finger. Another depicts a severed head being maneuvered with a stick, and still more show bloody body parts, blown-apart legs, mutilated torsos. Several show dead Afghans, lying on the ground or on Stryker vehicles, with no weapons in view.

In many of the photos it is unclear whether the bodies are civilians or Taliban, and it is possible that the unidentified deaths involved no illegal acts by U.S. soldiers. But it is a violation of Army standards to take such photos of the dead, let alone share them with others. Among the soldiers, the collection was treated like a war memento. It was passed from man to man on thumb drives and hard drives, the gruesome images of corpses and war atrocities filed alongside clips of TV shows, UFC fights and films such as Iron Man 2. One soldier kept a complete set, which he made available to anyone who asked.

The collection also includes several videos shot by U.S. troops. In a jumpy, 30-minute clip titled “Motorcycle Kill,” soldiers believed to be with another battalion in the Stryker Brigade gun down two Afghans on a motorcycle who may have been armed. One of the most chilling files shows two Afghans suspected of planting an IED being blown up in an airstrike. Shot through thermal imaging, the grainy footage has been edited into a music video, complete with a rock soundtrack and a title card that reads ‘death zone.’

Even before the war crimes became public, the Pentagon went to extraordinary measures to suppress the photos – an effort that reached the highest levels of both governments. Gen. Stanley McChrystal and President Hamid Karzai were reportedly briefed on the photos as early as May, and the military launched a massive effort to find every file and pull the pictures out of circulation before they could touch off a scandal on the scale of Abu Ghraib. Investigators in Afghanistan searched the hard drives and confiscated the computers of more than a dozen soldiers, ordering them to delete any provocative images. The Army Criminal Investigation Command also sent agents fanning out across America to the homes of soldiers and their relatives, gathering up every copy of the files they could find. The message was clear: What happens in Afghanistan stays in Afghanistan.

By suppressing the photos, however, the Army may also have been trying to keep secret evidence that the killings of civilians went beyond a few men in 3rd Platoon. In one image, two dead Afghans have been tied together, their hands bound, and placed alongside a road. A sign – handwritten on cardboard from a discarded box of rations – hangs around their necks. It reads “Taliban are Dead.” The Pentagon says it is investigating the photos, but insists that there is little more investigators can do to identify the men. “It’s a mystery,” says a Pentagon spokesman. “To be perfectly honest, I’m not sure they know where to take it next. All we have is two apparently dead Afghans handcuffed to each other against a mile marker. We don’t know much beyond that. For all we know, those two guys may have been killed by the Taliban for being sympathizers.”

But such statements suggest that the Pentagon isn’t following every lead. A Stryker vehicle in the photos, for example, bears identifying marks that are clearly visible in the image. And according to a source in Bravo Company, who spoke to Rolling Stone on the condition of anonymity, the two unarmed men in the photos were killed by soldiers from another platoon, which has not yet been implicated in the scandal.

“Those were some innocent farmers that got killed,” the source says. “Their standard operating procedure after killing dudes was to drag them up to the side of the highway.”

Army prosecutors insist that blame for the killings rests with a soldier near the bottom of the Stryker Brigade’s totem pole: Calvin Gibbs, a three-tour veteran of Iraq and Afghanistan who served as a squad leader in 3rd Platoon. Morlock and five soldiers charged with lesser crimes have pleaded guilty in exchange for testifying against Gibbs, who faces life in prison for three counts of premeditated murder.

The 26-year-old staff sergeant has been widely portrayed as a sociopath of Mansonesque proportions, a crazed killer with a “pure hatred for all Afghans” who was detested and feared by those around him. But the portrait omits evidence that the Army’s own investigators gathered from soldiers in Bravo Company. “Gibbs is very well-liked in the platoon by his seniors, peers and subordinates alike,” Spc. Adam Kelly reported, adding that Gibbs was “one of the best NCOs I’ve ever had the pleasure of working with in my military career. I believe that because of his experience, more people came back alive and uninjured than would have without him having been part of the platoon.” Another soldier described Gibbs as an “upbeat guy, very funny. He was one of those guys you could talk to about anything and he would make you feel better about the situation.”

At six-feet-four and 220 pounds, Gibbs could certainly intimidate those around him. Growing up in a devout Mormon family in Billings, Montana, he had dropped out of high school to get an equivalency degree and enlist in the Army. He plunged into soldiering, accumulating a slew of medals in Iraq, where the line between legitimate self-defense and civilian deaths was often blurry at best. In 2004, Gibbs and other soldiers allegedly fired on an unarmed Iraqi family near Kirkuk, killing two adults and a child. The incident, which was not prosecuted at the time, is now under investigation by the Army.

Before he joined Bravo Company in November 2009, Gibbs worked on the personal security detail for one of the top commanders in Afghanistan, a controversial, outspoken colonel named Harry Tunnell. Tunnell, who at the time was the commander of 5th Stryker Brigade, openly mocked the military’s approach to counterinsurgency – which emphasizes the need to win the support of local civilians – as better suited to a “social scientist.” “Political correctness dictates that we cannot talk about the oppressive measures employed during successful counterinsurgency campaigns,” he wrote. Tunnell also pushed his men to go after “guerrilla hunter killers,” insisting that the enemy “must be attacked relentlessly.”

When Gibbs left Tunnell’s detail and arrived at the front, he quickly became an extreme version of a relentless attacker. After he took command, Gibbs put a pirate flag on his tent. “Hey, brother,” he told a friend. “Come down to the line and we’ll find someone to kill.” A tattoo on his left shin featured a pair of crossed rifles offset by six skulls. Three of the skulls, colored in red, represented his kills in Iraq. The others, in blue, were from Afghanistan.

By the time Gibbs arrived, morale in the Stryker Brigade had hit rock bottom. Only four months earlier, the unit had been deployed to Afghanistan amid a chorus of optimism about its eight-wheeled armored vehicles, a technological advancement that was supposed to move infantry to the battlefield more quickly and securely, enabling U.S. troops to better strike against the Taliban. By December, however, those hopes had dissolved. The Taliban had forced the Strykers off the roads simply by increasing the size and explosive force of their IEDs, and the brigade had suffered terrible casualties; one battalion had lost more soldiers in action than any since the start of the war. Gibbs, in fact, had been brought in after a squad leader had his legs blown off by an IED.

The soldiers were bored and shellshocked and angry. They had been sent to Afghanistan as part of a new advance guard on a mission to track down the Taliban, but the enemy was nowhere to be found. “To be honest, I couldn’t tell the difference between local nationals and combatants,” one soldier later confessed. During the unit’s first six months in Afghanistan, the Taliban evaded almost every patrol that 3rd Platoon sent out. Frustrations ran so high that when the unit came across the body of an insurgent killed by a helicopter gunship in November 2009, one soldier took out a hunting knife and stabbed the corpse. According to another soldier, Gibbs began playing with a pair of scissors near the dead man’s hands. “I wonder if these can cut off a finger?” Gibbs asked.

The Pentagon’s top command, rather than addressing the morale problems, actually held up the brigade as a media-worthy example of progress in the war. The month after the helicopter incident – only four weeks before the killings began – the chairman of the Joint Chiefs of Staff, Adm. Mike Mullen, paid a heavily publicized visit to the area. The military’s strategy of counterinsurgency, he reminded members of 5th Stryker Brigade, required them to win hearts and minds by protecting the population. “If we’re killing local civilians,” he cautioned, “we’re going to strategically lose.”

Gibbs had a different idea about how to breathe new life into 3rd Platoon. Not long after he arrived, he explained to his fellow soldiers that they didn’t have to wait passively to be attacked by the enemy’s IEDs. They could strike back by hitting people in towns known to be sympathetic to the Taliban. “Gibbs told everyone about this scenario by pitching it – by saying that all these Afghans were savages, and we had just lost one of our squad leaders because his legs got blown off by an IED,” Morlock recalled. Killing an Afghan – any Afghan – became a way to avenge the loss.

The members of Bravo Company began to talk incessantly about killing Afghans as they went about their daily chores, got stoned or relaxed over a game of Warhammer. One idea, proposed half in jest, was to throw candy out of a Stryker vehicle as they drove through a village and shoot the children who came running to pick up the sweets. According to one soldier, they also talked about a second scenario in which they “would throw candy out in front and in the rear of the Stryker; the Stryker would then run the children over.” Another elaborate plan involved waiting for an IED attack, then using the explosion as an excuse to kill civilians. That way, the soldiers reasoned, “you could shoot anyone in the general area and get away with it.”

“We were operating in such bad places and not being able to do anything about it,” Morlock said in a phone interview from the jail at Joint Base Lewis-McChord in Washington state. “I guess that’s why we started taking things into our own hands.”

After killing the Afghan boy at La Mohammad Kalay, members of 3rd Platoon were jubilant. “They were high-fiving each other about having killed the guy,” one soldier recalled. They put the corpse in a black body bag and stowed it on top of their Stryker for the ride back to FOB Ramrod. No sooner had they arrived at the base than they were recounting the tale to soldiers they barely knew.

A few hours after the shooting, during a routine checkup at the base’s clinic, Holmes and Morlock bragged about having killed an insurgent to Alyssa Reilly, a fair-skinned, blond medic who was popular among the men in the unit. Reilly later paid the soldiers a social visit, and they all sat around playing spades. When it came time for their wager, Morlock and Holmes said they would bet a finger. Then they tossed the finger that Gibbs had sliced from Mudin’s body on the card pile. “I thought it was gross,” Reilly told investigators.

Morlock was particularly eager to volunteer the truth to his fellow soldiers, evidently unconcerned about how they would react to his having murdered an unarmed Afghan. The same evening he shot Mudin, several members of Bravo Company convened in the privacy of a Stryker vehicle for a nightcap of hashish, a common activity among the unit. Hash supplied by Afghan translators was a major part of the daily lives of many soldiers; they smoked up constantly, getting high in their vehicles, their housing units, even porta-potties. Now, in the tanklike interior of the Stryker, surrounded by its mesh of wires and periscopes and thermal-imaging computers, Morlock passed the hash and recounted the killing in detail, even explaining how he had been careful not to leave the grenade’s spoon and pin on the ground, where they might have been used as evidence that a U.S. weapon had been involved in the attack. For the same reason, he’d also been careful to brush away traces of white explosive powder around Mudin’s body.

Before the military found itself short of troops in Afghanistan and Iraq, Morlock was the kind of bad-news kid whom the Army might have passed on. He grew up not far from Sarah Palin in Wasilla, Alaska; his sister hung out with Bristol, and Morlock played hockey against Track. In those days, he was constantly in trouble: getting drunk and into fights, driving without a license, leaving the scene of a serious car accident. Even after he joined the Army, Morlock continued to get into trouble. In 2009, a month before he deployed to Afghanistan, he was charged with disorderly conduct after burning his wife with a cigarette. After he arrived in Afghanistan, he did any drug he could get his hands on: opium, hash, Ambien, amitriptyline, flexeril, phenergan, codeine, trazodone.

As Morlock bragged about the killing, word of the murder spread back home to families and friends. Soldiers e-mailed photos to their buddies and talked about the killing during visits home. On February 14th, three months before the Army launched its investigation, Spc. Adam Winfield sent a Facebook message to his father, Chris, back in Cape Coral, Florida. A skinny, bookish 21-year-old, Winfield was pissed off at being disciplined by Gibbs. “There are people in my platoon that have gotten away with murder,” he told his father. “Everyone pretty much knows it was staged. . . . They all don’t care.” Winfield added that the victim was “some innocent guy about my age, just farming.”

During Facebook chats, Winfield continued to keep his father in the loop. “Adam told me that he heard the group was planning on another murder involving an innocent Afghanistan man,” Chris Winfield, himself a veteran, later told investigators. “They were going to kill him and drop an AK-47 on him to make it look like he was the bad guy.” Alarmed, the elder Winfield called the command center at Joint Base Lewis-McChord, and told the sergeant on duty what was going on. But according to Winfield, the sergeant simply shrugged it off, telling him that “stuff like that happens” and that “it would be sorted out when Adam got home.” Tragically, commanders at the base did nothing to follow up on the report.

Back in Afghanistan, Winfield was having second thoughts about reporting the incident. He believed the killings were wrong, but he had finally earned a place in the “circle of trust” erected by Gibbs, who had started off thinking of him as too “weak” to belong to the kill team. Reversing course, he begged his father to stop contacting the Army, saying that he feared for his life. Winfield said Gibbs had warned him that if he told anyone about the murder, he would “go home in a body bag.” His father agreed to keep the matter quiet.

Given the lack of response from their superiors, the soldiers of 3rd Platoon now believed they could kill with impunity – provided they planted “drop weapons” at the scene to frame their victims as enemy combatants. The presence of a weapon virtually guaranteed that a shooting would be considered a legitimate kill, even under the stricter rules of engagement the military had implemented as a key element of counterinsurgency. A drop weapon was the ultimate get-out-of-jail-free card. And in the chaotic war zone, they were easy to find.

The military keeps close track of the weapons and ammunition it issues to soldiers, carefully documenting every grenade exploded, every magazine expended. So Gibbs made it his business to gather “off the books” weapons through a variety of channels. He got friendly with guys in the Afghan National Police and tried to trade them porn magazines in exchange for rocket-propelled grenades; he cajoled other units to give him munitions; he scrounged for broken and discarded UXO – unexploded ordnance – until he had collected a motley arsenal of random weaponry, old frag grenades, bent RPG tails, duct-taped claymore mines, C-4, mortar rounds. His best find was a working AK-47 with a folding butt stock and two magazines, which he pulled from the wreckage of an Afghan National Police vehicle that had been blown up near the base’s gate. Gibbs placed the AK-47 and the magazines in a metal box in one of the Strykers. Later, a corporal named Emmitt Quintal discovered the gun and wondered what it was doing there. As he recalled, Staff Sgt. David Bram “sat me down and explained to me that it was basically to cover our ass if anything happened.”

Two weeks after the murder of Gul Mudin, something did.

It was the night of January 27th and the platoon was driving along the highway near their forward operating base. Suddenly, through their thermal imaging, they spotted a human heat signature on the side of the road – a potentially suspicious sign, since the Taliban often operate at night, using the cover of darkness to plant IEDs.

The patrol stopped 100 yards away from the man, and a handful of soldiers and an interpreter got out of their vehicles. They could see that the man was crouched down, or curled up like a ball close to the ground. As they approached, the man stood up and held his arms in front of his chest. To the soldiers, the motion was either an indication that he was cold, or that he was hiding a suicide-bomb vest.

Shouting to the man in Pashto, the soldiers illuminated him with intense, high-power spotlights and ordered him to lift up his shirt. But the man began to pace back and forth in the blinding white light, ignoring their calls. “He was acting strange,” recalls a soldier. For several minutes the man shuffled around as the soldiers fired warning shots at him. The bullets skipped around him.

Then – ignoring the warnings – the man began walking toward the troops. “Fire!” someone yelled. Gibbs opened fire, followed by at least five other soldiers. In the course of a few seconds, they expended approximately 40 rounds.

The man’s body lay on the ground. He turned out to be completely unarmed. According to official statements made by several soldiers, he also appears to have been deaf or mentally disabled. Above his beard, a large portion of his skull was missing, blown away by the hail of bullets. Spc. Michael Wagnon collected a piece of the skull and kept it as a trophy.

It was the team’s second killing of an unarmed man in as many weeks, and the second time they violated a body. But rather than investigate the shooting, the platoon’s officers concentrated on trying to justify it. When 1st Lt. Roman Ligsay radioed Capt. Matthew Quiggle, the platoon’s commanding officer, and informed him that the same unit had shot an unarmed Afghan male, the captain was furious. “He strongly believed that we had illegitimately killed a local national,” recalls Quintal.

Quiggle ordered Ligsay to search until they found a weapon. “Lt. Ligsay was pretty freaked out,” Quintal recalls. “He was positive he was going to lose his job.” For the next hour the platoon swept the area with their flashlights looking for weapons, but they couldn’t find anything.

Then Staff Sgt. Bram ordered Quintal to hand him the AK-47 magazine that Gibbs had stowed in the metal box in the Stryker. A private named Justin Stoner passed it down. A few minutes later, a voice called out in the darkness. “Sir!” Bram yelled. “I think I found something.”

Lt. Ligsay walked up and saw the black magazine lying on the ground. He called it in, and the platoon breathed a sigh of relief. The members of the kill team knew it was a drop magazine, but it turned the shooting into a legitimate kill.

“The incident was staged to look like he may have had a weapon,” Stoner told investigators. “Basically, what we did was a desperate search to justify killing this guy. But in reality he was just some old, deaf, retarded guy. We basically executed this man.”

Under the rules of engagement, however, the U.S. military still considers the man responsible for his own death. Because he ignored the platoon’s warnings and moved in their direction, no one has been charged in his killing – even though the Army now knows he was gunned down by soldiers intent on shooting unarmed civilians for sport.

Within a month, according to the Army, Gibbs executed another civilian and planted a weapon on the body. It was during Operation Kodak Moment, a routine mission to photograph and compile a database of the male residents of a village called Kari Kheyl. On February 22nd, the day of the mission, Gibbs hid the AK-47 he had stolen from the Afghan National Police in a black assault pack. As the platoon made its way through the village, he went to the hut of Marach Agha, a man he suspected of belonging to the Taliban, and ordered him outside.

First Gibbs fired the AK-47 into a nearby wall and dropped the weapon at Agha’s feet. Then he shot the man at close range with his M4 rifle. Morlock and Wagnon followed up with a few rounds of their own. With the scene staged to his satisfaction, Gibbs called in a report.

Staff Sgt. Sprague was one of the first to respond. Gibbs claimed that he had turned a corner and spotted the man, who had fired at him with the AK-47, only to have the rifle jam. But when Sprague picked up the Kalashnikov, it seemed to be in perfect operating condition. A short time later, as he walked down a dusty alley in the village, Sprague himself came under attack from small-arms fire. He responded instinctively by squeezing the trigger on the AK-47 – and the gun fired “with no problems at all.”

Sprague reported the discrepancy to Lt. Ligsay. When the body was identified, relatives also reported that Agha was a deeply religious man who would never have taken up arms. He “did not know how to use an AK-47,” they told Ligsay. Once again, however, no action was taken, nor was Gibbs disciplined.

With their commanding officers repeatedly failing to investigate, the kill team was starting to feel invulnerable. To encourage soldiers in other units to target unarmed civilians, Gibbs had given one of the “off the books” grenades he had scrounged to a friend from another battalion, Staff Sgt. Robert Stevens. “It showed up in a box on my desk,” recalled Stevens, a senior medic. “When I opened the box, I saw a grenade canister, which had a grenade in it and a dirty green sock.” Figuring the sock was some kind of joke, Stevens threw it away. Later, when he saw Gibbs, he mentioned getting the grenade.

“Did you get the other thing?” Gibbs asked.

“What, the sock?” Stevens said.

“No, what was in the sock,” Gibbs replied.

Inside the sock, Gibbs had placed a severed human finger.

Stevens got the message. On March 10th, as his convoy was driving down Highway 1, the central road connecting Kandahar to the north, Stevens stuck his head out of his Stryker’s open hatch and tossed the grenade. It detonated a few seconds later than he had anticipated, and when it blew, it thudded into the vehicle. Stevens immediately began firing at a nearby compound of huts, yelling at another platoon member to do the same. “Get the fuck up, Morgan!” he screamed. “Let’s go, shoot!”

No casualties were reported from the incident, but it earned Stevens an Army Commendation Medal and a Combat Medical Badge. Stevens later admitted that he had concocted the ambush not only because he wanted to get rid of the illegal grenade but because he “wanted to hook up the guys in the company” with their Combat Infantryman Badges, 14 of which were awarded in the aftermath of the shooting. All of the awards were revoked when the Army learned the attack had been faked.

The assault staged by Stevens suggested a new way to target Afghan civilians. In addition to approaching targets on foot, Gibbs decided to use his Stryker as a shooting platform, affording greater mobility with the protection of armor. In a perverse twist, the vehicle that had proved ineffective at combating the Taliban was about to be turned on the very people it was supposed to defend.

On March 18th, during a maintenance run to Kandahar Airfield, the unit drove past a populated area of the city. According to one soldier, Gibbs opened the hatch of the moving Stryker and tossed out a grenade. As it exploded with a loud bang, shrapnel hit the Stryker. “RPG!” Gibbs shouted. “RPG!” Sgt. Darren Jones, who had discussed faking attacks with Gibbs, opened fire indiscriminately on the local residents, who frantically scrambled to avoid the incoming rounds. Gibbs raised his M4 and laid down fire as well.

There is no way to know how many, if any, casualties resulted from the fusillade. Lt. Ligsay, who was in the same Stryker with Gibbs and Jones, maintains that he mistakenly believed the attack to be genuine and ordered the convoy to keep moving. The platoon did not return to the area to conduct a battle damage assessment, and no charges were ever filed in the incident.

A few weeks later, sometime in late March or early April, members of 3rd Platoon fired on unarmed civilians twice on the same day, indicating a growing sense of their own invincibility. Five soldiers were part of a patrol in a grape field in the Zhari District when they spotted three unarmed men. According to Stevens, Gibbs ordered the soldiers to open fire, even though the men were standing erect and posed no threat. All five soldiers fired their weapons at the men, but they managed to escape unscathed. Gibbs was not pleased. “He mentioned that we needed to work on our accuracy,” Stevens recalled, “because it did not appear that anyone was hurt.”

That same evening, while manning a guard tower overlooking a field in the Zhari District, soldiers from 3rd Platoon were directly told not to shoot at an elderly farmer who had been granted permission to work his land nearby. Despite the warning, two soldiers reportedly shot at the farmer as if he were an armed combatant. They once again failed to hit their target, but the officer in charge was furious. “This farmer has never been a problem,” he later told investigators. “He’s 60 to 70 years old.”

One morning that spring, Gibbs approached Morlock flashing what looked like a small metal pineapple. “Hey, man, I’ve got this Russian grenade,” he said. Gibbs added that the weapon would be the perfect tool to fake another attack, since the Taliban were known to carry Russian explosives. Morlock liked the idea. The night before, talking with a bunch of soldiers outside their bunk rooms, he had announced that he was looking to kill another haji, a pejorative term that U.S. troops in Iraq and Afghanistan use for Muslims. One soldier who took part in the conversation dismissed it as idle talk. “I didn’t really think anything of it,” he told investigators, “because soldiers say stuff like that all the time.”

The morning of May 2nd, the platoon was on a routine patrol in a village called Qualaday, a few miles from base. Following standard procedure, the unit’s leaders entered a house to talk with a man who had previously been arrested for having an IED. That inadvertently left the rest of the platoon free to roam the village looking for targets, without having to worry about an officer’s supervision.

Outside the house, Morlock was overheard instructing Winfield in how a grenade explodes, cautioning him to remain on the ground during the blast. Then the two soldiers moved off with Gibbs. Nearby, in a compound filled with children, they picked out a man with a white beard and escorted him outside. “He seemed friendly,” Winfield recalled. “He didn’t seem to have any sort of animosity toward us.”

Gibbs turned to his men. “You guys want to wax this guy or what?” he asked. Morlock and Winfield agreed that the man seemed perfect.

Gibbs walked the Afghan to a nearby ditch and forced him to his knees, ordering him to stay that way. Then he positioned Morlock and Winfield in a prone position behind a small berm no more than 10 feet away. “To be honest,” Morlock later told investigators, “me and Winfield thought we were going to frag ourselves, ’cause we were so fucking close.”

With everyone in position, Gibbs took cover behind a low wall and chucked a grenade toward the Afghan. “All right, dude, wax this guy!” he shouted. “Kill this guy, kill this guy!”

As the grenade went off, Morlock and Winfield opened fire. Morlock got off several rounds with his M4. Winfield, who was armed with the more powerful SAW machine gun, squeezed off a burst that lasted for three to five seconds.

Gibbs shouted for Morlock to proceed with the next stage of the plan. “Get up there and plant that fucking grenade!”

The man lay where he had fallen. One of his feet had been blown off by the blast; his other leg was missing below the knee. Morlock ran up and dropped the Russian pineapple grenade near the dead man’s hand. Gibbs walked up to the body, stood directly over it, and fired twice into the man’s head, shattering the jaw.

Later, when the scene had calmed down – after soldiers had pushed away the dead man’s wife and children, who were screaming, hysterical with grief, and Morlock had spun the story to the higher-ups – Gibbs took out a pair of medical shears and cut off the corpse’s left pinky finger, which he kept for himself. Then, wearing a surgical glove, he reached into the dead man’s mouth, pulled out a tooth and handed it to Winfield.

Winfield held the tooth for a while. Then he tossed it aside, leaving it behind on the ground at Qualaday.

This time, though, the villagers refused to be placated. The dead man, it turned out, was a peaceful cleric named Mullah Allah Dad. Two days later, the murder provoked an uproar at a districtwide council attended by Capt. Quiggle, the unit’s commanding officer. The district leader launched into a blistering attack of the platoon. “He pretty much told us that we planted the grenade in order to shoot the guy,” recalled 1st Lt. Stefan Moye, who escorted Quiggle to the meeting.

But the next day, instead of launching an inquiry into the platoon’s behavior, Quiggle dispatched Moye to the scene of the shooting to do damage control. With Gibbs hovering nearby, the lieutenant found two elderly villagers who claimed to have seen Mullah Allah Dad with a grenade. Relieved, Moye urged them to spread the word. “This is the type of stuff that the Taliban likes to use against us and try to recruit people to fight against us,” he said.

His mission accomplished, Moye left the village feeling that the platoon could return to its usual rhythms. “After that,” he said, “everything was normal.”

Things might have remained “normal,” and the killings might have continued, if it hadn’t been for what began as a trivial spat between bunkmates. Around midnight, the same evening that Moye returned from pacifying village elders, Pfc. Stoner walked into the company’s tactical operations center to register a complaint. Stoner, who had helped plant the AK-47 magazine on the civilian murdered by the highway, said he was sick and tired of other soldiers in the unit using his room as “a smoke shack for hash.” Worried that the lingering odor would get him busted, he had asked them to find another place to get stoned. They had refused, pausing only to remove the battery from the room’s smoke detector.

“They baked the room many times until it stank constantly,” Stoner said. “I was worried for my own job.” Emphasizing that he wasn’t a snitch, Stoner told the sergeant on duty that he didn’t want to get his fellow soldiers in trouble. Then, growing emotional, he mentioned that “he and a bunch of other guys had executed a local national out on Highway 1.” The sergeant didn’t take the story seriously enough to report it up the chain of command. “I thought he was just upset and needed to talk to someone about the incident,” he later recalled. Instead of alerting his superiors about the murder allegation, the sergeant simply assured Stoner that the matter of hash smoking in his room would be handled quietly, and that his identity would be kept confidential.

But discretion wasn’t exactly the unit’s strong suit. By the next day, everyone knew that Stoner had ratted them out. “Everyone began to panic,” Quintal recalls. Gibbs, who didn’t care for hashish, gathered members of the kill team in his room. “We need to address the situation with Stoner,” he reportedly said. “Snitches get stitches.”

On May 6th, Gibbs and six other soldiers descended on Stoner’s room, locking the door behind them, and attacked Stoner while he was sitting on his bed. Grabbing him by the throat, they dragged him to the floor and piled on, striking him hard but taking care to avoid blows to the face that might leave visible bruises. “I’ve been in the Army four years,” Morlock said as he pummeled Stoner in the stomach. “How could you do this to me?” Before leaving, they struck Stoner in the crotch and spit in his face.

A few hours later, Gibbs and Morlock returned to Stoner’s room. As Stoner sat on his bed, still dazed from the assault, Morlock explained that the beating would not happen again, so long as Stoner kept his mouth shut “from fucking now on.” If Stoner were disloyal again, Gibbs warned, he would be killed the next time he went out on patrol. “It’s too easy,” he added, explaining that he could hide Stoner’s body in a Hesco barrier, one of the temporary structures used to fortify U.S. positions.

Then Gibbs reached into his pocket and took out a bit of cloth. Unfolding it, he tossed two severed fingers on the floor, with bits of skin still hanging off the bone. If Stoner didn’t want to end up like “that guy,” Morlock said, he better “shut the hell up.” After all, he added, he “already had enough practice” at killing people.

Stoner had no doubt that Morlock would follow through on the threat. “Basically, I do believe that Morlock would kill me if he had the chance,” he said later.

But the beating proved to be the kill team’s undoing. When a physician’s assistant examined Stoner the next day, she saw the angry red welts covering his body. She also saw the large tattoo across Stoner’s back. In gothic type, beneath a grinning red skull flanked by two grim reapers, it read:

what if im not the hero

what if im the bad guy

Stoner was sent to talk to Army investigators. In the course of recounting the assault, he described how Gibbs had thrown the severed fingers on the floor. The investigators pressed him about how Gibbs came by the fingers. Stoner told them it was because the platoon had killed a lot of innocent people.

At that point, the investigators asked Stoner to start from the beginning. When had the platoon killed innocent people? Bit by bit, Stoner laid out the whole history, naming names and places and times.

As other members of the platoon were called in and interviewed, many confirmed Stoner’s account and described the shootings for investigators. Morlock, who proved particularly gregarious, agreed to speak on videotape. Relaxed and unconcerned in front of the camera, he nonchalantly described the kills in detail.

Morlock’s confession kicked off an intense search for evidence. When the Army’s investigators were dispatched to FOB Ramrod, they went straight to the top of a Hesco barrier near Gibbs’ housing unit. Right where Morlock said it would be, they found the bottom of a plastic water bottle containing two pieces of cloth. Inside each piece of cloth was a severed human finger. But then a strange thing happened. When investigators compared prints of the two fingers to those in the company’s database, the prints didn’t match up. Either the records were screwed up, which was quite possible, or there were more dead guys out there who were unaccounted for.

Last week, on March 23rd, Morlock was sentenced to 24 years in prison after agreeing to testify against Gibbs. “The Army wants Gibbs,” says one defense lawyer. “They want to throw him in jail and move on.” Gibbs insists that all three killings he took part in were “legitimate combat engagements.” Three other low-level soldiers facing murder charges – Winfield, Holmes and Wagnon – also maintain their innocence. As for the other men in Bravo Company, five have already been convicted of lesser crimes, including drug use, stabbing a corpse and beating up Stoner, and two more face related charges. In December, Staff Sgt. Stevens was sentenced to nine months in prison after agreeing to testify against Gibbs. He was stripped to the lowest service rank – private E-1 – but over the protests of military prosecutors, he was allowed to remain in the Army.

So far, though, no officers or senior officials have been charged in either the murders or the cover-up. Last October, the Army quietly launched a separate investigation, guided by Brig. Gen. Stephen Twitty, into the critical question of officer accountability. But the findings of that inquiry, which was concluded last month, have been kept secret – and the Army refuses to say whether it has disciplined or demoted any of the commanders responsible for 3rd Platoon. Even if the commanding officers were not co-conspirators or accomplices in the crimes, they repeatedly ignored clear warning signs and allowed a lethally racist attitude to pervade their unit. Indeed, the resentment of Afghans was so commonplace among soldiers in the platoon that when Morlock found himself being questioned by Army investigators, he expressed no pity or remorse about the murders.

Toward the end of Morlock’s interview, the conversation turned to the mindset that had allowed the killings to occur. “None of us in the platoon – the platoon leader, the platoon sergeant – no one gives a fuck about these people,” Morlock said.

Then he leaned back in his chair and yawned, summing up the way his superiors viewed the people of Afghanistan. “Some shit goes down,” he said, “you’re gonna get a pat on the back from your platoon sergeant: Good job. Fuck ‘em.”

You know how we’ve been covering the efforts of U.S. Uncut, the growing campaign to stop corporate tax dodgers from exploiting overseas tax havens? Well here’s an excellent example of why such efforts are desperately needed, from the front page of the New York Times:

General Electric, the nation’s largest corporation, had a very good year in 2010.

The company reported worldwide profits of $14.2 billion, and said $5.1 billion of the total came from its operations in the United States.

Its American tax bill? None. In fact, G.E. claimed a tax benefit of $3.2 billion.

How can that be, you ask?

The company has been cutting the percentage of its American profits paid to the Internal Revenue Service for years, resulting in a far lower rate than at most multinational companies.

Its extraordinary success is based on an aggressive strategy that mixes fierce lobbying for tax breaks and innovative accounting that enables it to concentrate its profits offshore. G.E.’s giant tax department, led by a bow-tied former Treasury official named John Samuels, is often referred to as the world’s best tax law firm….The team includes former officials not just from the Treasury, but also from the I.R.S. and virtually all the tax-writing committees in Congress.

If that doesn\’t make your blood boil, I don\’t know what would.

Corporations argue that the U.S.\’s top corporate tax rate of 35% is prohibitively high and puts them at a disadvantage against foreign companies. But even if you buy that argument (and I do not, because I think corporations should be responsible for paying taxes in countries in which they reap huge profits), it\’s hard to swallow when the corporation in question — and not just any corporation, but the biggest in the world – is claiming a tax benefit. Not only did GE not pay any taxes in the U.S. last year, it effectively got money back from the U.S. government.

But wait, there\’s more! ThinkProgress dug up a speech given by GE CEO Jeffery Immelt at West Point in 2009. Titled “Renewing American Leadership,” the speech contains a rather ironic take-down of corporate greed:

Few of us will ever do what many of you will do for duty, honor and country. But America doesn’t expect heroism from all of us. […] Wherever our talents lie, and whenever our conscience requires, we must all, to the best of our abilities, help keep America the great face for good it has long been. We are trying to do that at GE. […]

I think we are at the end of a difficult generation of business leadership, and maybe leadership in general. Tough-mindedness, a good trait – was replaced by meanness and greed – both terrible traits. Rewards became perverted. The richest people made the most mistakes with the least accountability.

And Immelt dared give that speech to the nation\’s future military leaders — a group that knows a thing or two about true sacrifice.

Brazil looks likely to elect an extraordinary leader next weekend

By Hugh O’Shaughnessy
Sunday, 26 September 2010

The world’s most powerful woman will start coming into her own next weekend. Stocky and forceful at 63, this former leader of the resistance to a Western-backed military dictatorship (which tortured her) is preparing to take her place as President of Brazil.

As head of state, president Dilma Rousseff would outrank Angela Merkel, Germany’s Chancellor, and Hillary Clinton, the US Secretary of State: her enormous country of 200 million people is revelling in its new oil wealth. Brazil’s growth rate, rivalling China’s, is one that Europe and Washington can only envy.

Her widely predicted victory in next Sunday’s presidential poll will be greeted with delight by millions. It marks the final demolition of the “national security state”, an arrangement that conservative governments in the US and Europe once regarded as their best artifice for limiting democracy and reform. It maintained a rotten status quo that kept a vast majority in poverty in Latin America while favouring their rich friends.

Ms Rousseff, the daughter of a Bulgarian immigrant to Brazil and his schoolteacher wife, has benefited from being, in effect, the prime minister of the immensely popular President Luiz Inacio Lula da Silva, the former union leader. But, with a record of determination and success (which includes appearing to have conquered lymphatic cancer), this wife, mother and grandmother will be her own woman. The polls say she has built up an unassailable lead – of more than 50 per cent compared with less than 30 per cent – over her nearest rival, an uninspiring man of the centre called Jose Serra. Few doubt that she will be installed in the Alvorada presidential palace in Brasilia in January.

Like President Jose Mujica of Uruguay, Brazil’s neighbour, Ms Rousseff is unashamed of a past as an urban guerrilla which included battling the generals and spending time in jail as a political prisoner. As a little girl growing up in the provincial city of Belo Horizonte, she says she dreamed successively of becoming a ballerina, a firefighter and a trapeze artist. The nuns at her school took her class to the city’s poor area to show them the vast gaps between the middle-class minority and the vast majority of the poor. She remembers that when a young beggar with sad eyes came to her family’s door she tore a currency note in half to share with him, not knowing that half a banknote had no value.

Her father, Pedro, died when she was 14, but by then he had introduced her to the novels of Zola and Dostoevski. After that, she and her siblings had to work hard with their mother to make ends meet. By 16 she was in POLOP (Workers’ Politics), a group outside the traditional Brazilian Communist Party that sought to bring socialism to those who knew little about it.

The generals seized power in 1964 and decreed a reign of terror to defend what they called “national security”. She joined secretive radical groups that saw nothing wrong with taking up arms against an illegitimate military regime. Besides cosseting the rich and crushing trade unions and the underclass, the generals censored the press, forbidding editors from leaving gaps in newspapers to show where news had been suppressed.

Ms Rousseff ended up in the clandestine VAR-Palmares (Palmares Armed Revolutionary Vanguard). In the 1960s and 1970s, members of such organisations seized foreign diplomats for ransom: a US ambassador was swapped for a dozen political prisoners; a German ambassador was exchanged for 40 militants; a Swiss envoy swapped for 70. They also shot foreign torture experts sent to train the generals’ death squads. Though she says she never used weapons, she was eventually rounded up and tortured by the secret police in Brazil’s equivalent to Abu Ghraib, the Tiradentes prison in Sao Paulo. She was given a 25-month sentence for “subversion” and freed after three years. Today she openly confesses to having “wanted to change the world”.

In 1973 she moved to the prosperous southern state of Rio Grande do Sul, where her second husband, Carlos Araujo, a lawyer, was finishing a four-year term as a political prisoner (her first marriage with a young left-winger, Claudio Galeno, had not survived the strains of two people being on the run in different cities). She went back to university, started working for the state government in 1975, and had a daughter, Paula.

In 1986, she was named finance chief of Porto Alegre, the state capital, where her political talents began to blossom. Yet the 1990s were bitter-sweet years for her. In 1993 she was named secretary of energy for the state, and pulled off the coup of vastly increasing power production, ensuring the state was spared the power cuts that plagued the rest of the country.

She had 1,000km of new electric power lines, new dams and thermal power stations built while persuading citizens to switch off the lights whenever they could. Her political star started shining brightly. But in 1994, after 24 years together, she separated from Mr Araujo, though apparently on good terms. At the same time she was torn between academic life and politics, but her attempt to gain a doctorate in social sciences failed in 1998.

In 2000 she threw her lot in with Lula and his Partido dos Trabalhadores, or Workers’ Party which set its sights successfully on combining economic growth with an attack on poverty. The two immediately hit it off and she became his first energy minister in 2003. Two years later he made her his chief of staff and has since backed her as his successor. She has been by his side as Brazil has found vast new offshore oil deposits, aiding a leader whom many in the European and US media were denouncing a decade ago as a extreme left-wing wrecker to pull 24 million Brazilians out of poverty. Lula stood by her in April last year as she was diagnosed with lymphatic cancer, a condition that was declared under control a year ago. Recent reports of financial irregularities among her staff do not seem to have damaged her popularity.

Ms Rousseff is likely to invite President Mujica of Uruguay to her inauguration in the New Year. President Evo Morales of Bolivia, President Hugo Chavez of Venezuela and President Fernando Lugo of Paraguay – other successful South American leaders who have, like her, weathered merciless campaigns of denigration in the Western media – are also sure to be there. It will be a celebration of political decency – and feminism.

Female representation: A woman’s place… is in the government

In recent years, female political representation has undergone significant growth, with dramatic changes occurring in unexpected corners of the globe. In some countries women are dominating cabinets and even parliamentary chambers. By comparison, the UK falls far behind, with only 22 per cent of seats in the Commons currently held by women.

Bolivia In the Bolivian cabinet, 10 men are now matched by 10 women. In 2009, women won 25 per cent of seats in the lower chamber, and 47 per cent in the upper chamber.

Costa Rica In 2010, women won 39 per cent of seats in the lower chamber.

Argentina In 2009, women won 39 per cent of seats in the lower chamber and 47 per cent in the upper chamber.

Cuba In 2009, women won 41 per cent of seats in the lower chamber.

Rwanda In 2009, women won 56 per cent of seats in the lower chamber and 35 per cent in the upper chamber.

Mozambique In 2009, women won 39 per cent of seats in the lower chamber.

Angola In 2009, women won 38 per cent of seats in the lower chamber.

Switzerland Has a female-dominated cabinet for the first time. In 2007, women won 29 per cent of seats in the lower chamber.

Germany In 2009, the cabinet had six women and 10 men. That year, women won 33 per cent of lower chamber seats.

Spain Nine women compared with eight men in cabinet. In 2008, women won 37 per cent of seats in the lower chamber.

Norway Equal numbers of men and women in the cabinet. Women won 40 per cent of seats in the lower chamber.

Denmark Nine women and 10 men in cabinet. In 2007, women won 23 per cent of seats in the lower chamber.

Netherlands Three women and nine men in cabinet. In 2010, women won 41 per cent of seats in the lower chamber.

Charlotte Sewell

To safely enclose and robotically dismantle the 25-year-old makeshift confinement sarcophagus at Chernobyl, contractors are now erecting a massive steel structure weighing more than 29,000 metric tons

By Charles Q. Choi  | Thursday, March 17, 2011 | 13

Computer simulated image of the construction of the New Safe Confinement. Image: Novarka

CHERNOBYL, Ukraine—Imagine a metal arch taller than the Statue of Liberty. Now picture it sliding a distance of roughly three football fields, making it the largest movable structure ever . Under this steel rainbow engineers are planning to entomb the site of the worst nuclear accident in history, the destroyed reactor at the Chernobyl power plant, using robotic cranes to dismantle the ruins and keep its deadly remains from poisoning the rest of the planet.

After reactor No. 4  exploded at Chernobyl in 1986 due to errors in both design and operation it sent plumes of radioactive dust as far away as Japan and the U.S. To contain the fallout, the Soviet Union constructed a metal and concrete structure commonly known as the sarcophagus over the wreckage.

“It was really quite a remarkable feat, but after 25 years, it’s in danger of collapse,” civil and environmental engineer Eric Schmieman of Battelle Memorial Institute explains in an interview in Kiev.

The sarcophagus, technically known as the Shelter Object, was made of more than 7,000 metric tons of metal and 400,000 cubic meters of concrete. It was erected as quickly as possible to limit worker exposure to radiation, and was never meant to last forever. In many ways it was designed “like a house of cards,” Schmieman says, with pieces of metal essentially leaning against each other and hooked together. “There are no welded joints or bolted joints—it wouldn’t take much of a seismic event to knock it down.”

At the same time, when the sarcophagus was completed, “there were over 1,000 square meters of openings in the roof where joints didn’t match up,” Schmieman says. These holes allowed water in, resulting in corrosion that is hastening the structure’s decline. Since then, workers have patched many of these holes, but 100 square meters of gaps remain. To help keep radioactive matter from leaking , a dust- suppression system inside relies on sprinklers that periodically spray a watery solution to prevent it from becoming airborne.

Now, to safely enclose the ailing sarcophagus, the French consortium Novarka is working on a replacement: the New Safe Confinement, a steel structure 110 meters high at its tallest point, 164 meters wide, spanning across 257 meters and weighing more than 29,000 metric tons. In comparison, the Statue of Liberty from the ground to the tip of its torch is about 93 meters high, says Schmieman, who helped lead New Safe Confinement’s conceptual design .

Because the destroyed reactor is still highly radioactive, to protect workers, the arch will not be constructed over the sarcophagus. R ather, it will be assembled nearby from prefabricated segments each about 25 meters high and weighing an average of 300 metric tons. Once complete, hydraulic jacks will then slide the arch approximately 300 meters on Teflon bearings during the course of a week to enclose the sarcophagus. Walls on either side  of the structure, making it resemble an aircraft hangar, will help isolate debris. “All told, it has a design life of 100 years,” Schmieman says.

Inside the structure, three robotic cranes capable of lifting up to 50 metric tons each will be equipped with tools to help dismantle the sarcophagus, using drills, manipulator arms and concrete crushers, along with vacuum cleaners that can suck up to 10 metric tons of dust. The cranes will also employ radioactivity monitors as well as cameras to help remotely operate the tools . Once the sarcophagus and its contents are dismantled , it remains to be seen where the most radioactive material will be buried, but there are facilities to store the less radioactive remains.

During the first week of March, I saw deep trenches and large steel piles here meant for the foundation of the arch. Currently, the goal is to finish the New Safe Confinement by 2014, although contractors are giving themselves a year leeway. “Keep in mind, this is a one-of-a-kind structure, and nothing like this has ever been attempted,” Schmieman cautions. “Further, Chernobyl is one of the most hazardous working sites in the world, and we frequently discover unexpected radiological hazards in excavation works. The combination of these factors introduces many uncertainties into any schedule.”

In addition, some of the money needed to complete the project has yet to be raised. Twenty-nine countries have pledged funds to the Shelter Implementation Plan creating the New Safe Confinement, but so far another $835 million are needed; also, the storage facility designed to hold spent nuclear fuel from reactor Nos. 1 to 3 still requires funding to the tune of $195 million . Fundraising events to coincide with the 25th anniversary of the disaster in April are now underway, according to the European Bank for Reconstruction and Development, which is managing these efforts.

“I am fully aware that this is a considerable amount of money which is particularly difficult to raise at a time of universal fiscal constraints,” Thomas Mirow, president of the European Bank for Reconstruction and Development, said in a statement. “Nevertheless, we must not forget that it is in the best interest of Ukraine and the international community to bring to a successful conclusion the important work we have started in Chernobyl.”

The sacrifices made by the clean up workers immediately after the Chernobyl tragedy are driving those at the project to work to a much higher standard, says structural engineer Randy Jorissen , deputy manager for technical direction for the New Safe Confinement. “All they did to limit the extreme disaster, giving their lives for the task—I just hope we learned our lesson and that it never happens again,” he says. “It’s very satisfying to me to be part of a very significant effort to bring to a conclusion what those heroes started 25 years ago.”

By PHIL WHABA | REUTERS

Published: Mar 19, 2011 00:31 Updated: Mar 19, 2011 00:31

NEW YORK: Nike plans to raise the prices on its shoes and sports clothing markedly in 2012 to cope with the rising costs of oil, cotton and transportation that are hurting its profitability. The shares in the world’s largest athletic shoe and clothing maker plunged 7 percent on fears that already stretched margins will come under even greater pressure this year and next. It reported a lower-than-expected quarterly profit on Thursday, hurt by rising production costs.

The company expects margin pressures to persist this year, intensifying in the current quarter.

“This is evidence that rising input costs are hurting Nike’s profit,” said Giri Cherukuri, a portfolio manager with OakBrook Investments, which owns Nike shares. “Nike’s margins will be under pressure for the rest of the year.”

To contend with that, Nike executives said the company would ramp up and broaden its price increases.

Gross margins, which slipped 1.1 percentage points to 45.8 percent during the third quarter, were further hurt by the greater use of air freight to ship products and meet consumer demand.

The company said there had been some product shortages and that suppliers would increase their capacity.

Nike forecast its gross margin during the current quarter will be 3 percentage points below year-earlier levels, but that pressure on margins would ease later in the year as price increases kick in.

“Beginning in spring 2012, we’ll take more significant price increases across a broader range of styles,” Chief Financial Officer Don Blair said on a conference call.

Blair said on the call it was too early to know how the crisis in Japan might affect its business in that country, which accounted for 3.8 percent of third-quarter sales.

Net income in the fiscal third quarter rose 5.2 percent to $523 million, or $1.08 a share, compared with $497 million, or $1.01 cents a share, in the year-earlier quarter.

That was below analysts’ average expectation of $1.12 per share, according to Thomson Reuters I/B/E/S.

The company’s shares fell $5.81, or 6.8 percent, to $79.60 following the earnings report, after closing at $85.41 on the New York Stock Exchange.

Revenue in the quarter ended February 28 rose 7.3 percent to $5.08 billion and comparable sales at Nike stores rose 13 percent.

Future orders, excluding currency exchange rates — a key measure of sales growth — rose 9 percent, in line with the estimates of several Wall Street analysts.

UBS analyst Michael Binetti had expected 10 percent growth and added he believed investors were looking for an increase of 8 percent to 9 percent. McAdams Wright Ragen forecast growth of 8 percent to 9 percent, while Barclays Capital was at 7 percent to 9 percent and Citi at about 8 percent.

Orders for Nike brand shoes and apparel scheduled for delivery from March through July 2011 totaled $7.9 billion.

By region, revenue in Nike’s largest market, North America, increased 9 percent to $1.84 billion, while sales in emerging markets and greater China rose 19 percent and 21 percent, respectively. Japan was the only market where sales fell, sliding 8 percent.

The Obama administration has issued a gag order over findings on a recent spike in dolphin mortalities along the US Gulf coast following the BP oil spill, citing a federal criminal investigation over the spill as the reason.

An abnormal dolphin mortality this year along the Gulf coast has become part of a federal criminal investigation over last year’s BP oil spill disaster and as a result, has led the US government to clamp down on biologists’ findings, with orders to keep the results confidential. The dolphin die-off, labeled an “unusual mortality event (UME),” resulted in wildlife biologists being contracted by the National Marine Fisheries Service to record the recent spike in dolphin deaths by collecting tissue samples and specimens for the agency, but late last month were privately ordered to keep their results under wraps. Reuters has obtained a copy of the agency letter that states, in part: “Because of the seriousness of the legal case, no data or findings may be released, presented or discussed outside the UME investigative team without prior approval.” One biologist involved with tracking dolphin mortalities for over 20 years and speaking on the condition of anonymity, told Reuters that: “It throws accountability right out the window. We are confused and … we are angry because they claim they want teamwork, but at the same time they are leaving the marine experts out of the loop completely.” Some scientists said they have received a personal rebuke from government officials about “speaking out of turn” to the media over attempts at determining the dolphins’ deaths. Additionally, these scientists say the collected specimens and samples are being turned over to the government for evaluation under a deal that omits independent scientists from the final results of lab tests. Almost 200 dead bottlenose dolphin bodies have been found since mid-January through this week along shorelines of Gulf coast states, including Florida, Alabama, Mississippi and Louisiana, Reuters notes. About half of the carcasses are newborns or stillborn infants. That number is around 14 times the average numbers recorded during the same time frame between 2002 and 2007 and has coincidentally occurred during the first calving season since the BP Deepwater Horizon debacle last year in the Gulf. Although many of the dolphin specimens recently collected show no outward signs of oil contamination, lab analysis is crucial in helping to determine their deaths. Some experts believe the recent surge of deaths is the result of dolphins inhaling or ingesting oil during the oil spill, the results of which are just now beginning to show their toll, including a possible upsurge in dolphin miscarriages. The recent spike in dolphin deaths has compounded the dolphin mortality problem, as scientists were already busy attempting to determine the deaths of nearly 90 dead dolphins, mostly adults, that washed up along the US Gulf coast during the weeks and months after the BP disaster. Some are questioning the Marine Fisheries Service, part of the National Oceanic and Atmospheric Administration (NOAA), and its delay in providing dolphin samples to laboratories. “It is surprising that it has been almost a full year since the spill, and they still haven’t selected labs for this kind of work,” said Ruth Carmichael, of the independent Dauphin Island Sea Lab, located in Alabama, according to Reuters. “I can only hope that this process is a good thing. I just don’t know. This is an unfortunate situation,” she added. Officials with the NOAA state the confidentiality measures are an integral part of the current investigation over the BP oil spill. “We are treating the evidence, which are the dolphin samples, like a murder case,” said Dr. Erin Fougeres, a Fisheries Service marine biologist, Reuters notes. “The chain of custody is being closely watched. Every dolphin sample is considered evidence in the BP case now,” she added.

Read more: http://www.digitaljournal.com/print/article/305096#ixzz1RpPBPtSO

Thursday, March 24, 2011 - by Joel Hruska

It’s been nearly a decade since the music industry declared war against file sharers via its controversial policy of suing individuals supposedly identified via their IP addresses. After all this time one would expect the various companies to present a consistent, united front. As a recent court filing against Limewire shows this is absolutely not the case. Last May, federal district court judge Kimba Wood granted the record industry’s request for a summary judgement against Limewire. With their winning ticket in hand, the RIAA withdrew to contemplate the level of statutory and punitive damages it felt Limewire should pay. The recording studios have never been overly interested in due diligence or common sense but this latest tops all.

Limewire, the plaintiffs allege, owes them between $400 billion and 75 trillion. The latter, written out, comes to 75,000,000,000,000.

We decided to graph a handful of additional values to put the $75 trillion in context. World GDP for 2011 is expected to  be ~$65 trillion, the US national debt is currently $14.25 trillion, and the total median income for all 114,825,428 US households in 2010 is just $5.7 trillion. In other words, every single US household would have to spend all of its income buying nothing but music for over 13 years in order to arrive at what the music industry has deemed a reasonable settlement. Even the lower figure of $400 billion still amounts to seven percent of total household income in the entire country.

The legal question at the center of these absurdly high judgements is whether or not the plaintiffs can demand statutory damages from each individual infringement. A simple example is as follows: Assume that the record industry is able to recover $10 in statutory damages each time Song XYZ is shared. If 10,000 people download Song XYZ, Limewire is on the hook for $100,000 in statutory damages from just one song. If Limewire had a library of 100 songs, each of which is downloaded by 10,000 people, it’d be on the hook for $10 million.

The alternative reading is that the plaintiffs are only eligible to recover statutory damages based on the number of songs shared. If Limeware shared 100 songs, as above, it would be required to pay damages of $10 per song or $1000 total. The enormous gap between these two figures is a genuine problem for modern copyright law. Judge Wood writes: “To the best of this Court’s knowledge, the issue of whether a plaintiff should be able to recover from a secondarily liable defendant multiple awards per work based on the number of direct infringers… has never been addressed in a context where the secondarily liable defendant has enabled hundreds, if not thousands, of individuals to infringe.”

Having acknowledged the problem, she rules that the plaintiffs are only eligible to recover a single statutory reward per work infringed. One of the strongest arguments against the claim that Limewire owes up to $75 trillion is that it violates the judicial precept of absurdity. In arguing that Limewire should be eligible for damages on every individual download, the studios were effectively arguing that Limewire owed it more money than the entire record industry has made since Edison invented the phonograph in 1877.

This decision is important because it both acknowledges a legitimate gap in copyright law while slapping down the recording industry’s blatant stupidity. It’s incredibly ironic that the music studios, who unquestionably have the most to gain from balanced copyright law that addresses digital media while maintaining fair use, instead paint themselves in motley. Even if Wood had agreed with their logic, no higher court would have allowed a $400 billion fine to stand against one company. Ridiculous moves like this leave us wondering how sincere the music industry is when it speaks of finding common ground.

Could it be that America is actually turning less violent? Or are we as violent as ever — but have simply found different ways of assuaging our urges?

March 20, 2011  |

Los Angeles’ violent-crime rates are four times lower now than they were 1992. The interesting thing is, nobody can really explain why.As of December 25, last year, only 293 homicides were reported in LA, along with 781 rapes, 10,734 robberies, and 9,129 aggravated assaults. In 1992, that blood-soaked year of the Rodney King Riots, Los Angeles saw 1,092 murders, 1,861 rapes, 39,222 robberies, and 47,736 aggravated assaults.

These figures echo a nationwide trend. “Crime Rate at 20-Year Low Level,” reads a February 24 headline in the Frederick, Maryland News Post. “Major Crime at 39-Year Low in Elgin,” the Chicago Tribune crowed on February 22. “Fresno’s Murder Rate Is Drastically Down in 2011,” announced that California’s town’s ABC-TV affiliate on February 23. Such headlines are typical these days. Crime’s down. What’s up?

Theories abound. Various agencies, such as the office of LA Mayor Antonio Villaraigosa, credit themselves with the shift. But in the din of the applause, some of these theories and claims cancel each other out.

Noting that LA in 1992 “was like a war zone,” LAPD Sgt. Joe Kuns remembers how, that year, no one in their right mind strolled the downtown intersection of First and Main streets for fun after dark. Drug dealers and their customers ruled that corner, he says. It’s a different story now. Brightly lit businesses welcome local residents, who wave happily while walking their dogs.

Why? Some would say it’s because those drug dealers and their customers are now locked up. According to the US Bureau of Justice Statistics, the number of drug-related arrests has nearly doubled nationwide since 1992. Drug-related offenders comprised 6 percent of Minnesota’s incarcerated in 1989; last year, according to the Minnesota Department of Corrections, they comprised 18 percent.

As for exact correlations between drug violations and violent crime, the jury’s still out. A 2009 report by the King’s College London International Centre for Prison Studies found that “given the significant costs of incarceration … in budget terms, but also in terms of the negative impact on community relations, social cohesion and public health — it is hard to justify a drug policy approach that prioritises widespread arrest and harsh penalties for drug users on grounds of effectiveness.”

Gang violence is being quelled as well. One program alone, ICE’s Operation Community Shield, has resulted in over 20,000 gang-related arrests since 2005. Is this helping?

Kuns is quick to assert that assigning any definitive cause to LA’s plunging crime rate “would be intellectually dishonest.” It’s anyone’s guess.

“In meetings with professors from USC and UCLA, we’ve tried to apply methodical approaches to isolate causal relationships between what our department is doing now with what it was doing twenty years ago. I wish there had been a moment when we all looked at each other across the table and said, ‘That’s it, we’ve figured it out.’ But there hasn’t been.”

Kuns does credit community involvement. He says the no-snitch code is dissolving as more people than ever call 911 and anonymous tip lines. Los Angeles Sheriff’s Department spokesman Steve Whitmore agrees.

Even in LA gang strongholds such as Compton, Lynwood, and Lennox, “people have decided that enough is enough.” Admittedly “hesitant to talk about how crime is dropping, because a lot of times the bad guys will hear that and say, ‘We’ll show them,’” Whitmore also credits “the visual saturation of law enforcement, as the sheriff has flooded certain areas of our county with law enforcement and targeted teams. And technology helps.”

Cell phones, texting, and email make crime reporting exquisitely quick, easy, and secret.

Do crimewatch TV shows such as America’s Most Wanted spur viewers into action? Do reality shows such as Cops and The First 48 humanize police, making viewers help rather than hate them? In books such as More Guns, Less Crime (University of Chicago Press, 1998), conservative economist John Lott attributes shrinking crime rates to increased legal gun ownership.

Could it be that America is actually turning less violent? Or are we as violent as ever — but have simply found less interpersonal means of assuaging our urges?

Award-winning University of Hawaii anatomist Milton Diamond believes that one powerful tool in reducing at least one type of violent crime is porn — including kiddie porn.

Published last fall in the scholarly journal Archives of Sexual Behavior, Diamond’s latest academic study tracked crime in the Czech Republic after pornography was legalized there.

“As found in all other countries in which the phenomenon has been studied, rape and other sex crimes did not increase,” Diamond’s report reads. In particular, Denmark and Japan “had a prolonged interval during which possession of child pornography was not illegal.” When kiddie porn was legal in Denmark and Japan, both countries “showed a significant decrease in the incidence of child sex abuse.”

Diamond — who directs UH’s Pacific Center for Sex and Society and won this year’s Kinsey Award for the Scientific Study of Sexuality — does not approve of actual children being used in porn, but rather images of children produced via artwork or computer graphics.

“It’s the lesser of two evils,” he says.

“Why would someone commit a crime if he didn’t have to? Does he say, ‘I’m gonna go out and rape somebody’? Or might he say, ‘Look, there’s a danger in doing that, and I’m horny, so now I’ll masturbate’? If I was a potential rapist, I’d be thinking, ‘Why the hell would I want to go out in the cold when I can stay inside and masturbate?’ Think of all the problems we could solve this way.

“We can’t say that every potential rapist is crazy or stupid. They’re reacting to the same things everybody reacts to.” Pre-Internet and pre-DVD, “they went out and ‘did something’ about those reactions,” Diamond asserts, but now they can stay safely at home, ensconced with electronic fantasies.

“If I have a choice between having real children abused or having child porn on the Net, I say have child porn and save kids. I want the same thing anti-porn protesters want: to stop child abuse. If porn will do it, I’m for it.”

Whatever’s curbing crime these days, it’s making fools of those who predicted that an economic meltdown would turn America into a Mad Maxian hellzone terrorized by bloodthirsty out-of-work stock clerks.

“Murder, Suicide Rates Climb When Jobs Vanish and Economy Slows,” Bloomberg blared, citing a 2009 study published in The Lancet that linked every 1 percent increase in unemployment with a .79 percent increase in homicides. (But according to the same study, every 1 percent increase in unemployment is also linked with a 1.39 percent decrease in car-crash deaths. So in that sense, economic collapse saves nearly twice as many lives as it takes.)

“If you go by the old adage that crime is tied to the economy, then these should be banner years for violent crime,” says the LAPD’s Kuns. “But it’s going in the opposite direction.”

According to the US Bureau of Justice Statistics’ annual National Crime Victimization Survey, violent and property crime rates were lower in 2008 than at any time since these surveys began in 1973. According to the FBI’s annual Uniform Crime Reports, violent crime declined 6.2 percent nationwide just in the first half of 2010. Broken down by region, murder/rape/robbery/aggravated assault fell by 7.8 percent in the South, 7.2 percent in both the Midwest and West, and a comparatively — troublingly — small 0.2 percent in the Northeast.

“Economic conditions and crime: This is a very complicated relationship,” says Stanford University law professor Lawrence Friedman, the award-winning author of Crime and Punishment in American History (Basic Books, 1994). “Dire economic circumstances certainly give some people incentives to commit property crimes. But on the whole, it is hard to show a correlation, especially if you look at the broad sweep of history. The period after World War II was one of tremendous economic growth, and yet the violent crime rate went up dramatically” in the US at that time. 

Was it because the war’s end brought home a huge influx of young males, the demographic most likely to commit violent crimes? Clearly the perpetrators of all those postwar murders, rapes, assaults and strongarm robberies weren’t famished bread thieves a la Les Misérables. This should shatter the romance that most criminals commit crimes not by choice but by necessity.

What spurs crime? Greed. Hate. Opportunity. What stems it?

“There’s a growing groundswell of folks accepting their personal ownership of what goes on in their neighborhoods,” Kuns says. “Regardless of their station in life, they’re taking responsibility for the places in which they live and for a reasonable radius around them. They’ve realized that although the police are happy to rescue you when we can — that’s the fun part of our job — the policing of your neighborhood starts with you.”

In some neighborhoods these days, “people literally run out of their houses and try to stop crimes themselves.

“Say every time a crime takes place, we get four or five calls from community members providing information. After a while, the bad guys think, ‘The probability of someone seeing me committing a crime and making that call, and thus the probability of my getting caught, is so high that it’s not worth committing the crime.’

“It’s like game theory.”

Officers took orders from UK police division that employed spy Mark Kennedy, German MPs told

Five undercover police officers from Germany were sent to the G8 protests in Gleneagles to infiltrate activist groups, German police have privately admitted.

The officers took orders from the UK’s National Public Order Intelligence Unit (NPOIU), the secretive police division that employed Mark Kennedy to spy on activists across Europe, said Jörg Ziercke, head of Germany’s federal police.

Ziercke made the admissions in a private sitting of the German parliament held at the end of January to discuss Germany’s involvement in the Kennedy case, Der Spiegel reported.

Kennedy, known to activists as Mark Stone or “Flash”, because of his seemingly ready supply of cash, was a regular visitor to Germany and helped organise protests in Heiligendamm, the town near Rostock where the G8 meetings took place in 2007.

According to Der Spiegel, whose reporters claim to have been leaked the minutes from the January meeting, Ziercke admitted that German state authorities had specifically requested Kennedy’s presence in Heiligendamm.

At the same meeting, Ziercke was forced to tell MPs that Kennedy worked for three German states during at least five visits to the country between 2004 and 2009. He worked for Mecklenburg-Vorpommern, where the G8 meeting was taking place, as well as Baden-Württember and Berlin.

The agent was working on a contract brokered directly by the German parliament, who deemed him a trusted agent, Der Spiegel claimed.

Ziercke also told MPs at the Bundestag that Kennedy had a long-term lover in Berlin – in direct violation of a law forbidding police officers having sexual relationships while undercover – and that he had been invited to Germany by the authorities to infiltrate the anti-fascist movement.

While discussing the Kennedy case, Ziercke answered questions about German undercover officers abroad. The minutes do not specify how many agents were sent to Gleneagles, but someone present at the meeting told Der Spiegel that Ziercke talked of five being sent to Scotland.

Thousands of leftwing protesters disrupted the Gleneagles summit by paralysing traffic and throwing stones at the police.

Ziercke allegedly said the secret operation in Gleneagles was merely part of a European-wide project to exchange information from undercover operatives working across a number of countries.

He said the police forces in EU member states help each other by sharing information “regarding Euro-anarchists, militant left extremists and leftwing terrorists”. This sort of co-operation was also common during major international sporting events, he added, and was widely praised by governments. Ziercke said this exchange programme appeared to be useful tool. Police can only tackle organised and conspiratorial international networks by working just as “internationally and conspiratorially”, said Ziercke.

However, he said, police should think again about how to control and monitor these sorts of clandestine operations.

Both the Guardian and Spiegel have already reported that Ziercke told German MPs that the agent committed at least two crimes, but the cases against him were dropped at the behest of German authorities who knew Kennedy’s true identity.

Kennedy first broke the law during protests at Heiligendamm. He later committed arson during a demonstration in Berlin at which he set fire to containers, Der Spiegel said. The newspaper said Kennedy’s involvement in criminal activity raised concerns that he was working as an agent provocateur and not just an observer - and the fact that investigations into both crimes were shelved suggested police authorities wielded an unacceptable influence over the country’s judicial process.

Kennedy spent long periods in Germany and lived with individuals in the anarchist movement during his time in the country. At the same time, he entered 22 different countries across Europe using a fake passport, including Spain, Italy and Iceland – where he helped found the activist movement.

The revelations about Kennedy’s role in Germany come despite the government maintaining its refusal to publicly answer a series of parliamentary questions from opposition politicians.

The Bundestag said “operational reasons” prevented them answering any questions about the country’s co-operation with undercover police officers from other countries, and Kennedy in particular.

The Metropolitan police, which recently took control of the NPOIU, declined to comment.

Tue, Dec 1 2009

By Mohamed Ahmed

HARADHEERE, Somalia (Reuters) - In Somalia’s main pirate lair of Haradheere, the sea gangs have set up a cooperative to fund their hijackings offshore, a sort of stock exchange meets criminal syndicate.

Heavily armed pirates from the lawless Horn of Africa nation have terrorized shipping lanes in the Indian Ocean and strategic Gulf of Aden, which links Europe to Asia through the Red Sea.

The gangs have made tens of millions of dollars from ransoms and a deployment by foreign navies in the area has only appeared to drive the attackers to hunt further from shore.

It is a lucrative business that has drawn financiers from the Somali diaspora and other nations — and now the gangs in Haradheere have set up an exchange to manage their investments.

One wealthy former pirate named Mohammed took Reuters around the small facility and said it had proved to be an important way for the pirates to win support from the local community for their operations, despite the dangers involved.

“Four months ago, during the monsoon rains, we decided to set up this stock exchange. We started with 15 ‘maritime companies’ and now we are hosting 72. Ten of them have so far been successful at hijacking,” Mohammed said.

“The shares are open to all and everybody can take part, whether personally at sea or on land by providing cash, weapons or useful materials … we’ve made piracy a community activity.”

Haradheere, 400 km (250 miles) northeast of Mogadishu, used to be a small fishing village. Now it is a bustling town where luxury 4×4 cars owned by the pirates and those who bankroll them create honking traffic jams along its pot-holed, dusty streets.

Somalia’s Western-backed government of President Sheikh Sharif Ahmed is pinned down battling hard-line Islamist rebels, and controls little more than a few streets of the capital.

The administration has no influence in Haradheere — where a senior local official said piracy paid for almost everything.

“Piracy-related business has become the main profitable economic activity in our area and as locals we depend on their output,” said Mohamed Adam, the town’s deputy security officer.

“The district gets a percentage of every ransom from ships that have been released, and that goes on public infrastructure, including our hospital and our public schools.”

RISK VS REWARDS

In a drought-ravaged country that provides almost no employment opportunities for fit young men, many are been drawn to the allure of the riches they see being earned at sea.

Abdirahman Ali was a secondary school student in Mogadishu until three months ago when his family fled the fighting there.

Given the choice of moving with his parents to Lego, their ancestral home in Middle Shabelle where strict Islamist rebels have banned most entertainment including watching sport, or joining the pirates, he opted to head for Haradheere.

Now he guards a Thai fishing boat held just offshore.

“First I decided to leave the country and migrate, but then I remembered my late colleagues who died at sea while trying to migrate to Italy,” he told Reuters. “So I chose this option, instead of dying in the desert or from mortars in Mogadishu.”

Haradheere’s “stock exchange” is open 24 hours a day and serves as a bustling focal point for the town. As well as investors, sobbing wives and mothers often turn up there seeking news of male relatives missing in action.

Every week, Mohammed said, gang members and equipment were lost to the sea. But he said the pirates were not deterred.

“Ransoms have even increased in recent months from between $2-3 million to $4 million because of the increased number of shareholders and the risks,” he said.

“Let the anti-piracy navies continue their search for us. We have no worries because our motto for the job is ‘do or die’.”

Piracy investor Sahra Ibrahim, a 22-year-old divorcee, was lined up with others waiting for her cut of a ransom pay-out after one of the gangs freed a Spanish tuna fishing vessel.

“I am waiting for my share after I contributed a rocket-propelled grenade for the operation,” she said, adding that she got the weapon from her ex-husband in alimony.

“I am really happy and lucky. I have made $75,000 in only 38 days since I joined the ‘company’.”

• Bobbie Johnson, San Francisco
• Wednesday 27 January 2010 07.00 GMT

Just two weeks after Google said it was the victim of an organised hacking attack, details of a similar sting that targeted three of the world’s biggest oil companies have emerged.

Documents obtained by US newspaper the Christian Science Monitor show that the computer systems of three major energy companies – ExxonMobil, Marathon and ConocoPhillips – were hit by a string of attacks in 2008 aimed at stealing valuable information.

The strikes, which used precision phishing attacks to fool executives into bypassing security procedures, focused on “bid data”, the valuable information collected by the companies on new oil deposits and potential sites for future operations.

According to the Monitor’s investigation, the three companies – which are all based in Texas – were only made aware of the extent of the attacks following an FBI investigation.

None of the companies involved in have made a public comment, but security experts have warned in the past about the growing importance of cybersecurity.

A report late last year by US defence company Northrop Grumman suggested that American systems were being targeted by the Chinese government – which has invested heavily in its ‘informationised’ army.

“First, the values of information systems and networks have never been greater,” said Northrop Grumman’s chief technology officer Robert Brammer in December. “Second, cybersecurity threats have never been greater.”

Though precise details of the Texan attacks remain unclear, they bear similar hallmarks to those used in the strike on Google and more than 30 other American companies, which is now being dubbed Operation Aurora by internet security experts.

Aurora used a vulnerability in Microsoft’s Internet Explorer web browser to access some confidential information, while the Financial Times reported earlier this week that the hackers responsible had also used instant messaging programs to pose as the friends of Google employees in order to obtain protected data such as passwords.

As a result of the attacks, which are said to have originated in China, Google has threatened to protest by uncensoring its search engine in the country - a move that has threatened to escalate relations between Beijing and Washington towards a diplomatic standoff.

The origins of the oil company hackers are not known, but the newspaper said that at least some of the information was sent to computers in China.

It is far from the first time that major companies or systems have been the victim of hacking attacks. According to reports that emerged last year, hackers have targeted a number of major computer networks belonging to governments, private companies or other important schemes.

The $300bn Joint Strike Fighter project - a collaboration between countries including the United States, Britain, the Netherlands and Israel - is said to have been compromised, while the US electrical grid was also an apparent target.

News of the attacks on ExxonMobil and others also throws into relief comments made last week by Microsoft chief executive Steve Ballmer.

In a speech to oil industry executives in Houston, Ballmer scoffed at Google’s stance over the hacking attacks and suggested that information warfare was incredibly common.

“People are always trying to break into other people’s data,” he said. “There’s always somebody trying to break into Microsoft.”

Such attempted break-ins are part of the reason Barack Obama recently suggested that defending from internet attacks was “one of the most serious economic and national security challenges we face”.

That realisation led to the White House to appoint a new head of cybersecurity last month, while the British government is also planning to institute its own national cyber security centre to combat the growing threat of online warfare and criminal activity.

The defector who convinced the White House that Iraq had a secret biological weapons programme has admitted for the first time that he lied about his story, then watched in shock as it was used to justify the war.

Rafid Ahmed Alwan al-Janabi, codenamed Curveball by German and American intelligence officials who dealt with his claims, has told the Guardian that he fabricated tales of mobile bioweapons trucks and clandestine factories in an attempt to bring down the Saddam Hussein regime, from which he had fled in 1995.

“Maybe I was right, maybe I was not right,” he said. “They gave me this chance. I had the chance to fabricate something to topple the regime. I and my sons are proud of that and we are proud that we were the reason to give Iraq the margin of democracy.”

The admission comes just after the eighth anniversary of Colin Powell’s speech to the United Nations in which the then-US secretary of state relied heavily on lies that Janabi had told the German secret service, the BND. It also follows the release of former defence secretary Donald Rumsfeld’s memoirs, in which he admitted Iraq had no weapons of mass destruction programme.

The careers of both men were seriously damaged by their use of Janabi’s claims, which he now says could have been – and were – discredited well before Powell’s landmark speech to the UN on 5 February 2003.

The former CIA chief in Europe Tyler Drumheller describes Janabi’s admission as “fascinating”, and said the emergence of the truth “makes me feel better”. “I think there are still a number of people who still thought there was something in that. Even now,” said Drumheller.

In the only other at length interview Janabi has given he denied all knowledge of his supposed role in helping the US build a case for invading Saddam’s Iraq.

In a series of meetings with the Guardian in Germany where he has been granted asylum, he said he had told a German official, who he identified as Dr Paul, about mobile bioweapons trucks throughout 2000. He said the BND had identified him as a Baghdad-trained chemical engineer and approached him shortly after 13 March of that year, looking for inside information about Saddam’s Iraq.

“I had a problem with the Saddam regime,” he said. “I wanted to get rid of him and now I had this chance.”

He portrays the BND as gullible and so eager to tease details from him that they gave him a Perry’s Chemical Engineering Handbook to help communicate. He still has the book in his small, rented flat in Karlsruhe, south-west Germany.

“They were asking me about pumps for filtration, how to make detergent after the reaction,” he said. “Any engineer who studied in this field can explain or answer any question they asked.”

Janabi claimed he was first exposed as a liar as early as mid-2000, when the BND travelled to a Gulf city, believed to be Dubai, to speak with his former boss at the Military Industries Commission in Iraq, Dr Bassil Latif.

The Guardian has learned separately that British intelligence officials were at that meeting, investigating a claim made by Janabi that Latif’s son, who was studying in Britain, was procuring weapons for Saddam.

That claim was proven false, and Latif strongly denied Janabi’s claim of mobile bioweapons trucks and another allegation that 12 people had died during an accident at a secret bioweapons facility in south-east Baghdad.

The German officials returned to confront him with Latif’s version. “He says, ‘There are no trucks,’ and I say, ‘OK, when [Latif says] there no trucks then [there are none],’” Janabi recalled.

He said the BND did not contact him again until the end of May 2002. But he said it soon became clear that he was still being taken seriously.

He claimed the officials gave him an incentive to speak by implying that his then pregnant Moroccan-born wife may not be able to travel from Spain to join him in Germany if he did not co-operate with them. “He says, you work with us or your wife and child go to Morocco.”

The meetings continued throughout 2002 and it became apparent to Janabi that a case for war was being constructed. He said he was not asked again about the bioweapons trucks until a month before Powell’s speech.

After the speech, Janabi said he called his handler at the BND and accused the secret service of breaking an agreement that they would not share anything he had told them with another country. He said he was told not to speak and placed in confinement for around 90 days.

With the US now leaving Iraq, Janabi said he was comfortable with what he did, despite the chaos of the past eight years and the civilian death toll in Iraq, which stands at more than 100,000.

“I tell you something when I hear anybody – not just in Iraq but in any war – [is] killed, I am very sad. But give me another solution. Can you give me another solution?

“Believe me, there was no other way to bring about freedom to Iraq. There were no other possibilities.”

Paul Joseph Watson
Infowars.com
February 14, 2011

While talking heads like Glenn Beck continue to invoke the threat of radical Islam, they habitually ignore the blindingly obvious, that radical Islam is a creature of the US military-industrial complex. Case in point – the terrorist who trained the London bombers was a US informant and has been freed after serving only four and a half years of a possible 70-year sentence.

Citing his “exceptional co-operation,” in working with US authorities, a New York Judge released Mohammed Junaid Babar despite him pleading guilty to five counts of terrorism, an outcome that has, “Raised questions over whether Babar was a US informer at the time he was helping to train the ringleader of the 7 July tube and bus bombings,” reports the London Guardian.

Babar admits to consorting with high level “Al-Qaeda” terrorists, as well as “providing senior members with money and equipment, running weapons.” He also set up a training camp in Pakistan in 2003 where alleged 7/7 ringleader Mohammad Sidique Khan learned bomb-making techniques.

“Graham Foulkes, a magistrate whose 22-year-old son David was killed by Khan at Edgware Road underground station in 2005, said: “People get four and a half years for burglary. They can get more for some road traffic offences. So for an international terrorist who’s directly linked to the death of my son and dozens and dozens of people to get that sentence is just outrageous.”

But Babar’s release makes perfect sense given the fact that he was likely working for US authorities as an informant while training one of the alleged London bombers.

“A remark from the sentencing judge that Babar “began co-operating even before his arrest”, has raised the possibility, supported by other circumstantial evidence obtained by the Guardian, that he may have been an informant for the US government before his detention by the FBI in April 2004,” writes the Guardian’s Shiv Malik, who in a separate article goes into greater depth on how, “Babar may have been working for the US security services while pretending to be a jihadi – allegations that could imply serious failures to prevent the 7 July bombings.”

The Guardian article describes how a top US terrorism lawyer has seen sealed evidence in the case which “suggests Babar could have been working for the US authorities before his arrest in April 2004.”

“Having reviewed the court transcript himself, bereaved father Graham Foulkes said: “There’s a hint from one or two of the sentences [in the transcript] that do strongly suggest [Babar’s] co-operation was going well beyond his official arrest. And it looks as if the Americans may well have known in detail what Babar was up to in Pakistan [at the time] and that is a very, very serious matter.”

The fact that Babar has served less than 5 years for playing a crucial role in attacks which killed 52 people and injured hundreds more clearly indicates that he is being rewarded by US authorities for his involvement in the 7/7 bombings.

Lest we forget that the the so-called mastermind behind the 7/7 London bombings, Haroon Rashid Aswat, was a British intelligence asset. Former Justice Dept. prosecutor and terror expert John Loftus revealed that the so called Al-Muhajiroun group, based in London, had formed during the Kosovo crisis, during which fundamentalist muslim leaders (Or what is now referred to as Al-Qaeda) were recruited by MI6 to fight in Kosovo.

The revelations about Babar once again underscore the myopic and ludicrous assertions of people like Glenn Beck, who constantly invoke the threat of radical Islam, particularly in the context of recent events in Egypt, while failing to point out that radical Islam is being fostered and fomented by the US military-industrial complex.

Almost every single major terror plot over the last decade plus blamed on “radical Islam” has had the combined or individual fingerprints of US, British, Canadian and Israeli intelligence agencies and federal law enforcement bodies all over it.

9/11

Every single shred of evidence concerning the alleged 9/11 hijackers points to the fact that they were patsies controlled by informants working for the US government.

The US Special Operations Command’s Able Danger program identified the hijackers and their accomplices long before 9/11, but when the head of the program, Colonel Anthony Shaffer, tried to pass the information on to the 9/11 Commission, he was gagged and slandered and the vital information his team had passed on was ignored and buried.

Curt Weldon, Former U.S. Republican Congressman and senior member of the House Armed Services Committee, documented how the US government tracked the hijackers’ movements before 9/11.

Louai al-Sakka, the man who trained six of the hijackers, was a CIA informant. A number of the other alleged hijackers were trained at US air bases. In the months prior to 9/11, alleged hijackers Khalid Almidhar and Nawaf Alhazmi were renting rooms in a house owned and lived in by an FBI informant.

In a 2002 article entitled The Hijackers We Let Escape, Newsweek’s Michael Isikoff and Daniel Klaidman documented how, “The CIA tracked two suspected terrorists to a Qaeda summit in Malaysia in January 2000, then looked on as they re-entered America and began preparations for September 11.”

The fact that there were numerous Al-Qaeda affiliated terrorists involved in the pre-planning stages of 9/11 is unsurprising given former FBI translator Sibel Edmonds’ testimony that Bin Laden was working for the US right up until the day of 9/11.

On the very morning of 9/11, the money man behind the alleged hijackers, Pakistan’s ISI Chief Mahmoud Ahmad, was meeting with U.S. government and intelligence officials.

Indeed, even after 9/11, the so-called spiritual leader of the very hijackers who allegedly slammed Flight 77 into the Pentagon, Anwar al-Awlaki, was himself invited to dine with Pentagon top brass mere months after the attack.

UNDERWEAR BOMBER

Al-Awlaki was later involved in directing the underwear bomber, who was allowed to board the plane by order of the US State Department aided by a well-dressed man who got Abdulmutallab on the airliner despite the fact that he was on a terror watch list and had no passport. Eyewitness and Delta 253 passenger Kurt Haskell subsequently blew the whistle to state that Umar Farouk Abdulmutallab was given the bomb by the US government to create a pretext for the implementation of naked body scanners and boost the TSA’s budget.

FORT HOOD SHOOTING

Fort Hood shooter Army Maj. Nidal Malik Hasan repeatedly communicated with alleged Al-Qaeda leaders for nearly a year before his rampage. The FBI knew Hasan was sending emails to terrorists, but they did nothing, allowed him to remain on a U.S. Army base, and even invited him to participate in Homeland Security exercises. Hasan was also being handled by US agent Al-Awlaki.

FORT DIX

Lawyers in a case relating to the much vaunted 2007 terror plot to attack Fort Dix and kill “as many soldiers as possible” concluded that FBI informants were the key figures behind the operation and that the accused, six foreign-born Muslims, were merely bungling patsies. US agent Al-Awlaki was again involved in training the would-be terrorists.

TORONTO PLOT

The “Toronto 18? terrorists turned out to be “a bunch of incompetent guys who were primarily misled by a delusional megalomaniac”. The explosive fertilizer material the terrorist cell apparently planned to use was in fact purchased by an informant working for the Royal Canadian Mounted Police, agents of which had radicalized the group. US agent Al-Awlaki was again involved in the plot.

PORTLAND PLOT

The man accused of attempting to blow up a Christmas tree in Portland’s Pioneer Courthouse Square, Mohamed Osman Mohamud, was a befuddled patsy, groomed and radicalized from start to finish by the FBI as part of a radicalization and entrapment program. Shortly after news of the attempted bombing broke, it emerged that the FBI had provided Mohamud with a fake bomb, van, and cell phone (to be used as a detonator) in the incident, as well as thousands of dollars in cash at every step of the plot.

MUMBAI MASSACRE

The man accused of being the mastermind behind the 2008 Mumbai massacre, David Headley, was a US government informant and was also at one time on the payroll of the Central Intelligence Agency.

SHOE BOMBER

Hundreds of terror suspects have been convicted in civilian federal courts, including convicted shoe bomber Richard Reid who attended the Finsbury Park Mosque in North London. The Finsbury imam at the time was Abu Hamza al-Masri who began working with British Security Services in 1997.

MIAMI PLOT

In the media-lauded Miami terror case in 2007, the supposed ringleader Narseal “Prince Marina” Batiste “had heard of Al-Qaeda, but wasn’t sure what it stood for. The FBI instigators made Batiste swear loyalty to al-Qaida; then had him call on his local buddies to form an ‘Islamic army’ in Miami. None had military training. Some could barely read. But Batiste assured the group in the midst of its collective marijuana buzz of greatness ahead,” wrote Saul Landau.

These were the men who comedian John Stewart referred to as “seven dipshits in a warehouse” after Attorney General Alberto Gonzales had ludicrously told the press that the group of semi-retarded gang-bangers had planned to “wage a ground war against America”.

NEW YORK SYNAGOGUE BOMB PLOT

A group of so-called Muslim terrorists were busted in New York for supposedly planning to blow up synagogues in the Bronx and shoot down military airplanes flying out of the New York Air National Guard base. The men were provided with fake explosives and inactive missiles by an FBI informant, reported the Christian Science Monitor. Two of the ringleaders of the “deadly” plot which was endlessly hyped by the media turned out to be semi-retarded potheads, exactly as we had predicted would be the case due to the innumerable past cases with the exact same modus operandi.

I could go on for pages and pages listing details of ever major terror plot since and indeed before 9/11 that were blamed on “radical Islam” yet in fact turned out to be completely contrived by the FBI, CIA, Canadian or British authorities.

It is a glaring and manifestly provable fact that radical Islam is being manufactured and provoked by the US military-industrial complex in order to provide itself with an enemy to justify billions every year in weapons sales along with giant federal government slush funds that enrich the coffers of public-private partnerships while crushing the constitutional rights of American citizens.

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Glenn Beck is completely accurate when he says that radical Islam represents a direct threat to the future of freedom in the west. The ultimate “clash of civilizations” is a very real possibility. But by deliberately obscuring the fact that radical Islam is a creature of the US military-industrial complex, a bastard child of the new world order that is being strengthened by our own governments to be used as a weapon against us, Beck and others who regurgitate the same rhetoric are misleading Americans into thinking that radical Islam itself is the new world order, when in fact radical Islam is merely a tool of the new world order, being from its very inception completely owned and controlled by the US military-industrial complex.

by Aaron Saenz

February 12th, 2011

If you’re thinking of robbing a Las Vegas casino, and you’re not George Clooney, I have a word of advice: give up now. As Anthony Carleo recently found out, even if you leave the casino in one piece, the chips you stole are going to be worthless long before you make your get away. The 29 year old suspect is accused of robbing the Bellagio on December 14th of 2010, stealing chips whose face value totaled around $1.5 million dollars. Their real value, however, was zero. Thanks to RFID tags embedded inside them, the chips with denominations of $100 to $25,000 could be immediately deactivated rendering them unredeemable for cash value. Watch CCTV footage from the December 14th robbery in the video clip below, followed by the recent press conference from the Las Vegas Police concerning Carleo’s arrest. Stealing worthless chips and then getting caught trying to sell them to undercover officers? Danny Ocean this guy is not.

According to comments made to Minyanville by CHIPCO International, the casino chips used by Bellagio are typical of the industry. Highly specialized markings already make them hard to counterfeit, but embedded RFID tags allow casinos to track their every movement. If a chip is stolen, its ID can be associated with the theft in casino databases, preventing it from being redeemed for cash. Each high tech chip only costs about $2.50 to make, and they ensure that very little theft can succeed.

Actually, they do much more than that. RFID chips are a form of security, but they are also an amazingly precise way of measuring activity in the casino. The Bellagio and its competitors can track how much each table is making or losing, even verifying that dealers are handling each transaction correctly. They can log how much you spend, where you spend it, and use that information to keep you in the game longer with well timed drinks and services catered to your activity. If you’re using high-rolling chips you can almost guarantee that a casino knows what you’re up to. Turns out Big Brother is alive and well, playing craps in Las Vegas.

And he remembered to bring his video surveillance equipment. This short clip from the Bellagio robbery garnered international attention upon its release last year. You can see the suspect fleeing the scene with his motor cycle helmet disguise and less foresight than Mr. Magoo.
Carleo was arrested as the Bellagio robber on January 28th of this year. The Las Vegas Police were sparing on the details of his capture, but according to the Las Vegas Sun, he was taken into custody after officers arranged a sting. Having discovered that his chips were essentially worthless, he was attempting to sell the $25,000 ones to hapless dupes before Bellagio completely discontinued the denomination (an action which occurred last month).
I know what you’re thinking: Carleo was a fool. If you want to succeed in robbing a casino you have to avoid the chips and go for the cash. O ye of little paranoia, the future could see that possibility foiled as well. Current forms of currency tracking are meager in comparison to casino chips, but there’s no reason to think that RFID tags couldn’t easily be included, especially in large denomination bills. And let’s not forget that we’re moving towards non-currency forms of payments anyways. Credit cards are taking a larger and larger share of transactions, and we’ve seen how biometric technology like iris scans could replace your wallet with your body when it comes to paying even minuscule bills. Whether it’s a dollar bill or plastic, currency is going digital, and with that transformation comes all the tracking feats you can dream up; from anti-theft benefits to government tracking concerns. The currency of tomorrow will resemble modern casino chips more and more…if we don’t discontinue it outright.

But let’s not get too upset by that. As I just said, we’ve already made the leap towards digital tracking via our increased use of plastic as payment. There are dangers involved with that, but also some great benefits. I’ve been robbed via my credit card number three times. I never paid for a cent of those thefts because I could dispute payments with my bank/credit card company. If we start to adopt biometrically enhanced forms of ID and payment then concerns of identity theft could be lessened as well. Digital money can be scary, but it can also be a great way to insulate consumers from theft.

As Carleo’s misadventure at the Bellagio goes to show, casinos aren’t the easy-targets some may think they are. The same technology that makes Las Vegas resemble Fort Knox could spread to all forms of cash. If RFID doesn’t curb robbery, then biometrics might. Crime is paying less and less everyday. Which is why Clooney should make his next Ocean’s movie very soon.

Monday, 14 February 2011

By Jerome Taylor

Renowned astrophysicist Stephen Hawking once remarked that humankind would need to colonise space within the next century if it was to survive as a species.

“It will be difficult enough to avoid disaster in the next 100 years, let alone the next thousand or million,” he said somewhat pessimistically last year. “Our only chance of long-term survival is not to remain inward-looking on planet Earth, but to spread out into space.”

The prospect of long-term space travel has led scientists to consider, increasingly seriously, the following conundrum: if travelling to a new home might take thousands of years, would humans be able to successfully procreate along the way? The early indications from Nasa are not encouraging. Space, it seems, is simply not a good place to have sex.

According to a review by three scientists looking into the feasibility of colonising Mars, astronauts would be well advised to avoid getting pregnant along the way because of the high levels of radiation that would bombard their bodies as they travelled through space.

Without effective shielding on spaceships, high-energy proton particles would probably sterilise any female foetus conceived in deep space and could have a profound effect on male fertility. “The present shielding capabilities would probably preclude having a pregnancy transited to Mars,” said radiation biophysicist Tore Straume of Nasa’s Ames Research Center in an essay for the Journal of Cosmology.

The DNA which guides the development of all the cells in the body is easily damaged by the kind of radiation that would assail astronauts as they journeyed through space. Studies on non-human primates have shown that exposure to ionising radiation kills egg cells in a female foetus during the second half of pregnancy. “One would have to be very protective of those cells during gestation, during pregnancy, to make sure that the female didn’t become sterile so they could continue the colony,” Dr Straume said.

Radiation in space comes from numerous sources but the two types that have Nasa scientists most concerned are solar flares and galactic cosmic rays. Flares are the result of huge explosions in the Sun’s atmosphere that catapult highly charged protons across space. The Earth’s atmosphere and magnetic field absorbs much of this harmful radiation – but in space astronauts are much more vulnerable.

Galactic cosmic rays pose an even greater threat. They are made up of even heavier charged particles. Although Nasa’s shields can protect astronauts against most flare radiation, it is unlikely they could do the same against cosmic rays. Until recently, sex had been a taboo subject for Nasa, which has a strict code of conduct stating that “relationships of trust” among astronauts are to be maintained at all times. Only once has a husband and wife been on the same mission – Jan Davis and Mark Lee – and they have remained tight-lipped over whether they joined the 62-mile high club.

Hackers have run rampant through the networks of at least five oil and gas firms for years, reveals a report.

Compiled by security firm McAfee, it details the methods and techniques the hackers used to gain access to the unnamed multinational firms.

Via a combination of con tricks, computer vulnerabilities and weak security controls, the attackers gained access and stole secrets, it says.

The hackers targeted documents about oil exploration and bidding contracts.

Cashing inGreg Day, director of security strategy at McAfee, said that the attacks used to break into all the networks were built around code and tools widely available on the net’s underground.

As such, he said, they were not very sophisticated but that did not dent their effectiveness.

In its report detailing what it dubbed the Night Dragon attacks, McAfee said the series of co-ordinated attempts to penetrate at least a dozen multinational oil, gas and energy companies began in November 2009. Five firms had confirmed the attacks, said McAfee.

In a long-running campaign, the attacks continued and the hackers methodically worked to penetrate the computer networks of these firms.

The first stage of the attack was to compromise the external server running a company’s website. Hacker tools were then loaded on the compromised machine and used to lever open access to internal networks. Then, cracking tools were used to gather usernames and passwords and get deeper access.

Once embedded, the hackers disabled internal network settings so they could get remote access to machines on the corporate networks. Via this route, sensitive documents, proprietary production data and other files were found and pilfered.

McAfee said the information stolen was “tremendously sensitive and would be worth a huge amount of money to competitors”.

The concerted attacks on oil firms resemble other specific attacks such as Stuxnet which targeted Iran

Rik Ferguson, director of security research at Trend Micro said the information gathered by McAfee showed this was not a run-of-the-mill incident.

“The intrusions were multi-staged, multi-vector, pervasive and sustained,” he said.

Mr Ferguson said most companies would admit that “they come under sustained attack all the time.”

“The difficulty is in separating out the white noise of script-kiddies, hobbyists and automated malware infection routines from the targeted intrusion attempts.

McAfee’s Mr Day said corporates were going to have to get much better at analysing the attacks hitting them if they were to avoid falling victim in a similar way.

“We have had a decade of cyber crime all about ‘write it, randomly spray it and see who falls foul’,” he said. “In the next decade many attacks will have a more specific purpose and they will keep going until they are successful.”

The attacks seemed to have a motive in common with that behind the Operation Aurora attacks on Google in China and the Stuxnet virus, which targeted industrial plant and machinery, and is thought to have been designed to attack Iran’s nuclear programme.

It was not clear if the Night Dragon attacks were state-sponsored, said Mr Day. Circumstantial evidence, such as the fact that all the attack activity took place during the Chinese business day, suggested China was involved but it was by no means conclusive.

Equally, the fact that during its investigation McAfee uncovered the identity of one individual based in China who provided invaluable aid and computer resources to those behind the attacks did not mean everything was backed by China.

The clues could be misdirection, said Mr Day.

“The attackers did not seem to be at all careful in covering their trail,” he said. “Was that just they were not that skilled or were they trying to leave a bread crumb trail to paint a false picture?”

You would almost need to be disconnected from the Internet to not know about Aaron Barr, the CEO of HBGary Federal, feeling the wrath of Anonymous after Barr told of his intentions to expose the leaders of Anonymous at an upcoming Security B-Sides conference. But today, WikiLeaks published a document called “The WikiLeaks Threat” [PDF] which revealed two other intelligence firms, besides HBGary, were working to develop a strategic plan of attack against WikiLeaks on the behalf of Bank of America.When I saw that, I wanted to relate what I saw in the proposal.

“The WikiLeaks Threat” outlines a plan by three private data intelligence firms, Palantir Technologies, HBGary Federal, and Berico Technologies, which were hired to effectively combat and attack WikiLeaks. The intel firms were “acting upon request from Hunton and Williams, a law firm working for Bank of America.” According to The Tech Herald, “Hunton and Williams were recommended to Bank of America’s general council by the Department of Justice. Hunton and Williams would act as outside counsel on retainer, while Palantir would take care of network and insider threat investigations. For their part, Berico Technologies and HBGary Federal would analyze WikiLeaks.”

The Bank of America drama started when The New York Times wrote that Assange said he planned to “take down” a major American bank and use data off an executive’s hard drive to reveal an “ecosystem of corruption.” At that point, Bank of America began an internal investigation with the help of consulting firm Booz Allen Hamilton, “scouring thousands of documents,” and looking for any systems that had been compromised. The NYTimes reported that the Bank of America “has also sought advice from several top law firms about legal problems that could arise from a disclosure, including the bank’s potential liability if private information was disclosed about clients.”

The “The WikiLeaks Threat” proposal published today on WikiLeaks begins with an overview of WikiLeaks, including history and profile of Julian Assange and an organizational chart with names of staff and volunteers.

Page five is dedicated to Glenn Greenwald, Salon.com columnist, mentioning how “this level of support needs to be disrupted…Without the support of people like Glenn wikileaks would fold.” The Tech Herald points out that earlier drafts of this proposal and an email from Aaron Barr used the word “attacked” instead of “disrupted.”

The proposal goes on to lists the strengths and weakness of WikiLeaks. By page 14, it talks of “potential proactive tactics” such as “submitting fake documents to WikiLeaks and then calling out the error.” The proposal continued, “Create concern over the security of the infrastructure…Cyber attacks against the infrastructure to get data on document submitters.” There is a screenshot of page 14 below.

On page 15, “Speed is crucial!” the proposal stated. The expertise of Palantir Technologies, HBGary Federal, and Berico Technologies was listed and then, “They can be deployed tomorrow against this threat as a unified and cohesive investigative analysis cell.”

The next several pages of the proposal highlight the strengths of these data intelligence firms before a conclusion. “In the new age of mass social media, the insider threat represents an ongoing and persistent threat even if WikiLeaks is shut down. Traditional responses will fail; we must employ the best investigative team, currently employed by the most sensitive of national security agencies.”

Pages 21 - 24 include slides titled, “Rapid Search, Massive Scale,” “Visualize Networks and Relationships,” “Detailed Attack Vector Analysis,” and “Geospatial Analysis.”

On WikiLeaks, it calls attention to these proposed attack actions:

• Feed the fuel between the feuding groups. Disinformation. Create messages around actions of sabotage or discredit the opposing organizations. Submit fake documents and then call out the error.
• Create concern over the security of the infrastructure. Create exposure stories. If the process is believed not to be secure they are done.
• Cyber attacks against the infrastructure to get data on document submitters. This would kill the project. Since the servers are now in Sweden and France putting a team together to get access is more straightforward.
• Media campaign to push the radial and reckless nature of WikiLeaks activities. Sustain pressure. Does nothing for the fanatics, but creates concern and doubt among moderates.
• Search for leaks. Use social media to profile and identify risky behavior of employees.

So, I’m wondering . . . what does Assange have on Bank of America to prompt such a proposal? If this proposal is true, then Bank of America was hiring private intel firms to hack, whack and attack WikiLeaks? Is the FBI going to look into this, I wonder, like it is investigating Anonymous for attacking sites? Allegedly, the Department of Justice recommended Hunton and Williams to Bank of America. The proposal states, “we must employ the best investigative team, currently employed by the most sensitive of national security agencies.”

The whole thing leaves me with nothing but questions.

By Michael Cooney, on 02-10-2011 22:46

Published in : Agenda, Social Engineering

Views : 189

Since it sounds like a not-so-basic- science fiction script, you won’t be surprised that the scientific masterminds at the Defense Advanced Research Projects Agency are behind it. 

DARPA in a nutshell wants to know about how stories or narratives or whatever might like to call them influence human behavior. To this end, DARPA is hosting a workshop called “Stories, Neuroscience and Experimental Technologies (STORyNET): Analysis and Decomposition of Narratives in Security Contexts,” on Feb. 28^th to discuss the topic.

“Stories exert a powerful influence on human thoughts and behavior. They consolidate memory, shape emotions, cue heuristics and biases in judgment, influence in-group/out-group distinctions, and may affect the fundamental contents of personal identity. It comes as no surprise that these influences make stories highly relevant to vexing security challenges such as radicalization, violent social mobilization, insurgency and terrorism, and conflict prevention and resolution. Therefore, understanding the role stories play in a security context is a matter of great import and some urgency,” DARPA stated. “Ascertaining exactly what function stories enact, and by what mechanisms they do so, is a necessity if we are to effectively analyze the security phenomena shaped by stories. Doing this in a scientifically respectable manner requires a working theory of narratives, an understanding of what role narratives play in security contexts, and examination of how to best analyze stories-decomposing them and their psychological impact systematically.”

According to DARPA, STORyNET has three goals:

1. To survey narrative theories. These empirically informed theories should tell us something about the nature of stories: what is a story? What are its moving parts? Is there a list of necessary and sufficient conditions it takes for a stimulus to be considered a story instead of something else? Does the structure and function of stories vary considerably across cultural contexts or is there a universal theory of story?

2. To better understand the role of narrative in security contexts. What role do stories play in influencing political violence and to what extent? What function do narratives serve in the process of political radicalization and how do they influence a person or group’s choice of means (such as violence) to achieve political ends? How do stories influence bystanders’ response to conflict? Is it possible to measure how attitudes salient to security issues are shaped by stories?

3. To survey the state of the art in narrative analysis and decomposition tools. How can we take stories and make them quantitatively analyzable in a rigorous, transparent and repeatable fashion? What analytic approaches or tools best establish a framework for the scientific study of the psychological and neurobiological impact of stories on people? Are particular approaches or tools better than others for understanding how stories propagate in a system so as to influence behavior?

Whether or not STORyNET goes beyond deep discussions at a workshop remains to be seen, but DARPA is certainly interested in developing such thought machines. In 2008 it said it wanted to build avant-garde artificial intelligence (AI) software known as a Machine Reading Program (MRP) that can capture knowledge from naturally occurring text and transform it into the formal representations used by AI reasoning systems.

For example, all of the text in the World Wide Web will become available for automating the monitoring and analysis of technological and political activities of nations; plans, rhetoric, and activities of transnational organizations; and scientific discovery within various disciplines, DARPA stated. As digitized text from library books becomes available, new avenues of cultural awareness and historical research will be enabled. With truly general techniques for effectively handling the incompatibilities between natural language and the language of formal inference, a system could, in principal, be constructed that maps between natural and formal languages in any subject domain, DARPA said.

DARP also has its Cyber Genome Program it hopes will develop technologies that will help law enforcement types collect, analyze and identify all manner of digital artifacts.

The objective of the four-year program is to produce revolutionary cyber defense and investigatory technologies for the collection, identification, characterization, and presentation of properties and relationships from software, data, and/or users to support law enforcement, counter intelligence, and cyber defense teams, DARPA stated. Such digital artifacts may be collected from computers, personal digital assistants, and/or distributed information systems such as cloud computers, from wired or wireless networks, or collected storage media. The format may include electronic documents or software to include malware, DARPA stated.

Kevin Carmichael

Washington— Globe and Mail Update

Posted on Thursday, February 10, 2011 2:22PM EST

A proxy of the currencies that matter is the International Monetary Fund’s Special Drawing Right, or SDR, whose value is determined by a basket that includes the dollar, the euro, the pound and the yen.

Towards the end of last year, the fund opted to leave the composition of the SDR unchanged. That decision surprised some. Given China’s dominance of world trade, it seemed logical to include the yuan in the group. There was some speculation in foreign exchange markets that the newly strong Canadian dollar might be added.

A new report by the IMF suggests that it will be only a matter of time before the fund gets itself a bigger basket. The paper is called “Enhancing International Monetary Stability – A Role for the SDR?” and was released Thursday in conjunction with a discussion on the international monetary system at IMF headquarters in Washington.

The paper makes specific mention of the debate over including the yuan, also called the renminbi, in the SDR basket. The yuan was excluded because the Chinese government strictly controls the number of renminbi allowed to circulate outside the county. To be in the SDR basket, a currency is supposed to be “freely usable.”

But IMF staff members are now questioning whether that needs to be the case. The report notes the Chinese government is slowly allowing more non-residents, including central banks, to hold yuan-denominated deposits. The gradual development of renminbi derivatives in Hong Kong could, eventually, help deal with technical issues related to hedging exposure to currencies in the SDR basket – key if the SDR is to have a bigger role in foreign-exchange markets, as some, including IMF Managing Director Dominique Srauss-Kahn, would like.

Why does this matter? Including the Chinese currency in the SDR basket is seen as a way to coax the government into playing a bigger role in the international monetary system. It was China’s central bank governor who rekindled interest in the SDR by musing in 2009 that the IMF’s unit of exchange could be used to help calm volatility in currency markets. The inclusion of the yuan in the SDR basket could also be an important step in convincing private investors to take SDRs seriously because they would offer a means to get exposure to the Chinese currency.

The SDR was conceived in 1969 as an international currency, but never got off the ground. Have times changed? Stay tuned: we’re about to find out.

Harper and President Barack Obama shake hands at a joint news conference in the Eisenhower Executive Office Building after their meeting at the White House Friday. (Sean Kilpatrick/Canadian Press)

Canada and U.S. match up better than any countries on Earth: Obama

Last Updated: Friday, February 4, 2011 | 11:13 PM ET

A new Canada-U.S. agreement on border security won’t jeopardize Canadian sovereignty, Prime Minister Stephen Harper said Friday in Washington.

At the end of meetings with U.S. President Barack Obama, Harper said Canada’s sovereignty isn’t in question. “Our objective here is to make sure Canadians are safer and more secure.”

His comments came after he and Obama signed a deal that will lead to the two countries co-operating on ways to use technology to design a smarter border that remains open to trade and economic growth, but closed to security risks.

In announcing a joint declaration on the border, Obama said he and Harper “agreed to a new vision for managing our shared responsibilities, not just at the border but beyond the border.”

The president pointed to three initiatives:

• Better border security using better screening, new technologies, and information sharing among law-enforcement agencies. That also means ensuring a free flow of goods and people, keeping in mind the president’s goal of doubling U.S. exports.
• Creation of a new council to sweep away outdated regulations that stifle trade and job creation.
• Unspecified ways “to promote trade and investment from clean energy partnerships [and] the steps Canada can take to strengthen intellectual property rights.”

Harper touched on sovereignty several times at the post-meeting press conference. “We are not talking about eliminating the border,” he said, “but rather simplifying wherever possible the management of the border as well as the free flow of people and goods across that border.”

In Ottawa, Liberal Leader Michael Ignatieff decried the lack of specifics.

“Canadians want to travel freely across the border,” he said, “but the question is, how much information about ourselves are we being asked to surrender to American authorities? No one can tell us. This is why the secrecy of this deal is troubling.”

For his part, Obama sounded optimistic about the possibilities of improving the way the Canada-U.S. border is managed.

Obama: optimistic about the possibilities. (Sean Kilpatrick/Canadian Press)“Obviously Canada and the United States are not going to match up perfectly on every measure with respect to how we balance security issues, privacy issues, openness issues,” he said. “But we match up more than probably any country on Earth.”

Canadian officials have long been concerned that enhanced security after the Sept. 11, 2001, attacks on the United States would hinder the flow of daily trade between the two countries along the border.

The issue has raised concerns over sovereignty, privacy, and how much information Canada is willing to share with the U.S.

“They want as much as we can give them, and we’re not going to give them as much as they want,” Colin Robertson, the former Canadian diplomat who has been consulting with the Harper government on the issue, told The Canadian Press.

“Homeland Security wanted access to all migration records and a whole bunch of other stuff. We said no,” Robertson said.

In the House of Commons on Friday, opposition MPs accused the government of keeping the perimeter security negotiations under wraps.

“Today in Washington, the prime minister is continuing a pattern of talking to American officials about a perimeter security deal he won’t even admit exists,” Liberal MP Brian Murphy said.

‘We are not talking about eliminating the border,’ Prime Minister Stephen Harper says. (Sean Kilpatrick/Canadian Press)“Why won’t the Conservatives tell us about this deal? Is it because every other time they’ve negotiated with the Americans on softwood lumber, on ‘Buy America,’ on $16-billion fighter jets, Canadians have gotten a bad deal?”

Government House leader John Baird replied, “[Conservatives] will always put Canada’s interests first .… That means keeping our shared border open to trade, open to investment, and closed to security and terrorist threats.”

Bloc Québécois MP Pierre Paquette called a security perimeter deal “desirable,” but asked why the government would move so quickly with the White House when “neither parliamentarians nor the population have had any access to any information whatsoever regarding this debate.”

‘A little democracy’

The NDP has been pushing for a Commons debate on the issue.

“All we’re asking for is a little democracy,” NDP MP Paul Dewar said in question period. “[Harper] hasn’t informed Canadians what he’s up to and he hasn’t consulted this House.”

The issue has been a hot political topic since a U.S. government watchdog called Canada-U.S. border security “unacceptably ineffective” in a report released on Tuesday. Later that day, PMO spokesman Dimitri Soudas announced that Harper would be travelling to the U.S. to meet with Obama.

Liberal Leader Michael Ignatieff then accused Harper of “talking with President Obama about things he’s not prepared to talk to Canadians about.”

‘Americans continue to slag Canadians as terrorists and they go uncontested every single day.’— NDP MP Brian Masse

Robertson told The Canadian Press the government should be keeping other parliamentarians and politicians in the loop.

“Concerns over privacy, standards and sovereignty need to be assuaged and the case made for how the initiative serves the national interest,” he wrote in a forthcoming report for the Canadian Defence and Foreign Affairs Institute and the Canadian International Council. “Mr. Harper needs to confide in Mr. Ignatieff and the premiers.”

Since the release of the U.S. government watchdog’s report, opposition MPs have accused the government of not doing enough to stand up to the U.S.

“Every deal this prime minister has made has led to a thicker border, not a thinner one,” NDP MP Brian Masse said. “American politicians continue to slag Canadians as terrorists and they go uncontested every single day.”

And on Wednesday, Liberal MP Martha Hall Findlay accused the government of “negotiating a secret agreement with the U.S. on the border” while Joe Lieberman, one of two prominent U.S. senators who called for greater co-ordination of U.S. and Canadian security agencies in the wake of the report, “dragged our national reputation through the mud.”

International Trade Minister Peter Van Loan said he expects the talks to be productive and that the government knows what it’s doing.

“We have a very positive relationship with the Obama administration,” Van Loan told The Canadian Press. “We have the same risks in common, but we also have the same interest in keeping our economies and our trading relationship moving forward positively.”

Passed to the Telegraph by WikiLeaks

9:10PM GMT 04 Feb 2011

Ref ID: 09LONDON1451

Date: 6/19/2009 14:09

Origin: Embassy London

Classification: CONFIDENTIAL//NOFORN

Destination: 09LONDON1399

Header: VZCZCXRO4201PP RUEHDBU RUEHFL RUEHKW RUEHLA RUEHNP RUEHROV RUEHSL RUEHSRDE RUEHLO #1451/01 1701409ZNY CCCCC ZZHP 191409Z JUN 09FM AMEMBASSY LONDONTO RUEHC/SECSTATE WASHDC PRIORITY 2674INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITYRUEHBJ/AMEMBASSY BEIJING PRIORITY 1184RUEHMO/AMEMBASSY MOSCOW PRIORITY 2926RUEATRS/DEPT OF TREASURY WASHDC PRIORITYRHEHNSC/NSC WASHDC PRIORITY

Tags: EFIN,ECON,UK

C O N F I D E N T I A L SECTION 01 OF 03 LONDON 001451 NOFORN SIPDIS E.O. 12958: DECL: 06/19/2019 TAGS: EFIN, ECON, UK SUBJECT: LONDON-BASED EXPERTS AGREE THE U.S. DOLLAR WILL MAINTAIN ITS RESERVE STATUS REF: LONDON 1399

1.(C/NF) SUMMARY: Despite the decline in the dollar share of global FX reserves over the past decade and recent debates on the creation of a new global reserve currency, the U.S. dollar’s reserve status remains in-tact. Gains made by its nearest rivals–the euro, pound sterling, and yen–over the same period have not come at the expense of the dollar. Currency experts at HSBC and Deutsche Bank stressed to ECONOFFs during recent meetings the dollar’s principal reserve position took time to build up and would require a long time to change. They agreed recent proposals to make the SDR a global reserve currency lacked viability. The dollar’s trend decline, coupled with smaller developed currencies as well as emerging market currencies gaining importance, suggested greater diversification in terms of currency composition of central bank holdings instead of full displacement of the dollar. Longer term, an economic order based on a multiple reserve currency system is a possibility. End Summary.

Consensus on Dollar Maintaining Reserve Currency Status ——————————————— ———-

2.(C/NF) Along with other London-based financial experts (reftel London 1399), senior currency strategists agree the replacement of the dollar as the global reserve currency is unlikely. During meetings on June 16 with ECONOFFs, both David Bloom of HSBC and Henrik Gullberg of Deutsche Bank cited that IMF data on FX reserves indicated the dollar maintained a significant share of world reserves by a large margin from 2001 to 2008 and noted, more importantly, the data captured changes in FX reserve composition by central banks during a period of intense financial market volatility and when some central banks intervened to support their domestic currencies. Both FX experts maintained the dollar’s nearest rivals–the euro, pound sterling, and yen–failed to gain significant ground over the same period. The dollar share of total holdings of FX reserves fell from 71.5 percent in 2001 to 64 percent in the final quarter of 2008 but still accounted for more than twice the euro holdings, sixteen times more than pound sterling holdings, and twenty times more than yen holdings. Put simply, Bloom told us, the decision to hold a reserve currency is a very political decision; central banks consider the economic and political influence of a country and also its political and default risks. At the end of the day, Bloom said, people still want their long-term investments, such as pension funds, invested in dollars because the U.S. provides the safest investment. Gullberg noted Bank of Qternational Settlements (BIS) data on FX turnover, albeit lagged, revealed some smaller developed currencies–Australian and New Zealand dollar and the Swedish krona–as well as some emerging currencies–the Hong Kong dollar and Polish Zloty, for example–have increased in importance, though from a low level. Given currencies, rankings as official reserves typically parallel their status in international trade, this development might mean official reserves also will become more diversified says Gullberg; but it does not suggest displacement of the dollar.

3.(C/NF) In their May 2009 Currency Outlook, HSBC analysts argue even if the world continues to switch from the dollar to the euro at the rate of one percent per year, it would take 30 years for the two currencies to be held in equal proportions. For the euro or one of the dollar’s nearest rivals to overtake the it as the main reserve currency, a significant number of changes would need to take place; in particular, there would have to be some material loss of confidence in the dollar as a store of value and a loss of confidence in the U.S. economy. Gullberg also stressed to us the euro was still a “fresh experiment” and problems in peripheral euro-area countries may drag it down.

4.(C/NF) Gullberg told us the longer term risk to the dollar’s reserve status is inflation–more specifically if the U.S. faces sustained high inflation relative to other major economies, market and trade participants might be tempted to use another store of value. However, he stressed there has been no real evidence of inflation risk. Recent talk about exit strategies suggest the Federal Reserve and other central banks are aware of the longer-term inflationary consequences of running an expansionary policy for too long. Special Drawing Right (SDR) Proposals Lack Credibility ——————————————— ——— LONDON 00001451 002 OF 003

5.(C/NF) During the meeting with ECONOFFs, Bloom called discussions of the SDR as a reserve currency fanciful. He argued while some G20 members have raised the idea of replacing the dollar with the SDR, actual implementation would be incredibly complicated and therefore, he attached extremely low probability to the switch. He viewed the recent SDR proposals as political posturing rather than financial reality. In practical terms, it is difficult to suddenly and dramatically change the status quo of reserve ownership, he said. Gullberg also questioned the credibility of discussions of changing the SDR basket. He asserted a basket which included the Russian ruble and Chinese yuan would add to appreciation pressure, at the margin, on their own currencies because countries would be accumulating each others’ currency. Currently the SDR’s exchange rate is determined by a basket of currencies that include the dollar, yen, and pound sterling. The IMF is expected to review the basket in November 2010. (Comment: According to press reports, President Dmitry Medvedev recently urged the IMF to expand the currency basket of SDRs to include the Chinese yuan, commodity currencies, and gold as part of the process of the SDR maturing into a reserve currency.)

6.(C/NF) If the SDR became the world’s reserve currency, the composition of reserves would have to change materially says Bloom. Using the current dollar share as a starting point, HSBC analysts in their May 2009 currency outlook, posit shifting the 64 percent to an SDR proportion of dollars at the current exchange rate would mean central banks would have to cut the weight of the dollar by 22 percent, i.e. sell roughly 1.5 trillion dollars, assuming central banks hold 4.3 trillion of dollars in reserves now. (Comment: The SDR is comprised of fixed currency amounts, not fixed currency weights and the currency weights change on a daily basis because the value of the currencies within the SDR change. The IMF reviews the currency amounts every five years.) The sale would be made up by the ownership of the euro, yen, and pound sterling. As the fixed dollar amounts remain unchanged in the SDR, one would have to sell more dollars as the dollar fell in value. If the shift to the SDR precipitated a 20 percent drop in the dollar’s value, the amount of dollars sold would have to rise to $2.5 trillion because of the falling weight of the dollar in the SDR as the dollar depreciates. Using this example, analysts argue the reality of a shift away from the U.S. dollar is implausible. Jawboning by Russian officials? ——————————

7.(C/NF) Timothy Ash, Head of CEEMEA Research at the Royal Bank of Scotland, commented about mixed signals from policymakers in Russia on Moscow’s developing alternative reserve currencies in his June 16 report. He maintained Russian officials had been pushing for alternatives to the dollar as the global reserve currency for months, in part to use the global financial crisis as a means to further challenge the U.S. global hegemony since the collapse of the Soviet Union in the early 1990s. Recent comments by Russian Finance Minister Kudrin suggesting the dollar’s dominance as the global reserve currency would remain for some time and the dollar’s fundamentals were still “fine” potentially implied a change of tack from Moscow. However, Ash argued Russian President Medvedev and Senior economic advisor Arkady Dvorkovich appeared to distance themselves from Kudrin,s remarks and suggested the long-term goal was still to diversify the range of global reserve currencies. Ash contends the jawboning by Russian officials has refocused market and broader political attention on the BRIC summit and underscored Russian and BRIC influence over bigger picture dollar trends. Russia’s mission remains to push forward alternatives to the majors as reserve currencies. World of Multiple Reserve Currencies A Possibility, Down the Road ——————————————— ————–

8.(C/NF) While the SDR proposal may seem implausible, Bloom sees the potential in the distant future, with open markets, of a multiple reserve currency system with the dollar, euro and Chinese yuan sharing reserve currency status. There would naturally be winners and losers in such a system with the single reserve currency losing some status relative to the new entrants but it would not imply full displacement of the previous single reserve currency (i.e. the U.S. dollar). Bloom likened the debate to the one on which would become a bigger financial center–Hong Kong or Singapore. He argued history has proven there is room for both; therefore a world LONDON 00001451 003 OF 003 with multiple reserve currencies is possible if critical mass in markets creates the environment. Gullberg, however, argues a multiple reserve currency scheme takes away the benefit of having a reserve currency in the first place. Professor Danny Quah of the London School of Economics suggested to us during a June 16 meeting that China may not be ready to have the yuan serve as an international reserve currency and highlighted the concerns about China’s currency appreciating too quickly. Despite talk about boosting domestic demand, China remains an export-led economy; a rapid appreciation would lead to a loss in export competitiveness. As a holder of $700 billion of U.S. debt, rapid appreciation would yield 25 percent loss in real wealth. Mixed Views on Chinese Efforts to Promote Yuan Internationalization ——————————————— —-

9.(C/NF) Experts are divided on the effectiveness of Chinese efforts to promote the use of the yuan internationally. Professor Quah posited recent efforts to promote yuan use regionally were a good “testing the water” step for greater international usage. China’s trade with East and Southeast Asia is double that with the West so settling transactions in the yuan may help relieve pressure within the region. Gullberg, on the other hand, calls Chinese efforts to use the yuan in trade unrealistic and was not confident its trade partners would sign on to conduct transactions in it. HSBC analysts, in their May 2009 outlook, noted widespread take up of the option to settle in yuan would depend on the specifics of the policy. Pent-up demand among Hong Kong firms whose main business is centered on the mainland should give the scheme some critical mass at early stages. Firms conducting international trade are likely to be more worried about the risk management flexibility that comes with the currency denomination; consequently, the regulations will need to offer some reasonable degree of yuan convertibility to make it sustainably attractive.

Arlington, Texas (CNN) — The teams are in Texas, practicing and mentally preparing for game day. Not the Green Bay Packers or the Pittsburgh Steelers, but the dozens of security teams that have been brought in from all over the country to keep the Super Bowl safe.

With more than 100,000 people expected to attend the game, and an estimated worldwide television viewership of 110 million, the Super Bowl could be a tempting terror target. Though officials say there is no specific, credible information indicating there is a threat to the game, they have spent more than two years planning its protection.

“We’ve got redundancy built into this. We have planned and planned and planned,” says Milt Ahlerich, vice president of security for the National Football League.

Jerry Jones, the owner of the Dallas Cowboys, says he spent millions of dollars building security into the stadium where the game will be played.

“In these current times you would be shortsighted, really, not to have gone to the nth degree to design security and security equipment and security areas … and this stadium represents that,” Jones says.

There are perches for law enforcement snipers, according to Jones, and a system of surveillance cameras that can record almost every inch of the stadium. Multiple entrances also help to facilitate faster security screening and faster evacuation, if necessary.

People attending the Super Bowl can expect the kind of screening they might get at an airport, including magnetometers and pat-downs. Large items like backpacks are banned, as are camera and binocular cases, and umbrellas.

During the game the airspace for a 30-mile radius over the stadium will be restricted and patrolled by NORAD fighter jets.

Bomb-sniffing dogs, gun-toting police and officers trained to detect suspicious behavior are part of the Transportation Security Administration teams already deployed on the region’s DART transit system.

Teams from the National Nuclear Security Administration will rove the city with equipment to detect radioactive isotopes that could be emitted by a dirty bomb. NNSA’s Debbie Wilber says the administration’s sensors picked up 10 hits at the 2010 Super Bowl. Every one turned out to be harmless — the result of nuclear medicine.

Though much of the security on Super Bowl Sunday will not be visible, a recent media day showcased the resources that will be on hand: chemical and biological detection devices, bomb-retrieving robots, high-tech weaponry, and even a small unmanned aerial vehicle equipped with a camera that could fly inside the stadium if necessary.

The NFL estimates the price tag for securing the game is $10 million. The NFL will pick up half.

The recent Tucson shootings and a rash of homegrown terror incidents have heightened concerns about the possibility of an attack by a so-called lone wolf. To help counter that possibility, Homeland Security Secretary Janet Napolitano and the NFL launched the latest “If You See Something Say Something” campaign this week. It encourages the public to report suspicious activity.

The campaign slogan will be displayed during the game on huge video boards over the field. Public service announcements are also prominently displayed at the Dallas/Fort Worth International Airport and on the local DART transit system.

James Spiller, chief of the DART police department, says he is still anxious.

“The biggest concern always is that people see something and don’t say anything. We need their input to let us know what is happening,” he said.

Napolitano toured Cowboys Stadium this week and met with federal, state and local officials. Afterwards, she declared, “Security here is great. The planning is thorough.”

Among those who will be at the game Sunday: officials in charge of security for the 2012 Super Bowl. Their planning is already well under way, though the first game of the season is still months away.

December 11, 2010

By LOUISE STORY

On the third Wednesday of every month, the nine members of an elite Wall Street society gather in Midtown Manhattan.

The men share a common goal: to protect the interests of big banks in the vast market for derivatives, one of the most profitable — and controversial — fields in finance. They also share a common secret: The details of their meetings, even their identities, have been strictly confidential.

Drawn from giants like JPMorgan Chase, Goldman Sachs and Morgan Stanley, the bankers form a powerful committee that helps oversee trading in derivatives, instruments which, like insurance, are used to hedge risk.

In theory, this group exists to safeguard the integrity of the multitrillion-dollar market. In practice, it also defends the dominance of the big banks.

The banks in this group, which is affiliated with a new derivatives clearinghouse, have fought to block other banks from entering the market, and they are also trying to thwart efforts to make full information on prices and fees freely available.

Banks’ influence over this market, and over clearinghouses like the one this select group advises, has costly implications for businesses large and small, like Dan Singer’s home heating-oil company in Westchester County, north of New York City.

This fall, many of Mr. Singer’s customers purchased fixed-rate plans to lock in winter heating oil at around $3 a gallon. While that price was above the prevailing $2.80 a gallon then, the contracts will protect homeowners if bitterly cold weather pushes the price higher.

But Mr. Singer wonders if his company, Robison Oil, should be getting a better deal. He uses derivatives like swaps and options to create his fixed plans. But he has no idea how much lower his prices — and his customers’ prices — could be, he says, because banks don’t disclose fees associated with the derivatives.

“At the end of the day, I don’t know if I got a fair price, or what they’re charging me,” Mr. Singer said.

Derivatives shift risk from one party to another, and they offer many benefits, like enabling Mr. Singer to sell his fixed plans without having to bear all the risk that oil prices could suddenly rise. Derivatives are also big business on Wall Street. Banks collect many billions of dollars annually in undisclosed fees associated with these instruments — an amount that almost certainly would be lower if there were more competition and transparent prices.

Just how much derivatives trading costs ordinary Americans is uncertain. The size and reach of this market has grown rapidly over the past two decades. Pension funds today use derivatives to hedge investments. States and cities use them to try to hold down borrowing costs. Airlines use them to secure steady fuel prices. Food companies use them to lock in prices of commodities like wheat or beef.

The marketplace as it functions now “adds up to higher costs to all Americans,” said Gary Gensler, the chairman of the Commodity Futures Trading Commission, which regulates most derivatives. More oversight of the banks in this market is needed, he said.

But big banks influence the rules governing derivatives through a variety of industry groups. The banks’ latest point of influence are clearinghouses like ICE Trust, which holds the monthly meetings with the nine bankers in New York.

Under the Dodd-Frank financial overhaul, many derivatives will be traded via such clearinghouses. Mr. Gensler wants to lessen banks’ control over these new institutions. But Republican lawmakers, many of whom received large campaign contributions from bankers who want to influence how the derivatives rules are written, say they plan to push back against much of the coming reform. On Thursday, the commission canceled a vote over a proposal to make prices more transparent, raising speculation that Mr. Gensler did not have enough support from his fellow commissioners.

The Department of Justice is looking into derivatives, too. The department’s antitrust unit is actively investigating “the possibility of anticompetitive practices in the credit derivatives clearing, trading and information services industries,” according to a department spokeswoman.

Indeed, the derivatives market today reminds some experts of the Nasdaq stock market in the 1990s. Back then, the Justice Department discovered that Nasdaq market makers were secretly colluding to protect their own profits. Following that scandal, reforms and electronic trading systems cut Nasdaq stock trading costs to 1/20th of their former level — an enormous savings for investors.

“When you limit participation in the governance of an entity to a few like-minded institutions or individuals who have an interest in keeping competitors out, you have the potential for bad things to happen. It’s antitrust 101,” said Robert E. Litan, who helped oversee the Justice Department’s Nasdaq investigation as deputy assistant attorney general and is now a fellow at the Kauffman Foundation. “The history of derivatives trading is it has grown up as a very concentrated industry, and old habits are hard to break.”

Representatives from the nine banks that dominate the market declined to comment on the Department of Justice investigation.

Clearing involves keeping track of trades and providing a central repository for money backing those wagers. A spokeswoman for Deutsche Bank, which is among the most influential of the group, said this system will reduce the risks in the market. She said that Deutsche is focused on ensuring this process is put in place without disrupting the marketplace.

The Deutsche spokeswoman also said the banks’ role in this process has been a success, saying in a statement that the effort “is one of the best examples of public-private partnerships.”

Established, But Can’t Get In

The Bank of New York Mellon’s origins go back to 1784, when it was founded by Alexander Hamilton. Today, it provides administrative services on more than $23 trillion of institutional money.

Recently, the bank has been seeking to enter the inner circle of the derivatives market, but so far, it has been rebuffed.

Bank of New York officials say they have been thwarted by competitors who control important committees at the new clearinghouses, which were set up in the wake of the financial crisis.

Bank of New York Mellon has been trying to become a so-called clearing member since early this year. But three of the four main clearinghouses told the bank that its derivatives operation has too little capital, and thus potentially poses too much risk to the overall market.

The bank dismisses that explanation as absurd. “We are not a nobody,” said Sanjay Kannambadi, chief executive of BNY Mellon Clearing, a subsidiary created to get into the business. “But we don’t qualify. We certainly think that’s kind of crazy.”

The real reason the bank is being shut out, he said, is that rivals want to preserve their profit margins, and they are the ones who helped write the membership rules.

Mr. Kannambadi said Bank of New York’s clients asked it to enter the derivatives business because they believe they are being charged too much by big banks. Its entry could lower fees. Others that have yet to gain full entry to the derivatives trading club are the State Street Corporation, and small brokerage firms like MF Global and Newedge.

The criteria seem arbitrary, said Marcus Katz, a senior vice president at Newedge, which is owned by two big French banks.

“It appears that the membership criteria were set so that a certain group of market participants could meet that, and everyone else would have to jump through hoops,” Mr. Katz said.

The one new derivatives clearinghouse that has welcomed Newedge, Bank of New York and the others — Nasdaq — has been avoided by the big derivatives banks.

Only the Insiders Know

How did big banks come to have such influence that they can decide who can compete with them?

Ironically, this development grew in part out of worries during the height of the financial crisis in 2008. A major concern during the meltdown was that no one — not even government regulators — fully understood the size and interconnections of the derivatives market, especially the market in credit default swaps, which insure against defaults of companies or mortgages bonds. The panic led to the need to bail out the American International Group, for instance, which had C.D.S. contracts with many large banks.

In the midst of the turmoil, regulators ordered banks to speed up plans — long in the making — to set up a clearinghouse to handle derivatives trading. The intent was to reduce risk and increase stability in the market.

Two established exchanges that trade commodities and futures, the InterContinentalExchange, or ICE, and the Chicago Mercantile Exchange, set up clearinghouses, and, so did Nasdaq.

Each of these new clearinghouses had to persuade big banks to join their efforts, and they doled out membership on their risk committees, which is where trading rules are written, as an incentive.

None of the three clearinghouses would divulge the members of their risk committees when asked by a reporter. But two people with direct knowledge of ICE’s committee said the bank members are: Thomas J. Benison of JPMorgan Chase & Company; James J. Hill of Morgan Stanley; Athanassios Diplas of Deutsche Bank; Paul Hamill of UBS; Paul Mitrokostas of Barclays; Andy Hubbard of Credit Suisse; Oliver Frankel of Goldman Sachs; Ali Balali of Bank of America; and Biswarup Chatterjee of Citigroup.

Through representatives, these bankers declined to discuss the committee or the derivatives market. Some of the spokesmen noted that the bankers have expertise that helps the clearinghouse.

Many of these same people hold influential positions at other clearinghouses, or on committees at the powerful International Swaps and Derivatives Association, which helps govern the market.

Critics have called these banks the “derivatives dealers club,” and they warn that the club is unlikely to give up ground easily.

“The revenue these dealers make on derivatives is very large and so the incentive they have to protect those revenues is extremely large,” said Darrell Duffie, a professor at the Graduate School of Business at Stanford University, who studied the derivatives market earlier this year with Federal Reserve researchers. “It will be hard for the dealers to keep their market share if everybody who can prove their creditworthiness is allowed into the clearinghouses. So they are making arguments that others shouldn’t be allowed in.”

Perhaps no business in finance is as profitable today as derivatives. Not making loans. Not offering credit cards. Not advising on mergers and acquisitions. Not managing money for the wealthy.

The precise amount that banks make trading derivatives isn’t known, but there is anecdotal evidence of their profitability. Former bank traders who spoke on condition of anonymity because of confidentiality agreements with their former employers said their banks typically earned $25,000 for providing $25 million of insurance against the risk that a corporation might default on its debt via the swaps market. These traders turn over millions of dollars in these trades every day, and credit default swaps are just one of many kinds of derivatives.

The secrecy surrounding derivatives trading is a key factor enabling banks to make such large profits.

If an investor trades shares of Google or Coca-Cola or any other company on a stock exchange, the price — and the commission, or fee — are known. Electronic trading has made this information available to anyone with a computer, while also increasing competition — and sharply lowering the cost of trading. Even corporate bonds have become more transparent recently. Trading costs dropped there almost immediately after prices became more visible in 2002.

Not so with derivatives. For many, there is no central exchange, like the New York Stock Exchange or Nasdaq, where the prices of derivatives are listed. Instead, when a company or an investor wants to buy a derivative contract for, say, oil or wheat or securitized mortgages, an order is placed with a trader at a bank. The trader matches that order with someone selling the same type of derivative.

Banks explain that many derivatives trades have to work this way because they are often customized, unlike shares of stock. One share of Google is the same as any other. But the terms of an oil derivatives contract can vary greatly.

And the profits on most derivatives are masked. In most cases, buyers are told only what they have to pay for the derivative contract, say $25 million. That amount is more than the seller gets, but how much more — $5,000, $25,000 or $50,000 more — is unknown. That’s because the seller also is told only the amount he will receive. The difference between the two is the bank’s fee and profit. So, the bigger the difference, the better for the bank — and the worse for the customers.

It would be like a real estate agent selling a house, but the buyer knowing only what he paid and the seller knowing only what he received. The agent would pocket the difference as his fee, rather than disclose it. Moreover, only the real estate agent — and neither buyer nor seller — would have easy access to the prices paid recently for other homes on the same block.

An Electronic Exchange?

Two years ago, Kenneth C. Griffin, owner of the giant hedge fund Citadel Group, which is based in Chicago, proposed open pricing for commonly traded derivatives, by quoting their prices electronically. Citadel oversees $11 billion in assets, so saving even a few percentage points in costs on each trade could add up to tens or even hundreds of millions of dollars a year.

But Mr. Griffin’s proposal for an electronic exchange quickly ran into opposition, and what happened is a window into how banks have fiercely fought competition and open pricing. To get a transparent exchange going, Citadel offered the use of its technological prowess for a joint venture with the Chicago Mercantile Exchange, which is best-known as a trading outpost for contracts on commodities like coffee and cotton. The goal was to set up a clearinghouse as well as an electronic trading system that would display prices for credit default swaps.

Big banks that handle most derivatives trades, including Citadel’s, didn’t like Citadel’s idea. Electronic trading might connect customers directly with each other, cutting out the banks as middlemen.

So the banks responded in the fall of 2008 by pairing with ICE, one of the Chicago Mercantile Exchange’s rivals, which was setting up its own clearinghouse. The banks attached a number of conditions on that partnership, which came in the form of a merger between ICE’s clearinghouse and a nascent clearinghouse that the banks were establishing. These conditions gave the banks significant power at ICE’s clearinghouse, according to two people with knowledge of the deal. For instance, the banks insisted that ICE install the chief executive of their effort as the head of the joint effort. That executive, Dirk Pruis, left after about a year and now works at Goldman Sachs. Through a spokesman, he declined to comment.

The banks also refused to allow the deal with ICE to close until the clearinghouse’s rulebook was established, with provisions in the banks’ favor. Key among those were the membership rules, which required members to hold large amounts of capital in derivatives units, a condition that was prohibitive even for some large banks like the Bank of New York.

The banks also required ICE to provide market data exclusively to Markit, a little-known company that plays a pivotal role in derivatives. Backed by Goldman, JPMorgan and several other banks, Markit provides crucial information about derivatives, like prices.

Kevin Gould, who is the president of Markit and was involved in the clearinghouse merger, said the banks were simply being prudent and wanted rules that protected the market and themselves.

“The one thing I know the banks are concerned about is their risk capital,” he said. “You really are going to get some comfort that the way the entity operates isn’t going to put you at undue risk.”

Even though the banks were working with ICE, Citadel and the C.M.E. continued to move forward with their exchange. They, too, needed to work with Markit, because it owns the rights to certain derivatives indexes. But Markit put them in a tough spot by basically insisting that every trade involve at least one bank, since the banks are the main parties that have licenses with Markit.

This demand from Markit effectively secured a permanent role for the big derivatives banks since Citadel and the C.M.E. could not move forward without Markit’s agreement. And so, essentially boxed in, they agreed to the terms, according to the two people with knowledge of the matter. (A spokesman for C.M.E. said last week that the exchange did not cave to Markit’s terms.)

Still, even after that deal was complete, the Chicago Mercantile Exchange soon had second thoughts about working with Citadel and about introducing electronic screens at all. The C.M.E. backed out of the deal in mid-2009, ending Mr. Griffin’s dream of a new, electronic trading system.

With Citadel out of the picture, the banks agreed to join the Chicago Mercantile Exchange’s clearinghouse effort. The exchange set up a risk committee that, like ICE’s committee, was mainly populated by bankers.

It remains unclear why the C.M.E. ended its electronic trading initiative. Two people with knowledge of the Chicago Mercantile Exchange’s clearinghouse said the banks refused to get involved unless the exchange dropped Citadel and the entire plan for electronic trading.

Kim Taylor, the president of Chicago Mercantile Exchange’s clearing division, said “the market” simply wasn’t interested in Mr. Griffin’s idea.

Critics now say the banks have an edge because they have had early control of the new clearinghouses’ risk committees. Ms. Taylor at the Chicago Mercantile Exchange said the people on those committees are supposed to look out for the interest of the broad market, rather than their own narrow interests. She likened the banks’ role to that of Washington lawmakers who look out for the interests of the nation, not just their constituencies.

“It’s not like the sort of representation where if I’m elected to be the representative from the state of Illinois, I go there to represent the state of Illinois,” Ms. Taylor said in an interview.

Officials at ICE, meantime, said they solicit views from customers through a committee that is separate from the bank-dominated risk committee.

“We spent and we still continue to spend a lot of time on thinking about governance,” said Peter Barsoom, the chief operating officer of ICE Trust. “We want to be sure that we have all the right stakeholders appropriately represented.”

Mr. Griffin said last week that customers have so far paid the price for not yet having electronic trading. He puts the toll, by a rough estimate, in the tens of billions of dollars, saying that electronic trading would remove much of this “economic rent the dealers enjoy from a market that is so opaque.”

“It’s a stunning amount of money,” Mr. Griffin said. “The key players today in the derivatives market are very apprehensive about whether or not they will be winners or losers as we move towards more transparent, fairer markets, and since they’re not sure if they’ll be winners or losers, their basic instinct is to resist change.”

In, Out and Around Henhouse

The result of the maneuvering of the past couple years is that big banks dominate the risk committees of not one, but two of the most prominent new clearinghouses in the United States.

That puts them in a pivotal position to determine how derivatives are traded.

Under the Dodd-Frank bill, the clearinghouses were given broad authority. The risk committees there will help decide what prices will be charged for clearing trades, on top of fees banks collect for matching buyers and sellers, and how much money customers must put up as collateral to cover potential losses.

Perhaps more important, the risk committees will recommend which derivatives should be handled through clearinghouses, and which should be exempt.

Regulators will have the final say. But banks, which lobbied heavily to limit derivatives regulation in the Dodd-Frank bill, are likely to argue that few types of derivatives should have to go through clearinghouses. Critics contend that the bankers will try to keep many types of derivatives away from the clearinghouses, since clearinghouses represent a step towards broad electronic trading that could decimate profits.

The banks already have a head start. Even a newly proposed rule to limit the banks’ influence over clearing allows them to retain majorities on risk committees. It remains unclear whether regulators creating the new rules — on topics like transparency and possible electronic trading — will drastically change derivatives trading, or leave the bankers with great control.

One former regulator warned against deferring to the banks. Theo Lubke, who until this fall oversaw the derivatives reforms at the Federal Reserve Bank of New York, said banks do not always think of the market as a whole as they help write rules.

“Fundamentally, the banks are not good at self-regulation,” Mr. Lubke said in a panel last March at Columbia University. “That’s not their expertise, that’s not their primary interest.”

By Matthew Lasar | Published 7 months ago

Much of the world’s food supply is transported via an inefficient, polluting, and dangerous system of highways and trucks. The overwhelming share of the fuel used to move food powers cumbersome vehicles, only eight percent is really needed to transport the cargoes themselves to supermarkets, according to one estimate.

So what’s the alternative? Move the whole system underground and set up a “transport industry Internet,” says the United Kingdom based Foodtubes Project, a consortium of academics, project planners, and engineers. Siphon veggies, corn flakes, and cans of baked beans about in high-speed capsules (one by two meters) traveling through dedicated pipelines lodged below our cities. And why not? That’s the way we transport water, oil, gas, and sewage, isn’t it?

“All all conditions, day or night, delivery can be guaranteed,” a Foodtubes PowerPoint presentation promises. “Whatever the weather, FOODTUBES will deliver the goods!”

No traffic jams

A proposed Foodtubes station in London

Imagine a 1,500 kilometer underground FoodTubes ring circling the UK. The packet-switched-style network would connect all major food producers and retailers via 3,000 kilos of smart grid controlled air pressure pipe. The Foodtubes capsules, spaced one meter apart, will race about in gangs of 300 or so at 100kph. As many as 900,000 will be in circulation at any given moment, either zipping around beneath London and Liverpool or being loaded and unloaded at freight dockets.

“Really fast food,” Foodtubes literature calls the concept, with big payoffs for the economy and environment. “Inefficient food transport costs the Earth,” another presentation insists. Huge quantities of diesel are burned to move food trucks—17 billion for each 25 million UK homes, which represents eight percent of all the carbon dioxide mixed into the atmosphere.

“In contrast, we transport 180 times more weight of water than food every day (150 litres/person) in pipelines, with little pollution and no traffic jams,” the project notes. “Multiply by 5 to get the totals for the 120 million USA households.”

Add to that the traffic relieving removal of huge trucks from UK roads. 200,000 of them could be replaced by 17,000 kilos of pipelines and capsules, the group estimates, saving the country 40 million tons of CO₂ each year, and the world perhaps as much as four billion if the idea was adopted globally.Food bosses in the way

There is, however, one big impediment to this revolution—the current system, with its legacy stakeholders.

“The freight industry is deeply entrenched at every level of government and commerce,” Foodtubes warns. “They claim rights to profit from dominating our roads, shaking our buildings and polluting our air. Many traditional politicians and food bosses are oil-junkies, dedicated to keeping things as they are—whatever the social costs.”

Nonetheless, Foodtubes thinks it’s time for the UK to experiment with this idea via public/private partnerships in which the food industry own sections of the capsules, and publicly owned enterprises get the show started.

“The business operation is likely to be highly profitable and the transport savings to supermarkets and others will be immediate and significant,” project literature promises.

Uncle Ted has 5 children, but once the new world order is done with its economic raping of the middle class, you may be forced to get sterilized for cash

Paul Joseph Watson
Prison Planet.com
Monday, December 6, 2010

Just months after a leaked UN blueprint that revealed climate change alarmists would start pushing “overpopulation” fears in favor of the discredited mantra of global warming as a means of dismantling the middle class, billionaire globalist Ted Turner followed suit during a Cancun luncheon yesterday when he urged the world to adopt China’s brutal one-child policy, and even suggested poor people should be sterilized in return for government handouts.

Following a speech by economist Brian O’Neill from the U.S.’s National Center for Atmospheric Research which “concluded that a rapidly rising global population is contributing to an acceleration of emission growth,” Uncle Ted stepped in to remind us that mere slaves should not aspire to follow his example of having five children, restricting themselves to one or being made to face the wrath of a Chinese-style one child policy, which sends women who defy its edicts to “re-education camps,” once they have been beaten, forcibly injected and had their baby boiled alive inside their womb of course.

“Mr. Turner – a long-time advocate of population control – said the environmental stress on the Earth requires radical solutions, suggesting countries should follow China’s lead in instituting a one-child policy to reduce global population over time. He added that fertility rights could be sold so that poor people could profit from their decision not to reproduce,” reports the Globe and Mail.

The secret behind Turner’s call for western nations to enforce a tyrannical policy that in China is administered by undercover police and “family planning” authorities who kidnap, force drug and then forcibly abort babies of pregnant women, has nothing whatsoever to do with his concern for the environment.

Turner himself has five children and owns no less than 2 million acres of land. He is the largest private landowner on the planet, falling short of only the royal families of Europe. Turner has publicly advocated shocking population reduction programs that would cull the human population by a staggering 95%, a figure only achievable by outright genocide, mass abortion and infanticide.

In the third world, Turner has contributed literally billions to population reduction, namely through United Nations programs, leading the way for the likes of Bill & Melinda Gates and Warren Buffet (Gates’ father has long been a leading board member of Planned Parenthood and a top eugenicist). Gates himself has given speeches in which he promotes the use of vaccines and abortion as a means of reducing global population and lowering CO2 emissions.

Quite how an improvement in health care through vaccines that supposedly save lives would lead to a lowering in global population is an oxymoron, unless Gates was referring to vaccines that sterilize people, which is precisely the same method advocated in White House science advisor John P. Holdren’s 1977 textbook Ecoscience, which calls for a dictatorial “planetary regime” to enforce draconian measures of population reduction via all manner of oppressive techniques, including sterilization.

This is what Gates and Turner discussed when they met in secret with the likes of George Soros and David Rockefeller at a private gathering of billionaires in Manhattan last year, a confab focused around how these globalists could use their wealth to “slow the growth of the world’s population.”

As is manifestly provable, the true agenda behind fanning the flames of fears about overpopulation is to reduce living standards globally, by preventing the third world from ever becoming economically prosperous, while also eviscerating the middle classes of western nations. It has nothing whatsoever to do with saving the earth and is merely another convenient trojan horse that globalists invoke to advance their tyranny.

This fact was admitted in a leaked UN blueprint which emerged in September. The document called for alarmists to push “overpopulation” as a replacement for “climate change,” while conceding that the ultimate goal was to “limit and redirect the aspirations for a better life of rising middle classes around the world,” in other words, to convince the masses that they will have to be content with a state of near poverty in order to save the planet from armageddon. Although Uncle Ted will get to keep his 2 million acres and his five kids will go on to procreate ad infinitum, naturally.

Overpopulation is a myth. The UN’s own figures clearly indicate that population is set to stabilize in 2020 and then drop dramatically after 2050. As the Economist reported, “Fertility is falling and families are shrinking in places— such as Brazil, Indonesia, and even parts of India—that people think of as teeming with children. As our briefing shows, the fertility rate of half the world is now 2.1 or less—the magic number that is consistent with a stable population and is usually called “the replacement rate of fertility”. Sometime between 2020 and 2050 the world’s fertility rate will fall below the global replacement rate.”

To emphasize, not only do the numbers clearly indicate that overpopulation is a contrived scare, but the scaremongers themselves have been caught admitting that they are fanning the fears in order to reduce living standards in the west and consequently set in motion a “global redistribution of wealth.”

And don’t for a second be fooled into thinking that this so-called “global redistribution of wealth” will manifest some kind of socialist utopia. As was uncovered during the Copenhagen summit, the program of “global redistribution of wealth” largely centers around looting the wealth of the middle classes in richer countries through carbon taxes and then using that money to bankroll the construction of world government. As the leaked “Danish text” revealed, the money generated from consumption taxes will go directly to the World Bank, not to developing countries.

Let me emphasize again, even if you believe the claptrap circulated about overpopulation, the men being empowered to “solve the problem” have stated that their primary goal is to kill 95 per cent of humanity while destroying prosperity and economic freedom in the west, as well as ensuring that the third world remains in mountains of debt to the World Bank and IMF.

This is akin to hiring Ted Bundy to spearhead a program aimed at alleviating an epidemic of physical abuse towards women. It would be like appointing Charlie Manson the leader of a teen summer camp.

Ted Turner is a billionaire industrialist with five kids, 2 million acres of land and a network of business interests that combined must spew more carbon dioxide in a year than all the people reading this article put together in a lifetime could manage. And he is telling you to make sacrifices, to not have children, to sell your reproductive rights and be sterilized, to reduce your living standards, just like Al Gores flaps his gums about rising sea levels caused by global warming while purchasing oceanside property worth millions of dollars.

How much more evidence will it take for people to accept the fact that overpopulation is a myth and that it has been hijacked by global warming alarmists who are now using it as a replacement for the discredited science of man-made climate change in order to build their new world order, which is based entirely around squeezing the middle class and making people more dependent on big government, thereby becoming the architects of their own enslavement and being forced to crawl cap-in-hand to the likes of Uncle Ted and beg for a dime.

Many treatments for depression are no more effective than placebos.

December 5, 2010  |

 21/365 - western medicine

Photo Credit: Image by jypsygen via Flickr

A warning: for people satisfied with their standard depression treatments, debunking myths about them may be troubling. However, for critically-thinking depression sufferers who have not been helped by antidepressants, psychotherapy, or other standard treatments, discovering truths about these treatments can provide ideas about what may actually work for them.

Critical thinkers have difficulty placing faith in any depression treatment because science tells them that these treatments often work no better than placebos or nothing at all, and if one lacks faith in a depression treatment, it is not likely to be effective. In fact, it is belief and faith—or what scientists call “expectations” and the “placebo effect”—that is mostly responsible for any depression treatment working. Critical-thinkers can find a way out of depression when their critical thinking about depression treatments is validated and respected, and they are challenged to think more critically about their critical thinking.

Myth 1: Antidepressants Are More Effective than Placebos 

Many depressed people report that antidepressants have been effective for them, but do antidepressants work any better than a sugar pill? Researcher Irving Kirsch (professor of psychology at the University of Hull in the United Kingdom as well as professor emeritus at the University of Connecticut and author of The Emperor’s New Drugs) has been trying to answer that question for a significant part of his career.

In 2002, Kirsch and his team at the University of Connecticut examined 47 depression treatment studies that had been sponsored by drug companies on the antidepressants Prozac, Paxil, Zoloft, Effexor, Celexa, and Serzone. Many of these studies had not been published, but all had been submitted to the Food and Drug Administration (FDA), so Kirsch used the Freedom of Information Act to gain access to all the data. He discovered that in the majority of the trials, antidepressants failed to outperform sugar pill placebos.

“All antidepressants,” Kirsch reported in 2010, “including the well-known SSRIs [selective serotonin reuptake inhibitors], had no clinically significant benefit over a placebo.” While in aggregate, antidepressants slightly edge out placebos, the difference is so unremarkable that Kirsch and others describe it as “clinically negligible.”

Why are so many doctors unaware of the lack of superiority of antidepressants as compared to placebos? The answer became clear in 2008 when researcher and physician Erick Turner (currently at the Department of Psychiatry and Center for Ethics in Health Care, Oregon Health and Science University) discovered that antidepressant studies with favorable outcomes were far more likely to be published than those with unfavorable outcomes. Analyzing published and unpublished antidepressant studies registered with the FDA between 1987-2004, Turner found that 37 of 38 studies having positive results were published; however, Turner reported, “Studies viewed by the FDA as having negative or questionable results were, with 3 exceptions, either not published (22 studies) or published in a way that, in our opinion, [falsely] conveyed a positive outcome (11 studies).”

Myth 2: If the First Antidepressant Fails, Another Antidepressant Will Likely Succeed

In The Noonday Demon, the popular 2001 book about depression, writer and depression sufferer Andrew Solomon repeated the then urban legend that “more than 80 percent of depressed patients are responsive to medication.” Solomon accurately cites a journal article that states this statistic; however, following the “reference trail,” I discovered that the journal article that Solomon cited refers to a second article for evidence of this statistic, but this second journal article mentions nothing about 80 percent of depressed patients responding to some medication.

The National Institute of Mental Health (NIMH) was aware that there was no research to back up the assertion that 80 percent of depressed patients improve if they keep trying different medications, so NIMH funded “Sequential Treatment Alternatives to Relieve Depression” (STAR*D), the largest ever study of sequential depression treatments. STAR*D results were published in 2006.

In Step One of STAR*D, all depressed patients were given the antidepressant Celexa, and in Step Two, patients who failed to respond to Celexa were divided into different groups and received other treatments (mostly different drug treatments) in place of or in addition to Celexa. If their second treatment failed, there was a third and, if necessary, a fourth treatment step.

In every STAR*D treatment step, remission rates were either equal to or significantly lower than the customary placebo performance in other antidepressant studies, but to the exasperation of many scientists, there was no placebo control in this $35 million U.S. taxpayer funded STAR*D study. (STAR*D researchers disclosed receiving consulting and speaker fees from the pharmaceutical companies which manufacture the antidepressants studied in STAR*D.)

In March 2006, NIMH triumphantly announced that 50 percent of depressed people saw remission of symptoms after the first two STAR*D steps. However, NIMH failed to mention in its press release that in the same time it took to complete these first two steps—slightly over 6 months—previous research shows that depressed people receiving no treatment at all have a spontaneous remission rate of 50 percent.

In November 2006, following the completion of all four STAR*D steps, STAR*D authors claimed a 67 percent cumulative remission rate, which again exasperated many scientists because this number failed to incorporate STAR*D’s extremely high relapse and dropout rates. In an American Journal of Psychiatry editorial that accompanied STAR*D authors’ report, J. Craig Nelson, M.D, stated, “I found a cumulative sustained recovery rate of 43 percent after four treatments, using a method similar to the authors but taking relapse rates into account.” However, even 43 percent turns out to be an inflated rate.

Separate analyses of STAR*D in 2010 by psychologist Ed Pigott and medical reporter Robert Whitaker revealed that STAR*D researchers had inflated remission numbers by switching mid-study to a more lenient measurement, and also by including patients who were not depressed enough at baseline to meet study criteria. But even taking the STAR*D data as is, Pigott’s analysis revealed that less than 3 percent of the entire group of depressed patients who began the STAR*D study can be ascertained as having a sustained remission (i.e., actually participated in the final assessment without relapsing and/or dropping out).

Myth 3: Electroconvulsive Treatment (ECT) is an Effective Last Resort

Andrew Solomon in The Noonday Demon also states, “ECT seems to have some significant impact between 75 and 90 percent of the time. About half of those who have improved on ECT still feel good a year after treatment.” Is ECT really that effective?

In 2004, researcher Joan Prudic, M.D. and her team at New York State Psychiatric Institute conducted a major study of ECT, which involved 347 patients at seven hospitals. Reported were both the immediate outcomes and the outcomes over a 24-week follow-up period. With respect to immediate outcomes, Prudic reported: “In contrast to the 70 to 90 percent remission rates expected with ECT, remission rates, depending on criteria, were 30.3 to 46.7 percent.” Even worse for ECT advocates, Prudic noted that, “10 days after ECT, patients had lost 40 percent of the improvement.”

There are also studies comparing ECT with a placebo (called “sham ECT”). In sham ECT, patients receive muscle-relaxing and anesthetizing drugs that routinely accompany ECT, and they are hooked up to the ECT apparatus, but they receive no electric voltage. Psychiatrist Colin Ross reports, “No study has demonstrated a significant difference between real and placebo (sham) ECT at 1 month post-treatment.”

Myth 4: Cognitive Behavior Therapy (CBT) is the Best Psychotherapy for Depression

First, the good news about CBT. The only non-drug treatment examined in STAR*D was a form of cognitive therapy (which was not fully detailed by STAR*D authors and only administered in Step Two). Among those who failed Celexa in the first step, three groups in Step Two switched from Celexa to one of three antidepressants, and their remission rates ranged from 25 to 26.6 percent; but one group in Step Two switched from Celexa to cognitive therapy, and its remission rate was 41.9 percent. STAR*D researchers did not assess whether any differences in treatment effectiveness were statistically significant.

Another group in Step Two maintained Celexa and added cognitive therapy, and this “Celexa plus cognitive therapy” group’s remission rate was 29.4 percent, not as high as the group that received cognitive therapy without medication. This begs the question: Is it also a myth that “antidepressants plus psychotherapy” works better than either treatment alone? Research psychologist David Antonuccio at the University of Nevada School of Medicine reports, “Combined psychotherapy and drug treatment do not appear to be superior to therapy or drug treatment alone.”

What psychotherapy is best for depression? While Americans hear most about CBT, it turns out that CBT or some form of cognitive therapy is no more effective for depression than any of several other types of psychotherapy. In 2008, psychologists Pim Cuijpers and Annemicke van Straten at the University of Amsterdam reported on a meta-analysis of 53 studies, each of which compared two or more different types of psychotherapy for depression. Included were varieties of “cognitive-behavior therapy,” “psychodynamic therapy,” “behavioral activation therapy,” “social skills training,” “problem-solving therapy,” “interpersonal therapy,” and “nondirective supportive therapy.” The major finding? “No large differences in efficacy between major psychotherapies for mild to moderate depression.”

So, if psychotherapy technique is not all that important, what is? Psychologist Bruce Wampold at the University of Wisconsin reviewed the psychotherapy outcome literature, examining hundreds of studies and meta-analyses, for his book The Great Psychotherapy Debate. Wampold unequivocally states that outcome effectiveness does not depend on the specific techniques of psychotherapy but instead depends on so-called “non-specific” factors such as the nature of the alliance between therapist and their client, and clients’ confidence in the therapy and in their therapist. “Simply stated,” Wampold concludes, “the client must believe in the treatment or be led to believe in it.”

Myth 5: No Treatment for Depression Works 

In April 2002, an NIMH-funded study on the antidepressant Zolof, the herb St. John’s wort, and a placebo had some curious results. The findings were that 32 percent of placebo-treated patients experienced remission, better than the 25 percent remission for the Zoloft-treated patients or the 24 percent remission for the St. John’s wort-treated patients. Most scientists would say that this study shows that neither Zoloft nor St. John’s wort worked, but those subjects who had positive outcomes with these two treatments would disagree. So, does this study show that antidepressants and St. John’s wort are not helpful, or does it show that “expectations,” belief,” and “faith” are the likely factors that make all treatments work?

When assessing whether a specific treatment is effective, scientists are trained to rule out the effect of expectations. Researchers evaluate a depression treatment as effective if, in a controlled study, the treatment outcome is significantly better than a placebo. However, the reality of depression treatments is that expectations, faith, belief, and the placebo effect are—far and away—the most important reasons why anything works. 

In 2004, Heather Krell, M.D. and her group at the University of California in Los Angeles examined the influence of patient expectations on the effectiveness of an experimental antidepressant. They found that among those depressed patients expecting that the medication would be very effective, 90 percent had a positive response; while among those expecting the medication would be somewhat effective, only 33 percent had a positive response. No depressed people were included in this study who expected the experimental drug to be ineffective, but such nonbelievers, in my experience, rarely report a positive response with antidepressants. All treatments can work, but rarely do so if one doesn’t believe in them.

A Path for Treatment Resisters: Critical Thinking about Critical Thinking

Critical thinking and an absence of self-deception are crucial for success in many areas of life, but these same talents can be problematic with respect to depression. A more accurate notion of how truly powerless one is in a situation (such as family, an organization, or society) can result in a greater feeling of helplessness, pain, and depression.

From several classic studies, we know that moderately depressed people are, in a sense, more critically thinking than are nondepressed people. These studies show that depressed people are more accurate than are nondepressed people in both their assessment of control over events and in judging people’s attitudes toward them. Researchers Lauren Alloy and Lyn Abramson at the University of Pennsylvania in 1979, studying nondepressed and depressed subjects who played a rigged game in which they had no actual control, found that depressed subjects more accurately evaluated their lack of control when either losing or winning. And researcher Peter Lewinsohn at the University of Oregon in 1980, found that depressed subjects judge other people’s attitudes toward them more accurately than nondepressed subjects.

Critical thinking also creates a problem for depression treatment, as skepticism makes one stubbornly resistant to much of what helps others. Specifically, to the extent one has uncritical faith in a treatment, it is far more likely to be experienced as successful; but to the extent that one is more skeptical about the effectiveness of treatment, one is less likely to have expectations that it will be effective, and this becomes a self-fulfilling prophesy.

Before modern research borne out this problematic relationship between depression and critical thinking, the American psychologist and philosopher William James (1842-1910) recognized this reality based on his personal experience. James had a history of severe depression, which helped fuel some of his greatest wisdom as to how to overcome depression.

In The Thought and Character of William James, Ralph Barton Perry’s classic biography on his teacher, in the chapter “Depression and Recovery,” we learn that James at age 27 described himself as going through a period of a “disgust for life” in which Perry describes as an “ebbing of the will to live. . . . a personal crisis that could only be relieved by philosophical insight.” What was James’s transformative insight?

James was a critical thinker and had no stomach for smiley-faced positive thinking, but he also concluded that his pessimism might just destroy him. With his critical thinking, he came quite pragmatically to “believe in belief.” He continued to maintain that one cannot choose to believe in whatever one wants (one cannot choose to believe that 2 + 2 = 5); however, he concluded that there is a range of human experience in which one can choose beliefs. He came to understand that, “Faith in a fact can help create the fact.” So, for example, a belief that one “has a significant contribution to make to the world” can keep one from committing suicide during a period of deep despair, and remaining alive makes it possible to in fact make a significant contribution.

Critical thinkers are skeptics who have difficulty with belief and faith, but depression treatments work to the extent that one has faith in them. Instead of viewing themselves as failures for not improving with standard treatments, depressed critical thinkers can logically acknowledge the downside of their temperament. Myth busting about standard treatments enables critically-thinking treatment resisters to release their pain over “treatment failure.” The pain of failure is one of the many pains that results in depression as well as substance abuse and other compulsions that are fueled by a need to shut down one’s pain. Releasing any pain, including the pain of treatment failure, can be helpful.

When critically-thinking treatment resisters discover that there have been others like themselves who have escaped this conundrum by finding something that they could believe in without giving up their critical thinking, this can be a jump start for them in finding their own particular antidote to depression. William James ultimately let go of his dallying with suicide, remained a tough-minded thinker with scientific loyalty to the facts, but also developed faith that, “Life shall be built in doing and suffering and creating.”

Facebook stalking is now being used as a tool by the Israeli army to expose women who lie about their religious background in order to avoid military service.

According to reports more than 1,000 women have been tracked down after they falsely claimed they were exempt from the draft because they were Orthodox Jews.

Military service is compulsory for most Israelis over the age of 18 - three years for men and two years for women.

But to avoid having to join people can cite a variety of reasons - one of them is an exemption for Orthodox, or religiously observant, Jews.

Using Facebook, the Israeli army is checking women’s status updates and photos to confirm if such claims are genuine.

A senior Israeli officer said they had found examples of young women who had declared themselves exempt posting photographs of themselves on Facebook in immodest clothing, or eating in non-kosher restaurants.

Others were caught by responding to party invitations on Friday nights - the Jewish Sabbath.

It is estimated that more than 35% of Jewish women in Israel do not join the army, because they say they are religious - but the army suspects that thousands of them are, in fact secular and eligible to serve.

JIM RANKIN AND SANDRO CONTENTA

STAFF REPORTERS

At about the time his crime spree began, convicted serial killer Russell Williams was taking a cocktail of medications for chronic pain — including a drug that in some cases causes mind-altering side effects.

One of the drugs, according to an informed source, was prednisone — a corticosteroid used to treat inflammation, arthritis, asthma, lupus and certain cancers. Studies since the 1950s indicate it can cause a range of adverse reactions, including euphoria, mania and bipolar disorder.

The case shocked many last month, when details of Williams’ disturbing crimes were aired in court.

The most important question, however — why did a man with no criminal past suddenly, at 44, embark on a series of ritualistic fetish crimes that quickly escalated to murder — remained unanswered.

Could the drugs be a piece in the puzzle?

Prescription and other drugs can be a factor in violent crimes, says Glenn Woods, former RCMP director of behavioural sciences. But many other factors come into play.

“Everything from personal events, the work life — there’s a whole host of things that go on in our lives every day and we all have different ways of coping,” says Woods. “Some of these offenders cope with these stressors or precipitating factors by acting out on their fantasies.

“So, could medication be part of that? I suppose it could be. But if it was, it’s an accumulative effect — it could be medication, it could be things going on at work, it could be the home life, it could be a host of things. It would be taking a leap to say it would be any one of those things, but it could be a combination.”

Corticosteroid drugs have been cited as a defence or mitigating factor in some U.S. cases involving violence or murder, with very limited success.

Williams, 47, pleaded guilty last month to 82 break-and-enters and thefts, two sexual assaults involving home invasion, and to raping and killing his colleague Cpl. Marie-France Comeau, 38, of Brighton and Jessica Lloyd, 27, of Belleville.

The former air force colonel and commander of Canada’s largest base, in Trenton, Ont., is now serving a mandatory life sentence at Kingston Penitentiary.

His medical history did not come up during his four-day guilty plea and sentencing in Belleville last month. Crown attorney Lee Burgess told the Star in an email that he would not comment on matters that did not come up in court.

Williams’ defence attorneys did not respond to email questions about his medication. The Star also left a message about prednisone at the Ottawa home of Williams’ wife, Mary Elizabeth Harriman, but did not receive a response.

The police investigation looked for anything in Williams’ background that could have triggered his actions, according to a source close to the investigation. Nothing was found.

In April, the Star received an anonymous letter from someone identifying him- or herself as a former co-worker. It said Williams was on a “strong medication” for the past few years, concluding: “I believe this changed him.”

This week, another source, who asked not to be identified, named prednisone. The informed source said Williams was placed on it around the time his string of fetish break-and-enters and thefts began. Prednisone, a generic prescription drug, has been around since the 1950s and is made by a number of drug companies.

Monique Murdoch, who lives next door to the cottage in Tweed that Williams shared with his wife, told the Star Williams began taking medication for chronic pain some time after returning home from a posting to Dubai in 2006.

Williams began breaking into homes, methodically photographing women’s and girls’ underwear, and then posing and masturbating in the items, on Sept. 9, 2007. Shortly after that date, Murdoch says, Williams told her about being on medication.

“One time, we were playing cards and he actually had to get up to stand,” says Murdoch, whose family became close with Williams and his wife. “It was some kind of chronic pain and it was going through his whole body.”

“He did say he was on medication,” recalls Murdoch. “They were trying to find the right combination so that he could function, and obviously they did or he wouldn’t have become base commander.”

The pain was so intense that at one point Williams stopped jogging, says Murdoch, adding Williams was also suffering from insomnia.

It’s unclear how long Williams was taking prednisone, or at what dose. In the U.S., pilots taking high doses of prednisone are banned from flying by the Federal Aviation Administration.

In Canada, Williams’ military doctor would have been informed of his medical treatment, even if he had gone to an outside specialist, says a Canadian Forces spokesperson. The military would not comment on Williams’ medical history.

According to Canadian Air Force flight surgeon guidelines: “In general, systemic corticosteroids are not compatible with flight duties for any aircrew . . . Inhaled and topical intranasal corticosteroids are acceptable without requiring an operational flying restriction.”

When asked by police during his taped interrogation and confession why he committed his crimes, Williams provided no explanation.

“Dunno,” Williams shrugged.

“Have you spent much time thinking about that?” asked Ontario Provincial Police Det. Insp. Jim Smyth.

“Yeah, but I don’t know the answers, and I’m pretty sure the answers don’t matter.”

Williams added that he became interested in women’s underwear when he was in his 20s. But there is no evidence of Williams committing criminal acts until his first fetish home invasion in 2007. He is a serial killer the likes of which experts have rarely seen.

A former close friend of Williams told the Star that he noticed numerous medications in Williams’ room in October 2008 and wonders now if they had anything to do with his crimes.

“After it all happened I thought, what on Earth could cause that?” the friend, who asked not to be identified, said in an interview. “I knew he had been taking (the drugs) — but I’m really only grasping at straws because the whole thing is inexplicable.

“But it did strike me that maybe it was all those pills he was taking.”

The friend asked Williams in 2008 about the pills. Williams mentioned arthritis, the friend recalls. “He had to take a combination of at least five or six different pills on a daily basis . . . I thought, wow, that’s a lot.”

A search of Health Canada’s adverse drug reaction database shows there have been 563 reports mentioning prednisone in the past 20 years. The cholesterol drug Lipitor, by comparison, has been reported 1,807 times since it came on the market 13 years ago.

While rare, prednisone side effects cited in the Canadian database include agitation, anxiety, hallucinations and personality and psychotic disorders. In one case, a 28-year-old woman on a 15-milligram dose experienced all of those reactions and was hospitalized.

In another, a 48-year-old woman on a 60-milligram dose experienced insomnia, confusion and a personality disorder. She was also hospitalized.

The drug can also cause slight euphoria and full-blown mania.

In 2003 Quebec psychiatrist François Sirois reviewed studies of corticosteroids since the 1950s. He found side effects in a small number of cases ranging from mild euphoria to “full-blown reversible” psychotic reactions, to “bona fide bipolar disorder.”

In one Toronto case study, a 14-year-old cancer patient with no history of psychiatric illness received 75 milligrams of prednisone a day as part of his treatment. Doctors then noticed a serious psychotic reaction.

“He has multiple grandiose delusions,” said a report co-written by Toronto psychiatrist Dr. Irfan Mian. “He believed that he was God, had created a computer program that could read minds, had billions of dollars, had cured ill people, could revive the dead, and could transport people with his mind. He had visual hallucinations, seeing flames on his hand that he believed were flames from hell.”

In an interview, Mian added that the boy had to be restrained because he was acting aggressively and verbally threatening other children.

Dr. E. Sherwood Brown, who has written extensively about prednisone, says he is “skeptical that prednisone had anything to do with” turning Williams into a serial killer.

“But I’m absolutely fascinated by the story and whether it did all start with him starting prednisone,” adds Brown, an associate professor in the psychiatry department at the University of Texas Southwestern Medical Center.

People being treated for chronic pain, such as that from arthritis, are more likely to be on a lower dose, making psychiatric issues less likely, he adds. High dosages are more likely to trigger severe psychiatric side effects.

“I guess at this point there’s so many unanswered questions,” Brown says. “Was he actually on prednisone continuously for years? Some people are, but it’s usually a pretty low dose.”

Going on and off the drug, says Brown, can also cause unwanted side effects.

Brown notes that prednisone is not usually the first choice of treatment for conditions such as lupus and arthritis, due in part to its side effects, which also include “bone loss, weight gain, (and) diabetes.” It is used more often in severe cases of joint pain.

By Saman Mohammadi

Al-Qaeda is a CIA creation. That sounds like a crazy assertion because for nine years we’ve heard from the establishment media and corrupt political leaders that Al-Qaeda is a transnational menace, and the Western world’s biggest security threat in the 21st century. But, there is nothing crazy about restating the truth. What’s crazy is to keep denying this simple fact as impossible, and continuing to blindly trust the voices of authority just because they are in authority.

In general, Islamic terrorist groups like Al-Qaeda and Hamas were created, funded, and trained by the CIA and Mossad to serve their own interests in the Middle East. By framing Palestinian resistance as terrorism to the world, Israel’s leaders are able to carry out their objectives of creating a unified Israeli state, and destroying the Palestinian resistance. Likewise, under the umbrella of the war on terrorism, the Anglo-American establishment is in the position to secure large areas in the Middle East and Central Asia, providing them the military footing in a region of great geopolitical importance.

Reporter Richard Sale exposed Israel-Hamas connections in an article called “Hamas History Tied To Israel” that appeared in the United Press International back in June of 2002. Sale wrote:

Israel and Hamas may currently be locked in deadly combat, but, according to several current and former U.S. intelligence officials, beginning in the late 1970s, Tel Aviv gave direct and indirect financial aid to Hamas over a period of years.

Israel “aided Hamas directly — the Israelis wanted to use it as a counterbalance to the PLO (Palestinian Liberation Organization),” said Tony Cordesman, Middle East analyst for the Center for Strategic Studies.

Israel’s support for Hamas “was a direct attempt to divide and dilute support for a strong, secular PLO by using a competing religious alternative,” said a former senior CIA official.

It is dumbfounding to first learn that Israel gave financial support to Hamas, especially since Israeli leaders frequently accuse Iran of funding terrorism, and meddling in the Palestinian peace process. One expects the Iranian regime to be a supporter of terrorism because it is undoubtedly brutal, and anti-democratic, but to find out that Israel, a Western-style democracy, funds and trains terrorists, and not just any terrorists, but terrorists that recruit other unwitting terrorists who seek Israel harm, is a bewildering realization. What else are Israeli leaders capable of? What else are U.S. leaders capable of? If they arm and fund terrorists, then what is the depth of their evil crimes?

Thinking like a cold-hearted foreign policy strategist is a prerequisite to understanding the sophisticated rationale behind the Israeli, American, and British intelligence agencies joint-policy of recruiting Islamic terrorists, funding and training them, and letting them loose into the wild. Since Islamists are the enemies of popular leftist movements that promote social and democratic values, it is natural for Western and Israeli elites, who also hate grassroots democratic movements rising up in the Middle East because they threaten their power, to extend their hand to the Islamists and provide them with resources and training, in the name of “the enemy of my enemy is my friend.”

The secret arrangement between Western intelligence agencies and Islamists worked perfectly in Iran in 1953 when the CIA lend support to the religious radicals, whose antagonism against Muhammad Mosaddeq’s government strengthened the chances of a successful CIA coup against the democratically elected Prime Minister Mosaddeq. Twenty six years later, of course, the religious radicals grew out of their subservient role, ousted the U.S.-backed Shah, and turned into the monsters that they are today.

Iran’s Islamic Revolution showed that propping up terrorists and radicals can backfire, it may take a generation or two, but there is always blowback in warfare, regardless if it is fought by means of deception.

Israel’s support for Hamas in its early development was both direct, and indirect. Investigative reporter Robert Dreyfuss explained the foundations of Islamic fundamentalism in his book “Devil’s Game: How the United States Helped Unleash Fundamentalist Islam.” On January 26, 2006, the day of Hamas’s victory in Palestinian parliamentary elections, Dreyfuss appeared on Democracy Now to promote his book, telling Amy Goodman about the establishment of Hamas. Here is an excerpt from the interview :

And starting in 1967, the Israelis began to encourage or allow the Islamists in the Gaza and West Bank areas, among the Palestinian exiled population, to flourish. The statistics are really quite staggering. In Gaza, for instance, between 1967 and 1987, when Hamas was founded, the number of mosques tripled in Gaza from 200 to 600. And a lot of that came with money flowing from outside Gaza, from wealthy conservative Islamists in Saudi Arabia and elsewhere. But, of course, none of this could have happened without the Israelis casting an approving eye upon it.

And during these years, during that 20-year span, the Hamas organization was a bitter opponent of Palestinian nationalism, clashed repeatedly with the P.L.O. and with Fatah, of course, refused to participate in the P.L.O. umbrella. And just as during the ’50s and ’60s, the Muslim Brotherhood fought against the Nasserists, the Baath Party, the communists and the rest of the Arab left, in the 1970s and ’80s, the Muslim Brotherhood fought against the Palestinian national movement. Now that’s not even a surprise, you know. In 1970, when the king of Jordan launched his massive counter-offensive against the Palestinians there in that event called Black September, the Muslim Brotherhood was a strong supporter of the king and actually backed his effort, which resulted in thousands of Palestinians killed in a virtual civil war in Jordan.

So there’s plenty of evidence that the Israeli intelligence services, especially Shin Bet and the military occupation authorities, encouraged the growth of the Muslim Brotherhood and the founding of Hamas.

Members of the foreign policy establishment in Washington, who endlessly preach to the American people and the world about the threat of Islamic terrorism, and hide proof of their lies behind claims of national security, never bring up the facts that Dreyfuss documented in his book, and many others have demonstrated since the war on terror began. Despite what a lot of people like to believe, high-ranking government officials in the U.S. don’t comment on the ties between the CIA and Islamic terrorists because such facts would reveal their incompetence and stupidity, but because they would reveal their criminality, and treasonous activities. Believing that the Washington establishment is filled with incompetent fools is serious misreading of present and recent history.

Looking away from the facts, and continuing to mistakenly believe that 9/11 was done by Al-Qaeda, is the easy thing to do. Sometimes we need to challenge prevailing conventions, and see with new eyes. Then, everything becomes clear, including the problems, and the solutions.

Andrew Gavin Marshall helps us see with new eyes by laying out the deep connections between the CIA and Al-Qaeda in his three part series “The Imperial Anatomy of Al-Qaeda.” In part one, called “ The CIA’s Drug-Running Terrorists and the “Arc of Crisis,” Marshall reflects on the mythic significance of the 9/11 attacks in the popular mind, and how the Anglo-American-Israeli elite manipulated a fearful and nervous Western public in the immediate hours and days after the attacks, before committing thousands of soldiers in an imperial and criminal war disguised as a war on terrorism:

The events of 9/11 pervade the American and indeed the world imagination as an historical myth. The events of that day and those leading up to it remain largely unknown and little understood by the general public, apart from the disturbing images repeated ad nauseam in the media. The facts and troubled truths of that day are lost in the folklore of the 9/11 myth: that the largest attack carried out on American ground was orchestrated by 19 Muslims armed with box cutters and urged on by religious fundamentalism, all under the direction of Osama bin Laden, the leader of a global terrorist network called al-Qaeda, based out of a cave in Afghanistan.

 

The myth sweeps aside the facts and complex nature of terror, al-Qaeda, the American empire and literally defies the laws of physics. As John F. Kennedy once said, “The greatest enemy of the truth is not the lie deliberate, contrived, and dishonest but the myth persistent, pervasive, and unrealistic.”

 

This three-part series on “The Imperial Anatomy of Al-Qaeda” examines the geopolitical historical origins and nature of what we today know as al-Qaeda, which is in fact an Anglo-American intelligence network of terrorist assets used to advance American and NATO imperial objectives in various regions around the world.

The manufactured image of Al-Qaeda is dominant in the war on terror because the state terrorists who control Washington, Tel Aviv, Ottawa, London, and Paris desired a new enemy to occupy the Western mind. It doesn’t matter that there are less than 100 Al-Qaeda members in Afghanistan, as long as people back home are kept afraid, and clueless.

John Stockwell, a top former CIA officer, saw modern warfare unfolding in this deceptive and evil way. Back in the 1980s, he said that “if the Soviet Union were to disappear off the face of the map, the United States would quickly seek out new enemies to justify its own military-industrial complex.” Looking back now, his insight was prophetic. The September 11, 2001 events created in the minds of the American people the myth of the “terrorist” enemy, which was enough to justify aggressive invasions in Afghanistan and Iraq, massive military spending, the destruction of civil liberties, torture gulags, and the creation of a technological police state in America.

As Chief of the Angola Task Force, Stockwell overlooked U.S. interests in the Angolan Civil War in 1975. Shortly after, he resigned and published In Search of Enemies, a book that many regard as the best book on the CIA by an insider. Stockwell’s criticism exposed the lies and crimes of the U.S. establishment in a way that few have. He said America was not fighting communism, but independent political movements in Third World nations that threatened the interests of Wall Street, U.S. multinational corporations, and the global oligarchs.

In his book “ The Praetorian Guard: The U.S. Role in the New World Order “ Stockwell described the United States military/intelligence apparatus as something like a giant mercenary company, doing the dirty work for the powerful global financial interests that rules Washington through debt, and deception, writing, “… the United States [is] cast in the role of Praetorian Guard, protecting the interests of the global financial order against fractious elements in the Third World.”

The “fractious elements” that Stockwell spoke of are springing up rapidly inside of America’s own borders, as more and more Americans are finding out that their country’s slide into Third World despotism was not a spontaneous historical development, but the result of a planned and deliberate policy by the global financial elites who seek a new world order in which freedom has no part.

II.

In my last article, I asked “when will U.S. leaders confess to the American people that America carries out false-flag attacks as part of its foreign policy,” but I was naive to even the raise the question. The traitorous war criminals will not confess about anything willingly. As we see from George Bush’s new book Deception Points, the image-making has only begun. The dark and twisted individuals who were involved in the 9/11 attacks and oversaw the destruction of America will spin and lie until the end, much like Lee Atwater, the political strategist behind the Reagan and Bush presidential campaigns in the 1980s, who lied about converting to Christianity and getting a new perspective “on the nature of humanity, love, brotherhood,” on his deathbed, before dying from a brain tumor.

In the documentary Boogie Man:The Lee Atwater Story by award-winning filmmaker Stefan Forbes, veteran Republican campaign strategist Ed Rollins said that Atwater “was telling this story about how a Living Bible was what was giving him faith and I said to Mary, “I really, sincerely hope that he found peace.’ She said, “Ed, when we were cleaning up his things afterwards, the Bible was still wrapped in the cellophane and had never been taken out of the package,’ which just told you everything there was. He was spinning right to the end,” (quote taken from Wikipedia’s page on Lee Atwater).

The tale about Atwater’s image crafting extends to the Washington establishment’s reliance on lies, and spinning to appear better than they are. Likewise, Atwater’s fall from grace before he died was a telling sign, and a prelude to the establishment’s upcoming fall from grace. The question is not when the devilish crooks will finally collapse, but when the American people will stop believing their lies, including, most of all, their lie about the 9/11 attacks. Once disbelief about the official 9/11 story goes mainstream, the collapse of the rotten establishment will happen soon after.

III.

I hope everybody soon realizes that the great “terrorism” crisis that we’re all facing springs from lies. And it needs to happen very soon. We must stop being naive, and taking the words of perpetual liars seriously. Deference towards authority figures when those same authority figures are actively stabbing you in the back, front, and both sides, is suicide. It is madness. A self-induced death without the self even realizing it.

Anybody who critically examines the September 11 attacks, the war on terror, and the multi-trillion financial con led by Wall Street and the White House can’t help but conclude that America is suffering a slow national death at the hands of its national guardians. It is murder by deception, and trickery.

The traitorous murderers go all the way up to the White House, through a maze of conspiracy, and all the way back to the high point of the Cold War when Kennedy was assassinated by the same group of overlords that now wield power in Washington to the detriment of the country, and the rest of the world. Their capacity for evil knows no bounds.

The few who look deeply into the subjects of 9/11 and the JFK murder understand the gravity of the current reality. Everything we’ve been told about modern American, and world history is false.

While it is true that America is currently under attack, the plotters who are aiming to take down America and rebuild upon its ruins are not Islamic terrorists, or communists, but international financial con men who wield power over the President, the Congress, the Senate, the Pentagon, the private Federal Reserve Bank, and intelligence agencies. They have a dark vision for the new world, and they were busy implementing it for the last several decades while the rest of us were engaged with our jobs, families, and everyday lives.

People naively assumed that the politicians they elected to represent them in Washington, Ottawa, London, and other capitols around in the Western world were defending their best interests, but all the while financial and corporate tricksters who were part of the secret conspiracy for world government successfully corrupted America’s top political leaders, top federal agencies, and top news institutions in order to keep the public clueless about their past, and fearful about their future.

IV.

It is easy to understand why conspiracy theorists think Al-Qaeda did 9/11. They repeatedly ask, “why hasn’t anybody in the media said anything,” or “if 9/11 was an inside job, it wouldn’t be a secret for this long.” They carelessly overlook the fact that modern oppression in the Western world begins and ends with the oppression of thought, so although there are many free-willed individuals in the media who can speak openly, they are largely ignorant about 9/11 and feel comfortable with demonizing anybody that diverts from the official view. It is truly an Orwellian world.

The Western media’s propaganda and censorship is more advanced compared to other regions in the world because it suppresses free thought so much that it doesn’t have to suppress free speech like other dictatorial regimes. Also, censorship in the West requires less work, as there are not many dissident views that threaten the establishment in any meaningful way.

The official conspiracy theorists may not know it, but their submission to the official view of 9/11 makes them slaves. Not physical slaves, but slaves to the ideas, and plans of the authorities in power. Believing whatever you’re told about reality and history is a form of mental enslavement, and it is the only form of enslavement in which the slave does not even know that he is a slave. In other words, a brainwashed voter in modern society is less free than a slave who lived in a previous age because he is denied both freedom, and knowledge of his slavery to authority. At least the old slaves knew of their condition, unlike the modern naive dupes.

“Man,” wrote 19th century author Samuel Butler, “is the only animal that can remain on friendly terms with the victims he intends to eat until he eats them,” (Samuel Butler’s Notebooks, pg. 53). Keep this quote in mind as you watch former President Bush’s interviews in the days ahead. Remember that although he appears hospitable and attentive, and would make a fun drinking buddy, he is not your friend, nor was he ever. And the same is true with President Obama, who lies to you every day about the 9/11 attacks, and Wall Street’s heist. Just because they are in the highest positions of authority does not make them your guardians, and your protectors.

To accept the truth that we have all been betrayed by our top authority figures like Bush, Obama, Harper, Blair, and Cameron, is a hard thing to do, but we must learn to accept it. They share with the global elite a great contempt for the public, and look at people as mindless dupes who deserve to be hoodwinked. But there is a way to fight back as a victim of government brainwashing. Stop being a dupe. Stop being so naive. Stop trusting what leaders in power say, because everything they say is a lie. Start believing in your own mind. In your own eyes. Without free minds, we can’t fight for a just, free, and peaceful world. Before we can end the criminal war on terror, we must win the war on the mind. And that begins with you deconstructing the 9/11 lie, and searching deep within your own soul, where the war between truth and lies, good and evil, a free mankind and an enslaved mankind, is being fought.

Lesley Ciarula Taylor; Staff Reporter

A Canadian security surveillance company is part of a project to develop technology to watch moviegoers as they watch a movie.

Using a combination of 2-D and 3-D imaging, the technology would be able to measure emotions, groupings and movement to “revolutionize market research” at movie theatres.

“This tool will feed powerful marketing data (to) film directors, cinema advertisers and cinemas about what audiences enjoy and what adverts capture the most attention,” Dr. Abdul Farooq, of the Machine Vision Laboratory at the University of the West of England in Bristol, said in a release from UWE.

The lab has partnered with Aralia Systems of West Sussex, England, to build the new software. Aralia in turn is in partnership with Pikaia Systems of Ottawa, which holds several pending infrared illumination patents.

The new technology would use 2-D cameras to detect emotion and 3-D cameras to measure movement.

“This will do what has been done manually for years in cinemas,” Jessica Engler, marketing manager of Aralia, told the Star. “It’s the technology aspect that scares” people.

“What we’re keen to determine is: Are they sitting in family groups? At what point are they enjoying the film? Are they looking happy or are they looking bored?” said Professor Melvyn Smith, director of the Machine Vision Lab.

As for the potential to measure movement, “We plan to build on the capabilities of current technology used in cinemas to detect criminals making pirate copies of films with video cameras,” said Machine Vision Lab’s Farooq.

Anti-piracy cameras are only at the testing stage, Aralia’s Engler pointed out, and are only used with “full permission” of the movie audience. “We don’t have plans to illegally tape people.”

The three-year project is part of Aralia’s strategy to “create new markets in the entertainment and advertising industries,” said CEO Glynn Wright. The company previously concentrated on intelligence surveillance and video analytics.

Pikaia, founded in 2007, provides customized security surveillance and tracking for private and public companies.

By NORIMITSU ONISHI

Published: November 8, 2010

JAKARTA, Indonesia — The two houses where he spent part of his boyhood stand pretty much the way they did when he went back to Hawaii four decades ago. The two schools he attended have grown larger but, in spirit, remain unchanged. Some of his old friends can still be found around the neighborhood.

Near one of his homes here, the same family still runs a wooden stall selling gado-gado, an Indonesian salad covered in peanut sauce. Agus Salam, who took over the business from his mother years ago, played soccer with the American boy everybody here called Barry.

“His house — all the houses around here — haven’t changed,” said Mr. Salam, 56.

When President Obama visits Jakarta on Tuesday, he will find a city that, in some ways, has changed beyond recognition. A city of one luxury hotel and one shopping mall when Mr. Obama lived here between 1967 and 1971, Jakarta is now the overextended and overcrowded capital of the world’s fourth most populous nation. But Jakarta’s neighborhoods, including the two where Mr. Obama lived, retain enough of their former selves that the president would quickly find his bearings.

Jakarta regards Mr. Obama as a local boy made good, and he remains extremely popular throughout Indonesia. But his last-minute postponements of three previously planned visits here have clearly sapped the enthusiasm surrounding his homecoming, even among his most ardent supporters.

“He’s not as popular here as he was before,” Mr. Salam said.

In 1967, Indonesia was still reeling from the aftershocks of an attempted Communist coup that led to the killing of at least 500,000 people. Suharto, the general who would rule Indonesia through the late 1990s, was about to assume power and launch an authoritarian era called the New Order.

Mr. Obama, his mother, Stanley Ann Dunham, and his Indonesian stepfather, Lolo Soetoro, moved into a one-story house in a district called Menteng-Dalam. At the time, it was a new neighborhood where natives of Jakarta, known as Betawis, lived with an increasing number of newcomers from different corners of Java and Sumatra, the main islands in Indonesia. The area was connected to the electric grid only a couple of years before Mr. Obama moved in.

“It was a very poor area when the family came here,” said Coenraad Satjakoesoemah, 79, a retired airline manager and a neighborhood leader. “There were still dirt roads, only a few houses and lots of large trees.”

In Mr. Satjakoesoemah’s living room, Mr. Obama’s mother taught English to the neighborhood women, including his wife, Djumiati. While the residents regarded Mr. Obama’s mother as a “free spirit,” Barry, who was chubby, was referred to as the “boy who runs like a duck,” said Mrs. Satjakoesoemah, 69.

Mr. Obama, the couple said, attended school with children who could not afford to buy shoes.

The school — Santo Fransiskus Asisi, a Roman Catholic school that had been founded just in 1967 — is still located a couple of blocks away. When the 6-year-old Barry entered the school, there were only three grades with a total of 150 students. Now, about 1,300 students from kindergarten through high school study there, said the principal, Yustina Amirah. Mr. Obama has spoken about growing up here and hearing the Muslim call to prayer, but Ms. Amirah said that since the school’s founding, everyone had hewed to the institution’s official religion.

“Barry followed church services like everybody else,” Ms. Amirah said.

Sometime in the third grade, after his family moved to a different part of the city, Mr. Obama transferred to Elementary School Menteng 1, possibly the most famous primary school in Indonesia. Founded as a Dutch colonial school in 1934, it has long drawn the children of the country’s ruling class because of its location in Menteng, traditionally the wealthiest residential neighborhood in Jakarta.

Nowadays, though many wealthy Indonesians send their children to international schools here, the Menteng public school still draws the children of the elite, so much so that the principal, Hasimah, said she could “count on one hand” the students, out of a total of 400, who are not driven to school every day by their parents or drivers.

A mosque was built on the school grounds in 2002, a sign of the growing influence of Islam in Indonesia’s public life. But the school four decades ago did not even have a prayer room, in keeping with the state’s secularism at the time, Ms. Hasimah and students from the era said.

During the presidential campaign of 2008, right-wing American groups spread rumors that Mr. Obama had attended a radical madrasa while living here. Though most of the Menteng school’s students have always been Muslim, Rully Dasaad, 49, a former classmate, chuckled at the idea that of all schools in the country, Menteng was equated with a madrasa.

“I was brought to school in a Cadillac,” Mr. Dasaad said.

But Mr. Obama’s family did not live in the exclusive Menteng district. The family stayed instead in a far humbler neighborhood called Matraman-Dalam, on a short block of single-story, detached houses, a stone’s throw from a traditional Indonesian neighborhood of narrow, winding streets.

Though he lived in that neighborhood for only two years, Mr. Obama left a lasting impression because of his outgoing and sometimes rowdy personality.

“Barry was so naughty that my father even scolded him one time,” said Sonni Gondokusumo, 49, a former neighbor and classmate.

Mr. Obama’s family rented the guest house inside a compound belonging to a prominent physician. There, according to the neighborhood’s longtime residents, the young Obama, who had already experienced differences in class and religion in his short stay in Indonesia, was exposed to another aspect of Jakarta’s diversity.

His nanny was an openly gay man who, in keeping with Indonesia’s relaxed attitudes toward homosexuality, carried on an affair with a local butcher, longtime residents said. The nanny later joined a group of transvestites called Fantastic Dolls, who, like the many transvestites who remain fixtures of Jakarta’s streetscape, entertained people by dancing and playing volleyball.

In the compound, Mr. Obama often played with the two sons of the physician’s driver.

One time, recalled the elder son, Slamet Januadi, now 52, Mr. Obama asked a group of boys whether they wanted to grow up to be president, a soldier or a businessman. A president would own nothing while a soldier would possess weapons and a businessmen would have money, the young Obama explained.

Mr. Januadi and his younger brother, both of whom later joined the Indonesian military, said they wanted to become soldiers. Another boy, a future banker, said he would become a businessman.

“Then Barry said he would become president and order the soldier to guard him and the businessman to use his money to build him something,” Mr. Januadi said. “We told him, ‘You cheated. You didn’t give us those details.’ ”

“But we all became what we said we would,” he said.

I had the privilege of sitting in on a fascinating think session today put together by the U.S. Army focusing on future scenarios that could have serious impacts on U.S. national security in the coming decades and well, the role multinational corporations might play in those scenarios was one of the more interesting topics attendees were asked to look at.Dubbed the Alternative Futures Symposium, the event asked mid-level officers and civilians from the U.S. Army and several other services and nations to look at what types of contingencies the U.S. may have to plan for in the event of a complete global economic collapse, the continued rise of Asia as an economic and political powerhouse and the proliferation of advanced military technology eroding the massive advantage U.S. forces have enjoyed for decades.  Their conclusions will ultimately be included in the Unified Quest program which is meant to challenge and inform the Army’s various “concepts” it uses to help shape itself to fight future wars.

All these events were examined through the lens of current trends that are rapidly changing the world, from climate change and terrorism to demographic shifts, developments in computing technology and potential for fights over natural resources. However, one of the most interesting trends that participants were asked to consider in their debates about future threats was that of the growing power of  multinational corporations.

The Center for Strategic and International Studies’ Karen Meacham gave a presentation before before participants dove into the issues asking attendees to consider seven “revolutions” likely to occur in the coming decades and how they may shape the 21st Century security environment. One of these revolutions was the multinational corporation as an even bigger player in geopolitics than it already is.

Of the 50 largest economies in the world right now, seven are multinational corporation, according to Meacham. With this trend looking like it will continue to grow,  these corporations may become “almost equal to governments,” Meacham said. This means that, “in some cases, they need to figure out what they stand for.”

“We’re now well beyond the Westphalian” system of nation-state-centered government, Meacham added, noting the challenge to governance these corporations will present.

And the trend of non-state actors becoming more and more influential isn’t limited to corporations. In recent years, The Bill and Melinda Gates Foundation gave more grant money around the planet than the entire budget of the World Health Organization, according to Meacham. “Therefore, the influence they wield is staggering,” she said.

She ended her talk on the rise of multinational organizations by quoting Henry Kissenger (love him or hate him) as saying that governments must figure out how to balance the globalized economy and its multinationals with the traditional nation state construct.

One conference attendee raised another interesting angle to the multinational debate: Where do the loyalties of these extremely powerful corporations lie when their leadership is distributed around the globe? The attendee also raised the spectre of terrorists getting jobs in one of these corporations in order to infiltrate a country they seek to harm. (He, like most attendees, was speaking under Chatham House rules to encourage candid debate on a wide range of ideas.)

While massive companies influencing world affairs is nothing new, just look at the British East India Company or today’s energy companies, the number of new ones rising around the world today is. It’s interesting to see multinational corporations being looked at by the most powerful Army on Earth as it works to inform its future doctrine and operational concepts. Can’t wait to see the results of this session.

– John Reed

Panic! We got our man

Oct 29th 2010, 2:01 by W.W. | IOWA CITY

SO, the FBI tricked some guy into thinking he was helping al-Qaeda plan an attack on Washington, DC’s subway system. The AP reports:

A Pakistani-born suburban father was trying to enlist in a terrorist organization in January and was eager to become a martyr when he unknowingly walked into an FBI sting and began helping plan a purported attack on the Washington subway system, according to court documents.

What followed was an elaborate ruse in which Farooque Ahmed was given intelligence-gathering duties and coded information in a Quran by two individuals posing as al-Qaida operatives as part of the supposed plot to kill commuters on the nation’s second-busiest subway system.

So the probability of an attack just went down, and we can all rest a little easier, right? Wrong! The fact that the FBI was able to bamboozle this fellow into participating in a non-existent scheme has led Metro transit cops to seriously consider riffling through commuters’ stuff.

Adam Tuss of WTOP reports:

The day after federal investigators unveiled an unsuccessful terrorist plot against the D.C. Metro system, transit police are considering implementing one of the most controversial security measures available to them.

Metro police now believe they may have to resort to random bag searches, after learning of the FBI’s Wednesday arrest of Farooque Ahmed, 34, of Ashburn, Va., for helping to plan an attack on the D.C. subways.

How does this make sense? The feds didn’t unveil an unsuccessful terrorist plot. They unveiled a man’s willingness to join a fabricated plot. But let us suppose that Mr Ahmed had signed on to an honest-to-goodness mass-murder conspiracy, and that this intrigue is now exposed and its principals rounded up. The chances of an attack are now higher or lower? There is now more or less reason for police to nose through the personal belongings of law-abiding citizens? I say: lower, less. White House press secretary Robert Gibbs seems to suggest as much. “This is another important example of work by the FBI by all levels of our law enforcement and by our national security team to keep this country safe,” Mr Gibbs said at a press briefing. If it’s working, it’s working!

The best I can do on behalf of the DC transit police goes something like this:

Our earlier decision not to conduct random bag searches was based on the assumption that no one was willing to put a life-threatening device in his or her bags. The case of Mr Ahmed has revealed a vital piece of new information: Mr Ahmed was willing to put a life-threatening device in his bag. We infer that if Mr Ahmed was willing, others might be willing as well, and that the probability of future bag-related terror is greater than we had estimated. Therefore, we propose to reduce the chances of such an attack by ransacking innocent commuters’ satchels.

Naturally, I remain unmoved by my attempt at rational reconstruction. Perhaps a commenter more sympathetic to police harassment can do better. Al-Qaeda aspirants are like the Hydra; when one is captured, two take his place? Help me out here.

(Photo credit: AFP)

Justin Hyde — The U.S. Transportation Security Administration will update its pat-down methods at 450 U.S. airports on Friday to allow more aggressive touching, with inspectors instructed to touch travelers’ personal do-not-fly zones if they refuse scanners. Who’s ready for a road trip?The current TSA first date pat-down keeps the touching mostly to the sides of your body and down your legs, with the screeners using the back of their hands. While the TSA has declined to specify all the details of the new pat-down guidelines, the Boston Herald reported earlier this week that the techniques include “over-the-clothes searches of passengers’ breast and genital areas.”

The difference between the old regime and the new - which in typical TSA fashion will be sprung on unsuspecting travelers without notice - was described by an ACLU official who had the procedure during a test at Boston’s Logan Airport two months ago:

Two (female) TSA officers stepped over to me, and gave me the new procedure, which included touching my face and hair, and in between and directly under my breasts. Much like a medical appointment, they explained the motions they would make before actually touching me, and both women were professional and polite about the screening - even apologetic about it - but I couldn’t help but think this was overly invasive overkill.

Of course, travelers can avoid the new form of civil unions by accepting the full-body scans that led one ExpressJet pilot to walk off the job last week. At the other end of the business, the chairman of British Airways has also criticized the growing load of U.S. safety rules, saying several are “completely redundant.“

What happened when drugs were legal and why they were prohibited

Mike Jay

Today, as the notion of legalising drugs is making its way into the mainstream political agenda for the first time in living memory, one of the most common objections to it is that it represents a high-risk experiment whose outcome cannot be accurately modelled or predicted. Yet within the context of history, the opposite is true: it is the prohibition of drugs which is the bold experiment without precedent. A hundred years ago, any of us could have walked into our high street chemist and bought cannabis or cocaine, morphine or heroin over the counter. At this point, mind-altering drugs had been freely available throughout history and across almost every culture, and their prohibition, pressed forward largely by the goal of eliminating alcohol from modern societies, was a radical break with the traditional wisdom of public policy.

Nor was it the case that the prohibition of drugs was a response to their sudden emergence in Western societies. In 1800, virtually the only drugs familiar to the West were alcohol and opium; but by 1900, the constellation of substances which form the modern category of illicit drugs - opiates, cannabis, cocaine, stimulants and psychedelics - had all found their niches within a consumer culture driven by scientific discovery and the expansion of global trade. The nineteenth century, typically regarded as an era of repression, moral probity and social control, could also be billed as ‘Drug Legalisation - The First Hundred Years’ (Jay 2000).

There is much which today’s policy makers can learn from this era. Not only were most of the policies now being debated - statutory control and regulation, medical supervision and legal exclusion - all pioneered with varying degrees of success, but the legal availability of drugs offers a glimpse of how the general public originally negotiated their benefits and dangers, and how the various substances found their own levels within the society at large. History, of course, has its limits: it cannot tell us everything, and cannot be expected to repeat itself exactly. Cannabis, for example, was legal throughout the nineteenth century, and its levels of use remained for various reasons quite low: if it were legalised tomorrow, we would hardly expect its prevalence to fall to nineteenth-century levels. But history nevertheless illuminates many of the underlying dynamics in the modern drug debate, not least by offering the possibility of distinguishing between the consequences of drugs themselves and those which only followed once their use had been prohibited.

Perhaps the most significant difference was that today’s prime distinction between ‘medicinal’ and ‘recreational’ drugs was, in a society without illicit drugs, at best embryonic. Opiate and cocaine preparations, like alcohol and tobacco, were both intoxicant and medicine, and the distinction between ‘use’ and ‘abuse’, ‘feeling good’ and ‘feeling better’ was vague and subject to medical and social fashion (Berridge & Edwards 1987). Today’s Class A substances were not typically understood as drugs of ‘abuse’ but as tonics, pick-me-ups or mild sedatives, medicines ‘for the nerves’ inhabiting a middle ground perhaps similar to that occupied today by health supplements, over-the-counter stimulants or energy drinks. This was not because they were only available in mild preparations like opium tinctures and coca teas: even in the late nineteenth century, when pure cocaine and injectable morphine were readily available, the great majority of the public chose to continue consuming these drugs in dilute and manageable preparations.

Even in this era of mild plant and patent preparations, though, there was a clear need for some types of statutory drug controls. Until the 1860s, the market was unregulated: anyone could sell any substance to anyone, and make whatever claims they wished for it. Although most doctors were not overly preoccupied with the dangers of opiate addiction - which was typically seen as a marginal side-effect of the most effective medicine in their pharmacopeia - accidental poisonings and overdoses were a risk which was clearly exacerbated by preparations which labelled their contents inaccurately or not at all. The emergent pharmacy profession began to lobby for control of the sale of such substances, and in 1868 the Poisons and Pharmacy Act was passed. This limited the sale of arsenic, cyanide and opium, previously sold everywhere from grocers’ to pubs, to registered pharmacists; the pharmacists, in turn, were obliged to record details of their sales (date, quantity and purchaser).

In retrospect, this initial level of statutory regulation was perhaps the most effective public policy initiative of the era. Public confidence in the drug business rose, and misuse fell. Deaths by accidental overdose, suicide or poisoning remained steady from the 1870s to the 1900s at less than 200 a year in Britain - a figure which today’s doctors would gladly trade for the thousands associated with modern prescription drugs (Parssinen 1983). The combination of reliable health information and traceable sales provoked a modest public reaction against opiate drugs, the first indication that a population presented with a credible assessment of the dangers of drug use will to some extent regulate their use on their own initiative (Musto 1973).

But there were two initially unrelated dynamics in nineteenth-century culture which would, by the end of the century, have dovetailed to put the outright prohibition of drugs on the political agenda. The first was a growing set of racial anxieties at the prospect of a multicultural society; the second was the extension of medical science into the notion that drug addiction, and by extension all drug use, was a disease which needed to be addressed under medical supervision.

It was the racial anxieties which bit first. In 1874, the Opium Exclusion Act passed in San Francisco became the first drug prohibition in the modern West: but this was a prohibition to the Chinese population only. It was represented as being for the immigrants’ own good as well as for the protection of the whites who might be contaminated by the foreign habit, but the most obvious driving force was the fear of miscegenation between Chinese and whites in the informal and disinhibited surroundings of Chinatown opium dens (Kohn 1987). Around the same time, the political mood in Britain was turning against the imperial adventures of the Opium Wars, and images of a China ‘enslaved’ by addiction to British opium became prevalent through the reports of missionaries and campaigning journalists. Although these images have subsequently been shown to have been greatly exaggerated (Newman 1995), they transformed the perception of opium from indigenous medicine to foreign poison, and anti-opium groups (including Quakers and Temperance activists) promulgated the fear that the growing Chinatowns in Britain might become breeding-grounds for the new ‘plague’ (Harding 1988).

Metaphors of ‘plague’ and ‘contagion’ were, simultaneously, being given new and literal force by a medical profession for whom the addictive qualities of opium, morphine and cocaine were becoming more significant. The development in the 1870s of the hypodermic syringe, and consequent wider use of potent alkaloidal extracts like morphine, fuelled medical concerns about unprecedentedly powerful and dangerous drugs being available to the general public. Opium users like Thomas de Quincey had long since pointed out that constant use of the drug led to serious physical cravings, tolerance of high doses and withdrawal symptoms (in opposition to much of the medical opinion of the 1820s, which saw these effects simply as over-indulgence or vice). But from the 1870s onwards the modern notion of addiction came to take shape, along with the still-familiar claim that this was a ‘disease’ which required specialist treatment by professionals (Harding 1988). This, particularly in the context of the contemporary ‘degeneration theory’ which proposed that indulgence in drugs could pass on hereditary disorders to the users’ offspring (Pick 1989), gradually led to some doctors calling for all opiates to be prohibited to the general public without medical supervision.

There was an element of professional self-interest in all this: opium was the most common and effective remedy of its time, and the majority of the population understandably preferred self-medication with cheap patent pills and tinctures to paying doctors’ fees. But there was also, in the new world of cocaine, morphine and needles, a pressing need for new medical advice and statutory controls: manufacturers’ guarantees of strength and purity, professional guidance around the potentially hazardous issues of injection and dosage, and public information about the risks of addiction. Yet many medical voices went further, arguing for an outright ban with an urgency perhaps attributable to the fact that the largest group in the emerging addict population were medical professionals: from the 1870s to the 1920s, the profession’s own surveys repeatedly suggested that around half of all addicts were doctors and their wives (Jay 2000). As the medical profession grew in expertise and stature, their calls for legal controls on opiates and cocaine became more authoritative. For the medical profession was not only becoming better organised to extend its remit into new arenas of public health - it was developing its new views against the background of a popular and influential Temperance movement.

Temperance had a diverse set of lobbying groups behind it - the church, the Women’s Movement and, particularly in America, the moral high ground of politics - but at its core was an aspirational middle-class crusade to convert the alcohol-fuelled culture of the working classes to civic responsibilities, Christian virtues and ‘moral hygiene’ (Behr 1997). Most campaigners, doctors and churchmen alike, were united in their belief that alcohol was by far the most significant root of social evil, and the dangers of drugs like opium and cocaine were only stressed in the particular contexts where ethnic minorities lived cheek-by-jowl with the white working classes (Musto 1973). Nevertheless, the Temperance movement had the side-effect of carrying the drug debate in its wake. Medical diagnoses like ‘opium inebrity’ were coined, and the urge to indulge in any form of intoxication was classified as ‘moral insanity’, a condition whose ultimate recourse was confinement in an asylum (Harding 1988). The public voices prepared to defend the traditional use of drugs were few, and the new medical taxonomy of drug use as a disease, and by extension a contagious ‘plague’, dovetailed with broader fears about miscegenation and racial contamination to produce a climate where, led by the United States, the League of Nations began around 1900 to agree on international measures to prohibit the non-medical use of opiates and cocaine.

The basic template for today’s drug laws was hammered out at summits like the Hague Conference of 1911, and mostly passed into national law in the form of emergency wartime legislation like Britain’s 1915 Defence of the Realm Act, later codified in the Dangerous Drugs Act of 1921 (Kohn 1987). The initial effect most noticeable to the general public was that the range of preparations available over the chemist’s counter - long-time staples like cannabis, opium or coca tinctures, as well as recently-developed brand medicines like Bayer Pharmaceuticals’ new cough treatment, ‘Heroin’ - were replaced with synthetic alternatives like codeine or ephedrine, alongside useful new palliatives like aspirin. Despite their universal availability, the problematic use of the newly illicit drugs was little higher at this point than it had been a generation before (Parssinen 1983), and the prohibition initially led only to a limited and regional illegal traffic in pure and concentrated substances like morphine, cocaine and heroin (Musto 1973). The pressing drug issue of the day was the campaign for alcohol prohibition in America, which built up an irresistable head of steam until the 18th Amendment brought it into law, via the Volstead Act, in 1920.

Historically, there are clear examples of prohibitions which have worked. We only have to look around the world today to see that drugs which are prevalent in some countries have been prevented from gaining a foothold in other similar ones by legal exclusion. But the common denominator of successful prohibitions is that they have nipped a drug habit in the bud, interdicting supply before demand has been established (Courtwright 2001). Once demand is present, the financial arbitrage presented to suppliers will always be a more powerful driver than government tools for interdiction and enforcement. Counter-examples are rare - the Japanese success in curtailing amphetamine use in the 1950s is perhaps the best - and American prohibition was not among them. Alcohol use was too widely established across the social spectrum to halt an illicit traffic which began on the day the law was passed and which proceeded, through financial muscle and the corruption of public officials, to develop a vast shadow economy which in its centres like Chicago came virtually to amount to an alternative government.

The collapse of the American experiment with prohibition in 1932 left America both internally ravaged by organised crime and corruption and externally isolated from the rest of the world which had balked at following its lead, and it was in this climate that much of today’s drug legislation was assembled, driven through League of Nations Conferences and Geneva Conventions mostly by American initiatives (Davenport-Hines 2001). There were many interest groups in America who had much to gain by switching the focus from alcohol to drugs, and from rebranding traditional medicines as ‘new menaces’. The US Narcotics Bureau needed to shake off the stigma which attached to the Alcohol Bureau by showing that their new quarry was a genuine enemy, far more dangerous than alcohol, and that this time their goal was one which every citizen should support and respect. Medical opinion, too, was keen to backtrack from the less-than-credible excesses of their anti-alcohol warnings and to reverse the nineteenth-century consensus by insisting that substances such as cannabis were, in fact, more dangerous than alcohol. The press and other media, too, found their readers and listeners eager to believe that drugs might be the slippery slope to hell which had been claimed of alcohol a generation before. Drugs were still prominently linked with ethnic minorities, and new anxieties led to the ‘anti-narcotic’ laws being extended to control the sale of new substances such as cannabis, associated with the Mexican immigrant population, which had previously been assessed (by a British Royal Commission among others) as a minor public health issue.

The new legislation left a picture almost unrecognisable from the one which had existed before prohibition. The thrust of the original drug prohibitions - to protect the majority white population from the habits of ethnic minorities - failed to stem demand as drugs flowed through the emerging multicultural societies in much the same way as other culturally specific tropes like fashion, music or food (Shapiro 1999). Medically, new and serious problems emerged. The mild patent preparations, which had proved the most popular forms of the now-illicit drugs, had vanished: now opiates and cocaine were provided by illicit traffickers only in their most concentrated, lucrative and dangerous forms. The health costs of drugs increased in other ways, as risky procedures like injection moved away from the ambit of doctors and chemists and into more dangerous and unhygenic areas situated specifically beyond the reach of the law. Criminal organisations, many with their origins in alcohol prohibition, filled the vacuum left by patent and pharmaceutical companies, enforcing their illicit trade with violence. Drugs were not without their problems before prohibition, but the majority of the problems associated with them today only emerged fully under the legislation of the twentieth century.

These problems may have been produced by prohibition but, although many of them would not survive long without it, they cannot all be expected to vanish overnight with its repeal. The last century of public policy has transformed our traditional relationship with drugs into something new and uniquely problematic, for which history offers no tailor-made solution. It does, however, offer a reminder that the drug which presents the most obvious public health problems is alcohol, and that although alcohol policy remains highly problematic it has broadly proved to be best tackled not with prohibition but with socialisation under an umbrella of statutory regulation and education. History offers, too, an illustration of how a society legally permeated by today’s illicit drugs used to function, and shows that high levels of overall drug prevalence can coexist with low levels of problematic use. Finally, if offers a chance to evaluate the tools of control and regulation which might form an alternative to our present policy and which, once an outright ban has failed to prevent availability of any drug, have historically proved the most effective response.

Mike Jay is a journalist and author of several books, among which Emperors of Dreams: Drugs in the Nineteenth Century (Deadalus 2001).

References

Behr, Edward (1997), Prohibition. Penguin.

Berridge, Virginia and Edwards, Griffith (1987), Opium and the People: Opium Use in Nineteenth Century England. Yale University Press.

Courtwright, David T (2001), Forces of Habit: Drugs and the Making of the Modern World. Harvard University Press.

Davenport-Hines, Richard (2001), The Pursuit of Oblivion: A Global History of Narcotics. Weiderfeld & Nicholdon.

Harding, Geoffrey (1998), Opiate Addiction, Morality and Medicine. Macmillan Press.

Jay, Mike (2000), Emperors of Dreams: Drugs in the Nineteenth Century. Deadalus Press.

Kohn, Marek (1987), Narcomania: On Heroin. Faber & Faber.

Musto, David F. (1999), The American Disease: Origins of Narcotic Control. Oxford University Press.

Newman, Richard (1995), Opium Smoking in Late Imperial China: A Reconsideration. Modern Asian Studies 29:4, Cambridge University Press.

Parssinen, Terry (1983), Secret Passions, Secret Remedies: Narcotic Drugs in British Society 1820-1930. Manchester University Press.

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Shapiro, Harry (1999), Waiting for the Man: The Story of Drugs and Popular Music. Helter Skelter Publishing.

Imagine that a company could use the Web to rate your health, your employability—even your dating appeal. Welcome to the credit score of the future.

by Jessica Bennett

October 22, 2010

How much about your online life is private? The author (pictured, with her boyfriend) dared one company to find out.

Imagine you’re an employer, looking to hire me for a job. You subscribe to a Web site that gives you background information, and this is what you find. Jessica Rose Bennett, 29, spends 30 hours a week on social-networking sites—while at work. She is an excessive drinker, a drug user, and sexually promiscuous. She swears a lot, and spends way beyond her means shopping online. Her writing ability? Superior. Cost to hire? Cheap.

In reality, only part of this is true: yes, I like a good bourbon. But drugs? That comes from my reporting projects—and one in particular that took me to a pot farm in California. The promiscuity? My boyfriend of five years (that’s him above) would beg to differ on that, but I did once write a story about polyamory. I do spend hours on social-networking sites, but it’s part of my job. And I’m not nearly as cheap to hire as the Web would have you believe. (Take note, future employers!)

Related: 10 Ways to Protect Your Privacy Online »

The irony, of course, is that if this were a real job search, none of this would matter—I’d have already lost the job. But this is the kind of information surmisable to anybody with a Web connection and a bit of background data, who wants to take the time to compile it all. For this particular experiment, we asked ReputationDefender, a company that works to keep information like this private, to do a scrub of the Web, with nothing but my (very common) name and e-mail address to go on. Three Silicon Valley engineers, several decades of experience, and access to publicly available databases like Spokeo, Facebook, and LinkedIn (no, they didn’t do any hacking)—and voilà. Within 30 minutes, the company had my Social Security number; in two hours, they knew where I lived, my body type, my hometown, and my health status. (Note: this isn’t part of ReputationDefender’s service; they did the search—and accompanying graphic— exclusively for NEWSWEEK, to show how much about a person is out there for the taking.)

It’s scary stuff, but scarier when you realize it’s the kind of information that credit-card companies and data aggregators are already selling, for pennies, to advertisers every day. Or that it’s the kind of data, as The Wall Street Journal revealed last week, that’s being blasted to third parties when you download certain apps on Facebook. (Under close watch by Congress, Facebook has said it’s working to “dramatically limit” its users’ personal exposure.) “Most people are still under the illusion that when they go online, they’re anonymous,” says Nicholas Carr, the author of The Shallows: What the Internet Is Doing to Our Brains. But in reality, “every move they make is being collected into a database.”

This, say tech experts, is the credit score of the future—a kind of aggregated ranking for every aspect of your life. It’s an assessment that goes beyond the limits of targeted advertising—you know, those pesky shoe banners that follow a visit to Zappos, made possible by tracking devices we know as “cookies”—by making use of the data in ways that are more personal and, potentially, damaging. Think HMOs, loan applications, romantic partners. Let’s say you’ve been hitting up a burger joint twice a week, and you happen to joke, in a post on Twitter, how all the meat must be wreaking havoc on your cholesterol. Suddenly your health-insurance premiums go up. Now imagine your job is listed on Salary.com; your vacation preferences linked to Orbitz. Think how this could affect your social standing, or your ability to negotiate a raise or apply for a loan. Finally, what if you could know, based on Web history and location tracking, that a prospective mate had a communicable disease. Wouldn’t you pay to find out? “Most of us just don’t realize the potential consequences of this,” says Lorrie Cranor, a Web-privacy expert at Carnegie Mellon University.

Think it sounds shady? It’s perfectly legal—and happening already. In 2009, a Quebec woman who was receiving sick leave for depression had her disability benefits revoked after her insurance company discovered photos on Facebook—her profile was public—where she looked like she was having fun. At the time, a spokesperson for the Canadian Life and Health Insurance Association told reporters that such information is fair game. Credit-card companies use social media to determine what kind of offers might work the best on your social group—or to get insight on whether you’d default on a loan. Ultimately, it’s safe to assume that every Web site you visit—yep, that means NEWSWEEK, too—reserves the right to install tracking technology on your computer, eating up information about your tastes, guilty pleasures, and everything in between. Each company can then decide where that trove of data ultimately ends up—and, for data gold mines like Facebook, there’s very little incentive to keep it to themselves. “It’s not only Global 2000 and Fortune 2000 companies who want this information,” says Michael Fertik, the founder and CEO of ReputationDefender. “Eventually, it’s going to be every person in your life.” The ultimate paradox? It doesn’t matter if the information is wrong—or, in my case, comically incomplete.

by Jim Zarroli

October 18, 2010

In the financial markets, a lot rides on the word of a company’s top executives. If a CEO tells a lie, a lot of shareholders can get hurt.

Now, after studying thousands of corporate earnings calls, two researchers from Stanford University think they’ve come up with a way to tell when senior executives are fibbing.

It’s a question that people have been wrestling with for as long as humans have been interacting with each other.

“I think since the Garden of Eden we’ve been trying to figure this out — who’s lying and who’s not lying,” says David Larcker, a professor of accounting at Stanford’s Graduate School of Business.

Opaque Books, Huge Frauds

He says it’s a question that has taken on real urgency in the business world in recent years. The financial crisis underscored how opaque the books are at a lot of companies, and before that came the massive corporate frauds at Enron and WorldCom.

“There were some gigantic accounting frauds — big restatements and things like that — so a typical issue for us or for analysts or institutional investors is, can you actually predict those companies that are likely to have problems?” Larcker says.

That question is what he and Ph.D. student Anastasia Zakolyukina set out to answer. It’s a field psychologists and linguists have studied a lot over the years, and they’ve come up with certain indicators that signal deception.

For instance, in 2002 NPR interviewed Computer Associates CEO Sanjay Kumar, who later went to prison for securities fraud, about his company’s auditing practices.

Here’s what he said: “There’s no one out there today in the world of public companies who has the former chief accountant for the SEC running their audit committee. We do. There’s no one out there who has the pre-eminent governance leader, professor [Jay] Lorsch, for example, running their governance committee. We do.”

In other words, Kumar was asked, “Can your books be trusted?” And he replied by saying, “We hire the very best auditors.” Larcker says that can be a big warning sign.

“You basically are not answering the question. You’re basically making reference to somebody else, and those are the kinds of things in psychology you look for,” he says.

Words To Watch Out For: ‘We’ And ‘Our Team’

Larcker and Zakolyukina pored through the transcripts of thousands of corporate earnings calls when CEOs and chief financial officers take questions from analysts.

And then they studied the words of executives at companies that later had to restate earnings, which often happens after fraud has occurred. The researchers identified some key indicators of deception.

Zakolyukina says lying executives tend to overuse words like “we” and “our team” when they talk about their company. They avoid saying “I.”

She says there’s a reason for that: “If I’m saying ‘I’ or ‘me’ or ‘mine,’ I’m showing my ownership of the statement, so psychologically I’m showing I’m responsible for what I’m saying.”

Emphasizing The Positive

Lying CEOs also tend to use a lot of words that express positive emotion — things are fabulous and fantastic and extraordinary.

Here’s what Enron CEO Kenneth Lay said when he addressed his employees at a time when the company was about to implode: “I think our core businesses are extremely strong. We have a very strong competitive advantage. Of course, we are transferring this very successful business model and approach to a lot of new, very large markets globally.”

Words like that can be a form of overcompensation.

“If all my speech is ‘fantastic,’ ’superb,’ ‘outstanding,’ ‘excellent’ and all my speech sounds like a big hype — it probably is,” Larcker says.

A Speech Detector That Issues Red Flags

Larcker and Zakolyukina have put their data into a computer model — one that can issue red flags when signs of deception occur. And they’ve already heard from a lot of people in the markets wanting to use it.

Larcker says he received at least one critical comment that basically said: “Thanks a lot for telling the CEOs and CFOs how to lie.”

He acknowledges that a lot more research needs to be done in the field, and he’s the first to admit his model is not foolproof.

But in a decade when billions of dollars have been lost in accounting frauds, a lot of investors will be ready to seize on any tool they can find to figure out who they can trust.

Published: 20 April, 2009, 13:03

As the world financial and economic crisis comes into its own, the Western community leaders are seeking to impress on mankind the idea that this upheaval will end up ‘turning the world into something different’.

Even though the picture of the ‘new world order’ remains vague and fuzzy, the main idea is quite clear: A single global government, goes the argument, has to be established if we don’t want general chaos to prevail.

Every now and again, Western politicians mention the need for a ‘new world order’, a ‘new world financial architecture’, or some kind of ‘supranational control’, calling it a ‘New Deal’ for the world. Nicolas Sarkozy was the first to say so, while addressing the UN General Assembly in September 2007 (that is, before the crisis).

During the February 2009 meeting in Berlin convened to prepare the G20 summit, this was echoed by Gordon Brown, who said that a worldwide New Deal was needed. We are conscious, he added, that where the world financial flows were concerned, we would not be able to emerge from this situation with the help of purely national authorities alone. We need the authorities and world watchdogs to make the activities of financial institutions operating in the world markets totally open to us. Both Sarkozy and Brown are protégés of the Rothschilds.

Statements made by certain representatives of ‘the global elite’ indicate that the current crisis is being used as a mechanism for provoking some deepening social upheavals that would make mankind – plunged as it is already into chaos and frightened by the ghost of an all-out violence – urge of its own free will that a ‘supranational’ arbitrator with dictatorial powers intervene into the world affairs.

The events are following the same path as the Great Depression in 1929-1933: a financial crisis, an economic recession, social conflicts, establishing totalitarian dictatorships, inciting a war to concentrate power, and capital in the hands of a narrow circle. This time, however, the case in point is the final stage in the ‘global control’ strategy, where a decisive blow should be dealt to the national state sovereignty institution, followed by a transition to a system of private power of transnational elites.

As early as the late 1990s, David Rockefeller, author of the idea of private power that is due to replace the governments, said that we (the world) were on the threshold of global changes. All we need, he went on, is some large-scale crisis that will make people accept the new world order.

Jacques Attali, Sarkozy’s adviser and former EBRD chief, claimed that the elites had been incapable of dealing with the currency problems of the 1930s. He was afraid, he said, that a similar mistake would be made again. At first we’ll wage wars, he went on, and let 300 million people perish. After that reforms will follow and a world government. Shouldn’t we better think about a world government already at this stage, he asked?

The same was stated by Henry Kissinger: In the final analysis, the main task is to define and formulate the general concerns of the majority of countries, as well as of all leading states with regard to the economic crisis, considering the collective fear of a terrorist jihad. Next, all of that should be converted to a common action strategy… Thus, America and its potential partners are getting a unique chance for turning the moment of the crisis into a vision of hope.

The world is being led to accept the “new order” idea step by step to avoid provoking events that are likely to make the universal protests against the worsening conditions of human existence take ‘a wrong course’ and become uncontrolled. The main thing that Stage One managed to achieve was to start a wide-ranging discussion on ‘global government’ and the ‘inadmissibility of protectionism’ with an emphasis on the ‘hopelessness’ of the national-state models for emerging from the crisis.

This discussion is proceeding against the background of information pressures that help to build up human anxieties, fear, and uncertainty. Some of those information actions are the following: WTO forecasts to the effect that 1.4 billion people are likely to sink below the poverty line in 2009; a warning by the WTO director general that the biggest world trade slide in postwar history is in the offing; a statement by the IMF’s Dominique Strauss-Kohn (a protégé of Sarkozy’s) that a world economic crash is impending unless a large-scale reform of the financial sector of the world economy is implemented, and a crash that is most likely to bring in its wake not only social unrest but also a war.

Against this background, the idea to introduce a common world currency as a cornerstone of the ‘new world order’ was put forward. The real masterminds of this long-standing project are as yet in the shadow. Let us note that some or other representatives of Russia are pushed to the fore. This is reminiscent of the situation before World War I, where the Anglo-French circles that possessed some well-elaborated plans for a new division of the world instructed the Russian Foreign Minister to draw up a general program for the Entente Cordiale. It went down in history as the ‘Sazonov program’, even though Russia did not play an independent role in that war and was from the start built into the system of interests of the British financial elite.

On March 19, Henry Kissinger came to Moscow as a member of The Wise Men (James Baker, George Schultz, and others), who had meetings with the Russian leaders before the G20 summit. Dmitry Trenin, director of the Moscow Carnegie Center and participant in the latest US meeting of the Bilderbergers, called that meeting a ‘positive signal’. On March 25, Moskovsky Komsomolets published an article ‘The Crisis and the World Problems’, by Gavriil Popov (currently President of the International Union of Economists) that openly voiced what was normally discussed behind closed doors.

The article mentioned World Parliament, World Government, World Armed Forces, World Police Force, World Bank, the necessity of placing under international control the nuclear weapons, nuclear power generating capacities, the entire amount of space rocket technology, and the planet’s minerals, the imposition of birth-rate limits, the cleansing of humanity’s gene pool, the fostering of people intolerant to cultural and religious incompatibility, and the like.

The “countries that will not accept the global prospects,” says Popov, “must be expelled from the world community.”

Of course, the Moskovsky Komsomolets article conveys nothing new that would enable one to understand the strategy of the global elite. Another thing is important. The establishment of a totalitarian police order and the elimination of national states is being suggested as an open program of action, and what both the liberals, and the socialists, and the conservatives always viewed as ‘new fascism’ is being recommended as the only possible salutary path for the whole of mankind. Someone wants the discussing of these projects to become a norm. In this context, some ‘particularly trusted’ representatives of Russia are pushed to the fore, Russia that will become the main victim of the policy of total plunder should the ‘global government’ become a reality.
The G20 did not discuss the common world currency issue, since time had not yet come for that. The summit itself was a step forward on the way to chaos, because its decisions, if followed blindly, will only worsen the world socioeconomic situation and, to quote Lyndon LaRouche, will “finish off the patient.”

In the meantime, the crisis is being exacerbated, and analysts are predicting an era of mass-scale unemployment. The most pessimistic predictions come from LEAP/Europe 20201, which regularly publishes them in its bulletins and even set them out in an open letter sent to the leaders of the Twenty before the London summit.

As early as February 2006, LEAP was surprisingly precise in describing the prospects for the ‘systemic global crisis’ as a consequence of the financial illness caused by the US debt. LEAP analysts are viewing the current events in the context of the general crisis that began in the late 1970s and is now in its fourth, final and most grave stage, the so-called ‘elutriation phase’, where the collapse of real economy begins. According to LEAP’s Frank Biancheri, it is not simply a recession but the end of the system, in which its main pillar, the US economy, collapsed. “We are witnessing the end of an entire epoch before our own eyes.”

The crisis may lead to some most difficult consequences. LEAP forecasts a rise in unemployment to 15-20% in Europe and as much as 30% in the United States. If the key dollar problem fails to be solved, the world events will take a most dramatic turn. The dollar collapse may take place as early as July 2009, and the potentially decades-long crisis will trigger off “a world-wide geopolitical disintegration” with social upheavals and civil conflicts, with the division of the world into separate blocs, with the world coming back to Europe’s1914, with military clashes, etc. The most powerful popular unrest will take place in countries with the least developed social security systems and the biggest concentrations of weapons, primarily in Latin America and the United States, where social violence is already now manifest in the activities of armed gangs. Experts note the beginning of US population fleeing to Europe, where the direct threat to life is for the time being not so great. Aside from armed conflicts, LEAP analysts forecast power, food and water shortages in areas dependent on food imports.

LEAP experts describe behavior demonstrated by the Western elites as absolutely inadequate: “Our leaders have failed to understand what happened, and show the same amount of incomprehension to this day. We are amid a period of protracted recession, and it was necessary to engage in introducing some long-term measures to cushion the blows, whereas our leaders still hope to avoid a prolonged recession… All of them have been formed around the American pillar and cannot see that the pillar is a shambles…”

But this is not seen by the mid-level leaders, while the top-level world managers are, on the contrary, informed quite well; it is they who are implementing the ‘controlled chaos’ and general disintegration policy, including a civil war and the disintegration of the United States planned for the end of 2009, a scenario that is being widely discussed both by American and world media.

On the threshold of conflicts planned in various areas of the planets, a system is being established that will give a supranational center relying on a large-scale punitive machine total political, military, legal, and electronic control over the population. That system uses the network management principle that allows embedding into any society parallel structures of authority that report to external decision-making centers and are legalized through the doctrine of prevalence of international law over national law. The shell remains national, while real power becomes transnational. Jacques Attali calls this a ‘global law-based state’.

The ruling center of the global law-based state is located in the US. While its fundamentals began to emerge in the 1990s, the fight against terrorism after the 9/11 events has lead to radically new phenomena. The passing of the 2001 Patriot Act not only allowed security services to control the American population and suspected foreigners, but also accelerated the passing of state responsibilities into the hands of transnational corporate structures.

Intelligence activities, trade of war, penitentiary system, and information control are passing into private hands. This is done through so-called outsourcing, a relatively new business phenomenon that consists of trusting certain functions to private firms that act as contractors and relying on individuals outside an organization to solve its internal tasks.

In 2007, the American government found out that 70% of its secret intelligence budget is spent on private contracts and that “Cold-War intelligence bureaucracy is transforming into something new, where contractor’s interests dominate.” For American society (Congress included), their activities remain classified, which allows them to gather more and more important functions in their hands.

Former CIA employees say that nearly 60% of their staff are on contracts. Those people analyze most of the information, write reports for those who make decisions in state authorities, maintain communications among various security services, help foreign stations, and analyze data interception. As a result, America’s National Security Agency is becoming more and more dependent on private companies that have access to classified information. No wonder, then, that it is lobbying a bill in the Congress that is supposed to guarantee immunity to corporations that have worked with NSA for the last five years.

The same is happening to private military companies (PMCs), which have been assuming more and more army and police functions. On a significant scale, it started in the nineties in former Yugoslavia, but contract workers were especially widely used in Afghanistan and other conflict zones. They did the ‘dirtiest’ actions, as was the case during the war in South Ossetia, where up to 3000 mercenaries were involved. At the moment, PMCs are real armies, each up to 70,000 strong, that operate in over 60 countries, with annual revenues of up to $180 billion (according to Brookings Institution, USA) For example, over 20,000 employees of American PMCs work in Iraq along with the 160,000 American military contingent.

The system of private prisons is also growing rapidly in the US. The prison industry complex, which uses slave labor and sweatshop practices, is flourishing, and its investors are based on Wall Street. The use of convict labor by private corporations has been legalized in 37 states already, and it is used by major corporations such as IBM, Boeing, Motorola, Microsoft, Texas Instrument, Intel, Pierre Cardin, and others. In 2008, the number of inmates in US private prisons was about 100,000, and it is growing rapidly, along with the total number of inmates in the country (mostly African-Americans and Latin Americans), which is 2.2 million people, or 25% of all convicts in the world.

After Bush came to power, privatization of the system for transportation and retention of migrants in concentration camps began. In particular, a branch of the notorious firm Halliburton, Kellog Brown and Root (once headed by Dick Cheney), did just that.

The biggest achievements have been made over the last few years in the area of establishing electronic control over people’s identities, carried out under the pretext of counterterrorism. Currently, the FBI is creating the world’s biggest database of biometric indexes (fingerprints, retina scans, face shapes, scar shapes and allocation, speech and gesture patterns, etc.) that now contains 55 million fingerprints. The latest novelties include the introduction of body scanning system in US airports, tracking of literature read by passengers in flight, and so on. A new opportunity to gather detailed information on people’s private lives follow from the NSA Directive N59, passed in summer 2008, ‘Identification and tracking biometry for the purpose of strengthening national security’, and the classified ‘Homeland Terrorism Preparedness Law’.

Evaluating the policy of America’s authorities, ex-Congressman and 2008 presidential candidate Ron Paul said that America is gradually turning into a fascist state, “We are approaching not a Hitler-type fascism, but one of a softer type, which shows in the loss of civil freedoms, when corporations rule everything and… the government lies in the same bed with big business.” May we remind you that Ron Paul is one of the few American politicians speaking for the closing of the Federal Reserve System as a secret unconstitutional organization?

With Obama’s coming to power, the police order in America is getting tighter and tighter in two directions – strengthening internal security and militarization of civilian institutions. Tellingly, having condemned the infringements on individual freedoms done by the Bush administration, Obama has put his own staff under total control by making them fill out a 63-question form that touches upon the most intricate details of their private lives. In January, the US President signed bills that enable the continuation of the illegal practice of abducting people, keeping them secretly in prisons, and moving them to countries where tortures are used. He also proposed a bill called National Emergency Help Center Establishment Act, which stipulates the establishment of six such centers in US military bases to provide help to people who are displaced due to an emergency situation or disaster and thus get into military jurisdiction. Analysts connect this bill with possible disturbances and consider it proof that the US administration is preparing for a military conflict which may follow after the provocation that is being planned.

The American system of police control is actively implemented in other countries, primarily in Europe – through the establishment of American law hegemony on its territory by means of closing various agreements. A big part here was played by US–European talks out of the glare of publicity on creation of the common ‘area of control over the population’ that were held in spring 2008, when the European Parliament adopted resolution that ratified creation of the single transatlantic market abolishing all barriers to trade and investments by 2015. The talks resulted in the classified report prepared by the experts from six participating countries. This report described the project to create the ‘area of cooperation’ in the spheres of ‘freedom, safety and justice’.

The report dwells upon the reorganization of the system of justice and internal affairs of the EU member states in such a manner that it would resemble the American system. It concerns not only the ability to transfer personal data and cooperation of police services (which is already being carried out), but also, for example, extradition of EU immigrants to US authorities in accordance with the new mandate that abolished all the guarantees the European procedure of extradition provided. In the US the Military Commissions Act of 2006 is in force, and it allows persecution or imprisonment of any person who is identified as an ‘illegally fighting enemy’ by the executive authorities and extends to immigrants from any country not at war with the US. They are persecuted like “enemies” not based on some evidence but because they were labeled so by the governmental agencies. No foreign governments have protested against this law which is of international importance.

Soon they will sign the agreement on personal data communication, in accordance with which the American authorities will be able to obtain such personal information as credit card numbers, bank account details, investments, travel routes or communication via Internet, as well as the information concerning race, political and religious beliefs, habits, etc.. It was under the US pressure that the EU countries have introduced biometric passports. The new EU regulation implies the overall switch of EU citizens to electronic passports from the end of June 2009 by 2012. New passports will contain a chip with not only passport info and a photo, but also fingerprints.

We are witnessing the creation of the global electronic concentration camp, and crisis, conflicts and wars are used to justify it. As Douglas Reed wrote “people tend to tremble in the face of an imaginary danger and are too lazy to see the real one.”

By David S. Fallis
Washington Post Staff Writer
Sunday, October 24, 2010; 12:34 PM

Outside a baby shower in Landover three years ago, Erik Kenneth Dixon snapped. As he argued with his sister and her boyfriend in a parking lot, the 25-year-old man whipped out a .45-caliber Glock and shot her in the leg. Then he chased down her boyfriend, firing between cars and at the running man’s feet until he slipped on wet grass. As the prone man held his hands up in futile defense, Dixon executed him, firing seven times.

By law, Dixon was prohibited from owning a gun. He had spent almost three years in prison for shooting at a man. But three months before the baby-shower killing, he gave his girlfriend $335 and took her to an old brick house on a commercial strip just beyond the District line in Forestville, home to a gun shop called Realco.

“He knew which one he wanted and picked it out,” the woman would later tell police.

Dixon’s Glock was one of 86 guns sold by Realco that have been linked to homicide cases during the past 18 years, far outstripping the total from any other store in the region, a Washington Post investigation has found. Over that period, police have recovered more than 2,500 guns sold by the shop, including over 300 used in non-fatal shootings, assaults and robberies.

Realco has been known as a leading seller of “crime guns” seized by local police, but a year-long Post investigation reveals the magnitude of Realco’s pattern and links the guns sold by the store to specific crimes. The Post compiled its own databases of more than 35,000 gun traces by mining unpublicized state databases and local police evidence logs.

The Post investigation found that a small percentage of gun stores sells most of the weapons recovered by police in crimes - re-confirming the major finding of studies that came out before federal gun-tracing data were removed from public view by an act of Congress in 2003. For the most part, these sales are legal, but an unknown number involve persons who buy for those who cannot, including convicted felons such as Dixon, in a process known as a “straw purchase.” Such sales are illegal for the buyer and the store, if it knowingly allows a straw purchase. But cases are hard to prove. Law enforcement officials rarely prosecute gun stores, deterred by high bureaucratic hurdles, political pressure and laws that make convictions difficult.

The investigation also found that:

l Nearly two out of three guns sold in Virginia since 1998 and recovered by local authorities came from about 1 percent of the state’s dealers - 40 out of the 3,400 selling guns. Most of those 40 had received government warnings that their licenses were in jeopardy because of regulatory violations. But only four had their licenses revoked, and all are still legally selling guns after transferring their licenses, reapplying or re-licensing under new owners.

l A gun store in Portsmouth, Va., transformed over the past seven years from a modest family-owned business into one of the state’s top sellers of “crime guns,” leading Virginia in the category of how quickly its guns moved from the sales counter to crime scenes.

l The federal Bureau of Alcohol, Tobacco, Firearms and Explosives, which investigates gun trafficking and regulates the firearms industry, is hamstrung by the law, politics and bureaucracy. The agency still has the same number of agents it had three decades ago. It can take as long as eight years between inspections of gun stores. And even when inspectors turn up evidence of missing guns, they cannot compel a dealer to take inventory.

In Maryland, Realco towers over the other 350 handgun dealers in the state as a source of guns confiscated in the District and Prince George’s County, the most violent jurisdictions in the area. Nearly one out of three guns The Post traced to Maryland dealers came from Realco. The rest were spread among other shops across the state.

The store is a paradox for law enforcement and politicians. Its owners say they scrupulously follow handgun laws. State and federal regulators have documented only minor problems in numerous inspections.

“The owners of Realco Guns are cooperative with our detectives and have been compliant with all reporting requirements,” said Maj. Andy Ellis, commander of the public affairs division for Prince George’s police. “It shows a weakness in our system when a company like Realco can adhere to the law yet still be the source of so many crime guns. I can only imagine how much lower our violent-crime rate would be if Realco sold shoes instead of guns.”

Dealers on the front lines
Tracing brings into sharp relief the fact that virtually all crime guns are first sold as new weapons by a licensed dealer to someone who cleared a background check. The criminal demand for weapons - especially new ones that cannot be tied to previous crimes - puts dealers at the front line of crime prevention.

One ATF study found that about half the guns in trafficking cases started as “straw purchases” from licensed dealers. As in the Dixon case, a person with a clean record buys a gun for a person who cannot or does not want to do so. The ATF looks to merchants to proactively weed out suspicious customers, such as a girlfriend buying for a boyfriend.

Most experts and ATF officials agree that the number of conscientious dealers far outweighs the minority that break the law. Straw schemes can be hard to detect. A gun traced to a merchant does not necessarily signal that the merchant did anything wrong, the experts say. The number of traces a store generates is shaped by many factors, including the type and number of guns sold, geography, clientele and how clerks vet customers.

The District has no walk-in gun shops but is ringed by more than 100 in Maryland and Virginia. Of the 996 guns successfully traced last year in the city, about one-fourth were tracked back to Maryland dealers, one-fourth to Virginia dealers and the rest to shops nationwide, according to the ATF.

To track crime guns in the District and Prince George’s, The Post used public information requests to obtain local police logs listing 76,000 guns recovered by police in the two jurisdictions, then matched the serial numbers against a Maryland database of gun sales.

About 9,400 had no serial numbers and could not be matched. Another 13,300 were rifles or shotguns, which the state does not track. About 44,000 guns were not listed in state sales records, meaning the weapons were probably sold by dealers scattered across the country or had their serial numbers entered into police logs incorrectly.

About 8,700 guns were tracked to the Maryland merchants that last sold them.

Police in the District and Prince George’s on average seized more than 160 Realco guns annually from 1997 through 2008. Realco’s firearms end up at local crime scenes at a rate nearly twice that of any other active Maryland dealer that had 10 or more guns seized.

On a single day, police have logged two, three or even four guns sold by Realco, records show.

A Taurus .40-caliber pistol sold by the store in March 2004 was put to work in a murder three weeks later at a Popeyes in Oxon Hill, where 20-year-old Robert Garner Jr. killed 22-year-old Kelvin Braxton. Police learned that Garner’s girlfriend had bought the gun.

A Glock .45-caliber the shop sold to Alfred L. Evans in June 2004 was used in October 2005 in Clinton at a busy traffic light to kill 28-year-old Keith Ingaharra. After one driver cut the other off in evening rush-hour traffic, Ingaharra stepped from his car waving his hands. Evans shot Ingaharra in the hip, leg and chest and then drove home.

“He had the gun right there at his fingertips,” said Ingaharra’s mother, Bonnie Rogers. “He just took it out and blew him away.”

A Kel-Tec 9mm sold by Realco in January 2007 was used by Terris T. Luckett seven months later to shoot his wife 20 times, killing her at their Clinton home. He then killed a barber, John Scales III, in his shop. Luckett, who bought the gun, incorrectly thought the two were having an affair, police say.

Realco’s president, Carlos del Real, declined repeated requests to be interviewed, dismissing the news value of gun tracing.

“It’s such a ridiculous topic,” said del Real, who took over the shop after his brother died in 2008. “Maybe we should just move our shop a few hundred miles away.”

Glenn Ivey said that after he became Prince George’s state’s attorney in 2002, he asked law enforcement colleagues if he could do anything about the flow of guns from Realco, which he said he knew of from his time in the 1990s as a prosecutor in the District.

“I had an eye toward trying to take action,” Ivey said. “The feedback we got was: They are doing it the way they are supposed to. They are following the letter of the law.”

Asked about Realco, ATF spokeswoman Clare Weber said stores with greater numbers of traces are inspected more frequently.

“The number of traces that come back to a [gun dealer] is not a revocable offense if the dealer is found in compliance with record-keeping requirements,” she said.

Joseph R. Vince Jr., who retired from the ATF’s Crime Gun Analysis Branch in 1999 and has worked as an expert for lawyers who represent victims of gun violence, said the pattern prompts questions.

“If a gun store is bleeding crime guns, you have got to ask yourself what . . . is going on,” Vince said. “I have no problem with somebody being in the firearms business. That is a legitimate business. But why can’t the public be aware of where guns to criminals are coming from?”

Realco walks the line
Realco, one of dozens of dealers licensed over the years to sell handguns in Prince George’s, opened more than 35 years ago when Carlos del Real’s older brother Greg secured an ATF dealer’s license.

The store - whose address is now in District Heights after an annexation three years ago - occupies a 1930 Craftsman-style house on a strip of Marlboro Pike, between the Loose Ends Hair Studio and the Black Ribeye drive-through. Across the street is a Dunkin’ Donuts and a check-cashing service. Down the block is a liquor store and a police substation.

Stretched across one end of the front porch at Realco is a “Team Glock” banner, a marketing nod to the angular-shaped handgun. Bars line the windows. Customers enter in the back next to a sign announcing the “Realco Outdoor World & Gun Hospital.”

Inside is a small paneled showroom lined with glass display cases and space for only a handful of customers. Rifle bags, gun safes, animal trophies and assorted gun gear fill the shop. Tacked behind the counter is a small yellow notice: “We will refuse the sale of ammo and guns to suspected straw purchasers.”

Researchers in law enforcement, academia and the media first began to examine gun tracing data for clues to potential illegal sales in the late 1990s. (The efforts so angered gun supporters that they successfully lobbied Congress to impose a blackout on the once-public data in 2003.) In 1999, The Post identified Realco as the source of 493 guns used in crimes from 1996 to 1998, based on data from the ATF. That was twice the number of any other dealer in the region, and later researchers would rank Realco in the top 10 in the nation for crime-gun traces.

At the time, Greg and Carlos del Real disputed the numbers. They said they operated in a high-crime area but obeyed all laws.

“We step all over these people’s constitutional rights to prevent these straw purchases,” Greg del Real said.

Months later, Maryland State Police officials told The Post they were “taking an aggressive look” at Realco and potential straw purchases. Nothing came of the investigation, records show.

Greg del Real followed news of the state probe with a letter to The Post, disputing that “our store is in any way responsible for the flow of ‘crime guns.’â??”

Guns, he wrote, are traced for many reasons that might not include “criminal use,” including stolen guns and guns used in self-defense.

“We suspect that those reasons for traces, coupled with our high volume of sales, may account for the ‘higher than average’ number of gun traces attributed to our store,” he wrote.

“The hundreds of sales that we have refused to make over the years,” he also noted, “are not reflected in any statistical report.”

Realco was back in the news in August 2007 when D.C. police issued a report that identified the leading sources of crime guns seized in D.C. in 2006 - Realco was No. 1 with 76, three times the number of the next-most-frequent dealer.

That month, prosecutor Ivey joined Jesse L. Jackson’s Rainbow/Push Coalition and others outside Realco in a “protest against illegal guns.” Inside the shop, Maryland State Police pored over Realco’s paperwork. Investigators found little of concern.

“The brothers Del Real were cooperative during the inspection,” they wrote.

Crime guns stack up
The gun industry often says that traces reflect little more than the number of guns a merchant has sold. But Maryland dealers that have sold almost as many or more guns than Realco have had their guns seized at much lower rates, records show.

Realco is listed in the Maryland database as selling 19,000 guns since 1984. Of every 1,000 sold, analysis shows, police later recovered 131.

About five miles away from Realco, near Andrews Air Force Base, is Maryland Small Arms Range Inc. The longtime dealer has sold about 15,000 guns over the past 25 years. For every 1,000 it sold, police later recovered 41.

Jack Donald, a longtime salesman at the shop, said police officers often use the range on site, potentially affecting who shops there.

“It may be some kind of a deterrent,” Donald said.

Atlantic Guns, a long-established dealer in Silver Spring, has sold more than 18,000 guns in the past 25 years. For every 1,000 sold, police have recovered 28.

And in Rockville, a second Atlantic Guns location has sold more than 21,000 firearms since 1984 - the most listed in state records. Out of every 1,000 guns sold, police recovered eight.

One of the main ATF indicators of trafficking is how quickly guns are seized after they are sold, known as “time to crime.” The faster guns are recovered, the ATF has found, the more likely they were bought by someone with criminal intent, sometimes through straw purchases. Anything less than three years is considered a potential red flag.

In general, Realco guns have been recovered more quickly than guns sold by other Maryland dealers. In Prince George’s and the District, 55 percent of the recovered Realco guns were logged by police within three years, compared with 40 percent for the guns recovered from other Maryland dealers.

A Smith & Wesson .40-caliber handgun sold in March 2006 was recovered by Prince George’s police 13 months later not far from a body, surrounded by shell casings, on a Landover street. A 26-year-old man was shot and killed after finding two men breaking into his car. The shooter told police that he asked a 21-year-old woman to purchase the handgun for him because he was 20 at the time and “not of legal age to purchase one himself,” police said.

In a May 2006 straw purchase, a man bought a handgun at Realco for a felon friend who wanted to shoot abortion doctors. The plot was foiled after the felon’s family called authorities weeks later.

In another straw scheme that ended later that year, a 22-year-old District man on probation for a handgun violation had his 47-year-old girlfriend, an office manager at a law firm who had a clean record, buy handguns for him on four shopping trips to Realco, prosecutors said. The scheme unraveled after police recovered one of the guns in the District.

The ATF trace revealed that the woman had bought it at Realco two months before. After talking with an ATF agent, she filed reports that one of the guns was stolen, but she eventually said she gave it to her boyfriend.

The man “went to Realco Guns with her on each occasion,” she told the ATF, according to a document filed in court.

The straw purchase
When Erik Dixon first shot at a man, he had in his grip a relatively new Ruger .40-caliber handgun from Realco.

Dixon, then 21, had a string of arrests, was on federal probation, had abused drugs and complained of hearing voices in his head.

Standing outside his mother’s home in Landover the night of May 3, 2003, he accused a man, an acquaintance, of attacking him. Dixon ordered the man to the ground, took $200 from him and pulled the trigger. The bullet struck the asphalt, and lead fragments ricocheted into the victim’s face and shoulder.

As Dixon put the gun to the back of the man’s head, a police car turned onto the street. Dixon fled.

When police arrested Dixon two days later, the gun fell from his waistband. Realco had sold the gun about eight months before, records show, to a man who had lived in the area.

Charged with attempted murder, Dixon claimed he was insane. The courts sent him to prison on a lesser charge of felony assault.

Once out, he met Cathy R. Anderson, 31, and soon asked that she buy a gun for him. In January 2007, the pair visited Realco, where she made a down payment on a Glock .45, signing a form saying she was buying the gun for herself. Dixon was in the store with her, she later told police.

She told investigators she didn’t know of his criminal past. She said she never touched the gun after she picked it up on a return trip to Realco.

“I took it back to Erik’s truck and gave it to him,” she told police.

Two months later, Anderson called Maryland State Police, nervous about what she had done. That day, April 5, they opened a straw-purchase investigation to track down Dixon and the gun. Nine days later, he murdered his sister’s boyfriend.

He was arrested nine days after that in Virginia. Anderson cooperated with prosecutors, who chose not to charge her. Dixon is serving a 60-year sentence.

In phone messages, Anderson declined to be interviewed, saying Dixon is no longer in her life.

“That was then; this is now,” she said. “. . . I’m sorry for what happened.”

Contributing to this report were staff writers James V. Grimaldi and Sari Horwitz, videographer Ben de la Cruz, staff researcher Julie Tate and former staff researcher Meg Smith.

Published: Thursday, October 14, 2010, 9:00 PM

In seven years, New Orleans’ crime camera program has yielded six indictments: three for crimes caught on video and three for bribes and kickbacks a vendor is accused of paying a former city official to sell the cameras to City Hall.

The Times-PicayuneA crime camera at the corner of St. Roch Avenue and North Villere Street was not operating when a man was killed nearby in November 2008.

Given that ignominious track record and the millions the city has paid for a camera network that rarely worked, Mayor Mitch Landrieu unceremoniously pulled the plug on the project Thursday.

“Most of us can agree that based on the way that they were installed, based on the way that they operated and the way that they were not maintained, that they were not a good investment,” Landrieu said as he announced his proposal to scratch the program from the city budget. The budget requires City Council approval.

For now, the cameras will stay in place, but won’t be maintained. Landrieu said he wants to wait to see if they are ever something they could use again before taking them down.

“When you really prioritize and you’re asking whether that is the best money spent on trying to make the streets safe, we concluded given our financial pressures and our requirement to the city that we not waste money, that that’s not a good priority for us,” Landrieu said.

Once upon a time, the cameras were not only a priority, but they also were touted as a panacea for a crime-stricken city. Mayor Ray Nagin introduced the concept in 2003 and handed the program to his whiz-kid technology chief, Greg Meffert.

On a national television interview and in a USA Today article in 2004, Meffert bragged that New Orleans was blazing a new crime-fighting trail. He also claimed that a pilot project in the Iberville public housing development had reduced murders by 57 percent. At the time, he laughed off suggestions that the statistics were skewed by the tiny sample size.

Should the city’s crime cameras be scrapped?

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But the tables turned late last year when he testified in a civil court trial. As he tried to defend his decision to replace the original crime camera vendors with a team led by a buddy from the private sector named Mark St. Pierre, Meffert said in fact, the sample size in the Iberville trial was too small to matter.

In 2005 and 2006, a larger camera project failed to get off the ground as various St. Pierre companies set up deals with computer giant Dell Inc. to sell them to New Orleans, Baton Rouge, Lafayette, Savannah, Ga., and elsewhere. St. Pierre gave Meffert a corporate credit card, letting him charge big sums for personal items while he was city tech chief, including exotic vacations for him, Nagin and their families.

As soon as the civil trial ended last November, U.S. Attorney Jim Letten indicted St. Pierre, Meffert and Meffert’s wife Linda, charging them with a 63-count corruption scheme centered on the crime camera deal and the money St. Pierre paid to the Mefferts.

After Meffert left City Hall, there were only 53 Dell cameras in place. Nagin still promised a network of 250 cameras, but the wireless connections that were supposed to enable the cameras to communicate images back to police stations had major problems. A new vendor tried to establish a different process, but a new scandal broke out. Nagin’s new technology chief, Anthony Jones, was accused of taking gratuities from a vendor and falsifying payments. An audit found the city didn’t get the network it asked for, and Jones was fired.

Records of exactly how much money the city spent on the cameras are spotty. The city has paid for equipment, but also for contract personnel to install and maintain the system over the years. The total could be as high as $10 million. A city tally of the contract costs in early 2009 totaled more than $6 million. A review of the post-Meffert crime camera contract earlier this year showed that 200 cameras and network equipment under the latest contract would have cost another $4 million.

Nagin’s last crime camera vendor, Technology Consortium Group, claimed all of the units were working in February. But after Ronal Serpas took over as police superintendent in May, he said he found many of them were still down.

“There were many days that so few were operating that they had no impact,” Serpas said Thursday, adding that the NOPD found that private cameras provided more help to detectives.

by Seymour M. Hersh

November 1, 2010

Some experts say that the real danger lies in confusing cyber espionage with cyber war.

Published: 19 August, 2010, 17:38

Former Cuban President Fidel Castro continues to taunt the West, this time with an article that accuses the ultra-secretive Bilderberg Group of conspiring to create a one-world government.

Despite his advanced age and periodic bouts with an intestinal disorder, 84-year-old Castro continues to warn on the West, this time by dedicating three pages in the Communist Party newspaper Granma that quotes excerpts from a 2006 book by investigative journalist Daniel Estulin entitled “The Secrets of the Bilderberg Club”.

In a nutshell, Estulin’s book makes the tempting case that an elite group of political, academic and economic leaders are, as quoted by Castro, “ushering in a world government that knows no borders and is not accountable to anyone but its own self.”

Castro went on to call the book a “fantastic story” that draws public attention to “sinister cliques and the Bilderberg lobbyists” that are making a mockery of Western democratic traditions.

The Bilderberg Group, which holds annual closed-door meetings that are rarely covered by the mainstream media, got its name from a hotel in Holland where it commenced its first meeting in 1954. This year’s meeting was held in Spain, at the luxury Dolce Hotel in Sitges from June 3-6, and was opened by Spanish Prime Minister José Luis Rodríguez Zapatero. Thanks to growing interest in the group, which has become something of an Internet sensation, there was no shortage of protesters outside of this year’s venue.

Is Castro on to something?

Although international meetings that bring together the world’s movers and shakers occur on a regular basis, Bilderberg Group functions are different in that they convene behind closed doors, while the mainstream corporate media, despite having numerous representatives at these annual events, never reveals the content of what is discussed.

The Bilderberg Group website, which consists of just one page, defends its activities by tersely stating between nibbles of a caviar-coated cracker: “Bilderberg is a small, flexible, informal and off-the-record international forum in which different viewpoints can be expressed and mutual understanding enhanced. Bilderberg’s only activity is its annual Conference. At the meetings, no resolutions are proposed, no votes taken, and no policy statements issued.”

The website failed to explain, however, the coincidence of prominent guests who have gone on to be elected as political leaders of their respective countries, including Bill Clinton who first attended in 1991.

The rare photographs taken of public figures whisked into these insanely secret events behind an iron phalanx of security have naturally fed numerous conspiracy theories over the motivation behind these meetings. Meanwhile, the guest list to these events is a veritable who’s who of the most influential people of our times.

Here is a brief peek at some of the big-name attendees of this year’s power pow-wow that were leaked to the media: Bill Gates, Microsoft chairman; Richard Holbrooke, Special Representative for Afghanistan and Pakistan; Henry Kissinger, former US Secretary of State; Moisès Naìm, Editor-in-Chief, Foreign Policy; Her Majesty the Queen of the Netherlands; Her Majesty the Queen of Spain; Robert Rubin, Co-chairman, Council on Foreign Relations; Eric Schmidt, CEO, Google; Paul Volcker, US Economic Recovery Advisory Board; Peter Vosel, CEO, Royal Dutch Shell plc; Robert Zoellick, President, World Bank.

And the list goes on, but unfortunately any sort of mainstream reporting on these meetings does not.

Although Castro’s personal endorsement of Estulin’s book will draw attention to the mystery that surrounds Bilderberg, the diehard Cuban leader was not the first person to pull the lid off of this story.

Europe is also puzzled

On the initiative of Mario Borghezio, Italian Member of the European Parliament (Lega Nord, Europe of Freedom and Democracy Group), Daniel Estulin addressed the European Parliament in a press conference entitled “Bilderberg Group – Towards the Creation of a One World Company Ltd.?”

During the conference, Estulin accused North American and European elites of conspiring to create a so-called “aristocracy of purpose” in order to “control the necessities of life for the rest of the planet.”

Seemingly unpredictable events, Estulin argues, like the recent financial implosion that had powerful aftershocks around the planet, are actually nothing more than planned catastrophes designed to bring about the “One World Company, Ltd.”

At the same press conference, Borghezio used the opportunity to criticize the “selection” of Herman van Rompuy as the first president of the European Union, whose nomination was allegedly sealed after he was seen rubbing elbows at a recent Bilderberg event alongside the likes of Henry Kissinger, former prime minister of Sweden Carl Bildt and David Rockefeller, one of the great granddads of the annual get-together.

Here is the British media’s take on van Rompuy’s rise to power:

“The man tipped to be Europe’s first president is already considering new EU taxes to fund the rising cost of Brussels and the welfare state.”

Herman Van Rompuy, the Belgian Prime Minister, broke his silence before Thursday’s summit to choose the president – but only at a meeting of the secretive Bilderberg group of top politicians, bankers and businessmen.”

Mr. Van Rompuy’s contentious remarks were aired privately amid the grand surroundings of the Castle of the Valley of the Duchess near Brussels. The château hosted the talks on the Treaty of Rome in 1957 that launched the European Union.”

Clearly, the selection of van Rompuy by an elite minority of champagne-sipping individuals flies in the face of democratic theory and hurls Europe back into the Dark Ages when the voice of the people was considered bothersome at best.

“For me,” Borghezio told the conference, the selection of van Rompuy “relates to events that take place in absolute confidentiality, without public control, and had I not exposed it myself, we probably would still not have known about van Rompuy’s affiliations.”

Castro, who has been in power through 11 US presidencies (he has predicted that he will not survive Obama’s first term in office), has frequently harbored suspicions of conspiratorial plots. The former president has gone on the record as saying the events of September 11, for example, was an inside job by the US government to promote military expenditures and global reach.

Castro, who underwent emergency intestinal surgery in July 2006, handed over presidential powers to his brother Raul in February 2008. Yet this has not stopped the Communist from speaking his mind on matters of international urgency.

On August 8, Castro convened a special session of the Cuban parliament to discuss the threat of a “nuclear holocaust” over the Middle East crisis involving Israel, Iran and the United States. He even made a personal plea to US President Barack Obama to “avoid the worst possible outcome,” which would spell “disaster for humanity.”

Webster G. Tarpley, a frequent commentator on RT, noted that the US media largely ignored Castro’s warnings.

“Not surprisingly,” Tarpley was quoted by Global Research as saying, “the controlled Wall Street news media in the United States did everything possible to trivialize, denigrate and ridicule this dramatic warning. Frivolity and inanity rule US news coverage this summer.”

It is no surprise that the same media “frivolity and inanity” that is able to ignore warnings by a veteran global leader on the perils of a potential nuclear holocaust, is also able to ignore accusations that an ultra-secret organization is trampling recklessly on democratic terrain.

The question, however, is not whether the accusations against the Bilderberg Group are true or false, but rather why the international corporate media, despite having front row seats at these elite meetings, continually fail to report the content of these events to the public. Given the high-profile guest lists year after year, which regularly include the leaders of practically every Western power, this seems to be part of the public’s “right to know.”

Although Fidel Castro will never be elected as democracy’s poster boy, he seems to have a very valid argument in questioning the existence of a secretive group such as Bilderberg, which seems to have next to nothing in common with the West’s democratic traditions.

Secrecy regardless of the justifications has absolutely no place in a modern democracy.

October 27, 2010

Treasury Hid A.I.G. Loss, Report Says (New York Times):

The United States Treasury concealed $40 billion in likely taxpayer losses on the bailout of the American International Group earlier this month, when it abandoned its usual method for valuing investments, according to a report by the special inspector general for the Troubled Asset Relief Program.

“In our view, this is a significant failure in their transparency,” said Neil M. Barofsky, the inspector general, in an interview on Monday.

In early October, the Treasury issued a report predicting that the taxpayers would ultimately lose just $5 billion on their investment in A.I.G., a remarkable outcome, since the insurance company was extended $182 billion in taxpayer money in the early months of its rescue. The prediction of a modest loss, widely reported as A.I.G., the Federal Reserve and the Treasury rushed to complete an exit plan, contrasted with an earlier prediction by the Treasury that the taxpayers would lose $45 billion.

“The American people have a right for full and complete disclosure about their investment in A.I.G.,” Mr. Barofsky said, “and the U.S. government has an obligation, when they’re describing potential losses, to give complete information.”

U.S. Treasury too rosy on bailout cost – TARP cop (Reuters):

The Obama administration’s latest estimate of taxpayer costs of the Wall Street bailout is too rosy and could ultimately damage public trust in government, the top bailout cop said on Monday.

In its quarterly report to Congress, the Special Inspector General for the Troubled Asset Relief Program said the Treasury Department’s bailout cost estimate for American International Group (AIG.N) was an example of using misleading numbers to paint a positive pre-election account of the program.

The administration on Sept. 30 slashed its estimate of the overall cost of the U.S. financial bailout by more than half to less than $50 billion on the back of a new plan to sell the government’s stake in insurer AIG.

The SIGTARP report said the Treasury Department, in coming up with the fresh estimate, had changed its calculation method to estimate a $5 billion cost for AIG. That was a shift from an earlier projection of $45 billion that used a broader measure to calculate the cost.

See also the SIGTARP Quarterly Report from July 21, 2009:

By itself, the Troubled Asset Relief Program (“TARP”) is a huge program at $700 billion. As discussed in SIGTARP’s April Quarterly Report, the total financial exposure of TARP and TARP-related programs may reach approximately $3 trillion.  Although large in its own right, TARP is only a part of the combined efforts of the Federal Government to address the financial crisis. Approximately 50 initiatives or programs have been created by various Federal agencies since 2007 to provide potential support totaling more than $23.7 trillion. The Federal Reserve has been one of the lead agencies responding to the financial crisis — increasing its balance sheet to more than $2 trillion to implement a wide range of programs designed to stimulate liquidity in financial markets, as well as several institution-specific interventions. The Federal Reserve’s $2 trillion balance sheet (which grew from approximately $900 billion prior to the financial crisis to a peak of nearly $2.3 trillion in December 2008),322 however, does not reflect the true potential amount of support the Federal Reserve has provided to those programs, which is estimated to be at least $6.8 trillion. This is because many of the programs involve guarantees that, although not listed on the balance sheet, expose the Federal Reserve to significant losses if the assets they are backing deteriorate in value.

Drug addicts across the UK are being offered money to be sterilised by an American charity.Project Prevention is offering to pay £200 to any drug user in London, Glasgow, Bristol, Leicester and parts of Wales who agrees to be operated on.

The first person in the UK to accept the cash is drug addict “John” from Leicester who says he “should never be a father”.

The move has been criticised by some drug charities who work with addicts.

Project Prevention founder Barbara Harris admitted her methods amounted to “bribery”, but said it was the only way to stop babies being physically and mentally damaged by drugs during pregnancy.

Drug treatment charity Addaction estimates one million children in the UK are living with parents who abuse drugs.

Pregnant addicts can pass on the dependency to the unborn child, leading to organ and brain damage.

Mrs Harris set up her charity in North Carolina after adopting the children of a crack addict.

Damage to childrenSpeaking to the BBC’s Inside Out programme, she said: “The birth mother of my children obviously dabbled in all drugs and alcohol - she literally had a baby every year for eight years.

“I get very angry about the damage that drugs do to these children.”

After paying 3,500 addicts across the United States not to have children, she is now visiting parts of the UK blighted by drugs to encourage users to undergo “long-term birth control” for cash.

John, a 38-year-old addict from Leicester, is the first person in the UK to accept money to have a vasectomy after being involved in drugs since he was 12.

“It might work in America but Great Britain is a very different country”

Maria Cripps Dovetail Centre

He said: “It was something that I’d been thinking about for a long time.

“I won’t be able to support a kid; I can just about manage to support myself.”

Simon Antrobus, chief executive of Addaction, said while no-one wanted to see children brought up in a drug-using environment, there was no place for Project Prevention in the UK.

“It exploits very vulnerable people who are addicted to drugs and alcohol at probably the lowest point in their lives,” he said.

The Reverend Robert Black, of Victory Outreach, which works with former addicts in east London, said he thought Project Prevention’s aims were “very devious”.

Reversible contraceptionMaria Cripps, team leader at Islington’s Dovetail service which is part of Cranstoun Drug Services, said: “I think Barbara uses some very extreme examples to get her point across. It might work in America but Great Britain is a very different country.”

But Reverend Martin Blakebrough, director of Camden’s Kaleidoscope Project in north London, said sterilisation was “worth considering” if it was right for the individual.

A spokesperson at the British Medical Association said: “The BMA’s ethics committee does not have a view on the charity Project Prevention.

“As with all requests for treatment, doctors need to be confident that the individual has the capacity to make the specific decision at the time the decision is required.

“The BMA’s ethics committee also believes that doctors should inform patients of the benefits of reversible contraception so that the patients have more reproductive choices in the future.”

Sterilising The Addicts is on Inside Out London, East Midlands and West on 18 October on BBC One at 1930 BST and in Scotland as BBC Scotland Investigates: Addicts - No Children Allowed. Those living in the rest of the UK can watch via the BBC iPlayer following transmission.

by Aaron Saenz

September 26th, 2010

The million-plus citizens of Leon, Mexico are set to become the first example of a city secured through the power of biometric identification. Iris and face scanning technologies from Global Rainmakers, Inc. will allow people to use their eyes to prove their identify, withdraw money from an ATM, get help at a hospital, and even ride the bus. GRI’s eye scanning systems aren’t more secure than others on the market, but they are faster. Large archway detectors using infrared imaging can pick out 50 people per minute, even as they hustle by at speeds up to 1.5 meters per second (3.3 mph). The first phase of the Leon iris and face scanning project has already begun. It is estimated to cost around $5 million and focuses on law enforcement agencies’ security check points. Over the next three years commercial uses will be rolled out with banks leading the charge. Check out the videos below to see GRI’s wide range of iris scanning stations in action. Whether you’re jealous or intimidated by Leon’s adoption of widespread eye identification you should pay attention to the project – similar biometric checkpoints are coming to locations near you. Some are already in place.

When it comes to biometric identification, fingerprints are the most widespread and trusted technology. Yet they only contain a few dozen data points to link to your ID. Irises, in contrast, have around 2000 points of reference – enough to uniquely identify every person on Earth. Many companies have developed the means to take an iris scan and use these reference points to match them quickly to a database of scans. The problem has typically been that getting the image of the iris itself is slow and requires people to come very close to the scanning device. GRI has focused on improving the iris acquisition side of the technology, increasing the speed and range of their devices. Not only that, but they are bringing the costs down. A 30 person per minute device (the HBox Mini) costs around $48,000. Yet smaller devices, ones suitable for ATMs or desktop computers are falling below $2000. As they become faster and more affordable, the adoption of iris scanners is seemingly becoming more inevitable as well.

Here’s a demo of the larger devices from GRI. Notice that masks and sunglasses are generally not going to deter a scan:
The HBox V provides rapid access to restricted areas for those in cars at a rate around 12 people per minute.
Smaller devices like the EyeSwipe and EyeSwipe Mini could work for secured locations in an office. According to Fast Company, this scale of iris scanning tech is in place in Bank of America’s headquarters in Charlotte.
The HCam would provide a means of iris identification for computers and ATMs.
My apologies for showing so many different videos of GRI technology but I wanted to give you an idea of how completely the company has encompassed the application space for iris and face scanning. From large foot trafficked areas, to automobiles, to home use they’ve got it covered. They don’t have a handheld portable scanner that I’ve seen…but give them time and they’ll probably develop that as well.

This makes me believe GRI’s implementation in Leon is eventually going to exceed anything we’ve seen before. Every other means of access (license, credit card, keys, etc) has the potential of being augmented or replaced by iris and face scanning. Get on a bus, pass security on the way into work, pay for a meal, order packages online – all without using anything besides your eye. The Leon project could make this futuristic world appear in just 3 to 5 years. That’s incredible.

We have to put this in a larger context, too. India just launched its enormous effort to digitally identify more than a billion residents using fingerprints, face, and iris scans. Japan already uses finger scans during entry into the country. The EU is working on a variety of passive scanning technologies to help secure airports and other public spaces.

To some these emerging applications must seem like the sign of a privacy apocalypse. Government and commercial institutions will endeavor to create enormous shared databases of biometric data and scan huge numbers of private citizens everywhere they go. The first phase of the project in Leon is going to help track the movements of ‘watch-listed individuals’. Rapid scanning face and iris scanning technologies will redefine our sense of privacy in ways that make Big Brother seem like a little sissy.

Jeff Carter, chief business development officer of GRI, didn’t make any of this sound less threatening in his interview with Fast Company’s Austin Carr:

“…we’ve even worked with three-letter agencies on technology that can capture 30-plus feet away. In certain spaces, eventually, you’ll be able to have maybe one sensor the size of a dime, in the ceiling, and it would acquire all of our irises in motion, at a distance, hundreds–probably thousands as computer power continues to increase–at a time.”

“…If you’ve been convicted of a crime, in essence, this will act as a digital scarlet letter. If you’re a known shoplifter, for example, you won’t be able to go into a store without being flagged. For others, boarding a plane will be impossible.”

For commercial applications it’s just as incredible:

“Right now, we can determine how many eyeballs are on a Web page. And what you look at and click. For the first time, we can do that in a physical world. If you look at this or that advertisement, and then go purchase the product advertised, we can tie those two things together.”

“When you get masses of people opting-in, opting out does not help. Opting out actually puts more of a flag on you than just being part of the system. We believe everyone will opt-in.”

Does that vision sound ominous to you? It does to me, and I’m pretty biometric friendly. Yet I’m also fairly cynical. People already have a pretty good handle on my information. Google reads all my emails, albeit in an anonymous way. My bank knows most everything I buy, ditto for credit card companies. As Carter points out, I already deal with these commercial trackers every day. And I’ve opted into these systems. I could pay for everything with cash, but I find the convenience of plastic too great to ignore. While I’m worried about being verbally assaulted by billboards that try to identify me, they’re going to arrive whether I want them to or not.

Rather than fight the advent of biometrics, I’d rather focus on controlling how such data is used. We can pressure governments to insure that people are not unjustly placed on watch-lists. We can require businesses to divorce our identities from collected data to make advertisements anonymous even as they are personalized. We can limit who can use these technologies, and how, even as we accept that they will be widely adopted in the future. Now is the time, as the first cities test the feasibility of biometric ID systems, to ensure that they will be used to benefit rather than restrict the individual. The crucial moment to guide the path of this emergent technology has arrived. Blink and you could miss it.

By MATT RICHTEL
Published: July 06, 2003

 THIS is Charles Lax’s brain on speed.

Mr. Lax, a 44-year-old venture capitalist, is sitting in a conference for telecommunications executives at a hotel near Los Angeles, but he is not all here. Out of one ear, he listens to a live presentation about cable television technology; simultaneously, he surfs the Net on a laptop with a wireless connection, while occasionally checking his mobile device — part phone, part pager and part Internet gadget — for e-mail.

Mr. Lax flew from Boston and paid $2,000 to attend the conference, called Vortex. But he cannot unwire himself long enough to give the presenters his complete focus. If he did, he would face a fate worse than lack of productivity: he would become bored.

”It’s hard to concentrate on one thing,” he said, adding: ”I think I have a condition.”

The ubiquity of technology in the lives of executives, other businesspeople and consumers has created a subculture of the Always On — and a brewing tension between productivity and freneticism. For all the efficiency gains that it seemingly provides, the constant stream of data can interrupt not just dinner and family time, but also meetings and creative time, and it can prove very tough to turn off.

Some people who are persistently wired say it is not uncommon for them to be sitting in a meeting and using a hand-held device to exchange instant messages surreptitiously — with someone in the same meeting. Others may be sitting at a desk and engaging in conversation on two phones, one at each ear. At social events, or in the grandstand at their children’s soccer games, they read news feeds on mobile devices instead of chatting with actual human beings.

These speed demons say they will fall behind if they disconnect, but they also acknowledge feeling something much more powerful: they are compulsively drawn to the constant stimulation provided by incoming data. Call it O.C.D. — online compulsive disorder.

”It’s magnetic,” said Edward M. Hallowell, a psychiatry instructor at Harvard. ”It’s like a tar baby: the more you touch it, the more you have to.”

Dr. Hallowell and John Ratey, an associate professor at Harvard and a psychiatrist with an expertise in attention deficit disorder, are among a growing number of physicians and sociologists who are assessing how technology affects attention span, creativity and focus. Though many people regard multitasking as a social annoyance, these two and others are asking whether it is counterproductive, and even addicting.

The pair have their own term for this condition: pseudo-attention deficit disorder. Its sufferers do not have actual A.D.D., but, influenced by technology and the pace of modern life, have developed shorter attention spans. They become frustrated with long-term projects, thrive on the stress of constant fixes of information, and physically crave the bursts of stimulation from checking e-mail or voice mail or answering the phone.

”It’s like a dopamine squirt to be connected,” said Dr. Ratey, who compares the sensations created by constantly being wired to those of narcotics — a hit of pleasure, stimulation and escape. ”It takes the same pathway as our drugs of abuse and pleasure.”

”It’s an addiction,” he said, adding that some people cannot deal with down time or quiet moments. ”Without it, we are in withdrawal.”

ACCORDING to research compiled by David E. Meyer, a psychology professor at the University of Michigan, multitaskers actually hinder their productivity by trying to accomplish two things at once. Mr. Meyer has found that people who switch back and forth between two tasks, like exchanging e-mail and writing a report, may spend 50 percent more time on those tasks than if they work on them separately, completing one before starting the other.

As a result, Mr. Meyer said, businesspeople who multitask ”are making themselves worse businesspeople.”

He says little research has been done into why some people are compulsively drawn to multitasking. But he theorizes that the allure has several layers. Multitasking offers a guise of productivity, a ”macho” show of accomplishment, and similarities to a quick amphetamine rush.

”It’s related to what happens to skydivers or jet pilots,” he said. ”They put themselves in situations where, if they don’t perform at peak efficiency, they’ll crash and burn. In the aftermath there is a rush of chemicals.”

Patrick P. Gelsinger, the chief technology officer at Intel, says it is clear that the overall time spent in front of screens — whether desktop computers or hand-held devices — is rising. ”Time spent watching television is down,” he said. ”But over all you see a discretionary increase in the amount of time people are connected to technology.”

The presence of such devices, as well as their power, will only grow. Networks that provide wireless Internet access are in their early stages. Intel has put the full force of its science and marketing effort behind wireless devices and the superfast miniature microprocessors that power them.

Intel portrays computers as pushing productivity, and Mr. Gelsinger scoffs at the idea that digital devices have a compulsive or physically addictive draw. ”We don’t make drugs,” he said. ”We make technology building blocks that move the world forward in all ways.”

But he concedes that there can be a point at which the constant accessibility of information is hard to escape.

In one meeting at Intel, Mr. Gelsinger said he found himself sending an instant message to his boss across the room — a potential distraction, though he argued that by doing so, he did not have to engage in ”disruptive whispering.” At other times, Mr. Gelsinger has had to remind himself not to use e-mail on his laptop during a meeting because it can send the message that he is not paying full attention.

SOMETIMES, discipline must be imposed from the outside. At a recent technology conference organized by The Wall Street Journal and attended by industry heavyweights like Bill Gates of Microsoft, Steve Jobs of Apple Computer and Stephen M. Case of AOL Time Warner, people were discouraged from using their wireless Internet access during presentations.

Bucking the recent tradition at trade shows and technology conferences, the organizers decided not to provide wireless Internet access inside the conference.

”We wanted people to absorb what the speakers were saying,” said Walt Mossberg, a technology columnist at The Journal.

”We decided that if you have Wi-Fi, it would be destructive,” he added. ”If you have the Internet, it will win out. People imagine they can multitask, but sometimes people overestimate the extent to which they can do it.”

If multitasking creates a problem for people, the cause is not the gadget makers themselves, said Jeff Hallock, the senior director for consumer products at Sprint PCS, the mobile telephone carrier. The company has been selling the manna of multitasking: phones that can also take digital pictures, send e-mail and instant messages and download music. But Mr. Hallock says those functions help people stay organized, not make them frenetic.

”We’re enhancing people’s lives so they can have more control of the flurry of activity that’s seemingly coming in,” he said.

”You don’t have to check your voice mail,” he added. ”We’re giving you the chance to do so.”

The notion that using all these devices creates a harmful addiction is absurd to Bruce P. Mehlman, assistant commerce secretary for technology policy and a former executive at Cisco Systems. Mr. Mehlman said the presence of many gadgets in people’s lives created not a cacophony, but harmony and balance.

Mobile phones, wireless Internet devices and laptops have liberated executives, he said, allowing them to leave the office and to spend more time at home. The users of these technologies are constantly wired, he said, but to a very positive goal.

”Ten years ago, you had to be in the office 12 hours,” said Mr. Mehlman, who said he now spent 10 hours a day at work, giving him more time with his wife and three children, while also making use of his wireless-enabled laptop, BlackBerry and mobile phone.

”I get to help my kids get dressed, feed them breakfast, give them a bath and read them stories at night,” he said. He can also have Lego air fights — a game in which he and his 5-year-old son have imaginary dogfights with Lego airplanes.

Both love the game, and it has an added benefit for Dad: he can play with one hand while using the other to talk on the phone or check e-mail. The multitasking maneuver occasionally requires a trick: although Mr. Mehlman usually lets his son win the Lego air battles, he sometimes allows himself to win, which forces his son to spend a few minutes putting his plane back together.

”While he rebuilds his plane, I check my e-mail on the BlackBerry,” Mr. Mehlman explained.

Mr. Lax, too, cannot pass up the chance to use every bit of technology that comes his way. A graduate of Boston University who lives outside Boston, he is managing general partner at GrandBanks Capital, a venture investment firm. He serves on the boards of three companies, working to turn them into successful ventures. ”I build companies one customer at a time,” he said, adding that his investments are up against other well-financed competitors. ”It’s a race against time.”

Mr. Lax uses technology to keep up. He is, by his own admission, ”Always On.”

On his office desk is a land-line telephone, a mobile phone, a laptop computer connected to several printers, and a television, often tuned to CNN or CNBC. At his side is the aptly named Sidekick, a mobile device that serves as camera, calendar, address book, instant-messaging gadget and fallback phone. It can browse the Internet and receive e-mail. He has been known to pick it up whenever it chirps at him — and he acknowledges having used it to check e-mail while in the men’s restroom.

There is no down time in the car, either. ”I talk on the phone, but I have a headset,” Mr. Lax said. Does he do anything else, like using his Sidekick to read e-mail? ”I won’t be quoted as saying what else I do because it could get me arrested,” he said, laughing.

Mr. Lax said he loved the constant stimulation. ”It’s instant gratification,” he said, and it staves off boredom. ”I use it when I’m in a waiting situation — if I’m standing in line, waiting to be served for lunch, or getting takeout coffee at Starbucks. And, my God, at the airport it’s disastrous to have to wait there.

”Being able to send an e-mail in real time is just — ” Mr. Lax paused. ”Can you hold for a second? My other line is ringing.”

When he returned, he said he shared this way of working with many venture capitalists. ”We all suffer a kind of A.D.D,” he said. ”It’s a bit of a joke, but it’s true. We are easily bored. We have lots of things going on at the same time.”

The technology gives him a way to direct his excess energy. ”It is a kind of Ritalin,” he said, referring to the drug commonly taken by people with attention deficit disorder.

BUT he said technology dependence could have its down side. ”I’m in meetings all the time with people who are focused on what they’re doing on their computers, not on the presentation,” he said.

During the Vortex telecommunications conference, held in May in Dana Point, Calif., he and dozens of others were using wireless Internet access. He said that he was paying attention to the speaker, using his Internet connection to look up information about the cable industry.

”I was supporting the effort of the speaker by figuring the elements he was talking about,” Mr. Lax said. He paused. ”I was also doing e-mail so I guess I wasn’t giving 100 percent,” he added. ”I was 40 percent supporting the effort, and 60 percent doing other things.”

Indeed, he said, the technology can be a bit distracting. ”But it’s not a problem,” he said. ”Being able to process lots of data allows me to be more efficient and productive.”

”It allows me to accelerate success.”

By JAMES RISEN

WASHINGTON — Erik Prince, whose company, Blackwater Worldwide, is for sale and whose former top managers are facing criminal charges, has left the United States and moved to Abu Dhabi, according to court documents.

Mr. Prince, a former member of the Navy Seals and an heir to a Michigan auto parts fortune, left the country after a series of civil lawsuits, criminal charges and Congressional investigations singled out Blackwater or its former executives and other personnel. His company, now called Xe Services, has collected hundreds of millions of dollars from the United States government since 2001.

Current and former colleagues said Mr. Prince hoped to focus on security work from governments in Africa and the Middle East. They also said he was bitter about the legal scrutiny and negative publicity his company had received.

“He needs a break from America,” said one colleague, speaking only on the condition of anonymity about Mr. Prince’s long-rumored move.

Mr. Prince does not face any criminal charges, but five former top company executives have been indicted on federal weapons, conspiracy and obstruction charges. Two guards who worked for a Blackwater-affiliated company face murder charges from a 2009 shooting in Afghanistan, and the Justice Department is trying to revive its prosecution of five former Blackwater guards accused of killing 17 Iraqi civilians in 2007.

Over the past several years, Congress has also conducted a series of investigations of Blackwater’s activities in Iraq and Afghanistan, including an inquiry by the House Intelligence Committee into the company’s involvement in a proposed Central Intelligence Agency assassination program.

Mark Corallo, a spokesman for Mr. Prince, declined to comment about Mr. Prince’s move. Richard L. Beizer, a Washington lawyer representing Mr. Prince in a civil case, did not respond to requests for comment.

In documents filed last week in a civil lawsuit brought by former Blackwater employees accusing Mr. Prince of defrauding the government, Mr. Prince sought to avoid giving a deposition by stating that he had moved to Abu Dhabi in time for his children to enter school there Aug. 15. In the documents filed in federal court in Virginia, Mr. Prince’s lawyers describe Abu Dhabi as Mr. Prince’s place of residence. His deposition is now scheduled to take place there next week, lawyers involved in the case said.

Mr. Prince made a name for himself during the height of the war in Iraq, when Blackwater became the most recognizable brand name in the booming field of private security contracting. The company, which Mr. Prince founded in 1997, expanded rapidly, winning a series of contracts with the State Department, the C.I.A. and the Defense Department.

But Blackwater personnel in Iraq soon gained a reputation for cowboy tactics and the use of excessive force while guarding convoys of United States diplomats, leading to complaints from Iraqis and friction with the United States military.

Blackwater’s biggest public crisis came in September 2007, when its guards on a convoy in Nisour Square in Baghdad opened fire with machine guns, grenade launchers and other weapons, killing 17 Iraqi civilians. Five guards were indicted in the United States on manslaughter charges, but the charges were dismissed late last year by a federal judge. The Justice Department is appealing that ruling.

The Nisour Square killings ultimately led the State Department to drop Blackwater from its diplomatic security contract in Iraq. But the Justice Department has been investigating whether Blackwater sought to bribe Iraqi government officials to allow the firm to operate in the country after the Nisour Square killings.

In 2009, with scrutiny of Blackwater’s activities intensifying, Mr. Prince changed the company’s name and overhauled the management. He sold the company’s aviation arm early this year, and finally placed the whole company, including its huge headquarters and training complex in Moyock, N.C., up for sale in June.

If you’ve been paying attention to some of the more peculiar side-effects of the global recession, you may have noticed that Canadians have been behaving uncharacteristically uppity of late. This new-found swagger is a result of Canada having the dubious distinction of being the “least-bad-rich-world-economy” – an honour that would be rather unimpressive if the rest of the G8 wasn’t so persistently gloom-stricken.

While most wealthy economies are still stagnant, in decline or disrepair, the Canadian economy has outpaced allcomers and will job reports expected to tell different stories”>avoid the possibility of a double-dip recession that continues to haunt the US. But beyond the chorus of self-congratulatory backslapping coming from Ottawa, there has emerged a new and immediate threat of economic crisis that is being willfully ignored by Canadian politicians.

This November, in an effort to increase tax revenue, California will hold a referendum on whether or not to legalise the cultivation and use of marijuana. If passed, the change in law would be devastating to the Canadian economy, halting the flow of billions of dollars from the US into Canada and eventually forcing hundreds of thousands into unemployment.

Over the past 20 years, Canada has developed a substantial and highly profitable marijuana industry that is almost completely dependent on the US market. Between 60 and 90% of the marijuana produced domestically is exported to the US via cross-border smuggling operations. It’s exactly like the alcohol prohibition of the 1920s, only far more sophisticated and more profitable. The establishment of a legal industry based in the US would likely cripple these exports overnight.

Due to its contraband nature, it’s difficult to determine exactly how much marijuana contributes to the Canadian economy, but a number of agencies and economists have estimated that it is in the range of $20bn per year (£12.5bn), making it Canada’s single largest agricultural product. The bulk of production is based in British Columbia, where it employs a labour force of 250,000, roughly one in 14 adults. Although strict financial controls are often credited as the source of Canada’s economic resilience, it’s worth pointing out that marijuana production often insulates communities from larger economic phenomenon.

My hometown, Nelson, British Columbia, is an example of such a community. After the lumber industry entered into decline, Nelson was able to make the transition from a typical rural lumber town into a thriving arts and mountain sports hotbed, due in part to the wealth generated by marijuana growers. If one were to have spent the last three years in this idyllic mountain hamlet, the economic crisis would have been barely noticeable.

All over Canada there are comparable situations. Countless cities, including major centres like Vancouver, would have been far worse off if marijuana cultivation hadn’t filled the employment vacuum left by declining resource-based industries.

But the current system only works if it exists in contrast to American prohibition. If Californians vote to legalise, the only way for Canada to avoid taking a massive economic hit would be to follow suit, legalising on a national level and taxing the industry a la tobacco or alcohol.

Ironically, support for legalisation is stronger in Canada than it is in California. Canada’s most prominent rightwing thinktanks have long supported legalisation, as do the majority of Canadians. But since the Conservative prime minister, Stephen Harper, formed a minority government in 2006, drug reform has been wiped off the agenda and the gears have grinded into reverse. In a bizarre twist that defies all rational thought, the Conservatives have decided they want to go in the opposite direction of the Canadian voter and emulate outdated Republican drug war policies that have already proved catastrophic in the US.

The Conservatives have proposed legislation that would introduce mandatory minimum prison sentences for marijuana producers. If passed, the legislation would result in spending billions in order to put more people in prison – the exact scenario that lead California into severe debt and towards legalisation. Even more stupefying, police in Montreal recently raided a “compassion centre” that legally distributes medicinal cannabis, and Conservative politicians have started calling for medicinal centres to be shut down across the country.

Meanwhile, the Liberal opposition, who when still in power tabled a decriminalisation bill, have rolled onto their bellies and supported Harper’s crackdown on pot. It’s a startling departure from the situation seven years ago, when Canada was a global leader in marijuana reform. Back then, there was the political will and the only obstacle to progress was the Bush administration.

But the only government worth blaming today is our own. What the world will get from Canada now is a demonstration of what to avoid – the spectacle of a nation intentionally sabotaging itself for reasons that don’t even deserve to be labelled ideological. Looks like we might get that double dip after all.

By Frank Thadeusz

The entire country seemed to be obsessed with reading. The sudden passion for books struck even booksellers as strange and in 1836 led literary critic Wolfgang Menzel to declare Germans “a people of poets and thinkers.”

“That famous phrase is completely misconstrued,” declares economic historian Eckhard Höffner, 44. “It refers not to literary greats such as Goethe and Schiller,” he explains, “but to the fact that an incomparable mass of reading material was being produced in Germany.”Höffner has researched that early heyday of printed material in Germany and reached a surprising conclusion — unlike neighboring England and France, Germany experienced an unparalleled explosion of knowledge in the 19th century.

German authors during this period wrote ceaselessly. Around 14,000 new publications appeared in a single year in 1843. Measured against population numbers at the time, this reaches nearly today’s level. And although novels were published as well, the majority of the works were academic papers.

The situation in England was very different. “For the period of the Enlightenment and bourgeois emancipation, we see deplorable progress in Great Britain,” Höffner states.

Equally Developed Industrial Nation

Indeed, only 1,000 new works appeared annually in England at that time — 10 times fewer than in Germany — and this was not without consequences. Höffner believes it was the chronically weak book market that caused England, the colonial power, to fritter away its head start within the span of a century, while the underdeveloped agrarian state of Germany caught up rapidly, becoming an equally developed industrial nation by 1900.

Even more startling is the factor Höffner believes caused this development — in his view, it was none other than copyright law, which was established early in Great Britain, in 1710, that crippled the world of knowledge in the United Kingdom.

Germany, on the other hand, didn’t bother with the concept of copyright for a long time. Prussia, then by far Germany’s biggest state, introduced a copyright law in 1837, but Germany’s continued division into small states meant that it was hardly possible to enforce the law throughout the empire.

Höffner’s diligent research is the first academic work to examine the effects of the copyright over a comparatively long period of time and based on a direct comparison between two countries, and his findings have caused a stir among academics. Until now, copyright was seen as a great achievement and a guarantee for a flourishing book market. Authors are only motivated to write, runs the conventional belief, if they know their rights will be protected.

Yet a historical comparison, at least, reaches a different conclusion. Publishers in England exploited their monopoly shamelessly. New discoveries were generally published in limited editions of at most 750 copies and sold at a price that often exceeded the weekly salary of an educated worker.

London’s most prominent publishers made very good money with this system, some driving around the city in gilt carriages. Their customers were the wealthy and the nobility, and their books regarded as pure luxury goods. In the few libraries that did exist, the valuable volumes were chained to the shelves to protect them from potential thieves.

In Germany during the same period, publishers had plagiarizers — who could reprint each new publication and sell it cheaply without fear of punishment — breathing down their necks. Successful publishers were the ones who took a sophisticated approach in reaction to these copycats and devised a form of publication still common today, issuing fancy editions for their wealthy customers and low-priced paperbacks for the masses.

A Multitude of Treatises

This created a book market very different from the one found in England. Bestsellers and academic works were introduced to the German public in large numbers and at extremely low prices. “So many thousands of people in the most hidden corners of Germany, who could not have thought of buying books due to the expensive prices, have put together, little by little, a small library of reprints,” the historian Heinrich Bensen wrote enthusiastically at the time.

The prospect of a wide readership motivated scientists in particular to publish the results of their research. In Höffner’s analysis, “a completely new form of imparting knowledge established itself.”

Essentially the only method for disseminating new knowledge that people of that period had known was verbal instruction from a master or scholar at a university. Now, suddenly, a multitude of high-level treatises circulated throughout the country.

The “Literature Newspaper” reported in 1826 that “the majority of works concern natural objects of all types and especially the practical application of nature studies in medicine, industry, agriculture, etc.” Scholars in Germany churned out tracts and handbooks on topics such as chemistry, mechanics, engineering, optics and the production of steel.

In England during the same period, an elite circle indulged in a classical educational canon centered more on literature, philosophy, theology, languages and historiography. Practical instruction manuals of the type being mass-produced in Germany, on topics from constructing dikes to planting grain, were for the most part lacking in England. “In Great Britain, people were dependent on the medieval method of hearsay for the dissemination of this useful, modern knowledge,” Höffner explains.

The German proliferation of knowledge created a curious situation that hardly anyone is likely to have noticed at the time. Sigismund Hermbstädt, for example, a chemistry and pharmacy professor in Berlin, who has long since disappeared into the oblivion of history, earned more royalties for his “Principles of Leather Tanning” published in 1806 than British author Mary Shelley did for her horror novel “Frankenstein,” which is still famous today.

‘Lively Scholarly Discourse’

The trade in technical literature was so strong that publishers constantly worried about having a large enough supply, and this situation gave even the less talented scientific authors a good bargaining position in relation to publishers. Many professors supplemented their salaries with substantial additional income from the publication of handbooks and informational brochures.

Höffner explains that this “lively scholarly discourse” laid the basis for the Gründerzeit, or foundation period, the term used to describe the rapid industrial expansion in Germany in the late 19th century. The period produced later industrial magnates such as Alfred Krupp and Werner von Siemens.The market for scientific literature didn’t collapse even as copyright law gradually became established in Germany in the 1840s. German publishers did, however, react to the new situation in a restrictive way reminiscent of their British colleagues, cranking up prices and doing away with the low-price market.

Authors, now guaranteed the rights to their own works, were often annoyed by this development. Heinrich Heine, for example, wrote to his publisher Julius Campe on October 24, 1854, in a rather acerbic mood: “Due to the tremendously high prices you have established, I will hardly see a second edition of the book anytime soon. But you must set lower prices, dear Campe, for otherwise I really don’t see why I was so lenient with my material interests.”

The investment arms of the CIA and Google are both backing a company that monitors the web in real time — and says it uses that information to predict the future.

The company is called Recorded Future, and it scours tens of thousands of websites, blogs and Twitter accounts to find the relationships between people, organizations, actions and incidents — both present and still-to-come. In a white paper, the company says its temporal analytics engine “goes beyond search” by “looking at the ‘invisible links’ between documents that talk about the same, or related, entities and events.”

The idea is to figure out for each incident who was involved, where it happened and when it might go down. Recorded Future then plots that chatter, showing online “momentum” for any given event.

“The cool thing is, you can actually predict the curve, in many cases,” says company CEO Christopher Ahlberg, a former Swedish Army Ranger with a PhD in computer science.

Which naturally makes the 16-person Cambridge, Massachusetts, firm attractive to Google Ventures, the search giant’s investment division, and to In-Q-Tel, which handles similar duties for the CIA and the wider intelligence community.

It’s not the very first time Google has done business with America’s spy agencies. Long before it reportedly enlisted the help of the National Security Agency to secure its networks, Google sold equipment to the secret signals-intelligence group. In-Q-Tel backed the mapping firm Keyhole, which was bought by Google in 2004 — and then became the backbone for Google Earth.

This appears to be the first time, however, that the intelligence community and Google have funded the same startup, at the same time. No one is accusing Google of directly collaborating with the CIA. But the investments are bound to be fodder for critics of Google, who already see the search giant as overly cozy with the U.S. government, and worry that the company is starting to forget its “don’t be evil” mantra.

America’s spy services have become increasingly interested in mining “open source intelligence” — information that’s publicly available, but often hidden in the daily avalanche of TV shows, newspaper articles, blog posts, online videos and radio reports.

“Secret information isn’t always the brass ring in our profession,” then CIA-director General Michael Hayden told a conference in 2008. “In fact, there’s a real satisfaction in solving a problem or answering a tough question with information that someone was dumb enough to leave out in the open.”

U.S. spy agencies, through In-Q-Tel, have invested in a number of firms to help them better find that information. Visible Technologies crawls over half a million web 2.0 sites a day, scraping more than a million posts and conversations taking place on blogs, YouTube, Twitter and Amazon. Attensity applies the rules of grammar to the so-called “unstructured text” of the web to make it more easily digestible by government databases. Keyhole (now Google Earth) is a staple of the targeting cells in military-intelligence units.

Recorded Future strips from web pages the people, places and activities they mention. The company examines when and where these events happened (“spatial and temporal analysis”) and the tone of the document (“sentiment analysis”). Then it applies some artificial-intelligence algorithms to tease out connections between the players. Recorded Future maintains an index with more than 100 million events, hosted on Amazon.com servers. The analysis, however, is on the living web.

“We’re right there as it happens,” Ahlberg told Danger Room as he clicked through a demonstration. “We can assemble actual real-time dossiers on people.”

Recorded Future certainly has the potential to spot events and trends early. Take the case of Hezbollah’s long-range missiles. On March 21, Israeli President Shimon Peres leveled the allegation that the terror group had Scud-like weapons. Scouring Hezbollah leader Hassan Nasrallah’s past statements, Recorded Future found corroborating evidence from a month prior that appeared to back up Peres’ accusations.

That’s one of several hypothetical cases Recorded Future runs in its blog devoted to intelligence analysis. But it’s safe to assume that the company already has at least one spy agency’s attention. In-Q-Tel doesn’t make investments in firms without an “end customer” ready to test out that company’s products.

Both Google Ventures and In-Q-Tel made their investments in 2009, shortly after the company was founded. The exact amounts weren’t disclosed, but were under $10 million each. Google’s investment came to light earlier this year online. In-Q-Tel, which often announces its new holdings in press releases, quietly uploaded a brief mention of its investment a few weeks ago.

Both In-Q-Tel and Google Ventures have seats on Recorded Future’s board. Ahlberg says those board members have been “very helpful,” providing business and technology advice, as well as introducing him to potential customers. Both organizations, it’s safe to say, will profit handsomely if Recorded Future is ever sold or taken public. Ahlberg’s last company, the corporate intelligence firm Spotfire, was acquired in 2007 for $195 million in cash.

Google Ventures did not return requests to comment for this article. In-Q-Tel Chief of Staff Lisbeth Poulos e-mailed a one-line statement: “We are pleased that Recorded Future is now part of IQT’s portfolio of innovative startup companies who support the mission of the U.S. Intelligence Community.”

Just because Google and In-Q-Tel have both invested in Recorded Future doesn’t mean Google is suddenly in bed with the government. Of course, to Google’s critics — including conservative legal groups, and Republican congressmen — the Obama Administration and the Mountain View, California, company slipped between the sheets a long time ago.

Google CEO Eric Schmidt hosted a town hall at company headquarters in the early days of Obama’s presidential campaign. Senior White House officials like economic chief Larry Summers give speeches at the New America Foundation, the left-of-center think tank chaired by Schmidt. Former Google public policy chief Andrew McLaughlin is now the White House’s deputy CTO, and was publicly (if mildly) reprimanded by the administration for continuing to hash out issues with his former colleagues.

In some corners, the scrutiny of the company’s political ties have dovetailed with concerns about how Google collects and uses its enormous storehouse of search data, e-mail, maps and online documents. Google, as we all know, keeps a titanic amount of information about every aspect of our online lives. Customers largely have trusted the company so far, because of the quality of their products, and because of Google’s pledges not to misuse the information still ring true to many.

But unease has been growing. Thirty seven state Attorneys General are demanding answers from the company after Google hoovered up 600 gigabytes of data from open Wi-Fi networks as it snapped pictures for its Street View project. (The company swears the incident was an accident.)

“Assurances from the likes of Google that the company can be trusted to respect consumers’ privacy because its corporate motto is ‘don’t be evil’ have been shown by recent events such as the ‘Wi-Spy’ debacle to be unwarranted,” long-time corporate gadfly John M. Simpson told a Congressional hearing in a prepared statement. Any business dealings with the CIA’s investment arm are unlikely to make critics like him more comfortable.

But Steven Aftergood, a critical observer of the intelligence community from his perch at the Federation of American Scientists, isn’t worried about the Recorded Future deal. Yet.

“To me, whether this is troublesome or not depends on the degree of transparency involved. If everything is aboveboard — from contracts to deliverables — I don’t see a problem with it,” he told Danger Room by e-mail. “But if there are blank spots in the record, then they will be filled with public skepticism or worse, both here and abroad, and not without reason.”

If you want to understand copyright law, its history, and how it’s been abused, you really ought to read this excellent overview by law professor and practicing intellectual property attorney, Lydia Pallas Loren, called The Purpose of Copyright (found via Teleread). The article kicks off with a point that we’ve made over and over again here, that many people incorrectly believe the purpose of copyright law is to protect creators. Unfortunately, this false belief permeates many in society — including copyright lawyers:

Copyright permeates our lives and yet, despite its impact on our lives, relatively few people, including lawyers, have sufficient knowledge or understanding of what copyright is. And far too many people, including lawyers, have major misconceptions concerning copyright. These misconceptions are causing a dangerous shift in copyright protection, a shift that threatens the advancement of knowledge and learning in this country. This shift that we are experiencing in copyright law reflects a move away from viewing copyright as a monopoly that the public is willing to tolerate in order to encourage innovation and creation of new works to viewing copyright as a significant asset to this country’s economy. The most recent example of this shift is the new Digital Millennium Copyright Act, sign by the President on October 28, 1998.

Understanding the root cause and the dangers of this shift requires exposing the most fundamental and most common misconception concerning the underlying purpose of the monopoly granted by our copyright law. The primary purpose of copyright is not, as many people believe, to protect authors against those who would steal the fruits of their labor. However, this misconception, repeated so often that it has become accepted among the public as true, poses serious dangers to the core purpose that copyright law is designed to serve.

From there, the article digs deep into the history of copyright, from well before The Statute of Anne, back to a time when copyright was a private agreement among publishers, designed to retain monopolies, act as censors and generally control the publishing market. It certainly wasn’t about protecting creators, who had nothing to do with it. From the beginning it was about middlemen and monopolies. What’s unfortunate is that our founding fathers, who were so well versed in the problems of monopolies and the harm they cause, still seemed to believe that a limited version of such monopolies might encourage greater learning and education in the field of science. In fact, they specifically added the clause “to promote the progress,” to make it clear to Congress that these monopolies were only to be used if they met that goal:

The framers of the United States Constitution, suspicious of all monopolies to begin with, knew the history of the copyright as a tool of censorship and press control. They wanted to assure that copyright was not used as a means of oppression and censorship in the United States. They therefore expressly provided for the purpose of copyright: to promote the progress of knowledge and learning.

While the courts and Congress initially took safeguarding that point of copyright law seriously, it eventually changed. Early on, however, Congress and the courts actually did focus on whether or not the overall public benefited or was harmed by aspects of copyright law. However, before too long, the whole concept of copyright law was bastardized into having nothing to do with the public benefiting, and only being about copyright holders (once again, often the middlemen) benefiting at the expense of the greater public. In other words, it’s come full circle back to what it once was: a tool for middlemen to limit and censor expression.

These are only a few small snippets, but it’s an excellent read. Many of you may already be up on these points, but whether you’ve read similar things before or not, I highly recommend this article.

• By Kim Zetter

• August 10, 2010  |

The owner of an internet service provider who mounted a high-profile court challenge to a secret FBI records demand has finally been partially released from a 6-year-old gag order that forced him to keep his role in the case a secret from even his closest friends and family. He can now identify himself and discuss the case, although he still can’t reveal what information the FBI sought.

Nicholas Merrill, 37, was president of New York-based Calyx Internet Access when he received a so-called “national security letter” from the FBI in February 2004 demanding records of one of his customers and filed a lawsuit to challenge it. His company was a combination ISP and security consultancy business that was launched in the mid-90s and had about 200 customers, Merrill said, many of them advertising agencies and non-profit groups.

Despite the fact that the FBI later dropped its demand for the records, Merrill was prohibited from telling his fiancée, friends or family members that he had received the letter or that he was embroiled in a lawsuit challenging its legitimacy. He occasionally showed up for court hearings about the case, but sat silently in the audience with other court observers. In 2007, he was prevented from publicly accepting an award for his courage from the American Civil Liberties Union, because he was not allowed to identify himself as the plaintiff in the case.

U.S. District Judge Victor Marrero in New York finally released Merrill partially from the gag order (.pdf) on July 30, which Merrill revealed publicly only on Monday.

“After six long years of not being able to tell anyone at all what happened to me – not even my family – I’m grateful to finally be able to talk about my experience of being served with a national security letter,” Merrill said in a statement. “Internet users do not give up their privacy rights when they log on, and the FBI should not have the power to secretly demand that ISPs turn over constitutionally protected information about their users without a court order. I hope my successful challenge to the FBI’s NSL gag power will empower others who may have received NSLs to speak out.”

A national security letter is an informal administrative letter the FBI can use to secretly demand customer records from ISPs, financial institutions, libraries, insurance companies, travel agencies, stockbrokers, car dealerships and others. NSLs have been used since the 1980s, but the Patriot Act, passed after the September 11, 2001 terrorist attacks, and a subsequent revision in 2003 expanded the kinds of records that could be obtained with an NSL.

With an NSL, the FBI does not need to seek a court order to obtain such records, nor does it need to prove just cause. An FBI field agent simply needs to draft an NSL stating the information being sought is “relevant” to a national security investigation.

The letters come with a life-long gag order, so businesses that receive such letters are prohibited from revealing to anyone, including customers who may be under investigation, that the government has requested records of transactions. Violation of a gag order can be punishable by up to five years in prison.

The gag orders raise the possibility for extensive abuse of NSLs, under the cover of secrecy. Indeed, in 2007, a Justice Department Inspector General audit found that the FBI, which issued almost 200,000 NSLs between 2003 and 2006, had abused its authority and misused NSLs.

In Merrill’s case, although the letter’s gag order “was totally clear that they were saying that I couldn’t speak to a lawyer” about it, he immediately contacted his personal attorney, and together they went to the ACLU in New York, which agreed to represent him.

“My gut feeling is I’m an American,” Merrill said, in an interview with Threat Level on Tuesday. “I always have a right to an attorney. There’s no such thing as you can’t talk to your attorney.

“I kind of felt at the beginning, so few people challenge this thing, I couldn’t just stand by and see, in my opinion, the basic underpinnings of our government undermined,” he continued. “I was taught about how sophisticated our system of checks and balances is . . . and if you really believe in that, then the idea of one branch of government just demanding records without being checked and balanced by the judicial just is so obviously wrong on the surface.”

Merrill and the ACLU filed the lawsuit under the name “John Doe,” challenging the legality of the letter and asserting that customer records were constitutionally protected information. Merrill said the NSL, which listed 16 categories of records, including e-mail and billing records, was “very broad.”

“It was kind of open ended,” he said. “It went through a list of things and then said ‘and anything else.’ The implication was just send us everything and the kitchen sink.”

Merrill wouldn’t say how many records he had that were relevant to the request but said in general, “In the most broad understanding of what is electronic communication transaction records, I probably had like thousands and thousands of records on each client, if you consider that you host things and you’re using software that creates log files. . . . ISPs have a lot of records on every client typically. They may have records of every time you posted something, of every web site you visited.”

Over the years the case progressed, Merrill was careful not to disclose his identity. At one point he attended a packed hearing — filled with law school students and media — but he was careful not to speak with anyone.

Friends began to question whether he was John Doe when he was publicly identified with a second case involving a grand jury subpoena from the Secret Service for customer records related to the news site IndyMedia. In that case, no gag order was imposed. Merrill said he was forced to lie when asked about John Doe or simply refused to answer.

“It put me in a very difficult position,” he said.

In 2007, the ACLU granted “John Doe” a liberty award, along with four Connecticut librarians who also filed a legal challenge over NSLs. Because of the gag order against Merrill, the ACLU had to present his award to an empty chair.

In December 2008, the Second Circuit Court of Appeals ruled that some of the NSL gag provisions were unconstitutional, in part because they limited judicial review of the gag orders and forced courts to defer to the government’s assertions about the necessity of a gag order and also thwarted the ability of recipients to challenge a gag order. The case was sent back to the U.S. District Court for the Southern District of New York, forcing the government to justify the constitutionality of the gag order imposed on Merrill.

In June 2009, the government introduced secret evidence to the court to justify continuing the gag order, claiming that if information were revealed about the letter it would harm an ongoing investigation. Merrill and his attorneys were prevented from learning the specifics of the evidence in order to refute it. The government was then ordered by the court to produce an unclassified summary of its evidence.

The ACLU worked hard to negotiate a partial gag-lift with the government that allowed Merrill to finally identify himself, while still keeping the details of the letter secret. In return, Merrill and the ACLU agreed to drop their appeal of the case.

Although the case helped expose the secrecy around NSLs and resulted in some First Amendment progress for entities receiving such requests — Congress amended the law to allow recipients to challenge NSLs and gag orders, and the FBI must now also prove in court that disclosure of an NSL would harm a national security case — the fight over NSLs is not over. The Obama administration has been seeking to expand the FBI’s power to demand internet activity records of customers without court approval or suspicion of wrongdoing. If granted, the data sought without a court order could expand to include web browser and search history, and Facebook friend requests.

“Even though this case has resulted in significant improvements to NSL procedures, innocent Americans’ private records remain too vulnerable to secret and warrantless data collection by the FBI,” said Melissa Goodman, staff attorney with the ACLU National Security Project in a statement. “At a minimum, the FBI should have to show individual suspicion before it issues an NSL for an individual’s personal information and invades Americans’ right to privacy and free speech on the Internet.”

The FBI’s use of national security letters to get information on Americans without a court order increased from 16,804 in 2007 to 24,744 in 2008. The 2008 requests targeted 7,225 U.S. people.

In the 2007 inspector general’s report, investigators found that the FBI had failed to adequately justify some letters, had evaded limits on (and sometimes illegally issued) NSLs to obtain phone, e-mail and financial information on American citizens, and had under-reported the use of NSLs to Congress.

About 60 percent of a sample of the FBI’s NSLs did not conform to Justice Department rules, and another 22 percent possibly violated the statute because they made improper requests of businesses or involved unauthorized collections of information.

Subsequently, the number of NSLs issued in 2007 dramatically dropped from 49,000 to 16,000, but has rebounded in recent years.

Merrill’s experience with the case has prompted him to launch a non-profit, the Calyx Institute, aimed at educating the technology and telecommunications industry and developing best practices and tools for safeguarding the privacy of customers.

“I feel there’s a lot of work to be done,” he said. “The case has made me realize that just one or two people standing up can have a great effect. I either want to inspire others to follow the example . . . or develop technology that makes it more difficult for people to be snooped on.”

By Katie Drummond

Extreme altitudes are a major barrier for troops fighting in the mountains of Afghanistan, and the military’s spent millions trying to minimize altitude’s impact on physical and cognitive ability. Now, Darpa-funded researchers are making impressive progress towards inhaled drugs that would pump up troop performance by fast-tracking the body’s natural adaptations to altitude.

The Pentagon’s blue sky research arm has awarded $4.7 million to scientists at the Case Western Reserve School of Medicine, to develop pharmaceuticals that can rapidly boost oxygen delivery. Blood carries less oxygen at high altitudes, leading to a lack of oxygen in bodily tissue, called hypoxia. That, in turn, can cause nausea, confusion and fatigue — hardly the attributes the military’s after in battle-ready troops. By augmenting blood flow to tissues, the research team hopes to enhance oxygen delivery too.

That’s an adaptive process the human body is already capable of, but the necessary acclimatization can take weeks. Dr. Jonathan Stamler, who’s leading the research at Case Western, says the drugs will essentially do what we already can.

“We’re essentially mimicking nature here,” he tells Danger Room. “Take people climbing mountains, who will set up base camps at varying altitudes to give their bodies time to adjust. We’re making these mechanisms much, much more acute — a matter of minutes, rather than days.”

The drugs will work by increasing blood levels of nitric oxide, which is naturally released by red blood cells to dilate vessels and increase blood flow.

Within three years, Darpa wants to see animal models and human subjects capable of immediately exercising more efficiently at altitude after taking the drugs. Stamler and co. are well on their way to meeting the ambitious goal: they’re already performing tests on animal models, and have applied for FDA approval to try the approach in people.

Stamler also anticipates widespread civilian applications for the drug, which will likely be dispensed in portable inhalers.

“A deficiency of nitric oxide has been observed in a number of conditions, from sickle cell disease to heart attacks and strokes,” he says.

Figuring out a quick way to increase nitric oxide levels might also help the military solve another major problem: donated blood that’s weeks old by the time it hits the front lines. Older blood is low on nitric oxide, which some scientists now suspect leads to risk of heart attack and stroke among transfusion recipients.

“If we can get this right for Darpa,” he says, “Then the actual approach could apply to much more than just altitude adaptations.”

• By David Kravets
• April 27, 2010  |

One study after another purports to chronicle how much intellectual property piracy hurts the economy, and contributes to every societal ill from  terrorism to child porn and slavery.

A new study unveiled Tuesday sets out to examine intellectual property in a different light: How fair use — which doesn’t require permission from the copyright holder — actually benefits the economy.

The trade group, Computer & Communications Industry Association, in a follow-up to its 2007 report, asks: “What contribution is made to our economy by industries that depend on the limitations to copyright protection when engaged in commerce?”

For the year 2007, the fair-use economy accounted for $4.7 trillion in revenue (.pdf)  and $2.2 trillion in value added, roughly one-sixth the total gross domestic product of the United States, according to the study. The fair-use economy also employed more than 17 million people with a $1.2 trillion payroll.

Fair-use-dependent industries include educational institutions, search engines, web hosting providers, software developers and device manufacturers, among others.

To be sure, the government urges caution when analyzing the economics of intellectual property. Still, we thought we’d throw this study into the mix because of its novel approach.

“The protection afforded by fair use and other limitations and exceptions has been a major contributing factor to these economic gains, and will continue to support growth as the U.S. economy becomes even more dependent on information industries,” the study said.

The association’s membership includes Microsoft, Google, eBay, AMD, Yahoo, Oracle and others.

Under the Copyright Act, fair use is not copyright infringement. In the software context, for example, software development depends on making temporary copies of copyrighted software to facilitate the programming of interoperability.

By Brandon Keim

British Petroleum and government disaster-relief agencies are using a toxic chemical to disperse oil in the Gulf of Mexico, even though a better alternative appears to be available.

As the Deepwater Horizon oil spill spreads, BP and the U.S. Coast Guard have conducted tests with Corexit 9500, a chemical designed to break oil slicks into globules that are more quickly consumed by bacteria or sink into the water column before hitting shore.

The decision has been a controversial one. A few scientists think dispersants are mostly useful as public relations strategy, as they make the oil slick invisible, even though oil particles continue to do damage. Others consider Corexit the lesser of two evils: It’s known to be highly toxic, adding to the harm caused by oil, but at least it will concentrate damage at sea, sparing sensitive and highly productive coastal areas. Better to sacrifice the deep sea than the shorelines.

But even as these arguments continue, with 230,000 gallons of Corexit on tap and more commissioned by BP, a superior alternative could be left on the shelf.

Called Dispersit, it’s manufactured by the U.S. Polychemical Corporation and has been approved for use by the Environmental Protection Agency. Both Corexit and Dispersit were tested by the EPA, and according to those results, Corexit was 54.7 percent effective at breaking down crude oil from the Gulf, and Dispersit was 100 percent effective.

Not only did Corexit do a worse job of dispersing oil, but it was three times as lethal to silverfish – used as a benchmark organism in toxicity testing — and more than twice as lethal to shrimp, another benchmark organism and an important part of Gulf fisheries.

As for why Corexit is being used instead of Dispersit, authorities haven’t yet said. According to the Protect the Ocean blog, U.S. Polychemical executive Bruce Gebhardt said the government had used Corexit before, and was sticking with what it already knows. Corexit makes up most dispersant stockpiles in the United States for this reason, though dispersant manufacture can be easily ramped up.

In a 1999 letter, the U.S. Coast Guard told U.S. Polychemical that “product information from planning mode evaluations remain on file to facilitate rapid review in the context of a spill.” In that same year, the EPA added Dispersit to the National Oil and Hazardous Substances Pollution Contingency Plan, which determines what will be considered for use in an oil spill.

Relief agencies were not immediately available for comment about Dispersit. In a Tuesday press conference, Charlie Henry, the scientific support coordinator for the National Oceanic and Atmospheric Administration, said the potential effects of Corexit’s use in the Gulf are unknown. “Those analyses are going on, but right now there’s no consensus,” he said. “And we’re just really getting started. You can imagine it’s something we’ve never thought about.”

Actor Sean Penn, who is helping manage a camp of displaced earthquake victims in Haiti, is making pointed criticisms of journalists for dropping the ball on coverage of Haiti. He’s wrong. I’ve been on the ground in Port-au-Prince working as an independent journalist for the past ten months. I’m an earthquake survivor who’s seen the big-time reporters come and go. They’re doing such a stellar job and I want to help out, so I’ve written this handy guide for when they come back on the one-year anniversary of the January quake! (Published on my blog, Huffington Post, and inspired by this piece in Granta.)

For starters, always use the phrase ‘the poorest country in the Western hemisphere.’ Your audience must be reminded again of Haiti’s exceptional poverty. It’s doubtful that other articles have mentioned this fact.

You are struck by the ‘resilience’ of the Haitian people. They will survive no matter how poor they are. They are stoic, they rarely complain, and so they are admirable. The best poor person is one who suffers quietly. A two-sentence quote about their misery fitting neatly into your story is all that’s needed.

On your last visit you became enchanted with Haiti. You are in love with its colorful culture and feel compelled to return. You care so much about these hard-working people. You are here to help them. You are their voice. They cannot speak for themselves.

Don’t listen if the Haitians speak loudly or become unruly. You might be in danger, get out of there. Protests are not to be taken seriously. The participants were probably all paid to be there. All Haitian politicians are corrupt or incompetent. Find a foreign authority on Haiti to talk in stern terms about how they must shape up or cede power to incorruptible outsiders.

The US Embassy and United Nations always issue warnings that demonstrations are security threats. It is all social unrest. If protesters are beaten, gassed, or shot at by UN peacekeepers, they probably deserved it for getting out of control. Do not investigate their constant claims of being abused.

It was so violent right after the January 2010 earthquake. ‘Looters’ fought over goods ’stolen’ from collapsed stores. Escaped prisoners were causing mayhem. It wasn’t necessary to be clear about how many people were actually hurt or died in fighting. The point is that it was scary.

Now many of those looters are ’squatters’ in ’squalid’ camps. Their tent cities are ‘teeming’ with people, like anthills. You saw your colleagues use these words over and over in their reports, so you should too. You do not have time to check a thesaurus before deadline.

Point out that Port-au-Prince is overcrowded. Do not mention large empty plots of green land around the city. Of course, it is not possible to explain that occupying US Marines forcibly initiated Haiti’s shift from distributed, rural growth to centralized governance in the capital city. It will not fit within your word count. Besides, it is ancient history.

If you must mention Haiti’s history, refer vaguely to Haiti’s long line of power-hungry, corrupt rulers. The ‘iron-fisted’ Duvaliers, for example. Don’t mention 35 years of US support for that dictatorship. The slave revolt on which Haiti was founded was ‘bloody’ and ‘brutal.’ These words do not apply to modern American offensives in Afghanistan and Iraq.

Today, Cite Soleil is the most dangerous slum in the world. There is no need to back up this claim with evidence. It is ’sprawling.’ Again, there’s no time for the thesaurus. Talk about ruthless gangs, bullet holes, pigs and trash. Filth everywhere. Desperate people are eating cookies made of dirt and mud! That always grabs the reader’s attention.

Stick close to your hired security or embed yourself with UN troops. You can’t walk out on your own to profile generous, regular folk living in tight-knit neighborhoods. They are helpless victims, grabbing whatever aid they can. You haven’t seen them calmly dividing food amongst themselves, even though it’s common practice.

Better to report on groups that periodically enter from outside to deliver food to starving kids (take photos!). Don’t talk to the youth of Cite Soleil about how proud they are of where they come from. Probably gang members. Almost everyone here supports ex-President Jean-Bertrand Aristide. But their views aren’t relevant. There is no need to bring politics into your story.

You can’t forget to do another story about restaveks. Child slaves. It’s so shocking. There is little new information about restaveks, so just recycle old statistics. Present it as a uniquely Haitian phenomenon. Enslaved Haitian farmworkers in southern Florida, for example, aren’t nearly as interesting.

When you come back here in six months, there will still be a lot of desperate poor people who have received little to no help. There are many big, inefficient foreign NGOs in Haiti. Clearly something is wrong. Breathless outrage is the appropriate tone.

But do not try to get to the bottom of the issue. Be sure to mention that aid workers are doing the best they can. Their positive intentions matter more than the results. Don’t name names of individuals or groups who are performing poorly. Reports about food stocks sitting idly in individual warehouses are good. Investigations into why NGOs are failing to effect progress in Haiti are boring and too difficult. Do not explore Haitian-led alternatives to foreign development schemes. There are none. Basically, don’t do any reporting that could change the system.

On the other hand, everyone here loves Bill Clinton and Wyclef Jean. There are no dissenting views on this point. Never mind that neither lives here. Never mind that Clinton admitted to destroying Haiti’s domestic rice economy in the ’90s. Never mind that Jean’s organization has repeatedly mismanaged relief funds. That’s all in the past. They represent Haiti’s best hope for the future. Their voices matter, which means the media must pay close attention to them, which means their voices matter, which means the media must …

Finally, when you visit Haiti again: Stay in the same expensive hotels. Don’t live close to the people. Produce lots of stories and make money. Pull up in your rented SUV to a camp of people who lost their homes, still living under the wind and rain. Step out into the mud with your waterproof boots. Fresh notepad in hand. That ragged-looking woman is yelling at you that she needs help, not another foreigner taking her photo. Her 3-year-old boy is standing there, clinging to her leg. Her arms are raised, mouth agape, and you can’t understand her because you don’t speak Haitian Creole.

Remove the lens cap and snap away. And when you’ve captured enough of Haiti’s drama, fly away back home.

Guards and officials at a prison in northern Mexico let inmates out, lent them guns and let them use official vehicles to carry out drug-related killings, including the massacre of 17 people last week, prosecutors said Sunday.

Mexican attorney general spokesman Ricardo Najera, shown at a 2009 news conference, said Sunday that officials at a northern Mexican prison temporarily released inmates to carry out killings. (Alexandre Meneghini/Associated Press) After carrying out the killings the inmates would return to their cells, the attorney general’s office said in a revelation that was shocking even for a country wearied by years of drug violence and corruption.

“According to witnesses, the inmates were allowed to leave with authorization of the prison director … to carry out instructions for revenge attacks using official vehicles and using guards’ weapons for executions,” attorney general spokesman Ricardo Najera said at a news conference.

The director of the prison in Gomez Palacio in Durango state and three other officials were placed under a form of house arrest pending further investigation. No charges have yet been filed.

Prosecutors said the prison-based hit squad is suspected in three mass shootings, including the July 18 attack on a party in the city of Torreon, which is near Gomez Palacio. In that incident, gunmen fired indiscriminately into a crowd of mainly young people in a rented hall, killing 17 people, including women.

Police found more than 120 bullet casings at the scene, and Najera said tests matched those casings to four assault rifles assigned to guards at the prison.

Similar ballistics tests linked the guns to earlier killings at two bars in Torreon, the capital of northern Coahuila state, he said. At least 16 people were killed in those attacks on Feb. 1 and May 15, local media reported.

Najera blamed the killings on disputes between rival drug cartels. “Unfortunately, the criminals also carried out cowardly killings of innocent civilians, only to return to their cells,” he said.

Coahuila and neighbouring Durango are among several northern states that have seen a spike in drug-related violence that authorities attribute to a fight between the Gulf cartel and its former enforcers, known as the Zetas.

Interior Secretary Francisco Blake said the revelation “can only be seen as a wake-up call for authorities to address, once again, the state of deterioration in many local law enforcement institutions … we cannot allow this kind of thing to happen again.”

By Michael Klurfeld, on 08-02-2010 01:03

Here’s some creepy news. According to Chet Uber, a hacker who spoke at the Defcon security conference today, his organization is employed by the government to monitor internet traffic. And guess what? That means the government may have a record of what you do online.

Mr. Uber is the director of Project Vigilant, which has deals with several regional ISPs. Apparently in the EULAs associated with getting online through these companies, customers agree to allow the ISPs in question to share their data with third-party partners. And at least one of those partners is an agency which tracks “more than 250 million IP address a day,” with the capability to “develop portfolios on any name, screen name or IP address.” This information is then passed on to what Mr. Uber calls “three letter agencies.”

I find this very scary. The implication is that Vigilant is probably not alone in selling internet usage records to the government. It’s definitely a business, and I can’t think of any field without competition. So those few ISPs that Vigilant works with are not the only ones which are in effect snooping on their customers.

To be fair, Vigilant doesn’t only compromise citizen privacy. It does some good, such as setting up proxies to allow dissidents in Iran to communicate. Still, the fact that people are setting up companies which rely on loopholes to spy for the government is pretty unnerving.

As a footnote, Mr. Uber claims that he set in motion the pieces which ultimately gave up Bradley Manning, the source of last week’s giant Wikileaks scoop, to the feds. Maybe I’m just crazy, but that seems much less relevant than knowing the government has inroads into monitoring millions of peoples’ online usage.

I urge you all to read your ISP’s EULA to see if you’re being monitored this way. If you want to limit how much of your data is getting tracked, you can use something like Peerblock.

Will Hays: America’s Morality Czar

“Morality became a divisive issue during the 1920s in the United States. One focal point of the cultural debate was Hollywood and its movies. Known for promiscuity, gambling and alcohol, Hollywood developed an image as a hotbed of immoral behavior. In the early 1920s the town was rocked by a series of scandals which brought widespread condemnation from civic, religious and political organizations. In 1921, one of America’s most popular movie stars, comic Roscoe “Fatty” Arbuckle, was accused of raping a young actress, Virginia Rappe. After she died of internal injuries, he was indicted for manslaughter. Arbuckle was eventually acquitted, but the public outcry about Hollywood’s lack of morals became deafening.

Women’s clubs, church organizations, youth movements, and various reform groups demonstrated across the country, calling for censorship of Hollywood films. By 1922 the federal government and 36 states were considering enacting laws against the industry. Banks began to rescind movie companies’ credit lines. The media fed the frenzy by blowing minor scandals out of proportion, with the encouragement of many European business interests. The European movie industry, decimated by the war, was eager to rebuild itself and break Hollywood’s near-monopoly on feature films. Besides these attacks, the American film industry was concerned about declining attendance at movies and competition from radio. Nervous about the growing backlash toward the industry and fearing censorship, the movie industry decided to regulate itself.

In the late 1930s, the United States government tried to sue the movie industry for alleged violation of anti-trust laws, but failed. Hays remained unaffected, having risen to become the industry’s virtual czar. He was given a new five-year contract in 1941. Although he continued to face minor uprisings by various conservative groups, Hays successfully oversaw the activities of the Motion Picture Producers and Distributors of America until 1945, when he retired as its president. He remained as an advisor to the MPPDA until 1950. During that time he used his influence to work against the spread of Communism in America, laying the groundwork for the Hollywood blacklisting of the 1950s.”

SOURCE: “Will Hays.” Encyclopedia of World Biography Supplement, Vol. 21. Gale Group, 2001.

By RICHARD PÉREZ-PEÑA

Published: April 11, 2010

From the start, Internet users have taken for granted that the territory was both a free-for-all and a digital disguise, allowing them to revel in their power to address the world while keeping their identities concealed.

Judge Shirley Strickland Saffold, left, is suing The Plain Dealer of Cleveland, led by Susan Goldberg, saying the paper violated her privacy in reporting on comments sent from her e-mail address.

A New Yorker cartoon from 1993, during the Web’s infancy, with one mutt saying to another, “On the Internet, nobody knows you’re a dog,” became an emblem of that freedom. For years, it was the magazine’s most reproduced cartoon.

When news sites, after years of hanging back, embraced the idea of allowing readers to post comments, the near-universal assumption was that anyone could weigh in and remain anonymous. But now, that idea is under attack from several directions, and journalists, more than ever, are questioning whether anonymity should be a given on news sites.

The Washington Post plans to revise its comments policy over the next several months, and one of the ideas under consideration is to give greater prominence to commenters using real names.

The New York Times, The Post and many other papers have moved in stages toward requiring that people register before posting comments, providing some information about themselves that is not shown onscreen.

The Huffington Post soon will announce changes, including ranking commenters based in part on how well other readers know and trust their writing.

“Anonymity is just the way things are done. It’s an accepted part of the Internet, but there’s no question that people hide behind anonymity to make vile or controversial comments,” said Arianna Huffington, a founder of The Huffington Post. “I feel that this is almost like an education process. As the rules of the road are changing and the Internet is growing up, the trend is away from anonymity.”

The Plain Dealer of Cleveland recently discovered that anonymous comments on its site, disparaging a local lawyer, were made using the e-mail address of a judge who was presiding over some of that lawyer’s cases.

That kind of proxy has been documented before; what was more unusual was that The Plain Dealer exposed the connection in an article. The judge, Shirley Strickland Saffold, denied sending the messages — her daughter took responsibility for some of them. And last week, the judge sued The Plain Dealer, claiming it had violated her privacy.

The paper acknowledged that it had broken with the tradition of allowing commenters to hide behind screen names, but it served notice that anonymity was a habit, not a guarantee. Susan Goldberg, The Plain Dealer’s editor, declined to comment for this article. But in an interview she gave to her own newspaper, she said that perhaps the paper should not have investigated the identity of the person who posted the comments, “but once we did, I don’t know how you can pretend you don’t know that information.”

Some prominent journalists weighed in on the episode, calling it evidence that news sites should do away with anonymous comments. Leonard Pitts Jr., a Miami Herald columnist, wrote recently that anonymity has made comment streams “havens for a level of crudity, bigotry, meanness and plain nastiness that shocks the tattered remnants of our propriety.”

No one doubts that there is a legitimate value in letting people express opinions that may get them in trouble at work, or may even offend their neighbors, without having to give their names, said William Grueskin, dean of academic affairs at Columbia’s journalism school.

“But a lot of comment boards turn into the equivalent of a barroom brawl, with most of the participants having blood-alcohol levels of 0.10 or higher,” he said. “People who might have something useful to say are less willing to participate in boards where the tomatoes are being thrown.”

He said news organizations were willing to reconsider anonymity in part because comment pages brought in little revenue; advertisers generally do not like to buy space next to opinions, especially incendiary ones.

The debate over anonymity is entwined with the question of giving more weight to comments from some readers than others, based in part on how highly other readers regard them. Some sites already use a version of this approach; Wikipedia users can earn increasing editing rights by gaining the trust of other editors, and when reviews are posted on Amazon.com, those displayed most prominently are those that readers have voted “most helpful” — and they are often written under real names.

Hal Straus, interactivity editor of The Washington Post, said, “We want to be able to establish user tiers, and display variations based on those tiers.” The system is still being planned, but he says it is likely that readers will be asked to rate comments, and that people’s comments will be ranked in part based on the trust those users have earned from other readers — an approach much like the one The Huffington Post is set to adopt. Another criterion could be whether they use their real names.

But experience has shown that when users help rank things online, sites may have to guard against a concerted campaign by a small group of people voting one way and skewing the results.

A popular feature on The Wall Street Journal’s site lets readers decide whether they want to see only those comments posted by subscribers, on the theory that the most dedicated readers might make for a more serious conversation.

A few news organizations, including The Times, have someone review every comment before it goes online, to weed out personal attacks and bigoted comments. Some sites and prominent bloggers, like Andrew Sullivan, simply do not allow comments.

Some news sites review comments after they are posted, but most say they do not have the resources to do routine policing. Many sites allow readers to flag objectionable comments for removal, and make some effort to block comments from people who have repeatedly violated the site’s standards.

If commenters were asked to provide their real names for display online, some would no doubt give false identities, and verifying them would be too labor-intensive to be realistic. But news executives say that merely making the demand for a name and an e-mail address would weed out much of the most offensive commentary.

Several industry executives cited a more fundamental force working in favor of identifying commenters. Through blogging and social networking sites like Facebook and Twitter, millions of people have grown accustomed to posting their opinions — to say nothing of personal details — with their names attached, for all to see. Adapting the Facebook model, some news sites allow readers to post a picture along with a comment, another step away from anonymity.

“There is a younger generation that doesn’t feel the same need for privacy,” Ms. Huffington said. “Many people, when you give them other choices, they choose not to be anonymous.”

Can the sentimental brand association of a logo be so powerful that it inspires consumers to take actions they might not have otherwise intended to take? According to a new University of Toronto study, even a subliminal glimpse of a fast-food logo can make a person more impatient and impulsive with money.

“The logo activates associations with the brand,” explains study co-author Chen-Bo Zhong, professor of organizational behavior and human resource management at the university.

“I think logos or other situational cues all have the same type of effect of “automaticity” — [triggering] regulatory behaviour that is beyond our control. Studies have shown, for example, that these norms can be activated when people see an image of a library: They will lower their voices without actually having to be in a library.” He also cited a study that found people who viewed a picture of an exclusive restaurant displayed better manners during a subsequent eating task.

A 2008 Duke University study found people who looked at the Apple logo scored higher on a creativity test than those who had looked at an IBM logo–presumably because they were reflecting the differing brand traits they associated with those logos.

The stronger the brand “personality,” the stronger the association, Mr. Zhong said. In the case of fast-food, logos from popular chains such as McDonald’s promote associations with fast food — namely, notions related to immediate gratification and to saving time.

The first part of the study assessed 57 people after they looked at a series of flashing images. One part of the control group had fast-food logos in their set of images, but the logos were flashing at a rate too fast for the conscious mind to absorb. After the viewing, those exposed to the fast-food logos read a passage significantly faster than those who did not see the logos in their flashing images (69.5 seconds versus 84 seconds).

Another part of the study asked participants to rate the esthetics of four logos. The fast-food group saw logos of McDonald’s and KFC in the mix; the control group instead viewed pictures of two generic low-priced diners. Afterward, they were all asked if they would like to receive a higher amount of money in one week or a lower amount of money immediately. Those exposed to the fast-food logos were much more likely to want the money immediately.

“Fast food seemed to have made made people impatient in a manner that could put their economic interest at risk,” the study concludes.

The research underscores what most advertising professionals have long said about strong brands — that a strong identity stems from a clear idea.

“When marketers are trying to personalize a brand whether or not they are aware of this psychological [phenomenon] — that branding can also affect people’s behaviour. But if you have a unified impression of a brand it is much easier for consumers to have a clear association. Consumers identify them more easily.”

When it comes to logos, a person’s reaction is not dependent on context, the researchers found, and in fact could work against what the individuals may want to be doing at that moment.

The feelings of impatience “will be applied to people’s behaviour whether it is in a productive context or not,” Mr. Zhong said. “You don’t want to have that type of [impatient] behaviour when you are wanting to relax at home or read something. But the activation of these goals will affect people regardless of whether that is their immediate goal or not, even if it works against their happiness at that point.”

That could make brands think long and hard about the negative and perhaps somewhat narrow implications of certain brand associations, or how a logo of one brand may influence a consumer’s feelings about a second brand. Would apparel retailers in a shopping mall now be wary of being too close to a fast-food court, for example?

“I think it depends on the purpose of customer going to the mall,” Mr. Zhong said. “The exposure to fast food will make them more committed to find the things they want, and get the task done. In fact, if you want people to browse, then having a fast-food restaurant near your brand might be a good thing.”

In any case, the power of logos and their corresponding associaiton begins at an early age.

Recent research from the University of Michigan found children as young as three can recognize brand logos and products. Children viewed logos for 50 brands across 16 product categories including fast food, toys, electronics and apparel, and were asked questions about the brands. The results ranged from zero recognition to 93% for a fast-food brand. Another group who had been asked to divide pictures of McDonald’s and Burger King food items onto boards showing the corresponding brand expressed brand judgments when asked to compare the two chains.

“A logo that is exposed for even a very short period of time can still have an effect,” Mr. Zhong said. “The strength of the association is probably more important than the [duration] of exposure. Logos are fairly powerful if they have a strong association.”

In a nation where millions go hungry, some of the food supermarkets throw out could feed people in need. But not every grocery chain cares.

April 18, 2010  |

Unemployment. Health care. The national debt. So many social issues take a lot to fix: experts, money, and lots of time. To add to a growing list of social issues, here’s another: 1 in 7 American households has trouble putting food on the table at some point during the year, according to a recent USDA report.

But in a nation where so many go hungry, a possible solution has emerged.

Grocery stores have lots of foods that need to be taken off shelves daily: stock that needs to rotate, surplus food like bananas that are starting to have brown spots, or refrigerated items that need to move for the new product coming in. Food products make up 63 percent of a supermarket’s disposed waste stream, according to a California Integrated Waste Management Board industry study. That’s approximately 3,000 lbs. thrown away per employee every year. The stores can’t sell the food, so they toss it in the compost or garbage.

Organizations and an army of volunteers — called “food recovery” groups — are stationed around the country, ready to transport that food from the stores to the people that need it most. Meats that are close to the sell-by date, for example, can be frozen and good for several more months.

If only it was that simple.

While most food retailers participate in some kind of food donation program, many stick to things like breads, cakes, and dented cans, while throwing away fruits, vegetables, meats, and other perishable food most needed by the hungry.

“Liability” and “bad press” are the oft-cited reasons food retailers give for not donating perishable food, but they’re not good ones, say food recovery advocates.

President Clinton signed the Bill Emerson Federal Good Samaritan Food Donation Act in 1996, designed to protect those establishments and individual donors from criminal and civil liability, should any recipients become ill from food donation. State laws have been in place long before that which protect donors and encourage donation. None of the laws have ever been challenged.

The federal law protects all donations made in good faith. The only exception is “gross negligence” or intentional misconduct — the plaintiff would have to prove that the company or individual, in donating food to the needy, was intentionally and knowingly engaging in conduct that was likely to harm another person. But realistically, what homeless person or shelter is going to sue for food poisoning?

“Bad press” is another poor excuse. Would shoppers really view a grocery chain as “bad” when, in the noble process of rescuing food from landfills, one needy person (or more) fell ill? Likely not.

Food recovery programs do take some time, energy and investment. But they’re not impossible operations. Chains like Albertsons lead the way in training employees to hold food for local partners in the community rather than indiscriminately tossing foods that may be safe for consumption.

Arlene Mercer, founder of Long Beach-based food recovery organization Food Finders, says she sees a growing willingness among grocery stores to donate. “During this economy people are recognizing there is a food crisis,” she says, adding that the agencies Food Finders serve report a near-quadrupling of need from prior years.

Here they are, from best to worst: how the five largest food retailers in the U.S. handle perishable food waste.

1) SuperValu Inc. (Albertsons, Lucky)

Albertsons was the first food chain to start a formal perishable food recovery program. In its “Fresh Rescue” program, each store partners with a local community organization to receive the food. Each store has one or two employees trained and designated to work with partner agencies.

“Stores have been doing it on their own for a few years now but we wanted to find a way to pull it all together,” said Lilia Rodriguez, a spokesperson for Albertsons. “It’s eggs, cheese, milk, fruits – and it’s those products that are really hard for food banks to get a hold of. Non-perishables are usually what they get.”

Rodriguez said that in addition to helping the community, it improves employee morale.

“The employee that helps knows they’re doing their part in the community,” she said. “They know the shelter or church around the corner it’s going to.”

As for the fear of liability, Rodriguez noted the Good Samaritan protections and added that, “Most but not all [agencies] have refrigerated trucks. If they don’t, we ask them to cover the food with thermal blankets for the 15 or 20 minute drive to the agency. We want to make sure it gets there safely.”

Albertsons has also provided refrigerated trucks to some of its partner organizations.

“When it comes to feeding people, there’s no competition,” Rodriguez said. “Number one, it’s the right thing to do. Number two, one of our top initiatives as a company is the fight against hunger. We feel like, if we don’t do it, who will? It isn’t about cost-impact. It’s about doing what’s right. And ultimately, it helps our customers.”

2) Ralphs Grocery Company

Like many chains, Ralphs has participated in hunger initiatives for years. The company’s Bringing Hope to the Table program raises money for food banks.

But according to a Long Beach, Calif., Ralphs employee, who spoke on the condition of anonymity, at some stores, food inevitably gets taken off the shelves and composted while it’s still good. Bananas start to have brown spots, potatoes get a green tint and packaged vegetables – such as carrots, broccoli, cauliflower, green beans, and mushrooms – reach their sell-by dates.

“Today I threw out 20 bags of lettuce” the employee said in an interview, reporting that any food past the sell-by date gets thrown into compost. “The code date was for yesterday – but I would have purchased any one of those bags.”

That practice should change once the company’s Perishable Donations Partnership is rolled out to all its stores. The company started the program in early 2009 with the goal of donating perishable products that are not sellable but still edible. At the end of November 2009, the program was in place at two-thirds of the company’s stores. Ralphs hopes to expand the program to all of its stores before this summer.

“It’s meat that’s at its sell-by date – if we freeze it on that date, the food bank is still very able to use it,” said Ralphs spokesperson Kendra Doyel. “It’s also produce, slightly bruised fruit for example.”

She said the company realized protein and produce were “very critical” for the needs of food banks.

“We like people who like food, and we’ve had a long-standing commitment to [reduce] food waste,” Doyel said. “This way we can reduce food waste and get more food to them.”

In implementing the program, the company is also working with food banks and food recovery groups to ensure food safety, Doyel said. This involves making sure organizations have refrigerated trucks or thermal blankets.

“It was a matter of getting a program in place,” said Doyel. “We take it personally not only as company but as individuals.”

3) Wal-Mart Stores Inc.

“Wal-Mart has a pretty terrible track record with throwing out perfectly edible food instead of donating it,” said Taylor Leake, a spokesperson for Wake-Up Walmart.

But after years of criticism for its food waste, Wal-Mart started a partnership with hunger-relief organization Feeding America in November 2008.

The program has now rolled out to all Wal-Mart stores and Sam’s Club locations, according to Wal-Mart spokesperson Amelia Neufeld.

“Wal-Mart’s food donation program takes food that is still safe for consumption off Wal-Mart shelves and delivers it to neighborhood food banks,” the company said in a statement. “The food – which consists of nutritious servings of produce, deli meat, beef, chicken, dairy and other groceries – is then given to needy families, often in less than 24 hours.”

4) Costco Wholesale Corp.

Costco has no company-wide food recovery program in place. According to figures derived from its own 2009 sustainability report, the company composts 45 million pounds of food each year.

“With this information, we realized that we could divert much of the organic waste from the landfill,” says Costco’s sustainability report. “We are testing several new technologies as a way to reduce the amount of waste material our locations throw into the trash.

“Our goal is to reduce our operating costs through decreased garbage collection and disposal costs; and to identify potential reuse markets for what would otherwise be waste materials.”

Costco’s sustainability report goes on to describe one of the company’s food waste diversion programs, which involves placing the company’s de-packaged produce and deli waste in large bins. The bins can then be picked up by dairy farmers for feed or “local worm farm operators that turn the organic waste into compost.”

The report does not address the issue of food recovery.

“Food recovery isn’t listed as a way to reduce waste because if it could be recovered, it isn’t waste,” said Karen Raines, director of corporate sustainability for Costco. “The food that is thrown into the dumpster isn’t food that’s suitable for human consumption.”

But that might not always be the case. It’s not that all that food that has been thrown away has gone bad.

“Grocery stores have a sell-by date listed on a lot of foods, but those foods are still good for another 10 days, on average,” said Mercer of Food Finders. “We call that our ‘window of opportunity.’”

Arlene Mercer, founder of recovery group Food Finders, said that though she has approached the company, it will not participate and has instead offered her discounts on the food she buys for the programs and occasional free turkeys.

Raines says it’s up to each warehouse to decide what to donate, because it “really just comes down to food safety laws to see what’s suitable for human consumption.”

“Those sell-by dates are there for a reason,” she added.

Even with legal protections, many companies, including Costco, are still concerned by the prospect of a lawsuit.

“Good Samaritan laws don’t say anything – they just say you may or may not be sued if you donate,” said Raines.

There is evidence Costco is making some changes affecting the issue of food insecurity. In October, the company finally started accepting food stamps.

“This economy was a wake-up call,” said Richard Galanti, Costco’s chief financial officer, in an October earnings call to Wall Street analysts.  “It is not just low-end economic strata that are using this, that typically don’t have purchasing power. It’s a lot of people that are using this as a source of their overall consumption.”

As to why they hadn’t implemented food stamps before, he said, “I think that was probably a little bit arrogant on our part.”

5) Safeway Inc. (Vons and Safeway) 

Vons and Safeway partner with Feeding America, which was formerly known as America’s Second Harvest. The Los Angeles Regional Food Bank and San Diego Food Bank are major recipients of the grocery chain’s donations.

“Each year we give millions of dollars of food to various food banks and hunger programs,” says company spokesperson Teena Massingill. “That’s food donated from our stores: bread donations, day-old bread from store from pantry, food that we can’t sell in the store but is still good – a dented can, a product that’s still good but reformulated. It also includes food drives we do – customers will purchase food and put in bins.”

But excess perishable foods routinely get thrown away.

Former Safeway deli employee John Wadginski says walking into a Safeway store still brings up bad memories for him. It wasn’t selling the food that bothered him – it was the amount he was required to throw away at the end of each night that made his stomach churn.

“All the ‘daily specials’ – cooked food like ham and ribs were dumped each night,” Wadginski said. “I had to throw out 10 pound hams that weren’t even touched. It was easily 50 pounds of food a night.”

Other employees corroborated his claims.

“Once the items are out of our control, we cannot guarantee that they will be kept under the specified temperatures,” said Massingill. “While Good Samaritan laws may or may not protect a donor in this case, it is best to error on the side of caution when dealing with the health and safety of others. Many pantries do not have refrigeration units on site at all, making it impossible to completely avoid spoilage.”

It’s not just food requiring refrigeration that Safeway chooses not to donate. Produce receives the same treatment.

“If a produce item is deemed unfit for sale, we do not donate it for human consumption,” Massingill said. “It may be deemed unfit because it is bruised or overripe … Safeway does not donate items that are not fit for consumption or could be unfit for consumption when they reach the final recipient.”

• By David Kravets
• March 23, 2010  |

Lawmakers are proposing a national identification card — what they’re calling “high-tech, fraud-proof Social Security cards” — that would be required for all employees in the United States.

The proposal by Sen. Charles Schumer (D-New York) and Sen. Lindsay Graham (R-South Carolina) comes as the states are grappling to produce another national identification card at the behest of the Department of Homeland Security. Virtually none of the states are in compliance with this Real ID program — adopted in 2005 — requiring state motor vehicle bureaus to obtain and internally scan and store personal information like Social Security cards and birth certificates for a national database.

Graham, left, and Schumer, are calling for national ID cards to combat illegal immigration.
Photo: AP

Now comes a bid for a second card.

Homeland Security officials pointed to the Sept. 11 hijackers’ ability to get driver’s licenses in Virginia using false information as justification for the proposed $24 billion Real ID program. Schumer and Graham point to illegal immigration as cause for their plan.

“We would require all U.S. citizens and legal immigrants who want jobs to obtain a high-tech, fraud-proof Social Security card. Each card’s unique biometric identifier would be stored only on the card; no government database would house everyone’s information,” they said. “The cards would not contain any private information, medical information or tracking devices. The card would be a high-tech version of the Social Security card that citizens already have.”

Jim Harper, director of information policy studies at the Cato Institute, suggests the plan would undoubtedly lead to a national database. He added that “there is no practical way of making a national identity document fraud-proof.”

What’s more, Richard Esguerra, the Electronic Frontier Foundation’s in-house activist, notes that a national ID card likely would expand from its stated purpose.

“Because of the ID card’s proposed universality, it will likely be requested and required by airlines, insurance agencies, health care providers, mortgage lenders, credit card companies, and so forth,” he said.

And this so-called mission creep is no fantasy.

A recent and clear example of this is the Adam Walsh Child Protection and Safety Act. The 2007 law requires states to have statutes demanding sex-offender registration for those convicted of the non-sex-related offenses.

Graham and Schumer said they have discussed the immigration plan with President Barack Obama, but that apparently is as far it has gone. Regarding Real ID, beginning Jan. 1 the law was supposed to have blocked anybody from boarding a plane using their driver’s license as ID if their resident state did not comport with the Real ID program.

But the Department of Homeland Security extended the deadline for another year.

Last year, The Pirate Bay moved to an ISP that has facilities located in a former NATO nuclear bunker. It has operated with them successfully for some time but we can now reveal that Hollywood movie studios are threatening the ISP with a legal strike over its servicing of TPB and several other sites. The ISP’s owner, however, is in no mood to capitulate.

In early October 2009, The Pirate Bay was forced to move outside its native Sweden and find a new host in Ukraine. Their stay in Eastern Europe didn’t last long though, and soon they found a new and fairly unorthodox home.

CyberBunker is a former nuclear warfare bunker in The Netherlands. The facility was built by NATO in the 1950s and was designed to survive a nuclear war. After that threat largely subsided the bunker changed owners and is now believed to be used as a webhosting data center and is the presumed (in reality this is almost impossible to prove) home of The Pirate Bay.

CyberBunker: Threatened With MPA Strike

At the time, Sven Kamphuis, one of the owners of CB3ROB/Cyberbunker, said there were initial difficulties with setting up The Pirate Bay in its new location. Several carriers refused to assist following threats from local anti-piracy group, BREIN. Those problems were soon overcome but although The Pirate Bay continued to function and even grow, we can now exclusively reveal that there are turbulent seas ahead.

According to detailed information received by TorrentFreak, Disney Enterprises and Paramount Pictures in association with Sony Pictures, Twentieth Century Fox, Universal Studios and Warner Bros. (known collectively as the MPA) have been threatening CB3ROB Ltd with legal action over their hosting of The Pirate Bay and several other prominent movie-related sites.

Via its lawyers, in November 2009 the MPA sent CB3ROB a written “copyright warning” which stated that its members own the exclusive rights to a list of movies. The MPA further noted that CB3ROB is the Internet service provider for not only The Pirate Bay, but also movie streaming giants including Watch-Movies-Online.tv, Movie2K.com, TVShack.net, NovaMov.com and MovShare.com. Those sites, they say, are infringing their exclusive rights.

The complaint went on to detail the mechanics of The Pirate Bay, the guilty verdict delivered to its operators in a Swedish court in 2009 and the injunction placed on the site in the Amsterdam District Court in October the same year. Information on the nature of the streaming sites detailed above was also included.

The MPA warning then went on to suggest that since CB3ROB are aware that The Pirate Bay and the other sites are infringing, it is their responsibility to ensure that those infringements stop – i.e, bring an end to providing them with hosting and bandwidth or, as appears to be the case with The Pirate Bay, filter out torrents relating to MPA member works. Failure to do so would result in the MPA taking CB3ROB to court in Germany.

A very tight deadline of a few days was set for a CB3ROB respond, which appears to have been adhered to. The response, however, was not what the MPA had hoped for.

Through their lawyers, CB3ROB rejected the claims of the MPA on several grounds including what they term as an incorrect description of The Pirate Bay’s business model.

As readers will remember, last year the site “went magnetic” by dumping its tracker and relying on DHT and PEX instead. Therefore, CB3ROB argued, the rulings against TPB in Sweden and The Netherlands related to a time when the site’s operations were conducted in a different manner. The complaint is further rejected on grounds that as an ISP, CB3ROB aren’t responsible for the activities of its customers.

TorrentFreak spoke with Sven Olaf Kamphuis from CB3ROB who confirmed our information is correct.

“Once again [Disney] tried to infringe upon the right to provider immunity and the concept of net neutrality by claiming that by providing the Pirate Bay (and others) with Internet connectivity we (CB3ROB Ltd. & Co. KG) would be ‘assisting them in engaging in copyright violations’, which, should our customers be doing that, remains to be proven in court anyway,” he told us.

“They tried this (as usual) by means of an injunction, which we have had our attorneys block by means of a schutzbrief sent to all courts, basically saying they can’t get an injunction without going through the usual court case process,” he added.

Kamphuis says that he believes German law is quite specific in granting provider immunity, with data communications receiving protection under the law in pretty much the same way as postal mail. He explained:

“Providers are immune to any liability claims as long as they:

1: Don’t initiate the transfer of data (which we don’t, the user’s browser does)
2: Don’t select the addressees (IP addresses in this case) of the information to be transferred (Which we don’t, even Disney is free to use the PirateBay as far as we’re concerned )
3: Don’t modify or select the information to be transferred (which we don’t)”

Kamphuis told TorrentFreak that if Disney and friends have a problem with the activities of CB3ROB clients, they should start a court case against them, a route he notes that has been traveled before, without success.

“If they’re too lazy (or don’t have valid arguments) to win court cases against individual parties and force them to terminate their activities, that cannot and will not be made the problem of the Internet industry, we simply cannot tolerate that,” he insists. “They’re trying to blackmail ISPs into cleaning up the mess caused by their dysfunctional business model, which the Internet industry, of course, will not do.”

The information we received detailing CB3ROB’s rejection of the Swedish and Dutch decisions was also confirmed.

“Disney apparently also can’t read Dutch, nor Swedish, as all court verdicts so far are for the Pirate Bay WITH torrent trackers, which they seem to keep messing up with torrent-files. It would help if they would pick some attorneys to represent them who at the very minimum know what they’re talking about, and stop babbling nonsense.”

Kamphuis insists that his company will accept anyone as a customer who can pay the bills and they will do everything required to deliver Internet connectivity to them – period. As an ISP, he says, they provide this service indiscriminately, “..but you know what,” he adds, “I’ve got a great idea.”

“Why don’t all ISPs just give them what they want and drop all packets that contain the word ‘Disney’ from them, including the ones from and to -their- websites, let’s see how long they last without using OUR internet for promoting and selling their shitty crap,” he concludes.

The TSA has a dismal record of enriching private corporations with failed technologies. Will the “digital strip search” device just bring more of the same?

January 6, 2010  |

Scan, baby, scan. That’s the mantra among politicians at all levels in the wake of the thwarted terrorist attack aboard a Detroit-bound passenger jet. According to conventional wisdom, the would-be “underwear bomber” could have been stopped by airport security if he’d been put through a full-body scanner, which would have revealed the cache of explosives attached to Umar Farouk Abdulmutallab’s groin.

Within days or even hours of the bombing attempt, everyone was talking about so-called whole-body imaging as the magic bullet that could stop this type of attack. In announcing hearings by the Senate Homeland Security Commitee, Joe Lieberman approached the use of scanners as a foregone conclusion, saying one of the “big, urgent questions that we are holding this hearing to answer” was “Why isn’t whole-body-scanning technology that can detect explosives in wider use?” Former Homeland Security chief Michael Chertoff told the Washington Post, “You’ve got to find some way of detecting things in parts of the body that aren’t easy to get at. It’s either pat downs or imaging, or otherwise hoping that bad guys haven’t figured it out, and I guess bad guys have figured it out.”

Since the alternative is being groped by airport screeners, the scanners might sound pretty good. The Transportation Security Administration has claimed that the images “are friendly enough to post in a preschool,” though the pictures themselves tell another story, and numerous organizations have opposed them as a gross invasion of privacy. Beyond privacy issues, however, are questions about whether these machines really work — and about who stands to benefit most from their use. When it comes to high-tech screening methods, the TSA has a dismal record of enriching private corporations with failed technologies, and there are signs that the latest miracle device may just bring more of the same.

Known by their opponents as “digital strip search” machines, the full-body scanners use one of two technologies — millimeter wave sensors or backscatter x-rays — to see through clothing, producing ghostly images of naked passengers. Yet critics say that these, too, are highly fallible, and are incapable of revealing explosives hidden in body cavities — an age-old method for smuggling contraband. If that’s the case, a terrorist could hide the entire bomb works within his or her body, and breeze through the virtual strip search undetected. Yesterday, the London Independent reported on “authoritative claims that officials at the [UK] Department for Transport and the Home Office have already tested the scanners and were not persuaded that they would work comprehensively against terrorist threats to aviation.” A British defense-research firm reportedly found the machines unreliable in detecting “low-density” materials like plastics, chemicals, and liquids — precisely what the underwear bomber had stuffed in his briefs.

Yet the rush toward full-body scans already seems unstoppable. They were mandated today as part of the “enhanced” screening for travelers from selected countries, and hundreds of the machines are already on order, at a cost of about $150,000 apiece. Within days of the bombing attempt, Reuters was reportingthat the “greater U.S. government shift toward using the high-tech devices could create a boom for makers of security imaging products, and it has already created a speculative spike in share prices in some companies.”

Which brings us to the money shot. The body scanner is sure to get a go-ahead because of the illustrious personages hawking them. Chief among them is former DHS secretary Michael Chertoff, who now heads the Chertoff Group, which represents one of the leading manufacturers of whole-body-imaging machines, Rapiscan Systems. For days after the attack, Chertoff made the rounds on the media promoting the scanners, calling the bombing attempt “a very vivid lesson in the value of that machinery” — all without disclosing his relationship to Rapiscan. According to the Washington Post:

Chertoff’s advocacy for the technology dates back to his time in the Bush administration. In 2005, Homeland Security ordered the government’s first batch of the scanners — five from California-based Rapiscan Systems.

Today, 40 body scanners are in use at 19 U.S. airports. The number is expected to skyrocket at least in part because of the Christmas Day incident. The Transportation Security Administration this week said it will order 300 more machines.

In the summer, TSA purchased 150 machines from Rapiscan with $25 million in American Recovery and Reinvestment Act funds.

The Washington Examiner last week ran down an entire list of all the former Washington politicians and staff members who are now part of what it calls the “full-body scanner lobby”:

One manufacturer, according to the Cleveland Plain Dealer, is American Science & Engineering, Inc. AS&E has retained the K Street firm Wexler & Walker to lobby for “federal deployment of security technology by DHS and DOD.” Individual lobbyists on this account include former TSA deputy administration Tom Blank, who also worked under House Speaker Newt Gingrich.

Chad Wolf — former assistant administrator for policy at TSA, and a former aide to Kay Bailey Hutchison, R-Tex., a top Senate appropriator and the ranking Republican on the transportation committee — is also lobbying on AS&E’s behalf.

Smiths Detection, another screening manufacturer, employs top transportation lobbying firm Van Scoyoc Associates, including Kevin Patrick Kelly, a former top staffer to Sen. Barbara Mikulski, D-Md., who sits on the Homeland Security Appropriations subcommittee. Smiths also retains former congresswoman Helen Delich Bentley, R-Md.

Former Sen. Al D’Amato, R-N.Y., represents L3 Systems, about which Bloomberg wrote today: “L-3 has ‘developed a more sophisticated system that could prevent smuggling of almost anything on the body,’ said Howard Rubel, an analyst at Jefferies & Co., who has a ‘hold’ rating on the stock.”

In forecasting the fate of the full-body scanners, we can turn to recent history, which saw the rapid rise — and decline — of the previous “miracle” screening technology. In the years following 9/11, dozens of explosive trace portals (ETPs) were installed in airports across the country, at a cost of about $160,000 each. These “puffer” machines — so called because they blow air on passengers to dislodge explosive particles — were once celebrated as the “no-touch pat down.” But in a Denver test by CBS in 2007, a network employee was sprayed with explosives and then walked through the airport’s three puffers without any trouble. The machines also set off false alarms, and they frequently broke down, leading to sky-high maintenance costs.

After spending more than $30 million on the puffer machines — most of them purchased from GE — the TSA announced earlier this year that it was suspending their use. Only about 25 percent of the machines were ever even deployed at US airports. A report last month from the Government Accountability Office found that the TSA had not adequately tested the puffers before buying them.

What will happen if the full-body scanner goes the way of the puffer? Well, there’s always the next generation of security equipment: the Body Orifice Security Scanner, or BOSS chair. This contraption, which has an uncomfortable resemblance to an electric chair, is used in prisons, mostly in the UK, for tracing cell phones, shivs, and other dangerous contraband that’s been swallowed or inserted into body cavities by inmates. So far, it only detects metal, but you never know.

Give me a friendly German Shepherd any day.

Last Updated: Tuesday, March 23, 2010 | 1:30 PM ET

The Associated Press

Britain has expelled an Israeli diplomat from London over the use of forged passports in the suspected Mossad assassination of a Hamas operative, a top official has said.

Foreign Secretary David Miliband told legislators Tuesday that the diplomat, who has not been named, was removed following an investigation into the use of 12 fake U.K. passports in the Jan. 20 slaying in Dubai.

British Foreign Secretary David Miliband addresses the House of Commons after Britain expelled an Israeli diplomat on Tuesday. (PA/Associated Press)A British investigation found there are “compelling reasons to believe that Israel was responsible” for the slaying, Miliband said.

Israel has declined to confirm or deny whether it was involved.

Israel’s actions had put British nationals at risk and showed a “profound disregard” for Britain’s sovereignty, Miliband said, adding that Israel’s longtime business, personal and political ties to Britain “adds insult to injury” in this case.

The foreign secretary said Britain will continue to support Israel’s bid for security and stability but that Israel’s actions had been completely unacceptable.

Israel’s foreign ministry confirmed that the country’s ambassador to Britain Ron Prosor was called to London’s Foreign Office on Monday for talks, but declined to provide further details.

There was no suggestion the ambassador himself would be expelled. The diplomat ordered out of Britain was expected to be a lower-ranking official.

Speaking to reporters after the expulsion was announced, Prosor said Israel was “disappointed by the decision of the British government” but affirmed his commitment to a relationship “of mutual importance.”

Ron Prosor, Israel’s ambassador to Britain, speaks to members of the media outside the Israeli Embassy in central London on Tuesday. (Lefteris Pitarakis/Associated Press)

Interpol involvement

Dubai authorities have accused Israel’s Mossad spy agency of being behind the slaying of Mahmoud al-Mabhouh in a luxury hotel room, and have identified at least 26 suspects of an alleged hit squad that travelled to Dubai on fake identities and forged European and Australian passports.

Interpol has unveiled a wanted list of 27 people in connection with the slaying. Israel has neither confirmed nor denied any involvement in al-Mabhouh’s killing.

At least 15 of the names used by the suspected killers match those of Israeli citizens who are dual nationals of Western countries, including eight Israeli-British dual nationals. All have denied involvement, saying their identities were stolen.

Diplomatic expulsions are a rare sanction against foreign governments. Britain kicked out four Russian diplomats in 2007 over the country’s refusal to extradite to London a suspect in the poisoning death of Alexander Litvinenko.

The country’s Serious and Organized Crime Agency has conducted an inquiry into the use of forged British passports, but is not involved in wider inquiries by Dubai police into the killing.

Posted March 22, 2010; 10:00 a.m.

by Hilary Parker

A Princeton University research team has demonstrated that all sweeteners are not equal when it comes to weight gain: Rats with access to high-fructose corn syrup gained significantly more weight than those with access to table sugar, even when their overall caloric intake was the same.

In addition to causing significant weight gain in lab animals, long-term consumption of high-fructose corn syrup also led to abnormal increases in body fat, especially in the abdomen, and a rise in circulating blood fats called triglycerides. The researchers say the work sheds light on the factors contributing to obesity trends in the United States.

“Some people have claimed that high-fructose corn syrup is no different than other sweeteners when it comes to weight gain and obesity, but our results make it clear that this just isn’t true, at least under the conditions of our tests,” said psychology professor Bart Hoebel, who specializes in the neuroscience of appetite, weight and sugar addiction. “When rats are drinking high-fructose corn syrup at levels well below those in soda pop, they’re becoming obese — every single one, across the board. Even when rats are fed a high-fat diet, you don’t see this; they don’t all gain extra weight.”

In results published online Feb. 26 by the journal Pharmacology, Biochemistry and Behavior, the researchers from the Department of Psychology and the Princeton Neuroscience Institute reported on two experiments investigating the link between the consumption of high-fructose corn syrup and obesity.

The first study showed that male rats given water sweetened with high-fructose corn syrup in addition to a standard diet of rat chow gained much more weight than male rats that received water sweetened with table sugar, or sucrose, in conjunction with the standard diet. The concentration of sugar in the sucrose solution was the same as is found in some commercial soft drinks, while the high-fructose corn syrup solution was half as concentrated as most sodas.

The second experiment — the first long-term study of the effects of high-fructose corn syrup consumption on obesity in lab animals — monitored weight gain, body fat and triglyceride levels in rats with access to high-fructose corn syrup over a period of six months. Compared to animals eating only rat chow, rats on a diet rich in high-fructose corn syrup showed characteristic signs of a dangerous condition known in humans as the metabolic syndrome, including abnormal weight gain, significant increases in circulating triglycerides and augmented fat deposition, especially visceral fat around the belly. Male rats in particular ballooned in size: Animals with access to high-fructose corn syrup gained 48 percent more weight than those eating a normal diet.

“These rats aren’t just getting fat; they’re demonstrating characteristics of obesity, including substantial increases in abdominal fat and circulating triglycerides,” said Princeton graduate student Miriam Bocarsly. “In humans, these same characteristics are known risk factors for high blood pressure, coronary artery disease, cancer and diabetes.” In addition to Hoebel and Bocarsly, the research team included Princeton undergraduate Elyse Powell and visiting research associate Nicole Avena, who was affiliated with Rockefeller University during the study and is now on the faculty at the University of Florida. The Princeton researchers note that they do not know yet why high-fructose corn syrup fed to rats in their study generated more triglycerides, and more body fat that resulted in obesity.