Tuesday, January 31, 2012

Health Care

Gonzalo Lira makes the case against the US Health care System, such as it is and if you check his website, http://gonzalolira.blogspot.com/ , you will find the trolls arguing that we have it better in the US. Perhaps but the anxiety levels in the US about health insurance tell another story.It is my belief that the one percent would rather see European social-democracy wrecked by debt problems thus holding out no hope for real reform in the US of a medical system that is rationed, doesn't work and yields no security:

These facts are from the CIA—and they are undisputed:

• Infant mortality rate in the United States: 6.06 per 1,000 live births.

• Infant mortality rate in France: 3.29 per 1,000 live births.

• Average life expectancy in the United States: 78.37 years (75.92 for men, 80.93 for women).

• Average life expectancy in France: 81.19 years (78.20 for men, 84.54 for women).

• Total expenditure on health care in the United States: 16.2% of GDP (2009).

• Total expenditure on health care in France: 3.5% of GDP (2009).

• Expenditure on health care in the United States per capita: $7,517 per year (2009).

• Expenditure on health care in France per capita: $1,148 per year (2009).

So . . . to make it clear: France has a Socialist-Commie health care system, while the United States has “the best health care system in the world”—

—and yet the French live longer, have an infant mortality rate roughly half the United States’, and yet still manage to spend less than Americans on health care.

A lot less—in fact, the Socialist-Commie Frogs spend less than a quarter of what the United States does, as a proportion of GDP.

And when you break it down per person per year? The French spend less than one-sixth what the United States spends—yet live longer, and have a lower infant mortality rate

These are the facts—and they are undisputed.

So! One of two things is going on: Either the French—as a people—are simply better than Americans; made of finer stuff; simply superior physical specimens.

Or . . .

Big Pharma, Big Med and Big Insurance are stealing from the American people every last bit of money they can get their hands on, while the Federal government refuses—out of incompetence, stupidity or corruption—to do anything about this rampant, blatant theft.

Too harsh, you say? Well, next time you go bankrupt from your medical bills, tell me again if I’m being too harsh. Because if you go bankrupt in America, there’s a 60% chance it will be because of medical bills. And if you do go bankrupt because of medical expenses? There’s a 40% chance you actually did have medical insurance—yet went bankrupt anyway! (Source here)

These are the facts—and they are undisputed.

This is America today.

Monday, January 30, 2012

Newt Gingrich

From the AlterNet website this discussion of the merits or otherwise of the candidate that is attracting Republican attention in this race. Florida's Primary is tomorrow and may help to decide who else needs to drop out:

More American families went on food-stamps during George W. Bush's term in office than under any other president in history – almost a half-million more than under Barack Obama. Facts don't matter much in a GOP primary contest, however; and Newt Gingrich catapulted himself to victory in South Carolina in large part by calling Obama “the food stamp president” and then picking a fight about it with Fox News pundit Juan Williams during a January 16 debate.

Gingrich had set a brilliant trap for a Republican primary contest. Most people understood the food stamp president line to be a classic example of the racist “dog-whistle” – the kind of rhetoric that has long been at the heart of the GOP's “Southern Strategy” -- and Newt was confident that he'd be called on it.

Williams obliged. “My e-mail account, my Twitter account, has been inundated with people of all races who are asking if your comments are not intended to belittle the poor and racial minorities,” he said.

Gingrich's response was practiced, and perfectly tuned for the Republican base. “Well, first of all, Juan, the fact is that more people have been put on food stamps by Barack Obama than any president in American history. I know, among the politically correct, you’re not supposed to use facts that are uncomfortable... and if that makes liberals unhappy...I’m going to continue to find ways to help poor people learn how to get a job, learn how to get a better job, and learn, some day, to own the job.”

Newt earned a standing ovation from the audience, and immediately after the debate Team Gingrich turned the exchange into an online ad titled, “The Moment.” Five polls taken in South Carolina in the days leading up to the debate had Mitt Romney up by an average of 11 points. Six polls in the following three days found Gingrich up by an average of just under three points, and a week later – after another testy exchange with CNN's John King – Gingrich beat the former Massachusetts governor by 12 percentage points in the Palmetto State's primary.

Newt Gingrich is a deeply flawed candidate. But fresh off his South Carolina trouncing of Romney, who has long been anointed the GOP front-runner, the political establishment is beginning to wonder – with horror or enthusiasm, as the case may be – if the veteran pol actually has a shot at becoming the Republicans' standard-bearer in 2012.

He does, although Romney still has formidable advantages in fundraising and organization on the ground. If Gingrich does manage to pull off an unlikely victory in the nominating contest, it will be the result of running a picture-perfect, almost archetypal right-populist campaign that is perfectly suited to this moment, with the ascendancy of the hard-right Tea Party among Republican primary voters.

The right-populist storyline is simple, and compelling for many at a time when Americans have seen an unprecedented loss of economic security. According to the right-populist narrative, the working class – especially the white working class -- is caught in a vice between two pernicious forces: an elite festering with corruption at the top and a legion of undeserving freeloaders at the bottom.

Sandwiched between these two forces is the “real America,” as Sarah Palin put it during the last election cycle. Gingrich defines the “middle-class” broadly enough to include white-collar professionals and all but the most affluent “entrepreneurs.”

Whereas traditional populism pits working people against corrupt bankers and the titans of big business, Gingrich's brand of right-populism is directed at cultural elites – intellectuals, the media and “latté liberals.”

During his exchange with CNN's John King, Gingrich was again happy to have the media serve as his foil. “I think the destructive, vicious, negative nature of much of the news media makes it harder to govern this country,” he said to King, who'd had the temerity to ask about Gingrich's past marital infidelities, before adding: “I am tired of the elite media protecting Barack Obama by attacking Republicans.” Again, the crowd went wild.

Later, during his victory speech, Gingrich drove the point home: “The American people,” he said, “feel that they have elites who have been trying for a half century to force us to quit being American and become some other kind of system.” At the same time, Gingrich said that the “African-American community should demand paychecks and not be satisfied with food stamps."

It's an updated version of Ronald Reagan's mythical “welfare queens” – suggesting that those receiving nutritional assistance are “undeserving” blacks content to live off the public teat. Never mind the fact that almost 60 percent of food-stamp recipients are children and the elderly – people who can't be expected to “demand paychecks” – or that only 8 percent of beneficiaries receive welfare. Never mind that whites make up the largest share of food-stamp households. In the right-populist view, lazy people of color are living high on the hog on an average benefit of $287 per month.

While he heaps scorn on those families that require some nutritional assistance during the worst economy America has seen for 70 years, warning that we are fast becoming an “entitlement society,” Newt's other big selling-point is his promise to bring Obama down to size in a series of unmoderated “Lincoln-Douglas-style” debates. It's a pitch that taps directly into the Right's sense of being talked down to by liberals – specifically, by a smartypants president with a degree from Harvard Law School. The GOP base wants nothing more than to see the elitist food-stamp president humbled intellectually – it lies at the heart of their bizarre obsession with the fact that he uses a teleprompter like every other pol -- and Gingrich is offering them an opportunity to do it vicariously through his bulldog campaign.

Conservatives have come to believe that their grievances are universally held by the American people. One of the most interesting tidbits from the South Carolina exit polls is that among those voters who said that the ability to defeat Obama in November was the most important characteristic in a candidate, Gingrich won by 14 points. That, despite the fact that Obama is leading Romney by less than two points in head-to-head polling but crushing Gingrich by 11 percentage points.

Ultimately, if Newt Gingrich does manage to claw his way to the nomination on the back of grievance politics, it could swing the election decisively to Obama. A poll released January 17 (PDF) found that Gingrich had a net positive favorability rating of 5 points among Republicans, but Americans as a whole view him unfavorably by a whopping 60-26 point margin.

Joshua Holland is an editor and senior writer at AlterNet.

Sunday, January 29, 2012

US Shadow Banking

Ellen Brown has produced another devastating essay on the state of banking in the US:

The Wall Street Journal reported on January 19th that the Obama Administration was pushing heavily to get the 50 state attorneys general to agree to a settlement with five major banks in the “robo-signing” scandal. The scandal involves employees signing names not their own, under titles they did not really have, attesting to the veracity of documents they had not really reviewed. Investigation reveals that it did not just happen occasionally but was an industry-wide practice, dating back to the late 1990s; and that it may have clouded the titles of millions of homes. If the settlement is agreed to, it will let Wall Street bankers off the hook for crimes that would land the rest of us in jail – fraud, forgery, securities violations and tax evasion.

To the President’s credit, however, he seems to have shifted his position on the settlement in response to protests before his State of the Union address. In his speech on January 24th, President Obama did not mention the settlement but announced instead that he would be creating a mortgage crisis unit to investigate wrongdoing related to real estate lending. “This new unit will hold accountable those who broke the law, speed assistance to homeowners, and help turn the page on an era of recklessness that hurt so many Americans,” he said.

The Deeper Question Is Why

Whether massive robo-signing occurred is no longer in issue. The question that needs to be investigated is why it was being done. The alleged justification—that the bankers were so busy that they cut corners—hardly seems credible given the extent of the practice.

The robo-signing largely involved assignments of mortgage notes to mortgage servicers or trusts representing the investors who put up the loan money. Assignment was necessary to give the trusts legal title to the loans. But assignment was delayed until it was necessary to foreclose on the homes, when it had to be done through the forgery and fraud of robo-signing. Why had it been delayed? Why did the banks not assign the mortgages to the trusts when and as required by law?

Here is a working hypothesis, suggested by Martin Andelman: securitized mortgages are the “pawns” used in the pawn shop known as the “repo market.” “Repos” are overnight sales and repurchases of collateral. Yale economist Gary Gorton explains that repos are the “deposit insurance” for the shadow banking system, which is now larger than the conventional banking system and is necessary for the conventional system to operate. The problem is that repos require “sales,” which means the mortgage notes have to remain free to be bought and sold. The mortgages are left unendorsed so they can be used in this repo market.

The Evolution of the Shadow Banking System

Gorton observes that there is a massive and growing demand for banking by large institutional investors – pension funds, mutual funds, hedge funds, sovereign wealth funds – which have millions of dollars to park somewhere between investments. But FDIC insurance covers only up to $250,000. FDIC insurance was resisted in the 1930s by bankers and government officials and was pushed through as a populist movement: the people demanded it. What they got was enough insurance to cover the deposits of individuals and no more. Today, the large institutional investors want similar coverage. They want an investment that is secure, that provides them with a little interest, and that is liquid like a traditional deposit account, allowing quick withdrawal.

The shadow banking system evolved in response to this need, operating largely through the repo market. “Repos” are sales and repurchases of highly liquid collateral, typically Treasury debt or mortgage-backed securities—the securitized units into which American real estate has been ground up and packaged, sausage-fashion. The collateral is bought by a “special purpose vehicle” (SPV), which acts as the shadow bank. The investors put their money in the SPV and keep the securities, which substitute for FDIC insurance in a traditional bank. (If the SPV fails to pay up, the investors can foreclose on the securities.) To satisfy the demand for liquidity, the repos are one-day or short-term deals, continually rolled over until the money is withdrawn. This money is used by the banks for other lending, investing or speculating. Gorton writes:

This banking system (the “shadow” or “parallel” banking system)—repo based on securitization—is a genuine banking system, as large as the traditional, regulated banking system. It is of critical importance to the economy because it is the funding basis for the traditional banking system. Without it, traditional banks will not lend and credit, which is essential for job creation, will not be created.

All Behind the Curtain of MERS

The housing shell game was made possible because it was all concealed behind an electronic smokescreen called MERS (an acronym for Mortgage Electronic Registration Systems, Inc.). MERS allowed houses to be shuffled around among multiple, rapidly changing owners while circumventing local recording laws. Title would be recorded in the name of MERS as a place holder for the investors, and MERS would foreclose on behalf of the investors. Payments would be received by the mortgage servicer, which was typically the bank that signed the mortgage with the homeowner. The homeowner usually thinks the servicer is the lender, but in fact it is an amorphous group of investors.

This all worked until courts started questioning whether MERS, which admitted that it was a mere conduit without title, had standing to foreclose. Courts have increasingly held that it does not.

Making matters worse for the servicing banks, Fannie Mae sent out a memo telling servicers that in order to be reimbursed under HAMP—a government loan modification program designed to help at-risk homeowners meet their mortgage payments—the servicers would have to produce the paperwork showing the loan had been assigned to the trust.

The hasty solution was a rash of assignments signed by an army of “robosigners,” to be filed in the public records. But the documents are patent forgeries, making a shambles of county title records.

Complicating all this are tax issues. Since 1986, mortgage-backed securities have been issued to investors through SPVs called REMICs (Real Estate Mortgage Investment Conduits). REMICs are designed as tax shelters; but to qualify for that status, they must be “static.” Mortgages can’t be transferred in and out once the closing date has occurred. The REMIC Pooling and Servicing Agreement typically states that any transfer significantly after the closing date is invalid. Yet the newly robo-signed documents, which are required to begin foreclosure proceedings, are almost always executed long after the trust’s closing date. The whole business is quite complicated, but the bottom line is that title has been clouded not only by MERS but because the trusts purporting to foreclose do not own the properties by the terms of their own documents.

John O’Brien, Register of Deeds for the Southern Essex District of Massachusetts, calls it a “criminal enterprise.” On January 18th, he called for a full scale criminal investigation, including a grand jury to look into the evidence. He sent to Massachusetts Attorney General Martha Coakley, U.S. Attorney General Eric Holder and U.S. Attorney Carmen Ortiz over 30,000 documents recorded in the Salem Registry that he says are fraudulent.

From Lending Machines to Borrowing Machines

The bankers have engaged in what amounts to a massive fraud, not necessarily because they started out with criminal intent, but because they have been required to in order to come up with the collateral (in this case real estate) to back their loans. It is the way our system is set up: the banks are not really creating credit and advancing it to us, counting on our future productivity to pay it off, the way they once did under the deceptive but functional façade of fractional reserve lending. Instead, they are vacuuming up our money and lending it back to us at higher rates.

“Instead of lending into the economy,” says British money reformer Ann Pettifor, “bankers are borrowing from the real economy.” She wrote in the Huffington Post in October 2010:

The crazy facts are these: bankers now borrow from their customers and from taxpayers. They are effectively draining funds from household bank accounts, small businesses, corporations, government Treasuries and from e.g. the Federal Reserve. They do so by charging high rates of interest and fees; by demanding early repayment of loans; by illegally foreclosing on homeowners, and by appropriating, and then speculating with trillions of dollars of taxpayer-backed resources.

Not only has the system destroyed county title records, but it is highly vulnerable to bank runs and systemic collapse. In the shadow banking system, as in the old fractional reserve banking system, the collateral is being double-counted: it is owed to the borrowers and the depositors at the same time. This allows for expansion of the money supply, but bank runs can occur when the borrowers and the depositors demand their money at the same time. And unlike the conventional banking system, the shadow banking system is largely unregulated. It doesn’t have the backup of FDIC insurance to prevent bank runs.

That is what happened in September 2008 following the bankruptcy of Lehman Brothers, a major investment bank. Gary Gorton explains that it was a run on the shadow banking system that caused the credit collapse that followed. Investors rushed to pull their money out overnight. LIBOR—the London interbank lending rate for short-term loans—shot up to around 5%. Since the cost of borrowing the money to cover loans was too high for banks to turn a profit, lending abruptly came to a halt.

Fixing the System

The question is how to eliminate this systemic risk. As noted by The Business Insider:

Regulate shadow banking more tightly, and you probably have to also provide government backstops. Shudder. Try to shut the thing down or restrict it and you suck credit out of the system, credit which much of the non-financial “'real” economy uses and needs.

Interestingly, countries with strong public sector banking systems largely escaped the 2008 credit crisis. These include the BRIC countries—Brazil Russia, India, and China—which contain 40% of the global population and are today’s fastest growing economies. They escaped because their public sector banks do not need to rely on repos and securitizations to back their loans. The banks are owned and operated by the ultimate guarantor—the government itself. The public sector banking model deserves further study.

Whatever the solution, a system that requires the slicing and dicing of mortgages behind an electronic smokescreen so they can be bought and sold as collateral for the pawn shop of the repo market is obviously fraught with perils and is unsustainable. Please contact your state attorney general and urge him or her not to go through with the robo-signing settlement, which will be granting immunity for crimes that are not yet fully known. Phone numbers are here. The surface of this great shadowy second banking system has barely been scratched. It needs a very thorough investigation.

Ellen Brown is an attorney and president of the Public Banking Institute, http://publicbankinginstitute.org/. Her websites are http://webofdebt.com/ and http://ellenbrown.com/.

Saturday, January 28, 2012

State Of The Union

This consideration of the President's speech from Global Research in Montreal suggests everything that is s aid and done this year is a function of an election year:

"If we have to use force, it is because we are America. We are the indispensable nation. We stand tall. We see further into the future." Secretary of State Madeleine Albright, 1998

“America remains the one indispensable nation in world affairs—and as long as I’m President, I intend to keep it that way.” President Barack Obama, State of the Union message, 2012

President Barack Obama’s 2012 State of the Union message is an object lesson in contemporary U.S. class politics. Obama came into office three years ago on a wave of progressive hopes and even euphoria, very understandable given the bitter history of racism in this country and the fact that he was taking the place of his widely despised predecessor, George W. Bush.

What the last three years as well as this speech have reaffirmed is that, regardless of the particular personality or characteristics of the person assuming the U.S. presidency, it is a job that comes with a specific job description: CEO of the imperialist ruling class.

For militarism and chauvinism, combined with empty liberal rhetoric, President Barack Obama’s 2012 State of the Union message would be hard to beat. That it was lavished with uncritical praise by liberal Democratic Party units like MoveOn.org—an allegedly “anti-war” group—was just another reminder that 2012 is an election year.

The president began by hailing the U.S. war on Iraq, a war he supposedly opposed when he was candidate Obama in 2008. Back then he was perceived by millions as the “peace candidate,” a critical element in his election victory.

“Last month, I went to Andrews Air Force Base and welcomed home some of our last troops to serve in Iraq,” said Obama. “Together, we offered a final, proud salute to the colors under which more than a million of our fellow citizens fought—and several thousand gave their lives. We gather tonight knowing that this generation of heroes has made the United States safer and more respected around the world.”


In fact, the war in Iraq largely destroyed a country that posed no threat whatsoever to the U.S. Millions of Iraqis were killed, wounded or forced into exile and its society torn to shreds. Not only did thousands of U.S. soldiers die in a war fought on entirely false pretenses, hundreds of thousands more suffered severe physical and psychological wounds. The total cost of the war will exceed $3 trillion—$3,000,000,000,000.

Obama portrayed the Afghanistan war as another impending success: “The Taliban’s momentum has been broken. ...” Even his top advisers, however, view the war as a stalemate, one where the U.S.—despite more than three decades of inflicting devastation on Afghanistan—cannot achieve a military victory.

He lauded the NATO overthrow of the government in Libya and predicted a similar outcome in Syria. But, of course, not a hint of criticism of the absolute monarchies that rule Saudi Arabia and other oil-rich countries in the Gulf.

Continuing his triumphalist world tour: “Ending the Iraq war has allowed us to strike decisive blows against our enemies. From Pakistan to Yemen, the al-Qaeda operatives who remain are scrambling, knowing they can’t escape the reach of the United States of America.”

US targets China

“We’ve made it clear that America [sic] is a Pacific power.” The primary target of the U.S. military buildup in Asia is China. The anti-China campaign is economic as well: “We’ve brought trade cases against China at nearly twice the rate as the last administration. Tonight I’m announcing the creation of a Trade Enforcement Unit that will be charged with investigating unfair trade practices in countries like China.”

Near the end of his remarks, Obama celebrated the damage that “crippling sanctions” are having on the Iranian people, and once again threatened Iran with military attack, including the use of nuclear weapons: “America [sic] is determined to prevent Iran from getting a nuclear weapon, and I will take no options off the table to achieve that goal.”

Regarding the only country in the Middle East that actually possesses nuclear weapons, the president declared: “Our iron-clad commitment to Israel’s security has meant the closest military cooperation between our two countries in history.” Not even the usual ritual mention of the Palestinians this time around.

In between his imperialistic international pronouncements, the president lamented about the difficulties of life for workers without jobs and students burdened by high-interest debt, and called on employers, universities and Congress to do better. He spent a good deal of time advocating a “fairer” tax system. But he projected no actual new programs.

When it came to helping Big Oil, it was a very different story: “Tonight I’m directing my administration to open up more than 75 percent of our potential offshore oil and gas resources.” In addition he expressed unambiguous support for “fracking,” the extremely hazardous extraction of gas from underground shale rock by blasting it apart using massive amounts of water and chemicals. Fracking has polluted water supplies, has sickened many people and recently has caused earthquakes in non-quake-prone areas.

While on the one hand calling for “comprehensive immigration reform” and something like the Dream Act, he boasted of stepping up the militarization of the border with Mexico: “That’s why my administration has put more boots on the border than ever before.”

Financial crimes go unpunished

Following more lamenting about bad things done by Wall Street and the big banks that led to the financial/economic crisis, what seemed to excite loyal Democrats more than anything else was this announcement by Obama: “We will also establish a Financial Crimes Unit of highly trained investigators to crack down on large-scale fraud and protect people’s investments. Some financial firms violate major anti-fraud laws because there’s no real penalty for being a repeat offender.”

But these two sentences raise more than a few questions, starting with, “What took so long?” followed by, “What—there is no real penalty for financial firms that repeatedly violate major anti-fraud laws?”

President Obama took office as the biggest financial/economic crisis since the Great Depression of the 1930s was breaking. Countless articles and whole books dissecting widespread fraud, particularly in the multi-trillion-dollar mortgage banking business, have been written. Virtually none of those who reaped immense profits from these fraudulent operations have gone to jail or even lost their fortunes. The famous exception is Bernie Madoff, who made the mistake of stealing mainly from the rich.

There is no particular reason to believe that three years later, the“Financial Crimes Unit” is anything but another election ploy. Under capitalism, all are not equal before the law. The “justice system” is administered by the rich against the rest.

Echoing the words of Madeleine Albright, President Clinton’s war-mongering secretary of state from 1997 to 2001, Obama thundered: “America remains the one indispensable nation in world affairs—and as long as I’m President, I intend to keep it that way.” The implication, of course, is that all other countries and nations in the world are … dispensable.

Richard Becker is a frequent contributor to Global Research.

Friday, January 27, 2012

Pensions Failure

From IceCap Asset Management January Investor Presentation we get this essay via zero hedge reminding us that the payout of pensions in the Western World seems a bit iffy just at the moment. Pension plans are relying on excessively optimistic promises of high returns:

Most Canadian pension funds are banking on 7% annual returns forever. Over the next few years, this unrealistic expectation will cost the respective governments and companies millions in shortfalls.

In the USA, the California Public Employees Retirement System assumes it will earn over 7.75% annual returns. This false hope will result in over $6 billion a year in lower than expected investment income, that will also have to be paid by the financially challenged state (ie. taxpayers).

Meanwhile, Thelma O’Keefe continues to quietly sock away 5% of her paycheck each and every week and has no idea what all the fuss will be about when she is eventually told her pension benefits will be slightly less than originally promised.

Over 50 years ago, the average worker started to earn pension benefits and has been dreaming of working less, and golfing more, ever since. The Defined Benefit Pension Plan has been the rock of this dreamy foundation and is certainly a costly beast to say the least. Once the auditors, actuaries, custodians, lawyers, administrators, consultants, performance measurement guys, trustees and investment managers have been paid for their services, is there little wonder most of these retirement funds are running a little short.

Yet, the primary reason most people fall asleep with even a slight mention of the words “pension funds” is due to the complexities and confusion resulting from this cumbersome investment scheme.

However, after 3 quick espressos you’ll see that the entire pension spectrum boils down to an educated guess as to how much money the pension plan will have to pay out to its retirees, and how much money its investments will pay in to the pension plan itself.

This “pay-out-in” dynamic is a precarious balancing act to say the least. Should guesstimates for either one fall short, the difference will have to be made up by tax payers for government pension plans, and by profits for company pension plans.

It is widely known by now that practically every government in the Western World is drowning in debt with no signs of growth anywhere on the horizon. Unfortunately, this looming pension funding problem could not have come at a worse time for these government supported pension funds.

Meanwhile, most companies are certainly flush with cash and are infinitely better off than their public pension fund counterparts. However, even this enviable position will not help due to the expectations of great stock and bond market returns.

Ever since the Western World pushed the debt envelope too far and proceeded to allow its governments to orchestrate one ill conceived bailout after another, investors of all shapes and sizes – including billion dollar pension funds and the little old ladies, have had to push their risk envelope too far and assume way too much risk in an effort to increase their investment returns.

Thursday, January 26, 2012

Euro Muddle

From Wolf Richter of http://www.testosteronepit.com/ this discussion of the newest European dead. Read it if you dare:

"The case of Greece is hopeless," Otmar Issing said today during an interview. He should know. He was a member of the Executive Board of the Bundesbank and of the Governing Council of the ECB. Another substantive voice in an increasingly loud chorus.

But it’s legally impossible to kick Greece out of the Eurozone. So he suggested a procedure: Tell the country that it has to implement reforms as a condition for financial help. When implementation is lacking, the basis for financial help disappears, and “you have to end it,” he said. “Then it's up to the Greeks to think about what they want to do."

That has been happening all along. The bailout troika (EU, ECB, and IMF) has offered money in exchange for a broad range of tough reforms. At first, it was easy for Greece to agree to reforms in return for bailout billions, but adequate implementation turned out to be impossible. Demonstrations, strikes, and riots, an unwilling bureaucracy, a political power struggle, morose economic conditions—all have seen to it that the unpopular German dictate, as it’s called, would fail.

“Greece must implement the agreed measures and reforms,” German Finance Minister Wolfgang Schäuble told reporters in Brussels. “And of course, all Greek parties must agree to the measures."

Another set of German must’s that Greece won’t be able to fulfill. By design. It gives German and Greek politicians an out—no one wants to be tagged with having made the first historic step in breaking up the Eurozone.

So, they’re going through a drawn-out step-by-step procedure of demands for reforms, promises, failed implementations, rebukes, withheld bailout transfers that then might still be made, and so on. The idea is to keep markets from panicking, give governments time to prepare for the inevitable, and render politicians blameless for Greece’s exit from the monetary union.

Return to Otmar Issing. "A monetary union without political union is absurd,” he said. “The keyword today is fiscal union. But a fiscal union cannot function without a political union. Yet decisions in that direction have to be democratically legitimate ... and that takes time. Those that defend the concept of a fiscal union know that."

So, Chancellor Angela Merkel, Schäuble, and the hordes of proponents of a fiscal union know that it cannot function without a political union—and yet they keep paying lip service to it. Beneath the surface, are they loosening the ties of the monetary union? Because the price of saving the impossible is just too high? It seems. And word is getting out.

“The fact that we profit massively from the euro doesn’t mean we have to accept every political horse-trade to save it,” said the president of Germany's Association of Exporters. For how the German industrial elite opened up about exiting the Eurozone, read.... ‘The Old Europe’ Is ‘Not An Option For Germany.’

In Greece, the economic tailspin continues. Squeezed from all sides, and faced with oil prices that have nearly doubled in 2011, Greeks have been heading into public woods to chop down trees; they need logs for their fireplaces to make it through the winter. Authorities filed 1,500 criminal complaints in 2011, twice as many as in the prior year.

But not everything is doom and gloom in Greece. Tourism set a record in 2011: 16.5 million tourists, up by 10% from 2010, and responsible for a 1% increase in GDP, according to the Association of Greek Tourism Companies (SETE). And it expects another record in 2012. While the number of tourists from the EU declined, Russians increased by 88%. And the uptrend is expected to continue. Easier visa requirements, it seems; sometimes, the Greek government does something right.

And Greece’s exit from the Eurozone? According to the SETE, the drachma would turn Greece into a tourist mecca for all budgets, and business would boom. So the only major growth industry in Greece declares that it would be even better off if Greece left the Eurozone. A ringing endorsement.

Indeed. Austerity measures are taking their daily toll. Suicides jumped by 22.5%. Pharmacies are having difficulties obtaining medications. More cuts are coming. If there is no agreement on the debt swap and with the bailout Troika, Greece will default in March. But now, even the Troika is in disarray.

Wednesday, January 25, 2012

A Cuban View Of Iran

Looked at from this side of the Straits of Florida war with Iran sounds ever more likely and as a path out of intolerable debt, war has always been the answer, unfortunately. However this essay by Fidel Castro Ruz, President Emeritus (as it were) of Cuba presents an alternative view, offered to us by Global Research in Montreal.

I recently had the satisfaction of having a pleasant conversation with Mahmoud Ahmadinejad. I had not seen him since 2006, more than five years ago, when he visited our country to participate in the 14th Summit of the Non-Aligned Movement of Countries in Havana. During the summit, Cuba was elected for the second time as president of the organization for a three-year term.

I had become gravely ill on July 26, 2006, a month and a half prior to the summit, and could barely sit up in bed. Many of the most distinguished leaders who participated in the event were kind enough to visit me. Chavez and Evo visited me several times. One afternoon four visitors came by whom I will always remember: UN Secretary General Kofi Annan; an old friend, Abdelaziz Buteflika, the president of Algeria; Mahmoud Ahmadinejad, the president of Iran; and the vice minister of Foreign Affairs and current Foreign Minister of China, Yang Jiechi, on behalf of the leader of the Communist Party and the president of China, Hu Jintao. It was really an important time for me; I was in the midst of intense physiotherapy on my right hand that I had seriously injured when I fell in Santa Clara.

With all four I spoke about some of the difficulties facing the world at the time; problems that have become progressively more complex.

During our meeting yesterday, I noted that the Iranian president was absolutely calm and tranquil, completely unconcerned about the Yankee threats and, fully confident in the capacity of his people to confront any aggression and in the effectiveness of their arms —which, in large part, they produce themselves— to inflict an unpayable price on its aggressors.

In reality, we hardly spoke about the topic of war. Mahmoud Ahmadinejad was focused on the ideas he had presented at the Main Hall of the University of Havana during his conference on the struggle of humankind: “Moving towards reaching and achieving peace, security, respect and human dignity as a fundamental desire of all human beings throughout history.”

I am convinced that Iran will not commit any rash actions that might contribute to setting off a war. If a war were to be unleashed, it would inevitably be completely as a result of the recklessness and congenital irresponsibility of the Yankee Empire.

I believe that the political situation surrounding Iran and the associated risks of a nuclear war that involves us all —regardless of whether one possess nuclear weapons— are extremely delicate because they threaten the very existence of our species. The Middle East has become the most troubled region on the planet, the same region that produces the energy resources vital for the world’s economy.

The destructive power and the mass sufferings caused by some of the weapons used in World War Two led to a strong movement to ban weapons such as asphyxiating gas and others. Nevertheless, conflicting interests and the huge profits made by arms manufacturers led to the production of crueler and more destructive weapons; modern technology has now added the means and material to build weapons that if used in a world war would lead to extinction.

I support the opinion, undoubtedly shared by all those with a basic sense of responsibility, that no country big or small has the right to possess nuclear weapons.

They never should have been used to attack two defenseless cities such as Hiroshima and Nagasaki, killing and irradiating with horrible and long-lasting effects hundreds of thousands of men, women and children, in a country that had already been militarily defeated.

If fascism indeed forced the allied nations against Nazism to compete with this enemy of humanity in the production of such weapons, once the war ended and the United Nations was created, the first duty of this organization should have been to prohibit nuclear weapons without exception.

However, the United States, the strongest and richest power, forced the rest of the world to follow its lead. Today, they have hundreds of satellites that spy and monitor the entire world from outer space. Their naval, air and land forces are equipped with thousands of nuclear weapons; and they control the world’s finances and investments at their whim via the International Monetary Fund.

Analyzing the history of each Latin American nation, from Mexico to Patagonia, by way of Santo Domingo and Haiti, one can observe that each and every country, without exception, have suffered for 200 years, from the beginning of the 19th century up until today. And, in one way or another, they are increasingly suffering the worst crimes that power and force can commit against the rights of a people. Brilliant Latin American writers are emerging in an increasing number. One of them, Eduardo Galeano, author of the book Open Veins of Latin America: Five Centuries of the Pillage of a Continent that describes the aforementioned, has just been invited to open the prestigious Casa de Las Americas Awards as a recognition to his outstanding body of work.

Events happen incredibly fast; but technologies report them to the public even faster. On any given day, like today, important news comes out a dizzying pace. A cable report dated from January 11 states: “The Danish presidency of the European Union confirmed on Wednesday that a new series of more severe European sanctions against Iran, because of its nuclear program, will be discussed on January 23. The new sanctions will not only target the oil industry but also the Central Bank.”

During a meeting with international journalists, Danish Foreign Minister Villy Soevndal said that “We will increase sanctions against the oil industry in addition to sanctions against financial structures.” This clearly demonstrates that, in order to impede nuclear proliferation, Israel can go on accumulating hundreds of nuclear warheads while Iran is not allowed to produce 20% enriched uranium.

Another article, from a respected British news agency, states that “China gave no hint on Wednesday of giving ground to U.S. demands to curb Iran’s oil revenues, rejecting Washington’s sanctions on Tehran as overstepping …”

The sheer tranquility with which the United States and civilized Europe carry out this campaign with incredible and systematic acts of terrorism is enough to shock anybody. Just look at these lines reported by another important European news agency: “The murder on Wednesday of Iranian nuclear specialist Mostafa Ahmadi Roshan [a scientist at the Natanz nuclear plant] was the fourth attack to kill a leading scientist in the country in almost exactly two years.”

On January 12, 2010: “Massoud Ali Mohammadi, a particle physics professor at Tehran University is killed when a booby-trapped motorcycle explodes outside his home in the capital. “

On November 29, 2010: “Two attacks target leading Iranian nuclear scientists on the same day. Majid Shahriari, a key member of Iran’s Atomic Energy Agency, is killed in Tehran by a limpet bomb attached to his car. His colleague Fereydoon Abbasi Davani is also targeted by a bomb attached to his car, but escapes.” The car was parked in front of the Shahid Beheshti University in Tehran where both men worked as professors.

On July 23, 2011: “Gunmen shoot dead Dariush Rezaei-Nejad, a senior scientist who is reportedly associated with the defense ministry, and wound his wife as they waited for their child outside a Tehran kindergarten.”

On January 11, 2012 —the same day that Ahmadinejad travelled from Nicaragua to Cuba to give a conference at the University of Havana—, scientist Mostafa Ahmadi Roshan, “a deputy director at the Natanz nuclear enrichment facility, is killed in a car bomb blast outside the [Allameh Tabatabai] University in east Tehran.” As in previous years “Iran once again accused the United States and Israel.”

The killings represent a systematic and selective slaughter of brilliant Iranian scientists. I have read articles by known Israeli sympathizers who write about crimes carried out by Israeli intelligence services in cooperation with the United States and NATO as if they were the most normal occurrence.

At the same time, Moscow news agencies report that “Russia warned that in Syria a similar scenario is developing as to that in Libya, and added that this time the attack will be launched from neighboring Turkey.

“The secretary of the Russian Security Council, Nikolai Patrushev, said the West wants to ‘punish Damascus not as much for repressing the opposition, but because it is unwilling to sever ties with Tehran.’”

“…NATO members and some Persian Gulf states, operating according to the Libya scenario, intend to move from indirect intervention in Syrian affairs to direct military intervention…This time the main strikes forces will not be provided by France, the U.K. or Italy, but possibly by neighboring Turkey.”

“Washington and Ankara are now assumed to be negotiating a “no-fly” zone over Syria, where Syrian armed insurgents can be trained and concentrated, added Patrushev.”

News is not only coming out of Iran and the Middle East, but also from other parts of Central Asia near the Middle East. These reports show the great complexity of the problems that can arise from this dangerous region.

The United States has been led by its contradictory and absurd imperial policy to get involved in serious problems in countries such as Pakistan, whose borders with Afghanistan were drawn up by the colonialists without taking into account culture or ethnicities.

In Afghanistan, which defended its independence against English colonialism for centuries, drug production has multiplied in the wake of the Yankee invasion. Meanwhile, European soldiers, supported by drone airplanes and armed with sophisticated US weapons, carry out deplorable massacres that increase the people’s hatred and ward off any possibilities of peace. All this and other dirty actions are also reported by Western news agencies.

“WASHINGTON, January 12, 2012 – US Secretary of Defense Leon Panetta called the actions of four U.S. marines who urinated on corpses in Afghanistan “utterly deplorable” The video of the act was circulated in the Internet.

“’I have seen the footage, and I find the behavior depicted in it utterly deplorable…’

“’This conduct is entirely inappropriate for members of the United States military and does not reflect the standards of values our armed forces are sworn to uphold…’”

In reality, Panetta neither confirms nor denies the action, and anyone, including the Secretary of Defense himself, may harbor doubt.

But it is also extremely inhumane that men, women and children, or an Afghani combatant fighting against the foreign occupation, be murdered by bombs dropped by drone planes. Another very serious incident: dozens of Pakistani soldiers and officials who safeguarded the country’s borders have been killed by these bombs.

Afghani President Karzai stated that the outrage committed against the bodies was “simply inhumane.” He asked for the US government “to urgently investigate the video and apply the most severe punishment to anyone found guilty in this crime.”

Meanwhile Taliban spokespersons declared that “over the last ten years, hundreds of similar acts have been carried out that were not reported…”

One even feels sorry for those soldiers, thousands of kilometers away from their family, friends and country, sent to fight in countries that they might not have even heard of during their school days, where they are assigned the task of killing or dying to enrich transnational companies, arms manufacturers and unscrupulous politicians who each year squander funds needed to feed and educate the uncountable millions of hungry and illiterate people around the world.

Many of these soldiers, victims of the trauma suffered, end up taking their own lives.

Is it an exaggeration to say that world peace is hanging by a thread?

Tuesday, January 24, 2012

A National Foreclosure Law

It is my belief that the outcome of the presidential race has already been decided, not by the vote of the people or even the ridiculous Electoral College but instead by the one percent. In an effort to keep his seat the sitting President is playing a double edged game, sounding populist drum beat for our benefit and acquiescence while at the same time reassuring the one percent their assets and status are safe. With this move to create a new national foreclosure law the one percent protect their assets at our expense and any President willing to sell his soul to achieve this will get their backing. This essay by Yves Smith at naked capitalism:

There is a slow moving but nevertheless troubling effort underway to change foreclosure laws across the US. The Uniform Law Commission, the same body that created the Uniform Commercial Code, a model set of laws that sought to harmonize commercial laws in all 50 states, has had two full day public but not well publicized meeting of a “study group” on mortgage foreclosure. Note that it took over a decade to draft the first version of the UCC and a protracted period for it to be implemented by states (most states have adopted the updated version of the UCC, although certain articles of the new version have not been implemented in any states).

Given its august history, one would think the ULC would be above political influences. That would appear to be a naive assumption these days. The study committee’s public meetings meetings to solicit opinion from “stakeholders” on “problems” with foreclosures. Curiously enough, these “stakeholder” meetings had no representation of investors (Tom Deutsch of the American Securitization Forum would claim he played that role, but everyone in mortgage land knows the ASF is a sell side organization) and effectively no input from homeowners or consumer advocates (none at the first meeting, and only, at the second, in Washington last week).

I got reports from three people who attended the latest session, in Washington, last week, na all were disheartening. Tom Cox, the Maine attorney who broke the robosigning scandal, provided a memorandum that argues that the commission has effectively assumed that the “problems” require a legislative solution:

Before there can be a determination made as to whether there is a need for a new uniform act dealing with foreclosure issues, there must be an clear accounting of (1) what the problems are that cause legislation to be considered, (2) what has caused those problems to occur, and (3) only then, whether the problems lend themselves to a legislative solution that would be offered by a new uniform act. Unfortunately, it appears that the JEBURPA letter of May 30, 2011 and all of the subsequent steps leading to this stakeholders’ meeting have failed to conduct the step 2 analysis. Further, it appears that the assumption has been made that new legislation is the solution to the perceived problems without there having been analysis of whether other non-­‐legislative solutions might be more appropriate.

Cox provided a detailed account of the January 13 meeting. Despite the fact that he and the academics present (including Kurt Eggert, Adam Levitin, and Alan White) all argued that the there is nothing wrong with existing laws, the problem is that they aren’t being followed, and a new statue won’t solve that. (Interestingly, the senior counsel of the American Bankers Association was the only other party present to speak against the initiative. Some participants, namely Judge Mize of the National Center for State Courts, and Dennis Ceuvas of the National Association of Attorneys General, said they were neutral).

The most disturbing part of Cox’s report is that this plan is NOT to develop a model statute, a la the UCC, which state legislatures would then have to approve, but that Professor William Breetz (the chairman) and member Barry Nekritz (the American Bar Association representative to the Committee) want to create an overlay statue. Moreover, he was apparently the only person in the room with any foreclosure experience, and a considerable amount of disiformation was conveyed by industry participants.

His comments were considerable more moderate than those of another observer, who wrote:

I wanted to vomit. I don’t think it’s going anywhere fast, but I wanted to scrub off the subtle corruption that permeated the area.

Cox also reported his understanding is that the Study Committee is making a recommendation that a uniform act drafting process begin and that ULC president Michael Houghton and executive director John Sebart are keen to see the project move forward.

Not only is it disheartening that this sort of effort is underway, but its slow timetable and largely invisible nature (until it is too late) will make it hard to organize against it. At a minimum, investors and consumer groups need to make their voices heard. The idea that elite attorneys from banks, financial services lobbying organizations, the Fed, and academia amount to “stakeholders” is offensive and absurd, particularly on an issue of importance to most citizens, the integrity of the laws protecting their biggest asset.

Monday, January 23, 2012

War Is Peace

It seems as though war is one way nations have historically managed to get out of overwhelming debt obligations. Iran seems to be the next favored target according to this essay from Global Research, which strikes an unnecessarily somber note in my opinion about all out nuclear war. It will be bad enough if oil supplies are badly disrupted for even a short while:

President Obama's government is using its Ministry of Propaganda, a.k.a., the American media, to spread the story that President Obama, Pentagon chief Panetta, and other high US officials are delivering strong warnings to Israel not to attack Iran.

For someone as familiar with Washington as I am, I recognize these reports for what they are. They are Br’er Rabbit telling Br’er Fox “please don’t throw me in the briar patch.”

If you don’t know the Uncle Remus stories, you have missed a lot. Br’er Rabbit was born and raised in the briar patch.

What these “leaked” stories of Washington’s warnings and protests to Israel are all about is to avoid Washington’s responsibility for the war Washington has prepared. If the war gets out of hand, and if Russia and China intervene or nukes start flying, Washington wants the blame to rest on Israel, and Israel seems willing to accept the blame. Nikolai Patrushev, who heads Russia’s Security Council, has apparently been deceived by Washington’s manipulation of the media. According to the Interfax news agency, Patrushev condemned Israel for pushing the US towards war with Iran.

You get the picture. The helpless Americans. They are being bullied by Israel into acquiescing to a dangerous war. Otherwise, no more campaign contributions.

The facts are different. If Washington did not want war with Iran it would not have provided the necessary weapons to Israel. It would not have deployed thousands of US troops to Israel, with a view toward the American soldiers being killed in an Iranian response to Israel’s attack, thus “forcing” the US to enter the war. Washington would not have built a missile defense system for Israel and would not be conducting joint exercises with the Israeli military to make sure it works.

If Washington did not want Israel to start the war, Washington would inform the Israeli government in no uncertain words that an Israeli strike on Iran means that the US will NOT veto the UN’s denunciation of Israel and the sanctions that would be placed on Israel as a war criminal state. Washington would tell Israel that it is good-bye to the billions of dollars that the bilked American taxpayers, foreclosed from their homes by fraudulent mortgages and from jobs by offshoring, hand over by compulsion to Israel to support Israel’’s crimes against humanity.

But, of course, Washington won’t prevent the war that it so fervently desires.

Neither will Washington’s NATO puppets. “Great” Britain does as it is told, subservient and occupied Germany, bankrupt France, Italy occupied with US air bases with a government infiltrated by the CIA, bankrupt Spain and Greece will all, in hopes of an outpouring of US dollars and devoid of any dignity or honor, support the new war that could end life on earth.

Only Russia and China can prevent the war.

Russia took the first step when the newly appointed Deputy Prime Minister for military affairs, Demitry Rogozin told a press conference in Brussels that Russia would regard an attack on Iran as “a direct threat to our security.”

Washington is counting on subverting Russia’s opposition to Washington’s next war. Washington can time the attack on Iran right after the March elections in Russia. When Putin wins again, the treasonous Russian opposition parties, financed by the CIA, will unleash protests in the streets. The subservient and utterly corrupt Western media will denounce Putin for stealing the election. The orchestrated protests in Russia will turn violent and discredit, if not prevent, any Russian response to the naked aggression against Iran.

For Rogozin’s warning to be effective in preventing war, China needs to enter the fray. Washington is banking on China’s caution. China deliberates and never rushes into anything. China’s deliberation will serve Washington’s war.

It is possible that the crazed neocon Washington government will have one more “victory” before Russia and China comprehend that they are next on the extermination list. As this date cannot be far off, life on earth might expire before the unpayable debts of US and EU countries come due.

Paul Craig Roberts is a frequent contributor to Global Research.

Sunday, January 22, 2012

Housing Hijinks Continue

It seems plans are afoot to let loose private investment on foreclosed homes as a way to allow the surplus of foreclosed homes to ab absorbed back into the housing market. This plan appears to have all the hallmarks of another massive public bailout of private wastrels. As this essay from Counterpunch points out, the easy way to help homeowners involves no moral hazard that might encourage future investors to expect public bailouts. Why we are expected to put up with more socialism for the banks at the expense of the people and public services is beyond me but mention Occupy Wall Street and face scorn. Yet it seems to me any 99 percenter who supports the plans outlined here needs to think again.

Federal Reserve chairman Ben Bernanke wants US taxpayers to purchase more of the garbage loans and mortgage-backed securities (MBS) that the big banks still have on their books. (Cash for trash) That’s the impetus behind the Fed’s 26-page white paper that was delivered to Congress last Wednesday. The document outlines the Fed’s plan for ‘stabilizing the housing market’, which is a phrase that Bernanke employs when he wants to provide more buy-backs, giveaways, subsidies and other corporate welfare to big finance.

“Restoring the health of the housing market is a necessary part of a broader strategy for economic recovery,” Bernanke opined in a letter to the Senate Banking and House Financial Services committees.

Indeed. The housing depression continues into its 5th year with no end in sight, mainly because the people who created the crisis are still in positions of power. And, they’re still offering the same remedies, too, like handing the banks another blank check to save them from losses on their bad bets. That’s what this new “housing stabilization” boondoggle is really all about, bailing out the bankers. Here’s a summary from Bloomberg:

“Bernanke’s Fed study said “more might be done,” including eliminating entirely the reduced fees for risky loans, “more comprehensively” cutting lenders’ put-back risks; and further streamlining refinancing for other Fannie Mae and Freddie Mac borrowers. The U.S. also should consider having Fannie Mae and Freddie Mac refinance loans not already backed by the government, which would add credit risk for the companies, according to the report….” (Bloomberg)

First of all, Fannie and Freddie only return loans (“put-backs”) that don’t meet their standards and which the banks foisted on them so they wouldn’t have to face the losses. The idea that the publicly-funded GSE’s should just “eat the losses” is ridiculous.

And, why–in heaven’s name–would congress want to take on more risk when they can keep millions of people in their homes by simply reducing the principal on their mortgages to the present value of the house? (aka–”Cramdowns”) Naturally, the losses would have to be absorbed by the banks who–by everyone’s admission–were
responsible for the present crisis due to their lax lending standards and, oftentimes, fraudulent behavior. This would lead to a restructuring of the country’s biggest banks through a Resolution Trust Corporation (RTC) so their toxic assets and backlog of foreclosed properties can be auctioned off as soon as possible.

This is a straightforward way to fix the housing market and it should have been done long ago. Bernanke’s solution is not only unreasonable, it’s also deceitful. Here’s more from the Fed’s paper: “Continued weakness in the housing market poses a significant barrier to a more vigorous economic recovery”..(without action)…“the adjustment process will take longer and incur more deadweight losses, pushing house prices lower and thereby prolonging the downward pressure on the wealth of current homeowners and the resultant drag on the economy at large.”

Did it really take Bernanke 5 years to figure out that housing is a “drag on the economy”?

No, of course not. So, what’s going on now that has suddenly spurred him to act?

Well, for one thing, the banks are losing a great deal of money on the mortgage-backed securities (MBS) that they bought in the last few years. Here’s the story in the Wall Street Journal:

“After flickering to life early in 2011, the market for subprime- and other risky residential-mortgage bonds has returned to its comatose state. And many investors believe a revival could be years away.

Prices on some bonds, which are backed by mortgages that don’t meet the standards needed to get backing from government-controlled companies like Fannie Mae and Freddie Mac, plummeted as much as 30% last year. The ABX, an index that tracks the value of subprime bonds, ended the year at 43.44 cents on the dollar, down from 59.90 cents at year-end 2010 and a peak of 62.68 cents in February 2011

While that decline pushed yields up to as much as 17%—bond yields rise as prices fall—many fund managers have pulled out of the market due to worries about further price declines. Moreover, repeated downgrades have left too few investment-grade securities for them to own. Wall Street banks, which traditionally have played a key role in the market matching buyers and sellers, are backing away ahead of new regulations that will make it more expensive to hold riskier assets.” (Investors Sour on Subprime Bonds, WSJ)

So, Wall Street’s financial geniuses got back into the MBS-biz (for a second time) and got whacked again? That’s right; and now they want John Q. Public to pay for it with another bailout.

And, there’s more to this story, too. European banks own roughly $100 billion of these mortgage-backed turkeys which they’re presently shedding like crazy in order to meet new capital requirements. That means US bank balance sheets are dripping red as the value of their financial asset-stockpile continues to plunge. That’s why Sugar Daddy Bernanke has stepped in, because it’s time for another multi-billion dollar bank rescue.

Look, the Fed has already purchased over $1.25 trillion of these toxic MBS which represents humongous long-term losses for the taxpayer. Do we really need more of this sludge?

Bernanke promised that the first round of quantitative easing (QE1) would boost employment (It hasn’t) and improve housing sales (it never happened) The only uptick in sales occurred because the colluding banks deliberately reduced the supply of foreclosed homes they put on the market. The reduction has led to a massive 1.7 million backlog of housing units (shadow inventory) that will eventually be dumped onto the market triggering another sharp decline in housing prices. Bernanke wants to do something about the bulging inventory as well as prop up the value of sagging MBS. So, the Fed’s plan actually has two main objectives; in other words, it’s the double whammy. Here’s more from Bloomberg:

“Since the Fed started buying $1.25 trillion of mortgage bonds in January 2009, the value of U.S. housing has fallen 4.1 percent, and is down 32 percent from its 2006 peak, according to an S&P/Case-Shiller index. The central bank is poised to buy about $200 billion this year, or more than 20 percent of new loans, as it reinvests debt that’s being paid off. Some Fed officials have said they may support additional purchases that Barclays Capital estimates could total as much as $750 billion.”

Did you catch that? Taxpayers are going to get slammed for another $750 billion. That’s nearly as much as Obama’s American Recovery and Reinvestment Act (ARRA), the fiscal stimulus that added 2 percent to GDP and kept unemployment from rocketing to 13 percent. Bernanke wants to throw that same amount down a Wall Street sinkhole.

So maybe you think this won’t happen, after all, could Congress really be so gullible as to fall for Bernanke’s fearmongering flim-flam again?

Maybe and maybe not. But there are some pretty wealthy and well-connected people who are betting that the Fed will do as it’s told and pave the way for another hefty bailout. In fact, the world’s largest bond fund (Pimco) has stumped up a mountain of cash betting that good buddy Bernanke will get the printing presses whirring sometime in mid-January. Here’s the story from Zero Hedge:

”….in December the fund (Total Return Fund or TRF) doubled down on its QE3 all in bet, by “borrowing” even more cash, or a record $78 billion, using the proceeds to buy even more MBS, as well as Treasurys, which hit a combined 31% of the TRF’s holdings. In other words, between MBS and USTs, Pimco holds a whopping 79% of total, mostly in very long duration exposure. In fact, this combination of long duration and pre-QE exposure has not been seen at PIMCO since late 2008, early 2009, meaning that as many banks have been suggesting, (Bill) Gross is convinced that the Fed will announce if not outright QE3 this January, then at least intimate it is coming.”(“Pimco Doubles Down On All In Bet Fed Will Monetize MBS”, Zero Hedge)

So what does Pimco know that we don’t know? More importantly, from whom are they getting their information?

And, there’s another thing, too. This whole deal about converting foreclosed homes into rental properties is another scam. Here’s the scoop from another article in the Wall Street Journal:

“The paper also signaled that the Fed…. will try to involve banks more directly in housing-revival approaches… One area involves efforts to turn foreclosed homes into rental properties….

Banking regulations typically direct banks to sell foreclosed homes quickly, although the rules do recognize this isn’t always practical and so these properties can be held up to five years. The Fed said it is now “contemplating issuing guidance” to banks and regulators that would possibly allow banks to turn some of these foreclosed homes into rental properties…..The hope is this may help stanch the flow of foreclosed properties into markets…” (“Fed Up With the Depressed State of Housing”, Wall Street Journal)

Bingo. The banks are not only sitting on 1.7 million shadow inventory of homes they’ve stockpiled to keep prices artificially high. They also have millions more in the pipeline when a settlement is finally reached on the robo-signing scandal. So, what are they going to do with all that backlog?

That’s easy. They’ll schluff it off on the taxpayer by creating a foreclosure-to-rental swindle where the government provides lavish incentives for banks and private equity scavengers to buy the homes (in bulk) for pennies on the dollar with loans provided by–you guessed it–Uncle Sam. Here’s a summary of what’s going on behind the scenes:

“As the Obama administration and federal regulators work on a program to sell government-owned foreclosures in bulk to investors, those investors aren’t wasting any time stockpiling cash and buying foreclosed properties at auction and from the major banks.

Oakland, California-based Waypoint Real Estate Group, a major acquirer of so-called “REO to Rental” (Real Estate Owned) just announced a partnership with a private equity firm, Menlo Park, California-based GI Partners, to buy foreclosed properties….

“Our approach to buying distressed single-family houses, renovating them, and leasing to residents who are committed to a path to future home ownership is a viable solution to our nation’s housing crisis,” said Colin Wiel, managing director and co-founder of Waypoint in a press release. “Our partnership with GI Partners ensures we can take the next step in our company’s evolution.”

GI is taking an increasingly popular bet on distressed real estate, closing on a $400 million fund with Waypoint, which has plans to purchase $1 billion in distressed real estate assets over the next two years, according to its release. (“Private Equity Readying a Run on Foreclosures”, Diana Olick, CNBC)

So, what do these guys know that we don’t know? And why are they plunking down big money when the details have not even been released yet?

None of this really passes the smell test, does it? The only thing we know for sure is that the “fix is in” and that Bernanke will do what he always does when the banks are in a pinch. Throw them a lifeline.

MIKE WHITNEY lives in Washington State. He is a contributor to "Hopeless: Barack Obama and the Politics of Illusion," forthcoming from AK Press.

Saturday, January 21, 2012

Fukushima Update

It is no longer headline news but the Japanese power plant destruction has led to radioactivity being detected worldwide. And this article from Global Research in Canada suggests the levels may be rising.

The University of California at Berkeley detected cesium levels in San Francisco area milk above over EPA limits … and even higher than they were 6 months ago.

Finnish public television says that cesium from Fukushima has been detected in lichens, fungi and elk and reindeer meat in Finland.

The Australian Radiation Protection and Nuclear Safety Agency confirmed a radiation cloud over the East Coast of Australia.

The West Coast of Canada is getting hit by debris from Japan … and at least some of it is likely radioactive.

The authors of the controversial study claiming 14,000 deaths in the U.S. so far from Fukushima are now upping their figure to 20,000. I spoke with nuclear health expert Chris Busby about their study, and he said that mortality figures fluctuate pretty substantially in the normal course, and so it is hard to know at this point one way or the other whether their figures are accurate.

And while there is no evidence linking them to Fukushima, Bed Bath and Beyond has recalled radioactive tissue holders after they set off police radiation monitors aboard a delivery truck This may just be an example of the incredibly lax handling of radioactive materials.

And thyroid cancers are – mysteriously – on the rise in the U.S.

But don’t worry: The owner of the Fukushima plant has the plant in cold shutdown, so everything is “under control” … Although temperatures have apparently jumped inside Fukushima’s number 2 reactor, and the Japanese have no idea where the nuclear fuel has gone, so they are drilling a hole into the containment vessel to try to find it.

Friday, January 20, 2012

Syrians Love Their Leader

From Jonathan Steele of the Guardian newspaper in England reports things in Syria may not be as they seem to those of us who watch events through the western press. This provocative article should give pause to anyone who wonders why the rebellion in Syria has failed signally to follow in the footsteps of the other "uprisings" in the Arab world. I find it hard sometimes to remind myself that reality comes in many different forms and the mainstream press is just one of them. The other reality? Perhaps that's the one that suggests, mildly, that most people don't care about politics and just want peace, even in Syria.

Suppose a respectable opinion poll found that most Syrians are in favour of Bashar al-Assad remaining as president, would that not be major news? Especially as the finding would go against the dominant narrative about the Syrian crisis, and the media considers the unexpected more newsworthy than the obvious.

Alas, not in every case. When coverage of an unfolding drama ceases to be fair and turns into a propaganda weapon, inconvenient facts get suppressed. So it is with the results of a recent YouGov Siraj poll on Syria commissioned by The Doha Debates, funded by the Qatar Foundation. Qatar's royal family has taken one of the most hawkish lines against Assad – the emir has just called for Arab troops to intervene – so it was good that The Doha Debates published the poll on its website. The pity is that it was ignored by almost all media outlets in every western country whose government has called for Assad to go.

The key finding was that while most Arabs outside Syria feel the president should resign, attitudes in the country are different. Some 55% of Syrians want Assad to stay, motivated by fear of civil war – a spectre that is not theoretical as it is for those who live outside Syria's borders. What is less good news for the Assad regime is that the poll also found that half the Syrians who accept him staying in power believe he must usher in free elections in the near future. Assad claims he is about to do that, a point he has repeated in his latest speeches. But it is vital that he publishes the election law as soon as possible, permits political parties and makes a commitment to allow independent monitors to watch the poll.

Biased media coverage also continues to distort the Arab League's observer mission in Syria. When the league endorsed a no-fly zone in Libya last spring, there was high praise in the west for its action. Its decision to mediate in Syria was less welcome to western governments, and to high-profile Syrian opposition groups, who increasingly support a military rather than a political solution. So the league's move was promptly called into doubt by western leaders, and most western media echoed the line. Attacks were launched on the credentials of the mission's Sudanese chairman. Criticisms of the mission's performance by one of its 165 members were headlined. Demands were made that the mission pull out in favour of UN intervention.

The critics presumably feared that the Arab observers would report that armed violence is no longer confined to the regime's forces, and the image of peaceful protests brutally suppressed by army and police is false. Homs and a few other Syrian cities are becoming like Beirut in the 1980s or Sarajevo in the 1990s, with battles between militias raging across sectarian and ethnic fault lines.

As for foreign military intervention, it has already started. It is not following the Libyan pattern since Russia and China are furious at the west's deception in the security council last year. They will not accept a new United Nations resolution that allows any use of force. The model is an older one, going back to the era of the cold war, before "humanitarian intervention" and the "responsibility to protect" were developed and often misused. Remember Ronald Reagan's support for the Contras, whom he armed and trained to try to topple Nicaragua's Sandinistas from bases in Honduras? For Honduras read Turkey, the safe haven where the so-called Free Syrian Army has set up.

Here too western media silence is dramatic. No reporters have followed up on a significant recent article by Philip Giraldi, a former CIA officer who now writes for the American Conservative – a magazine that criticises the American military-industrial complex from a non-neocon position on the lines of Ron Paul, who came second in last week's New Hampshire Republican primary. Giraldi states that Turkey, a Nato member, has become Washington's proxy and that unmarked Nato warplanes have been arriving at Iskenderum, near the Syrian border, delivering Libyan volunteers and weapons seized from the late Muammar Gaddafi's arsenal. "French and British special forces trainers are on the ground," he writes, "assisting the Syrian rebels, while the CIA and US Spec Ops are providing communications equipment and intelligence to assist the rebel cause, enabling the fighters to avoid concentrations of Syrian soldiers …"

As the danger of full-scale war increases, Arab League foreign ministers are preparing to meet in Cairo this weekend to discuss the future of their Syrian mission. No doubt there will be western media reports highlighting remarks by those ministers who feel the mission has "lost credibility", "been duped by the regime" or "failed to stop the violence". Counter-arguments will be played down or suppressed.

In spite of the provocations from all sides the league should stand its ground. Its mission in Syria has seen peaceful demonstrations both for and against the regime. It has witnessed, and in some cases suffered from, violence by opposing forces. But it has not yet had enough time or a large enough team to talk to a comprehensive range of Syrian actors and then come up with a clear set of recommendations. Above all, it has not even started to fulfil that part of its mandate requiring it to help produce a dialogue between the regime and its critics. The mission needs to stay in Syria and not be bullied out.

Thursday, January 19, 2012

Inconvenient Crews

Maritime law has a long history of flag flying as a means of signalling intent. 19th century warships used to fly the enemy's flag as a ruse while the ships approached each other swapping flags at the last minute before opening fire on an unsuspecting enemy. From Counterpunch http://www.counterpunch.org/ this essay about modern flag swapping by Karl Grossman who dissects how cruise ship companies short change passengers and crew by playing the odds of flying the wrong flag. And these would be the flags we want flying over ever larger cruise ships visiting Key West through an enlarged channel dredged for their convenience?

The disdain of much of the cruise ship industry for safety (as well as labor and environmental) laws is signaled by flags that fly on the stern of more than half of cruise ships. They are called “flags of convenience.”

Some 60 percent of cruise ships are now registered in Panama, Liberia and the Bahamas. By doing this—by obtaining “flags of convenience” from these and other countries—ship owners can avoid the laws of the nation from which they actually operate and take advantage of weak safety, labor and environmental standards.

The Costa Concordia and the other Costa ships are registered in Italy, although for years Costa ships flew the “flag of convenience” of Panama. Most of the other 100 ships of Costa’s owner, Florida-headquartered Carnival Corporation., sail, however, under “flags of convenience” of Panama and the Bahamas.

There has been sharp criticism through the years of this practice.

“Maritime lawlessness isn’t confined to pirates. Thanks to a system of ship registration called ‘flags of convenience,’ it is all too easy for unscrupulous ship owners to get away with criminal behavior,” wrote Rose George in an op-ed piece in the New York Times last year. “They have evaded prosecution for environmental damage like oil spills, as well as poor labor conditions, forcing crews to work like slaves without adequate pay or rest. But unlike piracy, which seems intractable, the appalling conditions on some merchant ships could be stopped.”

It used to be that ships flew the flag of the nation where they were from—and abided by its laws. “A ship is considered the territory of the country in which it is registered,” noted S.J. Tomlinson in a 2007 essay in the Villanova Sports and Entertainment Law Journal.

It was in the U.S. in the 1920s that the practice of registering ships in foreign nations began. Ship owners were frustrated by increased regulation and rising labor costs and also were seeking a way around Prohibition. Panama was an early haven. Liberia later became popular.

And the Bahamas later joined in. Other nations now involved include the Marshall Islands.

Indeed, the Deepwater Horizon oil rig at which an explosion in 2010 killed 11 crewmen and set off the massive Gulf of Mexico oil spill was registered in the Marshall Islands. It was considered to be a vessel requiring a national flag.

Many of these nations that provide “flags of convenience” at a price “lack the capacity or will to monitor the safety and working conditions on ships or to investigate accidents,” said George. “Instead, ship safety certificates are given out by private classification societies. Owners are allowed to choose which society they want—and the worst predictably choose the least demanding, This self-policing has been compared to registering a car in Bali so you can drive it in Australia with faulty brakes.”

Stated M.J. Wing in a 2003 essay in the Tulane Maritime Law Journal: “Those nations whose open registries have become the most popular also tend to be those who possess the most lax labor, safety, and environmental codes.”

CBS News travel editor Peter Greenberg, believes that “when you have a ship that’s home-ported in the United States, U.S. law should prevail.” There needs to be a change of law, he said.

He made the comment after a 2010 fire aboard the Carnival Splendor which left 4,500 passengers and crew stranded at sea. The National Transportation Safety Board had said it would lead the investigation into what happened, but Carnival argued that the U.S. didn’t have jurisdiction because the ship was registered in Panama.

“With all due respect to the Panamanian authorities,” commented Greenberg. “I have not seen a show called ‘CSI Panama’ lately. I really want guys who know what they’re doing, who really live this work, to do the investigation.”

What began in the 1920s has now become a maritime industry norm. Meanwhile, the cruise industry has been exploding—growing at a rate as high as 7 percent annually in recent years. Ships have grown to be humongous. Oasis of the Seas, a ship of Florida-headquartered Royal Caribbean International, which went into service in 2009, can carry more than 6,000 passengers. It’s a model for other megaships. And the gargantuan floating hotel is registered in the Bahamas.

Carnival Corporation proudly announced last April that it had added its “100th cruise ship to its fleet with the delivery of the Carnival Magic. It can carry more than 5,400 passengers. It is registered in Panama. Carnival described itself as “a global cruise company and one of the largest vacation companies in the world. Our portfolio of leading cruise brands includes Carnival Cruise Lines, Holland America Line, Princess Cruises and Seabourn…P&O Cruises…Cunard Line…AIDA…Costa Cruises…and Iberocruceros.”

Carnival categorizes its Carnival Magic as a ship in its “Dream Class.”
The cruise ship industry has become a huge business—and like most big businesses has no problem avoiding rules. The traditional antidote has been government regulation, but the “flags of convenience” system offers an end-run to that.

The sea is not forgiving to those who would cut corners. The dream of a cruise at sea can easily become a nightmare—as it became for the passengers on the Costa Concordia.

Major changes need to be made in the maritime industry—including the end of the “flags of convenience” system. There should be an international ban on “flags of convenience.” As for the United States, all forms of public transportation—airplane, train, car, truck and much of ship transport—are accompanied by comprehensive government regulation. This needs to happen to all seagoing vessels emanating from U.S. ports—without the scam of licenses from Panama, Liberia and the Bahamas. The years of ship owners doing what they want must end. Large numbers of lives are at stake. The anarchy on the high seas cannot be allowed to continue.

Karl Grossman, professor of journalism at the State University of New York/College of New York, is the author of the book, The Wrong Stuff: The Space’s Program’s Nuclear Threat to Our Planet (Common Courage Press).

Wednesday, January 18, 2012

Mortgage Settlement Fades

According to Yves Smith at naked capitalism the mortgage fiasco that was supposed to be worked out in a fifty state agreement has now slipped into a truly comatose state. Smith says the states declining to [participate in the "50 state" talks may have increased from five to twelve and the number of "defectors" may be increasing. Chaos seems to be the order of the day for a while on this subject.

At least when Penelope was resisting her suitors, it was clear what her objectives were. She was holding out on her belief that her husband Odysseus would return. And the suitors come off like real boors, so maybe she had also decided the single life was a better option than marrying any of them.

By contrast, it seems as if the Obama administration has completely lost the plot in what was formerly called the 50 state attorney general negotiations, and that appears to have fed directly into the news today of meetings of a breakaway group interested in concrete results.

Remember that despite the successful effort of by the Feds to make the AG group the face of the effort, this drill is being quietly guided by the Administration (the DoJ, HUD, and other federal regulators are participating in the negotiations). A telling moment occurred when Iowa AG Tom Miller, the leader of the state AGs, practically fawned over then assistant Treasury secretary Michael Barr in Congressional hearings in late 2010.

When the talks started, it was clear that the Administration wanted to get the housing mess out of the headlines, based on the false premise that the use of enough cheap credit, regulatory forbearance (official speak for “extend and pretend”) plus some helpful-around-the-margins programs to distract the peasants, would allow the housing market to heal on its own. The evidence is overwhelmingly to the contrary. Housing credit is entirely dependent on government support, and there is not even a remote chance that this will change any time soon. The authorities are not only oblivious to the way servicers abuse investors, but New York Fed president William Dudley made it clear that he thinks it’s a great idea to reverse the creditor hierarchy and burn first mortgage investors to save second lien investors, who happen to be banks. And the supposedly helpful programs like HAMP turned out to be utter disasters.

But the most remarkable to see federal regulators do the equivalent of sticking fingers in their ears and yelling “Lalala” whenever the issue of servicer and foreclosure mill fraud comes up (they give servicing deficiencies plenty of lip service in testimony and speeches, but their actions convey a completely different message). As Michael Olenick discussed in a recent post, there is a massive overhang of shadow housing inventory. Buyers are reluctant to come into the market if they think (correctly in many locales) that prices have not bottomed. In states that for various reasons now have more teeth in foreclosure documentation requirements (New York, Nevada, and New Jersey), foreclosures have come to a near standstill. That’s a de facto admission that the parties representing creditors (almost always securities trusts) failed to live up to their promises to investors in the pooling & servicing agreements. It also raises the ugly likelihood that the borrower IOU, the note, never made it to the trust, but is in limbo earlier in the transfer chain.

So the Administration’s puppets, the cooperating attorneys general, have been engaged in truly bizarre negotiations. The banks know the real objective is to “reduce uncertainty” which is really “get possible sources of trouble neutralized”. AG suits can be very powerful, as Eliot Spitzer’s prosecutions of big corporate accounting abuses and dubious behavior by sell side analysts demonstrated. They change perceptions of what will be tolerated and also pave the way for private lawsuits. And as we’ve pointed out repeatedly, the banks keep asking for more and more at the negotiating table. That’s a bad faith bargaining strategy, one you pursue only if you are certain the other side is desperate to get a deal done. But the whole process has looked less and less plausible as the banks keep upping their demands and Tom Miller keeps saying, month after month, that a deal is mere weeks away.

But the pretense started to crack as important states exited the talks: New York, Delaware, Nevada, Massachusetts, and California. The Miller camp keeps mentioning that California may come back with no evidence to support that spin (non-developments or old news on the California front has been misrepresented more than once, a sign of desperation to keep a brave front up).

But today’s leak is a biggie. A little birdie had told me a bigger group was discussing an settlement in opposition to the AG format a couple of months ago, but this is apparently the first in person meeting of a group this large. The report by Loren Berlin at Huffington Post says as many as 15 states are participating, and Hawaii, New Hampshire, Missouri, Mississippi, Maryland, Kentucky and Minnesota joined the five states that had already abandoned the talks in pow-wow in Washington last Tuesday. So the known total of the possible breakaway group is 12, and we’ve heard past rumors of Colorado and Oregon as being not very keen with the Miller-led talks. Key extracts:

The meeting was prompted by the slow pace at which a national foreclosure settlement led by the Obama administration is progressing, and is likely to be the first in a series..

“The talks weren’t just about investigations,” said a source with knowledge of the discussions. “They were also about the attorneys general offices feeling uninvolved in a process by which their federal colleagues have been negotiating on their behalf.”

Hah, so we have confirmation of who is really driving this train.

Notice that this group includes only Democrats (Colorado is Republican but not confirmed as on the outs). However, even a group of 12 Democratic AGs is significant. First, it is a direct repudiation to the Obamap-led effort to sweep the mortgage mess under the rug. Second, 12 or more departures would undermine the status of the settlement. Per Dave Dayen in an earlier post:

The master settlement agreement with the tobacco industry in 1998 eventually got the agreement of 46 AGs, with the other four coming aboard later. That would be similar to the necessary outcome here; to become the official position of the National Association of Attorneys General, at least 38-41 of the AGs would have to sign on. And even that has no binding force to supersede state law.

In addition, despite the effort of Tom Miller to pretend that there is unanimity among the AG group, he not only has dissenters on the left but also on the right. Four Republican attorneys general said in a letter last April that they were firmly opposed to any principal reductions of mortgages as part of the deal, and that IS now part of the deal. So in the unlikely event the Miller talks get closer to resolution, these AGs are also likely to bolt.

So perhaps there is some Penelope-like logic behind the neverending negotiations. Bringing them to a close would reveal, finally, what we said all along: that there is no deal to be had among the participants. Since the objective is reducing uncertainty, Mr. Market will be happier with his fantasy that a settlement deal may finally take place than the recognition that attorneys general no longer have pretend negotiations keeping them from doing their job of pursuing mortgage miscreants.

Tuesday, January 17, 2012

Banking Wars

By the pseudonym George Washington at the zero hedge website this discussion about the drive to control central banks world wide and especially in the Middle East. Weird but true it seems. The evidence as offered here is though provoking.

The Middle Eastern and North African wars – planned 20 years ago – don’t necessarily have much to do with fighting terrorism. They are, in reality, about oil and protecting Israel (and read the section entitled “Securing the Realm” here). However as AFP reports there is another major motivation for the expanding wars:

The latest round of American sanctions are aimed at shutting down Iran’s central bank, a senior US official said Thursday, spelling out that intention directly for the first time.

“We do need to close down the Central Bank of Iran (CBI),” the official told reporters on condition of anonymity, while adding that the United States is moving quickly to implement the sanctions, signed into law last month.

Foreign central banks that deal with the Iranian central bank on oil transactions could also face similar restrictions under the new law, which has sparked fears of damage to US ties with nations like Russia and China.

“If a correspondent bank of a US bank wants to do business with us and they’re doing business with CBI or other designated Iranian banks… then they’re going to get in trouble with us,” the US official said.

Why is the U.S. targeting Iran’s central bank?

Well, multi-billionaire Hugo Salinas Price told King World News:

What happened to Mr. Gaddafi, many speculate the real reason he was ousted was that he was planning an all-African currency for conducting trade. The same thing happened to him that happened to Saddam because the US doesn’t want any solid competing currency out there vs the dollar. You know Gaddafi was talking about a gold dinar.

As I noted in August:

Ellen Brown argues in the Asia Times that there were even deeper reasons for the war than gold, oil or middle eastern regime change.

Brown argues that Libya – like Iraq under Hussein – challenged the supremacy of the dollar and the Western banks:

Later, the same general said they planned to take out seven countries in five years: Iraq, Syria, Lebanon, Libya, Somalia, Sudan, and Iran.

What do these seven countries have in common? In the context of banking, one that sticks out is that none of them is listed among the 56 member banks of the Bank for International Settlements (BIS). That evidently puts them outside the long regulatory arm of the central bankers’ central bank in Switzerland.

The most renegade of the lot could be Libya and Iraq, the two that have actually been attacked. Kenneth Schortgen Jr, writing on Examiner.com, noted that “[s]ix months before the US moved into Iraq to take down Saddam Hussein, the oil nation had made the move to accept euros instead of dollars for oil, and this became a threat to the global dominance of the dollar as the reserve currency, and its dominion as the petrodollar.”

According to a Russian article titled “Bombing of Libya – Punishment for Ghaddafi for His Attempt to Refuse US Dollar”, Gaddafi made a similarly bold move: he initiated a movement to refuse the dollar and the euro, and called on Arab and African nations to use a new currency instead, the gold dinar. Gaddafi suggested establishing a united African continent, with its 200 million people using this single currency.


And that brings us back to the puzzle of the Libyan central bank. In an article posted on the Market Oracle, Eric Encina observed:

One seldom mentioned fact by western politicians and media pundits: the Central Bank of Libya is 100% State Owned … Currently, the Libyan government creates its own money, the Libyan Dinar, through the facilities of its own central bank. Few can argue that Libya is a sovereign nation with its own great resources, able to sustain its own economic destiny. One major problem for globalist banking cartels is that in order to do business with Libya, they must go through the Libyan Central Bank and its national currency, a place where they have absolutely zero dominion or power-broking ability. Hence, taking down the Central Bank of Libya (CBL) may not appear in the speeches of Obama, Cameron and Sarkozy but this is certainly at the top of the globalist agenda for absorbing Libya into its hive of compliant nations.

Alex Newman wrote in November:

According to more than a few observers, Gadhafi’s plan to quit selling Libyan oil in U.S. dollars — demanding payment instead in gold-backed “dinars” (a single African currency made from gold) — was the real cause [of the Libyan war and killing of Gadhafi]. The regime, sitting on massive amounts of gold, estimated at close to 150 tons, was also pushing other African and Middle Eastern governments to follow suit.

And it literally had the potential to bring down the dollar and the world monetary system by extension, according to analysts. French President Nicolas Sarkozy reportedly went so far as to call Libya a “threat” to the financial security of the world. The “Insiders” were apparently panicking over Gadhafi’s plan.

“Any move such as that would certainly not be welcomed by the power elite today, who are responsible for controlling the world’s central banks,” noted financial analyst Anthony Wile, editor of the free market-oriented Daily Bell, in an interview with RT. “So yes, that would certainly be something that would cause his immediate dismissal and the need for other reasons to be brought forward [for] removing him from power.”

According to Wile, Gadhafi’s plan would have strengthened the whole continent of Africa in the eyes of economists backing sound money — not to mention investors. But it would have been especially devastating for the U.S. economy, the American dollar, and particularly the elite in charge of the system.

“The central banking Ponzi scheme requires an ever-increasing base of demand and the immediate silencing of those who would threaten its existence,” Wile noted in a piece entitled “Gaddafi Planned Gold Dinar, Now Under Attack” earlier this year. “Perhaps that is what the hurry [was] in removing Gaddafi in particular and those who might have been sympathetic to his monetary idea.”

Investor newsletters and commentaries have been buzzing for months with speculation about the link between Gadhafi’s gold dinar and the NATO-backed overthrow of the Libyan regime. Conservative analysts pounced on the potential relationship, too.

“In 2009 — in his capacity as head of the African Union — Libya’s Moammar Gadhafi had proposed that the economically crippled continent adopt the ‘Gold Dinar,’” noted Ilana Mercer in an August opinion piece for WorldNetDaily. “I do not know if Col. Gadhafi continued to agitate for ditching the dollar and adopting the Gold Dinar — or if the Agitator from Chicago got wind of Gadhafi’s (uncharacteristic) sanity about things monetary.”

But if Arab and African nations had begun adopting a gold-backed currency, it would have had major repercussions for debt-laden Western governments that would be far more significant than the purported “democratic” uprisings sweeping the region this year. And it would have spelled big trouble for the elite who benefit from “freshly counterfeited funny-money,” Mercer pointed out.

“Had Gadhafi sparked a gold-driven monetary revolution, he would have done well for his own people, and for the world at large,” she concluded. “A Gadhafi-driven gold revolution would have, however, imperiled the positions of central bankers and their political and media power-brokers.”

Adding credence to the theory about why Gadhafi had to be overthrown, as The New American reported in March, was the rebels’ odd decision to create a central bank to replace Gadhafi’s state-owned monetary authority. The decision was broadcast to the world in the early weeks of the conflict.

In a statement describing a March 19 meeting, the rebel council announced, among other things, the creation of a new oil company. And more importantly: “Designation of the Central Bank of Benghazi as a monetary authority competent in monetary policies in Libya and appointment of a Governor to the Central Bank of Libya, with a temporary headquarters in Benghazi.”

The creation of a new central bank, even more so than the new national oil regime, left analysts scratching their heads. “I have never before heard of a central bank being created in just a matter of weeks out of a popular uprising,” noted Robert Wenzel in an analysis for the Economic Policy Journal. “This suggests we have a bit more than a rag tag bunch of rebels running around and that there are some pretty sophisticated influences,” he added. Wenzel also noted that the uprising looked like a “major oil and money play, with the true disaffected rebels being used as puppets and cover” while the transfer of control over money and oil supplies takes place.

Other analysts, even in the mainstream press, were equally shocked. “Is this the first time a revolutionary group has created a central bank while it is still in the midst of fighting the entrenched political power?” wondered CNBC senior editor John Carney. “It certainly seems to indicate how extraordinarily powerful central bankers have become in our era.”

Similar scenarios involving the global monetary system — based on the U.S. dollar as a global reserve currency, backed by the fact that oil is traded in American money — have also been associated with other targets of the U.S. government. Some analysts even say a pattern is developing.

Iran, for example, is one of the few nations left in the world with a state-owned central bank. And Iraqi despot Saddam Hussein, once armed by the U.S. government to make war on Iran, was threatening to start selling oil in currencies other than the dollar just prior to the Bush administration’s “regime change” mission. While most of the establishment press in America has been silent on the issue of Gadhafi’s gold dinar scheme, in Russia, China, and the global alternative media, the theory has exploded in popularity.

A reader comments:

No one is paying attention to the petro-dollars and the current desperation of European and US banks. Even Iran prices oil in $$$s per the treaty after WWII, but no one wants $$$s any more because it has been such a poor investment vehicle. Gold has been much better. Iraq did not want $$$s, was invaded. Libya did not want $$$s, was invaded (I believe they wanted gold). Iran does not want $$$. The dollars are deposited in US and European banks. The dollars standing as the finacial reserve currency of the world was / is being threatened, and thus the Federal Reserve Banks ability to print unlimited dollars!