World Watches Raid on Relief Flotilla as Israel’s PR Machine Flails

It’s been 24 hours since we began watching live video of the Freedom Flotilla as it attempted to deliver 10,000 metric tons of humanitarian aid to the people of Gaza, and much remains murky. With the Israeli government refusing to provide information on the killed, injured and detained passengers – who included European legislators, medical personnel and activists, all civilians – we are left in the dark.

Of course, Israel is quite happy to spread around the latest IDF videos which claim to show the events on the ships as Israeli commandos attacked. Left out of those video accounts is the essential, core fact that the ships were in international waters at the time – and had in fact specifically decided to alter their course to avoid just such a confrontation during the night.

Many of us watching the live feeds from Turkish TV heard the announcement of the captains decision to shift his course shortly after the Israeli warships made initial contact when the flotilla was still 100 miles off the coast. We then saw the passengers take off their life vests and relax after the initial preparations made with the first Israeli radio message. We thought that things would be calm overnight. We were oh so wrong.

The IDF – forgetting that in a wired world, they do not have total control of what we see and therefore think – has been flogging a set of videos purporting to show the boarding and also provided handy onscreen notes in case US media doesn’t see it the same way. They’ve also provided random shots of slingshots and a few boards or pipes – just lying on what appears to be a ship’s deck but note carefully that they provide no footage of these “weapons” being used nor proof they even belong to the passengers.

Now consider this PR effort in the conjunction with the pre-flotilla effort the IDF launched and which is well documented in the video above. Along with multiple lies about conditions in Gaza, the Israeli Government Publicity Office sent round an “ironic” press release recommending that journalists going to Gaza dine at an upscale restaurant, a claim made to counter any concerns about the desperate conditions in Gaza which had just been reported once again by the UN Relief Agency.

But just as many of us know the lie of today’s Israeli spin which claims Israel’s murder of up to 19 civilians was justified, the lie of the restaurant video effort was shown clearly when viewers saw Mahmoud Abbas dining in the Israeli video. Abbas has not been in Gaza since the launch of the Israeli siege and the video was years old.

Did some passengers resist the Israeli attack – perhaps. In fact some of the Turkish TV video appears to show one or two passengers pushing a commando against a door as he drops from the helicpter onto the deck. So we have the elite Israeli commandos, trained for weeks to board these vessels pushed about – and this justifies the killing of up to 19 civilians? Repeat after me: the passengers were aboard a legal vessel in international waters – not attacking Israel in any fashion – and never intending to land in Israel at all.

Or as Dror Feiler, an Israeli organizer of the flotilla said before sailing:

In an interview with Israel Radio, he said he’s considered the various scenarios: “Either they take over our ships and force us to come to Ashdod, or intercept and sink us — or we’ll make it to Gaza. If we make it, we will have broken the siege. If they sink us, they will be showing the true face of a country gone insane. And if they force us into Ashdod, then they will be exactly like pirates in the Gulf of Aden . . . they’ll be the new pirates of the Mediterranean.”

As of now, there are reliable reports of a death toll of up to 19, with at least 50 wounded and numerous journalists held without the ability to contact their employers. The PM of Ireland has rightly accused the Israeli’s of kidnapping Irish citizens and governments around the world are demanding explanations and information on their citizens as well as an independent investigation. People around the word have gathered to protest this new Israeli crime – from Iraq to Times Square.

The US however is simply asking Netanyahu to investigate – and parroting Israel’s own language – expressing regret at the loss of life. As I write this, the UN Security Council is still conferring behind closed doors with CNN I reporting that the US is blocking efforts to launch an independent investigation into Israel’s actions on the high seas.

Meanwhile, in Istanbul, Turkish families wait for word on their loved ones:

“My son is 4 years old and my daughter is 6. They packed 300 lollipops for their father to take to Palestinian children in Gaza,” [Aynur Akdeniz] said through tears.

… Like the other families gathered at the İHH building trying to obtain news from their relatives on the ship, Akdeniz said she was shocked by the attacks and that she was worried and crying.

“I did not expect that much cruelty. My husband even did not have a pocket knife on him,” she said. “It was a strict rule for all of them not to have anything that might be used as a weapon. But Israel was afraid of a few civilian people.”

While we wait for word from the passengers, we also have learned that a 21 year old American student in Israel has been shot in the eye by Israeli forces with a gas cannister and will lose her eye.

The sinking of the Cheonan: Another Gulf of Tonkin incident

The Gulf of Tonkin Incident, in 1964, was a major turning point in US military involvement in Vietnam. It authorized Prezi Johnson by the Gulf of Tonkin Resolution to retaliate for the purported attacks in the Gulf of Tonkin and to start an official war against N-Vietnam.

In 1965, President Johnson commented privately: "For all I know, our Navy was shooting at whales out there."

In 1981, Captain Herrick and journalist Robert Scheer re-examined Herrick's ship's log and determined that the first torpedo report from August 4, which Herrick had maintained had occurred—the "apparent ambush"—was in fact unfounded.

Finally, in October, 2005 the NYT reported that Robert J. Hanyok, a historian for the NSA, had concluded that the agency deliberately distorted the intelligence reports that it had passed onto policy-makers regarding the incident. He concluded that the motive was not political but was probably to cover up honest intelligence errors...

History repeats itself.

Soon after the sinking of the South Korean warship, the Cheonan, Defense Minister Kim Tae-young ruled out a North Korean torpedo attack, noting that a torpedo would have been spotted, and no torpedo had been spotted. Intelligence chief Won See-hoon, said there was no evidence linking North Korea to the Cheonan’s sinking.

The sinking of the Cheonan: Another Gulf of Tonkin incident


Brendan Stone and Stephen Gowans discuss the Cheonan sinking on Unusual Sources.

Stephen Gowans

While the South Korean government announced on May 20 that it has overwhelming evidence that one of its warships was sunk by a torpedo fired by a North Korean submarine, there is, in fact, no direct link between North Korea and the sunken ship. And it seems very unlikely that North Korea had anything to do with it.

That’s not my conclusion. It’s the conclusion of Won See-hoon, director of South Korea’s National Intelligence. Won told a South Korean parliamentary committee in early April, less than two weeks after the South Korean warship, the Cheonan, sank in waters off Baengnyeong Island, that there was no evidence linking North Korea to the Cheonan’s sinking. (1)

South Korea’s Defense Minister Kim Tae-young backed him up, pointing out that the Cheonan’s crew had not detected a torpedo (2), while Lee Ki-sik, head of the marine operations office at the South Korean joint chiefs of staff agreed that “No North Korean warships have been detected…(in) the waters where the accident took place.” (3)

Notice he said “accident.”

Defense Ministry officials added that they had not detected any North Korean submarines in the area at the time of the incident. (4) According to Lee, “We didn’t detect any movement by North Korean submarines near” the area where the Cheonan went down. (5)

When speculation persisted that the Cheonan had been sunk by a North Korean torpedo, the Defense Ministry called another press conference to reiterate “there was no unusual North Korean activities detected at the time of the disaster.” (6)

A ministry spokesman, Won Tae-jae, told reporters that “With regard to this case, no particular activities by North Korean submarines or semi-submarines…have been verified. I am saying again that there were no activities that could be directly linked to” the Cheonan’s sinking. (7)

Rear Admiral Lee, the head of the marine operations office, added that, “We closely watched the movement of the North’s vessels, including submarines and semi-submersibles, at the time of the sinking. But military did not detect any North Korean submarines near the country’s western sea border.” (8)

North Korea has vehemently denied any involvement in the sinking.

So, a North Korean submarine is now said to have fired a torpedo which sank the Cheonan, but in the immediate aftermath of the sinking the South Korean navy detected no North Korean naval vessels, including submarines, in the area. Indeed, immediately following the incident defense minister Lee ruled out a North Korean torpedo attack, noting that a torpedo would have been spotted, and no torpedo had been spotted. (9)

The case gets weaker still.

It’s unlikely that a single torpedo could split a 1,200 ton warship in two. Baek Seung-joo, an analyst with the Korea Institute for Defense Analysis says that “If a single torpedo or floating mine causes a naval patrol vessel to split in half and sink, we will have to rewrite our military doctrine.” (10)

The Cheonan sank in shallow, rapidly running, waters, in which it’s virtually impossible for submarines to operate. “Some people are pointing the finger at North Korea,” notes Song Young-moo, a former South Korean navy chief of staff, “but anyone with knowledge about the waters where the shipwreck occurred would not draw that conclusion so easily.” (11)

Contrary to what looks like an improbable North-Korea-torpedo-hypothesis, the evidence points to the Cheonan splitting in two and sinking because it ran aground upon a reef, a real possibility given the shallow waters in which the warship was operating. According to Go Yeong-jae, the South Korean Coast Guard captain who rescued 56 of the stricken warship’s crew, he “received an order …that a naval patrol vessel had run aground in the waters 1.2 miles to the southwest of Baengnyeong Island, and that we were to move there quickly to rescue them.” (12)

Some members of South Korea’s opposition parties – which have been highly critical of the government for blaming North Korea for the disaster– “contend that the boat was sunk either by a ‘friendly fire’ torpedo during a training exercise or that it broke part while trying to get off a reef.” (13) Whatever the cause, they don’t believe the findings of the official inquiry.

So how is it that what looked like no North Korean involvement in the Cheonan’s sinking, according to the South Korean military in the days immediately following the incident, has now become, one and half months later, an open and shut case of North Korean aggression, according to government-appointed investigators?

The answer has much to do with the electoral fortunes of South Korea’s ruling Grand National Party, and the party’s need to marshal support for a tougher stance on the North. Lurking in the wings are US arms manufacturers who stand to profit if South Korean president Lee Myung-bak wins public backing for beefed up spending on sonar equipment and warships to deter a North Korean threat – all the more likely with the Cheonan incident chalked up to North Korean aggression.

Lee is a North Korea-phobe who prefers a confrontational stance toward his neighbor to the north to the policy of peaceful coexistence and growing cooperation favored by his recent predecessors (and by Pyongyang, as well. It’s worth mentioning that North Korea supports a policy of peace and cooperation. South Korea, under its hawkish president, does not.) Fabricating a case against the North serves Lee in a number of ways. If voters in the South can be persuaded that the North is indeed a menace – and it looks like this is exactly what is happening – Lee’s hawkish policies will be embraced as the right ones for present circumstances. This will prove immeasurably helpful in upcoming mayoral and gubernatorial elections in June.

What’s more, Lee’s foreign policy rests on the goal of forcing the collapse of North Korea. When he took office in February 2008, he set about reversing a 10-year-old policy of unconditional aid to the North. He has also refused to move ahead on cross-border economic projects. (14) Lee’s goal, as Selig Harrison, the US establishment’s foremost liberal expert on Korea describes it, is to “once again [seek] the collapse of the North and its absorption by the South.” (15) Forcing the collapse of North Korea was the main policy of past right-wing and military governments to which Lee’s government is historically linked. The claim that the sinking of the Cheonan is due to an unprovoked North Korean torpedo attack makes it easier for Lee to drum up support for his confrontational stance.

But it does more than that. It also helps Lee move ahead with his goal of re-unifying the Korean peninsula by engineering the collapse of the North. Lee has used the Cheonan incident to: cut off trade with the North; block the North’s use of the South’s shipping lanes; argue for stepped up international sanctions against Pyongyang; call for the beefing up of the South’s military; and issue a virtual declaration of war, branding North Korea the South’s principal foe and announcing that “It is now time for the North Korean regime to change.” (16) Seoul already spends $20 billion per year on its armed forces, almost three times more than the $7 billion Pyongyang allocates to military spending. South Korea has one of the most miserly social welfare systems in the industrialized world, in part because it spends so much on defense. (17) Only 28 percent of the South’s working population is covered by a government pension plan, a state of affairs that has given rise to “’silver’ job fairs, established to find jobs for people aged 60 and over.” (18) Even so, the South’s military spending as a percentage of its GDP is a drop in the bucket compared to the North’s. With a smaller economy, North Korea struggles (and fails) to keep up with its more formidably armed neighbor, channeling a crushingly large percentage of its GDP into defense. It is caught in a difficult bind in which it not only has to defend its borders against South Korea, but against the 30,000 US troops stationed on the Korean peninsula and twice as many more in nearby Japan. By expanding the South’s military budget, and using the Cheonan affair to put the country on a virtual war footing, Lee forces the North to either divert even more of its limited resources to its military – a reaction which will ratchet up the misery factor inside the North as guns take even more of a precedence over butter – or leave itself inadequately equipped to defend itself.

This meshes well with calls from the RAND Corporation for South Korea to buy sensors to detect North Korean submarines and more warships to intercept North Korean naval vessels. (19) An unequivocal US-lackey – protesters have called the security perimeter around Lee’s office “the U.S. state of South Korea” (20) – Lee would be pleased to hand US corporations fat contracts to furnish the South Korean military with more hardware. Lee’s right-wing party and US military contractors win, while North Koreans and the bulk of Koreans of the south are sacrificed on the altar of South Korean militarism.

The United States, too, has motivations to fabricate a case against North Korea. One is to justify the continued presence, 65 years after the end of WWII, of US troops on Japanese soil. Many Japanese bristle at what is effectively a permanent occupation of their country by more than a token contingent of US troops. There are 60,000 US soldiers, airmen and sailors in Japan. Washington, and the Japanese government – which, when it isn’t willingly collaborating with its own occupiers, is forced into submission by the considerable leverage Washington exercises — justifies the US troop presence through the sheer sophistry of presenting North Korea as an ongoing threat. The claim that North Korea sunk the Cheonan in an unprovoked attack strengthens Washington’s case for occupation. Not surprisingly, US Secretary of State Hilary Clinton has seized on the Cheonan incident to underline “the importance of the America-Japanese alliance, and the presence of American troops on Japanese soil.” (21)

Given these political realities, it comes as no surprise that from the start members of Lee’s party blamed the sinking of the Cheonan on a North Korean torpedo, (22) just as members of the Bush administration immediately blamed 9/11 on Saddam Hussein, and then proceeded to look for evidence to substantiate their case, in the hopes of justifying an already planned invasion. (Later, the Bush administration fabricated an intelligence dossier on Iraq’s banned weapons.) In fact, the reason the ministry of defense felt the need to reiterate there was no evidence of a North Korean link was the persistent speculation of GNP politicians that North Korea was the culprit. Lee himself, ever hostile to his northern neighbor, said his “intuition” told him that North Korea was to blame. (23) Today, opposition parties accuse Lee of using “red scare” tactics to garner support as the June 2 elections draw near. (24) And leaders of South Korea’s four main opposition parties, as well as a number of civil groups, have issued a joint statement denouncing the government’s findings as untrustworthy. Woo Sang-ho, a spokesman for South Korea’s Democratic Party has called the probe results “insufficient proof and questioned whether the North was involved at all.” (25)

Lee announced, even before the inquiry rendered its findings, that a task force will be launched to overhaul the national security system and bulk up the military to prepare itself for threats from North Korea. (26) He even prepared a package of sanctions against the North in the event the inquiry confirmed what his intuition told him. (27) No wonder civil society groups denounced the inquiry’s findings, arguing that “The probe started after the conclusions had already been drawn.” (28)

Jung Sung-ki, a staff reporter for The Korean Times, has raised a number of questions about the inquiry’s findings. The inquiry concluded that “two North Korean submarines, one 300-ton Sango class and the other 130-ton Yeono class, were involved in the attack. Under the cover of the Sango class, the midget Yeono class submarine approached the Cheonan and launched the CHT-02D torpedo manufactured by North Korea.” But “’Sango class submarines…do not have an advanced system to guide homing weapons,’ an expert at a missile manufacturer told The Korea Times on condition of anonymity. ‘If a smaller class submarine was involved, there is a bigger question mark.’” (29)

“Rear Adm. Moon Byung-ok, spokesman for [the official inquiry] told reporters, ‘We confirmed that two submarines left their base two or three days prior to the attack and returned to the port two or three days after the assault.’” But earlier “South Korean and U.S. military authorities confirmed several times that there had been no sign of North Korean infiltration in the” area in which the Cheonan went down. (30)

“In addition, Moon’s team reversed its position on whether or not there was a column of water following an air bubble effect” (caused by an underwater explosion.) “Earlier, the team said there were no sailors who had witnessed a column of water. But during [a] briefing session, the team said a soldier onshore at Baengnyeong Island witnessed ‘an approximately 100-meter-high pillar of white,’ adding that the phenomenon was consistent with a shockwave and bubble effect.” (31)

The inquiry produced a torpedo propeller recovered by fishing vessels that it said perfectly match the schematics of a North Korean torpedo. “But it seemed that the collected parts had been corroding at least for several months.” (32)

Finally, the investigators “claim the Korean word written on the driving shaft of the propeller parts was same as that seen on a North Korean torpedo discovered by the South …seven years ago.” But the “’word is not inscribed on the part but written on it,’ an analyst said, adding that “’the lettering issue is dubious.’” (33)

On August 2, 1964, the United States announced that three North Vietnamese torpedo boats had launched an unprovoked attacked on the USS Maddox, a US Navy destroyer, in the Gulf of Tonkin. The incident handed US president Lyndon Johnson the Congressional support he needed to step up military intervention in Vietnam. In 1971, the New York Times reported that the Pentagon Papers, a secret Pentagon report, revealed that the incident had been faked to provide a pretext for escalated military intervention. There had been no attack.

The Cheonan incident has all the markings of another Gulf of Tonkin incident. And as usual, the aggressor is accusing the intended victim of an unprovoked attack to justify a policy of aggression under the pretext of self-defense.

1. Kang Hyun-kyung, “Ruling camp differs over NK involvement in disaster”, The Korea Times, April 7, 2010.
2. Nicole Finnemann, “The sinking of the Cheonan”, Korea Economic Institute, April 1, 2010. http://newsmanager.commpartners.com/kei/issues/2010-04-01/1.html
3. “Military leadership adding to Cheonan chaos with contradictory statements”, The Hankyoreh, March 31, 2010.
4. “Birds or North Korean midget submarine?” The Korea Times, April 16, 2010.
5. Ibid.
6. “Military plays down N.K. foul play”, The Korea Herald, April 2, 2010.
7. Ibid.
8. “No subs near Cheonan: Ministry”, JoongAng Daily, April 2, 2010.
9. Jean H. Lee, “South Korea says mine from the North may have sunk warship”, The Washington Post, March 30, 2010.
10. “What caused the Cheonan to sink?” The Chosun Ilbo, March 29, 2010.
11. Ibid.
12. “Military leadership adding to Cheonan chaos with contradictory statements”, The Hankyoreh, March 31, 2010.
13. Barbara Demick, “In South Korea, competing reactions to sinking of warship”, The Los Angeles Times, May 28, 2010.
14. Blaine Harden, “Brawl Near Koreas’ Border,” The Washington Post, December 3, 2008.
15. Selig S. Harrison, “What Seoul should do despite the Cheonan”, The Hankyoreh, May 14, 2010.
16. “Full text of President’s Lee’s national address”, The Korea Times, May 24, 2010.
17. Selig S. Harrison, “What Seoul should do despite the Cheonan”, The Hankyoreh, May 14, 2010.
18. Su-Hyun Lee, “Aging and seeking work in South Korea,” The New York Times, September 11, 2009.
19. “Kim So-hyun, “A touchstone of Lee’s leadership”, The Korea Herald, May 13, 2010.
20. The New York Times, June 12, 2008.
21. Mark Landler, “Clinton condemns attack on South Korean Ship”, The New York Times, May 21, 2010.
22. Kang Hyun-kyung, “Ruling camp differs over NK involvement in disaster”, The Korea Times, April 7, 2010.
23. “Kim So-hyun, “A touchstone of Lee’s leadership”, Korea Herald, May 13, 2010.
24. Kang Hyun-kyung, “Ruling camp differs over NK involvement in disaster”, The Korea Times, April 7, 2010; Choe Sang-Hun, “South Korean sailors say blast that sank their ship came from outside vessel”, The New York Times, April 8, 2010.
25. Cho Jae-eun, “Probe satisfies some, others have doubts”, JoongAng Daily, May 21, 2010.
26. “Kim So-hyun, “A touchstone of Lee’s leadership”, The Korea Herald, May 13, 2010.
27. “Seoul prepares sanctions over Cheonan sinking”, The Choson Ilbo, May 13, 2010.
28. Cho Jae-eun, “Probe satisfies some, others have doubts”, JoongAng Daily, May 21, 2010.
29. Jung Sung-ki, “Questions raised about ‘smoking gun’”, The Korea Times, May 20, 2010.
30. Ibid.
31. Ibid.
32. Ibid.
33. Ibid.

Most of the articles cited here are posted on Tim Beal’s DPRK- North Korea website, www.vuw.ac.nz/~caplabtb/dprk/, an invaluable resource for anyone interested in Korea.

VJ Day, Honolulu Hawaii, August 14, 1945

Click this link ...... http://vimeo.com/5645171

Wall Street's War By Matt Taibbi

By
Matt Taibbi

It's early May in Washington, and something very weird is in the air. As Chris Dodd,
Harry Reid and the rest of the compulsive dealmakers in the Senate
barrel toward the finish line of the Restoring American Financial
Stability Act – the massive, year-in-the-making effort to clean up the
Wall Street crime swamp – word starts to spread on Capitol Hill that
somebody forgot to kill the important reforms in the bill. As of the
first week in May, the legislation still contains aggressive measures
that could cost once-
indomitable behemoths like Goldman Sachs and JP Morgan Chase tens of billions of dollars. Somehow, the bill has
escaped the usual Senate-whorehouse orgy of mutual back-scratching,
fine-print compromises and freeway-wide loopholes that screw any chance
of meaningful change.

The real shocker is a thing known among Senate insiders as "716." This section of an amendment would force America's banking giants to either forgo their access to the public teat they receive through the
Federal Reserve's discount window, or give up the insanely risky,
casino-style bets they've been making on derivatives. That means no
more pawning off predatory interest-rate swaps on suckers in Greece, no
more gathering balls of subprime shit into incomprehensible debt deals,
no more getting idiot bookies like AIG to wrap the crappy mortgages in
phony insurance. In short, 716 would take a chain saw to one of Wall
Street's most lucrative profit centers: Five of America's biggest banks
(Goldman, JP Morgan, Bank of America, Morgan Stanley and Citigroup)
raked in some $30 billion in over-the-counter derivatives last year. By
some estimates, more than half of JP Morgan's trading revenue
between 2006 and 2008 came from such derivatives. If 716 goes through,
it would be a veritable Hiroshima to the era of greed.

Get more Matt Taibbi on the Taibblog.

"When I first heard about 716, I thought, 'This is never gonna fly,'" says Adam White, a derivatives expert who has been among the most vocal advocates for reform. When I speak to him early in May, he
sounds slightly befuddled, like he can't believe his good fortune.
"It's funny," he says. "We keep waiting for the watering-down to take
place – but we keep getting to the next hurdle, and it's still staying
strong."

In the weeks leading up to the vote on the reform bill, I hear one variation or another on this same theme from Senate insiders: that the usual process of chipping away at key legislation is not taking place
with its customary dispatch, despite a full-court press by Wall Street.
The financial-services industry has reportedly flooded the Capitol with
more than 2,000 paid lobbyists; even veteran members are stunned by the
intensity of the blitz. "They're trying everything," says Sen. Sherrod
Brown, a Democrat from Ohio. Wall Street's army is especially imposing
given that the main (really, the only) progressive coalition working
the other side of the aisle, Americans for Financial Reform, has been
in existence less than a year – and has just 60 unpaid "volunteer"
lobbyists working the Senate halls.

Read Taibbi's original scathing Wall Street investigation, "The Gre...

The companies with the most at stake are particularly well-connected. The lobbying campaign for Goldman Sachs, for instance, is being headed up by a former top staffer for Rep. Barney Frank,
Michael Paese, who is coordinating some 14 different lobbying firms to
fight on Goldman's behalf. The bank is also represented by Capitol Hill
heavyweights like former House majority leader Dick Gephardt and former
Reagan chief of staff Ken Duberstein. All told, there are at least 40
ex-staffers of the Senate Banking Committee – and even one former
senator, Trent Lott – lobbying on behalf of Wall Street. Until the
final weeks of the reform debate, however, it seemed that all these
insiders were facing the prospect of a rare defeat – and they weren't
pleased. One lobbyist even complained to The Washington Post
that the bill was being debated out in the open, on the Senate floor,
instead of in a smoky backroom. "They've got to get this thing off the
floor and into a reasonable, behind-the-scenes" discussion, he groused.
"Let's have a few wise fathers sit around the table in some quiet room"
to work it out.

As it neared the finish line, the Restoring American Financial Stability Act was almost unprecedentedly broad in scope, in some ways surpassing even the health care bill in size and societal impact. It
would rein in $600 trillion in derivatives, create a giant new federal
agency to protect financial consumers, open up the books of the Federal
Reserve for the first time in history and perhaps even break up the
so-called "Too Big to Fail" giants on Wall Street. The recent history
of the U.S. Congress suggests that it was almost a given that they
would fuck up this one real shot at slaying the dragon of corruption
that has been slowly devouring not just our economy but our whole way
of life over the past 20 years. Yet with just weeks left in the nearly
year-long process at hammering out this huge new law, the bad guys were
still on the run. Even the senators themselves seemed surprised at what
assholes they weren't being. This new baby of theirs, finance reform,
was going to be that one rare kid who made it out of the filth and the
crime of the hood for everybody to be proud of.

Then reality set in.

Picture the Restoring American Financial Stability Act as a vast conflict being fought on multiple fronts, with the tiny but enormously influential Wall Street lobby on one side and pretty much everyone else
on the planet on the other. To be precise, think World War II – with
some battles won by long marches and brutal campaigns of attrition,
others by blitzkrieg attacks, still more decided by espionage and
clandestine movements. Time after time, at the last moment, the Wall
Street axis has turned seemingly lost positions into surprise victories
or, at worst, bitterly fought stalemates. The only way to accurately
convey the scale of Wall Street's ingenious comeback is to sketch out
all the crazy, last-minute shifts on each of the war's four major
fronts.

---

FRONT #1



AUDITING THE FED

The most successful of the reform gambits was probably the audit-the-Fed movement led by Sen.
Bernie Sanders, the independent from Vermont. For nearly a century, the
Federal Reserve has been, within our borders, a nation unto itself –
with vast powers to shape the economy and no real limits to its
authority beyond the president's ability to appoint its chairman. In
the bubble era it has been transformed into a kind of automatic bailout
mechanism, helping Wall Street drink itself sober by flooding big banks
with cheap money after the collapse of each speculative boom. But
suddenly, with both the Huffington Post crowd and the Tea Party raising
their pitchforks in outrage, Sanders managed to pass – by a vote of
96-0 – an amendment to force the Fed to open its books to congressional
scrutiny.

If Alan Greenspan and Ben Bernanke don't take that 96-0 vote as a kick-to-the-groin testament to the staggering unpopularity of the Fed, they should. When 96 senators agree on something, they're usually
affirming their devotion to the flag or commemorating the death of
Mother Teresa. But as it turns out, the more than $2 trillion in loans
that the Fed handed out in secret after the 2008 meltdown is something
that both the left and the right have no problem banding together to
piss on. One of the most bizarre alliances of the bailout era took
place when Sanders, a democratic socialist, and Sen. Jim DeMint, a
hardcore conservative from South Carolina, went on the CNBC show hosted
by crazy supply-sider Larry Kudlow – and all three found themselves in
complete agreement on the need to force Fed loans into the open.
"People who come from very different places agree that it ought not to
be done in secret, that the Fed isn't Skull and Bones," says Michael
Briggs, an aide to Sanders.

Matt Taibbi uncovers how the nation's biggest banks are ripping off American
cities with the same predatory deals that brought down Greece.

The Sanders amendment, if it survives in conference, will lead to some delicious disclosures. Almost exactly a year ago, Sanders questioned Bernanke at a Senate-budget hearing, asking him to name the
banks that had been bailed out by the Fed. "Will you tell the American
people to whom you lent 2.2 trillion of their dollars?" Sanders
demanded.

After a little hemming and hawing, a bored-looking Bernanke – Time magazine's 2009 Person of the Year, by the way – bluntly said, "No." It would be "counterproductive," he explained, if clients and investors
learned that these poor banks were broke enough to need a public
handout.

Bernanke's performance that day so rankled Sanders that he wrote up his amendment specifically to bring the Fed's goblin-in-chief to heel. The new law will force Bernanke to post the identity of loan recipients
on the Fed's website for all to see. It also mandates that the
Government Accountability Office investigate potential conflicts of
interest that took place during the bailout, such as the presence of
Goldman CEO Lloyd Blankfein in the room during the negotiations of the
AIG bailout, which led to Goldman's receiving $13 billion of public
money via the rescue.

Taibbi reveals how the government's case against Goldman Sachs barely begins
to target the depths of Wall Street's criminal sleeze.

The Sanders amendment was perhaps the headline victory to date in the ongoing War for Finance Reform, but even this battle entailed some heavy casualties. Sanders had originally filed an amendment that was
much closer to a House version pressed by libertarian hero Ron Paul,
one that would have permanently opened the Fed's books to Congress. But
as the Senate crawled closer to a vote, the Sanders camp began to hear
that the Obama administration opposed the bill, fearing it would give
Congress too much day-to-day involvement in Fed policy. "The White
House was saying how wonderful transparency is, but they still had
'concerns,' "Briggs says. "Within a couple hours, those concerns were
being worked out."

The end result was a deal that restricted the audit to a one-time shot: Congress could only examine Fed loans made after December 2007. Once the audit was complete, the Fed's books would once again be sealed
forever from public scrutiny. Sen. David Vitter, a Democrat from
Louisiana, countered with an amendment to permanently open up the Fed's
books, but it was shot down by a vote of 62-37. In one of the most
absurd and indefensible retreats of the war, a decisive majority of
senators voted to deny themselves the power to audit the Federal
Reserve on behalf of the American people. When it comes to protecting
the world's wealthiest banks from public scrutiny, it turns out,
Democrats and Republicans have no trouble achieving bipartisanship.

---

FRONT #2



PROTECTING CONSUMERS

The biggest no-brainer of finance reform was supposed to be the Consumer Financial Protection
Bureau. The idea was simple: create a federal agency whose sole mission
would be to make sure that financial lenders don't rape their customers
with defective products, unjust fees and other fine-print nightmares
familiar to any American with a credit card. In theory, the CFPB would
rein in predatory lending by barring lenders from making loans they
know that borrowers won't be able to pay back, either because of hidden
fees or ballooning payments.

Wall Street knew it would be impossible to lobby Congress on this issue by taking the angle of "We're a rapacious megabank that would like to keep skull-fucking to death our customers using
incomprehensible and predatory loans." So it came up with another
strategy – one that deployed some of the most inspired nonsense ever
seen on the Hill. The all-powerful lobbying arm of the U.S. Chamber of
Commerce, which has been fierce in its representation of Wall Street's
interests throughout the War for Finance Reform, cued up a $3 million
ad campaign implying that the CFPB, instead of targeting asshole
bankers in flashy suits and hair gel, would – and this isn't a joke –
target your local butcher, making it hard for him to lend you the money
to buy meat. That's right: The ads featured shots of a squat butcher
with his arms folded, standing in front of a big pile of meat. "The
economy has made it tough on this local butcher's customers," the ad
reads. "So he lets some of them run a tab and pay the bill over time to
make ends meet. But now Washington wants to make it tougher on
everyone." After insisting – falsely – that this kindly butcher would
be subject to the new consumer protection bureau, the ad warns that the
CFPB "would also have the ability to collect information about his
customers' financial accounts and take away many of their financial
choices."

Sitting in the Senate chamber one afternoon not long before the vote, I even heard Sen. Mike Enzi, an impressively shameless Republican from Wyoming, insist that the CFPB would mean that "anyone who has ever
paid for dental care in installments could be facing the prospect of
paying for dental care upfront." Other anti-reform ads claimed that
everyone from cabinetmakers to electricians would be hounded by the new
agency – even though the CFPB's mandate explicitly excludes merchants
who are "not engaged significantly in offering or providing consumer
financial products or services."

The CFPB was always a pretty good bet to pass in some form. Just as pushing through anything that could plausibly be called "health care reform" was a political priority for the Obama administration, creating
a new agency with the words "consumer protection" in the title was
destined from the start to be the signature effort of the finance bill,
which is otherwise mostly a mishmash of highly technical new
regulations. But that didn't stop leading Democrats from doing what
they could to chisel away at the thing. Throughout the process, Chris
Dodd, the influential chairman of the Senate Banking Committee, has set
new standards for reptilian disingenuousness – playing the role of
stern banker-buster while taking millions in Wall Street contributions.
Dodd worked overtime trying to craft a "bipartisan" bill with the
Republican minority – in particular with Sen. Richard Shelby, the
ranking Republican on the committee. With his dyed hair, porcine trunk
and fleshy, powdery-white face, Shelby recalls an elderly sumo wrestler
in drag. I happened to be in the Senate on the day that Shelby proposed
a substitute amendment that would have stuffed the CFPB into the FDIC,
effectively scaling back its power and independence. Throughout the
debate, I was struck by the way that Dodd and his huge black
caterpillar eyebrows kept crossing the aisle to whisper in Shelby's
ear. During these huddles, Dodd would gently pat Shelby's back or hold
his arm; it was like watching a love scene in a Japanese monster movie.

Shelby's amendment was ultimately defeated by a vote of 61-37 – but he and Dodd still reached a number of important compromises that significantly watered down the CFPB. The idea was to rack up as many
exemptions as possible for favored industries, all of which had
contributed generously to their favorite senators. By mid-May,
Republicans and Democrats had quietly agreed to full or partial
"carve-outs" for banks with less than $10 billion in deposits, as well
as for check-cashers and other sleazy payday lenders. As the bill
headed toward a vote, there was also a furious fight to exempt auto
dealers from anti-
predatory regulations – a loophole already approved by the House – even though car loans are the second-largest
source of borrowing for Americans, after home mortgages. The purview of
the CFPB, in essence, was being limited to megabanks and mortgage
lenders. That's a major victory in the war against Wall Street, but it
will be hard to be too impressed if Congress can't even find a way to
vote for consumer protection against used-car salesmen.

---

FRONT #3



ENDING "TOO BIG TO FAIL"

Perhaps the fiercest fight of all over finance reform involved a part of the bill called
"resolution authority" – also known as, "The next time an AIG or a
Lehman Brothers goes belly up, do we bail the fuckers out? And if so,
with whose money?" In its original form, the bill answered these
crucial questions by requiring that banks contribute to a $50 billion
fund that could be used to aid failing financial institutions. The fund
was hardly a cure-all – $50 billion "wouldn't even be enough to bail
out Citigroup's prop-trading desk," as one industry analyst observed –
but it at least established a precedent that banks should pay for their
own bailouts, instead of simply snatching money from taxpayers.

The fund had been established after a fierce battle last fall, when Democrats in the House beat back a seemingly insane proposal backed by the Obama administration that would have paid for bailouts by borrowing
from taxpayers and recouping the money from Wall Street later on, by
means of a mysterious, convoluted process. That heroic stand in the
House, which was marked by long nights of ferocious negotiations, was
wiped out in one fell swoop on May 5th, after Dodd and Shelby huddled
up in another of their monster-love sessions and hammered out a deal to
strip the bailout fund from the bill. The surprise rollback was
introduced by the Senate leadership late on a Wednesday and voted on
three hours later. Just like that, taxpayers were back to fronting the
nation's biggest banks the money when they find themselves in financial
trouble.

One day after the Shelby-Dodd wipeout, another key reform got massacred. This was the "Too Big to Fail" amendment put forward by two reform-minded freshmen, Sens. Ted Kaufman of Delaware and Sherrod Brown
of Ohio. The measure would have mandated the automatic breakup of any
bank that held more than 10 percent of all insured deposits, or had at
risk more than two percent of America's GDP. The amendment was just the
kind of common-sense, loophole-proof, no-bullshit legislation that,
sadly, almost never passes in the modern Senate.

Brown is an interesting character. Whenever I talk to him, I often forget he's a U.S. senator; he feels more like a dude you met on an Amtrak train and struck up a conversation with. He remains the only
member of Congress I've ever met who took off his shoes and socks in
the middle of an interview. But when I catch up with him in an anteroom
outside the Senate chamber on the day his and Kaufman's amendment ends
up being voted on, he seems harried and tense, like a man waiting for
bad news in a hospital lobby. In recent weeks, he confides, he has
found himself facing both barrels of the banking lobby.

"There are 1,500 bank lobbyists in this town, and they're coming by all the time," he says. "And it's not just the lobbyists. When the bank lobbyist from Columbus comes by, he brings 28 bankers with him."

At the moment, though, Brown has a more pressing problem. He and Kaufman are both making themselves conspicuous in the Senate chamber, and the reason why is illustrative of the looniness of Senate
procedure. Unlike in the House, where a rules committee decides in
advance which amendments will be brought to a vote, senators have no
orderly, dependable way of knowing if or when their proposals will get
voted on. Instead, they're at the mercy of a strange and nebulous
process that requires them to badger the leadership, who have the sole
discretion of deciding which amendments go to a vote. So Brown is
reduced to hanging around the Senate floor and trying to get a
committee chair like Chris Dodd to put Too Big to Fail to a vote before
other amendments use up all the time allotted for debate. It's not
unlike fighting a crowd of pissed-off airport passengers for a single
seat on an overbooked flight – you're completely at the mercy of the
snippy airline rep behind the desk.

Near the end of the day, to Brown's surprise, Dodd actually allows his amendment to go to a vote. In the end, however, the proposal to break up the nation's riskiest banks gets walloped 61-33, with an
astonishing 27 Democrats – including key banking committee heavyweights
like Dodd and Chuck Schumer of New York – joining forces to defeat it.
After the debate, Kaufman, a gregarious and aggressive advocate of
finance reform, seems oddly unfazed that his fellow Democrats blew the
best chance in a generation to corral the great banking monsters of
Wall Street. "For some of them, it was just a bridge too far," he says.
"There's an old saying: Never invest in anything you don't understand."
Given the bizarre standards of the Senate bureaucracy, Kaufman
considers it a victory just to have gotten his amendment into the
woodshed for an ass-whipping.

I encounter that same "just glad to be here" vibe from Sen. Jeff Merkley, a Democrat from Oregon who co-authored one of the handful of genuinely balls-out reforms in the entire bill. The Merkley-Levin
amendment couldn't have been more important; it called for restoring
part of the Glass-Steagall Act, the Depression-era law that prevented
commercial banks, investment houses and insurance companies from
merging. The repeal of Glass-Steagall in 1999 paved the way for the
creation of the Too-Big-to-Fail monsters like Citigroup, who drove the
global economy into a ditch over the past 10 years.

Merkley-Levin was the Senate version of the "Volcker Rule," a proposal put forward by former Fed chief and Obama adviser Paul Volcker, that would prevent commercial banks from engaging in the kind
of speculative, proprietary trading that helped trigger the financial
crisis. When I meet with Merkley, he is in the same position as Brown
and Kaufman, waiting anxiously for a chance to get his amendment voted
on, with no idea of when or if that might happen. A vote – even if it
means defeat – is all he's hoping for. When I ask if he's excited about
the prospect of restoring a historic piece of legislation like
Glass-Steagall, he smiles faintly. "I'm not saying I'm real
optimistic," he says.

In the end, Merkley is forced to resort to the senatorial equivalent of gate-crashing: He attaches his amendment to the sordid proposal to exempt auto dealers from the CFPB, which has already been approved for
a vote. That Merkley has to invoke an arcane procedural stunt just to
get such a vital reform a vote is a testament to how convoluted
American democracy looks by the time it reaches the Senate floor.

As with the whittled-down victories over the Fed audit and the Consumer Finance Protection Bureau – and the brutal defeat of Too Big to Fail – the stalling over the Volcker Rule underscores the basic
dynamic of the Senate. With deals cut via backroom consensus, and
leaders like Reid and Dodd tightly controlling which amendments go to a
vote, the system allows a few powerful members whose doors are
permanently open to lobbyists to pilot the entire process from
beginning to end. One Democratic aide grumbles to me that he had no
access to the negotiations for months, while a Wall Street lobbyist he
knows could arrange an audience with the leadership. The whole show is
carefully orchestrated from start to finish; no genuinely tough
amendment with a shot at being approved receives an honest up-or-down
vote. "It's all kind of a fake debate," the aide says.

---

FRONT #4


REINING IN DERIVATIVES

When all the backroom obfuscation doesn't work, of course, there is always one last route in
Congress to killing reform: the fine print. And never has an amendment
been fine-printed to death as skillfully as the proposal to reform
derivatives.

Imagine a world where there's no New York Stock Exchange, no NASDAQ or Nikkei: no open exchanges at all, and all stocks traded in the dark. Nobody has a clue how much a share of IBM costs or how many of them are
being traded. In that world, the giant broker-dealer who trades
thousands of IBM shares a day, and who knows which of its big clients
are selling what and when, will have a hell of a lot more information
than the day-trader schmuck sitting at home in his underwear, guessing
at the prices of stocks via the Internet.

That world exists. It's called the over-the-counter derivatives market. Five of the country's biggest banks, the Goldmans and JP Morgans and Morgan Stanleys, account for more than 90 percent of the
market, where swaps of all shapes and sizes are traded more or less
completely in the dark. If you want to know how Greece finds itself
bankrupted by swaps, or some town in Alabama overpaid by $93 million
for deals to fund a sewer system, this is the explanation: Nobody
outside a handful of big swap dealers really has a clue about how much
any of this shit costs, which means they can rip off their customers at
will.

This insane outgrowth of jungle capitalism has spun completely out of control since 2000, when Congress deregulated the derivatives market. That market is now roughly 100 times bigger than the federal
budget and 20 times larger than both the stock market and the GDP.
Unregulated derivative deals sank AIG, Lehman Brothers and Greece, and
helped blow up the global economy in 2008. Reining in derivatives is
the key battle in the War for Finance Reform. Without regulation of
this critical market, Wall Street could explode another mushroom cloud
of nuclear leverage and risk over the planet at any time.

The basic pillar of derivatives reform is simple: From now on, instead of trading in the dark, most derivatives would have to be traded on open exchanges and "cleared" through a third party. Last
fall, Wall Street lobbyists succeeded at watering down the clearing
requirement by pushing through a series of exemptions for "end-users" –
that is, anyone who uses derivatives to hedge a legitimate business
risk, like an airline buying swaps as a hedge against fluctuations in
jet-fuel prices. But the House then took it even further, expanding the
exemption to include anyone who wants to hedge against balance-sheet
risk. Since every company has a balance sheet, including giant insurers
like AIG and hedge funds that gamble in derivatives, the giant loophole
now covered pretty much everyone except a few megabanks. This was
regulation with a finger crossed behind its back.

When it came time for the Senate to do its version, however, the lobbyists were in for a surprise. Sen. Blanche Lincoln of Arkansas – best known as one of the few Democrats to vote for Bush's tax cuts –
suddenly got religion and closed the loophole. Facing a tough primary
battle against an opponent who was vowing to crack down on Wall Street,
Lincoln tweaked the language so derivatives reform would apply to any
greedy financial company that makes billions trading risky swaps in the
dark.

Republicans went apeshit, pulling the same tactics they tried to gut the Consumer Finance Protection Bureau. Sen. Enzi, back at the lectern after his failed attempt to claim that the CFPB was a government plot
to control the orthodontics industry, barked to the Senate gallery that
Lincoln's proposal would harm not millionaire swap dealers at JP Morgan
and Goldman Sachs, but "a wheat-grower in Wyoming." Unmoved by such
goofy rhetoric, the Senate shot down an asinine Republican amendment
that would have overturned Lincoln's reform by a vote of 59-39.

---

Then reform advocates started reading the fine print of the Lincoln deal, and realized that all those Wall Street lobbyists had really been earning their money.

That same day the GOP amendment failed, the derivatives expert Adam White was at his home in Georgia, poring over a "redline" version of the Lincoln amendment, in which changes to the bill are tracked in
bold. When he came to a key passage on page 570, he saw that it had a
single line through it, meaning it had been removed. The line read,
"Except as provided in paragraph (3), it shall be unlawful to enter
into a swap that is required to be cleared unless such swap shall be
submitted for clearing."

Translation: It was no longer illegal to trade many uncleared swaps. Wall Street would be free to go on trading these monstrosities by the gazillions, largely in the dark. "Regulators can't say any longer if
you don't clear it, it's illegal," says White.

Once he noticed that giant loophole, White went back and found a host of other curlicues in the text that collectively cut the balls out of the Lincoln amendment. On page 574, a new section was added denying
the Commodity Futures Trading Commission the power to force
clearinghouses to accept swaps for clearing. On page 706, two lines
were added making it impossible for buyers who get sold an uncleared
swap to void the deal. Taken altogether, the changes amount to what
White describes as a "Trojan Horse" amendment: hundreds of pages of
rigid rules about clearing swaps, with a few cleverly concealed clauses
that make blowing off those rules no big deal. Michael Greenberger, a
former official with the Commodity Futures Trading Commission who has
been fighting for derivatives reform, describes the textual trickery as
a "circle of doom. Despite the pages and pages of regulations,
violating them is risk-free."

On May 18th, as the clock ran out on the deadline to file amendments, reform-minded Democrats staged a concerted push to close the loopholes. But when Sen. Maria Cantwell of Washington offered a
proposal to eliminate the "Trojan Horse" sham, Reid tried to slam the
door on her and everyone else working to strengthen reform. The
majority leader called for a vote to end debate – a move that would
squelch any remaining amendments. This extraordinary decision to cut
off discussion of our one, best shot at revamping the rules of modern
American finance was made, at least in part, to enable senators to get
home for Memorial Day weekend.

But then something truly unexpected took place. Cantwell revolted, joined by Sen. Russ Feingold of Wisconsin. That left Reid in the perverse position of having to convince three Republicans to come over
to his side to silence a member of his own party. On May 20th, Reid got
the votes he needed to kill the debate. A few hours later, the Senate
passed the bill, loopholes and all, by a vote of 59-39.

In a heartwarming demonstration of the Senate's truly bipartisan support for Wall Street, Sen. Sam Brownback – a Republican from Kansas – stepped in to help Democrats kill one of the bill's most vital
reforms. At the last minute, Brownback mysteriously withdrew his
amendment to exempt auto dealers from regulation by the CFPB – a
maneuver that prevented the Merkley-Levin ban on speculative trading,
which was attached to Brownback's amendment, from even being voted on.
That was good news for car buyers, but bad news for the global economy.
Senators may enjoy scolding Goldman Sachs in public hearings, but when
it comes time to vote, they'll pick Wall Street over Detroit every time.

The rushed vote also meant that the Democratic leadership wasn't able to gut 716, the amazingly aggressive section of Lincoln's amendment that would cut off taxpayer money to big banks that gamble on
risky derivatives. Not that they didn't try. With just three minutes to
go before the deadline, Dodd had filed a hilarious amendment that would
have delayed the ban on derivatives for two years – and empowered a new
nine-member panel to unilaterally kill it. Sitting on the panel would
be Bernanke, Treasury Secretary Tim Geithner and FDIC chief Sheila
Bair, all of whom violently opposed 716.

Dodd was forced to withdraw his amendment after Wall Street complained that even this stall-and-kill tactic would create too much "uncertainty" in the market. That left 716 still alive for the moment –
but even its staunchest supporters expected the leadership to find some
way to gut it in conference, especially since President Obama
personally opposes the measure. "Treasury and the White House are in
full-court mode, assuring everybody that this will be fixed," says
Greenberger. "And when they say fixed, that means killed."

Whatever
the final outcome, the War for Finance Reform serves as a sweeping
demonstration of how power in the Senate can be easily concentrated in
the hands of just a few people. Senators in the majority party – Brown,
Kaufman, Merkley, even a committee chairman like Lincoln – took a back
seat to Reid and Dodd, who tinkered with amendments on all four fronts
of the war just enough to keep many of them from having real teeth.
"They're working to come up with a bill that Wall Street can live with,
which by definition makes it a bad bill," one Democratic aide explained
in the final, frantic days of negotiation.

On the plus side, the bill will rein in some forms of predatory lending, and contains a historic decision to audit the Fed. But the larger, more important stuff – breaking up banks that grow Too Big to
Fail, requiring financial giants to pay upfront for their own bailouts,
forcing the derivatives market into the light of day – probably won't
happen in any meaningful way. The Senate is designed to function as a
kind of ongoing negotiation between public sentiment and large
financial interests, an endless tug of war in which senators maneuver
to strike a delicate mathematical balance between votes and access to
campaign cash. The problem is that sometimes, when things get really
broken, the very concept of a middle ground between real people and
corrupt special interests becomes a grotesque fallacy. In times like
this, we need our politicians not to bridge a gap but to choose sides
and fight. In this historic battle over finance reform, when we had a
once-in-a-generation chance to halt the worst abuses on Wall Street,
many senators made the right choice. In the end, however, the ones who
mattered most picked wrong – and a war that once looked winnable will
continue to drag on for years, creating more havoc and destroying more
lives before it is over.

German President's Resignation Tied to Telling Truth About Afghan War

German President Horst Koehler resigned Monday in a surprise move after being criticized for reportedly linking military deployments abroad with the country's economic interests -- creating a new headache for Chancellor Angela Merkel.

Koehler, a member of Merkel's Christian Democrats, cited a week of criticism over a radio interview he gave following a visit to German troops in Afghanistan.

He said in that broadcast that, for a country with Germany's dependency on exports, military deployments could be "necessary ... in order to defend our interests, for example free trade routes.


Opposition politicians had called for Koehler to take back the remarks and accused him of damaging public acceptance of German military missions abroad.


Koehler positioned himself as an outsider to Germany's political elite and enjoyed high popularity ratings. He occasionally refused to sign bills into law due to constitutional concerns, and once warned politicians against using the global financial crisis as a "backdrop for posturing."

The presidency is supposed to be above the political fray and carries little real power but traditionally functions as the nation's moral voice. The president is chosen by a special assembly of lower-house lawmakers and representatives of Germany's 16 states.

The U.S., Brazil and Turkey: how to lose friends and estrange allies

By Tomás Rosa Bueno (Source: mycatbirdseat.com)

But where are the tough sanctions of yester-week? Where’s Hillary, the iron-brained lady, for whose sake Barack, I ween, Lost his principles and went all shady?(Apud François Villon’s “Ballade des femmes des temps jadis”)

Richard Falk’s article Rebalancing the World gives a fair and balanced view of the far-reaching consequences of the May 17 Tehran Declaration. However, when addressing the possible reasons for the U.S. negative response to the deal brokered by Brazil between Turkey and Iran he’s right in essence, but off the mark on one crucial detail: it’s not true, or at least not entirely true, that “American leaders tried to talk Brasilia and Ankara out of making any independent steps to resolve the crisis”. They did so only from May 12, when apparently they got strong signs that Iran would accept a deal. This is when Clinton called both Lula and Erdogan to tell them that the U.S. had strong signs of the opposite, that Iran would not play ball. Erdogan took Clinton’s words at face value and cancelled his scheduled trip to Tehran at the last minute. Lula decided to go ahead with what after all was to be to climax of six months of intense talks and consultations involving Turkey, Iran, the U.S., France, and Russia.

A deal was struck, and Erdogan had to cancel his cancellation and rush to Tehran to be present when it was signed.

Brazil was directly involved in this issue when Obama, during the G20 Summit in Cleveland last year, publicly asked Lula to use Brazil’s influence and good relations with Iran to bring the Iranians back to the negotiation table. It’s not know whose idea it was, but this is when the “Turkey scheme” was born. The talks between the three countries continued throughout this period, and Brazil’s FM Celso Amorim spent this time practically living in a plane flying between Brazil and Turkey. The U.S. was fully informed of these intense negotiations and made suggestions all along, including in the form of the now famous letter Obama sent to Lula on April 20th, which was the basis for Brazil’s – and Turkey’s – final proposal to Iran.

In retrospect, this chain of events makes it obvious that the Obama Administration fully expected Lula and Erdogan to make fools of themselves by coming out of Iran empty-handed and cured of their aspirations to play a role in the issue, but prodded them on anyway, “urging” them to “impress upon Iran the opportunities” of a deal, hoping to use their failure as a tool to bolster its case for stronger sanctions. When, against all odds, a deal with Iran was struck in exactly the same terms outlined by Obama in his letter to Lula, the U.S. was forced to renege on its own proposals in terms that verged on being insulting, at the very likely risk of alienating two crucial regional allies in South America and in the Middle East, because negotiating with Iran was never their intention. Their game plan contemplated only the sanctions drive.

Since it has been demonstrated that sanctions do not work and must be used only as a last resort, when all other paths to negotiation have been closed, it makes sense to ask what are the U.S. real goals in pushing for them at such a high cost when Iran has shown its willingness to engage in meaningful talks about its nuclear program.

*

If they weren’t who and what they are, we could almost pity them. They had it all set up for a grand finale: Turkey and Brazil humiliated back into the sanctions fold, a unanimous vote for new harsher sanctions against Iran by the UN Security Council and a final declaration by the NPT Review Conference plenum including a condemnation of Iran’s “continued violations” of the NPT.

Instead, they had to vote for an NPT declaration that had their pet-State Israel as the bad guy, the sanctions won’t even be voted by the UNSC and they will end up looking like fools. As Armstrong could have said, it will be a small humiliation for one country, but a great victory for mankind…

Sic transit stultitia mundi.

German President Horst Köhler Resigns

ddp

German President Horst Köhler resigned on Monday.

German President Horst Köhler, under fire for controversial comments he made about Germany's mission in Afghanistan, resigned with immediate effect on Monday in a shock announcement that comes as the latest in a series of blows to Chancellor Angela Merkel.

German President Horst Köhler announced his resignation on Monday in response to fierce criticism of comments he made about Germany's military mission in Afghanistan.

"I declare my resignation from the office of president -- with immediate effect," Köhler, with tears in his eyes and speaking in a faltering voice, said in a statement, flanked by his wife Eva-Luise.

The president is the head of state and his duties are largely ceremonial. But the resignation is the latest in a string of setbacks for Chancellor Angela Merkel since her re-election last September. The German federal assembly -- made up of parliamentary MPs and delegates appointed by the country's 16 federal states -- will have to vote for a successor to Köhler within 30 days, according to the federal constitution.

The president had become the target of intense criticism following remarks he made during a surprise visit to soldiers of the Bundeswehr German army in Afghanistan on May 22. In an interview with a German radio reporter who accompanied him on the trip, he seemed to justify his country's military missions abroad with the need to protect economic interests.

"A country of our size, with its focus on exports and thus reliance on foreign trade, must be aware that ... military deployments are necessary in an emergency to protect our interests -- for example when it comes to trade routes, for example when it comes to preventing regional instabilities that could negatively influence our trade, jobs and incomes," Köhler said.

It sounded as though Köhler was justifying wars for the sake of economic interests, in the context of the Afghan mission which is highly controversial in Germany and throughout Europe.

'The Criticism Lacks the Necessary Respect for My Office'

In his statement on Monday, Köhler said: "My comments about foreign missions by the Bundeswehr on May 22 this year met with heavy criticism. I regret that my comments led to misunderstandings in a question so important and difficult for our nation. But the criticism has gone as far as to accuse me of supporting Bundeswehr missions that are not covered by the constitution. This criticism is devoid of any justification. It lacks the necessary respect for my office."

German Chancellor Angela Merkel said Köhler had informed her of his decision at midday on Monday, just two hours before he announced it. "I tried to change his mind, unfortunately that didn't succeed and that is why I say I regret this resignation very deeply," she told reporters in a short briefing. "I think the German public will be very sad about this resignation because Horst Köhler was a president of the people, of the citizens in Germany."

"He was an important advisor especially in the economic and financial crisis with his big international experience and I will miss his advice in the future."

The mayor of the northern city state of Bremen, Jens Böhrnsen, will take over from Köhler as interim head of state until a new president is elected. Under the constitution, Böhrnsen assumes the position in his capacity as president of the Bundesrat, the upper house of parliament.

"Super Horst's" Fall From Grace

Köhler became president in 2004 and was elected for a second five-year term in 2009. The former head of the International Monetary Fund was the first non-politician to become German head of state. He is a member of Merkel's conservative Christian Democrats and was nominated for the presidency by the CDU with the backing of their coalition partners, the pro-business Free Democrats.

He won praise during his first term for making a series of strong speeches urging Germany to reform its economy, and his apparent independence from the government prompted mass circulation Bild newspaper to dub him "Super Horst."

But he surprised commentators in recent months by appearing to stay on the sidelines in the euro crisis. The resignation a few weeks ago of his press spokesman Martin Kothé exposed Köhler's weaknesses in public speaking to such an extent that members of his staff were likening him to former president Heinrich Lübke, who was notoriously prone to embarrassing gaffes.

Insiders say Köhler was hurt by the lack of support from Merkel and members of her government during the furore surrounding his comments about Afghanistan. Merkel's response to his resgination on Monday was noticeably curt and she devoted most of the briefing to talking about the killings by Israeli forces of activists aboard a flotilla of Gaza-bound aid ships.

Finding a successor to Köhler will pose a headache for Merkel, whose popularity has slumped in recent months. She has been hit by criticism of her handling of the euro crisis and by the loss of a center-right majority in the upper house following sharp declines for her CDU in a state election in North Rhine-Westphalia, Germany's most populous state, on May 9.

A further blow came last week with the resignation of CDU heavyweight Roland Koch, the governor of Hesse, a conservative hardliner whose departure has left a big gap in the right wing of her party.

cro -- with wire reports

To: Politicians, Media, NGOs, and Citizens of All Nations

We the undersigned, Jews and non-Jews, left and right, Israelis and citizens of many countries, hereby express our sympathy and solidarity with the State of Israel in regard to the May 31, 2010 Gaza flotilla incident for the following reasons:

BECAUSE the Gaza flotilla was organized, funded, and manned by—among others—anti-Semitic, anti-Israel, anti-democratic, and pro-terrorist organizations.

BECAUSE these organizations support the genocide of Israeli Jews and the destruction of the State of Israel.

BECAUSE the participants were armed with lethal weapons and prepared to use them against Israeli soldiers.

BECAUSE the participants were solely responsible for the violence that occurred, including grievous bodily harm to several Israeli soldiers.

BECAUSE the flotilla was in open violation of international law.

BECAUSE Israel is the victim of a global public campaign of racist incitement and hatred.

BECAUSE the portrayal of the incident by the world media thus far has been inaccurate, untrue, and clearly biased against the State of Israel.

For all these reasons, we the undersigned hereby demand the following:

WE DEMAND an immediate, fair, and unbiased investigation into the organizations behind the flotilla and their role in the violence that ensued as a result of their actions.

WE DEMAND the immediate prosecution and conviction of those participants in the flotilla responsible for the violence and especially those responsible for the injuries to Israeli soldiers.

WE DEMAND an immediate, open, and fair investigation into the role of various national governments in funding, equipping, and facilitating the flotilla and the ensuing violence.

WE DEMAND an immediate end to anti-Israeli incitement in the media and in the political arena.

WE DEMAND an immediate and unequivocal statement of support for Israel’s actions from world leaders and organizations, especially President of the United States Barack Obama, including an acknowledgement of the legality of these actions.

WE DEMAND that the media cease and desist its biased and misleading reporting of this incident and confine themselves to the facts at hand.

WE DEMAND an immediate public apology to Israel from the organizations involved in the incident and the governments that supported them.

We hope and believe that this time truth will win out over lies, and that those behind this incident will be exposed and prosecuted for their actions.

Sincerely,

The Undersigned

Fury and despair as BP admits oil could leak for months

Obama administration warns that the most environmentally disastrous spill in US history may continue until August

Salvage vessels skim and collect oil near the site of the spill. The White House said the US was 'prepared for the worst'. Photograph: Win Mcnamee/Getty Images

An uncontrollable fountain of oil could gush into the Gulf of Mexico until August, the Obama administration warned today, as BP conceded it was moving to a containment strategy after failing to plug the well at the centre of the most environmentally disastrous spill in US history.

As anger and despair grew in the coastal communities of Louisiana, BP began preparations to cut a leaking drill pipe on the ocean floor and attach a containment cap intended to capture at least some of the 12,000 to 19,000 barrels of crude spewing from its Macondo well every day.

The oil company, which has come under withering attack for its handling of the crisis, acknowledged there was "no certainty" of success in the effort, which will take four to seven days and which some experts say could make the leak worse.

A White House adviser said the US government was "prepared for the worst" after efforts to halt the leak by pumping mud, golf balls, tyres and other debris into the well were halted without success yesterday.

Carol Browner, the administration's energy czar, said there may be no solution until two relief wells being drilled into the oilfield by BP are complete later in summer. "There could be oil coming up till August when the relief wells are done," she said. "This is probably the biggest environmental disaster we have ever faced in this country."

At the weekend, as the failure of BP's latest attempt became clear, President Barack Obama vented his frustration at the situation.

"It is as enraging as it is heartbreaking, and we will not relent until this leak is contained, until the waters and shores are cleaned up, and until the people unjustly victimised by this manmade disaster are made whole," Obama said in a statement.

Another two months of leakage from the site of BP's sunken Deepwater Horizon oil rig would mean that the spill, which already eclipses the 1989 Exxon Valdez disaster in Alaska, would cause even more damage to marshland wildlife habitats and to the livelihood of shrimpers, fishermen and tourism workers in southern states. Oil already stretches over a distance of 130 miles by 70 miles.

Browner said: "We are prepared for the worst. We have been prepared from the beginning."

As the crisis moved to its fifth week, both BP and Obama faced attacks for failing to come up with a solution. Billy Nungesser, president of Plaquemines parish, Louisiana, called for immediate funding to build a network of sand barriers to protect the coastline.

"It's time for BP to step up to the plate – don't wait for the president," said Nungesser. "Every time that oil takes out a piece of the marsh, a piece of Louisiana is gone forever."

Oil has been leaking from a broken drilling pipe on the ocean floor since the rig caught fire and sank on 20 April, killing 11 offshore workers.

At the weekend, BP abandoned a "top kill" operation to fix the leak after engineers were unable to stem the pressure of oil with thousands of tonnes of drilling mud. "We're disappointed that oil is going to flow for a while and we're going to redouble our efforts to keep it off the beaches," BP's managing director, Bob Dudley, told CNN. "We're moving to a containment operation."

BP's new plan involves using underwater robots and a diamond wire-cutter to create a clean cut through the leaking pipe, then attach a "riser" allowing oil to be pumped to the ocean surface and collected by a ship. Experts say it will be difficult to create a watertight seal on a high-pressure gushing pipe at a depth of 1,500 metres (5,000ft).

Former US secretary of state Colin Powell joined calls for the military to take command of the operation from BP. Powell said the problem was beyond the capacity of BP to solve and the government should bring in "decisive force". He said: "The military brings organisation, it brings control, it brings assets."

How the MSM is reporting the attack on Gaza aid ships

Now the MSM
CBC down plays the number to 9 people killed and claims Israel was acting in self defense
Israeli raid of ships was self-defence: Netanyahu

CNN down plays the number dead to 9 people and claims self defense

Fox head line read Self Defense and after clicking that the title reads


Israeli Officials Claim Aid Flotilla Had Ties to Al Qaeda, PM Gives Military 'Full Support Fox wins the prize for outlandish lies here. Not only do they claim self defense they throw in Al Qaeda.

MSNBC used this grainy black and white video to support Israel's claim of self defense

Visit msnbc.com for Breaking News, World News, and News about the Economy

They claim people on the boat took to pistols away from the IDF and shot at them and then Israel acted in self defense. Like a rapist, they blame the victims. They blame the people on the aid ships.

Now ABC News and CBS News raise the death count to 10 a whopping one person higher than the other major networks. They both present the self defense claims from Israel but even after upping the death count to 10 from 9 they still are only reporting 50% of the deaths.

What really Happened At least 20 dead and 30 injured. And NOT self defense.

Also in a related story
Israeli Hit-and-Run killed 7 Japanese sailors Israel runs over the ship killing 7 people. They run away trying to act like it didn't happen. Matching paint samples prove the Israelis rammed the ship and they are forced to apologize.
_________________
END THE GOD DAMN WARS

Again, Zionists Set Up Jews for Holocaust

Israel is the primary source of anti-Semitism in the world today, and jeopardizes the security of all Jews. Proclaiming itself the "Jewish State" but acting as a rogue state, Israel exposes all Jews to revulsion and retribution.

The murder of Gaza peace activists provides more evidence that the actual goal of Zionism is not to protect Jews from anti-Semitism but in fact, is to create anti-Semitism.

The purpose is to make Jews a pariah unto the nations with no choice but to follow Zionist dictates.

Eventually, they will be sacrificed for Zionist goals, as they were in the holocaust. This is because Zionism is a Masonic (Illuminati, cabalist, satanic) secret society intent on building a totalitarian New World Order. The majority of Jews have no part in this, except to be sacrificed again for a cause they have no inkling of.

Zionists are stripping Israelis and Jews of moral legitimacy so they can be liquidated again without any compunction. And most Israelis and Jews cooperate by supporting Israeli outrages with feeble excuses, blithely indifferent to the possible consequences.

Do the moral arithmetic: In 2006, Israel kills 1400 Lebanese and inflicts $10 billion in damage because 2 soldiers are captured. In 2009-10, Israel kills 1300 Gaza civilians and levels countless buildings because of a few popgun rockets. Now this- killing unarmed international peace activists bringing aid to the beleaguered Gazans.


JEWISH HOMELAND?

Israel would never have been created if it were only "a Jewish Homeland." Israel is intended to be the capital of the Rothschild Cabalist World Empire. Ordinary Jews have no role in this except as cannon fodder.

My grandparents died in the holocaust. I blame the Illuminati bankers who brought the Nazis to power. I blame the Zionists for collaborating with the Nazis. I blame the Zionists for preventing European Jews from being rescued. I blame Zionists for stopping aid from reaching ghettos. I blame Zionists for rounding up Jews and sending them to concentration camps. I blame Zionists for sabotaging Jewish resistance.

Israel was not created as result of the holocaust. It was the other way round. The Nazis were brought to power partly to force Jews to set up Israel for the Rothschilds and the Illuminati.

IRONIES

History is full of ironies! The "freedom flotilla" reminds me of the ragtag Haganah ships who ran the British blockade to bring Jewish refugees to Palestine. Now it is deluded young Israelis playing the role of the British.

Before it was Jews who were starving in a ghetto surrounded by Nazis. Now it is Palestinians in a Gaza ghetto surrounded by Jews!

As usual, the Israelis are trying to portray the murder of 20 unarmed peace activists as an act of self defense. Machine gun toting commandos were attacked with sticks!!! One commando got skim milk powder thrown on his clean, freshly pressed uniform!

This is the classic Zionist tactic: despoil and kill and take everything. Then blame the victim for raising a hand in protest. Anti-Semite!!

Of course, the pathetic Zionist-controlled western media takes the Zionist line.

Most Jews are decent, good people. They believe in the Moral Order not the new world order.

Zionists aren't Jews. It's about time more Jews realized it.

--

Scientists warn of unseen deepwater oil disaster

NEW ORLEANS – Independent scientists and government officials say there's a disaster we can't see in the Gulf of Mexico's mysterious depths, the ruin of a world inhabited by enormous sperm whales and tiny, invisible plankton.

Researchers have said they have found at least two massive underwater plumes of what appears to be oil, each hundreds of feet deep and stretching for miles. Yet the chief executive of BP PLC — which has for weeks downplayed everything from the amount of oil spewing into the Gulf to the environmental impact — said there is "no evidence" that huge amounts of oil are suspended undersea.

BP CEO Tony Hayward said the oil naturally gravitates to the surface — and any oil below was just making its way up. However, researchers say the disaster in waters where light doesn't shine through could ripple across the food chain.

"Every fish and invertebrate contacting the oil is probably dying. I have no doubt about that," said Prosanta Chakrabarty, a Louisiana State University fish biologist.

On the surface, a 24-hour camera fixed on the spewing, blown-out well and the images of dead, oil-soaked birds have been evidence of the calamity. At least 20 million gallons of oil and possibly 43 million gallons have spilled since the Deepwater Horizon drilling rig exploded and sank in April.

That has far eclipsed the 11 million gallons released during the Exxon Valdez spill off Alaska's coast in 1989. But there is no camera to capture what happens in the rest of the vast Gulf, which sprawls across 600,000 square miles and reaches more than 14,000 feet at its deepest point.

Every night, the denizens of the deep make forays to shallower depths to eat — and be eaten by — other fish, according to marine scientists who describe it as the largest migration on earth.

In turn, several species closest to the surface — including red snapper, shrimp and menhaden — help drive the Gulf Coast fishing industry. Others such as marlin, cobia and yellowfin tuna sit atop the food chain and are chased by the Gulf's charter fishing fleet.

Many of those species are now in their annual spawning seasons. Eggs exposed to oil would quickly perish. Those that survived to hatch could starve if the plankton at the base of the food chain suffer. Larger fish are more resilient, but not immune to the toxic effects of oil.

The Gulf's largest spill was in 1979, when the Ixtoc I platform off Mexico's Yucatan peninsula blew up and released 140 million gallons of oil. But that was in relatively shallow waters — about 160 feet deep — and much of the oil stayed on the surface where it broke down and became less toxic by the time it reached the Texas coast.

But last week, a team from the University of South Florida reported a plume was headed toward the continental shelf off the Alabama coastline, waters thick with fish and other marine life.

The researchers said oil in the plumes had dissolved into the water, possibly a result of chemical dispersants used to break up the spill. That makes it more dangerous to fish larvae and creatures that are filter feeders.

Responding to Hayward's assertion, one researcher noted that scientists from several different universities have come to similar conclusions about the plumes after doing separate testing.

No major fish kills have been reported, but federal officials said the impacts could take years to unfold.

"This is just a giant experiment going on and we're trying to understand scientifically what this means," said Roger Helm, a senior official with the U.S. Fish and Wildlife Service.

In 2009, LSU's Chakrabarty discovered two new species of bottom-dwelling pancake batfish about 30 miles off the Louisiana coastline — right in line with the pathway of the spill caused when the Deepwater Horizon burned and sank April 24.

By the time an article in the Journal of Fish Biology detailing the discovery appears in the August edition, Chakrabarty said, the two species — which pull themselves along the seafloor with feet-like fins — could be gone or in serious decline.

"There are species out there that haven't been described, and they're going to disappear," he said.

Recent discoveries of endangered sea turtles soaked in oil and 22 dolphins found dead in the spill zone only hint at the scope of a potential calamity that could last years and unravel the Gulf's food web.

Concerns about damage to the fishery already is turning away potential customers for charter boat captains such as Troy Wetzel of Venice. To get to waters unaffected by the spill, Wetzel said he would have to take his boat 100 miles or more into the Gulf — jacking up his fuel costs to where only the wealthiest clients could afford to go fishing.

Significant amounts of crude oil seep naturally from thousands of small rifts in the Gulf's floor — as much as two Exxon Valdez spills every year, according to a 2000 report from government and academic researchers. Microbes that live in the water break down the oil.

The number of microbes that grow in response to the more concentrated BP spill could tip that system out of balance, LSU oceanographer Mark Benfield said.

Too many microbes in the sea could suck oxygen from the water, creating an uninhabitable hypoxic area, or "dead zone."

Preliminary evidence of increased hypoxia in the Gulf was seen during an early May cruise aboard the R/V Pelican, carrying researchers from the University of Georgia, the University of Mississippi and the University of Southern Mississippi.

An estimated 910,000 gallons of dispersants — enough to fill more than 100 tanker trucks — are contributing a new toxin to the mix. Containing petroleum distillates and propylene glycol, the dispersants' effects on marine life are still unknown.

What is known is that by breaking down oil into smaller droplets, dispersants reduce the oil's buoyancy, slowing or stalling the crude's rise to the surface and making it harder to track the spill.

Dispersing the oil lower into the water column protects beaches, but also keeps it in cooler waters where oil does not break down as fast. That could prolong the oil's potential to poison fish, said Larry McKinney, director of the Harte Research Institute at Texas A&M University-Corpus Christi.

"There's a school of thought that says we've made it worse because of the dispersants," he said.

___

Associated Press writer Jason Dearen contributed to this report from San Francisco.