Saturday, April 3, 2010

Forecasters: S. Florida Winter Among Coldest Ever

Record Low Average Temperatures Set For Miami Beach, West Palm Beach, Naples

Cooler Than Normal Temps, Higher Rainfall Expected In April

MIAMI (CBS4) ― Unless you spent this winter somewhere else, you know it was chilly, at least by South Florida standards. Now, with the data in, the National Weather Service has made it official. The first 3 months of the year were the coldest ever reported in Miami Beach, Naples, and West Palm Beach, and was among the coldest winters ever for Ft. Lauderdale and Miami.

That information was included in an analysis of winter weather patterns conducted by the National Weather Service weather forecast office in Miami.

Forecasters sat March set record cold readings for Miami Beach, which was 5.8 degrees colder than normal, on average, and for Naples, where the average temperature was almost a degree colder than the previous record.

Forecasters say, overall, there were only a handful of days where temperatures were above normal in South Florida.

Miami temperatures averaged almost 5 degrees below normal, making the January-March period the 9th coldest ever, while Ft. Lauderdale had it's 4th coldest period ever.

While the cold weather of winter appears to be over, that doesn't mean South Florida won't continue to see cooler-than-normal temperatures, according to the National Weather Service.

Their outlook claims cooler than normal coastal water temperatures in Florida will combine with the continued "el Nino" weather pattern to likely keep April temperatures below the norm.

The May forecast sees temperatures closer to normal, but that comes with the likelihood rainfall will be greater than normal.

All of South Florida also saw an increase in rainfall when compared to previous years, but West Palm Beach, with almost 11 inches of rainfall in March, saw it's 5th wettest march ever. Miami Beach, with just over 4 inches of rain in March, saw it's 9th wettest March ever.

Creative Movements For Change In Palestine

Creative Movements For Change In Palestine

This week was the 34th anniversary of Palestinian Land Day, and also a day for awareness of the growing boycott, divestment, sanctions movement. Land Day commemorates the deaths of six peaceful activists in a demonstration, and today we talk about activism and its ability to make change.

Remi Kanazi, a poet and activist, and Phyllis Bennis of the Insitute for Policy Studies join Laura Flanders in studio to discuss the ways that art, nonviolent protest, and pushes for creative boycotts are changing the way Americans look at Israel and Palestine.

Who’s Afraid of 9/11 Conspiracy Theories?

Whenever someone insists too strongly about something not being true, we tend to suspect that maybe it is. In their denials of involvement in 9/11, do Israel’s apologists “protest too much”?

While it would take a small book to adequately document the Israeli connection to 9/11-as editor Justin Raimondo has attempted in The Terror Enigma-let us briefly recall some of the more intriguing facts as reported in the mainstream media, involving dancing Israelis, Odigo warnings, and Zim’s timely move.

The story of the five Israelis who were seen celebrating and filming as the Twin Towers burned and collapsed was investigated by Neil Mackay in Scotland’s Sunday Herald. The so-called “dancing Israelis” worked for Urban Moving Systems, later deemed to be a Mossad front by the FBI. Despite failing numerous polygraph tests, the young men were deported to Israel two months later. Back home, several of the men appeared on a TV chat show, in which one of them amazingly said, “Our purpose was to document the event.”
Two employees of Odigo, an Israeli instant messaging service, received messages two hours before the World Trade Center attack on September 11 predicting the attack would happen, Ha’aretz reported.

Zim-American Israeli Shipping Co., part-owned by the Israeli government, moved their North American headquarters from the 16th floor of the WTC to Norfolk, Virginia one week before the 9/11 attacks, incurring a $50,000 fine for breaking its lease, according to the Jerusalem Post.

Despite being in the public domain, none of these relevant facts are mentioned in the 9/11 Commission’s 567-page report.

Moreover, Philip Zelikow, the executive director of the 9/11 Commission, is concerned about the spread of such inconvenient facts to the wider public. “Our worry,” he says, “is when things become infectious…. [then] this stuff can be deeply corrosive to public understanding. You can get where the bacteria can sicken the larger body.”

But was Zelikow speaking here as an American government official or as a pro-Israeli insider?

In the same month that he authored the so-called “Bush Doctrine” of preemptive war, which provided the justification for the 2003 invasion of Iraq, Zelikow made this candid admission: “Why would Iraq attack America or use nuclear weapons against us? I’ll tell you what I think the real threat (is) and actually has been since 1990-it’s the threat against Israel.”

Yet, instead of investigating the Israeli connection, Zelikow used the 9/11 Commission to sell the Israeli-inspired Iraq war to the American people.

Zelikow’s “bacteria” quote is cited in a 2008 paper entitled “Conspiracy Theories.” Co-authored by Cass Sunstein, who currently heads President Obama’s White House Office of Information and Regulatory Affairs, the main focus of the paper “involves conspiracy theories relating to terrorism, especially theories that arise from and post-date the 9/11 attacks.”

Rather than attempting to debunk such theories, Sunstein and Vermeule claim that those who suspect Israeli involvement in 9/11 suffer from a “crippled epistemology.” This, the authors argue, is due to “a sharply limited number of (relevant) informational sources.” In other words, “they know very few things, and what they know is wrong.”

To counter these suspicions, Sunstein recommends “cognitive infiltration of extremist groups, whereby government agents, or their allies (acting either virtually or in real space, and either openly or anonymously) will undermine the crippled epistemology of those who subscribe to such theories. They do so by planting doubts about the theories and stylized facts that circulate within such groups, thereby introducing beneficial cognitive diversity.”

It could, of course, be argued that Sunstein’s work also suffers from a crippled epistemology-his research relies heavily on pro-Israeli sources, most notably the notorious Islamophobe Daniel Pipes.

Pipes is a bit of an expert on conspiracy theories, having written two books on the subject. “Conspiracism provides a key to understanding the political culture of the Middle East,” Pipes opines in The Hidden Hand: Middle East Fears of Conspiracy. “It helps explain much of what would otherwise seem illogical or implausible, including the region’s record of political extremism and volatility, its culture of violence, and its poor record of modernization.”

Like Sunstein, Pipes is concerned that many in the region suspect Israeli involvement in 9/11. “The implications in the Middle East are quite profound,” Pipes told the LA-based Jewish Journal. “It’s one more brick in the edifice of fear and loathing of Israel and the Jews.”

In the absence of a proper 9/11 investigation, there remains a broad range of opinion about the precise nature of Israeli complicity. In The Terror Enigma, Justin Raimondo tentatively concludes that the Israeli connection to 9/11 amounts to “foreknowledge and passive collaboration with Bin Laden’s jihad.” Other experts, such as Alan Sabrosky, are less circumspect. Dr. Sabrosky, former director of studies of the Strategic Studies Institute at the US Army War College, has recently stated that “it is 100 percent certain that 9/11 was a Mossad operation. Period.”

Either way, it’s hardly surprising that some of the most obsessive critics of 9/11 “conspiracy theories” have ties to Israel. If Americans ever find out that their “staunchest ally” had anything to do with the mass murder of their fellow citizens on September 11, 2001, the would-be conspiracy debunkers have good reason to be afraid.

* Maidhc Ó Cathail is a widely published writer based in Japan.

Tax Day ‘war’? Tea Partiers promise to meet anarchists with firepower

Update: Conservative blogger objects to being quoted as example of "Anarchist side," asks for correction

It's war!

Or at least that's the word being employed by the right-wing blogosphere to describe anarchist groups' plans to "crash" the Tea Party movement's Tax Day demonstrations on April 15.

"Anarchists plan war on April 15th Tea Parties," reads a headline at Gateway Pundit. The Fox Nation Web site links to that story using the same headline.

But is it war the anarchists are planning? Not according to the blog posting that started it all: A call to action at the anarchist news site Infoshop, urging people to "Crash the Tea Parties!"

"If the tea party movement continues to grow in size and strength there is a big chance they will dominate this country in the near future," the posting implores. "If the tea party movement takes over this country they will really hurt poor people by getting rid of social programs like food stamps, unemployment benefits, disability benefits, student aid, free health care, etc."

Infoshop outlines "three options" for challenging the Tea Party movement: Organizing counter-protests on Tax Day; handing out leaflets at Tea Party events to convince some of them to change their views; and "ignoring the Tea Party movement," which it suggests is "the worst option."

Nowhere in that list is any suggestion of violence -- or "war," as some bloggers would have it -- but that didn't stop a number of commenters at Gateway Pundit from promising to come to the protests armed.

"I’ll wear my hard hat and carry my 'little friend' under a jacket," promises commenter "Tom Mannis," in the first response to the Gateway Pundit article.

"Be aware anarchists, you WILL be HUGELY outnumbered," writes "Rick Mercer" at Fox Nation. "You won't have the numbers you like to help yourself feel anonymous. And some of us DO legally carry concealed weapons to protect our rights. MAKE MY DAY, PUNK!"

For its part, the anarchist side seems to be taking a different tack.

"Bring your video cameras to every single tea party rally you may attend in the future, with extra batteries and more memory than you think you need," writes blogger "Russ" at The Resistance. "Don't...fight...back. If they yell, yell back. If they rant, rant back. If they push or punch...make sure it was on tape, smile and tell them they're on Tea Party Camera."

Update: In a comment left on this story, conservative blogger Russell Cote pointed out that he is far from being a member of "the Anarchist side" and requested that Raw Story provide a correction to the above paragraph, which cites "Russ" as offering the advice to anarchists that he was actually quoting sarcastically.

Cote, whose own blog is That's Right: A Conservative Madman's Conversations with Himself, writes, "I'm sorry you and nobody else got the joke but your site is getting a little out of control with the loons and I am holding you personally responsible for any shenanigans that go on. A simple correction is all I'm asking for."

Failed Banks and Failed Billions

More Financial Bubbles Ahead in the US Housing Market

April 01, 2010 "International Forecaster" -- Bubbles
have a hard time coming to an end, especially in residential real estate. Underlying forces such as government intervention to prolong the agony and the abject stupidity of builders extends the bubbles.

We are in a vast home inventory expansion and builders are going to build 535,000 new homes. The projected foreclosure rate could give us as much as a 3-year home inventory, up from present levels of about a year, if one includes the lenders shadow inventory. This past week the home building index rose 7.1% and it is up 25.1% year-to-date. The retail index rose 17% y-t-d, yet unemployment stubbornly clings to 22-1/8%. In fact, the retail index is up 87.4% y-o-y. We would say that index is grossly overpriced. As you can see bubbles have a way of not wanting to die quickly. This is caused by man’s disparately wanting to cling to the past attempting to take the easy way out rather than adapting to change. Government tries to keep sections of the economy alive rather than letting the cleansing process take its course.

The subsidization of the housing market is doomed to failure, because there simply isn’t enough money and credit available to keep it going indefinitely. All government is doing is re-flating a dying bubble. These Socialistic/Marxist policies just won’t work. Whether government likes it or not interest rates are headed higher, probably by 1% or more by the end of the year as government in its quest for more money to cover its debts crowds most others out of the market. This can be accommodated by the Fed, but not without higher inflation or perhaps hyperinflation, which in turn will drive interest rates even higher. We are seeing the reigniting of speculative mania in other markets as well – in the stock market and particularly in the low quality sector of the bond market worldwide. The mis-pricing of investments and finance is resulting in terrible distortions, mostly the result of Fed and government policy.

This mania has been aided and abetted by US dollar strength, especially over the past two months. We saw JPMorgan Chase, Goldman Sachs and Citigroup and others loading up on the long side of the dollar starting last October between USDX 74 and 78. They obviously knew the Greece episode was on the way. Irrespective, and in spite of no positive fundamentals, dollar strength was used to draw funds into dollar denominated assets. Supposedly the dollar has some sort of competitive advantage, which it doesn’t, and that a strong dollar will be re-flationary, which it has been. Gold and silver should have been flying to the upside, but our government detests free markets and it again temporarily suppressed prices. This is the result of the machinations of Larry Summers and Tim Geither. Dollar strength has the perceived benefit of the Fed’s ability to endlessly create money and credit.

It is this perception added to Greece, European and euro problems that have fueled speculation in world markets. Perceptions are one thing, and fundamentals are another more powerful force, which in time will reassert themselves. Problems will first be evident in the bond markets, which have already begun. As soon as the 10-year T-note solidly crosses 4% the market, the dollar and bonds will falter. The current strength is perceived to be the weakness of other currencies and their economies, prospective re-flationary policies and the concept of too big to fail. This is why there is the concept that the current “recovery” will persist. They also recognize that individual euro zone countries cannot inflate their way out of problems. One currency prohibits that from happening. This means Greece and others cannot monetize their debt and that means any kind of recovery is years away. All 19 near bankrupt countries are in the same boat except the US. Markets believe in the Bernanke put or backstop. They also believe the Fed will reinflate again. They would rather have inflation or hyperinflation, which they can in part control, rather than deflation, which once it begins cannot be contained.

Then enters the question will the Fed deliberately choose deflation in a year or two to bring about world government? Is this what Greece was all about? We do not know for sure. All we can do is guess. Do not forget Europe’s problems are not as bad as those of the US even though they are led to believe they are.

The 10-year Treasury note may well be telling us something and that is that higher rates are on the way. It certainly doesn’t auger well for any recovery. If credit spreads widen watch out. Such a development would mean the dollar would begin to retrace its recent gains. Dollar gains are over at 82 on the USDX. We await its correction.

We have spent more than 70 years as Americans and we gasp at the criminal enterprise that America has become. Lawbreaking has become as casual as running a business, whether it is on Wall Street or within the beltway in Washington. Worse yet, almost all malefactors never see the inside of a jail, they just have their corporations pay fines and go back to doing what they were doing, which was breaking the law.

One of the ultimate insults comes from the FDIC requesting donations. 200 to 500 banks will fail this year because of incompetence and terrible investments. We believe, as the year progresses, bank failures will explode. One of the factors leading us to this conclusion is that more than 1,000 banks have professionals overseeing bank operations from the Comptroller of the Currency’s Office. Worse yet, we are seeing many banks and credit unions telling depositors they may have to wait seven days or more for their money. Can bank holidays be far behind? We believe it will happen over the next couple of years.

As we go forward we continue to see massive Treasury purchases by the Fed. The monetization is spellbinding at somewhere between 50 and 80 percent. The more we look at this cartoon the more we know quantitative easing cannot stop. If it does the system will collapse. The Fed and the FDIC even want pension funds to buy their toxic garbage, as does Fannie Mae and Freddie Mac. What a sordid turn of events, but not unexpected considering what we are dealing with.

Unemployment sticks at 22-1/8% as tax revenues continue to plunge as the budget deficit heads toward Mars. The next administration push will be to legalize illegal aliens. You ask where will this all end? Can you believe builders have been buying CDOs? Lennar has plunged in and Orleans fell into insolvency with 20% of their assets in toxic garbage.

There is no question zero interest rates, unbridled government deficits, stimulus plans and the Fed’s quantitative easing have been a failure. The result normally would be to pump more aggregates into the system. We will have to see what the Fed, Congress and the administration do, especially between now and the election. Is it any wonder we have called for a two-third’s official dollar devaluation and a debt default. Be patient we should see them happen within two years. Maybe we will get lucky and get tariffs on goods and services. That way we can bring most of our jobs back and get a healthy economy back with 5% unemployment. Many credit derivatives will be banned as well. We have been involved in markets for 50 years and we know sooner or later those who are leveraged – or on margin – lose sooner or later. As a broker we never had margin accounts. The halt in the downward fall of economics, finance and stock market prices are but an interlude. There are still no solutions, so the downside will begin anew. One thing that has come out of the foregoing and the recent troubles in Greece and with the euro is that gold has been recognized as money, as a currency. That view is going to grow as gold trades higher and higher. As an example, just look at the value of gold in euros and all other currencies. Gold has consolidated time after time at $1,050 to $1,100 no matter what the US government threw at the gold market. There have been a few exceptions to gold’s strength, but over time all currencies will fall against the only real money. On the short-term do not forget the government is very short gold and silver on the Comex, probably the LBMA and most certainly in the producer shares. This week’s numbers will give us an indication whether they have begun to cover. We are going to also see a resumption of inflation officially in the next CPI figures. Real inflation is again approaching 8% and this inflation will be reflected in gold and silver prices. Not all professionals are dumb enough to believe official figures. On the downside we do not believe $1,050 to $1,100 will ever be broken again. Your gains when they come will be quick and large.

Now that most of the evidence is in, it is apparent that Lehman Brothers management created a colossal fraud even bigger than that of Enron with its Repo 105 maneuvers and was assisted by its accounting firm of Ernst & Young, and by the NY fed under the direction of our current Treasury Secretary Timothy Geithner. Geithner and all the top management and directors of Lehman should be charged criminally, but all being Illuminati members no one has been charged. Do not expect much from the Department of Justice. Eric Holder was the official who wrote the pardon letter for March Rich, tax cheat and Mossad operative for the State of Israel. As you can see Holder is where he is today because of his enablement of criminal activity. It shows you again that Wall Street, banking and Washington are nothing more than a criminal cartel. The question now is who else on Wall Street is doing the same thing? We already know they keep two sets of books, which is sanctioned by the BIS, the FASB and your government. What is really going on at these Illuminist firms, besides that they tell us they are doing God’s work.

As this criminal activity unfolds the Chairman of the Federal Reserve Ben Bernanke wants more regulatory authority for the Fed so the Fed can better cover up criminal activities. He says the Fed is unequally suited to supervise large, complex financial organizations and to address both safety and soundness risks and risks in the stability of the financial system as a whole. This is the ringleader talking. This is the nexus, the core, the leader of criminal activity in America grasping for even more power. This is the same group under Greenspan and then Bernanke that created the stock market bubble of the late 1990s, the housing, mortgage, commercial real estate bubble, the bubble that took the Dow to 14,100 and then from 6,500 to 10,900, the toxic garbage bubble and the bubble on Wall Street and in banking.

These are the people who lost Americans trillions of dollars so they could implement world government. All this just didn’t happen; it was planned that way. Yes, they are unequally suited to the creation and transmission of criminal activity. This is the same Fed that spent two years in Lehman’s offices and found nothing, because they aided and abetted their criminal activity. They knew everything that was going on. They were trying to bail Lehman out and it did not work. The SEC was there with them, shoulder to shoulder, covering up the crime scene. They are all liars and thieves, not incompetents. We then wonder how deep and serious the fraud is at other firms. From what we have seen so far we haven’t even scratched the surface. We want to see all these facilitators in jail. We do not want to see the Fed with more power. We want to see the Fed out of business as well as the end of the SEC and CFTC. As you can see our government and Wall Street are totally corrupt and unless we do something about it they will destroy our country.

Inside the Employment Numbers

As expected, the BLS employment numbers showed a gain for the first time since December 2007. Plus 162,000 was the number. The magical Birth/Death Index accounted for 81,000 of the gain. The second most important factor was the hiring of census workers.

The Census Bureau has added 72,000 workers so far this year, 48,000 of those in March.

Back in the real world, the U-6 number which incorporates people who have stopped looking for work, or part-timers who can’t find full-time jobs, climbed by 0.1 percentage point to 16.9%

Famous Papal Forgeries -

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While exiled in Avignon, France, the papacy commissioned a series of forged documents that are known today as the Pseudo-Isidorian Decretals. The documents – fictitious letters back-dated by centuries which granted the Church absolute control over all Europe, Asia Minor and Egypt – were compiled and enforced by popes and their associates over a span of nearly four centuries. Voltaire, one of the Enlightenment’s greatest intellectuals, derided the Decretals as ‘the boldest and most magnificent forgery that ever deceived the world.’ (Philosophical Dictionary)

Another voluminous set of fraudulent documents connected with the papacy is now known as the Pseudo-Dionysius Areopagite Forgeries:

“Dionysius, or Pseudo-Dionysius, as he has come to be called, was an unknown person who wrote in the late fifth or early sixth century CE and who transposed in a thoroughly original way the whole of Pagan Neoplatonism from Plotinus to Proclus into a distinctively new Christian context. Since he represented himself as St. Dionysius the Areopagite, an Athenian member of the judicial council, the Areopagus, who was converted instantly by St. Paul, his work, strictly speaking, might be regarded as a successful ‘forgery,’ providing him with impeccable Christian credentials that conveniently antedated Plotinus by over 200 years. Dionysius’ fictitious identity was first seriously called into question by Lorenzo Valla in 1457 and John Grocyn in 1501, a critical viewpoint later accepted and publicized by Erasmus from 1504 onward. But only in modern times has it become generally accepted that instead of being the disciple of St. Paul, Dionysius must have lived in the time of Proclus, and was perhaps of Syrian origin, someone who knew enough of Platonism and the Christian tradition to transform them both. So he has come to be known as Pseudo-Dionysius, that is, a kind of counterfeit representation or forgery of a supposed original.” – Lewis & Hammer, The Invention of Sacred Tradition

Alex Jones: Attacked by Fox

Click this link ......

Financial Reform 201

Now that ObamaCare has become law, Paul Krugman now is agitating for "financial reform," once again creating straw men, giving us a picture of the regulatory history of finance that is not true, and proposing "solutions" that only will lead to more problems. Other than that, I guess he will offer sound advice.

On the surface, all of us can agree. The financial meltdown on Wall Street came about because huge numbers of "investments," hedge funds, and other financial devices were pyramided atop securitized mortgages, which were being sold as though they were gold, instead of the fools gold they really were. To many people, it was obvious that this whole scheme was unsustainable, and when it went down, it went down quickly and very hard.

(In 2006, when I was appealing a tax ruling on my house, I told an Allegany County tax board that the housing market was, in fact, a bubble that would burst violently. They laughed at me, and one person said, "We don't see that happening." I replied that it would -- and it did.)

It is not hard to see in hindsight what happened. However, Krugman and I disagree on a large number of particulars, and one of them is the role of regulation in this mess, and the other is, well, the role of regulation needed to fix it.

Now, I agree with most (but not all) of what he writes here:
It’s easy to see where concerns about banks that are “too big to fail” come from. In the face of financial crisis, the U.S. government provided cash and guarantees to financial institutions whose failure, it feared, might bring down the whole system. And the rescue operation was mainly focused on a handful of big players: A.I.G., Citigroup, Bank of America, and so on.

This rescue was necessary, but it put taxpayers on the hook for potentially large losses. And it also established a dangerous precedent: big financial institutions, we now know, will be bailed out in times of crisis. And this, it’s argued, will encourage even riskier behavior in the future, since executives at big banks will know that it’s heads they win, tails taxpayers lose. (Emphasis mine)
He is correct about the moral hazard in the system, but the bailout was not necessary; in fact, it has blocked the needed liquidation of bad assets in the system and it is preventing a recovery from happening. Here we see the huge gulf between the Keynesians (and Friedmanites, for that matter) and the Austrians.

To a Keynesian, all assets pretty much are homogeneous, and what really matters is spending. Consumption is little more than people "buying back the products they make" in order to keep the Circular Flow intact. Thus, throwing more money into the economy via borrowing and printing will keep the economy from falling into the pit of deflation and helping set the stage for a recovery. To a Keynesian, the worst thing that can happen in deflation, for it creates an endless downward spiral that ends at an "equilibrium" of high unemployment and hopelessness.

(Robert Murphy in his Politically Incorrect Guide to the Great Depression has a good commentary on this error. He points out that if this were true, then the Federal Reserve System's tightening of money in 1921 would have thrown the economy into a pit from which it would not have emerged. Instead, the economy soon afterward had a robust recovery.)

Austrians take a different tact. First, consumption is a purposeful activity, done by people to meet their needs and desires. Second, the basis of consumption is production; we consume because we produce, and we pay for consumption by exchanging what we have produced for those goods and services we need.

This implies that there is a balance within the economy that must be sustained. The housing meltdown came about because the go-go housing market could not continue, as the pouring of resources into housing pulled the entire system out of balance. Unfortunately, too many economists have claimed that the housing meltdown came about because housing prices fell (Martin Feldstein comes to mind here); no, prices fell because this market could not be sustained no matter how much money the government and the banks threw into it.

In other words, the Keynesians and Friedmanites have made the fundamental error of violating what Carl Menger called the Law of Cause and Effect. They have assumed that the effect really was the cause of the calamity. Furthermore, they continue to demand "solutions" that only prop up the malinvestments -- at the expense of the rest of the economy, the still-healthy portion that will not be healthy much longer if the government continues its path of borrowing, printing money, and propping up the bad investments.

I do agree with Krugman that the moral hazard problem is real, but I disagree with his proposed "solutions" that really only compound the problem. What he proposes is to bring back the banking regulations that existed from the New Deal to the early 1980s, and then putting the rest of the financial system under the same regulatory umbrella. In his view, cited elsewhere, "smart" and "well-meaning" regulators can take over from there and keep calamities from happening.

Before going further, I agree with Krugman that moral hazard was a huge problem and I also agree that under the current mentality that grips the system today, the bankers and financial barons invariably will be successful in asking for new money to clean up the mess they have made. However, Krugman also forgets that the establishment of the Fed in and of itself was a huge moral hazard. The original purpose of the central bank was to be a backstop that would provide newly-printed money to member banks in case of a run or a "panic," which occurred once in a while. The presence of the Fed sent a signal to the bankers that the government had their backs, and that problem continues to this day.

There is another issue I have noted before, and that is the difference between Krugman's view of where regulated banking stood in 1980 and the view of Austrians and others. According to Krugman, the banking cartel (which it really was) was doing just fine, but ideological Reaganites came in and undid the whole carefully and wisely-planned structure, all in the name of ideology. Then they created an entire shadow system, also done from ideology.

In a word, that view is nonsense. The banking cartel was losing capital because the government held down interest rates it could offer depositors even while inflation raged in double-digits. People sought other venues and found them. In the meantime, Michael Milken already was helping to finance ventures that the banks would not touch. (As Daniel Fischel notes in Payback, much of the recovery of the 1980s came from Milken's financing methods.)

As economists such as George Stigler and Sam Peltzman pointed out, regulation has the effect of offering protection to regulated firms, but also serving to keep out competitors. In other words, contra Krugman, regulation creates what in effect are government-sponsored cartels. From this, we see "Capture Theory" emerging, as the regulated industries and their government regulators form a tag team that operates to the benefit of the people in the system -- and against consumers.

The ultimate irony is that Krugman and others are demanding re-regulation as a form of "consumer protection," which clearly has not been the pattern of regulation. Krugman can deny this point, but he is the one who is wrong.

Krugman can provide this fantasy of regulation all he wants, and I am sure that plenty of people will believe it, but that does not change the fact that "Capture Theory" is real and provides a much stronger view of regulation than does Krugman's Keynesianism. The re-regulation he espouses not only will make the economy weaker (as it protects the current set of malinvestments), but it also sets the stage for crises in the future.

Instead, we need to abolish the government backstops altogether and stop this bailout foolishness, which only provides the economic agony we are experiencing. The problem is not "too big to fail" or "we need more regulation." No, what we need is to clear the moral hazard out of the system and let the economic assets move to their real values.

Only then will we have a real recovery.

Open House Traffic is Serious Business.

Open Houses: Serious Business

Anybody care to explain: A) Why REALTORS™ still get free advertising like this from local newspapers, even after years of crap like this (pdf “fact sheet” from 2006)? B) What the heck is that photo supposed to have to do with the story?

Now that March is behind us, let’s have a look at our monthly stats preview. Most of the charts below are based on broad county-wide data that is available through a simple search of King County Records. If you have additional stats you’d like to see in the “preview,” drop a line in the comments and I’ll see what I can do.

Here’s your preview of March’s foreclosure and home sale stats:

First up, total home sales as measured by the number of “Warranty Deeds” filed with the county:

King County Warranty Deeds

Warranty Deeds shot up over 55% from February, and over 55% from March last year. I suspect we will see between 1,200 and 1,500 closed sales this month, and I wouldn’t be surprised if we get close to 2,000 in one of the next three months before the tax credit expires. After that, we’ll probably see a notable drop.

Next, here’s Notices of Trustee Sale, which are an indication of the number of homes currently in the foreclosure process:

King County Notices of Trustee Sale

That was a short-lived stint in the negative year-over-year territory. Spiking hard, foreclosures shot up 24% from last year, and 87% from the prior month. Yow. It will be interesting to see if this is a new wave or just a one-month spike.

Here’s another measure of foreclosures, looking at Trustee Deeds, which is the type of document filed with the county when the bank actually repossesses a house through the trustee auction process. Note that there are other ways for the bank to repossess a house that result in different documents being filed, such as when a borrower “turns in the keys” and files a “Deed in Lieu of Foreclosure.”

King County Trustee Deeds

Actual completed foreclosures posted another stronger YOY gain, increasing 67% from 2009.

Lastly, here’s an approximate guess at where the month-end inventory was, based on our sidebar inventory tracker (powered by Estately):

King County SFH Active Listings

Getting closer and closer to flat year-over-year.

Stay tuned later this month a for more detailed look at each of these metrics as the “official” data is released from various sources.

Mongolia: The Pentagon's Trojan Horse. US-NATO Partner Wedged Between China And Russia

Because of its history, its location and the nations which surround it, Mongolia would seem the last country in the world to host annual Pentagon-led military exercises and to be the third Asian nation to offer NATO troops for the war in Afghanistan.

From the early 1920s until the breakup of the Soviet Union in 1991 Mongolia was the latter nation’s longest-standing and in many ways closest political and military ally, its armed forces fighting alongside those of the USSR against the Japanese in World War II. It was not a member of the Warsaw Pact as that alliance was formed in Europe six years after and in response to the creation of NATO in 1949, but Mongolia was a military buffer between the Soviet Union and the Japanese army in China in the Second World War and between it and China during the decades of the Sino-Soviet conflict.

Mongolia is also buried deep within the Asian continent and is the world’s second-largest landlocked nation next to Kazakhstan, which is only 21 miles from its western border. Those two countries along with North Korea, impenetrable in most every sense of the word, are the only three that border both China and Russia.

Russia abuts Mongolia along its entire northern frontier and China along its eastern, southern and western borders. There is no way to enter the country except by passing through or over Russia and China.

As such Mongolia would have appeared to be a refuge of non-alignment in a world of rapidly expanding U.S. and NATO penetration of increasingly vast tracts of the earth’s surface.

But in the post-Cold War period no country is beyond the Pentagon’s reach, either inside or on its borders.

In the last decade alone the U.S. has acquired bases and other military installations and stationed its armed forces throughout parts of the world that it had never penetrated during the Cold War era, including:

Africa: Approximately 2,000 troops and the Pentagon’s Combined Joint Task Force-Horn of Africa at Camp Lemonnier in Djibouti in the Horn of Africa.

Black Sea: Seven new air and training bases in Bulgaria and Romania and the de facto control of air, navy, infantry and surveillance bases in Georgia.

Baltic Sea: The activation in April of a Patriot Advanced Capability-3 theater interceptor missile battery in Eastern Poland with an initial contingent of 100 troops to run it.

Middle East: Air bases, forward operating bases, base camps, weapons storage facilities and troops transit centers in Iraq, Jordan and Kuwait and a long-range (2,900-mile) interceptor missile radar facility in Israel staffed by 120 U.S. military personnel.

Central Asia: An air base in Kyrgyzstan through which 35,000 U.S. and NATO troops transit each month for the war in Afghanistan and plans for a new special forces “anti-terrorist” training center in the nation.

South Asia: A proliferation of infantry and air bases in Afghanistan, including the mammoth Bagram Air Field with 25,000 military personnel and contractors. The Bagram military complex has been more than tripled in size since the 2001 invasion and is currently undergoing yet further large-scale expansion.

East Asia: The return of the U.S. military to the Philippines after being ordered to leave by the country’s Senate in 1991 with at least 600 troops and two permanent structures in Camp Navarro in Mindanao where the U.S. Joint Special Operations Task Force-Philippines (JSOTF-P) is based.

South America: Seven new military, including air and naval, bases in Colombia agreed upon last summer.

Central America: In addition to the U.S. retaining the use of the Soto Cano Air Base in Honduras for its 550-troop Joint Task Force-Bravo after the military coup d’etat of last June 28, a report surfaced in September of 2009 that U.S. Secretary of State Hillary Clinton had reached an agreement with new Panamanian President Ricardo Martinelli for the opening of two new American naval bases, one each on the Caribbean and Pacific coasts.

Indian Ocean: U.S. Africa Command deployed lethal Reaper “hunter-killer” drones, spy planes and over a hundred service members to Seychelles late last year.

South Pacific: A secretive military satellite base in Western Australia was approved in 2007. The massive expansion of the Andersen Air Force Base and construction of barracks for 8,000 Marines on Guam is underway.

New bases on every inhabited continent outside the Pentagon’s own.

Mongolia, however remote it is and previously inaccessible it may have been, is no exception to the wave of worldwide U.S. military expansion.

On March 29 NATO announced that the nation had become the 45th country to contribute troops for the North Atlantic military bloc’s International Security Assistance Force (ISAF) in Afghanistan. The 44th nation to be formally dragooned into NATO’s first ground and first Asian war was Montenegro, the world’s newest (universally recognized) state.

There are in fact more than 45 countries with troops subordinated to NATO in the Afghan war zone in addition to those from all but six European nations, two South Pacific ones (Australia and New Zealand), a Persian Gulf state (the United Arab Emirates), all three South Caucasus nations (Armenia, Azerbaijan and Georgia), Asia’s Singapore and South Korea and the U.S. and Canada.

Last November the Financial Times confirmed that Colombia was deploying infantry forces to Afghanistan under NATO command, in December the ISAF website divulged that Egyptian military personnel are operating in the east of the country [1], and this January the U.S. armed forces newspaper Stars and Stripes revealed that troops from Bahrain and Jordan were already in the war zone.

The inclusion of Colombia and Egypt is particularly significant as now troops from all six populated continents are among those of fifty-some-odd nations serving under NATO – soon to number 150,000, with almost all U.S. forces placed under NATO command – in not only a single war theater but in one country. The world has never before witnessed such a widespread military network concentrated on and in one small land.

Mongolia’s Defense Minister Luvsanvandan Bold was at NATO headquarters in Brussels on March 29 to formalize his nation’s deployment of an estimated 250 more troops for the Afghan war. He was accompanied by his country’s chief of the general staff and secretary of the National Security Council.

The delegation met with NATO’s Deputy Secretary General Claudio Bisogniero and the “meeting marked the formal recognition of the Mongolian contribution to the International Security Assistance Force (ISAF).”

NATO’s number two civilian leader said on the occasion that “These are important agreements, not just from a legal perspective, but chiefly to mark Mongolia’s full recognition as a member of ISAF and a key contributor to the international mission.” [2]

The military bloc announced that as Mongolia is now an official Troop Contributing Nation, it will be invited to the 56-nation NATO foreign ministers meeting to begin on April 23 in Estonia.

The Mongolian entourage also visited Supreme Headquarters Allied Powers Europe, NATO’s main military command, outside Mons, Belgium, where it was accorded an honor guard reception and met with the Deputy Supreme Allied Commander Europe, General Sir John McColl.

NATO now has a military partner squeezed between Russia and China.

A report from last year placed matters in historical perspective. Deployment to Afghanistan will assist “The Mongolian army, which has not seen major combat since assisting the Soviet invasion of Manchuria in 1945,” to “acquire vital, on-the-ground experience.” The mission “will mark its largest military presence in Afghanistan since the age of Genghis Khan.” [3]

However, the U.S. first secured Mongolian troops for the war in Afghanistan much earlier, in 2003, and Genghis Khan was invoked for the occasion, which should cast in doubt the references to peacekeeping used in subsequent citations. The latest development signals the transition from a bilateral U.S.-Mongolian military partnership to the broadening of NATO’s role in Asia and the further consolidation of an Asian NATO.

“The landlocked nation has previously operated artillery training teams in Afghanistan and sent troops to serve with the U.S.-led occupation of Iraq,” and in the course of doing so “Mongolia’s involvement in Iraq and Afghanistan has helped cement its alliance with the United States and secure grants and aid.” [4]

U.S. Marines were deployed to the capital of Mongolia, Ulan Bator (Ulaanbaatar), “for the first time in the history of the Marine Corps, Aug. 18, 2003 in support of Khaan Quest ‘03.” [5]

The live-fire military exercise, which has been held every year since, is named after Genghis Khan. The announced purpose of the training exercises, run by the Pentagon’s Pacific Command, has been to upgrade Mongolian soldiers to United Nations peacekeeping standards. Having little else in the way of exports, the nation’s troops are paid comparatively handsomely for missions abroad.

As to the nature of the peacekeeping missions the Pentagon has been training Mongolia’s armed forces to conduct, after the first Khaan Quest exercises – in which they were instructed by U.S. Marines in “peacekeeping operations such as check point, patrolling, immediate action drills, riot control and more” [6] – in August of 2003, the U.S. deployed troops they had instructed to Iraq in September and to Afghanistan in October.

The second rotation of Mongolian troops to Iraq occurred in early 2004 and the second Khaan Quest U.S.-led military exercises were staged in Mongolia the same year.

Mongolia was invited to participate in the Cobra Gold exercises in Thailand, Asia’s largest war games, in 2004 for the first time. The roster also included the U.S., Thailand, the Philippines and Singapore.

The following year U.S. Marines returned to the nation for Khaan Quest 2005 and almost two weeks of joint training with the Mongolian Armed Forces.

The Marines and 130 local troops engaged in what was described as a mock battle 65 miles west of the capital, a repeat of similar engagements in 2003 and 2004. [7]

Five months after the April exercises Mongolia’s President Nambariin Enkhbayar visited Hawaii on his way home from the United Nations to meet with the top commander of the U.S. Pacific Command, whose “vast area of responsibility [consists of] half the surface of the globe that includes half its population spread across 36 countries,” [8], Admiral William Fallon.

After the meeting the Mongolian head of state was quoted as saying “We have been discussing how to cooperate to expand and develop the capacity of the Mongolian armed forces and peacekeeping operations,” and that he and Fallon “found complete understanding” about collaboration between the Pentagon’s Pacific Command and the Mongolian armed forces. [9]

The following month Donald Rumsfeld became the first U.S. secretary of defense to visit Mongolia and addressed soldiers from the nation who had served in Iraq and Afghanistan. Until the last moment he also was to have visited China’s and Russia’s other joint neighbor, Kazakhstan, to “discuss increasing U.S. help in their [Kazakhstan's and Mongolia's] military modernization programs” on his way to a NATO meeting in Lithuania to meet “with Ukraine’s defense minister about that country’s effort to join the organization.” [10]

Speaking of Mongolian officials’ military cooperation with the U.S., he said “Located between Russia and China, they decided that their democracy, stability and future was mostly tied to the relationships they could create.” [11]

It was confirmed at the time that six U.S. Marine and one Army officer were assigned to the nation’s military and that “With US funding and training, the Mongolian government built a peacekeeping force of 5,000 troops from its current force of 11,000 troops.” [12] Almost half its men under arms are available for deployments abroad.

On November 21st of 2005 President George W. Bush followed in Rumsfeld’s footsteps, arriving for a one-day visit to Ulan Bator with his secretary of state Condoleezza Rice. As Rumsfeld was the first Pentagon chief, so Bush was the first standing U.S. head of state to visit Mongolia. Both were on recruitment missions, and not just for the wars in Iraq and Afghanistan. A report on the U.S. defense chief’s trip included the observation that “In Mongolia, Rumsfeld tried to nurture a relationship that may be a hedge against a shift in China’s current path.” [13]

Bush’s comments while there didn’t spare his hosts an ex post facto swipe at the nation’s political past (until last May the ruling party’s name was still that of the communist period) and an evocation of the Genghis Khan mythos (and ethos): “Free people did not falter in the Cold War, and free people will not falter in the war on terror. The Mongolian armed forces are serving the cause of freedom, and U.S. forces are proud to serve beside such fearless warriors.” [14]

Months afterward it was revealed that Rumsfeld had promised impoverished Mongolia (with a population roughly equal to that of Chicago) $11 million worth of U.S. military equipment. [15]

In January of 2006 Mongolia announced that, despite a transition in the nation’s cabinet underway at the time, it would keep its U.S.-trained troops in Iraq and Afghanistan.

In the middle of the year the U.S. State Department disclosed that “Rumsfeld said the United States plans to join Mongolia in an upcoming multinational exercise that is intended to strengthen regional cooperation in peacekeeping.

“The exercise, called ‘Conquest,’ is scheduled for late summer.” [16] Once again the alleged peacekeeping nature of America’s military role in Mongolia was belied by the name of the operation.

During the summer the Pentagon conducted the Khaan Quest 2006 exercises in which “300 American military personnel [trained] 600 Mongolian troops, as well as 200 others from Bangladesh, Fiji, South Korea, Thailand and Tonga,” at what by that time was a permanent training base at Tavan Tolgoi (Five Hills).

It was announced before the August war games that “The training is part of the millions of dollars that President Bush promised during his visit to Mongolia last year.” [17]

During Khaan Quest 2006 “Admiral William J. Fallon, head of the U.S. Pacific Command, greeted media and soldiers, praising the peacekeeping exercises and stressing the importance of Tavan Tolgoi as an international training site.” [18] The next year Fallon took over Central Command whose area of responsibility includes both Iraq and Afghanistan.

The two-week military exercises were held “on the windswept steppe of Mongolia, a key American ally strategically placed between Russia and China.”

To demonstrate its appreciation of the role that Mongolia plays in U.S. geostrategic plans for Eurasia, three months earlier “The U.S. Congress passed a resolution…commending Mongolia on marking 800 years since Genghis Khan forged a nation out of the vast territory inhabited by disparate tribes, and praising its ‘commitment to democracy, freedom and economic reform.’”[19]

In late July and early August Mongolian air force officials were invited to Operation Cooperative Cope Thunder in Alaska, “the largest multilateral air combat exercise in the northern Pacific, with about 1,300 personnel participating” from the United States, NATO, Australia, Canada, Germany, Japan, South Korea and Sweden. [20]

In October the seventh rotation of Mongolian troops “left for Iraq on board a special flight” to “join U.S. soldiers on patrol missions and maintaining order in the Iraqi capital [of] Baghdad.” [21]

By 2007 the Pentagon’s military integration of Mongolia had progressed beyond the point of the latter merely sending observers to U.S. war games and in July Mongolian airmen joined colleagues from the U.S., Spain, Thailand and Turkey for the two-week Red Flag-Alaska exercises in which “80 aircraft and 1,500 service members from the six countries [flew] together in this multinational exercise that provides realistic combat training….” [22]

The same month, at a time when almost 1,000 of its troops had served in the Iraq war zone, The Times of London in a feature called “War earns Mongolia rich peace dividend” summed up the results of four years of direct U.S.-Mongolian military cooperation:

“[Mongolian] soldiers are fed, given new uniforms, battle armour and night-vision equipment when they arrive in Iraq and President Bush has promised Mongolia $14.5 million to renovate its Armed Forces.

“The country’s readiness to fight in Iraq was also key to winning it a highly sought-after first-round place in Washington’s $5 billion Millennium Challenge Account.” [23]

Khaan Quest 2007 expanded to include over 1,000 troops from the U.S., Mongolia and seven other Asian and Asia-Pacific nations – Bangladesh, Tonga, South Korea, Brunei, Sri Lanka, Indonesia and Cambodia – to “improve their interoperability” and the “multinational speed of response, mission effectiveness…and unity of effort. [24]

The 2008 Khaan Quest exercises added troops from France, India, Nepal and Thailand to the U.S. Pacific Command-run operation.

The BBC reported at the time:

“As exercises go, these ones are relatively small – but they are symbolic.

“They represent part of Mongolia’s ongoing efforts to build ties that extend beyond its two super-power neighbours.” [25]

In July of 2008 Mongolia was invited to participate in the 20-nation Pacific Rim Airpower Symposium held in the capital of Malaysia. Mongolia doesn’t border the Pacific or even have a navy. It is separated from that ocean by hundreds of miles of Chinese and Russian territory.

The four-day event was hosted by the Royal Malaysian Air Force and U.S. Pacific Air Forces’ 13th Air Force, and included participants from the U.S., Malaysia, Mongolia, Australia, Bangladesh, Brunei, Cambodia, Canada, Chile, India, Indonesia, Japan, Nepal, New Zealand, the Philippines, Singapore, South Korea, Sri Lanka, Thailand and Vietnam. The commander of the 13th Air Force, Lieutenant General Loyd Utterback, remarked at the time: “Through this symposium, we have a great opportunity to share and understand what each nation brings to the battlefield.” [26]

Mongolian forces were also part of a U.S.-led military exercise on the order of Khaan Quest in Bangladesh in April of 2008 along with troops from the U.S. and the host nation, Brunei, Cambodia, India, Indonesia, Malaysia, Nepal, South Korea, Sri Lanka and Tonga.

Following by three years what appeared like an attempt at a “color revolution” scenario in Mongolia in March and April of 2005 ahead of a presidential election (on the heels of successful equivalents in Georgia, Ukraine and Kyrgyzstan), riots broke out in Ulan Bator after parliamentary elections in the summer of 2008. The standard “color revolution” technique. Molotov cocktails were hurled into the offices of the ruling Mongolian People’s Revolutionary Party and at least five people were killed and 300 injured, leading to a four-day state of emergency being declared. (The protests were led by supporters of the Democratic Party of Tsakhiagiin Elbegdorj, about whom more later.)

Five months afterward, in early November, Mongolia and Russia held a joint peacekeeping training exercise in the first country, the only joint maneuvers of any sort since the breakup of the Soviet Union seventeen years earlier. In the interim the Pentagon had led six comparable exercises in Mongolia from 2003-2008.

Mongolia was granted observer status in the Shanghai Cooperation Organization (whose members are China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan) in 2004, but in the succeeding six years has made no efforts to gain full membership.

In July of 2009 the nation’s military announced that it would expand upon previous deployments to Afghanistan, limited to artillery training units, by sending a full contingent of troops as part of “cooperation that stems from its ‘third neighbor’ policy to reach out to allies other than China and Russia,” meaning the U.S. and NATO. [27]

On August 15 the twelve-day Khaan Quest 2009 exercises were launched under U.S. leadership. In addition to American and Mongolian forces, troops from Cambodia, India, Japan and South Korea participated.

“The exercise is the most visible form of US-Mongolian military cooperation,” which “grew out of Mongolia’s participation in the US-led war in Iraq, the first combat action that Mongolian troops had seen since World War II.”

“In addition to the Khaan Quest exercise, US military cooperation with Mongolia includes the Marine Leadership Development Exchange Program, an initiative unique to Mongolia in which a small group of US Marines ‘embeds’ with Mongolian forces full time to help train them in western military methods.” [28]

Developing out of the annual Khaan Quest exercises, a Mongolian Expeditionary Force consisting of “elite soldiers selected by Mongolian Armed Forces Maj. Javkhlanbayar Dondogdorj specifically” for Afghanistan are to be deployed to the war front in that country. [29]

The exercises in Mongolia were preceded by a United Nations Staff Officers Course run under the U.S. State Department’s Global Peace Operations Initiative with officers from the U.S., Mongolia, Germany, Bangladesh, India, Malaysia, the Philippines, Singapore and Thailand.

Khaan Quest 2009 closed with a ceremony which featured “a parade by the graduating platoons and speeches by the chief of staff of US Pacific Command (which sponsored the exercise), as well as Mongolia’s defense minister and chief of armed forces.” [30]

This year’s Khaan Quest 2010 “is scheduled to begin August 2010 and event officials are expecting a larger participating force” than in 2009. [31]

Earlier in the year, on May 24, the candidate of the Democratic Party, Tsakhiagiin Elbegdorj, won the nation’s presidential election, becoming the first president never to have been a member of the Mongolian People’s Revolutionary Party and the first to have been educated in the West. In fact he received a diploma from the University of Colorado at Boulder’s Economic Institute in 2001 and a Master of Public Administration degree from Harvard University’s John F. Kennedy School of Government the following year.

The nation’s military ties with Washington and with NATO can be expected to grow even firmer and more extensive under the Elbegdorj administration.

With its vast expanse (over 600,000 square miles) and its sparse population (less than 3 million people with almost 40 percent living in the capital), Mongolia is the optimal location for U.S. military surveillance (ground, air and satellite) to monitor China and Russia simultaneously. The nation’s new U.S.-educated head of state is not likely to deny Washington’s requests in that regard.


1) International Security Assistance Force
American Forces Press Service
December 16, 2009
2) North Atlantic Treaty Organization, March 29, 2010
3) Reuters, July 22, 2009
4) Ibid
5) Marine Corps News, August 28, 2003
6) Ibid
7) Xinhua News Agency, April 17, 2005
8) U.S. Department of Defense, May 18, 2009
9) Associated Press, September 20, 2005
10) Voice of America News, October 16, 2005
11) United News of India, October 22, 2005
12) Ibid
13) Associated Press, October 25, 2005
14) USA Today, November 21, 2010
15) Regnum (Russia), March 13, 2006
16) U.S. Department of State, June 5, 2006
17) Mongolia Web, July 30, 2006
18) Mongolia Web, August 21, 2006
19) Reuters, August 11, 2006
20) United Press International, July 28, 2006
21) Xinhua News Agency, October 4, 2006
22) Air Force Link, July 26, 2007
23) The Times, July 16, 2007
24) Ulan Bator Post, August 2, 2007
25) BBC News, September 10, 2008
26) Air Force Link, July 23, 2008
27) Reuters, July 22, 2009
28) EurasiaNet, August 25, 2010
29) Khaan Quest 2009, August 21, 2009
30) EurasiaNet, August 25, 2010
31) Khaan Quest 2009, August 25, 2009

Rick Rozoff is a frequent contributor to Global Research.

Financial Fraud and the Economic Crisis

A Cavalcade of U.S. Corruption Is Finally Being Scrutinized

The “F Word” (for fraud) is back in polite conversation on Wall Street. Fraud and financial crime are slowly becoming part of the debate over what must be done to restrore confidence in what has so plainly been a confidence game.

Drilling for oil has knocked financial reform out of the headlines but among commentators, a concern with crime and the absence of punishment is being raised again.

First there was Robert Reich, the former Clinton Labor Secretary, a small man with a large and insistent voice. He’s practically spitting because he’s so pissed off with the inaction, asking where has the SEC been—not the Bush SEC which blew the Madoff probe but the Obama appointees:

“It’s now clear Lehman Brothers’ balance sheet was bogus before the bank collapsed in 2008, catapulting the Street and the world into the worse financial crisis since 1929. The Lehman bankruptcy examiner’s recent report details what just about everyone on the Street has known since the firm imploded - that Lehman defrauded its investors. Even Hank Paulson, in his recent memoir, referred to Lehman’s balance sheet as bogus.

In order to look like it could borrow $30 for every dollar of its own money, Lehman shifted liabilities off its books at the end of each quarter. Its CPA, Ernst and Young, approved of this fraud against the advice of its own whistle blower, whom Ernst and Young fired.

Lehman’s practices couldn’t have been all that different from those of every other big bank on the Street. After all, they were all competing for the same business, and using many of the same techniques. Lehman was just the first to go under, causing a financial run that led George W. to warn “this sucker could go down” unless the federal government came up with hundreds of billions to bail out the others.”

Reich is joining former Bank regulator Bill Black who has been contending that the banks have been robbing us. To see some of his recent interviews, check out Real News Network.

Now Ed Harrison who produces the credit writedowns site is asking about follow up. Whatever happened to the FBI accusation that there has been an epidemic of mortage fraud. He writes;

“Rampant fraud in the mortgage industry has increased so sharply that the FBI warned Friday of an “epidemic” of financial crimes which, if not curtailed, could become “the next S&L crisis.”

Assistant FBI Director Chris Swecker said the booming mortgage market, fueled by low interest rates and soaring home values, has attracted unscrupulous professionals and criminal groups whose fraudulent activities could cause multibillion-dollar losses to financial institutions.

“It has the potential to be an epidemic,” said Swecker, who heads the Criminal Division at FBI headquarters in Washington. “We think we can prevent a problem that could have as much impact as the S&L crisis,” he said.

In the 1980s, many Savings and Loans failed because of poor management, risky loans and investments, and in some cases, fraud. Taxpayers were left with a $132 billion tab to cover federal guarantees to S&L customers.

This is the headline and first four paragraphs of a CNN article from 17 September 2004.

Where are the investigations, perp walks, convictions? So what happened to all that fraud?

It’s still ongoing.”

Yes it is.

The World Policy Institute examines corruption in global terms in its latest World Policy Journal. Daniel Kauffman writes about a part of the problem the media has not really explored—what’s called “State capture;”

Most research on corruption focuses on developing countries, which is unfortunate. When corruption indexes focus exclusively on cruder forms of corruption (what we think of as typical cases of bribery), they mask one of the most seri- ous governance challenges facing countries like
the United States today—so-called legal corrup- tion and state capture by powerful corporations.

(For evidence of this, one need only look to the undue influence exerted by Wall Street and mortgage giants over regulations leading up to the financial crisis, or by giant carmakers over automobile safety regulators.)

Indeed, research suggests that legal corruption and state capture
in the United States are extremely high when compared with most countries in the world, and higher than any other industrialized OECD country. Thus, contrary to popular notions, both developing and rich countries face corruption challenges, although their form may differ.”

This is part of what Transparency International, an agency that monitors corrption worldwide calls an “untamed hyra:, Lawrence Cockcroft, co-founder of the international corruption watchdog, Transparency International, observes that this blight is “so deeply entrenched in nations the world over, that regardless of initiatives for improvement,” victims and perpetrators alike are often desperately interconnected in a web that threatens to undermine progress towards and resolution of the dominant global humanitarian needs of our time.”

Overseas these problems are also common, but in many countries there seems to be far more vigillence and prosecution. One recent example:

(AFP) SHANGHAI — An executive at China Mobile, the world’s biggest mobile
operator, has been detained after going missing with hundreds of millions of
yuan (tens of millions dollars), a report said Thursday.

Li Xiangdong, based in the southwestern Sichuan province and in charge of
China Mobile’s centralized wireless music platform, went missing “many days
ago”, the 21st Century Business Herald said, citing unnamed sources.

It was unclear how Li siphoned the money away from the company, but industry
insiders said a possible source was kickbacks from service providers and
content providers doing business with China Mobile, the report said.

Stories like this are becoming increasingly common. Overseas, the crimes seem to be prosecuted. What about here?

by Danny Schechter

China Denies Backing Iran Sanctions

Yesterday’s claims that the Chinese government had, after months of US cajoling, finally agreed to support sanctions against Iran appear to be premature, and China has reiterated its past position that diplomacy, not sanctions, should resolve the issue.

We will strengthen communication with other parties and engage all parties to promote a proper resolution by diplomatic means,” insisted Chinese foreign ministry spokesman Qin Gang.

Foreign Minister Yang Jiechi insisted that China’s position had not changed at all, and he met today with Iran’s top nuclear negotiator Saeed Jalili about the issue.

Russian officials also issued a statement saying that they supported “focused and selective” sanctions, which is largely in keeping with their previous statements in opposition to the broader package of “crippling” economic sanctions sought by the US.

Secretary of State Hillary Clinton claimed earlier this week that there was a “consensus” on the need for sanctions and claimed specifically that China had a “growing awareness” of the importance of the move.

Keep your hands off my stuff!

The more social programs there are and the bigger government gets, the more expensive government becomes and the less freedom we have. The money has to come from somewhere and if it doesn’t come from the people directly through taxes, it must be printed. This causes the more insidious tax of inflation which most people don’t see or understand. Today we have a very powerful wealthy group of un-elected power-brokers in charge of the printing press who have virtually no oversight. They have taken control of ours and the entire world economy by convincing the masses that this unconstitutional arrangement is free-market capitalism. It is not. A central bank is a key pillar in the Communist Manifesto as it is the very control mechanism for that system. They sit above the economy acquiring assets with their counterfeit fiat while the rest of the world wonders how it’s possible that everyone is going broke. The more broke people become, the more dependent they are on the system. They must borrow to survive and become slaves of that system. “Debt” after all is “slavery”. Well-meaning liberals point at this Ponze Scheme they’ve concocted and claim that the free market has failed and that we need to spread the wealth around and give relief to the poor by expanding the government sector giving even more wealth and power to the very people who caused the grief. Government after all has no money…. they have to borrow from the private Central Bank to fund these socialist liabilities and eventually even borrow more to pay off the interest they owe again inflating the currency. This vicious cycle continues until eventually the only people who have any assets at all are the people who are in charge of the printing press. It is a Feudal system, not free market. We can argue for days about “Capitalism” vs. “Socialism” but I think everyone should agree that the big problem is this un-elected Cartel that we have silently controlling the whole show. These same people own the major corporations and the media, and they control both the Democrats and Republicans in Washington. The only way to fight them is to not go along with anything that gives them more control. Fighting for individual freedom and Liberty is the only way to combat these people. The way we fight for freedom is to resist this Democracy – Two wolves and a sheep deciding on what’s for dinner. What’s mine is mine! Keep your hands off my stuff! First, let’s end the Federal Reserve control of the system and give the power back to the people where it belongs, then we can argue about the “isms”.

Tarpley: China up for Iran sanctions - April Fool's Day prank

Click this link ......

True News: How to Talk to People About Obama's Health Care Bill

Click this link .......

100 million Americans question or find fault with the official 9/11 story

The failure to rebuild the World Trade Center site in Manhattan has received endless attention. But public anger about this failed reconstruction should not been seen so negatively. After all, mental reconstruction has also still not been successful and is surely more needed, with too many Americans still accepting the official government story about 9/11. This, despite a huge amount of compelling evidence that elements of the US government played some role, despite a very large, active 9/11 truth movement, and despite an impressive number of highly credible people demanding a new investigation as documented at

In the recent Angus Reid Public Opinion survey of a representative national sample of American adults, 62 per cent of respondents disagree with the view that the "Sept. 11 incident was a big fabrication as a pretext for the campaign against terrorism and a prelude for staging an invasion against Afghanistan." Far more Republicans disagree at 80 percent, compared to 66 percent of Independents and 55 percent of Democrats.

Consistent with this is that two-thirds of Americans (67 percent) agree with the government commission that investigated the events of Sept. 11, 2001, which concluded that an attack was carried out by 19 hijackers who were members of the al-Qaeda terrorist organization, led by Osama bin Laden. Though 12 per cent of respondents reject the commission's findings, one-in-five Americans (21 percent) are undecided. In particular, 35 percent of Independents and 34 percent of Democrats do not accept the official version, compared to just 20 percent of Republicans.

These figures translate to about 100 million Americans that question or find fault with the official 9/11 story, far from a trivial number and far too many to dismiss as conspiracy nuts and part of the lunatic fringe. This is the important message that merits public appreciation.

That the mainstream media refuses to acknowledge this kind of public sentiment reflects on their lack of courage to dig deep into the role of the government and face the truth. This behavior does nothing to improve American democracy and trust in government. True patriots must acknowledge that government through the terrible acts of some individuals can carry out hideous acts; there is a bipartisan history of this. Truth is the best way to stop such behavior.

Clearly, Republicans have blocked out the painful possibility that the Bush-Cheney administration played a role in 9/11. This may also explain why the large tea party movement that results from strong disillusionment with government does not embrace the 9/11 truth movement.

Here is my perspective: If far more Americans rejected or questioned the official government story and demanded a new investigation, we would get the mental reconstruction sorely needed to ensure that the government never again uses a false flag operation to advance a policy (wars in Iraq and Afghanistan) that would not otherwise receive public support, especially one that kills thousands of Americans, both civilians and soldiers.

That the reconstruction at ground zero in Manhattan has still not succeeded symbolizes that the wounds of 9/11 are not healed, which means that we still have some chance of demanding and discovering the full truth, regardless of how painful it is. The cost of a first-rate new investigation might be $50 million, far less than the billions of dollars to reconstruct the Manhattan site.

In the end, truth is more important than new buildings. Worse than a hole in the ground is a hole in our national soul. We need Congress to authorize and fund a new 9/11 investigation. The highly fragmented 9/11 truth movement must unite behind a political strategy to make this happen. The only reason to fear a new investigation is the likely unsettling finding that, indeed, the US government was a lot more than incompetent and negligent.

Forensic experts to reexamine WTC rubble

New York forensic experts will start a major new search Monday through debris from the World Trade Center for remains of people killed in the 9/11 terrorist attack, officials said.

About 844 cubic yards (645 cubic meters) of material recovered from the reconstruction site at Ground Zero will be combed for bones and other remains of the 2,752 people killed when hijacked airliners slammed into the Twin Towers on September 11, 2001.

"That material is going to be sifted to see if there are any human remains," said Jason Post, a spokesman for Mayor Michael Bloomberg. "We're taking every step we can to recover the remains of 9/11 victims."

Experts, including anthropologists, will hand check the material in the 1.4-million-dollar operation, which could go on as long as three months at a closed location at a landfill on Staten Island.

Previous searches through the mountain of rubble from the World Trade Center, which collapsed as a result of the aircraft strikes, have already turned up 1,772 pieces of potential human remains, according to the mayor's office.

Many of those remains belonged to already identified victims.

The following video is a series of aerial photos of the Fresh Kills landfill, where an earlier forensic investigation of the 9/11 rubble was carried out. The photos are from 2002.

With AFP.