March Madness in 2009….and in 1939

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From a recent piece at Lew Rockwell,  Nightmare on Wall Street

March Madness

Insurance giant AIG, already rescued by the public, comes back for more. The bill now totals almost $200 billion, nearly half of which goes to foreign banks, including the very banks that shaped government policy on the bank bail-out, a criminal conflict of interest.

  1. China and the US face off over US surveillance in Chinese waters, as well as over Chinese currency pegging
  2. The Bernie Madoff investigation reveals that family and friends of the ex-Nasdaq chief connived in his fraud, which prosecutors charge, has been going on since the 1980s. Money-laundering through an English bank is part of it.
  3. After three rescues, Citigroup ends up trading at around $1 and needing another round of government aid. That brings the government’s total commitment to Citi to over $300 billion.
  4. Net capital flows to the US turn negative, auto sales fall sharply, and pension-funding shortfalls are destroying company balance sheets.
  5. The Fed Reserve commits to buy $300 billion in Treasuries (creating $1 trillion in new money). The bond market reacts positively. But, in what seems like a warning from the other side of the Atlantic, when the Bank of England tries to auction British bonds, it fails to find enough buyers for the first time in seven years. The market is signaling its belief that the UK government is effectively bankrupt.
  6. Upward pressure on LIBOR, the London interbank offer rate, continues relentlessly. This is a measure of the willingness of banks to lend to each other and it’s showing severe credit market stress…..

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and,

“As reports about the AIG deal circulate and stir up public anger, the USNS Impeccable, a survey ship (read, spy-ship) faces off with Chinese ships in what the US claims are international waters off Hainan island. But the encounter is also within 200 miles of the Chinese coast, a zone China considers its exclusive economic zone. Hainan is also a key strategic base in the South China Sea and the location of China’s biggest submarine base. This comes just days after US military talks with China resume.

The US claims it’s a Chinese provocation, although it’s hard to believe that a Chinese spy ship snooping around Americans coasts would be greeted with brotherly love. It seems more likely to be a US provocation.

Notice that the incident reinforces Barack Obama’s provocative warnings to the Chinese about currency manipulation during the presidential campaign. Obama was apparently playing to the part of his base that is China-hawkish and protectionist. Notice that this is also a neo-conservative position, as human rights interventionists (let’s call them liberventionists) would like to see a tougher US posture in places like China and Darfur.

In short, the big government wing in both parties likes the “Chinese currency manipulation” motif……”

And in a recent piece at Lew Rockwell and Human Events,  Pat Buchanan writes:

 March Madness in 1939

“Made a fool of by Hitler, baited by his backbenchers, goaded by Lord Halifax, facing a vote of no confidence, on March 31, 1939, Chamberlain made the greatest blunder in British diplomatic history. He handed an unsolicited war guarantee to the Polish colonels who had just bitten off a chunk of Czechoslovakia. Lunacy, raged Lloyd George, who was echoed by British leaders and almost every historian since.

With the British Empire behind it, Warsaw now refused even to discuss a return of Danzig, the Baltic town, 95 percent German, which even Chamberlain thought should be returned.

Hitler did not want a war with Poland. Had he wanted war, he would have demanded the return of the entire Polish Corridor taken from Germany in 1919. He wanted Danzig back and Poland as an ally in his anti-Comintern Pact. Nor did he want war with a Britain he admired and always saw as a natural ally.

Nor did he want war with France, or he would have demanded the return of Alsace.

But Hitler was out on a limb with Danzig and could not crawl back.

Repeatedly, Hitler tried to negotiate Danzig. Repeatedly, the Poles rebuffed him. Seeing the Allies courting Josef Stalin, Hitler decided to cut his own deal with the detested Bolsheviks and settle the Polish issue by force.

Though Britain had no plans to aid Poland, no intention of aiding Poland and would do nothing to aid Poland – Churchill would cede half that nation to Stalin and the other half to Stalin’s stooges – Britain declared war for Poland.

The most awful war in all of history followed, which would bankrupt Britain, bring down her empire and bring Stalin’s Red Army into Prague, Berlin and Vienna. But Hitler was dead and Germany in ashes….”

My Comment

In an earlier piece,  Nationalization In a Time of Monopoly, I noted the ominous end game in which we’re finding ourselves:

“First, it [the state] creates debt everywhere until the capital base of the economy is destroyed and production is in tatters. Banks become bankrupt, except for those that have government connections and can consolidate. The monopolies have nothing to restrain their anti-market behavior and push their own agendas in concert with the state. With no limit to cheap credit, the money supply swells. Workers can no longer keep up with inflation. The lopsided development of the state sector crushes savings and production in the remainder of the economy. Jobs dwindle.

To supplement them, the corporate-state creates make-work programs on the domestic front. When bad times and discontent persist, it looks abroad.

Then comes war.

That is where nationalization in a time of monopoly will take us.” (Lew Rockwell, March, 2009)

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That warning cannot be emphasize enough. We meddle further at our own peril.
Beware any further ceding of power to the government.

Before any more doing  –  undo, undo, undo.

Or , as Buchanan shows in his gripping time-line, when this end game rolls out, we will find that even countries that do not want war with us now,  will be forced into it.

How To Become An American Billionaire

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In the news at Yahoo Finance, these are the characteristics of a sample group of billionaires:

*Billionaire Parents Had Math-Related Careers

Math prowess is ofter inherited. Engineer, accountant and small-business owner predominated among the professions followed by those billionaire parents whom the study could track down.

* Billionaires had September Birthdays

Of the 380 self-made American tycoons on Forbes list of the World’s Billionaires over the last three years, the most (42) were born in September.

*Billionaires Dropped Out and Tuned In….To Tech Success

More than 20% of self-made billionaires on the latest list of the World’s Billionaires dropped out and became tech tycoons – including Bill Gates, Steve Jobs, Michael Dell, Larry Ellison, (Oracle) and Theodore Waitt (Gateway).

*Skull and Bones

Many billionaires were members of Skull and Bones, the secret society to which John Kerry and George W. Bush belonged. They include hedge-fund manager Edward Lampert, Blackstone co-founder Steven Schwarzman and FedEx founder Frederick Smith.

*Goldman Sachs

Of 68 self-made American finance billionaires, at least eight come out of Goldman Sachs, especially: its “risk arbitrage” unit where Edward Lampert, Daniel Och, Tom Steyer and Richard Perry started out.

My Comment

This is the kind of news article that deserves deconstructing. Apparently, the way to the greatest wealth in the US is through an early start, a good head for figures, and a network of the most politically well–connected people around, i.e., through insider contacts. If that’s so, it portends ill for real capitalism.

I have no idea what the September birthdays mean….

How To Fix the Economy (Ongoing)

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A letter from Alan Jacquemotte.  He writes:

The following is in response to an interview of Mark Faber which can be found at http://www.lewrockwell.com/schiff/schiff12.html

And in the interview Faber says that the the inflation will FOLLOW the depression, not occur simultaneously. And that the depression may last as long as 10 years before the inflation kicks in.

So essentially what he is saying is that “things (prices) will go down for some indeterminate length of time…and then they will go up to higher than wherever they got down to”. Wow! Heavy stuff!

Anyway, whoever titled the piece is obviously “naming with an agenda”, just like the neo-cons do with their “wars” on drugs and “terror”. Very sad company in which to find yourself.

You, Schiff, Faber, et. al. should all just admit that: one, you were wrong about the inflation, and, two, that your model is flawed. Then start figuring out what is actually true.

You can start with this: before Cain (and his people) started “mixing labor” with the land, Abel (and his people) lived off that land and required free access to all of it to maintain their way of life. Having stolen Abel’s land, Cain’s descendants (that would be us) can never claim “just acquisition”, therefore there is NO “justly acquired” property. Not ever, not anywhere.
You can also figure out that even with gold-backed money we had fractional-reserve requirements on banks which is what leads to the leveraging that creates the booms and busts (and we had MANY devastating depressions while under the gold standard; gold’s main function has always been to make a currency unprofitable to counterfeit, but we have modern technology today that can do the same thing far less expensively).

If you had totally fiat currency (think “ration coupons”) and took out each month exactly as much as you put in (something we could easily do today with modern technology), you would NEVER have inflation, so obviously whether the currency is specie-backed or not is not what leads to inflation and is not the actual problem that has lead to the crash. The actual problem is that ALL land has been privatized by surrepticiously-owned governments (like our own) for the benefit of the surrepticious owners without those governments paying compensation to all the people whose free access to all of that land has been stolen, leading to a chronic condition of there being TOO LITTLE money around (which results in labor being kept as cheap as possible – again, to the benefit of our surrepticious owners). So the opening of the money spigot is just a necessity to keep the cash cows from having an uprising (ya know, like the one called “Shays Rebellion” that scared the banking interests enough to call for – and get – a rewrite the US Constitution).

The following plan addresses and conclusively handles the actual problem by completely revamping the economic resource distribution system that had been able to cover up the actual problem until today (flawed as it always been, the current distribution system passed as a workable system until cybernation technology began eliminating human employment faster than it could be created; the tipping point of human under-employment has been reached and the old system “is a goner”):

1. End the Federal monopoly on money and replace the Federal Reserve’s debt-money with US Government-printed “ration coupon” money backed by the combined property and wealth of the USA. (This new “money” could be completely electronic.)

2. Declare the U.S. National Debt “odious” and payable by the banksters and their representatives in Congress that ran up the tab for the benefit of themselves and their bankster bosses. (This goes all the way back to the 1787 Constitutional Convention, dominated by representatives of banking interests, which created the federal monopoly on money that flew in the face of the decades of economic stability provided by state-issued scrip; of Pennsylvania’s delegates alone, seven of eight, including Benjamin Franklin, were major stockholders in the Bank of North America, and three were BNA board members.)

3. Ration every legal resident $1000 per month of the new money with no qualification or strings attached. Everybody will be able to work and make as much additional money as they want. (For legal residents less than 18 years-old, half the amount should go into a trust, as below.)

In order to not incentivize “octomoms” (or any other prospective baby-farmers), beginning one year after implementation, the money ration of newborns should be held in trust until they reach age 18. The trustee of their account will be held jointly responsible (with their parents) for their proper care until they reach age 18.

4. All income-based federal taxation is replaced by an automaticaly-collected “economic infrastructure maintenance fee” of up to one percent on EVERY electronic debit transfer (whatever is required to keep prices stable; something less than one-half percent will probably prove sufficient). Like with the human body, as long as you take out as much as you put in, there is NO inflation. Cash and barter transactions will be federally untaxed and the U.S. federal government will “self-fund” with the new money. Besides eliminating the IRS and the inherent costs of “tax avoidance behavior”, this fee will also impede price distortions caused by market speculation.

5. The more decision points a system has, the more intelligent the decisions it can devise, therefore, in all other economic matters (besides the furnishing and regulating of liquidity rations “autonomically” by the federal government as described above), free market auction should be “the brain”; central planning is inherently stupid and always makes things worse.

As has been made obvious in recent days, mainly the administrators of a centrally-planned economy wind up helping themselves and their friends to the funds and credit in the national treasury at the expense of everyone else. “Regulation” merely provides the “false sense of security” necessary for the spider to get the fly to drop his guard.

Consequently we will need to get rid of every Federal law, policy or agency that discourages competition, unevenly distributes resources, or hides or socializes risk while privatizing profits (i.e., pretty much all of them), including all taxes on personal and corporate income and all personal and corporate subsidies (including all Minimum Wage laws, grants, tariffs, etc.).

6. Our current Constitution being “self-defining” (that is, the government gets to appoint the people who decide what the the words of the constitution actually MEAN; “self-definition” – also known as “lying” – is the defining characteristic of ALL National Socialists such as the German Nazis, and the American neo-cons, Federalists, and all other bank-backed U.S. political parties including today’s Republicans and Democrats), we will also need to replace the current U.S. Constitution with one with “some teeth in it”. For example, it should define all the terms it uses (like “person”) within the constitution itself rather than have those terms be totally subject to the political whim of the day.

Just for starters, the above plan will improve things regarding unemployment, poverty, crime, healthcare, urban blight, rural living affordability, childcare, etc., and will diminish incentives for crime, wars, illegal immigration, market volatility and speculation.

People in other countries will want to implement this plan once they see it working. We could offer statehood to countries that are willing to apply for it. (We already did this with Texas, so there is precedent.)

Everybody gets the same “bailout” amount, everybody pays the same percentage…and everybody’s balance sheet gets improved without specifically rewarding those who took the “free call option on rising real estate prices” bait.

Cars get sold or leased again and banks get people to whom to lend. On the other hand, no specific bailouts should be done just because a particular industry has costs that are too high for them to be market-competitive, and weak or broke banks and companies need to be bought up by the few still-strong ones or by private equity (rather than by the government).

Simple, fair, effective…and we will keep on “trending down” until something like it gets implemented.

Alan

P.S. The above may require the creation of a new political party that runs candidates who back this plan and who also DO NOT TAKE ANY MONEY FROM ANYONE. The party will have to handle all campaign expenses. If a politician takes “a little money” where does it stop? If we ever want to get our political system back, voting for people that “do not take money at all” has to become “the thing to do”. The only way we can expect to compete with the banks is by changing the game.

My Comment

OK…this will have to take place between dragging some machinery around and some house guests…so I will put things down as they occur. Before looking at specifics, just two philosophical “wonderings”:

1. I have a problem with anyone thinking “the economy”can be fixed.. Nothing wrong with a term like “economy” as a useful shorthand for a complex whole but grossly misleading if it allows us to think we can “fix” it. This relates back to the post Mike Martin sent about thinking of the economy as a machine rather than an ecological system.

2.  I also wonder if the assumption that anyone has to fix what’s happening isn’t mistaken. Things can get better on their own without programs or plans on a macro level. That is, the problems we might end up creating with any program might be worse than what we would have without them.  I think a micro approach is a better (and more individualistic) approach.  That is, each person finds the best way to empower themselves, using existing tools and resources…..

3. Undo, before do...

More later on the specifics.

OK, Lila here.

Just found a good weight machine for $250. The seller was going through bankruptcy, job loss and other misfortunes, which I will refrain from making the subject of a blog post. I felt for him and at the same time was rubbing my hands in childish glee at the bargain I’d got (actually, he wasn’t selling at a loss, either, so my guilt was wasted. He’d paid exactly the same sum two years ago, had never really had time to use it, and now needed the money more than the machine).

The point of this digression is to show you that even a simple transaction can be seen in a number of ways – depending on where you’re standing. Think about it.

1) Obviously, his need was my gain.

2) Obviously, also, my gain did not subtract from his well being, but added to it; it improved his situation.

3) Not only that, it oiled the wheels for a future win-win transaction between us, since I feel well disposed toward him and also – quite unnecessarily – irrationally guilty to be taking something from him, even if I’m paying for it. That guilt means that when I start on an upcoming project, I will almost certainly turn to him for help.

3) Now I probably wouldn’t have thought of using someone for this project at all, if I hadn’t made a good deal now. That wouldn’t be because I didn’t have the money or didn’t need the extra help, but because it’ s human nature to restrict expenditure when things look bad. I’d have felt (again, irrationally) that I should be doing things myself and saving. But having already saved on this transaction, I’d feel I’d “made out” and that little impetus would encourage me to reward myself with a treat – a little extra help……which translates into work for an unemployed man. He, in turn, feels better for having parted with something without making a profit on it and eases up on any slight resentment he might be feeling (also, irrationally) toward me.

So what does this have to do with anything?

Just this. Even the smallest transaction is a complex affair.  Even when it’s engaged in with as much rational self-interest as human beings can muster,  it’s fraught with irrational consequences. The repercussions can hardly be foreseen, being so complex and extensive.  Now think of the huge, unbelievably convoluted set of events in the financial world today, and it’s fairly certain that any sense we might have of where things will go from here has to be haphazard…..and any plan or program to change it even more so…..and any assurance that the change will be to the good fleeting at best…

( Despite the negative response it seems to be provoking  and despite my own caveats, I still think this scheme has some merit. I might be wrong, of course, or simply ignorant of all the implications).

Last update: OK –  I think this has become rather convoluted, so I’ll take it to a new post….

A Response From Naomi Wolf To My Post

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From the Comments on my post, “Naomi Wolf and Fiat Law” (which I’ve since corrected)

  • naomi wolf said…

    9

    Naomi W here — I am a big believer in crediting sources. I have not read your work before now. But I do want to note that the quote you use and attribute to me is actually a quote from Michael Ratner of the Center for Constitutional Rights. I was interviewing him in that piece.

    But it is always good to have crosspartisan dialogue and I will certainly explore your work — yours Naomi

    04/6/09 11:29 PM | Comment Link Edit This

  • Lila said…

    10

    Ms. Wolf –

    I stand corrected.

    And I apologize for the mistake (and have immediately corrected it), although I think it doesn’t alter my larger point about memes
    Lila R

Surveillance State: UK Total Email Archive

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In the news:

“In a move that even the most nonchalant of privacy advocates is crying foul over, the UK has put into effect a European Union directive which mandates the archival of information regarding virtually all internet traffic for the next 12 months. The program formally goes into effect today.In the news:

“The data retention rules require the archival of all email traffic (the identities of the sender and receiver, but not the contents of the messages), records of VOIP telephone calls (traditional phone calls are already monitored), and information about every website visited by any computer user in the country. The rules are being pushed down “across the board to even the smallest company,” as every ISP large or small will be required to collect and store the data. That data will then be accessible — to fight “crime and terrorism,” of course — by “hundreds of public bodies” to investigate whatever crimes they see fit.

Technically the new directive applies to all countries of the EU, but individual nations appear to be complying with the rules to various degrees. Privacy-obsessed Sweden is reportedly ignoring the rule completely, for example….”

More here on the launching of a UK program to archive all email.

My Comment

My opinion of Swedish “socialism” rises by the day.  First, we found out they didn’t nationalize their banks; then they refused to bail out their auto industry; now they’re giving the finger to the latest mind-boggling intrusion into privacy….

Rutherford Show April 6, 12: 30 est

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I’ll be talking to Dave Rutherford today   (Monday April 6th at 12:30 pm Eastern Time) on the Rutherford Show on Corus Radio Network, which is the CNN Radio Affiliate in Canada, about civil unrest during the economic downturn, based on an article that ran in a Canadian newspaper.

http://business.theglobeandmail.com/servlet/story/RTGAM.20090326.wunrest26/BNStory/Business/home

 

The Rutherford Show

403.444.4357

www.am770chqr.com and www.630ched.com

 

Pentagon Lifts Media Ban On War Dead

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In the news today:

“DOVER AIR FORCE BASE, Del. – The Pentagon’s 18-year ban on media covering the return of fallen U.S. service members ended with a solemn ceremony for the arrival of a flag-draped casket of an airman felled in Afghanistan.

After receiving permission from family members, the military opened Dover Air Force Base in Delaware to the media Sunday night for the return of the body of Air Force Staff Sgt. Phillip Myers of Hopewell, Va.”

 More here.

My Comment

Very interesting to me that they lift this media ban just now.  After 18 years (since Gulf War I).

Why? Maybe it’s done for the highest motives.

Maybe, just maybe, it’s done to distract from coverage of worker unrest and channel emotions elsewhere.

I’m glad the ban is lifted. But let’s hope the media is savvy enough not to disconnect these two things: the war dead and the working wounded.

It’s the same war. It’s state machinery in the service of a small group of financiers attacking free markets and free society.

FBI Not Going After the Lenders

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In the news today:

“There was the appearance of fraud or misrepresentation in almost every file,” Fitch Investors declared in late 2007 after reviewing nonperforming subprime MBS (the same stuff they, S&P and Moody’s rated triple-A).

Black estimates there are as many as 500,000 cases of mortgage fraud that need to be investigated. Furthermore, such extensive mortgage fraud led to accounting fraud, which led to securities fraud at any/all publicly traded mortgage lenders. As with the FBI, the SEC was “completely ineffective” in stopping such crimes, much less investigating them now, he says.

“Among the biggest mortgage lenders, IndyMac was put into FDIC receivership, Countrywide was acquired by Bank of America, Golden West was acquired by Wachovia, and WaMu was ultimately acquired by JPMorgan.

This is relevant because the government’s current practice of keeping banks’ senior management and boards intact (unlike, say GM’s) is effectively prohibiting any investigation of possible (likely) wrongdoing at those firms.

It is for these reasons Black says the FBI’s current level of 800 cases per year is “no longer symbolic prosecutions, it’s shambolic prosecutions….”

More here.

Comment

Why isn’t  the FBI on the case? Why don’t we have criminal convictions at a higher level? Note: 80% of the fraud is not from the borrowers, they say, but from the lenders. 

This is exactly the point I made arguing against nationalization. All it does is prevent investigation. And it makes the government (i.e., the public, that is, you) responsible for the banks’ losses.  Stick your fingers into your ears and close your eyes and don’t listen to the siren call of the state…..offering anything...forget it.

AIG Is A Criminal Scam (Update)

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Karl Denninger quotes AIG investigators:

“In fact, our investigation suggests that by the time AIG had entered the CDS fray in a serious way more than five years ago, the firm was already doomed. No longer able to prop up its earnings using reinsurance because of growing scrutiny from state insurance regulators and federal law enforcement agencies, AIG’s foray into CDS was really the grand finale. AIG was a Ponzi scheme plain and simple, yet the Obama Administration still thinks of AIG as a real company that simply took excessive risks. No, to us what the fraud Bernard Madoff is to individual investors, AIG is to the global financial community.As with the phony reinsurance contracts that AIG and other insurers wrote for decades, when AIG wrote hundreds of billions of dollars in CDS contracts, neither AIG nor the counterparties believed that the CDS would ever be paid. Indeed, one source with personal knowledge of the matter suggests that there may be emails and actual side letters between AIG and its counterparties that could prove conclusively that AIG never intended to pay out on any of its CDS contracts.

(Karl Denninger talking) Read that folks. Then read it again. Then read it AGAIN. More excerpts:

There are two basic problems with side letters. First, they are a criminal act, a fraud that usually carries the full weight of an “A” felony in many jurisdictions. Second, once the side letter is discovered by a persistent auditor or regulator examining the buyer of protection, the transaction becomes worthless. You paid $6 million to AIG to shift risk via the reinsurance, but the side letter makes clear that the transaction is a fraud and you lose any benefit that the apparent risk shifting might have provided.

(Denninger) And finally, the last nail in the coffin:

The key point is that neither the public, the Fed nor the Treasury seem to understand is that the CDS contracts written by AIG with these various non-insurers around the world were shams – with no correlation between “fees” paid and the risk assumed. These were not valid contracts as Fed Chairman Ben Bernanke, Treasury Secretary Geithner and Economic policy guru Larry Summers claim, but rather acts of criminal fraud meant to manipulate the capital positions and earnings of financial companies around the world.

Indeed, our sources as well as press reports suggest that the CDS contracts written by AIG may have included side letters, often in the form of emails rather than formal letters, that essentially violated the ISDA agreements and show that the true, economic reality of these contracts was fraud plain and simple. Unfortunately, by not moving to seize AIG immediately last year when the scandal broke, the Fed and Treasury may have given the AIG managers time to destroy much of the evidence of criminal wrongdoing.

Only when we understand how AIG came to be involved in CDS and the fact that this seemingly illegal activity was simply an extension of the reinsurance/side letter shell game scam that AIG, Gen Re and others conducted for many years before will we understand what needs to be done with AIG, namely liquidation. Seen in this context, the payments made to AIG by the Fed and Treasury, which were then passed-through to dealers such as Goldman Sachs (NYSE:GS), can only be viewed as an illegal taking that must be reversed once the US Trustee for the Federal Bankruptcy Court for the Southern District of New York is in control of AIG’s operations….”

That’s a post by Karl Denninger, citing comments by AIG investigators

My Comment

Well.. finally some people are catching on. It’s ALL a scam, folks. One gigantic ball of criminality. Told you so.

All this high falutin’ stuff about who’s going to fix what when is nothing more than jive talk to cover up for crime. I’ve always said that.   Here in June 2006, here in July 2006   On September 19 2008 and  September 30, 2008  and this year again,  and again and again.

These folks live in each other’s pockets, buy each other’s businesses, swap each other’s debts…. and crimes…..  We have a mafia in power. All this talk about fixing this and fixing that is beside the point…and misleading. There’s a fix alright. It’s the fix cooked up by the regulators, the bankers, and the politicians.

What we really need now is the FBI busting in and handcuffing people and dragging them off to sticky little jail cells where they can be subjected to all forms of inquiry within the law.

We’ve been saying this till our throat hurts.

But, of course, we weren’t the right sort (well-connected Wall Street money manager), and no one paid any attention…and now it’s a bit late. The paper trail has probably gone cold.

But atta boy, anyway, Karl.

Update: Apparently, this post confused a number of people.

James Klicker writes to let me know that Ritholz’s post is what Denninger is riffing off.

Let me clarify. The post above is Karl Denninger’s commentary on a post by Barry Ritholz (of The Big Picture).  However,  my interest was not in the fact of AIG’s criminality (Ritholz’s post), but in Denninger’s forthright reaction.

Compare it to the wussy cover-up for AIG’s chief executives, especially Hank Greenberg, which a lot of people seem to favor.

AIG’s criminality has been known for a long time. I wrote about it on September 19, 2008, purely on what I’d gathered from skimming off-shore newsletters, which had been documenting the criminality in the company since the 1980s. My interest is less in AIG’s criminality (which is so obvious you’d have to be wilfully blind not to notice) but why it is that so many people rushed to claim niceties of contract law for a company whose contracts were obviously fraudulent to begin with. Sounds like the usual media deflection…

Media-Trix: The Partisan Press…

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“In the 1980s, the rise of the right-wing Likud government in Israel brought to the surface a long held but submerged desire among many hard-line Israelis to expel Palestinians from their land under cover of a larger war, one that would destabilize the Middle East and fragment the Arab states……..

Such a widespread Middle Eastern War was not regarded as in the national interest by Israeli realists or by Americans, who were prepared to let Saddam Hussein’s Iraq remain, as it was providing the balance to Iran and regional stability Yehoshafat Harkabi, an expert in Israeli foreign policy, dismissed the Pax Israelica, concluding that Israel had not enough power to succeed on such a grand scale, when it had failed in Lebanon against the weakest Arab state. (64)……..

In 1990, as the Cold War came to an end, this campaign to capture public opinion and government policy for the right commenced openly, deploying the language of cultural or religious war and manipulating public opinion through the strategic use of propaganda in the media, think-tanks, and opinion journals. Leading it was the prominent neo-conservative Richard Perle, who set up the Committee for Peace and Security in the Gulf to promote a war against Saddam Hussein. ……….

It is not “Jewish consciousness” that spontaneously drives Israeli settlements, but rather specific forces that have orchestrated that consciousness.

The proof for this lies in a 1990 National Jewish Population Study that found that 52% of Jews in the US married in the five years preceding the study had married a non-Jew and indicated that a very large and increasing proportion of the Jewish population was actually disconnected from involvement in its heritage.(69)

It was two Orthodox programs, the Lubavitch Hasidic and the Aish Ha Torah, that first challenged this assimilation.  I have already noted some of Aish Ha Torah’s activities in relation to CACI. The Lubavitch, a branch of Orthodox Hasidic Judaism (part of the Haredi with whom they share a virulent Jewish chauvinism), are also highly praised in the American media, for instance by  New York Times religion editor Peter Steinfels, (70) although they are criticized by many Orthodox themselves and although some of  their web sites decry Jesus Christ virulently (71) and suggest that that the true Messiah is the 7th  Lubavitch, Rabbi Menachem Schneerson, who has stated controversially,

“This is what needs to be said about the body: the body of a Jewish person is of a totally different quality from the body of [members] of all nations of the world … A non-Jew’s entire reality is only vanity.” (72)……..

Before his death in 1995, Schneerson, whose birthday was made into Education Day by President Reagan, greatly expanded Lubavitch outreach and influence in politics in the US (76) and Israel and on Jewish studies world-wide. Among other prominent US backers of the Lubavitchers on Capitol Hill are Senator Joseph Lieberman (D.Conn.), chairman of the Senate Armed Services Committee, Sen. Carl Levin (D-Mich.), Assistant Secretary of Defense, Paul D. Wolfowitz, the Comptroller of the US Department of Defense, Dov Zakheim, an ordained Orthodox rabbi and former Comptroller of the Pentagon, and Stuart Eizenstat, former Deputy Treasury Secretary.

Billionaire gold and diamond magnate, Joseph Gutnick of Australia, who credits Schneerson with directing him where to mine, was subsequently appointed by Schneerson as his main representative to the Israeli government. Gutnick, who was instrumental in the election of Benjamin Netanyahu as prime minister of Israel in 1996, is also a Hasidic rabbi. (77)

The movement of such right-wing groups to the center and the creation of a “Jewish consciousness” can be significantly attributed to the Mega Group, convened in 1991 by Rabbi Lurie under Leslie Wexler, CEO of Victoria’s Secret, and Charles Bronfman, a top executive of Seagrams Corporation. At first it was made up of some 20 Jewish billionaires, including  Bronfman’s brother Edgar, Chairman of the World Jewish Congress; Harvey Meyerhoff, the Baltimore real estate magnate; Laurence Tisch of Loews Corp.; Hollywood mogul, Stephen Spielberg; Max Fisher, a Detroit oilman; Max Lender of Lender Bagels; and Leonard Abramson, the founder of U.S. Healthcare, (78).

Initially the object was simply to raise money quickly for Operation Exodus, which  was United Jewish Appeal’s billion-dollar campaign for Soviet Jewish emigration. Mega Group members dominate the board of trustees of the Washington Institute for Near East Policy (WINEP), the pro-Israeli think-tank in Washington, that has been campaigning for an Iraq war as a the centerpiece of  a “war against terrorism.” Both JINSA and Frank Gaffney’s Center for Security Policy are heavily underwritten by Irving Moskowitz, a right-wing Zionist business magnate and JINSA board member who has lavishly financed the establishment of several religious settlements in Arab East Jerusalem. (79) Among the Mega Group’s institutional bases are the World Jewish Congress, the Conference of Presidents of Major Jewish American Organizations, and the United Jewish Fund, a recent merger of the major American and Canadian Jewish charities. Disbursing annual gross contributions of nearly $3 billion, Mega is now one of the most powerful concentrations of Jewish charitable giving, overshadowing even the traditional giant UJA. (80) The most important of Mega’s high-profile Jewish programs is Birthright Israel, which promotes trips to Israel for youth. Members of  “Mega” have financed the candidacies of every Likud prime minister, including of course, Sharon. (81) It was under the wing of Mega that many of the prominent neo-conservatives of the Bush administration have come to power……….

….In 1996 another  group of neo-conservatives, also with ties to the Likud, prepared a report for Netanyahu, then Likud prime minister. Headed by Perle, the group included among others Feith,  David Wurmser of the American Enterprise Institute and his wife Meyrav, ensconced both at the right-wing Hudson Institute and the Middle East Media Research Institute (MEMRI). ……….

There were also calculated and far-sighted inroads through espionage into US defense policy. Again, this espionage is intimately bound up with government contracting and is, in effect, industrial espionage for the defense industry. Leading neo-conservative Richard Perle, who was caught spying for Israel while working as an aid to Senator “Scoop” Jackson in 1970, went on without reprimand to maintain a revolving door between work for Israeli defense firms and for the U.S. government, even being placed in charge of international security policy in 1982. In that position, he was able to circumvent protocol and hire two other pro-Israeli functionaries who had earlier had their security clearances revoked for espionage, Stephen Bryen and Michael Ledeen. In 1982, Douglas Feith was investigated over allegations that he had handed over secret documents to the Israeli embassy, but after being fired from the NSC,  was nevertheless hired back by Perle. On  leaving the Pentagon in 1986, Feith promptly started a law firm in Israel. In 1987, the most famous spy of them all, Jonathan Pollard, a U.S. Navy intelligence analyst, was imprisoned for life for selling a roomful of U.S. secret documents to Israel. (88)

….. In March 2000, Wall Street’s high-tech index Nasdaq fell, taking with it the highly speculative markets in the US and Israeli that had made the rich much richer, but had also ruined labor-intensive industries and spawned a dispossessed underclass in Israel. (89) The neo-conservatives were also simultaneously faced with the prospect of the lifting of the decade-long sanctions on Iraq. This was presaged by French and Russian plans to break the air ban that fall and the decision by Hugo Chavez, Venezuela’s independent-minded President, to visit Iraq as part of a tour of OPEC nations designed to strengthen the oil cartel as a global force. Chavez also convened an OPEC Heads of State summit in Caracas, the first of its kind since 1975 and challenged wealthier nations to assume responsibility for what he called a manufactured oil crisis. (90)

These developments were the impetus for the now famous policy paper calling for American world domination, released in September 2000 by the Project for the New American Century, Rebuilding America’s Defences: Strategies, Forces And Resources For A New Century. The PNAC Statement of Principles was signed by Cheney, Wolfowitz, and Rumsfeld, as well as by Eliot Abrams, Jeb Bush, Zalmay Khalilzad, and many others.

With the prospect of Saddam rising from the ashes, things began to heat up. Two interesting meetings took place —  Martin Indyk, US ambassador to Israel met without authorization in August with the former head of the Mossad, Ephraim Halevy, in the process triggering a CIA probe that suspended his security clearance; at the same time, Mega member, Ronald Lauder of cosmetic giant Estee Lauder, a major financial backer of Sharon, met with Sharon in September 2000 during the fragile peace process unfolding under Prime Minister, Ehud Barak. Apparently these meetings set the stage for Sharon’s visits to the Islamic holy sites on the Temple Mount/al-Haram al-Sharif in Jerusalem, accompanied by armed security guards. It was seen by many as a staged provocation. The Palestinians, disillusioned by the concessions that had won them no part of the global pie, exploded that fall in the Second Intifada.

Then, at the end of the year, Saddam Hussein switched the reserve currency of Iraq from the dollar to the euro. At the time it was a purely political move, as the euro was low, but a warning was sounded in DC……..

In February, the instability that resulted in the region gave Sharon and the right-wing a landslide victory. During the course of the year, for the first time since 1953, Israel’s GDP actually fell. Immediately, Sharon launched a propaganda offensive inside the United States, aimed at winning American support for his plans to overturn the Mid-East peace process. One prong of the offensive consisted in hiring two U.S. public relations firms- Rubenstein Associates and Morris, Carrick, and Guma – to promote Israeli government propaganda in the media and government circles in the US. (91)

“We don’t want to be seen as the Sanhedrin,” insists Mega’s Charles Bronfman. But, in fact, it is clear that Mega was part of a calculated promotion of religious sentiment that enabled the rise of a right-wing government in Israel that would enact the policies that the elites favored, ultimately for financial reasons as much as religious ones. The other prong of the pro-Sharon propaganda offensive, a think-tank, was created jointly by Mega members,  Abramson, Edgar Bronfman, and hedge-fund manager Michael Steinhardt (owner of the New Republic), and the Israeli government. (92) It was named Emet, the three letters representing  the beginning, middle and end of the alef-beit (the Hebrew Alphabet) and literally meaning truth, but a truth with a specialized meaning –  Emet is the realization (the end) of God’s primordial will (the beginning) in his Creation (that is in the physical world).

Even before the Israeli government, however, it was the Israeli lobby in the US which was consulted…………

Emet at first lacked focus and was not very successful. But then came 9/11 and it was transformed. It became the very effective Foundation for the Defense of Democracies, which claimed to be a non-profit and a non-partisan group dedicated to eradicating international terrorism. FDD targeted its advertising at Washington, the Hamptons, and college campuses, even establishing fellowship programs that took 52 undergraduates and 19 professors to Israel in 2002, ostensibly to study the effects of terrorism first-hand. But far from being apolitical, FDD was a front for right-wing politics: its president, Clifford May, is a former Republican National Committee PR man while Vice-President, Nir Boms, is an academic liaison for the Israeli Embassy in Washington and has served in the Israeli Defense Forces. The $3 million annual budget comes mainly from Mega with Bronfman, Steinhardt, and Home Depot co-founder Bernard Marcus each giving  $250,000 in 2002. (94)

Despite the claim to be anti-terrorist, one FDD official, Dr. Walid Phares, is closely associated with the Pro-Israel Lebanese militia, Guardians of the Cedar, and materials from the Israeli terrorist group Kach have been found on the website of another……

The American media is already an easy mark for such control because of its corporate character. Music, film, and TV production, cable and satellite channel ownership, and book and magazine publishing are all controlled by about fifty firms, of which about ten completely dominate most of the areas. According to one expert, only ten media giants – AOL Time Warner, Disney, General Electric, News Corporation, Viacom, Vivendi, Sony, Bertelsmann, AT&T and Liberty Media  – control most of what is viewed and read in the US, even on internet. (95) Because of the concentrated control of this oligopoly, what competition for viewers does remain fosters unhealthy sensationalism instead of more insightful or comprehensive coverage……

Add to these institutional flaws, the domination of the Zionist lobby’s powerful machinery, and it becomes clear why reporting on the Middle East in general and American foreign policy there is thoroughly biased. Even without Emet’s public relations work, the media is completely dominated by pro-Israeli writers. Eric Alterman, a Nation columnist, lists the commentators and publications in America that can be counted on to be reflexively pro-Israel and then points out that are were less than half a dozen on the left who were reflexively pro-Palestinian in the same way(99)…..

In the mid 1970s Si Kenen, editor of the AIPAC-affiliated Near East Report based in Washington, DC, started a column, The Monitor, to clarify “controversial issues and to expose negative propaganda.”(101) One of NER’s main targets was the team of Rowland Evans and Robert Novak, whose column was syndicated in about 250 American cities. When the columns contained errors about Israel, Kenen would orchestrate a letter-writing campaign to the papers carrying the columns. Eventually, Evans and Novak stopped writing on the Middle East for several years.Similarly the pro-Israeli watchdog groups, CAMERA (Committee for Accuracy in Middle East Reporting in America) and FLAME (Facts and Logic About the Middle East), intimidate print or TV journalists who dare contradict the official line on the Middle East. CAMERA has repeatedly confronted and attacked CNN, PBS, and NPR for their reporting and has pursued aggressive tactics against book stores and college libraries, indicting even the National Geographic, Encyclopedia of the Modern Middle East, Webster’s New World Encyclopedia and the Encyclopedia Britannica for “unabashed inventions.” (102)……

A propaganda network, a culture permeated with self-deceiving exceptionalism and obsessed with domestic cultural divisions, a language of bureaucratic normalization and contextual distortion, and the commercial nature of the mass media – these are the reasons why the torture story stayed on the sidelines for two years before surfacing. They are also the reasons why the story has disappeared as suddenly as it surfaced….”

My Comment

That’s part of a chapter from The Language of Empire that got cut out of the original book. I’m putting it up on the website as it contains a lot of research and background helpful to understanding how the media works today.

Read the whole chapter by clicking the button Media Control (LOE) at the top of the blog, or on the side. Note: The excerpt above has long sections cut out.