Author Archives: Lila

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.

Egoism Versus Altruism

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A short excerpt from Ayn Rand:

“Men have been taught that the ego is the synonym of evil, and selflessness the ideal of virtue. But the creator is the egoist in the absolute sense, and the selfless man is the one who does not think, feel, judge or act. These are functions of the self.

Here the basic reversal is most deadly. The issue has been perverted and man has been left no alternative—and no freedom. As poles of good and evil, he was offered two conceptions: egoism and altruism. Egoism was held to mean the sacrifice of others to self. Altruism—the sacrifice of self to others. This tied man irrevocably to other men and left him nothing but a choice of pain: his own pain borne for the sake of others or pain inflicted upon others for the sake of self. When it was added that man must find joy in self-immolation, the trap was closed. Man was forced to accept masochism as his ideal—under the threat that sadism was his only alternative. This was the greatest fraud ever perpetrated on mankind.

This was the device by which dependence and suffering were perpetuated as fundamentals of life.”
— Ayn Rand  in The Soul of An Individualist

My Comment

To forestall the superficial and misleading view that Rand was advocating  Gordon Gekko style greed (she wasn’t) or crude selfishness (she wasn’t),  read through this extended criticism of those readings of Rand.

Rand is Nietzschean. She gets a number of things wrong, yes.  But to believe that her rewriting of morality, her overturning of Christian ethics was on behalf of enslavement to the vices, is, I think wrong, although it’s a widespread error.

Like Nietzsche, but less successfully (in my opinion) Rand was really trying to envision a new morality.  Actually, I would say it’s not really a new morality.  It’s a return to an old pagan one – of  virtu rather than virtue  –  a return to techne (meaning excellence, skill, self-transcendence, or mastery) as the moral center of a being, an inward-directed moral center.

This she contrasts with what she, like Nietzsche, calls the slave mentality, the other directed mentality of Christianity.

As anyone formulating a new turn and a break from so powerful a forebear, Rand overstates her case and is sometimes ungenerous to her predecessor. But it’s wrong, I think, to call her an advocate of  “selfishness” of the Wall Street bankster variety.

Summers and Roubini Tie-In Confirmed

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Thanks to Robert Wenzel for pointing me to this confirmation of my own previously expressed feeling that Nouriel Roubini was one of the “designated” doom-and-gloomers (not that I think he’s wrong necessarily, but how come everyone of them comes out of the Stern School of Business in New York, or has World Bank or IMF backgrounds, or worked for Goldman Sachs, or studied with Larry Summers….

You don’t suppose that’s all accidental, do you?)

Summers Was Paid $5.2 Million in Past Year by Hedge Fund; Owned “Asset” in Nouriel Roubini Firm

Top White House economic adviser Lawrence Summers received about $5.2 million over the past year in compensation from hedge fund D.E. Shaw, and also received hundreds of thousands of dollars in speaking fees from major financial institutions and other organzations.

A financial disclosure form released by the White House Friday afternoon (Friday afternoon. Got that?) and first reported on by WSJ shows that Summers made frequent appearances before Wall Street firms including J.P. Morgan, Citigroup, Goldman Sachs and Lehman Brothers.

In total, Summers made a total of about 40 speaking appearances to financial sector firms and other places, with fees totaling about $2.77 million. Fees ranged from $10,000 for a Yale University speech to $135,000 for an appearance paid for by Goldman Sachs & Co.

Probably the most curious item on the disclosure form is that Summers appears to have owned stock in Nouriel Roubini’s firm Roubini Global Economics. Summers shows that before he joined the White House he sold an asset in Roubini Global Economics for a capital gain of between $15,0000 [sic] and $50,000. Strongly suggesting that Summers had an equity position in the firm. The form also shows that he was an advisor to the board of Nouriel’s RGE Monitor and that he recieved advisory board compensation of $147,500 from Roubini Global Economics.

Given these new disclosures, it is interesting to note Roubini’s recent comment to NYT:

Mr. Roubini believes that the Treasury’s plan does not preclude nationalization at all. Rather, he said, it will help to clear the way to full government takeover of some troubled institutions.

“I see the option of nationalization” and the one presented by the Obama administration “as being complementary,” Mr. Roubini said. He believes that the stress tests the government plans on conducting on the banks will reveal which are solvent and which are insolvent.

In his view, those banks that are deemed insolvent will not participate in the toxic-asset plan and will be taken over by the government. Banks deemed solvent will be the ones that get to participate.

Nationalization “is fully on the table for banks that are insolvent,” Mr. Roubini said.

A special shout out goes to Lila Rajiva who has been on to Roubini for sometime and wrote in a comment to an EPJ blog post:

I don’t know what the financial press actually do, besides taking dictation….

By the way, I think Roubini is one of the “designated” doom and gloomers myself…

Comment

No crystal ball or mathematical forecasting ability here, alas. Just trying to tell it like it is without worrying about what people think.  But glad to know I’m not misleading anyone…

MindBody: The Devotional East-West

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My favorite Beatle, George Harrison, playing one of my favorite pop classics, My Sweet Lord. George  always seemed to me to have more musical talent than Paul, and more intellectual and spiritual depth than the rather self-preoccupied John. Here’s a Spanish version I found as well.

The lyrics include the following lines in Sanskrit:

Gurur Brahma, gurur Vishnu, gurur devo Mahesvarah

gurus saksat param Brahma, tasmai sri gurave namah

(The teacher is Brahma, the teacher is Visnu, the teacher is the Lord Mahesvara, Verily the teacher is the supreme Brahman, to that respected teacher I bow down)

What an amazing devotional feeling the music has. And what incredibly open souls these working class boys from Liverpool had that they could go across the globe and create something so different from what they grew up in.

I guess to many people in the West, it brings up negative images of “hippies,” “drop-outs,” Hare Krishna cultists, and so on. An image that is completely counter-cultural (in a negative sense) and Luddite. But that may be the result of speaking only one cultural language.  As an observer with a foot in the east and west (and in a few other places as well), I can feel, almost immediately, the very traditional aspect of this so-called counter-culture – the longing for community, for self-transcendence, for self-discipline,  for rootedness, for leadership based in hierarchy and particularity – everything, which, in a perverted form, ends up making people vulnerable to the mass spectacles of the state, but, in its natural form, makes possible the inward life that the individual and the community both need in order to exist.

Actually, it was ordinary suburban post-WW II culture, shaped by the military, the state, and the CIA, that was anti-traditional, even though it might have worn the outward trappings of family values and religious tradition. It was ultimately only a  whited sepulchre (Matthew 23:27).  There was, in  many cases, nothing inside.

Nature abhors a vacuum. The Beatles and everyone after them began to fill the vacuum from sources (Eastern, mystical, ‘primitive,’ psychedelic, folk) that somehow connected them more intensely to history and tradition than their own dominant culture, from which, therefore, they felt they had to escape.

Wordsworth captured something of the same feeling when he wrote about a very similar move at the turn of the nineteenth-century, from rococo brittleness to the psychological depth of Romanticism. Thus,  in The World Is Too Much With Us:

I ‘d rather be A Pagan suckled in a creed outworn, So might I,
standing on this pleasant lea, Have glimpses that would make me less
forlorn; Have sight of Proteus rising from the sea, Or hear old Triton
blow his wreathed horn.”

On a different level but in the same vein as Harrison’s popular hit, here’s a lesser known masterpiece of devotional feeling,  written by jazz legend JohnMcLaughlin — Lotus Feet of the Lord, played here by Domenico Lafasciano.

I’d like to find a link to the original Mahavishnu version, but here’s another beautiful version, by flamenco virtuoso Paco di Lucia and McLaughlin.

I’ve been playing a lot of these classics, because I’ve been wondering how all that spiritual ferment was sucked out and siphoned off. Where did it go to, that tremendous fusion of eastern and western sensibility, of subconscious and conscious impulses, spiritual and emotional intuitions, social and individual struggles?

I don’t mean artistically….. because it bore plenty of artistic fruit.

But socially…politically…

The Erasure of Memory in The Total State

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“This term “intellectual” having being identified with “liberal”  it scarcely is surprising  that Lionel Trilling discovered no conservative intellectuals; one might as well have sought for carnivorous vegetarians. But actually the man of intellectual strength  need not be alienated from his cultural patrimony  and his society; he may be a member of what Coleridge called the clerisy….

“Because it flourishes upon rootlessness among the masses, the total state  detests and endeavors to obliterate  knowledge of the past. ” A sense of the past is far more basic to the maintenance of freedom than hope for the future… Hence the relentless effort by totalitarian governments to destroy memory…”

— Excerpted, with a long elision, from pages 485-487 of Russell Kirk’s The Conservative Mind.

You’ll find essentially the same argument in The Language of Empire where I argue that commercial news media, advertising, and entertainment (from soap dramas and sports to court-room dramas and pornography) all combine in various ways to fragment and destroy memory, making it easier to impose state propaganda onto public consciousness.  The erasure and manipulation of memory was precisely what was at work in the Abu Ghraib torture – the effacing of cultural identity and sexual identity.

In Klein’s  Shock Doctrine, this argument is appropriated and reversed, and torture becomes the logical outcome of  capitalist profit-seeking, instead of statist power-seeking.

(I’ll be going through the book and compiling the many points of resemblance between her argument and mine, as well as hers and Peter Linebaugh’s and others whom she doesn’t cite).

Again (without making any allegations), I note the following resemblances:

(1) Kubark manual and its connection to Abu Ghraib

(2)  Erasure of memory through terror (shock) in the  population in order to create and impose a new reality. She says the new reality is the capitalist market economy; I argue it’s the propaganda of the state; analysis of the term “rapid dominance”

(3)  Connecting terrorist attacks on New York to terror bombing in Iraq to the shock of torture.

(4) Connecting apocalyptic terror in some forms of Christianity to  emphasis on “terror” in the Promethean (neoconservative) ideology of the Bush administration. She changes my indictment of  neo-conservatism to an indictment of capitalism.

(5) I blame neoconservative ideology and trace its roots to Leninism and to an ideology of power, to Machiavellianism. She blames capitalism and traces its roots to Milton Friedman and Hayek.

(6) In articles preceding my book, I charge that the Asian tsunami might be connected to nuclear testing and state weapons research and allege pre-knowledge and failure to assist on the part of the state.  She connects the tsunami to corporate profiteering.

(7) In an article published before my book, I connect Katrina to the failure of the federal government and the state’s forced gentrification program through housing. She connects Katrina to capitalist profiteering.

(8) I mention Ewan Cameron at a central part of the book. She does too. I connect it to state behavioral modification research. She connects it to the Chicago School of Economics.

(9) I show the similarity of CIA torture techniques to Nazi and to Soviet techniques and to their mind-control programs. She does not mention the Soviets (who were actually ahead of the US on several counts). I need to double check this more carefully.

(10) I notice a repetitive symbolism of towers, which I use to draw attention to a non-monolithic, fragmented reality which the state wishes to  erase  but which resurfaces nonetheless as a “real” of history (drawing on my studies of the writing of Deleuze, a post-structuralist thinker whose work is compatible with individualist and anti-state thinking and with chaos theory and complexity).

I reference Deleuze sub-textually in my first book.

I use a similar technique in “Mobs” – of subtextual linking through imagery.

My book (being my first) had to be written within a word count given to me by my publisher, and it was written as a media text, since they and I did not have the resources/name that would allow me to undertake a larger project. The arguments, though complex and I think convincing, had to be fitted into a shorter  length and into a more academic frame-work. Still, you’ll see all Klein’s main points made in my book, in relation to the state.

Considering that the manuscript and several closely related articles were published in December 2004 – 2005, and given that the book was sent to every major liberal-left opinion journal and outlet, and that Klein began writing her book only in 2004 and published it only in 2007, it’s hard for me to believe that she didn’t see any of it.

I was writing quite a bit for Dissident Voice and Counterpunch then, and she cites Counterpunch on other things.

Check out the dates of my pieces on this site, the number of hits they got, and the reprints. and you’ll see it’s hard to believe a serious researcher on the subject could’ve have missed them.

Another coincidence: the GetAbstract business award which “Mobs” won  in 2008 was previously awarded to Benoit Mandelbrot, who was the father of modern complexity theory, as well as to Nicholas Taleb (2007), whose work also draws on complexity theory. Taleb and Mandelbrot are in fact collaborating on new work.

Now, Klein’s book was recently awarded a newly-created Warwick Prize under the theme “complexity”. The prize was awarded just this year, 2009. Could this be a way to counter the identification of complexity theory with market-based “spontaneous order”?

I have no way of knowing and I’m making no allegations. Merely noting the points of coincidence and wondering aloud….

To be fair, people can arrive at similar ideas and even imagery simultaneously without reading or being influenced directly by each other. And I have a lot of respect for Klein’s antiwar reporting in the Guardian. Hers was a much needed voice. To the extent that Shock Doctrine draws attention to the negative impact of globalization and points out how free trade is “managed” – that’s a very good thing and deserves the widest hearing.

Also, at first glance, the Cato Institute critique which I referenced earlier,  doesn’t seem fair to the book in calling it poorly researched. It seems well-documented, from the number of citations. Of course, I haven’t followed through and pinpointed whether they actually support her text, but there are  plenty of them and of good quality.

There’s also the possibility that she lumped together various people out of pure ignorance (though it’s hard to believe that). It’s quite possible she really doesn’t know the difference between the old right and the new right,  between Friedman, the Austrians, Sachs and Rubin…or perhaps doesn’t think the differences are important enough to matter.

But that would be rather shoddy (and frightening) given that she’s trying to critique capitalism. You’d think it would be a good thing to know what it was first.

Repeal of the Uptick Rule Exacerbated Financial Crash

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The uptick rule prevents traders from selling a stock short, unless it’s on a movement upward of the price (which shows that there are enough buyers for sellers).  It was repealed in July  6, 2007, after an SEC study  (begin in May 2, 2005) showed that it had no statistically significant correlation with greater volatility.

But that study itself, only 6 months in duration and limited to a period of relatively low volatility and up-trending prices, was probably flawed, say many critics. They blame the financial collapse of the banks in 2008, at least in part, to the repeal of the rule.

A later SEC study (from November 2008) now shows the repeal of the rule  (a rule originally enacted in 1934 to prevent just the sort of cascading selling that destroyed the financial industry) did  indeed have a huge effect on the volatility of trading in the markets.

As this piece. suggests, the repeal had a direct and sizable role in exacerbating the sudden bear raids on Bear Stearns and Lehman Brothers in 2008.  The piece references a study by Birinyi Associates in April 2008 on volatility in the market after the repeal.

* The VIX (Volatility Index) went up at once from 13.25 to 23.55

*In the same period the absolute dollar value of the daily change in each stock in the S&P 500 increased from $1.02 to $1.77.

*July 6, 2007 shows an immediate and striking change in volume of stock purchases,  from plus ticks to minus, indicating full-throttle shorting (mostly by hedge funds)

*Bear (with a float of 159,098,000 shares) traded down from $61.58 to $2.84 in 5 trading days (March 14 to March 20) on  volume of 4.2 times its total float. Lehman went down from $16.20 to 15 cents in 5 days on almost 3 times its float.

Critics of the reinstatement of uptick (i.e., supporters of the repeal of uptick) claim that all it does is help politically connected firms. They say that institutional firms and market makers can and do short whenever they want. The uptick rule only prevents the general public from shorting.

OK. If that’s so, the answer is to fix things so that the market-makers play by the same rules as everyone else.

But, actually, I don’t agree with the critics. If you look at the context of what’s happened to the economy to get us to where we are today, you’ll see that each step followed the previous one systematically and purposefully, at least to appearances.

Look at the way things have moved:

First, there was the Kelo decision, allowing eminent domain seizure of property by the government from private owners on behalf of developers (2005). That signaled the end of the housing bubble.

Then there was the failure of the Bush administration to get social security privatized (which would have  let the elites get more ordinary people’s savings into their hands).That meant there was no more money to be pumped into the party.

Then came the repeal of the uptick rule, signaling that everything was in place for a crisis to occur.

Now, take a look at the resume of the chief regulator at this time, SEC Chairman Christopher Cox.

Significant highlights of his career include the following:

* Senior White House Counsel 1986-88.  Advised on the 1987 stock market crash.

*Authored the Private Securities Litigation Reform Act, which protects investors from fraudulent lawsuits

*Chairman of the Committee on Homeland Security

*Chairman of the Task Force on Capital Markets

*17 years in Congress, 10 in the Majority Leadership in the House of Reps.

*28th Chairman of the SEC from June 2, 2005 onward.

*Leadership role in integrating US and overseas regulation of the stock market

* Member of the Federal Housing Finance Oversight Board (2008), which advises the Director of the FHFA on the safety and soundness of Fannie Mae, Freddie Mac, and the Federal Home Loan Banks.

*Member of the Financial Stability Oversight Board that oversees the $700 billion Troubled Assets Relief Program.

Kagawa of Japan On Pulpit Versus Practice

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“There are theologians, preachers and religious leaders, not a few, who think that the essential thing about Christianity is to clothe Christ with forms and formulas. They look with disdain upon those who actually follow Christ and toil and moil, motivated by brotherly love and passion to serve. . .They conceive pulpit religion to be much more refined than movements for the actual realizations of brotherly love among men. . The religion Jesus taught was diametrically the opposite of this. He set up no definitions about God, but taught the actual practical practice of love.”

— Kagawa,  Japanese missionary of the slums

Comment

Kagawa was a socialist and a Christian. He said he was a socialist because he was a Christian.  I respect this socialism, because it’s not funded by the state but came from his own heart and hands, his own sacrifice. That’s real charity. And it’s a world away from the comfortable lives of professional activists and foundations, however well intended.

Sentier 2 and Franco-Israeli Money Laundering

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“SocGen is one of four banks due to appear at the Paris criminal court in the trial known as “Sentier 2”, due to its links with the capital’s Sentier textile district.

The other three banks in the case are HSBC (HSBA.L) unit Societe Marseillaise de Credit (SMC), Barclays France (BARC.L) and National Bank of Pakistan.

SocGen Chairman Daniel Bouton and three other officials at the bank are due to appear at the Paris criminal court in connection with the case.

In July 2006, a French magistrate ruled that more than 130 bankers should face money laundering charges in connection with an alleged cheque scam in the late 1990s.

The alleged money laundering took place between 1996 and 2001 in the Sentier area of the city and involved stolen or fraudulent cheques shuttled between France and Israel…”

From Reuters

 Comments:

Aren’t at least two of these banks counterparties of AIG?