Monday, January 31, 2011

Egyptians, Greeks, Tunisians, British, USA, China and most countries Are All Protesting Against Pillaging of Their Economies

Nomi Prins - former managing director of Goldman Sachs and head of the international analytics group at Bear Stearns in London - notes that the Egyptian people are rebelling against being pillaged by giant, international banks and their own government as much as anything else....

US Mint Sells Absolute Record 6.4 Million Ounces Of Silver In January, 50% More Than Previous Highest Month

She also points out that the Greek, British, Tunisian and other protesters Worldwide are/will be all in the same boat:

The ongoing demonstrations in Egypt are as much, if not more, about the mass deterioration of economic conditions and the harsh result of years of financial deregulation, than the political ideology that some of the media seems more focused on.


According to the CIA's World Fact-book depiction of Egypt's economy, "Cairo from 2004 to 2008 aggressively pursued economic reforms to attract foreign investment and facilitate GDP growth." And, while that was happening, "Despite the relatively high levels of economic growth over the past few years, living conditions for the average Egyptian remain poor."

Unemployment in Egypt is hovering just below the 10% mark, like in the US, though similarly, this figure grossly underestimates underemployment, quality of employment, prospects for employment, and the growing youth population with a dismal job future. Nearly 20% of the country live below the poverty line (compared to 14% and growing in the US) and 10% of the population controls 28% of household income (compared to 30% in the US). [By the most commonly used measure of inequality - the Gini Coefficient - the U.S. has much higher inequality than Egypt]. But, these figures, as in the US, have been accelerating in ways that undermine financial security of the majority of the population, and have been doing so for more than have a decade.

Around 2005, Egypt decided to transform its financial system in order to increase its appeal as a magnet for foreign investment, notably banks and real estate speculators. Egypt reduced cumbersome bureaucracy and regulations around foreign property investment through decree (number 583.) International luxury property firms depicted the country as a mecca (of the tax-haven variety) for property speculation, a country offering no capital gains taxes on real estate transactions, no stamp duty, and no inheritance tax.

But, Egypt's more devastating economic transformation centered around its decision to aggressively sell off its national banks as a matter of foreign and financial policy between 2005 and early 2008 (around the time that US banks were stoking a global sub-prime and other forms-of-debt and leverage oriented crisis). Having opened its real estate to foreign investment and private equity speculation, the next step in the deregulation of the country's banks was spurring international bank takeovers complete with new bank openings, where international banks could begin plowing Egyptians for fees. Citigroup, for example, launched the first Cards reward program in 2005, followed by other banks.

According to an article in Executive Magazine in early 2007, which touted the competitive bidding, acquistion and rebranding of Egyptian banks by foreign banks and growth of foreign M&A action, the biggest bank deal of 2006 was the sale of one of the four largest state-run banks, Bank of Alexandria, to Italian bank, Gruppo Sanpaolo IMI. This, a much larger deal than the 70% acquisition by Greek's Piraeus Bank of the Egyptian Commercial Bank in 2005, one of the first deals to be blessed by the Central Bank of Egypt and the Ministry of Investment that unleashed the sale of Egypt's banking system to the highest international bidders.

The greater the pace of foreign bank influx and take-overs to 'modernize' Egypt's banking system, inevitably the more short-term, "hot" money poured into Egypt. Pieces of Egypt, or its companies, continued to be purchased by foreign conglomerates, trickling off when the global financial crisis brewed full force in 2008, though not before Goldman Sachs Strategic Investments Limited in the UK bought a $70 million chunk of Palm Hills Development SAE, a high-end real estate developer, in March, 2008.

When a country, among other shortcomings, relinquishes its financial system and its population's well-being to the pursuit of 'good deals', there is going to be substantial fallout. The citizens protesting in the streets of Greece, England, Tunisia, Egypt and anywhere else, may be revolting on a national basis against individual leaderships that have shafted them, but they have a common bond; they are revolting against a world besotted with benefiting the powerful and the deal-makers at the expense of ordinary people.

As Joe Weisenthal notes, a survey from Credit Suisse confirms that economic and financial problems are weighing heavily on the Egyptian people:

A recent survey from Credit Suisse on emerging markets -- which you can download here -- sheds some light on how much worse shape Egypt is in compared to other emerging markets.

Here are a few.

First of all, there's a lot of anxiety. Much of the population foresaw worsening conditions over the next six months.


Image: Credit Suisse

Meanwhile, real household income growth has been negative for all income strata.


Image: Credit Suisse

And of course, food is far and away the biggest cost that Egyptians face. So agriculture inflation bites hard.


Image: Credit Suisse

China..... According to an article by Michael Pettis, Chinese living standards are being suppressed by up to 20% to pay for the incompetence of Chinese banks. I’ve got doubts about the 20% figure, but even so, some of the figures in this article are startling...



Finally, It’s the Fed That Has Become Too Big to Fail....

Outrageous and Utterly Corrupt Crooks, thieves and Murderers.....

By Rick Ackerman, Rick's Picks

We’re still not sure whether CNBC was making a joke or simply advertising its ignorance with a recent headline, “Accounting Tweak Could Save Fed from Losses.” This was a tweak about as subtle and ingenuous as Bernie Madoff’s balance sheet. What the central bank did was revise and advantage its own rules so that if some financial catastrophe were to inflict huge losses on the Federal Reserve System, the U.S. Treasury would take the hit, not the Fed itself. Oh, and taxpayers needn’t be concerned about the presumptuousness of this coy arrangement, since the changes provide for the Fed to pay back the losses with future profits. Do we really need to point out to CNBC et al. that any such profits would have to come almost entirely from… interest income on Treasury bills, bonds and notes held by the Fed?

Who would have believed that the nation’s banking system would one day be powered by the feather merchants’ version of a perpetual motion machine, or that the bulk of America’s liquid “wealth” could be stored on a few computer chips no bigger than a piggy-bank’s snout? As we now know, all it takes to pull off this scam is a credulous press, an ignorant Congress, and central bankers so cynical that they actually believe the public is too stupid to understand what’s going on. Thus is Helicopter Ben able to say with a straight face: “Under a scenario in which short-term interest rates rise very significantly, it’s possible that there might come a period where we don’t remit anything to the Treasury for a couple of years. That would be I think a worst-case scenario.” Hello!!!! Are we actually supposed to believe that the day this Zimbabwean twist on quantitative easing is announced, that it won’t send the dollar into a death dive, making Americans poorer by a third, or even half, overnight?

Media Fell for Ol’ Switcheroo....

News reports noted that the Fed rule-change was announced on January 6 but that it took a couple of weeks for its significance to sink in. Significant in what way? In Reuters’ words, it is significant because “It makes [the Fed’s] insolvency much less likely.” This explanation is darkly funny for two reasons. In the first place, by accepting the Fed’s spin at face value, the news media have trained their eagle eye not on the crafty magician’s hands, but on the breasts of his assistant, just as the Fed might have hoped. And second, the notion of insolvency’s being “much less likely” is a blatant cop-out that as much as admits the news media don’t know what the hell the rule change is going to accomplish. They are telling us the Fed’s three-card-Monte switcheroo is significant because it supposedly will protect the Fed against going belly-up. But is that what is significant here? In fact, when the day comes that the Fed is forced to acknowledge the worthlessness of its vast mortgage holdings – a day that is surely coming — even the village idiot will understand that Treasury is powerless to set things right (other than by ginning up hyperinflationary quantities of cash). In the meantime, don’t expect the working press to delve into the actual significance of the “accounting tweak”; for if they were to expose it for the brazen fraud it is, the resulting epiphany of a failing economy with no political route to recovery would be too painful and bewildering to bear.

~ ~ ~

Related: Federal Reserve Balance Sheet Update: Week Of January 26 - $1.129 Trillion In UST Holdings

~ ~ ~

For those whose brains are about to explode from the shock of how a handful of private bankers essentially voted themselves kings and queens of America, check out this clip of Dancing With The Stars Pammy and Hans performing on the Ellen DeGeneres show....

Sunday, January 30, 2011

Medvedev pitches Russian modernization to investors at Davos...

World Government is just a few clicks away....

This is the genius moment in the complicated Fabric... to merge East and West, papering over the great divide with money... We have reached our goals by buying our way with the world, if American capital can safely gain a certain degree of control over Kremlin reactions. Putin and friends know who is behind this wave of "Islamist" terrorism-of Al-CIAda-the same people who have been behind all the "Islamist" terrorism in Russia, 9/11 and the World over ever since.... They know that it was a USA/Israel NEXUS of evil , yet they do not reveal the proof that their investigators must have, to the world....If American money can ensure that American military moves are not exposed by Moscow, for fear that it will cause a rupture in the flow of vital modernization investments, then limited warfare tactics (terrorism) can safely be applied with less chance of accidentally tripping the nuclear trigger.... That is the whole idea behind the "irregular warfare" concept, conduct low-level military operations (terrorism, and Proxy wars), in order to advance the agenda without crossing the nuclear threshold. Fear of what the covert forces (both military and economic) will do next paralyzes the will to react--the essence of terrorist theory... Self-censorship, to avoid more unpleasantness. This is where Medvedev is most valuable to the plotters, giving Russia the means to build on a national scale, while giving America a free pass to push its weight around in the former Soviet countries and the World..., creating hundreds and hundreds of miserable Tribes with Flags...., a Kissengerian concept for the sake of Israel and USA.... If it is safe to buy into Russia, then it is safe to buy into any of Russia's former satellite countries in Eastern Europe, the Greater Middle East, Africa or Asia....

President Dmitry Medvedev identified key priorities of his ambitious plan to modernize Russia in a speech Wednesday at the World Economic Forum in the Swiss resort town of Davos.

Initially, the Russian leader was expected to deliver a keynote speech at Davos and to then attend several panel discussions on the forum’s sidelines. But he decided to cut short his stay owing to the suicide bombing at Moscow’s Domodedovo airport on Monday. He took a flight back home just a few hours after his arrival in Switzerland.

Dmitry Medvedev made Russia’s modernization plan the centerpiece of his speech at Davos to reassure the world’s largest gathering of business leaders that the investment climate in Russia is improving.

“Russia still faces quite a few difficulties in establishing rule of law and building a modern, efficient economy,” he said. “But we are undergoing dramatic changes and we are moving forward.”

Government stakes up for grabs

Medvedev’s message to his audience in Davos was that Russia’s bid to modernize will create new opportunities for doing business in the country.

One of the key priorities will be to privatize large government-owned companies in the financial and energy sectors, as well as some infrastructure assets. Toward this end, the Russian government’s list of strategic enterprises, protected against foreign ownership, has been slashed by 80 percent.

“Minority stakes will be sold off and new portfolio investors will come on board, but the companies will continue to be managed the same way as before,” argues Natalia Orlova, chief economist of Russia’s Alfa Bank. “In other words, this privatization doesn’t involve any major transformations in the structure of the economy or in the behavior of its key players.”

This means that Russia’s government will retain its key role in the national economy even after the planned sell-off of some of its assets.

A special fund will be set up in Russia to help reduce risks posed by foreign investors, notably by introducing co-investment schemes. Under such schemes, intended for up to 10 years, corporate projects will be co-financed by private investors and the government, the Russian business daily Vedomosti reports. At least 20 billion roubles should be raised for the fund to begin with, says the paper, adding that over time the proportion of private investment should considerably surpass that of treasury allocations.

Russian authorities are not going to introduce any additional taxes on the financial sector in an effort to make Moscow a world financial center.

The abolition on January 1, 2011, of the tax on the sale of shares (or the capital gains tax) is expected to give a jolt to foreign investment in Russia. The Russian economy does need foreign capital. Admittedly, though, along with encouraging heavier direct investment (notably, in industrial production), a favorable taxation system may also draw more speculative capital onto the country’s stock exchange.

Investment plus technological expertise

According to Dmitry Medvedev, investors should be excited about the idea of creating a common Eurasian market, spanning the continent from the Atlantic coast to the Pacific, and operating under uniform, clear-cut rules. Russia’s prospective accession to the World Trade Organization and to the Organization for Economic Cooperation and Development will help translate this idea into reality, he said.

The Russian president promised a favorable climate for innovative, high-tech entrepreneurship and venture capital in the country. He pushed his country’s Skolkovo project as the most ambitious international high-tech project. “I’m sure we can expect new global brands to arrive in Russia in the years to come.”

Dmitry Medvedev also stressed the importance of attracting technological expertise. Projects to develop energy efficient technologies and to enhance energy security should become the driving force of Russia’s high-tech sector, he said, inviting foreign partners to contribute.

One striking example of such partnership is a recent deal between the British oil giant BP and Russia’s Rosneft.

“Owing to a high degree of uncertainty and to the constant redistribution of property in the 1990s, Russian petroleum companies now lag some ten years behind in oil recovery technology,” explains Valery Mironov, deputy director of the Russian School of Economics’ Development Center. “Which is why they have to collaborate with foreign companies in offshore recovery and deep-water drilling.”

Expanding broadband Internet across Russia will create greater opportunities for doing business in Russia, Medvedev said. Improved Internet connectivity will also make it easier for the business community to have direct contact with Russian government agencies, thus cutting down on corruption.

Improvements to infrastructure are crucial to modernization and attracting foreign investment, Medvedev said. Russia should make sure its infrastructure is accessible both to the business community and the public at large. Preparations for large-scale international sporting events, such as the Sochi Olympics in 2014 and the FIFA World Cup in 2018, are expected to give an additional boost to infrastructure development in Russia, he said.

Human resources

A competent workforce is extremely importance to investors. Russia has already relaxed its migration laws to encourage qualified foreign professionals to come and work in Russia, and is willing to unilaterally validate foreign university diplomas and academic degrees.

On the other hand, the government expressed willingness to sponsor study-abroad programs for Russians aspiring to become civil servants, scientists and engineers.

Mironov warns, however, that additional investment in personnel training programs may fail to produce the desired effect, speeding up the country’s brain drain instead.

“In order to encourage intellectuals to start their businesses here, in Russia, rather than leave upon completing a free study program, we will need to reduce existing bureaucratic barriers,” he says.

Indeed, the risk of brain drain from Russia is still quite high.

“Developed countries seek to boost exports of industrial products, and demand for qualified engineers is constantly increasing. There are a lot of surveys indicating that developed countries will have to attract engineers from Russia, India and China in the next fifteen years, until they manage to readjust their own education systems.”

The how and the what

Observers say the modernization priorities outlined by President Medvedev at Davos are all potential steps in the right direction, but that there is nothing new about them.

“These points migrate from one speech to the next, but it remains unclear just how they’ll be executed and how the nation’s leadership see the structure of this process as a whole as well as the order in which the unveiled plans should be implemented,” Mironov says.

He holds that in order to dispel foreign investors’ doubts about Russia, it is crucial to understand where this country should be heading. And that any modernization program should come with a clear-cut strategy.

As for Medvedev’s program, in its current form it looks chaotic and disorderly, Mironov claims.

“All the points sound good enough, but it’s unclear if they can be effectively implemented in Russia’s present-day investment climate,” says Natalia Orlova. In her view, the program does not envisage any measures to make the country more competitive. And “without enhancing its competitiveness, it’d be hard to see all the proposed mechanisms functioning properly,” she believes.

Yelena Matrosova, director of the Center for Macroeconomic Studies at the company BDO, suggests that Russia should turn for advice to countries that have successfully modernized their economies. Modernization, according to her, it is not a Russian invention, and all the relevant “recipes” have already been “spelled out.”

After WWII, modernization reforms were pursued in Japan, Germany, the UK, the United States, and China. Russia would be wise to draw on their expertise as it gets down to the task of charting a road-map for its own modernization....

Saturday, January 29, 2011

Inequality In America Is Worse Than In Egypt, Tunisia Or Yemen

[Click for larger image]

Gini Coefficients are like golf - the lower the score, the better (i.e. the more equality).

Egyptian, Tunisian and Yemeni protesters all say that inequality is one of the main reasons they're protesting.

However, the U.S. actually has much greater inequality than in any of those countries.

Specifically, the "Gini Coefficient" - the figure economists use to measure inequality - is higher in the U.S.

According to the CIA World Fact Book, the U.S. is ranked as the 42nd most unequal country in the world, with a Gini Coefficient of 45.

In contrast:

  • Tunisia is ranked the 62nd most unequal country, with a Gini Coefficient of 40.
  • Yemen is ranked 76th most unequal, with a Gini Coefficient of 37.7.
  • And Egypt is ranked as the 90th most unequal country, with a Gini Coefficient of around 34.4.
And inequality in the U.S. has soared in the last couple of years, since the Gini Coefficient was last calculated, so it is undoubtedly currently much higher.

So why are Egyptians rioting, while the Americans are complacent?

Well, Americans - until recently - have been some of the wealthiest people in the world, with most having plenty of comforts (and/or entertainment) and more than enough to eat.

But another reason is that - as Dan Ariely of Duke University and Michael I. Norton of Harvard Business School demonstrate - Americans consistently underestimate the amount of inequality in our nation.

As William Alden wrote last September:

Americans vastly underestimate the degree of wealth inequality in America, and we believe that the distribution should be far more equitable than it actually is, according to a new study.

Or, as the study's authors put it: "All demographic groups -- even those not usually associated with wealth redistribution such as Republicans and the wealthy -- desired a more equal distribution of wealth than the status quo."

The report ... "Building a Better America -- One Wealth Quintile At A Time" by Dan Ariely of Duke University and Michael I. Norton of Harvard Business School ... shows that across ideological, economic and gender groups, Americans thought the richest 20 percent of our society controlled about 59 percent of the wealth, while the real number is closer to 84 percent.

Here's the study:

norton ariely in press -

Thursday, January 27, 2011


For how long is this HUBRIS sustainable by the Flailing Empire.....???

While Billary is flailing about in vein.....

The prairie fire of mass protests in Tunisia continues to burn and shows signs of spreading to Libya, Algeria, Egypt, Jordan, Syria and Yemen.... In Tunisia, protesters want the entire old leadership to be removed, arrested and prosecuted lock, stock and barrel and their illegally-acquired wealth parked in secret bank accounts abroad to be brought back. Saudi Arabia, which has been giving shelter to the discredited despots of the Arab world, has not yet been affected, but it cannot remain unaffected for long. Egypt saw massive protests on January 25 in response to tweeted calls from nowhere and everywhere for observing a day of revolt. Tweets are now calling for a "Day of Anger" as a follow-up on January 28. Libya, Algeria, Jordan and Yemen are seeing the beginnings of a protest movement. Whether the prairie fire continues to spread or subsides would depend on what happens in the coming days in Tunisia, Yemen and Egypt....Syria will not be far behind....

As the cliché goes, every revolution begins with noble intentions and ends up by devouring its own children....and that's exactly what happened to the March 14th Saatchi&Saatchi doctored by the US/Color Revolution in a blatant attempt to use the "fruits" of political assassinations by the Infamous White House Murder INC, in the Levant....
One thing we Lebanese can and should do, is to refrain from supporting elements which stand discredited and which have become the anathema of the people of Lebanon and the World....

2. The developing situation is very confusing. In Tunisia, the Army initially fraternized with the protesters and reportedly refused to act against them. Latest reports say it is concerned over the continuing protests over one issue or the other and might be tempted to intervene and take over power to restore law and order. In Egypt, the Army is still carrying out the orders of President Hosni CIA Mubarak, but for how long....

3. New faces and new voices are emerging across the Arab world to take over the leadership of the protesters. Political and economic causes are behind the protests----despotism, dictatorship, subservience to the ZIOCON Western World, Israeli/US wars in Iraq, Lebanon, Yemen, Somalia and Afghanistan, suppression of the rights of the people, excesses and utter brutality of the security/intelligence forces in dealing with people's movements, unemployment, inflation, corruption, opulence of the leaders etc.

4.One does not know in which direction ---- towards democratization and religious liberalization of the Arab world or towards more Wahhabism and Salafism?---- these new faces and new voices will take their countries forward. Will it mark the beginning of the end of political Islam or will it see a new phase of it? The protesters are not inspired by Al- CIAda or other jihadi organizations, but some traditional Islamic organizations such as the Muslim Brotherhood of Egypt are taking advantage of the bandwagon effect...

5. The West---particularly the USA--- which hailed the East European revolt of the late 1980s and the early 1990s, is concerned because in many places the protesters are targeting Western puppets/surrogates in the leaderships of these countries. The East Europe revolt was beneficial to the West. The Arab revolt, if it succeeds, may not be so.

6. Its political and economic fall-out is unpredictable. What effect on availability of energy to keep the economies of the world going? What effect on the INFLAMED and stupid Western/Zionist ideological campaign against Islam ? What effect on the FAKE and so-called war against terrorism? What impact in Af-Pak region, Iraq and way beyond? US officials are travelling across the countries on fire "advising" the leaders and the security forces to observe restraint in dealing with the protesters.....????

7. The World Economic Forum (WEF) in Davos, which is holding its annual meeting since January 26, has been fiddling while the Arab world is burning. It has created a last-minute panel to discuss Tunisia. Nothing more. Do the protests call for a re-visit of the economic model propagated in the past by the WEF? Many of the business tycoons----particularly from Europe and USA, Canada, Australia---- who have assembled in Davos are the very same people responsible for the economic plight of the Arab protesters. Yet, the sound of silence from Davos is deafening. An obliging Swiss Government has seen to it that there are no inconvenient protests against the WEF in the streets of Davos and Zurich.

8. The protest waves in East Europe had a copy-cat effect ...The protest waves in the Arab world too could have a copy-cat effect....but Where...USA and others next?

" Bankers fund all sides of conflicts Worldwide...."

Except for the Palestinian side...., Why???
That's what the Free loving people are asking, not just in the Arab World, but the World over since 1920....

Meanwhile, the power behind the power in USA and its utterly corrupt politicians continue doing what they do best; Corruption beyond redemption and Greed:

BOMBSHELL REPORT: Goldman Sachs Got Billions From Taxpayers Thru AIG For Its OWN Account, Crisis Panel Finds; Contradicting SWORN Testimony From Execs

"If these allegations are correct, it appears to have been a direct transfer of wealth from the Treasury to Goldman's shareholders," said Joshua Rosner, a bond analyst and managing director at independent research consultancy Graham Fisher & Co., after he was read the relevant section of the report. "The AIG/CIA counterparty bailout, which was spun as necessary to protect the public, seems to have protected the institution at the expense of the public."

AIG is a CIA Front from inception.....


You want Peace, get ready for War....

Message by an Iranian to the Egyptian people:

Brave Egyptians should not settle for anything less than a secular democracy with free and transparent elections where all Egyptians can participate. History has shown that the West is more interested in "false" stability rather than true long-term and lasting democracy and human rights in the Middle East....

Egypt is a few steps short of a disaster. The corrupt, incompetent regime will not survive.

Most likely outcome--- the Generals take charge, announce a reform government, start the process of responding to the injustice and despair of the common citizen. Then the situation staggers along for some period.

Worst outcome the Generals stand with the same gang that has looted the nation--- probably minus Mubarak. Then there is a possible civil war with the soldiers in many cases siding with the people not their officers. The only organized opposition is the Muslim Brotherhood which could then possibly gain power.

Our central US foreign policy concern is the stability of the Peace Treaty with Israel. At the end of the day if required--- we would go to war to prevent the annihilation of the Israelis. This would be a terrible outcome for the entire region.

And--- oh by the way---there is the matter of the Suez Canal and the flow of oil to a Europe with an increasingly ant-Israeli political stance.

We have few good options. The President and Secretary Clinton are carefully walking the line.

This one is important. Egypt is central to peace in the region. Their people have been ill-used by the Mubarak Regime. Watch the enlisted soldiers of the Egyptian Army. If they go with the people--- there will be incredible bloodshed.

General Barry McCaffrey, US (Ret.)

Wednesday, January 26, 2011

Davos, Dakar and a ton of BRICS...

Davos, Dakar and a ton of BRICS...
By Pepe Escobar

What passes for a global elite has just invested in the two-hour drive in the snow from Zurich to Davos in Switzerland for the 2011 World Economic Forum (WEF) - ostensibly to discuss the state of the world under the overarching theme "Shared Norms for the New Reality". One of these norms is "collective sacrifice" - which in the context of the rich and powerful may sound as the ultimate paradox. The mood in Davos is expected to be "somber".

Meanwhile, there's the mirror image of Davos, the gathering by the World Social Forum (WSF) in Dakar, Senegal - ostensibly to discuss in detail the multi-dimensional structural crisis of capitalist globalization. And all this while the BRIC group of emerging powers (Brazil, Russia, India, China) annexes a new member and gets ever more ambitious.

So what does this flurry of activity tells us about the actual state of the world?

I network, therefore I am

As even The Economist admits - without a hint of irony - "the world is a complicated place". Yet don't expect the aristocratic former vice president of the European Commission (EC), Etienne Davignon, dishing out on Davos in the British magazine's 14-page cover story special on "The Rich and the Rest".

A case can be built that Davos offers significant sectors of the so-called "globocrats" the opportunity to buy intellectual seriousness. Essentially these globocrats are politicians, chief executive officers, bankers, hedge fund managers, diplomats and academics, plus U2's Bono, not all of them meritocracy darlings.

Davos though offers an added bonus. A stint does not entail listening to "the rest", that annoying, amorphous entity also known as "the people" - as in drought-afflicted subsistence farmers, desperate refugees from failed or failing states, flesh-and-blood victims of "structural unemployment", and those millions of foreclosed-upon, riches-to-rags middle classes and lower middle classes barely surviving in the developed North. They are unlikely to crash the Davos talkfest anyway.

The WEF is a prestige brand (some would say "scam") - promoted with ruthless efficiency. As it duly congregates mostly the super-wealthy (some would say plutocracy) of what Zygmunt Bauman has defined liquid modernity, it costs a ton of money; from basic membership at about US$52,000 (plus an entrance ticket at $19,000) to an annual "strategic partner" membership at a whopping $527,000 (plus five allowed invitations at $19,000 each).

WEF is not accepting any more "strategic partners" for 2011 unless it's a Chinese or Indian company placed among the 250 largest in the world. Probably eyeing them as well, and not leaving anything to chance, Google with throw a $250,000-plus party at Davos on Friday night.

Virtually nothing is solved in practice at Davos by the sound of these so-called "great minds" schmoozing - be it in "public" sessions or in some secret rendezvous at a private suite. Like in Hollywood parties, the point of Davos is just to show up, network and work the room. The financial elite, government bureaucrats, billionaire charity moguls and think tankers are always networking anyway.

So-called "problem solving" sessions at Davos are usually nonsense - or a bad joke, like Microsoft's Bill Gates discussing development strategies with former US deputy defense secretary Paul Wolfowitz (this actually happened). No one in Davos saw the 2008 financial crisis coming. And once the proceedings are over, few would not blink to pack the Moet and jet-safari from Davos to Darfur to pose for a Louis Vuitton-style ad, complete with Sudanese refugees as extras in full regalia.

Alternative world(s)

After the ruling classes schmooze in Davos, "the rest" will be left with the World Social Forum - born 10 years ago in southern Brazil, which in 2011 will be held in Dakar, Senegal.

The WSF vows to dissect the four dimensions - political, cultural, environmental and ideological - of the current crisis of capitalism. There could hardly be a better place to discuss it than Africa - impoverished and exploited by colonialism and then, during a still incomplete de-colonization process, by neo-colonial practices.

The WSF promises to debate the multiple links between migrations and Diasporas, and the role of social and communitarian movements (no Facebook, please). Previous meetings may have been marred by torrents of empty rhetoric. But now plenty of analyzes coming from the so-called alter-globalization movement are being recognized as pertinent - and essential for understanding the crisis of neo-liberalism. For instance, monitoring of the casino economy and elimination of fiscal paradises are now being discussed at the summits of the Group of 20 (G-20).

The fight against inequality is paramount (Davos itself has recognized it as one of the key parameters of the "new reality'). But in the rush towards its self-described "another word is possible" agenda, the WSF is even more concerned with the advent of new modes of production and consumption, and a new geopolitical equation.

While Davos seems to reflect a hazy concern of global elites at the plight of "the rest", the WSF seems to point to a strategic debate and the possible articulation of an on the go, coordinated global resistance.

The WSF identifies three possible answers to the current mega-crisis; neo-conservatism; a profound capitalist reconstruction proposed by Green New Deal activists; and a radical social and environmental alternative. The efforts seem to converge to the second possibility.

Davos could be helpful to many if it examined in depth, like the WSF proposes, how the North/South relationship is dramatically changing, also considering the existence of a hefty North in the South (think Singapore) and a South in the North (think Detroit).

That's where the WSF dovetails into the success story of more than 30 markets emerging worldwide. In real life - not talk shows - what this spells is the increasing power of the extended BRIC group inside the G-20.

Meet the new BRICS

France's mini-Napoleonic ruler, President Nicolas CIA/MOSSAD Sarkozy, will preside the G-20 in 2011. He's already started with a bang - calling for a summit in China next March to discuss the dangers of a currency war.

Sarkozy/CIA/MOSSAD....., populist instincts and all, is trying hard to pose as a visionary, yearning for a world drenched in more "responsibility" and "solidarity" where market laws are not the Bible.

But it remains to be seen how he is going to convince emerging markets not to shore up their reserves in exchange of some vague promise of help if they run into trouble; how he is going to convince the BRICs to give more power to the International Monetary Fund (IMF) while the much-spun IMF democratization still is a mirage; and how he is going to convince the US government to impose a tax over financial transactions - something the Group of Eight has been debating for years now.

As for the BRIC group, they are now formally BRICS: South Africa formally joined last month. This means a geographical span including Asia, Latin America, Europe and Africa. Crucially, the next BRIC meeting will be in April in Beijing, only one month after the Sarkozy currency war bash.

To state that many in Washington's political circles are not one bit ecstatic about this new development is the understatement of the year. BRICS does not demonize Iran; does not endorse American wars in Iraq and AfPak; supports Palestine; and favors replacing the US dollar as the world's reserve currency with a basket of currencies. On top of it in 2011 BRICS will have five seats at the 15-seat United Nations Security Council; Brazil until the end of 2011, India and South Africa until the end of 2012, plus the two permanent members China and Russia.

BRICS are now joined by yet another catchy acronym - MIST, conceived by none other than Jim O'Neill, the Goldman Sachs stalwart who coined the original BRIC in 2001. MIST are Malaysia, Indonesia, South Korea and Turkey.

A solid case can be made that any of these countries would be more suitable to be part of BRIC - especially Turkey (this was discussed at a BRIC summit in Brasilia last year). South Africa ranks only 31st in global gross domestic product terms, behind the whole MIST. But China is South Africa's number one trading partner, and India wants to "conquer" Africa as much as China. Anyway, none of this precludes an actual, strong alliance of BRIC and MIST towards that Washington-dreaded new world order - multipolarity.

For Washington, since mid-2008 the name of the game is a "multi-partner" world - coined by US Secretary of State Hillary Clinton. Implicit is the concept of the US as a senior partner in a so-called "coalition of the willing". Compare it with the Brazilian Foreign Ministry saluting the new BRICS as willing to "reform the financial system and increase democratization of global governance". The rattling of teeth in Washington could be heard time zones away.

And we're not even talking about China - where the Communist Party is pulling all stops to conform an advanced, educated, 70% urban society with 1.4 billion people by 2030, politically stable and with a non-interventionist foreign policy. As much as Washington may see it as BRICS + MIST = less US, for China the name of the game is multipolarity, period.

And even with multipolarity, the outlook ahead is bleak: peak oil; energy wars (first Iraq, next Iran?); the ramp-up of greenhouse gas emissions; climate change; water wars; and rampant poverty while the richest 1% of the population controls 43% of the world's assets.

Bottles of Moet can be bet that the global elites at Davos won't be giving much thought to what the world really needs - a new political culture, horizontal and diverse, promoting the convergence between citizen networks and social movements.

At the moment one possibility ahead points to an all-out privatization of life - and even of artificial life. The other possibility is the development of a new paradigm - a real, global New Deal that certainly won't come down as a gift from any institutional Above. This will only happen via the mobilization of social groups and civil societies all around the world. Enough talking; it's time to act. ...

NATO and Various Wars.....

L'OTAN n'a rien à faire à attaquer la Libye (ou, naguère, l'Afghanistan ou la Serbie). L'OTAN, après la disparition de l'URSS en tant que puissance idéologique et militaire, n'a plus de raison d'être. [Si, d'ailleurs, elle en a jamais eu : elle a été créée 6 ans AVANT le pacte de Varsovie et a toujours disposé, sur celui-ci, d'une supériorité nette, dans TOUS les domaines, matériels et immatériels, du début à la fin].

L'OTAN est, aux 20e et 21e siècles, ce qu'était la Sainte Alliance de 1815 : une coalition d'intérêts établis conservateurs. Je rappelle que non seulement aucun des buts de la Sainte Alliance ne s'est réalisé, mais qu'il est advenu exactement le contraire de ce pourquoi elle avait été créée : nationalités, puis révolutions sociales, puis républiques, puis déchristianisation....

Ne peut-on sérieusement envisager que derrière les "révolutions" Tunisienne, Egyptienne et Libyenne se cache obama?

L'objectif des Américains ne serait-il pas de contrecarrer l'avancée colonisatrice des Chinois en Afrique, notamment les empêcher de s'approprier les zones pétrolifères dans les années à venir?

Ce qui me parait curieux et qui renforce ma conviction c'est que le senario est identique dans chacun des trois pays concernés, à savoir, soulèvement d'une faible partie de la population , retournement presque immédiat des principaux chefs militaires et pression des USA sur les chefs d'état....

Et la répression a HAMA en Syrie, 1982....20.000 morts civils..., et la sale guerre imposé Liban, 200.000 morts sur une population de 4 Millions...ou était l'Otan....? et la repression chinoise il y a quelques années à la place Tieannenmen ...., répression pas tendre non plus, pourquoi l'Otan n'est-il pas intervenu ?

Selon que vous serez puissant ou misérable..., c'est toujours et encore toujours d'application.

Ici on parle d'un génocide de quelques milliers de gens, mais celui de quelques millions, à l'époque où il se passait et dont les Alliés étaient parfaitement au courant...

Réponse : pas d'intervention, ce n'était pas un objectif militaire !

Par contre, bombarder Dresden, Hamburg, Hanover, le LIBAN pendant plus de 40 ans et Gaza etc..., là oui, objectifs militaires.....

Il y a eu plus de morts civils en France dü aux bombardements alliés que dü aux Allemands.

Mais ils sont morts pour la bonne cause, cela leur fait une belle épitaphe...

Financial Crisis Inquiry Commission Slams Greenspan, Bernanke, Geithner, Paulson, Summers, SEC, Rating Agencies and Big Banks for Causing Crisis

The Financial Crisis Inquiry Commission is releasing its report Thursday....

What they will fail to tell you is that ALL this utter corruption comes from the top down....from SEC, from the White House, From Congress and from the power behind the power in USA, the crumbling Empire.....

The sleazy New York Times has a preview of the report, which shows that the Commission will slam the right people for causing the financial crisis.

Barry Ritholtz gives a good summary of the Times' article:

The many causal factors highlighted in the FCIC report:

• Alan Greenspan’s malfeasance — his refusal to perform his regulatory duties because he did not believe in them — allowed the credit bubble to expand, driving housing prices to dangerously unsustainable levels; Greenspan’s advocacy for financial deregulation was a “pivotal failure to stem the flow of toxic mortgages” and “the prime example” of government negligence;

• Ben S. Bernanke failed to foresee the crisis;

• The Bush administration’s “inconsistent response” — saving Bear, but allowing Lehman to crater — “added to the uncertainty and panic in the financial markets.”

• Bush Treasury secretary Henry M. Paulson Jr. wrongly predicted in 2007 that subprime meltdown would be contained.

• The Clinton White House, including then Treasury Secretary Lawrence Summers, made a crucial error in “shielding over-the-counter derivatives from regulation [CFMA]. This was “a key turning point in the march toward the financial crisis.”

• Then NY Fed President, now Treasury secretary Timothy F. Geithner failed to “clamp down on excesses by Citigroup in the lead-up to the crisis;” Further, a month before Lehman’s collapse, Geithner was still in the dark about Lehman’s derivative exposure;

• Low interest rates brought about by the Fed after the 2001 recession “created increased risks” but were not chiefly to blame, according to the FCIC (I place some more weight on Ultra-low rates than they do);

• The financial sector spent $2.7 billion on lobbying from 1999 to 2008, while individuals and committees affiliated with the industry made more than $1 billion in campaign contributions. The impact of which an incestuous relationship between bankers and regulators, Congress and bankers, and classic regulatory capture by the industry.

• The credit-rating agencies “cogs in the wheel of financial destruction.”

• The Securities and Exchange Commission allowed the 5 biggest banks to ramp up their leverage, hold insufficient capital, and engage in risky practices.

• Leverage at the nation’s five largest investment banks was wildly excessive: They kept only $1 in capital to cover losses for about every $40 in assets;

• The Office of the Comptroller of the Currency along with the Office of Thrift Supervision, “federally pre-empted” (blocked) state regulators from reining in lending abuses;

• The report documents “questionable practices by mortgage lenders and careless betting by banks;”

• The report portrays the “bumbling incompetence among corporate chieftains” as to the risk and operations of their own firms:

-Citigroup executives admitting that they paid little attention to the risks associated with mortgage securities.
-AIG executives were blind to its $79 billion exposure to credit default swaps;
-Merrill Lynch top managers were surprised when mortgage investments suddenly resulted in billions of dollars in losses;

I certainly agree with all of these points, and have criticized these same players in the past.

It should be noted that leading banking analyst Chris Whalen - who I greatly respect - agrees with FCIC Commissioner Peter Wallison (co-director of the American Enterprise Institute's program on financial policy studies) that Freddie and Fannie were a leading cause for the crisis. This is the minority view of the FCIC.

Many people - including me - have criticized the FCIC for seeming to sidestep the massive fraud which was a core cause of the crisis. However, the Commission has indicated that it will make criminal referrals. We'll have to wait and see if the referrals are for big or small fish.....

The Financial Crisis Inquiry Commission largely blames Greenspan, Bernanke, Geithner, Summers, the rating agencies, SEC and big banks for the economic crisis. (Here's the final report).

Bernanke is still Fed chief, and the government has substantially increased the Fed's power in the last year. Geithner is still Secretary of the Treasury....

Summers just resigned, being replaced by someone with a virtually identical philosophy, background and mindset as Summers.

The rating agencies are unrepentant, and have not been reined in. They are still government-sponsored monopolies which are accept bribes to give high ratings. And see this.

The SEC is still not acting as a real watchdog, and the banks are still speculating wildly with excessive leverage and acting as predators - instead of supporters - of the real (non-financial sector) economy.

Indeed, the banks are growing even larger, instead of being downsized, even though independent financial experts say that the very size of the banks is hurting the economy. The FCIC report doesn't really tackle that issue (the phrase "too big to fail" does not appear in the report itself, only in a very peripheral way in the footnotes).

Nor does the report detail the fact that inequality in the U.S. is higher than it has been since 1917, and that inequality was one of the prime causes of the economic crisis. The FCIC does not even mention the words "inequality" or "oligarchy", and mentions the word "oligopoly" only once (in a footnote) .

And while the FCIC report discusses mortgage fraud, it does not dig deeply enough into fraud by the largest financial players, detail other types of financial fraud, or push hard enough for prosecution, even though fraud was one of the core causes of the financial crisis, and one of the main reasons that the economy has not stabilized.

For example, the report uses the word "fraud" 46 times, compared to 167 mentions of "leverage". The phrases "control fraud", "accounting fraud", "regulatory capture", "systemic fraud", "criminal fraud" and "criminally negligent" do not appear anywhere in the report, nor do the words "looting" or "Ponzi". The word "prosecute" appears only once (and only in a historical context), and the word "prosecution" appears only 6 times (and half of them are buried in footnotes). The word "corrupt" appears only twice (one of them in a footnote).

So - while the FCIC report looks impressive at first glance - it doesn't hit hard enough, and is not going to lead to any real change.

And see this, and this visual representation by Tyler Durden of the most frequently-used words in the report....

Nobel prize winning economists George Akerloff and Joseph Stiglitz, former Fed chairman Alan Greenspan, leading economists such as Robert Shiller, Anna Schwartz, James Galbraith, former lead S & L regulator William K. Black, former Tarp overseer Elizabeth Warren and many other leading financial experts say that criminal fraud was the primary cause of the financial crisis.

They also say that failing to prosecute that fraud will prolong the crisis, interfere with the ability to stabilize the economy, and cause future crises. And see this.

They make it clear that the most fraud destructive fraud starts at the top: with the heads of the biggest banks, biggest accounting firms, and biggest corporations.

Experts in fraud as a cause of economic crises have developed a set of terms to describe this process, including "looting", "control fraud", "accounting fraud" and "regulatory capture". However, none of these terms appear in the Financial Crisis Inquiry Commission Report.

Why not?

As Josh Rosner of of Graham-Fisher told me:

If one looks closely at the document behind the investigation, it appears the FCIC failed to highlight perhaps the most central issue in the crisis - warehouse lending. Documents in the FCIC archives demonstrate that at least one of the rating agencies was aware, before they began to downgrade securities en masse, that the Wall Street banks were aggressively cleaning out their inventory of securities and selling them to investors. Other documents demonstrate that at least one large firm was aggressively seeking to offload risks they had intended to retain by moving them to sales traders and arming sales-traders with information to use to move those risks, even going so far as to choose specific firms to target. Clearly, they believed in the greater fool theory, the question is did they make honest representations to those they sought to fool. Culpability seems clear, and I would think legal action should follow, but as is the case with most "gold panel" commissions, those who control the game make sure they can skate away.
And in a series of 3 investigative reports, Yves Smith shares insights gained from insiders on the Commission.

Yesterday, Smith noted:

From the very outset, the Financial Crisis Inquiry Commission was set up to fail.


The investigations were further hampered by the requirement that subpoenas have bi-partisan approval along with Its decision to hold hearings with high profile individuals, including top Wall Street executives, before much in the way of lower-level investigation had been completed. The usual way to get meaningful disclosure from a top executive is to confront him with hard-to-defend material or actions; interrogations under bright lights, while a fun bit of theater, generally yield little in the absence of adequate prep.


Recent reports that the panel urged various prosecutors to launch criminal probes were a hopeful sign that the commission might nevertheless come out with some important findings. But correspondence from insiders in the last few days suggests otherwise. One, for instance, wrote, “I’m still in the process of getting the stink out of my clothes.”

These ideologically-neutral sources close to the investigation depict the commissioners as having pre-conceived narratives and of fitting various tidbits unearthed during the investigation into these frameworks, with the majority focusing more on the problems caused by deregulation and the failure of the authorities to use even the powers they had, while the minority assigns blame to government meddling, particularly housing-friendly policies.

These insiders see both sides as wrong, and want to encourage investigative reporters to challenge both the majority and dissenting accounts. They contend that both versions help perpetuate the myth that Wall Street was as much a victim of the crisis as anyone else.


From a source close to the investigation:


When it comes to the three reports (one report and two dissents) to be released the Financial Crisis Inquiry Commission later this week[,] the reports start out with how many documents were reviewed and how many people interviewed. This sets us up to believe that the Commissioners relied on facts garnered from the documents and interviews in coming to their conclusions.

It would do Americans a lot of good to put this to the test. Did the Commissioners really use the facts to arrive at their conclusions or did they arrive at the conclusions first and are simply citing a selection of the facts to support their previously arrived at positions?

In fact, the majority will provide a history of financial crisis anecdotes and then try to fit the facts into its theory that the crisis was avoidable if only the financial sector took fewer risks and government was more competent. The dissents will do the same to support their theory that it was all government’s fault.


Which of the multitude of anecdotes were critical? If they can’t identify one or two critical factors, ask them specifically (anecdote by anecdote) whether the crisis would have occurred even if the anecdote in question didn’t occur. If they can’t tell you either, then really what they are saying is the crisis was a “perfect storm” of just the right mix of private sector greed and public sector incompetence coming together at the same time. In other words, what happened could not have been predicted and the crisis was not avoidable.


Catastrophic financial system collapse is not the result of largely unrelated anecdotes. There are too many firewalls in the system to allow it to happen. It has to be the result of one or more firewalls failing or something really big in the system going bad. What was there about the system that was big enough to cause systemic failure so quickly? What connects the two: the failure of the housing and securities markets?

Based on further discussions with individuals familiar with how the report was developed, the following shortcomings are evident:

The Commission was able to do comparatively little in the way of forensic work; the bulk of its effort was devoted to the hearings, which delivered relatively little in the way of new insight

As indicated above, the FCIC report is guilty of “drunk under the streetlight” behavior, of trying to fit its story to already known or easily found information. Even though the report makes extensive use of salacious extracts from e-mails, the insiders content that none of these information in these e-mails illuminates information critical to the crisis trajectory.


The sad thing isn’t that the FCIC did not do its job. As we indicated earlier, that failure was by design. No one in the officialdom wants the mechanisms of the crisis to be exposed in full. It would compromise too many influential people and restoke well warranted public ire about the bailout of a miscreant financial services industry and its ongoing extractive behavior. Ironically, this core element of the dissent’s criticism is spot on, even if their own narrative suffers from precisely the same flaws. As FCIC commissioner Peter Walliston observes:

Like Congress and the Obama administration, the Commission’s majority erred in assuming that it knew the causes of the financial crisis…The Commission did not seriously investigate any other cause and did not effectively connect the factors it investigated to the financial crisis. The majority’s report covers in detail many elements of the economy before the financial crisis that the authors did not like, but generally fails to show how practices that had gone on for many years suddenly caused a worldwide financial crisis. In the end, the majority’s report turned out to be a just-so story about the financial crisis, rather than a report on what caused the financial crisis…..

From the beginning, the Commission’s investigation was limited to validating the standard narrative about the financial crisis—that it was caused by deregulation or lack of regulation, weak risk management, predatory lending, unregulated derivatives, and greed on Wall Street. Other hypotheses were either never considered or were treated only superficially. In criticizing the Commission, this statement is not intended to criticize the staff, who worked diligently and effectively under difficult circumstances and did extraordinarily fine work in the limited areas they were directed to cover. The Commission’s failures were failures of management.

By having the FCIC validate widely accepted, superficial, and ultimately inadequate explanations of the crisis, the Obama administration continues in its policy of looking forward rather than back, when looking back is the foundation of any serious scientific, investigative, or prosecutorial process. The odds are high that the media and the public at large will mistake the extensive use of anecdote in the FCIC report for accuracy and completeness. As with so many accounts of the crisis, the artful use of detail will yet again have the effect of diverting attention from the true drivers of the crisis and thus leave Wall Street free to devise new ways to wreck the economy for fun and profit.

Today, Smith writes:

What is troubling about the report is the manner in which it hews to conventional wisdom. Its ten major findings are hardly controversial, yet they are still insufficient to explain why the financial system seized up and appeared close to failure. And telling a familiar-sounding story assures that the status quo will remain unchallenged, and serves to validate the inadequate reforms now underway. After all, they are premised on the very same superficial beliefs.

I participated in a blogger conference call with FCIC commissioners Phil Angelides and Brooksley Born. I’m clearly not cut out for public life. It was disconcerting to hear them thumping their talking points. For instance, Angelides began by saying that the purpose of the report was to explain why we faced the choice in 2008 of spending billions of dollars to bail out the financial system or let it fail.

That’s a false dichotomy that serves to justify the unprecedented rescues. It implies that the only way the crisis could have been addressed was the course of action taken. We pointed out as the crisis was unfolding that some of the early interventions made matters worse. Even at the peak of the crisis, a range of other actions were possible but were not taken. The bias throughout the crisis was to throw money at the problem with virtually no strings attached, and even in the cold light of day, to take far too little in the way of corrective and punitive measures.


Another problem area was the difficulty in getting subpoenas issued. The process was made difficult by design; it took sign off by commissioners of both parties. As a result, nearly all the document production was voluntary.

And in her hardest-hitting post on the issue, Smith reports:

The Financial Crisis Inquiry Commission report increasingly looks like a whitewash. Even though the commission has made referrals for criminal prosecution, you’d never know that reading its end product. The references to “fraud” and “crime” are sparing, and ex mention of the SEC’s fraud investigation of Goldman, consist almost entirely of mortgage fraud, which is the FBI’s notion of “fraud for profit” or “fraud for housing”, meaning borrower fraud. The book also acknowledges the fraudulent lending by firms that were prosecuted like Ameriquest. In other words, the notion that the TBTF firms might have engaged in less than savory activity is remarkably absent from the report.

The FCIC has also been unduly close-lipped about their criminal referrals, refusing to say how many they made or giving a high-level description of the type of activities they encouraged prosecutors to investigate. By contrast, the Valukas report on the Lehman bankruptcy discussed in some detail whether it thought civil or criminal charges could be brought against Lehman CEO Richard Fuld and chief financial officers chiefs Chris O’Meara, Erin Callan and Ian I Lowitt, and accounting firm Ernst & Young. If a report prepared in a private sector action can discuss liability and name names, why is the public not entitled to at least some general disclosure on possible criminal actions coming out of a taxpayer funded effort? Or is it that the referrals were merely to burnish the image of the report, and are expected to die a speedy death?

Matt Stoller [financial writer and former chief policy aide for Congressman Alan Grayson] provides further support for the cynical take. Via e-mail:

I was on a conference call today with Phil Angelides and Brooksley Born, two commisioners of the Financial Crisis Inquiry Commission. During their unveiling of the FCIC report, they used words like deregulation, leverage, imprudent risk-taking, reckless behavior, failures at credit agencies, and failed regulators. Left out were words like crime, fraud, looting, or a specialized form of looting known as control fraud. At every point reporters asked about their referrals of criminal cases, which someone leaked before the report came out, they demurred. “We are not prosecutors”, said Angelides.

I asked about the criminal nature of the crisis. I said I didn’t want to know about any specific case, but whether they thought that fraud or crime was a core cause of the crisis. This is an important distinction, because the real question at hand is whether you trust the system to correct itself, or whether you believe that the people running the system are the problem and must be removed before we can fix the system. It’s obvious, as you’ll see, that Born and Angelides believe the former.

Neither Born nor Angelides would answer whether accounting fraud or crime was a primal cause of the crisis. The gist of the response was “it’s all in the report,” along with an attempt to pretend like they had discovered the systemic mortgage origination fraud that the FBI discussed in 2004. Born also repeated that they wouldn’t disclose specific cases of criminal referrals, even though I had specifically said that I was not interested in such disclosures. It was a filibuster, and an obvious one at that. I kept pressing, and asked them repeatedly to answer my question, and after the third follow-up Angelides finally said they had to go.

With that, the FCIC has completed the final act of oversight for the last Democratic Congress, and it held true to what Democrats in the last Congress believed. Everyone was at fault for the crisis, but no one is to blame. This was Bush’s line in 2008, that “Wall Street got drunk”, and Obama’s line throughout the Dodd-Frank mark-up. The Republicans went after the GSEs and “regulation”, and the Democrats sadly lamented the tragedy of the crisis. Again, everyone’s at fault, and no one is to blame. I saw high-ranking Democrat Carolyn Maloney brag yesterday about her vote for TARP in the hearing on foreclosures, noting that the Dow busted through 12,000 as a sign of prosperity. This is what they believe, in their bones. There was no theft, only tragedy. The American economy lives on the crack of financialization, not the production of valuable services and goods that solve real problems.

You can even read Obama’s Cooper Union speech from 2008, and with a few additions, it’s basically that narrative. Deregulation bad, regulation good. New Deal “outmoded”, excessive pay a problem. (I do find it amusing that Obama in 2008 brought up how other banks spread rumors about Bear Stearns so it would collapse, and then stressed how the SEC “should investigate and punish this kind of market manipulation.” But that’s kind of an exception, an adorable one that suggested there were rhetorical remnants of outrage among elites)

The FCIC report is destined for the same dustbin of history as that speech. It is a document of and by well-meaning insiders that just can’t deal with the corruption they were supposed to investigate. It’s a psychological crutch maybe, or perhaps a denial mechanism, but it doesn’t really matter. This report is just a cover-up, the same kind of cover-up that is allowing the thieves to escape with their loot.

Nothing will come from the generation in power who created this mess. They just don’t have it in them. The bad guys will steal again. I mean, crime pays. Besides, who’s going to call it crime, anyway?

Tuesday, January 25, 2011

Lebanese keep out, Israel lays claim to all the resources in the Mediterranean...

JPEG - 33.1 kb

by Manlio Dinucci*

For years, various companies have been exploring the hydrocarbon deposits in the Levantine Basin, but only a handful of political and economic leaders were privy to the size of the prize. On 29 December 2010, the Israeli authorities gave Noble Energy Inc. the green light to release the news. The communication, announcing that exploitation was taking off after a political freeze, has been coupled with a diplomatic campaign to allow Tel Aviv to siphon off all the reserves to the detriment of the other coastline states...

Geographical map of the natural gas and oil reserves location, drawn up by the U.S. Geological Survey. Around 60% of the deposits lie in the waters and territory belonging to Gaza....

U.S.-based Noble Energy Inc. recently announced a massive natural gas field discovery, located 130 kilometers offshore of Haifa [1] and consisting of an estimated 450 billion cubic meters. Resources in the surrounding area should total some 700 billion cubic meters. Exploration and exploitation are overseen by an international consortium composed by the U.S. company Noble Energy Inc., currently the largest shareholder with a 40% stake, plus Israeli enterprises Delek, Avner and Ratio Oil Exploration [2]

This accounts for only a small part of the energy reserves abounding in the Levantine basin, which comprises Israel, the Palestinian territories, Lebanon and their territorial waters. According to U.S. Geological Survey, a U.S. Government agency which has been prospecting in the region for several years, the natural gas deposits in the basin amount to approximately 3 500 billion cubic meters, while the oil reserves have been assessed at 1,7 billion barrels.

The Israeli government, with Washington’s backing, considers it is entitled to all the energy reserves. Israeli national infrastructure minister Uzi Landau declared that the large natural gas fields would not only bring economic benefits to Israeli citizens but could also transform Israel into a gas supplier in the Mediterranean region. However, objected Speaker of the Lebanese Parliament Nabih Berri, Israel is disregarding the fact that, according to the maps, the fields stretch into Lebanese territorial waters. The United Nations Convention stipulates that a coastal state may exploit offshore gas and oil reserves within a zone extending 200 nautical miles (370 kilometers) from the shore.

According to the same principle, the reserves belong in great measure also to the Palestinian Authority. From the map drawn up by the U.S. Geological Survey itself, it emerges that the major portion of the gas deposits (around 60%) lie in the waters and territory belonging to Gaza. Exploitation rights were granted by the Palestinian Authority to a consortium formed by British Gas and its partner Consolidated Contractors (based in Athens and owned by two Lebanese families), of which 10% is held by the Palestinian Authority.

Two wells, Gaza Marine-1 and Gaza Marine-2 are ready but not operational. In fact, Tel Aviv has systematically rebuffed all the proposals from the Palestinian Authority and the consortium to export gas to Israel and Egypt. Therefore, the Palestinians possess vast riches which they are unable to exploit.

To seize the totality of the energy reserves – both Palestinian and Lebanese – bathing in the Levantine Basin, Israel has chosen the military option. The Lebanese Foreign Affairs Minister Ali al-Shami recently urged the UN Secretary General to prevent Israel from exploiting the offshore energy reserves located in Lebanese territorial waters. Minister Uzi Landau claimed instead that the reserves are in Israeli waters and warned that his country will not think twice about employing force to protect them. Israel has therefore threatened to attack Lebanon again, like it did in 2006, with the intention this time of impeding it from exploiting its offshore deposits [3].

It is for the same reason that Israel does not accept a Palestinian state. To do so would imply the recognition of Palestinian sovereignty over a large portion of the energy reserves, which Israel wants to grab. It was to this end that the 2008-2009 “Cast Lead Operation” was launched and Gaza has been caught in the clutches of the blockade. Meanwhile, Israeli war ships control the whole of the Levantine Basin – and hence the offshore oil and gas reserves – within the framework of the NATO-sponsored “Mediterranean Dialogue” to “contribute to the security and stability of the region”.

[1] Company’s press release: “Noble Energy Announces Significant Discovery at Leviathan Offshore Israel”, Houston, December 29, 2010.

[2] Editor’s note: Delek Drilling, Avner Oil Exploration and Ratio Oil Exploration own 22,67%, 22,67% and 15% of the shares respectively. Since, however, Delek and Avner belong to the same owner, they control 45,34% of the consortium, while Ratio Oil corresponds to private investments through the Bank of Israel.

[3] “Will Israel attack Lebanon to steal its gas?“, by Alfredo Jalife-Rahme, Voltaire Network, 22 August 2010.