Friday, March 28, 2008

Jeffrey St. Clair: Hillary's Berserker Ambition

Some (much?) of this is fevered well past where I would go (ie, the stuff on Ford, Reagan, Carter, Obama) however, it's most useful for its collection of some of the sordid history of the Clintons. St Clair is the only one I've seen (doubtless there are others) who has hinted if not made the case that the Clintons purposefully worked to ensure a Republican congress in 1994, 1996 (2000?)so as to be able to resist pressure to enact a progressive agenda.
He also leaves out Clinton's responsibility for WTC 93 and Oklahoma City both of which involved the FBI and perhaps (doubtless!) other government agencies.
St Clair mentions the bombing of Serbia. Has someone done more on Clinton & GW Bush (and GHW Bush?) and the KLA? If it were only GW Bush I could understand the connection to criminal enterprises. But why would three administrations ally themselves against the KLA, especially as GHW Bush had strong connections with the Serbs, their enemies? Nor do I understand why GHW Bush and Clinton allowed the wars in the former Yugoslavia. Many will recall that when Clinton needed to be reelected in 1996, he finally put a stop to it very quickly.
PS. St Clair also misses the point I've made elsewhere that Hillary's "mishandling" of the health care initiative was a deliberate and sophisticated operation intended to ensure that no universal single payer option would be allowed.

March 24, 2008
Hillary's Berserker Campaign ... for 2012
Blonde Ambition


Hillary Clinton can not win the Democratic nomination for president. The numbers tell the story. Even with robust victories in Pennsylvania, Indiana, West Virginia and Kentucky, Hillary will trail Obama in popular votes and pledged delegates as they enter the convention hall in Denver.

Any other candidate would have been shamed into dropping out long ago. But these are the Clintons and they have no shame.

So why does Hillary persist? Because she hasn't abandoned her aspiration for the White House. Not in 2008, but for 2012. Here's the perverse logic at work.

If Obama defeats McCain in November, it will take an act of treachery beyond anything even the Clintons have ever conjured from their grimoire of political demonology for Hillary to challenge him in 2012. She will be 69 in 2016, almost ready to move into one of the Beverly Nursing Homes, owned by a company she once represented as a corporate lawyer, aggressively protecting the bottom line against such extravagances as healthy meals, clean sheets and proper medical care for the elderly.

Hillary Clinton is the prisoner of an unimpeachable mathematics. So she makes the most of a remorseless situation by doing what the Clintons do best: commit political fratricide. Quite literally, in this case, by knocking off a brother.

In order to realize her vaulting ambition, Hillary must mortally wound Obama as candidate in the fall race against John McCain so that she can run against McCain in 2012.

McCain is at best a one term president. The signs of this are as clear as the scar jagging down his face. McCain, whose resemblance to Lon Chaney becomes eerier by the day, is already an old man, older than Reagan when he was first elected. He is plagued by a cancer he refuses to speak about, a war he refuses to end and an economy that is collapsing beyond the point of recovery. Add to this prospectus, the fact that McCain is prone to the most self-destructive impulses of any American politician since Aaron Burr. His political fate will be sealed before he even swears his oath.

Thus Hillary's berserker strategy against Obama. (For more on "berserkerism" see the SF novels of Fred Saberhagen.)

Down in Mark Penn's dark computer lab, the data culled from pulse polls and focus groups probing the hidden prejudices in the psyche of white America are being packed like shrapnel into political landmines set for Obama: he's unpatriotic, he's un-Christian, he's a Palestinian symp and, yes, he's black. That's three strikes and one head shot.

Exploitation of racial panic is second nature to the power couple Ishmael Reed calls Ma and Pa Clinton. Bill Clinton launched his 1992 campaign by personally overseeing the execution of Ricky Ray Rector, a brain-damaged young black man. He wagged his finger at the rapper Sister Souljah, denouncing her music and political opinions as a danger to young minds. The Clintons pilloried their one-time friend Lani Guinier, for her legal writings on the status of blacks and women and booted Dr. Jocelyn Elders from her position as Surgeon General for her refreshingly candid statements about the utility of condoms and masturbation for sexually active youths.

And that's how they treated people they knew. At a structural level, the Clintons' economic and social agenda, incubated at the conservative Democratic Leadership Council, struck directly at poorest precincts of America, targeting blacks and Hispanics with a fervor not seen since Pat Buchanan and Kevin Phillips crafted the infamous Southern Strategy for Richard Nixon. Hence, the dismantling of welfare, harsh federal crime bills, the refusal to intervene against racial profiling or redress the grievous injustices caused by the racially-motivated sentences handed out for crack cocaine.

The fallout from Ms. Clinton's racially-tinged blitz against Obama will spread far and wide across her party like the toxic particles from a nuclear blast. They've done it all before. The Clintons' reckless first two years in the White House, from the heavy-handed Travel Office fiasco to the fires of Waco and HRC's sophomoric bungling of the health care reform, spurred the GOP takeover of congress in 1994, which they used to their political profit. Then in 1996, Clinton refused to allocate DNC money to tight senate and congressional races, a miserly tactic that allowed the faltering Republicans to retain control of both houses of Congress. It was a cynical decision that many high-ranking Democrats believe constituted a deliberate sabotage of the party's prospects, designed to secure a monopoly-like control of the party apparatus for the Clintons, turning the DNC into their own private PAC.

That's the logic of triangulation. The daisy-cutter tactics of Hillary's current campaign might be called pre-emptive triangulation. The Clintons enrich themselves politically by looting the ruins of their own party.

Look how swiftly her campaign knee-capped her friend Bill Richardson. After working sedulously for Richardson's endorsement only to lose out to Obama, Mark Penn dismissed the governor as "irrelevant." On Good Friday, Clinton intimate James Carville denounced Richardson as "a Judas."

Clinton believes she must destroy the party in order to save it-for herself. But her campaign geared at women and white working class voters relies on a perversion of the past. The recent past at that, as if they believe that the American electorate is blinking out from a kind of political Alzheimer's, where the short-term goes first. Perhaps that's why Penn and his pack of geeks geared their themes to appeal to geezers and grandparents. Clintontime is recast as a glittering epoch of peace and prosperity. Yet this was a decade when Iraq was bombed every three days and a half-million people died under the cruel sanctions regime, when cruise missiles were launched on Sudan and Afghanistan to divert popular attention from blow-jobs and thong-snapping interns, when an illegal air war was orchestrated against Serbia, racking up thousands of civilian casualties and the ongoing bloodbath against peasants in South America known as Plan Colombia, the drug war that keeps on killing.

The Clinton 90s was a time when the economic chasm in America between the rich and everyone else deepened and widened profoundly, under the command of Alan Greenspan and Wall Street maestro Robert Rubin, and the social safety nets protecting the most vulnerable among us where shorn in the name of political pragmatism. The Clintons evoke a nostalgia for a time that never was. If you require objective confirmation of the economic enervation unleashed by the Clinton program consult Contours of Descent, economist Robert Pollin's brilliant dissection of that dismal era.

This coarse reality is transparent to those who lived through it and still suffer the aftershocks of the Clintons' neoliberal program. That's one reason why almost the only blacks to back HRC are encrusted members of Congressional Black Caucus and corporate shills like Andrew Young, who whitewashed Nike's crimes against workers in its Asian sweat-factories. Both camps are old hands at palming political gratuities and walking around money.

Meanwhile, Obama plays the role of willing victim like he spent years studying Italian frescos on the torments of St. Sebastian. He exudes a sense of entitlement nearly as all-engrossing as the Clintons and compounds this with a martydom complex that dramatizes the wounding of each slingshot and arrow lobbed his way.

Although it's not strictly attuned to her peculiar pathology, Hillary could almost call it quits right now, even before she claims Pennsylvania as a scalp. She has fatally toxified Obama and almost certainly secured the White House for her good friend John McCain.

Hillary is following the Reagan model. In 1976, Ronald Reagan bled Gerald Ford through the long winter and spring months, before bludgeoning him the late primary in Pennsylvania. As told in Adam Clymer's new book, Drawing the Line at the Big Ditch: the Panama Canal Treaties and the Rise of the Right, Reagan finally found a theme to his weird internecine challenge in the Panama Canal Treaty. Reagan fell short in the end, but he had hobbled Ford, who stumbled and fell against Carter in the fall election. Carter inherited a stagnant economy, soaring oil prices and a simmering crisis in the Middle East. Reagan easily unseated Carter in the 1980 election. The Clintons are shrewd enough to detect the striking historical parallels here and craven enough to exploit them for their own long-term advantage.

The Clinton war room may still throb to the beats of Fleetwood Mac's "Don't Stop Thinking About Tomorrow." But late at night, when Mandy Grunwald has slipped on her flannels and Mark Penn has powered-down his Cray super-computer, Hillary and Bill will surely toast their strange time-delayed victory to the chords of McCartney's "Live and Let Die."

Jeffrey St. Clair is the author of Been Brown So Long It Looked Like Green to Me: the Politics of Nature and Grand Theft Pentagon. His newest book, Born Under a Bad Sky, will be published this spring. He can be reached at:

Monday, March 24, 2008

WSJ: New Limits to Growth Revive Malthusian Fears

March 24, 2008

Wall Street Journal

"Limits-to-growth" theories are getting a second look amid surging raw material costs.

New Limits to Growth
Revive Malthusian Fears
Spread of Prosperity
Brings Supply Woes;
Slaking China's Thirst
March 24, 2008; Page A1

(See Corrections & Amplifications item below.)

Now and then across the centuries, powerful voices have warned that human activity would overwhelm the earth's resources. The Cassandras always proved wrong. Each time, there were new resources to discover, new technologies to propel growth.

James Brander, left, a professor of international business at the University of British Columbia's Sauder School of Business and Matthew Kahn, right, a professor at UCLA's Institute of the Environment, discuss limits-to-growth ideas in the context of today's rapid run-up in raw material costs. Plus, share your own thoughts.1
Could Resources Become a Limit to Global Growth?2

Today the old fears are back.

Although a Malthusian catastrophe is not at hand, the resource constraints foreseen by the Club of Rome are more evident today than at any time since the 1972 publication of the think tank's famous book, "The Limits of Growth." Steady increases in the prices for oil, wheat, copper and other commodities -- some of which have set record highs this month -- are signs of a lasting shift in demand as yet unmatched by rising supply.

As the world grows more populous -- the United Nations projects eight billion people by 2025, up from 6.6 billion today -- it also is growing more prosperous. The average person is consuming more food, water, metal and power. Growing numbers of China's 1.3 billion people and India's 1.1 billion are stepping up to the middle class, adopting the high-protein diets, gasoline-fueled transport and electric gadgets that developed nations enjoy.

The result is that demand for resources has soared. If supplies don't keep pace, prices are likely to climb further, economic growth in rich and poor nations alike could suffer, and some fear violent conflicts could ensue.

Some of the resources now in great demand have no substitutes. In the 18th century, England responded to dwindling timber supplies by shifting to abundant coal. But there can be no such replacement for arable land and fresh water.

WSJ's Patrick Barta reports from India on how development threatens to overwhelm the Earth's resources. (March 24)

The need to curb global warming limits the usefulness of some resources -- coal, for one, which emits greenhouse gases that most scientists say contribute to climate change. Soaring food consumption stresses the existing stock of arable land and fresh water.

"We're living in an era where the technologies that have empowered high living standards and 80-year life expectancies in the rich world are now for almost everybody," says economist Jeffrey Sachs, director of Columbia University's Earth Institute, which focuses on sustainable development with an emphasis on the world's poor. "What this means is that not only do we have a very large amount of economic activity right now, but we have pent-up potential for vast increases [in economic activity] as well." The world cannot sustain that level of growth, he contends, without new technologies.

Americans already are grappling with higher energy and food prices. Although crude prices have dropped in recent days, there's a growing consensus among policy makers and industry executives that this isn't just a temporary surge in prices. Some of these experts, but not all of them, foresee a long-term upward shift in prices for oil and other commodities.

Today's dire predictions could prove just as misguided as yesteryear's.

"Clearly we'll have more and more problems, as more and more [people] are going to be richer and richer, using more and more stuff," says Bjorn Lomborg, a Danish statistician who argues that the global-warming problem is overblown. "But smartness will outweigh the extra resource use."

Some constraints might disappear with greater global cooperation. Where some countries face scarcity, others have bountiful supplies of resources. New seed varieties and better irrigation techniques could open up arid regions to cultivation that today are only suitable as hardscrabble pasture; technological breakthroughs, like cheaper desalination or efficient ways to transmit electricity from unpopulated areas rich with sunlight or wind, could brighten the outlook.

In the past, economic forces spurred solutions. Scarcity of resource led to higher prices, and higher prices eventually led to conservation and innovation. Whale oil was a popular source of lighting in the 19th century. Prices soared in the middle of the century, and people sought other ways to fuel lamps. In 1846, Abraham Gesner began developing kerosene, a cleaner-burning alternative. By the end of the century, whale oil cost less than it did in 1831.

A similar pattern could unfold again. But economic forces alone may not be able to fix the problems this time around. Societies as different as the U.S. and China face stiff political resistance to boosting water prices to encourage efficient use, particularly from farmers. When resources such as water are shared across borders, establishing a pricing framework can be thorny. And in many developing nations, food-subsidy programs make it less likely that rising prices will spur change.

This troubles some economists who used to be skeptical of the premise of "The Limits to Growth." As a young economist 30 years ago, Joseph Stiglitz said flatly: "There is not a persuasive case to be made that we face a problem from the exhaustion of our resources in the short or medium run."

Today, the Nobel laureate is concerned that oil is underpriced relative to the cost of carbon emissions, and that key resources such as water are often provided free. "In the absence of market signals, there's no way the market will solve these problems," he says. "How do we make people who have gotten something for free start paying for it? That's really hard. If our patterns of living, our patterns of consumption are imitated, as others are striving to do, the world probably is not viable."

Dennis Meadows, one of the authors of "The Limits to Growth," says the book was too optimistic in one respect. The authors assumed that if humans stopped harming the environment, it would recover slowly. Today, he says, some climate-change models suggest that once tipping points are passed, environmental catastrophe may be inevitable even "if you quit damaging the environment."
Patrick Barta
Resource constraints in fast-growing India are hitting farmers and city-dwellers alike.

One danger is that governments, rather than searching for global solutions to resource constraints, will concentrate on grabbing share.

China has been funding development in Africa, a move some U.S. officials see as a way for it to gain access to timber, oil and other resources. India, once a staunch supporter of the democracy movement in military-run Myanmar, has inked trade agreements with the natural-resource rich country. The U.S., European Union, Russia and China are all vying for the favor of natural-gas-abundant countries in politically unstable Central Asia.

Competition for resources can get ugly. A record drought in the Southeast intensified a dispute between Alabama, Georgia and Florida over water from a federal reservoir outside Atlanta. A long-running fight over rights to the Cauvery River between the Indian states of Karnataka and Tamil Nadu led to 25 deaths in 1991.

Economists Edward Miguel of the University of California at Berkeley and Shanker Satyanath and Ernest Sergenti of New York University have found that declines in rainfall are associated with civil conflict in sub-Saharan Africa. Sierra Leone, for example, which saw a sharp drop in rainfall in 1990, plunged into civil war in 1991.

A Car for Every Household

The rise of China and India already has changed the world economy in lasting ways, from the flows of global capital to the location of manufacturing. But they remain poor societies with growing appetites.

Nagpur in central India once was known as one of the greenest metropolises in the country. Over the past decade, Nagpur, now one of at least 40 Indian cities with more than a million people, has grown to roughly 2.5 million from 1.7 million. Local roads have turned into a mess of honking cars, motorbikes and wandering livestock under a thick soup of foul air.

A local resident takes water from a partially dried-up pond on the outskirts of Yingtan, China. Water shortages have been blamed on global warming, pollution and rising consumption by farmers and cities.

"Sometimes if I see something I like, I just buy it," says Sapan Gajbe, 32 years old, a dentist shopping for an air conditioner at Nagpur's Big Bazaar mall. A month earlier, he bought his first car, a $9,000 Maruti Zen compact.

In 2005, China had 15 passenger cars for every 1,000 people, close to the 13 cars per 1,000 that Japan had in 1963. Today, Japan has 447 passenger cars per 1,000 residents, 57 million in all. If China ever reaches that point, it would have 572 million cars -- 70 million shy of the number of cars in the entire world today.

China consumes 7.9 million barrels of oil a day. The U.S., with less than one quarter as many people, consumes 20.7 million barrels. "Demand will be going up, but it will be constrained by supply," ConocoPhillips Chief Executive Officer James Mulva has told analysts. "I don't think we are going to see the supply going over 100 million barrels a day, and the reason is: Where is all that going to come from?"

Says Harvard economist Jeffrey Frankel: "The idea that we might have to move on to other sources of energy -- you don't have to buy into the Club of Rome agenda for that." The world can adjust to dwindling oil production by becoming more energy efficient and by moving to nuclear, wind and solar power, he says, although such transitions can be slow and costly.

Global Thirst

There are no substitutes for water, no easy alternatives to simple conservation. Despite advances, desalination remains costly and energy intensive. Throughout the world, water is often priced too low. Farmers, the biggest users, pay less than others, if they pay at all.

An underground rail tunnel under construction in New Delhi, India. The nation is adding thousands of miles of rail lines and new roads, along with other infrastructure, using enormous quantities of materials such as steel, copper and aluminum.

In California, the subsidized rates for farmers have become a contentious political issue. Chinese farmers receive water at next to no cost, accounting for 65% of all water used in the country.

In Pondhe, an Indian village of about 1,000 on a barren plateau east of Mumbai, water wasn't a problem until the 1970s, when farmers began using diesel-powered pumps to transport water farther and faster. Local wells used to overflow during the monsoon season, recalls Vasantrao Wagle, who has farmed in the area for four decades. Today, they top off about 10 feet below the surface, and drop even lower during the dry season. "Even when it rains a lot, we aren't getting enough water," he says.

Parched northern China has been drawing down groundwater supplies. In Beijing, water tables have dropped hundreds of feet. In nearby Hebei province, once large Baiyangdian Lake has shrunk, and survives mainly because the government has diverted water into it from the Yellow River.

Climate change is likely to intensify water woes. Shifting weather patterns will be felt "most strongly through changes in the distribution of water around the world and its seasonal and annual variability," according to the British government report on global warming led by Nicholas Stern. Water shortages could be severe in parts Africa, the Middle East, southern Europe and Latin America, the report said.

Feeding the Hungry

China's farmers need water because China needs food. Production of rice, wheat and corn topped out at 441.4 million tons in 1998 and hasn't hit that level since. Sea water has leaked into depleted aquifers in the north, threatening to turn land barren. Illegal seizures of farmland by developers are widespread. The government last year declared that it would not permit arable land to drop below 120 million hectares (296 million acres), and said it would beef up enforcement of land-use rules.

On Beijing's Outskirts, The Thirst Is Growing4
Many Chinese towns, lacking irrigation systems,
rely on ad-hoc well digging, a practice that is in effect
reducing their ground water levels year by year.
Loretta Chao
Well diggers in China are using massive equipment to reach deeper and deeper water supplies.

The farmland squeeze is forcing difficult choices. After disastrous floods in 1998, China started paying some farmers to abandon marginal farmland and plant trees. That "grain-to-green" program was intended to reverse the deforestation and erosion that exacerbated the floods. Last August, the government stopped expanding the program, citing the need for farmland and the cost.

A growing taste for meat and other higher-protein food in the developing world is boosting demand and prices for feed grains. "There are literally hundreds of millions of people...who are making the shift to protein, and competition for food world-wide is a new reality," says William Doyle, chief executive officer of fertilizer-maker Potash Corp. of Saskatchewan.

It takes nearly 10 pounds of grain to produce one pound of pork -- the staple meat in China -- and more than double that to produce a pound of beef, according to Vaclav Smil, a University of Manitoba geographer who studies food, energy and environment trends. The number of calories in the Chinese diet from meat and other animal products has more than doubled since 1990, according to the U.N. Food and Agriculture Organization. But China still lags Taiwan when it comes to per-capita pork consumption. Matching Taiwan would increase China's annual pork consumption by 11 billion pounds -- as much pork as Americans eat in six or seven months.

Searching for Solutions

The 1972 warnings by the Club of Rome -- a nongovernmental think tank now based in Hamburg that brings together academics, business executives, civil servants and politicians to grapple with a wide range of global issues -- struck a chord because they came as oil prices were rising sharply. Oil production in the continental U.S. had peaked, sparking fears that energy demand had outstripped supply. Over time, America became more energy efficient, overseas oil production rose and prices fell.

The dynamic today appears different. So far, the oil industry has failed to find major new sources of crude. Absent major finds, prices are likely to keep rising, unless consumers cut back. Taxes are one way to curb their appetites. In Western Europe and Japan, for example, where gas taxes are higher than in the U.S., per capita consumption is much lower.

New technology could help ease the resource crunch. Advances in agriculture, desalination and the clean production of electricity, among other things, would help.

But Mr. Stiglitz, the economist, contends that consumers eventually will have to change their behavior even more than then did after the 1970s oil shock. He says the world's traditional definitions and measures of economic progress -- based on producing and consuming ever more -- may have to be rethought.

In years past, the U.S., Europe and Japan have proven adept at adjusting to resource constraints. But history is littered with examples of societies believed to have suffered Malthusian crises: the Mayans of Central America, the Anasazi of the U.S. Southwest, and the people of Easter Island.

Those societies, of course, lacked modern science and technology. Still, their inability to overcome resource challenges demonstrates the perils of blithely believing things will work out, says economist James Brander at the University of British Columbia, who has studied Easter Island.

"We need to look seriously at the numbers and say: Look, given what we're consuming now, given what we know about economic incentives, given what we know about price signals, what is actually plausible?" says Mr. Brander.

Indeed, the true lesson of Thomas Malthus, an English economist who died in 1834, isn't that the world is doomed, but that preservation of human life requires analysis and then tough action. Given the history of England, with its plagues and famines, Malthus had good cause to wonder if society was "condemned to a perpetual oscillation between happiness and misery." That he was able to analyze that "perpetual oscillation" set him and his time apart from England's past. And that capacity to understand and respond meant that the world was less Malthusian thereafter.

Write to Justin Lahart at justin.lahart@wsj.com13, Patrick Barta at patrick.barta@wsj.com14 and Andrew Batson at andrew.batson@wsj.com15

Corrections & Amplifications:

China's annual pork consumption would increase by 11 billion pounds if China matched Taiwan's per-capita consumption rate. A previous version of this article incorrectly gave the figure as 11 million pounds.
URL for this article:

Hyperlinks in this Article:
(1) t=1874
(11) t=1874
(12) t=1874

Saturday, March 22, 2008

DN: Fed Bails out Banking/Investment Industry, NOT Bear Stearns

Democracy Now

March 20, 2008
Fed Bailout of Bear Stearns First of its Kind Since Great Depression

The nation’s fifth largest investment bank Bear Stearns nearly collapsed last week. It was saved only after the Federal Reserve took extraordinary measures to help JPMorgan purchase the eighty-five-year-old firm. The Fed has become the lender of last resort for other investment banks in a move that marks one of the broadest expansions of the Fed’s lending authority since the 1930s. We speak with Nomi Prins, an author and former investment banker at Bear Stearns, and Max Fraad Wolff, an economist and writer. [includes rush transcript]


Nomi Prins, former investment banker turned journalist. She used to run the European analytics group at Bear Stearns. She is the author of two books Other People’s Money: The Corporate Mugging of America and Jacked: How “Conservatives” Are Picking Your Pocket. She is now a Senior Fellow at Demos.

Max Fraad Wolff, economist and writer. He is an instructor at the Graduate Program in International Affairs, New School University. He is a frequent contributor to Huffington Post, Asia Times and the Indypendent.
Rush Transcript
This transcript is available free of charge. However, donations help us provide closed captioning for the deaf and hard of hearing on our TV broadcast. Thank you for your generous contribution.
Donate - $25, $50, $100, More...
Related Links
Nomi Prins: "Ode to Bear, Stearns"
Nomi Prins: "Subprime Lending's Smartest Guys in the Room"
Max Fraad Wolff: "Indebted By Blood"
Max Fraad Wolff: "From Bubble to Rubble: $10 Trillion Home Mortgage Debt Tanks Economy"

AMY GOODMAN: We are seeing some of the worst crises we have seen in decades, whether we’re talking about the economy, whether we’re talking about the war, and those two issues, we’re going to take on today.

JUAN GONZALEZ: Yes, we are. Well, Wall Street and the nation’s economy is in a state of crisis. The nation’s fifth largest investment bank Bear Stearns nearly collapsed last week. It was saved only after the Federal Reserve took extraordinary measures to help JPMorgan purchase the eighty-five-year-old firm.

As part of the deal, the Fed put up $30 billion to guarantee Bear Stearns’s riskiest investments. For the first time ever, the Federal Reserve has become the lender of last resort for other investment banks in an effort to prevent firms from going under. It is a move that marks one of the broadest expansions of the Fed’s lending authority since the 1930s. At least ten investment funds, including the fund Carlyle Capital run by the Carlyle Group, have recently collapsed or been forced to sell assets.

Consumers are feeling the effects of the economic crisis everywhere. Food prices are rising. Gas prices have reached all-time highs. The dollar is weakening. Credit card debt is expanding. Home prices are falling. And foreclosures continue to rise.

AMY GOODMAN: A year ago, Treasury Secretary Henry Paulson predicted the fallout from the subprime mortgage crisis was “largely contained.” But now, Alan Greenspan is admitting the current economic crisis will likely be the most wrenching since the end of the Second World War.

And then, there’s the occupation of Iraq, which has just entered its sixth year. The Nobel Prize-winning economist Joseph Stiglitz projects the war will cost at least $3 trillion.

We’re joined right now by two guests. Nomi Prins is with us. She’s a former investment banker turned journalist. She used to run the European analytics group at Bear Stearns. She is the author of two books: Other People’s Money: The Corporate Mugging of America and Jacked: How “Conservatives” Are Picking Your Pocket. She’s now a senior fellow at the think tank Demos. Max Fraad Wolff is an economist and writer. He is an instructor at the Graduate Program in International Affairs, New School University, here in New York. He’s a frequent contributor to the Huffington Post, Asia Times and The Indypendent.

We welcome you both to Democracy Now! Nomi Prins, this story is personal for you. You worked at Bear Stearns.

NOMI PRINS: Yes, actually, I did. I worked there from 1993 to 2000, so I actually worked there through the emerging market crisis and the Asian crisis and Long-Term Capital Management’s implosion and the start of CDOs, the collateralized debt obligations, that are sort of at the crux of a lot of the hedge fund and credit hedge fund implosions that I believe have had more of an impact on the negative aspects of the economy than the actual level of housing prices. It is a fact that investment banks could leverage and lend and leverage and lend, and so on, to create so much leverage in the market that the market cannot contain it, hence the Fed coming in and actually becoming an investment bank of sorts.

JUAN GONZALEZ: This issue of the CDOs, as you mentioned, these collateralized debt obligations, that really were the underpinning of this increased subprime lending that went on, clearly—we’ve discussed on previous shows that everyone was able to pass the blame onto someone else along the chain from the original broker or the mortgage lender down on the street to the firms on Wall Street. But to what degree is it your sense that those that were packaging these loans knew very well the risky nature of the lending practices that were at the bottom of the scale here at the street level?

NOMI PRINS: It’s not even a question they knew; they actually are predicated on lending practices being risky, because a risky lending practice means that interest rates on a particular lending practice are higher. That means when you package them into CDOs and other types of securities, they look like they have more of a return for investors or hedge funds that then buy them along the way. So there’s a desire for risk in the market.

AMY GOODMAN: What should we understand about Bear Stearns and this bailout?

NOMI PRINS: Two things. One is that this bailout, which is not merely a bailout, it is the Fed acting as an investment banker, as a hedge fund. They are taking $30 billion of risky assets. That’s not merely overstepping, which it also is, the lines between a government body and the public and the banking system; that is taking on additional risks that, instead of admitting should not have been there, should have been regulated away. We should have had not just lending practices, but leverage practices, on Wall Street regulated and transparent and curtailed. It is a way of not having to admit anything and throwing money into a declining economy and an increasing problem in order to look like everything is OK. The statement by Paulson, who used to run Goldman Sachs—it was a large player in the CDO market, after Bear Stearns started it—he is also not taking any blame for the system’s collapse because of its own choice to create these risky assets, to leverage them, to not talk about them, to not describe what is in them and to not show it to the FCC, to the public, to anyone.

JUAN GONZALEZ: I’d like to ask Max Wolff, this issue of government oversight and regulation, people forget now that it was back in the Clinton—in the latter part of the Clinton years that Glass-Steagall was eliminated, and I think Rubin’s last act as—and also a former Goldman Sachs person, right?—his last act before he left the Clinton administration was achieving the end of the Glass-Steagall Act. To what degree did that have an effect on how these kinds of risky investment practices are jumping over into the regular banking system?

MAX FRAAD WOLFF: That’s a great question. I mean, there’s also a debate about whether that was his last act at the Department of Treasury or his first act at Citigroup, because it was Citigroup’s merger that would have been illegal had Glass-Steagall not been repealed.

AMY GOODMAN: Explain Glass-Steagall.

MAX FRAAD WOLFF: Glass-Steagall was a law put in place after the Great Depression that created what they call a firewall or a separation between investment banking and commercial retail banking, the idea being that you want to contain the potential breakout of problems in the financial system so that it can’t spread like wildfire and roughshod across different segments of the industry, more or less like it has across the different segments of the US financial industry in the last, say, ten to twelve months with absolutely devastating results, which is still ongoing. So we can’t sum up the damage done, because each day there’s more damage, a little bit like the war in Iraq. Getting a tally on the damage or cost of Iraq is impossible because it goes up while you’re trying to measure how much it went up the day before, the week before, the month before, the year before. So it’s a bit of a mess.

So, Glass-Steagall is part of an old regulatory framework that has been systematically torn down. The tearing down of that framework has allowed global financial markets to integrate, which has allowed vast savings to pour into the United States, new financial products to be innovated by Wall Street and all kinds of different financial firms, without regulation outside the core of the banking system, which built up and built up and built up and was celebrated and celebrated and celebrated as the efficiency and the genius of the free market, until, of course, with no brakes and no skid marks at the scene of the accident, it hit a brick wall.

The only thing I might add to that is I take a bit of an issue with the description that Bear Stearns was bailed out. Everybody Bear Stearns does business with was bailed out. Bear Stearns was taken out by the Federal Reserve and JPMorgan, which then served Bear Stearns’s still-warm remains to JPMorgan Chase. And they are now devouring them, and it’s being celebrated as a rescue. And for the 30 percent of all shares held by its employees, it is a devastating blow that has taken away retirement plans, hopes for the future, etc., etc. So they bailed out Wall Street—

JUAN GONZALEZ: Very similar to the Enron crisis for the employees who held—

AMY GOODMAN: We have to break. When we come back, I want to ask Nomi about her colleagues at Bear Stearns, those very people that Max is talking about. We are talking about the crisis in the economy today. Max Fraad Wolff, our guest from New School University, and Nomi Prins, former investment banker at Bear Stearns, now journalist. Stay with us.


AMY GOODMAN: As we look at the economy today, we’re joined by Max Fraad Wolff, economist and writer, a teacher at the Graduate Program at New School University here in New York, also Nomi Prins, author of the book Jacked, as well as Other People’s Money: The Corporate Mugging of America. She is a former investment banker at Bear Stearns, worked there from ’93 to 2000.

Can you talk about what’s happening to the people inside Bear Stearns?

NOMI PRINS: Yeah. I mean to take off also from Max’s point. Inside the firm, for the most part, people have had no control over what has actually happened. They come in, they do their jobs. Like Enron, like WorldCom, like Global Crossing, it’s what they do. So when I was talking to my old friends there and my old colleagues there, I was getting comments like, you know, this is like getting literally punched in the face. This is like—one of the fellows who runs one of the areas said, “You know what? This is literally like having, you know, a child die. It’s like being raped.” It’s all of these things. You know, you leave work on Friday after the stock is down $30, you come in on Monday morning, having heard Sunday that you’re being taken out at $2 a share, and you know. And one of the guys in there who actually kind of was knowing what was going on said, you know, this was the government shutting us down.

So, as Max was saying, a bailout is one way to look at—the Fed bailed part of the banking industry out by shutting down Bear Stearns and coming in there to look like it was saving the day. The reality is, inside the firm, people are having to look for their jobs, people have been losing their retirement as they see their shares go down.

AMY GOODMAN: How many people work there?

NOMI PRINS: There’s 14,000 employees. And some of them say, “Well, we’re interviewing in other places.” You know, places like Goldman Sachs and Morgan Stanley are going to sort of pick up the remains of who’s left. But the reality is, the system is in such a devastating state right now that other firms are not going to pick up a lot of these people. And what they have amassed in retirement and in stock is actually worth very, very little.

And many of these people—I have friends in there who actually were at the Left Forum last weekend. You know, this is not just merely people who have run the company into the ground or taken all of the risk. These are people who go into work every day and really are looking at the fact that something happened around them that they have to deal with, much as with lots of other corporate failures.

JUAN GONZALEZ: And what’s the—looking down the road, what’s the potential expansion of this crisis, because other financial institutions have been talked about of having similar problems, having huge exposures on these CDOs? What’s your sense of what’s going to happen in the future?

NOMI PRINS: The CDO market is a $2 trillion market. The write-downs that have related to subprime loans underlying some of those securities have only amounted to about $120 billion. So when you look at the differentiation between what’s valued and what’s out there, you’re talking about a lot of potential catastrophe to come. And again, no discussion of what happened at the source to deregulate the market such that these things could be created. So there is a lot of downside. And the fact is, the banking system itself, through its own steps and with a lack of regulation, has leveraged itself beyond its capacity to take that risk.

AMY GOODMAN: Max Wolff, what’s going to happen? What should happen?

MAX FRAAD WOLFF: Well, I mean, I think it’s always tough to know exactly what’s going to happen. The way I like to do this in other lectures or my classes is to make the following point: there’s an epidemiology to this. And the discussion so far reminds me of the AIDS as “GAIDS” discussion, where we pathologize early victims as deviants who get some just punishment and pretend that it’s not a sort of pathogen entering a population where the sickest and most vulnerable fall first.

The sickest and most vulnerable people in the US money game are highly indebted, low-income consumers who tend to get subprime loans. In the journal—the mainstream journalist discussion, it sounds like there’s subprime people, like they’re born subprime in a special incubator with some kind of deformity. In fact, that’s a FICO credit score. And the poorest people get hit first and hardest by every economic disruption, because poverty means vulnerability in a market economy. So what we’ve seen in the beginning of a turndown of a long boom, a boom that really began in the early ’80s, is the weakest and most vulnerable with the most debt and the least income, the subprime crowd, hit—got slammed first, and then it sort of moves to the population, as “GAIDS” becomes AIDS becomes recognized.

And so, we’re—I think we’re in the early innings of this, maybe a third of the way through—half, if we’re lucky. Now, that doesn’t mean that the pain will continue to be so localized in finance. It’s already spilling out into the US macroeconomy. It is already an international phenomenon. And it’s heavily falling into retail. I expect severe difficulties in retail soon, and I expect greater difficulties in housing markets, because, actually, although it gets less press than I think it deserves, already 40-plus percent of delinquencies and default issue notices are moving out of the strict subprime market into what’s called Alt-A, Alt-B, and then prime—so, in other words, people between subprime and prime, and then cascading over into prime. We know this is a problem, because ten percent of all US homeowners are what we call “underwater”—they owe more than their house is worth. That’s a pretty serious amount.

And so, I see increasing bailouts with willy-nilly rewriting of federal legislation, which was done in those meetings. The JPMorgan-Federal Reserve meetings with Bear Stearns, in effect, redid American financial regulatory law, bumping an inactive Cox-led SEC out of the way, asserting Federal Reserve control in places and ways that had not been asserted before, and therefore front-running Congress and the presidency, which has been sitting on its hands, which is a little bit like the Glass-Steagall situation.

But now we have the Federal Reserve coming in to basically take out, not bail out, one firm to support all the other firms, immediately making available to them all kinds of access to cash and support they never got before, which, by the way, would have saved Bear Stearns, and in so doing—blasé, private meeting, no transparency—rewriting American financial legislation, while the President tells crazy fictional stories about Iraq and the Congress does fundraising for its next election, and is a byproduct that will be told later, what legislation to pass. I mean, it’s kind of surreal at this point.

AMY GOODMAN: I want to thank you both very much for being with us, Max Fraad Wolff, economist, writer, teaches at the New School University here in New York, writes for The Indypendent and Huffington Post and Asia Times; Nomi Prins, former investment banker at Bear Stearns, has written two books, Other People’s Money: The Corporate Mugging of America and Jacked: How Conservatives Are Picking Your Pocket.

Elliott Abrams assualt on Palestinians, Arabs & Muslims


Elliott Abrams' Uncivil war
Conflicts Forum, 7 January 2007

Is the Bush administration violating the law in an effort to provoke a Palestinian civil war?

Deputy National Security Advisor, Elliott Abrams — who Newsweek recently described as “the last neocon standing” — has had it about for some months now that the U.S. is not only not interested in dealing with Hamas, it is working to ensure its failure. In the immediate aftermath of the Hamas elections, last January, Abrams greeted a group of Palestinian businessmen in his White House office with talk of a “hard coup” against the newly-elected Hamas government — the violent overthrow of their leadership with arms supplied by the United States. While the businessmen were shocked, Abrams was adamant — the U.S. had to support Fatah with guns, ammunition and training, so that they could fight Hamas for control of the Palestinian government.

While those closest to him now concede the Abrams’ words were issued in a moment of frustration, the “hard coup” talk was hardly just talk. Over the last twelve months, the United States has supplied guns, ammunition and training to Palestinian Fatah activists to take on Hamas in the streets of Gaza and the West Bank. A large number of Fatah activists have been trained and “graduated” from two camps — one in Ramallah and one in Jericho. The supplies of rifles and ammunition, which started as a mere trickle, has now become a torrent (Haaretz reports the U.S. has designated an astounding $86.4 million for Abu Mazen’s security detail), and while the program has gone largely without notice in the American press, it is openly talked about and commented on in the Arab media — and in Israel. Thousands of rifles and bullets have been poring into Gaza and the West Bank from Egypt and Jordan, the administration’s designated allies in the program.


A CounterPunch Special Report
Thoughts on the Attempted Murder of Palestine
The Siren Song of Elliott Abrams

Former CIA analyst

"Coup" is the word being widely used to describe what happened in Gaza in June when Hamas militias defeated the armed security forces of Fatah and chased them out of Gaza. But, as so often with the manipulative language used in the conflict between the Palestinians and Israel, the terminology here is backward. Hamas was the legally constituted, democratically elected government of the Palestinians, so in the first place Hamas did not stage a coup but rather was the target of a coup planned against it. Furthermore, the coup -- which failed in Gaza but succeeded overall when Palestinian Authority President Mahmoud Abbas, acting in violation of Palestinian law, cut Gaza adrift, unseated the Palestinian unity government headed by Hamas, and named a new prime minister and cabinet -- was the handiwork of the United States and Israel.

The Fatah attacks against Hamas in Gaza were initiated at the whim of, and with arms and training provided by, the United States and Israel. No one seems to be making any secret of this. Immediately after Hamas won legislative elections in January 2006, Elliott Abrams, who runs U.S. policy toward Israel from his senior position on the National Security Council staff, met with a group of Palestinian businessmen and spoke openly of the need for a "hard coup" against Hamas. According to Palestinians who were there, Abrams was "unshakable" in his determination to oust Hamas. When the Palestinians, urging engagement with Hamas instead of confrontation, observed that Abrams' scheme would bring more suffering and even starvation to Gaza's already impoverished population, Abrams dismissed their concerns by claiming that it wouldn't be the fault of the U.S. if that happened.

Abrams has been working on his coup plan ever since with his friends in Israel. As part of this scheme, the U.S. also urged Abbas -- again making no secret of this -- to dissolve the Fatah-Hamas unity government formed in March this year, form a new government, and call for new elections. Abbas acceded to U.S. demands with embarrassing alacrity after Hamas took Gaza. In a further gratuitous turn of the screw, he has appealed to Israel to turn up the heat on Hamas in Gaza by stopping delivery of fuel to Gaza's power plant and keeping the Rafah border crossing point from Egypt closed so that none of the thousands of Palestinian waiting at the border to return home will be able to enter.

Monday, March 17, 2008

Paul Craig Roberts: How to End the Subprime Crisis

Here's Roberts' last line:
However, greed and ideology won over sound advice. The result is a crisis that, if mishandled, will be calamitous.
Since Bush and Cheney want calamity in the US as they want it in Iraq, and everywhere else, they will run far and fast from any remedy to the crisis. In this case, they don't have to run. All they have to do is to do what they are now doing, nothing; and to sit on any positive movement or ideas.

March 11, 2008
How to End the Subprime Crisis


Reforms often do more harm than good. This is currently the case with the “mark-to-market” rule, which is imploding the US financial system by requiring financial institutions to value subprime mortgages at their current market values.

This makes a big problem for balance sheets. These financial instruments became troubled prior to a market being established for them, as they were marketed direct from issuers to investors. Now that they are troubled and with their true values unknown, no one wants them. Their lack of liquidity assigns them a low value.

The result is tremendous pressure on balance sheets. The plummeting value of subprime derivatives is pushing institutions that own them into insolvency, destroying their own stock values and forcing the financial institutions to sell untroubled liquid assets, thus resulting in an overall decline in the stock market.

The solution is to suspend the mark-to-market rule. Instead, allow financial institutions to keep the troubled instruments at book value, or 85-90% of book value, until a market forms that can sort out values, and allow financial institutions to write down the subprime mortgages and other troubled instruments over time.

Suspending the mark-to-market rule would take pressure off the stock market and make it unnecessary for the Fed to lower interest rates in an effort to force liquidity into the economy through an impaired banking system. The problem is not a general lack of liquidity, but liquidity for poorly conceived new financial instruments. Low US interest rates could worsen the crisis by accelerating the dollar’s decline. Now that inflation has raised its head, more liquidity from the Fed adds to the economic distress.

It is mindless to allow a “reform” to cause a financial crisis, but that is what is happening. Unfortunately, there are people who argue that anything less than financial armageddon would create a “moral hazard.”

It is certainly true that securitized subprime mortgage instruments were a bad idea, that a lot of people who should have known better opened floodgates to greed and fraud, and that “somebody should pay.” But it shouldn’t be the general public and the economy that pays.

It is also true that without the Federal Reserve’s irresponsible low interest rate monetary policy, which produced a housing boom, the subprime instruments would not have been created, or at least not in such amounts. Rapidly rising real estate prices were expected to make the risky loans good. What were issuers and the Federal Reserve thinking?

No doubt but that greed, fraud, and bad policy all played their roles. But at the heart of the problem is a 1999 “reform” that repealed an earlier reform known as the Glass-Steagall Act.

In 1933 the Glass-Steagall Act separated commercial banking from the securities business. It prevented securities speculation from destroying bank capital and shrinking bank deposits from bank failures and runs on banks by depositors. Congress and President Bill Clinton foolishly repealed the Glass-Steagall Act in 1999.

The repeal of the 1933 law was driven by profit lust in the banking industry and by “free market” ideology, which claims the unfettered marketplace is always superior to regulation. In pushing the repeal forward, Congress and Clinton ignored warnings from the General Accounting Office that the banks needed to build up their capital levels before being permitted to enter a broad range of securities businesses. The GAO also noted that there were no regulatory structures in place to monitor the new financial networks that would result from removing the wall between commercial and investment banking.

However, greed and ideology won over sound advice. The result is a crisis that, if mishandled, will be calamitous.

Paul Craig Roberts was Assistant Secretary of the Treasury in the Reagan administration. He was Associate Editor of the Wall Street Journal editorial page and Contributing Editor of National Review. He is coauthor of The Tyranny of Good Intentions.He can be reached at:

Robert Parry: Did Hillary Clinton fabricate her role in the S-Chip Program?
Clinton's Child-Health Hype

By Robert Parry
March 17, 2008

A centerpiece of Hillary Clinton’s case for her candidacy – that she rebounded from the disaster of her health-care plan in 1994 to help enact a popular state-by-state program for children’s health insurance three years later – looks to be largely a fabrication.

At most, Clinton appears to have been a quiet supporter within her husband’s White House for the so-called S-CHIP program, which was fashioned through bipartisan compromise in the U.S. Senate against initial Clinton administration opposition.

Nevertheless, in debates and speeches over the past several months, Clinton has presented her S-CHIP role as proof of her key argument that the way to achieve progress in Washington is through hard work and determination.

“You know, when I wasn’t successful about getting universal health care, I didn’t give up,” Clinton said during the Feb. 26 debate in Ohio. “I just got to work and helped to create the Children’s Health Insurance Program. And, you know, today in Ohio 140,000 kids have health insurance.”

In speeches, Clinton alters her references to the S-CHIP program to cite the number of children covered in whatever state she’s in. Her story often receives warm applause and the nodding of heads. Sometimes, mothers of sick children are brought to Clinton’s campaign appearances to thank her.

However, according to people familiar with the history of the S-CHIP program, Clinton’s account is essentially false or – at least – a gross exaggeration.

In her memoir, Living History, the S-CHIP law merited only a brief reference at the end of a long paragraph in which she asserts, “I worked behind the scenes with Senator [Ted] Kennedy to help create the Children’s Health Insurance Program.”

However, according to a Boston Globe examination of the program’s history, Clinton “had little to do with crafting the landmark legislation or ushering it through Congress.” The Globe article by Susan Milligan quoted key participants in the law’s passage as having little or no recollection of any legislative role by the then-First Lady.

“The [Clinton] White House wasn’t for it,” said Sen. Orrin Hatch, R-Utah, who worked with Sen. Kennedy, D-Massachusetts, to write the law and to win passage. “We really had to rough them [President Bill Clinton and his advisers] up. … She may have done some advocacy [privately] over at the White House. But I’m not aware of it.”

President Clinton fought the original S-CHIP plan in 1997 because he feared it might disrupt a budget deal he was crafting with Republican leaders who then controlled Congress. However, Kennedy – recruiting Hatch and other Republicans – managed to forge a bipartisan consensus behind the bill, which passed later that year.

Asked by the Globe about Hillary Clinton’s role, Hatch responded: “Does she deserve credit for S-CHIP? No, Teddy does, but she doesn’t.”

Bay State Plan

The Globe reported that Kennedy patterned the S-CHIP plan after a Massachusetts program that started in 1996. Kennedy met with two Bay State health-care advocates, Dr. Barry Zuckerman of Boston Medical Center and John McDonough, then a Democratic state legislator.

McDonough said Kennedy developed the national S-CHIP concept after that meeting.

“I don’t recall any signs of Mrs. Clinton’s engagement,” said McDonough, who has not endorsed a presidential candidate. “I’m sure she was behind the scenes, engaged in lobbying, but it is demonstrably not the case” that she was a driving force behind the bill.

Rep. Henry Waxman, a California Democrat who was then the ranking Democrat on the House Energy and Commerce Committee that handles health legislation, also had no recollection of Hillary Clinton weighing in.

“I don’t remember the role of the [Clinton] White House,” said Waxman, who is uncommitted on this year’s presidential race. “It [the S-CHIP bill] did not originate at the White House.”

In response to the Globe’s inquiries, Clinton campaign advisers did not spell out what Clinton did to enact the law, but one aide, Chris Jennings, said “at every step of the way, she was always pushing” for expanded healthcare for children.

The Clinton campaign also suggested that politics might be influencing the questions about Clinton’s S-CHIP role, since Sen. Kennedy has endorsed Barack Obama and Sen. Hatch is supporting John McCain, the presumptive Republican nominee. [Boston Globe, March 14, 2008]

Still, while it’s common for politicians to highlight their roles in passing popular legislation, Sen. Clinton has woven the enactment of S-CHIP as a central thread in her campaign narrative. It explains how she would govern and why voters should embrace her vision that pluck and hard work can conquer all.

In Clinton’s narrative, she picked herself up from her failed health-care plan, learned some lessons, and then pushed through a slimmed-down measure (S-CHIP) that has produced important results for millions of American families.

If that story is essentially false, then she is misleading voters not only on her credentials as a bipartisan crafter of legislation but on her notion that she can bring about change through her burn-the-midnight-oil tenacity.

Barack Obama has offered a competing vision, that his ability to rally public enthusiasm for change – and his distance from the bitter partisanship of the Clinton Years – will let him transcend Washington’s divisions and achieve real progress on domestic priorities.

Though there may be merit to both approaches, neither Democratic candidate has articulated what may be the most important element in overcoming Republican resistance – winning a landslide that carries in large Democratic majorities in the House and Senate.

However, the likelihood that either Obama or Clinton will have the “coattails” needed to achieve a filibuster-proof Senate or a dominant House majority has faded over the past several weeks with the length and negativity of the Democratic nominating race.

The disclosure that Hillary Clinton hyped her role in passing the S-CHIP law is only going to raise new doubts about the honesty and integrity of the onetime Democratic frontrunner.

Robert Parry broke many of the Iran-Contra stories in the 1980s for the Associated Press and Newsweek. His latest book, Neck Deep: The Disastrous Presidency of George W. Bush, was written with two of his sons, Sam and Nat, and can be ordered at His two previous books, Secrecy & Privilege: The Rise of the Bush Dynasty from Watergate to Iraq and Lost History: Contras, Cocaine, the Press & 'Project Truth' are also available there. Or go to

Friday, March 14, 2008

Xymphora: Hillary and the race card

Hillary trying to ensure a McCain victory. Even Hillary's not that powerful. If she were , she'd have more effective means, such as election fraud which she's benefited from in at least two states, NY and NH, that I'm aware of. (She probably won NY but certainly not by the official margin. See the NYT article and my forthcoming blog.) --RB
Hillary's two-part strategy

by Xymphora

It is impossible to continue to pretend that the Clinton race-baiting isn't a conscious strategy of the campaign. They can do the math. She can't possibly obtain enough elected delegates. She needs to convince the superdelegates that Obama is unelectable, and the only way to do that is to make it appear that race will be enough of an issue that it will lead to a McCain win over Obama.

The deeper, more Machiavellian, strategy is also based on mathematics, her age. McCain won't run again. Obama, if he wins, will. She'll be too old to run if she has to wait through two more terms. He only hope is to ensure that McCain beats Obama, and then run against the new Republican candidate in 2012. She therefore has to make race a big issue, to make sure that McCain wins. It is not a 'suicide pact': she is intentionally attempting to make sure that McCain wins so that she can run in 2012.

The Clintons' strategy is risky as it runs the risk of backfiring. They are basically insulting Americans by assuming Americans are racists. Even racists don't like to have somebody make that kind of insulting assumption! Here's an idea: why doesn't she throw caution to the winds, switch parties, and run as McCain's VP? Do you think her elderly female fans would follow her, on the assumption that the bigger deal is that she can then run as the super bipartisan (and MWFTJP) candidate in 2012? Too crazy, right?

Wednesday, March 12, 2008

Eric Alterman: Why Mainline Jews Fear Obama

Hint: Go to the last paragraph.

Eric Alterman
(Some) Jews Against Obama

[from the March 24, 2008 issue]

This article can be found on the web at

During the past few months a small group of neoconservative Jews, many of whom hold key positions in the world of official Jewish institutions, have been working to undermine the presidential candidacy of Barack Obama with a series of carefully planted character assassinations and deliberately misleading innuendo. I noticed this trend when Debra Feuer, a counsel for the American Jewish Committee, sent a confidential memo to her counterparts at other organizations criticizing Obama's views on the Middle East, Iran and Syria and attacking him for having once appeared at a fundraiser headlined by the late Edward Said. The memo, reported by the Forward, was immediately disowned, but not denied, by AJC executive director David Harris.

Also throwing his hatchet into the ring was Morton Klein, who heads up the Likud-loving Zionist Organization of America, complaining that "Barack Obama doesn't understand the continuing Arab war against Israel" and terming the notion of an Obama presidency "frightening." He was joined by Malcolm Hoenlein, executive vice president of the Conference of Presidents of Major American Jewish Organizations, the umbrella group that professes to speak for all American Jews. Hoenlein told the Israeli daily Ha'aretz that Obama's talk of "change" could prove "an opening for all kinds of mischief" and gave voice to what he termed "a legitimate concern over the zeitgeist around the campaign." The Tennessee Republican Party issued a news release noting what it claimed was "a growing chorus of Americans concerned about the future of the nation of Israel, the only stable democracy in the Middle East, if Sen. Barack Hussein Obama is elected president of the United States."

Let us note first of all that, like every American politician for the past half-century or so with nondelusional presidential aspirations, Obama views the crisis of Israel/Palestine largely through an Israeli lens. He asserts that he would not even be in politics at all were it not for the support he has enjoyed from his local Jewish community. He called Israel one of "our most important allies" and added, "I think that its security is sacrosanct and that the United States has a special relationship with Israel, as I myself do with the Jewish community."

Thanks in part to statements like those, the neoconnish campaign against Obama was not able to gain much traction. Perhaps as a consequence, as the Forward has editorialized, "the attacks on Obama have metastasized into a wide-ranging assault on his associations." These attacks, as blogger Matthew Yglesias notes, have largely amounted to the following: "First Obama was an anti-Semite because Zbigniew Brzezinski is an anti-Semite. Then Obama was an anti-semite because Robert Malley is an anti-semite. And now according to [Commentary's Noah] Pollack [sic] it's Samantha Power who's tainted by Jew-hatred."

The surrogate slurs have come from many sources. Writing on, right-wing blogger Ed Lasky argued that Malley, an Obama adviser and former Clinton national security official, "represents the next generation of anti-Israel activism." CAMERA, the Committee for Accuracy in Middle East Reporting in America, took this a step further by investigating Malley's roots and declaring that "Malley's parents were rabidly anti-Israel" and that Malley's articles on Middle East issues "demonize Israel only slightly less than his father." This is nonsense, naturally. Former National Security Adviser Sandy Berger and former State Department officials Dennis Ross, Martin Indyk, Aaron David Miller and Daniel Kurtzer, all of whom worked with Malley, signed a letter denouncing "a series of vicious personal attacks" against him. Regarding the much admired Ms. Power, neocon foreign policy wonk Max Boot has taken his colleague Pollak to task for his misleading attack on her views in Commentary's blog "Contentions," where the attacks originally appeared.

According to a report in Newsweek, Ann Lewis, a senior adviser to Hillary Clinton, made reference during a conference call with Jewish leaders to Brzezinski, whom she falsely labeled Obama's "chief foreign policy adviser." (In fact, according to Brzezinski, he has advised Obama on a total of one occasion.) While Brzezinski did anger some Jews with his endorsement of the controversial Walt/Mearsheimer book, his views are not only well within the foreign policy mainstream; they are also completely consistent with those expressed by a majority of American Jews--far more so than those hawks who profess to speak in their name.

In a remarkably stupid line of questioning during the final Democratic debate, Tim Russert demanded over and over that Obama reject Louis Farrakhan's kind words for him so that Jews might feel a bit more comfortable with him. (In fact, according to exit polls, Obama has beaten Clinton among Jewish voters in California, Connecticut and Massachusetts, while she has bested him in New York, New Jersey and Maryland.) When Obama decided to indulge Russert and "reject and denounce" Farrakhan, Russert kept up his lunatic line of questioning by demanding that Obama reject Russert's misstated version of his Protestant minister's views as well.

What is it that these neocons and their media mouthpieces really fear about an Obama presidency? Perhaps it is honesty about the issue. Speaking to a largely Jewish audience in Cleveland, Obama explained, "There is a strain within the pro-Israel community that says unless you adopt an unwavering pro-Likud approach to Israel, you're anti-Israel and that can't be the measure of our friendship with Israel." Then came his kicker: "One of the things that struck me when I went to Israel was how much more open the debate was around these issues in Israel than they are sometimes here in the United States." No wonder he scares them so...

Eliot Spitzer:,Feb 2008: Bush-Cheney's war on consumers --US intervention to support predatory lending

Predatory Lenders' Partner in Crime

By Eliot Spitzer
The Washington Post
(reprinted at

Thursday 14 February 2008
How the Bush Administration stopped the states from stepping in to help consumers.

Several years ago, state attorneys general and others involved in consumer protection began to notice a marked increase in a range of predatory lending practices by mortgage lenders. Some were misrepresenting the terms of loans, making loans without regard to consumers' ability to repay, making loans with deceptive "teaser" rates that later ballooned astronomically, packing loans with undisclosed charges and fees, or even paying illegal kickbacks. These and other practices, we noticed, were having a devastating effect on home buyers. In addition, the widespread nature of these practices, if left unchecked, threatened our financial markets.

Even though predatory lending was becoming a national problem, the Bush administration looked the other way and did nothing to protect American homeowners. In fact, the government chose instead to align itself with the banks that were victimizing consumers.

Predatory lending was widely understood to present a looming national crisis. This threat was so clear that as New York attorney general, I joined with colleagues in the other 49 states in attempting to fill the void left by the federal government. Individually, and together, state attorneys general of both parties brought litigation or entered into settlements with many subprime lenders that were engaged in predatory lending practices. Several state legislatures, including New York's, enacted laws aimed at curbing such practices.

What did the Bush administration do in response? Did it reverse course and decide to take action to halt this burgeoning scourge? As Americans are now painfully aware, with hundreds of thousands of homeowners facing foreclosure and our markets reeling, the answer is a resounding no.

Not only did the Bush administration do nothing to protect consumers, it embarked on an aggressive and unprecedented campaign to prevent states from protecting their residents from the very problems to which the federal government was turning a blind eye.

Let me explain: The administration accomplished this feat through an obscure federal agency called the Office of the Comptroller of the Currency (OCC). The OCC has been in existence since the Civil War. Its mission is to ensure the fiscal soundness of national banks. For 140 years, the OCC examined the books of national banks to make sure they were balanced, an important but uncontroversial function. But a few years ago, for the first time in its history, the OCC was used as a tool against consumers.

In 2003, during the height of the predatory lending crisis, the OCC invoked a clause from the 1863 National Bank Act to issue formal opinions preempting all state predatory lending laws, thereby rendering them inoperative. The OCC also promulgated new rules that prevented states from enforcing any of their own consumer protection laws against national banks. The federal government's actions were so egregious and so unprecedented that all 50 state attorneys general, and all 50 state banking superintendents, actively fought the new rules.

But the unanimous opposition of the 50 states did not deter, or even slow, the Bush administration in its goal of protecting the banks. In fact, when my office opened an investigation of possible discrimination in mortgage lending by a number of banks, the OCC filed a federal lawsuit to stop the investigation.

Throughout our battles with the OCC and the banks, the mantra of the banks and their defenders was that efforts to curb predatory lending would deny access to credit to the very consumers the states were trying to protect. But the curbs we sought on predatory and unfair lending would have in no way jeopardized access to the legitimate credit market for appropriately priced loans. Instead, they would have stopped the scourge of predatory lending practices that have resulted in countless thousands of consumers losing their homes and put our economy in a precarious position.

When history tells the story of the subprime lending crisis and recounts its devastating effects on the lives of so many innocent homeowners, the Bush administration will not be judged favorably. The tale is still unfolding, but when the dust settles, it will be judged as a willing accomplice to the lenders who went to any lengths in their quest for profits. So willing, in fact, that it used the power of the federal government in an unprecedented assault on state legislatures, as well as on state attorneys general and anyone else on the side of consumers.


The writer is governor of New York

Tuesday, March 4, 2008

Glenn Greenwald: House Democrats Bow to Bush on Illegal Wiretapping

Here are the first few paragraphs of Glenn Greenwald's latest screed on the capitulation of the Democrats to Bush-Cheney's illegal activities. Greenwald is once again on target except that he prefers to ignore the Zionist issue, namely that all of Congress and much of the grassroots is comfortable with "Islamic extremism" as the dangerous element justifying such illegality and corruption of our democratic values. --Ronald

Glenn Greenwald
Monday March 3, 2008
House Democratic leadership: not just complicit but also self-destructive

The signs are unmistakably clear that what was always inevitable -- full compliance by the House Democratic leadership with Bush's demands on warrantless eavesdropping and telecom amnesty -- is now imminent. House leaders spent the week floating their specific proposals for how they intend to comply in full, and yesterday, House Intelligence Committee Chairman Silvestre Reyes went on CNN with Wolf Blitzer, refused to criticize the President or the Senate FISA bill, and repeatedly and meekly expressed his willingness "this week" to give what he called full "blanket immunity" to telecoms (C&L has the video of Reyes' astoundingly weak and incoherent answers in response to Blitzer's Bush-mimicking questions).

This is, of course, everything except surprising. No rational person who has watched Congressional Democrats since they took over Congress could possibly have expected them to do anything but what they always do: namely, whatever they're told to do by the White House. The last thing they were ever going to do was stand their ground over Americans' basic liberties and the rule of law, concepts about which they couldn't possibly care less.

The whole drama they started when they refused to pass the Senate bill by the deadline was never about anything substantive. They were just throwing a little petulant tantrum because they felt they were being treated unfairly again because they were given only a few days to comply with the President's orders, when they wanted a couple of weeks to comply.

And their irritation wasn't even directed at the President as much as it was at the Senate for being so unfair in waiting until the deadline to pass a FISA bill, thus giving the House only a small amount of time to capitulate in full (on CNN, Chairman Reyes refrained almost completely from criticizing the White House, instead reserving his criticism for the Senate over this procedural insult). The only "principle" the bulk of Congress believes in is the preservation of their own ceremonial customs. That's all this drama was ever about.

There's very little point anymore in writing about how the Congressional Democratic leadership is complicit in all of the worst Bush abuses, or about how craven they are. All of that is far too documented and established at this point to be worth spending any time discussing. They were never going to take a stand against warrantless eavesdropping or the destruction of the rule of law via telecom amnesty for one simple reason: many of them don't actually oppose those things, and many who claim to oppose them don't actually care about any of it. That's all a given.

Saturday, March 1, 2008

Book Review: Ronald Bleier: Annie Machon: Spies, Lies and Whistleblowers: MI5, MI6 Agents of Terror

It’s the (Intelligence and Security) Services, Stupid: A review of Annie Machon’s Spies, Lies and Whistleblowers: MI5, MI6 And the Shayler Affair[1]

By Ronald Bleier

February 2008

We joined the services to stop terrorism, not become involved in it.”

“It appears that we have given up on the notion of due process, fair trials and democratic rights in Britain.”

-- Annie Machon

In August 1997 two ex- MI5 officers, David Shayler and his companion Annie Machon, fled to France in connection with their plan to expose corruption and mismanagement in MI5 and MI6, Britain’s domestic and foreign intelligence services. Both highly rated agents, they had spent years unsuccessfully attempting to redress issues of corruption and mismanagement. Spies, Lies tells their story in remarkable and eye opening detail as they blow the whistle on outmoded procedures, low officer morale and drunkenness, and on misguided and illegal operations. Their book traces the steps by which they came to the alarming conclusion that the intelligence and security services have devolved into the enablers and initiators of terror.

At the heart of the book is the exposure of a sensational case of MI6 collusion with an Islamic extremist group that tried to assassinate Colonel Gaddafi. The public didn’t learn of the plot until the New York Times (NYT) published an account on August 5, 1998 under the interrogative title: “Did the British government try to assassinate Col. Muammar el-Qaddafi the Libyan leader, in February 1996 by planting a bomb under his motorcade?” The Times noted that MI6 paid $160,000 to the group. (pp. 247- 250) The NYT story was soon confirmed on BBC’s Panorama TV program and a few months later, in November 1998, the government of Libya showed TV footage of the attack.

Machon explains that she and Shayler decided to voluntarily leave the service about a year before they fled England. They coordinated their flight with the publication of an article by Shayler in the Mail on Sunday, the sister publication of Britain’s popular newspaper, The Daily Mail. They fled in order to give the newly elected Labour government led by Tony Blair time to investigate their evidence. They were optimistic about getting a fair hearing since Blair had just won an election by a landslide on a reform platform that included human rights and an ethical foreign policy. (p. 192)

Shayler and Machon placed much of their hopes in a public interest defence, which Tony Blair, his new Home Secretary, Jack Straw, and his Attorney General, John Morris, had unsuccessfully supported while in opposition when the Official Secrets Act had been updated in 1989. Moreover Machon expected that government ministers would be “outraged” to find that the “secret state” had compiled and maintained personal files on them as if they were security risks. “If there was ever a time,” Machon writes, “to make Britain’s outdated and anti-democratic system – -particularly with regard to the intelligence establishment –- more open and accountable, this was it.” (p. 192)

In the end Shayler and Machon were cruelly disillusioned when they found that the Blair government chose not to address the issues they raised, but instead launched a vicious and libelous smear campaign against them. The government’s damage control/cover up operation was largely successful, and it wasn’t until a year later that the news of the MI6 terror conspiracy rose to such a level that it required a public denial by Foreign Secretary Robin Cook.

The Real Security Issue

The key issue raised by the Gaddafi assassination conspiracy is the basic one of security. Machon writes that most experts believe that assassinations of heads of state tend to destabilize a region. Such actions create a power vacuum that leads to unrest and violence. Had the assassination attempt succeeded, it might have led to the emergence of an Islamic state in Libya that could have posed a regional and international security threat. Machon wonders if “at the very least” MI5 might have been dupes of the extremists, unwittingly creating the circumstances leading to a state controlled by fundamentalists. (pp. 282-284)

Machon here limits her consideration to the least worst-case scenario. However, readers may well doubt that MI6 didn’t understand the implications of an extremist takeover in a strategic North African country. Is it not simpler to conclude that MI6 deliberately intended the very destabilization that would be the predictable consequence of the success of such a conspiracy?

Why would the services deliberately work at cross-purposes to their mission to protect the public from crime, disorder and terror? Spies, Lies argues that the intelligence and security services in Britain (and doubtless elsewhere if not everywhere) have morphed into the very enemy that they were created to defend. Instead of fighting terror, they sponsor terror.

Much of the problem lies in the natural tendency of government agencies to grow larger and more powerful. With the collapse of the Soviet Union (1989-1991) Western military and intelligence agencies scrambled to create a substitute enemy. At the time it may have seemed that Islamic terrorism would not be perceived as sufficiently threatening to justify Cold War budgets. However, since fear of Moslem terror was grounded in the Israeli-Arab conflict and the powerful pro Zionist/anti Muslim ethos, it only awaited adequate fertilization. In the academic world, Bernard Lewis, English born, Jewish professor of Middle East studies at Princeton, supplied a Zionist perspective for his scholarly justification for the clash of Western vs. Moslem cultures. In Lewis’s view, nationalist Islamists posed a threat not merely to the Jewish state that they believed discriminated against Muslims, but to the Western world and its values.

In the end it didn’t take long for militarists in the U.S. and in Europe to shift their targets. As chance or a decisive covert push from the CIA would have it, the anti-Muslim movement was propelled by Saddam Hussein’s decision to invade Kuwait in August 1990. There soon followed such high profile set pieces as the World Trade Center bombing in New York City in 1993, the African Embassy bombings of August 1998, the USS Cole bombing of October 2000, and others – most or all attributed to Al Qaeda.[2] Yet these and other high profile terror events tellingly display the distinctive red flag (as does the MI6 Gaddafi assassination plot, not to mention the terror of 9/11) of a covert government connection with those accused of responsibility for the attacks.

Sadiq living in London

For example, in addition to the London based Libyan agent codenamed Tunworth with whom MI6 negotiated, the BBC TV Panorama program reported that Libya accused the UK of giving refuge to Abdullah Al-Sadiq, the leader of the Militant (or Fighting) Islamic Group (FIG), the organization which planned the Gaddafi assassination. The Foreign Office, pressured to address the media report, issued a non-denial denial; simply saying said that they didn’t know if Sadiq was in the country, which, according to Machon, was also a lie. (pp. 247-248)

Kalifa Bazelya

Machon also devotes a chapter to the strange (or not so strange) case of Khalifa Bazelya, the charge d’affairs of the Libyan Interest section in London, a known member of a Libyan terrorist organization, the ESO. Machon claims that the ESO was responsible for the Lockerbie bombing of December 1988 in which 270 people were killed, and the 1989 bombing of a French plane, UTA 772 in which 171 people died.

Bazelya was allowed into England in 1993 on the unconvincing pretext that MI6 thought that they could recruit him. Machon argues that if the government had really wanted to do so, they could have approached him while he was in Libya, saving the British taxpayers the millions of pounds that it cost for his surveillance from June 1993 to December 1995. Moreover, as part of the intelligence services’ surveillance protocol, Bazelya was allowed to operate freely. While in the UK he intimidated opposition Libyans and created local terror cells. After a great deal of effort, Shayler finally managed to get Bazelya declared persona non grata, forcing him to return home. (pp. 139ff)

Judith Hart --How MI5 vetoed Wilson’s choice of a Cabinet Minister

Machon presents several characteristic instances revealing the services’ abuse of their powers. One of these, the case of Judith Hart, rose to the level of a cause célèbre in the 1970s in Harold Wilson’s government. MI5 prevented Hart from obtaining a ministerial post alleging that she had connections with communists. In an unprecedented move, a skeptical Harold Wilson demanded the raw intelligence on which MI5 based their allegations rather than simply the summaries usually supplied to ministers. As it turned out, a telephone tap revealed that Hart had indeed been in contact with the Communist Party HQ in King Street, but only to talk to a friend who worked there. Nevertheless, Wilson agreed to post Hart to a less sensitive area of government. (pp. 48-49)

Breaking and entering the home of an Opposition Journalist

The case of Victoria Brittain, a journalist for the left of center Guardian newspaper, was one where MI5 not only abused its powers but also engaged, Machon claims, in gross illegality. The pretext for their harassment of someone MI5 apparently considered an ideological enemy was that Brittain was involved in supporting Libyan terrorists. Shayler, who was handed the Brittain brief in 1995, soon found that the evidence against her was wholly without merit and that she was by no means a security threat. He also learned that MI5 falsified evidence that was presented to the Home Secretary in order to obtain a warrant to break and enter her home, to search her papers and to install an eavesdropping device. Shayler also discovered that MI5 also illegally collected financial information from her bank without a warrant. (pp. 158-159)

Despite Shayler’s protests, MI5 refused to shut down the operation and the case threw him into a crisis. He was faced with the choice of following orders based on illegal operations or resigning. In 1995, about a year before he finally resigned, he still had hopes of effecting change from within and he decided that it was best not to be labeled a troublemaker.

When he fled to France in August 1997, Shayler went public with his information about the “flawed” Victoria Brittain investigation, which is how she learned of MI5’s trampling her rights. Shayler’s leak of the Brittain case was specifically cited as one of the reasons that he was later convicted and imprisoned for offenses against the Official Secrets Act. (p. 199; 206)

The power of the secret government

One means by which the services secure and maintain their power in the UK and elsewhere has already been mentioned: the practice of maintaining files with potentially embarrassing or career destroying information on a wide variety of people. Machon found that MI5 was rife with personnel imbued with a Cold War, “Reds under the bed” mentality. Often senior management types, they tended to view politicians, professionals and others as enemies of the state if their views were left of center or if they pressed for reform.

Machon explains that during her MI5 induction courses she was told that MI5 had compiled over a million such files. They were taught that the files were rife with errors and recruits understood that they offered possibilities for abuse. In her almost six-year career with MI5 Machon reviewed or was shown by colleagues the files kept by MI5 on about 30 politicians, celebrities, union leaders and others, including such well known figures as John Lennon, Tony Blair and his wife Cherie, cabinet members Jack Straw, Clare Short, Robin Cook, Conservative British prime minister Ted Heath, Labour MP leader Neil Kinnock, Labour PM Harold Wilson, and others.

The judicial system – an arm of the government

Machon’s chapter on “British Justice in Action,” details Shayler’s trial and his unsuccessful appeal in all its fascinating and infuriating detail. Machon argues that Shayler’s ordeal was not about due process but was intended to shield the services from scandal and embarrassment.

As he expected, when he returned to England in 2000, Shayler was charged with offenses against the Official Secrets Act among other transgressions. In lengthy pre trial procedures the Crown successfully worked to ensure the inadmissibility of Shayler’s core contention that he was forced to go public because no one in the chain of command, including the prime minister’s office, would accept his evidence. In the end the courts accepted the fiction that he made no such effort. (pp. 322-323)

On November 4, 2002, Shayler was found guilty of offenses against the Official Secrets Act and was sentenced to 6 months in jail. Upon his conviction the media didn’t shrink from piling on, dishing out disinformation supporting the government position. One egregious lie widely broadcast was the claim that Shayler had “sold agent lives down the river for money” although no one ever produced any such evidence.

The Services Prolong the Irish Civil War

Both Shayler and Machon served in departments at MI5 that worked on IRA terror. Accordingly they could both testify that, as she puts it in one of her chapter heads, “MI5 Fails to get to Grips with the IRA.” In 1971 the British Army was sent to Northern Ireland to protect Catholics from Protestant violence since the local police forces, the Royal Ulster Constabulary, effectively took the side of the Protestants. Very soon the British Army lost the support of Catholics when they embarked on a policy of imprisoning IRA suspects without trial. This policy led directly to the events of Bloody Sunday, January 30 1972, when the British Army shot 26 Catholics (13 were killed, including 6 minors) who were marching in protest against arbitrary detentions. Over the next three decades more than 3,000 people died and hundreds of millions of pounds were spent in insurance payouts alone. (pp. 58-59)

MI5’s Failure to Prevent Bishopsgate

Machon devotes a chapter to the bombing of Bishopsgate, the IRA attack of April 1993 in the City of London, which she claims is one of four attacks that could have been prevented had MI5 acted on available information. The Bishopsgate bombing was the most financially devastating attack in UK history (one person was killed, none injured). It cost the taxpayer 350 million pounds; it hit at the heart of the UK financial infrastructure, gave PIRA (the Provisional IRA) worldwide publicity and forced the government to negotiate for the first time in the 25 years of the modern conflict. (p. 289)

In a July 2000 expose published in the British weekly magazine Punch, Shayler argues that the authorities missed two opportunities to prevent the bombing. Machon also goes into some detail about the government’s reaction to Shayler’s expose. Instead of using Shayler’s information to investigate and reform the services, the government decided to throw all its weight against the messenger and took Punch to court for alleged offenses against secrecy laws. (pp. 302-309

Jobs for the boys, secrecy for the public

The inquiry into the events of Bloody Sunday conducted by the senior Metropolitan police commander, Sir John Stephens[3] revealed that British Army intelligence conspired with Loyalist terrorists to murder innocent Catholics, most notably the Catholic lawyer Patrick Finucane in February1989. The 2003 inquiry report also found that a key British agent codenamed Stakeknife, who had deeply infiltrated PIRA, was personally responsible for the torture and execution of fellow British undercover agents. (p. 61)

Machon uses the findings of the Stephens Report to argue that the shoot to kill policy employed by the British Army in Northern Ireland “only served to prolong the conflict.” In Machon’s view, “the British intelligence establishment never wanted an end to the civil war in Northern Ireland. It wanted jobs for the boys and of course the suspension of civil liberties and secrecy [about its illegal operations] made possible by the conflict.” (p. 62)

The Israeli Embassy Bombing – a Mossad Operation?

On July 26, 1994 a bomb exploded in an Audi car parked outside the Israeli Embassy in London and another bomb exploded outside Balfour House Finchley, home to a number of Jewish groups. In all, 19 people were injured (none killed). In January 1995 the London police arrested four Palestinians, two of whom, Samar Alami and Jawed Botmeh, were convicted in December 1996 of conspiracy to cause explosions -– no one was tried or convicted for setting the bombs. The two men are currently serving a twenty-year prison sentence.

Machon’s account of the affair suggests that the intelligence services and the judicial system, not to mention the media and the political echelon, effectively joined forces to convict the two Palestinians who were apparently set up by the Israeli secret service. It seems that the Mossad targeted the two men, both engineers, because they were using their expertise to test components and delivery methods of bombs to be used against the Israelis in the Occupied Territories. Machon presents persuasive evidence indicating that the two Palestinians had no knowledge of the London bombings.

Central to Machon’s argument are two important documents that were withheld from the trial judge as well as the defendants. The first relates to Shayler’s discovery that MI5 had received prior warnings of the attack but didn’t act on them. The second was a memo written by MI5 senior manager Andrew Knight who “assessed that the Israelis themselves were responsible for the bomb in order to persuade the British authorities to increase the security around the Embassy.” (p. 226; 229-30)

Shayler’s exposures of the critical documents in Punch and in the Mail on Sunday, forced a government response and led to appeals. Nevertheless, senior British judges in the Court of Appeal and the House of Lords allowed the convictions to stand. (p. 227) Machon doesn’t speculate, but some readers might hazard the guess that sensitivities in connection with Israeli involvement might very well be the reason that to this day the two men are still in jail.

Is Reform Possible?

In the Mail on Sunday story of August 1997 that was inspired by his revelations, Shayler stressed the “inflexible management” and the “dangerous intransigence” of the bureaucracy and the MI5 mindset. Shayler’s underlying assumption is that reform of the services is a realistic possibility. However such a view is at odds with the evidence that he and Machon present throughout Spies, Lies that tends to show that the problem is much deeper and more intractable than they both seem to have imagined when they fled England. They came to find and that the entire political system effectively collaborates to destroy whistleblowers and silence potential reformers.

How do we explain Tony Blair’s reversal with regard to a public service defense once he took office? How do we explain his lack of interest in documentary evidence of widespread corruption and illegality by MI5 and MI6? Was Blair cynical while in opposition, adopting a position that he understood would be popular? It may be that once he attained high office, Blair was forced to come to grips with the realities of power and came to understand that in order to survive he would have to accommodate the services and other centers of influence.

The Machon book points to a world in which the intelligence and security services purposefully work against the public interest in order to advance their ideological agenda of militarism and endless war. Without war, without terror, their mission would evaporate and they would be exposed as superfluous and a danger to civil society.

Perhaps the most depressing section of the book when it comes to reform going forward is Machon’s description of an expensive in-depth independent study of the practices and procedures at MI5 undertaken during her term of service. For a brief moment it seemed as if effective reforms might be implemented and a significant morale boost among rank and file officers was evident. But in the end the reforms were blocked leading to the departure of another crop of energetic MI5 recruits.

Reading between the lines

There exists a tension in the Machon-Shayler narrative between the more hopeful assumption that the problem with the services is merely one of bungling and mismanagement, and the tougher, often implicit recognition that the services have become an independent power center, more dominant at times than any other British institution. Did Machon and Shayler feel that they had to soften their views at certain points in order to have their book pass MI5 censorship? Some readers will wonder if their chapter on the Lockerbie disaster supporting the official story is such an example.

In any event, they create the space to speculate on the death of Princess Diana and they provide several pages of not unpersuasive evidence pointing to the services’ involvement (pp. 211-216) as well as a brief note boldly stating that the services hastened Margaret Thatcher’s downfall when she pushed the 1989 Security Service Act through Parliament. (p. 367)

One might rationalize the current state of affairs whereby the intelligence and security services exist as an independent and unaccountable power center, if it were clear that they operated wholly or even largely in the national interest. In that case one might imagine that critical government agencies would be staffed by able idealists like Shayler and Machon, dedicated to preventing terrorism and to the civil and constitutional rights of the public.

The End

[1]Annie Machon, Spies, Lies, and Whistleblowers: MI5, MI6 And the Shayler Affair, The Book Guild Ltd: Sussex, England, 2005. All page references are to this edition.

[2] Plans to pin the blame for the Oklahoma City bombing of 1995 on Islamic extremists were apparently derailed due to the intervention of loose cannon Timothy McVeigh who seemed to go out of his way to get arrested. His getaway car had no license and he neglected to remove his sidearm from his belt when he was pulled over by a state trooper.

[3] The Guardian newspaper offers the alternate spelling, Stevens. See “Operation Banner, 1969-2007,” available online.