Mike Whitney: Bernanke/Paulsen deliberately created the Panic of Sept 2008 So that AIG and Goldman Might Live

September 15, 2009

The Real Lesson of Lehman's Fall

Lehman Died So TARP and AIG Might Live

By MIKE WHITNEY

http://counterpunch.org/

"Lehman's fate was sealed not in the boardroom of that gaudy Manhattan headquarters. It was sealed downtown, in the gloomy gray building of the New York Federal Reserve, the Wall Street branch of the U.S. central bank."

-- Stephen Foley, U.K. Independent

Stephen Foley is on to something. Lehman Bros. didn't die of natural causes; it was drawn-and-quartered by high-ranking officials at the US Treasury and the Federal Reserve. Most of the rubbish presently appearing in the media, ignores this glaring fact. Lehman was a planned demolition (most likely) concocted by ex-Goldman Sachs CEO Henry Paulson, who wanted to create a financial 9-11 to scare Congress into complying with his demands for $700 billion in emergency funding (TARP) for underwater US banking behemoths. The whole incident reeks of conflict of interest, corruption, and blackmail.

The media have played a critical role in peddling the official "Who could have known what would happen" version of events. Bernanke and Paulson were fully aware that they playing with fire, but they chose to proceed anyway, using the mushrooming crisis to achieve their own objectives. Then things began to spin out of control; credit markets froze, interbank lending slowed to a crawl, and stock markets plunged. Even so, the Fed and Treasury persisted with their plan, demanding their $700 billion pound of flesh before they'd do what was needed to stop the bleeding. It was all avoidable.

Lehman had potential buyers--including Barclays--who probably would have made the sale if Bernanke and Paulson had merely provided guarantees for some of their trading positions. Instead, Treasury and the Fed balked, thrusting the knife deeper into Lehman's ribs. They claimed they didn't have legal authority for such guarantees. It’s a lie. The Fed has provided $12.8 trillion in loans and other commitments to keep the financial system operating without congressional approval or any explicit authorization under the terms of its charter. The Fed never considered the limits of its "legal authority" when it bailed-out AIG or organized the acquisition of Bear Stearns by JP Morgan pushing $30 billion in future liabilities onto the public's balance sheet. The Fed's excuses don't square with the facts.

Here's how economist Dean Baker recounts what transpired last September 15:

"Last September, when he (Bernanke) was telling Congress that the economy would collapse if it did not approve the $700 billion TARP bailout, he warned that the commercial paper market was shutting down.

This was hugely important because most major companies rely on selling commercial paper to meet their payrolls and pay other routine bills. If they could not sell commercial paper, then millions of people would soon be laid off and the economy would literally collapse.

What Mr. Bernanke apparently forgot to tell Congress back then is that the Fed has the authority to directly buy commercial paper from financial and non-financial companies. In other words, the Fed has the power to prevent the sort of economic collapse that Bernanke warned would happen if Congress did not quickly approve the TARP. In fact, Bernanke announced that the Fed would create a special lending facility to buy commercial paper the weekend after Congress voted to approve the TARP." ("Bernanke's bad Money", Dean Baker, CounterPunch)

The reason Bernanke did not underwrite the commercial paper market was, if he had, he wouldn't have been able to blackmail congress. He needed the rising anxiety from the crisis to achieve his goals.

Here's a clip from an editorial in the New York Times (admitting most of what has already been stated) that tries to put a positive spin on the Fed's behavior:

"Mr. Nocera says that almost everyone he’s ever spoken to in Hank Paulson’s old Treasury Department agrees that without the immediate panic caused by the Lehman default, the government would never have agreed to make the loans needed to save A.I.G., a company it knew very little about. In effect, the Lehman bankruptcy caused the government to panic, which in turn caused it to save the firm it really had to save to prevent catastrophe. In retrospect, if you had to choose one firm to throw under the bus to save everyone else, you would choose Lehman.....it is quite likely that the financial crisis would have been even worse had Lehman been rescued. Although nobody realized it at the time, Lehman Brothers had to die for the rest of Wall Street to live. ("Lehman Had to Die So Global Finance Could Live", Sept 14, 2009, New York Times)

So, according to the muddled logic of the NY Times, everything worked out for the best so there's no need to hold anyone accountable. (Tell that to the 7 million people who have lost their jobs since the beginning of the meltdown) This latest bit of spin is pure cover-your-ass journalism, an attempt to rewrite history and absolve the guilty parties. The fact is, Paulson and Bernanke deliberately created the crisis in order to jam their widely-reviled TARP policy down the public's throat. The Times thinks the public should be grateful for that because, otherwise, the crooked insurance giant, AIG, would not have been bailed out and Goldman Sachs and other Wall Street heavies would not have been paid off.

The reason panic spread through the markets after Lehman filed for bankruptcy, was because the Reserve Primary Fund, which had lent Lehman $785 million (and recieved short-term notes called commercial paper) couldn't keep up with the rapid pace of withdrawals from worried clients. The sudden erosion of trust triggered a run on the money markets. Here's an excerpt from a Bloomberg article, "Sleep-At-Night-Money Lost in Lehman Lesson Missing $63 Billion":

"On Tuesday, Sept. 16, the run on Reserve Primary continued. Between the time of Lehman’s Chapter 11 announcement and 3 p.m. on Tuesday, investors asked for $39.9 billion, more than half of the fund’s assets, according to Crane Data.

“Reserve’s trustees instructed employees to sell the Lehman debt, according to the SEC.

“They couldn’t find a buyer.

“At 4 p.m., the trustees determined that the $785 million investment was worth nothing. With all the withdrawals from the fund, the value of a single share dipped to 97 cents.

“Legg Mason, Janus Capital Group Inc., Northern Trust Corp., Evergreen and Bank of America Corp.’s Columbia Management investment unit were all able to inject cash into their funds to shore up losses or buy assets from them. Putnam closed its Prime Money Market Fund on Sept. 18 and later sold its assets to Pittsburgh-based Federated Investors.

“At least 20 money fund managers were forced to seek financial support or sell holdings to maintain their $1 net asset value, according to documents on the SEC Web Site.

“When news that Reserve Primary broke the buck hit the wires at 5:04 p.m. that Tuesday, the race was on" (Bloomberg)

This is what a run on the shadow banking system looks like. Bernanke and Paulson pinpointed the trouble in the commercial paper market and used it to put more pressure on Congress to approve their bailout bill.

Bloomberg again:

"It was commercial paper and the $3.6 trillion money market industry that traded the notes that came close to sinking the global economy -- not a breakdown in credit-default swaps or bank-to-bank lending....

“Like ice-nine, the fictitious substance in Kurt Vonnegut Jr.'s 1963 novel Cat’s Cradle, a single seed of which could harden all the world’s water, commercial paper was the crystallizing force that froze credit markets, choking off the ability of companies and banks to borrow money and pay bills." (Sleep-At-Night-Money Lost in Lehman Lesson Missing $63 Billion, Bob Ivry, Mark Pittman and Christine Harper, Bloomberg News)

Bernanke could have fixed the problem in an instant. All he needed to do was provide explicit government guarantees on money markets and commercial paper. That would have ended the bank-run pronto. But he chose not to. He chose to wait until Congress capitulated so he could net $700 billion for his banking buddies.

According to the UK Telegraph:

"On Thursday night, the Treasury went literally down on his knees before Nancy Pelosi, speaker of the House of Representatives, begging her to agree taxpayer money to bail out the financial system. Bernanke, a scholar of the financial panic that caused the Great Depression, told fearful lawmakers there wouldn't be a banking system in place by Monday morning if they didn't act. Paulson talked openly about planning for martial law, about how to feed the American people if banking and commerce collapsed."

Despite their dire warnings, on Monday morning, the banking system was still in tact, just as it was a full month later when the first TARP funds were handed out to the big banks. It was all a hoax. The problem wasn't the banks toxic assets at all, but the commercial paper and money markets. The Fed and Treasury knew that they could count on Congress's abysmal ignorance of anything financial; and they weren't disappointed. On October 3, 2008, Congress passed the Financial Rescue Plan (TARP) Paulson's fear-mongering had triumphed.

Here's a quick look at the Lehman chronology:

On Sept 15, 2008, Lehman Bros filed for bankruptcy sending the Dow plummeting 504 points.

On Sept 17, the Dow falls 449 points in reaction to AIG bailout.

On Sept 29, the Dow tumbles 777 points after House votes "No" on TARP.

On Oct 3, the House passes Financial Rescue Plan (TARP) The Dow falls 818 points.

On Oct 7, the Fed creates the Commercial Paper Funding Facility to backstop the commercial paper market. Two weeks later, Bernanke announces the Money Market Investor Funding Facility to make loans of longer maturities.

These are the two facilities which relieved the tension in the markets, not the TARP funds. It's clear that Bernanke knew exactly how to fix the problem, because he did so as soon as the TARP was passed. Here's economist Dean Baker in The American Prospect:

"Bernanke was working with Paulson and the Bush administration to promote a climate of panic. This climate was necessary in order to push Congress to hastily pass the TARP without serious restrictions on executive compensation, dividends, or measures that would ensure a fair return for the public's investment.

“Bernanke did not start buying commercial paper until after the TARP was approved by Congress because he did not want to take the pressure off, thereby leading Congress to believe that it had time to develop a better rescue package. ("Did Ben Bernanke Pull the TARP Over Eyes?", Dean Baker, The American Prospect)

The American people have been ripped off by industry reps working the policy-levers from inside the government. That's the real lesson of the Lehman bankruptcy. Happy anniversary.

Mike Whitney lives in Washington state. He can be reached at fergiewhitney@msn.com

Chris Rizo: 91 former AGs file brief in Siegelman case;Eric Holder refuses to act on 600 cases of Bush-Cheney-Rove's Selective Prosecution

If AG Holder will stop looking for corrupt Republicans to exculpate, and take a minute to

peruse this (latest) brief on Siegelman's behalf--a brief filed by a group of AG's both

Republican and Democratic--maybe then he'll finally be impelled to put a stop to this

long, groundless persecution of a blameless man.

And while he's at it, he could also take a peek at some, or all, of the (at least) six hundred

other cases of selective prosecution by Rove/Cheney's DoJ. (If you want to know more

about it, go to http://www.politicalprosecutions.org/.)

MCM

[Mark Crispin Miller]

91 former AGs file brief in Siegelman case

BY CHRIS RIZO

Don Siegelman (D)

http://www.legalnewsline.com/news/222809-91-former-ags-file-brief-in-siegelman-case

WASHINGTON (Legal Newsline)-- A bipartisan group of 91 former state attorneys general are asking the U.S. Supreme Court to hear an appeal by former Alabama Gov. Don Siegelman.

The former Democratic governor is appealing his federal bribery conviction. The former attorneys general, in a brief filed Thursday, said the case raises important free speech issues.

In court papers, the former attorneys general said it was not against the law for Siegelman to appoint former HealthSouth CEO Richard Scrushy to a hospital regulatory board after Scrushy arranged for $500,000 in donations to Siegelman's campaign for a statewide lottery.

They said there was no agreement between the governor and Scrushy concerning the appointment.

"This case concerns the criminalization of conduct protected by the First Amendment - the giving and receiving of campaign contributions," the group's amicus brief said.

Last month, a group of nine law professors filed a similar brief with the high court, raising First Amendment issues. The group of professors were represented by Jesse Choper of the University of California at Berkeley School of Law.

Siegelman, who is out on bail pending appeal, and Scrushy were convicted in 2006 of bribery and other charges. Siegelman was sentenced to more than seven years in federal prison and Scrushy to nearly seven years.

Although the 11th U.S. Circuit Court of Appeals dropped two charges against Siegelman, the court upheld much of his conviction. The appeals court, meanwhile, upheld all of Scrushy's conviction. He is currently serving his sentence in a federal prison in Texas.

Government prosecutors have until Oct. 14 to respond to Siegelman and Scrushy's appeals to the U.S. Supreme Court.

Siegelman was the governor of Alabama from 1999 to 2003. He served as the state's attorney general before being elected governor.

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Marcy Wheeler: Rahm Emannuel: Political Malpractice or Obama's Cheney, or Both

Rahm Emanuel has stood between us and accountability on torture. And if today or tomorrow or soon, DOJ announces a whitewash, Rahm owns that too.

http://emptywheel.firedoglake.com/2009/08/17/rahm-and-the-torture-investigation/

Back when Obama picked Rahm, I grudgingly accepted it. If, as seemed to be the plan, Obama picked Rahm because of his perceived ability to get things done legislatively, it at least signaled an intent to avoid the legislative problems Clinton had. Turns out, though (and I guess this was predictable), Rahm brought a legislative strategy that might be appropriate for 2004, but is a disaster given the majorities we have in 2009. And then Rahm failed to even effectively implement that outdated legislative strategy (someone at the surreal midget bar experience--someone who has a lot of respect for Rahm--called it "political malpractice").

And in exchange for this political malpractice, a tight, professional campaign turned literally overnight into a leaky sieve.

Within short order after his selection, Rahm was working hard to jerry-rig his replacement to make it easy for him to swoop back into the House in two years to take away Pelosi's gavel. As a result, Greg Craig was forced to jump through some ill-advised hoops to distract the press from Rahm's conversations with Rod Blagojevich; you can be sure Rahm's conversations with Blago will continue to be a liability as that case gets closer to trial.

But, we were promised, Rahm would get us health care. What that really meant though is that we had to clear the political landscape to give Rahm his opportunity to get us health care. And instead of doing the legislative work to get that done, Rahm and the loathsome Jim Messina have been trying to cut deals with big health care corporations to turn this into a welfare program for them. As even that effort is beginning to go south, Rahm has (predictably) already switched into scapegoat mode, trying to blame his utter failure on health care on someone else.

Against that background, consider again the parallel scapegoating directed at Greg Craig and Eric Holder for their efforts to come clean on torture. Not only is Rahm prepping to blame Max Baucus for his own health care failure, but he's prepping to blame Greg Craig and Eric Holder, too (Rahm's worried, you see, because he let Dick Cheney gain the upper hand in this debate, which is yet another thing he failed to anticipate). And, at the same time, he's doing everything he can to limit the torture investigation into one targeting only the Lynndie England's of the torture world, and not the Yoos, Cheneys, and Addingtons.

Rahm is standing between America and coming clean on her war crimes.

Now, I raise all this because I do think Rahm is at a vulnerable moment. One of the most interesting passages in the very significantly timed NYT beat sweetener the other day was this one:

But when a New York Times Magazine profile of Ms. Jarrett last month explored the old scratchiness, White House officials said the normally calm Mr. Obama erupted with anger. An informal edict went out: no more cooperating with staff profiles. As a result, Mr. Emanuel declined a formal interview for this article.

First the timing. Rahm's worried enough about his looming failures to order up a big Times profile for himself, in addition to all the scapegoating stories he's planting. He wants you to concentrate on the 9-0 legislative victory (or whatever he is claiming), and ignore that instead of the health care we were promised, we got corporate welfare (and hell--a lot of those "victories" were just corporate welfare, too!).

Next: Obama's getting fed up with the collapse of "no drama Obama" brand, which (as I pointed out), started eroding the moment he picked Rahm.

But finally, check out that last line: as a result of Obama's edict against these kinds of profiles, Rahm "declined a formal interview for this article." Not, "Rahm declined to cooperate with this article," but declined a formal interview. Which presumably is Rahm-speak for "insisted on meeting in an undisclosed location rather than his White House office." Insisted on anonymous quotes rather than on-the-record ones. Insisted on a thin disguise for his involvement in it.

Obama said, "stop this shit," and Rahm turned right around and got himself plastered in the NYT.

That's the environment in which Holder is about to announce an investigation into torture, and Rahm is sure to be doing everything he can to turn it into a whitewash. That's the environment in which Rahm is fixing to blame his own health care failures on any transparency on torture.

And we've got to make sure it doesn't happen.

Spotlight

Marcy Wheeler: John Brennan's Deputy National Security Advisor advises continuing illegal spying

John Brennan's dangerous national security advice
http://www.salon.com/opinion/greenwald/
Friday Aug. 14, 2009


Editor's note: Glenn Greenwald is on vacation this week. Marcy Wheeler, who blogs at Firedoglake, is guest-blogging today.

Last year, Glenn posted some statements from now-Deputy National Security Advisor John Brennan on counterterrorism. The post contributed to pressure that led Brennan to withdraw his candidacy to be CIA Director (which is how he ended up as Deputy NSA, which doesn't require congressional approval).

In addition to passages on rendition and torture, Glenn linked to an NPR story attributing Obama's switch on counterterrorism issues -- particularly his infamous flip-flop on retroactive immunity for the telecoms that had illegally spied on Americans -- to Brennan.

What's important in that statement is Obama's reference to "the information I've received." He's advised on intelligence matters by John Brennan, the former director of the National Counterterrorism Center. Like many intelligence professionals, Brennan says the FISA program is essential to the fight against terrorism.

By adopting Brennan's view, Obama improves his standing with the intelligence community; for someone looking ahead to a presidential administration, that's important.

So it was under Brennan's tutelage that Obama came to the following conclusion about Bush's illegal domestic surveillance program.

"That, in my mind, met my basic concerns. And given that all the information I've received is that the underlying program itself actually is important and useful to American security, as long as it has these [civil liberties safeguards] on them, I felt it was more important for me to go ahead and support this compromise," Obama said.

That's all very, um, interesting in retrospect, given what we've recently learned about Brennan's very complicit role in Bush's illegal program. The IG Report on the surveillance program revealed that from at least May 2003 until April 2005 (and possibly until Brennan retired in late 2005) intelligence centers that Brennan headed -- the Terrorist Threat Integration Center and the National Counterterrorism Center -- developed the threat assessments and a list of Al Qaeda affiliated organizations used in the program's targeting. While that section of the report is rather vague about how these threat assessments were used, it appears that John Brennan was either in charge of developing the information that substituted for "probable cause," and/or affirmed the urgency of the Al Qaeda threat to justify the program itself (though the assessments were approved by more senior people). For a period, it appears, John Brennan decided who would get wiretapped and who wouldn't (including organizations like Al Haramain, now suing for having been illegally wiretapped).

Spencer Ackerman asked Brennan last week about his role in the program. Brennan gave a response that Alberto Gonzales himself could have given:

I fulfilled all my responsibilities at NCTC that I was asked to fulfill. And there are a number of different programs, some of which have come out in the press, some of which have not. Some of the things that have come out in the press have been inaccurate in terms of the representations there. And when I look back in terms of my service at the NCTC and those places I believe I fulfilled those responsibilities to the best of my abilities.

These issues related to the so-called domestic surveillance programs and other things -- one of the things I mentioned, there's a lot of hyperbole and misrepresentations about what actually happened. And a lot of times people go down certain roads believing reports as facts. And that's not the case. So I'm not going to go into sort of what my role was in that instance because a lot of those activities are still considered classified and not in the public domain, irrespective of what the press reports might be out there.

For a guy who counseled Obama that this program was "important and useful to American security," Brennan's response is pathetically weak, making himself out to be a guy doing no more than "fulfilling his duties," rather than pushing the program on the presidential candidate as a big success, rather than (apparently) picking and choosing who got illegally surveilled.

There's something fundamentally wrong about the guy who pushed Obama to flip-flop on a campaign pledge now treating the program with this much false ambivalence.

Of course, Brennan may be down-playing his role in the illegal program out of more than just a desire to hide his complicity. After all, the IG Report itself is much more ambivalent about the program's benefit to counterterrorism.

The IGs also examined the impact of PSP information on counterterrorism efforts. Many senior IC officials believe that the PSP filled a gap in intelligence collection thought to exist under the FISA statute shortly after the al-Qa'ida terrorist attacks against the United States. Others within the IC, including FBI agents, CIA analysts and officers, and other officials had difficulty evaluating the precise contribution of the PSP to counterterrorism efforts because it was most often viewed as one source among many available analytic and intelligence-gathering tools in these efforts.

And much closer to home for Brennan, here's a telling detail about how the NCTC developed its threat assessments.

NCTC analysts involved in preparing the threat assessments told the ODNI OIG that only a portion of the PSP information was ever used in the ODNI threat assessments because other intelligence sources were available that provided more timely or detailed information about the al-Qaida threat to the United States. [my emphasis]

That is, the analysts who worked with Brennan at NCTC found that this surveillance program wasn't the best source of information on terrorist threats out there. Never mind, though, because Brennan was going to convince Obama to keep it anyway.

The centrality of Brennan in not just this program, but in the NCTC's collection and dissemination of information on threats--including those threats purportedly presented by US persons--is troublesome for another reason. A few weeks ago, peace activists in the Tacoma, WA area exposed a member of Fort Lewis' Force Protection Service who had infiltrated their groups and gained access to the list-serve they used to communicate with members via email. That information, collected by a military employee or contractor, was shared with the national network of agencies of which NCTC forms the core.

He admitted that he did pass on information to an intelligence network, which, as you mentioned earlier, was composed of dozens of law enforcement agencies, ranging from municipal to county to state to regional, and several federal agencies, including Immigration Customs Enforcement, Joint Terrorism Task Force, FBI, Homeland Security, the Army in Fort Lewis.

This is not supposed to happen. It's not supposed to happen because Posse Comitatus should prevent the military from this kind of domestic spying (though it is, after all, what NSA is doing as well). And it's not supposed to happen because Congress mandated that this kind of information sharing only take place after consultation with a Privacy and Civil Liberties Review Board. And this consultation (or not) with a board is an area where Obama has continued Bush's disdain for civil liberties. Not only has President Obama, thus far, failed to nominate anyone to serve on that board. But his Administration recently removed all mention of the board from the White House website. The Obama Administration continues to push this kind of information sharing. But they have, literally, disappeared all concern for civil liberties.

Back when he persuaded candidate Obama to flip-flop on a key campaign promise, Brennan appears to have oversold the benefits of the program (according to the IG Report). More importantly, when Obama flip-flopped, he promised to build more protections for civil liberties. Right now, he's not even fulfilling what Congress has mandated.

Glenn was right, last year, to oppose John Brennan for CIA Director. But in his current role as Deputy National Security Advisor, Brennan has not only sustained the Bush's domestic wiretap program, but he seems to be pushing a homeland security strategy that completely ignores civil liberties protections while constructing this massive, abusive -- and not terribly effective -- network of spying on American citizens.

-- Marcy Wheeler

Black Box Voting: Goodbye to Fair Elections in Wisconsin -- and elsewhere?

This long email is a shocker, and so well worth reading to the end.

MCM [Mark Crispin Miller]

From http://blackboxvoting.org/:

Wisconsin is set to ratify a '5-year plan' which will advocate looking into forced mail-in voting, Etch-a-Sketch-style electronic voter registration tablets which eliminate the physical signature, and Internet voting. The combination of mail-in voting and physical signature removal pulls the wheels right off of mail-in voting checks and balances -- and safeguards for mail-in voting are already inadequate.
By the way, the primary architect of current mail-in vote authentication software is Jeffrey Dean, perhaps the most colorful character ever to hit the election scene; at one point he worked for the man who headed the White House Plumbers unit from the Watergate scandal. Jeff Dean has been to prison twice in the last 15 years, once on multiple counts of computer fraud used for embezzlement.

Wisconsin's new 5-year plan echoes new proposals and changes in many states (New York-failed this time, will be brought up again; Florida, part-way there; Indiana, part-way there, California, most of the way there, Arizona, most of the way there, Colorado, most of the way there...).

Wisconsin's plan, touted by Kevin Kennedy, director of the Government Accountability Board, would cost $17 million to make all the changes. Claims that mail-in voting increases participation, or is less expensive, are now being questioned by many researchers. Some data indicates that mail-in voting actually produces LOWER participation, and the high costs associated with authentication software hint that it may actually be more expensive than polling place voting.

The runaway vote-by-mail train requires that I bring this up, whether it's politically correct or not:

If you're concerned about bogus voters being entered onto the voter registration rolls by groups like ACORN, take a deep breath. With mail-in voting, an even bigger concern is dumping REAL voters who are UNLIKELY TO VOTE onto the rolls.

Black Box Voting research into the software used to authenticate votes indicates that people unlikely to vote can be targeted to have an insider vote for them. Traditionally non-mainstream populations like prisoners, the homeless, and low income may participate in elections at lower than average rates -- there is not enough data yet to know. We really don't have any adequate authentication mechanisms to determine whether the mail-in ballots submitted are real, from real voters, or counterfeit, cast en masse by insiders for specific target groups deemed less likely to vote. If insiders counterfeit votes for real people who didn't vote, it will be almost impossible to detect.

VOTE-BY-MAIL SOFTWARE APPEARS TO BE SET UP FOR JUST SUCH A SCENARIO

Black Box Voting has obtained this court testimony, by programmer Brian Clubb, pertaining to a software programming revision ordered by Jeffrey Dean:

"...if this voter showed up in the subsequent upload, then I need to find where he appeared in the first upload, tell them what envelope number, what ballot number he was assigned so they can pull it back out. "

One implication of the above programming change: It allows an insider cast votes for a selection of voters deemed unlikely to vote. If a voter actually does vote, it enables you to pull the bogus vote back out of the system. (see pp. 1-20 for more background on above quote; full transcript: http://www.blackboxvoting.org/1-10-06-04kim-v-dean.pdf - 1,007 KB)

By eliminating physical signatures, maximizing mail-in votes, and pushing real people who are less likely to vote onto the rolls, you set the stage for wholesale inside "VoteR" fraud which will be very difficult to detect.

INTERNET AND MAIL-IN VOTING = CONCEALING KEY COMPONENTS OF THE ELECTION

Internet and mail-in voting conceal the counting of the vote, conceal who showed up to vote (and Internet voting eliminates the physical record for who voted). Both systems open the gate for removal of political privacy. Internet voting removes the hard copy evidence of the vote, just as the new Internet voter registration systems remove physical evidence of the signature. Both Internet and mail-in voting remove neighborhood polling places, a key battleground for restoring public right to know and public controls over elections. Once removed, it's difficult to restore them.

While well intended, many local officials are buying into a sales plan cooked up by think tanks and vendors. The evidence does not support the sales pitch that these tactics increase voter turnout or that it saves money. Here is the progression we are seeing nationwide:

THE THINK TANK PLAN

1. Implement "no-excuse" absentee voting
2. Authorize Internet voter registration and "voter registration modernization" (have voters sign Etch-a-Sketch style electronic tablets instead of physical signatures on registration cards).
3. Authorize opt-in "permanent absentee voting" (further increases percentage of mailed-in votes)
4. Send press releases about the high percentage of mail-in voting, citing this as justification for moving to all-mail-in voting (forced mail-in).
5. Convert to forced mail-in voting for small elections; then convert state to mail-in voting.
6. Experiment with Internet voting.

Note that each step involves removal of physical evidence and concealment of more election processes from the public. These steps are being pushed all over the United States in cookie-cutter legislation. Local officials believe they are implementing just one step, but a review of national actions shows that once one step is achieved the next one is proposed. The steps are almost identical from state to state.

Signature matching is one of the key "checks and balances" cited to tell us mail-in voting is secure. Really? A dog's paw-print made it through signature checks in Washington State for two elections in a row. Yes, a dog named Duncan was registered to vote, using his pawprint for a signature. Most people do not realize that the physical signatures are not examined -- only the scanned computer image.

Using computers, one scanned signature can be stretched and colors changed. Scanned images can be imported and exported from the incoming absentee envelopes into the database containing scans of the voter registration signatures. Note that with Internet voter registration and electronic tablet registration, there is no physical copy of the signature on the voter card.

WHO IS JEFFREY DEAN?

Well, you just can't make this stuff up. He developed VoteRemote, one of the most widely used signature authentication software programs. Jeffrey Dean's prison documents are posted on the Black Box Voting Web site - Here's the link: http://www.bbvdocs.org/dean/dean-criminal-docs.pdf

Jeff Dean was sentenced to four years in prison on 23 counts of embezzlement, achieved by modifying a computer accounting program. He returned to prison in 2004 for contempt of court, and has been back in court since on civil litigation. Black Box Voting has examined over 900 pages of testimony from his various courtroom adventures, and we have learned that he personally ordered several modifications in the mail-in voting software which disable some of the checks and balances. His court transcripts are posted on our Web site.

You really can't make this up: Before his prison stint, Jeffrey Dean worked for the law firm where Egil "Bud" Krogh was a partner. Egil Krogh went to jail after being in charge of Nixon's White House "Plumber's" unit, the source of the Watergate scandal which led to the downfall of Nixon's presidency.

While still in prison, on work release, Jeffrey Dean was given a contract working for King County, Washington (together with his brother, Neil Dean), to develop mail-in voting software. Public records obtained by Black Box Voting show that Jeffrey Dean was given a key to, and 24-hour access to, the King County voter registration database, mail-in ballot program, ballot printing system and vote tabulation software. Jeff Dean sold his "Vote Remote" mail-in software to Diebold Election Systems (Now called Premier); his brother Neil Dean sold his company to Pitney Bowes. The other large mail-in software system is now made by Pitney Bowes.

Mail-in voting software is unregulated and uncertified, and under control of the handful of insiders who run the databases. Black Box Voting is one of the only voting rights groups investigating this.

CASTING MULTIPLE VOTES WITH INTERNET VOTING

If you like the idea of a neighbor rounding up access codes of the disinterested to multi-vote himself, you'll love Internet voting. The Internet voting mechanism used in Hawaii -- voting at home with a four-digit pin code mailed to voters -- was an open invitation to vote selling, coercion, and contamination by insiders. Some people voted more than once.

TERRIBLE PARTICIPATION

Only 6.3 percent of Hawaii's eligible voters cast votes on the new Internet system (as compared with 28 percent in a previous similar election), a record low. Vendor's response: "Our systems aren't really about turnout. They're more about accessibility to participation." Huh? The election commission leaped off the democracy boat altogether with this: "The technology side, it works."

Your self-cleaning oven probably works too, but it's not a democracy. For democratic elections to work, you need public controls, you can't have concealment of key processes, and you need participation.

Important steps -- I know, it's swimming against the current if you are a Democrat. But mail-in voting is just as concealed and undemocratic as paperless touch-screen voting.

Block mail-in and Internet voting efforts: Internet and mail-in voting systems violate your inalienable rights because they transfer control to insiders and conceal essential election processes. Help to kill these proposals.


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Democracy Now: Jeremy Keenan: West's Manufactured Terror extends to Africa

August 06, 2009

http://www.democracynow.org/2009/8/6/keenan

British Anthropologist Jeremy Keenan on “The Dark Sahara: America’s War on Terror in Africa”

As Secretary of State Hillary Clinton continues her seven-nation tour of Africa, we hear from British anthropologist Jeremy Keenan. He traces AFRICOM, the US military command in Africa, to a 2003 kidnapping of European tourists. The hostage taking was widely blamed on Islamic militants thought to be affiliated with al-Qaeda, but Keenan argues that the Bush administration and the Algerian government were the ones responsible. [includes rush transcript]

Guest:

Jeremy Keenan, Professor of social anthropology at the School of Oriental and African Studies in London. His latest book is The Dark Sahara: America’s War on Terror in Africa. Its sequel, The Dying Sahara, will be released next year.


AMY GOODMAN: Secretary of State Hillary Clinton has emphasized that her seven-country tour of Africa is intended to promote democracy, fight corruption, and boost US investments in African trade and agriculture.
We turn now to another issue that’s widely expected to be discussed on every stop: AFRICOM, the US military command in Africa, which has been publicly opposed by every country on the continent except Liberia.
Now Secretary Clinton will not be visiting the countries in and around the oil- and gas-rich Sahara desert—Mali, Niger, Chad, Algeria and Mauritania. But a new book by British anthropologist Jeremy Keenan argues this area is crucial to understanding the birth of AFRICOM and the Bush administration’s expansion of the global war on terror into Africa.
Keenan is a professor of social anthropology at the School of Oriental and African Studies in London and has spent over four decades working in and writing about this region. He traces AFRICOM and the US military concern over al-Qaeda’s presence in Africa back to the February 2003 kidnapping of thirty-two European tourists in Algeria’s Sahara desert. The hostage taking was widely blamed on Islamic militants thought to be affiliated with al-Qaeda, but Professor Keenan argues that the Bush administration and the Algerian government were the ones to blame.
His latest book is called The Dark Sahara: America’s War on Terror in Africa. Its sequel is called The Dying Sahara, will be released next year.
Anjali Kamat and I spoke with Professor Keenan last week and asked him to lay out the story.
JEREMY KEENAN: Really, the story begins in 2002. That, you will remember, is after the Americans had thought they had successfully defeated the Taliban in Afghanistan. So we move from Afghanistan at the end of 2001 with the America now sort of launching its global war on terror. And there was a feeling—there was very little evidence for this, but at least the American military felt, and they were saying, that the terrorists that they thought they had dislodged from Afghanistan had moved across through that part of Asia, across the Horn of Africa, into the Sudan and across into the Sahara, and from there, they were going to attack Europe. There was absolutely no evidence for that, and that, of course, is really a figment of imagination. And that was in sort of 2002.
And what America was trying to do or the Bush administration was trying to do was to justify the militarization of Africa. In other words, the early seeds, the growth of AFRICOM. It wanted a reason, an excuse, to, if you like, secure Africa, primarily for its oil resources, the gradually increasing threat of China on the continent. But it hadn’t got a reason, or it hadn’t got an excuse or a justification to do so. And the war on terror provided just such a reason. It provided the justification for the Bush administration, if you like, to get a grip on Africa and to launch the war on terror in Africa.
The problem was, there was very little terror in Africa. In fact, if we exclude the incidents in Mombasa in the hotels in 1998, a few incidents in Egypt, in North Africa and the Algerian coast, all of which are rather marginal to the main oil areas of Africa, which are around Nigeria and West Africa, there was effectively no terrorism on the continent.
And so, what happened was they fabricated it. And what they did was to kidnap, hijack and take hostage seven different groups of tourists, Europeans, traveling in the Central Sahara in Algeria, the Central Algerian Sahara. And over a period of about three to four weeks, seven different groups literally just disappeared into thin air. There were all sorts of stories of sort of Bermuda Triangles in the Sahara and so forth. Gradually, the idea or the news came out that these had been taken by Islamist or Islamic terrorists. But there was no certainty. It was being manipulated by Algeria, the Algerian secret services, working with the Americans.
And the name of the leader gradually sort of percolated out, only after about three or four months, as a man called El Para. That was his pseudonym or his war name. He had twelve—he has at least twelve aliases that I know of. There’s even a rumor that he was trained as a Green Beret in America in the 1990s. Certainly, he was working for the Algerian DRS. That’s the Algerian security services, secret military intelligence services. He was in charge of a group of so-called terrorists who kidnapped, took hostage these thirty-two European hostages. That was the beginning of the story.
That incident itself ran on for six months. The tourists were held in two different hideouts in the Algerian Sahara, literally hundreds of miles—thousands of miles from anywhere. One group was released under a rather theatrically established attack, a sort of false attack, by the military after three months. Then the second group were taken all the way south into Mali. That’s two, two-and-a-half thousand miles, sort of—or kilometers south of the Mediterranean coast, right into bottom half of the Sahara. And eventually, they were released, after six months in captivity.
Now, by this time, America was talking, or the Bush administration was talking about the Sahara being a swamp of terror. “We’ve got to drain it.” El Para was being described as Osama bin Laden’s man in the Sahara. And so on and so forth. And there were lots of little incidents along the way, so to speak. El Para, himself, over the next six months was allegedly chased by combined forces of American Special Forces along with the Mali army, Algerian army, the Nigerian army, into Chad, a story which all the evidence suggests never even ever took place. This lasted for almost two years, a year and a half. And it provided the Bush administration with, if you like, the information or the disinformation to launch a new front in the war on terror, what they call the Saharan front or a second front. And I should say the word “second front” was used by the Americans for almost every new phase in the war on terror, every part of the world where they launched a new front was usually called a “second front.” So there were lots of second fronts—in Latin America, in the Far East, in Southeast Asia, and, of course, in the Sahara. And that was really the story.
What is extraordinary is that, by a thousand-to-one chance, million-to-one chance, I was sort of there in the region for two or three years, more or less continuously, before this incident took place. I was there for much of the time while it happened and afterwards. And I’ve been working there for a long time, so I knew—I had a network of very close friends all through this region, local people. I mean, I talk about this region, we’re talking about a very large sort of chunk of the Sahara, much of the Central Sahara and what we call the Sahel. That’s the southern shore. So, all this region, I had a sort of network of close friends, people I’d been working with, local people, mostly Tuareg, Tuareg tribesmen, who were able to provide me with details of what didn’t happen in the area. You know, we’re talking about events which were being fabricated.
But it provided the basis for launching this new front in the war on terror, and that has become, if you like, the base for more or less everything that has happened in Africa since then. When I say everything that’s happened, in terms of the development of AFRICOM and much of the ideology, if you like, that propaganda, if you want to call it that, that the Americans have used to justify much of the military action that they have taken in the rest of the continent. And when they talk about the threat of terrorism in Africa, various countries to the south, the justification for this, the argument is, “Look what happened in the Sahara. This is where al-Qaeda was, and now is. And these vast, ungoverned spaces, these are the dangerous areas, the failed states, the areas which aren’t being governed. This is where terrorists are lurking, where they’re hanging out. They’re threatening Europe. They’re threatening the rest of Africa.” So, this story, which was fabricated over this period of time, 2003 and 2004, has become, if you like, the base, the fact, the truth behind what is really an enormous lie.
AMY GOODMAN: Jeremy Keenan, who ordered the kidnapping?
JEREMY KEENAN: The leader was a man called El Para. We know that he is—there is overwhelming evidence that he is an agent for the DRS. So the question is who—the DRS is the Algerian—
AMY GOODMAN: The DRS being…?
JEREMY KEENAN: That’s the Department of Renseignement et Sécurité, the Department of Information and Security, so the secret military intelligence services in Algeria. The head of that, or the operational head, was a man called General Smain Lamari. His boss, the overall command, is General Mohamed Mediène. Mediène is still alive. He still holds that job. Smain Lamari, who almost certainly managing the operation, died in August two years ago. So he was managing it, and it is almost certain that he would have been ordering it and controlling it from Algiers itself.
ANJALI KAMAT: You talk about how Algeria colluded with the United States, but what’s in it for Algeria?
JEREMY KEENAN: With 9/11, Algeria saw an opportunity, and the President, Bouteflika, President Bouteflika—I think I’m right in saying—was the first foreign president to visit George Bush in the States. And I think I’m correct in saying he probably undertook more visits than almost any other at that time. Anyhow, the development of a very close relationship between Algeria and America.
I should say, at that time, it was Algeria being a bit pushy. And what they wanted, in essence, was a deal with America, the deal being that Algeria was saying, “Look, you’ve had this horrific atrocity happen in America, 3,000 people killed, but we know this. We understand this. We’ve been the front line against terrorism for the last ten years. We’ve had 200,000 people killed. You know, we are in the same boat together.” So, Algeria wanting to, if you like, get into bed with America. What America—what Algeria wanted, of course, was high-tech equipment for its army, surveillance equipment, communications equipment. Ideally, they wanted attack helicopters and night-vision equipment and so forth.
America, for its turn, was saying, “Look, it’s all very well, you know, you saying these things about us, but, you know, you’re on top of the terrorist situation. You know, really, you don’t need this sort of equipment. You know, the country is the best it’s been now for well over—you know, for ten years. There’s very little terrorism left. There are a few incidents up in the east in the mountains, but, by and large, you know, you’re in control of the situation.” So this was the American excuse, if you like, for not delivering, you know, what Algeria was wanting. That was in September.
Literally a month later, there was the first kidnap attempt on European hostages in the Sahara. And what Algeria was saying, to itself, was, “Look, you know, we’ve got to show to the Americans that we’re not on top of terrorism. We’ve got to show that it exists and it’s a problem.” And also, at that same time, the Algerians knew that the Americans were sort of imagining, if you like, this movement of Taliban terrorists from Afghanistan through the southern Sahara, weaving across and getting up into Europe in that way, which is a crazy idea. So the Algerians were saying, “Well, if we can sort of get some terrorism in that area, we can hopefully win the argument that we’re not on top of it, and also we can sort of give the Americans some concrete evidence to bolster their own theory,” which was based on no intelligence at all.
ANJALI KAMAT: Let me fast-forward to the present. In your book, you talk about the role of General Jim Jones, who is now national security adviser to President Obama. Can you talk about current US policy in Africa and what the current status of AFRICOM is, now that you’ve set up for us the story of what created the rationale for AFRICOM?
JEREMY KEENAN: Yes, certainly. General Jim Jones plays an interesting role in this. He was, if you like, at the beginning of the story, and he’s at the end of it, or if you talk about the present, now, as of course Obama’s head of national security, national security adviser. At the beginning of this story, in 2002, 2003, he was head of EUCOM, so the Supreme Allied Commander in Europe and head of EUCOM, and EUCOM, that’s European Command, of course covered Africa. Africa was minute; it took up very little attention from EUCOM. But that has changed. And so, in a sense, the growth of AFRICOM out of EUCOM, European Command, sort of covers this period. So it began with General Jones, when he was in charge, and the story that I’ve just told you, that was under his—on his watch, so to speak. And, of course, now he is Obama’s national security adviser.
So what is happening with American policy in Africa now? There was a huge amount of optimism, of course, with Obama coming to power. I think now, a few months further on, we are a little bit more cautious and uncertain of what is actually happening, particularly on the AFRICOM front. At the sort of time of Obama’s election, I think there was a feeling amongst or within AFRICOM that it might well get the chop. There was certainly political pressure, and still is, in Washington not to use a military presence in this way. But what we’ve seen in the last few months suggests, and it’s still early days for Obama, that in fact he is following rather in the lines—in the footsteps of his predecessor in promoting and pushing AFRICOM.
And this, I think, is very serious for Africa, and it is not going to do American foreign policy any good at all, because what we’re seeing at the moment, in the last few months there’s been almost a replay of the story I’ve just told you and the same individuals concerned. That is, the people who took the hostages in 2003, the same people, have been taking hostages again now—a very complicated story; I won’t go into the details of it—but since last December, that’s December 2008, and up until last month. So more hostage takings again by the same people who kidnapped them in 2003. So we know that there is some involvement of the Algerian security forces, and the question is, is America involved again?
Now, in what I have written on this in the last few weeks and so forth, I have been very careful to say that I have no evidence, direct evidence, of America being involved in the way that it was in 2003 and during the Bush period. However, I do not know if the odd phone call took place. Just because I don’t have evidence doesn’t mean to say there is no involvement.
What is worrying is that the AFRICOM and America now, the American government, is now talking, again, in the same language as in 2003, ’04: “Yes, we’ve got al-Qaeda all over the Sahara. This is a security threat, and need AFRICOM,” etc. So, this is very worrying. Again, as I emphasize, it’s the early days in the Obama administration. I don’t think he’s being particularly well advised on this, the what’s going on in Africa in this particular context. But it does—it sounds very, very familiar: the same place, exactly the same people, the people who assassinated the hostage who was killed on the 31st of May, a man called Edwin Dyer, who just happened to be in the wrong place at the wrong time, a tourist. He happened to be British, living in Austria. The person who assassinated him and beheaded him was the same person who took—who was El Para’s number two, who took the hostages in 2003, the same people.
AMY GOODMAN: Jeremy Keenan, I wanted to ask you about Hillary Clinton’s trip to Africa, seven countries. She’ll be going to Kenya, South Africa, Angola, Congo, Nigeria, Liberia, Cape Verde. The significance of these countries and US policy in Africa?
JEREMY KEENAN: Well, I remain a little reserved. Trips and words are one thing; actions are another. And while, of course, one obviously welcomes this apparent change in policy between the Bush administration and the Obama administration, and, if you like, the attempts to reconstruct better relations between America and the rest of the world, as long as America is peddling the AFRICOM idea and, if you like, giving primacy to the military, because this is what is happening, AFRICOM is the front line, if you like, of American policy in Africa. As long as that line is being pushed, we’re not going to have really much change in Africa.
The present line of giving primacy to AFRICOM, given its history and given what it is doing, is not what Africa itself wants. And I think the question is quite self-evident: why is it that, so far, every single country in Africa has said, “We do not want AFRICOM?” What could be clearer than that? So no matter what Hillary is doing running around Africa, the message from Africa has been, even from rulers who are fairly despotic and certainly by no means very democratic. Authoritarian rulers who have done the bidding of the United States over these years are saying, “We do not want AFRICOM in our country,” as at least a base for it.
So, until America gets that message onboard, loud and clear, and it sees and understands the history of how AFRICOM has developed from this very, very murky past, which I document in this volume—then the second volume will be out in the beginning of the year, that covers the last two or three years of what is happening—American-African policy is—sure, it will improve, because it can’t get any worse, but it’s going to be very suspect. And it is not, in my view, the right path.


AMY GOODMAN: British anthropologist Jeremy Keenan. His latest book, The Dark Sahara: America’s War on Terror in Africa.

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Robert Dreyfuss: Billion Dollar Mystery in Iraq

Billion-Dollar Mystery in Iraq
posted by Robert Dreyfuss on 08/04/2009 http://www.thenation.com/blogs/dreyfuss/458866/print


A multi-billion dollar mystery is unfolding in Iraq, and it may reach to the highest levels of the Iraqi government.

It involves what the New York Times calls an "extremist Shiite group" that has now reconciled with Prime Minister Maliki and his regime. The group is responsible for the kidnapping and murder of five British contractors who, according to the Guardian, were installing a sophisticated financial tracking system in Iraq's ministry of finance in 2007.

The story so far:

Today, the Times reports:

"An extremist Shiite group that has boasted of killing five American soldiers and of kidnapping five British contractors has agreed to renounce violence against fellow Iraqis, after meeting with Iraq's prime minister.


"The prime minister, Nuri Kamal al-Maliki, met with members of the group, Asa'ib al-Haq, or the League of the Righteous, over the weekend, said Ali al-Dabbagh, a spokesman for the prime minister, confirming reports. 'They decided they are no longer using violence, and we welcome them,' he said in a telephone interview.

"Mr. Dabbagh first revealed the negotiations in remarks on Monday to Al Iraqiya, the state television network. 'We have reached an agreement to resolve all problems, especially regarding detainees who do not have Iraqi blood on their hands,' he said. He did not say anything about British victims of the group."


In other words, Maliki met with a bunch of Shiite terrorists, welcomed them with open arms. Why would he do that?

In addition, the Times reports, the terrorists have a "liaison to the government." By coincidence, his name is also Maliki, and he wants to get into the government's favor and take part in the "political process":

"Salam al-Maliki, the insurgent group's liaison to the government, said in a telephone interview that the group had not renounced fighting the Americans. 'Of course we want to get into the political process, because circumstances have improved, and the United States is out right now,' said Mr. Maliki, who is not related to the prime minister. 'We told the government anyone who has Iraqi blood on their hands, you should keep him in jail. We are only fighting the United States.'"

The Guardian, in a related story, suggests that the kidnapping of the five Britons was carried out with government collusion by a team of 80 to 100 men, dressed as Interior Ministry police officials and driving a convoy of 19 white SUVs. Here's the Guardian story:

"An investigation into the kidnapping of five British men in Iraq has uncovered evidence of possible collusion by Iraqi government officials in their abduction, and a possible motive – to keep secret the whereabouts of billions of dollars in embezzled funds.


"A former high-level Iraqi intelligence operative and a current senior government minister, who has been negotiating directly with the hostage takers, have told the Guardian that the kidnapping of IT specialist Peter Moore and his four bodyguards in 2007 was not a simple snatch by a band of militants but a sophisticated operation, almost certainly with inside help. Only Moore is thought still to be alive.

"Witnesses to the extraordinary operation which led to the abductions have also told us that they have been warned by superiors to keep quiet."


And this crucial piece:

"Moore was employed to install a new computer tracking system which would have followed billions of dollars of oil and foreign aid money through the ministry of finance. The 'Iraq Financial Management Information System' was nearly complete and about to go online at the time of the kidnap.


"The senior intelligence source said: 'Many people don't want a high level of corruption to be revealed. Remember this is the information technology centre [at the ministry of finance], this is the place where all the money to do with Iraq and all Iraq's financial matters are housed.'"

The Times story, which notes that the terrorist group also killed five US soldiers, says that the five British contractors were seized in retaliation for the detention of some of the group's leaders, after the killing of the Americans. But that makes no sense. Why would they organize and carry out a 19-SUV, 80-person raid on the finance ministry just as retaliation? And could this group have done so? As the Guardian points out, only a government agency could have pulled off the attack.

You can watch a 12-minute video on the case at the Guardian site.

Curiously, the Times report adds: "American military officials say the group is supported by Iran."

I tried getting some background on the League of the Righteous, and I found a posting on the Long War Journal about them, including alleged ties to Iran's Qods Force, the arm of the Revolutionary Guards.

There's more background here, too, at the Long War Journal.