NYSE Runs Out of Gold Bars: What Happens Next?
By Seeking Alpha
03-30-2009
In the first Great Depression, the government tried, for several years, between 1929 and 1933, to maintain a fiction that the U.S. dollar was still convertible and as “good as gold”, in spite of having irresponsibly printed more dollars than they had gold to back them.
Back in the 1920s, just like during the last 22 years, the Federal Reserve had run its printing press overtime, and, as a result, it couldn’t deliver. The U.S. Treasury eventually ran out of the gold, in the face of overwhelming public demand, resulting in the infamous gold confiscation order, by President Franklin Roosevelt, in 1933. History may be repeating itself, except that the government no longer makes any pretension to maintaining a gold standard, or any standards at all. Instead, nowadays, the futures exchanges offer to trade gold for a floating number of dollars, and, it appears, they have printed more paper contracts than they can redeem, at least when it comes to 1 kilogram bars.
The NYSE-Liffe futures exchange has, it seems, run out of 1 kg bars of gold. Futures markets, like NYSE-Liffe and COMEX, try hard to maintain the fiction that they will deliver physical gold, in completion of executed contracts. Indeed, to prevent fraud, U.S. law requires clearing members to keep a stockpile, of one kind or another, consisting of a minimum of 90% of metal. Up until October, 2008, it didn’t matter. Only about 1% of long buyers of paper gold futures contracts typically took delivery. Now, the situation is very different. Demand has surged and, it appears, one major futures exchange, NYSE-Liffe, and by extension, the COMEX gold warehouses it shares with its larger cousin, are unable to meet the requirements of their contracts, vis-a-vis, delivery of 1 kg. bars.
As of December 31, 2008, the NYSE-Liffe mini-gold (YG) contract specifications were changed to read, in pertinent part, as follows:
33.2 fine troy ounces (+10%), no Less than 995 fineness. Seller’s discretion delivery of one vault receipt representing one bar or one Warehouse Depository Receipt (WDR) representing either 1/3 interest in one full size gold NYSE Liffe vault receipt or full interest in a NYSE Liffe Mini Gold vault receipt. Delivered to exchange approved vaults by exchange approved carriers.
But, before that, on August 26, 2008, it read as follows:
33.2 troy ounces (±5%) of refined gold, assaying not less than 995 fineness, contained in no more than one bar.
In summary, there is now so much demand for delivery of the mini-contracts that the exchange can no longer deliver 1 kg bars. When the wording was changed, a flurry of complaints resulted. Technically, in my opinion, if you bought a mini futures contract from an NYSE-Liffe clearing member, prior to December 31st, you could bind them to their legal contract with you, and force them to either deliver the 1 kg bar, or pay for you to obtain it on the open spot market. Based upon the original wording, NYSE-Liffe and its clearing members are legally obligated to deliver that 1 kg bar per contract, whether they want to or not, and regardless of the internal rules of the exchange. Whether anyone will force compliance, however, is an open question.
Absent legal action, clearing members are now being allowed to hand out little slips of paper, called “warehouse depository receipts” (WDR). These are being substituted for “vault receipts” (VR). The WDRs, in contrast to the VRs, merely promise the customer that he owns a 1/3 interest in a 100 ounce bar. The customer is not allowed to take delivery, unless he can accumulate 3 WDRs, which equals 1 VR. NYSE-Liffe shares its warehouses with COMEX. The warehouse is predominantly stocked with 100 ounce bars. The COMEX ETF also stores 100 ounce bars, and clearing members can withdraw baskets of them in order to meet delivery demands. But, the COMEX ETF doesn’t store any 1 kg. bars.
After a customer complaint, I contacted the head of regulatory compliance at NYSE-Liffe, and had a serious chat with him. He seemed like a nice enough fellow, but he wouldn’t admit that NYSE-Liffe had run out of 1 kilo bars. He said that the warehouse registrar has complete “discretion” to hand out paper WDRs, representing a 1/3rd interest in a 100 ounce bar, if the “circumstances warrant”. But, if the exchange has “complete discretion” to alter contracts as they see fit, what is the purpose of the advertised contract specifications? NYSE-Liffe claims that its clearing members can rely on Exchange Rule 1408. This obscure rule, however, was never communicated to customers. Nevertheless, it is now being relied upon by the exchange, in an attempt to “default” on the contracts without legal consequences. The rule says that clearing members can substitute delivery of a WDR, giving the customer a 1/3rd interest in a 100 ounce bar, instead of a physical 1 kg bar of gold. There is only one problem. In their eagerness to sell contracts, the exchange failed to communicate that to customers and failed to make it a part of the contract specifications. As a result, clearing members may be saved from claims by one against the other, but they are NOT immune to the just claims of aggrieved customers. The exchange clearly misled the public, intentionally or unintentionally, and allowed clearing members to sell huge numbers of 1 kg contracts, even though they did not have enough 1 kg. bars to fulfill the contracts.
There has been a lot of talk, over the past year, by bearish gold commentators, claiming that the shortage of gold and silver is merely a fluke of the retail market. However, 1 kg. bars of gold are NOT a retail denomination. They are the primary unit used in most commodity futures markets. Unlike the American exchanges, the 1 kg. bar dominates deliverable contracts, for example, on the Tokyo Commodities Exchange, as well as many other commodities exchanges around the world. They were also the primary unit of the mini-gold contracts (YG), offered by NYSE-Liffe, prior to the technical default. In other words, the retail gold shortage has spread into the wholesale market. What’s next? Will there be a shortage of 100 ounce bars? No exchange rule can be used to hide from a technical default on delivery of 100 ounce bars. But, vast numbers of 100 ounce bars are stored at the iShares COMEX gold trust (IAU). So, a default in delivery of 100 ounce bars will take a while.
All that said, however, given that the Fed printing press is running overtime, things are going to get tighter. It will take only a few months of delivery percentages similar to those seen in December, 2008, before all the 100 ounce gold bars are gone. What will the futures exchanges do? Hand out little slips of paper entitling contract holders to a ¼ interests in 400 ounce banker’s bars? There is no rule that allows that. What happens when people start taking mass delivery of the 400 ounce bars? Will they hand out fractional shares in gold mines, along with picks and shovels?
The only way that remaining supplies can be rationed is by a rise in price sufficient to deter some of the buying. For some reason, the supply and demand for gold on the futures market is significantly out of synchronization. This implies that those who claim that the price of gold is manipulated are probably correct, because the situation could not happen in a completely free market. But, even if the gold market is manipulated, the manipulators cannot stop this from happening if the demand for delivery continues. In a more practical sense, coupled with the nearly complete removal of all small retail denominations of gold from store shelves around the world, demand is clearly outstripping supply by a considerable measure.
With the U.S. and the U.K. now engaged in quantitative easing (printing new dollars and pounds), and other central banks ready to join, we can reasonably assume that the desire to exchange paper money for gold will get stronger. If the price does not rise significantly, and quickly, it is only a matter of time before these shortages reach the 100 ounce bars, and, then, on to the 400 ounce banker’s bars. That is what happened, back in the 1930s, and it is happening again. The main difference is that, in the 1930s, the price was fixed by the government, so the conversion of dollars to gold could not be controlled by a rise in price. Now, however, the price of gold can go up until, potentially, it is high enough to discourage more buying by the public. It is impossible to say whether or not this means a rise to $2,000 or $2,500 per ounce by the end of 2009, as some have predicted. But, it does mean that the price will surely rise, that the rise is going to be huge, and, probably, that it will be fast and furious, at some point in the near future.
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Tuesday, March 31, 2009
Jack Cafferty Blasts "The War On Drugs"
Commentary: War on drugs is insane
STORY HIGHLIGHTS
Jack Cafferty: We spend enormous sums to enforce the laws against drugs
Mexican cartels have set up operations in 230 American cities, he says
Cafferty: Enforcement doesn't stop Americans from finding ways to get drugs
He says there are many other uses for the billions we spend in war on drugs
Next Article in Politics »
By Jack Cafferty
Special to CNN
Editor's note: Jack Cafferty is the author of a new book, "Now or Never: Getting Down to the Business of Saving Our American Dream." He provides commentary on CNN's "The Situation Room" daily from 4 to 7 p.m. ET. You can also visit Jack's Cafferty File blog.
Jack Cafferty says America's effort to prohibit illegal drugs doesn't work and should be rethought.
NEW YORK (CNN) -- Here's something to think about:
How many police officers and sheriff's deputies are involved in investigating and solving crimes involving illegal drugs? And arresting and transporting and interrogating and jailing the suspects?
How many prosecutors and their staffs spend time prosecuting drug cases? How many defense lawyers spend their time defending drug suspects?
How many hours of courtroom time are devoted to drug trials? How many judges, bailiffs, courtroom security officers, stenographers, etc., spend their time on drug trials?
How many prison cells are filled with drug offenders? And how many corrections officers does it take to guard them? How much food do these convicts consume?
And when they get out, how many parole and probation officers does it take to supervise their release? And how many ex-offenders turn right around and do it again?
So how's this war on drugs going?
Someone described insanity as doing the same thing over and over and expecting a different result each time. That's a perfect description of the war on drugs.
Don't Miss
Cafferty: My battle with alcoholism
The Cafferty File: Join the conversation
Jack's new book: "Now or Never"
In Depth: Commentaries
The United States is the largest illegal drug market in the world. Americans want their weed, crack, cocaine, heroin, whatever. And they're willing to pay big money to get it.
The drug suppliers are only too happy to oblige. The Mexican drug cartels now have operations in 230 American cities. That's 230 American cities!
And we're not just talking about border towns, but places such as Anchorage, Alaska; Boston, Massachusetts; Atlanta, Georgia; and Billings, Montana. They're everywhere. And they don't just bring drugs, but violence and crime as well -- lots of it at no extra charge.
They have been able to infiltrate those 230 cities because we have not bothered to secure our borders. In addition to illegal aliens who come here to work and avail themselves of our social programs, we have criminals from Mexico bringing drugs in, taking money and guns back, and recruiting American kids into their criminal enterprises while they're here.
What do you suppose the total price tag is for this failed war on drugs? One senior Harvard economist estimates we spend $44 billion a year fighting the war on drugs. He says if they were legal, governments would realize about $33 billion a year in tax revenue. Net swing of $77 billion. Could we use that money today for something else? You bet your ass we could. Plus the cartels would be out of business. Instantly. Goodbye crime and violence.
If drugs were legalized, we could empty out a lot of our prison cells. People will use this stuff whether it's legal or not. Just like they do booze. And you could make the argument that in some cases alcohol is just as dangerous as some drugs. I know.
Like I said ... something to think about. It's time.
The opinions expressed in this commentary are solely those of Jack Cafferty. E-mail to a friend | Mixx it | Share
All About Illegal Drugs • Law Enforcement • Cocaine
STORY HIGHLIGHTS
Jack Cafferty: We spend enormous sums to enforce the laws against drugs
Mexican cartels have set up operations in 230 American cities, he says
Cafferty: Enforcement doesn't stop Americans from finding ways to get drugs
He says there are many other uses for the billions we spend in war on drugs
Next Article in Politics »
By Jack Cafferty
Special to CNN
Editor's note: Jack Cafferty is the author of a new book, "Now or Never: Getting Down to the Business of Saving Our American Dream." He provides commentary on CNN's "The Situation Room" daily from 4 to 7 p.m. ET. You can also visit Jack's Cafferty File blog.
Jack Cafferty says America's effort to prohibit illegal drugs doesn't work and should be rethought.
NEW YORK (CNN) -- Here's something to think about:
How many police officers and sheriff's deputies are involved in investigating and solving crimes involving illegal drugs? And arresting and transporting and interrogating and jailing the suspects?
How many prosecutors and their staffs spend time prosecuting drug cases? How many defense lawyers spend their time defending drug suspects?
How many hours of courtroom time are devoted to drug trials? How many judges, bailiffs, courtroom security officers, stenographers, etc., spend their time on drug trials?
How many prison cells are filled with drug offenders? And how many corrections officers does it take to guard them? How much food do these convicts consume?
And when they get out, how many parole and probation officers does it take to supervise their release? And how many ex-offenders turn right around and do it again?
So how's this war on drugs going?
Someone described insanity as doing the same thing over and over and expecting a different result each time. That's a perfect description of the war on drugs.
Don't Miss
Cafferty: My battle with alcoholism
The Cafferty File: Join the conversation
Jack's new book: "Now or Never"
In Depth: Commentaries
The United States is the largest illegal drug market in the world. Americans want their weed, crack, cocaine, heroin, whatever. And they're willing to pay big money to get it.
The drug suppliers are only too happy to oblige. The Mexican drug cartels now have operations in 230 American cities. That's 230 American cities!
And we're not just talking about border towns, but places such as Anchorage, Alaska; Boston, Massachusetts; Atlanta, Georgia; and Billings, Montana. They're everywhere. And they don't just bring drugs, but violence and crime as well -- lots of it at no extra charge.
They have been able to infiltrate those 230 cities because we have not bothered to secure our borders. In addition to illegal aliens who come here to work and avail themselves of our social programs, we have criminals from Mexico bringing drugs in, taking money and guns back, and recruiting American kids into their criminal enterprises while they're here.
What do you suppose the total price tag is for this failed war on drugs? One senior Harvard economist estimates we spend $44 billion a year fighting the war on drugs. He says if they were legal, governments would realize about $33 billion a year in tax revenue. Net swing of $77 billion. Could we use that money today for something else? You bet your ass we could. Plus the cartels would be out of business. Instantly. Goodbye crime and violence.
If drugs were legalized, we could empty out a lot of our prison cells. People will use this stuff whether it's legal or not. Just like they do booze. And you could make the argument that in some cases alcohol is just as dangerous as some drugs. I know.
Like I said ... something to think about. It's time.
The opinions expressed in this commentary are solely those of Jack Cafferty. E-mail to a friend | Mixx it | Share
All About Illegal Drugs • Law Enforcement • Cocaine
Monday, March 30, 2009
Many Seeking Health Insurance Turned Down In U.S.
Insurers shun those taking certain meds
How health insurers secretly blacklist those with certain ailments.
Related Content
MomsMiami.com | How to save on prescription drugs
What do they have on you?
Vista Guide for Medical Underwriting
BY JOHN DORSCHNER
JDORSCHNER@MIAMIHERALD.COM
Trying to buy health insurance on your own and have gallstones? You'll automatically be denied coverage. Rheumatoid arthritis? Automatic denial. Severe acne? Probably denied. Do you take metformin, a popular drug for diabetes? Denied. Use the anti-clotting drug Plavix or Seroquel, prescribed for anti-psychotic or sleep problems? Forget about it.
This confidential information on some insurers' practices is available on the Web -- if you know where to look.
What's more, you can discover that if you lie to an insurer about your medical history and drug use, you will be rejected because data-mining companies sell information to insurers about your health, including detailed usage of prescription drugs.
These issues are moving to the forefront as the Obama administration and Congress gear up for discussions about how to reform the healthcare system so that Americans won't be rejected for insurance.
It's especially timely because growing numbers are looking for individual health insurance after losing their jobs. On top of that, small businesses, which make up the bulk of South Florida's economy, are frequently finding health policies too expensive and are dropping coverage, sending even more people shopping for insurance.
The problem is, material available on the Web shows that people who have specific illnesses or use certain drugs can't buy coverage.
''This is absolutely the standard way of doing business,'' said Santiago Leon, a health insurance broker in Miami. Being denied for preexisting conditions is well known, but when a person sees the usually confidential list of automatic denials for himself, ``that's a eureka moment. That shows you how harsh the system is.''
A 50-year-old Broward County man, with two long-standing medical conditions, saw the harshness for himself when surfing the Web trying to learn why insurers kept denying him coverage. He was shocked to find several insurers' instructions to sales personnel, usually called the Guide to Medical Underwriting and often marked ``confidential and proprietary.''
''I think it's atrocious what's going on,'' he said. ``Basically, they're taking only the healthy so they can get the fattest profits. If you really need insurance, then you can't get it.''
The man, a self-employed consultant, didn't want his name or preexisting conditions identified for fear that the information might frighten away potential employers.
CONFIDENTIAL GUIDE
Insurers don't want to talk about the guides. Sunrise-based Vista , which has its 35-page ''confidential and proprietary'' guide tucked away within its website, refused to make executives available for an interview and instead issued a brief statement:
``The medical underwriting guidelines used by VISTA are based on industry standards, comply with all regulations and are subject to review by the Florida Department of Insurance. VISTA's Guide to Medical Underwriting is an educational tool intended to assist agents and brokers who are selling VISTA individual plans. We do not comment on our specific underwriting processes and practices.''
Sandra Foertsch, who sells individual policies, says the fundamental concern of insurers is clear: ''They don't want to buy a claim,'' meaning that they would start to collect $500 monthly premiums from a person and quickly pay out more than that to doctors and other providers.
Foertsch said she was surprised that any of the guides could be found on the Web. ``I'd guess someone made a mistake.''
The Miami Herald asked several other major Florida insurers -- Aetna, Humana and Blue Cross Blue Shield of Florida -- for copies of their underwriting guides. All refused, saying they contained propriety information and were confidential.
Searching the Web, The Miami Herald found underwriting guidelines for Coventry Health Care, which owns Vista; Wellpoint; Assurant Health; and Blue Cross Blue Shield of Nebraska.
Among the health problems that the guides say should be rejected: diabetes, hepatitis C, multiple sclerosis, schizophrenia, quadriplegia, Parkinson's disease and AIDS/HIV.
Some guides echo Nebraska's warning on the Web that it's ''intended as a reference tool only,'' with final decisions made by managers.
COVERAGE VARIES
Insurers have different criteria. Sleep apnea and fainting for no known cause are reasons for denial for the Nebraska plan, but not for other plans. Vista doesn't want to cover severe acne, but other guides seen don't mention it. Insurers often use measures of body mass index to reject those who are too heavy or too thin.
For cancer, the key is how patients have been doing in remission. Wellpoint, a national insurer, rejects applicants who have had breast or prostate cancer within the past five years. With other types of cancer, 10 years must have passed. Assurant Health, based in Milwaukee, rejects most patients whose cancer has not been in remission for at least eight years.
Other reasons for automatic denial by various companies: alcohol-related problems of people who have not been abstinent for at least six years, chronic bronchitis, severe migraines, and a cardiac pacemaker installed within the last two years.
Some insurers will automatically reject applicants who are using certain prescription drugs. Wellpoint denies anyone who within the past year has taken Abilify and Zyprexa for mental disorders as well as Neupogen, which is used to treat the side effects of chemotherapy. Vista lists the anticoagulant Warfarin and the pain medication Oxycontin. Both companies list insulin.
The medications, of course, are indications of specific health problems. To make sure that applicants are not lying, insurers hire a data-gathering service -- Medical Information Bureau, Milliman's Intelliscript or Ingenix Medpoint.
Intelliscript and Medpoint do computerized searches of a person's drug use, gleaned from pharmacy benefits managers and other databases. The two companies say they comply with privacy laws. ''Ingenix requires each Medpoint client to obtain the authorization of the individual applicant or insured person,'' said Ingenix spokeswoman Karin Olson.
Last year, the Federal Trade Commission accused both companies of violating the Fair Credit Reporting Act by not offering to provide consumers with information about them. The companies agreed to settlements in which they promised to let people see their personal information.
How health insurers secretly blacklist those with certain ailments.
Related Content
MomsMiami.com | How to save on prescription drugs
What do they have on you?
Vista Guide for Medical Underwriting
BY JOHN DORSCHNER
JDORSCHNER@MIAMIHERALD.COM
Trying to buy health insurance on your own and have gallstones? You'll automatically be denied coverage. Rheumatoid arthritis? Automatic denial. Severe acne? Probably denied. Do you take metformin, a popular drug for diabetes? Denied. Use the anti-clotting drug Plavix or Seroquel, prescribed for anti-psychotic or sleep problems? Forget about it.
This confidential information on some insurers' practices is available on the Web -- if you know where to look.
What's more, you can discover that if you lie to an insurer about your medical history and drug use, you will be rejected because data-mining companies sell information to insurers about your health, including detailed usage of prescription drugs.
These issues are moving to the forefront as the Obama administration and Congress gear up for discussions about how to reform the healthcare system so that Americans won't be rejected for insurance.
It's especially timely because growing numbers are looking for individual health insurance after losing their jobs. On top of that, small businesses, which make up the bulk of South Florida's economy, are frequently finding health policies too expensive and are dropping coverage, sending even more people shopping for insurance.
The problem is, material available on the Web shows that people who have specific illnesses or use certain drugs can't buy coverage.
''This is absolutely the standard way of doing business,'' said Santiago Leon, a health insurance broker in Miami. Being denied for preexisting conditions is well known, but when a person sees the usually confidential list of automatic denials for himself, ``that's a eureka moment. That shows you how harsh the system is.''
A 50-year-old Broward County man, with two long-standing medical conditions, saw the harshness for himself when surfing the Web trying to learn why insurers kept denying him coverage. He was shocked to find several insurers' instructions to sales personnel, usually called the Guide to Medical Underwriting and often marked ``confidential and proprietary.''
''I think it's atrocious what's going on,'' he said. ``Basically, they're taking only the healthy so they can get the fattest profits. If you really need insurance, then you can't get it.''
The man, a self-employed consultant, didn't want his name or preexisting conditions identified for fear that the information might frighten away potential employers.
CONFIDENTIAL GUIDE
Insurers don't want to talk about the guides. Sunrise-based Vista , which has its 35-page ''confidential and proprietary'' guide tucked away within its website, refused to make executives available for an interview and instead issued a brief statement:
``The medical underwriting guidelines used by VISTA are based on industry standards, comply with all regulations and are subject to review by the Florida Department of Insurance. VISTA's Guide to Medical Underwriting is an educational tool intended to assist agents and brokers who are selling VISTA individual plans. We do not comment on our specific underwriting processes and practices.''
Sandra Foertsch, who sells individual policies, says the fundamental concern of insurers is clear: ''They don't want to buy a claim,'' meaning that they would start to collect $500 monthly premiums from a person and quickly pay out more than that to doctors and other providers.
Foertsch said she was surprised that any of the guides could be found on the Web. ``I'd guess someone made a mistake.''
The Miami Herald asked several other major Florida insurers -- Aetna, Humana and Blue Cross Blue Shield of Florida -- for copies of their underwriting guides. All refused, saying they contained propriety information and were confidential.
Searching the Web, The Miami Herald found underwriting guidelines for Coventry Health Care, which owns Vista; Wellpoint; Assurant Health; and Blue Cross Blue Shield of Nebraska.
Among the health problems that the guides say should be rejected: diabetes, hepatitis C, multiple sclerosis, schizophrenia, quadriplegia, Parkinson's disease and AIDS/HIV.
Some guides echo Nebraska's warning on the Web that it's ''intended as a reference tool only,'' with final decisions made by managers.
COVERAGE VARIES
Insurers have different criteria. Sleep apnea and fainting for no known cause are reasons for denial for the Nebraska plan, but not for other plans. Vista doesn't want to cover severe acne, but other guides seen don't mention it. Insurers often use measures of body mass index to reject those who are too heavy or too thin.
For cancer, the key is how patients have been doing in remission. Wellpoint, a national insurer, rejects applicants who have had breast or prostate cancer within the past five years. With other types of cancer, 10 years must have passed. Assurant Health, based in Milwaukee, rejects most patients whose cancer has not been in remission for at least eight years.
Other reasons for automatic denial by various companies: alcohol-related problems of people who have not been abstinent for at least six years, chronic bronchitis, severe migraines, and a cardiac pacemaker installed within the last two years.
Some insurers will automatically reject applicants who are using certain prescription drugs. Wellpoint denies anyone who within the past year has taken Abilify and Zyprexa for mental disorders as well as Neupogen, which is used to treat the side effects of chemotherapy. Vista lists the anticoagulant Warfarin and the pain medication Oxycontin. Both companies list insulin.
The medications, of course, are indications of specific health problems. To make sure that applicants are not lying, insurers hire a data-gathering service -- Medical Information Bureau, Milliman's Intelliscript or Ingenix Medpoint.
Intelliscript and Medpoint do computerized searches of a person's drug use, gleaned from pharmacy benefits managers and other databases. The two companies say they comply with privacy laws. ''Ingenix requires each Medpoint client to obtain the authorization of the individual applicant or insured person,'' said Ingenix spokeswoman Karin Olson.
Last year, the Federal Trade Commission accused both companies of violating the Fair Credit Reporting Act by not offering to provide consumers with information about them. The companies agreed to settlements in which they promised to let people see their personal information.
Many Seeking Health Insurance Turned Down In The U.S.
Insurers shun those taking certain meds
How health insurers secretly blacklist those with certain ailments.
Related Content
MomsMiami.com | How to save on prescription drugs
What do they have on you?
Vista Guide for Medical Underwriting
BY JOHN DORSCHNER
JDORSCHNER@MIAMIHERALD.COM
Trying to buy health insurance on your own and have gallstones? You'll automatically be denied coverage. Rheumatoid arthritis? Automatic denial. Severe acne? Probably denied. Do you take metformin, a popular drug for diabetes? Denied. Use the anti-clotting drug Plavix or Seroquel, prescribed for anti-psychotic or sleep problems? Forget about it.
This confidential information on some insurers' practices is available on the Web -- if you know where to look.
What's more, you can discover that if you lie to an insurer about your medical history and drug use, you will be rejected because data-mining companies sell information to insurers about your health, including detailed usage of prescription drugs.
These issues are moving to the forefront as the Obama administration and Congress gear up for discussions about how to reform the healthcare system so that Americans won't be rejected for insurance.
It's especially timely because growing numbers are looking for individual health insurance after losing their jobs. On top of that, small businesses, which make up the bulk of South Florida's economy, are frequently finding health policies too expensive and are dropping coverage, sending even more people shopping for insurance.
The problem is, material available on the Web shows that people who have specific illnesses or use certain drugs can't buy coverage.
''This is absolutely the standard way of doing business,'' said Santiago Leon, a health insurance broker in Miami. Being denied for preexisting conditions is well known, but when a person sees the usually confidential list of automatic denials for himself, ``that's a eureka moment. That shows you how harsh the system is.''
A 50-year-old Broward County man, with two long-standing medical conditions, saw the harshness for himself when surfing the Web trying to learn why insurers kept denying him coverage. He was shocked to find several insurers' instructions to sales personnel, usually called the Guide to Medical Underwriting and often marked ``confidential and proprietary.''
''I think it's atrocious what's going on,'' he said. ``Basically, they're taking only the healthy so they can get the fattest profits. If you really need insurance, then you can't get it.''
The man, a self-employed consultant, didn't want his name or preexisting conditions identified for fear that the information might frighten away potential employers.
CONFIDENTIAL GUIDE
Insurers don't want to talk about the guides. Sunrise-based Vista , which has its 35-page ''confidential and proprietary'' guide tucked away within its website, refused to make executives available for an interview and instead issued a brief statement:
``The medical underwriting guidelines used by VISTA are based on industry standards, comply with all regulations and are subject to review by the Florida Department of Insurance. VISTA's Guide to Medical Underwriting is an educational tool intended to assist agents and brokers who are selling VISTA individual plans. We do not comment on our specific underwriting processes and practices.''
Sandra Foertsch, who sells individual policies, says the fundamental concern of insurers is clear: ''They don't want to buy a claim,'' meaning that they would start to collect $500 monthly premiums from a person and quickly pay out more than that to doctors and other providers.
Foertsch said she was surprised that any of the guides could be found on the Web. ``I'd guess someone made a mistake.''
The Miami Herald asked several other major Florida insurers -- Aetna, Humana and Blue Cross Blue Shield of Florida -- for copies of their underwriting guides. All refused, saying they contained propriety information and were confidential.
Searching the Web, The Miami Herald found underwriting guidelines for Coventry Health Care, which owns Vista; Wellpoint; Assurant Health; and Blue Cross Blue Shield of Nebraska.
Among the health problems that the guides say should be rejected: diabetes, hepatitis C, multiple sclerosis, schizophrenia, quadriplegia, Parkinson's disease and AIDS/HIV.
Some guides echo Nebraska's warning on the Web that it's ''intended as a reference tool only,'' with final decisions made by managers.
COVERAGE VARIES
Insurers have different criteria. Sleep apnea and fainting for no known cause are reasons for denial for the Nebraska plan, but not for other plans. Vista doesn't want to cover severe acne, but other guides seen don't mention it. Insurers often use measures of body mass index to reject those who are too heavy or too thin.
For cancer, the key is how patients have been doing in remission. Wellpoint, a national insurer, rejects applicants who have had breast or prostate cancer within the past five years. With other types of cancer, 10 years must have passed. Assurant Health, based in Milwaukee, rejects most patients whose cancer has not been in remission for at least eight years.
Other reasons for automatic denial by various companies: alcohol-related problems of people who have not been abstinent for at least six years, chronic bronchitis, severe migraines, and a cardiac pacemaker installed within the last two years.
Some insurers will automatically reject applicants who are using certain prescription drugs. Wellpoint denies anyone who within the past year has taken Abilify and Zyprexa for mental disorders as well as Neupogen, which is used to treat the side effects of chemotherapy. Vista lists the anticoagulant Warfarin and the pain medication Oxycontin. Both companies list insulin.
The medications, of course, are indications of specific health problems. To make sure that applicants are not lying, insurers hire a data-gathering service -- Medical Information Bureau, Milliman's Intelliscript or Ingenix Medpoint.
Intelliscript and Medpoint do computerized searches of a person's drug use, gleaned from pharmacy benefits managers and other databases. The two companies say they comply with privacy laws. ''Ingenix requires each Medpoint client to obtain the authorization of the individual applicant or insured person,'' said Ingenix spokeswoman Karin Olson.
Last year, the Federal Trade Commission accused both companies of violating the Fair Credit Reporting Act by not offering to provide consumers with information about them. The companies agreed to settlements in which they promised to let people see their personal information.
How health insurers secretly blacklist those with certain ailments.
Related Content
MomsMiami.com | How to save on prescription drugs
What do they have on you?
Vista Guide for Medical Underwriting
BY JOHN DORSCHNER
JDORSCHNER@MIAMIHERALD.COM
Trying to buy health insurance on your own and have gallstones? You'll automatically be denied coverage. Rheumatoid arthritis? Automatic denial. Severe acne? Probably denied. Do you take metformin, a popular drug for diabetes? Denied. Use the anti-clotting drug Plavix or Seroquel, prescribed for anti-psychotic or sleep problems? Forget about it.
This confidential information on some insurers' practices is available on the Web -- if you know where to look.
What's more, you can discover that if you lie to an insurer about your medical history and drug use, you will be rejected because data-mining companies sell information to insurers about your health, including detailed usage of prescription drugs.
These issues are moving to the forefront as the Obama administration and Congress gear up for discussions about how to reform the healthcare system so that Americans won't be rejected for insurance.
It's especially timely because growing numbers are looking for individual health insurance after losing their jobs. On top of that, small businesses, which make up the bulk of South Florida's economy, are frequently finding health policies too expensive and are dropping coverage, sending even more people shopping for insurance.
The problem is, material available on the Web shows that people who have specific illnesses or use certain drugs can't buy coverage.
''This is absolutely the standard way of doing business,'' said Santiago Leon, a health insurance broker in Miami. Being denied for preexisting conditions is well known, but when a person sees the usually confidential list of automatic denials for himself, ``that's a eureka moment. That shows you how harsh the system is.''
A 50-year-old Broward County man, with two long-standing medical conditions, saw the harshness for himself when surfing the Web trying to learn why insurers kept denying him coverage. He was shocked to find several insurers' instructions to sales personnel, usually called the Guide to Medical Underwriting and often marked ``confidential and proprietary.''
''I think it's atrocious what's going on,'' he said. ``Basically, they're taking only the healthy so they can get the fattest profits. If you really need insurance, then you can't get it.''
The man, a self-employed consultant, didn't want his name or preexisting conditions identified for fear that the information might frighten away potential employers.
CONFIDENTIAL GUIDE
Insurers don't want to talk about the guides. Sunrise-based Vista , which has its 35-page ''confidential and proprietary'' guide tucked away within its website, refused to make executives available for an interview and instead issued a brief statement:
``The medical underwriting guidelines used by VISTA are based on industry standards, comply with all regulations and are subject to review by the Florida Department of Insurance. VISTA's Guide to Medical Underwriting is an educational tool intended to assist agents and brokers who are selling VISTA individual plans. We do not comment on our specific underwriting processes and practices.''
Sandra Foertsch, who sells individual policies, says the fundamental concern of insurers is clear: ''They don't want to buy a claim,'' meaning that they would start to collect $500 monthly premiums from a person and quickly pay out more than that to doctors and other providers.
Foertsch said she was surprised that any of the guides could be found on the Web. ``I'd guess someone made a mistake.''
The Miami Herald asked several other major Florida insurers -- Aetna, Humana and Blue Cross Blue Shield of Florida -- for copies of their underwriting guides. All refused, saying they contained propriety information and were confidential.
Searching the Web, The Miami Herald found underwriting guidelines for Coventry Health Care, which owns Vista; Wellpoint; Assurant Health; and Blue Cross Blue Shield of Nebraska.
Among the health problems that the guides say should be rejected: diabetes, hepatitis C, multiple sclerosis, schizophrenia, quadriplegia, Parkinson's disease and AIDS/HIV.
Some guides echo Nebraska's warning on the Web that it's ''intended as a reference tool only,'' with final decisions made by managers.
COVERAGE VARIES
Insurers have different criteria. Sleep apnea and fainting for no known cause are reasons for denial for the Nebraska plan, but not for other plans. Vista doesn't want to cover severe acne, but other guides seen don't mention it. Insurers often use measures of body mass index to reject those who are too heavy or too thin.
For cancer, the key is how patients have been doing in remission. Wellpoint, a national insurer, rejects applicants who have had breast or prostate cancer within the past five years. With other types of cancer, 10 years must have passed. Assurant Health, based in Milwaukee, rejects most patients whose cancer has not been in remission for at least eight years.
Other reasons for automatic denial by various companies: alcohol-related problems of people who have not been abstinent for at least six years, chronic bronchitis, severe migraines, and a cardiac pacemaker installed within the last two years.
Some insurers will automatically reject applicants who are using certain prescription drugs. Wellpoint denies anyone who within the past year has taken Abilify and Zyprexa for mental disorders as well as Neupogen, which is used to treat the side effects of chemotherapy. Vista lists the anticoagulant Warfarin and the pain medication Oxycontin. Both companies list insulin.
The medications, of course, are indications of specific health problems. To make sure that applicants are not lying, insurers hire a data-gathering service -- Medical Information Bureau, Milliman's Intelliscript or Ingenix Medpoint.
Intelliscript and Medpoint do computerized searches of a person's drug use, gleaned from pharmacy benefits managers and other databases. The two companies say they comply with privacy laws. ''Ingenix requires each Medpoint client to obtain the authorization of the individual applicant or insured person,'' said Ingenix spokeswoman Karin Olson.
Last year, the Federal Trade Commission accused both companies of violating the Fair Credit Reporting Act by not offering to provide consumers with information about them. The companies agreed to settlements in which they promised to let people see their personal information.
Saturday, March 28, 2009
Vast Spy System Loots Computers in 103 Countries
By JOHN MARKOFF
Published: March 28, 2009
TORONTO — A vast electronic spying operation has infiltrated computers and has stolen documents from hundreds of government and private offices around the world, including those of the Dalai Lama, Canadian researchers have concluded.
Enlarge This Image
Tim Leyes for The New York Times
The Toronto academic researchers who are reporting on the spying operation dubbed GhostNet include, from left, Ronald J. Deibert, Greg Walton, Nart Villeneuve and Rafal A. Rohozinski.
Multimedia
Graphic
The Vast Reach of ‘GhostNet’
In a report to be issued this weekend, the researchers said that the system was being controlled from computers based almost exclusively in China, but that they could not say conclusively that the Chinese government was involved.
The researchers, who are based at the Munk Center for International Studies at the University of Toronto, had been asked by the office of the Dalai Lama, the exiled Tibetan leader whom China regularly denounces, to examine its computers for signs of malicious software, or malware.
Their sleuthing opened a window into a broader operation that, in less than two years, has infiltrated at least 1,295 computers in 103 countries, including many belonging to embassies, foreign ministries and other government offices, as well as the Dalai Lama’s Tibetan exile centers in India, Brussels, London and New York.
The researchers, who have a record of detecting computer espionage, said they believed that in addition to the spying on the Dalai Lama, the system, which they called GhostNet, was focused on the governments of South Asian and Southeast Asian countries.
Intelligence analysts say many governments, including those of China, Russia and the United States, and other parties use sophisticated computer programs to covertly gather information.
The newly reported spying operation is by far the largest to come to light in terms of countries affected.
This is also believed to be the first time researchers have been able to expose the workings of a computer system used in an intrusion of this magnitude.
Still going strong, the operation continues to invade and monitor more than a dozen new computers a week, the researchers said in their report, “Tracking ‘GhostNet’: Investigating a Cyber Espionage Network.” They said they had found no evidence that United States government offices had been infiltrated, although a NATO computer was monitored by the spies for half a day and computers of the Indian Embassy in Washington were infiltrated.
The malware is remarkable both for its sweep — in computer jargon, it has not been merely “phishing” for random consumers’ information, but “whaling” for particular important targets — and for its Big Brother-style capacities. It can, for example, turn on the camera and audio-recording functions of an infected computer, enabling monitors to see and hear what goes on in a room. The investigators say they do not know if this facet has been employed.
The researchers were able to monitor the commands given to infected computers and to see the names of documents retrieved by the spies, but in most cases the contents of the stolen files have not been determined. Working with the Tibetans, however, the researchers found that specific correspondence had been stolen and that the intruders had gained control of the electronic mail server computers of the Dalai Lama’s organization.
The electronic spy game has had at least some real-world impact, they said. For example, they said, after an e-mail invitation was sent by the Dalai Lama’s office to a foreign diplomat, the Chinese government made a call to the diplomat discouraging a visit. And a woman working for a group making Internet contacts between Tibetan exiles and Chinese citizens was stopped by Chinese intelligence officers on her way back to Tibet, shown transcripts of her online conversations and warned to stop her political activities.
The Toronto researchers said they had notified international law enforcement agencies of the spying operation, which in their view exposed basic shortcomings in the legal structure of cyberspace. The F.B.I. declined to comment on the operation.
Although the Canadian researchers said that most of the computers behind the spying were in China, they cautioned against concluding that China’s government was involved. The spying could be a nonstate, for-profit operation, for example, or one run by private citizens in China known as “patriotic hackers.”
“We’re a bit more careful about it, knowing the nuance of what happens in the subterranean realms,” said Ronald J. Deibert, a member of the research group and an associate professor of political science at Munk. “This could well be the C.I.A. or the Russians. It’s a murky realm that we’re lifting the lid on.”
A spokesman for the Chinese Consulate in New York dismissed the idea that China was involved. “These are old stories and they are nonsense,” the spokesman, Wenqi Gao, said. “The Chinese government is opposed to and strictly forbids any cybercrime.”
The Toronto researchers, who allowed a reporter for The New York Times to review the spies’ digital tracks, are publishing their findings in Information Warfare Monitor, an online publication associated with the Munk Center.
At the same time, two computer researchers at Cambridge University in Britain who worked on the part of the investigation related to the Tibetans, are releasing an independent report. They do fault China, and they warned that other hackers could adopt the tactics used in the malware operation.
“What Chinese spooks did in 2008, Russian crooks will do in 2010 and even low-budget criminals from less developed countries will follow in due course,” the Cambridge researchers, Shishir Nagaraja and Ross Anderson, wrote in their report, “The Snooping Dragon: Social Malware Surveillance of the Tibetan Movement.”
In any case, it was suspicions of Chinese interference that led to the discovery of the spy operation. Last summer, the office of the Dalai Lama invited two specialists to India to audit computers used by the Dalai Lama’s organization. The specialists, Greg Walton, the editor of Information Warfare Monitor, and Mr. Nagaraja, a network security expert, found that the computers had indeed been infected and that intruders had stolen files from personal computers serving several Tibetan exile groups.
Back in Toronto, Mr. Walton shared data with colleagues at the Munk Center’s computer lab.
One of them was Nart Villeneuve, 34, a graduate student and self-taught “white hat” hacker with dazzling technical skills. Last year, Mr. Villeneuve linked the Chinese version of the Skype communications service to a Chinese government operation that was systematically eavesdropping on users’ instant-messaging sessions.
Early this month, Mr. Villeneuve noticed an odd string of 22 characters embedded in files created by the malicious software and searched for it with Google. It led him to a group of computers on Hainan Island, off China, and to a Web site that would prove to be critically important.
In a puzzling security lapse, the Web page that Mr. Villeneuve found was not protected by a password, while much of the rest of the system uses encryption.
Mr. Villeneuve and his colleagues figured out how the operation worked by commanding it to infect a system in their computer lab in Toronto. On March 12, the spies took their own bait. Mr. Villeneuve watched a brief series of commands flicker on his computer screen as someone — presumably in China — rummaged through the files. Finding nothing of interest, the intruder soon disappeared.
Through trial and error, the researchers learned to use the system’s Chinese-language “dashboard” — a control panel reachable with a standard Web browser — by which one could manipulate the more than 1,200 computers worldwide that had by then been infected.
Infection happens two ways. In one method, a user’s clicking on a document attached to an e-mail message lets the system covertly install software deep in the target operating system. Alternatively, a user clicks on a Web link in an e-mail message and is taken directly to a “poisoned” Web site.
The researchers said they avoided breaking any laws during three weeks of monitoring and extensively experimenting with the system’s unprotected software control panel. They provided, among other information, a log of compromised computers dating to May 22, 2007.
They found that three of the four control servers were in different provinces in China — Hainan, Guangdong and Sichuan — while the fourth was discovered to be at a Web-hosting company based in Southern California.
Beyond that, said Rafal A. Rohozinski, one of the investigators, “attribution is difficult because there is no agreed upon international legal framework for being able to pursue investigations down to their logical conclusion, which is highly local.”
By JOHN MARKOFF
Published: March 28, 2009
TORONTO — A vast electronic spying operation has infiltrated computers and has stolen documents from hundreds of government and private offices around the world, including those of the Dalai Lama, Canadian researchers have concluded.
Enlarge This Image
Tim Leyes for The New York Times
The Toronto academic researchers who are reporting on the spying operation dubbed GhostNet include, from left, Ronald J. Deibert, Greg Walton, Nart Villeneuve and Rafal A. Rohozinski.
Multimedia
Graphic
The Vast Reach of ‘GhostNet’
In a report to be issued this weekend, the researchers said that the system was being controlled from computers based almost exclusively in China, but that they could not say conclusively that the Chinese government was involved.
The researchers, who are based at the Munk Center for International Studies at the University of Toronto, had been asked by the office of the Dalai Lama, the exiled Tibetan leader whom China regularly denounces, to examine its computers for signs of malicious software, or malware.
Their sleuthing opened a window into a broader operation that, in less than two years, has infiltrated at least 1,295 computers in 103 countries, including many belonging to embassies, foreign ministries and other government offices, as well as the Dalai Lama’s Tibetan exile centers in India, Brussels, London and New York.
The researchers, who have a record of detecting computer espionage, said they believed that in addition to the spying on the Dalai Lama, the system, which they called GhostNet, was focused on the governments of South Asian and Southeast Asian countries.
Intelligence analysts say many governments, including those of China, Russia and the United States, and other parties use sophisticated computer programs to covertly gather information.
The newly reported spying operation is by far the largest to come to light in terms of countries affected.
This is also believed to be the first time researchers have been able to expose the workings of a computer system used in an intrusion of this magnitude.
Still going strong, the operation continues to invade and monitor more than a dozen new computers a week, the researchers said in their report, “Tracking ‘GhostNet’: Investigating a Cyber Espionage Network.” They said they had found no evidence that United States government offices had been infiltrated, although a NATO computer was monitored by the spies for half a day and computers of the Indian Embassy in Washington were infiltrated.
The malware is remarkable both for its sweep — in computer jargon, it has not been merely “phishing” for random consumers’ information, but “whaling” for particular important targets — and for its Big Brother-style capacities. It can, for example, turn on the camera and audio-recording functions of an infected computer, enabling monitors to see and hear what goes on in a room. The investigators say they do not know if this facet has been employed.
The researchers were able to monitor the commands given to infected computers and to see the names of documents retrieved by the spies, but in most cases the contents of the stolen files have not been determined. Working with the Tibetans, however, the researchers found that specific correspondence had been stolen and that the intruders had gained control of the electronic mail server computers of the Dalai Lama’s organization.
The electronic spy game has had at least some real-world impact, they said. For example, they said, after an e-mail invitation was sent by the Dalai Lama’s office to a foreign diplomat, the Chinese government made a call to the diplomat discouraging a visit. And a woman working for a group making Internet contacts between Tibetan exiles and Chinese citizens was stopped by Chinese intelligence officers on her way back to Tibet, shown transcripts of her online conversations and warned to stop her political activities.
The Toronto researchers said they had notified international law enforcement agencies of the spying operation, which in their view exposed basic shortcomings in the legal structure of cyberspace. The F.B.I. declined to comment on the operation.
Although the Canadian researchers said that most of the computers behind the spying were in China, they cautioned against concluding that China’s government was involved. The spying could be a nonstate, for-profit operation, for example, or one run by private citizens in China known as “patriotic hackers.”
“We’re a bit more careful about it, knowing the nuance of what happens in the subterranean realms,” said Ronald J. Deibert, a member of the research group and an associate professor of political science at Munk. “This could well be the C.I.A. or the Russians. It’s a murky realm that we’re lifting the lid on.”
A spokesman for the Chinese Consulate in New York dismissed the idea that China was involved. “These are old stories and they are nonsense,” the spokesman, Wenqi Gao, said. “The Chinese government is opposed to and strictly forbids any cybercrime.”
The Toronto researchers, who allowed a reporter for The New York Times to review the spies’ digital tracks, are publishing their findings in Information Warfare Monitor, an online publication associated with the Munk Center.
At the same time, two computer researchers at Cambridge University in Britain who worked on the part of the investigation related to the Tibetans, are releasing an independent report. They do fault China, and they warned that other hackers could adopt the tactics used in the malware operation.
“What Chinese spooks did in 2008, Russian crooks will do in 2010 and even low-budget criminals from less developed countries will follow in due course,” the Cambridge researchers, Shishir Nagaraja and Ross Anderson, wrote in their report, “The Snooping Dragon: Social Malware Surveillance of the Tibetan Movement.”
In any case, it was suspicions of Chinese interference that led to the discovery of the spy operation. Last summer, the office of the Dalai Lama invited two specialists to India to audit computers used by the Dalai Lama’s organization. The specialists, Greg Walton, the editor of Information Warfare Monitor, and Mr. Nagaraja, a network security expert, found that the computers had indeed been infected and that intruders had stolen files from personal computers serving several Tibetan exile groups.
Back in Toronto, Mr. Walton shared data with colleagues at the Munk Center’s computer lab.
One of them was Nart Villeneuve, 34, a graduate student and self-taught “white hat” hacker with dazzling technical skills. Last year, Mr. Villeneuve linked the Chinese version of the Skype communications service to a Chinese government operation that was systematically eavesdropping on users’ instant-messaging sessions.
Early this month, Mr. Villeneuve noticed an odd string of 22 characters embedded in files created by the malicious software and searched for it with Google. It led him to a group of computers on Hainan Island, off China, and to a Web site that would prove to be critically important.
In a puzzling security lapse, the Web page that Mr. Villeneuve found was not protected by a password, while much of the rest of the system uses encryption.
Mr. Villeneuve and his colleagues figured out how the operation worked by commanding it to infect a system in their computer lab in Toronto. On March 12, the spies took their own bait. Mr. Villeneuve watched a brief series of commands flicker on his computer screen as someone — presumably in China — rummaged through the files. Finding nothing of interest, the intruder soon disappeared.
Through trial and error, the researchers learned to use the system’s Chinese-language “dashboard” — a control panel reachable with a standard Web browser — by which one could manipulate the more than 1,200 computers worldwide that had by then been infected.
Infection happens two ways. In one method, a user’s clicking on a document attached to an e-mail message lets the system covertly install software deep in the target operating system. Alternatively, a user clicks on a Web link in an e-mail message and is taken directly to a “poisoned” Web site.
The researchers said they avoided breaking any laws during three weeks of monitoring and extensively experimenting with the system’s unprotected software control panel. They provided, among other information, a log of compromised computers dating to May 22, 2007.
They found that three of the four control servers were in different provinces in China — Hainan, Guangdong and Sichuan — while the fourth was discovered to be at a Web-hosting company based in Southern California.
Beyond that, said Rafal A. Rohozinski, one of the investigators, “attribution is difficult because there is no agreed upon international legal framework for being able to pursue investigations down to their logical conclusion, which is highly local.”
The Dire Future of Mexico
The Dire Future For Mexico Edit Delete
7:41PM, Saturday, 28 Mar, 2009
My readers I have more than a passing knowledge of large-scale drug dealers. I wrote a biography of Paul Lir Alexander. He was the Baron of Cocaine in Brasil. He was rated as one of the top ten drug dealers of all times. At the moment he is serving a 45-year sentence in a prison outside of Minas Gerais, Brasil.
I got to know a lot about the Colombian drug cartels. The Medellin cartel was as bloody and ruthless as they came. We all have heard of their late leader Pablo Escobar. The Cali cartel was more pragmatic and business like. But they could be very rough and violent also.
In any event they had good common sense. They realized that if they exported their violence to the US and other developed countries, there would be a huge back lash that would lead to their destruction.
Both cartles used an ingenious distribution system inside the US. They would pick a well-educated Colombian and send him to the US. THis person would get a Green Card, buy a middle class house, drive a middle class car, and simply appear to be a hard working and honest immigrant. Any police check would turn up nothing to make authoprities suspicious. These people often distributed drugs for decades without getting detected.
Now we have the very virulent and violent Mexican drug cartels. They just haul the drugs to local distributors and let them sell the product. They also have initiated a campaign of violence and murder here in the US. They seem to have complete disregard for the laws of this country or its power.
As the US and Mexico move to crush these cartels, we will see a huge escalation of violence right here in the USA. These cartels get $20 billion US dollars each year from drug sales. They will also attract money from the same wealthy Muslim elements in the Middle East who fund Al Qaeda and other radical groups. With this large war chest, these cartels will be able to launch trerrorist attacks and start firing rockets into US cities. Areas near the Mexican border will become like Israeli areas near Palestinians. The drug cartels will adopt similar tactics. They will have funding like the Palestinians never dreamed of. They also will be cold-booded and brutal is a way Palestinians never were.
The US will step up efforts to stop the drug flow and interdict the flow of money and weapons back to Mexico. These moves will fail as they have for the last 30-40 years. Troops will be mobilized and sent to the Mexican border with great fanfare. US Army, Navy and Marine Corps "Special Ops" units will go into Mexico chasing the cartels. Unmanned Predator drones will hunt down and kill cartel leaders. The full technology and power of the US will not stop these cartels. They have lost the so called War On Drugs for 30 years after spending $40 billion dollars and putting hundreds of thousands of people in prison for decades.
Sadly little or nothing will be done to stop the huge demand for drugs. Any talk of legalization will be shouted down by conservative elements.
Eventually the US will seal the border and send troops into Mexico. The Mexican state will collapse. It could break apart. Its economy will collapse.
My suggestion to the US authorities is to hire Israeli Army and intelligence officials who have experience fighting these kind of insurgencies.
It breaks my heart to see this happen. My wife and I had our honey moon in Mexico City. I have spent years in Mexico. I only have the warmest and most wonderful memories of the people there.
In 1982 Ridley Scott produced the cult classic film Blade Runner. It was a dark vision of the future. Sadly it appears that he was right.
7:41PM, Saturday, 28 Mar, 2009
My readers I have more than a passing knowledge of large-scale drug dealers. I wrote a biography of Paul Lir Alexander. He was the Baron of Cocaine in Brasil. He was rated as one of the top ten drug dealers of all times. At the moment he is serving a 45-year sentence in a prison outside of Minas Gerais, Brasil.
I got to know a lot about the Colombian drug cartels. The Medellin cartel was as bloody and ruthless as they came. We all have heard of their late leader Pablo Escobar. The Cali cartel was more pragmatic and business like. But they could be very rough and violent also.
In any event they had good common sense. They realized that if they exported their violence to the US and other developed countries, there would be a huge back lash that would lead to their destruction.
Both cartles used an ingenious distribution system inside the US. They would pick a well-educated Colombian and send him to the US. THis person would get a Green Card, buy a middle class house, drive a middle class car, and simply appear to be a hard working and honest immigrant. Any police check would turn up nothing to make authoprities suspicious. These people often distributed drugs for decades without getting detected.
Now we have the very virulent and violent Mexican drug cartels. They just haul the drugs to local distributors and let them sell the product. They also have initiated a campaign of violence and murder here in the US. They seem to have complete disregard for the laws of this country or its power.
As the US and Mexico move to crush these cartels, we will see a huge escalation of violence right here in the USA. These cartels get $20 billion US dollars each year from drug sales. They will also attract money from the same wealthy Muslim elements in the Middle East who fund Al Qaeda and other radical groups. With this large war chest, these cartels will be able to launch trerrorist attacks and start firing rockets into US cities. Areas near the Mexican border will become like Israeli areas near Palestinians. The drug cartels will adopt similar tactics. They will have funding like the Palestinians never dreamed of. They also will be cold-booded and brutal is a way Palestinians never were.
The US will step up efforts to stop the drug flow and interdict the flow of money and weapons back to Mexico. These moves will fail as they have for the last 30-40 years. Troops will be mobilized and sent to the Mexican border with great fanfare. US Army, Navy and Marine Corps "Special Ops" units will go into Mexico chasing the cartels. Unmanned Predator drones will hunt down and kill cartel leaders. The full technology and power of the US will not stop these cartels. They have lost the so called War On Drugs for 30 years after spending $40 billion dollars and putting hundreds of thousands of people in prison for decades.
Sadly little or nothing will be done to stop the huge demand for drugs. Any talk of legalization will be shouted down by conservative elements.
Eventually the US will seal the border and send troops into Mexico. The Mexican state will collapse. It could break apart. Its economy will collapse.
My suggestion to the US authorities is to hire Israeli Army and intelligence officials who have experience fighting these kind of insurgencies.
It breaks my heart to see this happen. My wife and I had our honey moon in Mexico City. I have spent years in Mexico. I only have the warmest and most wonderful memories of the people there.
In 1982 Ridley Scott produced the cult classic film Blade Runner. It was a dark vision of the future. Sadly it appears that he was right.
Friday, March 27, 2009
Tax Havens And Money Laundering
The G20 and tax
Haven hypocrisy
Mar 26th 2009 | BERLIN
From The Economist print edition
Big economies are leaning on offshore tax havens. But greater abuse may be taking place at home
MONEY launderers are moved by greed, unlike Jason Sharman, a political scientist at Australia’s Griffith University. Yet with a budget of $10,000 and little more than Google (and the ads at the back of this paper), he showed how easy it was to circumvent prohibitions on banking secrecy, forming anonymous shell companies and secret bank accounts across the world. In doing so he has uncovered an uncomfortable truth for many of the leaders of Group of 20 nations meeting on April 2nd to discuss, among other things, sanctions against offshore tax havens. The most egregious examples of banking secrecy, money laundering and tax fraud are found not in remote alpine valleys or on sunny tropical isles but in the backyards of the world’s biggest economies.
Panoramic Images
Wyoming, the Switzerland of the Rocky MountainsAt issue is not banking secrecy as the Swiss once knew it, where discreet men in plush offices promised to take the names of their clients to the grave. This is a more insidious form of secrecy, in which authorities and bankers do not bother to ask for names, something long outlawed in offshore tax centres such as Jersey and Switzerland but which has persisted in America. For shady clients, this is a far better proposition: what their bankers do not know, they can never be forced to reveal. And their method is disarmingly simple. Instead of opening bank accounts in their own names, fraudsters and money launderers form anonymous companies, with which they can then open bank accounts and move assets.
Nowhere is this more prevalent than in America. Take Nevada, for example. Its official website touts its “limited reporting and disclosure requirements” and a speedy one-hour incorporation service. Nevada does not ask for the names of company shareholders, nor does it routinely share the little information it has with the federal government.
There is demand for this ask-no-questions approach. The state, with a population of only 2.6m, incorporates about 80,000 new firms a year and now has more than 400,000, roughly one for every six people. A study by the Internal Revenue Service found that 50-90% of those registering companies were already in breach of federal tax laws elsewhere.
A money-laundering threat assessment in 2005 by the federal government found that corporate anonymity offered by Delaware, Nevada and Wyoming rivalled that of familiar offshore financial centres. For foreigners, America is a particularly attractive place to stash cash, because it does not tax the interest income they earn. Thus with both anonymity and no taxation, America offers them all the elements of a tax haven.
Change may be coming in America, but slowly. In March Senator Carl Levin proposed a law forcing states to identify the beneficial owners of corporations. “For too long, criminals have misused US corporations to hide illicit activity, including money laundering and tax fraud,” said Mr Levin. “It doesn’t make sense that less information is required to form a US corporation than to obtain a driver’s licence.”
Yet a similar bill introduced last year died a quiet death in committee.
America is not the only rich nation Mr Sharman tested. He tried to open anonymous shell companies and bank accounts 45 times across the world. These were successful in 17 cases, of which 13 were in OECD countries. One example was Britain, where in 45 minutes on the internet he formed a company without providing identification, was issued with bearer shares (which have been almost universally outlawed because they confer completely anonymous ownership) as well as nominee directors and a secretary. All was achieved at a cost of £515.95 ($753).
In other cases Mr Sharman formed companies by providing no more than a scanned copy of his driving licence. In contrast, when trying to open accounts in Bermuda and Switzerland, he was asked for documentation such as notarised copies of his birth certificate. “In practice OECD countries have much laxer regulation on shell corporations than classic tax havens,” Mr Sharman concludes. “And the US is the worst on this score, worse than Liechtenstein and worse than Somalia.”
Haven hypocrisy
Mar 26th 2009 | BERLIN
From The Economist print edition
Big economies are leaning on offshore tax havens. But greater abuse may be taking place at home
MONEY launderers are moved by greed, unlike Jason Sharman, a political scientist at Australia’s Griffith University. Yet with a budget of $10,000 and little more than Google (and the ads at the back of this paper), he showed how easy it was to circumvent prohibitions on banking secrecy, forming anonymous shell companies and secret bank accounts across the world. In doing so he has uncovered an uncomfortable truth for many of the leaders of Group of 20 nations meeting on April 2nd to discuss, among other things, sanctions against offshore tax havens. The most egregious examples of banking secrecy, money laundering and tax fraud are found not in remote alpine valleys or on sunny tropical isles but in the backyards of the world’s biggest economies.
Panoramic Images
Wyoming, the Switzerland of the Rocky MountainsAt issue is not banking secrecy as the Swiss once knew it, where discreet men in plush offices promised to take the names of their clients to the grave. This is a more insidious form of secrecy, in which authorities and bankers do not bother to ask for names, something long outlawed in offshore tax centres such as Jersey and Switzerland but which has persisted in America. For shady clients, this is a far better proposition: what their bankers do not know, they can never be forced to reveal. And their method is disarmingly simple. Instead of opening bank accounts in their own names, fraudsters and money launderers form anonymous companies, with which they can then open bank accounts and move assets.
Nowhere is this more prevalent than in America. Take Nevada, for example. Its official website touts its “limited reporting and disclosure requirements” and a speedy one-hour incorporation service. Nevada does not ask for the names of company shareholders, nor does it routinely share the little information it has with the federal government.
There is demand for this ask-no-questions approach. The state, with a population of only 2.6m, incorporates about 80,000 new firms a year and now has more than 400,000, roughly one for every six people. A study by the Internal Revenue Service found that 50-90% of those registering companies were already in breach of federal tax laws elsewhere.
A money-laundering threat assessment in 2005 by the federal government found that corporate anonymity offered by Delaware, Nevada and Wyoming rivalled that of familiar offshore financial centres. For foreigners, America is a particularly attractive place to stash cash, because it does not tax the interest income they earn. Thus with both anonymity and no taxation, America offers them all the elements of a tax haven.
Change may be coming in America, but slowly. In March Senator Carl Levin proposed a law forcing states to identify the beneficial owners of corporations. “For too long, criminals have misused US corporations to hide illicit activity, including money laundering and tax fraud,” said Mr Levin. “It doesn’t make sense that less information is required to form a US corporation than to obtain a driver’s licence.”
Yet a similar bill introduced last year died a quiet death in committee.
America is not the only rich nation Mr Sharman tested. He tried to open anonymous shell companies and bank accounts 45 times across the world. These were successful in 17 cases, of which 13 were in OECD countries. One example was Britain, where in 45 minutes on the internet he formed a company without providing identification, was issued with bearer shares (which have been almost universally outlawed because they confer completely anonymous ownership) as well as nominee directors and a secretary. All was achieved at a cost of £515.95 ($753).
In other cases Mr Sharman formed companies by providing no more than a scanned copy of his driving licence. In contrast, when trying to open accounts in Bermuda and Switzerland, he was asked for documentation such as notarised copies of his birth certificate. “In practice OECD countries have much laxer regulation on shell corporations than classic tax havens,” Mr Sharman concludes. “And the US is the worst on this score, worse than Liechtenstein and worse than Somalia.”
President Lula Of Brasil Blasts Wall Street And London Bankers
'White, blue-eyed bankers have brought world economy to its knees': What the Brazilian President told Gordon Brown
By JAMES CHAPMAN
Last updated at 9:41 AM on 27th March 2009
Comments (67)
Add to My Stories
Gordon Brown’s efforts to broker an £80billion bailout for world trade on a trip to Brazil hit a stumbling block tonight when the country’s president lashed out at ‘white, blue-eyed’ bankers for bringing the world economy to its knees.
Mr Brown watched on uneasily as his host, President Luiz Inacio Lula de Silva, launched a bizarre tirade in which he warned that next week’s G20 summit in London would be a ‘spicy’ affair.
President Lula said it was completely unfair that the poorest people in the world were suffering most for the mistakes of wealthy, Western financiers.
Luiz Inacio Lula da Silva embraces Gordon Brown after the press conference where the Brazilian president made the comments about 'a crisis that was caused by people, white with blue eyes'
‘This was a crisis that was fostered and boosted by irrational behaviour of people that are white, blue-eyed, that before the crisis looked like they knew everything about economics,’ he declared.
‘Now they have demonstrated that they don’t know anything about economics.’
President Lula, head of Brazil’s main left-wing party, said that ‘no black man or woman, no indigenous person, no poor person’ had been in any way culpable for the global banking crisis.
More...
Brown to borrow £351billion in the next two years (that's more than Britain's total debt from 1691 to the 1997 election)
‘I’m not acquainted with any black banker,’ he said. ‘The part of humanity that’s responsible should pay for the crisis.’
The president, who apologised for coughing at the start of his joint press conference with Mr Brown because he had been snacking on ‘cheese bread’ immediately beforehand, lavished praise on the Prime Minister’s role in trying to rebuild world economies.
But he said he favoured tougher regulation of the financial sector than Mr Brown and celebrated the chance the crisis gave governments to create a bigger state.
Turning to the G20 summit in London, he added: ‘Normally we are very polite with each other – but this meeting in London, it has to be a little bit spicy, a little bit of heat.’
Mr Brown meets former Brazlian footballer Socrates (left) during his visit at the Pacaembu stadium in Sao Paulo
And Mr Brown also appeared to be criticised from within his own government.
Foreign Office Minister Lord Malloch Brown appeared to issue a warning to the Prime Minister ahead of the G20 summit next week that words needed to be backed up with action.
In an interview with the Associated Press newswire, he said: 'We can't again engage in meaningless, empty commitments which don't survive the flight home.
The global economy is going to go on descending on April 3, the massive destruction of wealth that is going on is not going to be stopped by any leaders' communiqué.'
The Prime Minister included Brazil on his whistlestop world tour ahead of the G20 because it is the world’s tenth largest economy and relatively open to free trade.
He warned that world trade is already shrinking for the first time in 30 years in the latest phase of the financial crisis.
Mr Brown set out plans for an £80billion trade guarantee scheme to try to keep the global economy moving. The fund would involve money from governments, the World Bank and private capital and being used to increase credit flows that underpin trade deals.
Take a look at yourselves: Brown and Lula examine their reflections before the joint press conference
The Prime Minister said that was the ‘minimum’ amount needed to prevent a full-scale collapse in world trade that could prove catastrophic for many economies.
Underwriting world trade deals, Mr Brown said, is the fourth weapon at the disposal of governments and central banks as they try to halt their financial decline.
It follows moves to cut interest rates, use tax cuts and spending hikes as a ‘fiscal stimulus’ and print money, so-called ‘quantitative easing’.
The Prime Minister’s focus on trade came after he appeared to retreat from the idea of another big debt-funded Budget giveaway following Bank of England Governor Mervyn King’s unprecedented warning that Britain could not afford one.
Doubts have also been cast over whether the UK's public finances could stretch to a further fiscal stimulus, if one was required.
Yesterday the Tories moved to exploit the apparent breakdown in relations between Downing Street, the Treasury and the Bank of England.
Shadow Chancellor George Osborne claimed there was now a serious 'crisis' of confidence' at the heart of the Government following Mervyn King's warning that debt was so high there is no room for further tax cuts and spending rises.
He seized on Alistair Darling's refusal to fully back the Bank of England Governor when challenged by a Tory MP in the Commons. Mr Osborne said: 'A dire situation for the Government just got worse.
'When a Chancellor pointedly refuses in Parliament to express confidence in the Governor of the Bank of England, or agree with the statements he makes on the Budget, then we have reached a crisis of confidence in the Government's economic policy and its ability to lead us into a recovery.'
To drive the message home the Tories also released a two-page dossier on the rift, showing that it proved Mr Brown's policies had failed.
Tory Party Chairman Eric Pickles said the intervention from Lord Malloch Brown challenged the Mr Brown's leadership and his stewardship of the economy. 'This Government and its economic policies are falling apart by the minute,' he said.
Brazil is the third leg of Mr Brown's whistle-stop tour, which started with a speech to the European Parliament in Strasbourg on Tuesday before moving on to New York.
However, his efforts to lay the groundwork for the summit have been beset by signs of tension between the US and Europe over how to tackle the downturn.
Czech Prime Minister Mirek Topolanek - current holder of the EU presidency - has branded US President Barack Obama's fiscal stimulus package and financial bail-out 'the way to hell'.
Print this article Read later Email to a friend
Share this article:
By JAMES CHAPMAN
Last updated at 9:41 AM on 27th March 2009
Comments (67)
Add to My Stories
Gordon Brown’s efforts to broker an £80billion bailout for world trade on a trip to Brazil hit a stumbling block tonight when the country’s president lashed out at ‘white, blue-eyed’ bankers for bringing the world economy to its knees.
Mr Brown watched on uneasily as his host, President Luiz Inacio Lula de Silva, launched a bizarre tirade in which he warned that next week’s G20 summit in London would be a ‘spicy’ affair.
President Lula said it was completely unfair that the poorest people in the world were suffering most for the mistakes of wealthy, Western financiers.
Luiz Inacio Lula da Silva embraces Gordon Brown after the press conference where the Brazilian president made the comments about 'a crisis that was caused by people, white with blue eyes'
‘This was a crisis that was fostered and boosted by irrational behaviour of people that are white, blue-eyed, that before the crisis looked like they knew everything about economics,’ he declared.
‘Now they have demonstrated that they don’t know anything about economics.’
President Lula, head of Brazil’s main left-wing party, said that ‘no black man or woman, no indigenous person, no poor person’ had been in any way culpable for the global banking crisis.
More...
Brown to borrow £351billion in the next two years (that's more than Britain's total debt from 1691 to the 1997 election)
‘I’m not acquainted with any black banker,’ he said. ‘The part of humanity that’s responsible should pay for the crisis.’
The president, who apologised for coughing at the start of his joint press conference with Mr Brown because he had been snacking on ‘cheese bread’ immediately beforehand, lavished praise on the Prime Minister’s role in trying to rebuild world economies.
But he said he favoured tougher regulation of the financial sector than Mr Brown and celebrated the chance the crisis gave governments to create a bigger state.
Turning to the G20 summit in London, he added: ‘Normally we are very polite with each other – but this meeting in London, it has to be a little bit spicy, a little bit of heat.’
Mr Brown meets former Brazlian footballer Socrates (left) during his visit at the Pacaembu stadium in Sao Paulo
And Mr Brown also appeared to be criticised from within his own government.
Foreign Office Minister Lord Malloch Brown appeared to issue a warning to the Prime Minister ahead of the G20 summit next week that words needed to be backed up with action.
In an interview with the Associated Press newswire, he said: 'We can't again engage in meaningless, empty commitments which don't survive the flight home.
The global economy is going to go on descending on April 3, the massive destruction of wealth that is going on is not going to be stopped by any leaders' communiqué.'
The Prime Minister included Brazil on his whistlestop world tour ahead of the G20 because it is the world’s tenth largest economy and relatively open to free trade.
He warned that world trade is already shrinking for the first time in 30 years in the latest phase of the financial crisis.
Mr Brown set out plans for an £80billion trade guarantee scheme to try to keep the global economy moving. The fund would involve money from governments, the World Bank and private capital and being used to increase credit flows that underpin trade deals.
Take a look at yourselves: Brown and Lula examine their reflections before the joint press conference
The Prime Minister said that was the ‘minimum’ amount needed to prevent a full-scale collapse in world trade that could prove catastrophic for many economies.
Underwriting world trade deals, Mr Brown said, is the fourth weapon at the disposal of governments and central banks as they try to halt their financial decline.
It follows moves to cut interest rates, use tax cuts and spending hikes as a ‘fiscal stimulus’ and print money, so-called ‘quantitative easing’.
The Prime Minister’s focus on trade came after he appeared to retreat from the idea of another big debt-funded Budget giveaway following Bank of England Governor Mervyn King’s unprecedented warning that Britain could not afford one.
Doubts have also been cast over whether the UK's public finances could stretch to a further fiscal stimulus, if one was required.
Yesterday the Tories moved to exploit the apparent breakdown in relations between Downing Street, the Treasury and the Bank of England.
Shadow Chancellor George Osborne claimed there was now a serious 'crisis' of confidence' at the heart of the Government following Mervyn King's warning that debt was so high there is no room for further tax cuts and spending rises.
He seized on Alistair Darling's refusal to fully back the Bank of England Governor when challenged by a Tory MP in the Commons. Mr Osborne said: 'A dire situation for the Government just got worse.
'When a Chancellor pointedly refuses in Parliament to express confidence in the Governor of the Bank of England, or agree with the statements he makes on the Budget, then we have reached a crisis of confidence in the Government's economic policy and its ability to lead us into a recovery.'
To drive the message home the Tories also released a two-page dossier on the rift, showing that it proved Mr Brown's policies had failed.
Tory Party Chairman Eric Pickles said the intervention from Lord Malloch Brown challenged the Mr Brown's leadership and his stewardship of the economy. 'This Government and its economic policies are falling apart by the minute,' he said.
Brazil is the third leg of Mr Brown's whistle-stop tour, which started with a speech to the European Parliament in Strasbourg on Tuesday before moving on to New York.
However, his efforts to lay the groundwork for the summit have been beset by signs of tension between the US and Europe over how to tackle the downturn.
Czech Prime Minister Mirek Topolanek - current holder of the EU presidency - has branded US President Barack Obama's fiscal stimulus package and financial bail-out 'the way to hell'.
Print this article Read later Email to a friend
Share this article:
A Beautiful Saying!
Life isn't about waiting for the storm to pass...IT'S ABOUT LEARNING TO DANCE IN THE RAIN!
Wednesday, March 25, 2009
Was Governor Eliot Spitzer Removed Because He Was About To Bust AIG
He's Back...The Return of Elliot Spitzer....
Was Eliot Spitzer Taken Out Because He Was Going to Bust AIG?
c/p Brilliant at Breakfast
March 18, 2009
America is known for its great second acts, and we may be witnessing the curtain rising on Spitzer's.
Elliot Spitzer is back and hes talking. The thought of this, no doubt, brings a small shiver to the boardrooms of some of the perps walking around trying to figure out how to hide the money this week. Today Edward Liddy testified that there have been death threats made to or about executives who received bonuses, so no names will be put on the record, but these anonymous players must know that the jig is up in the land of easy-money. Isn't what to do a no-brainer for these great Americans?
Spitzer may be as "disgraced" as any anonymous sex loving Republican loser, but America is known for its great second acts, and we may be witnessing the curtain rising on Spitzer's.
Today in Slate Elliot Spitzer has a short op-ed that speaks volumes about what is going on, and indirectly, if you follow the money, what happened to him. Plainly stated, Spitzer brings the AIG Ponzi Scheme one step closer to the revered establishment when he explains how the bailout money was funneled straight into the top players, with Goldman Sachs being the name that comes up again and again. These top players already got bailout money, and Goldman is looking at zero losses at this point, while regular Americans are being asked to make concessions or just plain losing everything. here are the biggest financial entities in the world, making billions on what appears to have been nothing but air traded back and forth, and having gutted the American people they are walking away with 100% return to their stockholders. In return AIG seems to think that its appropriate to pay themselves bonuses with the leftover funds. This leaves AIG still a wobbly shell with no plan of how to go forward, and the threat of the collapse of all of the world's financial markets still up in the air. So, what was all that bailout money for? Apparently to make sure that no one at Goldman or the other few top firms in the hand-out-line lost anything!
The relationship between AIG and Goldman goes back long enough that one would think that Goldman would know, having bought so much of this "insurance" or whatever it was, whether the "products" were ...er...real or feasible at all. Indeed, Goldman and AIG almost merged a few years ago, but Spitzer notes that the unknown black hole of AIG's business practices were probably what prevented it. Still, that didn't stop the incestuous dealings; it almost makes one think that this whole thing was a setup.
This is country that Spitzer is familiar with; he has been a terrible liability to entities that, under the Bush administration, were allowed to literally gut the country and its citizens. All of this seems to have been part of the Bush Administration's own Ponzi Scheme, which figured that the illusion of an ownership society, terrified of the "terraism" and steeped in the me, me, me, culture would look the other way while they finished clearing out the vault. Beyond that, it's clear that the media hyped housing bubble encouraged the house flip mentality and the idea that anyone could be rich. The idea of the lottery dropping on our own heads made us more protective of the rich, because we might one day be one....or look, we could be one with no money down, if we could just balance that on this, and flip that house!!
Every week came a new offer from our bank or credit card to just put the enclosed check into the bank for a $50,000 loan, unsecured and with a low APR!! Who would know that those same banks would go out of their way to cause a day or week default by changing the cycle or stopping refusing cards that went over-limit, in order to charge fees and raise the rates. Who could know that the fine print on all those little fliers talking about privacy rights and how they are selling all of our information, also said that by-the-way the interest rate is now 25% and the minimum payment has tripled! Default on that and likely AIG has sold insurance to your lending institution that should repay them for making the bad loan in the first place....no money down mortgages? No problem....its the same story. This is the ownership society and we all need to own alot of stuff. It is... what did he say?...uniquely American!
Spitzer was questioning this back in February 2008 when he wrote his Valentine to predatory lenders in the Washington Post. He detailed that Attorneys General across the country had entered into litigation in an attempt to protect the people of their states from predatory lending. The response from the federal government was astounding!
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.
snip
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.
Now, they will say that they fought the consumer protection laws to actually protect the consumers and assure that they could get credit in the future. But actually, Americans could get credit; just credit that they were able to handle and could, by reasonable standards, pay back. This was just more of the same in hindsight. Looking back that all that the Bush administration has done, the beginnings of this disaster looks almost quaint, and not like an institutionalized foray into the dirty underside of criminal activity. There were quotas passed by the government as to who got the loans and the focus was on certain populations who would be helped into homeownership even if they couldn't maintain the credit. It was treated as some sort of fulfillment of the American Dream for people to own something, but really had more to do with the insurance on the loans than the people involved. The American dream is dead, as we well know, but what it was, way back then, was that people could afford to own a house and put their kids in college!
AIG sold insurance to the biggest entities in the financial world to cover the proliferation of bad loans. This insurance became so common that it was impossible that the lions of finance didn't somehow have an inkling that something was wrong. Didn't Goldman and the rest of these huge firms know something about the stability of an impossible business plan? Hadn't Goldman gone over everything in their bid to merge? And what of the government and their mandating of certain loans that were bound to go bad. There were people involved in these things, and its not like regular people understand the ins and outs of the financial industry. They rely on brokers to explain it to them. But these brokers were being forced to see a certain product to an unqualified population. How could they? Why would they? Those are questions for another time.
Spitzer has been fighting these guys and asking questions all along. Coincidentally, right after the WSJ editorial appeared on Valentine's Day 2008, Spitzer was caught up in what was an extremely unusual sting. So unusual is an investigation like this that it seems almost like it was a set-up; and considering where it all came from and how it all came down, it might well have been.
It seems that Spitzer's bank was investigating expenses under the auspices of the newer Homeland Security laws of the Bush administration. Greg Palast wrote about this compellingly, and in light of how the whole thing is shaking out now, and what Spitzer said back then about this financial mess and what he tried to DO about it, Palast had a pretty good early grasp on what had gone down. So now, with Spitzer poking his head up from the underground of "healing his family," at this most compelling of moments, its probably worthwhile for Americans to screw their heads on straight and forget the details of the hooker, and look at what Spitzer was working on when he was taken down. We might all find ourselves wanting to thank the egotistical crime fighter who cant keep it in his pants.
I am no apologist for breaking the law, and usually its the highest and mightiest that fall the hardest. But when the mainstream is showing us the shiny object, we must resist the temptation to succumb to our base natures and try to see the bigger picture. There was never a real case against Elliot Spitzer, and no charges were filed. The release of embarrassing personal information was at the discretion of the Bush Administration's Justice Department.
Why was this information released? It wasn't that he was a crusader against such crimes, because many who have been caught were exactly the same and their information has been kept quiet. It wasn't that the press is all so great in their investigative journalism, either...because we know they're loathe to get off their asses if they can just read a talking point; as is evidenced by the reportage on this case.
Palast:
Not all crimes lead to federal bust or even public exposure. It’s up to something called “prosecutorial discretion.”
Funny thing, this ‘discretion.’ For example, Senator David Vitter, Republican of Louisiana, paid Washington DC prostitutes to put him in diapers (ewww!), yet the Senator was not exposed by the US prosecutors busting the pimp-ring that pampered him.
Naming and shaming and ruining Spitzer – rarely done in these cases - was made at the ‘discretion’ of Bush’s Justice Department.
Or maybe we should say, 'indiscretion.'
Bush's Justice Department.
Its clear to me that all things being equal, this was at the very least, not a transsexual streetwalker a la Hugh Grant, and it was all very ho-hum and quiet. So, whatever the problem that leads to this sort of behavior, I don't want to know about it...its personal, so just walk on by...nothing to see here.
Welcome back Elliot Spitzer. I hope we hear more from you very soon...your voice is needed in this matter.
http://www.ripcoco.com/
http://brilliantatbreakfast.blogspot.com/2009/03/hes-backthe-return-of-elliot-spitzer.html
http://www.alternet.org/blogs/peek/132547/was_eliot_spitzer_taken_out_because_he_was_going_to_bust_aig/
=====
Why the Bush Administration "Watergated" Eliot Spitzer
by F. William Engdahl
Global Research, March 18, 2008
The spectacular and highly bizarre release of secret FBI wiretap data to the New York Times exposing the tryst of New York state Governor, Eliot Spitzer, the now-infamous "No.9," with a luxury call-girl, had less to do with the Bush Administration’s pursuit of high moral standards for public servants. Spitzer was likely the target of a White House and Wall Street dirty tricks operation to silence one of its most dangerous and vocal critics of their handling the current financial market crisis.
A useful rule of thumb in evaluating spectacular scandals around prominent public figures is to ask what and who might want to eliminate that person. In the case of Governor Eliot Spitzer, a Democrat, it is clear that the spectacular "leak" of government FBI wiretap records showing that Spitzer paid a high-cost prostitute $4,300 for what amounted to about an hour’s personal entertainment, was politically motivated. The press has almost solely focused on the salacious aspects of the affair, not least the hefty fee Spitzer apparently paid. Why the scandal breaks now is the more interesting question.
Spitzer became Governor of New York following a high-profile record as a relentless State Attorney General going after financial crimes such as the Enron fraud and corruption by Wall Street investment banks during the 2002 dot.com bubble era. The powerful former head of the large AIG insurance group, Hank Greenburg was among his detractors. He made powerful enemies by all accounts. He was bitterly hated on Wall Street. He had made his political career on being ruthless against financial corruption. Most recently, from his position as Governor of the nation’s second largest state, and home to its financial industry, Spitzer had begun making high profile attacks on the complicity of the Bush Administration in covertly arranging bailout if its Wall Street financial friends at the expense of ordinary homeowners and citizens, paid all with taxpayer funds.
Curiously, Spitzer, who had been elected governor in 2006 defeating a Republican by winning nearly 70 percent of the vote, has been not charged in any crime. However, the day the scandal broke New York Assembly Republicans immediately announced plans to impeach Spitzer or put him on public trial were he to refuse resignation. Spitzer could be asked to testify in any trial involving the Emperors Club prostitution ring. But so far he hasn’t been charged with a crime. Prostitution is illegal in most US states, but clients of prostitutes are almost never charged, nor are their names usually leaked in a case in process. The Spitzer case is in the hands of Washington and not state authorities, underscoring the clear political nature of the Spitzer "Watergate."
The New York Times said Spitzer was an individual identified as Client 9 in court papers filed last week. Client 9 arranged to meet with "Kristen," a prostitute who officially charged $1,000 an hour, on February 13 in a Washington hotel. Whatever transpired, Spitzer paid her $4,300, according to the official documents. The case is clearly political when compared with more egregious recent cases involving Republicans. Republican Mark Foley was exposed propositioning male interns in Congress and Rudolph Giuliani was discovered cheating on his wife, but no or few Republican calls for resignations were heard.
Why the attack now?
Spitzer had become increasingly public in his blaming the Bush Administration for the nation’s current financial and economic disaster. He testified in Washington in mid-February before the US House of Representatives Financial Services subcommittee on the problems in New York-based specialized insurance companies, known as "monoline" insurers. In a national CNBC TV interview the same day, he laid blame for the crisis and its broader economic fallout on the Bush Administration.
Spitzer recalled that several years ago the US Office of the Comptroller of the Currency went to court and blocked New York State efforts to investigate the mortgage activities of national banks. Spitzer argued the OCC did not put a stop to questionable loan marketing practices or uphold higher underwriting standards.
"This could have been avoided if the OCC had done its job," Spitzer said in the interview. "The OCC did nothing. The Bush Administration let the housing bubble inflate and now that it's deflating we're dealing with the consequences. The real failure, the genesis, the germ that has spread was the subprime scandal," Spitzer said. Fraudulent marketing and very low "teaser" mortgage rates that later ballooned higher, were practices that should have been stopped, he argued. "When mortgages are being marketed, there is a marketplace obligation to ensure the borrower can afford to pay back the debt," he said.
That TV interview was only one instance of Spitzer laying blame on the Bush Republicans. On February 14, Spitzer published a signed article in the influential Washington Post titled, "Predatory Lenders' Partner in Crime: How the Bush Administration Stopped the States From Stepping In to Help Consumers."
That article, laying clear blame on the Administration for the development of the sub-prime crisis, appeared the day after his ill-fated tryst with the prostitute at the Mayflower Hotel. Just a coincidence? Spitzer wrote, ""In 2003, during the height of the predatory lending crisis, the OCC invoked a clause from the 1863 National Bank Act pre-empting 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."
In his article Spitzer charged, "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 he federal government was turning a blind eye." Bush, said Spitzer right in the headline, was the "Predator Lenders' Partner in Crime." The President, said Spitzer, was a fugitive from justice. And Spitzer was in Washington to launch a campaign to take on the Bush regime and the biggest financial powers on the planet. Spitzer wrote, "When history tells the story of the sub-prime lending crisis and recounts its devastating effects on the lives of so many innocent homeowners the Bush administration will not be judged favourably."
With that article, some Washington insiders believe, Spitzer signed his own political death warrant.
F. William Engdahl is the author of Seeds of Destruction, the Hidden Agenda of Genetic Manipulation recently released by Global Research. He also the author of A Century of War: Anglo-American Oil Politics and the New World Order, Pluto Press Ltd.. To contact by e-mail: info@engdahl.oilgeopolitics.net.
William Engdahl is a Research Associate of the Centre for Research on Globalization (CRG). His writings can
be consulted on www.engdahl.oilgeopolitics.net and on Global Research.
Global Research Articles by F. William Engdahl
http://www.globalresearch.ca/index.php?context=va&aid=8376
Was Eliot Spitzer Taken Out Because He Was Going to Bust AIG?
c/p Brilliant at Breakfast
March 18, 2009
America is known for its great second acts, and we may be witnessing the curtain rising on Spitzer's.
Elliot Spitzer is back and hes talking. The thought of this, no doubt, brings a small shiver to the boardrooms of some of the perps walking around trying to figure out how to hide the money this week. Today Edward Liddy testified that there have been death threats made to or about executives who received bonuses, so no names will be put on the record, but these anonymous players must know that the jig is up in the land of easy-money. Isn't what to do a no-brainer for these great Americans?
Spitzer may be as "disgraced" as any anonymous sex loving Republican loser, but America is known for its great second acts, and we may be witnessing the curtain rising on Spitzer's.
Today in Slate Elliot Spitzer has a short op-ed that speaks volumes about what is going on, and indirectly, if you follow the money, what happened to him. Plainly stated, Spitzer brings the AIG Ponzi Scheme one step closer to the revered establishment when he explains how the bailout money was funneled straight into the top players, with Goldman Sachs being the name that comes up again and again. These top players already got bailout money, and Goldman is looking at zero losses at this point, while regular Americans are being asked to make concessions or just plain losing everything. here are the biggest financial entities in the world, making billions on what appears to have been nothing but air traded back and forth, and having gutted the American people they are walking away with 100% return to their stockholders. In return AIG seems to think that its appropriate to pay themselves bonuses with the leftover funds. This leaves AIG still a wobbly shell with no plan of how to go forward, and the threat of the collapse of all of the world's financial markets still up in the air. So, what was all that bailout money for? Apparently to make sure that no one at Goldman or the other few top firms in the hand-out-line lost anything!
The relationship between AIG and Goldman goes back long enough that one would think that Goldman would know, having bought so much of this "insurance" or whatever it was, whether the "products" were ...er...real or feasible at all. Indeed, Goldman and AIG almost merged a few years ago, but Spitzer notes that the unknown black hole of AIG's business practices were probably what prevented it. Still, that didn't stop the incestuous dealings; it almost makes one think that this whole thing was a setup.
This is country that Spitzer is familiar with; he has been a terrible liability to entities that, under the Bush administration, were allowed to literally gut the country and its citizens. All of this seems to have been part of the Bush Administration's own Ponzi Scheme, which figured that the illusion of an ownership society, terrified of the "terraism" and steeped in the me, me, me, culture would look the other way while they finished clearing out the vault. Beyond that, it's clear that the media hyped housing bubble encouraged the house flip mentality and the idea that anyone could be rich. The idea of the lottery dropping on our own heads made us more protective of the rich, because we might one day be one....or look, we could be one with no money down, if we could just balance that on this, and flip that house!!
Every week came a new offer from our bank or credit card to just put the enclosed check into the bank for a $50,000 loan, unsecured and with a low APR!! Who would know that those same banks would go out of their way to cause a day or week default by changing the cycle or stopping refusing cards that went over-limit, in order to charge fees and raise the rates. Who could know that the fine print on all those little fliers talking about privacy rights and how they are selling all of our information, also said that by-the-way the interest rate is now 25% and the minimum payment has tripled! Default on that and likely AIG has sold insurance to your lending institution that should repay them for making the bad loan in the first place....no money down mortgages? No problem....its the same story. This is the ownership society and we all need to own alot of stuff. It is... what did he say?...uniquely American!
Spitzer was questioning this back in February 2008 when he wrote his Valentine to predatory lenders in the Washington Post. He detailed that Attorneys General across the country had entered into litigation in an attempt to protect the people of their states from predatory lending. The response from the federal government was astounding!
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.
snip
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.
Now, they will say that they fought the consumer protection laws to actually protect the consumers and assure that they could get credit in the future. But actually, Americans could get credit; just credit that they were able to handle and could, by reasonable standards, pay back. This was just more of the same in hindsight. Looking back that all that the Bush administration has done, the beginnings of this disaster looks almost quaint, and not like an institutionalized foray into the dirty underside of criminal activity. There were quotas passed by the government as to who got the loans and the focus was on certain populations who would be helped into homeownership even if they couldn't maintain the credit. It was treated as some sort of fulfillment of the American Dream for people to own something, but really had more to do with the insurance on the loans than the people involved. The American dream is dead, as we well know, but what it was, way back then, was that people could afford to own a house and put their kids in college!
AIG sold insurance to the biggest entities in the financial world to cover the proliferation of bad loans. This insurance became so common that it was impossible that the lions of finance didn't somehow have an inkling that something was wrong. Didn't Goldman and the rest of these huge firms know something about the stability of an impossible business plan? Hadn't Goldman gone over everything in their bid to merge? And what of the government and their mandating of certain loans that were bound to go bad. There were people involved in these things, and its not like regular people understand the ins and outs of the financial industry. They rely on brokers to explain it to them. But these brokers were being forced to see a certain product to an unqualified population. How could they? Why would they? Those are questions for another time.
Spitzer has been fighting these guys and asking questions all along. Coincidentally, right after the WSJ editorial appeared on Valentine's Day 2008, Spitzer was caught up in what was an extremely unusual sting. So unusual is an investigation like this that it seems almost like it was a set-up; and considering where it all came from and how it all came down, it might well have been.
It seems that Spitzer's bank was investigating expenses under the auspices of the newer Homeland Security laws of the Bush administration. Greg Palast wrote about this compellingly, and in light of how the whole thing is shaking out now, and what Spitzer said back then about this financial mess and what he tried to DO about it, Palast had a pretty good early grasp on what had gone down. So now, with Spitzer poking his head up from the underground of "healing his family," at this most compelling of moments, its probably worthwhile for Americans to screw their heads on straight and forget the details of the hooker, and look at what Spitzer was working on when he was taken down. We might all find ourselves wanting to thank the egotistical crime fighter who cant keep it in his pants.
I am no apologist for breaking the law, and usually its the highest and mightiest that fall the hardest. But when the mainstream is showing us the shiny object, we must resist the temptation to succumb to our base natures and try to see the bigger picture. There was never a real case against Elliot Spitzer, and no charges were filed. The release of embarrassing personal information was at the discretion of the Bush Administration's Justice Department.
Why was this information released? It wasn't that he was a crusader against such crimes, because many who have been caught were exactly the same and their information has been kept quiet. It wasn't that the press is all so great in their investigative journalism, either...because we know they're loathe to get off their asses if they can just read a talking point; as is evidenced by the reportage on this case.
Palast:
Not all crimes lead to federal bust or even public exposure. It’s up to something called “prosecutorial discretion.”
Funny thing, this ‘discretion.’ For example, Senator David Vitter, Republican of Louisiana, paid Washington DC prostitutes to put him in diapers (ewww!), yet the Senator was not exposed by the US prosecutors busting the pimp-ring that pampered him.
Naming and shaming and ruining Spitzer – rarely done in these cases - was made at the ‘discretion’ of Bush’s Justice Department.
Or maybe we should say, 'indiscretion.'
Bush's Justice Department.
Its clear to me that all things being equal, this was at the very least, not a transsexual streetwalker a la Hugh Grant, and it was all very ho-hum and quiet. So, whatever the problem that leads to this sort of behavior, I don't want to know about it...its personal, so just walk on by...nothing to see here.
Welcome back Elliot Spitzer. I hope we hear more from you very soon...your voice is needed in this matter.
http://www.ripcoco.com/
http://brilliantatbreakfast.blogspot.com/2009/03/hes-backthe-return-of-elliot-spitzer.html
http://www.alternet.org/blogs/peek/132547/was_eliot_spitzer_taken_out_because_he_was_going_to_bust_aig/
=====
Why the Bush Administration "Watergated" Eliot Spitzer
by F. William Engdahl
Global Research, March 18, 2008
The spectacular and highly bizarre release of secret FBI wiretap data to the New York Times exposing the tryst of New York state Governor, Eliot Spitzer, the now-infamous "No.9," with a luxury call-girl, had less to do with the Bush Administration’s pursuit of high moral standards for public servants. Spitzer was likely the target of a White House and Wall Street dirty tricks operation to silence one of its most dangerous and vocal critics of their handling the current financial market crisis.
A useful rule of thumb in evaluating spectacular scandals around prominent public figures is to ask what and who might want to eliminate that person. In the case of Governor Eliot Spitzer, a Democrat, it is clear that the spectacular "leak" of government FBI wiretap records showing that Spitzer paid a high-cost prostitute $4,300 for what amounted to about an hour’s personal entertainment, was politically motivated. The press has almost solely focused on the salacious aspects of the affair, not least the hefty fee Spitzer apparently paid. Why the scandal breaks now is the more interesting question.
Spitzer became Governor of New York following a high-profile record as a relentless State Attorney General going after financial crimes such as the Enron fraud and corruption by Wall Street investment banks during the 2002 dot.com bubble era. The powerful former head of the large AIG insurance group, Hank Greenburg was among his detractors. He made powerful enemies by all accounts. He was bitterly hated on Wall Street. He had made his political career on being ruthless against financial corruption. Most recently, from his position as Governor of the nation’s second largest state, and home to its financial industry, Spitzer had begun making high profile attacks on the complicity of the Bush Administration in covertly arranging bailout if its Wall Street financial friends at the expense of ordinary homeowners and citizens, paid all with taxpayer funds.
Curiously, Spitzer, who had been elected governor in 2006 defeating a Republican by winning nearly 70 percent of the vote, has been not charged in any crime. However, the day the scandal broke New York Assembly Republicans immediately announced plans to impeach Spitzer or put him on public trial were he to refuse resignation. Spitzer could be asked to testify in any trial involving the Emperors Club prostitution ring. But so far he hasn’t been charged with a crime. Prostitution is illegal in most US states, but clients of prostitutes are almost never charged, nor are their names usually leaked in a case in process. The Spitzer case is in the hands of Washington and not state authorities, underscoring the clear political nature of the Spitzer "Watergate."
The New York Times said Spitzer was an individual identified as Client 9 in court papers filed last week. Client 9 arranged to meet with "Kristen," a prostitute who officially charged $1,000 an hour, on February 13 in a Washington hotel. Whatever transpired, Spitzer paid her $4,300, according to the official documents. The case is clearly political when compared with more egregious recent cases involving Republicans. Republican Mark Foley was exposed propositioning male interns in Congress and Rudolph Giuliani was discovered cheating on his wife, but no or few Republican calls for resignations were heard.
Why the attack now?
Spitzer had become increasingly public in his blaming the Bush Administration for the nation’s current financial and economic disaster. He testified in Washington in mid-February before the US House of Representatives Financial Services subcommittee on the problems in New York-based specialized insurance companies, known as "monoline" insurers. In a national CNBC TV interview the same day, he laid blame for the crisis and its broader economic fallout on the Bush Administration.
Spitzer recalled that several years ago the US Office of the Comptroller of the Currency went to court and blocked New York State efforts to investigate the mortgage activities of national banks. Spitzer argued the OCC did not put a stop to questionable loan marketing practices or uphold higher underwriting standards.
"This could have been avoided if the OCC had done its job," Spitzer said in the interview. "The OCC did nothing. The Bush Administration let the housing bubble inflate and now that it's deflating we're dealing with the consequences. The real failure, the genesis, the germ that has spread was the subprime scandal," Spitzer said. Fraudulent marketing and very low "teaser" mortgage rates that later ballooned higher, were practices that should have been stopped, he argued. "When mortgages are being marketed, there is a marketplace obligation to ensure the borrower can afford to pay back the debt," he said.
That TV interview was only one instance of Spitzer laying blame on the Bush Republicans. On February 14, Spitzer published a signed article in the influential Washington Post titled, "Predatory Lenders' Partner in Crime: How the Bush Administration Stopped the States From Stepping In to Help Consumers."
That article, laying clear blame on the Administration for the development of the sub-prime crisis, appeared the day after his ill-fated tryst with the prostitute at the Mayflower Hotel. Just a coincidence? Spitzer wrote, ""In 2003, during the height of the predatory lending crisis, the OCC invoked a clause from the 1863 National Bank Act pre-empting 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."
In his article Spitzer charged, "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 he federal government was turning a blind eye." Bush, said Spitzer right in the headline, was the "Predator Lenders' Partner in Crime." The President, said Spitzer, was a fugitive from justice. And Spitzer was in Washington to launch a campaign to take on the Bush regime and the biggest financial powers on the planet. Spitzer wrote, "When history tells the story of the sub-prime lending crisis and recounts its devastating effects on the lives of so many innocent homeowners the Bush administration will not be judged favourably."
With that article, some Washington insiders believe, Spitzer signed his own political death warrant.
F. William Engdahl is the author of Seeds of Destruction, the Hidden Agenda of Genetic Manipulation recently released by Global Research. He also the author of A Century of War: Anglo-American Oil Politics and the New World Order, Pluto Press Ltd.. To contact by e-mail: info@engdahl.oilgeopolitics.net.
William Engdahl is a Research Associate of the Centre for Research on Globalization (CRG). His writings can
be consulted on www.engdahl.oilgeopolitics.net and on Global Research.
Global Research Articles by F. William Engdahl
http://www.globalresearch.ca/index.php?context=va&aid=8376
Monday, March 23, 2009
A New Currency To Replace The US Dollar
China Takes Aim at Dollar
Article
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By ANDREW BATSON
BEIJING -- China called for the creation of a new currency to eventually replace the dollar as the world's standard, proposing a sweeping overhaul of global finance that reflects developing nations' growing unhappiness with the U.S. role in the world economy.
The unusual proposal, made by central bank governor Zhou Xiaochuan in an essay released Monday in Beijing, is part of China's increasingly assertive approach to shaping the global response to the financial crisis.
Mr. Zhou's proposal comes amid preparations for a summit of the world's industrial and developing nations, the Group of 20, in London next week. At past meetings, developed nations have criticized China's economic and currency policies.
This time, China is on the offensive, backed by other emerging economies such as Russia in making clear they want a global economic order less dominated by the U.S. and other wealthy nations.
China's a Bellwether
3:31
David Semple of Van Eck Emerging Markets Fund outlines opportunities in China's real-estate and retail sectors, along with greater stability in Russia. But the situation in Eastern Europe is still uncertain. Polya Lesova reports.
However, the technical and political hurdles to implementing China's recommendation are enormous, so even if backed by other nations, the proposal is unlikely to change the dollar's role in the short term. Central banks around the world hold more U.S. dollars and dollar securities than they do assets denominated in any other individual foreign currency. Such reserves can be used to stabilize the value of the central banks' domestic currencies.
Monday's proposal follows a similar one Russia made this month during preparations for the G20 meeting. Like China, Russia recommended that the International Monetary Fund might issue the currency, and emphasized the need to update "the obsolescent unipolar world economic order."
Chinese officials are frustrated at their financial dependence on the U.S., with Premier Wen Jiabao this month publicly expressing "worries" over China's significant holdings of U.S. government bonds. The size of those holdings means the value of the national rainy-day fund is mainly driven by factors China has little control over, such as fluctuations in the value of the dollar and changes in U.S. economic policies.
In his paper, published in Chinese and English on the central bank's Web site, Mr. Zhou argued for reducing the dominance of a few individual currencies, such as the dollar, euro and yen, in international trade and finance.
"The re-establishment of a new and widely accepted reserve currency with a stable valuation benchmark may take a long time," Mr. Zhou said. In remarks earlier Monday, one of his deputies, Hu Xiaolian, also said the dollar's dominant position in international trade and investment is unlikely to change soon. Ms. Hu is in charge of reserve management as the head of China's State Administration of Foreign Exchange.
Most nations concentrate their assets in those reserve currencies, which exaggerates the size of flows and makes financial systems overall more volatile, Mr. Zhou said.
Moving to a reserve currency that belongs to no individual nation would make it easier for all nations to manage their economies better, he argued, since it would give the reserve-currency nations more freedom to shift monetary policy and exchange rates.
It could also be the basis for a more equitable way of financing the IMF, Mr. Zhou added. China is among several nations under pressure to pony up extra cash to help the IMF.
John Lipsky, the IMF's deputy managing director, said the Chinese proposal should be treated seriously. "It reflects officials' concerns about improving the stability of the financial system," he said. "It's interesting because of China's unique position, and because the governor put it in a measured and considered way."
Reuters
Zhou Xiaochuan, governor of the People's Bank of China.
China's proposal is likely to have significant implications, said Eswar Prasad, a professor of trade policy at Cornell University and former IMF official. "Nobody believes that this is the perfect solution, but by putting this on the table the Chinese have redefined the debate," he said. "It represents a very strong pushback by China on a number of fronts where they feel themselves being pushed around by the advanced countries," such as currency policy and funding for the IMF.
A spokeswoman for the U.S. Treasury Department declined to comment on Mr. Zhou's views. In recent weeks, senior Obama administration officials have sought to reassure Beijing that the current U.S. spending spree is a short-term effort to restart the stalled American economy, not evidence of long-term U.S. profligacy.
Mr. Zhou's comments -- coming on the heels of Mr. Wen's musing about the safety of China's dollar holdings -- appear to be a warning to the U.S. that it can't expect China to finance its spending indefinitely.
The central banker's proposal reflects both China's desire to hold its $1.95 trillion in reserves in something other than U.S. dollars and the fact that Beijing has few alternatives. With more U.S. dollars continuing to pour into China from trade and investment, Beijing has no realistic option other than storing them in U.S. debt.
Mr. Zhou argued -- without mentioning the dollar by name -- that the loss of the dollar's de facto reserve status would benefit the U.S. by avoiding future crises. Because other nations continued to park their money in U.S. dollars, the argument goes, the Federal Reserve was able to pursue an irresponsible policy in recent years, keeping interest rates too low for too long and thereby helping to inflate a bubble in the housing market.
"The outbreak of the crisis and its spillover to the entire world reflected the inherent vulnerabilities and systemic risks in the existing international monetary system," Mr. Zhou said. The increasing number and intensity of financial crises suggests "the costs of such a system to the world may have exceeded its benefits."
Mr. Zhou isn't the first to make that argument. "The dollar reserve system is part of the problem," Joseph Stiglitz, the Columbia University economist, said in a speech in Shanghai last week, because it meant so much of the world's cash was funneled into the U.S. "We need a global reserve system," Mr. Stiglitz said in the speech.
View Full Image
Reuters
People past the headquarters of the central bank of the People''s Republic of China in Beijing Feb. 16, 2009.
Mr. Zhou's idea is to expand the use of "special drawing rights," or SDRs -- a kind of synthetic currency created by the IMF in the 1960s. Its value is determined by a basket of major currencies. Originally, the SDR was intended to serve as a shared currency for international reserves, though that aspect never really got off the ground. These days, the SDR is mainly used in the IMF's accounting for its transactions with member nations. Mr. Zhou suggested countries could increase their contributions to the IMF in exchange for greater access to a pool of reserves in SDRs.
Holding more international reserves in SDRs would increase the role and powers of the IMF. That indicates China and other developing nations aren't hostile to international financial institutions -- they just want to have more say in running them. China has resisted the U.S. push to make an immediate loan to the IMF because that wouldn't give China a bigger vote. Ms. Hu said Monday that China, which encourages the IMF to explore other fund-raising options, would consider buying into a bond issue.
The IMF has been working on a proposal to issue bonds, probably only to central banks. Bond purchases are one way for the organization to raise money and meet its goal of at least doubling its lending war chest to $500 billion from $250 billion. Japan has loaned the IMF $100 billion and the European Union has pledged another $100 billion.
Mr. Lipsky called bond sales to central banks "an option that is part of our tool kit, even though it hasn't been utilized previously."
—Terence Poon in Beijing, James T. Areddy in Shanghai, and Bob Davis and Michael M. Phillips in Washington contributed to this article.
Write to Andrew Batson at andrew.batson@wsj.com
Article
Video
Comments (10)
MORE IN ECONOMY »
By ANDREW BATSON
BEIJING -- China called for the creation of a new currency to eventually replace the dollar as the world's standard, proposing a sweeping overhaul of global finance that reflects developing nations' growing unhappiness with the U.S. role in the world economy.
The unusual proposal, made by central bank governor Zhou Xiaochuan in an essay released Monday in Beijing, is part of China's increasingly assertive approach to shaping the global response to the financial crisis.
Mr. Zhou's proposal comes amid preparations for a summit of the world's industrial and developing nations, the Group of 20, in London next week. At past meetings, developed nations have criticized China's economic and currency policies.
This time, China is on the offensive, backed by other emerging economies such as Russia in making clear they want a global economic order less dominated by the U.S. and other wealthy nations.
China's a Bellwether
3:31
David Semple of Van Eck Emerging Markets Fund outlines opportunities in China's real-estate and retail sectors, along with greater stability in Russia. But the situation in Eastern Europe is still uncertain. Polya Lesova reports.
However, the technical and political hurdles to implementing China's recommendation are enormous, so even if backed by other nations, the proposal is unlikely to change the dollar's role in the short term. Central banks around the world hold more U.S. dollars and dollar securities than they do assets denominated in any other individual foreign currency. Such reserves can be used to stabilize the value of the central banks' domestic currencies.
Monday's proposal follows a similar one Russia made this month during preparations for the G20 meeting. Like China, Russia recommended that the International Monetary Fund might issue the currency, and emphasized the need to update "the obsolescent unipolar world economic order."
Chinese officials are frustrated at their financial dependence on the U.S., with Premier Wen Jiabao this month publicly expressing "worries" over China's significant holdings of U.S. government bonds. The size of those holdings means the value of the national rainy-day fund is mainly driven by factors China has little control over, such as fluctuations in the value of the dollar and changes in U.S. economic policies.
In his paper, published in Chinese and English on the central bank's Web site, Mr. Zhou argued for reducing the dominance of a few individual currencies, such as the dollar, euro and yen, in international trade and finance.
"The re-establishment of a new and widely accepted reserve currency with a stable valuation benchmark may take a long time," Mr. Zhou said. In remarks earlier Monday, one of his deputies, Hu Xiaolian, also said the dollar's dominant position in international trade and investment is unlikely to change soon. Ms. Hu is in charge of reserve management as the head of China's State Administration of Foreign Exchange.
Most nations concentrate their assets in those reserve currencies, which exaggerates the size of flows and makes financial systems overall more volatile, Mr. Zhou said.
Moving to a reserve currency that belongs to no individual nation would make it easier for all nations to manage their economies better, he argued, since it would give the reserve-currency nations more freedom to shift monetary policy and exchange rates.
It could also be the basis for a more equitable way of financing the IMF, Mr. Zhou added. China is among several nations under pressure to pony up extra cash to help the IMF.
John Lipsky, the IMF's deputy managing director, said the Chinese proposal should be treated seriously. "It reflects officials' concerns about improving the stability of the financial system," he said. "It's interesting because of China's unique position, and because the governor put it in a measured and considered way."
Reuters
Zhou Xiaochuan, governor of the People's Bank of China.
China's proposal is likely to have significant implications, said Eswar Prasad, a professor of trade policy at Cornell University and former IMF official. "Nobody believes that this is the perfect solution, but by putting this on the table the Chinese have redefined the debate," he said. "It represents a very strong pushback by China on a number of fronts where they feel themselves being pushed around by the advanced countries," such as currency policy and funding for the IMF.
A spokeswoman for the U.S. Treasury Department declined to comment on Mr. Zhou's views. In recent weeks, senior Obama administration officials have sought to reassure Beijing that the current U.S. spending spree is a short-term effort to restart the stalled American economy, not evidence of long-term U.S. profligacy.
Mr. Zhou's comments -- coming on the heels of Mr. Wen's musing about the safety of China's dollar holdings -- appear to be a warning to the U.S. that it can't expect China to finance its spending indefinitely.
The central banker's proposal reflects both China's desire to hold its $1.95 trillion in reserves in something other than U.S. dollars and the fact that Beijing has few alternatives. With more U.S. dollars continuing to pour into China from trade and investment, Beijing has no realistic option other than storing them in U.S. debt.
Mr. Zhou argued -- without mentioning the dollar by name -- that the loss of the dollar's de facto reserve status would benefit the U.S. by avoiding future crises. Because other nations continued to park their money in U.S. dollars, the argument goes, the Federal Reserve was able to pursue an irresponsible policy in recent years, keeping interest rates too low for too long and thereby helping to inflate a bubble in the housing market.
"The outbreak of the crisis and its spillover to the entire world reflected the inherent vulnerabilities and systemic risks in the existing international monetary system," Mr. Zhou said. The increasing number and intensity of financial crises suggests "the costs of such a system to the world may have exceeded its benefits."
Mr. Zhou isn't the first to make that argument. "The dollar reserve system is part of the problem," Joseph Stiglitz, the Columbia University economist, said in a speech in Shanghai last week, because it meant so much of the world's cash was funneled into the U.S. "We need a global reserve system," Mr. Stiglitz said in the speech.
View Full Image
Reuters
People past the headquarters of the central bank of the People''s Republic of China in Beijing Feb. 16, 2009.
Mr. Zhou's idea is to expand the use of "special drawing rights," or SDRs -- a kind of synthetic currency created by the IMF in the 1960s. Its value is determined by a basket of major currencies. Originally, the SDR was intended to serve as a shared currency for international reserves, though that aspect never really got off the ground. These days, the SDR is mainly used in the IMF's accounting for its transactions with member nations. Mr. Zhou suggested countries could increase their contributions to the IMF in exchange for greater access to a pool of reserves in SDRs.
Holding more international reserves in SDRs would increase the role and powers of the IMF. That indicates China and other developing nations aren't hostile to international financial institutions -- they just want to have more say in running them. China has resisted the U.S. push to make an immediate loan to the IMF because that wouldn't give China a bigger vote. Ms. Hu said Monday that China, which encourages the IMF to explore other fund-raising options, would consider buying into a bond issue.
The IMF has been working on a proposal to issue bonds, probably only to central banks. Bond purchases are one way for the organization to raise money and meet its goal of at least doubling its lending war chest to $500 billion from $250 billion. Japan has loaned the IMF $100 billion and the European Union has pledged another $100 billion.
Mr. Lipsky called bond sales to central banks "an option that is part of our tool kit, even though it hasn't been utilized previously."
—Terence Poon in Beijing, James T. Areddy in Shanghai, and Bob Davis and Michael M. Phillips in Washington contributed to this article.
Write to Andrew Batson at andrew.batson@wsj.com
A Really Funny Read!
F YOU THINK EDUCATION IS EXPENSIVE, TRY IGNORANCE
Indian Student
It was the first day of a school USA and a new Indian student named
Chandrasekhar Subramanian entered the fourth grade.
The teacher said, "Let's begin by reviewing some American History.
Who said "Give me Liberty, give me Death"?
She saw a sea of blank faces, except for Chandrasekhar, who had his hand up:
"Patrick Henry, 1775" he said. "Very good!"
Who said "Government of the People, by the People, for the People,
shall not perish from the Earth?"
Again, no response except from Chandrasekhar.
"Abraham Lincoln, 1863" said Chandrasekhar.
The teacher snapped at the class,
"Class, you should be ashamed. Chandrasekhar,
who is new to our country, knows more about its history than you do."
She heard a loud whisper: "Fuck the Indians,"
"Who said that?" she demanded.
Chandrasekhar put his hand up. "General Custer, 1862."
At that point, a student in the back said, "I'm gonna puke."
The teacher glares around and asks "All right! Now, who said that?"
Again, Chandrasekhar says,"George Bush to the Japanese Prime Minister,1991."
Now furious, another student yells,"Oh yeah? Suck this!"
Chandrasekhar jumps out of his chair waving his hand and shouts to the teacher
"Bill Clinton, to Monica Lewinsky, 1997!"
Now with almost mob hysteria someone said
"You little shit. If you say anything else, I'll kill you."
Chandrasekhar frantically yells at the top of his voice,
" Michael Jackson to the child witnesses testifying against him- 2004."
The teacher fainted.And as the class gathered around the teacher on
the floor, someone said, "Oh shit, we're fucked!"
And Chandrasekhar said quietly, I think it was George Bush, Iraq, 2007."
Indian Student
It was the first day of a school USA and a new Indian student named
Chandrasekhar Subramanian entered the fourth grade.
The teacher said, "Let's begin by reviewing some American History.
Who said "Give me Liberty, give me Death"?
She saw a sea of blank faces, except for Chandrasekhar, who had his hand up:
"Patrick Henry, 1775" he said. "Very good!"
Who said "Government of the People, by the People, for the People,
shall not perish from the Earth?"
Again, no response except from Chandrasekhar.
"Abraham Lincoln, 1863" said Chandrasekhar.
The teacher snapped at the class,
"Class, you should be ashamed. Chandrasekhar,
who is new to our country, knows more about its history than you do."
She heard a loud whisper: "Fuck the Indians,"
"Who said that?" she demanded.
Chandrasekhar put his hand up. "General Custer, 1862."
At that point, a student in the back said, "I'm gonna puke."
The teacher glares around and asks "All right! Now, who said that?"
Again, Chandrasekhar says,"George Bush to the Japanese Prime Minister,1991."
Now furious, another student yells,"Oh yeah? Suck this!"
Chandrasekhar jumps out of his chair waving his hand and shouts to the teacher
"Bill Clinton, to Monica Lewinsky, 1997!"
Now with almost mob hysteria someone said
"You little shit. If you say anything else, I'll kill you."
Chandrasekhar frantically yells at the top of his voice,
" Michael Jackson to the child witnesses testifying against him- 2004."
The teacher fainted.And as the class gathered around the teacher on
the floor, someone said, "Oh shit, we're fucked!"
And Chandrasekhar said quietly, I think it was George Bush, Iraq, 2007."
Thursday, March 19, 2009
Wonderful Words Of Wisdom From A 90-Year Old Woman
Written By Regina Brett, 90 years old, of The Plain Dealer, Cleveland , Ohio
"To celebrate growing older, I once wrote the 45 lessons life taught me. It is the most-requested column I've ever written.
My odometer rolled over to 90 in August, so here is the column once more:
1. Life isn't fair,but it's still good.
2. When in doubt, just take the next small step.
3. Life is too short to waste time hating anyone.
4. Your job won't take care of you when you are sick. Your friends and parents will. Stay in touch
5. Pay off your credit cards every month.
6. You don't have to win every argument. Agree to disagree.
7. Cry with someone. It's more healing than crying alone.
8. It's OK to get angry with God. He can take it.
9. Save for retirement starting with your first paycheck.
10. When it comes to chocolate,resistanc e is futile.
11. Make peace with your past so it won't screw up the present.
12. It's OK to let your children see you cry.
13. Don't compare your life to others.You have no idea what their journey is all about.
14. If a relationship has to be a secret,you shouldn't be in it.
15. Everything can change in the blink of an eye. But don't worry; God never blinks.
16. Take a deep breath. It calms the mind.
17. Get rid of anything that isn't useful,beautiful or joyful.
18. Whatever doesn't kill you really does make you stronger.
19. It's never too late to have a happy childhood. But the second one is up to you and no one else.
20. When it comes to going after what you love in life, don't take no for an answer.
21. Burn the candles, use the nice sheets, wear the fancy lingerie. Don't save it for a special occasion. Today is special.
22. Over prepare, then go with the flow.
23. Be eccentric now. Don't wait for old age to wear purple.
24. The most important sex organ is the brain.
25. No one is in charge of your happiness but you.
26. Frame every so-called disaster with these words'In five years, will this matter?'
27. Always choose life.
28. Forgive everyone everything.
29. What other people think of you is none of your business.
30. Time heals almost everything. Give time time.
31. However good or bad a situation is, it will change.
32. Don't take yourself so seriously. No one else does.
33. Believe in miracles.
34. God loves you because of who God is, not because of anything you did or didn't do.
35. Don't audit life. Show up and make the most of it now.
36. Growing old beats the alternative -- dying young.
37. Your children get only one childhood.
38. All that truly matters in the end is that you loved.
39. Get outside every day. Miracles are waiting everywhere.
40. If we all threw our problems in a pile and saw everyone else's,we'd grab ours back.
41.. Envy is a waste of time. You already have all you need.
42. The best is yet to come.
43. No matter how you feel, get up, dress up and show up.
44. Yield.
45. Life isn't tied with a bow, but it's still a gift."
"To celebrate growing older, I once wrote the 45 lessons life taught me. It is the most-requested column I've ever written.
My odometer rolled over to 90 in August, so here is the column once more:
1. Life isn't fair,but it's still good.
2. When in doubt, just take the next small step.
3. Life is too short to waste time hating anyone.
4. Your job won't take care of you when you are sick. Your friends and parents will. Stay in touch
5. Pay off your credit cards every month.
6. You don't have to win every argument. Agree to disagree.
7. Cry with someone. It's more healing than crying alone.
8. It's OK to get angry with God. He can take it.
9. Save for retirement starting with your first paycheck.
10. When it comes to chocolate,resistanc e is futile.
11. Make peace with your past so it won't screw up the present.
12. It's OK to let your children see you cry.
13. Don't compare your life to others.You have no idea what their journey is all about.
14. If a relationship has to be a secret,you shouldn't be in it.
15. Everything can change in the blink of an eye. But don't worry; God never blinks.
16. Take a deep breath. It calms the mind.
17. Get rid of anything that isn't useful,beautiful or joyful.
18. Whatever doesn't kill you really does make you stronger.
19. It's never too late to have a happy childhood. But the second one is up to you and no one else.
20. When it comes to going after what you love in life, don't take no for an answer.
21. Burn the candles, use the nice sheets, wear the fancy lingerie. Don't save it for a special occasion. Today is special.
22. Over prepare, then go with the flow.
23. Be eccentric now. Don't wait for old age to wear purple.
24. The most important sex organ is the brain.
25. No one is in charge of your happiness but you.
26. Frame every so-called disaster with these words'In five years, will this matter?'
27. Always choose life.
28. Forgive everyone everything.
29. What other people think of you is none of your business.
30. Time heals almost everything. Give time time.
31. However good or bad a situation is, it will change.
32. Don't take yourself so seriously. No one else does.
33. Believe in miracles.
34. God loves you because of who God is, not because of anything you did or didn't do.
35. Don't audit life. Show up and make the most of it now.
36. Growing old beats the alternative -- dying young.
37. Your children get only one childhood.
38. All that truly matters in the end is that you loved.
39. Get outside every day. Miracles are waiting everywhere.
40. If we all threw our problems in a pile and saw everyone else's,we'd grab ours back.
41.. Envy is a waste of time. You already have all you need.
42. The best is yet to come.
43. No matter how you feel, get up, dress up and show up.
44. Yield.
45. Life isn't tied with a bow, but it's still a gift."
Wednesday, March 18, 2009
Iran Getting More SAMS From Russia
MOSCOW — Russian news agencies cited a top defense official Wednesday as confirming that a contract to sell powerful air-defense missiles to Iran was signed two years ago, but saying no such weapons have yet been delivered.
Russian officials have consistently denied claims the country already has provided some of the S-300 missiles to Iran. They have not said whether a contract existed.
The state-run ITAR-Tass and RIA-Novosti news agencies and the independent Interfax quoted an unnamed top official in the Federal Military-Technical Cooperation Service as saying the contract was signed two years ago. Service spokesman Andrei Tarabrin told The Associated Press he could not immediately comment.
Supplying S-300s to Iran would change the military balance in the Middle East and the issue has been the subject of intense speculation and diplomatic wrangling for months.
Israel and the U.S. fear that, were Iran to possess S-300 missiles, it would use them to protect its nuclear facilities _ including the uranium enrichment plant at Natanz or the country's first atomic power plant, which is now being built by Russian contractors at Bushehr.
That would make a military strike on the Iranian facilities much more difficult.
It was not clear why the missiles have not been delivered, but the reports cited the defense official as saying "fulfillment of the contract will mainly depend on the current international situation and the decision of the country's leadership."
That could indicate that Russia intends to use the contract as a bargaining chip before next month's meeting between President Dmitry Medvedev and President Barack Obama.
But the defense official said Russia does not intend to abandon the contract, estimated to be worth hundreds of millions of dollars, ITAR-Tass said,
A prominent Russian analyst, Ruslan Pukhov of the Center for Analysis of Strategies and Technologies, said the missile contract was seen by the Kremlin as primarily a political rather than commercial matter.
"The S-300 contract, and cooperation with Iran in general, is regarded by Moscow only as an instrument of political bargaining with the West and not as a way of realizing the fundamental defense and commercial interests of Russia," he was quoted as saying by RIA-Novosti.
Russian officials have consistently denied claims the country already has provided some of the S-300 missiles to Iran. They have not said whether a contract existed.
The state-run ITAR-Tass and RIA-Novosti news agencies and the independent Interfax quoted an unnamed top official in the Federal Military-Technical Cooperation Service as saying the contract was signed two years ago. Service spokesman Andrei Tarabrin told The Associated Press he could not immediately comment.
Supplying S-300s to Iran would change the military balance in the Middle East and the issue has been the subject of intense speculation and diplomatic wrangling for months.
Israel and the U.S. fear that, were Iran to possess S-300 missiles, it would use them to protect its nuclear facilities _ including the uranium enrichment plant at Natanz or the country's first atomic power plant, which is now being built by Russian contractors at Bushehr.
That would make a military strike on the Iranian facilities much more difficult.
It was not clear why the missiles have not been delivered, but the reports cited the defense official as saying "fulfillment of the contract will mainly depend on the current international situation and the decision of the country's leadership."
That could indicate that Russia intends to use the contract as a bargaining chip before next month's meeting between President Dmitry Medvedev and President Barack Obama.
But the defense official said Russia does not intend to abandon the contract, estimated to be worth hundreds of millions of dollars, ITAR-Tass said,
A prominent Russian analyst, Ruslan Pukhov of the Center for Analysis of Strategies and Technologies, said the missile contract was seen by the Kremlin as primarily a political rather than commercial matter.
"The S-300 contract, and cooperation with Iran in general, is regarded by Moscow only as an instrument of political bargaining with the West and not as a way of realizing the fundamental defense and commercial interests of Russia," he was quoted as saying by RIA-Novosti.
U.S. Weighs Taliban Strike Into Pakistan
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By DAVID E. SANGER and ERIC SCHMITT
Published: March 17, 2009
WASHINGTON — President Obama and his national security advisers are considering expanding the American covert war in Pakistan far beyond the unruly tribal areas to strike at a different center of Taliban power in Baluchistan, where top Taliban leaders are orchestrating attacks into southern Afghanistan.
The New York Times
The Taliban have found a haven in and around Quetta.
According to senior administration officials, two of the high-level reports on Pakistan and Afghanistan that have been forwarded to the White House in recent weeks have called for broadening the target area to include a major insurgent sanctuary in and around the city of Quetta.
Mullah Muhammad Omar, who led the Taliban government that was ousted in the American-led invasion in 2001, has operated with near impunity out of the region for years, along with many of his deputies.
The extensive missile strikes being carried out by Central Intelligence Agency-operated drones have until now been limited to the tribal areas, and have never been extended into Baluchistan, a sprawling province that is under the authority of the central government, and which abuts the parts of southern Afghanistan where recent fighting has been the fiercest. Fear remains within the American government that extending the raids would worsen tensions. Pakistan complains that the strikes violate its sovereignty.
But some American officials say the missile strikes in the tribal areas have forced some leaders of the Taliban and Al Qaeda to flee south toward Quetta, making them more vulnerable. In separate reports, groups led by both Gen. David H. Petraeus, commander of American forces in the region, and Lt. Gen. Douglas E. Lute, a top White House official on Afghanistan, have recommended expanding American operations outside the tribal areas if Pakistan cannot root out the strengthening insurgency.
Many of Mr. Obama’s advisers are also urging him to sustain orders issued last summer by President George W. Bush to continue Predator drone attacks against a wider range of targets in the tribal areas. They also are recommending preserving the option to conduct cross-border ground actions, using C.I.A. and Special Operations commandos, as was done in September. Mr. Bush’s orders also named as targets a wide variety of insurgents seeking to topple Pakistan’s government. Mr. Obama has said little in public about how broadly he wants to pursue those groups.
A spokesman for the National Security Council, Mike Hammer, declined to provide details, saying, “We’re still working hard to finalize the review on Afghanistan and Pakistan that the president requested.”
No other officials would talk on the record about the issue, citing the administration’s continuing internal deliberations and the politically volatile nature of strikes into Pakistani territory.
“It is fair to say that there is wide agreement to sustain and continue these covert programs,” said one senior administration official. “One of the foundations on which the recommendations to the president will be based is that we’ve got to sustain the disruption of the safe havens.”
Mr. Obama’s top national security advisers, known as the Principals Committee, met Tuesday to begin debating all aspects of Afghanistan-Pakistan strategy. Senior administration officials say Mr. Obama has made no decisions, but is expected to do so in coming days after hearing the advice of that group.
Any expansion of the war is bound to upset those in Mr. Obama’s party who worry that he is sinking further into a lengthy conflict in Afghanistan, even while reducing forces in Iraq. It is possible that the decisions about covert actions will never be publicly announced.
Several administration and military officials stressed that they continued to prod the Pakistani military to take the lead in a more aggressive campaign to root out Taliban and Qaeda fighters who are attacking American forces in Afghanistan and increasingly destabilizing nuclear-armed Pakistan.
But with Pakistan consumed by political turmoil, fear of financial collapse and a spreading insurgency, American officials say they have few illusions that the United States will be able to rely on Pakistan’s own forces. However, each strike by Predators or ground forces reverberates in Pakistan, and Mr. Obama will be weighing that cost.
Adm. Mike Mullen, the chairman of the Joint Chiefs of Staff, said on “The Charlie Rose Show” on PBS last week that the White House strategy review addresses the “safe haven in Pakistan — making sure that Afghanistan doesn’t provide a capability in the long run or an environment in which Al Qaeda could return or the Taliban could return.” But another senior official cautioned that “with the targets now spreading, an expanding U.S. role inside Pakistan may be more than anyone there can stomach.”
As part of the same set of decisions, according to senior civilian and military officials familiar with the internal White House debate, Mr. Obama will have to choose from among a range of options for future American commitments to Afghanistan.
His core decision may be whether to scale back American ambitions there to simply assure it does not become a sanctuary for terrorists. “We are taking this back to a fundamental question,” a senior diplomat involved in the discussions said. “Can you ever get a central government in Afghanistan to a point where it can exercise control over the country? That was the problem Bush never really confronted.”
A second option, officials say, is to significantly boost the American commitment to train Afghan troops, with Americans taking on the Taliban with increasing help from the Afghan military. President Bush pursued versions of that strategy, but the training always took longer and proved less successful than plans called for.
A third option would involve devoting full American and NATO resources to a large-scale counterinsurgency effort. But Mr. Obama would be bound to face considerable opposition within NATO, whose leaders he will meet with early next month in Strasbourg, France. At the very time the United States is seeking to expand its presence in Afghanistan, many of the allies are scheduled to leave.
As for American strikes on militant havens inside Pakistan, administration officials say the Predator and Reaper attacks in the tribal areas have been effective at killing 9 of Al Qaeda’s top 20 leaders, and the aerial campaign was recently expanded to focus on the Pakistani Taliban leader, Baitullah Mehsud, as well as his fighters and training camps. American intelligence officials say that many top Taliban commanders remain in hiding in and around Quetta, but some Afghan officials say that other senior Taliban leaders have fled to the Pakistani port city of Karachi.
Missile strikes or American commando raids in the city of Quetta or the teeming Afghan settlements and refugee camps around the city and near the Afghan border would carry high risks of civilian casualties, American officials acknowledge.
Thom Shanker contributed reporting from Washington, and Carlotta Gall from Islamabad, Pakistan.
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By DAVID E. SANGER and ERIC SCHMITT
Published: March 17, 2009
WASHINGTON — President Obama and his national security advisers are considering expanding the American covert war in Pakistan far beyond the unruly tribal areas to strike at a different center of Taliban power in Baluchistan, where top Taliban leaders are orchestrating attacks into southern Afghanistan.
The New York Times
The Taliban have found a haven in and around Quetta.
According to senior administration officials, two of the high-level reports on Pakistan and Afghanistan that have been forwarded to the White House in recent weeks have called for broadening the target area to include a major insurgent sanctuary in and around the city of Quetta.
Mullah Muhammad Omar, who led the Taliban government that was ousted in the American-led invasion in 2001, has operated with near impunity out of the region for years, along with many of his deputies.
The extensive missile strikes being carried out by Central Intelligence Agency-operated drones have until now been limited to the tribal areas, and have never been extended into Baluchistan, a sprawling province that is under the authority of the central government, and which abuts the parts of southern Afghanistan where recent fighting has been the fiercest. Fear remains within the American government that extending the raids would worsen tensions. Pakistan complains that the strikes violate its sovereignty.
But some American officials say the missile strikes in the tribal areas have forced some leaders of the Taliban and Al Qaeda to flee south toward Quetta, making them more vulnerable. In separate reports, groups led by both Gen. David H. Petraeus, commander of American forces in the region, and Lt. Gen. Douglas E. Lute, a top White House official on Afghanistan, have recommended expanding American operations outside the tribal areas if Pakistan cannot root out the strengthening insurgency.
Many of Mr. Obama’s advisers are also urging him to sustain orders issued last summer by President George W. Bush to continue Predator drone attacks against a wider range of targets in the tribal areas. They also are recommending preserving the option to conduct cross-border ground actions, using C.I.A. and Special Operations commandos, as was done in September. Mr. Bush’s orders also named as targets a wide variety of insurgents seeking to topple Pakistan’s government. Mr. Obama has said little in public about how broadly he wants to pursue those groups.
A spokesman for the National Security Council, Mike Hammer, declined to provide details, saying, “We’re still working hard to finalize the review on Afghanistan and Pakistan that the president requested.”
No other officials would talk on the record about the issue, citing the administration’s continuing internal deliberations and the politically volatile nature of strikes into Pakistani territory.
“It is fair to say that there is wide agreement to sustain and continue these covert programs,” said one senior administration official. “One of the foundations on which the recommendations to the president will be based is that we’ve got to sustain the disruption of the safe havens.”
Mr. Obama’s top national security advisers, known as the Principals Committee, met Tuesday to begin debating all aspects of Afghanistan-Pakistan strategy. Senior administration officials say Mr. Obama has made no decisions, but is expected to do so in coming days after hearing the advice of that group.
Any expansion of the war is bound to upset those in Mr. Obama’s party who worry that he is sinking further into a lengthy conflict in Afghanistan, even while reducing forces in Iraq. It is possible that the decisions about covert actions will never be publicly announced.
Several administration and military officials stressed that they continued to prod the Pakistani military to take the lead in a more aggressive campaign to root out Taliban and Qaeda fighters who are attacking American forces in Afghanistan and increasingly destabilizing nuclear-armed Pakistan.
But with Pakistan consumed by political turmoil, fear of financial collapse and a spreading insurgency, American officials say they have few illusions that the United States will be able to rely on Pakistan’s own forces. However, each strike by Predators or ground forces reverberates in Pakistan, and Mr. Obama will be weighing that cost.
Adm. Mike Mullen, the chairman of the Joint Chiefs of Staff, said on “The Charlie Rose Show” on PBS last week that the White House strategy review addresses the “safe haven in Pakistan — making sure that Afghanistan doesn’t provide a capability in the long run or an environment in which Al Qaeda could return or the Taliban could return.” But another senior official cautioned that “with the targets now spreading, an expanding U.S. role inside Pakistan may be more than anyone there can stomach.”
As part of the same set of decisions, according to senior civilian and military officials familiar with the internal White House debate, Mr. Obama will have to choose from among a range of options for future American commitments to Afghanistan.
His core decision may be whether to scale back American ambitions there to simply assure it does not become a sanctuary for terrorists. “We are taking this back to a fundamental question,” a senior diplomat involved in the discussions said. “Can you ever get a central government in Afghanistan to a point where it can exercise control over the country? That was the problem Bush never really confronted.”
A second option, officials say, is to significantly boost the American commitment to train Afghan troops, with Americans taking on the Taliban with increasing help from the Afghan military. President Bush pursued versions of that strategy, but the training always took longer and proved less successful than plans called for.
A third option would involve devoting full American and NATO resources to a large-scale counterinsurgency effort. But Mr. Obama would be bound to face considerable opposition within NATO, whose leaders he will meet with early next month in Strasbourg, France. At the very time the United States is seeking to expand its presence in Afghanistan, many of the allies are scheduled to leave.
As for American strikes on militant havens inside Pakistan, administration officials say the Predator and Reaper attacks in the tribal areas have been effective at killing 9 of Al Qaeda’s top 20 leaders, and the aerial campaign was recently expanded to focus on the Pakistani Taliban leader, Baitullah Mehsud, as well as his fighters and training camps. American intelligence officials say that many top Taliban commanders remain in hiding in and around Quetta, but some Afghan officials say that other senior Taliban leaders have fled to the Pakistani port city of Karachi.
Missile strikes or American commando raids in the city of Quetta or the teeming Afghan settlements and refugee camps around the city and near the Afghan border would carry high risks of civilian casualties, American officials acknowledge.
Thom Shanker contributed reporting from Washington, and Carlotta Gall from Islamabad, Pakistan.
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