Friday, July 18, 2008

Terrorism Funds May Let Brass Fly in Style

Terrorism Funds May Let Brass Fly in Style

Luxury Pods for Air Force Debated

By R. Jeffrey Smith

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The Air Force's top leadership sought for three years to spend counterterrorism funds on "comfort capsules" to be installed on military planes that ferry senior officers and civilian leaders around the world, with at least four top generals involved in design details such as the color of the capsules' carpet and leather chairs, according to internal e-mails and budget documents.

Production of the first capsule -- consisting of two sealed rooms that can fit into the fuselage of a large military aircraft -- has already begun.

Air Force officials say the government needs the new capsules to ensure that leaders can talk, work and rest comfortably in the air. But the top brass's preoccupation with creating new luxury in wartime has alienated lower-ranking Air Force officers familiar with the effort, as well as congressional staff members and a nonprofit group that calls the program a waste of money.

Air Force documents spell out how each of the capsules is to be "aesthetically pleasing and furnished to reflect the rank of the senior leaders using the capsule," with beds, a couch, a table, a 37-inch flat-screen monitor with stereo speakers, and a full-length mirror.

The effort has been slowed, however, by congressional resistance to using counterterrorism funds for the project and by lengthy internal deliberations about a series of demands for modifications by Air Force generals. One request was that the color of the leather for the seats and seat belts in the mobile pallets be changed from brown to Air Force blue and that seat pockets be added; another was that the color of the table's wood be darkened.

Changing the seat color and pockets alone was estimated in a March 12 internal document to cost at least $68,240.

In all, for the past three years the service has asked to divert $16.2 million to the effort from what the military calls the GWOT, or global war on terrorism. Congress has twice told the service that it cannot, including an August 2007 letter from Rep. John P. Murtha (D-Pa.) to the Pentagon ordering that the money be spent on a "higher priority" need.

Officials say the Air Force nonetheless decided last year to take $331,000 from counterterrorism funds to cover a cost overrun, partly stemming from the design changes, although a senior officer said yesterday in response to inquiries that it will reverse that decision.

The internal Air Force e-mails, provided to The Washington Post by the Project on Government Oversight (POGO), a nonprofit Washington group, and independently authenticated, make it clear that lower-ranking officers involved in the project have been pressured to create what one described as "world class" accommodations exceeding the standards of a regular business-class flight.

"I was asked by Gen. [Robert H.] McMahon what it would take to make the [capsule] . . . a 'world class' piece of equipment," an officer at the service's Air Mobility Command said in a March 2007 e-mail to a colleague, referring to the mobility command's top officer then. "He said he wanted an assurance . . . that we would be getting a world class item this week."

Air Force officials say the program dates from a 2006 decision by Air Force Gen. Duncan J. McNabb that existing seats on transport planes, including some that match those on commercial airliners, may be fine for airmen and troops but inadequate for the top brass. McNabb was then the Air Mobility commander; he is now the Air Force's vice chief of staff, and Defense Secretary Robert M. Gates nominated him in June to become head of the military's Transportation Command.

In a letter of complaint sent yesterday to Gates, POGO asserted that the new capsules will provide no special communications or work capabilities beyond those already available for top officials on Air Force transport aircraft. It is "a gross misuse of millions of taxpayer dollars that could otherwise be used to train and equip soldiers," wrote Danielle Brian, the group's executive director.

She added that "in a time of war, it is critical for senior officials to visibly prioritize the needs of the men and women on the frontline." The Air Force program, she said, represents an "egregious failure of leadership."

A military officer familiar with the program, speaking on the condition of anonymity because he was not authorized to speak about it, likewise said that its extravagance has provoked widespread contempt among lower-ranking Air Force personnel. "This whole program is an embarrassment," the officer said, particularly because transport seating for troops en route to the battlefield is in his view generally shoddy.

The criticism is the latest in a series of volleys to hit the Air Force over the past year, stemming from an inadvertent flight of nuclear warheads over the continental United States, the mistaken transfer of secret nuclear-related materials to Taiwan, and a corrupt $50 million contract for a Thunderbirds air show. Gates fired the top two Air Force military and civilian leaders last month, citing defects in their stewardship of nuclear arms.

The Air Force already has two trailers, known as Silver Bullets, that can be loaded aboard large transports for use by top military and civilian officers, plus a fleet of about 100 planes specifically meant for VIP travel. But McMahon, who is now the Air Force's deputy chief of staff for logistics, installations and mission support, said the new program was started because the service ferried more "senior travelers" to distant regions after the attacks of Sept. 11, 2001, and identified a "gap" in its capability.

It initially planned to build 10 of the capsules, he said, for use by four-star generals, fleet admirals and federal officials at the level of assistant secretary and above. "It is not opulent and it is not a box," McMahon said, but meant to match the comfort level of the VIP fleet.

Explaining his instructions to subordinates, McMahon said he used the term world class "in just about everything I discuss. . . . That represents an attitude." He said he wanted to "create an environment that whoever was riding in that would be proud of," the government would be proud of and "the people of the United States" would be proud of.

Construction of what the Air Force initially termed the new Senior Leader Intransit Comfort Capsules, or SLICC, has already begun, under a contract paid from general Air Force funds. One of the 18-by-9-foot capsules has been partly completed. But McMahon said the program has recently been downsized from 10 capsules to three, plus the four pallets fitted with swiveling leather chairs, known as Senior Leader Intransit Pallets, or SLIP.

The reason, he said, is that the Air Force has upgraded the VIP fleet by adding new air defenses to the planes, reducing its need for new capsules. All four pallets will be finished this year, McMahon said, but he added that building them is much more complicated than "going down to your neighborhood store and buying a recliner and slapping it" onto a platform.

Because of the cutback in the number of capsules and pallets, the program is currently estimated to cost $7.6 million.

Air Force documents about the SLICC, dated June 8, 2006, emphasize the need to install "aesthetically pleasing wall treatments/coverings" -- in addition to the monitor, footrests and a DVD player. The beds, according to one document, must be able to support a man with "no more than 50% compression of the mattress material." The seats are to swivel such that "the longitudinal axis of the seat is parallel to the longitudinal axis of the aircraft" regardless of where the capsules are facing, the document specified.

In a draft document dated Nov. 15, 2006, that spelled out the requirements for the SLICC, the word "Comfort" was repeatedly crossed out with a horizontal line and replaced by a less cushy-sounding alternative, "Conference." McMahon said he thinks the term "comfort" was dropped from the name to distinguish it from pallets of latrines that could be loaded aboard military aircraft.

Although the program's estimated $20 million cost is nearly equivalent to what the Pentagon spends in about 20 minutes, the e-mails show that small details have so far received the attention of many high-ranking officers, including McMahon; Gen. Arthur J. Lichte, the current Air Mobility commander; and Brig. Gen. Kenneth D. Merchant, the mobility command's logistics director.

The leather and carpet color choices were made by McNabb, according to several of the e-mails exchanged by lower-ranking officers, although a spokesman for the general said those selections were McMahon's responsibility. The e-mails state that McMahon ordered that the seats be re-covered, and one e-mail complains that the contractor "would not swap out the brown seat belts for replacement blue seat belts." The changes delayed the project by months and added to its cost.

McMahon said he does not recall intervening on the leather color change, but said he was sure it was unrelated to the Air Force's color. He said that it was probably because blue would not show dirt as much as tan or brown would.

The Costs of War: The Parents' Agony

The Costs of War: The Parents' Agony

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Every day for a parent of a person in the United States military is a long day, filled with concern for their daughter or son. Parents of nine US Army soldiers were notified of the deaths of their family members in Afghanistan this week.

July 16 and 17, 2008 have been extraordinarily long days for another group of parents.

In Washington, DC, on July 17, 2008, John and Linda Johnson, the parents of US Army Private First Class (PFC) Lavena Johnson, met US Army criminal investigators concerning the classification of the death of their daughter, who died three years ago on July 19, 2005 in Balad, Iraq. The Army labeled her death a suicide, despite evidence from materials the Army reluctantly provided to the parents that she was beaten, bitten, sexually assaulted, burned and shot. Despite numerous questions from Dr. John Johnson about the Army's investigation and determination of suicide, the Army stuck to its guns, saying that Lavena Johnson committed suicide. After the briefing, the Johnsons asked Congressman William Lacy Clay and Congresswoman Diane Watson to request that House Oversight and Governmental Reform Committee Chairman Henry Waxman hold hearings, requiring the production of witnesses to testify under oath to their knowledge of how Lavena died - an attempt to get information that the Army has so far failed to provide.

On July 16, 2008, at Fort Knox, KY, Helen and Eric Burmeister, the parents of PFC James Burmeister, attended the court-martial of their son. After being in three IED explosions in Iraq, upon his unit's return to Germany, James left his unit and flew to Canada. He stayed in Canada for ten months, and while there, in hopes of ending the practice, spoke publicly about "bait and kill" zones used by some military units to entice Iraqis into a zone with interesting objects and then shoot them. James voluntarily returned himself to military control at Fort Knox four months ago. In those four months, despite shrapnel still in his body and raging post-traumatic stress disorder, James was provided with minimal medical and emotional assistance. He was court-martialed on July 16, 2008 for being absent without leave (AWOL) and was convicted. The prosecution brought up the public statements and interviews Burmeister gave on "bait and kill." He was sentenced to six months in jail, a loss of pay, reduction in rank to private and a bad-conduct discharge that will deny him medical assistance for physical and emotional wounds suffered on active duty. He was taken from the court directly to jail.

On July 16, 2008, in Boise, Idaho, the parents of US Army war resister PFC Robin Long waited for the news that their son had been deported from Canada and placed in the hands of the US military. Ironically, war resister Long was handed over to US officials at the Peace Arch on the US-Canadian border, just north of Seattle, Washington. Three years ago, in 2005, Long went to Canada after refusing to serve in Iraq, a war he called an "illegal war of aggression." A Canadian federal judge on July 15 ordered that Long be deported after she ruled that he failed to provide clear and convincing evidence that he would suffer irreparable harm if he were returned to the United States. Long was taken by Washington State police to a civilian jail to await the arrival of Army military police who will transport him to the military prison at Fort Lewis, Washington. Eventually, he will be returned to his unit in Colorado for probable court-martial. At least 200 other US military personnel are in Canada. Several have requested refugee status but have been denied and risk deportation.

The costs of the wars in Iraq and Afghanistan continue to mount. The lives of hundreds of thousands of Americans and millions of Iraqis and Afghans have been permanently damaged by these wars. Support the families, but end the war.

George W. Bush's About-Face on Iran

George W. Bush's About-Face on Iran

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The United States is taking a very important step in Iran's direction by involving itself directly in negotiations over nuclear issues.

Saturday, the State Department's No. 3, William Burns, will participate in the meeting in Switzerland between Javier Solana and Iranian negotiator, Saed Jalili.

The American diplomat's presence is unprecedented. It will not be symbolic only. It's at the Saturday meeting in Geneva that the Iranians will give their formal response to the Western proposals Solana had presented in Tehran in July.

For European diplomacy, which is the source of the efforts towards a negotiated solution, the fact that the United States is involving itself so visibly is a great success. It addresses a very clear message to the Iranians as to the seriousness of a diplomatic undertaking they could question as long as Washington kept its distance.

Nonetheless, Americans and Iranians still assert that their positions have not changed. Tehran still refuses to stop uranium enrichment, the precondition established by the United States and the five other countries involved (France, Germany, Great Britain, Russia and China) for real negotiations. Washington proclaims that additional sanctions will be imposed if Tehran refuses to stop enrichment and negotiate.

Nonetheless, it remains the case that the American administration has effected an about-face: it agrees to participate in discussions - although these are presented as preliminary - even before Iran submits to its conditions.

If the United States makes such a gesture, it's in the hope of seeing the Iranians grab the opportunity. Western inducements for stopping enrichment will have aroused an internal debate in Tehran that should be fed by betting on the most conciliating voices winning out.

Six months before stepping down, George W. Bush is distancing - at least for the moment - the prospects of another war in the Middle East. His gesture favors relaxation on the oil markets where speculation is inflaming the price per barrel. Above all, it must be seen in the context of the electoral campaign in the United States. Negotiating with Iran is a demand Democratic candidate Barack Obama has put forward. By taking the initiative, the Republican administration cuts the grass out from under his feet and promotes John McCain.

After the American about-face, it's up to the Iranians to play. Now they may be conciliatory without losing face. "It's possible to have discussions with the United States on different subjects in the near future," Iranian President Mahmoud Ahmadinejad declared Monday evening, objecting only to any preconditions.

The Islamic Republic wants to be acknowledged by the United States as an indispensable interlocutor. It can seize the opportunity now or wait for the next American president, but then the escalation in tensions could quickly resume.

As economy sours and oil rises, Washington postures

As economy sours and oil rises, Washington postures

David Lightman

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During a week of economic turmoil and wildly fluctuating energy prices, Washington lawmakers did little to calm consumers, opting instead to spent a lot of time trying to land political punches.

Republicans kept talking about the importance of allowing drilling off U.S. coastlines. Democrats countered with how releasing some oil from the Strategic Petroleum Reserve might help drive down oil prices.

The Democratic-led House of Representatives voted 244-173 Thursday on a largely party-line vote to require oil companies to drill on federally leased land they already control or lose their rights. The bill, which also would speed up leasing in Alaska's National Petroleum Reserve, fell far short of the two-thirds needed for passage; President Bush had threatened a veto anyway.

There were small hints of possible legislative breakthroughs, though. Ten senators joined a bipartisan effort to break the energy deadlock. Legislation to provide more regulation of energy futures trading was proceeding.

But most of the lawmakers' time was spent claiming that opponents were stubborn and misreading the American public. Or as Sen. Bob Corker, R-Tenn., put it, "This is all about political games, not about solving our country's problems."

Data show vividly that the public agrees.

A Quinnipiac University poll taken July 8-13 found that a scant 14 percent of likely voters approved of the way Congress is handling its job. That percentage is below the 26 percent who approved of President Bush's performance.

The disdain of Congress had a bipartisan tinge. The approval rating among Democrats was 19 percent, compared with 15 percent among Republicans and 8 percent among independents.

Polls also suggest that the public is willing to embrace a number of solutions to the energy and economic crunch.

"The public doesn't know that much about the respective energy plans," said Carroll Doherty, Pew Research Center associate director. "They want something done."

In a Fox News/Opinion Dynamics survey conducted last month, three-fourths of those surveyed said they backed "increased drilling for oil in the U.S. immediately," while about half urged building new nuclear-power plants.

Barack Obama, the presumptive Democratic presidential nominee, and John McCain, the presumptive Republican nominee, have a long list of remedies, and experts think that having a long menu of options is good politics and good policy.

"I'd rather have both candidates not get committed to a lot of specifics," said Philip Sharp, the president of Resources for the Future, a nonpartisan research group, "so they can have room to govern when they get to the White House. I want to know broadly where they are."

Robert Kaufmann, the director of the Center for Energy and Environmental Studies at Boston University, put it this way. "Voters will probably want to pick some from column A and some from column B," he said.

But the Democratic-controlled Congress and the Bush White House and its Republican allies appear deadlocked.

Bush this week stepped up his push to open coastal waters to drilling, lifting an 18-year-old executive ban.

"It makes sense to me to say to the world that we're going to use new technologies to explore for oil and gas in the United States," the president said, "offshore oil, ANWR (the Arctic National Wildlife Refuge), oil shale products — to help change the psychology, to send a clear message that the supplies of oil will increase."

Congress still must approve overturning the ban, and within hours of Bush's action Monday, House Speaker Nancy Pelosi branded the idea a "hoax." The next day, she hosted an economic meeting at which participants were Democrats or experts sympathetic to the party's positions.

"It's important that the American people understand that our own Department of Energy has said, at best, you're talking about Americans seeing some effect at the pump 10 years from now," said Rep. Chris Van Hollen, D-Md., the chairman of the Democratic Congressional Campaign Committee.

Bush said, in effect, so what?

Noting that some analysts estimate that it will be at least seven years until the impact of offshore drilling is felt, the president said, "If we'd done it seven years ago, we'd be having a different conversation today."

Van Hollen and other Democrats instead suggested releasing some oil from the nation's Strategic Petroleum Reserve. "It is something that will have an impact within 10 days at the price at the pump," Pelosi said.

Nonsense, Bush said. The reserve, he said, is for emergencies, and using some of it wouldn't address the "fundamental issue" of how to find alternative sources of energy.

Looking at the broader economy, Democrats this week suggested a new stimulus package that could provide energy assistance for low-income people, more money for infrastructure, new tax rebates, help for families facing foreclosure and aid to states' Medicare programs. Bush and other Republicans have said it's too soon to talk about such a plan.

If there's any consensus, it's this: No one knows what solutions make the most sense, said Bruce Buchanan, a professor of government at the University of Texas.

"We're on untrodden ground. Nobody has a good metric for predicting what will happen on energy or the economy," he said.

This much is clear, though: The public is tired of the constant sniping and the only rare attempts to fix things.

"The public is looking for solutions," said Doherty of the Pew Research Center. "They don't see this as an ideological issue."

ON THE WEB

The Fox News/Opinion Dynamics poll on Americans' views of energy alternatives: http://www.foxnews.com/projects/pdf/062108_energy_release_web.pdf

The Quinnipiac poll: http://www.quinnipiac.edu/x1295.xml?ReleaseID=1192

The House roll call vote on the drilling bill: http://clerk.house.gov/evs/2008/roll511.xml

Will 401(k) losses set off panic?

Will 401(k) losses set off panic?

Sharp drop in retirement nest eggs could trigger wave of selling

In the next few weeks, the millions of Americans who have been investing their retirement funds in the stock market through their 401(k) plans or Individual Retirement Accounts are going to open their second-quarter statements and be shocked by the losses in their retirement nest eggs... -->dropend-->

When they suddenly face these losses, the fear could trigger another wave of selling, this time out of panic. In fact, it's almost surprising that the stock market losses haven't made bigger headlines.

Perhaps the stock market's decline has been overshadowed by the rise in oil prices. Or by the soaring statistics for bankruptcies and foreclosures, which hit closer to home.

Perhaps investors are soothed by the promises of politicians that things will soon be better. That's why presidential election years are traditionally good for the stock market. But not this year. As consumer confidence statistics touch record lows, the stock market has fallen sharply in the first half of the year.

And I'm starting to get e-mail queries like this one:

"I'm losing money fast in my retirement account mutual funds. I'm 50 years old, what do I do if ALL of my money is Chicken Money? I'm in a panic and beginning to feel like it's a waste of time and money trying to save for retirement. I'm down to $105,000. What should I do?"

I'm torn about giving my standard answer, one in which I truly believe, that over the "long run" a diversified portfolio of stock market investments is your only real choice to grow your funds and beat inflation. After all, there has never been a 20-year period where you'd have lost money in a diversified portfolio of large company stocks with dividends reinvested.

But then I recognize that many individuals simply won't have the discipline -- or the time -- to ride out a true bear market. They'll panic and sell at the very bottom --in effect, "creating" the bottom! That's why I've always recommended a cushion of "Chicken Money" on the side -- money in low-yielding, but safe, money market funds and short-term CDs. That gives you courage to ride through a decline with appropriate investments for the rest of your money.

But in bear markets, fear tends to take over rational thought.

Is this a real bear market?

The "technical" definition of a bear market is a 20 percent decline in the Dow Jones industrial average -- and we've hit bear territory. But those 30 popular Dow stocks hardly reflect the market's breadth.

The Standard & Poor's 500 stock index is the measure used by most investment managers. And by that measure, we've indeed fallen into bear territory since the index hit its highs of last October.

On Oct. 11, the S&P 500 index reached an all-time intra-day high of 1,576.09. At the end of June, the closing level was 1,280 -- a decline of 18.8 percent. By July 9, the S&P 500 was off 21 percent from its peak.

According to the Morningstar Market Commentary, the worst performing group in the second quarter was the financial stocks -- which shed 17 percent of their value between April and the end of June.

The best performing group was the Morningstar Commodity Index -- up 21 percent for the quarter. And bonds provided no safety as interest rates rose on inflation fears, cutting bond prices by 1.3 percent on the Morningstar Core Bond Index.

Just for perspective, the average duration of a bear market is 17 months, and the longest ran for 42 months, from November 1938 through April 28, 1942.

Hope: elections, the market

So where is the traditional election year bullishness? The first six months of this election year posted the largest stock market loss -- a 12.6 percent decline based on the S&P 500 stock index -- of any presidential election year since 1940, according to Jim Stack of Investech Research. His company keeps track of those historic market relationships at www.Investech.com.

Stack notes that the only other double-digit losses in the first half of a presidential election year came in 1940, at the start of World War II when Germany invaded France, and in 1932, at the depths of the Great Depression!

Now here's the optimistic part of Stack's statistics: Those two years -- 1932 and 1940 -- with double-digit stock market losses in the first half, each rebounded for double-digit gains in the second half from July through Election Day!

As of Friday's close, Stack sent word to his subscribers that he's still waiting for confirming signals from his indicators that it's time to buy. His Friday comment: "There is no confirmation that a market bottom is at hand, or even near."

The most bearish case

Perhaps the best-stated bearish case is made by Bert Dohmen, who has written the Wellington Letter for 30 years, and whose latest book, Prelude to Meltdown, was reviewed in this column last year.

Dohmen called the market top last October. He now says the "first good support" for the Dow could come at 9,750 -- but he implies that won't be the ultimate bottom!

Dohmen's advice is to use any current rally to liquidate stocks globally.

How to react

While bulls and bears debate the market direction, individual investors have a more immediate issue: How to position their investments for future growth, inflation protection, and some degree of financial security.

To answer that, you have to examine your own situation and risk tolerance. This isn't a question of calling market turns; it's an assessment of your own changing financial situation, your goals -- and your financial and emotional ability to ride out a long-term decline (if there is one) in the stock market.

As you get closer to retirement, your priorities will change -- and so will your ability to watch your retirement nest egg gyrate in value. It's best to do that kind of thinking in the calm period before panic erupts. That may not be long now. And that's The Savage Truth.

Citigroup posts $2.5B loss, but beats expectations

Citigroup posts $2.5B loss, but beats expectations

By MADLEN READ

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Citigroup posted another loss and laid off 6,000 employees in the second quarter as it struggled with surging loan defaults, but the $2.5 billion shortfall was smaller than Wall Street anticipated.

Citi's shares rose 5 percent in premarket trading Friday and helped boost the broader market, whose grim prognosis for the U.S. financial system this year sent stocks plummeting.

The nation's biggest banking company by assets lost the equivalent of 54 cents per share in the April-June period. In the same timeframe last year, the bank earned $6.23 billion, or $1.24 per share.

Analysts surveyed by Thomson Financial had predicted a larger loss of 66 cents share.

Citigroup Inc.'s securities and banking division wrote down the value of its assets by $7.2 billion, before taxes, and an asset revaluation cost its consumer lending business $745 million. Those write-downs totaling about $8 billion are significantly lower than write-downs taken in the first quarter and in last year's fourth quarter.

However, credit costs jumped to $7.2 billion as more consumers defaulted on their loans — implying that while losses in the credit markets are decelerating, losses from actual defaults in Citigroup's mortgages, home-equity loans, auto loans and credit card lines are mounting.

The $7.2 billion in credit costs included $4.4 billion in credit losses and a $2.5 billion charge to bulk up reserves for future loan losses.

Citigroup has failed to turn a profit for three straight quarters, losing a cumulative $17.4 billion during that period after writing down its assets by about $46 billion. Its shares have tumbled 65 percent over the past year, and recently hit their lowest point since the day Citicorp and Travelers combined in October 1998.

But after better-than-expected results from two other big consumer banks this week — JPMorgan Chase & Co. and Wells Fargo & Co. — the market appears to be deciding that the prospect for the ailing financial sector may not be as dire as they feared.

Citigroup stock rose 90 cents, or 5.5 percent, to $17.34 in premarket trading.

Citigroup's results were helped by asset sales, lowered expenses, and record revenues in transaction services, interest rate and currency trading and commodities.

The bank has raised about $40 billion over the past several months by shedding businesses, lowering its dividend, and selling stock.

And during the second quarter, Citi lopped off $99 billion from its total assets, which now stand at $2.02 trillion. Back in May, Chief Executive Vikram Pandit said the bank would shrink its then-$2.2 trillion in balance sheet assets by about $400 billion to $500 billion over the next few years.

"While there is still much to do, we are encouraged by our progress in delivering on our commitment to the re-engineering efforts," Pandit said in a statement.

Not all financial services companies have been clearing the low bar that Wall Street set for them this quarter.

The brokerage Merrill Lynch & Co. late Thursday reported a wider-than-expected quarterly loss and write-downs from losing investments in the debt markets approaching $40 billion. The credit lender Capital One Financial Corp., meanwhile, posted a larger-than-expected profit decline.

Operation Gladio: CIA Network of "Stay Behind" Secret Armies

Operation Gladio

Andrew G. Marshall

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1. Executive Summary
2. An Overview
3. The Birth of Operation Gladio
4. The Red Brigades
5. The Murder of Aldo Moro
6. The Bologna Bombing
7. Endnotes


1. Executive Summary

Through NATO, working with various Western European intelligence agencies, the CIA set up a network of stay behind "secret armies" which were responsible for dozens of terrorist atrocities across Western Europe over decades. This report will focus on the stay behind army in Italy, as it is the most documented. Its codename was Operation Gladio, the 'Sword'.

2. An Overview

The Purpose of the 'Stay Behind' Armies

In the early 1950s, the United States began training networks of "stay behind" volunteers in Western Europe, so that in the event of a Soviet invasion, they would "gather intelligence, open escape routes and form resistance movements." The CIA financed and advised these groups, later working in tandem with western European military intelligence units under the coordination of a NATO committee. In 1990, Italian and Belgian investigators started researching the links between these "stay behind armies" and the occurrence of terrorism in Western Europe for a period of 20 years.[1]

'Secret Armies' or Terrorist Groups?

These "stay behind" armies colluded with, funded and often even directed terrorist organizations throughout Europe in what was termed a "strategy of tension" with the aim of preventing a rise of the left in Western European politics. NATO's "secret armies" engaged in subversive and criminal activities in several countries. In Turkey in 1960, the stay behind army, working with the army, staged a coup d'├ętat and killed Prime Minister Adnan Menderes; in Algeria in 1961, the French stay-behind army staged a coup with the CIA against the French government of Algiers, which ultimately failed; in 1967, the Greek stay-behind army staged a coup and imposed a military dictatorship; in 1971 in Turkey, after a military coup, the stay-behind army engaged in "domestic terror" and killed hundreds; in 1977 in Spain, the stay behind army carried out a massacre in Madrid; in 1980 in Turkey, the head of the stay behind army staged a coup and took power; in 1985 in Belgium, the stay behind attacked and shot shoppers randomly in supermarkets, killing 28; in Switzerland in 1990, the former head of the Swiss stay behind wrote the US Defense Department he would reveal "the whole truth," and was found the next day stabbed to death with his own bayonet; and in 1995, England revealed that the MI6 and SAS helped set up stay behind armies across Western Europe.[2]

3. The Birth of Operation Gladio

A 'Strategy of Tension'

In 1990, the Italian Prime Minister had confirmed that Italy's "stay behind" army, termed "Gladio" (Sword), existed since 1958, with the approval of the Italian government. In the early 1970s, Italy's communist support was growing, so the government turned to a "Strategy of Tension" using the Gladio network. At a top secret 1972 Gladio meeting, one official referred to making a "pre-emptive attack" on the Communists. As the Guardian reported, links between Gladio in Italy, all three Italian secret services and Italy's P2 Masonic Lodge were well documented, as the head of each intelligence unit was a member of the P2 Lodge.[3]

Setting up the Network

In 1949, the CIA helped set up the Italian secret armed forces intelligence unit, named SIFAR, staffed in part with former members of Mussolini's secret police. It later changed its name to SID. At the end of World War 2, a former Nazi collaborator, Licio Gelli, was facing execution for his activities during the war, but managed to escape by joining the US Army Counter-Intelligence Corps. In the 1950s, Gelli was recruited by SIFAR. Gelli was also head of the P2 Masonic Lodge in Italy, and in 1969, he developed close ties with General Alexander Haig, who was then Assistant to National Security Advisor Henry Kissinger. Through this network, Gelli became chief intermediary between the CIA and General De Lorenzo, Chief of the SID.[4]

Gladio Creates 'Tension'

Gladio was involved in a silent coup d'├ętat in Italy, when General Giovanni de Lorenzo forced the Italian Socialist Ministers to leave the government.[5] On December 12, 1969, a bomb exploded at the National Agrarian Bank, which killed 17 people and wounded 88 others. That afternoon, three more bombs exploded in Rome and Milan. US intelligence was informed ahead of time of the bombing, but did not inform the Italian authorities.[6] In 2000, a former Italian Secret Service General stated that the CIA "gave its tacit approval to a series of bomb attacks in Italy in the 1960s and 1970s."[7] The bombing was linked to two neofascists and to an SID agent.[8]

Testifying in a court case trying four men accused of involvement in the 1969 bank bombing in Milan, General Gianadelio Maletti, former head of military counter-intelligence from 1971 to 1975, stated that his unit discovered evidence that explosives were supplied to a right wing Italian terrorist group from Germany, and that US intelligence may have aided in the transfer of explosives. He was quoted as saying that the CIA, "following the directives of its government, wanted to create an Italian nationalism capable of halting what it saw as a slide to the left and, for this purpose, it may have made use of rightwing terrorism," and that, "I believe this is what happened in other countries as well."[9]

The Report

The Italian government released a 300-page report on Gladio operations in Italy in 2000, documenting connections with the United States. It declared that the US was responsible for inspiring a "strategy of tension." In examining why those who committed the bombings in Italy were rarely caught, the report said, "those massacres, those bombs, those military actions had been organised or promoted or supported by men inside Italian state institutions and, as has been discovered, by men linked to the structures of United States intelligence."[10]

4. The Red Brigades

The Red Brigades were a leftist Italian terrorist organization that was formed in 1970. In 1974, Red Brigade founders Renato Curcio and Alberto Franceschini were arrested. Alberto Franceschini later accused a top member of the Red Brigades, Mario Moretti, of turning them in, and that both Moretti and another leading Red Brigade member, Giovanni Senzani, were spies for the Italian and US secret services.[11] Moretti rose up through the ranks of the Red Brigades as a result of the arrest of the two founders.

The Red Brigades and the CIA

The Red Brigades worked closely with the Hyperion Language School in Paris, which was founded by Corrado Simioni, Duccio Berio and Mario Moretti. Corrado Simoni had worked for the CIA at Radio Free Europe, Duccio Berio had been supplying the Italian SID with information of leftist groups and Mario Moretti, apart from being accused by the Red Brigades founders as being an intelligence asset, also happened to be the mastermind and murderer of former Italian Prime Minister, Aldo Moro. An Italian police report referred to the Hyperion Language School as "the most important CIA office in Europe."[12]

5. The Murder of Aldo Moro

Moro Makes Powerful Enemies

Aldo Moro, who served as Italy's Prime Minister from 1963 until 1968 and later, from 1973 until 1976, was kidnapped and murdered by the Red Brigades in 1978, while still a prominent politician in the Christian Democrat Party. When he was kidnapped, Moro was on his way to Parliament to vote on inaugurating a new government, of which he negotiated, for the first time since 1947, to be backed by the Italian Communist Party (PCI). Moro's policy of working with and bringing the Communists into the government was denounced by both the USSR and the United States.

Kissinger's Threat

Moro was held for 55 days before his eventual murder. The reasoning was for his plan to bring the Communist Party into the government. Four years prior to his death, in 1974, Moro was on a visit as Italian Prime Minister, to the United States. While there, he met with US Secretary of State Henry Kissinger, who told Moro, "..You must abandon your policy of bringing all the political forces in your country into direct collaboration... or you will pay dearly for it."[13]

Moro was "Sacrificed"

Steve Pieczenik, a former State Department hostage negotiator and international crisis manager, "claimed that he played a critical role in the fate of Aldo Moro." Pieczenik "said that Moro had been "sacrificed" for the "stability" of Italy." He had been sent to Italy by President Jimmy Carter on the day of Moro's kidnapping to be part of a crisis committee, of which he said was "jolted into action by the fear that Moro would reveal state secrets in an attempt to free himself." The action the committee took was to leak a memo saying that Moro was dead, and to have the memo attributed to the Red Brigades. The purpose of this was to "prepare the Italian public for the worst and to let the Red Brigades know that the state would not negotiate for Moro, and considered him already dead."[14] In a documentary on the subject, Pieczenik stated that, "The decision was made in the fourth week of the kidnapping, when Moro's letters became desperate and he was about to reveal state secrets," and that, "It was an extremely difficult decision, but the one who made it in the end was interior minister Francesco Cossiga, and, apparently, also prime minister Giulio Andreotti."[15]

Moro's Letters

Among Moro's released letters, which he was writing while in captivity, he stated that he feared that a shadow organization, with "other secret services of the West ... might be implicated in the destabilisation of our country."[16] During his interrogation while in captivity, Moro even referred to "Nato's anti-guerrilla activities." However, the Red Brigades did not use this information,[17] perhaps because, according to the founders of the Red Brigades, the leader of the organization at the time of Moro's kidnapping, Mario Moretti, was working for the Italian or US intelligence services.[18]

Maverick Journalist Killed by President?

Shortly after Moro's death, Italian journalist, Mino Pecorelli, a man with "excellent secret service contacts," voiced his suspicion in a 1978 article that Moro's death was linked to Gladio, which was not officially acknowledged until 1990. A year after Moro's death, Pecorelli was shot dead in Rome. He claimed that the kidnapping of Moro was committed by a "lucid superpower." In 2002, former seven-term Prime Minister, Giulio Andreotti, was convicted of "ordering" Pecorelli's murder.[19] Pecorelli was about to publish a book "containing damaging criticisms of [Prime Minister Giulio] Andreotti by murdered Christian Democratic leader Aldo Moro."[20]

6. The Bologna Bombing

On the morning of August 2, 1980, Italy experienced its worst-ever terrorist attack at Bologna train station, which killed 85 people, and wounded more than 200 others. A long and complicated investigation was undertaken, and eventually, a trial began. In 1988, four right-wing terrorists were sentenced to life in prison. Two other defendants were convicted of slandering the investigation, "Francesco Pazienza, a former financier linked to several criminal cases in Italy, and Licio Gelli, the former grandmaster of the so-called P-2 Masonic lodge."[21] This is the very same Licio Gelli who happened to be a CIA intermediary for the head of Italian intelligence for the Gladio network. Although later on, Gelli was acquitted of the charges.

7. Endnotes

[1] Bruce W. Nelan, Europe Nato's Secret Armies. Time Magazine: November 26, 1990: http://www.time.com/time/magazine/article/0,9171,971772,00.html

[2] PHP, Secret Warfare: Operation Gladio and NATO's Stay-Behind Armies. ISN: http://translate.google.ca/translate?hl=en&sl=de&u=http://www.ethz.ch/&sa=X&oi=

translate&resnum=1&ct=result&prev=/search%3Fq%3DETH%26hl%3Den%26sa%3DG

[3] Ed Vulliamy, Secret agents, freemasons, fascists... and a top-level campaign of political 'destabilisation'. The Guardian: December 5, 1990: http://www.cambridgeclarion.org/press_cuttings/vinciguerra.p2.etc_graun_5dec1990.html

[4] Arthur E. Rowse, GLADIO: THE SECRET U.S. WAR TO SUBVERT ITALIAN DEMOCRACY. Covert Action Quarterly: December 1994

[5] PHP, Secret Warfare: Operation Gladio and NATO's Stay-Behind Armies. ISN: http://translate.google.ca/translate?hl=en&sl=de&u=http://www.ethz.ch/&sa=X&oi=

translate&resnum=1&ct=result&prev=/search%3Fq%3DETH%26hl%3Den%26sa%3DG

[6] Philip Willan, US 'supported anti-left terror in Italy'. The Guardian: June 24, 2000: http://www.cambridgeclarion.org/press_cuttings/us.terrorism_graun_24jun2000.html

[7] CBC, CIA knew, but didn't stop bombings in Italy – report. CBC News: August 5, 2000: http://www.cbc.ca/world/story/2000/08/05/cia000805.html

[8] Peter Dale Scott, The Road to 9/11: Wealth, Empire, and the Future of America. University of California Press, 2007: page 181

[9] Philip Willan, Terrorists 'helped by CIA' to stop rise of left in Italy. The Guardian: March 26, 2001: http://www.guardian.co.uk/world/2001/mar/26/terrorism

[10] Philip Willan, US 'supported anti-left terror in Italy'. The Guardian: June 24, 2000: http://www.cambridgeclarion.org/press_cuttings/us.terrorism_graun_24jun2000.html

[11] Philip Willan, Infiltrators blamed for murder of Italian PM. The Guardian: April 10, 1999: http://www.guardian.co.uk/Archive/Article/0,4273,3852325,00.html

[12 – 13] Arthur E. Rowse, GLADIO: THE SECRET U.S. WAR TO SUBVERT ITALIAN DEMOCRACY. Covert Action Quarterly: December 1994

[14] Malcolm Moore, US envoy admits role in Aldo Moro killing. The Telegraph: March 16, 2008: http://www.telegraph.co.uk/news/worldnews/1581425/US-envoy-admits-role-in-Aldo-

Moro-killing.html

[15] Saviona Mane, A murder still fresh. Haaretz: May 9, 2008: http://www.haaretz.com/hasen/spages/981929.html

[16] Ed Vulliamy, Secret agents, freemasons, fascists... and a top-level campaign of political 'destabilisation'. The Guardian: December 5, 1990: http://www.cambridgeclarion.org/press_cuttings/vinciguerra.p2.etc_graun_5dec1990.html

[17] Philip Willan, Moro's ghost haunts political life. The Guardian: May 9, 2003: http://www.guardian.co.uk/print/0,,4665179-105806,00.html

[18] Philip Willan, Infiltrators blamed for murder of Italian PM. The Guardian: April 10, 1999: http://www.guardian.co.uk/Archive/Article/0,4273,3852325,00.html

[19] Philip Willan, Moro's ghost haunts political life. The Guardian: May 9, 2003: http://www.guardian.co.uk/print/0,,4665179-105806,00.html

[20] BBC News, Giulio Andreotti: Mr Italy. BBC: October 23, 1999: http://news.bbc.co.uk/2/hi/europe/483295.stm

[21] AP, Four Get Life in Prison In Bombing in Bologna. The New York Times: July 12, 1988: http://query.nytimes.com/gst/fullpage.html?res=940DE0D61131F931A25754C0A96E948260


The Ring Masters
Part 1


The Puppeteers
Part 2


The Foot Soldiers
Part 3



Canada hands US Iraq war resister over to Pentagon for punishment

Canada hands US Iraq war resister over to Pentagon for punishment

By Keith Jones
Go To Original

Canada’s Border Services Agency turned Iraq war resister Robin Long over to US authorities Tuesday morning. Long, who fled the US Army in 2005 after learning he was to be deployed to Iraq, was immediately sent to a Bellingham, Washington county jail. He has since been transferred to the US Army base in Fort Carson, Colorado where he will be subject to military discipline for “desertion”—an offense for which US military personnel can be court-martialed, jailed and, in time of war, executed.

A US military spokesman told Canwest News Service that “the unit commander will look at the facts” and make a recommendation “about what disciplinary actions will ensue.”

The 25-year old Long had been in the custody of Canada’s border and immigration police, the CBSA, since last October. He had sought political refugee status in Canada, arguing that the 2003 US invasion of Iraq was illegal, that were he deployed to Iraq he would be complicit in war crimes, and that he would suffer irreparable harm if deported to the US.

Canada’s Immigration and Refugee Board, courts, and Conservative government have callously rejected the appeals of Long and other US war resisters for refuge in Canada. Making a mockery of Canada’s treaty commitments to uphold international law and to provide political asylum, Canadian authorities have refused to entertain arguments concerning the legality of the US’s unprovoked, “pre-emptive” war against Iraq, dismissed evidence concerning the atrocities perpetrated by the US occupation force, and pooh-poohed the severity of the penalties meted out to “deserters” asserting that they do not constitute “persecution” or “cruel and unusual punishment.”

Long, who is from Boise, Idaho, joined the US military in 2003 at the age of 19. In March 2005, he received orders to go to Iraq. But he refused to report to his new military unit and instead made his way to Canada in June 2005, where he soon after applied for asylum.

Long has explained his actions by saying that the Bush administration’s justifications for the war have proven to be false and that he was not prepared to be a “tool of destruction.” He told one interviewer, “These people came back [from Iraq] and were telling these horrific stories and our superiors were egging people on. Some people were actually volunteering to go over there and it just seemed like justified homicide. It didn’t sit right in my stomach. I morally couldn’t do it.”

Long is the first war resister Canada has handed over to US authorities. But the CBSA, with the full support of the Conservative government, is well-advanced in the process of turning many of the estimated 200 war resisters in Canada over to the US government and possible criminal prosecution for their refusal to participate in an illegal war that has led to the death of more than a million Iraqis. According to Michelle Robidoux of the War Resisters Support Campaign, at least nine other war resisters, in addition to Long, have been ordered deported by the end of this summer.

The CBSA was slated to deport Corey Glass, a former sergeant in the California National Guard, to the US last week. But on July 9, the day before he was to be expelled from Canada, a Federal Court judge ruled that the immigration board had violated Glass’s rights by refusing to accord him two hearings routinely granted failed refugee-claimants—a “humanitarian and compassionate review” and a “pre-removal risk assessment.”

Canada’s highest judicial body, the Supreme Court, gave its explicit sanction to the deportation of the war resisters and implicit support for their prosecution by the US military when it refused last November to hear the appeals of conscientious objectors Jeremy Hinzman and Brandon Hughey. Hinzman’s and Hughey’s claims for refugee status had been rejected by the Immigration and Refugee Board and two lower level federal courts had confirmed the board’s decisions. (See “Canada’s Supreme Court opens door to deportation of US ‘war resisters’”)

As for the Canadian government, in 2005 when the Liberals held office, it took the highly unusual step of intervening at Hinzman’s refugee hearing—the first for an Iraq war resister—to successfully urge the Immigration and Refugee Board to exclude any arguments concerning the legality of the US’s invasion of Iraq. The pretext invoked by the government was that only the International Court of Justice at the Hague has the authority and jurisdiction to adjudicate on the legality of a war. (See “Canada denies asylum to US soldier who refused to serve in Iraq”)

During the Vietnam War more than 50,000 US draft-dodgers and “deserters” found refuge in Canada. Today, however, the Canadian judiciary, immigration board, and government are determined to ensure that the country not become a safe haven for those in the US military who refuse to be party to the US’s wars of aggression in Iraq and Afghanistan.

This is not just because Canada’s elite does not want to rile the Bush administration and US military. The Canadian ruling class is determined to jettison the myth of Canada as a peace-keeping nation—a myth closely bound up with Pearson and Trudeau Liberal governments’ attitude toward the Vietnam War and decision to allow Vietnam war resisters to apply for landed immigrant status in Canada—because they see it as cutting across their efforts to revive Canadian militarism and use the Canadian Armed Forces (CAF) as a means to assert their predatory interests on the world stage.

Popular feeling in Canada, however, is strongly against the Bush administration and the Iraq war and supportive of the war resisters. An Angus Reid poll, conducted at the beginning of last month, found that two thirds of Canadians favor granting permanent residence status to US Iraq war resisters. In the case of the Afghan War, in which the CAF is a major participant with 2,500 troops stationed in Kandahar, public opinion is more divided. Despite the strong support accorded the war by Canada’s principal political parties and the media, polls have, nevertheless, consistently shown that a majority of Canadians favor the withdrawal of Canadian troops.

In an attempt to curry favor with the public, the opposition parties combined at the end of May to pass a non-binding resolution urging the minority Conservative government, one of Washington’s most fervent allies, to allow Iraq war resisters to remain in Canada. The resolution, which was co-sponsored by Bob Rae, the erstwhile social-democrat and Liberal foreign affairs critic, and by Olivia Chow, the wife of NDP leader Jack Layton, was adopted by 137 to 100. It read: “That the government immediately implement a program to allow conscientious objectors and their immediate family members (partners and dependents), who have refused or left military service related to a war not sanctioned by the United Nations and do not have a criminal record, to apply for permanent resident status and remain in Canada; and that the government should immediately cease any removal or deportation actions that may have already commenced against such individuals.”

The reference to a “war not sanctioned by the United Nations” served a double purpose. It avoided the politically explosive question of the patently illegal character of the US’s invasion of Iraq and denied legitimacy to, and support for asylum for, Afghan War resisters, whether in the US or Canada.

The Liberals’ support for the motion was very much a means for it to try to put some distance between itself and the Conservatives, after it had combined forces with the government to extend the CAF’s leading role in the counter-insurgency war in Afghanistan until at least the end of 2011. Nor should it be forgotten that it was under the Liberal government of Paul Martin that the Canadian state initiated the drive to expel the war resisters and that the Liberal government intervened at the very first refugee hearing to make clear its support for their being returned for punishment in the US, when it successfully argued for the exclusion of all arguments relating to the war’s illegality.

Barney Frank and the putrefaction of American liberalism

Barney Frank and the putrefaction of American liberalism

By Bill Van Auken
Go To Original

Chairing a hearing of the House Financial Services Committee Wednesday, Representative Barney Frank (Democrat of Massachusetts) let slip one of the most revealing remarks made in response to Federal Reserve Chairman Ben Bernanke’s testimony on America’s deepening economic crisis.

“No one expects equality, equality is not a good thing, you can’t have an economy that works if everything’s equal,” said Frank. “But too much inequality also has negative consequences.”

Frank made the comment after noting that, given a continuation of the present rate of layoffs and downsizing, the US economy will lose a million jobs this year. He also drew attention to a section in the Federal Reserve Board’s own monetary policy report which noted that real wages are falling significantly as a result of spiraling prices, while labor productivity is rising.

In other words, the income of working people is being eroded even as they face intensified exploitation.

The latest Labor Department figures show that real wages fell by 0.9 percent in June alone, a rate that would slash workers’ incomes by nearly 11 percent over the course of a year.

Frank, who has chaired the Financial Services panel since the Democrats took the leadership of the House in 2007 and was previously its ranking Democratic member, was speaking not as an outraged advocate for workers, but rather as an advisor to the bankers and corporate CEOs whose interests he serves.

The message was clear: inequality is good because it is the source of great wealth for the ruling class, but social polarization beyond a certain level threatens the entire system with social eruptions.

The outlook of the fourteen-term Massachusetts lawmaker, often referred to as one of the most liberal members of the US House of Representatives, reflects the putrefaction of American liberalism.

The point that Frank was making in his remarks was not new. He has repeated the same theme again and again over the last several years, making it something of a political mantra in addressing audiences of financiers, businessmen and corporate executives.

In a speech at the National Press Club shortly after taking the chairmanship of the key financial oversight committee, Frank declared: “Inequality is not necessarily a bad thing. It’s necessary in the capitalist system, and I’m a capitalist. But we do not have to have a government that reinforces it.”

Talking to an audience of Boston business leaders a few months earlier, he sounded the same theme: “I’m a capitalist, and that means I’m for inequality. But you reach a point where you get more inequality than is healthy.”

And in an opinion column drafted for BusinessWeek magazine in February 2006 he wrote: “Inequality is not a bad thing in a free market economy; indeed, it’s essential if we’re to benefit from the incentives and efficiencies that make the market so effective a producer of wealth.”

If Barney Frank is a capitalist, as he proudly proclaims, he has become one thanks to his political career in the Democratic Party. His most recent financial disclosure forms indicate a net worth in financial assets of well over $1 million, with an extensive portfolio of investments.

His relations with Wall Street’s largest banks and finance houses have stood him in good stead. According to the Center for Responsive Politics, he pulled in $1.8 million in campaign contributions in the run-up to the 2006 election. He is well on his way to substantially topping that figure in the present campaign season, recording $1.2 million in contributions by the end of March. Securities and Investment firms were responsible for $164,600 of that money, real estate interests for $156,401, law firms for $130,768, insurance companies for $117,674 and commercial banks for $74,350.

In return, he has dutifully defended these massive financial interests, acting as a key architect of the government bailout of Bear Stearns earlier this year and now the plan to prop up the mortgage finance giants Fannie Mae and Freddie Mac with unlimited cash from the federal Treasury.

But even given these financial-political relations, Frank’s blunt defense of inequality is a significant testimony to the state of the Democratic Party and American liberalism.

“Equality is not a good thing.” Such a statement stands in diametrical opposition to a long and central tradition in American political thought that—however much it was violated in practice by chattel slavery and the workings of the capitalist system—held equality to indeed be a “good thing.”

For Thomas Jefferson and the other founders of the American republic, inspired by the revolutionary spirit of the Enlightenment, the equality of man was not just a “good thing” but, as Jefferson wrote in the Declaration of Independence, a self-evident truth.

Abraham Lincoln went further, taking equality not only as a self-evident truth, but as a proposition that had to be proven in bloody struggle, a transcendental goal to be realized by American society in a “new birth of freedom.”

In the depths of a Great Depression, Franklin Delano Roosevelt delivered his “rendezvous with destiny” speech to the 1936 Democratic convention, again invoking these profound political traditions, while flaying the “economic royalists” of Wall Street as the reincarnation of King George III.

“For too many of us the political equality we once had won was meaningless in the face of economic inequality,” Roosevelt said. “A small group had concentrated into their own hands an almost complete control over other people’s property, other people’s money, other people’s labor—other people’s lives. For too many of us life was no longer free; liberty no longer real; men could no longer follow the pursuit of happiness.”

Roosevelt spoke as a highly class-conscious representative of the American capitalist class, who sought to save the system from the threat of social revolution by implementing social reforms and imposing certain restrictions on the predations of his own class. That was in a period when, even in the midst of the greatest collapse of capitalism to that point in history, American capitalism retained immense financial reserves and benefited from the most advanced and powerful industrial base in the world. The decayed stated of American capitalism today, with its massive deficits and shrunken industry, is a far cry from that of Roosevelt’s day. This immense decline in the objective position of American capitalism is the most important factor in the repudiation by American liberalism of any reform agenda.

The inequality outlined by Roosevelt more than 70 years ago has today become even more extreme. It has indeed proven a “good thing” for those at top of the economic ladder, who have amassed obscene fortunes through a vast transfer of wealth from American working people, the overwhelming majority of society.

The share of the national income monopolized by the top 1 percent is now higher than at any time since 1928, not only before Roosevelt, but before Herbert Hoover. Since the end of the 1970s, the top 1 percent has seen its income rise on average by nearly 240 percent, while the majority of the population has seen its real income stagnate or decline.

Yet neither Frank nor any other leading Democrat is sounding an alarm against today’s “economic royalists” or “malefactors of great wealth.” Instead, they present themselves unabashedly as their representatives and defenders.

Frank’s embrace of inequality as a positive good under conditions in which millions are being thrown out of foreclosed homes, seeing their incomes ravaged by soaring gas and food prices and facing the threat of employment is the end product of a protracted and deep decay of American liberalism.

The immense growth of social inequality is at the root of this process. It is to the top 1 percent that Frank and the other leading Democrats are politically oriented. They speak for the privileged social layers—of which they are a part—which have seen their personal wealth balloon at the expense of society as a whole.

The ideal of equality—openly repudiated by the Democrats—is today inseparable from the fight of working people to defend their living standards and basic rights against the attacks being carried out by the corporations and the government.

FREDDIE & FANNIE UNCONSTITUTIONAL BAIL OUT USING WHAT?

FREDDIE & FANNIE UNCONSTITUTIONAL BAIL OUT USING WHAT?

Go To Original

Arthur Henning of the Chicago Tribune said back in 1935, "The New Deal will bring the Communist Party within striking distance of overthrow of the American form of government..." Mark Sullivan of the Buffalo Evening News also expressed alarm in 1935: "The New Deal is to America what the early phase of Nazism was to Germany..."

The nation is awash in fear because they are coming to realize that while they've been buying all the hype from the cabal of gangsters in Washington for decades, reality is now setting in as poverty is slamming millions who used to belong to the middle class. From dangerous lending practices to the derivatives time bomb waiting to go off and inflation getting ready to launch into hyper inflation, the situation is more grim by the week. A financial catastrophe so many have been warning about for decades, it's all coming home to roost. The "perfect storm" as it's being called. The beast is now devouring itself and we the people are caught in their cross fire.

Unfortunately, most Americans haven't been listening. They're either addicted to sports, shopping, porn, drugs or yaking on their cell phones while the world has been heading for financial Armageddon. Oh, they perk up when they hear things like how many new jobs Bill Clinton created! Clinton used to love to brag that he had created 14 million new jobs during his tenure. He did? Sure, and Mr. Jones can thank Clinton for all three of his minimum wage jobs while Clinton supported the destruction of our true and meaningful job bases: ag, industrial and manufacturing. George W. Bush has steadfastly supported the same destructive redistribution of America's wealth into the hands of foreign countries while our people go without - backed up by both Democrats and Republicans.

Still, the American people continue to vote the same incumbents back into office expecting change as they did in 2006. Nothing has changed. We tried to tell people they were being led like cattle to the slaughter house. But, since corporate media has controlled the flow of information in this country for decades, the majority remain in the dark without a clue. The Internet has been a tremendous tool, but not everyone owns a computer and too many continue to play the right vs the left.

Tragically, the majority of Americans have zero knowledge of our monetary and banking systems. Take a good look at the person in front of you at the grocery store, post office or at these rallies during this past primary 'season.' Virtually all of them will tell you our form of government is a democracy and that mother government is the answer to what's bringing us to ruin. Ignorance is not bliss. As the empty bellies in this country grow louder because families have to sacrifice food for gas, dental appointments for gas and other basic necessities, the anger and frustration will build. As their paychecks continue to shrink from more and more heavy taxation, spending will decline and the economy will not grow.

As the American people become more desperate, they will grab at anything thrown out there to save their homes and jobs. Barack Hussein Obama and Juan McCain will continue feeding them gibberish about "fixing the economy." Why, only yesterday, Obama "calls for a new stimulus package to jump start the economy." Who does this huckster think he's kidding?

Since tens of millions have little understanding of how and why we got here, they will grab the lie that sounds the best. Neither Obama or McCain have ever even whispered the only real solution to our monetary and financial crisis. Perhaps they're listening to another blithering idiot, US Treasury Secretary Henry Paulson who said last week: "...the US economy would most likely be stronger at the end of 2008, even as oil prices surged to new records above 146 dollars. "I think there is a very strong possibility that we will be growing at the end of the year. We will have stronger growth at the end of the year than we have right now."

The upside is that millions of Americans do know and understand how we came to this point. They know because, just like me, they learned from individuals like Dr. Edwin Vieira, who has been educating on this issue for over 30 years. The same as Congressmen Louis McFadden (deceased, 1936) and Ron Paul; G. Edward Griffin and too many more to list. We also know that what is being proposed regarding Freddie Mac and Fannie Mae is against the law. The U.S. Constitution does NOT authorize Congress to act as a bank to bail out corporations like Lee Iacocca's Chrysler Corporation, the infamous 'Mexican Peso Bailout' under Marxist Bill Clinton or Freddie and Fannie.

As James K. Hickel, of the Heritage Foundation so accurately pointed out in 1983: "In the case of the Chrysler bail-out, a big chunk of taxpayer money was committed to a shaky and inappropriate venture. Every American became an involuntary and uncompensated partner in a company whose future is still in doubt. On top of this, the bail-out even failed in its purpose. The precedent established is extremely dangerous."

Not only was it a dangerous precedent and in violation of the supreme law of the land, here we are 25 years down the road: "Chrysler to lay off thousands of salaried workers, cut 750 job at Ohio plant. The white-collar cuts come on top of the 13,000 layoffs Chrysler announced in February as part of a massive restructuring plan." GM has also announced huge lay offs coming. This bail out of Freddie and Fannie will not help the local economies where the lay offs happen. The situation will worsen when those workers can't make their mortgage payments and default. The states won't be able to tax at the same rates and will begin to crumble. Services in your state will be cut and those who lose their state, city and county jobs will have a hard time with their mortgages. Add the number of seniors already dependent upon the state for their very existence, including medical care and the increasing numbers of seniors filing for bankruptcy and you have a financial sledge hammer coming down on the states that's going to get ugly.

As for the Mexican Peso bail out, millions of us demanded Congress stop such lunacy, but you see, it was tied to NAFTA. The same NAFTA both the Republicans and Democrats have allowed to remain in effect for over 15 years even though it is clearly unconstitutional and has killed MILLIONS of good jobs. An excellent analysis can be found here: The Peso Crisis and Cause. The U.S. Constitution was again trashed and too few cared.

On July 16, 2008, I happened to catch a segment with Judge Andrew Napolitano on FAUX News Network's afternoon session hosted by the affable, but ignorant, Shepard Smith. Napolitano patiently tried to explain to Smith why Congress has NO authority to bail out any of these private corporations. Smith looked perplexed, as usual. Andrew Napolitano is one smart man who isn't afraid to call it like it is and would have made a first rate Attorney General under a Ron Paul presidency. Add Dr. Edwin Vieira as Secretary of the Treasury and we would have seen the first steps taken towards ridding America of her shackles to the unconstitutional "Federal" Reserve Banking System.

What Smith didn't seem to grasp, the looting of the American people once more to save stock holders of these corporations -- just what is going to be used for this latest swindle of the people's purse? The U. S. Constitution does not authorize Congress to act as a bank or loan guaranty agency. All the cable network gas bags and political pundits are weighing in on this financial tsunami with one band aid or another. Of the dozens of columns and news items I've read in the past couple of weeks, I believe the one that best sums it up is by Lew Rockwell, Fannie, Freddie, Fascist:

"Place the blame not only on the banks, but also on the institutions that are siphoning off their liabilities for irresponsible behavior, and that would be Freddie and Fannie. And who created these? Travel back in time to the New Deal. Here is an article about the creation of Freddie Mac. And here is another about Fannie Mae.

They were created by FDR in 1938 to fund mortgages insured by the Federal Home Administration. They were used by every president as a means to achieve this peculiar American value that every last person must own a home, no matter what. So they were given the legal permission to purchase private mortgages and make them part of their portfolios. Still later, under LBJ and Nixon, they became public companies and sold stock."

These crooks in Washington want to rescue the stock holders of Freddie and Fannie to the tune of ONE TRILLION dollars. That's just what these two entities need right now. Who knows what the final numbers will be? We have to remember that close to another million homes will go into foreclosure by the time the next puppet president is sworn into office. What will they "need" a year from now? Where will this ONE TRILLION "dollars" come from? July 15, 2008: Bernanke: Economy faces 'numerous difficulties'

"Bernanke's testimony comes just two days after the Fed and the Treasury Department came to the rescue of mortgage giants Fannie Mae and Freddie Mac, offering to throw them a financial lifeline. The Fed chief was later joined by Treasury Secretary Henry Paulson and Securities and Exchange Commission Chairman Chris Cox, who were summoned to detail the rescue plan. The two companies hold or guarantee more than $5 trillion in mortgages -- almost half of the nation's total. The Bush administration is asking Congress to temporarily increase lines of credit to Fannie and Freddie and to let the government buy their stock. The Fed has offered to let the companies draw emergency loans."

Where in Art.1, Section 8, of the U. S. Constitution does it authorize the federal government to buy up stock in any corporation and reward stockholders for their gross mismanagement? Where is the "FED" going to get this ONE TRILLION "dollars"? Why, they're going to create it out of thin air - the magical money machine! As I write this column, Congress has run this country into a $9,498,511,404,143.63 debt. That's just under $9.5 TRILLION "dollars." How many Americans know what "debt ceiling" means?

March 22, 2008: Congress Raises the Debt Ceiling To Accommodate Bush's Legacy

"The House fiscal 2009 budget, which passed last week, raises the borrowing authority of the United States from $9.815 trillion to $10.2 trillion, an increase of $385 billion dollars. The Senate, passing its own version of the 2009 budget, did not raise the federal borrowing authority, but does expect to spend $3 trillion, with a projected deficit from $340 to $366 billion. Some estimate that the Treasury Department will hit the $9.815 ceiling limit shortly after the November elections, which will be no surprise to anyone. The two chambers will have to reach a compromise in the next few weeks. The big winners in all of this are the foreign entities the U.S. will borrow from in an effort to finance the expenditures."

Increase lines of credit, Mr. Bush? What you're asking is to further enslave my daughter who already works two jobs just to keep afloat, to save these stock holders and entities that should never have been created in the first place. If this ONE TRILLION "dollars" created out of thin air is added to the national debt, it will exceed the current 'debt ceiling' as the interest accumulates; Congress will have to raise it again. Counterfeit U.S. Senator, Chris Dodd wants everyone to shut up about Freddie and Fannie. Could it be because this incompetent blowhard is the Chairman of the U.S. Senate Committee on Banking, Housing and Urban Affairs that recently passed another rape of we the people:

July 11 (Bloomberg) -- "The U.S. Senate passed a $300 billion plan to help thousands of Americans keep their homes and tighten regulation of Fannie Mae and Freddie Mac in an effort to ease the worst housing slump since the Great Depression. The legislation, approved 63-5 today, would let an estimated 400,000 struggling homeowners avoid foreclosure by refinancing their subprime mortgages into fixed-rate loans backed by the government. The measure also offers tax incentives to potential home buyers and sets aside $4 billion to help communities buy foreclosed properties."

"Backed by the government" means if they default again, we the people are on the hook in higher taxes for all this borrowed paper. There isn't any $300 BILLION in the U.S. Treasury. It's empty and overdrawn almost $9.5 TRILLION dollars. That $300 BILLION will have to be borrowed from the private "FED" and the interest will be slapped on our backs. What future is there for our children and grand children except as slaves to the powerful? Does anyone see the lunacy here?

Increase lines of credit, Mr. Bush? No, increase debt. Rearranging massive debt with more massive borrowing (debt). Does anyone see the lunacy here? The truth is that you cannot have a "strong, robust economy" that is based on debt because debt is not prosperity no matter how much clever word smithing is being pumped out for public consumption. A nation's monetary system cannot and will not survive under a fiat currency such as we've had shoved down our throats since 1913. This is why so many own gold. Yes, you should have a good back up food system, but when paper money is worthless, no one turns down gold.

Change cannot happen with the same incumbents who have approved this fleecing of we the people as well as all the other unconstitutional legislation coming out of CON-gress for decades. Unless you want to be little better than oxen to the yoke while Congress takes care of the bankers, help kick them out in November. This means getting out and working for a candidate and if machines and/or scanners are used, a hand count must take place immediately because any constitutional candidate running for high level offices will lose. Listen to the voice of experience.

Learning Links:

1 - Be a part of history. This is the real new print media
2 - Are Monetary & Banking Crises Inevitable in the Near Future? (March 2005)
3 - Will The Coming Monetary Crisis Provide Opportunity For Reform? (March 2005)
4 - The Shearing is Nearing (Feb. 2007)
5 - 78% Income Tax Rate Hike?
6 - July 10, 2006. Congress Ignoring Looming Financial Catastrophe
7 - October 4, 2007. Congress will do nothing to stop coming financial disaster
8 - The Final Globalization of The US Banking System
9 - Mortgage Meltdown. Interest rate 'freeze' - the real story is fraud
Bankers pay lip service to families while scurrying to avert suits, prison
10 - Will you out live your money?
11 - Congressman McFadden brings formal charges against Federal Reserve