Wednesday, February 20, 2013

There’s Still a Foreclosure Crisis

As Many as 90% of Foreclosed Properties Held Off the Market 

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“I still worry about further price declines. There’s no really concrete reason for an upturn now. A recent survey of home buyers didn’t find any sudden change in optimism and there seems to be a souring on the idea of home ownership. That might reverse again as the crisis ends, but I suspect that it’s not easily reversed because the whole idea of proudly owning a home has been tarnished … That’s why I think home prices may still go down.” 

-Robert Shiller, co founder of S&P Case-Shiller Home Price Index
There’s an article on the AOL Real Estate blog that explains much of what is happening in today’s housing market although the piece was written back in July 2012. The article, which was written by journalist Teke Wiggen, was widely circulated when it first appeared, but has since been swept down the memory hole to make room for the nonsensical blabber about a “housing recovery”. Even so, it’s worth reviewing the content of Wiggin’s extraordinary piece since the facts are just as relevant today as when he first wrote them 7 months ago. Here’s a clip from the article titled “‘Shadow REO’: As Many as 90% of Foreclosed Properties Held Off the Market, Estimates Suggest”:
“As many as 90 percent of REOs are withheld from sale, according to estimates recently provided to AOL Real Estate by two analytics firms. It’s a testament to lenders’ fears that flooding the market with foreclosed homes could wreak havoc on their balance sheets and present a danger to the housing market as a whole.
Online foreclosure marketplace RealtyTrac recently found that just 15 percent of REOs in the Washington, D.C., area were for sale, a statistic that is representative of nationwide numbers, the company said.
Analytics firm CoreLogic provided an even lower estimate, suggesting that just 10 percent of all REOs in the country are listed by their owners, which include mortgage giants Fannie Mae and Freddie Mac as well as the Federal Housing Administration.” (“‘Shadow REO’: As Many as 90% of Foreclosed Properties Held Off the Market, Estimates Suggest”, AOL Real Estate)
It’s worth noting, that CoreLogic and RealtyTrac are two of the most respected names in the industry, in fact, Calculated Risk, the nation’s Number 1 economics blog, frequently uses data from CoreLogic to make its point that prices have “bottomed” and that housing is gradually recovering. Here’s more from the article:
“… if lenders turn their REO release valve to full blast, the deluge of foreclosures cascading onto the market could plunge the country into a recession, said Thomas Martin, president of consumer advocacy group Americas Watchdog.
“If they let the dam essentially break. It could be a catastrophic disaster for the U.S. economy,” he said, predicting that some major banks would fail and home prices would nosedive by 20 percent.
That doomsday scenario has many industry professionals supporting lenders’ tactics of holding onto most of their REOs. Otherwise, they would be “causing the floor to fall out from underneath the entire market,” Faranda said. He added that banks don’t have the manpower to push the paperwork required to put all their foreclosures on the market.” (“‘Shadow REO’: As Many as 90% of Foreclosed Properties Held Off the Market, Estimates Suggest”, AOL Real Estate)
So, the banks are deliberately keeping the majority of distressed homes “off market” in order to keep prices artificially high, fleece another generation of credulous buyers, and effect the appearance of a revitalised and soaring housing market. Now–tell me–which part of this equation even vaguely resembles a “free market”? It’s all central planning by a criminal bank cabal that controls all the levers of state power lock, stock and barrel.
Even so, it looks like John Q Public has swallowed this latest load of public relations malarkey judging by data that shows that sales of new and existing homes are gaining pace. Ahh, but looks can be deceiving. A closer inspection of the data suggests that it’s not Mr. Public who’s buying all those homes, but deep-pocket speculators who’ve piled into the market seeking short-term gains. Check this out from Bloomberg:
“Transactions involving investors jumped 75 percent in November from a year earlier in 25 metropolitan areas tracked by Radar Logic Inc. It’s a market that could total 12 million homes, JPMorgan analysts led by Anthony Paolone wrote in a note last month.
Blackstone, the largest U.S. private real estate owner and the only firm with more homes than Hughes, has spent $3 billion on rentals, Jonathan Gray, Blackstone’s global head of real estate said today at a Credit Suisse Financial Services Forum in Miami. Blackstone said last month it spent $2.7 billion on 17,000 properties, accelerating purchases as prices rose faster than anticipated…
The New York-based firm, which started buying single-family houses last year, has bought so quickly it’s “warehousing” more than half of the inventory as it completes purchases, renovates and rents the properties, Gray said in January…
Whether the single-family rental market grows from “a $10 to $20 billion market to a $100 to $200 billion market” will depend “on how successfully institutional investors are able to execute over the next few years,” Bordia said.” (“Billionaire Hughes Chasing Blackstone as U.S. Rental King”, Bloomberg)
Get the picture? It’s a speculator feeding frenzy featuring some of Wall Street’s biggest names all plunging into the sharkpool at the same time. The only thing missing from this bizarre mix is the traditional young couple looking to partake in the American dream by buying their first home or the move-up buyer who wants to use the equity he’s built up over the last decade to buy that 3-bedroom Tudor in the country. Normal “organic” buyers have vanished from the marketplace while ravenous speculators are grabbing everything that isn’t bolted to the floor. Naturally, that’s pushed prices higher while creating the illusion of a thriving market.

But what do these investors really have in mind? Are they planning on becoming responsible long-term landlords committed to serving the needs of the community after the devastation they caused by crashing the financial system in 2008?
In your dreams! Here’s more from Bloomberg:
“New York-based JPMorgan, whose private bank oversees $877 billion, started pooling investments from its clients in mid- 2012 into a partnership to purchase distressed properties, betting that prices will rise over the next several years and provide investors with income from renters along the way, said Lyon…
The goal is to sell the houses within three to four years in one of three ways: through an initial public offering of a real estate investment trust, a sale to an existing REIT or to an institutional buyer such as a pension fund, Lyon, who’s based in San Francisco, said. Clients will receive a share of any price appreciation depending on the size of their investment.” (“JPMorgan Joins Rental Rush For Wealthy Clients: Mortgages”, Bloomberg)
There you have it. The banks are only going to hang-around long enough to see prices surge, then they’re going to dump their inventory back on the market so Mom and Pop can see their equity go down the drain for the second time in a decade. Nice, eh? Speculators aren’t interested in building a strong and sustainable housing market, what they’re looking for is a sharp jolt to quarterly profits, so they can nab that new Maserati Gran Tourismo for those long drives to the Hamptons.

And there’s another part of this story that may seem only remotely connected to the “vanishing REO inventory”, but it has a profound effect on the market all the same, that is, the fact that the banks are still cooking the books to make it look like they’re in better shape than they really are. If these fundamentally-insolvent financial institutions had been taken over and nationalized when the government had the chance in 2009, then their stockpile of toxic assets and non performing loans would have been processed and sold via a gov entity like the Resolution Trust Corporation (RTC) which helped to liquidate bank-owned assets following the savings and loan scandal. That means, housing prices would have found a real bottom by now, and the market would be experiencing positive growth. (unlike the fake investor-fueled growth we see now) But since the TBTF zombies were propped up by trillions in public funds, bailouts, handouts, subsidies and other forms of corporate welfare, the problem persists to this day. Get a load of this from Floyd Norris at the New York Times:
“The board that sets American accounting rules moved on Wednesday to substantially reduce the use of market values in financial statements. The move, if adopted, would give banks more freedom to value financial assets as they deem appropriate.
The proposal by the Financial Accounting Standards Board, contained in what is called an exposure draft, would also end the counter intuitive practice of a bank’s profits rising simply because its credit has worsened, and then falling when the credit recovers…
Under the proposed new rules, which are unlikely to become effective before 2015, it would no longer matter whether a particular bank asset was a bond or a loan. Either way, if the bank intended to keep the asset until it was paid off, it would be carried on the books at cost, without rising or falling in value when market prices changed.” (“Proposal Gives Banks More Freedom to Value Assets”, New York Times)
How do you like that? So, the banks are not only allowed to assign fake prices to their assets, they can also report an increase in profits when their credit deteriorates. Such a deal! In other words, if a mortgage-backed security (MBS) that’s packed with subprimes and liar’s loans has plunged to $.30 cents on the dollar, Mr. Banker can keep it on the books at 100 cents on the dollar, thus, preserving the confidence of his thoroughly-hoodwinked shareholders. This is just another illustration of how the banks have corrupted the regulatory system to the point where no one has the foggiest idea of what they’re really worth.

So, how does all this accounting hanky-panky connect with the fact that the banks are keeping 90% of foreclosed properties off the market?

It just explains how regulators have teamed up with the banks to keep the “housing recovery” charade in place. If the banks were forced to write-down the losses on their stockpile of non performing loans and defunct mortgages, then more REOs would be pushed onto the market and prices would fall sharply. But because the banks are allowed to lie, the housing depression drags on. That’s not only bad for the economy, it also puts the public at risk of another crisis because, as the Wall Street Journal notes:
“… investors will remain reliant on banks’ own views of the worth of their assets. Those judgments proved seriously flawed during the financial crisis and left many with insufficient capital. Taxpayers, who as a result were called upon to bail out numerous institutions, also are left more vulnerable.” (“Banks Have Their Way With FASB”, Wall Street Journal)
Allowing the banks to lie puts everyone at greater risk. Unfortunately, that doesn’t matter to Obama and his cohorts at the Fed. They’ve done everything in their power to preserve black box banking, an opaque, criminal business model built on deception, avarice and theft, the banker’s trifecta.

Arrested for Your Politics in America? It's Already Happening

In the US, due process - one of the defining features of a democratic judicial process - continues to be badly bludgeoned: Obama fights tooth and nail to push through NDAA [2], which would allow indefinite detention of US citizens, and the definition of terrorism has expanded its unwieldy scope, casting a widening net that ensures more and more people are captured in its snare.

The US has pursued "domestic terrorism" by practicing pre-emptive prosecution, that is, going after individuals who have committed no crime but are alleged to possess an ideology that might dispose them to commit acts of "terrorism". Maintaining that it can -and should - be in the business of divining intent, the government decimates crucial elements of the US justice system.

Thus, in cases where terrorism is charged, prosecutors need not prove guilt beyond a reasonable doubt. Rather, only the defendant's potential for committing a crime need be established in order to convict.

Consider the case of Tareq Abufayyad [3], a young Palestinian man and recent college graduate who was detained at San Francisco International Airport when he was on his way to unite with his family, all of them naturalised citizens of the US. Tareq was deemed inadmissible merely on the grounds that he had the potential to become a Hamas-operative.

FBI Agent Robert Miranda, the lead investigator into the government's case against the Holy Land Foundation, argued before the Immigration Judge presiding over Tareq's case that, because he was a well-educated man from Gaza, a strong-hold of Hamas, Tareq would be "attractive to Hamas" as a future recruit.

It's not hard to understand why David Cole, a professor of law at Georgetown University, concluded [4] pre-emptive prosecution as an "inevitably speculative endeavour".

Project Salam, an organisation devoted to monitoring and documenting the US Justice Department's prosecution of terrorism cases, points out that the logic of pre-emptive prosecution - enthusiastically embraced after 9/11 - was derived in significant part from Dick Cheney's infamous "One Percent Doctrine". Ron Suskind explained Cheney's reasoning [5]:

"Even if there's just a 1 percent chance of the unimaginable coming due, act as if it is a certainty…. Justified or not, fact-based or not, 'our response' is what matters." 
Commenting on the impact Cheney's policy had on the role of evidence in judicial proceedings, Suskind writes:

"As to 'evidence', the bar was set so low that the word itself almost didn't apply." 
Terrorism statutes

For the past 12 years, this wanton policy has been wielded primarily against Muslims in a frenzy of cases brought against US citizens and others in immigration, civil and criminal courts, with anguished and predictable devastation wrought on individuals and their families.

In a telephone conversation with me, however, Downs noted that this policy has recently been extended to apply to those who hold other "ideologies", namely leftists and anarchists. Downs pointed to a handful of cases, including the "Cleveland 5", "RNC 8" and "Nato 3" [6] that suggest the direction in which the policy of preemptive prosecution is going. "If they are sufficiently 'Muslim', they are sufficiently 'predisposed'," writes Steve Downs, civil liberties lawyer and founder of Project Salam, in Victims of America's Dirty Wars [7].

In the wake of 9/11, many states - including Illinois, New York, New Jersey and Oklahoma - passed terrorism statutes that included their own variations on the definition of terrorism. However, because it is the federal government that primarily handles cases of terrorism, states have rarely employed these laws.

Last year, for the first time, Illinois deployed its own statute against terrorism. Illinois' terrorism law states [8]:

"A person commits the offence of terrorism, when with the intent to intimidate or coerce a significant portion of a civilian population; he or she knowingly commits a terrorist act." 
The language used is vague, opaque and clearly lends itself to a chillingly broad landscape of prosecutorial action. But most significant, the statute does not require that an unlawful act be committed in order for a charge of terrorism to be brought against an individual in an Illinois court.

Indeed, civil rights lawyer Michael Deutsch believes, "The law could theoretically be used against labour strikes, acts of civil disobedience, demonstrations, and so on." In other words, acts that should be protected under the First Amendment are not exempted from the definition of terrorism.

We have already seen how the domestic front of the "War on Terror" has effectively turned lawful acts, like contributing to charities [9] in the Middle East, into illegal "material support" of Foreign Terrorist Organisations. Staggering attacks on democracy and liberty continue as a growing list of activities that are framed as terrorism.

The only time the Illinois statute has been used was against a group of Occupy activists.

On May 16, 2012, days before the NATO summit was scheduled to take place in Chicago, the local police raided an apartment [10] and arrested nine Occupy activists who had come together from around the country to protest the convention.

Over the next few days, all but three were released. Those who remained behind bars were: Brian Church, 22, and Brent Betterly, 24, from Florida, and Jared Chase, 27, from New Hampshire.

On May 19, they were indicted under the state's anti-terrorism statute and charged with conspiracy to commit terrorism and possession of explosives.

After announcing the charges, the State's Attorney, Anita Alvarez, released a document to the press that introduced the three young men as "self-proclaimed anarchists" and "members of the "'Black Bloc' group", and sketched out the plans they had been "conspiring" against the city of Chicago.

What the press release did not mention is that the group had been infiltrated and coached by two undercover police officers named "Gloves" and "Mo".

Definition of terrorism

Utilising one of the classic tactics perfected in time-honoured counter-intelligence operations used to intimidate, threaten and entrap people engaged with political groups out of favour with the government (from the Black Panthers, environmental protection groups, and Communists to protesters of the Vietnam war and others), the cops convinced the young men [11] to concoct Molotov cocktails and, as soon as they did, phoned into police headquarters - triggering the raid.

After the charges were announced, Deutsch, the lawyer representing the three men, told the press [12] that the case was "even worse than entrapment".

On the phone, Deutsch explained to me that this case fits within "the whole policy of pre-emptive prosecution, of creating the crime and then solving it".

Entrapment is consistently employed in these cases. However, where the presence of entrapment may have seen a case thrown out in the past, the logic of pre-emptive prosecution arms the state with the ability to justify its actions and successfully circumvent that defence, as noted by Project Salam:

"When the defendant claims as a defence to have been entrapped in a crime manufactured by the government, the government counters with the claim that the defendant was 'predisposed' to commit the crime, which would negate the entrapment defence." 
On January 25, the Nato 3's lawyers filed a motion in the Circuit Court of Cook County, Illinois, challenging the constitutionality of the state's terrorism law. If the court agrees with them, the defendants will be charged with possession of explosives but will no longer face a 40-year prison sentence for terrorism.

While the Illinois court should find the law unconstitutional, the truth remains that the nebulous but potent charge of terrorism has been used to systematically curtail justice. In the words of Glenn Greenwald:

"It's just a manipulative slogan legitimising all forms of American violence against Muslims and delegitimising any acts meaningfully impeding US will." 
As a New York Court of Appeals decision [13] admitted last December, there is no real definition of terrorism beyond our "collective understanding" of it. But in the term's meaninglessness lies its limitless power to undermine justice everywhere.






















US Training of Mexican Troops Has Escalated in Step With Mexico’s Murder Rate

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US training of Mexican military forces spiked in fiscal years 2010 and 2011, coinciding with a sharp rise in drug-war homicides in Mexico, an analysis of records made public under the Foreign Assistance Act show.
The training in those two years, funded by the US Department of Defense, and to a lesser extent by the US Department of State, covered a wide range of military skill sets and involved hundreds of training programs offered in the US to Mexican forces as well as dozens (at least 60) provided inside Mexico.

For example, in Mexico City during that two-year period, the US military provided to Mexican security forces training in, among other tactics, “asymmetrical conflict,” “anti-terrorism,” and “open-source intelligence” gathering. US military training also was provided in other parts of Mexico, including the state of Campeche, where infantry, marksmanship and intelligence programs were offered to Mexican troops; and in Chiapas, in fiscal 2011, infantry training was provided to Mexican Marines over two-week periods in April and September.

The latter training programs might be considered particularly sensitive for Mexican politics, given the Mexican state of Chiapas is home to the Zapatista Army of National Liberation (EZLN, in its Spanish initials).

The Zapatistas are a rebel indigenous group governing more than 1,000 rural communities that rose up in arms in 1994. However, since peace talks were initiated in 1995, the Zapatistas have not fired a shot and have converted to peaceful and civil resistance.

In the 1990s, under Mexican President Ernesto Zedillo, a member of the PRI Party, an unsuccessful, violent counter-insurgency campaign was waged against the Zapatistas that involved the use of both the Mexican military and civilian paramilitary forces — as part of an effort to destroy the indigenous movement and its autonomous communities.

On another sensitive front for Latin American/US relations, Foreign Assistance Act records reveal that US military training also was provided to Mexican soldiers in fiscal 2010 and 2011 by the US Department of Defense’s Western Hemisphere Institute for Security Cooperation (WHINSEC). The Institute was formerly the School of the Americas, which, in past decades, provided training to some of the most notorious violators of human rights in Latin America.

WHINSEC, now reportedly reformed and sensitive to human rights, offered at least 10 different training programs (some multiple times) to Mexican troops in fiscal 2010 and 2011 in subjects such as “counter-narco-terrorism,” “joint operations” and “counterdrug ops,” according to data provided to Congress under the requirements of the Foreign Assistance Act.

US officials interviewed by Narco News contend that any correlation between increased US military training and rising homicide rates in Mexico is nothing more than “anecdotal." They argue further that, based on the US military’s internal “classified” assessments, there is no evidence that Mexican troops trained by the US are subsequently being drafted into organized crime rings or otherwise involved in narco-trafficking corruption. In fact, a DoD official actually argues that the homicide rate in Mexico could likely be reduced if there were a more “persistent” use of military force to counter the “cartel” violence in affected regions in Mexico.

However, the correlation between US training and Mexico’s homicide rate remains striking, and there is public-source evidence pointing to significant corruption within Mexico’s military that arguably could exploit US military training. Also, the trajectory of the drug war to date makes clear that the more Mexican security forces attack criminal organizations, the more violence those groups commit, including against civilians, to protect their markets and turf from both the government and rival organizations.

The hard-nosed military strategy pursued by former Mexican President Felipe Calderón in prosecuting the drug war, as a result, has failed to adequately account for the blowback on the civilian population of Mexico, some critics charge.

Mexico’s new president, PRI Party member Enrique Peña Nieto, is promising a different course in the drug-war conflict, recently announcing plans to direct a considerable amount of funding, $9.2 billion (US dollars) this year, to social programs — though he offers few specifics. Peña Nieto also is promising to put an emphasis on aggressively pursuing street-level crime (extortion, kidnapping, gang violence) as opposed to targeting narco-trafficking “kingpins” — the latter a strategy pursued at great cost by his PAN Party predecessor.

But is Peña Nieto’s drug-war strategy really that much different than Calderón’s, or is his policy rhetoric simply a mask concealing a much-less innovative plan — an approach already being pursued by the Mexican security forces, with US help, for years now?

The Numbers

In fiscal 2006, ended Sept. 30 of that year, just prior to Calderón assuming the presidency in December, total funding for US training provided to Mexican troops totaled $1.3 million. In fiscal 2010 (which began Oct. 1, 2009), that figure jumped to $12.6 million; and a year later, for fiscal 2011 (the latest year for which finalized figures are available), US funding jumped to $15.2 million.

Likewise, the total number of Mexican security forces trained annually by the US military exploded from 632 in fiscal 2006 to 2,206 in fiscal 2011, according to figures released under the Foreign Assistance Act.

Homicides in Mexico totaled 10,452 in 2006, according to INEGI (the Mexican State Statistics Agency). In 2009, that number jumped to 19,803; and then to 25,757 in 2010; in 2011, the number rose again, to 27,213.

Though the uptick in Mexican homicides began in 2008, within a year of then-President Calderón’s deploying the Mexican military in large numbers in the drug war, the three-year period (2009-2011) in which Mexican homicides hit a zenith during his presidency clearly tracks closely with the steep increase in US military training provided to Mexican troops over that same period.

That training is overseen by US Northern Command (Northcom), a DoD branch created in 2002 that is responsible for US homeland defense as well as security cooperation efforts with The Bahamas, Canada and Mexico.

Michael Kucharek, a spokesman for Northcom, explains that the Mexican government ultimately controls the US military training provided to Mexico, whether funded by DoD or the State Department.

“The way it’s done is that it’s up to the Mexico to decide what training we [the US military] provide,” Kucharek says. “We provide them with a list [of options], and the Mexican military decides what they want.”

Kucharek adds that “we [DoD] do not see the training as counter-productive” and stresses that any perceived relationship between US funding for military training for Mexico and that nation’s homicide rate is “anecdotal.” He insists there is no real evidence to show that the US-trained Mexican soldiers are joining the ranks of criminal groups and committing murders.

“We do not see it that way,” he says. “We think journalists are making a leap (when they claim Mexican soldiers are joining organized crime in large numbers). Just so you know, we have our own way to check on those dynamics. … I think what is being taken as fact (with respect to Mexican soldiers trained by the US later being linked to narco-trafficking) may not, in fact, be fact.”

Kucharek, in essence, says the blame for Mexico’s huge homicide problem (more than 120,000 murdered and some 25,000 disappeared over Calderón’s term in office) has more to do with inadequate military force.

“It is a war among cartels who themselves are under increasing pressure [by Calderón’s military strategy],” he says. “Where it is not working, it is because of the lack of persistent force in some areas of Mexico to combat it [narco-violence].

“[New Mexican President] Peña Nieto now wants to sink more money into social programs as an alternative to the lure of the cartels,” Kucharek adds. “We’ll see if that works, but expect military-to-military and security cooperation [between the US and Mexico] to continue.”

Kucharek’s bullishness on the Mexican military and the benefits of US training, though, doesn’t seem to square with the facts on the ground in Mexico that are not classified. A January 2013 report by Human Rights Watch points out that between January 2007 and April 2012, the Mexican military opened some 5,000 investigations into human rights violations carried out by Mexican soldiers against civilians, yet “military judges sentenced only 38 military personnel for human rights violations.”

And corruption within the Mexican military is not a low-level problem, either. Last year, a Mexican Army general and three retired officers (two of them former generals) were arrested and accused of having ties to narco-traffickers. But Mexican generals being accused of links to narco-traffickers is nothing new. In the mid-1990s, Mexico’s drug czar, a former Army general, also was accused, and later convicted, of providing protection to the head of the Juarez Cartel.

Over the course of the Calderón administration, more than 16,000 Mexican soldiers were convicted of desertion — a figure that does not include the tens of thousands of additional soldiers who deserted, and were not caught, but by the mere act of deserting are now branded criminals. How do you think those individuals are now making a living?

And then we have the Zetas, a fierce organized crime group operating in Mexico that is highly skilled in paramilitary tactics — such as intelligence gathering, surveillance and marksmanship. The Zetas were started by former Mexican special-ops soldiers who were assisted by members of a Guatemalan special-forces unit, the Kaibiles, according to a DEA Powerpoint presentation obtained by Narco News previously.

The Guatemala Human Rights Commission has this to say about the Kaibiles:

While former members of Guatemala’s Elite Special Forces Unit (Kaibiles) are finally being sentenced for human rights atrocities committed during the 36-year internal armed conflict, Guatemala continues to train Kaibiles and their role is expanding to include combating organized crime.

Despite a congressional ban restricting direct funding to the Guatemalan army due to its involvement in brutal violence, the United States continues to support, train, and coordinate with the Kaibiles.

So it seems the path between US military training of Mexican security forces and their exploitation by organized crime in Mexico may not always be direct, but it certainly can’t be declared nonexistent either.

“My take is we made a huge investment of resources in Mexico to support Calderón’s [drug-war] policy that did not work and only increased the bloodshed, and put innocent people in the crossfire,” says Adam Isacson, senior associate for regional security policy at the Washington Office on Latin America — an independent, nongovernmental group focused on shaping US policy to support human rights and social justice in Latin America. “[The Calderón administration] did not reform [Mexico’s] security services, but just put them into the street [to fight the drug war]. And we helped to supply the equipment [not measured in the Foreign Assistance Act figures] and training for that. Calderón should have had a different policy that took into account civilians more.”

The Laboratory

Although recently empowered Mexican President Peña Nieto is promising a new course in Mexico’s approach to the drug war, there are already signs that it won’t do much to change the underlying dynamics of the carnage in Mexico’s cities and rural communities.

On one front, the Peña Nieto administration plans to take a page out of the lessons learned from the US war in Vietnam by making an effort to reduce and control media coverage of drug-war violence and death. According to Mexican reports, he is urging the media to make an effort to find an “equilibrium” between bad and good news, and his administration also is tightly controlling the perp walks, information and data released about the drug war.

“What Peña Nieto is doing is ... sweeping violence under the rug in hopes that no one notices,” security expert Jorge Chabat said in an interview with the Associated Press. “It can be effective in the short term, until the violence becomes so obvious that you can’t change the subject.”

Peña Nieto also plans to stand up a paramilitary force, composed of ex-soldiers, that could eventually be some 40,000 strong. Peña Nieto also hopes to created a single, consolidated national police force. With these tools, he says, the Mexican military can be replaced as the primary enforcer of security in the drug war in Mexico, and the battle can be refocused from hunting down the top narco-capos to stemming street violence and other crimes against the community, such as extortion and kidnappings.

But is this focus on street-level violence really anything new?

A trail of email correspondence involving a Mexican diplomat obtained by the secret-spilling organization WikiLeaks seems to show that the Mexican military has been focused on “surgically” attacking street-level crime since at least 2009, when it made Ciduad Juarez, a Mexican border city that abuts El Paso, Texas, a laboratory for the strategy.

The description in the emails obtained by WikiLeaks of the Mexican diplomat, codenamed MX1, reveals that he doubled as a confidential source for a US-based private intelligence firm called Stratfor. The details revealed about MX1 via his email correspondence with Stratfor match the publicly available information on Fernando de la Mora Salcedo — a Mexican foreign service officer who studied law at the University of New Mexico, served in the Mexican Consulate in El Paso, Texas, and was later stationed in the Mexican Consulate in Phoenix (though, sources indicate, he appears to have since been recalled to Mexico).

MX1, in one of the emails released by WikiLeaks, describes the Mexican military’s mission in Juarez in 2009 (the very year Mexico’s homicide rate began to explode) as involving a special-operations and intelligence-unit component that was embedded within the larger Mexican military force. These special units were charged with carrying out “surgical strikes” against narco-trafficking “cells” and street criminals.

An even more troubling revelation in the MX1 email trail is what the Mexican diplomat describes in a July 13, 2009, email as a “change in strategy” in the Mexican troop deployment in Juarez — a change that refocused the mission on a more “modest goal.”

From a July 13, 2009, MX1 email correspondence:

The larger picture of the change in strategy has to do with a more modest goal. As the major cartels have all guaranteed routes into the US, the addiction problem [in] Juarez is causing most of the violence. About 80% of kidnapping victims that survived that you talk to mention that their captors seemed to be high on something.

Therefore, a major component of the [Mexican military] strategy will be to prevent kidnappings and the like by directing efforts against drug addicts and gangs. Gangs are presenting major problems because they are pissed off at each other and their cartel bosses because they are not getting what they were promised. The more modest goal of combating the social violence is supposed to give some breathing room to the [cartel] bosses so that they can issue orders to calm things down. [Emphasis added.]

Is the strategy outlined by MX1 really that much different from Peña Nieto’s plan to essentially back off pursuit of the leadership of the “major cartels” and instead attack street-level crime — with the help of former Mexican soldiers re-branded as a paramilitary force. If anything, utilizing paramilitaries, instead of the military, may open the door to even more deadly consequences for an even larger number of innocent citizens and purely political targets. Could that be why, in part, Peña Nieto’s administration is now so intent on controlling the media message about the drug war?

Time will tell.

But one thing is clear. US officials do not appear poised to slow down the provision of military training — special-operations, intelligence and infantry-readiness training, etc. — that is necessary for Peña Nieto to accomplish his drug-war objectives.

Peter Valasco, spokesman for the US State Department, stated the following in an email to Narco News:

When President Obama met with then President-elect Peña Nieto on November 27 [2012], the two leaders reiterated our shared commitment to working together to meet our common citizen security and rule of law challenges. The United States remains committed to working in partnership with Mexico, and the administration of Mexican President Enrique Peña Nieto, to address our shared security challenges. 

We commend the government and people of Mexico for their courage and commitment to combat criminals and corruption while strengthening institutions. The government has taken major steps, including professionalizing its police forces; instituting anti-corruption initiatives; and establishing long-term judicial reforms.  We are committed to working in partnership with Mexico and look forward to advancing common goals for both our nations in the coming years with the Peña Nieto administration.

The next experiment in the drug-war laboratory is set to unfold. And it seems Mexico’s civilian population still finds itself in the Petri dish.

Stay tuned….

Brennan Refuses To Rule Out Drone Assassinations Within The US

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In written responses to questions submitted by the Senate Intelligence Committee, John Brennan, the Obama administration’s nominee for director of the Central Intelligence Agency (CIA), refused to rule out drone assassinations of American citizens on US soil. The committee on Friday released a declassified version of Brennan’s responses.
Brennan, currently President Obama’s chief counterterrorism adviser, is the architect and director of the program of drone missile assassinations that is run out of the White House with the personal participation of Obama. Asked squarely, “Could the Administration carry out drone strikes inside the United States?” Brennan replied, “This Administration has not carried out drone strikes inside the United States and has no intention of doing so.”
This is what is known as a non-responsive answer. It is reasonable to assume that if the answer was “no,” Brennan would simply have written, “no.” Instead, in order to avoid a giving straightforward “yes,” he answered a different question than the one that was asked.
Brennan’s answers to the written questions make clear that there was nothing accidental about his refusal to rule out drone assassinations within the United States at his February 7 confirmation hearing before the Senate committee. It was, rather, an expression of a deliberate policy adopted by the Obama White House and the military/intelligence agencies.
When asked at the hearing whether he believed that the Obama administration could carry out drone assassinations on US soil, Brennan responded that he was determined to “optimize transparency on these issues, but at the same time, optimize secrecy and the protection of our national security.” He thus completely evaded the question, and no member of the committee, Democrat or Republican, pursued the matter further.
The very real threat of presidential assassinations of US citizens and others within the United States starkly raises the specter of police-military dictatorship. Behind the legalistic double-talk of the administration’s white paper on drone killings of Americans, made public two weeks ago, the US government is claiming unlimited powers to assassinate anyone, anywhere in the world.
By asserting the power to order the killing of alleged terrorists—secretly and without judicial or congressional oversight—and acting on this asserted power to kill thousands of people, including at least three American citizens—the Obama administration has effectively abrogated the US Constitution’s Bill of Rights and the Fifth Amendment’s guarantee that no person shall be “deprived of life … without due process of law.”
The lack of significant protest from any section of the political or media establishment underscores the disintegration of American democracy and the absence of any constituency for the defense of democratic rights within the US ruling class. Just how rapidly the American bourgeoisie is breaking with its own previous legal norms is demonstrated by the absence of serious opposition to Brennan’s confirmation. Four years ago, Obama had to scuttle plans to name Brennan, then a top CIA official, to head the agency, due to protests over his role in and public defense of the Bush administration’s use of torture.
Now the Senate is poised to confirm Brennan’s nomination. The major newspapers either ignored the transcript of his written responses to the intelligence committee or carried perfunctory reports buried in their inside pages. The major organ of American liberalism, the New York Times, which has editorialized in support of Brennan’s confirmation, did not bother even to report his refusal to rule out drone assassinations within the US.
On the same day that the Senate committee released Brennan’s written responses, the Los Angeles Times reported that the Federal Aviation Administration (FAA) has issued 1,428 domestic drone permits since 2007, a figure far higher than previous estimates. The newspaper wrote, “The FAA this week solicited proposals to create six sites across the country to test drones, a crucial step before widespread government and commercial use is approved.”
Under Department of Homeland Security grants, many local police departments have already acquired drones and implemented their own drone spying programs. The use of drones within the US for manhunts, such as the recent dragnet by Los Angeles police in pursuit of rogue officer Christopher Dorner, is by now a reality. The hundreds of drones already buzzing overhead “can carry high-resolution video cameras, infrared sensors, license plate readers, listening devices and other high-tech gear,” the Los Angeles Times reported.
Since 9/11, the foundations of a police state in the US have been systematically laid. Under the cover of the so-called “war on terror,” the extrajudicial “wartime” powers of the president have been massively expanded. With Obama, this process has been intensified. The illegal drone assassination program has been expanded, along with renditions and domestic spying. Laws have been enacted sanctioning the military detention, without charges or trial, of US citizens.
The police state measures enacted since September 11, 2001 have nothing to do with protecting American citizens from terrorism. They are, on the contrary, designed to be used against the growth of working class opposition to social inequality and ever worsening living and working conditions.
Especially since the financial crash of 2008 that set off the greatest crisis of American and world capitalism since the Great Depression, the ruling classes in all of the major imperialist countries have turned to brutal austerity policies to place the burden of the failure of their system on the working class. With no policies to offer for alleviating the suffering of the people, and facing growing popular resistance, they are all turning to state violence and the criminalization of working class struggle.
In the United States, the center of the world crisis, the ruling class has likewise responded to the economic decline of American capitalism with militarism abroad and austerity and increasing repression at home.
It would be politically naïve not to assume that the US military/intelligence apparatus is drawing up lists of political opponents to be eliminated, “disappeared” or imprisoned in the event of major social convulsions, just as Washington’s client dictatorships in Latin America, Indonesia and elsewhere have done in the past.
The American working class must make its own preparations for the mass struggles that lie ahead. At the center of these preparations, and the only basis for the defense of democratic rights, is the adoption of a revolutionary perspective whose aim is to break the grip of the corporate-financial ruling elite and replace its repressive state with a workers state.

You Won’t Believe Who Is Getting Away With Paying Zero Taxes While The Middle Class Gets Hammered

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The federal income tax is a bad joke and it needs to be abolished.  All over the nation, hard working American families are being absolutely crushed by oppressive levels of taxation, and our politicians are constantlycoming up with new ways to extract money from all of us every single year.  Meanwhile, many ultra-wealthy Americans and many of the most profitable corporations in the country pay little to nothing in taxes.  In fact, as you will see below, there are dozens of very prominent corporations that make billions of dollars in profits and yet don't pay a dime in taxes.  Tax avoidance has become a multi-billion dollar industry in the United States.  Those that have the resources to "play the game" use shell companies, offshore tax havens and the thousands of loopholes in our tax code to minimize their tax burdens as much as possible.  Meanwhile, the rest of us get absolutely hammered.  This is fundamentally unfair.  The federal income tax system is irreversibly broken at this point, and it is time to abolish it.  If you think that the federal income tax system can be "fixed", then you probably have never studied it.  Our tax code is nearly 4 million words long and it is absolutely riddled with thousands of loopholes that favor big corporations and the ultra-wealthy.  We should come up with a better, fairer way to fund the government.  The United States once prospered greatly without a federal income tax, and it could do so again.
Many people simply do not believe that it is possible for corporations inside the United States to make billions of dollars in profits each year and not pay a dime in income taxes.
Well, according to a report put out by Public Campaign, that is exactly what is happening.  Posted below are numbers that come directly from their report.  30 large corporations are listed, and 29 of them had a tax burden for 2008 through 2010 that was less than zero even though they all made enormous profits.  And all 30 of them spent more on lobbying than they did on taxes.
The numbers that you are about to see are for 2008, 2009 and 2010 combined.  For "taxes paid", please note that for 29 of the corporations a negative number is given.  That means that the net tax liability for 2008 through 2010 was actually less than zero.
After seeing these numbers, is there anyone out there that is still willing to claim that our tax system is "fair"?...
General Electric
U.S. Profits: $10,460,000,000
Taxes Paid: ‐$4,737,000,000
PG&E Corp.
U.S. Profits: $4,855,000,000
Taxes Paid: ‐$1,027,000,000
Verizon Communications
U.S. Profits: $32,518,000,000
Taxes Paid: ‐$951,000,000
Wells Fargo
U.S. Profits: $49,370,000,000
Taxes Paid: ‐$681,000,000
American Electric Power
U.S. Profits: $5,899,000,000
Taxes Paid: ‐$545,000,000
Pepco Holdings
U.S. Profits: $882,000,000
Taxes Paid: ‐$508,000,000
Computer Sciences
U.S. Profits: $1,666,000,000
Taxes Paid: ‐$305,000,000
CenterPoint Energy
U.S. Profits: $1,931,000,000
Taxes Paid: ‐$284,000,000
U.S. Profits: $1,385,000,000
Taxes Paid: ‐$227,000,000
Duke Energy
U.S. Profits: $5,475,000,000
Taxes Paid: ‐$216,000,000
U.S. Profits: $9,735,000,000
Taxes Paid: ‐$178,000,000
NextEra Energy
U.S. Profits: $6,403,000,000
Taxes Paid: ‐$139,000,000
Consolidated Edison
U.S. Profits: $4,263,000,000
Taxes Paid: ‐$127,000,000
U.S. Profits: $365,000,000
Taxes Paid: ‐$112,000,000
Integrys Energy Group
U.S. Profits: $818,000,000
Taxes Paid: ‐$92,000,000
Wisconsin Energy
U.S. Profits: $1,725,000,000
Taxes Paid: ‐$85,000,000
U.S. Profits: $2,124,000,000
Taxes Paid: ‐$72,000,000
Baxter International
U.S. Profits: $926,000,000
Taxes Paid: ‐$66,000,000
Tenet Healthcare
U.S. Profits: $415,000,000
Taxes Paid: ‐$48,000,000
Ryder System
U.S. Profits: $627,000,000
Taxes Paid: ‐$46,000,000
El Paso
U.S. Profits: $4,105,000,000
Taxes Paid: ‐$41,000,000
Honeywell International
U.S. Profits: $4,903,000,000
Taxes Paid: ‐$34,000,000
CMS Energy
U.S. Profits: $1,292,000,000
Taxes Paid: ‐$29,000,000
U.S. Profits: $286,000,000
Taxes Paid: ‐$26,000,000
Navistar International
U.S. Profits: $896,000,000
Taxes Paid: ‐$18,000,000
DTE Energy
U.S. Profits: $2,551,000,000
Taxes Paid: ‐$17,000,000
Interpublic Group
U.S. Profits: $571,000,000
Taxes Paid: ‐$15,000,000
U.S. Profits: $1,020,000,000
Taxes Paid: ‐$9,000,000
U.S. Profits: $1,977,000,000
Taxes Paid: ‐$4,000,000
U.S. Profits: $4,247,000,000
Taxes Paid: $37,000,000 (a rate of less than 1%)
U.S. Profits: $163,691,000,000
Taxes Paid: ‐$10,602,000,000
Just look at that combined total again.
Those 30 companies had combined profits of more than 163 billion dollars during those three years, and yet the combined net tax liability of those companies was negative 10.6 billion dollars.
I wish I could make my taxes look like that.
Another company that is making headlines because of their taxes these days is Facebook.
It turns out that Facebook made more than a billion dollars in 2012 but did not pay a single dime in federal or state income taxes.  The following is from a report that was just released by Citizens for Tax Justice...
Earlier this month, the Facebook Inc. released its first “10-K” annual financial report since going public last year. Hidden in the report’s footnotes is an amazing admission: despite $1.1 billion in U.S. profits in 2012, Facebook did not pay even a dime in federal and state income taxes.
Instead, Facebook says it will receive net tax refundstotaling $429 million.
According to Businessweek, Facebook has an additional 2 billion dollars in tax credits that it will be able to use in future years...
Facebook says that it anticipates reducing its tax liability in the future by an additional $2.17 billion by using further net operating loss carry-forwards that it has banked.
And of course when it comes to abusing the tax system, the big Wall Street banks are some of the worst offenders.  The following is an excerpt from a report put out by the office of U.S. Senator Bernie Sanders...
Here are just a few examples of how the corporations and Wall Street banks these CEOs work for have significantly harmed our economy and the federal budget:
1. Bank of America CEO Brian Moynihan
Number of Offshore Tax Havens in 2010? 371.
In 2010, Bank of America operated 371 subsidiaries incorporated in offshore tax havens. 204 of these subsidiaries are incorporated in the Cayman Islands, which has a corporate tax rate of 0%.
Amount of federal income taxes Bank of America would have owed if offshore tax havens were eliminated? $2.5 billion.
Bank of America has stashed $18.5 billion in offshore tax havens to avoid paying U.S. income taxes. Bank of America would owe an estimated $2.5 billion in federal income taxes if its use of offshore tax avoidance was eliminated.
Amount of federal income taxes paid in 2010? Zero. $1.9 billion tax refund.
Bank of America received a $1.9 billion tax refund from the IRS in 2010, even though it made $4.4 billion in profits.
Taxpayer Bailout from the Federal Reserve and the Treasury Department? Over $1.3 trillion.
During the financial crisis, Bank of America received a total of more than $1.3 trillion in virtually zero interest loans from the Federal Reserve and a $45 billion bailout from the Treasury Department.
2. JP Morgan Chase CEO James Dimon
Number of Offshore Tax Havens in 2010? 83.
In 2010, JP Morgan Chase operated 83 subsidiaries incorporated in offshore tax havens.
Amount of federal income taxes JP Morgan Chase would have owed if offshore tax havens were eliminated? $4.9 billion
JP Morgan Chase has stashed $21.8 billion in offshore tax haven countries to avoid payng income taxes. If this practice was outlawed, it would have paid $4.9 billion in federal income taxes.
Taxpayer Bailout from the Federal Reserve and the Treasury Department? $416 billion
During the financial crisis, JP Morgan Chase received a total of more than $391 billion in virtually zero interest loans from the Federal Reserve and a $25 billion bailout from the Treasury Department, while Jamie DImon served as a director of the New York Federal Reserve.
3. Goldman Sachs CEO Lloyd Blankfein
Amount of federal income taxes paid in 2008? Zero. $278 million tax refund.
In 2008, Goldman Sachs received a $278 million refund from the IRS, even though it earned a profit of $2.3 billion that year.
Number of offshore tax havens in 2010? 39.
In 2010, Goldman Sachs operated 39 subsidiaries in offshore tax haven countries.
Amount of federal income taxes Goldman Sachs would have owed if offshore tax havens were eliminated? $3.32 billion.
Goldman Sachs has stashed $20.63 billion in offshore tax haven countries to avoid paying income taxes. If this practice was outlawed, it would have paid $3.32 billion in federal income taxes.
Taxpayer Bailout from the Federal Reserve and the Treasury Department? $824 billion.
During the financial crisis, Goldman Sachs received a total of $814 billion in virtually zero interest loans from the Federal Reserve and a $10 billion bailout from the Treasury Department.
Are you starting to get the picture?
The big banks and the big corporations make billions, but they pay nothing or next to nothing.
The rest of us bust our rear ends to try to get ahead, and we get gougedby dozens of different taxes.
Over time, the percentage of the overall tax burden shouldered by corporations has gotten smaller and smaller.
Back in 1950, corporate taxes accounted for about 30 percent of all federal revenue.  In 2012, corporate taxes accounted for less than 7 percent of all federal revenue.
These days, large corporations have become absolute masters at avoiding taxes.  In fact, there are many international tax havens that are doing a booming business in setting up sham headquarters for U.S. corporations.  For example, the city of Zug, Switzerland only has a population of 26,000 people but it is the headquarters for 30,000 companies.
But corporations are not the only ones doing this kind of thing.
The ultra-wealthy have also mastered the art of legally not paying taxes.
As I mentioned in a previous article, it has been reported that the global elite have up to 32 TRILLION dollars stashed in offshore banks around the globe.
With that amount of money, you could pay off the entire U.S. national debt and still have enough money left over to buy every product and service produced in the United States during an entire year.
It is time to admit that our tax system is broken.
Congress has had decades to fix it, and yet the abuses just keep getting worse.
What we are doing is not working.
We need to abolish the income tax.
If you are still not convinced that the federal income tax is an abomination and that we need to abolish it, here are some more shocking facts about our tax system from one of my previous articles about taxes...
1 - The U.S. tax code is now 3.8 million words long.  If you took all of William Shakespeare's works and collected them together, the entire collection would only be about 900,000 words long.
2 - According to the National Taxpayers Union, U.S. taxpayers spendmore than 7.6 billion hours complying with federal tax requirements.  Imagine what our society would look like if all that time was spent on more economically profitable activities.
3 - 75 years ago, the instructions for Form 1040 were two pages long.  Today, they are 189 pages long.
4 - There have been 4,428 changes to the tax code over the last decade.  It is incredibly costly to change tax software, tax manuals and tax instruction booklets for all of those changes.
5 - According to the National Taxpayers Union, the IRS currently has1,999 different publications, forms, and instruction sheets that you can download from the IRS website.
6 - Our tax system has become so complicated that it is almost impossible to file your taxes correctly.  For example, back in 1998 Money Magazine had 46 different tax professionals complete a tax return for a hypothetical household.  All 46 of them came up with a different result.
7 - In 2009, PC World had five of the most popular tax preparation software websites prepare a tax return for a hypothetical household.  All five of them came up with a different result.
8 - The IRS spends $2.45 for every $100 that it collects in taxes.
9 - According to The Tax Foundation, the average American has to workuntil April 17th just to pay federal, state, and local taxes.  Back in 1900, "Tax Freedom Day" came on January 22nd.
10 - When the U.S. government first implemented a personal income tax back in 1913, the vast majority of the population paid a rate of just 1 percent, and the highest marginal tax rate was just 7 percent.
11 - Residents of New Jersey pay $1.64 in taxes for every $1.00 of federal spending that they get back.
12 - The United States is the only nation on the planet that tries to tax citizens on what they earn in foreign countries.
13 - According to Forbes, the 400 highest earning Americans pay an average federal income tax rate of just 18 percent.
14 - Warren Buffett had an effective tax rate of just 17.4 percent for 2010.
15 - The top 20 percent of all income earners in the United States payapproximately 86 percent of all federal income taxes.
16 - Sadly, as Bill Whittle has shown, you could take every single penny that every American earns above $250,000 and it would only fund about 38 percent of the federal budget.
Please share this article with as many people as you can.  We have now entered a time of the year when tens of millions of Americans will be filling out their tax returns, and the pain of going through that process will make people even more receptive than normal to the truth about how broken our system is.