Sunday, March 13, 2016

A Warning From the Bank for International Settlements (BIS): The Calm Before the Storm?

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The Bank for International Settlements (BIS) is worried that recent ructions in the equities markets could be a sign that another financial crisis is brewing. In a sobering report titled “Uneasy calm gives way to turbulence”  the BIS states grimly: “We may not be seeing isolated bolts from the blue but the signs of a gathering storm that has been building for a long time.”
The authors of the report are particularly concerned that the plunge in stock prices and the slowdown in global growth are taking place at the same time that investor confidence in central banks is waning. The Bank Of Japan’s announcement that it planned to introduce negative interest rates (aka–NIRP or negative interest rate policy) in late January illustrates this point. The BOJ hoped that by surprising the market, the policy would have greater impact on borrowing thus generating more growth. But, instead, the announcement set off a “second phase of turbulence” in stock and currency markets as nervous investors sold off risk assets and moved into safe haven bonds. The BOJ’s action was seen by many as act of desperation by a policymaker that is rapidly losing control of the system. According to the BIS:
“Underlying some of the turbulence of the past few months was a growing perception in financial markets that central banks might be running out of effective policy options.”
This is a recurrent theme in the BIS report, the notion that global CBs have already used their most powerful weapons and are currently trying to muddle-by with untested, experimental policies like negative rates that slash bank profitability while having little impact on lending.
While the BIS report provides a good rundown of recent events in the financial markets, it fails to blame central banks for any of the problems for which they alone are responsible. The sluggish performance of the global economy, the massive debt overhang, and the erratic behavior of the stock market are all directly attributable to the cheap money policies coordinated and implemented by central banks following the Great Recession in 2008.  It’s hard to believe that the BIS’s failure to insert this fact into its narrative was purely accidental.
But the real problem with the BIS report is not that it refuses to assign blame for the current condition of the markets and the economy,  but that it deliberately misleads its readers about the facts. While it’s true that China is facing slower growth, oil prices are plunging, emerging markets have been battered by capital flight, and yields on junk bonds are relentlessly rising, it’s also true that central bank policy is not primarily designed to address these problems, but to ensure the continued profitability of its main constituents,  the big banks and mega-corporations. Keep in mind, the global economy has been sputtering for the last 6 years, but the BIS has only expressed alarm just recently.  Why? What’s changed?
What’s changed is profits are down, and when profits are down,  Wall Street and its corporate allies lean on the central banks to work the levers to improve conditions. Here’s more on the so called “earnings recession” from an article in the Wall Street Journal titled “S&P 500 Earnings: Far Worse Than Advertised”:
“There’s a big difference between companies’ advertised performance in 2015 and how they actually did.
How big? ….S&P earnings per share fell by 12.7%, according to S&P Dow Jones Indices. That is the sharpest decline since the financial crisis year of 2008. Plus, the reported earnings were 25% lower than the pro forma figures—the widest difference since 2008 when companies took a record amount of charges.
The implication: Even after a brutal start to 2016, stocks may still be more expensive than they seem. Even worse, investors may be paying for earnings and growth that aren’t anywhere near what they think. The result could be that share prices have even further to fall before they entice true value investors.” ( “S&P 500 Earnings: Far Worse Than Advertised“, Wall Street Journal)
Profits are down and stocks are in trouble. Is it any wonder why the BIS is running around with its hair on fire?
Also, corporate earnings have dropped for two straight quarters which is a sign that the economy is headed for a slump. Take a look at this clip from CNBC:
“Recessions have followed consecutive quarters of earnings declines 81 percent of the time, according to an analysis from JPMorgan Chase strategists, who said they combed through 115 years of records for their findings.”(CNBC)
“81 percent” chance of a recession?
Yep.
This is what the BIS is worried about.  They could are less about China or the instability they’ve created with their zero rates and cheap money policies. Those things simply don’t factor into their decision-making. It’s all just fluff for the sheeple. Here’s more from Jim Quinn at Burning Platform:
“The increasing desperation of corporate CEOs is clear, as accounting gimmicks and attempts to manipulate earnings in 2015 has resulted in the 2nd largest discrepancy between reported results and GAAP results in history, only surpassed in 2008…..Based on fake reported earnings per share, the profits of the S&P 500 mega-corporations were essentially flat between 2014 and 2015…..earnings per share plunged by 12.7%, the largest decline since the memorable year of 2008….
With approximately $270 billion of “one time” add-backs to income used to deceive the public, the true valuation of the median S&P 500 stock is now the highest in history – higher than 1929, 2000, and 2007. Wall Street’s latest con game, with the active participation of corporate CEO co-conspirators, is a last ditch effort to fend off the inevitable stock market crash….All economic indicators are flashing red for recession. Stocks are poised for a 40% decline faster than you can say Wall Street criminal banks.” (“The Great Corporate Earnings Fraud“, Burning Platform)
Get it? When the profitability of the world’s biggest corporations are at stake, the central banks will move heaven and earth to lend a hand. This was the basic subtext of the discussions at the recent G-20 summit in Shanghai, China. The finance ministers and central bankers wracked their brains for two days to see if they could settle on new strategies for boosting earnings. In fact, the austerity-minded IMF even called on the G-20 to support a coordinated plan for fiscal stimulus to  boost activity and decrease the risks to the equities markets. Unfortunately, finance ministers balked because fiscal stimulus puts upward pressure on wages and shifts more wealth to working stiffs. That’s why the idea was shelved, because the oligarchs can’t stand the idea that workers are getting a leg-up. What they want is a workforce that scrapes by on minimum wage and lives in constant fear of losing their job.  The class war continues to be a top priority among the nations voracious CEOs and corporate bigwigs.
The “failed” G-20 summit was clearly a turning point for the markets. Now that the central banks are out of ammo, the only hope to keep stock prices artificially high rested on Keynesian fiscal stimulus injected directly into the real economy. That hope was extinguished at the meetings. The prospect that equities can continue to climb higher in the face of shrinking profits, tighter credit, slower growth and bigger corporate debtloads is unrealistic to say the least. Just check out this excerpt from a recent article at Bloomberg:
“Companies still have a little time before they must pay down the bulk of $9.5 trillion of debt maturing in the next five years….But it’s not getting any easier for these corporations to borrow, at least not in the U.S. In fact, many of these obligations are becoming harder and more expensive to repay at a time when companies face a historic pile of bonds and loans coming due.
It’s not terribly surprising that companies have a bigger debt load to pay down. They borrowed trillions of dollars on the heels of unprecedented stimulus efforts started by the Federal Reserve at the end of 2008 during the worst financial crisis since the Depression. They kept piling on the leverage as central banks around the world doubled down on low-rate policies and kept purchasing assets to encourage investors to buy riskier securities….”(“Scaling the $9.5 trillion debt wall, Bloomberg)
DB - US Corp leverage close to peak
What the author is saying is that central bank policy seduced corporations into borrowing tons of money that they frittered-away on stock buybacks and dividends, neither of which create the revenue streams necessary to repay their debts. So rather than build their companies for the future, (Business investment is at record lows) corporations have been behaving the same way the Wall Street banks acted before the Crash of ’08. They’ve been borrowing trillions from Mom and Pop investors via the bond market, goosing their share prices through stock buybacks, increasing executive compensation, and dumping the money in offshore accounts. Now the bill is coming due, and they don’t have the money to repay the debt or the earnings-potential to avoid default. Something’s gotta give.
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Corporate red ink is one of many reasons why the BIS thinks “We may not be seeing isolated bolts from the blue but the signs of a gathering storm that has been building for a long time.” Like the gigantic asset-price bubble in stocks, it’s a sign that the economy and the markets are headed for a long and painful period of adjustment.

Pentagon deploying drone aircraft within the US

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A report released by the Department of Defense inspector general reveals that for nearly ten years, the US military has been coordinating the domestic use of drones with local officials and the National Guard. It has done so without any public accountability or reporting by the media.
The Pentagon report, prepared last month, was made public last week only after a Freedom of Information Act request filed by the Federation of American Scientists.
The inspector general report provides only a glimpse into the extensive use of the military within the borders of the United States. It refers to “less than 20” instances since 2006 when drones were requested by US agencies for use outside of military bases. It does not include a complete list of cases where drones were used, but instead provides nine examples occurring between 2011 and 2016.
While the report is accompanied by the usual reference to “protecting the American public’s civil liberties and privacy rights,” the use of drones (or unmanned aircraft systems, UAS) within the country is a serious warning. It is part of a broader expansion of domestic military activity over the past fifteen years and complements the much more extensive deployment of drone aircraft by the Federal Bureau of Investigation.
Several of the examples listed include large-scale training exercises that involve a simulated natural disaster. Such exercises provide an opportunity for the military to practice the coordination of its assets with local, state and federal civilian agencies.
The cases listed include Exercise Guardian Shield 2015. In this exercise, carried out last summer in Ohio, the Ohio Air National Guard, the FBI and state and local agencies simulated incidents throughout the state. Exercise Ardent Sentry 2011, another example listed in the report, was a nationwide exercise simulating an earthquake along the New Madrid Seismic Zone, which includes parts of Arkansas, Illinois, Indiana, Kentucky, Missouri, Mississippi and Tennessee. The exercise was overseen by the US Northern Command, set up in 2002 under the Bush administration as the first-ever command in charge of military activity within the United States.
Military drones were also reportedly deployed during several natural disasters, including flooding in the Mississippi River Valley at the beginning of this year and in South Carolina last October. Of the nine cases listed, six took place in the last 10 months, indicating a significant expansion of military drone use.
The use of drone aircraft is part of the integration of the military with domestic agencies (through a program known as Defense Support of Civil Authorities, or DSCA), under the authority of the US Northern Command. In 2006, then-Defense Secretary Donald Rumsfeld signed an interim order that, according to the inspector general report, “encourages the use of DoD [Department of Defense] UAS to support appropriate domestic mission sets.”
The current DSCA policy guidelines (adopted in 2012 under the Obama administration) contain extremely broad language calling for the military to respond to requests “from civil authorities for domestic emergencies, law enforcement support, and other domestic activities, or from qualifying entities for ‘special events.’”
The ground is being laid for a much broader use of military drones. A 2012 Department of Defense report to Congress identified 110 potential drone bases within the US and called for expanded military access to domestic airspace, ostensibly for the purpose of training individuals to meet the vast growth in “operational demand” abroad, i.e., the assassination program of the Obama administration in Afghanistan, Pakistan, Yemen, Somalia and other countries.
The potential drone bases cited in the 2012 report were located in 39 different states throughout the country.
Since the US Northern Command was first established, the Pentagon, under the Bush and Obama administrations, has pushed for a reinterpretation of the Posse Comitatus Act, which prohibits the use of the military for domestic purposes. In 2008, the Pentagon established an “anti-terror” unit within the framework of the Northern Command composed of 20,000 regular Army troops that could be used within the US.
A Department of Justice “white paper” on drone assassination, leaked to the press in February 2013, outlined the Obama administration’s position that the White House has the authority to kill anyone, including US citizens, anywhere in the world without judicial process. In the spring of that year, Attorney General Eric Holder refused to rule out the possibility that the president could, under “extraordinary circumstances…authorize the military to use lethal force within the territory of the United States,” including by means of drone strikes.
Over the past several years, the Pentagon has carried out a series of domestic exercises simulating large-scale military operations. These include most significantly Operation Jade Helm, begun in July 2015 and involving drills in parts of California, Nevada, Utah, Colorado, Arizona, Louisiana, Mississippi, New Mexico and Texas.
The expanded use or simulated use of military forces within the country has coincided with the militarization of local police and the use of the National Guard to impose effective martial law in response to terrorist attacks or social protests, including the lockdown of Boston following the Boston Marathon bombing in 2013, and the states of emergency in Ferguson, Missouri and Baltimore, Maryland during protests against police violence in 2014 and 2015.
Last June, FBI Director James Comey acknowledged that his agency had used drone surveillance aircraft to monitor the protests in both Ferguson and Baltimore. An Associated Press report prior to Comey’s testimony revealed that the FBI had conducted more than 100 flights in 11 states during a single month that year, employing shell companies to operate the aircraft.
The events in Ferguson and Baltimore revealed the essential purpose behind all of these measures. Utilizing the “war on terror” as a pretext, the White House and the Pentagon have worked systematically to expand the apparatus of surveillance and repression—military and police—to utilize the instruments of war ever more directly against social opposition within the United States.

America's Contribution to Death of Honduran Activist Goes Unmentioned in U.S. Coverage

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Honduran environmental activist Berta Cáceres [3] was shot and killed in her home in La Esperanza, Intibuca, Wednesday. While the killers’ ID remains unknown, activists, media observers and the Cáceres family pointed to the increasingly reactionary and violent Honduran government, which has frequently clashed with Cáceres over her high-profile activism against land dispossession and mining, and her defense of indigenous rights.
There was widespread outcry and grief over her death, and the story was covered by major media in the United States. But there was a glaring problem with the coverage: Almost none of it mentioned that the brutal regime that likely killed Cáceres came to power in a 2009 coup d’etat supported by the United States, under President Barack Obama and then-Secretary of State Hillary Clinton.

As Greg Grandin at The Nation explains [4]:
Cáceres was a vocal and brave indigenous leader, an opponent of the 2009 Honduran coup that Hillary Clinton, as secretary of State, made possible. In The Nation, Dana Frank [5] and I [6] covered that coup as it unfolded. Later, as Clinton’s emails were released, others, such as Robert Naiman [7]Mark Weisbrot [8] and Alex Main [9], revealed the central role she played in undercutting Manuel Zelaya, the deposed president, and undercutting the opposition movement demanding his restoration. In so doing, Clinton allied with the worst sectors of Honduran society.
The Honduran military abducted President Manuel Zelaya at gunpoint and flew him out of the country on June 28, 2009. While the coup unfolded before the international community, the United Nations, the EU and the Organization of American States rushed to condemn it. Fifteen House Democrats joined in [7], sending a letter to the Obama White House insisting that the State Department “fully acknowledge that a military coup has taken place and…follow through with the total suspension of non-humanitarian aid, as required by law.”
But Clinton’s State Department staunchly refused to do so, bucking the international community and implicitly recognizing the military takeover. Emails revealed [10] last year by the State Department show that Clinton knew very well there was a military coup, but rejected cries by the international community to condemn it. As The Intercept’s Lee Fang reported [11], Clinton attempted to use her lobbyist friend Lanny Davis to open up back channels with Roberto Micheletti, the illegitimate interim ruler installed after the coup, effectively endorsing the new right-wing government that would go on to crack down on Cáceres and others activists.

In her memoirs, Clinton herself discloses she had no intention on restoring the elected President Zelaya to power. “In the subsequent days [after the coup] I spoke with my counterparts around the hemisphere, including Secretary Espinosa in Mexico. We strategized on a plan to restore order in Honduras,” Clinton wrote, “and ensure that free and fair elections could be held quickly and legitimately, which would render the question of Zelaya moot.”

On September 28, State Department officials blocked the OAS from adopting a resolution that would have refused to recognize Honduran elections carried out under the dictatorship—giving the US’s final seal of approval to the military coup that began three months prior.
One wouldn’t know any of this reading US reports of  Cáceres’ death. The coup, and its subsequent purging of environmental, LGBT and indigenous activists, is treated as an entirely local matter, reduced to the “cycle of violence” cliche often employed with destructive governments the United States helped usher into power.

The New York Times mentioned [12] that the Honduran coup put activists like Caceres in danger–but didn’t mention that the US had backed the coup.

The Washington Post [13],  Guardian [14]NBC [15]CNN [16] andNPR [17] didn’t mention the 2009 coup that brought to power Cáceres’ likely murderers, let alone the US’s tacit involvement in the coup. The New York Times [18] did briefly mention it, but omitted US responsibility:
Since a 2009 coup in Honduras, journalists, judges, labor leaders, human rights defenders and environmental activists have been assassinated in targeted killings, with their murders often going unsolved. Twelve environmental defenders were killed in Honduras in 2014, according to research by Global Witness, which makes it the most dangerous country in the world, relative to its size, for activists protecting forests and rivers.
The Times noted how much more oppressive and difficult life is under the new regime, but made no mention of who helped bring that regime about. Cáceres, of course, wasn’t killed in a vacuum. Her death is in part the result of a deliberate strategy by the United States to prop up a regressive, pro-development, pro-corporate government. That US-based media, reporting on the death of a foreign activist, wouldn’t mention their own government’s role is a glaring omission—and one that follows a distinct pattern of global reporting.

Chaos in other countries is seen as something organic, a product of failed cultures doomed to perpetual violence. It’s usually more complicated than that—especially in a region with a history of US intervention going back more than a century.

The documentation of Washington’s role in the 2009 coup is thorough and unequivocal. Combined with the fact that one of the principal parties responsible for Honduras’ regime change is currently running for president, the international context for the assassination of an environmental activist could hardly be more relevant.

Five Years After Fukushima, 'No End in Sight' to Ecological Fallout


And U.S. nuclear regulatory agency comes under fire for 'half-baked' reforms that fail to improve public safety 

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The environmental impacts of the 2011 Fukushima Daiichi nuclear disaster are already becoming apparent, according to a new analysis from Greenpeace Japan, and for humans and other living things in the region, there is "no end in sight" to the ecological fallout.

The report warns that these impacts—which include mutations in trees, DNA-damaged worms, and radiation-contaminated mountain watersheds—will last "decades to centuries." The conclusion is culled from a large body of independent scientific research on impacted areas in the Fukushima region, as well as investigations by Greenpeace radiation specialists over the past five years.

"The government's massive decontamination program will have almost no impact on reducing the ecological threat from the enormous amount of radiation from the Fukushima nuclear disaster," said Kendra Ulrich, senior nuclear campaigner at Greenpeace Japan. "Already, over 9 million cubic meters of nuclear waste are scattered over at least 113,000 locations across Fukushima prefecture."

  • High radiation concentrations in new leaves, and at least in the case of cedar, in pollen;
  • apparent increases in growth mutations of fir trees with rising radiation levels;
  • heritable mutations in pale blue grass butterfly populations and DNA-damaged worms in highly contaminated areas, as well as apparent reduced fertility in barn swallows;
  • decreases in the abundance of 57 bird species with higher radiation levels over a four year study; and
  • high levels of caesium contamination in commercially important freshwater fish; and radiological contamination of one of the most important ecosystems – coastal estuaries.
The report comes amid a push by the government of Japanese Prime Minister Shinzō Abe toresettle contaminated areas and also restart nuclear reactors in Japan that were shut down in the aftermath of the crisis.

However, Ulrich said, "the Abe government is perpetuating a myth that five years after the start of the nuclear accident the situation is returning to normal. The evidence exposes this as political rhetoric, not scientific fact. And unfortunately for the victims, this means they are being told it is safe to return to environments where radiation levels are often still too high and are surrounded by heavy contamination."

According to Greenpeace, it's not only the Abe government that holds "deeply flawed assumptions" about both decontamination and ecosystem risks, but the International Atomic Energy Agency (IAEA), too. Indeed, the failures in the methods used by the IAEA to come to the "baseless conclusion" that there would be no expected ecological impacts from the Fukushima disaster are "readily apparent," the report claims.

In September, Greenpeace Japan blasted the IAEA for "downplaying" the continuing environmental and health effects of the nuclear meltdown in order to support the Japanese government's agenda of normalizing the ongoing disaster.

Meanwhile, the Union of Concerned Scientists (UCS) charged on Thursday that the U.S. Nuclear Regulatory Commission (NRC) has also failed to learn lessons from the Fukushima meltdown. In its report, Preventing an American Fukushima, the group states that five years after the nuclear accident, the NRC "has made insufficient progress in improving U.S. nuclear power safety" while implementing "half-baked" reforms.

"[A]ll too often," UCS said, "the agency abdicated its responsibility as the nation's nuclear watchdog by allowing the industry to rely on voluntary guidelines, which are, by their very nature, unenforceable."

"The NRC and the nuclear industry have taken steps to address some of the safety vulnerabilities revealed by the Fukushima disaster," acknowledged report author Edwin Lyman, a UCS senior scientist and co-author of the 2014 book, Fukushima: The Story of a Nuclear Disaster. "But so far, the agency has failed to fully learn the lessons of Fukushima. It needs to go back to the drawing board and reconsider critical safety recommendations that it dismissed without good justification. The health and safety of the more than 100 million Americans living within 50 miles of a nuclear plant hang in the balance."

On March 11, 2011, a massive earthquake off the coast of Japan triggered a tsunami, which in turn produced equipment failures and the release of radioactive material at theFukushima Nuclear Power Plant. The disaster is the single largest release of radioactivity into the ocean and one of only two Level 7 nuclear disasters in world history—the other being Chernobyl.

How the FBI Polices Dissent and Why It Matters in the Encryption Debate

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With the Federal Bureau of Investigation (FBI) attempting to gain access to the San Bernardino shooter's phone, and in the process create a backdoor into encrypted devices across the world - many in the media have framed the issue as being one of privacy versus security. While there is undoubtedly a compelling privacy issue at stake, many advocates have also pointed to another fundamental right at stake - the right of free expression. The Supreme Court has long noted that privacy is fundamental to free expression. More recently, the UN Special Rapporteur on Freedom of Opinion and Expression released a report concluding that strong encryption was essential to protect free expression.
When tackling encryption from a free expression standpoint, many advocates have rightfully expressed fear that "authoritarian" governments could use backdoors into encrypted devices to go after journalists, human rights defenders and dissidents. Yet, by placing the threat to free expression mainly on foreign bad actors, the FBI is being let off the hook. It isn't just encryption in the hands of other governments that threatens free expression: The FBI should not be trusted either, as it has a long history of policing dissent.
One does not need to have a very a long memory to be aware of the FBI's bad acts. In November 2015, the Partnership for Civil Justice  obtained documents through Freedom of Information Act (FOIA) requests that describe how, from 2000 to 2010, the FBI used counterterrorism agents to routinely spy on the lawful political activity of School of the Americas Watch, which organizes annual protests against US Latin American policy. Throughout the released documents, the FBI acknowledged the "peaceful intent" of these protests, but continued its counterterrorism investigation. In addition, it was also revealed in 2015 that the FBI had monitored anti-Keystone XL pipeline protesters and Black Lives Matter protesters. All of these allegations come on the heels of revelations about widespread FBI "counterterrorism" monitoring of Occupy Wall Street (once again via documents obtained through FOIA requests by the Partnership for Civil Justice).
The problem with the FBI encryption debate stems from a larger problem with how the FBI is discussed. Discussions about FBI spying - including by earnest civil libertarians - often employ narratives that obscure the root cause: that the FBI is the United States' political police.
Whenever there are discussions of the FBI's policing of political activity, they tend to follow a similar two-part narrative. According to this narrative, the first part of the saga takes place in a long-ago time, nothing at all like today, when the FBI did routinely spy on political groups. The FBI didn't just spy though. It staged illegal break-ins of political groups' offices; it attempted to sterilize Communist Party leader Gus Hall's brother's horse; and it sent a letter to Martin Luther King Jr., attempting to blackmail the civil rights leader into killing himself.
The FBI's blatant disregard for the US Constitution during this era is generally attributed to its director, J. Edgar Hoover. According to this misleading narrative, the problem was not one with the FBI per se, but with a particularly troublesome individual who amassed too much personal power, became too personally entwined with the institution he ran, and used federal police power to carry out his personal agendas and prejudices. Thus, according to this narrative, when Hoover died, ending his directorship-for-life, many of the problems of the FBI were resolved.
This narrative contends that even if Hoover alone was not responsible for the FBI assuming the role of the United States' political police, soon after his death, the US Senate staged a massive investigation, known as the Church Committee, into all of the wrongdoing in US law enforcement and intelligence agencies. It suggests that by bringing misdeeds previously unknown to light, the FBI was able to reform itself. In line with this narrative, the current director of the FBI, James Comey, speaks openly about keeping a copy of the letter Hoover sent to King (urging him to kill himself) on his desk as a warning. If Comey is troubled by the fact that the name of the author of this letter still adorns the building in which he works, he refuses to say so on the grounds that he is "no historian."
The second part of this narrative picks up after September 11, 2001. After the terrorist attacks, many within the government felt the reforms that made sense during the Church Committee were no longer applicable to the urgent needs of national security. In a moment of extreme fear, the FBI overstepped its bounds and increased scrutiny of dissent, which was considered "unpatriotic" or "seditious" in a time of war.
This narrative is fundamentally false for multiple reasons. First, Hoover cut his teeth during the Palmer raids, which entailed the arrests of anarchists, socialists and other radicals. At that time, the 24-year-old Hoover was the head of the Justice Department's Radical Division, a section devoted exclusively to policing those with radical political views. The Radical Divisionwould become the General Intelligence Division, which, according to the FBI's own website, was its "predecessor." While Hoover had many peculiar personality traits, he was also undeniably not out of step with the environment that produced him. During this time, many major police departments had "Red Squads," which, as the name would suggest, were intelligence divisions dedicated to "radical" political groups, and many states passed criminal "syndicalism" or "anarchy" statutes essentially outlawing certain points of view. While there is no doubt that Hoover was motivated by a personal antipathy toward left-wing politics, civil rights and dissent, he was not alone in thinking the state was an appropriate vehicle for crushing "subversive" political beliefs.
Another fundamental mistake within this narrative is its assumption that no one knew what was going on. In 1950, the National Lawyers Guild (NLG) - well before Watergate or the Church Committee - had gathered evidence that the FBI used "illegal wire-tapping, mail-opening, and other forms of illegal procedures." However, because the FBI, along with the Central Intelligence Agency and Nation Security Agency, was engaged in extensive spying on the NLG, including wiretaps and break-ins of an NLG office, the FBI was aware of the NLG's planned report. Before the NLG report could even be released, the FBI responded by drafting a report accusing the National Lawyers Guild of being the "Legal Bulwark of the Communist Party."
Citing as evidence that the NLG was a Communist front, the report stated, "The guild today is crying for an investigation of the FBI, the vigilant guardian of our national security, on the ridiculous grounds that it is a 'gestapo' or 'political police' whose practices and policies violate our laws, infringe our liberties, and threaten our democracy." The report also cited as evidence of the NLG following the "Moscow line," an article published by the NLG, stating that "the FBI, and the United States Department of Justice act in close contact with the ultrareactionary Committee for the Investigation of Un-American Activities." The report was released by the House Un-American Activities Committee as the committee's own work, with no mention of the fact that the FBI drafted it (see Robert Sherrill's First Amendment Felon).
The FBI also was not a "reformed" agency until it let zeal for national security, brought on by post-9/11 hysteria, get the better of it. Starting in 1981, roughly five years after the end of the Church Committee, the FBI would begin investigating the Committee in Solidarity with the People of El Salvador (CISPES), first to determine if they were unregistered agents of a foreign power (they were not), and then as part of a "counterterrorism investigation." When this investigation came to light - after a series of suspicious break-ins at CISPES offices that remain unsolved to this day, and two separate FOIA requests - the Senate Select Committee on Intelligence investigated the matter and released a report.
The committee concluded that the FBI had initiated its investigation on the "basis of allegations that should not have been considered credible; it was broadened beyond the scope justified even by those allegations; and it continued after the available information had clearly fallen below the standards required by the applicable guidelines." Stunningly though, the report also concluded that the CISPES investigation was an anomaly that "contrasts sharply with the overall record of respect for and protection of First Amendment rights that characterized the FBI's counterintelligence and counterterrorism programs" at that time, and they did not believe the CISPES investigation was motivated by "ideological or political bias" on the part of the FBI.
CISPES was not the last FBI spying revelation before 9/11, but it is a significant one. Unlike the pre-Church Committee era, the FBI could not be so blatant about its policing of dissent. The official reason the agency chose - "terrorism" - is very telling, since this was a good 20 years before 9/11.
Unfortunately, this narrative has largely obfuscated the root causes of the FBI's continuous political spying. It has led to us to discuss FBI spying in two ways: either as a never-ending series of isolated incidents, possibly stemming from an overzealous response to September 11, 2001; or as an exotic remnant of a bygone era, instead of recognizing a pattern not just amongst current cases of FBI spying, but between the present activities of the FBI and past ones.
The FBI came into being during a time when many openly advocated the idea of policing "radical" or "subversive" political speech. Although the FBI no longer formally polices "subversive" ideas, it continues to use its existing powers, like counterterrorism authority, to do just that. This is not a coincidence, nor is it the product of individual bad actors. It is the product of the institution itself, an institution that was formed to be the United States' political police and continues to play that role. When we obscure this history, we also obscure what is at stake in the encryption debate. There is a multitude of reasons to support strong encryption, but without acknowledging the role of the FBI as the United States' political police, we miss a very important one.

The Financial System Is A Larger Threat Than Terrorism

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In the 21st century Americans have been distracted by the hyper-expensive “war on terror.” Trillions of dollars have been added to the taxpayers’ burden and many billions of dollars in profits to the military/security complex in order to combat insignificant foreign “threats,” such as the Taliban, that remain undefeated after 15 years. All this time the financial system, working hand-in-hand with policymakers, has done more damage to Americans than terrorists could possibly inflict.
The purpose of the Federal Reserve and US Treasury’s policy of zero interest rates is to support the prices of the over-leveraged and fraudulent financial instruments that unregulated financial systems always create. If inflation was properly measured, these zero rates would be negative rates, which means not only that retirees have no income from their retirement savings but also that saving is a losing proposition. Instead of earning interest on your savings, you pay interest that shrinks the real value of your saving.
Central banks, neoliberal economists, and the presstitute financial media advocate negative interest rates in order to force people to spend instead of save. The notion is that the economy’s poor economic performance is not due to the failure of economic policy but to people hoarding their money. The Federal Reserve and its coterie of economists and presstitutes maintain the fiction of too much savings despite the publication of the Federal Reserve’s own report that 52% of Americans cannot raise $400 without selling personal possessions or borrowing the money. http://www.federalreserve.gov/econresdata/2013-report-economic-well-being-us-households-201407.pdf [1]
Negative interest rates, which have been introduced in some countries such as Switzerland and threatened in other countries, have caused people to avoid the tax on bank deposits by withdrawing their savings from banks in large denomination bills. In Switzerland, for example, demand for the 1,000 franc bill (about $1,000) has increased sharply. These large denomination bills now account for 60% of the Swiss currency in circulation.
The response of depositors to negative interest rates has resulted in neoliberal economists, such as Larry Summers, calling for the elimination of large denomination bank notes in order to make it difficult for people to keep their cash balances outside of banks.
Other neoliberal economists, such as Kenneth Rogoff want to eliminate cash altogether and have only electronic money. Electronic money cannot be removed from bank deposits except by spending it. With electronic money as the only money, financial institutions can use negative interest rates in order to steal the savings of their depositors.
People would attempt to resort to gold, silver, and forms of private money, but other methods of payment and saving would be banned, and government would conduct sting operations in order to suppress evasions of electronic money with stiff penalties.
What this picture shows is that government, economists, and presstitutes are allied against citizens achieving any financial independence from personal saving. Policymakers have a crackpot economic policy and those with control over your life value their scheme more than they value your welfare.
This is the fate of people in the so-called democracies. Any remaining control that they have over their lives is being taken away. Governments serve a few powerful interest groups whose agendas result in the destruction of the host economies. The offshoring of middle class jobs transfers income and wealth from the middle class to the executives and owners of the corporation, but it also kills the domestic consumer market for the offshored goods and services. As Michael Hudson writes, it kills the host. The financialization of the economy also kills the host and the owners of corporations as well. When corporate executives borrow from banks in order to boost share prices and their performance bonuses by buying back the publicly held stock of the corporations, future profits are converted into interest payments to banks. The future income streams of the corporations are financialized. If the future income streams fail, the companies can be foreclosed, like homeowners, and the banks become the owners of the corporations.
Between the offshoring of jobs and the conversion of more and more income streams into payments to banks, less and less is available to be spent on goods and services. Thus, the economy fails to grow and falls into long-term decline. Today many Americans can only pay the minimum payment on their credit card balance. The result is massive growth in a balance that can never be paid off. It is these people who are the least able to service debt who are hit with draconian charges. The way the credit card companies have it now, if you make one late payment or your payment is returned by your bank, you are hit for the next six months with a Penalty Annual Percentage Rate of 29.49%.
In Europe entire countries are being foreclosed. Greece and Portugal have been forced into liquidation of national assets and the social security systems. So many women have been forced into poverty and prostitution that the hourly price of a prostitute has been driven down to $4.12.
Throughout the Western world the financial system has become an exploiter of the people and a deadweight loss on economies. There are only two possible solutions. One is to break the large banks up into smaller and local entities such as existed prior to the concentration that deregulation fostered. The other is to nationalize them and operate them solely in the interest of the general welfare of the population.
The banks are too powerful currently for either solution to occur. But the greed, fraud, and self-serving behavior of Western financial systems, aided and abeted by governments, could be leading to such a breakdown of economic life that the idea of a private financial system will become as abhorent in the future as Nazism is today.