Transcript reveals anger of AIG employees toward politicians, public

By Brady Dennis
Washington Post Staff Writer
Thursday, March 4, 2010; A16

 

During the national furor that erupted last year after American International Group paid more than $165 million in bonuses, the voices of those vilified for receiving the payments remained silent, at least in public.

But behind closed doors, employees at AIG's Financial Products division -- the very unit whose trading had hastened the insurance giant's collapse -- were defiant, saying they were merely getting what they were due, recoiling at public accusations that they were behind their capitalizing on the company's massive taxpayer bailout.

"I will stand behind every action I have taken in this company from Day One," one employee said, according to a newly obtained transcript of a conference call the division's head held last March with some of his staff.

But when another employee asked whether the staff would be getting a second round of bonuses promised for March 2010, his colleagues burst into laughter, apparently considering this a preposterous notion amid the public outrage.

Yet they did see that money, at least most of it. Last month, under a deal in which employees agreed to take a cut in their upcoming retention bonuses in return for an accelerated payment, AIG paid out about $100 million to employees at the firm. AIG is scheduled to pay the last of the bonuses this month.

Even so, neither time nor money has softened the employees' feelings of wrongful persecution and their anger over becoming the subjects of scorn and ridicule. Seldom was that sense of victimhood more clear or more visceral than in the conference call of March 23, 2009.

Gerry Pasciucco, who had been hired to wind down Financial Products after the AIG bailout, was in Wilton, Conn., broadcasting his image and his voice to shaken, frustrated and furious employees in London, Paris and Hong Kong. Pasciucco quickly encountered a buzz saw of complaints over demands that they forgo the bonuses they were due. Emotions were running especially high in the London boardroom, where scores of staffers had gathered around a large table.

"I think it violates everything I believe in, and it's un-American," one employee said that day, according to the transcript of the call.

"This country is supposed to stand on due process," said another. The names of the staff members were redacted from the transcript obtained by The Washington Post.

'Missing the point'

The employees said that the corporate leaders who had driven the firm into the ground were already gone from the company. Those who had remained behind to help clean up the mess and repay the taxpayer bailout were due their compensation, they told Pasciucco.

"You made a commitment to us, and we made a commitment to you. And for anybody to look beyond that, as the politics and the media are at the moment, is missing the point," said an employee. "You can't expect us to just roll over and ignore that commitment because there is a bunch of immoral bigots that intend us to do something different. It's not going to happen."

Another was even more irate, lashing out at the public for scapegoating AIG employees. "To be honest with you, I really hope it blows up. I think the U.S. taxpayer deserves to lose a trillion dollars over this thing for the way they have behaved."

And then he turned on politicians who had joined the anti-AIG posse. "They only care about the next election, just like we only care about the next bonus. Well, none of them cares about the country, none of us cares about the institution," he said, adding: "They really don't care, and I really don't care. And frankly, if a trillion dollars gets lost, fine."

The AIG retention bonuses have rankled many in the public because the company has received a federal rescue package of about $180 billion in loans, stock investments and other commitments from the Federal Reserve and the Treasury Department. Closing down AIG Financial Products' trading portfolio has been vital to stemming further losses and repaying the public money.

As the employees were confronting Pasciucco last spring, lawmakers in Washington were contemplating a 90 percent tax on the bonus payments. AIG's chief executive, Edward M. Liddy, had been berated on Capitol Hill. Employees had received anonymous threats, some violent.

'Is this blackmail?'

Pasciucco wanted to assuage their angst that day. But he also had another goal: persuading them to return 50 percent of the bonus money in hopes that New York Attorney General Andrew M. Cuomo would not make their names public, as he was threatening. Employees fumed, accusing Cuomo of "blackmail" and "extortion." They complained that they were being forced to pay "protection money."

"Is this blackmail? To a certain extent, it is," Pasciucco told employees that morning. "If the only reason you would give money back is because you are afraid for your family and you are afraid for your safety, then it is."

He agreed that the manner in which some Washington officials had responded to the furor was despicable. "I think it's distasteful. It's unfair. It's unjust. I agree with you, it's not American. It is McCarthy-ite. . . . It will be viewed as a horribly dark period."

Still, he tried to offer a dose of realism. The retention payments might have been guaranteed by contract, he said, but Financial Products had made bad bets that cost taxpayers billions of dollars. Although the decision to return part of their money was voluntary, he said, such a pledge might help employees defuse some of the public anger.

"I am not laying this out that it's the right, moral thing to do, but I am telling you that you are naive if you think that you can ignore the political reality around this as you make your decision," he said, adding: "I am just going to caution you that if you are not lionized and . . . garlands of roses are not put around your shoulders, you shouldn't be surprised."

http://www.washingtonpost.com/wp-dyn/content/article/2010/03/03/AR2010030303764_pf.html?dbk

 

 

Why not name the bank that it came from?

See video here: http://expanton.com/pg/videolist/watch/1439

The English translation on the ProSieben video is very accurate. Cryptogon has many readers in Germany. I think we would all appreciate a high confidence German to English translation of what is being said in the video.

Note that this is not a London Good Delivery bar. It’s too small. The minimum weight of a London Good Delivery gold bar is, “350 troy ounces (approximately 10.9 kilograms).” The tungsten/gold bar shown in the video is 500 grams.

Update: Confirmation of Statements Made in Video

Felix, of fefe.de, sent the following:

The translation in the video is accurate, but it’s only the white subtitles, the yellow ones are apparently from the site who uploaded the video.

There is not much content there. It is a fluff piece about the company that deals with the gold and the CEO (?) shares this anecdote about how one bank bought this gold bar that was filled with tungsten and one of his guys detected it on a hunch (?!?). They verified by cutting it open.

You’d think that they have more sophisticated measuring equipment than hunches of their workers.

They don’t mention when this bar was found, could have been a long time ago.

—End Update—

Via: ZeroHedge:

German TV station ProSieben finds what appears to be some evocative proof of gold counterfeiting, in the form of tungsten gold substitutes coming to the W.C.Heraeus foundry, which is the world’s largest privately-owned precious metals refiner and fabricator, located in Hanau, Germany. The foundry has isolated at least one 500-gram tungsten bar due for melting, originating from a (so far) unnamed bank, which as the head of the foundry stated made the unpleasant discovery that “not all the glitters is gold.”

http://cryptogon.com/?p=14094

 

SIBEL EDMONDS, a former FBI translator, claims that the following government officials have committed what amount to acts of treason.

They are lawmakers Dennis Hastert, Bob Livingston, Dan Burton, Roy Blunt, Stephen Solarz and Tom Lantos, as well as at least three members of George W. Bush’s inner circle: Douglas Feith, Paul Wolfowitz and Marc Grossman. But is Sibel Edmonds credible?

“Absolutely, she’s credible,” Senator Chuck Grassley (R-Iowa) told CBS’s 60 Minutes when he was asked about her in 2002. “The reason I feel she’s very credible is because people within the FBI have corroborated a lot of her story.” Edmonds’s remarkable allegations of bribery, blackmail, infiltration of the U.S. government and the theft of nuclear secrets by foreign allies and enemies alike rocked the Bush Administration. In fact, Bush and company actually prevented Edmonds from telling the American people what she knew—up until now.

John M. Cole, an 18-year veteran of the FBI’s Counterintelligence and Counterespionage departments, revealed the panic of upper-echelon officials when Edmonds originally started talking back in 2002. “Well, the Bureau is gonna have to try to work something out with Sibel,” Cole said an FBI executive assistant told him at the time, “because they don’t want this to go out and become public.”

But they couldn’t “work something out with Sibel” because, it seems, she wasn’t looking to make a deal. Edmonds says she was looking to expose what she believed to be the ugly truth about the infiltration of the U.S. government by foreign spies. They were enabled, Edmonds claimed, by high-ranking U.S. officials and insider moles planted at nuclear weapons facilities around the nation.

“Everybody at headquarters level at the Bureau knew what she was saying was extremely accurate,” Cole said recently. “They were trying to figure out ways of keeping this whole thing quiet because they didn’t want Sibel to come out.”

Her under-oath testimony for the Ohio Election Commission, given in a recent videotaped deposition, is both shocking and horrifying. (Edmonds was the star witness for Congressional candidate David Krikorian in connection with a formal complaint initiated by Representative Jean Schmidt [R-Ohio]. Challenging her in 2008, a Krikorian flyer had accused Schmidt of accepting “blood money” from Turkish interests to help block a House bill recognizing Turkey’s genocide of Armenians in 1915.) The deposition was allowed to proceed by the Obama Administration, which chose not to invoke the draconian and little-known “State Secrets Privilege” to gag her, as the previous administration had done, twice.

Edmonds testified that Congressman Dennis Hastert (R-Illinois), a former Speaker of the House, was involved in “several categories” of corruption on behalf of Turkish agents, according to information she claims to have heard while translating and analyzing FBI counterintelligence wiretaps recorded from 1996 through 2002. She mentioned his “acceptance of large sums of bribery in forms of cash or laundered cash” coupled with the ability “to do certain favors…make certain things happen for… [the] Turkish government’s interest.”

Edmonds also alleged, on the public record, Hastert’s use of a “townhouse that was not his residence for certain not very morally accepted activities” and said that “foreign entities knew about this. In fact, they sometimes participated in some of those…activities in that particular townhouse.”

The allegations against Hastert include accepting some half-million dollars in bribes. While several FBI sources have corroborated Edmonds’s account, the best Hastert’s attorneys could do was offer a nondenial denial to the charges. But the proof, as they say, may be in the post-Congressional pudding. As Edmonds had predicted years earlier, Hastert—who left Congress in 2007—now makes $35,000 a month lobbying his old colleagues as a registered foreign agent for the Turkish government.

Former Congressman Bob Livingston (RLouisiana), who was set to become Speaker prior to Hastert until evidence of a sexual affair was revealed by Larry Flynt, was described in Edmonds’s deposition as having participated in “not very legal activities on behalf of foreign interests” before leaving office in 1999. Afterward, she said, Livingston acted “as a conduit to…further foreign interests, both overtly and covertly,” and also became both a lobbyist and “an operative” representing Turkish interests.

According to Edmonds, Representative Roy Blunt (R-Missouri)—likely to run for a U.S. Senate seat in 2010—was “the recipient of both legally and illegally raised…campaign donations from…Turkish entities.” Edmonds also claimed that hard-right Representative Dan Burton (R-Indiana), who was instrumental in the impeachment of President Bill Clinton, carried out “extremely illegal activities” and covert operations that were “against the United States citizens” and “against the United States’ interests.”

Edmonds named allegedly traitorous Democrats too. She said that former New York Congressman Stephen Solarz, now also a lobbyist, “acted as conduit to deliver or launder contributions and other bribe[s, including blackmail] to certain members of Congress.” And, according to Edmonds, the late Congressman Tom Lantos (D-California) was said to have been involved in “not only…bribe[ry], but also…disclosing [the] highest level protected U.S. intelligence and weapons technology information both to Israel and to Turkey [and] other very serious criminal conduct.”

The most overtly salacious of the allegations involved Representative Jan Schakowsky (D-Illinois), who is “married with…grown children, but she is bisexual,” according to Edmonds. The FBI whistleblower described how Schakowsky was “hooked” by Turkish agents into having a lesbian “sexual relationship with one of their spies,” and “the entire episodes of their sexual conduct was being filmed because the entire house…was bugged…to be used for certain things that they wanted to request.”

Edmonds noted, however, that she didn’t “know if she [Schakowsky] did anything illegal afterwards” since Edmonds was fired by the FBI before learning what came of that particular setup. The Turks, she said, intended to get at Schakowsky’s husband, lobbyist Robert Creamer, who in April 2006 began serving five months in prison (and 11 months of house arrest) for check-kiting and failing to collect withholding tax.

Schakowsky’s office has vehemently denied the allegations. As head of the U.S. House Intelligence Committee’s Subcommittee on Oversight and Investigation, Schakowsky might be expected to hold hearings on any of the former FBI employee’s revelations but she has not. She has also refused Edmonds’s challenge to take a polygraph test and has not yet sued her for libel, as the whistleblower has challenged her to do.

Edmonds’s most disturbing allegations, however, may be against high-ranking appointed officials in the Bush Administration. Elaborating on testimony she laid out in her sworn deposition, Edmonds told American Conservative magazine’s Phil Giraldi—a 17-year CIA counterterrorism officer—very specific details of alleged traitorous schemes perpetrated by top State and Defense Department officials. As already noted, these included Douglas Feith, Paul Wolfowitz and, perhaps most notably, former Deputy Undersecretary of State Marc Grossman, the third-highest-ranking official in the Bush State Department.

Edmonds said that Feith and Wolfowitz were involved in plans to break Iraq into U.S. and British protectorates months prior to 9/11. She also claimed that the duo shared information with Grossman on how to blackmail various officials and that Grossman had accepted cash to help procure and sell nuclear weapons technology to Israel and Turkey—and, from there, on to the foreign black market. There the technology would be purchased by the highest bidder, such as Pakistan, Iran, Libya, North Korea or possibly even al-Qaeda.

Additionally, Edmonds claimed that Grossman, the U.S. Ambassador to Turkey before taking his State Department post, had tipped off Turkish diplomats to the true identity of covert CIA operative Valerie Plame Wilson’s front company, Brewster Jennings & Associates, a full three years prior to their being publicly outed by columnist Robert Novak. That in itself, according to George H.W. Bush, would be an act of treason carried out by “the most insidious of traitors.”

Former CIA counterterrorism officer Giraldi summed up Edmonds’s disclosures to me in blunt terms: “This was a massive coordinated espionage effort directed against United States nuclear secrets engineered by foreign agents who successfully corrupted senior government officials and legislators in our Congress. It’s that simple.”

According to a declassified version of a 2005 Department of Justice Inspector General’s report, Sibel Edmonds’s allegations are “credible,” “serious” and “warrant a thorough and careful review by the FBI.”
Perhaps more damningly, the FBI’s John Cole recently confirmed a key element of Edmonds’s claims when he revealed the existence of “the FBI’s decade-long investigation” of the State Department’s Grossman. Edmonds claimed that Grossman was perhaps the top U.S. ringleader for the entire foreign espionage scheme. The probe, Cole added, “ultimately was buried and covered up.”

Cole, who now works as an intelligence contractor for the Air Force, not only finds Edmonds “very credible,” but also confirms the “ongoing and detailed effort by Turkey to develop influence in the United States” through a number of illegal means.

“Turkish individuals would ask for favors—ya know, ‘You help me out, and I’ll help you out’—and basically what would happen is the elected official would either receive money or some kind of gift,” Cole explained. “Or, if it was a government employee, I’ve seen it where after they retired, they get these very lucrative positions with a Turkish company, or whatever the country may be.”

As noted, Hastert now works for Turkey, and Grossman now works for a Turkish company and as a lobbyist—no doubt raking in a pretty penny from both. Hastert and Grossman repeatedly ignored requests to comment on these charges.

The mainstream U.S. media, however, apparently remain uninterested in investigating any of it. Not even after Cole himself called for a “Special Counsel” to investigate and prosecute. So what the hell is going on here?
Giraldi believes that, as with companies such as AIG and GM becoming “too big to fail,” the size and success of this massive national security espionage scandal has simply become too big to bust.

He told me, “You have to look at Marc Grossman being part of a much bigger operation in terms of the Israelis and the Turks obtaining influence over our legislators and over a number of senior government officials at the Pentagon and State Department. Because this thing was so big, and it affected both Democrats and Republicans, I think the U.S. government is terrified of opening up this Pandora’s box.”

Giraldi added, “The people in Congress and in the Justice Department who should be investigating this…and also in the media—because the media is tied hand and foot to government—this is all part of one big, you know, conspiracy, if you want to look at it this way. And, essentially, this is a story that they don’t want to get out.”

So why, exactly, isn’t the media covering Sibel Edmonds, whom the ACLU once described as “the most gagged person in the history of the U.S.,” now that she is finally able to tell her story? It’s a story, after all, that the legendary 1970s whistleblower Daniel Ellsberg has deemed “far more explosive than the Pentagon Papers.”

“If we had an effective mainstream media that was going after this story, that would make it come out,” Giraldi noted. “But we don’t have an effective media.” He then pointed out one more reason for the media’s reluctance to dig into this story: “According to Sibel, Grossman actually bragged that he would get from the Turks the information that they wanted to appear in an article. He would write it up, and he would fax it over to the New York Times, and they would print it just as he had written it under somebody else’s byline.”

Guess we won’t expect any coverage of this scandal from the New York Times, “the paper of record,” any time soon. And if a story isn’t covered by the Times, and thereafter picked up by everybody else, did it really happen? Given the complicity of the media with regard to Sibel Edmonds, it would appear the government never even needed to invoke the “State Secrets Privilege” in the first place.

As of this writing, HUSTLER stands to be the largest, most “corporate” U.S. outlet in which these startling, now-public, on-the-record disclosures have been reported. The moral: Pull off a large enough crime, and it becomes too big to do anything about.

By Brad Friedman

http://www.blacklistednews.com/news-7532-0-5-5--.html

Does anyone find this weird? This report was dated on Feb.7th, 2010. What are your thoughts about this?

1. Gaithersburg, MD Gaithersburg Police Chief John King resigned with little explanation last week, leaving his colleagues and community members wondering what happened.

2. Guttenberg, IA Police Chief Resigns After Seven Months on the Job, no reason

3. Harrisburg, PA - Richard Pickles retires after serving a month as Harrisburg police chief

4. Culpeper, VA When Scott Barlow announced two weeks ago he would step down from his job as chief of police with the town of Culpeper, it caught a lot of people off guard, including us.

5. Carbondale, IL - Police Chief Resigns, no reason given

6. Austin, MN - Several Austin City Council members said they were "shocked" by Austin Police Chief Paul Philipp's resignation Tuesday morning.

7. Jonesboro, GA - The City of Jonesboro’s new police chief has resigned, five weeks after being named to the top job.

8. Manassas, VA - found this quote: "I hope the Chief enjoys his retirement. Between his service in the Secret Service, Fairfax and Manassas, he’s earned it."

9. West Covina, CA - Tolich, a 21-year veteran of the force, retired nine years before he was eligible for full retirement benefits, Finance Director Thomas Bachman said.

In an email Tolich sent to members of the department, he tells fellow officers that a personal matter involving him and his family led to the sudden departure.

These were either benign stories or little info given. (Bearing in mind that a seasoned cop could probably make a pretty believable alibi for leaving.)

10. Oroville, CA

11. Burlington City, PA

12. Bellmead, TX

13. Bridgeport, WV

14. Gaston, ID

15. Meigs, GA

16. Independence, LA

17. Miami, FL

18. Britt, IA

19. Nickerson, KS

20. New Holland, PA

21. Navarre, OH

22. Glocester, RI

23. Lithonia, GA

24. Harrison, NY

25. Huntsville, AL

26. Moose Lake, MN

27. Boxborough, MA

28. Sutton, WV

29. Itta Bena, MS

30. St. Cloud, FL

31. Menomonie, WI

32. Fanwood, NJ

33. Morton's Gap, KY

34. New Haven, CT

35. Guttenberg, IA

36. South Amboy, NJ

37. Santa Cruz, CA

38. Bakersfield, CA

39. South Pasadena, CA

40. Tulsa, OK

41. Hastings, MN

42. Stamford, CT

43. Dallas, TX

44. Somerville, MA

45. Greensboro, NC

46. Avon, CO

47. Benton, IL

48. Nogales, AZ

49. West Tisbury, MA

50. Gainesville, GA

51. Anniston, AL

52. West Richland, WA

53. Watford City, ND

54. Ponce Inlet, FL

55. Clearwater, FL

56. Monmouth, ME

57. Brookfield, IL

58. Ludowici, GA

59. Orland, CA

60. Springfield, NJ

61. Holt, MO

62. Brookneal, VA

63. Chesterton, IN

64. Edina, MN

65. Birmingham, MI

66. Montebello, CA

67. Vonore, TN

68. Ventnor, NJ

69. New Hartford, NY

70. Kennedy, AL

Some major cities had Police Chief turnover in 2009 (early Infragard info?)

Seattle

Atlanta

Los Angeles

Miami

San Francisco

Dallas

 

 

From youtube:

(note: if the user name includes asterixs, it is to protect the identity of the poster because I recieved the question in a private message and have not recieved explicit permission to post it.)

Question from "wely****":

"do you believe that 911 was an inside job ? or they just let it happen ? this is a huge difference
I know that Afghanistan war was planned before 911 .. but what do you think about all Bin Laden's tapes and confessions ? are they fabricated as many people say ??
and of course war on Iraq was not coz of the WMD or coz of the "ties" to al-Qaeda, but for oil
you know ? it's really sad when I read that the media is controlled by the govt in America .. the country that talks about freedom all day and night ..
but I think you have the ability to establish your own TV channel and say whatever you want or to write an article in a famous newspaper to express your opinion .. come on, man ... it's america .. you gotta have some space to talk and express your doubts
I know that the US administrators behave like any dictator in the third world but at least you have many free people who believe in peace and truth like Seymour Hersh who revealed The My Lai Massacre in Vietnam
God be with you, and really wish you all luck"

 

My Reply:

 

It appears to me that 9-11 was a result of at minimum - active complicity from several high ranking officials. There is no other way to explain the repeated failures of advanced security measures designed to prevent things like that from happening - in addition to the physical anomalies such as the speed of the building collapse, strange heat signatures, and the traces of military grade explosives. As far as Bin Laden's tapes - it is documented that Osama Bin laden was a CIA asset under the code name "Tim Osmand" during the conflict with the USSR and Afganistan. They trained him and funded his activities with millions of dollars.

Do you speak Arabic? You may be in a better position to tell me exactly what he did say. I have heard conflicting reports as to his actual words - as I don't speak Arabic I have no way of confirming or denying this.

It also seems to me that the war in Iraq was not just for oil, but a doorway to a strategic presence in the region. I might even go so far as to call it a proxy war with China among other things. I am well aware of the fabrications used to justify invasion, as are many Americans. Regardless of our stance on the reasons, it is abundantly clear the majority of the people of The United States DO NOT want to be there.

Fortunately we do still have some freedom in expressing ourselves - and we do so more than you might imagine as a foreigner looking in judging by our media. The problem is that it is a "grassroots" movement which means it consists of regular working class people struggling to survive day to day, and taking action in their free time. This severely limits the resources available to us. In addition, the ones with all the money know the game is rigged and want to keep it that way because it keeps their bellies fat.

As far as establishing our own TV channel, due to FCC restrictions, prohibitive cost issues, and private networks simply denying people air time - this is nearly impossible. If anything relevant does some how manage to squeeze thru - the rest of the media quickly jumps in to action discrediting the idea in unison. The internet seems to be the last bastion of free speech, and those in power are working day and night to try to pull the plug on that too. Australia, Germany, and France - supposed free democratic nations are also beginning to heavily restrict and filter internet content following the China model.

The sad thing about fascism is that totalitarians really only need to convince about 25% of the population. About 25% will be indifferent or not informed at all, and the rest are easily marginalized or misdirected with the endless steam of mind numbing television programming. That is all it takes to overthrow a democracy.

The United States of America is entering into the most dangerous time in its history right now, and part of the plan to collapse this once free nation is to demonize us around the world so that when it does become violent the rest of the world will not lift a finger to help. I beg of you, please tell anyone that cares to listen that the majority of our people, properly informed would not tolerate the many atrocities committed in the name of our country. Without the support of the rest of the world, I fear America has little time left as a free nation.

Thanks for the good wishes,
Take care
-MV

 

According to the filings in Blake J Robbins v Lower Merion School District (PA) et al, the laptops issued to high-school students in the well-heeled Philly suburb have webcams that can be covertly activated by the schools' administrators, who have used this facility to spy on students and even their families. The issue came to light when the Robbins's child was disciplined for "improper behavior in his home" and the Vice Principal used a photo taken by the webcam as evidence. The suit is a class action, brought on behalf of all students issued with these machines.

If true, these allegations are about as creepy as they come. I don't know about you, but I often have the laptop in the room while I'm getting dressed, having private discussions with my family, and so on. The idea that a school district would not only spy on its students' clickstreams and emails (bad enough), but also use these machines as AV bugs is purely horrifying.

Schools are in an absolute panic about kids divulging too much online, worried about pedos and marketers and embarrassing photos that will haunt you when you run for office or apply for a job in 10 years. They tell kids to treat their personal details as though they were precious.

But when schools take that personal information, indiscriminately invading privacy (and, of course, punishing students who use proxies and other privacy tools to avoid official surveillance), they send a much more powerful message: your privacy is worthless and you shouldn't try to protect it.

http://www.boingboing.net/2010/02/17/school-used-student.html

It appears that this time China's posturing is for real. Following up on our earlier post that Chinese military officials want to "punish" America by selling Treasuries, Asia Times Online is reporting that an explicit directive by the Chinese government has notified reserve managers to sell all risky US assets, including asset backed and corporates, and just hold on to explicitly guaranteed Treasuries and Agency debt. And from following TIC data we know that China's enthusiasm for MBS/Agencies over the past year has been matched solely by that of one Bill Gross.

From Asia Times:

Dollar-denominated risk assets, including asset-backed securities and corporates, are no longer wanted at the State Administration of Foreign Exchange (SAFE), nor at China’s large commercial banks. The Chinese government has ordered its reserve managers to divest itself of riskier securities and hold only Treasuries and US agency debt with an implicit or explicit government guarantee. This already has been communicated to American securities dealers, according to market participants with direct knowledge of the events.

It is not clear whether China’s motive is simple risk aversion in the wake of a sharp widening of corporate and mortgage spreads during the past two weeks, or whether there also is a political dimension. With the expected termination of the Federal Reserve’s special facility to purchase mortgage-backed securities next month, some asset-backed spreads already have blown out, and the Chinese institutions may simply be trying to get out of the way of a widening. There is some speculation that China’s action has to do with the recent deterioration of US-Chinese relations over arm sales to Taiwan and other issues. That would be an unusual action for the Chinese to take–Beijing does not mix investment and strategic policy–and would be hard to substantiate in any event.

Furthermore, demonstrating just how seriously China is approaching a populist-driven adversarial stance with the US, was earlier speculation that instead of unpegging its currency (a move much desired by the US administration in its goal to further weaken the dollar and make China less competitive in the export market), China would reduce its trade balance not by the traditional way of currency inflation, but by the economic textbook footnote approach of raising salaries.

Higher labor costs would cut Chinese export competitiveness while boosting domestic spending power and sustaining economic growth, according to the bank. Premier Wen Jiabao’s government has been pressed by U.S. and European officials to end a 19- month yuan peg to the dollar to help diminish trade and investment imbalances that contributed to the credit crisis.

“Wage increases are a better option because they largely benefit Chinese workers,” Tao Dong, a Credit Suisse economist in Hong Kong who has covered the Chinese and Asian economies for more than 15 years, said in an interview yesterday. “Currency appreciation will only result in Chinese exporters losing out to competitors in countries such as Malaysia and Mexico.”

The strategy may limit gains in the yuan to 3 percent this year, according to Tao. This month’s 13 percent increase in minimum wage in eastern China’s Jiangsu province indicates that higher pay will play an important role in officials’ efforts to rebalance growth in the fastest-growing major economy, Tao said.

The wage decision “argues against a large one-off yuan revaluation,” Ben Simpfendorfer, an economist with Royal Bank of Scotland in Hong Kong, wrote in a note this week.

One thing is certain - China will now focus on doing precisely the opposite of what America would urge Chinese authorities to do, in order to establish itself as the focal point of negotiating leverage and increasingly humiliate the Obama regime. If this involves selling USTs or corporates (both fixed income and equities) so be it. This is further confirmed by carefully worded disclosure in today's copy of China Securities Journal:

The China Securities Journal, a government-backed daily, accused the U.S. in a tough-worded front page editorial of playing the "exchange rate card."

It said that, just as China didn't interfere with Federal Reserve purchases of U.S. Treasuries, "the U.S. has no right to interfere in China's exchange rate policy."

"Whether or not to appreciate is our own business," the newspaper said.

"Whether it will appreciate, when and by how much is an integral part of China's monetary policy."

It is not clear when the asset divestiture directive takes place or if it is already being enforced. Juding by the afterhours action in futures and the currency markets, some dumping may already be taking place. Alternatively, we now know just who it is that sell into every rally (yes, even in this market, every buyer is matched with a seller).

http://www.zerohedge.com/article/china-dumping-begins-reserve-managers-notified-any-non-usg-guaranteed-securities-must-be-div

Are we about to enter a third, and this time fatal, leg of the financial crisis? The problems of euroland which have so unsettled markets this week – and in particular those of Portugal, Ireland, Greece and Spain (the "pigs", as they have become known in financial circles) – are worrying enough in themselves.

But they are also a proxy for much wider concern about how national governments extract themselves from the fiscal and monetary mire they have created in fighting the downturn. It's proving messy, though, and they are running the risk of provoking an even worse crisis in the process.

Think of the three phases of the economic implosion like this. The first was a fairly conventional, if extreme, banking crisis where a cyclical overexpansion of credit and lending suddenly, and violently, corrects itself in a great outpouring of risk aversion.

In the second phase, governments and central banks attempt to counter the economic consequences of this crunch with unprecedented levels of fiscal and monetary support. Temporarily, at least, it seemed to work.

Until now, investors have been happy to finance the resulting deficits, in part because government bonds have seemed the only safe place to put your funds, but also because central banks have, in effect, been creating money to compensate for the paucity of private-sector credit. The mechanism varies from region to region, but much of this new money has found its way into deficit financing.

We are now entering the third, inevitable phase of the crisis where markets question the ability of even sovereign nations to repay their debts. Unnerved by this loss of fiscal and monetary credibility, governments and central banks are being forced, much sooner than they would have wished, to start withdrawing their support.

I say earlier than they would have wished because the recovery is not yet assured. Private demand and credit provision remain subdued. Policy-makers knew they would eventually have to abandon their fiscal and monetary support, but the timing of it may no longer be a matter of choice.

The first tremors around these so-called "exit strategies" occurred in Dubai a few months back when the emirate, fearing for its own solvency, shocked markets by announcing that it no longer stood behind the debts of its financially stretched state-owned enterprises. In this case, Dubai's fellow and richer emirate, Abu Dhabi, eventually came to the rescue.

It is much less clear that Greece, Spain, Portugal and Ireland can rely on similar support, either from richer members of the euro area or the European Central Bank.

For the "pigs", membership of the euro excludes the easy option, which is to devalue and turn on the printing presses according to local needs. Instead, monetary policy, and increasingly fiscal policy too, are dictated by Germany and France, the core euro nations.

Whether the fiscal consolidation demanded is politically feasible looks questionable. And even if these countries do succeed in making the necessary adjustments, they may face a classic deflationary debt spiral, where slashing the deficit causes the economy to shrink further which, in turn, increases the deficit.

Little surprise, then, that one of the big bets in markets right now is that these distressed members of the euro will be forced either into default, or rather like Britain with the ERM in the early 1990s, out of the single currency altogether. Serious knock-on consequences for creditor economies would follow.

Yet to true believers in the doomsday scenario, even an outcome as extreme as this would not be the end of the crisis. Fiscal ruin is not confined to the southern European nations. The hors d'oeuvre consumed, it would be on to the main course – the default of one or more of the big, triple-A rated sovereigns. Financial and economic chaos would follow quickly in its wake.

There's a world of worry out there, fed by self-interested speculators, which is proving hard to counter. Yet things rarely work out as predicted, and though nobody should be in any doubt about the scale of the economic adjustment still to be made in Western economies, more benign outcomes are still possible. Bigger, advanced economies with their own currencies are better placed to manage their exits than the "pigs".

However, right now, both Washington and London seem gripped by the sort of political paralysis that can indeed prove lethal. We should not assume that the sudden loss of market confidence that has afflicted Greece – essentially a developing market economy that should never have been in the euro in the first place – will be confined to the "pigs". The burgeoning size of public indebtedness the world over makes all economies vulnerable.

Even so, this week's tremors should be seen as more of a warning than the beginning of a fatal endgame. The austerity of tighter fiscal and monetary conditions is coming to all of us. With or without the compliance of policy-makers, the markets will impose it. But it doesn't have to be a rout.

http://www.telegraph.co.uk/finance/comment/jeremy-warner/7168631/Eurozone-pigs-are-leading-us-all-to-slaughter.html

Fascism Anyone?

Fascism’s principles are wafting in the air today, surreptitiously masquerading as something else, challenging everything we stand for.

 By Laurence W. Britt  The cliché that people and nations learn from history is not only overused, but also overestimated; often we fail to learn from history, or draw the wrong conclusions. Sadly, historical amnesia is the norm.

 We are two-and-a-half generations removed from the horrors of Nazi Germany, although constant reminders jog the consciousness. German and Italian fascism form the historical models that define this twisted political worldview. Although they no longer exist, this worldview and the characteristics of these models have been imitated by protofascist1 regimes at various times in the twentieth century. Both the original German and Italian models and the later protofascist regimes show remarkably similar characteristics. Although many scholars question any direct connection among these regimes, few can dispute their visual similarities.

 Beyond the visual, even a cursory study of these fascist and protofascist regimes reveals the absolutely striking convergence of their modus operandi. This, of course, is not a revelation to the informed political observer, but it is sometimes useful in the interests of perspective to restate obvious facts and in so doing shed needed light on current circumstances.

 For the purpose of this perspective, I will consider the following regimes: Nazi Germany, Fascist Italy, Franco’s Spain, Salazar’s Portugal, Papadopoulos’s Greece, Pinochet’s Chile, and Suharto’s Indonesia. To be sure, they constitute a mixed bag of national identities, cultures, developmental levels, and history. But they all followed the fascist or protofascist model in obtaining, expanding, and maintaining power. Further, all these regimes have been overthrown, so a more or less complete picture of their basic characteristics and abuses is possible.

 Analysis of these seven regimes reveals fourteen common threads that link them in recognizable patterns of national behavior and abuse of power. These basic characteristics are more prevalent and intense in some regimes than in others, but they all share at least some level of similarity.

    1. Powerful and continuing expressions of nationalism. From the prominent  displays of flags and bunting to the ubiquitous lapel pins, the fervor to show patriotic nationalism, both on the part of the regime itself and of citizens caught up in its frenzy, was always obvious. Catchy slogans, pride in the military, and demands for unity were common themes in expressing this nationalism. It was  usually coupled with a suspicion of things foreign that often bordered on  xenophobia.

    2. Disdain for the importance of human rights. The regimes themselves viewed human rights as of little value and a hindrance to realizing the objectives of the ruling elite. Through clever use of propaganda, the population was brought to accept these human rights abuses by marginalizing, even demonizing, those being targeted. When abuse was egregious, the tactic was to use secrecy, denial, and disinformation.

     3. Identification of enemies/scapegoats as a unifying cause. The most significant common thread among these regimes was the use of scapegoating as a  means to divert the people’s attention from other problems, to shift blame forfailures, and to channel frustration in controlled directions. The methods of choice—relentless propaganda and disinformation—were usually effective. Often the regimes would incite “spontaneous” acts against the target scapegoats, usually communists, socialists, liberals, Jews, ethnic and racial minorities, traditional  national enemies, members of other religions, secularists, homosexuals, and“terrorists.” Active opponents of these regimes were inevitably labeled as terrorists and dealt with accordingly.

    4. The supremacy of the military/avid militarism. Ruling elites always identified closely with the military and the industrial infrastructure that supported it. A disproportionate share of national resources was allocated to the military, even  when domestic needs were acute. The military was seen as an expression of nationalism, and was used whenever possible to assert national goals, intimidate other nations, and increase the power and prestige of the ruling elite.

    5. Rampant sexism. Beyond the simple fact that the political elite and the national culture were male-dominated, these regimes inevitably viewed women as second-class citizens. They were adamantly anti-abortion and also homophobic. These attitudes were usually codified in Draconian laws that enjoyed strong support by the orthodox religion of the country, thus lending the regime cover for its abuses.

     6. A controlled mass media. Under some of the regimes, the mass media were  under strict direct control and could be relied upon never to stray from the party line. Other regimes exercised more subtle power to ensure media orthodoxy. Methods included the control of licensing and access to resources, economic pressure, appeals to patriotism, and implied threats. The leaders of the mass  media were often politically compatible with the power elite. The result was usually success in keeping the general public unaware of the regimes’ excesses.

     7. Obsession with national security. Inevitably, a national security apparatus was under direct control of the ruling elite. It was usually an instrument of oppression, operating in secret and beyond any constraints. Its actions were justified under the rubric of protecting “national security,” and questioning its activities was portrayed as unpatriotic or even treasonous.

    8. Religion and ruling elite tied together. Unlike communist regimes, the fascist and protofascist regimes were never proclaimed as godless by their opponents. In fact, most of the regimes attached themselves to the predominant religion of the country and chose to portray themselves as militant defenders of that religion. The fact that the ruling elite’s behavior was incompatible with the precepts of the religion was generally swept under the rug. Propaganda kept up the illusion that the ruling elites were defenders of the faith and opponents of the “godless.” A perception was manufactured that opposing the power elite was tantamount to an attack on religion.

     9. Power of corporations protected. Although the personal life of ordinary citizens was under strict control, the ability of large corporations to operate in relative freedom was not compromised. The ruling elite saw the corporate structure as a way to not only ensure military production (in developed states), but also as an additional means of social control. Members of the economic elite were often pampered by the political elite to ensure a continued mutuality of interests, especially in the repression of “have-not” citizens.

    10. Power of labor suppressed or eliminated. Since organized labor was seen as the one power center that could challenge the political hegemony of the ruling elite and its corporate allies, it was inevitably crushed or made powerless. The poor formed an underclass, viewed with suspicion or outright contempt. Under some regimes, being poor was considered akin to a vice.

    11. Disdain and suppression of intellectuals and the arts. Intellectuals and the inherent freedom of ideas and expression associated with them were anathema to these regimes. Intellectual and academic freedom were considered subversive to national security and the patriotic ideal. Universities were tightly controlled; politically unreliable faculty harassed or eliminated. Unorthodox ideas or expressions of dissent were strongly attacked, silenced, or crushed. To these regimes, art and literature should serve the national interest or they had no right to exist.

    12. Obsession with crime and punishment. Most of these regimes maintained Draconian systems of criminal justice with huge prison populations. The police were often glorified and had almost unchecked power, leading to rampant abuse. “Normal” and political crime were often merged into trumped-up criminal charges and sometimes used against political opponents of the regime. Fear, and hatred, of criminals or “traitors” was often promoted among the population as an excuse for more police power.

    13. Rampant cronyism and corruption. Those in business circles and close to the power elite often used their position to enrich themselves. This corruption worked both ways; the power elite would receive financial gifts and property from the economic elite, who in turn would gain the benefit of government favoritism. Members of the power elite were in a position to obtain vast wealth from other sources as well: for example, by stealing national resources. With the national security apparatus under control and the media muzzled, this corruption was largely unconstrained and not well understood by the general population.

    14. Fraudulent elections. Elections in the form of plebiscites or public opinion polls were usually bogus. When actual elections with candidates were held, they would usually be perverted by the power elite to get the desired result. Common methods included maintaining control of the election machinery, intimidating an disenfranchising opposition voters, destroying or disallowing legal votes, and, as a last resort, turning to a judiciary beholden to the power elite.

 Does any of this ring alarm bells? Of course not. After all, this is America, officially a democracy with the rule of law, a constitution, a free press, honest elections, and a well-informed public constantly being put on guard against evils. Historical comparisons like these are just exercises in verbal gymnastics. Maybe, maybe not.
 

"When facism comes to America, it will be wrapped in the American flag."  - Huey Long

                                 Notes:

 1. Defined as a “political movement or regime tending toward or imitating Fascism”—Webster’s Unabridged Dictionary.

                                 References                                  Andrews, Kevin. Greece in the Dark. Amsterdam: Hakkert, 1980.
                                 Chabod, Frederico. A History of Italian Fascism. London: Weidenfeld, 1963.
                                 Cooper, Marc. Pinochet and Me. New York: Verso, 2001.
                                 Cornwell, John. Hitler as Pope. New York: Viking, 1999.
                                 de Figuerio, Antonio. Portugal—Fifty Years of Dictatorship.
                                     New York:Holmes& Meier, 1976.
                                 Eatwell, Roger. Fascism, A History. New York: Penguin, 1995.
                                 Fest, Joachim C. The Face of the Third Reich. New York: Pantheon, 1970.
                                 Gallo, Max. Mussolini’s Italy. New York: MacMillan, 1973.
                                 Kershaw, Ian. Hitler (two volumes). New York: Norton, 1999.
                                 Laqueur, Walter. Fascism, Past, Present, and Future. New York: Oxford, 1996.
                                 Papandreau, Andreas. Democracy at Gunpoint. New York: Penguin Books, 1971.
                                 Phillips, Peter. Censored 2001: 25 Years of Censored News. New York: Seven
                                 Stories. 2001.
                                 Sharp, M.E. Indonesia Beyond Suharto. Armonk, 1999.
                                 Verdugo, Patricia. Chile, Pinochet, and the Caravan of Death. Coral Gables,
                                 Florida: North-South Center Press, 2001.
                               Yglesias, Jose. The Franco Years. Indianapolis: Bobbs-Merrill, 1977.

 

http://www.informationclearinghouse.info/article4113.htm