31 August, 2009

Sri Lanka War Crimes (told you so!)

Last night I watched another video in our
newsroom, this time from Sri Lanka.

It was sent to us by a group of exiled
journalists. It was chillingly reminiscent of
the Bosnia video.

The casual banter and laughter of the
uniformed killers was what I immediately
found so callous and shocking, as they kicked
in the head and then shot -- point-blank --
their bound, blindfolded, naked victims.

The raw footage -- one continuous shot
lasting one minute and eight seconds -- is
sickening.

The group Journalists for Democracy in Sri
Lanka -- comprised of Tamils and Sinhalese --
claim the footage they.d obtained was filmed
in January this year and depicts the
extra-judicial execution of Tamils by Sri
Lankan government soldiers.

This video contains images that some may find
distressing.

http://c.brightcove.com/services/viewer/feder
ated_f8/1184614595
http://blogs.channel4.com/snowblog/2009/08/26
/authenticating-the-sri-lanka-war-crimes-foot
age/

http://tangibleinfo.blogspot.com/2009/01/help
-massacre-in-progress-do-something.html

I think Steven Spielberg would have had a
hard job staging this grim scene.

We were unable to verify the authenticity of
the footage, but we did our level best to do
so and we would not have broadcast our report
had we not been confident with the expert
analysis we received.

Before we went to air, I watched the video
with a leading Sri Lankan human rights
investigator -- a Sinhalese himself -- who
provided forensic insights into its
authenticity.

This investigator has many years of
experience looking into abuses and impunity
in his homeland, but he.d never seen anything
like this.

Many detractors have made their points of
view clear in emails to Channel 4 News or on
the websites of newspapers like Sri Lanka.s
Daily Mirror.

While it.s true that Tamil Tiger insurgents
were known to masquerade in government
uniforms, what makes the video credible is
that telltale casual dialogue between the
killers as they dispatch their helpless
captives.

In rough provincial Sinhala accents, they
jokingly argue over who gets to shoot whom.

They take turns, mockingly play-acting the
popular folk game .kurupiti gahanawa wage. --
.Your Turn, My Turn..

When the Bosnian Scorpion video emerged in
Belgrade in 2005, the then UN War Crimes
Prosecutor was in Belgrade and commented: "I
have seen the video and there is no doubt
about the perpetration of crimes."

Two years later, a Serbian war crimes court
sentenced four members of the group to a
total of 58 years in prison for the
extrajudicial executions.

Will this happen in Sri Lanka, if this video
is indeed authenticated and these killings
deemed prima facie evidence of war crimes?

The answer is a resounding "No."

The Sri Lankan government has summarily
rejected all calls for an independent
investigation into alleged war crimes.

It is not within the jurisdiction of the
International Criminal Court to investigate
alleged war crimes in a state which is not
party to the Rome statute (Sri Lanka isn.t)
or in the absence of a UN Security Council
Resolution, which instructs the ICC to
investigate. This extremely unlikely to
happen.


=======================

TRO Vanni appeals to the people of Tamil
Nadu, the Government of India, the
international community and international
humanitarian organizations for the immediate
delivery of medical supplies by land, sea or
air within the next 24 hours.

Tamils Rehabilitation Organisation Head
Office: 254 Jaffna Road, Kilinochchi, Sri
Lanka Ph/Fax: +94 (0) 21 228 3947

http://www.hawaii.edu/powerkills/RM1.TAMILS.B
OMBED.JPG

Tamils murdered by bombing

26 January 2009


Over the last 24 hours over 300 civilians who
were awaiting relief and medical assistance
within the "Safety Zone" declared by the
Government of Sri Lanka have been killed and
several thousand injured in Udaiyaarkaddu,
Suthanthirapuram, and Vallipuram in the
Mullaitivu District by Sri Lanka Army
multi-barrel artillery and mortar shelling by
the Sri Lanka armed forces.

TRO Vanni is making an URGENT APPEAL to the
people of Tamil Nadu, the Government of
India, the Royal Norwegian Government, the
international community, international
humanitarian organizations and the United
Nations for the immediate delivery of medical
supplies and medical teams to the hospitals
in the Vanni.

These medical supplies must arrive within the
next 24 hours if the lives of these injured
are to be saved. If these supplies do not
arrive immediately there will be a nitarian
catastrophe of enormous proportions and
hundreds more will die.

The heavy shelling and bombing has caused
terror in the civilian population and many
have run into the jungles seeking refuge.
Many of these people are injured and are in
dire need of assistance.

Medical personnel and volunteers are unable
to access these areas due to continuous
shelling. All of the hospitals in the Vanni,
Kilinochchi Hospital and Mullaitivu Hospital,
have been displaced and are functioning in
schools or other public buildings. These
displaced hospitals have been stretched to
their limit due to the continuous bombing and
shelling of the Vanni over the past few
months.

The injured have no access to medical
supplies and there are not enough doctors and
other medical staff available to treat the
population.

The continuing indiscriminate aerial
bombardment and shelling by the Sri Lanka
armed forces has caused immense destruction
and suffering, which has been exacerbated by
the Government of Sri Lanka.s draconian
embargoes on supplies of food, medicine,
fuel, tents, tarpaulins, and other
humanitarian relief items to the people. The
attacks and the embargoes comprise a callous
effort to drive the population of the Vanni,
on pain of death and injury, into
military-controlled areas.

http://www.spur.asn.au/EPDP_Murder_Man_and_In
fant.jpg

TRO Vanni appeals to the people of Tamil
Nadu, the Government of India, the
international community and international
humanitarian organizations for the immediate
delivery of medical supplies by land, sea or
air within the next 24 hours.

Tamils Rehabilitation Organisation Head
Office: 254 Jaffna Road, Kilinochchi, Sri
Lanka Ph/Fax: +94 (0) 21 228 3947

BBC buries .. the murder of Sri Lanka
journalist who said that the Sri Lanka DEEP
STATE bombs its own citizens!

SirLanka is one of the countries...
QUOTE: "..in the world routinely to bomb its own citizens."

(think 9/11, bali, madrid 11 march, bologna gladio)

http://u2r2h-documents.blogspot.com/2007/07/uk-carnage-attempt-in-basra.html

http://cache.daylife.com/imageserve/07ZR9p321
S4Ll/610x.jpg

On April 20, a roadside bomb set off by
government soldiers in rebel-held territory
in Sri Lanka killed a Roman Catholic priest
who was also a human rights activist.
Reverend MX Karunaratnam accused the
government of committing serious human rights
violations in its military campaign against
the Tamil Tigers.

gravely concerned following the killing of
human rights defender Rev. Fr. M X
Karunaratnam, Chairperson of the NorthEast
Secretariat on Human Rights (NESoHR), in
Vanni on 20 April 2008. NESoHR is a local,
independent human rights monitoring body in
the North East of Sri Lanka. Further
Information

Posted 20/05/2008 On 20 April 2008, at
approximately 12:30pm, Rev. Fr. M X
Karunaratnam was killed in a claymore
anti-personel mine attack on
Mallaavi-Vavunikku'lam Road in Vanni. Rev.
Fr. M X Karunaratnam used the road regularly
to get to his residential prayer and
counselling centre in Vavunikku'lam. His
vehicle was known publicly.

On this occasion he was on his way to a
remembrance event for Mr Sivanesan, an MP for
the Tamil National Alliance (TNA), who was
reportedly also killed in a claymore
anti-personel mine attack on 6 March 2008.
Rev. Fr. M X Karunaratnam's car had broken
down and he was steering it whilst being
towed. The car which was towing him was not
targeted.

Some reports have claimed that the Deep
Penetration Unit of the Sri Lankan army was
responsible for these killings. Front Line is
calling for an immediate, exhaustive, and
impartial investigation into the killing of
Rev. Fr. M X Karunaratnam.

In a recent report Rev. Fr. M X Karunaratnam
called for a United Nations body to be
established to monitor human rights
violations in Sri Lanka. He added that Sri
Lanka's human rights record was totally
unacceptable and that there had been many
adverse reports on human rights violations
against Tamils.

http://www.tamilnation.org/images/boundaries/
060118jaffnadisplacement1%20copy.gif

Wickramatunga is the latest in a long line of
Sri Lankan journalists who have been murdered
or silenced over the past two decades.

M. X. Karunaratnam was born in Jaffna.He was
a officer with the Bank of Ceylon before he
was opdained as a priest in 1989.Father
Karunaratnam was founder and Chairman of
NESHOR.He was also the Chairman of NGO
Consortium of Jaffna.He was engaged in relief
work for War displaced and worked in the
Tsunami relief.

M. X. Karunaratnam was a priest of the Jaffna
Diocese and served in the Vanni region of Sri
Lanka and worked from the LTTE controlled
parts of Sri Lanka. He worked for human
rights and called on the United Nations and
foreign human rights organisation to monitor
the human rights situation in Sri Lanka .
Earlier two other NESHOR
members and Tamil National Alliance MPs
Ariyanayagam Chandra Nehru and Joseph
Pararajasingham were killed.He was extremely
critical of the Sri Lankan government.

He was killed in the Mallaavi-Vavunikku'lam
Road in Vanni after he was returning from a
Sunday mass and going to a remembrance
ceremony for a Tamil National Alliance MP a
pro LTTE party Kiddinan Sivanesan who was
also killed similar fashion.He killed by a
claymore blast carried out allegedly by a
Deep Penetration Unit (DPU) of the Sri Lanka
Army.


http://www.unhcr.org/refworld/country,,USDOS,
,LKA,,48d5cbf9c,0.html 2008 Report on
International Religious Freedom - Sri Lanka

Released by the Bureau of Democracy, Human
Rights, and Labor Cite as United States
Department of State, 2008 Report on
International Religious Freedom - Sri Lanka,
19 September 2008. Online. UNHCR Refworld,
available at:
http://www.unhcr.org/refworld/docid/48d5cbf9c
.html
[accessed 27 January 2009]

In April 2008 the Bishop of Mannar moved the
historical statue of Our Lady of Madhu from
Madhu Church to St. Xavier's Church in
Thevanpiddy to protect it from increasing
hostilities between government security
forces and the LTTE in the area. The Bishop
of Mannar asked the Government and the LTTE
to stay at least 1.2 miles away from the
church to enable civilian access.

In April 2008 Pastor Huthin Manohar from
Mannar was released from custody after 48
days in detention. Manohar's name was given
to police by Pastor Nahulan from the
Foursquare Church who was arrested in
February for transporting LTTE equipment and
explosives in his van. Police appear to be
investigating all pastors who may have been
closely associated with Nahulan or who may
have used his van. Six other pastors from the
Foursquare Church were arrested and later
released.

In April 2008 a Sri Lanka Army (SLA) claymore
antipersonnel mine allegedly killed the
Chairman of the North East Secretariat on
Human Rights, Father M. X. Karunaratnam, in
Vanni (Northern Province).

In March 2008 the Foursquare Gospel Church in
Kelaniya, Gampaha District was informed by
the Chairman of the Pradeshiya Sabha that the
approvals for constructing a new church
building were revoked and that work must stop
immediately. No reason was given for the
reversal.

In January 2008 UNP parliamentarian T.
Maheswaran was killed at a Hindu temple in
Kotahena. The main suspect is a former member
of Maheswaran's security detail who has
connections to the progovernment Tamil party
Eelam's People Democratic Party. However, the
Inspector General of Police stated the LTTE
was responsible.

In October 2007 the bodies of Vavuniya Pastor
Victor Yogarajan and his two sons were found
buried near Negombo. The three had been
missing since March 2007.

In September 2007 an SLA claymore mine killed
Father Nicholaspillai Packiyaranjit, Mannar
Coordinator of Jesuit Refugee Service, in
Mannar.

In September 2007 unidentified men abducted,
severely abused, and killed Hindu priest
Subramaniasharma Ketheswara Kurukkal in
Jaffna as he was traveling to visit
relatives. His body was found on the road.

In September 2007 the chief monk of the
Boddhirukkaramaya Temple led a protest
against expansion work being performed on a
Catholic church just north of Colombo.
Protesters demanded that construction stop
immediately, warning lives would be otherwise
lost. A judge told Father Susith Silva to
suspend the church expansion. In October 2007
police interrupted mass at the same church
and sent worshipers home. The chief monk
stated that Buddhists in the area do not want
a church nearby and would not allow the
building to proceed.

In April 2007 an exchange of fire between the
Sri Lanka Navy and a group of youths during a
cordon and search operation killed Hindu
priest Ratnasabapathy Aiyar Somaskantha in
Velanai, Jaffna.

In January 2007 government security forces
shot and killed Reverend Nallathamby
Gnanaseelan of the Tamil Mission Church of
Jaffna.

In August 2006 Father Thiruchchelvan Nihal
Jim Brown and his assistant, Wenceslaus
Vinces Vimalathas, disappeared after six
armed men followed them from a security
forces checkpoint near a predominantly
Catholic neighborhood near the Jaffna
peninsula. In March 2007 local press reported
that DNA tests confirmed Father Brown's
death; however, in June 2007 the Ministry of
Foreign Affairs stated the opposite.

In August 2006 government troops were accused
of firing into Philip Nerean Church in
Allapiddy, Kayts Island (Northern Province),
Father Jim Brown's church. Approximately 30
civilians died.

In June 2006 in Pesalai, government troops
were accused of opening fire at a Christian
church where hundreds of civilians, including
both Christian and Hindu Tamils, were seeking
shelter from an exchange of fire between the
Government and the LTTE.

In May 2006 eight Tamil men were abducted
from a Hindu temple in the north as they were
decorating the temple for a religious
festival. Eyewitnesses claimed the eight men
were taken away by Army personnel. However,
at the end of the reporting period, no action
had been taken by the Human Rights Commission
in Jaffna in response to petitions filed with
the UN Special Rapporteur for Extra-Judicial
Killings by the next of kin of the abducted.
The whereabouts of the missing individuals
remained unknown.

In 2005 Joseph Pararajasingham, a Member of
Parliament for the pro-LTTE Tamil National
Alliance (TNA) and a Christian, was
assassinated while attending midnight mass at
a church in Batticaloa in the east.


Wickramatunga

He also blames Sri Lanka's Deep State with
his murder and regular [[Gladio]]-style
bombing of its own citizens.
http://u2r2h-documents.blogspot.com/2009/01/b
bc-censors-deep-state-example.html
BBC
actor reading Wickramatunga's last article
(audio download and transcript) }}


Lasantha Manilal Wickrematunge(April 5, 1958
- January 8, 2009) was a prominent Sri Lankan
anti-government journalist and
polatician who was assassinated on
January 2009 . He was known for taking
"governments of all hues to task" , was a
"virulent critic of the Mahinda Rajapaksa
government" , and had been "locked in a
legal battle with the president's brother,
defence secretary Gotabaya Rajapaksa" , who
was seeking a military solution to the Tamil
insurgency .

Coming after numerous killings of
anti-government and other journalists -
e.g. P. Devakumaran (stabbed May 2008),
Sampath de Silva (shot April 2006), Taraki
Sivaram (abducted near police station, 2005)
- the murder of such a prominent journalist
was widely condemned across the world. The
Daily Mirror called it the "biggest blow" to
media freedom in Sri Lanka and the Editors
Guild held the government responsible for the
killing as it has failed to stop attacks
against media personnel. The government also
expressed shock at the killing, pledging to
do everything in its power to catch his
killers.

He had been on Amnesty International's
endangered list since 1998 when
anti-tank shells were fired on his house.
In a moving testimonial that was published
after his death, he wrote:

No other profession calls on its
practitioners to lay down their lives for
their art save the armed forces and, in Sri
Lanka, journalism.

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posted by u2r2h at Monday, August 31, 2009 0 comments links to this post

30 August, 2009

Three Dead Kennedys - USA CIA murders -AngloFinance Empire

http://globalresearch.ca/coverStoryPictures/14960.jpg
Three Dead Kennedys


nice photo.. two were murdered by the US secret junta,


Oswald's military intelligence file destroyed in 1973.


Jackie Kennedy's blood-splattered pink and navy Chanel suit that she wore on the day of the assassination is in climate controlled storage in the National Archives. Jackie wore the suit for the remainder of the day, stating "I want them to see what they have done" when asked aboard Air Force One to change into another outfit.



Sirhan Sirhan - Manchurian Candidate


The location of Kennedy's wounds suggested that his
assailant had stood behind him, but some witnesses said
that Sirhan faced west as Kennedy moved through the
pantry facing east. This has led to the suggestion that
a second gunman actually fired the fatal shot, a
possibility supported by coroner Thomas Noguchi, Chief
Medical Examiner-Coroner for the County of Los Angeles.

In 2007, analysis of an audio recording of the shooting
made by freelance reporter Stanislaw Pruszynski
appeared to indicate, according to forensic expert
Philip van Praag, that thirteen shots were fired, even
though Sirhan's gun held only eight rounds.


http://tedhuntington.com/sirhan.jpg


Dec 17, 1963 Richard Helms memo to Deputy Director CIA - Project MKULTRA The present investigation is concerned with chemical agents which are effeftive in modifying the behavior and function of the central nervous system. (1) Materials which will render the induction of HYPNOSIS easier or otherwise enhance it's usefulness. (2) Materials and physical methods which will produce AMNESIA for events preceeding and during their use. author's note; Sirhan has no memory of how he got into the pantry or of shooting Senator Kennedy. p.260 JFK VS. CIA


Thane Eugene Cesar, killed RFK


Sirhan Sirhan, shot and wounded 5 people, missed RFK


I think that Sirhan was a typical fanatical religious human. Sirhan was a typical younger male human, no chance for sex, friendship, science, basically left like most people with the brutal, unfeeling, religious, antisexual humans on earth.


Carl Uenger, maitre-d of the Embassy hotel (where there must have been at least 10 cameras and microphones hidden in each room - where are these vids?), pinned Sirhan against a steam table before Sirhan shot. Sirhan only got 1 or 2 shots off pointed at RFK. 1 missed and hit Paul Schrade, another hit Elizabeth Evans, a 3rd hit William Weisel, 4th Ira Goldstein, and 5th Irwin Stroll (from an 8 shot .22 revolver). After Sirhan started to fire Cesar shot RFK in the armpit, moving the gun up and shooting a second time in the armpit, and finally a third and fatal shot to the back of the head of RFK less than 1 inch away. RFK grabbed the clip-on neck tie on Thane Cesar and that is the neck tie on the ground on the left side of the photo above.

Like the JFK killing, the shocking part of the RFK killing is the number of humans involved that supported the killing of RFK, and the number of humans that protect Thane Cesar. The real hero human of the RFK killing is Thomas Noguchi, the LA county coroner that stuck to the true story that the powder marks indicated the the 3 shots fired from behind RFK were from contact to 1 inch away. Not one person of tens of people including Cesar, puts Sirhan gun less than 2 feet away at any time.

The list of people that covered up that Cesar killed Kennedy is in the thousands. There is going to be a serious exposure and cleaning up operation, in the US government (and on the entire planet).

Thane Cesar is quoted as saying:
He thought the Kennedy family are crooks
Thought the Kennedy brothers were communists, or aided communism. That he gave money to and supported George Wallace (a person that said "segregation forever") in 1968.
the defense lawyer people for Sirhan were paid to lie. They stopped Noguchi from telling the people on the jury that the 3 bullets that killed RFK came from behind and were shot from less than 1 inch away. They never called Thane Cesar to the stand, or implied in any way that Cesar killed RFK. Here Sirhan was going to be killed, but the people in the California State Supreme Court did something to stop all executions, this is a perfect example of how a human was going to be killed that did not kill any human (although Sirhan did try to, and did succeed in wounding at least 5 people, and my vote is for life imprison for this human, but, the idiot US undemocratic court system had already put Sirhan up for parole as early as 1994.

The worst humans involved with the RFK cover up are:
DeWayne Wolfer of LAPD and Cal State Long Beach (destroyed 2 bullets from Ambassedor)
Evelle Younger, DA and later California Attorney General (tried to get Noguchi to change his story)
Russell Parsons, Grant Cooper lawyer humans for Sirhan (did not call Cesar to stand, told Noguchi not to give gory details of distance of gun to RFK)


The entire LAPD (and all government people) must be policed with cameras and microphones. What is amazing is that Darryl Gates, once Police Chief of LA is quoted as saying "casual drug users should be taken out and shot". Stopping homicide, and assaults should have been the number one priority for this human, not doing violence! And this is typical among humans in police and military (and perhaps every where on earth).

That Thane Cesar was not even questioned until volunteering saying something like "don't you want a statement from me?" the grammer Cesar uses is worse than the people in the police, Cesar says "he done shot 5 times by then", not that this is a reason to lock a human in jail. Cesar owned a .22, but was not searched the night RFK was killed, the .45 Cesar had was not taken in as evidence. And even 2 months after the RFK killing the .22 Cesar owned was never taken in as evidence or test fired.

What is shocking is that some people are happy that JFK and RFK were killed. Cesar is quoted as saying that he "ducked and covered" (a reference to a US propoganda film about what to do during a nuclear war), perhaps implying that the Kennedies would have caused a nuclear war. But the reality is that if anybody is going to sink the planet into war, it will be the far right conservative violent humans willing to use the massive military arsenal to start destruction on various parts of earth. Here again, Bush Jr. and Sr. are perfect examples of this kind of person, recklessly using the weapons we all paid for.



I was never enthralled by the Kennedys, because I didn’t think America should be a home to royal families and an aristocracy.

I remember Jack’s equivocations on the War of that time and eventual decision to escalate what was to become a national tragedy. I remember brother Bobby at first hesitant to embrace civil rights and look the other way when civil rights workers like my friend Jerome Smith was beaten in the deep South.

I remember reading about the Mafia like business dealings of their dad, “the Ambassador,” Joe Kennedy who made his fortune running booze during prohibition, and who appeased Hitler when posted to England.

The real power elite is not just made up of politicos. It is controlled by our corporate rulers. They were not in that church. They are in their country clubs and boardrooms, counting their lucre and happy to see right battle left as long as they are left alone to amass their billions. They are behind the attempt to scuttle health care reform, and keep our profitable for some wars going.

“He saw war and tried to stop it,” said Ted of Brother Bob.” But who is trying to stop the wars now? Who is even talking about them?



the U.S. empire does not maintain 872 bases and military missions spread across the length and width of the planet so that its troops can experience the delights of multiculturalism or breathe fresh air of life. It maintains them, at enormous cost, Noam Chomsky has said on numerous opportunities, because they are the principal instrument in a plan of global domination comparable only to that which obsessed Adolf Hitler in the 1930s. To think that those troops and weapons systems are based in Latin America for some reason other than to insure the territorial and political control of a region that experts consider the richest on the planet in terms of its natural resources – water, energy, biodiversity, minerals, agriculture, etcetera – would be unforgivably stupid. These bases are the front-line of a military aggression that may or may not occur today or tomorrow, but will certainly occur when the imperialists consider it convenient.


http://globalresearch.ca/coverStoryPictures/14930.jpg

Hugo Chavez


Venezuela's president has said that he is preparing to break off ties with Colombia over its decision to grant the US military increased access to military bases in the country.

Hugo Chavez said on Tuesday that there was "no possibility" of repairing relations with the government of Alvaro Uribe, his Colombian counterpart, due to the move, which he says could allow the US to target Venezuela.

"We have to prepare the rupture of relations with Colombia ... this is going to happen," Chavez told Nicolas Maduro, his foreign minister, in a conversaton broadcast on state television on Tuesday.

Bogota has said the deal with Washington, which would allow the US military to increase its presence at seven bases under a 10-year lease agreement, is necessary to tackle drug trafficking.

'Declaration of war'

The US deployment on Colombian soil would be capped at 800 troops, according to the agreement, but Chavez has warned that the bases could be used as a launching point to unseat Latin American leaders.

"Those seven Yankee bases there are a declaration of war against the Bolivarian revolution and that's how we see it. A declaration of war," Chavez said.

Bogota and Caracas share a $7bn-a-year trade realtionship, but in light of the military deal, Chavez has threatened to shift many of the country's purchases to Argentina.

He also withdrew his ambassador to Bogota earlier this month, before sending him back several days later.

Venezuela's threat to cut ties with Colombia came before a regional summit in Bariloche, Argentina, on Friday, where Latin American leaders will discuss the US-Colombian security arrangement.

Bolivia and Ecuador, allies of Venezuela, have also criticised the troop deal, but a number of nations in the region have dismissed the concerns, saying that it is purely an internal matter for Colombia.


WASHINGTON -- A recent analysis of the 2007 financial markets of 48 countries has revealed that the world's finances are in the hands of just a few mutual funds, banks, and corporations. This is the first clear picture of the global concentration of financial power, and point out the worldwide financial system's vulnerability as it stood on the brink of the current economic crisis.

A pair of physicists at the Swiss Federal Institute of Technology in Zurich did a physics-based analysis of the world economy as it looked in early 2007. Stefano Battiston and James Glattfelder extracted the information from the tangled yarn that links 24,877 stocks and 106,141 shareholding entities in 48 countries, revealing what they called the "backbone" of each country's financial market. These backbones represented the owners of 80 percent of a country's market capital, yet consisted of remarkably few shareholders.

"You start off with these huge national networks that are really big, quite dense," Glattfelder said. “From that you're able to ... unveil the important structure in this original big network. You then realize most of the network isn't at all important."

The most pared-down backbones exist in Anglo-Saxon countries, including the U.S., Australia, and the U.K. Paradoxically; these same countries are considered by economists to have the most widely-held stocks in the world, with ownership of companies tending to be spread out among many investors. But while each American company may link to many owners, Glattfelder and Battiston's analysis found that the owners varied little from stock to stock, meaning that comparatively few hands are holding the reins of the entire market.

“If you would look at this locally, it's always distributed,” Glattfelder said. “If you then look at who is at the end of these links, you find that it's the same guys, [which] is not something you'd expect from the local view.”

Matthew Jackson, an economist from Stanford University in Calif. who studies social and economic networks, said that Glattfelder and Battiston's approach could be used to answer more pointed questions about corporate control and how companies interact.

"It's clear, looking at financial contagion and recent crises, that understanding interrelations between companies and holdings is very important in the future,” he said. "Certainly people have some understanding of how large some of these financial institutions in the world are, there's some feeling of how intertwined they are, but there's a big difference between having an impression and actually having ... more explicit numbers to put behind it."

Based on their analysis, Glattfelder and Battiston identified the ten investment entities who are “big fish” in the most countries. The biggest fish was the Capital Group Companies, with major stakes in 36 of the 48 countries studied. In identifying these major players, the physicists accounted for secondary ownership -- owning stock in companies who then owned stock in another company -- in an attempt to quantify the potential control a given agent might have in a market.

The results raise questions of where and when a company could choose to exert this influence, but Glattfelder and Battiston are reluctant to speculate.

"In this kind of science, complex systems, you're not aiming at making predictions [like] ... where the tennis ball will be at given place in given time," Battiston said. “What you're trying to estimate is ... the potential influence that [an investor] has."

Glattfelder added that the internationalism of these powerful companies makes it difficult to gauge their economic influence. "[With] new company structures which are so big and spanning the globe, it's hard to see what they're up to and what they're doing,” he said. Large, sparse networks dominated by a few major companies could also be more vulnerable, he said. "In network speak, if those nodes fail, that has a big effect on the network."

The results will be published in an upcoming issue of the journal Physical Review E.




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posted by u2r2h at Sunday, August 30, 2009 0 comments links to this post

14 August, 2009

Uighur Nationalism, Turkey and the CIA

Uighur Nationalism, Turkey and the CIA

Written by Farooq Hussain World Aug 14, 2009

Much was made in the news, earlier this month, of the series of violent clashes that erupted between Uighurs, a Turkic, and predominantly Muslim, minority ethnic group in China, and the Chinese state police, and Han Chinese residents in the the province of Xinjiang, in northwestern China.

But the media.s recent attention to the matter should be seen in light of a larger geo-political strategy, involving Turkey and the CIA, in ongoing furtherance of The Bernard Lewis Plan. Originally implemented under the supervision of Zbigniew Brzezinski during the Carter administration, the plan was based on Lewis. idea of an .Arc of Crisis., created around the southern borders of Soviet Union, by empowering Muslim radicals to rebel against the communists, to bring about the fall of the Soviet Empire. The key aspect of this strategy, over the last 30 years, as revealed in the book and movie, Charlie Wilson.s War, began with support for the Mujahideen in Afghanistan, which became the CIA.s largest covert operation ever.

As outlined in Brzezinski.s Grand Chessboard, control over central Asia, which in addition to Afghanistan, comprises the five former Soviet republics of Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan, is a key factor in mastery of all of Eurasia, and thereby, the world.

Because, as is popularly known, Central Asia holds vast stores of energy resources. Less known, however, is it.s role in the drug trade. Since the implementation of Bernard Lewis. Plan, and the US. involvement in Afghanistan, the country now accounts for almost 95% of the world.s opium production. And it is profits arising mostly from this illicit trade that go largely to financing the deliberate spread of a fabricated brand of Islamic fundamentalism.

As mentioned by noted whistleblower Sibel Edmonds, .You get to a point where it gets very complex, where you have money laundering activities, drug related activities, and terrorist support activities converging at certain points and becoming one..1

Despite years of her testimony being suppressed by the State Secrets Privilege, it is her revelations, discovered in the course of her work for the FBI, that now help explain the significance of the immigration case against Turkish religious leader, Fethullah Gülen, living in self-imposed exile in the Pennsylvania, and explodes this entire complex of American foreign policy in the Middle East and Central Asia, and it.s broader implications for the Islamic world.

Fethullah Gülen, while also leading the movement behind Turkey.s current Islamic renaissance, is one of the key operatives who have been fronting for the CIA in the radicalization of Central Asia, involving drug trafficking, money laundering, and the nuclear black market, and false-flag terrorism.

A number of sources reveal that the Gulen organization has been used as a tool for the Special Operations Department of the Turkish police force, which evolved from the Counter-Guerrilla, the Turkish branch of Operation Gladio.2 Operation Gladio was a clandestine initiative backed by the United States, which after WWII employed former SS to create .stay-behind. anti-communist. It was responsible for the infamous .Strategy of Tension. in Italy during the 70.s, which used false-flag terror operations, like that of the Red Brigade, to destabilize the country.3

In Turkey, there is a popular belief that the Counter-Guerrilla are responsible for numerous unsolved acts of violence, and have exerted great influence over the country.s Cold War history, most notably for engendering the military coups of 1971, and 1980.4

Among the documents that the attorneys for the State Department presented, in favor of rejecting Gulen.s application for a permanent visa, there are claims about the Gülen movement.s financial structure, it being emphasized that the it.s economic power reached $25 billion. The lawyers state:

Because of the large amount of money that Gülen.s movement uses to finance his projects, there are claims that he has secret agreements with Saudi Arabia, Iran, and Turkic governments. There are suspicions that the CIA is a co-payer in financing these projects.5

Most incriminating is the list of references that Gulen provided in an apparent effort to bolster his application, namely George Fidas, Graham Fuller, and Morton Abramowitz.

Graham Fuller happens to be listed as one of the American Deep State rogues on Sibel Edmonds. State Secrets Privilege Gallery. Graham E. Fuller is an American author and political analyst, specializing in .Islamic extremism.. Formerly vice-chair of the National Intelligence Council, he also served as Station Chief in Kabul for the CIA. A .think piece. that Fuller wrote for the CIA was identified as instrumental in leading to the Iran-contra affair.6 The Iran-Contra affair was that network of activity whereby Israel sold weapons to Iran on behalf of the Americans, to fund the Contras, and then where a large-scale drug-smuggling operation, involving cocaine from Nicaragua, was used to fund the Mujahideen in Afghanistan. 7

George Fidas worked thirty-one years for the CIA, while Morton Abramowitz was also deeply involved with Afghan Mujahideen and Kosovo rebels. Abramowitz was succeeded by Marc Grossman as ambassador in Turkey, after working under him in Ankara for a number of years. During that period, the US opened an espionage investigation into activities at the embassy involving Major Douglas Dickerson, a weapons procurement specialist for Central Asia. Dickerson and his wife, an FBI translator, later became famous when they tried to recruit Sibel to spy for this criminal network. Grossman is currently receiving $1.2 million per annum from Ihlas Holding, a Gulen-linked Turkish conglomerate. 8

With regards to the separatist moves over Xinjiang, according to TurkPulse: .One of the main tools Washington is using in this affair in order to get Turkey involved in the Xinjiang affair is some Turkish Americans, primarily the Fetullah Gulen..9

Another Turk used in this affair is Enver Yusuf Turani, also featured in Sibel.s Gallery, who is Prime Minister of Xinjiang, with the US being the only country to recognize it as .East Turkistan.. East Turkistan is the home of the .Eastern Turkistan Islamic Movement,. a UN-nominated terrorist organization .funded mainly by Osama bin Laden.s al-Qaeda network and received training, support and personnel from both the al-Qaeda and the Taliban regime of Afghanistan. .10 The Uighurs constitute as many as 22, of the Guantanamo Bay detainees. Five of those have been set free, and were eventually sent to Albania, amid much controversy.

In fact, Abramowitz and Fuller were key players in the establishment of `East Turkistan,. .proclaiming the government in exile within 4-5 months, starting in May (2004) and completing the proclamation in mid-September. The ceremony was held at Capitol Hill under American flags in Washington.. 11

The FSB, the Russian intelligence organization formerly called the KGB, has repeatedly taken action against the Gulen movement for acting as a front organization for the CIA. The FSB has claimed that the `Nurcus. religious brotherhood in Turkey has engaged in espionage on behalf of the CIA, through the companies connected with Fethullah Gulen. Russia has banned all of Gulen.s madrassas, and in April of this year, banned the Nurcu Movement completely.12

The Gulen Movement founded madrassas all over the world in the 1990.s, most of them in the newly independent Turkic republics of Central Asia, including Azerbaijan, Turkmenistan, Uzbekistan, Kazakhstan, Kyrgyzstan and Russia. The madrassas, says one writer named Lukery, .appear to be used as a front for enabling CIA and State Department officials to operate undercover in the region, with many of the teachers operating under diplomatic passports..13

Lukery called Sibel Edmonds to ask her to comment on the latest revelations. She said, in full:

You.ve got to look at the big picture. After the fall of the Soviet Union, the super powers began to fight over control of Central Asia, particularly the oil and gas wealth, as well as the strategic value of the region.

Given the history, and the distrust of the West, the US realized that it couldn.t get direct control, and therefore would need to use a proxy to gain control quickly and effectively. Turkey was the perfect proxy; a NATO ally and a puppet regime. Turkey shares the same heritage/race as the entire population of Central Asia, the same language (Turkic), the same religion (Sunni Islam), and of course, the strategic location and proximity.

This started more than a decade-long illegal, covert operation in Central Asia by a small group in the US intent on furthering the oil industry and the Military Industrial Complex, using Turkish operatives, Saudi partners and Pakistani allies, furthering this objective in the name of Islam.

This is why I have been saying repeatedly that these illegal covert operations by the Turks and certain US persons dates back to 1996, and involves terrorist activities, narcotics, weapons smuggling and money laundering, converging around the same operations and involving the same actors.

And I want to emphasize that this is .illegal. because most, if not all, of the funding for these operations is not congressionally approved funding, but it comes from illegal activities.

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posted by u2r2h at Friday, August 14, 2009 0 comments links to this post

13 August, 2009

Bombshell: Bin Laden worked for US till 9/11 !!!

Former FBI translator Sibel Edmonds dropped a bombshell on the Mike Malloy radio show, guest-hosted by Brad Friedman (audio, partial transcript).

In the interview, Sibel says that the US maintained 'intimate relations' with Bin Laden, and the Taliban, "all the way until that day of September 11."


http://americanbuilt.us/images/war-criminals/osama-brzezinski.jpg
Brzezinski and Bin Laden

http://www.declarepeace.org.uk/captain/murder_inc/site/pics/bin-Laden-Brzezinski300.jpg
Brzezinski and Bin Laden
These 'intimate relations' included using Bin Laden for 'operations' in Central Asia, including Xinjiang, China. These 'operations' involved using al Qaeda and the Taliban in the same manner "as we did during the Afghan and Soviet conflict," that is, fighting 'enemies' via proxies.

As Sibel has previously described, and as she reiterates in this latest interview, this process involved using Turkey (with assistance from 'actors from Pakistan, and Afghanistan and Saudi Arabia') as a proxy, which in turn used Bin Laden and the Taliban and others as a proxy terrorist army.

Control of Central Asia
The goals of the American 'statesmen' directing these activities included control of Central Asia's vast energy supplies and new markets for military products.

The Americans had a problem, though. They needed to keep their fingerprints off these operations to avoid a) popular revolt in Central Asia ( Uzbekistan, Azerbaijan, Kazakhstan and Turkmenistan), and b) serious repercussions from China and Russia. They found an ingenious solution: Use their puppet-state Turkey as a proxy, and appeal to both pan-Turkic and pan-Islam sensibilities.

Turkey, a NATO ally, has a lot more credibility in the region than the US and, with the history of the Ottoman Empire, could appeal to pan-Turkic dreams of a wider sphere of influence. The majority of the Central Asian population shares the same heritage, language and religion as the Turks.

In turn, the Turks used the Taliban and al Qaeda, appealing to their dreams of a pan-Islamic caliphate (Presumably. Or maybe the Turks/US just paid very well.)

According to Sibel:
This started more than a decade-long illegal, covert operation in Central Asia by a small group in the US intent on furthering the oil industry and the Military Industrial Complex, using Turkish operatives, Saudi partners and Pakistani allies, furthering this objective in the name of Islam.
Uighurs
Sibel was recently asked to write about the recent situation with the Uighurs in Xinjiang, but she declined, apart from saying that "our fingerprint is all over it."

Of course, Sibel isn't the first or only person to recognize any of this. Eric Margolis, one of the best reporters in the West on matters of Central Asia, stated that the Uighurs in the training camps in Afghanistan up to 2001:
"were being trained by Bin Laden to go and fight the communist Chinese in Xinjiang, and this was not only with the knowledge, but with the support of the CIA, because they thought they might use them if war ever broke out with China."
And also that:
"Afghanistan was not a hotbed of terrorism, these were commando groups, guerrilla groups, being trained for specific purposes in Central Asia."
In a separate interview, Margolis said:
"That illustrates Henry Kissinger's bon mot that the only thing more dangerous than being America's enemy is being an ally, because these people were paid by the CIA, they were armed by the US, these Chinese Muslims from Xinjiang, the most-Western province.

The CIA was going to use them in the event of a war with China, or just to raise hell there, and they were trained and supported out of Afghanistan, some of them with Osama Bin Laden's collaboration. The Americans were up to their ears with this."

Rogues Gallery
Last year, Sibel came up with a brilliant idea to expose some of the criminal activity that she is forbidden to speak about: she published eighteen photos, titled "Sibel Edmonds’ State Secrets Privilege Gallery," of people involved the operations that she has been trying to expose. One of those people is Anwar Yusuf Turani, the so-called 'President-in-exile' of East Turkistan (Xinjiang). This so-called 'government-in-exile' was 'established' on Capitol Hill in September, 2004, drawing a sharp rebuke from China.

Also featured in Sibel's Rogues Gallery was 'former' spook Graham Fuller, who was instrumental in the establishment of Turani's 'government-in-exile' of East Turkistan. Fuller has written extensively on Xinjiang, and his "Xinjiang Project" for Rand Corp is apparently the blueprint for Turani's government-in-exile. Sibel has openly stated her contempt for Mr. Fuller.

Susurluk
The Turkish establishment has a long history of mingling matters of state with terrorism, drug trafficking and other criminal activity, best exemplified by the 1996 Susurluk incident which exposed the so-called Deep State.

Sibel states that "a few main Susurluk actors also ended up in Chicago where they centered 'certain' aspects of their operations (Especially East Turkistan-Uighurs)."

One of the main Deep State actors, Mehmet Eymur, former Chief of Counter-Terrorism for Turkey's intelligence agency, the MIT, features in Sibel's Rogues Gallery. Eymur was given exile in the US. Another member of Sibel's gallery, Marc Grossman was Ambassador to Turkey at the time that the Susurluk incident exposed the Deep State. He was recalled shortly after, prior to the end of his assignment, as was Grossman's underling, Major Douglas Dickerson, who later tried to recruit Sibel into the spying ring.

The modus operandi of the Susurluk gang is the same as the activities that Sibel describes as taking place in Central Asia, the only difference is that this activity was exposed in Turkey a decade ago, whereas the organs of the state in the US, including the corporate media, have successfully suppressed this story.

Chechnya, Albania & Kosovo
Central Asia is not the only place where American foreign policy makers have shared interests with Bin Laden. Consider the war in Chechnya. As I documented here, Richard Perle and Stephen Solarz (both in Sibel's gallery) joined other leading neocon luminaries such as Elliott Abrams, Kenneth Adelman, Frank Gaffney, Michael Ledeen, James Woolsey, and Morton Abramowitz in a group called the American Committee for Peace in Chechnya (ACPC). For his part, Bin Laden donated $25 million to the cause, as well as numerous fighters, and technical expertise, establishing training camps.

US interests also converged with those of al-Qaeda in Kosovo and Albania.

Of course, it is not uncommon for circumstances to arise where 'the enemy of my enemy is my friend.' On the other hand, in a transparent democracy, we expect a full accounting of the circumstances leading up to a tragic event like 9/11. The 9/11 Commission was supposed to provide exactly that.

State Secrets
Sibel has famously been dubbed the most gagged woman in America, having the State Secrets Privilege imposed on her twice. Her 3.5 hour testimony to the 9/11 Commission has been entirely suppressed, reduced to a single footnote which refers readers to her classified testimony.

In the interview, she says that the information that was classified in her case specifically identifies that the US was using Bin Laden and the Taliban in Central Asia, including Xinjiang. In the interview, Sibel reiterates that when invoking the gag orders, the US government claims that it is protecting " 'sensitive diplomatic relations,' protecting Turkey, protecting Israel, protecting Pakistan, protecting Saudi Arabia..." This is no doubt partially true, but it is also true that they are protecting themselves too, and it is a crime in the US to use classification and secrecy to cover up crimes.

As Sibel says in the interview:
I have information about things that our government has lied to us about... those things can be proven as lies, very easily, based on the information they classified in my case, because we did carry very intimate relationship with these people, and it involves Central Asia, all the way up to September 11.

Summary

The bombshell here is obviously that certain people in the US were using Bin Laden up to September 11, 2001.

It is important to understand why: the US outsourced terror operations to al Qaeda and the Taliban for many years, promoting the Islamization of Central Asia in an attempt to personally profit off military sales as well as oil and gas concessions.

The silence by the US government on these matters is deafening. So, too, is the blowback.
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posted by u2r2h at Thursday, August 13, 2009 0 comments links to this post

10 August, 2009

WHO OWNS THE WORLD?? Here is who!

You know that the 12 Federal Reserve Banks are owned by private banksters.

And you've heard of the Bank of International Settlements (BIS), which is the "Central Banks' Central Bank".

But you probably don't know who owns BIS or how it is regulated.

Spiegel provided the answer last month:

The BIS is a closed organization owned by the 55 central banks. The heads of these central banks travel to the Basel headquarters once every two months, and the General Meeting, the BIS's supreme executive body, takes place once a year.

So the private banks own the Fed (and other central banks), and the central banks, in turn, own BIS.

Interestingly, Spiegel points out that BIS is largely immune from regulation, oversight or taxes:

Formally registered as a stock corporation, it is recognized as an international organization and, therefore, is not subject to any jurisdiction other than international law.

It does not need to pay tax, and its members and employees enjoy extensive immunity. No other institution regulates the BIS, despite the fact that it manages about 4 percent of the world's total currency reserves, or .217 trillion ($304 trillion), as well as 120 tons of gold...

Central bankers are not elected by the people but are appointed by their governments. Nevertheless, they wield power that exceeds that of many political leaders. Their decisions affect entire economies, and a single word from their lips is capable of moving financial markets. They set interest rates, thereby determining the cost of borrowing and the speed of global financial currents.


========================


The World needs a breather from the US. And they'll get it sooner than many think

We're making this way too complicated. It's simple really.

The Fed has only one tool at its disposal; to create more money. Typically, the way the Fed adds to the money supply is by lowering interest rates. When the Fed lowers rates below the rate of inflation; they're basically selling dollars for under a buck. That's a good deal, so, naturally, speculators jump on it and trigger a credit expansion. What follows is a frenzy of market activity that ends in a housing, credit, tech or equity bubble. Eventually, the bubble bursts and the economy goes into a tailspin. Then, after a period of digging-out, the process resumes again. Wash, rinse, repeat. It's always the same. The moral is: Cheap money creates bubbles; and bubbles move wealth from workers to rich motherporkers. It's as simple as that. That's why the wealth gap is wider now than anytime since the Gilded Age. The rich own everything.

The Federal Reserve is the policy arm of the big banks and brokerage houses. Period. Ostensibly, its mandate is to maintain "price stability and full employment". Right. Anyone notice how many jobs the Fed has created lately? How about the dollar? Is it really supposed to zig-zag like it has been for the last decade? The central task of the Fed is to shift wealth from one class to another. And it succeeds at that task admirably. The Fed's "mandate" is public relations claptrap. Bernanke hasn't lifted a finger for homeowners, consumers or ordinary working stiffs. "Yer on yer own. Just don't expect a handout. That's socialism!" All the doe is flowing upwards...according to plan. The Fed is a social engineering agency designed to serve as the de facto government behind the smokescreen of democratic institutions. Did you really think a black, two year senator with no background in foreign policy or economics was calling the shots?

Puh-leeese! Obama is a public relations invention who's used to cut ribbons, console the unemployed, and convince Americans they live in a "post racial" society. Right. (Just take a look at the footage from Katrina again) The Fed has complete control over monetary policy and, thus, the country's economic future. Bernanke doesn't even pretend to defer to Congress anymore. Why bother? After Lehman caved in, Bernanke invoked the "unusual and exigent" clause in the Fed's charter and declared himself czar. Now he has absolute power over the nation's purse-strings.

The $13 trillion the Fed has committed to the financial system since the beginning of the crisis --via loans and outright purchases of mortgage-backed garbage and US sovereign debt--was never authorized by Congress. In fact, the Fed stubbornly refuses to even identify which institutions got the "loans", how much the loans were worth, what kind of collateral was accepted for the loans, or when the loans have to be repaid.

In truth, the loans are not loans at all, but gifts to the industry to keep asset prices artificially high so that the entire financial system does not come crashing down. Check this out:

"In an analysis written by economist Gary Gorton for the Federal Reserve Bank of Atlanta.s 2009 Financial Markets Conference titled, "Slapped in the Face by the Invisible Hand; Banking and the Panic of 2007", the author shows that mortgage-related securities ballooned from $492.6 billion in 1996 to $3,071.1 in 2003, while asset backed securities (ABS) jumped from $168.4 billion in 1996 to $1,253.1 in 2006. All told, more than $20 trillion in securitized debt was sold between 1997 to 2007. "

$20 trillion! How much of that feces paper--which is worth just pennies on the dollar-- is sitting on the balance sheets of banks and other financial institutions just waiting to blow up as soon as the Fed asks for its money back? And the Fed will never get its money back because the prices of complex securities and derivatives will never regain their pre-crisis values. Why? Because these derivatives are linked to underlying collateral (mortgages) which have already declined 33% from their peak and are headed lower still. Also, these toxic assets were sold as risk-free (many of them were rated triple A) and have now been exposed as extremely risky or fraudulent. Because these assets were heaped together in bundles to strip out their interest rates, they cannot be easily separated which means that they are worth considerably less than the 33% that has been lost on the underlying collateral (mortgages) The securitization markets are not expected to rebound for a decade or more, which means that the Fed will have to find other more-creative way to goose the credit system to avoid a downward spiral.

But how?

Zero percent interest rates haven't worked because qualified borrowers are cutting spending and saving their disposable income, while people who need to borrow, no longer meet the banks' tougher lending standards. Bank credit is shrinking even though excess bank reserves are nearly $900 billion. When banks stop lending, the economy contracts, business activity slows, unemployment soars and growth sputters. Presently, the economy is still contracting, but at a slower pace than before. "Less bad" is the new "good". All the recession indicators are still blinking red--income, employment, sales, and production--all down big! But it doesn't matter because it's a "Green Shoots" rally; plenty of cheap liquidity for the markets and a freeway off-ramp (for sleeping) for the unemployed.

The Fed's lending facilities are designed to pump liquidity into the system and inflate another bubble by generating more debt. Unfortunately, most people accept Bernanke's feeble defense of these corporate-welfare programs and fail to see their real purpose. An example may help to explain how they really work:

Say you bought a house at the peak of the bubble in 2005 and paid $500,000. Then prices dropped 40% (as they have in Calif) and your house is now worth $300,000. If you only put 5% down, ($25,000) then you are underwater by $175,000. Which means that you own more on the mortgage than your house is currently worth. (This is essentially what has happened to the entire financial system. The equity has vaporized, so institutions are using dodgy accounting tricks instead of reporting their real losses.) So Bernanke comes along and gives you $175,000 no interest, rotating loan to you so that no one knows that you are really busted and you can continue spending just as you had before. Not bad, eh? This is what the lending facilities are all about. It is a charade to conceal the fact that a large portion of the nation's financial institutions are insolvent and propped up by state largess.

But there's more, too.

Now that Bernanke has given you $175,000 no interest, rotating loan; you expect that eventually he will ask for his money back. Right? So your only hope of saving your home, in the long run, is to engage in risky behavior, like dabbling the stock market. It's like playing roulette, except you have nothing to lose since you are underwater anyway.

This is exactly what the financial institutions are doing with the Fed's loans. They're betting on equities and hoping they can avoid the Grim Reaper.

Here's how former hedge fund manager Andy Kessler summed it up last week in the Wall Street Journal: "By buying U.S. Treasuries and mortgages to increase the monetary base by $1 trillion, Fed Chairman Ben Bernanke didn't put money directly into the stock market but he didn't have to. With nowhere else to go, except maybe commodities, inflows into the stock market have been on a tear. Stock and bond funds saw net inflows of close to $150 billion since January. The dollars he cranked out didn't go into the hard economy, but instead into tradable assets. In other words, Ben Bernanke has been the market." (Andy Kessler, "The Bernanke Market" Wall Street Journal)

Only a small portion of the money that has gone into the stock market in the last 6 months (since the March lows) has come from money markets. The fed's loans are being laundered into stocks via financial institutions that are rolling the dice for their own survival. The uptick in the markets has helped insolvent banks raise equity in the capital markets so they don't have to grovel to Congress for another TARP bailout. Everybody's elated with Bernanke's latest bubble except working people who have seen their wages slashed by 4.5%, their credit lines cut, the home values plunge, and their living standards sink to third world levels. And the Fed's spending-spree is not over yet; not by a long shot. The next wave of home foreclosures (already 1.9 million in the first half of 2009) is just around the corner--the Alt-As, option arms, prime loans. The $3.5 trillion commercial real estate market is capsizing. The under-capitalized banking system will need assistance. And there will have to be another round of fiscal stimulus for ailing consumers. Otherwise, foreign holders of US Treasurys will see that the US can no longer provide 25% of global demand and head for the exits.

Bernanke's back is against the wall. The only thing he can do is print more money, shove it though the back door of the stock exchange and keep his fingers crossed. The rest is up to CNBC and the small army of media cheerleaders.

There is some truth to the theory that Bernanke saved the financial system from a Chernobyl-type meltdown. But that doesn't change the facts. Accounts must be balanced; debts must be paid. The Fed chief has committed $13 trillion to maintain the appearance of solvency. But the system is bankrupt. The commercial paper market, money markets, trillions of dollars of toxic debt instruments, and myriad shyster investment banks and insurance companies are now backed by the "full faith and credit" of the US Treasury. The financial system is now a ward of the state. The "free market" has deteriorated into state capitalism; a centralized system where all the levers of power are controlled by the Central Bank. If Bernanke's Politburo withdraws its loans--or even if he raises interest rates too soon-- the whole system will collapse.

The economy is now balanced on the rickety scaffolding of the dollar. As the Obama stimulus wears off, the rot in the economy will become more apparent. Household red ink is at record highs, so personal consumption will not rebound. That means US assets and US sovereign debt will become less attractive. Foreign capital will flee. The dollar will fall.

The world needs a breather from the US. And they'll get it sooner than many think.

Mike Whitney

====================


Tent cities springing up all over America are filling with the homeless unemployed from the worst economy since the 1930s. While Americans live in tents, the Obama government has embarked on a $1 billion crash program to build a mega-embassy in Islamabad, Pakistan, to rival the one the Bush government built in Baghdad, Iraq.

Hard times have now afflicted Americans for so long that even the extension of unemployment benefits from 6 months to 18 months for 24 high unemployment states, and to 46 - 72 weeks in other states, is beginning to run out. By Christmas 1.5 million Americans will have exhausted unemployment benefits while unemployment rolls continue to rise.

Amidst this worsening economic crisis, the House of Representatives just passed a $636 billion "defense" bill.

Who is the United States defending against? Americans have no enemies except those that the US government goes out of its way to create by bombing and invading countries that comprise no threat whatsoever to the US and by encircling others.Russia for example.with threatening military bases.

America.s wars are contrived affairs to serve the money laundering machine: from the taxpayers and money borrowed from foreign creditors to the armaments industry to the political contributions that ensure $636 billion "defense" bills.

President George W. Bush gave us wars in Iraq and Afghanistan that are entirely based on lies and misrepresentations. But Obama has done Bush one better. Obama has started a war in Pakistan with no explanation whatsoever.

If the armaments industry and the neoconservative brownshirts have their way, the US will also be at war with Iran, Russia, Sudan and North Korea.

Meanwhile, America continues to be overrun, as it has been for decades, not by armed foreign enemies but by illegal immigrants across America.s porous and undefended borders.

It is more proof of the Orwellian time in which we live that $636 billion appropriated for wars of aggression is called a "defense bill."

Who is going to pay for all of this? When foreign countries have spent their trade surpluses and have no more dollars to recycle into the purchase of Treasury bonds, when US banks have used up their "bailout" money by purchasing Treasury bonds, and when the Federal Reserve cannot print any more money to keep the government going without pushing up inflation and interest rates, the taxpayer will be all that is left. Already Obama.s two top economic advisors, Treasury Secretary Timothy Geithner and director of the National Economic Council Larry Summers, are floating the prospect of a middle class tax increase. Will Obama be maneuvered away from his promise just as Bush Sr. was?

Will Americans see the disconnect between their interests and the interests of "their" government? In the small town of Vassalboro, Maine, a few topless waitress jobs in a coffee house drew 150 applicants. Women in this small town are so desperate for jobs that they are reduced to undressing for their neighbors. amusement.

Meanwhile, the Obama government is going to straighten out Afghanistan and Pakistan and build marble palaces to awe the locals half way around the world.

The US government keeps hyping "recovery" the way Bush hyped "terrorist threat" and "weapons of mass destruction." The recovery is no more real than the threats. Indeed, it is possible that the economic collapse has hardly begun. Let.s look at what might await us here at home while the US government pursues hegemony abroad.

The real estate crisis is not over. More home foreclosures await as unemployment rises and unemployment benefits are exhausted. The commercial real estate crisis is yet to hit. More bailouts are coming, and they will have to be financed by more debt or money creation. If there are not sufficient purchasers for the Treasury bonds, the Federal Reserve will have to purchase them by creating checking accounts for the Treasury, that is, by debt monetization or the printing of money.

More debt and money creation will put more pressure on the US dollar.s exchange value. At some point import prices, which include offshored goods and services of US corporations, will rise, adding to the inflation fueled by domestic money creation. The Federal Reserve will be unable to hold down interest rates by buying bonds.

No part of US economic policy addresses the systemic crisis in American incomes. For most Americans real income ceased to grow some years ago. Americans have substituted second jobs and debt accumulation for the missing growth in real wages. With most households maxed out on debt and jobs disappearing, these substitutes for real income growth no longer exist.

The Bush-Obama economic policy actually worsens the systemic crisis that the US dollar faces as reserve currency. The fact that there might be no alternative to the dollar as reserve currency does not guarantee that the dollar will continue in this role. Countries might find it less risky to settle trade transactions in their own currencies.

How does an economy based heavily on consumer spending recover when so many high-value-added jobs, and the GDP and payroll tax revenues associated with them, have been moved offshore and when consumers have no more assets to leverage in order to increase their spending?

How does the US pay for its imports if the dollar is no longer used as reserve currency?

These are the unanswered questions.

Paul Craig Roberts was Assistant Secretary of the Treasury during President Reagan.s first term. He was Associate Editor of the Wall Street Journal.

===========================

William White predicted the approaching financial crisis years before 2007's subprime meltdown. But central bankers preferred to listen to his great rival Alan Greenspan instead, with devastating consequences for the global economy.

William White had a pretty clear idea of what he wanted to do with his life after shedding his pinstriped suit and entering retirement.

White, a Canadian, worked for various central banks for 39 years, most recently serving as chief economist for the central bank for all central bankers, the Bank for International Settlements (BIS), headquartered in Basel, Switzerland.

Then, after 15 years in the world's most secretive gentlemen's club, White decided it was time to step down. The 66-year-old approached retirement in his adopted country the way a true Swiss national would. He took his money to the local bank, bought a piece of property in the Bernese Highlands and began building a chalet. There, in the mountains between cow pastures and ski resorts, he and his wife planned to relax and enjoy their retirement, and to live a peaceful existence punctuated only by the occasional vacation trip. That was the plan in June 2008.

And now this.

White is wearing his pinstriped suits again. He has just returned from California, where he gave a talk at a large mutual fund company. Then he packed his bags again and jetted to London, where he consulted with the Treasury. After that, he returned to Switzerland to speak at the University of Basel, and then went on to Frankfurt to present a paper at the Center for Financial Studies. From there, White traveled to Paris to attend a meeting at the Organization for Economic Cooperation and Development (OECD). Finally, he flew back across the Atlantic to Canada. White is clearly in demand, including in North America.

Since the economy went up in flames, the wiry retiree has been jetting around the globe like a paramedic for the world of high finance. He shows no signs of exhaustion, despite his rigorous schedule. In fact, White, with his gray head of hair, is literally beaming with energy, so much so that he seems to glow.

Perhaps it is because someone, finally, is listening to him.

Listening to him, that is, and not to his rival of many years, the once-powerful former chairman of the US Federal Reserve Bank, Alan Greenspan. Greenspan, who was reverentially known as "The Maestro," was celebrated as the greatest central banker of all time -- until the US real estate bubble burst and the crash began.

Before then, no one in the world of central banks would have dared to openly criticize Greenspan's successful policy of cheap money. No one except White, that is.

'A Disorderly Unwinding of Current Excesses'

White recognized the brewing disaster. The analysis department at the BIS has a collection of data from every bank around the globe, considered the most impressive in the world. It enabled the economists working in this nerve center of high finance to look on, practically in real time, as a poisonous concoction began to brew in the international financial system.

White and his team of experts observed the real estate bubble developing in the United States. They criticized the increasingly impenetrable securitization business, vehemently pointed out the perils of risky loans and provided evidence of the lack of credibility of the rating agencies. In their view, the reason for the lack of restraint in the financial markets was that there was simply too much cheap money available on the market. To give all this money somewhere to go, investment bankers invented new financial products that were increasingly sophisticated, imaginative -- and hazardous.

As far back as 2003, White implored central bankers to rethink their strategies, noting that instability in the financial markets had triggered inflation, the "villain" in the global economy. "One hopes that it will not require a disorderly unwinding of current excesses to prove convincingly that we have indeed been on a dangerous path," White wrote in 2006.

In the restrained world of central bankers, it would have been difficult for White to express himself more clearly.

Now White has been proved right -- to an almost apocalyptical degree. And yet gloating is the last thing on his mind. He, the chief economist at the central bank for central banks, predicted the disaster, and yet not even his own clientele was willing to believe him. It was probably the biggest failure of the world's central bankers since the founding of the BIS in 1930. They knew everything and did nothing. Their gigantic machinery of analysis kept spitting out new scenarios of doom, but they might as well have been transmitted directly into space.

For years, the regulators of the global money supply ignored the advice of their top experts, probably because it would require them to do something unheard of, namely embark on a fundamental change in direction.

The prevailing model was banal: no inflation, no problem. But White wanted central bankers to take things a step further by preventing the development of bubbles and taking corrective action. He believed that interest rates ought to be raised in good times, even when there is no risk of inflation. This, he argued, counteracts bubbles and makes it possible to lower interest rates in bad times. He also advised the banks to beef up their reserves during a recovery so that they would be in a position to lend money in a downturn.

If White's model had been applied, it might have been possible to avoid the collapse of the financial system -- or at least soften the fall. But there was simply no support for his ideas in the singular, and highly secretive, world of central bankers.

Prima Donnas of the Banking World

The BIS is a closed organization owned by the 55 central banks. The heads of these central banks travel to the Basel headquarters once every two months, and the General Meeting, the BIS's supreme executive body, takes place once a year. The central bankers -- from Alan Greenspan and his successor Ben Bernanke, to German Bundesbank President Axel Weber and Jean-Claude Trichet, the head of the European Central Bank (ECB) -- are fond of the Basel meetings. When they arrive, the BIS's dark office building at Centralbahnhof 2 in Basel suddenly comes alive. Secretaries inhabit the otherwise deserted offices of the governors, stenographers and chauffeurs stand at the ready and dark limousines wait outside.

The penthouse at the top of the building, with its magnificent view of Basel, is decorated for the annual dinner, the nuclear shelter in the basement is swept out and the wine cellar is restocked with the best wines. At the BIS's private country club, gardeners prepare the tennis courts as if a Grand Slam tournament were about to be held there. The losers of matches can find comfort in the clubhouse, where the Indonesian guest chef serves up Asian delicacies à la carte.

"Central bankers can sometimes be prima donnas," says former BIS Secretary General Gunter Baer. He remembers the commotion that erupted at one of the annual events when it became known that a certain vintage of Mouton Rothschild was unavailable.

The corridors of the BIS headquarters buildings are lined with retro white leather chairs and sofas from the 1970s. The round table where the delegates address the problems of the global economy is polished to a high gloss. But the most impressive space of all is the auditorium, with its modern armchairs in white leather and chrome, the thousands of tiny LED lights, the booths in the back where the interpreters sit behind one-way glass, and the console where the financial masters of the world do their work, centrally positioned at the front of the room. The room is evocative of the control room in "Star Trek." It was supposed to be the hub from which the financial world was to be guided through every possible hazard.

Naturally, the building is largely bugproof, the goal being to prevent anything from leaking to the outside and any unauthorized individuals from penetrating into its interior. There are no public minutes of the meetings. Everything that is discussed there is confidential. The word transparency is unknown at the BIS, where nothing is considered more despicable than an indiscreet central banker.

Central bankers, proud of their independence, are intent on holding themselves above all partisan influences while taking all necessary measures to keep the global economy healthy.

These traits make the BIS one of the world's most exclusive and influential clubs, a sort of Vatican of high finance. Formally registered as a stock corporation, it is recognized as an international organization and, therefore, is not subject to any jurisdiction other than international law.

It does not need to pay tax, and its members and employees enjoy extensive immunity. No other institution regulates the BIS, despite the fact that it manages about 4 percent of the world's total currency reserves, or .217 trillion ($304 trillion), as well as 120 tons of gold.

"Our strength is that we have no power," says BIS Secretary General Peter Dittus. "Our meetings are generally not oriented toward decision-making. Instead, their value consists in the exchange of views." There are no across-the-board agreements on the order of: "Let's raise the prime rate by a point." Opinions take shape in a much more subtle fashion, through something resembling osmosis.

Central bankers are not elected by the people but are appointed by their governments. Nevertheless, they wield power that exceeds that of many political leaders. Their decisions affect entire economies, and a single word from their lips is capable of moving financial markets. They set interest rates, thereby determining the cost of borrowing and the speed of global financial currents.

Their greatest responsibility is to prevent a bank or market crash from jeopardizing the viability of the financial system and, with it, the real economy. It is no accident that central bankers are also in charge of bank supervision in most countries.

But this time they failed miserably. How could this community of central bankers, despite its access to insider information, have so seriously underestimated the dangers? And why on earth did it not intervene?

"Somehow everybody was hoping that it won't go down as long as you don't look at the downside," William White told SPIEGEL. "Similar to the comic figure Wile E. Coyote, who rushes over a cliff, keeps running and only falls when he looks into the depth. Of course, this is nonsense. One falls, because there is an abyss."

But why did they all refuse to recognize the abyss? Why did the central bankers, of all people -- those whose actions are above profit expectations, shareholder pressure and the need to please voters -- keep their eyes tightly shut? Did they too succumb to the general herd instinct?

"As long as everything goes well, there is a great reluctance to (make) any kind of change," says White. "This behavior is deeply rooted in the human mind."

White calls it the human factor. And that factor had a name: Alan Greenspan.

The Killjoy Vs. the Party Animal

Greenspan was long a member of the BIS board of directors and was effectively White's superior. As a fervent champion of the free market, he advocated the model of minimal intervention. In his view, the role of central banks was to control inflation and price stability, as well as to clean up after burst bubbles. Because no one can know when bubbles are about to burst, he argued, it would be impossible to intervene at the right moment.

In his eyes, the instrument of sharply raising interest rates to counteract market excesses routinely failed. Leaning "into the wind," he argued, was pointless. He could even cite historical proof for his thesis. Between the beginning of 1988 and the spring of 1989, the Fed raised the prime rate by three percentage points, the goal being to curtail lending by raising the cost of borrowing. The textbook conclusion was that this would be toxic to the markets, but precisely the opposite occurred: Prices continued to rise.

This supposed paradox repeated itself five years later. Once again, the Fed raised interest rates and, again, the market shot up.

These experiences only strengthened Greenspan's conviction that raising interest rates was an ineffective tool to counteract bubbles. However he never tried raising interest rates to a significantly greater degree than had previously been done, to see what would happen.

The question of who was right, Greenspan or White, didn't exactly lead to a power struggle in Basel. The forces were too unevenly distributed for that. On the one side was the admonishing chief economist, with his seemingly antiquated model that advocated the establishment of reserves, and on the other side was the glamorous central banker, under whose aegis the economy was booming -- the killjoy vs. the party animal.

The central bankers certainly discussed the competing models. But most of them were behind Greenspan, because his system was what they had studied at their elite universities. They refused to accept White's objections that the economy is not a science. There was no way of verifying his model, they said.

Besides, who was about to question success? Greenspan was their superstar, the inviolable master, a living legend. "Greenspan always demanded respect," White recalls, referring to the Maestro's appearances. Hardly anyone dared to contradict the oracular grand master.

And why should they have contradicted Greenspan? "When you are inside the bubble, everybody feels fine. Nobody wants to believe that it can burst," says White. "Nobody is asking the right questions."

He even defends his erstwhile rival. "Greenspan is not the only one to blame. We all played the same game. Japan as well as Europe followed the low interest policy, almost everybody did."

Meanwhile, White noted with concern what the central bankers were triggering as a result. Their policy of cheap money led to the Asian financial crisis in 1997. When the debt that banks had accumulated went into default, the International Monetary Fund (IMF) and other donors had to inject more than $100 billion (.71 billion) to rescue the world economy.

In describing the failure of the markets as far back as 1998, White wrote that it is naïve to assume that markets behave in a disciplined way.

But Greenspan, the champion of free markets, remained impassive.

Graphic: The curse of cheap money
DER SPIEGEL

Graphic: The curse of cheap money
A few weeks later, the market demonstrated its destructive power once again, when Russia plunged into a financial crisis, bringing down the New York hedge fund Long Term Capital Management (LTCM) along with it. The New York Fed hurriedly convened a meeting of the heads of international banks, initiating a bailout that remains unprecedented to this day. The global economy was saved from a systemic crisis -- at a cost of $3.6 billion (.2.6 billion).

And what did Greenspan do? He lowered interest rates. Then the next bubble, the so-called New Economy, began to grow in Silicon Valley. It burst in the spring of 2000. What did Greenspan do? He lowered interest rates. This time the reduction was massive, with the benchmark rate dropping from 6 percent to 1 percent within three years. This, according to White, was the cardinal error. "After the 2001 crash, interest rates were lowered very aggressively and left too low for too long," he says.

While the economy was recovering from the demise of the dotcom sector and from the terrorist attacks of Sept. 11, 2001, cheap money was already on its way to triggering the next excess. This time it took place in the housing market, and this time it would be far more devastating.

White was losing his patience. Was there no other option than to regularly allow the economy to collapse? Didn't the policy of operating without a safety net border on stupidity? And wasn't it written, in both the Bible and the Koran, that it was important to provide for seven years of famine during seven good years?

This time, White didn't just want to discuss his views behind closed doors. This time, he decided to seek a broader audience.

One Villain Replaced by Another

His destination was Jackson Hole in Wyoming, a kind of Mecca for financial experts. It was August 2003.

Once a year, the Federal Reserve Bank of Kansas City invites leading economists and central bankers to a symposium in Jackson Hole. Against the magnificent backdrop of the Grand Teton National Park, the world's financial elite spends its time unwinding on hiking trails and in canoes, before retreating into conference rooms to discuss the state of the global economy. Only those who can hold their own in front of this audience are considered important in the industry.

"This is an opportunity we can't afford to miss," BIS economist Claudio Borio told his boss, White, as he wrote himself a few last-minute notes in his room at the Jackson Lake Lodge in preparation for his speech to the symposium.

Greenspan was in the audience when Borio and White presented their theories -- theories that had absolutely nothing in common with the powerful Fed chairman's worldview, or that of most of his colleagues.

White and Borio described the dramatic changes that had taken place since deregulation of the financial markets in the 1980s. Price stability was no longer the problem, they argued, but rather the development of imbalances in the financial markets, which were increasingly causing earthquake-like tremors. "It is as if one villain had gradually left the stage only to be replaced by another," White and Borio wrote in the paper they presented at Jackson Hole. As it turned out, it was a villain with the ability to unleash devastatingly destructive forces.

It was created by what the two BIS economists called the "inherently procyclical" nature of the financial system. What they meant is that perceptions of value and risk develop in parallel. People suffer from a blindness to future dangers that is intrinsic to the system. The better the economy is doing, the higher the ratings issued by the rating agencies, the laxer the guidelines for approving credit, the easier it becomes to borrow money and the greater the willingness to assume risk.

A bubble develops. When it bursts, the results can be devastating. "In extreme cases, broader financial crises can arise and exacerbate the downturn further," White wrote in his analysis. The consequences, according to White, are high costs to the real economy: unemployment, a credit crunch and bankruptcies.

All it takes to predict such imbalances, White argued, is to monitor "excessive credit expansion and asset price increases," and to take corrective action early on, even without a pending threat of inflation.

This task, the authors concluded, must be performed by monetary policy, among other things. The central banks, according to White and Borio, could limit credit expansion and thus avoid adverse effects on the global economy.

The Jackson Hole paper was an assault on everything Greenspan had preached and, as everyone knew, he was not fond of being contradicted. Other members of the audience glanced surreptitiously at the Maestro to gauge his reaction. Greenspan remained impassive, his face expressionless behind his large spectacles, as he listened to White. Later, during a more relaxed get-together, he refused to even look at White.

White suspected he had failed to convince his audience.

"You can lead a horse to water, but you can't make it drink," he says.

'All We Could Do Was to Present our Expertise'

Now that the US prime rate is bobbing up and down between zero and 0.25 percent, and the Fed is pumping hundreds of billions of dollars into the market, White's words at the 2003 conference have undoubtedly come back to haunt many a central banker.

In that speech, White had prophesied that if the "worst scenario materializes, central banks may need to push policy rates to zero and resort to less conventional measures, whose efficacy is less certain."

He warned that the money supply could dry up. Markets, he wrote, "can freeze under stress, as liquidity evaporates." He also identified -- a full four years before the bursting of the real estate bubble -- the disturbing developments in the US real estate market as a consequence of lax monetary policy.

"Further stimulus has not come free of charge and has raised questions about the sustainability of the recovery," he warned. From today's perspective, White's predictions are almost frightening in their accuracy.

But when push came to shove, he was unable to overturn the prevailing ideology. "We were staff," he says. "All we could do was to present our expertise. It was not within our power how it was used."

Despite the disappointment at Jackson Hole, White didn't give up on supplying data, facts and analyses. Perhaps, he reasoned, this constant flow of information could help to break through mental barriers.

He would repeatedly refer to the "Credit Risk Transfer" report published by the BIS's Committee on the Global Financial System in 2003. The publication describes how loans were packaged into tranches using so-called collateralized debt obligations and then marketed worldwide. For banks, the experts wrote, "CRT instruments may reduce banks' incentives to monitor their borrowers and alter their treatment of distressed borrowers."

That, in a nutshell, was the underlying problem that would eventually trigger the mother of all crises. Many US bankers lowered their guard when it came to issuing subprime mortgages, because they could be repackaged and quickly resold, for example to unsophisticated bankers at German state-owned Landesbanken in places like Dresden, Hamburg and Munich.

The central bankers were also not exactly taken by surprise by the failure of the rating agencies. In their report, the BIS experts derisively described the techniques of rating agencies like Moody's and Standard & Poor's as "relatively crude" and noted that "some caution is in order in relation to the reliability of the results."

But nothing happened.

A Greek Tragedy in the Making

In the 2004 BIS annual report, White was unusually frank in criticizing the Fed's lax monetary policy. Although Greenspan sat on the bank's board of directors at the time, the board never sought to influence the analyses of its experts. But neither did it take them seriously.

In January 2005, the BIS's Committee on the Global Financial System sounded the alarm once again, noting that the risks associated with structured financial products were not being "fully appreciated by market participants." Extreme market events, the experts argued, could "have unanticipated systemic consequences."

Graphic: The curse of cheap money
DER SPIEGEL

Graphic: The curse of cheap money
They also cautioned against putting too much faith in the rating agencies, which suffered from a fatal flaw. Because the rating agencies were being paid by the companies they rated, the committee argued, there was a risk that they might rate some companies too highly and be reluctant to lower the ratings of others that should have been downgraded.

These comments show that the central bankers knew exactly what was going on, a full two-and-a-half years before the big bang. All the ingredients of the looming disaster had been neatly laid out on the table in front of them: defective rating agencies, loans repackaged to the point of being unrecognizable, dubious practices of American mortgage lenders, the risks of low-interest policies. But no action was taken. Meanwhile, the Fed continued to raise interest rates in nothing more than tiny increments.

"You can see all the ingredients of a Greek tragedy," says White. The downfall was in sight, and yet no one dared disrupt the party, no one except White, the lone BIS economist, who says: "If returns are too good to be true, then it's too good to be true."

And yet the economy was humming along, and billions in bonuses were being handed out like candy on Wall Street. Who would be willing to put an end to the orgy?

Clearly not Greenspan.

'I Asked Myself: Is This the Big One?'

The Fed chairman was not even impressed by a letter the Mortgage Insurance Companies of America (MICA), a trade association of US mortgage providers, sent to the Fed on Sept. 23, 2005. In the letter, MICA warned that it was "very concerned" about some of the risky lending practices being applied in the US real estate market. The experts even speculated that the Fed might be operating on the basis of incorrect data. Despite a sharp increase in mortgages being approved for low-income borrowers, most banks were reporting to the Fed that they had not lowered their lending standards. According to a study MICA cited entitled "This Powder Keg Is Going to Blow," there was no secondary market for these "nuclear mortgages."

Three days later, Greenspan addressed the annual meeting of the American Bankers Association in Palm Desert, California, via satellite. He conceded that there had been "local excesses" in real estate prices, but assured his audience that "the vast majority of homeowners have a sizable equity cushion with which to absorb a potential decline in house prices."

The Maestro had spoken -- and the party could continue.

William White and his Basel team were dumbstruck. The central bankers were simply ignoring their warnings. Didn't they understand what they were being told? Or was it that they simply didn't want to understand?

In the March 2006 BIS quarterly report, the Basel analysts described, once again, the grave risks of the subprime market. "Foreign investment in these securities has soared," they wrote. They also cautioned that there were "signs that the US housing market is cooling" and warned that investors "may be exposed to losses in excess of what they had anticipated."

A short time later, White argued for his model once again in a working paper titled "Is Price Stability Enough?" Low inflation rates are not a sign of normalcy, he warned, and central banks should not allow themselves to be led astray by low rates. Both the LTCM bankruptcy and the collapse of the stock markets in 2001 occurred "in an environment of effective price stability."

It was a waste of time and effort. Roger Ferguson, the then-deputy Fed chairman, ironically started to refer to the BIS's Cassandra-like chief economist as "Merry Sunshine."

"There are limits to pressing your argument," White says. "If you keep repeating your point over and over again, nobody will listen anymore."

A Loss of Confidence

Ben Bernanke, who succeeded Greenspan as Fed chief in early 2006, was especially deaf to White's warnings. When he presented his biannual report on the state of the economy to the US Congress on July 19, 2006, he made no mention whatsoever of the subprime risk.

A few months later, in December, the BIS reported that the index for securitized US subprime mortgages had fallen sharply in the fourth quarter of the year. A loss of confidence began to take shape.

The first casualties began surfacing a few weeks later. On Feb. 8, 2007, HSBC, the world's third-largest bank at the time, issued the first profit warning in its history. On April 2, the US mortgage lender New Century Financial filed for bankruptcy.

Bernanke remained unimpressed. "The troubles in the subprime sector seem unlikely to seriously spill over to the broader economy or the financial system," he said. It was June 5, 2007.

White made one last, desperate attempt to bring the central bankers to their senses. "Virtually no one foresaw the Great Depression of the 1930s, or the crises which affected Japan and Southeast Asia in the early and late 1990s, respectively. In fact, each downturn was preceded by a period of non-inflationary growth exuberant enough to lead many commentators to suggest that a 'new era' had arrived," he wrote in June 2007 in the BIS annual report.

But even if Bernanke had listened, it would have been too late by then. On June 22, the US investment bank Bear Stearns announced that it needed $3 billion (.2.1 billion) to bail out two of its hedge funds, which had suffered heavy losses during the course of the US real estate crisis. In Germany, entire banks were soon seeking government bailout funds. Banks increasingly lost trust in one another, and the money markets gradually dried up.

It was the beginning of the end. "When the crisis started, I asked myself: Is this the big one?" White recalls. "The answer was: Yes, this is the big one."

Just as Predicted

Meanwhile, the global economy is on the brink of disaster, as it faces the most devastating and brutal crisis in a century. The only reason the financial system is still intact is that governments are spending billions to support it. Central bankers have been forced to abandon their air of sophisticated aloofness and to try, together with politicians, to save what can be saved. Nowadays no one is talking about the free market's ability to heal itself.

And everything happened just the way White predicted it would.

This is visibly unpleasant for officials at the BIS. Even though they can pride themselves for having provided the best analyses, they have also been forced to admit that their central bankers failed miserably. "We had the right nose, but we didn't know how to use it," says BIS Secretary General Dittus. "We didn't manage to portray the global and financial imbalances in a convincing fashion."

Did White express himself unclearly? No, it was more that he represented a system that only questioned the prevailing view. "Ultimately, an economic model can only be defeated by an opposing model," says BIS Chief Economist Stephen Cecchetti, White's successor. "Unfortunately, we don't have a generally recognized model yet. Perhaps this partly explains why our warnings were less effective than would have been desirable."

The group of the 20 most important industrialized and emerging nations, which is now left with the task of cleaning up the wreckage of the crisis, apparently faces less academic problems. At the London G-20 summit in April, the group decided to promote a crisis-prevention model based on White's theories.

They want to introduce what might be called his hoarding model, which calls for banks to build up reserves in good times so that they can be more flexible in bad times. The central banks, according to White, must actively counteract bubbles and exert stronger control over the financial industry, including hedge funds and insurance companies.

As an adviser to German Chancellor Angela Merkel's group of experts, White helped to shape the basic tenets of the new order. And the 79th annual report of the BIS, published in Basel last week, also reads like pure White. It lists, as the causes of the crisis, extensive global imbalances, a lengthy phase of low real interest rates, distorted incentive systems and underestimated risks. In addition to improved regulation, the BIS argues that "asset prices and credit growth must be more directly integrated into monetary policy frameworks."

Simply Part of Life

Even though this is what he has been saying for more than 10 years, White, a passionate financial professional, is the last person to show signs of bitterness. During a conversation in his Paris office at the OECD, he has no harsh words for those who had long dismissed him as an alarmist. For White, the BIS will always be the greatest experience for an economist. The errors made by central bankers, politicians and business executives, he says, are simply part of life.

"Take the Enron example," he says. "We analyzed the disaster and found that 12 different levels of the government malfunctioned. This is part of human nature."

He is familiar with human nature, and he knows how to handle it. White is more concerned about the things he doesn't understand. New Zealand is a case in point. Interest rates were raised early in the crisis there, and yet the central bank was unable to come to grips with the credit bubble. Investors were apparently borrowing cheap money from foreign lenders.

This is the sort of thing that worries him. "That's when you have to ask yourself: Who exactly is controlling the whole thing anymore?"

Perhaps his model has a flaw in that regard. Could it be possible that central bankers today have far less influence than he assumes?

The thought causes him to wrinkle his brow for a moment. Then he smiles, says his goodbyes and quickly disappears into a Paris Metro station.

He knows that he is needed.

Translated from the German by Christopher Sultan

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