Take your savings acounts out of the "too big to fail banks" before they confiscate them. It's perfectly legal ...and inevitable, given the precarious conditions of the big banks due to their derivative speculations and the fact that futher taxpayer bailouts are now against the law. It's called a "bail-in." The FDIC can't save you, it's already broke. And don't let your stock broker keep your cash in money market funds, because these are mostly run by TBTF banks.

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Bail-out Is Out, Bail-in Is In: Time for Some Publicly-Owned Banks

Posted on April 29, 2013 by Ellen Brown

“[W]ith Cyprus . . . the game itself changed. By raiding the depositors’ accounts, a major central bank has gone where they would not previously have dared. The Rubicon has been crossed.”

—Eric Sprott, Shree Kargutkar, “Caveat Depositor”

The crossing of the Rubicon into the confiscation of depositor funds was not a one-off emergency measure limited to Cyprus.  Similar “bail-in” policies are now appearing in multiple countries.  (See my earlier articles here.)  What triggered the new rules may have been a series of game-changing events including the refusal of Iceland to bail out its banks and their depositors; Bank of America’s commingling of its ominously risky derivatives arm with its depository arm over the objections of the FDIC; and the fact that most EU banks are now insolvent.  A crisis in a major nation such as Spain or Italy could lead to a chain of defaults beyond anyone’s control, and beyond the ability of federal deposit insurance schemes to reimburse depositors.

The new rules for keeping the too-big-to-fail banks alive: use creditor funds, including uninsured deposits, to recapitalize failing banks.

But isn’t that theft?

Perhaps, but it’s legal theft.  By law, when you put your money into a deposit account, your money becomes the property of the bank.  You become an unsecured creditor with a claim against the bank.  Before the Federal Deposit Insurance Corporation (FDIC) was instituted in 1934, U.S. depositors routinely lost their money when banks went bankrupt.  Your deposits are protected only up to the $250,000 insurance limit, and only to the extent that the FDIC has the money to cover deposit claims or can come up with it.

The question then is, how secure is the FDIC?

Can the FDIC Go Bankrupt?

In 2009, when the FDIC fund went $8.2 billion in the hole, Chairwoman Sheila Bair assured depositors that their money was protected by a hefty credit line with the Treasury. But the FDIC is funded with premiums from its member banks, which had to replenish the fund. The special assessment required to do it was crippling for the smaller banks, and that was just to recover $8.2 billion.  What happens when Bank of America or JPMorganChase, which have commingled their massive derivatives casinos with their depositary arms, is propelled into bankruptcy by a major derivatives fiasco?  These two banks both have deposits exceeding $1 trillion, and they both have derivatives books with notional values exceeding the GDP of the world.

Bank of America Corporation moved its trillions in derivatives (mostly credit default swaps) from its Merrill Lynch unit to its banking subsidiary in 2011.  It did not get regulatory approval but just acted at the request of frightened counterparties, following a downgrade by Moody’s. The FDIC opposed the move, reportedly protesting that the FDIC would be subjected to the risk of becoming insolvent if BofA were to file for bankruptcy.  But the Federal Reserve favored the move, in order to give relief to the bank holding company.  (Proof positive, says former regulator Bill Black, that the Fed is working for the banks and not for us. “Any competent regulator would have said: ‘No, Hell NO!’”)

The reason this risky move would subject the FDIC to insolvency, as explained in my earlier article here, is that under the Bankruptcy Reform Act of 2005, derivatives counter-parties are given preference over all other creditors and customers of the bankrupt financial institution, including FDIC insured depositors. Normally, the FDIC would have the powers as trustee in receivership to protect the failed bank’s collateral for payments made to depositors. But the FDIC’s powers are overridden by the special status of derivatives.  (Remember MF Global?  The reason its customers lost their segregated customer funds to the derivatives claimants was that derivatives have super-priority in bankruptcy.)

The FDIC has only about $25 billion in its deposit insurance fund, which is mandated by law to keep a balance equivalent to only 1.15 percent of insured deposits.  And the Dodd-Frank Act (Section 716) now bans taxpayer bailouts of most speculative derivatives activities.  Drawing on the FDIC’s credit line with the Treasury to cover a BofA or JPMorgan derivatives bust would be the equivalent of a taxpayer bailout, at least if the money were not paid back; and imposing that burden on the FDIC’s member banks is something they can ill afford.

BofA is not the only bank threatening to wipe out the federal deposit insurance funds that most countries have.  According to Willem Buiter, chief economist at Citigroup, most EU banks are zombies. And that explains the impetus for the new “bail in” policies, which put the burden instead on the unsecured creditors, including the depositors.  Below is some additional corroborating research on these new, game-changing bail-in schemes.

Depositors Beware

An interesting series of commentaries starts with one on the website of Sprott Asset Management Inc. titled “Caveat Depositor,” in which Eric Sprott and Shree Kargutkar note that the US, UK, EU, and Canada have all built the new “bail in” template to avoid imposing risk on their governments and taxpayers.  They write:

[M]ost depositors naively assume that their deposits are 100% safe in their banks and trust them to safeguard their savings. Under the new “template” all lenders (including depositors) to the bank can be forced to “bail in” their respective banks. 

Dave of Denver then followed up on the Sprott commentary in an April 3 entry on his blog The Golden Truth, in which he pointed out that the new template has long been agreed to by the G20 countries:

Because the use of taxpayer-funded bailouts would likely no longer be tolerated by the public, a new bank rescue plan was needed.  As it turns out, this new “bail-in” model is based on an agreement that was the result of a bank bail-out model that was drafted by a sub-committee of the BIS (Bank for International Settlement) and endorsed at a G20 summit in 2011. For those of you who don’t know, the BIS is the global “Central Bank” of Central Banks. As such it is the world’s most powerful financial institution.

The links are in Dave’s April 1 article, which states:

The new approach has been agreed at the highest levels . . . It has been a topic under consideration since the publication by the Financial Stability Board (a BIS committee) of a paper, Key Attributes of Effective Resolution Regimes for Financial Institutions in October 2011, which was endorsed at the Cannes G20 summit the following month. This was followed by a consultative document in November 2012, Recovery and Resolution Planning: Making the Key Attributes Requirements Operational.

Dave goes on:

[W]hat is commonly referred to as a “bail-in” in Cyprus is actually a global bank rescue model that was derived and ratified nearly two years ago. . . . [B]ank deposits in excess of Government insured amount in any bank in any country will be treated like unsecured debt if the bank goes belly-up and is restructured in some form.

Jesse at Jesse’s Café Americain then picked up the thread and pointed out that it is not just direct deposits that are at risk. The too-big-to-fail banks have commingled accounts in a web of debt that spreads globally. Stock brokerages keep their money market funds in overnight sweeps in TBTF banks, and many credit unions do their banking at large TBTF correspondent banks:

You say you have money in a pension fund and an IRA at XYZ bank?  Oops, it is really on deposit in you-know-who’s bank.  You say you have money in a brokerage account?  Oops, it is really being held overnight in their TBTF bank.  Remember MF Global?  Who can say how far the entanglements go?  The current financial system and market structure is crazy with hidden risk, insider dealings, control frauds, and subtle dangers.

Also at Risk: Pension Funds and Public Revenues 

William Buiter, writing in the UK Financial Times in March 2009, defended the bail-in approach as better than the alternative.  But he acknowledged that the “unsecured creditors” who would take the hit were chiefly “pensioners drawing their pensions from pension funds heavily invested in unsecured bank debt and owners of insurance policies with insurance companies holding unsecured bank debt,” and that these unsecured creditors “would suffer a large decline in financial wealth and disposable income that would cause them to cut back sharply on consumption.”

The deposits of U.S. pension funds are well over the insured limit of $250,000.  They will get raided just as the pension funds did in Cyprus, and so will the insurance companies.  Who else?

Most state and local governments also keep far more on deposit than $250,000, and they keep these revenues largely in TBTF banks.  Community banks are not large enough to service the complicated banking needs of governments, and they are unwilling or unable to come up with the collateral that is required to secure public funds over the $250,000 FDIC limit.

The question is, how secure are the public funds in the TBTF banks?  Like the depositors who think FDIC insurance protects them, public officials assume their funds are protected by the collateral posted by their depository banks.  But the collateral is liable to be long gone in a major derivatives bust, since derivatives claimants have super-priority in bankruptcy over every other claim, secured or unsecured, including those of state and local governments.

The Cyprus Wakeup Call

Robert Teitelbaum wrote in a May 2011 article titled “The Case Against Favored Treatment of Derivatives”:

. . . Dodd-Frank did not touch favored status [of derivatives] and despite all the sound and fury, . . . there are very few signs from either party that anyone with any clout is suddenly about to revisit that decision and simplify bankruptcy treatment. Why? Because for all its relative straightforwardness compared to more difficult fixes, derivatives remains a mysterious black box to most Americans . . . .  [A]s the sense of urgency to reform passes . . . we return to a situation of technical interest to only a few, most of whom have their own particular self-interest in mind.

But that was in 2011, before the Cyprus alarm bells went off.  It is time to pry open the black box, get educated, and get organized.  Here are three things that need to be done for starters:

• Protect depositor funds from derivative raids by repealing the super-priority status of derivatives.
• Separate depository banking from investment banking by repealing the Commodity Futures Modernization Act of 2000 and reinstating the Glass-Steagall Act.
• Protect both public and private revenues by establishing a network of publicly-owned banks, on the model of the Bank of North Dakota.

For more information on the public bank option, see here. Learn more at the Public Banking Institute conference June 2-4 in San Rafael, California, featuring Matt Taibbi, Birgitta Jonsdottir, Gar Alperovitz and others.  

Ellen Brown is an attorney, chairman of the Public Banking Institute, and the author of eleven books, including Web of Debt: The Shocking Truth About Our Money System and How We Can Break Free. Her websites are webofdebt.com and ellenbrown.com.

An honest look at the Census Bureau's wealth data proves that since the supposed end of the recession only the top 7% got richer, much richer, while the bottom 93% have lost 4% of their assets.

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Recovery for the 7 Percent — Paul Craig Roberts

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April 28, 2013 |  Original here

“From the end of the recession in 2009 through 2011 (the last year for which Census Bureau wealth data are available), the 8 million households in the U.S. with a net worth above $836,033 saw their aggregate wealth rise by an estimated $5.6 trillion, while the 111 million households with a net worth at or below that level saw their aggregate wealth decline by an estimated $600 billion.” Pew Research, “An Uneven Recovery, by Richard Fry and Paul Taylor.

Since the recession was officially declared to be over in June 2009, I have assured readers that there has been no recovery. Gerald Celente, John Williams (shadowstats.com), and no doubt others have also made it clear that the alleged recovery is an artifact of an understated inflation rate that produces an image of real economic growth.

Now comes the Pew Research Center with its conclusion that the recession ended only for the top 7 percent of households that have substantial holdings of stocks and bonds. The other 93% of the American population is still in recession. http://www.pewsocialtrends.org/2013/04/23/a-rise-in-wealth-for-the-wealthydeclines-for-the-lower-93/

The Pew report attributes the recovery for the affluent to the rise in the stock and bond markets, but does not say what caused these markets to rise.

The stock market’s recovery does not reflect rising consumer purchasing power and retail sales. The labor force is shrinking, not growing. Job growth lags population growth, and the few jobs that are created are primarily dead-end jobs in lowly paid domestic services. Retail sales adjusted for inflation and real median household income have been bottom bouncing since 2009.

To the extent that there is profit growth in US corporations, it comes from labor cost savings from offshoring US jobs and from bringing in foreign workers on work visas. By lowering labor costs, corporations boost profits and thereby capital gains for those 7 percent who have large holdings of financial assets. Those in the 93 percent who are displaced by foreign workers experience income reductions. This transfer of the incomes of the 93 percent to the 7 percent via jobs offshoring and work visas is the reason for the stark rise in US income inequality.

Another source of the stock market’s rise is the Federal Reserve’s policy of quantitative easing, that is, the printing of $1,000 billion dollars annually with which to support the too-big-to-fail banks’ balance sheets and to finance the federal budget deficit. The cash that the Fed is pouring into the banks is not finding its way into business and consumer loans, but the money is available for the banks to speculate in derivatives and stock market futures. Thus, the Fed’s policy, which is directed at keeping afloat a few oversized banks, also benefits the 7 percent by driving up the value of their stock portfolios.

The reason bond prices are so high that real interest rates are negative is that the Fed is purchasing $1,000 billion of mortgage-backed “securities” and US Treasury debt annually. The lower the Fed forces interest rates, the higher go bond prices. If you are among the 7 percent, the Fed has produced capital gains for your bond portfolio. But if you are a saver among the 93 percent, you are losing purchasing power because the interest you receive is less than the rate of inflation.

The Pew report puts it this way: Since the “recovery” that began in June 2009, wealthy households experienced a 28 percent rise in their net worth, while everyone else lost 4 percent of their assets.

Is this the profile of a democracy in which government serves the public interest, or is it the profile of a financial aristocracy that uses government to grind the population under foot?

A highly erudite and gripping review of a new book by Jeremy Scahill, author of the New York Times best seller Blackwater, that should be required reading for all Americans concerned with the secret evolution of the American Empire, its growing destabilization of the planet, and its conversion of the homeland into a battle field.

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Tomgram: Engelhardt, Field of Nightmares

Posted by Tom Engelhardt at 8:04am, April 23, 2013.
Follow TomDispatch on Twitter @TomDispatch.

Note for TomDispatch readers: This is part two of my series on how Washington helped create its enemies in the post-9/11 era. Part one was “The Enemy-Industrial Complex.” Also, I can't resist mentioning that I -- and so TomDispatch -- was named "Truthdigger of the week" at the invaluable website Truthdig.com. To read Alexander Kelly's piece on TD and me accompanying that honor, click here. Tom]

Filling the Empty Battlefield 
Jeremy Scahill, Blowback Reporter 
By Tom Engelhardt

Chalmers Johnson’s book Blowback: The Costs and Consequences of American Empire was published in March 2000 -- and just about no one noticed.  Until then, blowback had been an obscure term of CIA tradecraft, which Johnson defined as “the unintended consequences of policies that were kept secret from the American people.”  In his prologue, the former consultant to the CIA and eminent scholar of both Mao Zedong’s peasant revolution and modern Japan labeled his Cold War self a “spear-carrier for empire.”

After the Soviet Union disappeared in 1991, he was surprised to discover that the essential global structure of that other Cold War colossus, the American superpower, with its vast panoply of military bases, remained obdurately in place as if nothing whatsoever had happened.  Almost a decade later, when the Evil Empire was barely a memory, Johnson surveyed the planet and found “an informal American empire” of immense reach and power.  He also became convinced that, in its global operations, Washington was laying the groundwork “all around the world... for future forms of blowback.”

Johnson noted “portents of a twenty-first century crisis” in the form of, among other things, “terrorist attacks on American installations and embassies.”  In the first chapter of Blowback, he focused in particular on a “former protégé of the United States” by the name of Osama bin Laden and on the Afghan War against the Soviets from which he and an organization called al-Qaeda had emerged.  It had been a war in which Washington backed to the hilt, and the CIA funded and armed, the most extreme Islamic fundamentalists, paving the way years later for the Taliban to take over Afghanistan.

Talk about unintended consequences! The purpose of that war had been to give the Soviet Union a Vietnam-style bloody nose, which it more than did. All of this laid the foundation for... well, in 1999 when Johnson was writing, no one knew what. But he, at least, had an inkling, which on September 12, 2001, made his book look prophetic indeed. He emphasized one other phenomenon: Americans, he believed, had “freed ourselves of... any genuine consciousness of how we might look to others on this globe.”

With Blowback, he aimed to rectify that, to paint a portrait of how that informal empire and its historically unprecedented garrisoning of the world looked to others, and so explain why animosity and blowback were building globally.  After September 11, 2001, his book leaped to the center of the 9/11 display tables in bookstores nationwide and became a bestseller, while “blowback” and that phrase “unintended consequences” made their way into our everyday language.

Chalmers Johnson was, you might say, our first blowback scholar.  Now, more than a decade later, we have a book from our first blowback reporter.  His name is Jeremy Scahill.  In 2007, he, too, produced a surprise bestseller, Blackwater: The Rise of the World's Most Powerful Mercenary Army. It caught the mood of a moment in which the Bush administration, in service to its foreign wars, was working manically to “privatize” national security and the U.S. military by hiring rent-a-spies, rent-a-guns, and rent-a-corporations for its proliferating wars. 

In the ensuing years, it was as if Scahill had taken Johnson’s observation to heart -- that we Americans can’t see our world as it is.  And little wonder, since so much of the American way of war has plunged into the shadows.  As two administrations in Washington arrogated ever greater war-making and national security powers, they began to develop a new, off-the-books, undeclared style of war-making.  In the process, they transformed an increasingly militarized CIA, a hush-hush crew called the Joint Special Operations Command (JSOC), and a shiny new “perfect weapon” and high-tech fantasy object, the drone, into the president’s own privatized military.

In these years, war and the path to it were becoming the private business and property of the White House and the national security state -- and no one else.  Little of this, of course, was a secret to those on the receiving end.  It was only Americans who were not supposed to know much about what was being done in their name.  As a result, there was a secret history of twenty-first-century American war crying out to be written.  Now, we have it in the form of Scahill’s latest book, Dirty Wars: The World Is a Battlefield.

Scahill has tracked, in particular, the rise of JSOC.  In Iraq, it grew into a kind of Murder Inc., “an executive assassination wing,” as Seymour Hersh once put it, operating out of Vice President Dick Cheney’s office.  It next turned its hunter/killer methods on Afghanistan and then on the planet, as the special operations forces themselves grew into an expansive secret military cocooned inside the U.S. military.  In those years, Scahill started following the footsteps of special ops types into the field, while mainlining into sources in their community as well as other parts of the American military and intelligence world.

In his new book, he dramatically retraces the bureaucratic intel wars in Washington as the Pentagon, the CIA, and the rest of the U.S. Intelligence Community muscled up, and secret presidential orders gave JSOC, in particular, unprecedented authority to turn the globe into a free-fire zone.  Finally, as a reporter, he traveled to a series of danger spots -- Somalia, Yemen, Pakistan -- that Americans could care less about, where the U.S. military and the CIA (in conjunction with private security contractors) were experimenting with and developing new ways of waging Washington’s spreading secret wars.

As Scahill writes in his acknowledgements, thanking another reporter who traveled with him, “We were shot at together on rooftops in Mogadishu, slept on dingy floors in rural Afghanistan, and traveled together in the netherlands of Southern Yemen.”  That catches something of the spirit behind a book produced by a dedicated, unembedded, independent reporter -- a thoroughly impressive, even awe-inspiring piece of work.

In the process, Scahill, who in these years broke a number of major stories as national security correspondent for the Nation magazine, fills us in on those American military death squads in Iraq, nightmarish special ops night raids in Afghanistan (that target all the wrong people), secret renditions of terror suspects to a CIA-funded jail in Somalia (after President Obama had forsworn “rendition”), the dispatching of drones and cruise missiles in disastrous strikes on civilians in Yemen, the hunting down and assassination of American citizens (aka terror suspects, although 16-year-old Abdulrahman Awlaki certainly wasn’t one) also in Yemen on the orders of the president, the complex world of JSOC-CIA-Blackwater operations in Pakistan -- and so much more, including an indication that JSOC has even launched secret ground operations of some sort in Uzbekistan. (Who knew?)

Dirty Wars is also, in Johnson’s terms, a history of the future; that is, a history of potential blowback-to-come, a message in a bottle sent to us from the hidden front lines of America’s global battlefields -- and therein lies a tale of tales.

Preparing the Battlefield

A couple of years back, TomDispatch correspondent Ann Jones told me something I’ve never forgotten.  Having spent time with U.S. troops in Afghanistan, she described their patrols in the countryside this way: yes, there were dangers, mainly IEDs (roadside bombs) and the odd potshot taken at them, but on the whole the areas they patrolled every day were eerily “empty.”  In some sense, it almost seemed as if no one was there, as if they were fighting a ghost war on -- her term -- an empty battlefield.

As it happens, her observation has a planetary analogue that lies at the heart of Scahill’s remarkable book.  As you may remember, in the wake of the 9/11 attacks, it took no time at all for Bush administration officials to think big.  Notoriously, Secretary of Defense Donald Rumsfeld began urging aides to build a case against Iraqi dictator Saddam Hussein only five hours after American Airlines Flight 77 crashed into the Pentagon.  Within weeks administration figures were already talking with confidence about the need to “drain the swamp” of terrorists and enemies on a global scale.  They were reportedly planning to target 60 to 80 countries, almost a third to close to one-half of the nations on this planet.  In other words, when they quickly declared a Global War on Terror, they weren’t kidding.  They meant it quite literally and, as Scahill reports, they promptly went to work building up the kinds of forces -- secret and at their command alone -- that could fight anywhere on the sly.

As these forces were dispatched globally to collect intelligence, train foreign forces (also often “special” and secret), and especially hunt and kill terrorists, a new tradecraft term came into play, a phrase as crucial to Scahill’s book as “blowback” was to Johnson’s.  They were, it was claimed, going out to “prepare the battlefield” (or alternately, “the battlespace” or “the environment”).  That process of preparation couldn’t have been more breathtakingly hubristic.  Secretary of Defense Rumsfeld summed up the situation this way: “Today, the entire world is the ‘battlespace.’”

BUY THE BOOK

Here’s the strange thing, though: when those secret forces went out to do their dirty work, that global battlefield was, using Jones’s term, remarkably, eerily empty.  There was hardly anyone there.  Perhaps hundreds or at most a few thousand jihadis scattered mainly in the backlands of the planet.  If “preparing the battlefield” turned out to be the crucial term of the era, it wasn't exactly a descriptively accurate one.  More on the mark might have been: “creating the battlefield” or “filling the empty battlefield.”

The pattern that Scahill traces brilliantly might have boiled down to a version of the tag line for the movie Field of Dreams: if you prepare it, they will come.  The result was not so much a war on, as a war of, and for, terror.  Washington would, at one and the same time, produce a killing machine and a terror-generating machine.  Dirty Wars catches the way its top officials became convinced that the planet’s last superpower, with “the finest fighting force the world has ever known” (as American presidents now never grow tired of repeating), could simply kill its way to victory globally.

As Scahill also shows, they were often remarkably successful at eliminating the figures on their “kill list” of targeted enemies from Osama bin Laden on down: Bin Laden himself in Pakistan, Abu Musab al-Zarqawi in Iraq, Aden Hashi Ayro in Somalia, Anwar al-Awlaki in Yemen, as well as various “lieutenants” of top al-Qaeda figures and allied groups.  And yet, as those on the kill lists died, thanks to the CIA’s drones and JSOC’s raiders, so did others.  Often enough, they were innocent civilians -- and in quantity.  People who shouldn’t have ever had their doors kicked in, their sons arrested or their pregnant wives shot down, and who bitterly resented what they experienced.  And so before Washington knew it, the kill list was growing larger, not smaller, and its wars were becoming more, not less, intense and spreading to other lands.  The battlefield, copiously prepared, was filling with enemies.

A Perpetual Motion Machine for the Destabilization of the Planet

As Washington launched its post-9/11 adventures, the neoconservative allies of the Bush administration, believing the wind in their sails, eyed the vast area from North Africa to the Central Asian border of China (aka “the Greater Middle East”) that they liked to call the “arc of instability.”  The job of the U.S., they imagined, was to bring stability to that “arc” by using America's overwhelming military power to create a Pax Americana in the region.  They were, in other words, fundamentalists and the U.S. military was their born-again religion.  They believed that its techno-power would trump every other form of power on the planet, hands down.

In the wake of the American withdrawal from Iraq and in light of the ongoing disastrous war in Afghanistan, if you look at the Greater Middle East today -- from Pakistan to Syria, Afghanistan to Mali -- you’ll know what instability is really all about.  Twelve years later, much of the region has been destabilized to one degree or another, which might pass as the definition for Washington of short-term success and long-term failure.

In reality, they should have known better from the start.  After all, behind the global war launched by the Bush administration and carried on by Obama was a twenty-first-century replay of a brutal flop of a strategy in Washington’s failed war in Vietnam.  The phrase that went with it back then was “the crossover point,” the supposedly crucial moment in what was bluntly thought of as a “war of attrition.”  

The idea was simple enough.  The staggering firepower available to Washington would be brought to bear on the Vietnamese enemy with the obvious, expectable result: sooner or later, a moment would be reached in which the U.S. would be killing more of that enemy than could be replaced by recruitment in South Vietnam or the infiltration of reinforcements from the North.  At that moment, Washington would “crossover” into victory.  We know just where that led -- to the infamous body count (which the Bush administration tried desperately to avoid in Iraq and Afghanistan), to slaughter on a staggering scale, and to defeat when the prodigious number of enemies killed somehow never resulted in the U.S. crossing over.

And here’s the ironic thing.  Like his father who, as the first Gulf War ended in 1991, spoke ecstatically of having “kicked the Vietnam syndrome once and for all,” George W. Bush and his top officials had an overwhelming allergy to the memory of Vietnam.  Yet they still managed to launch a global war of attrition against a range of groups they defined as “terrorists.” They were clearly planning to kill them, one by one if possible, or in “signature” groups if necessary, until some crossover point was reached, until the enemy was losing more members than could be replaced and victory came into sight. As in Vietnam, of course, that crossover point never arrived and it’s increasingly clear that it never will.  Scahill’s reporting couldn’t be more incisive on the subject.

Dirty Wars is really the secret history of how Washington launched a series of undeclared wars in the backlands of the planet and killed its way to something that ever more closely resembled an actual global war, creating a world of enemies out of next to nothing.  Think of it as a bizarre form of unconscious wish fulfillment and the results -- they came! -- as a field of nightmares.

What was created in the process now seems more like a perpetual motion machine for the destabilization of the planet.  Just follow the spread of drone bases and of JSOC’s raiders, and you can actually watch the backlands of the globe destabilizing before your eyes, or read Scahill’s book and get a superb blow-by-blow account of just how it happened.  The process is now well underway in Africa where destabilization seems to be heading south from Libya via Mali.

Reread Blowback 13 years later and it’s hard to believe that anyone was so ahead of his times, given the human predilection for being unable to foresee much of anything.  Perhaps the saddest thing that can be said about Dirty Wars is that, the way things look, 13 years from now Scahill's book, too, may seem as fresh as last night’s news.  He has laid out a style of off-the-books war-making that seems destined to be perpetuated, no matter what administration is in power.

Much remains unknown when it comes to our recent non-war wars.  Thirteen years from now we may know far more about what JSOC, the CIA, and others were really doing in these years.  None of that, however, is likely to change the pattern Scahill has set down for us.

So let’s not hesitate to say it: mission accomplished!  The world may not have been a battlefield then.  But they prepared the global battlespace so well that it’s heading in that direction now.

Almost unnoticed, imperial wars also have a way of coming home.  Take the reaction to the Boston marathon bombings.  The response was certainly the largest, most militarized manhunt in American history.  In its own way, it was also an example of the empty battlefield.  An 87-square mile metropolitan area was almost totally locked down. At least 9,000 heavily up-armored local, state, and federal law enforcement officers, hundreds of National Guard troops, SWAT teams, armored vehicles, helicopters, and who knows what else hit the streets of greater Boston’s neighborhoods in a search for two dangerous, deluded young men, one of whom ended up bloodied inside a boat in a backyard just outside the zone the police had cordoned off to search in Watertown.  It was a spectacle that would have been unimaginable in pre-9/11 America.

The expense must have been staggering (especially if you add in business losses from the city’s shutdown).  In the end, of course, one of the suspects was killed and the other captured -- and celebrations of that short-term success began immediately on the streets of Boston and in the media.  But here, too, killing your way to success is unlikely to prove a winning strategy.  After all, we’re already in Scahill’s blowback world in which, no matter the number of deaths, there is unlikely to be a crossover point.

After Dzhokhar Tsarnaev, the second Boston bombing suspect, was captured, Republican Senator Lindsey Graham tweeted a new phrase into the American lexicon.  While calling for the 19-year-old to be held as an “enemy noncombatant” (à la Guantanamo), he wrote, "The homeland is the battlefield."  That should send chills down the spine of any reader of Dirty Wars.

Above all else, there’s this: while the world burned and melted, Washington set itself one crucial global mission: to send its secret forces out onto that global battlefield to hunt random jihadis. It may be the worst case of imperial risk assessment since Nero fiddled and Rome burned.

Tom Engelhardt, co-founder of the American Empire Project and author of The United States of Fear as well as a history of the Cold War, The End of Victory Culture, runs the Nation Institute's TomDispatch.com. His latest book, co-authored with Nick Turse, is Terminator Planet: The First History of Drone Warfare, 2001-2050.

[Note for TomDispatch Readers:  This essay focused on Jeremy Scahill’s new book Dirty Wars: The World Is a Battlefield (Nation Books).  In June, a film of the same title directed by Rick Rowley and based on the book will hit the theaters.  I’ve seen it in preview.  Its focus differs from the book’s.  Scahill is its narrator.  It's deeply personal and is powerfully humanizing of those whose doors we’ve kicked in during this last grim decade-plus.  It could be the documentary of the year.]

Follow TomDispatch on Twitter and join us on Facebook or Tumblr. Check out the newest Dispatch book, Nick Turse’s The Changing Face of Empire: Special Ops, Drones, Proxy Fighters, Secret Bases, and Cyberwarfare.

Copyright 2013 Tom Engelhardt

Is the United States the best country in the world? Not even close. Among the 29 countries evaluated by UNICEF, the U.S. ranks from between 23rd to 27th in all six categories considered (the 27th being in education).

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UNICEF: U.S. kids worse off than many of their Western counterparts

Posted by Caitlin Dewey and Max Fisher on April 18, 2013 at 11:48 am

Data source: UNICEF

American children are on average worse off than children in Western Europe and barely better off than their counterparts in the Baltic states and the former Yugoslavia, according to a recent report from United Nation’s Children’s Fund (UNICEF) on the welfare of children in developed countries.

The report, which compares kids in 29 Western countries, measures well-being across five metrics: material well-being, health and safety, behaviors and risks, housing and environment, as well as education. It ranks the United States in the bottom third on all five measures of well-being and particularly low on education and poverty. The United States is joined at the bottom by “emerging” European economies, while the Scandinavian countries and the Netherlands come out on top. The report notes that this latter group of countries tends to spend far more per capita on social welfare programs.

The countries with the best reported child well-being tend to invest in strong social safety nets. Norway, Iceland and Sweden sink nearly 7 percent of their GDP, according to an OECD report, into education. Countries such as Estonia, Latvia and Lithuania, which until the ‘90s had GDPs per capita of less than $5,000, have been able to put less money into such services. Though U.S. GDP per capita was more than $48,000 in 2012, that money is not spread evenly cross the unusually large U.S. population.

As we noted earlier, one of the report’s more alarming findings for the United States is the degree to which income inequality has increased the population of children who grow up in relative poverty, meaning that America’s famously abundant wealth does not equally benefit all children. Economists rate the U.S. economy as one of the most unequal in the Western world.

The low U.S. rating, then, does not mean that all American children are worse educated, less healthy and less well-off than all children in, for example, Greece and Slovakia. After all, many American kids are doing great. But the report, just as worryingly, means that significant numbers of American children are so much worse off than the average Greek or Slovakian child as to bring the overall U.S. average beneath those other, relatively less wealthy and developed countries.

Here’s a chart showing the rankings, overall and across the five key metrics, for all 29 countries:

Data: UNICEF

Still, the United States did do well on some comparative metrics. American kids get more exercise than almost any others studied in the report, but they’re still, by far, the most overweight. (Chalk that up to American calorie consumption, which is also one of the world’s highest.) American kids also are the least likely to drink alcohol — a finding that matches long-standing alcohol consumption patterns of American adults. According to the World Health Organization, Americans ages 15 and up have consumed far less alcohol than their counterparts abroad for decades.

Meanwhile, Canadian children smoke the most marijuana, with more than one in four reporting they’d lit up in the past year — a period when Canada continued its national debate on the country’s cannabis laws.

Here’s something that might surprise you: kids in high-achieving Finland attend preschool less than anyone else, which seems to buck research linking preschool to later educational and economic success. But, as the report explains, that statistic is somewhat misleading: preschool begins later in Finland than it does elsewhere, which throws off the numbers.

Finally, there are some interesting, if unpleasant, hints on how Europe’s recent economic crises could impact youth there. In Spain, Italy and Ireland, more than 10 percent of children ages 15 to 19 are not enrolled in education, employment or training — a frightening figure that might reflect post-recession unemployment numbers and which could, per UNICEF, augur “mental health problems, drug abuse, involvement in crime, and long-term unemployment and welfare dependence” in the future.

Some of those effects could be playing out in Spain already. More than half of the surveyed Spanish children said they’d been in a physical fight within the past year, a huge 15 percent jump from UNICEF’s 2001 survey. Greece reported a similar jump in the past decade. Both countries have suffered in the European financial crisis.

As the report notes, these types of statistics are interesting less as a snapshot of the present than a predictor of the future.

“At the heart of the case to be made is the fact that childhood is … a time in which future patterns and pathways of health and well-being are being laid down and in which disruption can have lifelong consequences,” the report concludes. “Protecting the years of childhood is therefore essential both for the well-being of those who are children today and for the well-being of the societies of tomorrow.”

Any American who wants to understand the trajectory of the American economy (ever more downward), why this is happening, and what will ultimately be required to reverse the relentless lowering of American salaries and offshoring of American jobs should listen to economist Richard Wolff passionately lay it out in easily understandable terms. It's not pretty.

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 theREALnews                                                                               Permalink

Obama Preaches Stimulus to Europe and Practices Austerity at Home

Richard Wolff: Low wages, cheap money, and cheap equipment are driving higher profits and the politics of austerity - April 21, 13

Bio

Richard D. Wolff is a Professor of Economics Emeritus at the University of Massachusetts, Amherst. And he is currently a Visiting Professor of the Graduate Program in International Affairs at the New School University in New York. Since 2008, he has been writing and speaking chiefly on the global capitalist crisis. His latest book is Democracy at Work: A Cure for Capitalism.

Dear fellow Americans, Stop believing everything you are told by the corporate-owned mainstream media and pay more attention to the news that they suppress. Orwell's "1984" will soon become reality if we fail to recognize and oppose it...

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Boston Marathon Bombing

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April 19, 2013 | Original Here

Boston Marathon Bombing
 
Dear Readers,

A number of you have asked me my take on the Boston Marathon Bombing and subsequent events.

I am flattered that so many look to me for leadership on so many issues. However,
I have not followed closely the Boston event. My website hasn’t the resources to field an investigative team, and in my opinion the TV and print news is part of the misinformation or disinformation. While driving (April 19) I listened to a NPR program on the Boston bombing and was disheartened by the absence of hard questions and any thought.

Alex Jones has made a definitive statement that I lack the information to verify or contest. (See here: http://www.youtube.com/watch?v=axQtAFtmtVA )

The video shows numerous military type guys on the scene prior to the explosion in identical garb–black baseball hats with white insignia, black shirts or jackets, tan pants and combat boots with cell phones in their hands. All have identical backpacks.

The backpack straps match those on the remains of an exploded backpack, which the media has attributed to the backpack of one of the two brothers who are alleged to have committed the bombing. But they also match those of the guys who seem to move at ease among the police. No cop demands to search any of the backpacks.

The video also shows prior to the bombing bomb-sniffing dogs patrolling and the Boston Globe’s report that a mock bomb attack would be part of a drill at the marathon.

These documented facts have disappeared, to the extent that I have paid attention, from the media’s reports.

What strikes me about the event is the ease with which authorities were able to lockdown entire metropolitan areas, preventing US citizens from leaving their homes in order to go to their jobs, to doctor’s appointments, to the grocery store, or to walk their dogs. This is a precedent. It sets the stage for martial law, although it is not being called that, and for daylight curfews. Is this what Homeland Security meant two years ago when its leader said the agency had shifted its focus from terrorism to domestic extremists?

All of this is happening because of 4 or 5 deaths including one of the alleged perpetrators of the bombing. The response of the authorities is disproportionate to the crime.

Lockdowns of metropolitan areas because of a hunt for one guy that might be a patsy? This is a new development. It is ominous for our future as a free society.

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Blogger's Notes: (1) I embed below the video linked to in the third paragraph from the top. (2) the large type in the third paragraph from the bottom was not used by Paul Craig Roberts in his actual blog post but he did use it in his e-mail notification of this post.

Does The Economist magazine portray the British economy in an intellectualy honest fashion? Not in my book! What do you think?

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Thatcherism: Good or Bad for Britain?

by David L Griscom | April 17, 2012

The April 13th edition of The Economist magazine featured a picture of Margaret Thatcher on the cover together with the words "Freedom fighter." What did they mean by that?
 
Well, they said "She thought nations could be great only if individuals were set free." They clarified this thought as "...the right of individuals to run their own lives, as free as possible from micromanagement from the states."
 
The Economist goes on to say that when Tharcher took power "She privatized state industries, refused to negotiate with unions, abolished state controls, broke the striking miners and replaced Keynesian with [Milton] Friedman's monetarism."
 
This sounds to me as though the "individuals" being set free were solely those that held corporate personhood.
 
The Economist does mention that Thatcher had her critics: 
"Her reforms, it is said, sowed the seeds of the recent economic crisis."
 
This article further describes the nature of these criticisms in this way:  "Without Thatcherism ...Financial services would not make up such a large slice of the British economy and the country would not now be struggling under the burden of individual debt caused by excessive borrowing and government debt caused by the need to bail out the banks."
 
From what I have learned from the intellectually honest economists that I regularly feature on this blog, the preceding criticism is mostly correct ...except for failing to explain that the burden of individual debt is traceable to Thatcher's privatization of all utilities (see below).  In addition, one might add that "the need to bail out the banks" was due to Thatcher's total deregulation of banking -- a virtual invitation for bankers to speculate in caustic derivatives and credit default swaps, creating a bubble that was bound to blow up.

The Economist concedes that "Some of this [criticism] is true" but continues with the rationalization "but then without Thatcherism Britain's economy would still be mired in state control, the commanding heights of its economy would be owned by the government, and militant unions would be a power in the land."
 
My comment regarding this last "defense" of Thatcherism is that if she hadn't sold off the then-price-regulated, government-run utilities at fire-sale prices to greedy corporations, the British people would not now be shivering in their unheated houses, unable to afford the current kleptocratic prices of heat, electricity, and water.  This cruel state of affairs would never have come to pass if the "militant unions" were still "a power in the land."

But this is just my labor-sympathetic make. Watch the video below for the opinion of a female Member of Parliament and draw your own conclusion:

http://youtu.be/XDtClJYJBj8

Glenda Jackson launches tirade against Thatcher in tribute debate 

 barnetbugle 
 Published on Apr 10, 2013

Excerpts from the column below: "Save a handful of corrupt banks, screw the American public – that is the Fed’s policy. Like almost every other American institution, the Fed represents the mega-rich." "The attack on gold is a desperate attempt to protect the US dollar from the Fed’s policy of quantitative easing. But the attack on bullion has apparently failed. The price was driven down, but the demand for physical possession has hit new highs." "What we are witnessing is the failure of a policy of financial corruption."

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Update to the Update: The Attack on Gold — Paul Craig Roberts

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April 16, 2013 | Find Original Here

Tuesday, April 16. The orchestrated attack on bullion in the paper gold market took the spot prices of gold and silver down on Friday and Monday, but actual physical purchases rose during this period. The sales were of paper claims, not of real metal.

The demand for physical possession of bullion rose so strongly that large wholesalers such as www.tulving.com and large retailers such as Gainesville Coins reported sold out items. Also, dealers raised the premiums above the spot price that is charged for coins. From Friday to Monday the premium on Silver Eagles at the large online retailer, Gainesville Coins, rose from $3.75 to $5.99 above the spot price of silver. The percentage increase in premium was larger than the percentage decline in the silver price. Thus, the price of a silver one Troy ounce coin did not drop despite the drop in the spot price. Today (April 16) the price of a silver eagle purchased with a credit card from retailer Gainesville Coins is $30.36. You would never know that the market had fallen out.

Today (Tuesday, April 16) Tulving reported 29% of its bar and coin bullion categories sold out and had almost no silver coin stock. The premium over spot on new gold eagles was $63.95. At large online retailers the premium was $71. Gainesville Coins has no silver Buffalos and lists shipment of orders to commence when coins are available, estimated to be May 10.

What I am reporting are facts, not a theory. We have just had two days of massive sales of paper claims on bullion, but during these days when the price of gold and silver collapsed under short sales, it was difficult to get your hands on the metal itself. On telephone orders you wait in long queues to place an order and are told that delivery awaits availability.

Listening to the media and to academic economists such as Paul Krugman, you would think no one any longer wants gold and silver. But try getting your hands on some.

The physical bullion market, gold especially, is dominated by Asians. Americans are a minor player. Most Americans still believe in the almighty dollar, but few Asians do. The Chinese tomorrow would dump their two trillion of US dollar-denominated assets and purchase gold, except that the action would drive down the dollar and drive up the gold price. So, unlike the orchestrated attack on gold, China plays a slow hand, using the orchestrated attack on gold to acquire the metal at lower prices.

As I understand it, the open interest or future contracts on COMEX greatly exceed the bullion available for delivery. This is a paper market mainly settled in cash, not by taking delivery. If the contracts had to be settled in bullion instead of cash, the COMEX would fail.

One advantage of growing old is that one gains perspective. I remember when gold was $35 an ounce and silver $1 an ounce. If memory serves, until sometimes in the 1960s, a person could still take a paper dollar to a bank and be given a silver dollar. There were $1 dollar and $5 dollar silver certificates (paper money) that circulated along with Federal Reserve currency. At that time banks did not differentiate. A dollar was a dollar. Silver certificates today have collectors’s value, but the Federal Reserve currency does not.

If memory serves, sometimes after 1966 if a person presented a silver certificate to a Federal Reserve Bank, he received one or five ounces or raw silver in return depending on the denomination of the certificate, which looked like a Federal Reserve note except it said Silver Certificate. I have some of these envelopes of little pieces of silver.

When silver was taken out of US coins in the 1960s and copper was taken out of the US penny in the early 1980s, despite my opposition as Assistant Secretary of the US Treasury for Economic Policy, all real constraints on fiat money were removed.

Today we see the Fed protecting its protection of “banks too big to fail” with low interest rates by creating enormous sums of money in order to purchase both Treasury bonds and mortgage backed derivatives.

These Fed purchasers are at the expense of savers and CD and bond purchasers who receive a negative real rate of interest.

Now, to protect its bank rescue policy, the Fed is attempting to drive down the price of bullion, thus depriving Americans of any way of protecting their life savings from the inflation that the Fed’s money printing will ultimately cause.

Save a handful of corrupt banks, screw the American public – that is the Fed’s policy.
Like almost every other American institution, the Fed represents the mega-rich.

Anyone with open eyes can see that it is impossible for the US dollar to maintain its current exchange value and role as world money when its supply is being increased by $1,000 billion per year while the world is ceasing to use the dollar for international payments.

The attack on gold is a desperate attempt to protect the US dollar from the Fed’s policy of quantitative easing. But the attack on bullion has apparently failed. The price was driven down, but the demand for physical possession has hit new highs.

What is it that we really know? What have we learned since the Clinton regime?

We have learned that integrity is rare in the US government, in the justice system, and in the financial sector. Whatever integrity one can find in these arenas wouldn’t amount to one ounce of gold.

Americans live in a rigged system in which propaganda determines the public’s awareness and consciousness. Americans, or most of them, live in the Matrix.

Since the end of WWII, most foreign governments have been in the habit of going along with Washington. Only in the aftermath of Washington’s phony wars based on lies and phony economy based on rigged statistics is the rest of the world beginning to realize that Washington is a destabilizing force.

Chavez, the recently deceased leader of Venezuela made the point most powerfully when he spoke at the UN. Standing at the podium in the General Assembly, he said that “Satan himself stood here yesterday speaking as if he owned the world. You can still smell the sulfur.” He was speaking of George W. Bush, and the entire assembly knew it.

The Russian leader, Putin, speaking of Washington, has declared that we know what comrade wolf is up to.

The Chinese can see the new military bases that stupid Washington is building in the Chinese area of influence.

A country whose currency is being abandoned as the means of international settlement, not only by the BRICS but also by puppet states such as Australia and Japan, has reached the point of absurdity when it tries to eliminate bullion as a refuge against the depreciating dollar.

The Federal Reserve and the US Treasury using their dependent bullion banks, every one of which would be busted if interest rates were not rigged by the Federal Reserve, have used leverage in the paper market to drive down the prices of gold and silver; yet, purchases of physical bullion are outrunning supplies.

What we are witnessing is the failure of a policy of financial corruption.

Integrity is a scarce commodity in the US government. Try to find much of it. Demonstrating a rare example of integrity, Brooksley Born resigned as head of the Federal Commodity Futures Trading Commission, because the Federal Reserve chairman, the US Treasury secretary, and the SEC chairman prevented her from d[o]ing her statutory duty and regulating over the counter derivatives. The three morons who prevented her from doing her duty caused the financial collapse.

Integrity is almost non-existent in the US justice system.

Integrity is totally non-existent in the US financial system. As Michael Hudson has proven, the financialization of the economy has destroyed the economy.

With dollars, and now with Washington’s demand Japanese yen and European euros being printed in profusion, where can people put their money, at least those who still have some?

Can they put it in bonds when the Federal Reserve is monetizing debt at $1,000 billion annually and real interest rates are negative?

Can they put it in stocks that are pumped up by banks speculating with the Fed’s money while retail sales, labor force participation, and consumer incomes fall?

Safety can only be found in gold and silver, traditional, historical money that cannot be inflated.This is why bullion is under attack by Washington.

Readers ask me what they can do to protect themselves and where can they go to make gold and silver purchases.

I am not a registered financial advisor. I do not provide financial advice.

Every person must make their own decision. All I can do is to provide information, which is not guaranteed to be correct.

There are various simple options in contrast with the more demanding options of the professional trader. A person can accumulate gold and silver coins and keep them in a home safe or bury them on the property. A person can purchase shares of the Central Fund of Canada which convey ownership in a company that owns gold and silver bullion in a vault in Canada. A person can put money under management with companies that have a strong component of gold, such as Golden Returns Capital LLC whose gold depository is in the US.

Or you can decide to go with William S. Kaye (wskaye@pacgrp.com) whose depository is in Hong Kong.

There is GoldMoney, a Channel Islands based depository firm with storage vaults in London, Switzerland and Asia, and there is GoldSwitzerland, a Swiss company with its storage vault in Switzerland.

If you want a reading on whether physical gold is being sold or merely paper shorts, subscribe to John Brimelow brimelowgoldjottings@gmail.com

This list is not exhaustive. Protecting wealth can be harder than acquiring wealth. This is especially true for the middle class. The super rich can lose hundreds of millions of dollars and still be rich.

Gold and silver investments are not my speciality. I am an economist. I am aware that the US media is a propaganda organization, not a purveyor of truth. Currently the US is creating 1,000 billion dollars annually, but the demand for dollars is not growing with the supply.

Therefore, the exchange value of the dollar is at risk. A high and rising dollar price of bullion is an indication that the exchange value of the dollar with regard to other currencies is too high.

To protect the dollar from its money printing practice, the Fed has used naked shorts, its bullion bank dependents, and the presstitute media to drive down the gold price in the paper market, essentially an unreal market not inhabited by purchasers of physical metal. If the dollar’s exchange value takes a visible hit, import prices will rise, and the Fed will lose control over interest rates.

Meanwhile the demand for bullion possession rises.

The latest disinformation being put out is that bullion dealers, faced with the collapse of bullion prices, are afraid of the risk of purchasing bullion to sell to the public. They are going out of business and not replenishing their stocks. Gold and silver bullion is not available, because bullion dealers are afraid to stock the metals.

Little doubt that Americans who believe every fairy tale “their” government tells them will believe this one too. But those who don’t will observe the long lines waiting to purchase physical metal, not paper claims, and continue to load up on bullion.