the arab revolution forsaken by the west and forgotten by the world

aljazeera | Thousands of Bahrainis have begun a week-long rally in a Shia village, 10 days ahead of the first anniversary of the start of pro-democracy protest which was brutally crushed, activists have said.

"The large number of people who participated yesterday [Saturday] wanted to deliver a message to the government that people are determined to keep up the demands that they made on February 14 last year," Matar Matar, a leading Shia opposition activist, told the AFP news agency on Sunday.

"They will use any venue available," he added.

Mostly-Shia protesters occupied Manama's Pearl Square for about a month last year until they were driven out in a heavy-handed mid-March crackdown.

The "steadfast" rally began in the afternoon in al-Muqsha village, about 7km west of Manama, the capital, and continued until 11:00 pm (2000 GMT).

It will reconvene at the same time on Sunday, according to Matar, a former MP.

Sheikh Ali Salman, a Shia cleric and leader of al-Wefaq, the main Shia opposition grouping, urged demonstrators to rename the rally spot in the village as "Freedom Square," insisting that people have decided that "there will be no return to pre-February 14".

"It is impossible that Bahrain remains without equality between its people," he said, according to the al-Wefaq Facebook page.

Although al-Wefaq said that the protest would last a week, the interior ministry announced on Friday that the demonstration had been authorised for two days only.

Matar said that his party informed the interior ministry that it intends to hold a seven-day rally, after it did not get authorisation to organise an open-ended demonstration.

During the month-long protest last year, the Shia-led opposition demanded significant constitutional changes that would reduce the power of the Sunni al-Khalifa ruling dynasty, including through having an elected prime minister.

Tensions have remained high in Bahrain since the initial deadly crackdown, and sporadic violence has risen in recent weeks as the first anniversary approaches of the launch of the protests.

top 1% collect half of all capital gains...,

Video - Theophilus Beckford Bringing in the Sheaves

Forbes | Capital gains are the key ingredient of income disparity in the US-- and the force behind the winner takes all mantra of our economic system. If you want even out earning power in the U.S, you have to raise the 15% capital gains tax.

Income and wealth disparities become even more absurd if we look at the top 0.1% of the nation's earners-- rather than the more common 1%. The top 0.1%-- about 315,000 individuals out of 315 million-- are making about half of all capital gains on the sale of shares or property after 1 year; and these capital gains make up 60% of the income made by the Forbes 400.

It's crystal clear that the Bush tax reduction on capital gains and dividend income in 2003 was the cutting edge policy that has created the immense increase in net worth of corporate executives, Wall St. professionals and other entrepreneurs.

The reduction in the tax from 20% to 15% continued the step-by-step tradition of cutting this tax to create more wealth. It had first been reduced from 35% in 1978 at a time of stock market and economic stagnation to 28% . Again 1981, at the start of the Reagan era, it was reduced again to 20%-- raised back to 28% in 1987, on the eve of the October 19 232% crash in the market. In 1997 Clinton agreed to reduce it back to 20%, which move was an inducement for the explosion of hedge funds and private equity firms-- the most "rapidly rising cohort within the top 1 per cent."

Make no mistake; the battle that is to be fought over the coming attempt to reverse this reduction in capital gains will be bloody and intense. The facts are clear according to the Congressional Budget Office more than 80% of the increase in income inequality was the result of an increase in the share of household income from capital gains. In fact, you can go so far as to claim that "Capital Gains income is the most unevenly distributed-- and volatile-- source of household income," according to Laura D'Andrea Tyson, University of California business professor and former chairwoman of the Council of Economic Advisers under President Clinton.

No wonder the super wealthy plutocrats obtained the largest share of national income-- 25% of the nation's wealth- greater than any other industrial nation in the the period of 1979 to 2005. Make no mistake; after unemployment-- this disparity between the 1%-- 3 million-- or the 0.1%-- the 300,000-- and the other 312 million citizens of the U.S. has become the major theme of the Occupy Wall Street movement-- and an important national debate.

I commend you to the late Justice Louis Brandeis warning to the nation that " We can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we can't have both." We have to make up our minds to restore a higher, fairer capital gains tax to the wealthiest investor class-- or ultimately face increased social unrest.

wall st. is privately critical of the protesters

NYTimes | Publicly, bankers say they understand the anger at Wall Street — but believe they are misunderstood by the protesters camped on their doorstep.

But when they speak privately, it is often a different story.

“Most people view it as a ragtag group looking for sex, drugs and rock ’n’ roll,” said one top hedge fund manager.

“It’s not a middle-class uprising,” adds another veteran bank executive. “It’s fringe groups. It’s people who have the time to do this.”

As the Occupy Wall Street demonstrations have grown and spread to other cities, an open question is: Do the bankers get it? Their different worldview speaks volumes about the wide chasms that have opened over who is to blame for the continuing economic malaise and what is best for the country.

Some on Wall Street viewed the protesters with disdain, and a degree of caution, as hundreds marched through the financial district on Friday. Others say they feel their pain, but are befuddled about what they are supposed to do to ease it. A few even feel personally attacked, and say the Occupy Wall Street protesters who have been in Zuccotti Park for weeks are just bitter about their own economic fate and looking for an easy target. If anything, they say, people should show some gratitude.

“Who do you think pays the taxes?” said one longtime money manager. “Financial services are one of the last things we do in this country and do it well. Let’s embrace it. If you want to keep having jobs outsourced, keep attacking financial services. This is just disgruntled people.”

He added that he was disappointed that members of Congress from New York, especially Senator Charles E. Schumer and Senator Kirsten Gillibrand, had not come out swinging for an industry that donates heavily to their campaigns. “They need to understand who their constituency is,” he said.

Generally, bankers dismiss the protesters as gullible and unsophisticated. Not many are willing to say this out loud, for fear of drawing public ire — or the masses to their doorsteps. “Anybody who dismisses them publicly is putting a bull’s-eye on their back,” the hedge fund manager said.

the destruction of economic facts

Businessweek | During the second half of the 19th century, the world's biggest economies endured a series of brutal recessions. At the time, most forms of reliable economic knowledge were organized within feudal, patrimonial, and tribal relationships. If you wanted to know who owned land or owed a debt, it was a fact recorded locally—and most likely shielded from outsiders. At the same time, the world was expanding. Travel between cities and countries became more common and global trade increased. The result was a huge rift between the old, fragmented social order and the needs of a rising, globalizing market economy.

To prevent the breakdown of industrial and commercial progress, hundreds of creative reformers concluded that the world needed a shared set of facts. Knowledge had to be gathered, organized, standardized, recorded, continually updated, and easily accessible—so that all players in the world's widening markets could, in the words of France's free-banking champion Charles Coquelin, "pick up the thousands of filaments that businesses are creating between themselves."

The result was the invention of the first massive "public memory systems" to record and classify—in rule-bound, certified, and publicly accessible registries, titles, balance sheets, and statements of account—all the relevant knowledge available, whether intangible (stocks, commercial paper, deeds, ledgers, contracts, patents, companies, and promissory notes), or tangible (land, buildings, boats, machines, etc.). Knowing who owned and owed, and fixing that information in public records, made it possible for investors to infer value, take risks, and track results. The final product was a revolutionary form of knowledge: "economic facts."

Over the past 20 years, Americans and Europeans have quietly gone about destroying these facts. The very systems that could have provided markets and governments with the means to understand the global financial crisis—and to prevent another one—are being eroded. Governments have allowed shadow markets to develop and reach a size beyond comprehension. Mortgages have been granted and recorded with such inattention that homeowners and banks often don't know and can't prove who owns their homes. In a few short decades the West undercut 150 years of legal reforms that made the global economy possible.

The results are hardly surprising. In the U.S., trust has broken down between banks and subprime mortgage holders; between foreclosing agents and courts; between banks and their investors—even between banks and other banks. Overall, credit (from the Latin for "trust") continues to flow steadily, but closer examination shows that nongovernment credit has contracted. Private lending has dropped 21 percent since 2007. Outstanding loans to small businesses dropped more than 6 percent over the past year, while lending to large businesses, measured in commercial loans of more than $1 million, fell nearly 9 percent.

The importance of economic facts may not be obvious to Americans. "What does the fish know about the water in which it swims?" asked Albert Einstein. But it's easy to grasp from the perspective of the developing and former communist countries where I live and work. In these countries, most of our assets and relationships are in the informal sector, outside the legal economy. Because they're not recorded in public memory systems, they cannot be written up as facts and are, in effect, invisible. All we have are shadow markets.

Without standardization, the values of assets and relationships are so variable that they can't be used to guarantee credit, to generate mortgages and bundle them into securities, to represent them in shares to raise capital. Nor do they fit the standard slots required to enter global markets. That's why credit crunches and massive unemployment are chronic conditions for most people forced to operate in the informal economy. These are the ones you see protesting in the streets of Arab countries or living in tents surrounding Port-au-Prince. We know only too well that facts don't speak for themselves: They have to be constructed through legal processes and kept transparent. They have to be defended, too.

culture of complicity

NYTimes | Given the fierce insularity of Japan’s nuclear industry, it was perhaps fitting that an outsider exposed the most serious safety cover-up in the history of Japanese nuclear power. It took place at Fukushima Daiichi, the plant that Japan has been struggling to get under control since last month’s earthquake and tsunami.

In 2000, Kei Sugaoka, a Japanese-American nuclear inspector who had done work for General Electric at Daiichi, told Japan’s main nuclear regulator about a cracked steam dryer that he believed was being concealed. If exposed, the revelations could have forced the operator, Tokyo Electric Power, to do what utilities least want to do: undertake costly repairs.

What happened next was an example, critics have since said, of the collusive ties that bind the nation’s nuclear power companies, regulators and politicians.

Despite a new law shielding whistle-blowers, the regulator, the Nuclear and Industrial Safety Agency, divulged Mr. Sugaoka’s identity to Tokyo Electric, effectively blackballing him from the industry. Instead of immediately deploying its own investigators to Daiichi, the agency instructed the company to inspect its own reactors. Regulators allowed the company to keep operating its reactors for the next two years even though, an investigation ultimately revealed, its executives had actually hidden other, far more serious problems, including cracks in the shrouds that cover reactor cores.

Investigators may take months or years to decide to what extent safety problems or weak regulation contributed to the disaster at Daiichi, the worst of its kind since Chernobyl. But as troubles at the plant and fears over radiation continue to rattle the nation, the Japanese are increasingly raising the possibility that a culture of complicity made the plant especially vulnerable to the natural disaster that struck the country on March 11.

Already, many Japanese and Western experts argue that inconsistent, nonexistent or unenforced regulations played a role in the accident — especially the low seawalls that failed to protect the plant against the tsunami and the decision to place backup diesel generators that power the reactors’ cooling system at ground level, which made them highly susceptible to flooding.

A 10-year extension for the oldest of Daiichi’s reactors suggests that the regulatory system was allowed to remain lax by politicians, bureaucrats and industry executives single-mindedly focused on expanding nuclear power. Regulators approved the extension beyond the reactor’s 40-year statutory limit just weeks before the tsunami despite warnings about its safety and subsequent admissions by Tokyo Electric, often called Tepco, that it had failed to carry out proper inspections of critical equipment.

The mild punishment meted out for past safety infractions has reinforced the belief that nuclear power’s main players are more interested in protecting their interests than increasing safety. In 2002, after Tepco’s cover-ups finally became public, its chairman and president resigned, only to be given advisory posts at the company. Other executives were demoted, but later took jobs at companies that do business with Tepco. Still others received tiny pay cuts for their role in the cover-up. And after a temporary shutdown and repairs at Daiichi, Tepco resumed operating the plant.

In a telephone interview from his home in the San Francisco Bay Area, Mr. Sugaoka said, “I support nuclear power, but I want to see complete transparency.”

seppuku for the 21st century

Video - Harsh cinematic seppuku with a wooden sword.

Thiscantbehappening | Who will be the liquidators?

Whether Japan needs a few hundred volunteers to shovel boric acid on burning plutonium, or whether Japan needs 800,000 draftees, as in the Soviet Union, somebody’s got to do it.

Michio Kaku suggested the Japanese military, presumably because they are available and can fly helicopters. One could also argue that soldiers are paid to risk their lives for their country, and Japan has never needed them more.

Lets think about this, I say. The Japanese military is constitutionally forbidden to make war on anyone, so they are probably the nicest military in the world. And like every other military, it is full of young men who aren’t paid much, who haven’t lived much, who haven’t even started their families yet. Most important, Japanese soldiers bear no moral responsibility at all for the problem. Why should they die to solve it?

If someone has to die an agonizing, terrifying, nauseating, blistering, stinking, metastasizing death, who should be first guy to run into the Fukushima reactors with a bucket of wet cement?

I nominate Jeffrey Immelt.

Immelt is chairman and CEO of General Electric. General Electric designed all six of the faulty Fukushima reactors. General Electric built three of them. General Electric claimed it was safe to build these reactors next to the ocean in an earthquake zone. General Electric built 23 reactors in the United States exactly like the ones melting down right now in Japan. General Electric has made colossal profits promoting nuclear power in Japan and around the world. Jeffrey Immelt made $15.2 million last year.

He makes the most money, it’s his company, and he tells everyone else what to do. At any time since taking over GE in 2000, he could have said, “Those plants are too dangerous. We sold them to Japan. We need to shut them down.” He didn’t do that. Hence the nuclear waste in Tokyo’s drinking water belongs to Jeffrey Immelt.

This is what Immelt says on the GE website: “I’m out talking about this company seven days a week, 24 hours a day, with nothing to hide. We’re a 130-year-old company that has a great record of high-quality leadership and a culture of integrity.”

That is the statement of a moral turd. A shameless, sociopathic, moral turd. GE ran the Hanford Nuclear Reservation, one of the most polluted places on the planet. GE has paved parking lots with nuclear waste. GE has released vast clouds of radiation on innocent, unwarned people in United States just to see what would happen. GE has done radiation experiments on the testes of prisoners without properly warning them. GE dumped 1.3 million pounds of PCBs into the Hudson River, making it poisonous for generations. GE has refused to clean up the PCBs in the Hudson and elsewhere. GE has lied repeatedly about the PCBs. GE is a serial polluter of ground water. GE takes enormous pride in paying no corporate taxes in the United States. GE has been fined many times for defrauding the the Defense Department. GE has been fined many times for design flaws and safety violations at its nuclear plants in the United States. GE has shipped most of its operations overseas so it can pay workers less and get fined less. GE owns a big chunk of NBC and MSNBC, which has been covering Japan less and less as the meltdown gets worse and worse. GE sees to it that all those NBC Dateline true crime documentaries don’t inform anyone about GE crimes. And last, but far from least, GE launched the political career of Ronald Reagan.

For all that, GE has been named “America’s Most Admired Company” in a poll conducted by Fortune magazine.

For all that, Jeffrey Immelt has been named Chairman of Obama’s Economic Advisory Panel.

For all that, I say give Jeffrey Immelt a one-way ticket to Fukushima and a bucket of wet cement. While he’s pouring it on the burning fuel rods, he can throw in his MBA from Harvard.

Then give another one-way ticket and bucket of wet cement to Jack Welch, who was head of GE from 1981 to 2000. He can toss his #1 best-selling autobiography, Jack: Straight from the Gut, onto the fuel rods as well.

Then the Japanese get to pick between their prime minister and the head of the Tokyo Electric Power Company. But GE should go first. It’s the honorable way. Harakiri for the 21st century.

the collapse of the largest asian power company...,

Video - BBC World Business Report Tokyo Electric Power Company's share price lost 70% of its value after the earthquake

France24 | The question of a full or partial government takeover of Tokyo Electric Power Co. (TEPCO) has become more pressing in recent days as the company continues to struggle to bring its nuclear reactors at the Fukushima site under control.

As the pressure mounts on the tarnished company, it was reported Wednesday that the utility company’s president Masataka Shimizu has been hospitalised due to high blood pressure and dizziness.

A Japanese government minister reported on Tuesday that the government could impose state ownership on Asia's largest utility. Speaking to a press conference, National Strategy Minister Koichiro Gemba, said that it was “possible to hold various discussions on how TEPCO should function,” and added that the government could step in to pay the hefty compensation bills the company couldn’t cover.

However, confusingly, Chief Cabinet Secretary Yukio Edano told a separate press conference that the government was “not at the moment considering nationalisation,” and TEPCO spokesman Hajime Motojuku told Reuters he was unaware of any nationalisation plans.

TEPCO has lost about $30 billion in market value since the devastating earthquake and tsunami on March 11, which knocked out electricity at its Fukushima nuclear plant site and precipitated the country’s worst nuclear crisis in history.

Compounding costs

The rumours of nationalisation spurred a frantic selloff of TEPCO’s shares on Tuesday and Wednesday. The utility fell 100 yen on the Nikkei Wednesday, the maximum daily limit. The 18 percent drop came after a 19 percent slump a day earlier. Analysts believe that nationalisation could hurt the embattled company’s shareholders, but be good news for its bondholders.

As if the TEPCO's precarious financial position and its workers’ heroic efforts to avert an even uglier nuclear disaster were not enough, the firm is now also struggling with a spiraling PR disaster. The firm was already tarnished by the 2002 scandal involving the fabrication of data during safety inspections of the Fukushima nuclear plant.

“Japanese people don’t expect [TEPCO] to tell the truth,” Philip White, who works for the Tokyo-based anti-nuclear group CNIC, told FRANCE 24. “People are skeptical of what they are hearing from TEPCO and the government, but they do not have other sources of information.”

Radiation worries have been compounded by the rolling blackouts the company has had to enforce in the service area it covers. Nomura Holdings analyst Shigeki Matsumoto said this month that TEPCO will have to pay more than $1 billion every month on alternative fuels to make up for lost power capacity.

why no defence of saudi "right to protest"?

ActivistPost | Secretary of State Hillary Clinton had been exhaustively in front of cameras promoting the right for people to protest in Egypt, Bahrain, Iran, and Libya. She's been touting the freedom to use social networking sites as a way for Arab people to organize against their oppressive regimes. Now, the Administration is even considering arming the opposition in Libya.

Clinton's perpetual propaganda efforts exposed her blatant hypocrisy when a silent peaceful protester was violently removed from one of her recent speeches on the very subject. However, the hypocrisy now seems to go much deeper in her deafening silence over the prospect for protests in Saudi Arabia.

After Human Rights Watch revealed that a nationwide "Day of Rage" protest had been planned in Saudi Arabia for this week, March 11th, Bloomberg reported that the Saudi government claims that demonstrations and marches are "strictly" prohibited by law. A Saudi Interior Ministry official said protests "contradict Islamic values" and "They harm public interest, infringe on the rights of others, spread chaos and lead to bloodshed."

This prohibition of popular dissent proves beyond a shadow of doubt that Saudi Arabia is indeed the most tyrannical authoritarian regime in the Arab world. Yet, U.S. Administration officials have been strangely silent about supporting the people's uprising there.

allstate goes in on BoA

Video - Allstate Haysbert Nothing to Fear commercial

LATimes | But a lawsuit filed last week provides a pointed reminder that the bubble would never have happened had it not been for irresponsible lenders and the feckless investors who kept them awash in cash.

The case pits insurer Allstate against Bank of America and Countrywide, the giant mortgage lender that Bank of America bought in 2008. The suit claims that Countrywide misrepresented the risks posed by the bundles of mortgages it sold to investors such as Allstate, which sank $700 million into the securities from 2005 to 2007. After the housing bubble burst, the mortgages in those securities started defaulting at a torrid pace, causing the value of the securities to plummet.

The complaint presents only one side of the dispute, of course. A Bank of America spokesman suggested that Allstate was "a sophisticated investor … looking for someone to blame." But Allstate's examination of a sample of the mortgages in each bundle found that Countrywide's disclosures consistently understated such important indicators as the percentage of mortgages with low down payments or with no proof of the borrower's income (so-called liar loans). And by Allstate's analysis, Countrywide's disclosures weren't off by a little bit. For example, in 11 securities that were supposedly free of "underwater" mortgages, up to 14% of the loans turned out to be larger than the value of the house.

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It's true that lenders across the industry threw caution to the winds during the housing boom — how else to explain the existence of liar loans and mortgages that went belly up as soon as housing prices turned down? But that was just part of the problem. As Bank of America observed, Allstate and other buyers of mortgage-backed securities were often sophisticated investors. Yet they don't seem to have bothered with a rigorous risk analysis until after they lost their shirts.

Instead, they relied on credit rating agencies — which were paid by the sellers of the securities, not the buyers — to protect them from bad investments. Given that most of the securities Allstate bought were given pristine AAA ratings, it's clear that the rating agencies involved also failed to do the research needed to spot the discrepancies between Countrywide's claims and the actual risks.

2011 will bring more decriminalization of elite financial fraud

HuffPo | The role of the criminal justice system with regard to financial fraud by elite bankers in 2011 is likely to reprise its role last decade -- de facto decriminalization. The Galleon investigation of insider trading at hedge funds will take much of the FBI's and the Department of Justice's (DOJ) focus.

The state attorneys general investigations of foreclosure fraud do focus on the major players such as the Bank of America (BoA), but they are unlikely to lead to criminal liability for any senior bank officials. It is most likely that they will lead to financial settlements that include new funding for loan modifications.

The FBI and the DOJ remain unlikely to prosecute the elite bank officers that ran the enormous "accounting control frauds" that drove the financial crisis. While over 1000 elites were convicted of felonies arising from the savings and loan (S&L) debacle, there are no convictions of controlling officers of the large nonprime lenders. The only indictment of controlling officers of a far smaller nonprime lender arose not from an investigation of the nonprime loans but rather from the lender's alleged efforts to defraud the federal government's TARP bailout program.

What has gone so catastrophically wrong with DOJ, and why has it continued so long? The fundamental flaw is that DOJ's senior leadership cannot conceive of elite bankers as criminals.

As the Huffington Post Investigative Fund's David Heath reports:

Benjamin Wagner, a U.S. Attorney who is actively prosecuting mortgage fraud cases in Sacramento, Calif., points out that banks lose money when a loan turns out to be fraudulent. An investor in loans who documents fraud can force a bank to buy the loan back. But convincing a jury that executives intended to make fraudulent loans, and thus should be held criminally responsible, may be too difficult of a hurdle for prosecutors. 'It doesn't make any sense to me that they would be deliberately defrauding themselves,' Wagner said."

Mr. Wagner is confused by his own pronouns: "It doesn't make any sense to me that they would be deliberately defrauding themselves." This direct quotation needs to be read in conjunction with the author's description of his position: "banks lose money" when loans "turn out to be fraudulent." Wagner was responding to a question about control fraud -- frauds led by the person controlling the seemingly legitimate entity who uses it as a "weapon." The relevant "they" is the person looting the bank -- the CEO. The word "themselves" refers not to the CEO, but rather to the bank. The CEO is not looting the CEO; he is looting the bank's creditors and shareholders. Two titles capture this well known fraud dynamic. The Nobel laureate in economics, George Akerlof, and Paul Romer co-authored >Looting: the Economic Underworld of Bankruptcy for Profit in 1993 and I wrote The Best Way to Rob a Bank is to Own One (2005). The CEO becomes wealthy by looting the bank. He uses accounting as his ammunition because, to quote Akerlof & Romer, it is "a sure thing." The firm fails (or in the modern era, is bailed out), but the CEO walks away wealthy.

Here is the four-part recipe for maximizing fraudulent accounting income in the short-term:

1. Grow extremely rapidly
2. By making bad loans at high yields
3. While employing extreme leverage, and
4. Providing only minimal loss reserves

A bank that follows this recipe is mathematically guaranteed to report record income in the near term. The first two ingredients in the recipe are linked. A bank in a reasonably competitive, mature market such as home mortgage lending cannot decide to grow extremely rapidly by making good loans. A bank can, however, guarantee its ability to grow rapidly -- and charge a premium yield -- if it lends to the tens of millions of people who cannot afford to own a home. Equally importantly, if many lenders follow the same recipe they will cause a financial bubble to hyper-inflate. Financial bubbles extend the lives of accounting control frauds by making it simple to refinance loans to those who cannot afford to purchase the asset. The longer that delinquencies and defaults can be delayed the more the CEO can loot the bank.

Note that the same recipe that maximizes short-term fictional income in the near term maximizes real losses in the longer term. Mr. Wagner is unable to understand that accounting control fraud represents the ultimate "agency" problem -- the unfaithful agent (the CEO) enriches himself at the expense of the principals he is supposed to serve and the firm's creditors. Agency problems are well known to white-collar criminologists, economists, lawyers that practice corporate, securities, or criminal law, and financial regulators. Yes, accounting control fraud causes the bank to suffer huge losses. The loans don't "turn out to be fraudulent" -- they are fraudulent when made. The recognition of the losses is delayed when an epidemic of accounting control fraud hyper-inflates a bubble, but the bubble will increase the ultimate losses. Sacramento, California is one of the epicenters of the mortgage fraud that drove the financial crisis, so Mr. Wagner's lack of understanding of fraud mechanisms is particularly harmful.

it couldn't have happened to a better audit firm...,

RollingStone | The short version of what happened goes something like this. Lehman Brothers, like all the other big banks on Wall Street in those years, was nearing insolvency and desperate for cash. In advance of its quarterly reports in 2007, the firm executed a series of something called Repo 105 transactions in an attempt to make their balance sheet look healthier than it was.

These Repo 105 transactions are just loans that Ernst and Young and Lehman Brothers conspired to book as revenue from sales. If I go to you and I ask you to lend me a hundred bucks to pay for Knicks tickets, that’s a loan, and you and I and the SEC and every investor on Wall Street all know I’m in debt to you, that I owe you a hundred bucks.

Here’s how Lehman Brothers paid for their Knicks tickets: a week before the game, they went to you and offered to you “sell” you their worthless puke-stained lava lamp for a hundred bucks, with the understanding that two days after the Knicks game, it would come back and “buy” the lamp back for the same $100 (plus a small commission for your trouble). And when Lehman pocketed that $100 from the initial transaction, they decided to call that not borrowing but a true sale, i.e. they booked that hundred bucks as revenue from an honest sale of a worthless piece-of-shit lava lamp.

In 2007 and 2008 Lehman would do this before the end of every quarter. They would "sell" billions of dollars of assets, typically bonds, to various companies, and use that money to pay down debt before the quarter’s end, so that they didn’t look so flat-ass broke to investors. Then, a week or so after the end of the quarter, they would go out and borrow more money, and then "buy" the assets back. The reasons they did this were myriad, but in most cases the assets they were "selling" were depressed in value at the time and could not have been sold at anything like face value had they really gone out on the market and tried. So instead of really "selling" these items on their balance sheet, they worked together with other companies to jury-rig these “repurchase” agreements that looked like sales but were actually loans.

Lehman was doing massive amounts of these deals every quarter. In the second quarter of 2008, they lightened up their balance sheets with $50 billion worth of Repo agreements. This technique, apparently known as "window dressing," isn’t that much different conceptually from the Enron-style book-doctoring that used "independent" special purpose vehicles to hide liabilities. In this case Lehman didn’t use shell companies but instead scattered its dent in the financial atmosphere by booking loans as sales. Ernst and Young, which made over $100 million in fees between 2001 and 2008 working with Lehman, aided the process by signing off on Lehman’s crazy accounting. In the report by bankruptcy examiner Anton Valukas that came out last March, he describes how Ernst and Young threw up a brilliant "We’re not corrupt, we’re just incredibly stupid" defense when confronted with the question of the $50 billion in Repo 105s in the second quarter of 2008.

case against assange impossible without manning

Antiwar | The Obama Administration is reportedly offering a possible plea bargain to the detained Pfc Bradley Manning, if he agrees to testify against WikiLeaks founder Julian Assange that Assange pressured him to release the various classified documents.

Manning is facing several decades in a military prison over his alleged role in the releases, but as an active duty member of the military he is being charged under the military’s legal code, not the civilian one.

Which makes charging Julian Assange, who seems to be the administration’s primary target, considerably more difficult, as he is neither an American citizen nor a member of the American military, nor indeed were any of his alleged misdeeds committed on American soil.

This makes the Justice Department’s hopes of prosecuting him extremely difficult, but right now those efforts seem to be centering on claims Assange could be charged with conspiracy for “encouraging” Manning. The only evidence to that effect is a chatlog, and would almost certainly be dismissed as hearsay unless they can convince Manning to testify as well.

Sources say that the administration has yet to determine exactly what sort of plea bargain it is planning to offer Manning for incriminating Assange, but the bidding may well begin with a pillow and sheets, both of which Manning has been barred from having in detention. Amid reports of his deteriorating health, it remains to be seen how the administration may be able to coerce him into cutting a deal.

western civilization has shed its values...,

Video - Bob Marley chasing those crazy baldheads.

Globalresearch | Western Civilization no longer upholds the values it proclaims, so what is the basis for its claim to virtue?

For example, the US print and TV media and the US government have made it completely clear that they have no regard for the First Amendment. Consider CNN's Wolf Blitzer's reaction to the leaked diplomatic cables that reveal how the US government uses deceptions, bribes, and threats to control other governments and to deceive the American and other publics. Blitzer is outraged that information revealing the US government's improprieties reached the people, or some of them. As Alexander Cockburn wrote, Blitzer demanded that the US government take the necessary steps to make certain that journalists and the American people never again find out what their government is up to.

The disregard for the First Amendment is well established in the US media, which functions as a propaganda ministry for the government. Remember the NSA leak given to the New York Times that the George W. Bush regime was violating the Foreign Intelligence Surveillance Act and spying on Americans without obtaining warrants from the FISA court? The New York Times spiked the story for one year and did not release it until after Bush's reelection. By then, the Bush regime had fabricated a legal doctrine that "authorized" Bush to violate US law.

Glenn Greenwald writing in Salon has exposed the absence of moral standards among WikiLeaks' critics. A number of American politicians have called for the US government to murder Julian Assange, as have journalists such as neoconservative propagandist Jonah Goldberg, who wrote: "Why wasn't Assange garroted in his hotel room years ago?"

WikiLeaks' critics could not make it clearer that they do not believe in accountable government. And to make certain that the government is not held accountable, WikiLeaks' critics are calling for every possible police state measure, including extra-judicial murder, to stamp out anyone who makes information available that enables the citizenry to hold government accountable.

The US government definitely does not believe in accountable government. Among the first things the Obama regime did was to make certain that there would be no investigation into the Bush regime's use of lies, fabricated "intelligence," and deception of the American public and the United Nations in order to further its agenda of conquering the independent Muslim states in the Middle East and turning them into US puppets. The Obama regime also made certain that no member of the Bush regime would be held accountable for violating US and international laws, for torturing detainees, for war crimes, for privacy violations or for any of the other criminal acts of the Bush regime.

As the cables leaked by a patriotic American to WikiLeaks reveal, the US government was even able to prevent accountable government in the UK by having British prime minister Brown "fix" the official Chilcot Inquiry into the deceptions used by former prime minister Tony Blair to lead the British into serving as mercenaries in America's wars. The US was able to do this, because the British prime minister does not believe in accountable government either.

The leaked documents show that the last thing the US government wants anywhere is a government that is accountable to its own citizens instead of to the US government.

the second accuser...,

The second accuser, Sofia Wilen, 26, is Anna's friend. Here is a video of an Assange press conference where one can see the girls together.


Video - Assange press conference where both accusers were present.

Those present at the conference marveled at her groupie-like behavior. Though rock stars are used to girls dying to have sex with them, it is much less common in the harsh field of political journalism. Sofia worked hard to bed Assange, according to her own confession; she was also the first to complain to police. She is little known and her motives are vague. Why might a young woman (who shares her life with American artist Seth Benson) pursue such a sordid political adventure?

interpol issues red notice for the arrest of julian assange

Wired | The international police organization Interpol has issued a Red Notice for the arrest of WikiLeaks’ founder Julian Assange, in connection with a sex crime investigation in Sweden.

A Red Notice is kind of international wanted poster seeking the provisional arrest of a fugitive, with an eye towards extradition to the nation that issued the underlying arrest warrant. Interpol transmits the notices to its 188 member countries, including Britain, where Assange is believed to be located. Interpol has no authority to compel a subject’s arrest. It issued 5,020 Red Notice last year for a variety of crimes.

A terse extract of Assange’s notice appeared on Interpol’s website Tuesday, without a photograph, reporting that the 39-year-old Australian is wanted for “sex crimes” by the International Public Prosecution Office in Gothenburg, Sweden.

A Swedish judge on Nov. 18 ordered Assange “detained in absentia” to answer questions in a rape, coercion and molestation investigation in Stockholm. A court approved an international arrest warrant for the ex-hacker two days later, at which point Sweden reportedly applied to Interpol for the Red Notice. Assange’s lawyer appealed the detention order to the Svea Court of Appeal, but lost. Assange filed a new appeal Tuesday to the Swedish Supreme Court.

laissez faire les bankster gangsters

Video - Matt Taibbi discusses his new book 'Griftopia' with Danny Schecter in the First Tuesdays Series at McNally Jackson NYC on Nov 3 2010.

Alternet | Deterrence -- it's the vaunted idea behind "tough on crime" sentences for violent offenses. Lock the door, throw away the key, and the theory says that heinous acts will be prevented.

However, things haven't worked out that way because the toughest "tough on crime" policies are most focused on crimes of passion, derangement and destitution -- crimes that are often not calculated and therefore not deterrable. This is probably one of the reasons why the murder rate has been higher in death penalty states than in non-death penalty states, leading most criminologists to conclude that capital punishment does not hinder conventional homicide.

But what about crimes of economic homicide? These are the opposite of crimes of passion. When, say, a speculator securitizes bad mortgages and peddles them to pension funds as safe investments, that fraud involves exactly the kind of calculation that might be deterred via the prospect of harsh punishment.

"What if a bank CEO was given life without parole?" I asked Taibbi. "What if instead of country club jail, one of these guys was shown experiencing prison like a regular convict? That would have to stop some of the worst stuff, right?"

"Right, and go a step further," Taibbi countered. "How about putting a few of them in the electric chair? Are you telling me Goldman Sachs execs aren't then going to change?"

We both busted out laughing -- and hard. Not at the truth behind the theorizing, but at the idea that any of it would actually happen today. In 2005, Washington couldn't even pass a post-Enron proposal to hold CEOs legally liable for their companies' corporate tax fraud. So the notion that the same money-dominated capital will now subject CEOs to anything remotely "tough on crime" is, well, far-fetched.

And yet, the hypothetical is compelling, isn't it? That's because it highlights how our society misapplies deterrence -- and how it might apply the concept more successfully.

The necessity of such a criminal justice shift should be obvious. With financial fraud now so sophisticated and pervasive, we clearly need zero-tolerance solutions to change Wall Street's culture. Indeed, without true shock-and-awe deterrence, most regulatory reform will likely be an ineffectual thumb in the economic dike -- just as the thieves desire.

revising history but still gettin that gubmint cheese...,

Video - Haley Barbour's new fake history of the south.

NYTimes | Traditional Southern Republicanism is socially conservative and assertively pro-business, characterized by an aversion to taxes, regulation, abortion, same-sex marriage and gun control.

But while its politicians have long held forth against the federal government, the South remains heavily dependent on federal largesse in the form of farm subsidies, defense contracts and aid for its large concentrations of poor people. More than a few Southern Republicans who railed against the federal stimulus package accepted the money anyway.

The Tea Party brand of conservatism is less tolerant of this wink-and-nod approach to government spending and places a lower priority on social issues.

It has some echoes of the small-government gospel that was preached by Mr. Yerger and other pioneers of the modern Republican Party in the South, who found few Southerners sympathetic to their condemnation of the New Deal. Many of them initially viewed social issues like segregation as tactical stands worth taking to draw disaffected Democrats to their free-market agenda, according to Joseph Crespino, a professor at Emory who has studied the rise of conservative politics in Mississippi.

How the small-government fundamentalists of the Tea Party fit into the mainstream Southern Republican Party remains to be seen.

“This could be a very fleeting experience for the Republican Party, if they ignore us,” said Kevin Desmond, a director of the Patriots of East Tennessee, a local Tea Party group. “When Lamar Alexander, the senator here in Tennessee, comes up for election in 2014, I think he’s going to have his hands full.”

There are other signs that the realignment might not be permanent. Growing Latino populations in Florida and Texas, and in Georgia and South Carolina, could rearrange the political map again before too long.

deliberate fraud and coverup by the fed?

Video - William Black on Dylan Ratigan on the Fed and Bank Fraud.

FDIC called upon to put BoA into receivership

HuffPo | Charging that the ongoing foreclosure fraud epidemic is the work of precisely the same unrepentant bank officers whose fraudulent mortgage schemes crashed the financial system in the first place, two leading critics of the financial industry are calling on the FDIC to put some of the nation's biggest banks into receivership -- starting with the Bank of America -- and make them clean house.

William K. Black, a former regulator and white-collar crime expert who cracked down on massive fraud during the savings and loan scandal of the 1980s, and his fellow economics professor at the University of Missouri-Kansas City, L. Randall Wray, write in the Huffington Post that it's time to "foreclose on the foreclosure fraudsters". They write:

The lenders, officers, and professional that directed, participated in, and profited from the fraudulent loans and securities should be prevented from causing further damage to the victims of their frauds, through fraudulent foreclosures.

They argue that, far from being a coincidence, massive foreclosure fraud "is the necessary outcome of the epidemic of mortgage fraud that began early this decade." The reason for that:

The banks that are foreclosing on fraudulently originated mortgages frequently cannot produce legitimate documents... Now, only fraud will let them take the homes. Many of the required documents do not exist, and those that do exist would provide proof of the fraud that was involved in loan origination, securitization, and marketing. This in turn would allow investors to force the banks to buy-back the fraudulent securities. In other words, to keep the investors at bay the foreclosing banks must manufacture fake documents.... Foreclosure fraud is the only thing standing between the banks and Armageddon."

So the only solution, then, is new management. "We should remove the senior leadership of the banks and replace them with experienced bankers with a reputation for integrity and competence, i.e., the honest officers that quit or were fired because they refused to engage in fraud," Black and Wray write.

They suggest starting with Bank of America, which they call "a 'vector' spreading the mortgage fraud epidemic throughout much of the Western world."

Looming large among Bank of America's sins is its purchase of mortgage giant Countrywide Financial long after it became clear that the company had engaged in massive fraud.

Even the extremely slow-to-anger New York Fed, which bought billions of securitized mortgages that Bank of America improperly represented as fully documented and conforming to underwriting standards, is now demanding that it buy some of them back.

the grameenist microcredit hoodwink and bamboozle..,

Himal | Far from being a panacea for fighting rural poverty, microcredit can impose additional burdens on the rural poor, without markedly improving their socio-economic condition.

For years, the example of microcredit in Bangladesh has been touted as a model of how the rural poor can lift themselves out of poverty. This widely held perception was boosted in 2006, when Mohammad Yunus and Grameen Bank, the microfinance institution he set up, jointly received the Nobel Peace Prize. In Southasia in particular, and the world in general, microcredit has become a gospel of sorts, with Yunus as its prophet.

Consider this outlandish claim, made by Yunus as he got started in the late 1970s: ‘Poverty will be eradicated in a generation. Our children will have to go to a ‘poverty museum’ to see what all the fuss was about.’ According to Milford Bateman, a senior research fellow at the Overseas Development Institute (ODI) in London who is one of the world’s experts on Grameen and microcredit, the reason this rhetoric resonated with international donors during the era of neoliberal globalisation, was that ‘they love the non-state, self-help, fiscally-responsible and individual entrepreneurship angles.’

Grameen’s origins are sourced to a discussion Yunus had with Sufiya Begum, a young mother who, he recalled, ‘was making a stool made of bamboo. She gets five taka from a business person to buy the bamboo and sells to him for five and a half taka, earning half a taka as her income for the day. She will never own five taka herself and her life will always be steeped into poverty. How about giving her a credit for five taka that she uses to buy the bamboo, sell her product in free market, earn a better profit and slowly pay back the loan?’ Describing Begum and the first 42 borrowers in Jobra village in Bangladesh, Yunus waxed eloquent: ‘Even those who seemingly have no conceptual thought, no ability to think of yesterday or tomorrow, are in fact quite intelligent and expert at the art of survival. Credit is the key that unlocks their humanity.’

But what is the current situation in Jobra? Says Bateman, ‘It’s still trapped in deep poverty, and now debt. And what is the response from Grameen Bank? All research in the village is now banned!’ As for Begum, says Bateman, ‘she actually died in abject poverty in 1998 after all her many tiny income-generating projects came to nothing.’ The reason, Bateman argues, is simple: ‘It turns out that as more and more ‘poverty-push’ micro-enterprises were crowded into the same local economic space, the returns on each micro-enterprise began to fall dramatically. Starting a new trading business or a basket-making operation or driving a rickshaw required few skills and only a tiny amount of capital, but such a project generated very little income indeed because everyone else was pretty much already doing exactly the same things in order to survive.’

Contrary to the carefully cultivated media image, Yunus is not contributing to peace or social justice. In fact, he is an extreme neoliberal ideologue. To quote his philosophy, as expressed in his 1998 autobiography, Banker to the Poor,

I believe that ‘government’, as we know it today, should pull out of most things except for law enforcement and justice, national defense and foreign policy, and let the private sector, a ‘Grameenized private sector’, a social-consciousness-driven private sector, take over their other functions.