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Posted on May 5, 2010 by kf1

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What Really Triggered the Financial Crisis? By MIKE WHITNEY

Posted on April 29, 2010 by kf1

In Greed We Trust

Most people still don’t know what caused the financial crisis. They know it had something to do with subprime mortgages and Lehman Bros, but beyond that, it gets rather hazy. Unfortunately, Congress appears to be in the dark too, which is why their attempt to regulate the system is bound to fail and pave the way for another crisis in the next few years. [Financial crises occur on average every seven years. Eds.]

The real source of the the last crisis is a design-flaw in the architecture of the modern banking system. This sounds more complicated than it really is.

You see, credit, which used to be strictly regulated–since it allows banks to create money out of thin air–has become a franchise which is shunted off to hedge funds, insurance companies, pension funds and other so-called shadow banks which are able to take advantage of loopholes in the system and create gigantic amounts leverage without any regulatory supervision.

At one time, when a bank made a loan, they made sure that the applicant had a job, steady income, collateral, and a good credit history. That’s because the banks knew they would be holding the loans to maturity and any loss on the loan would impact their profitability. That’s the only way that it’s safe to allow private industry (aka–the bank) to create credit. The financial crisis proves that unregulated credit-generation is every bit as lethal as a neutron bomb, which kills everyone in the vicinity, but leaves the buildings still standing. The credit-mechanism cannot be handed over to unregulated speculators without putting the entire economy at risk.

The new system works differently. Now the banks are largely middle-men who originate the mortgages, (or other loans) chop them up into bits and pieces in their off-balance sheet operations, and sell them to investors in the secondary market. The process is called securitization and it magically transforms one man’s liability (the loan) into another man’s asset.(the security) But don’t be fooled. The debt is the same as if it was still sitting on the bank’s balance sheet instead of some oddball structured-debt instrument, like a mortgage backed security (MBS) or a collateral debt obligation (CDO). What’s really changed is the ability to generate credit has shifted from highly-regulated depository institutions to fly-by-night speculators whose only interest is to maximize leverage, create another bubble, and cash in before the mighty zeppelin crashes to earth.

Keep in mind, that a bank is any institution that takes deposits and agrees to provide ready access to cash for people who want to withdraw funds. A bank makes its money by “borrowing short” (deposits or repo) to “go long”. (putting money in long-term illiquid assets) That means that a bank is required to hold liquid reserves and enough capital to meet its needs even in a crisis.

The banks have abdicated their role as credit producers, because the shadow banks can do the job cheaper. And the reason they can do it cheaper is because they are undercapitalized. Take AIG for example. They were selling insurance policies (CDS) but they didn’t have the capital reserves to pay off the claims. Think of how easy it would be to make gobs of money if you could sell property that you didn’t really own. The only problem, of course, is that if you engaged in such activity, you’d be dragged off to the hoosegow in chains.

So how do the shadow banks make so much money by increasing leverage?

Here’s how it works: There are three houses on the block; all of them are identical and all of them are the same price, $100,000 each.

Harry buys the first house and pays cash, $100,000 on the barrelhead.

Joe buys the second house and puts 10 per cent down, in other words, he pays $10,000.

Frank, who works for a big chiseling hedge fund on Wall Street, buys the third home and puts 0.0 per cent down; so he has zero equity.

12 months later the value of all three homes has gone up 10 per cent; so now they are all worth $110,000. That means:

Harry has made a measly 10 per cent on his investment.

Joe has made 100 per cent on his investment.

And chiseling Frank has made $10,000 pure profit.

This simple breakdown is intended to help people grasp the real purpose behind securitization and derivatives trading, which is not to make markets operate more efficiently or to “disaggregate” (spread) risk (as the proponents of “innovation” say). It is simply to peddle garbage assets which are balanced on minuscule slices of capital. It’s a shyster’s dream-come-true; capitalism without capital.

All Wall Street’s profit’s derive from some variation of this low-capital, high-risk schema.

ZERO-HOUR FOR LEHMAN
The day the shadow system blew up

Before to the meltdown, the depository “regulated” banks were mainly funded through repurchase agreements (repo) with institutional investors. (aka—“shadow banks”; investment banks, hedge funds, insurers) The banks would post collateral, in the form of bundled “securitized” bonds, and use the short-term loans to maintain operations. When the bank’s collateral became suspect — because no one knew which bundles held the subprime mortgages — then intermediaries (primary dealers) demanded more collateral for the loans. Suddenly the banks were losing money hand-over-fist as the value of their assets tumbled. Lehman got trapped in this revolving door and couldn’t roll-over its debt using its shabby collateral, which, by now, everyone knew was garbage. There was a bank-run on the shadow system; the secondary market collapsed.

In other words, the banks were going to the primary dealers the same way that I would go to a pawn shop, and borrow money by posting my lavish, fully-landscaped 4,000 ft colonial home and custom Maserati sports car for a $200,000 loan. That scam might work for a while, but eventually the owner of the pawn shop will wise up and realize that I don’t really own a lavish, fully-landscaped 4,000 ft colonial home and custom Maserati sports car. Rather, I live in a makeshift clapboard-shack with a corrugated tin roof by the railroad tracks and drive a rusty Schwinn bicycle to my job collecting aluminum cans for the recycling center. That’s what happened to Lehman.

When Lehman Bros collapsed, there was NOT a panic. That’s another myth. Lehman merely triggered a radical repricing event, which means that the assets that had been trading for artificially high prices, suddenly fell to reflect what reasonable people thought was there “true” market value. This (collective) judgment was not made out of fear, but rather with the knowledge that the underlying collateral (shabby mortgages) was gravely impaired. Prices in the repo market for some MBS and CDOs fell more than 50 per cent.

Of course, Bernanke still clings to the idea that these are just “unloved” assets that will eventually bounce back. But what else can he say? “We’re going to mark these turkeys down to their real value and shove the banking system off a cliff?” That’s not going to happen.

So, it’s up to congress to grasp the thistle and demand that the shadow banks be strictly regulated from here-on-out so we don’t end up in the same pickle two years from now.

The state has a compelling interest to make sure that credit-generating financial institutions are strictly regulated. Credit expansion is vital to economic growth and to raising standards of living. But, in the wrong hands, it will increase inequality, divert money away from productive activity, and inflate asset bubbles that end in disaster.

The reforms which are now being debated in the congress, (Too big to fail, off-balance sheet operations, derivatives trading, securitization) miss the larger point. Regulators must have the authority to intervene WHEREVER they think it is necessary to ensure that institutions are adequately capitalized, that lending standards are strictly upheld and that credit production is carefully monitored by trained government supervisors.

Mike Whitney lives in Washington state and can be reached at fergiewhitney@msn.com

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At the Geopolitical Crossroads of China and Russia: Kyrgyzstan And The Battle For Central Asia

Posted on April 20, 2010 by kf1

Kyrgyz President Kurmanbek Bakiyev was deposed five years after and in the same manner as he came to power, in a bloody uprising.

Elected president two months after the so-called Tulip Revolution of 2005 he helped engineer, he was since then head of state of the main transit nation for the U.S. and NATO war in Afghanistan.

The Pentagon secured the Manas Air Base (as of last year known as the Transit Center at Manas) in Kyrgyzstan shortly after its invasion of Afghanistan in October of 2001 and in the interim, according to a U.S. armed forces publication last June, “More than 170,000 coalition personnel passed through the base on their way in or out of Afghanistan, and Manas was the transit point for 5,000 tons of cargo, including spare parts and equipment, uniforms and various items to support personnel and mission needs.

“Currently, around 1,000 U.S. troops, along with a few hundred from Spain and France, are assigned to the base.” [1]

Kyrgyzstan And The Battle For Central Asia

The White House’s Special Representative for Afghanistan and Pakistan Richard Holbrooke paid his first visit in his current position to Kyrgyzstan – and the three other former Soviet Central Asian republics which border it, Kazakhstan, Tajikistan and Uzbekistan – in February and said “35,000 US troops were transiting each month on their way in and out of Afghanistan.” [2] At the rate he mentioned, 420,000 troops annually.

The U.S. and NATO also established military bases in Tajikistan and Uzbekistan for the war in South Asia, but on a smaller scale. (U.S. military forces were ordered out of the second country following what the government claimed was a Tulip Revolution-type armed uprising in its province of Andijan less than two months after the Kyrgyz precedent. Germany maintains a base near the Uzbek city of Termez to transit troops and military equipment to Afghanistan’s Kunduz province where the bulk of its 4,300 forces is concentrated.)

In February of 2009 the Kyrgyz government announced that it was also evicting U.S. and NATO forces from its country, but relented in June when Washington offered it $60 million to reverse its decision.

Kyrgyzstan borders China.

It not only borders China, Kazakhstan, Tajikistan and Uzbekistan, but is only separated from Russia by a single nation, Kazakhstan. To gain an appreciation of Russian and Chinese concerns over hundreds of thousands of U.S. and NATO troops passing through Kyrgyzstan, imagine a comparable amount of Chinese and Russian soldiers regularly passing through Mexico and Guatemala, respectively. For almost nine years and at an accelerating rate.

It is not only a military “hard power” but also a “soft power” threat that the Western role in Kyrgyzstan poses to Russia and China.

The nation is a member of the post-Soviet Collective Security Treaty Organization (CSTO) along with Russia, Armenia, Belarus, Kazakhstan, Tajikistan and Uzbekistan – seen by many as the only counterpart to NATO on former Soviet space – and of the Shanghai Cooperation Organization (SCO) with China, Russia and the three above-mentioned Central Asian nations.

According to U.S. officials, during and after the Tulip Revolution of 2005 not a single U.S. or NATO flight into the Manas Air Base was cancelled or even delayed. But a six-nation CSTO exercise scheduled for days afterward was cancelled.

The uprising and the deposing of standing president Askar Akayev in March of 2005 was the third self-styled “color revolution” in the former Soviet Union in sixteen months, following the Rose Revolution in Georgia in late 2003 and the Orange Revolution in Ukraine in late 2004 and early 2005.

As the Kyrgyz version was underway Western news media were asking the question “Who’s next?” Candidates included other former Soviet states like Armenia, Azerbaijan, Belarus, Kazakhstan, Moldova and Uzbekistan. And Russia. Along with Georgia, Ukraine and Kyrgyzstan those nations accounted for ten of the twelve members of the post-Soviet Commonwealth of Independent States (CIS).

As Agence France-Presse detailed in early April of 2005: “The CIS was founded in December 1991 on the very day the Soviet Union disappeared….But over the past year and a half, three faithful Kremlin allies were toppled in…revolutions: Eduard Shevardnadze in Georgia, Leonid Kuchma in Ukraine, and, last week, Askar Akayev in Kyrgyzstan….Even though Kyrgyzstan’s new interim leaders have vowed to continue their deposed predecessor’s Moscow-friendly policies, the lightning toppling of the government there has spawned speculation that the CIS would soon collapse.” [3]

The leader of the “color revolution” prototype, Georgia’s Mikheil Saakashvili, gloated over the Kyrgyz “regime change,” attributing the “brave” actions of the opposition in Ukraine and Kyrgyzstan “to the Georgia factor,” and added, “We are not waiting for the development of events, but are doing our best to destroy the empire in the CIS.” [4]

Shortly after the uprising former Indian diplomat and political analyst M.K. Bhadrakumar wrote of the then seemingly inexorable momentum of “color” revolts in the former Soviet Union:

“[A]ll the three countries [Georgia, Ukraine, Kyrgyzstan] are strategically placed in the post-Soviet space. They comprise Russia’s ‘near abroad.’

“Washington has been expanding its influence in the arc of former Soviet republics — in the Baltics…the Caucasus, and Central Asia — in recent years with a tenacity that worries Moscow.

“Ever since 2003 when Mr. Akayev decided on allowing Russia to establish a full-fledged military base in Kant he knew he was on the American ‘watch list.’ The political temperature within Kyrgyzstan began to rise.

“The Americans made it clear in many ways that they desired a regime change in Bishkek….The ‘revolution’ in the Central Asian state of Kyrgyzstan has already thrown up surprises. A comparison with the two earlier ‘colour revolutions’ in Georgia and Ukraine will be a good starting point.

“First, the striking similarities between the three ‘revolutions’ must be duly noted. All three are meant to signify the unstoppable spread of the fire of liberty lit by the United States in Afghanistan and Iraq in the aftermath of 9/11.

“But behind the rhetoric, the truth is that the U.S. wanted regime change in Georgia, Ukraine and Kyrgyzstan because of difficulties with the incumbent leadership. The leaders of all the three countries — Eduard Shevardnadze in Georgia, Leonid Kuchma in Ukraine, and Askar Akayev in Kyrgyzstan — had enjoyed the support of the U.S. during most of their rule.

“Washington had cited them repeatedly as the beacons of hope for democracy and globalisation in the territories of the former Soviet Union.

“Their trouble began when they incrementally began to edge towards a resurgent Russia under Vladimir Putin.” [5]

Seven weeks after Bhadrakumar’s column appeared his analysis would be confirmed by no less an authority on the matter than U.S. President George W. Bush.

Visiting the capital of Georgia a year and a half after its “Rose Revolution,” he was hosted by his counterpart Mikheil Saakashvili, former State Department fellowship recipient and U.S. resident, who seized power in what can only be described as a putsch but nevertheless said:

“Georgia will become the main partner of the United States in spreading democracy and freedom in the post-Soviet space. This is our proposal. We will always be with you in protecting freedom and democracy.”

Bush reflected Saakashvili’s inflated estimate of himself: “You are making many important contributions to freedom’s cause, but your most important contribution is your example. Hopeful changes are taking places from Baghdad to Beirut and Bishkek [Kyrgyzstan]. But before there was a Purple Revolution in Iraq or Orange Revolution in Ukraine or a Cedar Revolution in Lebanon, there was a Rose Revolution in Georgia.” [6]

A few days after the Kyrgyz coup Bush welcomed Ukraine’s “orange” president Viktor Yushchenko – who this January only received 5.45 per cent of the vote in his reelection bid – and applauded his U.S.-assisted ascent to power, saying it “may have looked like it was only a part of the history of Ukraine, but the Orange Revolution represented revolutions elsewhere as well….We share a goal to spread freedom to other nations.” [7]

Beyond the threat of the dissolution of the CIS and of the CSTO, in April of 2005 Der Spiegel featured a report with the title “Revolutions Speed Russia’s Disintegration.”

In part it revealed the prime movers behind the events in Kyrgyzstan. According to Der Spiegel, (April 4, 2005):

“As early as February,” Roza Otunbayeva – now the apparent head of the provisional government – “pledged allegiance to a small group of partners and sponsors of the Kyrgyz revolution, to ‘our American friends’ at Freedom House (who donated a printing press in Bishkek to the opposition). …

“Trying to help the democratic process, the Americans poured some $12 million into Kyrgyzstan in the form of scholarships and donations – and that was last year alone. Washington’s State Department even funded TV station equipment in the rebellious southern province town of Osh.” [8] [9]

This process of geostrategic transformation, from the Balkans to the former Soviet Union and the Middle East was also supported by Freedom House, the National Endowment for Democracy, the National Democratic Institute, the International Republican Institute and other non-governmental organizations.

A week after the “tulip” takeover the project director for Freedom House, Mike Stone, summed up the role of his organization with two words: “Mission accomplished.” [10]

A British newspaper that interviewed him added, “US involvement in the small, mountainous country is higher proportionally than it was for Georgia’s ‘rose’ revolution or Ukraine’s ‘orange’ uprising. [11]

Assistance also was provided by Western-funded and -trained “youth activists” modeled after and trained by those organized in Yugoslavia to topple the government of Slobodan Milosevic in 2000:

Compare the names:

Yugoslavia: Otpor! (Resistance!)
Ukraine: Pora! (It’s Time!)
Georgia: Kmara (Enough)
Kyrgyzstan: KelKel (Stand Up and Go)

Behind them all, deposed Kyrgyz president Askar Akayev identified the true architects of his ouster. On April 2 he stated “There were international organisations who supported and financed the Tulip Revolution in Kyrgyzstan.

“A week before these events I saw a letter on the internet signed by the US ambassador to Kyrgyzstan. It contained a detailed plan for the revolution.” [12]

The Kyrgyz Tulip (formerly Lemon, Pink and Daffodil) Revolution was as unconstitutional and as disruptive to the nation as its Georgian and Ukrainian predecessors were, but far more violent. Deaths and injuries occurred in the southern cities of Osh and Jalal Abad (Jalalabad, Jalal-Abad) and in the capital of Bishkek.

It was also the first “color” revolt in a nation bordering China. Not only  did Russia and China voice grave concerns over the developments in Kyrgyzstan, Iran did also, seeing where the trajectory of “regime change” campaigns was headed.

In the four decades of the Cold War political changes through elections or otherwise in any nation in the world – no matter how small, impoverished, isolated and seemingly insignificant – assumed importance far exceeding their domestic effects. World political analysts and policy makers asked the key question: Which way would the new government align itself, with the U.S. or the Soviet Union?

In the post-Cold War period the question is no longer one of political philosophy or socio-economic orientation, but this: How will the new administration support or oppose U.S. plans for regional and global dominance?

With Roza Otunbayeva as chief spokesperson if not head of a new Kyrgyz “people’s government,” there is reason to believe that Washington will not be dissatisfied with the overthrow of her former “tulip” partner Bakiyev. She has already confirmed that the American base at Manas will not be closed.

Less than two months after the 2005 coup Otunbayeva, then acting foreign minister, met with her U.S. counterpart Condoleezza Rice in Washington during which the latter assured her that “the U.S. administration will continue to help the Kyrgyz government promote democratic processes in the country.” [13]

Shortly after the March “democratic transformation,” its patron saint, Georgia’s Mikheil Saakashvili, boasted that “Roza Otunbayeva worked in Tbilisi in recent years and was the head of UN office in Abkhazia. During the Rose Revolution she was in Georgia and knew everything that was happening…the Georgian factor was a catalyst of many things going on there [in Kyrgyzstan].”[14]

From the U.S. perspective she appears to have reliable bona fides.

Russia has put its air base in Kyrgyzstan on high alert, though comments from leading Russian government officials – Prime Minister Vladimir Putin in particular – indicate an acceptance of the uprising which has already caused 65 deaths and hundreds of injuries.

But Russia attempted to put the best face on the revolt five years ago also.

Which direction the next Kyrgyz government takes will have repercussions far beyond the nation’s small size and population (slightly over five million).

It could affect U.S. and NATO plans for the largest military offensive of the Afghan war scheduled to begin in two months in Kandahar province.

It could determine the future of the Collective Security Treaty Organization and the Shanghai Cooperation Organization, the two major potential barriers to Western military penetration of vast tracts of Eurasia.

The stakes could hardly be higher.

Notes

1) Stars and Stripes, June 16, 2009
2) Agence France-Presse, March 4, 2010
3) Agence France-Presse, April 3, 2005
4) The Messenger, March 31, 2005
5) The Hindu, March 28, 2005
6) Civil Georgia, May 10, 2005
7) Associated Press, April 4, 2005
8) Der Spiegel, April 4, 2005
9) Russian Information Agency Novosti, June 16, 2005
10) The Telegraph, April 2, 2005
11) Ibid
12) Associated Press, April 2, 2005
13) Interfax, June 15, 2005
14) Civil Georgia, March 30, 2005

Source

Kyrgyzstan Upheaval May Be Blow to Pursuit of Afghan War – by Chris Sands – 2010-04-15 War Preparations? U.S. Warship Arrives in Georgia for Joint Training – 2010-04-15

Rwanda Shuts Down Independent Press – by Ann Garrison – 2010-04-15

Kyrgyzstan Risks Turning Into Second Afghanistan – Medvedev – 2010-04-14

Americans to Fly to Afghanistan Via North Pole and Kazakhstan – 2010-04-14

Kazakhstan to Permit Military Overflights to Afghanistan– by Elisabeth Bumiller – 2010-04-14

Traditional Flu Vaccine May Increase Risk of H1N1 – 2010-04-14

Kazakhstan Suggested US to Open Military Base on its Territory – by Daniyar Karimov – 2010-04-14

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“We Have Shot an Astounding Number of People” – Behind the Afghan Fraud By CONN HALLINAN

Posted on April 15, 2010 by kf1

All frauds have a purpose, mostly to relieve the unwary of their wealth, though occasionally to launch some foreign adventure: the 1965 Tonkin Gulf hoax that escalated the Vietnam War comes to mind.

So what was the design behind “Operation Moshtarak,” or the “battle of Marjuh,” in Afghanistan’s Helmand Province, the largest U.S. and NATO military operation in Afghanistan since the 2003 invasion? That Moshtarak was a fraud was obvious from the start, a con job that the U.S. media enthusiastically went along with.

Marjuh was billed as a “fortress,” a “city of 80,000” and the Taliban’s “stronghold,” packed with more than 1,000 “hard core fighters.” But as Gareth Porter of the Inter Press Service revealed, Marjuh is not even a city, but a district of scattered villages. As the days went by—and civilian deaths passed military casualties—the number of “hard core” fighters declined to 750, then 500, and then maybe 100. In the end, it was barely a skirmish. “Hardly a single gun was captured by NATO forces,” tribal elder and former police chief Abdul Rahman Jan told Time.

According to Porter, Marju is “either a few clusters of farmers’ homes or a large agricultural area covering much of the southern Helmand River Valley.” Marjuh actually embraces about 125 square miles, an area big enough to simply swallow the 10,000 U.S., NATO and Afghan Army troops assigned to the offensive.

The area was also billed as the “linchpin of the militants’ logistical and opium-smuggling network.” Marjuh is indeed an area with significant poppy cultivation, but according to Julian Mercille, a Lecturer at University College Dublin and an expert on U.S. foreign policy, the Taliban get “only 4 percent of the trade.” Local farmers reap about 21 percent of the $3.4 billion yearly commerce, according to Mercille, while “75 percent of the trade is captured by government officials, the police, local and regional brokers and traffickers.” In short, our allies.

And the word “linchpin” soon dropped off the radar screen as it became obvious that Operation Moshtarak would not touch the drug trade because it would alienate local farmers, thus sabotaging the goal of winning the “hearts and minds” of residents.

In some ways the most interesting part of the Marjuh operation was a gathering that took place shortly after the “fighting” was over: President Barak Obama called a meeting Mar. 12 in the White House to ask his senior staff and advisors if the “success” of Moshtarak would allow the U.S. to open negotiations with the Taliban. According to Porter, Secretary of State Hillary Clinton and Defense Secretary Robert Gates opposed talks until after a similar operation aimed at Khandahar is completed this summer.

The Khandahar offensive is being pumped up as a “blow at the Taliban’s heartland” and the “fulcrum” of the Afghan war. Khandahar is, indeed, where the Taliban got its start and, at 600,000, is Afghanistan’s second largest city. Whether a military operation will have any more impact than the attack on Marjuh is highly unlikely. While Time was predicting the Taliban would make a “bloody stand,” the insurgents have never engaged in a standup battle with the U.S. and NATO. As they did in Marjuh, they will simply decamp to another area of the country,or blend in with the local population.

However, the White House gathering suggests that the administration may be searching for a way out before the 2012 elections. With the economic crisis at home continuing, and the bill for the war passing $200 billion, Afghanistan is looking more and more like a long tunnel with no light at the end.

Certainly our allies seem to have concluded that the Americans are on an exit path.

The Karzai government and the UN have opened talks with some of the Taliban, as well as Gulbuddin Hekmatyar’s Islamic Party. Pakistan—correctly concluding it was being cut out of the peace talks—swept up 14 senior Taliban officials, including the organization’s number two man, Mullah Abdul Ghani Baradar.

The Pakistanis claim they are simply aiding the U.S. war effort, but the former head of the UN mission to Afghanistan, Kai Eide, bitterly denounced the arrests as nothing more than effort to derail the on-going negotiations. What seems certain now is that whenever talks do open, the Pakistanis will be at the table. “You cannot achieve stability in Afghanistan without Pakistan,” the country’s Prime Minister, Yusuf Raza Gilani told the Financial Times.

If Islamabad is in on the talks, that means the Taliban will have a presence in whatever peace agreement emerges, a fact that has distressed India. Not only is it likely that India will lose much of its influence with the Karzai government—and see more than a billion dollars in aid go for naught—its traditional enemy, Pakistan, will almost certainly regain much of its former influence with Kabul. “Pakistan wants to exercise tutelage over Afghanistan,” former Indian foreign minister Kanwal Sibal told the Financial Times.

The push by the U.S. to find a political solution is partly driven by the rapidly eroding NATO presence. The Canadians are sticking by their pledge to be out by 2011, and when the Netherlands tried to raise the possibility of Dutch troops remaining, the government fell. The British Labor Party, behind in the polls but catching up to the Tories, wants to rid itself of the Afghan albatross before upcoming elections and has been supportive of Karzai’s negotiations.

The U.S. is also discovering that the Afghanis play a mean game of chess.

When the Obama Administration demanded that the Karzai government reinstate an independent electoral commission, plus end corruption—in particular, dumping the President’s larcenous half brother Ahmed Wali Karzai who runs Khandahar like a feudal fiefdom—the Afghan president flew off to Teheran to embrace the President of Iran, Mahmud Ahmadinejad, and meet with Iran’s supreme leader, Ayatollah Ali Khamenei. Given that the U.S. is trying to isolate Iran in the region, Karzai’s Iran visit was not a happy moment on the Potomac.

Yet Iran has influence over the Northern Alliance, which will need persuading to accept the Taliban into a coalition. Rather than isolating Iran, Karzai has made it central to a peace agreement that the U.S. and NATO want.

For the past five years the U.S. has been wooing India as a bulwark against China, but because Washington needs Pakistan to broker a peace, the Americans agreed to sending F-16 fighter-bombers, helicopter gun ships, and reconnaissance drones to Islamabad. A better-armed Pakistan, however, hardly goes down well in New Delhi, particularly because the Indians see their former influence in Kabul on the wane.

So India promptly went off and met with the Russians. Ever sympathetic, Moscow offered New Delhi a bargain basement price on an aircraft carrier and a passel of MIG-29s tossed in. That dealt a blow to another aim of U.S. diplomacy: keeping Russia out of South Asia.

The same week as Pakistan’s foreign minister was in Washington with a laundry list of goodies for “helping out” in Afghanistan, Karzai jetted off to Beijing to talk about aid and investments. So much for the plan to keep China out of Central Asia.

This is beginning to look like checker players vs. chess masters.

But there does seems to be a developing consensus that the war must wind down. If that is the direction, than the Karzai government’s upcoming “peace jirga,” set for late April or early May, takes on greater importance.

While the administration appears to be divided over how, when, and with whom to negotiate, “withdrawing” doesn’t mean the U.S. won’t leave bases behind or end its efforts to penetrate Central Asia. The White House recently announced an agreement with Kyrgyzstan to set up a U.S. “counter-terrorism center” near the Chinese border.

The danger at this juncture is seeing peace talks as a zero-sum game: if Pakistan gains, India loses; if the U.S. withdraws, the Taliban win; if Iran is helpful it will encourage nuclear proliferation.

The bottom line in Afghanistan is the Afghans. What they want, and how they get it, is not the business of Washington, Brussels, New Delhi, Teheran, or Islamabad. The “graveyard of empires” has claimed far more Afghan lives than those of the invaders. As U.S. Afghan commander Stanley McCrystal told the New York Times, “We have shot an astounding number of people.”

Indeed, we have.

Conn Hallinan can be reached at: ringoanne@sbcglobal.net

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The Marjah mirage

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The Cover-Ups That Exploded By ALEXANDER COCKBURN

Posted on April 14, 2010 by kf1

The Pentagon is reeling after two lethal episodes uncovered by diligent journalism show trigger-happy U.S. Army helicopter pilots and U.S. Special Forces slaughtering civilians, then seeking to cover up their crimes.

The worldwide web was transfixed on Monday when Wikileaks put up on YouTube a 38-minute video, along with a 17-minute edited version, taken from a U.S. Army Apache helicopter, one of two firing on a group of Iraqis in Baghdad at a street corner in July of 2007. Twelve civilians died, including a Reuters photographer Namir Noor-Eldeen, 22, and a Reuters driver, Saeed Chmagh, 40.

At a press conference in Washington, D.C., Wikileaks said it had got the footage from whistle-blowers in the military and had been able to break the encryption code. The Pentagon has confirmed the video is genuine.

Meanwhile, in Afghanistan, the U.S. military has finally admitted that Special Forces troops killed two pregnant Afghan women and a girl in a February, 2010, raid, in which two Afghan government officials were also killed. Brilliant reporting by Jerome Starkey of The Times of London has blown apart the U.S. military’s cover-up story that the women were killed by knife wounds administered several hours before the raid.

It now appears that the knife wounds may have been inflicted by the Special Forces troops retrieving their bullets from the dead or dying women’s bodies. Starkey’s story last Sunday in The Times reported that “Afghan investigators also determined that American forces not only killed the women but had also ‘dug bullets out of their victims’ bodies in the bloody aftermath” and then “washed the wounds with alcohol before lying to their superiors about what happened.”

The 17-minute video recording the US military’s massacre from the air in Baghdad, is utterly damning. The visual and audio record reveal the two Apache helicopter pilots and the US Army intelligence personnel monitoring the real-time footage falling over themselves to make the snap judgment that the civilians roughly a thousand feet below are armed insurgents and that one of them, peeking round a corner, was carrying an RPG, that is, a rocket-propelled antitank grenade launcher.

The dialogue is particularly chilling, revealing gleeful pilots gloating over the effect of their initial machine-gun salvoes. “Look at those dead bastards,” one pilot says. “Nice,” answers the other. Then, as a wounded man painfully writhes toward the curb, the pilots eagerly wait for an excuse to finish him off.  “All you gotta do is pick up a weapon,” one pilot says yearningly.

Then suddenly a civilian van, seeing the carnage, pulls up. A man jumps out, and starts dragging the wounded man around to load him in. The pilots implore the intelligence monitors to give them the go-ahead to strafe the van, about which they have made the instant, fatally erroneous judgment that this is an insurgent rescue squad. A few moments later, the intelligence monitors, with zero visual evidence underpinning their judgment, give the go-ahead.

Another salvo finishes off the wounded man and his would-be rescuer, kills other civilians in the van and wounds two children in the front seat.

U.S. ground troops arrive on the scene, report the presence of wounded children. “Well, it’s their fault for bringing their kids into a battle,” one pilot tells the other. There are further sniggers as a U.S. armored vehicle rolls up. “I think they just drove over a body,” one of the pilots cackles.

One disgraceful exchange discloses a brutal order to the US ground troops not take the wounded children to the nearest military hospital, thus condemning them to the long waits and understaffed, underequipped Baghdad civilian hospitals. It clearly shows the culpability of the next command echelon, which is just as great as that of the pilots.

In the wake of the lethal onslaught, the U.S. military denied that any error had taken place, its version of events faithfully cited by the New York Times under the headline “2 Iraqi Journalists Killed as U.S. Forces Clash With Militias”:

“According to the [U.S. military’s] statement, American troops were conducting a raid when they were hit by small-arms fire and rocket-propelled grenades. The American troops called in reinforcements and attack helicopters. In the ensuing fight, the statement said, the two Reuters employees and nine [sic] insurgents were killed.”

The footage made public by Wikileaks makes it clear this was fiction, from start to finish.

Defense analyst Pierre Sprey, who led the design teams for the F-16 and A-10 and who spent many years in  the Pentagon,  stresses two particularly damning features of the footage. The first is the claim that Noor-Eldeen’s telephoto lense could be mistaken for an RPG.   “A big telephoto for a 35mm camera is under a foot and half at most. An RPG, unloaded , is 3 feet long  and loaded, 4 foot long. These guys were breathing hard to kill someone.”

Sprey’s second point is that an Apache helicopter makes a very loud “whomp, whomp” noise. “ Twelve guys are unconcerned, with loud helicopters right overhead. Imagine if they were planning an assault on American troops. They’d  be crouched down and skulking along walls, spread out.  They would not be walking casually down the middle of the street, totally ignoring the  helicopters.”

A retired U.S. Marine was even blunter in an email exchange:

“Not a good show at all. The group on the ground were banishing nothing that ‘looked’ or appeared as weapons, especially the voiced ‘RPG’ which is so obvious when loaded. And then again – they were told in advance by intelligence (I am sure by the tone in the flight) that these people were bad guys. The Apache crews were just stupid and the intelligence clowns pointing them and egging them on are guilty of murder – ‘you are clear to engage’. GMAFB.”

In the aftermath the US military claimed that some AK-47s and a grenade launcher had been found at the scene. Sprey comments that, in the course of the subsequent coverup,  the weapons may well have been planted, LAPD style.   According to Reuters their  men had been working on a story about weight lifting when they heard about a military raid in the neighborhood, and decided to drive there to check it out. Local witnesses say there was no fire fight anywhere near where they were gunned down by the Apaches.

Reuters, which by that time had already had four employees killed in Iraq by the U.S. military (ultimately, to date, eight), demanded an investigation, which the Army says it undertook but found no breach of its Rules of Engagement by the pilots or U.S. Army intelligence.

The reaction of David Schlesinger, Reuter’s editor in chief, to the release of the footage by Wikileaks was appallingly feeble. Schlesinger said on April 5, “The deaths of Namir Noor-Eldeen and Saeed Chmagh three years ago were tragic and emblematic of the extreme dangers that exist in covering war zones. We continue to work for journalist safety and call on all involved parties to recognize the important work that journalists do and the extreme danger that photographers and video journalists face in particular.”

This anodyne blather elicited a furious email aimed at Schlesinger – sent two days later to The Baron site, “For Reuters people past and present” – from a former Reuters editor in chief and general manager, Michael Reupke. Wrote Reupke, “The flabby response to the shameful murder of photographer Namir Noor-Eldeen and driver Saeed Chmagh by reckless U.S. forces is not reassuring. What of their families? Why do we leave it to others to make the running? Is this a Thomson effect? Michael Reupke (outraged and angry!).” The final sentence alludes to the 2008 takeover of Reuters by the media conglomerate Thomson.

In fact, Reuters was shown the Apache video by the U.S. military shortly after the killings but raised no stink. Requests for public release under the Freedom of Information Act were denied. Finally, whistleblowers handed the video to Wikileaks.

Leave the last word to a retired U.S. Army man, answering the email from the retired U.S. Marine quoted above:

“The damage this incident and its video evidence will do is immense … it will irrefutably confirm for many that large chunk of anti-American propaganda which insists the American flyers are just playing computer shoot-em-up games using real flesh and blood as a proxy for the digital figures they usually slaughter only in the arcades.

“How much is simulator training responsible for the disconnection from reality demonstrated in this incident? The crew was detached from reality … How [is] the Army … producing crews that, having the potential for such incompetence, cannot detect it among themselves. If anyone in that crew had paused and asked if the action being taken was correct, surely it would have been aborted … The Army has to find out why.”

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“Hold Me Back!” – Israel’s Bellicose Threats Against Iran By URI AVNERY

Posted on April 10, 2010 by kf1

“HOLD ME back!” is a part of Israeli folklore. It reminds us of our childhood.

When a boy has a scuffle with a bigger and stronger boy, he pretends that he is going to attack him any moment and shouts to the spectators: “Hold me back, or I am going to kill him!”

Israel is now in such a situation. We pretend that we are going to attack Iran at any moment and shout to the entire world: “Hold us back or…”

And the world does indeed hold us back. Continue reading →

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Wikileaks reveals video showing US air crew shooting down Iraqi civilians

Posted on April 6, 2010 by kf1

http://collateralmurder.com/

A secret video showing US air crew falsely claiming to have encountered a firefight in Baghdad and then laughing at the dead after launching an air strike that killed a dozen people, including two Iraqis working for Reuters news agency, was revealed by Wikileaks today.

The footage of the July 2007 attack was made public in a move that will further anger the Pentagon, which has drawn up a report identifying the whistleblower website as a threat to national security. The US defence department was embarrassed when that confidential report appeared on the Wikileaks site last month alongside a slew of military documents.

The release of the video from Baghdad also comes shortly after the US military admitted that its special forces attempted to cover up the killings of three Afghan women in a raid in February by digging the bullets out of their bodies.

The newly released video of the Baghdad attacks was recorded on one of two Apache helicopters hunting for insurgents on 12 July 2007. Among the dead were a 22-year-old Reuters photographer, Namir Noor-Eldeen, and his driver, Saeed Chmagh, 40. The Pentagon blocked an attempt by Reuters to obtain the video through a freedom of information request. Wikileaks director Julian Assange said his organisation had to break through encryption by the military to view it. Continue reading →

Posted in Empire, Ideaology, Iraq | Leave a comment

How 9/11 was done

Posted on March 23, 2010 by kf1

Twin Towers

Click here

Follow realkhanfactor on Twitter

Posted in Conspiracy, Empire, Zionism | Leave a comment

Dr. Norman Finkelstein at the University of Waterloo

Posted on March 20, 2010 by kf1

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Biden and the Settlements – Wiping the Spit Off His Face By URI AVNERY

Posted on March 16, 2010 by kf1

Some weeks the news is dominated by a single word. This week’s word was “timing”.

It’s all a matter of timing. The Government of Israel has insulted the Vice President of the United States, Joe Biden, one of the greatest “friends” of Israel (meaning: somebody totally subservient to AIPAC) and spat in the face of President Barack Obama. So what? It’s all a matter of timing.

If the government had announced the building of 1600 new housing units in East Jerusalem a day earlier, it would have been OK. If it had announced it three days later, it would have been wonderful. But doing it exactly when Joe Biden was about to have dinner with Bibi and Sarah’le – that was really bad timing.

The matter itself is not important. Another thousand housing units in East Jerusalem, or 10 thousand, or 100 thousand – what different does it make? The only thing that matters is the timing.

As the Frenchman said: It’s worse than criminal, it’s stupid.

* * *

THE WORD “stupid” also figured prominently this week, second only to “timing”.

Stupidity is an accepted phenomenon in politics. I would almost say: to succeed in politics, one needs a measure of stupidity. Voters don’t like politicians who are too intelligent. They make them feel inferior. A foolish politician, on the other hand, appears to be “one of the folks”.

History is full of acts of folly by politicians. Many books have been written about this. To my mind, the epitome of foolishness was achieved by the events that led to World War I, with its millions of victims, which broke out because of the accumulated stupidity of (in ascending order) Austrian, Russian, German, French and British politicians.

But even stupidity in politics has its limits. I have pondered this question for decades, and who knows, one day, when I grow up, I might write a doctoral thesis about it.

My thesis goes like this: In politics (as in other fields) foolish things happen regularly. But some of them are stopped in time, before they can lead to disaster, while others are not. It this accidental, or is there a rule?

My answer is: there certainly is a rule. It works like this: when somebody sets in motion an act of folly that runs counter to the spirit of the regime, it is stopped in its tracks. While it moves from one bureaucrat to another, somebody starts to wonder. Just a moment, this cannot be right! It is referred to higher authority, and soon enough somebody decides that it is a mistake.

On the other hand, when the act of folly is in line with the spirit of the regime, there are no brakes. When it moves from one bureaucrat to the next, it looks quite natural to both. No red light. No alarm bell. And so the folly rolls on to the bitter end.

I remember how this rule came to my mind the first time. In 1965, Habib Bourguiba, the president of Tunisia, took a bold step: he made a speech in the biggest refugee camp in Jericho, then under Jordanian rule, and called upon the Arabs to recognize Israel. This caused a huge scandal all over the Arab world.

Some time later, the correspondent of an Israeli paper reported that in a press conference at the UN headquarters, Bourguiba had called for the destruction of Israel. This sounded strange to me. I made inquiries, checked the protocol and found out that the opposite was true: the reporter had mistakenly turned a no into a yes.

How did this happen? If the journalist had erred in the opposite direction and reported, for example, that Gamal Abd-el-Nasser had called for the acceptance of Israel into the Arab League, the news would have been stopped at once. Every red light would have lit up. Someone would have called out: Hey, something strange here! Check again! But in the Bourguiba case nobody noticed the mistake, for what is more natural than an Arab leader calling for the destruction of Israel? No verification needed.

That’s what happened this week in Jerusalem. Every government official knows that the nationalist Prime Minister is pushing for the Judaization of East Jerusalem, that the extreme nationalist Minister of the Interior is even more eager, and that the super-nationalist Mayor of Jerusalem practically salivates when he imagines a Jewish quarter on the Temple Mount. So why should a bureaucrat postpone the confirmation of a new Jewish neighborhood in East Jerusalem? Just because of the visit of some American windbag?

Therefore, the timing is not important. It’s the matter itself that’s important.

* * *

DURING HIS last days in office, President Bill Clinton published a peace plan, in which he tried to make up for eight years of failure in this region and kowtowing to successive Israeli governments. The plan was comparatively reasonable, but included a ticking bomb.

About East Jerusalem, Clinton proposed that what is Jewish should be joined to the State of Israel and what is Arab should be joined to the state of Palestine. He assumed (rightly, I believe) that Yasser Arafat was ready for such a compromise, which would have joined some new Jewish neighborhoods in East Jerusalem to Israel. But Clinton was not wise enough to foresee the consequences of his proposal.

In practice, it was an open invitation to the Israeli government to speed up the establishment of new settlements in East Jerusalem, expecting them to become part of Israel. And indeed, since then successive Israeli governments have invested all available resources in this endeavor. Since money has no smell, every Jewish casino-owner in America and every Jewish brothel-keeper in Europe was invited to join the effort. The Biblical injunction – “Thou shalt not bring the hire of a whore, or the price of a dog, into the house of the Lord thy God, for any vow; for even both these are abomination unto the Lord thy God” (Deuteronomy 23:18) – was suspended for this holy cause.

Now the pace is speeded up even more. Because there is no more effective means of obstructing peace than building new settlements in East Jerusalem.

* * *

THAT IS clear to anyone who has dealings with this region. No peace without an independent Palestinian state, no Palestinian state without East Jerusalem. About this there is total unanimity among all Palestinians, from Fatah to Hamas, and between all Arabs, from Morocco to Iraq, and between all Muslims, from Nigeria to Iran.

There will be no peace without the Palestinian flag waving above the Haram al-Sharif, the holy shrines of Islam which we call the Temple Mount. That is an iron-clad rule. Arabs can compromise about the refugee problem, painful as it may be, and about the borders, also with much pain, and about security matters. But they cannot compromise about East Jerusalem becoming the capital of Palestine. All national and religious passions converge here.

Anyone who wants to wreck any chance for peace – it is here that he has to act. The settlers and their supporters, who know that any peace agreement would include the elimination of (at least) most settlements, have planned in the past (and probably are planning now) to blow up the mosques on the Temple Mount, hoping that this would cause a worldwide conflagration which would reduce to ashes the chances of peace once and for all.

Less extreme people dream about the creeping ethnic cleansing of East Jerusalem by administrative chicanery, demolition of houses, denying means of livelihood and just making life in general miserable for Arabs. Moderate rightists just want to cover every empty square inch in East Jerusalem with Jewish neighborhoods. The aim is always the same.

* * *

THIS REALITY is, of course, well known to Obama and his advisors. In the beginning they believed, in their innocence, that they could sweet talk Netanyahu and Co. into stopping the building activity to facilitate the start of negotiations for the two-state solution. Very soon they learned that this was impossible without exerting massive pressure – and they were not prepared to do that.

After putting up a short and pitiful struggle, Obama gave in. He agreed to the deception of a “settlement freeze” in the West Bank. Now building is going on there with great enthusiasm, and the settlers are satisfied. They have completely stopped their demonstrations.

In Jerusalem there was not even a farcical attempt – Netanyahu just told Obama that he would go on building there (“as in Tel Aviv”), and Obama bowed his head. When Israeli officials announced a grandiose plan for building in “Ramat Shlomo” this week, they did not violate any undertaking. Only the matter of “timing” remained.

* * *

FOR JOE BIDEN, it was a matter of honor. For Mahmoud Abbas, it is a matter of survival.

Under intense pressure from the Americans and their agents, the rulers of the Arab countries, Abbas was obliged to agree to negotiations with the Netanyahu government – though only “proximity talks”, a euphemism for “distance talks”.

Clearly, nothing will come out of these talks except more humiliation for the Palestinians. Quite simply: anyone building in East Jerusalem and the West Bank is announcing in advance that there is no chance for an agreement. After all, no sane Israeli would invest billions in a territory he intends to turn over to the Palestinian state. A person who is eating a pizza is not negotiating about it in good faith.

Even at this late stage, Abbas and his people still hope that something good will come out of all this: the US will acknowledge that they are right and exert, at long last, real pressure on Israel to implement the two-state solution.

But Biden and Obama did not give much cause for hope. They wiped the spit off their faces and smiled politely.

As the saying goes: when you spit in the face of a weakling, he pretends that it is raining. Does this apply to the president of the most powerful country in the world?

Uri Avnery is an Israeli writer and peace activist with Gush Shalom. He is a contributor to CounterPunch’s book The Politics of Anti-Semitism.

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