Douglas Caddy

One reason why JFK had to be assassinated.

Below are excerpts from Richard Hoagland’s recent white paper (see link below) that documents JFK‘s attempts to end the Cold War, which started in 1961 by his proposing to Soviet Premier Nikita Khrushchev at their first meeting held in Vienna of a joint mission to send humans to the Moon.

These efforts continued right up to the time of his death in November 1963. In August 1963 JFK met with Soviet Ambassador Dobrinyin about the matter just before the President addressed the UN and in the same month he sent a conciliatory message to Khrushchev. According to Sergei Khrushchev, the Soviet Premier’s son, his father had decided by mid-November to accept JFK’s proposal of a joint mission.

This idea terminated with Kennedy’s killing. One of the first acts President Lyndon Johnson, who had been in charge of NASA during the Kennedy Administration, was to have Congress pass legislation forbidding just such a joint mission.

As Sergei Khrushchev later wrote, the Cold War might have ended in 1969 with the first human landing on the Moon when "an American astronaut and a Soviet cosmonaut might have stepped onto the moon’s surface together."

Instead, he observed, “The Cold War was prolonged by twenty years.”

One can only imagine the conspiratorial fury of LBJ, who was a product of the Brown and Root military-industrial war machine, and his close next-door neighbor and ally, FBI Director J. Edgar Hoover, who was obsessed with the Communist menace, at the knowledge that JFK was attempting to end the Cold War by a U.S.-Soviet joint mission to the Moon.

Kennedy had to be stopped.

http://www.enterprisemission.com/newfrontier.htm

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At our recent Enterprise Mission Washington DC National Press Club briefing on “the hidden discoveries and benefits of the space program,” we revealed White House, State Department and NASA memos that now prove that my efforts at CBS to explain Kennedy’s ringing call to send humans to the Moon, as something “far MORE than merely Cold War competition” were, in fact, correct! These documents now clearly demonstrate that -- despite all that has been drummed into us for the last 40 or so years in terms of the glib “Cold War explanation” -- Kennedy’s decision on and surprisingly firm political commitment to Apollo was NOT driven “primarily by Cold War competition with the Russians” … but by motivations demonstrably now far, far larger—

The foundation for this new analysis can be found, not surprisingly, in Kennedy’s own historic address to that Joint Session of Congress, May 25, 1961 … if you just seriously look—

“ … finally, if we are to win the battle that is now going on around the world between freedom and tyranny, the dramatic achievements in space which occurred in recent weeks should have made clear to us all, as did the Sputnik in 1957, the impact of this adventure on the minds of men everywhere, who are attempting to make a determination of which road they should take …

“Now it is time to take longer strides -- time for a great new American enterprise – time for this nation to take a clearly leading role in space achievement, which in many ways may hold the key to our future on earth [emphasis added]….”

“… the key to our future on Earth ….”

As we further detail in our New York Times Bestseller, “Dark Mission: the Secret History of NASA,” these newly-published documents reveal that, within days of his ringing challenge to the American people, the Congress and the Soviets in Washington, Kennedy was actually, urgently, trying to sell Nikita Khrushchev (then head of the Soviet Union), at their first Summit in Vienna, on the daring idea of joint US/USSR space exploration programs!

Including—

Going to the Moon, not in competition … but together!

To add further substance to this major historical revision, we have the first-person testimony of none other than Sergei Khrushchev, Soviet Premier Nikita Khrushchev’s son, in the October, 1999 issue of American Heritage Magazine:

“…that same August [1963], Kennedy sent Father a proposal about joining Soviet and American forces for a flight to the moon. He had first mentioned the idea in Vienna, in June 1961, but at the time Father hadn’t replied [emphasis added]….”

This, of course, not only tosses into the ashcan of history all the “real-politic reasons” we’ve been given for Kennedy engaging in an expensive space race with the Russians -- it raises profound political, diplomatic and economic questions regarding the President’s real, underlying motivations for going to the Moon at all!

What was John Fitzgerald Kennedy really thinking?

Obviously, from this documentation, and despite his repeated public rhetoric regarding American’s “winning the race to the Moon,” the President privately thought a joint lunar effort with the USSR was the only real way to proceed! Consistent with this analysis, the documents now reveal that Kennedy tried repeatedly to get Premier Khrushchev to go along with this radical idea; on the record, we have at least five attempts by Kennedy, across the three full years of his Presidency -- in secret NSC memos and discussions in the White House, and in equally clandestine diplomatic efforts with both Khrushchev, and even meetings with the Washington Ambassador from the Soviet Union, Anatoly Dobrynin -- to quietly convince the Premier to undertake a joint manned mission to the Moon!

It is clear from these remarkably persistent initiatives, long before his going public at the United Nations in September 1963, that the President in fact saw “a combined journey to the Moon” as vastly more significant and far-reaching than “achieving an American propaganda coup over the Soviet Union, by going there alone ….”

And, in mid-November 1963, according to Sergei Khrushchev’s personal recollections -- after literally years of determined efforts by the President to convince him to accept this 180-degree reversal of the then public perception of “an all out race” … Nikita Khrushchev finally did agree!

Again, according to his son … this time on PBS:

“… in the August of 1963, President Kennedy met with the Soviet Ambassador Dobrinyin, and then he spoke to the United Nations. He offered once more to join the efforts, and at that time my father was very serious. I walked with him, sometime in late October or November, and he told me about all these things. He told me that we have to think about this and maybe accept this idea …

“He thought also of the political achievement of all these things, that then they would begin to trust each other much more ....”

However, just days later … John Kennedy was killed.

In 1999, Sergei Khrushchev looked back:

“… the Cold War might have ended in 1969 … an American astronaut and a Soviet cosmonaut might have stepped onto the moon’s surface together.

“But life turned out differently. In November 1963 John F. Kennedy died, and a year later, in October 1964, my father was removed from power. The leaders who replaced Father hurried to “correct his mistakes” by giving a new impetus to the arms race and producing tens of thousands of tactical nuclear weapons. By 1989 the Soviet army had seven thousand nuclear cannon.

“The Cold War was prolonged by twenty years [emphasis added] ….”

This indisputable chronology now makes clear what Kennedy’s “secret agenda” -- via a vis Apollo – really was from the beginning: not only the first, historic manned mission to the Moon … but a radical “end run” on the decades-long, hopelessly stalemated international situation vis a vis the Soviet Union. An imaginative attempt to diffuse -- if not completely end -- the long “Cold War,” decades sooner than it eventually ended; to usher in a new era of unprecedented cooperation between the United States and the Soviet Union, beginning in space … literally on the surface of another world … but ultimately, designed to spread around this world.

A radical, imaginative effort that ultimately, we now know succeeded … only to be killed by John Kennedy’s own, untimely death.

For those who have not lived long enough to remember the frightening nightmares of those years for all us kids -- the pointless “duck and cover” exercises in the middle of the day; the recurring wail of air raid sirens in “mock Russian bomber drills” in the middle of the night; the recurring images on TV of “atom bombs blowing entire cities into smithereens …” – there is no imagining the almost physical lifting of the burden with the real ending of the Cold War, in 1991.

Or the haunting thought I had, when I first found these extraordinary documents confirming my deepest-held suspicions of Kennedy’s real thinking on Apollo, echoing exactly those of Premier Khrushchev’s son:

That -- were it not for the sudden murder of this young President on that Dallas afternoon -- the long nuclear nightmare of the Cold War could realistically have ended a full generation earlier … replaced by “who knows what” -- if Kennedy had also lived to be the architect of that new, unwritten future!

It is testimony to the lack of imaginative thinking in Washington, on how to end (not merely “win”) our current “war on terror” – the so-called “clash of civilizations” -- which presents us now with the same dismal prospects that once confronted Kennedy, for “more unending nightmares for countless generations of Americans to come ….”

http://www.enterprisemission.com/newfrontier.htm

A Word From Our Sponsor

By NATHAN GLAZER

January 20, 2008

The New York Times Book Review

THE MIGHTY WURLITZER

How the CIA Played America.

By Hugh Wilford.

Illustrated. 342 pp. Harvard University Press. $27.95.

This is a book whose content somewhat contradicts its title. “Mighty Wurlitzer” was the metaphor Frank Wisner, the first chief of political warfare for the Central Intelligence Agency, used to describe the C.I.A.’s “array of front organizations.” They were, he said, “capable of playing any propaganda tune he desired.” But Wisner rather exaggerated what he was able to do, as one learns from this remarkably detailed and researched book by Hugh Wilford, a British scholar now at California State University, Long Beach. For these organizations were not exactly “front organizations” as the term was understood by the Communist Information Bureau, or Cominform, the model that the young C.I.A. was trying to match.

The Kremlin had set up the Cominform in the early years of the cold war to coordinate the activities of scores of Communist-controlled professional, artistic and intellectual groups, and the C.I.A. decided to create or influence its own array of organizations and publications among intellectuals, labor organizations and citizen groups. But the leaders of just about all of these groups had minds of their own, and most of the organizations had been established independently of the C.I.A. For example, the small magazines Partisan Review and The New Leader, which, Wilford says, received C.I.A. funds in one way or another, owed nothing to the agency, either in their founding or in their operations. The idea of “fronts” hardly applies to them.

There were indeed fronts directly established by the C.I.A. for a particular goal, and the story Wilford tells of them in “The Mighty Wurlitzer” is fascinating, involving a surprising collection of well-known figures in American life. Consider the Independent Service for Information, set up at Harvard specifically for the purpose of getting some young anti-Communist Americans to attend a huge youth festival being organized by the Communists in Vienna in 1959. This was one of a series of events in which the Soviet Union promoted its versions of peace and progress, as contrasted with the cold-war policies of the capitalist United States.

A youthful Gloria Steinem had just spent a year and half in India, where, we are told, she befriended Indira Gandhi and the widow of the “revolutionary humanist” M. N. Roy, and had met a researcher who seems to have been a C.I.A. agent or contact. Attractive and progressive, Steinem was hired to run the I.S.I. and to recruit knowledgeable young Americans who could debate effectively with the Communist organizers of the festival, defending the United States against Communist criticism of segregation and other American failings.

Conservative student leaders certainly could have been found for this purpose, but they did not interest the C.I.A. or the I.S.I.: socialists and others on the non-Communist left had greater appeal because they would be more effective in reaching out to the European students who attended such festivals. One of those who went to Vienna was Zbigniew Brzezinski, then a Harvard graduate student; one of those who agonized over the offer of free transportation was Michael Harrington of the Young People’s Socialist League. The offer was withdrawn, according to Harrington, when he insisted that he had to be free to criticize capitalism and Communism equally.

The C.I.A.’s connections to the I.S.I. and a host of other organizations and publications was exposed in a storm of magazine and newspaper articles in 1967, and just about everything that had once been secret became public. Steinem stood up bravely: “I was happy to find some liberals in government in those days who were farsighted and cared enough to get Americans of all political views to the festival,” she told The New York Times. And to The Washington Post she said: “In my experience the agency was completely different from its image: it was liberal, nonviolent and honorable.”

Steinem was a “witting” participant. Many others dependent on C.I.A. backing were “unwitting” (the terms, it seems, were in common use in the agency), because the money they accepted was channeled through existing foundations or through organizations ostensibly set up by wealthy individuals. Generally, it appeared that the funds were independent of the government. (The sums seem remarkably small for the most part, though I have not factored in inflation.)

Whereas the C.I.A. created the I.S.I. for a specific purpose, its relationship to the American Federation of Labor and the Congress of Industrial Organizations, the subject of an important chapter on American trade unions, was utterly different. The labor organizations had existed before the C.I.A. and had long been fighting Communists on their own — in American unions as well as in international trade union organizations. During the cold war they found common cause with the agency in battling Communist influence in foreign unions. But they had their own exceptionally qualified officials to conduct their foreign activities. In the A.F.L., probably the most important was Jay Lovestone, described by Wilford as “a particularly fanatical and ruthless anti-Communist.”

This remark illustrates Wilford’s somewhat cool attitude toward what many saw, with some legitimacy, as a worldwide conflict between tyranny and freedom. Lovestone had been the leader of the American Communist Party until he was expelled by Stalin himself. Clearly he knew a great deal about Soviet Communism and would not brook any interference or accept any guidance from C.I.A. officials, who in those early days were often from Ivy League colleges. Lovestone called them “fizz kids.” Of course Lovestone was not dependent on C.I.A. money — the A.F.L. had its own resources. But the C.I.A. was eager to support an organization like the A.F.L. in its anti-Communist work. Similarly with Walter and Victor Reuther in the C.I.O.

“Newly available evidence,“ Wilford concludes, “shows that the old imagery of puppet masters and marionettes fails utterly to capture the complexities of partnership between the Lovestoneites of the A.F.L. and the ‘fizz kids’ of the C.I.A.” This will hardly be surprising to the knowledgeable. And Wilford explains that the C.I.A.’s involvement with the American Committee for Cultural Freedom, an influential cold-war association of writers and scholars dominated by New York intellectuals, was very much the same story.

Even when C.I.A. control was greatest, many American anti-Communists saw themselves not as doing the agency’s bidding but as pursuing common ends — contesting Communist influence among intellectuals, trade unionists, blacks, women’s groups, student groups and the like. There seem to be few cases where the C.I.A. wanted a group to do things that its leaders did not want to do. Rather, the issue that created conflict was generally the C.I.A. insistence on hiding its involvement — concealing the source of money and swearing “witting” leaders to secrecy, with penalties if they revealed what they knew (though there seem to be no cases, at least in this book, where any penalties were imposed).

After the C.I.A.’s activities were exposed, there were few who said they had been used, though rather more who said they were sorry to have kept the C.I.A. connection secret. Norman Thomas is one who, according to Wilford, expressed regret. Along with Victor Reuther, Allard Lowenstein and Bayard Rustin, Thomas was involved with the C.I.A.-sponsored Committee on Free Elections in the Dominican Republic, which lent “international credibility to a 1966 ballot effectively rigged against the socialist former president, Juan Bosch.” This is one of those passages that lead a reader to wonder if Wilford has fully grasped the nature of the conflict between socialists and Communists at that time.

After all, Thomas and Rustin were socialists; there must have been other reasons than Bosch’s socialism that caused them to oppose him.

Thomas was an acquaintance of Allen Dulles, the director of central intelligence, and could call on him when there was a financial emergency. Likewise, Arthur Schlesinger Jr., a former member of the O.S.S., the predecessor to the C.I.A., personally knew senior officers of the agency and would brief them on cultural developments he was aware of. He frequently saw Frank Wisner, the manager of the Mighty Wurlitzer, “on the Georgetown dinner party circuit,” and they would commiserate about the debates New York intellectuals insisted on having over McCarthyism, which the C.I.A. found unhelpful. It was a time, as Wilford writes, “when the alliance between cold-war anti-Communism and liberal idealism still appeared natural and right.” That alliance explains much that current readers may find surprising in this book. It explains as well the outrage many writers have expressed about the C.I.A. connection over the past few decades.

There is a great deal to be learned from this book. Wilford has consulted an astonishing number of scholarly and popular accounts, along with the papers and records of some of the central participants and organizations. He’s done a remarkable job of research. If, on occasion, he doesn’t appear in full command of the story, I would trace that to his inability to see the degree to which the Communists were pariahs to the anti-Stalinist left. So, when he writes that “much of the American left had rejected the Dewey commission’s finding that Trotsky was innocent of the charges leveled against him by Stalin,” one wonders just what “left” he could possibly have in mind. I suspect it is those who were Communist-influenced or sympathetic to the Soviet Union. There aren’t many such slips, however. Wilford has mastered an enormously complex tale in almost every detail.

Nathan Glazer, a professor emeritus of sociology and education at Harvard, is the author, most recently, of “From a Cause to a Style: Modernist Architecture’s Encounter With the American City.”

I remember Sibel Edmonds from the 9/11 Com public hearings. She was at every one. She was not shy about being in front of a tv camera. She's a real babe, that's with a capitol Babe.

Operationally, she was an islamic translator for the FBI, and confirmed what we heard from John O'Neill circles that there was a serious backlog of intercept tape transcriptions and translations, which became critical on 9/11.

Whistle blowers don't fare too well though.

She was represented by ex-COPA member Mark Zaid, who also represented the Able Danger Colonel Schafer, who squeeled about 9/11 foreknoweldge to Rep. Kurt Weldon (R.Pa.), but now that's capitol Ex-COPA - (Zaid's last email said I can't afford his services, so I'm glad Sibel can), Ex-Able Danger, as they disbanded the DOD unit that condcuted open source data mining on Al Quada in USA; and Ex-Rep Kurt Weldon, who lost his last election to an even more pro-military guy.

So whistle blowing has not been healthy for Edmonds, Schafer or Weldon, all of whom lost their jobs over it.

Her advantage is that she can sell her story to Playboy, and do a spread - the Babes of 9/11.

BK

Sibel Edmonds, Turkey and the Bomb

A Real 9/11 Cover-Up?

By DAVE LINDORFF

January 7, 2008

http://www.counterpunch.org/lindorff01072008.html

If a new article just published Saturday in the Times of London based upon information provided by US government whistleblower Sibel Edmonds, a 37-year-old former Turkish language translator for the FBI, we have not only solid evidence of prior knowledge of 9-11 by high up US government officials, but evidence of treasonous activity by many of those same officials involving efforts to provide US nuclear secrets to America's enemies, even including Al Qaeda.

The story also casts a chilling light on the so-called "accidental" flight of six nuclear-armed cruise missiles aboard an errant B-52 that flew last Aug. 30 from Minot AFB in North Dakota to Barksdale AFB in Shreveport, Louisiana.

The Sunday Times reports that Edmonds, whose whistleblowing efforts have been studiously ignored by what passes for the news media in American news media, approached the Rupert Murdoch-owned British paper a month ago after reading a report there that an Al-Qaeda leader had been training some of the 9-11 hijackers at a base in Turkey, a US NATO alley, under the noses of the Turkish military.

Edmonds, who was recruited by the FBI after 9-11 because of her Turkish and Farsi language skills, has long been claiming that in her FBI job of covertly monitoring conversations between Turkish, Israeli, Persian and other foreign agents and US contacts, including a backlog of untranslated tapes dating back to 1997, she had heard evidence of "money laundering, drug imports and attempts to acquire nuclear and conventional weapons technology." But the Turkish training for 9-11 rang more alarm bells and made her decide that talking behind closed doors to Congress or the FBI was not enough. She had to go public.

Edmonds claims in the Times that even as she was providing evidence of moles within the US State Department, the Pentagon, and the nuclear weapons establishment, who were providing nuclear secrets for cash, through Turkey, to Pakistan's intelligence agency, the Inter-Services Intelligence, or ISI, agencies within the Bush administration were actively working to block investigation and to shield those who were committing the acts of treason.

Pakistan's ISI is known to have had, and to still maintain close contacts with Al-Qaeda. Indeed, the Times notes that Pakistan's nuclear god-father, General Mahmoud Ahmad, was accused of sanctioning a $100,000 wire payment to Mohammed Atta, one of the 9/11 hijackers, immediately before the attacks.

Edmonds claims, in the Times article, that following the 9-11 attacks, FBI investigators took a number of Turkish and Pakistani operatives into custody for questioning about foreknowledge of the attacks, but that a high-ranking US State Department official repeatedly acted to spirit them out of the country.

Edmonds was fired from her FBI translating job in 2002 after she accused a colleague of having illicit contact with Turkish officials. She has claimed that she was fired for being outspoken, and in 2005 her position was reportedly vindicated by the Office of Inspector General of the FBI, which concluded that she had been sacked for making valid complaints.

One of those whom Edmonds claims in the Times report was being investigated in connection with the nuclear information transfers was Pentagon analyst Lawrence Franklin. Franklin was convicted and jailed in 2006 for passing US defense information to American Israel Public Affairs Committee lobbyists and sharing classified information with an Israeli diplomat. Franklin, in 2001, was part of the Pentagon Office of Special Plans, a kind of shadow intelligence unit set up by the Bush administration inside the Pentagon whose job it was to gin up "evidence" to justify a war against Iraq. In that capacity, he (along with several other OSP members and arch neocon schemer Michael Ledeen) was also identified by Italian investigative journalists working for the newspaper La Republican, as having been at a crucial meeting in December 2001 in Rome with the Italian defense and intelligence service ministers. La Republicca reports that at that meeting a plan was hatched to fob off forged Niger embassy documents as evidence that Iraqi strongman Saddam Hussein was trying to buy uranium ore from Niger.

If Edmonds' story is correct, and Al-Qaeda, with the aid of Turkish government agents and Pakistani intelligence, with the help of US government officials, has been attempting to obtain nuclear materials and nuclear information from the U.S., it casts an even darker shadow over the mysterious and still unexplained incident last August 30, when a B-52 Stratofortress, based at the Minot strategic air base in Minot, ND, against all rules and regulations of 40 years' standing, loaded and flew off with six unrecorded and unaccounted for nuclear-tipped cruise missiles.

That incident only came to public attention because three as yet unidentified Air Force whistleblowers contacted a reporter at the Military Times newspaper, which ran a series of stories about it, some of which were picked up by other US news organizations.

An Air Force investigation into that incident, ordered by Defense Secretary Robert Gates, claimed improbably that the whole thing had been an "accident," but many veterans of the US Air Force and Navy with experience in handling nuclear weapons say that such an explanation is impossible, and argue that there had to have been a chain or orders from above the level of the base commander for such a flight to have occurred.

Incredibly, almost five months after that bizarre incident (which included several as yet unexplained deaths of B-52 pilots and base personnel occurring in the weeks shortly before and after the flight), in which six 150-kiloton warheads went missing for 36 hours, there has been no Congressional investigation and no FBI investigation into what happened.

Yet in view of Edmonds' story to the London Times, alleging that there has been an ongoing, active effort for some years by both Al Qaeda and by agents of two US allies, Turkey and Pakistan, to get US nuclear weapons secrets and even weapons, and that there are treasonous moles at work within the American government and nuclear bureaucracy aiding and abetting those efforts, surely at a minimum, a major public inquiry is called for.

Meanwhile, there is enough in just this one London Times story to keep an army of investigative reporters busy for years. So why, one has to ask, is this story appearing in a highly respected British newspaper, but not anywhere in the corporate US media?

Dave Lindorff is the author of Killing Time: an Investigation into the Death Row Case of Mumia Abu-Jamal. His n book of CounterPunch columns titled "This Can't be Happening!" is published by Common Courage Press. Lindorff's newest book is "The Case for Impeachment", co-authored by Barbara Olshansky.

He can be reached at: dlindorff@yahoo.com

From The Sunday Times (U.K.)

January 6, 2008

http://www.timesonline.co.uk/tol/news/worl...icle3137695.ece

[Note: What I found most intriguing in this important article are the following three paragraphs:

“Following 9/11, a number of the foreign operatives were taken in for questioning by the FBI on suspicion that they knew about or somehow aided the attacks.

“Edmonds said the State Department official once again proved useful. “A primary target would call the official and point to names on the list and say, ‘We need to get them out of the US because we can’t afford for them to spill the beans’,” she said. “The official said that he would ‘take care of it’.”

“The four suspects on the list were released from interrogation and extradited.” ]

For sale: West’s deadly nuclear secrets

A WHISTLEBLOWER has made a series of extraordinary claims about how corrupt government officials allowed Pakistan and other states to steal nuclear weapons secrets.

Sibel Edmonds, a 37-year-old former Turkish language translator for the FBI, listened into hundreds of sensitive intercepted conversations while based at the agency’s Washington field office.

She approached The Sunday Times last month after reading about an Al-Qaeda terrorist who had revealed his role in training some of the 9/11 hijackers while he was in Turkey.

Edmonds described how foreign intelligence agents had enlisted the support of US officials to acquire a network of moles in sensitive military and nuclear institutions.

Among the hours of covert tape recordings, she says she heard evidence that one well-known senior official in the US State Department was being paid by Turkish agents in Washington who were selling the information on to black market buyers, including Pakistan.

The name of the official – who has held a series of top government posts – is known to The Sunday Times. He strongly denies the claims.

However, Edmonds said: “He was aiding foreign operatives against US interests by passing them highly classified information, not only from the State Department but also from the Pentagon, in exchange for money, position and political objectives.”

She claims that the FBI was also gathering evidence against senior Pentagon officials – including household names – who were aiding foreign agents.

“If you made public all the information that the FBI have on this case, you will see very high-level people going through criminal trials,” she said.

Her story shows just how much the West was infiltrated by foreign states seeking nuclear secrets. It illustrates how western government officials turned a blind eye to, or were even helping, countries such as Pakistan acquire bomb technology.

The wider nuclear network has been monitored for many years by a joint Anglo-American intelligence effort. But rather than shut it down, investigations by law enforcement bodies such as the FBI and Britain’s Revenue & Customs have been aborted to preserve diplomatic relations.

Edmonds, a fluent speaker of Turkish and Farsi, was recruited by the FBI in the aftermath of the September 11 attacks. Her previous claims about incompetence inside the FBI have been well documented in America.

She has given evidence to closed sessions of Congress and the 9/11 commission, but many of the key points of her testimony have remained secret. She has now decided to divulge some of that information after becoming disillusioned with the US authorities’ failure to act.

One of Edmonds’s main roles in the FBI was to translate thousands of hours of conversations by Turkish diplomatic and political targets that had been covertly recorded by the agency.

A backlog of tapes had built up, dating back to 1997, which were needed for an FBI investigation into links between the Turks and Pakistani, Israeli and US targets. Before she left the FBI in 2002 she heard evidence that pointed to money laundering, drug imports and attempts to acquire nuclear and conventional weapons technology.

“What I found was damning,” she said. “While the FBI was investigating, several arms of the government were shielding what was going on.”

The Turks and Israelis had planted “moles” in military and academic institutions which handled nuclear technology. Edmonds says there were several transactions of nuclear material every month, with the Pakistanis being among the eventual buyers. “The network appeared to be obtaining information from every nuclear agency in the United States,” she said.

They were helped, she says, by the high-ranking State Department official who provided some of their moles – mainly PhD students – with security clearance to work in sensitive nuclear research facilities. These included the Los Alamos nuclear laboratory in New Mexico, which is responsible for the security of the US nuclear deterrent.

In one conversation Edmonds heard the official arranging to pick up a $15,000 cash bribe. The package was to be dropped off at an agreed location by someone in the Turkish diplomatic community who was working for the network.

The Turks, she says, often acted as a conduit for the Inter-Services Intelligence (ISI), Pakistan’s spy agency, because they were less likely to attract suspicion. Venues such as the American Turkish Council in Washington were used to drop off the cash, which was picked up by the official.

Edmonds said: “I heard at least three transactions like this over a period of 2½ years. There are almost certainly more.”

The Pakistani operation was led by General Mahmoud Ahmad, then the ISI chief.

Intercepted communications showed Ahmad and his colleagues stationed in Washington were in constant contact with attach鳠in the Turkish embassy.

Intelligence analysts say that members of the ISI were close to Al-Qaeda before and after 9/11. Indeed, Ahmad was accused of sanctioning a $100,000 wire payment to Mohammed Atta, one of the 9/11 hijackers, immediately before the attacks.

The results of the espionage were almost certainly passed to Abdul Qadeer Khan, the Pakistani nuclear scientist.

Khan was close to Ahmad and the ISI. While running Pakistan’s nuclear programme, he became a millionaire by selling atomic secrets to Libya, Iran and North Korea. He also used a network of companies in America and Britain to obtain components for a nuclear programme.

Khan caused an alert among western intelligence agencies when his aides met Osama Bin Laden. “We were aware of contact between A Q Khan’s people and Al-Qaeda,” a former CIA officer said last week. “There was absolute panic when we initially discovered this, but it kind of panned out in the end.”

It is likely that the nuclear secrets stolen from the United States would have been sold to a number of rogue states by Khan.

Edmonds was later to see the scope of the Pakistani connections when it was revealed that one of her fellow translators at the FBI was the daughter of a Pakistani embassy official who worked for Ahmad. The translator was given top secret clearance despite protests from FBI investigators.

Edmonds says packages containing nuclear secrets were delivered by Turkish operatives, using their cover as members of the diplomatic and military community, to contacts at the Pakistani embassy in Washington.

Following 9/11, a number of the foreign operatives were taken in for questioning by the FBI on suspicion that they knew about or somehow aided the attacks.

Edmonds said the State Department official once again proved useful. “A primary target would call the official and point to names on the list and say, ‘We need to get them out of the US because we can’t afford for them to spill the beans’,” she said. “The official said that he would ‘take care of it’.”

The four suspects on the list were released from interrogation and extradited.

Edmonds also claims that a number of senior officials in the Pentagon had helped Israeli and Turkish agents.

“The people provided lists of potential moles from Pentagon-related institutions who had access to databases concerning this information,” she said.

“The handlers, who were part of the diplomatic community, would then try to recruit those people to become moles for the network. The lists contained all their ‘hooking points’, which could be financial or sexual pressure points, their exact job in the Pentagon and what stuff they had access to.”

One of the Pentagon figures under investigation was Lawrence Franklin, a former Pentagon analyst, who was jailed in 2006 for passing US defence information to lobbyists and sharing classified information with an Israeli diplomat.

“He was one of the top people providing information and packages during 2000 and 2001,” she said.

Once acquired, the nuclear secrets could have gone anywhere. The FBI monitored Turkish diplomats who were selling copies of the information to the highest bidder.

Edmonds said: “Certain greedy Turkish operators would make copies of the material and look around for buyers. They had agents who would find potential buyers.”

In summer 2000, Edmonds says the FBI monitored one of the agents as he met two Saudi Arabian businessmen in Detroit to sell nuclear information that had been stolen from an air force base in Alabama. She overheard the agent saying: “We have a package and we’re going to sell it for $250,000.”

Edmonds’s employment with the FBI lasted for just six months. In March 2002 she was dismissed after accusing a colleague of covering up illicit activity involving Turkish nationals.

She has always claimed that she was victimised for being outspoken and was vindicated by an Office of the Inspector General review of her case three years later. It found that one of the contributory reasons for her sacking was that she had made valid complaints.

The US attorney-general has imposed a state secrets privilege order on her, which prevents her revealing more details of the FBI’s methods and current investigations.

Her allegations were heard in a closed session of Congress, but no action has been taken and she continues to campaign for a public hearing.

She was able to discuss the case with The Sunday Times because, by the end of January 2002, the justice department had shut down the programme.

The senior official in the State Department no longer works there. Last week he denied all of Edmonds’s allegations: “If you are calling me to say somebody said that I took money, that’s outrageous . . . I do not have anything to say about such stupid ridiculous things as this.”

In researching this article, The Sunday Times has talked to two FBI officers (one serving, one former) and two former CIA sources who worked on nuclear proliferation. While none was aware of specific allegations against officials she names, they did provide overlapping corroboration of Edmonds’s story.

One of the CIA sources confirmed that the Turks had acquired nuclear secrets from the United States and shared the information with Pakistan and Israel. “We have no indication that Turkey has its own nuclear ambitions. But the Turks are traders. To my knowledge they became big players in the late 1990s,” the source said.

How Pakistan got the bomb, then sold it to the highest bidders

1965 Zulfikar Ali Bhutto, Pakistan’s foreign minister, says: “If India builds the bomb we will eat grass . . . but we will get one of our own”

1974 Nuclear programme becomes increased priority as India tests a nuclear device

1976 Abdul Qadeer Khan, a scientist, steals secrets from Dutch uranium plant. Made head of his nation’s nuclear programme by Bhutto, now prime minister

1976 onwards Clandestine network established to obtain materials and technology for uranium enrichment from the West

1985 Pakistan produces weapons-grade uranium for the first time

1989-91 Khan’s network sells Iran nuclear weapons information and technology

1991-97 Khan sells weapons technology to North Korea and Libya

1998 India tests nuclear bomb and Pakistan follows with a series of nuclear tests. Khan says: “I never had any doubts I was building a bomb. We had to do it”

2001 CIA chief George Tenet gathers officials for crisis summit on the proliferation of nuclear technology from Pakistan to other countries

2001 Weeks before 9/11, Khan’s aides meet Osama Bin Laden to discuss an Al-Qaeda nuclear device

2001 After 9/11 proliferation crisis becomes secondary as Pakistan is seen as important ally in war on terror

2003 Libya abandons nuclear weapons programme and admits acquiring components through Pakistani nuclear scientists

2004 Khan placed under house arrest and confesses to supplying Iran, Libya and North Korea with weapons technology. He is pardoned by President Pervez Musharraf

2006 North Korea tests a nuclear bomb

2007 Renewed fears that bomb may fall into hands of Islamic extremists as killing of Benazir Bhutto throws country into turmoil

The similarities between the JFK and Bhutto case keep growing. Note that Bhutto was supposed to meet with two Americans that evening, and give them a report on the Pakistani Intelligence agency's assault on democracy. Note that the two Americans were Patrick Kennedy and ARLEN SPECTER!!!! Can it get any creepier?

I long have been troubled by Patrick Kennedy's -- my congressman -- and his family's social interactions with accessories after the fact in the murder of JFK.

Most glaring case in point: Caroline Kennedy Schlossberg and Senator Edward Kennedy presented a Profiles in Courage Award to Gerald Ford.

Congressman Kennedy is, to my knowledge, the only relative of JFK who has publicly opined on the particulars of the Dallas conspiracy. In a newspaper interview a few years back, he forcefully stated his belief that Castro killed his uncle John.

The family must play the game, so none of this should surprise us.

But it all is so very, very sad.

Charles

Yes it is sad Charles.

Perhaps playing the game is akin to respectfully requesting that the Big Bag please not kill us and/or our kids--please and thank you. The game is something that John F. Kennedy Jr. didn't play, the same JFK Jr. that died in a beyond suspicious airplane incident along with his wife and possible heir.

I really don't know, but I can only imagine what it'd be like to be in a family that's been hunted and slaughtered for generations.

A friend told me some 20 years ago that while attending the tennis matches at Forest Hills, New York, he walked around a corner and almost bumped into Senator Edward Kennedy who was walking alone in the opposite direction. For a brief moment Senator Kennedy's face turned white. My friend said he realized afterwards that the Senator for that instant had the fear that the assassin had come for him.

There is a problem about motive. The American government paid Butto large sums of money to go back to Pakistan. Bush's intention was for Butto to work as a "democratic front" for Musharraf. Butto's death has therefore caused political problems for Bush. I therefore fail to see the sense of the CIA being involved in the death of Butto. She was Bush's type of foreign politician - corrupt.

Cui Bono in Pakistan

Who Killed Bhutto?

By ROBERT FISK

www.counterpunch.org

Weekend edition December 31, 2007

http://www.counterpunch.org/fisk12312007.html

Weird, isn't it, how swiftly the narrative is laid down for us. Benazir Bhutto, the courageous leader of the Pakistan People's Party, is assassinated in Rawalpindi--attached to the very capital of Islamabad wherein ex-General Pervez Musharraf lives--and we are told by George Bush that her murderers were "extremists" and "terrorists". Well, you can't dispute that.

But the implication of the Bush comment was that Islamists were behind the assassination. It was the Taliban madmen again, the al-Qa'ida spider who struck at this lone and brave woman who had dared to call for democracy in her country.

Of course, given the childish coverage of this appalling tragedy--and however corrupt Ms Bhutto may have been, let us be under no illusions that this brave lady is indeed a true martyr--it's not surprising that the "good-versus-evil" donkey can be trotted out to explain the carnage in Rawalpindi.

Who would have imagined, watching the BBC or CNN on Thursday, that her two brothers, Murtaza and Shahnawaz, hijacked a Pakistani airliner in 1981 and flew it to Kabul where Murtaza demanded the release of political prisoners in Pakistan. Here, a military officer on the plane was murdered. There were Americans aboard the flight--which is probably why the prisoners were indeed released.

Only a few days ago--in one of the most remarkable (but typically unrecognised) scoops of the year--Tariq Ali published a brilliant dissection of Pakistan (and Bhutto) corruption in the London Review of Books, focusing on Benazir and headlined: "Daughter of the West". In fact, the article was on my desk to photocopy as its subject was being murdered in Rawalpindi.

Towards the end of this report, Tariq Ali dwelt at length on the subsequent murder of Murtaza Bhutto by police close to his home at a time when Benazir was prime minister--and at a time when Benazir was enraged at Murtaza for demanding a return to PPP values and for condemning Benazir's appointment of her own husband as minister for industry, a highly lucrative post.

In a passage which may yet be applied to the aftermath of Benazir's murder, the report continues: "The fatal bullet had been fired at close range. The trap had been carefully laid, but, as is the way in Pakistan, the crudeness of the operation--false entries in police log-books, lost evidence, witnesses arrested and intimidated--a policeman killed who they feared might talk--made it obvious that the decision to execute the prime minister's brother had been taken at a very high level."

When Murtaza's 14-year-old daughter, Fatima, rang her aunt Benazir to ask why witnesses were being arrested--rather than her father's killers--she says Benazir told her: "Look, you're very young. You don't understand things." Or so Tariq Ali's exposé would have us believe. Over all this, however, looms the shocking power of Pakistan's ISI, the Inter Services Intelligence.

This vast institution--corrupt, venal and brutal--works for Musharraf.

But it also worked--and still works--for the Taliban. It also works for the Americans. In fact, it works for everybody. But it is the key which Musharraf can use to open talks with America's enemies when he feels threatened or wants to put pressure on Afghanistan or wants to appease the " extremists" and "terrorists" who so oppress George Bush. And let us remember, by the way, that Daniel Pearl, the Wall Street Journal reporter beheaded by his Islamist captors in Karachi, actually made his fatal appointment with his future murderers from an ISI commander's office. Ahmed Rashid's book Taliban provides riveting proof of the ISI's web of corruption and violence. Read it, and all of the above makes more sense.

But back to the official narrative. George Bush announced on Thursday he was "looking forward" to talking to his old friend Musharraf. Of course, they would talk about Benazir. They certainly would not talk about the fact that Musharraf continues to protect his old acquaintance--a certain Mr Khan--who supplied all Pakistan's nuclear secrets to Libya and Iran. No, let's not bring that bit of the "axis of evil" into this.

So, of course, we were asked to concentrate once more on all those " extremists" and "terrorists", not on the logic of questioning which many Pakistanis were feeling their way through in the aftermath of Benazir's assassination.

It doesn't, after all, take much to comprehend that the hated elections looming over Musharraf would probably be postponed indefinitely if his principal political opponent happened to be liquidated before polling day.

So let's run through this logic in the way that Inspector Ian Blair might have done in his policeman's notebook before he became the top cop in London.

Question: Who forced Benazir Bhutto to stay in London and tried to prevent her return to Pakistan? Answer: General Musharraf.

Question: Who ordered the arrest of thousands of Benazir's supporters this month? Answer: General Musharraf.

Question: Who placed Benazir under temporary house arrest this month? Answer: General Musharraf.

Question: Who declared martial law this month? Answer General Musharraf.

Question: who killed Benazir Bhutto?

Er. Yes. Well quite.

You see the problem? Yesterday, our television warriors informed us the PPP members shouting that Musharraf was a "murderer" were complaining he had not provided sufficient security for Benazir. Wrong. They were shouting this because they believe he killed her.

Robert Fisk is a reporter for The Independent and author of Pity the Nation. He is also a contributor to CounterPunch's collection, The Politics of Anti-Semitism. Fisk's new book is The Conquest of the Middle East.

U.S. Experts Criticize Bhutto Post-Mortem

By LAWRENCE K. ALTMAN

The New York Times

December 31, 2007

Leading American experts in forensic pathology this weekend deplored the failure of Pakistani officials to order an autopsy of Benazir Bhutto, saying that the standard medical procedure was a crucial part of any credible investigation of a murder.

Exhuming the body of Ms. Bhutto, 54, a former prime minister who was killed Thursday at a political rally, could still be extremely useful in determining more precisely whether she was shot, hit by shrapnel from a suicide bomb or, less likely, died from striking her head against an object in the vehicle in which she was riding, the experts said in interviews.

A reporter for The New York Times read the experts the entire medical report on Ms. Bhutto.

Proper examination of the autopsy material, the clothing Ms. Bhutto wore when she was killed and the debris in the area surrounding the explosion could also help determine which extremist group made a bomb or fired a bullet, if either caused her death.

Ms. Bhutto’s case recalls that of President John F. Kennedy, who was slain in 1963. Controversy still swirls around the assassination, in part because of a flawed autopsy.

Not performing an autopsy of Ms. Bhutto “was a severe mistake, especially in the light of past problems with the murders of national leaders,” because it will fuel speculation, said Dr. Michael M. Baden, who is a top forensic official for the New York State Police as well as a former New York City chief medical examiner.

Seven doctors, but no forensic pathologist, signed Ms. Bhutto’s medical report. None were “trained to pick up the finer points of gunshot wounds” and other causes of criminal deaths, Dr. Baden said. For example, her doctors said they did not feel a bullet or foreign body, but did not probe for evidence of one.

“With Kennedy, the treating doctors were wrong about the entrance and exit wounds” of the bullet-damaged skull, said Dr. Baden, who was chairman of the forensic pathology panel of the House of Representatives select committees on the assassinations of Kennedy and the Rev. Dr. Martin Luther King Jr.

Dr. Baden said he suspected that Ms. Bhutto died from a bullet that left two or three tiny fragments seen on X-rays before it exited the skull through a wound that the Pakistani doctors did not notice in part because they apparently did not shave the bloodied thick scalp hair.

Dr. Werner U. Spitz, former chief medical examiner in Detroit, said he could not understand why the government did not try to quench “the thirst of the Pakistani people to know the facts, because they are all angry, and if you confronted them with the facts, maybe the anger” would disappear.

Dr. Spitz said he suspected that Ms. Bhutto died after being hit by a bullet fired from a high-powered rifle.

Dr. Vincent J. DiMaio, a former chief medical examiner in San Antonio, who also deplored the lack of an autopsy in Ms. Bhutto’s case, said he suspected that a fragment that was propelled against her head was a more likely explanation for her death than a bullet wound.

This has been a huge pool of investment errors. This has sucked in the best and the brightest people on earth, those who allocate capital. They trusted Alan Greenspan. They trusted artificially low interest rates. They trusted fiat money. That trust has been betrayed, as always. But this time, it has been betrayed on a scale that puts the world's banking system at risk.

"Trust" and "trusted" are not, in my experience anyway, concepts that the banking community give much value to. "Make hay when the sun shines", yes. "Rake it in when no one is watching", yes.

But not "trust".

The word was long ago, surgically removed from the bankers lexicon.

Crisis may make 1929 look a 'walk in the park'

Last Updated: 11:02pm GMT 23/12/2007

Page 1 of 3

Telegraph (U.K.)

December 23, 2007

http://www.telegraph.co.uk/money/main.jhtm...cccrisis123.xml

As central banks continue to splash their cash over the system, so far to little effect, Ambrose Evans-Pritchard argues things are rapidly spiralling out of their control

Twenty billion dollars here, $20bn there, and a lush half-trillion from the European Central Bank at give-away rates for Christmas. Buckets of liquidity are being splashed over the North Atlantic banking system, so far with meagre or fleeting effects.

•As the credit paralysis stretches through its fifth month, a chorus of economists has begun to warn that the world's central banks are fighting the wrong war, and perhaps risk a policy error of epochal proportions.

"Liquidity doesn't do anything in this situation," says Anna Schwartz, the doyenne of US monetarism and life-time student (with Milton Friedman) of the Great Depression.

"It cannot deal with the underlying fear that lots of firms are going bankrupt. The banks and the hedge funds have not fully acknowledged who is in trouble. That is the critical issue," she adds.

Lenders are hoarding the cash, shunning peers as if all were sub-prime lepers. Spreads on three-month Euribor and Libor - the interbank rates used to price contracts and Club Med mortgages - are stuck at 80 basis points even after the latest blitz. The monetary screw has tightened by default.

York professor Peter Spencer, chief economist for the ITEM Club, says the global authorities have just weeks to get this right, or trigger disaster.

"The central banks are rapidly losing control. By not cutting interest rates nearly far enough or fast enough, they are allowing the money markets to dictate policy. We are long past worrying about moral hazard," he says.

"They still have another couple of months before this starts imploding. Things are very unstable and can move incredibly fast. I don't think the central banks are going to make a major policy error, but if they do, this could make 1929 look like a walk in the park," he adds.

The Bank of England knows the risk. Markets director Paul Tucker says the crisis has moved beyond the collapse of mortgage securities, and is now eating into the bedrock of banking capital. "We must try to avoid the vicious circle in which tighter liquidity conditions, lower asset values, impaired capital resources, reduced credit supply, and slower aggregate demand feed back on each other," he says.

New York's Federal Reserve chief Tim Geithner echoed the words, warning of an "adverse self-reinforcing dynamic", banker-speak for a downward spiral. The Fed has broken decades of practice by inviting all US depositary banks to its lending window, bringing dodgy mortgage securities as collateral.

Quietly, insiders are perusing an obscure paper by Fed staffers David Small and Jim Clouse. It explores what can be done under the Federal Reserve Act when all else fails.

Section 13 (3) allows the Fed to take emergency action when banks become "unwilling or very reluctant to provide credit". A vote by five governors can - in "exigent circumstances" - authorise the bank to lend money to anybody, and take upon itself the credit risk. This clause has not been evoked since the Slump.

Yet still the central banks shrink from seriously grasping the rate-cut nettle. Understandably so. They are caught between the Scylla of the debt crunch and the Charybdis of inflation. It is not yet certain which is the more powerful force.

America's headline CPI screamed to 4.3 per cent in November. This may be a rogue figure, the tail effects of an oil, commodity, and food price spike. If so, the Fed missed its chance months ago to prepare the markets for such a case. It is now stymied.

This has eerie echoes of Japan in late-1990, when inflation rose to 4 per cent on a mini price-surge across Asia. As the Bank of Japan fretted about an inflation scare, the country's financial system tipped into the abyss.

[Note: click on the above link to read the rest of this article.]

I can understand the the military want to be able to react quickly, but the time of the need for an almost immediate retaliatory strike has passed. The issue now is security. Any use will be considered over a fairly long time. IMO, getting release authority for a nuke should be harder than getting the council to admit they made a mistake with a parking ticket!

Nuclear Site Is Breached

South African Attack Should Sound Alarms

Washington Post

By Micah Zenko

Thursday, December 20, 2007

http://www.washingtonpost.com/wp-dyn/conte...id=opinionsbox1

An underreported attack on a South African nuclear facility last month demonstrates the high risk of theft of nuclear materials by terrorists or criminals. Such a crime could have grave national security implications for the United States or any of the dozens of countries where nuclear materials are held in various states of security.

Shortly after midnight on Nov. 8, four armed men broke into the Pelindaba nuclear facility 18 miles west of Pretoria, a site where hundreds of kilograms of weapons-grade uranium are stored. According to the South African Nuclear Energy Corp., the state-owned entity that runs the Pelindaba facility, these four "technically sophisticated criminals" deactivated several layers of security, including a 10,000-volt electrical fence, suggesting insider knowledge of the system. Though their images were captured on closed-circuit television, they were not detected by security officers because nobody was monitoring the cameras at the time.

So, undetected, the four men spent 45 minutes inside one of South Africa's most heavily guarded "national key points" -- defined by the government as "any place or area that is so important that its loss, damage, disruption or immobilization may prejudice the Republic."

Eventually, the attackers broke into the emergency control center in the middle of the facility, stole a computer (which was ultimately left behind) and breached an electronically sealed control room. After a brief struggle, they shot Anton Gerber, an off-duty emergency services officer. Gerber later explained that he was hanging around because he believed (reasonably, in retrospect) that his fiancée -- a site supervisor -- was not safe at work. Although badly injured, Gerber triggered the alarm, setting off sirens and lights and alerting police stationed a few miles away.

Nevertheless, the four escaped, leaving the facility the same way they broke in.

Amazingly, at the same time those four men entered Pelindaba from its eastern perimeter, a separate group of intruders failed in an attempt to break in from the west. The timing suggests a coordinated attack against a facility that contains an estimated 25 bombs' worth of weapons-grade nuclear material. On Nov. 16, local police arrested three suspects, ranging in age from 17 to 28, in connection with this incident.

In response to the successful attack, the South African Nuclear Energy Corp. suspended six Pelindaba security personnel, including the general manager of security, and promised an "internal investigation which will cover culpability, negligence and improvements of Security Systems." It should be noted that Pelindaba's security was considered to have been upgraded after a break-in there two years ago (one individual was detained shortly after breaching the security fence).

It is still unclear why the two groups of intruders sought to break into this particular facility. More important, however, is that had the armed attackers succeeded in penetrating the site's highly enriched uranium storage vault, where the weapons-grade nuclear material is believed to be held, they could have carried away the ingredients for the world's first terrorist nuclear bomb.

As this incident shows, nuclear terrorism is a global issue, extending far beyond the familiar policy talking points of U.S. cooperation with Russia over its nuclear stockpiles, the security of Pakistan's nuclear arsenal in the face of threats from Islamic extremists, and concerns that if Iran acquires nuclear capabilities it could provide a bomb to sympathetic terrorist organizations.

Indeed, the essential ingredients required for making a nuclear weapon exist in more than 40 countries, in facilities with differing levels of security. Unfortunately, there are still no binding global standards on how to secure nuclear weapons and weapons-grade nuclear material. In the absence of sustained political leadership from the world's nuclear powers to develop, agree to and implement effective nuclear security standards, armed attacks such as the one at Pelindaba could become commonplace.

Micah Zenko is a research associate in the project on Managing the Atom at Harvard University's Belfer Center for Science and International Affairs. The views expressed here are solely those of the author.

Profligate lending and the creation of money out of thin air in order to generate this year's profits and this year's bonuses is not at all a new phenomenon in the long history of banking and finance.

If you lend trillions of dollars that don't really exist, and lend them to people who you know in advance can't possibly repay the amounts they've borrowed, what else can you expect to happen? Sooner or later the chickens must come home to roost.

As one savvy commentator pointed out, the banking industry has had a fabulous run these past years and enjoyed the enormous profiteering. Now when the expected can no longer be fobbed off, they want the government and regulators to bail them out.

Reducing the Basle Accord criteria will merely allow further off balance sheet shenaningans to take place out of the public eye.

The World's Largest Banks Are Now Trapped

by Gary North

www.lewrockwell.com

December 19, 2007

http://www.lewrockwell.com/north/north591.html

The subprime mortgage crisis constitutes the worst banking error in my lifetime. Nothing else comes close.

It has visibly begun to unravel. The European Central Bank on Tuesday, December 18, opened a line of credit of $500 billion to commercial banks.

The Federal Reserve System under Greenspan was the prime instigator. It forced down short-term interest rates by supplying the overnight bank-to-bank loan market with sufficient liquidity to drop the rate to 1%. This encouraged banks to make loans at low rates.

These loans were short-term loans. The borrowers then went out and bought long-term assets: bonds and mortgages. This is known as the carry trade. The pioneering central bank in the carry trade was the Bank of Japan. It lowered short-term rates from about 7% in 1990 to just above zero in 1999, where it stayed until mid-2006. But the yen is not the world's reserve currency. The U.S. dollar is.

Through a complex combination of government-licensed monopoly (Federal Reserve System), implied government safety nets for mortgage investors (Fannie Mae and Freddy Mac), creative finance (asset-backed securities), and credit-rating services that were either stunningly naïve or compensated in ways not beneficial to objective analysis, brokers marketed a series of high-commission, fast-sale investment packages that sold like hotcakes until August, 2007. Then, without warning, they stopped selling.

These packages had sold all over the world. European banks got in on the action, marketing these investment packages to their clients.

Americans have seen all this before: the savings and loan crisis of the 1980's. The S&L's were borrowed short (depositors) and lent long (home buyers). Then the rules changed. The government in 1980 abolished Regulation Q, which had limited the rate of interest that banks and S&L's could pay to depositors. A rate war began.

The government had little choice. Money market funds, which had been invented around 1975, were not under the banking system. They were not bound by Regulation Q. They were paying high rates on short-term money. Depositors were pulling funds out of banks and buying money-market funds. The banks were hemorrhaging.

As soon as the banks could compete with money market funds, the S&L's were doomed. Their money was tied up for 30 years. Depositors (legally, owners) were cashing in. It was It's a Wonderful Life without the honeymoon money.

Then Congress stepped in with its own honeymoon money: about half a trillion dollars, if you count interest on the national debt.

That was the test of the mortgage carry trade. The system failed. We are now in the midst of another similar test. It is much larger. It is worldwide. It is affecting capital markets that were once far-removed from mortgages.

MAKING HAY WHILE THE SUN SHINED

You have heard of NINJA loans: no income, no job or assets. These were loans made by local mortgage brokers to first-time home buyers. Poor people were offered loans at rates far lower than conventional loans. The brokers told the prospective debtors that they could re-finance later to get long-term loans. This was not put in writing, and so it cannot be proven. But everyone in the industry knew it was being done. Therein lies the trap for America's largest banks. "Everyone knew."

If lawyers can persuade juries that everyone knew, America's largest banks are on the hook for more money in reparations than they have as capital. Why? Fraud. They sold investors, including European banks, investments known to be fraudulent.

Here it is, folks: what we have dreamed about. The money-grubbing lawyers are about to wipe out the money-grubbing bankers. There is only one hitch: the world's economy could crash. Darn!

In the December 9 issue of the San Francisco Chronicle ran a great headline:

MORTGAGE MELTDOWN

It had even better subheads:

Interest rate 'freeze' – the real story is fraud

Bankers pay lip service to families while scurrying to avert suits, prison

The author, Sean Olender, is a lawyer. He explained what he thinks the Secretary of the Treasury Henry Paulson and the banks are really up to. It's not about helping poor homeowners. (You probably suspected this.)

The present bailout proposal was not the first one. He describes earlier ones.

First the Treasury Department urged the creation of a new fund that would buy risky mortgage bonds as a tactic to hide what those bonds were really worth. (Not much.) Then the idea was to use Fannie Mae and Freddie Mac to buy the risky loans, even if it was clear that U.S. taxpayers would eventually be stuck with the bill. But that plan went south after Fannie suffered a new accounting scandal, and Freddie's existing loan losses shot up more than expected.

The first was the old standby: a government-funded bailout. This was the now-familiar S&L solution. It did not pass muster. It may a year from now. The second was a bailout by two of the perps. But their capital is tied up in mortgages. The flow of investors' new funds is faltering. These two agencies need honeymoon money. They are in no position to provide it.

Now, just unveiled Thursday, comes the "freeze," the brainchild of Treasury Secretary Henry Paulson. It sounds good: For five years, mortgage lenders will freeze interest rates on a limited number of "teaser" subprime loans. Other homeowners facing foreclosure will be offered assistance from the Federal Housing Administration.

Mr. Olender is not persuaded by the sincerity of the offer. He perceives this as a judicial move, not an economic move. He sees it as the government's attempt to place a legal moat around the banks' castles.

The sole goal of the freeze is to prevent owners of mortgage-backed securities, many of them foreigners, from suing U.S. banks and forcing them to buy back worthless mortgage securities at face value – right now almost 10 times their market worth.

Not being a lawyer, I am willing to ascribe economic motives as well. If whole neighborhoods face eviction, they are likely to decline very rapidly into residences of illegal drug salesmen and crackheads. These houses are not in upscale parts of town. Once in decline, borderline neighborhoods are almost impossible to restore. The value of the lenders' capital is at risk. Keeping homeowners in their homes does make economic sense. The flow of mortgage payments remains. The houses are maintained. But I digress.

The ticking time bomb in the U.S. banking system is not resetting subprime mortgage rates. The real problem is the contractual ability of investors in mortgage bonds to require banks to buy back the loans at face value if there was fraud in the origination process.

And, to be sure, fraud is everywhere. It's in the loan application documents, and it's in the appraisals. There are e-mails and memos floating around showing that many people in banks, investment banks and appraisal companies – all the way up to senior management – knew about it.

That is the supposed key to the prosecution: "Everyone knew." If everyone knew, then defrauded investors have a legal case. Anyway, they would have a case if they were not trying to collect from the real masters of America, the multinational banks.

There are lots of people who would like to muzzle subpoena-happy New York Attorney General Andrew Cuomo to buy time and make this all go away. Cuomo is just inches from getting what he needs to start putting a lot of people in prison. I bet some people are trying right now to make him an offer "he can't refuse."

Here we have an attorney general who understands how his immediate predecessor became the Governor of New York: handing out lots of subpoenas to big business CEO's. Cuomo has a severe case of subpoena envy.

Mr. Olender then gets to the heart of the matter: the bottom line. What is the bottom line? The bottom line.

The catastrophic consequences of bond investors forcing originators to buy back loans at face value are beyond the current media discussion. The loans at issue dwarf the capital available at the largest U.S. banks combined, and investor lawsuits would raise stunning liability sufficient to cause even the largest U.S. banks to fail, resulting in massive taxpayer-funded bailouts of Fannie and Freddie, and even FDIC.

I see what he is getting at. There appears to have been fraud at every level. But this, it seems to my judicially untrained eye, is the very loophole the banks need. If everyone knew, as seems likely, and nobody blew the whistle, which is clear in retrospect, then these practices were common. If they were common, then they were not criminal. The government knew, and the government did nothing. Ditto for the Federal Reserve, the Comptroller of the Currency, and every other regulatory agency – Federal, state, and local.

When a criminal conspiracy acts in a criminal fashion, it can be prosecuted. But when a criminal conspiracy has been licensed by the government, and has de facto run the government of every major nation for a century, it will be difficult to get a conviction. None dare call it criminal.

Mr. Olender is correct in his observation regarding the magnitude of this economic liability.

The problem isn't just subprime loans. It is the entire mortgage market. As home prices fall, defaults will rise sharply – period. And so will the patience of mortgage bondholders. Different classes of mortgage bonds from various risk pools are owned by different central banks, funds, pensions and investors all over the world. Even your pension or 401(k) might have some of these bonds in it.

This is the domino effect. The subprime mess cannot be contained. It is like an untreated cancer cell. It will spread.

Mr. Olender means well, but he suffers from an affliction that is almost universal where the banking system is involved: terminal naïveté.

Perhaps some U.S. government department can make veiled threats to foreign countries to suggest they will suffer unpleasant consequences if their largest holders (central banks and investment funds) don't go along with the plan, but how could it be possible to strong-arm everyone?

How? The same way the Bank of England and Parliament have been strong-arming the British since 1694. If you were to identify the longest-running, most successful example of political strong-arming in modern history, you could do no better than to study the Bank of England's relationship with Parliament.

This example is today universal. Every nation on earth has a central bank except Andorra and Monaco. Monaco has a casino instead. Andorra has sheep, but at least only the sheep get sheared. It is different for the rest of us.

What would be prudent and logical is for the banks that sold this toxic waste to buy it back and for a lot of people to go to prison. If they knew about the fraud, they should have to buy the bonds back. The time to look into this is before the shredders have worked their magic – not five years from now.

What would be even more prudent and even more logical would be to abolish central banking. But the world is neither prudent nor logical when it comes to fractional reserve banking and the bubbles it creates.

Yet this bubble is like no other in my lifetime. It is tied to housing, and the entire Western world has been affected. The home-owning masses feel rich because their homes have risen in price. Why has this happened? Because buyers of houses just one price range down have sold and want to move up. Houses are rising because suckers at the bottom were lured into preposterous loans. I don't mean the home buyers, who got in with no money down. I mean the suckers who lent them the money.

Here is why the government is getting in. If the government bails out the new homeowners, it baptizes the entire procedure retroactively.

The goal of the freeze may be to delay bond investors from suing by putting off the big foreclosure wave for several years. But it may also be to stop bond investors from suing. If the investors agreed to loan modifications with the "real" wage and asset information from refinancing borrowers, mortgage originators and bundlers would have an excuse once the foreclosure occurred. They could say, "Fraud? What fraud?! You knew the borrower's real income and asset information later when he refinanced!"

This is what the freeze bill all about. It is going to sail through Congress. The President will sign it. As soon as it's law, the banks are far safer than before. There may be lawsuits, but judges will know where their bread is buttered.

Mr. Olender goes on to name names and identify culprits. Here, I have decided not to follow his lead.

CONCLUSION

The economic losses are gigantic and will grow. The trickle of bad news is going to become a flood over the next year. It will wear down the resistance of perma-bulls, who believe that the Federal Reserve can save the day and save the stock market. All over the world, the repercussions of bad loans, carry-trade leverage, and relatively tight money are going to be felt.

This has been a huge pool of investment errors. This has sucked in the best and the brightest people on earth, those who allocate capital. They trusted Alan Greenspan. They trusted artificially low interest rates. They trusted fiat money. That trust has been betrayed, as always. But this time, it has been betrayed on a scale that puts the world's banking system at risk.

The bailouts have only just begun.

December 19, 2007

Pakistan learns the US nuclear way

By Zia Mian

AsiaTimes

December 19, 2007

http://www.atimes.com/atimes/South_Asia/IL19Df02.html

The United States recently admitted that since the attacks of September 11, 2001, it has been helping Pakistan secure its nuclear weapons and the materials used to make them. Pakistan has welcomed this assistance. A former Pakistani general who was involved in the nuclear weapons complex has said that "we want to learn from the West's best practices".

But the US track record for securing its own nuclear weapons, nuclear materials and weapons information isn't encouraging, to say the least. If the United States can't secure its own nuclear complex, why expect Pakistan to do it any better?

On November 11, The Washington Post reported that the United States sent "tens of millions of dollars worth of equipment such as intrusion detectors and ID systems to safeguard Pakistan's nuclear weapons". A week later, The New York Times, which had been sitting on the story for three years, revealed that the program was in fact much larger, "Over the past six years, the Bush administration has spent almost $100 million on a highly classified program to help General Pervez Musharraf, Pakistan's president, secure his country's nuclear weapons." The assistance ranged from "helicopters to night-vision goggles to nuclear detection equipment".

The US military claims to be confident about the security of Pakistan's nuclear arsenal. A Pentagon press spokesman said, "At this point, we have no concerns. We believe that they are under the appropriate control." The chairman of the US Joint Chiefs of Staff declared, "I don't see any indication right now that security of those weapons is in jeopardy."

Zero locks

A concern about nuclear weapons security in Pakistan is that Islamists in the military may seize control of the weapons and try to use them. Pakistan claims to have followed the US example and installed coded combination-lock switches, known as Permissive Action Links, on its weapons.

Since the 1960s, most US nuclear weapons are supposed to have been protected against unauthorized use by coded combination-lock switches that could only be activated by someone who knew that proper sequence of characters. These switches were introduced in 1962 by Robert McNamara when he was secretary of defense to ensure control over the use of US nuclear weapons.

According to Bruce Blair, a former missile launch control officer, Strategic Air Command, which was responsible for the nuclear-armed missiles and bombers, installed the switches but set the combinations of all the locks to a string of zeros. The codes for launching US nuclear missiles apparently stayed set at 00000000 until the late 1970s. The reason? Strategic Air Command did not want there to be any problems or delays in launching the nuclear missiles caused by a more complex set of numbers.

McNamara apparently did not know that the locks he had ordered to be installed on nuclear weapons were largely worthless, and that the military with direct control of the weapons were evading official instructions for securing nuclear missiles. He only learned of this from Blair in January 2004. McNamara was outraged. But, as Blair observed, this is but "one of a long litany of items pointing to the ignorance of presidents and defense secretaries and other nuclear security officials about the true state of nuclear affairs".

Wayward nukes

Problems with securing nuclear weapons are not a matter of Cold War history. In August this year, six US nuclear-armed cruise missiles were inadvertently loaded onto a bomber at Minot Air Force Base in North Dakota and flown across the country to Barksdale Air Force Base in Louisiana. The cruise missiles remained fitted to the bomber for 24 hours before it took off and for hours after it landed without anyone realizing that it was carrying nuclear warheads. It was "an unprecedented string of procedural failures", according to General Richard Newton, the assistant deputy chief of staff for operations for the US Air Force.

As nuclear analyst Hans Kristensen has pointed out, the incident showed "the apparent break-down of nuclear command and control for the custody of the nuclear weapons". Put simply, the ground crews did not know, or bother to check, that they were loading nuclear weapons on a plane; the bomber's pilot and crew did not know or bother to check that they were carrying nuclear weapons; the respective base commanders did not know nuclear weapons were leaving or arriving; and, the national authorities responsible for nuclear weapons did not know where these nuclear weapons were or that they were being moved across the country. The weapons were to all intents and purposes lost for about 36 hours.

Gates, guards and guns

A key concern about nuclear security in Pakistan is the risk of radical Islamist militants making a bid for its nuclear weapons or its stock of the materials with which to make nuclear weapons. There is a growing armed insurgency in the areas bordering Afghanistan that has been spreading across Pakistan's North-West Frontier Province and into its major cities.

The United States, which has much less of a threat to worry about, has had plenty of problems trying to makes sure terrorists could not get their hands on the materials with which to make nuclear weapons. The US Department of energy currently spends $1.3 billion a year on securing its facilities that contain significant amounts of nuclear weapons-useable materials through the use of fences, guards, cameras, intrusion sensors, and so on. But many of these facilities are not required or able to protect against a 19-strong group of attackers such as were involved in the September 11, 2001, aircraft hijackings.

The failure to secure weapons materials at US facilities has been exposed by exercises in which simulated attackers carried away material sufficient to make a weapon. Reports show that the security at the sites fails more than 50% of the time. The Project on Government Oversight, an independent watch dog group, has revealed for instance that during a mock attack on Los Alamos National Laboratory in New Mexico, a US Special Forces team "was able to steal enough weapons-grade uranium for numerous nuclear weapons". In a subsequent security test at the same site, the "mock terrorists gained control of sensitive nuclear materials which, if detonated, would have endangered significant parts of New Mexico, Colorado and downwind areas".

Nuclear know-how

A particular worry about Pakistan is that scientists and engineers within its nuclear program may share weapons information with other countries or Islamist groups. The story of Abdul Qadeer Khan is all too familiar, as is that of several senior former Pakistani nuclear scientists who were found to have met with the al-Qaeda leadership in Afghanistan.

In the United States, there is a long and troubling history of nuclear weapons information going missing from the nuclear weapons laboratories, and ending up in unexpected places. The first and most famous atomic spy was Klaus Fuchs, who passed on the secrets of the US nuclear weapons project to the Soviet Union during World War II. Fuchs claimed he did it for ideological reasons.

More recently, the Project on Government Oversight has compiled a list of reports on the loss of classified information from the US nuclear complex. They found 17 incidents in 2004 alone in which classified information from Los Alamos was sent using unclassified networks. This led the Department of Energy, which manages the U.S. nuclear weapons program, to shut down all operations involving removable hard drives, laptops, CDs and DVDs, flash drives and such like, across the entire complex.

In one dramatic case, missing computer disks containing nuclear weapons information were lost and mysteriously found several weeks later behind a copy machine. In another case, classified information about nuclear weapons designs was found during a raid on a drug den. In January 2007, there was an incident in which a highly classified email message about nuclear weapons was sent unsecured by a senior Pentagon nuclear adviser and then forwarded by others. It has been described as "the most serious breach of US national security".

Nuclear people

History suggests that the most enduring problem for the security of nuclear weapons, materials and information, is the people who work in and manage the nuclear weapons complex. The United States has a nuclear weapons personnel reliability program which screens people who are allowed to work with nuclear weapons. Pakistan says it has adopted a similar program.

An independent study of the US nuclear personnel reliability program found that between 1975 and 1990, the United States disqualified annually between 3% and 5% of the military personnel it had previously cleared for working with nuclear weapons. These people were removed on the grounds of drug or alcohol problems, conviction for a serious crime, negligence, unreliability or aberrant behavior, poor attitude, and behavior suggesting problems with law and authority.

Problems like this continue. In October 2006, a Los Alamos lab worker with the "highest possible security clearance" was arrested in a cocaine drug bust. One year later, the commander of a US nuclear submarine was removed from his duties after it was discovered that the ship's crew failed to do daily safety checks on its nuclear reactor for a month and then falsified the daily records to cover up the lapse.

False security

After 60 years of living with the bomb, the United States has failed to get its own nuclear house in order. It continues to suffer serious problems with securing its own nuclear weapons, nuclear materials and weapons-related information. Showing no sign of having learned from its own mistakes, the United States may only end up encouraging a false sense of security and confidence about nuclear weapons security in Pakistan.

The only sure way to secure nuclear weapons and materials is not to have them. The only way to be sure that nuclear weapons scientists do not pass information is to forbid scientists from working on such weapons. Anything short of that is taking a risk and being willing to pay the price for living in a nuclear-armed world.

Zia Mian, a Foreign Policy In Focus columnist, directs the Project on Peace and Security in South Asia at the Program on Science and Global Security, at Princeton University's Woodrow Wilson School for Public and International Affairs.

(Posted with permission from Foreign Policy in Focus)

The Collapse of the Modern Day Banking System

Staring Into the Abyss

By MIKE WHITNEY

December 17, 2007

Counterpunch.org

http://www.counterpunch.org/

Stocks fell sharply last week on news of accelerating inflation which will limit the Federal Reserves ability to continue cutting interest rates. On Tuesday the Dow Jones Industrials tumbled 294 points following the Fed's announcement of a quarter point cut to the Fed Funds rate. On Friday, the Dow dipped another 178 points when government figures showed consumer prices had risen 0.8 per cent last month after a 0.3 per cent gain in October. The stock market is now lurching downward into a "primary bear market". There has been a steady deterioration in retail sales, commercial real estate, and the transports. The financial industry is going through a major retrenchment, losing more than 25 per cent in aggregate capitalization since July. The real estate market is collapsing. California Gov. Arnold Schwarzenegger announced on Friday that he will declare a "fiscal emergency" in January and ask for more power to deal with the $14 billion budget shortfall from the meltdown in subprime lending.

Economists are beginning to publicly acknowledge what many market analysts have suspected for months; the nation's economy is going into a tailspin.

Morgan Stanley's Asia Chairman, Stephen Roach, made this observation in a New York Times op-ed on Sunday:

This recession will be deeper than the shallow contraction earlier in this decade. The dot-com-led downturn was set off by a collapse in business capital spending, which at its peak in 2000 accounted for only 13 percent of the country's gross domestic product. The current recession is all about the coming capitulation of the American consumer - whose spending now accounts for a record 72 percent of G.D.P.

Most people have no idea how grave the present situation is or the disaster the country will face if trillions of dollars of over-leveraged bonds and equities begin to unwind. There's a widespread belief that the stewards of the system - Bernanke and Paulson - can somehow steer the economy through this "rough patch" into calm waters. But they cannot, and the presumption shows a basic misunderstanding of how markets work. The Fed has no magical powers and will not allow itself to be crushed by standing in the path of a market-avalanche. As foreclosures and bankruptcies increase; stocks will crash and the fed will step aside to safety.

In the last few weeks, Bernanke and Paulson have tried a number of strategies that have failed. Paulson concocted a plan to help the major investment banks consolidate and repackage their nonperforming mortgage-backed junk into a "Super SIV" to give them another chance to unload their bad investments on the public. The plan was nothing more than a public relations ploy which has already been abandoned by most of the key participants. Paulson's involvement is a real black eye for the Dept of the Treasury. It makes it look like he's willing to dupe investors as long as it helps his d Wall Street buddies.

Paulson also put together an "industry friendly" rate freeze that is supposed to help struggling homeowners avoid foreclosure. But the plan falls well short of providing any meaningful aid to the estimated 3.5 million homeowners who are facing the prospect of defaulting on their loans if they don't get government assistance. Recent estimates by industry experts say that Paulson's plan will only help 140,000 mortgage holders, leaving millions of others to fend for themselves. Paulson has proved over and over that he is just not up to the task of confronting an economic challenge of this magnitude head-on.

Fed chief Bernanke hasn't done much better than Paulson. His three-quarter point cut to the Fed's Funds rate hasn't lowered interest rates on mortgages, stimulated greater home sales, stabilized the stock market or helped banks deal with their massive debt-load. It's been a flop from start to finish. All it's done is weaken the dollar and trigger a wave of inflation. In fact, government figures now show energy prices are rising at 18.1 per cent annually. Bernanke is apparently following Lenin's supposed injunction  though there's no conclusive evidence he actually said it -- that "the best way to destroy the Capitalist System is to debauch the currency."

On Wednesday, the Federal Reserve initiated a "coordinated effort" with the Bank of Canada, the Bank of England, the European Central Bank, the and the Swiss National Bank to address the "elevated pressures in short-term funding of the markets." The Fed issued a statement that "it will make up to $24 billion available to the European Central Bank (ECB) and Swiss National Bank to increase the supply of dollars in Europe." (Bloomberg) The Fed will also add as much as $40 billion, via auctions, to increase cash in the U.S. Bernanke is trying to loosen the knot that has tightened Libor (London Interbank Offered Rate) rates in England and reduced lending between banks. The slowdown is hobbling growth and could send the world into a recessionary spiral. Bernanke's "master plan" is little more than a cash giveaway to sinking banks. It has scant chance of succeeding. The Fed is offering $.85 on the dollar for mortgage-backed securities (MBSs) and collateralized debt obligations (CDOs) that sold last week in the E*Trade liquidation for $.27 on the dollar. At the same time, the Fed has promised to keep the identities of the banks that are borrowing these emergency funds secret from the public. The Fed is conducting its business like a bookie.

Unfortunately, the Fed bailout has achieved nothing. Libor rates---which are presently at seven-year highs---have not come down at all. This is causing growing concern among the leaders of the Central Banks around the world, but there's really nothing they can do about it. The banks are hoarding cash to meet their capital requirements. They are trying to compensate for the loss of value to their (mortgage-backed) assets by increasing their reserves. At the same time, the system is clogged with trillions of dollars of bad paper which has brought lending to a halt. The huge injections of liquidity from the Fed have done nothing to improve lending or lower interbank rates. It's been a flop. The market is driving interest rates now. If the situation persists, the stock market will crash.

Staring Into the Abyss

One of Britain's leading economists, Peter Spencer, issued a warning on Saturday:

The Government must suspend a set of key banking regulations at the heart of the current financial crisis or risk seeing the economy spiral towards a future that could make 1929 look like a walk in the park.

Spencer is right. The banks don't have the money to loan to businesses or consumers because they're trying to raise more cash to meet their capital requirements on assets that continue to be downgraded. (The Fed may pay $.85 on the dollar, but investors are unwilling to pay anything at all.)Spencer correctly assumes that the reason the banks have stopped lending is not because they "distrust" other banks, but because they are capital-strapped from all their "off balance" sheets shenanigans. If the Basel regulations aren't modified, money markets will remain frozen, GDP will shrink, and there'll be a wave of bank closings.

Spencer said:

The Bank is staring into the abyss. The Financial Services Authority must go round and check that all banks are solvent, and then it should cut the Basel capital requirement level from 8pc to about 6pc. ("Call to Relax Basel Banking Rules, UK Telegraph)

Spencer confirms what we already knew; the banks are seriously under-capitalized and will come under growing pressure as hundreds of billions of dollars of mortgage-backed securities (MBSs) and collateralized debt obligations (CDOs) continue to lose value and have to be propped up with additional capital. The banks simply don't have the resources and there's going to be a day of reckoning.

Pimco's Bill Gross put it like this: "What we are witnessing is essentially the breakdown of our modern day banking system." Gross is right, but he only covers a small portion of the problem.

The economist Ludwig von Mises is more succinct in his analysis:

There is no means of avoiding the final collapse of a boom brought on by credit expansion. The question is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.

The basic problem originated with the Federal Reserve when former Fed chief Alan Greenspan lowered interest rates below the rate of inflation for 31 months straight which pumped trillions of dollars of low interest credit into the financial system and ignited a speculative frenzy in real estate. Greenspan has spent a great deal of time lately trying to avoid any blame for the catastrophe he created. He is a first-rate "buck passer". In Wednesday's Wall Street Journal, Greenspan scribbled out a 1,500-word defense of his actions as head of the Federal Reserve, pointing the finger at everything from China's "low cost workforce" to "the fall of the Berlin Wall". The essay was typical Greenspan gibberish. In his trademark opaque language; Greenspan tiptoes through the well-documented facts of his tenure as Fed chief to absolve himself of any personal responsibility for the ensuing disaster.

Greenspan's apologia is a masterpiece of circuitous logic, deliberate evasion and utter denial of reality. He says:

I do not doubt that a low U.S. federal-funds rate in response to the dot-com crash, and especially the 1 per cent rate set in mid-2003 to counter potential deflation, lowered interest rates on adjustable-rate mortgages (ARMs) and may have contributed to the rise in U.S. home prices. In my judgment, however, the impact on demand for homes financed with ARMs was not major.

"Not major"? 3.5 million potential foreclosures, 11-month inventory backlog, plummeting home prices, an entire industry in terminal distress pulling down the global economy is not major?

But Greenspan is partially correct. The troubles in housing cannot be entirely attributed to the Fed's "cheap credit" monetary policies. They were also nursed along by a Doctrine of Deregulation which has permeated US capital markets since the Reagan era. Greenspan's views on how markets should function were -- to great extent -- shaped by this non-interventionist/non-supervisory ideology which has created enormous equity bubbles and imbalances. The former-Fed chief's support for adjustable-rate mortgages (ARMs) and subprime lending shows that Greenspan thought of himself as more as a cheerleader for the big market-players than an impartial referee whose job was to monitor reckless or unethical behavior.

Greenspan also adds this revealing bit of information in his article:

The value of equities traded on the world's major stock exchanges has risen to more than $50 trillion, double what it was in 2002. Sharply rising home prices erupted into major housing bubbles world-wide, Japan and Germany (for differing reasons) being the only principal exceptions." ("The Roots of the Mortgage Crisis", Alan Greenspan, Wall Street Journal)

This admission proves Greenspan's culpability. If he knew that stock prices had doubled their value in just 3 years, then he also knew that equities had not risen due to increases in productivity or demand.(market forces) The only reasonable explanation for the asset inflation, therefore, was monetary policy. As his own mentor, Milton Friedman famously stated, "Inflation is always and everywhere a monetary phenomenon". Any capable economist would have known that the explosion in housing and equities prices was a sign of uneven inflation. Now that the bubble has popped, inflation is spreading like mad through the entire economy.

Greenspan is a very sharp man. It is crazy to think he didn't know what was going on. This is basic economic theory. Of course he knew why stocks and housing prices were skyrocketing. He was the one who put the dominoes in motion with the help of his printing press.

But Greenspan's low interest credit is only part of the equation. The other part has to do with way that the markets have been transformed by "structured finance".

What's so destructive about structured finance is that it allows the banks to create credit "out of thin air", stripping the Fed of its role as controller of the money supply. David Roache explains how this works in an excerpt from his book "New Monetarism" which appeared in the Wall Street Journal:

The reason for the exponential growth in credit, but not in broad money, was simply that banks didn't keep their loans on their books any more-and only loans on bank balance sheets get counted as money. Now, as soon as banks made a loan, they "securitized" it and moved it off their balance sheet.

There were two ways of doing this. One was to sell the securitized loan as a bond. The other was "synthetic" securitization: for example, using derivatives to get rid of the default risk (with credit default swaps) and lock in the interest rate due on the loan (with interest-rate swaps). Both forms of securitization meant that the lending bank was free to make new loans without using up any of its lending capacity once its existing loans had been "securitized."

So, to redefine liquidity under what I call New Monetarism, one must add, to the traditional definition of broad money, all the credit being created and moved off banks' balance sheets and onto the balance sheets of nonbank financial intermediaries. This new form of liquidity changed the very nature of the credit beast. What now determined credit growth was risk appetite: the readiness of companies and individuals to run their businesses with higher levels of debt. (Wall Street Journal)

The banks have been creating trillions of dollars of credit (by originating mortgage-backed securities, collateralized debt obligations and asset-backed commercial paper) without maintaining the proportional capital reserves to back them up. That explains why the banks were so eager to provide mortgages to millions of loan applicants who had no documentation, no income, no collateral and a bad credit history. They believed there was no risk, because they were making enormous profits without tying up any of their capital. It was, quite literally, money for nothing.

Now, unfortunately, the mechanism for generating new loans (and fees) has broken down. The main sources of bank revenue have either been seriously curtailed or dried up entirely. (Mortgage-backed) Commercial paper (ABCP) one such source of revenue, has decreased by a full-third (or $400 billion) in just 17 weeks. Also, the securitization of mortgage-backed securities is DOA. The market for MBSs and CDOs and other complex bonds has followed the Pterodactyl into the history books. The same is true of structured investment vehicles (SIVs) and other "off balance-sheet" swindles which have either gone under entirely or are presently withering with every savage downgrade in mortgage-backed bonds. The mighty juggernaut that was grinding out the hefty profits ("structured investments") has suddenly reversed and is crushing everything in its path.

The banks don't have the reserves to cover their downgraded assets and the Federal Reserve cannot simply "monetize" their bad bets. There's no way out. There are bound to be bankruptcies and bank runs. "Structured finance" has usurped the Fed's authority to create new credit and handed it over to the banks.

Now everyone will pay the price.

Investors have lost their appetite for risk and are steering clear of anything connected to real estate or mortgage-backed bonds. That means that an estimated $3 trillion of securitized debt (CDOs, MBSs and ASCP) will come crashing to earth delivering a violent blow to the economy.

It's not just the banks that will take a beating. As Professor Nouriel Roubini points out, the broker dealers, the investment banks, money market funds, hedge funds and mortgage lenders are in the crosshairs as well.

Non-bank institutions do not have direct access to the Fed and other central banks liquidity support and they are now at risk of a liquidity run as their liabilities are short term while many of their assets are longer term and illiquid; so the risk of something equivalent to a bank run for non-bank financial institutions is now rising. And there is no chance that depository institutions will re-lend to these to these non-banks the funds borrowed by central banks as these banks have severe liquidity problems themselves and they do not trust their non-bank counterparties. So now monetary policy is totally impotent in dealing with the liquidity problems and the risks of runs on liquid liabilities of a large fraction of the financial system. (Nouriel Roubini's Global EconoMonitor)

As the downgrades on CDOs and MBSs continue to accelerate, there'll likely be a frantic "flight to cash" by investors, just like the recent surge into US Treasuries. This could well be followed by a series of spectacular bank and non-bank defaults. The trillions of dollars of "virtual capital" that were miraculously created through securitzation when the market was buoyed-along by optimism will vanish in a flash when the market is driven by fear. In fact, the equity bubble has already been punctured and the process is well underway.

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

This disclosure reminds one of the situation in Iraq. As was pointed out at the time, the only reason Bush was willing to invade Iraq was because he knew they did not have WMD. Maybe this information will now be used to argue that the time is right to invade Iran.

Charles Ostman, Senior Fellow at the Institute for Global Futures, appeared on the coasttocoastam radio show saturday night (Dec. 8).

He maintained that the National Intelligence Estimate was released recently because those opposed to an attack on Iran had concluded that the only way to stop an imminent irresponsible operation by Bush/Cheney against Iran was to make the NIE report public.

He stated that those opposed to an attack became alarmed several months ago when it was revealed that six nuclear bombs had somehow been flown to a base in Louisiana, which was a jump-off point for U.S. Mideast military operations. He said that the mysterious "unauthorized" six nuclear bombs were either to be used in a false-flag operation by Bush/Cheney or in some other operation that would have given them the excuse to attack Iran.

Those in the intelligence community opposed to such an attack now believe that the release of the NIE report means such a U.S. military operation has been aborted.

In my opinion, with Bush/Cheney being sidelined by the NIE report, the ball has now shifted to Israel, which will devise a way to instigate a war with Iran.

U.S. Intelligence Says Iran Has Ended Nuke Program

A new consensus assessment from all sixteen U.S. intelligence agencies has concluded Iran shut down its nuclear weapons program more than four years ago. The National Intelligence Estimate starkly contradicts the Bush administration’s claims Iran is actively pursuing a nuclear bomb. National Security Advisor Stephen Hadley announced the findings in Washington.

National Security Advisor Stephen Hadley: “The IC (Intelligence community) has high confidence, high confidence, that Iran had a covert nuclear weapons program that it has never acknowledged and continues to deny. The intelligence community has high confidence that Iran halted its covert nuclear weapons program in the fall of 2003 and they have moderate confidence that it had not restarted that program as of mid-2007."

The assessment goes on to conclude spy agencies do not know whether Iran intends to develop nuclear weapons. It effectively rejects a National Intelligence Estimate two years ago that claimed Iran was pursuing a nuclear bomb through a secret program. The estimate also stands in stark contrast to recent language from President Bush and Vice President Dick Cheney. In October, Bush warned of a “World War III” if Iran continued with alleged nuclear activities. According to the Washington Post, the Bush administration has maintained its threatening rhetoric despite hearing of the intelligence community’s skepticism as early as July. Despite the findings, Hadley and other administration officials say they remain concerned Iran will attempt to develop a bomb.

Ahmadinejad Calls for Gulf Pact

Hours before the new intelligence report was released, Iranian President Mahmoud Ahmadinejad spoke at a summit of Gulf Arab states where he proposed a regional security pact.

Iranian President Mahmoud Ahmadinejad: “We propose the establishment of economic and security pacts and institutions among the seven states here. The pacts should serve the people of our region more than ever before.’’

UN Weapons Inspectors for Iraq Closing Office

The new report was released just over five years since the erroneous 2002 intelligence estimate that claimed Iraq possessed chemical and biological weapons and was intent on restarting its nuclear program. The report proved mostly false but was used as the basis to drum up Congressional support for war. Intelligence officials interviewed by the New York Times say the specter of the 2002 report hung over their activities. The report also comes as the UN’s weapon inspection agency for Iraq is preparing to close its doors. On Monday, UNMOVIC director Brian Mullady said looking back, his main regret is not having prevented a war.

UNMOVIC director Brian Mullady: “I guess my nostalgia is that if we had been more trusted by the world and the fact that we were doing a good job over there. UNSCOM had done a good job. UNSCOM destroyed more missiles than the forces did during the 1991 war. If we had more trust, more people to say yes, this is probably true and more doubt about what the U.S. and the British position was, maybe we could have prevented a war."

www.democracynow.org Dec. 4, 07

From Jim Hoagland's Washington Post column reprinted in the Houston Chronicle of Dec. 9, 2007 titled, "Bush is to blame for collapse of presidential authority":

"The intelligence community -- and particularly the CIA, which was conceived as an exclusive tool for the president's use in making and executing his most difficult decisions -- has today made itself a separate agency of government, answerable essentially to itself. The National Intelligence Estimate makes clear that for better or worse, spy agencies today make the finished product of policy rather than providing the raw materials."

Recall that both Edwin A. Walker and Otto F. Otepka retained Dr. Robert J. Morris, from the Dallas John

Birch Society and YAF, as their lawyers during a time of national crisis as well. Walker, after the Ole

Miss Riots and Otepka after being fired by Dean Rusk, Dean Acheson and John F. Kennedy for leaking

classified documents, to SISS, I believe it was, related to the confirmation hearings for Walt Whitman Rostow.

Otepka, for all intents and purposes, along with Ms. Florence(?) Knight of the passport office, known as

the "Dragon Lady" would have had to rule on each and every one of Lee Harvey Oswald's passport

applications and on his readmission into the USA after declaring himself to be a defector. Otepka

even admitted that he had the Oswald portfolio on his desk even before he reapplied for admission

to the USA. Any comments here?

And in early 1964, William F. Buckley, Jr. presented the YAF Man of the Year award to Robert J. Morris.

I wonder if Doug could share with us exactly WHY Robert J. Morris was chosen for this award. I can see

NOTHING that Morris did, absent his obvious role in the JFK conundrum and assassination, which would have

warranted such a prestigious award from Mr. Buckley.

Also, the Senior William F. Buckley, shortly after World War I became the first person to utilize private funding

to intervene in the Foreign Affairs of a sovereign nation, Mexico, using the assistance of relatives of the former

U. S. Treasury Secretary under Reagan and Bush one Nicholas F. Brady, Jr. the college classmate of George W.

Bush at The Yale Skull and Bones Society. Does anyone have any insights to offer in regards to this little factoid?

This was during the Buckley attempts to stave off nationalization of Pantapec Oil by Mexico, which apparently failed

as I recollect.

And lastly, it now appears that Clendenin J. Ryan, Sr. the father of Clendenin J. Ryan, Jr. Caddy's roommate at

Georgetown, who had inherited a fortune of about $100,000,000 from his father just like Charles Edison did from his

father, Thomas Alva Edison, were both involved with the formation and/or funding of Young Americans for

Freedom in the early 1960's. Ryan, Sr. was also the primary financial sponsor of the antics and campaigns of

OSS Colonel Ulius "Pete" Amoss, from Baltimore, who ran the ISI Foundation there.

And finally, it was also Clendenin J. Ryan, Sr. who led the takeover attempts launched against ITT shortly before

it became a dedicated CIA proprietary in South America and Latin America. Any insights into these events?

Is this why Richard Condon, in The Manchurian Candidate, chose to mention most of the persons involved with

this original sojourn into Mexico under General John J. Pershing including George A. Draper, Wick Draper's uncle,

James Hugh Angleton, Jim Angleton's father who gave birth to Jim in Mexico to a Mexican mother, William F.

Buckley, Jr. mentioned as "...that fascinating young man who wrote about man and God at Yale." and Charles

A. Willoughby himself who is almost everyone's favorite candidate along with Robert J. Morris as 2 of the Gang

of Five involved with plotting JFK's demise?

In answer to the question posed in your second paragraph above, I am at loss to offer an explanation as to the circumstances that led to YAF presenting an award to Robert Morris in 1974. At that time I was attending New York University Law School and working in the New York City office of Governor Nelson Rockefeller, for Lt.-Gov. Malcolm Wilson. Between hitting the law books and working I had no time for YAF in those days.

Actually it was in 1964 as posted above and not 1974. Were you involved with YAF in 1964 at all and were you ever invited to these YAF Man of the Year presentations? Could you speculate for us at least based on what you know about Dr. Robert J. Morris and his roles in The John Birch Society, his YAF work with Larrie Schmidt and his part in the Wanted For Treason Poster? Did you ever meet this man in person? What do you know about him? Can you ask Bill Buckley any of these questions as well?

I apologize for misstating the year. In 1964 I was in law school. 1974 was post-Watergate. I was not active in YAF in 1964 for the reasons stated in my prior reply. I never met Robert Morris and am not in possession of any information that would answer the questions you pose. Bill Buckley is still suffering from the trauma of the recent death of his wife, Pat, and this coupled with his extremely poor health seem to present a circumstance whereby it would not be appropriate to bother him with any questions.

Recall that both Edwin A. Walker and Otto F. Otepka retained Dr. Robert J. Morris, from the Dallas John

Birch Society and YAF, as their lawyers during a time of national crisis as well. Walker, after the Ole

Miss Riots and Otepka after being fired by Dean Rusk, Dean Acheson and John F. Kennedy for leaking

classified documents, to SISS, I believe it was, related to the confirmation hearings for Walt Whitman Rostow.

Otepka, for all intents and purposes, along with Ms. Florence(?) Knight of the passport office, known as

the "Dragon Lady" would have had to rule on each and every one of Lee Harvey Oswald's passport

applications and on his readmission into the USA after declaring himself to be a defector. Otepka

even admitted that he had the Oswald portfolio on his desk even before he reapplied for admission

to the USA. Any comments here?

And in early 1964, William F. Buckley, Jr. presented the YAF Man of the Year award to Robert J. Morris.

I wonder if Doug could share with us exactly WHY Robert J. Morris was chosen for this award. I can see

NOTHING that Morris did, absent his obvious role in the JFK conundrum and assassination, which would have

warranted such a prestigious award from Mr. Buckley.

Also, the Senior William F. Buckley, shortly after World War I became the first person to utilize private funding

to intervene in the Foreign Affairs of a sovereign nation, Mexico, using the assistance of relatives of the former

U. S. Treasury Secretary under Reagan and Bush one Nicholas F. Brady, Jr. the college classmate of George W.

Bush at The Yale Skull and Bones Society. Does anyone have any insights to offer in regards to this little factoid?

This was during the Buckley attempts to stave off nationalization of Pantapec Oil by Mexico, which apparently failed

as I recollect.

And lastly, it now appears that Clendenin J. Ryan, Sr. the father of Clendenin J. Ryan, Jr. Caddy's roommate at

Georgetown, who had inherited a fortune of about $100,000,000 from his father just like Charles Edison did from his

father, Thomas Alva Edison, were both involved with the formation and/or funding of Young Americans for

Freedom in the early 1960's. Ryan, Sr. was also the primary financial sponsor of the antics and campaigns of

OSS Colonel Ulius "Pete" Amoss, from Baltimore, who ran the ISI Foundation there.

And finally, it was also Clendenin J. Ryan, Sr. who led the takeover attempts launched against ITT shortly before

it became a dedicated CIA proprietary in South America and Latin America. Any insights into these events?

Is this why Richard Condon, in The Manchurian Candidate, chose to mention most of the persons involved with

this original sojourn into Mexico under General John J. Pershing including George A. Draper, Wick Draper's uncle,

James Hugh Angleton, Jim Angleton's father who gave birth to Jim in Mexico to a Mexican mother, William F.

Buckley, Jr. mentioned as "...that fascinating young man who wrote about man and God at Yale." and Charles

A. Willoughby himself who is almost everyone's favorite candidate along with Robert J. Morris as 2 of the Gang

of Five involved with plotting JFK's demise?

In answer to the question posed in your second paragraph above, I am at loss to offer an explanation as to the circumstances that led to YAF presenting an award to Robert Morris in 1974. At that time I was attending New York University Law School and working in the New York City office of Governor Nelson Rockefeller, for Lt.-Gov. Malcolm Wilson. Between hitting the law books and working I had no time for YAF in those days.

Grasping at Stock Market Straws

by Gary North

www.lewrockwell.com

On Tuesday, November 27, the Dow Jones Industrial Average rose by 215 points. The next day, it rose by 330 points.

Why?

The financial press had an immediate answer on Tuesday. The news had broken that morning of the offer by the government of Abu Dhabi to pay $7.5 billion for 4.9% of America's largest and most prestigious bank, Citigroup.

The news reports failed to explain the 4.9% figure. It has to do with U.S. government rules against allowing any single purchaser of stock to buy more than 4.9% without getting permission from the U.S. government.

Abu Dhabi bought the limit of what it was allowed to buy. I have no doubt that it could have negotiated more than 4.9% for its $7.5 billion if there had not been a government-imposed limit, which would have eaten up precious time. The participants on both sides recognized that the bank was facing an emergency. It had squandered at least this much money and possibly much more in its ill-fated subprime mortgage lending schemes. Without warning, the bank in August suffered horrendous losses. There is no way that Citigroup would have sold 4.9% of the company last July. Citigroup was fat and sassy. Its president, the now-departed Charles Prince, was riding high.

The stock fund managers started buying as soon as the news hit. The official interpretation: "This decision by Abu Dhabi indicates that America's largest bank is in good shape. This is the end of the subprime crisis."

Here is my interpretation:

A small percentage of a gigantic pool of oil-generated capital, which is managed by government bureaucrats in a city-state whose nation did not exist as recently as 1970, was used to buy 4.9% of the largest bank in the United States because this purchase was perceived as a better deal than buying T-bills denominated in a falling dollar.

Here is a city-state that until half a century ago was an underdeveloped town in a desert. The Wiki Encyclopedia describes it in 1958.

Into the mid-20th century, the economy of Abu Dhabi continued to be sustained mainly by camel herding, production of dates and vegetables at the inland oases of Al Ain and Liwa Oasis, and fishing and pearl diving off the coast of Abu Dhabi city, which was occupied mainly during the summer months. Most dwellings in Abu Dhabi city were, at this time constructed of palm fronds (barasti), with the wealthier families occupying mud huts. The growth of the cultured pearl industry in the first half of the twentieth century created hardship for residents of Abu Dhabi as pearls represented the largest export and main source of cash earnings.

Today, the residents of Abu Dhabi are doing better financially. The net worth of each of the 420,000 citizens is $17 million. Of course, they can't actually get their hands on this money. It is administered on their behalf by salaried bureaucrats.

These bureaucrats are in charge of allocating billions of dollars worth of oil revenue. They have decided to get into the banking business, a profession that is prohibited by Islamic law: usury taking. They have no experience in banking. But they thought, "Gee, let's buy part of a bank that is suffering major capital losses." Result? The Dow rose 215 points. Why does Abu Dhabi have this kind of money to invest? Because oil is up, and the world's economy is repeating the experience of 1973–79: a massive transfer of wealth to Arab, Iranian, and other oil kingdoms. To this group, add Russia, which now has almost $500 billion in foreign currencies, third only to China and Japan.

In 1988, Gorbachev went begging to the West for money. Today, the West is at the mercy of the good graces of Putin. "Please sell us oil. Please sell us natural gas. We'll be good. We promise!"

The only thing that will send oil back to 2006's level ($55) is a worldwide recession. Supply and demand favor the oil exporters from now on. This is permanent. The world's economic power will shift inexorably to the oil kingdoms and to China.

Abu Dhabi's purchase points to the future: the sale of America's economic crown jewels to foreign owners. The profits from American-based companies will then flow to foreigners who own the companies. This scenario is unlikely to change in my lifetime or yours.

Yet this purchase caused a 215-point rally in the Dow. Investors are short-sighted. They regard as a cause of celebration the most visible private transfer of American capital to foreigners in our lifetimes.

WEDNESDAY

On Wednesday, November 28, the Dow climbed 330 points. Why? Because of a vague remark by a member of the FED's Board of Governors in a speech to the Council on Foreign Relations. He said that the FED should be pragmatic. So what? This has been the FED's position since 1933. Here is what he said: "In my view, these uncertainties require flexible and pragmatic policymaking – nimble is the adjective I used a few weeks ago."

This comment was interpreted to mean that the FED will lower the target rate for overnight bank loans by another .25 percentage point. Other than serving as a symbol of the FED's commitment to liquify the banks by a small percent, such a decline will have no impact on the massive, multi-billion dollar losses that have been sustained by the financial sector and which will continue, everyone admits, through 2008 and maybe into 2009.

Kohn's actual speech was anything but reassuring. He began with an open admission of what is now apparent: financial experts don't know what is happening in the capital markets.

Central banks, other authorities, and private-market participants must make decisions based on analyses made with incomplete information and understanding. The repricing of assets is centered on relatively new instruments with limited histories – especially under conditions of stress; many of them are complex and have reacted to changing circumstances in unanticipated ways; and those newer instruments have been held by a variety of investors and intermediaries and traded in increasingly integrated global markets, thereby complicating the difficulty of seeing where risk is coming to rest.

In other words, those AAA-rated credit instruments back in April may today be worth approximately what Abu Dhabi was worth in 1958.

The economy is facing uncertainty on a massive scale. Notice his phrase, "especially adverse outcomes."

Another consequence of operating under a high degree of uncertainty is that, more than usually, the potential actions the Federal Reserve discusses have the character of "buying insurance" or managing risk – that is, weighing the possibility of especially adverse outcomes. The nature of financial market upsets is that they substantially increase the risk of such especially adverse outcomes while possibly having limited effects on the most likely path for the economy.

When we see this sort of analysis from a high official, we had better understand what he is saying. Here is what he is saying:

"When great chunks of that AAA-rated paper turns into something suitable for fan-hitting, don't blame the Federal Reserve when it finally hits."

Then he launched into a theme made popular by Alan Greenspan: moral hazard. "Moral hazard" refers to a mental outlook that says, "The Federal Reserve will intervene to save the capital markets whenever it looks as though those markets are about to fall apart." Greenspan assured us again and again that this was not the FED's goal at all. Then he and the FOMC inflated the dollar, lowered the Federal Funds rate, and proved that the moral hazard effect was alive and well at the FED, as always. Kohn continued:

Central banks seek to promote financial stability while avoiding the creation of moral hazard. People should bear the consequences of their decisions about lending, borrowing, and managing their portfolios, both when those decisions turn out to be wise and when they turn out to be ill advised. At the same time, however, in my view, when the decisions do go poorly, innocent bystanders should not have to bear the cost.

Innocent bystanders: you know, the average Joe investor. Well, maybe the average head of Citigroup, who got a severance settlement of about $40 million. It's hazardous out there!

Asset prices will eventually find levels consistent with the economy producing at its potential, consumer prices remaining stable, and interest rates reflecting productivity and thrift.

That's what we need: productivity and thrift! And how will we get more productivity and greater thrift? By selling off our capital assets to oil-exporting governments that confiscated the oil in the name of the People 70 years ago.

To be sure, lowering interest rates to keep the economy on an even keel when adverse financial market developments occur will reduce the penalty incurred by some people who exercised poor judgment. But these people are still bearing the costs of their decisions and we should not hold the economy hostage to teach a small segment of the population a lesson.

Bearing the cost of their decisions, yes. Like the former head of Merrill Lynch, who walked away with $160 million for his trouble. It's tough being out there in the trenches!

The Federal Reserve's reduction of the discount rate penalty by 50 basis points in August followed this model. It was intended not to help particular institutions but rather to open up a source of liquidity to the financial system to complement open market operations, which deal with a more limited set of counterparties and collateral.

The "financial system," yes. But how was this accomplished in August? By lowering interest rates that banks charge to reach other, i.e., lowering capital costs for commercial banks. Banks, in fedspeak, are "the financial system." Unfortunately, things are looking a little dicey.

However, the increased turbulence of recent weeks partly reversed some of the improvement in market functioning over the late part of September and in October. Should the elevated turbulence persist, it would increase the possibility of further tightening in financial conditions for households and businesses. Heightened concerns about larger losses at financial institutions now reflected in various markets have depressed equity prices and could induce more intermediaries to adopt a more defensive posture in granting credit, not only for house purchases, but for other uses a well.

In other words, November's data point to a possible credit crunch, or, as he put it, "a more defensive posture in granting credit." How far will the ripple effect spread? He doesn't know.

The underlying causes of the persistence of relatively wide-term funding spreads are not yet clear. Several factors probably have been contributing. One may be potential counterparty risk while the ultimate size and location of credit losses on subprime mortgages and other lending are yet to be determined.

Do you recognize the phrase, "counterparty risk"? No? Let me clarify. It refers to contractual guarantees by major financial institutions to compensate holders of bonds and other credit assets if the market creates losses for them. Sadly, the net worth of most of the guarantors is far less than the contractual obligations incurred. Then who is holding the bag? Nobody knows: ". . . the ultimate size and location of credit losses on subprime mortgages and other lending are yet to be determined."

Finally, banks may be worried about access to liquidity in turbulent markets. Such a concern would lead to increased demands and reduced supplies of term funding, which would put upward pressure on rates.

What would be the effect of upward pressure on rates? A fall in the market price of bonds. Then the bond holders will contact the "counterparties" and ask them to cut a check for the loss.

If you do not understand what this means, think "fan."

All of this was the groundwork for Kohn's statement that caused a 330-point rise in the Dow.

In my view, these uncertainties require flexible and pragmatic policymaking – nimble is the adjective I used a few weeks ago. In the conduct of monetary policy, as Chairman Bernanke has emphasized, we will act as needed to foster both price stability and full employment.

He laid the groundwork to say that central banks are unable to do much about what is happening, because nobody knows what is happening, or to whom, or when it will end.

This is not the stuff of a 36,000 Dow. This is the stuff of stock fund managers' optimism, which as recently as July was shared by the head of Citigroup and the head of Merrill Lynch.

CONCLUSION

The investing community wants to believe that the FED and Abu Dhabi can change the fundamentals of the economy, thereby restoring confidence in the stock market. In other words, the fund managers believe that symbols are more fundamental than the reality of the highly leveraged, self-monitored debt market which has created so many liabilities that the solvency of some of America's largest banks is at stake.

The stock market will need many more interventions by Abu Dhabi and other Arab oil states, which now control the flow of funds America's capital markets.

The great fire sale has begun. Senior American managers have begun to sell the nation's seed corn to the Arabs. They will continue to do so as the economic agents of American people. The sale of 4.9% of Citigroup is a visible turning point.

Stock market investors cheered. They bought. Why? Because they expect to be able to sell later on to the Arabs.

This is the greater-fool strategy. "Buy now; sell to a fool later." But the greater fools are the American buyers who are planning to sell their claims to the future of America's productivity. The only way that the Arabs will turn out to be greater fools is if America ceases to be productive.

Without thrift, this is a real possibility. American households have been in a net negative position for two years. They are borrowing their way to the good life. In short, they are imitating the U.S. government.

This is not going to turn out well.

December 1, 2007

Gary North is the author of Mises on Money. Visit http://www.garynorth.com.He is also the author of a free 20-volume series, An Economic Commentary on the Bible.

Find this article at:

http://www.lewrockwell.com/north/north589.html

Good point, Mike. It does seem a bit of a coincidence, Doug, that, subsequent to your involvement in Watergate, you wrote two books that, at least on the surface, seemed designed to help the Republicans, and Gerry Ford in particular, retain control of the White House. Was this an honest reflection of your concerns at the time? Or were you encouraged to go in this direction? How did Washington work in 74-75? Does it still work that way today? Should we assume that most pro-Bush or anti-Bush or pro-Hilary or anti-Hillary books are being encouraged by forces behind the scenes?

Here is the background on my writing both The Hundred Million Dollar Payoff and subsequently

How They Rig Our Elections.

Both books were my own idea. No one suggested their topics to me.

They were both written by me in the years immediately following the breaking of the Watergate case in June 1972.

The Hundred Million Dollar Payoff, published in 1974, is 99 percent comprised of the systematic compilation of internal union documents that revealed how organized labor used its members’ dues money to engage in partisan political activity. These documents were obtained through legal discovery in a landmark federal case, George L Seay, et. at, v. Grand Lodge International Association of Machinists, et al.

As I wrote in the book’s Introduction, “One of the most significant revelations of the multifaceted Watergate scandal has been the number of corporations (perhaps as many as twenty) that contributed corporate funds to the reelection campaign for President Nixon....These contributions from corporate treasuries to the Nixon campaign are indefensible. Violations of the Federal Election Campaign Act should be prosecuted no matter who is involved – corporations, national banks, or labor organizations, all of which are covered by the act...One object of this book is to trace the sources of organized labor’s financial support of political activity.”

Because I was aware of the thousands of union documents that had been revealed in the Seay case, I conceived of the idea of writing a book that would, hopefully, bring some balance to the partisan political atmosphere that pervaded in the wake of Watergate.

I received a $15,000 grant from the Robert M Schuchman Memorial Foundation to write the book. Schuchman, while a student at Yale University Law School, was the first National Chairman of Young American for Freedom. He died at an early age while studying under Professor Milton Friedman at the University of Chicago.

As to how Gerald Ford came about to endorse the book:

(1) When Ford was serving as Vice President under Nixon, he sent me an unsolicited personal letter on his VP letterhead in 1974 complimenting me on "The Hundred Million Dollar Payoff."

(2) On the day he became President, after Nixon resigned, the Washington Star interviewed Ford. He said in reply to a question as to what book he was currently reading, that he every night before he went to bed he spent 15 minutes reading from my book, The Hundred Million Dollar Payoff, which he described as “a very serious study on the tremendous amount of political clout organized labor has.”

(3) I was invited to be the principal speaker on my book and on the political role of organized labor at an officially sanctioned luncheon sponsored by the 1976 Republican Convention in Kansas City. Before I was invited, someone in the White House telephoned me for material to support my statement that President Ford, who was to be nominated at the Convention, had praised my book. I sent that person in the White House the letter I had received from VP Ford and the Washington Star article. Once those were received, my invitation to speak was confirmed and officially announced.

The University of Oregon Library Archives in Eugene, Oregon contain my personal and professional papers, which include a ticket to the luncheon bearing the sponsorship by the Republican National Convention as well as the original letter from VP Ford to me and a copy of his interview that appeared in the Washington Star.

Elsewhere in the Forum I have described the moment when the Right Went Wrong. This occurred at a 1974 meeting of the Schuchman Foundation’s Board of Directors when Joseph Coors, President of Coors Beer, told the directors that they must follow his orders and those of his lackeys, Ed Fuelner and Paul Weyrich, or face retaliation. The Board refused to buckle to Coors’ demands. Subsequently Fuelner founded the Heritage Foundation and Weyrich founded the Committee for a Free Congress – both funded by Coors. These two organizations brought about the emergence of the Radical Right, which has been a calamity of the entire world and the driving force to curtail individual liberty and impose a police state. Only a few weeks ago President George W. Bush delivered a major address at the Heritage Foundation.

Friends lobbied for 'Deep Throat' to head FBI while he was leaking Watergate secrets

11/29/2007

Filed by Nick Juliano

www.rawstory.com

http://rawstory.com//printstory.php?story=8419

Newly released papers from Richard Nixon's White House files show the now-disgraced former president was urged to appoint Mark Felt -- the man who years later would be revealed as Deep Throat -- as the head of the FBI.

The National Security Archives released more than 10,000 pages of Nixon documents this week, including letters, postcards and telegrams that were sent as part of a lobbying campaign to see Felt, then the Bureau's No. 2 official, become FBI director after J. Edgar Hoover's death, according to the Associated Press.

"He has the integrity, the ability, the experience and the image to insure that our FBI will continue to deserve and maintain world esteem," Harold L. Child Jr., legal attache to the embassy in Japan and a 30-year FBI veteran, told Nixon in an April 1973 letter.

That very same month, Felt called reporter Bob Woodward in the Washington Post newsroom to pass along a tip about then-FBI Director L. Patrick Gray, a Nixon loyalist who replaced Hoover. Gray resigned that month after it was revealed that he destroyed documents related to the Watergate investigation. Woodward recounts the phone call in his book The Secret Man, which documented his relationship with his secret source.

About 9:30 p.m. [on April 26, 1973] my phone at the Post rang. "Give me a number to call you on," Mark Felt said. I gave him a basic city desk line and picked it up myself when the call came in. "you've heard the Gray story?" Felt said. "Well, it's true."

Felt was confirming early speculation about Gray's pending resignation. Over the previous 10 months, Felt, who was at the time in the No. 2 position at the FBI, had passed along scores of tips to Woodward, helping the young reporter and his colleague Carl Bernstein expose the massive corruption within the Nixon White House that became known as Watergate.

It was not until 2005 that Felt unmasked himself as Deep Throat, although Nixon's secret tape recordings revealed that White House chief of staff H.R. Haldeman suspected Felt was Woodward's leaker as early as October 1972.

Felt expected to replace Hoover upon his death earlier that year -- before the Watergate hotel break-in -- but Nixon, whose administration already was engaged in myriad political treacheries, decided against the career FBI officer in favor of loyal Gray.

"As best I could tell Felt was crushed but he put on a good face," writes Woodward, who first met Felt years earlier while still in the Navy.

Woodward first used Felt as a source for an article he wrote about the assassination attempt aimed at George Wallace, but it was June 19, 1972 that the pair first spoke about the story that would launch Woodward's career. Two days after the Watergate break-in, Felt warned that the case was going to "heat up" and abruptly ended their telephone conversations, according to Woodward's account.

Over the following weeks and months, Felt continued to pass along tidbits of information and guide the young reporter in his efforts to expose the corruption within Nixon's White House and presidential campaigns. The two would often meet in the dead of night in an abandoned parking garage, scenes memorably portrayed by Hal Holbrook and Robert Redford in the film adaptation of All the President's Men.

Felt's role in exposing Watergate remained a secret to virtually everyone aside from Woodward, Bernstein and the Post editors.

Within the FBI Felt was well renowned for his years of service and tenacity -- qualities that apparently didn't interest a president trying to shield himself from investigations led by that very agency.

"Mr. Felt is a man of outstanding loyalty, character, reputation, habits," wrote Efton A. Stanfield in a telegram to Nixon. The "fidelity, bravery, and integrity of Mr. Felt are unquestioned."

Felt himself was the lead agent in a telegram sent to the White House by a group of agents asking that a highly qualified professional be nominated. The police chief in Kodiak, Alaska, made the case for Felt, and so did ordinary citizens. Writing from Brooklyn, N.Y., Viena K. Neaville told Nixon that choosing Felt would be good for him because, "You would be spared the tremendous aggravation to which you are subjected by so many factions."

Great job Bill, as usual. If an audio is available could you post a link, please.

The retention of focus on (y)our objectives certainly, in reading, was impressive.

Hi Gary,

John Judge implied in an email that a streaming audio will be available through the Coast to Coast AM internet archive, though I don't know how that works.

I taped it pretty clear through my phone, but only got snippits of other parts of the show via my internet, so I only have my part of the show. I'll see if John Geherity, our man in Dublin, can link to what's out there, if anything.

I did find a link that tells us more about John Ziegler, the guy who cut us off at the pass and bushwacked Cyril in the first round:

http://www.johnziegler.com/editorial.php?e=144

I'm sure we haven't heard the last from him.

BK

Please see my above posting of Nov. 23 that contains the link to the coasttocoastam website to replay the program.

COPA director John Judge is now in Dallas, and will be at the Grassy Knoll today at noon as he has been for most of the November 22nd anniversaries, maintaining a tradition started by the late Penn Jones.

Being the Thanksgiving holiday in the USA, there shouldn't be many others around, though next year, the 45th, should be more popular.

Judge's last report from DC before he left announces a nationwide Coast to Coast AM live radio broadcast of intervews with COPA members, including Cyril Wecht, Gary Aguilar, Walt Brown, Bob Groden and myself.

The program begins at 11 pm on the West Coast, 2am EST.

I am scheduled to be on from Midnight-12:30 or 3am to 3:30am EST.

I'm expecting a wakeup call from Tim Gratz.

Here's John Judge's note:

Friends,

I am very excited that the Coast to Coast radio will present the best researchers and evidence instead of the usual hype and speculation. This talk show will be heard by

millions of people across the country, and more afterwards who subscribe

to the podcasts. It is an opportunity to promote our own work, but also a chance to make COPA visible to a large new segment of the public.

PLEASE check out COPA's new website at

www.politicalassassinations.com and consider attending our regional meeting in Dallas this year from November 23-25 at the Hotel Lawrence. Listeners in the Dallas area might actually attend.

Here is their website schedule:

http://www.coasttocoastam.com/shows/schedule.html

The lineup at this point as far as I know starts about 10:30 pm Pacifictime (1:30 am EST or 12:30 am Central) with a different guest during each hour:

Dr. Wecht

Walt Brown

Robert Groden

Dr. Aguilar

William Kelly

John Judge

--

John Judge

Coalition on Political Assassinations (COPA)

PO Box 772

Washington, DC 20044

Check out our new website:

www.politicalassassinations.com

Annual meeting in Dallas November 22-25, 2007

Hotel Lawrence - 214-761-9090 - discount room reservations "COPA 2007"

Speakers, films, books, resources, email for details

Coming up: 2008 - Memphis (April 3-6), LA (June 6-8) and Dallas

(November 21-23) regional meetings

National organization of medical and ballistic experts, academics and

authors, researchers and interested individuals investigating major

political assassinations in America and abroad.

Donations NOT tax deductible

Here is the summary of the program following its broadcast that appears on the coasttocoastam website. For a nominal fee one can listen on the Internet to a replay of the program. I was a live listener and found the program fascinating.

----------

JFK Assassination Special V

November 22, 2007

coasttocoastam radio program

http://www.coasttocoastam.com/shows/2007/11/22.html#recap

In our 5th JFK Assassination Special a variety of guests presented theories and evidence that generally ran counter to the single gunman theory of the Warren Commission. An exception to that was second hour guest, radio host John Ziegler, who recently published an editorial outlining his belief that Oswald acted alone. Ziegler debated forensic expert Dr. Cyril Wecht, who has cited the difficulty in drawing conclusions based on the poorly performed autopsy of JFK.

Kicking off the third hour, researcher Walt Brown said the assassination could not have happened without the CIA knowing about it, and the evidence points towards LBJ being involved. Another researcher, J. Harrison, told him that JFK was killed as part of a group of 17, including Malcolm Wallace, whose fingerprint likely matched an unaccounted-for print at the Texas School Book Depository where Oswald was found.

Independent researcher William Kelly called for a Grand Jury to reopen the investigation of JFK's murder, and for a review of the JFK Assassination Records Act. Author and photographic consultant Robert Groden, who made the Zapruder film public in 1975, said the explosion in Kennedy's head, as seen in the film, reverses the assumption that the bullet came from in front. It must have come from behind where the Grassy Knoll was located, he suggested.

In the last hour, Dr. Gary Aguilar spoke about the mishandling of the medical information and inexplicable elements in JFK's autopsy. Investigator John Judge, who helped put the evening's guests together, noted that history has become a "stolen commodity" leaving citizens in a position where they are allowed to believe anything. His research indicates that Johnson knew the assassination was coming and that he was put into office by war profiteers.

In our Fast Blast poll, 80% of the respondents believe in the conspiracy angle rather than the lone gunman theory. For more on the JFK assassination, check out recaps from our shows in 2003, 2004 , 2005, and 2006.

Related Articles

JFK Assassination

Marking the 44th anniversary of JFK's assassination, a crowd gathered today in Dealey Plaza in Dallas, where witness Ernest Brandt shared his account. Meanwhile, an assassination plot to kill JFK in Chicago was recently revealed.

We ought not have two threads running about the same story, as interesting as it is.

I have no idea who first posted the story but someone in authority ought to merge the threads.

I agree and apologize. However, before I posted the above story, I carefully checked the Forum and there was no other posting that covered the same item. I am at a loss to explain how the double posting came about unless there was some sort of procedural computer glitch.

Posthumous book claims Ford knew of CIA coverup in Kennedy assassination

1. 11/21/2007 @ 8:59 am

Filed by David Edwards and Nick Juliano

www.rawstory.com

Did the CIA orchestrate a cover-up in the assassination of President John F. Kennedy?

http://rawstory.com//printstory.php?story=8340

According to the publisher of a new book, who appeared on Fox News Wednesday morning, the last living words of former President Gerald Ford fingered the CIA in the orchestration a cover-up of Kennedy's assassination.

Ford, who died late last year, was the longest surviving member of the Warren Commission, which investigated Kennedy's assassination. The new book, "A Presidential Legacy and the Warren Commission," was written by Ford before his death, its publisher claims.

"This book, actually authored by Gerald Ford, finally proves once and for all that the CIA, our government, did destroy documents and cover-up many facts that day in Dallas," publisher Tim Miller told Fox & Friends Wednesday morning.

Kennedy was killed as his motorcade rolled through downtown Dallas Nov. 22, 1963. Officially seen as the work of a single shooter, Lee Harvey Oswald, the Kennedy assassination has sparked myriad conspiracy theories placing responsibility for the assassination on a variety of suspects, including the CIA, the Mafia or Cuban President Fidel Castro.

Although Miller was given little time to go into detail about the book on Wednesday morning's show, a press release gives more detail on the book, being published by Flat Signed publishers.

In the book, Ford argues that the CIA destroyed information about the assassination, but he "contends with interesting specificity that Oswald was the only shooter," Miller says.

"There was a conspiracy to kill John F. Kennedy," says Tim Miller, CEO of FlatSigned.com, in the release. "There is no doubt that President Gerald Ford knew more about the JFK death. There is no doubt President Clinton knows more. Has he or any other US President since November 22, 1963 ever swore under oath that they know no more?"

This video is from Fox's Fox & Friend's, broadcast on November 21.

From a previous posting by Paul Rigby:

p.142: "Who, Amoss wondered, might be willing to invest in such a scheme? [To smuggle Stalin's son out of the Soviet Union – PR] He found the answer through a complicated chain of contacts, beginning with Mrs. Mary Vaughan King, who runs the Baltimore public relations firm, Counsel Services, of which the colonel is a client. It led to Clendenin Ryan, a somewhat quixotic multi-millionaire, who once served as an assistant to Mayor La Guardia, ran for the New York mayoralty himself on an independent ticket and the governorship of New Jersey, published a semi-political magazine, and sent large sums abroad to break communist-inspired strikes and influence voters in favor of anti-communist candidates for high office."

Amoss ran International Services of Information and worked for Frank Wisner of the CIA. Even Carleton S. Coon worked for Amoss at the OSS as a Major under the Colonel. Coon and Amoss later worked with Robert Emmett Johnson in Baltimore at ISI. So now we have Amoss and Coon linked through Clendenin Ryan right into The Richard Condon Manchurian Candidate crowd like Brig Gen Bonner Fellers who was an ISI patron (Fighting Frank Bollinger), and "...that fascinating young man who wrote about man and God at Yale." (William F. Buckley, Jr. founder of YAF which was funded by Clendenin Ryan) and Ray S. Cline who was John Yerkes Iselin himself in Manchurian Candidate. Cline later took over control of R. E. Johnson when Cline ran WACL and murdered Archbishop Romero.

What was the magazine Clendenin Ryan published? The American Mercury from 1950-1952, the Buckley years.

What other groups did he help to fund and found later in his career? Young Americans for Freedom started at the Sharon estate of William F. Buckley, Jr.

The Conservative Press in Twentieth-Century America - Google Books Resultby Ronald Lora, William Henry Longton - 1999 - Social Science - 744 pages

The new purchaser of the Mercury was Clendenin J. Ryan, an erstwhile reformer who was a prominent financier and the son of an even more prominent financier, ...

books.google.com/books?isbn=0313213909...

The Other Side of the Sixties: Young Americans for Freedom and the ... - Google Books Resultby John A. Andrew - 1997 - Political Science - 287 pages

... David Franke, George Gaines, Robert Harley, James Kolbe, Richard Noble, Suzanne Regnery, Clendenin Ryan, Scott Stanley, John Weicher, and Brian Whelan. ...

books.google.com/books?isbn=0813524016...

Anybody have anything else on this guy Clendenin Ryan? Do a google or a yahoo search on this guy and it may

open your eyes. His family made their money in Copper apparently.

Apparently Clendenin Ryan funded Ulius Amoss and his gang of spies and assassins and somehow Richard Condon found out about Bonner Fellers, Ray S. Cline and Wickliffe Draper and Condon even inserted names of several American

Mercury writers to draw attention to this den of theives and their links to YAF, The American Mercury and The Pioneer Fund. Condon even mentioned American Mercury writers like Arnold Bennett, George Sokolosky, Westbrook Pegler and others from that circle of friends. Clendenin Ryan was involved with the Baltimore & Ohio railroad as well in some form or fashion and Condon mentions that company in ManCand, too.

Richard Condon apparently wanted us to be able to follow the path from Bonner Fellers in Cairo, Egypt through ISI via Amoss and Coon into Baltimore, MD where the trail would be picked up with The American Mercury crowd which was first started in Baltimore by H. L. Mencken then later bought by Clendenin Ryan, who funded several illicit ISI projects. The links back into YAF began with God and Man at Yale (Buckley) via Clendenin Ryan, the publisher of The American Mercury in the early 1950's. Ryan also helped start YAF. Later the Mercury moved to East 57th Street in NYC. Richard Giesbrecht also isolated American "Mercury" in his statement to the FBI.

when Draper was closely involved with that publication.

Will those who could not accept the fact that Richard Condon knew what he was talking about finally admit their

ill conceived notions? Does anyone else have any information on Clendenin Ryan to share here?

Clendenin Ryan was a student at the School of Foreign Service, Georgetown University, at the same time I was (1956-60). He was one of my roommates in a off-campus house during that period, along with David Franke. Our house was the scene of laying the groundwork for the modern Conservative movement that was about to be born.

From what I vaguely remember, as this occurred some 50 years ago, he was the son of Clendenin Ryan, and grandson of Thomas Fortune Ryan. During one of our talks, Clendenin told me that his father had contributed the beautiful stain glass window that adorns to this day the front of St. Patrick's on Fifth Avenue in Manhattan.

Clendenin, my former roommate, was tangentially involved in the founding of YAF. His contribution was in the area of activity, not in funding. YAF was founded by funds advanced by Charles Edison, son of Thomas Edison, for whom I worked following my graduation from Georgetown. Charles Edison, former governor of New Jersay and former Secretary of the Navy under FDR, had his home and office in the Towers of the Waldorf. His philosophy, which I have adopted to this day, is that the American Eagle must have two strong wings to fly a straight course: a left one and a right one. The right wing has been way too strong for the past 30 years; hopefully, the left wing will strengthen in 2008 and the Eagle will again soar straight-away.

Clendenin Ryan, former roommate and friend, died from cancer in the late 1960's, on a date that I cannot pinpoint from memory. My guess is that he was under 30 years of age when he passed.

I never met his father nor, of course, his grandfather. The posting above about his father's political activity comes as news as his son never mentioned any of this to me.

**************************************************************

"His philosophy, which I have adopted to this day, is that the American Eagle must have two strong wings to fly a straight course: a left one and a right one. The right wing has been way too strong for the past 30 years; hopefully, the left wing will strengthen in 2008 and the Eagle will again soar straight-away."

A wonderful and commendable sentiment, to be sure. But, I have little hope of ever seeing this ideal come to fruition again, Doug. Unfortunately, both parties have become too definitively melded to ever make a reasonable judgment call, in our lifetime. At least, that's how it appears from my P.O.V.

Actually, my p.o.v. is very close to yours. While I was attending Georgetown University in Washington, D.C. in the late 1950's, I happened to go into a Hot Shoppes for one of its famous hamburgers (the best ever.) There was a man sitting at the counter and he was talking outloud to himself. One thing that he exclaimed then has stuck with me over the years. He said, "It's amazing how much poison the American system can absorb."

After seven years of Bush and Cheney, I fear that the American system has ingested a fatal dose, one that will lead to the demise of the Republic as we have known it since its founding over 200 years ago.

If the U.S. has a presidential election in 2008 (I write "if"), and a Democrat is elected, that person will face a daunting task in undoing the immense damage that has been inflicted.

Still it is best to try to maintain a positive attitude and cling to the hope that the American Eagle after 2008 will again soar straight-away.

From a previous posting by Paul Rigby:

p.142: "Who, Amoss wondered, might be willing to invest in such a scheme? [To smuggle Stalin's son out of the Soviet Union – PR] He found the answer through a complicated chain of contacts, beginning with Mrs. Mary Vaughan King, who runs the Baltimore public relations firm, Counsel Services, of which the colonel is a client. It led to Clendenin Ryan, a somewhat quixotic multi-millionaire, who once served as an assistant to Mayor La Guardia, ran for the New York mayoralty himself on an independent ticket and the governorship of New Jersey, published a semi-political magazine, and sent large sums abroad to break communist-inspired strikes and influence voters in favor of anti-communist candidates for high office."

Amoss ran International Services of Information and worked for Frank Wisner of the CIA. Even Carleton S. Coon worked for Amoss at the OSS as a Major under the Colonel. Coon and Amoss later worked with Robert Emmett Johnson in Baltimore at ISI. So now we have Amoss and Coon linked through Clendenin Ryan right into The Richard Condon Manchurian Candidate crowd like Brig Gen Bonner Fellers who was an ISI patron (Fighting Frank Bollinger), and "...that fascinating young man who wrote about man and God at Yale." (William F. Buckley, Jr. founder of YAF which was funded by Clendenin Ryan) and Ray S. Cline who was John Yerkes Iselin himself in Manchurian Candidate. Cline later took over control of R. E. Johnson when Cline ran WACL and murdered Archbishop Romero.

What was the magazine Clendenin Ryan published? The American Mercury from 1950-1952, the Buckley years.

What other groups did he help to fund and found later in his career? Young Americans for Freedom started at the Sharon estate of William F. Buckley, Jr.

The Conservative Press in Twentieth-Century America - Google Books Resultby Ronald Lora, William Henry Longton - 1999 - Social Science - 744 pages

The new purchaser of the Mercury was Clendenin J. Ryan, an erstwhile reformer who was a prominent financier and the son of an even more prominent financier, ...

books.google.com/books?isbn=0313213909...

The Other Side of the Sixties: Young Americans for Freedom and the ... - Google Books Resultby John A. Andrew - 1997 - Political Science - 287 pages

... David Franke, George Gaines, Robert Harley, James Kolbe, Richard Noble, Suzanne Regnery, Clendenin Ryan, Scott Stanley, John Weicher, and Brian Whelan. ...

books.google.com/books?isbn=0813524016...

Anybody have anything else on this guy Clendenin Ryan? Do a google or a yahoo search on this guy and it may

open your eyes. His family made their money in Copper apparently.

Apparently Clendenin Ryan funded Ulius Amoss and his gang of spies and assassins and somehow Richard Condon found out about Bonner Fellers, Ray S. Cline and Wickliffe Draper and Condon even inserted names of several American

Mercury writers to draw attention to this den of theives and their links to YAF, The American Mercury and The Pioneer Fund. Condon even mentioned American Mercury writers like Arnold Bennett, George Sokolosky, Westbrook Pegler and others from that circle of friends. Clendenin Ryan was involved with the Baltimore & Ohio railroad as well in some form or fashion and Condon mentions that company in ManCand, too.

Richard Condon apparently wanted us to be able to follow the path from Bonner Fellers in Cairo, Egypt through ISI via Amoss and Coon into Baltimore, MD where the trail would be picked up with The American Mercury crowd which was first started in Baltimore by H. L. Mencken then later bought by Clendenin Ryan, who funded several illicit ISI projects. The links back into YAF began with God and Man at Yale (Buckley) via Clendenin Ryan, the publisher of The American Mercury in the early 1950's. Ryan also helped start YAF. Later the Mercury moved to East 57th Street in NYC. Richard Giesbrecht also isolated American "Mercury" in his statement to the FBI.

when Draper was closely involved with that publication.

Will those who could not accept the fact that Richard Condon knew what he was talking about finally admit their

ill conceived notions? Does anyone else have any information on Clendenin Ryan to share here?

Clendenin Ryan was a student at the School of Foreign Service, Georgetown University, at the same time I was (1956-60). He was one of my roommates in a off-campus house during that period, along with David Franke. Our house was the scene of laying the groundwork for the modern Conservative movement that was about to be born.

From what I vaguely remember, as this occurred some 50 years ago, he was the son of Clendenin Ryan, and grandson of Thomas Fortune Ryan. During one of our talks, Clendenin told me that his father had contributed the beautiful stain glass window that adorns to this day the front of St. Patrick's on Fifth Avenue in Manhattan.

Clendenin, my former roommate, was tangentially involved in the founding of YAF. His contribution was in the area of activity, not in funding. YAF was founded by funds advanced by Charles Edison, son of Thomas Edison, for whom I worked following my graduation from Georgetown. Charles Edison, former governor of New Jersay and former Secretary of the Navy under FDR, had his home and office in the Towers of the Waldorf. His philosophy, which I have adopted to this day, is that the American Eagle must have two strong wings to fly a straight course: a left one and a right one. The right wing has been way too strong for the past 30 years; hopefully, the left wing will strengthen in 2008 and the Eagle will again soar straight-away.

Clendenin Ryan, former roommate and friend, died from cancer in the late 1960's, on a date that I cannot pinpoint from memory. My guess is that he was under 30 years of age when he passed.

I never met his father nor, of course, his grandfather. The posting above about his father's political activity comes as news as his son never mentioned any of this to me.