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Bankers Could Go To Jail

CEPR | June 25, 2014

Morning Edition had a strange piece discussing how regulators can punish banks for breaking the law. The piece focused on the various fines and regulatory measures that can be imposed as penalties when banks are found to have broken the law. Remarkably it never considered the underlying logic of the punishment and the likely deterrent effect on criminal activity.

While banks are legal institutions, ultimately it is individuals that break the law. The question that any regulator should be asking is the extent to which the penalties being imposed will discourage future law breaking. As a practical matter, the immediate victims of the measures mentioned in the piece are banks’ current shareholders. Since there is often a substantial period of time between when a crime is committed and when regulators discover it and succeed in imposing a penalty, the shareholders facing the sanction will be a different group from the shareholders who benefited from the original crime. This makes little sense either from the standpoint of justice or from the standpoint of deterring criminal activity by bankers.

The imposition of large fines may cause current shareholders to demand the executives who broke the law be fired, but in many cases they will have already moved on to other jobs or retired. In the case of the fraudulent loans that were passed on in mortgage backed securities (MBS) in the housing bubble years, most of the top executives had already left their banks by the time actions were brought by the Justice Department.

In this case, they made enormous amounts of money by breaking the law. The financial crisis may have caused them to retire or leave their banks somewhat sooner than they would have preferred, but almost all of them come out as net gainers from their actions.

The one sanction that would clearly be effective in deterring bankers from breaking the law would be putting them in jail for breaking the law. It is likely that the prospect of spending several years in prison, along with fines taking away most of their monetary gains, would provide a serious disincentive to bankers who might otherwise break the law. The Justice Department could have pressed cases by showing that top officials in banks had good reason to believe that many of the mortgages they were passing along in MBS were fraudulent.

It is likely that top executives at major investment banks had some knowledge that many of the loans they were securitizing were fraudulent, since there were numerous accounts in the business press about bad loans. There were also widely circulated jokes about the quality of these loans. (It was common to talk about “NINJA” loans, referring to loans where the borrower had no income, no job, and no assets.) It is likely that the top officials at these banks had at least as much knowledge of the loans their banks were securitizing as the people writing about them in the business press. (Deliberately passing along fraudulent loans is fraud.)

June 26, 2014 Posted by | Corruption, Deception, Economics, Mainstream Media, Warmongering, Timeless or most popular | | Leave a comment

Obama requests $500 million to aid Syrian rebels

RT | June 26, 2014

The White House on Thursday asked Congress for half-a-billion dollars in aid to go towards opposition fighters in Syria at war with the regime of recently re-elected President Bashar Al-Assad.

In a report sent to lawmakers at the Capitol on Thursday, the White House requested $500 million in aid to “help defend the Syrian people, stabilize areas under opposition control and facilitate the provision of essential services, counter terrorist threats and promote conditions for a negotiated settlement.”

The Associated Press reported that the multimillion dollar request makes up just a fraction of a larger, $65.8 billion overseas operations request sent to Congress that, if approved, would fund a number of Pentagon and State Department programs, as well as $1 billion in assistance to nations adjacent to Syria.

This latest request by the administration for aid comes merely weeks after the president outlined his foreign policy objectives during a speech last month at the West Point Military Academy graduation ceremony.

“As president, I made a decision that we should not put American troops into the middle of this increasingly sectarian civil war, and I believe that is the right decision. But that does not mean we shouldn’t help the Syrian people stand up against a dictator who bombs and starves his own people,” Obama said. “And in helping those who fight for the right of all Syrians to choose their own future, we are also pushing back against the growing number of extremists who find safe haven in the chaos.”

“So with the additional resources I’m announcing today, we will step up our efforts to support Syria’s neighbors — Jordan and Lebanon, Turkey and Iraq — as they contend with refugees and confront terrorists working across Syria’s borders.”

At the time, Obama added that he would “work with Congress to ramp up support for those in the Syrian opposition who offer the best alternative to terrorists and brutal dictators.” Now only weeks later, he appears to have taken the first steps to securing such funding.

Since nearly the start of the Syrian civil war more than three years ago, hawkish Republicans in Congress have urged the White House to take action against Assad, with Sen. John McCain (R-Arizona) going as far as to travel abroad to meet with rebel fighters overseas. Others have condemned any response from Washington altogether, though, including Sen. Rand Paul (R-Kentucky), who this week attributed the arming of fighters in Iraq as the impetus for a “jihadist wonderland” there created on Uncle Sam’s watch and dime.

According to the AP’s Julie Pace, White House officials said the Obama administration would work with members of Congress and regional player to come to terms with what sort of training and assistance in particular would be provided to opposition fighters by the US.

“One potential option,” Pace wrote, “would be to base US personnel in Jordan and conduct the training exercise there.”

Also last month, the Pentagon deployed more than 6,000 Marines to Jordan to conduct drills alongside military officials there.

June 26, 2014 Posted by | Militarism, Progressive Hypocrite, War Crimes | , , | 1 Comment

Iraq intervention, redux?: The folly of ‘humanitarian imperialism’

By Roqayah Chamseddine | Al-Akhbar | June 26, 2014

Jean Bricmont’s powerful book Humanitarian Imperialism: Using Human Rights to Sell War , written during the occupation of Iraq, is a timely historical critique of Western interventionism, one worth examining as the United States of America moves once more in the direction of military entanglement in Iraq. Bricmont, a Belgian theoretical physicist and professor at The Université catholique de Louvain, discusses the ideological factors which legitimize military action in response to humanitarian abuses and “in defense of democracy” (p. 7). — “This is the discourse and the representation that must be challenged in order to build a radical and self-confident opposition to current and future wars.” The humanitarian rationales offered under the banner of there being “a responsibility to protect” have only increased since the end of World War II, and methods to reinforce such motivations have grown progressively coercive.

Bricmont introduces a formula which will come to define “humanitarian imperialism:” when A exercises power over B, he does so for B’s “own good” (p. 11). This is the creed of philanthropic power — which peddles and rationalizes war as a column maintaining international order — and which continues to define the very nature of international conflict post-World War II. Interventionism is no longer argued as being warranted in the name of Christianity, Bricmont argues, but what he calls ideological reinforcements: democracy and human rights. For example, despite former US President George W. Bush’s frequent use of religious imagery, the call to invade Iraq was not only drenched in chilling white saviourism but an overwhelming exceptionalism which contends that only military efforts led by the United States of America would bring about a just liberation and lasting stability for the people of Iraq. “[T]he dangers to our country and the world will be overcome. We will pass through this time of peril and carry on the work of peace,” George W. Bush stated in 2003. “We will defend our freedom. We will bring freedom to others and we will prevail.”

The horrors inflicted upon the people of Iraq are still understated, and since 2003 the bloodshed has not stopped. When Obama delivered his speech in 2011 celebrating the US military withdrawal, there were bombings and shootings in Baghdad, in Mosul, in Kirkuk and in Tal Afer. While the Iraqi people were preparing burial shrouds Obama was reaffirming the previous administration’s claims that the US left for the Iraqi people a stable country, had forged a lasting peace and made the world more secure. Amongst the congratulatory frill and repugnant nationalism Obama did make one salient point — that the US legacy in Iraq will endure and that it shall be remembered. The legacy of this tragic and implacable war will live on in the wombs of Iraqi women who bear children with congenital birth defects as a result of depleted uranium; the riddled bodies of those now suffering from cancer due to the toxic munitions used by the US military and finally in the land of Iraq, which has been devoured and polluted by the chemical weapons the US unleashed during its occupation.

Bricmont does not neglect to stress the deliberation and mercilessly skillful care taken by the US in the implementation of sanctions against Iraq, quoting Marc Bossuyt on this “silent genocide” (p. 24), former Belgian Constitutional Court judge and current member of the Permanent Court of Arbitration in The Hague:

The sanctions against Iraq has as its clear purpose the deliberate infliction on the Iraqi people of conditions of life (lack of adequate food,medicines, etc.) calculated to bring about its physical destruction in whole or in part. It does not matter that this deliberate physical destruction has as its ostensible objective the security of the region.

Bossuyt further explained that not only were the sanctioning bodies responsible but that they could not be acquitted from the charge of having the “intent to destroy the Iraqi people.” The callousness of the sanctions were most illustrated by the words of then US Secretary of State Madeleine Albright who defended the deaths of some 500,000 Iraqi children in 1996 during an interview with Lesley Stahl for 60 Minutes. When she was confronted with a question by Stahl, who cited the half a million dead children, Albright smoothly responded: “I think this is a very hard choice but the price-we think the price is worth it.”

The practice of humanitarian imperialism is not confined to the Middle East and North Africa and Bricmont’s analysis covers much of its breadth. The US involvement in the 1954 coup d’état in Guatemala for example is one of many historical events covered which “is an exemplary illustration of the real existing “defense of democracy” as it has been practiced by the United States” writes Bricmont (p. 26). The characterization of this “defense of democracy” is what is one of the most valuable components of this text as it applies to much of how the US military industrial complex functions, and it includes the following points, as developed by Bricmont:

  • A paranoid attitude on the part of the superpower toward the slightest challenge.
  • Demonization of adversaries. In those days, it was enough to call the victim a “communist.” Later, the label became “terrorist.” In any case, demonization prevents their side of the story from being taken into consideration.
  • Media conformism: U.S. media relay the official U.S. government version of events without serious investigation; opposing views are dismissed as absurd.
  • Total disregard for international law.

What transpires after the arguments for war are challenged and when claims, like in the case of Iraq, that there exist “weapons of mass destruction,” one of the reasons for the military invasion, are disproven? Bricmont provides us with the argument that is then posed to anti-interventionists who ask why the US cannot then simply “pull out:”

Because, we are told, it is now necessary to “stabilize” Iraq, to “construct democracy” there, etc. As a result, even if it is true that many organizations and intellectuals who defend human rights were initially opposed to the war, they have found themselves more or less obliged to support the ongoing war of occupation until the situation is “stabilized.”

Stabilization takes priority and defence of human rights begins to dwindle once the foreign military occupation ebbs and, above all else, once interests are met. Even now as whispers calling for more US involvement in Iraq grow into shouts the Obama administration has managed to receive immunity for security forces, a “necessary assurance” which protects the US from prosecution in Iraqi courts, denying the people of Iraq even the opportunity to seek justice. And yet the US left a sovereign and capable nation, is that not what we are told? And if so, what does the Obama administration fear, that US war crimes may face the judge’s gavel?

The US has been the direct cause of much of the calamities that have ravaged Iraq — the pangs of the US sanctions, which lasted from 1990 until 2003, continue to torment and fragment the land between the two rivers. The hurdle of immunity in Iraq is one that has been faced by the Obama administration before. When the US abandoned plans to keep “several thousand” troops in Iraq it came after Iraqi leaders refused to grant them immunity from Iraqi courts, and Commander in Chief Obama would rather the US military be shielded from prosecution and withdraw than face Iraq’s judicial system for crimes against the Iraqi people. This is the manner in which intervention devastates — it reintroduces former disparities and attempts to destroy for those under occupation and in the sight of imperial powers any existing components of their self-determination, which includes their right to bring their tormentors to justice. The Obama administration had promised “no troops on the ground” in Iraq and has sent 300 “military advisors” and 275 soldiers to protect the US embassy in Baghdad, despite there already being “a few hundred” troops working as “uniformed personnel” with the same legal protections provided to embassy workers. These troops, even if they range in the hundreds, are but a paltry issue in comparison to the formidable presence of the US aircraft carrier, cruiser and destroyer which have made their way into the Persian Gulf, and the US army installations, comprised of 4 active US bases, in neighboring Kuwait. Further US involvement in Iraq is not a troubling possibility, it is horrifying reality. This is where, once again, the “guilt factor” creeps into the discourse. We are told that “we must support X against Y” and that the only way to do so is militarily and that only our superior military outfits are capable of dressing the open wounds (that our previous military interventions caused).

The US is arguing for the use of airstrikes — The Obama administration is seeking to quiet the bloodshed with arms and pundits are once again nodding in approval. If we are to follow this flawed contention then where does this interventionism end? Will there be annual interventions until Iraq is “stable” enough and will the cycle of pin-the-blame-on-the-dictator (and not our humanitarian intervention) continue? How is the US authorized to intervene when it has already proven itself incapable of exiting the international stage without trails of blood being left behind? What Iraq needs now, and what Iraq has always needed, is unity and reconciliation, not a permanent cycle of war facilitated by foreign bodies. Those who make war profitable and who otherize human life itself cannot lecture the world on stability and freedom, nor can they implement “democracy” by way of the bullet or “precision” airstrikes.

This brings us to Libya, and though this book was written well before the military offensive in Libya, Bricmont has discussed the subject in relation to his book both before and after the killing of Gaddafi. The sole purpose of an army, writes Bricmont (p. 31), is to defend its own country — or to attack another — And even if the latter is deemed legitimate it can never be humanitarian as everything about an army is to serve these aims. In an interview with Belgian writer Michele Collon, before the killing of Gaddafi, Bricmont is asked about the intervention in Libya, specifically as to whether or not the leftist parties who defended the no-fly zone are mistaken in supporting military involvement.

His response cut to the bone of the matter — An intervention would strengthen what he calls the “barricade effect” wherein countries that are within the reach of the US will begin to feel threatened and will then as a result “seek to increase their armaments.” Along with the barricade effect such interventions also open up the doors for others, and so what is to stop any other nation to interfere elsewhere? And once there is intervention then the likelihood of a civil war becomes more probable. In Libya there was the ethnic cleansing of Black Libyans and now many are arguing that the state is on the verge of a civil war as the chaos, much like in Iraq, has not paused.

It is often asked “if military intervention is not the answer, then what is? The answer? Peaceful solutions such as negotiations and cooperative diplomatic efforts, much of which the US and its allies have intentionally circumvented time and time again, should be the primary focus (p. 66):

There is a world of difference between intervention and cooperation. Unlike intervention, cooperation is carried out with the agreement of the host government. Few governments in the Third World reject cooperation if it is sincere. With so much misery in the world it is hard to imagine a situation in which, for a given expenditure of money and effort, cooperation would not save more human lives than intervention.

Bricmont’s book ends with a confident and almost poetic closing, despite the heart-wrenching subject on which the entire text is based:

All those who prefer peace to power, and happiness to glory, should thank the colonized peoples for their civilizing mission. By liberating themselves, they made Europeans more modest, less racist, and more human. Let us hope that the process continues and that the Americans are obliged to follow the same course. When one’s own cause is unjust, defeat can be liberating.

The struggle against neocolonialism shall define the 21 century according to Bricmont, but what we build after the chaos shall define us and shall become our legacy. And so as time moves forward and the bloodshed continues in much of the world, and as the US once again has Iraq in its sights, let us aim for peaceful resolutions rather than military interventions.

~

Roqayah Chamseddine is a Sydney based Lebanese-American journalist and commentator. She tweets @roqchams and writes ‘Letters From the Underground.’

June 26, 2014 Posted by | Book Review, Mainstream Media, Warmongering, Militarism, Progressive Hypocrite, Timeless or most popular | , | Leave a comment

Tired of World Bank, China to launch alternative

RT | June 26, 2014

China is moving forward with a plan to create its own version of the World Bank, which will rival institutions that are under the sway of the US and the West. The bank will start with $100 billion in capital.

The Asian Infrastructure Investment Bank (AIIB) will extend China’s financial reach and compete not only with the World Bank, but also with the Asian Development Bank, which is heavily dominated by Japan. The $100 billion in capital is double that originally proposed, the Financial Times (FT) reported.

A member of the World Bank, China has less voting power than countries like the US, Japan, and the UK. It is in the ‘Category II’ voting bloc, giving it less of a voice. In the Asian Development Bank, China only holds a 5.5 percent share, compared to America’s 15.7 percent share and Japan’s 15.6 share.

At the International Monetary Fund, China pays a 4 percent quota, whereas the US pays nearly 18 percent, and therefore has more influence within the organization and where loans go.

“China feels it can’t get anything done in the World Bank or the IMF so it wants to set up its own World Bank that it can control itself,” the FT quoted a source close to discussions as saying.

To date, 22 countries have expressed interest in the project, including oil-rich Middle Eastern nations, the US, India, Europe, and even Japan, the FT reported.

“There is a lot of interest from across Asia but China is going to go ahead with this even if nobody else joins it,” the FT source said.

Funding for the Asian Infrastructure Investment Bank will mostly be sourced from the People’s Republic of China and be used to pay for infrastructure projects.

The bank’s first project will be a reincarnation of the ancient Silk Road, the vast network of trade routes between China and its regional neighbors. Another proposed project is a railway from Beijing to Baghdad.

The idea for the bank was first floated in October 2013, when China unveiled plans to create the bank. Then it was initially to be funded with $50 billion in capital.

Separately, the BRICS nations plan to have a $100 billion development bank ready by 2015.

Funds will be reserved for emerging market members who are often bypassed by institutions like the IMF and World Bank.

Bank preparations will likely be finalized at the 6th annual BRICS summit on July 14-16, when the five world leaders convene in Brazil.

June 26, 2014 Posted by | Economics | , , , , | Leave a comment

Bulgaria: South Stream doesn’t breach EU laws

RT | June 26, 2014

Bulgarian officials say the construction of the Russian-led South Stream gas pipeline does not breach EU legislation. The European Commission is concerned the agreement between Russia and Bulgaria violates EU competition law.

The Bulgarian government stood by its position on the legality of the pipeline in a Wednesday statement, ITAR-TASS reports. The agreement on South Stream construction signed in 2008 did not provide any exclusive rights, concessions, or tendering for the South Stream Bulgaria Company which is the owner of the pipeline, and therefore it does not violate EU law, it said.

“With its position the government presents arguments and motives in support of the decisions the Bulgarian nation has taken and which were the subject of concern at the EU Commission,” Reuters quotes the official statement.

Bulgaria will put these arguments at the Brussels summit on Friday, but the decision of the commission whether to accept or reject them may end up in full infringement proceedings and possible fines against Sofia, Reuters says.

According to Gunther Oettinger, the European Commissioner for Energy, the construction process should be suspended until, “it completely corresponds to the requirements of the European Union.”

On Tuesday Austria, another strong defender of the pipeline, signed a deal to construct a South Stream arm on its territory, thus showing its firm commitment.

The 2,446 km South Stream pipeline will stretch across southern and central Europe via the Black Sea, bypassing Ukraine and reducing the country’s importance as a gas transit route. 64 billion cubic meters of gas will be transported annually.

Gazprom has said the project, estimated to cost $45 billion, can be completed without any funding from international partners.

June 26, 2014 Posted by | Economics, Malthusian Ideology, Phony Scarcity | , , , , | Leave a comment

Happy Custer Massacre Day!

By James Bovard | CounterPunch | June 26, 2014

custer2

On this day in 1876, Gen. George Custer led his 7th Cavalry regiment to their demise in Montana. The Battle of Little Big Horn was one of the biggest defeats suffered by the U.S. Army in the war against the Indians. It is only in recent years that proper attention has been paid to the role of atrocities by Custer and other military leaders in stirring up the wrath of oppressed Indians.

I visited the Little Big Horn Battlefield National Monument 45 years ago during a cross-country trip as a 12-year-old boy to a Boy Scout Jamboree in Idaho. Like most Scouts, I subscribed to the Patriotic Version of American History. After visiting the battlefield, I scribbled (or copied) a note that the Seventh Cavarly’s “heroic defense made the nation yearn for details that no white man lived to tell.” Many years later, I learned that Custer’s men were wiped out in part because the Army Quartermaster refused to permit them to carry repeating rifles – which supposedly wasted ammo. The Indians didn’t have a quartermaster, so they had repeating rifles, and the rest is history.

custer burning down shenandoah valley 1864 tlc0065

Custer also played a leading role in the 1864 desolation of the Shenandoah Valley, where I was raised a century later. After failing to decisively vanquish southern armies in the battlefield, Lincoln and his generals decided to win the war by brutalizing civilians. In August  1864, Gen. U.S. Grant  ordered  the destruction of all the barns, crops, and livestock in the Shenandoah Valley.  The etching above shows his troops after torching much of the town of Mt. Jackson, Virginia. The population of Warren County, my home county, fell by 20% during the 1860s. Did anyone who refused to submit to Washington automatically forfeit his right to live?  The desolation from the war and the systemic looting in its aftermath (ironically labeled “Reconstruction”) helped keep the South economically prostrate for generations.

During the 1864 campaign, Custer was under the command of Gen. Phil Sheridan. Sheridan later became notorious for slaughtering Indians as a top commander out west. He is best known for telling an Indian chief in 1869: “The only good Indian is a dead Indian.” He apparently felt the same way about Southerners – or at least “secessionists” and their wives and children.

Sheridan’s campaign to starve Shenandoah Valley residents into submission evoked fierce opposition from the  guerillas led by Col. John S. Mosby, the “Grey Ghost of the Confederacy.” Late in the war, when Confederate armies were being trounced or pinned down everywhere, a few hundred Mosby partisans tied up ten thousand Yankees. Mosby suffered none of the Sir Walter Scott-style sentimentality that debilitated many Southern commanders. Instead of glimmering sabers, his men carried a pair of .44 caliber revolvers. There was so much fear of Mosby that the planks on the bridge across the Potomac were removed each night, for fear that he would raid the capital. Reading about him as a boy,  I was impressed how a few well-placed attacks could throw the entire government into a panic. (Herman Melville captured the dread that northern troops had of Mosby in his epic poem, A Scout to Aldie.)

Mosby’s men were vastly outnumbered but they fought valiantly to try to stop Sheridan’s torching of the valley. Sheridan responded by labeling Mosby’s men war criminals and announcing that they would be executed if captured. The North stretched the definition of illegal enemy combatant at the same time it redefined its own war crimes out of existence. Six of Mosby’s men were hung in Front Royal, Virginia in September 1864.

In the weeks after the hanging of his men, Mosby’s men captured 700 northern troops. In early November, his troops hanged several captured Yankees in retaliation. A sign was attached to one of the corpses: “These men have been hung in retaliation for an equal number of Colonel Mosby’s men, hung by order of General Custer at Front Royal. Measure for measure.”  Recognizing the perils to his own troops, Sheridan ceased executing captured Mosby’s guerillas.

Unfortunately, most of the war crimes of the Civil War have been forgotten in the rush to sanctify a pointless vast loss of lives. Recasting the war as a triumph of good over evil was an easy way to make atrocities vanish. And failing to recognize the true nature of that war lowered Americans’ resistance to politicians commencing new wars that promised to vanquish evil once and for all.

James Bovard, a policy advisor to the Future of Freedom Foundation, is the author of author of Public Policy Hooligan,Attention Deficit Democracy, The Bush Betrayal, Terrorism and Tyranny, and other books.  More info at www.jimbovard.com; on Twitter @jimbovard

 

June 26, 2014 Posted by | Timeless or most popular, War Crimes | , | Leave a comment

Enough Secret Law: Newly Released DOJ Drone Killing Justification Memo… Points To Another Secret Drone Memo

By Mike Masnick | Techdirt | June 25, 2014

We already reported on the finally released DOJ legal drone memo that supposedly “justifies” the extrajudicial killing of Americans via drones. However, as we noted, much of it was actually redacted, leaving many of the details and reasons totally secret. Jameel Jaffer, the ACLU lawyer who helped get this heavily redacted memo released in the first place has written up an analysis which notes how ridiculous the redactions are and the fact that the memo actually points to another secret memo that reveals more details:

In one instance, the long sought-after drone memo references another legal memo that concluded that al-Awlaki’s American citizenship did not “preclude the contemplated lethal action.” From this reference, we can deduce that the OLC authored a separate drone memo assessing – and dispensing with – the proposition that an American citizen had the right not to be deprived of his life without some form of judicial process. But that earlier memo, treated by the executive branch as binding law, is still secret.

This kind of thing is all too common, but tremendously problematic. For folks actually trying to understand what the law actually is the fact that people have to play this bizarre game of 20 questions, seeking secret laws and interpretations, only to get breadcrumbs pointing to other secret interpretations of the law is just ridiculous. We’ve complained in the past about the dangers of a secret law, but just the fact that the American public needs to play this stupid game, and the DOJ appears to have broken up the secret interpretations of the law into different sections, making it that much harder to track it all down, raises serious questions about what sort of government we have, and how Americans can be expected to respect, let alone obey, the law when we can’t even be told what it is.

June 26, 2014 Posted by | Civil Liberties, Deception, Progressive Hypocrite | , , | Leave a comment