Penny Wise and Euro Foolish
By John P. Hussman, Ph.D., Hussman Funds | October 23, 2011
Among the effects of the recent and now renewed credit strains in the global economy is that investors have lost touch with relative magnitudes. For example, a billion dollars effectively represents about $3.20 for every adult and child in the U.S., while a trillion dollars represents about $3,200 dollars per person. From our standpoint, among the most important research coordination that government provides comes from the National Institutes of Health (NIH), which funds basic medical research in cancer, diabetes, multiple sclerosis, Alzheimer’s, autism, and other conditions, and where the total annual budget is about $31 billion annually (roughly $100 per American). Add in just over $7 billion in research through the National Science Foundation, and about $120 per citizen a year is spent by the government on essential medical and non-military scientific research through these agencies. These figures pale in comparison to the amounts that are increasingly demanded in order to make bondholders whole on their voluntary, bad investments. The Federal Reserve provided an amount equal to the entire NIH budget simply to backstop the rescue of Bear Stearns, which allowed Bear Stearns bondholders to receive 100 cents on the dollar, plus interest. In return, the Fed got questionable assets that it pouched into a shell company called “Maiden Lane,” which were later reported to have “underperformed.”
Incomprehensibly large bailout figures now get tossed around unexamined in the wake of the 2008-2009 crisis (blessed, of course, by Wall Street), while funding toward NIH, NSF and other essential purposes has been increasingly squeezed. At the urging of Treasury Secretary Timothy Geithner, Europe has been encouraged to follow the “big bazooka” approach to the banking system. That global fiscal policy is forced into austere spending cuts for research, education, and social services as a result of financial recklessness, but we’ve become conditioned not to blink, much less wince, at gargantuan bailout figures to defend the bloated financial institutions that made bad investments at 20- 30- and 40-to-1 leverage, is Timothy Geithner’s triumph and humanity’s collective loss.
The most depressing display of math-illiteracy by investors last week was the excitement over a report suggesting that France and Germany had agreed to a 2 trillion euro bailout package for Europe, which triggered a “risk-on” tone for the rest of the week, even after the report was retracted as inaccurate. It was almost beyond belief that investors took that report seriously, but people have become so tolerant of unbelievably large figures that virtually any bailout number can now be tossed out without triggering the least bit of scrutiny. Notably, 2 trillion euros is more than the GDP of France, and is half the GDP of Germany and France combined. Moreover, Europe has just gone through a tooth-pulling process just to approve 440 billion euros for the European Financial Stability Fund (EFSF) from all EU members combined.
So barring new dedicated funds from Germany and France, which had zero chance of being forthcoming, the only way you could morph 440 billion euros into 2 trillion euros was for each of those 2 trillion euros to really be only 22 euro cents of protection. In other words, you could only say that the EFSF would “protect” 2 trillion euros in European debt by limiting the protection to about 20% of face value, without using any of the funds to recapitalize banks or deal with much deeper probable losses on Greek debt (50-60%). Those losses alone will gulp down a large chunk of the EFSF (not to mention post-default needs to stabilize Greece over the longer-term, which the Troika estimates at another 450 billion euros).
Last week, the yield on one-year Greek debt closed at 183%, a new record, and up from 169% the prior week. Yet on Friday, the market rallied on hopes of a comprehensive “solution” to the European debt crisis, and took heart that part of an 8 billion euro hold-over loan to Greece was approved. The 1-year Greek yield pushed 3 percentage points higher. As I’ve noted before, this limited amount of immediate relief is needed to buy time preparatory to a default. A clean solution to the European debt problem does not exist. The road ahead will likely be tortuous.
The way that Europe can be expected to deal with this is as follows. First, European banks will not have their losses limited to the optimistic but unrealistic 21% haircut that they were hoping to sustain. In order to avoid the European Financial Stability Fund from being swallowed whole by a Greek default, leaving next-to-nothing to prevent broader contagion, the probable Greek default will be around 50%-60%. Note that Greek obligations of all maturities, including 1-year notes, are trading at prices about 40 or below, so a 50% haircut would actually be an upgrade. Given the likely time needed to sustainably narrow Greek deficits, a default of that size is also the only way that another later crisis would be prevented (at least for a decade, and hopefully much longer).
Gradually, but eventually, European leaders are beginning to recognize that you can’t solve a sovereign debt crisis by expanding the quantity of sovereign debt, when even the strongest countries are already bloated with it. You can’t get “Out” by walking through yet another door marked “In.” The markets aren’t quite to that realization, hoping for some easy “final” resolution that will simply make the problem go away, but that dawn will come.
The Troika report released over the weekend notes that “the situation in Greece has taken a turn for the worse … Deeper PSI [private sector involvement – i.e. loss-taking], which is now being contemplated, also has a vital role in establishing the sustainability of Greece’s debt*. To assess the potential magnitude of improvements in the debt trajectory, and potential implications for official financing, illustrative scenarios can be considered using discount bonds with an assumed yield of 6 percent and no collateral. The results show that debt can be brought to just above 120 percent of GDP by end-2020 if 50 percent discounts are applied… *Footnote: The ECB does not agree with the inclusion of the illustrative scenarios concerning a deeper PSI in this report.”
That footnote is interesting – it’s not that the ECB disputed the deeper loss-taking scenarios – it just didn’t want to include them in the report.
My guess is that European leaders will force a bank recapitalization within days – probably 100 billion euros, preferably 200 billion, but the larger number is doubtful because at present market values, European banks would have to sell new shares in nearly the same quantity as their current outstanding float in order to acquire the new capital. Yet Stratfor correctly notes that even in the event of a 200 billion recapitalization, a 50% haircut on Greek debt “would absorb more than half of that 200 billion euros. A mere 8 percent haircut on Italian debt would absorb the remainder.” So a good chunk of the present EFSF could end up recapitalizing banks, especially if too little is raised from private investors. This would leave little ammunition against any further strains, should they develop.
Of course, Europe wouldn’t need to blow all of these public resources or impose depression on Greek citizens if bank stockholders and bondholders were required to absorb the losses that result from the mind-boggling leverage taken by European banks. It’s that leverage (born of inadequate capital requirements and regulation), not simply bad investments or even Greek default per se, that is at the core of the crisis.
The bottom line is a) European leaders will likely initiate a forced bank recapitalization within days; b) Greece will default, but the new hold-over funding may give the country a few more months; c) the EFSF will not be “leveraged” by the European Central Bank; d) banks are likely to take haircuts of not 21%, but closer to 50% or more on Greek debt; e) much of the EFSF will go toward covering post-default capital shortfalls in the European banking system following writedowns of Greek debt; f) the rest will most probably be used to provide “first loss” coverage of perhaps 10% on other European debt, which may be sufficient to limit contagion provided that implied default probabilities on Italian and Spanish debt don’t breach that level and the global economy stabilizes; g) uncertainty following a Greek default is likely to create significant financial strains, even in the absence of a recession; h) all bets for stability are off if the global economy deteriorates markedly from here, which is unfortunately what we continue to expect.
Shenanigans
On the subject of bank capital, I can’t stress enough that the proper approach is for government to restrict even temporary, fully-collateralized assistance only to those institutions that are clearly solvent, and to promptly restructure the other institutions. What the global economy needs most is not bank bailouts, but to establish and enforce a legal and regulatory structure that allows the streamlined bankruptcy of insolvent institutions (Title II of Dodd-Frank addresses this with a more comprehensive policy than existed in 2008, but it doesn’t read as a “clean” solution in my view – putting too many cooks in the kitchen – particularly the Fed and the Treasury).
Again, again, again, the “failure” of a financial institution only means that the institution fails to pay off its own bondholders. Depositors typically lose nothing. For example, “saving” Bear Stearns meant primarily that Bear Stearns’ bondholders would be made whole. Saving Dexia a few weeks ago meant the same thing for Dexia’s bondholders. The key is not to prevent “failure,” but to prevent disorderly failure and piecemeal liquidation. Washington Mutual was a seamless, and therefore nearly unmemorable “failure.” Lehman was disorderly and jarring. The difference was that there was a legal and regulatory structure to quickly cut away stockholder and bondholder liabilities in the Washington Mutual instance (which was handled by the FDIC), while there was no similar way to restructure non-bank financials like Lehman in 2008.
From my perspective, weak regulation of bank leverage, inadequate capital requirements, and the need for prompt, streamlined restructuring for insolvent banks are among the most urgent problems that the global economy faces. Consider this. The Financial Times reported on Friday that in 2008, Dexia lent 1.5 billion euros of its capital to two institutional investors, who used the cash to buy newly issued shares in … wait for it … Dexia. Remember that as a bank, Dexia operated at leverage of about 50 times its tangible shareholder equity (see last week’s comment ). So Dexia’s maneuver made it possible to meet regulatory capital standards and take on a huge amount of additional leverage, without actually raising any bona-fide capital. As FT noted, “The unorthodox funding move, which roused Belgian regulators’ concern at the time, amounted to Dexia borrowing money from itself to finance a capital increase. This is illegal in most jurisdictions and is now banned in the European Union, but did not break Belgium’s existing laws.”
On a similarly outrageous note, Bloomberg reported last week that ” Bank of America , hit by a credit downgrade last month, has moved derivatives from its Merrill Lynch unit to a subsidiary flush with insured deposits… The Federal Reserve and the Federal Deposit Insurance Corp. disagree over the transfers, which are being requested by the counterparties. The Fed has signaled that it favors moving the derivatives to give relief to the bank holding company, while the FDIC is objecting. The bank doesn’t believe regulatory approval is needed.” Well, other than that it goes against Section 23A of the Federal Reserve Act , but then, the Fed can make an exemption whether the FDIC likes it or not . And that’s what we’ve come to – government of the banks, by the banks, and for the banks (because banks are people too) .
The Bloomberg report continued, “Bank of America’s holding company — the parent of both the retail bank and the Merrill Lynch securities unit — held almost $75 trillion of derivatives at the end of June, according to data compiled by the OCC. About $53 trillion, or 71 percent, were within Bank of America NA [the FDIC insured entity], according to the data, which represent the notional values of the trades. That compares with JPMorgan’s deposit-taking entity, JPMorgan Chase Bank NA, which contained 99 percent of the New York-based firm’s $79 trillion of notional derivatives.”
Note that the figures are in trillions, not billions (U.S. GDP is $15 trillion). That said, the vast majority of the “notional value” of derivatives in the financial system represents multiple fully-hedged links in a long chain between final users who actually take the risk, so Bank of America’s true risk is most probably a tiny fraction of that notional amount. Unless those derivatives include unhedged short positions in credit default swaps on Greek debt (which we can’t really rule out), it’s not clear that the derivatives themselves are underwater. The real problem, in my view, is that the transfer is clearly driven by the intent to get around capital adequacy regulations, and runs precisely opposite to the right way to create a good bank and a bad bank . It saddles the good bank – the taxpayer insured one – with the questionable liabilities, while “giving relief” to the holding company. This is really preposterous. … Full article
What Quantitative Easing Really Means
By ISMAEL HOSSEIN-ZADEH | CounterPunch | October 21, 2011
Stripped from the fancy (and mystifying) jargon, quantitative easing (QE) simply means increasing the quantity of money supply, or easing credit conditions—in the hope of stimulating the stagnant economy. This is usually done by having central banks inject a pre-determined quantity of money into the coffers of commercial banks in return for the purchase of their financial assets, which consist largely of government bonds. Although it is typically done electronically, or on paper, its practical effect is the same as printing money.
This is supposed to be an expansionary monetary policy designed to promote economic recovery. The rationale behind the policy is that the addition of new funds to the capital base of the commercial banks (at or near zero interest rates) will enable them to, in turn, extend new credit to businesses and/or manufacturers at reasonably low rates so that they would, then, be encouraged to borrow, to expand, to hire and, therefore, create growth and prosperity.
While under certain circumstance (when money supply or capital markets are tight, interest rates are too high and effective demand or purchasing power is strong) this may work, under the current market conditions (where there is no shortage of capital, interest rate or the cost of borrowing is already low, and effective demand is very weak) it is bound to fail—as it has actually failed miserably.
Borrowing and investing in the production of goods and manufactures is weak not because there is a shortage of investible funds (corporations are sitting on more than $2 trillion in cash but not hiring) or because the cost of borrowing is too high, as is implicitly assumed by the QE gurus, but because the macro-level purchasing power is too weak and the uncertain market conditions do not warrant investment and expansion. Furthermore, corporations prefer to produce not at home but where the labor is cheapest globally.
Likewise, the reluctance on the part of banks to extend credit to manufacturers is not because they lack capital, but because they find it more profitable to invest in speculation, that is, in buying and selling of assets and/or securities such as bonds, stocks, commodities, real estate, currencies, and the like—destabilizing activities that tend to create asset price bubbles, inevitably followed by bursts. Parasites discovered a long time ago that it is easier to suck the existing blood out of the body of living organisms than producing it from scratch. Karl Marx used an even better metaphor to characterize parasitic finance capital: “The complete objectification, inversion and derangement of capital as interest-bearing capital. . . . It appears as a Moloch demanding the whole world as a sacrifice belonging to it of right.”
This explains why instead of increasing industrial production and raising employment the 1,200 billion dollars of money that the Federal Reserve Bank has pumped into the coffers of commercial banks through two rounds of QEs has simply resulted in further financialization of the economy; which goes to explain the significant bubbling of some asset prices of the past few years, especially the considerable rise in certain share prices as well as the drastic rise in the price of a number of important commodities such as rice, wheat, and oil.
By the same token, it also explains why the QE policy has further exacerbated income and wealth inequality, both in Europe and the United States, as it has helped only the financial elite without any help to the public. “The evidence suggests that QE cash ends up overwhelmingly in profits, thereby exacerbating already extreme income inequality and the consequent social tensions that arise from it,” reports Dhaval Joshi, of BCA Research. Joshi further points out that real wages – adjusted for inflation – have fallen in both the US and UK, where QE has been used to promote growth. “The shocking thing is, two years into an ostensible recovery, [UK] workers are actually earning less than at the depth of the recession. Real wages and salaries have fallen by £4bn. Profits are up by £11bn. The spoils of the recovery have been shared in the most unequal of ways.” In Germany, meanwhile, where there has been no quantitative easing, real wages have risen.
It is not unreasonable, therefore, to conclude that the financial oligarchy is using QE essentially as a legal, policy tool to further enrich itself at the expense of everybody else. Not only were the Wall Street gamblers able to bail themselves out by means of $16 trillions of taxpayers’ dollars, but now they are also showering themselves with additional trillions of QE dollars to grow even richer and bigger.
Let us assume for a moment that, as the Federal Reserve and the government claim, QE is honestly designed to be an expansionary monetary policy intended to stimulate the economy. If so, why is then the government at the same time pursuing a fiscal policy that is contractionary, that is, moving in the opposite direction of the monetary policy by cutting social spending at all levels of the public sector?
The answer is that while from the viewpoint of national or public interests the two policies contradict each other, they are quite consistent from the viewpoint of Wall Street gamblers; both the supposedly expansionary monetary policy and the brutally austere contractionary fiscal policy serve the nefarious interests of the financial aristocracy. It is hard to believe that economic policy makers do not see the obvious: that their monetary and fiscal policies contradict each other. But, then, it is perhaps not so much a matter of economic knowhow or policy expertise as it is of wicked preferences and warped loyalties to the powerful special interests to be served.
Are You Mentally Ill? If You Drink Too Much You Are, Says Big Pharma
By Martha Rosenberg | Dissident Voice | October 8th, 2011
It’s no secret that Pharma is trying to replace its declining pill franchise with optional vaccines like the HPV vaccine which Texas Gov. Rick Perry tried to mandate for adolescent girls. Vaccines are expensive, can be mass marketed to vast swathes of the population and are usually immune to generic competition, pun intended.
One reason for the switch away from pills is that doctors are increasingly wary of prescribing new “blockbuster” drugs after the recalls of Vioxx, Bextra, Baycol, Meridia, Trovan, Fen Phen and new warnings on asthma, epilepsy, pain, bone and hormone drugs.
And there are new wrinkles in compensation. Private and government insurers are becoming less willing to “cough up money for an expensive new drug–particularly when a cheap and reliable generic is available,” the Wall Street Journal reported recently.
So it’s no wonder that Pharma and its benefactors at the National Institutes of Health are mining a new revenue source: the nation’s millions of alcoholics and drugs addicts who need a “vaccine.”
“Sixty percent of people with a substance abuse disorder also suffer from another form of mental illness, says a recent New York Times’ Science Times. (Another?) They are “wired differently” and may have a “developmental brain disorder,” says the article, next to a photo of Amy Winehouse, lest anyone miss The Point.
“We now know that addiction is a disease that affects both brain and behavior,” says Nora D. Volkow, director of the National Institute on Drug Abuse, in an National Institutes of Health newsletter. “We have identified many of the biological and environmental factors and are beginning to search for the genetic variations that contribute to the development and progression of the disease.”
Of course, Pharma’s stratagems to grow its “mentally ill” franchise are well known. People with occasional anxiety are really depressed, then bipolar, then suffering from an assortment of amorphous “spectrum” diseases and dysrythmias with no known cause, no cure, no diagnostic tests and no turnoff valve on the pharmacy spigot.
The situation is even worse for children because they’re given drugs against their will by parents, teachers and doctors. Toddlers are diagnosed with ADHD, conduct disorders, depression, bipolar disorder, oppositional defiant disorder, mood disorders, obsessive-compulsive disorders, mixed manias, social phobia, anxiety, sleep disorders, borderline disorders, irritability, aggression, pervasive development disorders, personality disorders and (pant, pant) even schizophrenia–all of which require expensive medication cocktails.
But the picture gets scarier when researchers start identifying “biological factors” in “animal models” of addiction and depression at major primate research centers. (There are eight including the University of Washington, Seattle; the University of California, Davis; the University of Wisconsin, Madison; Emory University; Harvard University; the Southwest Foundation for Biomedical Research; Oregon Health Sciences University; and Tulane University.)
Scarier for people that is. It’s already pretty scary for animals.
Because even though “proof” of mental illness in animal and human brain matter is as accurate as phrenology, it allows Brave New World diagnoses in which people suffer from – or are at risk of – psychiatric illness in the absence of symptoms. On the basis of a brain scan! Because we have a drug to treat it.
Already drugs for pre-asthma, pre-diabetes, pre-mental illness, pre-cardiovascular conditions and pre-osteoporosis are a big part of Pharma’s arsenal. (And bone measuring machines that “prove” risk for osteoporosis, are in doctors’ offices.)
Pharma’s “early treatment” ruse — especially insidious in children who aren’t given the chance to grow up without drugs — is accelerated by disinformation that the mongered “silent” diseases are progressive: the longer you wait to treat them, the sicker you get! But who knows whether the drugs were ever needed, since they’re taken before symptoms appear?
Of course, the first problem with Pharma’s plan to treat alcoholic and drug addicts’ mental illness with a vaccine is that they are not mentally ill or suffering from a vaccine deficiency. But, secondly, alcoholism and drug addiction are diseases of denial in which sufferers want to drink. Hello? (Can anyone imagine Amy Winehouse asking for a vaccine?) That’s why Antabuse, a drug that makes people violently sick if they drink on it, fails.
Thirdly, doctors have long recognized that alcoholism and drug addiction are not strictly medical problems that can be treated by practitioners. “If a doctor is honest with himself, he must sometimes feel his own inadequacy. Although he gives all that is in him, it often is not enough,” wrote William D. Silkworth, MD, in 1939. “We physicians must admit we have made little impression upon the problem as a whole. Many types do not respond to the ordinary psychological approach.”
The only treatment that works for alcoholics and addicts — much to Pharma’s chagrin — is non-medical, non-pharmaceutical and free — administered in self-help groups run by other alcoholics and addicts. Which brings us to the fourth reason Pharma can’t cash in on its new chosen customers: for alcoholics and addicts, drugs are not the solution they are the problem!
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Martha Rosenberg is a columnist/cartoonist who writes about public health. Her first book, tentatively titled Born with a Fritos Deficiency: How Flaks, Quacks and Hacks Pimp the Public Health, will be published by Amherst, New York-based Prometheus Books next year.She can be reached at: martharosenberg@sbcglobal.net.
Revealed: UK government plotted with Israel lobby to ban Salah
By Asa Winstanley – The Electronic Intifada – 6 October 2011
Birmingham – As Palestinian leader Sheikh Raed Salah’s appeal against deportation concluded in a Birmingham court this week, new details of the UK government’s deep links to the Israel lobby have emerged.
This follows a separate High Court ruling in London on 30 September, when a judicial review into the government’s June imprisonment of Salah ruled he was entitled to damages for “wrongful detention.”
While a panel of two immigration judges is expected to deliver a verdict within 10 days of the hearing, internal government emails obtained by The Electronic Intifada show Home Secretary Theresa May moved quickly to ban Salah not long after the pro-Israel group Community Security Trust (CST) sent a secret report on him. The report contained quotes ascribed to Salah with the word “Jews” inserted into his rhetorical attacks on Israeli occupation forces, in an attempt to paint him as an anti-Semite.
In court on Monday, government barrister Neil Sheldon said, “There is no question of this being a doctored quote, or a cooked-up quote,” although he conceded that the words “Jews” did not appear in the original poem written by Salah. A Jerusalem Post report cited by the government against Salah “may well have got it wrong,” Sheldon stated (“Civil Liberties,” 20 June 2009).
But Sheldon seemed to argue that this fact did not matter because that is how the poem was reported in a “respectable media outlet in Israel.”
This and other similar misquotes were then used by May as a principle source for her banning order against Salah. Salah entered the UK legally on 23 June. Neither he nor his organizers were aware of the ban, because the government had not managed to serve it on him in time.
Conservative Party funder on board of group that pushed for Salah to be banned
The Electronic Intifada can reveal that Poju Zabludowicz, a billionaire real estate magnate who bankrolls the ruling Conservative Party (to which May belongs), is named as a CST board member in a report by an expert witnesses called by Salah’s lawyers. The emails obtained by The Electronic Intifada appear to show that CST played a key role in the banning of Salah.
As well as personally funding UK Prime Minister David Cameron’s campaign for the Conservative Party leadership, Zabludowicz’s family used to own Israeli arms company Soltam (now part of Elbit). And he has owned a minority holding in British Israel, a company with several malls — including one in the illegal West Bank settlement Maaleh Adumim.
David Miller, a sociology professor from the University of Strathclyde in Scotland, was called by Salah’s lawyers to testify as an expert witness in the case. His report on the CST was entered into evidence. It includes a list names of the CST advisory board from June 2010. In court, he said the list was available in the public domain, and later showed The Electronic Intifada where it could be viewed publicly.
A spokesperson for the CST refused to comment when asked by The Electronic Intifada if Zabludowicz or several other members of the list were still board members. Sheldon said Miller’s conclusions that the CST is not a reliable source on the matter belied the list, which includes several members of parliament, lords and former and current senior police officers.
Pro-Israel group CST pushed privately for Salah to be banned
In a 17 June email to the deputy director of the Special Cases Directorate (SCD) of the UK Border Agency (UKBA), Michael Whine, a CST director, said he was writing following the request of an official from another government department. Whine attached a CST report on Salah “who plans a speaking tour of the UK from the end of next week.”
The report claimed that Salah’s “record of provocative acts and statements carry a risk that his presence in the UK could well have a radicalizing impact on his audiences.”
Only 17 minutes after this report was sent, Faye Johnson, Theresa May’s private secretary, emailed SCD Director Andrew Jackson about “a parliamentary event on 29 June” at which Salah was due to speak. Johnson then asked if there was “anything that we can do to prevent him from attending (e.g. could we exclude him on the grounds of unacceptable behavior?).” It is not clear where May had first heard about Salah.
A few hours later, Jonathan Rosenorn-Lanng at the SCD sent an email asking UKBA colleagues for more information on Salah that could be used to exclude him. But it seems this request was a token, as Rosenorn-Lanng insisted he would be “going with what I’ve got in any event” — seemingly a reference to the CST report on Salah.
Pro-Israel lobby group asked for court sources
The previous Monday, Rosenorn-Lanng was the only witness called by the government lawyers in their response to the appeal. Under cross-examination, he had said that, although he was “not expected to be an expert on the actual issues I’m dealing with,” the recommendations he presented to the Home Secretary on exclusions from the UK were checked by people who were experts.
In court, Sheldon also named pro-Israel lobby group the Board of Deputies of British Jews as a further source for the document put together by Rosenorn-Lanng. This document led to May personally signing the order for Salah’s exclusion from the UK.
But it’s likely this is a confusion borne of out of Michael Whine’s dual roles at both the CST and the Board of Deputies. As well as being director of “Government and International Affairs” at the CST, Whine also holds a director’s position at the Board of Deputies and has written a journal article for the CST on European governmental responsibility toward “combating anti-Semitism” (“Two Steps Forward, One Step Back: Diplomatic Progress in Combating Antisemitism,” 2010 [PDF]).
Although Whine sent the report on Salah from a CST email address on 17 June, and with the CST mentioned in his signature, the deputy director of the SCD referred to him as “Mike Whine at the Board of Deputies.”
Although CST predecessor, the Community Security Organization, used to be part of the Board of Deputies, the CST established itself as a charity independent of the Board in 1994 following certain changes in charity law. The CST was granted a special dispensation by the Charity Commission allowing it to withhold public release of the names of its trustees.
Goverment’s only source was anti-Palestinian group
Salah’s barrister Raza Husain had asked why Salah’s hosts in the country had not been consulted by the government or their advice sought on Salah. He also asked why they had not consulted a group like Jews For Justice For Palestinians, who issued a statement in favor of Salah’s right to speak in the country.
Pressed by Husain on this point over the whole three days of hearings, the government was unable to point to a single outside group whose advice it had drawn on, apart from the CST and the Board of Deputies (taken in the context of the emails, it seems both were via Whine).
Husain told the court he was not aware of any primary document in the report to Theresa May compiled by Rosenorn-Lanng that was not from the CST (apart from a “communities impact assessment” from the another government department). Sheldon’s reply was that, if that was the state of the evidence, “that’s the evidence.”
He later said it was “simply not the case” that everything from the CST was “taken at face value,” and he gave the example that a CST report referred to Salah’s presence on the Mavi Marmara as part of the 2010 Gaza Freedom Flotilla. Rosenorn-Lanng had said the government discounted an accusation used in a CST submission that Salah might have been involved in indoctrination that led to an attack on Israeli naval commandos as a “rumor.”
But it also emerges from the emails that even May recognized that the case was “very finely balanced.” May’s private secretary Faye Johnson said as much in an email dated 23 June, 4:26pm, to SCD Deputy Director Rod McLean, thanking him for his submission. This submission is seemingly the documents assembled by Rosenorn-Lanng, who had in court described the CST as a “principal source.” But once Salah had been arrested on 28 June, some civil servants advised May against deportation because he had a ticket to leave the country on 5 July anyway, and arrest would only attract more attention to the case.
Husain’s argument was: if the case was so finely balanced even when only a report from a group biased against Salah had been received, how did the scales tip now that Salah’s side of the story had been heard in court?
Salah’s exclusion order an an affront to free speech
Sheldon’s argument was that the exclusion decision taken by May was something she is democratically accountable for, and that the Tribunal should be “very slow” to substitute its own view for hers, because it had an incomplete jurisdiction. He argued that the accusations against Salah in the document assembled by Rosenorn-Lanng were not counts of an indictment that had to be proved, and that the question for the Tribunal was, was there sufficient evidence for May to base her decision on. He characterized the evidence as disputed.
Husain took exception to that, saying the judges had to deal with the material on its own terms. He argued that the true aim of the exclusion order was to block free speech, pointing to Faye Johnson’s emailed reference to Salah’s scheduled meeting in the Houses of Parliament.
Sheldon argued that Salah’s presence in the country would have the effect of radicalizing “elements of the Muslim community.” Sheldon said Salah had been convicted in Israel of funding charities linked to Hamas and that it was a misrepresentation of a revised indictment to say this related only to charitable work.
Asked by The Electronic Intifada for a response to the accusations heard in court, Mark Gardner of the CST wrote, “It is a disgraceful slur to claim that CST’s attitudes to antisemitism are based upon the assumed religion or ethnicity of those concerned. We completely reject any insinuation that CST used ‘doctored’ quotes. You should note that there was a Guardian article which carried similar accusations to those you are making. They changed it following our legal intervention.”
This last comment seems to be a reference to a Guardian article by David Hearst, who also had access to some of the government emails, to which an amendment notice is appended (“May warned of weak case against Sheikh Raed Salah,” 26 September 2011).
Should Salah win his appeal, the government is likely to challenge the ruling. Since he is a well-known leader of peaceful popular resistance against the Israeli occupation, UK government collusion with Israeli authorities has already caused a great deal of damage to Britain’s reputation in the Arab world. A deportation would only increase such damage.
When the law has just been changed to allow Israel’s former foreign minister and war crimes suspect Tzipi Livni to freely visit Britain even while Salah remains on restrictive bail, one can accuse the UK of rank hypocrisy.
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Asa Winstanley is a freelance journalist based in London who has lived in and reported from occupied Palestine. He edited the book “Corporate Complicity in Israel’s Occupation,” out in October. His website is www.winstanleys.org.
Diane Black Bonds With Israel in Required Initiation Ritual
Kenny’s Sideshow | September 20, 2011
One of the best kept secrets lately has been the complete list of congress members that visited Israel during their recent ‘break.’
My ‘con,’ Republican Diane Black, 6th district Tennessee, zionist states of America, was one of them.
As a freshman congressperson it is no surprise that she had to make the obligatory trip, meet with the criminals in charge and let them know she is with them all the way. There seems to be no other way to secure a long term congressional career and Mrs. Black knows it.
What’s odd is that Diane kept her trip to Israel about as hidden as could be. To the best of my knowledge she did not announce it publicly in advance. It was a reported 9 day visit where for all intents and purposes she just disappeared. Upon her return she has not posted anything about this ‘educational’ trip paid for by the AIPAC subsidiary The American Israel Education Foundation on her official government web site or her Facebook page. No press release, no nothing except for one apparent tweet that few saw. One might get the impression that she was trying to hide her trip from her constituents. Why would that be Diane?
What is also odd is that the Murfreesboro Daily News Journal, the newspaper in the largest city in Diane’s district did not find her trip to Israel newsworthy. Neither did the nearby Nashville media including the Tennessean or any of the local tv or radio stations. The secret has been safe with no debate anywhere to be found among the middle Tennessee area residents.
Without the help of Video Rebel’s Blog and Legistorm’s trip report it would still be a secret to me.
A statement that was found from Black is “My Trip to Israel” on an obscure site Tennesseans Watching Federal and State Government and as far as I can tell not re-posted anywhere else.
Black, number 25 on the list of wealthiest congresspersons, is a low key zionist supporter. She is not required to shout from the rooftops her loyalty to the apartheid illegitimate state in her overwhelmingly non-jewish but fairly significant christian zionist populated district. She just needs to deliver the votes in Congress as needed.
The Palestinian initiative for statehood recognition in the UN will get no support from Mrs. Black. The wishes of the Israeli criminal ‘leaders’ will dictate her foreign policy votes and war mongering stance.
Once again I’m ashamed to have a congressperson who will represent Israel’s and of course big corporate interests ahead of those of the folks of Tennessee. We’ll even go so far as to call her a traitor, a tea party traitor. The best we can hope for is that her first two years in Congress will also be her last.
Breivik massacre has “Gladio” clues from previous massacres in Belgium
By Wayne Madsen | Intrepid Report | September 19, 2011
The CIA’s infamous “stay-behind” networks, originally established by the CIA to commit acts of sabotage against an expected Soviet invasion of Western Europe, was, instead, used in the 1970s and 1980s, amid calls for peace and an end to the Cold War in Europe, to stage “false flag” terrorist attacks that were blamed on Communist cells in Western Europe. In fact the terrorist attacks were carried out by right-wing paramilitaries on the payroll of the CIA.
The terror visited by the Gladio fear-stoking paramilitaries was especially felt in the Belgian province of Brabant where the Brabant Gang, active from 1982 and 1985, the height of Europe’s anti-nuclear and anti-U.S. military campaign. Twenty eight people were killed by the Brabant Gang with scores of others injured. Particularly targeted were Delhaize supermarkets, the chain that owns Food Lion in the United States.
Oddly, money stolen from victims was sometimes found dumped by the gang members. Three of the killings stemmed from the robbery of an arms dealer. There were several reports that the Brabant Gang was run by elements of the Belgian Gendarmerie SDRA6 (Service de documentation, de renseignments et d’action VI)—a secret branch of Belgian security—and the U.S. Defense Intelligence Agency, acting on behalf of the CIA. The Brabant Gang was also linked to the activities of a neo-Nazi organization in Belgium called the Westland New Post, whose terrorist actions were blamed by authorities on the Communist Combatant Cells, also believed to be a construct of the Belgian and American security services.
Among the victims of the Brabant Gang were Belgian real estate tycoon Jacques Fourez and his secretary, Elise Dewit, killed by the gangsters in 1983. Their deaths as well as others were linked to the evidence they possessed of secret parties, called “pink ballets,” at which Belgium’s elite, including members of the royal family, NATO officers, and politicians, participated in orgies with underage males and females.
There is another link between the Belgian Gladio operations in the 1980s and the activities of Anders Behring Breivik in Norway. A number of Belgian neo-Nazi paramilitary members were connected to the Order of the Solar Temple, a secret society founded in the 1960s by French Nazis. The Order of the Solar Temple is a cult following of the Knights Templar. Breivik and his closest associates were also affiliated with anti-Islamic Knights Templar groups. Between 1994 and 1997, a number of Solar Temple members were murdered ritualistic-style or committed mass suicide. The deaths occurred in Cheiry and Salvan, in western Switzerland; Vercors, France; and Morin Heights and Saint-Casimir, Quebec.
Japanese television journalists who contacted this editor in 2000 had discovered similar links between the Solar Temple and the CIA, as they had previously discovered existed between the CIA and the Japanese murder and suicide religious cult, Aum Shinrikyo. The Order of the Solar Temple was founded in 1984 by Joseph di Mambro, a former Rosicrucian, and Luc Jouret, born in the Belgian Congo and a Marxist-turned-neo-Nazi. In 1984, Shoko Asahara founded Aum Shirinkyo, which means “Supreme Truth.” Aum Shirinkyo soon attracted a number of influential adherents, including members of the Japanese royal family. In 1995, Aum attacked the Tokyo subway system with sarin.
In the mid-1990s, Belgian gangster Marc Dutroux was arrested for carrying out a series of kidnappings of young girls, who he proceeded to sexually abuse, torture, and in four cases, murder. Dutroux’s parents had emigrated to the Belgian Congo but later returned to Belgium. Dutroux’s kidnappings and abuse of young girls occurred during the 1980s, the same time frame that members of the Belgian elite were engaging in orgies with underage girls and boys. Dutroux was constantly being let off the hook by the Belgian authorities and the police’s failure to take prompt and severe action against the pedophile rapist ultimately led to the reorganization of Belgian law enforcement. One of the first trial judges in the Dutroux case, Jean-Marc Connerotte, testified that he was threatened by shadowy figures in the highest echelons of the government for trying the case against Dutroux. Dutroux was finally convicted and sentenced to life imprisonment in 2004. Dutroux was also convicted of having murdered his one-time accomplice, Bernard Weinstein.
WMR has been informed by reliable sources that the Belgian pedophile scandal also involved top American officials and is linked to the pedophile networks active in Washington, DC, Los Angeles, and Omaha during the same time frame, the 1980s. In some cases, Belgian and other European politicians who engaged in Pink Ballet activities were blackmailed by the CIA into backing NATO initiatives in Europe.
Previously published in the Wayne Madsen Report.
Copyright © 2011 WayneMadenReport.com
Can US Congress see beyond the orchestration and opulence in Tel Aviv?
Rev. Carolyn L. Boyd – The Electronic Intifada – 9 September 2011
Americans are frustrated, angry and disappointed in the political leadership of our country. We are enduring one crisis after another: housing, war, jobs, budget, debt and deficit. We are also shouldering our own personal and professional crises. We are governed by political ideologies that are inflexible, uncompromising and that ignore the long-term well-being of our country.
Yet, with all of these pressing and unrelenting national challenges, a record 81 House members, about a fifth of the chamber, spent a week in Israel last month, courtesy of a foundation set up by the American Israel Public Affairs Committee (AIPAC), the largest pro-Israel lobby group in the US.
As a participant in the Interfaith Peace-Builders’ African Heritage Delegation to Israel/Palestine, who recently returned from a two-week fact-finding study tour, I can attest that Israelis have their own urgent and pressing issues to deal with: ongoing maintenance of the 63-year-old occupation (yes, it dates to the 1948 ethnic cleansing of approximately 750,000 Palestinians), expensive and unjust military rule over the Palestinian people in the occupied West Bank and Gaza Strip, seized in 1967, massive Israeli youth protests regarding the rising cost of housing, food, and gas, and the ongoing oppression of Jews of color and Palestinians citizens of Israel.
Congressman Jesse Jackson, Jr., one of the Democrats who visited Israel, said that he was looking forward to learning about Israel’s business and commercial sectors as well as the latest tools and technology the country is using to fight terror, but what did he really see? I doubt he saw and experienced what the 14 members of the African Heritage Delegation witnessed.
More than likely, his delegation saw and experienced the beauty and opulence of Tel Aviv. They enjoyed the finest of foods and perhaps sampled wines from the colonized Golan Heights. They probably witnessed well-orchestrated military exercises and political speeches. I suspect they did not hear, as we did, from Palestinians who are displaced from their homes, whose lands, farms and olive trees have been confiscated or from the mothers who worry about their sons being bullied, abused and imprisoned by the Israeli police using the most technologically advanced counterinsurgency practices.
I’m sure they did not see, as my delegation did, the rationing of water to Palestinians, the daily blackouts of electricity or the lack of health care services to the elderly or those suffering from post-traumatic occupation stress syndrome. No doubt, they did not meet Palestinians, as we did, in Hebron who live each day under the assault of angry, militant Jewish settlers.
Democracy means more than voting rights
House Majority Leader Eric Cantor, who led one of two Republican delegations, stated, “I am pleased to be bringing so many of our new Members of Congress to Israel so that they can learn firsthand about Israel and the important role our key ally plays in the Middle East. The United States and Israel share similar core values of democracy, human rights and a strong national defense.”
Yet Israel is not living up to the definition of a democracy. Israel has dominated Palestinians for 63 years while illegally occupying the West Bank, including East Jerusalem, and Gaza for the past 44 years. It routinely denies full participation of Palestinian citizens of Israel. Inside Israel, it is well documented that Jews of color (Sephardi and Mizrahi Jews), African Palestinians and non-Jewish residents are treated as second- and third-class citizens with diminished human and civil rights. Democracy means more than voting rights for Palestinian citizens. There must be equality under the law, yet that is significantly absent in Israel and dramatically lacking in how Israel administers the occupied West Bank and Gaza Strip.
There is simply too much at stake in America for our congressional members to meet with Israeli and Palestinian leaders without the complete picture of the Israeli-Palestinian conflict. The situation is vastly different from the one Israel’s prime minister depicted recently to Congress.
What if we stopped the $3 billion in aid?
What if we stopped the $3 billion in aid we give to Israel annually and used the savings to create a national jobs-deficit reduction program? Our African Heritage Delegation believes, as many Americans do, that we need a jobs growth and deficit reduction program here at home now. This is the time to reallocate financial resources to American families and communities and to fix our obsolete, dilapidated infrastructure.
The two-tier system of law Israel has established in the occupied West Bank, documented by Human Rights Watch, recalls the Jim Crow laws of the American South and the discriminatory practices of apartheid South Africa. Our members of Congress should loudly reject such discrimination. And they should spend more time with constituents in dire need of their leadership as well as modeling democratic values in their respective congressional districts.
Rev. Carolyn L. Boyd lives in Alexandria, Virginia.
Obama’s Jobs Plan
Moon of Alabama | September 9, 2011
Obama’s jobs plan:
- “We will continue to falsely diagnose a solvency crisis as a normal liquidity recession.” (I would otherwise have to demand credit write downs from those criminal banksters who pay for my reelection bid.)
- “We will cut the payroll taxes which pay for social security.” (This will make it easier to later gut the whole program.)
- “We will pay for that by later cutting Medicare and Medicaid.” (See how I never lose sight of my original aims.)
- “We also ask the Congress super-committee to find more ways to cut spending.” (Time for the cat food commission to earn its name.)
- “We will give tax breaks to companies that hire workers.” (Just fire them from those well payed jobs, rehire them for less and get another tax break. What’s not to like here?)
- “We will give some money to the cities and towns so they can keep more policemen on their payrolls.” (We will need those when the people eventually start to revolt.)
- “We will put up $10 billion of the people’s money toward a public-private infrastructure bank. (Here is some upfront money for the banksters to privatize more of the now public owned space.)
- “We will also offer money to rehab vacant and foreclosed houses that are now owned by the banks.” (They never really wanted those houses so why should they pay for them?)
- “We ask Congress to pass this immediately.” (Please don’t give anyone time to find out what really is behind these ideas.)
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“Democratic Institutions?” – 10 Lessons from history that will destroy your trust in the CIA
By Kit | OffGuardian | July 20, 2018
… At every corner, we are urged to simply believe what we are told. Whether it is about believing Porton Down and MI6 about “novichok”, or believing the White Helmets about Sarin, or believing the FBI about “collusion”, we are presented with no facts, just assertions from authority. Those who question those assertions are deemed “bots” at best or “traitors” at worst.
Well here, fellow traitors, are the Top Ten reasons to question anything and everything the CIA – or any intelligence agency – has ever told you. … Read full article
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