Washington’s “Global War on Terrorism” (GWOT): Violence, War and Instability in an “Arc of Terror” | Global Research
Twelve years into America’s “war on terror,” it is time to admit that it has failed catastrophically, unleashing violence, war and instability in an “arc of terror” stretching from West Africa to the Himalayas and beyond. If we examine the pretext for all this chaos, that it could possibly be a legitimate or effective response to terrorism, it quickly becomes clear that it has been the exact opposite, fueling a global explosion of terrorism and a historic breakdown of law and order.
The U.S. State Department’s “terrorism” reports  present a searing indictment of the “war on terror” on its own terms. From 1987 to 2001, the State Department’s “Patterns of Global Terrorism” reports had documented a steady decline in terrorism  around the world, from 665 incidents in 1987 to only 355 incidents in 2001. But since 2001, the U.S. “war on terror” has succeeded in fueling the most dramatic and dangerous rise in terrorism ever seen.
The State Department reports seem, at first glance, to show some short-term success, with total terrorist incidents continuing to decline, to 205 incidents in 2002 and 208 in 2003. But the number of more serious or “significant” incidents (involving death, serious injury, abduction, kidnapping, major property damage or the likelihood of such results) was already on the rise, from 123 incidents in 2001 to 172 in 2003.
But then the 2004 report , due to be published in March 2005, revealed that the number of incidents had spiked to an incredible 2,177, including 625 “significant” incidents, even though the report excluded attacks on U.S. occupation forces in Iraq. Secretary of State Condoleeza Rice took decisive action, not to urgently review this dangerous failure of U.S. policy, but to suppress the report. We only know what it said thanks to whistleblowers who leaked it to the media, and to Larry Johnson , an ex-CIA and State Department terrorism expert and a member of Ray McGovern’sVeteran Intelligence Professionals for Sanity .
Rice eventually released a reformatted version of the 2004 report, ostensibly replacing “Patterns of Global Terrorism” with a new report titled “Country Reports on Terrorism” that excluded all statistical data. The State Department has continued to publish “Country Reports on Terrorism” every year, and was forced to include a “statistical annex” beginning with the report for 2005. The reports also include disclaimers that this data should not be used to compare patterns of terrorism from one year to the next because of the “evolution in data collection methodology”. In other words, a report that used to be called “Patterns in Global Terrorism” should not be used to study patterns in global terrorism!
So, what is the State Department afraid we might find if we used it to do just that? Let’s take a look. The politicization of these reports certainly undermines their reliability, but, as Secretary Rice understood verywell, the dramatic rise in global terrorism that they reveal is undeniable.
The numbers obviously spiked in Iraq and Afghanistan while under U.S. occupation, so we’ll exclude the figures for those periods in those countries. The rationale for the “war on terror” was always that, by “fighting them there”, we wouldn’t have to “fight them here”, so we’ll just look at the effect “here” and everywhere else.
On that limited basis, the State Department reports nonetheless document an explosion of terrorism, from 208 incidents in 2003 to 2,177 in 2004 to 7,103 incidents in 2005. Since then, the total has fluctuated between a high of 7,251 incidents in 2008 and a low of 5,029 incidents in 2009, after President Obama’s election temporarily raised hopes of a change in U.S. policy. The State Department has not issued a report for 2013 yet, but the number of “terrorist” incidents in 2012 remained at 5,748, documenting an intractable crisis that is the direct result of U.S. policy.
The ineffectiveness of the war on terror is intricately entwined with its illegitimacy. In my book,Blood On Our Hands: the American Invasion and Destruction of Iraq, I argued that the illegitimacy of the hostile U.S. military occupation of Iraq was at the root of all its other problems. The U.S. forces who illegally invaded the country lacked any real authority to restore the rule of law and order that they themselves had destroyed. Even today, two years after expelling U.S. forces, the Iraqi government installed by the U.S. occupation remains crippled by fundamental illegitimacy in the eyes of its people.
The United States’ “war on terror” faces the same problem on a global scale. The notion of fighting “terror with terror” or a “war on terror” was always fundamentally flawed, both legally and in its prospects for success. As Ben Ferencz , the only surviving prosecutor from the Nuremberg war crimes trials, explained to NPR on September 19th 2001 , a week after the mass murders of 2,753 people in his hometown, New York City:
“It is never a legitimate response to punish people who are not responsible for the wrong done. We must make a distinction between punishing the guilty and punishing others. If you simply retaliate en masse by bombing Afghanistan, let us say, or the Taliban, you will kill many people who don’t approve of what has happened. I wouldn’t say there is no appropriate role (for the military), but the role should be consistent with our ideals… our principles are respect for the rule of law, not charging in blindly and killing people because we are blinded by our tears and our rage. We must first draw up an indictment and specify what the crimes were, calling upon all states to arrest and detain the persons named in the indictment so they can be interrogated by U.S. examiners… I realize that (the judicial process) is slow and cumbersome, but it is not inadequate… We don’t have to rewrite any rules. We have to apply the existing rules.”
Ferencz took issue with the use of terms like “war”, “war crimes” and “terrorism.”
“What has happened here is not war in its traditional sense… War crimes are crimes that happen in wartime. There is confusion there… Don’t use the term “war” crimes, because that suggests there is a war going on and it’s a violation of the rules of war. This is not in that category. We are getting confused with our terminology in our determination to put a stop to these terrible crimes… To call them “terrorists” is also a misleading term. There’s no agreement on what terrorism is. One man’s terrorism is another man’s heroism… We try them for mass murder. That’s a crime under every jurisdiction and that’s what’s happened here and that is a crime against humanity.”
British military historian Michael Howard told NPR that U.S. leaders were making “a very natural but a terrible and irrevocable error” in declaring a “war on terrorism.” He elaborated in a lecture in London  a few weeks later:
“…to use, or rather to misuse the term “war” is not simply a matter of legality, or pedantic semantics. It has deeper and more dangerous consequences. To declare that one is “at war” is immediately to create a war psychosis that may be totally counter-productive for the objective that we seek. It will arouse an immediate expectation, and demand, for spectacular military action against some easily identifiable adversary, preferably a hostile state…”
In the U.S. Congress in 2001, Barbara Lee stood alone  against a sweeping Authorization for the Use of Military Force (AUMF), giving the president the authority to use “all necessary and appropriate force against those nations, organizations, or persons” whom he judged to have “planned, authorized, committed or aided” the mass murders of September 11th.
Barbara Lee implored her colleagues not to “become the evil we deplore,” but she was the only Member with the clarity and courage to vote “No” to the AUMF. Twelve years later, she has 31 co-sponsors forH.R. 198 , a bill to finally repeal the 2001 AUMF. They include former civil rights leader John Lewis, who said recently , “If I had to do it all over again, I would have voted with Barbara Lee. It was raw courage on her part. So, because of that, I don’t vote for funding for war. I vote against preparation for the military. I will never again go down that road.”
From the outset, few Americans understood that the “war on terror” was not legally a real war in which the civilian rule of law was suspended. Elizabeth Wilmshurst resigned as Deputy Legal Advisor to the British Foreign Office in protest at the U.K.’s “crime of aggression” against Iraq in 2003. A year later, she told theIndependent , “This rather extraordinary war on terror, which is a phrase that all lawyers hate… is not really a war, a conflict against terror, any more than the war on obesity means that you can detain people.”
As the Obama administration took office in 2009, an Eminent Jurists Panel  convened by the International Commission of Jurists, and headed by former President of Ireland Mary Robinson issued a report on the U.S. response to terrorism since 2001. The report concluded that the U.S. government had confused the public by framing its counter-terrorism activities within a “war paradigm.” It explained,
“The U.S.’ war paradigm has created fundamental problems. Among the most serious is that the U.S. has applied war rules to persons not involved in situations of armed conflict, and, in genuine situations of warfare, it has distorted, selectively applied and ignored otherwise binding rules, including fundamental guarantees of human rights laws.”
Like Ben Ferencz, the ICJ panel insisted that established principles of law “were intended to withstand crises, and they provide a robust and effective framework from which to tackle terrorism.”
But Barack Obama was an unlikely candidate to restore the rule of law to U.S. policy, to demilitarize the “war on terror” or to derail the gravy train of the largest military budget since World War II. Hislong-term ties to General Dynamics CEO Lester Crown  and his thorough vetting by Crown and other military-industrial power-brokers ensured that the 2008 election was the first in 14 years in which Democrats raised more campaign cash from the weapons industry than Republicans, even after the Republicans almost doubled the military budget in 8 years and nominated industry darling John McCain for president.
A persistent part of the Obama myth is his description of himself as a “constitutional law professor.” While serving as an Illinois State Senator, Mr. Obama did have a part-time job as a lecturer teaching 3 two-hour seminars per year at the University of Chicago in a program that brought politicians and other prominent people into the law school to give students a taste of the “real world.” Most of the seminars were on public interest law or racism, not constitutional law , but in the looking-glass world of Obama mythology, this has transformed him into a “constitutional law professor” for political purposes.
Obama has failed to close Guantanamo, escalated the longest and most unpopular war  in U.S. history in Afghanistan, maintained the largest military budget since World War II , conducted23,000 air strikes  (mostly in Afghanistan ), launched or expanded covert and proxy wars in Pakistan, Yemen, Somalia, Libya and Syria, and deployed U.S. special forces to 120 countries .
But perhaps the signature initiative of Obama’s war policy has been the expansion of assassination operations  using unmanned drones and JSOC death squads. These operations violate still-standing executive orders  by previous presidents that prohibit assassination by U.S. forces or officials. They are not legally covered by the 2001 AUMF, because very few of the people he is killing were involved in the crimes ofSeptember 11th, as former State Department Legal AdviserJohn Bellinger pointed out to the Washington Post  in 2010.
Just as Bush administration lawyers wrote memos claiming that torture was not torture, Obama’s have reportedly written memos claiming that assassination is not assassination and that innocent civilians in half-a-dozen countries are somehow implicated in September 11th and therefore legitimate targets under the 2001 AUMF. But after Bush’s torture memos were widely ridiculed as legal fig-leaves to justify war crimes, the Obama administration has drawn a veil of secrecy over its assassination memos. If Obama’s legal training has taught him nothing else, it’s that he can’t afford to expose his illegitimate cover for war crimes to public scrutiny and global outrage.
As the U.N.’s Special Rapporteur for Extrajudicial Executions Philip Alston wrote in June 2010 ,
“Targeted killings pose a rapidly growing challenge to the international rule of law, as they are increasingly used in circumstances which violate the rules of international law… The most prolific user of targeted killings today is the United States, which primarily uses drones for attacks… the United States has put forward a novel theory that there is a “law of 9/11″ that enables it to legally use force in the territory of other states as part of its inherent right to self-defense on the basis that it is in an armed conflict with Al-Qaeda, the Taliban and “associated forces,” although the latter group is fluid and undefined. This expansive and open-ended interpretation of the right to self-defense goes a long way towards destroying the prohibition on the use of armed force contained in the UN Charter.”
The prohibition against the threat or use of force in Article 2.4 of the UN Charter  is the foundation of peace in the modern world. As Alston implied, it is either an unintended victim or an intended target of the “war on terror.” The history of U.S. war policy since the end of the Cold War suggests the latter. U.S. officials came to see the Charter’s prohibition on the threat or use of force as a constraint on their ability to exploit the “power dividend ” they gained from the collapse of the Soviet Union. For ten years, they struggled to sell the world on new interventionist doctrines of “reassurance “, “humanitarian intervention “, “responsibility to protect ” and “information warfare .” In the Clinton administration’s 1997 Quadrennial Defense Review (QDR) , itclaimed the right to use unilateral military force to “defend vital national interests,” including “preventing the emergence of a hostile regional coalition…(and) ensuring uninhibited access to key markets, energy supplies and strategic resources.”
As the British Foreign Office’s top Legal Adviser  told his government during the Suez Crisis in 1956, “The plea of vital interest, which has been one of the main justifications for wars in the past, is indeed the very one which the U.N. Charter was intended to exclude.” So the implicit threat in Clinton’s QDR was a violation the U.N. Charter, and his attack on Yugoslavia in 1999 was a flagrant violation and a crime of aggression. When British Foreign Secretary Robin Cook told Secretary Albright the U.K. was having difficulty “with its lawyers” over the plan to attack Yugoslavia, she told him the U.K. should “get new lawyers.”
When planes crashed into the World Trade Center and the Pentagon on September 11th, counter-terrorism still seemed an unlikely pretext for overturning the U.N. Charter. But, within hours, according to Under-secretary Cambone’s notes  obtained by CBS News, Defense Secretary Rumsfeld told a meeting at the Pentagon, “Judge whether good enough hit S.H. (Saddam Hussein) at same time – not only UBL (Usama Bin Laden)… Go massive. Sweep it all up. Things related and not.”
Twelve years later, as Michael Howard predicted, it is much harder to unscramble the consequences of America’s “natural but terrible” embrace of open-ended aggression and militarism. But underlying all the crimes and atrocities committed in our names is the fiction that we are at “war” with “terror”, whatever that can possibly mean. What it means in practice is that the U.S. government has applied an opportunistic soup of peacetime and wartime rules to justify whatever it wants to do, to use force anywhere in the world, to kill or maim anybody, to spy on anybody, to violate any treaty or human rights law and to project power anywhere, to effectively place itself beyond the rule of law. To paraphrase Richard Nixon , “When the United States does it, that means that it is not illegal.”
The analysis of international lawyers like Ben Ferencz and other experts gives us a clear road-map to ending the war on terror and starting to undo its terrible consequences. There is a surprisingly clear consensus across the political spectrum on what needs to be done.
On the one hand, we have Noam Chomsky saying , on October 18th 2001, that, “The only way we can put a permanent end to terrorism is to stop participating in it.” On the other hand we have Eliza Manningham-Buller, the first woman to head MI5, the U.K.’s domestic intelligence agency, describing a meeting at the British Embassy  in Washington on September 12th 2001, where “there was one thing we all agreed on: terrorism is resolved through politics and economics, not through arms and intelligence… I call it a crime, not an act of war… I have never thought it helpful to refer to a “war” on terror any more than a war on drugs.”
Ending the failed war on terror means restoring the rule of law to U.S. policy – not by secret interpretations of extraordinary laws granting unconstitutional emergency powers, but by genuine compliance with U.S. law and international treaties like the U.N. Charter and the Geneva Conventions. If we allow our government to persist in this failed and disastrous policy, it will continue to corrupt and erode its own authority, it will destabilize the entire world and it will leave us defenseless in the face of real existential dangers like climate change and nuclear war.
Nothing could be more urgent than ending the failed war on terror (FWOT). These are the practical steps we must demand of the President and Congress:
1) Pass Barbara Lee’s bill, H.R.198 , to repeal the 2001 Authorization for the Use of Military Force.
2) Close the concentration camp at Guantanamo Bay. Transfer accused criminals to stand trial in legitimate courts under fair trial standards, and release and compensate people wrongly imprisoned and/or tortured.
3) Halt all drone strikes, assassinations and military or paramilitary operations that violate the U.N. Charter, the Geneva Conventions or other established principles of international law.
4) Substantially cut the U.S. military budget to end the most expensive and destabilizing unilateral arms build-up in the history of the world.
5) Acknowledge that the U.S. has committed aggression, torture and other war crimes during the past 12 years. Restore legal accountability and compensate victims.
6) Make a new commitment to good faith diplomacy and cooperation with other countries to deal with the world’s pressing political, economic, social and environmental problems, including the explosion of terrorism caused by the war on terror.
Nicolas J. S. Davies is author of Blood On Our Hands: The American Invasion and Destruction of Iraq. He wrote the chapter on “Obama At War” for the just released book, Grading the 44th President: A Report Card on Barack Obama’s First Term as a Progressive Leader.
Hedge funds raised bullish commodity bets to a 15-week high after a drought in Brazilthreatened crops from coffee to soybeans.
The net-long position across 18 U.S.-traded commodities climbed 15 percent to 900,330 futures and options in the week ended Feb. 4, the biggest gain since August, U.S. Commodity Futures Trading Commission data show. Investors turned bullish on arabica coffee for the first time since July 2012 and soybean wagers rose by the most in almost three months. Brazil is the biggest exporter of both crops.
The Standard & Poor’s GSCI Agriculture Index of eight commodities rose 3.3 percent last week, reaching an eight-week high Feb. 6. In Brazil, also the top sugar grower, the driest January since 1954 drained dams and scorched plants. Extreme global weather also is threatening other crops with too much rain hampering Indonesia’s cocoa harvest and freezing temperatures damaging U.S. wheat.
“Agriculture is probably the best hope for a decent commodity run this year,” said Peter Sorrentino, who helps manage $4.4 billion at Huntington Asset Advisors in Cincinnati. “These weather issues will definitely have a decided positive influence on prices.”
The S&P GSCI Spot Index of 24 raw materials gained 2.1 percent last week. The MSCI All-Country World index of equities rose 0.8 percent, while the Bloomberg Treasury Bond Index slid 0.1 percent. The Bloomberg Dollar Spot Index, a gauge against 10 major trading partners, dropped 0.8 percent. The S&P GSCI Agriculture Index rose 0.2 percent at 4:18 p.m. New York time.
Money managers held a coffee net-bullish position of 7,981 contracts on Feb. 4, the CFTC data show. That’s the first bet on a rally since July 2012. Prices for arabica, the variety favored by Starbucks Corp., surged 23 percent since Dec. 31, the best start to a year since 1997.
Plantations in Brazil are enduring dry weather just when rain is needed the most for tree roots to absorb nutrients as the beans begin to grow inside the coffee cherries. Rain may be “too late” and there isn’t enough time to reverse the damage to trees and beans, Terra Forte, a Sao Joao da Boa Vista-based shipper, said in a report.
Hot, dry weather cut potential soybean yields in as much as 40 percent of Brazil’s growing areas, Commodity Weather Group LLC in Bethesda, Maryland, said in a report Feb. 7. In Kansas, the top winter-wheat-growing state, 35 percent of the crop was in good or excellent condition, down from 58 percent on Dec. 30 after sub-zero temperatures swept the nation, the government said Feb. 3. The Indonesian Cocoa Association sees the nation’s crop dropping to the lowest in a decade as rains in the third-biggest grower hurt flowering and delay the harvest.
Raw materials from copper and corn to sugar and coffee will be have supply surpluses this year after a decade-long bull market spurred producers to build new mines, drill more wells and expand planting of crops. Banks led by Goldman Sachs Group Inc. and Citigroup Inc. say commodities are heading for losses in 2014. The S&P GSCI Agriculture Index tumbled 22 percent last year, the most since 1981, after U.S. crops recovered from the worst drought since the 1930s.
Inventories of soybeans around the world will equal 26.7 percent of consumption this season, up from 23.5 percent a year earlier, the U.S. Department of Agriculture said Jan. 10. Corn stockpiles will equal 17.1 percent of use, compared with 15.4 percent a year earlier. Global coffee production is set to exceed demand for a fourth season, pushing stockpiles to a five-year high, according to the USDA.
“We’re not in a precarious situation for crop supplies like we were a year ago,” said Kelly Wiesbrock, a managing director at Harvest Capital Strategies in San Francisco, which oversees $1.8 billion. “We do have a buffer today in the event that we have below-trend yields this year. It’s unlikely we see drastic price reaction.”
World food prices fell in January to a 19-month low, the United Nations’ Food & Agriculture Organization said Feb. 6. The Rome-based group’s index of 55 food items is 4.5 percent lower than a year ago.
The S&P GSCI Enhanced Commodity Index, Goldman’s preferred measure, will drop 3 percent in the next 12 months, the bank said in a Jan. 12 report. Precious metals will lead losses with a 15 percent drop, while agriculture will decline 11 percent.
Money managers increased their net-bullish soybean holdings by 20 percent to 146,533 contracts, the highest this year. Prices gained 3.8 percent last week, the most since August. Cocoa wagersgained 7.2 percent to 83,038, a second straight increase. Investors held a net-short position of 52,963 in wheat, compared with 62,501 a week earlier.
Wagers on a gold rally slid 2.1 percent to 59,408 contracts, the first decline this year, the CFTC data show. Federal Reserve officials said Jan. 29 they would trim monthly purchases of bonds to $65 billion from $75 billion, after a $10 billion cut announced in December. Bullion rose 70 percent from December 2008 to June 2011 as the Fed pumped more than $2 trillion into the financial system.
Gold rebounded 5.6 percent this year after a 28 percent decline in 2013 that was the biggest since 1981. About $1.6 trillion was erased from the value of global equities in 2014 amid signs of slow economic growth in China and a slump in emerging-market currencies. Sales of gold coins by the U.S. Mint rose 63 percent in January to the highest since April.
Investors became bearish on copper before prices capped the biggest rally this year. Funds are holding a net-short position of 6,832 contracts, compared with a net-long of 11,735 a week earlier. Futures in New York rose 1.2 percent last week, the most since Dec. 27. Inventories at warehouses monitored by the London Metal Exchange declined 16 percent this year to the lowest since December 2012.
“Commodities, especially base metals, might be getting to close to a point where investors have discounted something close to a worst-case scenario,” said Sameer Samana, a senior international strategist at Wells Fargo Advisors LLC, which oversees about $1.4 trillion. “There will be pockets of strength. The issue in Brazil could be a catalyst.”
To contact the reporter on this story: Luzi Ann Javier in New York at firstname.lastname@example.org
To contact the editor responsible for this story: Millie Munshi at email@example.com
‘Breathtaking’ Corruption in the EU
A recent article at the BBC discusses the findings of a report by EU Home Affairs commissioner Cecilia Malmstroem on corruption in the EU. According to the report, the cost of corruption in the EU amounts to €120 billion annually. We would submit that it is likely far more than that (in fact, even Ms. Malmstroem herself concurs with this assessment). This is of course what one gets when one installs vast, byzantine bureaucracies and issues a veritable flood of rules and regulations every year. More and more people are needed to administer this unwieldy nightmare of red tape, and naturally the quality of the hires declines over time due to the sheer numbers required.
Moreover, many small to medium sized businesses would probably not be able to survive if they didn’t occasionally bribe officials. Big business considers bribes a perfectly normal cost of business anyway, especially when the business concerned involves milking tax cows. As you will see further below, the defense business – or better the war racket – is especially prone to corruption. Tax payers of course end up paying every cent. Another sector that is apparently subject to widespread corruption is health care – which should be no surprise, since health care provision is an almost fully socialistic enterprise in Europe. Bribes may well mean the difference between life and death in some instances. You will probably also not be overly surprised to learn that there was VAT fraud amounting to €5 billion in the bizarre and totally ineffective and useless ‘carbon credits’ market, which has turned into a boondoggle of amazing proportions. There’s simply no other way of making a mint in that market we suppose. From the BBC:
“The extent of corruption in Europe is “breathtaking” and it costs the EU economy at least 120bn euros (£99bn) annually, the European Commission says. EU Home Affairs Commissioner Cecilia Malmstroem has presented a full report on the problem.
She said the true cost of corruption was “probably much higher” than 120bn. Three-quarters of Europeans surveyed for the Commission study said that corruption was widespread, and more than half said the level had increased.
“The extent of the problem in Europe is breathtaking, although Sweden is among the countries with the least problems,” Ms Malmstroem wrote in Sweden’s Goeteborgs-Posten daily. The cost to the EU economy is equivalent to the bloc’s annual budget. For the report the Commission studied corruption in all 28 EU member states. The Commission says it is the first time it has done such a survey.
National governments, rather than EU institutions, are chiefly responsible for fighting corruption in the EU.
In some countries there was a relatively high number reporting personal experience of bribery. In Croatia, the Czech Republic, Lithuania, Bulgaria, Romania and Greece, between 6% and 29% of respondents said they had been asked for a bribe, or had been expected to pay one, in the past 12 months. There were also high levels of bribery in Poland (15%), Slovakia (14%) and Hungary (13%), where the most prevalent instances were in healthcare.
Last year Europol director Rob Wainwright said VAT fraud in the carbon credits market had cost the EU about 5bn euros.”
And that is merely what they actually know about. Remember, there are know unknowns and unknown unknowns here as well, and they probably dwarf what is actually known. One gets an inkling of how big the problem may really be when considering the case of Greece.
The EU corruption map according to the official report – via BBC.
Bribes Exceeding Greek Official’s Memory Storage Capacity
Greece is of course a special case in terms of official corruption. If you ever wondered how the country could go bankrupt in such short order after joining the euro zone, wonder no longer. Here are a few excerpts from a recent article in the NYTabout a lower level official in the defense ministry who received so many bribes that he cannot even remember them all anymore. The amounts involved are astonishing:
“When Antonis Kantas, a deputy in the Defense Ministry here, spoke up against the purchase of expensive German-made tanks in 2001, a representative of the tank’s manufacturer stopped by his office to leave a satchel on his sofa. It contained 600,000 euros ($814,000).
Other arms manufacturers eager to make deals came by, too, some guiding him through the ins and outs of international banking and then paying him off with deposits to his overseas accounts.
At the time, Mr. Kantas, a wiry former military officer, did not actually have the authority to decide much of anything on his own. But corruption was so rampant inside the Greek equivalent of the Pentagon that even a man of his relatively modest rank, he testified recently, was able to amass nearly $19 million in just five years on the job.”
One certainly wonders what more powerful officials were able to skim off. Unfortunately, corruption is so widespread and reportedly involves the highest echelons of the bureaucracy and the body politic in Greece, so that one must expect that we will never find out. No wonder there is a lot of tax evasion in Greece: who wants to hand over his hard earned money to such a gang of thieves? It is like paying off the mafia.
Meanwhile, the companies paying the bribes are of course just as guilty, and many of them come from countries that are themselves ranked relatively low on the corruption scale – e.g. Germany and Sweden. It seems to be an ‘opportunity makes thieves’ type situation.
“Never before has an official opened such a wide window on the eye-popping system of payoffs at work inside a Greek government ministry. At various points, Mr. Kantas, who returned to testify again last week, told prosecutors he had taken so many bribes he could not possibly remember the details.
Mr. Kantas’s testimony, if accurate, illustrates how arms makers from Germany, France, Sweden and Russia passed out bribes liberally, often through Greek representatives, to sell the government weaponry that it could ill afford and that experts say was in many cases overpriced and subpar.
The 600,000 euros, for instance, bought Mr. Kantas’s silence on the tanks, which were deemed of little value in any wars Greece might fight, according to Constantinos P. Fraggos, an expert on the Greek military who has written several books on the subject. Greece went ahead and bought 170 of the tanks for about $2.3 billion.
Adding to the absurdity of the purchase (almost all of it on credit), the ministry bought virtually no ammunition for them, Mr. Fraggos said. It also bought fighter planes without electronic guidance systems and paid more than $4 billion for troubled, noisy submarines that are not yet finished and sit today virtually abandoned in a shipyard outside Athens. At the height of the crisis, when it was unclear whether Greece would be thrown out of the euro zone and long before the submarines were finished, the Greek Parliament approved a final $407 million payment for the German submarines.”
The Defense Ministry is hardly the only ministry suspected of being a hotbed of corruption. But the Defense Ministry makes a particularly rich target for investigators because Greece went on a huge spending spree after 1996 when it got into a low-level skirmish with Turkey over the Imia islets in the Aegean Sea.
One former director general of the Defense Ministry, Evangelos Vasilakos, calculated that Greece spent as much as $68 billion on weaponry over the next 10 years, much of it borrowed money. To win these deals, which involved the approval of military and Defense Ministry officials, as well as Parliament, arms dealers probably spent more than $2.7 billion on bribes, according to Tasos Telloglou, an investigative reporter for the Greek daily newspaper Kathimerini, who has written extensively on the subject.”
Buying $68 billion worth of largely useless weaponry is certainly quite a feat for a country of slightly over 11 million inhabitants. The Saudis may well be able to top that on a per capita basis, but they have a lot of oil money and haven’t required a bailout from anyone. Greece was not able to actually afford these expensive toys.
Even if the weapons were in perfect working order, this buying spree wouldn’t make any sense. Is Greece really going to fight a war with Turkey, a NATO partner? The very idea is absurd. Since we can rule this possibility out, what on earth are the weapons good for?
We can hereby amend Randolph Bourne’s famous saying: ‘War is the health of the State – and its minions and suppliers‘.
Say hello to a white elephant in the Greek shrubbery.
(Image author unknown)
Guest Post: Will Austrian Bank Woes Be Again the Catalyst For A European Kondratieff Winter? | Zero Hedge
Originally posted at The Prudent Investor blog,
Sad affairs have been heating up in the tiny Alpine republic in the center of the European Union. While Austria experiences record unemployment at record growth rates and tax revenues have fallen behind optimistic projections, the looming bankruptcy of a mid-sized regional bank, Hypo Group Alpe Adria (HGAA), may propel the country to the disdained position of being the catalyst for a new round of bank failures due to interwoven banks risks on both the domestic and the international level.
Austrian politicians are up in arms since a third-party expert opinion that recommends to wind down the bank at a cost of €18 billion has been leaked to the media, but keep on marching on the most fatal route that will not dissolve the problems: They keep flogging the dead horse HGAA with taxpayer’s millions in a monthly money injection routine that has cost so far around €4.5 billion.
Current talks involving politicians appear to be more adequately suited for the Vienna opera house, but not for a rolling high finance train wreck that needs more than monthy band aids.
On Monday Austrian financial market authority FMA publicly said what the official Austria never wanted to hear as it is now confronted with a widening public discussion on a problem it had surrealstically hoped to brush under the carpet. FMA head Harald Ettl warned that any further delay would make the – in this blogger’s humble opinion doomed HGAA – an incalculable risk and that Austria should consider no option as a taboo anymore.
Nothing could be more true. An unorderly liquidation of HGAA will not only push Austria from the throne of the best economy in the Eurozone, pushing its public debt to GDP ratio well over 100%, but will also have continent wide reverberations.
Bad Bank Idea Stopped In its Tracks by RBI
The governments preferred solution, a bad bank for HGAA with the other Austrian banks as shareholders was stopped in its tracks on Monday.
Raiffeisenbank International (RBI) CEO Karl Sevelda ruled out his participation in such a special purpose vehicle, claiming his shareholders will vote “no” on this issue. RBI is laden down with its own problems like a 3-digit billion exposure to ailing Central Easter Europe’s countries where it had applied an aggressive “growth before everything else” strategy that is now becoming a boomerang due to to mounting bad loans.
The government was desperate to push through such a bad bank scenario as this would have helped to avoid a rapid expansion in public debts. Without a bad bank HGAA’s debts would trigger guarantees from the owner, the province of Carinthia. As Carinthia is technically bankrupt itself this would lead to triggering state guarantees as Austrian laws do not provide for the bankruptcy of a province.
The FMA’s comments on HGAA will at least have one effect: Fingerpointing between those responsible for the whole mess has already begun. Austria’s central bank, which issued a “no problem” expertise about HGAA at the beginning of the financial crisis in 2008, is more focussed on avoiding investor litigation that could hit the institution based on this old “expertise.”
So where do we go from here? As a dyed in the wool Austrian it can be assumed that the Austrian grand coalition, under fire from all sides since its formation last November because it has only come up with new tax ideas but no sizable savings in its expenditures, will apply the ostrich strategy once more.
Alas, this time the government may not find the time to sip coffee and push the debt wagon further as the EU is watching developments closely. On Monday Daniele Nouy, head of the newly formed EU banking authority EBA warned in an interview with the Financial Times, that it may not be appropriate to merge very sick banks with their not so sick counterparts. While not naming HGAA directly Nouy said, “we have to accept, that some banks will disappear.”
Austria’s banking woes look eerily similar to the failure of Creditanstalt in 1931 that was the fuse for the last European Kondratieff winter. For those sticking with K-cycles this may not be a good outlook. 83 years later such an event is more than overdue in Europe and given Europe’s overall outlook it does not take much anymore to set the Great EU Chaos into full fledged motion.
Chart: The Long Wave Analyst
Team Obama pulled a cute one last week nominating Blythe Masters, JP Morgan’s commodity chief, to an advisory committee of the Commodity Futures Trading Commission (CFTC) which supposedly regulates activities on the paper trades in corn, pork bellies, cocoa, coffee, wheat, corn — oh, and gold, too, by the way, in which JP Morgan has been suspected of massive gold (and silver) market manipulations and other misconduct lately. That would include the 2011 MF Global Fiasco in which nearly a billion dollars from “segregated” customer accounts somehow ended up parked over at JP Morgan as a result of bad derivative bets on tanking Eurozone bonds. MF Global, primarily a commodities trading brokerage, was liquidated in 2011. The CFTC never issued referrals for prosecution to the Department of Justice in the matter and, of course, MF Global’s notorious CEO, Jon Corzine remains at large, enjoying caramel flan lattes in the Hamptons to this day. Such are the Teflon transactions of the Obama years: nothing sticks.
There was such a Twitter storm over Blythe Masters that she withdrew from consideration for the committee before the day was out.
JP Morgan is one of the specially privileged “primary dealer” banks said to be systemically indispensible to world finance. Supposedly, if one of them is allowed to flop, the whole global matrix of global debt obligations — and, hence, global money — would dissolve in a misty cloud of broken promises. They are primary dealers to their shadow partner, the Federal Reserve, and their main job in that relationship is buying treasury bonds, bills, and notes from the US government and then “selling” them to the Fed (earning commissions on the sales, of course). The Fed, in turn, “lends” billions of dollars at zero interest back to the primary dealers who then park the “borrowed” money in accounts at the Fed at a higher interest rate. This is, of course, money for nothing, and even small interest rate differentials add up to tidy profits when the volumes on deposit are so massive.
This “carry trade” was started because the primary dealer banks were functionally insolvent after 2008 and needed to build “reserves” up to some level that would putatively render them sound. But that was a sketchy concept anyway since accounting standards had been officially abandoned in 2009 when the Financial Accounting Standards Board (FASB) declared that banks could report the stuff on their books at any value they felt like. In short, the soundness of the biggest banks in the USA could no longer be determined, period. They were beyond accounting as they were beyond the law. At the same time, the banks began the operations of shifting all the janky debt paper, mostly mortgages and derivative instruments (i.e. made-up shit like “CDOs squared”), value unknown, from their vaults to the a vaults of the Federal Reserve, where it resides to this day, rotting away like so much forgotten ground round in the sub-basement of an abandoned warehouse of a bankrupt burger chain.
All of these nearly incomprehensible shenanigans have been going on because debt all over the world can’t be repaid. The world’s economy, as constructed emergently over the decades, can’t function without repayable debt, which is the essence of “credit” — the fundamental trust implicit in banking. You have “credit” because other persons or parties believe in your ability to repay. After a while, this becomes a mere convention in millions of transactions. What’s happened is that the conventions remain in place but the trust is gone. It’s gone in particular among the parties deemed too big to fail.
Everybody knows this now and everybody is trying desperately to work around it, led by the Federal Reserve. Trust is gone and credit is going and debt is sitting between a rock and a hard place with its grubby hands pressed together, praying that it will be forgiven, forgotten, or overlooked a little while longer. By the way, the reason trust and credit are gone is because oil is no longer cheap and world economies can’t grow anymore. They can’t afford to run the day-to-day operations of a techno-industrial society. They can only pretend to afford it. The stock markets are mere scorecards for players who can only lie and cheat now to keep the game going. Somewhere beyond all the legerdemain and fraud, however, there remains a real world that is not going away. We just don’t know what it will look like when the smog of fraud clears.
The extra cost to borrow for China’s riskiest companies is at the highest in 20 months as soaring interest rates heighten concern the nation will experience its first onshore bond default.
The yield gap on five-year AA- notes over AAA debt jumped 27 basis points last month to 224, the most since June 2012, Chinabond indexes show. Ratings of AA- or below are equivalent to non-investment grades globally, according to Haitong Securities Co., the nation’s second-biggest brokerage. The similar spread in the U.S. is 403 basis points, Bank of America Merrill Lynch data show.
The failure of coal companies to meet payment deadlines for trust products has increased concern over debt defaults, with the equivalent of $53 billion of bonds sold by renewable energy, construction materials, metals and mining companies due in 2014. A report on Jan. 30 signaled China’s factories are contracting for the first time since August amid signs of financial stress including mounting losses and bailouts.
“China’s bond market will definitely see its first default this year,” said Xu Hanfei, a bond analyst inShanghai at Guotai Junan Securities Co., the nation’s third-biggest brokerage. “The economy is slowing while the government seems still confident about growth, which means the authorities probably won’t announce any measures to avert the slowdown. This is the worst scenario.”
A further $21 billion of securities in those three sectors mature in 2015, the Bloomberg data show, with companies including Baoshan Iron & Steel Co., China Minmetals Corp. and Wuhan Iron & Steel Co. among the most indebted. Bonds of steel and coal companies are under added pressure considering the government’s campaign to reduce smog, and industry overcapacity, according to Moody’s Investors Service, which has a negative outlook on both.
LDK Solar Co. is looking at ways to restructure obligations on its offshore yuan debt after missing payments on its dollar debt last year. Zhuhai Zhongfu Enterprise Co. (000659), a manufacturer of beverage packaging, said on Jan. 28 its 2015 debentures may be suspended from trade after its estimated net loss was as much as 450 million yuan ($74.2 million) in 2013. The yield on the 5.28 percent notes has climbed 217.5 basis points this year to 18.76 percent, exchange data show.
The world’s second-biggest economy slowed in the fourth quarter to 7.7 percent from 7.8 percent in the previous three months as Premier Li Keqiang drove up money-market rates to encourage companies and local governments to deleverage.
China’s central bank signaled in a Feb. 8 report that volatility in money-market interest rates will persist and borrowing costs will rise, further underscoring the risk of defaults which could weigh on confidence and drag down growth.
China Credit Trust Co. reached an agreement last month to repay bailed-out investors in a high-yield product whose threatened failure spurred concern bad debts will rise in the nation’s $1.7 trillion trust industry.
The gap between top-rated and lower-rated bonds in China may widen further this year as news about possible defaults shakes the market, according to Cheng Qingsheng, an analyst at Evergrowing Bank Co.
“There should be a default in China’s onshore bonds this year,” Shanghai-based Cheng said. “Privately issued bonds have higher default risks than publicly traded bonds.” A first default may happen in the steel, coal, shipping or photovoltaic power industries, Cheng said.
As default concerns escalate, the cost of insuring the nation’s debt against non-payment is rising. China’s credit-default swaps have increased 13 basis points this year to 93 as of Feb. 7. The yuanfell to 6.0646 per dollar on Feb. 7, the lowest level this year. It was little changed at 6.0605 as of 10:32 a.m. in Shanghai.
There have been no defaults in China’s publicly traded domestic debt market since the central bank started regulating it in 1997, according to Moody’s.
Local governments have helped some companies avert missing payment deadlines, according to Yao Wei, the Hong Kong-based China economist at Societe Generale SA. CHTC Helon Co., a fiber maker which used to be called Shandong Helon Co., repaid 400 million yuan of notes in April 2012 even as it failed to make loan repayments.
Shanghai Chaori Solar Energy Science & Technology Co. (002506), which averted default on an interest payment last year and had just 618.7 million yuan cash as of September, will pay 898 million yuan of debt in March, according to Guotai Junan. The solar-panel maker’s debt-to-asset ratio was 90.1 percent at the end of the third quarter, according to a company financial report released Oct. 27.
Other companies are receiving help from related entities. Changzhou Wintafone Chemical Co., a maker of herbicides and insecticides based in the eastern province of Jiangsu, said last month it’s stopped production and can’t repay notes due in March. Changzhou Qinghong Chemical Co., the note’s guarantor, repaid 36.9 million yuan on its behalf on Jan. 17.
A first default may be avoided if local governments continue to step in, said Beijing-based Yang Feng, a bond analyst at Citic Securities Co., the nation’s biggest brokerage.
“The cost of a default on a bond would be very high,” said Yang. “If a company in Shanghai defaults, it would be difficult for every company in the city to raise money.”
The yield on AA- rated five-year corporate bonds climbed 13 basis points last month to 8.38 percent. The rate on the benchmark five-year government bond dropped 24 basis points to 4.22 percent over the same period.
The average yield on high-yield Dim Sum bonds, or yuan-denominated notes sold in Hong Kong, has climbed 14 basis points this month to 5.66 percent on Feb. 6, the highest since October, according to an index compiled by HSBC Holdings Plc. Yields averaged 5.52 percent on Dec. 31.
U.S. dollar-denominated 13.25 percent notes sold by Glorious Property Holdings Ltd. (845) in February last year and due in 2018 were yielding 19.61 percent on Feb. 7, Bloomberg-compiled prices show. The company’s chief executive officer and chief financial officer resigned last week, less than one month after shareholders rejected an offer by Chinese billionaire Zhang Zhirong to take the developer private.
“Investors have turned cautious on high-yield bonds,” said Guotai Junan’s Xu, who forecasts China’s economy will grow 7 percent this year. “Since China’s onshore bond market hasn’t had a default, the market may not have priced in all the risk it should have.”
Sinovel Wind Group Co. (601558), said on Jan. 29 its bonds due 2016 may be suspended from trade because it may report a second year of losses. The yield on the 6.2 percent notes has jumped 329 basis points in 2014 to 15.01 percent as of today. Similarly, Nanjing Iron & Steel Co. (600282), partly owned by Chinese billionaire Guo Guangchang, said last month its 2018 bonds may stop trading because it too could report a second year of losses. The yield on those notes has soared 208 basis points this year to 10.72 percent, exchange data show.
“It would be best if the government will allow defaults,” Zhang Ming, a senior research fellow at the government-backed Chinese Academy of Social Sciences in Beijing, said in a Jan. 22 interview. “The bubbles are gradually inflating, and sooner and later there will be a collapse. The best scenario is that you allow defaults in some places when you are ready so that some risks can be released. The later the default, the more damaging.”
To contact Bloomberg News staff for this story: Judy Chen in Shanghai firstname.lastname@example.org
JPMorgan Sued For Crony Justice – Presenting “A Decade of Illegal Conduct by JP Morgan Chase” | Zero Hedge
Earlier today, the non-profit organization Better Markets did what so many others have only dreamed of doing – they sued JPMorgan.
Specifically, as they disclose in the fact sheet posted on their website, they are “challenging the historic and unprecedented $13 billion settlement agreement between the U.S. Department of Justice and JP Morgan Chase (“Agreement”). Better Markets alleges in its complaint that the DOJ violated the Constitution and laws of the United States by using a mere contractual agreement to resolve claims of historic importance without subjecting the Agreement to independent judicial review. In effect, the DOJ acted as investigator, prosecutor, judge, jury, sentencer, and collector, without any check on its authority or actions, even though the amount is the largest in the 237 year history of the United States. Because the DOJ has declared its intention to use the Agreement as a “template” in future similar cases, it is imperative that the DOJ’s unlawful and secretive approach in the settlement process be subjected to judicial review.”
We wish them the best of luck, as in a “crony jsutice” system as corrupt as this one – perhaps best described, paradoxically enough by the fictional movie The International – where the same DOJ previously implicitly admitted it will not prosecute “systemically important” firms like JPM to the full extent of the law and instead merely lob one after another wrist slap at them to placate the peasantry, any hope for obtaining true justice is impossible.
That said, the key aspects of the Better Markets lawsuit deserve attention. They are broken down as follows:
For years leading up to the financial crisis of 2008, JP Morgan Chase allegedly engaged in pervasive fraud in the packaging and sale of thousands of mortgage-backed securities to investors. Those securities were stuffed with subprime loans that failed to meet applicable underwriting criteria. Employees, managers, and potentially high-level executives of JP Morgan Chase knew that the securities were riddled with toxic loans, but they allegedly concealed the truth from investors when they marketed and sold the securities. Investors lost huge but still unknown sums of money as a result of the fraud, and the bank’s illegal conduct contributed directly to the biggest financial crash since 1929 and the worst economy since the Great Depression of the 1930s.
After negotiating the Agreement in complete secrecy, the DOJ announced the $13 billion deal on November 19, 2013, claiming that it was holding JP Morgan Chase accountable for its illegal activities. Under the Agreement, DOJ grants JP Morgan Chase broad civil immunity in exchange for a $2 billion civil penalty, along with $4 billion in “consumer relief” for the benefit of homeowners with problem mortgages. The Agreement also allocates $7 billion to eight other agencies or states to resolve their claims against JP Morgan Chase.
Key Allegations in the Complaint
The Agreement was struck under the most extraordinary circumstances. For example—
- THE HISTORIC CLAIMS: The Agreement resolved claims of pervasive fraud that contributed to the worst financial crash since 1929 and the worst economy since the Great Depression of the 1930s.
- THE LARGEST AMOUNT EVER: The settlement amount was the largest in U.S. history from any single entity by more than 300%.
- THE BIGGEST BANK: JP Morgan Chase is the largest, richest, and most well-connected Wall Street bank in the United States.
- THE HIGHEST-LEVEL NEGOTIATORS: The Attorney General and other senior DOJ political appointees negotiated directly and entirely in secret with the CEO of JP Morgan Chase, someone who was considered a possible Treasury Secretary just a few years ago.
- THE $10 BILLION PHONE CALL: The cellphone of DOJ’s third highest ranking official rang with the “familiar” phone number of JP Morgan Chase’s CEO, who called to offer billions of dollars to stop DOJ from holding a press conference and filing a lawsuit in just a few hours. The call worked, and the press conference and lawsuit were both called off.
- THE UNPRECEDENTED AGREEMENT: DOJ gave complete civil immunity to JP Morgan Chase for defrauding thousands in exchange for $13 billion, via a contract that was negotiated and finalized in secret without any review or approval by a federal court.
?Notwithstanding the historic nature of the settlement, the Agreement was never subjected to judicial review, so there has been no independent evaluation of its terms. Furthermore, the vague settlement documents fail to disclose critically important information about every aspect of the deal. For example, the Agreement fails to identify or explain—
- THE LOSSES: How much did JP Morgan Chase’s clients, customers, counterparties, investors, and others lose as a result of its fraudulent conduct? $100 billion? $200 billion? More?
- THE PROFITS: How much revenue, profits, and other benefits did JP Morgan Chase receive as a result of its fraudulent conduct, and was it all disgorged? $10 billion? $20 billion? More?
- THE BONUSES: Who received what amount of bonuses for the illegal conduct?
- THE INVESTIGATION: What was the scope and thoroughness of the investigation that provided the basis for the Agreement?
- THE FRAUD: What are the material facts of the illegal conduct by JP Morgan Chase and the specific violations of law that were committed?
- THE CULPRITS: What exactly did the individual executives, officers, managers, and employees involved in the illegal conduct actually do to carry out the fraud, and do any of them still work for the bank?
- THE CORRECTIVE ACTION: Why did the contract fail to impose on JP Morgan Chase any obligation to change any of its business or compliance practices, which are standard conduct remedies that regulators routinely require? And how can the sanctions effectively punish and deter JP Morgan Chase, given its wealth and its extensive history of lawless conduct?
- THE LACK OF ADMISSIONS: Why are there no admissions of fact or law by JP Morgan Chase, and what, if any, are the concrete legal implications of their so-called “acknowledgment”?
By entering the Agreement without seeking any judicial review and approval, the DOJ violated the Constitution and laws of the United States.
- The Executive Branch, acting through the DOJ, violated the separation of powers doctrine by unilaterally striking a bargain with JP Morgan Chase to resolve unprecedented matters of historic importance, without seeking any judicial review and approval of the Agreement.
- The DOJ violated the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (“FIRREA”) by failing to commence a civil action in federal court so that the court could, among other things, assess the civil penalty.
- The DOJ acted arbitrarily and capriciously by, among other things, entering the Agreement without seeking judicial review and approval.
* * *
But perhaps the most informative aspect of the lawsuit fact sheet is simply stepping back and observing the relentless illegal transgressions by Jamie Dimon’s firm. Better Markets summarizes them best as follows:
Highlights From A Decade of Illegal Conduct by JP Morgan Chase
- United States v. JPMorgan Case Bank, NA, No-1:14-cr-7 (S.D.N.Y. Jan 8, 2014) ($1.7 billion criminal penalty); In re JPMorgan Chase Bank, N.A., OCC Admin. Proceeding No. AA-EC-13-109 (Jan. 7, 2014) ($350 million civil penalty); In re JPMorgan Chase Bank, N.A., Dept. of the Treasury Financial Crimes Enforcement Network Admin. Proceeding No. 2014-1 (Jan. 7, 2014) ($461 million civil penalty) (all for violations of law arising from the bank’s role in connection with Bernie Madoff’s Ponzi scheme, the largest in the history of the U.S.);
- In re JPMorgan Chase Bank, N.A., CFTC Admin. Proceeding No. 14-01 (Oct. 16, 2013) ($100 million civil penalty); In re JPMorgan Chase & Co., SEC Admin. Proceeding No. 3-15507 (Sept. 19, 2013) ($200 million civil penalty); In re JPMorgan Chase & Co., Federal Reserve Board Admin. Proceeding No. 13-031-CMP-HC (Sept. 18, 2013) ($200 million civil penalty); UK Financial Conduct Authority, Final Notice to JP Morgan Chase Bank, N.A. (Sept. 18, 2013) (£137.6 million ($221 million) penalty); In re JPMorgan Chase Bank, N.A., OCC Admin. Proceeding No. AA-EC-2013-75, #2013-140 (Sept. 17, 2013) ($300 million civil penalty) (all for violations of federal law in connection with the proprietary trading losses sustained by JP Morgan Chase in connection with the high risk derivatives bet referred to as the “London Whale”);
- In re JPMorgan Chase Bank, N.A., CFPB Admin. Proceeding No. 2013-CFPB-0007 (Sept. 19, 2013) ($20 million civil penalty and $309 million refund to customers); In re JPMorgan Chase Bank, N.A., OCC Admin. Proceeding No. AA-EC-2013-46 (Sept. 18, 2013) ($60 million civil penalty) (both for violations in connection with JP Morgan Chase’s billing practices and fraudulent sale of so-called Identity Protection Products to customers);
- In Re Make-Whole Payments and Related Bidding Strategies, FERC Admin. Proceeding Nos. IN11-8-000, IN13-5-000 (July 30, 2013) (civil penalty of $285 million and disgorgement of $125 million for energy market manipulation);
- SEC v. J.P. Morgan Sec. LLC, No. 12-cv-1862 (D.D.C. Jan. 7, 2013) ($301 million in civil penalties and disgorgement for improper conduct related to offerings of mortgage-backed securities);
- In re JPMorgan Chase Bank, N.A., CFTC Admin. Proceeding No. 12-37 (Sept. 27, 2012) ($600,000 civil penalty for violations of the Commodities Exchange Act relating to trading in excess of position limits);
- In re JPMorgan Chase Bank, N.A., CFTC Admin. Proceeding No. 12-17 (Apr. 4, 2012) ($20 million civil penalty for the unlawful handling of customer segregated funds relating to the bankruptcy of Lehman Brothers Holdings, Inc.);
- United States v. Bank of America, No. 12-cv-00361 (D.D.C. 2012) (for foreclosure and mortgage-loan servicing abuses during the Financial Crisis, with JP Morgan Chase paying $5.3 billion in monetary and consumer relief);
- In re JPMorgan Chase & Co., Federal Reserve Board Admin. Proceeding No. 12-009-CMP-HC (Feb. 9, 2012) ($275 million in monetary relief for unsafe and unsound practices in residential mortgage loan servicing and foreclosure processing);
- SEC v. J.P. Morgan Sec. LLC, No. 11-cv-03877 (D.N.J. July 7, 2011) ($51.2 million in civil penalties and disgorgement); In re JPMorgan Chase & Co., Federal Reserve Board Admin. Proceeding No. 11-081-WA/RB-HC (July 6, 2011) (compliance plan and corrective action requirements); In re JPMorgan Chase Bank, N.A., OCC Admin. Proceeding No. AA-EC-11-63 (July 6, 2011) ($22 million civil penalty) (all for anticompetitive practices in connection with municipal securities transactions);
- SEC v. J.P. Morgan Sec., LLC, No. 11-cv-4206 (S.D.N.Y. June 21, 2011) ($153.6 million in civil penalties and disgorgement for violations of the securities laws relating to misleading investors in connection with synthetic collateralized debt obligations);
- In re JPMorgan Chase Bank, N.A., OCC Admin. Proceeding No. AA-EC-11-15, #2011-050 (Apr. 13, 2011) (consent order mandating compliance plan and other corrective action resulting from unsafe and unsound mortgage servicing practices);
- In re J.P. Morgan Sec. Inc., SEC Admin. Proceeding No. 3-13673 (Nov. 4, 2009) ($25 million civil penalty for violations of the securities laws relating to the Jefferson County derivatives trading and bribery scandal);
- In re JP Morgan Chase & Co, Attorney General of the State of NY Investor Protection Bureau, Assurance of Discontinuance Pursuant to Exec. Law §63(15) (June 2, 2009) ($25 million civil penalty for misrepresenting risks associated with auction rate securities);
- In re JPMorgan Chase & Co., SEC Admin. Proceeding No. 3-13000 (Mar. 27, 2008) ($1.3 million civil disgorgement for violations of the securities laws relating to JPM’s role as asset-backed indenture trustee to certain special purpose vehicles);
- In re J.P. Morgan Sec. Inc., SEC Admin. Proceeding No. 3-11828 (Feb. 14, 2005) ($2.1 million in civil fines and penalties for violations of Securities Act record-keeping requirements); and
- SEC v. J.P. Morgan Securities Inc., 03-cv-2939 (WHP) (S.D.N.Y. Apr. 28, 2003) ($50 million in civil penalties and disgorgements as part of a global settlement for research analyst conflict of interests).
Did we mention that nobody from JPM has gone to prison, and instead as of late last week, one of the biggest JPM culprits was set to become a member of the CFTC’s advisory panel before the people and not the regulators, were forced to step in? Why? #AskJPM
CP | By Linda Nguyen, The Canadian Press
Posted: 02/10/2014 4:00 am EST | Updated: 02/10/2014 6:59 am EST
TORONTO – The love affair Canadians have with debt is still going strong, according to a new report by credit monitoring agency Equifax Canada.
Equifax said Monday that its figures show that consumer debt, excluding mortgages, rose to $518.3 billion through the end of November 2013. That was up 4.2 per cent from $497.4 billion a year earlier.
Despite the increase in debt, however, the overall delinquency rate — bills due past 90 days — declined to a record low of 1.12 per cent from 1.19 per cent in the same period of 2012.
“The real pattern that we’ve been observing is that Canadians are taking on more debt, but they can handle it well and are making those monthly payments,” said Regina Malina, director of analytics for Equifax.
Meanwhile, overall consumer debt, including mortgages, also continues to rise — up 9.1 per cent to $1.422 trillion from $1.303 trillion a year earlier.
Malina says the data shows that Canadians are willing to take on more debt — from car loans to credit card purchases — but are more aware of how important it is to keep their debt levels under control.
High debt levels are not a big concern in current conditions, which signal a stabilizing economy, improvement in the unemployment rate and an anticipated gradual increase in interest rates.
But Malina says if any or all of these conditions change, Canadians should reconsider how much debt they are piling on.
“That is the reason why we should remain vigilant,” she said. “It’s easy to get complacent. Even if the debt is up, and the delinquency is going down, it is no cause for alarm but as I said, we have to watch out for these other economic factors.”
Equifax uses data from 25 million files on consumer credit history, including national credit cards, loans and mortgages in compiling the report each quarter.
Submitted by Adam Taggart of Peak Prosperity,
Argentina is a country re-entering crisis territory it knows too well. The country has defaulted on its sovereign debt three times in the past 32 years and looks poised to do so again soon.
Its currency, the peso, devalued by more than 20% in January alone. Inflation is currently running at 25%. Argentina’s budget deficit is exploding, and, based on credit default swap rates, the market is placing an 85% chance of a sovereign default within the next five years.
Want to know what it’s like living through a currency collapse? Argentina is providing us with a real-time window.
So, we’ve invited Fernando “FerFAL” Aguirre back onto the program to provide commentary on the events on the ground there. What is life like right now for the average Argentinian?
Aguirre began blogging during the hyperinflationary destruction of Argentina’s economy in 2001 and has since dedicated his professional career to educating the public about his experiences and observations of its lingering aftermath. He is the author of Surviving the Economic Collapse and sees many parallels between the path that led to Argentina’s decline and the similar one most countries in the West, including the U.S., are currently on. Our 2011 interview with him “A Case Study in How An Economy Collapses” remains one of Peak Prosperity’s most well-regarded.
Chris Martenson: Okay. Bring us up to date. What is happening in Argentina right now with respect to its currency, the peso?
Fernando Aguirre: Well, actually pretty recently, January 22, the peso lost 15% of its value. It has devalued quite a bit. It ended up losing 20% of its value that week, and it has been pretty crazy since then. Inflation has been rampant in some sectors, going up to 100% in food, grocery stores 20%, 30% in some cases. So it has been pretty complicated. Lots of stores don’t want to be selling stuff until they get updated prices. Suppliers holding on, waiting to see how things go, which is something that we are familiar with because that happened back in 2001 when everything went down as we know it did.
Chris Martenson: So 100%, 20% inflation; are those yearly numbers?
Fernando Aguirre: Those are our numbers in a matter of days. In just one day, for example, cement in Balcarce, one of the towns in Southern Argentina, went up 100% overnight, doubling in price. Grocery stores in Córdoba, even in Buenos Aires, people are talking about increase of prices of 20, 30% just these days. I actually have family in Argentina that are telling me that they go to a hardware store and they aren’t even able to buy stuff from there because stores want to hold on and see how prices unfold in the following days.
Chris Martenson: Right. So this is one of those great mysteries of inflation. It is obviously ‘flying money’, so everyone is trying to get rid of their money. You would think that would actually increase commerce. But if you are on the other end of that transaction, if you happen to be the business owner, you have every incentive to withhold items for as long as possible. So one of the great ironies, I guess, is that even though money is flying around like crazy, goods start to disappear from the shelves. Is that what you are seeing?
Fernando Aguirre: Absolutely. Shelves halfway empty. The government is always trying to muscle its way through these kind of problems, just trying to force companies to stock back products and such, but they just keep holding on. For example, gas has gone up 12% these last few days. And there is really nothing they can do about it. If they don’t increase prices, companies just are not willing to sell. It is a pretty tricky situation to be in.
Chris Martenson: Are there any sort of price controls going on right now? Has anything been mandated?
Fernando Aguirre: As you know, price controls don’t really work. I mean, they tried this before in Argentina. Actually, last year one of the big news stories was that the government was freezing prices on food and certain appliances. It didn’t work. Just a few days later those supposedly “frozen” prices were going up. As soon as they officially released them, they would just double in price.
Chris Martenson: Let me ask you this, then: How many people in Argentina actually still have money in Argentine banks in dollars? One of the features in 2001 was that people had money in dollars, in the banks. There was a banking holiday; a couple of weeks later, banks open up; Surprise, you have the same number in your account, only it’s pesos, not dollars. It was an effective theft, if I could use that term. Is anybody keeping money in the banks at this point, or how is that working?
Fernando Aguirre: Well, first of all, I would like to clarify for people listening: Those banks that did that are the same banks that are found all over the world. They are not like strange South American, Argentinean banks – they are the same banks. If they are willing to steal from people in one place, don’t be surprised if they are willing to do it in other places as well.
Click the play button below to listen to Chris’ interview with Fernando Aguirre (36m:42s):
A Catastrophic Cooling 5,200 Years Ago Was Preceeded by a Few Decades of Warming and Low Sunspot Activity: Sound Familiar? | The Daily Sheeple
The Daily Sheeple
February 6th, 2014
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The 2004 annual meeting of the American Geophysical Union saw evidence that proved beyond doubt that a devastating and abrupt change in climate happened 5,200 years ago. Now when I say abrupt I really do mean abrupt. A massive and profound global cooling event happened 5,200 years ago, and one of the leading scientists in the field of ice core analysis thinks it’s about to happen again.
Not much was said about this outside of scientific circles, certainly nothing was said by the government. Even the words and research of a world renowned expert count for nothing. As far as the warmist government is concerned, we are all to believe we will die of heatstroke in the next 50 years.
Thompson even mentions the Sun, and it’s role in climate forcing, and once again, just like 5,200 years ago, the Sun is showing the lowest activity for a century. Predictions for solar cycle 25 are that there may not be any sunspots at all.
Have you ever seen a soft non-woody plant after it has been exposed to frost and ice? They shrivel, sometimes blacken and die. Even plants that have lain under snow and ice all winter show signs of decay quite rapidly once the ice melts and they are exposed to air.
Lonnie Thompson is a professor of geological sciences at Ohio State, he is also a researcher at Byrd Polar Research Center. His specialty is ice core analysis.
Thompson has taken ice core samples from all over the world. He goes to the highest and coldest places he can find to collect them. Each year whatever is in the atmosphere is represented as a band in the core, Thompson explains:
They record things like anthropogenic changes. You can see when lead was put into gasoline. You can see when legislation was passed to remove it. Anything that’s in the air gets recorded. If you’re at the top of the Himalayas, you can see the development of industry in India through the nitrates and the sulfates that make up the chemistry in the cores. There’s a record with the ice cores. The thing that really makes them unique is that they record the history of the earth’s atmosphere. In the bubbles there is an archive of our atmosphere, and by extracting those gases, we can measure CO2 and methane, and nitrous oxide, CFCs, and you can see how the earth’s atmosphere has changed through time. We now have a record going back 650,000 years from the polar cores in Antarctica of these gases and that gives us a perspective of what’s natural and what’s not.
There is a history of things like micro-organisms; you know, if you want to look at life in extreme environments, then look at what’s living in the ice at 23,500 feet, a high radiation, low oxygen environment, and so we have been working on developing protocols of how you would extract that. these would be the same protocols you would use if you ever drilled the northern ice field of Mars. If I was looking for life on Mars, I’d be looking in the ice because it’s a very good recorder of what has happened in the past on any planet.
Some of the surprises, of course, are things like insects. You wouldn’t expect at 23,000 feet to find insects in the ice, but you do. In the tropics they get caught up in the thunderstorms; they get carried up to very high elevation. They come out in the snow and then they’re perfectly preserved. We find them 25,000-years-old. You can identify the insect, and you can then carbon date it, to C14 date it. In the polar regions, people have been trying for years to extract C14 to independently date the cores. It’s very difficult to do. In fact, it hasn’t been done yet. But in the tropics, we have time series based on Carbon-14 dating, using insects and organics, plant remains, and things like that that get trapped in the ice.
The beauty of the ice is that it records so many different things about climate and environment, but it also records the forcings of climate, such as volcanic history, the sulfate in the tefra that come from the eruptions. We can look at the cosmogenic nuclides, like Beryllium-10, Chlorine-36 that are produced in the stratosphere due to modulation of the output of Sun, and therefore we can get a history of solar variations, which is very important in the natural forcings of the climate on the planet. (source)
Thompson had visited the Quelccaya ice cap in Peruvian Andes many times. He took samples and monitored the speed of the glacier and other geological processes going on there. It was on one of these trips that he found plants, perfectly preserved, non-woody plants, still wet where the ice had melted from them that day. They were undamaged and perfectly preserved, not black, wilted or shrivelled. The only way that could happen is if they had been covered in snow and found by Thompson within a short time of the snow melting before the frost damage started to show. He was in the right place at the right time, but one thing confused him. They were sitting at the bottom of a wall of sheer ice, the leading end of a receding glacier, a glacier that the ice cores told him had been there for thousands of years.
Carbon dating of the plants revealed them to be 5,200 years old. What’s more, they were wetland plants, plants that you would not expect to find in the Andes, but there they were. He has since collected more plants from other glaciers and valleys in the Andes, they too are 5,200 years old.
In 1991 hikers found what they thought was a dead body, and indeed it was. But this victim of foul play lived a long time ago, 5,200 years ago to be precise. Otzi-the iceman was found in South Tyrol, Italy.
To be so well preserved and untouched by animals he must have been covered with snow almost immediately after his death. Food he was carrying indicated that he had been lower down the valley in the previous 12 hours. His wounds prove there was someone else in the area that carried out the attack that cost him his life. He had eaten a full meal of deer and ibex shortly before his death. We know Otzi hadn’t been exposed since his death as there was no decay on the body.
Isotropic events show changes in the isotopes that are present in the atmosphere. There may be more carbon in mud, or a different isotope of oxygen in ice cores.
Tree ring analysis in the UK shows the narrowest rings, indicating colder and drier conditions occurred 5,194 years ago.
Artifacts discovered in Florida shows that water came over the land 5,200 years ago.
Mark Meier, a glaciologist, collected samples from trees re-exposed as a glacier retreated in the South Cascades, the roots were just over 5, 000 years old.
It’s obvious that a monumental event took place some 5,200 years ago. It got colder. Snow came down and never went away, until now. This cold period was preceded by a period of warming that lasted several decades and by reduced solar activity. Lonnie Thompson is concerned that history may be about to repeat itself.
The event was abrupt enough to bury plants, a body and trees for some 5,000 years. That’s one hell of a storm. Enough snow year on year that glaciers were formed on Kilimanjaro and in the Peruvian Andes, glaciers that are just giving up their secrets over 5,000 years later.
When large areas are covered in snow their albedo rate changes. The white snow reflects heat back into space that would otherwise warm the planet. Cooling becomes a vicious circle, heat is reflected, the ice doesn’t melt, it gets colder still. This continues until an exceptional warm cycle succeeds in starting the melt, as is happening with glaciers right now. Sadly, this often presages a quick flip back to much colder conditions. Here’s a simple explanation of albedo:
Professor Thompson sums up his concerns:
“This would suggest a very large-scale, abrupt event occurring at this time in the past, due to natural events that had huge scale impacts. We need to understand what caused that, because 5,200 years ago, there may have been 250,000,000 people living on the planet. We’ve now got 6.5 billion, most of then living in the latitudes where this abrupt event is recorded.
I think the natural system has had abrupt changes in the past, which just tells us that this system is capable of changing over a very short period of time, and we have been very fortunate that our civilization has developed over a time when we haven’t had large-scale changes in climate.” (source)
As I have said many times, global cooling will kill hundreds of millions of people across the globe. Millions of Americans will die, yet the government denies that it’s happening.
The conclusion has to be that they want these events to unfold while the people are unprepared. They want the massive die off that will allow them to fully implement the New World Order they crave.
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Contributed by Chris Carrington of The Daily Sheeple.
Chris Carrington is a writer, researcher and lecturer with a background in science, technology and environmental studies. Chris is an editor for The Daily Sheeple. Wake the flock up!