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Manipulating the Data on CIA Drone Strikes against Civilians: Leaked Pakistani Document contradicts US Accounts | Global Research

Manipulating the Data on CIA Drone Strikes against Civilians: Leaked Pakistani Document contradicts US Accounts | Global Research.

 

drone

A secret Pakistani government document contradicts several of the US’s rare public statements on the CIA’s drone strikes in Pakistan.

The document outlines over 300 drone strikes dating between 2006 and September 2013. It is compiled by local officials using a network of on-the-ground agents and informants reporting to the FATA Secretariat, the tribal administration.

It is the fullest official record of the covert campaign yet to emerge, providing the dates, precise times and exact locations of drone strikes, as well as casualty estimates. The document abruptly stops routinely recording civilian casualties after the start of 2009, but overall casualty estimates continue to be comparable to independent estimates such as those compiled by the Bureau.

Yahya al Libi - As Sahab Media

The US description of Yahya al Libi’s death differs from the version in the Pakistani document.

Related story – Leaked official document records 330 drone strikes in Pakistan

Neither US nor Pakistani officials routinely acknowledge strikes or provide estimates of casualties. But occasionally the US’s view of individual strikes emerges – usually through an anonymous official quoted in a mainstream media outlet.

The secret document shows that Pakistani officials sometimes filed a rather different assessment from the US’s occasional public statements.

For example, in June 2012, the CIA launched the latest in a series of attempts to kill Abu Yahya al Libi, al Qaeda’s second-in-command. Congressional aides told Los Angeles Times reporter Ken Dilanian that after the strike, the CIA showed video of the strike to politicians who are charged with overseeing the drone programme. This showed a missile killing ‘just one person’ – al Libi.

But contemporaneous media reports, as well as later field investigations by Amnesty Internationaland the Bureau, found a far higher casualty toll. These found that the attack was a sequence of three strikes, including an attack on rescuers. Amnesty found that 10-16 died in total. Six were civilians who had come to rescue the injured after the initial blast.

A named CIA spokesman strongly rejected the allegation that lawmakers might have been shown only partial footage of the strike, calling the claim ‘baseless’. But the Pakistan government document records 10 deaths.

Related story – Bureau investigation finds fresh evidence of drone strikes on rescuers

The Pakistani document also contradicts the US account of a strike in 2011. Drones attacked a large gathering of men who had gathered in a public space in Dattakhel one morning in March 2011. The Pakistani government was quick to protest that the attack had killed tribal elders who had gathered for a jirga – a traditional form of mediation.

US officials speaking on condition of anonymity have poured scorn on this claim. ‘These people weren’t gathering for a bake sale. They were terrorists,’ one told the New York Times the day after the strike.

The New York Times later published the results of the Bureau’s first field investigation into drones, naming 19 individuals killed in this strike. An unnamed US official who briefed the paper continued to insist the dead men were legitimate targets.

‘The fact is that a large group of heavily armed men, some of whom were clearly connected to al Qaeda and all of whom acted in a manner consistent with AQ-linked militants, were killed,’ he said.

Related story – Get the data: Pakistani government’s secret report on drone strikes

The leaked Pakistani document stops regularly recording civilian casualties in January 2009, but occasionally uses ambiguous language that suggests non-combatants were among the dead. For this strike, the document appears to privately echo what the Pakistani government was already saying in public: ‘The attack was carried out on a Jirga and it is feared that all the killed were local tribesmen.’

A US official, speaking on condition of anonymity, told the Bureau yesterday: ‘While we will not be commenting on the details or locations of purported counterterrorism operations, there is a wide gap between US assessments of civilian casualties and non-governmental assessments.’

He added: ‘There is no credible information to substantiate claims that US counterterrorism actions have resulted in the deaths of hundreds of innocent civilians, but there are parties interested in spreading such disinformation.’

In the case of the jirga strike, multiple international organisations – including a field investigation byAssociated Press – have identified civilian casualties, and Pakistan’s army chief complained about a high civilian death toll. The case has been used as a basis for a complaint to the UN Human Rights Council and a legal challenge in England.

The US government has protested over the claims of civilian casualties but has never indicated who it was targeting.

The same New York Times article contains a third example. The anonymous official rejected the Bureau’s description of a separate strike, on December 6 2010.

Journalists reported that a drone fired on a vehicle carrying three alleged militants as it drove through the village of Khushali. ‘The sources say one militant was able to escape from the car and hide inside a nearby shop. The drone then fired two more missiles at the shop killing the militant, as well as two civilians inside,’ CNN reported.

Presented with this finding, the unnamed official told the New York Times: ‘There were two strikes that day, and neither matches the claim. One targeted a car, killing two militants who had visited several Al Qaeda compounds that day; the other killed a handful of militants, including a top AQ [al Qaeda] terrorist.’

But again the document appears to contradict this, noting: ‘At about 1840 hours US Drone carried out missile strike at a shop in village Khushali Tori Khel, Tehsil Mirali, North Waziristan Agency’.

Chris Woods, who ran the Bureau’s drones project at the time and is now writing a book about armed drones, said: ‘When the Bureau first challenged CIA claims of zero drone civilian casualties in 2011, anonymous US officials used the New York Times to disparage some of its findings. An official denied, for example, that a shop had deliberately been targeted in December 2010. This secret FATA document, never intended for public release, indicates that a shop was indeed hit that day.’

He continued: ‘The CIA’s ongoing role in the Pakistan drone campaign appears to be the greatest obstacle to much-needed transparency in cases such as this.’

The US official told the Bureau: ‘US counter-terrorism operations are precise, lawful, and effective. The United States takes extraordinary care to make sure that its counterterrorism actions are in accordance with all applicable domestic and international law, and that they are consistent with US values and policy.’

But other observers criticised the US policy of releasing information through selective leaks rather than a more routine disclosure policy.

Mustafa Qadri, the Amnesty International researcher who investigated strikes for the organisation’s report, Will I Be Next?, said: ‘Ultimately the US bears primary responsibility for disclosing the full extent of its drone program, the facts about how many have been killed and the factual and legal basis for these deaths.’

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CDC Prepares for Perfect Storm: “The Next Plane Could Bring a Pandemic…”

CDC Prepares for Perfect Storm: “The Next Plane Could Bring a Pandemic…”.

Mac Slavo
January 30th, 2014
SHTFplan.com

pandemic2

It’s happening.

The avian flu virus, which up until last year infected poultry exclusively, has now mutated and crossed over to humans.

What’s even scarier is the fact that the Chinese have been unable to contain the novel H7N9 strain of the virus and health officials the world over are getting ready for the worst. It’s spreading and we now have confirmation that the virus has begun appearing in other countries.

On Thursday, billions of Chinese will be on the move to celebrate the Lunar New Year, creating ripe conditions for the spread of the influenza virus from those already infected. And many of those celebrations will include chickens, the primary carriers of H7N9. In addition, with the Winter Olympics, one of the world’s largest sporting events, just two weeks away, the virus could find the ideal conditions for breaking out.

And that means the next plane could bring a pandemic to the U.S. or anywhere else around the world. “The bottom line is the health security of the U.S. is only as strong as the health security of every country around the world,” says Dr. Thomas Frieden, director of the U.S. Centers for Disease Control.

“We are all connected by the food we eat, the water the drink and the air we breathe.”

But that’s not the worst of it. Last year the World Health Organization warned that H7N9 is one of the most lethal influenza strains ever identified.

Of the nearly 250 officially confirmed reports of human infection since last year, a quarter of those infected have died.

Those are the official numbers, but it is likely that the number of active infections could be a hundred-fold (or more) higher.

Moreover, like any flu virus, H7N9 continues to mutate and scientists recently suggested that all it would take for this particular strain to become a deadly global pandemic is an increase in its transmission rate.

It was initially thought that the virus only spread through human contact with poultry, but that theory was quickly turned on its head when a team of researchers at the University of Hong Kong confirmed that the virus had gone airborne.

If H7N9 mutates to transmission rates of other flu viruses, which is certainly a possibility, then we could well be looking at a mass global pandemic – and according to WHO the H7N9 is mutating eight (8) times faster than a typical flu virus.

To put this in perspective, the 1918 Spanish Flu infected as many as half a billion people (about a quarter of the world’s population). The mortality rate was somewhere in the area of 5% to 10%, with a final death toll of around 50 million people.

At a 25% mortality rate the H7N9 avlian flu, combined with modern transportation systems and metropolitan areas housing tens of millions of people, there is serious potential for a globally significant catastrophe.

Should this virus increase its transmission rate we could be looking at a scenario where a billion or more people contract the virus around the world.

The math is straight forward. One in four will perish.

While we’ve had pandemic scares in the recent past, this one really has researchers and global health officials spooked:

The fast mutation makes the virus’ evolutionary development very hard to predict. “We don’t know whether it will evolve into something harmless or dangerous,” He said. “Our samples are too limited. But the authorities should definitely be alarmed and get prepared for the worst-case scenario.”

As of yet, there is no available vaccine, and one novel mechanism of action for H7N9 is that as soon as it infects its host it develops rapid antiviral resistance, so traditional medicines like Tamiflu don’t work.

One infected student at a local school, or a restaurant worker, or a passenger on an airplane could take this to the next level.

And once it takes hold, there will be no stopping it.

Most don’t believe it is possible with our advanced sciences and research facilities.

History proves otherwise.

  • Plague of Justinian (541 – 542) – At it’s peak over 5,000 people per day died in the city of Constantinople
  • Black Death (1348 – 1350) – Over 75 Million Dead. Nearly 60% of Europe.
  • Smallpox (16th Century) – Wiped out entire civilizations like the Aztecs.
  • The Third Pandemic (1855 – circa 1990) – A Bubonic Plague that killed over 10 million in China and India
  • The Spanish Flu (1918 – 1919) – Over 50 million dead

The only steps one can take is to be ready in advance with a Pandemic Preparedness Plan, as recommended by Tess Pennington:

When an outbreak occurs, many will remain in a state of denial about any approaching epidemics. Simply put, most people believe themselves to be invincible to negative situations and do not like the idea change of any kind.

They will remain in this state until they realize they are unable to deny it to themselves any longer. Being prepared before the masses come out of their daze will ensure that you are better prepared before the hoards run to the store to stock up.

In addition to remaining isolated from the general population, you must have (in advance) access to food, water, medicine, and self defense armaments.

If such a virus were to spread, infecting millions and killing off 25% of those who contract it, you can be assured of widespread panic as the unprepared search and fight for resources.

20 Early Warning Signs That We Are Approaching A Global Economic Meltdown

20 Early Warning Signs That We Are Approaching A Global Economic Meltdown.

Earth From SpaceHave you been paying attention to what has been happening in Argentina, Venezuela, Brazil, Ukraine, Turkey and China?  If you are like most Americans, you have not been.  Most Americans don’t seem to really care too much about what is happening in the rest of the world, but they should.  In major cities all over the globe right now, there is looting, violence, shortages of basic supplies, and runs on the banks.  We are not at a “global crisis” stage yet, but things are getting worse with each passing day.  For a while, I have felt that 2014 would turn out to be a major “turning point” for the global economy, and so far that is exactly what it is turning out to be.  The following are 20 early warning signs that we are rapidly approaching a global economic meltdown…

#1 The looting, violence and economic chaos that is happening in Argentina right now is a perfect example of what can happen when you print too much money

For Dominga Kanaza, it wasn’t just the soaring inflation or the weeklong blackouts or even the looting that frayed her nerves.

It was all of them combined.

At one point last month, the 37-year-old shop owner refused to open the metal shutters protecting her corner grocery in downtown Buenos Aires more than a few inches — just enough to sell soda to passersby on a sweltering summer day.

#2 The value of the Argentine Peso is absolutely collapsing.

#3 Widespread shortages, looting and accelerating inflation are also causing huge problems in Venezuela

Economic mismanagement in Venezuela has reached such a level that it risks inciting a violent popular reaction. Venezuela is experiencing declining export revenues, accelerating inflation and widespread shortages of basic consumer goods. At the same time, the Maduro administration has foreclosed peaceful options for Venezuelans to bring about a change in its current policies.

President Maduro, who came to power in a highly-contested election last April, has reacted to the economic crisis with interventionist and increasingly authoritarian measures. His recent orders to slash prices of goods sold in private businesses resulted in episodes of looting, which suggests a latent potential for violence. He has put the armed forces on the street to enforce his economic decrees, exposing them to popular discontent.

#4 In a stunning decision, the Venezuelan government has just announced that it has devalued the Bolivar by more than 40 percent.

#5 Brazilian stocks declined sharply on Thursday.  There is a tremendous amount of concern that the economic meltdown that is happening in Argentina is going to spill over into Brazil.

#6 Ukraine is rapidly coming apart at the seams

A tense ceasefire was announced in Kiev on the fifth day of violence, with radical protesters and riot police holding their position. Opposition leaders are negotiating with the government, but doubts remain that they will be able to stop the rioters.

#7 It appears that a bank run has begun in China

As China’s CNR reports, depositors in some of Yancheng City’s largest farmers’ co-operative mutual fund societies (“banks”) have been unable to withdraw “hundreds of millions” in deposits in the last few weeks. “Everyone wants to borrow and no one wants to save,” warned one ‘salesperson’, “and loan repayments are difficult to recover.” There is “no money” and the doors are locked.

#8 Art Cashin of UBS is warning that credit markets in China “may be broken“.  For much more on this, please see my recent article entitled “The $23 Trillion Credit Bubble In China Is Starting To Collapse – Global Financial Crisis Next?

#9 News that China’s manufacturing sector is contracting shook up financial markets on Thursday…

Wall Street was rattled by a key reading on China’s manufacturing which dropped below the key 50 level in January, according to HSBC. A reading below 50 on the HSBC flash manufacturing PMI suggests economic contraction.

#10 Japanese stocks experienced their biggest drop in 7 months on Thursday.

#11 The value of the Turkish Lira is absolutely collapsing.

#12 The unemployment rate in France has risen for 9 quarters in a row and recently soared to a new 16 year high.

#13 In Italy, the unemployment rate has soared to a brand new all-time record high of 12.7 percent.

#14 The unemployment rate in Spain is sitting at an all-time record high of 26.7 percent.

#15 This year, the Baltic Dry Index experienced the largest two week post-holiday decline that we have ever seen.

#16 Chipmaker Intel recently announced that it plans to eliminate5,000 jobs over the coming year.

#17 CNBC is reporting that U.S. retailers just experienced “the worst holiday season since 2008“.

#18 A recent CNBC article stated that U.S. consumers should expect a “tsunami” of store closings in the retail industry…

Get ready for the next era in retail—one that will be characterized by far fewer shops and smaller stores.

On Tuesday, Sears said that it will shutter its flagship store in downtown Chicago in April. It’s the latest of about 300 store closures in the U.S. that Sears has made since 2010. The news follows announcements earlier this month of multiple store closings from major department stores J.C. Penney and Macy’s.

Further signs of cuts in the industry came Wednesday, when Target said that it will eliminate 475 jobs worldwide, including some at its Minnesota headquarters, and not fill 700 empty positions.

#19 The U.S. Congress is facing another deadline to raise the debt ceiling in February.

#20 The Dow fell by more than 170 points on Thursday.  It is becoming increasingly likely that “the peak of the market” is now in the rear view mirror.

And I have not even mentioned the extreme drought that has caused the U.S. cattle herd to drop to a 61 year low or the nuclear radiation from Fukushima that is washing up on the west coast.

In light of everything above, is there anyone out there that still wants to claim that “everything is going to be okay” for the global economy?

Sadly, most Americans are not even aware of most of these things.

All over the country today, the number one news headline is about Justin Bieber.  The mainstream media is absolutely obsessed with celebrity scandals, and so is a very large percentage of the U.S. population.

A great economic storm is rapidly approaching, and most people don’t even seem to notice the storm clouds that are gathering on the horizon.

In the end, perhaps we will get what we deserve as a nation.

Is “the environment” now obsolete?

Is “the environment” now obsolete?.

For millennia the presence of humans on planet Earth hardly made a dent in its ecosystems. Humans were at the mercy of their environment as much as any other creature. But with the advent of agriculture, humans began to influence the planet in major ways. Some scientists posit that the clearing of large swaths of land for planting over the past 10,000 years released enough carbon into the atmosphere to delay the next ice age.

Of course, in the past two centuries the pace of those carbon releases has grown exponentially with the industrial revolution through the burning of fossil fuels. These emissions now threaten to flip the planet into a warm state far beyond anything experienced by humans in their relatively brief time on Earth. The question we must now face is whether humans still live in “the environment” or whether they now are“the environment” by virtue of their actions.

The distinction mattered little as long as we didn’t live in what economist Herman Daly calls “a full world.” The introduction to his piece “Economics in a Full World” which appeared in Scientific American in 2005 states: “The global economy is now so large that society can no longer safely pretend it operates within a limitless ecosystem.”

And, pretending is all we’ve been doing since the dawn of humans. As it turns out, the biosphere that is our home has been shaped by the very organisms that inhabit it. For example, about 2.4 billion years ago, cyanobacteria which are capable of photosynthesis appeared and began absorbing carbon dioxide from Earth’s atmosphere and releasing oxygen in great quantities back into it. The period has been dubbed The Great Oxidation Event, and it wiped out most anaerobic bacteria (because, of course, they can’t survive in an oxygen environment). As a result, The Great Oxidation Event is regarded as one of the largest extinction events of all time.

We see the imprint of living organisms shaping the biosphere everywhere. The carbon cycle–the very basis of life as we know it–involves plants and microorganisms both on land and in the sea. Even our human bodies are part of it as we breathe in oxygen and expel carbon dioxide. Shell-making aquatic organisms use carbon and calcium from seawater to make their shells. When these organisms die, their shells sink to the ocean floor where they become part of the vast carbonate-rich deposits of sedimentary rocks.

And there is the nitrogen cycle, a cycle critical to the survival of all living things. None of us can live without the nitrogen needed to build the proteins and the nucleic acids (DNA and RNA) we depend on for our functioning. Nitrogen in the atmosphere, however, cannot be utilized by plants. But, it turns out that soil bacteria convert this nitrogen into a form that is usable for plants and therefore usable for the animals that eat those plants. (Lightening also performs this transformation.)

So the principle is that organisms are both acted upon by their environment and act ontheir environment. They both adapt to their circumstances and attempt to alter those circumstances to enable them to survive and thrive. There can be no doubt that humans do this. Of course, this doesn’t guarantee that all organisms will survive, at least not in their current form. And, that’s how we get evolution on Earth. Organisms gradually change over time or go extinct if they cannot adapt quickly enough to changing circumstances or alter those circumstances enough to allow their survival.

All organisms are continuously acting both to adjust to surrounding circumstances and to shape those circumstances. This is a key insight. We earthbound organisms are not, as Darwin implies, mere helpless actors. Each of us has a role to play in maintaining the web of life. This conclusion is logical. How can we say that wolves are influencing the evolutionary development of sheep without saying sheep are influencing the evolutionary development of wolves?

What can we now say about “the environment” when the dominant force shaping it us? We have interfered in the carbon cycle in a profound way, vastly speeding up the introduction of carbon into the atmosphere and the oceans (ocean acidification). What can we now say about the nitrogen cycle after 1905 when Fritz Haber figured out how to convert nitrogen from the air into a form usable for plants–a discovery that led to modern-day nitrogen fertilizers that have greatly expanded the food supply and thus allowed human populations to skyrocket?

But, runoff laced with these same fertilizers is responsible for the eutrophication of bodies of water. And, it turns out that the long-term use of artificial nitrogen fertilizers actually reduces the productivity of the soil. One affectless but nevertheless ominous observation from recent research on the subject summarizes the problem: Long-term nitrogen fertilizer use “has been implicated in widespread reports of yield stagnation or even decline for grain production in Asia.” (For a fuller summary, see this piece inGrist.)

To every action there is a reaction. It just may not show up right away.

In a recent opinion piece in The New York Times Erle Ellis, a biologist, embraced the idea that there is no “environment” that constrains human action. Here is the heart of his argument:

 The science of human sustenance is inherently a social science. Neither physics nor chemistry nor even biology is adequate to understand how it has been possible for one species to reshape both its own future and the destiny of an entire planet. This is the science of the Anthropocene. The idea that humans must live within the natural environmental limits of our planet denies the realities of our entire history, and most likely the future. Humans are niche creators. We transform ecosystems to sustain ourselves. This is what we do and have always done. Our planet’s human-carrying capacity emerges from the capabilities of our social systems and our technologies more than from any environmental limits.

Ellis is one of the few scientists I’ve read who understands that what we humans are doing to the Earth is really a political issue–notice that he invokes social science. And, he has given his advocacy services over to the side that proclaims that perpetual growth in the human domain is possible. To repeat: His conclusion stems not from mere natural science, but from social science, that is, the realm of the political.

But, he makes two obvious errors in his piece when he proclaims: “There really is no such thing as a human carrying capacity. We are nothing at all like bacteria in a petri dish.”

He is referring, of course, to the classic illustration of the petri dish which ultimately runs out of food for the hungry, multiplying bacteria it contains, and that leads to a population crash among the bacteria. His error is in assigning agency only to humans, in assigning the ability to shape our environment only to humans. And yet, as a biologist who must know the history of planet Earth, he is being disingenuous. Remember the humble cyanobacteria and the huge destruction it wreaked on other forms of life. Ellis says in the previous excerpt: “Humans are niche creators.” But, so are all other organisms on the planet, a rather glaring omission. This is, in fact, a key similarity between us and bacteria.

What Ellis imagines is that humans will always and everywhere be successful at creating new niches for themselves–that all the other organisms on the planet will somehow accommodate us enough to allow the human species to grow continuously and its extractions from the rest of the natural world to grow with it. He is right that humans have always altered the biosphere (as has every other organism). But he seems not to understand the current scale of alterations and the rapidity with which they are taking place. Scale matters. Remember Herman Daly’s admonish that we live in a full world. And, that world is on course to change its climate dramatically in just a few decades. Such a time line is unprecedented in human history.

Ellis again has a scientific lapse by simply dismissing the competition and cooperation from other species as inconsequential–for example, competition for basic resources such as food and water and cooperation from such species as bees which pollinate the lion’s share of the world crops. He is too dismissive of human-induced changes in the oceans, the soils and the atmosphere as something humans will always and everywhere be able to survive.

He tells us that 200,000 years ago humans started to transform the planet. What he fails to mention is that it has not been a one-way trajectory skyward. About 70,000 years ago, probably because of climate change, human numbers were likely reduced to just 2,000. The lack of genetic diversity in humans has long pointed to such an event. All of us today come from those 2,000.

But, of course, we’re better equipped than those humans. And today, with our unparalleled knowledge, we wouldn’t foolishly undermine the systems in our biosphere that are critical to our well-being, would we?

Ellis writes with the vast overconfidence of someone who thinks he knows the future with certainty and that humans will always figure something out no matter the scope or rapidity of the changes they face. In his opinion piece he gushes: “Who knows what will be possible with the technologies of the future?” Actually, nobody knows.

But, we humans are not “in charge” of the biosphere. We are only competing and cooperating with various parts of it in a struggle to survive and thrive. Isn’t it obvious by now that the biosphere does not always do what we want it to do and only what we want it to do? It’s as if the law of unintended consequences has never occurred to Ellis.

Given that we know now that all organisms try to remake the biosphere to their liking, this should make us far less confident that we can make everything turn out just fine for humans. Keep in mind that we face a bewildering and essentially incalculable array of actors with whom we are forced sometimes to fight and sometimes to cooperate. In fact, we cannot even know what all of them are and probably are only familiar with a small sliver of all that lives. Our knowledge of the biosphere and the Earth is not just imperfect, it is wildly imperfect. If we’re so smart, why didn’t we avoid changing the climate, devastating the fisheries, degrading the soil through rapid erosion, and lacing the air, water and soil with toxic chemicals in the first place?

Even though Ellis is right that there is no fixed human carrying capacity–because humans, their social and technological circumstances, and the world of other organisms and Earth processes are changing all the time–this is but a red herring. No bona fide scientist has said otherwise. When most scientists refer to human carrying capacity, they mean long-term carrying capacity; they mean thousands of years. And, Ellis never even contemplates the possibility that this fluctuating human carrying capacity might go down! The human story forever goes upward (except, for example, 70,000 years ago, when, due to climate change, it didn’t).

So we have a semantic sleight-of-hand that ducks the long-term problem and places Ellis (whether he knows it or not) firmly on the side of interests that only think short-term, primarily the industrial and commercial interests. We are back to politics, again. With which interests should we ally ourselves? The well-being and futurity of the human race or the short-term interests of powerful elites?

William Catton Jr., author of the ecological classic Overshoot, prefigured the coming of the Anthropocene, an age of the Earth dominated by human actions–where menacing geological changes such as changes in the chemistry of the ocean and the atmosphere take place by dint of human action and within a human lifetime. Catton gave humans a new name, homo colossus, a human-tool hybrid with immense power to shape the globe. With worldwide geologic changes coming this fast, what will it mean from now on to refer to the geologic time scale?

If we are indeed already in the Anthropocene, then “the environment” cannot be “out there.” And, it cannot be “preserved.” The environment is us and everything else together constantly in flux. It is no longer a static scientific construction, but a political one within which we humans are firmly situated along with all the other organisms and Earth processes. We cannot be above or apart from it. We cannot “save it” as actors from beyond.

But, we can decide which values we want to defend. With apologies to some of my geologist friends who understand rightly that the human project on planet Earth will just be a blip in Earth’s history–please stop identifying with the rocks! Rocks are an excellent area of study; and, we have geologists to thank for much of what we know about Earth’s systems. But, the time has now come to realize that that knowledge has political implications for what we as humans will actually do from here on out.

The advent of the Anthropocene has wiped out the distinction between human history and natural history. And so, my minor temper tantrum over geology applies to all the other natural sciences. There is no distinction between us and the natural world. There is just the thin membrane of life and life processes clinging to the Earth’s surface which we call the biosphere and of which humans are merely a part.

It has always been thus. But now, it is imperative that we understand this if we wish to salvage anything we call human in the century to come.

_________________________________________________________________________

P.S. The inspiration for this piece comes from Bruno Latour who gave the Gifford Lectures last year, particularly the third and fourth lectures. And, I thank my friend Jim Armstrong for some thoroughly stimulating discussions about these lectures and Latour’s latest work.

Chinese Stocks Tumble On Contagion Concerns From First Shadow-Banking Default | Zero Hedge

Chinese Stocks Tumble On Contagion Concerns From First Shadow-Banking Default | Zero Hedge.

While manufacturing and services PMIs disappointed, the big problem in big China remains that of an out-of-control credit creation process that is blowing up. As we previously noted, instead of crushing credit creation, the PBOC’s liquidity rationing has forced distressed companies into high-interest-cost products in the shadow-banking world. Investors on the other side of “troubled shadow banking products” had assumed that ‘someone’ would bail them out but this evening Reuters reports that ICBC has confirmed that it will not rescue holders of the “Credit Equals Gold #1 Collective Trust Product”, due to mature Jan 31st with $492 million outstanding. The anxiety from contagion concerns of the first shadow-banking default has pushed the Shanghai Composite back near 2,000 for the first time since July – and to its narrowest spread to the S&P 500 in almost 8 years.

The Shanghai Composite is tumbling… to six month lows (and back near 2,000 for the firs time since July)…

 

and its closest (nominally) to the S&P 500 in almost 8 years…

 

As we previously noted,

…borrowers are facing rising pressures for loan repayments in an environment of overcapacity and unprofitable investments. Unable to generate cash to service their loans, they have to turn to the shadow-banking sector for credit and avoid default. The result is an explosive growth of the size of the shadow-banking sector (now conservatively estimated to account for 20-30 percent of GDP).

 

Understandably, the PBOC does not look upon the shadow banking sector favorably. Since shadow-banking sector gets its short-term liquidity mainly through interbanking loans, the PBOC thought that it could put a painful squeeze on this sector through reducing liquidity. Apparently, the PBOC underestimated the effects of its measure. Largely because Chinese borrowers tend to cross-guarantee each other’s debt, squeezing even a relatively small number of borrowers could produce a cascade of default. The reaction in the credit market was thus almost instant and frightening. Borrowers facing imminent default are willing to borrow at any rate while banks with money are unwilling to loan it out no matter how attractive the terms are.

 

Should this situation continue, China’s real economy would suffer a nasty shock. Chain default would produce a paralyzing effect on economic activities even though there is no run on the banks. Clearly, this is not a prospect the CCP’s top leadership relishes.

 

So the PBOC’s efforts are merely exacerbating the situation for the worst companies… for example… Zhenfu Energy…

As Reuters reports,

Industrial and Commercial Bank of China, the world’s largest bank by assets, said on Thursday that it has no plans to use its own money to repay investors in a troubled off-balance-sheet investment product that it helped to market.

 

ICBC’s shares have fallen this week amid speculation that the bank would be forced to help repay investors in a 3 billion yuan ($496.20 million) high-yield investment product issued by China Credit Trust Co Ltd but marketed through ICBC branches. The product is due to mature on Jan. 31.

 

“Regarding this unsubstantiated rumour, a situation completely does not exist in which ICBC will assume the main responsibility (for the trust product),” an ICBC spokesman told Reuters by phone on Tuesday.

 

The trust product, called “2010 China Credit / Credit Equals Gold #1 Collective Trust Product”, used the funds it raised from wealthy investors in 2010 to make a loan to unlistedcoal company Shanxi Zhenfu Energy Group Ltd.

 

But in May 2012, Zhenfu Energy’s vice chairman, Wang Ping Yan, was arrested for accepting deposits without a banking licence.

Which Barclays warns:

In our view, despite the trust issuer, distributor bank and local government perhaps trying to bail out the mining company, the regulators and central government could probably allow the trust product default to happen as:

  1. government appears fairly determined to reform the financial system and cut off the implicit guarantee of financial institutions;
  2. the State Council is reportedly streamlining regulation of shadow banking including trust business; and
  3. the default of trust products could have less social impact than the default of WMPs, bonds and other products sold to the general public or have problematic practices, such as asset-pool investments.

In our view, the default of trust products could trigger some short-term negative impacts on China’s financial sector and the reputation of financial institutions. However, we believe it is positive for the healthy development of financial system in the long run because the default could do the following:

  1. Be a step to reduce the implicit guarantee of financial institutions for investment products. Banks could shift their financial liabilities back to the investors.
  2. Increase the risk awareness of both investors and financial institutions, which could correct the pricing of investment products to more risk-oriented.

Its conclusion is dire: “If the trust product goes into default, we believe it would be the first default to test the financial system.”

Here is the product…

And the growth of such products has been enormous as we have explained in great detail previously: at RMB10.1 trillion as of Q3 should the first domino fall, watch out below.

Finally for those who have forgotten, below is a quick schematic of what a WMP looks like:

As Michael PettisJim ChanosZero Hedge (numerous times), and now George Soros have explained. Simply put –

“There is an unresolved self-contradiction in China’s current policies: restarting the furnaces also reignites exponential debt growth, which cannot be sustained for much longer than a couple of years.”

The “eerie resemblances” – as Soros previously noted – to the US in 2008 have profound consequences for China and the world – nowhere is that more dangerously exposed (just as in the US) than in the Chinese shadow banking sector as explained above.

Thyroid Cancer in Children on Rise; Japan: The next wave – 101 East – Al Jazeera English

Japan: The next wave – 101 East – Al Jazeera English.

We investigate the long-term effects of the 2011 tsunami, including a potential cancer threat for Fukushima’s children.

 Last updated: 10 Jan 2014 09:59
On March 11, 2011, the ground trembled and the sea engulfed the coastal towns in Japan’s Fukushima prefecture. The earthquake and tsunami led to a nuclear disaster which became synonymous with the infamous Chernobyl and Three-Mile accidents.

Today, spacious luxury neighbourhoods have been dramatically transformed into decaying ghost towns, a scene from a post-apocalypse movie. And two years on, while the country struggles to rebuild itself, many say the crisis is far from over.

On a stretch of lonely beach in the heavily contaminated no-go zone surrounding the crippled Fukushima nuclear plant, one man is on a lonely mission. His seven-year-old daughter is the only person unaccounted for after a five-storey tsunami crushed the nearby town of Okuma in March 2011. The authorities stopped looking for her long ago, but Norio Kimura has not and never will. It is unlikely he will find his little girl and yet he trudges on, looking for clues. Among the pieces he has found is a shoe he says belonged to his dead child.

Connect With 101 East

In a private children’s hospital well away from the no-go zone, parents are holding on tight to their little sons and daughters, hoping doctors will not find what they are looking for – thyroid cancer.

Tests commissioned by the local authorities have discerned an alarming spike in the incidence of thyroid cancer in Fukushima children. Out of 200,000 children screened so far in government-ordered tests, there are 18 confirmed cases of thyroid cancer and 25 suspected cases. While specialists and experts are reluctant to draw a definitive link between the tumours and the nuclear radiation that erupted from the stricken power station, they are nonetheless deeply concerned.

Former thyroid surgeon, Akira Sugenoya says the spike in numbers should be taken seriously. He knows the devastation radiation can have after spending five years operating on hundreds of Chernobyl children suffering from thyroid cancer. But Professor Geraldine Thomas, a specialist in the molecular pathology of cancer in Imperial College London, says the fears are unfounded and have driven Japanese mothers to make unnecessary choices, including abortions.

It is not just the children who are a cause for concern. Farmer Kazuya Tarukawa worries that his crops have been contaminated and fears the radiation effects will be passed down the food chain. His crops may have passed the government’s radioactive safety limits but Tarukawa’s conscience is burning. He believes the government’s safety limits are inaccurate.

What are the long-term effects of Japan’s earthquake and tsunami? 101 East investigates the next wave of pain and fear after Japan’s nuclear crisis.

Spike in cancer detections and tainted crops. Is there a link to the #Fukushima nuclear disaster? @AJ101East #JapanNextWave

US challenges ‘provocative’ China sea law – Asia-Pacific – Al Jazeera English

US challenges ‘provocative’ China sea law – Asia-Pacific – Al Jazeera English.

The US is already at odds with China over its air defence zone over the East China Sea [Getty]
The United States has described as “provocative and potentially dangerous” new Chinese restrictions of foreign fishing vessels in disputed waters in the South China Sea.

From January 1, China has required foreign fishing vessels to obtain approval to enter waters it says are under its jurisdiction. It rejects territorial claims by the Philippines, Taiwan, Malaysia, Brunei and Vietnam.

Jen Psaki, a spokeswoman for the US State Department, said on Thursday that China gave no justification under international law for the new restictions.

“Our long-standing position has been that all concerned parties should avoid any unilateral action that raises tensions, and undermines the prospects for a diplomatic or other peaceful resolution of differences,” she said.

“The passing of these restrictions on other countries’ fishing activities in disputed portions of the South China Sea is a provocative and potentially dangerous act.” 

The US is already at odds with China declaring in November an air defence zone over an area of the East China Sea claimed by Japan and South Korea.

The US flew B-52 strategic bombers into the new zone in defiance, raising tensions further in the Pacific.

The new Chinese rules do not outline penalties, but the requirements are similar to a 2004 national law that says boats entering Chinese territory without permission can have their catch and fishing equipment seized and face fines of up to $82,600.

Hua Chunying, a Chinese foreign ministry spokeswoman, said regulating the use of marine resources was a normal practice.

China’s ties with the Philippines have been especially frosty over the South China Sea.

Raul Hernandez, a spokesman for the Philippine foreign ministry, said Manila had asked its embassy in Beijing to get more information on the rules.

Activist Post: No-Brainer Course In Derailing The Trans-Pacific Partnership

Activist Post: No-Brainer Course In Derailing The Trans-Pacific Partnership.

Heather Callaghan
Activist Post

If you don’t know what it is yet – that means it’s working. The secrecy, that is. But once Pandora’s Box is opened, there’s no putting anything back. It will go down in history as one of the worst, oppressive plagues to saturate the planet.

Like Spider Man trying to stop a train from going over with nothing but his strength and shooting threads; we are going to need all the Web we can get to stop the fast-tracking Trans-Pacific Partnership from running over us. Perhaps more aptly, it is a tangled web we’ll be left trapped in as prey if we do nothing.

Here’s a crash-course and the easiest approach – all guesswork removed. But first, here’s a sampling of what you can kiss goodbye if this mammoth piece of legislation goes through…

What’s left of our jobs, food safety, Internet freedom, natural medicine, small farming, choice in medicine, financial regulation, privacy and more. Basically, all your rights. It permeates every area of your life, it’s been ramrodded through the Senate, and the media is not saying anything. It grants the likes of Monsanto, Wall Street and other huge entities full reign with immunity.

Kiss any last American sovereignty goodbye and say hello to your new global crypto-corpocracy complete with international tribunals and the end of domestic law – from your newly refurbished prison cell, of course. After all, you clicked on the wrong Internet link! And your ISP was watching and reported you. In the near future, this article could be enough to jail me, ban my whole family from the Internet, have computers seized and delete the website. No more videos that piece other clips together, or anything that hints at “infringement,” no more fair use, so no more non-corporate news.

It’s been shrouded in secrecy, especially from the People and Congress, planned behind closed doors for years, and proponents are searching for sponsors to have the President push it through now that Congress is back from recess.

The Trans-Pacific Partnership n. 1. A “free trade” agreement that would set rules on non-trade matters such as food safety, internet freedom, medicine costs, financial regulation, and the environment. 2. A binding international governance system that would require the United States, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam, and any other country that signs on to conform their domestic policies to its rules. 3. A secret trade negotiation that has included over 600 official corporate “trade advisors” while hiding the text from Members of Congress, governors, state legislators, the press, civil society, and the public.

Here’s your crash course link on the TPP. You’ll be ready for take-off in no time. They’ve made it that simple:

Expose the TPP

After being mind-blown and catching your breath, you can do the absolute easiest thing there is to do by using Twitter with the hashtag #NOFastTrackTPP (but wait, there’s more).

Don’t use social media? No problem, scroll down. For social media users, here are the easiest things you can do, besides sharing memes and links on Facebook. Share things to Reddit andStumbleUpon. Everyone should call their reps (below).

See the Twitter storm event – still going. Pull any memes – share. Only use this hashtag for social media:  #NOFastTrackTPP. Using other hashtags and adding more will split the trends.

Next, Tweet your little heart out to your reps and others. Easily find them by clicking the “Discover” button and typing “congressman” in the search. All their Twitter names appear. Find celebrities, they often re-tweet. Example: @repfitzpatrick or @RepBera

Example Tweet:

@RepBera NO to Fast Track Authority and TPP, or we will not re-elect!! ‪#‎NoFastTrackTPP‬

Here’s another: “Do NOT sponsor FastTrack! Vote NO on TPP! ‪#‎NoFastTrackTPP‬”

Some reps have stood against the TPP, so first you might want to see this:

Spank or Thank?

– OR –

Use a general message for everyone: “I will NEVER support the Trans-Pacific Partnership#NOFastTrackTPP”

Want to jump into the Twitter storm? Easy. Sign up at Twitter, it runs you through a few-second tour and you can figure out the rest, see Help, or ask friends. Use the hashtag #NOFastTrackTPP on Facebook statuses.

Non-Social Media Users:

Find all your representatives’ info/forms in one-click. Just click on your state:
Contacting the Congress

Or use this:
Call President Obama: 202-456-6213
Call your Representative: 202-225-3121
or Toll Free (877) 762-8762

E A S Y  S C R I P T:

(Breathe and talk slowly. You will do just fine. Be polite and confident.)

“Hi, this is (your full name). I am a constituent of Rep/Senator (name). I live in (name of city). I am calling to request that Rep/Sen (name) vote NO on Fast Track Authority. It is important to me that Congress follows the Constitutional directive to negotiate international trade and that all trade agreements are given full consideration, debate and amendments as needed.

Do you know Rep/Sen (name) position on Fast Track Authority? Will he/she vote Yes or No? (wait for an answer)

Do you know Rep/Sen (name) position on the Trans Pacific Partnership Agreement? Will he/she vote Yes or No? (wait for an answer)

(regardless of their response, just continue)

Once again, I am requesting that Rep/Sen (name) vote NO on Fast Track Authority and NO on the TPP! Please be sure he/she gets my message. Thank you.”

Go to the Crash-Course site and print off PDFs to share. Actually, that whole website is designed to help you take action, online and off. You can still share the hashtag in any way you choose – it gets the point across fast.

URGENT:

If you can target these two reps, you could stop the fast-track today:

1) MIKE QUIGLY (IL-05)
D.C. 202-225-4061
District: (773) 267-5926
Twitter: @RepMikeQuigley
https://www.facebook.com/repmikequigley

2) GREG MEEKS (NY-05)
D.C. (202) 225-3461
District: 347-230-4032 & 718-725-6000
Twitter: Gregory Meeks
https://www.facebook.com/gregorymeeksny05

Lastly, if you have done something, no matter how small to derail the TPP fast track – THANK YOU!!

Special thanks also to Andrew Pontbriand, Emily Laincz and Nick Bernabe for their tireless organizing, efforts and information  – and to all those who joined them. Without them, this article wouldn’t be – nor will it with the TPP!

The smallest action is bigger than the greatest intention.

 

Heather Callaghan is a natural health blogger and food freedom activist. You can see her work at NaturalBlaze.com and ActivistPost.com. Like at Facebook.

Recent posts by Heather Callaghan:

The Real China Threat: Credit Chaos | Zero Hedge

The Real China Threat: Credit Chaos | Zero Hedge.

“There is an unresolved self-contradiction in China’s current policies: restarting the furnaces also reignites exponential debt growth, which cannot be sustained for much longer than a couple of years.”

The “eerie resemblances” – as Soros previously noted – to the US in 2008 have profound consequences for China and the world – nowhere is that more dangerously exposed (just as in the US) than in the Chinese shadow banking sector as explained below…

Submitted by Minxin Pei via The National Interest,

The spectacle of a game of financial chicken in the world’s second-largest economy is both entertaining and terrifying. Twice in 2013, the People’s Bank of China (PBOC), the country’s central bank, tried to demonstrate its resolve to rein in runaway credit growth. In June, it engineered a sudden credit squeeze that sent the interbank lending rates to more than 20 percent and caused a short-lived panic in the Chinese financial markets. Apparently, the financial turmoil was too much for the Chinese government, which quickly ordered the Chinese central bank to reverse course. As a result, the PBOC lost both face and credibility.

However, as credit growth continued unabated and activities in the most risky segment of China’s financial sector – the so-called shadow banking system – displayed alarming recklessness, the PBOC was left with no choice but try one more time to send a strong message that it could not be counted on to provide unlimited liquidity to the banking system.

It did so in December 2013 with a modified approach that provided liquidity only to the selected large banks but pressured smaller banks (which are the most active participants in the shadow banking system). Although interbank lending rates did not spike to nose-bleeding levels, as they did in June, they doubled quickly. Most Chinese banks held on to their cash and refused to lend to each other. Chinese equity markets fell nearly 10 percent, giving back nearly all the gains since mid-November, when the Chinese Communist Party’s (CCP) reform plan bolstered market sentiments.

Unfortunately for the PBOC, the renewed turbulences in the Chinese banking sector were again viewed as too dangerous by the top leadership of the CCP even though it seemed that the PBOC initially received its support. Consequently, the PBOC had to beat another hasty retreat and inject enough liquidity to force down interbank lending rates. Thus, in the first two rounds of a stand-off between the PBOC and China’s shadow banking system, the latter is widely seen as the winner. The PBOC blinked first each time.

For the moment, the conventional wisdom is that, as long as the PBOC maintains sufficient liquidity (translation: permitting credit growth at roughly the same pace as in previous years), China’s financial sector will remain more or less stable. This observation may be reassuring for the short-term, but overlooks the dangerous underlying dynamics in China’s banking system that prompted the PBOC to act in first place.

Of these dynamics, two deserve special attention.

The first one is the rapid rise in indebtedness (or financial leverage) in the Chinese economy since 2008. In five years, the country’s total debt-to-GDP ratio (including both public and private debt) rose from 130 percent to 210 percent, an unprecedented increase for a major economy. Historically, such expansion of credit hasrarely failed to inflate a credit bubble and cause a financial crisis. In the Chinese case, what makes the credit explosion even more risky is the low creditworthiness of the major borrowers. Only a quarter of the debt is owed by those with relatively high creditworthiness (consumers and the central government). The remaining 75 percent has gone to state-owned enterprises, private real-estate developers, and local governments, all of which are known to have weak loan repayment capacity (most state-owned enterprises generate low cash profits, private real-estate developers are overleveraged, and local governments have a narrow tax base). Staggering under an unsustainable debt burden of roughly 160 percent of GDP (equivalent to $14 trillion), these borrowers are expected to default on a significant portion of their bank debt in the coming years.

The second dynamic, closely related to the first one, is the growth of the shadow-banking sector. Two drivers shape activities in this sector, which operates outside the banking system. To minimize their exposure to risky borrowers, Chinese banks have curtailed their lending. But at the same time, these banks have embraced the shadow banking activities to increase their revenue. Specifically, Chinese banks peddle new “wealth management products” – short-term securities promising high interest rates – to their depositors. The issuers of such securities, which are not protected or insured by the government – are typically high-risk borrowers, such as local governments (and their financing vehicles) and real estate developers.

In the meantime, these borrowers are facing rising pressures for loan repayments in an environment of overcapacity and unprofitable investments. Unable to generate cash to service their loans, they have to turn to the shadow-banking sector for credit and avoid default. The result is an explosive growth of the size of the shadow-banking sector (now conservatively estimated to account for 20-30 percent of GDP).

Understandably, the PBOC does not look upon the shadow banking sector favorably. Since shadow-banking sector gets its short-term liquidity mainly through interbanking loans, the PBOC thought that it could put a painful squeeze on this sector through reducing liquidity. Apparently, the PBOC underestimated the effects of its measure. Largely because Chinese borrowers tend to cross-guarantee each other’s debt, squeezing even a relatively small number of borrowers could produce a cascade of default. The reaction in the credit market was thus almost instant and frightening. Borrowers facing imminent default are willing to borrow at any rate while banks with money are unwilling to loan it out no matter how attractive the terms are.

Should this situation continue, China’s real economy would suffer a nasty shock. Chain default would produce a paralyzing effect on economic activities even though there is no run on the banks. Clearly, this is not a prospect the CCP’s top leadership relishes.

So the task for the PBOC in the coming year will remain as difficult as ever. It will have to navigate between gently disciplining the banks and avoiding a financial panic. Its ability to do so is anything but assured. It has already lost the first two rounds of this game of financial chicken. We can only hope that it can do better in the next round.

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India Savings Deposit Scam Collapse Leaves Thousands Penniless – Bloomberg

India Savings Deposit Scam Collapse Leaves Thousands Penniless – Bloomberg.

Sudipta Sen was on the run when police arrested him on April 23 at Hotel Snow Land, a resort with views of the Himalayas in Sonamarg, India, about 2,700 kilometers northwest of his Kolkata base.

Sen’s Saradha Realty India Ltd., the anchor of an empire that took in small deposits and promised payouts of land, apartments or a refund of clients’ money with interest rates as high as 24 percent, was defaulting on thousands of deals. Employees of Sen’s media companies hadn’t gotten paychecks in months. As cash dried up, 1.74 million customers saw savings vanish, Bloomberg Markets magazine will report in its February issue.

The upheaval didn’t end with Saradha. Panicked depositors rushed to pull money from similar companies. Since April, more than 34 people have committed suicide, 13 of them Saradha agents and investors. A 50-year-old domestic helper south of Kolkata in Baruipur, one of many hubs of Sen’s activities, set herself ablaze after losing 30,000 rupees ($482).

Saradha Group, the parent of Saradha Realty, was among hundreds of unlicensed deposit-taking enterprises that serve India’s poor — and skirt regulators.

Clients scraped up as little as 100 rupees a month in a country where the World Bank’s Global Financial Inclusion Database found just 35 percent of adults had a bank account and 8 percent borrowed through formal channels in 2011.

Saradha Group Chairman and Managing Director Sudipta Sen was arrested on April 23 as…Read More

Goat Farmers

India requires such quasi-banks to register with state or federal authorities. Many don’t. Saradha and others avoid oversight by disguising themselves as real estate developers, goat farmers and emu raisers, says U.K. Sinha, chairman of the Securities and Exchange Board of India, the nation’s capital markets regulator, known as SEBI.

Sen, chairman and managing director of Saradha Group, said he owned 160 companies. About 15 operated as real firms, Sen’s lawyer Samir Das says.

Unlawful deposit companies proliferate in India. Saradha took in at least $200 million based on preliminary figures, Sinha says. Actual numbers may be bigger, he says. Such firms have raised a total of more than $2 billion, Sinha estimates.

Sen has been jailed since his arrest. Police have filed 155 charge sheets, formal documents of accusation, against Sen, Das says. Sivaji Ghosh, additional director general of the West Bengal police’s criminal investigation department, said in mid-December he expects a special court that will handle all Saradha-related cases to be set up soon.

Photographer: Subhankar Chakraborty/Getty Images

Sudpita Sen has been jailed since his arrest in April. A special court may be set up to… Read More

Saradha Fallout

What makes Saradha’s collapse noteworthy is the turmoil it spread across six states, a territory the size of Spain in eastern India, where access to banks is limited.

Depositors protested and mobs ganged up on agents. Abhimanyu Nayak, who worked for another unregistered collection firm called Seashore Group, jumped in front of a train in Odisha state in May as investors hounded him for their cash.

Saradha and its aftermath hurt so many people that the government had to step in, says Pratip Kar, who served as SEBI’s executive director from 1992 to 2006 and now works as a World Bank consultant.

“Ponzi schemes like Saradha create widespread havoc, like a tsunami,” says Kar, describing ploys in which companies repay depositors with money from new investors. “When the shopkeeper and the household helper and the rickshaw pullers are robbed of their minuscule savings, it is painful.”

New Powers

The Saradha fiasco sparked an overhaul of SEBI’s powers. The regulator has shut 15 companies and barred the owners from the capital markets. It’s investigating 20 more, Sinha says.

That’s a fraction of India’s fraudulent collection businesses, says Prithvi Haldea, chairman of researcher Prime Database in New Delhi.

“There are countless scams currently in operation in various sizes, shapes and forms,” he says. “Saradha led to a new law and that’s a good thing, but is it geared toward conquering all scams? Certainly not.”

In India, several regulators supervise banks and financial companies — creating gaps that scammers exploit. SEBI monitors so-called collective investment schemes, known as CISs, which typically deal with money pooled from customers.

SEBI, which had power to investigate but not enforce, can now search and seize property and recover wrongful gains, Sinha says. The government can also classify pools of more than 1 billion rupees as CISs and put them under SEBI’s purview. In the past, no threshold existed.

‘Nothing Escapes’

As for smaller scams outside SEBI’s radar, Sinha says, some states have passed a measure to protect depositors against unauthorized money raising. SEBI will share information with states, the corporate affairs ministry and the Reserve Bank of India to help fight fraud.

“We want to ensure nothing escapes,” Sinha says.

The reforms don’t go far enough, says Satyajit Das, author of a dozen books on financial risk, including “Extreme Money: Masters of the Universe and the Cult of Risk.”

“The regulatory infrastructure doesn’t actually keep up with reality,” he says, adding that scammers will simply create dozens of small companies to avoid the 1 billion rupee threshold.

“The authorities need to accept that in the modern financial system, these quaint distinctions between banks, nonbanks and CISs are a complete waste of time,” he says. Das says India needs one powerful financial regulator.

Ajay Shah, an economist at the National Institute of Public Finance and Policy in New Delhi, says hasty laws may not address the scope of a malfeasance.

‘Ponzi Schemes’

“Laws are enacted as a knee-jerk response to an event and often poorly thought through,” he says, commenting about the government’s reactions to financial scandals. “Ponzi schemes like Saradha are a visible sign that the government’s strategy is fundamentally broken.”

Lax law enforcement and India’s slow judicial system aid fraudulent companies, says Prime Database’s Haldea, who is also an investor-protection activist with a website listing economic offenders.

“People assume that they will never be caught or will get off lightly,” he says. “Ultimately, the fear of law has to go down the throats of fraudsters.”

Financial scams are hurting India as it battles an economic slump. The central bank predicts growth will remain at 5 percent in the 12 months ending on March 31, the same pace as in the previous fiscal year and the slowest growth in a decade.

Undermining Confidence

Harm to small investors undermines confidence in the financial system. When Indians lose cash, they put money into physical assets such as gold, which India imports, Shah says. That reduces household capital that powers the economy.

India raised the tax on gold imports three times in 2013 to curb demand and tackle a record $87.8 billion current-account deficit that weakened the rupee in August to an all-time low of 68.845 to the dollar.

“Beyond the actual dollars lost, these Ponzi schemes contaminate people’s confidence, and the financial markets become weak,” Shah says. “To have a comprehensive, vibrant economy, you need to have households that have confidence in an array of financial institutions and products, whether it’s a bank or mutual funds.”

Tuku Biswas lost her life savings to Saradha. Biswas, a sex worker in Kolkata’s Sonagachi neighborhood of multistory brothels, was 28 in 2012, when she discovered she had the HIV virus.

‘Sister’s Future’

Determined to support her 11-year-old sister, Biswas deposited 7,500 rupees a month with Sen’s Saradha Tours & Travels Pvt. Biswas expected a lump sum of 131,250 rupees — including the promised 17 percent interest — by August 2013. When Saradha imploded in April, she got nothing.

“That money was my sister’s future,” she says. “All I want is my money back. I don’t know how long I have left to live.”

Saradha lured clients with an array of pitches. Saradha Realty took cash as an advance for properties that the company didn’t identify at the outset, according to an April 23 statement from SEBI.

Investors chose land, an apartment or a refund of their money with average interest of 12 to 24 percent at the end of the agreement. Saradha also took as little as 100 rupees a month for 12 to 60 months. Some investors put in 10,000 to 100,000 rupees for 15 to 120 months or lump sums for 12 to 168 months.

Sen documented his own downfall in an April 6 letter to India’s Central Bureau of Investigation, four days before he fled Kolkata.

‘Women, Wine’

He said he made a costly foray into the media industry by acquiring television channels and newspapers in 2011. Close aides kept a major chunk of depositors’ money, he wrote. And marketing officials who recruited agents were illiterate, he said.

“They only understood money, women and wine,” Sen wrote.

Sen described his aspirations in the letter. “I never thought about my limitations,” he wrote.

“A few of my well-wishers cautioned that it is not possible to organize a big empire. But I did not hear anyone’s advice.”

Starting as a property agent in the 1990s, Sen became the owner of Saradha Construction Co. in West Bengal, according to local newspapers.

In July 2008, he established Saradha Realty as his deposit-taking business, hiring thousands of agents in four months. Saradha paid them about 30 percent of the cash they brought in — sparking a stampede for customers.

SEBI began questioning Sen’s business in 2010. He went on a takeover spree, his letter and corporate filings show.

Bogus Factory

He bought debt-ridden motorcycle assembler Global Automobiles Pvt. and kept 150 employees on the payroll, who pretended to work when people visited. The factory never produced a single motorcycle, former employee Lakhinder Ram says.

Sen denied to SEBI that he was running a collective investment scheme. He handed over 63 cartons of irrelevant information in 2012 to delay the regulator, according to SEBI’s statement.

In an April 1 letter, Sen again denied Saradha was running CISs, saying he was receiving money from sales and advance bookings with the help of brokers — a claim SEBI rejected.

Sen was with two associates when he was arrested in April, including Debjani Mukherjee, who joined Saradha Tours in 2008 and by 2011 was a director of 38 companies. As of early December, clients and employees had filed 390 so-called first information reports against Sen and his aides to police, which set criminal investigations in motion.

As officials dissect Sen’s enterprise aided by expanded powers, economist Shah says the lesson for India must extend beyond Saradha.

“Our entire approach to financial regulations today is completely wrong because it hurts the people and the economy,” he says.

To contact the reporter on this story: Yoolim Lee in Singapore at yoolim@bloomberg.net

To contact the editor responsible for this story: Michael Serrill at mserrill@bloomberg.net

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