Saturday, December 31, 2011

US sanctions on Iran's central bank. Tehran has called this an act of war

On the last day of 2011, US President Barack Obama Saturday signed into law measures penalizing foreign financial institutions doing business with Iran's central bank, Bank Markazi - the toughest sanctions imposed yet over Iran's development of a nuclear weapon. In recent weeks Tehran has repeatedly warned that it would deem the signing of this measure an act of war and respond with drastic steps including the closure of the Strait of Hormuz.
The bill targeting anyone dealing with Iran's central bank seeks to force other countries to choose between buying oil from Iran or being shut out of transactions with US financial institutions and banks. The new sanctions will begin taking effect in 60 days – the toughest not for at least six months, giving Tehran some space to cooperate with international demands to call off its nuclear weapon program. The president will have some flexibility in applying the measure.

debkafile's Iranian sources report signs that rather than using this leeway to back down, Tehran appears bent on heading for a collision with the United States and its opponents in the Persian Gulf and Middle East.
Just this Saturday, Dec. 31, Gen. Masoud Jazayeri, one of the Revolutionary Guards heads, wrote on the Guards' site: "Discourse about closing the Strait of Hormuz belongs to five years ago. Today's debate in the Islamic Republic of Iran contains new layers and the time has not come to disclose them."

This was published shortly after Iran announced the test firing of ballistic missiles targeting the strategic strait – and then, few hours later, contradicting itself by reporting that the missile test fire would only take place "in the coming days."

Our sources report that Gen. Jazayeri's comment was also made in answer to Israel's chief of staff Lt. Gen. Benny Gantz, who said in an address to high school students in Beersheba Friday, Dec. 30, "A nuclear-armed Iran is a threat to the region and world no less than to Israel. I think that with the appropriate international and Israeli disposition, which I will not spell out here, we can beat that challenge."

The Iranian general likewise declined to elaborate on Tehran's next moves.

After Obama signed the new sanctions, senior US officials stressed the administration intends to move forward with implementing the law in a way that doesn't damage the global economy. "We believe we can do this." They added: "The president will consider his options, but our intent—our absolute intent—is to do it in a timed and phased way."

Earlier Saturday, Dec. 31, debkafile reported Iran had managed by a media trick to close the Strait of Hormuz for at least five hours without firing a shot.

What is the difference between a cult and a religion?

Cults can occur inside of and outside a 'mainstream' religion (here I take it that the question is referring to the classical 'cults' whereby strong leaders have control over members of their group, rather than alternative definitions such as 'personality cults', or 'cults of devotion').

Three ideas seem essential to the concept of a cult.

1. Thinking in terms of us versus them with total alienation from "them."
2. The intense, though often subtle, indoctrination techniques used to recruit and hold members.
3. The charismatic cult leader. Cultism usually involves some sort of belief that outside the cult all is evil and threatening; inside the cult is the special path to salvation through the cult leader and his teachings.

The indoctrination techniques include:

Subjection to stress and fatigue;
Social disruption, isolation and pressure;
Self criticism and humiliation;
Fear, anxiety, and paranoia;
Control of information;
Escalating commitment;
Use of auto-hypnosis to induce "peak" experiences

Cults are absent of the betterment of the individual person but rather than leader only. Cults try to subvert the human will with total and complete obedience to the leader of a group or sect

Conclusion

The term 'cult' tends to be used as a term of abuse. As shown above, there are stringent guidelines for defining whether a body of people (whether religious, lifestyle orientated, political) are a cult or not. An example of of cult outside of 'mainstream' religion is David Koresh. Within 'mainstream' religion we have the cult around Chris Brain at the 'Nine o'clock service' in Sheffield, within the Anglican church.

Iranian missile spin closes Hormuz for five hours

By a media trick, Tehran proved its claim that closing the Strait of Hormuz is as "easy as drinking water," debkafile reports. First thing Saturday morning, Saturday, Dec. 31, Iran's state agencies "reported" long-range and other missiles had been test-fired as part of its ongoing naval drill around the Strait of Hormuz. Ahead of the test, Tehran closed its territorial waters. For five hours Saturday, not a single warship, merchant vessel or oil tanker ventured into the 30-mile wide Hormuz strait, waiting to hear from Tehran' that the test was over.

Instead, around 0900 local time, a senior Iranian navy commander Mahmoud Moussavi informed Iran's English language Press TV that no missiles had been fired after all. "The exercise of launching missiles will be carried out in the coming days," he said.
For five hours therefore, world shipping obeyed Tehran's warning and gave the narrow waterway through which one-fifth of the world's oil passes, a wide berth. They stayed out of range of a test which, debkafile's military sources report, aimed to demonstrate for the first time that Shahab-3 ballistic missiles which have a range of 1,600 kilometers and other missiles, such as the Nasr1cruise marine missile, are capable of reaching Hormuz from central Iran.

The Moussavi statement was not aired on Iran's Farsi-language media. It was not necessary; Tehran had demonstrated by this ruse that it could close the vital waterway for hours or days at any moment.

Friday night, shortly after Tehran reported the missile-firing test was to take place the next morning, Washington announced the $3.48 billion sale to the United Arab Emirates of 94 advanced THAAD missiles with supporting technology.

Like the $30 billion sale of 84 F-15 fighter jets to the Saudi Arabia announced this week, delivery dates were not specified. The first F-15s for Saudi Arabia are due some time in 2015. It must therefore be said that the announced sophisticated US arms sales to the Persian Gulf nations bear only tangentially on the current state of tension in the region around Iranian threats.
The Hormuz missile stratagem has given Tehran three advantages in its face-off with Washington and the Gulf Arab governments:
1. It gave credibility to the threats issued by Iranian military chiefs last week regarding free passage in the Strait of Hormuz and Western sanctions:
On Dec. 29, Navy commander Adm. Habibollah Sayari said it was "really easy" for Iran's armed forces to shut the strait, adding "But today, we don't need [to shut] the strait because we have the Sea of Oman under control and can control the transit."

The next day, Deputy Commander of the Revolutionary Guards Gen. Hossein Salami said the United States was not in a position to tell Tehran "what to do in the Strait of Hormuz. Any threat will be responded to by threat… We will not relinquish our strategic moves if Iran's vital interests are undermined by any means."

2. For Tehran, closing the vital waterway to international traffic without firing a shot – even for a few hours – served to rebut the warning given by US Fifth Fleet spokeswoman Lt. Rebecca Rebarich on Dec. 29. She said: "Anyone who threatens to disrupt freedom of navigation in an international strait is clearly outside the community of nations: any disruption will not be tolerated."

It also addressed the dispatch of the USS John C. Stennis aircraft carrier through the strait into the Sea of Oman in proximity to Iran's ten-day Velayati 90 naval drill. The Stennis, accompanied only by a single destroyer, demonstrated US confidence in its military muscle against any Iranian threat.
As the Stennis passed through the big US air base at al-Udeid, Qatar, went on high alert.
3. Tehran did not explain why its war game, designated in advance a display of Iranian naval and air control of the Strait of Hormuz and the Sea of Oman, suddenly morphed into a ballistic missile test; nor its postponement.

debkafile's military sources report that the Iranians were in fact sending a message to the Gulf rulers and the US bases on their soil that they would not escape missile retaliation for a possible US or Israel attack on the Islamic Republic's nuclear facilities or harsh sanctions.

Friday, December 30, 2011

Obama's foreign policy spin Caroline Glick

In recent months, a curious argument has surfaced in favor of US President Barack Obama. His supporters argue that Obama's foreign policy has been a massive success. If he had as much freedom of action in domestic affairs as he has in foreign affairs, they say, his achievements in all areas would be without peer.

Expressing this view, Karen Finney, a former Democratic spokeswoman who often defends the party in the US media, told The Huffington Post, "Look at the progress the president can make when he doesn't have Republicans obstructing him."

According to a Gallup poll from early November, the US public also believes that Obama's foreign policy has been successful. Whereas 67 percent of Americans disapproved of Obama's handling of the economy and the federal budget deficit, 63% of Americans approved of his terrorism strategy. So, too, 52% approved of his decision to remove US forces from Iraq. In general, 49% of Americans approved of Obama's handling of foreign affairs while 44% disapproved.

These support levels tell us a great deal about the insularity of the American public. For when one assesses the impact to date of Obama's foreign policy it is impossible to avoid the conclusion that if the US public was more aware of the actual consequences of his policies, his approval rating in foreign affairs would be even lower than his approval rating in domestic policy.

Indeed, a cursory examination of the impact so far of Obama's foreign policies in country after country and region after region indicates that his policies have been more damaging to US national interests than those of any president since Jimmy Carter. And unlike Obama, Americans widely recognized that Carter's foreign policies were failed and dangerous.

The failure of Obama's foreign policies has been nowhere more evident than in the Middle East.

Take Iraq for instance. Obama and his supporters claim that the withdrawal of all US forces from Iraq is one of his great accomplishments. By pulling out, Obama kept his promise to voters to end the war in "a responsible manner." And as the polling data indicate, most Americans are willing to give him credit for the move.

But the situation on the ground is dangerous and getting worse every day. Earlier this month, just ahead of the departure of the last US forces from Iraq, Iraq's Prime Minister Nouri al-Maliki visited with Obama at the White House. Immediately after he returned home, the Shi'ite premier began a ruthless campaign against his Sunni coalition partners in a no-holds barred bid to transform the Iraqi government and armed forces into partisan institutions controlled by his Dawa Party.

Forces commanded by Maliki's son arrested and allegedly tortured several of the Sunni Vice President Tariq al-Hashimi's bodyguards. They forced the guards to implicate Hashimi in terror plots. Maliki subsequently issued an arrest warrant for Hashimi. So, too, he issued an arrest warrant for the Sunni Deputy Prime Minister Saleh al-Mutlak and fired him without permission from the Iraqi parliament.

Hashimi and Mutlak are now in hiding in Erbil. Maliki is demanding that the Kurdish regional government extradite them to Baghdad for trial.

Maliki's actions have driven Sunni leaders in the Sunni provinces of Diyala, Anbar and Salahadin to demand autonomy under Iraq's federal system. He has responded by deploying loyal forces to the provinces to fight the local militias.

The situation is so explosive that three prominent Sunni leaders, former prime minister Ayad Allawi, who heads the Iraqiya party, Parliament Speaker Osama Nujaifi and Finance Minister Rafe al-Essawi published an op-ed in The New York Times on Tuesday begging Obama to rein in Maliki in order to prevent Iraq from plunging into civil war.

THEN THERE is Egypt. Obama's decision in February to abandon then-president Hosni Mubarak, the US's most dependable ally in the Arab world, in favor of the protesters in Tahrir Square was hailed by Obama's supporters as a victory for democracy and freedom against tyranny. By supporting the protesters against the US ally, Obama argued that he was advancing US interests by showing the Muslim world the US favored the people over their leaders.

Ten months later, the Egyptian people has responded to this populist policy by giving jihadist parties a two-thirds majority in parliamentary elections. For the first time in 30 years, the strategic anchor of US power in the Arab world - the Egyptian-Israeli peace treaty - is in danger. Indeed, there is no reason to believe it will survive.

According to the Gallup poll, 48% of Americans approve of Obama's handling of the war in Afghanistan and 44% disapprove. Here, too, it is far from clear what there is to approve of. Against the public entreaties of the US commanders on the ground, Obama is carrying through on his pledge to withdraw all US surge troops from Afghanistan before the US presidential election in November. In the meantime, the US is engaged in negotiations with the Taliban. The purpose of these negotiations is to reach a political agreement that would set the conditions for the Taliban to return to power after a US pullout. That is, the purpose of the talks is to set the conditions for a US defeat in Afghanistan.

The administration hails its success in overthrowing Libyan dictator Muammar Gaddafi without sacrificing a single US soldier. And certainly, this was a success. However, Gaddafi's opponents, who are now taking charge of the country, are arguably worse for the US than Gaddafi was. They include a significant number of al-Qaida terrorists and are dominated by jihadist forces. Attempts by the NATO-backed provisional government to convince them to disarm have failed completely.

Since Gaddafi was overthrown, large quantities of advanced weapons from his arsenal - allegedly including stockpiles of weapons of mass destruction - have gone missing. Significant quantities of Libyan shoulder-to-air missiles have made their way to Gaza since Gaddafi's overthrow.

In Syria, while the administration insists that dictator Bashar Assad's days in power are numbered, it is doing essentially nothing to support the opposition. Fearing the instability that would ensue if a civil war were to break out in Iran's Arab protectorate, the US has chosen to effectively sit on its hands and so cancel any leverage it ought to wield over the shape of things to come.

AS FOR Iran, Obama's policies have brought about a situation where the regime in Tehran does not fear a US military strike on its nuclear installations. Obama's open opposition to the prospect of an Israeli strike against Iran's nuclear installations has similarly convinced the regime that it can proceed without fear in its nuclear project.

Iran's threat this week to close the Straits of Hormuz in the event that the US imposes an embargo on Iranian oil exports is being widely characterized by the US media as a sign of desperation on the part of the regime. But it is hard to see how this characterization aligns with reality. It is far more appropriate to view Iran's easy threats as a sign of contempt for Obama and for US power projection under his leadership.

If Iran's ambitions to acquire nuclear weapons are thwarted, it will be despite Obama, not because of him.

Then there is the so-called peace process between Israel and the Palestinians. Due to Obama's unbridled hostility towards Israel, there is no chance whatsoever that Israel and the PLO will reach a peace deal for the foreseeable future. Instead, Fatah and Hamas have agreed to unify their forces. The only thing standing in the way of a Hamas takeover of the PLO is Congress's threat to cut off US aid to the Palestinian Authority. For his part, Obama has gone out of his way to discredit the congressional threat by serving as an indefatigable lobbyist for maintaining US financial support for the PA.

Of course, the Middle East is not the only region where the deleterious consequences of Obama's foreign policy are being felt. From Europe to Africa, from Asia to Latin America, Obama's determination to embrace US adversaries such as Vladimir Putin and Hugo Chavez has weakened pro-US forces and strengthened US foes.

So how is that that while Carter was perceived by the majority of the American public as a foreign policy failure, a large plurality of Americans views Obama's foreign policy as a success?

Obama's success in hiding his failures from the American public owes to two related factors. First, to date the US has not been forced to contend directly with the consequences of his failures.

Carter's failures were impossible to ignore because the blowback from them was immediate, unmistakable and harsh. His betrayal of the shah of Iran led directly to the takeover of the US Embassy in Tehran and the hostage crisis. Carter could not spin to his advantage the daily stories about the hostages. He could not influence CBS Evening News anchor Walter Cronkite's decision to end every broadcast by reminding viewers how many days the hostages had been in captivity.

So, too, the consequences of Carter's weakness in confronting the Soviet Union were impossible to ignore or minimize with images of Soviet tank columns invading Afghanistan dominating the news.

To date, Obama's foreign policy failures have yet to explode in a manner that can make the average American aware of them.

Then, too, Obama and his advisers have been extremely adept in presenting his tactical achievements as strategic victories. So it is that the administration has successfully cast the killing of Osama bin Laden as a strategic victory in the war on terror. Obama has upheld the mission, as well as the killing of al- Qaida leader Anwar al-Awlaki, as proof of his competence in securing US interests. And to a large degree, the US public has accepted his claims.

Because it is impossible to know when Obama's failures will begin to directly impact the America people, it is possible that he will not pay a political price for them in the 2012 election. Be that as it may, the Republican presidential contenders would provide an invaluable service to both themselves and the American public as a whole if they made exposing Obama's disastrous stewardship of US foreign policy a central plank of their campaigns.

At a minimum, forewarned is forearmed. And the dimensions of Obama's failures are so enormous, that it is clear that the American people will suffer their consequences for years to come.

Originally published in The Jerusalem Post.
© 2011 Caroline Glick

Spielberg's Horse Opera -- A WarningI

I guess Steven Spielberg is such in institution now, such a trusted brand (in the boring expression the business majors have foisted on us), that he assumes, with some reason, that he can put just anything on the screen, sure in the knowledge that it will be praised. That the movie promotion industry and its camp followers will go along with the gag.

Sad, but all too true. So far War Horse, a mawkish and manipulative boy-meets-horse opera, has gotten good reviews. It shouldn't. The movie has some good acting, some beautiful scenes, and lush music from John Williams, Spielberg's long-time musical accomplice. But for me, scenes of gratuitous coarseness ruin what would otherwise have been a mediocre to pretty good movie.

In addition to being overly sentimental, the movie has some Private Ryanesque scenes of World War I combat that are not for the faint-hearted. But worst of all is a hideous and inexcusable sequence where a terrified horse, in fact the central character in the movie, runs at flank speed through no-man's land only to be badly cut and painfully brought down and encased by barbed wire. The sequence is so gut-wrenching that it reduced my wife -- a softie when it comes to animals but hardly a creampuff -- to sobs. It ended about the time I had decided I needed to escort her to the lobby to gather herself. She wasn't the only one in the theater the scenes disturbed.

The movie is rated PG-13, which I'm told means parental guidance for children 13 and under. Hard to imagine how an adult could benefit from seeing this episode of what can only be described as animal torture, let alone a 13 year old. In younger children the scenes described above could cause nightmares.

In the contemporary entertainment world, where edginess is king and gore is to be lingered over, Spielberg and his movie-making colleagues seem to have forgotten about the imagination, a glorious human organ, but one so long ignored by Hollywood that it's in a serious state of national atrophy. We don't have to be beaten within an inch of our lives to get our attention or our empathy. Surely movie audiences aren't so jaded that they require this level of violence and coarseness to respond.

My guidance to parents is to take the 13 year-old animal lovers in your family to We Bought a Zoo or to the dog park. Skip War Horse, which could have been a good movie for youngsters in the absence of the unnecessary, over-the-top brutality, though a doubtful one for adults because of its clichéd heart-tugging and utter predictability.

C'mon Steve, what the hell were you thinking?


Thursday, December 29, 2011

'Stuxnet virus used on Iran was 1 of 5 cyberbombs'

Researchers say crippling computer virus unleashed on Iran in 2010 has at least four 'cousins'

The Stuxnet virus that last year damaged Iran's nuclear program was likely one of at least five cyber weapons developed on a single platform whose roots trace back to 2007, according to new research from Russian computer security firm Kaspersky Lab.

Security experts widely believe that the United States and Israel were behind Stuxnet, though the two nations have officially declined to comment on the matter.

A Pentagon spokesman on Wednesday declined comment on Kaspersky's research, which did not address who was behind Stuxnet.

Stuxnet has already been linked to another virus, the Duqu data-stealing trojan, but Kaspersky's research suggests the cyber weapons program that targeted Iran may be far more sophisticated than previously known.

Kaspersky's director of global research & analysis, Costin Raiu, told Reuters on Wednesday that his team has gathered evidence that shows the same platform that was used to build Stuxnet and Duqu was also used to create at least three other pieces of malware.

Raiu said the platform is comprised of a group of compatible software modules designed to fit together, each with different functions. Its developers can build new cyber weapons by simply adding and removing modules.

"It's like a Lego set. You can assemble the components into anything: a robot or a house or a tank," he said.

Kaspersky named the platform "Tilded" because many of the files in Duqu and Stuxnet have names beginning with the tilde symbol "~" and the letter "d."

'Fairly certain' that malware existed

Researchers with Kaspersky have not found any new types of malware built on the Tilded platform, Raiu said, but they are fairly certain that they exist because shared components of Stuxnet and Duqu appear to be searching for their kin.

When a machine becomes infected with Duqu or Stuxnet, the shared components on the platform search for two unique registry keys on the PC linked to Duqu and Stuxnet that are then used to load the main piece of malware onto the computer, he said.

Kaspersky recently discovered new shared components that search for at least three other unique registry keys, which suggests that the developers of Stuxnet and Duqu also built at least three other pieces of malware using the same platform, he added.

Those modules handle tasks including delivering the malware to a PC, installing it, communicating with its operators, stealing data and replicating itself.

Makers of anti-virus software including Kaspersky, US firm Symantec Corp and Japan's Trend Micro Inc have already incorporated technology into their products to protect computers from getting infected with Stuxnet and Duqu.

Yet it would be relatively easy for the developers of those highly sophisticated viruses to create other weapons that can evade detection by those anti-virus programs by the modules in the Tilded platform, he said.

Kaspersky believes that Tilded traces back to at least 2007 because specific code installed by Duqu was compiled from a device running a Windows operating system on August 31, 2007.

Wednesday, December 28, 2011

The Behind The Scenes Panic In Europe

Think "all is fine" in Europe after today's largely irrelevant Italian bill auction (the auction was for 6 month debt - even Greece can raise that kind of money)? Think again. Here is the Fermentation Committee Chairman explaining why Europe is so hard pressed to create a fake sense of calm, allowing those who know the real story to take advantage of the situation while they still can, and sharing the behind the scenes truth you won't get anywhere else. Certainly not SWIFT.

From UBS:

Europe Rumbles Continue Beneath More Upbeat Headlines - Ever since last week’s liquidity operation, most headlines out of Europe have leaned toward the reassuring side. Beneath those headlines, however, there are signs the strains remain and may, in fact, be growing.

European banks are making great use of the ECB’s overnight deposit facility. Last night they parked $590 billion at the ECB breaking the record they had set the night before. They are clearly unwilling to lend to other European banks, highlighting the distrust and fear in the interbank marketplace. While the ECB’s lending initiative calmed the markets somewhat, it apparently has done nothing to free up the logjam blocking interbank lending.

The distrust on the streets is said to be growing also. Barroom gossip says that safe-deposit boxes are in a demand that borders on frenzy. They allow you to take your Euros and covert them into something of value (gold, Swiss Francs, etc.) and sock it away in a safe place.

Others are said to be buying property in London and elsewhere lest you awake one day and discover that your Euros have reverted to drachmas or lira.

Savvy bankers are said to be setting up personal and communal trusts domiciled in places like the Bahamas, the Caymans or the Isle of Jersey. Some banks are offering depository accounts denominated (and repayable) in alternate currencies like the dollar or the yen.

We think a Lehman-like event would most likely be triggered by a run on a bank or a series of banks. The scramble for currency (value) protection among the public could turn into that bank run in the same way that a crowd can instantly turn into a mob. Watch the money flows out of Greece and Italy very carefully. The pot continues to bubble

Palestinian Authority Chairman Mahmoud Abbas kicked off preparations for a fresh outbreak of anti-Israel "resistance" – which concerned US and Israeli security circles believe will develop into "Intifada No. 3" – Tuesday, Dec. 27, by suddenly firing, the West Bank's top security officer Maj. Gen. Diab el-Ali. He did not notify US Lt. Gen. Michael R. Moeller, the American Security Coordinator between Israel and the PA appointed by Secretary of State Hillary Clinton, and Israel's military coordinator, Maj. Gen. Eitan Dangot, of this step which caught them unawares.
Palestinian military intelligence chief, Maj. Gen. Nidal Dokhan, was appointed to replace Maj. Gen. el-Ali.

debkafile's military sources in Washington and Jerusalem report that in both capitals, the Palestinian leader's action is seen as paving the way for radical changes in West Bank security. This fragile edifice was kept stable for some years thanks to joint US-Israeli-Palestinian efforts to back up peaceful relations between the Palestinians and Israel after the bloody years of the "Al Aqsa Intifada" terror.

Abbas (Abu Mazen) has now decided to upset this equilibrium by orchestrating an Arab Spring-style uprising on the West Bank, the differences being that the Palestinians will not rise up against their own leaders, i.e., himself, but against Israel, and that in no time this event is liable to revert to the "intifada"-style Palestinian terrorist violence of the early 2000s.
Four actions leading up to these steps have aroused trepidation:

1. Abbas's deal in Cairo last week with the extremist Hamas leader Khaled Meshal is one. The two rivals agreed that notwithstanding their differences they would go forward on common objectives.
For example, Meshaal sought the resurgence of armed resistance against Israel which Abbas opposes. They compromised on a "popular resistance" campaign of protracted mass demonstrations which would smash through the defense barrier dividing the West Bank from Israel, knocking over IDF checkpoints and storming en masse into Israel. The "demonstrators" would also march on and burst into Jewish civilian settlements.

2. For this campaign to succeed, it is necessary to redefine the functions of the eight Palestinian commando battalions of the Palestinian National Security Forces-PNSF, soon to be joined by two more just ending their training in Jordan.
The PNSF was created and is funded by the United States, while British and Jordanian military instructors train its 8,000 combatants.
To make sure the Palestinian "uprising" does not turn against the Palestinian Authority and himself, Abbas will place these military battalions at the forefront of the mass demonstrations. They are to lead the throngs to their points of confrontation with Israel.

The PA chairman is therefore highhandedly retooling the armed Palestinian force, which was painstakingly created by the United States, to make it a hammer for confronting Israel's armed forces and civilians on both sides of the Green Line.

3. Abbas fired Gen. Diab el-Ali because he worked productively with the American coordinating unit for four years, from the day the first battalion was formed. His successor Maj. Gen. Dokhan is regarded in Western security circles as a shadowy figure of the undercover world.

The difference between them is that while Gen. Diab el-Ali is trusted in Washington and Jerusalem as genuinely and uncompromisingly willing to combat an upsurge of terror and Hamas extremism on the West Bank, the same cannot be said of the new man. Gen. Dokhan maintains good relations with US and Israel officers but also stands well with the heads of the radical Hamas and Jihad Islami.

Neither US nor Israeli commanders would risk sharing sensitive intelligence with him lest it reach the wrong hands. His appointment therefore as the senior officer on the West Bank is seen as the beginning of the end of the successful military and intelligence cooperation the US crafted between Israel and the Palestinian Authority for combating West Bank terrorism and presaging the return of the pro-terror Palestinian organizations.

This is what Khaled Meshaal was driving at Tuesday, Dec. 27, when he said his accord with Mahmoud Abbas had ushered in a new era of Palestinian cooperation after "Hamas forces on the West Bank were eradicated in recent years."

4. In intensive consultations this week, debkafile's sources report that US and Israeli security officials were of the opinion that the security changes Abbas is molding will have the effect of destroying the security stability the West Bank has enjoyed under US-backed Palestinians Authority rule. After opening the door to the radical Palestinian organizations, the PA will soon lose control as Hamas and Jihad Islami ride into the enclave's towns and villages. Any demonstrations will soon get out of hand and descend into violent turmoil.
At the same, time, those security officials estimate that it will take Abbas up to two months to remodel the Palestinian PNSF for its newly designated mission.


Tuesday, December 27, 2011

A Run On The Global Banking System - How Close Are We?

Nine weeks after its bankruptcy, the general public still hasn’t quite realized the implications of the MF Global scandal.

My own sense is, this is the first tremor of the earthquake that’s coming to the global financial system. And how the central banks and financial regulators treated the “Systemically Important Financial Institutions” that had exposure to MF Global—to the detriment of the ordinary, blameless customer who got royally ripped off in its bankruptcy—is both the template of how the next financial crisis will be handled, and an accelerator that will make the next crisis happen that much sooner.

So first off, what happened with MF Global?

Simple: It went bankrupt—because it made bad bets on European sovereign debt, by way of leveraging positions 100-to-1. Yeah, I know: Stupid. Anyway, they went bankrupt—which in and of itself is no big deal. It’s not as if it’s the first time in history that a brokerage firm has gone bust. But to me, the big deal in this case was the way the bankruptcy was handled.

Now there are several extremely serious aspects to the MF Global case: Specifically, how their customers were shut out of their brokerage accounts for over a week following the bankruptcy, which made it impossible for those customers to sell out of their positions, and thus caused them to lose serious money; and of course how MF Global was more adept than Mandrake the Magician at making money disappear—about $1 billion, in fact, which still hasn’t turned up. These are quite serious issues which merit prolonged discussion, investigation, prosecution, and ultimately jailtime.

But for now, I want to discuss one narrow aspect of the MF Global bankruptcy: How authorities (mis)handled the bankruptcy—either willfully or out of incompetence—which allowed customer’s money to be stolen so as to make JPMorgan whole.

From this one issue, it seems clear to me that we can infer what will happen when the next financial crisis hits in the nearterm future.

Brokerage firms hold clients’ money in what are known as segregated accounts. This is the money that brokerage firms hold for when a customer makes a trade. If a brokerage firm goes bankrupt, these monies are never touched—because they never belonged to the firm, and thus are not part of its assets.

Think of segregated accounts as if they were the content in a safety deposit box: The bank owns the vault—but it doesn’t own the content of the safety deposit boxes inside the vault. If the bank goes broke, the customers who stored their jewelry and pornographic diaries in the safe deposit boxes don’t lose a thing. The bank is just a steward of those assets—just as a brokerage firm is the steward of those customers’ segregated accounts.

But when MF Global went bankrupt, these segregated accounts—that is, the content of those safe deposit boxes—were taken away from their rightful owners—that is, MF Global’s customers—and then used to pay off other creditors: That is, JPMorgan.

(The mechanics of how this was done are interesting, but insanely complicated, and ultimately not relevant to this discussion. To grossly simplify, MF Global pledged customer assets to JPMorgan, in a process known as rehypothecation—customer assets which MF Global did not have a right to. Needless to say, JPMorgan covered its ass legally. Ethically? Morally? Black as night.)

This was seriously wrong—and this is the source of the scandal: Rather than being treated as a bankruptcy of a commodities brokerage firm under subchapter IV of the Chapter 7 bankruptcy law, MF Global was treated as an equities firm (subchapter III) for the purposes of its bankruptcy.

Why does this difference of a single subchapter matter? Because in a brokerage firm bankruptcy, the customers get their money first—because after all, it’s theirs—while in an equities firm bankruptcy, the customers are at the end of the line.

In the case of MF Global, what should have happened was for all the customers to get their money first. Then everyone else—including JPMorgan—would have picked over the remaining scraps. And the monies MF Global had already pledged to JPMorgan? They call it clawback for a reason.

The Chicago Mercantile Exchange, which handled the bankruptcy, should have done this—but instead, the Merc was more concerned with making JPMorgan whole than with protecting the money that rightfully belonged to MF Global’s 40,000 customers.

Thus these 40,000 MF Global customers had their money stolen—there’s no polite way to characterize what happened. And this theft was not carried out by MF Global—it was carried out by the authorities who were charged with handling the firm’s bankruptcy.

These 40,000 customers were not Big Money types—they were farmers who had accounts to hedge their crops, individuals owning gold (like Gerald Celente—here’s his account of what happened to him)—

—in short, ordinary investors. Ordinary people—and they got screwed by the regulators, for the sake of protecting JPMorgan and other big fry who had exposure to MF Global.

That, in a nutshell, is what happened.

Now, what does this mean?

It means that nobody’s money is safe. It means that regulators care more about protecting the so-called “Systemically Important Financial Institutions” than about protecting Ordinary Joe investors. It means that, when crunchtime comes, central banks and government regulators will allow SIFI’s to get better, and let the Ordinary Joes get fucked.

So far, so evil—but here comes the really troubling part: It is an open secret that there are more paper-assets than there are actual assets. The markets are essentially playing musical chairs—and praying that the music never stops. Because if it ever does—that is, if there is ever a panic, where everyone decides that they want their actual asset instead of just a slip of paper—the system would crash.

And unlike with fiat currency, where a central bank can print all the liquidity it wants, you can’t print up gold bullion. You can’t print up a silo of grain. You can’t print up a tankerful of oil.

Now, question: When is there ever a panic? When is there ever a run on a financial system?

Answer: When enough participants no longer trust the system. It is the classic definition of a tipping point. It’s not that all of the participants lose faith in the system or institution. It’s not even when most of the participants lose faith: Rather, it’s when a mere some of the participants decide they no longer trust the system that a run is triggered.

And though this is completely subjective on my part—backed by no statistics except scattered anecdotal evidence—but it seems to me that MF Global has shoved us a lot closer to this theoretical run on the system.

As I write this, a lot of investors whom I know personally—who are sophisticated, wealthy, and not at all the paranoid type—are quietly pulling their money out of all brokerage firms, all banks, all equity firms. They are quietly trading out of their paper assets and going into the actual, physical asset.

Note that they’re not trading into the asset—they’re simply exchanging their paper-asset for the real thing.

Why? MF Global.

“The MF Global scandal has made it clear that the integrity of the system has disappeared,” said a good friend of mine, Tuur Demeester, who runs Macrotrends, a Dutch-language newsletter out of Brugge. “The banks are insolvent, the governments are insolvent, and all that’s left is for the people to realize what’s going on—and that will start a panic.”

He hit it on the head: Some of the more sophisticated people—like Tuur, like some of my acquaintances, (like myself, frankly)—have realized that the MF Global scandal means that there is no safety for any paper investment: The integrity of the systems has been completely shattered. If in the face of one medium-sized brokerage firm going under, the regulators will openly allow ordinary people to be ripped off for the sake of protecting the so-called “Systemically Important Financial Institutions”—in this case JPMorgan—what will happen if there is a system-wide run? What if two or three MF Globals happen simultaneously?

Will they protect the citizens’ money? Or will they protect the “Systemically Important Financial Institutions”?

I think we know the answer.

And I think we all know the answer to the question of whether there will be crisis flashpoint in the near-term future: After all, as Demeester pointed out, all the banks and all the governments are broke.

Thus it’s only a matter of time before they come for your money.

At SPG, we’ve been putting together Scenarios for other black swan events which are becoming increasingly likely: What to do if the eurozone breaks up, what to do if you have to leave America, what to do if there is an Israeli-Iranian war, what to do if there is forced dollar devaluation, and so on.

Now, because of this open kleptocracy and cronyism being shown by the financial authorities in the wake of the MF Global bankruptcy, we’ve been obliged to put together a new Scenario, devoted exclusively to preparing for a run on the markets: What to do in order to protect your assets from regulatory malfeasance, if there is a system-wide MF Global-type breakdown and a subsequent run on the entire financial system.

And there will be such a run on the system: It’s only a matter of time. In fact, the handling of the MF Global affair has sped up the timeframe for this run on the system, because the forward-edge players—such as Demeester, myself, and my other acquaintances who understand the implications of the bankruptcy—realize that the regulators will side with the banksters, and not the ordinary investors: So we are preparing accordingly.

Once there is a full-on panic, anyone with money in the system will lose at least a big chunk of it, in one of two ways, or a combination thereof:

• One, the firms—commodities brokerage firms, equity firms, investment banks and commercial banks—will not allow people to withdraw the totality of their money, and/or they will put a withdrawal cap of some sort, enforced by the central banks and other regulatory bodies. (Like they did in Argentina.)

• Two, the central banks will “provide liquidity”—that is, print money—while simultaneously declaring a banking holiday to, quote, “calm the markets”. During that bank holiday, the currency will be devalued by double digits—which will mean that your cash holdings will essentially be taxed to save the banksters—again. (Like they did in Argentina.)

Thus apart from proving that the United States really is Argentina with nukes, the MF Global bankruptcy has proven something crucial: The central banks and government regulators have completely fallen into the trap of confusing the welfare of the “Systemically Important Financial Institutions” with the welfare of the system itself. They don’t seem to realize that the SIFI’s are actors within the system—not the system itself.

We critics of the current, corrupt state of affairs also sometimes confuse the SIFI’s with the system itself, whenever we say, “The whole system is corrupt!”

But the system is not corrupt—it’s the regulators and SIFI’s who are corrupt. If nothing else, the handling of the MF Global bankruptcy has proven that, once and for all. That’s why we’re pulling out our money now—while we still can.

Because once the general public catches on to what we already know . . . oh boy.

The Façade in DC

In the Old West, buildings were often built with “false fronts”, or façades, that hid the fact that the actual building behind them was much less than it appeared on the surface. The word “façade” is defined as “a superficial appearance or illusion of something”. Now many are probably not aware that the White House in DC has a façade. But it’s not in front of the WH – it’s inside it. President Barack Obama is a human façade – a living, breathing illusion.

Victor Davis Hanson discusses Obama The Myth in his column “When the Legend Becomes Fact, Print the Legend”. Throughout the 2008 Presidential campaign, the façade that is Barack Obama was prominent. The media was in love with this god-like persona (“He’s sort of a god…he’s going to bring all different sides together”). He caused some media figures to practically swoon in adoration (“a thrill going up my leg“) But what does reality tell us?

Hanson documents the reality of the Obama myths.

Consider. Did Obama achieve a B+ average at Columbia? Who knows? (Who will ever know?) But even today’s inflated version of yesteryear’s gentleman Cs would not normally warrant admission to Harvard Law. And once there, did the Law Review editor publish at least one seminal article? Why not?

At Chicago, did lecturer Obama write a path-breaking legal article or a book on jurisprudence that warranted the rare tenure offer to a part-time lecturer? (Has that offer ever been extended to others of like stature?) In the Illinois legislature or U.S. Senate, was Obama known as a deeply learned man of the Patrick Moynihan variety? Whether as an undergraduate, law student, lawyer, professor, legislator or senator, Obama was given numerous opportunities to reveal his intellectual weight. Did he ever really? On what basis did Harvard Law Dean Elena Kagan regret that Obama could not be lured to a top billet at Harvard?

Where did this aura of brilliance originate? Padded resume, perhaps?

Hanson distills the problem:

In short, the myth of Obama’s brilliance was based on his teleprompted eloquence, the sort of fable that says we should listen to a clueless Sean Penn or Matt Damon on politics because they can sometimes act well. Read Plato’s Ion on the difference between gifted rhapsody and wisdom — and Socrates’ warning about easily conflating the two. It need not have been so. At any point in a long career, Obama the rhapsode could have shunned the easy way, stuck his head in a book, and earned rather than charmed those (for whom he had contempt) for his rewards. Clinton was a browser with a near photographic memory who had pretensions of deeply-read wonkery; but he nonetheless browsed. Obama seems never to have done that. He liked the vague idea of Obamacare, outsourced the details to the Democratic Congress, applied his Chicago protocols to getting it passed, and worried little what was actually in the bill. We were to think that the obsessions with the NBA, the NCAA final four, the golfing tics, etc., were all respites from exhausting labors of the mind rather than in fact the presidency respites from all the former.

Conclusion? Obama is a heck of an actor who knows how to erect a wonderful façade and illusion of competence.

Hanson proceeds to dismantle the myths of Obama The Healer, Obama The Reformer and Obama The Magnanimous One. Obama was to be the one who would heal the nation of racism (but who has brought more racial polarization than ever, primarily through the racists who he surrounded himself with, such as Eric Holder and and Van Jones). He was to be the one who was to reverse the ills of the Bush administration, but in fact has turned back few Bush policies and instead has introduced “the Chicago/Illinois system of Tony Rezko, Blago, and the Daleys” to DC and has brought new flavors of corruption with episodes such as Jon Corzine & the missing billion, GE’s Immelt tax dodging, Solyndra, Fast & Furious, etc. He was to roll back Bush foreign policy, yet has failed to shut down Gitmo, has attacked U.S. allies (Pakistan) and continues to intervene in countries like Libya. And who’s surprised at what has already happened in Iraq, after Obama (finally) fulfilled his promise to pull the troops out?

Hanson points out:

We went in a blink from the surge that failed and made things worse and all troops must be out by March 2008 to Iraq was a shining example of American idealism and commitment. It was as if the touch-and-go, life-and-death gamble between February 2007 and January 2009 in Iraq never had existed. Bombing Libya was not warlike, and those who sued Bush on Iraq and Guantanamo now filed briefs to prove that we were not at war killing Libyan thugs. We hear only of reset; never that Obama has now simply abandoned all his “Bush-did-it” policies and is quietly going back to the Bush consensus on Russia, Iran, Syria, and the Middle East in general. We will not only never see Guantanamo closed or KSM tried in a civilian court, but never hear why not. Are we to applaud the hypocrisy as at least better than continued ignorance?

And it would be funny if it wasn’t so sad that Obama actually believes his own mythology.

The ego is amazing – it reminds me of an old song by Mac Davis:

Oh Lord it’s hard to be humble
when you’re perfect in every way.

I can’t wait to look in the mirror
’cause I get better looking each day

To know me is to love me
I must be a hell of a man.

O Lord it’s hard to be humble
but I’m doing the best that I can.

With Barack Obama, it’s all a façade. Behind the pompousness and self-inflated ego, behind the false front of an alleged healer and reformer lies an underachieving leftist ideologue who has accomplished little more than digging the nation into a far deeper hole than when he began Occupy White House 2008. As I have contended all along, Barack Obama’s problem isn’t that he lacked executive experience – the problem is his leftist ideology and inherent incompetence.

Qatar builds Sunni intervention force of Libyan, Iraqi terrorists against Assad

The Qatar oil emirate, encouraged by its successful participation in the campaign to overthrow Libya's Muammar Qaddafi, has established a Sunni Arab intervention force to expedite the drive for Syrian President Bashar Assad's ouster, debkafile's military sources report. The new highly mobile force boosts the anti-Assad Free Syrian Army, whose numbers have jumped to 20,000 fighters, armed and funded by Qatar and now forming into military battalions and brigades at their bases in Turkey.

When they saw the Syrian massacre continuing unabated this month, the Qatari and Saudi rulers approved a crash program for the Qatari chief of staff Maj.-Gen Hamas Ali al-Attiya to weld this mobile intervention Sunni Muslim force out of al Qaeda linked-operatives for rapid deployment on the Turkish-Syrian border.

A force of 2,500 has been recruited up until now, our sources report. The hard core is made up of 1,000 members of the Islamic Fighting Group in Libya-IFGL, which fought Qaddafi, and 1,000 operatives of the Ansar al-Sunna, the Iraqi Islamists which carried out 15 coordinated bomb attacks in Baghdad last Thursday killing 72 people and injuring 200.

Qatar has just had them airlifted from Libya and Iraq to the southern Turkish town of Antakya (Antioch) in the border province of Hatay.
It is in this town of quarter-of-a- million inhabitants that the new Sunni force has located its command center and separate camps for the two main contingents to undergo intensive training for combat missions in the embattled Syrian towns and provinces of Idlib, Homs, Jabal al-Zawiya, scenes of the fiercest clashes between Syrian troops and rebels.

debkafile also reveals that the man appointed top commander of the Sunni intervention force headquartered in Antioch is none other than Abdel Hakim Belhaj, whose militia last August seized control of Tripoli after it was captured from Qaddafi by NATO and Qatari forces.

He has picked his deputies - Al-Mahdi Hatari, former head of the Tripoli Brigade and loyal crony Kikli Adem.
Qatari officers have set up communication links between the Libyan and Iraqi camps and since last week are coordinating their operations with the Free Syrian Army.

This flurry of military activity is taking place under the watchful gaze of the Turkish military and its intelligence services but they are not interfering.

debkafile's military and counter-terror analysts stress that the rise of a new Qatari-led Sunni Muslim rapid intervention force breaks fresh strategic ground with ramifications for the United and Israel as well as for the Gulf Arab countries, Syria, Libya and Iraq.
1. A year has gone by since the Arab Revolt first broke out in December 2010. Yet this is the first time a Sunni Muslim power has established an intervention force - one moreover which is composed almost entirely of fighting men drawn from the ranks of al Qaeda and its extremist Islamist affiliates and allies.

2. The new Sunni force, funded by the Persian Gulf oil states, is silently backed by the US and NATO members, with Turkey in the forefront of this support group. This means that the Sunni-Shiite divide is spiraling into overt conflict with Western support afforded to one side.
3. Despite finding itself increasingly isolated by its Arab neighbors, Tehran has so far not intervened directly in conflicts in which it owns an interest – such as Gulf Cooperation Council-GCC intervention against a Shiite-led uprising in Bahrain, and now Sunni militias and terrorists enlisted to battle the Allawite regime of Iran's closest ally, Bashar Assad in Damascus.
4. Iran's Lebanese proxy. Hizballah's Hassan Nasrallah, must also be feeling an uncomfortable draft coming from a Sunni fighting force near his strongholds and carrying out raids against his closest ally, Bashar Assad. He can't ignore the possibility of that force conducting similar excursions against his own Shiite militia.

5. Israel too must find cause for concern in the rise of a Sunni military intervention force capable of moving at high speed from one arena to another and made up almost entirely of Islamist terrorists. At some time, Qatar might decide to move this force to the Gaza Strip to fight Israel.

Monday, December 26, 2011

Job Creation Is Price of Obamacare

I am not an expert on health-care policy, but I do know something about job creation. So when a House Oversight and Government Reform subcommittee asked me to testify about the effect on employers of the Patient Protection and Affordable Care Act, sometimes known as Obamacare, I thought I could offer some insights.

As I told the committee in a July 28 hearing, it is critical that Congress does a good job of balancing the benefits of new legislation against the costs of that legislation. That process begins with recognizing that laws like Obamacare come at a price.

Our company, CKE Restaurants Inc., employs about 21,000 people (our franchisees employ 49,000 more) in Carl’s Jr. and Hardee’s restaurants. For months, we have been working with Mercer Health & Benefits LLC, our health-care consultant, to identify Obamacare’s potential financial impact on CKE. Mercer estimated that when the law is fully implemented our health-care costs will increase about $18 million a year. That would put our total health-care costs at $29.8 million, a 150 percent increase from the roughly $12 million we spent last year.

The money to cover our increased expenses will have to come from somewhere. We are a profitable company and, after paying our obligations, we reinvest our earnings in the business. Reinvesting in the business is how we grow, create jobs and opportunity. This is true for most U.S. businesses.

Cutting Spending

To offset higher health-care expenses, we will have to cut spending on new restaurant construction, one of our largest discretionary spending areas. But building new restaurants is how we create jobs. An $18 million increase in our costs would more than consume the $8.8 million we spent on new restaurant construction last year, leaving nothing for growth. We will also need to reduce our general capital spending, which also creates jobs and allows us to improve our infrastructure and maintain our business. In summary, our ability to create new jobs could vanish.

To reduce the financial impact of Obamacare, many businesses, including ours, will have to consider increasing the number of part-time employees (those who work less than 30 hours a week as defined under the health-care law) and reducing the number of full-time employees. So, some individuals seeking full-time work will need to find two jobs.

Automation will also become more appealing. For example, although we value the personal touch, electronic ordering kiosks will become more economically desirable. Nationwide, 63 percent of our employees are minorities and 62 percent are female. Unfortunately, these cuts will affect them the most.

The complexity of this legislation makes it hard to anticipate costs in the future. Our investments pay off -- when they are successful -- over the long term. Because we don’t know what our health-care expenses will be in two or three years, we are unable to determine with any certainty how much our investments will have to return for us to be profitable. All of that counsels in favor of holding off on new investments and saving our funds. We want to grow. But we are unable to do so knowing that large and undetermined liabilities will absorb funds we otherwise would invest for expansion.

My testimony was followed by that of Grady Payne, chief executive officer of Connor Industries Inc., a supplier of cut lumber and assembled wood products for shipping and crating needs. Based in Fort Worth, Texas, it has plants and employees in eight states and employs 450 people. He laid out the options open to his company under the health-care law, each of which would cost $1 million or more. According to Payne, that amount is “more than the company makes.” He concluded that his company’s goals have turned “from ‘hire-and-grow’ to ‘cut-and- survive.’”

Scaling Back

Victoria Braden, the president and CEO of Braden Benefits Strategies Inc., a corporate employee-benefits adviser based in Johns Creek, Georgia, also testified. She said adoption of the law led to immediate job cuts at her company as she scaled back an expansion into a new line of business. Obamacare “is devastating to my business, expensive for me and my clients to administer, and works against our goals of helping businesses to expand, and putting people back to work,” she said.

I understand that many members of Congress believe providing everyone with health insurance is a top priority. Several committee members said so at the hearing, and I respect them for caring about the uninsured. My point to them was this: Everyone has a stake in job creation. As far as I am aware, no one in Washington -- Republican or Democrat, liberal or conservative -- can achieve their goals unless our economy prospers and creates jobs. Washington needs to understand that legislation like the health-care law has costs as well as benefits, that the costs suppress job growth, and that when too much legislation kills too many jobs, everyone suffers.

Chief executives have responsibilities to their existing employees, customers and shareholders. We simply cannot risk their jobs and their money by investing when we know that legislation like Obamacare will make it so much harder to earn a profit. The sooner both parties in Washington understand this, the sooner we can all begin looking for ways to strengthen the social safety net without hurting the economy.

(Andrew Puzder is the chief executive officer of CKE Restaurants Inc. and co-author of “Job Creation: How It Really Works and Why The Government Doesn’t Understand It.” The opinions expressed are his own.)

While President Obama Arrives in Hawaii Amidst Security and Fanfare, Former House Speaker Nancy Pelosi Slips Quietly into Big Island Resort

BY MALIA ZIMMERMAN - News that President Barack Obama arrived in Hawaii this weekend to join his wife Michelle and daughters Malia and Sasha in time for a Christmas holiday has been covered by news media worldwide.

The first family and their friends have been enjoying a reclusive 17-day holiday vacation in beach front homes in Kailua, Oahu.

But another powerful politician is here for the holidays as well, albeit on another island and with less media attention.

Congresswoman Nancy Pelosi, D-CA, who served as Speaker of the House and is now head of the House minority, is once again spending her Christmas at the exotic Four Seasons Resort Hualalai at Historic Ka'upulehu in Kona on the island of Hawaii.

Pelosi reportedly plans to spend her Christmas Eve at midnight mass in St. Michael's Catholic Church in Kailua-Kona.

Pelosi spent the last two Christmas holidays in Kona at the same hotel in an elaborate suite that rents for $10,000 a night.

The Four Seasons Resort Hualalai’s details its luxurious setting and amenities on its web site: “Gloriously revitalised, this natural tropical paradise offers more than ever to explore – with a newly expanded Spa, beachfront dining, fashion boutiques and new Deluxe Suites, in addition to Jack Nicklaus signature golf. Set on the Big Island’s exclusive Kona-Kohala Coast, this showpiece resort captures the essence of Hawaiian design, culture and tradition.”

Pelosi has her share of allies in Hawaii, including Hawaii Gov. Neil Abercrombie, who she defended during his successful campaign for governor in 2010. When Democratic Gubernatorial Candidate Mufi Hannemann claimed during the primary that Abercrombie was not effective in Congress, Pelosi issued a statement calling Abercrombie “outstanding, effective and courageous.”

Pelosi has been escorted by local police during her last two holiday visits to Hawaii Island at a cost of $34,000 to local taxpayers.

Obama’s trip to the island of Oahu has proved much pricier to state and federal taxpayers.

In a Hawaii Reporter story published last week, the total cost (based on what is known) for a 17-day round trip vacation to Hawaii for the President and his family and staff and security is an estimated $4,113,038.

That includes $3,629,622 for separate travel for the president and his family, $151,200 for housing for security, $72,216 for staff to stay in one of Hawaii's most luxurious resorts, the Moana Surfrider in Waikiki, and local police protection and ambulance detail for $260,000.

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WHITE HOUSE INSIDER: Heads Up – The Cook The Books Campaign Is Underway

A brief email message from our longtime D.C. political operative tells us to watch for some serious polling data manipulation to favor the Obama presidency as 2012 is underway.

Hope you had a wonderful Christmas. Not sure if you are abroad or not but wanted to get this message to you so you know what to specifically watch out for in the coming weeks and months. Got word there is a comprehensive polling and economic data program about ready to be launched via some administration operatives and particular media outlets. Big time cooking the books on this polling data they will be pushing out there soon.

Told Wapo will be one of if not the first. Urge you to read beyond the polling headline and you will find the facts behind the numbers. All campaigns attempt to do this kind of thing, but nobody gets away with it as much as the Obama administration. It will prove to be a huge obstacle for whoever the GOP nominee is. And this is just the start.

These polls are fabrications intended to shape public opinion. They are not reflections of public opinion. That make sense? The poll itself will be regurgitated to other secondary media. That is how we did it over and over again in 2007 and 2008. We used the polling to work against Hillary, and then we used the same platform of tricks to use against and paralyze the McCain campaign.

You have to find the actual polling data. It will be buried but you can find it easy enough once you figure out the links. Then go back and compare to previous polling and you’ll note the shift. That shift is proof of the dishonesty of the media. At least some of them. The Obama people fed them the request, and these polls will be used to paint the picture.

Just thought I’d give you the heads up on that. More to come in a couple weeks, maybe sooner. Been very busy trying to stay ahead of the administration on so many things. They must have hundreds of people running interference already. Everywhere I go, they are already there. Cannot be the work of the administration. Too incompetent and clumsy. Got other entities involved already in the day to day stuff.

FnF about to pay us big dividends though. Might not be quite enough, but the damage will be considerable. Got something else in the works as well. Hopefully the voters will be more clearheaded in 2012 than they were in ’08. So damn easy to fool back then. Scares me to think they will be again.

Oh My – How Those Obama-Friendly Polls Do Lie!

New Washington Post/ABC News Poll being sited by various media as proof of an “Obama Approval Surge”. But do the numbers add up? Not quite…
his Washington Post-ABC News poll was conducted by telephone December 15-18 2011, among a random national sample of 1,005 adults, including landline and cell phone-only respondents. Results for the full sample have a 3.5 point error margin. Sampling, data collection and tabulation by Abt-SRBI of New York.

Do you approve or disapprove of the way Barack Obama is handling his job as president?

Approve: 49% Disapprove: 47%

Those numbers are now being used as evidence of Barack Obama’s once-again found approval among American voters just as 2012 and its accompanying election cycle begins in earnest. It is, according to numerous and subsequent media reports, the first time President Obama has had a higher approval vs disapproval rating since early last summer – and perhaps a trend that will propel him to re-election victory in November of 2012.

But how to explain what is indeed a rather significant 5-point approval increase over polling data from just last month? Is it a reflection of Obama’s supposed “victory” over Republicans in the payroll tax reduction debate? Although many in the media are this very minute scrambling to posture just such an explanation – it is not likely. Why? Because this most recent Washington Post/ABC news poll, though just recently published, was actually taken BEFORE the final resolution to the payroll tax debate took place – December 15th – December 18th. The Obama “victory” over the Republicans did not happen for a number of days after the polling was actually conducted.

There is more to explain Barack Obama’s “Surge” in the polls though – and just as Insider warned, the cause is, while sadly predictable, no less insidious.

Here is the data regarding the political affiliation of those individuals who participated in the most recent Washington Post/ABC News poll:

Democrat 32%

Republican 25%

A seven-point advantage favoring Democrats – thus favoring support of President Barack Obama!

Now let us look back to the previous poll by Washington Post/ABC News published in November:

Do you approve or disapprove of the way Barack Obama is handling his job as president?

Approve: 44% Disapprove: 53%

And here then is the political affiliation of those individuals who participated in the Washington Post/ABC News poll from November:

Democrat 29%

Republican 26%

AND THERE YOU HAVE IT – IN THE MOST RECENT POLL NOW BEING SITED AS PROOF OF AN OBAMA APPROVAL “SURGE”, THERE WAS A HIGHER PERCENTAGE OF DEMOCRATS AND A LOWER PERCENTAGE OF REPUBLICANS INVOLVED IN THAT POLL THAN THE ONE PUBLISHED LAST MONTH – A CLEAR CASE OF MANIPULATING THE OUTCOME. IN THIS CASE A 4-POINT SHIFT FROM THE PREVIOUS POLL THAT NOW OVERWHELMINGLY FAVORS DEMOCRAT PARTY AFFILIATION - ALMOST THE EXACT AMOUNT OF THE 5-POINT OBAMA “SURGE” NOW BEING REPORTED BY VARIOUS MEDIA OUTLETS. AND SO GOES THE INCESTUOUS RELATIONSHIP BETWEEN THE MAINSTREAM MEDIA AND THE OBAMA WHITE HOUSE. AND JUST AS INSIDER WARNED – THERE WILL BE MUCH MORE OF THIS TO COME IN 2012.

KEEP YOUR EYES OPEN FOLKS…

Ron Paul in 2009–‘I Wouldn’t Risk American Lives’ to End the Holocaust

On the evening of Sept. 16, 2009, I was invited to a function for Rand Paul’s U.S. Senate campaign at the headquarters of Americans for Tax Reform.

I had been invited by a friend of mine via Facebook [2] who was a passionate supporter of Ron Paul [3]. Within minutes of arriving, I saw Rep. Paul enter the room, followed by an entourage of several college students.

I immediately walked up to Paul and introduced myself, and Paul smiled at me and shook my hand. I told him that I had always wanted to ask him a question, and that it was a hypothetical question, but I would appreciate his answer nonetheless. Paul smiled, and welcomed the question. At this point there were about 15 people surrounding us, listening.

And so I asked Congressman Paul: if he were President of the United States during World War II, and as president he knew what we now know about the Holocaust, but the Third Reich presented no threat to the U.S., would he have sent American troops to Nazi Germany purely as a moral imperative to save the Jews?”

And the Congressman answered:

“No, I wouldn’t. I wouldn’t risk American lives to do that. If someone wants to do that on their own because they want to do that, well, that’s fine, but I wouldn’t do that.”


Paul then looked at me, and I politely thanked him for his time. He smiled at me again and nodded his head, and many of his young followers were also smiling, and nodding their heads in agreement. Clearly, I was the only one in the room who was disturbed by his response.

When I first presented the story of Paul’s comments about the Holocaust to major news media outlets two years ago, they were so stunned they were afraid to publish my story, and as a result it has remained unpublished until now.

I went to great lengths afterwards to learn more about the basis for Paul’s comments. I spoke to Eric Dondero, a former senior aide for Paul, in February 2010. Dondero is quoted in a Weekly Standard article [4] today about Paul’s isolationist beliefs.

When I called Dondero again this morning, and told him I was finally going forward with the story, he told me that Paul had made similar comments to him.

“He told me numerous times it was not worth it to intervene to save the Jews in World War II,” Dondero said. “I don’t think that’s because he’s an antisemite. It’s because he’s an extreme isolationist and he’s trying to be 100% principled–he doesn’t think there’s any reason to intervene for human rights or any other reason anywhere on the planet.”

Calls to Rep. Paul’s congressional office and campaign office last week and this morning were not returned.

The Holocaust of World War II is not the only historical tragedy that Paul’s isolationism would disregard.

In 2007, the Congressman actually faulted [5] Abraham Lincoln for using military force to end slavery in the Civil War: “He shouldn’t have gone to war… Slavery was phased out in every other country in the world and the way I’m advising that it should have been done is do like the British Empire did; you buy the slaves and release them.”

Editors told me two years ago that they couldn’t believe Paul would respond in the same way to a question about the Holocaust, but I wasn’t surprised. Paul’s answer is actually consistent with much of what he’s been saying for years.

Yet philosophical consistency doesn’t always translate into a policy that is practical–or presidential.

'Ron Paul wishes Israel didn't exist'

Former senior aide to Republican presidential hopeful says that while Paul is not an anti-Semite, he believes Israel is 'more trouble than it's worth'

Republican presidential hopeful Ron Paul negates Israel's right to exist, Eric Dondero, who served as a senior aide to the 76-year-old Texas congressman for over 12 years, said on Monday.

In a blog posted in Rightwing News, Dondero said that while Paul was, in his opinion, neither a racist nor an anti-Semite, he is very much anti-Israel.

"I worked for the man for 12 years (and) I never heard a racist word expressed towards Blacks or Jews come out of his mouth… I can categorically say that I never heard anything out of his mouth, in hundreds of speeches I listened to over the years, that could be called, anti-Semite," he writes.

But according to Dondero, the elderly congressman "wishes the Israeli state did not exist at all."

The congressman's former aide insists in his blog that Paul expressed the controversial sentiment "numerous times in our private conversations."

Paul's view, he said, "is that Israel is more trouble than it is worth, specifically to the America taxpayer. He sides with the Palestinians, and supports their calls for the abolishment of the Jewish state, and the return of Israel, all of it, to the Arabs."


Following Dondero's statement, Executive Director of Republican Jewish Coalition Matthew Brooks said that the former senior aide's blog "simply confirmed what we already know – Paul is against the Jewish State of Israel."

Brooks had previously called Paul's views on Israel "misguided and extreme." He was also excluded from a Republican presidential candidates' panel hosted by the Republican Jewish Coalition in November.


The Nightmare After Christmas

By Detlev Schlichter of The Cobden Center

The Nightmare After Christmas

The pathetic state of the global financial system was again on display this week. Stocks around the world go up when a major central bank pumps money into the financial system. They go down when the flow of money slows and when the intoxicating influence of the latest money injection wears off. Can anybody really take this seriously?

On Tuesday, the prospect of another gigantic cash infusion from the ECB’s printing press into Europe’s banking sector, which is in large part terminally ill but institutionally protected from dying, was enough to trigger the established Pavlovian reflexes among portfolio managers and traders.

None of this has anything to do with capitalism properly understood. None of this has anything to do with efficient capital allocation, with channelling savings into productive capital, or with evaluating entrepreneurship and rewarding innovation. This is the make-believe, get-rich-quick (or, increasingly, pretend-you-are-still-rich) world of state-managed fiat-money-socialism. The free market is dead. We just pretend it is still alive.

There are, of course those who are still under the illusion that this can go on forever. Or even that what we need is some shock-and-awe Über-money injection that will finally put an end to all that unhelpful worrying about excessive debt levels and overstretched balance sheets. Let’s print ourselves a merry little recovery.

How did Mr. Bernanke, the United States’ money-printer-in-chief put it in 2002? “Under a paper-money system, a determined government can always generate higher spending…” (Italics mine.)

Well, I think governments and central banks will get even more determined in 2012. And it is going to end in a proper disaster.

Lender of all resorts

Last week in one of their articles on the euro-mess, the Wall Street Journal Europe repeated a widely shared myth about the ECB: “With Germany’s backing, the ECB has so far refused to become a lender of last resort, …” This is, of course, nonsense. Even the laziest of 2011 year-end reviews will show that the ECB is precisely that: A committed funder of states and banks. Like all other central banks, the ECB has one overriding objective: to create a constant flow of new fiat money and thus cheap credit to an overstretched banking sector and an out-of-control welfare state that can no longer be funded by the private sector. That is what the ECB’s role is. The ECB is lender of last resort, first resort, and soon every resort.

Let’s look at the facts. The ECB started 2011 with record low policy rates. In the spring it thought it appropriate to consider an exit strategy. The ECB conducted a number of moderate rate hikes that have by now all been reversed. By the beginning of 2012 the ECB’s policy rates are again where they were at the beginning of 2011, at record low levels.

So why was the springtime attempt at “rate normalization” aborted? Because of deflationary risks? Hardly. Inflation is at 3 percent and thus not only higher than at the start of the year but also above the ECB’s official target.

The reason was simply this: states and banks needed a lender of last resort. The private market had lost confidence in the ability (willingness?) of certain euro-zone governments to ever repay their massive and constantly growing debt load. Certain states were thus cut off from cheap funding. The resulting re-pricing of sovereign bonds hit the banks and made it more challenging for them to finance their excessive balance sheets with money from their usual sources, not least U.S. money market funds.

So, in true lender-of-last resort fashion, the ECB had to conduct a U-turn and put those printing presses into high gear to fund states and banks at more convenient rates. While in a free market, lending rates are the result of the bargaining between lenders and borrowers, in the state-managed fiat money system, politicians and bureaucrats define what constitutes “sustainable” and “appropriate” interest rates for states and banks. The central bank has to deliver.

The ECB has not only helped with lower rates. Its balance sheet has expanded over the year by at least €490 billion, and is thus 24% larger than at the start of the year. This does not even include this week’s cash binge. The ECB is funding ever more European banks and is accepting weaker collateral against its loans. Many of these banks would be bust by now were it not for the constant subsidy of cheap and unlimited ECB credit. If that does not define a lender of last resort, what does?

And as I pointed out recently, the ECB’s self-imposed limit of €20 billion in weekly government bond purchases (an exercise in market manipulation and subsidization of spendthrift governments but shamelessly masked as an operation to allow for smooth transmission of monetary policy) is hardly a severe restriction. It would allow the ECB to expand its balance sheet by another €1 trillion a year. (The ECB is presently keeping its bond purchases well below €20 billion per week.)

Deflation? What deflation?

It is noteworthy that there still seems to be a widespread belief that all this money-printing will not lead to higher inflation because of the offsetting deflationary forces emanating from private bank deleveraging and fiscal austerity.

This is an argument I came across a lot when I had the chance in recent weeks to present the ideas behind my book to investors and hedge fund managers in London, Edinburgh and Milan. Indeed, even some of the people who share my outlook about the endgame of the fiat money system do believe that we could go through a period of falling prices first, at least for certain financial assets and real estate, before central bankers open the flood-gates completely and implement the type of no holds barred policy I mentioned above. Then, and only then will we see a dramatic rise in inflation expectations, a rise in money velocity and a sharp rise in official inflation readings.

Maybe. But I don’t think so. I consider it more likely that we go straight to higher inflation.

The deleveraging in the banking sector is the equivalent of austerity in the public sector: it is an idea. A promise. The reflationary policy of the central bank is a fact. And that policy actively works against private bank deleveraging and public sector debt reduction.

Consider this: The present credit crisis started in 2007. Yet, none of the major economies registered deflation. All are experiencing inflation, often above target levels and often rising. In the euro-area, over the past twelve months, the official inflation rate increased from 2 percent to 3 percent.

From the start of 2011 to the beginning of this month, the U.S. Federal Reserve boosted the monetary base by USD 560 billion, or 27 percent. So far this year, M1 increased by 17.5 percent and M2 by 9.5 percent.

Below is the so-called “true money supply” for the U.S. calculated by the Mises Institute.

As the Mises-Institute’s Doug French pointed out, total assets held by the six biggest banks in the U.S. increased by 39% over the past 5 years. Maybe this is not surprising given that in our brave new world of limitless fiat money, credit contraction is strictly verboten.

In the UK the official inflation reading is at around 5 percent, but nevertheless in October the Bank of England embarked on another round of “quantitative easing”. It has so far expanded its balance sheet by another £50 billion in not even three months, which constitutes balance sheet growth of about 20 percent.

What we have experienced in the UK in 2011 provides a good forecast in my view for the entire Western world for 2012: rising unemployment, weak or no growth, failure of the government to rein in spending, growing public debt, further expansion of the central bank’s balance sheet, rising inflation.

Death of a safe haven

And what about Switzerland? Here the central bank expanded its balance sheet by 40 percent over just the first three quarters of the year, and almost tripled the monetary base over the same period of time. Most of this even occurred before the 6th of September, the day on which Mr. Hildebrand, the President of the Swiss National Bank, told the world and his fellow Swiss countrymen and women that the whole safe-haven idea was rubbish and that Switzerland was now joining the global fiat money race to the bottom.

Deflation has become the bogeyman of the policy establishment. It must be avoided at all cost! Of course for most of us regular folks deflation would simply mean a tendency toward lower prices. It would mean that the capacity of the capitalist economy to increase the productivity of labour through the accumulation of capital and to thus make things more affordable over time (a true measure of rising general wealth) would accurately be reflected in falling nominal prices. The purchasing power of money would increase over time. This, however, would require a form of hard and apolitical money. Instead we are constantly told that our economy needs never-ending monetary debasement in order to function properly. We are constantly told to fear nothing more than deflation, which can only be averted by a determined government and a determined central bank. And the never-ending supply of new fiat money.

Appropriately, there is no talk of exit strategies any longer.

Given the size of the already accumulated imbalances I think a stop to this madness of fiat money creation would be painful at first but hugely beneficial in the long run. I am the last to say that no risk of a very painful deflationary correction exists. But a correction is now unavoidable in any case, and every other policy option will make the endgame only worse. Even if I am wrong on the near-term outlook on inflation and even if all this money-printing does not lead to higher inflation readings imminently, it will still be a hugely disruptive policy. Money injections obstruct the dissolution of imbalances and invariably add new imbalances to the economy, including new debt and capital misallocations, that will make even more aggressive money printing necessary in the future.

The nationalization of money and credit

Herein lies a fundamental contradiction in our present system: The desire for constant inflation and constant credit expansion requires that the banks be shielded from the effects of their own business errors. Allowing capitalism’s most efficient regulators, profit and loss, to do the regulating, would mean that banks could face the risk of bankruptcy – this is, of course, the ultimate disciplinary force in capitalism. This could then lead to balance sheet correction and thus periods of deflation. Ergo, banks cannot be capitalist enterprises at full risk of bankruptcy as long as constant credit growth and inflation are the overriding policy goals. The constant growth of the banking sector must be guaranteed by the state through the unlimited provision of bank reserves from a lender-of-last resort central bank.

That banks get ever bigger, that they routinely hand out multi-million dollar bonuses, and that they frequently get bailed out, is not a result of the greed of the bankers – a stupid explanation anyway, only satisfactory to the intellectually challenged and perennially envious – but is integral to the fiat money system.

Banking under state protection ultimately means banking under state control. In the end it means state banking. And this is where we are going.

Last week the Federal Reserve and the Bank of England announced plans to tighten the control over the balance sheet management and the risk-taking of private banks. This is just the beginning, believe me. The nationalization of money and credit will intensify in 2012 and beyond. More regulation, more restriction, more control. Not only in defence of the bankrupt banks but also the bankrupt state. We will see curbs on trading, short-selling restrictions and various forms of capital controls.

A system of state fiat money is incompatible with capitalism. As the end of the present fiat money system is fast approaching the political class and the policy bureaucracy will try and defend it with everything at their disposal. For the foreseeable future, capitalism will, sadly, be the loser.

The conclusion from everything we have seen in 2011 is unquestionably that the global monetary system is on thin ice. Whether the house of cards will come tumbling down in 2012 nobody can say. When concerns about the fundability of the state and the soundness of fiat money, fully justified albeit still strangely subdued, finally lead to demands for higher risk premiums, upward pressure on interest rates will build. This will threaten the overextended credit edifice and will probably be countered with more aggressive central bank intervention. That is when it will get really interesting.

We live in dangerous times. Stay safe and enjoy the holidays.

In the meantime, the debasement of paper money continues.