REVOLUTION from ABOVE


NATO HQ, Brussels. Some critics have noted a hidden Swastika in the logo

OVERWORLDS, UNDERWORLDS
“A revolution from above refers to major political and social changes that are imposed by an elite on the population it dominates. By contrast, the plain term revolution suggests that pressure from below is a major driving force in events, even if other social groups cooperate with — or ultimately capture —the movement. The phrase was coined by the Spanish writer Joaquín Costa in the 19th century.[1] In contrast, a “revolution from below” refers to a grassroots campaign against elites.”

EXAMPLES
Enlightened Despotism in 18th-century Europe
Fascism
Stalin‘s Collectivization of agriculture
Soviet Industrialization
White Revolution in Iran
Spain pt1Spain pt2

SIDNEY WEBB and the FABIANS
http://socialistworker.org/2014/05/30/revolution-from-above
6. The Fabian Model
In Germany, behind the figure of Lassalle there shades off a series of “socialisms” moving in an interesting direction. The so-called Academic Socialists (“Socialists of the chair,” Kathedersozialisten–a current of Establishment academics) looked to Bismarck more openly than Lasalle, but their conception of state-socialism was not in principle alien to his. Only, Lassalle embarked on the risky expedient of calling into being a mass movement from below for the purpose–risky because once in motion it might get out of hand, as indeed it did more than once. Bismarck himself did not hesitate to represent his paternalistic economic policies as a kind of socialism, and books got written about “monarchical socialism,” “Bismarckian state-socialism,” etc. Following further to the right, one comes to the “socialism” of Friedrich List, a proto-Nazi, and to those circles where an anti-capitalist form of anti-Semitism (Dühring, A. Wagner, etc.) lays part of the basis for the movement that called itself socialism under Adolf Hitler.

“It is of my opinion that the swastika is what has been hidden from western consciousness by placing it in plain view, with its image sullied. However in the business world, post WWII, it is business as usual. The swastika in the lobby of JP Chase bank? :lol: Remember also that it has been shown that Hitler and the Third Reich was receiving ‘western financial aid’.” -http://www.religionforums.org/Thread-Does-your-religion-believe-in-credithttp://kachina2012.wordpress.com/2011/12/15/the-sacred-cut-by-tons-brunes/,
http://criti-carlos.blogspot.com/2014/02/negocios-que-crecieron-con-los-nazis.html

The thread that unites this whole spectrum, through all the differences, is the conception of socialism as equivalent merely to state intervention in economic and social life. “Staat, greif zu!” Lassalle called. “State, take hold of things!”–this is the socialism of the whole lot. This is why Schumpeter is correct in observing that the British equivalent of German state-socialism is–Fabianism, the socialism of Sidney Webb. The Fabians (more accurately, the Webbians) are, in the history of the socialist idea, that modern socialist current which developed in more complete divorcement from Marxism, the one most alien to Marxism. It was almost chemically pure social-democratic reformism unalloyed, particularly before the rise of the mass labor and socialist movement in Britain, which it did not want and did not help to build (despite a common myth to the contrary). It is therefore a very important test, unlike most other reformist currents which paid their tribute to Marxism by adopting some of its language and distorting its substance.

The Fabians, deliberately middle-class in composition and appeal, were not for building any mass movement at all, least of all a Fabian one. They thought of themselves as a small elite of brain-trusters who would permeate the existing institutions of society, influence the real leaders in all spheres Tory or Liberal, and guide social development toward its collectivist goal with the “inevitability of gradualness.” Since their conception of socialism was purely in terms of state intervention (national or municipal), and their theory told them that capitalism itself was being collectivized apace every day and had to move in this direction, their function was simply to hasten the process. The Fabian Society was designed in 1884 to be pilot-fish to a shark: at first the shark was the Liberal Party; but when the permeation of Liberalism failed miserably, and labor finally organized its own class party despite the Fabians, the pilot-fish simply reattached itself.

There is perhaps no other socialist tendency which so systematically and even consciously worked out its theory as a Socialism-from-Above. The nature of this movement was early recognized, though it was later obscured by the merging of Fabianism into the body of Labor reformism. The leading Christian socialist inside the Fabian Society once attacked Webb as “a bureaucratic Collectivist” (perhaps the first use of that term.) Hilaire Belloc’s once-famous book of 1912 on The Servile State was largely triggered by the Webb type whose “collectivist ideal” was basically bureaucratic. G.D.H. Cole reminisced: “The Webb’s in those days, used to be fond of saying that everyone who was active in politics was either an ‘A’ or a ‘B’–an anarchist or a bureaucrat–and that they were ‘B’s’…”

These characterizations scarcely convey the full flavor of the Webbian collectivism that was Fabianism. It was through-and-through managerial, technocratic, elitist, authoritarian, “plannist.” Webb was fond of the term wire-pulling almost as a synonym for politics. A Fabian publication wrote that they wished to be “the Jesuits of Socialism.” The gospel was Order and Efficiency. The people, who should be treated kindly, were fit to be run only by competent experts. Class struggle, revolution and popular turbulence were insanity. In Fabianism and the Empire imperialism was praised and embraced. If ever the socialist movement developed its own bureaucratic collectivism, this was it “It may be thought that Socialism is essentially a movement from below, a class movement,” wrote a Fabian spokesman, Sidney Ball, to disabuse the reader of this idea; but now socialists “approach the problem from the scientific rather than the popular view; they are middle-class theorists,” he boasted, going on to explain that there is “a distinct rupture between the Socialism of the street and the Socialism of the chair.”

The sequel is also known, though often glossed over. While Fabianism as a special tendency petered out into the larger stream of Labor Party reformism by 1918, the leading Fabians themselves went in another direction. Both Sidney and Beatrice Webb as well as Bernard Shaw–the top trio–became principled supporters of Stalinist totalitarianism in the 1930s. Even earlier, Shaw, who thought socialism needed a Superman, had found more than one. In turn he embraced Mussolini and Hitler as benevolent despots to hand “socialism” down to the Yahoos, and he was disappointed only that they did not actually abolish capitalism. In 1931 Shaw disclosed, after a visit to Russia, that the Stalin regime was really Fabianism in practice. The Webbs followed to Moscow, and found God. In their Soviet Communism: a New Civilization, they proved (right out of Moscow’s own documents and Stalin’s own claims, industriously researched) that Russia is the greatest democracy in the world; Stalin is no dictator; equality reigns for all; the one-party dictatorship is needed; the Communist Party is a thoroughly democratic elite bringing civilization to the Slavs and Mongols (but not Englishmen); political democracy has failed in the West anyway, and there is no reason why political parties should survive in our age…

They staunchly supported Stalin through the Moscow purge trials and the Hitler-Stalin Pact without a visible qualm, and died more uncritical pro-Stalinists than can now be found on the Politburo. As Shaw has explained, the Webbs had nothing but scorn for the Russian Revolution itself, but “the Webbs waited until the wreckage and ruin of the change was ended, its mistakes remedied, and the Communist State fairly launched.” That is, they waited until the revolutionary masses had been straitjacketed, and the leaders of the revolution cashiered, the efficient tranquility of dictatorship had settled on the scene, the counter-revolution firmly established; and then they came along to pronounce it the Ideal. Was this really a gigantic misunderstanding, some incomprehensible blunder? Or were they not right in thinking that this indeed was the “socialism” that matched their ideology, give or take a little blood? The swing of Fabianism from middle-class permeation to Stalinism was the swing of a door that was hinged on Socialism-from-Above.

If we look back at the decades just before the turn of the century that launched Fabianism on the world, another figure looms, the antithesis of Webb: the leading personality of revolutionary socialism in that period, the poet and artist William Morris, who became a socialist and a Marxist in his late forties. Morris’ writings on socialism breathe from every pore the spirit of Socialism-from-Below, just as every line of Webb’s is the opposite. This is perhaps clearest in his sweeping attacks on Fabianism (for the right reasons); his dislike of the “Marxism” of the British edition of Lassalle, the dictatorial H.M. Hyndman; his denunciations of state-socialism; and his repugnance at the bureaucratic-collectivist utopia of Bellamy’s Looking Backward. (The last moved him to remark: “If they brigaded me into a regiment of workers, I’d just lie on my back and kick.” Morris’ socialist writings are pervaded with his emphasis from every side on class struggle from below, in the present; and as for the socialist future, his News from Nowhere was written as the direct antithesis of Bellamy’s book. He warned

that individual men cannot shuffle off the business of life on to the shoulders of an abstraction called the State, but must deal with it in conscious association with each other…Variety of life is as much an aim of true Communism as equality of condition, and…nothing but an union of these two will bring about real freedom.

“Even some Socialists,” he wrote, “are apt to confuse the cooperative machinery towards which modern life is tending with the essence of Socialism itself.” This meant “the danger of the community falling into bureaucracy.” Therefore he expressed fear of a “collectivist bureaucracy” lying ahead. Reacting violently against state-socialism and reformism, he fell backwards into anti-parliamentarism but he did not fall into the anarchist trap:

…people will have to associate in administration, and sometimes there will be differences of opinion…What is to be done? Which party is to give way? Our Anarchist friends say that it must not be carried by a majority; in that case, then, it must be carried by a minority. And why? Is there any divine right in a minority?

This goes to the heart of anarchism far more deeply than the common opinion that the trouble with anarchism is that it is over-idealistic. William Morris versus Sidney Webb: this is one way of summing up the story.

SYNARCHISM
https://en.wikipedia.org/wiki/Synarchism
http://canadanewslibre.com/2012/10/23/synarchism-joint-rule-by-secret-elite/
http://adage.com/article/agency-news/wpp-s-synarchy-choice-sparks-sneers/127164/
http://www.foundationwebsite.org/OnSynarchy.htm
http://www.newdawnmagazine.com/articles/synarchy-the-hidden-hand-behind-the-european-union
Synarchy: The Hidden Hand Behind the European Union
by Lynn Picknett & Clive Prince

While questions remain about the existence of a single global elite with an agenda that goes beyond simply keeping itself very, very rich, there are certainly groups that want to run the world for quite other reasons. And with the increasing globalisation of political and economic institutions, it has become easier for a relatively small group to inveigle itself into quite staggeringly influential positions. One cabal in particular reveals – alarmingly – what a small group, driven by a fanatical belief system, can achieve from the shadows. And writing as we are in the United Kingdom, this group is on our doorstep, and has been for over a century. And although perhaps small in number, its reach is big. Our research into this subject demonstrated that every major step in the development of the European Union from a simple trading body to a borderline superstate can be traced back to a very specific ideology, which upholds rule by an elite from behind the scenes. But this isn’t just about politics. Astonishingly, this ideology is also about mysticism and magic. This shadowy politico-occult movement is synarchy, which was developed by the Frenchman Joseph Alexandre Saint-Yves, the Marquis d’Alveydre, in opposition to the rise of anarchy in the second half of the nineteenth century. To him the ideal synarchist state would be a rigid social hierarchy topped by an elite that is predestined to rule – absolutely at odds with the then emerging concepts of democracy, individual liberty and social mobility. Central to Saint-Yves was the creation of a united Europe, a call for which appears on the first page of his first book on synarchy, Keys to the East (1877). He believed that his perfectly balanced society reflected deep cosmic laws, with which his elite perfectly resonated.

They are also directly guided by the powers that rule the universe – as he believed himself to be. Saint-Yves claimed that in the ancient past an advanced civilisation – based, of course, on synarchic principles – had governed the whole world. This golden age lasted from 7500 to 4000 BCE, before imploding due to a global catastrophe, remembered in legends such as Atlantis. Since then the occult powers-that-be have periodically reintroduced the revelation of synarchy, sending or inspiring figures such as Moses and Jesus – and, naturally, Saint-Yves himself. He adopted the idea, popular in nineteenth-century esoteric and theosophical circles, that spiritually advanced masters – to him preservers of the synarchic revelation – existed in Agartha, a hidden realm in the Himalayas. He confided in his closest associates that he had been visited by its emissaries. Another significant aspect of his version of history was that clandestine societies had transmitted the secret of synarchy throughout the ages. It comes as no surprise to discover that his ‘spiritual fathers of synarchy’ were the usual suspects – the Knights Templar.

For a time in the 1880s and 90s Saint-Yves’ ideas were seriously discussed in political circles in France and elsewhere in Europe. In 1886 he formed the Syndicate of the Professional and Economic Press to promote synarchy to political and business leaders. Several members of the French Parliament joined, including government minister François Césaire Demahy – later a founder of the influential nationalist movement Action Française – and Paul Deschanel, who became President of France in 1920. Saint-Yves was made a chévalier of the Légion d’honneur in 1893. In the end, however, Saint-Yves’ followers realised things would have to change radically. After his death in 1909, and particularly in the uncertain aftermath of the First World War, they knew they could never achieve their ambitions through conventional means – and turned to stealth. They decided on inveigling their members into key positions in political and economic institutions intending on creating, in the words of Richard F. Kuisel, a specialist in twentieth-century French political history, “a world government by an initiated elite.”1 Synarchy came to stand for ‘rule by secret society’, which in practice makes it difficult to distinguish between card-carrying synarchists and those merely under their influence.

Towards Europe’s ‘United States’
The most high-profile late nineteenth-century devotee of Saint-Yves was the physician Gérard Encausse (‘Papus’), a leading light among French esoteric societies. He blended the teachings of his ‘spiritual master’, the eighteenth century occult philosopher Louis-Claude de Saint-Martin, and his ‘intellectual master’ Saint-Yves. Encausse founded the Martinist Order, into which he absorbed synarchist principles – so that, unusually, it had political ambitions, including the formation of ‘a United States of Europe’. Delusions of grandeur, one might have thought… Encausse’s death in 1916 resulted in a schism in the Martinist Order over its involvement in politics. The activists, under Victor Blanchard – head of the secretariat of the Chamber of Deputies of the French Parliament – formed the breakaway Martinist and Synarchic Order, which established the Synarchic Central Committee in 1922, designed to pull in promising young civil servants and “younger members of great business families.”2 The Committee soon became the Synarchic Empire Movement, or MSE (Mouvement Synarchique d’Empire) in 1930, under dedicated firebrands Jeanne Canudo and Vivien Postel du Mas. Canudo is best remembered today as an energetic campaigner for European unity and founder of several youth organisations in the 1930s, select members of which were inducted into the esoteric synarchist orders that she led together with Postel du Mas. An important witness to these events was the celebrated Parisian litterateur Maurice Girodias (publisher of scandalous sensations such as The Story of O, Lolita, Henry Miller’s Sexus and William S. Burrough’s The Naked Lunch). As a teenager in the 1930s he was involved both with Canudo’s European groups and an esoteric society that met at Postel du Mas’ luxurious apartment to hear the ‘secret masters’ speaking through teenage trance medium Laurette. Girodias said of Postel du Mas’ magical salons: “I saw at his feet men of science, company directors, and bankers.”3

Beyond Top Secret
The MSE produced an important but beyond Top Secret document – its very existence unknown to outsiders until 1941 – entitled The Synarchist Revolutionary Pact for the French Empire, usually known simply as the Synarchist Pact. The exact authorship is uncertain but the main candidates are Postel du Mas and the businessman Jean Coutrot. It was only as a result of Coutrot’s apparent suicide under the Nazi Occupation, when copies were found among his possessions, that anyone knew the Pact existed.4 This highly scary document set out a programme for “invisible revolution” or “revolution from above”: that is, taking over a state from within by infiltrating into high office. The first step was to take control of France, before creating the “European Union” – then, tomorrow… Saint-Yves did not invent the concept of a federal Europe. For example, Victor Hugo is credited with first using the term ‘United States of Europe’, although – probably not coincidentally – he was a close friend of Saint-Yves in the French ex-pat community in the Channel Islands in the 1860s. But it became a serious political force when the Pan-European movement was established in 1923 by the Austrian Count Richard Coudenhove-Kalergi, described by Otto von Habsburg – in rather telling terms – as the “guide and prophet” of a united Europe.

He famously won over Winston Churchill, who began espousing European unity from 1930 and wrote a foreword to the Count’s 1953 book An Idea Conquers the World. The Count was a committed believer that cosmic forces shape events, giving him at least the profile of a synarchist. (Sadly we have no information about Churchill’s views on the more occult aspects.) But there is evidence of a closer connection with the French synarchists. In their 1968 Synarchy and Power, André Ulmann and Henri Azeau interviewed one of the inter-war members of the MSE, who claimed it had “inspired the action of Coudenhove-Kalergi and his pan-Europeanism.”5 Coudenhove-Kalergi also lent his support to pro-Europe groups formed by the MSE’s Jeanne Canudo.

Maurice Girodias’ involvement with the synarchists began as a 16-year-old when, at a Theosophical Society lecture in 1935, he was intrigued by a group in flamboyant Templar garb led by Postel du Mas and Canudo. He was told they were “schismatic theosophists with political designs, and they are linked to Count Coudenhove-Kalergi… who is a champion of the United States of Europe… Their aim is to launch a pan-European political party and to institute in the entire world, commencing with Europe, a society obedient to a spiritualist idea.”6 In conversation with Girodias Postel du Mas named Coudenhove-Kalergi as one of the two major promoters of his and Canudo’s plans.

The Hood
In the tumultuous aftermath of the First World War, like the rest of Europe France became polarised between communism and fascism. The mid-1930s saw the creation of several clandestine far-right groups, both civilian and military, which were integrated into a single network under the control of a three-man Superior Council. Although it gave itself no particular name, the press dubbed it the Cagoule – or the sinister-sounding ‘Hood’. Indeed, the Chicago Tribune’s correspondent in Paris, William Shirer, summed up the Cagoule as “deliberately terrorist, resorting to murder and dynamiting, and its aim was to overthrow the Republic and set up an authoritarian régime on the model of the Fascist state of Mussolini.”7 Italy supplied the Cagoule with funds and arms and, in return, the Cagoule assassinated anti-fascist Italian refugees in Paris. The Cagoule was led by chévalier of the Légion d’honneur Eugène Deloncle, with the other Council members being Dr Henri Martin and Colonel Georges Groussard, who oversaw cabals within the military. It was funded by wealthy industrialists, including Eugène Schueller, founder of L’Oréal – who obviously thought synarchy was “worth it” – in whose company’s headquarters the group met. Although most of the Cagoule were simply anti-communist extremists, who had probably never heard of synarchy, there’s no doubt that there was a strong connection between the MSE and Superior Council, particularly Deloncle.

The connection was acknowledged by Shirer8 and by Richard Kuisel, who writes: “Strangely enough, although the Cagoule was an archenemy of Freemasonry, it imitated Masonic ritual, symbolism, and method of recruitment. The head of the Cagoule, Eugène Deloncle, even likened its recruiting procedures to the ‘chain method’ of the Illuminati.”9  Basically, through the Cagoule, the synarchists had taken over terrorist groups for their own ends, planning to precipitate a state of emergency that would enable its chosen man to step in as a strong leader to restore order “in the interests of public safety.” And their chosen man was Marshal Philippe Pétain. In September 1937 a series of bomb explosions rocked Paris, intended to kick-start a wave of armed attacks to spread chaos and confusion. But a lucky break led the police to caches of arms and ammunition around the city and Deloncle was arrested. An official report pointed to the MSE, noting “affiliates of the Synarchic Movement were very numerous and already in place within, and at the head of, the major organs of the state, ready to take charge.”10

It is hard to overestimate the influence of the synarchists. They were – and no doubt still are – hardly a bunch of nobodies. A major player in this story was none other than François Mitterrand, later France’s longest-serving President. Although he was to reinvent himself as a socialist, before and during the Second World War he was very much of the extreme right. Even at the time it was rumoured that Mitterrand was a member of the Cagoule. But more sensationally, Henri Martin’s family claimed he had actually planted the 1937 bombs.11 But while no firm evidence exists to support Mitterrand being a cagoulard, and he strenuously denied it when confronted with his shady past in the 1990s, he certainly had the connections, besides the relevant political – and indeed, esoteric – views. Mitterrand believed in rule by an elite – preferably an elite of one: himself. Although from a relatively modest background, he always had an unshakeable belief in his personal superiority, even seeing significance in his family’s origins in the town of Bourges, where a field called the Champs de Mitterrand marks the exact centre of France. ‘Mitterrand’ means ‘middle of the land’. When the ultra-ambitious Mitterrand finally achieved power he notoriously governed through his ‘clan’ of friends and relatives, famously remarking that he needed only “fifty well-placed friends to run the country.”12 And he began building the clan during those pre-war days, around leading cagoulards, particularly those close to Deloncle. Mitterrand was a close friend of conspirator in the assassination of the Italian anti-fascist Rosselli brothers, Jean Bouyver, and of François Méténier, Deloncle’s assistant who was sentenced to 20 years for his part in the 1937 bombings. But the closest family connection was with Deloncle: Mitterrand’s brother Robert married Deloncle’s sister-in-law just before the outbreak of war. It is inconceivable that Mitterrand never met the Cagoule’s mastermind and top synarchist. Also, as we will see, like Deloncle Mitterrand was deeply fascinated by esoteric and mystical matters.

Secrets of the Hitler-friendly State
Although the Cagoule’s plans to create a state of emergency to bring Pétain to power failed, of course this was achieved three years later by an even greater crisis. In June 1940 France fell to Nazi Germany, Pétain emerging as the leader of the new Hitler-friendly French State, based in Vichy. Almost immediately after France’s ignominious surrender some claimed elements in the military had connived in the defeat, believing that jumping into bed with the Nazis would enable Pétain to achieve his cherished national reorganisation. So it is all the more disturbing that one of Ulmann and Azeau’s ex-MSE informants told them that a senior figure behind the group and “one of the mentors” of the young men being groomed for future greatness in the 1920s and 30s was none other than General Maxime Weygand.13 No doubt not coincidentally married to Saint-Yves’ great-niece, he was Supreme Commander of French and British forces at the outbreak of the Second World War, and in June 1940 it was he who advised the French government to ask Hitler for terms. French researcher Roger Mennevée argued that Vichy represented the climax of the first phase of the plan outlined in the Synarchist Pact – taking power in France in preparation to extend it to Europe – using the Germans to do what the Cagoule had failed to three years earlier.14 Ulmann and Azeau note that, coincidence or not, Vichy was organised precisely on synarchist lines.

Both the Occupation and Vichy were seen as an opportunity by the synarchists. In Paris, Postel du Mas and Canudo positively welcomed the German overlords. One investigator into synarchy notes of one of her pro-Europe organisations, “the majority were found, after 1940, either in the corridors of power in Vichy, or in the collaborationist circles in Paris.”15 In Vichy, unsurprisingly, former cagoulards rose to the top, particularly in the dreaded Milice, Vichy’s equivalent of the Gestapo. Deloncle was freed from prison – and formed a political party to build a ‘new Europe’, while Henri Martin and Colonel Groussard enjoyed high-level roles in the intelligence and surveillance network. Historian John Hellman states bluntly that former cagoulards were behind the “manipulation, control, and orientation of Pétainist France.”16 Although a one-to-one connection between the Cagoule and the synarchs may sometimes be something of a leap, the latter were undoubtedly active in Vichy. Shirer declares there is “no doubt” that synarchists “infiltrated the highest posts in business and finance and in the government bureaucracy.”17 Certainly many of the young hopefuls groomed by the MSE rose to Vichy’s upper echelons – including Yves Bouthillier, Minister of Finance from 1940 to 1942.

What about Mitterrand? Imprisoned in June 1940, he escaped from the Occupied territory in December 1941 to the Vichy zone. He was welcomed by ex-cagoulards who got him various government jobs (his main sponsor was the father-in-law of both his brother and Deloncle) and was even awarded Vichy’s highest honour for services to the state, the Francisque Gallique, in 1943. Soon afterwards Mitterrand hastily changed sides, joining the Resistance and making his way to London to ally himself with the Free French – the only episode allowed to be remembered after the war. He wasn’t the only Vichyite to jump ship. Many French synarchists began cosying up to the Allies, as it was increasingly obvious that the tide had turned against Hitler. Henri Martin joined the American covert organisation, the OSS, and Deloncle established contact with the British SOE, although he was killed in a gun battle with the Gestapo in January 1944. In November 1943 a group of Free French analysts drew up a report explicitly examining synarchists in Vichy and, lately, in the Resistance, acknowledging the reality of synarchy and its considerable influence.18 Unbelievably, Mitterrand emerged from the conflict a Resistance hero and a left-wing politician, his connections with Vichy and his far-right background assigned to the collective amnesia that conveniently gripped France after the war. But as he clearly had cagoulard sympathies and connections, he must have shared their aims – despite his later bluster to the contrary. And with his interests, associations and chameleon-like changing of political colours in order to achieve his goals he certainly looks like the perfect synarchist. But most suspicious by far are his extraordinary efforts to create the European Union…

The EU: An Alternative History
The ‘European project’ began on 9 May 1950 with French Foreign Minister Robert Schuman’s announcement that France and West Germany had agreed to co-ordinate their coal and steel industries. Italy, Belgium, the Netherlands and Luxembourg took up his offer to join in, leading seven years later to the Treaty of Rome that established the European Economic Community (EEC). Schuman was only the front man. The prime mover was actually Jean Monnet, the most influential businessman and economist in post-war Europe. Period. The massive international power base he had built up before and during the war gave him immense political influence while keeping out of the public eye.

It was Monnet who had secured the Allies’ backing for General de Gaulle against Roosevelt’s opposition, and in return, de Gaulle gave him responsibility for rebuilding the French economy and industry – a position he used to achieve his great dream, laying the foundations for the EEC. The ‘Schuman Declaration’ was the result of intrigue, trickery and subterfuge by Monnet,19 his most audacious trick being to get French and West German governments to set up a supranational organisation to co-ordinate their industries without realising exactly what they had signed up to. This radical new concept, of an organisation with control over individual nations’ industries but with its own, outside autonomy, laid the foundation for all that came after. Unsurprisingly, Monnet became president of the new body, called – with a chillingly Orwellian tone – the High Authority. Shuman became the first president of the European Parliament in 1958.

What was really going on? A rather large clue lies in the fact that Monnet was another pre-war protégé of the Synarchist Empire Movement. In 1936, Vivien Postel du Mas told Maurice Girodias that, alongside Coudenhove-Kalergi, Monnet was an influential promoter of the synarchist agenda. He certainly publicly supported Canudo’s pro-Europe groups. And one of Ulmann and Azeau’s ex-MSE informants went so far as to describe Monnet as a “true synarch… whose membership of the movement was never in doubt for the true initiates.”20 (Note the occult-sounding “initiates.”) Schuman, too, had pre-war synarchist connections, although not as direct: he had worked closely on political reform in France and European integration with the professor of law Louis Le Fur, a synarchy activist.

Power for Power’s Sake
The Single European Act of 1986, which established free trade and movement between EEC states, was the culmination of the process set in motion by the Schuman Declaration. Over the years the EEC had come to include the UK and Ireland, among others, but the original idea had gone as far as it could. It was Mitterrand who went beyond the original concept by proposing not just closer economic, but alsopolitical, union. The 1992 European Union (‘Maastricht’) Treaty not only turned the EEC into the EU, but for the first time gave the European Parliament powers over member nations (until then it had only an advisory role). Was this the beginning of a European superstate? It also agreed on a single currency, establishing the ‘eurozone’ and the European Central Bank – now terrifyingly beleaguered. All this was Mitterrand’s initiative (aided by German Chancellor Helmut Kohl), including changing the name to the ‘European Union’. Straight out of the Synarchist Pact. Mitterrand made his second bid for the presidency in 1981 – but unlike the first sixteen years before, backed by Jean Monnet, this one was successful. He held the office for two seven-year terms, only being prevented from a third term by the onset of the cancer of which he was to die in 1996. His presidency is remembered for its corruption and the blatant nepotism of his ‘clan’ being rewarded with positions of power. Political historians accept that Mitterrand was purely interested in power for power’s sake, and for the enrichment of himself and his clan, with no real political agenda or vision – except when it came to the ‘European project’. There, he was driven by the desire to see a fully integrated Europe, which he declared “takes precedence over everything.”

But was Mitterrand a card-carrying synarchist? He moved in the right circles, through his pre-war associations with the Cagoule’s leadership. His pursuit of closer European integration certainly fits the synarchists’ core objective. And his interest in esoteric matters also fits the profile – which tends to be downplayed by Mitterrand’s biographers, although it is explored in Nicolas Bonnal’s Mitterrand, the Great Initiate (2001). He employed astrologers – even for major foreign policy decisions – believed in reincarnation, and was interested in UFOs. Even more intriguing to Dan Brown fans – and indeed, our own – is the fact that he had a special veneration for Mary Magdalene, focused on her cult centre at Vézelay. And much has been made of him visiting the celebrated ‘village of mystery’ of Rennes-le-Château (actually only the most high-profile of several visits) during his 1981 election campaign. Nicknamed ‘the Sphinx’, Mitterrand was also fascinated by ancient civilisations: as President he oversaw a great accumulation of Egyptian antiquities by French museums and universities, believing there was some connection between that civilisation and ancient France. Saint-Yves would have agreed.

As President, Mitterrand also spent some 30 billion francs on a major programme of public building, mostly in Paris. Like all egomaniacs he was driven to leave his solid, tangible mark on history. But apparently, there was more to it than that. His monuments’ esoteric symbolism is acknowledged even by mainstream writers, such as Marie Delarue in her 1999 study, tellingly entitled A Republican Pharaoh. She refers to the Parisian buildings as “a journey for initiates,” noting they “seem to relate more to personal destiny and François Mitterrand’s pronounced taste for hermeticism and the Sacred Science, than to the politics of socialist governments.”21 The most famous of his monuments is the great glass pyramid outside the Louvre, unveiled in 1993 to mark the bicentenary of the French Revolution, and clearly reflecting a link between ancient Egypt and France. But the most imposing public work is the Grande Arche de la Fraternité in the La Défence area of Paris, completed in 1989 and designed by the Danish architect Otto von Spreckelsen. Bizarrely – and rather ambitiously – it represents a three-dimensional ‘shadow’ of a hyperdimensional cube that he called a “porte cosmique”: ‘cosmic gateway’ or perhaps even ‘stargate’… But “the most beautiful, most esoteric and least known of the Mitterrandian Great Works”22 – and his personal favourite – is the 1989 Monument to the Rights of Man and the Citizen in the Parc du Champs-de-Mars, in the shadow of the Eiffel Tower. Modelled on an Egyptian funerary temple and aligned to the Sun on the summer solstice, it is literally covered in esoteric symbolism, much of it obviously Masonic. After Mitterrand’s death his staff revealed that he often visited it at night, silently meditating. In both action and belief Mitterrand certainly fits the profile of the synarchist. But remember that synarchy’s elite believed itself to be in direct contact with powerful non-human intelligences who effectively pulled the strings of those in power. Or perhaps Mitterrand was simply under the synarchist elite.

So… Nobody can pretend the journey from the Schuman Declaration to today’s EU has been untroubled. It has been repeatedly obstructed by those opposed to a federal Europe, and diverted by vested interests – political, economic and even criminal – seeking to turn it to their advantage. The whole thing simply can’t have been planned and directed exclusively by the synarchist elite. But on the other hand, it is undeniable that things have turned out how Saint-Yves and his followers would have wanted. And given that all the major steps along the way were the initiative of individuals with direct synarchist connections, it would equally be wrong to dismiss their influence on the EU’s creation. Of course, Saint-Yves’ vision did not end with the creation of the EU and the eurozone. They merely marked the beginning of the ultimate synarchist dream of a true United States of Europe. Building on those foundations, and bringing about even closer integration, depends on overcoming the individual nations’ interests, which has always presented a problem – unless the situation changes drastically. And that is precisely what is happening right now with the major crisis in the eurozone, which has brought the EU to the brink of make-or-break. Senior figures – including the European Commission President José Manuel Barroso – have declared that the only solution to the crisis and preventing it happening again is an even greater level of economic and political integration. The same conclusion has been reached by the likes of the powerful financier George Soros, who has called for a European central authority with greater powers over the member states. On the other hand, some believe that the crisis will be the downfall of the EU. And synarchists – no matter who or where they are – simply can’t let that happen.

Footnotes
1. Richard F. Kuisel, ‘The Legend of the Vichy Synarchy’, in French Historical Studies, spring 1970, 378.
2. André Ulmann and Henri Azeau, Synarchie et pouvoir (Julliard, 1968), 63.
3. Maurice Girodias, Une journée sur le terre (Éditions de la Différence, 1990), vol. I, 411.
4. The Pact was finally published in 1946 by Raoul Hussan, writing under the pseudonym Geoffrey de Charnay, in Synarchie: Panorama de 25 années d’activité occulte (Médicis).
5. Ulmann and Azeau, 64.
6. Girodias, vol. I, 149.
7. William L. Shirer, The Collapse of the Third Republic: An Enquiry into the Fall of France in 1940 (William Heinemann, 1970), 209.
8. See Shirer, 217-20.
9. Kuisel, 385.
10. Quoted in Jean-Raymond Tournoux, L’Histoire secrète (Plon, 1962), 173.

11. The allegation was made to journalist Pierre Péan, during his research for Une jeunesse française: François Mitterrand 1934-1947 (Fayard, 1994), see page 109.
12. Quoted in John Laughland, The Death of Politics: France under Mitterrand (Michael Joseph, 1994), 60.
13. Ulmann and Azeau, 116.
14. Writing in Action, 2 November 1945.
15. De Charnay, 69.
16. John Hellman, The Knight-Monks of Vichy France: Uriage, 1940-1945 (Liverpool University Press, 1997), 331.
17. Shirer, 218.
18. The report is reproduced in Ulmann and Azeau, pages 293-310. Ulmann was one of the Free French analysts, who worked alongside Mitterrand after his ‘defection’.
19. See, for example, Merry and Serge Bromberger, Jean Monnet and the United States of Europe(Coward-McCann, 1969).
20. Ulmann and Azeau, 63.
21. Marie Delarue, Un pharaon républicain (Jacques Grancher, 1999), 8.
22. Delarue, 50.

{Lynn Picknett & Clive Prince began their joint career with Turin Shroud: How Leonardo Da Vinci Fooled History and – eight books later – they have just published The Forbidden Universe. They are best known for their 1997 The Templar Revelation, which Dan Brown acknowledged as the primary inspiration for The Da Vinci Code. As a reward for their contribution they were given cameos in the movie (on the London bus). They also give talks to an international audience. Lynn & Clive both live in South London. Their website is www.picknettprince.com.}

BANKERS’ FASCISM
https://en.wikipedia.org/wiki/Executive_Intelligence_Review
http://www.american-buddha.com/shortdef.htm
http://wlym.com/archive/campaigner/8304.pdf
http://www.larouchepub.com/eiw/public/2003/eirv30n21-20030530/eirv30n21-20030530_040-the_mexico_case_the_fascist_phil.pdf
http://modernhistoryproject.org/mhp?Article=Synarchism#Synarchism
Synarchism: The Fascist Roots Of the Wolfowitz Cabal
by Jeffrey Steinberg / May 30, 2003

In 1922, Count Richard Coudenhove-Kalergi launched the Pan European Union, at a founding convention in Vienna, attended by more than 6,000 delegates. Railing against the “Bolshevist menace” in Russia, the Venetian Count called for the dissolution of all the nation-states of Western Europe and the erection of a single, European feudal state, modeled on the Roman and Napoleonic empires. “There are Europeans,” Coudenhove-Kalergi warned, who are “naïve enough to believe that the opposition between the Soviet Union and Europe can be bridged by the inclusion of the Soviet Union in the United States of Europe. These Europeans need only to glance at the map to persuade themselves that the Soviet Union in its immensity can, with the help of the [Communist] Third International, very quickly prevail over little Europe. To receive this Trojan horse into the European union would lead to perpetual civil war and the extermination of European culture. So long, therefore, as there is any will to survive subsisting in Europe, the idea of linking the Soviet Union with Pan Europe must be rejected. It would be nothing less than the suicide of Europe.”

Elsewhere, Coudenhove-Kalergi echoed the contemporaneous writings of British Fabian Roundtable devotees H.G. Wells and Lord Bertrand Russell, declaring: “This eternal war can end only with the constitution of a world republic…. The only way left to save the peace seems to be a politic of peaceful strength, on the model of the Roman Empire, that succeeded in having the longest period of peace in the west thanks to the supremacy of his legions.” The launching of the Pan European Union was bankrolled by the Venetian-rooted European banking family, the Warburgs. Max Warburg, scion of the German branch of the family, gave Coudenhove-Kalergi 60,000 gold marks to hold the founding convention. Even more revealing, the first mass rally of the Pan European Union in Berlin, at the Reichstag, was addressed by Hjalmar Schacht, later the Reichsbank head, Economics Minister and chief architect of the Hitler coup. A decade later, in October 1932, Schacht delivered a major address before another PanEuropa event, in which he assured Coudenhove-Kalergi and the others, “In three months, Hitler will be in power…. Hitler will create PanEuropa. Only Hitler can create PanEuropa.” According to historical documents, Italy’s Fascist dictator Benito Mussolini was initially skeptical about the PanEuropa idea, but was “won over” to the scheme, following a meeting with Coudenhove-Kalergi, during which, in the Count’s words, “I gave him a complete harvest of Nietzsche’s quotes for the United States of Europe…. My visit represented a shift in the behavior of Mussolini towards PanEuropa. His opposition disappeared.” At the founding congress of the Pan European Union in Vienna, the backdrop behind the podium was adorned with portraits of the movement’s leading intellectual icons: Immanuel Kant, Napoleon Bonaparte, Giuseppe Mazzini, and Friedrich Nietzsche.

Bankers’ Fascism
The pivotal role of Schacht in the Hitler coup and in the Pan European Union, highlights a critical dimension of the universal fascist scheme: the top-down role of the financial “overworld” and its banking technocrats. By all historical accounts, Schacht was the architect, in 1930, of the Bank for International Settlements (BIS), along with the Bank of England’s Montagu Norman. Historian Carroll Quigley, in his epic book, Tragedy and Hope—A History of the World in Our Time (New York: MacMillan Company, 1966), described the BIS scheme to establish a dictatorship over world finance: “The powers of financial capital had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent private meetings and conferences.

The apex of the system was to be the Bank for International Settlements in Basle, Switzerland, a private bank owned and controlled by the world’s central banks which were themselves private corporations. Each central bank, in the hands of men like Montagu Norman of the Bank of England, Benjamin Strong of the New York Federal Reserve Bank, Charles Rist of the Bank of France, and Hjalmar Schacht of the Reichsbank, sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world.” Quigley highlighted the role of Schacht’s closest ally in the BIS scheme, Bank of England Governor Norman, who headed the privately owned British institution for an unprecedented 24 years (1920-44). “Norman was a strange man,” Quigley reported, “whose mental outlook was one of successfully suppressed hysteria or even paranoia. He had no use for governments and feared democracy. Both of these seemed to him to be threats to private banking, and thus to all that was proper and precious in human life. Strong-willed, tireless, and ruthless, he viewed his life as a kind of cloak-and-dagger struggle with the forces of unsound money which were in league with anarchy and Communism.”

Montagu Norman and Hjalmar Schacht personified the banking overworld, that bankrolled and installed Hitler and the Nazis in power, in pursuit of their larger, universal fascist scheme. Even more damning were the profiles of Schacht and Norman and their role in the Hitler project, in The Hitler Book, by a Schiller Institute research team, headed by Helga Zepp-LaRouche (New York: New Benjamin Franklin House, 1984): “The BIS, nominally set up after the breakdown of ‘normal’ international financial relations in order to prevent a downward spiraling of international payments, in fact finished off the hapless Weimar Republic by its stern refusal to come to the help of a virtually bankrupt Germany in the crucial summer of 1931, after the Danat Bank collapse had brought the whole nation to its knees. Schacht, who had been a member of the original BIS team and was to return to its board from 1933 through 1938, had been campaigning since his 1930 resignation as head of the Reichsbank, for Anglo-American support for a takeover by the NSDAP [Nazi Party] and its leader, Herr Hitler. He had resigned on March 7, 1930 and the BIS was formally established in June.

In September, he was off to London and the United States, to ‘sell’ the Nazi option to the Anglo-American leadership, notably Bank of England governor and BIS director Montagu Norman, and the already influential Dulles brothers of Sullivan & Cromwell law firm, one of America’s most influential—and the attorneys for IG Farben, and many other large German companies and provincial governments. Schacht’s Hamburg friend and colleague, patrician Nazi Gerhard Westrick, ran the correspondent law firm to Dulles’s in Germany.” On March 16, 1933, a grateful Hitler brought Schacht back as head of the Reichsbank, explained The Hitler Book. A year later, Schacht was made Economics Minister. “Now, the BIS was going to help the Third Reich—by 1939 it had no less than several hundred million Swiss gold francs invested in Germany. On the BIS board were Baron Kurt von Schröder, by now a general in the SS Death’s Head Brigade; Dr. Hermann Schmitz of IG Farben—whom Schacht had trained at the imperial economics ministry from 1915 on—and, later, Hitler’s two personal appointees, Walter Funk and Emil Puhl of the Reichsbank.”

File: ‘Synarchist/Nazi-Communist’
The larger universal fascist schema, into which the Norman-Schacht “Hitler project” fit, was well known to leading American intelligence, military, and diplomatic figures of the Franklin Roosevelt era, who maintained exhaustive files under such headings as “Synarchist/Nazi-Communist.” U.S. government archives from the FDR era, which were made available to EIR researchers, feature extensive intelligence reports on the international fascist plots, from the files of the U.S. State Department; U.S. Army Intelligence and Navy Intelligence; and the Coordinator of Information (COI), and its successor, the Office of Strategic Services (OSS).

These files are of immediate relevance today, given the ongoing coup d’état in Washington by the disciples of Leo Strauss, Alexandre Kojève, and Carl Schmitt inside the George W. Bush Administration. Kojève and Schmitt were leading figures in the wartime “Synarchist” conspiracy, and they personified the perpetuation of that universal fascist plan and apparatus into the postwar period. Already, major American and European newspapers have identified such putschists as Paul Wolfowitz, Abram Shulsky, William Kristol, John Ashcroft, Steve Cambone, and Gary Schmitt as the offspring of the late University of Chicago Prof. Leo Strauss; Strauss, in turn, was the life-long collaborator and promoter of Nazi jurist Carl Schmitt, official Nazi philosopher and Nietzsche revivalist Martin Heidegger, and French Synarchist Alexandre Kojève—all unabashed advocates of tyranny as the only appropriate form of government. Although the May 4 Sunday New York Times feature off-handedly mentions Kojève as Strauss’s colleague, without further identification, all of the major media coverage has been sanitized of any discussion of the overtly fascist/Synarchist roots of the Straussian creed. Nevertheless, there are growing indications that some elements within the U.S. political institutions—particularly the military and intelligence communities, which comprise an important element of what Lyndon LaRouche refers to as “the institution of the U.S. Presidency”—are waking up to the cruel reality that a small group of universal fascists has seized the reins of power and is steering an ill-equipped President George W. Bush, the United States, and the rest of the world into a maelstrom of perpetual war and chaos. A timely review of the history of the 20th-Century Synarchists is, therefore, in order, to enable those political circles already shocked into action, to understand the nature of the enemy, and exploit the greatest weakness of these Straussian would-be putschists—their open embrace of universal fascism, otherwise known as “Synarchism.”

The Langer Study
As EIR reported on May 9 (“Dick Cheney Has a French Connection—To Fascism”), in 1947, OSS veteran and Harvard Prof. William L. Langer assembled the official history of the Roosevelt Administration’s dealings with Vichy France. Our Vichy Gamble was based on an exhaustive review of wartime archives, buttressed by interviews with top American officials, including OSS head Gen. William Donovan and President Franklin Roosevelt himself. Langer minced no words in discussing the Synarchist circles in Vichy France. Referring to Adm. Jean François Darlan, who, along with Pierre Laval, was among the most notorious of the Vichy collaborationists with the Nazis, Langer wrote: “Darlan’s henchmen were not confined to the fleet. His policy of collaboration with Germany could count on more than enough eager supporters among French industrial and banking interests—in short, among those who even before the war, had turned to Nazi Germany and had looked to Hitler as the savior of Europe from Communism…. These people were as good fascists as any in Europe…. Many of them had long had extensive and intimate business relations with German interests and were still dreaming of a new system of ‘synarchy,’ which meant government of Europe on fascist principles by an international brotherhood of financiers and industrialists.” EIR is in possession of many of the documents that Langer reviewed, in preparing Our Vichy Gamble.

They offer an in-depth study of a fascist apparatus, whose European-wide tentacles extended into France, Germany, Britain, Spain, Italy, the Netherlands—and, across the Atlantic, inside the United States. One particularly revealing document, prepared by the Coordinator of Information in November 1940, focussed on the Synarchist strategy towards England and America. The document was called, “Synarchie and the Policy of the Banque Worms Group.” The unnamed author began, “In recent reports there have been several references to the growing political power of the Banque Worms group in France, which includes amongst its members such ardent collaborationists as Pucheu, Benoist-Mechin, Leroy-Ladurie, Bouthillier, and representatives of big French industrial organizations.” Under the subtitle, “Similarity of aims of ‘Synarchie’ and Banque Worms,” the report continued, “The reactionary movement known as ‘Synarchie’ has been in existence in France for nearly a century. Its aim has always been to carry out a bloodless revolution, inspired by the upper classes, aimed at producing a form of government by ‘technicians,’ under which home and foreign policy would be subordinated to international economy.

The aims of the Banque Worms group are the same as those of ‘Synarchie,’ and the leaders of the two groups are, in most cases, identical.” The “Banque Worms group” was closely allied with the Lazard banking interests in Paris, London, and New York, and with Royal Dutch Shell’s Henri Deterding. Hippolyte Worms, the bank’s founder, was one of 12 initial Synarchist Movement of Empire (SME) members, according to other French police and intelligence reports. The report itemized the aims of the Synarchists, as of August 1940: “to check any new social schemes which might tend to weaken the power of the international financiers and industrialists; to work for the ultimate complete control of all industry by international finance and industry; to protect Jewish and Anglo-Saxon interests; … to take advantage of Franco-German collaboration to conclude a series of agreements with German industries, thereby establishing a solid community of interests between French and German industrialists, which will tend to strengthen the hands of international finance and industry; … to effect a fusion with Anglo-Saxon industry after the war.” The author of the COI study reported, “There is reason to believe that both [Hermann] Göring and Dr. [Walther] Funk are in sympathy with these aspirations,” and that “Some headway is claimed to have been made in securing the adhesion of big U.S. industry to the movement.”

Beaverbrook and Hoare
The COI study’s segment regarding “Policy in regard to Great Britain,” elaborated the following Synarchist plan: “To bring about the fall of the Churchill Government by creating the belief in the country that a more energetic government is needed to prosecute the war; it is recognized that an effective means of creating suspicion of the Government’s efficiency would be to induce the resignation of Lord Beaverbrook; to bring about the formation of a new Government including Sir Samuel Hoare, Lord Beaverbrook and Mr. Hore-Belisha. (Note. The source has added that in the Worms group it is believed that those circles in Great Britain who are favorably disposed to their plan, are most critical of Mr. Churchill, Lord Halifax and Captain Margesson.); through the medium of Sir Samuel Hoare to bring about an agreement between British industry and the Franco-German ‘bloc'; to protect Anglo-Saxon interests on the continent; to reach an agreement for the cessation of the reciprocal bombing of industrial centers. (Note. The source has added that Göring is reputed to have signified his entire approval of this project.)” The naming of Lord Beaverbrook and Sir Samuel Hoare, two leading figures in the British Roundtable group, as Synarchist collaborators is of great significance, indicating that American intelligence, from no later than 1940, was tracking the high-level British involvement in the scheme for a postwar universal fascist “Europe of the oligarchs,” along precisely the lines spelled out in Count Coudenhove-Kalergi’s “Synarchist” manifesto, founding the Pan European Union. Indeed, other U.S. intelligence wartime documents identified the PEU as a project of the European Synarchist secret brotherhood.

The Synarchist Movement of Empire (SME), according to various accounts in the wartime U.S. files, was founded in 1917 or 1922, and the first two major “projects” of the Synarchists were Mussolini’s March on Rome and the launching of the Pan Europa movement. Back on the British front: Sir Samuel Hoare was a leading figure in British intelligence, having been posted to Russia during the period of the Bolshevik Revolution, where he had a personal hand in the assassination of Grigori Rasputin, after Rasputin had warned that Russian participation in World War I would surely lead to the fall of the Romanovs. Hoare was the leading British military intelligence case-officer for instigating the overthrow of the Tsar and the Russian Revolution.

He personified the upper echelons of what U.S. intelligence files characterized as the “Synarchist/Nazi-Communist” group. In his capacity as Foreign Secretary in 1935, he had negotiated the Hoare-Laval agreement, by which Great Britain and France mutually accepted Mussolini’s conquest by invasion of Abyssinia, a major act of appeasement. He later served as British ambassador to Francisco Franco’s Spain, and, according to several biographical accounts, remained secretly on Lord Beaverbrook’s payroll as a policy advisor. Hoare, later “Lord Templewood,” was also a leading British promoter of Frank Buchman and the Moral Rearmament Movement, the antecedent to Rev. Sun Myung Moon’s Unification Church (see EIR, Dec. 20, 2002). The case of Lord Beaverbrook (Max Aitken) has even more profound and enduring implications, given that two of the leading financial-political propagandists for today’s neo-conservative revolution in Washington—press magnates Lord Conrad Black and Rupert Murdoch—are Beaverbrook protégés.

The Australian Murdoch, on graduating Oxford, did an apprenticeship at Beaverbrook’s London Daily Express, which Murdoch referred affectionately to as “Beaverbrook’s brothel.” For Black, the connection ran deeper—through the wartime British secret intelligence high command. Conrad Black’s father, George Montagu Black, worked directly under the Beaverbrook chain of command during World War II, when Beaverbrook was Minister of Aircraft Production, and when Black and Edward Plunkett Taylor ran the Canadian front company War Supplies, Ltd. out of the Willard Hotel in Washington, coordinating all British-American-Canadian military procurement arrangements. The $1.3 billion garnered by Taylor and Black from their wartime “private” arms deals provided the seed money for G.M. Black’s postwar launching of the Argus Corp., which, today, is the Hollinger Corp. media cartel of Conrad Black.

Beaverbrook’s transformation, from a leading promoter of an Anglo-German alliance following Hitler’s takeover, to a leading war cabinet official, following Hitler’s attack on Britain, was nothing short of miraculous. In 1935, when Hoare had conducted the secret negotiations with Laval, Beaverbrook had accompanied the Foreign Secretary on the trip and conducted his own back-channel work to assure positive media coverage of the deal in both England and France. That year, Beaverbrook traveled to Rome and Berlin for personal meetings with Mussolini and Hitler. A year later, Beaverbrook was the guest of Hitler’s Foreign Minister Joachim von Ribbentrop, at the Munich Olympic Games. But the most famous part that Beaverbrook played in the Hitler saga, had to do with the 1933 Reichstag fire—the arson attack on the Weimar Republic’s parliament—which consolidated Hitler’s death grip on absolute power.

Beaverbrook had posted a trusted aide, Sefton Delmer, in charge of his Daily Express press bureau in Berlin, and Delmer had become a confidant of Hitler, traveling with him on the campaign trail during the 1933 elections. Delmer was one of the first “journalists” to arrive as the Reichstag burned, and his dispatch from the scene—complete with exclusive interviews with Hitler, Göring, and others—established the cover for the actual Nazi authors of the terror attack, which sealed Hitler’s dictatorship. Delmer, in a 1939 article recounting the incident, stuck to his story, which countered the majority of the world media coverage, and blamed the fire on a communist—not on the Nazis. Beaverbrook—even after his “Damascus road conversion” to war cabinet minister—retained his ties to the Nazi machine. When Nazi leader Rudolph Hess parachuted into Scotland, in a final vain effort to maintain the Anglo-Nazi alliance against the Soviet Union, Beaverbrook arranged a private prison interview with Hess. Details of the session are still sketchy, but one quote to emerge from the meeting, was Hess telling Beaverbrook: “Hitler likes you a great deal.”

‘Synarchism’ Defined
Among the thousands of documents that EIR obtained from the U.S. wartime archives was an 18-page French military intelligence report, summarizing a 100-page dossier on the French Synarchist groups, dated July 1941. The report dealt with the Synarchist Movement of Empire (SME), the Synarchist Revolutionary Convention (SRC) and the Secret Committee of Revolutionary Action (SCRA), the military leadership arm of the SME, also known as the “Cagoulards” (the “hooded ones”). The report provided a brief history: “The Synarchist movement is an international movement born after the Versailles Treaty, which was financed and directed by certain financial groups belonging to the top international banking community. Its aim is essentially to overthrow in every country, where they exist, the parliamentary regimes which are considered insufficiently devoted to the interests of these groups and therefore, too difficult to control because of the number of persons required to control them. “SME proposes therefore to substitute them by authoritarian regimes more docile and more easily manueverable. Power would be concentrated in the hands of the CEOs of industry and in designated representatives of chosen banking groups for each country.

In a word, the idea is to give to each country a political constitution and an appropriate national economic structure organized for the following purposes: “1. Place the political power directly into the hands of chosen people and eliminate all intermediaries. 2. Establish a maximum concentration of industries and suppress all unwarranted competition. 3. Establish an absolute control of prices of all goods (raw materials, semi-finished or finished goods). 4. Create judicial and social institutions that would prevent all extremes of action.” The dossier reported that, following failed Cagoulard insurrections in 1934 and 1937, the SME infiltrated all the economic and related ministries of the French government, conducted sabotage from within the regime, and set the basis for the Vichy government of 1940, which was dominated, from top to bottom, by Synarchist secret society members. The report named 40 top officials of the government of Marshal Henri Philippe Pétain, who were all SME members. The dossier repeatedly emphasized that the French SME was but one component of an international Synarchist apparatus, “organized and financed in all countries by certain elements of industrial CEOs and high banking circles. Its objective on the international level is to subvert all of the democratic regimes in the world, and substitute them with stronger governments, more docile and whose leaders of command in each nation are centralized in the hands of a number of affiliates belonging to big business and international banking interests which coordinate their activities around the world.” In France, under the Vichy regime, noted the dossier, “the main administrations of the country, have become the arms of Bank Worms whose administrative council controls all of the top administrators of the state.”

The Synarchists did not concentrate all their efforts on infiltrating and controlling the Vichy regime. A U.S. military intelligence report, dated July 27, 1944, from the military attaché in Algiers, warned of Synarchist penetration of the upper echelons of the Free French government of Gen. Charles de Gaulle, headquartered in Algeria. “Some of the oldest and formerly most faithful supporters of General de Gaulle are worried by what they call a tendency to let ‘Synarchism’ penetrate even the highest brackets of the Algiers Administration,” the report began. “It is believed that General de Gaulle up to recently, opposed Synarchism, which is a strongly reactionary movement, financed by the Haute Banque. He has even ordered a confidential study to be made on the subject, a copy of which has been seen by American officers.” The report concluded, “If it is a fact that many individuals who are holding positions of importance in the cabinet and the immediate entourage of General de Gaulle, are also closely associated with political ideas alien to the program which de Gaulle and his government publicly endorse, then far-reaching political inferences may be drawn.”

Of course, a decade later, leading wartime “Gaullist” Jacques Soustelle would launch the Secret Army Organization (OAS), which would be responsible for repeated assassination attempts against de Gaulle, and would be implicated in the Permindex assassination of President John F. Kennedy. While it is not certain that Soustelle was a wartime member of the Synarchist plot, it is certain, from French and American government records, that one leading Synarchist operative infiltrated into the de Gaulle Free French camp was Robert Marjolin, one of Alexandre Kojève’s prize student/protégés of his 1933-39 courses on Hegel, Nietzsche, and the “end of history.” Marjolin became Minister of Economy in the first de Gaulle postwar government, and he immediately brought Kojève into the ministry.

The Cult of Napoleon
At its core, the Synarchist international—like its front group Pan European Union—sought to create a one-world tyranny, modeled on the reign of Napoleon Bonaparte. The first “Synarchist” text was written in the 1860s by Joseph Alexandre Saint-Yves d’Alveydre (1842-1909), an occultist and follower of Napoleon Bonaparte’s own mystical advisor, Antoine Fabre d’Olivet (1767-1825). Fabre d’Olivet had started out as a leading member of the Jacobins, participating personally in the foiled assassination plot against King Louis XVI in 1789. He later served as a top official of the Interior and War Ministries under Napoleon Bonaparte. His occult writings about “purgative violence” and the “will to power”—antecedents of the works of Nietzsche—were adopted by Saint-Yves d’Alveydre, who launched the idea of Synarchism as a counter to the anarchy that had destabilized all of Europe, from 1648. Saint-Yves’ successor, Gerard Vincent Encausse (“Papus”), founded the Saint-Yves School of Occult Sciences, and began a recruiting drive for a secret society, which he called the Synarchy Government.

In his 1894 book Anarchie, Indolence & Synarchie, Papus spelled out an ambitious scheme to recruit all of the leaders of industry, commerce, finance, the military, and academia, to a single power scheme, aimed at destroying the “internal microbe” of society, anarchy. Both Saint-Yves and Papus envisioned a global Synarchist empire, divided into five geographic areas: 1. the British Empire; 2. Euro-Africa; 3. Eurasia; 4. Pan-America; 5. Asia. Indeed, Alexandre Kojève is identified in Russian sources as a leader of the so-called “Eurasians,” a group of Russian emigrés in the 1920s Berlin and Paris, led by Sir Samuel Hoare’s Guchkov and tied into the Soviet secret service project called “the Trust.” The “Eurasians” welcomed the Russian Revolution as a purgative force to wipe out corrupt Western civilization. Kojève’s own cosmology of great tyrants counted Josef Stalin and Adolf Hitler as second only to Napoleon, in achieving the “end of history” goal of a true global tyranny.

Strauss, Kojève, Schmitt, and Schacht
While none of the American archive documents reviewed to date by EIR identify Nazi jurist Carl Schmitt as a Synarchist, circumstantial evidence points to that conclusion. Schmitt was an emissary to Spain, Portugal, France, and Italy, during the height of fascism, turning out a series of juridical documents, justifying the jackboot tyrannies. Schmitt was a protected asset of Göring, the leading Synarchist figure in Nazi Germany. Like the banker Hjalmar Schacht, Schmitt was cleared of war crimes by the Nuremberg Tribunals. In effect, as documented in The Hitler Book, Schacht blackmailed the Tribunal, by aggressively asserting that he was only acting on behalf of the international financial establishment, represented by the Bank for International Settlements, in his incarnation as a top Nazi official. If backed against a wall, he threatened, he would provide evidence of the international financial cabal behind the “Hitler project.” Schacht was acquitted, over the strenuous objections of both the American and Soviet judges. In effect, the perpetrators of the Nazi Holocaust were brought to justice at Nuremberg, while the architects of the larger Synarchist scheme, like Schacht and Leo Strauss’ mentor Carl Schmitt, were given a safe conduct, and, through the efforts of postwar occupation figures like John J. McCloy and Gen. William Draper, were vetted for future service. A final note: In 1955, Schmitt was corresponding with Kojève, arranging for the Paris-based Russian emigré to address the Düsseldorf industrialists’ association—which had been a focal point of Franco-German “Synarchist” collaboration between the Nazi and Vichy governments—and meet, during that visit, with Schmitt’s close friend Schacht. It was this Kojève who maintained the closest collaboration with Leo Strauss, and who promoted his theories of purgative violence and universal tyranny with such leading Strauss disciples as Allan Bloom (the mentor of Deputy Defense Secretary Paul Wolfowitz) and Francis Fukuyama. This Synarchist stew remains Vice President Dick Cheney’s gang’s “French Connection.”

http://www.forbes.com/sites/jamesgruber/2013/05/26/central-bankers-rule-the-world/
http://www.salon.com/2014/11/10/loretta_lynchs_wall_street_friends_what_you_should_know_about_ag_nominees_finance_past/
http://www.yesmagazine.org/new-economy/economic-security-beyond-jobs
http://www.nysun.com/national/fixing-the-fed-could-emerge-as-priority/88915/

http://www.yesmagazine.org/blogs/david-korten/when-bankers-rule-the-world
http://www.globalresearch.ca/secretive-group-of-international-bankers-to-form-a-world-government/18940
http://www.globalresearch.ca/bankers-rule-city-of-london-vs-scottish-independence/5402548
http://www.washingtonsblog.com/2014/04/wars-bankers-wars.html

http://www.economist.com/news/essays/21596796-democracy-was-most-successful-political-idea-20th-century-why-has-it-run-trouble-and-what-can-be-do
http://www.vox.com/2014/4/18/5624310/martin-gilens-testing-theories-of-american-politics-explained
http://www.telegraph.co.uk/news/worldnews/northamerica/usa/10769041/The-US-is-an-oligarchy-study-concludes.html
http://www.telegraph.co.uk/news/worldnews/northamerica/usa/10731390/Why-Americas-poisonous-politics-makes-Market-Leninism-an-attractive-alternative.html

PLUS INTEREST
http://www.publicbankinginstitute.org/public_banking_and_corporate_news_when_big
_media_struggles_to_understand_local_economic_autonomy

http://ellenbrown.com/2014/11/19/wsj-reports-bank-of-north-dakota-outperforms-wall-street/
http://truth-out.org/news/item/12605-its-the-interest-stupid-why-bankers-rule-the-world
It’s the Interest, Stupid! Why Bankers Rule the World
by Ellen Brown  /  08 November 2012

In the 2012 edition of Occupy Money, Professor Margrit Kennedy writes that a stunning 35 percent to 40 percent of everything we buy goes to interest. This interest goes to bankers, financiers, and bondholders, who take a 35 percent to 40 percent cut of our GDP. That helps explain how wealth is systematically transferred from Main Street to Wall Street. The rich get progressively richer at the expense of the poor, not just because of “Wall Street greed,” but because of the inexorable mathematics of our private banking system. This hidden tribute to the banks will come as a surprise to most people, who think that if they pay their credit card bills on time and don’t take out loans, they aren’t paying interest. This, says Dr. Kennedy, is not true. Tradesmen, suppliers, wholesalers and retailers all along the chain of production rely on credit to pay their bills. They must pay for labor and materials before they have a product to sell, and before the end-buyer pays for the product 90 days later. Each supplier in the chain adds interest to its production costs, which are passed on to the ultimate consumer. Dr. Kennedy cites interest charges ranging from 12 percent for garbage collection, to 38 percent for drinking water, to 77 percent for rent in public housing in her native Germany. Her figures are drawn from the research of economist Helmut Creutz, writing in German and interpreting Bundesbank publications. They apply to the expenditures of German households for everyday goods and services in 2006; but similar figures are seen in financial sector profits in the United States, where they composed a whopping 40 percent of US business profits in 2006. That’s more than five times the 7 percent made by the banking sector in 1980. Bank assets, financial profits, interest and debt have all been growing exponentially.

110812brown 1
(Source: Adapted from Of Two Minds)

Exponential growth in financial sector profits has occurred at the expense of the non-financial sectors, where incomes have at best grown linearly.

110812brown 2(Source: Consider the Evidence)

By 2010, 1 percent of the population owned 42 percent of financial wealth, while 80 percent of the population owned only 5 percent of financial wealth. Dr. Kennedy observes that the bottom 80 percent pay the hidden interest charges that the top 10 percent collect, making interest a strongly regressive tax that the poor pay to the rich.

110812brown 3
(Source:
Who Rules America?
)

Exponential growth is unsustainable. In nature, sustainable growth progresses in a logarithmic curve that grows increasingly more slowly until it levels off (the red line in the first chart above). Exponential growth does the reverse: It begins slowly and increases over time, until the curve shoots up vertically (the chart below). Exponential growth is seen in parasites, cancers – and compound interest. When the parasite runs out of its food source, the growth curve suddenly collapses. People generally assume that if they pay their bills on time, they aren’t paying compound interest; but again, this isn’t true. Compound interest is baked into the formula for most mortgages, which comprises 80 percent of US loans. If credit cards aren’t paid within the one-month grace period, interest charges are compounded daily; and even if you pay within the grace period, you are paying 2 percent to 3 percent for the use of the card, since merchants pass their merchant fees on to the consumer. Debit cards, which are the equivalent of writing checks, also involve fees. Visa-MasterCard and the banks at both ends of these interchange transactions charge an average fee of 44 cents per transaction - though the cost to them is about 4 cents. Even if you pay cash, you are liable to be paying an additional 2 percent to 3 percent, since, until recently, merchants were not allowed to give discounts for cash payments. A July 2012 settlement with Visa and MasterCard, however, allowed merchants in the settlement to add a surcharge for credit card use.

How to Recapture the Interest: Own the Bank
The implications of all this are stunning. If we had a financial system that returned the interest collected from the public directly to the public, 35 percent could be lopped off the price of everything we buy. That means we could buy three items for the current price of two, and that our paychecks could go 50 percent farther than they go today. Direct reimbursement to the people is a hard system to work out, but there is a way we could collectively recover the interest paid to banks. We could do it by turning the banks into public utilities and their profits into public assets. Profits would return to the public, either reducing taxes or increasing the availability of public services and infrastructure. By borrowing from their own publicly-owned banks, governments could eliminate their interest burden altogether. This has been demonstrated elsewhere with stellar results, including in Canada, Australia, and Argentina, among other countries. In 2011, the US federal government paid $454 billion in interest on the federal debt – nearly one-third the total $1.1 trillion ($1,100 billion) paid in personal income taxes that year. If the government had been borrowing directly from the Federal Reserve – which has the power to create credit on its books and now rebates its profits directly to the government – personal income taxes could have been cut by a third. Borrowing from its own central bank interest-free might allow a government to eliminate its national debt altogether. In Money and Sustainability: The Missing Link, Bernard Lietaer and Christian Asperger, et al., cite the example of France. The treasury borrowed interest-free from the nationalized Banque de France from 1946 to 1973. The law then changed to forbid this practice, requiring the treasury to borrow instead from the private sector. The authors include a chart showing what would have happened if the French government had continued to borrow interest-free, versus what did happen. Rather than dropping from 21 percent to 8.6 percent of GDP, the debt shot up from 21 percent to 78 percent of GDP. “No ‘spendthrift government’ can be blamed in this case,” write the authors. “Compound
interest explains it all!”

More than Just a Federal Solution
It is not just federal governments that could eliminate their interest charges in this way. State and local governments could do it too. Consider California. At the end of 2010, it had general obligation and revenue bond debt of $158 billion. Of this, $70 billion, or 44 percent, was owed for interest. If the state had incurred that debt to its own bank – which then returned the profits to the state – California could be $70 billion richer today. Instead of slashing services, selling off public assets, and laying off employees, it could be adding services and repairing its decaying infrastructure. The only US state to own its own depository bank today is North Dakota. North Dakota is also the only state to have escaped the 2008 banking crisis, sporting a sizable budget surplus every year since then. It has the lowest unemployment rate in the country, the lowest foreclosure rate, and the lowest default rate on credit card debt. Globally, 40 percent of banks are publicly owned, and they are concentrated in countries that also escaped the 2008 banking crisis.

These are the BRIC countries – Brazil, Russia, India, and China – which are home to 40 percent of the global population. The BRICs grew economically by 92 percent in the last decade, while Western economies were floundering. Cities and counties could also set up their own banks; but in the US, this model has yet to be developed. In North Dakota, meanwhile, the Bank of North Dakota underwrites the bond issues of municipal governments, saving them from the vagaries of the “bond vigilantes” and speculators, as well as from the high fees of Wall Street underwriters and the risk of coming out on the wrong side of interest rate swaps required by the underwriters as “insurance.

“One of many cities crushed by this Wall Street “insurance” scheme is Philadelphia, which has lost $500 million on interest swaps alone. The complicated way in which the swaps work was explained in an earlier article here. Last week, the Philadelphia City Council held hearings on what to do about these lost revenues, which have gone directly into the coffers of Wall Street banks. In an October 30 article titled “Can Public Banks End Wall Street Hegemony?” Willie Osterweil discussed a solution presented at the hearings in a fiery speech by Mike Krauss, a director of the Public Banking Institute. Krauss’ solution was to do as Iceland did: Just walk away. He proposed “a strategic default until the bank negotiates at better terms.” Osterweil called it “radical,” since the city would lose it favorable credit rating. But Krauss had a solution to that problem: the city could form its own bank, and use it to generate credit from public revenues just as Wall Street banks do now. “The crux of Krauss’ argument, and most radical of all, is for the creation of a public bank,” wrote Osterweil, which “will keep the taxes and other financial assets of the people … circulating in the city, by leveraging them to provide the sustainable and affordable credit required in a modern economy to power locally directed economic development and jobs creation.” It is a radical solution whose time has come. Public banking may be a radical solution, but it is also an obvious one. This is not rocket science. By developing a public banking system, governments can keep the interest and reinvest it locally. According to Kennedy and Creutz, that means public savings of 35 percent to 40 percent. Costs can be reduced across the board; taxes can be cut or services can be increased; and market stability can be created for governments, borrowers and consumers. Banking and credit can become public utilities, feeding the economy rather than feeding off it.

the DEEP STATE (excerpts)
http://peterdalescott.net/q.html
http://www.dotnews.com/2013/suspicious-fire-kennedy-library-remains-under-investigation
http://whowhatwhy.com/2014/06/29/carlyle-groups-latest-acquisition-the-jfk-library/
http://whowhatwhy.com/2014/10/26/the-deep-state-and-the-bias-of-official-history-2/
http://www.lewrockwell.com/2014/02/peter-dale-scott/the-deep-state/
http://japanfocus.org/-Peter_Dale-Scott/4090
The State, the Deep State, and the Wall Street Overworld  /  The Asia-Pacific Journal
by Peter Dale Scott  / March 13, 2014

In the last decade it has become more and more obvious that we have in America today what the journalists Dana Priest and William Arkin have called

two governments: the one its citizens were familiar with, operated more or less in the open: the other a parallel top secret government whose parts had mushroomed in less than a decade into a gigantic, sprawling universe of its own, visible to only a carefully vetted cadre – and its entirety…visible only to God.1

And in 2013, particularly after the military return to power in Egypt, more and more authors referred to this second level as America’s “deep state.”2 Here for example is the Republican analyst Mike Lofgren:

There is the visible government situated around the Mall in Washington, and then there is another, more shadowy, more indefinable government that is not explained in Civics 101 or observable to tourists at the White House or the Capitol. The former is traditional Washington partisan politics: the tip of the iceberg that a public watching C-SPAN sees daily and which is theoretically controllable via elections. The subsurface part of the iceberg I shall call the Deep State, which operates according to its own compass heading regardless of who is formally in power.3

At the end of 2013 a New York Times Op-Ed noted this trend, and even offered a definition of the term that will work for the purposes of this essay:

DEEP STATE n. A hard-to-perceive level of government or super-control that exists regardless of elections and that may thwart popular movements or radical change. Some have said that Egypt is being manipulated by its deep state.4

The political activities of the deep state are the chief source and milieu of what I have elsewhere called “deep politics:” “all those political practices and arrangements, deliberate or not, which are usually repressed rather than acknowledged.”5

Others, like Tom Hayden, call the deep state a “state within the state,” and suggest it may be responsible for the failure of the Obama administration to follow the policy guidelines of the president’s speeches:

We have seen evidence of a “state within the state” before, going back as far as the CIA’s operations against Cuba. In Obama’s time, the president correctly named the 2009 coup in Honduras a “coup”, and then seemed powerless to prevent it.6

This development of a two-level or dual state has been paralleled by two other dualities: the increasing resolution of American society into two classes – the “one percent” and the “ninety-nine percent” – and the bifurcation of the U.S. economy into two aspects: the domestic, still subject to some governmental regulation and taxation, and the international, relatively free from governmental controls.7

All three developments have affected and intensified each other – particularly since the Reagan Revolution of 1980, which saw American inequality of wealth cease to diminish and begin to increase.8 Thus for example we shall see how Wall Street – the incarnation of the “one percent” – played a significant role in increasing the deep state after World War Two, and how three decades later the deep state played a significant role in realigning America for the Reagan Revolution.In earlier books I have given versions of this America-centered account of America’s shift into empire and a deep state. But another factor to be mentioned is the shift of global history towards an increasingly global society dominated by a few emergent superpowers. This trend was accelerated after the Industrial Revolution by new technologies of transport, from the railroad in the 19th century to the jet plane and space travel in the 20th.9 In the fallout from this rearrangement we must include two world wars, as a result of which Britain ceased to act as the dominant superpower it had been since Napoleon. Not surprisingly, the Soviet Union and the United States subsequently competed in a Cold War to fill the gap. It  was not however predetermined that the Cold War would be as thuggish and covertly violent as for decades it continued to be. For that we should look to more contingent causes on both sides of the Iron Curtain – starting with the character of Stalin and his party but also including the partly responsive development of the American deep state.

The Deep State, The Shadow Government and the Wall Street Overworld
The “deep state” was defined by the UK newsletter On Religion as “the embedded anti-democratic power structures within a government, something very few democracies can claim to be free from.”10 The term originated in Turkey in 1996, to refer to U.S.-backed elements, primarily in the intelligence services and military, who had repeatedly used violence to interfere with and realign Turkey’s democratic political process. Sometimes the definition is restricted to elements within the government (or “a state-within-the state”), but more often in Turkey the term is expanded, for historical reasons, to include “members of the Turkish underworld.”11 In this essay I shall use “deep state” in the larger sense, to include both the second level of secret government inside Washington and those outsiders powerful enough, in either the underworld or overworld, to give it direction. In short I shall equate the term “deep state” with what in 1993 I termed a “deep political system:” “ one which habitually resorts to decision-making and enforcement procedures outside as well as inside those publicly sanctioned by law and society.”12 Like myself, Lofgren suggests an ambiguous symbiosis between two aspects of the American deep state:

1)  the Beltway agencies of the shadow government, like the CIA and NSA, which have been instituted by the public state and now overshadow it, and

2)  the much older power of Wall Street, referring to the powerful banks and law firms located there.

In his words,

It is not too much to say that Wall Street may be the ultimate owner of the Deep State and its strategies, if for no other reason than that it has the money to reward government operatives with a second career that is lucrative beyond the dreams of avarice – certainly beyond the dreams of a salaried government employee.13

I shall argue that in the 1950s Wall Street was a dominating complex. It included not just banks and oil firms but also the oil majors whose cartel arrangements were successfully defended against the U.S. Government by the Wall Street law firm Sullivan and Cromwell, home to the Dulles brothers. This larger complex is what I mean by the Wall Street overworld.

http://www.nomiprins.com/presidents-bankers

The Long History of the Wall Street Overworld
Lofgren’s inclusion of Wall Street is in keeping with Franklin Roosevelt’s observation in 1933 to his friend Col. E.M. House that “The real truth … is, as you and I know, that a financial element in the larger centers has owned the Government ever since the days of Andrew Jackson.”14 FDR’s insight is well illustrated by the efficiency with which a group of Wall Street bankers (including Nelson Rockefeller’s grandfather Nelson Aldrich and Paul Warburg) were able in a highly secret meeting in 1910 to establish the Federal Reserve System – a system which in effect reserved oversight of the nation’s currency supply and of all America’s banks in the not impartial hands of its largest.15 The political clout of the quasi-governmental Federal Reserve Board (where the federal Treasury is represented but does not dominate) was clearly demonstrated in 2008, when Fed leadership secured instant support from the successive administrations of a Texan Republican president, followed by a Midwest Democratic one, for public money to rescue the reckless management of Wall Street banks: banks Too Big To Fail, and of course far Too Big To Jail, but not Too Big To Bail.16

Wall Street and the Launching of the CIA
Top-level Treasury officials, CIA officers, and Wall Street bankers and lawyers think alike because of the “revolving door” by which they pass easily from private to public service and back. In 1946 General Vandenberg, as Director of Central Intelligence (DCI), recruited Allen Dulles, then a Republican lawyer at Sullivan and Cromwell in New York, “to draft proposals for the shape and organization of what was to become the Central Intelligence Agency in 1947.” Dulles promptly formed an advisory group of six men, all but one of whom were Wall Street investment bankers or lawyers.17 Dulles and two of the six (William H. Jackson and Frank Wisner) later joined the agency, where Dulles proceeded to orchestrate policies, such as the overthrow of the Arbenz regime in Guatemala, that he had previously discussed in New York at the Council on Foreign Relations.18 There seems to be little difference in Allen Dulles’s influence whether he was a Wall Street lawyer or a CIA director. Although he did not formally join the CIA until November 1950, he was in Berlin before the start of the 1948 Berlin Blockade, “supervising the unleashing of anti-Soviet propaganda across Europe.”19 In the early summer of 1948 he set up the American Committee for a United Europe (ACUE), in support of what became by the early 1950s “the largest CIA operation in Western Europe.”20

The Deep State and Funds for CIA Covert Operations
Wall Street was also the inspiration for what eventually became the CIA’s first covert operation: the use of “over $10 million in captured Axis funds to influence the [Italian] election [of 1948].”21 (The fundraising had begun at the wealthy Brook Club in New York; but Allen Dulles, still a Wall Street lawyer, persuaded Washington, which at first had preferred a private funding campaign, to authorize the operation through the National Security Council and the CIA.)22 Dulles’s friend Frank Wisner then left Wall Street to oversee an enlarged covert operations program through the newly created Office of Policy Co-ordination (OPC).

Dulles, still a lawyer, campaigned successfully to reconstruct Western Europe through what became known as the Marshall Plan.23Together with George Kennan and James Forrestal, Dulles also “helped devise a secret codicil [to the Marshall Plan] that gave the CIA the capability to conduct political warfare. It let the agency skim millions of dollars from the plan.”24 This created one of the earlier occasions when the CIA, directly or indirectly, recruited local assets involved in drug trafficking. AFL member Irving Brown, the assistant of AFL official Jay Lovestone (a CIA asset), was implicated in drug smuggling activities in Europe, at the same time that he used funds diverted from the Marshall Plan to establish

a “compatible left” labor union in Marseilles with Pierre Ferri-Pisani. On behalf of Brown and the CIA, Ferri-Pisani (a drug smuggler connected with Marseilles crime lord Antoine Guerini), hired goons to shellack striking Communist dock workers.25

An analogous funding source for the CIA developed in the Far East: the so-called

“M-Fund,” a secret fund of money of enormous size that has existed in Japan [in 1991] for more than forty years. The Fund was established by the United States in the immediate postwar era for essentially the same reasons that later gave rise to the Marshall Plan of assistance by the U.S. to Western Europe, including the Federal Republic of Germany….. The M-Fund was used not only for the building of a democratic political system in Japan but, in addition, for all of the purposes for which Marshall Plan funds were used in Europe.26

For at least two decades the CIA lavishly subsidized right-wing parties in countries including Japan and Indonesia, possibly still using captured Axis funds.27 (One frequently encounters the claim that the source of the M-fund was gold looted by Japan during World War Two (“Yamashita’s gold”).28

As a general rule the CIA, rather than assimilating these funds into its own budget, appears to have left them off the books in the hands of cooperative allied powers – ranging from other U.S. agencies like the Economic Cooperation Administration (ECA. set up in 1948 to administer the Marshall Plan) to oil companies to powerful drug kingpins.29 The CIA never abandoned its dependency on funds from outside its official budget to conduct its clandestine operations. In Southeast Asia, in particular, its proprietary firm Sea Supply Inc., supplied an infrastructure for a drug traffic supporting a CIA-led paramilitary force, PARU.30 The CIA appears also to have acted in coordination with slush funds from various U.S. government contracts, ranging from the Howard Hughes organization to (as we shall see) the foreign arms sales of U.S. defense corporations like Lockheed and Northrop.31

{Peter Dale Scott, a former Canadian diplomat and English Professor at the University of California, Berkeley, is the author of Drugs Oil and WarThe Road to 9/11, and The War Conspiracy: JFK, 9/11, and the Deep Politics of War. His most recent book is American War Machine: Deep Politics, the CIA Global Drug Connection and the Road to Afghanistan. His website, which contains a wealth of his writings, is here.}

Notes
1 Dana Priest and William Arkin, Top Secret America: The Rise of the New American Security State (New York: Little Brown, 2011), 52.
2 E.g. Marc Ambinder and D.G. Grady, Deep State: Inside the Government Secrecy Industry (New York: Wiley, 2013); cf. John Tirman, “The Quiet Coup: No, Not Egypt. Here,” HuffingtonPost, July 9, 2013: “Now we know: the United States of America is partially governed by a deep state, undemocratic, secret, aligned with intelligence agencies, spying on friend and foe, lawless in almost every respect.”
3 Mike Lofgren, “A Shadow Government Controls America,” Reader Supported News, February 22, 2014.
4 Grant Barrett, “A Wordnado of Words in 2013,” New York Times, December 21, 2013.
5 Peter Dale Scott, Deep politics and the death of JFK (Berkeley: University of California Press, 1998), 7.
6Tom Hayden discussing the crisis in Venezuela,” Tikkun, February 25, 2014.

7 To take a single telling example, six of Sam Walton’s heirs are now reportedly wealthier than the bottom 30% of Americans, or 94.5 million people (Tim Worstall, “Six Waltons Have More Wealth Than the Bottom 30% of Americans,” Forbes, December 14, 2011). Cf. the devastating picture of a disintegrating America in George Packer, The Unwinding: An Inner History of the New America (New York: Farrar, Straus and Giroux, 2013).
8 See Kevin Phillips, The politics of rich and poor: wealth and the American electorate in the Reagan aftermath (New York: HarperCollins, 1991). Cf. John T. Stinson, The Reagan Legacy (Bloomington, IN: iUniverse, 2009), 146; Timothy Noah, The great divergence: America’s growing inequality crisis and what we can do about it (New York: Bloomsbury, 2012).
9 For the impact of railroads on expanded social awareness, see Benedict Anderson, Imagined communities: reflections on the origin and spread of nationalism (London: Verso, 1991).
10What is the Deep State?” On Religion [2013].
11 Gareth Jenkins, “Susurluk and the Legacy of Turkey’s Dirty War,” Terrorism Monitor, May 1, 2008; quoted in Peter Dale Scott, “9/11, Deep State Violence and the Hope of Internet Politics,” Global Research, June 11, 2008. For the Susurluk incident, see also Scott, American War Machine, 19-20, etc.
12 Scott, Deep Politics and the Death of JFK, xi-xii.
13 Lofgren, “ A Shadow Government Controls America.”
14 Quoted in Peter Dale Scott, The Road to 9/11: Wealth, Empire, and the Future of America, 1.

15 Forbes magazine founder Bertie Charles Forbes wrote six years later: “Picture a party of the nation’s greatest bankers stealing out of New York on a private railroad car under cover of darkness, stealthily riding hundred[s] of miles South, embarking on a mysterious launch, sneaking onto an island [the appropriately named Jekyll Island] deserted by all but a few servants, living there a full week under such rigid secrecy that the names of not one of them was once mentioned, lest the servants learn the identity and disclose to the world this strangest, most secret expedition in the history of American finance. I am not romancing; I am giving to the world, for the first time, the real story of how the famous Aldrich currency report, the foundation of our new currency system, was written” (B.C. Forbes, Leslie’s Weekly, October 19, 1916; in T. Cushing Daniel, Real money versus false money-bank credits; the most important factor in civilization and least understood by the people [Washington, D.C., The Monetary educational bureau, 1924], 169; cf. B.C. Forbes, Men who are making America [New York: Forbes Publishing Co., 1922], 398; cf. G. Edward Griffin, The Creature from Jekyll Island: A Second Look at the Federal Reserve [Westlake Village, CA: American Media, 1994]). Paul Warburg later wrote that “Though eighteen years have since gone by, I do not feel free to give a description of this most interesting conference, concerning which Senator Aldrich pledged all participants to secrecy” (Paul Warburg, The Federal Reserve System: Its Origin and Growth [New York, Macmillan, 1930], ZZ).

16 Congress was persuaded to provide perfunctory support of the bailout, under an alleged mysterious threat of martial law. See Peter Dale Scott, “Martial Law, the Financial Bailout, and War,” Global Research, January 8, 2009; reprinted in  Michel Chossudovsky and Andrew Gavin Marshall, eds., The Global Economic Crisis: The Great Depression of the XXI Century (Montreal, Global Research Publishers. Centre for Research on Globalization, 2010), 219-40; Llewellyn H. Rockwell, Jr., “Sen. Inhofe: [Henry] Paulsen [Secretary of the Treasury and former Chief Executive Officer of Goldman Sachs] Threatened Martial Law To Pass Bailout,” LewRockwell.com, November 20, 2008.
17 Richard Helms with William Hood A look over my shoulder: a life in the Central Intelligence Agency (New York: Random House, 2003), 82-83. Cf. Scott, American War Machine, 26-28.
18 Laurence H Shoup and William Minter, Imperial brain trust: the Council on Foreign Relations and United States foreign policy (New York: Monthly Review Press, 1977).
19 Gordon Thomas, Secret Wars: One Hundred Years of British Intelligence Inside MI5 and MI6 (New York: Thomas Dunne Books/ St. Martin’s Press, 2009), 98. This may have occurred during Dulles’s visit to Europe in the spring of 1947 (James Srodes, Dulles: Master of Spies [Washington: Henry Regnery, 1999], 392).
20 Richard Aldrich, The Hidden Hand: Britain, America, and Cold War secret intelligence (Woodstock, NY: Overlook Press, 2001), 343. Dulles also chaired the executive committee of the companion National Committee for a Free Europe (behind the Iron Curtain), whose legal affairs were handled by Sullivan and Cromwell (Wilson D. Miscamble, George F. Kennan and the Making of American Foreign Policy, 1947-1950 (Princeton, NJ: Princeton University Press, 1992), 204.
21 Amy B. Zegart, Flawed by Design: The Evolution of the CIA, JCS, and NSC (Stanford: Stanford UP, 1999), 189; citing Christopher Andrew, For the President’s Eyes Only (New York: HarperCollins, 1995), 172; see also Church Committee, Final Report, Book 4, 28-29.
22 David Wise and Thomas B. Ross, The Espionage Establishment (New York: Random House, 1967), 166; Scott, Road to 9/11, 13.
23 “In January 1946 Dulles outlined in some detail a reconstruction plan that is one of the earliest notions of what would, a year later, be known as the Marshall Plan” (Srodes, Allen Dulles: Master of Spies, 374).
24 Tim Weiner, Legacy of ashes: the history of the CIA (New York: Doubleday, 2007), 28.

25 Douglas Valentine, “The French Connection Revisited: The CIA, Irving Brown, and Drug Smuggling as Political Warfare,” Covert Action.
26 Norbert Schlei, “Japan’s ‘M-Fund’ Memorandum, January 7, 1991,“ JPRI [Japan Policy Research Institute] Working Paper No. 11: July 1995: “Incident to the revision of the Security Treaty [in 1960], Vice President Nixon agreed to turn over exclusive control of the M-Fund to Japan. It has been alleged that this action by Nixon was part of a corrupt political bargain, whereby it was agreed that if Japan would assist him to become President of the United States, Nixon would agree to release control of the Fund to Japan and, if he became President, would return Okinawa to Japan.”
27 “C.I.A. Spent Millions to Support Japanese Right in 50’s and 60’s,” New York Times, October 9, 1994. Cf. Scott, American War Machine, 93-94, 298-99; citing Chalmers Johnson, “The 1955 System and the American Connection: A Bibliographic Introduction,” JPRI [Japan Policy Research Institute] Working Paper No. 11: July 1995.
28 Sterling Seagrave and Peggy Seagrave, Gold warriors: America’s secret recovery of Yamashita’s gold (London: Verso, 2003). Cf. Richard Hoyt, Old Soldiers Sometimes Lie (New York: Forge, 2002), 80.
29 Scott, American War Machine, 94, etc.
30 Scott, American War Machine,
31 Norman Mailer, “A Harlot High and Low: Reconnoitering Through the Secret Government,” New York, August 16, 1976 (Hughes); Michael Schaller, Altered states: the United States and Japan since the occupation (New York: Oxford University Press, 1997), 294 (Lockheed).

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TRUE CRIME
http://spectrevision.net/2013/01/18/true-crime/
ELITE PANIC
http://spectrevision.net/2013/05/03/elite-panic/

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JUST BETWEEN US


Peer-to-peer apps send information without involving distant servers or wireless carriers.

PHONE to PHONE MESH NETWORKS
http://www.technologyreview.com/news/516571/build-your-own-internet-with-mobile-mesh-networking/
http://www.engadget.com/2014/09/29/hong-kong-secure-messaging/
http://blogs.wsj.com/digits/2014/09/29/firechat-messaging-app-gains-users-during-hong-kong-protests/
http://www.npr.org/blogs/alltechconsidered/2014/09/29/352476454/how-hong-kong-protesters-are-connecting-without-cell-or-wi-fi-networks

As throngs of pro-democracy protesters continue to organize in Hong Kong’s central business district, many of them are messaging one another through a network that doesn’t require cell towers or Wi-Fi nodes. They’re using an app called FireChat that launched in March and is underpinned by mesh networking, which lets phones unite to form a temporary Internet.

警方將會切斷中環金鐘灣仔一帶網絡,rthk已comfirm 未down firechat 快down 如果大家關注政總現場情況或會到政總, 請先到 AppStore 或 PlayStore 安裝及登入 FireChat…. http://t.co/7Pz9KbW6sr
— 黃之鋒 (@joshuawong1013) September 28, 2014

So far, mesh networks have proven themselves quite effective and quickly adopted during times of disaster or political unrest, as they don’t rely on existing cable and wireless networks. In Iraq, tens of thousands of people have downloaded FireChat as the government limits connectivity in an effort to curb ISIS communications. Protesters in Taiwan this spring turned to FireChat when cell signals were too weak and at times nonexistent.

And FireChat’s popularity is surging in Hong Kong. About 100,000 users downloaded the free FireChat app between Sunday morning and Monday morning, according to The Wall Street Journal. While there are no reports of cell-network outages so far, student leaders are recommending FireChat for fear authorities may shut off communications. Gizmodo explains why mesh networks can be critical during tense showdowns with governments:

“Mesh networks are an especially resilient tool because there’s no easy way for a government to shut them down. They can’t just block cell reception or a site address. Mesh networks are like Voldemort after he split his soul into horcruxes (only not evil). Destroying one part won’t kill it unless you destroy each point of access; someone would have to turn off Bluetooth on every phone using FireChat to completely break the connection. This hard-to-break connection isn’t super important for casual chats, but during tense political showdowns, it could be a lifeline.”

And as we have previously reported, Open Garden, the company that made FireChat and an Android mesh networking app also called Open Garden, has bigger ambitions for mesh networking:

“Once you build a mesh network … now you have a network that is resilient, self-healing, cannot be controlled by any central organization, cannot be shut down and is always working,” Christophe Daligault, Open Garden’s vice president for sales and marketing says. “I think that solves many other drawbacks or challenges of the mobile broadband Internet today.”

He says none of this would be possible without the rapid spread of smartphones, because that means no extra hardware is needed. “Each [phone] becomes a router and in a sense you’re growing the Internet — everyone who joins the mesh network creates an extension of the Internet,” Daligault says. “In a year or two from now, I think people won’t even remember that you had to be on Wi-Fi or get a cell signal to be able to communicate.”

without CELL PHONE RECEPTION
http://thinkprogress.org/world/2014/10/01/3574517/umbrella-protest-in-china/
http://www.newrepublic.com/article/119638/hong-kong-protests-behind-barricades
http://www.technologyreview.com/news/525921/the-latest-chat-app-for-iphone-needs-no-internet-connection/
The Latest Chat App for iPhone Needs No Internet Connection
by Tom Simonite  /  March 28, 2014

Mobile app stores are stuffed with messaging apps from WhatsApp to Tango and their many imitators. But FireChat, released last week for the iPhone, stands out. It’s the only one that can be used without cell-phone reception. FireChat makes use of a feature Apple introduced in the latest version of its iOS mobile software, iOS7, called multipeer connectivity. This feature allows phones to connect to one another directly using Bluetooth or Wi-Fi as an alternative to the Internet. If you’re using FireChat, its “nearby” chat room lets you exchange messages with other users within 100 feet without sending data via your cellular provider.

umbrellas

Micha Benoliel, CEO and cofounder of startup Open Garden, which made FireChat, says the app shows how smartphones can be set free from cellular networks. He hopes to enable many more Internet-optional apps with the upcoming release of software tools that will help developers build FireChat-style apps for iPhone, or for Android, Mac, and Windows devices. “This approach is very interesting for multiplayer gaming and all kinds of communication apps,” says Benoliel.

Anthony DiPasquale, a developer with consultancy Thoughtbot, says FireChat is the only app he’s aware of that’s been built to make use of multipeer connectivity, perhaps because the feature remains unfamiliar to most Apple developers. “I hope more people start to use it soon,” he says. “It’s an awesome framework with a lot of potential.

brellas

There is probably a great use for multipeer connectivity in every situation where there are people grouped together wanting to share some sort of information.” DiPasquale has dabbled in using multipeer connectivity himself, creating an experimental app that streams music from one device to several others nearby. The new feature of iOS7 currently only supports data moving directly from one device to another, and from one device to several others. However, Open Garden’s forthcoming software will extend the feature so that data can hop between two iPhones out of range of one another via intermediary devices.

teargas

That approach, known as mesh networking, is at the heart of several existing projects to create disaster-proof or community-controlled communications networks (see “Build Your Own Internet with Mobile Mesh Networking”). Apps built to exploit such device-to-device schemes can offer security and privacy benefits over those that rely on the Internet. For example, messages sent using FireChat to nearby devices don’t pass through any systems operated by either Open Garden or a wireless carrier (although they are broadcast to all FireChat users nearby).

AFP PHOTO : ALEX OGLEAlex Ogle:AFP:Getty Images

That means the content of a message and metadata could not be harvested from a central communications hub by an attacker or government agency. “This method of communication is immune to firewalls like the ones installed in China and North Korea,” says Mattt Thompson, a software engineer who writes the iOS and Mac development blog NSHipster. Recent revelations about large-scale surveillance of online services and the constant litany of data breaches make this a good time for apps that don’t rely on central servers, he says. “As users become more mindful of the security and privacy implications of technologies they rely on, moving in the direction of local, ad-hoc networking makes a lot of sense.”

brooms

However, peer-to-peer and mesh networking apps also come with their own risks, since an eavesdropper could gain access to local traffic just by using a device within range. Open Garden’s main product is an app that allows Android devices to share their Internet connections (see “Could You Spare Some Internet Access?”).

However, Benoliel says that won’t be coming to the iPhone anytime soon because the feature that FireChat relies on cannot be used to share data connectivity. Peer-to-peer mobile communications and mesh networks could prove especially important in countries with minimal communications infrastructure. “You can see Google spending billions on fiber and balloons, but this is not going to solve the problem of ubiquitous mobile connectivity,” Benoliel says. He argues that the spread of cheap Android phones across the world will make mesh networking feasible. “We need to create small Internets that can function on their own and [then] connect them to the big Internet.”

LTE RADIO
http://chinaelectionsblog.net/hkfocus/?tag=benny-tai
http://www.scmp.com/news/hong-kong/article/1603506/how-occupy-central-leaders-lost-grip-protest
http://www.technologyreview.com/news/530996/future-smartphones-wont-need-cell-towers-to-connect/
Future LTE Radio Smartphones Won’t Need Cell Towers to Connect
by Tom Simonite / September 29, 2014

A new feature being added to the LTE protocol that smartphones use to communicate with cellular towers will make it possible to bypass those towers altogether. Phones will be able to “talk” directly to other mobile devices and to beacons located in shops and other businesses. Known as LTE Direct, the wireless technology has a range of up to 500 meters, far more than either Wi-Fi or Bluetooth. It is included in update to the LTE standard slated for approval this year, and devices capable of LTE Direct could appear as soon as late 2015. LTE Direct has been pioneered by Qualcomm, which has been working on the technology for around seven years. At the mobile chip manufacturer’s Uplinq conference in San Francisco this month, it announced that it’s helping partners including Facebook and Yahoo experiment with the technology. Researchers are, for example, testing LTE Direct as a way to allow smartphones to automatically discover nearby people, businesses, and other information. Some see the technology as a potential new channel for targeted promotions or advertising.

Despite its long range, LTE Direct uses relatively little power, so a phone could be constantly looking for nearby devices without significantly draining its battery life. A device with LTE Direct active might discover other phones using the technology or communicate with beacons—fixed devices installed in businesses or integrated into the infrastructure of an airport or train station. “You can think of LTE Direct as a sixth sense that is always aware of the environment around you,” said Mahesh Makhijani, technical marketing director at Qualcomm, at a session on the technology. “The world around you is full of information, and the phone can use that to predict and to help you in your everyday life.”


Protests sprouted up in Kowloon shortly after demonstrations started on Hong Kong island. The protest site sits on the junction of two large highways and has blocked traffic.

Beacons using LTE Direct could broadcast useful information as well as special offers. A beacon installed in an airline check-in desk, for instance, might offer information on delays to people nearby who are booked on an affected flight. Facebook is exploring how the technology could be used with its mobile app. “LTE Direct would allow us to create user experiences around serendipitous interactions with a local business or a friend nearby,” said Jay Parikh, Facebook’s vice president of infrastructure engineering. “You could find out about events or do impromptu meet-ups.”

HK

LTE Direct can be used much like the iBeacons announced by Apple last year, which retailers including Macy’s are testing as a way to track and connect with shoppers’ mobile devices. However, iBeacon devices use the Bluetooth protocol, which has a much shorter range, and which not everyone leaves switched on. Yahoo has also begun developing apps that use LTE Direct, says Beverly Harrison, a principal scientist at Yahoo Labs. One is a kind of digital tour guide. If you tell the app how long you have to spare, from 10 minutes to two hours, it will suggest a route past nearby points of interest, drawing on online information about places detected using LTE Direct. Harrison says Yahoo plans to start testing the app in January.

LTE Direct could also help smooth out the network glitches that occur when large numbers of users are trying to connect to the same cell tower. R/GA, an ad agency in New York whose clients include Nike and Beats, is designing a system that would use LTE Direct to serve up to a million people in or around Times Square on New Year’s Eve. Roman Kalantari, a creative director at RG/A, says LTE Direct is the only wireless technology that could keep devices online under such conditions. RG/A and a technology consultancy called Control Group are also interested in using LTE Direct to serve targeted promotions. A smartphone could use LTE Direct to signal to nearby businesses what types of foods or products a customer is interested in so that it can offer customized deals, says Kalantari. “The idea that every retailer could be observing purchase intent is extraordinary valuable,” he says.

In theory, LTE Direct could be used to create communication apps that route all data from device to device. Some chat apps can already use Wi-Fi and Bluetooth to link up nearby phones, but LTE Direct could offer extended range and better performance. However, carriers will control which devices on their networks can use LTE Direct because it uses the same radio spectrum as conventional cellular links. Wireless carriers might even gain a new stream of revenue by charging companies that want to offer services or apps using the technology, Qualcomm says.


Hong Kong protesters #handsupfriday‬

GOVERNMENT SPYWARE
http://www.theguardian.com/world/2014/sep/30/hong-kong-pro-democracy-protest-leaders-occupy
http://qz.com/274425/here-is-the-full-text-of-the-chinese-communist-partys-message-to-hong-kong/
http://blogs.wsj.com/chinarealtime/2014/09/25/pro-beijing-media-accuses-hong-kong-student-leader-of-u-s-government-ties/
https://www.lacoon.com/lacoon-discovers-xsser-mrat-first-advanced-ios-trojan/
http://www.theverge.com/2014/10/1/6877377/sophisticated-iphone-and-android-malware-is-spying-on-hong-kong
Sophisticated iPhone and Android malware is spying on Hong Kong protesters
by Amar Toor  /  October 1, 2014


Activists in Hong Kong practice being sprayed by water cannons during a September 7, 2014, drill in preparation for upcoming civil disobedience events. (Reuters/Tyrone Siu)

A fake smartphone app is being used to remotely monitor pro-democracy protesters in Hong Kong, according to a report from the New York Times. Researchers from Lacoon Mobile Security say the phishing scam is spreading across the messaging application WhatsApp, through texts that read: “Check out this Android app designed by Code4HK for the coordination of OCCUPY CENTRAL!”, along with a link to download software. Lacoon says the software, once downloaded, can access a user’s personal data, including phone calls, text messages, and the physical location of their smartphone. Code4HK — a developer community that has helped to spread information about the protests — tells the Times it had nothing to do with the texts.


“The CIA is everywhere, including in Hong Kong. Search the net for ‘Jimmy Lai and CIA’, and one will find a series of reports of how the CIA is using Jimmy Lai (owner of an unprofitable Apple Magazine) to channel tens of millions of dollars to opposition and democratic parties in Hong Kong. Lai is now under the investigation of ICAC (HK anti-corruption agency). A number of opposition parties in Hong Kong have confessed that they accepted money from Lai and did not declare it. This is a big news in Hong Kong.”

The origin of the scam remains unknown, but Lacoon CEO Michael Shaulov says the Chinese government is likely behind it, given the location of the servers and the sophistication of the operation. The company traced it to a computer that they say is similar to those that the Chinese government allegedly used to launch cyberattacks against US targets last year.

The spread of the app remains equally unclear, though Shaulov says it was downloaded by one out of every ten phones that received the fake message. It has affected both Android and iOS users alike, although many in the security world have noted that only jailbroken iOS phones are vulnerable. “This is the first time that we have seen such operationally sophisticated iOS malware operational, which is actually developed by a Chinese-speaking entity,” Shaulov told the Times. Similar iOS malware has been distributed by FinFisher, but never before linked to China.

Today’s report comes as thousands of protesters flocked to the streets on China’s National Day, calling for Beijing to allow for free democratic elections in 2017. China had previously said it would allow Hong Kong to choose its own leader by that date, but backtracked on that promise in August, when it announced that all candidates would have to be approved by Beijing. Protesters in the “Occupy Central” movement have clashed with police since protests escalated over the weekend, and there are fears of further confrontation tonight, during National Day celebrations.


Hong Kong’s original Occupy movement

The Chinese government has gone to great lengths to censor news of the demonstrations. Most state-run media have not mentioned it, and Chinese web censors have stepped up efforts to block images and videos on social media. On Sunday, the government blocked access to Instagram within mainland China, and posts on the Twitter-like service Sina Weibo have been aggressively deleted, according to the Times. In the past few days, censors have blocked any Weibo posts including the words “Hong Kong,” “barricades,” and “umbrella” — the unofficial symbol of Hong Kong’s movement.

mainland-democracy-detained-occupy.png
Oct 3: Taken awayWang Zang 王藏, poet and vocal supporter of Occupy Central. At least seven mainlanders have been detained for their involvement in or support for the Occupy Central movement in Hong Kong, reports Human Rights In China. This does not include the Shenzhen activist who was taken away after posting photos of the Occupy Central movement on Weibo.

NETWORK BLACKOUTS
http://www.hrichina.org/en/detentions-mainland-related-occupy-central-movement-2014
http://shanghaiist.com/2014/09/29/instagram-blocked-mainland-china.php
http://advocacy.globalvoicesonline.org/2014/10/02/hong-kong-protesters-shore-up-mobile-communications-tools-in-face-of-technical-threats/
Hong Kong Protesters Shore Up Mobile Communications Tools in Face of Technical Threats
by inmediahk.net / 2 October 2014

This post was adapted in two segments from an article written by Oiwan Lam and originally published in Chinese on 1 October 2014 on citizen media platform inmediahk.net. It was translated by Loki Chu.

On September 28, after Hong Kong police unleashed tear gas on protesters, many said that they could not access the Internet with their mobile phones and had to run to Central or Wanchai districts before they could send their messages. Since then, a large number of protesters have downloaded FireChat to prepare for communication during network outages or network congestion. The FireChat application can run over a mesh network. As each mobile phone sends out a weak signal, a mesh network turns each mobile phone into a network node and links the nodes together to form a local telecommunication network that enables the exchange of messages between users. But Internet privacy and security experts warn that this software has security vulnerabilities and its users may become the targets of attacks. Calls may be intercepted and the locations of users may be tracked. The application also lacks a strong authentication system for users’ identities — it is relatively easy to impersonate another user, making the network vulnerable to infiltration by malicious actors.

Applications Anti-Monitor Connectivity System Compatibility
Serval Mesh + For communication content and metadata (location, contacts, etc.) to encrypt + Phone signal and Internet cut off time, but also be able to use - No iOS version
FireChat - Easy to be monitored: communication content and metadata can easily be accessed and monitored + Phone signal and Internet cut off time, but also be able to use + Android andiOS can be used on the system
ChatSecure + Encrypts the communication content and metadata - Can only be used when there is Internet + Android andiOS can be used on the system
Redphone(Android) /Signal (iOs) + Encrypts the communication content and metadata - Can only be used when there is mobile phone signal

Internet Society Hong Kong will organize a week with FireChat inventor Micha Benoliel the conference. The meeting will be webcast. Internet Society Hong Kong Facebook and Twitter. Chart found at https://pao-pao.net/article/194

Are there any tools that are more secure than FireChat and can be used during major network congestion? President of the Hong Kong Professional Information Security Association Eric Fan bluntly answered, “No.” He urged users not to download applications casually and not to jailbreak their iPhones or iPads because these actions are likely to pose security problems. Indeed, security vulnerabilities abound in this arena, and threats from mainland China are many. In mid-September, hackers distributed an Android application that was discovered to be spyware capable of stealing information from users’ smartphones and tracking users’ locations on Baidu Maps, a mainland Chinese version of Google Maps. The hackers disguised themselves as Code4HK, a group of tech geeks who support social movements in Hong Kong. Fan pointed out that, in fact, many applications have security vulnerabilities, and users must be vigilant in protecting their communication tools. In addition, under a good network connection, he recommends the use of Telegram. Telegram is an application similar to WhatsApp, but all communications are encrypted and users may choose to delete conversation records permanently to prevent old records from being spied upon if a user’s mobile phone or computer is confiscated. This particular point is important for activists who are targets of political persecution. It is now common practice for Hong Kong police to confiscate protest organizers’ mobile phones, and in some cases, they even obtain search warrants and confiscate personal computers for investigation. Google Talk is another common communication tools among protesters. It is prudent to develop the habit of choosing the “off-the-record” chat option so that others cannot read the chat history.

iOS SPYWARE
http://www.inmediahk.net/node/1026710
http://mobile.reuters.com/article/idUSL2N0RV2D320140930?irpc=932
Advanced iOS virus targeting Hong Kong protestors -security firm
reporting by Jim Finkle; edit by Richard Valdmanis  /  Sep 30, 2014

Cybersecurity researchers have uncovered a computer virus that spies on Apple Inc’s iOS operating system for the iPhone and iPad, and they believe it is targeting pro-democracy protesters in Hong Kong. The malicious software, known as Xsser, is capable of stealing text messages, photos, call logs, passwords and other data from Apple mobile devices, researchers with Lacoon Mobile Security said on Tuesday. They uncovered the spyware while investigating similar malware for Google Inc’s Android operating system last week that also targeted Hong Kong protesters. Anonymous attackers spread the Android spyware via WhatsApp, sending malicious links to download the program, according to Lacoon. It is unclear how iOS devices get infected with Xsser, which is not disguised as an app. Lacoon Chief Executive Michael Shaulov told Reuters that Xsser is the most sophisticated malware used to date in any known cyberattack on iOS users. “This is one the most interesting developments we have seen,” he said. “It’s the first real indication that really sophisticated guys are shifting from infecting PCs or laptops to going after iOS devices.”

The code used to control that server is written in Chinese. The high quality of the campaign and the fact it is being used to target protesters suggests that it is coming from a sophisticated attacker in China, Shaulov said. “It is the first time in history that you actually see an operationalized iOS Trojan that is attributed to some kind of Chinese entity,” he said. A Trojan is a term used by cyber researchers to describe malware that enters a device disguised as something harmless. Still, he said that his company’s research team has yet to identify any specific victims of the iOS Trojan. Lacoon said on its blog that it is possible the attackers might have deployed the Trojan in other places, in addition to spying on pro-democracy protesters in Hong Kong. “It can cross borders easily, and is possibly being operated by a Chinese-speaking entity to spy on individuals, foreign companies, or even entire governments,” they said in a blog post describing their analysis.

KILL SWITCHES
http://globalvoicesonline.org/2014/10/02/fears-of-a-network-blackout-still-loom-for-hong-kongs-pro-democracy-protesters/
by inmediahk.net  /  2 October 2014

On September 28, rumors that Hong Kong police had asked mobile phone operators to shut down network services in Hong Kong’s Admiralty area spread like wildfire. Tensions were already running high, as police had used tear gas on pro-democracy protesters just hours before. The Federation of University Student Unions, a key organization that has helped mobilize the massive sit-in dubbed Occupy Central, immediately called for protesters to retreat from the demonstration if network services were cut. On social media, messages from various sources urging protesters to download and install FireChat, a chat application that can be used over the Internet or via Bluetooth technology, went viral. The FireChat Bluetooth setting allows users within close proximity to one another to communicate without a mobile Internet connection. Scores of protesters downloaded FireChat in an effort to maintain communication during the protest in case of a network shutdown, despite the inherent security vulnerabilities that the app carries. Thus far however, a network shutdown has not taken place.

Many are now wondering if it is even possible for a network blackout to be imposed on Hong Kong. This happens on a regular basis in regions of mainland China like Xinjiang, where authorities use Internet blackouts to contain ethnic unrest among the region’s Uyghur minority. Yet network infrastructure and corporate governance is much less tightly controlled in the special administrative region of Hong Kong. Charles Mok, the legislative councillor for the Information Technology Functional Constituency, believes that the chance of a network blackout is very slim.

Two ordinances regulate the government’s power to impose a network blackout. Hong Kong’s Telecommunications Ordinance says in the face of a public emergency, if the chief executive (highest authority in the region) decides that the government must exert control over telecommunication stations, he can sign a warrant to do so and use the networks instead for public messages. Although the warrant cannot remain in effect for more than one week, successive warrants from week to week may be issued. This ordinance, however, does not define “emergency.” The region’s Emergency Regulations Ordinance states that “on any occasion in which the chief executive in Council may consider to be an occasion of emergency or public danger, he may make any regulations whatsoever that he may consider desirable in the public interest.” In other words, Hong Kong needs to be in a state of (a vaguely-defined) “emergency” for the government to demand Internet providers to shut down their networks, whether throughout the whole territory or in a specific region.

Charles Mok pointed out that the government would have difficulty exercising the power given by these two ordinances because both mobile network services and fixed line network services operate in open markets in Hong Kong. According to data provided by the Hong Kong Trade Development Council, there are a total of 20 local fixed line telecommunications network operators as of June 2013, five mobile network operators as of December 2012 and 194 Internet service providers as of June 2013. One can imagine the huge impact should a Cap 106 warrant be issued. Moreover, the warrant must be sent directly to either the CEO or CTO of the service providers, and before overseas operators receive these warrants, the network should remain connected. Charles Mok added that should the government really want to disconnect the network, it may still be done with the 3G and 4G mobile network operators, but once the network is cut, mobile phone voice services will also be terminated, and the impact will be impossible to measure.


#Hong Kong: Twitter Reverb is a Twitter-owned tool that illustrates how conversation unfolds on the social network. The blue line tracks tweet per minute

CHOKE POINTS
http://advocacy.globalvoicesonline.org/2013/12/17/in-chinas-ethnic-minority-regions-internet-blackouts-are-the-norm/
In Tibet and Uyghur Regions, Internet Blackouts Are the Norm
by Oiwan Lam  / 17 December 2013

… as we approached Aba County, something changed. I stopped getting messages on WeChat and QQ, China’s most popular mobile apps…When I tried to load e-mail, an error occurred: “Could not authenticate cellular data network: PDP authentication failure.” I still had a signal—the little 3G icon was there and everything. But the signal didn’t seem to contain any data.

Stories of Internet censorship in China often focus on surveillance and social media filtering, practices that violate the rights to free expression and privacy of all users in mainland China. But those living in remote, embattled ethnic minority regions of the country face a far more bleak reality when it comes to using the Internet.

Prolonged network shutdowns have become a regular occurrence in Uyghur and Tibetan minority regions of western China, as Christopher Beam describes in the New Republic article quoted above. Chinese authorities believe that foreign forces, such as the Tibetan Government in Exile and World Uyghur Congress are involved in the organization of separatist activities in China. Seeking to contain unrest and discontent in conflict areas, authorities have imposed Internet shutdowns, depriving individuals of their right to communication online. In some extreme cases, network shutdowns have extended to local mobile networks.

Student-led protest in Chabcha county, Tibetan Autonomous Prefecture. Photo by Students for a Free Tibet via Flickr (CC BY 2.0)

This kind of “political punishment” began in Tibetan Autonomous Prefectures with 2008 political riots in Lhasa. The Internet was shutdown in March of 2008, and briefly restored in December 2008, only to be cut off again a few months later when the first self-immolation protest took place. Internet access has remained unstable in the area ever since.

According to Tibetan dissident writer Woeser’s blog, Internet and mobile SMS connections for more than 18 counties from Garze Tibetan Autonomous Prefecture were cut off from the global Internet for at least three months beginning in February 2009. A number of counties in Aba Prefecture, predominantly Tibetan, suffered a similar fate. Connection disruptions now have become a norm in conflict areas where self-immolation protests and anti-government demonstrations are frequent. Most recently, a network shutdown occurred in Diru county, following protests against a policy that required Tibetans in a local village to put Chinese national flags on their rooftops. The Xinjiang region, mainly populated by the Muslim Uyghur minority group, has faced similar challenges. Amid protests in 2009, residents faced a nearly year-long Internet shutdown and were even deprived of telephone service for a week at the height of the unrest. Since then, network disruptions have happened on a smaller scale during politically sensitive periods. In March 2013, protests erupted after a seven-year-old Uyghur boy was stabbed to death by a Han Chinese in Piqan county of Turpan Prefecture, leading to a three-day Internet blackout. This past June, the Internet was again shut down temporarily in Urumqi to stop the spread of rumors related to forced demolitions in Piqan county — 27 people were killed [zh] in riots during a violent confrontation between protestors and police surrounding the demolitions.

These shutdowns have violated citizens’ rights to communication of expression, and have left them unable to seek information, goods, and services through the Internet. They have also given local authorities a monopoly on information — control over news and analysis of these regional conflicts now sits firmly in the hands of the government. For example, the above-mentioned demolition protest in Piqan county was characterized as a “terrorist attack” by state media. When the Uyghur community attempted to report on the situation, spreading an alternative version of the storyusing Sina Weibo, the Internet blackout expanded from Piqan county to Urumqi, the largest city in Xinjiang. Citizen journalists in Bachu county faced a similar situation last month, when both local authorities and state media quickly labeled riots as a terrorist attack, thus justifying an information crackdown. Many Han Chinese have fully embraced official state explanations of conflicts in Xinjiang and have even criticized ethnic groups for not being grateful for preferential ethnic policies, such as exemption from the One-Child Policy. As the online public sphere has been dominated by Han Chinese, mainstream public opinion has further marginalized ethnic communities in unrest areas.

Internet shutdowns in China have not been limited to areas of ethnic conflict. InJune 2009, the Internet was shut down for a few days in the Hubei province city ofShishou, following riots triggered by the alleged murder of a young woman working in a local hotel. But Shishou is connected with other cities by a major highway — information about the incident and crackdown spread through Chinese social media and was even translated into English for global readers. Ultimately, the shutdown did not paralyze the city as it might have in Xinjiang or Tibet. Within the Chinese Communist Party, many have questioned the value of this “hard” practice of social control. Softer approaches have been used in much of the country and seen as effective, but they have not been applied to far west border areas where conflict has become endemic. With state officials suggesting that ethnic minorities may be linked to terrorist organizations, they have justified harder tactics on the grounds that these groups are a risk to national security.

Thus far, Internet shutdowns in China have been regional and targeted at specific areas of unrest, with one exception — for an hour in April 2012, all users in mainland China were unable to visit overseas websites and foreign IPs could not access the Chinese network. Many speculated that the disruption was caused by the upgrade of the Chinese Great Firewall. The incident demonstrated the ability of the Chinese authority to cut off the domestic network if and when necessary.

More and more countries have begun to resort to Internet shutdowns when facing mass protests. During the Arab Spring, both the Mubarak regime in Egypt and the Assad regime in Syria severed Internet connections in an effort to control protests. A nation-wide Internet blackout took place in Sudan after riots erupted in northern Khartoum in September 2013. But while shutdowns have lasted just a few days in most of these cases, China’s minority regions face a different paradigm. Prolonged blackouts have exacerbated minority citizens’ marginalization. Literally disconnected from the rest of the country, these communities have been left on the wrong side of what appears to be a growing digital divide.

PREVIOUSLY on SPECTRE
EGYPT SHUTS DOWN INTERNET – U.S. PROPOSES INTERNET KILL SWITCH
http://spectrevision.net/2011/01/28/egypt-shuts-down-internet/
http://spectrevision.net/2011/02/11/mesh-phone-networks/

IRANIAN ELECTION FAKED OUTRIGHT – IRAN’S PROXY FIGHT
http://spectrevision.net/2009/06/19/what-tipped-you-off/

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OUR BEST NAZIS


Former CIA Director Allen Dulles

“EX” NAZIS in U.S. GOVERNMENT
http://consortiumnews.com/2013/06/06/how-wall-st-bailed-out-the-nazis/
How Wall St. Bailed Out the Nazis
by Jerry Meldon  / June 6, 2013

Near the end of World War II, the secret collaboration between U.S. spymaster Allen Dulles and Nazi SS officers enabled many German war criminals to escape prosecution and positioned them to fan the flames of post-war tensions between the former allies, the United States and the Soviet Union. In that way, the Old Nazis — aided by Dulles and other ex-Wall Street lawyers – prevented a thorough denazification of Germany and put the Third Reich’s stamp on decades of atrocities during the long Cold War, spreading their brutal death-squad techniques to faraway places, especially Latin America. Though the World War II generation has largely passed from the scene and the Cold War ended more than two decades ago, the consequences of Dulles’s actions in those final days of World War II are still reverberating in Germany.

One of the after-shocks was felt in a Munich courtroom just last month, with the opening of the trial of Beate Zschape, a 38-year-old neo-Nazi who is accused as an accessory to two bombings, 15 bank robberies and ten murders between 2000 and 2007 by the terrorist cell, the “National Socialist Underground” (NSU). Two male fellow gang members reportedly took their own lives to avoid arrest before Ms. Zschape torched their hideout and turned herself in, in November 2011. But the back story is no less disturbing. Nine of the NSU’s ten murder victims were immigrants, eight of them Turkish, one Greek. All ten were slain execution-style by the same Ceska Browning pistol. Yet it took more than a decade for police forces across Germany and the country’s domestic intelligence agency, the Bureau for the Protection of the Constitution (BFV), to connect the dots that would link the homicides to Germany’s xenophobic neo-Nazi netherworld.



But the question is whether the missed connections resulted from incompetence or complicity. Last summer, following reports of the massive shredding of BFV’s files on right-wing extremists, the head of the agency tendered his resignation. Then in November, Der Spiegel reported: “Four parliamentary committees [are] dissecting the work of law enforcement units … four department heads have already resigned. The government’s failures in fighting rightwing terrorists have plunged [the BFV] into the worst crisis since it was … set up in postwar Germany to … stop precisely the kind of extremist thinking that allowed the Nazis to rise to power in the 1930s. The discovery of the NSU and its crimes … has shaken the system to its core. … “The more secrets come to light, the clearer it becomes how extensively intelligence agencies had infiltrated right-wing extremist groups. The trio of neo-Nazis that made up the NSU was surrounded by informants linked with [the BFV].  … One of the big questions … is whether [the BFV] actually strengthened military right-wing groups.” How the BFV worked at cross-purposes – coddling neo-Nazis while supposedly constraining them – is not entirely surprising in light of the circumstances surrounding the BFV’s birth. West Germany’s first parliamentary elections in 1950 propelled into the chancellorship, Konrad Adenauer – a stalwart of the same party as that of current German chancellor Angela Merkel, the conservative Christian Democratic Union (CDU). When Adenauer named Dr. Hans Globke as his Secretary of State, the West German chancellor laid his cards on the table. Globke’s checkered past included wartime service at the helm of the Nazi Interior Ministry’s Office for Jewish Affairs. He drafted the infamous Nuremberg Laws for the Protection of German Blood and wrote the “Commentary” that provided the rationale for genocide.

The Interior Minister who signed the Nuremberg Laws, Dr. Wilhelm Frick, was sentenced to death at Nuremberg and hanged in October 1946. Globke would appear to have been culpable, too, having advanced his career during Nazi rule. His immediate supervisor, Interior Ministry Legal Counsel Bernard Loesner, resigned following Hitler’s decision to proceed with the extermination of European Jewry. When Loesner stepped down, Globke stepped up and left his fingerprints on the Final Solution. But Globke was not only spared the fate of some colleagues tried at Nuremberg but emerged as an important figure in shaping post-war West Germany. In the 1961 book, The New Germany and the Old Nazis, T.H. Tetens, a German economist who worked for the U.S. War Crimes Commission, noted that Globke controlled every department of West Germany’s government in Bonn and “has done more than anyone else to re-Nazify West Germany.”


Der Spiegel revisited the same subject in a March 2012 article headlined “The Role Ex-Nazis Played in Early West Germany.” It reported that two dozen cabinet ministers, a president and a chancellor had belonged to Nazi organizations. The article reported that historians were poring through voluminous BFV files “to determine how many of the Nazi dictatorship’s helpers hid under the coattails of the domestic intelligence service in the earlier years of the Federal Republic” and whether “the protection of the young, optimistic constitution [had been] in the hands of former National Socialists.” Berlin historian Michael Wildt told Der Spiegel he was convinced that the postwar police and intelligence services had been riddled with former Nazis. Entire government departments and agencies, he said, “covered up, denied and repressed” their murky history – which evoked the following mea culpa from Der Spiegel’s staff: “It’s a charge that doesn’t just apply to politicians and public servants, at least not in the early years of the republic. Senior members of the media, including at Spiegel, proved to be unwilling or incapable of sounding the alarm. This isn’t surprising, given the number of ex-Nazis who had forced their way into editorial offices.”

Author T.H. Tetens noted the irony in Dr. Globke, “[the] former key administrator in the Final Solution, [having] full control over the Office for the Protection of the Constitution.” Had he lived long enough, Tetens might have suggested that the BFV be renamed the Office for the Protection of Neo-Nazis. Tetens might also feel vindicated by recently released CIA documents describing another branch of German intelligence that Globke’s controlled, the vast spy network run by Adolf Hitler’s former espionage czar, Lt. Gen. Reinhard Gehlen, a.k.a. the “Gehlen Organization,” a.k.a. “The Gehlen Org” or, simply, the “Org.” Until 1955, when West Germany became a sovereign state, the Gehlen Org operated nominally under the aegis of James Critchfield of the CIA – which paid for the Org’s intelligence product. In reality, Gehlen ran the Org from its creation in 1946 until his retirement in 1968. In 1956, the Org officially became Germany’s foreign intelligence service and was renamed the Bundesnachrichtendienst (BND). Recently, the BND has been declassifying its files to come clean about its postwar origins. Documents released to date by both it and the CIA confirm suspicions that, at least in the Gehlen years, the Org/BND was little more than a U.S.-bankrolled “sheep-dipping” operation for fugitive Nazis.



The U.S. Connection
And this troubling history goes back even further to the days of World War II when the American intelligence agency, the Office of Strategic Services, fell under the control of a group of Wall Street lawyers who saw the world in the moral grays of business deals, measured less by right and wrong than by dollars and cents. In the introduction to The Old Boys: The American Elite and the Origins of the CIA, author Burton Hersh identifies this common denominator: “In 1941 [the year of America’s entry into the war}, an extraordinarily nimble New York antitrust attorney named William ‘Wild Bill’ Donovan inveigled Franklin Roosevelt into underwriting the first encompassing intelligence instrumentality, the Office of the Coordinator of Information [OCI]. “Donovan’s profession was relevant, and it was no accident that all three [of The Old Boys’] load-bearing protagonists … Bill Donovan, Allen Dulles, Frank Wisner – achieved status in America by way of important Wall Street law partnerships. … “The faction-ridden [OCI] gave way in 1942 to the [OSS]. From then on a civilian-directed, operationally oriented spy service would top the wish list of America’s emerging power elite.”

These Wall-Street-lawyers-turned-spymasters brought their moral relativism and their ardor for aggressive capitalism to their World War II decision-making. Thus, they created an opening for Nazi war criminals who – after Germany’s crushing defeat at the Battle of Stalingrad in February 1943 – saw the writing on the wall regarding the future of the Third Reich and started hedging their bets. As the war ground on for two more years, thousands of them took steps to evade post-war prosecutions, in part, by arranging protection from British and American officials. Most of those American officials served in U.S. intelligence agencies, either Army intelligence or the civilian-run OSS, the CIA’s forerunner. OSS spymaster Allen Dulles played into this Nazi game in spring 1945, as Soviet, British and American forces were converging on Berlin. Dulles engaged in negotiations for the separate surrender of German forces in Italy with SS General Karl Wolff. It apparently didn’t bother Dulles that Wolff, like many of his SS brethren, was a major war criminal. After September 1943, when Italy withdrew from the Axis and made peace with the Allies, Wolff’s troops committed an average of 165 war crimes a day executing his orders to liquidate the Italian resistance and terrorize its supporters. (In 1964, a German judge sentenced Wolff to 15 years in prison for various war crimes, including ordering the deportation of 300,000 Jews from the Warsaw Ghetto to the Treblinka death camp.)

Initially, Dulles met with Wolff in defiance of orders from the dying President Franklin D. Roosevelt. The contacts also were behind the back of Soviet leader Josef Stalin, whose army had not only turned the tide of the war at Stalingrad but was still doing the bulk of the fighting. As Hitler’s Third Reich neared the end of its days, six out of every seven German divisions were lined up against the Red Army. Ultimately, Dulles secured authorization for what was code-named “Operation Sunrise,” but his determination to consummate a deal with Wolff didn’t stop at negotiations. When the Italian resistance set a trap for Gen. Wolff, Dulles saved him in what his OSS colleague (and future Supreme Court Justice) Arthur Goldberg described as treason. Moreover, when Soviet spies informed Stalin about the Dulles-Wolff assignations – which continued even as the Red Army suffered 300,000 casualties in a three-week period – the ensuing brouhaha played right into Hitler’s own game plan for survival. Desperate to bolster the morale of his collapsing army, Der Fuehrer seized on the dissension opening in the ranks of the Allies. He gave his generals the following pep talk (as transcribed in Gabriel Kolko’s The Politics of War): “The states which are now our enemies are the greatest opposites which exist on earth: ultra-capitalist states on one side and ultra-Marxist states on the other. … [Their] objectives diverge daily … and anyone … can see how these antitheses are increasing. “If we can deal it [the alliance] a couple of heavy blows, this artificially constructed common front may collapse with a mighty thunderclap at any moment.” Indeed, Wolff’s surrender overtures to Dulles might have been an attempt to both save his own skin and help Hitler drive a wedge into the “artificially constructed common front.”



The overall value of Dulles’s negotiations toward ending the war also was dubious. Less than one week before the general armistice ending the War in Europe, Dulles offered Nazi officers an advantageous deal, letting one million German combatants surrender to British and American forces on May 2, 1945, rather than to the Russians. By surrendering to the British and Americans, most of these Germans not only avoided harsh treatment from the Russians but high-ranking Nazi officers benefited from the Truman administration’s quick pivot from its war-time alliance with Stalin to the Cold War confrontation with Moscow. President Harry Truman’s staunchly anti-communist advisers, including Secretary of State James Byrnes, persuaded Truman to default on FDR’s commitment to a thorough postwar denazification of Germany, one in a series of decisions which enabled thousands of war criminals to avoid justice and permitted many to assume key positions in the new West German government.

Steering the Cold War
Yet, the use of Nazis by U.S. intelligence agencies had the additional dangerous effect of letting the Nazis influence how the United States perceived its erstwhile allies in Moscow. Washington formulated much of its early Cold War policies based on information about Moscow’s intentions that originated with Gehlen’s blemished agents.These infamous Final Solution perpetrators included:
–Willie Krichbaum, reportedly the Gehlen Org’s top recruiter. As the senior Gestapo official for southeastern Europe, Krichbaum managed the deportation of 300,000 Hungarian Jews for extermination.
–Dr. Franz Six, former Dean of the Faculty of the University of Berlin and Adolph Eichmann’s immediate supervisor in the Ideological Combat branch of the SS security apparatus. In 1941, according to a report he wrote (which Christopher Simpson cites in Blowback: The First Account of America’s Recruitment of Nazis, and its Disastrous Effect on our Domestic and Foreign Policy), a Six-led SS commando group murdered 200 people in the Russian city of Smolensk, “among them 38 intellectual Jews.” Wanted for war crimes, Six joined the Gehlen Org in 1946, but later was betrayed by a former SS officer working undercover for a US/UK dragnet for fugitive Nazis. In 1948, a U.S. military tribunal sentenced him to 20 years for war crimes including murder. After serving four, he was granted clemency by John McCloy, another Wall Street lawyer then serving as U.S. High Commissioner for Germany. Six then rejoined the Org.
–Gestapo captain Klaus Barbie, the infamous “Butcher of Lyon,” who escaped via the so-called “rat lines” to South America, where he then worked with right-wing intelligence services and organized neo-Nazi support for violent coups against elected and reformist governments, including the 1980 “cocaine coup” in Bolivia. After decades of spreading Nazi techniques across Latin America, Barbie was arrested and returned to France where he was given a life sentence in 1984 for ordering the deportation of 44 Jewish orphans to the death camp at Auschwitz
–SS Colonel Walter Rauff, who dodged postwar prosecution for developing mobile gas vans and administering their deployment to murder some 250,000 Eastern Europeans, mostly Jewish women and children. The appearance of Rauff’s name on the list is interesting because, as the Milan-based SS intelligence chief for northwestern Italy in 1945, he was Gen. Wolff’s liaison with Allen Dulles. According to a 1984 Boston Globe Op-Ed by former U.S. Justice Department lawyer John Loftus, Rauff, after playing his part in Operation Sunrise, calmly turned himself in and told agents of the U.S. Army Counter-Intelligence Corps (CIC) that he had made surrender “arrangements [with] Mr. Dulles … to avoid further bloodshed in Milan.”



In Loftus’s words, Dulles “promised that none of the [surrender] negotiators would ever be prosecuted as war criminals. When Truman and Stalin discovered what Dulles [had been up to], there were outraged orders to call off Sunrise… [But] Dulles went ahead anyway, with Truman’s reluctant concurrence … [Dulles] kept his bargain … Rauff was released.” Christopher Simpson confirms in Blowback that “each of the SS officers involved in Operation Sunrise [escaped] serious punishment … despite the fact that each was a major war criminal. A U.S. military tribunal tried [SS intelligence chief] Walter Schellenberg, who had helped trap and exterminate the Jews of France. He was convicted but freed shortly thereafter under a clemency [order] from the U.S. High Commissioner for Germany, John McCloy… “Wolff was sentenced to ‘time served’ in a [British] denazification proceeding in 1949, then released … without … objection from … U.S. … authorities. Fifteen years later a West German court tried Wolff a second time. He was convicted of administering the murder of 300,000 persons, most of them Jews, and of overseeing SS participation in slave labor programs.”



Fleeing to Latin America
However, when the war ended, neither the Gehlen Org recruitment program nor Wall Street lawyer McCloy’s clemency rulings had begun, leaving tens of thousands of war criminals desperate to relocate in secure foreign outposts. SS Col. Rauff just happened to have the right connections to make that happen. In Unholy Trinity: The Vatican, the Nazis and Soviet Intelligence, Australian investigative reporter, Mark Aarons, and former Justice Department lawyer Loftus reconstruct how Rauff became the mass murderers’ travel agent of choice. Shortly after the Wolff/Dulles surrender negotiations were successfully completed on April 29, 1945, Rauff was arrested by unidentified Americans and delivered to an OSS unit led by James Angleton, the future CIA counter-intelligence chief. From its description by Aarons and Loftus, Angleton’s team appears to have been tracking communists in the Italian underground – which would have been consistent with Washington’s postwar policy of backhanding leftwing resistance leaders, from European partisans to Vietnam’s Ho Chi Minh, irrespective of the magnitude of their contributions to the Allied cause.



Angleton’s team reportedly debriefed Rauff at length, probably about what he had learned when he carried out Wolff’s orders to liquidate the resistance. After Angleton’s team released him, Rauff established contact with his former SS colleague Friederich Schwendt – who was already on the payroll of the U.S. Army Counter-Intelligence Corps (CIC) and, like Rauff himself, was wanted for murder. Schwendt was also a master counterfeiter. He laundered his product through banks, obtaining legitimate Western currency in return – enough, in fact, that over the next three years, Rauff was able to furnish thousands of fellow war criminals false identities and one-way tickets to South America. Rauff himself wound up in Chile, where he later reportedly advised Gen. Augusto Pinochet’s ruthless secret police. As for Allen Dulles, he became director of the CIA from 1953 to 1961. Under his leadership, the CIA overthrew democratically elected governments in Iran (1953) and Guatemala (1954) and replaced them with anti-democratic dictatorships. To this day, neither country has fully regained its democratic footing.

After the CIA’s disastrous 1961 Bay of Pigs invasion, President John F. Kennedy sacked Dulles, but Dulles did not wander far from the centers of power. After JFK’s assassination two years later, President Lyndon B. Johnson asked Dulles to serve on the Warren Commission’s investigation of Kennedy’s murder. Dulles died on Jan. 29, 1969. However, even today, seven decades after Dulles opened the door to U.S. collaboration with Nazi war criminals, his decision continues to infect government actions around the globe.


SS officer Klaus Barbie

HITLER’S SHADOW
http://consortiumnews.com/2013/06/06/hitlers-shadow-reaches-toward-today/
by Robert Parry / Dec. 17, 2010

The U.S. government protected Nazi war criminal Klaus Barbie in the years after World War II and later unleashed the infamous Butcher of Lyon on South America by aiding his escape from French war-crimes prosecutors, according to a report issued by the National Archives in 2010. The report, entitled “Hitler’s Shadow,” concentrates on the decisions by the U.S. Army’s Counterintelligence Corps to use Barbie and other ex-Nazis for early Cold War operations, but other work by investigative journalists and government investigators has shown how Barbie’s continued allegiance to Nazi ideology contributed to the spread of right-wing extremism in Latin America. With his skills as an intelligence operative and his expertise in state terror, Barbie helped shape the particularly vicious style of anti-communism that dominated South America for most of the Cold War. He also played a role in building a conduit for drug proceeds to fund right-wing paramilitary operations, including Ronald Reagan’s beloved Nicaraguan Contra rebels.

In 1980, Barbie used his perch in Bolivian intelligence to organize an alliance of military leaders and cocaine barons to overthrow Bolivia’s democratically elected leftist government in a bloody coup. Though fitting with Washington’s distrust of left-wing populist governments in South America, the so-called Cocaine Coup had other long-term consequences for the United States. Bolivia’s coup regime ensured a reliable flow of coca to Colombia’s Medellin cartel, which quickly grew into a sophisticated conglomerate for smuggling cocaine into the United States. Some of those drug profits then went to finance right-wing paramilitary operations, including the CIA-backed Contras, according to other U.S. government investigations. Barbie reportedly collaborated, too, with representatives of Rev. Sun Myung Moon’s Unification Church as they worked with Bolivia’s Cocaine Coup regime to organize anti-communist operations in South America. By then, the region had become a center for Moon’s global money-laundering operations. In 1982, Moon began pouring hundreds of millions of his mysterious dollars into the right-wing Washington Times newspaper to influence U.S. politics.



Eventually, as Bolivia’s corrupt Cocaine Coup government crumbled and Barbie’s identity became well known, French authorities finally secured Barbie’s return to France to face a war-crimes trial in 1983. (He died in 1991.) The Butcher of Lyon’s role in these South American anti-communist activities caused brief embarrassment for Moon’s church and some right-wing Americans. But the Nazi collaboration didn’t draw much attention from the U.S. news media, which was already shying away from critical reporting on the Reagan administration’s unsavory alliances in Central and South America. Indeed, the Right’s growing dominance of Washington opinion circles can be viewed as a continuum dating back to those days right after World War II, when U.S. priorities switched quickly from prosecuting Axis war criminals to seeking their help in crushing leftist political influence in Western Europe and Asia. Suddenly, U.S. intelligence agencies were freeing Nazi and Japanese war criminals from prison and exploiting their talents to neutralize labor unions, student groups and other left-wing organizations. Though the National Archives report deals with ex-Nazis in Europe, a similar program was underway in Japan where war criminals such as right-wing yakuza gangsters Yoshio Kodama and Ryoichi Sasakawa were freed and allowed to become important political figures in Japan – and later internationally by supporting a global crusade against communism.

In the 1960s, Kodama and Sasakawa joined with Rev. Moon and two right-wing dictators, Taiwan’s Chiang Kai-shek and South Korea’s Park Chung Hee, to create the World Anti-Communist League (WACL), which also brought in right-wing leaders from Latin America and Europe, including ex-Nazis and neo-Nazis, according to authors Scott and Jon Lee Anderson in their landmark 1986 book, Inside the League. So, with the Cocaine Coup in 1980, Barbie not only closed the circle, bringing together death-squad commanders, ex-Nazis, neo-Nazis and various sociopaths from around the globe, but he helped ensure that drug proceeds would be available to fund right-wing causes in the future. “Hitler’s Shadow,” in effect, tells the first chapter of this right-wing restoration as U.S. intelligence agencies turned to former Nazi officials and SS officers to counter the perceived greater threat from the Soviet Union and Communist groups in Europe.



“Gestapo officers, who also held ranks in the SS, were in the U.S. Army Counterintelligence Corps’s automatic arrest category after the war,” the report said. “Later, CIC used former Gestapo officers to garner useful intelligence for the postwar period on everything from German right-wing movements to underground communist organizations. Intelligence officers often overlooked the significant role Gestapo officers played in the murder of Jews, POWs, and the political enemies of the Nazis.” The report notes that “approximately 1,200 newly released files relate to the penetration of German Communist activities and specifically to ‘Project Happiness,’ the CIC’s codename for counterintelligence operations against the KPD,” the German Communist Party.

Though Barbie – notorious for personally torturing French partisans during the war – may be the best known ex-Gestapo officer recruited by the CIC, others had similar histories. For instance, Anton Mahler was the chief interrogator of Hans Scholl, a leader of the White Rose, a Munich-based student organization that secretly passed out leaflets urging Adolf Hitler’s overthrow and decrying German apathy in the face of Hitler’s crimes. Hans and his sister Sophie Scholl were convicted of high treason and beheaded in February 1943. Mahler also served in Einsatzgruppe B in occupied Belarus as the group slaughtered more than 45,000 people, most of them Jews, the report said. Nevertheless, CIC deployed Mahler as an informant starting in February 1949 and soon made him a full-time employee.

Regarding Barbie, the report builds on a 1983 investigation by a Justice Department investigator who confirmed suspicions that U.S. intelligence had worked with and protected this hunted war criminal who was accused of executing 4,000 people and shipping 7,000 Jews to concentration camps. “In the spring of 1947 a CIC agent named Robert S. Taylor from CIC Region IV (Munich) recruited Klaus Barbie, the one-time Gestapo Chief of Lyon (1942–44),” the new report said. “Barbie helped run a counterintelligence net named ‘Büro Petersen’ which monitored French intelligence. “In 1948 Barbie helped the CIC locate former Gestapo informants. In 1949–50, he penetrated German Communist Party (KPD) activities in CIC Region XII (Augsburg). … He continued to work for the CIC in return for protection against French war crimes charges.”

Ratline to Bolivia
The story of Barbie’s escape to South America with the CIC’s collaboration was addressed in the 1983 report by Allan A. Ryan Jr., head of the Justice Department’s Nazi-hunting Office of Special Investigations. Ryan’s 218-page report said that in 1951, the CIC helped Barbie evade French authorities and flee over a “ratline” to Bolivia. Ryan said that a half dozen CIC officers participated in the cover-up of Barbie’s identity and excused their actions by claiming that the French arrest of Barbie could jeopardize the security of other CIC operations. To get Barbie to Bolivia, the CIC officers used a ratline run by a Croatian priest, Father Krunoslav Draganovich, Ryan wrote. Ryan said the Central Intelligence Agency later rebuffed suggestions that Barbie be reactivated in the 1960s, but Barbie – using the name Altmann – held an official position with a state-owned shipping company that allowed him to move freely and even to travel to the United States. [For more on Ryan’s report, see Time magazine, Aug. 29, 1983]



More significantly, Barbie became a figure in Bolivian intelligence and used that perch to coordinate with other right-wing intelligence services around the continent that were engaged in Operation Condor, a program of assassinating suspected subversives and other dissidents. In the 1970s, these intelligence agencies had teamed up to give their assassination squads regional and even global reach, including the murder of Chilean diplomat Orlando Letelier and an American co-worker on the streets of Washington in 1976. For the Cocaine Coup in 1980, Barbie recruited Argentina’s feared intelligence service along with young neo-Nazis from Europe. The World Anti-Communist League arranged support from Moon and other Asian rightists. For years, Moon had been sinking down roots in South America, especially in Uruguay after right-wing military dictators seized power there in 1973. Moon also cultivated close ties with dictators in Argentina, Paraguay and Chile, reportedly ingratiating himself with the juntas by helping the regimes buy weapons and by channeling money to allied right-wing organizations. “Relationships nurtured with right-wing Latin Americans in the [World Anti-Communist] League led to acceptance of the [Unification] Church’s political and propaganda operations throughout Latin America,” the Andersons wrote in Inside the League. “As an international money laundry, … the Church tapped into the capital flight havens of Latin America. Escaping the scrutiny of American and European investigators, the Church could now funnel money into banks in Honduras, Uruguay and Brazil, where official oversight was lax or nonexistent.”

Moon expanded his network of friends when Barbie helped pull together a right-wing alliance of Bolivian military officers and drug dealers for the Cocaine Coup. WACL associates, such as Alfredo Candia, coordinated the arrival of some of the paramilitary operatives from Argentina and Europe who would help out in the violent putsch. Barbie, then better known as Altmann, was in charge of drawing up plans for the coup and coordinating with Argentine intelligence. One of the first Argentine intelligence officers to arrive was Lt. Alfred Mario Mingolla. “Before our departure, we received a dossier on” Barbie, Mingolla later told German investigative reporter Kai Hermann. “There it stated that he was of great use to Argentina because he played an important role in all of Latin America in the fight against communism. From the dossier, it was also clear that Altmann worked for the Americans.”

As the coup took shape, Bolivian Col. Luis Arce-Gomez, the cousin of cocaine kingpin Roberto Suarez, also brought onboard neo-fascist terrorists such as Italian Stefano della Chiaie who had been working with the Argentine death squads. [See Cocaine Politics by Peter Dale Scott and Jonathan Marshall] Still a committed fascist, Barbie started a secret lodge, called Thule. During meetings, he lectured to his followers underneath swastikas by candlelight. On June 17, 1980, in nearly public planning for the coup, six of Bolivia’s biggest traffickers met with the military conspirators to hammer out a financial deal for future protection of the cocaine trade. A La Paz businessman said the coming putsch should be called the “Cocaine Coup,” a name that would stick. [See Cocaine Politics] Less than three weeks later, on July 6 in Buenos Aires, Argentina, U.S. undercover drug enforcement agent Michael Levine said he met with a Bolivian trafficker named Hugo Hurtado-Candia. Over drinks, Hurtado outlined plans for the “new government” in which his niece Sonia Atala, a major cocaine supplier, will “be in a very strong position.” [See Levine’s Big White Lie]

On July 17, the Cocaine Coup began, spearheaded by Barbie and his neo-fascist goon squad which was dubbed the “Fiancés of Death.” “The masked thugs were not Bolivians; they spoke Spanish with German, French and Italian accents,” Levine wrote. “Their uniforms bore neither national identification nor any markings, although many of them wore Nazi swastika armbands and insignias.” The slaughter was fierce. When the putschists stormed the national labor headquarters, they wounded labor leader Marcelo Quiroga, who had led the effort to indict former military dictator Hugo Banzer on drug and corruption charges. Quiroga “was dragged off to police headquarters to be the object of a game played by some of the torture experts imported from Argentina’s dreaded Mechanic School of the Navy,” Levine wrote. “These experts applied their ‘science’ to Quiroga as a lesson to the Bolivians, who were a little backward in such matters. They kept Quiroga alive and suffering for hours. His castrated, tortured body was found days later in a place called ‘The valley of the Moon’ in southern La Paz.” To DEA agent Levine back in Buenos Aires, it was soon clear “that the primary goal of the revolution was the protection and control of Bolivia’s cocaine industry. All major drug traffickers in prison were released, after which they joined the neo-Nazis in their rampage. “Government buildings were invaded and trafficker files were either carried off or burned. Government employees were tortured and shot, the women tied and repeatedly raped by the paramilitaries and the freed traffickers.” The fascists celebrated with swastikas and shouts of “Heil Hitler!” Hermann reported. Col. Arce-Gomez, a central-casting image of a bemedaled, pot-bellied Latin dictator, grabbed broad powers as Interior Minister. Gen. Luis Garcia Meza was installed as Bolivia’s new president. The victory put into power a right-wing military dictatorship indebted to the drug lords. Bolivia became South America’s first narco-state.



Moon’s Throne
One of the first well-wishers arriving in La Paz to congratulate the new government was Moon’s top lieutenant (and former KCIA officer) Bo Hi Pak. The Moon organization published a photo of Pak meeting with the new strongman, General Garcia Meza. After the visit to the mountainous capital, Pak declared, “I have erected a throne for Father Moon in the world’s highest city.” According to later Bolivian government and newspaper reports, a Moon representative invested about $4 million in preparations for the coup. Bolivia’s WACL representatives also played key roles, and CAUSA, one of Moon’s anti-communist organizations, listed as members nearly all the leading Bolivian coup-makers. Soon, Colonel Luis Arce-Gomez, a coup organizer and the cousin of cocaine kingpin Roberto Suarez, went into partnership with big narco-traffickers, including Cuban-American smugglers based in Miami. Nazi war criminal Barbie and his young neo-fascist followers found new work protecting Bolivia’s major cocaine barons and transporting drugs to the Colombian border. “The paramilitary units – conceived by Barbie as a new type of SS – sold themselves to the cocaine barons,” German journalist Hermann wrote. “The attraction of fast money in the cocaine trade was stronger than the idea of a national socialist revolution in Latin America.”

A month after the Cocaine Coup, General Garcia Meza participated in the Fourth Congress of the Latin American Anti-Communist Confederation, an arm of the World Anti-Communist League. Also attending that Fourth Congress was WACL president Woo Jae Sung, a leading Moon disciple. As the drug lords consolidated their power in Bolivia, the Moon organization expanded its presence, too. Hermann reported that in early 1981, war criminal Barbie and Moon leader Thomas Ward were seen together in apparent prayer. On May 31, 1981, Moon representatives sponsored a CAUSA reception at the Sheraton Hotel’s Hall of Freedom in La Paz. Moon’s lieutenant Bo Hi Pak and Bolivian strongman Garcia Meza led a prayer for President Ronald Reagan’s recovery from an assassination attempt. In his speech, Bo Hi Pak declared, “God had chosen the Bolivian people in the heart of South America as the ones to conquer communism.”

In the early 1980s, cocaine kingpin Suarez – his coffers now overflowing with cash – invested more than $30 million in various right-wing paramilitary operations, including the Contra forces in Central America, according to U.S. Senate testimony in 1987 by an Argentine intelligence officer, Leonardo Sanchez-Reisse. Sanchez-Reisse testified that the Suarez drug money was laundered through front companies in Miami before going to Central America. There, Argentine intelligence officers — including Sanchez-Reisse and other veterans of the Cocaine Coup — trained the fledgling Contra forces. But by late 1981, the cocaine taint of Bolivia’s military junta was so deep and the corruption so pervasive that U.S.-Bolivian relations were stretched to the breaking point. “The Moon sect disappeared overnight from Bolivia as clandestinely as they had arrived,” Hermann reported. The Cocaine Coup leaders soon found themselves on the run, too. Interior Minister Arce-Gomez was extradited to Miami and was sentenced to 30 years in prison for drug trafficking. Drug lord Suarez got a 15-year prison term. General Garcia Meza became a fugitive from a 30-year sentence imposed on him in Bolivia for abuse of power, corruption and murder.

SS veteran Barbie was returned to France to face a life sentence for war crimes. He died in 1991 at the age of 77. But Moon’s organization suffered few negative repercussions from its role in the Cocaine Coup. By the early 1980s, flush with seemingly unlimited funds, Moon had moved on to promoting himself as a key friend of the new Republican administration in Washington. A guest at Reagan’s First Inauguration, Moon made his organization useful to the new President and to Vice President George H.W. Bush, who would later become a paid speaker for Moon’s organization. Where Moon got his cash was not a mystery that American conservatives were eager to solve. “Some Moonie-watchers even believe that some of the business enterprises are actually covers for drug trafficking,” wrote Scott and Jon Lee Anderson. While Moon’s representatives have refused to detail how they’ve sustained their far-flung activities – including many businesses that insiders say lose money – Moon’s spokesmen have denied recurring allegations about profiteering off illegal trafficking in weapons and drugs.

In a typical response to a gun-running question by the Argentine newspaper, Clarin, Moon’s representative Ricardo DeSena responded, “I deny categorically these accusations and also the barbarities that are said about drugs and brainwashing.” [Clarin, July 7, 1996] Nevertheless, Moon’s organization did its best to disrupt the work of U.S. investigative reporters and government investigators looking into the connections between the drug trade and right-wing paramilitary operations such as the Nicaraguan Contras. In the mid-1980s, for instance, when journalists and congressional investigators began probing the evidence of Contra-connected drug trafficking, they came under attack from Moon’s Washington Times. An Associated Press story that I co-wrote with Brian Barger about a Miami-based federal probe into gun- and drug-running by the Contras was disparaged in an April 11, 1986, front-page Washington Times article with the headline: “Story on [contra] drug smuggling denounced as political ploy.” When Sen. John Kerry, D-Massachusetts, uncovered additional evidence of Contra-drug trafficking, the Washington Times denounced him, too. The newspaper published articles depicting Kerry’s probe as a wasteful political witch hunt. “Kerry’s anti-contra efforts extensive, expensive, in vain,” declared the headline of one Times article on Aug. 13, 1986. Despite the attacks, Kerry’s Contra-drug investigation eventually concluded that a number of Contra units were implicated in the cocaine trade. “It is clear that individuals who provided support for the contras were involved in drug trafficking, the supply network of the contras was used by drug trafficking organizations, and elements of the contras themselves knowingly received financial and material assistance from drug traffickers,” Kerry’s investigation stated in a report issued April 13, 1989.

Mysterious Contra Backer
In 1998, CIA’s Inspector General Frederick Hitz confirmed the earlier allegations of extensive cocaine trafficking by the Contras, including significant ties to Bolivia’s traffickers. Hitz also cited a partially redacted document referring to a “religious” group cooperating with the Contra-cocaine trade. “There are indications of links between [a U.S. religious organization] and two Nicaraguan counter-revolutionary groups,” read an Oct. 22, 1982, cable from the office of the CIA’s Directorate of Operations. “These links involve an exchange in [the United States] of narcotics for arms.” In 1982, the CIA quickly shut down any further reporting on this drug deal, citing the role of U.S. citizens. “In light of the apparent participation of U.S. persons throughout, agree you should not pursue the matter further,” CIA headquarters wrote on Nov. 3, 1982. During the Inspector General’s investigation, Hitz conducted a follow-up interview, with Contra-connected drug trafficker Renato Pena, who described the redacted U.S. religious organization as a Contra “political ally that provided only humanitarian aid to Nicaraguan refugees and logistical support for contra-related rallies, such as printing services and portable stages.” Moon’s religious-political groups, some based in the United States, were extremely active supporting the Contras in the early 1980s, suggesting that Moon’s Washington Times might have had more than an ideological reason to attack investigators exploring Contra drug trafficking. To this day, the Washington Times remains a reliably right-wing voice in the U.S. capital. [Moon died on Sept. 3, 2012.] Still, the CIA’s shielding of the name of that “religious organization” and similar protective behavior represented a continuation of a long-standing pattern in which U.S. intelligence covered up for right-wing and neo-Nazi criminality, a dark history that began with the likes of Klaus Barbie and has extended “Hitler’s Shadow” to modern times.


Wernher von Braun not only created the infamous V-2 rocket, but also was behind the Saturn V [NASA]

MEANWHILE at NASA
http://www.aljazeera.com/indepth/opinion/2013/05/2013521386874374.html
by Amy Shira Teitel / 03 May 2013

On Thursday, September 20, 1945, Wernher von Braun arrived at Fort Strong. The small military site on the northern tip of Boston Harbour’s Long Island was the processing point for Project Paperclip, the government programme under which hundreds of German scientists were brought into America. Von Braun filled out his paperwork that day as the inventor of the Nazi V-2 rocket, a member of the Nazi party, and a member of the SS who could be linked to the deaths of thousands of concentration camp prisoners. Two and a half decades later on Wednesday, July 16, 1969, von Braun stood in the firing room at Kennedy Spaceflight Centre and watched another of his rockets, the Saturn V, take the Apollo 11 crew to the Moon.

That he was responsible for both the deadly Nazi V-2 and NASA’s majestic Saturn V makes Wernher von Braun a controversial historical figure. Some hold that his participation in the Nazi war effort necessitates classifying him as a villain. But while his actions during the Second World War were monstrous, he wasn’t motivated by some inherent evil or personal belief in Nazi ideology. Von Braun was motivated by his childhood obsession with spaceflight, a somewhat uncritical patriotism, and a naive grasp of the ramifications of his actions in creating one of the War’s deadliest weapons. How can we treat someone who brought technological triumph to two nations, in one case as a purveyor of death and destruction and in the other a bringer of wonder and inspiration?



The von Brauns
Wernher von Braun’s lineage can be traced back to the Junkers, a social class of nobles that dominated the Prussian military officer corps, the landowning elite, and offices of civil service in the 19th and early 20th centuries. High social standing was inherited or acquired through marriage, a legacy that typically gave Junkers a narrow and self-interested world view. Von Braun’s father Magnus was a civil servant, a career that ensured the family had a certain quality of life. Raised in this privileged environment with a sense of his Junker heritage shaped von Braun at an early age into a proud and sometimes arrogant young man. Wernher von Braun’s love affair with space, which was at odds with his upbringing, began when his mother Emmy gave him a telescope for his thirteenth birthday. Looking up at the Moon and the stars, he was seized with a desire to travel into space; launching rockets and landing spacecraft, men, and possibly himself on the Moon became his life’s goal. He devoured books about space travel and worked out mission plans of his own. This obsession with spaceflight took a toll on his academics, as von Braun only applied himself to the subjects that would help him launch rockets. He excelled beyond his professors in maths and physics, eventually teaching classes and tutoring his peers. His grades in other courses, meanwhile, were largely satisfactory. Nevertheless, he was skipped ahead halfway through the twelfth grade to graduate high school a year early.

It was around this time that von Braun got his first hands-on experience with rockets as a member of the Verein fur Raumschiffahrt (VfR), an amateur rocket society. The VfR’s activities caught the German Army’s attention, and when a group of officers went to watch a launch in the spring of 1932, it was von Braun who stood out. Army Ordnance officer Walter Dornberger saw promise in the young engineer and offered him the opportunity to develop his rockets and explore their possible military applications on the Army’s dime. Von Braun accepted Dornberger’s offer and began his doctoral work in physics and engineering at the University of Berlin later that year. In 1933, Adolf Hitler came to power. Still deeply engaged in his doctoral work, von Braun was only partially aware of the nationwide changes brought about by this new leadership. He was only 21 and by his own admission (albeit later in life) apolitical and somewhat disinterested in the world around him. He was patriotic, but rockets were his main concern.

Von Braun finished his dissertation in 1934. Titled “Design, Theoretical and Experimental Contributions to the Problem of the Liquid Fuel Rocket”, its contents were deemed so important to the future of Germany’s military that it was hidden under a new title, “Regarding Combustion Experiments”, and transferred to the Army Ordnance’s custody. Von Braun was just 22. Not long after, he began working for the Army on a variety of rocket programmes, among them the ballistic missile the Nazi Propaganda Ministry would eventually call Vergeltungswaffe-Zwei, Vengeance Weapon 2 or V-2. The Army increased funding for the V-2 programme throughout the 1930s. By the time the War broke out in 1939, von Braun was running a sizable operation at a dedicated rocket facility at Peenemunde. Sitting on the northern German island of Usedom, Peenemunde afforded von Braun’s team the space to build, test, and launch their rockets harmlessly into the Baltic Sea. But the V-2s that were launched towards London beginning in 1944 weren’t built at Peenemunde. These rockets were built in underground factories near the central German town of Nordhausen – most famously at Mittelwerk, where construction was done by prisoners from the nearby Dora-Mittelbau concentration camp. Over 60,000 prisoners lived, worked, and died in the damp underground tunnels at Mittelwerk. Some succumbed to disease and malnutrition. Some were worked to death. Others were hanged publicly in group executions. The death rate rose so high that crematoriums became a necessity.

Von Braun visited Mittelwerk at least once; he was given a tour of the facility by SS guards in late 1943 when prisoners were still excavating tunnels. But just how this and any subsequent trips affected the young rocketeer is open to speculation. There are no records of von Braun planning or overseeing operations at Mittelwerk, even from a distance. It’s possible that his boyhood disinterest in politics helped him either ignore or repress what he knew about Mittelwerk, or perhaps he was able to justify the deplorable conditions in his rockets’ factory as a necessity of war. Years later, in America, von Braun called the V-2 his contribution to Germany’s wartime arsenal. It was what any citizen was expected to do. During his tenure developing the V-2, von Braun joined the Nazi party and became a member of the SS. He also held on to his dream of landing men on the Moon. One night in early March of 1944, he drank too much at a party and spoke too freely in what he thought was just casual conversation. He told fellow party goers that he foresaw the war ending badly for Germany and added that all he’d ever wanted to do with his rockets was launch them into space. It was an admission akin to treason, which was a crime punishable by death. Von Braun was arrested weeks later, and while he was never incarcerated, it was his first indication that he wouldn’t be safe in his home country when the war ended.



Von Braun was attracted by the opportunities America promised and suspected that the US military would support his continued research in rocketry. He had already decided that he wanted to surrender to and build rockets for America when he heard that Hitler was dead on May 1, 1945. Hiding with his fellow rocket engineers in Bavaria at the time, von Braun elected an emissary from the group, his younger brother Magnus, to go, find and surrender to American soldiers. Magnus did. By nightfall on May 2, Wernher von Braun was in the hands of American soldiers and within months the US government made him the offer he’d hoped for: military funding to develop an Americanised version of the V-2.

After working in relative obscurity in New Mexico for four years, von Braun and other former Peenemunders brought overseas under Project Paperclip were moved to the US Army’s Redstone Arsenal in Huntsville, Alabama. On March 22, 1952, von Braun introduced the American public to his vision of space exploration in the pages of Collier’s Magazine. In a series of articles published over two years, he described how men would live and work in huge doughnut-shaped orbital space stations before setting off on missions to the Moon. He imagined spacecraft launching and gliding back to Earth daily. And he described, in detail, the rockets he would build to launch such missions. Americans met the man behind this compelling future on March 9, 1955 when von Braun appeared in the first episode of Walt Disney’s Tomorrowland TV series. Viewers saw von Braun’s vision come to life with stunning animation.Von Braun brought the same vision to NASA when the agency absorbed his rocket group in 1960. Throughout the decade, he was pictured shaking hands with presidents, smiling with astronauts, and posing in front of the massive rockets that would launch them into space. And while NASA’s path to the Moon ultimately deviated from von Braun’s vision, he nevertheless achieved his boyhood dream in 1969. Whatever celebrity von Braun achieve in America, it couldn’t erase his Nazi past. But in the same way he covered or ignored his association with Mittelwerk, American leaders and administrators suppressed or deliberately misrepresented his past and emphasised his contributions to the nation’s space programme and space exploration generally. He wasn’t ostracised as an ex-Nazi; he was celebrated as the creator of the Saturn V.

Yaroslav Stetsko, an OUN leader during World War II, meets George H.W. Bush.
Yaroslav Stetsko, an OUN leader during World War II, meets George H.W. Bush.

COLLABORATION: AMERICA’S DIRTY LITTLE SECRET
http://fpif.org/seven-decades-nazi-collaboration-americas-dirty-little-ukraine-secret/
An interview with Russ Bellant, author of “Old Nazis, the New Right, and the Republican Party.”
by   /  March 18, 2014

As the Ukrainian crisis has unfolded over the past few weeks, it’s hard for Americans not to see Vladimir Putin as the big villain. But the history of the region is a history of competing villains vying against one another; and one school of villains—the Nazis—have a long history of engagement with the US, mostly below the radar, but occasionally exposed, as they were by Russ Bellant in his book Old Nazis, The New Right And The Republican Party (South End Press, 1991). Bellant’s exposure of Nazi leaders from German allies in the 1988 Bush presidential campaign was the driving force in the announced resignation of nine individuals, two of them from the Ukraine, which is why he was the logical choice to turn to illuminate the scattered mentions of Nazi and fascist elements amongst the Ukrainian nationalists, which somehow never seems to warrant further comment or explanation. Of course most Ukranians aren’t Nazis or fascists—all the more reason to illuminate those who would hide their true natures in the shadows…or even behind the momentary glare of the spotlight.



Q: Your book, Old Nazis, the New Right, and the Republican Party exposed the deep involvement in the Republican Party of Nazi elements from Central and Eastern Europe, including Ukrainian, dating back to World War II and even before. As the Ukrainian crisis unfolded in the last few weeks there have been scattered mentions of a fascist or neo-fascist element, but somehow that never seems to warrant further comment or explanation. I can’t think of anyone better to shed light on what’s not being said about that element. The danger of Russian belligerence is increasingly obvious, but this unexamined fascist element poses dangers of its own. What can you tell us about this element and those dangers?

A: The element has a long history, of a long record that speaks for itself, when that record is actually known and elaborated on. The key organization in the coup that took place here recently was the Organization of Ukrainian Nationalists [OUN], or a specific branch of it known as the Banderas [OUN-B]. They’re the group behind the Svoboda party, which got a number of key positions in the new interim regime. The OUN goes back to the 1920s, when they split off from other groups, and, especially in the 1930s began a campaign of assassinating and otherwise terrorizing people who didn’t agree with them.

As World War II approached, they made an alliance with the Nazi powers, they formed several military formations, so that when Germany invaded the Soviet Union in June 1941, they had several battalions that went into the main city at the time, where their base was, Lvov, or Lwow, it has a variety of spellings [also ‘Lviv’]. They went in, and there’s a documented history of them participating in the identification and rounding up Jews in that city, and assisting in executing several thousand citizens almost immediately. There were also involved in liquidating Polish group populations in other parts of Ukraine during the war.

Without getting deeply involved in that whole history, the Organization of Ukrainian Nationalists to this day defend their wartime role, they were backers of forming the 14th Waffen SS Division, which was the all-Ukrainian division that became an armed element on behalf of the Germans, and under overall German control. They helped encourage its formation, and after the war, right at the end of the war, it was called the First Ukrainian division and they still glorify that history of that SS division, and they have a veterans organization, that obviously doesn’t have too many of members left but they formed a veterans division of that.

If you look insignia being worn in Kiev in the street demonstrations and marches to the SS division insignia still being worn. In fact I was looking at photographs last night of it and there was a whole formation marching, not with 14th Division, but with the Second Division, it was a large division that did major battle around the Ukraine, and these marchers were wearing the insignia on the armbands of the Second Division.

So this is a very clear record, and the OUN, even in its postwar publications has called for ethno-genetically pure Ukrainian territory, which of course is simply calling for purging Jews, and Poles, and Russians from what they consider Ukrainian territory. Also, current leaders of Svoboda have made blatantly anti-Semitic remarks that call for getting rid of Muscovite Jews and so forth. They use this very coarse threatening language that anybody knowing the history of World War II would tremble at. If they were living here, it would seem like they would start worrying about it.

Obviously these people don’t hold monopoly power in Ukraine, but they stepped up and the United States has been behind the Svoboda party and these Ukrainian nationalists. In fact the US connections to them go back to World War II and the United States has had a long-standing tie to the OUN, through the intelligence agencies, initially military intelligence, and later the CIA.

Q: Your book discusses a central figure in the OUN, Yaroslav Stetsko, who was politically active for decades here in America. What can you tell us about his history?

A: Yaroslav Stetsko was the number two leader of the OUN during World War II and thereafter. In 1959, Stefan Bandera, who was head of the OUN, was killed and that’s when Stetsko assumed the leadership. Stetsko in 1941 was the guy who actually marched into Lvov with the German army June 30, 1941 and the OUN issued a proclamation at that time under his name praising and calling for glory to the German leader Adolf Hitler and how they’re going to march arm in arm for the Ukraine and so forth. After the war, he was part of the key leadership that got picked up by the Americans.

There’s a number of accounts I’ve seen, at least three credible up reports, on how they were in the displaced person camp, the Allied forces set up displaced persons camp and picked up tens of thousands of these former allies of Hitler from countries all over the East, Hungary, Latvia, Lithuania – there weren’t Polish collaborators I think most people know the Germans heavily persecuted and murdered millions of Polish residents – but Bulgaria, Romania, Croatia, and so forth, Belorussia. They had them in these camps they built and organized them, where the Ukrainians were assassinating their Ukrainian nationalist rival so that they would be the undisputed leaders of Ukrainian nationalist movement, so they would get the sponsorship of the United States to continue their political operation, and they were successful in that regard. So when Bandera was out of the picture, Stetsko became the undisputed leader of Ukrainian nationalists.

The Organization of Ukrainian Nationalists in 1943 under German sponsorship organized a multinational force to fight on behalf of the retreating German army. After the battle of Stalingrad in ’43 the Germans felt a heightened need to get more allies, and so the Romanian Iron Guard, the Hungarian Arrow Cross, the Organization of Ukrainian Nationalists and others with military formations in place to assist came together and formed the united front called the Committee of Subjugated Nations and again worked on behalf of of the German military. In 1946, they renamed it the Anti-Bolshevik Bloc of Nations, ABN. Stetsko was the leader of that until he died in 1986.

I mention this in part because the OUN tries to say well during the war we fought the Germans and the communists. The fact of the matter is that they were the leadership of this whole multinational alliance on behalf of the German the last two years of the war and in the war thereafter. All the postwar leaders of the unrepentant Nazi allies were all under the leadership of Yaroslav Stetsko.

Q: What happened when Stetsko, and others like him from other German allied forces came to the United States?

A: In the United States, when they came, his groups organized ‘captive nations’ committees, they became, supposedly, the representatives of people who are being oppressed in Eastern Europe, the Baltic countries, by the Soviet. But they were, in fact, being given an uncritical blank check to represent the voices of all these nations that were part of the Warsaw Pact when in fact they represented the most extreme elements of each of the national communities.

The Captive Nations Committee in Washington DC for instance was run by the person who headed the Ukrainian organization of nationalists, that was true in a number of places. In my hometown area near Detroit as well, they played a major role. In the early 50s, when they were resettled in the United States, there was at least 10,000 of them that were resettled, when you look at all the nationalities. They became politically active through the Republican national committee, because it was really the Eisenhower administration that made the policy decision in the early 1950s, and brought them in. They set up these campaign organizations, every four years they would mobilize for the Republican candidate, whoever it would be, and some of them like Richard Nixon, in 1960, actually had close direct ties to some of the leaders like the Romanian Iron Guard, and some of these other groups.

When Richard Nixon ran for president in 1968, he made a promise to these leaders that they would if he won the presidency he would make them the ethnic outreach arm of the Republican National Committee on a permanent basis, so they wouldn’t be a quadrennial presence, but a continuing presence in the Republican Party. And he made that promise through a guy named Laszlo Pasztor, who served five years in prison after World War II for crimes against humanity. He was prosecuted in 1946 by non-Communist government that actually had control of Hungary at the time. There was a period from ’45 to ’48 when the Hungarian Communist Party didn’t run Hungary. They were the ones who prosecuted him. He had served as a liaison between the Hungarian Nazi party and Berlin; he served in the Berlin embassy of the Hungarian Arrow Cross movement. This is the guy that got picked to organize all the ethnic groups, and the only people that got brought in were the Nazi collaborators.

They didn’t have a Russian affiliate because they hated all Russians of all political stripes. There were no African Americans or Jewish affiliates either. It was just composed of these elements, and for a while they had a German affiliate but some exposure of the Nazi character of the German affiliate caused it to be quietly removed, but other [Nazi] elements were retained.



Q: Your book was researched and published in the 1980s. What was happening by that point in time, after these groups had been established for more than a decade?

A: I went to their meetings in the 1980s, and they put out material that really make clear who they were there 1984, one of their 1984 booklets praised the pro-Nazi Ustashi regime in Croatia, and these Ustashi killed an estimated 750,000 people and burned them alive in their own camp in Croatia. And here they are praising the founding of this regime, and acknowledging that it was associated with the Nazis, and it was signed by the chairman of the Republican National Committee. You couldn’t make this stuff up. It was just crazy.

I interviewed the Kossack guy, he showed me his pension from service in the SS in World War II, and how he was affiliated with free Nazi groups in the United States, and he was just very unrepentant. These are the umbrellas that were called ‘Captive Nations Committees’ by these people that Stetsko was over, and was part of, too. The Reagan White House brought him in, and promoted him as a major leader and did a big dinner—[UN Ambassador] Jeane Kirkpatrick was part of it, George Bush as Vice President, of course Reagan—and Stetsko was held up as a great leader., And proclamations were issued on his behalf.

When Bush was running for president in 1988, Bush Senior, he came to these basically one of the leading locations of the Ukrainian nationalists in North America, which is in just outside of Detroit, a suburb of Detroit to their cultural center, and one of their foremost leaders in the world is headquartered out of their, at the time, he got Bush to come there and they denounced the OSI and Bush just shook his head, he wouldn’t say anything about it.

The OSI was the Offices of Special Investigations, it was investigating the presence of Nazi war criminals in the United States, and deporting those that were found to have lied on their history when they applied to come into the United States after the war. They had deported a number of people from all over the United States. They had a lot of open investigations, and all these émigré Nazis were trying to bring all the political pressure they could to stop these investigations, including the Ukrainian nationalists ones.

So they denounced them, the OSI investigations, in front of Bush, Bush nodded his head, but he wouldn’t say anything because he didn’t want to sound like he was sympathetic to the Nazi war criminals, but at the same time he didn’t want to offend his hosts by disputing the issue with them. So, the issue of World War II was still being played out over four decades later, in the politics of the presidency, and unfortunately Bush and Reagan continued to be on the side that we tried to defeat in World War II.



Q: What was the response when your book came out, with all this information? How was the information received, and what was the political reaction?

A: Prior to the book’s publication, Washington Jewish Week had done a story about some of the ethnic leaders of the Bush campaign and their history, like denying the Holocaust, or being involved with these émigré Nazi groups. They named a couple of them that weren’t part of the Heritage Groups Council, but they were part of the Bush campaign.

Then when I published the book, it brought out a lot more names, and the Philadelphia Inquirer and the Boston Globe did stories on them. It got to the point where when reporter from the Philadelphia Inquirer would call them about one of their ethnic leaders of the Bush campaign the standard response was he’s no longer part of the campaign, and they’d say that almost as soon as the name would get mentioned. So that they would call that person, and I’ll give the example of Florian Galdau, he was, he ran the Rumanian Iron Guard in New York City. He had wartime record. [Romanian Archbishop Valerian] Trifa himself was implicated in the mass killing of Jews in Bucharest in 1941, I believe. Galdau’s record is clear, because when Trifa was prosecuted he was one of the people targeted by the Office of Special Investigations, and he was forced into deportation in the 1980s, but in those records, they identify Florian Galdau is one of his operatives, so his history is known, except apparently to the Bush campaign.

So when he was identified by the Philadelphia Inquirer, they immediately said he wasn’t part of it, so the Philadelphia Inquirer called Florian Galdau, and he said, “No, I’m part of it. They never said anything to me. As far as I know I’m still part of the campaign.” And that was the pattern.

The Republican National Committee said after the election that they were going to put a blue ribbon committee together and do an investigation of the charges in my book. I was never contacted, nobody affiliated with the book project, the publisher wasn’t contacted none, none of the sources I worked with was contacted. And after about a year, with nobody raising any issues or questions about it they just folded it up and they said well we have not had the resources to investigate this matter.

I did publish an op-ed in the New York Times about two weeks after the election was over, and I think that was the last time anybody said anything publicly about it that got any kind of forum. I think they were allowed to just die and wither away, that is those leaders. The Republican idea was probably to bring in another generation of people who were born in the United States as these émigré’s died off, but they never did anything about this history that Richard Nixon had bequeathed them with. The Reagan White House had really made deep political commitments and alliances with them, they didn’t want to look like they turned their back on them; and Bush wanted them for his reelection campaign, so he wasn’t going to turn his back on them either.

If you want an anecdote, I know that 60 Minutes was working on a piece that Bradley’s team was working on, and Nancy Reagan herself called the executive producer and said that we would really like it if you would wouldn’t do this story, and they killed it. Because, basically, it’s not just about Nazis and the Republican national committee were Nazis in the White House, it inevitably raises the question of who are they how did they get here, who sponsored them and it goes back to the intelligence agencies at that point. And some people don’t like treading there, if it’s tied to an intelligence agency, they prefer to just stay away from the subject. So, some people at 60 Minutes were frustrated by it, but that’s what happened. I think that they were able to effectively kill the story when people tried to cover it. They were able to persuade news managers to not delve into it too much.

Q: What’s happened since you wrote your book, and most of the World War II generation died off? What have the OUN and its allies been up to since then that we should be aware of?

A: Once the OUN got sponsored by the American security establishment intelligence agencies, they were embedded in a variety of ways in Europe as well, like Radio Free Europe which is headquartered in Munich. A lot of these groups, in the ABN were headquartered in Munich under the sponsorship of Radio Free Europe. From there they ran various kinds of operations where they were trying to do work inside the Warsaw Pact countries. When the Soviet Union collapsed in 1991, a number of them moved back into the Ukraine as well as the other respective countries, and began setting up operations there, and organizing political parties. They reconstituted the veterans group of the Waffen SS, they held marches in the 1990s in the Ukraine, and organized political parties, in alliance with the United States, and became part of what was called the Orange Revolution in 2004, when they won the election there.

The prime minister was closely allied with them. They worked with the new government to get veterans benefits for the Ukrainian SS division veterans, and they started establishing the statues and memorials and museums for Stepan Bandera, who was the leader of the OUN, and who I should say was despised by other Ukrainian nationalists because of their methods, because they were extreme and violent toward other rival Ukrainian nationalist groups as well. So Bandera wasn’t a universal hero, but this group was so influential, in part because of its US connections, that if you go online and you Google ‘Lviv’ and the word ‘Bandera’ you’ll see monuments and statues and large posters and banners of Bandera’s likeness and large monuments permanent erected monuments on behalf of Bandera so they made this guy like he’s the George Washington of the Ukraine.

That government was in power until 2010, when there was another election, and a new regime was elected with a lot of support from the East. Ukrainian nationalist groupings around the Orange Revolution were sharply divided against each other, and there was rampant corruption, and people voted them out. The United States was very aggressive in trying to keep the nationalists in power, but they lost the election. The United States was spending money through the National Endowment for Democracy, which was pumping money into various Ukrainian organizations, and they were doing the same thing in Russia and many other countries around the world as well. We’re talking about many millions of dollars a year to affect the politics of these countries.

When the occupations came in Independence Square in Kiev late last year, you can see Svoboda’s supporters and you can hear their leaders in the parliament making blatant anti-semitic remarks. The leader of the Svoboda party went to Germany to protest the prosecution of John Demjanjuk, who was the Ukrainian who was settled in the United States, who was implicated as a concentration camp guard in the killing of innocent people. The German courts found him guilty and Svoboda leadership went to Germany to complain about convicting this guy. The reason they said they didn’t want any Ukrainian tainted with it because they live a lie that no Ukrainian had anything to do with the German Nazi regime, when history betrays them, and their own affiliations betray them. But they don’t like that being out there publicly, so they always protest their innocence of any Ukrainian being charged with anything, regardless of what the evidence is.

Q: Your book was an important revelation but was not alone. Your book notes that Jack Anderson reported on the pro-Nazi backgrounds of some of the ethnic advisors as far back as 1971, yet when your report came out almost two decades later, everyone responded with shock, surprise, and even denial. What lessons should we draw from this history of buried history? And how should it influence our thinking about the unfolding crisis in the Ukraine?

A: I don’t believe it’s ever too late to become familiarized and educated about the history of this phenomenon both the wartime history and our postwar collaboration with these folks. There were a number of exposés written about the émigré Nazis. There was a 1979 book calledWanted and it did a number of case stories of these people being brought in to the United States, including the Trifa story. Christopher Simpson did a book called Blowback that discussed the policy decisions, it’s an incredible book. He’s a professor at American University and he did years of research through the Freedom of Information Act and archives, and got the policy documents under which the decisions were made to bring these folks together, and not just into the United States but to deploy them around the world.

Like my book, it didn’t get the attention it deserved. The New York Times book reviewer was negative toward the book. There are people that really don’t want to touch this stuff. There’s a lot of people who don’t want it touched. I think it’s really important for people who believe in openness and transparency and democratic values, who don’t want to see hate groups come back to power in other parts of the world to know what happened.

There’s not very many Americans that really even know that the Waffen SS was a multinational force. That’s been kind of kept out of the received history. Otherwise people would know that there were Ukrainian Nazis, Hungarian Nazis, Latvian Nazis, and they were all involved in the mass murder of their fellow citizens, if they were Jewish, or even if they were co-nationalists that were on the other side of the issue of the war. They were just mass murderers, across Eastern Europe. And that history, those facts aren’t even well-known. A lot of people didn’t even know this phenomenon even existed.

I think all Americans have a responsibility to know what their government is doing in the foreign policy in Europe as well as elsewhere around the world, as well as Latin America as well as Africa. Since our policy was to uphold apartheid in South Africa why weren’t Americans challenging that more? They began challenging that in the 80s, but the apartheid regime was run by the Nazi party. They were allied with Germany in World War II, they were the Nationalist party and they took power in 1948 and the United States backed that for decades. We backed the death squads in Latin America, even though they massacred tens of thousands of people – 30,000 people in Chile alone. Americans aren’t being attentive to what their government is doing abroad, even though it’s been doing done with their tax dollars and in their name, and I think we just have a general responsibility.

I went to these meetings, I went to these conferences, I went over a period of years. I met with them directly, most of the people I wrote about, I met with them personally or in group meetings. People can’t afford to do that on their own, timewise, but there’s enough literature out there they can read and pursue it, they will get enough enough of a handle to get what the real picture is, to demand change. I’m not totally partisan in this, but I think the Republican Party was extreme on this, but the Democrats folded and didn’t challenge this when they knew it was going on.

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INNOCENT or NOT

EVERYTHING’S on FILE
https://rt.com/usa/news/agency-us-nctc-surveillance-998/
Everyone is fair game: Spy agency conducts surveillance on all US citizens  /  13 December, 2012

The Obama administration overruled recommendations from within the US Department of Homeland Security and implemented new guidelines earlier this year that allow the government to gather and analyze intelligence on every single US citizen. Since the spring, a little-know intelligence agency outside of Washington, DC has been able to circumvent the Fourth Amendment to the US Constitution and conduct dragnet surveillance of the entire country, combing massive datasets using advanced algorithms to search and seize personal info on anyone this wish, reports the Wall Street Journal this week. There’s no safeguard that says only Americans with criminal records are the ones included, and it’s not just suspected terrorists that are considered in the searches either. The National Counterterrorism Center (NCTC) has been provided with entire government databases and given nearly endless access to intelligence on everyone in the country, regardless of whether or not they’ve done anything that would have made them a person of interest. As long as data is “reasonably believed” to contain “terrorism information,” the agency can do as they wish. What’s more is the NCTC can retain that information for years, reviewing it whenever they’d like to take a look. The update to the agency’s policies, reported by RT at the time and reexamined this week in the Journal, expose any person in the country to invasive and nearly endless government surveillance.

According to documents obtained by the Journal through Freedom of Information Act requests and conversations between the paper and persons familiar with that Situation Room sound-off, Ms. Callahan unsuccessfully argued against updating a 2008 Justice Department memo about what intel the NCTC can have and how they use it. Just weeks after that meeting, new guidelines were authorized and, within months, Ms. Callahan was working elsewhere. Despite her efforts, a 32-page document, “Guidelines for Access, Retention, Use and Dissemination by the National Counterterrorism Center and other Agencies of Information in Datasets Containing Non-Terrorism Information,” went into effect, and with that the NCTC was no longer restricted to only terrorism-related intelligence. Indeed, the changes aren’t just within the name of the document. The 2012 update to the NCTC’s data-mining policies expand the intelligence the agency can comb while at the same time removing safeguards that were in place for privacy’s sake. Under the new rules, data on innocent Americans can be retained for five years, and intel on anyone “reasonably believed to constitute terrorism information” can be kept until the end of time.

According to the paper, “flight records, casino-employee lists, the names of Americans hosting foreign-exchange students and many others” can be collected indefinitely and searched at will within the NCTC, an agency only nine years old and not nearly as well-known as her sister spy groups: the CIA and FBI. Once the NCTC has the info, though, they can decide who else can be made privy to it. If the US government is so inclined, intelligence on specific citizens can be sent to any foreign nation in the world. On the blog PrivacySOS, civil liberties advocate Kade Crockford condemns the spy program by saying any safeguard that could be implemented wouldn’t end what appears to be a serious constitutional violation. “And even if it was an effective anti-terrorism technique, widespread, warrantless surveillance of every single living human being – suspicious or not – damn sure isn’t democratic practice. We are supposed to be innocent until proven guilty in this country, not the other way around,” Crockford writes. Meanwhile, in-between Calabrese’s original post and the Journal’s article from this week, search giant Google confirmed that the federal government has sent more requests for personal user data in 2012 than ever before. “This is the sixth time we’ve released this data, and one trend has become clear: Government surveillance is on the rise,” Google explained last month.

The latest revelation from the Journal of course is but the most recent installation in what has become a remarkable year in terms of finding out the truth about Uncle Sam’s shocking full-fledged surveillance. Throughout 2012, several former employees of the National Security Agency (NSA) have stepped up and given interviews about the grievances with the office, particularly their disregard for the privacy of Americans. “When you open up the Pandora’s Box of just getting access to incredible amounts of data, for people that have no reason to be put under suspicion, no reason to have done anything wrong, and just collect all that for potential future use or even current use, it opens up a real danger — and to what else what they could use that data for, particularly when it’s all being hidden behind the mantle of national security,” NSA whistleblower Thomas Drake told Current TV host Eliot Spitzer earlier this year.

Earlier this month, former NSA analyst William Binney spoke with RT and said that the FBI — who maintains databases that can be requested by the NCTC under their latest policies — has been storing the emails of every person in America for at least a decade. “So, yes, this can happen to anyone. If they become a target for whatever reason – they are targeted by the government, the government can go in, or the FBI, or other agencies of the government, they can go into their database, pull all that data collected on them over the years, and we analyze it all. So, we have to actively analyze everything they’ve done for the last 10 years at least,” he said. Upon winning a Callaway award for civic courage in DC last month, Mr. Binney explained that he and other former NSA agents “could not be accessories to violations of the US Constitution.” Ms. Callahan has since left her post within the NCTC and is now practicing law in the nation’s capital focusing specifically on privacy.



DATA KEPT INDEFINITELY
http://www.aclu.org/blog/national-security-technology-and-liberty/vast-new-spying-program-was-started-secret-bogus
Vast New Spying Program Started in Secret on Bogus Pretext
by Chris Calabrese, Legislative Counsel, ACLU Washington  /  12/13/2012

The Wall Street Journal today published (alternate link) an in-depth review of a new, relatively unknown program run by the National Counterterrorism Center (NCTC). Although we have been warning about the dangers of the program for months, and Itestified before Congress about the issue in July, the Journal’s story conveys how controversial the program was even inside the government. It also describes the broad scope of new authority the government is granting itself.

The program is striking in so many ways. Innocent people can be investigated and their data kept for years. It can be shared with foreign governments. All of this in service of not just terrorism investigations but also investigations of future crimes. In effect, the U.S. government is using information it gathers for its ordinary business to turn its own citizens into the subjects of terrorism investigations. Meanwhile, all of this is supposed to be against the law. The Privacy Act of 1974 says that information collected by the federal government for one purpose is not supposed to be used for another. However, agencies are attempting to circumvent these rules by publishing boilerplate notices in the Federal Register. Sadly, that practice has become far too common. Worse, all of this happened in secret, approved by National Security Advisor John Brennan and signed off on by Attorney General Eric Holder. No public debate or comment and suddenly, every citizen can be put under the terrorism microscope.

Ironically, all of these changes to the rules came in response to an attempted attack that had nothing to do with information collection or a U.S. citizen. The government cites the attempted 2009 Christmas bombing by Umar Farouk Abdulmutallab as the impetus for the changes. However, as the Journal story makes clear, Abdulmutallab wasn’t a U.S. citizen, and collecting information on him wasn’t a problem. Instead, his own father had identified him to the U.S. government as a potential terrorist. In short, an attack by a known foreign terror suspect was used to justify changes to rules about collecting information on U.S. citizens.

Finally, credit must be given to those who fought the program. It’s clear that DHS, especially the Privacy Officer, Mary Ellen Callahan, and the Office of Civil Rights and Civil Liberties pushed back hard against this. Nancy Libin, the chief privacy officer at the Department of Justice, also expressed serious reservations and fought an internal battle against the changes. It’s probably not a surprise that none of them are still in government. If you want to learn more here is a simple guide to the main changes created by the 2012 NCTC guidelines. And here are the Freedom of Information Act documents that we have gathered on NCTC—we will post more as we receive additional records.


Mary Ellen Callahan, then-chief privacy officer of the Department of Homeland Security: ‘This is a sea change in the way that the government interacts with the general public.’

SPY ETHICS
http://online.wsj.com/article/SB10001424127887324478304578171623040640006.html
by Julia Angwin / December 12, 2012

Top U.S. intelligence officials gathered in the White House Situation Room in March to debate a controversial proposal. Counterterrorism officials wanted to create a government dragnet, sweeping up millions of records about U.S. citizens—even people suspected of no crime. Not everyone was on board. “This is a sea change in the way that the government interacts with the general public,” Mary Ellen Callahan, chief privacy officer of the Department of Homeland Security, argued in the meeting, according to people familiar with the discussions. A week later, the attorney general signed the changes into effect. Through Freedom of Information Act requests and interviews with officials at numerous agencies, The Wall Street Journal has reconstructed the clash over the counterterrorism program within the administration of President Barack Obama. The debate was a confrontation between some who viewed it as a matter of efficiency—how long to keep data, for instance, or where it should be stored—and others who saw it as granting authority for unprecedented government surveillance of U.S. citizens.

The rules now allow the little-known National Counterterrorism Center to examine the government files of U.S. citizens for possible criminal behavior, even if there is no reason to suspect them. That is a departure from past practice, which barred the agency from storing information about ordinary Americans unless a person was a terror suspect or related to an investigation. Now, NCTC can copy entire government databases—flight records, casino-employee lists, the names of Americans hosting foreign-exchange students and many others. The agency has new authority to keep data about innocent U.S. citizens for up to five years, and to analyze it for suspicious patterns of behavior. Previously, both were prohibited. Data about Americans “reasonably believed to constitute terrorism information” may be permanently retained.

The changes also allow databases of U.S. civilian information to be given to foreign governments for analysis of their own. In effect, U.S. and foreign governments would be using the information to look for clues that people might commit future crimes. “It’s breathtaking” in its scope, said a former senior administration official familiar with the White House debate. Counterterrorism officials say they will be circumspect with the data. “The guidelines provide rigorous oversight to protect the information that we have, for authorized and narrow purposes,” said Alexander Joel, Civil Liberties Protection Officer for the Office of the Director of National Intelligence, the parent agency for the National Counterterrorism Center.

The Fourth Amendment of the Constitution says that searches of “persons, houses, papers and effects” shouldn’t be conducted without “probable cause” that a crime has been committed. But that doesn’t cover records the government creates in the normal course of business with citizens. Congress specifically sought to prevent government agents from rifling through government files indiscriminately when it passed the Federal Privacy Act in 1974. The act prohibits government agencies from sharing data with each other for purposes that aren’t “compatible” with the reason the data were originally collected. But the Federal Privacy Act allows agencies to exempt themselves from many requirements by placing notices in the Federal Register, the government’s daily publication of proposed rules. In practice, these privacy-act notices are rarely contested by government watchdogs or members of the public. “All you have to do is publish a notice in the Federal Register and you can do whatever you want,” says Robert Gellman, a privacy consultant who advises agencies on how to comply with the Privacy Act. As a result, the National Counterterrorism Center program’s opponents within the administration—led by Ms. Callahan of Homeland Security—couldn’t argue that the program would violate the law. Instead, they were left to question whether the rules were good policy.

Under the new rules issued in March, the National Counterterrorism Center, known as NCTC, can obtain almost any database the government collects that it says is “reasonably believed” to contain “terrorism information.” The list could potentially include almost any government database, from financial forms submitted by people seeking federally backed mortgages to the health records of people who sought treatment at Veterans Administration hospitals. Previous government proposals to scrutinize massive amounts of data about innocent people have caused an uproar. In 2002, the Pentagon’s research arm proposed a program called Total Information Awareness that sought to analyze both public and private databases for terror clues. It would have been far broader than the NCTC’s current program, examining many nongovernmental pools of data as well. “If terrorist organizations are going to plan and execute attacks against the United States, their people must engage in transactions and they will leave signatures,” the program’s promoter, Admiral John Poindexter, said at the time. “We must be able to pick this signal out of the noise.”

Adm. Poindexter’s plans drew fire from across the political spectrum over the privacy implications of sorting through every single document available about U.S. citizens. Conservative columnist William Safire called the plan a “supersnoop’s dream.” Liberal columnist Molly Ivins suggested it could be akin to fascism. Congress eventually defunded the program. The National Counterterrorism Center’s ideas faced no similar public resistance. For one thing, the debate happened behind closed doors. In addition, unlike the Pentagon, the NCTC was created in 2004 specifically to use data to connect the dots in the fight against terrorism. Even after eight years in existence, the agency isn’t well known. “We’re still a bit of a startup and still having to prove ourselves,” said director Matthew Olsen in a rare public appearance this summer at the Aspen Institute, a leadership think tank. The agency’s offices are tucked away in an unmarked building set back from the road in the woodsy suburban neighborhood of McLean, Va. Many employees are on loan from other agencies, and they don’t conduct surveillance or gather clues directly. Instead, they analyze data provided by others.

The agency’s best-known product is a database called TIDE, which stands for the Terrorist Identities Datamart Environment. TIDE contains more than 500,000 identities suspected of terror links. Some names are known or suspected terrorists; others are terrorists’ friends and families; still more are people with some loose affiliation to a terrorist. TIDE files are important because they are used by the Federal Bureau of Investigation to compile terrorist “watchlists.” These are lists that can block a person from boarding an airplane or obtaining a visa. The watchlist system failed spectacularly on Christmas Day 2009 when Umar Farouk Abdulmutallab, a 23-year-old Nigerian man, boarded a flight to Detroit from Amsterdam wearing explosives sewn into his undergarments. He wasn’t on the watchlist. He eventually pleaded guilty to terror-related charges and is imprisoned. His bomb didn’t properly detonate. However, Mr. Abdulmutallab and his underwear did alter U.S. intelligence-gathering. A Senate investigation revealed that NCTC had received information about him but had failed to query other government databases about him. In a scathing finding, the Senate report said, “the NCTC was not organized adequately to fulfill its missions.”

“This was not a failure to collect or share intelligence,” said John Brennan, the president’s chief counterterrorism adviser, at a White House press conference in January 2010. “It was a failure to connect and integrate and understand the intelligence we had.” As result, Mr. Obama demanded a watchlist overhaul. Agencies were ordered to send all their leads to NCTC, and NCTC was ordered to “pursue thoroughly and exhaustively terrorism threat threads.” Quickly, NCTC was flooded with terror tips—each of which it was obligated to “exhaustively” pursue. By May 2010 there was a huge backlog, according a report by the Government Accountability Office. Legal obstacles emerged. NCTC analysts were permitted to query federal-agency databases only for “terrorism datapoints,” say, one specific person’s name, or the passengers on one particular flight. They couldn’t look through the databases trolling for general “patterns.” And, if they wanted to copy entire data sets, they were required to remove information about innocent U.S. people “upon discovery.” But they didn’t always know who was innocent. A person might seem innocent today, until new details emerge tomorrow.

“What we learned from Christmas Day”—from the failed underwear bomb—was that some information “might seem more relevant later,” says Mr. Joel, the national intelligence agency’s civil liberties officer. “We realized we needed it to be retained longer.” Late last year, for instance, NCTC obtained an entire database from Homeland Security for analysis, according to a person familiar with the transaction. Homeland Security provided the disks on the condition that NCTC would remove all innocent U.S. person data after 30 days. After 30 days, a Homeland Security team visited and found that the data hadn’t yet been removed. In fact, NCTC hadn’t even finished uploading the files to its own computers, that person said. It can take weeks simply to upload and organize the mammoth data sets. Homeland Security granted a 30-day extension. That deadline was missed, too. So Homeland Security revoked NCTC’s access to the data. To fix problems like these that had cropped up since the Abdulmutallab incident, NCTC proposed the major expansion of its powers that would ultimately get debated at the March meeting in the White House. It moved to ditch the requirement that it discard the innocent-person data. And it asked for broader authority to troll for patterns in the data.

As early as February 2011, NCTC’s proposal was raising concerns at the privacy offices of both Homeland Security and the Department of Justice, according to emails reviewed by the Journal. Privacy offices are a relatively new phenomenon in the intelligence community. Most were created at the recommendation of the 9/11 Commission. Privacy officers are often in the uncomfortable position of identifying obstacles to plans proposed by their superiors. At the Department of Justice, Chief Privacy Officer Nancy Libin raised concerns about whether the guidelines could unfairly target innocent people, these people said. Some research suggests that, statistically speaking, there are too few terror attacks for predictive patterns to emerge. The risk, then, is that innocent behavior gets misunderstood—say, a man buying chemicals (for a child’s science fair) and a timer (for the sprinkler) sets off false alarms. An August government report indicates that, as of last year, NCTC wasn’t doing predictive pattern-matching. The internal debate was more heated at Homeland Security. Ms. Callahan and colleague Margo Schlanger, who headed the 100-person Homeland Security office for civil rights and civil liberties, were concerned about the implications of turning over vast troves of data to the counterterrorism center, these people said. They and Ms. Libin at the Justice Department argued that the failure to catch Mr. Abdulmutallab wasn’t caused by the lack of a suspect—he had already been flagged—but by a failure to investigate him fully. So amassing more data about innocent people wasn’t necessarily the right solution.

The most sensitive Homeland Security data trove at stake was the Advanced Passenger Information System. It contains the name, gender, birth date and travel information for every airline passenger entering the U.S. Previously, Homeland Security had pledged to keep passenger data only for 12 months. But NCTC was proposing to copy and keep it for up to five years. Ms. Callahan argued this would break promises the agency had made to the public about its use of personal data, these people said. Discussions sometimes got testy, according to emails reviewed by the Journal. In one case, Ms. Callahan sent an email complaining that “examples” provided to her by an unnamed intelligence official were “complete non-sequiturs” and “non-responsive.”

In May 2011, Ms. Callahan and Ms. Schlanger raised their concerns with the chief of their agency, Janet Napolitano. They fired off a memo under the longwinded title, “How Best to Express the Department’s Privacy and Civil Liberties Concerns over Draft Guidelines Proposed by the Office of the Director of National Intelligence and the National Counterterrorism Center,” according to an email obtained through the Freedom of Information Act. The contents of the memo, which appears to run several pages, were redacted. The two also kept pushing the NCTC officials to justify why they couldn’t search for terrorism clues less invasively, these people said. “I’m not sure I’m totally prepared with the firestorm we’re about to create,” Ms. Schlanger emailed Ms. Callahan in November, referring to the fact that the two wanted more privacy protections. Ms. Schlanger returned to her faculty position at the University of Michigan Law School soon after but remains an adviser to Homeland Security. To resolve the issue, Homeland Security’s deputy secretary, Jane Holl Lute, requested the March meeting at the White House. The second in command from Homeland Security, the Justice Department, the FBI, NCTC and the office of the director of national intelligence sat at the small conference table. Normal protocol for such meeting is for staffers such as Ms. Callahan to sit against the walls of the room and keep silent. By this point, Ms. Libin’s concern that innocent people could be inadvertently targeted had been largely overruled at the Department of Justice, these people said. Colleagues there were more concerned about missing the next terrorist threat. That left Ms. Callahan as the most prominent opponent of the proposed changes. In an unusual move, Ms. Lute asked Ms. Callahan to speak about Homeland Security’s privacy concerns. Ms. Callahan argued that the rules would constitute a “sea change” because, whenever citizens interact with the government, the first question asked will be, are they a terrorist? Mr. Brennan considered the arguments. And within a few days, the attorney general, Eric Holder, had signed the new guidelines. The Justice Department declined to comment about the debate over the guidelines. Under the new rules, every federal agency must negotiate terms under which it would hand over databases to NCTC. This year, Ms. Callahan left Homeland Security for private practice, and Ms. Libin left the Justice Department to join a private firm.

Homeland Security is currently working out the details to give the NCTC three data sets—the airline-passenger database known as APIS; another airline-passenger database containing information about non-U.S. citizen visitors to the U.S.; and a database about people seeking refugee asylum. It previously agreed to share databases containing information about foreign-exchange students and visa applications. Once the terms are set, Homeland Security is likely to post a notice in the Federal Register. The public can submit comments to the Federal Register about proposed changes, although Homeland Security isn’t required to make changes based on the comments.

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GOLDMAN REX

MAP DOES NOT INCLUDE PRIME MINISTERS or CENTRAL BANKS
http://www.goldmansachs.com/who-we-are/locations/index.html
http://www.businessinsider.com/current-goldman-alumni-in-key-public-positions-2012-11
http://www.bloomberg.com/news/2012-11-14/goldman-sachs-names-70-partners-fewest-as-public-company.html
http://dealbook.nytimes.com/2008/10/20/the-guys-from-government-sachs/
http://dealbook.nytimes.com/2012/11/26/bank-of-englands-new-leader-a-member-of-the-government-sachs-club/

COUP DE MONDE
http://truth-out.org/opinion/item/12996-goldman-sachs-global-coup-de-tat
Goldman Sachs’ Global Coup D’etat
by Thom Hartmann and Sam Sacks / 27 November 2012

When the people of Greece saw their democratically elected Prime Minister George Papandreou forced out of office in November of 2011 and replaced by an unelected Conservative technocrat, Lucas Papademos, most were unaware of the bigger picture of what was happening all around them. Similarly, most of us in the United States were equally as ignorant when, in 2008, despite the switchboards at the US Capitol collapsing under the volume of phone calls from constituents urging a “no” vote, our elected representatives voted “yes” at the behest of Bush’s Treasury Secretary Henry Paulsen and jammed through the biggest bailout of Wall Street in our nation’s history. But now, as the Bank of England, a key player in the ongoing Eurozone crisis,announces that former investment banker Mark Carney will be its new chief, we can’t afford to ignore what’s happening around the world. Steadily – and stealthily – Goldman Sachs is carrying out a global coup d’etat.

There’s one tie that binds Lucas Papademos in Greece, Henry Paulsen in the United States, and Mark Carney in the U.K., and that’s Goldman Sachs. All were former bankers and executives at the Wall Street giant, all assumed prominent positions of power, and all played a hand after the global financial meltdown of 2007-08, thus making sure Goldman Sachs weathered the storm and made significant profits in the process. But that’s just scratching the surface. As Europe descends into an austerity-induced economic crisis, Goldman Sachs’s people are managing the demise of the continent. As the British newspaper The Independent reported earlier this year, the Conservative technocrats currently steering or who have steered post-crash fiscal policy in Greece, Germany, Italy, Belgium, France, and now the UK, all hail from Goldman Sachs. In fact, the head of the European Central Bank itself, Mario Draghi, was the former managing director of Goldman Sachs International.

And here in the United States, after Treasury Secretary and former Goldman CEO Henry Paulsen did his job in 2008 securing Goldman’s multi-billion dollar bailout, he was replaced in the new Obama administration with Tim Geithner who worked very closely with Goldman Sachs as head of the New York Fed and made sure Goldman received more than $14 billion from the bailout of failed insurance giant AIG.

What’s happening here goes back more than a decade. In 2001, Goldman Sachs secretly helped Greece hide billions of dollars through the use of complex financial instruments like credit default swaps. This allowed Greece to meet the baseline requirements to enter the Eurozone in the first place. But it also created a debt bubble that would later explode and bring about the current economic crisis that’s drowning the entire continent. But, always looking ahead, Goldman protected itself from this debt bubble by betting against Greek bonds, expecting that they would eventually fail. Ironically, the man who headed up the Central Bank of Greece while this deal was being arranged with Goldman was – drumroll please – Lucas Papademos.

Goldman made similar deals here in the United States, masking the true value of investments, then selling those worthless investments to customers while placing bets that those same investments would eventually fail. The most notorious example was the “Timberwolf” deal, which brought down an Australian hedge fund, and which Goldman Sachs banksters emailed each other about, bragging, “Boy, that Timberwolf was one shitty deal.” This sort of behavior by Goldman helped inflate, and then eventually pop, the housing bubble in the United States. The shockwave then ran across the Atlantic, hitting Europe and turning Goldman’s debt-masking deal with Greece years earlier sour, thus deepening the crisis.

All of these antics should have brought about the demise of Goldman as well, but with their alumni in key policy positions on both sides of the Atlantic, Goldman not only survived, it flourished. As the DailyKos sums up, “The normal scenario usually involves helping a nation hide a problem and sell its debt until the problem blows up into a bubble that bursts in a spectacular way…Goldman Sachs then puts their ‘man’ into a position of power to direct the bailouts so that Goldman gets all its money back and more, while the nation’s economy gets gutted.”

For years, tinfoil hat crazies who’ve bookmarked Glenn Beck’s websites and often appear as “experts” on Fox so-called News have warned us about a one-world government (herehere, and here). The latest threat, according to them, is Agenda 21and the creation of a Soviet-style world authority that will confiscate private party everywhere, redistribute wealth to developing nations, and force us all to live by new global laws that sacrifice our national sovereignty. It’s totalitarian governments and not transnational corporations that we should be afraid of, they warn. But when the tinfoil hat is removed, you can see that a sort of one-world government has already been established in a far more subtle form, through the rise of Goldman Sachs and their colleagues in the Wall Street elite. A million questions arise when looking at what’s happening around the world. But many of these questions can be answered, once it’s acknowledged that Goldman Sachs alumni have executed a global coup d’etat.

Why are the working people of Greece, Portugal, Spain, and Italy suffering under austerity and being asked to sacrifice their pensions, their wages, and their jobs when, after five years, it’s clear these policies are only making these nations’ debts even harder to pay off? It’s because Goldman Sachs is sucking the last remaining wealth out of those nations to recoup whatever failed investments they made before the Crash. Why have thousands of homeowners in the United States turned to suicide, domestic violence, and even mass murder when faced with home foreclosure, when a simple solution like re-writing mortgages, which FDR did successfully during the Great Depression, could put an end to the bloodshed and misery?

It’s because re-writing mortgages would force banks like Goldman Sachs to take a hit. And thanks to the game they’ve created, they actually make more money when a home they own is foreclosed on. Why, despite mountains of evidence, have banksters at Goldman Sachs and other Wall Street institutions not been thrown in jail for defrauding customers, manipulating LIBOR interest rates, and throwing thousands of Americans out of their homes illegally in a massive robo-signing scandal? It’s because we have a two-tiered justice system in which those in power, like Goldman Sachs executives, get a slap on the wrist when they steal $50 billion, but people like you and me go to jail for stealing a 7-11 Slurpee. Now does it make sense why Wall Street was bailed out and Main Street was sold out?

In this post-crash world, where agents of Goldman Sachs have infiltrated key positions of power all around the world, we must all fundamentally re-understand how we view the global economy and just how much effect our democratic institutions have on this economy. We no longer have an economy geared to benefit working people around the world; we have an economy that’s geared to exploit working people for Goldman Sachs’ profits. Trader Alessio Rastani told the BBC in September before Goldman’s Lucas Papademos was installed as Greece’s Prime Minister, “We don’t really care about having a fixed economy, having a fixed situation, our job is to make money from it…Personally, I’ve been dreaming of this moment for three years. I go to bed every night and I dream of another recession.” Rastani continued, “When the market crashes… if you know what to do, if you have the right plan set up, you can make a lot of money from this.” And as we’ve seen over the last decade, Goldman Sachs knows exactly what to do. They’ve had the right plan set-up, and it’s nothing short of a global coup d’etat. As Rastani bluntly told the BBC, “This is not a time right now for wishful thinking that governments are going to sort things out. The governments don’t rule the world, Goldman Sachs rules the world.”

CITY of LONDON
http://blogs.wsj.com/source/2012/11/27/mark-carney-the-u-k-s-savior-maybe-not/
http://www.zerohedge.com/news/2012-11-26/goldmans-global-domination-now-complete-its-mark-carney-takes-over-bank-england
http://www.zerohedge.com/news/goldman-path-complete-world-domination-mark-carney-his-way-head-bank-england

“Far more importantly, Carney was a 13 year veteran of Goldman Sachs, most recently and very appropriately co-head of sovereign risk, which is ironic considering that Goldman had a grand rehearsal for the Greek currency swaps fiasco precisely with Carney at the helm in 1998, when Goldman got into hot water for the first time because while the company was advising Russia it was simultaneously betting against the country‘s ability to repay its debt.”

GREECE
http://www.spiked-online.com/index.php/site/article/11390/
http://wallstreetpit.com/85811-a-financial-coup-detat-in-the-making

LIBYA
http://www.deathandtaxesmag.com/97180/goldman-sachs-and-gaddafi-a-splendid-conspiracy/

GOLDMAN SACHS CONQUERS EUROPE
http://www.independent.co.uk/news/business/analysis-and-features/what-price-the-new-democracy-goldman-sachs-conquers-europe-6264091.html
by Stephan Foley / 18 November 2011

The ascension of Mario Monti to the Italian prime ministership is remarkable for more reasons than it is possible to count. By replacing the scandal-surfing Silvio Berlusconi, Italy has dislodged the undislodgeable. By imposing rule by unelected technocrats, it has suspended the normal rules of democracy, and maybe democracy itself. And by putting a senior adviser at Goldman Sachs in charge of a Western nation, it has taken to new heights the political power of an investment bank that you might have thought was prohibitively politically toxic. This is the most remarkable thing of all: a giant leap forward for, or perhaps even the successful culmination of, the Goldman Sachs Project.

It is not just Mr Monti. The European Central Bank, another crucial player in the sovereign debt drama, is under ex-Goldman management, and the investment bank’s alumni hold sway in the corridors of power in almost every European nation, as they have done in the US throughout the financial crisis. Until Wednesday, the International Monetary Fund’s European division was also run by a Goldman man, Antonio Borges, who just resigned for personal reasons. Even before the upheaval in Italy, there was no sign of Goldman Sachs living down its nickname as “the Vampire Squid”, and now that its tentacles reach to the top of the eurozone, sceptical voices are raising questions over its influence. The political decisions taken in the coming weeks will determine if the eurozone can and will pay its debts – and Goldman’s interests are intricately tied up with the answer to that question.

Simon Johnson, the former International Monetary Fund economist, in his book 13 Bankers, argued that Goldman Sachs and the other large banks had become so close to government in the run-up to the financial crisis that the US was effectively an oligarchy. At least European politicians aren’t “bought and paid for” by corporations, as in the US, he says. “Instead what you have in Europe is a shared world-view among the policy elite and the bankers, a shared set of goals and mutual reinforcement of illusions.”



This is The Goldman Sachs Project. Put simply, it is to hug governments close. Every business wants to advance its interests with the regulators that can stymie them and the politicians who can give them a tax break, but this is no mere lobbying effort. Goldman is there to provide advice for governments and to provide financing, to send its people into public service and to dangle lucrative jobs in front of people coming out of government. The Project is to create such a deep exchange of people and ideas and money that it is impossible to tell the difference between the public interest and the Goldman Sachs interest.

Mr Monti is one of Italy’s most eminent economists, and he spent most of his career in academia and thinktankery, but it was when Mr Berlusconi appointed him to the European Commission in 1995 that Goldman Sachs started to get interested in him. First as commissioner for the internal market, and then especially as commissioner for competition, he has made decisions that could make or break the takeover and merger deals that Goldman’s bankers were working on or providing the funding for. Mr Monti also later chaired the Italian Treasury’s committee on the banking and financial system, which set the country’s financial policies. With these connections, it was natural for Goldman to invite him to join its board of international advisers. The bank’s two dozen-strong international advisers act as informal lobbyists for its interests with the politicians that regulate its work. Other advisers include Otmar Issing who, as a board member of the German Bundesbank and then the European Central Bank, was one of the architects of the euro. Perhaps the most prominent ex-politician inside the bank is Peter Sutherland, Attorney General of Ireland in the 1980s and another former EU Competition Commissioner. He is now non-executive chairman of Goldman’s UK-based broker-dealer arm, Goldman Sachs International, and until its collapse and nationalisation he was also a non-executive director of Royal Bank of Scotland. He has been a prominent voice within Ireland on its bailout by the EU, arguing that the terms of emergency loans should be eased, so as not to exacerbate the country’s financial woes. The EU agreed to cut Ireland’s interest rate this summer.

Picking up well-connected policymakers on their way out of government is only one half of the Project, sending Goldman alumni into government is the other half. Like Mr Monti, Mario Draghi, who took over as President of the ECB on 1 November, has been in and out of government and in and out of Goldman. He was a member of the World Bank and managing director of the Italian Treasury before spending three years as managing director of Goldman Sachs International between 2002 and 2005 – only to return to government as president of the Italian central bank. Mr Draghi has been dogged by controversy over the accounting tricks conducted by Italy and other nations on the eurozone periphery as they tried to squeeze into the single currency a decade ago. By using complex derivatives, Italy and Greece were able to slim down the apparent size of their government debt, which euro rules mandated shouldn’t be above 60 per cent of the size of the economy. And the brains behind several of those derivatives were the men and women of Goldman Sachs.

The bank’s traders created a number of financial deals that allowed Greece to raise money to cut its budget deficit immediately, in return for repayments over time. In one deal, Goldman channelled $1bn of funding to the Greek government in 2002 in a transaction called a cross-currency swap. On the other side of the deal, working in the National Bank of Greece, was Petros Christodoulou, who had begun his career at Goldman, and who has been promoted now to head the office managing government Greek debt. Lucas Papademos, now installed as Prime Minister in Greece’s unity government, was a technocrat running the Central Bank of Greece at the time. Goldman says that the debt reduction achieved by the swaps was negligible in relation to euro rules, but it expressed some regrets over the deals. Gerald Corrigan, a Goldman partner who came to the bank after running the New York branch of the US Federal Reserve, told a UK parliamentary hearing last year: “It is clear with hindsight that the standards of transparency could have been and probably should have been higher.” When the issue was raised at confirmation hearings in the European Parliament for his job at the ECB, Mr Draghi says he wasn’t involved in the swaps deals either at the Treasury or at Goldman.

It has proved impossible to hold the line on Greece, which under the latest EU proposals is effectively going to default on its debt by asking creditors to take a “voluntary” haircut of 50 per cent on its bonds, but the current consensus in the eurozone is that the creditors of bigger nations like Italy and Spain must be paid in full. These creditors, of course, are the continent’s big banks, and it is their health that is the primary concern of policymakers. The combination of austerity measures imposed by the new technocratic governments in Athens and Rome and the leaders of other eurozone countries, such as Ireland, and rescue funds from the IMF and the largely German-backed European Financial Stability Facility, can all be traced to this consensus. “My former colleagues at the IMF are running around trying to justify bailouts of €1.5trn-€4trn, but what does that mean?” says Simon Johnson. “It means bailing out the creditors 100 per cent. It is another bank bailout, like in 2008: The mechanism is different, in that this is happening at the sovereign level not the bank level, but the rationale is the same.” So certain is the financial elite that the banks will be bailed out, that some are placing bet-the-company wagers on just such an outcome. Jon Corzine, a former chief executive of Goldman Sachs, returned to Wall Street last year after almost a decade in politics and took control of a historic firm called MF Global. He placed a $6bn bet with the firm’s money that Italian government bonds will not default. When the bet was revealed last month, clients and trading partners decided it was too risky to do business with MF Global and the firm collapsed within days. It was one of the ten biggest bankruptcies in US history.

The grave danger is that, if Italy stops paying its debts, creditor banks could be made insolvent. Goldman Sachs, which has written over $2trn of insurance, including an undisclosed amount on eurozone countries’ debt, would not escape unharmed, especially if some of the $2trn of insurance it has purchased on that insurance turns out to be with a bank that has gone under. No bank – and especially not the Vampire Squid – can easily untangle its tentacles from the tentacles of its peers. This is the rationale for the bailouts and the austerity, the reason we are getting more Goldman, not less. The alternative is a second financial crisis, a second economic collapse. Shared illusions, perhaps? Who would dare test it?

Mario Monti, Lucas Papademos and Mario Draghi have something in common: they have all worked for the American investment bank. This is not a coincidence, but evidence of a strategy to exert influence that has perhaps already reached its limits.

a ‘FRATERNAL ASSOCIATION’
http://www.presseurop.eu/en/content/article/1177241-our-friends-goldman-sachs
Our friends from Goldman Sachs…
by Marc Roche / 16 November 2011 / Le Monde

Serious and competent, they weigh up the pros and cons and study all of the documents before giving an opinion. They have a fondness for economics, but these luminaries who enter into the temple only after a long and meticulous recruitment process prefer to remain discreet. Collectively they form an entity that is part pressure group, part fraternal association for the collection of information, and part mutual aid network. They are the craftsmen, masters and grandmasters whose mission is “to spread the truth acquired in the lodge to the rest of the world.” According to its detractors, the European network of influence woven by American bank Goldman Sachs (GS) functions like a freemasonry. To diverse degrees, the new European Central Bank President, Mario Draghi, the newly designated Prime Minister of Italy, Mario Monti, and the freshly appointed Greek Prime Minister Lucas Papademos are totemic figures in this carefully constructed web.

Heavyweight members figure large in the euro crisis
Draghi was Goldman Sachs International’s vice-chairman for Europe between 2002 and 2005, a position that put him in charge of the the “companies and sovereign” department, which shortly before his arrival, helped Greece to disguise the real nature of its books with a swap on its sovereign debt. Monti was an international adviser to Goldman Sachs from 2005 until his nomination to lead the Italian government. According to the bank, his mission was to provide advice “on European business and major public policy initiatives worldwide”. As such, he was a “door opener” with a brief to defend Goldman’s interest in the corridors of power in Europe. The third man, Lucas Papademos, was the governor of the Greek central bank from 1994 to 2002. In this capacity, he played a role that has yet to be elucidated in the operation to mask debt on his country’s books, perpetrated with assistance from Goldman Sachs. And perhaps more importantly, the current chairman of Greece’s Public Debt Management Agency, Petros Christodoulos, also worked as a trader for the bank in London. Two other heavyweight members of Goldman’s European network have also figured large in the euro crisis: Otmar Issing, a former member of the Bundesbank board of directors and a one-time chief economist of the European Central Bank, and Ireland’s Peter Sutherland, an administrator for Goldman Sachs International, who played a behind the scenes role in the Irish bailout.

Relay exclusive information to the bank’s trading rooms
How was this loyal network of intermediaries created? The US version of this magic circle is composed of former highly placed executives of the bank who effortlessly enter the highest level of the civil service. In Europe, on the other hand, Goldman Sachs has worked to accumulate a capital of relationships. But unlike its competitors, the bank has no interest in retired diplomats, highly placed national and international civil servants, or even former prime ministers and ministers of finance. Goldman’s priority has been to target central bankers and former European commissioners. Its main goal is to legally collect information on initiatives in the near future and on the interest rates set by central banks. At the same time, Goldman likes its agents to remain discreet. That is why its loyal subjects prefer not to mention their filiation in interviews or in the course of official missions. These well-connected former employees simply have to talk about this and that secure in the knowledge that their prestige will inevitably be rewarded with outspoken frankness on the part of those in powerful positions. Put simply they are there to see “which way the wind is blowing,” and thereafter to relay exclusive information to the bank’s trading rooms.

Bid for global dominance
Now that it has a former director at the head of the ECB, a former intermediary leading the Italian government, and another in charge in Greece, the bank’s antagonists are eager to highlight the extraordinary power of its network in in Frankfurt, Rome and Athens, which could prove extremely useful in these turbulent times. But looking beyond these details, the power of Goldman’s European government before and during the financial ordeal of 2008 may well prove to be an obstacle. The relationships maintained by experienced former central bankers are less likely to be useful now that politicians are aware of the unpopularity of finance professionals who are seen to be responsible for the present crisis. Where Goldman Sachs used to be able to exercise its talents, it now has to contend with opposition from public authorities raising questions about a series of scandals. A well stocked address book is no longer sufficient in a complex and highly technical financial world, where a new generation of industry leaders are less likely to be imbued with an unquestioning respect for the establishment. In their bid for global dominance, they no longer need to rely on high finance crusaders in the Goldman mould, while the quest to protect shareholder’s rights, demands for more transparency and active opposition from the media, NGOs, and institutional investors continue to erode the potency of “the network effect.”

{Translated from the French by Mark McGovern}



The giant American investment bank which is accused of helping the Greek state to conceal the real nature of its financial situation while speculating on its debts can count on a remarkable network of advisers with very close links to European leaders, reports Le Monde.

“GOVERNMENT SACHS”
http://www.presseurop.eu/en/content/article/1177241-our-friends-goldman-sachs
Goldman Sachs, the international web
by Marc Roche / 3 March 2010 / Le Monde

Petros Christodoulou affects not to care about compliments or their source. Ever since he was a teenager, this top-of-the-class student has grown used to hearing his praises sung. Appointed on 19 February to the head of the organization for the management of Greek public debt, he has arrived at the top of the tree. However, the trouble is that the former manager of global markets at the National Bank of Greece (NBG) is at the centre of an inquiry, announced on 25 February by the United States Federal Reserve, on contracts relating to Greek national debt, which link Goldman Sachs and other companies to the government in Athens. The New York based investment bank was paid as a banking advisor to the Greek government while speculating on the Hellenic nation’s sovereign debt. In particular, the American regulator is interested in the role played by Petros Christodoulou, who, in collaboration with Goldman, supervised the creation of the London company Titlos to transfer debt from Greece’s national accounts to the NBG. Before joining the NBG in 1998, Mr Christodoulou had worked as a banker for – you guessed it – Goldman Sachs.

“Government Sachs”
The affair has highlighted the powerful network of influence that Goldman Sachs has maintained in Europe since 1985 – a tightly woven group of underground and high-profile go-betweens and loyal supporters, whose address books open the doors of ministries of finance. These carefully recruited and extraordinarily well-paid advisors understand all the subtleties of the corridors of power within the European Union, and have a direct line to decision makers that they can call during moments of crisis. But who are the members of the European arm of the institution which is so powerful in Washington that it is referred to as “government Sachs”? The key figure is Peter Sutherland, chairman of Goldman Sachs International, the bank’s London-based European subsidiary. The former European commissioner for competition and ex-chairman of BP, is an essential link between the investment bank and the 27 EU member states and Russia. In France, Goldman Sachs benefits from the support of Charles de Croisset, a former chairman of Crédit Commercial de France (CCF), who took over from Jacques Mayoux, a government inspector of finances and former chairman of Société Générale. In the United Kingdom, it can count on Lord Griffiths, who advised former prime minister Margaret Thatcher, and in Germany, on Otmar Issing, a one-time board member of the Bundesbank and ex-chief economist of the European Central Bank (ECB).

Discreetly advances its interests
And that is not to mention the many Goldman alumni who go onto hold positions of power, which the bank can count on to advance its position. The best known of these is Mario Draghi, Goldman’s vice-president for Europe between 2001 and 2006, who is the current governor of the Bank of Italy and Chairman of international regulator, the Financial Stability Board. But do not expect to come across former diplomats in the austere corridors of Goldman Sachs International. As an institution with real world interests, the bank prefers to recruit financiers, economists, central bankers, and former highly placed civil servants from international economic organizations, but considers retired ambassadors to be jovial status symbols without any real high-level contacts or business sense. For Goldman Sachs, this network has the advantage of enabling it to discreetly advance its interests. In the Financial Times of 15 February, Otmar Issing published an article voicing his hostility to any attempt by the European Union to rescue Greece. However, he omitted to mention the fact that he has been an international advisor to Goldman Sachs since 2006. Nor did he say that the bank’s traders, who have been speculating against the single European currency, might well lose their shirts if the EU does intervene.


Max Keiser & Catherine Austin Fitts on Goldman Sachs (2009)

$7 TRILLION in SECRET LOANS
http://www.slate.com/articles/business/moneybox/2011/11/the_7_trillion_secret_loan_program_the_government_and_big_banks_should_be_punished_for_deceiving_the_public_about_their_hush_hush_bailout_scheme_.html
The government and the big banks deceived the public about their $7 trillion secret loan program. They should be punished
by Eliot Spitzer  /   Nov. 30, 2011

Imagine you walked into a bank, applied for a personal line of credit, and filled out all the paperwork claiming to have no debts and an income of $200,000 per year. The bank, based on these representations, extended you the line of credit. Then, three years later, after fighting disclosure all the way, you were forced by a court to tell the truth: At the time you made the statements to the bank, you actually were unemployed, you had a $1 million mortgage on your house on which you had failed to make payments for six months, and you hadn’t paid even the minimum on your credit-card bills for three months. Do you think the bank would just say: Never mind, don’t worry about it? Of course not. Whether or not you had paid back the personal line of credit, three FBI agents would be at your door within hours. Yet this is exactly what the major American banks have done to the public. During the deepest, darkest period of the financial cataclysm, the CEOs of major banks maintained in statements to the public, to the market at large, and to their own shareholders that the banks were in good financial shape, didn’t want to take TARP funds, and that the regulatory framework governing our banking system should not be altered. Trust us, they said. Yet, unknown to the public and the Congress, these same banks had been borrowing massive amounts from the government to remain afloat. The total numbers are staggering: $7.7 trillion of credit—one-half of the GDP of the entire nation. $460 billion was lent to J.P. Morgan, Bank of America, Citibank, Wells Fargo, Goldman Sachs, and Morgan Stanley alone—without anybody other than a few select officials at the Fed and the Treasury knowing. This was perhaps the single most massive allocation of capital from public to private hands in our history, and nobody was told. This was not TARP: This was secret Fed lending. And although it has since been repaid, it is clear why the banks didn’t want us to know about it: They didn’t want to admit the magnitude of their financial distress.

The banks’ claims of financial stability and solvency appear at a minimum to have been misleading—and may have been worse. Misleading statements and deception of this sort would ordinarily put a small-market player or borrower on the wrong end of a criminal investigation. So where are the inquiries into the false statements made by the bank CEOs? And where are the inquiries about the Fed and Treasury officials who stood by silently as bank representatives made claims that were false, misleading, or worse? Only now, because of superb analysis done by Bloomberg reporters—who litigated against the Fed and the banks for years to get the information—are we getting a full picture of the Fed and Treasury lending. The reporters also calculated that recipient banks and other borrowers benefited by approximately $13 billion simply by taking advantage of the “spread” between their cost of capital in these almost interest-free loans and their ability to lend the capital.

In addition to the secrecy, what is appalling is that these loans were made with no strings attached, no conditions, and no negotiation to achieve any broader public purpose. Even if one accepts the notion that the stability of the financial system could not be sacrificed, those who dispensed trillions of dollars to private parties made no apparent effort to impose even minimal obligations to condition the loans on the structural reforms needed to prevent another crisis, made no effort to require that those responsible for creating the crisis be relieved of their jobs, took zero steps towards the genuine mortgage-reform that is so necessary to begin a process of economic renewal. The dollars lent were simply a free bridge loan so the banks could push onto others the responsibility for the banks’ own risk-taking. If ever there was an event to justify the darkest, most conspiratorial view held by many that the alliance of big money on Wall Street and big government produces nothing but secret deals that profit insiders—this is it.



So what to do? The revelations of the secret loan program may provide the opportunity for Occupy Wall Street to suggest a few concrete steps that would be difficult to oppose.

First: Demand a hearing where the bank executives have to answer questions—under oath—about the actual negotiations, or lack thereof, that led to these loans; about the actual condition of each of the borrowing banks and whether that condition differed from the public statements made by the banks at the time.

Second: Require the recipient banks to use this previously undisclosed gift—the profit they made by investing this almost interest-free money—to write down the value of mortgages of those who are underwater. The loans to the banks were meant to solve a short-term liquidity problem, not be a source of profits to fund bonuses. Take back the profits and put them to apublic use.

Third: Require the government officials responsible for authorizing these loans to explain why there was no effort made to condition these loans on changes in policy that would protect the public going forward.

Fourth: Ask congress to examine every filing and statement made to Congress by the banks about their financial condition and their indebtedness to see if any misrepresentations were made in an effort to hide these trillions of dollars of loans. Misleading Congress can be a felony, and willful deception of the Congress to hide the magnitude of the public bailouts should not go unprosecuted.

Finally: Demand that politicians return all contributions made by the institutions that got hidden loans. Pressure the politicians who continue to feed from the trough of Wall Street, even as they know all too well how the banks and others have gamed the system and the public.



“RESCUE”
http://www.nomiprins.com/thoughts/2011/11/30/the-feds-european-rescue-another-back-door-us-bank-goldman-b.html
The Fed’s European “Rescue”: Another back-door US Bank / Goldman bailout?
by Nomi Prins /  November 30, 2011

In the wake of chopping its Central Bank swap rates today, the Fed has been called a bunch of names: a hero for slugging the big bailout bat in the ninth inning, and a villain for printing money to help Europe at the expense of the US. Neither depiction is right. The Fed is merely continuing its unfettered brand of bailout-economics, promoted with heightened intensity recently by President Obama and Treasury Secretary, Tim Geithner in the wake of Germany not playing bailout-ball.  Recall, a couple years ago, it was a uniquely American brand of BIG bailouts that the Fed adopted in creating $7.7 trillion of bank subsidies that ran the gamut from back-door AIG bailouts (some of which went to US / some to European banks that deal with those same US banks), to the purchasing of mortgage-backed–securities, to near zero-rate loans (for banks). Similarly, today’s move was also about protecting US banks from losses – self inflicted by dangerous derivatives-chain trades, again with each other, and with European banks. Before getting into the timing of the Fed’s god-father actions, let’s discuss its two kinds of swaps (jargon alert – a swap is a trade between two parties for some time period – you swap me a sweater for a hat because I’m cold, when I’m warmer, we’ll swap back). The Fed had both of these kinds of swaps set up and ready-to-go in the form of : dollar liquidity swap lines and foreign currency liquidity swap lines. Both are administered through Wall Street’s staunchest ally, and Tim Geithner’s old stomping ground, the New York Fed.

The dollar swap lines give foreign central banks the ability to borrow dollars against their currency, use them for whatever they want – like to shore up bets made by European banks that went wrong, and at a later date, return them. A ‘temporary dollar liquidity swap arrangement” with 14 foreign central banks was available between December 12, 2007 (several months before Bear Stearn’s collapse and 9 months before the Lehman Brothers’ bankruptcy that scared Goldman Sachs and Morgan Stanley into getting the Fed’s instant permission to become bank holding companies, and thus gain access to any Feds subsidies.) Those dollar-swap lines ended on February 1, 2010. BUT – three months later, they were back on, but this time the FOMC re-authorized dollar liquidity swap lines with only 5 central banks through January 2011. BUT – on December 21, 2010 – the FOMC extended the lines through August 1, 2011. THEN– on June 29th, 2011, these lines were extended through August 1, 2012.  AND NOW – though already available, they were announced with save-the-day fanfare as if they were just considered.

Then, there are the sneakily-dubbed “foreign currency liquidity swap” lines, which, as per the Fed’s own words, provide “foreign currency-denominated liquidity to US banks.” (Italics mine.) In other words, let US banks play with foreign bonds. These were originally used with 4 foreign banks on April, 2009  and expired on February 1, 2010. Until they were resurrected today, November 30, 2011, with foreign currency swap arrangements between the Fed, Bank of Canada, Bank of England, Bank of Japan. Swiss National Bank and the European Central Bank. They are to remain in place until February 1, 2013, longer than the original time period for which they were available during phase one of the global bank-led meltdown, the US phase. (For those following my work, we are in phase two of four, the European phase.) That’s a lot  of jargon, but keep these two things in mind: 1) these lines, by the Fed’s own words, are to provide help to US banks. and 2) they are open ended.

There are other reasons that have been thrown up as to why the Fed acted now – like, a European bank was about to fail. But, that rumor was around in the summer and nothing happened. Also, dozens of European banks have been downgraded, and several failed stress tests. Nothing. The Fed didn’t step in when it was just Greece –or Ireland  – or when there were rampant ‘contagion’ fears, and Italian bonds started trading above 7%, rising unabated despite the trick of former Goldman Sachs International advisor Mario Monti replacing former Prime Minister, Silvio Berlusconi’s with his promises of fiscally conservative actions (read: austerity measures) to come. Perhaps at that point, Goldman thought they had it all under control, but Germany’s bailout-resistence was still a thorn, which is why its bonds got hammered in the last auction, proving that big Finance will get what it wants, no matter how dirty it needs to play.  Nothing from the Fed, except a small increase in funding to the IMF. Rating agency Moody’s  announced it was looking at possibly downgrading 87 European banks. Still the Fed waited with open lines. And then, S&P downgraded the US banks again, including Goldman ,making their own financing costs more expensive and the funding of their seismic derivatives positions more tenuous. The Fed found the right moment. Bingo.

Now, consider this: the top four US banks (JPM Chase, Citibank, Bank of America and Goldman Sachs) control nearly 95% of the US derivatives market, which has grown by 20% since last year to  $235 trillion. That figure is a third of all global derivatives of $707 trillion (up from $601 trillion in December, 2010 and $583 trillion mid-year 2010. )



Breaking that down:  JPM Chase holds 11% of the world’s derivative exposure, Citibank, Bank of America, and Goldman comprise about 7% each. But, Goldman has something the others don’t – a lot fewer assets beneath its derivatives stockpile. It has 537 times as many (from 440 times last year) derivatives as assets. Think of a 537 story skyscraper on a one story see-saw. Goldman has $88 billon in assets, and $48 trillion in notional derivatives exposure. This is by FAR the highest ratio of derivatives to assets of any so-called bank backed by a government. The next highest ratio belongs to Citibank with $1.2 trillion in assets and $56 trillion in derivative exposure, or 46 to 1. JPM Chase’s ratio is 44 to 1. Bank of America’s ratio is 36 to 1. Separately Goldman happened to have lost a lot of money in Foreign Exchange derivative positions last quarter. (See Table 7.) Goldman’s loss was about equal to the total gains of the other banks, indicative of some very contrarian trade going on. In addition, Goldman has the most credit risk with respect to the capital  it holds, by a factor of 3 or 4 to 1 relative to the other big banks. So did the Fed’s timing have something to do with its star bank? We don’t really know for sure.

Sadly, until there’s another FED audit, or FOIA request, we’re not going to know which banks are the beneficiaries of the Fed’s most recent international largesse either, nor will we know what their specific exposures are to each other, or to various European banks, or which trades are going super-badly. But we do know from the US bailouts in phase one of the global meltdown, that providing ‘liquidity’ or ‘greasing the wheels of ‘ banks in times of ‘emergency’ does absolute nothing for the Main Street Economy. Not in the US. And not in Europe. It also doesn’t fix anything, it just funds bad trades with impunity.



LEVERAGE
http://www.nomiprins.com/thoughts/2011/11/21/as-the-world-crumbles-the-ecb-spins-fed-smirks-and-us-banks.html
As the World Crumbles: the ECB spins, FED smirks, and US Banks Pillage
by Nomi Prins / November 21, 2011

Often, when I troll around websites of entities like the ECB and IMF, I uncover little of startling note. They design it that way. Plus, the pace at which the global financial system can leverage bets, eviscerate capital, and cry for bank bailouts financed through austerity measures far exceeds the reporting timeliness of these bodies. That’s why, on the center of the ECB’s homepage, there’s a series of last week’s rates – and this relic – an interactive Inflation Game (I kid you not)  where in 22 different languages you can play the game of what happens when inflation goes up and down. If you’re feeling more adventurous, there’s also a game called Economia, where you can make up unemployment rates, growth rates and interest rates and see what happens. What you can’t do is see what happens if you bet trillions of dollars against various countries to see how much you can break them, before the ECB, IMF, or Fed (yes, it’ll happen) swoops in to provide “emergency” loans in return for cuts to pension funds, social programs, and national ownership of public assets. You also can’t input real world scenarios, where monetary policy doesn’t mean a thing in the face of  tidal waves of derivatives’ flow. You can’t gauge say, what happens if Goldman Sachs bets $20 billion in leveraged credit default swaps against Greece, and offsets them (partially) with JPM Chase which bets $20 billion, and offsets that with Bank of America, and then MF Global (oops) and then…..you see where I’m going with this.

We’re doomed if even their board games don’t come close to mimicking the real situation in Europe, or in the US, yet they supply funds to banks torpedoing local populations with impunity. These central entities also don’t bother to examine (or notice) the intermingled effect of leveraged derivatives and debt transactions per country; which is why no amount of funding from the ECB, or any other body, will be able to stay ahead of the hot money racing in and out of various countries.  It’s not about inflation – it’s about the speed, leverage, and daring of capital flow, that has its own power to select winners and losers. It’s not the ‘inherent’ weakness of national economies that a few years ago were doing fine, that’s hurting the euro. It’s the external bets on their success, failure, or economic capitulation running the show. Similarly, the US economy was doing much better before banks starting leveraging the hell out of our subprime market through a series of toxic, fraudulent, assets.

Elsewhere in my trolling, I came across a gem of a working paper on the IMF website, written by Ashoka Mody and Damiano Sandri,  entitled ‘The Eurozone Crisis; How Banks and Sovereigns Came to be Joined at the Hip” (The paper does not ‘necessarily represent the views of the IMF or IMF policy’.) The paper is full of mathematical formulas and statistical jargon, which may be why the media didn’t pick up on it, but hey, I got a couple of degrees in Mathematics and Statistics, so I went all out.  And it’s fascinating stuff. Basically, it shows that between the advent of the euro in 1999, and 2007, spreads between the bonds of peripheral countries and core ones in Europe were pretty stable. In other words, the risk of any country defaulting on its debt was fairly equal, and small. But after the 2007 US subprime asset crisis, and more specifically, the advent of  Federal Reserve / Treasury Department construed bailout-economics, all hell broke loose – international capital went AWOL daring default scenarios, targeting them for future bailouts, and when money leaves a country faster than it entered, the country tends to falter economically. The cycle is set.

The US subprime crisis wasn’t so much about people defaulting on loans, but the mega-magnified effects of those defaults on a $14 trillion asset pyramid created by the banks. (Those assets were subsequently sold, and used as collateral for other borrowing and esoteric derivatives combinations, to create a global $140 trillion debt binge.) As I detail in It Takes Pillage, the biggest US banks manufactured more than 75% of those $14 trillion of assets. A significant portion was sold in Europe – to local banks, municipalities, and pension funds – as lovely AAA morsels against which more debt, or leverage, could be incurred. And even thought the assets died, the debts remained.

Greek banks bought US-minted AAA assets and leveraged them. Norway did too (through the course of working on a Norwegian documentary, I discovered that 8 tiny towns in Norway bought $200 million of junk assets from Citigroup, borrowed money from local banks to pay for them, and pledged 10 years of power receipts from hydroelectric plants in return. The AAA assets are now worth zero, the power has been curtailed for residents, and the Norwegian banks want their money back–blood from a stone.) The same kind of thing happend in Italy, Spain, Portugal, Ireland, Holland, France, and even Germany – in different degrees and with specific national issues mixed in.  Problem is – when you’ve already used worthless collateral to borrow tons of money you won’t ever be able to repay, and international capital slams you in other ways, and your funding costs rise, and your internal development and lending seize up, you’re screwed – or rather the people in your country are screwed.

In the IMF paper, the authors convincingly make the case that it wasn’t just the US subprime asset meltdown itself that initiated Europe’s implosion, but the fact that our Federal Reserve and Treasury Department adopted a reckless don’t-let-em-fail doctrine. Even though Bear Stearns and Lehman Brothers failed, their investors, the huge ones anyway, were protected. The Fed subsidized, and still subsidizes, $29 billion of risk for JPM Chase’s acquisition of Bear. The philosophy of saving banks and their practices poisoned Europe, as those same financial firms played euro-roulette in the global derivatives markets, once the subprime betting train slowed down.

The first fatal stop of the US bailout mentaility was the ECB’s 2010 bailout of Anglo Irish bank, which got the lion’s share of the ECB’s Irish-bailout: $51 billion euro of ELA (Emergency Loan Assistance) and $100 billion euro of regular lending at the time. After the international financial community saw the pace and volume of Irish bank bailouts, the game of euro-roulette went turbo, country by country.  More ‘fiscally conservative’ governments are replacing any semblance of population-supportive ones. The practice of  extracting ‘fiscal prudency’ from people and providing bank subsidies for bets gone wrong has infected all of Europe. It will continue to do so, because anything less will threathen the entire Euro experiement, plus otherwise, the US banks might be on the hook again for losses, and the Fed and Treasury won’t let that happen. They’ve already demonstrated that. It’d be just sooo catastrophic.

In the wings, the smugness of Treasury Secretary Tim Geithner and Fed Chairman, Ben Bernanke is palpable – ‘hey, we acted heroically and “decisively” to provide a multi-trillion dollar smorgasbord  of subsidies for our biggest banks and look how great we  (er, they) are doing now? Seriously, Europe – get your act together already, don’t do the trickle-bailout game – just dump a boatload of money into the same banks – and a few of your own before they go under  – do it for the sake of global economic stability. It’ll really work. Trust us.’ Most of the media goes along with the notion that US banks exposed to the ‘euro-contagion’ will hurt our (nonexistent) recovery. US Banks assure us, they don’t have much exposure – it’s all hedged. (Like it was all AAA.) The press doesn’t tend to question the global harm caused by never having smacked US banks into place, cutting off their money supply, splitting them into commercial and speculative parts ala Glass-Steagall and letting the speculative parts that should have died, die, rather than enjoy public subsidization and the ability to go globe-hopping for more destructive opportunity, alongside some of the mega-global bank partners.

Today, the stock prices of the largest US banks are about as low as they were in the early part of 2009, not because of euro-contagion or Super-committee super-incompetence (a useless distraction anyway) but because of the ongoing transparency void surrouding the biggest banks amidst their central-bank-covered risks, and the political hot potato of how many emergency loans are required to keep them afloat at any given moment.  Because investors don’t know their true exposures, any more than in early 2009. Because US banks catalyzed the global crisis that is currently manifesting itself in Europe. Because there never was a separate US housing crisis and European debt crisis. Instead, there is a worldwide, systemic, unregulated, uncontained,  rapacious need for the most powerful banks and financial institutions to leverage whatever could be leveraged in whatever forms it could be leveraged in. So, now we’re just barely in the second quarter of the game of thrones, where the big banks are the kings, the ECB, IMF and the Fed are the money supply, and the populations are the powerless serfs. Yeah, let’s play the ECB inflation game, while the world crumbles.



MEANWHILE:
the WORLD ACCORDING to GOLDMAN SACHS
http://www.bloomberg.com/news/2011-11-28/secret-fed-loans-undisclosed-to-congress-gave-banks-13-billion-in-income.html
Secret Fed Loans Gave Banks $13 Billion Undisclosed to Congress
by Bob Ivry, Bradley Keoun and Phil Kuntz   /  Nov 27, 2011

The Federal Reserve and the big banks fought for more than two years to keep details of the largest bailout in U.S. history a secret. Now, the rest of the world can see what it was missing. The Fed didn’t tell anyone which banks were in trouble so deep they required a combined $1.2 trillion on Dec. 5, 2008, their single neediest day. Bankers didn’t mention that they took tens of billions of dollars in emergency loans at the same time they were assuring investors their firms were healthy. And no one calculated until now that banks reaped an estimated $13 billion of income by taking advantage of the Fed’s below-market rates, Bloomberg Markets magazine reports in its January issue. Saved by the bailout, bankers lobbied against government regulations, a job made easier by the Fed, which never disclosed the details of the rescue to lawmakers even as Congress doled out more money and debated new rules aimed at preventing the next collapse. A fresh narrative of the financial crisis of 2007 to 2009 emerges from 29,000 pages of Fed documents obtained under the Freedom of Information Act and central bank records of more than 21,000 transactions. While Fed officials say that almost all of the loans were repaid and there have been no losses, details suggest taxpayers paid a price beyond dollars as the secret funding helped preserve a broken status quo and enabled the biggest banks to grow even bigger.

‘Change Their Votes’
“When you see the dollars the banks got, it’s hard to make the case these were successful institutions,” says Sherrod Brown, a Democratic Senator from Ohio who in 2010 introduced an unsuccessful bill to limit bank size. “This is an issue that can unite the Tea Party and Occupy Wall Street. There are lawmakers in both parties who would change their votes now.” The size of the bailout came to light after Bloomberg LP, the parent of Bloomberg News, won a court case against the Fed and a group of the biggest U.S. banks called Clearing House Association LLC to force lending details into the open. The Fed, headed by Chairman Ben S. Bernanke, argued that revealing borrower details would create a stigma — investors and counterparties would shun firms that used the central bank as lender of last resort — and that needy institutions would be reluctant to borrow in the next crisis. Clearing House Association fought Bloomberg’s lawsuit up to the U.S. Supreme Court, which declined to hear the banks’ appeal in March 2011.

$7.77 Trillion
The amount of money the central bank parceled out was surprising even to Gary H. Stern, president of the Federal Reserve Bank of Minneapolis from 1985 to 2009, who says he “wasn’t aware of the magnitude.” It dwarfed the Treasury Department’s better-known $700 billion Troubled Asset Relief Program, or TARP. Add up guarantees and lending limits, and the Fed had committed $7.77 trillion as of March 2009 to rescuing the financial system, more than half the value of everything produced in the U.S. that year. “TARP at least had some strings attached,” says Brad Miller, a North Carolina Democrat on the House Financial Services Committee, referring to the program’s executive-pay ceiling. “With the Fed programs, there was nothing.” Bankers didn’t disclose the extent of their borrowing. On Nov. 26, 2008, then-Bank of America (BAC) Corp. Chief Executive Officer Kenneth D. Lewis wrote to shareholders that he headed “one of the strongest and most stable major banks in the world.” He didn’t say that his Charlotte, North Carolina-based firm owed the central bank $86 billion that day.

‘Motivate Others’
JPMorgan Chase & Co. CEO Jamie Dimon told shareholders in a March 26, 2010, letter that his bank used the Fed’s Term Auction Facility “at the request of the Federal Reserve to help motivate others to use the system.” He didn’t say that the New York-based bank’s total TAF borrowings were almost twice its cash holdings or that its peak borrowing of $48 billion on Feb. 26, 2009, came more than a year after the program’s creation. Howard Opinsky, a spokesman for JPMorgan (JPM), declined to comment about Dimon’s statement or the company’s Fed borrowings. Jerry Dubrowski, a spokesman for Bank of America, also declined to comment. The Fed has been lending money to banks through its so- called discount window since just after its founding in 1913. Starting in August 2007, when confidence in banks began to wane, it created a variety of ways to bolster the financial system with cash or easily traded securities. By the end of 2008, the central bank had established or expanded 11 lending facilities catering to banks, securities firms and corporations that couldn’t get short-term loans from their usual sources.

‘Core Function’
“Supporting financial-market stability in times of extreme market stress is a core function of central banks,” says William B. English, director of the Fed’s Division of Monetary Affairs. “Our lending programs served to prevent a collapse of the financial system and to keep credit flowing to American families and businesses.” The Fed has said that all loans were backed by appropriate collateral. That the central bank didn’t lose money should “lead to praise of the Fed, that they took this extraordinary step and they got it right,” says Phillip Swagel, a former assistant Treasury secretary under Henry M. Paulson and now a professor of international economic policy at the University of Maryland. The Fed initially released lending data in aggregate form only. Information on which banks borrowed, when, how much and at what interest rate was kept from public view. The secrecy extended even to members of President George W. Bush’s administration who managed TARP. Top aides to Paulson weren’t privy to Fed lending details during the creation of the program that provided crisis funding to more than 700 banks, say two former senior Treasury officials who requested anonymity because they weren’t authorized to speak.

Big Six
The Treasury Department relied on the recommendations of the Fed to decide which banks were healthy enough to get TARP money and how much, the former officials say. The six biggest U.S. banks, which received $160 billion of TARP funds, borrowed as much as $460 billion from the Fed, measured by peak daily debt calculated by Bloomberg using data obtained from the central bank. Paulson didn’t respond to a request for comment. The six — JPMorgan, Bank of America, Citigroup Inc. (C)Wells Fargo & Co. (WFC)Goldman Sachs Group Inc. (GS) and Morgan Stanley — accounted for 63 percent of the average daily debt to the Fed by all publicly traded U.S. banks, money managers and investment- services firms, the data show. By comparison, they had about half of the industry’s assets before the bailout, which lasted from August 2007 through April 2010. The daily debt figure excludes cash that banks passed along to money-market funds.

Bank Supervision
While the emergency response prevented financial collapse, the Fed shouldn’t have allowed conditions to get to that point, says Joshua Rosner, a banking analyst with Graham Fisher & Co. in New York who predicted problems from lax mortgage underwriting as far back as 2001. The Fed, the primary supervisor for large financial companies, should have been more vigilant as the housing bubble formed, and the scale of its lending shows the “supervision of the banks prior to the crisis was far worse than we had imagined,” Rosner says. Bernanke in an April 2009 speech said that the Fed provided emergency loans only to “sound institutions,” even though its internal assessments described at least one of the biggest borrowers, Citigroup, as “marginal.” On Jan. 14, 2009, six days before the company’s central bank loans peaked, the New York Fed gave CEO Vikram Pandit a report declaring Citigroup’s financial strength to be “superficial,” bolstered largely by its $45 billion of Treasury funds. The document was released in early 2011 by the Financial Crisis Inquiry Commission, a panel empowered by Congress to probe the causes of the crisis.

‘Need Transparency’
Andrea Priest, a spokeswoman for the New York Fed, declined to comment, as did Jon Diat, a spokesman for Citigroup. “I believe that the Fed should have independence in conducting highly technical monetary policy, but when they are putting taxpayer resources at risk, we need transparency and accountability,” says Alabama Senator Richard Shelby, the top Republican on the Senate Banking Committee. Judd Gregg, a former New Hampshire senator who was a lead Republican negotiator on TARP, and Barney Frank, a Massachusetts Democrat who chaired the House Financial Services Committee, both say they were kept in the dark. “We didn’t know the specifics,” says Gregg, who’s now an adviser to Goldman Sachs. “We were aware emergency efforts were going on,” Frank says. “We didn’t know the specifics.”

Disclose Lending
Frank co-sponsored the Dodd-Frank Wall Street Reform and Consumer Protection Act, billed as a fix for financial-industry excesses. Congress debated that legislation in 2010 without a full understanding of how deeply the banks had depended on the Fed for survival. It would have been “totally appropriate” to disclose the lending data by mid-2009, says David Jones, a former economist at the Federal Reserve Bank of New York who has written four books about the central bank. “The Fed is the second-most-important appointed body in the U.S., next to the Supreme Court, and we’re dealing with a democracy,” Jones says. “Our representatives in Congress deserve to have this kind of information so they can oversee the Fed.” The Dodd-Frank law required the Fed to release details of some emergency-lending programs in December 2010. It also mandated disclosure of discount-window borrowers after a two- year lag.

Protecting TARP
TARP and the Fed lending programs went “hand in hand,” says Sherrill Shaffer, a banking professor at the University of Wyoming in Laramie and a former chief economist at the New York Fed. While the TARP money helped insulate the central bank from losses, the Fed’s willingness to supply seemingly unlimited financing to the banks assured they wouldn’t collapse, protecting the Treasury’s TARP investments, he says. “Even though the Treasury was in the headlines, the Fed was really behind the scenes engineering it,” Shaffer says. Congress, at the urging of Bernanke and Paulson, created TARP in October 2008 after the bankruptcy of Lehman Brothers Holdings Inc. made it difficult for financial institutions to get loans. Bank of America and New York-based Citigroup each received $45 billion from TARP. At the time, both were tapping the Fed. Citigroup hit its peak borrowing of $99.5 billion in January 2009, while Bank of America topped out in February 2009 at $91.4 billion.

No Clue
Lawmakers knew none of this. They had no clue that one bank, New York-based Morgan Stanley (MS), took $107 billion in Fed loans in September 2008, enough to pay off one-tenth of the country’s delinquent mortgages. The firm’s peak borrowing occurred the same day Congress rejected the proposed TARP bill, triggering the biggest point drop ever in the Dow Jones Industrial Average. (INDU) The bill later passed, and Morgan Stanley got $10 billion of TARP funds, though Paulson said only “healthy institutions” were eligible. Mark Lake, a spokesman for Morgan Stanley, declined to comment, as did spokesmen for Citigroup and Goldman Sachs. Had lawmakers known, it “could have changed the whole approach to reform legislation,” says Ted Kaufman, a former Democratic Senator from Delaware who, with Brown, introduced the bill to limit bank size.

Moral Hazard
Kaufman says some banks are so big that their failure could trigger a chain reaction in the financial system. The cost of borrowing for so-called too-big-to-fail banks is lower than that of smaller firms because lenders believe the government won’t let them go under. The perceived safety net creates what economists call moral hazard — the belief that bankers will take greater risks because they’ll enjoy any profits while shifting losses to taxpayers. If Congress had been aware of the extent of the Fed rescue, Kaufman says, he would have been able to line up more support for breaking up the biggest banks. Byron L. Dorgan, a former Democratic senator from North Dakota, says the knowledge might have helped pass legislation to reinstate the Glass-Steagall Act, which for most of the last century separated customer deposits from the riskier practices of investment banking. “Had people known about the hundreds of billions in loans to the biggest financial institutions, they would have demanded Congress take much more courageous actions to stop the practices that caused this near financial collapse,” says Dorgan, who retired in January.

Getting Bigger
Instead, the Fed and its secret financing helped America’s biggest financial firms get bigger and go on to pay employees as much as they did at the height of the housing bubble. Total assets held by the six biggest U.S. banks increased 39 percent to $9.5 trillion on Sept. 30, 2011, from $6.8 trillion on the same day in 2006, according to Fed data. For so few banks to hold so many assets is “un-American,” says Richard W. Fisher, president of the Federal Reserve Bank of Dallas. “All of these gargantuan institutions are too big to regulate. I’m in favor of breaking them up and slimming them down.” Employees at the six biggest banks made twice the average for all U.S. workers in 2010, based on Bureau of Labor Statistics hourly compensation cost data. The banks spent $146.3 billion on compensation in 2010, or an average of $126,342 per worker, according to data compiled by Bloomberg. That’s up almost 20 percent from five years earlier compared with less than 15 percent for the average worker. Average pay at the banks in 2010 was about the same as in 2007, before the bailouts.

‘Wanted to Pretend’
“The pay levels came back so fast at some of these firms that it appeared they really wanted to pretend they hadn’t been bailed out,” says Anil Kashyap, a former Fed economist who’s now a professor of economics at the University of Chicago Booth School of Business. “They shouldn’t be surprised that a lot of people find some of the stuff that happened totally outrageous.” Bank of America took over Merrill Lynch & Co. at the urging of then-Treasury Secretary Paulson after buying the biggest U.S. home lender, Countrywide Financial Corp. When the Merrill Lynch purchase was announced on Sept. 15, 2008, Bank of America had $14.4 billion in emergency Fed loans and Merrill Lynch had $8.1 billion. By the end of the month, Bank of America’s loans had reached $25 billion and Merrill Lynch’s had exceeded $60 billion, helping both firms keep the deal on track.

Prevent Collapse
Wells Fargo bought Wachovia Corp., the fourth-largest U.S. bank by deposits before the 2008 acquisition. Because depositors were pulling their money from Wachovia, the Fed channeled $50 billion in secret loans to the Charlotte, North Carolina-based bank through two emergency-financing programs to prevent collapse before Wells Fargo could complete the purchase. “These programs proved to be very successful at providing financial markets the additional liquidity and confidence they needed at a time of unprecedented uncertainty,” says Ancel Martinez, a spokesman for Wells Fargo. JPMorgan absorbed the country’s largest savings and loan, Seattle-based Washington Mutual Inc., and investment bank Bear Stearns Cos. The New York Fed, then headed by Timothy F. Geithner, who’s now Treasury secretary, helped JPMorgan complete the Bear Stearns deal by providing $29 billion of financing, which was disclosed at the time. The Fed also supplied Bear Stearns with $30 billion of secret loans to keep the company from failing before the acquisition closed, central bank data show. The loans were made through a program set up to provide emergency funding to brokerage firms.

‘Regulatory Discretion’
“Some might claim that the Fed was picking winners and losers, but what the Fed was doing was exercising its professional regulatory discretion,” says John Dearie, a former speechwriter at the New York Fed who’s now executive vice president for policy at the Financial Services Forum, a Washington-based group consisting of the CEOs of 20 of the world’s biggest financial firms. “The Fed clearly felt it had what it needed within the requirements of the law to continue to lend to Bear and Wachovia.” The bill introduced by Brown and Kaufman in April 2010 would have mandated shrinking the six largest firms. “When a few banks have advantages, the little guys get squeezed,” Brown says. “That, to me, is not what capitalism should be.” Kaufman says he’s passionate about curbing too-big-to-fail banks because he fears another crisis.

‘Can We Survive?’
“The amount of pain that people, through no fault of their own, had to endure — and the prospect of putting them through it again — is appalling,” Kaufman says. “The public has no more appetite for bailouts. What would happen tomorrow if one of these big banks got in trouble? Can we survive that?” Lobbying expenditures by the six banks that would have been affected by the legislation rose to $29.4 million in 2010 compared with $22.1 million in 2006, the last full year before credit markets seized up — a gain of 33 percent, according to OpenSecrets.org, a research group that tracks money in U.S. politics. Lobbying by the American Bankers Association, a trade organization, increased at about the same rate, OpenSecrets.org reported. Lobbyists argued the virtues of bigger banks. They’re more stable, better able to serve large companies and more competitive internationally, and breaking them up would cost jobs and cause “long-term damage to the U.S. economy,” according to a Nov. 13, 2009, letter to members of Congress from the FSF. The group’s website cites Nobel Prize-winning economist Oliver E. Williamson, a professor emeritus at the University of California, Berkeley, for demonstrating the greater efficiency of large companies.

‘Serious Burden’
In an interview, Williamson says that the organization took his research out of context and that efficiency is only one factor in deciding whether to preserve too-big-to-fail banks.  “The banks that were too big got even bigger, and the problems that we had to begin with are magnified in the process,” Williamson says. “The big banks have incentives to take risks they wouldn’t take if they didn’t have government support. It’s a serious burden on the rest of the economy.” Dearie says his group didn’t mean to imply that Williamson endorsed big banks. Top officials in President Barack Obama’s administration sided with the FSF in arguing against legislative curbs on the size of banks.

Geithner, Kaufman
On May 4, 2010, Geithner visited Kaufman in his Capitol Hill office. As president of the New York Fed in 2007 and 2008, Geithner helped design and run the central bank’s lending programs. The New York Fed supervised four of the six biggest U.S. banks and, during the credit crunch, put together a daily confidential report on Wall Street’s financial condition. Geithner was copied on these reports, based on a sampling of e- mails released by the Financial Crisis Inquiry Commission. At the meeting with Kaufman, Geithner argued that the issue of limiting bank size was too complex for Congress and that people who know the markets should handle these decisions, Kaufman says. According to Kaufman, Geithner said he preferred that bank supervisors from around the world, meeting in Basel, Switzerland, make rules increasing the amount of money banks need to hold in reserve. Passing laws in the U.S. would undercut his efforts in Basel, Geithner said, according to Kaufman. Anthony Coley, a spokesman for Geithner, declined to comment.

‘Punishing Success’
Lobbyists for the big banks made the winning case that forcing them to break up was “punishing success,” Brown says. Now that they can see how much the banks were borrowing from the Fed, senators might think differently, he says. The Fed supported curbing too-big-to-fail banks, including giving regulators the power to close large financial firms and implementing tougher supervision for big banks, says Fed General Counsel Scott G. Alvarez. The Fed didn’t take a position on whether large banks should be dismantled before they get into trouble. Dodd-Frank does provide a mechanism for regulators to break up the biggest banks. It established the Financial Stability Oversight Council that could order teetering banks to shut down in an orderly way. The council is headed by Geithner. “Dodd-Frank does not solve the problem of too big to fail,” says Shelby, the Alabama Republican. “Moral hazard and taxpayer exposure still very much exist.”

Below Market
Dean Baker, co-director of the Center for Economic and Policy Research in Washington, says banks “were either in bad shape or taking advantage of the Fed giving them a good deal. The former contradicts their public statements. The latter — getting loans at below-market rates during a financial crisis — is quite a gift.” The Fed says it typically makes emergency loans more expensive than those available in the marketplace to discourage banks from abusing the privilege. During the crisis, Fed loans were among the cheapest around, with funding available for as low as 0.01 percent in December 2008, according to data from the central bank and money-market rates tracked by Bloomberg. The Fed funds also benefited firms by allowing them to avoid selling assets to pay investors and depositors who pulled their money. So the assets stayed on the banks’ books, earning interest. Banks report the difference between what they earn on loans and investments and their borrowing expenses. The figure, known as net interest margin, provides a clue to how much profit the firms turned on their Fed loans, the costs of which were included in those expenses. To calculate how much banks stood to make, Bloomberg multiplied their tax-adjusted net interest margins by their average Fed debt during reporting periods in which they took emergency loans.

Added Income
The 190 firms for which data were available would have produced income of $13 billion, assuming all of the bailout funds were invested at the margins reported, the data show. The six biggest U.S. banks’ share of the estimated subsidy was $4.8 billion, or 23 percent of their combined net income during the time they were borrowing from the Fed. Citigroup would have taken in the most, with $1.8 billion. “The net interest margin is an effective way of getting at the benefits that these large banks received from the Fed,” says Gerald A. Hanweck, a former Fed economist who’s now a finance professor at George Mason University in Fairfax, Virginia. While the method isn’t perfect, it’s impossible to state the banks’ exact profits or savings from their Fed loans because the numbers aren’t disclosed and there isn’t enough publicly available data to figure it out. Opinsky, the JPMorgan spokesman, says he doesn’t think the calculation is fair because “in all likelihood, such funds were likely invested in very short-term investments,” which typically bring lower returns.

Standing Access
Even without tapping the Fed, the banks get a subsidy by having standing access to the central bank’s money, says Viral Acharya, a New York University economics professor who has worked as an academic adviser to the New York Fed. “Banks don’t give lines of credit to corporations for free,” he says. “Why should all these government guarantees and liquidity facilities be for free?” In the September 2008 meeting at which Paulson and Bernanke briefed lawmakers on the need for TARP, Bernanke said that if nothing was done, “unemployment would rise — to 8 or 9 percent from the prevailing 6.1 percent,” Paulson wrote in “On the Brink” (Business Plus, 2010).

Occupy Wall Street
The U.S. jobless rate hasn’t dipped below 8.8 percent since March 2009, 3.6 million homes have been foreclosed since August 2007, according to data provider RealtyTrac Inc., and police have clashed with Occupy Wall Street protesters, who say government policies favor the wealthiest citizens, in New York, Boston, Seattle and Oakland, California. The Tea Party, which supports a more limited role for government, has its roots in anger over the Wall Street bailouts, says Neil M. Barofsky, former TARP special inspector general and a Bloomberg Television contributing editor. “The lack of transparency is not just frustrating; it really blocked accountability,” Barofsky says. “When people don’t know the details, they fill in the blanks. They believe in conspiracies.”

In the end, Geithner had his way. The Brown-Kaufman proposal to limit the size of banks was defeated, 60 to 31. Bank supervisors meeting in Switzerland did mandate minimum reserves that institutions will have to hold, with higher levels for the world’s largest banks, including the six biggest in the U.S. Those rules can be changed by individual countries. They take full effect in 2019. Meanwhile, Kaufman says, “we’re absolutely, totally, 100 percent not prepared for another financial crisis.”

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LASER SCANNERS and YOU


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the END of PRIVACY
http://gizmodo.com/5923980/the-secret-government-laser-that-instantly-knows-everything-about-you
Hidden Government Scanners Will Instantly Know Everything About You From 164 Feet Away

Within the next year or two, the U.S. Department of Homeland Security will instantly know everything about your body, clothes, and luggage with a new laser-based molecular scanner fired from 164 feet (50 meters) away. From traces of drugs or gun powder on your clothes to what you had for breakfast to the adrenaline level in your body—agents will be able to get any information they want without even touching you. And without you knowing it.

The technology is so incredibly effective that, in November 2011, its inventors were subcontracted by In-Q-Tel to work with the US Department of Homeland Security. In-Q-Tel is a company founded “in February 1999 by a group of private citizens at the request of the Director of the CIA and with the support of the U.S. Congress.” According to In-Q-Tel, they are the bridge between the Agency and new technology companies. Their plan is to install this molecular-level scanning in airports and border crossings all across the United States. The official, stated goal of this arrangement is to be able to quickly identify explosives, dangerous chemicals, or bioweapons at a distance. The machine is ten million times faster—and one million times more sensitive—than any currently available system. That means that it can be used systematically on everyone passing through airport security, not just suspect or randomly sampled people.

Analyzing everything in real time
But the machine can sniff out a lot more than just explosives, chemicals and bioweapons. The company that invented it, Genia Photonics, says that its laser scanner technology is able to “penetrate clothing and many other organic materials and offers spectroscopic information, especially for materials that impact safety such as explosives and pharmacological substances.” [PDF] Formed in Montreal in 2009 by PhDs with specialties in lasers and fiber optics, Genia Photonics has 30 patents on this technology, claiming incredible biomedical and industrial applications—from identifying individual cancer cells in a real-time scan of a patient, to detecting trace amounts of harmful chemicals in sensitive manufacturing processes.

Meanwhile, In-Q-Tel states that “an important benefit of Genia Photonics’ implementation as compared to existing solutions is that the entire synchronized laser system is comprised in a single, robust and alignment-free unit that may be easily transported for use in many environments… This compact and robust laser has the ability to rapidly sweep wavelengths in any pattern and sequence.” [PDF] So not only can they scan everyone. They would be able to do it everywhere: the subway, a traffic light, sports events… everywhere.

Hidden Government Scanners Will Instantly Know Everything About You From 164 Feet AwayAbove: The Genia Photonics’ Picosecond Programmable Laser scanner is capable of detecting every tiny trace of any substance on your body, from specks of gunpowder to your adrenaline levels to a sugar-sized grain of cannabis to what you had for breakfast.

How does it work?
The machine is a mobile, rack-mountable system. It fires a laser to provide molecular-level feedback at distances of up to 50 meters in just picoseconds. For all intents and purposes, that means instantly. The small, inconspicuous machine is attached to a computer running a program that will show the information in real time, from trace amounts of cocaine on your dollar bills to gunpowder residue on your shoes. Forget trying to sneak a bottle of water past security—they will be able to tell what you had for breakfast in an instant while you’re walking down the hallway. The technology is not new, it’s just millions times faster and more convenient than ever before. Back in 2008, a team at George Washington University developed a similar laser spectrometer using a different process. It could sense drug metabolites in urine in less than a second, trace amounts of explosive residue on a dollar bill, and even certain chemical changes happening in a plant leaf. And the Russians also have a similar technology: announced last April, their “laser sensor can pick up on a single molecule in a million from up to 50 meters away.” So if Genia Photonics’ claims pan out, this will be an incredible leap forward in terms of speed, portability, and convenience. One with staggering implications.

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Observation without limits
There has so far been no discussion about the personal rights and privacy issues involved. Which “molecular tags” will they be scanning for? Who determines them? What are the threshold levels of this scanning? If you unknowingly stepped on the butt of someone’s joint and are carrying a sugar-sized grain of cannabis like that unfortunate traveler currently in jail in Dubai, will you be arrested? And, since it’s extremely portable, will this technology extend beyone the airport or border crossings and into police cars, with officers looking for people on the street with increased levels of adrenaline in their system to detain in order to prevent potential violent outbursts? And will your car be scanned at stoplights for any trace amounts of suspicious substances? Would all this information be recorded anywhere? There are a lot of questions with no answer yet, but it’s obvious that the potential level of personal invasion of this technology goes far beyond that of body scans, wiretaps, and GPS tracking.

Hidden Government Scanners Will Instantly Know Everything About You From 164 Feet AwayAbove: A page from a Genia Photonics paper describing its ability to even penetrate through clothing.

The end of privacy coming soon
According to the undersecretary for science and technology of the Department of Homeland Security, this scanning technology will be ready within one to two years, which means you might start seeing them in airports as soon as 2013. In other words, these portable, incredibly precise molecular-level scanning devices will be cascading lasers across your body as you walk from the bathroom to the soda machine at the airport and instantly reporting and storing a detailed breakdown of your person, in search of certain “molecular tags”. Going well beyond eavesdropping, it seems quite possible that U.S. government plans on recording molecular data on travelers without their consent, or even knowledge that it’s possible—a scary thought. While the medical uses could revolutionize the way doctors diagnose illness, and any technology that could replace an aggressive pat-down is tempting, there’s a potential dark side to this implementation, and we need to shine some light on it before it’s implemented.

{The author of this story is currently completing his PhD in renewable energy solutions, focusing on converting waste to energy in the urban environment. Even while most of this information is publicly available, he wanted to remain anonymous.}

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Channel One video still

MOLECULAR SCANS at 50 METERS
https://rt.com/news/russia-laser-bomb-detector-947/
Russian invisible laser bomb detector makes molecular scan at 50 meters / 25 April, 2012

Not even the tiniest of particles will be able to escape the new super-sensitive explosive detecting device created by Russian scientists. Its laser sensor can pick up on a single molecule in a million from up to 50 meters away. The device was developed over a period of five years by the Siberian branch of the country’s Academy of Sciences. It will undergo full testing this summer and is expected to be put to use by Russian intelligence later this year. The main challenge for scientists was to create a laser that would only interact with specific particles present in the air, thus allowing it to wheedle out traces of explosives. In addition, the device is not affected by changes in heat and humidity in the surrounding atmosphere. When the laser scans objects and recognizes particles of incendiary material, its creators maintain it is even able to detect traces of explosives left by fingerprints. A mounted camera on the device transmits images of the source of the explosive material, so that the user can control the laser’s movements from a different room. The contraption’s inventors are currently working on an extension of this function that will create a three-dimensional image of the target. It is totally safe to use, emitting less radiation than a cellphone.

“In our opinion it is the most effective device in the world for the remote detection of all known explosive substances like hexogen, octagon and trinitrotoluene.  It can also pick up home-made explosive materials often used by terrorists,” said Aleksandr Vorozhtsov, deputy director of the Institute of Chemical and Energy Technology to Russia’s Channel One. The laser is invisible to the naked eye, making it possible to “scan a potential terrorist without alerting him or giving him time to activate an explosive,” said Vladimir Yakubov, Chair of Research Radiophysics at Tomsk State University. The new invention has a myriad of applications, and scientists are currently working on a second, more portable version for possible use in airports, stations and even in the underground. In its current form, the machine consists of several parts and materials must be brought to a lab to be analyzed.

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NYPD IRIS SCANS

LOOK HERE
http://www.nydailynews.com/ny_local/2010/11/15/2010-11-15_nypd_begins_photographing_suspects_irises_preventing_prisoners_from_disguising_t.html

“The NYPD began taking pictures of suspects’ irises on Monday. The new program, which started in Manhattan and will expand to other boroughs by next month, is designed to prevent suspects from disguising their identities. The technology allows police to match a prisoner to his or her iris in as little as 5 seconds. Police said the move was prompted by a recent case in which a felon passed himself as a lesser offender and walked out of the courthouse. Police said the eye shots will not be kept on file if the charges are dismissed or if the case is sealed. “They’re being treated as other cases would be,” said Deputy Commissioner Paul Browne, the NYPD’s top spokesman.”

http://www.nbcnewyork.com/news/local/NYPD-to-Start-Iris-Scanning-Criminal-Suspects–108321624.html

“Along with fingerprints and mug shots, the New York City Police Department is now taking photographs of the irises of crime suspects. The NYPD says the images will be used to help avoid cases of mistaken identity. The process takes about five minutes. Every suspect will be scanned again using a handheld device shortly before they are arraigned to make sure the irises match. Police say the software, handheld device and cameras cost about $23,800 each, and 21 systems will be used around the city. Central booking in Manhattan started taking photos Monday. The devices will be in use in Brooklyn and the Bronx in the upcoming weeks, and later in Staten Island and Queens.”

http://www.fastcompany.com/1683302/iris-scanners-create-the-most-secure-city-in-the-world-welcomes-big-brother

We’ve all seen and obsessively referenced Minority Report, Steven Spielberg’s adaptation of Philip K. Dick’s dystopian future, where the public is tracked everywhere they go, from shopping malls to work to mass transit to the privacy of their own homes. The technology is here. I’ve seen it myself. It’s seen me, too, and scanned my irises.

Biometrics R&D firm Global Rainmakers Inc. (GRI) announced today that it is rolling out its iris scanning technology to create what it calls “the most secure city in the world.” In a partnership with Leon — one of the largest cities in Mexico, with a population of more than a million — GRI will fill the city with eye-scanners. That will help law enforcement revolutionize the way we live — not to mention marketers.

“In the future, whether it’s entering your home, opening your car, entering your workspace, getting a pharmacy prescription refilled, or having your medical records pulled up, everything will come off that unique key that is your iris,” says Jeff Carter, CDO of Global Rainmakers. Before coming to GRI, Carter headed a think tank partnership between Bank of America, Harvard, and MIT. “Every person, place, and thing on this planet will be connected [to the iris system] within the next 10 years,” he says.

Leon is the first step. To implement the system, the city is creating a database of irises. Criminals will automatically be enrolled, their irises scanned once convicted. Law-abiding citizens will have the option to opt-in.

When these residents catch a train or bus, or take out money from an ATM, they will scan their irises, rather than swiping a metro or bank card. Police officers will monitor these scans and track the movements of watch-listed individuals. “Fraud, which is a $50 billion problem, will be completely eradicated,” says Carter. Not even the “dead eyeballs” seen in Minority Report could trick the system, he says. “If you’ve been convicted of a crime, in essence, this will act as a digital scarlet letter. If you’re a known shoplifter, for example, you won’t be able to go into a store without being flagged. For others, boarding a plane will be impossible.”

GRI’s scanning devices are currently shipping to the city, where integration will begin with law enforcement facilities, security check-points, police stations, and detention areas. This first phase will cost less than $5 million. Phase II, which will roll out in the next three years, will focus more on commercial enterprises. Scanners will be placed in mass transit, medical centers and banks, among other public and private locations.

The devices range from large-scale scanners like the Hbox (shown in the airport-security prototype above), which can snap up to 50 people per minute in motion, to smaller scanners like the EyeSwipe and EyeSwipe Mini, which can capture the irises of between 15 to 30 people per minute.

I tested these devices at GRI’s R&D facilities in New York City last week. It took less than a second for my irises to be scanned and registered in the company’s database. Every time I went through the scanners after that–even when running through (because everybody runs, right, Tom Cruise?) my eyes were scanned and identified correctly. (You can see me getting scanned on the Hbox in the video below. “Welcome Austin,” the robotic voice chimes.)

For such a Big Brother-esque system, why would any law-abiding resident ever volunteer to scan their irises into a public database, and sacrifice their privacy? GRI hopes that the immediate value the system creates will alleviate any concern. “There’s a lot of convenience to this–you’ll have nothing to carry except your eyes,” says Carter, claiming that consumers will no longer be carded at bars and liquor stores. And he has a warning for those thinking of opting out: “When you get masses of people opting-in, opting out does not help. Opting out actually puts more of a flag on you than just being part of the system. We believe everyone will opt-in.”

This vision of the future eerily matches Minority Report, and GRI knows it. “Minority Report is one possible outcome,” admits Carter. “I don’t think that’s our company’s aim, but I think what we’re going to see is an enviroment well beyond what you see in that movie–minus the precogs, of course.”

When I asked Carter whether he felt the film was intended as a dystopian view of the future of privacy, he pointed out that much of our private life is already tracked by telecoms and banks, not to mention Facebook. “The banks already know more about what we do in our daily life–they know what we eat, where we go, what we purchase–our deepest secrets,” he says. “We’re not talking about anything different here–just a system that’s good for all of us.”

One potential benefit? Carter believes the system could be used to intermittently scan truck drivers on highways to make sure they haven’t been on the road for too long.

GRI also predicts that iris scanners will help marketers. “Digital signage,” for example, could enable adverti
sers to track behavior and emotion. “In ten years, you may just have one sensor that is literally able to identify hundreds of people in motion at a distance and determine their geo-location and their intent–you’ll be able to see how many eyeballs looked at a billboard,” Carter says. “You can start to track from the point a person is browsing on Google and finds something they want to purchase, to the point they cross the threshold in a Target or Walmart and actually make the purchase. You start to see the entire life cycle of marketing.”

So will we live the future under iris scanners and constant Big Brother monitoring? According to Carter, eye scanners will soon be so cost-effective–between $50-$100 each–that in the not-too-distant future we’ll have “billions and billions of sensors” across the globe.

Goodbye 2010. Hello 1984.

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