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TBR News June 19, 2011

Jun 19 2011

The Voice of the White House

Washington, D.C., June 19, 2011: “If you check the Internet as often as I do, you will find it a seething mass of various opinions, some intelligent and perceptive and others mere psycho-babble. Misinformation, disinformation and irrelevant garbage means we have to wear rubber boots when trolling. The subject of the PRC is a case in point. On the one hand, China is surging ahead, will overtake the United States in every field in ten weeks and, on the other, that China is a sociological and economic bubble that is going to burst sooner rather than later. I subscribe to the latter view. China overexpanded, is overpopulated, cannot feed or supply clean water for her huge population and has been engaging in outright criminal behavior in the business world. They counterfeit everything and the government is fully aware of it. They do just as they please with their neighbors, threatening them and buying up property in huge chunks, financed with the money they get from selling their fake gold-plated tungsten bars and counterfeit merchandise. This sort of activity rapidly reaches a peak and, coupled with the ecological problems facing her, will cause China to crash back to earlier days of civil violence, repression and economic collapse.”

A Nation of Swindlers: Fake Silver Dollars From China

http://www.china-mint.info/fake-coin-images.html

China is a great nation with a rich heritage, and all of the Chinese people I’ve met have been honorable. Yet China has a major problem with fakery, a problem for the rest of the world as well as itself. China is the world’s capital of counterfeiting, with coins, antiquities, fossils, computer software, music CDs, movie DVDs, books, paintings, clothes, sneakers, jewelry, watches, handbags, toys, sporting goods, film, batteries, food, baby formula, pet food, medicine, cars, car parts, trucks, and much else.

The Chinese make these goods, copying a major brand. But instead of putting their own label or logo on any given product, they put the brand’s logo on the product to try to fool consumers into thinking that the company behind the brand, and not the Chinese copyist, made it. They often succeed. China is the worst country in the world in terms of counterfeiting, according to the International Intellectual Property Alliance, with Russia, Italy, Mexico, Brazil, South Korea, Canada, India, Taiwan, and Portugal following in order. China not only is the worst country in the world, it appears to make far more counterfeits than all the other countries in the world combined. China is the source of about 80 percent of all counterfeit goods seized at U.S. ports by the U.S. Customs and Border Protection Agency. Entire factories, even entire towns in China, have been built specifically to produce counterfeit goods.

According to Dan Chow, a law professor at Ohio State University who specializes in Chinese counterfeiting and who was quoted in a CBS News story, “We have never seen a problem of this size and magnitude in world history. There’s more counterfeiting going on in China now than we’ve ever seen anywhere. We know that 15 to 20 percent of all goods in China are counterfeit.” According to attorney Harley Lewin, who has been going after counterfeiters from China for more than 20 years and who was quoted in the same CBS News story, “[Chinese counterfeiting] is the most profitable criminal venture, as far as I know, on Earth.”

China has a big problem with counterfeiting of its own currency, paper money as well as coins, according to counterfeit expert Robert Matthews. The Chinese police periodically seize fake large quantities of Chinese notes and coins.

China also has a big problem with the faking of its own past. Chinese antiquities shops and markets consist almost entirely of fakes, as reported in an article at the China Daily Web site. Professor Yang Jingrong stated that 95 percent of all antiquities sold in China are modern forgeries. Chinese antiquities shopkeepers for the most part appear to knowingly sell fakes as authentic under the subterfuge that it’s the buyer’s responsibility to determine authenticity.

Many Chinese counterfeit goods are shoddy or dangerous, using low-grade components or ingredients. Chinese imports into the U.S. in general account for more than 60 percent of product recalls by the U.S. Consumer Product Safety Commission. Chinese consumers also suffer from shoddy counterfeits. Horrible incidents have been reported multiple times in the news of dozens to hundreds of Chinese babies dying or getting sick after being fed counterfeit baby formula, laced with a deadly chemical to make a diluted product appear to have a higher protein content.

The 2008 Olympics demonstrated to the world just how ingrained fakery is in Chinese society today. China faked the opening ceremony, using digital effects for the televised proceedings instead of real fireworks, as later revealed by a Chinese newspaper; it faked its “national unity” parade by contending that children wearing costumes of different ethnic groups consisted of ethnic minorities when in fact they were all of the Han majority; and it even faked the age of its female gymnasts, breaking the Olympic rules, to let underage children compete.

The problem of Chinese counterfeiting has gone on for years and appears to just worsen over time. Fakery in China seems to be official government policy or at least officially tolerated. Whenever major news of Chinese counterfeiting surfaces in the West, the Chinese government takes highly publicized and sometimes dramatic but ultimately superficial steps to try to stop it. The true nature of official Chinese attitudes is more likely along the lines of statements from Chinese officials saying that counterfeiting is the cost that foreign companies must pay to be able to do business in China.

Chinese officials have also been quoted as saying the international press exaggerates the issue, and they have accused Chinese journalists of faking news reports of fake Chinese goods. Chinese journalists have in fact been caught faking. But much bigger than the problem of faking by Chinese journalists is the problem of faking in Chinese society as a whole.

China is a developing country and doesn’t appear to recognize international law regarding intellectual property. To the Chinese, copying is entrepreneurship, with copyrights, trademarks, and patents being foreign concepts and largely ignored. Chinese society as a whole in its energetic drive toward economic prosperity seems to have chosen fakery as a shortcut, ignoring conventions in the rest of the civilized world.

When Japan was transforming itself into an industrial power in the years following World War Two, it also competed by making low-cost goods. But for the most part it didn’t try to deceive by putting fake labels of companies from other countries on these products and trying to create the impression that these goods are of the same quality as those put out by these companies and are warranted by them. Japan proudly labeled its low-cost goods as “Made in Japan” rather than using fake labels as China does.

On the other hand, China has a rich cultural, scientific, and intellectual heritage. From the time of Confucius and Lao-Tzu, China has contributed to the betterment of civilization. Today, China also makes many authentic, original goods.

Coinage has a long history in China, with the first Chinese coins thought to have been minted at about the same time as the first coins in Asia Minor.

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Fakes of legitimate foreign coins regularly appear on eBay, sometimes sold as fakes, sometimes sold as replicas, sometimes sold as authentic coins, sometimes sold as coins that the seller found in his grandmother’s attic, and though he doesn’t know if they’re real or not, they sure look old to him. Many other Chinese counterfeits of U.S. dollars and other coins are out there as well, put out by other Chinese forgery factories. Some coin dealers in California report receiving about one phone call a day asking whether the old U.S. coins the person just bought on the street are real. One person emailed me about a dozen U.S. silver dollars he bought “cheap” in California that turned out to be magnetic, indicating an iron content, which no authentic U.S. dollar coins have.

Some Chinese forgery criminals sell marked replicas on eBay in large quantities. According to several people, all you have to do is ask and the Chinese seller will sell the same pieces to you not marked as replicas. Legitimate replica makers refuse to do this. The quality reportedly ranges from very obvious to very deceptive. Chinese forgery factories appear to be using eBay in this way to find wholesale buyers of their work. This has the potential of flooding the world’s collectibles markets with ever more Chinese fakes.

Identified fake Chinese-made early U.S. silver bars

Issuer Weight &
Value
Fineness Serial
number
Provenance or
other reference
Eagle Mining Co. 4.25 oz,
$5.48
.999 silver 217 Harvey & Norman
Stack-Smithsonian
Eagle Mining Co. 5.64 oz,
$7.27
.999 silver 336 Henry Clifford-
Bowers & Ruddy
3/1982:216
Eagle Mining Co. 5.64 oz,
$7.27
.999 silver 362 Henry Clifford –
Bowers & Ruddy
3/1982:217
Eagle Mining Co. 7.36 oz,
$9.42
.999 silver 365 NASCA
4/1980:2440
Eagle Mining Co. 4.96 oz,
$6.39
.999 silver 374 Stack family-
Smithsonian
Eagle Mining Co. 5.03 oz,
$6.48
.999 silver 377 Ira & Larry
Goldberg Coins &
Collectibles
5/2001:1178
Eagle Mining Co. 7.91 oz,
$10.20
.999 silver 380 New Netherlands
ad, inside front
cover,
Numismatist,
8/1958
Eagle Mining Co. 6.18 oz,
$7.97
.999 silver Henry Christensen
6/1980:1646
Eagle Mining Co. 16 other silver
bars; Bowers
1997, 271
Silver King, Pickets
Post, 1880
5.92 oz;
$7.63
.999 silver Ford 1957
brochure; Stack’s
1/2003:1664
Thorne Mining &
Refining Co.
23 Bowers 1997, 269
Thorne Mining &
Refining Co.
24 Bowers 1997, 269
Thorne Mining &
Refining Co.
97 Bowers 1997, 269
Thorne Mining &
Refining Co.
3.98 oz,
$5.13
.9998 silver 177 Henry Clifford-
Bowers & Ruddy
3/1982:183
Thorne Mining &
Refining Co.
191 Bowers 1997, 269
Thorne Mining &
Refining Co.
196 Bowers 1997, 269
Thorne Mining &
Refining Co.
198 Bowers 1997, 269
Thorne Mining &
Refining Co.
3.34 oz,
$4.30
.9998 silver 199 Stack family,
1980-Smithsonian
Thorne Mining &
Refining Co.
201 Bowers 1997, 269
Thorne Mining &
Refining Co.
4.05 oz,
$5.22
.9998 silver 210 Henry Clifford-
Bowers & Ruddy
3/1982:184-
Stack’s
6/1997:1025
Thorne Mining &
Refining Co.
212 Bowers 1997, 269
Thorne Mining &
Refining Co.
214 Bowers 1997, 269
Thorne Mining &
Refining Co.
217 Bowers 1997, 269
Thorne Mining &
Refining Co.
3.27 oz,
$4.21
.9998 silver 218 Harvey and
Norman Stack-
Smithsonian
Thorne Mining &
Refining Co.
219 Bowers 1997, 269
Thorne Mining &
Refining Co.
3.37 oz,
$4.34
.9998 silver 220 Henry Christensen
6/1980:1647
Thorne Mining &
Refining Co.
222 Bowers 1997, 269
Thorne Mining &
Refining Co.
223 Bowers 1997, 269
Thorne Mining &
Refining Co.
224 Bowers 1997, 269
Thorne Mining &
Refining Co.
225 Bowers 1997, 269
Thorne Mining &
Refining Co.
3.55 oz,
$4.57
.9998 silver 226 Superior
2/1992:3415
Thorne Mining &
Refining Co.
227 Bowers 1997, 269
Thorne Mining &
Refining Co.
228 Bowers 1997, 269
Thorne Mining &
Refining Co.
229 Bowers 1997, 269
Thorne Mining &
Refining Co.
230 Bowers 1997, 269
Thorne Mining &
Refining Co.
3.07 oz,
$3.96
.9998 silver 231 R. Green Mail Bid
Sale,
7/31/1954:2016
Thorne Mining &
Refining Co.
3.07 oz,
$3.96
.9998 silver 231 Superior
2/1992:3414
Thorne Mining &
Refining Co.
3.07 oz,
$3.96
.9998 silver 231 Fred Holabird
11/2001:906
Thorne Mining &
Refining Co.
3.07 oz,
$3.96
.9998 silver 231 Stack’s
1/2003:1676
Thorne Mining &
Refining Co.
232 Bowers 1997, 269
Thorne Mining &
Refining Co.
233 Bowers 1997, 269
Thorne Mining &
Refining Co.
2.86 oz,
$3.68
.9998 silver 234 Henry Clifford-
Bowers & Ruddy
3/1982:185
Thorne Mining &
Refining Co.
3.21 oz,
$4.14
235 New Netherlands
ad, inside front
cover,
Numismatist,
10/1958
Thorne Mining &
Refining Co.
236 Bowers 1997, 269
Thorne Mining &
Refining Co.
237 Bowers 1997, 269
Thorne Mining &
Refining Co.
238 Bowers 1997, 269
Thorne Mining &
Refining Co.
239 Bowers 1997, 269
Thorne Mining &
Refining Co.
240 Bowers 1997, 269
Thorne Mining &
Refining Co.
241 Bowers 1997, 269
Thorne Mining &
Refining Co.
3.11 oz,
$4.00
.9998 242 Henry Clifford-
Bowers & Ruddy
3/1982:186
Thorne Mining &
Refining Co.
2.64 oz,
$3.40
.9998 243 NASCA
4/1980:2449
Thorne Mining &
Refining Co.
244 Bowers 1997, 269
Thorne Mining &
Refining Co.
245 Bowers 1997, 269
Thorne Mining &
Refining Co.
246 Bowers 1997, 269
Thorne Mining &
Refining Co.
2.97 oz,
$3.83
.9998 247 NASCA
4/1980:2450
Thorne Mining &
Refining Co.
251 Bowers 1997, 269
Thorne Mining &
Refining Co.
252 Bowers 1997, 269
Thorne Mining &
Refining Co.
253 Bowers 1997, 269
Thorne Mining &
Refining Co.
254 Bowers 1997, 269
Thorne Mining &
Refining Co.
255 Bowers 1997, 269
Thorne Mining &
Refining Co.
259 Bowers 1997, 269
Thorne Mining &
Refining Co.
261 Bowers 1997, 269
Thorne Mining &
Refining Co.
262 Bowers 1997, 269
Thorne Mining &
Refining Co.
263 Bowers 1997, 269
Thorne Mining &
Refining Co.
264 Bowers 1997, 269
Thorne Mining &
Refining Co.
265 Bowers 1997, 269
Thorne Mining &
Refining Co.
266 Bowers 1997, 269
Thorne Mining &
Refining Co.
267 Bowers 1997, 269
Thorne Mining &
Refining Co.
268 Bowers 1997, 269
Thorne Mining &
Refining Co.
269 Bowers 1997, 269
Thorne Mining &
Refining Co.
270 Bowers 1997, 269
Thorne Mining &
Refining Co.
271 Bowers 1997, 269
Thorne Mining &
Refining Co.
272 Bowers 1997, 269
Thorne Mining &
Refining Co.
273 Bowers 1997, 269
Thorne Mining &
Refining Co.
274 Bowers 1997, 269
Thorne Mining &
Refining Co.
276 Bowers 1997, 269
Thorne Mining &
Refining Co.
277 Bowers 1997, 269
Thorne Mining &
Refining Co.
278 Bowers 1997, 269
Thorne Mining &
Refining Co.
279 Bowers 1997, 269
Thorne Mining &
Refining Co.
280 Bowers 1997, 269
Thorne Mining &
Refining Co.
281 Bowers 1997, 269
Thorne Mining &
Refining Co.
282 Bowers 1997, 269
Thorne Mining &
Refining Co.
283 Bowers 1997, 269
Thorne Mining &
Refining Co.
284 Bowers 1997, 269
Thorne Mining &
Refining Co.
285 Bowers 1997, 269
Thorne Mining &
Refining Co.
286 Bowers 1997, 269
Thorne Mining &
Refining Co.
287 Bowers 1997, 269
Thorne Mining &
Refining Co.
288 Bowers 1997, 269
Thorne Mining &
Refining Co.
289 Bowers 1997, 269
Thorne Mining &
Refining Co.
290 Bowers 1997, 269
Thorne Mining &
Refining Co.
291 Bowers 1997, 269
Thorne Mining &
Refining Co.
292 Bowers 1997, 269
Thorne Mining &
Refining Co.
293 Bowers 1997, 269
Thorne Mining &
Refining Co.
294 Bowers 1997, 269
Thorne Mining &
Refining Co.
295 Bowers 1997, 269
Thorne Mining &
Refining Co.
296 Bowers 1997, 269
Thorne Mining &
Refining Co.
2.74 oz,
$3.53
.9998 297 Ira & Larry
Goldberg Coins &
Collectibles, Inc.
10/2000:1372
Thorne Mining &
Refining Co.
298 Bowers 1997, 269
Thorne Mining &
Refining Co.
299 Bowers 1997, 269
Virtue Gold & Silver Co. 3.74 oz,
$4.70
.999 silver Paul Franklin,
1953-Don Keefer-
Keefer Estate-New
Netherlands Coin
Co. 1954-Kenyon
W. Painter, 3/1958-Henry
Clifford-Bowers &
Ruddy
3/1982:244-
Stack’s
6/1997:1033

With the collapsing American economy, many Americans are rushing to invest in gold; either coins or bar, and also silver. One of the most popular forms of this investment are American coins.  Where there is a need, there is always someone to fill it and in this case, the filling consists of  the massive counterfeiting of gold coins, silver coins, and even Swiss gold bars in China. Initially, it appeared they were only faking Morgan dollars, but then it turned out they were also making $20 Liberty, and Indian Head gold $2.50, $5, and $10 coins, of all dates. Evidently, this is extremely easy with today’s computer-and-laser-die-cutting technology, and the fakes are being die-struck in vast quantities, not cast, and visually at least, are superb copies.

The good news is that these fakes are readily detectable with a 0.01 – gram scale, as the Chinese in their greed are using lower carats of gold and lower grades of silver than the genuine coins, to maximize profit, and thus, in most cases, the fake coins and bars are lighter than the real ones. In a few cases, the silver coins of high numismatic interest are actually OVER weight – it appears that the supply of accurate planchet stock is a major difficulty for the forgers.

Here are links to a two-part article about this in Coin World Magazine:

http://www.coinworldonline.com/counterfeits/articles/20081203/counterfeit_1.asp

http://www.coinworldonline.com/counterfeits/articles/20081203/counterfeit_2.asp

Note: They are even faking PCGS and ANACS slabs!!:

http://www.coinworldonline.com/counterfeits/articles/20081203/counterfeit_3.asp
A friend who has an extremely wealthy friend in Europe (on the order of several hundreds of millions) asked this person to make enquiries at his bank. The bank told him candidly that indeed, the Chinese are also faking sovereigns, half sovereigns, French 20 Franc gold, and various denominations of Nicholas II Russian Rubles, of all dates, as well as Swiss gold bars. They said any gold bars they are offered for purchase are both weighed and the serial numbers checked with the manufacturers. The Chinese do not know the serial and manufacture date numbering systems on the gold bars, and so that error is quickly detectable.

The US Secret Service has been made aware of this problem, which was not new to them, and if they decide to launch an investigation, they have indicated that while they cannot do anything about the operations in China, they can, and will, seize any counterfeit US coins they come across. Dealers in these fakes would also be liable to fines and jail time. Foreign fakes are not under their purview, but if that business turns out to be substantial, there could conceivably be an FBI investigation of fraud in interstate commerce, targeting companies who are mail-ordering fake foreign coins. Individuals who have been cheated might also sue their suppliers – in short, this could turn into a huge mess.

General appearance aside, it is very easy it is to spot fakes – just with a scale reading to 1/00th of a gram, and a table of the correct weights and sizes of the coins or bars they are buying. (In the case of large-size bargold, unless buying from the manufacturer or a reputable bank, the serial numbers need to be verified, so that one does not buy a Chinese bar with a lead or mercury core)

Herewith a listing of what I have uncovered so far:

1; U.S .Morgan silver dollar. All dates and all mint marks;

2: U.S. gold coins viz the $2.50, $5.00 and $10.00 Indian head issues, all St. Gaudens $20

gold pieces

3. U.S. copper penny viz 1909 S  vdb

4. Three gold Imperial Russian roubles from the reign of Nicholas II

5. A gold 20 franc coin with the head of Napoleon I on the obverse

6. The South African Krugerrand

7. British sovereigns and half sovereigns of different monarchs and dates

8. Mexican silver pesos, all dates to include Olympic pieces

And in addition, they are also making fake gold bars from the Credit Suisse and other banks. The Chinese also made what looked like official U.S. Treasury gold bars but they were made of tungsten (which weighs the same as gold) and then triple gold plated. But the Chinese do not know the American numbering sequences hence the serial numbers are never correct. For some time, China has been paying for forgeign goods such as oil and steel, with these faked American bars and when it was discovered, started the story that it was the Chinese who were swindled by the Americans! Some absolute idiot claimed that the Americans took good gold bars, cut holes in them and put tungsten inside! This would be quite impossible but the truth is always a stranger to the self-important blogger and the thoroughly crooked Chinese!

It was always considered that numismatics as a relatively fraud-free area of collecting, but it appears that a coin collector today has to carry a digital scale around. This doesn’t affect me very much, but I too have wondered at the sudden appearance of all the Morgan dollars. As for Krugerands and similar gold pieces that are traded for bullion prices, it is obvious that the Chinese have lowered the purity and thus debase the value; otherwise, a fake Krug would have as much gold as a real one.

http://home.comcast.net/~reidgold/draped_busts/chinese.html

http://coins.about.com/od/worldcoins/ig/Chinese-Counterfeiting-Ring/

Plan for China’s Water Crisis Spurs Concern

June 1, 2011

by Edward Wong

New York Times

DANJIANGKOU, China — North China is dying.

A chronic drought is ravaging farmland. The Gobi Desert is inching south. The Yellow River, the so-called birthplace of Chinese civilization, is so polluted it can no longer supply drinking water. The rapid growth of megacities — 22 million people in Beijing and 12 million in Tianjin alone — has drained underground aquifers that took millenniums to fill.

Not atypically, the Chinese government has a grand and expensive solution: Divert at least six trillion gallons of water each year hundreds of miles from the other great Chinese river, the Yangtze, to slake the thirst of the north China plain and its 440 million people.

The engineering feat, called the South-North Water Diversion Project, is China’s most ambitious attempt to subjugate nature. It would be like channeling water from the Mississippi River to meet the drinking needs of Boston, New York and Washington. Its $62 billion price tag is twice that of the Three Gorges Dam, which is the world’s largest hydroelectric project. And not unlike that project, which Chinese officials last month admitted had “urgent problems,” the water diversion scheme is increasingly mired in concerns about its cost, its environmental impact and the sacrifices poor people in the provinces are told to make for those in richer cities.

Three artificial channels from the Yangtze would transport precious water from the south, which itself is increasingly afflicted by droughts; the region is suffering its worst one in 50 years. The project’s human cost is staggering — along the middle route, which starts here in Hubei Province at a gigantic reservoir and snakes 800 miles to Beijing, about 350,000 villagers are being relocated to make way for the canal. Many are being resettled far from their homes and given low-grade farmland; in Hubei, thousands of people have been moved to the grounds of a former prison.

“Look at this dead yellow earth,” said Li Jiaying, 67, a hunched woman hobbling to her new concrete home clutching a sickle and a bundle of dry sticks for firewood. “Our old home wasn’t even being flooded for the project and we were asked to leave. No one wanted to leave.”

About 150,000 people had been resettled by this spring. Many more will follow. A recent front-page article in People’s Daily, the Communist Party’s mouthpiece, said the project “has entered a key period of construction.”

Some Chinese scientists say the diversion could destroy the ecology of the southern rivers, making them as useless as the Yellow River. The government has neglected to do proper impact studies, they say. There are precedents in the United States. Lakes in California were damaged and destroyed when the Owens River was diverted in the early 20th century to build Los Angeles.

Here, more than 14 million people in Hubei would be affected if the project damaged the Han River, the tributary of the Yangtze where the middle route starts, said Du Yun, a geographer at the Chinese Academy of Sciences in Wuhan, the provincial capital.

Officials in provinces south of Beijing and Tianjin have privately raised objections and are haggling over water pricing and compensation; midlevel officials in water-scarce Hebei Province are frustrated that four reservoirs in their region have sent more than 775 million cubic meters, or 205 billion gallons, of water to Beijing since September 2008 in an “emergency” supplement to the middle route.

Overseers of the eastern route, which is being built alongside an ancient waterway for barges called the Grand Canal, have found that the drinking water to be brought to Tianjin from the Yangtze is so polluted that 426 sewage treatment plants have to be built; water pollution control on the route takes up 44 percent of the $5 billion investment, according to Xinhua, the official news agency. The source water from the Han River on the middle route is cleaner. But the main channel will cross 205 rivers and streams in the industrial heartland of China before reaching Beijing.

“When water comes to Beijing, there’s the danger of the water not being safe to drink,” said Dai Qing, an environmental advocate who has written critically about the Three Gorges Dam.

“I think this project is a product of the totalitarian regime in Beijing as it seeks to take away the resources of others,” she added. “I am totally opposed to this project.”

Ms. Dai and some Chinese scholars say the government should instead be limiting the population in the northern cities and encouraging water conservation.

The project’s official Web site says that the diversion “will be an important and basic facility for mitigating the existing crisis of water resources in north China” and that sufficient studies have been done. Wang Jian, a former environmental and water management official with the Beijing government and the State Council, China’s cabinet, agreed that the project “carries huge risks,” but he said there were no other options given the severity of the current water shortage.

The middle route is to start major operations in 2014, and the eastern route is expected to be operational by 2013. The lines were originally supposed to open by the 2008 Summer Olympics, but have been hobbled by myriad problems.

The diversion project was first studied in the 1950s, after Mao uttered: “Water in the south is abundant, water in the north scarce. If possible, it would be fine to borrow a little.”

In a country afflicted by severe cycles of droughts and floods and peasant rebellions that often resulted from them, control of water has always been important to Chinese rulers. Emperors sought to legitimize their rule with large-scale water projects like the Grand Canal or the irrigation system in Dujiangyan.

After the initial studies in the 1950s, the government did not look seriously again at the project until the 1990s, when north China was hit hard by droughts. In 2002, the State Council gave the green light for work to start on the middle and eastern routes; the western route, which would run at an average altitude of 10,000 to 13,000 feet across the Tibetan plateau to help irrigate the Yellow River basin, has been deemed too difficult to start for now.

Officials in Tianjin are so skeptical of the eastern route’s ability to deliver drinkable water that they are looking at desalinization as an alternative. Planners have more hope for the middle route, though the engineering is a much greater challenge — the canal has to be built entirely from scratch, with 1,774 structures constructed along its length to channel the water, since there is no pre-existing waterway like the Grand Canal to follow.

At the start of the route, the water level of the Danjiangkou Reservoir on the Han River has been raised 43 feet to 558 feet so that the water can flow downhill to Beijing. The government said the rising waters and a need to combat soil erosion necessitated moving 130,000 farmers last year from around the reservoir. Similar relocations are taking place all along the main channel, which runs through four provinces.

About 1,300 residents of Qingshan township have been moved to Xiangbei Farm, desolate land where a prison once stood. The villagers now live in sterile rows of yellow concrete houses 125 miles east of their abandoned ancestral homes. A government sign in the middle of the settlement says: “The land is fertile and has complete irrigation systems.”

The farmers know better. Each person is supposed to get a small plot of land free, but the soil here is well known to be exceedingly poor. The people also complain that in the government’s compensation formula, their old homes were undervalued, so many have had to pay several thousand dollars to buy new homes.

“There’s nothing here,” said Huang Jiuguo, 57. “There’s no enterprise. Our children are grown, and they need something to do.”

For three days last November, thousands of residents of a resettlement area in Qianjiang city blocked roads to protest poorly built homes and lack of promised compensation, according to a report by Radio Free Asia. Officials ordered the police to break up the rally, resulting in clashes, injuries and arrests.

Forced relocations, though, could pale next to larger fallouts from the project.

“We feel that we are still unsure how the project is going to impact on the environment, ecologies, economies and society at large,” said Mr. Du, the geographer in Wuhan, who carefully added he was not outright opposed to the project.

The central question for people in Hubei is whether the Han River, crucial to farming and industrial production hubs, will be killed to keep north China alive.

In a paper published in the Bulletin of the Chinese Academy of Sciences, Mr. Du and two co-authors estimated that the diversion project would reduce the flow of the middle and lower stretches of the Han significantly, “leading to an uphill situation for the prevention of water pollution and ecological protection.” Though the study first appeared in 2006, the government has not altered its original plan, Mr. Du said.

Central planners decided on the amount of water to be diverted based on calculations of water flow in the Han done from the 1950s to the early 1990s; since then, the water flow has dropped, partly because of prolonged droughts, but planners have made no adjustments, Mr. Du said. The amount to be diverted is more than one-third of the annual water flow. “That will exert a huge damaging impact on the river,” he said.

The Han River is already facing enormous challenges — industries are discharging more and more pollutants, companies are dredging sand to feed construction needs in nearby cities and algal bloom has hit the river hard. The diversion of water to Beijing will add to the pressures. “If the water quality cannot be ameliorated effectively, the aquatic life populations will be further decimated,” Mr. Du and his co-authors wrote.

The diversion from the Han is necessitating more complex projects to raise water levels. One side diversion brings water from the Yangtze to the Han. Another would bring water from the Three Gorges reservoir to the Danjiangkou reservoir.

Government officials in the south are keenly aware of the changes coming to the Han. In Xiangfan, officials have shuttered some small factories like paper producers and forced others to use more nonpolluting materials, said Yun Jianli, director of the environmental advocacy group Green Han River. “The local government is very concerned about the river and impact of the diversion project,” she said.

The political conflicts are obvious. Mr. Du, a member of the provincial consultative legislature, said officials in Hubei had been in constant negotiations with officials in Beijing for compensation. In the 1990s, the central government proposed a package of water projects valued at $50 million at the time to help Hubei. After rounds of negotiations, the current proposal for supplemental water projects is estimated at more than $1 billion.

The demands of the north will not abate. Migration from rural areas means Beijing’s population is growing by one million every two years, according to an essay in China Daily written last October by Hou Dongmin, a scholar of population development at Renmin University of China. “With its dwindling water resources, Beijing cannot sustain a larger population,” Mr. Hou said. “Instead, it should make serious efforts to control the population, if not reduce it.”

Beijing has about 100 cubic meters, or 26,000 gallons, of water available per person. According to a standard adopted by the United Nations, that is a fraction of the 1,000 cubic meters, or 260,000 gallons, per person that indicates chronic water scarcity.

The planning for Beijing’s growth up to 2020 by the State Council already assumes the water diversion will work, rather than planning for growth with much less water, said Mr. Wang, the former official.

City planners see a Beijing full of golf courses, swimming pools and nearby ski slopes — the model set by the West.

“Instead of transferring water to meet the growing demand of a city, we should decide the size of a city according to how much water resources it has,” Mr. Wang said. “People’s desire for development has no end.”

Li Bibo, Jonathan Kaiman and Jimmy Wang contributed research from Beijing.

Chinese stocks lose their luster in US markets

June 19, 2011

by Alexander Osipovich

AFP

NEW YORK (AFP) – High-flying shares in Chinese companies have come crashing to the ground recently, amid a flurry of accounting scandals and a crackdown by US regulators.

Less than two months ago, US investors were eagerly buying shares in Renren, a social-networking company dubbed the “Facebook of China,” and other firms that seemed poised to benefit from China’s rapid economic growth.

Renren’s shares jumped 29 percent on the day of its initial public offering (IPO) on the New York Stock Exchange in May. Then they sank, closing at just $7.03 on Friday, down to about half of their IPO price of $14.

Of the 12 Chinese companies that have debuted on US exchanges this year, only two are trading above their IPO prices, according to data from Morningstar, an investment research company.

“The drumbeat out of China right now is that certainly there’s an air of fraud and of different sets of numbers for Chinese reporting versus US reporting,” said Bill Buhr, an analyst with Morningstar.

“It basically is spooking investors. I think they assume that where there’s smoke, there’s fire,” he added.

The fallout threatens even firms which have not been tainted by accusations of wrongdoing, such as search engine Baidu, which closed at $117.68 on Friday, a drop of nearly 25 percent from its intraday high of $156 in April.

“Is This the China Bubble Bursting?” asked a recent headline in The Wall Street Journal.

The most recent Chinese company to fall under a cloud is Harbin Electric, whose stock has plunged more than 40 percent since Thursday, when a research firm accused it of falsifying documents.

Harbin Electric, a machinery maker listed on the NASDAQ, has denied the accusations.

The Securities and Exchange Commission has halted trading of several Chinese firms this year, accusing them of violations like keeping two sets of books or failing to disclose that their auditors had quit.

Last week, the SEC said it was probing two more firms — China Intelligent Lighting and Electronics and China Century Dragon Media — for submitting “materially misleading and deficient offering documents.”

“It will be difficult for Chinese IPOs to go forward in the US until the managements of companies decide to improve their operational and financial disclosure,” said Linda Killian, a principal at Renaissance Capital, which researches the IPO market.

Many of the Chinese companies being probed by the SEC listed on US exchanges through “reverse mergers,” a controversial technique in which a firm seeking to go public acquires a publicly traded shell company.

Financial reporting requirements are not as stringent for reverse mergers as they are for traditional IPOs, and the SEC issued a warning about the practice earlier this month, which singled out several Chinese firms.

“Given the potential risks, investors should be especially careful when considering investing in the stock of reverse merger companies,” Lori Schock, an SEC official, said in a statement.

Other factors have also harmed Chinese IPOs, such as rising inflation in China, tighter capital requirements for Chinese banks and civil unrest in smaller Chinese cities, said Killian of Renaissance Capital.

As the craze for Chinese IPOs has waned, commentators such as stock-market guru Jim Cramer have turned their attention away from China’s strong growth prospects and towards its weak record on corporate governance.

“There’s very little corporate governance, informal auditing, and of course, the prospect of government intervention since, remember, it’s still officially a communist country,” Cramer said on CNBC television.

The Destruction of Economic Facts

Renowned Peruvian economist Hernando de Soto argues that the financial crisis wasn’t just about finance—it was about a staggering lack of knowledge

by Hernando de Soto

Business Week

During the second half of the 19th century, the world’s biggest economies endured a series of brutal recessions. At the time, most forms of reliable economic knowledge were organized within feudal, patrimonial, and tribal relationships. If you wanted to know who owned land or owed a debt, it was a fact recorded locally—and most likely shielded from outsiders. At the same time, the world was expanding. Travel between cities and countries became more common and global trade increased. The result was a huge rift between the old, fragmented social order and the needs of a rising, globalizing market economy.

To prevent the breakdown of industrial and commercial progress, hundreds of creative reformers concluded that the world needed a shared set of facts. Knowledge had to be gathered, organized, standardized, recorded, continually updated, and easily accessible—so that all players in the world’s widening markets could, in the words of France’s free-banking champion Charles Coquelin, “pick up the thousands of filaments that businesses are creating between themselves.”

The result was the invention of the first massive “public memory systems” to record and classify—in rule-bound, certified, and publicly accessible registries, titles, balance sheets, and statements of account—all the relevant knowledge available, whether intangible (stocks, commercial paper, deeds, ledgers, contracts, patents, companies, and promissory notes), or tangible (land, buildings, boats, machines, etc.). Knowing who owned and owed, and fixing that information in public records, made it possible for investors to infer value, take risks, and track results. The final product was a revolutionary form of knowledge: “economic facts.”

Over the past 20 years, Americans and Europeans have quietly gone about destroying these facts. The very systems that could have provided markets and governments with the means to understand the global financial crisis—and to prevent another one—are being eroded. Governments have allowed shadow markets to develop and reach a size beyond comprehension. Mortgages have been granted and recorded with such inattention that homeowners and banks often don’t know and can’t prove who owns their homes. In a few short decades the West undercut 150 years of legal reforms that made the global economy possible.

The results are hardly surprising. In the U.S., trust has broken down between banks and subprime mortgage holders; between foreclosing agents and courts; between banks and their investors—even between banks and other banks. Overall, credit (from the Latin for “trust”) continues to flow steadily, but closer examination shows that nongovernment credit has contracted. Private lending has dropped 21 percent since 2007. Outstanding loans to small businesses dropped more than 6 percent over the past year, while lending to large businesses, measured in commercial loans of more than $1 million, fell nearly 9 percent.

The importance of economic facts may not be obvious to Americans. “What does the fish know about the water in which it swims?” asked Albert Einstein. But it’s easy to grasp from the perspective of the developing and former communist countries where I live and work. In these countries, most of our assets and relationships are in the informal sector, outside the legal economy. Because they’re not recorded in public memory systems, they cannot be written up as facts and are, in effect, invisible. All we have are shadow markets.

Without standardization, the values of assets and relationships are so variable that they can’t be used to guarantee credit, to generate mortgages and bundle them into securities, to represent them in shares to raise capital. Nor do they fit the standard slots required to enter global markets. That’s why credit crunches and massive unemployment are chronic conditions for most people forced to operate in the informal economy. These are the ones you see protesting in the streets of Arab countries or living in tents surrounding Port-au-Prince. We know only too well that facts don’t speak for themselves: They have to be constructed through legal processes and kept transparent. They have to be defended, too.

When then-Treasury Secretary Henry Paulson initiated his Troubled Asset Relief Program (TARP) in September 2008, I assumed the objective was to restore trust in the market by identifying and weeding out the “troubled assets” held by the world’s financial institutions. Three weeks later, when I asked American friends why Paulson had switched strategies and was injecting hundreds of billions of dollars into struggling financial institutions, I was told that there were so many idiosyncratic types of paper scattered around the world that no one had any clear idea of how many there were, where they were, how to value them, or who was holding the risk. These securities had slipped outside the recorded memory systems and were no longer easy to connect to the assets from which they had originally been derived. Oh, and their notional value was somewhere between $600 trillion and $700 trillion dollars, 10 times the annual production of the entire world.

Three years later there’s still plenty to be concerned about. Governments have worked to enact major financial and regulatory reforms, such as the Wall Street Reform and Consumer Protection Act ushered through Congress in 2010 by former Senator Chris Dodd (D-Conn.) and Representative Barney Frank (D-Mass.). Dodd-Frank has sought to move derivatives into clearinghouses where more data about them can be collected. It’s a step in the right direction. But if you believe in the value of public memory and economic facts, the reforms leave a number of problems outstanding.

First, various groups of derivatives end users, such as nonfinancial companies and sovereign wealth funds, are likely to be exempted from the clearing process—from 40 percent of them, according to Craig Pirrong of the University of Houston’s Bauer College of Business, to 70 percent, according to Michael Greenberger, a former Commodities Futures Trading Commission director. Second, the information collected would be available only to regulators because certain business data are considered “proprietary.” Third, the $700 trillion worth of derivatives that ignited the recession are not covered by Dodd-Frank. Warren Buffett successfully lobbied for their exclusion, saying it would be tantamount to rewriting old contracts and would force healthy derivatives players such as his own Berkshire Hathaway to post collateral on old deals. Fourth, the clearing system is not likely to be fully operational for another 5 to 10 years. Fifth, many clearinghouses do not have the kind of complete information required by traditional public memory systems: incentives for recording that asset owners can’t resist; standard classifications to facilitate identifying and governing the assets; universal access to the information; integration or linkages with other recording systems; provisions to protect third parties from negative externalities; identification of all asset holders and interested parties; limited liability provisions to improve accountability.

That’s a lot of failure to digest in a single paragraph. So let’s look sector by sector at the sorry state of facts in the financial system.

1) Mortgage Bundling. Banks that have tried to foreclose on nonperforming mortgages have discovered that in many cases they can’t collect the debts. Why? Because some companies that pooled, packaged, and converted those mortgages into liquid securities had dispensed with the usual procedures to record mortgage owners and passed the property to a shell company called MERS, which pretended to own the mortgages. The intent was to streamline what many real estate experts recognize are outdated, disaggregated, and cumbersome processes. The result, however, is that today, says professor Christopher L. Peterson of the University of Utah, “about 60 percent of the U.S.’s residential mortgages are now recorded in the name of MERS rather than the bank, trust, or company that actually has a meaningful economic interest in the repayment of the debt. For the first time in the nation’s history, there is no longer an authoritative, public record of who owns land in each county.”

Already the lack of facts is being felt around the U.S.: Courts from Kansas to New York have decided that foreclosures have been improper, and some authorities can’t figure out whom to tax. Without facts, credit will continue to be scarce, the value of bonds backed by mortgages will be at best doubtful, the value of houses is likely to slide further, foreclosure backlogs should increase, and banks will see their balance sheets burdened by more nonperforming paper.

2) Default Swaps. The leverage that created so many bad mortgages and the derivatives to help finance them would not have been possible without “credit default swaps” (CDSs)—ingenious derivative instruments that allowed lenders to insure their risks against defaults and pass them on to others. In principle, widening the market should be a good thing. But these risks have slipped outside the public memory systems, making it very difficult to know who ultimately bears the risk and where it is.

Robert Engle, a Nobel laureate who teaches economics at New York University, has said that proposals for reforming CDSs by Western governments are “good as far as they go, but they don’t go far enough.” European central banker Alexandre Lamfalussy and others have so far been unsuccessful at trying to collect information or even at creating a “risk office” at the Bank for International Settlements (BIS). In the last quarter of 2010, various BIS publications noted that statistics on international debt still had too many gaps and overlaps—and that banks, fearful over their proprietary obligations, were reluctant to provide information.

3) Exemptions. When the recession sent the prices of financial holdings spiraling downward, some banks and financiers were exempted from the U.S.’s long-established “mark-to-market” accounting standards, which force firms to report the value of their assets at current market prices. It’s reasonable to establish value other than through market prices, according to proponents, if the market is unusually depressed. But such a privilege creates the ability to destroy facts by hiding losses, increasing the price of assets to levels at which no one will buy. In the U.S., the Financial Accounting Standards Board and the Securities and Exchange Commission are reviewing accounting rules, while Congress has been holding hearings on the subject. Meantime, businesses are left to figure out reality on the basis of connections, influence, and private information. Just like we do in developing and former communist countries.

4) Off-Balance-Sheet Accounting. The modern balance sheet can be traced to Luca Pacioli, the 15th century mathematician and father of accounting. In the 1990s governments began destroying Pacioli’s legacy by allowing companies in financial difficulty to pass facts concerning debts from their public balance sheet to a less visible memory system called a special purpose entity (SPE) (or to sweep debt information into the balance sheet’s footnotes in words so obtuse that the statements cease being factual). Such “off-balance-sheet accounting” makes companies appear more profitable, despite their debts. By the time Enron closed its doors in 2002, it had created some 3,500 SPEs.

According to Frank Partnoy, a professor of securities law at the University of San Diego and one of the most insightful observers of the financial crisis, “abusive off-balance-sheet accounting” was its major cause. Yes, the Sarbanes-Oxley reforms were an effort to counter such abuses, and principles-based accounting where companies are told what they can do rather than how to do it may be steps in the right direction. But until we get the facts, we won’t know what to repair.

5) Government Use of Swaps and Repo Markets. Greece is the most notorious example of a country using derivative-based currency swaps to swell the value of government assets by pushing national debts into the future. Gustavo Piga, a professor of economics at the University of Rome Tor Vergata, revealed this fact-destroying practice: A country issues a debt in one currency—dollars, let’s say—at fictional exchange rates that it swaps for a euro debt for a certain period of time. Thus it gets an inflow of money that makes the ledger look positive because the actual debt appears as a swap that has produced income. Governments and banks can also distort facts by getting short-term funds against their assets in the so-called repo market, which, as a result of new rules in the past decade, they don’t have to report as loans in their memory systems. This is apparently how Lehman Brothers made it look like it had some $50 billion less in loans outstanding than it really did.

Europeans outlawed interest-rate swaps in 2008, though Piga has pointed out numerous loopholes. And it is hardly promising that Bloomberg News was forced to sue the European Central Bank for refusing to release information on Greece’s derivatives transactions. Dodd-Frank is essentially silent on the issue of repo markets. Gary Norton at the Brookings Institution has argued that we still do not have the vaguest idea of the size of the repo market.

6) Rating Agencies. Originally created to get and communicate the facts regarding the trustworthiness of businesses through a ratings scale, ratings agencies were an innovative way to get an abbreviated picture about a given business. But their reputation suffered when highly rated companies barely survived the outbreak of the recession or had to be rescued.

There seems to be more of a consensus about how to reform the ratings system. Dodd-Frank provides for an Office of Credit Ratings, though it has yet to be staffed. Europe, too, has established a new regulating agency, European Securities and Markets Authority, responsible for creating a central data repository to track rating agencies and their performance.

Important, too, is to consider whether overreliance on ratings based on co-variance formulas is a trustworthy substitute for facts. Any reform effort must keep in mind the difference between facts, which can be tested for truth, and opinions, such as ratings, which can’t. Facts are not simply about transparency; facts are about empirical truth.

If we can agree that the recession wasn’t about bubbles but about the organization of knowledge, we can move on to restoring the systems that allowed the global economy to expand more in the last 60 years than in the previous 2,000.

We are now staring at a legal and political challenge. A legal challenge because American and European governments allowed economic activity to cross the line from the rule-bound system of property rights, where facts can be established, into an anarchic legal space, where arbitrary interests can trump facts and paper swirls out of control. The rule of law is much more than a dull body of norms: It is a huge, thriving information and management system that filters and processes local data until it is transformed into facts organized in a way that allows us to infer if they hang together and make sense.

Mainly, though, it’s a political challenge. Politicians must raise the financial crisis to commanding heights, where the entrenched institutional problems of a failing order can be addressed. Markets were never intended to be anarchic: It has always been government’s role to police standards, weights and measures, and records, and not condone legalized sleight of hand in the shadows of the informal economy. To understand and repair one of mankind’s greatest achievements—the creation of economic facts through public memory—is the stuff of nation-builders.

With Karen Weise. De Soto is a Bloomberg Businessweek contributor

After Dumping 30% Of Its Treasury Holdings In Half A Year, Russia Warns It Will Continue Selling US Debt

June 18, 2011

by Tyler Durden

ZeroHedge

Just in time for the end of QE2, when the US needs every possible foreign buyer of US debt to step up to the plate, we get confirmation that yet another major foreign central bank has decided to not only not add to its US debt holdings, but to actively sell US Treasurys.

The WSJ reports that “Russia will likely continue lowering its U.S. debt holdings as Washington struggles to contain a budget deficit and bolster a tepid economic recovery, a top aide to President Dmitry Medvedev said Saturday. “The share of our portfolio in U.S. instruments has gone down and probably will go down further,” said Arkady Dvorkovich, chief economic aide to the president, told Dow Jones in an interview on the sidelines of the St. Petersburg International Economic Forum.” Well, with Russia out, at least we have China and Japan continuing to buy US debt….

Oh wait, China is contemplating dumping two thirds of its debt you say? And the biggest buyer of Japanese bonds is now in the process of selling Japanese bonds in the open market for the first time (so not really in the market of US bonds). Well, surely US households will step up to the plate. After all they all have so much “cash on the sidelines” courtesy of the RecoveryTM ©® that they can’t wait to dump it all into paper yielding less than 3% a year, and has negative real rates of return.

Wait, what’s that: according to the Fed, in Q1 US “households” sold $1.1 trillion annualized in Treasurys to the Fed? So, let’s get this straight: China, Japan, and now very much openly Russia, the three countries with the largest financial reserves in the world, are threatening, if not already dumping US bonds, just in time for US households to sell their holdings of US paper to Brian Sack. And this is happening 2 weeks before QE2 endsUm… Are we and Bill Gross (and certainly not Morgan Stanley) the only ones to see a problem with this?

More on the latest confirmation that the time of US superpower supremacy has ended…

Asked if U.S. debt was as solid an investment now as it was 10 years ago, Mr. Dvorkovich said: “On an absolute basis, yes. On a relative basis, compared to other investments, of course not.”

“When we take decisions and compare, we’re not thinking in absolute terms,” he said.

Russia’s financial reserves—which stood at $528 billion as of June 10—are the world’s third largest, after China and Japan’s. As of May, according to Russia’s central bank, 47% of reserves were in dollars and 41% in euros, compared with 45.2% in dollars and 43.1% in euros on Jan. 1.

The central bank recently diversified the stash to include the Canadian dollar, which makes up 1% of the total, and plans to put 0.8% into the Australian dollar starting in September.

Hackers take down CIA website, steal Sony user data and cause mayhem for Google online security.

June 17, 2011

Al Jazeera

. This year has been a busy one for hackers targeting organisations in the US. The map above gives detailed information on 15 of the most significant cyber attacks of 2011, according to various tech media reports, including a compilation of hack attack profiles by Business Insider.

Stated goals have ranged from simple larceny in attacks on banks like Citigroup to brazen government vandalism in hacks on the CIA, Senate and IMF websites.

Some of the attacks are said to be punishment for corporate policies that hackers resented. This was the justification cited in both attacks on Sony, after which Lulz Security said it aimed to cause “maximum embarrassment … for security flaws”.

The same group said it defaced PBS websites, leaked corporate user names posted fake stories saying “Tupac still alive” in order to protest what it viewed as a biased “Frontline” documentary about WikiLeaks.

The techniques used range from “spear-phishing” sensitive consumer data, harnessing falsified SecurId codes and taking advantage of “Zero-day vulnerability”.

Much of the hacking against US-based companies – both criminal and light-hearted – reportedly originates from within the US. But daring cyber assaults on Lockheed Martin and Google allegedly came from a centre in eastern China.

While the US president has sworn to defend the cyber security of the nation with the legal rationale that hacking is an “act of war”, stopping attackers residing in “neutral” countries is a major challenge for law enforcement.

Conversations with the Crow

When the CIA discovered that their former Deputy Director of Clandestine Affairs, Robert  T. Crowley, had been talking with author Gregory Douglas, they became fearful (because of what Crowley knew) and outraged (because they knew Douglas would publish eventually) and made many efforts to silence Crowley, mostly by having dozens of FBI agents call or visit him at his Washington home and try to convince him to stop talking to Douglas, whom they considered to be an evil, loose cannon.

Crowley did not listen to them (no one else ever does, either) and Douglas made through shorthand notes of each and every one of their many conversation. TBR News published most of these (some of the really vile ones were left out of the book but will be included on this site as a later addendum ) and the entire collection was later produced as an Ebook.

Now, we reliably learn, various Washington alphabet agencies are trying to find a way to block the circulation of this highly negative, entertaining and dangerous work, so to show our solidarity with our beloved leaders and protectors, and our sincere appreciation for their corrupt and coercive actions, we are going to reprint the entire work, chapter by chapter. (The complete book can be obtained by going to:

http://www.shop.conversationswiththecrow.com/Conversations-with-the-Crow-CWC-GD01.htm

Here is the eightieth  chapter

Conversation No. 80

Date: Thursday, April 17, 1997

Commenced: 2:21 PM CST

Concluded:  2:52 PM CST

RTC: Good afternoon Gregory. Did you get your car back from the shop in one piece?
GD: Yes, and it actually runs better now that they got the stroller out from under the engine compartment.

RTC: Now, now, Gregory, somehow I can’t believe that. How could a stroller get under your car?
GD: I like to run red lights, Robert, how else. And last night, I got a ticket for going twenty miles an hour.

RTC: Normally, that’s not so fast.

GD: Ah, but it was in the local mall.

RTC: Gregory, you must have been at the coffee again.

GD: What else? Glue is just too expensive. And when I used it in the past, my face kept sticking to the sheets. Oh, well, enough ribaldry so late in the day. And getting stuck to the sheets is a forbidden topic, I guess. Last week I dreamed I was eating an angel food cake and when I woke up, my pillow was gone. Enough, enough. How is life treating you?
RTC: Good days and bad days, Gregory.

GD: How is Emily?
RTC: Very good. Thank you for asking.

GD: Not at all. I had a privileged childhood. We were taught to be polite. I have no idea what good that does but I have been conditioned.

RTC: Bill Corson is thinking of running for Congress, by the way. Did he mention this to you?
GD: No. Is he serious?
RTC: Sometimes, it’s difficult to tell what is serious about Bill.

GD: Kimmel should run. The ladies would flock to his standard.

RTC: I think he’d spend most of his time on the platform discussing his grandfather and Pearl Harbor.

GD: Yes. He is a little limited in his scope. I was involved with politics one time and it was a hysterical romp in the sheep pen.

RTC: You ran for something?
GD: A speeding bus. No, I ran for nothing but I helped out a friend of mine who wanted to unseat a local judge. Interesting sort of thing. Do you want to hear about it?
RTC: Does this involve drag racing in the mall?
GD: No, actually it doesn’t but it had its roots in my friend, Marvin, and his Ferrari. He was going too fast in it and had a few drinks under his belt so the local cops grabbed him. The judge in his case, a local power, was nasty with him and Marvin loathed the man. Also, I note, Marvin had a lot of money. We knew each other, and he was aware that I could get things done in let’s say unorthodox ways. We had the same lawyer. Anyway, the judge, who was part of our local power elite, had been on the bench for centuries and was a permanent fixture. He was up for the standard reelection and Marvin wanted him booted off the bench. We made a deal, did Marvin and I. I would get rid of the judge and Marvin would pay my out of pocket expenses plus whatever he thought proper if I was successful. Now, we had some young attorney running for the job. He had no money and the sitting judge had all the local money behind him. How to unseat him.

RTC: You had one of your nasty friends shoot him?
GD: Now, you’re trying to use CIA tactics here, Robert. No, I was not going to shoot him or even run over him with someone else’s car on a rainy night. First, I went to see the young candidate. I asked him, in private, that if I got him elected at no expense to himself, would he throw out Marvin’s conviction for drunk driving and he laughed and agreed.

RTC: Did he?
GD: We’ll get to that in good time. Well, the first thing I did was to design a bumper sticker telling voters to vote for the judge. All perfectly straightforward. Took it to Frisco to a professional printer along with a phony purchase order I had drawn up using a letterhead from the judge’s reelection campaign. They printed 20,000 stickers and billed it to the judge. Next, I went to some of my Teamster friends for whom I had done a recent and significant favor and in return, we took all of these stickers and had the boys put them on the back of every car they could find in parking lots and other public places. Now note, I did not say on the rear bumper. They put them on the back trunk lids of the cars. Ever try to get a bumper sticker off, Robert? They stick like shit to a blanket. Many very angry citizens, Robert, many. Now, that was the first thing I did. The second was to write up a letter to every citizen in the town, telling them the reasons to vote for the judge. I ran off thousands at a girl friend’s church mimeograph service. For free, of course. Then we stuffed many thousand envelopes, sealed them and stuck labels on the front. I had the judge’s campaign office stamped with a rubber stamp on the front top and I had bought gummed labels for every registered voter in town. That I also billed to the judge. The stamps I had to buy. Now the overall theme of this mailing sounded as if it were written by a participant in the Special Olympics and the terrible sketches accompanying it were equally awful. We marked them as third class postage but sealed the envelopes, Robert, making them first class mailings. We, Marvin and I, dropped thousands of these into the main post office late at night and then a day later, we had so much fun. You see, the letters had postage due because they were not third class and notices were left for residents absent at work. The day after this, we drove past the local post office and I would have sworn that it had been snowing. There were vast snowbanks of ripped up letters all over the front lawn and sidewalk in front of the building as thousands of citizens flocked down there to pay their two cents only to discover really awful campaign trash.

RTC: (Laughter)

GD: Marvin did enjoy it too. And the next thing we did was to hire a sound truck to drive all over town early Sunday morning with a loud appeal for anyone hearing to vote for judge so and so the next week. My, my, so many irate late sleepers, wrenched from the arms of Morpheus, or their idiot sister, and having to listen to the message. Oh yes, we charged that to the judge as well. Let’s see now…yes, and then we got a couple of ladies I know to do a number. See, they would stand at bus stops in town around four in the afternoon, a block apart. One would get on the crowded commute bus and at the next stop, the other would. My, they would recognize each other and start a nice dialog that could be heard from one end of the bus to the other. They discussed the coming election and one said she would never vote for the incumbent judge because her cousin in the sheriff’s office had told her that the distinguished jurist had a fifteen year old black girl out in La Honda for weekends of endless fun. And they would then get off the bus, one stop at a time, and repeat the act again.

RTC: Now that’s really evil, Gregory.

GD: Oh, I thought so at the time. But creative and very, very deadly. See, when people hear something like that, they repeat it, Robert, but they don’t want to say it was gossip heard on a bus to they tell their co workers or family members that an unnamed high level police official told them. And so the good work prospers. And I rather like what I did on the day before the election. You see, in that town, you could get a permit from the city and bag the parking meters, paying for the daily take in return for free advertising….

RTC: Jesus

GD: So I bought some bread bags in Frisco and had another printer up there indicate that there was free parking that day, courtesy of the reelection campaign for the judge. Naturally, people parked and felt they could stay there all day, thanks to the judge and his friends. I got my Teamster friends and we bagged every meter in town. Along came the parking cops who looked at the bags and then called in to check. When they found the bags were fake, they tore them off and ticketed the cars.

RTC: Oh lovely, Gregory. I always said we should have put you on the payroll.

GD: I don’t take blood money. Interesting election results. The challenger spent about $200 on silly ads but a whopping 90% of the electorate turned out and about the same amount voted him into office in a stunning landslide. They voted their annoyance. I understand the judge’s people had some terrible bills they challenged. Anyway, Marvin got his conviction overturned.

RTC: Did he make it good to you?
GD: Well, I gave him my out of pocket expenses, mostly stamps, and told him as for anything additional, I would leave it up to his generosity. He gave me a check for the stamps and another sealed envelope. Of course I didn’t open it because that would be in bad taste and after he took me out to a wonderful, and very, very expensive  French dinner, I went home and opened the second envelope. Five hefty figures, Robert, five figures. I call that sowing seeds of kindness.

RTC: You missed your calling, Gregory.

GD: A wardheeler or a parson, Robert?

RTC: Not much difference in the end.

GD: Yes, and that’s where the judge got it.

(Concluded at 2:52 PM CST)

Dramatis personae:

James Jesus Angleton: Once head of the CIA’s Counterintelligence division, later fired because of his obsessive and illegal behavior, tapping the phones of many important government officials in search of elusive Soviet spies. A good friend of Robert Crowley and a co-conspirator with him in the assassination of President Kennedy

James P. Atwood: (April 16, 1930-April 20, 1997) A CIA employee, located in Berlin, Atwood had a most interesting career. He worked for any other intelligence agency, domestic or foreign, that would pay him, was involved in selling surplus Russian atomic artillery shells to the Pakistan government and was also most successful in the manufacturing of counterfeit German dress daggers. Too talkative, Atwood eventually had a sudden, and fatal, “seizure” while lunching with CIA associates.

William Corson: A Marine Corps Colonel and President Carter’s representative to the CIA. A friend of Crowley and Kimmel, Corson was an intelligent man whose main failing was a frantic desire to be seen as an important person. This led to his making fictional or highly exaggerated claims.

John Costello: A British historian who was popular with revisionist circles. Died of AIDS on a trans-Atlantic flight to the United States.

James Critchfield: Former U.S. Army Colonel who worked for the CIA and organizaed the Cehlen Org. at Pullach, Germany. This organization was filled to the Plimsoll line with former Gestapo and SD personnel, many of whom were wanted for various purported crimes. He hired Heinrich Müller in 1948 and went on to represent the CIA in the Persian Gulf.

Robert T. Crowley: Once the deputy director of Clandestine Operations and head of the group that interacted with corporate America. A former West Point football player who was one of the founders of the original CIA. Crowley was involved at a very high level with many of the machinations of the CIA.

Gregory Douglas: A retired newspaperman, onetime friend of Heinrich Müller and latterly, of Robert Crowley. Inherited stacks of files from the former (along with many interesting works of art acquired during the war and even more papers from Robert Crowley.) Lives comfortably in a nice house overlooking the Mediterranean.

Reinhard Gehlen: A retired German general who had once been in charge of the intelligence for the German high command on Russian military activities. Fired by Hitler for incompetence, he was therefore naturally hired by first, the U.S. Army and then, as his level of incompetence rose, with the CIA. His Nazi-stuffed organizaion eventually became the current German Bundes Nachrichten Dienst.

Thomas K. Kimmel, Jr: A grandson of Admiral Husband Kimmel, Naval commander at Pearl Harbor who was scapegoated after the Japanese attack. Kimmel was a senior FBI official who knew both Gregory Douglas and Robert Crowley and made a number of attempts to discourage Crowley from talking with Douglas. He was singularly unsuccessful. Kimmel subsequently retired, lives in Florida, and works for the CIA as an “advisor.”

Willi Krichbaum: A Senior Colonel (Oberführer) in the SS, head of the wartime Secret Field Police of the German Army and Heinrich Müller’s standing deputy in the Gestapo. After the war, Krichbaum went to work for the Critchfield organization and was their chief recruiter and hired many of his former SS friends. Krichbaum put Critchfield in touch with Müller in 1948.

Heinrich Müller: A former military pilot in the Bavarian Army in WWI, Müller  became a political police officer in Munich and was later made the head of the Secret State Police or Gestapo. After the war, Müller escaped to Switzerland where he worked for Swiss intelligence as a specialist on Communist espionage and was hired by James Critchfield, head of the Gehlen Organization, in 1948. Müller subsequently was moved to Washington where he worked for the CIA until he retired.

Joseph Trento: A writer on intelligence subjects, Trento and his wife “assisted” both Crowley and Corson in writing a book on the Russian KGB. Trento believed that he would inherit all of Crowley’s extensive files but after Crowley’s death, he discovered that the files had been gutted and the most important, and sensitive, ones given to Gregory Douglas. Trento was not happy about this. Neither were his employers.

Frank Wisner: A Founding Father of the CIA who promised much to the Hungarians and then failed them. First, a raging lunatic who was removed from Langley, screaming, in a strait jacket and later, blowing off the top of his head with a shotgun.

Robert Wolfe: A retired librarian from the National Archives who worked closely with the CIA on covering up embarrassing historical material in the files of the Archives. A strong supporter of holocaust writers specializing in creative writing

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