TBR News May 7, 2016

The Voice of the White House

Washington, D.C. May 7 2016: “Recently, there was much ado about the so-called ‘Panama Papers’ and the millions of pages of inside information on persons and entities who were using secret bank accounts to purportedly hide money from tax agencies and investigators of fiscal crimes. After much media trumpet-blowing, very select names were released and then total silence. Rumors began to spread that this was a political action, not a whistle-blowing one and the continued silence coupled with the fact that no Americans were listed and none of America’s friends either, gave credence to the thesis. That off-shore banks exist is not a secret but after all the media accusations, why is there no meat with the dinner? Probably because there isn’t any.”

 

Panama Papers source ‘John Doe’ sends manifesto to explain data-release actions

The anonymous source of the ‘Panama Papers’ has issued a manifesto explaining the motives for releasing the data. “John Doe” also called for action on corruption at the heart of income inequality.

May 6, 2016

DW

The German daily Süddeutsche Zeitung published on its website a manifesto written by the anonymous source of the “Panama Papers,” the 11.5 million files on offshore tax havens from the law firm Mossack Fonseca released last month.

The source denied being a spy: “For the record, I do not work for any government or intelligence agency, directly or as a contractor, and I never have. My viewpoint is entirely my own.”

“John Doe” had harsh words for what he called “massive, pervasive corruption” at the heart of income inequality, which he described as “one of the defining issues of our time.”

In the 1,800 word statement, Doe said the “sudden acceleration” of income inequality affects everyone around the world with politicians academics and activists “alike helpless to stop its steady growth.”

Doe accused law firms, and not just the Panama firm at the heart of the revelations, of using their influence to “write and bend laws worldwide to favor the interests of criminals over a period of decades.

Mossack Fonseca did not work in a vacuum – despite repeated fines and documented regulatory violations, it found allies and clients at major law firms in virtually every nation,” wrote the leaker, whose name and gender has not been made public.

Naming names

The source of the documents said the founders of Mossack Fonseca, Ramon Fonseca and Jürgen Mossack, and its “employees and clients should have to answer for their roles in these crimes” such as tax evasion and more serious offences. Doe said it could take decades for the full extent of the offenses to become known.

Doe said he would be “willing to cooperate with law enforcement” to prosecute wrongdoers whose activities were revealed in the papers but remains wary as whistleblowers “have had their lives destroyed …. after shining a light on obvious wrongdoing.” Instead, Doe said whistleblowers “deserve immunity from government retribution.”

Call for action

In the statement, Doe called on “the European Commission, the British Parliament, the United States Congress, and all nations to take swift action not only to protect whistleblowers, but to put an end to the global abuse of corporate registers.”

In the European Union, Doe said each member state’s corporate register should be freely accessible with detailed data plainly available on ultimate beneficial owners.

The United Kingdom received praise from Doe for its domestic initiatives but it still had “a vital role to play by ending financial secrecy on its various island territories, which are unquestionably the cornerstone of institutional corruption worldwide.”

Doe said the United States could no longer trust its 50 states to make sound decisions about their own corporate data.

“It is long past time for Congress to step in and force transparency by setting standards for disclosure and public access,” Doe wrote, adding that “reform of America’s broken campaign finance system cannot wait.

“Tax evasion cannot possibly be fixed while elected officials are pleading for money from the very elites who have the strongest incentives to avoid taxes,” the manifesto read.

 Individual causes

Doe also singled out particular states, such as New Zealand for “enabling the financial fraud Mecca that is the Cook Islands.”

The Conservative Party in the UK had been “shameless about concealing their own practices involving offshore companies.” The father of UK Prime Minister David Cameron was named in the Panama Papers.

Doe also named “Jennifer Shasky Calvery, the director of the Financial Crimes Enforcement Network at the United States Treasury” who had “just announced her resignation to work instead for HSBC.”

Failures

Doe said governments, banks, financial regulators and tax authorities have “failed.” While “judges have too often acquiesced to the arguments of the rich.”

He also said the media had failed with a number of organizations choosing not to report the story of the Panama Papers.

“But most of all, the legal profession has failed,” Doe wrote, saying that the collective impact of the failures was a “complete erosion of ethical standards” that is “tantamount to economic slavery.” The manifesto called for a revolution that would be “digitized,” suggesting “perhaps it has already begun.”

On Thursday night, the US White House announced a series of initiatives to crack down on international tax evasion: “The Panama Papers underscore the importance of the efforts the United States has taken domestically, and the efforts we have undertaken with our international partners, to address these shared challenges,” a statement from the White House explained.

 

The Müller Washington Journals   1948-1951

At the beginning of December, 1948, a German national arrived in Washington, D.C. to take up an important position with the newly-formed CIA. He was a specialist on almost every aspect of Soviet intelligence and had actively fought them, both in his native Bavaria where he was head of the political police in Munich and later in Berlin as head of Amt IV of the State Security Office, also known as the Gestapo.

His name was Heinrich Müller.

Even as a young man, Heini Müller had kept daily journals of his activities, journals that covered his military service as a pilot in the Imperial German air arm and an apprentice policeman in Munich. He continued these journals throughout the war and while employed by the top CIA leadership in Washington, continued his daily notations.

This work is a translation of his complete journals from December of 1948 through September of 1951.

When Heinrich Müller was hired by the CIA¹s station chief in Bern, Switzerland, James Kronthal in 1948, he had misgivings about working for his former enemies but pragmatism and the lure of large amounts of money won him over to what he considered to be merely an extension of his life-work against the agents of the Comintern. What he discovered after living and working in official Washington for four years was that the nation¹s capital was, in truth, what he once humorously claimed sounded like a cross between a zoo and a lunatic asylum. His journals, in addition to personal letters, various reports and other personal material, give a very clear, but not particularly flattering, view of the inmates of both the zoo and the asylum.

Müller moved, albeit very carefully, in the rarefied atmosphere of senior policy personnel, military leaders, heads of various intelligence agencies and the White House itself. He was a very observant, quick-witted person who took copious notes of what he saw. This was not a departure from his earlier habits because Heinrich Müller had always kept a journal, even when he was a lowly Bavarian police officer, and his comments about personalities and events in the Third Reich are just as pungent and entertaining as the ones he made while in America.

The reason for publishing this phase of his eventful life is that so many agencies in the United States and their supporters do not want to believe that a man of Müller¹s position could ever have been employed by their country in general or their agency in specific.

 

Tuesday, 28 December 1948

I see that Truman will be receiving a nice increase in his pay soon. Too early for me to consider such a thing. Christmas was as expected, sad but very pleasant in the new country. No longer hear German in the streets, although in Geneva it was more often French. Some prominent USA trade union people are being investigated by the legislature now. I have always maintained that next to university professors, the trade unions conceal the worst communists.

I will see the President sometime just after the New Year.

Now that the house is in order, I am having the wine cellar filled and I am expected to have some of my fellow workers over for a New Year party.

More strange stories to relate. The former deputy Secretary of State, Welles, was found lying unconscious in the snow at his estate near here on the day after Christmas. Robert told me that Welles, who was once the real Secretary (I keep wanting to write Minister here) of State was an old fairy who liked sailors, especially black ones. Could one of them have beaten him up? This does happen but no one wants to talk about it. He is alive but has frostbite. The Stalingrad sickness. We used to call the East Medal the Frozen Meat Order for just that reason.

General Truscott told me an extremely funny story about General Smith. He does not like him at all and I will put this down in case I need it later on.

The General, who was Chief of Staff to Eisenhower, was in Sicily during the campaign there and apparently was late for a conference with General Patton (probably the best the Americans had). They sent a staff car to see why he was late and found his car parked on the edge of a road. This was near an American artillery battery and when Smith heard the guns firing, he was sure they were Germans and fled, screaming like a girl, from his car and ran down into the bushes. It took three officers, including a General, to convince him that it was safe to return but everyone was terribly embarrassed to discover that Smith had shit his pants full! Someone had to put down a briefcase for him to sit on so he didn’t mess the car!

They say Patton enjoyed this very much.

The next time I have to deal with Smith, I will remember the story but I do not think I will bring it up to him. I understand he will be in Washington officially on Tuesday. He will see the President. Wants to be let out of the Ambassadorship and am told he has had someone write a book for him.

The story about Walter Bedell Smith is quite true and can be found today in the papers of General George Patton. From 1946 through 1949, Smith was U.S. Ambassador to the Soviet Union and after this, head of the CIA. According to his files, Müller’s initial contact with Smith and several others came about while he was being considered for employment.

Sumner Welles, who had once been the de facto Secretary of State and a close personal friend of Roosevelt, had left the government in 1943 as the result of a scandal involving a homosexual incident with a black Pullman porter on an official trip. He later began to drink heavily and was found unconscious on the grounds of his Maryland estate under circumstances that have never been explained.

Sunday, 2 January 1949

We have had very bad weather here, all across the eastern part of the continent. Very cold and much snow. Not unfamiliar to me. If Americans have a few centimeters of snow on the ground, they go quite mad with apprehension. The press is always filled with amusing stories. In Canada, some politician, out for a walk in the bad snowstorm, lost his way, fell into a river and drowned.

We had a decent little party last night and only one senior officer got drunk and threw up in the pantry. None of them know the difference between vinegar and prime vintage so I served them terrible domestic wine and champagne in expensive bottles. Soldiers who spend their wars in canteens or safely behind desks are so boastful with a few ounces of alcohol in them.

I recall a talk I had recently with Thayer and that obnoxious Russian, Pash. He is a hard-faced man with glasses who used to be a gymnastics teacher, hates all communists, Jews and Japanese. He was bragging to us how he pushed a General Dewitt into locking all the Japanese-Americans away in concentration camps at the beginning of their war. He took positive delight in this and then went on to discuss, in front of Thayer who had pretensions of gentility, the way he had Togliatti shot in Rome last July. I quote him exactly “We shot the ginny (?) in the head and he still lived. The next time we can stick a grenade up his wop ass.” After Thayer looked like he might enjoy throwing up privately, Pash went on to discuss how he and the Wisner gang of assassins were once going to shoot Wallace! He was very bitter that he was talked out of this little program! Marvelous what kind of lunatics we have to deal with. Suppose he didn’t like the President’s piano playing and fired a Panzerfaust into his ear?

Wallace needs to be attended to but not by Pash and I think a heart attack would be most beneficial. When I said this, Thayer looked at me as if I were mad and then excused himself. He probably did vomit into the bushes outside. At any rate, he did me the disservice by leaving me with the lunatic Pash who revealed a plot to me about poisoning some leftwing newspaper reporter he hated.

I will have to go to New York at once and can see the President when I come back. After him, I will be honored to visit with Colonel Hoover and, of course, the Admiral once again. I use the excuse of my work to avoid most of these idiots and assholes but sometimes, I have a duty to perform. This is not much different from the old days, after all.

 

Boris T. Pash was born Boris Pashkovski in Russia. His father was the Metropolitan Theophilus Pashkovski. Boris shortened his name in 1932. He was a refugee who came to this country after the October Revolution. He was a gym teacher in Los Angeles and held a rank in the National Guard of California. He was instrumental in persuading General De Witt to endorse a program of deportation and imprisonment of all Japanese-Americans after Pearl Harbor. Pash was later chief of security for the Manhattan atomic program and while there, incurred Roosevelt’s wrath by attempting to arrest a number of communist agents engaged in work on the project. He later became head of the U.S. Army’s Counterintelligence Corps (CIC) in San Francisco.

After the war, he was in charge of the ‘Alsos Project’ in which Pash and a team of military police went around conquered Germany rounding up German atomic scientists and shipping them to the United States. Later, he became involved with the new CIA and worked with Frank Wisner, head of the CIA’s clandestine operations. Pash was a strong anti-communist and became involved in various assassination projects such as the attempted murder of Italian communist leader, Palmiro Togliatti on 14 July, 1948, in Rome. The assassination attempt was a failure.

The Thayer mentioned was Charles Thayer who had been OSS chief in Vienna after the war. He became head of the Voice of America in 1947. He died in 1969 during a heart operation. Thayer was a strong proponent of the use of former Third Reich officials to combat communism but was viewed as too liberal by the hard-line conservatives who were bent on purging any element from government that they did not view as strongly anti-Soviet. Thayer’s problem was that he adopted a more moderate course of action and eventually was forced out of government service.

Thursday, 6 January 1949

New York. Bad weather in Washington when I left. Cold and instead of snow, it rained! Excellent rooms at the Hotel Plaza and a fine view from my windows of the great park. Much like the English Garden.

A shipment arrived for me here on the Los Angeles out of Antwerp. Must supervise the disposition of my material.

While the Grand Jury is sitting here, I am involved in work on the witnesses and the individuals being heard. Max Bedacht, whom I know of from my Munich days, is a witness. A known communist for certain but one who has changed his allegiance. A brief conversation with him and we talked about Weiss Ferdl and a pub he knew in Schwabing. Get on their good side, always.

Levine, the writer, talks to me about the communists for over three hours. He once said he knew about the late Duggan being a communist agent but now recants somewhat. He is getting pressure from the Administration here that, on the one hand, wants to clean out the communists (mostly because the people want them to) but on the other do not want to disrupt the image of the Roosevelt Administration and their communistic New Deal. They wish to have it both ways and they cannot.

I had to talk to Chambers who is a fat, untidy and very emotional man, filled with guilt about his communism and his homosexuality. Basically, he is trying to tell the truth and often does but he is so emotionally involved that he often goes far afield.

New York is a very interesting city. The famous “skyscrapers” are impressive and I spent part of yesterday morning at the Metropolitan Museum, which is splendid and can be walked to from the hotel although my security people do not like the idea. I will have to come back again or at least spin out my stay here and see more of it. Also, visited a dozen very good antique galleries and made some purchases. In one, I found a complete set of silver service for twelve. German, mid-19th century and obviously stolen by a GI after the war. But cheap enough and the initial matches my own new name so I had to buy the set. Two heavy boxes that my man carried out to the taxicab. The drivers of these vehicles are quite interesting characters. Also bought two miniatures, Elizabethan English, which show a man and his wife. Good frames and good techniques.

More work with the Grand Jury people. Levine very strongly exposes extensive communist networks here, in Mexico and Canada. At least some of what he produced as evidence makes complete sense and I will have to check it out. He thinks I am Swiss and asked me where he could buy a good cuckoo clock! I told him that these were German and he made a great face and said bad things about the Germans. These encounters are entertaining because I wonder what Levine would do if he discovered that he had lunch in the hotel suite of the head of the Gestapo! He even mentioned my old agency and went into some entirely inaccurate history. It was all I could do to keep from laughing in his very serious, pedantic face!

Colonel Hoover now claims he has “investigated” over two million US officials and found that only about seven thousand were “suspicious.” First, I cannot believe he has investigated so many and my own percentages are far higher. I am looking forward to my interview with him. It would be better to interview him at my home in Washington. He can sit down while I stand up with the window behind me. That way, I will have the physical and psychological advantage over him. I am told to keep my secretary away from him because attractive women tend to annoy him. A very proper man but, according to my background information, a savage anti-communist who ruthlessly persecuted thousands both during and after the 1914 war. Terrible legal troubles later over this but one can see just how he thinks. When Wilson was hidden in the White House (syphilis or stroke?) and no one ran the country, Hoover and his people ran amok (a word I learned from Hewel).

Americans tend to be either one way or the other. One day they embrace you and the next, beat you to death with a piece of metal pipe. This mindless chatter will go on for weeks but I have no reason to go back to Washington as long as I can impress people here. This is where the activity is, after all.

Perhaps I can get to a concert at the Metropolitan Opera. Is it true that they have a gold curtain there? Perhaps someday the Americans might reconstitute the Berlin Philharmonic but I doubt if Furtwängler will ever be allowed to conduct it. After all, he dared to conduct the orchestra when Hitler was present and this makes him a dangerous and evil Nazi although all he thought of was skiing, women and music. I understand F. was to conduct in Chicago but the Jews in the orchestra there made such a fuss that he will probably not come.

The American Army board has recommended clemency for most of the Peiper men from the Ardennes battle. If they didn’t need us so badly to fight the Russians, they would have hanged a lot more of us.

Ambassador Walther Hewel was Foreign Minister von Ribbentrop’s permanent representative at Hitler’s military headquarters. As a young student at the Munich University, Hewel had been with Hitler in his abortive putsch in 1923 and later went to Java where he learned to speak the local language. He vanished at the end of the war and is reputed to have escaped from embattled Berlin.

It was 1951 before Wilhelm Furtwängler, former conductor of the famous Berlin Philharmonic was permitted to conduct in public again.

 

https://www.amazon.com/DC-Diaries-Translated-Heinrich-Chronicals-ebook/dp/B00SQDU3GE?ie=UTF8&keywords=The%20DC%20Diaries&qid=1462467839&ref_=sr_1_1&s=books&sr=1-1

 

Washington’s Terrorism as Usual

The foreign-policy establishment marks 15 years of failure in the War on Terror.

May 6, 2016

by Philip Giraldi

The Ameerican Conservative

It’s been almost a decade and a half since 9/11, but the foreign-policy establishment still cannot admit that continuous American intervention in the Middle East has been a failure.

I recently attended a conference entitled “Hindsight: Reflections on 15 Years of the War on Terror.” With a wide range of highly respectable speakers, I naively expected that the panels would conclude that the so-called “global war on terror” had been a misguided project ab initio, that the United States continues to repeat mistakes in its national security policy that promote rather than discourage terrorism—and that the terrorism threat itself has been grossly inflated for largely political and economic reasons.

Apart from a single comment by a former U.S. Army general who correctly characterized American involvement in the Middle East as an overly robust response to what is in reality a “low threat, low national interests” situation for Washington policymakers, I was greatly disappointed. Everyone seemed to accept without any real question the presumption that the United States has a preemptive right to use military force to change foreign governments, ignoring that factor as a source of terrorism and only criticizing those actual interventions that have been badly implemented like Iraq and Libya.

Some of the speakers predictably were either promoting personal agendas or the agendas of their political patrons and employers. One keynote speaker blasted Republican foreign policy positions while praising Bill Clinton, and by extension Hillary, for their brilliant foreign policy team, which tempted me to shout out the name “Sandy Berger!” followed by “the Balkans!” and “Sudanese pharmaceutical factory!” The same speaker also refused to address a reasonable question about the well-attested massive Israeli spying operation in the U.S. in 2001, denying that it existed. Indeed, neither Israel nor Palestine were mentioned at all in an hour and a half panel discussion on foreign policy “challenges” coming from the Middle East, an omission that one has to consider to be curious.

While some speakers robustly condemned erosion of personal liberties due to increased security, it was all carefully done in a legal context, which is what I personally find most annoying about existing criticism of the war on terror. What is legal and what isn’t appears to trump how certain developments actually play out in practical terms and it should be accepted that any White House can always find a Department of Justice lawyer willing to affirm that nearly anything is legal, meaning that the distinction is meaningless.

Increasing oversight was promoted by several speakers, which is also a type of legal remedy. Admittedly, some panelists did note that existing oversight does not protect against abuse as the overseers generally do not oversee at all. Officials from all branches of government instinctively and consistently collude with the expectations of the administration, meaning that oversight does not equate to either transparency or accountability. And there was no consideration by panelists whether torture, rendition, data collection and telecommunications backdoors actually enhance national security. This was to my mind a major omission as the public is generally deluded into thinking that the “enhanced interrogation” and “acceptable” ethical lapses funded by the hundreds of billions of dollars invested annually in the warfare state are “making us safe.”

Only one speaker mentioned that existing terrorism cases in the U.S. generally come out of FBI entrapment operations, that the government has rarely caught terrorists in flagrante and that fewer than 50 Americans have been killed by Islamic terrorists since 9/11, suggesting the extent to which the terror threat has been dramatically hyped for reasons that have little or nothing to do with ISIS or al-Qaeda. A “pressure cooker bomb plot” cited by New York’s Deputy Commissioner of Intelligence and Counterterrorism as a great success involved a Muslim student who was reportedly only thinking about doing something but who did not even possess the pressure cooker that he was allegedly considering using as a weapon. Muslims arrested for terrorism plots rarely have the capability to carry out any offensive actions and are frequently reliant on FBI informants to provide them with a gun doesn’t work or a bomb that doesn’t explode. Or in this case possibly a pressure cooker with a hole in it.

There were nearly four hours of more and the same, to include hubristic snapshots of Russia and China as eternal enemies and several comments suggesting that Syria would not be so bad now if “we” had taken down Bashar al-Assad a few years back. After an unctuous hymn of praise regarding the effectiveness of the New York Police Department notably minus any mention of its domestic spying operations directed against Muslims, it occurred to me that the narrative being fed was conditioned by one overriding factor: nearly every speaker benefits personally from the continued existence of the war on terror. They are all part of the establishment and supporters of the Washington foreign policy consensus even if they don’t identify themselves that way. Even those academics and lawyers who criticize the war frequently do so in a restrained and high-minded fashion because the status derived from being a player in the continuation of the unending global conflict is as much in their interest as it is in the interests of those who are working for the government or a defense contractor.

Few in the United States and in Western Europe challenge the nature of the terrorist threat and governments have learned that if they shout “terrorism” often enough they will get a free pass on budgets and on approving legislation that restricts the freedom of the average citizen. Freedom is, unfortunately a zero-sum game, power taken from the people is gone forever and is given over to what we Americans have begun to call the “unitary executive,” a transitional process welcomed by heads of state in both parliamentary and presidential government systems.

The war on terror is the driving concern that fuels much government aggrandizement as well as spending. Depending on what one includes in the numbers it is plausible to suggest that as much as $1 trillion per year is being spent to fight against the alleged threat. The “counter-terror” wars in Iraq and Afghanistan have been the most expensive in U.S. history and they are not over yet. The ongoing intervention in Afghanistan, justified by President Obama as a war to prevent a resurgence of al-Qaeda, continues to cost more than $3 billion per month and is currently undergoing a “surge,” as are also operations in Iraq, Libya and Syria.

The federal government employed 2,726,000 as of 2014 compared to 1,500,000 in 2001, not including the military, which itself has 2,100,000 personnel in uniform, including reserves. Most of the new hires have been directly related to the War on Terror for manning the 200 post-9/11 military and CIA bases that have sprung up around the world. The number of reported federal employees does not include contractors, who add considerably to the payroll. More than half of the employees in key sectors within the intelligence community and at the Defense Department are contractors and every contractor costs three times as much as a normal employee.

It is projected that Uncle Sam will spend $4.2 trillion in 2017 compared with $1.863 trillion in 2001, $503 billion of which will be borrowed, reversing 2001’s budget surplus of $127 billion. The Department of Homeland Security, which did not exist prior to 2001, gets $40 billion and employs 180,000; the intelligence agencies get an estimated $100 billion and employ 100,000; the FBI gets nearly $9.5 billion; and the Department of Defense gets $632 billion, which does not include a slush fund to cover the war in Afghanistan and other contingencies. In 2001, the Pentagon budget was $277 billion. When all the increases are added up and compared to the baseline of 2001, the war on terror currently costs the American taxpayer directly more than $500 billion per year as part of an overall defense and national security budget that approaches $1 trillion. As there may be only 100 or so terrorists interested and plausibly capable of attacking the United States directly, that works out to something like $10 billion per year per terrorist.

And that is only at the federal level. Most states now have their own departments of homeland security, and most have dramatically increased both the numbers and firepower of their police forces. There is full-time security manning the entrances of nearly all federal and state and even many local office buildings and schools. The total costs of state and local expenditures to counter the essentially bogus terrorist threat might well exceed the federal expenditures, and then there is the spending on security, often mandated by the government, in the private sector. The conference I attended also demonstrated the extent to which universities, institutes, and security firms have become part of the huge and growing terrorism business, all feeding off of the false assumption that the twenty-first century is the age of the terrorist.

Apart from the benefit to defense industries, money spent directly on the war on terror is essentially wasted. But even as bad as all those numbers in terms of current spending are, consider for a moment the legacy costs and institutional damages that are not so readily visible. Professor Joseph Stiglitz of Columbia University estimates that Iraq will cost as much as $5 trillion when all the costs, including interest paid on borrowed money and medical treatment for life for the tens of thousands of wounded soldiers, are paid off. The bill for Afghanistan, which appears to lack an exit strategy, will be proportionate, depending on how long the U.S. stays there and at what commitment level. The money spent and the debt continuously incurred explain in part why the United States stumbles along with an antiquated infrastructure and a dysfunctional health-care system. The country cannot continue wasting resources on overstated terrorist threats without paying the price at home.

 

Erdogan wants to rule Turkey without Davutoglu

Recep Tayyip Erdogan has won his power struggle with Ahmet Davutoglu. But, DW’s Reinhard Baumgarten writes, the battle made clear that resistance to Turkey’s president is growing – even within his own party

May 7, 2016

DW

There is great cause for alarm in Turkey, where President Recep Tayyip Erdogan has gone to unprecedented lengths to consolidate his power. He is determined to change the constitution and make himself the boundless ruler of the Turkish people by hook or by crook. Voters have declined to help him to that end in two successive parliamentary elections. Both times his Justice and Development Party (AKP) came up clearly shy of the votes needed to assemble a parliamentary majority.

Yet Erdogan, who constantly points out that he is the first Turkish president to be directly elected, refuses to accept the message that voters have sent him. Erdogan appointed Ahmet Davutoglu to succeed him as prime minister because he saw him as a willing executor of his political will. That obviously didn’t work out. Despite his abundant loyalty toward Erdogan, Davutoglu remained too independent.

Tensions have been simmering within the AKP for months now. Party grandees such as Abdullah Gül and Bülent Arinc have openly expressed their displeasure with Erdogan’s shameless lust for power. Nevertheless, such criticism hasn’t changed anything. Quite the opposite: Erdogan, who is obliged by the current constitution to remain neutral on a party level, has strengthened his control over the AKP.

Relationship in tatters

A few days ago, the AKP’s executive body revoked party leader Davutoglu’s right to appoint district chairmen. On May 1, a blog bearing the title Pelican Brief popped up online. The blog bludgeoned Davutoglu. Turkish commentators suspect that the presidential palace is behind the defamation campaign.

The relationship between Erdogan and Davutoglu soured months ago. The president has called Davutoglu too pro-European and accused him of doing too little to shield Edogan from his growing list of enemies. The arguments against Davutoglu sound like something from the 19th century.

Who will replace Davutoglu? Perhaps Transportation Minister Binali Yildirim or possibly Energy Minister Berat Albayrak; the latter is the president’s son-in-law. Erdogan will no doubt see to it that the replacement is more pliant than Davutoglu was. With that, democracy in Turkey will come under further threat.

The increasing concentration of influence in Erdogan’s hands has long given rise to questions about the state of the constitutionally mandated separation of powers in Turkey. And it is not only the opposition that is worried: Recent reports by the European Parliament and Commission have expressed similar concerns. The more that power is consolidated under Erdogan, the greater the threat to democracy and stability in the EU candidate country.

 

Netanyahu to lecture UN after it failed to recognize Jewish ties to Temple Mount

May 7, 2016

RT

Following UNESCO’s resolution failing to acknowledge Israel’s historic ties to the Temple Mount, Prime Minister Benjamin Netanyahu invited all UN personnel working in the country to attend an open seminar on Jewish history at his office.

“Two weeks ago, I was shocked to hear that UNESCO adopted a decision denying any Jewish connection to the Temple Mount, our holiest site. It is hard to believe that anyone, let alone an organization tasked with preserving history, could deny this link which spans thousands of years,” Netanyahu posted on his official Facebook page on Friday.

“It is hard to believe that anyone, let alone an organization tasked with preserving history, could deny this link, which spans thousands of years,” he said.

UNESCO published its resolution in which it condemned Israel for security restrictions and other measures at the holy site on April 11. In response, Netanyahu dubbed the document as “absurd,” stressing that the UN “ignores the unique historic connection of Judaism to the Temple Mount.”

“That is why today I am announcing a seminar on Jewish history for all UN personnel in Israel,” the Israeli PM said in a statement, adding that he would “personally host” the lecture at his office.

The lecture will be delivered by a “leading scholar of Jewish history,” Netanyahu said.

According to Reuters’ sources, the lecture could take place next week. It is not clear how many UN personnel are planning to attend the event.

The resolution adopted by the UN cultural body refers to Israel as an occupying power in Jerusalem’s Old Town and uses the Arabic names Al-Aqsa Mosque/Al-Haram al-Sharif, never calling it the Temple Mount, as the Jews call it. The document also refers to the cities of Hebron and Bethlehem as “integral part of Palestine.” The resolution was submitted by Algeria, Egypt, Lebanon, Morocco, Oman, Qatar, and Sudan. The document has been authorized by the UN executive board’s Programme and External Relations Commission

The resolution was approved by 33 nations, among them France, Russia, Spain and Sweden. Seventeen countries abstained, two were absent and six countries voted against the resolution, namely the US, Estonia, Germany, Lithuania, the Netherlands and the United Kingdom.

In a recently issued protest letter to all the countries that supported the UNESCO decision, Israeli Foreign Ministry’s director Dore Gold lashed out at the document and stressed that Jerusalem is a 3,000-year-old capital of the Jewish people.

“While the UNESCO decision has no practical validity, we will not allow international sources to blur the connection of the Jewish nation to its eternal capital,” Gold said.

In response to the backlash from Israeli officials, UNESCO chief Irina Bokova later called for “respect and dialogue.”

 

Unhappy with the Obama economy, voters are buying what Trump’s selling

Obama has overseen a remarkable turnaround in the jobs market, but with layoffs reaching a seven-year high, many have subscribed to Trump’s narrative

US economy adds just 160,000 jobs in April – further sign of a slowdown

May 7, 2016

by Jana Kasperkevic

The Guardian

Back in mid-March, while standing in a middle of a stage in Ohio, Hillary Clinton made a promise: “We’re going to put a lot of companies and coal miners out of business. We’re going to make it clear that we don’t want to forget those people.”

The former secretary of state and Democratic presidential candidate was campaigning on her clean energy platform but may have come to regret that phrasing. Since September 2014, the mining sector has eliminated 191,000 jobs. About 7,000 of them were lost last month.

For many Americans the story of economic recovery that the Obama administration has been trying to tell – with 5% unemployment and 74 months of continuous job growth – is not one they are familiar with. It’s an issue that is driving them into the arms of Donald Trump.

“How can you say you’re going to put a lot of coal miners out of jobs and then come in here and tell us you’re going to be our friend?” a voter from West Virginia, hit hard by the downturn in the energy sector, told Clinton last week. “Those people out there don’t see you as a friend,”

Miners have, however, found a friend in Trump, republican candidate for president. A group of them attended a rally on Thursday waving signs that read “Trump digs coal”.

Obama has unarguably overseen a remarkable turnaround in the jobs market. The unemployment rate is now half the 10% peak it hit at the height of the recession. The president defended his economic legacy last week in a 6,000 word feature in the New York Times. Americans would “be much worse off had we not taken the steps that we took”, he said.

But with paychecks remaining disappointingly small and layoffs reaching a seven-year high, many have subscribed to Trump’s narrative instead the one presented by Obama’s administration. It’s a horror story about an American economy in terminal decline, its workers sold down the river to China and Mexico.

“People don’t really want to hear that it could have been worse. Sometimes such statements anger people and make the president seem out of touch. It doesn’t resonate because they can’t observe that alternative outcome,” explained Lawrence Mishel, president at the left-leaning Economic Policy Institute. “It’s progress in their weekly paychecks that resonates.”

“Wages are the unfinished business of the recovery,” the US labor department has noted repeatedly over the last few months as jobs report after jobs report have shown wage growth to be in the vicinity of just 2%. In addition to jobs, wages are one of the most important parts of this recovery.

In order for working class Americans to feel its effects, wage growth would have to be closer to 3% to 4%. When the US census last released its data about median household incomes in the US, it found that the average American was bringing home the same paycheck as Americans in 1997.

With rents and food costs going back, wages from 20 years ago are no longer cutting it. As a result, working Americans are tired of what they think of as “status quo” politics.

“People are feeling ornery and that’s the result of stagnant wages for the vast majority for at least the last dozen years,” said Mishel. “That may explain why among conservative GOP voters Trump has made headway. This is the first election I ever heard any GOP candidates talk about wages.”

Trump is not the only one talking about jobs and wage growth. While campaigning in Indiana last week, Clinton visited with ironworkers and toured an AM General plant. The union representing workers about to be laid off at two Indiana plants owned by Carrier Corp, an air-conditioning giant that is shifting production to Mexico, recently organized a rally for Bernie Sanders.

But his message appears to be resonating more with blue collar workers than Clinton’s.

“There is absolutely no allegiance to Hillary Clinton in Michigan as far as white males go, as far as working men go. Period,” said Michael Lavana, 37, who works for Ford and is member of the United Automobile, Aerospace and Agricultural Implement Workers of America Union (UAW). When casting his vote in the Michigan primary, Lavana voted for Trump and his brother, who is a retired Ford worker, voted for Bernie Sanders “just so that Clinton would not get the vote”.

Lavana has always been registered as Republican, but has not always voted along the party lines. In 2008, he voted for Obama. By 2012, he decided not to vote for either Obama or Mitt Romney. Instead, he says he “threw away” his vote by voting for Gary Johnson, the third-party Libertarian candidate. “I am not a Mitt Romney Republican,” he explained.

During his campaign, Trump has come out against abortion and gay marriage, but has also said that North Carolina was wrong to pass a “bathroom” law that critics say would curtail the rights of LGBT people. For Lavana, however, it’s his stance on the US economy that seems to be the deciding factor. “If Republicans have a fighting chance, they have to stay out of people’s bedrooms,” he said.

“That’s a big reason I am voting for Trump,” said Lavana. “I don’t really care what the guy says or what he flies off the handle about. Many of these candidates talk about jobs, but they don’t talk about what cost the jobs.”

He hopes that if elected, Trump would probably organize a task force to find out why companies are leaving the US for places like Mexico and Canada, where Ford has been expanding its operations.

Trump has yet to discuss in detail his plan for bringing jobs back to the US, somethings that Democrats, including Obama, have asked the media to push him on. On Friday afternoon, Obama told the White House press corp that all presidential candidates and nominees who say they have a solution to a particular problem should be pushed to explain their plan.

“What I’m concerned about is the degree to which the reporting and information start emphasizing the spectacle and the circus, because that’s not something that we can afford,” said Obama. “American people, they’ve got good instincts as long as they get good information.”

Trump’s promise to get jobs back to the US resonates with both Democrats and Republicans, said John Cakmakci, president of United Food and Commercial Workers Union Local 951 in Michigan. How he will do it, however, remains a mystery that the voters are not really interested in figuring out.

“People don’t want to know that. They just like that five-second simple solution to the problem,” said Cakmakci. One way that the union could help drive out the vote for Democrats is by educating its members, but there are limits to that approach as well. “Often times our members vote against their own self-interest, thinking that if they vote one way it will help them. You almost got to spoon feed people, but there’s only so much they want to listen to and digest.”

The main reason unions are not endorsing Trump is because he is running as a Republican, according to Vincent Roney, 36. Roney works at Accuride Wheel End Solutions operating a machine that cuts wheels from steel and aluminum and is also member of the UAW union.

“I’ve been a union member for almost 20 years and proud of it,” he said, adding that he does not agree with unions asking members to blindly vote Democrat. “Democrats tend to side with unions over the corporations they are dealing with. But as I see it, the big picture is being missed. What good is winning legislation in favor of higher wages and working conditions if the same lawmakers are allowing outsourcing of these jobs to other countries?”

Roney believes that if elected, Trump will do what he says: make America great again.

 

Roy Moore, Alabama Judge, Suspended Over Gay Marriage Stance

May 6, 2016

by Campbell Robertson

New York Times

An Alabama judicial oversight body on Friday filed a formal complaint against Roy S. Moore, the chief justice of the state’s Supreme Court, charging that he had “flagrantly disregarded and abused his authority” in ordering the state’s probate judges to refuse applications for marriage licenses by same-sex couples.

As a result of the charges, Chief Justice Moore, 69, has been immediately suspended from the bench and is facing a potential hearing before the state’s Court of the Judiciary, a panel of judges, lawyers and other appointees. Among possible outcomes at such a hearing would be his removal from office.

“We intend to fight this agenda vigorously and expect to prevail,” Chief Justice Moore said in a statement, saying that the Judicial Inquiry Commission, which filed the complaint, had no authority over the charges at issue.

Referring to a transgender activist in Alabama, Chief Justice Moore said the commission had “chosen to listen to people like Ambrosia Starling, a professed transvestite, and other gay, lesbian and bisexual individuals, as well as organizations which support their agenda.”

It is the second complaint lodged by the state’s Judicial Inquiry Commission against the judge. In 2003, he was ousted by the same body from his position as chief justice after disobeying a federal court order to remove a two-ton monument of the Ten Commandments that he had installed in the rotunda of the state judicial building.

He was elected to that office again nine years later.

The current complaint concerns Chief Justice Moore’s actions after federal court decisions regarding same-sex marriage. Last spring, he directed probate judges in Alabama not to abide by a Federal District Court’s order striking down the state’s ban on same-sex marriage, holding that issuing licenses to same-sex couples would violate the Alabama Constitution.

In January, six months after the United States Supreme Court’s ruling that same-sex marriage was a constitutional right, Chief Justice Moore, in an administrative order, instructed the state’s probate judges that they had a “ministerial duty” to enforce the state’s ban on same-sex marriage. Nearly all of the probate judges in the state have been issuing licenses to same-sex couples, though a few have stopped issuing marriage licenses altogether.

In his order, he argued that the Supreme Court’s decision applied only to the four states involved in the case that was before the court, and not to Alabama. That view runs counter to that of the federal district and appellate courts with jurisdiction over Alabama, and, according to the formal complaint, is “contrary to clear and determined law about which there is no confusion or unsettled question.”

The complaint lists six charges against Chief Justice Moore, and lays out several violations of the state’s canons of judicial ethics.

Richard Cohen, the president of the Southern Poverty Law Center, which had filed a series of complaints to the commission, said Chief Justice Moore “has disgraced his office for far too long.”

“For the good of the state he should be kicked out of office,” he added.

Chief Justice Moore held a news conference last week at which he argued he was upholding the law as he interpreted it in his capacity as a judge.

“This is about legalism,” he said, wearing his judicial robe and speaking to reporters in the rotunda of the state judicial building. “There is nothing in writing that you will find that I told anybody to disobey a federal court order.”

On Friday, his lawyer, Mathew Staver, made a similar argument, insisting the matter at hand was one that could only be decided by the United States Supreme Court.

“The Judicial Inquiry Commission has no jurisdiction to resolve legal disputes,” he said, “and the complaint is solely focused on a legal dispute between federal and state courts.”

 

Canada’s Fort McMurray wildfire ‘to double in size’

May 7, 2016

BBC News

Officials in Canada say the huge wildfire which has devastated the oil town of Fort McMurray in Alberta could double in size over the next 24 hours.

The fire currently covers an area larger than New York City and is being fanned by winds and feeding on dry vegetation.

The flames are now moving away from the town, most of whose inhabitants have now reached safety.

More than 80,000 people were evacuated from the city earlier this week.

Most fled south but many fled north. A land convoy evacuating people from oil worker camps in the north on Friday was suspended after 200ft (60m) flames flanked the road.

The police-escorted column of 1,500 vehicles was due to pass by the southern part of the city but was suspended on Friday afternoon until Saturday.

The provincial government said on Friday that the fire had grown to 1,000 sq km (386 sq miles).

Wildfire prevention manager Chad Morrison said there was a “high potential that the fire could double in size” by the end of Saturday.

But he added that it would expand into a more remote forested area north-east of Fort McMurray.

Dry conditions and 27C heat were expected during the day, but cooler temperatures would prevail and there was a possibility of rain on Sunday and Monday.

Twenty minutes south of Fort McMurray, the road forks into two branches. By noon on Friday, both were ablaze on either side.

We watched with the police as the skies filled with grey and black smoke and flames roared into the air, devouring even the tallest pine trees.

The danger, said one officer, was “tentacles growing out of the fire”, which could end up looping around and trapping people.

There are no reports of injuries or deaths but several residents who may have survived the fire have apparently been spotted in Fort McMurray. Teams are now sweeping the city in case any homeless people were left behind.

There is also concern about oil facilities, particularly near Nexen’s Long Lake oil extraction site.

“We’re looking at a blast area of about 14 kilometres if that plant were to go,” said Sgt Jack Poitras.

Tens of thousands were evacuated by air with 300 flights to the provincial capital Edmonton since Tuesday. Another 4,000 are due to leave on Saturday.

No deaths or injuries have been reported.

The provincial government has declared a state of emergency and will provide C$100m ($77m) in cash to evacuees.

More than 1,000 fire fighters and 150 helicopters, 295 pieces of heavy equipment and 27 aircraft tankers have been deployed, according to the Canadian government.

Alberta Premier Rachel Notley said the damage was extensive and would take months to repair.

She said: “The downtown is largely intact. The hospital is still standing. The telephone centre is intact. The water treatment centre is back up and running. Municipal buildings and the aeroplane remain intact.”

The city is in the heart of Canada’s oil sands country, and the region has the world’s third-largest reserves of oil.

As much as a quarter of the country’s oil production has been halted by the fire, raising concerns about the effect on the Canadian economy.

Two oil sand sites are directly threatened by the blaze while 10 operators have cut production.

In a statement released on Friday afternoon, Prime Minister Justin Trudeau called upon Canadians to donate to charities assisting relief efforts.

“To those who have lost so much: we are resilient, we are Canadians, and we will make it through this difficult time, together,” he said.

 

The Rape of Russia

by Anne Williamson

 

The following  are excerpts Anne Williamson’s testimony before the Committee on Banking and Financial Services of the U.S. House of Representatives, presented Sept. 21, 1999.

It shows how the historic opportunity given the U.S. to help transform Russia into a free, peaceful, pro-Western country was squandered in the form of a bruising economic rape carried out by corrupt Russian politicians and businessmen, assisted by Bush and (especially) Clinton administrations engaged in political payoffs to Wall Street bankers and others, and by ineptitude and greed on the part of the U.S. Treasury and the Harvard Institute for International Development, assisted by fellow travelers and manipulators at Nordex, the IMF, the World Bank, and the Federal Reserve.

The losers were the Russian people and (mainly) U.S. tax-payers.

And the winners? Ms. Williamson names names, and that’s why the elite media has shut out her book. She indicates their heroes are thieves, and they are afraid she may be right.

 

. . . I should like to add just a few words about myself by way of introduction. I am the author of Contagion: The Betrayal of Liberty, Russia, and the United States in the 1990s, which will be available to Committee Members and the American public in time for the nation’s Thanksgiving holiday. Prior to beginning my work on the book, I covered just about all things Russian for a broad range of publications which included inter alia The Wall Street Journal, The New York Times, Mother Jones, Art and Antiques, Premiere, Film Comment and SPY Magazine. From the late 1980s until 1997, I maintained homes in both Moscow and the United States. And therefore I can say for much of the last decade I had the privilege of being a witness to a dramatic history and the pleasure and excitement of sharing with the Russian people their remarkable land, language and culture. And it is with a profound gratitude to and a deep respect for that noble, heroic and too long-suffering people that I speak to you today.

In the matter before us – the question of the many billions in capital that fled Russia to Western shores via the Bank of New York and other Western banks – we have had a window thrown open on what the financial affairs of a country without property rights, without banks, without the certainty of contract, without an accountable government or a leadership decent enough to be concerned with the national interest or its own citizens’ well-being looks like. It’s not a pretty picture, is it? But let there be no mistake, in Russia the West has truly been the author of its own misery. And there is no mistake as to who the victims are, i.e. Western, principally U.S., taxpayers and Russian citizens whose national legacy was stolen only to be squandered and/or invested in Western real estate and equities markets.

The failure to understand where Communism ended and Russia began insured that the Clinton Administration’s policy towards Russia would be riddled with error and ultimately ineffective. Two mistakes are key to understanding what went wrong and why.

The first mistake was the West’s perception of the elected Russian president, Boris Yeltsin; where American triumphalists saw a great democrat determined to destroy the Communist system for freedom’s sake, Soviet history will record a usurper. A usurper’s first task is to transform a thin layer of the self-interested rabble into a constituency. Western assistance, IMF lending and the targeted division of national assets are what provided Boris Yeltsin the initial wherewithal to purchase his constituency of ex-Komsomol Communist Youth League bank chiefs, who were given the freedom and the mechanisms to plunder their own country in tandem with a resurgent and more economically competent criminal class. The new elite learned everything about the confiscation of wealth, but nothing about its creation. Worse yet, this new elite thrives in the conditions of chaos and eschews the very stability for which the United States so fervently hopes knowing full well, as they do, that stability will severely hamper their ability to obtain outrageous profits. Consequently, Yeltsin’s “reform” government was and is doomed to sustain this parasitic political base composed of the banking oligarchy.

Property Rights

The second mistake lay in a profound misunderstanding of Russian culture and in the Harvard Institute of International Development advisers’ disregard for the very basis for their own country’s success; property rights. It was a very grave error. Private property is not only the most effective instrument of economic organization, it is also the organizational mechanism of an independent civil society. The protection of property, both of individuals’ and that of a nation, has justified the existence of and a population’s acceptance of the modern state and its public levies.

Russian property rights are tricky; property has never been distributed, but only confiscated and awarded on a cyclical basis. For the big players property exists, as it always has, only where there is power. For the common man, the property right hasn’t advanced much beyond custom which prevents the taking of any man’s shelter, clothes or tools so long as continuous usage is demonstrable. An additional, purely Slavic feature of the Russians’ concept of property is the shared belief that each has a claim upon some part of the whole.

In ancient ‘Rus, property existed for the individual as a claim – or an entitlement if you will – to a shared asset, a votchina or “estate”, held by all the members of a particular clan. This understanding of property still informs the culture; though Westerners bemoan Moscow mayor Yury Lyuzhkov’s retention of the system of the residential permit (“propiska”) as an impediment to a flexible labor force, the policy is one of Lyuzhkov’s most popular. Muscovites are well-satisfied with a mayor who polices outsiders as they believe any proprietor of such a great estate as Moscow should.

The Russians’ failure to accept the Roman concept of private property has compelled them to suffer the coercive powers of the state so that at the very least a civil order, if not a civil society, might be established and sustained. The hackneyed idea that Russians have some special longing for tyranny is a pernicious myth. Rather, they share the common human need for predictable event undergirded by civil and state institutions and their difficult history is the result of their struggle to achieve both in the absence of private property.

Since only the Tsar or the Party had property, no individual Russian could be sure of long-term usage of anything upon which to create wealth. And it is the poor to whom the property right matters most of all because property is the poor man’s ticket into the game of wealth creation. The rich, after all, have their money and their friends to protect their holdings, while the poor must rely upon the law alone.

Connections

In the absence of property, it was access – the opportunity to seek opportunity – and favor in which the Russians began to traffic. The connections one achieved, in turn, became the most essential tools a human being could grasp, employ and, over time, in which he might trade. Where relationships, not laws, are used to define society’s boundaries, tribute must be paid. Bribery, extortion and subterfuge have been the inevitable result. What marks the Russian condition in particular is the scale of these activities, which is colossal. Russia, then, is a negotiated culture, the opposite of the openly competitive culture productive markets require.

Ironically, the nontransferability of the votchina system’s entitlement was the very flaw a shareholding culture and an equities market could have addressed successfully had Lenin’s revolutionary dictum of “Property to the people! Factories to the workers!” been realized. And such a program existed. It was designed by Larisa Piasheva, a free market Russian economist who was appointed by Moscow mayor Gavriil Popov to design and execute a program for the privatization of Moscow’s assets. Ms. Piasheva’s program was a fearless and rapid plunge into the market which would have distributed property widely into Russia’s many eager hands. Further, the program – inspired as it was by the policies of Ludwig Erhard and his adviser, the renowned Austrian economist Wilhelm Roepke – did not rely upon Western lending but instead tailored itself to maximize direct Western investment.

When the Administration says it had no choice but to rely upon the bad actors it did select for American largesse, Congress should recall Larisa Piasheva. How different today’s Russia might have been had only the Bush Administration and the many Western advisers from the IMF, the World Bank, the International Finance Corporation, the European Bank for Reconstruction and Development and the Harvard Institute of International Development then on the ground in Moscow chosen to champion Ms. Piasheva’s vision of a rapid disbursement of property to the people rather than to the “golden children” of the Soviet nomenklatura.

Instead, after robbing the Russian people of the only capital they had to participate in the new market – the nation’s household savings – by freeing prices in what was a monopolistic economy and which delivered a 2500 percent inflation in 1992, America’s “brave, young Russian reformers” ginned-up a development theory of “Big Capitalism” based on Karl Marx’s mistaken edict that capitalism requires the “primitive accumulation of capital”. Big capitalists would appear instantly, they said, and a broadly-based market economy shortly thereafter if only the pockets of pre-selected members of their own ex-Komsomol circle were properly stuffed. Those who hankered for a public reputation were to secure the government perches from which they would pass state assets to their brethren in the nascent business community, happy in the knowledge that they too would be kicked back a significant cut of the swag. The US-led West accommodated the reformers’ cockeyed theory by designing a rapid and easily manipulated voucher privatization program that was really only a transfer of title and which was funded with $325 million US taxpayers’ dollars.

Vouchers and Vandals

Voucher privatization’s conceits were compounded by a grievous insult; unregulated voucher investment funds, which the privatizers encouraged the uncertain Russian citizenry to patronize. Hundreds and hundreds of investment funds simply walked with their clients’ vouchers, reselling them to domestic criminals, Red Directors, western investment banks and international money launderers. In other words, the lion’s share of Russian money laundering occurs when capital enters the country, and what we see today in the Bank of New York scandal is, in fact, properly understood as capital flight. When the 18 month-long thieves’ banquet that voucher privatization was concluded in July 1994, the program, whose very design left the controlling shareholding of any single enterprise in the hands of the state, had actually institutionalized the state as the determinant owner of all that had formerly belonged to “the people”.

Co-temporaneously with voucher privatization, an early and precipitous Bush Administration initiative was coming to fruition. In early 1992, the “Bankers Forum” project was wheeled into place by a former New York Fed chief, Gerald Corrigan, who at George Bush’s direction sent in a group of experts from the Fed, commercial banks and the Volunteer Corps on an off-the-books mission to teach the Russians at the Central Bank the bond game. Moscow-based Dialog Bank’s Peter Derby, who explained the project’s background remarked, “Basically, when Corrigan asks, I guess no one turns him down, because people reacted instantaneously. It was done by private investors, who were asked by a person you can’t say no to” (my emphases).

The improbable yields (290 percent on 3-month paper at one point) on the Russian market’s GKO instruments were paid with US taxpayers’ money via IMF loans. Guess where all investment went? By yielding those kind of non-market returns, the bond market insured that all the country’s resources and all that it was capable of attracting went to the support of the state, just as Tsarism and Communism had done previously.

So lush were the bond market’s rewards that dubious market participants included the Russian Central Bank itself through an off-shore firm known as Fimaco. The involvement of the Harvard Institute of International Development’s HIID honchos in the same conflict-of-interest activities has already been admitted publicly and remains the object of a Boston Grand Jury’s scrutiny. The Harvard Management CorporationHMC, which invests the university’s endowment, was also an avid purchaser of Russian bonds, a dubious and unsettling history since there is no legal separation of HMC and the university itself. According to the Russian Interior Ministry’s Department of Organized Crime, Western employees of Russian banks, Western bankers and consultants, Russian bankers and anecdotal evidence, other likely participants include certain employees of the U.S. Treasury, of the multilateral agencies (most especially the World Bank’s Moscow offices), of bilateral aid agencies, and policy and program consultants acting through accounts established in their wives’ maiden names with non-U.S. reporting brokerages in Moscow. Even the Ford Foundation’s Moscow office sponsored its own internal Russian bond shop for which the unthinking Russian managers once asked this reporter to drum up U.S. investors.

Clinton Buys Wall Street

One particularly striking aspect of Bill Clinton’s presidency is how aggressively his administration has worked to capture the political support of the financial sector, offering up heretofore unseen gobs of government favor. A disproportionate number of firms receiving OPIC (Overseas Private Investment Corporation, a government entity) guarantees, Export-Import bank lending, and IFC (International Finance Corporation, the private lending arm of the World Bank) and Russian Enterprise Fund participation were generous contributors to both Clinton campaign coffers and the DNC. The basic formula was simple, it’s not the rocket science Russia’s Harvard advisers intimated it was: The bread and butter of all equity markets are bonds. Wall Street wanted a debt market. You build it and we’ll come, they said.

The aid program delivered best it could what was in reality a flimsy contrivance, which – in turn – was really only an exotic venue through which to pass public funds to selected Russians of the Clintons’ and HIID’s choosing and to Wall Street investment banks the Clintons hoped to entice permanently into their orbit of supporters and contributors. In short, the Russian bond market was the Arkansas Development Finance Authority gone international.

Today the Clinton Administration’s chief defense for their hand in Russia’s ruin is that somebody had to keep the communists at bay. But there were no communists in Russia by late 1991, only nascent investment bankers looking to nail down a stake any which way. Communism had evaporated by late 1987, the year in which the Russian people were allowed to hold convertible foreign currencies. Overnight, the power of money displaced the power of ideology.

The Role of Nordex and FPI

Though some now say the loans-for-shares privatization program marked the reformers’ fall from grace, I beg to differ. On 14 September 1991, Vladimir Shcherbakov, the last First Deputy Prime Minister of the Soviet Union, formed with two other partners, one of which was the now notorious Austrian firm, Nordex GmbH, the International Foundation for Privatization and Private Investment FPI. FPI’s charter was legitimized by Gorbachev’s signature and approved by 13 heads of what were still constituent republics.

In an interview published in a 1993 issue of VIP, the vanity organ of the commercialized nomenklatura, Shcherbakov reported excellent relations with the new regime of “eager young reformers” – Gaidar, Chubais et al – and their leader, Boris Yeltsin. All hail-fellows-well-met. So too did FPI enjoy similarly sympathetic connections to the EBRD, the IMF and the UN Industrial Development Organization. Shcherbakov even boasted about FPI’s “new approach to the problem of the property of the Western Army Groups in Eastern Germany that comes down to its joint exploitation by Russian and German businesses”, an eyepopping admission since a year after the interview was published, the Russian scandal was Bonn’s claim that Soviet weaponry sales to rogue regimes originating in the Western Army Group had amounted to a $4 billion criminal take.

A former employee of FPI, speaking through clenched teeth, reported, “It’s FPI not a well-known organization, but it’s one of the most wealthy and most powerful organizations in Russia,” and their work was engineering commission-paying deals for money or privilege with the Kremlin, thereby organizing a pipeline of tribute typical of corrupt regimes. “I can’t say it publicly, I can’t prove my position with documents, but I know they were privatizing companies, the very best companies, before we had a privatization program.”

The CIA has determined that through Nordex, FPI seized the export earnings from Russia’s natural resource companies – oil, gas, platinum, gold, diamonds – and from industrial firms exporting items such as steel and aluminum and then stashed the hefty profits in Western bank accounts. And only now, eight years almost to the day later, do US taxpayers learn that the “eager, young reformers” to whom their resources were sent for the purpose of building a new Russia were in league from day one with the exhausted Soviet nomenklatura in a scheme to loot Russia’s wealth and park it in the West.

Yegor Gaidar still insists, John Lloyd was good enough to remind us in his recent New York Times Sunday Magazine article, that “he had no choice but to let prices rise to increase supply and to scrap trade barriers so that foreign commodities could begin to fill store shelves.”

Freeing Prices Without Privatization

Gaidar’s assertion is untenable. The Soviet Union was economically self-sufficient except for bananas, coffee and coconuts. Foreign commodities weren’t required to fill Soviet shops. And even though the ruble was not convertible, that characteristic had nothing to do with the sudden shortages in late autumn 1991, which were only slightly worse than those normally encountered in the last thin years of Gorbachev’s perestroika.

No one had stopped producing, but shops were suddenly nearly empty. Producers had begun hoarding, as had fearful consumers, but why? It wasn’t that Yeltsin announced in November 1991 that the government intended to free prices, it’s that he also announced the exact date on which prices would be freed. Predictably, producers withheld their product from market and rubbed their hands together like flies awaiting the coming feast which Yeltsin’s newly announced policy guaranteed. Within a week of the ill-considered speech, Muscovites’ needs were being rationed.

However, Gaidar really was under pressure, but the pressure was coming from the West to open Russia to unrestricted imports in return for multilateral lending. Gaidar soon delivered a trade policy that was 100 percent back-to-front, accommodating as it did the self-serving demands of both the West and Russia’s nascent banking oligarchy; Russian manufacturing was to take the brunt of unrestricted foreign competition, but domestic banking was to be protected from competition! Even Russian Central Bank Chairman Viktor Gerashchenko protested, but the Russian bankers were accommodated and the IMF continued lending. So much for the “leverage” foreign policy elites claim foreign assistance programs provide the U.S.

In 1991, there was no hope whatsoever that wheezebag Soviet industries could compete with Western products. For decades, prices were set by Gosplan (State Ministry of Central Planning), any enterprise profits were claimed as Soviet tax revenues, all customer bases were guaranteed and therefore no enterprise had a financial incentive to compete. Without competition, there was never any need to improve quality.

How could freeing prices alone change this equation? Free prices only work to the benefit of consumers when producers compete with one another in the marketplace to satisfy customers’ demands, leaving consumers postitioned to reap the most benefit at the lowest price. Clearly, an equitable and transparent privatization that would have delivered property widely to Russia’s many eager hands should have preceded the freeing of prices. And during privatization, native producers should have enjoyed some protectionism at least, as did developing American industry and manufacture in the 19th century.

Jeff Sachs Can’t Read

Competent advisers would have known Russia never did develop an effective banking sector and system of credit in a 1000 years of her history. The story of Russian banking – ancient and modern – always has the same plot, only the names and the dates change. S.Y. Borovoi’s easily obtained history of 18th century banking outlines a typical episode involving a certain “Suterland, who received 2 million pounds for transfer to London, but instead lent the sums to Prince Potyomkin (800,000), Finance Minister Vyazemsky, Foreign Minister Bezborodko and even to the future emperor Pavel. The debt of these honorable people was, according to the custom, forgiven and paid by the state.” (My emphasis)

Certainly eager Western banks should have been given admission to Russia. By working initially with more developed and well-capitalized Western banks and later by competing with them, Russian banks could have developed quickly and today be mediating capital responsibly and profitably. No good economic purpose was achieved by foisting subsidized billion dollar loans onto Russia for the purchase of Western consumer goods.

Once the crime of voucher privatization was fully realized, thereafter ensued a years-long highly-criminal and oftentimes murderous scramble for hands-on control of the enterprises. Directors stashed profits abroad, withheld employees’ wages and after cash famine set in, used those wages, confiscated profits and state subsidies to “buy” the workers’ shares from them. The really good stuff – oil companies, metals plants, telecoms – was distributed to essentially seven individuals, “the oligarchs”, on insider auctions whose results were agreed beforehand. Once effective control was established, directors – uncertain themselves of the durability of their claim to the newly-acquired property – chose to asset strip with impunity instead of developing their new holdings.

Unsurprisingly, the entire jury-rigged effort has collapsed in flames. The bond market has gone bust, Russia is crushed by her IMF loan payments, and OPIC’s nearly $2 billion in U.S. taxpayer-provided guarantees are yet to be resolved. The West’s best course under whatever new government the Russian people elect is to take its own advice, stop meddling, cease all subsidies and allow what few market mechanisms that do exist in Russia to work. The sooner the banking industry’s pylesos (“vacuum cleaners”) are allowed to fail, then the sooner the national property can return to market where more able and productive hands might yet grasp it.

Until Russians have resolved for themselves how property is to be held and secured their decision de jure, all the destructive economic arrangements and cultural behaviors crowding Russian history will continue. Wealth will not be created without private property; without transferable property secured legally to protect no Russian will pay taxes; without revenues no Russian government can endure without falling back upon what is every state’s final reserve; coercion.

The years-long sugarcoating of what the Clinton administration’s policies have wrought in Russia is just one more lie bequeathed Americans. More Western money will only work to insure the continued degradation of Russia, bequeathing her people a future that can be discerned in that most familiar object of Russian folk culture – the Matryoshka nesting doll – a perfect, visual metaphor of Russia’s Brechtian universe: Each figure is captive, one inside the other, and in the end the biggest doll consumes the lot.

Free Money from the Fed

Turning to the question of the IMF and the World Bank generally and their specific roles in international finance, much needs to be said. When libertarians say that government produces nothing, they make a serious error. Government produces one thing in abundance – our money. U.S. paper fiat dollars have no intrinsic value and circulate only by faith and by edict. Consequently, the dollar in a baby boomer’s pocket is worth but the penny that was in his grandfather’s purse less than a century ago. But granddad’s penny was one hundredth of a gold-backed dollar’s value, while today’s dollar is the product of a government-operated pyramid scheme. Once the state slipped the “golden handcuffs” of budgetary discipline through the establishment of the Federal Reserve System, it gained the ability to create unlimited debt, thereby claiming for itself what before had been the purview of tyrants – the ability to debase the currency. It is the slow leaching of value from the U.S. dollar, not the far lesser sums raised by direct taxation, which has enabled the political class to purchase votes for its re-election, creating massive dependencies upon government amongst the citizenry in the process. The end result is the degradation of American society and the citizenry, a situation much remarked upon.

Any pyramid scheme remains viable only so long as its base continues to expand and it is that fact which has driven US foreign policy for much of the past century. Since politicians and investment bankers both have an interest in promoting deficits and in forcing taxpayers to redeem government debt, they were quick to come to terms on the advantages of underwriting foreign debt along with new markets and natural resources from abroad. Taxpayer-subsidized globalism then is not a new phenomenon, but it has reached an apogee of sorts under the guiding hand of the opportunistic Clinton Administration.

Once the criminal financial flows from Russia and Asia were combined with the easy money common to presidential election cycles and began pumping into the economy in the spring of 1995, it wasn’t long before asset inflation hit U.S. corporate share valuations. Throughout 1995 and 1996, the money supply kept rising, and along with it mutual fund holders’ paper wealth. Attracted by the double-digit yields found in risky, unregulated environments abroad, the banks – given the election year liquidity the Fed wished to export – lent unwisely and to excess. The moral hazard the 1995 $40 billion bailout of Mexico unleashed (the debt was refinanced, not repaid, with additional IMF lending and proceeds from eurobond sales in 1996) led to a tripling of international capital flows. Investors took greater and greater risks in the belief that the “new paradigm” economy promised taxpayer-provided redemptions if necessary. The consequence of all those dollars frolicking in exotic locales is a $141 billion bailout for Asia, more than $20 billion for Russia in 1998 alone, and $30 billion for Brazil in 1999.

Liberty vs. Empire

Cures under discussion all share one quality; each has some aspect that degrades American citizens’ independence and prosperity while delivering yet more more to intrude to the political class. It is one more irony of the post-cold war environment that ambitious American policymakers, who were so busy “reforming” Russia in the most appallingly cavalier and self-serving fashion, failed to honor the lesson Russia has to teach, i.e. liberty and empire do not cohabit.

The 1930s were the last era in which the international political and financial elite sought advantage through control of the global economy. What economists call “hot money” raced from one nation to the next throughout that era, leaving a trail of competitive currency devaluations in its wake. Six decades ago, as nation after nation was humbled by and strangled with the manipulations of the financial world’s insiders, history saw fit to serve up Adolph Hitler.

A world war and a score of years later, the allies established the IMF as a prophylactic money bag to prevent destabilizing trade imbalances and therefore, they thought, a repetition of the preceding decade’s nightmare. Yet over half a century later, the IMF, the World Bank and their similarly US-controlled spawn – the IFC, the six regional development banks and the EBRD – have become 800-pound gorillas of economic distortion and, over time, of pillage which unchecked will guarantee extensive international conflict and a broadly-based anti-Americanism.

During the Cold War, the International Monetary Fund got itself repeatedly into all sorts of financial and ethical mishaps in the West’s effort to contain the Soviet empire. But the IMF’s excesses were of little concern so long as its financial firepower could be directed at whatever nation appeared on the verge of toppling into the Soviet camp.

A Little Gift from Clinton via Rubin and Summers

No longer serving in an arguably wasteful manner what was nonetheless an agreed national purpose, the IMF has come to function increasingly as the personal gift of the office of the U.S. Treasury courtesy of that office’s service to the US presidency. The US-dependent IMF has been well pleased; far easier to serve a single master than answer to a committee of Congressmen such as yourselves.

he ascendancy of Treasury in foreign policy at the State Department’s expense is the result of a neo-mercantilist foreign policy in which enterprise is to be subject to direction from the presidential administration it is to serve. By expanding the mandates and accelerating the use of a host of international agencies in which the US is dominant – the IMF, the World Bank, the EBRD, the regional development banks, the IFC – and combining their efforts with those of the Commerce Department, the Export-Import Bank, OPIC and USAID-financed Enterprise Funds, the Clintons succeeded in constructing an international patronage machine in which the American executive stands supreme.

Today the president’s men are seeking to institutionalize the socialization of private investors’ and global bankers’ risks in international markets via a freshly-capitalized IMF. The price of the US’s $3.5 billion contribution to the proposed IMF bailout fund on top of another requested $14.5 billion was said to be insignificant when weighed against the financial calamity of a worldwide recession that IMF ministrations and policing could avert. But how true is this?

Taking the IMF’s behavior in Russia as a guide, the answer is that we can expect a rapid escalation of taxpayers’ liabilities in the service of failed policies. After the chaos unleashed by the Fund’s initial advocacy of a single ruble zone for the Commonwealth of Independent States, which handed management of the ruble to 12 central banks, the Fund’s monetary sages settled down to their more usual business of lending large sums in return for secret, IMF-designed recovery programs always said to be strictly enforced. In Russia’s case, only the rhetoric of strict conditions was enforced.

For example, when the IMF touted a 1996 $10.2 billion loan on the basis of what an extraordinary job Russia had done in meeting the conditions of a 1995 $6.7 billion loan, one crucial detail went unmentioned. The $6.7 billion loan was extended without any conditions via the IMF’s Systematic Transformation Facility, a program designed to funnel money to Russia in return for “the promise to reform”. Also left unsaid was that through the magic of money’s fungibility, the $6.7 billion loan financed – almost to the kopeck – Yeltsin’s bloody and disastrous assault on Chechnya.

Yeltsin and Tyson Chicken

Following the Russian Communists’ success in the December 1995 parliamentary elections, the Fund proceeded into even dodgier territory with the 1996 $10.2 billion loan, which came front-loaded with a billion dollars meant for Yeltsin’s re-election. Tape recordings of conversations between Mr. Clinton and Mr. Yeltsin made public demonstrate that in return longtime Clinton supporter and campaign donor Tyson Chicken’s exports to Russia – a $700 million annual business – were protected from a threatened 20 percent tariff increase.

Once the first tranche’s payout of a billion plus dollars arrived the following May, Yeltsin pulled out all the stops; back wages for state employees and pensions were paid, and after the IMF’s billion was consumed, the capricious Siberian ordered his initially mulish Central Bank to hand over a billion more. The IMF said nothing despite claiming the Fund’s main achievement during the previous 6 months was legislation establishing the Russian Central Bank as an independent institution. Therefore, the Fund’s current denial of any knowledge of the Russian Central Bank’s offshore operations through Fimaco is dubious at best.

But weren’t Americans told that Russia’s financial oligarchy paid for Yeltsin’s re-election? To the contrary, Russia’s bankers made serious money on Yeltsin’s electoral weakness by buying government bonds at distressed prices using cheap money handed over from government deposits. The lion’s share of the domestic bonds’ high yields have always been paid with IMF loans. Russia’s first representative to the World Bank, Leonid Grigoriev, explained, “Of course, the government was to return this money and that is why the yields on 3-month paper reached as much as 290 percent. The government’s paying such huge, impossible rates on treasury bills, well, it’s completely unbelievable. It had nothing to do with the market and therefore such yields can only be understood as a payback, just a different method.”

Clearly, building an empire of finance capitalism is an expensive business. But who pays? U.S. taxpayers, who paid directly through contributions to both multilateral and bilateral assistance efforts, and Russian workers, who paid indirectly by having their wages go unpaid and their national estate continually degraded. Secondly, the Russian people paid by being denied a means of exchange since the banking and trade sectors of the economy were quick to socialize amongst themselves what few rubles the IMF’s tight money policies allowed the Russian Central Bank to print.

Academic Pigs at the Public Trough

“The new paradigm” economy concocted by the Harvard-connected Clinton Administration appointees in the U.S. Treasury, was designed to extend the federal government’s meddling hand worldwide through its control of the multilateral and bilateral public lenders, enabling government a free ride on the back of a re-structured U.S. economy grown vigorous and ever more innovative on account of the benefits the Reagan era’s low taxation, moderate inflation, reduced regulation and expanding world trade had delivered. The overall scheme works as follows:

Sell assistance programs on an alleged “free market” and “humanitarian” basis by awarding government grants to those academics who can be relied upon to supply the intellectual camouflage politicians and journalists then repeat ad nauseum to a distracted public, move the IMF and the World Bank to target, induce target to raise taxes, fine tune target’s central banking operations, encourage borrowing and debt creation through the target’s government and its national banks, allowing IMF lending to pay yields if necessary; induce target to privatize national property while building a flimsy, artificial “infrastructure” for an equities market good enough to attract high risk foreign investors. Once the target nation’s government flounders, step back and watch speculators assert discipline through a run on the target’s currency. The subsequent devaluation delivers, in turn, a flood of cheap imports to American manufacturers and producers.

The finishing touch on the swindle is to confiscate more money from G-7 citizens (the lion’s share from Americans) to pay for what is said to be an “essential” IMF bailout; thereby allowing Uncle Sam’s IMF minions to entrench themselves more deeply in the target’s government. Taxes are raised, the population struggles beneath indebtedness, government funding demands and the inevitable domestic inflation a devaluation delivers. Western neo-colonialists then bully the target over its rapidly compounding debt in order to extract yet more property. Once successful, the world’s insiders then turn around and deliver cheap shares from privatizations and initial public offerings into the maw of U.S. mutual funds and portfolio investors. US taxpayers get hit coming (foreign aid) and going (bailouts) and innocent foreigners’ property is finagled away either from, or on account of, inattentive and corrupt leaderships. The big winners are the world’s increasingly corrupt and cozy governing class, international bureaucracies and global banks.

What U.S. policy has wrought across much of the post-cold war landscape is a moral, political and financial abomination based on fraud, theft and deceit. In Russia the results of the Clinton Administration’s policies are the perpetuation of the longest depression of the 20th century in what is increasingly an unpoliced deadly weapons dump, the biggest swindle of national property since Vladimir Lenin muscled the country early in the century and the discrediting of the ideas of free markets and democracy.

The Chickens Come Home

But as the old saying has it, what goes around comes around. Unfortunately, all those dollars the Fed printed to get Bill Clinton re-elected in return for Alan Greenspan’s third appointment as central bank chief, are now returning to the United States in the form of manufactured goods and commodities with which U.S. producers can not compete on price.

When exchange rates fluctuate against one another as they do now, some countries will inflate more quickly than other countries. The G-7 are the only nations that try to co-ordinate their monetary policies and the effort usually ends up a failure over time. When one country inflates too quickly, the value of its currency will decline.

Some governments – especially those with an election on the horizon – actually want to devalue since national exporters, their goods now being cheaper, sell more goods. Global lenders like the IMF are also fond of devaluations because a rising national income from bargain exports leaves plenty in the national kitty for principal and interest payments to them. (Global direct investors who stick to the dollar, quasi-“good guys”, fear devaluations, because their profits calculated in a devalued domestic currency buy fewer dollars for repatriation.)

But when exchange rates depreciate rapidly the specter of capital flowing out of a country appears. Foreigners and residents put their savings elsewhere. The currency goes into free fall, its value plummets, more investors flee and at the end of the cycle, interest rates skyrocket. This is exactly what happened in Asia in 1997, in Russia in 1998 and in Brazil in 1999.

One World, One Currency, One Tax Collector

Yet to curse the speculators is useless; since the 1973 collapse of Bretton Woods that broke the international link between the dollar and gold, the fear of the syndrome described above is the only remaining bit of discipline in the international system. How much better, the globalists reason, if there were to be one central bank and one fiat currency for everyone so that then national leaderships (and the financial oligarchies they sustain) could inflate and rob their own populations in unison.

In time, U.S. corporate profits will decline as a consequence of the IMF-induced deflation and share prices of all but premiere multinational corporations will follow suit. Alas, those Americans up to their necks in credit card debt may well be the next class of debtors to be rolled, and American farmers are already suffering serious losses from the collapse of farm commodities prices. In time, credit will dry up, government receipts will dwindle, the national debt will skyrocket and unemployment will increase. Eventually the government will inflate its way out of its accumulated debt.

Camdessus & Fischer: the Inmates Run the Asylum

Before concluding my remarks, I would like to recall one curious and mostly unremarked detail from 1994, that sticks out in this sad story like a boy’s unruly cowlick. In mid-July 1994 – at the very moment dollar-based Mexican tesobonos were being oversold to prosperous clients of Goldman Sachs and other U.S. investment banks, which, in turn, would lead to the 1995 Mexican bailout and the introduction of moral hazard into the world’s financial system – Michel Camdessus told a press conference that he intended to press for the creation of a new IMF facility to give members resources with which to defend themselves against speculative attacks in financial markets.

In other words, long before bailouts of entire countries became routine Camdessus wanted a new loan program to feed the last disciplinarians in the world’s financial system – currency speculators – so that national governments might become even more unaccountable to their citizens. At the time, The Economist slammed the proposal, saying it was “absurd and almost certainly unworkable,” since Camdessus “bizarrely” was assuming the IMF would know more about economic fundamentals than the markets. And that assumption, The Economist noted, was the very assumption which had been the undoing of the USSR’s centrally planned empire. But Camdessus’ 1994 plan is the very one the Clinton Administration implemented and seeks to institutionalize.

So who wags the tail of the money dog? Citizens who labor to create wealth for themselves and their families or folks like IMF chief Michel Camdessus, a French socialist and lifetime bureaucrat, and his deputy, Stanley Fischer, who together are quite possibly the two most incompetent people on the planet? Sadly, it appears a once free people are slowly but surely being enserfed to globalism’s useless hors d’oeuvres eaters and incompetent lenders.

It doesn’t take a conspiracy theory to observe that the downward arc of citizens’ liberties, independence and civic competence and of American culture generally parallels the declining value of the U.S. dollar, which has lost 99 percent of its value since the founding of the Fed, and 75 percent of that debasement has occurred since the last link with gold established by Bretton Woods collapsed in 1971. From that perspective, it’s really not very surprising that at the end of the century, not quite a century after America instituted the Federal Reserve and thereby began the process that would deliver the power of creating unlimited debt to the political class, the White House is occupied by a couple who share not so much a marriage as they do a collection of felonies.

Throughout the 1990s, finance capitalism’s shills have been a “new paradigm” economy so glorious one might have thought Beatrice awaited us each and every one at the very lip of Heaven itself. Their brassy tune celebrated the defeat of the business cycle by globalization, productivity gains and computer technology. Inflation was tamed, the golden horns sounded, and we were to dwell eternally in lush fields of full employment, low interest rates and a booming stock market. And, insiders winked, foreign money once mugged by speculators would have nowhere else to go but directly into Wall Street’s money machine.

But what if – instead of Beatrice – what waits over our collective shoulder down Purgatory way is a repeat of the European currency instabilities of the 1930s, which culminated in the most vicious and widely-fought war in world history?

Mother Russia

From the perspective of the many millions of her children, Mother Russia in late 1991 was like an old woman, skirts yanked above her waist, who had been abandoned flat on her back at a muddy crossroads, the object of others’ scorn, greed and unseemly curiosity. It is the Russian people who kept their wits about them, helped her to her feet, dusted her off, straightened her clothing, righted her head scarf and it is they who can restore her dignity – not Boris Yeltsin, not Anatole Chubais, not Boris Berezovsky nor any of the other aspirants to power. And it is the Russian people – their abilities, efforts and dreams – which comprise the Russian economy, not those of Vladimir Potanin or Viktor Chernomyrdin or Mikhail Khodorkovsky or Vladimir Gusinsky. And that is where we should have placed our bet – on the Russian people – and our stake should have been the decency, the common sense and abilities of our own citizens realized not through multilateral lending but through the use of tax credits for direct investment in the Russian economy and the training of Russian workers on 6-month to one year stints at the U.S. offices of American firms in conjunction with the elimination of U.S. tariffs on Russian goods.

Russia is a fabled land, home to a unique and provocative thousand year-old culture, and a country rich in the resources the world needs whose people had the courage and resilience to defeat this century’s greatest war machine, Hitler’s invading Wehrmacht. Yet, thanks to Boris Yeltsin’s thirst for power and megalomaniacal inadequacy, Russia has become the latest victim of American expediency and of a culturally hollow and economically predatory globalism. Consequently, Americans, who thought their money was helping a stricken land, have been dishonored; and the Russian people who trusted us are now in debt twice what they were in 1991 and rightly feel themselves betrayed.

The worst of it was that some pretty good ideas – private property, sound money, minimal government, the inviolability of contract and public accountability – that have delivered to the West’s citizenry the most prosperity and the most liberty in world history, and might have done the same for the Russians, were twisted into perverse constructions and only then exported via a Harvard-connected cabal of Clinton administration appointees who funded – without competition – their allies at Harvard University courtesy the public purse. Joining the US-directed effort were the usual legions of overpaid IMF/World Bank advisers whose lending terror continues to encircle the globe.

But where, in a land in which today more of the people die each year than are born, lies the gain? History’s yardstick will measure out the answer, and I suspect it will not suit us.