Take Your Pick at the Airport: Full Body Scan or Patdown
February 18th, 2009Via: USA Today:
For the first time, some airline passengers will skip metal detectors and instead be screened by body scanning machines that look through clothing for hidden weapons, the Transportation Security Administration said Tuesday.
An experimental program that begins today at Tulsa International Airport will test whether the $170,000 body scanners could replace $10,000 metal detectors that have screened airline passengers since 1973. Airports in San Francisco, Las Vegas, Miami, Albuquerque and Salt Lake City will join the test in the next two months, TSA spokesman Christopher White said.
The scanners aim to close a loophole by finding non-metallic weapons such as plastic and liquid explosives, which the TSA considers a major threat. The machines raise privacy concerns because their images reveal outlines of private body parts.
“We’re getting closer and closer to a required strip-search to board an airplane,” said Barry Steinhardt of the American Civil Liberties Union.
White said each scanner has explanatory signs on how the machines work and posters showing the image they create.
Passengers at the test airports will be instructed to go through the new scanners. Anyone who doesn’t want to go through will be allowed to refuse and instead go through a metal detector and receive a pat-down, White said.
Germany Passes Law Allowing it to Nationalize Banks
February 18th, 2009Via: Reuters:
The German cabinet approved a law on Wednesday letting it nationalise banks, setting aside a reluctance to seize private property in the latest government intervention worldwide to tackle the financial crisis.
Germany said it was not planning to extend the role of the state through the bill, which it described as a last resort and could lead to the forced nationalisation of struggling German lender Hypo Real Estate.
But it nonetheless set aside a postwar commitment to respect private property, becoming the latest government to edge away from free market policies, instead using state support to prop up flagging banks and industries.
Cryptogon Readers Send Contributions
February 18th, 2009MS $5
MW $20
EM $18
Also, someone bought about $2,400 worth of HDTV and associated furniture through Amazon. The commission paid to Cryptogon on that came to $95. I almost fell out of my chair when I saw that in the commission report! I don’t know who you are, but thank you for starting your Amazon session via Cryptogon.
I don’t mention the hundreds of less expensive things that people buy on Amazon via Cryptogon, but it all adds up. Thank you for remembering to buy your books, soap, tools, yoga pants, condoms, rice, bicycle parts, digital cameras etc. etc. on Amazon via Cryptogon.
The Invisible Hand of the Market: British Troops Seize £50 Million of Afghan Opium
February 18th, 2009What I think is happening here is that the USUK smack industrial complex has decided to drive up the street price of heroin.
My theory will be confirmed if we hear that Obama’s escalation of the war in Afghanistan includes counter-narcotics operations.
Why now?
First of all, heroin is cheap. Too cheap:
A gram of heroin can now be bought for as little as £25, with the average price somewhere between £40 and £50 per gram. In 1998, the average was £74.
The USUK is a victim of its own success with regard to heroin production in Afghanistan. The Taliban virtually eliminated it in the run up to 9/11 and then, after the U.S. invaded, opium production soared, year after year.
So, here we are, with cheap heroin.
Second (closely related to the first point), if heroin money is going to be used to buy U.S. Treasuries, it would be desirable for the price of heroin to be as high as possible. We’re in an economic crisis, after all. This is no time for cheap heroin!
Third, let’s look at a quote from The Art of War by Sun Tzu: “When you start a fire, be to windward of it. Do not attack from the leeward.”
In other words, “When you carry out counter narcotics operations, it’s profitable to have a stockpile of narcotics ready to enter the market as prices rise.”
That’s right, grasshopper. The USUK has been stockpiling opium somewhere; thousands of tons of it.
See: The Mystery of the Missing Opium:
It’s a mystery that has got British law enforcement officials and others across the planet scratching their heads. Put bluntly, enough heroin to supply the world’s demand for years has simply disappeared.
The United Nations Office on Drugs and Crime (UNODC) describes the situation as “a time bomb for public health and global security”.
This week’s Map of the Week comes courtesy of the UNODC. It shows their latest estimate of opium production in Afghanistan – another bumper year.
A crop of 7,700 tonnes will produce around 1,100 tonnes of heroin – it basically works on a 7:1 ratio.The mystery is that the global demand for heroin is less than half that. In other words, Afghanistan only needs to produce 3,500 tonnes to satisfy every known heroin user on the planet.
Look at the graph, though.
For the past three years, production has been running at almost twice the level of global demand. The numbers just don’t add up.
…
Theory 2: Vast quantities of heroin and morphine are being stockpiled. Antonio Maria Costa, head of the UNODC is convinced that is the only explanation. In a recent bulletin he issues an urgent order: ‘Find the missing opium.’ “As a priority, intelligence services need to examine who holds this surplus, where it may go, and for what purpose” he says. “We know little about these stockpiles of drugs, besides that they are not in the hands of farmers.”
Further credibility is given to the stockpiling theory in that ‘farm-gate’ prices for opium remain pretty stable at about $70 per kilo.
So where are the thousands of tonnes of drugs that the UNODC describe as a “time bomb”?
Ask Blackwater, I mean Xe. They’re probably the ones who have the contract to move it.
But not yet. Let supplies dwindle down a bit first. Let the media show stories about the soldiers stopping the flow of opium—after eight years of steadily increasing harvests, under the watchful eye of NATO and British Intelligence, and with thousands of tons of it stockpiled somewhere.
Via: Independent:
The roar came through the night as a phalanx of helicopters, silhouetted against the sky, flew in to land in Helmand’s Upper Sangin Valley amid the flash of Taliban fire from the surrounding hills.
This was the start of Operation Diesel involving more than 700 British and Afghan troops, including the SAS, in a mission to hunt down the vast stores of narcotics which are being used to fund the Afghan insurgency.
By the time it ended, after five days of rolling combat, opium worth more than £50m had been found hidden behind high walls of |purpose-built factories and storehouses. It was one of the biggest single finds of drugs caches. The operation also highlighted the new role for British troops since Nato’s controversial decision to extend its remit to embrace counter-narcotics. It was a move opposed by many commanders concerned about creating another enemy – disgruntled poppy farmers.
However, with Afghanistan providing 92 per cent of the world’s heroin supply, and a sizeable portion of the revenue going to the Taliban, the US have been insistent that the drug trade should be directly targeted. General John Craddock, the American commander of Nato forces in Europe, has declared that troops in Afghanistan can open fire on traffickers without the need for direct evidence.
Helmand, which produces 44 per cent of the national crop, is likely to see similar missions in the future. Sangin is one of the most violent parts of the province and has become a conduit for Taliban fighters and weapons coming from across the Pakistani border, with drugs going in the other direction. What was discovered during the raid in the Sapwan Qala area showed the scale of the opium cottage industry: 1,295kg of wet |opium and the equipment needed to turn it into street-level heroin including 5,000kg of ammonium chloride, 1,025 litres of acetic anhydride, 1,000kg of salt and 300kg of calcium hydroxide. Then there was the evidence of the intrinsic link between the trade and violence – Kalashnikov assault rifles, PKM heavy-calibre machine guns, rocket- propelled grenade launchers, thousands of rounds of ammunition and motorbikes modified for carrying out suicide attacks.
One of biggest drugs caches was being guarded by attack dogs. A marine said: “One of them was a massive guard dog which has had its ears and tail cut off. We were extremely wary because, at the same time, we were looking out for mines and IEDs (improvised explosive devices)”.
As the troops moved through the villages they came across former family homes converted to process opium. There were huge vats, presses and chemicals as well as piles of burlap sacks to pack the heroin.
“In one compound we found 10 to 15 barrels of wet opium cooking away,” said Marine Jake McEndoo, of 45 Commando. “It was the most I have ever seen.”
Meanwhile, Taliban fighters, dodging in and out of the warren of alleyways, maintained a steady stream of Kalashnikov and RPG fire. Captain Olly Osborne, of 45 Commado, said they were clearing a compound when an RPG buzzed over their heads. He said: “It was fired by a guy who came out of an alleyway. Our guys opened up on him in response”. The team then came under fire from a heavy machine gun until it was silenced by cannon fire from an Apache helicopter gunship.
Brigadier Gordon Messenger, commander of British troops in Helmand, said: “The links between the Taliban and the drugs trade are well proven and we know that the revenue from narcotics production directly funds the insurgency. This was a clinical, precise strike, supported by strong intelligence, which has had a powerfully disruptive effect on known insurgent and |narcotics networks in the area.”
The Defence Secretary, John Hutton, said: “Our dedicated and professional forces have once again taken the fight to the enemy. The seizure of £50m worth of narcotics will starve the Taliban of crucial funding and prevent the proliferation of drugs and terror on the UK’s streets.”
Research Credit: Moontrap
Obama Orders 17,000 U.S. Troops to Afghanistan
February 18th, 2009Via: Reuters:
U.S. President Barack Obama, in his first major military decision as commander-in-chief, has ordered 17,000 more troops to Afghanistan to tackle an intensifying insurgency, the White House said on Tuesday.
But in an interview with Canadian Broadcasting Corporation (CBC), Obama also said military means alone would not solve the problem.
U.S. officials have said Washington and its allies are not winning in Afghanistan, more than seven years after toppling the Taliban for giving sanctuary to al Qaeda leaders responsible for the September 11 attacks on the United States in 2001.
The extra 17,000 troops will increase the U.S. military presence in Afghanistan by more than 40 percent.
“This increase is necessary to stabilize a deteriorating situation in Afghanistan, which has not received the strategic attention, direction and resources it urgently requires,” Obama said in a statement.
Obama, not Bush, Now Seeking Delay of Rove Deposition
February 18th, 2009Change.
Via: RawStory:
Former Bush Deputy White House Chief of Staff Karl Rove has a new president urging Congress not to force him to testify next week.
President Barack Obama.
In a court brief quietly filed Monday, Michael Hertz, Obama’s acting assistant attorney general, said it was necessary to delay an effort to force Rove to be deposed in a congressional investigation into the firing of nine US Attorneys and the alleged political prosecution of a former Alabama governor.
Hertz said an effort was underway to find a “compromise” for Rove, and requested two weeks to broker a deal before proceeding in court.
“The inauguration of a new president has altered the dynamics of this case and created new opportunities for compromise rather than litigation,” Hertz wrote in the brief released late Monday by McClatchy’s Washington, D.C. bureau. “At the same time, there is now an additional interested party — the former president — whose views should be considered.”
The House Judiciary Committee sued the Bush Administration to force Rove to testify last year, saying that Rove shouldn’t be covered by executive privilege. They won. But their case has been held up by an appeal, and Hertz’s filing was the Obama administration’s first legal weighing-in on the matter. Obama’s Justice Department has supplanted the role of Bush’s Justice Department in the case, and their position will likely inform the terms under which Rove is questioned by Congress.
Hertz’s statement mirrors a statement from Obama White House Counsel Gregory Craig published Saturday.
“The president is very sympathetic to those who want to find out what happened,” Craig told The Washington Post. “But he is also mindful as president of the United States not to do anything that would undermine or weaken the institution of the presidency. So, for that reason, he is urging both sides of this to settle.”
Both Hertz’s and Craig’s statement point to an underlying challenge Obama faces with regard to Rove. Since former President Bush still claims that Rove is protected from testifying to Congress by executive privilege, even after departing office, Obama must decide whether he wants to risk diluting his own executive privilege in the future.
These statements, however, stand in contrast to Obama’s previous rhetoric.
In 2007, while in the Senate, Obama rebuked Bush’s White House as “the most secretive in modern history,” which aimed “to hide its abuse of our justice system.”
Responding to a Bush claim of executive privilege, he said, “By continuing to act as the most secretive White House in modern history, the Bush Administration has once again placed itself above the law in order to hide its abuse of our justice system from the American people. On the first day of an Obama Administration, we will launch the most sweeping ethics reform in history to shed sunlight on the decisions made by government and put the interests of the American people at the center of every decision that’s made.”
House Judiciary Chairman John Conyers, Jr. (D-MI), who subpoenaed Rove as recently as last week and demanded that he come before Congress Feb. 23, refused a request from Rove’s attorney seeking a delay. Rove didn’t show up on two previous occasions he was subpoenaed, once in 2008 and again in January. He didn’t honor a 2007 Senate Judiciary Committee subpoena either.
The New Depression: “This is the mother of all postwar crises, which has barely started and remains out of control.”
February 18th, 2009This article starts off well enough, but it goes off the rails. The problem is not “unregulated capital.” There are volumes of regulations related to capital and we don’t need an additional Soviet Ministry of Money Rules. The problem is the composition of the capital in the first place. The problem is the arbitrary ability of governments to print money out of thin air.
Restore sanity to money and skip the Neo Soviet tendencies that are emerging from essentially the same people who created this mess in the first place.
Fiat money is like cancer. Cancer spreads throughout the body and corrupts normal cell processes. Rather than making more useful cells, that an organism needs to survive and thrive, cancer repurposes those cells to turn healthy tissue is into tumors. If you have ever watched anyone die of cancer (I have) you know that it is one of the most unbelievable and horrific outcomes of the human condition.
Well, look around. The chaos that’s engulfing the planet is a result of the same process that turns a person into a tumor, except that the process has been turned inside out into the world around us.
Now, what about the role of derivatives in this fiat money-cancer analogy?
A Cryptogon reader and core contributor sent me a presentation on which he wanted some feedback. His presentation really summed things up and I’ll be posting that soon, but here’s a paragraph from what I wrote back:
I would focus a little more on the role that exotic derivatives have played in this. The commoditization of traditional loan products, and the resulting derivatives became an addiction that most banks (and many other financial entities, pension systems, municipalities, NORWAY! etc) simply could not resist. That’s what’s different about this “bust” cycle. It could be orders of magnitude worse than anyone thinks because this type of leverage has never been used before.
In other words, the financial cancer is capable of not only turning an organism into a tumor, but it has evolved into being able to turn the future into a tumor, today.
What does this say about governments that are WILLING TO DO ANYTHING to maintain a system of confetti paper that turns increasingly larger spans of the future into a cancerous mass?
The cure for this disease is small, decentralized commerce based on real money, barter and gifting. The tumors shrink away and the cancer dies in that environment.
Sorry to end this with a two sentence “prescription” but my son is running around, waving a greasy lambchop like a light saber and my wife needs a break.
Via: New Statesman:
We are living through a crisis which, from the collapse of Northern Rock and the first intimations of the credit crunch, nobody has been able to understand, let alone grasp its potential ramifications. Each attempt to deal with the crisis has rapidly been consumed by an irresistible and ever-worsening reality. So it was with Northern Rock. So it was with the attempt to recapitalise the banks. And so it will be with the latest gamut of measures. The British government – like every other government – is perpetually on the back foot, constantly running to catch up. There are two reasons. First, the underlying scale of the crisis is so great and so unfamiliar – and, furthermore, often concealed within the balance sheets of the banks and other financial institutions. Second, the crisis has undermined all the ideological assumptions that have underpinned government policy and political discourse over the past 30 years. As a result, the political and business elite are flying blind. This is the mother of all postwar crises, which has barely started and remains out of control. Its end – the timing and the complexion – is unknown.
…
Enormous international flows of unregulated capital have capsized the international financial system – with disastrous consequences for the real economy – in a manner akin to the effect of a roll-on, roll-off ferry shipping too much water. We can now see the cost of free-market capitalism and light-touch regulation. Iceland may provide an extreme example of the consequences of the credit crunch but it also illustrates the dangers facing the more vulnerable economies, the UK included, in a deregulated world where the market rules: a small, open economy; a large, internationally exposed banking sector; an independent currency that is not a serious global reserve currency (of which there are only three); and limited fiscal strength. These propositions have constituted the core economic beliefs – from Thatcher and Lawson to Blair and Brown – that have informed policymaking over the past three decades and without which, it was claimed ad nauseam, an economy could not succeed. Heavy-handed regulation and an overbearing state would serve only to frighten off capital and condemn a country to slow growth, stagnation and global marginality. Now we know the fallaciousness of these claims and the consequences of “letting the market decide”.
Like Iceland, albeit not as extremely, Britain has been living in a fool’s paradise. A failure to regulate the banks and other financial institutions in any meaningful fashion allowed bankers to behave in a grossly irresponsible and avaricious fashion; a boom that was made possible only by a government-enabled credit binge in which people borrowed recklessly; a bloated financial sector that grew to represent over 8 per cent of the total economy and which was found to have been built on foundations of sand; an overvalued currency that made manufacturing exports uncompetitive and thereby resulted in an unnecessary and counterproductive contraction in the manufacturing sector which must now be reversed; an absurd belief that boom and bust had been banished for ever, allowing the banks to turn a blind eye to the inflating of various asset bubbles and display a profound ignorance of the history of capitalism; a persistently chronic current account deficit that can no longer be compensated for by inward capital flows; monstrous salaries for those at the top of the financial and corporate tree, which were justified in terms of a trickle-down effect that remained a chimera, and as the reward for risk which was, in fact, a reward for greed and failure; growing inequality, which was justified in the name of a more competitive economy accompanied by declining social mobility in the cause of an open and flexible labour market; and, finally, the mushrooming of what can only be described as systemic corruption on a mega-scale as the state ignored the gargantuan abuses of those who ran the banks and other financial institutions, while regulatory authorities willingly colluded in their excesses.
This is the sad story of the New Labour era.
The ultimate cost of this debacle as yet remains unknown. What began as a financial crisis is threatening, as the government seeks to bail out a bankrupt financial sector, to become a currency crisis, with foreign investors concerned about the effects this might have on the value of sterling, and perhaps even worse, ultimately a sovereign debt crisis, with growing doubts about the UK’s financial viability. Until there is some end in sight to the financial crisis, and a line can be drawn under the banks’ indebtedness, we will not know the answer to these questions. One thing is clear, however: whatever the limitations of the social democratic era, it was never responsible for such an all-enveloping and cataclysmic crisis as the one that the neoliberal era – and the Thatcherites and New Labour – have managed to produce. After all the boasting about the virtues of the Anglo-American model of capitalism, the Grim Reaper has finally spoken: a boom pumped up by credit steroids and a bust that takes us back to the 1930s.
Black Hole: GM to Seek Another $30 Billion in Aid, Will Cut 47,000 Jobs
February 18th, 2009Via: AP:
General Motors Corp., presenting a dire outlook for the future, said Tuesday it may need $30 billion in total government financing to weather the economic downturn and would cut 47,000 jobs worldwide and shutter five more U.S. factories in a massive restructuring plan.
The automaker is already surviving on $13.4 billion in federal loans and said in a plan submitted to the Treasury Department that it would seek an additional $16.6 billion if economic conditions worsen, but it could achieve profitability in two years and fully repay its loans by 2017.
The U.S. automaker presented its turnaround plan to the Obama administration as it worked to win concessions from the United Auto Workers union and bondholders to dramatically resize the company. The UAW said it reached a tentative deal with GM, Chrysler LLC and Ford Motor Co. on contract changes but discussions were still under way about how the companies would fund union-run trust funds that will take over the companies’ retiree health care obligations starting next year.
GM said it was making progress but had not yet achieved all the concessions from union workers, debt holders, dealers and suppliers that the Bush administration sough in the loan terms provided last December.
President Barack Obama’s administration will review the plans from GM and Chrysler LLC but could pull the loans if they don’t approve the turnaround plans by March 31. The review could be extended into April, but if the government demands the money back it would force the companies into bankruptcy.
GM predicted it could run out of money before the March deadline and said it is seeking the additional funding under a worst-case-scenario projection, as U.S. sales have plummeted to a 26-year low and auto sales have fallen in other parts of the world.
In December, GM said it might need a total of $18 billion in government financing but only got a commitment of $13.4 billion, including $4 billion that the automaker received Tuesday.
GM wants to receive an additional $2 billion in March and $2.6 billion in April. The company has a $4.5 billion revolving line of credit that must be refinanced in 2011 but now believes that private funding won’t be available, so the automaker is asking the government to lend the money.
If market conditions deteriorate, GM says it may also need an additional $7.5 billion revolving line of credit to stay afloat, for a total potential request of $30 billion.
GM said it reviewed the potential costs of a bankruptcy filing, but said it was a poor option. If GM was forced into Chapter 11 reorganization proceedings, the company said the only credit available would be from the government, and the cost could reach as much as $100 billion.
U.S. Accuses Texas Financial Firm of ‘Massive’ Fraud
February 17th, 2009Via: New York Times:
Stopping what it called a “massive ongoing fraud,” the Securities and Exchange Commission on Tuesday accused Robert Allen Stanford, the chief of the Stanford Financial Group, of fraud in the sale of about $8 billion of high-yielding certificates of deposit held in the firm’s bank in Antigua. Also named in the suit were two other executives and some affiliates of the financial group.
In the complaint, filed in Federal District Court in Dallas, the S.E.C. accused Mr. Stanford and two associates — James M. Davis, a director and chief financial officer of Stanford Group and the Antigua-based bank affiliate, and Laura Pendergest-Holt, the chief investment officer of both organizations — with misrepresenting the safety and liquidity of the uninsured CDs.
The CDs were sold by Stanford International Bank through the firm’s registered broker-dealer and investment adviser, which are in Houston. Both the bank, which claims $8.5 billion in assets and 30,000 clients in 131 countries, and the brokerage unit, which operates about 30 offices in the United States, were named in the S.E.C. suit. Stanford Financial asserts that it advises about $50 billion in assets.
In its complaint, the S.E.C. said it could not account for the $8 billion in assets that were housed in the Antigua bank after issuing subpoenas for bank records and to various witnesses. Most witnesses, including Mr. Stanford, Mr. Davis, and the Antigua-based bank’s president, failed to appear to testify nor did they produce documents shedding light on the assets.
Ms. Pendergest-Holt said in testimony to the S.E.C. that she could not account for the assets, asserting that Mr. Stanford and Mr. Davis were the only ones with access to the bank’s assets.
In the complaint, the S.E.C. called “improbable, if not impossible” claims by the offshore bank that it paid “significantly” higher returns on its CDs because of the high quality of its investments.
The S.E.C. accused the bank and its affiliates of falsely stating in marketing materials that client funds were placed in liquid financial instruments, when in fact they were invested in private equity funds and real estate. On Nov. 28, Stanford International Bank quoted a rate of 5.375 percent on a $100,000 three-year CD, compared with rates of less than 3.2 percent at American banks. The bank recently has offered rates of more than 10 percent on five-year CDs, the filing stated.
In the complaint, the S.E.C. requested that the defendants’ assets be frozen and that a receiver be appointed to take control of business operations. It also requested that the assets of the bank and other offshore units be repatriated. And the agency asked that Mr. Stanford and the other named executives be required to surrender their passports.
The S.E.C. has come under fire in Congress and the media for ignoring repeated warnings over a period of years about the Bernard L. Madoff, who is accused of running a $50 billion Ponzi scheme. While investigators have been looking at Mr. Stanford and his financial empire’s activities for many months, the scrutiny into the too-good-to-be-true returns on the CDs increased substantially after the Madoff case.
Oddly enough, even the Stanford operation was touched by Mr. Madoff. Despite the fact the Antigua-bank assured investors in a report in December 2008 that it had no “direct or indirect” exposure Mr. Madoff’s funds, the bank suffered an estimated $400,000 in losses, apparently through investments in so-called “feeder funds.”
Additionally, the S.E.C. accused Stanford Capital Management, another Houston-based investment advisory unit, of inflating the performance of its $1.2 billion-asset Stanford Allocation Strategy mutual fund in promoting it to prospective investors.
The complaint also accused the offshore banking unit and the Houston-based broker dealer of violating provisions of the Investment Company Act of 1940 in failing to register as an investment company.
U.S. AIR FORCE INITIATES VOLUNTARY RECALL OF RETIRED OFFICERS
February 17th, 2009Now we’re talkin’…
Via: Military.com:
RANDOLPH AIR FORCE BASE, Texas (AFRNS) — The rapid expansion of unmanned aircraft systems and other emerging missions and rated officer requirements has created an Air Force demand for experienced, rated officers. To meet these critical shortages, the secretary of the Air Force has initiated a Voluntary Retired Rated Recall Program.
Pilots, navigators, and air battle managers who retired as a lieutenant colonel or below, and who are younger than 60, may apply for the program. Officers recalled under this program will be used in myriad positions including intelligence, surveillance and reconnaissance, rated staff, and other rated requirements. Officers will be recalled for between 24 and 48 months depending upon the requirement.
Officers recalled will not be eligible to receive aviator continuation pay. Also, by volunteering for recall, officers become eligible for deployment. Retired Regular and retired Reserve officers are eligible to apply, and officers who retired via a Selective Early Retirement Board may also apply. Officers permanently retired for a physical disability are ineligible.


