Open Letter to US Congressman Pete Sessions Republican, Texas
Dear Congressman,
I deeply appreciate your stand on Obamacare and your tireless efforts to restrict and eventually repeal Obamacare. I can see that the task is difficult in that those who stand to profit from this legislation (that’s not ordinary Americans) are waging a very intense and complicated battle complete with massive propaganda to keep Obamacare going. The result is that Americans have been very deceived by the Obamacare initiative. Please continue to fight. I will continue to post on my facebook page any info that I find that can shed light on the continuing destructiveness to our medical care system as well as the overall damage to our economy of which Obamacare plays a significant part.
One of my other major concern is the NSA. President Obama’s speech regarding his initiatives to make changes in NSA practice was filled with lies, half-truths and sidesteps. The entire speech was designed to quell dissent without actually reigning in the NSA’s bulk collection of all of our digital data. This bulk collection is at issue in my mind. Neither the NSA nor the President has established with documentation that the present bulk collection is necessary for national defense. Statements are constantly being made by them to that effect but anytime they are pressed for proof, there is no proof provided. That was clearly shown in the recent Senate hearings where testimonies were given by NSA officers. Statements were made in defense of the present scope of data collection while statistics given to support their policies were shown to have no merit. The lack of evidence demonstrated that this collection of all of our data is made with no probable cause.
Constitutionally speaking, reasonable suspicion is not the criterion for search and seizure of our private information. Probable cause is the criterion -- which is vastly different from reasonable suspicion. Therefore, I can only conclude that the NSA collection of wholesale data on Americans is unconstitutional and should be abolished immediately. In addition I have zero confidence that any of the proposed “reforms” that the President presented will be enacted. What we will get will be more smoke and mirrors designed to convince us that changes have occured hoping we will just relax and trust that the government will not continue to abuse its power. This is unconscionable. No government should ever be given this much power.
Much of the judicial oversight that the President is recommending is already in place. The fact that this oversight does not function well is a result of the the agency’s objective to “collect everything” in secret while stonewalling the FISA court. It was shown how the NSA engaged in every means to frustrate the over sight process. I don’t see the President’s proclamations changing any of that in the least.
The other concern I have is the use of “states secrets” as a way to limit designated representatives from viewing information held by this government that is vital to health and well being of Americans. Declaring “state secrets” and classifying information that does not warrant classifying have reached epidemic proportions. I cannot believe that a free society can have a “secret government”.
The effort to reign in the bulk data collection was nearly accomplished by Congress last summer. The Amash bill to de-fund the bulk collections nearly passed. I was disappointed to see that you voted against the bill. I can only assume that you were so wrapped up in the fight against Obamacare that you may have been confused about the NSA activity.
According to the NSA Inspector General, we’ve seen at least 12 specific, intentional cases of “abuse” by the NSA. In addition when it is revealed that at least 120,000,000 Americans have been spied on indescriminately wilthout cause or warrant the opportunities for abuse are staggering. The federal government’s independent PCLOB report on the NSA’s mass phone surveillance recently indicated that they found NO instance in which the program directly contributed to the discovery of a previously unknown terrorist plot or the disruption of a terrorist attack. At a recent press conference the Privacy and Civil Liberties Oversight Board made it clear that this NSA bulk spying program (that has been operating in secret for years) has no basis in law.
On the basis of what I have already stated plus much, much more I cannot accept your position to support this random, unwarranted collection and storing of personal data. I would ask that you please join any future effort to pass legislation to stop the bulk collection of the communications data of Americans.
Thank you for your work.
Larry Enge
Thursday, January 23, 2014
Wednesday, January 25, 2012
Tehran Pushes to Ditch the US Dollar
By Mark Katusa - Chief Energy Investment Strategist - Casey Research - January 25, 2012
The official line from the United States and the European Union is that Tehran must be punished for continuing its efforts to develop a nuclear weapon. The punishment: sanctions on Iran's oil exports, which are meant to isolate Iran and depress the value of its currency to such a point that the country crumbles.
But that line doesn't make sense, and the sanctions will not achieve their goals. Iran is far from isolated and its friends - like India - will stand by the oil-producing nation until the US either backs down or acknowledges the real matter at hand. That matter is the American dollar and its role as the global reserve currency.
The short version of the story is that a 1970s deal cemented the US dollar as the only currency to buy and sell crude oil, and from that monopoly on the all-important oil trade the US dollar slowly but surely became the reserve currency for global trades in most commodities and goods. Massive demand for US dollars ensued, pushing the dollar's value up, up, and away. In addition, countries stored their excess US dollars savings in US Treasuries, giving the US government a vast pool of credit from which to draw.
We know where that situation led - to a US government suffocating in debt while its citizens face stubbornly high unemployment (due in part to the high value of the dollar); a failed real estate market; record personal-debt burdens; a bloated banking system; and a teetering economy. That is not the picture of a world superpower worthy of the privileges gained from having its currency back global trade. Other countries are starting to see that and are slowly but surely moving away from US dollars in their transactions, starting with oil.
If the US dollar loses its position as the global reserve currency, the consequences for America are dire. A major portion of the dollar's valuation stems from its lock on the oil industry - if that monopoly fades, so too will the value of the dollar. Such a major transition in global fiat currency relationships will bode well for some currencies and not so well for others, and the outcomes will be challenging to predict. But there is one outcome that we foresee with certainty: Gold will rise. Uncertainty around paper money always bodes well for gold, and these are uncertain days indeed.
The Petrodollar System
To explain this situation properly, we have to start in 1973. That's when President Nixon asked King Faisal of Saudi Arabia to accept only US dollars as payment for oil and to invest any excess profits in US Treasury bonds, notes, and bills. In exchange, Nixon pledged to protect Saudi Arabian oil fields from the Soviet Union and other interested nations, such as Iran and Iraq. It was the start of something great for the US, even if the outcome was as artificial as the US real-estate bubble and yet constitutes the foundation for the valuation of the US dollar.
By 1975 all of the members of OPEC agreed to sell their oil only in US dollars. Every oil-importing nation in the world started saving their surplus in US dollars so as to be able to buy oil; with such high demand for dollars the currency strengthened. On top of that, many oil-exporting nations like Saudi Arabia spent their US dollar surpluses on Treasury securities, providing a new, deep pool of lenders to support US government spending.
The "petrodollar" system was a brilliant political and economic move. It forced the world's oil money to flow through the US Federal Reserve, creating ever-growing international demand for both US dollars and US debt, while essentially letting the US pretty much own the world's oil for free, since oil's value is denominated in a currency that America controls and prints. The petrodollar system spread beyond oil: the majority of international trade is done in US dollars. That means that from Russia to China, Brazil to South Korea, every country aims to maximize the US-dollar surplus garnered from its export trade to buy oil.
The US has reaped many rewards. As oil usage increased in the 1980s, demand for the US dollar rose with it, lifting the US economy to new heights. But even without economic success at home the US dollar would have soared, because the petrodollar system created consistent international demand for US dollars, which in turn gained in value. A strong US dollar allowed Americans to buy imported goods at a massive discount - the petrodollar system essentially creating a subsidy for US consumers at the expense of the rest of the world. Here, finally, the US hit on a downside: The availability of cheap imports hit the US manufacturing industry hard, and the disappearance of manufacturing jobs remains one of the biggest challenges in resurrecting the US economy today.
There is another downside, a potential threat now lurking in the shadows. The value of the US dollar is determined in large part by the fact that oil is sold in US dollars. If that trade shifts to a different currency, countries around the world won't need all their US money. The resulting sell-off of US dollars would weaken the currency dramatically.
So here's an interesting thought experiment. Everybody says the US goes to war to protect its oil supplies, but doesn't it really go to war to ensure the continuation of the petrodollar system?
The Iraq war provides a good example. Until November 2000, no OPEC country had dared to violate the US dollar-pricing rule, and while the US dollar remained the strongest currency in the world there was also little reason to challenge the system. But in late 2000, France and a few other EU members convinced Saddam Hussein to defy the petrodollar process and sell Iraq's oil for food in euros, not dollars. In the time between then and the March 2003 American invasion of Iraq, several other nations hinted at their interest in non-US dollar oil trading, including Russia, Iran, Indonesia, and even Venezuela. In April 2002, Iranian OPEC representative Javad Yarjani was invited to Spain by the EU to deliver a detailed analysis of how OPEC might at some point sell its oil to the EU for euros, not dollars.
This movement, founded in Iraq, was starting to threaten the dominance of the US dollar as the global reserve currency and petro currency. In March 2003, the US invaded Iraq, ending the oil-for-food program and its euro payment program.
There are many other historic examples of the US stepping in to halt a movement away from the petrodollar system, often in covert ways. In February 2011 Dominique Strauss-Kahn, managing director of the International Monetary Fund (IMF), called for a new world currency to challenge the dominance of the US dollar. Three months later a maid at the Sofitel New York Hotel alleged that Strauss-Kahn sexually assaulted her. Strauss-Kahn was forced out of his role at the IMF within weeks; he has since been cleared of any wrongdoing.
War and insidious interventions of this sort may be costly, but the costs of not protecting the petrodollar system would be far higher. If euros, yen, renminbi, rubles, or for that matter straight gold, were generally accepted for oil, the US dollar would quickly become irrelevant, rendering the currency almost worthless. As the rest of the world realizes that there are other options besides the US dollar for global transactions, the US is facing a very significant - and very messy - transition in the global oil machine.
The Iranian Dilemma
Iran may be isolated from the United States and Western Europe, but Tehran still has some pretty staunch allies. Iran and Venezuela are advancing $4 billion worth of joint projects, including a bank. India has pledged to continue buying Iranian oil because Tehran has been a great business partner for New Delhi, which struggles to make its payments. Greece opposed the EU sanctions because Iran was one of very few suppliers that had been letting the bankrupt Greeks buy oil on credit. South Korea and Japan are pleading for exemptions from the coming embargoes because they rely on Iranian oil. Economic ties between Russia and Iran are getting stronger every year.
Then there's China. Iran's energy resources are a matter of national security for China, as Iran already supplies no less than 15% of China's oil and natural gas. That makes Iran more important to China than Saudi Arabia is to the United States. Don't expect China to heed the US and EU sanctions much - China will find a way around the sanctions in order to protect two-way trade between the nations, which currently stands at $30 billion and is expected to hit $50 billion in 2015. In fact, China will probably gain from the US and EU sanctions on Iran, as it will be able to buy oil and gas from Iran at depressed prices.
So Iran will continue to have friends, and those friends will continue to buy its oil. More importantly, you can bet they won't be paying for that oil with US dollars. Rumors are swirling that India and Iran are at the negotiating table right now, hammering out a deal to trade oil for gold, supported by a few rupees and some yen. Iran is already dumping the dollar in its trade with Russia in favor of rials and rubles. India is already using the yuan with China; China and Russia have been trading in rubles and yuan for more than a year; Japan and China are moving towards transactions in yen and yuan.
And all those energy trades between Iran and China? That will be settled in gold, yuan, and rial. With the Europeans out of the mix, in short order none of Iran's 2.4 million barrels of oil a day will be traded in petrodollars.
With all this knowledge in hand, it starts to seem pretty reasonable that the real reason tensions are mounting in the Persian Gulf is because the United States is desperate to torpedo this movement away from petrodollars. The shift is being spearheaded by Iran and backed by India, China, and Russia. That is undoubtedly enough to make Washington anxious enough to seek out an excuse to topple the regime in Iran.
Speaking of that search for an excuse, this is interesting. A team of International Atomic Energy Agency (IAEA) inspectors just visited Iran. The IAEA is supervising all things nuclear in Iran, and it was an IAEA report in November warning that the country was progressing in its ability to make weapons that sparked this latest round of international condemnation against the supposedly near-nuclear state. But after their latest visit, the IAEA's inspectors reported no signs of bomb making. Oh, and if keeping the world safe from rogue states with nuclear capabilities were the sole motive, why have North Korea and Pakistan been given a pass?
There is another consideration to keep in mind, one that is very important when it comes to making some investment decisions based on this situation: Russia, India, and China - three members of the rising economic powerhouse group known as the BRICs (which also includes Brazil) - are allied with Iran and are major gold producers. If petrodollars go out of vogue and trading in other currencies gets too complicated, they will tap their gold storehouses to keep the crude flowing. Gold always has and always will be the fallback currency and, as mentioned before, when currency relationships start to change and valuations become hard to predict, trading in gold is a tried and true failsafe.
2012 might end up being most famous as the year in which the world defected from the US dollar as the global currency of choice. Imagine the rest of the world doing the math and, little by little, beginning to do business in their own currencies and investing ever less of their surpluses in US Treasuries. It constitutes nothing less than a slow but sure decimation of the dollar.
That may not be a bad thing for the United States. The country's gargantuan debts can never be repaid as long as the dollar maintains anything close to its current valuation. Given the state of the country, all that's really left supporting the value in the dollar is its global reserve currency status. If that goes and the dollar slides, maybe the US will be able to repay its debts and start fresh. That new start would come without the privileges and ingrained subsidies to which Americans are so accustomed, but it's amazing that the petrodollar system has lasted this long. It was only a matter of time before something would break it down.
Finally, the big question: How can one profit from this evolving situation? Playing with currencies is always very risky and, with the global game set to shift to significantly, it would require a lot of analysis and a fair bit of luck. The much more reliable way to play the game is through gold. Gold is the only currency backed by a physical commodity; and it is always where investors hide from a currency storm.
The basic conclusion is that a slow demise of the petrodollar system is bullish for gold and very bearish for the US dollar.
The official line from the United States and the European Union is that Tehran must be punished for continuing its efforts to develop a nuclear weapon. The punishment: sanctions on Iran's oil exports, which are meant to isolate Iran and depress the value of its currency to such a point that the country crumbles.
But that line doesn't make sense, and the sanctions will not achieve their goals. Iran is far from isolated and its friends - like India - will stand by the oil-producing nation until the US either backs down or acknowledges the real matter at hand. That matter is the American dollar and its role as the global reserve currency.
The short version of the story is that a 1970s deal cemented the US dollar as the only currency to buy and sell crude oil, and from that monopoly on the all-important oil trade the US dollar slowly but surely became the reserve currency for global trades in most commodities and goods. Massive demand for US dollars ensued, pushing the dollar's value up, up, and away. In addition, countries stored their excess US dollars savings in US Treasuries, giving the US government a vast pool of credit from which to draw.
We know where that situation led - to a US government suffocating in debt while its citizens face stubbornly high unemployment (due in part to the high value of the dollar); a failed real estate market; record personal-debt burdens; a bloated banking system; and a teetering economy. That is not the picture of a world superpower worthy of the privileges gained from having its currency back global trade. Other countries are starting to see that and are slowly but surely moving away from US dollars in their transactions, starting with oil.
If the US dollar loses its position as the global reserve currency, the consequences for America are dire. A major portion of the dollar's valuation stems from its lock on the oil industry - if that monopoly fades, so too will the value of the dollar. Such a major transition in global fiat currency relationships will bode well for some currencies and not so well for others, and the outcomes will be challenging to predict. But there is one outcome that we foresee with certainty: Gold will rise. Uncertainty around paper money always bodes well for gold, and these are uncertain days indeed.
The Petrodollar System
To explain this situation properly, we have to start in 1973. That's when President Nixon asked King Faisal of Saudi Arabia to accept only US dollars as payment for oil and to invest any excess profits in US Treasury bonds, notes, and bills. In exchange, Nixon pledged to protect Saudi Arabian oil fields from the Soviet Union and other interested nations, such as Iran and Iraq. It was the start of something great for the US, even if the outcome was as artificial as the US real-estate bubble and yet constitutes the foundation for the valuation of the US dollar.
By 1975 all of the members of OPEC agreed to sell their oil only in US dollars. Every oil-importing nation in the world started saving their surplus in US dollars so as to be able to buy oil; with such high demand for dollars the currency strengthened. On top of that, many oil-exporting nations like Saudi Arabia spent their US dollar surpluses on Treasury securities, providing a new, deep pool of lenders to support US government spending.
The "petrodollar" system was a brilliant political and economic move. It forced the world's oil money to flow through the US Federal Reserve, creating ever-growing international demand for both US dollars and US debt, while essentially letting the US pretty much own the world's oil for free, since oil's value is denominated in a currency that America controls and prints. The petrodollar system spread beyond oil: the majority of international trade is done in US dollars. That means that from Russia to China, Brazil to South Korea, every country aims to maximize the US-dollar surplus garnered from its export trade to buy oil.
The US has reaped many rewards. As oil usage increased in the 1980s, demand for the US dollar rose with it, lifting the US economy to new heights. But even without economic success at home the US dollar would have soared, because the petrodollar system created consistent international demand for US dollars, which in turn gained in value. A strong US dollar allowed Americans to buy imported goods at a massive discount - the petrodollar system essentially creating a subsidy for US consumers at the expense of the rest of the world. Here, finally, the US hit on a downside: The availability of cheap imports hit the US manufacturing industry hard, and the disappearance of manufacturing jobs remains one of the biggest challenges in resurrecting the US economy today.
There is another downside, a potential threat now lurking in the shadows. The value of the US dollar is determined in large part by the fact that oil is sold in US dollars. If that trade shifts to a different currency, countries around the world won't need all their US money. The resulting sell-off of US dollars would weaken the currency dramatically.
So here's an interesting thought experiment. Everybody says the US goes to war to protect its oil supplies, but doesn't it really go to war to ensure the continuation of the petrodollar system?
The Iraq war provides a good example. Until November 2000, no OPEC country had dared to violate the US dollar-pricing rule, and while the US dollar remained the strongest currency in the world there was also little reason to challenge the system. But in late 2000, France and a few other EU members convinced Saddam Hussein to defy the petrodollar process and sell Iraq's oil for food in euros, not dollars. In the time between then and the March 2003 American invasion of Iraq, several other nations hinted at their interest in non-US dollar oil trading, including Russia, Iran, Indonesia, and even Venezuela. In April 2002, Iranian OPEC representative Javad Yarjani was invited to Spain by the EU to deliver a detailed analysis of how OPEC might at some point sell its oil to the EU for euros, not dollars.
This movement, founded in Iraq, was starting to threaten the dominance of the US dollar as the global reserve currency and petro currency. In March 2003, the US invaded Iraq, ending the oil-for-food program and its euro payment program.
There are many other historic examples of the US stepping in to halt a movement away from the petrodollar system, often in covert ways. In February 2011 Dominique Strauss-Kahn, managing director of the International Monetary Fund (IMF), called for a new world currency to challenge the dominance of the US dollar. Three months later a maid at the Sofitel New York Hotel alleged that Strauss-Kahn sexually assaulted her. Strauss-Kahn was forced out of his role at the IMF within weeks; he has since been cleared of any wrongdoing.
War and insidious interventions of this sort may be costly, but the costs of not protecting the petrodollar system would be far higher. If euros, yen, renminbi, rubles, or for that matter straight gold, were generally accepted for oil, the US dollar would quickly become irrelevant, rendering the currency almost worthless. As the rest of the world realizes that there are other options besides the US dollar for global transactions, the US is facing a very significant - and very messy - transition in the global oil machine.
The Iranian Dilemma
Iran may be isolated from the United States and Western Europe, but Tehran still has some pretty staunch allies. Iran and Venezuela are advancing $4 billion worth of joint projects, including a bank. India has pledged to continue buying Iranian oil because Tehran has been a great business partner for New Delhi, which struggles to make its payments. Greece opposed the EU sanctions because Iran was one of very few suppliers that had been letting the bankrupt Greeks buy oil on credit. South Korea and Japan are pleading for exemptions from the coming embargoes because they rely on Iranian oil. Economic ties between Russia and Iran are getting stronger every year.
Then there's China. Iran's energy resources are a matter of national security for China, as Iran already supplies no less than 15% of China's oil and natural gas. That makes Iran more important to China than Saudi Arabia is to the United States. Don't expect China to heed the US and EU sanctions much - China will find a way around the sanctions in order to protect two-way trade between the nations, which currently stands at $30 billion and is expected to hit $50 billion in 2015. In fact, China will probably gain from the US and EU sanctions on Iran, as it will be able to buy oil and gas from Iran at depressed prices.
So Iran will continue to have friends, and those friends will continue to buy its oil. More importantly, you can bet they won't be paying for that oil with US dollars. Rumors are swirling that India and Iran are at the negotiating table right now, hammering out a deal to trade oil for gold, supported by a few rupees and some yen. Iran is already dumping the dollar in its trade with Russia in favor of rials and rubles. India is already using the yuan with China; China and Russia have been trading in rubles and yuan for more than a year; Japan and China are moving towards transactions in yen and yuan.
And all those energy trades between Iran and China? That will be settled in gold, yuan, and rial. With the Europeans out of the mix, in short order none of Iran's 2.4 million barrels of oil a day will be traded in petrodollars.
With all this knowledge in hand, it starts to seem pretty reasonable that the real reason tensions are mounting in the Persian Gulf is because the United States is desperate to torpedo this movement away from petrodollars. The shift is being spearheaded by Iran and backed by India, China, and Russia. That is undoubtedly enough to make Washington anxious enough to seek out an excuse to topple the regime in Iran.
Speaking of that search for an excuse, this is interesting. A team of International Atomic Energy Agency (IAEA) inspectors just visited Iran. The IAEA is supervising all things nuclear in Iran, and it was an IAEA report in November warning that the country was progressing in its ability to make weapons that sparked this latest round of international condemnation against the supposedly near-nuclear state. But after their latest visit, the IAEA's inspectors reported no signs of bomb making. Oh, and if keeping the world safe from rogue states with nuclear capabilities were the sole motive, why have North Korea and Pakistan been given a pass?
There is another consideration to keep in mind, one that is very important when it comes to making some investment decisions based on this situation: Russia, India, and China - three members of the rising economic powerhouse group known as the BRICs (which also includes Brazil) - are allied with Iran and are major gold producers. If petrodollars go out of vogue and trading in other currencies gets too complicated, they will tap their gold storehouses to keep the crude flowing. Gold always has and always will be the fallback currency and, as mentioned before, when currency relationships start to change and valuations become hard to predict, trading in gold is a tried and true failsafe.
2012 might end up being most famous as the year in which the world defected from the US dollar as the global currency of choice. Imagine the rest of the world doing the math and, little by little, beginning to do business in their own currencies and investing ever less of their surpluses in US Treasuries. It constitutes nothing less than a slow but sure decimation of the dollar.
That may not be a bad thing for the United States. The country's gargantuan debts can never be repaid as long as the dollar maintains anything close to its current valuation. Given the state of the country, all that's really left supporting the value in the dollar is its global reserve currency status. If that goes and the dollar slides, maybe the US will be able to repay its debts and start fresh. That new start would come without the privileges and ingrained subsidies to which Americans are so accustomed, but it's amazing that the petrodollar system has lasted this long. It was only a matter of time before something would break it down.
Finally, the big question: How can one profit from this evolving situation? Playing with currencies is always very risky and, with the global game set to shift to significantly, it would require a lot of analysis and a fair bit of luck. The much more reliable way to play the game is through gold. Gold is the only currency backed by a physical commodity; and it is always where investors hide from a currency storm.
The basic conclusion is that a slow demise of the petrodollar system is bullish for gold and very bearish for the US dollar.
Wednesday, November 16, 2011
We Need to Know About the Current CIA
“Blowback” is the term coined by the CIA to refer to unintended consequences and retaliatory actions. Ron Paul has repeatedly stated that the attack of the towers on September 11, 2001 was blowback from criminal, destructive and lethal activities conducted by the US in covert operations against various Islamic targets for years prior to 9/11. Chalmers Johnson in his book Nemesis documents such activity.
From Nemesis by Chalmers Johnson:
“On the basis of the new agreement with Egypt, between 1995 and 1998 the CIA carried out a series of renditions [kidnappings for the purpose of torture] aimed particularly at Islamic freedom fighters working in the Balkans, many of them originally from Egypt. Virtually all of the people the CIA kidnapped in these operations were killed after being delivered into Egyptian hands. Predictably enough, these kidnappings generated blowback, although ordinary Americans did not perceive it as such because the actions that provoked the retaliation were, of course, kept secret. On August 5, 1998, the International Islamic Front for Jihad, in a letter to an Arab-language newspaper in London, promised reprisal for recent U.S. renditions form Albania. Two days later, al-Qaeda blew up the U.S. embassies in Kenya and Tanzania with a loss of 224 lives. The U.S. renditions continued with the CIA and FBI carrying out some two dozen of them in 1999 and 2000. These in turn helped provoke the attacks on the navy destroyer USS Cole in the Yemeni port of Aden on October 12, 2000. Former CIA director George Tenet testified before the 9/11 Commission that there were more than seventy renditions leading up to 9/11.”
Again from Chalmers Johnson:
‘The people held in this U.S. version of the gulag are known as “ghost detainees.’ completely off-the-books. No charges are ever filed against them, and they are hidden away even from the inspectors of the International Committee of the Red Cross. In an unusual typology of rendition sites, Robert Baer, a former CIA operative in the Middle East and the author of ‘Sleeping with the Devil: How Washington Sold Our Soul for Saudi Crude’, has commented, ‘We pick up a suspect or we arrange for one of our partner countries to do it. Then the suspect is placed on a civilian transport to a third country where, let’s make no bones about it, they use torture. If you want good interrogation, you send someone to Jordan. If you want them to be killed, you send them to Egypt or Syria. Either way, the U.S. cannot be blamed as it is not doing the heavy work.”
The scope and collusion of CIA renditions - Chalmers Johnson:
“The Swedish case is of major political importance because it revealed that Swedish authorities collaborated with the CIA. It is now clear that in a number of European countries, some of the local intelligence people were in on these renditions to one degree or another and that throughout Europe several governments pretended ignorance and simply looked the other way. Given the one thousand CIA flights to European destinations, it is hard to imagine that local governments could have been completely ignorant of their purposes. Whether all Western European governments were involved; whether some their intelligence services were functionally working for the CIA rather than their own governments; or whether deniability had been built into their arrangements with the CIA, we do not know. But obviously more was going on than merely bad Americans and good but ignorant Europeans.
No evidence has ever been offered that the two men the CIA kidnapped from Sweden and then delivered to the tender mercies of the Egyptians had participated in terrorist activities..... At about 5:00 p.m. on December 18, 2001, the Swedish secret police picked up Agiza on a street on his way home from a Swedish-language class in Karlstad; minutes later they nabbed al-Zery in a shop in Stockholm....The police transported the two Egyptians to the Stockholm city airport, Bromma, an hour before it was scheduled to close. the police cars were quickly admitted and drove to the office of Police Inspector Paul Forell, who was on duty. There, obviously by prior agreement, they were met by eight balaclava-wearing Americans in business suits who had landed a few minutes earlier in N379P. The Americans used scissors to cut the clothes off Agiza and al-Zery, who were still in handcuffs and ankle chains. They then inserted suppositories presumably containing tranquilizers into their anuses, dressed them in diapers and jumpsuits, and took them to the Gulfstream. At 21:49, the Egyptians, Americans, and two SAPO officers took off for Cairo....
As details of what happened began to leak out, embarrassing the Swedish government, its ambassador in Cairo was ordered to look into the matter. He discovered that after some two years of intermittent torture of both men, the Egyptian authorities decided that al-Zery was innocent and sent him back to his native village, ordering him not ot leave without official permission. They sentenced Agiza to twenty-five years in Masra Tora Prison for membership in a radical organization, presumably the Muslim Brotherhood. Visits to the prison by the Swedish ambassador produced only meetings with the warden and no interviews with Agiza, whose wife and five children remain in Sweden but are faced with the continual threat of deportation.
In the weeks immediately after 9/11, it seems that the CIA conducted a global vacuuming operation seeking to ‘disappear’ suspicious young Islamic men from various countries, including our own. In the course of these activities the agency acquired the names of Agiza and al-Zery, then pressured the SAPO to arrest them and turn over to a rendition team. At least some Swedish authorities involved knew that transferring any prisoner to a country where he might be tortured was a violation of Swedish law as well as of article 3 of the 1984 U.N. Convention Against Torture, which Sweden had signed and ratified. This case damaged Sweden’s reputation as a champion of international protection of human rights.....
The Swedish affair accomplished nothing other than ruining the lives of two men, a wife and children, for no reason other than showing off the hubris of the CIA....
On June 24, 2005, an Italian judge signed a 213-page criminal arrest warrant for thirteen CIA operatives, including the former Milan station chief, Robert Seldon Lady, charging them with kidnapping an Egyptian in Milan who held political refugee status in Italy..... The warrants for the thirteen CIA men and women, together with their photos, were forwarded to the European police authority, which authorized their arrest anywhere on the continent. It is the first time that a fellow NATO member has ever filed criminal complaints against employees of the United States government acting in an official capacity.....
The abductee in this [another] case is (or was) a forty-two-year-old Islamic cleric, Hassan Mustafa Osama Nasr, known as ‘Abu Omar.’ In 1991, if not earlier, Omar fled Egypt for Albania because he belonged to the outlawed organization Jamaat al-Islamiyya and the police were after him. In Tirana, the Albanian capital, he worked for four years for various Islamic charities, but did not himself participate in any illegal activities. After 9/11, the Bush administration labeled the charities he worked for as supporters of terrorists.... In 1997, he surfaced in Rome where he was granted political refugee status. Shortly thereafter, he moved to Milan....
On Monday, February 17, 2003, shortly after noon, Abu Omar was walking down the Via Guerzoni toward a mosque to attend daily prayers when he was stopped by an officer of Italy’s paramilitary carabinieri police force. According to the Milan prosecutor, Amando Spataro, the Italian carabiniere had been hired by the CIA to approach Abu Omar and conduct a routine documents check....
According to a passerby’s account, two men speaking ‘bad’ Italian then emerged from a parked white van, sprayed a chemical in Abu Omar’s face, and hustled him into the van, which drove away at high speed followed by a least one and possibly two other cars... he was transferred to a civilian Gulfstream, which departed at 8:30 that night for Cairo. When Omar’s plane arrived in Cairo early on the morning of February 18, Egyptian authorities took him into custody. Accompanying Omar to Egypt in the Gulfstream was CIA Milan station chief Robert Lady.’
Although Italian political leaders have steadfastly maintained that they did not collaborate in any way with the kidnapping, it is obvious that police authorities knew a great deal about it. The nineteen-person CIA abduction team of commandos, drivers, and lookouts left an astonishing trail of evidence that suggests they were utterly indifferent to the possibility that they were being observed....by February 1, 2003, virtually all of them were there. They did not hide in safe houses or private homes but checked into four-star palaces like the Milan Hilton ($340 a night) and the Star Hotel ($325 a night)....for between three days and three weeks....eating lavishly at gourmet restaurants, they ran up bills of at least $144,984, which they paid for with Diners Club cards that matched their fake passports....After the delivery of Abu Omar to Aviano, four of the Americans checked into luxury hotels in Venice and others took vacations along the picturesque Mediterranean cost north of Tuscany, all still on the government tab......
Unfortunately, carrying out extraordinary renditions such as the ones in Sweden and Italy, torturing captives in secret prisons, shipping weapons to Islamic jihadists without checking their backgrounds or motives, and undermining democratically elected governments that are not fully on our political wavelength are the daily work of the Central Intelligence Agency. That was not always the case nor was it the intent of its founders or the expectations of its officials during its earliest years. As conceived in the National Security Act of 1947, the CIA’a main function was to compile an analyze raw intelligence to make it useful to the president. Its job was to help him see the big picture, put the latest crisis in historical and economic perspective, give early warning on the likely crises of the future, and evaluate whether political instability in one country or another was of any importance or interest to the United States. It was a civilian, non-partisan organization, without vested interests such as those of the military-industrial complex, and staffed by seasoned, occasionally wise analysts with broad comparative knowledge of the world and our place in it. As the New York Times Tim Weiner notes, ‘Once upon a time in the Cold War, the CIA could produce strategic intelligence. It countered the Pentagon’s wildly overstated estimates of Soviet military power. It cautioned that the war in Vietnam could not be won by military force. It helped keep the Cold War cold.
One of the CIA’s best-known historians, Thomas Powers, laments... ‘the CIA, as it existed for 50 years, is gone.’ I [Chalmers Johnson] think it was actually gone long before. My own view is that President Bush’s manipulation of intelligence to deceive the country into going to war and then blaming his failure on CIA’s ‘false intelligence’ delivered only the final coup de grace to the CIA’s strategic-intelligence function. Henceforth, the CIA will no longer have even a vestigial role in trying to discern the forces influencing our foreign policies. That work will now be done, if it is done at all, by the new director of national intelligence. The downgraded CIA will attend to such things as assassinations, dirty tricks, renditions, and engineering foreign coups....
The reality was and is that presidents like having a private army and do not like to be contradicted by officials not fully under their control. Thus the clandestine service long ago began to surpass the intelligence side of the agency in terms of promotions, finances, and prestige. In May of 2006, Bush merely put strategic analysis to sleep once and for all and turned over truth-telling to a brand-new bureaucracy of personal loyalists and the vested interests of the Pentagon.
This means that we are blinder than usual in understanding what is going on in the world. But, equally important, our liberties are also seriously at risk. The CIA’s strategic intelligence did not enhance the power of the president except insofar as it allowed him to do his job more effectively. It was, in fact, a modest restraint on a rogue president trying to assume the prerogatives of a king. The CIA’s bag of dirty tricks, on the other hand, is a defining characteristic of the imperial presidency. It is a source of unchecked power that can gravely threaten the nation -- as George W. Bush’s misuse of power in starting the war in Iraq demonstrated. The so-called reforms of the CIA in 2006 have probably further shortened the life of the American republic.”
CIA Funding- Chalmers Johnson:
“Wilson [Representative Charlie Wilson] soon discovered that all of the CIA’s budget and 40 percent of the Pentagon’s budget is ‘black’ -- that is, totally hidden from the public and all but a privileged few congressmen. As a member of the Defense Appropriations Subcommittee, he could add virtually any amount of money to whatever black project he supported.”
From Nemesis by Chalmers Johnson:
“On the basis of the new agreement with Egypt, between 1995 and 1998 the CIA carried out a series of renditions [kidnappings for the purpose of torture] aimed particularly at Islamic freedom fighters working in the Balkans, many of them originally from Egypt. Virtually all of the people the CIA kidnapped in these operations were killed after being delivered into Egyptian hands. Predictably enough, these kidnappings generated blowback, although ordinary Americans did not perceive it as such because the actions that provoked the retaliation were, of course, kept secret. On August 5, 1998, the International Islamic Front for Jihad, in a letter to an Arab-language newspaper in London, promised reprisal for recent U.S. renditions form Albania. Two days later, al-Qaeda blew up the U.S. embassies in Kenya and Tanzania with a loss of 224 lives. The U.S. renditions continued with the CIA and FBI carrying out some two dozen of them in 1999 and 2000. These in turn helped provoke the attacks on the navy destroyer USS Cole in the Yemeni port of Aden on October 12, 2000. Former CIA director George Tenet testified before the 9/11 Commission that there were more than seventy renditions leading up to 9/11.”
Again from Chalmers Johnson:
‘The people held in this U.S. version of the gulag are known as “ghost detainees.’ completely off-the-books. No charges are ever filed against them, and they are hidden away even from the inspectors of the International Committee of the Red Cross. In an unusual typology of rendition sites, Robert Baer, a former CIA operative in the Middle East and the author of ‘Sleeping with the Devil: How Washington Sold Our Soul for Saudi Crude’, has commented, ‘We pick up a suspect or we arrange for one of our partner countries to do it. Then the suspect is placed on a civilian transport to a third country where, let’s make no bones about it, they use torture. If you want good interrogation, you send someone to Jordan. If you want them to be killed, you send them to Egypt or Syria. Either way, the U.S. cannot be blamed as it is not doing the heavy work.”
The scope and collusion of CIA renditions - Chalmers Johnson:
“The Swedish case is of major political importance because it revealed that Swedish authorities collaborated with the CIA. It is now clear that in a number of European countries, some of the local intelligence people were in on these renditions to one degree or another and that throughout Europe several governments pretended ignorance and simply looked the other way. Given the one thousand CIA flights to European destinations, it is hard to imagine that local governments could have been completely ignorant of their purposes. Whether all Western European governments were involved; whether some their intelligence services were functionally working for the CIA rather than their own governments; or whether deniability had been built into their arrangements with the CIA, we do not know. But obviously more was going on than merely bad Americans and good but ignorant Europeans.
No evidence has ever been offered that the two men the CIA kidnapped from Sweden and then delivered to the tender mercies of the Egyptians had participated in terrorist activities..... At about 5:00 p.m. on December 18, 2001, the Swedish secret police picked up Agiza on a street on his way home from a Swedish-language class in Karlstad; minutes later they nabbed al-Zery in a shop in Stockholm....The police transported the two Egyptians to the Stockholm city airport, Bromma, an hour before it was scheduled to close. the police cars were quickly admitted and drove to the office of Police Inspector Paul Forell, who was on duty. There, obviously by prior agreement, they were met by eight balaclava-wearing Americans in business suits who had landed a few minutes earlier in N379P. The Americans used scissors to cut the clothes off Agiza and al-Zery, who were still in handcuffs and ankle chains. They then inserted suppositories presumably containing tranquilizers into their anuses, dressed them in diapers and jumpsuits, and took them to the Gulfstream. At 21:49, the Egyptians, Americans, and two SAPO officers took off for Cairo....
As details of what happened began to leak out, embarrassing the Swedish government, its ambassador in Cairo was ordered to look into the matter. He discovered that after some two years of intermittent torture of both men, the Egyptian authorities decided that al-Zery was innocent and sent him back to his native village, ordering him not ot leave without official permission. They sentenced Agiza to twenty-five years in Masra Tora Prison for membership in a radical organization, presumably the Muslim Brotherhood. Visits to the prison by the Swedish ambassador produced only meetings with the warden and no interviews with Agiza, whose wife and five children remain in Sweden but are faced with the continual threat of deportation.
In the weeks immediately after 9/11, it seems that the CIA conducted a global vacuuming operation seeking to ‘disappear’ suspicious young Islamic men from various countries, including our own. In the course of these activities the agency acquired the names of Agiza and al-Zery, then pressured the SAPO to arrest them and turn over to a rendition team. At least some Swedish authorities involved knew that transferring any prisoner to a country where he might be tortured was a violation of Swedish law as well as of article 3 of the 1984 U.N. Convention Against Torture, which Sweden had signed and ratified. This case damaged Sweden’s reputation as a champion of international protection of human rights.....
The Swedish affair accomplished nothing other than ruining the lives of two men, a wife and children, for no reason other than showing off the hubris of the CIA....
On June 24, 2005, an Italian judge signed a 213-page criminal arrest warrant for thirteen CIA operatives, including the former Milan station chief, Robert Seldon Lady, charging them with kidnapping an Egyptian in Milan who held political refugee status in Italy..... The warrants for the thirteen CIA men and women, together with their photos, were forwarded to the European police authority, which authorized their arrest anywhere on the continent. It is the first time that a fellow NATO member has ever filed criminal complaints against employees of the United States government acting in an official capacity.....
The abductee in this [another] case is (or was) a forty-two-year-old Islamic cleric, Hassan Mustafa Osama Nasr, known as ‘Abu Omar.’ In 1991, if not earlier, Omar fled Egypt for Albania because he belonged to the outlawed organization Jamaat al-Islamiyya and the police were after him. In Tirana, the Albanian capital, he worked for four years for various Islamic charities, but did not himself participate in any illegal activities. After 9/11, the Bush administration labeled the charities he worked for as supporters of terrorists.... In 1997, he surfaced in Rome where he was granted political refugee status. Shortly thereafter, he moved to Milan....
On Monday, February 17, 2003, shortly after noon, Abu Omar was walking down the Via Guerzoni toward a mosque to attend daily prayers when he was stopped by an officer of Italy’s paramilitary carabinieri police force. According to the Milan prosecutor, Amando Spataro, the Italian carabiniere had been hired by the CIA to approach Abu Omar and conduct a routine documents check....
According to a passerby’s account, two men speaking ‘bad’ Italian then emerged from a parked white van, sprayed a chemical in Abu Omar’s face, and hustled him into the van, which drove away at high speed followed by a least one and possibly two other cars... he was transferred to a civilian Gulfstream, which departed at 8:30 that night for Cairo. When Omar’s plane arrived in Cairo early on the morning of February 18, Egyptian authorities took him into custody. Accompanying Omar to Egypt in the Gulfstream was CIA Milan station chief Robert Lady.’
Although Italian political leaders have steadfastly maintained that they did not collaborate in any way with the kidnapping, it is obvious that police authorities knew a great deal about it. The nineteen-person CIA abduction team of commandos, drivers, and lookouts left an astonishing trail of evidence that suggests they were utterly indifferent to the possibility that they were being observed....by February 1, 2003, virtually all of them were there. They did not hide in safe houses or private homes but checked into four-star palaces like the Milan Hilton ($340 a night) and the Star Hotel ($325 a night)....for between three days and three weeks....eating lavishly at gourmet restaurants, they ran up bills of at least $144,984, which they paid for with Diners Club cards that matched their fake passports....After the delivery of Abu Omar to Aviano, four of the Americans checked into luxury hotels in Venice and others took vacations along the picturesque Mediterranean cost north of Tuscany, all still on the government tab......
Unfortunately, carrying out extraordinary renditions such as the ones in Sweden and Italy, torturing captives in secret prisons, shipping weapons to Islamic jihadists without checking their backgrounds or motives, and undermining democratically elected governments that are not fully on our political wavelength are the daily work of the Central Intelligence Agency. That was not always the case nor was it the intent of its founders or the expectations of its officials during its earliest years. As conceived in the National Security Act of 1947, the CIA’a main function was to compile an analyze raw intelligence to make it useful to the president. Its job was to help him see the big picture, put the latest crisis in historical and economic perspective, give early warning on the likely crises of the future, and evaluate whether political instability in one country or another was of any importance or interest to the United States. It was a civilian, non-partisan organization, without vested interests such as those of the military-industrial complex, and staffed by seasoned, occasionally wise analysts with broad comparative knowledge of the world and our place in it. As the New York Times Tim Weiner notes, ‘Once upon a time in the Cold War, the CIA could produce strategic intelligence. It countered the Pentagon’s wildly overstated estimates of Soviet military power. It cautioned that the war in Vietnam could not be won by military force. It helped keep the Cold War cold.
One of the CIA’s best-known historians, Thomas Powers, laments... ‘the CIA, as it existed for 50 years, is gone.’ I [Chalmers Johnson] think it was actually gone long before. My own view is that President Bush’s manipulation of intelligence to deceive the country into going to war and then blaming his failure on CIA’s ‘false intelligence’ delivered only the final coup de grace to the CIA’s strategic-intelligence function. Henceforth, the CIA will no longer have even a vestigial role in trying to discern the forces influencing our foreign policies. That work will now be done, if it is done at all, by the new director of national intelligence. The downgraded CIA will attend to such things as assassinations, dirty tricks, renditions, and engineering foreign coups....
The reality was and is that presidents like having a private army and do not like to be contradicted by officials not fully under their control. Thus the clandestine service long ago began to surpass the intelligence side of the agency in terms of promotions, finances, and prestige. In May of 2006, Bush merely put strategic analysis to sleep once and for all and turned over truth-telling to a brand-new bureaucracy of personal loyalists and the vested interests of the Pentagon.
This means that we are blinder than usual in understanding what is going on in the world. But, equally important, our liberties are also seriously at risk. The CIA’s strategic intelligence did not enhance the power of the president except insofar as it allowed him to do his job more effectively. It was, in fact, a modest restraint on a rogue president trying to assume the prerogatives of a king. The CIA’s bag of dirty tricks, on the other hand, is a defining characteristic of the imperial presidency. It is a source of unchecked power that can gravely threaten the nation -- as George W. Bush’s misuse of power in starting the war in Iraq demonstrated. The so-called reforms of the CIA in 2006 have probably further shortened the life of the American republic.”
CIA Funding- Chalmers Johnson:
“Wilson [Representative Charlie Wilson] soon discovered that all of the CIA’s budget and 40 percent of the Pentagon’s budget is ‘black’ -- that is, totally hidden from the public and all but a privileged few congressmen. As a member of the Defense Appropriations Subcommittee, he could add virtually any amount of money to whatever black project he supported.”
Wednesday, February 23, 2011
Dialogue with Congressman Regarding PATRIOT ACT(1)
The following is the text of letter to me from Congressman Pete Sessions Republican of Texas. His letter is a response to my telephone call to his office requesting that he not support renewal of the PATRIOT ACT.
PETE SESSIONS
32nd District, Texas
_____________
COMMITTEE ON RULES
_____________
COMMITTEE ON
FINANCIAL SERVICES
February 15, 2011
Dear Larry,
Thank you for contacting me regarding the United and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act (USA PATRIOT Act, H.R. 514), also known as the Patriot Act. I appreciate you taking the time to share your thoughts on this important homeland security issue.
The Patriot Act, enacted shortly after the attacks on 9/11, was intended to aid law enforcement personnel by facilitating information sharing and providing more extensive methods necessary to track terrorists at the earliest states of plot formation. The act enhances the ability of authorities to conduct surveillance on terrorists, with key provisions that account for modern technologies.
The original USA PATRIOT Act passed the House of Representatives by a vote of 337-79 on October 12, 2001. In 2005, Congress passed the USA PATRIOT Improvement and Reauthorization Act of 2005 by a vote of 257-171.
On January 26, 2011, Congressman James Sensebrenner (R-WI) introduced H.R. 514 in the House of Representatives to extend expiring provisions of the USA PATRIOT Act of 2004 until February 8, 2011. On February 14, 2011, the House of Representatives passed the act by a vote of 275-144. I voted in support of the legislation because I believe the USA PATRIOT Act has bolstered the ability of national security agents to protect American citizens from attack.
In crafting of the USA PATRIOT Act, Congress provided for the delicate balance between the ability to investigate those who may be attempting terrorist activities and a citizen’s legitimate expectation of privacy. In the years since the implementation of the USA PATRIOT Act, Congress has consistently been able to ensure the right of privacy for the ordinary citizen under the legislation.
Thankfully, the United States has managed to avert any major terrorist attack since 9/11, but the threat has not subsided. We must remain vigilant guardians of our homeland and reinforce our national security laws. The provisions of the proposed renewal of the USA PATRIOT Act supplement the ability of homeland security forces to protect our interests and our people.
Thank you again for sharing your thoughts and concerns. As always, if you have questions, please do not hesitate to contact me or my Legislative Correspondent, Katy Jane Jenevein, at 202.225.2231, or by email at KatyJane.Jenevein@mail.house.gov. I look forward to hearing from you in the future.
Sincerely,
Pete Sessions
Member of Congress
PETE SESSIONS
32nd District, Texas
_____________
COMMITTEE ON RULES
_____________
COMMITTEE ON
FINANCIAL SERVICES
February 15, 2011
Dear Larry,
Thank you for contacting me regarding the United and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act (USA PATRIOT Act, H.R. 514), also known as the Patriot Act. I appreciate you taking the time to share your thoughts on this important homeland security issue.
The Patriot Act, enacted shortly after the attacks on 9/11, was intended to aid law enforcement personnel by facilitating information sharing and providing more extensive methods necessary to track terrorists at the earliest states of plot formation. The act enhances the ability of authorities to conduct surveillance on terrorists, with key provisions that account for modern technologies.
The original USA PATRIOT Act passed the House of Representatives by a vote of 337-79 on October 12, 2001. In 2005, Congress passed the USA PATRIOT Improvement and Reauthorization Act of 2005 by a vote of 257-171.
On January 26, 2011, Congressman James Sensebrenner (R-WI) introduced H.R. 514 in the House of Representatives to extend expiring provisions of the USA PATRIOT Act of 2004 until February 8, 2011. On February 14, 2011, the House of Representatives passed the act by a vote of 275-144. I voted in support of the legislation because I believe the USA PATRIOT Act has bolstered the ability of national security agents to protect American citizens from attack.
In crafting of the USA PATRIOT Act, Congress provided for the delicate balance between the ability to investigate those who may be attempting terrorist activities and a citizen’s legitimate expectation of privacy. In the years since the implementation of the USA PATRIOT Act, Congress has consistently been able to ensure the right of privacy for the ordinary citizen under the legislation.
Thankfully, the United States has managed to avert any major terrorist attack since 9/11, but the threat has not subsided. We must remain vigilant guardians of our homeland and reinforce our national security laws. The provisions of the proposed renewal of the USA PATRIOT Act supplement the ability of homeland security forces to protect our interests and our people.
Thank you again for sharing your thoughts and concerns. As always, if you have questions, please do not hesitate to contact me or my Legislative Correspondent, Katy Jane Jenevein, at 202.225.2231, or by email at KatyJane.Jenevein@mail.house.gov. I look forward to hearing from you in the future.
Sincerely,
Pete Sessions
Member of Congress
Dialogue with Congressman Regarding PATRIOT ACT(2)
Following is my response to the Congressman's letter to me:
My thanks to you, Congressman Sessions for your response to my query regarding your support of the Patriot Act which by now has passed the Senate.
I want to begin by saying that in a free society we accept the risks inherent in living in such a society.
It is not my intention to seem crass or disrespectful, but I need to point out that it seems you have not really examined the evidence submitted by the administration in its attempt to prove the need for continued unconstitutional surveillance of Americans. The provisions of this Act saddle us with unconstitutional intrusions into the privacy of law abiding Americans as several documented incidences of invasion of privacy of non-terrorists citizens have shown.
One particular provision of the Patriot Act allows for the issuance and use of national security letters (NSL’s). This provision is noted on the ACLU web site where writers are advocating significant reform of the Patriot Act:
In addition the “proofs” presented that these measures are protecting us are rather unsubstantiated and seem more “trumped up” than not. Anyone can say, “we are doing this for your protection.” But declaring it does not make it true. I have read some of the reports of plots thwarted supposedly because of the Patriot Act. I am not convinced that anything would have been different without the Patriot Act. Government so often resorts to the “magic anti-tiger rock” scenario of Lisa Simpson. When questioned as to the effectiveness of the “magic anti-tiger rock”, the response is “Well you don’t see any tigers do you?”
History has shown that once governments take on more power or take rights away, they are loath to relinquish the power or remove restrictions as typified by our present situation. The so called “climate of terror” for which this Act has been put in place to address has no end. By that I mean anything can be termed acts of terror or threats of terror and therefore become elements of this so called “climate of terror”. Consequently the suspension of our rights has no end.
Many of us out here are not pleased with this state of affairs. We do not feel that our representatives are acting in our best interest. What terrorists can cause us to have 9 to 10% unemployment? Only government acting on a perceived threat of terrorism can so restrict, and spend, and inflate the monetary supply until so many more of us are driven into poverty. Our government has overreacted to the terrorist threat and driven us deeper into poverty. How can that be considered a positive outcome?
As a nation we are hypocritical when we say we are in support of freedom but do not adhere to the structure of our own republic with its rule of law. Instead we fall prey to majority rule even when the majority is in violation of the rule of law. We have a law that prohibits government from conducting unlawful searches -- that is with out court order and probable cause. Yet we pass an act to do this anyway. Then we try to lecture other countries on freedom. How hypocritical is that?
As we recall, President FDR was denied many times the implementation of some of the main provisions of his New Deal by a Supreme Court which declared these elements unconstitutional. He proceeded to browbeat the Court, went to the people by way of “fireside chats” and announced that an out of touch Supreme Court was interpreting the Constitution in a very non progressive manner. He stated that this court was in fact standing in the way of the installation of measures that were needed to help Americans during this tragic time. FDR finally prevail. The result: we got the New Deal and unemployment proceeded to climb above 20% and stay there for some time. Can we say in the spirit of Lisa Simpson that the provisions of the New Deal saved us from 30% or even 40% unemployment? Again that seems to be the prevailing method the government uses to justify expansionism.
The framers of the Constitution knew the dangers of too much government and did not see such as a source of safety. They understood this from their experience and the record of history. Things have not changed that much in 350 years and human nature has not changed at all. We are not going to be safe or prosperous again until we return to Constitutionally restrained government. And the only way to do this is to vote “no” on laws presented that are not Constitutional regardless of any rationale presented to justify such laws.
You as my representative are not there to do your own will in favor of your best interest for reelection. You are there to protect my rights and the rights of your constituents as these rights are enumerated in the Constitution. Back in 2008 our government prepared to bail out major financial institutions that were in default. This bailout has topped 2 trillion dollars and is rising. Any pole taken at the onset of this bailout effort showed that over 90% of those poled believed that the government should not create more debt to bail out these institutions. We believed that it would have been better for the nation for these institutions to go bankrupt and their toxic assets be liquidated. In addition many of us saw no provisions in the Constitution for bailing out industries using deficit spending or any other spending. Instead of allowing the liquidation that the nation desired and the situation required, the government acted in favor of the financial institutions at the expense of the economy. It is this kind of governance that makes me not trust this government to act in my best interests or to restrain itself to Constitutional limits.
Are we to say that those Congressmen who voted against renewing the Patriot Act care less about our security than those who voted for renewal? I challenge you to show proof of your assertions that this Patriot Act is serving the interests of the American people. Just stating so is not good enough. Stating that terrible things would have happened to us were it not for the Patriot Act is also not good enough. Are we also to believe that had the Patriot Act been in effect prior to 9/11 there would have been no attack on the towers? It is my understanding that we had sufficient information regarding those responsible for the attack to prevent their activity but our agencies were inept in their ability to utilize and share the information.
There appears to be a blindness that pervades our Congress and Senate. A blindness that causes our representatives not to see the danger to our economy and way of life because of the existing size of our government and our continued direction in spending. No terrorist attack can cause a total breakdown of our economic system. Hyperinflation, however, can do that. It is government spending and monetary policy that cause inflation -- not terrorists. As I witness more people losing jobs and homes and being introduced to a new experience of poverty, I don’t see this as the result of terrorists. I see this as a result of government activity and monetary policy.
I understand that in view of your past record it is unlikely that you will change your position on the Patriot Act. It is also clear from the number of votes in favor of the act that the government has succeeded in convincing many that compromising our privacy and restricting our rights in the name of protecting us from terrorists is in our best interest. However, I am writing this letter to document that there are a number of us who do not agree with government functioning in this manner. And hopefully this number is growing.
I will be posting your letter and my response along with any subsequent responses from your office on my blog.
Thank you for your time.
Larry Enge
My thanks to you, Congressman Sessions for your response to my query regarding your support of the Patriot Act which by now has passed the Senate.
I want to begin by saying that in a free society we accept the risks inherent in living in such a society.
It is not my intention to seem crass or disrespectful, but I need to point out that it seems you have not really examined the evidence submitted by the administration in its attempt to prove the need for continued unconstitutional surveillance of Americans. The provisions of this Act saddle us with unconstitutional intrusions into the privacy of law abiding Americans as several documented incidences of invasion of privacy of non-terrorists citizens have shown.
One particular provision of the Patriot Act allows for the issuance and use of national security letters (NSL’s). This provision is noted on the ACLU web site where writers are advocating significant reform of the Patriot Act:
“NSLs permit the government to obtain the communication, financial and credit records of anyone deemed relevant to a terrorism investigation even if that person is not suspected of unlawful behavior. Numerous Department of Justice Inspector General reports have confirmed that tens of thousands of these letters are issued every year and they are used to collect information on people two and three times removed from a terrorism suspect. NSLs also come with a nondisclosure requirement that precludes a court from determining whether the gag is necessary to protect national security. The NSL provisions should be amended so that they collect information only on suspected terrorists and the gag should be modified to permit meaningful court review for those who wish to challenge nondisclosure orders.”
In addition the “proofs” presented that these measures are protecting us are rather unsubstantiated and seem more “trumped up” than not. Anyone can say, “we are doing this for your protection.” But declaring it does not make it true. I have read some of the reports of plots thwarted supposedly because of the Patriot Act. I am not convinced that anything would have been different without the Patriot Act. Government so often resorts to the “magic anti-tiger rock” scenario of Lisa Simpson. When questioned as to the effectiveness of the “magic anti-tiger rock”, the response is “Well you don’t see any tigers do you?”
History has shown that once governments take on more power or take rights away, they are loath to relinquish the power or remove restrictions as typified by our present situation. The so called “climate of terror” for which this Act has been put in place to address has no end. By that I mean anything can be termed acts of terror or threats of terror and therefore become elements of this so called “climate of terror”. Consequently the suspension of our rights has no end.
Many of us out here are not pleased with this state of affairs. We do not feel that our representatives are acting in our best interest. What terrorists can cause us to have 9 to 10% unemployment? Only government acting on a perceived threat of terrorism can so restrict, and spend, and inflate the monetary supply until so many more of us are driven into poverty. Our government has overreacted to the terrorist threat and driven us deeper into poverty. How can that be considered a positive outcome?
As a nation we are hypocritical when we say we are in support of freedom but do not adhere to the structure of our own republic with its rule of law. Instead we fall prey to majority rule even when the majority is in violation of the rule of law. We have a law that prohibits government from conducting unlawful searches -- that is with out court order and probable cause. Yet we pass an act to do this anyway. Then we try to lecture other countries on freedom. How hypocritical is that?
As we recall, President FDR was denied many times the implementation of some of the main provisions of his New Deal by a Supreme Court which declared these elements unconstitutional. He proceeded to browbeat the Court, went to the people by way of “fireside chats” and announced that an out of touch Supreme Court was interpreting the Constitution in a very non progressive manner. He stated that this court was in fact standing in the way of the installation of measures that were needed to help Americans during this tragic time. FDR finally prevail. The result: we got the New Deal and unemployment proceeded to climb above 20% and stay there for some time. Can we say in the spirit of Lisa Simpson that the provisions of the New Deal saved us from 30% or even 40% unemployment? Again that seems to be the prevailing method the government uses to justify expansionism.
The framers of the Constitution knew the dangers of too much government and did not see such as a source of safety. They understood this from their experience and the record of history. Things have not changed that much in 350 years and human nature has not changed at all. We are not going to be safe or prosperous again until we return to Constitutionally restrained government. And the only way to do this is to vote “no” on laws presented that are not Constitutional regardless of any rationale presented to justify such laws.
You as my representative are not there to do your own will in favor of your best interest for reelection. You are there to protect my rights and the rights of your constituents as these rights are enumerated in the Constitution. Back in 2008 our government prepared to bail out major financial institutions that were in default. This bailout has topped 2 trillion dollars and is rising. Any pole taken at the onset of this bailout effort showed that over 90% of those poled believed that the government should not create more debt to bail out these institutions. We believed that it would have been better for the nation for these institutions to go bankrupt and their toxic assets be liquidated. In addition many of us saw no provisions in the Constitution for bailing out industries using deficit spending or any other spending. Instead of allowing the liquidation that the nation desired and the situation required, the government acted in favor of the financial institutions at the expense of the economy. It is this kind of governance that makes me not trust this government to act in my best interests or to restrain itself to Constitutional limits.
Are we to say that those Congressmen who voted against renewing the Patriot Act care less about our security than those who voted for renewal? I challenge you to show proof of your assertions that this Patriot Act is serving the interests of the American people. Just stating so is not good enough. Stating that terrible things would have happened to us were it not for the Patriot Act is also not good enough. Are we also to believe that had the Patriot Act been in effect prior to 9/11 there would have been no attack on the towers? It is my understanding that we had sufficient information regarding those responsible for the attack to prevent their activity but our agencies were inept in their ability to utilize and share the information.
There appears to be a blindness that pervades our Congress and Senate. A blindness that causes our representatives not to see the danger to our economy and way of life because of the existing size of our government and our continued direction in spending. No terrorist attack can cause a total breakdown of our economic system. Hyperinflation, however, can do that. It is government spending and monetary policy that cause inflation -- not terrorists. As I witness more people losing jobs and homes and being introduced to a new experience of poverty, I don’t see this as the result of terrorists. I see this as a result of government activity and monetary policy.
I understand that in view of your past record it is unlikely that you will change your position on the Patriot Act. It is also clear from the number of votes in favor of the act that the government has succeeded in convincing many that compromising our privacy and restricting our rights in the name of protecting us from terrorists is in our best interest. However, I am writing this letter to document that there are a number of us who do not agree with government functioning in this manner. And hopefully this number is growing.
I will be posting your letter and my response along with any subsequent responses from your office on my blog.
Thank you for your time.
Larry Enge
Thursday, February 3, 2011
Planned Parenthood: A Mirror of the Times
There are important people in my life who utilize some of the services of Planned Parenthood. Having said that I would add that other government related services are also a part of the lives of people in my life. But what this demonstrates to me is the that our government (particularly on the federal level) has done an effective job in making itself and promoting itself as not only a vital source and the supplier of last resort but as a necessary regulator of life in general.
Facing the reality that banks would control the economy (a reality brought on by the chartering of the Federal Reserve System in 1913) government has increasingly seen its mission to be to placate the populace (whose wealth was to be slowly siphoned away) with government substitutes for prosperity. A necessary part of this transition was the reeducation of the American public to believe in the necessity of central government as source and ultimate control.
In any society markets are the wealth building engines. But markets have to function efficiently to generate and secure the wealth of a society. Efficiently functioning markets also distribute wealth fairly. Those who apply the effort receive the wealth. Cartels and monopolies are difficult if not impossible to establish within a free market.
Even so in a large and complex society, government is totally necessary. Properly functioning government can assist markets in what it does best. But what we have in the West is not government that assists markets but government that controls markets. It is the model of the entire western world. Is it working? According to Fed Chairman, Bernanke, yes. According to Bernanke inflation is low (2-3%). According to other sources, it is not working. Inflation is 5-8% and rising. In fact one of the sources (Marc Faber) says that Bernanke is flat out lying.
The significance of inflation is that it is the mechanism that most effectively transfers wealth from the productive part of the society to Wall Street. It does so stealthily but very effectively. So yes, I guess it is working. But for whom? As we all know, the uber wealthy are increasing their wealth exponentially. The rest of us are treading at best but many are slipping. This is an orchestrated transfer. This is not free market function. This is control market function.
Free market benefits ordinary folks the best. Free markets are responsive to the needs and wishes of the populace because it centers around the relationship between those who need and those who supply. Even now, a free market in health care would be providing good quality care at affordable, competitive costs. In a free market we would have full employment. On the other hand controlled markets respond to the controller which would be the government. Some may say this is good since government is “the people”. For sure government promotes itself as being of the people, by the people and for the people. But does this really characterize our present federal government? I have serious doubts. So much policy is decided by those who have not been elected by “the people”. Many of these policy makers are part of the revolving door between the President’s Cabinet (all recent Presidents), Goldman Sachs, JP Morgan and the Federal Reserve. This revolving door is totally out of our control. As shown by the fact that any poll taken prior to the 2008-2009 bailouts revealed 90% or more of the people believed that AIG and others should not have been bailed out. However, at the nod of the Fed Head, they were bailed out and continue to be bailed out.
The bailout initiative has resulted in a monetary expansion of upwards of 3 trillion dollars and counting. Monetary expansion is a synonym for inflation. So when Bernanke says that inflation (the redistribution machine) is low, he can’t be telling the truth.
In government, ideology along with money rules. So the ideology that rules is the one that is voted in. In the free market place, ideology takes a secondary role and money is properly allocated. In a free market performance trumps ideology. Competition controls greed.
So the stage is set. They take the wealth and provide us with “services”. Services we could have provided for ourselves were we able to retain the wealth we as a society have generated. As a result we “need” Planned Parenthood. We “need” Social Security, food stamps, unemployment compensation, etc. All of these “needs” are a necessary part of the relationship promoted by this progressive concept of government. In addition, the fact that a dollar in 2011 is worth only about 3¢ compared to the dollar in 1913 does not mean that we have simply lost that value (wealth). Rather it means that wealth has been transferred. Wall Street now has that wealth - as if by magic.
I would much rather be able to take care of my own needs and the needs of those I love than to have to apply for “assistance” for those needs. We have forgotten that in a society with as much potential as ours we should be able to take care of ourselves. But we cannot even build an effective savings account. Because of government monetary policy, money in a savings loses value. We should be able to buy food, secure housing, acquire and sustain employment, access medical care, retire without the aid and control of government. Unfortunately I think we don’t believe that anymore. They (the money masters) have accomplished their goal well. We are all now safely wards of the state. We have attained the Orwellian paradigm. They have usurped the wealth. The stock market was up again today. There are 46 million Americans on food stamps. But we have Planned Parenthood. Soon we will have full scaled Obamacare (if the Republicans don’t derail it). Welcome to the Great Society.
Facing the reality that banks would control the economy (a reality brought on by the chartering of the Federal Reserve System in 1913) government has increasingly seen its mission to be to placate the populace (whose wealth was to be slowly siphoned away) with government substitutes for prosperity. A necessary part of this transition was the reeducation of the American public to believe in the necessity of central government as source and ultimate control.
In any society markets are the wealth building engines. But markets have to function efficiently to generate and secure the wealth of a society. Efficiently functioning markets also distribute wealth fairly. Those who apply the effort receive the wealth. Cartels and monopolies are difficult if not impossible to establish within a free market.
Even so in a large and complex society, government is totally necessary. Properly functioning government can assist markets in what it does best. But what we have in the West is not government that assists markets but government that controls markets. It is the model of the entire western world. Is it working? According to Fed Chairman, Bernanke, yes. According to Bernanke inflation is low (2-3%). According to other sources, it is not working. Inflation is 5-8% and rising. In fact one of the sources (Marc Faber) says that Bernanke is flat out lying.
The significance of inflation is that it is the mechanism that most effectively transfers wealth from the productive part of the society to Wall Street. It does so stealthily but very effectively. So yes, I guess it is working. But for whom? As we all know, the uber wealthy are increasing their wealth exponentially. The rest of us are treading at best but many are slipping. This is an orchestrated transfer. This is not free market function. This is control market function.
Free market benefits ordinary folks the best. Free markets are responsive to the needs and wishes of the populace because it centers around the relationship between those who need and those who supply. Even now, a free market in health care would be providing good quality care at affordable, competitive costs. In a free market we would have full employment. On the other hand controlled markets respond to the controller which would be the government. Some may say this is good since government is “the people”. For sure government promotes itself as being of the people, by the people and for the people. But does this really characterize our present federal government? I have serious doubts. So much policy is decided by those who have not been elected by “the people”. Many of these policy makers are part of the revolving door between the President’s Cabinet (all recent Presidents), Goldman Sachs, JP Morgan and the Federal Reserve. This revolving door is totally out of our control. As shown by the fact that any poll taken prior to the 2008-2009 bailouts revealed 90% or more of the people believed that AIG and others should not have been bailed out. However, at the nod of the Fed Head, they were bailed out and continue to be bailed out.
The bailout initiative has resulted in a monetary expansion of upwards of 3 trillion dollars and counting. Monetary expansion is a synonym for inflation. So when Bernanke says that inflation (the redistribution machine) is low, he can’t be telling the truth.
In government, ideology along with money rules. So the ideology that rules is the one that is voted in. In the free market place, ideology takes a secondary role and money is properly allocated. In a free market performance trumps ideology. Competition controls greed.
So the stage is set. They take the wealth and provide us with “services”. Services we could have provided for ourselves were we able to retain the wealth we as a society have generated. As a result we “need” Planned Parenthood. We “need” Social Security, food stamps, unemployment compensation, etc. All of these “needs” are a necessary part of the relationship promoted by this progressive concept of government. In addition, the fact that a dollar in 2011 is worth only about 3¢ compared to the dollar in 1913 does not mean that we have simply lost that value (wealth). Rather it means that wealth has been transferred. Wall Street now has that wealth - as if by magic.
I would much rather be able to take care of my own needs and the needs of those I love than to have to apply for “assistance” for those needs. We have forgotten that in a society with as much potential as ours we should be able to take care of ourselves. But we cannot even build an effective savings account. Because of government monetary policy, money in a savings loses value. We should be able to buy food, secure housing, acquire and sustain employment, access medical care, retire without the aid and control of government. Unfortunately I think we don’t believe that anymore. They (the money masters) have accomplished their goal well. We are all now safely wards of the state. We have attained the Orwellian paradigm. They have usurped the wealth. The stock market was up again today. There are 46 million Americans on food stamps. But we have Planned Parenthood. Soon we will have full scaled Obamacare (if the Republicans don’t derail it). Welcome to the Great Society.
Tuesday, August 10, 2010
CARTELS AND MONOPOLIES
Excerpts from
THE CASE AGAINST THE FED
By Murray N. Rothbard
Putting Cartelization Across: The Progressive Line
....It is important to realize that the problem faced by the big bankers was only one facet of a larger problem. Finance capital, led once again and not coincidentally by the Morgan Bank, had been trying without success to cartelize the economy on the free market. First, in the 1860s and 1870s, the Morgans, as major financiers and underwriters of America’s first big business, the railroads; tried desperately and repeatedly to cartelize railroads: to arrange railroad “pools” to restrict shipments, allocate shipments among themselves, and raise freight rates, in order to increase profits in the railroad industry. Despite the Morgan clout and a ready willingness by most of the railroad magnates, the attempts kept floundering, shattered on the rock of market competition, as individual railroads cheated on the agreement in order to pick up quick profits, and new venture capital built competing railroads to take advantage of the high cartel prices. Finally, the Morgan-led railroads turned to the federal government to regulate railroads and thereby to enforce the cartel that they could not achieve by the free market. Hence the Interstate Commerce Commission, established in 1887. (16)
In general, manufacturing firms did not become large enough to incorporate until the 1890s, and at that point the investment bankers financing the corporations, again led by the Morgans, organized a large series of giant mergers, covering literally hundreds of industries. Mergers would avoid the problem of cheating by separate individual firms, and monopoly firms could then proceed peacefully to restrict production, raise prices and increase profits for all the merged firms and stockholders. The mighty merger movement peaked from 1898 - 1902. Unfortunately, once again virtually all of these mergers flopped badly, failing to establish monopolies or monopoly prices, and in some cases steadily losing market shares from then on and even plunging into bankruptcy. Again the problem was new venture capital entering the industry and, armed with up-to-date equipment, outcompeting the cartel at the artificially high price. And once again, the Morgan financial interests, joined by other financial and big business groups, decided that they needed the government, in particular the federal government, to be their surrogate in establishing and, better yet, enforcing the cartel. (17)
The famed Progressive Era, an era of a Great Leap Forward in massive regulation of business by state and federal government, stretched approximately from 1900 or the late 1890s through World War I. The Progressive Era was essentially put through by the Morgans and their allies in order to cartelize American business and industry, to take up more effectively where the cartel and merger movements had left off. It should be clear that the Federal Reserve System, established in 1913, was part and parcel of that Progressive movement: just as the large meat packers managed to put through costly federal inspection of meat in 1906, in order to place cripplingly high costs on competing small meat packers, so the big bankers cartelized banking through the Federal Reserved System seven years later. (18)
Just as the big bankers, in trying to set up a Central Bank, had to face a public opinion suspicious of Wall Street and hostile to Central Banking, so the financiers and industrialists faced a public steeped in a tradition and ideology of free competition and hostility to monopoly. How could they get the public and legislators to go along with the fundamental transformation of the American economy toward cartels and monopoly?
The answer was the same in both cases: the big businessmen and financiers had to form an alliance with the opinion-molding classes in society, in order to engineer the consent of the public by means of crafty and persuasive propaganda. The opinion-molding classes, in previous centuries the Church, but now consisting of media people, journalists, intellectuals, economists and other academics, professionals, educators as well as ministers, had to be enlisted in this cause......
Hence the new alliance of State and Opinion-Molder, an old-fashioned union of Throne and Altar recycled and updated into a partnership of government, business leader, intellectual, and expert. During the Progressive Era, by far the most important forum established by Big Business and Finance which drew together all the leaders of these groups, hammered out a common ideology and policy program, and actually drafted and lobbied for the leading new Progressive measures of state and federal intervention, was the National Civic Federation; other similar and more specialized groups followed. (19)
It was not enough, however, for the new statist alliance of Big Business and Big Intellectuals to be formed; they had to agree, propound , and push for a common ideological line, a line that would persuade the majority of the public to adopt the new program and even greet it with enthusiasm. The new line was brilliantly successful if deceptive: that the new Progressive measures and regulations were necessary to save the public interest from sinister and exploitive Big Business monopoly, which business was achieving on the free market. Government policy, led by intellectuals, academics and disinterested experts in behalf of the public weal, was to “save” capitalism, and correct the faults and failures of the free market by establishing government control and planning in the public interest. In other words, policies, such as the Interstate Commerce Act, drafted and operated to try to enforce railroad cartels, were to be advocated in terms of bringing the the Big Bad Railroads to heel by means of democratic government action.
__________________________________
16 See Gabriel Kolko, Railroads and Regulation, 1877-1916 (Princeton: Princeton University Press, 1965).
17 See Kolko, Triumph of Conservatism, pp. 1-56; Naomi Lamoureaux, The Great Merger Movement in American Business, 1895-104 (New York: Campbridge University Press, 1985); Arthur S. Dewing, Corporate Promotions and Reorganizations (Cambridge, Mass.: Harvard University Press, 1914) and idem, The Financial Policy of Corporations, 2 vols., 5th ed. (New York: Ronald Press, 1953).
18 On meatpacking, see Kolko, Triumph of Conservatism, pp. 98 -108.
19 On the National Civic Federation, see James Weinstein, The Corporate Ideal in the Liberal State, 1890 -1918 (Boston: Beacon Press, 1968). Also see David Eakins, “The Development of Corporate Liberal Policy Research in the United States 1885 - 1965” (doctoral dissertation, Department of History, University of Wisconsin, 1966).
THE CASE AGAINST THE FED
By Murray N. Rothbard
Putting Cartelization Across: The Progressive Line
....It is important to realize that the problem faced by the big bankers was only one facet of a larger problem. Finance capital, led once again and not coincidentally by the Morgan Bank, had been trying without success to cartelize the economy on the free market. First, in the 1860s and 1870s, the Morgans, as major financiers and underwriters of America’s first big business, the railroads; tried desperately and repeatedly to cartelize railroads: to arrange railroad “pools” to restrict shipments, allocate shipments among themselves, and raise freight rates, in order to increase profits in the railroad industry. Despite the Morgan clout and a ready willingness by most of the railroad magnates, the attempts kept floundering, shattered on the rock of market competition, as individual railroads cheated on the agreement in order to pick up quick profits, and new venture capital built competing railroads to take advantage of the high cartel prices. Finally, the Morgan-led railroads turned to the federal government to regulate railroads and thereby to enforce the cartel that they could not achieve by the free market. Hence the Interstate Commerce Commission, established in 1887. (16)
In general, manufacturing firms did not become large enough to incorporate until the 1890s, and at that point the investment bankers financing the corporations, again led by the Morgans, organized a large series of giant mergers, covering literally hundreds of industries. Mergers would avoid the problem of cheating by separate individual firms, and monopoly firms could then proceed peacefully to restrict production, raise prices and increase profits for all the merged firms and stockholders. The mighty merger movement peaked from 1898 - 1902. Unfortunately, once again virtually all of these mergers flopped badly, failing to establish monopolies or monopoly prices, and in some cases steadily losing market shares from then on and even plunging into bankruptcy. Again the problem was new venture capital entering the industry and, armed with up-to-date equipment, outcompeting the cartel at the artificially high price. And once again, the Morgan financial interests, joined by other financial and big business groups, decided that they needed the government, in particular the federal government, to be their surrogate in establishing and, better yet, enforcing the cartel. (17)
The famed Progressive Era, an era of a Great Leap Forward in massive regulation of business by state and federal government, stretched approximately from 1900 or the late 1890s through World War I. The Progressive Era was essentially put through by the Morgans and their allies in order to cartelize American business and industry, to take up more effectively where the cartel and merger movements had left off. It should be clear that the Federal Reserve System, established in 1913, was part and parcel of that Progressive movement: just as the large meat packers managed to put through costly federal inspection of meat in 1906, in order to place cripplingly high costs on competing small meat packers, so the big bankers cartelized banking through the Federal Reserved System seven years later. (18)
Just as the big bankers, in trying to set up a Central Bank, had to face a public opinion suspicious of Wall Street and hostile to Central Banking, so the financiers and industrialists faced a public steeped in a tradition and ideology of free competition and hostility to monopoly. How could they get the public and legislators to go along with the fundamental transformation of the American economy toward cartels and monopoly?
The answer was the same in both cases: the big businessmen and financiers had to form an alliance with the opinion-molding classes in society, in order to engineer the consent of the public by means of crafty and persuasive propaganda. The opinion-molding classes, in previous centuries the Church, but now consisting of media people, journalists, intellectuals, economists and other academics, professionals, educators as well as ministers, had to be enlisted in this cause......
Hence the new alliance of State and Opinion-Molder, an old-fashioned union of Throne and Altar recycled and updated into a partnership of government, business leader, intellectual, and expert. During the Progressive Era, by far the most important forum established by Big Business and Finance which drew together all the leaders of these groups, hammered out a common ideology and policy program, and actually drafted and lobbied for the leading new Progressive measures of state and federal intervention, was the National Civic Federation; other similar and more specialized groups followed. (19)
It was not enough, however, for the new statist alliance of Big Business and Big Intellectuals to be formed; they had to agree, propound , and push for a common ideological line, a line that would persuade the majority of the public to adopt the new program and even greet it with enthusiasm. The new line was brilliantly successful if deceptive: that the new Progressive measures and regulations were necessary to save the public interest from sinister and exploitive Big Business monopoly, which business was achieving on the free market. Government policy, led by intellectuals, academics and disinterested experts in behalf of the public weal, was to “save” capitalism, and correct the faults and failures of the free market by establishing government control and planning in the public interest. In other words, policies, such as the Interstate Commerce Act, drafted and operated to try to enforce railroad cartels, were to be advocated in terms of bringing the the Big Bad Railroads to heel by means of democratic government action.
__________________________________
16 See Gabriel Kolko, Railroads and Regulation, 1877-1916 (Princeton: Princeton University Press, 1965).
17 See Kolko, Triumph of Conservatism, pp. 1-56; Naomi Lamoureaux, The Great Merger Movement in American Business, 1895-104 (New York: Campbridge University Press, 1985); Arthur S. Dewing, Corporate Promotions and Reorganizations (Cambridge, Mass.: Harvard University Press, 1914) and idem, The Financial Policy of Corporations, 2 vols., 5th ed. (New York: Ronald Press, 1953).
18 On meatpacking, see Kolko, Triumph of Conservatism, pp. 98 -108.
19 On the National Civic Federation, see James Weinstein, The Corporate Ideal in the Liberal State, 1890 -1918 (Boston: Beacon Press, 1968). Also see David Eakins, “The Development of Corporate Liberal Policy Research in the United States 1885 - 1965” (doctoral dissertation, Department of History, University of Wisconsin, 1966).
Subscribe to:
Posts (Atom)