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A team of journalists investigating the global electronic waste business has unearthed a security problem too. In a Ghana market, they bought a computer hard drive containing sensitive documents belonging to U.S. government contractor Northrop Grumman.
The drive had belonged to a Fairfax, Virginia, employee who still works for the company and contained "hundreds and hundreds of documents about government contracts," said Peter Klein, an associate professor with the University of British Columbia, who led the investigation for the Public Broadcasting Service show Frontline. He would not disclose details of the documents, but he said that they were marked "competitive sensitive" and covered company contracts with the Defense Intelligence Agency, the National Aeronautics and Space Administration and the Transportation Security Agency.
The data was unencrypted, Klein said in an interview. The cost? US$40.
Northrop Grumman is not sure how the drive ended up in a Ghana market, but apparently the company had hired an outside vendor to dispose of the PC. "Based on the documents we were shown, we believe this hard drive may have been stolen after one of our asset-disposal vendors took possession of the unit," the Northrop Grumman said in a statement. "Despite sophisticated safeguards, no company can inoculate itself completely against crime." Read more.
Investigating Khobar Towers: How a Saudi Deception Protected bin Laden
A five part series on Inter Press Service
Part 1: Al Qaeda Excluded from the Suspects List
By Gareth Porter*
WASHINGTON, Jun 22 (IPS) - On Jun. 25, 1996, a massive truck bomb exploded at a building in the Khobar Towers complex in Khobar, Saudi Arabia, which housed U.S. Air Force personnel, killing 19 U.S. airmen and wounding 372.
Immediately after the blast, more than 125 agents from the U.S. Federal Bureau of Investigation (FBI) were ordered to the site to sift for clues and begin the investigation of who was responsible. But when two U.S. embassy officers arrived at the scene of the devastation early the next morning, they found a bulldozer beginning to dig up the entire crime scene.
Hi Doug, Doug and Tom of "Wake Up Daytona" on WELE 1380 AM,
I've been listening in and am glad to hear you guys talking about the U.S. Constitution, the Founding Fathers, and "the Rule Of Law" on your program. Hopefully you will take the time to watch the following short YouTube videos from the recent gathering in Tampa of the Florida Oathkeepers and the speeches given by the national commander of The Patriots, Lt. Col. Robert M. Bowman, and the coordinator for the Orlando chapter of We Are Change Florida, Joshua Parrish.
Major Forum About Justice Department’s Misconduct Features Rep. John Conyers & Former U.S. Judge U.W. Clemon June 26 In DC
U.S. House Judiciary Committee Chairman John Conyers, Jr. (D-MI) is scheduled to keynote an unprecedented conference June 26 about misconduct allegations against the U.S. Department of Justice. The 8 to 11 a.m. forum is at the National Press Club in Washington, DC.
Military Officials Plead Guilty to Felony Charges Over Afghanistan Defense Contracts Military Officials Plead Guilty to Felony Charges Over Afghanistan Defense Contracts
Written By The Public Record
Two U.S. military officials pleaded guilty to various bribery, fraud and conspiracy charges relating to Department of Defense (DOD) contracts in Afghanistan. A third military official pleaded guilty to receiving stolen property, which was obtained through the bribery conspiracy. In addition, four DOD contractors and four affiliated contracting companies were indicted for their roles in paying bribes to the military officials and otherwise defrauding the United States.
The pleas of the military officials were filed today in U.S. District Court in Chicago. A superseding indictment of the contractors and companies was filed yesterday in U.S. District Court in Chicago.
"As the United States continues to expend resources in Afghanistan, the Antitrust Division will remain vigilant in prosecuting individuals and companies who divert funds for their personal gain," said Christine A. Varney, Assistant Attorney General in charge of the Department’s Antitrust Division. Read more.
Two militants' leaders who defected from notorious Taliban chief in Pakistan have revealed that their comrade was pursuing a US-Israeli agenda across the country.
A prominent militant leader, Turkistan Bittani, who broke away from Baitullah Mehsud, called him "an American agent".
Mehsud, a warlord in his late 30s, has claimed responsibility for dozens of devastating string attacks on both civilians and security forces throughout the feared region.
Moreover, Baetani emphasized that Mehsud was being funded by US and Israeli intelligence services for brainwashing innocent youths.
The insurgents' chief has recruited several teenagers who have carried out dozens of suicide attacks on Pakistani mosques and educational institutes over some past months. Read more.
By Dave Lindorff
The Obama administration and the Congressional Democrats are finally hitting the inevitable wall that was bound to confront them because of the president’s congenital inability to be a bold leader, and because of the party’s toxic decades-old decision to betray its working class New Deal base in favor of wholesale corporate whoredom.
The wall is health care reform, which both Barack Obama and the Democratic Party had hoped would be the ticket for them to ride to victory in the 2010 Congressional elections and the 2012 presidential election.
But you cannot achieve the twin goals of reducing health care costs and providing access to health care to 50 million uninsured people, while leaving the profit centers of the current system—doctors, hospitals and the health insurance industry—in charge and in a position to continue to reap profits.
Breaking News: U.S. Attorney Alice Martin Out by Friday
by alpolitics | Daily Kos
Alice Martin, embattled U.S Attorney for the Northern District of Alabama, announced today that she will resign effective this Friday. Assistant U.S. Attorney Joyce Vance has been nominated to replace her and the Senate Judiciary Committee will likely vote on her acceptance this Thursday. Vance is very highly regarded in the Alabama legal community.
Martin has a high national profile for the Eric Rudolph case as well as public corruption cases including those involved in the two-year college scandal and former Alabama Governor Don Siegelman. Martin will leave a legacy that will be interpreted in two different ways. Some will see her as a successful prosecutor of public corruption cases. Others will see her as politically motivated and tainted with allegations of misconduct in several different cases. This community will likely remember her for her involvement in the Don Siegelman case. Read more.
A government audit found that the State Department overpaid the contract-security firm once known as Blackwater
Worldwide by tens of millions of dollars because the company failed to properly staff its teams in Iraq.
The report didn't identify any specific security breaches, but it said the State Department should have withheld at least $55 million in payments to the company because of the shortfalls.
The audit by the Special Inspector General for Iraq Reconstruction and the State Department's Inspector General said the firm didn't employ enough guards, medics, marksmen and dog handlers to fully man the teams, which were responsible for protecting the U.S. ambassador to Iraq and other high-level officials.
The failure to consistently field the right numbers of guards endangered the U.S. officials whom the company was being paid to protect, the report concluded. Read more.
J. Turley: Senatorial Privilege? Sen. Dick Durbin Cashed Out His Stocks and Shares After Meeting w/ Paulson & Bernake
Sen. Dick Durbin, the second most senior democrat in the Senate, cashed out his stock the day after meeting with Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke. Durbin took the money and invested much of the $115,000 in Warren Buffett’s Berkshire Hathaway Inc.
The transfers occurred on Sept. 19th. The prior day he met with Paulson and Bernanke on the banking crisis.
I have long advocated a change in the ethics rules to require blind trusts for all members of Congress. Currently, members can make killings on the market by using their access to policy changes and special tips. Read more.
Iranian Filmmaker says Mousavi was told he won:
Iranian filmmaker Makhmalbaf reports on phone call from Ministry of Internal Affairs to Mousavi HQ
Makhmalbaf's Interview on Radio Farda | June 13, 2009, 12:00 AM | Translated for The Real News Network
Makhmalbaf: Yesterday, twenty agents in civilian clothing attacked press offices of Mousavi‘s campaign at Gheitarieh. They broke all communication devices and attacked the campaign staff, including Mr. Kharazi and Mr Amirzadeh. They beat up the staff and when the people confronted them, they fired tear gas at the crowd. These were agents in civilian clothing! Then the agents attempted to runaway. About seven of them were captured by the people and were kept at the campaign headquarters. Next the police arrived at the headquarters and demanded to have custody of the seven captives and said "We would punish these lawbreakers ourselves." . "No, we need this to be court documented; we know that after the election, you will lose them", said Mr. Amirzadeh.
[I think here he is referring back to before this recording begins. This has to do with the reports from the early counts at the polls indicating that Mousavi is the winner] The Ministry of Internal Affairs contacts press offices of Mousavi's campaign to prepare a message for declaring victory on Sunday [which is Hazrate Zahra's birthday http://en.wikipedia.org/wiki/Fatimah]. Mr Mousavi said that "within the next couple of hours I will declare victory and the celebrations would be on Sunday, which is Hazrate Zahra's birthday and Mother's Day [in Iran]". Afterwards Mr. Khamenei is notified that Mr Mousavi has won the election. At first he says fine, you can communicate this to the people, but the message propagation and broadcasting should be well managed [and controlled].
Behind the scenes the news changed! All the mobile phones belonging to Mousavi's campaign got disconnected. Also from couple of days ago the SMS messaging were disabled for all the mobile phones. It was communicated to the Reformist [Eslah Talab] newspapers [the papers of Mousavi's political party] that they were the winners but were told that they must refrain from announcing the victory. The campaign's communications headquarters was shutdown and the responsibility for campaign's communications was given to me [Makhmalbaf]. This is as much as I know personally. Read more, view video
By Dave Lindorff
If you want to fix the disaster that is called the American healthcare system, the first thing to do is to clearly point out what its major failings are, and there are two of these.
The first is cost. America is one of the or possibly the most expensive places in the world to get sick or injured. The corollary of that is that it is one of the best places to make a killing if you are in the medical business, whether as a doctor, a hospital company, a pharmaceutical firm or a nursing home owner.
Momentum Builds For Ron Paul's "Fed Transparency" Act
Joe Weisenthal | Business Insider
For years, Ron Paul has been a lone voice in Congress, questioning the wisdom of the Federal Reserve -- both its various chairmans and the institution itself. His dogged questioning of Alan Greenspan, and then Ben Bernanke, make for great TV (otherwise, those hearings are total snoozefests).
But now, as America wakes up to its dire financial situation and average people talk about things like "fractional reserve lending", the gold standard, and Zimbabwe-like inflation, he's finally getting some momentum.
It's baby steps, of course. Paul is the sponsor of the Federal Reserve Transparency act of 2009, which demands a GAO audit of the Fed, and a full report to Congress sometime next year. And it's gaining steam. It already has 175 co-sponsors in the House, and now a major Democrat, Rep. Alan Grayson (ironically, the same one who's proposing that stupid France vacation bill we mentioned this morning has joined on, and is urging his party colleagues to join them. Read more.
If I was an oligarch and I wanted to buy my spoiled little shit of a son a toy that would make him laugh and laugh for hours, I'd buy him a middle-class American. Because Americans are funny the way all dupes and chumps are funny. You can trick today's Americans time and again, and they always fall for it. And when you trick them, they stomp around dramatically and make a lot of blustery noise about "the people" who allegedly "aren't going to stand much more of this" because "our founding forefathers bla bla bla" and of course the ol' "you can fool some of the people some of the time, buttcha can't fool bla bla bla..." Basically, if you've seen your Elmer Fudd, then you've seen your American sucker in all of his cartoon comic-foil glory: a sentimental buffoon, a harmless chump whose guns don't fool anyone but himself.
Every day, Americans play the role of Elmer Fudd to the oligarchy's Bugs Bunny--if you look at it from the oligarchy's point of view, at least. Read more.
GAO: No problem smuggling secret weapons out of US
By Daniel Tencer | Raw Story
You’ve got to hand it to the U.S. Government Accountability Office — they’ve got initiative.
When the government agency — which has for years been holding successive administrations’ feet to the fire over deficit spending and other management issues — was tasked with investigating how secure America’s sensitive technologies are, it set up a dummy corporation to buy American weapons and see if it could ship them to countries known as transit points for smuggling weapons.
What they managed to smuggle out of the United States was astounding: Triggers for nuclear bombs; microchips for smart missiles; components for improvised explosives; even current-issue U.S. Army body armor.
And the method they used to do it was brilliant in its simplicity: To avoid export restrictions, they set up their dummy corporation inside the United States. Then, once in possession of the equipment, they shipped it overseas....
I’ve been reading through the hot-off-the-presses, exciting 100+ page report from the Commission on Wartime Contracting: “At What Cost? Contingency Contracting In Iraq and Afghanistan.” There have been several good pieces that covered the Congressional hearings related to this report, so I thought I would just post some of the more important excerpts from the report. One general note: The Commission, which was created due to the diligent efforts of Senators Jim Webb and Claire McCaskill, has been doing some incredibly important work digging deep into the corruption, waste, abuse, fraud, etc of the US war contracting system. The statute that created the commission “requires the Commission to assess a number of factors related to wartime contracting, including the extent of waste, fraud, abuse, and mismanagement of wartime contracts. The Commission has the authority to hold hearings and to refer to the Attorney General any violation or potential violation of law it identifies in carrying out its duties.”...
In the words of ACLU attorney Ben Wizner, a lead counsel on behalf of the five detainees suing Jeppesen Dataplan, President Obama now "owns the state secrets privilege."
Wizner is correct. Remember precisely what it is that the government wants the 9th circuit to decide: that the U.S. government can dismiss any federal or civil case before it reaches the phase of discovery simply because the government asserts that the national security interests of the United States would be compromised if the case proceeds.
That's the same expansive state secrets privilege that presidents for 50 years have enjoyed -- but it's precisely the privilege that Obama, not two months ago, expressed an anxiety about: "I actually think that the state secret doctrine should be modified. I think right now it's over-broad." Obama did not elaborate. During the presidential campaign, he criticized the use of the privilege as a justiciability doctrine to dismiss entire cases, rather than as an evidentiary doctrine, used to prevent the disclosure of highly-sensitive pieces of evidence.
Why is Obama hardening up his position? If the privilege in weakened, it exposes the government to perpetual liability resulting from the mistakes of the past eight years. Read more.
Swindlers, con men, and thieves could siphon off as much as $50 billion of the government's planned stimulus package as the money begins flooding the economy in coming months, according to David Williams, who runs Deloitte Financial Services Advisory and counsels clients on fraud prevention.
Williams predicted that about $500 million of the total $787 billion stimulus would be channeled into the traditional procurement network for government contracts, while the rest will be spent directly by the government or outside the corporate network.
"The rule of thumb typically is that of the about $500 billion worth of money that's going to run through the procurement process, somewhere between 5% and 10% of that usually finds it way into potential problems," Williams said. "That's sort of the benchmark that I use."
Companies will face increased pressure to try to stem the tide, and need to be prepared to safeguard data as well as the cash, according to Williams.
Williams said this week that the money flowing from the current stimulus package is particularly vulnerable to fraud because almost all movement of money is now done electronically. Read more.
There's an easy way to find oil. Go to some remote and gorgeous natural sanctuary, say Alaska or the Amazon, find some Indians, then drill down under them.
If the indigenous folk complain, well, just shoo-them away. Shoo-ing methods include: bulldozers, bullets, crooked politicians and fake land sales.
But be aware. Lately the Natives are shoo-ing back. Last week, indigenous Peruvians seized an oil pumping station, grabbed the nine policemen guarding it and, say reports, executed them. This followed the government's murder of more than a dozen rainforest residents who had protested the seizure of their property for oil drilling.
Again and again I see it in my line of work of investigating fraud. Here are a few pit-stops on the oily trail of tears:
In the 1980s, Charles Koch was found to have pilfered about $3 worth of crude from Stanlee Ann Mattingly's oil tank in Oklahoma. Here's the weird part. Koch was (and remains) the 14th richest man on the planet, worth about $14 billion. Stanlee Ann was a dirt-poor Osage Indian.
Stanlee Ann wasn't Koch's only victim. According to secret tape recordings of a former top executive of his company, Koch Industries, the billionaire demanded that oil tanker drivers secretly siphon a few bucks worth of oil from every tank attached to a stripper well on the Osage Reservation where Koch had a contract to retrieve crude.
Koch, according to the tape, would, "giggle" with joy over the records of the theft. Koch's own younger brother Bill ratted him out, complaining that, in effect, brothers Charles and David cheated him out of his fair share of the looting which totaled over three-quarters of a billion dollars from the Native lands.
The FBI filmed the siphoning with hidden cameras, but criminal charges were quashed after quiet objections from Republican senators. Read more.
KBR Inc. wasted billions of dollars through inefficiencies, lax oversight and poor management of its contract to support U.S. troops in Iraq and Afghanistan, according to an independent, bipartisan panel.
The contract -- to provide housing, food, laundry, mail delivery and fuel for U.S. troops -- was ultimately worth $31.7 billion, with most of the work being done in Iraq and Kuwait.
“The services could have been delivered for billions of dollars less,” the commission stated in a report released today at a hearing of the House Oversight and Government Reform’s national security panel. “Substantial evidence supports the view” that KBR’s services “cost too much.”
The Wartime Contracting Commission, in its first report since Congress established it last year, gives the most critical assessment to date of the contract that Houston-based KBR, then a unit of Halliburton Co., won in December 2001, shortly after the U.S. invaded Afghanistan. Read more.
Below is an essay which Thomas Paine wrote yesterday, on the 200th anniversary of his death; he generously approached me to inquire as to whether I would be willing to transcribe it for your readers and others who might benefit from his posthumous words of wisdom.~~Sean Madden
I, Thomas Paine, Two Hundred Years Hence*
It is Monday, 8 June 2009, two hundred years to the day since my miserable death, though I should add that while death was, indeed, miserable it was a swim in the sea compared with my life as it finally turned out. However, I have been dead for too long to want to harp on those wretched final years of my life—the assassination of my character, of my person, the unspeakable hypocrisy of it all, my freefall from grace and renown, the poverty, ill health, my seeking refuge in a bottle. But if there remains even one son or daughter of Liberty and Democracy in this present day—that is, the person to and for whom I write, as opposed to those who celebrate the cartoon Tom Paine, never thinking to read my works or to carry forth the struggle—then I should think that such a son or daughter of Liberty is unlikely to protest my assuming the privilege of penning this brief posthumous account. If not a single such person remains who is, in word and deed, committed to Liberty and Democracy—the only fit state for a human being who wishes to live as a whole person and who refuses to be infantilised—then rather than to assume the privilege, if there’s none worthy to grant it, I shall steal it back as rightfully my own.
I can quite quickly sum up what befell me and what has befallen countless other revolutionaries over the course of history; however, I do so not out of a desire or need to explain myself, but rather as a word of warning to those whom I consider my rightful progeny. My task is made easier by the fact that my rightful progeny, by the nature of the task which lies before them, shall already have apprised themselves of the historical accounts of revolutions, failed and successful, if in fact there has ever been an example of the latter. In brief, revolutionaries with integrity—those who hold, still, to the original stated aims of the revolution, the aims of Liberty and Democracy—are, at the point of the revolution’s failure (as opposed to the success touted in history books), quickly stripped of their honours, hollowed out, and hung safely out to die so that the ‘revolutionaries’ who were merely playing a part can usurp The Powers That Were to become those That Be. This perverted outcome must be avoided, and it shall not be avoided unless those who are in the struggle forever keep this near-inevitable outcome in mind, day in and day out, and for ever more, as the innumerable false actors lie constantly in wait.
Alabama Decisions Illustrate Abuse of Judicial Power
By Andrew Kreig | Huffington Post
The plight of litigants who face a biased judge is illustrated by the track record of a prominent Alabama federal judge, as well by major recent decisions requiring new trials in West Virginia and Georgia courts.
The track record of Chief U.S. District Judge Mark E. Fuller of Montgomery, Alabama shows that he continues to supervise cases compromised by his personal, financial or political interests despite his promise at his 2002 confirmation hearing to recuse himself from any conflicts.
By Dave Lindorff
My bank, a small regional institution that was not involved in sub-prime lending, and that was not a recipient of any TARP bailout money, cut off my home equity line of credit two weeks ago. They did it abruptly, with no notice—I only discovered it had happened when I tried to get a $500 advance from it to cover a payment I was making on my credit card. When I asked what was going on, the local branch manager informed me that “we are closing out a lot of credit lines while we reassess the value of houses in this region, which have been falling.”
Uncertainty in Law Circles Over New Rules for Judges
By John Schwartz | NYTimes
Lawyers across the country said Tuesday that a Supreme Court ruling on conflicts of interest among elected judges could prompt a deluge of requests for judges to recuse themselves from cases. But judges predicted that few situations would involve conflicts serious enough for the new ruling to apply.
On Monday, the court ruled that judges must remove themselves from cases that involve people who donated huge sums to help them get elected. While judges and lawyers might disagree on the consequences, legal experts said that either way, scrutiny would increase.
“You’re going to see a much greater analysis put to the campaign contributions that elected judges get,” said H. Thomas Wells Jr., the president of the American Bar Association. Read more.
Wartime Contracting Report: We Have Big, Costly Problems
By Robert O'Harrow, Jr. | Government, Inc. Blog
As promised, here's the new report by the Commission on Wartime Contracting in Iraq and Afghanistan, the organization formed by Congress to examine where all the money went.
It's a sad reminder about just how bad the contracting system has been in recent years, and all the billions that have been wasted because of poor oversight, poor planning and plain old corruption.
"The environment in Iraq and Afghanistan has been and continues to be susceptible to waste, fraud, and abuse," the report said.
The report, called "At What Cost? Contingency Contracting in Iraq and Afghanistan," contains the interim findings of the commission, which will issue a final report next year. It underscores the gloomy finding about the troubled federal procurement system from a host of other analysis in recent years.
It'll be the subject of a hearing today by the House Oversight and Government Reform Committee's national security and foreign affairs subcommittee. Read more.
Pakistan diverted U.S. aid meant for fighting Taliban terrorists to bolster its conventional warfare capabilities against India, documents indicate.
U.S. Defense Department documents accessed by the Press Trust of India reveal Islamabad secretly diverted a substantial portion of nearly $7 billion in foreign military financing and arms sales from the administration of former U.S. President George W. Bush to beef up its armed forces along the Indian border instead of fighting terrorists. Read more.
Tom wrote: When the Abu Ghraib photos were released in 2004, it seemed that most Americans were shocked by such novel and horrific images, but at least one was not. I'm talking about Alfred McCoy, who had been following the Central Intelligence Agency since the early 1970s, when it unsuccessfully tried to stop the publication of his book, The Politics of Heroin: CIA Complicity in the Global Drug Trade.
As soon as McCoy saw the now grimly iconic images of hooded figures, naked men on leashes, and the like, his reaction -- even grimmer than that of the rest of us -- was recognition. He had long been studying the CIA's pioneering research into methods of psychological torture. (The Agency had embarked on this project in the early 1950s, initially studying old Soviet and Chinese methods of interrogating and breaking prisoners.) As a result, he knew that what was unique at Abu Ghraib was not the methods of abuse, but those images. Thanks to cell phones and computers, these could be taken in quantity and passed around by anyone in the vicinity. Those photos, he also knew, were no record of aberrations: they represented policy and were recognizably out of the CIA's several-decade-old torture playbook.
That this was so still remains little understood today, even though in 2006 McCoy published an important book, A Question of Torture, on the subject (and even earlier wrote a post at TomDispatch laying out some of this grim history). His work has since been incorporated into, for instance, Jane Mayer's The Dark Side, a striking account of the war on terror as a torture fest. Yet the history offered in his book remains largely ignored or missing-in-action in our world -- and without it much of the so-called torture debate of this moment makes less sense than it should.
Recently, McCoy read a front-page New York Times piece headlined "U.S. Relies More on Aid of Allies in Terror Cases," which began this way: "The United States is now relying heavily on foreign intelligence services to capture, interrogate and detain all but the highest-level terrorist suspects seized outside the battlefields of Iraq and Afghanistan, according to current and former American government officials."
Again, McCoy quickly recognized ancient history returning to haunt us. After all, until the Bush era, American administrations regularly outsourced torture (and torture techniques) to foreign allies. So read his latest piece of missing history below and then, if you want to grasp the depths of this old story, which shows no sign of ending, get your hands on a copy of his book. (To catch a superb TomDispatch audio interview with McCoy in which he discusses the CIA's "Manhattan Project of the mind," click here.) Tom
Confronting the CIA's Mind Maze
America's Political Paralysis Over Torture
By Alfred W. McCoy
If, like me, you've been following America's torture policies not just for the last few years, but for decades, you can't help but experience that eerie feeling of déjà vu these days. With the departure of George W. Bush and Dick Cheney from Washington and the arrival of Barack Obama, it may just be back to the future when it comes to torture policy, a turn away from a dark, do-it-yourself ethos and a return to the outsourcing of torture that went on, with the support of both Democrats and Republicans, in the Cold War years.
Like Chile after the regime of General Augusto Pinochet or the Philippines after the dictatorship of Ferdinand Marcos, Washington after Bush is now trapped in the painful politics of impunity. Unlike anything our allies have experienced, however, for Washington, and so for the rest of us, this may prove a political crisis without end or exit.
Financial regulator seeks powers to curb excess speculation
By Kevin G. Hall | McClatchy Newspapers
If Congress grants the commission's wishes, big Wall Street players such as Goldman Sachs, Morgan Stanley, JP Morgan Chase and others would be subject to capital requirements, new business-conduct rules and more extensive reporting and recordkeeping requirements.
Firing the opening shot in a likely battle with Wall Street, the federal regulator who's overseeing the trading of oil contracts asked Congress on Thursday for broad powers to regulate the exotic private contracts that are thought to contribute to rising oil prices and the global financial crisis.
Testifying before the Senate Agriculture Committee, Commodity Futures Trading Commission Chairman Gary Gensler told lawmakers that he needs broad authority to bring all derivatives contracts under regulatory supervision. Derivatives involve bets that derive their value based on future prices of some underlying asset, such as oil contracts, interest rates, currency or even bonds and other forms of credit.
The new commission chief also called for an additional set of rules for swaps dealers, big global financial institutions that dominate activity in these markets. These rules would force players on both sides of a transaction in these markets to set aside cash to cover potential losses.
The global financial system nearly collapsed during the last four months of 2008 after the Federal Reserve and the Treasury Department rescued insurance giant American International Group. AIG was rescued because it had issued trillions of dollars in insurance-like private derivatives contracts and had insufficient reserves to cover its losses.
"The current financial crisis has taught us that the derivatives trading activities of a single firm can threaten the entire financial system and that all such firms should be subject to robust federal regulation," Gensler said. Read more.
What do I mean by that? Well, I mean that the power of banks and the power of bondholders are preventing the Obama administration from taking sensible decisions that place the interest of the taxpayer before that of the elite minority of bankers. The US's strategy for fixing the banking mess we are all in is inherently unjust and unfair, for it is rewarding the people who caused the crisis in the first place.
I am a development economist, and in very crude terms development economics is about how to make emerging economies grow, develop, and become like industrialised economies.
Like many others working in my profession, I am always struck by the injustices facing less developed countries in trying to break out of the arms of poverty, from global institutions that placed the interests of those who fund them - always the richer more powerful economies - above the interest of those developing countries, to global trade rules that were and are blatantly unfair.
So for those economists such as myself who opted out of analysing the world through a "neoliberal" or "neoclassical" perspective, we analyse power and how that can seriously affect, influence and manipulate trade for certain interests.
These relationships of power asymmetry can also be found within the developing countries themselves. Far too often I have worked on projects which failed, not because of poor economics or poor design, but because it went against the existing power structure in a village or industrial cluster.
That is, it was seen as disadvantageous to the existing power structures and status quo and hence those with power, prestige and a lot of money, went out of their way to stop it. Or equally as bad, they went out of their way to make sure it benefited only them.
In economic parlance, we say they "captured" the project and, of course, the funds. Read more.