Saturday, February 27, 2010

Grading Free Market Capitalism and "The Invisible Hand"

Free market capitalism is based on the idea that "the invisible hand" of the market will create the best possible outcome for the most people.

But as I noted a couple of weeks ago, the man who came up with idea of the invisible hand did not believe in unrestrained free market capitalism:

Americans have traditionally believed that the "invisible hand of the market" means that capitalism will benefit us all without requiring any oversight. However, as the New York Times notes, the real Adam Smith did not believe in a magically benevolent market which operates for the benefit of all without any checks and balances:

Smith railed against monopolies and the political influence that accompanies economic power ...

Smith worried about the encroachment of government on economic activity, but his concerns were directed at least as much toward parish councils, church wardens, big corporations, guilds and religious institutions as to the national government; these institutions were part and parcel of 18th-century government...

Smith was sometimes tolerant of government intervention, ''especially when the object is to reduce poverty.'' Smith passionately argued, ''When the regulation, therefore, is in support of the workman, it is always just and equitable; but it is sometimes otherwise when in favour of the masters.'' He saw a tacit conspiracy on the part of employers ''always and everywhere'' to keep wages as low as possible.

As Paul Krugman writes:

Adam Smith ... may have been the father of free-market economics, but he argued that bank regulation was as necessary as fire codes on urban buildings, and called for a ban on high-risk, high-interest lending, the 18th-century version of subprime.

Moreover, as I pointed out in September:

One of the leaders of the new science of financial modeling - Rama Cont - points out that Adam Smith was wrong about the "Invisible Hand".

Specifically, investors in financial markets rationally pursuing individual profit can produce outcomes that are bad for almost everyone.

As an article in City Journal notes:

Simple forecasts can also be mistaken if they fail to account for the actions of market participants themselves: investor strategies can influence prices, which in turn influence future strategies in a feedback loop that can cause considerable instability. Cont recalls the severe stock-market crash of October 1987, which seemed to strike out of the blue, since nothing significant was happening in the real economy. Subsequent research, though, blamed the crash in part on a new investment strategy, “portfolio insurance,” which a large number of fund managers had simultaneously adopted. Based on the famous Black-Scholes options-pricing model, this strategy recommended that fund managers reduce their risks by automatically selling shares whenever their values fell. But the approach didn’t take into account what would happen if many investors followed it simultaneously: a massive sell-off that could send the market plummeting. The 1987 crash was thus not provoked by events in the real economy but by a supposedly smart risk-management strategy—and the current downturn, of course, also derives at least partly from a global craze for a seemingly foolproof financial innovation...

Investors in financial markets rationally pursuing individual profit, then, can produce outcomes that are globally negative. Doesn’t that contradict classical economic theory? “Both theory and empirical facts do tend to show that, on the financial markets, the Invisible Hand does not always lead to welfare-improving general outcomes,” Cont replies.

Does this mean that free market capitalism is dead?

No. And I'm not sure that there is any better alternative.

But capitalism has to grow up and become less naive, relying less on a blind faith in "the invisible hand" and more on an understanding of human nature, including insights from the field of behavioral economics.

It must include sophisticated checks and balances to make sure that the system is not gamed, instead of childish ideas about the "inherent stability" of the market.

And it must make sure that the poker game doesn't suddenly end when one of the players gets all of the chips.

Of course, with high-frequency trading dominating the market (and see this), frontrunning, permanent bailouts (and see this), government-sponsored credit rating scams and enterprises, the creation and maintenance by the government of banks so big that their very size warps the entire system, socialism for the big boys, and all of the other shenanigans going on, we don't currently have free market capitalism.

Friday, February 26, 2010

"Bernanke Warned Congress On Wednesday That The United States Could Soon Face A Debt Crisis Like The One In Greece"

Bernanke is now joining Rosenberg, Ferguson and Faber, Edwards, Grice and many others in warning that the debt crisis rearing its head in Greece may spread to America, causing U.S. interest rates to climb.

As the Washington Times wrote yesterday:

With uncharacteristic bluntness, Federal Reserve Chairman Ben S. Bernanke warned Congress on Wednesday that the United States could soon face a debt crisis like the one in Greece, and declared that the central bank will not help legislators by printing money to pay for the ballooning federal debt.

Recent events in Europe, where Greece and other nations with large, unsustainable deficits like the United States are having increasing trouble selling their debt to investors, show that the U.S. is vulnerable to a sudden reversal of fortunes that would force taxpayers to pay higher interest rates on the debt, Mr. Bernanke said.

"It's not something that is 10 years away. It affects the markets currently," he told the House Financial Services Committee. "It is possible that bond markets will become worried about the sustainability [of yearly deficits over $1 trillion], and we may find ourselves facing higher interest rates even today."

Yes, massive debt overhangs do matter.

Contrary view: A very smart financial expert disagrees, telling me:

Higher interest rates do not equal a debt crisis.

Greece's situation is not comparable to the US. Greece's situation is comparable to that of California. It makes a big difference whether you control your currency or not.

America the Beautiful is Turning into America the Barbarian

Even after General Petraeus joined all of the experts saying that torture doesn't work, decreases national security, and is bad for our country, the Democrats are scrambling to be as pro-torture as the Republicans.

As Raw Story reports today:

Democratic leadership in the House was in disarray last night after having to withdraw the 2010 Intelligence Authorization Act, moments before it was to have been voted upon, as the result of a controversial anti-torture provision.

The amendment was added in the House Rules Committee late on Wednesday and had not previously been vetted in committee. It would have criminalized the most extreme forms of "enhanced interrogation" and provided stiff sentences for intelligence officers or medical professions who engaged in them.

Republican opposition caused the Democrats to attempt to remove the provision from the bill on Thursday by a unanimous consent agreement. When the Republicans refused to go along, the Democratic leadership was forced to pull the bill entirely.

In the wake of the debacle, there was confusion as to how the provision had gotten into the bill, and Democratic leaders appeared to be attempting to distance themselves from it.

The American Prospect had reported earlier that the amendment was proposed by House Intelligence Committee Chair Sylvestre Reyes (D-TX). After the withdrawal of the bill, however, Politico cited Democratic sources as saying that "House Rules Chairwoman Louise Slaughter attached the provision to the bill Wednesday over the objections of other House leaders." One source told RollCall (reg. req.), "No one wanted it in there," and Rep. Jane Harmon (D-CA) insisted, "It's a mystery how that language got in there."


The amendment would have banned the most extreme forms of "enhanced interrogation" -- including waterboarding, stress positions, sleep deprivation, prolonged isolation, and forced sexual acts -- and imposed sentences of up to fifteen years, or even life if a detainee died as a result of such treatment.

Instead of revealing the truth that torture doesn't work, Democrats and Republicans are both pandering to the lowest common denominator. See this, this and this.

America the Beautiful is turning into America the Barbarian before our very eyes.

Helicopter Ben and Pallet Tim

Fed chair Ben Bernanke is nicknamed "Helicopter Ben" because of his 2002 speech recommending that money be dropped from a helicopter in order to prevent deflation (and then actually doing it).

Similarly, I think we should nickname Secretary of Treasury Tim Geithner "Pallet Tim".

As I wrote last July:

A soon-to-be released report by special inspector general Neil Barofsky finds:

Many of the banks that got federal aid to support increased lending have instead used some of the money to make investments, repay debts or buy other banks

[The banks have also distributed] bailout money to pay executives fat bonuses which they used to buy gold toilets and prostitutes, and to lobby Congress to stop any meaningful reform.

The report by the special inspector general also calls on the Treasury Department to require regular, more detailed information from banks about their use of federal aid provided under the Troubled Asset Relief Program.

According to the Post, the Treasury has refused to collect such information, and:

In a written response, the Treasury again rejected that call. Officials have taken the view that the exact use of the federal aid cannot be tracked because money given to a bank is like water poured into an ocean.
But just like dye is frequently added to streams by scientists in order to trace the flow of water, Treasury could easily track the flow of bailout funds. Indeed, the government has very sophisticated software which tracks funds, which it uses in terrorism investigations. But that is all moot. The truth of the matter is that Treasury never even asked the banks to keep track of where the bailout money was going. If they ask, the banks would be required to keep track themselves.
In addition, as I have argued for years, the amount of the TARP bailouts could be much higher than $700 billion. See this and this. The amount could be in the trillions.

And Geithner's Treasury is administering trillions more through its other "emergency" programs.

Of course, Geithner's New York Fed also pushed to keep pay AIG's CDS counterparties at full value, and then to keep the deal secret.

But Pallet Tim had experience distributing large sums of money without any oversight even before he became Treasury Secretary.

In July 2009, Congressman Henry Waxman stated:

In a 13 month period from May 2003 to June 2004, the Federal Reserve sent nearly $12 billion in cash, mainly in $100 bills from the United States to Iraq. To do that, the Federal Reserve Bank in New York had to pack 281 million individual bills ... onto wooden pallets to be shipped to Iraq. The cash weighed more than 363 tons and was loaded onto C-130 cargo planes to be flown into Baghdad...

The Los Angeles Times reported at the time:

Prior audits by Stuart W. Bowen Jr., the special inspector general for Iraq reconstruction, found that more than $8.8 billion in such funds could not be properly accounted for.
Bloomberg wrote:
A report from Waxman's House Oversight and Government Reform Committee ... described contractors being told to bring big bags to collect shrink- wrapped bundles of money and one episode where a Bremer staff member was allegedly told to spend $6.75 million in a week.

"We have no way of knowing if the cash that was shipped into the green zone ended up in enemy hands,'' Waxman, a California Democrat, said at today's hearing.
I'm not too worried about the money having fallen into enemy hands. I think it is much more likely that it fell into the hands of gleeful defense contractors, like these happy fellows:

In addition, ABC noted that there might have been a partisan bias:

Rep. Paul Hodes, D-N.H., claimed that recent college graduates with Republican ties were sent to Iraq instead of experienced government personnel.

Rodes challenged, "I want to know why half the U.S. staff had never been outside of the country before and had to get a passport for the first time?"

(I'm not trying to make this a partisan issue: under the current Democratic administration, I would guess that Democratic folks are favorably getting their palms greased).

$2.4 billion of these $100 dollar bills were loaded onto pallets, put on C-130s and shipped to Iraq in June 2004:

Then, when the shipment date changed, officials had to scramble to line up U.S. Air Force C-130 cargo planes to hold the money. They did, and the $2,401,600,000 was delivered to Baghdad on June 22, 2004.

It was the largest one-time cash transfer in the history of the New York Fed
And guess who was the head of the New York Fed at the time this was going on?

Yup ... Pallet Tim.

Note: I am not implying that the Fed's shipment to Iraq were illegal (they were apparently part of a UN-sponsored Iraqi oil revenue arrangement). And I am not implying that Geithner is responsible for the theft of billions of dollars by defense contractors or others - he was never asked to oversee distribution of the funds once they arrived in Iraq, and he wasn't head of the New York Fed when the shipments started.

I am simply saying that Geithner has long been a yes-man to the powers-that-be, who ships pallets of money wherever he is told without question or any follow-up or tracking whatsoever.

Thursday, February 25, 2010

Professor Auerbach Provides More Evidence of Fed's Coverup Regarding Watergate and Iraq

Professor Robert Auerbach was kind enough to send me an email to let me know that Ron Paul read the following letter written by Auerbach into the Congressional record today:

I would like to enter into the record the following letter from Professor Robert D. Auerbach, a professor at the LBJ School of Public Affairs at the University of Texas. This letter provides additional information regarding remarks I made at yesterday's Financial Services Committee ... hearing, remarks which Federal Reserve Chairman Bernanke categorized as “bizarre.”


The head of the Federal Reserve bureaucracy should become familiar with its dismal practices.

First, consider the Fed’s coverup of the source of the $6300 in hundred dollar bills found on the Watergate burglars when they were arrested at approximately 2:30 A.M. on June 17, 1972 after they had broken into the Watergate offices of the Democratic Party. Five days after the break-in, June 22, 2003, at a board of directors’ meeting of officials at the Philadelphia Fed Bank, it was recorded in the minutes [shown on page 23 of my book] that false or misleading information had been provided to a reporter from the Washington Post about the $6,300. Bob Woodward told me he thought he was the Washington Post reporter who had made the phone inquiry. The reporter "had called to verify a rumor that these bills were stolen from this Bank" according to the Philadelphia Fed minutes. The Philadelphia Fed Bank had informed the Board on June 20 that the notes were "shipped from the Reserve Bank to Girard Trust Company in Philadelphia on April 3, 1972." The Washington Post was incorrectly informed of "thefts but told they involved old bills that were ready for destruction."

The Federal Reserve under the chairmanship of Author Burns not only kept the Fed from getting entangled in the Watergate coverup, which the Fed’s actions had assisted, it allowed false statements about bills the Fed knew were issued by the Philadelphia Fed Bank to stand uncorrected. Blocking information from the Senate and House Banking Committees [letters shown in my book, Chapter 2] and issuing false information during a perilous government crisis imposed huge costs on the public that had insufficient information to hold the Fed officials accountable for what they had withheld from the Congress. Had the deception been discovered the Fed chairmen following Burns may have been forced to rapidly implement some real transparency to restore the Fed’s credibility. That would have reduced or eliminated many of the lies, deceptions, and corrupt practices that are described in my book.

The second subject brought up by Congressman Ron Paul is the exposure of faulty examinations of the Federal Reserve of a foreign bank in Atlanta, Georgia through which $5.5 billion was sent to Saddam Hussein that a Federal Judge found to be part of United States active support for Iraq in the 1980s.

On November 9, 1993, several federal marshals brought a prisoner, Christopher Drogoul, into my office at the Rayburn House Office Building of the U.S. House of Representatives. The marshals removed the manacles. Drogoul took off his jump suit and changed into a shirt, tie, and business suit. He immediately looked like the manager of the Atlanta agency with domestic headquarters in New York City of Banca Nazionale. Drogoul had come to testify about a “scheme prosecutors said he masterminded that funneled $5.5 billion in loans to Iraq’s Hussein through BNL’s Atlanta operation. Some of the loans allegedly were used to build up Iraq’s military and nuclear arsenals in the years preceding the first Gulf War.” 1

Drogoul’s “’off book’ BNL-Atlanta funding to Iraq began in 1986 as financing for products under Department of Agriculture programs.”2 The loans allegedly had been authorized by the U.S. Department of Agriculture. Since Drogoul told the committee he was merely a tool in an ambitious scheme by the United States, Italy, Britain and Germany to secretly arm Iraq in their 1980-88 war, the testimony was politically contentious and unproven. He was sentenced in November 1993 to 37 months in prison and he had already served 20 months awaiting his sentencing hearing.

U.S. District Judge Ernest Tidwell found that the United States had actively supported Iraq in the 1980s by providing it with government-guaranteed loans even though it wasn’t creditworthy. The judge said such policies “clearly facilitated criminal conduct.”3

Gonzalez was drawn to Drogoul’s answer about the Fed examiner who had visited his Atlanta operation. Gonzalez said that:

“At the November 9, 1993 Banking Committee hearing I asked Christopher Drogoul, the convicted official of the Banca Nazionale Del Lavoro agency branch in Atlanta, Georgia, how the Federal Reserve Bank examiners could miss billions of dollars of illegal loans, most of which ended up in the hands of Hussein.

Mr. Drogoul stated:

The task of the Fed [bank examiner] was simply to confirm that the State of Georgia audit revealed no major problems. And thus, their audit of BNL usually consisted of a one or two-day review of the state of Georgia’s preliminary results, followed by a cup of espresso in the manager’s office.”

Gonzalez was appalled at the of lack of effective examination of a little storefront bank and also appalled by the gifts exchanged by officers of the New York Federal Reserve and the regulated banks in New York City where the main U.S. office of BNL was located. A description of what followed is in my book.

The Fed voted in 1995 to destroy the source transcripts of its policy making committee that had been sent to National Archives and Records Administration. Chairman Alan Greenspan had the committee vote on this destruction, telling the members: “I am not going to record these votes because we do not have to. There is no legal requirement.” (p. 104 in my book.) Greenspan thus removed any fingerprints on this act of record destruction. Donald Kohn, who is now Vice Chairman of the Board of Governors at the Federal Reserve, answered some questions I had sent to Chairman Greenspan about this destruction. Kohn replied in a letter on November 1, 2001 to me at the University of Texas that they had destroyed the source records for 1994, 1995 and 1996, they did not believe it to be illegal and there was no plan to end this practice. That is one reason why the Federal Reserve audit supported by Congressman Ron Paul is needed. The Fed must stop destroying its records.

Robert Auerbach is Professor of Public Affairs at the Lyndon Baines Johnson School of Public Affairs, The University of Texas at Austin. He was an economist with the House of Representatives Financial Services Committee during the tenure of four Federal Reserve Chairmen: Arthur Burns, William Miller, Paul Volcker, and Alan Greenspan. Auerbach also served as an economist in the U.S. Treasury's Office of Domestic Monetary Affairs during the first year of the Ronald Reagan administration and as a financial economist with the U.S. Federal Reserve System. Auerbach has been a professor of economics at the American University in Washington, D.C. (1976-83), and a professor of economics and finance at the University of California-Riverside (1983-93). He has written numerous articles, and two textbooks in banking and financial markets. He received two Masters degrees in economics, one from the University of Chicago and one from Roosevelt University, where he studied under Abba Lerner, and a Ph.D. in economics from the University of Chicago, where he studied under Milton Friedman.

1 Marcy Gordon, “Banker Imprisoned in BNL Case Tells Story to House Committee,” The Associated Press, November 9, 1993.

2 U.S. Newswire: “Former Executive of Atlanta Agency of Italian-Owned Bank Pleads Guilty to Conspiracy”, from U.S. Department of Justice, Public Affairs, June 2, 1992.

3 Peter Mantius, “Drogoul given 37 months Judge in BNL case also blasts actions of U.S. prosecutors,” The Atlanta Journal and Constitution, December 10, 1993, Section A, p. 12.

More Evidence that the Fed Sent Money to Iraq

Yesterday, I quoted an economist with the U.S. House of Representatives Financial Services Committee for eleven years who assisted with oversight of the Federal Reserve to show that there might be some basis for Ron Paul's questions to Ben Bernanke about the Federal Reserve's alleged shipment of money to Iraq.

Here is some more information.

In July 2009, Congressman Henry Waxman stated:

In a 13 month period from May 2003 to June 2004, the Federal Reserve sent nearly $12 billion in cash, mainly in $100 bills from the United States to Iraq. To do that, the Federal Reserve Bank in New York had to pack 281 million individual bills ... onto wooden pallets to be shipped to Iraq. The cash weighed more than 363 tons and was loaded onto C-130 cargo planes to be flown into Baghdad...

The Fed starting shipping the money a month after Saddam went into hiding (but long before he was captured), so the money likely did not go to Saddam. (Update: I have since discovered additional information about these shipments.) However, it shows how well the Fed can move money around the world.

And an interesting New York Times op-ed written in 2004 by Martin Mayer, a prolific financial journalist, Brookings Institution scholar, and the author of more than 30 books on financial market issues, argues:

Among [Saddam] Hussein's possessions when he was captured was three-quarters of a million dollars in United States currency in crisp new bills. Whence came the gentleman's stash?

Answering this question would help our understanding of terrorist financial networks. And if the cash is sequentially numbered, as is likely, then the question could be easily answered.

All United States currency is printed by the United States Mint, to the order of one of the 12 banks of the Federal Reserve system. It comes into circulation through a bank that has an account at the Fed for which it was printed. The Fed deducts the face value of the bills from that account, and an armored car takes them to their new owner.

That regional Federal Reserve Bank keeps a record that identifies the purchasing bank. And the purchaser knows how it disposed of the bills. When they are found all together, it means that the bank that bought the bills did not feed them out from the teller window or the cash machine, but delivered them to a single customer.

And the bank knows who that customer was. Between, say, Philadelphia and Iraq, there is no doubt a chain, perhaps involving banks in the Cayman or Channel Islands, in Abu Dhabi or Dubai. Still, each bank in the chain can give the name of the customer to which it gave these bills.

Although Saddam Hussein's government had many sanctions against it, it may well be that no laws were broken in the passage of the Federal Reserve notes from the mint to Tikrit. But it would be interesting to know which banks were collaborators in getting that cash to the tyrant of Iraq.

Unfortunately, the search for these witting or unwitting collaborators cannot even get started, because the Federal Reserve Board will not permit regional banks to reveal the identity of the purchasers of large blocks of United States currency. There is no law that prohibits such disclosure; it's simply a Fed policy. Yet in this age of payroll services and electronic payments, there are few legitimate uses outside the banking system for very large orders of hundred-dollar bills.

The Fed has always resisted placing American banks under obligation to reveal skulduggery, whether it involves drug smuggling, commercial fraud, terrorism or other international conspiracy. Banks are not, the Fed insists, law enforcement agencies. It may be that the F.B.I. has access to the Fed's records -- a spokesman for the Fed, after checking with the main office, would not say yea or nay -- but it is not clear that the F.B.I. has authority to continue such searches beyond American borders.

The Fed's manual on the Bank Secrecy Act still says that ''know your customer'' rules, while desirable, are ''not presently required by regulation or statute'' -- though the Patriot Act has spawned some rules on the identification of new customers. At any rate, the manual says rather mysteriously, such rules ''should not interfere with the relationship of the financial institution with its good customers.''

Senators Charles E. Grassley and Max Baucus, chairman and ranking member, respectively, of the Finance Committee, complained to the Treasury Department last year that not enough has been done to keep the financiers of terrorism from paying their bills through the American financial system. Perhaps Congress should tell the Fed to release its hold on information about which banks supply the bundles of cash that facilitate international crime.

The head of the UN office on drugs and crime says that drug money kept the global banking system afloat during the height of the financial crisis. Former Managing Director and board member of Wall Street investment bank Dillon Read, Catherine Austin Fitts, has long alleged that the American banking system launders huge amounts of drug money. I have no idea whether or not she is right.

In fact, I don't know anything about money laundering, drug trafficking or terrorist networks. But I might be able to guess who could keep track of that kind of information: the Fed.

Wednesday, February 24, 2010

Economist With Financial Services Committee For Eleven Years, Assisting With Oversight of the Fed, Lends Support to Ron Paul's Questions

Today, Ron Paul accused the Federal Reserve of having a hand in nefarious plots such as Watergate and arming Saddam Hussein. House Financial Services Committee Chair Barney Frank said that the Committee should look into it.

A 1992 article in the Los Angeles Times reports that the Fed had only a minor, indirect role in providing loans to Saddam (it was mainly the Department of Agriculture which made the loans, with backing from the State and Treasury Departments). The Times article also appears to say that most of the government officials involved thought that Saddam would use the loans for humanitarian purposes, and paints the Fed as the most reluctant of the involved agencies.

However, in 2008, the University of Texas published a book by Robert D. Auerbach - an economist with the U.S. House of Representatives Financial Services Committee for eleven years, assisting with oversight of the Federal Reserve, and subsequently Professor of Public Affairs at the Lyndon B. Johnson School of Public Affairs at the University of Texas at Austin - which seems to support Paul's questions.

In Deception and Abuse at the Fed, Auerbach claims:

Major instances of Fed mismanagement and abuse of power that were exposed by [House Financial Services Committee Chairman/Ranking Member Henry] Gonzalez, including:

  • Blocking Congress and the public from holding powerful Fed officials accountable by falsely declaring—for 17 years—it had no transcripts of its meetings;
  • Manipulating the stock and bond markets in 1994 under cover of a preemptive strike against inflation;
  • Allowing $5.5 billion to be sent to Saddam Hussein from a small Atlanta branch of a foreign bank—the result of faulty bank examination practices by the Fed;
  • Stonewalling Congressional investigations and misleading the Washington Post about the $6,300 found on the Watergate burglars.
You can read details of Auerbach's allegations about Iraq here, and about Watergate here.

Moreover, a 1982 article from the Miluawakee Sentinel alleges:

Police who searched the room the Watergate burglars used found $4,200 in $100 dollar bills, all numbered in sequence. [Senator] Proxmire asked the Federal Reserve Board where the money came from. As he explained in a letter to the late Rep. Wright Patman (D-Tex.), chairman of the House Banking Committee: “I got the biggest run-around [from the Federal Reserve] in years. They ducked, misled, lied, and gave me the idiot treatment."

I don't yet have an opinion as to what this means, whether Auerbach has his facts right, or whether his allegations - if true - really amount to proving that the Fed had a major role in arming Saddam or stonewalling Congressional investigators about Watergate.

Mainstream Media Refuses to Disclose that "Independent" Pundits Are Actually Lobbyists

As reporter Sebastian Jones points out (see this and this), former Congressman Richard Gephardt runs a lobbying firm representing giant insurance and pharmaceutical companies.

Retired General Barry McCaffrey sits on the board of a giant defense contractor, DynCorp, and lobbies for war.

And many other "pundits" interviewed by the mainstream news are really high-level lobbyists for giant companies, pushing their agendas.

And yet they are treated as "independent experts" by the media.

Indeed - 2 years after Jones asked the large networks why they don't have a disclaimer on the screen beneath the pundits' names saying who they really work for - nothing has been done.

The corporate media are acting like virtual "escort services" for the powerful, selling access - for a price - to viewers and to powerful government officials, instead of actually investigating and reporting on what those in power are actually doing.

And see this.

Tuesday, February 23, 2010

Foundation for the Study of Cycles: Gold to $2,000 By Late 2011, While Dollar and Stocks will Sink

I'm agnostic about different cycle systems, but - for what it's worth - the Foundation for the Study of Cycles is predicting:

  • Gold will head north of $2000 ounce by the 3rd or 4th quarter of 2011
  • This will happen in middle of a sinking stock market and economy
  • Other PMs will do well, but not as well as gold
  • A major new dollar decline will start in the 3rd quarter of 2010, and end in early 2012 (the dollar's value against gold will plummet)
  • A convergence of cycles will make 2012 a total train wreck. For example, the 500 geopolitical cycle will shift, with power and wealth heading from West to East. Other cycles will bottom during the period from late 2011 to late 2012, so things will get really ugly. The 4th quarter in 2012 will be a horrible time for America

Greenspan: Worst Financial Crisis EVER, INCLUDING the Great Depression

Greenspan just said that the current credit crunch is "by far the greatest financial crisis, globally, ever" -- including the 1930s Great Depression.

Bloomberg notes:

Greenspan said that while the economy was in worse shape in the Great Depression, the recent financial crisis was potentially more harmful than that in the 1930s because “never had short-term credit literally withdrawn.”
Greenspan also said “fiscal affairs are threatening this outlook” for recovery.

As I pointed out last May:

The following experts have said that the economic crisis could be worse than the Great Depression:

Unfortunately, virtually everything the American government has done since the crisis started has been counterproductive. See this, this, this, this, this, this, this, this, this, this and this.

The same is true of most other governments.

In the understatement of the day, Greenspan also called the recovery "extremely unbalanced," driven largely by high earners benefiting from recovering stock markets and large corporations.

Monday, February 22, 2010

How to Reach A Larger Audience

Stop preaching to the choir!

Start reaching a larger audience!

The people you talk with and the websites which publish what you write might think you're great, but the vast majority of people out there aren't hearing it.

You're Reaching a Very Small Audience

Communications experts like George Lakoff (who I recently interviewed) and Frank Luntz say that most people don't make political decisions based on fact and logic. Instead, they make decisions based on their ideas of morality and pre-existing "frames" of reference.

So if you are just reciting facts, you are not going to persuade anyone except the minority of people who reason and make decisions based on logic. (You may say "but all of the websites I read and people I talk to make decisions based on logic". Okay, but that only means that you don't read the overwhelming majority of websites or talk to the overwhelming majority of people who make decisions based on other factors. See this and this).

Associating an issue or person with an emotion is called “anchoring”.

Some words convey strong positive or negative emotions, and act as powerful anchor words. For example, in 1995, Newt Gingrich pushed the following positive words for use by politicians:

share... change... opportunity... legacy... challenge... control... truth... moral... courage... reform... prosperity... crusade... movement... children... family... debate... compete... active(ly)... we/us/our... candid(ly)... humane... pristine... provide...

liberty... commitment... principle(d)... unique... duty... precious... premise... care(ing)... tough... listen... learn... help... lead... vision... success... empower(ment)... citizen... activist... mobilize... conflict... light... dream... freedom...

peace... rights... pioneer... proud/pride... building... preserve... pro-(issue): flag, children, environment... reform... workfare... eliminate good-time in prison... strength... choice/choose... fair... protect... confident... incentive... hard work... initiative... common sense... passionate
"National security" is also, obviously, a very powerful anchor. Just using these some of these words to describe one's position helps to persuade people towards that position.

Gingrich urged the following negative words be describe one’s opponent:
decay... failure (fail)... collapse(ing)... deeper... crisis... urgent(cy)... destructive... destroy... sick... pathetic... lie... liberal... they/them... unionized bureaucracy... "compassion" is not enough... betray... consequences... limit(s)... shallow... traitors... sensationalists...

endanger... coercion... hypocrisy... radical... threaten... devour... waste... corruption... incompetent... permissive attitudes... destructive... impose... self-serving... greed... ideological... insecure... anti-(issue): flag, family, child, jobs... pessimistic... excuses... intolerant...

stagnation... welfare... corrupt... selfish... insensitive... status quo... mandate(s)... taxes... spend(ing)... shame... disgrace... punish (poor...)... bizarre... cynicism... cheat... steal... abuse of power... machine... bosses... obsolete... criminal rights... red tape... patronage
(Gingrich's buzzwords came from Luntz)

Lakoff and Luntz periodically release updated lists of anchors and frames concerning specific issues. For example, Lakoff writes today that Democrats promoting health care reform should use the words "freedom" and "life". And Luntz recently wrote that those fighting financial reform should focus on phrases such as "lobbyist loopholes", "agent of change", "government accountability", "bloated government bureaucracy". (Lakoff is on the left, and Luntz on the right. But everyone should look beyond their partisan biases to their scientific communications insights. They are, after all, two of the leading experts in field of communication).

Let's take the example of economic policy. You can write about the bailouts, credit default swaps and oligarchy until the cows come home. But you won't reach anyone who doesn't already know about those issues.

Instead, start out by framing the issue in terms the majority can understand. For example:

Obama's economic advisors - just like Bush's - are wolves in sheep's clothing. They rewarded the greed which caused the big banks to fail and brought on the collapse last year and the decay of the whole economy. We need real reform and real change, not the hypocrisy of rewarding the banksters with more bailouts. The crisis will not end until we give some some tough love to the banks to really rein in their radical corruption.
(I'm not an expert at framing, so you might be able to do better.)

Note: What should we do when we come face-to-face with a negative but powerful frame promoted by the other side? The best solution is usually to reframe it. Find a better, more powerful frame which encapsulates the truth.

The Religion Frame

The overwhelming majority - 75% - of all Americans consider themselves to be Christian. It is irrelevant for this discussion on reaching a larger audience whether or not those 75% are all living up to their values, whether every word of the Bible is true, whether Christianity is a detrimental force undermining democracy and reason, or whether all organized religion is a con.

What is important is that most Americans are Christian, and so you can't reach a wider audience unless you speak in language meaningful to Christians.

Let's take an example. The facts are that governments from around the world have admitted that they carry out false flag terror for political ends. But rounding up the confessions and facts won't persuade anyone except the small minority of people who think rationally and make decisions based on facts.

To reach a wider audience, I have to invoke Christian values, morality and the frames which are meaningful for people of faith.

For example:

  • "Punish the sinners"
  • Expose the "wolves in sheep's clothing"
  • "Root out evil"
  • "Protect national security"

You could say something like:

Traitors in Washington have - for a long time - committed sins against our country which are threatening our national security. Instead of using the world's greatest military to fight bad guys, there are sinners who have hijacked our defense apparatus for their own evil purposes.

If you think that this is beneath you, you are mistaken. Specifically, the first step is to climb up from the fog of unreason to logic. Congratulations, you've done that.

But the second step is to translate that logic into language that the majority can understand. If you don't do that, you have failed as a communicator.

For example, good science writers don't use a bunch of technical jargon. They translate that jargon into plain English that everyone can understand, and use everyday images that people will get. The same is true for any communication.

(And if you are an atheist and speaking in religious language seems dishonest, think of this as speaking a little Spanish when you travel to Mexico or a little French when you go to Paris: you're trying to converse a little in the "local language". Even if your accent is horrible, you'll get credit for trying.)

3 Brains Are Better than One

If you want to reach a larger audience, you also have to stop talking to only one out of three brains.

Yup, every person actually has 3 brains. Top-notch communicators appeal to all 3 brains.

The 3 brains are:

  • (1) The human brain (neocortex), where we handle logic, abstract thought, words, symbols and time. This is the one you've been preaching to and reaching only a small audience.
  • (2) The reptilian brain, which focuses solely on survival, fight-or-flight, and getting away from pain. This is, largely, what fearmongering politicians try to stir up.
  • (3) The mammalian brain, which handles emotions: love, indignation, compassion, envy, hope, etc. This is what, largely, what Obama's "hope" politics has focused on.

Most people incorrectly assume that if enough facts and logic are presented, people will believe the truth. In fact, psychologists, marketing experts and trial lawyers have found that facts are less persuasive for most people than emotions in reaching decisions.


The reptilian and monkey portions of our brain reach decisions based upon survival and emotion before the neocortex can make rational decisions. So facts alone won’t convince most people. Instead, stories, images and emotions are what sway most people.

For example, one political psychologist writes:

If you appeal primarily to people's reason without first getting them to feel the significance of the issue you're talking about, they're not going to be interested. From an evolutionary standpoint, our emotions play two major roles. One, our emotions appear to capture our attention, so if you don't make emotionally compelling arguments, if you don't use stories or examples to grab listeners, they won't hear important things you have to say. The other role of emotion, which is probably most crucial, is that emotions motivate us -- positive feelings pull us towards things that are generally good for us, and negative emotions move us away from things that are generally bad for us.

People are driven primarily by one of two emotions:

  • (1) Moving away from pain. People whose primary drive is to move away from pain usually believe that the world is primarily a scary and dangerous place, and that people are basically bad. Conservative political advisors typically try to manipulate this emotion.
  • (2) Moving towards pleasure. People whose primary drive is to move toward pleasure usually believe that the world is fundamentally a fair and good place, and that people are basically good. Liberal political advisors typically try to manipulate this emotion.

If someone falls into the first category, discussing how truth will help them avoid pain will be effective. For people in the second category, stressing the pleasure that truth will bring will be useful.

Of course, if you are communicating with more than one person at a time, you should mix both messages.

These illustrations brilliantly illustrate how those in power can manipulate these two emotions.

Motivating people through a moving away from pain/fear strategy works very effectively in the short run. This is because the reptilian brain reacts first and overrides the higher thinking functions. But, over time, it stops working, and the moving away from pain strategy eventually becomes ineffective. In the long run, hope and a positive vision works better than fear. The fact that we went from Bush to Obama make sense in this light.

Seeing, Hearing, Touching

Most modern people process information primarily through their visual sense. Some process information through hearing. Other process information kinesthetically (through touch and feeling).

People not living in modern societies process information primarily kinesthetically, as that is how we are biologically wired. As stated above, we are wired to make decisions largely based on feeling and emotion.

As a neuroscientist points out:

Smells and tactile stimuli are routed immediately through the amygdala the emotional seat of the brain most responsible for the fear response. To give you a simplified explanation, this means that smells and touch can evoke much more vivid memories and emotional responses than sights or sounds.

Sights and sounds are shunted first to the thalamus. The thalamus deconstructs your vision into basic chunks of information: shape, size and color. Audio signals are similarly reduced to information about volume and dissonance. Only after this has happened does the signal get passed to the amygdala and the frontal cortex. As a consequence of this slightly more circuitous route, visual and auditory cues often trigger emotions that feel less intense than those of smell and feel.

Reading books and browsing the internet are exercises in very visual mediums that are only rarely accompanied by sound, touch or smell. If you’re trying to communicate through either of these mediums, you are immediately handicapped out of three senses.

So what does this mean on a practical level?

Unless you communicate using a person's primary mode of learning (called "submodality"), you won't be speaking in his language, and so probably won't be able to persuade him.

Moreover, studies show that communications which rapidly switch back and forth between visual, auditory and kinesthetic cues best help the listener focus on the message.

Therefore, the world's top communicators will frequently and rapidly switch between "seeing", "hearing" and kinesthetic words.

Some examples of visual words and phrases are:

"I see what you mean."
"Look at what's happening."
"Can you picture that?"
"What's the big picture?"
Some examples of hearing words and phrases are:
"I hear you."
"If you listen carefully, you'll notice . . ."
"Can you hear their cries for justice?"
"That's the sound of democracy."
Some examples of kinesthetic words and phrases are:
"What would that feel like?"
"Pulled the rug out from under us."
"Tearing a hole in the Constitution"
"Getting tripped up on . . ."
"They're stabbing us in the back . . ."
An example switching submodalities could be as simple as: “I want to talk with you about the stories that we tell ourselves, the way we view the world and the way we feel as Americans.”

Obviously, multimedia is necessary for a website. Pictures which convey other senses are also effective. For example, photos of people smelling things will trigger the olfactory part of your readers' brain.

“You” Statements

The unconscious mind hears any statement using the word “you” as being directly at that particular listener.

Using a "you" statement when you are in a confrontational situation with someone will usually polarize the listener and destroy any possibility of influencing him.

A trick for getting around this is to use an “indirect you”; that is, speak in the third person. Here are some examples:
“[third person] was saying ...”

“He said ‘you wouldn’t believe’ . . .”

“She said ‘you can’t imagine how difficult . . .”

“He said ‘you would have to be, you know, disconnected from life to ignore . . .”

“She said ‘you’d have to be almost criminally disconnected from humanity to . . .”

“He said ‘you wouldn’t believe’ . . .”

“And I said to him, ‘you know, I agree.”

“Many people tell me that what they would like to say to [listener or listener’s group] is ‘you guys are . . . .’”

If you shift the rhythm of your speaking or writing, or the pace of your video or movie, the listener or viewer will have pay attention to follow you. This draws him in, and forces him to pay attention (and thus be receptive to your message). If you listen to a world-class speaker, they will pause more than you might assume, and speak quieter in parts.

Pacing your presentation is important.

Future Pacing

It can be powerful to tell a story in the future, as if its happening now. Then work your way back to the present, to connect the future and the present.

Masterful speeches can work back and forth and back forth among different time frames, interweaving present, future and even past events to make one's point and give the listener a feeling of continuity in one's vision.

Switch Levels

Similar to switching between timeframes, one can switch between levels of complexity: from the individual, to the group, to the societal, to all of humankind.

Tell how something will benefit the individual and also society. Don't just get stuck on one level or another.

Avoid Negatives

The unconscious mind usually doesn't hear negatives. It hears “not” as “is” (how do you react to "I am not a crook"?). And it doesn’t hear “un” or “dis”, or even "I will stop" or "I will end" sometimes.

As summarized in an article in the Washington Post:
The psychological insights yielded by the research, which has been confirmed in a number of peer-reviewed laboratory experiments, have broad implications for public policy. The conventional response to myths and urban legends is to counter bad information with accurate information. But the new psychological studies show that denials and clarifications, for all their intuitive appeal, can paradoxically contribute to the resiliency of popular myths.

This phenomenon may help explain why large numbers of Americans incorrectly think that Saddam Hussein was directly involved in planning the Sept 11, 2001, terrorist attacks, and that most of the Sept. 11 hijackers were Iraqi. While these beliefs likely arose because Bush administration officials have repeatedly tried to connect Iraq with Sept. 11, the experiments suggest that intelligence reports and other efforts to debunk this account may in fact help keep it alive.

The Post concludes that the studies show that "rather than deny a false claim, it is better to make a completely new assertion that makes no reference to the original myth".

So try to avoid negatives and stick to positive statements.


There is alot of information conveyed above. You will probably need to re-read this essay to get all of the fine points.

But if you're short on time, Thom Hartmann summarizes some of the most important elements of successful and persuasive communication based on modern discoveries into how people actually make decisions:
“Tell a story to capture their attention. Build into the story visual and auditory metaphors and elements, each designed to evoke emotional responses. Embed into the most emotional parts of the stories the information you want remembered. And pace the story so that listeners and viewers move to your beat
Note: If you have any ethical reservations about using these techniques, please note that I am only advocating using them to promote the truth. I am completely opposed to using psychology or marketing techniques to spread disinformation.

Why We are Susceptible to Manipulation

Biologists and sociologists tell us that our brains evolved in small groups or tribes.

As one example of how profoundly the small-group environment affected our brains, Daily Galaxy points out:

Research shows that one of the most powerful ways to stimulate more buying is celebrity endorsement. Neurologists at Erasmus University in Rotterdam report that our ability to weigh desirability and value doesn’t function normally if an item is endorsed by a well-known face. This lights up the brain’s dorsal claudate nucleus, which is involved in trust and learning. Areas linked to longer-term memory storage also fire up. Our minds overidentify with celebrities because we evolved in small tribes. If you knew someone, then they knew you. If you didn’t attack each other, you were probably pals.

Our minds still work this way, giving us the idea that the celebs we keep seeing are our acquaintances. And we want to be like them, because we’ve evolved to hate being out of the in-crowd. Brain scans show that social rejection activates brain areas that generate physical pain, probably because in prehistory tribal exclusion was tantamount to a death sentence. And scans by the National Institute of Mental Health show that when we feel socially inferior, two brain regions become more active: the insula and the ventral striatum. The insula is involved with the gut-sinking sensation you get when you feel that small. The ventral striatum is linked to motivation and reward.

In small groups, we knew everyone extremely well. No one could really fool us about what type of person they were, because we had grown up interacting with them for our whole lives.

If a tribe member dressed up and pretended he was from another tribe, we would see it in a heart-beat. It would be like seeing your father in a costume: you would recognize him pretty quickly, wouldn't you.

As the celebrity example shows, our brains can easily be fooled by people in our large modern society when we incorrectly ascribe to them the role of being someone we should trust.

As the celebrity example shows, our brains can easily be fooled by people in our large modern society when we incorrectly ascribe to them the role of being someone we should trust.

The opposite is true as well. The parts of our brain that are hard-wired to quickly recognize "outside enemies" can be fooled in our huge modern society, when it is really people we know dressed up like the "other team".

Wolf In Sheep's Clothing

Because of this hard-wiring in our brains from the days we lived in tiny tribes, we are highly susceptible to false flag attacks.

Specifically, if government agents dress up like the "other team" and stage an attack on their own country, most people's "defend the tribe" hardwiring kicks in, so they rally around their leaders and call for the heads of the "other team".

Our brains assume that we can tell truth from fiction, because they evolved in very small groups where we knew everyone extremely well, and usually could see for ourselves what was true.

On the other side of the coin, a tribal leader who talked a good game but constantly stole from and abused his group would immediately be kicked out or killed. No matter how nicely he talked, the members of the tribe would immediately see what he was doing.

But in a country of hundreds of millions of people, where the political class is shielded from the rest of the country, people don't really know what our leaders are doing with most of the time. We only see them for a couple of minutes when they are giving speeches, or appearing in photo ops, or being interviewed. It is therefore much easier for a wolf in sheep's clothing to succeed than in a small group setting.

Indeed, sociopaths would have been discovered very quickly in a small group. But in huge societies like our's, they can rise to positions of power and influence.

As with the celebrity endorsement example, our brains are running programs which were developed for an environment (a small group) we no longer live in, and so lead us astray.

Like the blind spot in our rear view mirror, we have to learn to compensate and adapt for our imperfections, or we may get clobbered.

Grow Up

The good news is that we can evolve.

While our brains have many built-in hardwired ways of thinking and processing information, they are also amazingly "plastic". We can learn and evolve and overcome our hardwiring - or at least compensate for our blind spots.

We are not condemned to being led astray by Madison Avenue advertisers and ruthless dictators and scientific frauds and fundamentalists.

We can choose to grow up as a species and reclaim our power to decide our own future.

McCain: Paulson and Bernanke Promised that the $700 Billion Troubled Asset Relief Program Would Focus on the Housing Meltdown

The Arizona Republic reports:

Sen. John McCain of Arizona ... says he was misled by then-Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke. McCain said the pair assured him that the $700 billion Troubled Asset Relief Program would focus on what was seen as the cause of the financial crisis, the housing meltdown.

"Obviously, that didn't happen," McCain said in a meeting Thursday with The Republic's Editorial Board, recounting his decision-making during the critical initial days of the fiscal crisis. "They decided to stabilize the Wall Street institutions, bail out (insurance giant) AIG, bail out Chrysler, bail out General Motors. . . . What they figured was that if they stabilized Wall Street - I guess it was trickle-down economics - that therefore Main Street would be fine."

McCain isn't the only one to say that Paulson was doing a bait-and-switch.

The TARP Inspector General found that Paulson misrepresented the too big to fail banks' health in the run-up to passage of TARP.

Congressmen Brad Sherman and Paul Kanjorski and Senator James Inhofe all say that the government warned of martial law if TARP wasn't passed (Inhofe says Paulson was the one doing the talking).

And Paulson himself has said:

During the two weeks that Congress considered the [TARP] legislation, market conditions worsened considerably. It was clear to me by the time the bill was signed on October 3rd that we needed to act quickly and forcefully, and that purchasing troubled assets—our initial focus—would take time to implement and would not be sufficient given the severity of the problem. In consultation with the Federal Reserve, I determined that the most timely, effective step to improve credit market conditions was to strengthen bank balance sheets quickly through direct purchases of equity in banks.
So Paulson knew "by the time the bill was signed" that it wouldn't be used for its advertised purpose - disposing of toxic assets - and would instead be used to give money directly to the big banks. But he didn't tell Congress before they voted to approve the TARP legislation.

Bullet-Proof Case (Not Ivins ... The FBI Cover-Up)

In a new post, vaccine expert Dr. Meryl Nass shreds the FBI's case against Bruce Ivins:

Federal Bureau of Invention: CASE CLOSED (and Ivins did it)

But FBI's report, documents and accompanying information (only pertaining to Ivins, not to the rest of the investigation) were released on Friday afternoon... which means the FBI anticipated doubt and ridicule. And the National Academies of Science (NAS) is several months away from issuing its $879,550 report on the microbial forensics, suggesting a) asking NAS to investigate the FBI's science was just a charade to placate Congress, and/or b) NAS' investigation might be uncovering things the FBI would prefer to bury, so FBI decided to preempt the NAS panel's report.
Indeed, both Lawrence Livermore National Labs and Sandia National Labs have already discredited the FBI's claims.

Back to Nass's article:
Here are today's reports from the Justice Department, AP, Washington Post and NY Times. The WaPo article ends,

The FBI's handling of the investigation has been criticized by Ivins's colleagues and by independent analysts who have pointed out multiple gaps, including a lack of hair, fiber other physical evidence directly linking Ivins to the anthrax letters. [Note by Washington's Blog: Indeed, handwriting analysis failed to link Ivins to the anthrax letters.] But despite long delays and false leads, Justice officials Friday expressed satisfaction with the outcome.

The evidence "established that Dr. Ivins, alone, mailed the anthrax letters," the Justice summary stated.

Actually, the 96 page FBI report is predicated on the assumption that the anthrax letters attack was carried out by a "lone nut." The FBI report fails to entertain the possibility that the letters attack could have involved more than one actor. The FBI admits that about 400 people may have had access to Ivins' RMR-1029 anthrax preparation, but asserts all were "ruled out" as lone perpetrators. FBI never tried to rule any out as part of a conspiracy, however.

That is only the first of many holes in FBI's case. Here is a sampling of some more.

  1. The report assumes Ivins manufactured, purified and dried the spore prep in the anthrax hot room at US Army Medical Research Institute of Infectious Diseases (USAMRIID). His colleagues say the equipment available was insufficient to do so on the scale required.
  2. But even more important, the letter spores contained a Bacillus subtilis contaminant, and silicon to enhance dispersal. FBI has never found the Bacillus subtilis strain at USAMRIID, and it has never acknowledged finding silicon there, either. If the letters anthrax was made at USAMRIID, at least small amounts of both would be there.
  3. Drs. Perry Mikesell, Ayaad Assaad and Stephen Hatfill were 3 earlier suspects. All had circumstantial evidence linking them to the case. In Hatfill's case, especially, are hints he could have been "set up." Greendale, the return address on the letters, was a suburb of Harare, Zimbabwe where Hatfill attended medical school. Hatfill wrote an unpublished book about a biowarfare attack that bears some resemblance to the anthrax case. So the fact that abundant circumstantial evidence links Ivins to the case might be a reflection that he too was "set up" as a potential suspect, before the letters were sent.
  4. FBI fails to provide any discussion of why no autopsy was performed, nor why, with Ivins under 24/7 surveillance from the house next door, with even his garbage being combed through, the FBI failed to notice that he overdosed and went into a coma. Nor is there any discussion of why the FBI didn't immediately identify tylenol as the overdose substance, and notify the hospital, so that a well-known antidote for tylenol toxicity could be given (N-acetyl cysteine, or alternatively glutathione). These omissions support the suggestion that Ivins' suicide was a convenience for the FBI. It enabled them to conclude the anthrax case, in the absence of evidence that would satisfy the courts.
  5. The FBI's alleged motive is bogus. In 2001, Bioport's anthrax vaccine could not be (legally) relicensed due to potency failures, and its impending demise provided room for Ivins' newer anthrax vaccines to fill the gap. Ivins had nothing to do with developing Bioport's vaccine, although in addition to his duties working on newer vaccines, he was charged with assisting Bioport to get through licensure.
  6. ***.
  7. The FBI's Summary states that "only a limited number of individuals ever had access to this specific spore preparation" and that the flask was under Ivins' sole and exclusive control. Yet the body of the report acknowledges hundreds of people who had access to the spores, and questions remain about the location of the spore prep during the period in question. FBI wordsmiths around this, claiming that no one at USAMRIID "legitimately" used spores from RMR1029 without the "authorization and knowledge" of Bruce Ivins. Of course, stealing spores to terrorize and kill is not a legitimate activity.
  8. FBI says that only a small number of labs had Ames anthrax, including only 3 foreign labs. Yet a quick Pub Med search of papers published between 1999 and 2004 revealed Ames anthrax was studied in at least Italy, France, the UK, Israel and South Korea as well as the US. By failing to identify all labs with access to Ames, the FBI managed to exclude potential domestic and foreign perpetrators.
  9. FBI claims that "drying anthrax is expressly forbidden by various treaties," therefore it would have to be performed clandestinely. Actually, the US government sponsored several programs that dried anthrax spores [Note by Washington's Blog: government labs in Utah and Ohio worked with dried anthrax]. Drying spores is not explicitly prohibited by the Biological Weapons Convention, though many would like it to be.
  10. The FBI report claims the anthrax letters envelopes were sold in Frederick, Md. Later it admits that millions of indistinguishable envelopes were made, with sales in Maryland and Virginia.
  11. FBI emphasizes Ivins' access to a photocopy machine, but fails to mention it was not the machine from which the notes that accompanied the spores were printed.
  12. FBI claims Ivins was able to make a spore prep of equivalent purity as the letter spores. However, Ivins had clumping in his spores, while the spores in the Daschle/Leahy letters had no clumps. Whether Ivins could make a pure dried prep is unknown, but there is no evidence he had ever done so.
  13. FBI asserts that Bioport and USAMRIID were nearly out of anthrax vaccine, to the point researchers might not have enough to vaccinate themselves. FBI further asserts this would end all anthrax research, derailing Ivins' career. In fact, USAMRIID has developed many dozens of vaccines (including those for anthrax) that were never licensed, but have been used by researchers to vaccinate themselves. There would be no vaccine shortage for researchers.
  14. Ivins certainly had mental problems. But that does not explain why the FBI accompanied Ivins' therapist, Ms. Duley (herself under charges for multiple DUIs) and assisted her to apply for a peace order against him. Nor does it explain why Duley then went into hiding, never to be heard from again.
  15. FBI obtained a voluntary collection of anthrax samples. Is that the way to conduct a multiple murder investigation: ask the scientists to supply you with the evidence to convict them? There is no report that spores were seized from anyone but Ivins, about 6 years after the attacks. This is a huge hole in the FBI's "scientific" methodology.
  16. FBI claims it investigated Bioport and others who had a financial motive for the letters attack, and ruled them out. However, FBI provides not a shred of evidence from such an investigation.
FBI gave this report its best shot. The report sounds good. It includes some new evidence. It certainly makes Ivins out to be a crazed, scary and pathetic figure. If you haven't followed this story intently, you may be convinced of his guilt.

On the other hand, there are reasons why a conspiracy makes better sense. If the FBI really had the goods, they would not be overreaching to pin the crime on a lone nut.

JFK, RFK, George Wallace, Martin Luther King, all felled by lone nuts. Even Ronald Reagan's would-be assassin was a lone nut. Now Bruce Ivins. The American public is supposed to believe that all these crimes required no assistance and no funds.

Does the FBI stand for the Federal Bureau of Invention?
Indeed, a minute's reflection will show how silly the FBI's claims are.

As I wrote in 2008:

The chief biological inspector for the U.N. Special Commission from 1994 to 1998 - who describes himself as one of the "four or five people in the whole country" who could make the type of anthrax used in the 2001 attacks - noted in testimony to Congress:

"I have maintained from the first descriptions of the material contained in the Daschle letter that the quality appeared to be such that it could be produced only by some group that was involved with a current or former state program in recent years. The level of knowledge, expertise, and experience required and the types of special equipment required to make such quality product takes time and experimentation to develop. Further, the nature of the finished dried product is such that safety equipment and facilities must be used to protect the individuals involved and to shield their clandestine activity from discovery."
Similarly, a manufacturer of specialized anthrax equipment said:
"You would need [a] chemist who is familiar with colloidal [fumed] silica, and a material science person to put it all together, and then some mechanical engineers to make this work . . . probably some containment people, if you don't want to kill anybody. You need half a dozen, I think, really smart people."
The U.N. biologist mentioned above also said that the equipment to make such high-tech anthrax does not exist at Fort Detrick, where Ivins worked. People who work at Fort Detrick have confirmed this. In other words, a lone scientist couldn't have done it without the support of a whole government laboratory. And Fort Detrick was not one such potential laboratory.
A former director of the bacteriology division at Ft. Detrick said the anthrax sent to Daschle was "so concentrated and so consistent and so clean that I would assert that Bruce could not have done that part".

I also noted in 2008:

According to the FBI, Ivins made the killer anthrax in his lab at Fort Detrick all by himself in something like 12 hours ...

Is that plausible?

Well, one of the handful of people who actually can produce the kind of high-tech weaponized anthrax used in the attacks said:

"In my opinion, there are maybe four or five people in the whole country who might be able to make this stuff, and I'm one of them," said Richard O. Spertzel, chief biological inspector for the U.N. Special Commission from 1994 to 1998. "And even with a good lab and staff to help run it, it might take me a year to come up with a product as good."
In addition, scientists at Ft. Detrick say that no one there had the equipment or knowledge to make weaponized anthrax of the type used in the letters ....

If it would take one of the handful of people who have the know-how and a good lab with staff a year, and if no one at Ivins’ lab knew how to do it, how could Ivins have made it all by himself in 12 hours without the proper equipment?
Rather than proving Ivins' guilt as a lone nut killer, the FBI has only succeeded in proving the great lengths that the government will go to cover up a crime.

Sunday, February 21, 2010

General Petraeus: Torture is Unnecessary, Hurts Our National Security and Violates Our American Values

General Petraeus - the military commander overseeing the wars in Iraq and Afghanistan - told Meet the Press Friday that torture is counterproductive:

I have always been on the record, in fact, since 2003, with the concept of living our values. And I think that whenever we have, perhaps, taken expedient measures, they have turned around and bitten us in the backside. We decided early on in the 101st Airborne Division we're just going to--look, we just said we'd decide to obey the Geneva Convention, to, to move forward with that. That has, I think, stood elements in good stead. We have worked very hard over the years, indeed, to ensure that elements like the International Committee of the Red Cross and others who see the conduct of our detainee operations and so forth approve of them. Because in the cases where that is not true, we end up paying a price for it ultimately. Abu Ghraib and other situations like that are nonbiodegradables. They don't go away. The enemy continues to beat you with them like a stick in the Central Command area of responsibility. Beyond that, frankly, we have found that the use of the interrogation methods in the Army Field Manual that was given, the force of law by Congress, that that works.
General Petraeus is, of course, correct.

Army Field Manual 34-52 Chapter 1 states:

"Experience indicates that the use of force is not necessary to gain the cooperation of sources for interrogation. Therefore, the use of force is a poor technique, as it yields unreliable results, may damage subsequent collection efforts, and can induce the source to say whatever he thinks the interrogator wants to hear."

Indeed, all of the top interrogation experts say that torture doesn't work in providing information which will keep us safe.

General Petraeus is also correct that we pay a heavy price for torture, and that the enemy uses it against us. In fact, top national security experts agree that torture reduces our national security.

And I agree wholeheartedly with General Petraeus that we should live our values. The father of our nation - George Washington - forbid the use of torture.

Torture has been used throughout history as a form of intimidation, to terrorize people into obedience. It is thus an authoritarian tactic, antithetical to democracy and the rule of law.

Finally, the type of torture used by the U.S. in the last 10 years is of a special type of torture created by Communists for the explicit purpose of extracting false confessions (see this, this, this, this and this). That's about as un-American as you can get.

Saturday, February 20, 2010

The Nazis' Murder of Jews, Communists and Gypsies In Gas Chambers Was an AMERICAN Idea

Believe it or not, the Nazis' murder of Jews, communists and gypsies using gas chambers was actually an American idea.

As the San Francisco Chronicle wrote in 2003:

the concept of a white, blond-haired, blue-eyed master Nordic race didn't originate with Hitler. The idea was created in the United States, and cultivated in California, decades before Hitler came to power. California eugenicists played an important, although little-known, role in the American eugenics movement's campaign for ethnic cleansing.

Eugenics was the pseudoscience aimed at "improving" the human race. In its extreme, racist form, this meant wiping away all human beings deemed "unfit," preserving only those who conformed to a Nordic stereotype. Elements of the philosophy were enshrined as national policy by forced sterilization and segregation laws, as well as marriage restrictions, enacted in 27 states. In 1909, California became the third state to adopt such laws. Ultimately, eugenics practitioners coercively sterilized some 60,000 Americans, barred the marriage of thousands, forcibly segregated thousands in "colonies," and persecuted untold numbers in ways we are just learning. Before World War II, nearly half of coercive sterilizations were done in California, and even after the war, the state accounted for a third of all such surgeries.

California was considered an epicenter of the American eugenics movement. During the 20th century's first decades, California's eugenicists included potent but little-known race scientists, such as Army venereal disease specialist Dr. Paul Popenoe, citrus magnate Paul Gosney, Sacramento banker Charles Goethe, as well as members of the California state Board of Charities and Corrections and the University of California Board of Regents.

Eugenics would have been so much bizarre parlor talk had it not been for extensive financing by corporate philanthropies, specifically the Carnegie Institution, the Rockefeller Foundation and the Harriman railroad fortune. They were all in league with some of America's most respected scientists from such prestigious universities as Stanford, Yale, Harvard and Princeton. These academicians espoused race theory and race science, and then faked and twisted data to serve eugenics' racist aims.

Stanford President David Starr Jordan originated the notion of "race and blood" in his 1902 racial epistle "Blood of a Nation," in which the university scholar declared that human qualities and conditions such as talent and poverty were passed through the blood.

n 1904, the Carnegie Institution established a laboratory complex at Cold Spring Harbor on Long Island that stockpiled millions of index cards on ordinary Americans, as researchers carefully plotted the removal of families, bloodlines and whole peoples. From Cold Spring Harbor, eugenics advocates agitated in the legislatures of America, as well as the nation's social service agencies and associations.

The Harriman railroad fortune paid local charities, such as the New York Bureau of Industries and Immigration, to seek out Jewish, Italian and other immigrants in New York and other crowded cities and subject them to deportation, confinement or forced sterilization.

The Rockefeller Foundation helped found the German eugenics program and even funded the program that Josef Mengele worked in before he went to Auschwitz.

Much of the spiritual guidance and political agitation for the American eugenics movement came from California's quasi-autonomous eugenic societies, such as Pasadena's Human Betterment Foundation and the California branch of the American Eugenics Society, which coordinated much of their activity with the Eugenics Research Society in Long Island. These organizations -- which functioned as part of a closely-knit network -- published racist eugenic newsletters and pseudoscientific journals, such as Eugenical News and Eugenics, and propagandized for the Nazis.


The most commonly suggested method of eugenicide in the United States was a "lethal chamber" or public, locally operated gas chambers. In 1918, Popenoe, the Army venereal disease specialist during World War I, co-wrote the widely used textbook, "Applied Eugenics," which argued, "From an historical point of view, the first method which presents itself is execution . . . Its value in keeping up the standard of the race should not be underestimated." "Applied Eugenics" also devoted a chapter to "Lethal Selection," which operated "through the destruction of the individual by some adverse feature of the environment, such as excessive cold, or bacteria, or by bodily deficiency."

Eugenic breeders believed American society was not ready to implement an organized lethal solution. But many mental institutions and doctors practiced improvised medical lethality and passive euthanasia on their own. One institution in Lincoln, Ill., fed its incoming patients milk from tubercular cows believing a eugenically strong individual would be immune. Thirty to 40 percent annual death rates resulted at Lincoln. Some doctors practiced passive eugenicide one newborn infant at a time. Others doctors at mental institutions engaged in lethal neglect.


Even the U.S. Supreme Court endorsed aspects of eugenics. In its infamous 1927 decision, Supreme Court Justice Oliver Wendell Holmes wrote, "It is better for all the world, if instead of waiting to execute degenerate offspring for crime, or to let them starve for their imbecility, society can prevent those who are manifestly unfit from continuing their kind . . . Three generations of imbeciles are enough." This decision opened the floodgates for thousands to be coercively sterilized or otherwise persecuted as subhuman. Years later, the Nazis at the Nuremberg trials quoted Holmes' words in their own defense.

Only after eugenics became entrenched in the United States was the campaign transplanted into Germany, in no small measure through the efforts of California eugenicists, who published booklets idealizing sterilization and circulated them to German officials and scientists.

Hitler studied American eugenics laws. He tried to legitimize his anti- Semitism by medicalizing it, and wrapping it in the more palatable pseudoscientific facade of eugenics. Hitler was able to recruit more followers among reasonable Germans by claiming that science was on his side. Hitler's race hatred sprung from his own mind, but the intellectual outlines of the eugenics Hitler adopted in 1924 were made in America.

During the '20s, Carnegie Institution eugenic scientists cultivated deep personal and professional relationships with Germany's fascist eugenicists. In "Mein Kampf," published in 1924, Hitler quoted American eugenic ideology and openly displayed a thorough knowledge of American eugenics. "There is today one state," wrote Hitler, "in which at least weak beginnings toward a better conception (of immigration) are noticeable. Of course, it is not our model German Republic, but the United States."


During the Reich's early years, eugenicists across America welcomed Hitler's plans as the logical fulfillment of their own decades of research and effort. California eugenicists republished Nazi propaganda for American consumption. They also arranged for Nazi scientific exhibits, such as an August 1934 display at the L.A. County Museum, for the annual meeting of the American Public Health Association.

In 1934, as Germany's sterilizations were accelerating beyond 5,000 per month, the California eugenics leader C. M. Goethe, upon returning from Germany, ebulliently bragged to a colleague, "You will be interested to know that your work has played a powerful part in shaping the opinions of the group of intellectuals who are behind Hitler in this epoch-making program. Everywhere I sensed that their opinions have been tremendously stimulated by American thought . . . I want you, my dear friend, to carry this thought with you for the rest of your life, that you have really jolted into action a great government of 60 million people."


More than just providing the scientific roadmap, America funded Germany's eugenic institutions.

By 1926, Rockefeller had donated some $410,000 -- almost $4 million in today's money -- to hundreds of German researchers. In May 1926, Rockefeller awarded $250,000 toward creation of the Kaiser Wilhelm Institute for Psychiatry. Among the leading psychiatrists at the German Psychiatric Institute was Ernst Rüdin, who became director and eventually an architect of Hitler's systematic medical repression.

Another in the Kaiser Wilhelm Institute's complex of eugenics institutions was the Institute for Brain Research. Since 1915, it had operated out of a single room. Everything changed when Rockefeller money arrived in 1929. A grant of $317,000 allowed the institute to construct a major building and take center stage in German race biology. The institute received additional grants from the Rockefeller Foundation during the next several years. Leading the institute, once again, was Hitler's medical henchman Ernst Rüdin. Rüdin's organization became a prime director and recipient of the murderous experimentation and research conducted on Jews, Gypsies and others.

Beginning in 1940, thousands of Germans taken from old age homes, mental institutions and other custodial facilities were systematically gassed. Between 50,000 and 100,000 were eventually killed.

Leon Whitney, executive secretary of the American Eugenics Society, declared of Nazism, "While we were pussy-footing around ... the Germans were calling a spade a spade."

A special recipient of Rockefeller funding was the Kaiser Wilhelm Institute for Anthropology, Human Heredity and Eugenics in Berlin. For decades,

American eugenicists had craved twins to advance their research into heredity.

The Institute was now prepared to undertake such research on an unprecedented level. On May 13, 1932, the Rockefeller Foundation in New York dispatched a radiogram to its Paris office: JUNE MEETING EXECUTIVE COMMITTEE NINE THOUSAND DOLLARS OVER THREE YEAR PERIOD TO KWG INSTITUTE ANTHROPOLOGY FOR RESEARCH ON TWINS AND EFFECTS ON LATER GENERATIONS OF SUBSTANCES TOXIC FOR GERM PLASM.

At the time of Rockefeller's endowment, Otmar Freiherr von Verschuer, a hero in American eugenics circles, functioned as a head of the Institute for Anthropology, Human Heredity and Eugenics. Rockefeller funding of that institute continued both directly and through other research conduits during Verschuer's early tenure. In 1935, Verschuer left the institute to form a rival eugenics facility in Frankfurt that was much heralded in the American eugenics press. Research on twins in the Third Reich exploded, backed by government decrees. Verschuer wrote in Der Erbarzt, a eugenics doctor's journal he edited, that Germany's war would yield a "total solution to the Jewish problem."

Verschuer had a longtime assistant. His name was Josef Mengele.


Rockefeller executives never knew of Mengele. With few exceptions, the foundation had ceased all eugenics studies in Nazi-occupied Europe before the war erupted in 1939. But by that time the die had been cast. The talented men Rockefeller and Carnegie financed, the great institutions they helped found, and the science they helped create took on a scientific momentum of their own.

As Michel Crichton wrote in 2004:

Its supporters included Theodore Roosevelt, Woodrow Wilson, and Winston Churchill. It was approved by Supreme Court justices Oliver Wendell Holmes and Louis Brandeis, who ruled in its favor. The famous names who supported it included Alexander Graham Bell, inventor of the telephone; activist Margaret Sanger; botanist Luther Burbank; Leland Stanford, founder of Stanford University; the novelist H. G. Wells; the playwright George Bernard Shaw; and hundreds of others. Nobel Prize winners gave support. Research was backed by the Carnegie and Rockefeller Foundations. The Cold Springs Harbor Institute was built to carry out this research, but important work was also done at Harvard, Yale, Princeton, Stanford and Johns Hopkins. Legislation to address the crisis was passed in states from New York to California.

These efforts had the support of the National Academy of Sciences, the American Medical Association, and the National Research Council. It was said that if Jesus were alive, he would have supported this effort.

All in all, the research, legislation and molding of public opinion surrounding the theory went on for almost half a century. Those who opposed the theory were shouted down and called reactionary, blind to reality, or just plain ignorant. But in hindsight, what is surprising is that so few people objected.


The plan was to identify individuals who were feeble-minded --- Jews were agreed to be largely feeble-minded, but so were many foreigners, as well as blacks --- and stop them from breeding by isolation in institutions or by sterilization.

Such views were widely shared. H.G. Wells spoke against "ill-trained swarms of inferior citizens." Theodore Roosevelt said that "Society has no business to permit degenerates to reproduce their kind." Luther Burbank" "Stop permitting criminals and weaklings to reproduce." George Bernard Shaw said that only eugenics could save mankind.


Eugenics research was funded by the Carnegie Foundation, and later by the Rockefeller Foundation. The latter was so enthusiastic that even after the center of the eugenics effort moved to Germany, and involved the gassing of individuals from mental institutions, the Rockefeller Foundation continued to finance German researchers at a very high level. (The foundation was quiet about it, but they were still funding research in 1939, only months before the onset of World War II.)

Since the 1920s, American eugenicists had been jealous because the Germans had taken leadership of the movement away from them. The Germans were admirably progressive. They set up ordinary-looking houses where "mental defectives" were brought and interviewed one at a time, before being led into a back room, which was, in fact, a gas chamber. There, they were gassed with carbon monoxide, and their bodies disposed of in a crematorium located on the property.

Eventually, this program was expanded into a vast network of concentration camps located near railroad lines, enabling the efficient transport and of killing ten million undesirables.

After World War II, nobody was a eugenicist, and nobody had ever been a eugenicist. Biographers of the celebrated and the powerful did not dwell on the attractions of this philosophy to their subjects, and sometimes did not mention it at all. Eugenics ceased to be a subject for college classrooms, although some argue that its ideas continue to have currency in disguised form.


The scientific establishment in both the United States and Germany did not mount any sustained protest. Quite the contrary. In Germany scientists quickly fell into line with the program. Modern German researchers have gone back to review Nazi documents from the 1930s. They expected to find directives telling scientists what research should be done. But none were necessary. In the words of Ute Deichman, "Scientists, including those who were not members of the [Nazi] party, helped to get funding for their work through their modified behavior and direct cooperation with the state." Deichman speaks of the "active role of scientists themselves in regard to Nazi race policy … where [research] was aimed at confirming the racial doctrine … no external pressure can be documented." German scientists adjusted their research interests to the new policies. And those few who did not adjust disappeared.
Appendix 1, State of Fear (Avon 2004).

Note: Obviously, not all Americans bought into crazy eugenics theories.