Aid or no aid, our message must reach the Americans: Pacify Afghanistan, no war in Pakistan, and cease turning Afghanistan into a source of regional tension.

ISLAMABAD, Pakistan—A couple of international English-language television news outlets and three U.S. officials is all that it took to throw the state of Pakistan, its sprawling media and the nation at large into a spin. There cannot be a better example to underscore that we need to create a stronger state. For almost two days last week, American news outlets created an international scare over the capital of nuclear-armed Pakistan falling to 300 militants. One international news network went as far as instructing its reporter here to end his piece with the line, ‘… from the outskirts of Islamabad,’ creating a chilling impression of a real war front.

If that was not preposterous, not a single senior official in Islamabad came out to set the record straight. The result was that the constant American-led demonization of Pakistan, which started around 2007 premised on the idea – again, a theory peddled by our allies in the U.S. – that the world should get ready for a possible military intervention in a balkanized Pakistan, gained more currency than at any other time. A few hundred hillbillies sneaking into a small town 100 kilometers from the capital were portrayed as a mortal threat capable of wiping out the state. The story created a panic in several friendly capitals and Pakistani diplomats were inundated with calls from worried foreign officials. It is stunning that two senior army officers – Generals Tariq Majeed and Ashfaq Kayani – had to intervene in strong words to counter the malicious propaganda. Our leadership-deficient political elite has apparently lost the ability to infuse confidence.

The Americans are clearly pushing Pakistan toward a civil war. Their morbid predictions for Pakistan if we don’t send our army to our tribal belt and kill every single Pakistani Pashtun are almost convincing if not considering that the core problem of instability in the entire region is the U.S. failure to bring reconciliation and peace to Afghanistan.

In their public statements, designed to generate increased pressure on Pakistan and isolate it internationally, Washington officials are pretending as if the root cause of their Afghan troubles is the Buner or Dir districts. This is deliberate misrepresentation. Are the so-called ‘Swat Taliban’ or the so called ‘Pakistani Taliban’ planning attacks on the United States? Hillary Clinton says so. But she is not telling the whole truth. Yes, Pakistan needs to ruthlessly quell any challenge to the state and kill the terrorists. That is our problem. But we need to do this in our own way using a combination of soft and hard power without turning our territory into a war zone and our ordinary people into enemies. The U.S. needs to help us in this with money and weapons because this problem is a spillover from the huge American blunders in Afghanistan.

But Islamabad needs to draw a line at the feverish American effort to shift the failed Afghan war to Pakistan and insist that Washington defuse the tensions inside Afghanistan first. We need to explain this to NATO member nations. Our media needs to hammer the point. Washington is using its powerful media projection ability to remove Afghanistan from news headlines and focus on Pakistan. Pakistani officials need to be skeptics. They should remember the saying, ‘Only the paranoid survive.’ A nuclear-armed nation that cannot be confronted militarily is being engaged through multiple insurgencies bred and groomed in Afghanistan. A segment of the power elite in Washington clearly wants a transformed Pakistan to fit its wider regional outlook.

And then there is this strange overlap: The American pressure for war in Pakistan is matched by more and more shadowy terrorists sneaking in from Afghanistan to fight and kill Pakistanis, with open supply lines and endless stock of sophisticated weapons. Pakistani commentators and civil society activists need to see this wider picture and not get carried away by moralistic U.S. statements that hide hardcore strategic goals.

Take Buner for example. When the government and the military decided to eliminate the terrorists who call themselves Pakistani Taliban, our people discovered that these shadowy fighters are no ragtag rebels moving around in decrepit jeeps. In the words of the army spokesman, ‘over 500 militants equipped with a sophisticated communication system are holed up in various parts of Buner who are constantly receiving money and arms from outside Pakistan.’

Aid or no aid, our message must reach the Americans: Pacify Afghanistan, no war in Pakistan, and cease turning Afghanistan into a source of regional tension.

If the political parties are unable to produce leaders, we cannot wait for them forever to do so. We in Pakistan do not have the luxury of time. The military can and will prevail over the threats facing us for the time being, but who will assume the challenge of making Pakistan an attractive place for its citizens? Pakistan’s existing ‘national leadership has been a failure in the best of times. Our challenges are tall and our leaders are pygmies. To move forward, Pakistan needs a new deal for the 21st century. And this deal cannot come through the ballot for the foreseeable future. Our best chance is for Pakistan’s best and brightest – outside the realm of our failed parties and a failed system – to step forward with a plan to remodel the state.

ISLAMABAD, Pakistan—The worst part of the continuing instability in Pakistan since 2007 is that it is fast pushing this nation’s best and brightest to lose hope. The doomsday reporting on Pakistan in the Am-Brit [American-British] media – which appears more like a war campaign than reporting – is devastating the national psyche. But this would not have been problematic had our national leadership been up to the challenge. This leadership has been a failure in the best of times. Now our challenges are tall and our leaders are pygmies by comparison.

I know Pakistani businessmen who made fortunes out of providing uninterrupted high-value services to the banking industry who are forced now to contemplate migration because they are losing hope. Their incomes are intact but it is the quality of their lives in Pakistan’s biggest city that they are concerned about.

The military institution is strong and is capable of holding Pakistan’s stability and integrity despite the alarm and the unanswered questions over how our situation deteriorated over the past four years and how our homeland has become exposed to multiple foreign players wreaking havoc here, not to mention why we have allowed ourselves to blindly trust one superpower with our interests.


The military can and will prevail over the threats facing us for the time being, but who will assume the challenge of reviving the national spirit, remodeling national politics and initiate the hard task of making Pakistan an attractive place for its citizens?

The political parties are unmitigated failures and cannot run a democracy. None of these parties today has a national agenda. Most of them have shrunk into narrow regional or ethnic interests. None of them has a working party system that produces leaders since most of these parties operate as one-man shows or as family-run businesses in their most primitive forms. If handed over power tomorrow morning, there is hardly any party out there that can come up with better plans or policies than the one currently in office.

And while this failure continues, the ethnic-based provincial division of the state is turning every administrative issue into an ethnic flashpoint. Some politicians and political parties are manufacturing ethnic tensions for political gain. Foreign players are exploiting this and courting separatism in Pakistan as a vehicle for pushing their own interests. It is an irony that there isn’t a single political party in Pakistan today that raises the flag of Pakistani nationalism. There was a time when India, our perennial enemy-friend, used to be the only bastion of advocates of separatism in Pakistan. But today we see the center of gravity of this trend moving to Washington, for various reasons.

But these are fallouts. The strings are still in our hands and no one can mess with us if we put our house in order. But who will do it in Pakistan?

If the political parties are unable to produce leaders, we cannot wait for them forever to do so. We in Pakistan do not have the luxury of time. The time for this was the 20th century when nations took their time to develop their national systems. We wasted that opportunity. Both an elected civilian leader and a military ruler – Zulfiqar Ali Bhutto and Ayub Khan – made good starts but messed up in the end.

To move forward, Pakistan needs a new deal for the 21st century. And this deal cannot come through the ballot for the foreseeable future. Our best chance is for Pakistan’s best and brightest – outside the realm of our failed parties and a failed system – to step forward with a plan to remodel the state, change the constitution and create an environment for real political parties to grow and prosper. This is the only way left to bring capable and creative civilian administrators to power. Such a civilian administration can and must borrow the support of the military institution for such a grand project of national rebuilding.

As we make a final push to expel America’s failed war encroaching into our territory in our northern and western regions, the wider national perspective must not be missed. A vibrant, creative and emerging Pakistan is still possible. But for this to happen, Pakistan’s thinking classes, the media and the public opinion will have to support creative out-of-the-box thinking.

The time to stop the rot is here. Let’s not become the worst managers of one of the world’s best pieces of real estate.

Pakistan’s army chief reacted angrily to US dismay that his forces had not acted to repel a Taliban insurgency advancing on Islamabad, the country’s capital and home to some of its nuclear assets.
Ashfaq Pervez Kiyani condemned the “pronouncements by outside powers raising doubts on the future of the country” in a rare statement at the weekend, insisting that his troops were ready for battle against any threat.
Pakistani security forces launched an offensive on Sunday to stop the Taliban’s advance in the north-west of the country, killing scores of militants according to the military
Gen Kiyani’s statement was interpreted as a sharp rebuff to comments by Hillary Clinton, US secretary of state, who said last week that Pakistan’s government was in danger of abdicating responsibility to its people in the face of the Taliban advance. She had expressed bewilderment that one of the world’s largest armies appeared unable to confront dozens of militants who had moved into the Buner district, 60 miles from the capital.
Gen Kiyani chaired a meeting of top generals after which he said Pakistan would pursue its own strategy in dealing with the Taliban.
The army, which has received about $1bn a year from the US since 2001, is sensitive to the widely held view in Pakistan that it is fighting America’s war against al-Qaeda along the border with Afghanistan. But it also faces criticism that it is unwilling to sever longstanding ties with militant groups that it once sponsored in insurgencies in Afghanistan and India, even as these turn against Pakistan.
The Pakistan army “never has and never will hesitate to sacrifice, whatever it may take, to ensure [the] safety and well-being of the people of Pakistan and the country’s territorial integrity”, the general said. “A country of 170m resilient people under a democratic dispensation, strongly supported by the army, is capable of handling any crisis that it may confront.”
He said victory against the terror and militancy would be achieved at all costs.
Gen Kiyani’s statement comes after international pressure for Pakistan to step up its fight against militants who have taken charge of the Swat valley where they have vowed to lay the foundation of an Islamic state. Asif Ali Zardari, Pakistan’s president, signed a law this month permitting the introduction of sharia law in Swat in return for Taliban militants laying down their arms.
Rather than moving towards conciliation, the Taliban have shown signs of expanding their influence outside Swat into nearby regions. A Taliban militant alarmed Pakistan’s allies last week when he said publicly that Osama bin Laden would be welcomed as a “brother” in Taliban-controlled territory.
A senior western diplomat said: “[Gen Kiyani’s] remarks in fact tell us that the army, under pressure from the Americans, is drawing a red line against the Taliban.”
The army clashed on Sunday with Taliban militants in Dir, a remote northern region near Swat. A senior government official said deployments in Dir were a precursor to a military campaign against Tali
Islamabad said on Friday that Taliban militants had vacated Buner, south of Swat, after occupying it a day earlier.

WASHINGTON (Reuters) - U.S. Secretary of State Hillary Clinton said on Wednesday Pakistan's government had abdicated to the Taliban by agreeing to Islamic law in part of the country and that the nuclear-armed nation posed a "mortal threat" to world security.
Clinton was asked by U.S. lawmakers on the House Foreign Affairs Committee about Pakistani President Asif Ali Zardari, under pressure from conservatives, earlier this month signing a regulation imposing Islamic law in Swat, once one of Pakistan's main tourist destinations.
"I think that the Pakistani government is basically abdicating to the Taliban and to the extremists," she said.
Earlier she had told the committee that Pakistan "poses a mortal threat to the security and safety of our country and the world."
Clinton said the Pakistani government had to deliver basic services to its people or it would find itself losing ground to the Taliban, whose influence has spread in northern Pakistan and has raised concerns about the stability of the country.
"The government of Pakistan ... must begin to deliver government services, otherwise they are going to lose out to those who show up and claim that they can solve people's problems and then they will impose this harsh form of oppression on women and others," she said.
(Editing by Bill Trott)

Sharmila Devi, Foreign Correspondent

NEW YORK // Arab-American groups have urged the Federal Bureau of Investigation to either confirm or deny allegations made by a US congressman that a number of mosques in the New York region are under law enforcement surveillance.Peter King, a Republican representative for New York, caused consternation when he told the Newsday newspaper that mosques had been monitored “for four or five years” and that “very few Muslims come forward to co-operate with police”.“King’s repeated use of Islamophobic rhetoric is of deep concern to Muslims in his district and to the entire American Muslim community,” said Faiza Ali, the community affairs director for the Council on American Islamic Relations (Cair) in New York. “We are hoping the FBI and other elected officials will repudiate his remarks.”Mr King’s allegations came as relations between US Muslim groups and the FBI have deteriorated across the country, threatening to undermine a co-operative spirit that developed after September 11.
In California, the Muslim community was disturbed by recent revelations that the FBI planted a spy in a mosque and by reports of Muslims being pressured to become informants.A coalition of Muslim groups urged the Obama administration to investigate recent FBI operations, including what they called the “infiltration of mosques” and use of “agents provocateurs to trap unsuspecting Muslim youth”. The American Civil Liberties Union has also started legal proceedings, demanding the FBI turn over its records on mosque surveillance in Orange County in southern California.A federal judge in California said Monday he would review more than 100 pages of records of the FBI inquiries to determine whether the information should be made public or is protected by law. And last week, a Muslim group in Michigan asked the US attorney general to investigate complaints the FBI has been asking the faithful there to spy on fellow worshippers.In New York, Mr King said he would not tone down his comments about the Muslim community even though he was considering a run for the US Senate, a move that usually pushes candidates to the political centre to win over a majority in the liberal-leaning state.Discussing a recent homeland security report about right-wing extremism, Mr King told the MSNBC cable channel on Friday that it had “never put out a report talking about [looking] out for mosques. Look out for Islamic terrorists in our country. Look out for the fact that very few Muslims come forward to co-operate with the police.”He later said: “I stand by everything I said. I consider any attack by Cair to be a badge of honour.”He has made similarly provocative remarks in the past. In 2007, he said there were “too many mosques in this country”.Cair-New York pointed out that any surveillance of mosques was contrary to repeated FBI assurances there was no such routine activity. “The FBI does not investigate mosques, we investigate people,” said John Miller, an FBI spokesman, last month.The Muslim community had been “tremendously supportive and worked very closely with [the FBI] in a number of instances around the country”, Robert Mueller, the FBI director, told the Senate judiciary committee last month.Ms Ali said Cair was still in contact with the FBI, particularly in transmitting any concerns about civil liberties issues. Last year, the FBI began a disengagement campaign with Cair and suspended contacts pending the resolution of unspecified “issues”.In 2007, the justice department designated 300 US Muslim groups and individuals as “unindicted co-conspirators” in charges against the Holy Land Foundation in Dallas, Texas.The second trial of the charity and five of its former leaders ended in guilty verdicts for funnelling millions of dollars to Hamas in the largest terrorism financing case in the United States since September 11.Cair-New York was hoping a reconstituted dialogue committee made up of the FBI and local Muslim groups would again meet regularly. The committee fell apart a couple of years ago after key personnel were reassigned to other tasks, Ms Ali said.She also pointed to a policy paper prepared by a coalition of Muslim groups in response to the New York Police Department, which in 2007 acknowledged surveillance of Muslim communities to identify risks from extremists.The coalition suggested ways in which counterterrorism efforts could be successful, but did not infringe on civil liberties. These included regular dialogue, educating Muslim, Arab and South Asian communities about positive collaboration with law enforcement agencies and about measures against hate crimes, and urging the NYPD to consult Muslim scholars.Up to one million Muslims live in the New York City area, which has about 200 mosques. Ms Ali worried that Muslims might avoid mosque attendance because of surveillance concerns.“I think given what’s been said by people like King, it will have a chilling effect on many individuals who go to mosque like we’ve seen in California,” she said.

By Jim White Oxdown Gazette

The Senate Armed Services Committee report does a very good job of describing the process by which Dick Cheney and Donald Rumsfeld drove prisoner interrogation techniques into the realm of torture. The report also provides us with confirmation that one of the underlying reasons for torture was to provide a link between al Qaeda and Saddam Hussein just prior to the invasion of Iraq.
A former psychiatrist in the US Army, Major Charles Burney, provided very clear evidence to the Senate investigators on the reasons for torture and on the intentional disregard for warnings from SERE trainers that torture would not work.
McClatchy found this from Burney regarding the information being sought during torture:
A former U.S. Army psychiatrist, Maj. Charles Burney, told Army investigators in 2006 that interrogators at the Guantanamo Bay, Cuba, detention facility were under "pressure" to produce evidence of ties between al Qaida and Iraq.
"While we were there a large part of the time we were focused on trying to establish a link between al Qaida and Iraq and we were not successful in establishing a link between al Qaida and Iraq," Burney told staff of the Army Inspector General. "The more frustrated people got in not being able to establish that link . . . there was more and more pressure to resort to measures that might produce more immediate results."
Later in the report, on its page 47, we have additional information from Burney concerning a "training" trip that interrogators took to Fort Bragg in September, 2002:
Despite the apparent instruction on physical pressures, MAJ Burney told the Army IG that instructors at Fort Bragg believed that the techniques used in SERE training should not be brought back for use at GTMO and that "interrogation tactics that rely on physical pressures or torture, while they do get you information, do not tend to get you accurate information or reliable information.,,344 In a written statement provided to the Committee, MAJ Burney reiterated that point, stating that "[i]t was stressed time and time again that psychological investigations have proven that harsh interrogations do not work. At best it will get you information that a prisoner thinks you want to hear to make the interrogation stop, but that information is strongly likely to be false.345"
So, when interrogators went to Fort Bragg to learn about SERE, they were told "time and again" that these techniques provide false information and should not be used, and yet they went directly into the approved methods for interrogation. In fact, Jay Bybee had already approved them in his August 1, 2002 OLC memo just a few weeks before the trip.
Summarizing Burney's information provided to Senate investigators:
1. SERE instructors told interrogators that torture produces false information.2. Torture was carried out to get an Iraq-al Qaeda link.
Putting the two pieces of information together, it becomes clear that torture was carried out with the intention of getting a false connection between Saddam Hussein and 9/11.

Foreign Minister Avigdor Lieberman, right, standing with U.S. envoy George Mitchell after a meeting in Jerusalem last week.(Reuters)

Lieberman: U.S. will accept any Israeli policy decision
By Lily Galili and Barak Ravid, Haaretz Correspondents
Tags: Middle East, Lieberman

The Obama Administration will put forth new peace initiatives only if Israel wants it to, said Foreign Minister Avigdor Lieberman in his first comprehensive interview on foreign policy since taking office. "Believe me, America accepts all our decisions," Lieberman told the Russian daily Moskovskiy Komosolets. Lieberman granted his first major interview to Alexander Rosensaft, the Israel correspondent of one of the oldest Russian dailies, not to an Israeli newspaper. The role of Israel is to "bring the U.S. and Russia closer," he declared.

During the interview, Lieberman said Iran is not Israel's biggest strategic threat; rather, Afghanistan and Pakistan are. This comes after years of Lieberman warning about the growing Iranian threat. Now, he has dropped Tehran to number two, with Iraq coming third. Lieberman also discussed Moscow's under-utilized role in the Middle East and the Israeli-Palestinian conflict, and said he aims to correct this. The newspaper emphasized Lieberman's intention to develop closer ties with Russia and to resolve international issues jointly. "Russia has a special influence in the Muslim world, and I consider it a strategic partner that should play a key role in the Middle East," Lieberman said in the interview. "I have argued for some time that Israel has insufficient appreciation for the 'Kremlin factor'; I intend to mend this gap," he said. Political sources in the Commonwealth of Independent States have told Haaretz that they believe Lieberman's appointment will result in "greater understanding" between Israel and Russia. Regarding his changing view on Israel's greatest threats, Lieberman said that since he began warning against the nuclear threat from Iran, nuclear threats have become more prevalent. Meanwhile, a more urgent problem has developed in Pakistan and Afghanistan. "Pakistan is nuclear and unstable, and Afghanistan is faced with a potential Taliban takeover, and the combination form a contiguous area of radicalism ruled in the spirit of Bin Laden," Lieberman said. "I do not think that this makes anyone in China, Russia or the U.S. happy ... these countries [Pakistan and Afghanistan] are a threat not only to Israel, but to the global order as a whole." In response to a question on Israel's role in countering these threats, Lieberman said, "Our role is that we should bring the U.S. and Russia closer ... it is unclear to me why the U.S. needs to confront Russia on Kosovo or Ukraine's entry to NATO; however, Russia needs to understand that close cooperation with Hugo Chavez does not build western confidence." Later in the interview, the foreign minister spoke unkindly of the road map, which he called binding, unlike the Annapolis process, in his view. The Palestinians "are not very familiar with the document," he said. Lieberman called a two-state solution a nice slogan that lacks substance. On Tuesday, Army Radio reported that Lieberman ruled out an Arab peace initiative, after previously announcing that Israel was not bound to the U.S.-backed Annapolis process. "This is a dangerous proposal, a recipe for the destruction of Israel," he was quoted as telling a closed meeting of senior Foreign Ministry officials. Meanwhile, Egyptian intelligence chief Omar Suleiman was due in Israel on Wednesday for talks with senior officials, but as of Tuesday night, there were no plans for a meeting with Lieberman. A senior political source in Jerusalem said Tuesday night that a meeting would take place, but neither the Foreign Ministry nor officials in Cairo would comment on the matter. Suleiman was scheduled to meet with President Shimon Peres, Prime Minister Benjamin Netanyahu, Defense Minister Ehud Barak, and Deputy Defense Minister Matan Vilnai. This will be the first exchange between the new Israeli administration and Egypt. The senior Egyptian official will discuss the security situation along the Gaza border, the Hezbollah terror ring uncovered in Egypt, and arms smuggling through Sinai. Another central issue in the talks will be the negotiations for the release of Gilad Shalit, and Israel's position on the resumption of peace talks with the Palestinian Authority. Lieberman sparked outrage in Egypt last year when he criticized its president, Hosni Mubarak, in a speech before the Knesset, saying that the Egyptian leader could "go to hell." His remarks were over Mubarak's refusal to make an official state visit to Israel. The Egyptian leader's sole trip to Israel was for the 1995 funeral of prime minister Yitzhak Rabin. At another time, Lieberman said Egypt's Aswan Dam should be bombed. Egyptian Foreign Minister Ahmed Aboul Gheit said earlier this month that Lieberman would not be welcome in Egypt unless he changes his positions. "If I meet him I will keep my hands to myself," Aboul Gheit told a television reporter in Cairo, declaring that he would refuse to shake the hand of Israel's foreign minister. There is a power struggle over Israel within Egypt, between the General Intelligence Service and the Foreign Ministry. The former manages the Israel "file," while the Foreign Ministry officially represents Cairo vis-a-vis Israel. If Suleiman and Lieberman do meet, it will be another factor within this power struggle.

by Martin D. Weiss, Ph.D. 04-20-09

A big bank CEO on a mission to deceive the public doesn’t have to tell outright lies. He can con people just as easily by using “perfectly legal” tricks, shams, and accounting ruses.
First, I’ll give you the big-picture facts. Then, I’ll show you how big U.S. banks are painting lipstick on some of the fattest pigs ever raised.
Six of America’s Largest Banks at Risk of Failure
As we have written here so often … as we documented in our recent white paper … as we showed in our presentation to the National Press Club … and as we explained again with new data in our follow-up press conference, the nation’s banking troubles are many times more severe than the authorities are admitting.
First, look at the megabanks: The authorities SAY that all of the 14 largest banks have earned a “passing” grade in their just-completed “stress tests.” But just six months ago, the authorities swore that, without a massive injection of taxpayer funds, those same banks would suffer a fatal meltdown.
Was the bad-debt disease magically cured? Did the economy miraculously turn around? Not quite. In fact, we have overwhelming evidence that the condition of the nation’s banks has deteriorated massively since then.
How can our trusted authorities be so blatantly deceptive and still keep their jobs? Perhaps you should ask Fed Chairman Ben Bernanke. Not long ago, for example, he declared that the total losses from the debt crisis would not exceed $100 billion, while conveying the hope that most of those losses could be soon written off. Also around that time, the International Monetary Fund (IMF) estimated the losses would be $1 trillion, with only a small percentage written off.
The IMF’s latest estimate: $4 trillion in losses, with only one-third of those written off so far. Bernanke’s error factor: He was 4,000 percent off the mark, in a world where 50 percent errors can be lethal.
Meanwhile, based on fourth quarter Fed data, we find that, among the nation’s megabanks, six are at risk of failure in our opinion (seven if you count Wachovia and Wells Fargo as separate institutions).JPMorgan Chase is the nation’s largest, with $1.7 trillion in assets in its primary banking unit. It’s massively exposed to defaults by its trading partners in derivatives — to the tune of 382 percent (almost four times) its risk-based capital. Plus, since it holds HALF of ALL the derivatives in the U.S. banking industry, JPMorgan is at ground zero in the debt crisis.

Citibank is the nation’s third largest, with assets of $1.2 trillion in its main banking unit. Its total credit exposure to derivatives is a bit lower than Morgan’s, at 278 percent, but still extremely high. Plus, it has other troubles, especially the surging default rates in its sprawling global portfolio of credit cards and other consumer loans. (More on these in a moment.)
Wells Fargo and Wachovia now make up the nation’s fourth largest bank with combined assets of $1.17 trillion. But in the fourth quarter, they still reported separately, which is illuminating: Even without Wachovia’s troubled assets, TheStreet.com Ratings has downgraded Wells Fargo to a D+. Wachovia, meanwhile, got a D. This tells you that Wells Fargo wasn’t exactly the best merger partner, unless you believe in some bizarre math wherein adding two negatives somehow gives you a positive result.
SunTrust, with $185 billion in assets, is getting hit hard by the collapse in the commercial real estate. Its Financial Strength Rating is D+.
HSBC Bank USA has massive credit exposure to derivatives that’s even greater than Morgan’s: 550 percent of risk-based capital. We’re not looking at its larger foreign operations. But the U.S. numbers are ugly enough, meriting a rating of D+.
Goldman Sachs, which reported for the first time as a commercial bank in the fourth quarter, seems to be taking the biggest risks of all in derivatives. Its total credit exposure is 1,056 percent of capital. Bottom line: It debuts as a bank with a rating of D, on par with Wachovia.
Regional banks: Banking regulators have been largely mute regarding major regional banks. But several are also at risk of failure, including Compass Bank (Alabama), Fifth Third (Michigan), Huntington (Ohio), and E*Trade Bank (Virginia). Primary reason: Massive losses in commercial real estate loans.
Smaller banks: On its “Problem List,” the FDIC reports only 252 institutions with assets of $159 billion. In contrast, our list of at-risk institutions includes 1,816 banks and thrifts with $4.67 trillion in assets. That’s seven times the number of institutions and 29 times more assets at risk than the FDIC admits.
What Explains the Huge Gap BetweenOfficial Declarations and Our Analysis?
We all use essentially the same data. And conceptually, the analytical approach is also similar.
The primary difference is that the regulators have an agenda: Instead of protecting the people from bank failures, they’re trying harder than ever to protect failed banks from the people. Specifically …
They have forever hidden the names of the banks on the FDIC’s “Problem List,” making it almost impossible for average consumers to get prior warnings of troubles.
They have never disclosed their own official ratings of the banks — the CAMELS ratings — making it difficult for the public to find safe institutions they can trust.
They have religiously underestimated — or understated — the depth and breadth of the debt crisis.
And as I explained a moment ago, they have rigged their recent stress tests to give passing grades to all of the nation’s 14 largest banks, sending the false signal that even the most dangerous among them are somehow “safe.”
Legal Cover-Ups, Flim-Flam and ShamIn the Big Bank’s “Glowing” First-Quarter Earnings Reports
Wall Street is aglow with the latest “better-than-expected” earnings reports by major banks. But take one look below the surface, and you’ll see three of the most egregious accounting gimmicks in recent history.

Gimmick #1. Toxic asset cover-up. In their infinite wisdom, global banking regulators have now agreed to let banks cover up their toxic assets by booking them at fluffy-high values, bearing little resemblance to actual market prices. Like magic, the bad assets are suddenly worth more, as hundreds of billions in losses are defined away.

Gimmick #2. Reserve flim-flam. Every quarter, banks are required to estimate their losses and decide how much to set aside in loss reserves. If they deliberately guess too much in one quarter and too little in the next, they can shove all their bad earnings into earlier P&Ls and make future P&Ls look rosy by comparison.

Gimmick #3. The great debt sham. Consider this scenario: A financially distressed real estate developer owes the bank $4 million. His revenues have plunged. He’s lost a fortune in his properties. And he’s on the brink of bankruptcy.

Therefore, in the secondary market, traders recognize that loans like his are worth, say, only half their face value, or about $2 million. So far, a very common situation, right?
But now imagine this: He walks into the bank one morning and claims that he really owes only $2 million. Why? Because, in theory, he says, he could buy back his own loan for that price, thereby reducing his debt in half.

In practice, of course, that’s a pipedream. If he actually had the cash to buy back his own loans on the market, then he wouldn’t be financially distressed in the first place. And if he weren’t financially distressed, his loans wouldn’t be selling on the market for half price.
The reality is that he can’t buy back his own debt and never will. And even if he could someday, he will still be on the hook for the full $4 million unless and until he files for bankruptcy and the bankruptcy judge decides otherwise.

That’s why the government would never let real estate developers — or hardly anyone else, for that matter — mark down the debts on their books and still stay in business. But guess what? The government lets banks do precisely that!

It’s the ultimate double standard: The banks get away with inflating their toxic assets. But at the same time, they’re allowed to mark to market their own debts, which happen to be trading at huge discounts on the open market precisely because of their toxic assets.
Accountants call it a “credit value adjustment.” I call it cheating.
Finding all of this hard to believe? Then consider …

How Citigroup Mobilized ALL THREE of TheseGimmicks to Create One of the Greatest AccountingShams of All Time in Its First-Quarter Earnings Report
I’m outraged. But I’m glad to see that someone besides us is speaking out:
Meredith Whitney, one of the few no-nonsense analysts in the industry, says that the banks’ latest reports are, in essence, “a great whitewash.”

Jack T. Ciesielski, publisher of an accounting advisory service, calls it “junk income.”
And Saturday’s New York Times, picking up from their research, lays out precisely how Citigroup has transformed a massive loss into what appears to be a fat profit …

First, Citigroup deployed the Toxic Asset Cover-Up. By inflating the value of the bad assets on its books, it was able to beef up its after-tax profits by $413 million.

Second, Citigroup used the Reserve Flim-Flam gimmick: By (a) shoving most of its bad-debt losses into last year’s fourth quarter and (b) greatly understating its likely losses in the first quarter, the bank legally rigged its books to look like it had made major improvements. Even assuming no further deterioration in its loan portfolio, I estimate this gimmick alone bloated profits by at least another $1 billion.

Third, Citigroup went all out with the Great Debt Sham, marking down its own debt and creating an additional $2.7 billion in purely bogus profits from this maneuver alone.
So here’s Citigroup’s true math for the first quarter:
So-called “profit”

$1.6 billion
Gimmick #1
$0.4 billion
Gimmick #2
$1.0 billion
Gimmick #3
$2.7 billion
Total gimmicks
$4.1 billion

Actual result:

$2.5 billion LOSS!

And all this despite the fact that Citigroup’s loan portfolios actually deteriorated further in the first quarter. Based on its Q1 2009 Quarterly Financial Data Supplement, we find that:
Net credit losses in Citi’s global credit card business surged from $1.67 billion at year-end 2008 to $1.94 billion by March 31. And compared to March 2008, they surged by a whopping 56 percent! (Page 9 of its data supplement.)

Foretelling future credit card losses, the delinquency rate (90+ days past due) on those credit cards jumped from 2.62 percent at year-end to 3.16 percent on March 31 (page 10).
Credit losses on consumer banking operations jumped from $3.442 billion on December 31 to $3.786 billion on March 31. And compared to the year-earlier period, they surged 66 percent (page 12).

By almost every measure, Citigroup’s first-quarter numbers are worse than they were just three months earlier and far worse than they were 12 months before.
My forecast: Citigroup’s effort last week to twist this into an “improvement” will go down in history as one of the greatest banking deceptions of all time.

But Citigroup is not the only one. Nearly all other major banks are suffering similar surges in their credit losses and delinquency rates. Nearly all are using at least one of the same gimmicks to bloat their first-quarter profits. And every single one is destined to see massive new losses, driving their shares to new lows and the banking system as a whole into a far more severe crisis.
Bottom line: Rather than the private-public partnership the government has called for to address the nation’s banking woes, we see little more than private-public collusion to hide the truth from the public, paper over the problems and, ultimately, sink the banks into an even deeper hole.

My Recommendations
In my book, The Ultimate Depression Survival Guide, I give you very detailed, step-by-step instructions on what to do immediately. Here’s a quick summary:

Step 1. Get away from risky stocks. Use the recent stock market rally as a selling opportunity — your second chance to get out of danger before it’s too late.

Step 2. Get out of sinking real estate. If there’s a temporary improvement in the market, grab it to sell the properties you’ve been wanting to sell all along.

Step 3. Raise as much cash as you possibly can — not only by selling stocks and real estate, but also by cutting expenses and selling other things you own.

Step 4. Make sure you keep your cash in one of the safe banks on the list we provide on the book’s resource page. Or better yet, follow my instructions on how to buy Treasury bills. They’re safer than any bank, with no limit on the Treasury’s direct guarantee.

Step 5. For assets you cannot sell, buy protection using exchange-traded funds that are designed to go UP when stocks fall. The more the market goes down, the more you make; and those profits can offset any losses you suffer in the stocks or real estate that you cannot sell.

Step 6. Later, get ready for the big bottom in nearly all markets. That’s when you should be able to lock in relatively safe interest rates of 10 percent or more for years to come … buy shares in our country’s best companies for pennies on the dollar … buy a dream home in a great location that’s practically being given away.

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Good luck and God bless!
Martin

Hanna Braun, London
First Published: September 2001:

In order to understand the circumstances that led to the birth of Zionism I shall sketch an outline of the history of Judaism and the Jews.
Since biblical times Jewish communities lived in Arab lands, in Persia, India, East and North Africa and indeed in Palestine. With the destruction of the Temple and the final fall of their state in 70 AD many Jews were taken out of Judea and hence to Rome and the Diaspora. Many poorer Judeans, however (such as subsistence farmers), were able to stay in Palestine. (Some of them had converted to Christianity and were one of the earliest Christian groups.) Modern research suggests that when Islam arrived in the area in 633 AD many of these Jews converted and that they form a considerable part of today's Palestinians. These various communities were on the whole well integrated into their respective societies and did not experience the persecutions that later became so prevalent in Europe. In Palestine, for instance, Muslims repeatedly protected their Jewish neighbours from marauding crusaders; in one instance at least, Jews fought alongside Muslims to try and prevent crusaders from landing at Haifa's port, and Salah al-Dinl-din, after re-conquering Jerusalem from the crusaders, invited the Jews back into the city.
The Jews in Spain under Moorish rule flourished and experienced a renaissance mirroring that of the great Islamic civilisation and culture at the time. As Christianity spread from the north of Spain, Jews were again protected by Muslim rulers until the fall of Granada - the last Moorish kingdom to pass into Christian hands - when both Jews and Muslims were expelled at the end of the 15th century (Jews in 1492 and Muslims 10 years later). Most of the Jews from the Iberian peninsula settled in North Africa and the lands under Ottoman rule, including Palestine, and continued their peaceful co-existence with Muslims in those countries. The bulk of Portuguese "converted" Jews (these were forced conversions and such Jews were called Marranos, i.e. pigs, by Jews who had fled or who preferred to die for their faith) settled in Amsterdam, presumably because they had long established trading connections in that city. In 1655 they were invited to Britain by Oliver Cromwell. Most of them were glad to resettle since at the time the Netherlands had just freed itself from the Spanish yoke and the shadow of the dreaded inquisition was still uncomfortably close.
The fate of Jewry in European countries was very different: persecutions, killings and burnings were widespread and Jews were forced to live in closed ghettos, particularly in the Russian Empire, where they were confined to the "Pale of Jewish" (?) settlement, an area which consisted of the Grand Duchy of Lithuania and Byelarus or White Russia. Anyone who wished to move outside these borders needed special permission. However, by the mid-19th century some of the more progressive Jewish communities had established themselves in the big cities of St. Petersburg, Moscow and Kiev.
In central and western Europe religious tolerance, followed by the granting of full citizen rights and emancipation, came relatively early, in the wake of general liberalization. However, Russian rulers remained opposed to any liberalization, including religious tolerance and emancipation, and as late as 1881 Tsar Alexander the third initiated a series of particularly vicious pogroms to divert unrest amongst the population, at a time when Britain, for instance, boasted of a Jewish prime minister.
Total segregation was not always imposed from outside, however; frequently it was enforced from within by highly authoritarian rabbis who exercised absolute power over their congregations, often including the right to life and the imposition of the death penalty. Thus it was a major decision for anyone to leave these congregations and to look for a broader education (known as "enlightenment"). In eastern Europe enlightenment was a relatively late phenomenon and it found expression initially in the mid-19th century, in a revival of Hebrew language and literature and in the modern idea of Jews seeing themselves as a people.
This distinction between a people and a religion was of course disapproved of by the Orthodox Jews, who still today regard Hebrew as a sacred language to be used solely for prayers and religious studies and the Jewish people and religion as indivisible. The concept of the Jews as people closely mirrored the relatively new European idea of a homogeneous nation state. An exception to this was the socialist "Bund" organisation whose members rejected nationalism and later Zionism.
Some of these early proto-Zionists, calling themselves "Hovevei Zion" (Lovers of Zion), started the first settlements in Palestine in the 1870's, and a larger number of immigrants followed after the Russian pogroms of 1881-82. These settlers distinguished themselves by their deliberate segregation from the indigenous population and their contempt for local customs and traditions. This naturally aroused suspicion and hostility in the locals. This exclusivity was largely based on a sense of superiority common to Europeans of the time, who believed they were the only advanced and truly civilised society and in true colonial fashion looked down on "natives" or ignored them altogether. However, beyond that there was also a particular sense of superiority of Jews towards all non-Jews. This belief in innate Jewish superiority had a long tradition in religious Jewish thinking, central to which was the notion of the Jews as God's chosen people. Moshe Ben Maimon (Maimonides) had been an exponent of this theory and quite often thinkers with a more humane outlook, e.g. Spinoza, were excommunicated. The accepted thinking in the religious communities was that Jews must on no account mix with gentiles for fear of being contaminated and corrupted by them. This notion was so deeply ingrained that it quite possibly still affected, albeit subconsciously, those Jews who had left the townships and had become educated and enlightened. Thus the early settlers from eastern Europe transferred the "Stettl" (townlet) mentality of segregation to Palestine, with the added belief in the nobility of manual labour and in particular soil cultivation. In this they had been influenced by Tolstoy and his writings.
The "father" of political Zionism, Theodore Herzl (1860-1904), came from a totally different perspective. Dr. Herzl was a Viennese, emancipated, secular journalist who was sent by his editor to Paris in 1894 to cover the Dreyfus affair. Dreyfus had been a captain in the French Army who was falsely accused and convicted of treason (although he was acquitted and completely cleared some years later). The case brought to light the strength of a strong streak of anti-Semitism prevalent in the upper echelons of the French Army and in the French press, with profound repercussions in emancipated Jewish circles. Herzl himself despaired of the whole idea of emancipation and integration and felt that the only solution to anti-Semitism lay in a Jewish Homeland. To that end he approached various diplomats and notables, including the Ottoman Sultan, but mainly European rulers, the great colonial powers of the time, and was rewarded for his efforts by being offered Argentina or Uganda by the British as possible Jewish Homelands.
Herzl would have been quite happy with either of these countries, but when the first Zionist Congress was convened in Basle in 1897, he came up against Eastern European Jewry, by far the greatest majority of participants, who, although broadly emancipated and enlightened, would not accept any homeland other than the land of Zion. Not only had some of them already settled in Palestine, there were strong remnants of the religious/sentimental notion of a pilgrimage and possibly burial in the Holy Land. The last toast in the Passover ceremony is "Next year in Jerusalem"; although this was a religious rather than a national aspiration, it was common amongst the Orthodox communities to purchase a handful of soil purporting to come from the Holy Land to be placed under the deceased's head. (Orthodox Jews at that time completely rejected any Jewish political movement and did not attend the congress.)
Herzl was quick to realise that unless he accepted the "Land of Zion", i.e. Palestinian option, he would have hardly any adherents. Thus the Zionist movement started with a small section of Jewish society who saw the solution to anti-Semitism in a return to its "roots" and in a renewal of a Jewish people in the land of their ancestors. In his famous book "Der Judenstaat" (The State of the Jews) Herzl wrote that the Jews and their state will constitute "a rampart of Europe against Asia, of civilisation against barbarism," and again regarding the local population, "We shall endeavour to encourage the poverty-stricken population to cross the border by securing work for it in the countries it passes through, while denying it work in our own country. The process of expropriation and displacement must be carried out prudently and discreetly--Let (the landowners) sell us their land at exorbitant prices. We shall sell nothing back to them."
Max Nordau, an early Zionist, visited Palestine and was so horrified that the country was already populated that he burst out in front of Herzl: "But we are committing a grave injustice!" Some years later, in 1913, a prominent Zionist thinker and writer, Ahad Ha'am (one of the people), wrote: "What are our brothers doing? They were slaves in the land of their exile. Suddenly they found themselves faced with boundless freedom ... and they behave in a hostile and cruel manner towards the Arabs, trampling on their rights without the least justification ... even bragging about this behaviour." But the dismay of Nordau and others at the injustices to, and total lack of recognition of, the indigenous population was silenced and indeed edited out of Jewish history and other books, as was some of Herzl's writing. The Zionist slogan of "a land without people for a people without land" prevailed and within a matter of a few years the immigrants became "sons of the land" (Bnei Ha'aretz), whereas the inhabitants became the aliens and foreigners.
Following renewed efforts and lobbying after Herzl's death, the Balfour Declaration in 1917, which granted Zionists a Jewish Homeland in Palestine, set the official seal of approval on their aspirations. Protests and representations by local Arab leaders were brushed aside. Lord Balfour wrote in 1919: "In Palestine, we do not even propose to consult the inhabitants of the country. (Zionism's) immediate needs and hopes for the future are much more important than the desires and prejudices of the 700,000 Arabs who presently inhabit Palestine."
Settlements grew slowly for a long time, but the systematic buying up of land, frequently from absentee landlords, which left tenant farmers homeless, contributed to the first Palestinian uprising in 1921-22 and other outbursts of hostilities. The worst was a massacre of some 65 Jews in Hebron in 1929, after orthodox Jews from Eastern Europe had founded a "Yeshiva" (a religious study centre) in the town and had aroused the suspicions and hostility of the indigenous population, who prior to this had lived in peace and harmony for hundreds of years with their non-European Jewish neighbours. Another contributing factor to growing Arab hostility was the Zionists' policy of not employing Arabs or buying their produce.
For many years Zionism remained a minority movement of mainly Eastern European Jews, excluding the whole religious establishment, most central and western European Jews and, last but not least, all non-European Jews who, unbeknown to Herzl and his co-founders, form the majority of us. These communities were ignored by early Zionists, who had little interest in their aspirations until the establishment of the state of Israel after the "independence" war of 1948-9. After this the new state unleashed a massive propaganda campaign to induce the Sephardi and Oriental Jews to "ascend" to the land of their ancestors, mainly for demographic reasons--in 1948 only about one third of the population and about 6% of the land were Jews or in Jewish hands--but also as cannon fodder. This also happened in the 1980's with the Jews of Ethiopia. However, upon arrival these non-European newcomers were treated very much as inferior second-class citizens. This European dominance is still prevalent in modern Israel where, for example, the national anthem speaks about Jewish longing for the East towards Zion, whereas for many of the non-European communities Palestine lies to the West. Sadly, this has led to some groups of Sephardi (non-European) or Oriental Jews becoming extreme right-wing chauvinists, so as to "prove" their credentials.
Immigration ("Aliyah"--ascent in Zionist parlance) took off in seriously large numbers with the rise of Hitler, who initially declared himself quite sympathetic to Zionism, as had other right-wing anti-Semites before him. New Jewish settlements mushroomed, leading to a bitter and prolonged Palestinian uprising from 1936 till 1939, when it was crushed by the British mandatory powers. But it was not until the end of the 2nd World War and the foundation of the state of Israel in 1948 that Zionism started to win the hearts and minds of the majority of Jewish society. Since that time we have witnessed an increasing and deliberate confluence of Judaism and Zionism, to the extent that today it is widely regarded as treason and self-hate for a Jew to criticise the state, let alone Zionism.
In my view, this development was almost inevitable given the preconception of an exclusive Jewish state. Could we realistically conceive of a France purely for the French? England only for the English? (Unless, of course we belong to the National Front or similar groups.) In a post-colonial world the notion is completely unacceptable and ridiculous. How then, can Israel and the majority of its citizens justify their claim and yet remain convinced that theirs is a modern, democratic society? The last resort, when all logical justifications fail, is that God has promised the land to his people, namely us. (This rather begs the question of where this leaves a non-believing Jew.) I have found over the years, and particularly in the last 30 or so years, that the numbers of young people wearing the skullcap and generally observing at least some of the religious laws has increased dramatically, and I believe this is no coincidence.
The religious establishment has gone along with the general flow and has, indeed, profited from it. Since the late 50's there has also been a notable and frightening change in the Orthodox community, which led to the establishment in 1974 of the "Gush Emunim" (the block of the faithful), initiated by Rabbi Tsvi Yehuda Kook the younger. This is the fundamentalist movement which believes in accepting the state of Israel and striving to make it entirely and exclusively Jewish. Prior to this time Orthodox Jewry played no important role in politics except in pressuring successive governments to introduce more Jewish religious regulations into state law. The ultra-orthodox group "Neturei Karta" (the landless) has never recognised the state of Israel, and its members are exempt from army service.
Although Gush Emunim is small in numbers, it wields disproportionate influence since successive Israeli governments covertly (and sometimes almost overtly) have endorsed its aspirations. Gush Emunim's followers have been allocated to special army units so as to enable them to observe Jewish religious laws and rituals in every detail (although even in the regular army only Kosher food is served and the Sabbath is observed as far as possible). These units have a reputation as dedicated, crack troops. What is less well known but silently condoned is their refusal to give medical aid or even drive wounded persons to the hospital on the Sabbath unless they are Jews.
In my view this is an extremely short-sighted and dangerous road, leading in the end to a fundamentalist theocracy much like that of the Taliban in Afghanistan. The fundamentalists' belief is that the Messianic age is already upon us and that any obstacles to a total elimination of any non-Jews in the promised land, i.e. the whole of what was Palestine including the Holy Mount, is God's punishment for sinful Jews, namely all those who are westernised and secular. This fully exonerates, and indeed sanctifies, a man like Baruch Goldstein who murdered 29 Palestinians praying in the Ibrahimi mosque, as well as the assassination of Yitzhak Rabin. Like the Hamas movement, which was initially encouraged by Israel's secret services, this is another genie which, having been let out of the bottle, can no longer be controlled.
It seems a bitter irony that a movement that initially saw itself as progressive, liberal and secular should find itself in an alliance with, and held to ransom by, the most illiberal reactionary forces. In my view this was inevitable from its inception although the founders, and most of us (including even people like myself, growing up in Palestine in the thirties), did not foresee this and certainly would not have wished it.
Nowadays the deliberate blurring of the distinction between Zionism and Judaism, which includes a rewriting of ancient as well as modern history, is exploited to stifle any criticism of Israel's policies and actions, however extreme and inhuman they may be. This, incidentally, also plays directly into anti-Semitic prejudices by equating Israeli arrogance, brutality and complete denial of basic human rights to non-Jews with general Jewish characteristics.
Zionism has now assumed the all-embracing mantle of righteousness. It claims to represent and to speak for all Jews and has adopted the slogan of "my country right or wrong." The West tolerates Israel's continuous breaches of human rights--violations that it would not tolerate if perpetrated by any other country. Few Western states and not many Jews dare take a stand against Israel, particularly as many of the former still feel a sense of unease and guilt about the holocaust which Zionist Jews inside and outside Israel have exploited in what to me seems an almost obscene manner. In the USA, the Jewish Zionist lobby is still strong enough to keep successive governments on board. Moreover, the USA regards Israel as an important strategic ally in its fight against Middle Eastern "rogue" states which have supplanted the Soviet Union as the great satanic enemy of the free world.
I fear that unless and until Israel is judged by the same criteria as other modern states, this is unlikely to change. It is the duty of all Jews with a sense of justice and a conscience to speak out against the falsifications of history by the Zionist lobby, and the dangerous misconceptions it has led the West to accept.
Hanna Braun, London, September 2001
Hanna Braun is a retired lecturer, living in London. She is a former Israeli, having emigrated to Palestine as a child in 1937 to escape Nazi Germany -- her grandmother later died in the Terezin ghetto. She was in the Haganah in 1948 but left Israel in 1958 for Britain, after having become disillusioned with the Israeli government. She is a signatory of The RETURN Statement Against the Israeli Law of Return - For the Palestinian Right to Return .

Interview: Zaid Hamid

Torture memos reveal brutality of US imperialism

Criticize Israel and lose your job

ISLAMABAD: The leading newspaper of Sri Lanka, Daily Mirror, in its editorial has criticised the role the Indian intelligence agency (RAW) is playing in the regional countries to destabilise them. The editorial has specially referred to Pakistan.
It said: “Among its (RAW’s) most ambitious operations that are currently underway, is the move to separate Balochistan province from Pakistan by supporting (the) Balochistan Liberation Army.”
The newspaper wrote: “It certainly is a monumental task for the informed Sri Lankan or for that matter anyone in the neighbourhood of India to keep a straight face when talking about the Research and Analysis Wing (RAW) in India.”
It said that formed in 1968, the predatory operations carried out by this external intelligence agency of India in the neighbouring countries were perhaps the best example as to how the country bullied its neighbours.
Commenting on the RAW’s role in Sri Lanka, it said: “The RAW in Sri Lanka has a pretty colourful record. Having raised, nursed and fortified the Liberation Tigers of Tamil Eelam, it later went through phases where it adopted ‘rock the baby, pinch the baby’ approach towards the LTTE.”
While many thought the assassination of former Indian premier Rajiv Gandhi would have hardened the approach of the RAW towards the LTTE, it really did not happen that way, it wrote.
“While New Delhi was shattered by the death of Nehru’s grandson, the less emotional RAW moved on with rest of operation,” it said.
The newspaper wrote: “In 2007, ripples were created in the spy agency when one of its Colombo-based officers, Ravi Nair of 1975 batch, was found allegedly carrying on an affair with a woman working for another country’s spy agency.
“The ‘crime’ was considered only second to what was committed by the RAW Joint Secretary, Rabinder Singh, in 2004 when he escaped with copies of several highly-confidential documents and is believed to have passed them on to the CIA. This was after Singh’s superiors confronted him with evidence that he had spent time with a Delhi-based female US embassy officer at a resort down (the) New Delhi-Jaipur highway.”
The newspaper said the incident really rocked the RAW and forced it to go for several reforms, which included tougher counter-check measures on its officers.
Following the embarrassment caused by Ravi Nair in Colombo, the RAW recalled the officer and made it a point to post a lady officer to Colombo, probably thinking that was the best way to discourage other countries, it wrote.
Reports that the RAW was out to create mischief in the backdrop of the recent military victories by the Sri Lankan troops surfaced days after media reports that Pottu Amman, who was pulled up by Prabhakaran over the recent debacles, had slipped off to India, the daily wrote..

Do we really want the Bank for International Settlements (BIS) issuing our global currency

In an April 7 article in The London Telegraph titled “The G20 Moves the World a Step Closer to
a Global Currency,” Ambrose Evans-Pritchard wrote:

“A single clause in Point 19 of the communiqué issued by the G20 leaders amounts to revolution in the global financial order.

“‘We have agreed to support a general SDR allocation which will inject $250bn (£170bn) into the world economy and increase global liquidity,’ it said. SDRs are Special Drawing Rights, a synthetic paper currency issued by the International Monetary Fund that has lain dormant for half a century.

“In effect, the G20 leaders have activated the IMF’s power to create money and begin global ‘quantitative easing’. In doing so, they are putting a de facto world currency into play. It is outside the control of any sovereign body. Conspiracy theorists will love it.”

Indeed they will. The article is subtitled, “The world is a step closer to a global currency, backed by a global central bank, running monetary policy for all humanity.” Which naturally raises the question, who or what will serve as this global central bank, cloaked with the power to issue the global currency and police monetary policy for all humanity? When the world’s central bankers met in Washington last September, they discussed what body might be in a position to serve in that awesome and fearful role. A former governor of the Bank of England stated:

“[T]he answer might already be staring us in the face, in the form of the Bank for International Settlements (BIS). . . . The IMF tends to couch its warnings about economic problems in very diplomatic language, but the BIS is more independent and much better placed to deal with this if it is given the power to do so.”1

And if the vision of a global currency outside government control does not set off conspiracy theorists, putting the BIS in charge of it surely will. The BIS has been scandal-ridden ever since it was branded with pro-Nazi leanings in the 1930s. Founded in Basel, Switzerland, in 1930, the BIS has been called “the most exclusive, secretive, and powerful supranational club in the world.” Charles Higham wrote in his book Trading with the Enemy that by the late 1930s, the BIS had assumed an openly pro-Nazi bias, a theme that was expanded on in a BBC Timewatch film titled “Banking with Hitler” broadcast in 1998.2 In 1944, the American government backed a resolution at the Bretton-Woods Conference calling for the liquidation of the BIS, following Czech accusations that it was laundering gold stolen by the Nazis from occupied Europe; but the central bankers succeeded in quietly snuffing out the American resolution.3

Modest beginnings, BIS Office, Hotel Savoy-Univers, Basel

First Annual General Meeting, 1931

In Tragedy and Hope: A History of the World in Our Time (1966), Dr. Carroll Quigley revealed the key role played in global finance by the BIS behind the scenes. Dr. Quigley was Professor of History at Georgetown University, where he was President Bill Clinton’s mentor. He was also an insider, groomed by the powerful clique he called “the international bankers.” His credibility is heightened by the fact that he actually espoused their goals. He wrote:

“I know of the operations of this network because I have studied it for twenty years and was permitted for two years, in the early 1960's, to examine its papers and secret records. I have no aversion to it or to most of its aims and have, for much of my life, been close to it and to many of its instruments. . . . [I]n general my chief difference of opinion is that it wishes to remain unknown, and I believe its role in history is significant enough to be known.”

Quigley wrote of this international banking network:

“[T]he powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent private meetings and conferences. The apex of the system was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world’s central banks which were themselves private corporations.”

The key to their success, said Quigley, was that the international bankers would control and manipulate the money system of a nation while letting it appear to be controlled by the government. The statement echoed one made in the eighteenth century by the patriarch of what would become the most powerful banking dynasty in the world. Mayer Amschel Bauer Rothschild famously said in 1791:

“Allow me to issue and control a nation’s currency, and I care not who makes its laws.”

Mayer’s five sons were sent to the major capitals of Europe – London, Paris, Vienna, Berlin and Naples – with the mission of establishing a banking system that would be outside government control. The economic and political systems of nations would be controlled not by citizens but by bankers, for the benefit of bankers. Eventually, a privately-owned “central bank” was established in nearly every country; and this central banking system has now gained control over the economies of the world. Central banks have the authority to print money in their respective countries, and it is from these banks that governments must borrow money to pay their debts and fund their operations. The result is a global economy in which not only industry but government itself runs on “credit” (or debt) created by a banking monopoly headed by a network of private central banks; and at the top of this network is the BIS, the “central bank of central banks” in Basel.
Behind the Curtain

For many years the BIS kept a very low profile, operating behind the scenes in an abandoned hotel. It was here that decisions were reached to devalue or defend currencies, fix the price of gold, regulate offshore banking, and raise or lower short-term interest rates. In 1977, however, the BIS gave up its anonymity in exchange for more efficient headquarters. The new building has been described as “an eighteen story-high circular skyscraper that rises above the medieval city like some misplaced nuclear reactor.” It quickly became known as the “Tower of Basel.” Today the BIS has governmental immunity, pays no taxes, and has its own private police force.4 It is, as Mayer Rothschild envisioned, above the law.

The BIS is now composed of 55 member nations, but the club that meets regularly in Basel is a much smaller group; and even within it, there is a hierarchy. In a 1983 article in Harper’s Magazine called “Ruling the World of Money,” Edward Jay Epstein wrote that where the real business gets done is in “a sort of inner club made up of the half dozen or so powerful central bankers who find themselves more or less in the same monetary boat” – those from Germany, the United States, Switzerland, Italy, Japan and England. Epstein said:

“The prime value, which also seems to demarcate the inner club from the rest of the BIS members, is the firm belief that central banks should act independently of their home governments. . . . A second and closely related belief of the inner club is that politicians should not be trusted to decide the fate of the international monetary system.”

In 1974, the Basel Committee on Banking Supervision was created by the central bank Governors of the Group of Ten nations (now expanded to twenty). The BIS provides the twelve-member Secretariat for the Committee. The Committee, in turn, sets the rules for banking globally, including capital requirements and reserve controls. In a 2003 article titled “The Bank for International Settlements Calls for Global Currency,” Joan Veon wrote:

“The BIS is where all of the world’s central banks meet to analyze the global economy and determine what course of action they will take next to put more money in their pockets, since they control the amount of money in circulation and how much interest they are going to charge governments and banks for borrowing from them. . . .

“When you understand that the BIS pulls the strings of the world’s monetary system, you then understand that they have the ability to create a financial boom or bust in a country. If that country is not doing what the money lenders want, then all they have to do is sell its currency.”5

The Controversial Basel Accords

The power of the BIS to make or break economies was demonstrated in 1988, when it issued a Basel Accord raising bank capital requirements from 6% to 8%. By then, Japan had emerged as the world’s largest creditor; but Japan’s banks were less well capitalized than other major international banks. Raising the capital requirement forced them to cut back on lending, creating a recession in Japan like that suffered in the U.S. today. Property prices fell and loans went into default as the security for them shriveled up. A downward spiral followed, ending with the total bankruptcy of the banks. The banks had to be nationalized, although that word was not used in order to avoid criticism.6

Among other collateral damage produced by the Basel Accords was a spate of suicides among Indian farmers unable to get loans. The BIS capital adequacy standards required loans to private borrowers to be “risk-weighted,” with the degree of risk determined by private rating agencies; and farmers and small business owners could not afford the agencies’ fees. Banks therefore assigned 100 percent risk to the loans, and then resisted extending credit to these “high-risk” borrowers because more capital was required to cover the loans. When the conscience of the nation was aroused by the Indian suicides, the government, lamenting the neglect of farmers by commercial banks, established a policy of ending the “financial exclusion” of the weak; but this step had little real effect on lending practices, due largely to the strictures imposed by the BIS from abroad.7

Similar complaints have come from Korea. An article in the December 12, 2008 Korea Times titled “BIS Calls Trigger Vicious Cycle” described how Korean entrepreneurs with good collateral cannot get operational loans from Korean banks, at a time when the economic downturn requires increased investment and easier credit:

“‘The Bank of Korea has provided more than 35 trillion won to banks since September when the global financial crisis went full throttle,’ said a Seoul analyst, who declined to be named. ‘But the effect is not seen at all with the banks keeping the liquidity in their safes. They simply don’t lend and one of the biggest reasons is to keep the BIS ratio high enough to survive,’ he said. . . .

“Chang Ha-joon, an economics professor at Cambridge University, concurs with the analyst. ‘What banks do for their own interests, or to improve the BIS ratio, is against the interests of the whole society. This is a bad idea,’ Chang said in a recent telephone interview with Korea Times.”

In a May 2002 article in The Asia Times titled “Global Economy: The BIS vs. National Banks,” economist Henry C K Liu observed that the Basel Accords have forced national banking systems “to march to the same tune, designed to serve the needs of highly sophisticated global financial markets, regardless of the developmental needs of their national economies.” He wrote:

“[N]ational banking systems are suddenly thrown into the rigid arms of the Basel Capital Accord sponsored by the Bank of International Settlement (BIS), or to face the penalty of usurious risk premium in securing international interbank loans. . . . National policies suddenly are subjected to profit incentives of private financial institutions, all members of a hierarchical system controlled and directed from the money center banks in New York. The result is to force national banking systems to privatize . . . .

“BIS regulations serve only the single purpose of strengthening the international private banking system, even at the peril of national economies. . . . The IMF and the international banks regulated by the BIS are a team: the international banks lend recklessly to borrowers in emerging economies to create a foreign currency debt crisis, the IMF arrives as a carrier of monetary virus in the name of sound monetary policy, then the international banks come as vulture investors in the name of financial rescue to acquire national banks deemed capital inadequate and insolvent by the BIS.”

Ironically, noted Liu, developing countries with their own natural resources did not actually need the foreign investment that trapped them in debt to outsiders:

“Applying the State Theory of Money [which assumes that a sovereign nation has the power to issue its own money], any government can fund with its own currency all its domestic developmental needs to maintain full employment without inflation.”

When governments fall into the trap of accepting loans in foreign currencies, however, they become “debtor nations” subject to IMF and BIS regulation. They are forced to divert their production to exports, just to earn the foreign currency necessary to pay the interest on their loans. National banks deemed “capital inadequate” have to deal with strictures comparable to the “conditionalities” imposed by the IMF on debtor nations: “escalating capital requirement, loan writeoffs and liquidation, and restructuring through selloffs, layoffs, downsizing, cost-cutting and freeze on capital spending.” Liu wrote:

“Reversing the logic that a sound banking system should lead to full employment and developmental growth, BIS regulations demand high unemployment and developmental degradation in national economies as the fair price for a sound global private banking system.”

The Last Domino to Fall

While banks in developing nations were being penalized for falling short of the BIS capital requirements, large international banks managed to escape the rules, although they actually carried enormous risk because of their derivative exposure. The mega-banks succeeded in avoiding the Basel rules by separating the “risk” of default out from the loans and selling it off to investors, using a form of derivative known as “credit default swaps.”

BIS Tower Building, Basel

Botta 1 Building, Basel

However, it was not in the game plan that U.S. banks should escape the BIS net. When they managed to sidestep the first Basel Accord, a second set of rules was imposed known as Basel II. The new rules were established in 2004, but they were not levied on U.S. banks until November 2007, the month after the Dow passed 14,000 to reach its all-time high. It has been all downhill from there. Basel II had the same effect on U.S. banks that Basel I had on Japanese banks: they have been struggling ever since to survive.8

Basel II requires banks to adjust the value of their marketable securities to the “market price” of the security, a rule called “mark to market.”9 The rule has theoretical merit, but the problem is timing: it was imposed ex post facto, after the banks already had the hard-to-market assets on their books. Lenders that had been considered sufficiently well capitalized to make new loans suddenly found they were insolvent. At least, they would have been insolvent if they had tried to sell their assets, an assumption required by the new rule. Financial analyst John Berlau complained:

“The crisis is often called a ‘market failure,’ and the term ‘mark-to-market’ seems to reinforce that. But the mark-to-market rules are profoundly anti-market and hinder the free-market function of price discovery. . . . In this case, the accounting rules fail to allow the market players to hold on to an asset if they don’t like what the market is currently fetching, an important market action that affects price discovery in areas from agriculture to antiques.”10

Imposing the mark-to-market rule on U.S. banks caused an instant credit freeze, which proceeded to take down the economies not only of the U.S. but of countries worldwide. In early April 2009, the mark-to-market rule was finally softened by the U.S. Financial Accounting Standards Board (FASB); but critics said the modification did not go far enough, and it was done in response to pressure from politicians and bankers, not out of any fundamental change of heart or policies by the BIS.

And that is where the conspiracy theorists come in. Why did the BIS not retract or at least modify Basel II after seeing the devastation it had caused? Why did it sit idly by as the global economy came crashing down? Was the goal to create so much economic havoc that the world would rush with relief into the waiting arms of the BIS with its privately-created global currency? The plot thickens . . . .


Ellen Brown developed her research skills as an attorney practicing civil litigation in Los Angeles. In Web of Debt, her latest book, she turns those skills to an analysis of the Federal Reserve and “the money trust.” She shows how this private cartel has usurped the power to create money from the people themselves, and how we the people can get it back. Her earlier books focused on the pharmaceutical cartel that gets its power from “the money trust.” Her eleven books include Forbidden Medicine, Nature’s Pharmacy (co-authored with Dr. Lynne Walker), and The Key to Ultimate Health (co-authored with Dr. Richard Hansen). Her websites are www.webofdebt.com and www.ellenbrown.com.


NOTES1. Andrew Marshall, “The Financial New World Order: Towards a Global Currency and World Government,” Global Research (April 6, 2009).
2 Alfred Mendez, “The Network,” The World Central Bank: The Bank for International Settlements, http://copy_bilderberg.tripod.com/bis.htm.
3 “BIS – Bank of International Settlement: The Mother of All Central Banks,” hubpages.com (2009).
4 Ibid.
5 Joan Veon, “The Bank for International Settlements Calls for Global Currency,” News with Views (August 26, 2003).
6 Peter Myers, “The 1988 Basle Accord – Destroyer of Japan’s Finance System,” http://www.mailstar.net/basle.html (updated September 9, 2008).
7 Nirmal Chandra, “Is Inclusive Growth Feasible in Neoliberal India?”, www.networkideas.org (September 2008).
8 Bruce Wiseman, “The Financial Crisis: A look Behind the Wizard’s Curtain,” Canada Free Press (March 19, 2009).
9 See Ellen Brown, “Credit Where Credit Is Due,” www.webofdebt.com/articles/creditcrunch.php (January 11, 2009).
10 John Berlau, “The International Mark-to-market Contagion,” OpenMarket.org (October 10, 2008).
Ellen Brown is a frequent contributor to Global Research. Global Research Articles by Ellen Brown