Category Archives: Ireland

‘deep state vs. Trump state’: Bill Kristol lets the cat out of the bag

“The Deep State is the big story of our time. It is the red thread that runs through the war on terrorism, the financialization and deindustrialization of the American economy, the rise of a plutocratic social structure and political dysfunction.” 1 — Mike Lofgren

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On February 14th, Dennis Kucinich, former Democrat Representative from Ohio and twice candidate for Democratic nomination for President, gave an extremely frank interview on Fox News calling for Americans to “wake up” in light of the leaked revelations that forced the resignation of Gen. Michael Flynn as President Trump’s National Security Advisor.

Here is an overview of what Kucinich said:

“Now what’s at the core of this is an effort by some in the intelligence community to upend any positive relationship between the US and Russia… The American people have to know that there’s a game going inside the intelligence community where there are those who want to separate the US from Russia in a way that would reignite the Cold War. That’s what’s at the bottom of all this…

“What’s going on in the intelligence community with this new president is unprecedented. They’re making every effort to offend him. Who knows what the truth is anymore. This is like the electronic version of Mad magazine: spy versus spy…

“There’s something wrong going on here in the intelligence community. I want to remind the viewers… that in the closing months of the Obama administration they put together a deal with Russia to create peace in Syria. A few days later, a military strike in Syria killed a hundred Syrian soldiers and that ended the agreement. What happened is inside the intelligence and the Pentagon there was a deliberate effort to sabotage an agreement the White House made.

This is like ‘deep state’. This is like some kind of a spy novel. But it’s real and the American people have to understand that a game is being played with the security of our country.

“This isn’t about whether you’re for or against Donald Trump. Hello! This is about whether or not the American people are bystanders in a power play inside the intelligence community the outcome of which could determine our relationship with Russia and whether or not billions of dollars are going to be spent in a new Cold War.”

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Now before offering my own broader thoughts below, I wish first to direct readers’ attention to an excellent recent article by Mike Whitney that lays out the background details and thereby better contextualises the ongoing ‘deep state’ campaign against the Trump administration. Here are just the opening paragraphs which usefully provide a flavour of Whitney’s standpoint:

The New York Times is currently engaged in one of its most ambitious projects: Removing a sitting president from office. In fact, Times columnist Nicolas Kristof even said as much in a recent article titled “How Can We Get Rid of Trump?”

Frankly, it’s an idea that I find attractive, mainly because I think Trump’s views on immigration, the environment, human rights, civil liberties and deregulation are so uniformly horrible, they could destroy the country. But the Times objections are different from my own. The reason the Times wants Trump removed is because Trump wants to normalize relations with Russia which threatens to undermine Washington’s effort to project US power deeper into Central Asia.

Trump’s decision to normalize relations with Moscow poses a direct threat to Washington’s broader imperial strategy to control China’s growth, topple Putin, spread military bases across Central Asia, implement trade agreements that maintain the dominant role of western-owned mega-corporations, and derail attempts by Russia and China to link the wealthy EU to Asia by expanding the web of pipeline corridors and high-speed rail that will draw the continents closer together creating the largest and most populous free trade zone the world has ever seen.

This is what the US foreign policy establishment and, by inclusion, the Times are trying to avoid at all cost. The economic integration of Asia and Europe must be blocked to preserve Washington’s hegemonic grip on world power. That’s the whole deal in a nutshell.

So don’t be fooled, the Times doesn’t care any more [sic] about the suffering of immigrant families who have been victimized by Trump’s extremist policies than they do about the three million refugees that have fled America’s wars in Libya and Syria. The fact that the Times continues to mischaracterize this vast human exodus as some sort of natural disaster instead of the predictable spillover from persistent US aggression, just confirms the fact that the Times is not a reliable source of unbiased information at all. It is a political publication that crafts a political narrative reflecting the views of politically-minded elites whose strategic objectives cannot be achieved without more brainwashing, more coercion and more war. 2

Click here to read Mike Whitney’s full article entitled “Liberals Beware: Lie Down With Dogs, Get Up With Fleas”.

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Deep state vs. Trump State

“But quite frankly there is an outside source which we refer to as the ‘deep state’ or the ‘shadow government’. There is a lot of influence by people which are actually more powerful than our government itself [or] our president” 3 — Ron Paul (shortly after Trump was elected)

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Listen attentively to the blunt advice Senate Democrat Leader, Chuck Schumer, gave Trump, speaking with MSNBC’s Rachel Maddow last month:

“Let me tell you, you take on the intelligence community, they have six ways from Sunday at getting back at you. So even for a practical, supposedly hard-nosed businessman, he’s being really dumb to do this.” 4

The threat to the newly elected Commander-in-Chief of the United States and ‘leader of the free world’ is plain. In fact, how could it be any plainer? Think you’re in charge, Mr President? Well, better watch your back!

More recently we have also heard from prominent neo-con William Kristol, co-founder with Robert Kagan of the ill-famed Project for the New American Century (PNAC) think tank, which set the stage strategically at the eve of the presidency of Bush jnr., right on cue for the “new Pearl Harbor” attacks of September 11th and the ensuing “Global War of Terror”. 5

On Valentine’s Day, Kristol tweeted:

Obviously strongly prefer normal democratic and constitutional politics. But if it comes to it, prefer the deep state to the Trump State.

This too is more than simply veiled threat. But then, to precisely what is Kristol referring when he eggs on the mysterious forces of the ‘deep state’, so antithetical (to judge from his own words) both to democracy and the US constitution? And to repeat, given the surrounding circumstances, Kristol’s tweet is more than a veiled threat, it is a gloat.

On the following day, The Atlantic magazine published an article asking “Are Deep-State Leakers Defending Democracy or Corroding it?” by David Graham, who correctly says:

[Yet] Schumer’s warning, even if realistic, is chilling: Not only does it raise the possibility of unelected, faceless bureaucrats using classified information to retaliate against a duly elected president, but that comes in the wake of the intelligence scandals of the Obama years. Edward Snowden’s revelations showed the vast powers that the NSA had accrued and could use, even on American citizens, with little or no oversight.

Further down this same piece, Graham then poses that weightier question: exactly what is the nature of this network of influence known as the ‘deep state’ which is suddenly flexing its muscles rather openly. Omer Taspinar, one of his respondents and a fellow at the well-connected Brookings Institute, supplies this eye-opening description:

“A clandestine network of retired intelligence officials, mafiosi, and others who engage in prosecutable criminal activity.” 6

His alarming portrait actually pertains to the Turkish ‘deep state’; and this, according to Taspinar, is ‘something different’. Indeed, notwithstanding Turkey is one of the West’s key allies with the second largest military force in the Nato bloc, it is basically an open secret that factions within the top echelons of its state institutions and military agencies engage in covert criminal activities on a regular basis: whether in the dirty war against Kurdish separatists and other regime opponents or, conversely, with intent to undermine President Erdogen and his government.

That ISIS and related Islamist terrorists have, for instance, been allowed free passage back and forth across the Turkish-Syrian border is a well-established fact and cannot be contested. Then, last July the world witnessed a dramatic but failed coup attempt which Erdogen blamed on the cultish CIA-backed fifth column ‘Gülen movement’. Evidently there is a great deal bubbling beneath the surface in Turkish ‘deep state’ politics. Indeed, if you type ‘deep state’ into google you will find myriad links to ‘Turkish deep state’; Turkey being the byword for ‘deep state’.

Back across the Bosphorus, on the other hand, we generally put more trust in the sanctity of our western democracies which we hope are better protected by constitutional systems of checks and balances. Nevertheless, criminal collusion certainly does take place at the highest levels of our society. Two of the plainest recent examples worth citing are Iran-Contra in America and the murderous hoax surrounding Iraqi WMDs. This second involved collusion between agencies on both sides of the Atlantic. Such high-level conspiracies in our own systems are of course pigeonholed as aberrations, ‘lapses’ or ‘failures’, and thereafter fitted with a label that designates them as exceptional: words such as ‘scandal’ and ‘-gate’. Tags now attached to some of the most ludicrous tittle-tattle and rumour, with the inevitable knock-on effect that the serious is conflated with the trivial, and the truth with fakery.

Moreover, when demonstrative evidence arises of continuity between conspirators, as periodically it does (see the two examples given below), this more damning proof of a wider high-level conspiracy tends, for obvious reasons, only to come to light many years or even decades after the event. Revelations of this kind are thereupon relegated to the position of interesting historic footnotes, rather than more properly treated as indicative and thus relevant to our understanding of contemporary events.

Hence, the flagrant and criminal lies that served as the pretext for war against Iraq were mostly overlooked during the commensurate push for regime change in Libya less than a decade on. And while nearly every schoolboy can repeat the name of Watergate (even if they don’t know the details) very few people know much, if anything at all, about the terroristic activities of ‘informants’ such as Stakeknife during “the troubles” in Ireland, or can name the clandestine and ‘stay-back’ operation ‘Gladio’ and its involvement throughout the 1970s and into the early ’80s in a Europewide “Strategy of Tension”.

Here is a short extract from a Guardian report published in 2003 about British agent ‘Stakeknife’ who it is alleged is guilty of at least forty IRA murders:

Yesterday, as west Belfast reeled from the news that Scappaticci and the British army agent known as Stakeknife were one and the same, an IRA source said: “He was the bogeyman of the IRA: judge, jury and executioner. He didn’t have to attend brigade meetings. He didn’t get involved in the politics or talking. But whenever something went wrong, Freddy Scappaticci was sent for.”

But this man, entrusted by the IRA army council with a crucial role, was in fact the British army’s most precious asset at the heart of the republican movement for a quarter of a century. 7

Click here to read the full article entitled “He did the IRA’s dirty work for 25 years – and was paid £80,000 a year by the government”.

Revelations about ‘Stakeknife’ and thousands of other ‘informants’ involved in Ulster terrorist gangs came to light thanks to reports by the Metropolitan Police commissioner, Sir John Stevens, following his three inquiries that spanned 14 years. In the final report Stevens finds that collusion between the security services and loyalist paramilitaries prolonged the Troubles and that “one branch of military intelligence was out of control and its activities were disastrous.” 8

At the time of the report’s release, Stevens said:

“My inquiries have highlighted collusion, ranging from the wilful failure to keep records, the absence of accountability, the withholding of intelligence and evidence, through to the extreme of agents being involved in murder.” 9

And below is embedded arguably the single most illuminating investigative documentary ever broadcast by the BBC – so important that I have already included it within earlier posts – a three-part Timewatch series from 1992 entitled simply Gladio in which filmmaker Allan Francovich goes on an extraordinary trail in efforts to interview key suspects and piece together the involvement of Nato, the CIA and British intelligence, and their collusion with ultra-right militia and other fascist groups including the Propaganda Due (P2) lodge in Italy:

These are the words of right-wing terrorist Vincenzo Vinciguerra, who is one of many to testify in the film:

“You had to attack civilians, the people, women, children, innocent people, unknown people far removed from any political game. The reason was quite simple. They were supposed to force these people, the Italian public, to turn to the State to ask for greater security. This is the political logic that lies behind all the massacres and the bombings which remain unpunished, because the State cannot convict itself or declare itself responsible for what happened.”

We must not be naïve. In reality, wherever political power is concentrated, there is always intrigue and plots of different kinds – though not all will be illicit. Beyond the more regularly reported machinations hatched within our local councils, county halls and regional police forces, there will be grander schemes forged at the rarefied heights of Cabinet, Whitehall, inside the Beltway and (heaven forfend) the inner circles of western security services.

‘Affairs’ such as Iran-Contra or so-called ‘failures’ like the Iraqi WMD hoax appear as singular irregularities simply by virtue of being so intimately exposed: other top-level conspiracies will soon become submerged when the “establishment” closes ranks. For instance, do you remember the name of Adam Werritty…? Look him up here and here and here.

Or consider, as a more immediate example, the ongoing VIP child abuse ‘scandal’. One moment it was making headline news, but then with an official inquiry underway (setting up inquiries as a tactic for delaying and covering tracks has an exceedingly long history – the Stevens Inquiry is the exception not the rule), public attention was switched from the original allegations toward some who were making the accusations. Presumption of innocence is a legal right, of course; a vital one that protects our freedom. So the burden of proof is always on the prosecution. But it is surely noteworthy that whilst some of our minor celebrities have been recently tried and jailed following police investigations into child abuse, none of the senior politicians or peers who came under similar suspicion has yet faced prosecution. But then ‘establishment’ and ‘cover up’ are words that fit together a lot like ‘Turkish’ and ‘deep state’.

Here is what senior Tory whip, Tim Fortescue, who had served in Sir Edward Heath’s government, told the BBC documentary “Westminster’s Secret Service” back in 1995:

“For anyone with any sense, who was in trouble, would come to the whips and tell them the truth, and say now, I’m in a jam, can you help?

“It might be debt, it might be… a scandal involving small boys, or any kind of scandal in which a member seemed likely to be mixed up in – they’d come and ask if we could help and if we could, we did.

“And we would do everything we can because we would store up brownie points… and if I mean, that sounds a pretty, pretty nasty reason, but it’s one of the reasons because if we could get a chap out of trouble then, he will do as we ask forever more.”

We might also recollect the sordid cases of Sir Jimmy Savile, and still more pertinently of Liberal MP, Sir Cyril Smith, who each abused literally hundreds of victims but escaped prosecution because repeated allegations made against them were only posthumously believed. It has since been disclosed that a thick dossier of police evidence on Cyril Smith was seized and deliberately held back by British intelligence immediately after he became a cabinet minister.10 Was this procurement by MI5 also ‘exceptional’ or ‘a lapse’, or might we presume that in all likelihood today’s intelligence services hold similar blackmailable dossiers on numerous prominent MPs?

Now let’s return to America and to the overarching question of how the term ‘deep state’ applies there. For the American ‘deep state’ is as irrefutably real (whether ‘something different’ or not) as its counterpart in Turkey, and large parts of it are not even particularly hard to locate:

Yes, there is another government concealed behind the one that is visible at either end of Pennsylvania Avenue, a hybrid entity of public and private institutions ruling the country according to consistent patterns in season and out, connected to, but only intermittently controlled by, the visible state whose leaders we choose. My analysis of this phenomenon is not an exposé of a secret, conspiratorial cabal; the state within a state is hiding mostly in plain sight, and its operators mainly act in the light of day. Nor can this other government be accurately termed an “establishment.” All complex societies have an establishment, a social network committed to its own enrichment and perpetuation. In terms of its scope, financial resources and sheer global reach, the American hybrid state, the Deep State, is in a class by itself. That said, it is neither omniscient nor invincible. The institution is not so much sinister (although it has highly sinister aspects) as it is relentlessly well entrenched.

So writes Mike Lofgren in a short essay entitled “Anatomy of the Deep State”.

A congressional staff member for 28 years who specialised in national security and had top secret security clearance, Lofgren was by his own account “at least on the fringes of the world I am describing, if neither totally in it by virtue of full membership nor of it by psychological disposition.” But then, as he goes on to describe, “psychological disposition” is not nearly as important as it might seem. Indeed, it is not at all necessary for insiders to be deeply committed to any greater cause:

Cultural assimilation is partly a matter of what psychologist Irving L. Janis called “groupthink,” the chameleon-like ability of people to adopt the views of their superiors and peers. This syndrome is endemic to Washington: The town is characterized by sudden fads, be it negotiating biennial budgeting, making grand bargains or invading countries. Then, after a while, all the town’s cool kids drop those ideas as if they were radioactive. As in the military, everybody has to get on board with the mission, and questioning it is not a career-enhancing move. The universe of people who will critically examine the goings-on at the institutions they work for is always going to be a small one. As Upton Sinclair said, “It is difficult to get a man to understand something when his salary depends upon his not understanding it.”

Still more instructively, Lofgren expounds (and at some length) how the ‘deep state’ is far less statelike than it sounds:

[T]he Deep State does not consist only of government agencies. What is euphemistically called “private enterprise” is an integral part of its operations. In a special series in The Washington Post called “Top Secret America,” Dana Priest and William K. Arkin described the scope of the privatized Deep State and the degree to which it has metastasized after the September 11 attacks. There are now 854,000 contract personnel with top-secret clearances — a number greater than that of top-secret-cleared civilian employees of the government. While they work throughout the country and the world, their heavy concentration in and around the Washington suburbs is unmistakable: Since 9/11, 33 facilities for top-secret intelligence have been built or are under construction. Combined, they occupy the floor space of almost three Pentagons — about 17 million square feet. Seventy percent of the intelligence community’s budget goes to paying contracts. And the membrane between government and industry is highly permeable: The Director of National Intelligence, James R. Clapper, is a former executive of Booz Allen Hamilton, one of the government’s largest intelligence contractors. His predecessor as director, Admiral Mike McConnell, is the current vice chairman of the same company; Booz Allen is 99 percent dependent on government business. These contractors now set the political and social tone of Washington, just as they are increasingly setting the direction of the country, but they are doing it quietly, their doings unrecorded in the Congressional Record or the Federal Register, and are rarely subject to congressional hearings. 11

Click here for the whole piece which reads like a who’s who of corporate insiders.

Incidentally, it follows that the ‘free press’, itself a loose conglomeration of competing corporate entities, although comparatively unfettered when interrogating the ‘deep state’ influence within Turkey or elsewhere, shies away from similar scrutiny at home. Indeed shares in what is, in effect, an article of faith that nothing remotely comparable to the Turkish ‘deep state’ exists or operates anywhere within boundaries of the West, whether in America or Britain, or any of our close European neighbours.

This in turn partly accounts for why neither William Kristol nor Chuck Schumer has been taken task following such staggeringly anti-democratic outbursts. The presumption being that similar admissions and innuendos are founded upon half truths at best; and having developed such a remarkable aptitude for doublethink, the media thus maintains, being half-convinced, that although the American ‘deep state’ exists and operates as a powerful political actor, the effects of its actions are of no tremendous importance. In any case, ignorance is bliss for journalists too, and extending Mike Lofgren’s other point, they also have their careers to consider.

In fairness, there are a few journalists who now feel sufficiently emboldened to shirk this general rule. Glenn Greenwald is one and when interviewed recently by Democracy Now!, he offered a quite alternative take on the huge importance of this sudden eruption of the American ‘deep state’ as it looms into fuller view. But first he outlined what he understands by the altogether slippery term ‘deep state’:

The deep state, although there’s no precise or scientific definition, generally refers to the agencies in Washington that are permanent power factions. They stay and exercise power even as presidents who are elected come and go. They typically exercise their power in secret, in the dark, and so they’re barely subject to democratic accountability, if they’re subject to it at all. It’s agencies like the CIA, the NSA and the other intelligence agencies, that are essentially designed to disseminate disinformation and deceit and propaganda, and have a long history of doing not only that, but also have a long history of the world’s worst war crimes, atrocities and death squads. This is who not just people like Bill Kristol, but lots of Democrats are placing their faith in, are trying to empower, are cheering for as they exert power separate and apart from—in fact, in opposition to—the political officials to whom they’re supposed to be subordinate.

Greenwald continues:

Now, I happen to think that the Trump presidency is extremely dangerous. You just listed off in your news—in your newscast that led the show, many reasons. They want to dismantle the environment. They want to eliminate the safety net. They want to empower billionaires. They want to enact bigoted policies against Muslims and immigrants and so many others. And it is important to resist them. And there are lots of really great ways to resist them, such as getting courts to restrain them, citizen activism and, most important of all, having the Democratic Party engage in self-critique to ask itself how it can be a more effective political force in the United States after it has collapsed on all levels. That isn’t what this resistance is now doing.

What they’re doing instead is trying to take maybe the only faction worse than Donald Trump, which is the deep state, the CIA, with its histories of atrocities, and say they ought to almost engage in like a soft coup, where they take the elected president and prevent him from enacting his policies. And I think it is extremely dangerous to do that. Even if you’re somebody who believes that both the CIA and the deep state, on the one hand, and the Trump presidency, on the other, are extremely dangerous, as I do, there’s a huge difference between the two, which is that Trump was democratically elected and is subject to democratic controls, as these courts just demonstrated and as the media is showing, as citizens are proving.

But on the other hand, the CIA was elected by nobody. They’re barely subject to democratic controls at all. And so, to urge that the CIA and the intelligence community empower itself to undermine the elected branches of government is insanity. That is a prescription for destroying democracy overnight in the name of saving it. And yet that’s what so many, not just neocons, but the neocons’ allies in the Democratic Party, are now urging and cheering. And it’s incredibly warped and dangerous to watch them do that.

Click here to read the full transcript or watch the interview on the Democracy Now! website.

Prior to Trump’s inauguration, I do not recall any focussed mainstream attention on the American ‘deep state’ and virtually no acknowledgment whatsoever of the decisive role it plays in shaping policy and otherwise pulling strings in Washington. Talk of ‘deep state’ politics anywhere in the West was almost entirely the preserve of ‘conspiracy theorists’. A few weeks into his foundering presidency, however, and ‘deep state’ insider and editor-at-large of The Weekly Standard, Bill Kristol, is loudly singing hallelujahs to its praise.

Lofgren concludes his essay optimistically:

The Snowden revelations (the impact of which have been surprisingly strong), the derailed drive for military intervention in Syria and a fractious Congress, whose dysfunction has begun to be a serious inconvenience to the Deep State, show that there is now a deep but as yet inchoate hunger for change. What America lacks is a figure with the serene self-confidence to tell us that the twin idols of national security and corporate power are outworn dogmas that have nothing more to offer us. Thus disenthralled, the people themselves will unravel the Deep State with surprising speed.

Trump is very evidently not that figure of “serene self-confidence” presaged in Lofgren’s remarks. Some interesting news, however, is that Trump’s presidency appears to have clumsily opened a rift between the White House and that “hybrid entity of public and private institutions” called the ‘deep state’ or ‘shadow government’. Not that Trump is anti-establishment. He is unshakeably a part of the establishment, although the establishment is not as monolithic as many believe. And in some areas the new administration’s policies seem to be seriously testing divisions between the competing establishment factions.

In the ensuing struggle between the ‘deep state’ and ‘Trump state’, as Kristol succinctly puts it, we are getting a momentary glimpse at the power/s behind the throne. But be warned because just as the cloak of invisibility begins to slip a little, so the ‘deep state’ in turn becomes not only more vulnerable but also more dangerous.

And it is actually not in our interests to take sides here, other than in seeking to oppose any continued escalation in already heightened tensions between America and Russia, since this presents a terrible risk to the survival of our civilisation and serves only to benefit the special interest groups. Aside from challenging this renewed threat of a Cold War, however, it is surely wise to distance ourselves and not lend our support to either camp. The rightful stance must surely be: a pox on both your houses!

Returning to Mike Whitney’s piece, he concludes:

[I]f you lie down with dogs, you’ll get up with fleas. Leftists should avoid the temptation of aligning themselves with groups and agencies that might help them achieve their short-term goal of removing Trump, but ultimately move them closer to a de facto 1984 lock-down police state. Misplaced support for the deep state Russophobes will only strengthen the national security state’s stranglehold on power. That’s not a path to victory, it’s a path to annihilation. 12

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Additional: Gary Webb, the ‘Dark Alliance’ and Pablo Escobar’s son

In the mid-’90s investigative journalist Gary Webb began writing a series of articles for the San Jose Mercury News called “Dark Alliance” in which he exposed details of a conspiracy involving CIA protection provided to Contra rebels known to be running cocaine in Nicaragua. He also alleged that the CIA had supported a Los Angeles drug ring and thereby helped to trigger the crack epidemic of the 1980s. In response, The New York Times, The Washington Post and, most especially, The Los Angeles Times attacked him and forced his resignation from the Mercury News.

Then, in 1998, Webb expanded his series of articles into a book called Dark Alliance: The CIA, the Contras, and the Crack Cocaine Explosion, in which he included response to the hostile mainstream criticism.

Webb is now vindicated:

In 1998, a CIA inspector general’s report acknowledged that the CIA had indeed worked with suspected drugrunners while supporting the contras. A Senator named John Kerry had investigated these links years earlier, and the media had mostly ignored his findings. After Webb published his articles, the media spent more time crushing Webb than pursuing the full story. It is only because of Webb’s work–as flawed as it was–that the CIA IG inquiry happened. So, then, it is only because of Webb that US citizens have confirmation from the CIA that it partnered up with suspected drug traffickers in the just-say-no years and that the Reagan Administration, consumed with a desire to overthrow the Sandinistas in Nicaragua, allied itself with drug thugs.*

In 2014 Gary Webb received an even higher accolade when his story was made into the Hollywood film, Kill the Messenger.

Whilst with regards to media criticism, Webb later wrote:

If we had met five years ago, you wouldn’t have found a more staunch defender of the newspaper industry than me… And then I wrote some stories that made me realize how sadly misplaced my bliss had been. The reason I’d enjoyed such smooth sailing for so long hadn’t been, as I’d assumed, because I was careful and diligent and good at my job… The truth was that, in all those years, I hadn’t written anything important enough to suppress…

Tragically, on December 10th 2004, Webb was found dead with two gunshot wounds to the head. His death was ruled suicide by the Sacramento County coroner’s office.

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Today we have fresh allegations of CIA involvement in drug-running. The following extract is taken from an article published on February 17th. So far it seems to have received no mainstream attention:

Juan Pablo Escobar Henao, son of notorious Medellín cartel drug kingpin, Pablo Escobar, now says his father “worked for the CIA.”

In a new book, “Pablo Escobar In Fraganti,” Escobar, who lives under the pseudonym, Juan Sebastián Marroquín, explains his “father worked for the CIA selling cocaine to finance the fight against Communism in Central America.”

“The drug business is very different than what we dreamed,” he continues. “What the CIA was doing was buying the controls to get the drug into their country and getting a wonderful deal.”

“He did not make the money alone,” Marroquín elaborated in an interview, “but with US agencies that allowed him access to this money. He had direct relations with the CIA.”

Notably, Marroquín added, “the person who sold the most drugs to the CIA was Pablo Escobar.”

[Bold highlights as in original]

* From an article entitled “Gary Webb Is Dead” written by David Corn, published in The Nation on December 13, 2004. https://www.thenation.com/article/gary-webb-dead/  

Webb, Gary (2002). “The Mighty Wurlitzer Plays On”. In Borjesson, Kristina. Into the Buzzsaw: Leading Journalists Expose the Myth of a Free Press. Prometheus Books. pp. 141–157. ISBN 1-57392-972-7.

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1 From an essay entitled “Anatomy of the Deep State” written by Mike Lofgren, published by Moyers & Company on February 21, 2014. http://billmoyers.com/2014/02/21/anatomy-of-the-deep-state/ 

2 From an article entitled “Liberals Beware: Lie Down With Dogs, Get up With Fleas” written by Mike Whitney, published in Counterpunch on February 22, 2017. http://www.counterpunch.org/2017/02/22/90663/ 

3 From an article entitled “Trump should resist neocon & shadow gov’t influence to justify people’s hopes – Ron Paul to RT” published by Russia Today on November 11, 2017. https://www.rt.com/usa/366404-trump-ron-paul-crosstalk/

4 Quote taken from article entitled “Schumer: Trump ‘really dumb’ for attacking intelligence agencies” written by Mallory Shelbourne, published in The Hill on January 3, 2017. http://thehill.com/homenews/administration/312605-schumer-trump-being-really-dumb-by-going-after-intelligence-community

5 

A transformation strategy that solely pursued capabilities for projecting force from the United States, for example, and sacrificed forward basing and presence, would be at odds with larger American policy goals and would trouble American allies. Further, the process of transformation, even if it brings revolutionary change, is likely to be a long one, absent some catastrophic and catalyzing event – like a new Pearl Harbor.

From Rebuilding America’s Defenses: Strategy, Forces and Resources For a New Century; Ch. V, ‘Creating Tomorrow’s Dominant Force’ pp. 62–3, published in September 2000 as a report of The Project for the New American Century. Available to download here: https://web.archive.org/web/20131010230819/http://www.newamericancentury.org/defensenationalsecurity.htm  

6 From an article entitled “Are Deep-State Leakers Defending Democracy or Corroding It?” written by David A. Graham, published  in The Atlantic on February 15, 2017. https://www.theatlantic.com/politics/archive/2017/02/american-deep-state-trump/516780/

7 From an article entitled “He did the IRA’s dirty work for 25 years – and was paid £80,000 a year by the government” written by Rosie Cowan, published in the Guardian on May 12, 2003. https://www.theguardian.com/uk/2003/may/12/northernireland.northernireland1

8

The report into alleged collusion between the security forces and loyalist paramilitaries has also found that military intelligence in Northern Ireland actually prolonged the Troubles.

It suggests one branch of military intelligence was out of control and its activities were disastrous.

From a BBC news article entitled “Security forces aided loyalist murders” published on April 17, 2003. http://news.bbc.co.uk/1/hi/northern_ireland/2954773.stm

9 From an article entitled “Murders, cover-up, arson – by Ulster security” written by Thomas Harding, published in The Telegraph on April 18, 2003. http://www.telegraph.co.uk/news/uknews/1427827/Murders-cover-up-arson-by-Ulster-security.html

10 

Tony Robinson, a special branch officer with Lancashire Police in the 1970s, said he saw a police dossier which was “thick” with allegations from boys claiming they had been abused by Sir Cyril.

He said that after taking the file out of the safe at special branch headquarters in Hutton, Preston, he was contacted by an officer from MI5 who told him it needed to be sent to London.

Mr Robinson also disclosed that the then Director of Public Prosecutions had examined the allegations but decided they were “not in the public interest”.

He said: ”The police now say the file is lost. It seems like there was a complete cover up to me.”

From an article entitled “Sir Cyril Smith sex abuse dossier seized by MI5” written by Steven Swinford, published in The Telegraph on November 14, 2012. http://www.telegraph.co.uk/news/uknews/crime/9678697/Sir-Cyril-Smith-sex-abuse-dossier-seized-by-MI5.html

11 From an essay entitled “Anatomy of the Deep State” written by Mike Lofgren, published by Moyers & Company on February 21, 2014. http://billmoyers.com/2014/02/21/anatomy-of-the-deep-state/

12 From an article entitled “Liberals Beware: Lie Down With Dogs, Get up With Fleas” written by Mike Whitney, published in Counterpunch on February 22, 2017. http://www.counterpunch.org/2017/02/22/90663/ 

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Whoops austeritypocalypse! or why unbounded economic reasonableness runs into such trouble…

Q: At the onset of the crisis, the former Finance Minister Papaconstantinou likened the Greek economy to the “Titanic” heading straight for the iceberg. Do you also feel as if you are standing on the bridge of the “Titanic”?

A: No. The “Titanic” sank a while ago. We’re steering the lifeboat and throwing lifebelts to those drowning around us.

This was the response Greek Prime Minister, Alexis Tsipras, gave in an exclusive interview to German magazine Stern1

*

“austerity”, what is it good for…?

As the economies of the western world continue to flounder, with Germany too (Europe’s last remaining industrial powerhouse) reeling just a little from the greater crisis, debt reduction is still regarded as the key component to any recovery programme. To meet these ends, all our governments have been overseeing huge cuts in public services, welfare payments especially gouged, in concerted efforts to reduce their deficits. This death of our societies by a thousand cuts of “austerity” being the recommended cure which mainstream economists have called for, and though alternative voices have no less insistently pointed out that “austerity measures” are inherently counterproductive (since they reduce tax revenues), these dissenting voices continue to be marginalised.

A few years ago Thomas Herndon stepped forward. Herndon, a university student and thus less rigid in his outlook, caused quite a rumpus – as a consequence, he has since been rewarded with his own wikipedia entry. This sudden burst of fame coming after he inadvertently stumbled upon grievous errors in an influential paper entitled Growth in a Time of Debt (published 2010), authored by eminent Harvard professors, Carmen Reinhart and Ken Rogoff – Rogoff, a former chief economist at the IMF.

In their paper, Reinhart and Rogoff had purported to show that whenever national debt is in excess of 90% of GDP, growth is “roughly cut in half”. This correlation had subsequently been quoted by policy-makers across the world, as well as routinely served up as empirical proof that there was simply no viable alternative to our continuing “austerity” programmes. Most notably, perhaps, former EU Commissioner for Economic and Monetary Affairs, Olli Rehn, leant rather heavily on Reinhart and Rogoff’s work.

But then doubting Thomas Herndon decided to check their figures for himself. And, to his own astonishment, discovered that one of the most frequently cited justifications for the imposed “austerity” strategy actually rested upon a few careless mistakes on a spreadsheet!

[Herndon had] spotted a basic error in the spreadsheet. The Harvard professors had accidentally only included 15 of the 20 countries under analysis in their key calculation (of average GDP growth in countries with high public debt).

Australia, Austria, Belgium, Canada and Denmark were missing.

Oops.

Herndon and his professors found other issues with Growth in a Time of Debt, which had an even bigger impact on the famous result. The first was the fact that for some countries, some data was missing altogether. 2

Click here to read more in this BBC news article.

Taken aback by this unexpected challenge from a novice, Reinhart and Rogoff felt obliged to issue a response:

We are grateful to Herndon et al. for the careful attention to our original Growth in a Time of Debt AER paper and for pointing out an important correction to Figure 2 of that paper. It is sobering that such an error slipped into one of our papers despite our best efforts to be consistently careful. We will redouble our efforts to avoid such errors in the future.

Confessing to their blunder, but keen also to defend their professional reputation, they casually added:

We do not, however, believe this regrettable slip affects in any significant way the central message of the paper or that in our subsequent work.

There has since been no halt to the economic gouging and scourging of Europe. Despite the more immediate evidence coming out of Greece, Spain, Portugal, and every other place where such “measures” have been most strongly administered, that prove “austerity” isn’t working. And even when all other factors, social and human factors, are set aside, and success or failure is judged within the exceedingly narrow terms of its proponents, we see that the sovereign debt burdens in all these countries have continued to rise. 3

Given such a lack of success, the response is obviously to double-down. Apply more stringent “austerity”; if the original cuts have failed, then they needed to be deeper. In former times the doctors would just have ordered more leeches, or the priests would have demanded a tightening of the cilice. Tougher love. Just too bad if the supposed antidote is the worst of the poison, because orthodoxy asserts that, poison or not, it is the best and only remedy. The really important thing is to never let mere facts (especially incalculable costs like human misery) get in the way of a damned fine economic theory!

*

 whose debt is it anyway…?

But how did these sovereign debt burdens arise in the first place? Or put another way, the related question might be asked, to whom are the debts actually owed? This second question is rarely broached, but in 2013 award-winning business journalist, Harald Schumann, sought a direct answer to precisely this question. He journeyed across the stricken eurozone countries and poised the question to those working inside the so-called “Troika” (IMF, European Central Bank and EU Commission) as well as significant politicians, economists, lawyers, journalists and even the occasional central banker. The result, a brilliantly constructed documentary entitled The Secret Bank Bailout, is embedded below:

I highly recommend watching the documentary in full, but would also like to offer a brief overview.

Schumann asks which parties were actually rescued by the bailouts, and finds that contrary to what ordinary Germans were led to believe (this is a German documentary originally titled Staatsgeheimnis Bankenrettung) the people living in the poorer eurozone states received barely a penny of this apparent ‘foreign aid’ – our own media perpetuates the self-same falsehood.  Because rather than letting the creditors and the banks absorb their speculative losses, these financial institutions were deemed “too big too fail” and protected. So the bailouts were never used to support the governments, but always passed on to the creditors of major banks, especially ones in Germany and France, who had taken the unwise risks that caused the crisis – the original losses often due to property bubbles in places like Spain and Ireland. (The whole notion of “too big too fail” is, of course, a contravention of even the most basic tenets of free market capitalism.)

And who have been the ultimate recipients of all this bailout money? Well, that has remained a closely guarded secret. We ought to be asking why, of course, which Schumann’s documentary does. He also seeks to penetrate the secret itself.

In the next sections, I will present a further overview comprising highlights of Schumann’s discoveries, and following the same route (then a little beyond it) as he investigated country by country, across the blighted eurozone.

*

 Ireland

The Irish people have been forced to take on 70 billion euros of additional debt to pay off foreign creditors.

Stephen Donnelly, independent Irish MP, says that the ECB held the Irish government virtually at gunpoint:

“The suspicion is that European Central Bank said ‘You will continue to pay these bondholders [the mainly foreign creditors] to whom you owe nothing or we will pull the emergency funding out of your banking system, thereby collapsing your banking system, thereby collapsing your economy.’ To me that is gunboat diplomacy… [with a little prompting] or blackmail. It is a very, very serious threat for a central bank to have made in actually forcing a sovereign nation to surrender its sovereignty to bailout an independent group of investors. Was the ECB acting illegally?”

Brian Hayes, Irish Deputy Minister of Finance:

“Of course that was a position that was foisted on the Irish people as a result of the decisions taken… It was the majority view of the ECB that this money had to be paid back.”

And where did the Irish bailout money go? A full breakdown of the bondholders of Anglo Irish bank is available here. (The list was publicly released by blogger Guido Fawkes.)

Germany has the most with 15 of the bond holders. Who between them hold 5.3 trillion euros.

France is next with 10 bond holders.  Who have an estimated 4 trillion.

Britain is third with 9 who have around 3 trillion.

The Swiss have 6 but who have about 8.5 trillion.

America has only three and hold only a trillion.

Other nations include, Spain, Belgium, Portugal, Holland Finland, Norway, Sweden, Poland, South Africa and Italy.

The bondholders include some of the world’s largest banks: Deutsche, Soc Gen, Barclay’s, PNB Paribas, UniCredit (who don’t appear on the list but own Pioneer Investments) and Wells Fargo (also not on the list but who own European Credit Management). There is also Goldman Sachs and Rothschild Group4

As Harald Schumann says “It’s like a Who’s Who of the financial world.”

Back to Stephen Donnelly:

“No country on earth in history has ever paid that amount of money back without having its own monetary policies… you gradually bleed, year on year on year. And now you really do depend on Europe. There was a quote by Nelson Mandela where he said something like: ‘It is the greatest tragedy of the human condition that we must endure so much pain before arriving at a compromise that we always knew was going to be needed.’”

The first lesson, therefore, is that the solution – any practicable solution – has to include debt cancellation.

*

 Spain

The Spanish people have been forced to take on 40 billion euros of additional debt to pay off foreign creditors.

Harald Schumann confronted Luis De Guindos, Spanish Minister of Finance, with advice he was given Stephen Donnelly that they would be better to let (some of) the banks fail because “banks have to be allowed to fail”. But Luis De Guindos disagrees:

“I think that the Irish situation is totally different from the Spanish situation. As I have said before, the size of the balance-sheet of the Irish banks in comparative terms with the GDP of Ireland was three times larger than the case of Spain. So I think that while in the case of Ireland the cost of recapitalising the banks has been above 20% of the Irish GDP, in the case of Spain we are talking 4% of GDP. So it’s a totally different situation and it’s not comparable at all.”

But economist Juan Rallo disagrees with De Guindos, and beginning with the figures themselves: “The real figure is not 40 billion, but 80 or 90 billion…”

And who are the creditors of the Spanish banks (particularly Bankia)? When Schumann manages to get hold of a list (thanks to “friendly people that help me”) he discovers that Deutsche Bank again features prominently.

Juan Moreno is a lawyer working with the 15M protest movement, who filed the lawsuit for the closure of Bankia to save the Spanish taxpayers from a bailout. When asked if the system would have collapsed, Moreno says:

“If you were to drop Bankia it would probably lead to the collapse of other banks, but not the big banks like BBVA, Santander, La Caixa, [Banco] Sabadell, or [Banco] Popular.”

Back to Luis De Guindos:

“A money market economy with fiat money is unstable. And we have an example that we let the banks go down… it was the Great Depression. It was the worst depression we had over the last century.”

Juan Moreno’s response:

“It’s all scaremongering. I don’t want that, I want numbers. I want to know what would really happen if they were to go bankrupt… With what we know now we would say this bank is beyond saving. We can’t continue to pour billions of euros into it. The creditors must take losses…

“The trial uncovered that the bank figures were falsified by upper management, but now we discover that the same had happened at the lower management levels. So a banking culture developed where employees were rewarded with bonuses so that the upper level did not realise how bad things were at the local branch level… The judge said that there was indeed public control of the bank, but the government supervisors played along. Letting the fox guard the hens is good for nothing.

“They’re all criminals: those in charge of Bankia and the public supervisors. If they’d let the savings banks go bankrupt, we would have found out what the politicians did with the money. Much of the debt that cannot be repaid is money that went to political parties, to city administrations, for work in the autonomous southern regions to companies connected to the government. These revelations would have made the political class disappear.”

So what is Moreno’s advice to the Germany citizens who are paying to prop up this corrupt system…?

“Numbers. The balance-sheet. It’s simple. You have to know the facts and apply the laws.”

*

 Cyprus

Meanwhile, depositors in Cypriot banks (savers as opposed to taxpayers) had more than 6 billion euros seized overnight in a so-called bail-in to pay off foreign creditors. This has crippled many businesses and stifled economic growth in a different way.

Panicos Demetraides, Governor of the Central Bank of Cyprus:

“It’s a change from past bailouts that we have had to bail-in on this occasion [from] uninsured depositors in the two big Cypriot banks. The burden of this bail-in has been borne partly by non-residents, but also partly by residents, Cypriot companies and households. About two-thirds of the burden has been borne actually by non-residents and one-third by residents.”

But as German MP Gerhard Schick (Green Party) explains:

“The European Central Bank allowed the Cypriot Central Bank to give money to banks in Cyprus even though they were insolvent. That’s a real mistake because then non-functioning structures are upheld and taxpayers’ money – and that’s what we’re talking about with a central bank – is endangered. In this way the ECB slowed down the rescue programme and made it possible for many creditors to withdraw their money and invest it elsewhere… The ECB was a creditor acting in self-interest to protect its own money. This conflict of interest should never have been allowed to happen, but it did because central bank money was put into bad banks.”

Back to Panicos Demetraides:

“Certainly the delays offered more informed investors [the chance] to protect their own investments. And they put the less informed investors at a disadvantage.”

Does this mean the ECB allowed other European banks time to withdraw their money? That must be some sort of rumour, says Demetraides. It is a rumour that must persist until there is an independent investigation, but as Gerhard Schick points out:

“The problem is that the ECB is a closed shop, and neither the European Parliament nor national parliaments are really able to call it to account when it breaks the rules.”

Harris Georgiades, Cypriot Minister of Finance:

“For us it was a take it or leave it situation. A decision that we accepted under pressure, and with no time to negotiate extensively. Essentially both of our kneecaps have been broken, and now we are asked to run.”

*

 Greece

Greece entered the crisis with a debt-to-GDP ratio of 110% and with around 10% unemployment. It was then put through an “austerity programme” supposedly designed to tackle the debt. Five years and several thousand suicides later, unemployment currently stands at 30% and debt-to-GDP is at around 180%.

This tremendous spike in debt remains in spite of ‘haircuts’ known as the Greek “Private sector involvement” or PSI, the first announced in July 2011, and quickly followed by PSI Mk2 (after PSI Mk1 failed), which involved a impressive sounding 50% reduction in the face value of Greek government bonds (GGB). 5 But then, as Yanis Varoufakis, current Greek Finance Minister, but as then a lowly Professor of Economics, wrote soon after:

In short, and so as not to overlabour the point, PSI Mk2 is dead in the water. The shenanigans of the shadow banking sector (which, lest we forget, includes not only the hedge funds but also, remarkably, the ‘proper’ banks shady Special Vehicles) plus the predictable deterioration of the Greek economy have put paid to it. The negotiations may go on for a little while longer, the announcement of a brilliant agreement may be made but, in truth, the idea that the Greek haircut will put Greece’s debt-to-GDP ratio back on a course towards 120% has sunk without trace. And if you need hard evidence for this, the European Summit of 9th December provided it even before 2011 was seen off: Officially, Europe’s great and good announced the end of PSI as a policy of the new ESM; Europe’s future central, permanent bailout fund. It had all been a mistake, they seemed to confess. 6

Greece has never been bailed out, only the European banks (well over 90% of the bailout money returning to them), and likewise the ‘haircut’ actually caused more problems than it solved. In particular, it permitted the looting of social security and public pension funds that are mandated by law to invest in government bonds – the following is taken from a special report published by Reuters:

Greece’s pension funds – patchily run in the first place, say unionists and some politicians – have been savaged by austerity and the terms of the international bailout keeping the country afloat.

Workers and pensioners suffered losses of about 10 billion euros ($13 billion) just in the debt restructuring of March 2012, when the value of some Greek bonds was cut in half. That sum is equal to 4.6 percent of the country’s GDP in 2011.

Many savers blame the debacle on the Bank of Greece, the country’s central bank, which administers three-quarters of pension funds’ surplus cash. Pensioners and politicians accuse it of failing to foresee trouble looming, or even of investing pension fund money in government bonds that it knew to be at high risk of a ‘haircut’ – having their value reduced. 7

Click here to read the full Reuters report.

In June 2014, Yanis Varoufakis was interviewed by Harald Schumann. Excerpts would feature in another collaboration between Arpad Bondy and Schumann; their follow-up documentary The Trail Of The Troika (in German, Macht ohne Kontrolle – Die Troika), which plotted another route across the continent in order to show how “austerity measures” have utterly failed to rescue the eurozone economies, and how in the process “the Troika” has also flagrantly breached its own European treaty regulations. Unfortunately, an English version of this more recent documentary is at present unavailable on youtube or elsewhere (so far as I can ascertain – but I will certainly embed a version as and when I find one). Meanwhile, uploads of the various interviews filmed during its making are now freely available, and embedded below is Schumann’s unabridged interview with Varoufakis, of which I have again selectively transcribed some of the answers he gave last summer:

What was the bailout for? The bailout was not in order to bail Greece out. Greece was never bailed out. The bailout loan that was extended in May of 2010 had a very singular, simple purpose. It was to transfer banking losses from the asset books of banks, not only Greek ones, but also French ones and German ones, onto the shoulders of the taxpayers. Initially the Greek taxpayers – because they knew that these shoulders were too weak to bear those losses, eventually it was always part of the plan to transfer them onto the shoulders of the German, and the French, and the Dutch and the Finnish taxpayers. And “the Troika” is here supervising this sinister transfer. [5:45 mins]

Smart people in Brussels, especially in Frankfurt, and of course Berlin, knew in May 2010 that Greece would never be able to repay its debts. They knew that again in the Spring of 2012 when they extended the second loan. They know it again now. In their minds they have already written off a very large bulk of the billions and billions that was given to the Greek state to give to the Greek banks and to give to the rest of the banks. All other things being equal, of course, “the Troika” would much rather more money was repaid than less money. But all other things are not equal. At this very moment in time, as we speak, while the Greek banks have huge black holes that we all know, even though they are not being admitted to, something similar is happening in the rest of the eurozone. Deutsche Bank, Finanzbank, BNP Paribas are skating on thin ice. They will never admit to it. And part of the angst and of the anxiety of the powers in Brussels, in Frankfurt, in Berlin, is how not to admit to the German, to the French, to the Dutch, to the Finnish people, that their banking sector was never really put back on an even keel. 8 [7:15 mins]

In 2010, what they had done was this: they lied to the Greek people and to the German people. They said to the Greek people: We have avoided bankruptcy. And they said to the German people that the Greeks, they were waivered, now we are going to punish them with austerity. But we will lend them the money because European solidarity demands that. In reality, what they were doing was transferring banking losses from the bankers – the European bankers, all of them – onto the shoulders first of the Greek taxpayers and eventually onto the German taxpayers, because the Greek taxpayers could not shoulder all of this money.

So they had lied to the German taxpayers. They said: We are not going to haircut the Greek debt. They were always going to haircut the Greek debt. They knew it. What they did with first bailout loan was to shift that big bulk, a 110 billion, from the bankers’ loss book onto the shoulders of Europe’s taxpayers. And then, after that had been effected, of course then they had to haircut – to do what they said they were never going to do – and who did they haircut? They haircut the small bondholders and the pension funds… So the PSI, the second bailout, the haircut of the private sector, was part of the original process of shifting the burden of adjustment and the cost of the crisis from the shoulders of those who caused it, onto the shoulders of those who didn’t cause it in Greece and in Germany. And all that in the name of European solidarity. And then they wonder why right-wing parties of the extreme part of the spectrum are winning power – or, at least, winning seats in the European Parliament. [21:30 mins]

Asked whether he thought the 2008 crisis had been caused as a result of incompetence or due to a more deliberate act of conspiracy, Varoufakis replied:

It wasn’t a conspiracy. It was a very simple operation: How do we stay in power? Mr [Jean-Claude] Juncker said it. Once he admitted: we know what needs to be done, we just don’t know how to do it and remain in power. Now don’t forget that before 2008, 2010, all parties of government, whether they were Christian-Democratic, Social-Democratic, it doesn’t matter. They had developed this extremely close relationship with the financial sector. They had looked at the financial sector as the cow that would bear the milk from which they would feed all, not only their political parties and careers, but also the welfare state – from the point of view of the Social-Democrats.

There was a kind of Faustian bargain between our politicians and bankers. We will let you do what you want, and you pay us a small amount proportional in order to fund our states. So when the crisis hit – which was completely unexpected for them – they had neither the analytical power nor the moral authority to go to these bankers and say: You know what, you’re out. You’re bankrupt, we’re taking over the banks… 9 [24 mins]

Finally, here was what Yanis Varoufakis, the economist (and not yet Finance Minister) said when asked for “any realistic proposal [to] how the dire economic situation in Greece can be improved”:

Well, we have to stop doing what we are doing and do something quite diferent. And there are two levels at which you should see this, because let’s not forget that once we have a monetary union you can’t talk about the overcoming of the crisis in one part of it in isolation to the others. It would be like talking about how South Dakota would escape the Great Depression in 1933 without the rest of the United States going through the New Deal. So we need a New Deal for Europe… 10 [32:30 min]

But, I have to insist: The solution must be European, because the crisis is European. And there are things we can do within two weeks to end this euro-crisis without violating any of the European Union treaties as long as we have the political will to do it. 11 [34:30 min]

*

there is a better alternative… (and always was)

Q: Your Finance Minister Varoufakis said that he is not afraid of an Armageddon.

A: He said in parliament: if you enter into negotiations, you are not seeking a breakup. But you have to keep a breakup in mind as a contingency. I share this view.

 

Q: So you have a Plan B in case Greece does decide to exit from the single currency?

A: We don’t need a contingency plan because we will stay in the eurozone. But we won’t achieve this objective at the expense of the weak – like our previous government.

 

– Alexis Tsipras in same interview published in Stern magazine.

On April 16th, Varoufakis was invited to speak at a press conference hosted by the Brookings Institute which is based in Washington. In answer to a question about being trapped in a position where the Greeks are left with little alternative but to default, Varoufakis replied:

I would willingly, eagerly and enthusiastically accept any terms offered to us if they made sense. I would have no problem with the Memorandum of Understanding if it was founded upon a reform programme that attacked the worse cases of rent-seeking in Greece, and made the reforms that were necessary in order to enhance efficiency and social justice. If it came for the planet Mars, if it came from Berlin, if it came from Brussels, if it came from Portugal, from Slovakia, I don’t care which, I would have embraced it. The problem we have with these conditions – you know, the take it or leave it conditions – is not so much the authoritarianism, it is that fact that we’ve tried that medicine and it hasn’t worked…

It is almost precisely three years ago since I wrote a post entitled ‘austerity’ or ‘Grexit’: is there really no better alternative for Greece? There have since been more than two and a half years of unrestrained “austerity” (prior to Syriza’s victory), a “take it or leave it” Hobson’s choice, which has deepened the crisis not only in Greece but across the entire eurozone. ‘Grexit’ has never been a realistic alternative, and as Syriza have maintained from the outset, they have no intention whatsoever of ditching the euro. So ‘Grexit’ becomes ‘Grexident’, in other words, an impossibility. Because any accidental Greek exit can only occur if it is accidentally on purpose, and that would mean ‘Grexpulsion’ – a term the mainstream has yet to adopt for obvious reasons.

In Washington, Varoufakis was once again unequivocal about Syriza’s position:

“Toying with ‘Grexit’, which is something we don’t do – we are refusing to discuss it, because as I have said before even worrying about it is like worrying about being hit by a comet in a universe in which comets are attracted to you if you are worried about them – toying with ‘Grexit’ and ideas of amputating Greece is profoundly anti-European because anybody who claims that they know what the effect of a ‘Grexit’ is, are deluded.” [52 mins]

*

Which brings us to an impasse. Accept “austerity” or get out! Jump off a cliff or suffer slow death by a thousand cuts. Is there really no genuine alternative for the Greeks?

Well, the answer to that question actually depends upon what you value. If you think that all debts are sacrosanct, then it necessarily follows that the Greeks must go on paying the banks to their bitter end. That the debt is unpayable doesn’t matter. That the debt is the consequence of so much ineptitude and malfeasance within the banking system doesn’t matter either. The Greeks must cough up because otherwise the chaos will worsen (or so we are again constantly given to believe). But if you value human life above money, and recognise that debts that cannot be repaid will never be repaid, then you can begin to think more constructively. In fact, the alternative becomes immediately and blindingly apparent. Since a debt cancellation will inevitably come sooner or later, the only real question is how much longer must the Greeks be punished in the meantime.

A way-out of all this mess is entirely possible. It doesn’t involve “austerity” and does not necessarily require a Greek exit from the eurozone. What is needed is simply an end to the bottomless banker bailouts and then new money being made available for reconstruction projects and other productive enterprise within Greece, Spain and elsewhere. Such a ‘New Deal’ injection is unlikely to be offered by the IMF, and neither will it be supported by the likes of Angela Merkel. But it can be fought for by the Greek people themselves, and in this battle to stop the wanton destruction of their nation, as fellow Europeans we should stand with them, recognising that the same aggressive financial interests that have already eviscerated Greece, will be pillaging our own lands soon enough.

The paragraphs above are taken from the post I wrote three years ago – yet so little has significantly altered that it remains pertinent enough to repeat it.

Back to Varoufakis who puts flesh on those barest of bones regarding the ‘New Deal’ option for Europe (and presenting the way ahead without any recourse to deficit spending by governments – so heretical to the neo-liberals):

Europe as a whole, the eurozone as a whole, is typified not only by a mountain of great private and public debts, which we do have. But there is another mountain hiding behind it: a huge mountain of idle savings with nowhere to go. And it should be our joint project to energise, to motivate, those idle savings, to help them overcome their great fear that keeps them idle, and channel them into productive investments – not investments into assets, but investments into real productive capacity. Now, how do we do this? Well, we have the European Investment Bank [EIB] that could do this. And we have the European Central Bank which is embarking on quantitative easing. Well, why can’t the EIB fund a major ‘New Deal’ for Europe, that channels investment to the private sectors of the countries and regions within countries that have a major output gap? [44 mins]

The whole of Varoufakis speech at the Brookings Institute and the subsequent Q+A session is embedded below:

*

last frenzy of reasonableness…?

Just days after Syriza were swept to election victory on January 26th, economist and former US Assistant Secretary of the Treasury for Economic Policy under Reagan, Paul Craig Roberts, published an article entitled “Is Democracy Dead In The West?” which began:

We will find out the answer to the question posed in the title in the outcome of the contest between the new Greek government, formed by the political party Syriza, and the ECB and the private banks, with whose interests the EU and Washington align against Greece.

Roberts, once known as the “Father of Reaganomics” but more recently a repentant neo-liberalist and outspoken opponent of the financial elites, continues:

The new [Syriza] government wants to moderate the agreements made by previous Greek governments that sold out the Greek people. The new government wants to stop giving away at bargain prices Greek public assets to clients of its creditors, and the new Greek government wants to raise the Greek minimum wage so that the Greek people have enough bread and water on which to live.

However, for the private bank creditors, for Merkel’s Germany that stands behind the banks, for Washington which could care less about the Greeks, for the Greek elites who see themselves as “part of Europe,” Syriza is something to be rid of.

Adding that:

A purpose of the “Greek financial crisis” is to establish that EU members are not sovereign countries and that banks that lend to these non-sovereign entities are not responsible for any losses with regard to the loans. The population of the indebted countries are the responsible parties. And these populations must accept the reduction of their living standards in order to ensure that the banks do not lose any money.

This is the “New Democracy.” It is a resurrection of the old feudal order. A few super-rich aristocrats and everyone else serfs obliged to support the ruling order. 12

Click here to read Paul Craig Robert’s full article.

The question is, who is actually right here? Certainly we ought to acknowledge that elements in Paul Craig Roberts’ more conspiratorial outlook are irrefutable, recognising that Goldman Sachs did indeed deliberately help to hide previous government debt in order to extend credit to Greece. The Greeks were set up; this has been established – details of Goldman Sachs involvement can be found in this previous post.

Varoufakis is diplomatic, arguably too diplomatic. But then, is Paul Craig Roberts unduly pessimistic when he says that Syriza can now do “very little”, and, in either case, is the very moderate and rather modest approach of Varoufakis a good one, pragmatically speaking? Extending a hand of friendship being unlikely to impress “the powerful rich interest groups that rule the West [who] could not care less about the people over whom they rule” (to quote Roberts again, who knows them well, of course). Yet it may be effective in another way, such relentless persuasion and his “frenzy of reasonableness” at least winning the more public battle for hearts and minds. My own view is that Varoufakis (and Syriza) have adopted a sensible stance, which is in fact evidenced by the harsh criticism they have received from both extreme flanks. Appearing too flexible has made him a target for derision from the more radical (and Communist) left-wing, whereas standing his ground irritates his more powerful opponents working within the establishment (who lash out publicly whenever Varoufakis is out of earshot).

Meanwhile, ‘Grexident’, German Finance Minister Wolfgang Schäuble’s own portmanteau neologism (I gather), is now trending on twitter – not literally, of course, because it doesn’t have a celebrity angle. But the hashtag certainly exists and the tweets that include it are mostly German and Greek, alternating like a stack of incomprehensible post-it-notes. And sadly, the word ‘Grexident’ isn’t the only eurozone nonsense currently trending:

Academic-turned-finance minister Varoufakis was called “a time-waster, a gambler and an amateur”, a source privy to the closed-door talks told the news service Bloomberg.

This is according to a Guardian article published on Friday [April 24th] and entitled “Time is running out for Greece, says Eurogroup chief”. The article continues:

Jeroen Dijsselbloem, head of the eurogroup of finance ministers, told reporters in Latvia it was a “highly critical” meeting as Greece had still not agreed a comprehensive and detailed list of reforms.

Although there were positive signs, there remained “wide differences to bridge on substance”, he said.

“We are all aware that time is running out … too much time has been lost.” […]

Dijsselbloem warned on Friday that after the lack of recent progress it would be very hard to consider a new programme for Greece to cover its funding needs beyond June. He ruled out giving Greece an early slice [of] bailout cash. […]

ECB president Mario Draghi also betrayed his exasperation and warned that central bank could impose tougher conditions in return for keeping Greek banks afloat.

Weeks ago, the Riga meeting had been pencilled in as the moment when the eurozone could sign off an aid payment for Greece, but in the event ministers vented their frustration with Varoufakis for Greece’s failure to bridge the gap with creditors.

Just to remind you, Mario Draghi is not only the former vice chairman of Goldman Sachs – directly implicated in bringing the crisis to Greece – but serves as a trustee of the Brookings Institute13

So watching Varoufakis descend into the belly of the beast that is the Brookings Institute and to receive such a warm welcome and nonjudgmental reception, I must confess that I was instantly reminded of the film, Goodfellas, Martin Scorsese’s gangster classic, and of one scene in particular:

“If you’re part of a crew, nobody ever tells you that they’re going to kill you. It doesn’t happen that way. There weren’t any arguments or curses like in the movies. So your murderers come with smiles. They come as your friends, the people who have cared for you all of your life, and they always seem to come at a time when you’re at your weakest and most in need of their help.”

But Varoufakis is not easily daunted, and so, as the Guardian piece describes:

Varoufakis said the talks [in Latvia] were “intense”, but remained confident that the two sides will resolve their differences in time.

“We agreed that an agreement will be difficult but it will happen and it will happen quickly because that is the only option we have,” he told a press conference.

Varoufakis later declared: “We want an agreement and we are willing to make compromises to achieve this … The cost of not having a solution would be huge for all of us, Greece and the eurozone”. 14

In saying so, he is quite correct. Not only the Greeks, but the Germans too, whose major banks are set to carry the heaviest losses in the event of default, ought to be aware of the extreme dangers of such brinksmanship. A basic instinct for self-preservation is what Varoufakis is relying on, but for so long as the banks and other financial institutions remain confident of receiving further bailouts, it is the German taxpayers who ought to worry – as should the rest of us – because so long as they remain “too big too fail” (i.e., untouchable) then bankers like Mario Draghi and co really have nothing at stake. For once the Greeks are unable to shoulder the debt burden, as Varoufakis reminded us last summer, it will be passed on to the shoulders of the Germans and the French.

Indeed, the people of Europe stand to lose enormously if this so-called ‘Grexident’ (in reality ‘Grexpulsion’) leads to ‘Grexit’ and then to ‘Grextagion’ as it will be doubtless be called; as idiotically named as it will have been idiotically contracted and spread. Because, if no compromise can be reached in spite of Varoufakis’ tireless efforts, then sooner then we imagine we may all be standing in the Greek people’s shoes.

*

Update:

A weekend can be a very long time in politics…

Unbeknownst to me, on Sunday 26th [the day before I posted this article] Yanis Varoufakis had put out a tweet in which he quoted the words of Franklin D Roosevelt, who famously said “They are unanimous in their hate for me; and I welcome their hatred”, adding simply “A quotation close to my heart (& reality) these days”:

This would be one of his final acts as chief negotiator at the Eurogroup meetings:

Greece moved to inject fresh momentum into problem-plagued talks with creditors on Monday, reshuffling its negotiating team to try and defuse tensions over its outspoken finance minister. […]

In a bid to ease tensions with lenders, the Syriza party-led coalition said the minister of international financial relations, Euclid Tsakalotos, would take over the coordination of the new team. The appointment will see the economics professor, who was raised in the UK, assuming a more active role in face-to-face negotiations with creditors.

So writes Helena Smith in the Guardian [April 27th], her report released a mere two hours after I posted.

Varoufakis told us that before he took the job he had written a pre-prepared resignation letter to carry around with him at all times, just in case he ever found himself sounding too much like a politician. Hopefully this will not be needed, and news that he has been “removed” is perhaps a little exaggerated:

[However,] one well-placed Athens official insisted that Varoufakis’s role had been upgraded “in many ways”. The official added: “To make him resign would be to retreat and the government would never do that.”

Three months after his elevation to power, prime minister Alexis Tsipras has come under extraordinary pressure to remove Varoufakis. Yet last night Tsipras said that his finance minister “is an important asset for the government, and [with creditors] he speaks their language better then they do”. In a wide-ranging interview aired on Greek TV, Tsipras rejected suggestions that his government had any intention of sacrificing the politician. Now that negotiations with creditors were in the final straight, Greece had to reorganise its negotiating team, the PM said. […]

But insiders insisted that the politician still enjoyed Tsipras’ confidence, even if the young premier was now reaching out to the German chancellor Angela Merkel in an effort to reach a political solution.

With his high popularity ratings at home, Varoufakis is credited with internationalising the country’s debt problem and raising questions over austerity economics.

“They [creditors] couldn’t counter his economic arguments rationally so they went for him claiming he didn’t understand eurozone rules and regulations, that his reforms weren’t good enough,” said one official. “Tsipras knows this is not about Varoufakis, but his government, because it has dared to take on the system that is Europe’s neoliberal doctrine. He knows that if one goes the other goes too, which is why Varoufakis is here to stay.”

I very much encourage Tsipras to stick by Varoufakis, certainly in the capacity of his chief economic advisor, if not within government itself. We so very seldom see anyone of such intelligence, integrity and courage in public office. The world needs more politicians like Varoufakis, not less.

Please note that I corrected this update after mistakenly believing that Varoufakis had stepped down from his role as Greek Finance Minister. Apologies for posting the incorrect original version.

*

1 From an interview published as “Give us six more months, and we will be another country”, written by A. Albes, F. Batzoglou, A. Petzold, published by Stern on February 18, 2015. http://www.stern.de/politik/ausland/interview-with-greek-primeminister-alexis-tsipras-give-us-six-more-months-and-we-will-be-another-country-2174273.html

2 From an article entitled “Reinhart, Rogoff… and Herndon: The student who caught out the profs” written by Ruth Alexander, published by BBC news on April 20, 2013. http://www.bbc.co.uk/news/magazine-22223190

3 Here are some interesting graphs taken from an wikipedia article entitled “European sovereign-debt crisis”, which show the rise in the levels of Greek, Spanish and Portuguese debt since 1999 as compared to the average of the eurozone:

 

 

 

All three graphs (and others including those for Ireland and Cyprus) show a marked turning point around 2007–8, providing further evidence not only that “austerity” hasn’t worked (even within its own terms of debt reduction), but that the western world is actually faced with a systemic banking crisis that flared up at that time. The debt-to-GDP ratios have flattened towards the end, but even so the downturn is mostly in the projected regions.

And this is from an article written by Tyler Durden and posted on zerohedge from February 18, 2013:

“Beleaguered Prime Minister Mariano Rajoy just broke another record. As if a plague of corruption scandals was not enough, Spain’s debt-to-GDP has now reached levels not seen in over 100 years. As El Pais reports, Spanish debt levels rose at an alarming EUR 400 million per day in 2012 making for the largest annual increase in debt in the nation’s history – all the while proclaiming austerity.”

And here’s another helpful graph that goes along with the article, showing once more that rather than reducing the nation’s debt, “austerity measures” are more closely correlated to the growth of that debt:

 

 

http://www.zerohedge.com/news/2013-02-18/chart-day-spanish-debt

4 These details of a summary of more detailed notes complied here: http://www.golemxiv.co.uk/2010/10/who-are-the-bond-holders-we-are-bailing-out/ 

5 Based on figures taken from an article entitled “Greece’s PSI is Dead on Arrival: An error in search of a rationale but also a failure that may prove a harbinger for the Modest Proposal” written by Yanis Varoufakis, published on January 11. 2012:

Back to the drawing board, our European leaders came up with a deeper haircut in October 2011. They called it PSI Mk2 and even had the foolish Greek PM fall on his sword, to be replaced by a hitherto loyal ECB functionary, so as to ensure that PSI Mk 2 would become Greece’s new light on the hill; a beacon of the last glimmer of hope for a desperate nation. PSI Mk 2 envisaged an impressive sounding 50% reduction in the GGBs’ face value which, in present value terms, would result in a haircut no less than 60% (since the interest rates charged on the new bonds, that would be swapped with the old ones, could not exceed the interest rates charged by the ECB and the EU for the original bailout funds). In other words, holders of GGBs would be hair-cut in two ways: a 50% reduction in face value and an interest rate less than 5% which would cut further into the present value of the old GGBs.

http://yanisvaroufakis.eu/2012/01/11/greeces-psi-is-dead-on-arrival-an-error-in-search-of-a-rationale-but-also-a-failure-that-may-prove-a-harbinger-for-the-modest-proposal/ 

6 Ibid.

7 From a special report entitled “Greeks rage against pension calamity” written by George Georgiopoulos & Lefteris Papadimas, published in Reuters on November 30, 2012. http://www.reuters.com/article/2012/11/30/us-greece-crisis-pensions-idUSBRE8AT0CV20121130

8 Varoufakis adds:

“The one thing if I were, I am not, but if I were the CEO of Deutsche Bank, I would be very wary of the dangers from “the Troika” in Athens that is casting a critical gaze into what is happening to Greek banks. Because if “the Troika” takes a keen interest, it will have to declare that the Greek banks are beyond salvation. And the only possible outcome of that would be nationalisation of these banks.”

9 Varoufakis  adds:

“There is no doubt that there was a great deal of incompetence. Our leaders, and I have to say most of my profession – speaking as an economist – had become steadily lobotomised since the late 1970s. We didn’t have leaders who understood macroeconomics… You just let the markets perform their triumphant trick and everything will be fine. Politicians were convinced of that, their careers went swimmingly, their cosy relation with the financial sector was working out for them beautifully. When the whole thing, this bubble, collapsed, they were found wanting analytically – they didn’t understand what happened – they believed their own rhetoric and when they started realising the truth, at that point they had already misled parliaments and electorates to such an extent that they would much rather die than confess to the sins of omission and commission.” [25:45 min]

10 Varoufakis offers the following example:

Regarding the Greek situation, the Greek debt, for instance. What we need to do is, we need, since the German government is going to find it politically very difficult to go to the parliament in Berlin and say: Well, it was all a mistake, we have to write off their debt. What you can do is you can create euphemisms – you can create what Keynes referred to as bisque bonds, GDP-related bonds. The Greek government could issue particular bonds that it exchanges for the debt that the ESF [European Social Fund] holds. And those bonds could specify that they can last 30 years let’s say. In 30 years they become extinct whether they have been repaid or not. And that the coupons, the repayments, on a year to year basis depend on the level of growth in Greece. So if growth is more than 3% then it specifies particular payment. That way Mr Schäuble will be able to look at his parliamentarians and say: We haven’t haircut it, but the extent to which the Greek debts will be repaid will be linked to our success in helping Greek growth. So you make them partners in Greek growth as opposed to bailiffs who come in and take your furniture away and throw you out on the street. [33:15 min]

11 The details go as follows:

Three things: The first thing we need to do is deal with the banking sector troubles throughout the eurozone. And the way I would do it – because we know we have declared this banking union which is really a term confirms there is no banking union – so what we should do about banks is this: Banks that are found out by the ECB in September (when the ECB assumes the role of the single supervisor of the banking system) to be wanting in terms of recapitalisation to have bad assets that have not been declared so far, they should accept money from the ESM – from the European stability mechanism – directly, not through the governments, directly. And the ESM should get shares, the shareholders should be wiped out and the ECB should appoint a new board of directors – hopefully not from within the country in which the bank is domiciled. This way you Europeanise these banks. In 6 months, 12 months, you resell them – you will resell them with a profit because those shares will be purchased by the ESM at very low prices. And then the ESM gets money back, the European taxpayers get their money back, TARP-like. And you do it step by step. You don’t Europeanise all 6,000 banks. The banks that are in trouble…

The second thing you do is to deal directly with the public debt, which is getting worse everywhere – except in Germany because of the low, low interest rates due to the fact that the crisis is proceeding. The European Central Bank should make a simple announcement tomorrow morning that will cost it nothing, zero. And the announcement is this: From now on, every time a government bond matures, the ECB will service, will pay, for the proportion of that bond that corresponds to the country’s Maastricht compliant legal debt. So in the case of Italy it will be half of it. So the European Central Bank will pay for this, not the Italian government. Now I said it won’t cost the European Central Bank anything, so how can that be if it pays half of it? The answer is the ECB issues its own bonds and sells them to the Chinese, to the Russians, to whoever wants to buy them at very, very low interest rates – because the ECB is such a sterling institution – and immediately opens a direct debit account for Italy. And says to Italy: Look, within ten years, this amount of money has to go in there in order to repay the Chinese. So in other words, what I’m suggesting is that the ECB should play a management role for public debt in Europe that costs nothing, that doesn’t require printing a single euro, and does not violate any treaty. Because ths is not a bailout…

And then we have the big problem of growth. Of investment. We have an amazing dearth of investment in Europe, both in the north and in the south. Even in Germany. So what we need is really a Roosevelt-like New Deal – a very large investment programme. I am not talking about a 100 million here and a 100 million there. We need something between 8 and 9% of eurozone GDP to be invested in productive activities… That would be what we need in order to avert deflation and in order to restart growth in Europe. Now we have the European investment Bank in Europe. The European Investment Bank is three times the size of the World Bank. It could very easily effect such a large scale investment-led recovery programme in Europe. The reason why it doesn’t do it, is because the convention is that 50% of every project is funded from a nation state. The nation state is bankrupt. Waive it. And what should we do instead? We should have either the ECB issuing more bonds in order to support the EIB bonds or something simpler than that. Everyone now, including Mr [Mario] Draghi and Mr [Jens] Weidmann [President of German Bundesbank], are speaking about the need for quantitative easing in Europe. Or at least they are considering it. Now we do not want American-style or British-style quantitative easing because this simply inflates bubbles… Mr Draghi’s worried about quantitative easing because he doesn’t know which assets to buy. German assets? Italian, you know, we are going to start arguing like children amongst ourselves, as to whose assets should be purchased. Bu the European Investment Bank issues European bonds, EIB-bonds. Why not have the EIB effect quantitative easing by purchasing EIB-bonds to such an extent that the EIB ca start a New Deal for Europe programme of 8–9% of eurozone GDP with the ECB buying only its bonds, which are European bonds?  And also they are triple-A bonds. Now that a combination of those three measures would deal with the banking sector crisis, it would create a rational way of managing the Maastricht compliant and legal part of the debt… and you have a massive investment-led recovery programme.

12 From an article entitled “Is Democracy Dead In The West?” written by Paul Craig Roberts, published on January 29, 2015. http://www.paulcraigroberts.org/2015/01/29/democracy-dead-west-paul-craig-roberts/ 

13 From Bloomberg Business (bold highlight added):

Mr. Mario Draghi has been the President of Executive Board and President of European Central Bank since November 2011. Mr. Draghi served as Governor of Banca d’Italia SpA since December 29, 2005 until November 01, 2011. He served as Managing Director of The Goldman Sachs Group, Inc. until January 2006. He served as Director-general of Italy’s treasury. He served as an Adviser to the Bank of Italy, an Executive Director of the World Bank and as a member of the Group of Seven deputies. He served as the Chairman of Financial Stability Board. He has been a Director at Bank For International Settlements since June 2012. He serves as a Trustee of The Brookings Institution. He has been Member Of Governing Council of European Central bank since January 16, 2006. He served as a Member of Governing Board at Banca d’Italia SpA and served as its Member of General Councils. He served as Member of Board of Governors – Italy of Asian Development Bank until November 2011. He served as Director of Bank For International Settlements from September 2011 to November 01, 2011. Mr. Draghi has a Doctorate in Economics from the Massachusetts Institute of Technology.

http://www.bloomberg.com/research/stocks/private/person.asp?personId=13154633&privcapId=5774394

14 From an article entitled “Time is running out for Greece, says Eurogroup chief” written by Graeme Wearden, published in the Guardian on April 24, 2015. http://www.theguardian.com/business/2015/apr/24/time-is-running-out-for-greece-says-eurogroup-chief-jeroen-dijsselbloem

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Filed under analysis & opinion, austerity measures, Cyprus, debt cancellation, did you see?, Germany, Greece, Ireland, neo-liberalism, Spain

how the Greeks were railroaded and what it means for all of us

Dear Greeks,

You are a proud people, a proud nation. Tomorrow you have yet another set of elections.

You say: We’re free. Bild says: It’s in your hands. There is a difference. If you did not want our billions, it would have been fine by us for you to vote for any leftists or rightist clown you wanted. But for over two years now, the situation is like this:

Your ATM’s continue to give you euros, only because we put them there, the Germans and the other nations that have the euro. Yet you still call us Nazis, which we do not fine funny. But anyway.

But let’s be clear on this:

If the elections are won by parties that want to put an end to austerity and reform, breaching every agreement, we will stop paying. The agreement was: you fix your country and meanwhile we will help you. If you do not want this anymore, then we do not want it either. It’s in your hands.

Tomorrow is your choice. But actually there is none. Namely, you have to choose between painful 
 reason and utter destruction. And we are very much afraid that you don’t get that yet.

Yours in friendship

Your Bild.”.1

They might just as well have added – P.S. Nice little place you’ve got here, you wouldn’t want anything to happen…

Bild were far from alone. For the last few weeks almost all of the loudest voices have been bullying the Greek people into submission, including their two main political parties New Democracy and Pasok – the very parties that helped plunge the country into the crisis to begin with.

Sadly, it seems to have worked. At least for the time being. Enough Greeks voting for the pro-bailout/austerity package to secure an election defeat for the only party offering any genuine alternative, which was Syriza. So what happens next? Well, a pro-austerity government has since been formed, and under its authority the Greek people can now look forward to the further ruination of their country.

On election day [June 17th] Yanis Varoufakis, a Greek-Australian economist and head of the Department of Economic Policy at the National and Kapodistrian University of Athens sent a letter to the BBC and “assorted international media”. It begins as follows:

Over the past 48 hours, as Greek voters are mulling over their options prior to entering the polling stations, the international media have indulged in a frenzy of disinformation and scaremongering. Gone is the nuanced reporting of the BBC, nowhere to be seen the critical approach to the Euro Crisis that the rest of the international media have shown over the past few weeks. As if united behind a common cause, the hordes of international TV and Radio reporters are now peddling a simple line: Today, the Greek people are choosing between ‘Reason’ (meaning the pro-bailout New Democracy party) and ‘Indulgence’; between staying in the euro and leaving on a whim. In moment of greater exuberance, they add that, today, Greeks can deal a decisive blow at the Eurozone by voting against the European Union’s strategy for dealing with the Euro Crisis. What utter nonsense!

This is nothing but an Assault on Truth. First, Greeks are NOT voting on whether they want to stay in the Eurosystem or to leave. They are voting between two different programs on how to survive within the Eurozone. On the one hand, there is the discredited ‘establishment’ line which has it that, to stay in the Eurozone, Greeks should simply do as they are being told by the troika. On the opposite corner, there is the Syriza position that doing as we are told is guaranteed to lead to the wholesale and final collapse of what is left of the Greek social economy, thus leading us out of the Eurozone by default. Their recommendation is that Greece should adopt a determined bargaining stand.

Click here to read the full letter.

Perhaps in response, Varoufakis was then invited to give an interview to BBC news. The interview can be seen here:

Strangely (as you will see if you watch the clip) the link to Athens failed. Varoufakis says:

[So,] It was with great relief that I received a call from their TV News Dept offering me a chance to make my point on camera. But as I was coming to that point, the link surreptitiously caved in. Now, I have no doubt that it was, most probably, a genuine technical failure. Having said that, the fact that I was not given a chance to complete my point at a later stage raises questions.

Click here to read more on Yanis Varoufakis’ blog.

The problems facing Greece began as a banking crisis that was born in the USA and frankly I can barely believe my ears when I hear some (especially American) commentators talking about the dangers of ‘Greek contagion’. The situation in Greece and elsewhere is the product of deregulation (especially of Wall Street and the City of London) combined with banker incompetence and criminality. Meanwhile, the endless bailouts just about pay to keep the banks afloat whilst compounding the debts and thus actually deepening the crisis itself. Only one country has so far stopped this rot and that country, Iceland, tackled their own problems by means of criminal prosecutions and a debt moratorium:

Iceland also did what other parts of Europe haven’t dared to do – let its banks go under. It took some of the cost itself but forced foreign creditors to take the biggest hit.

Lauded by some economists for taking unorthodox measures to fix its broken economy, others see it as a one-off example that would be hard to replicate.2

Even Iceland did not survive entirely unscathed but they have at least turned the corner. Their own economy is growing again:

Iceland’s GDP growth estimated at some 2.6 percent this year will outshine even powerhouses like Sweden.

“These are among the highest numbers in Europe,” said Finance Minister Steingrimur Sigfusson. “Sometimes it is easier to turn a small boat around than a big ship.”3

No doubt this is true, although tragically we may never find out how quickly our own ships might be turned around with Greece and the larger European flotilla still steering towards inevitable disaster:

Europe’s peoples are being marched into a catastrophe. They know that this is their predicament. They can see their march is leading them off a mighty cliff. But they are too afraid to veer off, in case there are beaten back into line, in case they get lost in the woods, for reasons that sheep know best. However, the only way this hideous march can end is if someone summons up the courage and does it. And steps out, showing the others that this march can stop and must stop – for everyone’s benefit. Who is that someone? We, Europeans, do not have many options. As I wrote above, the Irish people had a chance but did not take it. In two weeks, the Greeks have their chance. Voting for Syriza would offer us (and by ‘us’ I mean all Europeans) a chance of this circuit-breaker. A chance to say: Enough! Time to change course in order to save the Eurozone, so as to prevent the Great Postmodern Depression which lurks once the euro-system fragments formally.4

The abiding question: how many more opportunities can we afford to miss?

Click here to read more of the same excellent article by Yanis Varoufakis.

1“Liebe Griechen,

Ihr seid ein stolzes Volk, ein stolzes Land. Morgen wählt 
Ihr mal wieder Euer Parlament. Ihr sagt: Wir sind frei. BILD sagt Euch: Ihr habt es in der Hand. Das ist ein Unterschied. Wenn Ihr unsere Milliarden nicht bräuchtet, dann könntet Ihr von uns aus jeden Links- oder Rechts-Hallodri wählen, den Ihr wollt.

Seit mehr als zwei Jahren ist es aber so:

Aus Euren Geldautomaten kommen nur deshalb noch Euro heraus, weil 
wir, die Deutschen, und die anderen Euro-Staaten sie 
reingesteckt haben. Dass wir in Griechenland trotzdem als Nazis beschimpft werden, finden wir nicht komisch. Aber sei’s drum. Nur eines muss klar sein:

Wenn bei Euch jetzt Parteien gewinnen, die entgegen aller Verträge Schluss machen wollen mit dem Sparen und den Reformen – dann werden wir nicht mehr zahlen. Der Deal war: Ihr bringt endlich Euer Land auf Vordermann und wir helfen Euch über die Durststrecke. Wenn IHR das nicht mehr wollt, wollen WIR auch 
nicht mehr. Ihr habt es in der Hand.

Morgen ist Eure Wahl. Aber eigentlich ist es gar keine. 
Ihr habt nämlich nur die Wahl zwischen schmerzhafter 
Vernunft und völligem Untergang. Wir fürchten: Ihr habt das immer noch nicht begriffen.

Liebe Grüße

Eure BILD”

From an article entitled “Liebe Griechen, macht jetzt keinen Fehler” [literally, “Dear Greeks, don’t make a mistake now”], published in Bild, on June 15, 2012. http://www.bild.de/politik/ausland/griechenland-krise/liebe-griechen-macht-jetzt-keinen-fehler-24686922.bild.html

2 From an article entitled “Banking crisis over, Iceland’s economy thaws: Many see Iceland as offering a lesson to struggling European countries such as Greece and Spain”, written by Mia Shanley for Reuters, published on May 3, 2012. http://www.msnbc.msn.com/id/47280153/ns/business-world_business/t/banking-crisis-over-icelands-economy-thaws/#.T9-yaZFc5hc

3 Ibid.

4 From an article entitled “Why Europe should fear Fine Gael-like ‘reasonableness’ much, much more than it fears Syriza”, written by Yanis Varoufakis and posted on thegreekperspective.

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Filed under analysis & opinion, austerity measures, Greece, Iceland, Ireland

the IMF and its part in our downfall

For a refreshingly frank and insightful examination of the reasons for the current global economic crisis, and, more specifically, of the IMF’s part in our accelerating downfall, I recommend the following programme:

Empire: The IMF on trial

broadcast on Al Jazeera on Thursday 11th August at 9:00pm–10:00pm

Presenter Marwan Bishara leads a searching debate into the historic failures of the IMF, with reflections on the legacy of its intervention in Latin America — most especially in Argentina — as well as in East Asia and Africa. There is also speculation about what is likely to happen to Egypt, after calls for IMF intervention were declined, and to Greece, where the imposition of “austerity measures” is already in full swing.

The guests are:
Professor Alex Callinicos, director of European Studies, King’s College London and author of “Bonfire Of Illusions”.

Ann Pettifor, fellow, at the New Economics Foundation and author of “The Coming First World Debt Crisis”

Georges Corm, former Lebanese finance minister and former special consultant, World Bank

Dr Mario Blejer, former governor, Argentine Central Bank and former advisor, Bank Of England

Also included are interviews with:
Christine Lagarde, managing director, International Monetary Fund

Professor Alan Cibils, chair, Political Economy, Universidad Nacional Sarmiento

The programme is still available on Al Jazeera at the following times next week:

Sunday: 7:00 am; Monday: 9:00 pm; Tuesday: 1:00 pm; Wednesday: 2:00 pm; and Thursday: 7:00 am.

Click here to watch on the Al Jazeera website.

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Filed under Argentina, did you see?, Egypt, Europe, Greece, Iceland, Ireland, Italy, Latin America, Spain, Tunisia, Uncategorized, USA

if you tolerate this…

My eldest nephew is very excited at the moment. He has just turned eleven and is about to move to his new secondary school. Anyway, a few weeks ago, my sister showed me a letter she’d received via the assistant head at her son’s new school. It read:

“Dear Parent/Carer,

I am pleased to inform you that we will be installing biometric fingerprint readers at the – – – School as part of the catering system.”

“Pleased to inform you… as part of the catering system!”, I parroted back, as my sister read on from the briefing, my own voice rising with incredulity. “They’re fingerprinting the kids to help with the catering?!”

“Yes, but he’s not going to have his fingerprints taken”, she assured me, “they’re not going to treat him like a prisoner. It’s not compulsory…” And she then read on:

“This will enable students to get their dinners more quickly by speeding up the payments process. It will also mean that they can put cash into the system (via paying in machines, like a ticket machine) whenever it suits them so that they do not have to carry cash around with them all day…”

I interrupted again: “But you could do that with a card or something.”

“Yes, I know,” she said, “that’s the alternative option…” And then continuing from the letter:

“Swipe cards can be issued as an alternative to the finger scanning however these can obviously be lost, forgotten or stolen.”

“So what are the other parents thinking?” I asked her.

“There are a few of us refusing but mostly they think it’s just a good idea.”

“Do you know what company’s behind it?” I asked.

“No, but there are some notes on the back…” And she turned the letter over to show me, adding: “perhaps you can check it out”.

On the back of the letter, there is indeed “information” about the biometric system being installed. Information that explains why: “students, parents and staff can rest assured that the fingerprint images cannot be used by any other source for identification purposes”, because “the software turns your child’s fingerprint into a mathematical algorithm” and about how “the image of the fingerprint is then discarded”.

What the notes fail to mention, however, is that this kind of “processing” is standard procedure when recording any kind of digital biometrics. With “image capture” followed by “feature extraction” leading finally to “digital representation”, data compression is an inevitability, but that’s okay so long as in this processing the “vital information” isn’t lost. The important thing is that “the encoded information is functionally as unique as the original, and as easily processed, i.e., compared.”

How do I know this? In part because I’ve just read through Chapter 8 of the Defense Science Board Task Force report on biometrics (p35–6) published in September 2006. Not that a report from the US Department of Defense has anything to do with the installation of a catering system at a school in Sheffield, obviously…

So the fact that “the information stored cannot be used to recreate an image of the child’s fingerprint”, as the notes on the back of the letter explain, is actually beside the point. The actual point being that they can be used to identify the child, because the information is still “as functionally unique as the original”. To put all this another way, a photograph cannot be used to reconstruct a perfect 3-D likeness of your head. There is a loss of information. But that obviously doesn’t mean a photograph can’t be used to identify you. It can, and even when still more information is removed, by let’s say photocopying it a few times, a photo will still retain a sufficiently detailed likeness to identify you. Biometrics are just the next step down. The original photo can be deleted, just so long as sufficient details are retained of, for example, how wide your mouth is and how close together your eyes are. With enough of the right pieces of information, they can distinguish one person from another, reliably and consistently. Which is how biometrics works.

All of this biometric information, “the unique digital signatures” are then held in the database, as the notes on the letter from school also explain. Less clear is who actually owns this database. And skipping through the other details on the back of the letter, I can’t immediately find the name of the company involved, but it does give the brand name of their “cashless catering system”, which is IMPACT. So I looked up IMPACT:

“A million users in over 1700 schools throughout the UK.

We design, build and maintain industry leading, reliable and functional cashless payment systems under the brand name IMPACT…”

Here begins the sales pitch on the homepage of CRB Solutions. Never heard of them? Nor had I. Well, it turns out that they are a “Serco Learning Partner”, one of many. Indeed, Serco have more than 20 current “Learning Partners” offering “solutions” to “clients” (i.e., schools and colleges across the country), which means they have access to a lot of biometric and other kinds of data on school pupils and college students. For instance, listed directly above CRB Solutions, there is Aurora Computer Services, who are:

The UK market leader in face recognition. faceREGISTER is designed for sixth form registration or whole school lateness. faceREGISTER enables students to register automatically in school, college or university.”

Gone are the days, apparently, when teachers simply remembered their student’s faces. Now whenever a student is late:

they will be asked for a reason why they are late and these marks are fed back to Serco Facility via our administration software faceMANAGER.

Those of a more curious disposition are perhaps wondering what other kinds of personal information is downloaded at the “Serco Facility”. In fact, what other kinds of information more generally, since Serco already offers its services in sectors as diverse as environmental services, health, science, transport, local government, welfare to work, defence and nuclear. Nuclear? Yes, nuclear:

“We support the operation of over 20 nuclear reactors, and serve as the lead nuclear safety advisor to Westinghouse, designer of the AP1000 nuclear reactor currently under assessment for the UK’s new civil nuclear programme.” 1

That and the management of the National Nuclear Laboratory (NNL), which Serco says is the leading nuclear technology services provider in the UK, “with expertise across the full range of nuclear technology, including waste management, nuclear safety and non-proliferation, materials and corrosion and plant inspection.” So that’s pretty comprehensive. Aside from this, Serco also manages the UK Atomic Weapons Establishment (AWE) as part of a consortium with Lockheed Martin and Jacobs. So the company behind the introduction of school biometrics systems across the country is also responsible for managing the UK atomic power and weapons programmes:

“Serco has a reputation for being a tad secretive. This is perhaps not surprising, as it manages the Atomic Weapons Establishment in Berkshire, where nuclear weapons are made, and runs the ballistic missile early warning system.

There are parts of AWE that even the head of the company, Kevin Beeston, can’t go into. Other secrets, too, are kept from him, such as where the company stores evidence on behalf of the National Crime Squad. “I don’t need to know or want to know,” he says.” 2

So begins an article entitled “Serco thunders down the tracks: Traffic lights, rail services, atomic weapons, the time of day. This secretive company manages them all” from the Independent on Sunday, published in March 2002. The article goes on:

“While many people haven’t heard of Serco, almost everyone in this country will have come across its services. It is Serco that runs the speed cameras on the M25, and maintains the traffic signals on a third of motorways in the UK. Half of London’s traffic lights are run by Serco, as are all the signals in Dublin. Manchester’s tram service, Metrolink, and London’s Docklands Light Railway (DLR) are both Serco-operated. When you ring National Rail Enquiries, you will speak to a Serco employee. The company has also built hospitals and prisons.

“In fact, Serco is so ubiquitous, it even sets the time. It manages the National Physical Laboratory, which owns the atomic clock that gives us Greenwich Mean Time.

“You’d be forgiven for thinking Serco was a government ministry.”

This article was published almost a decade ago and yet Serco‘s involvement in running public services was so large and far-flung that comparison is already being made to “a government ministry”. So just how did Serco manage to expand so rapidly and yet so inconspicuously? Well, here’s a brief overview of their rise and rise, taken from the same article:

“As well as having a novel corporate culture, Serco also has an intriguing history. It started out in 1929 as the UK maintenance division of RCA, at the time a cinema and radio equipment company. In the late Fifties it got its first taste of top-secret government contracts. The Ministry of Defence needed a radio equipment specialist to design, build and run the four-minute warning system for nuclear attacks. RCA got the job and has been maintaining it since.

“But it was in the early Eighties that the government-related business really started taking off. Beeston takes up the story: “Mrs Thatcher had come in power in 1979 and began reducing public sector costs on a tax-reduction agenda and carrying out privatisation. One of biggest areas that was first turned to contractualisation was the Ministry of Defence.”

“Happily for Serco, Thatcher’s successors, John Major and Tony Blair, both exhibited a fondness for getting the private sector involved in the public sector.”

Click here to read the full article by Heather Tomlinson:

Four years later and Serco were already being talked of as “probably the biggest company you’ve never heard of”, as a glowing profile of their CEO Christopher Hyman in the Guardian explained:

“Have you recently travelled on a train in northern England? Or on London’s Docklands Light Railway? Or perhaps been caught by a speed camera?

“If the answer to any of these questions was yes — or you have spent any time in custody or the armed forces — chances are you have dealt with the support services company Serco. With almost 48,000 people helping to service 600 largely public-sector contracts around the world, Serco is probably the biggest company you’ve never heard of.”3

No longer a small British subsidiary of a little known American corporation, by 2006, when the article above was published, Serco had gone global. Here, for instance, is taste of what Serco are already running in Canada, Ireland, Dubai, and Australia these days:

Taken from ABC Australia’s Hungry Beast.

Rebranded with Olympian titles, we are familiar with the names of most of our new gods: Blackwater and DynCorp, gods of war and reconstruction; Monsanto, god of harvests; Nokia, god of messages; Walmart, god of convenience; Aviva, god of life (insurance); but then, above and beyond all of these, there is Serco, the god of all the things the other gods don’t already do. A god without portfolio, and although not quite omnipresent, Serco is certainly “highly maneuverable”. As their own bragging PR likes to put it: “Serco has a finger in many pies”.

Now, having reached this point I realise that I have drifted well away from the original issue. My initial response to reading the letter from my nephew’s school having been to wonder at the kind of country we are living in. Already the most surveilled society in history, and now face-scanning and fingerprinting our children on a routine basis. In the process, as my sister says, we are already treating them as if they’re little criminals. Is it really necessary to hammer home the point here?

For we may believe this data can and will never be retrieved for uses beyond the bounds of the schools and colleges involved, but in permitting such licence we are nevertheless inculcating a sense of naïve trust in the next generation, which will normalise them to accept adult life in a surveillance society. We are teaching them to submit to authority. The word Orwellian is very overworked, but what other word can be applied in this instance? We are fingerprinting our children and entrusting that information to the major government defence contractor. And there is barely a raised eyebrow. Parents are mostly thinking that this is “helpful”. So please, if you haven’t done so already, read Nineteen Eighty-Four (not that Orwell has anything to say about fingerprint or face recognition systems, because back in the 1940s such hi-tech digital biometrics had yet to be imagined, let alone invented).

So what kind of a world awaits my nephew and his friends when he finally leaves school in five years time? Well, that will depend.

The road ahead is already laid. As our national assets and provision of our state sector were stolen away, Serco, and a few other giant corporations, absorbed the new workforce and took over. And now, as ours and other economies around the world begin to splutter and flail, they are about to suck up whatever remains at bargain prices. Finally, they will put up their toll-booths at every turn of our daily lives, and in the envisaged “cashless society”, these toll-booths will also be our checkpoints — logging every transaction and every movement.

History ought to have taught us to beware, its overriding message being that the rise of tyranny needs to be constantly guarded against. But those, like Thatcher and Reagan, who rushed us away from more direct forms of centralised government (supposedly to save us from a Soviet style tyranny) have delivered us instead into the talons of an unregulated and monopolised market. Any distinction between interests of the state and the corporations having thus been eroded, the takeover by multinationals such as Serco has been unstoppable. After all, someone has to be in charge of things. Serco then (and the pantheon of other corporate gods we must increasingly bow to) amounts to governance by another title, and not merely at a national scale, but transnationally — a few corporations becoming, in effect, arms of an unelected and largely unaccountable “global governance”.

This shift away from democracy and towards neo-feudalism is happening in plain sight. You even get the picture from Serco‘s own PR  material — the closing overlapping mosaic of corporate heads in their latest video simultaneously and hypnotically announcing: “we are Serco”; with the eerie subtext being that “resistance is futile”. But resistance isn’t futile, not yet…

If you’d like further information about this widening programme of school biometrics then I direct you to a worthwhile campaign group called Leave Them Kids Alone (LTKA) that is calling for a stop to this latest encroachment upon our civil liberties, or rather, the civil liberties of our children.

2 From an article entitled “Serco thunders down the tracks: Traffic lights, rail services, atomic weapons, the time of day. This secretive company manages them all” by Heather Tomlinson published in the Independent on Sunday on Sunday 10th March 2002 http://www.independent.co.uk/news/business/news/serco-thunders-down-the-tracks-653444.html

3 From an article entitled “Happy, touchy-feely and driven by God: The Serco chief Christopher Hyman is unusual for his values of doing business, with staff and customers coming first and profit last” by Jane Martinson, published in the Guardian on Friday 24th February, 2006. http://www.guardian.co.uk/business/2006/feb/24/columnists.guardiancolumnists

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