Webster G. Tarpley
TARPLEY.net
June 26, 2010
  
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Webster G. Tarpley With Obama’s letter to the G-20 countries released at the end of last week, the US strategy for the upcoming Ottawa summit is clear: Obama will attempt to sabotage the meeting with a two-pronged attack designed to knock China and Germany off balance, and to prevent any urgent measures from being discussed which might roll back the exorbitant proliferation of derivatives, impose a Tobin tax on speculators, or regulate and restrain the hedge fund hyenas whose activities are ravaging the globe. Obama, as usual, operates under a veil of dissembling and deception. His letter talks first of all in edifying terms about the priority which must be given to economic recovery and growth. He says he wants to encourage the growth of internal consumption, especially in countries with large trade surpluses, meaning China and Germany, or possibly Japan. He sheds crocodile tears about the drastic austerity policies of the type being introduced by the Merkel government in Berlin. He tells countries which have built their strategy around exports that it is unwise to rely on exports. Much of this represents an attempt to prevent the Germans from bringing up the issues that are important to them and to the world, such as the need to restrain over-the-counter derivatives, especially the extremely toxic naked credit default swaps which Berlin has now banned in regard to government bonds denominated in euros. Obama does not want to hear about the German government’s plans for a Tobin tax on speculative turnover. He also wants to divert attention away from the European Union efforts to regulate and restrain hedge funds, which have played a prominent role in exacerbating the current world economic depression. Continue reading Obama Strategy for G-20 in Ottawa: Push Euro Down, Drive Renminbi Up, Attack Germany, and Keep Toxic Derivatives in Charge of the World Economy Webster G. Tarpley Prodded doubtless by forces above and behind the Oval Office, Obama has ousted General McChrystal in favor of General Petraeus, who now combines the post of CENTCOM theater commander with that of NATO commander in Afghanistan. This is a move deriving from the inherent fecklessness and incompetence of the Obama administration, especially from the imperialist point of view. Recent events have highlighted Obama’s total lack of executive ability, leaving him weakened as he faced the bizarre flap about some barrack-room gripes by McChrystal’s staff collected by a correspondent from Rolling Stone magazine. Because of Obama’s weakness, he felt obliged to react to the scuttlebutt peddled by Rolling Stone, when a stronger president could have dismissed it or ignored it. As Fletcher Pratt once wrote, Abraham Lincoln was capable of laughing an attempted coup d’état out of existence with an off-color joke. Obama is far too weak for that. As for General McChrystal, he was critically weakened and made vulnerable to ouster by the total failure of his counterinsurgency strategy, with the Marja offensive faltering and the Kandahar offensive indefinitely delayed, even as NATO losses rise exponentially, President Karzai turns towards Tehran and Beijing, and many of the NATO coalition partners prepare to defect. One effect of the sacking of McChrystal is likely to be the accelerated breakup of Continue reading Towards the Eighteenth Brumaire of General David Petraeus? Webster G. Tarpley The hearings held this past week by the Senate Armed Services Committee have established that the Obama Afghanistan policy is in ruins. Obama had always profiled himself as the most extreme warmonger when it came to Afghanistan – more aggressive than Hillary, more aggressive than McCain, and more aggressive than Bush. Now, the casualty lists are getting tragically longer, and the ground offensives touted by neocon favorite son Petraeus and McChrystal are turning out to be abortive. Defense Secretary Gates sounds more and more like McNamara during Vietnam or Rumsfeld during the Iraq debacle at when he assures the Senators that much progress is being made. The resulting crisis will be revealed no later than the November NATO summit by an increased rate of defection from the invasion coalition by various NATO states and other supporters of the US-led coalition. Most of all, there is also an immediate need for an antiwar challenger to run against Obama in the Democratic primary campaigns which began about a year from now with the Iowa straw poll. The fatal weakness of Obamas approach to the Afghanistan military adventure was the contradiction between the announced purpose – the need to defeat Al Qaeda, in reality the CIA’s own Arab Legion – and the real purpose, which has always been to export the civil war from Afghanistan into Pakistan to break up the Pakistan energy corridor between Iran and China and to make sure that the “Pipelinestan” perspective for that country’s economic development will never come to fruition. The populations of Pushtunistan and Baluchistan are targeted in order to spread rebellion and civil war into Pakistan. In the wake of the extremely fishy Times Square car bomb incident, a new dimension has been added to the US attack on Pakistan. It should be noted in passing that the Times Square car bomber had been subject to intensive surveillance by members of the US Joint Terrorism Task Force going back half a dozen years, suggesting that we are dealing with the umpteenth patsy of the current series. Since the US accuses of the Pakistani Taliban of being responsible for this alleged car bomb, a pretext for a direct bombing attack or special forces incursion targeting Pakistan is now available. As the Washington Post wrote on May 29, 2010:
As long as the US pursues the absurd and hopeless invasion of Afghanistan, the danger will increase that defeated US generals will seek career or political salvation through the flight forward of further escalating the wider war with Pakistan, leading towards Continue reading Obama Afghanistan Policy in Ruins; Anti-War Primary Challenger Needed Webster G. Tarpley To provide a new and spurious economic looting argument for making the US occupation of Afghanistan virtually endless, and to advance the candidacy of General David Petraeus as the principal neocon warmonger candidate for president on the Republican ticket in 2012 – these are the purposes of the story planted in the June 13, 2010 New York Times under the byline of James Risen, who is acting as stenographer for the neocons in the great tradition of his predecessor Judith Miller. In retrospect, this article may well be seen as the opening gun of an overt push to place General Petraeus in the White House in 2012 as the new Field Marshal von Hindenburg. According to this story, a Pentagon survey has determined that Afghanistan possesses at least $1 trillion worth of valuable minerals, including iron, copper, cobalt, gold, and lithium – with lithium being especially valuable because it is used in batteries for computers and for the new designs of electric automobiles. Of course, none of this is news, as the article itself concedes. The surveys done by the US occupation authorities over the last several years are explicitly based on careful studies done by the Soviets during their own occupation of Afghanistan during the 1980s. The basic outlines of what is being presented by Risen as front-page news were already published in a May 2004 World Bank report, which was used to dictate minerals legislation to the Afghan government. More recently, Afghan mineral wealth has been hyped by the Afghan embassy in Washington on various occasions, and was a featured theme of the visit here last month by Afghan President Karzai. Candidate Petraeus Touts “Stunning Potential”This planted puff piece is based on anonymous “senior US government officials.” The only exception is General David Petraeus, the warlord of the US Central Command, the theater of operations in which Afghanistan is located. Petraeus is directly cited as saying that the Afghan mineral riches whose presence the US has confirmed represent a “stunning potential” for the future development of the country. The implied message from Petraeus to the Washington elite is, to paraphrase, support me and cash in on the riches of Afghanistan, or else wimpy Obama’s self-serving pullout timetable will allow the Chinese to Continue reading New York Times Planted Story on Afghan Mineral Wealth Designed to Prolong US Occupation, Spur Neocon-Backed Petraeus Presidential Candidacy Webster G. Tarpley On the most important stop of last week’s desperate mission to make the world safe for derivatives, US Treasury Secretary Geithner has been dealt a decisive rebuff. Geithner’s obvious attempt to sabotage the recent prohibition enacted by the German government against naked credit default swaps (among the most toxic of derivatives) was rejected in Berlin on Thursday by German Finance Minister Wolfgang Schäuble. At their joint press conference, Geithner and Schäuble could hardly hide the atmosphere of tension and hostility, even though both were determined to mask the clash for domestic political reasons. A Handelsblatt blog pointed to the language of mutual dislike, and this newspaper headlined that the transatlantic conflict was escalating. The Washington Post published a photograph on Friday, May 28, 2010 showing the German minister scowling at the feckless featherweight Geithner. Geithner assured the journalists that there was a “broad agreement on regulatory reform,” but in reality there was no such common ground. Schäuble has now emerged as the strongman Continue reading Wall Street Operative Geithner Rebuffed in Berlin on Mission to Make World Safe for Derivatives Webster G. Tarpley The German government is now fully committed to escalating its ongoing counterattack against international financial speculation. These moves represent an historical watershed as Germany becomes the first major economic power to roll back the tide of financial globalization, under which crackdowns on hedge funds, derivatives, and the world gambling casino were branded as taboo for national governments. German Finance Minister Wolfgang Schäuble has announced that the Merkel government is sending a draft bill to the German parliament (the Bundestag) targeting “turbulence” and “volatility” through further regulation of “certain transactions [which] amplify the crisis.” The bill reaffirms the most fundamental German measure enacted so far, the May 18 blanket ban on all naked credit default swaps issued against the treasury bonds of the eurozone nations. This ban represents the most aggressive move anywhere in the OECD against these most toxic derivatives, which have figured prominently in the AIG bankruptcy and the recent Goldman Sachs Abacus scandal. They are also the derivatives being widely used by hedge fund hyenas and zombie banks to attack such nations as Greece , Spain , and the rest of the Southern tier of the euro. The naked CDS ban protects euroland government bonds, To that would now be added a ban on the naked shorting of those Euro zone government bonds themselves. This means that a speculator wishing to sell a Euro zone government bond short must own that bond in advance. This makes speculation more complex and expensive, and is all to the good. Schäuble’s new measures also expand protection for Continue reading Geithner Rushes to Sabotage German Derivatives Ban; Schäuble Prepares New Moves Against Speculators Webster G. Tarpley A group of Italian economists led by Franco Debenedetti of the famous financier clan and the banker Paolo Savona, obviously fearful that the Berlusconi-Tremonti government of Italy will join last Tuesday’s successful German ban on the type of toxic derivative known as the naked credit default swap, have sent an alarmed warning to the Corriere della Sera of Milan1. Debenedetti has contributed an article expressing similar sentiments to the Italian business newspaper Il Sole 24 Ore in which he rails at the “Mrs. Merkel market” now in force in Germany2. These economists, obviously inspired by the doctrines of Friedrich von Hayek and the Austrian school, want Italy to remain faithful no matter what to the widely discredited ideas of laissez-faire economics, even as those doctrines are everywhere under attack for having caused the current world economic depression. For these neoliberal and monetarist thinkers, any attempt to ban derivatives or tax speculation must be condemned as “economic populism,” which for these writers is a term of opprobrium. These anti-populist economists need to be reminded of some basic facts about derivatives. The collapse of the Central European banking system in the summer of 1931 was decisively enabled by derivatives – specifically by speculation in wool futures by a north German textile company which brought down the Danat Bank, leading to panic runs on all German banks. Thanks to the American New Deal of Franklin D. Roosevelt, most over-the-counter and exchange-traded derivatives were illegal from 1936 to 1982 under the Commodities Exchange Act, which was repealed by the free-market enthusiast Ronald Reagan. During those years, US rates of economic growth and real wages were far superior to what they have been any time since, and financial panics were much more limited than they had been before or have become since. Presumably, FDR would be dismissed as a mere populist. In today’s crisis, we are confronted at every turn with the fatal combination of deregulated hedge funds plus these now-rehabilitated derivatives, which in the meantime amount to a world speculative bubble of some $1.5 quadrillion of notional value. Lehman Brothers, Citibank, and Merrill Lynch were destroyed by derivatives in the form of a combination of their issuance of synthetic collateralized debt obligations based on mortgages and consumer debt, together with the credit default swaps used by hedge funds to attack these banks. The insurance company AIG had a hedge fund in London which issued $3 trillion worth of derivatives (more than the GDP of France), featuring a very toxic portfolio of credit default swaps. The failure of AIG caused by these toxic bets has now cost the US taxpayer $180 billion and counting. The attack on Greece, as these economists seem to recognize, was organized during a dinner party in Manhattan on Continue reading “The Market” is a Reactionary Mystification: Reply to the Attack on Economic Populism from Franco Debenedetti and other Italian Economists Webster G. Tarpley Tuesday’s German ban on naked credit default swaps – a measure repeatedly demanded by this web site over recent months — has been in effect now for about three days, and it is working. The panic slide of the euro has been stopped for now, and the forces of depression and destruction have been re-directed against US stocks, commodities, and certain emerging markets. The goal of euro stability has been momentarily achieved. Sarkozy, who talked a good game of limiting speculation, has been exposed as a Euro-wimp, too weak to buck the Anglo-Saxons and go along with Berlin. The Germans had to act alone because of the obvious sabotage of the eurogarchs of the Brussels Commission, which is now promising to come up with their proposal by October (!). Given the ferocity of the hedge fund assault, many Europeans by October will have lost their shirts, and will be living under bridges dressed in barrels, if more measures are not taken this month. The German ban on certain derivatives marks an historical watershed, the first time in decades that a major economic power has acted in overt violation of the implied rules of financial globalization, rules which pertain to the hot-money casino system which has dominated the world since the early 1990s. German Finance Minister Schäuble appears determined to press on in the fight against the speculators with or without the Euro-wimps and the US-UK pro-derivatives bloc. On the eve of the EU finance ministers’ meeting held today, Schäuble told reporters that markets were genuinely out of control, and that the German government intended to regulate over-the-counter derivatives. He intends to take this effort to the G-20 meeting in Canada. “I’m convinced the markets are really out of control,” Schäuble said. “That is why we need really effective regulation, in the sense of creating a properly functioning market mechanism.” Risks and rewards were currently “completely unbalanced,” he added. “We need transparency for all market participants.” Therefore, Schäuble said, over-the counter transactions need to be regulated. Furthermore, attention must be paid to the ratio of financial transactions to the real exchange of goods and services. “They bear no relationship to each other,” the minister said. “But, forgive my saying so, minimum profits of 25 per cent are simply unimaginable in the real economy. It isn’t healthy.” Schäuble was adamant that Continue reading Euro Momentarily Stabilized — German Ban on Naked Credit Default Swaps Is Working Webster G. Tarpley Germany and Europe have now made some promising initial steps in the direction of their necessary self-defense against the depredations of those zombie banks and hedge fund hyenas who have been organizing a massive speculative attack on Greece, Spain, Portugal, and Italy with a view to destabilizing the euro and perpetuating the world hegemony of the troubled US dollar. The most significant of these moves is the ban imposed unilaterally by the Merkel-Schäubele Christian Democratic-Liberal German coalition government to outlaw the use of high risk derivatives, specifically credit default swaps (CDS), for the naked shorting of government bonds which are denominated in euros. This means that Europe’s largest economy and the Frankfurt financial center – the biggest in continental Europe – will be off limits for speculators using these toxic CDS, which are issued by entities which have not fulfilled the legal requirements for underwriting insurance. This website has repeatedly urged a ban on credit default swaps. Germany Activates Ban On Naked Credit Default Swaps On Euro-Denominated Government Bonds, Naked Shorting of Financial StocksAccording to wire dispatches, the details of the German move are as follows. “Germany’s securities market regulator Bafin … banned naked short sales of certain securities, in particular the government bonds of the 16 countries that use the euro,” according to AFP. Bloomberg specified: ‘Germany … prohibited naked short-selling and speculating on European government bonds with credit-default swaps…. The German ban, which lasts until March 31, 2011, also applies to the shares of 10 banks and insurers including Allianz SE and Deutsche Bank AG, financial regulator BaFin said …. The step was needed because of “exceptional volatility” in euro-area bonds, BaFin said.’1 The German measure takes aim at the type of derivative which has been massively used by hedge funds and banks to speculate against the bonds of Greece and the other countries of the European Union’s Southern tier. Naked shorting of these bonds using credit default swaps occurs when a speculator places a derivatives bet against such bonds without simultaneously owning the bonds. Speculators using naked credit default swaps thus cannot plead that they are merely hedging or protecting themselves against the risk on bonds which they own. The ban unquestionably blunts one of the sharpest weapons in the speculative armory currently being used in the massive assault on Greece and the other Mediterranean EU states. Also banned is the traditional form of naked short sales of the stocks of a list of German financial and insurance institutions. This needs to be expanded to a blanket ban on naked short sales in Germany, and generalized to the rest of the EU, with the appropriate additions in each country. The goal must be to Continue reading Germany Bans Naked CDS Against Euro-Zone Government Bonds: Tentative First Steps in Europe’s Self-Defense Against Zombie Bankers and Hedge Fund Hyenas |
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