It now seems sure that the ongoing discussion in Cyprus' government will see a "no" vote as the WSJ is reporting a rather stunning gamble by the Cypriots (and by Cypriots we mean European leaders) to force the Russians to bear the brunt of the cost of the bailout. The non-resigned Cypriot FinMin is heading to Russia to propose a deal that includes imposing a 20% to 30% levy on Russian-held deposits in Cypriot banks, which could cost them billions of euros.
In exchange, Russia will be given:
RUSSIAN GOVERNMENT: equity in Cyprus's future national gas company and
RUSSIAN GOVERNMENT: some additional strategic benefits in the sector,
RUSSIAN INVESTORS: while Russian investors would be given control of the board of directors at Cyprus's banks.
The apparent quid pro quo in this deal does nothing to hide the fact that private property was stolen and while pointing fingers just at the Russians may play well for PR purposes, it is described as "a long shot" as the Kremlin notes, "it's practically impossible to talk without knowing details."
The official said that Michalis Sarris, who is being accompanied by a delegation of businessmen, is going to propose a deal that includes imposing a 20% to 30% levy on Russian-held deposits in Cypriot banks, which could cost them billions of euros. In exchange, Russia will be given equity in Cyprus's future national gas company and some additional strategic benefits in the sector, while Russian investors would be given control of the board of directors at Cyprus's banks.
However, the deal looks like a long shot. Ahead of the visit, Kremlin spokesman Dmitry Peskov said: "It's practically impossible to talk without knowing the details."
"The situation is very difficult--unprecedented--and we don't understand what's happening," he said. Mr. Putin hasn't spoken to his Cypriot counterpart, he added.
"We don't know about the visit [on Wednesday] because we have information that the [Cypriot] finance minister has offered his resignation. Since we don't know if Cyprus has a finance minister, we can't comment on proposals that he might make," he said.
Mr. Anastasiades hinted that the government is already working on a plan B. "We have our own plans," he said.
4- EU Banking Crisis
FINANCIAL REPRESSION - Doesn't Fly When People Actually Know
A couple of years back, when Carmen Reinhart and Belen Sbrancia updated the concept whereby governments might deal with a problematic mountain of debt by confiscating the savings of their subjects, the discussion was all about the subtle, sleight of hand solutions that might be employed.
Artificially cheap rates of interest might be forced on the embattled sovereign’s debt,
local banks might be obliged to buy mis-priced government paper,
exchange controls may be erected, and so on.
Ordinary people, it seemed, could be financially repressed without realising they were in fact the victims. There was no discussion back then of outright expropriation or a “tax”, as insured (and uninsured) depositors at Cypriot banks are now being forced to bear.
Joseph has a detailed discussion here of the peculiar circumstances that made a bailout of Cyprus particularly challenging.
Senior bondholders are all but non-existent at Cypriot banks (and therefore not available to share any pain), while
PSI at the sovereign level would have pushed local bond holders (local banks) over the edge and/or brought on months of litigation from foreign holders.
Meanwhile, we had the spectre of German politics (‘German taxpayers bailing out Russian money launderers’) clashing with Russian strategic interests (owners of the said laundered money).
Maybe ordinary Cypriots were always going to get it in the neck. Except that expropriation can never be straightforward in a democracy, where
politicians must be seen to be vaguely fair if they are to retain power.
It’s this point that seems to have been mis-read in Germany generally and amongst all members of the Troika, including the IMF’s Christine Lagarde, who might be regretting the boilerplate statement issued on her behalf on Saturday…
I welcome the agreement reached today to address Cyprus’ economic challenges. The IMF has always said that we would support a solution that is sustainable, that is fully financed, and that appropriately allocates the burden sharing. I believe that the agreed package meets these three objectives.
Appropriate allocation? Cypriots, to a man and woman, simply do not agree.
And when the ECB was busy last week threatening President Anastasiades with an immediate disorderly default if his government did not sign up to this shotgun bail-in, they seem to have overlooked the fact that Anastasiades has to get this all voted through.
Here’s what the Cypriot parliament currently looks like on the issue, courtesy of Alex White at JP Morgan:
Irrespective of the fate of Cyprus, the solution adopted will exacerbate the European debt crisis.
Many commentators note that the deposit grab may cause panic among bank depositors in Spain and other vulnerable countries as well. Indeed, many are asking whether this could be a modern Creditanstalt situation. Another common analogy is that this could be “worse than Lehman” failing.
On the other hand – given that the entire economy of Cyprus is smaller than that of Shreveport, Louisiana, and that Cyprus is mainly a parking spot for hot money from Russian oligarchs and mafia – some say that the whole crisis will quickly blow over.
What’s the bigger picture? Bank deposit grabs may spread to other vulnerable European countries. The New York Times reports:
Jeroen Dijsselbloem, the president of the group of euro area ministers, declined early Saturday to rule out taxes on depositors in countries beyond Cyprus.
And the chief economist of the German Commerzbank has called for private savings accounts in Italy to be similarly plundered:
A tax rate of 15 percent on financial assets would probably be enough to push the Italian government debt to below the critical level of 100 percent of gross domestic product.
Cyprus’s new president Nicos Anastasiades did not like the idea of forcing any losses on ordinary account holders….But after receiving what Cypriot officials said were reassurances from Angela Merkel…Mr Anastasiades agreed to a deal that he thought would include relatively modest “haircuts” – a 7 per cent levy on deposits above €100,000 and a 3.5 per cent hit on those below.
With the principle of haircuts agreed, Mr Anastasiades decided to stay for the finance ministers meeting, which was just getting under way. All he asked was that the rates be tweaked: raise the levy on the bigger deposits in order to lower the hit taken by the less well off. Both sides believed a deal was at hand….
However, Mr Anastasiades was left reeling by the response to his request for modest adjustments, according to Cypriot officials. Wolfgang Schäuble, the German finance minister, said Nicosia would immediately have to raise as much as €7bn from depositor haircuts. A stunned Mr Anastasiades decided to walk out…
But Mr Anastasiades soon learnt storming out was not an option. The European Central Bank had another shock for him: the island’s second-largest bank, Laiki, was in such bad shape that it no longer qualified for the eurosystem’s emergency liquidity assistance – the cheap central bank loans that teetering eurozone banks need to run their day-to-day operations.
The message, delivered by the ECB’s chief negotiator, Jörg Asmussen, meant that if no deal was reached, Laiki would collapse, probably bringing the island’s largest bank down with it, and saddling Nicosia with a €30bn bill to reimburse accounts covered by the country’s deposit guarantee scheme. It was money Nicosia did not have. All of the island’s account holders would be wiped out.
Mr Schäuble was not alone. Several officials involved in the talks said he not only had backing from the Finns, Slovaks and to a lesser extent the Dutch. The International Monetary Fund, which had been urging depositor haircuts for months, had won the argument over the skittish European Commission, which had long worried that seizing depositor assets could spark a bank run in Cyprus and, potentially, elsewhere in the eurozone.
Why are depositors, the folks most senior in the creditor hierarchy, being whacked? Shareholders and bondholders should be wiped out before they lose a penny. Yes, but this is a case where expediency, unwisely, has been allowed to carry the day.
There is pretty much squat in the way of equity and senior debt. The “other liabilities” may be secured. So then we get to liabilities to central and other banks. The liabilities to central banks are not going to be haircut; that is part of the “private sector participation” premise. Remember, banks in periphery countries have been pledging any asset the ECB will take to it, and any stuff the ECB won’t take to their own central bank. In the case of the Cypriot banks, the exposure is almost entirely that of the local central bank. Again from Cotterill:
As of January, the Cypriot central bank was extending around €9bn of secret liquidity in return for collateral no longer accepted at normal ECB liquidity ops. Much of it (it’s naturally difficult to determine how much) was probably going to Laiki.
… That’s €9 billion of Cyprus loans to the banks, mainly Laiki, which is junior to deposits, versus the €5.8 billion to be seized from depositors. So why aren’t the loans from the Cyprus central bank being written down and the Cyprus sovereign debt investors taking losses? Well, it turns out it is easier to screw retail customers than it is professional investors:
As it is, there were lots of good reasons why a sovereign debt restructuring did not happen. I don’t want to downplay them. Notably, the fact that the bonds that were best to restructure were governed under English law, and were likely held by the kind of investor who’s willing to litigate. I listed the problems here. Around it all was the inability to get write-downs out of Cypriot domestic-law sovereign debt, because that was held by the banks which already bore big black holes in their balance sheets. Again we come up to something that could be raised in the defence of the deposit levy — local exposure was so great everywhere, that any distribution of losses would have been painful. For the widow depositor, substitute the pension fund holding local-law bonds….
No wonder this cartoon – showing the EU forcing the Cypriot bankers to rob their depositors – is going viral in Cyprus (the caption just says “bank robbery of the Cypriot people):
As Tyler Durden notes, the Cypriot deposit grab is just one of a wide variety of forms of financial repression that central banks, big private banks and governments are using to grab money from the people. For example, negative interest rates are an ongoing theft.
It is always the tactic of governments that seek to abuse power to select the most marginalized and easily demonized targets in the first instance (Anwar Awlaki): because they know that once the citizenry cheers for that power on the ground that they dislike the target, the power then becomes institutionalized and impossible to resist when it expands outward, as it always does.
That’s what Thomas Jefferson meant when he wrote: “In questions of power . . . let no more be heard of confidence in man, but bind him down from mischief by the chains of the Constitution.” It’s also what Frederick Douglass meant when he warned:
Find out just what any people will quietly submit to and you have the exact measure of the injustice and wrong which will be imposed on them.”
Human nature means that once you vest a power in political leaders, once you acquiesce to radical theories, that power will inevitably be abused. The time to object – the only effective time – is when that power theory first takes root, not later when it is finally widespread.
German pastor Martin Niemöller initially supported Hitler. But he later opposed him, and was imprisoned in the Dachau concentration camp for years.
Niemöller wrote a brilliant poem – First They Came - about the manner in which Germans allowed Nazi abuses by failing to protest the abuse of “others”.
This is my modern interpretation of Niemöller’s poem …
Target 2 balances HAD begun to unwind, while the deposit flight that had taken hold across much of the periphery was reversing course. Markets HAD become convinced that European policy makers had stared into the abyss, realised both the nature and the magnitude of the crisis, and decided to do something about it. Nothing fundamental had changed: the hard work was all still to come. But things WERE moving in the right direction, and policy makers APPEARED to be back in charge. All of a sudden, things now look shaky.
4- EU Banking Crisis
BANKRUPTCY - Does Anyone Care How a Capitalist System (versus a Crony Capitalist System) is Supposed to Work?
First the bondholders should have been wiped out. If that was not enough then the deposits above the €100,000 deposit guarantee should have been hit. Then and only then should the average citizen been hit.
And guess what. The average Cyprus citizen would likely not have been hit. Instead, the EU mandated a "screw every citizen" policy to protect the senior bondholders.
Cyprus Bailout Math
What I wrote above was a guess, but an accurate one. Reader Jeff Baryshnik, Baryshnik Capital Management Inc., in Toronto provides some specifics in an email to me a few hours ago.
After a quick review of the most recent financial statements of the four publicly listed Cypriot banks as shown on their websites, it is notable that a simple alternative proposal could protect the country from bankruptcy and make its depositors whole.
By wiping out 100% of the equity, 100% of the bondholders, and 17% of the banks’ liability to central banks, the Cypriots could stabilize their banking system (based on the 5.8Bn EUR figure being discussed) without penalizing local savers.
Instead of raising 5.8Bn EUR from depositors, it could raise 1.4Bn from combined market cap, 2.0Bn from bondholders and preferred shareholders, and 2.4Bn of the 14.3Bn in combined Central Bank loans (Cypriot and ECB) it has on its books. This assumes zero contribution from the Cypriot subsidiaries of foreign banks so it may be conservative.
If the banking system is bankrupt, anything other than an Alice-in-Wonderland recovery system suggests that the order of liquidation is
Central Bank creditors, and
If 10Bn or even 17Bn EUR is truly required, then coincidentally up to 17.7Bn EUR is available from equity holders, debt holders, and Central Bank creditors without impairing a euro cent from depositors.
Much of the money in Cyprus was "hot money" from Russia seeing unfair tax advantages.
So what? Is that any reason to punish every Cyprus citizen? Clearly the answer must be "no".
Perhaps one can create additional spots for illegal deposits (if they could be proven), and one could (and should) distinguish between deposits above and below the deposit guarantee limit, but otherwise, the order suggested by Baryshnik seems quite reasonable.
4- EU Banking Crisis
CYPRUS - Breaks Public Trust, Signals Enormnity of EU Banking Problems and Incites the Politics of Germany Distating Terms
"I object to the entire scheme. First the bondholders should have been wiped out. If that was not enough then the deposits above the €100,000 deposit guarantee should have been hit. Then and only then should the average citizen been hit.
... And guess what. The average Cyprus citizen would likely not have been hit. Instead, the EU mandated a "screw every citizen" policy to protect the senior bondholders. This is not going to sit well in Cyprus or anywhere else, and all for a mere EU 5.8 billion Euros.
The stupidity and arrogance of these nannycrats is staggering.The nannycrats think this will stop "contagion". They are nuts." Mish 03-17-13
It breaks a cardinal rule, namely public trust on which money relies.
Had th public thought their savings were at risk from a restructuring, savers would have run on local banks, hence it is different from a tax
SIGNALS & POLITICS
Frederik Ducrozet, an economist with Credit Agricole, tells Business Insider:
I think the Cyprus deal as it stands a big deal indeed, mostly in terms of bad signaling (as the ongoing normalisation in Eurozone capital flows remains fragile and vulnerable to sudden stops) and politics (Germany still imposing its rules despite growing discontent in the South).
There were multiple reports which indicated that Germany told Cyprus: Confiscate your depositors' money or leave the Eurozone. That's a terrible political dynamic, and on top of Italy it exacerbates a bad overall political situation.
This is a nuclear war on savings and wealth - something that will likely crush animal spirits. This is a policy move you expect from a dictatorial regime in sub-Saharan Africa, not in an EMU member state. If the European governments can clandestinely expropriate 7 to 10 percent of their hard working citizen's precautionary savings after the close of business on a Friday night, what else are they capable of doing? Why even hold money in a bank account? Are they trying to start a bank run?
The Rape Of Cyprus By The European Union & The IMF The nations of Europe, Germany, France, the Netherlands and the rest, demanded that this take place, a "fait accompli," the President of Cyprus said and Europe annexes Cyprus. Let's be quite clear; the European Union has confiscated the private property of the citizens in Cyprus without debate, legislation or Parliamentary agreement. Pay attention please. The European Union and the European Central Bank and the IMF have just advocated the confiscation of private property for their own indulgence.
Cyprus: The World’s Biggest "Poker Game" The nations of Europe, Germany, France, the Netherlands and the rest, demanded that this take place, a "fait accompli," the President of Cyprus said and Europe annexes Cyprus. Let's be quite clear; the European Union has confiscated the private property of the citizens in Cyprus without debate, legislation or Parliamentary agreement. Pay attention please. The European Union and the European Central Bank and the IMF have just advocated the confiscation of private property for their own indulgence.
The new proposal will see smaller depositors, those with up to €100,000, taxed at 3%;
savers with €100,000 to €500,000 taxed at 10%; and those with
over €500,000 taxed at 15%, one official said.
ORIGINAL (SATURDAY NIGHT): Depositors in Cypriot banks will be hit with a one-off tax on their savings. Accounts
With more than €100,000 will be taxed at 9.9%,
With less at 6.75%,
Raising an expected €5.8 billion for the near-bankrupt nation.
Cypriot Parliament would adopt the taxes over the weekend and the money would be extracted from accounts before banks take up business Tuesday.
Part of a €10 billion ($12.96 billion) bailout from the euro zone and the International Monetary Fund.
The deal, announced early Saturday, marks the first time in the euro zone's five-year-old financial crisis that depositors in bloc's banks will lose money. "We have taken immediate measures so that electronic transfers cannot take effect before banks reopen on Tuesday," said the minister, who took office just two weeks ago.
Jörg Asmussen, a member of the executive board of the European Central Bank, stressed that amounts in excess of the levy will remain fully available. Accounts held in Greek offshoots of Cypriot banks will also be spared.
Cyprus, which first applied for help last summer, has proved a major headache for the euro zone, mostly because
of an outsized banking sector, which has swelled to eight times the size of the island's economy and was hit hard by a restructuring of Greek government debt last year.
Allegations of money laundering and
a general election in February also hampered bailout talks.
An initial assessment of Cyprus's finances in January concluded it needed more than €17 billion, including €10 billion just to stabilize its banks.
That would have been an unmanageable burden for the island, whose annual economic output is less than €18 billion and shrinking.
As they struggled to bring down the rescue costs, euro-zone finance ministers and the troika of the European Commission, the ECB and the IMF chose to go ahead with the deposit tax despite warnings it could unsettle savers and investors in other weak European countries.
"This is a special situation, with a very specific banking sector, with a very specific structure and size, which calls for this specific package," said Jeroen Dijsselbloem, the Dutch finance minister who chaired the discussions. He said similar measures weren't being considered for other countries that have received bailouts.
Officials hoped that the contribution of depositors will make it easier to pass the rescue package through parliaments in rich countries like Germany, the Netherlands and Finland. Lawmakers there have balked at bailing out foreign depositors, many of them Russians, whom they suspected of taking advantage of Cyprus's lax banking laws.
Nicosia will also raise its corporate-tax rate to 12.5% from 10%, among the euro zone's lowest,
impose a levy on interest income and
undergo a review of its anti-money-laundering legislation.
The IMF, which had been the strongest advocate for having the bailout burden fall partly on depositors, will contribute to the rescue, said the fund's Managing Director Christine Lagarde. Two officials said the IMF is expected to chip in €1 billion of the overall €10 billion needed.
Olli Rehn, the European Union's economic affairs commissioner, said Russia had indicated it was willing to give Cyprus more time to repay a €2.5 billion rescue loan from 2011, and may also lower the interest it charges. Mr. Sarris is expected to travel to Moscow on Wednesday to nail down the final terms.
The struggle to agree on a bailout for tiny Cyprus, which accounts for just 0.2% of the euro zone's economy, once again underlines how vulnerable the currency union remains to economic shocks in any member nation.
"Cyprus is of systemic relevance to the euro area," said Mr. Rehn. "Not to provide assistance to Cyprus would have posed a risk of undoing the progress that has been painstakingly made over the past year."
Ministers also agreed to give Portugal and Ireland more time to repay their bailout loans, but didn't provide any details.
IT IS not a fudge, but it is still a failure. The euro zone’s bail-out of Cyprus, which was sealed in the early hours of Saturday, did get the bill for creditor countries down from €17 billion to €10 billion, as had been rumoured. But the way it did so was somewhat unexpected.
Almost €6 billion of the savings for taxpayers in euro-zone countries came from losses imposed on depositors in Cyprus’s outsize banks. A one-off 9.9% levy will be imposed on all deposits over the insurance threshold of €100,000 before banks reopen after a bank holiday on Monday. That idea had been in the air for a while, not least because a lot of those uninsured deposits came from outside Cyprus, and from Russia in particular. The politics of saving wealthy Russians with money loaned by thrifty Germans were always going to be tricky.
What had not been anticipated was a 6.75% loss for savers with deposits in Cypriot banks below the insurance ceiling. Cypriots woke up this morning to find bank branches closed to them. By the time they will be able to get at their money, it will be too late. The offer of equity in banks to replace the value of their savings is meant to be a balm but it’s not a choice they would have made. Why this decision was taken is not yet clear. The most plausible explanation is that
the Cypriot government itself preferred to spread the pain rather than wipe out non-resident depositors and jeopardise its long-term prospects as an offshore financial centre for Russian and other money.
Whatever the rationale, it is a mistake for three reasons.
REWAKEN CONTAGION RISK: The first error is to reawaken contagion risk elsewhere in the euro zone. Depositors have come through the financial crisis largely unscathed. Now they have been bailed in, some of them in breach of an explicit promise that they can be sure of getting their money back even if a bank goes belly-up. Euro-zone leaders will spin the deal as reflecting the unique circumstances surrounding Cyprus, just as they did the Greek debt restructuring last year. But if you were a depositor in a peripheral country that looked like it needed more money from the euro zone, what would your calculation be? That you would never be treated like the people in Cyprus, or that a precedent had been set which reflected the consistent demands of creditor countries for burden-sharing? The chances of big, destabilising movements of money (into cash, if not into other banks) have just shot up.
EQUITY: The second error is one of equity. There is an argument to be made over the principles of bailing in uninsured depositors. And there is a case for hitting everyone in Cypriot banks before any taxpayer in another country. But there is no moral imperative for whacking Cypriot widows and leaving senior bank bondholders untouched, as appears to be the case here; or not imposing any losses on sovereign-debt investors in Cyprus; or protecting depositors in the Greek operations of Cypriot banks, as has also happened. The euro zone may cloak this bail-out in the language of fairness but it is a highly selective treatment. Indeed, the euro zone’s insistence that this is a one-off makes that perfectly plain: with enough foreigners at risk and a small enough country to push around, you get an outcome like Cyprus. (That is one reason why people are now wondering about the implications of this deal for little Latvia, also home to lots of Russian money and itself due to join the euro zone in 2014.)
STRATEGIC: The final error is strategic. The Cypriot deal has no coherence in the larger context. The euro crisis has been in abeyance for a few months, thanks largely to the readiness of the European Central Bank to intervene to help struggling countries. The ECB’s price for helping countries is to insist they go into a bail-out programme. The political price of going into a programme has just gone up, so the ECB’s safety net looks a little thinner.
The bail-out appears to move Europe further away from the institutional reforms that are needed to resolve the crisis once and for all. Rather than using the European Stability Mechanism to recapitalise banks, and thereby weaken the link between banks and their governments, the euro zone continues to equate bank bail-outs with sovereign bail-outs. As for debt mutualisation, after imposing losses on local depositors, the price of support from the rest of Europe is arguably costlier now than it ever has been.
It is also hard to square this outcome with the ongoing overhaul of finance. The direction of efforts to improve banks’ liquidity position is to encourage them to hold more deposits; the aim of bail-in legislation planned to come into force by 2018 is to make senior debt absorb losses in the event of a bank failure. The logic behind both of these reform initiatives is that bank deposits have two, contradictory properties. They are both sticky, because they are insured; and they are flighty, because they can be pulled instantly. So deposits are a good source of funding provided they never run. The Cyprus bail-out makes this confidence trick harder to pull off.
According to El-Erian, the EU actually had four valid reasons to make such an unprecedented move.
First, El-Erian says, given the problem – which stems partly from the enormous size of the Cypriot banking system relative to GDP – depositors are partly to blame. "In entrusting funds to Cypriot institutions, depositors (and especially foreign depositors) inadvertently funded the over-extension of the banking system, both domestically and abroad," writes El-Erian.
Second, much has been made about the "Russia angle" in the Cyprus deal. Because Cyprus is viewed as an off-shore tax haven for Russian oligarchs mafia types, many worry that the move could anger those depositors. El-Erian thinks that is a good thing, though: "By killing once and for all the notion that Cyprus is a safe and lax offshore haven, the levy serves to limit such intermediation [of funds from dubious origins] in future."
The third valid reason for a deposit haircut, according to El-Erian, is that the alternatives seemed worse. Someone was going to lose out in this deal. For the two reasons outlined above, it might as well be the depositors.
Finally, this will serve as a "wake-up call" for investors who thought the ECB had fixed everything with its "whatever it takes to save the euro" speech back in July. This, too, is a good thing, says El-Eria
CENTRAL BANKING MONETARY POLICIES, ACTIONS & ACTIVITIES
TECHNICALS & MARKET ANALYTICS
COMMODITY CORNER - HARD ASSETS
2013 - STATISM
STATISM - The Silent Culture of Concealment & the Incentive System of Collusion Runs the governing bureaucracies.
The presstitutes in the establishment media enable the warmongering Protection Racket as a condition of employment. Their lack of investigative reporting is only superseded by their ominous distortion of real patriotic loyalty
"We say in this nation that we are looking for people with honesty, integrity, drive and dedication, and then when we find such people, we take them out and whip them." anonymous
A government whistleblower, disclosing classified secrets, risks criminal charges. Defining restricted material usually includes a broad scope of information that casts officials or agencies in a compromising embarrassment. The idea that public servants may be engaged in violating laws is no excuse for blowing the whistle on such abuses if it involves "National Security". This protect the state attitude at all cost argument, is the very definition of institutional cover-up. In war, truth is the first casualty, so said Aeschylus.
So throwing the book at Bradley Manning comes as no surprise. Why should anyone be concerned about the intentional dissemination of raw evidence about war crimes, committed in the name of the War of Terror? Most would fail to be moved by the motivations of a stoic prisoner, who uploaded secured computer files to WikiLeaks. Many would cheer his interminable incarceration for disclosing military records.
A cogent reaction from another renowned whistleblower, Daniel Ellsberg of the Pentagon Papers fame, carries the weight of a brave man from another era.
"It's important to remember through all this that Manning has already pled guilty to ten charges of violating military regulations (few of which, if any would be civilian crimes) and faces twenty years in jail. Yet the prosecutors are still going ahead with the absurd charge of "aiding the enemy," a capital offense, of which the prosecutors are asking for life in prison.
Nixon could have brought that charge against me too. I was revealing wrongdoing by our government in a public way, and that information could have been read by our enemies in Vietnam. Of course, I never had that intent and Manning didn't either. We both leaked information to provoke a domestic debate about military force and government secrecy. And to say we did so to aid the enemy is absurd."
In any political trial, the spirit of the law is sacrificed for the expediency of protecting a debased regime. Balance in prosecution is a concept unknown to a government consumed with punishing any perceived enemy of the state.
Attorney Floyd Abrams and Professor Yochai Benkler provide a thoughtful perspective and legal opinion in The New York Times editorial - Death to Whistle-Blowers?
"Under the prosecution's theory, because Private Manning knew the materials would be published and that Al Qaeda could read them once published, he indirectly communicated with the enemy. But in this theory, whether publication is by WikiLeaks or The Times is entirely beside the point. Defendants are guilty of "aiding the enemy" for leaking to a publishing medium simply because that publication can be read by anyone with an Internet connection.
Private Manning's guilty plea gives the prosecution an opportunity to rethink its strategy. The extreme charges remaining in this case create a severe threat to future whistle-blowers, even when their revelations are crystal-clear instances of whistle-blowing. We cannot allow our concerns about terrorism to turn us into a country where communicating with the press can be prosecuted as a capital offense."
No such mercy from the imperial empire, Manning must suffer the supreme wrath for his transgressions. His admissions acknowledge expected official sanctions, but the sentiment of Daniel Ellsberg reflects the standpoint of many Manning supporters.
"...For the third straight year, Manning has been nominated for the Noble Peace Prize by, among others, Tunisian parliamentarians. Given the role the WikiLeaks cables played in the Arab Spring, and their role in speeding up the end of the Iraq War, I can think of no one more deserving who is deserving of the peace prize.
He's also deserving of the Congressional Medal of Honor. This medal, awarded by Congress-and not the executive branch-is given to military personnel, who during wartime, do what they should do for their country and their comrades, at the greatest risk to themselves."
Another target of recrimination, seen in the Sibel Edmonds dismissal is a classic example of punishing the whistleblower. Edmonds took a job as a translator at the FBI shortly after 9-11. Her story, stated in the YouTube interview, The Government Is Raping You: Sibel Edmonds, is compelling.
"Edmonds found at the FBI translation unit almost entirely two types of people. The first group was corrupt sociopaths, foreign spies, cheats and schemers indifferent to or working against U.S. national security. The second group was fearful bureaucrats unwilling to make waves. The ordinary competent person with good intentions who risks their job to "say something if you see something" is the rarest commodity. Hence the elite category that Edmonds found herself almost alone in: whistleblowers."
This characterization of morally challenged federal employees is a direct consequence of a system that protects the cover-ups, while punishing disclosure of conflicting evidence of outright corruption. The silent culture of concealment or the worse incentive system of collusion runs the governing bureaucracies.
The presstitutes in the establishment media enable the warmongering protection racket as a condition of employment. Their lack of investigative reporting is only superseded by their ominous distortion of real patriotic loyalty. Whistleblowers function as detectives doing the job that reporters abdicate. Woefully, so few citizens of conscience are willing to jeopardize their individual circumstance for the courage of genuine national security.
"Unfortunately, most of Edmonds' contributing editors at BoilingFrogs are decidedly left of center, and their anti-globalist, anti-war, anti-police-state arguments and analyses tend to range from the "progressive" to the Marxoid. However, when she went public and came under attack, it wasn't Sean Hannity and Rush Limbaugh who came to her defense; it was the anti-Bush Left that rallied to her aid. In fact, the faux conservatives at FOX, National Review, and the radio talk show universe alternately ignored and attacked her; they were busy cheerleading George W. Bush's unconstitutional wars abroad and his unconstitutional police-state measures at home. Sympathetic coverage for Edmonds from alternative media on the Right has been woefully lacking, with a few exceptions.
In April 2011, Sibel Edmonds submitted her manuscript for Classified Woman to the FBI for review, as required by terms of her employment agreement. Under that agreement, the FBI has 30 days to approve and/or require deletions and revisions. After waiting over 340 days with no response from the bureau, Edmonds took the path that few others have taken; she published anyway. However, with every publisher afraid to touch it, she was forced to publish it on her own. She knows that any day now the Obama administration, which has prosecuted more whistleblowers than all previous administrations combined, may come after her."
Forget about the false left-right paradigm. The "War of Terror" being waged by the imperium empire is designed to crush whistleblowers, and keep the brain dead in a zombie trance. Just consider the impact on the Afghanistan campaign if the FBI acted upon the evidence unclosed by Sibel Edmonds that cuts to the heart of the 911 myth assumptions.
The military-industrial-security-intelligence complex closes ranks to protect their "Splendid Little Wars". The whistleblowers that expose the lies out of the War Party establishment are only a minor distraction, as long as the public sleeps in their self-induced coma. The Army Times item, Hagel to order review of drone medal precedence, is one such interlude, while the control and command structure continues to aim their weapons at imaginary threats.
Who would doubt that the Bradley Mannings and Sibel Edmonds, squealers of state secrets, would be prime quarries for the hunt to eliminate enemies of the state? The only good government snitch is a Gitmo captive. So goes the claims of the governance prosecutors.
How many people have actually examined the information in the Manning WikiLeak disclosures or read the Edmonds account of 911-treason complicity? Oh no, the discomfort of confronting the fake reality of the official story of make believe is too disturbing for most people.
Loyalty of country is a very dangerous attitude, when your government sponsors state terrorism as a normal activity. The fear to face up to the horrors of administration deceit is the prime activity of the flag waving drones that cheer for more carnage.
When Edmonds describes the traitors within the national security structure, the fearful bureaucrats facilitate the ongoing treachery that passes for nationalism. When Manning exposes the documents that prove a genocide policy is in effect, the penalty demanded by the bellicose command is his execution.
An honorable whistleblower is a citizen hero. Disobeying dishonest laws is true patriotism. In the end, A Different Philosophy of Civil Disobedience, is needed. Complacency is the countrywide disease of choice. Real patriots oppose jingoistic orders. Stand down . . .
2012 - FINANCIAL REPRESSION
2011 - BEGGAR-THY-NEIGHBOR -- CURRENCY WARS
2010 - EXTEN D & PRETEND
CORPORATOCRACY - CRONY CAPITALSIM
CRONY CAPITALISM - From the Mouth of Fed President Richard Fisher
Reuters notes that the president of the Federal Reserve Bank of Dallas – Richard Fisher - said yesterday:
The largest U.S. banks are “practitioners of crony capitalism,” need to be broken up to ensure they are no longer considered too big to fail, and continue to threaten financial stability, a top Federal Reserve official said on Saturday.
Fisher said the existence of banks that are seen as likely to receive government bailouts if they fail gives them an unfair advantage, hurting economic competitiveness.
“These institutions operate under a privileged status that exacts an unfair tax upon the American people,” he said on the last day of the annual Conservative Political Action Conference (CPAC).
“They represent not only a threat to financial stability but to fair and open competition … (and) are the practitioners of crony capitalism and not the agents of democratic capitalism that makes our country great” ….
As Reuters global editor at large Chrystia Freeland noted, the “Arab Spring” and other protests around the world are really protests against crony capitalism:
Across the globe, this was a year when people took to the streets, often overthrowing their leaders in the process. That was true in the Arab world, in Russia, in India, in Western Europe, in the United States and even in China.
The unifying complaint is crony capitalism. That’s a broad term, to be sure, and its bloody Libyan manifestation bears little resemblance to complaints about the Troubled Asset Relief Programin the United States or allegations of corrupt auctions for telecommunications licenses in India. But the notion that the rules of the economic game are rigged to benefit the elites at the expense of the middle class has had remarkable resonance this year around the world and across the political spectrum. Could the failure of the experts to anticipate this anger be connected to the fact that the analysts are usually part of the 1 percent, or at least the 10 percent, at the top?
As for crony capitalism, this slogan of the street is both a challenge for the state and an opportunity. For some regimes, of course, crony capitalism, with a side order of repression, is the only dish on the menu. For them, the trends of 2011 do not bode well.
But most of today’s troubled market democracies don’t need a revolution to sweep away their cronies. What they do need is a new version of capitalism, designed for the 21st century. That is what the world’s protesters, in their different ways, are all asking for. Here’s hoping that 2012 provides some politicians with some answers.
Preface: Not all banks are criminal enterprises. The wrongdoing of a particular bank cannot be attributed to other banks without proof. But – as documented below – many of the biggest banks have engaged in unimaginably bad behavior.
You Won’t Believe What They’ve Done …
Here are just some of the improprieties by big banks:
Engaging in mafia-style big-rigging fraud against local governments. See this, this and this
Shaving money off of virtually every pension transaction they handled over the course of decades, stealing collectively billions of dollars from pensions worldwide. Details here, here, here, here, here, here, here, here, here, here, here and here
Indeed, one of the world’s top fraud experts – professor of law and economics, and former senior S&L regulator Bill Black – says that most financial fraud is “control fraud”, where the people who own the banks are the ones who implement systemic fraud. See this, this and this.
Trillions In Subsidies to the Giant Banks Are Continuing to This Day
Preface: Bloomberg’s recent estimate that the big banks are subsidized to the tune of $83 billion dollars per year created tremendous controversy. But – as shown below – the real number is many times larger.
Chris Whalen is one of America’s top banking analysts.
Specifically, Whalen estimates the following types of subsidies to the giant banks:
$360 billion in Federal Reserve subsidies, by creating an artificial “spread” in interest rates (Bloomberg, Business Insider, Huffington Post, and many other publications have documented that the government is subsidizing big banks with artificial and guaranteed “spreads”, where the banks borrow cheaper than any consumer can, and then lend the money back to the government at much higher interest rates.)
$120 billion in federal deposit insurance (through the FDIC, backed by the Treasury)
At least $100 billion in government-guaranteed loans, especially mortgages
At least $100 billion in monopolistic advantages in the secondary market for home mortgages. Specifically, the government subsidies the big banks to steal away fees earned from smaller banks, gain on sale into the TBA market and servicing. Whalen quotes a veteran banker explaining:
The smaller players lived on the bleeding edge of the mortgage market, but they were also far more efficient lenders than the large banks. Now, care of the Fed, we have a highly inefficient oligopoly in the US mortgage market that is built around the largest banks.
More than $100 billion in fees in the over-the-counter (OTC) derivative market. Whalen explains
The lack of capital required in these transactions and other special dispensations from the Fed provide the zombie banks with unlimited leverage and almost no public scrutiny. The fact that OTC contracts are exempt from the automatic stay in bankruptcy is a huge subsidy. The bilateral market structure is another.
That totals $780 billion per year.
But Whalen notes that there are many other subsidies as well:
The above points are only a partial list of the subsidies and other flows that allow the members of the banking industry to pretend to be profitable, risk-taking organizations in a free market economy.
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