THIS IS NOT A NORMAL RECESSION .MOVING TO PLAN B

This Is Not A Normal Recession: Moving on to Plan B

Mike Whitney
Global Research
November 21, 2008

“The Winter of 2008-2009 will prove to be the winter of global economic discontent that marks the rejection of the flawed ideology that unregulated global financial markets promote financial innovation, market efficiency, unhampered growth and endless prosperity while mitigating risk by spreading it system wide.” Economists Paul Davidson and Henry C.K. Liu “Open Letter to World Leaders attending the November 15 White House Summit on Financial Markets and the World Economy”

The global economy is being sucked into a black hole and most Americans have no idea why. The whole problem can be narrowed down to two words; “structured finance”.

Structured finance is a term that designates a sector of finance where risk is transferred via complex legal and corporate entities. It’s not as confusing as it sounds. Take a mortgage-backed security (MBS), for example. The mortgage is issued by a bank (the loan originator) which then sells the mortgage to a brokerage where it is chopped up into tranches (pieces of the loan) and sold in a pool of mortgages to investors that are looking for a rate that is greater than Treasurys or similar investments. The process of transforming debt (”the mortgage”) into a security is called securitization. At one time, the MBS was a reasonably safe investment because the housing market was stable and there were relatively few foreclosures. Thus, the chance of losing one’s investment was quite small.

In the early years of the Bush administration, Wall Street took advantage of the gigantic flow of capital coming into the country ($700 billion per year via the current account deficit) by creating more and more MBSs and selling them to foreign banks, hedge funds and insurance companies. It was real gold rush. Because the banks were merely the mortgage originators, they didn’t believe their own money was at risk, so they gradually lowered lending standards and issued millions of loans to unqualified applicants who had no job, no collateral and a bad credit history. Securitization was such a hit, that by 2005, nearly 80 percent of all mortgages were securitized and the traditional criteria for getting a mortgage was abandoned altogether. Subprimes, Alt-As and ARMs flourished, while the “30 year fixed” went the way of the Dodo. Lenders were no longer constrained by “creditworthiness”; anyone with a pulse and a pen could get approved. The mortgages were then shipped off to Wall Street where they were sold to credulous investors.

The disaggregation of risk–spreading the risk to many investors via securitization–was as much of a factor in the creation of “the largest equity bubble in history”, as the banks lax lending standards or Greenspan’s low interest rates. By spreading risk throughout the system, securitization keeps interest rates artificially low because the real risks are not properly priced. The low interest rates, in turn, stimulate speculation which results in equity bubbles. Eventually, credit expansion leads to crisis when borrowers can no longer make the interest payments on their loans and defaults spiral out of control. This forces massive deleveraging and the fire-sale of assets in illiquid markets. As assets lose value, prices fall and the economy enters a deflationary cycle.

There are many types of of structured instruments including asset-backed securities (ABS), mortgage-backed securities (MBS), collateralized debt obligations (CDOs) and collateralized loan obligations (CLOs) all of which provide a revenue stream from loans that were chopped into tranches and turned into securities. There are many problems with these complex securities, the biggest of which is that there is no way to unravel the individual pools of loans to isolate the bad paper. That’s why subprime mortgages had such a destructive affect on the secondary market, because–even though subprimes only defaulted at a rate of roughly 5 percent–MBS sales slumped nearly 90 percent. Why? Former Secretary of the Treasury Paul O’Neill explained it like this: “It’s like you have 8 bottles of water and just one of them has arsenic in it. It becomes impossible to sell any of the other bottles because no one knows which one contains the poison.”

Exactly right. So why weren’t these structured debt-instruments “stress tested” before the markets were reworked and the financial system became so dependent on them?

Greed. Because the real purpose of these exotic investments is not to provide true value to the buyer, but to maximize profits for the seller by increasing leverage. That is the real purpose of MBS, CDOs and all the other bizarre-sounding derivatives; higher profits with less capital. It’s a scam. Here’s how it works: A mortgage applicant buys a house for $400,000 and puts 10 percent down. His mortgage is sold to Wall Street, chopped into pieces, and stitched together in a pool of similar loans. Now the brokerage can use the debt as if it were an asset, borrowing at ratios of 20 or 30 to 1 to fatten the bottom line. When Fannie Mae and Freddie Mac were taken into conservatorship by the government, they were leveraged at an eye-popping 100 to 1. This shows that nearly an infinite amount of debt can be precariously balanced atop a paltry amount of capital. This explains why the $4 trillion aggregate value of the 5 big investment banks and the $1.7 trillion value of the hedge funds is now vanishing more quickly than it was created. Once the mighty gears of structured finance shift into reverse, deleveraging begins with a vengeance pulling trillions into a credit vacuum.

It all started when two Bear Stearns hedge funds defaulted in July 2006 and there were no offers for their MBS and other structured investments. Panic quickly spread to every corner of Wall Street as the alchemists of modern finance began to see that their worst nightmare might be realized, that trillions of dollars of Frankenstein investments could be worth nothing at all.

A d v e r t i s e m e n t

Since the Bear Stearns funds fiasco, there have been huge explosions in the financial markets. Fannie Mae, Freddie Mac, Wachovia, Washington Mutual, Indybank, AIG, Lehman Bros and other industry giants have either gone under or been forced into shotgun weddings by the FDIC. The stock market has plunged over 40 percent and suffered wild gyrations not seen since the 1930s. The entire Wall Street landscape has changed completely. Investment banking is no longer a viable business model; the Big 5 have either vanished or transformed themselves into holding companies to escape short sellers. The hedge funds have been deleveraging with a ferocity that has sent sent stocks and commodities crashing. In one day last week, the stock market plunged 300 points in the morning only to bounce back 550 points a few hours later; a whopping 850 point-spread in one trading day! No one but a madman would dabble in this market. Cautious investors have pulled up stakes and moved to the safety of Treasurys. Meanwhile, the financial tsunami is roaring through the real economy where consumer confidence has plummeted, unemployment is soaring and retail sales have fallen to historic lows. The downdraft from the financial markets has flattened Main Street and set the stage for a humongous $500 billion stimulus package to be delivered in the first few months of the Obama administration. The meltdown appears to be playing out much like Henry Paulson anticipated. According to Bloomberg News : “Shortly after leaving Wall Street as Goldman Sachs’ CEO, Henry Paulson was at Camp David warning the president and his staff of “over-the-counter derivatives as an example of financial innovation that could, under certain circumstances, blow up in Wall Street’s face and affect the whole economy.” (PAUL B. FARRELL, “30 reasons for Great Depression 2 by 2011″, MarketWatch)

So far, the Federal Reserve has provided nearly $2 trillion through its lending facilities just to keep the financial system upright. The Treasury is currently distributing $700 billion to key banks and other financial institutions that are perceived to be “too big to fail”. In truth, the “too big to fail” mantra is a just public relations hoax to conceal the web of counterparty deals that make it impossible for one institution to fail without dominoing through the rest of the system and wreaking havoc. That’s why AIG is still on life-support with regular injections of taxpayer money; because it had roughly $4 trillion of credit default swaps (structured “hedges” that are not traded on a regulated exchange) for which AIG does not have sufficient capital reserves. In other words, the taxpayer is now paying the debts of an insurance company that didn’t set aside the money to pay its claims. (As yet, No SEC indictments for securities fraud) In fact, the Fed and Treasury are now providing a backstop for the entire structured finance system which is frozen solid and shows no sign of thawing any time soon.

This is not a normal recession, which is a downturn in the business cycle and “a period of reduced economic activity” usually brought on by a mismatch between supply and demand. (that ends in two quarters of negative growth) The present situation is much more grave; it is the utter destruction of a system that was developed fairly recently and has proven to be thoroughly dysfunctional. It cannot withstand the effects of tighter credit or adverse market conditions. This is not a cyclical downturn; the structured finance system has collapsed leaving behind a multi-trillion dollar capital hole that is bringing the broader economy to its knees.

One by one, we have seen the structured instruments fail; mortgage-backed securities (MBS), collateralized debt obligations (CDOs), credit default swaps (CDS), commercial paper (CP), auction rate securities. Now we are seeing investors boycott anything related to structured investments. This is from Mish’s Global Economic Trend Analysis:

“There were NO sales of bonds backed by credit-card payments in October, the first time since 1993, when the asset-backed securities market was in its infancy. Yields on top-rated credit card bonds relative to benchmark interest rates reached a record high of 525 basis points more than the London interbank offered rate, or Libor, last week, according to Bank of America Corp. data.”

Wall Street has turned off the faucet for securitized investments. That market is toast. The only reason that Libor and the other gauges of interbank lending have normalized is because the Fed guaranteed money markets and commercial paper. It has nothing to do with trust between the banks themselves. There is no trust. Even so, the banks are not capable of making up for the vast amount of credit which was produced by the now-defunct investment banks and hedge funds which are constrained by losses of nearly $3.5 trillion; half of their total value. In the best case scenario, bank credit will only shrink 15 or 20 percent, which will put the US on track for a deep “18 month to 2 year” recession rather than another Great Depression.

Paulson’s attempt to divert $30 billion to non-bank financial institutions to revive loan securitization when there is no appetite among investors for such structured junk is pure folly. More troubling, is that neither Paulson nor Bernanke have a Plan B; an alternate scheme for rebuilding the financial markets on a solid, sustainable foundation rather than low interest rates and pools of debt. Everything they have done so far, suggests that they are focused on one thing alone; inflating another equity bubble. “Inflate or die”, as the saying goes; and Bernanke intends to achieve this objective using the same tools that brought us to the brink of catastrophe. Here’s a clip from a recent speech by Bernanke which shows his determination to prop up the broken system:

“The ability of financial intermediaries to sell the mortgages they originate into the broader capital market by means of the securitization process serves two important purposes: First, it provides originators much wider sources of funding than they could obtain through conventional sources, such as retail deposits; second, it substantially reduces the originator’s exposure to interest rate, credit, prepayment, and other risks associated with holding mortgages to maturity, thereby reducing the overall costs of providing mortgage credit.”

Sorry, Ben, the funding has dried up and the banks have shown no interest in going back to the days of conventional “30-year fixed” mortgages. It’s a dead letter. The Fed and Treasury need to stop looking for ways to reflate the bubble and work to restore confidence in the markets by increasing regulation and reducing the amount of leverage that’s allowable to 12 to 1. After all, it’s no coincidence that AIG, Fannie and Freddie, Lehman Bros, General Motors, General Electric have all fallen off a cliff at the very same time. They are all victims of the same low interest, easy money finance swindle which allowed them to roll over huge amounts of short-term debt at artificially low cost. When Bear blew up; lending tightened, demand weakened, and credit was flushed from the system at an unprecedented pace. Borrowing short for long-term investments is not feasible when credit becomes scarce, but it’s not because the banks aren’t lending. That’s just another myth that keeps the public from seeing what’s really going on. As Jon Hilsenrath points out in his Wall Street Journal article, “Banks Keep Lending, but that isn’t easing the crisis”, that is not the case:

“Banks actually are lending at record levels. Their commercial and industrial loans, at $1.6 trillion in early November, were up 15% from a year earlier and grew at a 25% annual rate during the past three months, according to weekly Federal Reserve data. Home-equity loans, at $578 billion, were up 21% from a year ago and grew at a 48% annual rate in three months….The numbers point to one of the great challenges of the crisis. The credit crunch is surely real, but it is complex and not easily managed. Banks are lending, but they’re also under serious strain as they act as backstops to a larger problem — the breakdown of securities markets..The worst of the credit crisis is being felt not in banks but in financial markets…”

The banks are not to blame. There is a generalized contraction of credit in the non-bank financial system where structured finance has blown up and taken half of Wall Street with it. It’s the end of an era. Here’s how economist Henry C. K. Liu sums it up in his “Open Letter to World Leaders attending the November 15 White House Summit on Financial Markets and the World Economy”:

“Neoliberal economists in the last three decades have denied the possibility of a replay of the worldwide destructiveness of the Great Depression that followed the collapse of the speculative bubble created by unfettered US financial markets of the ‘Roaring Twenties’. They fooled themselves into thinking that false prosperity built on debt could be sustainable with monetary indulgence. Now history is repeating itself, this time with a new, more lethal virus that has infested deregulated global financial markets with ‘innovative’ debt securitization, structured finance and maverick banking operations flooded with excess liquidity released by accommodative central banks. A massive structure of phantom wealth was built on the quicksand of debt manipulation. This debt bubble finally imploded in July 2007 and is now threatening to bring down the entire global financial system to cause an economic meltdown unless enlightened political leadership adopts coordinated corrective measures on a global scale.”

Rome is burning. It’s time to stop tinkering with a failed system and move on to “Plan B” before it’s too late.

ROTHSCHILD INVESTMENT BANKING POSTS RECORD RESULTS

Rothschild Investment Banking Posts Record Results

Ron Haruni
Seeking Alpha
November 21, 2008

The inability of the current investment banking model to withstand the ongoing liquidity crisis has forced many investment bankers out of business or those few that have survived to get by on reduced or no bonuses this year. However, as lenders globally continue to write off and provision for a significant volume of soured loans, U.K.’s Rothschild group, one of the world’s leading investment banking organizations, has posted record results. The bank has been able to maintain its very strong performance again this year, despite the credit crunch, economic slowdown and the threat of a U.S. recession, with investment banking and corporate banking businesses both producing record revenues.

A d v e r t i s e m e n t

The bank, according to Timesonline - reported a 31%, 459 million euro, improvement in profits. In addition, record results from the organization’s advisory and private banking operations enabled the bank to pay record bonuses to its 2,700 people in June.

The bank’s chairman Davide de Rothschild, following unconventional investment banking strategies, has steered his organization clear of proprietary trading, prime broking and other activities that have devastated rivals as a result of an environment where asset prices keep falling while liabilities remain fixed. The bank however, still wrote off 96 million euro because of souring loans. At some point, considering the global financial system is galloping off a cliff - today’s difficulties in investment banking will prompt an overhaul of the system favoring those players that have shown themselves to be the most cautious during this cycle.

Alongside its pro-forma group-wide results, Rothschild also unveiled that it had entered into a co-operation agreement in the field of M&A and Equity Capital Markets advisory in the food and agriculture sectors on a global basis with Netherlands’ Rabobank, a premier global financial institution providing financing and other services to food and agri business clients around the world.

As part of the deal, notes Timesonline, Rabobank is buying a 7.5% stake in one of the key holding companies in the Rothschild empire, Rothschild Continuation Holdings, which owns the N M Rothschild business in the U.K.

Rabobank becomes the second biggest investor outside the Rothschild family after the trading group Jardine Matheson, which owns 20%. This is Rothschild’s second joint venture with a Dutch bank.

Rothschild advisory clients include Rio Tinto (RTP), which is fighting a hostile bid from BHP, Billiton (BHP), and British Energy in its deal with France’s power giant EDF, a deal that gives the French company a dominant role in the British nuclear industry.

video:THE MEN BEHIND OBAMA

PART 1

PART 2

VIDEO: THE NEW WORLD ORDER HOLOCAUST IS COMING

THE IMPERIALISM YOU CAN BELIEVE IN

The Imperialism You Can Believe In

While Leftists Celebrate “Change,” Obama Appointees Suggest Massive Expansion Of Bush War Doctrine

Paul Joseph Watson
Prison Planet.com
Thursday, November 20, 2008

While naive, giddy and myopic establishment leftists have been celebrating the great “change” heralded by the election of Barack Obama, the President elect has been busy appointing people to key positions who advocate the same Neo-Con imperialist foreign policy crafted during eight years of the Bush administration.

The New York Times, widely recognized as the voice of the establishment Democratic left, set the tone of what we can expect from an Obama foreign policy in a lead editorial last Sunday entitled, “A military for a dangerous new world.”

The editorial calls for U.S. military imperialism not to be scaled back under Obama, but to be vastly expanded both in terms of budget and scope.

Iran, China, Somalia, Russia and Pakistan are all listed as potential targets of U.S. military aggression and the paper echoes what Obama himself has said he will implement - an addition of nearly 100,000 more soldiers and marines to American ground forces, bringing the total to 759,000 active duty forces, at a cost of $100 billion dollars over the next six years.

Does this sound like a “change” from the Project For a New American century framework of endless “multi-theatre warfare,” the inspiration for eight years of Bush administration militarism, or an expansion of that very doctrine?

(ARTICLE CONTINUES BELOW)

Obama’s announced appointees and those that are expected to follow differ only from their Bush administration contemporaries in proficiency and competence, their zeal for military adventurism is coequal, while others that shaped eight awful years of spying, torture, eviscerations on freedom and unprovoked military attacks on sovereign nations will merely stay on in their roles.

Welcome to the “change that you can believe in”.

Obama’s likely selection of Hillary Clinton for the position of Secretary of State highlights the brazen hypocrisy with which the “change” agenda has begun to be implemented since Obama won the election two and a half weeks ago.


Hillary Clinton


Clinton voted for the invasion of Iraq, a point on which she was attacked by Obama during the phony punch and judy show of the debates. Obama also denounced Clinton for voting in favor of a Senate resolution branding the Iranian Revolutionary Guard a terrorist organization. Clinton promised to “obliterate” Iran if it attacked Israel, a mantra echoed by Obama when he assured AIPAC, the notorious Israeli lobby, that military strikes against Iran were very much on the table.

Does this sound like the language of diplomacy or a change from eight years of the Bush doctrine?

Likewise, one of the favorites to become Obama’s Defense Secretary is Michèle A. Flournoy, deputy assistant secretary of defense in the Clinton administration and president of the Center for a New American Security (CNAS) think tank.

As Alex Lantier writes, “Members of CNAS, a rather small Washington think tank with a staff of 30 employees founded in 2003 by (John) Podesta and Flournoy, play an outsized role in the Obama transition team.”

“So many CNAS members are likely to join the Obama administration that CNAS officials told the (Wall Street) Journal they were concerned the think tank might fold after Obama’s inauguration.”

CNAS has opposed a set timeline for withdrawal from Iraq, has advocated the deployment of more troops in Afghanistan and has called for U.S. troops to be stationed in Pakistan. CNAS has also urged military spending to be beefed up in order to compete with China’s growing Navy.

“CNAS publications, many of which are publicly available on its web site, make it clear that the Obama administration’s foreign policy will have a thoroughly imperialist character,” notes Lantier.

How does this represent a “change” from eight years of Bush administration foreign policy? How does this represent a shift from a strategy of diplomacy based on intimidation, invasion and occupation?


Robert Gates

Obama’s advisors have also been floating the likelihood of Robert Gates remaining as Obama’s Secretary of Defense, so it looks like we’re either going to have a warmonger or a warmonger in the position - what a choice!

The Financial Times reported this week, “President-Elect Barack Obama and Robert Gates are negotiating terms under which the defense secretary would remain as Pentagon chief in the new administration.”

Gates of course has a history of entanglement with the military-industrial complex having pushed for the U.S. bombing of Nicaragua when he was deputy director of the CIA and later being indicted for his involvement in covering up the Iran Contra scandal.

Gates was the primary advocate for the Iraq “surge” which increased the U.S. military presence in the country.

Obama’s decision to appoint Eric Holder as Attorney General caused a flutter of controversy considering Holder’s involvement in ensuring billionaire fugitive investor Marc Rich received a presidential pardon at the end of Bill Clinton’s term, but the real dirt on Holder is far more shocking.


Eric Holder


After leaving the Clinton administration, Holder, who played a key role in the 2005 re-authorization of the Patriot Act, which Obama voted for, set up the legal and lobbying firm of Covington & Burling. The firm’s most high-profile case was its defense of Chiquita Brands International, Inc, whose executives were facing charges of aiding terrorists for bankrolling and arming right-wing death squads in Colombia.

As Bill Van Auken writes, “Using his longstanding ties at the Justice Department, Holder managed to get Chiquita off the hook with a fine that amounted to 0.55 percent of its annual revenue. This was despite the overwhelming evidence—and the company’s own admission—that it had paid out millions of dollars to the United Self-Defense Forces of Colombia (known by its Spanish acronym AUC), as its gunmen carried out the massacre, assassination, kidnapping and torture of tens of thousands of Colombian workers, peasants, trade union officials and left-wing political activists.”

“Holder’s record is not that of a champion of civil and democratic rights or a defender of the oppressed, but rather a legal servant of the corporations and the state, complicit in their criminality and repression.”

Holder’s law enforcement deputy in the Obama administration is likely to be Robert Mueller, who will remain as FBI Director despite his involvement in the use of National Security Letters to illegally spy on American citizens via the collection of email, telecommunications and financial records.


Robert Mueller



Obama’s head of the CIA transition team is none other than John Brennan, an aide to former CIA director George Tenet and a key participant in the formulation of policies that led to the torture scandal, extraordinary renditions and secret prisons.

Van Auken notes, “Brennan, like Tenet, deserves to confront a war crimes tribunal, yet he is shaping intelligence policy for Obama.”

“Given these appointments, a report published Monday by the Associated Press that the incoming Obama administration “is unlikely to bring criminal charges against government officials who authorized or engaged in” torture hardly comes as a surprise.”

Then we have Rahm Emanuel, “the enforcer”, and Obama’s new chief of staff.

Emanuel is the son of a member of the Zionist terrorist group Irgun, which was responsible for bombing hotels, marketplaces as well as the infamous Deir Yassin massacre, in which hundreds of Palestinian villagers were slaughtered.

Upon news of his appointment, Emanuel’s father, Dr. Benjamin Emanuel, told the Jerusalem Post, “Obviously he will influence the president to be pro-Israel. Why wouldn’t he be? What is he, an Arab? He’s not going to clean the floors of the White House.”

But forget sins of the father, Rahm Emanuel himself is a former Israeli IDF soldier who has a penchant for making death threats against his political enemies while crazily slamming a knife into a dinner table. Sounds like a diplomatic kind of guy.


Rahm Emanuel


When Emanuel’s appointment was confirmed, top Israeli newspaper the Maariv Daily hailed the news with the headline, “Our man in the White House.”

Another Israeli news outlet, Y Net, reported, “Emanuel is pro-Israeli, and would not be willing to consider accepting the job unless he was convinced that President-elect Obama is pro-Israel.”

Recall that President elect Barack Obama’s first act of “change” upon winning the Democratic presidential nomination back in June was to don a joint US-Israeli label pin, head on over to AIPAC and prostrate himself in front of the Israeli lobby, vowing to keep military action in mind for Iran and promising to hand over another $30 billion of American taxpayers’ money in military assistance to the Zionist state.

It seems that Obama has already answered the question of whether he can be a more hardcore Israel hard-liner than George W. Bush - ‘yes he can’!

When are left-wing establishment liberals going to overcome their inane idolatry for Obama and realize that the people he is putting into positions of power are the same and in some cases worse than the Neo-Cons who ran eight years of Bush foreign policy?

When are leftists going to get over their petty power trips and understand that the mantra of “change” is a mere illusion to provide left cover for a massive expansion in U.S. imperialism the likes of which the Bush administration could never have accomplished?

When are liberals going to stop behaving like gloating children and understand that Obama’s exalted messiah status and political capital, allied with his publicly stated agenda and the nature and track record of those he has appointed to key positions, is a recipe for a new wave of militarism and an expansion of the pre-emptive Bush foreign policy doctrine that Obama himself campaigned against with his rhetorical and empty promises of “change”?

NAOMI KLEIN: BAILOUT IS "MULTI-TRILLION DOLLAR CRIME SCENE"

Naomi Klein: Bailout is ‘multi-trillion-dollar crime scene’

David Edwards and Muriel Kane
Raw Story
Wednesday, Nov 19, 2008

The Bush administration has already handed out almost half of the $700 billion in bank bailout money authorized by Congress but has not even filled the mandated oversight positions to review how it is being used.

Naomi Klein, author of The Shock Doctrine: The Rise of Disaster Capitalism, has described the handling of the bailout as “borderline criminal” because of this and other problems. Klein spoke to Amy Goodman of Democracy Now! on Monday to explain her accusations.

“We were all reassured that there was going to be transparency, accountability, legality,” Klein stated. “But now we’re finding out that, in fact, Henry Paulson has achieved his original goal by stealth, because there is no accountability, and lawmakers are very hesitant to challenge this. … Essentially, what the Bush administration has done is said, ‘We dare you to challenge us and be responsible for the Great Depression.’”

* A d v e r t i s e m e n t
*

Klein sees three areas of borderline illegality. The first is that rather than being used to get banks lending again, the bailout money “is instead going to bonuses, is instead going to dividends, going to salaries, going to mergers.”

The second is that, without Congressional authorization, “the Treasury Department pushed through a tax windfall for the banks, a piece of legislation that allows the banks to save a huge amount of money when they merge with each other. And the estimate is that this represents a loss of $140 billion worth of tax revenue for the US government.”

The third problem, which dwarfs the $700 billion bailout itself, is that “there’s another $2 trillion that’s been handed out by the Federal Reserve in emergency loans to financial institutions, to banks, that actually we don’t really know who they’re handing the money out to, because, apparently, it’s a secret.”

“If the Fed has accepted distressed assets as collateral in exchange for these loans,” stated Klein, “there’s a very good chance the taxpayers aren’t going to be getting this money back. … So that’s why we’re calling this the ‘trillion-dollar crime scene’ or the ‘multi-trillion-dollar crime scene.’”

Klein argued that Congress should be challenging violations of the bailout legislation, but instead “what they’re saying is, we can’t afford to enforce the law … that somehow, because there’s an economic crisis, legality is a luxury that Congress can’t afford.”

“I’m quite concerned,” Klein stated, “that what we’re seeing from Obama’s team is an accepting of this logic that they need to give the market what it wants, which is continuity, smooth transition, which is really just code for more of the same. … I think we should question all of it. Across the board, I think the assumptions are faulty.”

Klein is also concerned that rather than using the crisis as a mandate to fix the underlying problems, the world leaders at the recent G20 summit were talking about propping up the old system.

“Think about what these leaders could do if they really wanted to,” Klein suggested. “When you have a crisis like this, which so clearly shows the need for those types of regulations, when you have an election like there just was in the United States, where people have said clearly that this is a priority, the leaders have an opportunity to act. … But they blew that opportunity, and they actually called for less regulation.”

“This crisis isn’t over,” Klein warned, “and the same people who justified this bailout, who clamored for this bailout, are the very people who are going to turn around and say to Barack Obama, ‘We can’t afford for you to make good on your election promises. We can’t afford universal healthcare.’”

“The money has been given to the people who needed it least, and it’s going to be used to justify austerity measures imposed against those who need it most,” Klein concluded. “It’s going to be used to justify cuts to food stamps. It’s going to be used to justify cuts to Social Security, to health care, let alone being used to justify why more ambitious plans for a national health care program, for green energy are not affordable. So people have to be ready for this. You know, the next shock is yet to come.”

MANIPULATIONS,CORRUPTION AND LOOTING TAKES ECONOMY TO THE BRINK

Manipulations, Corruption And Looting Takes Economy To The Brink

Watching obvious criminal manipulations, COMEX becomes CRIMEX, Dubai Exchange, economic pundits avoid reality, eight years that changed America, regulation will protect the elite

What you are now witnessing is the slow motion destruction of the CRIMEX, formerly known as the COMEX, a commodities futures market which is supposed to provide a means for producers to hedge their products, but which has morphed into a rigged casino where commodities that don't exist are traded as if they did for prices that exist only in the fairytales woven by the Illuminati, who control the exchange. This destruction is what happens when the credibility and integrity of the market owners and managers of the CRIMEX, together with the credibility and integrity of the market regulators, the CFTC, move from near zero to negative infinity.

Not only do the owners and regulators do absolutely nothing about obvious criminal manipulations and illegal concentrations of short positions, but also we believe that they conspire with the criminal operators, which we refer to as "commercial shorts," to aid and abet their criminal mischief by divulging the precise nature of the trading positions of the "spec longs" who take the other side of the contracts, thus allowing pinpoint attacks on black-box formulations, especially where stops have been placed, thereby minimizing the cost of the manipulations by preventing the waste associated with overkill. Also, the owners and regulators change margin requirements, and whitewash investigations of obvious illegalities, whenever it serves to protect the commercial shorts, thus making a mockery out of the exchange and transforming what are supposed to be free markets into crony capitalist, corporatist fascist systems of syndicated piracy. This lack of integrity and criminal manipulation is the most pronounced in the gold and silver commodity markets, but many other types of commodities are under manipulation as well, especially oil, base metals and agricultural produce, meaning most of the rest of the exchange.

The despicable, nefarious dealings of the miscreant CRIMEX owners and regulators is quickly catching up to them in the precious metals markets of the exchange, and soon every one of the spec longs is going to pick up their toys and go home, and if the specs have any brains or sense of justice, they will take as much of the CRIMEX gold and silver with them when they leave by paying cash for it and taking delivery of it.

Since the end of October, when open interest for the December gold contract started a new series of decreases as the rollovers got off to any early start, the December open interest has fallen from 190,140 to this past Friday's 122,902, yet total open interest has fallen from 305,451 to 285,219 during that same period.

Thus, of the 67,238 December contracts that have been terminated in the rollover thus far, total open interest has plummeted by 20,232 contracts, meaning that many of the contracts are not being rolled over, and are being cashed out instead. If this 30% ratio persists, we could see gold open interest fall to under 250,000, a multi-year low, an astonishing drop of 58% from the peak of 593,953 contracts set on January 15, 2008.

This is an absolute disgrace for the CRIMEX owners and regulators, and we wish them well in the ensuing bankruptcies and criminal investigations that will occur after the exchange collapses. No one wants to play in a game where the owners and sponsors are in cahoots with certain privileged players to make sure they come out on top. In addition, we note that no commodities market can survive without speculators who provide balance to the markets by taking the other side of contracts and by keeping the pendulum of market momentum alternating between bulls and bears. Otherwise the markets lean to far to one side or the other, and then bubble and/or collapse due to the lopsided positions. Once the precious metals markets of the exchange collapse, all the other markets will soon follow, as everyone realizes that the whole system is rigged against them. The CRIMEX will soon be ostracized from participation by honest market players. The criminal manipulators will soon find themselves traipsing in and out of court in endless investigations, and they will be forced to sit in their bedrooms, lonesome, because their is no one left who wants to play with them.

In a stunning new development, the Dubai Multi-Commodities Center is now putting the finishing touches on the formation of an exchange traded fund for silver with a launch likely next month as demand for silver has surged in the past six months. What may be happening here is that the OPEC nations, and possibly also Russia, are setting up a counterbalance against the collapse of oil prices. You may recall from past issues that we discussed at length how we thought that sovereign wealth funds in oil-rich nations were tweaking gold and silver upward every time oil was smashed by the Illuminist manipulators. The message was, you leave oil alone, or we will send gold and silver to the moon and expose your destruction of the US economy by killing the canaries in the coal mines, thus ringing the gold and silver alarm bells loud and clear. This makes the Illuminists rabid, and induces collective myocardial infarctions among them, because precious metal suppression, especially of gold, is JOB ONE at the Fed. The failure to cap the price of gold was Paul Volcker's only regret as Fed Head during his handling of the inflationary crisis of the late 70's and early 80's, and the privately owned, Illuminist Fed does not intend to make the same mistake twice.

The Illuminati have made two major mistakes, and the Dubai exchange may be the OPEC solution to the oil takedown, which is the direct result of those mistakes. The first mistake is that the Illuminati gave OPEC a taste of 147 oil, and then pounded it down to 55. This will not be tolerated, especially after these nations got a chance to experience the huge profits generated by such lofty oil prices. The second mistake is the trashing of silver prices in the face of growing shortages at a time when the above-ground silver stocks are at an all-time low and headed even lower. The shortages are being caused by manipulated silver prices that are below the cost of production, thus causing a collapse in production, and the manipulation of base metals prices into the subbasement is adding to the loss of production because 70% of silver is produced as a by-product of base metal processing. Due to these criminal price manipulations, the gold to silver ratio is now 77 to 1, when historically is should be around 15 or 20 to 1. This huge price imbalance, growing shortage and all-time low levels of above-ground stocks has set up the greatest opportunity to corner a commodity market in the history of the world.

The Hunt Brothers would be drooling right now. When they were trying to the corner the market, it was much, much larger by many billions of ounces, and prices were being driven much, much higher, topping $40 per ounce, because there was far less manipulation of those markets than there is today (yes, believe it or not, we once had something bordering on free markets). The Dubai silver ETF may pick up where the Hunt Brothers left off. Since there are only about a billion ounces of above-ground silver stocks left, and because silver is trading at a ridiculous sub-10, ten billion could clean out the entire above-ground silver stock. This is chump change for these wealthy oil sheiks and their sovereign wealth funds. So get ready to rumble as the evil Illuminist scum and the price-gouging sheiks of OPEC prepare to "get it on" in an oil-silver showdown, complete with some very spectacular fireworks to come. Both oil and silver are headed much higher, and gold will tag along for the ride as silver vaults to new heights.

In the end we expect some sort of compromise, as $150 oil would take down the entire world economy, which is now teetering on the brink. We should soon see $80 to $100 oil and $15 to $20 silver. Silver may go much higher than that depending on how stubborn the Illuminists become about the price of oil. This is starting to get very interesting, so stay tuned, as one of the greatest financial battles of all time gets under way.

Instead of foolishly pumping money into insolvent, zombie banks, the sheiks may well have decided to go after the silver market. Imagine what will happen as those who require silver to make their products see the COMEX gold and silver being funneled to Dubai's ETF. All we can say is, if you were waiting for some precious metals fireworks, get ready, because it's coming. It is now time to load up on precious metals, especially silver. Oil will do well also. As some form of confirmation, we also note the growing open interest in the February gold options and futures contracts. Let the Battle of the Titans begin.

The WSJ again avoids reality in an op-ed piece by Judy Shelton, called “Stable Money is Key and How the G-20 Can Rebuild the Capitalism of the Future.”

She points out, and rightly so, “that foreign attendees will take the view that Wall Street greed and inadequate regulatory oversight by US authorities caused the global financial crisis – never mind that their own regulatory agencies missed the boat and that their own governments eagerly bought up Fannie Mae and Freddie Mac securities for the higher yield over Treasuries.”

Ms. Shelton forgets that US interests asked, cajoled and strong-armed many nations into those purchases, as they did CDOs, SIVs and ABSs. Don’t you think they read the fine print and knew what they were buying – they are professionals? Behind the scenes there was a plan to spread the risk. Why would any sane government buy such toxic waste? Incidentally, where are the lawsuits and criminal actions? There are none because they were all in on the plan to distribute America’s problems, because if the US goes under they all go under. Regulatory agencies deliberately missed the boat because they were told to do so.

Then she has the temerity to tell us that “at the bottom of the world financial crisis” is international monetary disorder. Stating, “ever since the past WWII Bretton Woods system – anchored by a gold-convertible dollar – ended in August of 1971, the cause of free trade has been compromised by sovereign monetary – policy indulgence.” Spoken like a true internationalist Illuminist. This is what the WSJ and Barron’s have always been mouthpieces for – the Illuminists.

She goes on relating to sound money – perhaps even to a gold-based international monetary system. She says, “It’s hard to imagine a more universally accepted standard of value.”

Ms. Shelton admits that the nation of sound money and a new gold standard international monetary regime is appealing, neither will be part of any solution coming out of Washington or the G-20 this weekend or anytime soon. She goes on to say that fundamentally, our nation has only a sliver of bullion available to back tens of trillions in financial claims that are the crumbly bedrock for the entire global financial system.

Someone should make Ms. Shelton aware that in order to accommodate a gold standard for the world or the US all that has to be done is to officially increase the value of gold to where it belongs at $3,000 to $6,000 an ounce. Nations, particularly the US, do not want to do that because they have sold most of their gold in their efforts to suppress the gold price. That is why a gold standard is dismissed out of hand. She says the consensus is that concerted inflationary measures are the only possible solution. They would be wouldn’t they? She and all concerned know better. Every time in history re-inflation has been used it has been a failure.

That said don’t expect much in the way of public statements on a new currency. Along those lines there will only be leaks until they decide what can be done without weakening their control. Remember, part of what will happen is the further exposure that conventional economic doctrine is fatally flawed. What is disturbing is that many say that today’s problems are not the result of policies of the last 15 months. The greatest bubble in history began on August 15, 1971, and is littered with a trail of greed and power. Wall Street and banking led the looting of our country and Washington complied. Almost universally as well the media never questions decisions by the Treasury, Fed or Wall Street. They just report what the elitists want the public to hear. The revisionist falsehoods promulgated by the likes of Milton Friedman, Keynes and Ben Bernanke are enough to make real scholars cringe. The disinformation and distortion is startling. The public doesn’t know the difference and we never get to challenge them. Often what they have had to say are lies. Defending any of these liars from academia, Wall Street, such as Paulson, and government is a sacrilege. These people all participated in the rape of America over the past 31 years.

The best-laid plans often go astray. The elitists figured they’d have the time to lay off their losses over time. Banking analyst Meredith Whitney of Oppenheimer 1-1/2 years ago when she blew the whistle on Citigroup upset that plan. She still probably doesn’t realize that she changed the course of history.

These events have upset the elitists’ plans forcing them into policymaking out of desperation. In fact after 15 months the system is still out of control. We do not believe they will ever get a handle on it. No reform is on the way and only stopgap measures, such as creating more money and credit and having zero interest rates are the solution. Of course, they are not a solution. The powers are going to play this out to the bitter end. There is no stable money or monetary unit on the way. They just want you to think there is. They are scrambling now to create a major war, because they know if they do not they’ll be revolution.

Over the past eight years a major change has overcome America. As we have said before it is now socially and politically acceptable to lie and to mislead. Fascists have stolen our rights under our Constitution, from us and our leaders in Washington and Wall Street and banking are corrupt. There is no one left to complain too. There is no one there to protect us. Our Congress, courts, law enforcement, and regulatory agencies only protect the elite. We have just seen massive fraud by Wall Street and banking and our government allows American taxpayers to illegally bail them out.

Our protectors are looking the other way deliberately as we are looted of our assets and our freedom. This will continue until there is war or revolution. There is no meaningful change coming from Washington nor will the corruption and looting stop.

It seems now everyone is too big to fail except the average taxpayer. Each and every day brings us closer to the economic brink, even though our government is able without interruption to manipulate all world markets. This fraud will soon come to an end and we will have our vengeance.

The brainwashing of the American public has been successful but there will soon come a time via more hardship that they’ll finally wake Americans up. All those who have misled us and lied to us will be dealt with including those in our media.

At $1.25 quadrillion derivatives inhabit every part of our society and the world as well. We are at the beginning of the beginning of the horrible fallout we face caused by the Federal Reserve, Wall Street and banking. The $10 trillion plus that we have forecast as the bill for the taxpayers is but a drop in the bucket. Credit ratings are falling like stones and well they should. The only AAA rating left is for gold. You had best own it or you will regret it.

The terrorist scam is being thrown at us again. General Michael Hayden, director of the CIA says there are dangers during the presidential transition. That was because of a supposed spike in intercepted transmissions from terror suspects, which we do not believe. Then Caligula described the threat that gives it less validity and then the Lord of Spithead, the Home Office Security Minister in London called for a huge threat, which makes the credibility zero

HATE CRIMES ON THE RISE SINCE OBAMA VICTORY

Atlanta - In rural Georgia, a group of high-schoolers gets a visit from the Secret Service after posting “inappropriate” comments about President-elect Barack Obama on the Web. In Raleigh, N.C., four college students admit to spraying race-tinged graffiti in a pedestrian tunnel after the election. On Nov. 6, a cross burns on the lawn of a biracial couple in Apolacon Township, Pa.

The election of America’s first black president has triggered more than 200 hate-related incidents, according to the Southern Poverty Law Center – a record in modern presidential elections. Moreover, the white nationalist movement, bemoaning an election that confirmed voters’ comfort with a multiracial demography, expects Mr. Obama’s election to be a potent recruiting tool – one that watchdog groups warn could give new impetus to a mostly defanged fringe element.

Most election-related threats have so far been little more than juvenile pranks. But the political marginalization of certain Southern whites, economic distress in rural areas, and a White House occupant who symbolizes a multiethnic United States could combine to produce a backlash against what some have heralded as the dawn of a postracial America. In some parts of the South, there’s even talk of secession.

“Most of this movement is not violent, but there is a substantive underbelly that is violent and does try to make a bridge to people who feel disenfranchised,” says Brian Levin of the Center for the Study of Hate and Extremism at California State University, San Bernardino. “The question is: Will this swirl become a tornado or just an ill wind? We’re not there yet, but there’s dust on the horizon, a swirling of wind, and the atmospherics are getting put together for [conflict].”

Though postelection racist incidents haven’t posed any real danger to society or the president-elect, law enforcement is taking note.

“We’re trying to be out there at the cutting edge of this and trying to stay ahead of groups that are emerging,” says Special Agent Darrin Blackford, a spokesman for the Secret Service, which guards the US president.

“Anytime you start seeing [extremist propaganda] floating around, you have to be concerned,” adds Lt. Gary Thornberry of the Oklahoma Highway Patrol, a member of the FBI’s Joint Terrorism Task Force. “As far as it being an alarmist situation, I don’t see that yet. From a law enforcement point of view, you have to be careful, because it’s not illegal to have an ideology.”

After sparking conflict and showdowns in the 1990s – think Ruby Ridge, Waco, the Oklahoma City bombing – white supremacist and nationalist groups began this century largely splintered and powerless. Though high immigration levels helped boost the number of hate groups from 602 in 2000 to 888 in 2007, key leaders of such groups had died, been imprisoned, or were otherwise marginalized.

But postelection, at least two white nationalist websites – Stormfront and the Council of Conservative Citizens – report their servers have crashed because of heavy traffic. The League of the South, a secessionist group, says Web hits jumped from 50,000 a month to 300,000 since Nov. 4, and its phones are ringing off the hook.

“The vitriol is flailing out shotgun-style,” says Mr. Levin. “They recognize Obama as a tipping point, the perfect storm in the narrative of the hate world – the apocalypse that they’ve been moaning about has come true.”

Supremacist propaganda is already on the upswing. In Oklahoma, fringe groups have distributed anti-Obama propaganda through newspapers and taped it to home mail boxes. Ugly incidents such as cross-burnings, assassination betting pools, and Obama effigies are also being reported from Maine to Alabama.

The Ku Klux Klan has been tied to recent news events, as well. Two Tennessee men implicated for plotting to kill 88 black men, including Obama, were tied to the KKK chapter whose leader was convicted in a civil trial in Brandenburg, Ky., last week, for inciting violence. The murder last week in Louisiana of a KKK initiate, allegedly killed after trying to back out of joining, came at the hands of a new group called Sons of Dixie, authorities say.

“We’re not looking at a race war or anything close to it, but … what we are seeing now is undeniably a fairly major backlash by some subset of the white population,” says Mark Potok of the Southern Poverty Law Center’s Intelligence Report in Montomgery, Ala. “Many whites feel that the country their forefathers built has been … stolen from them, so there’s in some places a real boiling rage, and that can only become worse as more people lose jobs.”

In an election in which barely 20 percent of native Southern whites in Deep South states voted for Obama, the newly apparent political clout of “outsiders” and people of color has been unnerving to some.

“In states like Mississippi, Louisiana, and Alabama, there was extraordinary racial polarization in the vote,” says Merle Black, a political scientist at Emory University in Atlanta. “Black Americans really do believe that Obama is going to represent their interests and views in ways that they haven’t been before, and, in the Deep South, whites feel exactly the opposite.”

But for nonviolent secessionist groups like the League of the South, the hope is for a more vigorous debate about the direction of the US and the South’s role in it, says Michael Tuggle, a League blogger in North Carolina.

Mr. Tuggle says his group isn’t looking for an 1860-style secession but, rather, a model that Spain, for one, is moving toward, in which “there’s a great deal of autonomy for constituent regions” – a foil to what is seen as unchecked, dangerous federal power in Washington.

“To a lot of people, the idea of secession doesn’t seem so crazy anymore,” says Tuggle. “People are talking about how left out they feel, … and they feel that something strange and radical has taken over our country.”

FORMER CIA SPY WARNS OF CHINESE "TROJAN HORSE" MICROCHIPS

Robert Eringer worked as a spy for the FBI for 10 years beginning in 1993. Robert was responsible for bringing American CIA Traitor Edward Lee Howard to capture which he wrote about in his book, Ruse. Robert now writes for the Santa Barbara News-Press where the article below was first featured on the Manchurian Microchip.

The Santa Barbara News-Press provides access to subscribers only. We feel this article is newsworthy and should be seen by the masses. With that in mind, Mr. Eringer has given Daily Artisan his blessing to run his article.

The geniuses at Homeland Security who brought you hare-brained procedures at airports (which inconvenience travelers without snagging terrorists) have decreed that October is National Cyber Security Awareness Month. This means The Investigator — at the risk of compromising national insecurities — would be remiss not to make you aware of the hottest topic in U.S. counterintelligence circles: rogue microchips. This threat emanates from China (PRC) — and it is hugely significant.

The myth: Chinese intelligence services have concealed a microchip in every computer everywhere, programmed to “call home” if and when activated.

The reality: It may actually be true.

All computers on the market today — be they Dell, Toshiba, Sony, Apple or especially IBM — are assembled with components manufactured inside the PRC. Each component produced by the Chinese, according to a reliable source within the intelligence community, is secretly equipped with a hidden microchip that can be activated any time by China’s military intelligence services, the PLA.

“It is there, deep inside your computer, if they decide to call it up,” the security chief of a multinational corporation told The Investigator. “It is capable of providing Chinese intelligence with everything stored on your system — on everyone’s system — from e- mail to documents. I call it Call Home Technology. It doesn’t mean to say they’re sucking data from everyone’s computer today, it means the Chinese think ahead — and they now have the potential to do it when it suits their purposes.”

Discussed theoretically in high-tech security circles as “Trojan Horse on a Chip” or “The Manchurian Chip,” Call Home Technology came to light after the Defense Advanced Research Projects Agency (DARPA) launched a security program in December 2007 called Trust in Integrated Circuits. DARPA awarded almost $25 million in contracts to six companies and university research labs to test foreign-made microchips for hardware Trojans, back doors and kill switches — techie-speak for bugs and gremlins — with a view toward microchip verification.

Raytheon, a defense contractor, was granted almost half of these funds for hardware and software testing.

Its findings, which are classified, have apparently sent shockwaves through the counterintelligence community.

“It is the hottest topic concerning the FBI and the Pentagon,” a retired intelligence official told The Investigator. “They don’t know quite what to do about it. The Chinese have even been able to hack into the computer system that handles our Intercontinental Ballistic Missile system.”

Another senior intelligence source told The Investigator, “Our military is aware of this and has had to take some protective measures. The problem includes defective chips that don’t reach military specs — as well as probable Trojans.”

A little context: In 2005 the Lenovo Group in China paid $1.75 billion for IBM’s PC unit, even though that unit had lost $965 million the previous four years. Three congressmen, including the chairman of the House Armed Services Committee, tried to block this sale because of national security concerns, to no avail. (The PRC embassy in Washington, D.C., maintains a large lobbying presence to influence congressmen and their staffs through direct contact.)

In June 2007, a Pentagon computer network utilized by the U.S. defense secretary’s office was hacked into — and traced directly back to the Chinese PLA.

A report presented to Congress late last year characterized PRC espionage as “the single greatest risk to the security of American technologies.” Almost simultaneously, Jonathan Evans, director- general of MI5, Britain’s domestic security and counterintelligence service, sent a confidential letter to CEOs and security chiefs at 300 UK companies to warn that they were under attack by “Chinese state organizations” whose purpose, said Mr. Evans, was to defeat their computer security systems and steal confidential commercial information.

The Chinese had specifically targeted Rolls-Royce and Shell Oil.

The key to unlocking computer secrets through rogue microchips is uncovering (or stealing) source codes, without which such microchips would be useless. This is why Chinese espionage is so heavily focused upon the U.S. computer industry.

Four main computer operating systems exist. Two of them, Unix and Linux, utilize open-source codes. Apple’s operating system is Unix- based.

Which leaves only Microsoft as the source code worth cracking. But in early 2004, Microsoft announced that its security had been breached and that its source code was “lost or stolen.”

“As technology evolves, each new program has a new source code,” a computer forensics expert told The Investigator. “So the Chinese would need ongoing access to new Microsoft source codes for maintaining their ability to activate any microchips they may have installed, along with the expertise to utilize new hardware technology.”

No surprise then that the FBI expends much of its counterintelligence resources these days on Chinese high-tech espionage within the United States. Timothy Bereznay, while still serving as assistant director of the FBI’s Counterintelligence Division, told USA Today, “Foreign collectors don’t wait until something is classified — they’re targeting it at the research and development stage.” Mr. Bereznay now heads Raytheon’s Intelligence and Information Systems division.

The PRC’s intelligence services use tourists, exchange students and trade show attendees to gather strategic data, mostly from open sources. They have also created over 3,500 front companies in the United States — including several based in Palo Alto to focus on computer technology.

Back in 2005, when the Chinese espionage problem was thought to be focused on military technology, then-FBI counterintelligence operations chief Dave Szady said, “I think the problem is huge, and it’s something we’re just getting our arms around.” Little did he know just how huge, as it currently applies to computer network security.

The FBI is reported to have arrested more than 25 Chinese nationals and Chinese-Americans on suspicion of conspiracy to commit espionage between 2004 and 2006. The Investigator endeavored to update this figure, but was told by FBI spokesman William Carter, “We do not track cases by ethnicity.”

Excuse us for asking. We may be losing secrets, but at least the dignity of our political correctness remains intact.

Oh, and Homeland Security snagged comic icon Jerry Lewis, 82, trying to board a plane in Las Vegas with a gun — no joke.

BLACKWATER GUNBOATS WILL PROTECT SHIPS FROM PIRATES

Blackwater gunboats will protect ships

By Kim Sengupta
Wednesday, 19 November 2008
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The American security company Blackwater is planning to cash in on the rising threat of piracy on the high seas by launching a flotilla of gunboats for hire by the shipping companies.

The firm, which gained international notoriety when its staff killed civilians in Iraq, has already equipped one vessel, called The McArthur, which will carry up to 40 armed guards and have a landing pad for an attack helicopter.

The McArthur, a former survey ship, arrives in the Gulf of Aden, the scene of the recent high-profile hijackings and shootouts with Somali pirates, at the end of the year. It is to be joined by three or four similar vessels over next year to form the company's private navy.

Blackwater, which has strong ties with the Republican administration in Washington, was the subject of investigations by the US Congress and the Iraqi government after its guards shot dead 17 people in Baghdad's Nisoor Square last year, a massacre which led directly to changes in law regarding security contractors in Iraq.

Several security companies are rushing to the region despite the presence of British, American, Russian and Indian naval warships, among others, sent to protect ships. For fees ranging from £8,000 to £12,000 for transits of three and five days, companies are offering teams of unarmed guards, "non-lethal deck security personnel".

With more than 60 ships attacked in the Gulf and ship-owners paying an estimated £75m in ransom for the return of crew and cargo, the security companies foresee a lucrative business.

One US company, Hollowpoint Protective Services, says it is offering a comprehensive service of hostage negotiations backed by armed rescue operations if the talks fail. Eos, a British concern, says it favours a "non-lethal" approach with the use of sophisticated laser, microwave and acoustical devices. But Blackwater plans to have the largest and most heavily armed presence among the security contractors. The company believes that the presence of escorting gunboats will have a deterrent effect, with criminal gangs being forced to switch to more vulnerable targets.

A Blackwater spokeswoman, Anne Tyrrell, said there have already been about 15 inquiries about its anti-piracy service. The company refused to reveal how much it will charge. Its executive vice-president, Bill Matthews, said the US Navy and the Royal Navy do not have the resources in the region to provide total security, opening up a role for companies such as his. He added: "While there are temporary needs that perhaps outpace the limited resources of the Department of Defence [Washington] and the Ministry of Defence [London], the private sector is available to fill those gaps.

"We have been contacted by ship-owners who say they need our help in making sure goods get to their destination. The McArthur can help us accomplish that. We have not sought to enter the space until recently. It was not part of our business plan. But as the world changes, so does our business plan."

Nick Davis, a former British Army pilot who runs a company in Poole called Anti-Piracy Maritime Security Solutions, said: "It frightens me that Blackwater is going down there. Their background is not in deterrence. Their background is in weapons. To me, the best people to be armed are the military. Pirates might approach McArthur without knowing it's a Blackwater boat and try to hijack it."

Chris Austen, chief executive of Maritime & Underwater Security Consultants, in London, said ship-owners should be cautious about armed guards. "There are some flags that prohibit the carriage of arms or the use of violence. There are some insurers that will not accept it, and your insurance will be void."

Guns for hire: The violent option

The massacre on Baghdad's "Bloody Sunday" became a lethal symbol of the aggression with which Blackwater's private army carried out its mission in Iraq. I saw the deadly result of panicked security guards opening fire at a crowded Nisoor Square in the city centre. Round after round mowed down terrified men, women and children. At the end of the shooting spree, 17 people were dead and 20 injured. The killings sparked one of the most bitter and public disputes between the Iraqi government and its American patrons, and brought into focus the often violent conduct of the Western security companies – and that of Blackwater in particular. Operating in Iraq since the 2003 invasion, they were immune from scrutiny or prosecution. This was the seventh shooting of civilians involving Blackwater. The company's reputation in Iraq was particularly controversial. After Nisoor Square, the Iraqi government threatened to expel Blackwater. But it was forced to let the company operate again under pressure from Washington.

Kim Sengupta

AL-QUEDA INSULTS BARACK HUSSEIN OBAMA,CALLS HIM HOUSE NEGRO..COMPARES HIM TO POWELL,RICE,THOMAS

Al-Qaida Number Two Insults Obama With Racial Epithet in Threatening Message

CAIRO, Egypt (AP) - Al-Qaida's No. 2 leader used a racial epithet to insult Barack Obama in a message posted Wednesday, describing the president-elect in demeaning terms that imply he does the bidding of whites.

The message appeared chiefly aimed at persuading Muslims and Arabs that Obama does not represent a change in U.S. policies. Ayman al-Zawahri said in the message, which appeared on militant Web sites, that Obama is "the direct opposite of honorable black Americans" like Malcolm X, the 1960s African-American rights leader.

In al-Qaida's first response to Obama's victory, al-Zawahri also called the president-elect—along with secretaries of state Colin Powell and Condoleezza Rice—"house negroes."

Speaking in Arabic, al-Zawahri uses the term "abeed al-beit," which literally translates as "house slaves." But al-Qaida supplied English subtitles of his speech that included the translation as "house negroes."

The message also includes old footage of speeches by Malcolm X in which he explains the term, saying black slaves who worked in their white masters' house were more servile than those who worked in the fields. Malcolm X used the term to criticize black leaders he accused of not standing up to whites.

In Washington, State Department spokesman Sean McCormack said the latest message was just "more despicable comments from a terrorist."

The 11-minute 23-second video features the audio message by al-Zawahri, who appears only in a still image, along with other images, including one of Obama wearing a Jewish skullcap as he meets with Jewish leaders. In his speech, al-Zawahri refers to a Nov. 5 U.S. airstrike attack in Afghanistan, meaning the video was made after that date.

Al-Zawahri said Obama's election has not changed American policies he said are aimed at oppressing Muslims and others.

"America has put on a new face, but its heart full of hate, mind drowning in greed, and spirit which spreads evil, murder, repression and despotism continue to be the same as always," the deputy of al-Qaida chief Osama bin Laden said.

He said Obama's plan to shift troops to Afghanistan is doomed to failure, because Afghans will resist.

"Be aware that the dogs of Afghanistan have found the flesh of your soldiers to be delicious, so send thousands after thousands to them," he said.

Al-Zawahri did not threaten specific attacks, but warned Obama that he was "facing a Jihadi (holy war) awakening and renaissance which is shaking the pillars of the entire Islamic world; and this is the fact which you and your government and country refuse to recognize and pretend not to see."

He said Obama's victory showed Americans acknowledged that President George W. Bush's policies were a failure and that the result was an "admission of defeat in Iraq."

But Obama's professions of support for Israel during the election campaign "confirmed to the Ummah (Islamic world) that you have chosen a stance of hostility to Islam and Muslims," al-Zawahri said.

DAWN OF THE PIRATE:BIGGEST SHIP TO DATE "SIRIUS STAR" HIJACKED OFF SOMALIAN COAST

Pirates anchor hijacked supertanker off Somalia coast
• British government appeals for immediate release of the hostages
• Owner says ship is fully loaded with crude oil and crew is safe

Sirius Star ship

The Saudi-owned crude oil carrier Sirius Star was captured by pirates 450 miles south-east of Mombasa, Kenya. Photograph: Caters News Agency Ltd

The Saudi Arabia-owned supertanker hijacked by Somali pirates in a raid several hundred miles out to sea is understood to have anchored off the coast of Somalia.

The Sirius Star, which is fully loaded with crude oil, is understood to be at anchor close to a headland called Raas Cusbad, near Hobyo.

The owner of the ship, Vela International Marine, said the 25 crew members on board were safe.

The company said response teams had been established and were working to ensure the release of the crew and the vessel, which was seized by pirates on Saturday.

The president of the company, Salah Kaaki, said it was working with relevant embassies while awaiting further contact with the pirates.

"Our first and foremost priority is ensuring the safety of the crew. We are in communication with their families and are working towards their safe and speedy return," he said.

Two Britons are among the crew of the Sirius Star, which was captured 450 miles (725km) south-east of the Kenyan port of Mombasa.

The British government today appealed for the immediate release of the hijacked crew.

The armed forces minister, Bob Ainsworth, speaking from Kenya, said the hijacking of the Sirius Star underlined the scale of the challenge presented by piracy.

"Alongside our international partners, the government is deeply concerned, not least because two of the crew are British," he said.

"We call on those holding the men to release them and the rest of the crew immediately. We are sending a strong message to pirates that their activities will not be tolerated and that the global community is united in its efforts to deter and disrupt them."

Saudi's foreign minister today described the hijacking as "an outrageous act".

In the first public comments made by the Saudi government on the issue, Prince Saud Al-Faisal said: "Piracy, like terrorism, is a disease which is against everybody, and everybody must address it together."

The Rail, Maritime and Transport union, which represents seafarers, urged the government to push for an expansion of patrolling and escorts to help counter the threat of piracy.

The union's general secretary, Bob Crow, said the growth of piracy was a threat faced by the shipping industry on a global scale and required a global response.

"The most important immediate task is to get the Sirius Star, and the many other vessels already being held by pirates, released with their crews unharmed,'' he said.

"Like all workers, seafarers should be able to work without the fear of imminent attack, and the ordeal faced by seafarers held to ransom is unimaginable."

Nato and other international warships have increased patrols around northern Somalia to try to deter the heavily armed Somali pirate gangs who have seriously disrupted one of the world busiest shipping lanes. The pirates are holding about a dozen vessels hostage and more than 200 foreign crew. They are believed to have already netted more than £20m in ransoms this year.

Most of the captured ships were attacked in the Gulf of Aden, which connects the Red Sea to the Arabian Sea. But the seizure of the Sirius Star, a new ship more than 300 metres long and weighing three times as much as a typical aircraft carrier, took place in unpatrolled waters, hundreds of miles south of Somalia, at a latitude intersecting with Tanzania.

The ship was on course to sail around the Cape of Good Hope to the US when it was seized. The oil on board represents more than a quarter of Saudi Arabia's daily output. News of the hijacking caused the price of oil to jump by more than $1 a barrel.

The US navy would not comment on a possible rescue operation, saying only that it was evaluating the situation.

A spokesman for the Royal Navy said he could not say whether British servicemen were involved in any attempts to rescue the vessel. "It is our policy not to discuss operational matters," he said.

The Foreign Office confirmed two Britons were on board the ship. The other seamen are from Croatia, Poland, Saudi Arabia and the Philippines. The pirates seldom harm crew members as they wait for ransoms to be paid.

A fisherman, Abdinur Haji, described seeing the Saudi tanker just a few miles from the shore this morning.

"As usual, I woke up at 3am and headed for the sea to fish, but I saw a very, very large ship anchored less than three miles off the shore," he said.

He said two small boats floated out to the ship and 18 men, presumably pirates, climbed aboard with ropes woven into a ladder.

"I have been fishing here for three decades, but I have never seen a ship as big as this one," he said. "There are dozens of spectators on shore trying to catch a glimpse of the large ship, which they can see with their naked eyes."

In a typical pirate attack, a gang of young Somali men in a high-powered speedboat ambush a passing ship, firing automatic weapons and even rocket propelled grenades if an order to stop is ignored.

Captain Pottengal Mukundan, the director of the International Maritime Bureau (IMB), said the distance from the shore where the Sirius Star was attacked meant the pirates must have launched their skiff from a "mother ship" they had previously seized.

"The huge size of a vessel does not seem to daunt the pirates," he said. "It shows their high degree of audacity and resources."

The hijacking is likely to send shudders through the shipping industry. Insurance premiums for companies using the Gulf of Aden have soared this year as Somalia leapt to the top of world piracy charts. So lucrative is the crime - a typical western-owned ship can fetch more than £1m - that there are now at least five Somali pirate gangs employing more than 1,000 gunmen, according to the East African Seafarers' Association in Mombasa.

Between July and September there were 47 attacks off Somalia's coast, the longest in Africa, and 26 were successful.

The US navy said shipping firms were partly to blame for the hijackings. Vice Admiral Bill Gortney, commander of the combined maritime forces, said 10 out of 15 of the most recent attacks around Somalia involved ships that had ignored the IMB's advice to stay about 250 miles away from the coast or had failed to employ security guards on board.

"Companies don't think twice about using security guards to protect their valuable facilities ashore," he said. "Protecting valuable ships and their crews at sea is no different."

Graeme Gibbon Brooks, managing director of Dryad Maritime Intelligence Service, said the pirates probably did not know how much oil the ship was carrying. "They have hit the jackpot," he said.

CHENEY,GONZALES INDITED IN SOUTH TEXAS COUNTY

McALLEN, Texas (AP) - Vice President Dick Cheney and former Attorney General Alberto Gonzales have been indicted on state charges involving federal prisons in a South Texas county that has been a source of bizarre legal and political battles under the outgoing prosecutor.

The indictment returned Monday has not yet been signed by the presiding judge, and no action can be taken until that happens.

The seven indictments made public in Willacy County on Tuesday included one naming state Sen. Eddie Lucio Jr. and some targeting public officials connected to District Attorney Juan Angel Guerra's own legal battles.

Regarding the indictments targeting the public officials, Guerra said, "the grand jury is the one that made those decisions, not me."

Guerra himself was under indictment for more than a year and half until a judge dismissed the indictments last month. Guerra's tenure ends this year after nearly two decades in office. He lost convincingly in a Democratic primary in March.

Guerra said the prison-related charges against Cheney and Gonzales are a national issue and experts from across the country testified to the grand jury.

Cheney is charged with engaging in an organized criminal activity related to the vice president's investment in the Vanguard Group, which holds financial interests in the private prison companies running the federal detention centers. It accuses Cheney of a conflict of interest and "at least misdemeanor assaults" on detainees because of his link to the prison companies.

Megan Mitchell, a spokeswoman for Cheney, declined to comment on Tuesday, saying that the vice president had not yet received a copy of the indictment.

The indictment accuses Gonzales of using his position while in office to stop an investigation in 2006 into abuses at one of the privately-run prisons.

Gonzales' attorney, George Terwilliger III, said in a written statement, "This is obviously a bogus charge on its face, as any good prosecutor can recognize." He said he hoped Texas authorities would take steps to stop "this abuse of the criminal justice system."

Another indictment released Tuesday accuses Lucio of profiting from his public office by accepting honoraria from prison management companies. Guerra announced his intention to investigate Lucio's prison consulting early last year.

Lucio's attorney, Michael Cowen, released a scathing statement accusing Guerra of settling political scores in his final weeks in office.

"Senator Lucio is completely innocent and has done nothing wrong," Cowen said, adding that he would file a motion to quash the indictment this week.

Willacy County has become a prison hub with county, state and federal lockups. Guerra has gone after the prison-politician nexus before, extracting guilty pleas from three former Willacy and Webb county commissioners after investigating bribery related to federal prison contacts.

Last month, a Willacy County grand jury indicted The GEO Group, a Florida private prison company, on a murder charge in the death of a prisoner days before his release. The three-count indictment alleged The GEO Group allowed other inmates to beat Gregorio de la Rosa Jr. to death with padlocks stuffed into socks. The death happened in 2001 at the Raymondville facility.

In 2006, a jury ordered the company to pay de la Rosa's family $47.5 million in a civil judgment. The Cheney-Gonzales indictment makes reference to the de la Rosa case.

None of the indictments released Tuesday had been signed by Presiding Judge Manuel Banales of the Fifth Administrative Judicial Region.

Last month, Banales dismissed indictments that charged Guerra with extorting money from a bail bond company and using his office for personal business. An appeals court had earlier ruled that a special prosecutor was improperly appointed to investigate Guerra.

After Guerra's office was raided as part of the investigation early last year, he camped outside the courthouse in a borrowed camper with a horse, three goats and a rooster. He threatened to dismiss hundreds of cases because he believed local law enforcement had aided the investigation against him.

The indictments were first reported by KRGV-TV.

NEW SCIENCE MINISTER CLAIMS TO HAVE SIXTH SENSE POWERS

The Government's new science minister has raised eyebrows after he says he believes he has a 'sixth sense' to predict the future, it was revealed today.

Lord Drayson said he was one of the humans with a 'capability' that experts did not fully understand.

Although the peer does not claim his powers of foresight are paranormal, the comments may raise a few eyebrows among the community he represents.

Extra-sensory abilities are not commonly accepted to exist by scientists.

In an interview with The Sunday Times, Lord Drayson said: 'In my life there have been some things I have known, and I don't know why.

'I think there is a lot we don't understand about human capability.'

Pursuing his point, the peer cites Blink, the best-selling American book about human instinct by Malcolm Gladwell. The tome identified cases of individuals with the apparent power to foretell events.

'It's a really fascinating book,' said Lord Drayson. 'He gives lots of examples of people who have demonstrated very clearly that they have good instinct in their lives.

'One particular fireman in America had this amazing instinct... This guy (knew) when something bad was going to happen, when you need to leave the building.

'Gladwell's book is about the ability of the human being to know something, but not to know why they know it. This struck a chord with me.'

Lord Drayson described his ability as 'like a sixth sense' and said it could be linked to the way humans have evolved.

Lord Drayson, a multi-millionaire former businessman, returned to government last month, becoming the first science minister with a seat in the Cabinet.

A colourful character, he previously stood down as defence minister in order to spend more time on his hobby of motor racing.

The peer also said he believed in God, and saw no conflict between faith and science.

'I think faith is a very strange thing. You don't necessarily believe in something just because you have the evidence to prove it,' he said.

INTRODUCING THE NEW CHIEF OF STAFF RAHMBO EMANUEL

11-15-8


America's powerful Jewish lobby is alive, well and kicking. It is likely to become even more influential when President-Elect Barack Obama takes office as the 44th president of the United States in two months time, and Rahm Israel Emanuel ­ the son of a former Zionist terrorist ­ becomes the White House Chief of Staff in Obama's administration.

Emanuel, 51, is the first person named by Obama to become a member of his administration. He has been a Democratic member of the US House of Representatives since 2003, representing Illinois's 5th congressional district, which covers much of the north side of Chicago and parts of suburban Cook County.

Illinois is Obama's home state, from where he was elected to the US Senate in 2006. He is the son of a Kenyan father and a white American mother. He was (allegedly -ed) born in the US State of Hawaii and grew up in Chicago.

Emanuel was chairman of the Democratic Congressional Campaign Committee for the 2006 mid-term elections, in which the Democratic Party gained control of both the Senate and the House of Representatives. After the Democrats regained control of the House, Emanuel was elected as the next chairman of the Democratic Caucus. He is the fourth-ranking Democrat in the 435-member House, behind Speaker Nancy Pelosi, Majority Leader Steny How and Majority Whip Jin Clyburn.

On November 6, 2008, only two days after Obama was elected president, Emanuel accepted an offer from him to become the White House Chief of Staff in his administration, which begins on January 20th, 2009.

Emanuel is an influential member of the New Democratic Coalition, and a prominent advocate of economic liberalisation. He is noted for his combative style of politics and his political fundraising abilities.

Emanuel was born in Chicago, Illinois. His first name, Rahm, means "high" or 'lofty" in Hebrew, while his surname, Emanuel, means "God is with us." The Jews call themselves "God's chosen people" ­ a description that implies that the Jews believe that non-Jews (i.e. the rest of the world) don't matter. The meaning of Emanuel's surname seems to be of a piece with this reprehensible Jewish belief. Judaism is the only religion in the world that, by implication, denigrates the followers of other faiths in this belittling fashion.

According to Emanuel's father, his son is the namesake of Rahamim, a Lehi group commander who was killed. Rahm's surname was adopted by his family in 1933 after Rahm's paternal uncle, Emanuel Auerbach, was killed in a skirmish with Arabs in Jerusalem.

M Auerbach's death suggests that there is no love lost between Emanuel's family and the beleaguered people of Palestine, who have been at the receiving end of Israeli state terrorism ever since the creation of the Zionist state in 1948.

Emanuel's family background suggests that the long stalled Middle East peace process is not likely to make much headway while he is the White House Chief of Staff in Obama's administration.

This impression is reinforced by the fact that Emanuel ­ an American citizen by birth ­ joined the Israeli army as a volunteer during the 1991 Gulf war between the United States and Iraq. By joining the Israeli army, Emanuel violated a US law which prohibits American citizens from joining the armed forces of another country. Americans who do so can be stripped of their citizenship.

Emanuel's father, Benjamin M. Emanuel, is a pediatrician who was born in Jerusalem. He was a member of the Irgun, a Zionist terrorist group that operated in Palestine from 1931 to 1948 during the British Mandate.

Irgun (Hebrew: shorthand for Halgrun Ha Tzvai Hale'um BeEretz Yisra'el, National Military Organisation in the Land of Israel) was established as a terrorist offshoot of the earlier and larger Zionist paramilitary organisation Haganah (Hebrew: 'The Defence"). For reasons of secrecy, Zionists often referred to the Irgun, during that time, as Haganah Bet (Hebrew: literally "Defence B" or "Second Defence").

During the period 1936-1939, the Irgun carried out 60 attacks against Arab civilians and British soldiers, reflecting its world view that "political violence and terrorism" were "legitimate tools" in the Zionist struggle for the Land of Israel" ­ a state carved out, in 1948, from land where the Palestinians were in the majority, with a population of 900,000 Palestinians versus 600,000 Jews.

If a free and fair referendum had been held at the time to determine the future of the territory, the majority of the population would have voted for the creation of a Palestinian state. Instead, the great powers connived with the Zionists to create the Jewish state of Israel in 1948. The new state promptly proceeded to drive hundreds of thousands of Palestinians from their lands. Israel then illegally transferred the ownership rights of those lands to Jewish settlers who were brought in by the shipload from Europe.

Irgun was described as a terrorist organisation by the New York Times and by the Anglo-American Committee of Enquiry. All told, Irgun attacks against Arab targets resulted in at least 250 Arab deaths during this period.

In an Irgun attack on August 26, 1934, 24 Arab civilians were killed by a bomb at a marketplace at Jaffa. On February 27m 1939, 33 Arab civilians were killed in multiple Irgun attacks, including 24 by a bomb in an Arab market in the Suk Quarter of Haifa and 4 by a bomb in an Arab vegetable market in Jerusalem. On May 24, 1939, 5 Arab civilians were killed by a mine detonated by an Irgun group at the Rex cinema in Jerusalem. On June 19, 1939, 20 Arab civilians were killed by an Irgun hit squad in multiple shootings during a one-hour period.

Two of the most well-known Irgun attacks were the bombing of the King David Hotel in Jerusalem on July 22, 1946 and the Deir Yassin massacre (accomplished together with the Stern gang) on April 9, 1948. Irgun was also responsible for the assassination of the UN representative in Palestine in 1948.

Irgun was a political predecessor to Israel's right-wing Herut (or "Freedom") party, which led to today's Likud party. Likud has led or been part of most Israeli governments since 1977.

Menachem Begin was also a member of Irgun. He was on the British Mandate authorities' list of Irgun terrorists. He was later elected prime minister of Israel.

There has been no mention of any of this aspect of Rahm Israel Emanuel's background in the mainstream US media since he agreed to become the White House Chief of Staff in Obama's administration.

Emanuel went to school in Chicago. He graduated from Sarah Lawrence College in 1981, and went on to receive a master's degree in Speech and Communications from Northwestern University in 1985.

Emanuel is a close friend of fellow Chicagoan David Axelrod, chief strategist for the 2008 Barack Obama presidential campaign. Axelrod signed the ketubaa Jewish marriage contract at Emanuel's wedding to Amy Rule. Emanuel and his wife are members of Anshe Sholom B'nai Israel, a Modern Orthodox Jewish congregation in Chicago,

Emanuel has said of his Judaism: "I am proud of my heritage" That heritage, presumably, includes his father's stint as a member of the Irgun.

Bill Clinton's most serious primary rival in the 1992 presidential election campaign, Paul Tsongas (the New Hampshire Democratic primary winner in 1992) later withdrew, citing a lack of campaign funds.

Richard Mintz, a Washington public relations consultant who worked with Emanuel on the Clinton campaign says: "It was that (extra) million dollars (raised by Emanuel) that really allowed the campaign to ride out in New Hampshire (over Clinton's relationship with Gennifer Flowers and the controversy over his draft status during the Vietnam War."

Emanuel's rapport with potential donors within the Jewish community helped Clinton amass a then unheard of campaign fund sum of $ 72 million.

According to a report published in the London Economist after the 1992 election, 60 per cent of all private contributions to Clinton's campaign fund came from American Jews.

Following the campaign, Emanuel became a senior adviser to Clinton at the White House in 1993 to 1998. In the White House, Emanuel was initially Assistant to the President for Political Affairs and then Senior Adviser to the President for Policy and Strategy.

According to an American commentator, one of Emanuel's "proudest moments" during the Clinton administration "was an event that touched his political sensibilities and his personal ties to Israel: the 1993 Rose Garden signing ceremony after the Oslo Accords between Israel and the Palestine Liberation Organisation (PLO). Emanuel directed the details of the ceremony, down to the choreography of the handshake between Israeli Prime Minister Yitzhak Rabin and PLO leader Yasser Arafat. Hamas, a militant Palestinian organisation, said that Arafat had "sold out" to the Americans.