Khaki capitalism

Schumpeter

In some countries the “military-industrial complex” is more than a metaphor

THE darkest character in Joseph Heller’s dark novel, “Catch-22”, is Milo Minderbinder, a lowly mess officer who runs a huge business empire, M&M Enterprises, on the side. He flogs “surplus” army supplies, travels the world making deals and accumulating extravagant official titles (such as Caliph of Baghdad and Mayor of Cairo) and, in the spirit of popular capitalism, gives his fellow soldiers nominal shares in his ever-expanding business. M&M Enterprises almost crashes when the caliph-cum-mayor overextends himself by buying all the cotton in Egypt. There is so much of the stuff that he cannot get rid of it even by covering it in chocolate and serving it to the troops. The American government eventually steps in to solve his mounting problems: M&M Enterprises has grown too big to fail.

Europe’s sovereign-debt crisis

Once again, EU leaders have raised high hopes of a solution

SECOND marriages supposedly represent the triumph of hope over experience. Similarly, in the lead-up to every EU summit, investors become optimistic that this time—finally—leaders will manufacture a solution to the debt crisis. So it was with the latest summit on December 8th and 9th, due to take place after The Economist went to press. Beforehand, Angela Merkel, Germany’s chancellor, and Nicolas Sarkozy, the French president, had thrashed out a deal which promises future restrictions on the ability of euro-zone
countries to run large fiscal deficits.

The economy and stimulus

The economy makes headway. So do efforts to renew stimulus

WASHINGTON, DC | from the print edition

THREE months ago Barack Obama was firmly in the dock over news that no net jobs were created in August. Some gloomy people even saw a double-dip recession on the way.

Europe's central bank

by J.O. | LONDON

THE European Central Bank will be an enthusiastic lender-of-last-resort to banks but not to governments. That was the main message from the bank’s president, Mario Draghi, after its monthly policy meeting on December 8^th. The ECB voted to lower its benchmark interest rate from 1.25% to 1%, the second quarter-point cut in as many months. It also agreed on radical steps to help commercial banks secure the financing that private investors are increasingly loth to offer. But Mr Draghi scotched the idea that the ECB would step up its purchases of bonds of troubled euro-zone countries if a credible fiscal compact were agreed at the EU summit on December 9th.

Russia's future

Vladimir Putin should clean up the Kremlin and modernise the economy—for Russia’s sake and for his own

RUSSIA’S elections are not intended to produce surprises, just as its streets are not meant to heave with protesters and its political leaders are not supposed to be publicly booed. The country’s “managed democracy”, with the media muzzled, only tame opposition candidates allowed and widespread vote-rigging, is designed to hand big victories to Vladimir Putin and his United Russia party. Yet the Duma election on December 4th produced an upset: United Russia’s share of the vote fell from 64% to under 50%, giving it only a slim majority. Even more remarkably, demonstrators took to the streets in the biggest protests Russia has seen in years, chanting “Russia without Putin” before troops poured in to stop them (see article). Smaller protests took place in other cities. Now some 17,000 people have signed up for a protest on December 10th in Revolutionary Square, Moscow’s main public space. The government has asked them to find a different location.

America's 'crack' plague has roots in Nicaragua war

BY GARY WEBB
Mercury News Staff Writer
FOR THE BETTER PART of a decade, a San Francisco Bay Area drug ring sold tons of cocaine to the Crips and Bloods street gangs of Los Angeles and funneled millions in drug profits to a Latin American guerrilla army run by the U.S. Central Intelligence Agency, a Mercury News investigation has found.
This drug network opened the first pipeline between Colombia's cocaine cartels and the black neighborhoods of Los Angeles, a city now known as the "crack'' capital of the world. The cocaine that flooded in helped spark a crack explosion in urban America � and provided the cash and connections needed for L.A.'s gangs to buy automatic weapons.
It is one of the most bizarre alliances in modern history: the union of a U.S.-backed army attempting to overthrow a revolutionary socialist government and the Uzi-toting "gangstas'' of Compton and South-Central Los Angeles.

The following report was published in the daily Por Esto!, the third most widely read newspaper in Mexico, on May 22, 2000, and translated to English by The Narco News Bulletin.
This report wrapped up a five part series in Por Esto! based on the presentation at Columbia University Law School in New York City last march by its editor Mario Renato Menéndez Rodríguez.

Clinton's Mexican Narco-Pals

By Al Giordano
If the facts of the story were made of cocaine powder, the entire White House press corps would have sneezed; the news was right under their noses. Any one of them could have written:

MÉRIDA, MEXICO, FEBRUARY 15, 1999: U.S. President William Clinton met today with Mexican President Ernesto Zedillo to negotiate better cooperation between their nations in the fight against drugs. Incredibly, the anti-narcotics summit was hosted by powerful Mexican banker Roberto Hernández Ramírez, a man publicly accused of trafficking cocaine and laundering illicit drug money....

But that story wasn't reported in the States, despite a controversy over Hernández's alleged involvement in the drug trade that's raged on the Yucatán peninsula for two years. The heart-shaped box appeared on Air Force One. It was Valentine's Day 1999, and the Comeback Kid was getting out of Dodge. Bill Clinton had, just two days prior, escaped vanquishment by the U.S. Senate in Washington, DC. The presidential jet roared out of the February chill toward the tropical city of Mérida.
Clinton, in a video image broadcast across the globe that evening, stepped into the press cabin of the plane wielding a big pink heart-shaped box and doled out valentine chocolates to the reporters and photographers covering this trip. And to underscore with levity that the subject would now be changed -- from impeachment and Monica to "drugs" -- the White House press handlers regaled the journalists with bottles of hemp beer. The marijuana in the brew's recipe was reportedly non-intoxicating. Still, they were high, on laughter if not impunity, on Air Force One.

Wealthy Colombian businessman is a drug-trafficker, CIA operative alleges Posted by Bill Conroy -

Another source, a past employee, also claims narco-entrepreneur is connected to rightwing paramilitary forces

Narco News won an historic legal battle in 2001 when the New York Supreme Court dismissed a libel suit filed against the online publication by a giant Mexican bank. In the process, the court also extended critical free-press protections for the first time to Internet news sites and reporters.

US Government Accused of Seeking to Conceal Deal Cut With Sinaloa “Cartel” Posted by Bill Conroy

Lawyers for Alleged Narco-Boss Zambada Niebla Claim Prosecutors Suppressing Evidence By Invoking National Security
The criminal case against accused Mexican narco-trafficker Jesus Vicente Zambada Niebla now appears to be threatening to unravel the U.S. government’s ugly national-security interests in the drug war.
Zambada Niebla, son of one of the leaders of the Sinaloa “Cartel,” arguably the most powerful international narco-trafficking organization on the planet, argues in his criminal case, now pending in federal court in Chicago, that he and the leadership of Mexico’s Sinaloa drug-trafficking organization, were, in effect, working for the U.S. government for years by providing US agents with intelligence about rival drug organizations.
In exchange for that cooperation, Zambada Niebla contends, the US government granted the leadership of the Sinaloa “Cartel” immunity from prosecution for their criminal activities — including the narco-trafficking charges he now faces in Chicago.

Native American leaders urge Obama to reject Keystone XL Pipeline
By Brenda Norrell
Photo: Native American and First Nation leaders at the National Press Club in DC last week, opposing the Keystone XL pipeline. Photo IEN.
WASHINGTON -- Native American leaders urged President Obama to reject the permit for the Keystone XL pipeline, during a meeting at the third annual White House Tribal Nations Conference on Friday.
The Indigenous Environmental Network said a delegation of Native leaders called on Obama to reject a presidential permit for the proposed Keystone XL pipeline. The leaders also presented Obama with the Mother Earth Accord. The Accord outlines unique concerns of the United States leaders, and First Nation leaders in Canada. Their concerns are over the Keystone XL, Alberta Tar Sands and the heavy haul in Idaho and Montana.
During the meeting, Native American leaders presented Obama with a copy of the Academy Award nominated documentary film, Pipe Dreams.

“hay una música
que sabe nombrar esa luz
que disipa la noche
y convoca a las palabras
a reunirse en el poema”
- Sergio Borja
SAN CRISTOBAL DE LAS CASAS, CHIAPAS, MEXICO: Thousands of locals, tourists, journalists, human rights observers, anthropologists, archeologists and more who live in or have passed through this mountain city enjoyed Sergio Borja’s voice, guitar and songs, but few knew him by that name. At Bar Revolución, Dada Club and other venues he was Capitán Flais, leader of the band. His profound influence on the art, music and poetry of this region, and on so many of the talents that create those works, is felt heavily now after a cardiac arrest that took him on Sunday, November 6, at the age of 48.

US Prosecutors Seeking to Prevent Dirty Secrets of Drug War From Surfacing in Cartel Leader's Case

US Government Using National Security to Conceal Evidence, Attorneys for Narco-Trafficker Zambada Niebla Claim
The criminal case of accused Sinaloa drug organization leader Jesus Vicente Zambada Niebla is straying even further into the path of a cover-up under the guise of national security, if pleadings filed by his attorneys are to be believed.
Lawyers for the alleged Mexican narco-trafficker, son of one of the top figures in the Sinaloa “cartel,” recently filed a motion asking the court to block U.S. prosecutors’ efforts to exclude the defense from discussions with the judge over the treatment of evidence deemed classified material. Zambada Niebla’s attorneys contend they must be part of those discussions since the supposed classified material goes to the heart of their client's claims in the case.

The information the US government is seeking to withhold from Zambada Niebla’s attorneys, they believe, is likely related to a key figure in the case, an informant, Mexican attorney Humberto Loya Castro, who served as an intermediary between the Sinaloa Cartel leadership and US government agents seeking to obtain information on rival narco-trafficking organizations.
From the motion filed late last month by Zambada Niebla’s attorneys:

The government has announced its intention to make an ex parte submission [involving only the judge and prosecutors, excluding defense attorneys] to the Court concerning classified discovery issues. …
The defense believes that Humberto Loya Castro had access to the information that the [US] government now seeks to withhold throughout his many years of cooperation with the United States government and that high-ranking members of the Sinaloa cartel also had access to such information through Mr. Loya [Castro].
Mr. Zambada Niebla is alleged in the indictment to be a high-ranking member of the Sinaloa cartel. We believe that the information [the US government is seeking to cloak under national security] is material to the defense in that it may … contain information pertaining to agreements between agents of the United States government and the leaders of the Sinaloa cartel as well as policy arrangements between the United States government and the Mexican government pertaining to special treatment that was to be afforded to high-ranking members of the Sinaloa Cartel. Thus, Mr. Zambada Niebla’s counsel should be granted high-level security clearances to review the sensitive information.

Hungry For Justice

Narco-Mania!

All They Are Saying Is Give War a Chance: "Narco-Mania!" Premiers in Mexico Posted. by Al Giordano -

I can’t verify that this alleged transcript of today’s US State Department daily press briefing is real, but it came across my desk and it sure does sound like those crazy flashback-plagued hippies down at Foggy Bottom:

The dash for cash

Bank funding

Europe’s troubled banks are running out of money

USUALLY it is banks that put customers under a microscope before lending them a penny. But in Europe banks are the ones now facing scrutiny before investors, companies and savers will lend them any cash. Faced with an investor strike, banks are putting a halt to new loans and selling or pawning all they can. Unless the investor strike lifts soon, Europe risks a credit crunch. At worst, there may even be bank runs and failures.

In one sense, a slow bank run is already taking place in the market for bank bonds, which in happier times provide the long-term and stable funding that allows bank regulators to sleep peacefully at night. Since July these markets have frozen up almost completely for European banks. Bond issuance has plunged (see chart) and has shifted towards secured bonds, which are backed by assets that investors can grab if the bank defaults.

Two-speed Europe, or two Europes?

The future of the EU

by Charlemagne | BRUSSELS

NICOLAS Sarkozy is causing a big stir after calling on November 8th for a two-speed Europe: a “federal” core of the 17 members of the euro zone, with a looser “confederal” outer band of the ten non-euro members. He made the comments during a debate with students at the University of Strasbourg. The key passage is below (video here, starting near the 63-minute mark)

The euro zone crisis

by Buttonwood

IF TRADERS were planning to spend December in a drunken round of parties, they will have to think again. Yesterday saw the outline of a Merkel-Sarkozy plan to stabilise the euro, and it also saw S&P, the rating agency threatened by EU reforms, defiantly put the whole zone on negative credit watch.
The S&P move is interesting, to say the least. One could imagine two outcomes over the next few months. Option A would be a plan for the creditor nations to subsidise the latter, in which case one might expect creditor downgrades and debtor upgrades. Option B would involve a break-up of the whole region, in which case Germany and the Netherlands would keep their rating but some of the others would follow Greece into junk status.

Exposed: Fed Bailout of Big Banks Dwarfs TARP (What Occupy Wall Street i...

The FED's Bailout of Royal Bank of Scotland

Posted by Michael S. Rozeff

I just viewed a BBS documentary titled "RBS — Inside the Bank That Ran Out of Money." The bank ran aground by over-expansion, especially by making a bad acquisition (ABN AMRO) that held tons of bad loans. This acquisition came 5 weeks after the head of RBS stated that he didn't foresee any acquisitions. Evidently, RBS didn't take the time to investigate what it was buying. The ambition to grow took over. But my main point here is not the downside of conglomeration and growth by acquisition, but the role of the FED when RBS failed. It loaned RBS at least $84.5 billion, more than any other foreign bank.
Now, clearly, like many U.S. banks, they should have gone DOWN. Bad management should not be rewarded. The FED also bailed out U.S. banks that had been engaged in fraud or massive mismanagement and over expansion, and it bailed out AIG which I believe had written credit default swap insurance fraudulently. And it bailed out investment bankers that had purchased these swaps.

The Golden Age of Government Is Just Beginning. by Mark R. Crovelli

When I talk to self-identified "conservatives" today, I am surprised how many of them have finally awakened to the fact that governments all over the Western world are bankrupt. It has taken a long time for them to do the math, but it is finally dawning on them that when a government’s debts and liabilities massively outweigh its current and future assets and "income" (a more accurate word would be "loot"), that country is headed for disaster. While they cannot be praised for their quickness in recognizing something so blatantly obvious, at least these "conservatives" have bested their "liberal" friends in solving the problem, since most of the latter are sadly unable to add and subtract numbers with 12 zeros.

Newt Gingrich Is No Libertarian. by Murray N. Rothbard

E. J. Dionne is wrong in identifying the Republican elites, in particular the Gingrich faction, with the libertarian revolution (op-ed, Dec. 6) . The truth is that since we have been stuck with a two-party system, any electoral revolution against big government had to be expressed through a Republican victory. So it is certainly true that Newt Gingrich and his faction, as well as Robert Dole, have ridden to power on the libertarian wave.

Thursday, December 8, 2011