Wednesday, February 16
The Nine Circles of Hell! – all the news that gives you fits in print – for Wednesday, February 16, 2011, plus a bonus story on Israel and the ‘new’ Egypt and a special comment for Curveball, are:
Madoff says “complicit” banks “had to know” of Ponzi scheme
The New York Times
From Prison, Madoff Says Banks ‘Had to Know’ of Fraud
In his first interview for publication since his arrest in December 2008, Mr. Madoff — looking noticeably thinner and rumpled in khaki prison garb — maintained that family members knew nothing about his crimes.
But during a private two-hour interview in a visitor room here on Tuesday, and in earlier e-mail exchanges, he asserted that unidentified banks and hedge funds were somehow “complicit” in his elaborate fraud, an about-face from earlier claims that he was the only person involved …
In many ways, however, Mr. Madoff seemed unchanged. He spoke with great intensity and fluency about his dealings with various banks and hedge funds, pointing to their “willful blindness” and their failure to examine discrepancies between his regulatory filings and other information available to them.
“They had to know,” Mr. Madoff said. “But the attitude was sort of, ‘If you’re doing something wrong, we don’t want to know.’ ”
While he acknowledged his guilt in the interview and said nothing could excuse his crimes, he focused his comments laserlike on the big investors and giant institutions he dealt with, not on the financial pain he caused thousands of his more modest investors. In an e-mail written on Jan. 13, he observed that many long-term clients made more in legitimate profits from him in the years before the fraud than they could have elsewhere. “I would have loved for them to not lose anything, but that was a risk they were well aware of by investing in the market,” he wrote.
Mr. Madoff said he was startled to learn about some of the e-mails and messages raising doubts about his results — now emerging in lawsuits — that bankers were passing around before his scheme collapsed.
“I’m reading more now about how suspicious they were than I ever realized at the time,” he said with a faint smile.
He did not assert that any specific bank or fund knew about or was an accomplice in his Ponzi scheme, which lasted at least 16 years and consumed about $20 billion in lost cash and almost $65 billion in paper wealth. Rather, he cited a failure to conduct normal scrutiny.
How the middle class became the underclass
Are you better off than your parents?
Probably not if you’re in the middle class.
Incomes for 90% of Americans have been stuck in neutral, and it’s not just because of the Great Recession. Middle-class incomes have been stagnant for at least a generation, while the wealthiest tier has surged ahead at lighting speed.
In 1988, the income of an average American taxpayer was $33,400, adjusted for inflation. Fast forward 20 years, and not much had changed: The average income was still just $33,000 in 2008, according to IRS data.
Meanwhile, the richest 1% of Americans — those making $380,000 or more — have seen their incomes grow 33% over the last 20 years, leaving average Americans in the dust.
Experts point to some of the usual suspects — like technology and globalization — to explain the widening gap between the haves and have-nots.
But there’s more to the story.
One major pull on the working man was the decline of unions and other labor protections, said Bill Rodgers, a former chief economist for the Labor Department, now a professor at Rutgers University.
Because of deals struck through collective bargaining, union workers have traditionally earned 15% to 20% more than their non-union counterparts, Rodgers said.
But union membership has declined rapidly over the past 30 years. In 1983, union workers made up about 20% of the workforce. In 2010, they represented less than 12%.
“The erosion of collective bargaining is a key factor to explain why low-wage workers and middle income workers have seen their wages not stay up with inflation,” Rodgers said.
Without collective bargaining pushing up wages, especially for blue-collar work — average incomes have stagnated.
International competition is another factor. While globalization has lifted millions out of poverty in developing nations, it hasn’t exactly been a win for middle class workers in the U.S.
Factory workers have seen many of their jobs shipped to other countries where labor is cheaper, putting more downward pressure on American wages.
“As we became more connected to China, that poses the question of whether our wages are being set in Beijing,” Rodgers said …
While average folks were losing ground in the economy, the wealthiest were capitalizing on some of those same factors, and driving an even bigger wedge between themselves and the rest of America.
For example, though globalization has been a drag on labor, it’s been a major win for corporations who’ve used new global channels to reduce costs and boost profits. In addition, new markets around the world have created even greater demand for their products …
Another driver of the rich: The stock market.
The S&P 500 has gained more than 1,300% since 1970. While that’s helped the American economy grow, the benefits have been disproportionately reaped by the wealthy.
And public policy of the past few decades has only encouraged the trend.
The 1980s was a period of anti-regulation, presided over by President Reagan, who loosened rules governing banks and thrifts.
A major game changer came during the Clinton era, when barriers between commercial and investment banks, enacted during the post-Depression era, were removed.
In 2000, President Bush also weakened the government’s oversight of complex securities, allowing financial innovations to take off, creating unprecedented amounts of wealth both for the overall economy, and for those directly involved in the financial sector.
Tax cuts enacted during the Bush administration and extended under Obama were also a major windfall for the nation’s richest …
With the unemployment rate still excessively high and the real estate market showing few signs of rebounding, the American middle class is still reeling from the effects of the Great Recession.
Meanwhile, as corporate profits come roaring back and the stock market charges ahead, the wealthiest people continue to eclipse their middle-class counterparts.
“I think it’s a terrible dilemma, because what we’re obviously heading toward is some kind of class warfare,” Alan Johnson, a Wall Street compensation consultant said.
13,000 attend Wisconsin anti-government rally, demand labor rights
Thousands gather at Capitol for rallies
In a continued expression of solidarity and support for state workers’ rights, nearly 13,000 protesters crowded Capitol Square and spilled onto State Street in the second day of rallying in opposition to the proposed budget repair bill.
University of Wisconsin students, teaching assistants and staff joined union labor representatives from around the state as a part of the “Hands Off Our Teachers” rally while the Joint Finance Committee heard public testimony on Gov. Scott Walker’s bill.
AFSCME International President Gerald McEntee addressed the expansive crowd, saying the proposal, which would eliminate the majority of collective bargaining for union employees, marks the exploitation of the public service workers who provide essential services to the city and university.
“The bill would destroy our dignity,” he said. “It’s an attack on the freedoms of every Wisconsin citizen and would deny us our God-given rights.”
Labor and community representatives called for the assurance of a safe working environment, livable wages and affordable health care provided by collective bargaining measures.
Rev. Curt Anderson, a member of the Interfaith Coalition for Worker Justice, characterized Walker’s bill as a vehicle to weaken the working class instead of improving the state’s $137 million budget shortfall.
“Walker’s bill is no more about the state budget than the war in Iraq is about those imaginary weapons of mass destruction,” Anderson said.
Libya prepares for tomorrow’s anti-government ‘Day of Anger’
Agence France Presse
Clashes erupt as Libya braces for ‘Day of Anger’
Dozens of people were injured in clashes in Benghazi, a hospital in Libya’s second city said on Wednesday, on the eve of a nationwide “Day of Anger” called by cyber-activists in a bid to emulate revolts in neighbouring Egypt and Tunisia.
The director of the eastern city’s Al-Jala hospital, Abdelkarim Gubeaili, told AFP that 38 people were treated for light injuries.
The Quryna newspaper said security forces and demonstrators clashed late on Tuesday in what it branded the work of “saboteurs” among a small group of protesters.
The security forces intervened to halt a confrontation between supporters of Libyan leader Moamer Kadhafi, who has been in power since 1969 making him the Arab world’s longest-serving leader, and the demonstrators, said the newspaper close to Kadhafi’s son, Seif al-Islam.
It said at least 10 members of the security forces were among the injured.
The veteran leader faces rare Internet calls for protests nationwide on Thursday by activists buoyed by the ouster of veteran strongmen on Libya’s borders, in Egypt and Tunisia.
One Facebook group urging a “Day of Anger” in Libya, which had 4,400 members on Monday, had seen that number more than double to 9,600 by Wednesday morning following the Benghazi unrest …
The protest in Benghazi started as a sit-in by families of more than 1,000 prisoners killed in a 1996 shooting in the same Tripoli prison demanding the release of their lawyer, Fethi Tarbel, Libyan newspapers said.
Tarbel had been detained for having “spread rumours that the prison was on fire,” according to Quryna, but was released after the demonstration.
However the crowd of protesters grew and they began chanting anti-regime slogans such as “the people will end the corruption” and “the blood of the martyrs will not be in vain,” before police moved in to disperse them …
Thursday’s protest has been called to commemorate the deaths of 14 protesters in an Islamist rally in Benghazi in 2006.
Iraqi government protests now in their third week
The Washington Post
Violence erupts during anti-government protests in southern Iraq city
Protesters seized control of a key government building in the southern Iraq city of Kut on Wednesday during violent demonstrations against poor services and corruption triggered at least in part by the upheaval in Egypt and Tunisia.
The violence erupted after guards protecting the government headquarters of Wasit province opened fire on the demonstrators, killing one, wounding 27, and prompting the enraged crowd to storm the building, according to Capt. Mahdi Abbas of the province’s emergency police force.
The governor fled through a back door with his guards, as crowds swarmed into the compound, looting and ransacking the building and setting it on fire, Abbas said.
Other members of the provincial council also reportedly escaped, and the Iraqi Army was called in to try to quell the turmoil. Video broadcast on Iraqi television stations showed black smoke billowing from the building, as protestors clambered over walls into the compound.
Prime Minister Nouri al-Maliki, who has clearly been unsettled by an upsurge of demonstrations around the country in the weeks since the revolts in Egypt and Tunisia, declared a curfew in Kut and promised an investigation into the behavior of the guards who opened fire …
… the demonstration was only one of dozens that have erupted around the country in recent weeks, including in Sunni areas, against a wide range of grievances, from the prevalence of detention without trial to the ongoing lack of electricity.
Informant who convinced US to go to war with Iraq admits lies
Defector admits to WMD lies that triggered Iraq war
Past This is Hell! guest Martin Chulov writes …
The defector who convinced the White House that Iraq had a secret biological weapons programme has admitted for the first time that he lied about his story, then watched in shock as it was used to justify the war.
Rafid Ahmed Alwan al-Janabi, codenamed Curveball by German and American intelligence officials who dealt with his claims, has told the Guardian that he fabricated tales of mobile bioweapons trucks and clandestine factories in an attempt to bring down the Saddam Hussein regime, from which he had fled in 1995.
“Maybe I was right, maybe I was not right,” he said. “They gave me this chance. I had the chance to fabricate something to topple the regime. I and my sons are proud of that and we are proud that we were the reason to give Iraq the margin of democracy.”
The admission comes just after the eighth anniversary of Colin Powell’s speech to the United Nations in which the then-US secretary of state relied heavily on lies that Janabi had told the German secret service, the BND. It also follows the release of former defence secretary Donald Rumsfeld’s memoirs, in which he admitted Iraq had no weapons of mass destruction programme.
The careers of both men were seriously damaged by their use of Janabi’s claims, which he now says could have been – and were – discredited well before Powell’s landmark speech to the UN on 5 February 2003.
The former CIA chief in Europe Tyler Drumheller describes Janabi’s admission as “fascinating”, and said the emergence of the truth “makes me feel better”. “I think there are still a number of people who still thought there was something in that. Even now,” said Drumheller …
“I had a problem with the Saddam regime,” he said. “I wanted to get rid of him and now I had this chance” …
With the US now leaving Iraq, Janabi said he was comfortable with what he did, despite the chaos of the past eight years and the civilian death toll in Iraq, which stands at more than 100,000.
“I tell you something when I hear anybody – not just in Iraq but in any war – [is] killed, I am very sad. But give me another solution. Can you give me another solution?
“Believe me, there was no other way to bring about freedom to Iraq. There were no other possibilities.”
- Your bitter blind broke gap-toothed radio show host Chuck Mertz would like to calmly reply … I HAVE A SUGGESTION ASSHOLE! LOOK WHAT JUST HAPPENED IN EGYPT YOU FUCKING PRICK! WAR IS NOT THE ANSWER TO ANYTHING YOU SOUL-LESS PIECE OF SHIT!
Lawsuit says Pentagon allows military culture of rape, sexual assault
The New York Times
Lawsuit Says Military Is Rife With Sexual Abuse
A federal lawsuit filed Tuesday accuses the Department of Defense of allowing a military culture that fails to prevent rape and sexual assault, and of mishandling cases that were brought to its attention, thus violating the plaintiffs’ constitutional rights.
The suit — brought by 2 men and 15 women, both veterans and active-duty service members — specifically claims that Defense Secretary Robert M. Gates and his predecessor, Donald H. Rumsfeld, “ran institutions in which perpetrators were promoted and where military personnel openly mocked and flouted the modest Congressionally mandated institutional reforms.”
It also says the two defense secretaries failed “to take reasonable steps to prevent plaintiffs from being repeatedly raped, sexually assaulted and sexually harassed by federal military personnel” …
The plaintiffs’ stories in the complaint include accounts of a soldier stripping naked and dancing on a table during a break in a class on preventing sexual assault, physical and verbal harassment, and the rape of a woman by two men who videotaped the assault and circulated it to the woman’s colleagues …
Though the suit, which was filed in Federal District Court in Virginia, seeks monetary damages, those involved with the case said their goal was an overhaul of the military’s judicial system regarding rape, sexual assault and sexual harassment.
By resigning, Mubarak prevents a preemptive Israeli war on Iran
Mubarak’s departure thwarted Israeli strike on Iran
Netanyahu shared with Mubarak his concerns about the growing strength of Iran. Egypt played a key role in the Sunni, the “moderate,” axis, which lined up alongside Israel and the United States against Mahmoud Ahmadinejad and his allies in Lebanon, Syria and the Gaza Strip.
The toppling of the regime in Cairo does not alter this strategic logic. The revolutionaries at Tahrir Square were motivated by Egyptian national pride and not by their adoration of the Islamic Revolution in Iran. Whoever succeeds Mubarak will want to follow this line, even bolster Egyptian nationalism, and not transform Egypt into an Iranian satellite. This does not mean that Mubarak’s successor will encourage Israel to strike the Iranian nuclear installations.
On the contrary: they will listen to Arab public opinion, which opposes a preemptive war against Iran. Israel will find it difficult to take action far to the east when it cannot rely on the tacit agreement to its actions on its western border. Without Mubarak there is no Israeli attack on Iran. His replacement will be concerned about the rage of the masses, if they see him as a collaborator in such operation.
Whoever is opposed to a strike, or fear its consequences – even though they appear to be in favor, like Netanyahu and Defense Minister Ehud Barak – now have the ultimate excuse. We wanted to strike Iran, they will write in their memoirs but we could not because of the revolution in Egypt. Like Ehud Olmert says that he nearly made peace, they will say that they nearly made war. In his departure Mubarak prevented a preemptive Israeli war. This appears to have been his last contribution to regional stability.
- In the Radio Free Europe Radio Liberty post, “Many Israelis Worry About The ‘New Egypt’,” they reveal an Israel torn between fear and hope … but mostly fear:
Officially, Israeli leaders have been hesitant to sound skeptical about events in Egypt, mindful that the Camp David Accords are viewed there as an agreement struck with a corrupt regime. Israeli Defense Minister Ehud Barak told ABC News that he did “not think the relationship between Israel and Egypt is under any risk or that there is any kind of operational risk awaiting us.”
In a speech to the nation on February 4, Israeli Prime Minister Binyamin Netanyahu cautiously welcomed calls by Egyptians for democratic reforms, yet expressed the fear that many Israelis feel. “All those who cherish human liberty, including the people of Israel, are inspired by genuine calls for reform and by the possibility that it will take place,” he said, adding that “we expect any government of Egypt to honor the peace.”
It’s not just the Muslim Brotherhood that has threatened to tear up the Camp David Accords. Earlier this week, Ayman Nour, a leader of Egypt’s secular opposition who ran against Mubarak in 2005 and was imprisoned by the regime, told Egyptian radio that “the Camp David accord is over.”
On the other hand, Mohamed ElBaradei, the former diplomat who took on a leadership role during the protests that brought down Mubarak, recently told NBC News that “I assume Egypt will continue to respect” the treaty.
One prominent Israeli who diverged from the consensus is Natan Sharansky, the former Soviet dissident and leader of the “refusenik” movement for Jewish emigration. In an interview with the “Jerusalem Post” this week, Sharansky said: “This [untenable] pact between the free world and a bunch of dictators ostensibly bringing us stability was not broken by the free world. It was broken by the people in the streets. We have to go with this. This is the chance. I hope America will take it.”
Protests reveal how easy it is for government to shut down Internet
The New York Times
Egypt Leaders Found ‘Off’ Switch for Internet
Epitaphs for the Mubarak government all note that the mobilizing power of the Internet was one of the Egyptian opposition’s most potent weapons. But quickly lost in the swirl of revolution was the government’s ferocious counterattack, a dark achievement that many had thought impossible in the age of global connectedness. In a span of minutes just after midnight on Jan. 28, a technologically advanced, densely wired country with more than 20 million people online was essentially severed from the global Internet.
The blackout was lifted after just five days, and it did not save President Hosni Mubarak. But it has mesmerized the worldwide technical community and raised concerns that with unrest coursing through the Middle East, other autocratic governments — many of them already known to interfere with and filter specific Web sites and e-mails — may also possess what is essentially a kill switch for the Internet.
Because the Internet’s legendary robustness and ability to route around blockages are part of its basic design, even the world’s most renowned network and telecommunications engineers have been perplexed that the Mubarak government succeeded in pulling the maneuver off.
But now, as Egyptian engineers begin to assess fragmentary evidence and their own knowledge of the Egyptian Internet’s construction, they are beginning to understand what, in effect, hit them. Interviews with many of those engineers, as well as an examination of data collected around the world during the blackout, indicate that the government exploited a devastating combination of vulnerabilities in the national infrastructure.
For all the Internet’s vaunted connectivity, the Egyptian government commanded powerful instruments of control: it owns the pipelines that carry information across the country and out into the world.
Internet experts say similar arrangements are more common in authoritarian countries than is generally recognized. In Syria, for example, the Syrian Telecommunications Establishment dominates the infrastructure, and the bulk of the international traffic flows through a single pipeline to Cyprus. Jordan, Qatar, Oman, Saudi Arabia and other Middle Eastern countries have the same sort of dominant, state-controlled carrier.
Over the past several days, activists in Bahrain and Iran say they have seen strong evidence of severe Internet slowdowns amid protests there. Concerns over the potential for a government shutdown are particularly high in North African countries, most of which rely on a just a small number of fiber-optic lines for most of their international Internet traffic.