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Ronald Reagan, Central America and Everything Ted Cruz Doesn't Understand |
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Monday, 04 August 2014 08:29 |
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Gaffney writes: "There seems to be a general consensus that we should be addressing not only the symptoms, but also the 'root causes' of rising emigration from Central America. But what are they?"
Ronald Reagan, Oliver North. (photo: AP/Barry Thumma/Lana Harris)
Ronald Reagan, Central America and Everything Ted Cruz Doesn't Understand
By A.W. Gaffney, Salon
04 August 14
If we want to understand the immigration crisis, we need to revisit Reagan and the violence we brought the region
 here seems to be a general consensus that we should be addressing not only the symptoms, but also the “root causes” of rising emigration from Central America. But what are they? On the right, the influx of children from the region is said to be the predictable result of our allegedly lenient immigration policy; mass deportation, therefore, is supposedly the obvious solution. “[I]mmediately deport these families, these children,” demands Rep. Raúl Labrador, R-Idaho, in “plane loads,” specifies Sen. John McCain, R-Ariz. Closer to the center, the causes of immigration from the region are typically said to be rising gang violence, the drug trade and the drug war and – to a lesser extent – poverty.
With the exception of our immigration policy, it’s obvious these factors are playing a major role in encouraging emigration from Honduras, Guatemala and El Salvador. But if we are to speak of true “root causes,” we have to look deeper still: first, to the gross inequality from which these social maladies arise, and second, to the political forces that have maintained and enforced this economic status quo, decade after decade. The implications of Thomas Piketty’s “Capital” for the developed world have been much discussed, but the meaning of inequality for poor countries is no less: The crisis of Central American immigration, I would argue, is a crisis of inequality, tragically manifested.
Clearly, inequality in Central America has been, to some degree, the brutal legacy of colonialism. Yet even today, the countries of Central America are among the most unequal not only in the hemisphere, but also on the globe: Honduras is the eighth most unequal country worldwide, and Guatemala isn’t far behind. Income distribution aside, Central American nations are also the most impoverished in Latin America. Using a multidimensional index, the U.N. estimates that 79.9% of children in Guatemala, 78.9% in El Salvador and 63.1% in Honduras live in poverty (compared to 31.8% in Venezuela and 15.7% in Chile). In Honduras, rates of malnutrition reach 48.5% in rural areas, while almost half of Guatemalan children are moderately or severely stunted in growth. Superimposed on this poverty has been a devastating wave of gang violence. El Salvador, Guatemala and Honduras have some of the highest homicide rates in the world.
But why is the region so underdeveloped, why is poverty so entrenched, and why has the colonial legacy of inequality proven so resistant to social and political change? Though the situation is admittedly complex, the dismal state of affairs in Central America is in no small part the result of the failure of social democratic and left-of-center governments to maintain power and enact socioeconomic change; this failure, in turn, is sadly (in part) the consequence of the ironic “success” of U.S. foreign policy.
Consider the case of Guatemala. As it did elsewhere, the legacy of the colonial and postcolonial era meant massive inequalities in land ownership in Guatemala, with large numbers of dispossessed peasants condemned to lives of severe poverty. This status quo was maintained in the 1930s and ’40s by the U.S.-supported dictator Jorge Ubico, but it was challenged following his overthrow in 1944, particularly after the election of Jacobo Árbenz in 1951. “All the riches of Guatemala,” Árbenz announced at his inauguration, “are not as important as the life, the freedom, the dignity, the health and the happiness of the most humble of its people.” And he delivered: In seeking to take Guatemala out of feudalism, Árbenz redistributed lands of the United Fruit Company (with full compensation) to landless peasants.
Perhaps unsurprisingly – in the context of the reductionist zero-sum politics of the Cold War – Árbenz was soon deemed a communist threat; however strong his democratic credentials and however nonexistent Soviet involvement might be, his days were numbered.
In Operation PBSUCCESS, the CIA achieved the overthrow of Árbenz by destabilizing the Guatemalan economy, engaging in various innovative forms of psychological warfare and ultimately orchestrating an invasion of the country from Honduras in 1954. Following his overthrow, a military dictatorship was installed, and variably supported, for decades. But this status quo could only be maintained with violence and authoritarianism; insurgency would follow, while inequality and social deprivation would remain largely untouched. The logic of support for “anticommunist” dictatorship in Guatemala reached a bloody apex during the Reagan administration, when the U.S.-supported military regime went on an unprecedented killing spree. During the reign of General Rios Montt (called by Reagan “a man of great personal integrity,” though recently tried in Guatemala on charges of genocide), the military embarked on a “scorched earth” counterinsurgency operation. Some 100,000 Mayan peasants were murdered by the army between 1981 and 1983 alone, through unspeakable acts of brutality, torture and sexual violence. An international Truth Commission would later appropriately call this genocide.
The dynamics in El Salvador during this period were to some extent similar: a feudal distribution of land, grinding poverty, the inevitable guerilla resistance, an unspeakably brutal military regime, consistent U.S. support under the mantra of anti-communism, and a blind eye turned toward death squads. The infamous murder of hundreds of men, women and children by the American-trained Atlacatl Battalion in the village of El Mozote was but one massacre in a larger massacre. The tragedy was that none of this was inevitable. “The Reagan administration,” as the historian Walter LaFeber put it in his classic history of Central America decades ago, “had the alternative of negotiated settlements, international supervisions, and multilaterally shared responsibilities. It chose the unilateral escalation of the CIA-military effort to win supposed final victories.” Yet what did we win? If anything, we only “made much of Central America even more dependent on the United States,” as LaFeber presciently put it.
Honduras, meanwhile, served dutifully during these years as the archetypal “Banana Republic,” a regional U.S. battle station labeled by one expert “the USS Honduras” for its supporting role in such covert and overt military adventures. Yet lest the above events seem like ancient history, the case of Honduras suggests that much has stayed the same. In 2009, the left-wing-elected government of President “Mel” Zelaya was overthrown in a military coup – accompanied by the usual repression and human rights abuses – that was again countenanced by the United States. “Obama,” wrote Tim Padgett at Time magazine, “seems to have ceded Latin America strategy to right-wing Cold Warriors,” namely in Honduras.
One’s opinion of Zelaya, or his administration, is largely beside the point; the 2009 coup has been a disaster for Honduras. According to a report from the Washington-based Center for Economic and Policy Research, since the coup the economy has plunged, poverty has increased, social spending on health care and education has been slashed, economic inequality has worsened, and 100% of all real income gains have accrued to the wealthiest 10 percent of Hondurans. When I was in Honduras as a medical student in 2008, poverty was severe and crime was much discussed, but it is clear that things have worsened enormously: Honduras is now the murder capital of the world. Ironically, when Sen. Ted Cruz, R-Tex., recently called the influx of Central American immigrants “a crisis of the President’s own making,” he was perhaps unintentionally half correct.
But as the case of Honduras demonstrates, it’s not only about counterinsurgencies and coups – it’s about the economic policies that follow. The orthodox “neoliberal” economic policies of the so-called “Washington Consensus” – centered around privatization, trade and financial liberalization, and diminished social spending – exacerbated inequality throughout Latin America for decades. Things, however, actually began to improve in many parts of Latin America a decade or so ago: “The region moved left politically circa 2000,” Paul Krugman noted a few years back, “partially turning its back on the Washington Consensus — and there has been a dramatic reversal in inequality trends.” However, though inequality began to fall in much of South America – predominantly in nations with social-democratic or left governments – progress in Central America was “minimal” for much of the decade, according to a 2012 paper by the economist Giovanni Andrea Cornia. In Honduras and Guatemala, according to Cornia’s figures, the bottom 50% actually experienced a decrease in its income share during this period. Though the political situation varied from country to country – for instance, the left has won elections in both Nicaragua (which has much less of a problem with crime and emigration) and, more recently, El Salvador – the 2000s were overall a lost decade for much of Central America.
Admittedly, of course, it would be reductionist to explain the entire upsurge in Central American violence – or of child migration – on our foreign policy and neoliberal economic orthodoxy and its sociopolitical consequences. As others have emphasized, the impact of the drug war is no doubt critical, and gang violence can clearly take on a deranged logic of its own. But to divorce Central America – and this current crisis – from economics and history would be absurd. Countries like Honduras, El Salvador and Guatemala have needed a New Deal since they escaped colonialism; instead, they were kept under the jackboot of murderous regimes, far too often with U.S. support, for much of the twentieth century. Retrograde neoliberal economic policies subsequently propagated the legacy of inequality into the twenty-first century.
The border children, for reasons of human decency, should be treated as refugees. But we should know that they are also – in no small way – escaping our own failed foreign policy and economic ideology: They are the refugees of inequality.
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Seeking a Saner Food System, Three Times a Day |
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Monday, 04 August 2014 08:06 |
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King writes: "The 1.75 million cows in California generate, according to Lymbery and Oakeshott, more fecal waste than the human population of the U.K. Most of the waste matter flows to lagoons near the farms. But some escapes into the air as gas and into the ground (and water supply) through seepage."
(photo: Justin Sullivan/Getty Images)
Seeking a Saner Food System, Three Times a Day
By Barbara J. King, National Public Radio
04 August 14
 or Philip Lymbery, head of the U.K.-based Compassion in World Farming and his co-author Isabel Oakeshott, a visit to California's Central Valley amounted to an encounter with suffering.
In Farmageddon: The True Cost of Cheap Meat, Lymbery and Oakeshott write that the mega-dairies of the Central Valley are "milk factories where animals are just machines that rapidly break down and are replaced." At one huge dairy they visited, cows stood idly outdoors, some in shade and some in the sun. No grass cushioned their feet and certainly none was available to eat since, like almost all factory-farm cows, the animals were maintained on an unnatural diet of crops such as corn. The stench in the air was "a nauseous reek."
This same scene was repeated "every couple of kilometres, all with several thousand cows surrounded by mud, corrugated iron and concrete."
The hurt in Central Valley extends beyond cows to humans.
The 1.75 million cows in California generate, according to Lymbery and Oakeshott, more fecal waste than the human population of the U.K. Most of the waste matter flows to lagoons near the farms. But some escapes into the air as gas and into the ground (and water supply) through seepage. Water and air pollution, linked in part to the mega-dairies, is an immense worry for residents of the Central Valley, where, the authors report, children have a rate of asthma nearly three times above the national average and adult life expectancies are lower by up to a decade than the national average.
Similar disastrous circumstances surround mega-piggeries and industrial chicken farms in the U.S. And when those animals are turned into meat, there's enormous wastage. The single saddest statistic I have read in the realm of animal welfare comes from Farmageddon: the amount of meat discarded globally each year is equivalent to 11.6 billion chickens or 270 million pigs or 59 million cattle.
Lymbery and Oakeshott's answer to "Well, what can we do?" hit home for me. Positive change is in our hands, they insist. In the U.K. where they live, the scale of industrial agriculture is not yet huge and, even in countries like the U.S. where it is huge, there's hope. They write:
"Avoiding Farmageddon is easy as long as we buy products from animals reared on the land (free-range, organic), favour local producers or retailers that we trust, eat what we buy and therefore reduce food waste, and avoid overeating meat, we can fill our plates in ways that benefit the countryside, our health and animal welfare."
"Easy" sounds too Pollyanna-ish to my ears, but I did love the mantra adopted in the book:
"Each of us has three great opportunities a day to help make a kinder, saner food system through the [meal] choices we make."
It's a simple yet powerful message: At every breakfast, lunch and dinner, we make food choices that move us either toward a saner food system or further away.
My review of Farmageddon, published last week in the Times Literary Supplement, was positive. Even so, I gave Lymbery and Oakeshott a bit of a hard time for avoiding the topic of vegetarianism.
No, I'm not suggesting that everyone become vegetarian (or vegan) or that people who don't are somehow morally inferior. Though I don't eat cows, pigs, chickens, turkeys, lambs, goats or cephalopods like the octopus, I do eat fish on occasion and I have recently sampled insect cuisine (cricket cookies and grasshopper tacos). I'm no purist on this topic.
And I remember from last year Tania's "can't we all just get along?" post: none of us benefits by judging others' food habits (or worrying excessively that others are judging ours).
Still, in a book that tackles how we might eat smarter for the environment, for other animals, and for ourselves, I think it's too timid to stop at "eat less meat" and not discuss the "eat no meat" option.
And what about "eat no fish"? On this topic, Farmageddon has something thought-provoking to say, as I noted in my TLS review:
"'Fish farms are the forgotten factory farms under the water', according to Lymbery, 'and one of the fastest-growing sectors of intensive animal rearing.' Cataracts and fish and tail injuries plague the farmed salmon and trout confined in tiny spaces. Around the world, about 100 billion fish are farmed every year, a number that exceeds all the terrestrial farm animals put together."
"The result of all this effort is bleak: consumers eat fatty, chemical-laden fish, and the farmed fish, when they escape (Lymbery describes 'mass breakouts'), harm the wild fish stocks, through competition for food and places to spawn, and outright cannibalism."
About my pescatarian diet, and the type of fish I choose now and again for lunch or dinner, I'm thinking twice.
And three times.
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Ayn Rand and the Myth that Markets Aren't Free Enough |
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Written by <a href="index.php?option=com_comprofiler&task=userProfile&user=27775"><span class="small">Thomas Frank, Salon</span></a>
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Sunday, 03 August 2014 14:05 |
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Frank writes: "This summer will mark 13 years since the series of disclosures that led to the sudden bankruptcy of the Enron Corp. of Houston. The collapse of the gas-and-power leviathan, then one of the largest companies in the nation, was the starting gun for the modern age of neoliberal scandal, the corporate crime that set the pattern."
Ayn Rand; Bill Murray in "Groundhog Day". (photo: AP/Sony Pictures)
Ayn Rand and the Myth that Markets Aren't Free Enough
By Thomas Frank, Salon
03 August 14
I published the following in Harper’s Magazine to mark ten years since the demise of Enron. It was more than an anniversary piece, though: this was the story of our times. The architecture of modern-day corruption never changes and, as every day’s newspaper reminds us, the Age of Enron is still very much alive.
his summer will mark 13 years since the series of disclosures that led to the sudden bankruptcy of the Enron Corp. of Houston. The collapse of the gas-and-power leviathan, then one of the largest companies in the nation, was the starting gun for the modern age of neoliberal scandal, the corporate crime that set the pattern. It was not the first episode to feature grotesque bonuses for insiders, or a fawning press, or bought politicians, or average people being fleeced by scheming predators. But it was the first in recent memory to bring together all those elements in one glorious fireball of fraud.
And in the years since, we’ve seen many more fireballs, each following the Enron pattern and all of them culminating in the financial meltdown of 2008, along with the seemingly unending recession it triggered. It is fair to say that in some genuine, dismaying sense, we are living in the Age of Enron.
I remember Enron’s collapse with a special vividness, because in those days I was fascinated by the company. I first came across the corporate name in 1997. I lived in Chicago at the time, and Enron had been running advertisements there calling for the deregulation of the region’s electric utilities. This was puzzling to me, since Enron wasn’t a local outfit. What did they care about the energy market in Illinois?
As I soon discovered, Enron was not merely a business — it was also an ideological endeavor. “We believe in the inherent wisdom of open markets,” read the first sentence on their vision-and-values Web page. The second sentence read: “We are convinced that consumer choice and competition lead to lower prices and innovation.” In pursuit of that vision and those values, Enron pushed deregulation across the land. They ran TV commercials deriding the fusty old politicians who regulated things and praising open markets with an almost religious veneration. Early in 2001, Enron CEO Ken Lay actually said, “I believe in God and I believe in free markets.”
That was an outrageous statement, maybe, but only by a matter of degrees; market-worshiping libertarianism was the order of the day back then, just as it is now. What intrigued me was the way the media always chose to describe the looming deregulation of electricity markets: The change was supposed to be “inevitable,” as though history itself were pushing us to undo what our market-skeptical ancestors had devised, with their old-fashioned concerns about fairness and monopoly and fraud.
These days, less jovial emotions prevail. We deregulate not because we live in some enlightened “New Economy” where the forces of history love us and want us to prosper; we do it because we are afraid. We do it because the John Galts who rule us won’t have it any other way. If we want them to create jobs, we must do as they instruct.
I am sure that the next few corporate scandals and financial crises will be just as shocking and unforeseen as were their predecessors. Of course, we have no way of knowing what those particular disasters will be until the day they crush our 401(k) accounts or ring the Fed’s bailout bell. But we can predict their broad outlines, thanks to the template provided by Enron.
The primary component of the modern scandal is deregulation, either by law or by the de facto dumbing down or hacking back of the supervisory offices of government. This is the common thread that unites such otherwise disparate events as the 2008 financial crisis, the S&L debacle of the 1980s, the BP oil spill (made possible by the driller-friendly Minerals Management Service), and the fall of lobbyist Jack Abramoff (who aimed to shield offshore sweatshops from the heavy hand of the state).
But it was Enron that fully grasped the tantalizing possibilities of deregulation. After all, it owed its very existence to the 1985 merger of two pipeline companies aiming to take advantage of the deregulation of natural gas. Later on, its corporate mission was to “make markets” in utility services once considered to be natural monopolies, like water and electricity. The 1998 deregulation of the power industry in California is what allowed Enron’s energy traders (along with energy traders from other companies) to arrange that state’s famous man-made electricity crisis a few years later.
Meanwhile, the company got a leg up with the passage of the Commodity Futures Modernization Act of 2000. By some miraculous bit of foresight, this measure created regulatory blind spots not only in energy derivatives but also in credit default swaps. It thus exempted from scrutiny not merely certain Enron operations but also the instruments that nearly crashed the world economy in 2008.
And then, in a daisy chain of dereg disaster, Enron also provided the rationale for even more blind spots, more catastrophe. A contributing factor to the 2008 financial crisis, as the world now knows, was the Federal Reserve’s relentless hostility to regulating derivatives. Amazingly, the basis for this stubbornness was the apparent awesomeness of Enron. According to a report written by former Fed bank regulator Richard Spillenkothen for the Financial Crisis Inquiry Commission, certain Fed staffers pushed for new derivatives rules in the late 1990s. They were rebuffed, however, by “senior [Federal Reserve] Board economists” who, just a few years before Enron’s collapse, cited the company “as an example of a prominent player in the derivatives market that was successfully ‘regulated’ by counterparty discipline, without needing bank-like government oversight.”
The company’s spooky grip on economic policy persisted from beyond the grave. After Enron’s bankruptcy, reports Spillenkothen, the Fed’s regulatory staff made a presentation on the failure of the company’s Wall Street lenders to stop the fraud. In response, Fed brass made it clear that they were “unimpressed by staff findings”— after all, “no laws were broken [by the banks, that is] and related losses were manageable.” * The economy avoided total collapse that time, so no biggie.
The second inevitable element of the modern corporate scandal is the short-circuiting, buy-off or capture of the private sector’s oversight mechanisms. Again, it is Enron that blazed the trail to hell. The company encouraged (or, more accurately, was built upon) astounding conflicts of interest: special partnerships funded with Enron stock, and run by Enron officers, that existed to do deals with Enron proper and thereby hide the company’s losses. They were massively lucrative for the individuals within the partnerships, and the Enron employees who were supposed to review the propriety of these arrangements were often invited to cut themselves a slice. A few squares objected, of course, but such people were simply punished for their prissiness.
The same was true, on a grander scale, at Enron’s accounting firm, Arthur Andersen, which also happened to do consulting for the company. Individual Andersen employees saw what was going wrong at Enron — the crazy math, the puffed-up quarterly results — but the giant client simply demanded that those employees vanish and be replaced by more agreeable ones. The giant client got its way.
Instead of being discredited by the Enron disaster, this way of doing business thrived. It became the all-American system. During the Wall Street analyst scandal of 2003, it was discovered that the heroic leaders of the tech boom had issued passionate ratings on shares in trash companies in order to win those companies’ investment-banking business. “What used to be a conflict is now a synergy,” said Jack Grubman of Salomon Smith Barney, a man who once upgraded the stock of AT&T in order to get his children into a snobbish Manhattan preschool, and was eventually banned from the securities industry for life.
And during the financial crisis of 2008, the world discovered that the credit-ratings agencies—Moody’s, Fitch, and Standard & Poor’s—gave worthless mortgage-backed securities their respective seals of approval. The reason, again, was that they had been compromised in various Enronesque ways. Since they were paid for their ratings by the very firms that issued the securities, the emphasis was on “servicing the client,” as it was called at Moody’s. And the clients let the agencies know that if the ratings ever turned against them, they would take their business elsewhere. Again, the clients got their way.
We can also be confident that the next scandal will display the distinctively truculent culture of the trading floor. This, too, we learned from the folks in Houston. As Enron’s mission statement insisted so long ago, financial traders, acting in open markets, would deliver extraordinary benefits to consumers. During California’s electricity crisis, however, Enron’s traders behaved in a notably less altruistic manner, figuring out ways to send the state’s power elsewhere and even to shut down power plants during peak hours.
Audio recordings of these traders’ conversations later emerged and were included in the 2005 documentary “Enron: The Smartest Guys in the Room.” The traders can be heard boasting about how a colleague “just steals money from California,” cheering for a wildfire that has ignited under an important power-transmission line, and cackling with delight at the helpless idiocy of the non-trader world. “It weeds out the weak people in the market,” one trader says, presumably referring to high electricity prices. “Get rid of ‘em and you know what? The people who are strong will stick around.” (Several of these Übermenschen eventually did prison time for their roles in the episode.)
Where Enron led, others followed. Merrill Lynch emails made public in 2002 revealed star analyst Henry Blodget referring privately to certain stocks as a “piece of crap” or a “dog” at a time when he was recommending them to investors. Meanwhile, Jack Grubman typed out this denunciation of the whining executives at Focal Communications, which he had thoughtfully rated a “1? (meaning “buy”):
If I so much as hear one more fucking peep out of them, we will put the proper rating (i.e. 4 not even 3) on this stock, which every single smart buysider feels is going to zero. We lose credibility on MCLD and XO because we support pigs like Focal.
Since then, we have learned how Washington Mutual schemed to sell option adjustable-rate mortgages — “our most profitable mortgage loan” — even though option ARMs actually sucked for most borrowers. We found out that Angelo Mozilo, CEO of subprime lender Countrywide, described one of his company’s own offerings thusly: “In all my years in the business, I have never seen a more toxic product.” We discovered that Goldman Sachs executives viewed a particular collateralized debt obligation as “one shitty deal” but sold it anyway.
Ever since Enron, pugnacious trader talk of this sort has been a constant background noise to American life. But like a kidnap victim with Stockholm syndrome, we love the lout in spite of it all. Though he slays our bank account, yet will we trust in him: aspiring to his lifestyle, emulating his swaggering ways.
And so, in 2009, as the consequences of the financial crisis were becoming apparent to everyone, America fell in love with the Tea Party — a protest movement launched by a business reporter from the floor of the Chicago Board of Trade. And then we made a towering bestseller of “Atlas Shrugged,” the 1957 novel whose most famous chapter insists on understanding traders as the most exalted specimens of humanity:
We, who live by values, not by loot, are traders, both in matter and in spirit. A trader is a man who earns what he gets and does not give or take the undeserved. . . . The mystic parasites who have, throughout the ages, reviled the traders and held them in contempt, while honoring the beggars and the looters, have known the secret motive of their sneers: a trader is the entity they dread—a man of justice.
Another hallmark of the contemporary scandal is a sort of unconscious journalistic perversity. In virtually every case we have been considering, what turned out to be the worst companies were considered the best. Management theorists loved Enron. Fortune magazine compared it to Elvis. “We’re on the side of angels,” Enron president Jeff Skilling told BusinessWeek in 2001.
Skilling’s statement chimes nicely with the famous 2009 self-assessment of Goldman CEO Lloyd Blankfein, who said he was “doing God’s work.” And why shouldn’t he make such a claim? In the decade past, Goldman was routinely included on such lists as World’s Most Admired Companies (Fortune), 100 Best Companies to Work For (ditto), Best Place to Launch a Career (BusinessWeek), and Global 100 Most Sustainable Corporations (the verdict of Corporate Knights, a magazine launched in 2002 to “humanize the marketplace”).
And before journalists learned to scorn WaMu, the biggest bank to fail in American history, they invariably praised it as “innovative.” Its CEO, according to an analyst quoted by Fortune magazine in 1997, was “the Alexander the Great of the thrift industry.” Meanwhile, it was the sober opinion of Countrywide CEO Angelo Mozilo, among the grabbiest, grubbiest gents in the entire business, that his outfit had “made more difference to society, to the integrity of our society, than any company in the history of America.”
And let us not omit the kept politicians. Enron, again, was exemplary, so chummy with the Bush family that Bush the First rode to his son’s inauguration on a company jet, with Ken Lay by his side. The company’s hand-holding, kimono-opening complicity with the second Bush administration was staggering to behold. But all this seems almost quaint in 2011, now that we know the level of clout wielded by Wall Street. Laws are written their way. Treasury secretaries are drawn from their corner offices. Regulatory agencies are run with their well-being in mind. And when they get in trouble — well, there’s always their old pal Hank Paulson to write them a $700 billion check.
The final feature of the next Enron-style scandal — and the most important one — is that we will not get it. For most of us, the politics of it all will remain as foggy as were the complex derivatives and Special Purpose Entities themselves.
Oh, some people will understand. Certain business-school professors will recant, and politicians in places like Iceland will reconsider runaway bank deregulation. In the immediate aftermath of the disaster, we will enact reforms like Sarbanes-Oxley and Dodd-Frank to replace the reforms we gutted the last time around.
Yes, we will get mad when we first hear about what’s happened. The financial thieves of tomorrow will put it in our faces, just like the Enron bosses who cashed out as the company sank and the bonus-grabbing AIG execs in 2009. Americans will be infuriated. We will buzz like bees. We will scream for blood.
Then we will proceed to do exactly what Enron or AIG or Goldman Sachs wanted us to do all along. We will convince ourselves that these terrible things happened to us because markets aren’t free enough — that our only mistake was in not carrying our campaigns for deregulation or tax cuts to their logical conclusions. After Enron collapsed, let’s recall, the nation decided that Enron had been right all along: California had such terrible problems because it was run by tree-hugging liberals who stifled entrepreneurship with their preposterous interfering ways.
And today, after one of the clearest lessons in deregulatory folly that history is likely to provide, we are once again on a national crusade against regulation. We have filled Congress with clear-eyed believers who know that economic rules are an affront to freedom itself. We have signed up by the millions for Tea Party groups organized by anti-regulatory outfits like FreedomWorks — which, in its earlier incarnation as Citizens for a Sound Economy, took some $20,000 in funds from none other than Enron.
Or perhaps I’ve just misunderstood. Maybe what we’re so agitated about is the possibility that some law-and-order killjoy might bring the Age of Enron to a close. Maybe, for all our fond talk of the untainted republic of the Founders, the Texas of Ken Lay is where we really long to be. So let the next scandal ruin our neighbor, let it black out entire regions of the country, let it throw millions out of work — as long as we get a chance for our turn at the trough.
* In point of fact, according to a 2003 report by Neal Batson, the examiner appointed by the court overseeing Enron’s bankruptcy, the banks weren’t all that innocent: “There is sufficient evidence from which a fact-finder could conclude that: (i) certain financial institutions that were involved in Enron’s SPE [Special Purpose Entity] transactions had actual knowledge of the wrongful conduct of these [Enron] officers; (ii) these financial institutions gave substantial assistance to the officers by participating in the structuring and closing of the SPE transactions; and (iii) injury to the Debtors was the direct or reasonably foreseeable result of such conduct. As a result, a fact-finder could conclude that certain of these Financial Institutions aided and abetted these officers in breaching their fiduciary duties.”
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How the FBI Is Creating Terrorists |
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Sunday, 03 August 2014 14:00 |
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Berkowitz writes: "The federal government has all sorts of arrows in its quiver when it comes to gathering intelligence to thwart such attacks. And that is where it begins to gets dicey."
(photo: Nomad_Soul/Shutterstock.com)
How the FBI Is Creating Terrorists
By Bill Berkowitz, AlterNet
03 August 14
A damning new report suggests the bureau facilitates and sometimes even invents its targets' willingness to act
 et’s start with a premise I think we can all agree with: There have been no 9/11-type attacks on United States soil since, well, 9/11. Here’s another statement we all probably agree with: The federal government has all sorts of arrows in its quiver when it comes to gathering intelligence to thwart such attacks. And that is where it begins to gets dicey: Unfortunately, in its counterterrorism project, the government appears to be relying more and more on perhaps the most twisted of those arrows; the use of informants, coerced and/or rewarded, entrapment, and the sting.
Since the September 2001 terrorist attacks on the Twin Towers and the Pentagon, the federal government has obtained more than 500 federal counterterrorism convictions. According to a new Human Rights Watch report (produced in association with Columbia Law School’s Human Rights Institute), “nearly 50 percent of [those] … convictions resulted from informant-based cases; almost 30 percent of those cases were sting operations in which the informant played an active role in the underlying plot.”
The report, “Illusion of Justice: Human Rights Abuses in US Terrorism Prosecutions,” points out that, while “[m]any prosecutions have properly targeted individuals engaged in planning or financing terror attacks… many others have targeted individuals who do not appear to have been involved in terrorist plotting or financing at the time the government began to investigate them.
“Indeed, in some cases the Federal Bureau of Investigation may have created terrorists out of law-abiding individuals by conducting sting operations that facilitated or invented the target’s willingness to act.”
In addition, there is a good chance that, without the government’s active participation, many of those ensnared by the government did not have the mental or intellectual capacity to plan, finance and/or carry out a terrorist event.
“Americans have been told that their government is keeping them safe by preventing and prosecuting terrorism inside the US,” said Andrew Prasow, Human Rights Watch’s deputy Washington director, in a statement. “But take a closer look and you realize that many of these people would never have committed a crime if not for law enforcement encouraging, pressuring, and sometimes paying them to commit terrorist acts.”
According to the report, entrapment, or what smells like entrapment, is writ large over several of the cases. However, the report points out that proving entrapment is not an easy task for defendants: “In theory, the defendants in these cases should be able to avoid criminal liability by making a claim of ‘entrapment.’ However, US law requires that to prove entrapment a defendant show both that the government induced him to commit the act in question and that he was not ‘predisposed’ to commit it. This predisposition inquiry focuses attention on the defendant’s background, opinions, beliefs, and reputation — in other words, not on the crime, but on the nature of the defendant. This character inquiry makes it exceptionally difficult for a defendant to succeed in raising the entrapment defense, particularly in the terrorism context, where inflammatory stereotypes and highly charged characterizations of Islam and foreigners often prevail. Indeed, no claim of entrapment has been successful in a US federal terrorism case to date. European human rights law—instructive for interpreting internationally recognized fair trial rights — suggests that the current formulation of the US defense of entrapment may not comport with fair trial standards.”
“Illusion of Justice: Human Rights Abuses in US Terrorism Prosecutions” also “documented the following patterns that raise serious human rights concerns”:
• “Discriminatory investigations, often targeting particularly vulnerable individuals (including people with intellectual and mental disabilities and the indigent), in which the government — often acting through informants — is actively involved in developing the plot, persuading and sometimes pressuring the target to participate, and providing the resources to carry it out.
• “Use of overly broad material support charges, punishing behavior that did not demonstrate intent to support terrorism.
• “Prosecutorial tactics that may violate fair trial rights, such as introducing prejudicial evidence — including evidence obtained by coercion, classified evidence that cannot be fairly contested, and inflammatory evidence about terrorism in which defendants played no part; and limited ability to challenge surveillance warrants due to excessive government secrecy.
• “Harsh and at times abusive conditions of confinement, which often appear excessive in relation to the security risk posed. These include:
• “Prolonged solitary confinement and severe restrictions on communicating in pretrial detention, possibly impeding defendants’ ability to assist in their own defense and contributing to their pleading guilty.
• “Excessive lengthening of sentences and draconian conditions post- conviction, including prolonged solitary confinement and severe restrictions on contact with families or others, sometimes without explanation or recourse.”
Last year, I reviewed Trevor Aaronson’s excellent book The Terror Factory: Inside the FBI’s Manufactured War on Terrorism (Ig Publishing, 2013) and wrote: “Aaronson found that FBI informants and undercover agents were at the center of many of the cases touted by the FBI as successes in thwarting terrorist plots. In fact, were it not for the FBI, most of those plots would likely have fallen apart under the weight of their own senselessness and ineptitude.”
“…. After his extensive and exhausting investigation, Aaronson found that ‘the FBI has built the largest network of spies ever to exist in the United States – with ten times as many informants on the streets today [as] … during the infamous Cointelpro operations under FBI director J. Edgar Hoover – with the majority of these spies focused on ferreting out terrorism in Muslim communities.’”
The Terror Factory, which will be released in paperback on September 9, served as a springboard for the Human Rights Watch report, and at least two other independent projects: Al Jazeera’s July 20 documentary that “tells the story of three FBI informants who posed as Muslims and infiltrated U.S. Muslim communities”; and HBO’s recently released documentary Newburgh Sting, “which looks at the case of the so-called Newburgh 4 and prolific FBI informant Shahed Hussain, who is the subject of ‘The Superinformant’ chapter in The Terror Factory.”
Finally, there’s a good chance we all might say “Amen” to a critical clause in the Fifth Amendment to the Constitution: “No person shall be… deprived of life, liberty, or property, without due process of law.” Far too often, under the guise of combatting terrorism and preventing another 9/11, the government has gone way beyond the boundaries of responsible law enforcement practices. Using surveillance, coercion, entrapment, and intimidation has not only resulted in the government receiving less cooperation from very communities it seeks to enlist help, but it is more likely to create terrorists where terrorists do not exist.
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