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Transparent Dishonesty

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Immediately after assuming office, President Obama promised to provide a greater degree of transparency from his administration:

Transparency and the rule of law will be the touchstones of this presidency.

Since that moment, an enormous list of broken campaign promises has buried those false assurances of transparency.  Pondering over the heap of Obama’s discarded “bait and switch” enticements can cause a person to wonder how this man expects to get re-elected  … until the Republican aspirants come into view.

A recent gimmick of the current administration has been the “We the People” initiative.  This project resulted in the creation of a platform on the White House website, allowing for citizens to create petitions requesting government action on certain issues:

The We the People platform on WhiteHouse.gov gives Americans a new way to create, share, and sign petitions that communicate your views about your government’s actions and policies.

A signature threshold was established, requiring 5,000 on-line “signatures” within a 30-day period.  The threshold has subsequently been increased to 25,000 signatures in a month:

If a petition meets the signature threshold, it will be reviewed by the Administration and an official response will be issued.  And we’ll make sure that the petition is sent to the appropriate policy makers in the Administration.

The White House began responding to those petitions on October 26.  On November 5, Nancy Atkinson reported for Universe Today that We the People are interested in UFOs and space aliens:

The White House has responded to two petitions asking the US government to formally acknowledge that aliens have visited Earth and to disclose to any intentional withholding of government interactions with extraterrestrial beings.  “The U.S. government has no evidence that any life exists outside our planet, or that an extraterrestrial presence has contacted or engaged any member of the human race,” said Phil Larson from the White House Office of Science & Technology Policy, on the WhiteHouse.gov website.  “In addition, there is no credible information to suggest that any evidence is being hidden from the public’s eye.”

5,387 people had signed the petition for immediately disclosing the government’s knowledge of and communications with extraterrestrial beings, and 12,078 signed the request for a formal acknowledgement from the White House that extraterrestrials have been engaging the human race.

The denials made by Phil Larson are as false now as they were many years ago, when a 15-year-old high school student named John Greenwald, Jr. began sending Freedom of Information Act requests to the Pentagon, Air Force and numerous government agencies to ascertain what our officials had learned about those Unidentified Flying Objects, which have aroused so much curiosity since the advent of the Internet.  Over the years, John Greenwald has amassed a collection of over 600,000 pages of documents, which are available for free on his website, The Black Vault.

I was amused by John Greenwald’s lecture, recounting how – as a teenager – he made fools of the bureaucrats, who were charged with the responsibility of stonewalling any inquiries concerning the UFO phenomenon.  At his website, Greenwald recounted some of the highlights of this experience:

When I started researching this phenomenon fifteen years ago, you quickly learn that the government and military alike dismiss the entire topic, deny any involvement or interest in it, and they claim they could explain the mystery after their official investigation back in 1969 – and haven’t collected anything since.  Nothing could be further from the truth.

John Greenwald hit paydirt when he came across a document entitled “Air Force Instruction 10-206” or “AFI 10-206” (a 2008 edition can be seen here).  Here is Greenwald’s explanation (in the third person) of where this lead took him:

In the regulation entitled, “Operational Reporting,” chapter 5 outlines procedures for cataloguing different types of sightings, including the third on the list, “Unidentified Flying Objects” or UFOs.  Although this reference to UFOs is not a reference to alien spacecraft, the fact remains that this publication shows that the military does have an interest in the phenomena, whatever it might be.

*   *   *

Upon further investigation, Greenewald uncovered that the reports made under this Air Force document were called CIRVIS, or Communication Instructions for Reporting Vital Intelligence Sightings, reports.  He noted that they are filed and sent to the NORAD installation –which he then found out when he filed a FOIA request for the records – that NORAD was not subject to the FOIA.  This was due to the fact that it was under control by both Canadian and U.S. forces – therefore excluding it from U.S. law.

But “in good faith” the request was processed under a special NORAD instruction allowing access to their documents, but they claim they found “no records.”

Pushing forward, a simple phone call by Greenewald to the Department of National Defence (DND) in Canada yielded more than 100 pages of UFO / CIRVIS reports. According to NORAD – there was nothing.  According to Canada – there was a pile of records.

On September 2, 2011 Lee Speigel of The Huffington Post interviewed John Greenwald about the extent of UFO information obtained for The Black Vault by way of the Freedom of Information Act.  Lee Speigel provided this account of what happened after that interview:

On Sept. 2, The Huffington Post made inquiries to the Air Force about the UFO directives.  A spokesman said he’d arrange an interview with an appropriate officer.  But before the interview was set up, the 111-page instruction manual was revised on Sept. 6, and the UFO instructions were deleted, as were other portions of the document, now shortened to 40 pages.

*   *   *

For several weeks, military officials failed to respond to HuffPost inquiries about the rewritten manual, which included changes to areas unrelated to UFOs.

Finally, on Oct. 5, after several follow-up calls, an Air Force major emailed a response, informing HuffPost that UFO reporting is not a duty of the armed forces branch.  He denied any cover-up, and instead said it was a coincidence that the document was updated after this news organization asked for an explanation.

The Huffington Post piece included the reaction from John Greenwald:

“They’ve had many opportunities to take [the UFO reference] off of this publication and now look at what happens,” said Greenewald.  “All of a sudden, when a major news outlet like Huffington Post starts asking questions about why UFOs are still on the books — to have that media outlet not get a fast response, number one; and number two, the military completely re-writes the regulation, changes it and UFOs are nowhere to be found — that’s a fascinating coincidence.”

Obama’s promised “transparency” seems to have befallen the same fate as “hope” and “change”.  President Clinton’s former Chief of Staff, John Podesta, is now a Visiting Professor of Law at the Georgetown University Law Center.  Here is a video clip of John Podesta, making the case for disclosure of data compiled by the United States government on the subject of UFOs.  In a speech before the National Press Club on November 14, 2007, Mr. Podesta said this:

“I think it’s time to open the books” (on government investigations of UFOs).    .  .  .  “We ought to do it because it’s right.  We ought to do it because the American people, quite frankly, CAN handle the truth and we ought to do it because it’s the law.”

Yes, Mr. Podesta  . . .  but it’s so much easier for our officials to just lie.  They lie about everything else.  Why should this subject be treated any differently?


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Federal Reserve Bailout Records Provoke Limited Outrage

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On December 3, 2009 I wrote a piece entitled, “The Legacy of Mark Pittman”.  Mark Pittman was the reporter at Bloomberg News whose work was responsible for the lawsuit, brought under the Freedom of Information Act, against the Federal Reserve, seeking disclosure of the identities of those financial firms benefiting from the Fed’s eleven emergency lending programs.

The suit, Bloomberg LP v. Board of Governors of the Federal Reserve System, 08-CV-9595, (U.S. District Court, Southern District of New York) resulted in a ruling in August of 2009 by Judge Loretta Preska, who rejected the Fed’s defense that disclosure would adversely affect the ability of those institutions (which sought loans at the Fed’s discount window) to compete for business.  The suit also sought disclosure of the amounts loaned to those institutions as well as the assets put up as collateral under the Fed’s eleven lending programs, created in response to the financial crisis.  The Federal Reserve appealed Judge Preska’s decision, taking the matter before the United States Court of Appeals for the Second Circuit.  The Fed’s appeal was based on Exemption 4 of the Freedom of Information Act, which exempts trade secrets and confidential business information from mandatory disclosure.  The Second Circuit affirmed Judge Preska’s decision on the basis that the records sought were neither trade secrets nor confidential business information because Bloomberg requested only records generated by the Fed concerning loans that were actually made, rather than applications or confidential information provided by persons, firms or other organizations in attempt to obtain loans.  Although the Fed did not attempt to appeal the Second Circuit’s decision to the United States Supreme Court, a petition was filed with the Supreme Court by Clearing House Association LLC, a coalition of banks that received bailout funds.  The petition was denied by the Supreme Court on March 21.

Bob Ivry of Bloomberg News had this to say about the documents produced by the Fed as a result of the suit:

The 29,000 pages of documents, which the Fed released in pdf format on a CD-ROM, revealed that foreign banks accounted for at least 70 percent of the Fed’s lending at its October, 2008 peak of $110.7 billion.  Arab Banking Corp., a lender part- owned by the Central Bank of Libya, used a New York branch to get 73 loans from the window in the 18 months after Lehman Brothers Holdings Inc. collapsed.

As government officials and news reporters continue to review the documents, a restrained degree of outrage is developing.  Ron Paul is the Chairman of the House Financial Services Subcommittee on Domestic Monetary Policy.  He is also a longtime adversary of the Federal Reserve, and author of the book, End The Fed.  A recent report by Peter Barnes of FoxBusiness.com said this about Congressman Paul:

.   .   .   he plans to hold hearings in May on disclosures that the Fed made billions — perhaps trillions — in secret emergency loans to almost every major bank in the U.S. and overseas during the financial crisis.

*   *   *

“I am, even with all my cynicism, still shocked at the amount this is and of course shocked, but not completely surprised, [that] much [of] this money went to help foreign banks,” said Rep. Ron Paul (R-TX),   .   .   .  “I don’t have [any] plan [for] legislation …  It will take awhile to dissect that out, to find out exactly who benefitted and why.”

In light of the fact that Congressman Paul is considering another run for the Presidency, we can expect some exciting hearings starring Ben Bernanke.

Senator Bernie Sanders of Vermont became an unlikely ally of Ron Paul in their battle to include an “Audit the Fed” provision in the financial reform bill.  Senator Sanders was among the many Americans who were stunned to learn that Arab Banking Corporation used a New York branch to get 73 loans from the Fed during the 18 months after the collapse of Lehman Brothers.  The infuriating factoid in this scenario is apparent in the following passage from the Bloomberg report by Bob Ivry and Donal Griffin:

The bank, then 29 percent-owned by the Libyan state, had aggregate borrowings in that period of $35 billion — while the largest single loan amount outstanding was $1.2 billion in July 2009, according to Fed data released yesterday.  In October 2008, when lending to financial institutions by the central bank’s so- called discount window peaked at $111 billion, Arab Banking took repeated loans totaling more than $2 billion.

Ivry and Griffin provided this reaction from Bernie Sanders:

“It is incomprehensible to me that while creditworthy small businesses in Vermont and throughout the country could not receive affordable loans, the Federal Reserve was providing tens of billions of dollars in credit to a bank that is substantially owned by the Central Bank of Libya,” Senator Bernard Sanders of Vermont, an independent who caucuses with Democrats, wrote in a letter to Fed and U.S. officials.

The best critique of the Fed’s bailout antics came from Rolling Stone’s Matt Taibbi.  He began his report this way:

After the financial crash of 2008, it grew to monstrous dimensions, as the government attempted to unfreeze the credit markets by handing out trillions to banks and hedge funds.  And thanks to a whole galaxy of obscure, acronym-laden bailout programs, it eventually rivaled the “official” budget in size – a huge roaring river of cash flowing out of the Federal Reserve to destinations neither chosen by the president nor reviewed by Congress, but instead handed out by fiat by unelected Fed officials using a seemingly nonsensical and apparently unknowable methodology.

As Matt Taibbi began discussing what the documents produced by the Fed revealed, he shared this reaction from a staffer, tasked to review the records for Senator Sanders:

“Our jaws are literally dropping as we’re reading this,” says Warren Gunnels, an aide to Sen. Bernie Sanders of Vermont.  “Every one of these transactions is outrageous.”

In case you are wondering just how “outrageous” these transactions were, Mr. Taibbi provided an outrageously entertaining chronicle of a venture named “Waterfall TALF Opportunity”, whose principal investors were Christy Mack and Susan Karches.  Susan Karches is the widow of Peter Karches, former president of Morgan Stanley’s investment banking operations.  Christy Mack is the wife of John Mack, the chairman of Morgan Stanley.  Matt Taibbi described Christy Mack as “thin, blond and rich – a sort of still-awake Sunny von Bulow with hobbies”.  Here is how he described Waterfall TALF:

The technical name of the program that Mack and Karches took advantage of is TALF, short for Term Asset-Backed Securities Loan Facility.  But the federal aid they received actually falls under a broader category of bailout initiatives, designed and perfected by Federal Reserve chief Ben Bernanke and Treasury Secretary Timothy Geithner, called “giving already stinking rich people gobs of money for no fucking reason at all.”  If you want to learn how the shadow budget works, follow along.  This is what welfare for the rich looks like.

The venture would have been more aptly-named, “TALF Exploitation Windfall Opportunity”.  Think about it:  the Mack-Karches entity was contrived for the specific purpose of cashing-in on a bailout program, which was ostensibly created for the purpose of preventing a consumer credit freeze.

I was anticipating that the documents withheld by the Federal Reserve were being suppressed because – if the public ever saw them – they would provoke an uncontrollable degree of public outrage.  So far, the amount of attention these revelations have received from the mainstream media has been surprisingly minimal.  When one compares the massive amounts squandered by the Fed on Crony Corporate Welfare Queens such as Christy Mack and Susan Karches ($220 million loaned at a fraction of a percentage point) along with the multibillion-dollar giveaways (e.g. $13 billion to Goldman Sachs by way of Maiden Lane III) the fighting over items in the 2012 budget seems trivial.

The Fed’s defense of its lending to foreign banks was explained on the New York Fed’s spiffy new Liberty Street blog:

Discount window lending to U.S. branches of foreign banks and dollar funding by branches to parent banks helped to mitigate the economic impact of the crisis in the United States and abroad by containing financial market disruptions, supporting loan availability for companies, and maintaining foreign investment flows into U.S. companies and assets.

Without the backstop liquidity provided by the discount window, foreign banks that faced large and fluctuating demand for dollar funding would have further driven up the level and volatility of money market interest rates, including the critical federal funds rate, the Eurodollar rate, and Libor (the London interbank offered rate).  Higher rates and volatility would have increased distress for U.S. financial firms and U.S. businesses that depend on money market funding.  These pressures would have been reflected in higher interest rates and reduced bank lending, bank credit lines, and commercial paper in the United States.  Moreover, further volatility in dollar funding markets could have disrupted the Federal Reserve’s ability to implement monetary policy, which requires stabilizing the federal funds rate at the policy target set by the Federal Open Market Committee.

In other words:  Failure by the Fed to provide loans to foreign banks would have made quantitative easing impossible.  There would have been no POMO auctions.  As a result, there would have been no supply of freshly printed-up money to be used by the proprietary trading desks of the primary dealers to ramp-up the stock market for those “late-day rallies”.  This process was described as the “POMO effect” in a 2009 paper by Precision Capital Management entitled, “A Grand Unified Theory of Market Manipulation”.

Thanks for the explanation, Mr. Dudley.


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