Ron Paul on the Banker's Bailout

Today's commentary elicited a bunch of Ron Paul sightings, including this letter that the Congressmen sent out recently to 'Dear Friends':

Dear Friends:

The financial meltdown the economists of the Austrian School predicted has arrived.

We are in this crisis because of an excess of artificially created credit at the hands of the Federal Reserve System. The solution being proposed? More artificial credit by the Federal Reserve. No liquidation of bad debt and malinvestment is to be allowed. By doing more of the same, we will only continue and intensify the distortions in our economy - all the capital misallocation, all the malinvestment - and prevent the market's attempt to re-establish rational pricing of houses and other assets.

Last night the president addressed the nation about the financial crisis. There is no point in going through his remarks line by line, since I'd only be repeating what I've been saying over and over - not just for the past several days, but for years and even decades.

Still, at least a few observations are necessary.

The president assures us that his administration "is working with Congress to address the root cause behind much of the instability in our markets." Care to take a guess at whether the Federal Reserve and its money creation spree were even mentioned?

We are told that "low interest rates" led to excessive borrowing, but we are not told how these low interest rates came about. They were a deliberate policy of the Federal Reserve. As always, artificially low interest rates distort the market. Entrepreneurs engage in malinvestments - investments that do not make sense in light of current resource availability, that occur in more temporally remote stages of the capital structure than the pattern of consumer demand can support, and that would not have been made at all if the interest rate had been permitted to tell the truth instead of being toyed with by the Fed.

Not a word about any of that, of course, because Americans might then discover how the great wise men in Washington caused this great debacle. Better to keep scapegoating the mortgage industry or "wildcat capitalism" (as if we actually have a pure free market!).

Speaking about Fannie Mae and Freddie Mac, the president said: "Because these companies were chartered by Congress, many believed they were guaranteed by the federal government. This allowed them to borrow enormous sums of money, fuel the market for questionable investments, and put our financial system at risk."

Doesn't that prove the foolishness of chartering Fannie and Freddie in the first place? Doesn't that suggest that maybe, just maybe, government may have contributed to this mess? And of course, by bailing out Fannie and Freddie, hasn't the federal government shown that the "many" who "believed they were guaranteed by the federal government" were in fact correct?

Then come the scare tactics. If we don't give dictatorial powers to the Treasury Secretary "the stock market would drop even more, which would reduce the value of your retirement account. The value of your home could plummet." Left unsaid, naturally, is that with the bailout and all the money and credit that must be produced out of thin air to fund it, the value of your retirement account will drop anyway, because the value of the dollar will suffer a precipitous decline. As for home prices, they are obviously much too high, and supply and demand cannot equilibrate if government insists on propping them up.

It's the same destructive strategy that government tried during the Great Depression: prop up prices at all costs. The Depression went on for over a decade. On the other hand, when liquidation was allowed to occur in the equally devastating downturn of 1921, the economy recovered within less than a year.

The president also tells us that Senators McCain and Obama will join him at the White House today in order to figure out how to get the bipartisan bailout passed. The two senators would do their country much more good if they stayed on the campaign trail debating who the bigger celebrity is, or whatever it is that occupies their attention these days.

F.A. Hayek won the Nobel Prize for showing how central banks' manipulation of interest rates creates the boom-bust cycle with which we are sadly familiar. In 1932, in the depths of the Great Depression, he described the foolish policies being pursued in his day - and which are being proposed, just as destructively, in our own:

Instead of furthering the inevitable liquidation of the maladjustments brought about by the boom during the last three years, all conceivable means have been used to prevent that readjustment from taking place; and one of these means, which has been repeatedly tried though without success, from the earliest to the most recent stages of depression, has been this deliberate policy of credit expansion.

To combat the depression by a forced credit expansion is to attempt to cure the evil by the very means which brought it about; because we are suffering from a misdirection of production, we want to create further misdirection - a procedure that can only lead to a much more severe crisis as soon as the credit expansion comes to an end... It is probably to this experiment, together with the attempts to prevent liquidation once the crisis had come, that we owe the exceptional severity and duration of the depression.

The only thing we learn from history, I am afraid, is that we do not learn from history.

The very people who have spent the past several years assuring us that the economy is fundamentally sound, and who themselves foolishly cheered the extension of all these novel kinds of mortgages, are the ones who now claim to be the experts who will restore prosperity! Just how spectacularly wrong, how utterly without a clue, does someone have to be before his expert status is called into question?

Oh, and did you notice that the bailout is now being called a "rescue plan"? I guess "bailout" wasn't sitting too well with the American people.

The very people who with somber faces tell us of their deep concern for the spread of democracy around the world are the ones most insistent on forcing a bill through Congress that the American people overwhelmingly oppose. The very fact that some of you seem to think you're supposed to have a voice in all this actually seems to annoy them.

I continue to urge you to contact your representatives and give them a piece of your mind. I myself am doing everything I can to promote the correct point of view on the crisis. Be sure also to educate yourselves on these subjects - the Campaign for Liberty blog is an excellent place to start. Read the posts, ask questions in the comment section, and learn.

H.G. Wells once said that civilization was in a race between education and catastrophe. Let us learn the truth and spread it as far and wide as our circumstances allow. For the truth is the greatest weapon we have.

Corruption, Whispers & Receivership

by Jim Willie, CB. Editor, Hat Trick Letter | September 24, 2008

Print

The United States has transformed itself, the most radical degraded aspects having occurred in the last eight years. Many might object or cringe at repeated mention of the Fascist Business Model implemented by the Clinton Administration, and carried to extreme by the Bush II Administration. It is a harsh departure from Beacon of Freedom. Too bad, fact of life! This merger of state and big business in the midst of a climax, the biggest display of exported financial toxin in modern history, and the disintegration of the financial structure for the nation owning the world reserve currency. The Fascist Business Model has criminal fraud & corruption as its chief characteristic, alienation & resentment as its chief foreign effect, and systemic failure & collapse as its chief outcome. Broad war often follows. How anybody could think the sharing of bank and oil executives with federal government leadership as a move toward progress on the evolution chart, that is moronic. Surely, it is about political power and corruption. The military budget is sacred, and private contractor deals are made without bids. Now five to six energy giants will hog all Iraqi oil service contracts. The terrorism topic is untouchable for dispute. A Coup d’Etat is in progress as the Wall Street conmen and fraud kings have taken implicit control of the USGovt. This will be recognized in time, even while resistance is evident. To me the ongoing drama smacks of a comedy of corruption. US citizens are in shock & awe, while foreigners are aghast in disgust.

Hidden in the bowels of the Lehman Brothers failure cleanup process was a convenient provision. The JPMorgan firm was given $138 billion to settle ‘private accounts’ in what seems like a clear case of corruption, a handout of counterfeit money, enabling JPMorgan to reload for costly credit default swap losses or for costly gold suppression games, or both. Goldman Sachs and Merrill Lynch have succeeded in converting to private banks, just in time to benefit from the trough devised to benefit banks. Is there a secondary benefit of averting legal liability for bond fraud, since now a new financial firm? These are two more egregious examples of the deep collusion in the Fascist Business Model, a theme that has reached climax proportions. The Securities & Exchange Commission, the Commodities Futures Trading Commission, the Debt Ratings Agencies, the military contractors, and professional lobbyist groups work toward rounding out the collusion pentagrams. See a list of dumbfounding factors, angles, stories, and developments at the end of this article, in outline form. The bust continues.

The final battle is underway, for USGovt bailout of practically the entire US banking and mortgage system. Its ancillary businesses like insurance are next. The Credit Default Swap segment represents nitroglycerine soon to be brought under the crippled USGovt aegis. The mega bailout plan puts Wall Street firms first in line to benefit. The plan in my view is the culmination of arrogant criminality, as its architects and promoters are the primary agents for the banking system collapse itself. Only one or two senators in Congress had the stones to confront Treasury Secy Paulson and USFed Chairman Bernanke, calling them on their extreme gall to dictate to Congress on bailout responsibility, when failures by the collection of banksters caused the problems even as their cohorts stand in line for deep financial assistance. The claims by Paulson that taxpayer protection is first and foremost is another total lie. His first priority is to funnel as much public money into Wall Street balance sheets before the grand game is shut down. Another phony call, deep lie, pure nonsense!

The desire for punishment, prosecution, and avoidance for benefits has come like a wave. We will see if its legislative delays result in months of grandstanding debate as Rome burns. In haste, the nationalization of the banking and mortgage industry might achieve legislative passage in the same manner as the Patriot Act, without reading its provisions. Pressure builds for passage without examination, with questions and objections regarded as unpatriotic. The next step is for big bold lies of assurances to be given, enough for satisfying sleepy Congressional senators and representatives, few of whom are aware of the deep fraud laced into the banking and asset base being rescued. The plan is being sold as a pre-emptive maneuver to ward off a disaster, providing necessary liquidity ahead of the likely unfolding events instead of providing funds after a bank failure. Fraud’s best friend is amplified liquidity doled out during times of emergency expedience.

One should have noticed on Tuesday that Paulson totally overshadowed a confused bewildered Bernanke, as the seasoned Wall Street conman even answered questions directed at the university rookie. Gentle Ben is totally out of his league when dealing in financial crime syndicate circles. No college courses on syndicates! Bernanke himself is shocked at how wide the ‘Too Big To Fail’ umbrella has become, this from a man who once claimed the subprime mortgage crisis would be contained and not result in any contagion. My retort was to expect total systemic bond contagion, a correct forecast. Bernanke actually is telling Congress today that he expects no inflationary impact from the banking and mortgage bailout program, a truly gigantic package with monstrous inflation implications! The estimated $700 billion bailout cost is laughable, when it will ultimately cost between $1500 and $2000 billion. The entire mega bailout package (let’s be clear) covers the entire US banking industry.

Congressman Ron Paul made a great quote after lecturing the inept misguided and naïve USFed Chairman Bernanke on the high risks of price fixing. The bailout constitutes the quintessential price fix. Ron Paul said, “Most illiquid bond assets are illiquid because they are not worth anything.” The Wall Street fraud kings want the USGovt to pay inflated values for their illiquid worthless assets that clog and obstruct the banking industry. Bernanke actually regards the payment for bank bailouts can come from other funds. He implies the Exchange Stabilization Fund can use its funds. If Plunge Protection Team funds are co-mingled, these funds might be closely connected to USGovt security agency fraud associated with gutting of Fannie Mae. That is a perverse irony! By the way, where is Greenspan, whose fingerprints are on every object being dusted by intrepid examiners. He handed over the reins to a bagholder named Ben, just another dumb university economics professor. To succeed in academic economics circles, one must embrace heresy and weave logic like pretzels.

Paulson is attempting to shove a package down Congressional throats. Bernanke looks in body language like a boy caught in a disaster as his entire neighborhood burned down despite his best (but late) efforts to call in a district full of fire trucks. He actually looks like a man who has slept little in two weeks. To be sure, the Congress has been slow to react to the mortgage and banking crisis, choosing to delay until the new presidential term in office. Congress has become a den of irrelevant men and women owing more to lobbyists than to the people. Their chief function is to apply rubber stamps to directives crafted by others, usually from an array of bankers themselves. Why even GeorgeW himself is aghast!

Events are moving toward climax. The next sequence of events can no longer be regarded as coming from traditional ‘Inside the Box’ solutions. We are way beyond that arena, now firmly in the Twilight Zone. My past forecasts have been verified for bank system collapse, housing market’s unending decline, nationalization of soon everything under the US tainted sun, and finally the New Resolution Trust Corp. The New RTC is being argued as it takes shape. It is called the Troubled Asset Relief Program (TARP). That name conjures up images of the roof tarps that are dotted across the New Orleans landscape from federal programs to repair roofs after Hurricane Katrina. After numerous subcontractor steps, the $150 per square foot allotted by the USGovt resulted in cheap flimsy tarps instead of nice shingled roofs. A better title for the mortgage relief program would be the Securitized Housing Investment Trust (SHIT), offered by an emailer to CNBC. These bond assets are not troubled assets, but rather fraudulent assets. The new finance czar Paulson has asked for a blank check with trust given, laden with low-ball cost estimates, or else the system will surely fail. Why should representatives and elders of Congress trust Wall Street executives? They deserve prosecution, indictment, prison terms, and forced restitution instead. We are witnessing financial treason. Instead, some executives like at Fannie Mae and Freddie Mac received huge severance packages, and Lehman Brothers executives were granted the same. The events are moving toward some upcoming surprises of historical magnitude. Think default and receivership, with foreign control. The massive rollover and refunding requirements from USTreasury Bonds will put monumental strain on the system, which the monetization US$ printing press cannot alone manage. Unless and until foreign creditors step in, the US financial sector will continue to operate like a crime syndicate, since regulatory bodies and law enforcement officials are all part of the coordinated congame.

PREFACE

Many of the overwhelming impressions from the unfolding events are to appear in the October Hat Trick Letter report. First attention must go to paid subscribers. Events is in progress in an accelerated pace, enough to take my breath away on a given day. But rain and cheery faces in Costa Rica straighten me quickly. For more evidence in backing up my claim that private brokerage accounts being open for financial parent firm claim, see the October report also. Numerous (dozens) of emails came in request. The report will show the best information on this subject, with quotes freshly hidden within the US Federal Reserve website. No need to make such stuff up, since the US financial authorities are better than fiction! By the way, if my analysis and forecasts have any advantage over others, it is because my thought process comes from always thinking like a thief. Never think the best thoughts, hope for the best of human dignity, or expect fair play to emerge when forecasting the US financial markets. Their plan seems obviously to gut the system before it fails. Then they blame foreigners. False flag attacks then seal the deal, much like cauterizing a wound with a knife made hot in a bivouac fire.

Here is an outline of topics covered in the next report, due out in the next couple weeks. The date is not set, but the messages are becoming clear. Pardon the brevity of important points, but details are difficult to describe with brievity, and are saved for the next Hat Trick Letter. The ongoing format no longer will be continued as from past issues. Every report is a report of an emergency nature. We are observing the painful steps from failure of a system, with 330 million inhabitants, and commercial tentacles the world over. The four primary features that have pushed the United States into a certain position in Third World status are these:

1. globalization with deep Western investment in China
2. insolvency of four pillars of federal, trade, housing, banking
3. export of fraud with mortgage bonds, mainly to China, Europe, Russia, England
4. military aggression and annexation with continuous deceit and propaganda.

The many points describe a system broken without remedy, inviting default and receivership. Both are in progress behind the curtains, but on foreign soil. As Mohamed El-Erian of PIMCO (formerly Harvard Univ) said recently, “The unthinkable is thinkable.” Little known to the majority of Americans, foreign disgust grows. Their desire to isolate the United States is growing, in order to protect themselves from financial collapse and further spread of fraud. The German economics experts are saying “The World Shouldn't Have to Bear the Burden for America's Lapses” in Spiegel Online (click here) in a public article.

Listen to my interview this week handled by Contrary Investors Cafe Radio (click here), where we covered several of the topics mentioned throughout this article.

GOLD LAUNCH & USDOLLAR DEMISE

Not exactly mirror images of each other, the gold price and US$ index are moving in typical opposite directions. A peak in the USDollar occurred in early September, at the same time a bottom occurred for gold. The forewarned timing of events turning sharply around in the week of September 15th happened on schedule. Once again, the short rule restriction against bank stocks helped to stem the flow that favored the euro currency rise by 330 basis points on Monday. The USDollar fundamentals have begun to resemble those of a Third World. The USGovt federal deficits are accelerating. The US trade gap has turned toward a rise again. The housing market continues to hurtle down in its price decline, that being the primary force behind the bank collapse. Now finally comes the climax. USEconomic recession is intensifying, notwithstanding absurd USGovt statistics to the contrary. The nationalization movement for Fannie Mae, Freddie Mac, AIG, not to mention the steady handouts to JPMorgan, have assured of continued heavy red ink in deficits to the USGovt federal budget. Monetization under the table to firms like JPMorgan are happening somewhat in the open, but not properly understood by the masses, trained and untrained. The endless war is a sacred cow of bottomless costs, largely to support the other syndicate, the US security agency clandestine trafficking out of Afghanistan. Foreigners watch the heightened risk having become acute. The USDollar will be sold, and gold will be bought. A COMEX delivery default in gold is in progress.

Few are thinking in nonlinear or discontinuous terms. When (not if) the USTreasurys suffer a default, totally assured in my mind, confirmed by my sources of information, the gold price will launch onward and upward in huge steps. Even without a default, the strains on the USGovt budget will result in extraordinary risk either on the USTreasury Bond yield from added supply, OR on the USDollar from cowardly requisite monetization of debt. My conjecture is the first couple fundings for USGovt bailout debt obligations will be done with normal USTreasury auctions, not to mention some off-budget games. The next fundings will be done via pure monetization. The entire nationalization will cost another $1500 to $2000 billion for banks assets and mortgages, on top of another $1000 billion for an array of US industrial and financial giants outside the banking world. The failed US firms like General Motors are already lining up. So foreigners will be expected to foot the bill??? No way! They will pull the plug, or at least diversify in a huge way out of the USDollar and US$-based bonds.

NOTES & WHISPERS IN ILL WIND

The list of breakdown items, evidence, and criminal overtones is vast.

1. Money market funds almost caused a seizure earlier this week, which means the banking system almost went into a fatal cardiac arrest episode. The seizures spread across entire the financial system, even to brokerage funds, and extended to foreign banks. The commercial paper market was also affected. The Exchange Stabilization Fund was used, having possible currency implications.
2. Foreign entities were blocked from participation in both the Lehman Brothers and American Intl Group (AIG) busts, partly to retain control, but also most likely to limit opportunity for foreigners to obtain data, documents, and records of extreme fraud. The Germans pursued the AIG insurance units in a natural acquisition, far more prudent than inefficient USGovt conservatorship.
3. The USEconomy would move toward a centralized Soviet structure, not socialism, if liberties are curtailed further, especially if martial law is imposed. Rationing is a very real prospect. Watch freedom of speech, assembly, and more.
4. The nationalization of Fannie Mae puts the $1500 billion documented fraud since 1988 on the national tab. The New Jersey burnout home selling for $230k in a Fannie loan, the micro example, has played out on a national aggregate scale. The subprime mortgage movement used to be the visible portion of the mortgage crisis. The Fannie Mae gigantic fraud has been covered by the greater mortgage crisis, perhaps in a wildly successful multi-year project. Thanks to the intrepid Aaron Krowne of www.ML-implode.com for his shared ideas.
5. Final banking & mortgage system bailout by the USGovt might not occur until issues are addressed regarding prosecution, confessions, resignations, state’s evidence, and eventually restitution. The concept of RICO law enforcement against Wall Street would be both unprecedented and empty, since most assets have been gutted. No, on second thought, despite objections, the Congress will pass the bailout bill without reading it.
6. The move to halt home foreclosures is a typical stupid Congressional idea, which might result in civil disobedience and scoffing at mortgage payment on a broad scale. Worse, almost all cost estimates are wrong by a factor of 10x from reasonable forecasts. The pattern is to establish the plan, and deal with cost overruns later. Foreigners are still expected to pay the bills for American deficits anyway.
7. Watch the Lehman Brothers liquidation process, kept hidden. The dead are still trying to marry the dead in farcical ceremonies. The bond cemetery within the New RTC was crafted when it become clear the Lehman liquidation would kill all of Wall Street. Don’t expect any consummation of such necro-marriages to bear offspring. They will not make love with each, but rather EAT EACH OTHER.
8. Wall Street firms are now almost all aligned in similar fashion. If one fails, they all suffer the same risk from similar balance sheet of assets. Marking down one firm’s asset in liquidation would result in the failure of all of them. Any USGovt bank bailout has an unintended consequence of instant markdowns in market value of assets held widely throughout Wall Street and bank industry balance sheets. These banks have resisted writedowns in honest accounting, as only a small handful of financial firms have taken losses in earnest.
9. Any New Resolution Trust Corp for mortgage bailout rescues (a correct big forecast) would ostensibly be managed by the same Wall Street villains who are implicated in massive trillion$ fraud. Expect one in three dollars to be stolen by further fraud, just like the Hurricane Katrina relief efforts. To question their fraud in unpatriotic.
10. Private brokerage stock accounts can now be borrowed by financial firms, evidence produced in Federal Reserve documents. A gigantic final heist might be in the works, requiring a massive event that provides the cover of confusion like a World Trade Center attack. The Glass-Steagall Act was not repealed without a reason and plan! Its removal enables co-mingling of bank, brokerage, and insurance assets.
11. A pattern seems evident among failing Wall Street firms. It seems Wall Street firms without extensive stock brokerage accounts are permitted to fail first, leaving private accounts vulnerable. It seems Wall Street firms with big foreign equity ownership are set to fail last, leaving foreigners outside the loop.
12. The bank short rule restriction once more has been brought back. That emergency measure is as corrupt as possible, a horrible black eye to a nation that claims to be the home of free markets. The re-enacted rule has helped support the USDollar.
13. Tremendous strong high pressure zones are building on monetary inflation, while tremendous strong low pressure zones are building on asset price decline. The combination will surely make for some of the greatest financial storms in modern history, some already witnessed, and more sure to come.
14. Much talk has come of continuing independence of US financial firms, when they are beset by insolvency and worsening liquidity problems. The same applies to the USGovt, whose liquidity flow depends upon foreign credit supply. They have been defrauded, treated with hostility in trade and currency management issues, and in the case of Russia, subjected to military aggression and NATO treaty violation.
15. The totality of events has placed enormous concentrated risk on the USDollar, and consequently on the USTreasury Bond. Expect sharp decline in the US$ and default of the USTBond. Both fraud and nationalization has amplified the pressures.
16. The Global Energy War has opened a new front in the Global Capital War. Aggressive US actions to secure energy supply have endangered its capital supply. The backlash is not even on the American radar systems, as arrogance prevails. In high commerce and banking circles, the US is being isolated. Many European firms do not return phone calls to US bankers, on orders. An analogy of ‘glow candles for diesel engines’ has been stated for upcoming response to US bankers.
17. Reports have come from a London source that gold futures contracts are being settled in cash only at the COMEX, rather than with physical gold metal. That leaves would-be buyers without the metal they wish to take on delivery under contract. IS THAT NOT A DEFAULT?
18. The Hurricanes Gustav & Ike have hit the Southeast region hard, resulting in gasoline rationing. This trend might soon extend nationwide, and broaden to include more items. Hits to AIG and other insurance firms come at a bad time.

A solution comes from foreign creditors that does not require Congressional approval or vote, constituting an event to pull the rug from under the Americans. The avenue will be via bank channels. A receivership committee is being formed. More details are a main feature of the October HTL report. The accumulative debt held by US and foreign entities is so grand, that every single day interest of almost $1 billion is owed to them on a daily basis for the USGovt Treasury and Agency mortgage bonds. If the USGovt were to shut down all operations and provision of services, including military, the USGovt might achieve a balanced budget. It could balance its budget from tax revenue against just the interest expense on debt, with no other official function whatsoever. An interesting concept. Maybe that is part of the next Receivership Committee plan.

Bush’s Veto of Bill on C.I.A. Tactics Affirms His Legacy

War criminal!


March 9, 2008

By STEVEN LEE MYERS

WASHINGTON — President Bush on Saturday further cemented his legacy of fighting for strong executive powers, using his veto to shut down a Congressional effort to limit the Central Intelligence Agency’s latitude to subject terrorism suspects to harsh interrogation techniques.

Mr. Bush vetoed a bill that would have explicitly prohibited the agency from using interrogation methods like waterboarding, a technique in which restrained prisoners are threatened with drowning and that has been the subject of intense criticism at home and abroad. Many such techniques are prohibited by the military and law enforcement agencies.

The veto deepens his battle with increasingly assertive Democrats in Congress over issues at the heart of his legacy. As his presidency winds down, he has made it clear he does not intend to bend in this or other confrontations on issues from the war in Iraq to contempt charges against his chief of staff, Joshua B. Bolten, and former counsel, Harriet E. Miers.

Mr. Bush announced the veto in the usual format of his weekly radio address, which is distributed to stations across the country each Saturday. He unflinchingly defended an interrogation program that has prompted critics to accuse him not only of authorizing torture previously but also of refusing to ban it in the future. “Because the danger remains, we need to ensure our intelligence officials have all the tools they need to stop the terrorists,” he said.

Mr. Bush’s veto — the ninth of his presidency, but the eighth in the past 10 months with Democrats in control of Congress — underscored his determination to preserve many of the executive prerogatives his administration has claimed in the name of fighting terrorism, and to enshrine them into law.

Mr. Bush is fighting with Congress over the expansion of powers under the Foreign Intelligence Surveillance Act and over the depth of the American security commitments to Iraq once the United Nations mandate for international forces there expires at the end of the year.

The administration has also moved ahead with the first military tribunals of those detained at Guantánamo Bay, including Khalid Shaikh Mohammed, a mastermind of the Sept. 11, 2001, attacks, despite calls to try them in civilian courts.

All are issues that turn on presidential powers. And as he has through most of his presidency, he built his case on the threat of terrorism.

“The fact that we have not been attacked over the past six and a half years is not a matter of chance,” Mr. Bush said in his radio remarks, echoing comments he made Thursday at a ceremony marking the fifth anniversary of the creation of the Department of Homeland Security. “We have no higher responsibility than stopping terrorist attacks,” he added. “And this is no time for Congress to abandon practices that have a proven track record of keeping America safe.”

The bill Mr. Bush vetoed would have limited all American interrogators to techniques allowed in the Army field manual on interrogation, which prohibits physical force against prisoners.

The debate has left the C.I.A. at odds with the Federal Bureau of Investigation and other agencies, whose officials have testified that harsh interrogation methods are either unnecessary or counterproductive. The agency’s director, Gen. Michael V. Hayden, issued a statement to employees after Mr. Bush’s veto defending the program as legal, saying that the Army field manual did not “exhaust the universe of lawful interrogation techniques.”

Democrats, who supported the legislation as part of a larger bill that authorized a vast array of intelligence programs, criticized the veto sharply, but they do not have the votes to override it.

“This president had the chance to end the torture debate for good,” one of its sponsors, Senator Dianne Feinstein of California, said in a statement on Friday when it became clear that Mr. Bush intended to carry out his veto threat. “Yet, he chose instead to leave the door open to use torture in the future. The United States is not well served by this.”

The Senate’s majority leader, Harry Reid of Nevada, said Mr. Bush disregarded the advice of military commanders, including Gen. David H. Petraeus, who argued that the military’s interrogation techniques were effective and that the use of any others could create risks for any future American prisoners of war.

“He has rejected the Army field manual’s recognition that such horrific tactics elicit unreliable information, put U.S. troops at risk and undermine our counterinsurgency efforts,” Mr. Reid said in a statement. Democrats vowed to raise the matter again.

Senator John McCain, the presumptive Republican presidential nominee, has been an outspoken opponent of torture, often referring to his own experience as a prisoner of war in Vietnam. In this case he supported the administration’s position, arguing as Mr. Bush did Saturday that the legislation would have limited the C.I.A.’s ability to gather intelligence.

Mr. Bush said the agency should not be bound by rules written for soldiers in combat, as opposed to highly trained experts dealing with hardened terrorists. The bill’s supporters countered that it would have banned only a handful of techniques whose effectiveness was in dispute in any case.

The administration has also said that waterboarding is no longer in use, though officials acknowledged last month that it had been used in three instances before the middle of 2003, including against Mr. Mohammed. Officials have left vague the question of whether it could be authorized again.

Mr. Bush said, as he had previously, that information from the C.I.A.’s interrogations had averted terrorist attacks, including plots to attack a Marine camp in Djibouti; the American Consulate in Karachi, Pakistan; Library Tower in Los Angeles; and passenger planes from Britain. He maintained that the techniques involved — the exact nature of which remained classified — were “safe and lawful.”

“Were it not for this program, our intelligence community believes that Al Qaeda and its allies would have succeeded in launching another attack against the American homeland,” he said.

Senator John D. Rockefeller IV of West Virginia, the chairman of the Intelligence Committee, disputed that assertion on Saturday. “As chairman of the Senate Intelligence Committee, I have heard nothing to suggest that information obtained from enhanced interrogation techniques has prevented an imminent terrorist attack,” he said in a statement.

The handling of detainees since 2001 has dogged the administration politically, but Mr. Bush and his aides have barely conceded any ground to critics, even in the face of legal challenges, as happened with the prisoners at Guantánamo Bay or with federal wiretapping conducted without warrants.

At the core of the administration’s position is a conviction that the executive branch must have unfettered freedom when it comes to prosecuting war.

Stephen Hess, a presidential scholar at the Brookings Institution, said Mr. Bush’s actions were consistent with his efforts to expand executive power and to protect the results of those efforts. Some, he said, could easily be undone — with a Democratic president signing a bill like the one he vetoed Saturday, for example — but the more Mr. Bush accomplished now, the more difficult that would be. “Every administration is concerned with protecting the power of the presidency,” he said. “This president has done that with a lot more vigor.”

Representative Bill Delahunt, a Democrat from Massachusetts, has been holding hearings on the administration’s negotiations with Iraq over the legal status of American troops in Iraq beyond Mr. Bush’s presidency. He said the administration had rebuffed demands to bring any agreement to Congress for approval, and had largely succeeded.

“They’re excellent at manipulating the arguments so that if Congress should assert itself, members expose themselves to charges of being soft, not tough enough on terrorism,” he said. “My view is history is going to judge us all.”

Mark Mazzetti contributed reporting.

Collecting of Details on Travelers Documented

U.S. Effort More Extensive Than Previously Known

By Ellen Nakashima
Washington Post Staff Writer
Saturday, September 22, 2007; A01

The U.S. government is collecting electronic records on the travel habits of millions of Americans who fly, drive or take cruises abroad, retaining data on the persons with whom they travel or plan to stay, the personal items they carry during their journeys, and even the books that travelers have carried, according to documents obtained by a group of civil liberties advocates and statements by government officials.

The personal travel records are meant to be stored for as long as 15 years, as part of the Department of Homeland Security's effort to assess the security threat posed by all travelers entering the country. Officials say the records, which are analyzed by the department's Automated Targeting System, help border officials distinguish potential terrorists from innocent people entering the country.

But new details about the information being retained suggest that the government is monitoring the personal habits of travelers more closely than it has previously acknowledged. The details were learned when a group of activists requested copies of official records on their own travel. Those records included a description of a book on marijuana that one of them carried and small flashlights bearing the symbol of a marijuana leaf.

The Automated Targeting System has been used to screen passengers since the mid-1990s, but the collection of data for it has been greatly expanded and automated since 2002, according to former DHS officials.

Officials yesterday defended the retention of highly personal data on travelers not involved in or linked to any violations of the law. But civil liberties advocates have alleged that the type of information preserved by the department raises alarms about the government's ability to intrude into the lives of ordinary people. The millions of travelers whose records are kept by the government are generally unaware of what their records say, and the government has not created an effective mechanism for reviewing the data and correcting any errors, activists said.

The activists alleged that the data collection effort, as carried out now, violates the Privacy Act, which bars the gathering of data related to Americans' exercise of their First Amendment rights, such as their choice of reading material or persons with whom to associate. They also expressed concern that such personal data could one day be used to impede their right to travel.

"The federal government is trying to build a surveillance society," said John Gilmore, a civil liberties activist in San Francisco whose records were requested by the Identity Project, an ad-hoc group of privacy advocates in California and Alaska. The government, he said, "may be doing it with the best or worst of intentions. . . . But the job of building a surveillance database and populating it with information about us is happening largely without our awareness and without our consent."

Gilmore's file, which he provided to The Washington Post, included a note from a Customs and Border Patrol officer that he carried the marijuana-related book "Drugs and Your Rights." "My first reaction was I kind of expected it," Gilmore said. "My second reaction was, that's illegal."

DHS officials said this week that the government is not interested in passengers' reading habits, that the program is transparent, and that it affords redress for travelers who are inappropriately stymied. "I flatly reject the premise that the department is interested in what travelers are reading," DHS spokesman Russ Knocke said. "We are completely uninterested in the latest Tom Clancy novel that the traveler may be reading."

But, Knocke said, "if there is some indication based upon the behavior or an item in the traveler's possession that leads the inspection officer to conclude there could be a possible violation of the law, it is the front-line officer's duty to further scrutinize the traveler." Once that happens, Knocke said, "it is not uncommon for the officer to document interactions with a traveler that merited additional scrutiny."

He said that he is not familiar with the file that mentions Gilmore's book about drug rights, but that generally "front-line officers have a duty to enforce all laws within our authority, for example, the counter-narcotics mission." Officers making a decision to admit someone at a port of entry have a duty to apply extra scrutiny if there is some indication of a violation of the law, he said.

The retention of information about Gilmore's book was first disclosed this week in Wired News. Details of how the ATS works were disclosed in a Federal Register notice last November. Although the screening has been in effect for more than a decade, data for the system in recent years have been collected by the government from more border points, and also provided by airlines -- under U.S. government mandates -- through direct electronic links that did not previously exist.

The DHS database generally includes "passenger name record" (PNR) information, as well as notes taken during secondary screenings of travelers. PNR data -- often provided to airlines and other companies when reservations are made -- routinely include names, addresses and credit-card information, as well as telephone and e-mail contact details, itineraries, hotel and rental car reservations, and even the type of bed requested in a hotel.

The records the Identity Project obtained confirmed that the government is receiving data directly from commercial reservation systems, such as Galileo and Sabre, but also showed that the data, in some cases, are more detailed than the information to which the airlines have access.

Ann Harrison, the communications director for a technology firm in Silicon Valley who was among those who obtained their personal files and provided them to The Post, said she was taken aback to see that her dossier contained data on her race and on a European flight that did not begin or end in the United States or connect to a U.S.-bound flight.

"It was surprising that they were gathering so much information without my knowledge on my travel activities, and it was distressing to me that this information was being gathered in violation of the law," she said.

James P. Harrison, director of the Identity Project and Ann Harrison's brother, obtained government records that contained another sister's phone number in Tokyo as an emergency contact. "So my sister's phone number ends up being in a government database," he said. "This is a lot more than just saying who you are, your date of birth."

Edward Hasbrouck, a civil liberties activist who was a travel agent for more than 15 years, said that his file contained coding that reflected his plan to fly with another individual. In fact, Hasbrouck wound up not flying with that person, but the record, which can be linked to the other passenger's name, remained in the system. "The Automated Targeting System," Hasbrouck alleged, "is the largest system of government dossiers of individual Americans' personal activities that the government has ever created."

He said that travel records are among the most potentially invasive of records because they can suggest links: They show who a traveler sat next to, where they stayed, when they left. "It's that lifetime log of everywhere you go that can be correlated with other people's movements that's most dangerous," he said. "If you sat next to someone once, that's a coincidence. If you sat next to them twice, that's a relationship."

Stewart Verdery, former first assistant secretary for policy and planning at DHS, said the data collected for ATS should be considered "an investigative tool, just the way we do with law enforcement, who take records of things for future purposes when they need to figure out where people came from, what they were carrying and who they are associated with. That type of information is extremely valuable when you're trying to thread together a plot or you're trying to clean up after an attack."

Homeland Security Secretary Michael Chertoff in August 2006 said that "if we learned anything from Sept. 11, 2001, it is that we need to be better at connecting the dots of terrorist-related information. After Sept. 11, we used credit-card and telephone records to identify those linked with the hijackers. But wouldn't it be better to identify such connections before a hijacker boards a plane?" Chertoff said that comparing PNR data with intelligence on terrorists lets the government "identify unknown threats for additional screening" and helps avoid "inconvenient screening of low-risk travelers."

Knocke, the DHS spokesman, added that the program is not used to determine "guilt by association." He said the DHS has created a program called DHS Trip to provide redress for travelers who faced screening problems at ports of entry.

But DHS Trip does not allow a traveler to challenge an agency decision in court, said David Sobel, senior counsel with the Electronic Frontier Foundation, which has sued the DHS over information concerning the policy underlying the ATS. Because the system is exempted from certain Privacy Act requirements, including the right to "contest the content of the record," a traveler has no ability to correct erroneous information, Sobel said.

Zakariya Reed, a Toledo firefighter, said in an interview that he has been detained at least seven times at the Michigan border since fall 2006. Twice, he said, he was questioned by border officials about "politically charged" opinion pieces he had published in his local newspaper. The essays were critical of U.S. policy in the Middle East, he said. Once, during a secondary interview, he said, "they had them printed out on the table in front of me."

Democrats Scrambling to Expand Eavesdropping

August 1, 2007

By JAMES RISEN

WASHINGTON, July 31 — Under pressure from President Bush, Democratic leaders in Congress are scrambling to pass legislation this week to expand the government’s electronic wiretapping powers.

Democratic leaders have expressed a new willingness to work with the White House to amend the Foreign Intelligence Surveillance Act to make it easier for the National Security Agency to eavesdrop on some purely foreign telephone calls and e-mail. Such a step now requires court approval.

It would be the first change in the law since the Bush administration’s program of wiretapping without warrants became public in December 2005.

In the past few days, Mr. Bush and Mike McConnell, director of national intelligence, have publicly called on Congress to make the change before its August recess, which could begin this weekend. Democrats appear to be worried that if they block such legislation, the White House will depict them as being weak on terrorism.

“We hope our Republican counterparts will work together with us to fix the problem, rather than try again to gain partisan political advantage at the expense of our national security,” Senator Harry Reid of Nevada, the majority leader, said in a statement Monday night.

Some civil liberties groups oppose the proposed changes, expressing concern that there might be far-reaching consequences.

“Congress needs to take its time before it implements another piece of antiterrorism legislation it will regret, like the Patriot Act,” said Anthony D. Romero, executive director of the American Civil Liberties Union. “The Bush administration clearly has abused the FISA powers it already has and clearly wants to go back to the good old days of warrantless wiretapping and domestic spying. Congress must stop this bill in its tracks.”

The administration says that digital technology and the globalization of the telecommunications industry have created a legal quandary for the intelligence community. Some purely international telephone calls are now routed through telephone switches inside the United States, which means such “transit traffic” can be subject to federal surveillance laws requiring search warrants for any government eavesdropping.

Under the program of wiretapping without warrants, which began soon after the Sept. 11 attacks, the N.S.A. eavesdropped on the transit traffic without seeking court approval. But in January, the administration placed the program back under the FISA law, which meant warrants were required for surveillance of the transit traffic.

In the Senate, talks were under way on Tuesday on proposed legislation among members of the Senate Intelligence Committee and the Senate Judiciary Committee, as well as Mr. Reid and the Senate leadership, Congressional aides said. Similar talks are under way in the House.

Mr. McConnell sent Congressional leaders a new legislative plan last Friday, one that was more limited than an earlier administration plan.

The White House has told Democratic lawmakers that it will accept a narrow bill now but will come back later for broader changes, including legal immunity for telecommunications companies involved in the wiretapping program.

Mr. McConnell met with Congressional leaders of both parties on Tuesday to try to reach a compromise, a spokesman for him said.

Representative Heather Wilson, Republican of New Mexico and a member of the House Intelligence Committee, said, “Admiral McConnell has made the case that this change is needed and that it is a serious problem. This is too serious for political games.”

One obstacle to a deal this week is a disagreement between Democrats and the White House over how to audit the wiretapping of the foreign-to-foreign calls going through switches in the United States.

The Democrats have proposed that the eavesdropping be reviewed by the secret FISA court to make sure that it has not ensnared any Americans.

The administration has proposed that the attorney general perform the review, but Democrats are unwilling to give that kind of authority to Attorney General Alberto R. Gonzales, who is under fire for what some lawmakers describe as his misleading testimony about the dismissals of federal prosecutors and the wiretapping program.

Mr. Gonzalez has insisted that a 2004 dispute between the White House and Justice Department officials that erupted in the hospital room of then Attorney General John Ashcroft related to other intelligence activities. On Sunday, The New York Times reported that the dispute centered on the data mining elements of the N.S.A.’s program, rather than on the eavesdropping, leaving open the possibility that Mr. Gonzalez had been legalistic in his testimony, but had technically not lied.

In a letter Tuesday to Senator Arlen Specter, the Pennsylvania Republican who is the ranking minority member of the Senate Judiciary Committee, Mr. McConnell seemed to confirm the Times account though the letter did not mention Mr. Gonzalez or his testimony.

The letter said that “shortly after 9/11, the president authorized the National Security Agency to undertake various intelligence activities designed to protect the United States from further terrorist attack. A number of these intelligence activities were authorized in one order.”

The letter adds that “one particular aspect of these activities, and nothing more, was publicly acknowledged by the president and described in December 2005, following an unauthorized disclosure.”

I hate to get off on a rant....

I hear liberals constantly bemoan the fact that inequality exists in society due to the fact that the wealthy in the country continue to grow wealthier at an increasing rate while the wage earning public’s real wages have been stagnant for a great while. What’s the answer? Why get government involved of course by increasing the minimum wage and such other nonsense.

They can never see that the real reason that a privileged few reap vast amounts of money while others fall behind is due to the fact that government, contrary to what liberals would have us believe, has a vested interest in making sure that corporations are protected from competition and awarded monopolies in certain sectors of the American economy. The banking industry, petroleum, defense and pharmaceuticals just to name a few are a virtual protectorate of the government. With high government positions and advisory panels being stacked with industry insiders such as the former CEO of Goldman Sachs Henry Paulson being the Secretary of the Treasury.

The unholy alliance between government and certain big business in the United States creates the conditions that allow the gigantic disparities between the haves and have nots to become further exacerbated each year. The villain du jour this Christmas season was the executives working for the banking industry who received eight figure bonuses.

What does one expect when the fed has been creating liquidity in the market place ever since the tech bubble burst in 2000? The business of finance(ing), i.e. writing and selling mortgages has been in a bull market since interests rates were brought down by the Federal reserve beginning in 2000. The majority of mortgages get bundled up and sold to the J.P. Morgans and Goldman Sachs of the world who then sell them into the international market as mortgage backed securities, or derivatives. The windfalls earned by investment houses recently are directly attributable to the rise in speculation brought on by the federal reserves low interest rates.

Now that it seems the air has begun to leak out of the housing bubble leaving millions of Americans holding mortgages greater than the actual value of their home, or in car lingo, “upside down.” Wild speculation drove the housing market up past sustainable levels, leaving middle America holding the bag.

Even if the derivatives markets crash due to the underlying assets being over valued and many mortgage lenders and banks go under, which has begun to happen already, who gets hurt? Certainly not Sachs CEO Lloyd Blankfein who received a $53 million bonus this year.

No it’s the people on the bottom who will suffer, the roofer, the electrician, the carpenter, the bricklayer. And then, because of the public outcry, politicians will seize a greater portion of the economy, but this time it will be health care and insurance companies that will receive the spoils of government policies and their CEO’s will have windfall bonuses until they fall out of favor with the public and the cycle will start all over again. No matter who’s in charge, if you aren’t connected with the privileged class or a Washington insider, you will schlep harder and for less money. Because whether its democrats or republicans in charge the government must inflate the currency to pay its debts, and the subsequent inflation is like a thief picking your pocket. Convert your money to something else and move before it’s too late!

Fascism Talking Points

Speaking in Washington, D.C., the president said there had been progress in making the country safer in the five years since the attacks of Sept. 11, 2001. He also said that, even though U.S. actions have weakened al-Qaida since the Sept. 11 attacks, Americans must take seriously the words of the enemy.

Also Tuesday, the White House released a document titled the National Strategy for Fighting Terrorism, which says that America is safer than it was five years ago, but that significant threats remain.

So here's their message to us.

"Though weve successfully quelled the risk of any future terrorist attacks, prepare to be attacked at any moment."

Its a total contradiction, like Perpetual war for perpetual peace.

I hope this new line of asinine talking points, which invokes Stalin and Hitler, creates a backlash with the public. Its obviously an act of desperation, since you know Rove has cooked this shit up.

No one should miss the irony of an administration making comparisons to Stalin and Hitler that holds its own citizens incommunicado, skirts the illegal court established to skirt the fourth amendment to eavesdrop on its own people without warrants, institutes a doctrine of torture and when congress reacts and passes a law to uphold the Geneva Convention, which we were already a signator of in the first place, the President signs a signing statement indicating that he will not abide by the law.

In a knee jerk reaction to the countrys rising tide of right wing tendencies, the Supreme Court rules that it is constitutional for private property to be confiscated for private development. Hows that for imminent domain?

The vote went right down ideological lines, opposed by conservatives and favored by liberal leaning judges. But heres the kicker, if you subscribe to the notion that in general, the wealthy tend to be conservative and lower income people tend to be democrat, then the court has just handed the right/wealthy a gift on a silver platter. I hate to quote Boortz, but he made a good point. Whos ever heard of property being seized to put up low income housing? Nobody. Municipalities want to put in condos to generate more income from property taxes. The modern day definition of blight being, those $100K houses are in the way of putting up a row of condos, they gotta go.

I dont subscribe to the notion that some nebulous, grand conspiracy exists that is allowing oil companies in collusion with the government to gouge the consumer, however, why is it a stretch to believe that politicians from the ranks of the oil business wouldnt be supportive of legislation that curries favor with the oil industry? And we know this to be the case because the energy policy of the Bush administration provides tax exemptions for oil companies. It is simply the nature of the relationships of the politicians in power at any given time. They are going to look out for their donors and supporters, all politicians do.

Isnt it pertinent to suspect that when Jimmy Carter was president he supported favorable legislation for farmers? That he pressured law makers behind the scenes to get votes for an agricultural bill that was supportive of food growers? I think that an investigation into legislation from that era would reveal this to be the case.

That being said, I find it comical when I hear people who were encouraged to buy SUVs by the administration after 911, who have the furthest commutes and who are ardent Bush supporters, complain about the cost of gasoline. And many go so far as to claim that oil companies are gouging. Whether or not oil companies are gouging is a topic for another day. The one thing that is irrefutable is that oil companies are making record profits. So shouldnt people who profess to be conservative and support Bush be ecstatic that big oil is reaping record profits? You are capitalists arent you? Dont you invest in natural resource stocks?

Clearly they either have no fundamental core values or they are totally misguided and ill informed and dont really have any idea what it means to be conservative, in the historical sense. I suspect it is a little of both and what its devolved into now is team sports cheerleading. We root for the team in red, no matter how difficult it makes our lives.

A rise in gas prices in and of itself is bad enough. Couple that with the fact that many families have recently purchased homes. A large majority of these new buyers have been lured into buying more house than they can actually afford through creative financing. Many new home buyers have forgone the traditional mortgage that locks in a rate for thirty years in favor of interest only loans and adjustable rate mortgages. People who have left themselves no room for safety are now being squeezed by higher gas prices and rising interest rates.

Greenspans unprecedented interest rate slashing has fueled a bubble in the housing market. The housing bubble has given rise to suspect lending practices. People who wouldnt have been able to attain a mortgage five years ago are now handing out advice on real-estate as though they were tycoons.

The reality is that they have been bamboozled into thinking their house is a piggy bank. One day soon they are going to realize that extracting equity from their houses isnt increasing their wealth, merely their debt.

Rising interest rates, rising fuel costs, rising heating bills, increased minimum monthly credit card payments, and a zero savings rates are all merging at a time when the new bankruptcy law, essentially written by the banking industry, will make it much more difficult for Americans to declare bankruptcy.