Saturday, July 17, 2010

Gulf Oil Update: Day 89

Quick answers elusive in integrity testing of blown-out oil well in Gulf of Mexico

Published: Friday, July 16, 2010, 8:34 PM Updated: Friday, July 16, 2010, 9:13 PM
Jaquetta White,
The Times-Picayune

The first day of an "integrity test" on the blown-out well that for months had been shooting oil into the Gulf of Mexico ended with uncertainty, the federal government's point person for spill response said Friday.

BP PLC, via The Associated PressPressure lower than 6,000 pounds per square inch would signal that the well is damaged and that oil is escaping through fissures somewhere. This pressure gauge was photographed July 13.

Retired Coast Guard Admiral and National Incident Commander Thad Allen said the well appears to be in good condition, but that scientists have not yet been able to rule out the possibility of ruptures in the well below the sea floor.

Efforts were under way Friday to increase monitoring at the site to determine whether there are leaks.

"This is generally good news," Allen said. "I think we're at a point where there's enough uncertainty regarding what the pressure means we need to do due diligence going forward to be in a situation where we don't do any harm."

The integrity test involves measuring the pressure inside the Macondo well, which had until Thursday been gushing oil since the Deepwater Horizon rig exploded and sank in the Gulf of Mexico April 20, killing 11 people. BP operated the rig, which it leased from Transocean. The well was closed in Thursday afternoon so that the test could commence.

High pressure, in the range of 8,000 to 9,000 pounds per square inch, would indicate that the well was completely intact, Allen and BP officials have said. Pressure lower than 6,000 pounds per square inch would signal that the well is damaged and that oil is escaping through fissures somewhere.

The results are important because well integrity, or a high pressure reading, would mean that the well can remain shut and oil flow into the Gulf continually halted until the Macondo well is pumped with cement and sealed next month. Low pressure, however, would mean that the well would need to be reopened, allowing oil to spew unfettered into the Gulf until a system of oil collection vessels began pumping again.

Pressure inside the blown-out Macondo well was at 6,720 pounds per square inch on Friday, a grey area that provided two possible answers about the well's condition, Allen said.

Patrick Semansky, The Associated Press These vessels assisting in the capping of the Deepwater Horizon wellhead were photographed Friday in the Gulf of Mexico.

It's possible that there are holes in the well that are leaking oil, Allen said. But it is also possible that the reservoir has been "depleted" in the near three months since the spill began and is no longer capable of producing high rates of pressure.

"There are plausible supporting arguments for both of those," Allen said. "There's a very good chance that depletion could have done it. We're looking for indications that there could be leakage."

So far, there has been no indication of leaking oil, Allen said.

Two ROVs are monitoring the sea floor around the well looking for burps of methane gas or other anomalies. Four of the undersea robots are conducting sonar scanning. None of the vehicles has detected oil outside the well.

Other tests, one that measures the temperature near the top of the well and another that uses acoustic sensors, also did not find oil.

Preliminary results from a seismic test done Friday also provided no indication of oil below the sea floor. BP senior vice president Kent Wells called the test a "key piece of information."

"If we didn't have integrity and we were leaking oil and gas into some lower formation, this should pick that up," Wells said. "We're continuing with it, and at this point there is no evidence that the well does not have integrity, and that is a good thing."

More testing equipment, including a National Oceanic and Atmospheric Administration vessel, were being brought to the site Friday evening to conduct more tests.

Wells said the results so far appear to match with models BP engineers and government scientists have created for what an intact well with a depleted reservoir would produce.

"We've done modeling under numerous different scenarios. The pressure buildup we're seeing is consistent with the modeling we did around reservoir depletion and full integrity," Wells said. "The longer we monitor these trends the longer we'll convince ourselves that that is the case."

Wells said pressure within the Macondo well would not continue rising if it were breached. Instead it would flat-line, and possibly fall.

A Texas geologist who has been following the gusher said he believed well depletion is the likely cause of the lower-than-hoped-for pressure reading, not a leaking well.

"I don't think it's a cause for immediate concern, because it could reflect a natural loss of oil in the reservoir," said Don Van Nieuwenhuise, director of the Professional Geoscience Programs at the University of Houston. "It's amazing that it has held its strength for as long as it has."

Van Nieuwenhuise said the lack of any sign of oil so far is a good sign.

"When they first said this, I said if they can get to 7,000 (pounds per square inch) that would be good," Van Nieuwenhuise said. "The 8,000 to 9,000 estimate reflects its initial pressure, but since it's been bleeding so much, I'm not surprised it's at 7,000."

BP engineers and a team of government and academic scientists are monitoring the pressure readings and meeting every six hours to determine how to proceed, Allen said. If oil is detected outside the well, Allen said crews would immediately try to relieve the pressure inside the well by releasing oil into the sea again. Oil would flow unfettered until two oil collection vessels, the Helix Producer and the Q4000, could be restarted. That process could take "several hours," Allen said. Together, the vessels have the capacity to collect 35,000 barrels of oil. A BP plan, approved by the Coast Guard last month, calls for a total of four vessels with the capacity to collect up to 80,000 barrels of oil to be at work by the end of this month.

Even if it is determined that the well can remain shut in, that would only be a short-term solution for the gusher. The long-term solution for stopping the leak still is a relief well that would connect with the runaway well at about 18,000 feet below the water's surface and pump it with mud and cement.

The relief well has been drilled to about 17,840 feet. Wells said crews would drill for another 30 feet before intercepting the well at the end of July. From that point, it could take from days to a few weeks to kill the well.

A backup relief well has been drilled to 15,874 feet, but drilling on that well has been suspended so as not to interfere with the primary well.

Friday, July 16, 2010

Imminent Collapse of American Empire? Niall Ferguson Thinks So

Historian warns of sudden collapse of American ‘empire’

By Brent Gardner-Smith

July 14, 2010 "Aspen Daily News" -- Harvard professor and prolific author Niall Ferguson opened the 2010 Aspen Ideas Festival Monday with a stark warning about the increasing prospect of the American “empire” suddenly collapsing due to the country’s rising debt level.

“I think this is a problem that is going to go live really soon,” Ferguson said. “In that sense, I mean within the next two years. Because the whole thing, fiscally and other ways, is very near the edge of chaos. And we’ve seen already in Greece what happens when the bond market loses faith in your fiscal policy.”

Ferguson said empires — such as the former Soviet Union and the Roman empire — can collapse quite quickly and the tipping point is often when the cost of servicing an empire’s debt is larger than the cost of its defense budget.

“That has not been the case I think at any point in U.S. history,” Ferguson said. “It will be the case in the next five years.”

Ferguson was conscious of opening the Ideas Festival on such a stark note.

“Walter Isaacson, the leader of this great institution said, ‘Don’t be too dark!,’” Ferguson said.

The affable British scholar tried to keep it light. He used a stage whisper to tell the Aspen Institute audience, “I know you’re not comfortable with the word ‘empire,’ especially just after the Fourth of July, but you are the Redcoats now.”

He said the U.S. is now deeply in the red as a country because of a combination of the Great Recession, the resulting federal stimulus and financial bailout programs, two wars, the Bush tax cuts, and a growth in social entitlement programs.

And economic debt can lead to a sudden loss of military power and global respect, Ferguson said.

“By combating our crisis of private debt with an extraordinary expansion of public debt, we inevitably are going to reduce the resources available for national security in the years ahead,” Ferguson said. “Because as a debt grows, so the interest payments you have to make on it grow, even if interest rates stay low. And on current projections, the federal debt is going to be absorbing around 20 percent — a fifth of all the taxes you pay — within just a few years.

“The item of discretionary federal expenditure most likely to be squeezed is of course defense. And there are lots of historic precedents for that,” said Ferguson, who is the author of “Empire: The Rise and Demise of the British World Order and the Lessons for Global Power.”

Ferguson said the financial crisis that started in 2007 “has accelerated a fundamental shift in the balance of power,” with the U.S. shedding power and China absorbing it.

“I’ve just come back from China — a two-week trip there — and the thing I heard most often was, ‘You can’t lecture us about the superiority of your system anymore. We don’t need to learn anything from you about financial institutions and forget about democracy. We see where it has got you.’”

David Gergen of CNN, who moderated the discussion, which also included billionaire Mortimer Zuckerman, asked Ferguson whether it made a difference if the U.S. declined as a world power.

“Having grown up in a declining empire, I do not recommend it,” Ferguson said. “It’s not a lot of fun, actually, decline. To be more serious, a world in which the United States is no longer predominate is not likely to be a better world, actually.”

In what he called his “light moment,” Ferguson said, “I think there is a way out for the United States. I don’t think its over. But it all hinges on whether you can re-energize the real mainsprings of American power. And those two things are technological innovation and entrepreneurship.

“Those are the things that made the United States the greatest economy in the world and the critical question is, ‘Are we going to get it right?’ Can we revive those things in such a way that in the end we grow our way out of this hole the way the United States grew its way out of the 1970s and of course out of the 1930s?”

Editor's NOTE:

It will be impossible to "grow our way out of it" unless we re-establish a credible manufacturing base. As a result of unfair trade policies, inappropropriate currency valuations by foreign countries--especially China and the absence of protective tariffs, industrial production has been moved "off-shore" and labor "out-sourced." Until that is addressed, the situation will not change. Multi-national corporations have a vested interest in making sure it does not change and they have an almost unlimited supply of money with which to influence politicians.

In the absence of a mass awakening of the American population and a populist non-violent uprising, nothing will change.

--Dr. J. P. Hubert

Financial Regulation Bill Passes Senate: A Boon to Wall Street

The Wall Street Reform Bill: How Much Did We Lose Getting to 60?

Sen. Ted Kaufman
Huffington Post
Posted: July 15, 2010 01:22 PM

After months of careful consideration, landmark financial reform legislation moves towards final passage. While this bill is a vast improvement over the existing regulatory structure, I believe it should go further with respect to erecting statutory walls that address the fundamental problem of "too big to fail." I will support the conference report, though I do so with significant reservations about a missed opportunity to enact needed structural reforms that would better prevent another financial crisis.

Ultimately, given the make-up of the Senate and the requirement of 60 votes, this was the best bill that could pass. For those who wish the bill was stronger, let there be no confusion about where the blame lies. It is because almost every Senator on the other side of the aisle did everything they could to stall, delay and oppose Wall Street reform.

To be sure, the bill that has come out of conference includes some extremely important reforms. It establishes an independent Consumer Financial Protection Bureau (CFPB) with strong and autonomous rulemaking authority and the ability to enforce those rules for large banks and nonbanking entities like payday lenders and mortgage finance companies. In addition, it requires electronic trading and centralized clearing of standardized over-the-counter derivatives contracts as well as more robust collateral and margin requirements. The bill's inclusion of the Kanjorski provision will give regulators the explicit authority to break up megabanks that pose a "grave threat" to financial stability. And I was pleased that the bill includes a provision I helped develop to give regulators enhanced tools and powers to pursue financial fraud.

Through the Collins provision, the bill also establishes minimum leverage and risk-based capital requirements for bank holding companies and systemically risky non-bank institutions that are at least as stringent as those that apply to insured depository institutions. In light of the failures of past international capital accords, this requirement will set a much-needed floor on how low capital can drop in the upcoming Basel III negotiations on capital requirements. It will also ensure that the capital base of megabanks is not adulterated with debt that masquerades as equity capital.

That being said, unfortunately, I believe the bill suffers from two major problems. First, the bill delegates too much authority to the regulators. I've been around the Senate for 37 years. As I said on the Senate floor on February 4th of this year and in several speeches since then, I know that many times laws are not written with hard and clear lines. Laws are a product of legislative compromise, which often means they are vague and ambiguous. We often justify our vagueness by saying the regulators to whom we grant statutory authority are in a better position than we are to write the rules - and then to apply those regulatory rules on a case-by-case basis. But, as I have said, this was not one of those times. This was a time for Congress to draw hard lines that get directly at the structural problems that afflict Wall Street and our largest banks.

Despite repeated urging from me and others to pass laws that would help regulators to succeed, Congress largely has decided instead to punt decisions to the regulators, saddling them with a mountain of rulemakings and studies. The law firm Davis Polk has estimated that the SEC alone must undertake close to 100 rulemakings and more than a dozen studies.

Indeed, Congress has so choked the agencies with rulemakings and studies, the totality of the burden threatens to undermine the very ability of the agencies to accomplish their ongoing everyday mission. I for one urge the agencies to triage carefully these required rulemakings and studies, establish a hierarchy of priorities, and ensure that the agencies do not shift all resources to new rules meant to address old problems to such a degree that they fail to stay on top of current and growing problems. I will have more to say on this subject in a future speech.

Second, the legislation does not go far enough in addressing the fundamental problem of "too big to fail."
Instead of erecting enduring statutory walls as we did in the 1930s, the bill invests the same regulators who failed to prevent the financial crisis with additional discretion and relies upon a resolution regime to successfully unwind complex and interconnected mega-banks engaged across the globe. I am also disappointed that key reform provisions like the Volcker Rule and the Lincoln swaps dealers spin-off provision were scaled back in conference.

The bill mainly places its faith and trust in regulatory discretion and on international agreements on bank capital requirements and supervision. After decades of deregulation and industry self-regulation, it is incumbent upon the regulators now to reassert themselves and establish rulemaking and supervisory frameworks that not only correct their glaring mistakes of the past, but also anticipate future problems, particularly risks to financial stability. Unfortunately, the early indications we are seeing out of the G-20 and so-called Basel III discussions are not encouraging, as critical reforms are already being watered down and pushed back in part because some foreign regulators carelessly refuse to heed the risks posed by their megabanks.

The legislation also puts in place a resolution authority to deal with these institutions when they inevitably get into trouble. While such authority is absolutely necessary, it is not sufficient. That is because no matter how well Congress crafts a resolution mechanism, there can never be an orderly wind-down of a $2-trillion financial institution that has hundreds of billions of dollars of off-balance-sheet assets, relies heavily on wholesale funding, and has more than a toehold in over 100 countries. Of course, since financial crises are macro events that will undoubtedly affect multiple megabanks simultaneously, resolution of these institutions will be enormously expensive. And until there is international agreement on resolution authority, it is probably unworkable.

Given the history of financial regulatory failures and the enormous burden of rulemakings and studies with which the regulators are being tasked, Congress has a critical oversight responsibility. Congress first must ensure that the regulators have enough staff and resources at their disposal to follow through on their serious obligations. Just as important, Congress must monitor the regulatory phase of this bill's implementation closely to ensure that the regulators don't return to "business as usual" when the experience of the most recent financial crisis fades into memory.

Volcker Rule

For example, in addition to granting great discretion to regulators on how they interpret the ban on proprietary trading at banks, the scaled-back Volcker Rule contains a large loophole that allows megabanks to continue to own, control and manage hedge funds and private equity funds under certain conditions. Most notably, it includes a de minimis exception that permits banks to invest up to three percent of Tier 1 capital in hedge funds and private equity funds so long as their investments don't constitute more than three percent ownership in the individual funds.

The impact of a supposedly small three percent de minimis exception for investments in hedge funds and private equity firms has the potential to be massive. For example, a $2 trillion bank that has $100 billion in Tier 1 capital would be able to invest $3 billion into hedge funds. Since that $3 billion could only constitute three percent ownership, it would need to be invested alongside at least $97 billion of funds from outside investors. The bank would therefore be able to manage $100 billion in hedge fund assets, a massive amount equal to the current size of the largest hedge funds in the world combined. What's more, that $100 billion in assets can be leveraged several times over through the use of borrowed funds and derivatives into overall exposures that could exceed a trillion dollars. And given the ambiguity of the legislative language, unless clarified by a rulemaking, some commentators have indicated that megabanks could potentially provide prime brokerage loans to hedge funds they partially own and run.

Fortunately, the final bill does place costs on banks' de minimis investments in hedge funds and private equity funds. Specifically, the legislation requires a 100% capital charge on these proprietary investments, making them expensive for banks to hold. While this may be a helpful deterrent, I am concerned that it will not be enough of one, particularly when considering how lucrative and risky an activity it is for banks to run hedge funds and private equity funds.

The overarching problem is that banks will continue to be able to offer and run - never mind, partially own - risky investment funds. Even though the scaled-back Volcker Rule includes a "no bailout" provision, I have concerns about the credibility of that edict. Under any circumstance, the failure of a massive hedge fund run by a megabank would pose serious reputational and financial risks to that institution.

Just look at what happened when the structured investment vehicles (or SIVs) of Citigroup and other megabanks began to falter. Because of the reputational consequences of liquidating these funds and allowing them to default on their funding obligations, they were bailed out by the megabanks that spawned them even though the SIVs themselves were generally separate, off-balance-sheet entities with no official backing from the banks.

Finally, the strength of the core part of the Volcker Rule - the ban on proprietary trading - will depend greatly on the interpretation of the regulators. They will ultimately be the arbiter of whether broad statutory exceptions for "market making" or "risk-mitigating hedging" or "purchases" or "sales" of securities on "behalf of customers" are allowed to swallow the putative prohibition. I therefore urge the regulators to construe narrowly those activities that constitute exceptions to proprietary trading to ensure that the Volcker Rule has some teeth in it.

Swaps Dealer Spin-Off

Senator Lincoln's original swap dealer spin-off provision would have prohibited banks with swap dealers from receiving emergency assistance from the Federal Reserve or FDIC. By essentially forcing megabanks to spin off their swap dealers into an affiliate or separate company, this section would have helped restore the wall between the government-guaranteed part of the financial system and those financial entities that remain free to take on greater risk. It would also have forced derivatives dealers to be adequately capitalized.

While the final bill includes the Lincoln provision, it limits its application to derivatives that reference assets that are permissible for banks to hold and invest in under the National Bank Act. Since that exception covers interest rate, foreign exchange and other swaps, it ultimately exempts close to 90% of the over-the-counter derivatives market. Regulators must therefore reduce counterparty exposures by requiring the vast majority of derivatives contracts to be cleared and calibrate carefully the amount of capital that bank derivative dealers must maintain. Only then can we be sure we never again face a meltdown caused by excessively leveraged derivatives exposure that no regulator helps to keep in check.


The financial reform bill places enormous responsibilities and discretion into the hands of the regulators. Its ultimate success or failure will depend on the actions and follow-through of these regulators for many years to come. It is estimated that various federal agencies will be charged with writing over 200 rulemakings and dozens of studies. Many of the same regulators who failed in the run-up to the last crisis will once again be given the solemn task of safeguarding our financial stability. Like many others, I am concerned whether they have the capacity and wherewithal to succeed in this endeavor.

I repeat again, Congress has an important role to play in overseeing the enormous regulatory process that will ensue following the bill's enactment. The American people, for that matter, must stay focused on these issues, if just to help ensure that Congress indeed will fulfill its oversight duty and its duty to intervene if the regulators fail. Likewise, although I will be leaving the Senate in November, I will be watching closely to see how the regulators follow through on the enormous responsibilities they are being handed.

Let us not forget why reform is so necessary and important. After years of Wall Street malfeasance and the systematic dismantling of our regulatory structure, our financial system went into cardiac arrest and our economy nearly fell into the abyss. Wall Street, which had grown out of control on leverage and financial gimmickry, blew up. More than 8 million jobs were wiped out; millions more have lost their homes. We spent trillions of dollars in monetary easing and emergency measures to avert the wholesale failure of many of our megabanks. Not surprisingly, we continue to feel the aftershocks of the worst financial crisis since the Great Depression. The banks are not lending. Fed Chairman Bernanke just days ago urged them to do more for small businesses. Companies and consumers alike remain shaken in their confidence. And despite dramatic stimulus measures, the economic recovery has been slow and tentative.

Many of the opponents of Wall Street reform would like to make the dubious claim that the recovery is being held back by uncertainty about future regulations and taxes. In reality, it is being held back by the financial shock and the fact that we are still in a period of financial instability and undergoing an excruciating process of deleveraging. Even now it is unclear whether a European banking crisis based on their holdings of sovereign debt will continue to impede that recovery.

It is therefore imperative that we build a financial system on a firmer foundation. The American economy cannot succeed unless we restore and maintain financial stability. We simply cannot afford another financial crisis or continued financial instability if the American economy is to succeed in the coming decades. Getting financial regulation right and maintaining it for years to come should be one of this nation's highest priorities because the price of failure is far too high.


Dylan Ratigan Says "Watered-Down" Financial Reform Bill Won't Prevent Another Finacial Collapse--- Please watch video for Details

Visit for breaking news, world news, and news about the economy

Dylan Ratigan:

--40% of financial contributions to Congress come from Financial Industry.

--After Senate Bill passed committee, big bank stocks rebounded sharply.

--According to Bloomberg poll, 4 of 5 Americans don't trust Wall Street/Fin-Reg.

--Over $300 million spent by Financial Industry to get the bill they wanted.

--Fin-Reg bill did not reign-in excessive leveraging by investment banks.

--Bill does not prevent future tax-payer bailouts of too big to fail banks.


How Financial Brokers Became Bookies: The Insidious Transformation of Markets Into Casinos

By Ellen Brown

Global Research,
July 13, 2010

"You all are the house, you're the bookie. [Your clients] are booking their bets with you. I don't know why we need to dress it up. It's a bet." Senator Claire McCaskill, Senate Subcommittee on Investigations, investigating Goldman Sachs (Washington Post, April 27, 2010)

Ever since December 2008, the Federal Reserve has held short-term interest rates near zero. This was not only to try to stimulate the housing and credit markets but also to allow the federal government to increase its debt levels without increasing the interest tab picked up by the taxpayers. The total public U.S. debt increased by nearly 50% from 2006 to the end of 2009 (from about $8.5 trillion to $12.3 trillion), but the interest bill on the debt actually dropped (from $406 billion to $383 billion), because of this reduction in interest rates.

One of the dire unintended consequences of that maneuver, however, was that municipal governments across the country have been saddled with very costly bad derivatives bets. They were persuaded by their Wall Street advisers to buy credit default swaps to protect their loans against interest rates shooting up. Instead, rates proceeded to drop through the floor, a wholly unforeseeable and unnatural market condition caused by rate manipulations by the Fed. Instead of the banks bearing the losses in return for premiums paid by municipal governments, the governments have had to pay massive sums to the banks – to the point of bankrupting at least one city (Montgomery, Alabama).

Another unintended consequence of the plunge in interest rates has been that “savers” have been forced to become “speculators” or gamblers. When interest rates on safe corporate bonds were around 8%, a couple could aim for saving half a million dollars in their working careers and count on reaping $40,000 yearly in investment income, a sum that, along with social security, could make for a comfortable retirement. But very low interest rates on bonds have forced these once-prudent savers into the riskier and less predictable stock market, and the collapse of the stock market has forced them into even more speculative ventures in the form of derivatives, a glorified form of gambling. Pension funds, which have binding pension contracts entered into when interest was at much higher levels, are so strapped for returns that they actually seek out the riskier investments, which have higher returns. That means they can and do regularly get fleeced when the risk occurs.

Derivatives are basically just bets. Like at a racetrack, you don’t need to own the thing you’re betting on in order to play. Derivative casinos have opened up on virtually anything that can go up or down or have a variable future outcome. You can bet on the price of tea in China, the success or failure of a movie, whether a country will default on its debt, or whether a particular piece of legislation will pass. The global market in derivative trades is now well over a quadrillion dollars – that’s a thousand trillion – and it is eating up resources that were at one time invested in productive enterprises. Why risk lending money to a corporation or buying its stock, when you can reap a better return betting on whether the stock will rise or fall?

The shift from investing to gambling means that not only are investors making very little of their money available to companies to produce goods and services, but the parties on one side of every speculative trade now have an interest in seeing the object of the bet fail, whether a company, a movie, a politician, or a country. Worse, high-speed program traders can actually manipulate the market so that the thing bet on is more likely to fail.

High frequency traders -- a field led by Goldman Sachs -- use computer algorithms to automatically bet huge sums of money on minor shifts in price. These bets send signals to the market which can themselves cause the price of assets to shoot up or tumble down. By placing high-volume trades, the largest speculative traders can thus intentionally “fix” prices in any direction they want.

“Prediction” Markets

Casinos for betting on what something will do in the future have been promoted as reliable “prediction” markets, and they can cover a broad range of issues. MIT’s Technology Review launched a futures market for technological innovations, in order to bet on upcoming developments. The NewsFutures and TradeSports Exchanges enable people to wager on matters such as whether Tiger Woods will take another lover, or whether Bin Laden will be found in Afghanistan.

A 2008 conference of sports leaders in Auckland, New Zealand, featured Mark Davies, head of a sport betting exchange called Betfair. Davies observed that these betting exchanges, while clearly gambling forums, are little different from the trading done by financial firms such as JPMorgan. He said:
“I used to trade bonds at JPMorgan, and I can tell you that what our customers do is exactly the same as what I used to do in my previous life, with the single exception that where I had to pore over balance sheets and income statements, they pore over form and team-sheets.”

The online news outlet Slate monitors various prediction markets to provide readers with up-to-date information on the potential outcomes of political races. Two of the markets covered are the Iowa Electronic Markets and Intrade. Slate claims that these political casinos are consistently better at forecasting winners than pre-election polls. Participants bet real money 24 hours a day on the outcomes of a range of issues, including political races. Newsfutures and Casualobserver are similar, smaller exchanges.

Besides shifting the emphasis to gambling (“Why Vote When You Can Bet?” says Slate’s “Guide to All Political Markets”), prediction markets can be manipulated so that they actually affect outcomes. This became evident, for example, in 2008, when the John McCain campaign used the InTrade market to shift perception of his chances of winning. A supporter was able to single-handedly manipulate the price of McCain’s contract, causing it to move up in the market and prompting some mainstream media to report it as evidence that McCain was gaining in popularity.

Betting on Terrorism

The destructive potential of betting on political outcomes became particularly apparent in a notorious prediction market sponsored by the Pentagon, called the “policy analysis market” (PAM) or “terror futures market.” PAM was an attempt to use the predictive power of markets to forecast political events tied to the Middle East, including terrorist attacks. Trading in American Airlines shares in the days before the September 11th attack on the World Trade Center was one of the bases of the Pentagon’s justification for the program. According to the New York Times, the PAM would have allowed trading of futures on political developments including terrorist attacks, coups d’état, and assassinations.

The exchange was shut down a day after it launched, after commentators pointed out that the system made it ridiculously easy to make money with terror attacks.
At a July 28, 2003 press conference, Senators Byron L. Dorgan (D-ND) and Ron Wyden (D-OR) spoke out against the exchange. Wyden stated, “The idea of a federal betting parlor on atrocities and terrorism is ridiculous and it's grotesque,” while Dorgan called it “useless, offensive and unbelievably stupid”.
“This appears to encourage terrorists to participate, either to profit from their terrorist activities or to bet against them in order to mislead U.S. intelligence authorities,” they said in a letter to Admiral John Poindexter, the director of the Terrorism Information Awareness Office, which developed the idea. A week after the exchange closed, Poindexter offered his resignation.

Carbon Credit Trading

A massive new derivatives market that could be as destructive as the derivatives that contributed to the current economic meltdown is the trading platform called Carbon Credit Trading, which is on its way to dwarfing world oil trade. The program would allow trading not only in “carbon allowances” (permitting companies to emit greenhouse gases) and “carbon offsets” (allowing companies to emit beyond their allowance if they invest in emission-reducing projects elsewhere), but carbon derivatives -- such as futures contracts to deliver a certain number of allowances at an agreed price and time. Eoin O’Carroll cautioned in the Christian Science Monitor:

“Many critics are pointing out that this new market for carbon derivatives could, without effective oversight, usher in another Wall Street free-for-all just like the one that precipitated the implosion of the global economy. . . . Just as the inability of homeowners to make good on their subprime mortgages ended up pulling the rug out from under the credit market, carbon offsets that are based on shaky greenhouse-gas mitigation projects could cause the carbon market to tank, with implications for the broader economy.”

Robert Shapiro, former undersecretary of commerce in the Clinton administration and a cofounder of the U.S. Climate Task Force, warns, “We are on the verge of creating a new trillion-dollar market in financial assets that will be securitized, derivatized, and speculated by Wall Street like the mortgage-backed securities market.”

The proposed form of cap and trade has not yet been passed in the U.S., but a new market in which traders can speculate on the future of allowances and offsets has already been launched. The largest players in the carbon credit trading market include firms such as Morgan Stanley, Barclays Capital, Fortis, Deutsche Bank, Rabobank, BNP Paribas, Sumitomo, Kommunalkredit, Credit Suisse, Merrill Lynch and Cantor Fitzgerald. Last year, the financial services industry had 130 lobbyists working on climate issues, compared to almost none in 2003. The lobbyists represented companies such as Goldman Sachs and JPMorgan Chase.

Billionaire financier George Soros says cap-and-trade will be easy for speculators to rig. “The system can be gamed,” he said last July at a London School of Economics seminar. “That’s why financial types like me like it — because there are financial opportunities.”

Time to Board Up the Casinos and Rethink Our Social Safety Net?

At one time, gambling was called a sin and was illegal. Derivative trading was originally considered an illegal form of gambling. Perhaps it is time to reinstate the gambling laws, board up the derivatives casinos, and return the stock market to what it was designed to be: a means of funneling the capital of investors into productive businesses.

Short of banning derivatives altogether, the derivatives business could be slowed up considerably by imposing a Tobin tax, a small tax on every financial trade. “Financial products” are virtually the only products left on the planet that are not currently subject to a sales tax.

A larger issue is how to ensure adequate retirement income for the population without forcing people into gambling with their life savings to supplement their meager social security checks. It may be time to rethink not only our banking and financial structure but the entire social umbrella that our Founding Fathers called the Common Wealth.

Deficit hawks cry that we cannot afford more spending. But according to Richard Cook, who formerly served at the U.S. Treasury Department, the government could print and spend several trillion new dollars into the money supply without causing price inflation. Writing in Global Research in April 2007, he noted that the U.S. Gross Domestic Product in 2006 came to $12.98 trillion, while the total national income came to only $10.23 trillion; and at least 10 percent of that income was reinvested rather than spent on goods and services.

Total available purchasing power was thus only about $9.21 trillion, or $3.77 trillion less than the collective price of goods and services sold. Where did consumers get the extra $3.77 trillion? They had to borrow it, and they borrowed it from banks that created it with accounting entries on their books. If the government had replaced this bank-created money with debt-free government-created money, the total money supply would have remained unchanged. That means a whopping $3.77 trillion in new government-issued money could have been fed into the economy in 2006 without increasing the inflation rate.

In a 1924 book called Social Credit, C. H. Douglas suggested that government-issued money could be used to pay a guaranteed basic income for all. Richard Cook proposes a national dividend of $10,000 per adult and $5,000 per dependent child annually. In 2007, that would have worked out to about $2.6 trillion to provide a basic security blanket for everyone.

The Federal Reserve has funneled $4.6 trillion to Wall Street in bailout money, most of it generated via “quantitative easing” (in effect, printing money); yet hyperinflation has not resulted. To the contrary, what we have today is dangerous deflation. The M3 money supply shrank in the last year by 5.5 percent, and the rate at which it is shrinking is accelerating. The explanation for this anomaly is that the Fed’s $4.6 trillion added by quantitative easing fell far short of the estimated $10 trillion that disappeared from the money supply when the “shadow lenders” exited the market, after discovering that the “triple-A” mortgage-backed securities they had been purchasing from Wall Street were actually very risky investments.

Whether or not a national dividend is the best way to reflate the money supply, the important point here is that the government might be able to issue and spend several trillion dollars into the economy without creating hyperinflation. The money would merely make up for the shortfall between GDP and purchasing power, replacing the debt-money created as loans by private banks. As long as resources are sitting idle and people are unemployed -- and as long as the new money is used to put these resources together productively to create new goods and services -- price inflation will not result. Creating the national money supply is the sovereign right of governments, not of banks; and if the government wants to remain sovereign, it needs to exercise that right.

Gulf Oil Update: Day 88

Oil Spill Capped for a Second Day, Offering Some Hope

The New York Times
July 16, 2010

NEW ORLEANS — The hemorrhaging well that has spilled millions of gallons of oil into the Gulf of Mexico remained capped for a second day Friday, providing some hope of a long-term solution to the environmental disaster.

BP, via Associated Press
A video image Thursday afternoon showed no oil flowing.

Live video from the seabed Friday morning showed that all was quiet around the top of the well, suggesting the test assessing the integrity of the well was continuing. Earlier in the week, Kent Wells, a senior vice president for BP, had said that the longer the test continued the better, because it would indicate that the pressure inside the well was holding.

The oil stopped flowing around 2:25 p.m. Thursday when the last of several valves was closed on a cap at the top of the well, Mr. Wells said.

The announcement that the oil had stopped flowing into the Gulf came after a series of failed attempts to cap or contain the runaway well that tested the nation’s patience. Mr. Wells emphasized that pressure tests were being conducted to determine the status of the well, which is now sealed like a soda bottle. BP and the government could decide to allow the oil to flow again and try to collect all of it; they could allow the oil to flow and, if tests show the well can withstand the pressure from the cap, close the well during hurricanes; or they could leave the well closed permanently.

The last option seems unlikely, but whatever the decision, the cap is an interim measure until a relief well can plug the leak for good.

“I am very pleased that there’s no oil going into the Gulf of Mexico,” Mr. Wells said, “but we just started the test and I don’t want to create a false sense of excitement.”

That was not much of a risk along the Gulf Coast, where countless livelihoods have been put in jeopardy and fishermen frequently and gloomily remark that Prince William Sound has never been the same since the Exxon Valdez disaster.

“It’s like putting a Band-Aid on a dead man in my opinion,” said Jeff Ussury, 48, who considers his days as a crabber over for good. He doubted the news of the capping was even true.

“I started out kind of believing in them,” he said, “but I don’t believe in them at all anymore.”

Whether it was just the eye of the hurricane or the morning after the storm, the moment was a time to take stock of just how much damage had already been done since the deadly explosion on the Deepwater Horizon oil rig on the night of April 20.

For weeks, the BP spill camera — which along with terms like “top kill,” “containment dome” and “junk shot” made up a growing list of phrases that many people wish they had never learned — had shown a horrible chocolate plume of oil pouring upward from the broken blowout preventer, a symbol of government and corporate impotence. The plume has been a constant presence in the corner of TV screens, mocking reassurances from officials on the news programs who describe the latest attempt to stop the gushing.

But the view on Thursday afternoon was eerily tranquil, just the slate blue of the deep interspersed with small white particles floating across the screen. Though the exact amount of the oil that has poured out of the well may never be known, it was suddenly and for the first time a fixed amount. The disaster was, for a little while at least, finite.

At the White House, President Obama called the development a “positive sign,” though he cautioned that the operation was still in the testing phase.

In statements, Louisiana officials, including Gov. Bobby Jindal, said they were “cautiously optimistic.”

Officials at all levels played down expectations. Thad W. Allen, the retired Coast Guard admiral who is coordinating the spill response, told reporters on Thursday that the cap was primarily meant to be used to shut the well during extreme weather.

“The intention of the capping stack was never to close in the well per se,” he said. “It creates the opportunity if we have the right pressure readings to shut in the well. It allows us to abandon the site if there is a hurricane.”

He said that after the test, the cap would be used to capture oil through surface ships — two that are on the site now and two more that will be in operation in a week or two. With all four collection ships in place, BP could capture all of the oil, estimated at 35,000 to 60,000 barrels per day.

Mr. Wells cautioned that the test could take 48 hours or more, as scientists study pressure readings from the cap. If pressure rises and holds, that would be a sign that the casing — the 13,000-foot string of pipe that lines the well bore — is undamaged.

But if the pressure stays low or falls, that would suggest the well is damaged. In that case, Mr. Wells said, the test probably would be stopped well ahead of schedule, valves would be reopened and collection systems that had been shut down for the test would start again.

“Depending on what the test shows us, we may need to open this well back up,” he said.

The test had been delayed by about two days, first when the government ordered a last-minute review of the procedure out of concern that, by allowing the buildup of pressure, the test itself might harm the well. A particular fear, experts said, was that it might cause a shallow blowout — damaging the well lining close to the seabed, which could allow oil and gas to escape into the gulf outside the well, making the spill worse.

By Wednesday afternoon, those concerns had been allayed and preparations were made to begin the test. But late that night, a hydraulic leak was discovered in part of the choke valve equipment, and the test was scrubbed.

Thursday afternoon the test began again, first with the shutting down of pipes that funneled oil and gas to two surface ships.

In even the most optimistic case, the BP oil spill is far, far from over.

There are still millions of barrels of oil out in the gulf and months of work missing for fishermen and shrimpers; inestimable harm is still being inflicted on wildlife throughout the food chain; and anger still seethes along the Gulf coast.

“What’s to celebrate?” asked Kindra Arnesen, the wife of a shrimper from Plaquemines Parish, La., who has become a recognizable voice of outrage over the past two and a half months.

“My way of life’s over, they’ve destroyed everything I know and love,” she said, before going on to explain, in detail, why she believes the pressure tests are likely to fail.

Thursday, July 15, 2010

Gulf Oil Update: Day 87


BP Closed all 5 Cap Valves Thursday afternoon: No oil is currently leaking from the well bore and new Cap assembly located above the level of the sea-bed during the integrity testing.

It is not clear at this time whether the well casing might be leaking below the level of the sea-bed since BP has not disclosed whether the pressure inside the well-bore is being maintained in the range necessary to prove that no leak exists anywhere in the system. This should be obvious in the next 24 hours perhaps sooner.

Retired Adm. Thad Allen indicated yesterday that the acoustic (ultrasonic) testing from several days ago did not disclose any abnormal pockets or collection of oil or methane gas outside the well bore (below the sea-bed and above the oil reservoir) in the geological formation. If true that is very good news.

--Dr. J. P. Hubert


NEWS BUlLETIN: BP Suspends Integrity Tests Wednesday PM after Obama Administration gave OK to proceed: Cap Assembly Has Leak

BP works to fix valve leak before choking oil flow

Associated Press Writers
Jul 15, 5:10 AM EDT

NEW ORLEANS (AP) -- BP engineers working to choke the flow of oil into the Gulf of Mexico found a leak on a line attached to the side of the new well cap and were trying to fix it Thursday before attempting to stop the crude.

BP said Wednesday evening it had isolated the leak and was repairing it before moving forward. It wasn't clear how it would affect the timing of the operation, or whether oil continued to be slowly closed off into the cap.

Work started earlier Wednesday after a day-long hiatus to allay government fears that the disaster could be made worse by going forward with the tests to determine whether the temporary cap can withstand the pressure and contain the oil. It was the best hope yet of stopping the crude from streaming into the water for the first time since the April 20 explosion on the Deepwater Horizon rig that killed 11 people.

The process began with BP shutting off pipes that were funneling some of the oil to ships on the surface so the full force of the gusher went up into the cap. Then deep-sea robots began slowly closing, one at a time, three openings in the cap that let oil pass through. Ultimately, the flow of crude will be blocked entirely.

All along, engineers were watching pressure readings to learn whether the well is intact. The first two valves shut off like a light switch, while the third works more like a dimmer and takes longer to close off.

The leak was found in the line attached to the dimmer switch, but live video footage showed that oil previously spewing from other sources on the cap remained closed off.

Retired Coast Guard Adm. Thad Allen, the Obama administration's point man on the disaster, said a committee of scientists and engineers will monitor the results and assess every six hours, and end the test after 48 hours to evaluate the findings.

"I was gung-ho for this test and I remain gung-ho for this test," he said Wednesday.

If the cap works, it will enable BP to stop the oil from gushing into the sea, either by holding all the oil inside the well machinery like a stopper or, if the pressure is too great, channeling some through lines to as many as four collection ships.

The cap - a 75-ton metal stack of lines and valves - was lowered onto the well on Monday in hopes of either bottling up the oil inside the well machinery, or capturing it and funneling it to the surface. But before BP could test the equipment, the government intervened because of concerns about whether the buildup of pressure from the gushing oil could rupture the walls of the well and make the leak worse.

"We sat long and hard about delaying the tests," Allen said. He said that the pause was necessary in the interest of the public, the environment and safety, until officials were convinced the test could go forward.

Allen said the testing will also offer insight into the other, more permanent solution to the fix: two relief wells intended to plug the gusher from deep underground. The mapping of the sea floor that was done to prepare for the well cap test and the pressure readings will also help them determine how much mud and cement will be needed to seal off the well.

Drill work was stopped on one relief well because it was not clear what effect the testing of the cap could have on it. Work on the other relief well had already been stopped according to plan. (Editor's bold emphasis throughout)

The government estimates 1.5 million to 2.5 million gallons are leaking every day.

The latest effort to control the gushing well follows a string of failed attempts by BP to contain the leak, including the use of a giant concrete-and-steel box that quickly became encased in ice-like crystals; a colossal siphon tube that trapped very little oil, and an effort to jam the well by pumping in mud and shredded rubber.

As of Wednesday, the 85th day of the disaster, between 92 million and 182 million gallons of oil had spewed into the Gulf since the rig leased by BP exploded.


Scientist Denies He Ever Predicted BP Oil Spill Would Cause Extinction Of Mankind

Gus Lubin
Jul. 12, 2010, 1:48 PM

Suddenly everyone's talking about the methane-driven oceanic eruption and mass extinction theories of Dr. Gregory Ryskin, claiming that elevated methane levels from the oil spill could cause the end of mankind.

Absent from this discussion has been Ryskin, who Northwestern University says is out of his office until September. The professor gave us the real story by email:

"I also want to emphasize that in my theory, methane hydrates (clathrates) do not play any role."

Methane hydrates are the volatile compounds that have been released in large quantities in the Gulf of Mexico. They may suffocate aquatic life or cause a pressure explosion. But they probably won't poison the atmosphere and destroy 96 percent of life on earth.

He was talking about "an extremely fast, explosive release of dissolved methane (and other dissolved gases...) that accumulated in the oceanic water masses." For more on Ryskin's methane theories, he said we should watch this video from 2007... For more See THIS... and THIS...

Wednesday, July 14, 2010

Gulf Oil Update: Day 86

Gulf Gusher To Keep Flowing As Cap Test Delayed

by The Associated Press
July 14, 2010

Oil emerges from the damage wellhead Tuesday morning in the Gulf of Mexico.

A pivotal moment in the Gulf oil crisis hit an unexpected snag Tuesday evening when officials announced they needed more time before they could begin choking off the geyser of crude at the bottom of the sea.

BP and federal officials did not say what prompted the decision or when the testing would begin on a new, tighter-fitting cap it had just installed on the blown-out well. The oil giant had been scheduled to start slowly shutting off valves on the 75-ton cap, aiming to stop the flow of oil for the first time in three months.

It seemed BP was on track to start the test Tuesday afternoon. The cap, lowered over the blown-out well Monday night, is designed to be a temporary fix until the well is plugged underground.

A series of methodical, preliminary steps were completed before progress stalled. Engineers spent hours on a seismic survey, creating a map of the rock under the sea floor to spot potential dangers, like gas pockets. It also provides a baseline to compare with later surveys during and after the test to see if the pressure on the well is causing underground problems.

An unstable area around the wellbore could create bigger problems if the leak continued elsewhere in the well after the cap valves were shut, experts said.

"It's an incredibly big concern," said Don Van Nieuwenhuise, director of Professional Geoscience Programs at the University of Houston. "They need to get a scan of where things are, that way when they do pressure testing, they know to look out for ruptures or changes."

It was unclear whether there was something in the results of the mapping that prompted officials to delay. Earlier, BP Vice President Kent Wells said he hadn't heard what the results were, but he felt "comfortable that they were good."

National Incident Commander Thad Allen met with the federal energy secretary and the head of the U.S. Geological Survey as well as BP officials and other scientists after the mapping was done.

"As a result of these discussions, we decided that the process may benefit from additional analysis," Allen said in a statement. He didn't specify what type of analysis would be done, but said work would continue until Wednesday.

Assuming BP gets the green light to do the cap testing after the extra analysis is finished, engineers can finally begin to shut the openings in the 75-ton metal stack of pipes and valves gradually, one at a time, while watching pressure gauges to see if the cap holds or any new leaks erupt.

The operation could last anywhere from six to 48 hours.

If the cap works, it will enable BP to stop the oil from gushing into the sea, either by holding all the oil inside the well machinery like a stopper or, if the pressure is too great, channeling some through pipes to as many as four collection ships.

Along the Gulf Coast, where the spill has heavily damaged the region's vital tourism and fishing industries, people anxiously awaited the outcome of the painstakingly slow work.

"I don't know what's taking them so long. I just hope they take care of it," said Lanette Eder, a vacationing school nutritionist from Hoschton, Ga., who was walking on the white sand at Pensacola Beach, Fla.

"I can't say that I'm optimistic - It's been, what, 84 days now? - but I'm hopeful," said Nancy LaNasa, 56, who runs a yoga center in Pensacola.

The cap is just a stopgap measure. To end the leak for good, the well needs to be plugged at the source. BP is drilling two relief wells through the seafloor to reach the broken well, possibly by late July, and jam it permanently with heavy drilling mud and cement. After that, the Gulf Coast faces a long cleanup.

In Washington, White House spokesman Robert Gibbs said the effort to put the containment cap into operation "represents the best news that we've had in the preceding 85 days."

"We are approaching what we hope is the next phase in the Gulf - understanding that that next phase is likely to take many years," he added.

BP engineers planned to shut off pipes that are already funneling some oil to two ships, to see how the cap handles the pressure of the crude coming up from the ground. Then they planned to close, one by one, three valves that let oil pass through the cap.

Experts said stopping the oil too quickly could blow the cap off or further damage the well.

Scientists will be looking for high pressure readings of 8,000 to 9,000 pounds per square inch. Anything lower than 6,000 might indicate previously unidentified leaks in the well.

"What we can't tell is the current condition of the wellbore below the seafloor," Allen said. "That is the purpose of the well integrity test."

If the cap cannot handle the pressure, or leaks are found, BP will have to reopen the valves and let some of the oil out. In that case, BP is ready to collect the crude by piping it to as many as four vessels on the surface.

The leak began after the Deepwater Horizon offshore drilling platform exploded on April 20, killing 11 workers. As of Tuesday, the 84th day of the disaster, between 90.4 and 178.6 million gallons of oil had spewed into the Gulf.


BP delays tests on Cap: No reason given

Critical NEWS Update: 11:39 am 7/14/10

The results of acoustic (ultrasonography) tests performed on the geological formation in and around the Macondo Well yesterday July 13, 2010 have not been disclosed. Within the past hour, BP has announced that it has ceased drlling both of the "relief wells." This is either very good or extremely bad news. It may be that they have discovered the presence of multiple leaking channels below the sea-bed eminating from defects in the well casing suggesting that the relief wells will be unable to seal/kill the well.

More optimistically, it may be that BP has discovered that it will be unnecesary to use either of the relief wells because it will be able to successfully seal the well utilizing the new cap. The latter option seems unlikely however.

In any case, it is extremely odd that BP would simply cease drilling on both of the relief wells while they are supposedly analyzing the data.

--Dr. J. P. Hubert


This Can't Be Good: BP Delays Pressure Tests and Stops Drilling Relief Well

by Michael Graham Richard,
Ottawa, Canada on 07.14.10 a Discovery Company

Only Bad News on the Oil Spill Today

After some good news in the past couple of days, BP is going back to what it has accustomed us to over the past few months: bad news. The first of these is that despite the fact that the cap has been fitted over the oil leak, the pressure tests to determine if the leak can be completely captured by this new 'top hat' will have to wait for "further analysis" (this was decided after a meeting with Steven Chu and his team of advisers). The second piece of bad news has to do with the relief well, and when you put the two together, it's enough to worry...

Relief Well Drilling Stopped for "Up to 48 Hours"

BP said this morning that they were halting the drilling of the relief well - the second well that will connect with the leaking one deep underground and permanently plug the leak - for "up to 48 hours" and didn't explain this decision. Chances are it's simply to avoid contaminating seismic readings around the well, but it could also be a sign of bigger troubles. In any case, this delay means that whatever else happens in the meantime, the relief well will be completed later than it would have been otherwise.

What Could This Mean?

What's scary about this is the possibility that this suspension of operations for "further analysis" might mean that they found something really bad, and they're now making sure before going public with it. After all, the relief well is still a few weeks from being completed, so it's safe to assume that it isn't too close to the leaking well. If they're stopping drilling now, this could mean that they're afraid that the integrity of the well was severely compromised under the surface. Could this mean that the relief well won't be able to 'connect' with the leaking well as easily as first thought? Or at all? Or do they have to change their approach, causing further delays and allowing more oil to leak in the Gulf? These are scary possibilities.

Let's hope that these delays are in fact caused by minor problems and that the pressure tests will soon begin and succeed, and that the relief well will be able to plug the leak once and for all.

At this time, the oil is still gushing out of the leak, going into the Gulf of Mexico

Editor's NOTE:

Mr. John Hoffmeister, former CEO for Shell Oil was interviewed on "Hardball" with Chris Matthews this afternoon regarding the significance of the above developments. He confirmed that Secretary of Energy Steven Chu and a team of independent scientists/analysts had asked BP not to proceed with testing the new Cap by subjecting it to increasing amounts of pressure as BP had planned. Chu et al. are apparently concerned that not enough is known about whether the tests themselves might cause damage in the sub-sea surface of the well casing.

Hoffmeister again repeated his previous comment that many experts in the petroleum industry fear that the well-casing is badly damaged below the level of the sea bed which would complicate the attempt to seal/kill the Mocondo well utilizing the relief well(s) perhaps rendering it impossible. He agrees with the current plan to evaluate the situation more fully before proceeding. In addition, he recommended not testing the pressure until at least one of the relief wells is finished.

--Dr. J. P. Hubert

Dylan Ratigan: "The Financial Industry is Stealing America's Money"

Dylan Ratigan Rips GOP Congressman Kevin Brady Over Wall Street Greed

First Posted: 07-13-10 08:02 PM | Updated: 07-13-10 08:03 PM
Huffington Post

Rep. Kevin Brady (R-Texas) looked uncomfortable when MSNBC host Dylan Ratigan introduced him Tuesday afternoon to talk about unemployment benefits and Wall Street greed. Brady's discomfort proved well-founded.

Ratigan tore into the Texas Republican, who voted against the extension of unemployment benefits but for the Wall Street bailout known as the Troubled Asset Relief Program. Brady repeatedly attempted to deflect Ratigan's harsh line of questioning on the nature of Wall Street by arguing that potential -- not actual -- tax increases are stifling capital investment and thus job creation, but the MSNBC host didn't let up.

"I know you have an issue with the government, but I've got an issue with a private industry that's using the government to rape my country of its money, and I'd like to try to put a stop to that," Ratigan said.

"We are facing higher taxes in energy and income and capital and dividends," Brady argued, not for the last time. "All those tax proposals are what's keeping our recovery from gaining steam--"

"That's a lie. That's a lie," Ratigan shot back. "What's keeping our recovery from gaining steam is the fact that the financial industry is stealing America's money, depriving this country of any investment whatsoever, and that is the entire basis of our system, and the government has converted it from an investment vehicle into a vehicle for it to steal money for its rich friends."

The MSNBC host ended the segment on a frustrated note, complaining that Brady simply retreated to his talking points. "I'm done with you," Ratigan said, after he challenged Brady to answer his questions and his guest resumed talking about possible future taxes.


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Tuesday, July 13, 2010

More Evidence of Zionist Influence over US Policy

On Being Led By the Nose:
The Unchallenged Power of the Israel Lobby

July 12, 2010

I picked up a copy of a memoir written by the long-gone CIA Director, George Tenet. On the first page of the book's preface, Mr. Tenet described what it was like on the day after the World Trade Towers had exploded as a result of the terrorists' actions on 9-11-01.

I quote Mr. Tenet here:

“All this weighed heavy on my mind as I walked beneath the awning that leads to the West Wing and saw Richard Perle exiting the building just as I was about to enter. Perle is one of the godfathers of the neoconservative movement and, at the time, was head of the Defense Policy Board, an independent advisory group attached to the Secretary of Defense. Ours was little more than a passing acquaintance. As the doors closed behind him, we made eye contact and nodded. I had just reached the door myself when Perle turned to me and said, 'Iraq has to pay a price for what happened yesterday. 'They bear responsibility.' (Italics added).

“I was stunned but said nothing. Eighteen hours earlier, I had scanned passenger manifests for the four hijacked airplanes that showed beyond a doubt that al-Qa'ida was behind the attacks. Over the months and years to follow, we would carefully examine the potential of a collaborative role for state sponsors. The intelligence then and now, however, showed no evidence of Iraqi complicity."

The idea that George W. Bush's neocon advisers--Perle included--convinced him that the U.S. should invade Iraq received some attention after the Iraqi war started. But to my knowledge, no one, either in politics or the media, pressed the case too hard, lest they discover that those who wanted to invade Iraq had, not America's interest, but Israel's interest in mind.

There was never a threat to the United States from Saddam Hussein. He was a threat to his own people, but not to our country, a fact which became much more clear as the war went on. But Bush's critics stopped short of implicating Israel's interests as a reason for invading Iraq. A great many people believe, myself included, that Israel wanted Saddam out of the way because, while he was not really a military threat to Israel, he was a political threat. He was someone, like Hizbollah, who stood in the way of Israeli hegemony over the entire Middle East.

That desire by Israel goes a long way toward explaining why Israel has launched so many attacks on Lebanon and Syria. During the last several decades, Israel tried very hard to tame the country of Lebanon by using one excuse or another to invade that battered country. Each time, Israel came away without achieving its objective of control of Lebanon. It had installed Bashir Jamail as president only to see him assassinated during the confusion of the Lebanese Civil War. It conquered militarily the south of Lebanon in 1982, holding on to enough Lebanese territory to allow it to steal water out of the Litani River. By the year 2000, Hizbollah was strong enough to chase Israel out of Lebanon, remaining as a threat to Israel's hegemony from that time onward.

And Syria was warned not to get too rambunctious when Israel bombed Syria using one or another pretense to do so.

The most recent military planning by Israel to solidify what little hegemony it has over the area is the way it is shaking its fist at Iran, with the United States looking over its shoulder, adding weight to its threats against Iran.

What is different about this most recent threat is that Iran is no Iraq. Iran has the ways and means to retaliate against not only Israel, but against the United States as Israel's principal supporter in its efforts to tame Iran.

If we were to look rationally at the situation, we would soon realize that, while Iran is able to defend itself with the kind of military it possesses, it is quite incapable of invading another country, particularly one as militarily powerful as Israel. If we assume that Iran's nuclear program is intended to make a bomb, what earthly reason would it have to start a nuclear war against either Israel or the United States? Iran's leadership, while mouthy, and cruel toward its political dissidents, is not crazy enough to ask for someone to come in and wipe out their entire country, which is what certainly would happen should it start a war with nuclear weapons. Certainly, military and political people both in Israel and in the United States must realize this fact.

The most likely and rational reason behind such a nuclear program is one of self-defense against Israel, which has had a minimum of 200 nuclear warheads in its arsenal.

What, then, is behind this most recent insanity by Israel's supporters in America and by Israel itself? We can almost certainly agree that Iran is another country standing in the way of Israel's desired hegemony. I've been told by those who should know that the publicity given to Iran's nuclear program is cutting down on Jews either visiting or emigrating to Israel. That is an economic argument that the United States should not enter into, especially by going to war on Israel's behalf. But it's clear that is what Israel and its supporters here want.

One wonders what to make of the American politicians who are very much like an echo chamber for Israel's talking points concerning Iran. Do they realize that by being led around by the nose by Israel and its Lobby is very much against U.S. interests? Do they realize that even if Israel begins bombing Iran, the United States will pay the price?

Do our politicians understand, that while it is good for their campaign contributions to be solicitous of Israel's objectives, it would be devastating for America to be threatened by even more terrorist attacks than we have been.What has been unspoken by the media and by political leaders is that our continuing support of Israel's objectives by not only financing Israel's military, but by invading Muslim countries for whatever reason only creates more danger for American interests?

This has been largely unspoken by our military and political leaders, but on occasion something will accidentally slip out, exposing the dangers to us for our blind support of Israel. George W. Bush, for example, blurted out, during a statement on the Iraq War, that it was not Israel's fault that we invaded Iraq. And lately, some of our generals are voicing their concerns about the Palestinian-Israeli dispute. But by and large, there is total silence on the issue by the media. Our leaders choose to remain silent on why our complicity with Israel puts us in danger from terrorist groups around the world, but plain and simple, that's what is causing the attacks on our interests. G.W. Bush tried to put a different face on it by saying that "they" hated our freedoms. We deserve better by our presidents.

It does not appear that any of our leaders, from President Obama on down to state legislators, care to rally solve our terrorism problem. (Last year, the South Dakota legislature enacted a resolution approving the 1998 Israeli slaughter in the Gaza Strip).

Iran has offered to join a nuclear weapons free Middle East, but it does not appear that our President cares to take them up on that offer. He would, it appears, need permission from Israel's right wing government to do so. After witnessing his most recent surrender to Netanyahu and his policies, it's not likely that he ever will join. For now, it is sufficient that a nuclear country like the United States can lecture other, smaller countries on who can and who can't have a nuclear weapon.

Are we asking too much that all nations foreswear possession of nuclear weapons, and not just those who are smaller than us?

Does anyone beside a few people in the United States see the danger to our country in being led around by the nose by the Israeli government?


American Jewish Youth may Hold Key to Ending Radical Zionism

The Failure of the American Jewish Establishment

by Peter Beinart
The New York Review of Books
June 10, 2010

In 2003, several prominent Jewish philanthropists hired Republican pollster Frank Luntz to explain why American Jewish college students were not more vigorously rebutting campus criticism of Israel. In response, he unwittingly produced the most damning indictment of the organized American Jewish community that I have ever seen.

The philanthropists wanted to know what Jewish students thought about Israel. Luntz found that they mostly didn’t. “Six times we have brought Jewish youth together as a group to talk about their Jewishness and connection to Israel,” he reported. “Six times the topic of Israel did not come up until it was prompted. Six times these Jewish youth used the word ‘they‘ rather than ‘us‘ to describe the situation.”

That Luntz encountered indifference was not surprising. In recent years, several studies have revealed, in the words of Steven Cohen of Hebrew Union College and Ari Kelman of the University of California at Davis, that “non-Orthodox younger Jews, on the whole, feel much less attached to Israel than their elders,” with many professing “a near-total absence of positive feelings.” In 2008, the student senate at Brandeis, the only nonsectarian Jewish-sponsored university in America, rejected a resolution commemorating the sixtieth anniversary of the Jewish state. MORE...

Increasing Evidence of Coming War with Iran

Israel stations nuclear missile subs off Iran

By: Uzi Mahnaimi in Tel Aviv
The Sunday Times
May 30, 2010

Israel stations nuclear missile subs off IranUzi Mahnaimi in Tel Aviv
Three German-built Israeli submarines equipped with nuclear cruise missiles are to be deployed in the Gulf near the Iranian coastline.

The first has been sent in response to Israeli fears that ballistic missiles developed by Iran, Syria and Hezbollah, a political and military organisation in Lebanon, could hit sites in Israel, including air bases and missile launchers.

The submarines of Flotilla 7 — Dolphin, Tekuma and Leviathan — have visited the Gulf before. But the decision has now been taken to ensure a permanent presence of at least one of the vessels.

The flotilla’s commander, identified only as “Colonel O”, told an Israeli newspaper: “We are an underwater assault force. We’re operating deep and far, very far, from our borders.”

Each of the submarines has a crew of 35 to 50, commanded by a colonel capable of launching a nuclear cruise missile.

The vessels can remain at sea for about 50 days and stay submerged up to 1,150ft below the surface for at least a week. Some of the cruise missiles are equipped with the most advanced nuclear warheads in the Israeli arsenal.

The deployment is designed to act as a deterrent, gather intelligence and potentially to land Mossad agents. “We’re a solid base for collecting sensitive information, as we can stay for a long time in one place,” said a flotilla officer.

The submarines could be used if Iran continues its programme to produce a nuclear bomb. “The 1,500km range of the submarines’ cruise missiles can reach any target in Iran,” said a navy officer.

Apparently responding to the Israeli activity, an Iranian admiral said: “Anyone who wishes to do an evil act in the Persian Gulf will receive a forceful response from us.”

Israel’s urgent need to deter the Iran-Syria-Hezbollah alliance was demonstrated last month. Ehud Barak, the defence minister, was said to have shown President Barack Obama classified satellite images of a convoy of ballistic missiles leaving Syria on the way to Hezbollah in Lebanon.

Binyamin Netanyahu, the prime minister, will emphasise the danger to Obama in Washington this week.

Tel Aviv, Israel’s business and defence centre, remains the most threatened city in the world, said one expert. “There are more missiles per square foot targeting Tel Aviv than any other city,” he said.


Transfer of ammunitions to Israel for a possible attack against Iran
by Manlio Dinucci
Non-Alligned Press Network
4 July 2010
Rome (Italy)

The White House hasn’t stopped heaping pressure on Iran to force it to cooperate in Afghanistan and in Iraq. While the State Department has triggered the start of an anti-Iranian blockade by way of resolution 1929, the Pentagon has been sending ammunitions to Israel and opening air corridors to provide Tsahal with the opportunity to strike the Iranian economy. Will Iran succumb to the threat?-

"Saudi Arabia would never allow Israeli bombers to cross its airspace in order to strike Iran’s nuclear sites", declared Prince Mohammed Bin Nawaf, sent from Riyadh to London, thus refuting what was reported in the Times. Has the alarm been turned off? Nothing could be less certain. No one in Washington has denied the information, emanating from the Pentagon, to the effect that an Israeli attack against Iran’s nuclear sites "has been planned in agreement with the U.S. State Department" and that another air corridor is contemplated, especially intended for an attack against Bushehr, going through Jordan, Iraq and Kuwait. But, over and above the words, it is the facts that indicate that preparations for a possible attack against Iran are building up.

During his Washington visit, Israeli Defence Minister Ehud Barak secured some large military equipment, in particular JDAM bombs manufactured by Boeing. These are high-potential bombs which, with the addition of a new GPS-guided tail section, acquire a range of more than 60 Km beyond their automatic target. Recently, they have also been equipped with a laser-guided system, further enhancing their precision. According to the Israeli newspaper Haaretz, they were employed in the second war against Lebanon in 2006 and in the Cast Lead onslaught against Gaza in 2008.

In addition, Barak called on Washington to increase by 50% the "emergency stockpiles" set up in Israel by the U.S. army last December following a decision by Obama’s Administration. As reported in Haaretz, these depots contain missiles, bombs, aircraft ammunition, armored vehicles and other weapons, which are categorized at the time of their arrival to ensure "quick and easy access" at the Israeli end. For sure, even if not said, part of the weapons sent to the "emergency stockpiles" come from the Camp Darby U.S. military and logistical base [Translator’s note: located in Italy, between Pisa - civilian and military airport, control tower manned by military staff only - and Leghorn, commercial harbor.]: according to Global Security, the 31st Air Base supply squadron has, for a long time, also been in charge of the arsenals located in Israel, a kind of Camp Darby outlet that supplied the Israeli forces for its attacks against Lebanon and Gaza.

The weapons provided to Israel by the United States include "heavy penetrating warheads", such as the 1-ton Blu-117, apt for an attack against Iranian bunkers. For months these same weapons have been amassed at the U.S. Diego García base in the Indian Ocean to where B-2 bombers with air defence penetration capabilities have been transferred.

According to Dan Plesh, Director of the Centre for International Studies and Diplomacy at the University of London, "U.S. bombers are already on stand-by to destroy 10 000 targets inside Iran in just a few hours". Concurrently, Saudi Arabia is upgrading its 150 F-15 fighter bombers supplied by Boeing, equipped with the most advanced technology to boost their effectiveness in night attacks and to make them fully inter-operational with U.S. forces.


Act of war: Harsh new US penalties against Iran

If fully enforced, the new U.S. sanctions against Iran — signed into law by President Obama on July 1st — will potentially destroy the country’s economy. Killing several birds with one stone, the punitive measures will also impact some of Washington’s other rivals and are likely to pinch some of its allies as well. Whereas the Obama Administration calmly portrays economic sanctions as “peaceful” solutions to political problems, they are tantamount to an act of war ... an option which the U.S. has also been actively pursuing. Ultimately, the march to war begun by Bush is picking up momentum under Obama.

By: Peter Symonds
Non-Alligned Press Network
5 July 2010

Iranian President Mahmoud Ahmadinejad is seen at International Mehrabad Airport, Tehran, in September 2009. On 5 July 2010, an Iranian official said the country’s aircraft had been denied fuel in Germany, Britain and the United Arab Emirates as a result of tighter U.S. sanctions. Credit: Reuters/Morteza Nikoubazl/Files

US President Barack Obama signed into law last Thursday Congressional legislation against Iran that has the potential to heighten tensions, not only with Tehran, but America’s European and Asia rivals.

The legislation broadly targets foreign banks and corporations doing business in Iran and sets out unilateral US penalties against those that do not fall into line. Companies could be denied access to the US Export-Import Bank, restricting their ability to sell into the US market, or denied US government contracts.

The Comprehensive Iran Sanctions, Accountability, and Divestment Act requires the US Treasury Department to bar access to the American financial system to any foreign bank conducting transactions with Iranian entities blacklisted by the UN or the US government. The list includes some major Iranian banks, the Iranian energy sector, and businesses associated with the Islamic Revolutionary Guard Corps (IRGC).

The legislation provocatively targets foreign companies selling refined petroleum products, such as gasoline and diesel, to Iran, including producers, insurers and those involved in transportation. While Iran has huge reserves of oil, its energy infrastructure and refining capacity are badly rundown due to a lack of investment, forcing the importation of gasoline.

Washington has accused Tehran of seeking to build nuclear weapons. Last month the US and its European allies pushed a fourth resolution through the UN Security Council, imposing new penalties on Tehran over its refusal to shut down its uranium enrichment facilities and halt the construction of a heavy water research reactor. Following the UN resolution, the European Union (EU) foreshadowed further tough sanctions against Iran, including a ban on investment in its energy sector.

The Iranian regime has repeatedly denied it has any plans to build nuclear weapons, and denounced the UN and US sanctions as illegal. Under the Nuclear Non-Proliferation Treaty (NPT), which Iran has signed, countries have the right to develop any aspect of the nuclear fuel cycle, including uranium enrichment and plutonium reprocessing, for peaceful purposes. Iranian nuclear facilities, including the Natanz uranium enrichment plant, are subject to regular International Atomic Energy Agency (IAEA) inspections, which include a stock take of enriched uranium to ensure it is not used for military purposes.

The US legislation goes far further than the proposed EU sanctions and the UN resolutions, to which Russia and China only reluctantly agreed under pressure from Washington. Any significant constriction of the sale of refined petroleum products to Iran could impact heavily on its economy. Although Tehran has been building up its strategic reserves and is cutting back on imports, Iran still buys an estimated 25-30 percent of its gasoline needs on the international market.

The ramifications of the laws are even wider. Democrat congressman Ron Klein told the Wall Street Journal: “Foreign companies are going to have to make a choice: Do they want to do business with us or with the Iranians?” By threatening to penalise foreign banks and companies for activities that are not banned under UN resolutions, the law will inevitably fuel international resentment and intensify frictions.

Total CEO Christophe de Margerie Last week the French oil company Total ended sales of gasoline to Iran and Spain’s Repsol pulled out of a development contract with Royal Dutch Shell for Iran’s South Pars gas field. Total CEO Christophe de Margerie told an economic forum: “We do not think an embargo on the delivery of petrol products is a good way to settle differences of a political nature.” He complained that “too many things are politicised these days”.

In the US, the National Foreign Trade Council and the US Engage alliance of companies and associations also raised concerns, particularly over possible penalties against US parent companies for violations by their foreign subsidiaries. In a press statement, council president Bill Reinsch warned: “We are deeply concerned about the timing of this legislation and its unintended consequences for legitimate global commerce.”

Total is just the latest company to pull out of gasoline sales to Iran. Over the past six months, Russia’s LUKOIL, India’s Reliance Industries, Malaysia’s Petronas, Royal Dutch Shell and the Swiss firm Glencore, each announced a halt to sales. At the same time, several major Chinese corporations, including the state-owned China National Petroleum Corp and China Petroleum & Chemical Corp, reportedly increased their sales to Iran earlier this year.

Under the legislation, the US administration can waive penalties on countries, such as China, that backed the UN resolution against Iran. If Obama took action against Chinese oil companies, tensions would escalate between Washington and Beijing, which only agreed to support the latest UN sanctions if Iran’s energy sector were excluded. China imports roughly 15 percent of its crude oil from Iran and has signed several major agreements to develop energy projects there.

The new US sanctions point to the motivations underlying Washington’s continuing threats and provocations against Iran. American banks and corporations will be largely unaffected, as Washington has effectively blockaded Iran economically for more than three decades following the overthrow of the Shah in 1979. But the penalties will impact on US rivals, including close US allies such as Germany and Japan, that have substantial economic interests in Iran.

The Wall Street Journal pointed out last Thursday: “Among those that could face legal challenges and fines are Japan’s Big Three Banks—Mitsubishi UFJ Financial Group Inc., Sumitomo Mitsui Financial Group and Mizuho Financial Group Inc—as well as European firms such as Commerzbank Bank AB and Deutsche Bank AG, all of whom have businesses inside Iran.” Japan’s oil and gas producer Inpex Corp also has significant interests, including a 10 percent stake in the Azadegan oil field in southwestern Iran.

Iran not only has huge oil and gas reserves but is strategically located between the key regions of the Middle East and Central Asia. The nuclear issue is simply a convenient pretext for Washington to apply pressure in a bid to fashion a regime in Tehran that is more conducive to US ambitions for regional domination. The Obama administration’s overt support for the oppositional Green movement inside Iran, following last year’s presidential poll, had the same aim.

There is a dangerous logic to US attempts to choke off gasoline supplies to Iran. As several articles in the US press have pointed out, even if major foreign corporations pull out of the gasoline trade with Iran, Tehran will still have access to refined petroleum products—at a price—through various black markets operating in the Persian Gulf. If financial penalties fail to stop gasoline supplies and bring the Iranian economy to its knees, a clamor in the US for a military blockade is certain to intensify.

Like his predecessor Bush, President Obama has repeatedly refused to rule out military action against Iran, including air strikes against its nuclear facilities. Any attempt to enforce an economic blockade of Iran through military force—regarded internationally as an act of war—would create an explosive situation in the Persian Gulf.

For further information see "US, Israel Warships in Suez May Be Prelude to Faceoff with Iran"HERE...

Editor's NOTE:

It is pure insanity to start a war with Iran a country which represents absolutely no existential threat to the United States whatsoever! Even Fidel Castro can see that to start a war in the Persian Gulf is to once again (as in 1962) risk a global nuclear conflagration. Once again it is Zionist control of US government foreign policy vis a vis Iran that is responsible for the latest push to war.

Please e-mail, phone, send post cards to your representative, senators and the Obama administration in protest. The latest bellicose moves against Iran are blatantly immoral and extremely dangerous.

--Dr. J. P. Hubert