USA’s “diplomacy” (in Ukraine, Russia, Syria & elsewhere) via Neo-Con run NGOs

First published by AntiWar.com – Tuesday 18th February 2014

http://original.antiwar.com/giraldi/2014/02/17/diplomacy-is-a-four-letter-word/#idc-cover

Diplomacy is a four letter word
The Neocon Triumph
by Philip Giraldi

Why is the United States so reluctant to negotiate with other countries and so prone to leap immediately to the option of using force or chicanery in lieu  of a more deliberative foreign policy? It might partly be because we Americans are not very good at the subtlety and give-and-take that diplomacy requires, but it could also be because our framework for operating, which shapes what  we do and how we do it, is hopelessly skewed. One might even argue that the dominant neoconservative way of thinking has thoroughly infected both parties’ perceptions of how a foreign policy is supposed to work, leading official Washington to see everything in terms of "us and them" while at the same time  exonerating every American misstep by citing the largely bogus national security argument to explain places like Libya, Syria, Iraq, Afghanistan and Iran.

The vitriol unloaded on Russia since the rise of Vladimir Putin and most recently to ridicule almost every aspect of the Olympic Games is astonishing. By all means criticize Russia for its slide into authoritarianism, but turning it into a target of choice for ignorant media, politicians and White House spokesmen is just downright stupid. Moscow’s cooperation is essential to resolve a number of international crises and the hostility radiating from Washington only makes the world a much more dangerous place for everyone.

The sustained pressure on the Ukraine over the past several months has likewise  been remarkable and, under other circumstances, it would all be difficult to explain but for the fact that it and Russia are essentially two halves of one policy that is being orchestrated by the same group of neoconservatives, some of whom have now, fortuitously enough, attached themselves to the party in power in the White House, which is the Democrats. It was easy enough to do as many neocons are basically liberal Democrats if one excludes their aggressive foreign  policy views.

Remember the pastel revolutions in Eastern Europe that were sponsored by the United States and some western nations but which are now best forgotten? Involvement  of Non-Government Organizations (NGOs) in places like the Ukraine and Moldova sure turned out well, particularly when the biggest baddest NGO of all, the National Endowment for Democracy <http://www.ned.org/>  (NED) got  involved. When the Russians and others complained about the activities of NGOs interfering in their domestic politics NED was what they were referring to. NED instinctively favored people who called themselves democrats and were able to speak English, polyglot ability somehow demonstrating their political reliability. They turned out to be as corrupt as their predecessors and no less inclined to fool around with the electoral system they inherited. Tinkering in Georgia <http://www.realclearpolitics.com/articles/2008/08/we_are_not_all_georgians_now.html>  by Washington and its Israeli surrogates almost led to American  involvement in a war with Russia in which Washington had no conceivable interest. Remember John McCain’s "We are all Georgians now?"

Those who are aware of the insidious activities of NED, an ostensibly private  foundation that spreads “democracy” and is largely funded by Congress, know  that it has a Democratic Party half in its National Democratic Institute, and  a Republican Party half in its International Republican Institute. Madeleine Albright is in charge of the NED Dems while John McCain leads the NED GOP. Which is not to say that there is much in the way of adult supervision, probably a good thing as otherwise NED would be even more meddlesome than it already is.

After wrecking Eastern Europe NED has gone on to do yeoman’s work relating  to the Arab Spring, the results of which are clearly visible in Tunisia, Egypt  and Iraq. But now the focus is again on the former Soviet Union with millions of dollars going to opposition parties, this time with the full force of an uncritical mainstream media behind the effort. Easily forgotten are two indisputable  facts relating to Russia and the Ukraine. First, before the Soviet Union broke up in 1991, there was an understanding that the US and Europe would not use  the situation as an excuse to expand their spheres of influence into Eastern Europe. NED and other groups violated that understanding almost immediately and now Croatia, the Czech Republic, Slovakia, Bulgaria, Romania, Slovenia, Estonia, Latvia, Lithuania, Hungary, Romania and Poland are in the European Union and also in NATO, an organization that has absolutely no raison d’etreapart from serving as a military alliance against Russia.

Second, today’s Ukraine <http://en.wikipedia.org/wiki/Ukraine>  was largely shaped by Josef Stalin during Second World War, when parts of Poland  and Romania that had Ukrainian majorities were annexed. The Ukraine is roughly seventy-five per cent Ukrainian ethnically but ten million Ukrainian citizens  are ethnic Russians, more than 17% of the population. Many Ukrainians therefore look to Russia as a natural ally and trading partner while those who once were  part of Poland tend to look westward, but what is indisputable is that the current mildly pro-Moscow Ukrainian government of Viktor Yanukovych came to power after a free election monitored by international observers in 2010. Yanukovych believes in strong ties to Russia but is also friendly to the European Union and the United States. In spite of that studied neutrality Washington and the Europeans are stirring up unrest and trying to coerce the Ukrainian government into entering  into a formal arrangement with the EU that its elected leadership believes to be not in its best interests. Protesters, supported and possibly even trained and equipped <http://www.sott.net/article/273512-US-NGO-uncovered-in-Ukraine-protests>  by Europe and the US, have responded with violence.

The US State Department’s Assistant Secretary of State for European and Eurasian Affairs Victoria Nuland has been a  leader <http://www.infowars.com/victoria-nulands-ukraine-gate-deceptions/>  in the drive to punish the Ukraine and force it to become part of the EU. "We stand with the people of Ukraine who see their future in Europe," she said rather undiplomatically in December. But who is Nuland anyway? She  is described  in the media <http://www.reuters.com/article/2014/02/07/us-usa-diplomacy-nuland-idUSBREA161YH20140207>  as an experienced diplomat, which in a sense she is, but if  that phrase is intended to imply that she is completely a professional it would  be misleading. She is the wife of leading neoconservative Robert Kagan, who is best known for his assertion that Americans "are from Mars and Europeans  are from Venus". Kagan, who is quite portly and has characteristically never served in the US armed forces, presumably is Martian by adoption.

Victoria Nuland’s access to senior levels of government began when served as <http://www.reuters.com/article/2014/02/07/us-usa-diplomacy-nuland-idUSBREA161YH20140207>  principal deputy national security adviser to Vice President Dick Cheney,  a position possibly obtained through the good graces of her husband’s neocon  associates, who were in the ascendancy at the Pentagon and White House at that  time. She then moved on to become US Ambassador to NATO under Bush-Cheney before bouncing back to Washington to work as Hillary Clinton’s press secretary. In that capacity she has sometimes been described as comfortable in working with both conservatives and liberals, but that would be misleading as in terms of foreign policy Clinton is no liberal, strongly pro-Israel and aligning largely with the neocon vision of an American that is ready, willing and able to use force and coercion to establish a new world order that is subordinate to US  interests.

Like her husband, Nuland, backed by the White House and politicians including Senators John McCain and Lindsey Graham, is consistently  hostile<http://ronpaulinstitute.org/archives/featured-articles/2014/february/05/victoria-nuland-the-bride-at-every-wedding.aspx>  to Moscow, possibly because the neocon world view favors the predominantly  Jewish oligarchs who looted the Russian economy before being brought to heel by Putin. National Security statists also require a powerful adversary to validate  their assumptions about the need to reorganize and lead the world to deal with  transnational threats. Nuland predictably refused to congratulate Putin on his most recent electoral victory and she has gone to bat for groups like "Pussy Riot" to embarrass the Russian government.

Nuland was recently intercepted <http://ericmargolis.com/2014/02/f-europe/>   in a telephone conversation with the US Ambassador to the Ukraine Geoff Pyatt.  She and the ambassador discussed whom they would support in their drive to rearrange  the Ukrainian government, bringing in the UN afterwards to "glue" the deal. Nuland, who has visited the Ukraine several times to speak to the demonstrators and pass out cookies, described the possible European Union (EU) role in such a project disparagingly, using a four letter word which was widely reported in the media. The focus on her language somewhat obscured the far more important content of the call, discussing plans to destabilize the Ukraine while actively working to select one opposition politician as the preferred choice  to bring about change in the government.

Victoria Nuland’s call over an unencrypted phone line <http://www.infowars.com/victoria-nulands-ukraine-gate-deceptions/>  to discuss highly sensitive matters was, at a minimum, a security violation. She and the Administration subsequently tried to frame it as a Russian  setup, calling it "impressive tradecraft," which it was not, but there  is no actual evidence that Russia was in any way involved in the intercept,  though it did exploit the damaging material that was handed to it on a platter. And the complaint about spying is itself deliciously ironic coming from a government in Washington that has been tapping nearly everyone’s phones with impunity.

Ideologues like Victoria Nuland, who might serve as a poster child for what  is wrong with the US government, constitute only one element in the dysfunctional White House view of the world and how to interact with it. Former Senior State Department official James Bruno asks <http://www.politico.com/magazine/story/2014/02/us-ambassador-picks-103242.html#.UvunxvldV6I>  "Why does America send so many stupid, unqualified hacks overseas?" For the first time since the Second World War more than half of all US Ambassadors  overseas are political appointees rather than career diplomats, yet another instance of President Barack Obama’s saying one thing while running for office  and doing another thing when actually in power. Bruno describes an ambassador  to Sweden lying drunk in the snow, the current hotel chain owner nominee for  Norway who did not know the country was a constitutional monarchy, and a TV soap opera producer pick for Hungary who had no idea what interests the US might  have in the country. One Obama appointee Seattle investor Cynthia Stroum actually was forced to resign after running her embassy in Luxembourg into the ground, verbally abusing her staff and spending embassy funds on personal travel and alcohol.

All of these splendid examples of American officialdom have one thing in common:  they gave a lot of money to the Obama campaign. Raising $1.79 million is now  the going  price <http://www.politico.com/magazine/story/2014/02/us-ambassador-picks-103242.html#.UvunxvldV6I>  for an ambassadorship. Good work Mr. Obama. You promised transparency  and have again exceeded all expectations by appointing ambassadors whose lack  of qualifications would embarrass the head of state of a banana republic. With  Victoria Nuland firmly at the helm of our ship of state in Europe and working to overthrow a friendly government while a group of rich but clueless clowns heads our embassies every American will henceforth know that he or she can sleep safe at night.

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Usurious Returns on Phantom Money: The Credit Card Gravy Train

Global Research, February 16, 2014

The credit card business is now the banking industry’s biggest cash cow, and it’s largely due to lucrative hidden fees.

You pay off your credit card balance every month, thinking you are taking advantage of the “interest-free grace period” and getting free credit. You may even use your credit card when you could have used cash, just to get the free frequent flier or cash-back rewards. But those popular features are misleading. Even when the balance is paid on time every month, credit card use imposes a huge hidden cost on users—hidden because the cost is deducted from what the merchant receives, then passed on to you in the form of higher prices.

Visa and MasterCard charge merchants about 2% of the value of every credit card transaction, and American Express charges even more. That may not sound like much. But consider that for balances that are paid off monthly (meaning most of them), the banks make 2% or more on a loan averaging only about 25 days (depending on when in the month the charge was made and when in the grace period it was paid). Two percent interest for 25 days works out to a 33.5% return annually (1.02^(365/25) – 1), and that figure may be conservative.

Merchant fees were originally designed as a way to avoid usury and Truth-in-Lending laws. Visa and MasterCard are independent entities, but they were set up by big Wall Street banks, and the card-issuing banks get about 80% of the fees. The annual returns not only fall in the usurious category, but they are returns on other people’s money – usually the borrower’s own money! Here is how it works . . . .

The Ultimate Shell Game

Economist Hyman Minsky observed that anyone can create money; the trick is to get it accepted. The function of the credit card company is to turn your IOU, or promise to pay, into a “negotiable instrument” acceptable in the payment of debt. A negotiable instrument is anything that is signed and convertible into money or that can be used as money.

Under Article 9 of the Uniform Commercial Code, when you sign the merchant’s credit card charge receipt, you are creating a “negotiable instrument or other writing which evidences a right to the payment of money.” This negotiable instrument is deposited electronically into the merchant’s checking account, a special account required of all businesses that accept credit. The account goes up by the amount on the receipt, indicating that the merchant has been paid. The charge receipt is forwarded to an “acquiring settlement bank,” which bundles your charges and sends them to your own bank. Your bank then sends you a statement and you pay the balance with a check, causing your transaction account to be debited at your bank.

The net effect is that your charge receipt (a negotiable instrument) has become an “asset” against which credit has been advanced. The bank has simply monetized your IOU, turning it into money. The credit cycle is so short that this process can occur without the bank’s own money even being involved. Debits and credits are just shuffled back and forth between accounts.

Timothy Madden is a Canadian financial analyst who built software models of credit card accounts in the early 1990s. In personal correspondence, he estimates that payouts from the bank’s own reserves are necessary only about 2% of the time; and the 2% merchant’s fee is sufficient to cover these occasions. The “reserves” necessary to back the short-term advances are thus built into the payments themselves, without drawing from anywhere else.

As for the interest, Madden maintains:

The interest is all gravy because the transactions are funded in fact by the signed payment voucher issued by the card-user at the point of purchase. Assume that the monthly gross sales that are run through credit/charge-cards globally double, from the normal $300 billion to $600 billion for the year-end holiday period. The card companies do not have to worry about where the extra $300 billion will come from because it is provided by the additional $300 billion of signed vouchers themselves. . . .

That is also why virtually all banks everywhere have to write-off 100% of credit/charge-card accounts in arrears for 180 days. The basic design of the system recognizes that, once set in motion, the system is entirely self-financing requiring zero equity investment by the operator . . . . The losses cannot be charged off against the operator’s equity because they don’t have any. In the early 1990′s when I was building computer/software models of the credit/charge-card system, my spreadsheets kept “blowing up” because of “divide by zero” errors in my return-on-equity display.

A Private Sales Tax

All this sheds light on why the credit card business has become the most lucrative pursuit of the banking industry. At one time, banking was all about taking deposits and making commercial and residential loans. But in recent years, according to the Federal Reserve, “credit card earnings have been almost always higher than returns on all commercial bank activities.”

Partly, this is because the interest charged on credit card debt is higher than on other commercial loans. But it is on the fees that the banks really make their money. There are late payment fees, fees for exceeding the credit limit, balance transfer fees, cash withdrawal fees, and annual fees, in addition to the very lucrative merchant fees that accrue at the point of sale whether the customer pays his bill or not. The merchant absorbs the fees, and the customers cover the cost with higher prices.

A 2% merchants’ fee is the financial equivalent of a 2% sales tax – one that now adds up to over $30 billion annually in the US. The effect on trade is worse than either a public sales tax or a financial transaction tax (or Tobin tax), since these taxes are designed to be spent back into the economy on services and infrastructure. A private merchant’s tax simply removes purchasing power from the economy.

As financial blogger Yves Smith observes:

[W]hen anyone brings up Tobin taxes (small charges on every [financial] trade) as a way to pay for the bailout and discourage speculation, the financial services industry becomes utterly apoplectic. . . . Yet here in our very midst, we have a Tobin tax equivalent on a very high proportion of retail trade. . . . [Y]ou can think of the rapacious Visa and Mastercharge charges for debit transactions . . . as having two components: the fee they’d be able to charge if they faced some competition, and the premium they extract by controlling the market and refusing to compete on price. In terms of its effect on commerce, this premium is worse than a Tobin tax.

A Tobin tax is intended to have the positive effect of dampening speculation. A private tax on retail sales has the negative effect of dampening consumer trade. It is a self-destruct mechanism that consumes capital and credit at every turn of the credit cycle.

The lucrative credit card business is a major factor in the increasing “financialization” of the economy. Companies like General Electric are largely abandoning product innovation and becoming credit card companies, because that’s where the money is. Financialization is killing the economy, productivity, innovation, and consumer demand.

Busting the Monopoly

Exorbitant merchant fees are made possible because the market is monopolized by a tiny number of credit card companies, and entry into the market is difficult. To participate, you need to be part of a network, and the network requires that all participating banks charge a pre-set fee.

The rules vary, however, by country. An option available in some countries is to provide cheaper credit card services through publicly-owned banks. In Costa Rica, 80% of deposits are held in four publicly-owned banks; and all offer Visa/MC debit cards and will take Visa/MC credit cards. Businesses that choose to affiliate with the two largest public banks pay no transaction fees for that bank’s cards, and for the cards of other banks they pay only a tiny fee, sufficient to cover the bank’s costs.

That works in Costa Rica; but in the US, Visa/MC fees are pre-set, and public banks would have to charge that fee to participate in the system. There is another way, however, that they could recapture the merchant fees and use them for the benefit of the people: by returning them in the form of lower taxes or increased public services.

Local governments pay hefty fees for credit card use themselves. According to the treasurer’s office, the City and County of San Francisco pay $4 million annually just for bank fees, and more than half this sum goes to merchant fees. If the government could recapture these charges through its own bank, it could use the proceeds to expand public services without raising taxes.

If we allowed government to actually make some money, it could be self-funding without taxing the citizens. When an alternative public system is in place, the private mega-bank dinosaurs will no longer be “too big to fail.” They can be allowed to fade into extinction, in a natural process of evolution toward a more efficient and sustainable system of exchange.

Ellen Brown is an attorney, chairman of the Public Banking Institute, and author of twelve books including the bestselling Web of Debt. In her latest book, The Public Bank Solution, she explores successful public banking models historically and globally. She is currently running for California State Treasurer on a state bank platform.

Copyright © 2014 Global Research

The Entire Fiat Money System is Bankrupt

[Publisher's Note: This article was published in the Global Research E-Newsletter on November 2nd 2013.]

Demise of the Global US Fiat Dollar Reserve Currency

It’s been a while since I last wrote an article on the on-going financial crisis. I don’t write for the sake of writing, as others do because they have to do so, on account of their subscribers who pay hefty subscription fees and demand their money’s worth.

Major issues or trends do not change on a daily or even monthly basis. A trend may take a few years to run its course and unless there is a major factor that may affect the trend, there is hardly any need to comment any further on the trend or outcomes.

The events unraveling post Bernanke’s decision not to taper QE is most significant because it confirms our analysis that the banking crisis has not been resolved in any significant way after five years of money printing and massive asset inflation. The fiat money system has but one outcome – total collapse. It will also mean the demise of the global US dollar reserve currency.

There are no solutions at hand.

Bernanke is totally discredited and his continued tenure as Chair of the FED would only accelerate the realisation that the FED and all central banks have failed. Hence, the need to change the “leadership” at the FED, but the same policies would be followed with some cosmetic changes to hoodwink the ignorant masses. It is analogous to the transition from the second Bush presidency to that of Obama and all the theatrics of “change” propaganda. In fact, Obama is Bush 2 on steroids! Yellen will be Bernanke on steroids. Why are we so certain of this outcome at Future Fast-Forward?

Our reasons are as follows:

Prior to the Global Financial Tsunami of 2008, I had written several articles exposing the global Too Big To Fail (TBTF) banks as financial rapists and predators and they would cause untold havoc to the financial system.

Post the crisis, I had also warned that these global TBTF banks are all insolvent and the toxic assets on their balance sheets would exceed US$20 trillion at the minimum. The entire fiat money system is bankrupt. Printing toilet paper money by the trillions does not make the system solvent. It is a clear admission that the system is totally broken.

The banking Humpty-Dumpty has fallen from the wall and shattered into a thousand pieces! The confirmation for this is the fact that all central banks led by the FED have only one aim – to create massive asset inflation. How can a stock market of a bankrupt nation be at an all-time high? The FED and central banks the world over are not interested in resolving the unemployment problem because record unemployment would not collapse the fiat money system. It may trigger massive social unrest but that can be put down by a militarised police force, supported by a battle-hardened military as is happening in the US.

In the circumstances, we need to ask the US$ Trillion question – Why are all the central banks focusing on asset inflation via creation of money out of thin air?

The answer: THE FIAT MONEY SYSTEM IS THE ECONOMY, STUPID!

It used to be that the Petro-dollar was the linchpin of the global economy. However, when the derivatives market took off and became a US$800 Trillion global casino, the US$ toilet paper became the currency in global financial trading and speculation.

All the TBTF banks were leveraged to their eyeballs and the collaterals were hypothecated and re-hypothecated so many times over, it became an inverted pyramid joke.

The collaterals were bundled up into CDOs etc. rated AAA by corrupt rating agencies and traded. We need not repeat this old story. The point we are making here is that not only are the collaterals junks but they are supporting a mountain of debts in the trillions. Therefore, when collaterals are impaired the TBTF banks are in a shit-hole from which they cannot get out. The FED and other central banks have no choice but to bail out the TBTF banks if a systemic failure is to be avoided. If all the junk collaterals were to be off-loaded at once in the full glare of public scrutiny, there would be a run on all the banks. So, what was required was a stealth rescue effort. The TBTF banks were allowed to unload the junk collaterals bit by bit by the various schemes of the FED culminating in the US$85 billion a month purchases of treasury bonds and mortgages by the FED.

Additionally, newly “minted” collaterals were used to replace the junks so as to clean up the balance sheets of the TBTF banks. I have stated earlier that the minimum amount of toxic assets needed to be mopped up is US$20 trillion. After five years, the FED has just scratched the surface. It is debatable how many US$ Trillions the FED has actually pumped into the system directly and indirectly. How much and how long more can the FED continue to pump US$ toilet paper into the system without creating a massive loss of confidence in the dollar? When the balance sheet of the FED reaches US$7 Trillion or maybe US$10 Trillion? It is anybody’s guess.

For sure, there will be a point when another US$100 Billion is created on top of the stash of US$ toilet papers which will tip the scale and collapse the entire system. It is a catch-22 for the FED. If it stops creating fiat money out of thin air, the fiat money system would collapse immediately. If it continues with more money creation, it merely postpones the inevitable and more devastating end-game. This is the price we all have to pay for allowing the fiat money system to hold sway for so long.

The world was conned into accepting the biggest Ponzi scheme in the history of banking and finance – the US$ Global Reserve Currency Ponzi Scheme.

This scheme was created on a sand castle of debt, specifically US Treasury Bonds. The world does not need a Global Reserve Currency. Global trade can be conducted in any currency in accordance to the needs and resources of a country.

Why should there be a special privilege given to only one country to have its currency as the sole reserve currency for purposes of trade? It makes no sense as it is the result of US imperialist policies under the pretext of the Cold War. The con was based on the propaganda that the US$ should be the preferred currency and the US Treasury Bond is the “safest asset” to have in the event of an outbreak of war between the Western Imperialist camp and the Soviet bloc. We were told this arrangement was necessary if we are to enjoy the protection of the mighty US superpower!

Yet, when the Soviet bloc collapsed no one questioned the need to perpetuate the system.

Another spin was propagated. The US was the linchpin in the new era of globalisation as the US market was the biggest consumer / export market. Everyone was caught in this web of deceit. The US market was a market built on a mountain of debt. Adding insult to injury, the US consumers paid for the goods produced by millions breaking their backs with US$ toilet paper money!

Some so-called currency experts have asserted that no other currency can replace the US$ toilet paper as the global reserve currency because no other country has a bond market like the US bond market, dominated by the US treasury bonds.  What an idiotic statement!

If a country is not in debt, there is no need for any bonds to be issued. A bond is an I.O.U. A bond is a mere paper pledge to repay a debt.

And anyone who says and continues to perpetuate the myth that a US debt is a better debt and is more secure is an A@#hole!

Why would anyone want to work and produce goods which are sold and paid in US$ toilet paper and then use the surplus US$ toilet paper to lend to the US government who repays the debt by merely printing more US$ toilet paper?

So, do you still think the world needs a US$ toilet paper money as a reserve currency?


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