Saturday, October 23, 2010

‘ROLE OF FORCE IN STRATEGIC AFFAIRS’ Decline and Fall of the West

World's capital markets: an out-of-control computerized Casino!

I had made an observation for comments by the presiding deity led by Sir Lawrence Freedman (involved with Chilcot Enquiry that I have written about as the usual British whitewash) in the session before lunch, on 21 October. I had compared the current decades to end 16 century East West confrontation when the Eastern power the Ottomans , successors of Aryans, Arabs ,Mongols,Tatars ,Turks etc had reached the maximum overstretch upto the gates of Vienna .Europe , and then the US at head after WWII, had rolled back eastern armies ,colonized and still exploits the nations of the east .After the collapse of the USSR in 1990, West and Nato installed pro-west rulers in Ukraine (,Yushchenko, removed early this year), in Georgia and use of base in Kyrgyzstan , but now the shift has begun for the decline (and fall) of the west .USSR collapsed because of high defense expenditure .US now spends $700 billions as much as the rest of the world put together ,but its armed are forces caught in a quagmire in Iraq , with Tehran now calling the shots in Baghdad.(with acting Iraqi PM Maliki in Iran for help)

It may be recalled that after centuries of warfare between the Byzantine and Persian empires , both were exhausted .Then the Bedouins from the deserts of Arabia ,with the new egalitarian ideology of Islam conquered almost all their territories .Moscow collapsed , now what about Washington?!

This was not seriously dealt with by the Chair .I had then left.

Unless we take into account the coming fast decline of the West ,India cannot formulate any realistic strategic policies .India’s strategic community is still ruled by US –UK theories and writings and propaganda and remains beholden to pre October 2009 era ( decline announced by the collapse of Lahman Brothers and Merryl Lynch , basically the financiers have always ruled the world ).

On the subject of economic and financial decline and possible fall of the West here is my last piece on the subject. It has URLs of my articles about the decline of the US led West with a piece Decline of the American Century dated 11 Sep 2002 .

The Looming Mother of all Economic and Social Crisis,, etc

“Keynes's collective work amounted to a powerful argument that capitalism was by its very nature unstable and prone to collapse. Far from trending toward some magical state of equilibrium, capitalism would inevitably do the opposite. It would lurch over a cliff," --- Hyman Minsky.

On Thursday, May 6, 2010, ninety minutes before the end of the trading day, the U.S. stock market almost melted down. The Dow Jones Industrial Average dropped nearly 1,000 points. The market recovered before the end and closed down 348 points, or 3.2%, like a giant 747 narrowly averting a crash landing, but the questions of the day are: What happened? And what does it mean?

Said Robert Reich on his blog on May 6, “at this point no one knows why. Some say it was a sudden burst of worries about Greece's debt and the increasing possibility of a default that might cause a run by global investors. Others point to a "trading error." Giant high-speed computers generate millions in trade based on instructions embedded in computer programs designed to move fast enough to beat everyone else.”

Again on Friday, May 7, Dow fell another 140 points in a wild trading day. The decline wiped out US market gains for the year. The Dow closed down to 10,380!

World's capital markets: an out-of-control computerized Casino!

“Regardless of why it happened, it's further evidence that the nation's and the world's capital markets have become a vast out-of-control casino in which fortunes can be made or lost in an instant—which would be fine except for the fact that most of us have put our life savings there. Pension funds, mutual funds, school endowments—the value of all of this depends on a mechanism that can lose a trillion dollars in minutes without anyone having a clear idea why. So much of the market now depends on computer programs and mathematical models that no one fully understands, so much trading is in the hands of a few people whose fat thumbs or momentary carelessness might sink the economy, so much of global wealth now depends on who can move their money quickest at the slightest provocation—that we are toying with financial disaster every day. The luck or foolishness of a few traders, and inside knowledge and information that some possess and others don't, combined with ultra high-speed computers, put us all at the whim of a system whose risk is way out of proportion to any public benefits,” concluded Reich.

Greek Sickness Infects EU -PIGS to Slaughter

The austerity plans and the bailout packet for Greece which have adversely dented the ruling coalition of Chancellor Angela Merkel’s party in the just concluded regional elections in Germany, because Berlin has to foot the bill, would spread around Europe and beyond. It believed that the debt of five EU members Portugal, Ireland, Greece and Spain (PIGS) totals around $3.9 trillion. Britain’s debt is larger than any one of them.

Well-known US economist and political activist Lyndon H. LaRouche, Jr. voiced strong condemnation “the British swine have once again imposed a 1923-style hyper-inflationary collapse on modern Germany, with the trillions-dollar bailout scheme imposed on the Euro zone this past weekend. Only the immediate enactment of a Glass-Steagall law could prevent the United States itself from falling into the same fate now destined for continental European victims such as, above all other targets for total destruction, the Federal Republic of Germany.”

Bank of England Chief King paints a disastrous future for the country

London’s financially precarious position, which has been known for quite some time, was further unveiled by Edmund Conway, the Economics Editor of the Telegraph, UK. Conway revealed that US economist David Hale, who recently met with Mervyn King, Bank of England boss, was told by the latter that, "whoever wins this election will be out of power for a whole generation because of how tough the fiscal austerity will have to be."

Edmund Conway went on to further expose the untenable crisis awaiting UK:

"…no one yet comprehends just how tough the next five years will be. For obvious reasons: we have not experienced anything like it in our lifetimes. We have been insulated from the full pain of the financial/economic crisis so far by unprecedented low interest rates and by the bank bailouts. At some point, the anesthetic will wear off and we will face a period of austerity that may well make the ruling party so unpopular that it effectively becomes unelectable for decades. There will be strikes; there will be stagnation; there will probably be a double dip of some variety. But this time the pain will be unmistakably imposed by the politicians."

This analysis was further strengthened by former British minister, Michael Portillo, who said that the "financial crisis ravaging Britain would take 20 years to resolve, but the next five years would be critical!"

The Institute for Fiscal Studies had earlier warned that all three parties were hiding the full details of their plans to cut the deficit from voters. It said that the scale of cuts following the election could be the deepest since comparable records began just after World War II.

“Instability is an inherent and inescapable flaw of capitalism."

Hyman Minsky, a hitherto obscure macro-economist, who saw what was coming, predicted, decades ago, almost exactly the kind of meltdown that is hammering the global economy.

Minsky believed in capitalism, but he also believed it had almost a genetic weakness. Modern finance, he argued, was far from the stabilizing force that mainstream economics portrayed: rather, it was a system that created the illusion of stability while simultaneously creating the conditions for an inevitable and dramatic collapse.

Minsky's vision might have been dark, but he was not a fatalist; he believed it was possible to craft policies that could blunt the collateral damage caused by financial crises.

In his writings, Minsky looked to his intellectual hero, Keynes, arguably the greatest economist of the 20th century. But where most economists drew a single, simplistic lesson from Keynes--that government could step in and micromanage the economy, smooth out the business cycle, and keep things on an even keel--Minsky had no interest in what he and a handful of other dissident economists came to call "bastard Keynesian-ism."

Instead, Minsky drew his own far darker lessons from Keynes's landmark writings, which dealt not only with the problem of unemployment, but with money and banking. Although Keynes had never stated this explicitly, Minsky argued that Keynes's collective work amounted to a powerful argument that capitalism was by its very nature unstable and prone to collapse. Far from trending toward some magical state of equilibrium, capitalism would inevitably do the opposite. It would lurch over a cliff.

Minsky’s "Financial Instability Hypothesis"

In the wake of a depression, he noted, financial institutions are extraordinarily conservative, as are businesses. With the borrowers and the lenders who fuel the economy all steering clear of high-risk deals, things go smoothly: loans are almost always paid on time, businesses generally succeed, and everyone does well. That success, however, inevitably encourages borrowers and lenders to take on more risk in the reasonable hope of making more money. As Minsky observed, "Success breeds a disregard of the possibility of failure."

As people forget that failure is a possibility, a "euphoric economy" eventually develops, fueled by the rise of far riskier borrowers--what he called speculative borrowers, whose income would cover interest payments but not the principal; and those he called "Ponzi borrowers," whose income could cover neither, and could only pay their bills by borrowing still further. As these latter categories grew, the overall economy would shift from a conservative but profitable environment to a much more freewheeling system dominated by players whose survival depended not on sound business plans, but on borrowed money and freely available credit. Once that kind of economy developed, any panic could crash the market. The failure of a single firm, for example, or the revelation of a staggering fraud, could trigger fear and a sudden economy-wide attempt to shed debt.

"Minsky Moment"

This watershed moment - later dubbed the "Minsky moment" - would create an environment deeply inhospitable to all borrowers. The speculators and Ponzi borrowers would collapse first, as they lost access to the credit they needed to survive. Even the more stable players might find themselves unable to pay their debt without selling off assets; their forced sales would send asset prices spiraling downward, and inevitably, the entire rickety financial edifice would start to collapse. Businesses would falter, and the crisis would spill over to the "real" economy that depended on the now-collapsing financial system. (Note: the write up on Minsky has been extracted from “Why Capitalism Fails“by Stephen Mihm in the Boston Globe of 14 September, 2009.)

”Humanity faces the most serious crisis in modern history.”

In a book titled “The Global Economic Crisis, the Great Depression of the XXI Century,” edited by Prof Michel Chossudovsky and Andrew Gavin Marshall (to be released by end May), over a dozen distinguished economists and writers, Ellen Brown, Tom Burghardt, Michel Chossudovsky, Richard C. Cook, Shamus Cooke, John Bellamy Foster, Michael Hudson, Tanya Cariina Hsu, Fred Magdoff, Andrew Gavin Marshall, James Petras, Peter Phillips, Peter Dale Scott, Bill Van Auken, Claudia von Werlhof and Mike Whitney look under the glittering facade of western Capitalism and reveal a complex web of deceit and media distortion which serves to conceal the workings of the global economic system and its devastating impact on people's lives.

Despite the diversity of viewpoints and perspectives presented within this volume, all of the contributors ultimately come to the same conclusion: humanity is at the crossroads of the most serious economic and social crisis in modern history.

The economic recession is deep-seated in all major regions of the world, resulting in mass unemployment, the collapse of state social programs and the impoverishment of millions of people. The crisis—in tandem with a worldwide process of militarization, a "war without borders" led by Washington and its NATO allies—is intimately related to the restructuring of the global economy. The global financial architecture sustains strategic and national security objectives of the US-led West and their powerful business elites which control and dominate the functions of civilian government.

This book explains how the Federal Reserve (a private body), the Council on Foreign Relations, the Bank for International Settlements, and corporate boardrooms on Wall Street take far-reaching financial transactions routinely from computer terminals linked up to major stock markets, at the touch of a mouse button.

“The meltdown of financial markets in 2008-2009 was the result of institutionalized fraud and financial manipulation. The "bank bailouts" were implemented on the instructions of Wall Street, leading to the largest transfer of money wealth in recorded history, while simultaneously creating an insurmountable public debt.”

This process of economic decline is cumulative. The payments system of money transactions is in disarray. Payments of wages are no longer implemented, credit is disrupted and capital investments are at a standstill. Meanwhile, in Western countries, the "social safety net" inherited from the welfare state, which protects the unemployed during an economic downturn, is also in jeopardy.

The Myth of Economic Recovery

While the existence of a "Great Depression" on the scale of the 1930s is often acknowledged, it is veiled by false claims: "The economy is on the road to recovery". (The US recovered from the 1930s depression by the booming economic industrial production during and posts WWII, when it had a vibrant and expanding industrial economy with European powers dependent on it–a process carried on after the War’s end, which shifted the financial centre from London to Wall Street.)

The financial meltdown is not simply composed of the housing real estate bubble--which has already burst--but there are many more bubbles, all of which dwarf the housing bubble burst of 2008.

Regarding the so called economic recovery, already in early 2010, the "recovery" of the US economy has been predicted and confirmed through a carefully worded barrage of media disinformation. The social plight of increased unemployment in the US has been scrupulously camouflaged. Economists view bankruptcy as a macroeconomic phenomenon. The media reports on bankruptcies fail to provide an overall picture of what is happening at the national and international levels. When all these simultaneous plant closures in towns and cities across the land are added together, a very different picture emerges: entire sectors of a national economy are closing down.

Public opinion continues to be misled as to the causes and consequences of the economic crisis, not to mention the policy solutions. People are led to believe that the economy has a logic of its own which depends on the free interplay of market forces, hiding the role of powerful financial actors who pull the strings in the corporate boardrooms and have willfully influenced the course of economic events.

“The American Dream” morphs into a nightmare for the majority

The relentless and fraudulent appropriation of wealth is upheld as an integral part of "the American dream", a means of spreading the benefits of economic growth. A myth becomes entrenched that "without wealth at the top, there would be nothing to trickle down." This is pure hogwash.

Media disinformation largely serves the interests of a handful of global banks and institutional speculators who use their command over financial and commodity markets to amass vast amounts of wealth. The "bank bailouts", presented to the public as a requisite for economic recovery, have facilitated and legitimized a further process of appropriation of wealth. With inside information and foreknowledge, major financial players, using the instruments of speculative trade, have the ability to fiddle and rig market movements to their advantage, precipitate the collapse of a competitor and wreak havoc on the economies of developing countries. These tools of manipulation have become an integral part of the financial architecture; they are embedded in the system.

The Failure of Mainstream Economics

The economics profession rarely addresses the actual "real world" functioning of markets. Theoretical constructs centered on mathematical models serve to represent an abstract, fictional world far removed from reality. By failing to examine the interplay of powerful economic actors in the "real life" economy, the processes of market rigging, financial manipulation and fraud get overlooked. The concentration and centralization of economic decision-making, the role of the financial elites, the economic thinks tanks, the corporate boardrooms: none of these issues are examined in the universities’ economics programs. The theoretical construct is dysfunctional; it cannot be used to provide an understanding of the economic crisis.

Economic science has become an ideological construct to camouflage and justify the New World Order. The powers of market manipulation which serve to appropriate vast amounts of wealth are rarely addressed. And when they are acknowledged, they are considered to belong to the realm of sociology or political science. This means that the policy and institutional framework behind this global economic system, which has been shaped in the course of the last thirty years, is rarely analyzed by corporate hired economists.

Poverty and Social Inequality
The global political economy thus enriches the very few at the expense of the vast majority. The crisis has contributed to widening social inequalities both within and between countries. Under global capitalism, mounting poverty is not the result of a scarcity or a lack of human and material resources. The structures of social inequality have, quite deliberately, been reinforced, leading not only to a generalized process of impoverishment but also to the demise of the middle and upper middle income groups.
Bankruptcies have hit several of the most vibrant sectors of the consumer economy. The middle classes in the West have, for several decades, been subjected to the erosion of their material wealth. It exists in theory, built and sustained by household and other debts. With the demise of the civilian economy, the development of America’s war economy, supported by a whopping near-trillion dollar defense budget, has reached new heights. As stock markets tumble and the recession unfolds, the advanced weapons industries, the military and national security contractors and the up-and-coming mercenary companies (among others) have experienced a thriving and booming growth of their various activities.
War and the Economic Crisis
Wars lead to the impoverishment of people at home and around the world. The provision of essential goods and services to meet basic human needs has been replaced by a profit-driven "killing machine" in support of America’s "Global War on Terror". While the poor are made to fight in Iraq and elsewhere, wars enrich the upper class, which control industry, the military, oil and banking. “Western nations, particularly the United States, spend hundreds of billions of dollars a year to murder innocent people in far-away impoverished nations, while the people at home suffer the disparities of poverty, class, gender and racial divides.”
An outright "economic war" resulting in unemployment, poverty and disease is carried out through the free market. In the last twenty years, the global "free market" economy has brought poverty and social destitution to the lives of millions of people. Instead of tackling the impending social catastrophe, Western governments, to serve the interests of the economic elites, have installed a "Big Brother" police state, with a mandate to confront and repress all forms of opposition and social dissent. George Orwell’s 1984 are being created in USA.
The economic and social crisis has by no means reached its climax, and entire countries, including Greece and Iceland, are at risk. One need only look at the escalation of the Middle East Central Asian war and the US-NATO threats to China, Russia and Iran to witness how war and the economy are intimately related.
The Decline of the West and a Depressing Scenario
In the blog Global Guerrilla, John Robb, writing on The Decline of the West states, “the current sovereign debt crisis is another battle in a war for dominance between "our" integrated, impersonal global economic system and traditional nation-states. At issue is whether a nation-state serves the interests of the governed or the interests of a global economic system.
The global economic system is winning. The 2008 financial crisis, the first real battle of this war (as opposed to the early losses in skirmishes in Russia, Argentina, the Balkans, etc) was a resounding defeat for nation-states. The current crisis in the EU will almost certainly end with the same results.
When this war ends, and it won't be long, the global economic and financial system will be the victor. The nation-states of the West will join with those of the global south, mere shells of states that serve only to enforce the interests of the global economic system. More market-states than nation-states, citizens’ incomes will fall to developing world levels (made easy to due highly portable productivity), and wealth will stratify. Regulatory protections will be weak. Civil service pensions will be erased and corruption will reign. The once-dominant militaries of the West will be reduced to a small fraction of their current size, and their focus will be on the maintenance of internal control rather than on external threats. The clear and unambiguous message to every citizen of the West will be “you’re on your own.”
It will fragment society and lead to perpetual stagnation/depression, endemic violence/corruption, and squalor. New sources of order will see the rise of the criminal entrepreneur, whether they are the be-suited corporate gangster or the gang tattooed thug. For in the world of hollow states (without a morality that limits behavior) and limitless connectivity to the global economic system, these criminal entrepreneurs quickly become dominant, violently coercing or corrupting everyone in the path to their enrichment. (In former socialist states of east and central Europe, local and migrant mafias form an important segment of the new ruling elites.)
The author has kept a watch and written about the decline and fall of US hegemony since 11 September, 2002, when a declining US empire appeared at its most dazzling, like the afternoon sun past its prime.
The decline of the American Century Sept 11, 2002 Atimes:
The US Empire –Beginning of the End Game 24 Nov, 2006
The Decline and Coming Fall of US Hegemony March 30, 2008
-- An editorial titled 'Collapse of U.S. economy' in Belleville Intelligencer of 27 Feb, 2008 confirms the by now generally accepted ill health of US economy. Harry Koza in the Globe and Mail recently quoted Bernard Connelly, the global strategist at Banque AIG/CIA... in London that the likelihood of a Great Depression is growing by the day. Martin Wolf of U.K.'s Financial Times cited Dr. Nouriel Roubini of the New York University's Stern School of Business, who outlines how the losses of the American financial system will grow to more than $1 trillion, an amount equal to all the assets of all American banks.
The next domino to fall will be credit card defaults, and after that...who knows? There are so many exotic funds out there, with trillions of dollars in paper--or rather computer-screen money--and all about to disintegrate into nothingness. Over the next couple of years, scores of banks that have thrived on these devices, based on quickly disappearing equities, will fail.
The most frightening forecast so far comes from the Global Europe Anticipation Bulletin (GEAB), "The end of the third quarter of 2008 will be marked by a new tipping point in the unfolding of the global systemic crisis. In the United States, this new tipping point will translate into - get this - a collapse of the real economy, (the) final socio-economic stage of the serial bursting of the housing and financial bubbles and of the pursuance of the U.S. dollar fall. The collapse of U.S. real economy means the virtual freeze of the American economic machinery: private and public bankruptcies in large numbers, companies and public services closing down."
We are not experiencing a "remake" of the 1929 crisis or a repetition of the 1970s oil crises or 1987 stock market crisis. What we will have, instead, is truly a global momentous threat - a true turning point affecting the entire planet and questioning the very foundations of the international system upon which the world was organized in the last decades."
Western Military-Capitalist Civilization in Disarray September 25, 2008;
"Credit easing does not and cannot substitute for earnings, wages or tax revenues."---Max Fraad Wolff
"The [US] financial system is out of control and has led the economy into a wildly turbulent sea of heavily leveraged speculation. … The road ahead is dark and unknown." Steve Fraser author of" Wall Street: America's Dream Palace."
"Before the US economy can truly begin to expand again, the savings rate must rise to pre-bubble levels of 8pc--$2 trillion of household debt must be eliminated",---Economist David Rosenberg
Corporate Culture and Greed Sink the American Republic 17 May, 2009
"Over-grown military establishments are. Under any form of government inauspicious to liberty, and are to be regarded as particularly hostile to republican liberty."--George Washington (1732-1799), First US President.
"It is part of the general pattern of misguided policy that our country is now geared to an arms economy which was bred in an artificially induced psychosis of war hysteria and nurtured upon an incessant propaganda of fear." --General Douglas MacArthur, Speech, May 15, 1951
"[The] conjunction of an immense military establishment and a large arms industry is new in the American experience. . . . In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist." --Dwight D. Eisenhower (1890-1969), 34th US President, Farewell Address, Jan. 17, 1961
Confirmation of Pressure on Dollar and US Decline 8 October, 2009
And finally,
Falling Empires and their Currencies Rome, France, England and the USA Part 2: From England to the United States of America Rolf Nef January 16, 2007

Monday, October 4, 2010

Soviet Collapse Ruined the U.S.A.....

Georgi Arbatov was rightdepriving us of an enemy might have been the worst thing that Gorbachev could have done to us. When the “evil empire” was no longer there to force us into adopting a “good” counterpoint, we were without purpose. Lucky for us that the CIA had a ready-made nemesis for us to posture against, a global network of super terrorists–an army of Islamic James Bonds, otherwise known as “Al-CIAda.” All they had to do was to point us in their direction.]
04 October 2010

In 2005, then-President Vladimir Putin called the collapse of the Soviet Union the greatest geopolitical catastrophe of the 20th century. As time passes, I find myself agreeing with him more and more.

To be sure, my regrets are fundamentally different from Putin’s. I’ve been a U.S. citizen for three decades, and my son is as American as they come. The United States is clearly my home, and I consider myself a patriotic American. This is why I decry the disappearance of the Soviet empire. Its demise may have dealt a potentially mortal blow to the United States.

The Soviet Union strained its resources and pauperized, exploited and oppressed its own people in order to compete with the United States, the embodiment of the bitterly adversarial capitalist system. Most Soviets didn’t believe the authorities who told them that they were living and working in a “workers’ paradise.” It was a struggle that its leaders believed would prove the supremacy of communism. It was bad for the Soviet Union but a godsend for the United States.

The Soviet propaganda droned incessantly about how workers are impoverished and exploited under capitalism. It tried to flip the truth on its head: to deny that the U.S. government after the Great Depression implemented policies that helped raise incomes while drastically improving the work conditions and financial well-being of workers.

In the 1950s, things got even better for U.S. workers. The gap between the rich and the poor was the narrowest in U.S. history, and the U.S. middle class reached new levels of prosperity.

Soviet forays into post-colonial Africa and Asia and the revolutionary movements it fomented in Latin America forced Washington to pay attention to those countries and assist in their development. Even discounting support for the occasional tyrant, it did much good and helped spread U.S. influence and American values around the world. Even if they are not always followed in practice, democracy and free enterprise have become dominant political values globally.

To counter the Soviet “Evil Empire,” the United States willy-nilly had to go for the moral high ground and become a moral arbiter in world affairs. Now, China is gradually replacing U.S. influence the world over.

Finally, the Soviet Union strained its dysfunctional economic system to create a first-rate scientific and military complex. Sputnik, launched in 1957, galvanized the United States into action. A huge government effort to improve math, science and engineering followed. Funding for education and research was increased sharply, and the government and private universities expanded programs for the brightest students to go to the best universities, regardless of their parents’ ability to pay. The space race did little for the average Russian, but it did create a broad infrastructure for science and technology in the United States that set the foundation for U.S. supremacy in innovation, which the United States enjoys to this day.

After the Soviet collapse, Washington found a different adversary: Al-CIAda.... As a result, the leading 21st-century military and economic power is wasting its resources on a medieval war, gradually descending to the level of its new foe.

Osama bin Laden may be history’s greatest military strategist. He made Washington abandon its lofty moral ideals, forced the United States into a sea of debt and played a key role in pushing the United States off its pedestal of being the world’s supreme economic power. But ultimately, it is the collapse of the Soviet Union that is to blame.

Alexei Bayer, a native Muscovite, is a New York-based economist.

Saturday, October 2, 2010

Friday, October 1, 2010

B.C.C.I.: The Dirtiest Bank of All

B.C.C.I.: The Dirtiest Bank of All....the CIA/MOSSAD Bank....

By JONATHAN BEATY and S.C. GWYNNE NEW YORK;Cathy Booth/Miami, Jay Branegan/Hong Kong and Helen Gibson/

"I could tell you what you want to know, but I must worry about my wife and family -- they could be killed."

-- a former top B.C.C.I. officer....

"We better not talk about this over the phone. We've found some bugs in offices that haven't been put there by law enforcement."

-- a Manhattan investigator probing B.C.C.I.

Bank-fraud cases are usually dry, tedious affairs. Not this one. Nothing in the history of modern financial scandals rivals the unfolding saga of the Bank of Credit & Commerce International, the $20 billion rogue empire that regulators in 62 countries shut down early this month in a stunning global sweep. Never has a single scandal involved so much money, so many nations or so many prominent people.

Superlatives are quickly exhausted: it is the largest corporate criminal enterprise ever, the biggest Ponzi scheme, the most pervasive money-laundering operation and financial supermarket ever created for the likes of Manuel Noriega, Ferdinand Marcos, Saddam Hussein and the Colombian drug barons. B.C.C.I. even accomplished a Stealth-like invasion of the U.S. banking industry by secretly buying First American Bankshares, a Washington-based holding company with offices stretching from Florida to New York, whose chairman is former U.S. Defense Secretary Clark Clifford.

But B.C.C.I. is more than just a criminal bank. From interviews with sources close to B.C.C.I., TIME has pieced together a portrait of a clandestine division of the bank called the "black network," which functions as a global intelligence operation and a Mafia-like enforcement squad. Operating primarily out of the bank's offices in Karachi, Pakistan, the 1,500-employee black network has used sophisticated spy equipment and techniques, along with bribery, extortion, kidnapping and even, by some accounts, murder. The black network -- so named by its own members -- stops at almost nothing to further the bank's aims the world over.

The more conventional departments of B.C.C.I. handled such services as laundering money for the drug trade and helping dictators loot their national treasuries. The black network, which is still functioning, operates a lucrative arms-trade business and transports drugs and gold. According to investigators and participants in those operations, it often works with Western and Middle Eastern intelligence agencies. The strange and still murky ties between B.C.C.I. and the intelligence agencies of several countries are so pervasive that even the White House has become entangled. As TIME reported earlier this month, the National Security Council used B.C.C.I. to funnel money for the Iran-contra deals, and the CIA maintained accounts in B.C.C.I. for covert operations. Moreover, investigators have told TIME that the Defense Intelligence Agency has maintained a slush-fund account with B.C.C.I., apparently to pay for clandestine activities.

But the CIA may have used B.C.C.I. as more than an undercover banker: U.S. agents collaborated with the black network in several operations, according to a B.C.C.I. black-network "officer" who is now a secret U.S. government witness. Sources have told investigators that B.C.C.I. worked closely with Israel's spy agencies and other Western intelligence groups as well, especially in arms deals. The bank also maintained cozy relationships with international terrorists, say investigators who discovered suspected terrorist accounts for Libya, Syria and the Palestine Liberation Organization in B.C.C.I.'s London offices.

.....The bank's intelligence connections and alleged bribery of public officials around the world point to an explanation for the most persistent mystery in the B.C.C.I. scandal: why banking and law-enforcement authorities allowed the bank to spin out of control for so long.

In the U.S. investigators now say openly that the Justice Department has not only reined in its own probe of the bank but is also part of a concerted campaign to derail any full investigation. Says Robert Morgenthau, the Manhattan district attorney, who first launched his investigations into B.C.C.I. two years ago: "We have had no cooperation from the Justice Department since we first asked for records in March 1990. In fact they are impeding our investigation, and Justice Department representatives are asking witnesses not to cooperate with us."


1976: CIA and Other Intelligence Agencies Use BCCI to Control and Manipulate Criminals and CIA Terrorists Worldwide

[Source: Terry Kirk / Financial Times]

Investigative journalist Joseph Trento will later report that in 1976, the Safari Club, a newly formed secret cabal of intelligence agencies (see September 1, 1976-Early 1980s), decides it needs a network of banks to help finance its intelligence operations. Saudi Intelligence Minister Kamal Adham is given the task. “With the official blessing of George H. W. Bush as the head of the CIA, Adham transformed a small Pakistani merchant bank, the Bank of Credit and Commerce International (BCCI), into a world-wide money-laundering machine, buying banks around the world to create the biggest clandestine money network in history.” BCCI was founded in 1972 by a Pakistani named Agha Hasan Abedi, who was an associate of Adham’s. Bush himself has an account at BCCI established while still director of the CIA. French customs will later raid the Paris BCCI branch and discover the account in Bush’s name. [Trento, 2005, pp. 104] Bush, Adham, and other intelligence heads work with Abedi to contrive “a plan that seemed too good to be true. The bank would solicit the business of every major terrorist, rebel, and underground organization in the world. The intelligence thus gained would be shared with ‘friends’ of BCCI.” CIA operative Raymond Close works closely with Adham on this. BCCI taps “into the CIA’s stockpile of misfits and malcontents to help man a 1,500-strong group of assassins and enforcers.” [Trento, 2005, pp. 104] Soon, BCCI becomes the fastest growing bank in the world. Time magazine will later describe BCCI as not just a bank, but also “a global intelligence operation and a Mafia-like enforcement squad. Operating primarily out of the bank’s offices in Karachi, Pakistan, the 1,500-employee black network has used sophisticated spy equipment and techniques, along with bribery, extortion, kidnapping and even, by some accounts, murder. The black network—so named by its own members—stops at almost nothing to further the bank’s aims the world over.” [Time, 7/22/1991]

In 1977 Zbigniew Brzezinski, as President Carter’s National Security Adviser, forms the Nationalities Working Group (NWG) dedicated to the idea of weakening the Soviet Union by inflaming its ethnic tensions. The Islamic populations are regarded as prime targets. Richard Pipes, the father of Daniel Pipes, takes over the leadership of the NWG in 1981. Pipes predicts that with the right encouragement Soviet Muslims will “explode into genocidal fury” against Moscow. According to Richard Cottam, a former CIA official who advised the Carter administration at the time, after the fall of the Shah of Iran in 1978, Brzezinski favored a “de facto alliance with the forces of Islamic resurgence, and with the Republic of Iran.” [Dreyfuss, 2005, pp. 241, 251 - 256]

1978: CIA Begins Covert Action in draw the Soviets in.....

The CIA begins covert action against the Communist government in Afghanistan, which is closely tied to the Soviet Union. Some time this year, the CIA begins training militants in Pakistan and beaming radio propaganda into Afghanistan. By April 1979, US officials are meeting with opponents of the Afghan government to determine their needs. [Blum, 1995, pp. 344] Robert Gates, who will become CIA Director in the early 1990s, will later recall that in a meeting on March 30, 1979, Under Secretary of Defense Walter Slocumbe wonders aloud whether there is “value in keeping the Afghan insurgency going, ‘sucking the Soviets into a Vietnamese quagmire.’” [Gates, 1996, pp. 145] In March 1979, there is a major revolt in Herat province, and in June and August there are large scale army mutinies. [Cooley, 2002, pp. 5] President Carter will formally approve covert aid to opponents of the government in July (see July 3, 1979), which will result in a Russian invasion in December (see December 8, 1979).

Central Intelligence Agency, Robert M. Gates, Walter Slocumbe

War in Afghanistan....
Soviet-Afghan War, Counterterrorism Action Before the inside job of 9/11

November 1978-February 1979: Some US Officials Want to Support Radical Muslims to Contain Soviet Union

In December 1978, President Carter’s National Security Adviser Zbigniew Brzezinski says, “An arc of crisis stretches along the shores of the Indian Ocean, with fragile social and political structures in a region of vital importance to us threatened with fragmentation. The resulting political chaos could well be filled by elements hostile to our values and sympathetic to our adversaries.” [Time, 1/8/1979] There is widespread discontent and rioting in Iran at the time. State Department official Henry Precht will later recall that Brzezinski had the idea “that Islamic forces could be used against the Soviet Union. The theory was, there was an arc of crisis, and so an arc of Islam could be mobilized to contain the Soviets.” [Scott, 2007, pp. 67] In November 1978, President Carter appointed George Ball head of a special White House Iran task force under Brzezinski. Ball recommends the US should drop support for the Shah of Iran and support the radical Islamist opposition of Ayatollah Khomeini. This idea is based on ideas from British Islamic expert Dr. Bernard Lewis, who advocates the balkanization of the entire Muslim Near East along tribal and religious lines. The chaos would spread in what he also calls an “arc of crisis” and ultimately destabilize the Muslim regions of the Soviet Union. The Shah will later comment in exile, “I did not know it then, perhaps I did not want to know? But it is clear to me now that the Americans wanted me out. Clearly this is what the human rights advocates in the State Department wanted. What was I to make of the Administration’s sudden decision to call former Under Secretary of State George Ball to the White House as an adviser on Iran? Ball was among those Americans who wanted to abandon me and ultimately my country.” [Engdahl, 1992] While there is later debate about US policy towards Iran actually is at this time, it will be noted that the Carter administration had “no clear policy” due to internal divisions and confusion. [Keddie, 2003] The Shah abdicates on January 16, 1979, and Ayatollah Khomeini returns from exile to Iran on February 1, 1979, taking over the government. Brzezinski will attempt to create a de facto alliance with Khomeini’s new fundamentalist government, but his efforts will come to a half with the Iranian hostage crisis in November 1979 (see February-November 4, 1979).

Entity Tags: Shah Mohammad Reza Pahlavi, James Earl “Jimmy” Carter, Jr., George Ball, Zbigniew Brzezinski, Bernard Lewis, Henry Precht, Seyyed Ruhollah Khomeini
War in Afghanistan

Category Tags: Soviet-Afghan War, Counterterrorism Policy/Politics, US Dominance, US Intel
February-November 4, 1979: US Attempt to Create De Facto Alliance with Khomeini’s Iranian Government Ends Disastrously

After the Shah Mohammad Reza Pahlavi is deposed in Iran and Ayatollah Khomeini takes over as Iran’s new leader in February 1979, the US is interested in continuing to work with the Iranian government. At first the US is taken aback by the new fundamentalist Islamic government, and National Security Adviser Zbigniew Brzezinski contemplates fomenting a military coup to stop Khomeini. But Khomeini is fiercely anti-communist, and Brzezinski soon decides that Iran’s new government can become part of an effective anti-Soviet alliance he calls the “arc of crisis’ (see November 1978-February 1979). The US embassy in Teheran, Iran, remains open, and more US officials come to Iran and begin tentative talks there. [Dreyfuss, 2005, pp. 236-243] The CIA in particular begins secretly collaborating with Iranian intelligence, providing information about the Soviet Union, Afghanistan, and Iraq. The CIA and Iran both covertly work to destabilize the pro-Soviet government in Afghanistan. [Dreyfuss, 2005, pp. 264-265] In early November 1979, Brzezinski secretly meets with Iranian Prime Minister Mehdi Bazargan, as well as Iran’s foreign minister and defense minister, in Algiers, Algeria. But shortly before the meeting, the US agrees to allow the Shah, dying with cancer, to come to the US for medical treatment. Khomeini is enraged, and on November 4, just three days after the Algeria meeting begins, Khomeini arranges for students to take over the US embassy in Teheran and seize hostages. This realigns political forces in Iran and allows Khomeini to sideline Bazargan and other others meeting in Algeria, rendering the negotiations there moot. Brzezinski’s attempts to create a de facto alliance with Iran collapse. The US hostages will be held for over a year before finally being freed. [Dreyfuss, 2005, pp. 240-243]

Case in point is the PROMISE spyware sold to Khalid bin Mahfouz the eldest son of a Saudi entrepreneur who founded the National Commercial Bank in Saudi Arabia indicted in financing the 9/11 attack and international terrorism and former Chief executive of BCCI and get this Osama Bin Ladins brother in law by marriage to Mahfouz sister.

As well as setting up oil venture with the Taliban regime.

In 1996, Delta Oil Company formed a joint-venture with Nimir Petroleum Company, a company controlled by Osama Bin Laden’s brother in law, financial backer, and sponsor of international terrorism Defendant Khalid Bin Salim Bin Mahfouz.
This joint venture was known as Delta Nimir Khazar Limited and its purpose was to negotiate with the Taliban regime.
In December 1996, the Taliban announced that the Taliban government had agreed to allow a proposed pipeline through Afghanistan.

Delta Oil Company p.331

With Khalid bin Mahfouz, Nimir Petroleum engaged in a relationship with the Taliban regime in or about 1994. Nimir agreed to partner with the Saudi Delta Oil Company, by forming a joint-venture known as Delta Nimir Khazar Limited. Soon after, due to Nimir and Khalid bin Mahfouz’ influence, an agreement was reached between a consortium of oil companies and the Taliban. Nimir’s efforts to lobby for the consortium to reach an agreement with the Taliban regime included a meeting in November 1997 with a Taliban delegation to Texas.


Also note that this was one of the proposed pipeline routes outlined in Brzezinski’s book The Grand Chessboard....