Thursday, March 26, 2009

Brown Calls for EU-US Global Rule

again a "global crisis" is engineered on purpose to enact new global enslavement collars.

maybe the chip isn't embedding in your forehead today but gradually it will be and without so much as a whimper.......

no "change" except the change the masters of the universe want and will get.
easier to pretend the black dewd is on our side when in actuality he is groomed by them for their own purposes not yours or mine.
look who they chose as advisers, look who went to Russia to talk. Baker, Kissinger et al.
come on look who is helping the banking failure iron itself out?
the same fucks that engineeered it in the first place, come the fuck on its not that hard to see why the top mouth pieces are laughing in our faces!
we are had and after awhile its fuckin sad..........

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Tuesday, March 24, 2009

The Impact of Science on Society By Bertrand Russell

preview book online, click aboveon blog title
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Bertrand Russell - The Impact of Science on Society

September 21, 2007

This book published first in 1951 gives an important and rare glimpse into the minds of the elite and their ultimate goals.

First, we must remember that Bertrand Russell himself was a member of the elite whose family had served for generations in support of the ruling establishment. Further, he was an official British government propagandist whose job it was to promote and propogate certain ideas in service to the elite.

The book itself is classical rhetoric in which the ideas and views espoused at the beginning of the book are reasonable and humanitarian. However, these arguments are intended to disarm the reader to later accept the horrors later presented as desireable or inevitable.

The true intent, understanding of his message, and the future planned by the elite can easily be discerned from the following quotes:

Page 51 - Selective Breeding

"Gradually, by selective breeding the congenital differences between rulers and ruled will increase until they become almost different species. A revolt of the plebs would become as unthinkable as an organised insurrection of sheep against the practice of eating mutton.""

Page 54 - Scientific Dictatorship

"After all, most civilized and semi-civilized countries known to history and had a large class of slaves or serfs completely subordinate to their owners. There is nothing in human nature that makes the persistence of such a system impossible. And the whole development of scientific technique has made it easier than it used to be to maintain a despotic rule of a minority. When the government controls the distribution of food, its power is absolute so long as they can count on the police and the armed forces. And their loyalty can be secured by giving them some of the privileges of the governing class. I do not see how any internal movement of revolt can ever bring freedom to the oppressed in a modern scientific dictatorship."

Page 103-104 - Bacteriological War, Population and World Government

"I do not pretend that birth control is the only way in which population can be kept from increasing. There are others, which, one must suppose, opponents of birth control would prefer. War, as I remarked a moment ago, has hitherto been disappointing in this respect, but perhaps bacteriological war may prove more effective. If a Black Death could be spread throughout the world once in every generation survivors could procreate freely without making the world too full. There would be nothing in this to offend the consciences of the devout or to restrain the ambitions of nationalists. The state of affairs might be somewhat unpleasant, but what of that? Really high-minded people are indifferent to happiness, especially other people's. However, I am wandering from the question of stability, to which I must return.

There are three ways of securing a society that shall be stable as regards population. The first is that of birth control, the second that of infanticide or really destructive wars, and the third that of general misery except for a powerful minority. All these methods have been practiced: the first, for example, by the Australian aborigines; the second by the Aztecs, the Spartans, and the rulers of Plato's Republic; the third in the world as some Western internationalists hope to make it and in Soviet Russia... Of these three, only birth control avoids extreme cruelty and unhappiness for the majority of human beings. Meanwhile, so long as there is not a single world government there will be competition for power among the different nations. And as increase of population brings the threat of famine, national power will become more and more obviously the only way of avoiding starvation. There will therefore be blocs in which the hungry nations band together against those that are well fed. That is the explanation of the victory of communism in China.

These considerations prove that a scientific world society cannot be stable unless there is a world government."

Page 105 - Necessity of World Government

"The need for a world government, if the population problem is to be solved in any humane manner, is completely evident on Darwinian principles."

Page 110 - Elite Preservation of Power

"A society is not stable unless it is on the whole satisfactory to the holders of power and the holders of power are not exposed to the risk of successful revolution."

Page 110-111 Food Rationing by World Government

"First, as regards physical conditions. Soil and raw materials must not be used up so fast that scientific progress cannot continually make good the loss by means of new inventions and discoveries... If raw materials are not to be used up too fast, there must not be free competition for their acquisition and use but an international authority to ration them in - such quantities as may from time to time seem compatible with continued industrial prosperity. And similar considerations apply to soil conservation.

Second, as regards population...To deal with this problem it will be necessary to find ways of preventing an increase in world population. If this is to be done otherwise than by wars, pestilences, and famines, it will demand a powerful international authority. This authority should deal out the world's food to the various nations in proportion to their population at the time of the establishment of the authority. If any nation subsequently increased its population it should not on that account receive any more food. The motive for not increasing population would therefore be very compelling."

Page 113-114 - World Army & Massive Upheavals

"My conclusion is that a scientific society can be stable given certain conditions. The first of these is a single government of the whole world, possessing a monopoly of armed force and therefore able to enforce peace. The second condition is a general diffusion of prosperity, so that there is no occasion for envy of one part of the world by another. The third condition (which supposes the second fulfilled) is a low birth rate everywhere, so that the population of the world becomes stationary, or nearly so. The fourth condition is the provision for individual initiative both in work and in play, and the greatest diffusion of power compatible with maintaining the necessary political and economic framework.

The world is a long way from realizing these conditions, and therefore we must expect vast upheavals and appalling suffering before stability is attained. But, while upheavals and suffering have hitherto been the lot of man, we can now see, however dimly and uncertainly, a possible future culmination in which poverty and war will have been overcome, and fear, where it survives, will have become pathological. The road, I fear, is long, but that is no reason for losing sight of the ultimate hope."

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Watch the whole Interview and you will clearly see that "they" are well on their way with their plans, getting rid of YOU!

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Kissinger, Eugenics And Depopulation

By Leuren Moret
Dr. Henry Kissinger, who wrote: "Depopulation should be the highest priority of U.S. foreign policy towards the Third World."
Research on population control, preventing future births, is now being carried out secretly by biotech companies. Dr. Ignacio Chapela, a University of California microbiologist, discovered that wild corn in remote parts of Mexico is contaminated with lab altered DNA. That discovery made him a threat to the biotech industry.
Chapela was denied tenure at UC Berkeley when he reported this to the scientific community, despite the embarrassing discovery that UC Chancellor Berdahl, who was denying him tenure, was getting large cash payments - $40,000 per year - from the LAM Research Corp. in Plano, Texas.
Berdahl served as president of Texas A&M University before coming to Berkeley. During a presentation about his case, Chapela revealed that a spermicidal corn developed by a U.S. company is now being tested in Mexico. Males who unknowingly eat the corn produce non-viable sperm and are unable to reproduce.
Depopulation, also known as eugenics, is quite another thing and was proposed under the Nazis during World War II. It is the deliberate killing off of large segments of living populations and was proposed for Third World countries under President Carter's administration by the National Security Council's Ad Hoc Group on Population Policy.
National Security Memo 200, dated April 24, 1974, and titled "Implications of world wide population growth for U.S. security & overseas interests," says:
"Dr. Henry Kissinger proposed in his memorandum to the NSC that "depopulation should be the highest priority of U.S. foreign policy towards the Third World." He quoted reasons of national security, and because `(t)he U.S. economy will require large and increasing amounts of minerals from abroad, especially from less-developed countries ... Wherever a lessening of population can increase the prospects for such stability, population policy becomes relevant to resources, supplies and to the economic interests of U.S.
Depopulation policy became the top priority under the NSC agenda, Club of Rome and U.S. policymakers like Gen. Alexander Haig, Cyrus Vance, Ed Muskie and Kissinger. According to an NSC spokesman at the time, the United States shared the view of former World Bank President Robert McNamara that the "population crisis" is a greater threat to U.S. national security interests than nuclear annihilation.In 1975, Henry Kissinger established a policy-planning group in the U.S. State Department's Office of Population Affairs. The depopulation "GLOBAL 2000" document for President Jimmy Carter was prepared.
It is no surprise that this policy was established under President Carter with help from Kissinger and Brzezinski - all with ties to David Rockefeller. The Bush family, the Harriman family - the Wall Street business partners of Bush in financing Hitler - and the Rockefeller family are the elite of the American eugenics movement. Even Prince Philip of Britain, a member of the Bilderberg Group, is in favor of depopulation:
"If I were reincarnated I would wish to be returned to earth as a killer virus to lower human population levels" (Prince Philip Duke of Edinburgh, leader of the World Wildlife Fund, quoted in "Are You Ready for Our New Age Future?" Insiders Report, American Policy Center, December 1995).
Secretary of Defense Donald Rumsfeld has been proposing, funding and building Bio-Weapons Level 3 and Level 4 labs at many places around the U.S. even on university campuses and in densely populated urban locations. In a Bio-Weapons Level 4 facility, a single bacteria or virus is lethal. Bio-Weapons Level 4 is the highest level legally allowed in the continental U.S.
For what purpose are these labs being developed, and who will make the decisions on where bio-weapons created in these facilities will be used and on whom? More than 20 world-class microbiologists have been murdered since 2002, mostly in the U.S. and the UK. Nearly all were working on development of ethnic-specific bio-weapons (see Smart Dust, Roboflies &).
Citizens around the U.S. are frantically filing lawsuits to stop these labs on campuses and in communities where they live. Despite the opposition of residents living near UC Davis, where a Bio-Weapons Level 4 lab was planned, it had the support of the towns mayor.
She suddenly reversed her position after a monkey escaped from a high security primate facility on the campus where the bio-weapons lab was proposed. Residents claimed that if UC Davis could not keep monkeys from escaping from their cages, they certainly could not guarantee that a single virus or bacteria would not escape from a test tube. The AWOL monkey killed the project (see Smart Dust, Roboflies&).
Population is a political problem. The extreme secrecy surrounding the takeover of nuclear weapons, NASA and the space program and the development of numerous bio-weapons labs is a threat to civil society, especially in the hands of the military and corporations.
The fascist application of all three of these programs can be used to achieve established U.S. government depopulation policy goals, which may eliminate 2 billion of the worlds existing population through war, famine, disease and any other methods necessary.
Two excellent examples of existing U.S. depopulation policy are, first, the long-term impact on the civilian population from Agent Orange in Vietnam, where the Rockefellers built oil refineries and aluminum plants during the Vietnam War. The second is the permanent contamination of the Middle East and Central Asia with depleted uranium, which, unfortunately, will destroy the genetic future of the populations living in those regions and will also have a global effect already reflected in increases in infant mortality reported in the U.S., Europe, and the UK.
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Peak oilers working the majic that is depopulation!

Oil and People

download pdfImportant Notice: This is a plain text article extracted from Dr Colin Campbell's ASPO Newlsetter 55 (July 2005). Any images, graphs and other non-text components are not shown here. To view this article in its full context and with non-text components, please download the PDF version of the full newsletter. You should look for article #573. PDF versions of all newsletters can be found in the newsletter downloads section.
First published July 2005; article no. 573

The population of the World expanded six-fold in parallel with oil production during the First Half of the Age of Oil. William Stanton, author of The Rapid Growth of Human Population 1750-2000, contributes the following analysis of how population will have to return to pre-Oil Age levels. Let us hope that it does not come to this, but the options explained do have a certain chilling logic.

Reducing Population in step with Oil Depletion

Recent articles in the ASPO Newsletter have agreed that the explosion of world population from about 0.6 billion in 1750 to 6.4 billion today was initiated and sustained by the shift from renewable energy to fossil fuel energy in the Industrial Revolution. There is agreement that the progressive exhaustion of fossil fuel reserves will reverse the process, though there is uncertainty as to what a sustainable global population would be.

In this time of energy abundance, and the complacency it engenders, the vast majority of the general public assumes that what the future holds is “more of the same”. They argue, if pushed, that the expertise inherited by post-fossil-fuel scientists and engineers will allow a smooth transition into a new kind of energy-rich world in which renewable generators will produce as much energy as fossil fuels do now. Such a view is untenable because it ignores the fact that almost all materials essential to modern civilization will be orders of magnitude more costly, and scarce, when they have to be produced using renewable energy instead of fossil fuels.

In 2150, for example, a wind turbine constructed of steel, concrete and plastic may not be able to generate, during its lifetime, as much renewable energy as would have been used up in creating it. Imagine mining, refining and smelting the metal ores, quarrying and transporting the rock, growing the biomass; fabricating the component parts, and erecting and maintaining the structure, using only the trickle of electricity produced by another similar turbine. Vast engineering projects such as constructing the first Airbus A380 airliner (Bowie 2005), using only renewable energy from start to finish, would be unthinkable (to say nothing of flying the plane without oil!).

If, in this article, I discuss ways in which a global population reduction of some 6 billion people is likely to take place during the 21st Century, precedent suggests that nearly everyone will ignore me. “He must be mad”, media reviewers concluded when they read my first probes into the subject two years ago and effectively blacklisted the book (Stanton 2003). After all, do the world’s leading politicians and their scientific advisers, including highly paid demographers working for the United Nations and other international bodies, ever doubt that economic “business as usual” will continue for the foreseeable future?

But, given that ASPO is successfully challenging conventional wisdom on oil depletion (there were four anxious letters on the subject of peak oil in my local weekly newspaper in May), what are the options?

The first and most likely scenario is rejection. People in high places view an alleged need for population reduction with incredulity, scorn and denial. In consequence, the price of fossil fuels, especially oil, goes on rising without causing serious alarm in the West, except perhaps in the business world.

When, probably before 2010, the price is so high that construction of new airliners, airport terminals, Olympic villages and traffic reduction schemes judders to a halt, uncontrollable inflation and recession will spread round the world. The oil price may stabilise for a while, as manufacturing wilts, along with demand for its products.

In Third World nations, without oil, that can neither buy food nor grow it in adequate quantity without mechanised agriculture, a Darwinian struggle for shrinking resources of all kinds will be in full swing. Tribe against tribe, religion against religion, family against family, the imperative to survive will be driving strong groups to take what they want from weak ones. The concept of human rights will be irrelevant: “How can the weak have rights to food, when there is not enough even for the strong”?

It may well be that, in the West, the same argument will affect the thinking of militarily powerful nations. “If billions must die, and we have the technology to ensure that they are others, not us, why should we hold back”? Instantaneous nuclear elimination of population centres might even be considered merciful, compared to starvation and massacres prolonged over decades. Eventually, probably before 2150, world population will have fallen to a level that renewable energy, mainly biomass, can sustain. It is likely to be similar to the population before the Industrial Revolution.

That is the do-nothing, let Nature take its course, scenario, involving more than a century of immeasurable human suffering. What alternatives are there? They have to be scenarios in which enlightened governments and their peoples, with astonishing foresight and determination, take positive action to reverse population growth by new, Draconian, laws. China has pioneered such an approach, by its one child per family policy.

ASPO’s Oil Depletion Protocol (Campbell 2004) is a scenario that aims to persuade national governments to cope with declining oil production equitably and peacefully, on the world scale. An annual depletion rate (the percentage of remaining global oil reserves produced each year, currently about 2.5% per year) is calculated by experts, after which nations agree to reduce their consumption and/or production of oil year after year strictly in accordance with the depletion rate. How population reduction will be achieved in step with growing oil shortage is not spelt out. Some will see the Protocol as too idealistic for a Darwinian world, because it expects every nation to co-operate regardless of whether they are resource rich or poor, have a high or a low birth rate, or are responsibly or chaotically governed.

Probably the greatest obstacle to the scenario with the best chance of success (in my opinion) is the Western world’s unintelligent devotion to political correctness, human rights and the sanctity of human life. In the Darwinian world that preceded and will follow the fossil fuel era, these concepts were and will be meaningless. Survival in a Darwinian resource-poor world depends on the ruthless elimination of rivals, not the acquisition of moral kudos by cherishing them when they are weak. In fact, human civilization in the fossil fuel era has been totally anomalous, fuelled by the unthinking exploitation and exhaustion of all the world’s resources, not just fossil fuels. Sir Fred Hoyle pointed out, decades ago, that Western civilization was a “one-shot affair”, for this reason (Duncan 1997).

So the population reduction scenario with the best chance of success has to be Darwinian in all its aspects, with none of the sentimentality that shrouded the second half of the 20th Century in a dense fog of political correctness (Stanton 2003 page 193). It is best examined at the nation-state scale. The United Kingdom will serve as the model.

To those sentimentalists who cannot understand the need to reduce UK population from 60 million to about 2 million over 150 years, and who are outraged at the proposed replacement of human rights by cold logic, I would say “You have had your day, in which your woolly thinking has messed up not just the Western world but the whole planet, which could, if Homo sapiens had been truly intelligent, have supported a small population enjoying a wonderful quality of life almost for ever. You have thrown away that opportunity.”

The Darwinian approach, in this planned population reduction scenario, is to maximise the well-being of the UK as a nation-state. Individual citizens, and aliens, must expect to be seriously inconvenienced by the single-minded drive to reduce population ahead of resource shortage. The consolation is that the alternative, letting Nature take its course, would be so much worse.

The scenario is: Immigration is banned. Unauthorised arrives are treated as criminals. Every woman is entitled to raise one healthy child. No religious or cultural exceptions can be made, but entitlements can be traded. Abortion or infanticide is compulsory if the fetus or baby proves to be handicapped (Darwinian selection weeds out the unfit). When, through old age, accident or disease, an individual becomes more of a burden than a benefit to society, his or her life is humanely ended. Voluntary euthanasia is legal and made easy. Imprisonment is rare, replaced by corporal punishment for lesser offences and painless capital punishment for greater.

A rough calculation suggests that by following these Draconian but simple rules UK population could be reduced by 5 to 10 million during the first ten years, without excessive pain (compared to the alternatives). If this was thought too fast or too slow, there would be scope for modifying the child entitlements. The punishment regime would improve social cohesiveness by weeding out criminal elements.

UK military forces should be maintained strong and alert, given that other nations working to different scenarios, or to none, would certainly attempt Darwinian piracy on UK trade routes, or mount mass immigration invasions of UK coasts. Collaboration with other nations practising the same population reduction scenario would be of great mutual advantage.

Initially the greatest threats to UK security would come from rogue nations unwilling to curb traditionally high birth rates but lacking the means to feed the ever-growing numbers of new mouths. In the past, these were the poverty-stricken nations that repeatedly received humanitarian aid and famine relief, which did nothing to reduce the birth rate. In a Darwinian world, Nature would take its course. In consequence, their populations would reduce particularly fast and their threat would fade away.

After four or five decades the populations of the UK and other nations following the same scenario would probably be halved. In the rest of the world, where Nature was doing the reduction in an ambience of massacres and destruction, the proportionate fall would be greater and the pain would have been terrible. In the UK, in contrast, where orderly population shrinkage would have outpaced resource shrinkage, a relatively comfortable quality of life would have been enjoyed throughout the period. There would have been no loss of technological expertise, but it would no longer be employed in grandiose energy-wasteful projects. Instead, there would be intensive research into cost-effective methods of renewable energy recovery.

A particular problem could arise from the fact that the world’s greatest oil reserves are controlled by the nations surrounding the Gulf. They have dizzyingly high birth rates which, for cultural reasons, they might not want to lower. Their populations exploded following the discovery of oil, and if the explosion continues, even a very high oil price will not provide enough national income to prevent general poverty. Indeed, the demand for Gulf oil might occasionally fall, if for example alternative sources were still available to nations practising orderly population reduction, and there was minimal demand from the chaotic rest of the world. After a decade or two of unrestricted population growth, with limited income from oil and terrible shortages, especially of water, Nature will begin to reverse population growth around the Gulf.

Of course, in a Darwinian world, a militarily powerful nation might try to take oil by force anywhere on the planet. World War Two provided recent examples: oil supply being critical to Germany and Japan.

Another problem is likely to be the residual opposition to population reduction from sentimentalists and/or religious extremists unable to understand that the days of plenty, when criminals and the weak could be cherished at public expense, are over. Acts of violent protest, such as are carried out today by animal rights activists and anti-abortionists, would, in the Darwinian world, attract capital
punishment. Population reduction must be single-minded to succeed.

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UK population must fall to 30m, says Porritt

JONATHON PORRITT, one of Gordon Brown’s leading green advisers, is to warn that Britain must drastically reduce its population if it is to build a sustainable society.

Porritt’s call will come at this week’s annual conference of the Optimum Population Trust (OPT), of which he is patron.

The trust will release research suggesting UK population must be cut to 30m if the country wants to feed itself sustainably.

Porritt said: “Population growth, plus economic growth, is putting the world under terrible pressure.

“Each person in Britain has far more impact on the environment than those in developing countries so cutting our population is one way to reduce that impact.”

Population growth is one of the most politically sensitive environmental problems. The issues it raises, including religion, culture and immigration policy, have proved too toxic for most green groups.

However, Porritt is winning scientific backing. Professor Chris Rapley, director of the Science Museum, will use the OPT conference, to be held at the Royal Statistical Society, to warn that population growth could help derail attempts to cut greenhouse gas emissions.

Rapley, who formerly ran the British Antarctic Survey, said humanity was emitting the equivalent of 50 billion tons of CO2 into the atmosphere each year.

“We have to cut this by 80%, and population growth is going to make that much harder,” he said.

Such views on population have split the green movement. George Monbiot, a prominent writer on green issues, has criticised population campaigners, arguing that “relentless” economic growth is a greater threat.

Many experts believe that, since Europeans and Americans have such a lopsided impact on the environment, the world would benefit more from reducing their populations than by making cuts in developing countries.

This is part of the thinking behind the OPT’s call for Britain to cut population to 30m — roughly what it was in late Victorian times.

Britain’s population is expected to grow from 61m now to 71m by 2031. Some politicians support a reduction.

Phil Woolas, the immigration minister, said: “You can’t have sustainability with an increase in population.”

The Tory leader, David Cameron, has also suggested Britain needs a “coherent strategy” on population growth.

Despite these comments, however, government and Conservative spokesmen this weekend both distanced themselves from any population policy. ”

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Thursday, March 19, 2009

The Obama Deception

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Wednesday, March 18, 2009

Gambling on Derivatives

Gambling on Derivatives

Hedging Risk or Courting Disaster?

"It could rip your guts out overnight ... the biggest, most potentially lucrative, and destructive market in the world ."

Into the Fire new! by Linda Davies.
A new edition is out!

"In no circumstances enter the derivatives trading market without first agreeing it in writing with me ... at some time in the future it could bring the world's financial system to its knees."

Sir Julian Hodge

Memo, dated November 1990, to senior executives of the Cardiff-based Julian Hodge Bank, quoted in the Western Mail, Tuesday, February 28 1995.

"We view them as time bombs both for the parties that deal in them and the economic system ... In our view ... derivatives are financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal."

Warren Buffett

The world's greatest stock market investor, known as "the Sage of Omaha", in his Chairman's Letter in the Berkshire Hathaway 2002 Annual Report.

Unlike Warren Buffet, Sir Julian Hodge, the Welsh banker, issued his apocalyptic warning three years before the first rash of derivatives disasters involving Metallgesellschaft, Orange County, Sears Roebuck, Proctor & Gamble, happened in 1994. More was to come in 1995 in the form of the Daiwa and Barings scandals. None of those on their own, however, threatened to bring the world financial system to its knees. Until recently the crisis that came closest to doing so involved LTCM in September 1998. Nearly 10 years later, in March 2008, the FED took emergency action to avoid what was called derivatives Chernobyl. That action seemed to have worked ... for a while, but the Credit Crunch has raised worries, could a mega-catastrophe lie around the corner ...?

Financial Derivatives Timeline

12th Century

In European trade fairs sellers sign contracts promising future delivery of the items they sold.

What are Derivatives?

Derivatives are financial instruments that have no intrinsic value, but derive their value from something else. They hedge the risk of owning things that are subject to unexpected price fluctuations, e.g. foreign currencies, bushels of wheat, stocks and government bonds. There are two main types: futures, or contracts for future delivery at a specified price, and options that give one party the opportunity to buy from or sell to the other side at a prearranged price.

Derivatives and Speculation

The job of a derivatives trader is like that of a bookie once removed, taking bets on people making bets.

The description above comes from In Into the Fire a novel about fraudulent trading in derivatives (now out in a new edition), by Linda Davies. Why on earth should anyone want to be a bookie once removed? The answer was given 63 years earlier by John Maynard Keynes in his best-known work.

Keynes on Speculation

"Professional investment may be likened to those newspaper competitions in which the competitors have to pick out the six prettiest faces from a hundred photographs, the prize being awarded to the competitor whose choice most nearly corresponds to the average preferences of the competitors as a whole; so that each competitor has to pick, not the faces which he himself finds the prettiest, but those which he thinks likeliest to catch the fancy of the other competitors, all of whom are looking at the problem from the same point of view."

"It is not a case of choosing those which, to the best of one's judgment, are really the prettiest, nor even those which average opinion genuinely thinks the prettiest. We have reached the third degree when we devote our intelligences to anticipating what average opinion expects the average opinion to be. And there are some, I believe, who practise the fourth, fifth and higher degrees."

Keynes, John Maynard The general theory of employment, interest and money. London : Macmillan, St. Martin's Press, 1936. page 156.

Derivatives and the Nobel Prize for Economics

Although futures markets have existed in some form since at least the 17th century, modern futures markets developed in the 1850's with the opening of the Chicago Board of Trade. However, since the early 1970s financial futures markets dealing with currencies, shares and bonds have become much more important.

In 1971 the Bretton Woods system of fixed exchange rates broke down when the US suspended the convertibility of the dollar to gold. In a world of (mainly) floating exchange rates exporters and importers faced new risks. A couple of years later the Black-Scholes Model for determining the value of options was published. Its use caught on quickly and by the 1990s many financial institutions involved with derivatives were employing mathematicians and physicists to design ever more sophisticated financial instruments.

In 1997 the Royal Swedish Academy of Sciences awarded the Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel (the Nobel Prize for economics) to Professor Robert C. Merton of Harvard University and Professor Myron S. Scholes of Stanford University, Stanford for their method of determining the value of derivatives.

Merton and Scholes, in collaboration with the late Fischer Black, developed a pioneering formula for the valuation of stock options. Their methodology has paved the way for economic valuations in many areas. It has also generated new types of financial instruments and facilitated more efficient risk management in society.

The $3.5 Billion Rescue of LTCM

Just a year after Merton and Scholes received the Nobel Prize for their work a hedge fund in which they were among the principal shareholders, Long Term Capital Management, had to be rescued at a cost of $3.5 billion dollars as it was feared that its collapse could have had a disastrous effect on financial institutions around the world.

The Paradox of Hedging Risks

Why should a hedge fund that included two Nobel prize-winners among its principal shareholders make staggering losses by trading in financial instruments designed to reduce risk? There was, presumably, nothing wrong with the techniques themselves, just the way in which they were used. It is sometimes argued that measures to improve the safety of car occupants, e.g. seat belts, increase risk by encouraging drivers to go faster than they would without them.

It is possible that the sophisticated models that apparently enable risk to be accurately quantified encourage risk taking by financiers who would otherwise err on the side of caution. However that does not explain other scandals that have involved derivatives, e.g. the collapse of Barings Bank or the illegal trades in Swedish stocks by a member of the Flaming Ferraris.

Derivatives Traders and Gamblers

Keynes may have been exaggerating when he wrote about investors who practise the fourth, fifth and higher degrees of speculation. However, futures and options are highly geared, or leveraged, transactions and therefore traders/investors are able to assume large positions - with similar sized risks - with very little up-front outlay.

By their very nature they encourage those higher degrees of speculation so that derivatives traders behave, as Linda Davies wrote, like a bookie once removed. The potential rewards are such that a technique designed to reduce risk is all too often treated as a gambler's tool.

Mispriced Derivatives Scandals

Derivatives are sometimes deliberately mispriced in order to conceal losses or to make profits by fraud.

Mispriced options were used by NatWest Capital Markets to conceal losses and the British Securities and Futures Authority concluded its disciplinary action against the firm and two of its employees, Kyriacos Papouis and Neil Dodgson, in May 2000.

In March 2001 a Japanese court fined Credit Suisse First Boston 40 million yen because a subsidiary had used complex derivatives transactions to conceal losses.

In Seeing Tomorrow: rewriting the rules of risk by Ron S. Dembo and Andrew Freeman, a case in which "clever but criminal staff got inside an options pricing model and used tiny changes to skim off a few million dollars of profits for themselves" is described on page 23. The culprits were not prosecuted because the bank feared that the revelation could wipe out hundreds of millions of dollars of its overall value. This case is reminiscent of the plot of Into the Fire.

Another possible case came to light in January 2006 when Anshul Rustagi, a London-based derivatives trader at Deutsche Bank was suspended after allegedly overstating profits on his own trading book by £30 million. He was subsequently dismissed.

Toxic Derivatives and the Credit Crunch

The market in 2008 was worth over $516 trillion or about 10 times the value of the entire world's output. This enormous ticking time bomb threatens to wreck international efforts to solve the world's biggest financial crisis since the 1930s.

13th Century

There are many examples contracts entered into by English Cistercian Monestaries who frequently sold their wool up to 20 years in advance to foreign merchants.

Early 17th Century

1634-1637 Tulip Mania in Holland

Fortunes are lost in after a speculative boom in tulip futures burst.

Late 17th Century

Dojima Rice Futures

In Japan at Dojima, near Osaka a futures market in rice is developed to protect sellers from bad weather or warfare.

19th Century

1868 Chicago Board of Trade

Trading in wheat, pork belly and copper futures starts.

20th Century

Late 1960s - Black and Scholes begin collaboration

Fischer Black and Myron Scholes tackle the problem of determining how much an option is worth. Robert Merton joins them in 1970.

April 1973 The Chicago Board Options Exchange opens.
May/June 1973 The Black-Scholes Model is Published.

It appears in the Journal of Political Economy, one of the journals that had previously rejected it.

1994 Metallgesellshaft loses $1.5 billion on oil futures.
1995 Barings Bank goes bust.

Nick Leeson loses $1.4 billion by gambling that the Nikkei 225 index of leading Japanese company shares would not move materially from its normal trading range. That assumption was shattered by the Kobe earthquake on the 17th January 1995 after which Leeson attempted to conceal his losses.

1997 Nobel Prize in Economics awarded to Robert Merton and Myron Scholes.
1998 Long Term Credit Management Bailout

The hedge fund is rescued at a cost of $3.5 billion because of worries that its collapse would have severe repercussions for the world financial system.

1999 The Flaming Ferraris

Some traders at CSFB are sacked following allegations of illegal trades in an attempt to manipulate the Swedish stock market index.

21st Century

2001 Enron goes Bankrupt

The 7th largest company in the US and the world's largest energy trader made extensive use of energy and credit derivatives but becomes the biggest firm to go bankrupt in American history after systematically attempting to conceal huge losses.

2002 AIB loses $750 million

John Rusnak uses fictitious options contracts to cover loses on spot and forward foreign exchange contracts.

2003 Terrorism Futures Plan Dropped

The US Defense Department had thought that such a market would improve the prediction and prevention of terrorist outrages.

January 2004 NAB admits losing A$180 million

Four foreign currency dealers at the National Australia Bank are said to have run up the losses in three months of unauthorised trades.

August 2004 Citigroup bear raid

Citigroup traders led by Spiros Skordos made €15 million by suddenly selling €11 billion worth of European bonds and bond derivatives, and buying many of them back at a lower price.

November 2004 China Aviation loses $550m in speculative trade

This loss is the largest amount a company in Singapore has lost by betting on derivatives since the case of Nick Leeson and Barings.

October 2005 Refco suspends trading

One of the world's largest derivatives brokers is forced to freeze trades.

September 2006 Amaranth Advisors loses $6 billion

the US-based hedge fund suffered enormous loses trading in natural gas futures.

January 2008 Société Générale loses €4.9 billion in unauthorised futures trading

A rogue trader is blamed for the world's largest banking fraud up to that date.

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“remote possibility”

In an address to the Council of Foreign Relations on November 19, 2002, on the topic of derivatives, he admitted that there was a “remote possibility” that they could cause a chain reaction that would culminate in a financial implosion.

Even more worrisome in a speech Greenspan gave to bankers in May 2000, he admitted that: “The rapid growth and increasing importance of derivative instruments…has been a particular concern.”

Yet Greenspan still allowed the bubble to grow unchecked until he bowed out of his office in 2006.

dewds i'm telling you they knew what was going to hgappen, get yer popcorn and stay tuned

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Wednesday, March 04, 2009


Congress approved landmark legislation today that opens the door for a new era on Wall Street in which commercial banks, securities houses and insurers will find it easier and cheaper to enter one another's businesses.

The measure, considered by many the most important banking legislation in 66 years, was approved in the Senate by a vote of 90 to 8 and in the House tonight by 362 to 57. The bill will now be sent to the president, who is expected to sign it, aides said. It would become one of the most significant achievements this year by the White House and the Republicans leading the 106th Congress.

''Today Congress voted to update the rules that have governed financial services since the Great Depression and replace them with a system for the 21st century,'' Treasury Secretary Lawrence H. Summers said. ''This historic legislation will better enable American companies to compete in the new economy.''

The decision to repeal the Glass-Steagall Act of 1933 provoked dire warnings from a handful of dissenters that the deregulation of Wall Street would someday wreak havoc on the nation's financial system. The original idea behind Glass-Steagall was that separation between bankers and brokers would reduce the potential conflicts of interest that were thought to have contributed to the speculative stock frenzy before the Depression.

Today's action followed a rich Congressional debate about the history of finance in America in this century, the causes of the banking crisis of the 1930's, the globalization of banking and the future of the nation's economy.

Administration officials and many Republicans and Democrats said the measure would save consumers billions of dollars and was necessary to keep up with trends in both domestic and international banking. Some institutions, like Citigroup, already have banking, insurance and securities arms but could have been forced to divest their insurance underwriting under existing law. Many foreign banks already enjoy the ability to enter the securities and insurance industries.

''The world changes, and we have to change with it,'' said Senator Phil Gramm of Texas, who wrote the law that will bear his name along with the two other main Republican sponsors, Representative Jim Leach of Iowa and Representative Thomas J. Bliley Jr. of Virginia. ''We have a new century coming, and we have an opportunity to dominate that century the same way we dominated this century. Glass-Steagall, in the midst of the Great Depression, came at a time when the thinking was that the government was the answer. In this era of economic prosperity, we have decided that freedom is the answer.''

In the House debate, Mr. Leach said, ''This is a historic day. The landscape for delivery of financial services will now surely shift.''

But consumer groups and civil rights advocates criticized the legislation for being a sop to the nation's biggest financial institutions. They say that it fails to protect the privacy interests of consumers and community lending standards for the disadvantaged and that it will create more problems than it solves.

The opponents of the measure gloomily predicted that by unshackling banks and enabling them to move more freely into new kinds of financial activities, the new law could lead to an economic crisis down the road when the marketplace is no longer growing briskly.

''I think we will look back in 10 years' time and say we should not have done this but we did because we forgot the lessons of the past, and that that which is true in the 1930's is true in 2010,'' said Senator Byron L. Dorgan, Democrat of North Dakota. ''I wasn't around during the 1930's or the debate over Glass-Steagall. But I was here in the early 1980's when it was decided to allow the expansion of savings and loans. We have now decided in the name of modernization to forget the lessons of the past, of safety and of soundness.''

Senator Paul Wellstone, Democrat of Minnesota, said that Congress had ''seemed determined to unlearn the lessons from our past mistakes.''

(Page 2 of 2)

''Scores of banks failed in the Great Depression as a result of unsound banking practices, and their failure only deepened the crisis,'' Mr. Wellstone said. ''Glass-Steagall was intended to protect our financial system by insulating commercial banking from other forms of risk. It was one of several stabilizers designed to keep a similar tragedy from recurring. Now Congress is about to repeal that economic stabilizer without putting any comparable safeguard in its place.''

Supporters of the legislation rejected those arguments. They responded that historians and economists have concluded that the Glass-Steagall Act was not the correct response to the banking crisis because it was the failure of the Federal Reserve in carrying out monetary policy, not speculation in the stock market, that caused the collapse of 11,000 banks. If anything, the supporters said, the new law will give financial companies the ability to diversify and therefore reduce their risks. The new law, they said, will also give regulators new tools to supervise shaky institutions.

''The concerns that we will have a meltdown like 1929 are dramatically overblown,'' said Senator Bob Kerrey, Democrat of Nebraska.

Others said the legislation was essential for the future leadership of the American banking system.

''If we don't pass this bill, we could find London or Frankfurt or years down the road Shanghai becoming the financial capital of the world,'' said Senator Charles E. Schumer, Democrat of New York. ''There are many reasons for this bill, but first and foremost is to ensure that U.S. financial firms remain competitive.''

But other lawmakers criticized the provisions of the legislation aimed at discouraging community groups from pressing banks to make more loans to the disadvantaged. Representative Maxine Waters, Democrat of California, said during the House debate that the legislation was ''mean-spirited in the way it had tried to undermine the Community Reinvestment Act.'' And Representative Barney Frank, Democrat of Massachusetts, said it was ironic that while the legislation was deregulating financial services, it had begun a new system of onerous regulation on community advocates.

Many experts predict that, even though the legislation has been trailing market trends that have begun to see the cross-ownership of banks, securities firms and insurers, the new law is certain to lead to a wave of large financial mergers.

The White House has estimated the legislation could save consumers as much as $18 billion a year as new financial conglomerates gain economies of scale and cut costs.

Other experts have disputed those estimates as overly optimistic, and said that the bulk of any profits seen from the deregulation of financial services would be returned not to customers but to shareholders.

These are some of the key provisions of the legislation:

*Banks will be able to affiliate with insurance companies and securities concerns with far fewer restrictions than in the past.

*The legislation preserves the regulatory structure in Washington and gives the Federal Reserve and the Office of Comptroller of the Currency roles in regulating new financial conglomerates. The Securities and Exchange Commission will oversee securities operations at any bank, and the states will continue to regulate insurance.

*It will be more difficult for industrial companies to control a bank. The measure closes a loophole that had permitted a number of commercial enterprises to open savings associations known as unitary thrifts.

One Republican Senator, Richard C. Shelby of Alabama, voted against the legislation. He was joined by seven Democrats: Barbara Boxer of California, Richard H. Bryan of Nevada, Russell D. Feingold of Wisconsin, Tom Harkin of Iowa, Barbara A. Mikulski of Maryland, Mr. Dorgan and Mr. Wellstone.

In the House, 155 Democrats and 207 Republicans voted for the measure, while 51 Democrats, 5 Republicans and 1 independent opposed it. Fifteen members did not vote.

Tucked away in the legislation is a provision that some experts today warned could cost insurance policyholders as much as $50 billion. The provision would allow mutual insurance companies to move to other states to avoid payments they would otherwise owe policyholders as they reorganize their corporate structure. Many states, including New York and New Jersey, do not allow such relocations without the consent of the insurer's domicile state. But the legislation before Congress would pre-empt the states.

Both the Metropolitan Life Insurance Company and the Prudential Life Insurance Company are in the midst of reorganizing into stock-based corporations that are requiring them to pay billions of dollars to policyholders from years of accumulated surplus. In exchange, the policyholders give up their ownership in the mutual insurance company.

The legislation would permit any mutual insurance company to avoid making surplus payments to policyholders by simply moving to states with more permissive laws and setting up a hybrid corporate structure known as a mutual holding company.

The provision was inserted by Representative Bliley at the urging of a trade association. It attracted little opposition because it was attached to a provision that forbids insurers from discriminating against domestic-violence victims.

In a letter sent to Congress this week, Mr. Summers said that the provision ''could allow insurance companies to avoid state law protecting policyholders, enriching insiders at the expense of consumers.''

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Tuesday, March 03, 2009

As early as 1995 Clinton had telegraphed his obeisance to these same powerful interests when he issued presidential directive 41,

which announced that arms sales were essential for preserving US jobs.

How Clinton Set the Stage for Bush

By Mark H. Gaffney

10/18/07 "ICH" -- -- At the end of the Cold War the peoples of the earth shared a rare moment in human history. In fact, nothing like it had ever happened before. The United Sates stood alone as the lone planetary Superpower. The American star which had been rising since the second World War had now reached its zenith. For whatever reason, it seemed that destiny had selected the United States for a special role: to guide the community of nations into a period of unparalleled peace and prosperity. With the fading of East-West tensions this and much more seemed within reach. For a brief time it did appear that anything was possible. And why not? After all, the United States faced no serious military challenges. The US dollar was the favored currency in international exchange. In fact, it had been for decades. English was the lingua franca of science, diplomacy and commerce. Almost the entire world acknowledged US leadership. American culture was widely imitated. Together, this was unprecedented. Never had one nation, let alone a democracy, achieved such global influence. America had both the prestige and the power literally to shape the future of humanity.

Legacy of the Cold War

The world was desperate for a new vision. This was true for many reasons, but primarily because the titanic struggle between capitalism and socialism had been enormously destructive. The forty-five year Cold War had been waged on many fronts and in the most improbable places. It was an ideological war, not a clash of civilizations. As the vying spheres of influence ebbed and flowed across the continents, numerous nations were drawn in. Proxy wars raged along the tectonic margins and at the friction points where East and West collided. Neither side could defeat the other militarily without destroying itself, because the epic struggle was governed by a mad doctrine, Mutually Assured Destruction (MAD). It was a fitting acronym for an insane time, and also a cruel paradox. For decades the world, rigged to a trip wire, could neither stand still nor move forward. The added rub, which I believe the world sensed intuitively, was that the precarious balance could not be sustained indefinitely. Of course, looking back it is now clear that that the Cold War itself, I mean the idea of the Cold War, was a carefully cultivated illusion: a false reality; but that is another story. Certainly the consequences were real enough. Citizens of the planet who lived through the period know what it means to live wedged between impossible alternatives–––the unthinkable on one hand and the unendurable on the other. Many were crushed beneath these wheels. Some nations were utterly destroyed, even beyond hope of recovery. The list of victims is long, and includes Afghanistan, Angola, Cambodia, Chile, the Dominican Republic, Haiti, East Timor, Ethiopia, Granada, Guatemala, Honduras, Indonesia, Laos, Mozambique, Nicaragua, Panama, Somalia, Sudan, and Viet Nam. No doubt, there are others...

Even as the Cold War trampled on the rights of indigenous people everywhere it despoiled the global environment. Toxic mayhem on a vast scale accompanied the nuclear arms race. Entire regions were affected and many were ruined or left permanently scarred. The open wounds from the heyday of uranium mining still deface the landscapes of the American southwest. As I write, Navaho children play on the tailing piles, amidst the radioactive dust, left behind by soul-less corporations that appeared on the scene, eager to make a fast buck, boomed briefly, then disappeared or were swallowed, in turn, by still larger corporations with even less of a conscience. Even worse scars can be found in the former Soviet republics where whole provinces were poisoned by catastrophic accidents at Sverdlovsk and Chernobyl, and entire districts, such as the Aral Sea region, were despoiled by central planning gone amok.

Dashed Hopes

By any measure, the toll of the Cold War was incalculable, and it’s no wonder that when the corrupt old Soviet state finally collapsed under its own weight the world’s response was: good riddance! The dismantling of the Iron Curtain was attended by joyous celebration across Europe. For a brief moment hope soared. In the US there was even talk of a peace dividend. Everywhere people dared to believe that the victory of the West presaged a new era of international cooperation, now desperately needed to address a long list of pressing problems, among them Third World poverty, overpopulation, the challenge of sustainable development, the energy crisis, AIDs, and the environment. Most importantly, at long last real progress toward nuclear disarmament seemed within reach. All eyes now turned to the West and especially to Washington for answers and for leadership. Yet, as I write in October 2007 it is painfully obvious, and has been for most of the presidency of George W. Bush, that the high hopes have been dashed. All that remains is the question: How and why did this happen? It is a difficult question, admittedly, but if we are to find our way back and regain a measure of hope, we must face it with brutal honesty.

Today, many Americans hold G. W. Bush personally responsible for the wars in Iraq, Afghanistan and elsewhere that have brought about America’s increasing isolation in the world. Many also blame Bush for the general decline in our fortunes and for the dimming of hope. While I am no friend of the Bush administration, I do not entirely agree with this view, because I take issue with those who still naively believe in a partisan solution. The truth is more complex. In fact, the previous Democratic administration of William Jefferson Clinton bears a large measure of responsibility for the disasters that have befallen us. In many ways the Clinton White House set the stage for George W. Bush. Dr. Helen Caldicott, the tireless campaigner against nuclear oblivion, writes that she got the wake-up call about Clinton in 1999 when she was invited to attend a meeting in Florida about the weaponization of space. Caldicott was aghast as she listened to knowledgeable individuals describe US military planning, then current. Like many of us, she had trusted Bill Clinton, and had believed he was taking care of the nation’s business. Suddenly, Caldicott realized she had been living in a fool’s paradise. She writes:

“To my horror I found that seventy-five military industrial corporations such as Lockheed Martin, Boeing, Raytheon, TRW Aerojet, Hughes Space, Sparta Corp, and Vista Technologies had produced a Long Range Plan, written with the cooperation of the US Space Command, announcing a declaration of US space leadership and calling for the funding of defensive system and ‘a seamlessly integrated force of theatre land, sea, air and space capabilities through a world-wide global defense information network.’ The US Space Command would also ‘hold at risk’ a finite number of ‘high-value’ earth targets with near instantaneous force application–––the ability to kill from space...I also discovered that the much-vaunted missile defense system was to be closely integrated with the weaponization of space, and that all of the hardware and software would be made by the same firms, at the combined cost of hundreds of billions of dollars to the US taxpayers.”[1]

The plan envisaged “full spectrum dominance,” that is, US military domination of land, sea, air and space. Although US planners sought to portray this next generation of technological wizardry as defensive, in actuality, the planned systems, if implemented, amounted to a major break with the 1972 ABM Treaty, and with long-standing US commitments to maintain the peaceful status of outer space. The cold logic of dominance meant that the project was offensive in nature. But why? Exactly who was to be targeted? Which enemies? Remember, this was 1999. The Cold War had been over for some years. Both Russia and the US were then cooperating to reduce the size of their nuclear arsenals. The START reductions were limited, to be sure, but the process was moving in the right direction and further reductions were possible. Obviously, the US military’s sweeping new plans for the domination of space threatened to undo all of this progress toward a more sane planet. It was obvious to Caldicott that a precious opportunity was in danger of being squandered, perhaps forever. The new space weapons threatened to trigger a new arms race and, very likely, another cycle of world conflict. Caldicott writes that she staggered home from the meeting determined “to become re-involved in educating the public about the impending catastrophe associated with the mad plans of the US Space Command and its associated corporations…”

The Critical Path:

Swords into Plowshares

The point is that not even one of the new weapons systems being planned were needed. In fact, the grand plan for space, if implemented, would have benefited no one but a few arms manufacturers and, of course, the bankers who finance such deranged schemes–––all at immense cost to the US taxpayer. The plans were in direct conflict with then-current US foreign policies. The weaponization of space was diametrically opposed to the limited nuclear arms reductions then in progress, yet, was being presented as in the best interests of America: a case of mendacity so brazen one has to wonder how the selfish individuals who cooked it up could sleep at night.

As I’ve noted, the end of the Cold War presented America and the world with a golden opportunity to move in a new direction, a direction that was, in fact, essential for the survival of our planetary civilization. As a younger man I was an admirer of the late R. Buckminster Fuller. The inventor is probably best known for the geodesic dome, but Fuller also popularized the concept of the “critical path.”[2] It is an expression used by engineers and it means exactly what it suggests. The idea is that if we are to become sustainable on “spaceship earth” and avoid destroying our planetary home we must learn to live within the physical limitations or budget imposed by Nature. This, in turn, requires that we drastically reduce our human “footprint” by becoming much more efficient in the way we use energy and natural resources. Fuller was a firm believer in human ingenuity, and he often argued that our predicament called for a designer revolution on various levels, both economic and social. None of the steps in the critical path are optional, from the standpoint of survival. Taken together, they should be understood as the minimum requirements necessary for the long-term success of the human enterprise. While experts often disagree, at the end of the Cold War the single most urgent step was obvious, or should have been, to every thinking person; and this includes the newly elected President Bill Clinton, who entered the White House in 1992 on a wave of high hopes.

As the first US president to be inaugurated in the post-Cold War era, Bill Clinton’s number one priority should have been to meet with our Russian neighbors at an early date, and to negotiate with them a mutual halt in nuclear weapons production and research, as well as a rapid build-down of existing nuclear stockpiles and delivery systems. It was also imperative that Clinton give firm direction to the US military. The Pentagon had to be made to understand that because the Cold War was now thankfully over the nation must chart a new path, one that required the urgent redeployment of resources away from the nuclear arms race. A key part of this redirection would be the announcement of a vital new mission for the national weapons labs (Lawrence, Los Alamos, and Sandia). Henceforth, the labs would cease most weapons-related research/development and would redirect their considerable energies and talents in a positive direction, the new mission being a Manhattan-scale project to solve the nation’s energy problem. The goal would be to wean America from its unhealthy dependence on coal and foreign oil. Clinton would instruct the labs to engineer a phased transition toward abundant and clean energy alternatives at the earliest possible date; and to make it happen he would also press Congress to appropriate the needed funding. Efforts would focus on a range of promising technologies, but especially wind, solar, tidal, and hydrogen. Meanwhile, the nuclear establishment would be stripped of its vast subsidies. Although in a bye-gone era these were a sound idea, the nuclear establishment had produced no energy solutions, despite years of preferential treatment. Indeed, the vast monies lavished upon it had succeeded only in creating another bureaucratic dinosaur. In fact,the nuclear industry itself had become an impediment to change, because its enormous subsidies undermined healthy market forces. Henceforth, nuclear power would have to compete on a more equal playing field with other alternatives. Assisting market forces to operate would be essential to the transition to clean energy; and for this reason another goal would be to achieve the economies of scale necessary to bring down the costs of clean and renewable alternatives. The end result would be greatly enhanced national productivity, the creation of whole new sectors of the economy, boosted foreign earnings, and millions of high-paying new jobs here in the US. Resources would also be redirected to a long list of outstanding social and environmental problems. At the top of the latter list: the urgent clean-up of the toxic mess created by the nuclear establishment during a profligate half-century of out-of-control weapons development. This alone would cost an estimated $350 billion (in 1995 dollars, according to the Department of Energy [DoE]), a whopping figure that does not even include the costs associated with cleaning up the mess at the Hanford reservation, the Nevada Test Site, and the Savannah and Clinch nuclear facilities, all so contaminated that a solution may not even be feasible.

Some will argue that the above visionary plan was (and is) unrealistically utopian–––too much to expect of any US president, let alone the Clinton White House. But I take strong exception with this viewpoint, because in the 1990s the transition I have described was already within reach. Few major technological breakthroughs were needed. Many of the important alternatives were already “on the shelf” and could have been brought to maturity without undue economic strain. Some, no doubt, would have become mainstream long since but for bureaucratic inertia and because powerful vested interests have actively suppressed them–––interests, I should add, that have long sought to keep America addicted to oil. No, what was needed more than anything was genuine leadership in the Clinton White House, in order to beak through the inertial barriers and confront the vested interests. What is the role of a president, after all, if not to use the power of his office (the bully pulpit) to catalyze changes that are needed for the good of the nation? This is precisely why a president must stand above special interests. In the early years of his presidency Clinton did not lack for popular support. A solid majority of the American people elected Clinton because they wanted change; and they looked to him to make the tough decisions. This is not just my opinion. Other commentators have also pointed this out. Bill Clinton entered office with tremendous political capital, yet, incredibly, he never used it. The crucial factor was leadership, and he simply failed to deliver. There are various theories as to why. Dr. Caldicott's frank assessment will make Democrats uncomfortable, but in my opinion it carries the ring of truth. Caldicott thinks Clinton lacked the necessary strength of character, and she has it right.

Clinton’s Nuclear Policy Review:

A Diminished Presidency?

Like other newly elected presidents, Bill Clinton soon ordered a policy review of US nuclear weapons doctrine. The review was of vital importance and required that Clinton become personally involved to insure its success. This also meant taking charge of the Pentagon as the commander-in-chief. Unfortunately, instead of asserting his authority, Clinton vacillated, as if he were unclear himself about priorities and objectives. The policy review was eventually delegated to mid-level officials who were easily outmaneuvered by hard-liners in the military. The generals opposed any changes in US nuclear policy and they ultimately won a decisive victory. This was a major defeat for Clinton, and one from which it seems he never recovered. Caldicott speculates that Clinton, thereafter, sought to compensate for his loss of standing by using military force abroad on more occasions than any president in two decades. She may be right. The point is that Clinton’s attempts to placate the Pentagon were no substitute for leadership. This probably explains why, even today, Clinton is widely viewed with contempt within the US armed services. Soldiers naturally respect strength and revile weakness.

Clinton’s diminished presidency did not become evident, however, for some years. Certainly none of this was immediately obvious. At the 1995 Nonproliferation Review (NPT) Conference the Clinton administration, to all appearances, achieved a major success by persuading a majority of nations to agree to an indefinite extension of the NPT. This success was probably due to Clinton’s vocal support for the Comprehensive Test Ban Treaty (CTBT), and because the US delegation agreed to a list of noble principles reaffirming the US obligation under Article VI of the NPT to take steps in the near future toward complete disarmament. The world did not then know that Clinton was about to violate those same principles, by succumbing to a deal with hard-line elements within his own administration. This in itself is an indication of Clinton’s failed leadership, for only a weak president would ever agree to such a back-room deal. What was this deal? The US Department of Energy (DoE), representing the national weapons labs, agreed to back Clinton’s support of the Comprehensible Test Ban only if Clinton agreed to preserve the labs’ traditional role as nuclear overseers; which, of course, meant preserving the nuclear arsenal itself. And so was born the Stockpile Stewardship and Management Program, otherwise known as Manhattan II. Although its stated purpose seemed innocuous: to insure the safety and reliability of the US nuclear stockpile, in reality, the program would maintain various nuclear research and development programs at roughly Cold War levels for many years. Additionally, the package created new computational and simulation programs to compensate for the anticipated ratification of the Comprehensive Test Ban Treaty. It is known that nuclear research secretly continued at Los Alamos–––in violation of the NPT. This came to light in 1995 when Dr. Don Wolkerstorfer, a Los Alamos manager, mentioned a new bunker buster, the B-61-11, during a radio debate.[3] The B-61-11 is a variable-yield nuclear penetrator (maximum yield: 340 kilotons). The following year Department of Defense (DoD) spokesperson Kenneth Bacon revealed that other earth penetrators were also in the works. Bacon told reporters that “We are now working on a series of weapons, both nuclear and conventional, to deal with deeply buried targets.”[4] There were even indications that the labs were moving ahead on an even more ambitious effort to develop the next generation of nuclear weapons. On April 25, 1997, the physicist Hans Bethe, the most senior surviving scientist from the Manhattan Project, sent a letter to Clinton, a letter that one day may have historic significance. In it Bethe urged the president to halt research on new weapons designs, including a pure fusion bomb, long regarded as the nuclear Holy Grail. Bethe, who led the theoretical division at Los Alamos during the development of the Atomic Bomb, was long retired. Yet, he maintained contacts in the labs and was informed about the kind of research that was underway. Bethe informed Clinton that the US already possessed more than sufficient weapons for it security, and he urged that

“...the time has come for our Nation to declare that it is not working, in any way, to develop further weapons of mass destruction of any kind. In particular, this means not financing work looking toward the possibility of new designs for nuclear weapons. And it certainly means not working on new types of nuclear weapons, such as pure-fusion weapons.”[5]

Bethe deserved to be taken seriously. After all, he won the 1967 Nobel Prize in physics for describing the fusion process that drives the stars. In his letter Bethe further wrote that because “new types of weapons [i.e., a pure fusion bomb] would, in time, spread to others and present a threat to us, it is logical for us not to pioneer further in this field.” Although the great physicist affirmed his support for the stewardship program, he also cautioned that computational experiments could be used to design new categories of weapons, even in the absence of underground testing. For this reason Bethe urged Clinton not to fund such programs. Again, this was sage counsel. It is believed that Israel evaded international detection while clandestinely developing nuclear weapons by this very means, i.e., through the use of computational models and computer simulations. Israel, which has never signed the NPT, is known to have staged only a very few small nuclear tests, perhaps even as few as one.[6] Yet, Israel succeeded in developing a large and advanced nuclear arsenal. Six weeks later Bethe received a polite reply from Clinton, in which the president deftly side-stepped all of the main points Bethe had raised.

Just five months later, in November 1997, Clinton issued a presidential directive, PDD-60, formalizing the outcome of his nuclear policy review. Most of the document remained classified, but more than enough was released to serve notice to the world that the United States had now become a far greater threat to the nonproliferation treaty than any terrorist or rogue state.[7] Clinton’s directive flew squarely in the face of the noble principles he had agreed to at the 1995 NPT conference. The directive reaffirmed the logic of the Cold War and announced a cornucopia of new spending to be showered upon the nuclear establishment over the next two decades. The directive announced that the US would maintain the status quo, that is, the Cold War triad of nuclear forces (i.e., bombers, ICBMs and submarines) as well as the hair-trigger launch-on-warning posture. The US insisted upon the right to nuclear first-use and even the right to use nukes against non-nuclear states that might somehow threaten US “interests.” These shocking revelations were unprecedented. The US also rejected a Russian proposal for deeper cuts in the number of strategic warheads. Instead, the US would move ahead with plans to upgrade the US Trident missile force and the B-2 bomber. The US would also resume production of plutonium pits, which are the fissile cores used in nuclear weapons. The directive reaffirmed the new emphasis on sub-critical testing and advanced computer modeling procedures: the very thing that Hans Bethe had cautioned against. Additionally, the US announced that it would resume production of tritium, an isotope of hydrogen used in thermonuclear weapons. The stated purpose was to provide additional supplies for the stewardship program. Because tritium has a half-life of twelve years, the tritium gas used in nuclear weapons decays and periodically must be replenished. Even so, the explanation was dubious, since tritium can be scavenged from deactivated weapons and recycled. Given even modest reductions in the size of the US nuclear force, in 1997 there was at least a thirty-year supply for the stewardship program.[8] This hinted that Hans Bethe was correct and the US was already secretly developing the next generation of nukes. As if all of this were not enough, the directive also announced that the US would complete construction of a brand new National Ignition Facility (NIF) at the Lawrence Livermore laboratory, where the world’s most powerful lasers would be used to study nuclear fusion–––another clue.

These policies had been decided with no public debate or consultations with Congress. Ten years later, it appears that Clinton had made a bargain with the devil. He may have acted in the mistaken belief that the much-anticipated ratification of the Comprehensive Test Ban by the US Senate would provide him some flexibility, allowing him to later rescind at least some of the newly announced policies. As we know, of course, in 1998 the Republican-controlled Senate rejected the Test Ban, dealing Clinton a stinging defeat. Obviously, Clinton’s attempts to placate the militarists in his administration backfired, with the tragic result of locking the US into a Cold War posture for many years to come, even though the Cold War was long over. All of which raises serious questions about Bill Clinton’s style of leadership, or lack thereof. But his character issues were not limited to placating generals. The more fundamental problem is that he chose to serve a small group of rich and powerful men, instead of serving the nation.

Clinton’s Expansion of NATO

For many years, during the Cold War, the North Atlantic Treaty Organization (NATO) was the first line of defense against a possible Soviet attack on Western Europe. But when the old Soviet state collapsed in the late 1980s during the presidency of Mikhail Gorbachev, NATO’s original purpose also ceased to exist. Later, when the Berlin wall came down, President George Bush Sr. assured Gorbachev that the US would not expand NATO into eastern Europe, if Russia did not oppose the reunification of Germany. The agreement was mutually beneficial, and Russia was true to its word. However, during his second term in the White House Clinton reneged on Bush’s promise by proposing to admit eastern European nations to the NATO alliance, starting with Poland, the Czech Republic, and Hungary. Clinton’s Secretary of State, Madeleine Albright, went on tour promoting the new plan. She argued that NATO expansion was a good idea because it would stabilize central Europe politically and economically. Thoughtful critics, however, such as former Senator Sam Nunn (R-GA), a long-time expert on US nuclear policy, pointed out that because Moscow would naturally view the eastward expansion of NATO as a threat to its national security, the probable consequence would be exactly the opposite. Clinton’s plan would destabilize Europe, stall progress toward arms reductions, and over the long term might even lead to a new Cold War. The critics also warned that the US taxpayer would pick up much of the tab for NATO expansion to the tune of many billions of dollars, most of which would end up in the bank accounts of various arms merchants. Yet, in 1998, with almost no debate the US Congress closed ranks behind Clinton and voted to support NATO expansion.

With hindsight, the critics were correct. Despite claims by the Clinton administration to the contrary, the expansion of NATO into eastern Europe was not in the best interests of the United States, nor in the best interests of Europe. At the time, the relatively poor nations of eastern Europe did not have money to waste on arms. Their top priority was to rebuild their infrastructure after the disaster of communism, and to improve the lives of their people. Of course, Washington promised that in return for purchasing our weapons the US would support their entry in the European Union (EU), which most of western Europe opposed at the time. Yet, this was an illusion, since their purchase of large quantities of US weapons actually slowed their economic recovery, and this more than anything delayed their entry into the European Union. No, the primary beneficiaries of NATO expansion were the US arms makers and their financial backers on Wall Street. All of whom saw in the break-up of the former Soviet bloc an opportunity to enrich themselves. A scurrilous lot, they can only be compared with the wave of carpetbaggers who infested the southern states after the American Civil War, for the purpose of exploiting the defeated Confederacy. The US arms industry, the world's largest, spent millions successfully lobbying the US Congress and the Clinton administration to expand NATO, and subsequently they cashed-in on this vast new arms bazaar. As early as 1995 Clinton had telegraphed his obeisance to these same powerful interests when he issued presidential directive 41, which announced that arms sales were essential for preserving US jobs. The directive instructed US diplomats to get busy and boost foreign sales of US-made weapons for the good of the economy. Obviously, Clinton found it easier to maintain the status quo, however perilous, rather than use the considerable power of his office to change that reality and move the nation away from the weapons economy built up during the Cold War. When Moscow protested the expansion of NATO Clinton brushed aside Russia’s security concerns with practiced aplomb. The president insisted that NATO was a force for stability, and his casual demeanor seemed to make light of this quaint idea that NATO might somehow threaten the Russians. How absurd!

Today, of course, as George W. Bush prepares to install an anti-ballistic missile (ABM) system in Poland and a new ABM radar site in the Czech Republic, on Russia’s doorstep, and as we hover on the brink of world war, it is perfectly clear that Moscow’s concerns were well-founded. The issue is why our former president, a Rhodes scholar, was purblind to the fact, ten years ago. The truth is that Bill Clinton’s expansion of NATO was never about the stability of Europe. It was never about US or global security. It was always about one thing: the sale of weapons for profit. All of this becomes more obvious as the world situation deteriorates, yet, the Democratic candidates in the presidential marathon apparently still don’t get it. As far as I can tell, they have been conspicuously silent about Clinton’s failed NATO policy. Which I take as a sober commentary on our deaf and dumb political culture. Someone needs to corner Hillary and ask her this pointed question, on camera: Why did your husband put the interests of the weapons manufacturers and bankers above the interests of our nation and our planet? Why, Hillary? Because there is no doubt that Bill’s NATO policy set the stage for the disasters that have overtaken us. Perhaps the real issue is whether Hillary, or any of the Democratic front-runners, have the integrity and courage to answer a simple question.

Mark H. Gaffney’s latest book, Gnostic Secrets of the Naassenes, was a finalist for the 2004 Narcissus Book Award. Mark can be reached for comment at Check out Mark’s web site

[1] Helen Caldicott and Craig Eisendrath, War in Heaven: The Arms Race and Outer Space, The New Press, New York, 2007, p. ix; also see Helen Caldicott, The New Nuclear Danger, The New Press, New York, 2004.

[2] Buckminster Fuller, Critical Path, St. Martin’s Griffin, New York, 1982.

[3] Broadcast by radio station KSFR in Santa Fe, New Mexico, on July 18, 1995. For more details about the B-61-11 go to

[4] Office of the Assistant Secretary of Defense (Public Affairs), DoD News Briefing, Tuesday April 23, 1996.

[5] The text of Bethe’s letter, and Clinton’s reply, have been posted by the Federation of American Scientists.

[6] Mark Gaffney, Dimona: The Third Temple?, Amana Books, Brattleboro, 1989, chapters 4 and 5.

[7] For an excellent discussion of PDD-60 see Rear Admiral Eugene Carroll, USN (ret), “The NPT Review -- Last Chance?”, The Defense Monitor, Vol. XXIX, No. 3, 2000. Posted at

[8] Kenneth D. Bergeron, Tritium On Ice, MIT Press, 2002. Also see Charles D. Ferguson’s review in the March/April 2003 issue of The Bulletin of the Atomic Scientists, (vol. 59, no. 02) pp. 70-72.

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