Wednesday, December 31, 2008

America's War On Islam - The "Fort Dix Five"

America's War on Islam: The "Fort Dix Five" - by Stephen Lendman

With world eyes on Gaza, the horrific carnage on the ground, innocent civilians being slaughtered, Israel's grievous crimes of war and against humanity, and its slow-motion genocide gaining speed, it's easy to forget America's war at home on Islam and its growing number of victims. This article highlights five recent ones - innocent young Muslim men called the "Fort Dix Five."

On December 22, The New York Times headlined: "5 Are Convicted of Conspiring to Attack Fort Dix" in reporting that a federal jury "convicted five men of conspiring to kill American soldiers at (the base) last year, but acquitted them of attempted murder."

After an eight-week trial, jurors deliberated for six days before returning a verdict. "The men, all Muslim immigrants (from) South Jersey or Philadelphia, face a maximum term of life in prison."

Sentencing is scheduled for April 22 for three defendants and April 23 for the others. Even The New York Times admitted that the "five defendants seemed (more like) South Jersey than seething jihadists" - based on their backgrounds, employment, normal activities, and trial evidence showing nothing out of the ordinary.

It's the latest example of post-9/11 witch-hunt justice against innocent Muslim victims - targeted for their faith, ethnicity, activism, prominence, benevolent charity, or whatever other motives the administration concocts for political advantage. As a result, growing numbers fill federal prisons for being Muslim at the wrong time in America. The "war on terror" is a jihad against them. Muslims everywhere are at risk. So are we all, and that won't change under Obama.

Charges Against the "Fort Dix Five"

On May 7, 2007, the FBI arrested the five on charges of plotting to kill US soldiers at Fort Dix, New Jersey. A June 5 DOJ press release stated:

"The five defendants are charged with conspiracy and other charges related to their plans to kill as many soldiers at the Army base as possible. A sixth man was indicted for aiding and abetting the illegal possession of firearms by three members of the group." The original Complaint was unsealed on May 8.

"One count against two of the defendants charges them with unlawful possession of machine guns - the AK-47s and M-16s they purchased and took possession of just before they were arrested by Special Agents of the FBI."

Prosecutors called the men "radical Islamists," and according to US Attorney Christopher J. Christie, "We intend to continue a vigorous prosecution of these defendants. Anyone who would plan such an attack should expect no less."

The six and charges against them are as follows:

Mohamad Ibrahim Shnewer (an ethnic Jordanian) on "conspiracy to murder members of the uniformed services (maximum statutory penalty of up to life in federal prison);"

Dritan Duka (an ethnic Albanian like his two brothers below) on "conspiracy to murder members of the uniformed services; unlawful possession of machine guns (maximum statutory penalty of 10 years in prison), two counts of being an illegal alien in possession of firearms (maximum statutory penalty of 10 years in prison);"

-- Shain Duka on "conspiracy to murder members of the uniformed services; unlawful possession of machine guns, two counts of being an illegal alien in possession of firearms;"

Eljvir Duka on "conspiracy to murder members of the uniformed services, one count of being an illegal alien in possession of firearms;"

Serdar Tatar (an ethnic Turk) on "conspiracy to murder members of the uniformed services;" and

Agron Abdullahu (an ethnic Kosovar) on "aiding and abetting the Duka brothers' illegal possession of weapons (maximum statutory penalty of 10 years in prison)." Abdullahu confessed and was sentenced to 20 months in prison for supplying the guns and ammunition in question. He'd already served 11 months and was released in October, according to his lawyer, Richard Coughlin.

The weapons transaction was "at a residence in Cherry Hill," New Jersey. "After the purchase from a cooperating witness," arrests were made.

In October 2007, Abdullahu pled guilty to weapons possession. A superceding January 15, 2008 indictment charged the other five men with the attempted murder of military personnel and weapons possession. According to US Attorney Christie at the time, "there is abundant evidence that the defendants fully subscribed to al Qaeda's jihadist ideology (and) were ready for martyrdom. We had a group that was forming a platoon to take on an army. They identified their target, they did their reconnaissance. They had maps. And they were in the process of buying weapons. This is a new brand of (homegrown) terrorism where a small cell of people can bring enormous devastation....They wanted to be jihadists."

The DOJ, Dominant Media, and Islamophobes Respond to the Convictions

A December 22 DOJ press release stated: "Five Radical Islamists (were) Convicted of Conspiring to Kill Soldiers at Fort Dix....announced Patrick Rowan, Assistant Attorney General for National Security, and Acting US Attorney Ralph J. Marra, Jr....These men planned, trained and ceaselessly talked unambiguously about their intention to ambush and kill US soldiers." Other "would-be terrorists of the homegrown variety (be alerted that we'll spend millions of taxpayer dollars to) find you, infiltrate your group, prosecute you and send you to federal prison for a very long time" - whether or not you're guilty.

The Washington Post highlighted the conviction of "five foreign-born Muslim men conspiring to kill US soldiers at Fort Dix and other military installations (never mentioned in the indictment) as part of what prosecutors charged was a plot to launch an Islamic "holy war" against the United States. Writer William Branigin emphasized their "plot" to use "automatic weapons (and) rocket-propelled grenades (also not mentioned) to kill as many US soldiers as possible.

Other comments included saying the "plot" began in January 2006, Osama bin Laden's "terrorist network" inspired it, the "cell" viewed "terrorist training videos glorifying the Sept. 11, 2001 attacks and depicting the beheading of American military personnel..." When arrested in May 2007, "they were in the final stages of addition to targeting Fort Dix, the cell discussed attacking other military installations, including Fort Monmouth, Lakehurst Naval Air Station, McGuire Air Force Base in New Jersey, the US Coast Guard building in Philadelphia, and Dover Air Force Base in Delaware. Another potential target was the annual Army-Navy football game in Philadelphia...."

Branigin never questioned the legitimacy of clearly bogus charges on their face - that five young men with hand weapons (automatic or otherwise) would declare war on the US Army at any or perhaps all of the above locations. Instead he accepted the official explanation and reported it like in a straight press handout.

David Horowitz is a right wing ideologue, an opponent of the progressive left, and a prominent anti-Muslim hatemonger "spread(ing) fear, bigotry and misinformation," about Islam according to the media watchdog group Fairness and Accuracy in Reporting (FAIR). It calls him "the Islamophobia movement's premier promoter....(as editor) via his website, FrontPage Magazine" and activities like his October 22 - 26, 2007 "Islamo-Fascism Awareness Week" that held "protests, teach-ins and sit-ins on more than 100 college campuses (to highlight) the threat posed by the Islamic crusade against the West."

On December 23, Front Page writer and Jihad Watch director Robert Spencer wrote about the Fort Dix Five, referred to the men as "jihad plotters," and said "They wanted to burst into Fort Dix and murder as many American soldiers as they could...." He commented on how Muslim community leaders "hurl(ed) reckless charges of entrapment (and should instead take) hard steps necessary to clean their own house."

"While Muslim and non-Muslim spokesmen have spilled oceans of ink since 9/11 asserting that Islam condemns 'terrorism' and the killing of 'innocents,' without defining what is meant by either term, no one has ever produced any examples of authoritative and orthodox Islamic religious scholars rejecting, on Islamic grounds, jihad violence against non-Muslims." It's about time they "institute(d) comprehensive and inspectable programs teaching against the jihad ideology and Islamic supremacism."

On December 23, Spencer's Jihad Watch (with no byline) mocked the kangaroo justice victims in its headline: "Muslims on Fort Dix jihadists - They wuz framed....It was all a joke....Oh Shnewer (one of the five about his explanation), you kidder! It then added various demeaning comments to clearly show disrespect for Islam.

Pat Robertson preaches hate and intolerance and his leaves no doubt where it stands in a December 22 article by its "Terrorism Analyst," Erick Stakelbeck - titled "Fort Dix Jihadis Convicted." He called the convictions "A nice 'stockade stuffer' for the US government, just in time for the holidays," then added Islamophobic comments like this:

" doesn't take a brain surgeon to walk into a shopping mall, yell 'Allahu Akhbar,' and start firing a rifle at shoppers. Granted, it obviously helps to have a larger force behind you (for funding, guidance and training) if you are scheming to carry out an attack like the one planned on Fort Dix. But deadly intent, a gun and some explosives can get a motivated, committed jihadist a long way as well." Obviously for Stakelbeck, they're guilty, case closed.

The Anti-Defamation League (ADL) was founded "to stop the defamation of the Jewish people and to secure justice and fair treatment to all. (It) fights anti-Semitism and all forms of bigotry, defends democratic ideals and protects civil rights for all" - or so it says. How does it act under its national director, Abraham Foxman.

Using anti-Semitism and a high moral agenda for cover, Waxman backs racial discrimination and nationalism. While preaching universal equality, he's for Jewish supremacy, the right of Israeli Jews to dominate Arabs, and to maintain a separate and unequal society.

On December 23, ADL "applauded the verdict convicting five would-be terrorists who conspired to kill American soldiers at New Jersey's Fort Dix last summer." ADL's national chair, Glen Lewy and Foxman issued this statement:

"The successful prosecution of the five terrorists for conspiring to kill American a testament to the dedication and hard work of teams of FBI investigators and Justice Department prosecutors who devoted enormous time, energy and passion to making our nation safer....In this case, justice has been served and our national security protected."

Imagine their comments if five Israeli Jews had been convicted on the same charges instead of Muslims.

No Plot, No Crime, So the FBI Invents Guilt with An Entrapment Sting Operation - Its Usual Modus Operandi to Ensnare the Innocent

At a Cherry Hill, NJ Circuit City store in January 2006, Mohamad Shnewer innocently wanted a home video transfered to DVD. It showed men shooting weapons at a Pocono Mountains firing range, playing paintball (an innocent game in which opposing teams try to eliminate opponents by marking them with water-soluble dye shot in capsules from air guns), and repeating Arabic phrases like Allah Akbar (meaning God is Greatest). The store clerk called the police. They notified the FBI. They began investigating and recruited two dubious informants to help.

Each knew nothing about the other. One was Besnik Bakalli, an ethnic Albanian, who falsely told defendants he was a Kosovo Liberation Army (KLA) veteran - the US/Germany supported terrorist group recruited to destabilize Kosovo/Serbia in the 1990s. At trial, however, he testified that he fought for no group and knew nothing about Islam or extremists calling for jihad.

Mahmoud Omar was the other informant, an Egyptian-born used car salesman/mechanic on probation for bank fraud. He and Bakalli entered the US illegally and faced likely deportation or worse. They were easily recruited, so cooperated, and were well compensated for their efforts - thousands of dollars a month, and according to defense lawyers, Omar (from when recruited in March 2006) will have earned $238,000 for his efforts. believes more - over $240,000 plus rent and other expenses, and, of course, leniency in handling their charges. Bakalli was used for a shorter period and reportedly was paid about $150,000. The FBI also relocated his parents to America as an added incentive to cooperate.

Its sting was to have both men befriend the defendants, wear a wire, egg them on with tough talk about their commitment to Islam, elicit negative views about the US military and war in Iraq and Afghanistan, incite a need for holy war in response, and suggest how to get weapons to "do something."

Hundreds of conversations were recorded and selectively played back at the eight week trial. In addition, Shnewer's house and car were bugged and rigged with hidden cameras for additional videotape accounts.

One conversation with defendant Tatar has Omar saying: "I want this country to pay the price for something they did to me" and then asked Tatar for help to get information about Fort Dix. He had no idea what he meant, yet Omar persisted and wanted Tatar to get him a map of Fort Dix. At one point, Tatar called the Philadelphia police about being pressured and voiced concern about something terror related.

Omar also organized so-called Fort Dix "reconnaissance missions" around the base's perimeter. In addition, he got two of the Duka brothers to buy firearms but not to commit terrorism or attack the Army base. At that point, they were arrested in Omar's apartment while buying inoperable rifles the FBI supplied for the sting.

What's clear from trial evidence is that no plot existed, no conspiracy, no intended crime, explicit rejections of violence, and without informant provocation no planned weapons purchase for any purpose. All five are innocent, unfairly targeted, entrapped, prosecuted, convicted, and the latest administration "war on terror" trophies from its scheme to incite fear.

The only trial evidence was their freely expressed hostile views about America's wars against Iraq and Afghanistan, sympathies for Islamic causes, and anger over how immigrants are treated in the US. None of this is illegal or incriminating, yet the defendants were convicted and face long incarcerations after sentencing, possibly for life.

Attorney Sam Schmidt represented one of the defendants accused in the 1998 US African embassy bombings. He explained how "The government (goes to extraordinary means) to find people (with) an antipathy to US policies (in the Middle East) and see which ones can get motivated, or angry enough (to be entrapped by the entreaties of an informant). Many of these cases appear to be the informant who is either working off a case to avoid going to jail or be deported or is seeking remuneration...."

They're used to entrap defendants, get them angry, and create the impression that they're willing to commit terrorism. To prove conspiracy, the government need only show that defendants appeared willing to commit a crime and did one thing (usually quite innocent) to use against them and convince a jury. No crime need be committed nor any detailed plans for one. In the Fort Dix case, prosecutors didn't have to prove a planned attack - only that defendants appeared willing or approved of US soldiers being attacked somewhere at some time.

With informants taping hundreds of conversations and training them to egg on targets, prosecutors can selectively use comments to make their case and intimidate juries to convict. In closing arguments, Shnewer's lawyer, Rocco Cipparone, said: "Omar led and led and pushed and pushed Mohamad as far as he could. But at the end of the day, all Mohamad did was talk and talk and talk. His actions - and inactions - speak more volumes than his words."

Transcripts also revealed that conversations included a mixture of English, Arabic, and Albanian, were filled with miscommunications, bravado, ambiguity and at times nonsense. At some points, the defendants seemed too scared to do anything. Clearly their intentions were non-violent.

For example, when they were supposedly shopping for weapons, one defendant worried that if someone is caught with a machine gun, he'll "be in deep s..t." And if anyone gets killed, "As Muslims, if we get caught, we all get sent away to Guantanamo Bay for 10 years with no court date....they can come to you in the morning when you are sleeping. And they don't play."

Despite their convictions, the government's indictment was vague on any intention to commit terrorism or that defendants' comments meant they planned it. The informants did the pushing while they just talked and nothing else. However, under US conspiracy law, if prosecutors can convince juries that defendants words implied actions they can get convictions.

According to former federal prosecutor and now executive director of the Center on the Administration of Criminal Law at New York University School of Law, Anthony Barkow: "A person is entrapped when he has no previous intention to violate the law and is persuaded to commit the crime by government agents. But if he's already willing to commit the crime (not applicable to the defendants), it's not entrapment if government agents convince him to do it."

Roger Williams University law professor Peter Margulies explains further that: "A virtue of American conspiracy law is it allows you to show conspiracy with relatively thin evidence. In Britain recently, they couldn't convict people in an airport bombing plot because they had to show that action was imminent. American law is more expansive than most other democracies in that respect."

Supreme Court Justice Robert Jackson was the chief US prosecutor at the Nuremberg Nazi war criminal trials. In a subsequent 1949 case, he expressed concern that US conspiracy law "constitutes a serious threat to fairness in our administration of justice." It lets prosecutors "target the people it doesn't like," according to Margulies, do it as deviously as they wish, and unjustly convict the innocent.

That's Jim Sues' view, executive director of the New Jersey Chapter of Council on American-Islamic Relations, on the Fort Dix Five case. "Many people in the Muslim community see this as (another) case of entrapment. The evidence showed no real honest-to-God planning for an attack on Fort Dix (or anywhere else). The defendants were never (even) all in a room at one time with a map of the (base), plotting what they were going to do." They had no violent plans whatever. Nor did other unjustly convicted Muslim victims - persecuted to incite fear and justify America's foreign aggression against Iraq, Afghanistan and all Islam.

Since 9/11, around 150 defendants were convicted through 2007 and many more this year. It shouldn't surprise that perhaps all were innocent, unfairly targeted, unjustly convicted and sentenced to long punitive incarcerations in federal prisons. In some cases, (for the so-called "worst of the worst") to harsh confinement in Supermax ones that crush the human spirit, mind and body through isolation, cruelty, and physical abuse for years or even life.

It's the wrong time to be Muslim in America. Expect little change under the new administration. Foreign wars will continue. So will the "war on terror." Innocent Muslims will be targeted. Others as well, so today we're all as vulnerable as the "Fort Dix Five."

Stephen is a Research Associate of the Centre for Research on Globalization. He lives in Chicago and can be reached at

Also visit his blog site at and listen to The Global Research News Hour on Monday through Friday at 10AM US Central time for cutting-edge discussions with distinguished guests on world and national issues. All programs are archived for easy listening.

Monday, December 29, 2008

Israel's Wanton Aggression On Gaza

Israel's Wanton Aggression On Gaza - by Stephen Lendman

It's not the first time and won't be the last. On December 27, AP reported that:

"Israeli aircraft struck Hamas security compounds across Gaza on Saturday in unprecedented waves of simultaneous attacks, and Hamas and medics reported dozens of people were killed."

Haaretz headlined:

"Israel launched (Operation Case Lead) Saturday morning (at around 11:30AM with no warning) the start of a massive offensive against Qassam rocket and mortar fire on its southern communities, targeting dozens of buildings belonging to the ruling Hamas militant group." reported that "Israeli missiles target Gaza," and continued:

"Israel has launched air strikes on Hamas installations across the Gaza Strip, killing at least 155 people and causing heavy damage, according to officials and witnesses."

"At least 30 missiles (later over 100 reported) were fired at targets on Saturday (morning), with the head of emergency services in Gaza saying at least 200 people were also wounded." By Sunday afternoon, Ma'an News reported much higher numbers - at least 285 known dead, more expected, and over 900 injured, many seriously.

Among the dead was Gaza's police chief, Tawfiq Jabber, after a missile struck a police graduation ceremony in Gaza City. Other "casualties" (presumed killed) were governor of the Al-Wusta (central) Districts, Ahmad Abu Aashur, and commander of Security and Protection Services (in the government police), Ismail Al-Ja'bari.

The Strip's interior ministry reported that all Gaza security compounds were destroyed. According to Hamas' deputy leader, Mousa Abu Marzook: So far "the aggression (hasn't) stop(ped)....they are targeting all the police headquarters and offices. We will defend our people, we will retaliate against this aggression....our military will retaliate."

Marzook asked the international community to condemn Israel's wanton state terrorism. "Nobody in this world can accept what happened....the international community (must) stand against this and say that it is not acceptable." Former Palestinian information minister, Mustafa Barghauthi, said: Israel didn't attack Hamas, it attacked "the whole population and the free will of the people of Gaza. (Israel is guilty of) war crimes." Hamas' leader, Ismail Haniyeh, said "Palestine has never witnessed an uglier massacre."

In Damascus, Khled Meshal, Hamas' political leader in exile, said Hamas pursued "all peaceful options without results" in calling for new Intifada resistance. The Arab League was tepid in its response. It called an "emergency" Sunday meeting in Cairo, then postponed it until Wednesday, December 31.

Meanwhile, the raids continue; the death and injury toll mounts; vast amounts of despair, anger, and destruction as well; and Fatah leader and Palestinian president Mahmoud Abbas (from Cairo) blamed Hamas for the violence. That provoked outrage from Hamas spokesman Fawzi Barhoum. He accused Abbas of "downplay(ing) the sufferings of our people in Gaza, belittl(ing) their pains, (and) providing justification of the holocaust and war waged by Israel."

As always, most of the dead and wounded are civilian men, women and children. No matter, according to Israeli military spokesman Avi Benayahu saying: Saturday's attack is "only the beginning. The operation was launched following the violation of the terms of the lull by Hamas and the unceasing attacks by Hamas authorities on Israeli civilians in the south of the country."

In fact, "attacks" were the pretext, not the cause of Israel's aggression. Since Hamas won a majority in the Palestinian Legislative Council (PLC) in January 2006, Israel, Washington and the West withheld recognition and more. All outside aid was cut off, an economic embargo and sanctions were imposed, and the legitimate government was isolated and vilified.

The leading candidate to become Israel's next prime minister, Tzipi Livni, vows as a "strategic objective" to overthrow Hamas by military, economic and diplomatic means. Her main opponent, Benjamin Netanyahu, pledges to "topple the Hamas regime" and end its effective resistance against an oppressive occupation.

All along, Hamas has been conciliatory to no avail. Earlier in the year, its leaders agreed to a ceasefire and observed months of it unilaterally, despite repeated Israeli violations and Gaza being under siege. On November 4, it ended after the Israeli Defense Forces (IDF) entered the Strip (without cause) and killed six Hamas officers supposedly to close off tunnels close to the Kisufim roadblock. Thereafter, in spite of both sides calling for peace, IDF hostilities continued.

Israel is a serial aggressor. Hamas responds in self-defense as international law allows. Article 51 of the UN Charter permits the "right of individual or collective self-defense (against an armed attack) until the Security Council has taken measures to maintain international peace and security."

On December 21, 1965, the UN General Assembly adopted Res. 2131 titled: "Declaration on the Inadmissibility of Intervention in the Domestic Affairs of States and the Protection of Their Independence and Sovereignty." It called armed intervention, subversion, and all forms of indirect intervention synonymous with aggression and, for the first time, recognized "the legitimacy of struggle by the people under colonial rules (including occupation) to exercise their rights to self-determination and independence."

On November 22, 1974, the General Assembly passed Res. 3236 recognizing that Palestinians have the same right to self-determination as other sovereign states.

On June 8, 1977, Protocol 1 to the August 1949 Geneva Conventions was passed - "relating to the Protection of Victims of International Armed Conflicts." It declared the legitimacy of armed struggle (or resistance) to achieve self-determination as long as no proscribed methods are used. Further, "all states (are urged) to provide material and moral assistance to the national liberation movements in colonial territories (including occupied people seeking freedom)."

Rarely do Palestinians get any, and, since 1967, have been some of the most isolated people in the world. For Gazans, no outside aid gets in, except for what Israel occasionally lets UN and humanitarian agencies supply and the little coming through tunnels on Egypt's border. It's never enough and falls woefully short of minimum amounts needed to survive. The result is a growing humanitarian crisis, an entire people on the verge of breakdown, compounded by mass slaughter, destruction, and it's "only beginning" according to the IDF spokesman.

The world community is silent and lets Israel do as it pleases - despite repeated international law violations, willful acts of aggression, grievous harm to four million people under occupation, including 1.5 million under a medieval Gaza siege, now under attack.

Reports were that EU nations and Russia called for (but didn't demand) an end to hostilities. According to Reuters, Washington urged Israel to avoid civilian casualties but stopped short of calling for an end to the attacks. White House spokesman Gordon Johndroe blamed Palestinians in saying "Hamas' continued rocket attacks into Israel must cease if the violence is to stop." Unsaid was that they respond to IDF violence or that until December 27 no Israeli was killed or injured.

Blame the Victim, Not the Aggressor

On Saturday, Condoleeza Rice accused Hamas for the violence. UN Secretary-General Ban Ki-moon could only express "deep alarm," and where was Barack Obama? An AP photo showed him on vacation "working out" at the Semper Fit Center at the Marine Corp Base Hawaii in Kailua, Hawaii on Saturday, and CBS News reported that he's "closely monitoring global events, including the situation in Gaza, but there is one president at a time," according to Brooke Anderson, his chief national security spokesperson.

In a July 2008 interview, The New York Times asked Obama if Israel should negotiate with Hamas in Gaza. He replied that "I don't think any country would find it acceptable to have missiles raining down on the heads of their citizens....I expect Israelis to do (all they can to stop them)....In terms of negotiating with Hamas, it is very hard to negotiate with a group that is not representative of a nation state, does not recognize your right to exist, (and) has consistently used terror as a weapon. Hamas is a terrorist's hard for Israel to negotiate with a country like that."

Hamas was democratically elected. It's the legitimate Palestinian government. It's falsely called a terrorist organization, and it has every right to resist an illegal occupation under international law. It observed a unilateral ceasefire for months and extended peace overtures numerous times in the past. Israel spurned them by dividing Gaza and the West Bank, co-opting Mamoud Abbas, inciting Fatah against Hamas, isolating Gaza, and pursuing a policy of aggression, killings, targeted assassinations, mass incarcerations, and torture with full support from Washington, the West, and (from his comments above) the incoming Obama administration.

The UN Refugee Works Relief Agency's (UNWRA) operations head for Palestinian refugees, John Ging, expressed outraged on what's happening. Earlier he said: Gazans got nothing from the months of ceasefire. There was no "restoration of a dignified existence. We had our supplies restricted (during the period) to the point where we were left in a very vulnerable and precarious position" with very little food left until it ran out.

The Palestine Solidarity Campaign (PSC) campaigns for Palestinian justice in areas of civil, human and political rights according to international law. Along with the Palestine Return Centre (PRC), the Palestinian Forum of Britain (PFB), the British Muslim Initiative (BMI), Stop the War, Friends of al Aqsa, the Muslim Association of Britain (MAB), and Respect, Islamic Human Rights Commission it organized emergency protests opposite Israel's London Embassy on December 28 and 29 to demand an end of the Gaza siege and ongoing aggression. The urgency was highlighted by saying: Israel's Cynicism (Is) Supported by the West's Complicity" as it called for public solidarity to end it.

For her part, Israeli foreign minister Tzipi Livni ordered the Ministry to "take emergency measures (to) open an aggressive and diplomatic international public relations campaign," according to Haaretz. In other words, Israel will spin its wanton aggression into justifiable self-defense and get dominant media help to sell it.

On December 27, The New York Times took the lead. It reported that "Israeli airstrikes hit Hamas security facilities in Gaza on Saturday in a crushing response to the group's rocket fire....Israeli military officials (called the attack) an effort to force Hamas to end its rocket barrages into southern Israel. Thousands of Israelis hurried into bomb shelters amid the hail of rockets," making it seem like Israel resembled London during the blitz when, in fact, Hamas attacks are mere pin pricks and only respond to first-strike Israeli attacks.

The Times and dominant media are silent on this. They continue spreading spurious lies about Hamas being "officially committed to Israel's destruction, and when it won Palestinian legislative elections in 2006 and then 'forcibly' took over Gaza in 2007, it said it would not recognize Israel, honor previous Palestinian Authority commitments to it, or end its violence against Israelis."

All of the above is untrue. The Times continues to report falsely. Hamas wants peace, has repeatedly been conciliatory, and its founder, Sheikh Ahmed Yassin, said earlier that armed struggle would end "if the Zionists ended (their) occupation of Palestinian territories and stopped killing Palestinian women, children and innocent civilians."

Israel rejects all overtures. More recently, Hamas offered peace and Israeli recognition in return for a Palestinian state inside pre-1967 borders - its Occupied Territories that it's entitled to under international law.

As early as 1988, the PLO under Yasser Arafat accepted a two-state solution with Palestinians willing to settle for only 22% of their pre-1948 homeland - a generous offer that, if accepted, would have had two sovereign states living peacefully alongside each other as neighbors.

Israel rejects this out of hand. It chooses dominance over peace, violence over reconciliation, and imperial conquest above the rule of law. It's colonizing the West Bank, ethnically cleansing the population, and continues to terrorize Gaza. "The newspaper of record" is selective about "fit news to print," so uncomfortable truths are suppressed. It reported that one Israeli was killed Saturday and another four wounded, one seriously, but didn't explain that previous rocket attacks caused no deaths or injuries.

After many months of siege compounded by ongoing attacks, Gaza is gravely affected, but so is the West Bank. Under the Fatah government, no rockets are launched, yet Israel maintains a violent occupation, continues to seize Palestinian land, expand its illegal settlements, and lets its residents terrorize Palestinians with impunity, even in cases of wanton killings and destruction of property.

Early Reports on the Ground and from Israel

On Saturday, Haaretz reported that 60 warplanes hit 50 targets simultaneously, then 20 more "struck 50 Palestinian rocket launchers in an effort to minimize Hamas' retaliatory strikes." The attack hit civilians with the IDF stating that those near targeted sites were "liable to get hurt." Some were children leaving school when the strikes were launched.

Haaretz writer Amos Harel called them "the harshest IDF assault on Gaza since the territory was captured during the Six-Day War in 1967." Palestinian sources described a massive attack, like "shock and awe," destroying about 40 targets in three to five minutes. The IDF spent months picking sites, and dozens more may "come under attack in the coming days. Little to no weight was apparently devoted to the question of harming innocent civilians. From Israel's standpoint, Hamas" brought this on itself. In Pentagon-speak, civilians are "collateral damage," but pictures of the slaughter show otherwise - stark evidence of crimes of war and against humanity that no authority will punish.

Also at issue is whether IDF ground forces will follow the air attacks, and if so, it won't be the first time. The right-wing Jerusalem Post quoted president Shimon Peres saying: "Israel will take all steps demanded of it to stop the rocket fire (but) we will not go into Gaza. There are other ways - we didn't leave Gaza in order to go back."

The Ma'an News Agency reported (through Monday AM) at least 310 killed and over 1000 wounded with medical sources saying arrivals at Gaza City hospitals are in "pieces." In addition, the Head of Emergency and ambulance department, Muawiya Hassanain, confirmed that medical crews continued pulling dozens from under rubble.

Things are desperate as he asked all Arab states for aid in the form of medications and operating supplies for those too badly injured to be moved. Hospital corridors are filled with bodies and gurneys, and local morgues are out of space.

Israeli defense minister and former prime minister, Ehud Barak, declared Gaza's 20 square kilometers a "special military zone" - a classification just short of a declaration of war. It already is for its people, and here's how Al-Azhar University professor Said Abdelwahed described conditions late Saturday:

"It is horrible outside! Minutes ago I heard the hissing of a Palestinian Qassam rocket, then another one accompanied by an explosion. It seems that the second one was hit by an Israeli aircraft that may have been targeting the Palestinian group. The news now is saying that an Israeli Apache helicopter has targeted a recreation ground with fish ponds."

"Al-Shifa hospital said that there are more than 195 dead and over 570 injured there. Every minute the number of casualties goes up. These are the figures in Gaza, but there are still no official statements from other towns and villages and refugee camps. Near our apartment, my youngest son was waiting for his school bus when the preventive security department was hit 50 meters from where he was standing. Two men and two young girls died immediately."

"It is utterly dark now. I am operating a small generator to contact the world via internet. Tonight everyone in Gaza is scared. It's totally dark (there's no power); children cry from fear; (at least) 206 people are dead. They (and the injured) line the floor at Al-Shifa hospital, but (it's) poorly equipped. (Its) administration called on people to donate blood. The teachers' syndicate declared a three days strike in protest...."

"Just in, Israeli aircraft (Saturday night) hit places east of Gaza City where a number of people were killed and injured. Casualties are rising. People remain under rubble. One mother lost two young daughters and a son as they were heading to school."

"Tonight is cold mainly for those whose windows (were) shattered by explosions." With Gaza under siege, "there is no glass available" to replace them. "In the apartment building where I live, 7 apartments witness freezing cold nights. They use blankets to cover in the place of the broken windows. Hundreds of homes" are in the same condition. Hamas' leader Ismail Haniyeh "gave a televised raise morale and to reconfirm that Hamas will not surrender. The death toll reached 210" and number of seriously injured is now up to 200. Another air raid" is now in progress north of Gaza City.

UNRWA Expresses "Horror"

The UN Relief and Works Agency commissioner Karen AbuZayd was outraged over Israel's attack, the mass killings and destruction, and expressed her "deep sadness at the terrible loss in human life." She reminded Israel that it's a signatory to "international conventions that protect non-combatants in times of conflict (and added that) these conventions are worthless if they are not upheld." A statement said that UNRWA will "exert all efforts to respond as quickly as possible to relieve suffering and pain (and added that today's attacks follow) weeks of a tight blockade that prevented UNRWA and other humanitarian agencies from assisting the population (that's) unable to (meet) their basic needs, and now" they're under attack.

The Israeli Committee Against House Demolitions (ICAHD) Expresses Outrage in Calling for An Immediate End of the Attacks.

It blamed the suffering in Israel and Gaza "squarely with successive Israeli governments" in citing 41 years of "increasingly oppressive Israeli Occupation without a hint that a sovereign and viable Palestinian state will ever emerge."

Why so? Because Israel and Washington won't tolerate one beyond the fiction of isolated, surrounded, impoverished, and impotent bantustan outposts that IDF forces can enter at will and wreak havoc on a helpless population.

Hamas and Islamic Jihad Response

After the air strikes, Hamas ordered its Al-Qassam Brigades to respond "by any means necessary." Spokesman Fawzi Barhoum called for a "massive response" and for renewal of others inside Israel. Islamic Jihad leader Khaled Al-Batsh called Israel's attack "open war." He also condemned the world community and Arab states for their "silence on such massacres" and vowed that Israel "would never make the resistance factions surrender."

West Bank Protests

Demonstrations erupted across the West Bank, including in Bethlehem, Ramallah city center, the Ad-Duheisha refugee camp, Hebron, Tulkarem, and East Jerusalem. Violent clashes broke out between Palestinian youths and IDF forces in Shufat refugee camp on the northern outskirts of East Jerusalem. Also in Qalandia, Ar-Ram and Al-Isawiya. Dozens of injuries and arrests were reported. Black flags were hung around the city and a commercial strike was declared.

Tulkarem governor Talal Duweikat and Palestinian Legislative Council (PLC) member Hasan Khriesah joined hundreds of others in the streets. The city declared a day of mourning in response.

In Hebron, hundreds of university students protested for an end to violence. They chanted anti-occupation slogans and called for Fatah and Hamas to unify for a common purpose. The group marched to the Bab Az-Zawiyah neighborhood where confrontations erupted with IDF forces, and they, in turn fired suffocating amounts of tear gas.

In Ramallah, Fatah organized a rally for hundreds and called for a general strike to close all city shops for the day. Demonstrators and international community institutions raised banners with slogans saying "one blood, one nation, Gaza and we are with you." Ministry of Prisoners Affairs, Ziyad Abu Ein, called on all Palestinians to unite in dark days. PLC member Mustafa Barghouthi called Israeli violence "their harshest crimes against Palestinians" and condemned world and Arab leaders for their silence.

In Bethlehem, protests erupted in the Ad-Duheisha refugee camp (south of the city) and a larger crowd assembled in the city.

A December 27 Palestinian press release read:

"A demonstration to condemn the massacres being committed in Gaza."

"Palestinian Civil Society organizations in the Bethlehem area, people of various political affiliations, Christians, and Muslims, and all people of conscience in the Bethlehem area are gathering at 5PM (Saturday) in front of the Church of Nativity and Omar's mosque in Bethlehem."

Through Sunday afternoon, around 300 people were massacred by bombing besieged Gaza. Over 1000 were reported injured as well. The victims include men, women, and children, and the numbers keeps rising. "Join us today as we call for ending the massacres, ending the siege on Gaza, for reconciliation between all Palestinians, and for freedom."


Khalid AlAzza
Dr. Mazin Qumsiyeh
Dr. Abdelfattah Abusrour

The Union of Health Work Committees - Gaza - Late Saturday Press Release - from Executive Director Yousef Momeusa

After two waves of Israeli air attacks, "television footage showed dead bodies scattered on a road and wounded and dead being carried away by distraught rescuers. There was widespread damage to buildings." The number of dead exceed 200 and is rising. At "least 750 were wounded, 125 with critical injuries." Updated numbers are much higher and continue climbing.

"The military operation makes the Palestinian blood fall like rain. As a consequence, the civilian population in the cities of Rafah, Khan-Younis, middle camps, Gaza City, Beit-Hanoun and Beit-Lahiya and in the refugee camp of Jabalia are suffering from the most horrible onslaught of Israeli military power....The number of dead and injured are increasing by the minute."

"The infrastructure is being destroyed leaving many areas without power and water. Medical supplies in the hospital are largely exhausted (and) food supplies are dwindling." A real health crisis looms. UHWC is working "around the clock at the risk to themselves to deal with the crisis....The entire world is witnessing these scandalous and outrageous acts, and yet no concrete steps have been taken!!"

"UHWC asks you to issue a strong Last Appeal Statement condemning Israel's human rights violations against the Palestinian people and to demand a cessation of this military offensive....There are no political considerations which can justify the silence of the international community any longer."


Dr. Yousef Momeusa
Executive Director

Professor Said Abdelwahed of Al-Azhar University, Gaza
on the End of the Six-Month Ceasefire

Prior to Israel's December 27 attack, he feared the worst and said it "means escalation; bombardment, air raids. It means military activities on the border. The last six months brought big pressures on our social life, on resources, all due to the Israeli siege." With it were high prices on goods able to enter from Egypt through tunnels that for the most part Israel allows given the dire situation on the ground.

"I can't see any progress being made towards a united Palestinian government. I think both sides" lose out as a result, "but Israel takes (full) advantage....The students (at my university) are deprived of many things. They are disappointed young people with no hope or future in front of them, so they are in bad shape."

Abdelwahed mentions a Gaza City health worker "expect(ing) the situation to deteriorate (further): more incursions and more military operations in border areas. While the world is busy with Christmas, Israel can take action. (Already) we have 16 hours of power cuts a day. Hospitals have to run generators for hours at a stretch, which they weren't designed for. So they break down - and because of the closure we have no spare parts....I cannot see the internal situation improving soon. We're short of everything. Eighty per cent of people in Gaza (rely) on food assistance. It's a big problem." It's now much bigger.

At 11PM on Saturday, Abdelwahed reported new air raids were in progress concentrating on the "eastern parts of the city of Gaza. One woman lost 10 of her family. Only she and a daughter remain alive. The daughter couldn't speak to the media because she didn't (understand) what happened. Panic is everywhere in the city and we anticipate (worse still) to come. Demonstrations erupted in Egypt, Jordan and Lebanon." The death toll keeps climbing. "An Israeli caller just rang us up. My youngest son answered. The caller threatened that if I have any weapons they will hit my place!!!"

There have been "five air raids in 10 minutes. Targets are societies and groups of social works in thickly populated areas. One mosque was hit as well. I am without electricity for 30 hours so far. I am still operating a small generator to contact the world via internet."

Abdelwahed sent this email on Sunday. "My family and I are okay but stressed....the building adjacent to (ours) was hit by a small rocket from a helicopter. (The) situation is horrible and people are really panicked."

"Last night, F16s targeted Al-Aqsa satellite channel and leveled it to the ground." Surrounding buildings are impossible to live in. "One small mosque across the street from Al-Shifa Hospital was (demolished)." Homes were badly damaged as well, one "belong(ing) to a friend of mine; he told me that what he witnessed was hard to describe in words....Also his sister was severely injured."

A medical doctor friend "told me that the death toll climbed to about 500 (though the media reports around 300) and more than 1000 injured." Israelis are targeting Rafah tunnels. "Hundreds of Palestinians stormed the Egyptian border with a bulldozer and on foot but failed to (get across) as the Egyptians shot live at them."

A "new air raid on different targets (reported) minutes ago. Many died and injured. My window glass (is) shattered. (The) Customs house and passport department have been demolished minutes ago. Aircraft are still in the sky operating."

"F16s (just) destroyed the largest security building in Gaza....Four missiles leveled the building to the ground; also police stations were hit and totally destroyed today. (We're hearing that many areas) were targeted by Israeli warplanes. Large numbers of civilians, including children died and were injured in today's attacks. At Rafah border, one Palestinian was shot dead (by the Egyptians). The situation on the border is terribly bad. An Israeli ground attack seems possible."

Ma'an News Agency Updated Timeline Late Saturday Through Mid-Day Sunday, December 28 and 29

-- 10:15PM - 2 more air strikes; at least 3 killed and 4 injured in Zaitoun neighborhood, Gaza City, and Jabalia in the north;

-- 11:30PM - Israeli air strikes hit the Al-Mansura neighborhood east of Gaza City; 3 Hamas Al-Qassam Brigades deaths are reported;

-- 11:50PM - air strikes hit Khan Younis in southern Gaza and several northern areas;

-- 1:01AM Sunday - Israeli jets strike the security room in front of Al-Shifa Hospital in Gaza City; a close by mosque is hit killing at least 2 and injuring 7;

-- 6:30AM - a medical storehouse in the Al-Junayna neighborhood and a fuel storage facility with diesel and benzene in the Tal As-Sultan area are hit - both near Rafah in the south; buildings and vital civilian supplies were destroyed; at least 3 deaths were reported;

-- 6:45AM - Gaza City's Shuja'iyya neighborhood is bombed; several were injured and a police center destroyed;

-- 8:00AM - Hamas police headquarters was attacked in the evacuated Israeli kfar Darum and Al-Matahin settlements;

-- 10AM - a police station in the Shuja'iyya Gaza City neighborhood was bombed; also three homes in the Tal Al-Hawa neighborhood west of the city were destroyed;

-- 10:30AM - a jeep in Gaza City's Zaitoun neighborhood was attacked killing one child; a second strike targeted the Jabalia area; no casualties were reported so far;

-- 11:00AM - the temporary headquarters of the Rafah governorate was bombed injuring several people; the original building was destroyed on Saturday;

-- 11:45AM - the government municipal council offices were bombed in Beit Hanoun in northern Gaza; several injuries were reported;

-- Noon - the As-Saraya government compound was attacked, killing one child and injuring several others;

-- Monday, December 28 - Israel's assaults continue with no letup; Haaretz reported that the Islamic University and another government compound in Gaza City were destroyed; other targets hit included a guest palace and at least some residential homes; "at first light Monday, strong winds blew black smoke from the bombed sites in Gaza City over deserted streets," punctuated by new explosions; Ehud Olmert spokesman Mark Regev said military action would continue until Israel "no longer (fears) terror (from) rocket barrages."

Throughout the attacks, images and reports on the ground are horrific and disturbing. All around is death and destruction. Amputated bodies fill Al-Shifa Hospital hallways. In one corner, a dead seven-year old boy is in a cardboard box because the hospital ran out of sheets to cover him.

One man is dazed after watching his son killed during the police graduation ceremony. Another father stood next to his son as he was decapitated. He's still screaming. In a hospital waiting room, a mother is silent after her son was pronounced dead.

Carnage is everywhere, inside and on the streets - body parts, blood, strewn clothing and other items. Twelve-year old Ayaman is screaming as his father tries not to let him see the bodies of his brother and uncle torn to pieces under sheets.

Yaha Muheisen stops searching for his son's body and Nawal Al-Lad'a can't find her two sons bodies in the hospital so she searches through rubble.

Gaza medical personnel confirm that the majority of the dead are civilians, including men, women and children. Most were torn to shreds. Bodies continue to be pulled from rubble. Some Palestinians say images resemble the 1982 (Beirut) Sabra and Shitila massacres of about 3000 men, women, children and infants during a 62-hour (proxy) Phalange militia force rampage while the IDF stood by and let it happen.

Ariel Sharon was defense minister at the time. After Israel invaded Lebanon in 1981, he authorized the operation, and in his autobiography confirmed that he negotiated it with Lebanon's president-elect Bashir Gemayel. Afterward, journalist Robert Fisk called it "one of the most shocking war crimes of the 20th century." Another in Gaza remains ongoing.

Israeli journalist Gideon Levy wrote that "The neighborhood bully strikes again....Once again, Israel's violent responses....exceed all proportion and cross every red line of humaneness, morality, international law and wisdom. What began yesterday in Gaza is a war crime....Once again the commentators sat in television studios and hailed the combat jets" that killed the innocent. "Once again, they urged (not) letting up....Once again, they described" disturbing images as a "difficult scene....When the bully is on a rampage, nobody can stop him."

Journalist Amira Hass called Gaza "Little Baghdad, bombs everywhere, smoke, fire, people not knowing where to hide, fear everywhere, rage and hatred." She wrote painfully of carnage and death, of the living searching for loved ones, of no electricity, no gas, no flour, no bread for the past week, just despair and destruction as Israeli attacks continue.

Harold Pinter on Israel

On December 24 at age 78, Harold Pinter lost his long battle with cancer. He was the most influential playwright of his generation, the 2005 Nobel laureate for literature, a voice of political protest, and a passionate campaigner against human rights abuses. The Nobel academy citation called him an author "who in his plays uncovers the precipice under everyday prattle and forces entry into oppression's closed room." For some, he was a "permanent public nuisance, a questioner of accepted truths, both in life and art."

Too ill with cancer, he recorded his award ceremony speech on videotape, voiced strong opposition to the Iraq war, Britain's role in it, and called the invasion a "bandit act, an act of blatant state terrorism, demonstrating absolute contempt for the concept of international law." Would he say less about Israel's current assault?

Pinter was Jewish, a critic of Israel's illegal occupation, and its brutality inflicted on Gazans. He was one of 105 prominent Jewish signers of an April 2008 "We're not celebrating Israel's Anniversary" petition. Its last paragraph read:

"We cannot celebrate the birthday of a state founded on terrorism, massacres and the dispossession of another people from their land. We cannot celebrate the birthday of a state that even now engages in ethnic cleansing, that violates international law, that is inflicting a monstrous collective punishment on (Gaza) civilians and that continues to deny to Palestinians their human rights and national aspirations." Pinter called George Bush a "mass murderer." He felt no different about merciless Israeli leaders.

A Possible Ground Invasion?

On Sunday, Haaretz reported that the IDF "will call 6500 reservists to duty, as part of the largest Israeli offensive on (Gaza) since it" seized the Territory in 1967. Defense officials said that the call-up is part of military preparations for a possible escalation of fighting. Meanwhile, IDF infantry and armored troops (including tanks) man Gaza's border for a possible ground invasion, and Israeli defense minister Ehud Barak warned that "The operation will be deeper and expanded as much as necessary."

"The Bloodiest Day in the History of Occupation"

That's from a Palestinian Centre for Human Rights PCHR) December 27 press release that "condemn(ed) in the strongest terms the war waged by" the IDF on Gaza. As it's done many times before, PCHR calls on the international community and High Contracting Parties to the Fourth Geneva Convention Relative to the Protection of Civilian Persons in Time of War to intervene immediately, to stop the killings, and to end the unprecedented devastation and deteriorated humanitarian conditions in Gaza.

The Gaza-based One Democratic State Group called for "all civil society organizations and freedom loving people to act immediately (to pressure their governments) to end diplomatic ties with Apartheid Israel and institute sanctions against it." It's press release headlined: "Stop the Massacre in Gaza - Boycott Israel Now!"

The "Stench of Death Hangs Over Gaza," wrote Ola Attallah, IslamOnline correspondent from Gaza City. Can we sense it, smell it, feel it, anguish over it, and decide once and for all this won't stand! If not now, when? If not us, who? If wanton butchery isn't incentive enough, what is?

Stephen Lendman is a Research Associate of the Centre for Research on Globalization. He lives in Chicago and can be reached at

Also visit his blog site at and listen to The Global Research News Hour on Monday through Friday at 10AM US Central time for cutting-edge discussions with distinguished guests on world and national issues. All programs are archived for easy listening.

Friday, December 26, 2008

Early Suspicions About Bernard Madoff

Early Suspicions About Bernard Madoff - by Stephen Lendman

On December 12, 2008, the Wall Street Journal headlined: "Top Broker Accused of $50 Billion Fraud. Bernard L. Madoff....was arrested by federal agents (the previous day) after his sons turned him in for running what they said their father called a giant Ponzi scheme."

Too late to matter, the SEC, in a civil complaint, cited an ongoing $50 billion swindle in asking a judge to seize the firm and its assets. "Our complaint alleges a stunning fraud that appears to be of epic proportions," according to Andrew Calamari, SEC's New York associate director of enforcement who was derelict in his duty since being appointed on November 14, 2004 after joining the agency in 2000.

In a separate criminal complaint from an equally derelict agency, the FBI's Theodore Cacioppi said Madoff "deceived investors by operating a securities business in which he traded and lost investor money, and then paid certain investors purported returns on investment with the principal received from other, different investors, which resulted in losses of billions of dollars."

Quotes from two Madoff employees were part of the complaint saying that he ran the investment business on a separate floor, kept financial statements under lock and key, and was "cryptic" about the firm's dealings. The two employees were unnamed but were believed to be Madoff's two sons, Andrew (the company's director of trading) and Mark (its senior managing director and compliance officer).

According to Mr. Cacioppi, Madoff told him and another agent: "There is no innocent explanation (and that he) paid investors with money that wasn't there," said he was "broke," and decided "it could not go on."

He was arrested, charged in federal court with criminal securities fraud, didn't enter a plea, was released on $10 million bond, and placed under 24-hour house arrest in his luxury Manhattan apartment. A preliminary hearing is scheduled for January 12.

On May 7, 2001, Barron's ran an Erin Arvedlund article titled: "Don't Ask, Don't Tell" that expressed doubts about Madoff's spectacular performance. Year in and year out, in up markets and down, he produced average annual compounded 15% returns or more for over a decade, and some of his larger multi-billion dollar-run funds never had a down year. Needless to say, he attracted investors who raved about him.

Not ordinary ones nor would Madoff accept any. His firm Bernard L. Madoff Investment Securities LLC operated as a securities broker/dealer globally. It was headquartered in New York and provided executions for broker-dealers, banks, and financial institutions. He was also one of the world's largest hedge fund managers, handling billions of dollars for a select clientele.

According to National Association of Securities Dealers' (NASD) records as of November 17, he had about $17.1 billion under management. On December 22, Bloomberg reported that loss calculations are still being tabulated, and its latest tally showed investors had about $36 billion with his firm. On December 11, Madoff told employees that he may have cost his clients $50 billion, according to the FBI complaint.

At least half of his clients were other hedge funds. The rest was a who's who of high net worth individuals, banks, pension funds, universities, charities, insurers, other money managers, New York and other synagogues, and the Palm Beach Country Club he belongs to - if it'll keep him or if he can afford the dues after being stripped of his assets.

Some notable investors include:

-- HSBC Bank

-- Bank Medici of Austria

-- Royal Bank of Scotland

-- Royal Bank of Canada

-- Fairfield Sentry Ltd.

-- Sumitomo Life Insurance Co.

-- UBS Bank

-- BNP Paribas

-- sovereign wealth funds

-- Sterling Equities, Inc run by New York Mets owner, Fred Wilpon

-- Yeshiva University

-- Tufts University

-- Hadassah

-- the Thyssen family

-- Senator Frank Lautenberg

-- Jeffrey Katzenberg

-- the (Eliot) Spitzer family

-- Liliane Bettencourt, heiress to the L'Oreal empire, called the world's wealthiest woman, number 17 on the Forbes 2008 list of the world's richest people

-- charities set up by Steven Spielberg, Mortimore Zukerman and Elie Wiesel

In total, over 4000 investors who, according to legal experts, may end up losing everything. As explained above, tallying the damage continues, and according to Madoff, it's around $50 billion.

Even sophisticated people lose out when they forget the old rule that if something looks too good to be true, most likely it is - especially in investing. Caveat emptor is key, but Madoff's clientele wanted none of it. Who can argue with success even though for many it was baffling. More on that below.

Nonetheless, his faithful reckoned that he was well respected. He'd been in business since 1960, served as vice-chairman of the NASD, was a member of its board of governors, and chairman of its New York region. He also chaired the Nasdaq's board of governors, served on its executive committee, and was chairman of its trading committee.

In addition, he was chief of the Securities Industry Association's trading committee in the 1990s and earlier this decade when he represented brokerage firms in discussions with regulators about new stock market trading rules.

In business for nearly 50 years, his web site highlighted the "high ethical standards" of his firm. It stated:

"In an era of faceless organizations owned by other equally faceless organizations, Bernard L. Madoff Investment Securities LLC harks back to an earlier era in the financial world: The owner's name is on the door. Clients know that Bernard Madoff has a personal interest in maintaining the unblemished record of value, fair-dealing, and high ethical standards that has always been the firm's hallmark."

He'll now defend that "hallmark" in US v. Madoff in US District Court for the Southern District of New York.

Early in December, he confessed to his sons that he ran "a giant Ponzi scheme," but unlike its originator (Charles Ponzi (1882 - 1949) did it globally. It's a pyramid scheme based on high promised returns (for Charles short-term ones), that require continued new investor funds to keep it going. If they slow or stop, the jig is up, and that's what happened to Madoff.

According to the Wall Street Journal, he suffered reversals in the recent market turmoil, chose not to tell investors, gambled on a rebound, assumed a high-risk strategy, and lost. It got worse as hedge fund redemptions increased ($7 billion according to the FBI complaint). He had trouble meeting them (he told his son) as new investor money dried up, finally stopped trying, confessed, called his business a fraud, "all a big lie," and said he was "finished" because the firm was insolvent.

Since the bull market ended in 2000, more people and the press began asking questions. Until recently, how could he prosper when so many others hit hard times. Madoff was secretive, abhored monitoring, and wasn't even registered with the SEC until September 2006. Nonetheless, early on, the agency was alerted that he was running a scam and did nothing.

In a December 22 Matt Renner Truthout article, former SEC criminal investigative lawyer Gary Aguirre spoke out and pointed fingers. He mentioned how his supervisor quashed his own attempt to subpoena Morgan Stanley's CEO John Mack in connection with his probe into possible insider trading by Pequot Capital Management, a prominent hedge fund.

He explained that as an investment advisor, the SEC had regulatory authority over Madoff. Yet after repeated complaints (over nine years) about a Ponzi scheme fraud, nothing was done to investigate. He speculated why:

-- perhaps "personal links" between him and SEC staff;

-- a reluctance to "apply the securities laws to the big players, to Wall Street's elite;" they only go after small fry;

-- Washington's revolving door culture in all government agencies that allow officials to "rotate out to the private sector and earn more money;" but from the SEC, it's for much higher salaries so a manager making $200,000 can jump to $2 million on the outside, provided "they play the game;" and, of course,

-- the unregulated climate since the Reagan era, under Democrats and Republicans, with little expected change under Obama.

The fox guards the hen house. The SEC failed dismally in its mandate. One bank failed after another. All the majors are insolvent. Given the magnitude of the problem, "you have to ask yourself, how could anybody miss the red flags...." In addition, the common practice of market manipulation and insider trading made Wall Street feel it was invulnerable. It still does even in the current environment, with suggestions of more criminal fraud to be uncovered, and Madoff now exposed as a swindler.

It's for the courts to handle him criminally and to process the dozens of lawsuits to follow.

James Petras on Madoff

James Petras wrote a jewel of a Madoff article titled: "Bernard Madoff: Wall Street Swindler Strikes Powerful Blows for Social Justice." He explained 11 reasons to give thanks given the type of clientele he attracted and how some use their wealth.

They practically "forced their money on (him)." Nonetheless, he "insisted they have recommendations from existing investors, deposit a substantial amount and guarantee their own solvency. Most considered themselves lucky to" be with him. His "standard message was that the fund was closed....but because they came from the same world (as himself) or were related to a friend, colleague or existing clients, he would take their money."

Petras listed the similarities with other high-level scams:

-- "constant high returns;

-- unmatched by any other broker;

-- a lack of third party oversight;

-- a backroom accounting firm physically incapable of auditing the multi-billion dollar operation;

-- a broker-dealer operation directly under his thumb; and"

-- an atmosphere of total secrecy he insisted on - "Don't Ask, Don't Tell;" more on that below.

Michael Hudson on Madoff and Ponzi

Hudson cuts through the fog on economics and finance and provides relevant historical perspective - currently in his latest article titled "Wealth Creation, or a Ponzi Scheme?" He explains how "financial cycles end in Ponzi schemes" with Madoff one example among many. "What (he) did was, in a nutshell, what the economy as a whole has been doing under the moniker (of) 'wealth creation.' " From that perspective, Madoff's scheme was pocket change, but try finding that said in the dominant media.

He and Charles Ponzi sold "hope, pandering to peoples' unrealistic desire to believe that a new way to make easy gains had been discovered, with no visible upper limit (on how long they) can persist in excess of the economy's own rate of growth."

Hudson explains that governments are instrumental in creating bubbles. They "need to be orchestrated by opinion makers, topped by public officials giving a patina of confidence." Alan Greenspan was America's lead "bubblemeister" much like Robert Walpole was for Britain during the early 18th century South Sea Bubble, and the same story is repeated throughout history.

"Today's balance sheets confuse bubble wealth with real capital formation" so that "investments (are what) accountants say they are." The same holds for "asset and debt values, given today's leeway for financial fiction." As a result, financial dealings became "decoupled from the 'real' economy." We live in a world of illusions. Media touts, government spokespeople and Fed chairmen effectively sell them, and everything works well until it doesn't.

Hudson shows how different "the actual economy is from what economic textbooks (and classical Adam Smith economics) teach. The recent stock market and real estate bubbles are much like pyramid schemes...." Money pours in from pension plans, mutual funds, and bank credit for real estate to bid up prices.

Something is terribly wrong. Value is divorced from "price, windfall and capital gains as distinct from earned income." Also, "market prices rise and fall," but debt remains. When it can't be repaid, "savings are wiped out" much like today.

"Instead of reducing the debt overhead by earning their way out of (it), economies (like America) have sought to inflate" as a way to do it - but not by the conventional inflation of creating higher prices and wages. It's by "asset-price creation," and America took the lead in doing it.

After Nixon closed the gold window in 1971, "The US economy (became) unique in being able to create credit and foreign debt" with no limit. The result has been "unparalleled" debt growth "relative to income, production and wages."

Madoff is one actor (a bit player) in a greater scheme with government in the lead role. It "replaced industrial growth with purely financial wealth creation in the form of a real estate, stock market" and other asset class bubbles. Classical economics got turned on it head. Losses since mid-2007 are off the charts - at least $7.7 trillion and rising from real estate, financial assets, life insurance and pension fund reserves. Trillions more disappeared earlier - at least $4 trillion from 1998 - 2002, more still from "pump and dump" schemes, plus countless billions from foreign wars and huge amounts of waste, fraud and abuse, all down a black hole and unaccounted for.

The financial system alone accounts for many lost trillions. As Hudson puts it: "Property and credit have become costs instead of a benefit, institutional forms of rent and interest-extracting overhead rather than helpful inputs." Things reached their mathematical limits. The economy is in free fall. Contagion is spreading globally. An economic dark age approaches, and ordinary Americans now suffer for their government's (and Wall Street's) crimes with no end of pain in sight. Madoff just played the game until he gave it up when his operation collapsed. When the government collapses, we print more money. When it happens to Wall Street, we give it to them.

When homeowners are foreclosed, workers laid off, sick people aren't treated, poverty and hunger increase, homelessness reaches record levels, and the American dream becomes a nightmare, no help like that is forthcoming.

Madoff will be prosecuted in federal court. He was charged with one count of securities fraud that carries a maximum 20 year sentence and $5 million fine. Because of his influence and connections, expect much less than that, incarceration (if any) in a minimum security ("country club") prison, and after the commotion subsides, a quiet early release or eleventh-hour Marc Rich-type pardon.

Compare that to the mandatory minimum five year hard time sentence for possessing five grams (less than one-fifth of an ounce) of crack cocaine - harming no one but the person involved, usually a black teenager. For 50 grams (less than two ounces), it's ten years hard time - no reprieves, early releases, eleventh hour pardons, or judicial fairness for persons with no influence or connections.

Madoff Actively Bought Influence

According to the Center for Responsive Politics, "Madoff and Company Spent Nearly $1 Million on Washington Influence." He and his wife Ruth gave $238,200 to federal candidates, parties, and committees since 1991. Democrats got 88% of it.

Overall, he and others at his firm gave $372,100 in campaign contributions since 1991, 89% to Democrats. The company also spent $590,000 on lobbying over the same period, all but $10,000 with Lent, Scrivner & Roth.

Those in Congress he contributed to included:

-- Senator Charles Schumer

-- Senator Hillary Clinton

-- Senator Christopher Dodd,

-- Rep. Charles Rangel, and others

He also gave $102,000 to the Democratic Senatorial Campaign Committee.

Madoff - "The anti-Semite's new Santa"

That's according to Bradley Burston in his December 17 Haaretz article headlined: "The Madoff betrayal - Life imitates anti-Semitism." Christmas came early this year in the form of Bernard Madoff. He's the "answer to every Jew-hater's wish list. The Aryan Nation at its most delusional couldn't have come up with anything to rival this."

Burston is a bit over the top, but The New York Times spells out what he means in a December 23 Robin Pogrebin article titled: "In Madoff Scandal, Jews Feel an Acute Betrayal." Throughout the country, they're "sending up something of a communal cry over a cost they say goes beyond the financial to the theological and the personal." After all, the Ten Commandments teaches - "Thou shalt not steal."

But here's "a Jew accused of cheating Jewish organizations trying to help other Jews....of betraying the trust of Jews and violating the basic tenets of Jewish law. A Jew, they say, who seemed to exemplify the worst anti-Semitic stereotypes of the thieving Jewish banker."

According to Rabbi David Wolpe of Sinai Temple, Los Angeles, "I'd like to believe someone raised in our community, imbued with Jewish values, would be better than this." Is that his concern, or perhaps something else?

Many Jewish charities, educational institutions, and other organizations representing Jewish and Israeli interests lost fortunes in the scandal. The Jewish Community Centers Association of North America for one, and the Chais Family Foundation that had to shut down its educational projects in Israel.

According to Rabbi Jeremy Kalmanofsky of Temple Ansche Chesned, New York, "The Jewish world is not going to be the same for a while." For Rabbi Burton Visotzky of the Jewish Theological Seminary: "The fact that he stole from Jewish charities (emphasis on "Jewish") puts him in a special circle of hell." Unstated, but perhaps implied, is it's OK to steal from "goyim" or at least not as bad.

The Anti-Defamation League (ADL) went further. It stated that Madoff's arrest prompted an outpouring of anti-Semetic comments on web sites around the world, one calling Madoff "an ideal poster boychick" for this kind of thievery with others much less nuanced in their postings. ADL's director Abraham Foxman (well known for his bigotry and hypocrisy) said "Jews are always a convenient scapegoat, and the fact that so many of the defrauded investors are Jewish created a perfect storm for the anti-Semites."

In contrast, "Rabbi without borders" Jennifer Krause makes the most sense by viewing the scandal "in the much greater context of a human drama that is playing out in sensationally terrible ways in America right now. The Talmud teaches that a person who only looks out for himself and his own interests will eventually be brought to poverty. Unfortunately, this is the metadrama of what's happening in our country right now. When you have too many people (who only care about themselves and not others), we're (all) brought to poverty."

Perhaps Mr. Foxman took note - a man known for his antipathy to Islam, disdaining Palestinians, and praising the convictions of innocent Muslims under American kangaroo court justice.

Barrons Suspicions in 2001

At a 1999 New York hedge fund conference, Madoff got lavish praise from those on the Street who knew him. After its 1971 founding, his brokerage firm helped "kick-start the the early 1970s and (became) one of (its) top three market-makers....(It also became) the third-largest firm matching buyers and sellers of New York Stock Exchange-listed securities."

In addition, he managed billions for private investors and performed spectacularly as described above. "When Barrons asked (him) how he (did it), he (said), 'It's a proprietary strategy. I can't go into it in great detail."

One of his hedge-fund-offering memoranda described the strategy this way:

"Typically, a position will consist of the ownership of 30 - 50 S & P 100 stocks, most correlated to that index, the sale of out-of-the-money calls on the index and the purchase of out-of-the-money puts on the index. The sale of the calls is designed to increase the rate of return, while allowing upward movement of the stock portfolio to the strike price of the calls. The puts, funded in large part by the sale of the calls, limit the portfolio's downside."

Options traders call this a "split-strike conversion" strategy. Simply put, it means Madoff apparently invested mainly in the largest S & P stocks. At the same time, he bought and sold offsetting options on them, to buy and sell shares at a fixed price on a future date. "The strategy, in effect, create(d) a boundary on a stock, limiting its upside, while at the same time protecting against a sharp decline" in its share price. In theory, when it works, it's a market-neutral strategy for positive returns no matter which way the market goes.

It got some on the Street wondering if "Madoff's market-making operation subsidize(d) and smooth(ed) his hedge-fund returns." Why would he do it? Because with access to a huge capital base, he could make larger bets with less risk. It works like this:

"Madoff Securities (stood) in the middle of a tremendous river of orders, which means that its traders (had) advance knowledge, if only by a few seconds, of what the big customers in the market (were) buying and selling. By hopping on the bankwagon, the market-maker effectively lock(ed) in profits. As such, throwing a little cash back to the hedge funds (was) no big deal. And the funds' consistent returns attract(ed) more capital. When Barron's ran that scenario by Madoff, he dismissed it as 'ridiculous.' "

Nonetheless, some on the Street "remain(ed) skeptical about how (he) achieve(d) such stunning double-digit returns using options alone. Three option strategists for major investment banks" didn't believe it, and one of his former investors said: "Anybody who's a seasoned hedge-fund investor knows that split-strike conversion is not the whole story."

More puzzling was that he charged no money-management fees, including for his private accounts. When asked to explain, he said "We're perfectly happy to just earn commissions on the trades."

Even so, no one understood his strategy, even people "who have all the trade confirms and statements." One happy investor added: "The only thing I know is that he's often in cash" when volatility gets extreme. The person refused to be identified because "Madoff politely request(ed) that his investors not reveal that he (ran) their money."

He said: "If you invest with me, you must never tell anyone" that you're doing it. "It's no one's business what goes on here." According to an investment manager of an asset pool with money in a Madoff fund: "When he couldn't explain (to me) how (he was) up or down in a particular month, I pulled the money out." When they had the chance, his investors wish they had as well. Hindsight teaches painful lessons.

Whisleblower Harry Markopolos on Madoff

It's a 21-page November 7, 2005 document to the SEC on the Wall Street Journal's web site explaining that "The World's Largest (Madoff-run) Hedge Fund is a Fraud." He collected "first-hand observations" from fund-of-fund Madoff investors and from heads of Wall Street equity derivative trading desks. Every senior manager said "Bernie Madoff was a fraud."

Markopolos himself is a "derivatives expert" with experience following the strategy Madoff used. He said "Very few people (anywhere) have the mathematical background needed to manage these types of products," but he's one of them. He outlined a list of "Red Flags" that made him suspicious that "Madoff's returns (weren't) real." Because careers and his own safety were on the line, his report was unsigned. He wrote it solely for internal SEC use. He suggested the "highly likely" possibility that "Maddof Securities is the world's largest Ponzi Scheme," but he worried about his powerful political connections.

Markopolos listed 29 Red Flags. Below is a sampling:

-- why would Madoff Securities (BM) charge only undisclosed commissions on trades and not operate like other hedge funds - taking a 1% management fee + 20% of the profits;

-- why does Madoff not let hedge and fund of fund investors mention his firm's name in their performance summaries or marketing literature; why the secrecy; any money manager with great returns should want all the publicity he or she could get;

-- Madoff's split-strike strategy was inferior to an "all index approach" and "incapable" of consistently generating high returns; "BM's strategy should not be able to beat the return on US Treasury bills due to" its glaring weakness;

-- BM's protection "put" option buying strategy hurts returns; it should have challenged him to earn average 0% ones, not the spectacular performance he achieved;

-- given the estimated size of his assets, "there (weren't) enough index option put contracts in existence to hedge the way BM" claimed; his strategy was mathematically impossible;

-- counterparty credit exposures for firms like UBS and Merrill Lynch were too large for these companies to approve;

-- BM's high returns could only be generated by so-called "front-running" his customers' order flows by using advance information unavailable to others; the practice is illegal and those using it are guilty of securities fraud.

Markopolos concluded as follows:

"I am pretty confident that BM is a Ponzi Scheme, but in the off chance he is front-running orders and his returns are real, then this case qualifies as insider trading under the SEC's bounty program as outlined in Section 21A(e) of" The Securities Exchange Act of 1934 establishing the agency. "However, if BM was front-running, a highly profitable activity, then he wouldn't need to borrow funds from investors at 16% implied interest. Therefore it is far more likely that (he was) a Ponzi Scheme....The elaborateness of (his) secrecy, his high 16% average cost of funds, and reliance on a derivatives investment scheme that few investors (or regulators could comprehend provide strong evidence) that this (was) a Ponzi Scheme," and Madoff was a swindler.

In May 1999, Markopolos alerted the SEC's Boston office of his suspicions, urged it investigate Madoff, and followed up with repeated futile requests until the New York office (on January 4, 2006) got involved, based on his allegations, according to the Wall Street Journal.

The SEC learned plenty but didn't act. It discovered that:

-- Madoff personally "misled the examination staff about the nature of his" Fairfield and other hedge fund accounts strategy;

-- he failed to inform his Fairfield funds investors that he was the investment advisor; and

-- he violated rules requiring that investment advisors register with the SEC; they must do so if they have more than 15 clients.

Using Markopolos' documents, SEC also investigated his allegations of front-running and Ponzi scheme practices, concluded they weren't substantiated, and recommended closing the case because Madoff "agreed to register his investment advisory business and Fairfield agreed to disclose information about Mr. Madoff to investors." It justified its action saying that the "violations (it uncovered) were not so serious as to warrant an enforcement action" - clearly due diligence negligence to give a Wall Street insider a free pass and very typical of how SEC operates.

In early 2008, Markopolos tried again through SEC's Washington office after getting an email from Jonathan Sokobin, an official charged with searching for big market risks. With low expectations he responded by emailing a very strong subject line: "$30 billion Equity Derivative Hedge Fund Fraud in New York." He cited an unnamed Wall Street pro who recently redeemed money from Madoff after learning that supposed trades in his account were never made.

Sokobin never responded. Markopolos heard nothing further until December 11 when a friend said Madoff was arrested. He was vindicated. "I kept firing bigger and bigger bullets at Madoff, but couldn't stop him. I finally felt relief," no thanks to the SEC, Wall Street's culture of fraud, big fish protecting each other because they all do similar things of one sort or other, and SEC acts more as facilitator than regulator.

In a December 23 letter to the Wall Street Journal, former SEC Boston office "examiner of advisers and funds" Eric Bright wrote:

"it wouldn't be the first time that something (like the Madoff case) fell through the cracks. The revolving door there is the biggest problem. Many staff regulators who are ambitious and competent quit to pursue jobs in the financial industry that pay multiple times their government salaries.

During my time at the SEC, I heard the excuses about why cases that we, the examination staff, uncovered failed to warrant actions by the enforcement staff. Too small....too complicated....too politically connected, don't rock the boat....It is time to rethink the structure of the regulatory system because what we have isn't working."

SEC Non-Enforcement Under George Bush

A December 24 New York Times Eric Lichtblau article highlighted how "Federal Cases of Stock Fraud Drop(ped) Sharply" under George Bush. The article states that "Federal officials are bringing far fewer prosecutions of fraudulent stock schemes" than eight years ago and suggests that the administration has been lax in "policing Wall Street" and "something of a paper tiger in investigating securities crimes."

According to a Syracuse University research group using DOJ data, prosecutions dropped from 437 cases in 2000 to 133 through November 30 this year. At the SEC, it's even worse. It undertook a disturbingly low 69 investigations in 2000, then practically none in 2007 with only seven - an 87% decline in due diligence.

According to Jacob Zamansky, a New York lawyer who specializes in representing aggrieved investors, "the SEC has completely fallen down on the job. They're more interested in protecting Wall Street than protecting individuals. The new administration has to do a complete overhaul of the SEC." Chances for that are practically zero. More on that below.

Former New York prosecutor Sean Coffey is as critical as Zamansky in calling SEC's enforcement efforts "awful." It "neutered the ability of the enforcement staff to be as proactive as they could be. It's hard to square the motto of investor advocate with the way they've performed the last eight years."

Data also show that the FBI (DOJ's main investigative arm) has been as negligent as the SEC, and Syracuse research group's co-director, David Burnham said it's "no surprise" given the administration's priorities and strongly pro-business stance.

Even the SEC's own internal data suggest that the agency has been lax and prefers wrist-slaps alone for its limited number of actions against infractions, hardly a way to deter them.

Barack Obama - Wall Street's Hired Hand

Since Ronald Reagan, and especially under Bill Clinton and George Bush, Wall Street got a free ride. Foxes guard the hen house. Regulators don't regulate. Investigations aren't conducted. Criminal fraud goes undetected. Little is done to eliminate it, and, except for rare instances like the Madoff scandal (that a business reversal and confession revealed), only small offenders need worry.

Section 4 of the Securities Exchange Act of 1934 established the SEC. It's mandated to enforce the Securities Act of 1933, the Trust Indenture Act of 1939, the 1940 Investment Company Act and Investment Advisers Act, Sarbanes-Oxley of 2002, and the Credit Rating Agency Reform Act of 2006. Overall, it's responsible for enforcing federal securities laws, the securities industry, the nation's stock and options exchanges, and other electronic securities markets. It's charged with uncovering wrongdoing, assuring investors aren't swindled, and keeping the nation's financial markets free from fraud.

It has five commissioners, a chairman, four main divisions (Corporation Finance, Trading and Markets, Investment Management, and Enforcement), 11 regional offices, a large staff and budget, and increasingly a culture of non-enforcement.

Enough for The New York Times (on December 15) to highlight its "String of Setbacks" under its current chairman, Christopher Cox. As Wall Street's top cop, the SEC has "increasingly conduct(ed) autopsies" of failed institutions instead of adequately performing preventive "biopsies." Madoff is the latest "black eye" from an agency wreaking of taint for lack of due diligence.

Earlier, "H. David Kotz, the commission's new inspector general, documented several major botched investigations. He told lawmakers of one case in which the commission's enforcement chief improperly tipped off a private lawyer about an insider-trading inquiry."

Another involved the agency's Miami office where investigators "inexplicably dropped an important inquiry involving securities sold by Bear Stearns (BS)." A third instance "documented the lack of any significant oversight....over (BS) in the months leading to its collapse."

SEC's enforcement division has been hampered by Bush administration budget cuts and regulatory changes making it harder to impose penalties, even in cases of egregious wrongdoing. Other problems also exist, including accusations that its employees engage in illegal insider trading and falsify financial disclosure forms. And there were "repeated instances of the failure by officials to pursue investigations."

Experts accused the Bush administration of hollowing out the commission, hobbling its enforcement and inspection efforts, and according to leading authority on SEC history, Joel Seligman, weakened the agency's ability and commitment to deter fraud.

Mary Schapiro will head the SEC for Obama. Under her stewardship, sharks on the Street will flourish. Business as usual will continue. She spent years advocating for Wall Street to be self-regulating, currently heads the Financial Industry Regulatory Authority (FINRA), was president and is now chairman and CEO of the National Association of Securities Dealers (NASD), is a former SEC commissioner, ran the Commodity Futures Trading Commission, and is expert at quashing investigations about fraud. Whether she'll roust any in her new post is problematic and doubtful as she likely was appointed to allow it. She's a consummate insider, considered safe, and no wonder Wall Street and the dominant media applauded her selection. That alone is the tip-off.

On her watch (beyond lip service), expect less enforcement, not more, and why so is simple. Eventually she'll return to the private sector to be well compensated for services rendered. Besides, there's no doubt where her interests lie, which ones she'll represent, and that's why she was chosen in the first place. Wall Street is in good hands with Mary Schapiro.

Stephen Lendman is a Research Associate of the Centre for Research on Globalization. He lives in Chicago and can be reached at

Also visit his blog site at and listen to The Global Research News Hour on Monday through Friday at 10AM US Central time for cutting-edge discussions with distinguished guests on world and national issues. All programs are archived for easy listening.

Wednesday, December 24, 2008

The Federal Reserve Abolition Act

The Federal Reserve Abolition Act - by Stephen Lendman

On June 15, 2007, Ron Paul introduced HR 2755: Federal Reserve Abolition Act. There were no co-sponsors, no further action was taken, and the legislation was referred to the House Committee on Financial Services and effectively pigeonholed and ignored.

It's a bold and needed measure to "abolish the Board of Governors of the Federal Reserve System and the Federal reserve banks, to repeal the Federal Reserve Act, and for other purposes."

The bill provides for management of employees, assets and liabilities of the Board during a dissolution period, and more as follows:

-- it designates the Director of the Office of Management and Budget to liquidate Fed assets in an orderly and expeditious manner;

-- transfer them to the General Fund of the Treasury after satisfying all claims against the Board and any Federal reserve bank;

-- assume all outstanding Board and member bank liabilities and transfer them to the Secretary of the Treasury; and

-- after an 18-month period, submit a report to Congress "containing a detailed description of the actions taken to implement this Act and any actions or issues relating to such implementation that remain uncompleted or unresolved as of the date of the report."

On November 22, "End the Fed" protests were held in 39 or more cities nationwide (including New York, Chicago, Los Angeles and Washington, DC), but you'd hardly know it for lack of coverage. Attendee demands were simple and emphatic:

-- end a private banking cartel's illegal monopoly control over the nation's money supply and price;

-- return that power to the US Treasury as the Constitution mandates;

-- end a fiat currency system backed by the waning full faith and credit of the government; and

-- return the country to a sound, hard currency monetary system.

"End the Fed! Sound Money for America!" is their slogan, and writer and US policy critic Webster Tarpley puts it well:

"....the privately owned central bank....has been looting and wrecking the US economy for almost a hundred years. We must end a system where unelected, unaccountable cliques of bankers and financiers loyal to names like Morgan, Rockefeller, and Mellon set interest rates and money supply behind closed doors, leading to de-industrialization, mass impoverishment, and a world economic and financial depression of incalculable severity."

In theory, the Fed was established to stabilize the economy, smooth out the business cycle, manage a healthy, sustainable growth rate, and maintain stable prices. In fact, it failed dismally. It contributed to 19 US recessions (including the Great Depression) and significantly to the following equity market declines that accompanied them as measured by the Dow or S & P 500 average - the S &P's inception was 1923; it became the S & P 500 in 1957:

-- 40.1% (Dow) from 1916 - 1917;

-- 46.6% (Dow) from 1919 - 1921;

-- the 1929 (Dow) crash in two stages - 47.9% in 1929 followed by a strong, temporary rebound; then - 86%; an 89% peak to trough total from October 1929 to July 1932;

-- 49.1% (Dow) from 1937 - 1938;

-- 40.4% (Dow) from 1939 - 1942;

-- 25.3% (S & P) from 1946 - 1947;

-- 19.8% (S & P) in 1957;

-- 26.8% (S & P) from 1961 - 1962;

-- 19.3% (S & P) in 1966;

-- 32.7% (S & P) from 1968 - 1970;

-- 45.1% (S & P) from 1973 - 1974;

-- 20.2% (S & P) from 1980 - 1982;

-- 32.9% (S & P) in 1987;

-- 19.2% (S & P) in 1990;

-- 18.8% (S & P) in 1998;

-- 49.1% (S & P) from 2000 - 2002; and

-- about 50% (S & P) and counting (excluding a bear market rebound) from October 2007.

The Fed is also directly responsible for monetary inflation and the decline in the US standard of living since its year end 1913 inception and especially since the 1970s. From the late 18th century to 1913, virtually no inflation existed under the gold standard except during times of war. Using government data, it now takes over $2000 to equal $100 of pre-Fed purchasing power. In other words, a 1913 dollar is worth about a nickel today.

At that time, a dollar was defined as 1/20 of an ounce of gold or about an ounce of silver. The Fed then changed the standard away from precious metals to the full faith and credit of the government. Ever since (except for periods such as the 1930s) inflation eroded the currency's value and (more than ever) continues to do it today.

It's why one analyst calls the dollar "nothing more than a popular symbol for the tangible substances it once represented - gold and silver." Its true value represents the world's waning confidence in America's ability to honor its debt obligations, and with good reason.

Under the Federal Reserve System (besides inflation), we've had rising consumer debt; record budget and trade deficits; a soaring national debt; a high level of personal and business bankruptcies; today, millions of home foreclosures; high unemployment; the loss of the nation's manufacturing base; growing millions in poverty; an unprecedented wealth gap between the rich and all others; and a hugely unstable economy now lurching into crisis mode.

In a November 24 Wall Street Journal op-ed, Hong Kong-based author and equity strategist Christopher Wood believes "The Fed Is Out of Ammunition." With trillions in personal wealth erased, "there is little doubt that we are witnessing a classic debt-deflation bust at work, characterized by falling prices, frozen credit markets and plummeting asset values."

He notes how "over-investment and over-speculation" on borrowed money got us here. Today, the Fed can control the supply of money but not its velocity or the rate it turns over. The current collapse set it in reverse with no signs of an impending turnaround.

Wood believes monetary and fiscal measures won't work. There are no easy solutions - "not as long as politicians and central bankers (won't) let financial institutions fail," and let market forces wash out excesses over time.

The Fed and Treasury will spend trillions of dollars to correct things, "but will merely compound (the problem) by adding debt to debt." The current crisis will end up "discrediting mechanical monetarism - and with it the fiat paper-money system....The catalyst will be foreign creditors fleeing the dollar for gold. That will in turn lead to global recognition of the need for a vastly more disciplined global financial system" with gold very likely playing a part.

Absent a hard money currency has led to the kind of monetary madness that Nouriel Roubini calls "crazy" policy actions - an explosion of quantitative easing in the trillions with no end of it in sight.

Roubini: "The Fed Funds rate has been we are already effectively at (zero interest rates) that signal a liquidity trap....Even (a sharp) fall in mortgage rates....will be of small comfort to debt burdened households as only those (that) qualify for refinancing will be able to" net out a "modest" monthly mortgage saving of about $150.

The Fed's "desperate policy actions....will eventually lead to much higher real interest rates on the public debt and weaken the US dollar (the result of a) tsunami of implicit and explicit public liabilities and monetary debt." It will get foreign investors to "ponder the long-term sustainability of the US domestic and external liabilities," and why not. They keep growing exponentially, and with nothing restraining a runaway Fed, dollar debasing may continue to the point where no one will want to hold them. It's gotten some analysts to recommend moving a portion of savings out of them into gold - the ultimate safe haven in times of crisis.

Abolish the Fed and Return the Nation's Money Creation Power to Congress Where It Belongs

Ron Paul has been in the vanguard of the Abolish the Fed movement, and on September 10, 2002 on the House floor said:

"Since the creation of the Federal Reserve, middle and working-class Americans have been victimized by a boom-and-bust monetary policy. In addition, most Americans have suffered a steadily eroding purchasing power because of the Federal Reserve's inflationary policies. This represents a real, if hidden, tax imposed on the American people...."

"It is time for the Congress to put the interests of the American people ahead of the special interests. Abolishing the Federal Reserve will allow Congress to reassert its constitutional authority over monetary policy."

"Abolishing the Federal Reserve and returning to a constitutional system (as mandated) will enable America to return to the type of monetary system envisioned by our nation's founders: one where the value of money is consistent because it is tied to a commodity such as gold....I urge my colleagues (to co-sponsor) my legislation to abolish the Federal Reserve."

Paul introduced his legislation in the 106th, 107th, 108th, and 110th Congresses. Each time, it died in committee. On November 22, he attended the End the Fed rally in Houston and addressed the crowd.

He called the current economic crisis as bad or worse than in the 1930s and said: "we know who caused it. It was the Federal Reserve that gave us all this trouble." He explained that we had a "free ride for decades because we've had a system that was devised where the dollar could act as if it were gold."

Not after August 1971 when Nixon closed the gold window, ended the 1944 Bretton Woods Agreement, and no longer let dollars be backed by gold or converted into it in international markets. A "new economic system" was created. It let us "spend beyond our means, live beyond our means, print money beyond our means," and it caused our current dilemma.

We created "an appearance of great wealth. But it was doomed to fail," and it became apparent in the past year: "the failure of the dollar reserve standard that was set up in August of 1971. It has ended. The only question" is what will replace it?

There's all kinds of talk, including setting up a new international fiat currency "with the loss of US sovereignty in total. We have to stop this move towards one world government and a one world currency." Otherwise our freedom and Constitution will be lost. When it was written, it contained prohibitions.

Article I, Section 8 gives Congress alone the right to coin (create) money and regulate the value thereof. The founders also wanted gold and silver to be legal tender, not fiat money, nor should there be a central bank. In 1935, the Supreme Court ruled that Congress cannot constitutionally delegate this power to another body. By creating the Federal Reserve System in 1913, Congress violated the Constitution it was sworn to uphold and defrauded the American public. Today's crisis is the fruit of its action, but watch out.

"The writing is on the wall, and the end of this system" approaches. "They cannot patch it up, they can't up it back together again. They know it and we know it. The only argument is what is it going to be replaced with?"

For now, "Central banks in the West especially have been dumping gold to artificially lower (its price) to pretend the dollar is of great value. They're still doing it, but they're running out of time (and) out of gold." It's shifting to stronger economic powers, ones who've been saving money, loaning it back to us, "and are ready to buy up America if we continue to do this. So it is a contest (between fiat) money and hard money, and that is such an important issue." It reflects what Daniel Webster once said:

"There can be no legal tender in this country....but gold and silver. This is a constitutional principle....of the very highest importance." Gold, however, wasn't the original monetary system standard. Silver was, the silver dollar, and only a constitutional amendment can change it.

Paper currency as well, whether backed by gold or not, wasn't the hard money authorized by the Constitution. Honest money is honest weights and measures of silver and gold. Federal Reserve Notes are paper fiat debt obligations. Fiat currency of any kind is a mechanism of wealth transference from the public to a privileged elite - through inflation and loss of purchasing power. It creates debt for the many and wealth for the few, especially when a private banking cartel controls it.

Our existing monetary system combines money, credit and debt into a dishonest system of empty promises in exchange for future ones. There is no eventual payment, only unfulfillable assurances to new generations that will be forced to pay for the debt now accumulated. It's a moneychangers dream - ever-expanding debt and a continuing interest rate stream, masquerading as wealth creation for the people. It's in fact a system of bondage and indebtedness benefitting the few at the expense of the many, a modern-day feudalism. It's how an elite 1% got to own 70% of the nation's wealth.

In the 1920s, Josiah Stamp, Bank of England president said:

"Banking was conceived in iniquity and was born in sin. Bankers own the earth. Take it away from them, but leave them the power to create deposits, and with a flick of the pen (today a computer keyboard) they will create enough deposits to buy it back again. However, take it away from them, and all the great fortunes like mine will disappear, and they ought to disappear, for this would be a happier and better world to live in. But if you wish to remain the slaves of Bankers and pay the cost of your own slavery, let them continue to create deposits."

Creating the Federal Reserve System to let bankers and not the government control the price and amount of fiat money debased the currency and is the root cause of today's financial problems. A return to honest gold and silver weights and measures is needed. The Constitution states that nothing but these metals are money and that paper bills of credit (like Federal Reserve notes) aren't allowed. Even ones backed by gold as the Constitution doesn't grant Congress the power to be bankers. It may only coin (create) and borrow money, not loan it out or give it away - and certainly not to bankers at the expense of the public interest.

Further, the Constitution contains no provision allowing Congress to enact legal tender laws. Article I, Section 10 forbids the individual states from making "anything but gold and silver coin a legal tender in payment of debts." However, US Code, 31 USC 5103, establishes US coins and currency, including Federal Reserve notes, as legal tender and has been used to debase the currency ever since - the way Gresham's Law works: bad (or debased) money drives out good (the kind with little difference between its nominal and commodity values).

For example, until 1964, US coins (except pennies and nickels) contained 90% silver. Starting in 1965, dimes and quarters were converted to their current nickel - copper composition. Half-dollars (now produced in limited quantities) had 90% silver. It then dropped to 40% in 1965 and by 1971 all US coins (except pennies and commemorative mintings) contained nickel and copper and no silver - a good example of debasing. As for paper currency, it's just paper.

Under a private banking cartel's control, it's been misused, stolen, and corrupted the way New York Times columnist Floyd Norris suggests in his November 24 article headlined: "Another Crisis, Another Guarantee." First the banks, then the auto companies, and who knows who's next in line for theirs. "As the nation's obligations rise into the trillions, at some point investors (and the public) may begin to question whether a government running huge deficits can also credibly promise that the dollar will not lose its value." How can there be any faith and credit left when it's vanishing and the Fed and Treasury operate like giant hedge funds.

It got UK-based Eclectica Asset Management chief investment officer, Hugh Hendry, concerned enough to say: "All (US) financials will be owned by the government in a year. I bet you. It's not good," but it's coming. US taxpayers will be "paying for this for a long time," and it's deeply concerning considering the amount of money creation - with no end in sight as problems keep mounting and limitless amounts keep being thrown at them.

On November 25 the Financial Times associate editor, Wolfgang Munchau, also worries about the Fed's "weapon of mass desperation" (so-called quantitative easing); focusing only on deflation and risking a currency crisis. He calls it a flawed, dangerous and shocking oversight - the possibility of "a mass flight out of dollar assets (at some point) and a large rise in US market interest rates, followed by a huge recession."

A November 24 headline highlights the problem: "US Pledges Top $7.7 trillion to Ease Frozen Credit," and it might as well have said there's plenty more where that came from if needed. With another $800 committed to two new loan programs the total reached $8.5 trillion, according to Bloomberg or nearly 60% of US 2007 GDP of $14 trillion, and the numbers keep rising exponentially because the problems continue to mount.

Bloomberg puts it in perspective saying "the (current) commitment dwarfs (TARP and puts) Federal Reserve lending last week (at) 1900 times the weekly average for the three years before the crisis," and with the added $800 billion it's about 2100 times pre-crisis levels.

In addition, the Fed refuses to identify recipients of about $2 trillion of emergency handouts or what troubled assets (if any) it's accepting as collateral. Call it lending or spending. They're public tax dollars being spread around like confetti and debasing it all as a result.

The Free Lakota Bank

On November 21, this writer discussed how Lakotahs are treated in an article titled "Fate of Lakotahs Highlights America's Failed Native American Policies." On November 24, the following press release and follow-up information announced:

"People of Lakota Launch Private Bank for Only Silver and Gold Currencies." All deposits are "liquid, meaning they can be withdrawn at any time in minted rounds. Some may confuse our economic system with isolationism....which it is not. Since we currently produce much more than we consume, we have the right to decide what medium of exchange to accept for our effort. And so we accept only value for value. Across our great land, over thousands of tribes and merchants participate in our system of trade. We invite others to trade with us and bring value back into our transactions."

This is the world's first non-reserve, non-fractional bank that accepts only silver and gold currencies for deposit. The Lakotas "invite people of any creed, faith or heritage to unite in an effort to reclaim control of wealth. It is our hope that other tribal nations and American citizens recognize the importance of silver and gold as currency and decide to mirror our system of honest trade."

The bank states that it issues, circulates and accepts for deposit "only AOCS - Approved silver and gold currencies." It calls paper not real money but "merely a promise to pay - a mortgage on wealth that does not exist, backed by a gun aimed at those who are expected to produce it. Since we deal only in real money, we do not participate in any central bank looting schemes." When corruption is rewarded and "honesty becom(es) may know that your society is doomed." Even as victims of adversity, Lakotas are working to prevent it.

End the Fed

Privatized money control is the single greatest threat to democratic freedom. As former lawyer, economist, academic, and Canadian prime minister (from 1935 - 1948) William Lyon Mackenzie King once said:

"Until the control of the issue of currency and credit is restored to government and recognized as its most conspicuous and sacred responsibility, all talk of sovereignty of Parliament and of democracy is idle and futile....Once a nation parts with control of its credit, it matters not who makes (its) laws....Usury once in control will wreck any nation," and indeed it has, far more now than ever.

It worried Thomas Jefferson enough to call banking institutions "more dangerous to our liberties than standing armies" at a much simpler time in our history. The right to create and control money belongs to the people through their elected representatives. For the past 95 years, powerful bankers accountable to no one have had it. They effectively run the country (and own it), and unless We the People change things, we'll continue to be victimized by economic tyranny and the eventual political kind that's coming.

Stephen Lendman is a Research Associate of the Centre for Research on Globalization. He lives in Chicago and can be reached at

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