June 21, 2012

When Putin meets Netanyahu

By M K Bhadrakumar    Asia Times 21 June , 2012

The two-day state visit by Russian President Vladimir Putin to Israel next week will raise eyebrows. Plainly put, it comes a little too early in his presidency - he took over the office as recently as May 7 - but underscores the Russian leader's sense of priority regarding Russia-Israel relations. 

Its timing comes at a juncture when the two countries are apparently far apart with regard to critical issues of regional security in the Middle East - Syria and Iran - and it seems improbable that the hiatus could be bridged easily anytime soon. Yet, Putin is returning to Israel for a second visit after a gap of seven years, and he is after all a transactional, results-oriented politician. for more 

5:40 PM (17 hours ago)

to GAJENDRA, gajendra, bcc: me 

Will Putin's Israel Visit Calm Middle East Tempest!
Since the end of World War II, international relations and movements during the Cold War and after the fall of the Berlin Wall have been mostly seen in black-and-white, with the Moscow led states in central Asia on the decline and on the defensive. Things are now changing with Asian countries led by China and Russia and hopefully India too, are trying to establish peace and security for economic growth for their people which the West had ruled and looted since the repulse of Ottoman arms from the Gates of Vienna in 16 century.
The most important event taking place now in the Middle East is the crucial strategic battle over Syria with U.S.-led West with support from Saudi Arabia and Gulf States along with Turkey and other Muslim Sunni states ranged against minority Alawite ruling elite in Syria supported by Lebanon and Iran and backed by Russia and China.
Since long Tel Aviv has been making threatening noises, along with its sympathizers and Jewish groups and lobbies in USA of a preemptive attack on Iran to stop it enriching Uranium which it is entitled to under NPT, a treaty basically designed by the West to isolate and punish upstart India. The author has proclaimed and written 5/6 articles on the subject that in end 2003 or early 2004 a more foolhardy misadventure than the illegal invasion of Iraq could have been undertaken by Bush and his handlers, the Zeo-cons. Since then after withstanding its destruction worse than that by Halagu's Mongol hordes and according to estimates after a loss of 1.4 million Iraqi lives and other consequential  ramifications, it is in the killing fields of Iraq that 6 years ago in the words of decorated US Marine Col Murtha admitted that the American army was 'broken' .It is like the destruction in WWII of 80% of Nazi war machine by the Soviet forces and people bearing terrible losses including over 10 million deaths .But with its so called scholars and media with aid from even  Hollywood films -a la John Wayne films and others and by rewriting history have given almost all the credit to Western arms. Falsely the West claims to have defeated Germany alone. Now be seen in the clutch of daily lies , the coverage of wars in Iraq, Afghanistan and Libya and now over Syria .The Western media outlets have been reduced to whores and pimps.
By 2007 or so many  of us had felt that was it was time for Washington to organise a Dunkirk like operation for its forces and  material caught up in the quagmire of Iraq and from the grave yards of imperial armies in Afghanistan. But Washington is now ruled by financiers, bankers and warmongers who benefit from profitable throbbing and thriving armament industry feeding on endless wars .USA spends almost as much as the rest of countries put together on defense, which any one can see is to terrorise the world and its people .To hell with the declining economic condition of the people in USA and Europe. US bill on national security, external and internal ads up to a hopping US$ one trillion. US exports are less than imports by $600 billion and survives by selling securities to China and others .The mighty America economically is a paper tiger living on Chinese buying its useless paper .For how long!
For at least two decades if not more the American economy has been declining .It was 50% of the world economy at the end of World War II and has now been reduced to 20% so out of which a good fraction is composed of financial industry which includes derivatives and other such fancy financial instruments which do not add to the brick and mortar of the grassroots productive economy. Like a raging bull Washington has been on a spree of so-called creative destruction which began 40/50 years ago beginning in Vietnam and south-east Asia and then followed it up in many countries in Latin America and then in Afghanistan, Iraq and Libya, not counting operations now in Yemen, Somalia and other countries
It is perhaps somewhat late for US Dunkirks .We shall see what will happen in Iraq and Afghanistan. In the latter Washington is at the mercy of Pakistan and Russia and other central Asian states for supplying its war machine.
In the middle of all this comes the visit of re-elected and re-invigorated Pres Vladimir Putin of Russia to Israel  ( and then to Jordan where Cherkes from Caucasia form the Royal guards). Since  the breakup of the USSR  millions of Russian speaking citizens not all of them Jews have migrated to Israel and play an important role politically in that country. Russia migrants were encouraged and welcomed to increase non-Palestinian population in Israel.) Therefore a visit by Putin has great significance in the current evolving strategic situation in Middle East .Peace is necessary for the people of West Asia .Israeli leaders Netanyahu and Barak may outdo each other in bellicose statements, but they did not buy Operation Iraqi freedom which was sold instead to George Bush, or rather to his handlers, the Neocons and Zeocons. In fact Barak looking at the creeping quagmire after 2004 in Iraq had asked Dick Cheney if US had plan B. It did not.
The Chinese and Russian leadership ( and India should join them) are in no mood for more wars .The raging violence and conflict in Afghanistan and in parts of Pakistan which have also affected Central Asian republics, formerly part of USSR adjoins Xinjiang province of China. India is still suffering from 2611 and other terror attacks organized from Pakistan .China. India and Russia are slowly building their economy to bring some minimum level of life to the starving millions especially in India. Unfortunately India is following the flawed Keynesian model of capitalism which Hyman Minsky had predicted has inbuilt mechanism to topple over as can be seen in U.S.-led Western counties.
 Putin will hopefully try to educate and persuade belligerent Israeli leaders Netanyahu and Barak that a destroyed , disoriented and broken up Syria would not help Israel . Syria has the 2nd most well organized Muslim brotherhood after Egypt which Assad's have kept at bay by brutal means .Even lessening of tensions in the region will be a help for all. In the heart of their hearts Tel Aviv's knows that USA is fast declining .Then what --Russia might also desire a less prominent Israeli profile in Moscow's  southern neighbour Georgia, with whom it had short brutal war a few years ago.
Below is a very interesting and well-written piece by Ambassador MK Bhadrakumar
Amb(Retd)K Gajendra Singh; 21 June, 2012 

When Putin meets Netanyahu 
By M K Bhadrakumar    Asia Times 21 June , 2012

The two-day state visit by Russian President Vladimir Putin to Israel next week will raise eyebrows. Plainly put, it comes a little too early in his presidency - he took over the office as recently as May 7 - but underscores the Russian leader's sense of priority regarding Russia-Israel relations.

Its timing comes at a juncture when the two countries are apparently far apart with regard to critical issues of regional security in the Middle East - Syria and Iran - and it seems improbable that the hiatus could be bridged easily anytime soon. Yet, Putin is returning to Israel for a second visit after a gap of seven years, and he is after all a transactional, results-oriented politician. 

Israeli Prime Minister Benjamin Netanyahu would know for sure that Putin can be trusted to bargain hard to get the best results for Russia in any given situation, but he could also be a valuable partner, especially if United States President Barack Obama gets re-elected for a second term in the White House. 

The motivations on both sides - Moscow and Tel Aviv - are complex and although their priorities may vary, it stands to reason that Russia and Israel are also drawn together in a realization that a partnership between them could be beneficial and in their mutual interest by augmenting their leverage in more than one direction - and may even be a factor of regional stability in the Middle East. 

What is often forgotten is that Putin always had a warm feeling toward Israel and is on record as saying as recently as the end of last year, "Israel is, in fact, a special state to us. It is practically Russian-speaking. Israel is one of the few foreign countries that can be called Russian-speaking. It's obvious that more than half of the population speaks Russian." 

The ostensible reason for his state visit next week is to inaugurate a memorial at Netanya to the Red Army's victory over Nazi Germany. The memorial itself has come up as a result of Netanyahu's state visit to Moscow in 2010, when he agreed with Putin (then prime minister) that Israel should commemorate the Red Army's sacrifices. 

Netanyahu said at that time, "The memorial will express the great appreciation that we feel for the Russian people. Many Jewish Red Army veterans currently live among us, here in Israel. The memorial on the shores of Netanya will also symbolize their contribution and heroism." 

Putin is also, in a manner of speaking, undertaking a "private" visit to Israel. Paradoxically, while the US is considered Israel's close ally, Obama himself isn't a terribly popular figure in Israel; on the other hand, while Israel harbors misgivings bordering on disquiet about many of Russia's policies in the Middle East and considers them at times to be unfriendly and unhelpful, the high level of Putin's personal popularity among the Israelis should be a cause for envy for Obama. 

The point is, the million strong Russian-speaking Jewish emigrants from the territories of the former Soviet Union have integrated well into Israeli society and hold important positions in Israel's national life. They constitute a humanitarian, cultural and economic bridge between Israel and Russia. 

Having said that, politics is a big divider and the main template of Putin's forthcoming visit is going to be over Syria and Iran. Briefly put, Israel and Russia find themselves in opposite camps over both those countries. 

Russia is opposed to foreign intervention in Syria, while the Israeli hand keeps popping up apparently fomenting violence there - the latest reports mention Israeli aircraft ferrying weapons to Kurdistan in northern Iraq (which were procured by Qatar for the use of the Syrian rebels). For its part, Israel resents Russia's military cooperation with the Syrian regime. 

Prima facie, it may seem there is no meeting point on Syria. But then, Russia and Israel would also have a convergence of interests in the overall stability of what is Israel's northern neighbor. Russia would apparently have more by way of shared concern with Israel than the US would have in regard of the rise of Islamism in the Middle East. 

While in the short-term Israel might regard a regime change in Syria as a gratifying development, it cannot but remain concerned that there could be a domino effect of any Muslim Brotherhood triumphed there. (Interestingly, Putin is heading for Jordan after his visit to Israel.) 

This brings up a core aspect of Russia's "intransigence" with regard to the Syrian situation. While Western commentators look at Syria being a "client state" of Russia, they blithely overlook Russia's fear that ascendancy of radical Islam in Syria can easily spread to its extended neighborhood in Central Asia and the North Caucasus. 

Of course, Russia will never allow itself to frontally articulate these Manichean fears (lest it is pushed into an existential struggle vis-a-vis militant Islam), and the nearest it could come would be such as when Russian Foreign Minister Sergey wrote in an article titled "On the Right Side of History" in the Huffington Post last week:
The Arab revolutions clearly show a willingness to go back to the roots of civilization that reveals itself in broad public support for the parties and movements acting under the flag of Islam. ... Such a situation is further proof that the simple (if not simplistic) binary construction of the Cold War period, described in the paradigms of East-West, capitalism-socialism, North-South, is being replaced by a multidimensional geopolitical reality. ...
In practical terms, Lavrov explained, what it amounts to in the Syrian situation could have grave implications for both Russia and Israel:
What seems to prevail ... are attempts to bring about regime change in Damascus as an element of a larger regional geopolitical game. These schemes are undoubtedly targeting Iran, since a large group of States, including the USA and NATO [North Atlantic Treaty Organization] countries, Israel, Turkey and some States of the region appear to be interested in weakening that country's regional positions. 

An attempt to cut the Gordian knot of long-standing problems is doomed to failure. ... Irrespective of the situation concerning Iran, however, it is evident that fueling intra-Syrian strife may trigger processes that would affect the situation in the vast territory surrounding Syria in the most negative way, having a devastating impact on both regional and international security. Risk factors include loss of control over [the] Syrian-Israeli border, a worsening of the situation in Lebanon and other countries in the region, weapons falling into the "wrong hands", including those terrorist organizations, and perhaps the most dangerous of all, an aggravation of inter-faith tensions and contradictions inside the Islamic world."
Whether Putin succeeds or not in nudging Netanyahu's thought processes in the above direction, he can be expected to give it his best shot. 

The high probability is that Putin may not succeed in this mission. His "meaningful" conversation with Obama on the sidelines of the Group of 20 summit in Mexico on Monday would have brought home that the US and its allies are already so far gone into the business of forcing a regime change in Syria that there is no easy turning back at this point. 

Again, the prospect of a "weakening" of Syria on the Middle Eastern chessboard in itself becomes a heady thought for Israel in the prevailing circumstances, and it may put a blinker on it from pondering what lies beyond, despite being so obviously challenged already by the victories of the Muslim Brotherhood in Egypt and elsewhere in its Arab neighborhood. 

Ironically it may be an easier task for Putin to persuade Netanyahu to give negotiations a chance to resolve the Iran issue. Russian diplomacy worked hard in recent weeks to see that the P5+1 [the five permanent members of the UN Security Council plus Germany] talks with Iran in Moscow on Monday didn't end up in a catastrophic failure. 

Talks between Iran and the P5+1 on Iran's nuclear program were suspended due to what European Union foreign-policy chief Catherine Ashton said were "significant gaps between ... the two positions." An "expert-level meeting" would be held on July 3 in Istanbul, Ashton said, with a high-level meeting to follow at an unspecified date, depending on the progress of the expert-level meeting, RFE reported. 

If the talks finally ended on a hopeful tone on Tuesday, much of the credit would go to the behind-the-scenes Russian (and Chinese) effort. The fact that the talks are going into a third round - in Beijing or Astana - is itself a breakthrough. 

Beyond that, to quote the chief Iranian negotiator Saeed Jalili, the Moscow talks were "more serious, more real and beyond a mere statement of positions". Jalili is on record as saying that "Iran has no problem with transparency" - hinting that it is open to international verification - and is prepared to prove its peaceful program "technically, legally and politically". But he said, Iran's "right to access peaceful nuclear energy, particularly uranium enrichment and nuclear fuel production cycle should be recognized." 

It is unlikely Putin would get into detailed negotiations, but he could lend a big hand to restrain Israel from taking any precipitate action in the critical weeks ahead. 

Of course, the most fascinating part of the visit might come if Putin and Netanyahu get around to exchanging notes on how they weigh the prospects of their countries' relations with the US in the event of Obama securing a second term. If the body language of the Putin-Obama meeting at Mexico on Monday was anything to go by, the two leaders are at some distance away from striking the chord of a friendship. Netanyahu of course has been a victim of Obama's "tough love" and often seemed uncomfortable with the experience 

Ambassador M K Bhadrakumar was a career diplomat in the Indian Foreign Service. His assignments included the Soviet Union, South Korea, Sri Lanka, Germany, Afghanistan, Pakistan, Uzbekistan, Kuwait and Turkey. 

Swiss Bank accounts of Nara Chandrababu Naidu


QUESTION: TV9 channel and Telugu Desam PR officials are focussing on alleged Mauritus Bank accounts and are completely silent on  European bank accounts. The point of argument is, whether  TV9  is hand in glove with TDP PR wing  and trying to suppressing this angle, alleged Banks in Mauritus didn't existed during the period that Mr.Kola is referring. That could be correct, however the bank accounts held in top Swiss banks need to be verified., just restricting to one country doesn't make one to come out clean. When Chandrababu existed from power, there were many allegations against him. 

Deutsche Bank AG, Singapore (A/C No. 2248634590-4985, in the name of C. Naidu Nara).
Credit Suisse Bank, Berne (A/c No. 0204049121100), 
Uni-on Bank of Switzerland (A/c No. 00991534218169), 
Natwest Bank, Paddin-gton, London (A/c No. 4928-364100832), 
Barclay's Bank in Singapore (A/c No. 00851327000124). 

Kola resurfaces, with list of Naidu's Swiss bank accounts
Jun 10, 2012 | DC | Hyderabad
Kola Krishnamohan, the man who duped the public and banks of several crores of rupees by making them believe that he had won Rs. 83 crore in the Euro lottery, suddenly surfaced on Saturday evening and created a flutter by alleging that Telugu Desam president N. Chandrababu Naidu has several Swiss bank accounts in his name and has deposited several hundred crores of dollars.

Though Krishnamohan backed his words with details of the alleged bank accounts, the TD was quick to rush to Mr Naidu's defence, rubbishing the allegations as nonsense and saying it was all part of a game plan by Sakshi media house. Krishnamohan said he had an account in Midlands Bank, London (A/c No. 433846958001) and transferred Rs. 4 crore to Mr Naidu's account in

Deutsche Bank AG, Singapore (A/C No. 2248634590-4985, in the name of C. Naidu Nara).

He added that Mr Naidu had accounts in foreign banks like 

Credit Suisse Bank, Berne (A/c No. 0204049121100), 
Uni-on Bank of Switzerland (A/c No. 00991534218169), 
Natwest Bank, Paddin-gton, London (A/c No. 4928-364100832), 
Barclay's Bank in Singapore (A/c No. 00851327000124). 

Krishnamohan added that Mr Naidu had "15,000 crore dollars deposited in his Singapore bank account."
He said when Mr Naidu came to know that he won the Euro lottery, he invited him (Krishnamo-han) to join the TD and took Rs. 5.10 crore from him, including Rs. 10 lakh through cheque, Rs. 1 crore in cash and another Rs. 4 crore through money transfer from his account. Krishnamohan added that the Enforcement Directorate, which investigated him, was aware of Mr Naidu's bank accounts in foreign countries.

He said that he would submit details of Mr Naidu's "misdeed" to the High Court within the next few days. Meanwhile, reacting sharply to Krishnam-ohan's allegations, Mr Naidu denied having any Swiss bank accounts either in his name or in the name of any of his family members. "I challenge those making allegations to prove that I have Swiss bank accounts, I am prepared to face any punishment," Mr Naidu said. In a related development senior TD leader T. Devender Goud, in a statement threatened to file defamation cases against Krishnamohan and Sakshi news channel for their attempts to malign the TD and its leader.



The use of the Drone (unmanned aircraft) strikes to kill Al Qaeda suspects in the Wazirisan area of Pakistan and in Yemen started under former President George Bush. These strikes are carried out by the Central Intelligence Agency (CIA).Mr.Bush carefully maintained the deniability of any role that he might be playing from the White House in ordering these strikes.

2. Under the CIA's charter as revised in the 1970s, the CIA cannot undertake any operation to kill an individual without a written directive from the President.Keeping this view, the Bush Administration kept the circumstances surrounding the Drone strikes vague and unclear.

3. After coming to office, President Barack Obama has ordered a dramatic escalation of Drone strikes in the Waziristan area as well as in Yemen to neutralise identified suspects of Al Qaeda. These strikes have killed many important operatives of Al Qaeda. At the same time, they have also killed many innocent Pakistanis adding to anti-US anger in Pakistan.

4. To give a heroic image to Mr.Obama, his advisers have been projecting the Drone strikes as carefully chosen and decided by Mr.Obama himself, thereby weakening the deniability of his role.

5. This is now threatening to boomerang by raising two issues: Firstly, is it legal for the US President toknowingly  order a Drone strike meant to kill a US citizen? Secondly, is it legal for the US to knowingly undertake Drone strikes despite the knowledge that they might kill innocent civilians? The first question has been raised in the US itself and the second before the UN Human Rights Council in Geneva.

6. The relevance of the first question in the US arises from the fact that Anwar al-Awlaki, the chief of Al Qaeda in Yemen, who was allegedly killed in a US Drone strike, was stated to have been a US citizen before he fled from the US to Yemen and took over the leadership of the local Al Qaeda. Those who have raised this issue in the US suspect that Mr.Obama might have ordered other Drone strikes against US citizens knowing them to be US citizens.

7. The US Civil Liberties Union and "The New York Times" have filed separate petitions before a US federal court requesting for access to Government documents relating to the Drone strikes. The Obama Administration has strongly opposed their petitions on grounds of national security and urged the court to reject their petitions outright. After having boasted that Mr.Obama personally orders the Drone strikes, the Government is now refusing even to confirm whether any documents on the subject exist.

8. In a counter filed before a district court in New York on June 20,2012, the Government said: "Whether or not the CIA has the authority to be, or is in fact, directly involved in targeted lethal operations remains classified." 

9.The AmericanCivil Liberties Union and "The New York Times" have requested  for access to the documents explaining the legal basis for the raids and the killing of terror suspects who are US citizens. The Governmenthas  asked the court for a summary judgement to dismiss their petitions.
10.The Government's counter-petition said:"Even to describe the numbers and details of most of these documents would reveal information that could damage the government's counterterrorism efforts." 

11. Describing the Government's argument as "absurd",  the ACLU said the Drone strikes were an open secret that Government officials had boasted about to reporters.

12.  "Senior officials have discussed it, both on the record and off. They have taken credit for its putative successes, professed it to be legal and dismissed concerns about civilian casualties," ACLU Deputy Legal Director JameelJaffer said in a statement.

13."The public is entitled to know more about the legal authority the administration is claiming and the way that the administration is using it."

14.The ACLU called on the  Obama administration to reveal information "about the process by which individuals, including American citizens, are added to government kill lists".

15. The White House has simultaneously organised a series of speeches and briefings by officials, including Mr. Obama's chief counterterrorism adviser John Brennan, to explain to the American people "the legal analysis and process involved."

16. In the UN Human Rights Council in Geneva, Mr.BenEmmerson, a Special Rapporteur, urged the US on June 21  to demonstrate that its Drone strikes are legal. Otherwise, he warned  that the Council may be called on to investigate. He added: "Each and every US attack will be investigated. Somebody needs to do right by these victims.The international community is extremely concerned about the use of targeted killings".( 22-6-12)

( The writer is Additional Secretary (retd), Cabinet Secretariat, Govt of India, New Delhi, and, presently, Director, Institute For Topical Studies, Chennai, and Associate, Chennai Centre For China Studies. E-Mail: seventyone2@gmail.com . Twitter: @SORBONNE75 )

Government’s Plan to Steal Your Money

Simon Black

Senior Editor of Sovereign Man 

There are consequences to being flat broke. There are consequences to investing any level of confidence in a financial system underpinned by debt and the creation of paper currency. There are consequences for ignoring reality and pretending that everything is normal.

This is one of them: European officials have flat-out admitted that they were discussing rolling out a series of harsh capital controls across the continent, including bank withdrawal limits and closing down Europe's borderless Schengen area. 

Some of these measures have already been implemented sporadically; customers of Italian bank BNI, for example, were all frozen out of their accounts starting May 31st, upon the recommendation and approval of Italy's bank regulator. No ATM withdrawals, no bill payments, nothing. Just locked out overnight. 

In Greece, the government has taken to simply pulling funds directly out of its citizens' bank accounts; anyone suspected of being a tax cheat (with a very loose interpretation in the sole discretion of the government) is being relieved of their funds without so much as administrative notification. It's no wonder why, according to the Greek daily paper Kathimerini, over $125 million per day is fleeing the Greek banking system. European political leaders aim to put a tourniquet on this wound in the worst possible way. 

So what are capital controls? 

Simply, capital controls are policies that restrict the free flow of capital into, out of, through, and within a nation's borders. They can take a variety of forms, including

Setting a fixed amount for bank withdrawals, or suspending them altogether — Forcing citizens or banks to hold government debt — Curtailing or suspending international bank transfers — Curtailing or suspending foreign exchange transactions — Criminalizing the purchase and ownership of precious metals — Fixing an official exchange rate and criminalizing market-based transactions 

Establishing capital controls is one of the worst forms of theft that a government can impose. It traps people's hard-earned savings and their future income within a nation's borders. 

This trapped pool of capital allows the government to transfer wealth from the people to their own coffers through excessive taxation or rampant inflation... both of which soon follow. 

The thing about capital controls is that they're like airline baggage fees; ultimately, all governments want to do it, they're just waiting on the first guy to impose them so that they can shrug their shoulders, stick it to the people, and blame 'industry standards'. 

Moreover, capital controls were a normal part of the global economic landscape for most of the 20th century, right up to the 1970s. It's been a long time coming for governments to return to that model. 

Since the inception of The Sovereign Man, it has been a constant theme for us to talk about the increasing threat of capital controls. Your money, your savings, your livelihood are all under attack by insolvent governments, and it's critical to take steps to reduce your exposure. 

When European financial leaders all openly admit that they're making plans to establish continent-wide capital controls, it really begs the question — what additional warning sign does one need? 

The dominos have already started falling. Iceland. Ireland. Greece. Spain. Portugal. Italy. Cyprus. Soon even France and the rest of Europe. And it will come to the United States as well. There are over 15 trillion reasons why. 

So what are the most critical steps to take now? 

1) Buy precious metals and store in a secure jurisdiction. 
Holding gold and silver overseas is a great way to (a) ensure your savings is protected against inflation, and (b) ensure that your precious metals cannot be confiscated in the event that gold ownership is criminalized in your home country. I strongly recommend Singapore, Hong Kong, and Abu Dhabi as three potential safe jurisdictions for your gold and silver. 

2) Open a foreign bank account. 
For funds that need to be maintained within the financial system (as opposed to precious metals), make sure you have a safe home for your money abroad in a safe, well-capitalized bank. 

3) Have a place to go overseas. 
Economic turmoil brought on by governments stealing people's savings generally does not bode well for social stability. If things get hairy, you'll want to have a place to wait it out. And you don't want to be deciding on the location while you're packing your bags.

As an example, I've picked up an 1,100-acre farm in central Chile that won't skip a beat when the financial system implodes. The sovereign debt bubble does not affect whether or not my trees will bear fruit or my vegetables will grow.


Simon Black
for The Daily Reckoning

EZ Cash Withdrawal


Joel Bowman
Reckoning today from Stavanger, Norway...

You were the last high, hi-i-i-i-igh, 
Hi-i-i-i-igh, hi-i-i-i-igh.

— The Dandy Warhols, "You Were The Last High" 

Do you hear that, Fellow Reckoner? The gears are beginning to grind. Growth is slowing. Manufacturing is slowing. China, Europe, the US...slowing, slowing, slowing...

Look what's coming across the wires. Here's Reuters:
Business activity across the euro zone shrank for a fifth straight month in June and Chinese manufacturing contracted, while weaker overseas demand slowed US factory growth, surveys showed on Thursday.

The data darkened the outlook for the world economy, adding to fears that Europe's debt crisis and slower growth in the United States and Asia would cause downturns around the globe.

But wait...didn't Bernanke yesterday commit to extending his Operation Twist program, under which the Fed swaps short-term bonds for longer-term ones to artificially suppress long-term interest rates. The distortion is designed to grease the gears, not gum them up. So what gives?
The problem with central planners "doing something" is that it quickly becomes a habit. The initial hit of EZ cash, for example, feels good. It gives a rush, puts a spring in the market's step. It brings forth demand, gooses the numbers, gives the appearance of a chatty, confident economy. Pretty soon, however, the market begins grinding its teeth, getting fidgety. The effect starts wearing off. 

So the planners rush back to the source of the manufactured euphoria. They inject another dose, hoping for the same buzz. The next time around is nice...but it's not quite the same as that first high. Something is missing. So they jack up the amount and try again. This time the reaction is even softer, duller. You see the pattern here (even if the planner junkies do not). Eventually, the economy is stumbling around like a strung-out meth head, lusting after the next high. But no matter how big the fix, how potent the mix, they can never regain the thrill and excitement of that first buzz.

Lookie here...the Feds have pumped trillions of stimulus dollars into the economy's wilting veins during the current and ongoing depression, including $4 trillion in direct, low-to-no interest loans to their buddies. And for what?

Here's the AP with more gloom, doom and inconvenient reality:
The National Association of Realtors said Thursday that sales of previously occupied homes dropped 1.5 percent in May from the previous month, raising fears that the housing market recovery is weakening. A separate survey showed manufacturing in the Philadelphia region contracted for the second straight month, providing more evidence that the economy is faltering.

Appetite for financial assets such as stocks was also dented by the results of a monthly HSBC survey which showed that manufacturing in China, the world's No. 2 economy, has continued to contract. China's growth has been a pillar of the global economy in recent years, so its slowdown has been of particular concern to investors.

In the 17-country eurozone, the equivalent manufacturing survey, called the purchasing managers' index, fell to 44.8 points in June from 45.1 the previous month. A number below 50 indicates contraction. A related survey on the services sector also showed declining activity, suggesting a drop in GDP in the second quarter.
Not one day has passed since The Bernank's renewed commitment to habitual recklessness, and markets are already blasé. Last we checked the Dow was down 150 points and on its way to steeper declines. But the planners have gone mad, Fellow Reckoner. Despite diminishing returns on their spending binges, they're doubling down on the dosage. It's only a matter of time before the poor fools O.D....

The other thing about rabid, dragon-chasing monetary junkies is that they won't hesitate to steal in order to get their fix. In today's guest column, The Sovereign Man's Simon Black shows you how the government is coming after your cash. Get ready for this... 

Security Weekly: Are Syria's Rebels Getting Foreign Support?


By Scott Stewart

A video recently posted to the Internet depicting an improvised explosive device (IED) attack in Syria has garnered a great deal of attention. A Syrian militant group called the Hawks Brigade of the Levant claimed the attack, which targeted a Syrian government armored troop bus as it traveled along a road near a rebel stronghold in the Idlib governorate. According to the group, the attack depicted in the video employed a type of IED called an explosively formed penetrator (EFP). Though the video was shot from a fairly long distance away, it does appear that the IED punched a substantial and focused hole through the armored bus -- precisely the type of effect that would be expected if an EFP were employed against such a target.

EFPs are a logical tool for militants to use against superior government forces that are heavily dependent upon armor. EFPs pose a significant threat to armored vehicles, which the Syrian military has utilized extensively, and quite effectively, in its campaign against Syrian rebel groups.

Studying the IED technology employed by a militant group is an important way to determine the group's logistics situation and trajectory. It can also be a way to discern if a group is receiving outside training and logistical assistance.

Explosively Formed Penetrators

An explosively formed penetrator, sometimes called an explosively formed projectile, is a simple device composed of a case, a liner and explosive filler. EFPs have been part of many countries' military inventories for years. The U.S. Army, for example, added the M2 Selectable Lightweight Attack Munition (aptly named the SLAM) to its inventory in 1990. Improvised EFP devices can also be constructed by non-state actors; they were widely used to target U.S. military vehicles in Iraq.

The employment of an EFP device in the field also requires a detonator and a firing chain to initiate the detonator. The firing chain can vary widely, from a hardwired command-detonated system to an improvised victim-actuated system that is triggered inadvertently by the target and involves modifying things like the infrared safety beam from a garage door opener. 

The case of an improvised EFP is often constructed from a short section of well-casing pipe with a steel plate welded to one end. A small hole is drilled in the plate to allow a blasting cap to be inserted. The pipe is then filled with high explosive, and a metal liner -- most often made of copper -- is affixed over the open end of the pipe.

EFPs utilize the same general principle as a shaped charge. In a traditional shaped-charge munition like the warhead on an anti-tank rocket, a thin metal cone is used to achieve a focusing effect. When crushed, the concave metal cone in the warhead becomes a molten, high-velocity projectile that, with a jet of super-heated gas from the explosive, penetrates the armor. However, in order for a shaped charge to work most effectively and achieve maximum penetration it must detonate at a precise, relatively short distance from its target. In a munition like a rocket-propelled grenade, an empty space between the nose of the warhead and the copper cone generally provides the required standoff distance.

The EFP munition is somewhat like a traditional shaped charge, but it incorporates a metal liner with less of an angle. So instead of forming a cone, the liner is more of a concave lens or dish shape. The EFP also uses a heavier liner that is formed into a slug or "penetrator" when the device is detonated. The penetrator is then propelled at the target at an extremely high velocity. The difference in the shape and weight of the liner allows the EFP to be deployed from a greater distance than a traditional shaped charge.

Because the components required to construct EFPs are simple, such devices can be fabricated inexpensively and out of readily available materials. Well-casing pipe and steel plate, for example, are widely available in almost any region of the world. Moreover, making the EFP casing from these elements requires little skill and simple machinery, such as a welder, a grinder and a drill.

The copper liner is the sophisticated part of the device, requiring a bit more precision in its fabrication. If the liner is not formed in a precise manner, the devices will tend to spit copper shrapnel rather than create a truly effective penetrator. However, once the proper shape of the liner is determined, either by copying the shape of the liner in a professionally designed EFP device or by trial and testing, the liners can be fabricated somewhat easily using a form and a hydraulic press.

Because of its ability to focus the force of an explosive charge, a small EFP containing just a few kilograms of high explosive can cause far more damage to an armored vehicle than can a traditional IED made with much more high-explosive material. This means a militant bombmaker can make hundreds of EFP devices from the explosive filler required to make one large vehicle-borne improvised explosive device (VBIED). And since they are small, EFPs are easily concealed and harder to detect than larger devices. They can also be placed next to the road rather than having to be buried in the road like an anti-tank mine. However, to function effectively and to project the penetrator into the optimal area of a vehicle, an EFP device does need to be positioned properly to allow for the appropriate standoff distance and aimed at the appropriate height for the targeted vehicle. It also needs to be deployed in a manner that allows for precise timing, whether the device is command-detonated or victim-actuated.

EFPs used in Iraq, Lebanon and the Palestinian territories have proved to be highly effective against armored vehicles -- even main battle tanks. And they are downright deadly against lighter vehicles like armored personnel carriers, transport trucks, jeeps and Humvees -- or the armored bus shown in the Syria video.

Indicators of Foreign Support

Much can be discerned from a careful examination of the IEDs a militant organization employs in its attacks. For example, in the 1970s the rapid increase of bombmaking skill in Palestinian and other Marxist-oriented militant groups clearly displayed that those groups had received training from professional bombmakers dispatched by state sponsors. Indeed, decades before al Qaeda opened training camps in Pakistan and Afghanistan, training camps in Lebanon's Bekaa Valley, the People's Democratic Republic of Yemen, Libya and Iraq were filled with militants from all over the world, and particular bombmaking techniques that appeared in distinct areas could be traced back to individual bombmakers who attended training courses together at those locations. Later, the emergence of signature IEDs in places such as El Salvador and Colombia demonstrated that bombmakers from the Provisional Irish Republican Army (PIRA) and Basque militant group ETA had been passing along their training to a new generation of militants in those countries -- a fact later backed up by the arrests of some of the bombmakers.

In many of the early jihadist attacks against U.S. interests in places such as Yemen, specific techniques utilized by some bombmakers made it obvious to investigators that they had received training at camps in Pakistan and brought their training home with them after fighting against the Soviets in Afghanistan. Later, after receiving training from Hezbollah, al Qaeda began to display hallmarks of Hezbollah's influence in its IED designs. 

The use of signature explosives, like Semtex H, by groups such as the PIRA and the Popular Front for the Liberation of Palestine-General Command also demonstrated a distinct logistical link between state sponsors of terrorism like Libya and their militant proxies. Indeed, under the Gadhafi regime, the Libyans were even known to use the diplomatic pouch to smuggle Semtex to their embassies in places like London, where the explosives were then provided to militant proxies for use in attacks. 

In more recent years, there were rapid advances in the IEDs employed by Nigerian militant group Boko Haram. When the group's IEDs progressed from small, crude devices to large suicide VBIEDs in the span of six months, it clearly indicated that the group's bombmakers had received external training.

In another recent case, underpowered suicide VBIEDs employed by al Qaeda in the Islamic Maghreb have demonstrated that the group's commanders in northern Algeria have a desire to attack and an abundance of suicide operatives, but are having difficulty amassing enough explosive material to create effective VBIEDs. This information allows analysts to gauge the type of threat such a group poses.

Which brings us back to EFPs. In Iraq, EFPs were most widely used by Shiite militants, who received copper liners for their improvised EFP devices from Iran's Quds Force. Indeed, the emergence of EFPs in Iraq was a strong indicator of Iran's support for the Shiite militias in Iraq. 

Though Syria shares a border with Iraq, one cannot simply assume that EFP technology has spilled across the border. Certainly, the principle behind EFPs is simple enough, but the EFPs in Iraq were largely used by Shiite militants, who are aligned with Iran and, by extension, the Syrian regime. The Quds Force is unlikely to have provided copper liners for improvised EFPs to the Sunni militants in Syria or to have permitted its Iraqi proxies to transfer them. (However, it is entirely possible that an entrepreneurial-minded Shi'i who had some of the liners could have sold them to a Sunni militant, who then furnished them to Syrian militants.)

It will be important to monitor how many EFPs Syrian militants deploy. If they deploy only a few EFP devices in scattered locations, they may be obtaining liners on an ad hoc basis. However, if EFPs are deployed in a broad, systematic fashion, it will be an indication -- though certainly not conclusive evidence -- that the Syrian militants are receiving supplies from an external source. The precision and effectiveness with which any such devices are employed will also be telling of the training the militants employing them have received. A domestically developed EFP capability will have some failures and inconsistencies -- the sorts of problems frequently evidenced as a bombmaker advances along the bombmaking learning curve. Such growing pains will be absent if the Syrian militants are aided by outside training and logistics.

There are many ways that one can judge the degree of foreign support that a militant group is receiving. The indicators can include anything from uniforms and assault rifles to the presence of increasing numbers of anti-tank guided missiles and man-portable air defense systems. But more subtle indications, such as those involving IED components and bombmaking skills, should not be overlooked.

Read more: Are Syria's Rebels Getting Foreign Support? | Stratfor 

Indian Railways: Abuse of PAN No for Tatkal bookings, Do not quote

Do not quote PAN for Tatkal bookings. Indian Railways display PAN as identity proof for Tatkal bookings.

The Railways have collect PAN for Tatkal bookings and display the PAN + name, sex and age of passengers on reservation charts pasted on railway compartments.
This is a boon for benami transactions. It is mandatory for traders like jewellers to collect tax (TCS) from customers on purchase of jewellery worth Rs 5 lakh & bullion worth Rs 2 lakh. While complying with TCS rules for collection, payment and uploading of TCS information (e-filing of TDS returns) jewellers have to furnish PAN of customers. For certain customers it is not convenient to provide PAN. To accommodate high net worth customers, traders have a easy source of benami PAN numbers, name, sex and age from reserved railway compartments. A traveller recently noticed a chap copying PAN particulars along with name, age and sex pasted on reserved compartments, and when confronted with the help of railway police, he admitted that he gets Rs 10 per PAN particulars from jewellers. These persons are copying PAN information of senior citizens, women etc from sleeper class with the intention that passengers in sleeper class are not serious tax payers and generally salaried class.

This wrong usage of a PAN number is known only to the regular tax payers, who regularly check their tax credit on form 26 AS provided by the Income Tax department on their website. This form 26 AS is updated only on filing of e-TDS returns by the traders. There is almost 6-12 months time delay for the PAN holder to know that a transaction of above nature has taken place on his name and that too only if he goes through form 26 AS. On noticing the tax credit of above nature while reconciling form 26 AS for tax credits for filing the return during subsequent financial year i.e. July / September, the tax payer has an option to exclude the same and go ahead in filing the return. In that case the department will first initiate action from the tax payer's side asking him to explain the sources of money for the above transaction done in his name and also to prove that he has not carried on the above transaction. The onus lies on the genuine tax payer for the fault committed by the traders. This dispute may even take more than 2 years to be settled.

In conclusion, the only way to protect yourself from these fraudulent transactions, is to avoid quoting PAN details for identity proof.
Kind Regards
Umesh Rathi, CFPcm
Principal Financial Planner
ARIHANT capital markets ltd
M. 91.  9406683366 
B.  91. 731. 4247436 
F.  91. 731. 3016199
skype id.   umesh.rathicfp 

Getting Ready for More QE

Bill Bonner
Bill Bonner
Are you ready for this, dear reader...? Well hold onto your hat because here comes another round of QE...stimulus...money printing...! Société Générale economist Michala Marcussen says it's coming. Today! Here'sBloomberg on the case:
A third round of quantitative easing is coming this Wednesday, top Société Générale economist Michala Marcussen says. 

Marcussen writes that if anything, the boost will help "only at the margins."

"We have long held the view that each new round of QE comes with diminishing returns," she says. "We nonetheless see the impact as positive — if nothing else giving the reassurance of a pilot in the plane."

On how the Federal Reserve will announce and implement QE3:

With economic data signalling stall speed growth for the US, we expect the Fed to lower its current 2012 growth outlook from 2.7%, narrowing the gap to our own forecast of 1.8%. This — and the risks from the euro area debt crisis — will allow the Fed to adopt QE3 at the June 20 FOMC. We estimate the Fed could extend twist by another $150bn, but our expectation is that the Fed will instead allow its balance sheet to expand a further $600bn, with purchases split 40/60% between MBS and Treasuries.
We wouldn't want to be on that plane! There are a bunch of clowns at the controls. And the motors are sputtering.

Reassurance? We'd be more reassured if we saw the pilot and co-pilot both bailing out.

But they're determined to keep flying... until the wings come off. 

Lest you think the Fed is doing some kind of public service...like delivering the mail to far outposts in Alaska...you should realize that they're delivering money...cash...to their friends and business partners. RT reports:
Bank Board Gave US $4 Trillion in Loans to Its Own Institutions

A report just released by the US Government Accountability Office explains how the Federal Reserve divvied up more than $4 trillion in low-interest loans after the fiscal crisis of 2008, and the news shouldn't be all that surprising. When the Federal Reserve looked towards bailing out some of the biggest banks in the country, more than one dozen of the financial institutions that benefited from the Fed's Hail Mary were members of the central bank's own board, reports the GAO. At least 18 current and former directors of the Fed's regional branches saw to it that their own banks were awarded loans with often next-to-no interest by the country's central bank during the height of the financial crisis that crippled the American economy and spurred rampant unemployment and home foreclosures for those unable to receive assistance. — RT
But most people don't know or care. They're still lining up to get on board. No kidding. 

Even with all that new money filling the bankers' pockets, apparently it ain't enough. Again, Bloomberg is on the story:
...there may actually be a shortage of dollars to meet demand as Europe's debt crisis deepens and the global economy slows. The dollar has risen 3.5 percent since the end of April against a basket of the most-widely traded currencies even amid speculation that the Fed, which meets this week, may undertake the type of stimulus measures that weakened it in the past. 

"The market often assumes that people are long dollars, but many of those dollars are held by central banks, which are unlikely to move out," Ian Stannard, head of European currency strategy at Morgan Stanley in London, said in a June 13 interview. "That leaves us with the private sector, which is short," meaning they don't have enough of them, he said. "In an environment where we see a global slowdown, the dollar will be well supported." 

Morgan Stanley says the potential scarcity of dollars among foreign private borrowers represents the US's net position with lenders abroad of minus $2.4 trillion, adding $4.8 trillion of US financial assets held by central banks, and subtracting $500 billion of foreign official assets held by the US. 

That equals about $2 trillion of demand from foreign private banks and companies. The gap has expanded from $400 billion in 2008, according to the New York-based firm. In 2002, there was a dollar surplus of $900 billion, the data show. 

"We expect the dollar to continue to strengthen in the coming months on risk aversion stemming from the euro crisis," strategists at the investment banking unit of Charlotte, North Carolina-based Bank of America Corp., wrote in a research report dated June 15.
But we're an equal-opportunity blog, here at The Daily Reckoning. So let's hear from the other side...

What's wrong with these Nobel Prize winners, anyway? Does the award cause brain damage? Inquiring minds want to know.

Take Paul Krugman...please!

And here comes Joseph Stiglitz. He's got a new book out. Here's an extract:
Markets have clearly not been working in the way that their boosters claim. Markets are supposed to be stable, but the global financial crisis showed that they could be very unstable, with devastating consequences.
Huh? Who said markets were supposed to be stable? Did Stiglitz just notice that prices go up and down...sometime in a very robust way. 

Here, at least he is on more solid ground:
The bankers had taken bets that, without government assistance, would have brought them and the entire economy down. But a closer look at the system showed that this was not an accident; the bankers had incentives to behave this way.
Then, he seems to get in over his head...

The poor man seems to have no interest in how those incentives came to be. A dear reader might want to pass this along to him:

Wall Street's perverse incentives...inequality...and the financial markets' recent extreme instability all have the same source — the feds. Their ersatz money led to an extreme increase in the amount of credit. Total credit in the US rose 50 times in the last 50 years. 

Wall Street had an incentive to peddle credit to everyone — even those who couldn't pay back their loans.

Wall Street makes money by dishing out credit...the more they dispense, the more they make. A disproportionate amount of this new credit goes to their customers, their clients, and their cronies — that is, to the 'rich.' That's why the rich are so rich. Because their financial assets went up in price faster than consumer prices or labor rates (both held down by outsourcing to emerging markets).

As for instability, what do you expect when you have a monetary system that allows credit to expand many times faster than the real economy? And what happens to an economy when money itself can't be trusted? Try this experiment; let carpenters build your next house with an elastic tape measure...or let pilots fly planes with whacky instruments...or set the escalator at the shopping mall to go faster and faster. You'll see plenty of accidents there too.

What is wrong with Stiglitz? Markets soar when the Fed hints at more money...and crash when it hints that it will sit still. And Stiglitz blames the markets for instability! When you operate with an elastic currency...and you expand credit 50 times in 50 years...you have to assume that the financial world will get a little 'toppy.' Then, when it falls over, he seizes the opportunity to tell us that markets need to be controlled by the same people who gave us the credit bubble: 
...markets once again must be tamed and tempered. The consequences of not doing so are serious: within a meaningful democracy, where the voices of ordinary citizens are heard, we cannot maintain an open and globalized market system, at least not in the form that we know it, if that system year after year makes those citizens worse- off. One or the other will have to give — either our politics or our economics.
That's chutzpah...that's cheek...that's brass! Or brain damage.


Bill Bonner
for The Daily Reckoning

June 20, 2012

Why Pakistan interferes in Afghanistan

in PERSPECTIVE by Nitin Pai — June 19, 2012 at 6:18 pm | 0 comments

A strong, independent Afghanistan is perceived as an existential threat to Pakistan

Just why is Pakistan interested in installing a friendly regime in Afghanistan? Books and articles written over the last couple of decades, will offer arguments such as the need for strategic depth to counter India; the need to prevent an Indian encirclement of Pakistan; and, even more grandly, the creation of an Islamic centre of power that stretches from the shores of the Arabian Sea to the Caucasus Mountains. Going by the statements of members of the Pakistani establishment and some of its commentators, these do appear to explain why Pakistan seeks to dominate Afghanistan.

Yet, to a large extent, the ambition and the paranoia that motivates these objectives are in the realm of fantasy. Some important people in Pakistan do believe in these fantasies—and we must take them seriously, because those important people can and do act on the basis of their delusions. However, there is also an argument to be made that these fantasies, paranoias and strategic sophistries mask the real motive.

The reality is that Pakistan seeks to dominate Afghanistan for the fear of its own dismemberment. Until the Soviet invasion of Afghanistan in 1979, Islamabad's main agenda was to prevent Kabul-supported Pashtun and Baloch nationalism from escalating into full-blown movements for independence. The strength of Pashtun nationalism and Kabul's rejection of the Durand Line—both of which continue to this day—create deep insecurities in Islamabad, causing it to bolster Islamism as an ideological counter, instigate political instability in Afghanistan and attempt to install a friendly regime there.

It is a matter of historical record that Pakistan—under President Zulfikar Ali Bhutto—began training Islamist militants in 1973, long before the Soviet invasion. Burhanuddin Rabbani, Gulbuddin Hekmatyar and Ahmed Shah Massoud received training in Pakistani camps so that Bhutto could counter Kabul's "forward policy" towards Pakistan. Kabul's policies over the Durand Line had caused Pakistan to close its borders with Afghanistan in 1961. When the Baloch insurgency erupted in the early 1970s, Kabul, under the Daoud regime, supported it.

Bhutto's response was to nurture proxies in the form of Islamist militants—an old trick for the Pakistani establishment—under the leadership of the then Brigadier Naseerullah Babar, who as Inspector-General of the Frontier Corps, set up training camps in North and South Waziristan. More than 5000 militants were thus trained between 1973-1977. This took place, it must be stressed, before the Soviets invaded in 1979. The narrative that most people accept—that Pakistan's sponsorship of the mujahideen was a response to Soviet invasion of Afghanistan—is factually incorrect. Rizwan Hussain's Pakistan and the Emergence of Islamic Militancy in Afghanistan has a good account of this.

The Pakistani establishment fears that a strong independent Afghanistan—like the one that existed up to the mid-1970s—will pursue an irredentist agenda, claiming the Pashtun areas of Pakistan. People in the tribal regions of Pakistan have only a tenuous association with the Pakistani state. Even for people in the so-called "settled areas" of Khyber-Pakhtunkhwa province (formerly the North West Frontier Province), age-old Pashtun solidarity is often stronger than allegiance to a new-fangled geopolitical entity called Pakistan. Afghanistan can well decide to again support the insurgency in Balochistan to weaken the Pakistan state enough to prise out the Pashtun lands for itself. Pakistani strategists, therefore, can see an existential threat in a strong, independent Afghanistan.

They can't, however, state this as the official reason because to do so would be to admit the hollowness of the idea of Pakistan. That is where fantastic notions of strategic depth, pre-empting strategic encirclement or building a Central Asian caliphate come in useful. "Strategic depth" is a plausible justification to convince patriotic Pakistanis of why their military is interfering in Afghanistan. Islamabad's case appears a lot more 'understandable' to international opinion if it cites the fear of Indian encirclement, rather than fear of Pashtun and Baloch self-determination as the explanations for its actions. Domestic and foreign Islamists will be enthused by the idea of flying the green flag of Islam all the way to the borders of Russia.

There are two broad ways to address Pakistan's insecurities. First, the Pakistani military-jihadi complex might be persuaded to stop destabilising Afghanistan if it were convinced that Kabul will not lay claim to Pashtun lands east of the Durand Line. In practice that would be nearly impossible, not least because Afghan nationalism will not accept it. Even Mullah Omar's Taliban regime—despite owing its power to Pakistani support—didn't.

The other way is for Pakistan to evolve a political and economic framework where all its citizens, including the Pashtun and the Baloch, see a common, shared future. In other words, this requires Pakistan "to get its act together" and assure its citizens of equity, justice, rule-of-law and a promise of a better tomorrow. All of Pakistan's neighbours including Afghanistan will, as it is in their interests to co-operate with Islamabad towards this end. For a number of reasons—the most importance of which is the military-jihadi complex—Pakistan's leaders are unwilling to take this course.

Therefore, some matters will be decided by the force of arms. If at all.

Nitin Pai is the editor of Pragati
Tags: Featured



MakhdoomShahabuddin,  who was Minister for Textiles in the outgoing Cabinet headed by Prime Minister YousefRazaGilani, has reportedly  been nominated by President Asif Ali Zardari to be the new Prime Minister of Pakistan. Barring unlikely surprises, he is expected to be elected to the vacant post by the National Assembly on June 22,2012.

2.On the instructions of Mr.Zardari, the Pakistan People's Party members and legislators have conducted themselves with dignified anger and restraint in the wake of the controversial ruling of a three-member bench headed by Chief Justice Iftikhar Muhammad Chaudhry disqualifying Mr.Gilani from holding office because of his earlier conviction for contempt of court. The  conviction was triggered off by  his failure to carry out the directive of the court to write to the Swiss Government for re-opening investigation into a case in which allegations of money-laundering had been made against Mr.Zardari and the late Benazir Bhutto.

3. The PPP has decided not to challenge the ruling of the Supreme Court and to accept its verdict despite its serious reservations over its validity. The Election Commission, apparently with the prior concurrence of Mr.Zardari, promptly carried out the directive of the court to declare Mr.Gilani disqualified to hold the post of the Prime Minister and to  function as a member of the Parliament.Immediately thereafter, Mr.Gilani vacated his official residence and shifted to the Islamabad Club. The PPP has advised its cadres against holding any public demonstrations on this issue.

4."The Daily Times" of Lahore (June 21,2012) has quoted an unnamed leader of the PPP as saying as follows :"We will protest over this highly politicised and PPP-specific judgement, the way the democratic forces should protest yet will desist from taking it to a point of no return for the continuation of the current system and ensure a democratic transition." 

5.Now that the PPP  has decided to comply with the verdict against Mr.Gilani, the question is whether the confrontation between the Executive and the Judiciary at the institutional level and between Mr.Zardari and the Chief Justice at the personal level will continue and, if so, in what form and with what consequences.

6. While the analysts of the Pakistani political scene have focussed on the institutional confrontation between the Executive and the Judiciary, they have overlooked the personal confrontation between the Chief Justice and Mr.Zardari, which has also played a role in the dogged determination with which the two institutions have fought each other.

7. This personal confrontation had its roots in the lack of enthusiasm of Mr.Zardari for the re-appointment of Iftikhar Muhammad Chaudhry , who had been removed from office by Gen.Pervez Musharraf, as the Chief Justice and the nullification of  the National Reconciliation Ordinance (NRO) of Musharraf, which enabled Zardari and Benazir to return from political life and resume their political activities, by the Chief Justice after re-assuming office.. The nullification of the NRO created the danger of Mr.Zardari's election being questioned by the court at some stage. It was the NRO that removed the disqualification against Zardari on the ground that he was facing a criminal investigation.

8. The Chief Justice avoided creating the impression of his being vindictive against Mr.Zardari because of the latter's dragging his feet over the question of his re-appointment. He kept the pressure on Mr.Gilani, who was really carrying out the wishes of Mr.Zardari, and avoided directly targeting Mr.Zardari by questioning the legality of his election once the NRO was set aside.

9. The Chief Justice has hit out against Mr.Gilani directly and Mr.Zardari indirectly by framing the verdict of the bench headed by him as based on constitutional principles and not caused by personal petulance.The constitutional principle that he has asserted is that in determining the constitutionality of the actions of the Executive and the Parliament, the interpretation of the Judiciary will be final. This is a judicial position that nobody can question despite suspicions that exterior factors have influenced the judgement.

10.From the acceptance of the verdict by the Election Commission and the Government without delay, it is apparent that Mr.Zardari and his advisers have decided to come to terms with the  reality that in this case they are on a weak wicket.The Government's options have been reduced and it cannot hope to prevail ultimately in any confrontation with the judiciary presided over by the present Chief Justice on the question of asking the Swiss Government to re-open the investigation into the pending allegations against Mr.Zardari.

11.Will the court now ask the new Prime Minister to write to the Swiss Government? If so, will he do so? If he too refuses to do so, the drama could be repeated---- with the danger of Mr.Zardari becoming the direct  target on the ground that he was unable or unwilling to make his Prime Minister comply with the directive of the court.

12. These questions were posed by some journalists toBarrister AitzazAhsan, who represented  Mr.Gilani before the court. He has been quoted as replying as follows: " A decision would be taken in this regard once the court directs the new Prime Minister to do so." His reply gives no clue as to what the new Prime Minister might do.

13. However, there are other indicators which suggest that Mr.Zardari feels that the confrontation on this particular issue should not be allowed to reach a point of no return. Such a confrontation could be counter-productive. Among such indicators are the Government's  decision not to appeal against the judgement to a larger bench and to implement the verdict however unpalatable it might be.

14. The confrontation would most probably continue, but not necessarily on the issue of a letter to the Swiss Government. The Chief Justice, who was till now occupying the moral high ground, has been placed on the defensive by serious allegations of his sonArsalanIftikhar being the beneficiary of a financial relationship with a businessman of questionable credentials. Apparently realising that this case could be a mine-field , the Chief Justice has sought to pre-empt any allegations of inaction by him by suggesting an enquiry into the allegations against his son by the National Accountability Bureau.

15. This investigation could provide Mr.Zardari and his advisers with an opportunity to keep up the campaign to have the Chief Justice discredited.The confrontation will continue in other forms and other arena, but to describe the recent judgement disqualifying Mr.Gilani as a judicial coup would be overstating its significance and implications . ( 21-6-12)

( The writer is Additional Secretary (retd), Cabinet Secretariat, Govt of India, New Delhi, and, presently, Director, Institute For Topical Studies, Chennai, and Associate, Chennai Centre For China Studies. E-Mail: seventyone2@gmail.com . Twitter: @SORBONNE75 )

Corporate espionage via social media rampant in India Inc.: Survey

Thursday, June 14, 2012

Over 35 per cent of companies operating in various sectors across India are engaged in corporate espionage to gain advantage over their competitors and are even spying on their employees via social networking websites, according to a just concluded survey undertaken by apex industry body ASSOCHAM.

The Associated Chambers of Commerce and Industry of India (ASSOCHAM) carried out a covert survey during January-May and interacted with about 1,500 CEOs and EDs diverse sectors like – auto, biotech, BFSI(banking, financial services and insurance), consumer packaged goods, education, FMCG, healthcare, information technology (IT), infrastructure, manufacturing and telecom at Ahmedabad, Bangalore, Chennai, Delhi-NCR and Mumbai to ascertain the measures taken by India Inc to safeguard their data, plans, clients' details, products and other confidential and trade related secrets.

Besides, ASSOCHAM representatives also interacted with about 200 private eye agencies, corporate spooks, detective firms, surveillance agencies and trained sleuths in the aforesaid five cities.

"A whopping 350 respondents from detective firms said demand from companies in the IT-BPO, infrastructure, FMCG, banking, insurance, manufacturing and telecom sectors is overwhelming as they have large database, sensitive networks and information like research and development processes, innovations, product specifications, new marketing and sales strategies," said Mr D.S. Rawat, secretary general of ASSOCHAM while releasing the findings of the survey.

Almost all the company representatives in these domains acknowledged the prevalence of industrial espionage to gain access to information and steal trade secrets of their competitors through private deals with sleuths and spy agencies.

Almost 1,200 respondents from various companies said they take services of detectives and surveillance agencies to spy on their employees' lifestyle, keep a tab on their whereabouts constantly and even the ex-employees (esp. the ones who were laid off or were ousted for committing a fraud) apart from the usual pre and post-employment verification highlights the ASSOCHAM survey.

Companies who have strong unions and are vulnerable to pilferage hire spy agencies and plant an under-cover agent, a mole in minor job profiles in rival companies to ascertain if union leaders are getting paid for creating trouble, disclosed many detectives.

Besides, many senior officials even said they go for background check of an individual's commercial, criminal and financial records as part of an employment screening policy of their companies.

A staggering 1,110 respondents out of 1,500 top officials in various companies said they use social networking sites like Facebook, Twitter, YouTube, Google+, Linkedin, Friendster and others to dig out relevant information and keep a track of their rival companies and employees.

Many of these said they do monitor the developments in their rival companies through social media updates but they do take several corrective measures in this behalf to minimize the risks involved with social media usage and are educating their staff about misuse of social media tools and its backlash.

While about 900 said that apart from social media monitoring they also indulge in corporate espionage and bug offices of their rivals by planting a mole in other companies. Most of these said they generally plant people in minor job profiles like receptionists, peon, photo-copier and others.

About a quarter of respondents said they have hired computer experts for installing monitoring software to hack and crack the networks, track e-mails of their rivals and perform other covert activities.

Many employers said they have invested significant amount in installing spying gadgets in their office establishments to monitor website connections, phone calls and records, e-mails and review computer files of their employees and maintain a record of the same.

Demand for spying gadgets in India is rising at about 30 per cent and the market for spying equipments is currently poised at about Rs 4,500 crore with over 20 per cent of market being controlled by close-circuit television cameras (CCTVs), according to ASSOCHAM. Other significant spy gadgets include – audio/video surveillance devices, GPS tracking systems and other such tools.

June 19, 2012

US: The Great Correction Continues Correcting


Bill Bonner
Reckoning today from Baltimore, Maryland...

Overpaid b**tards!

You gotta love this Great Correction. It's gotten so much bad press. And so many people trying to stop it. But it just keeps going...doing its work. From Barry Ritholtz...

— There have been an average of 1.6 million nationwide foreclosure starts per year for the past five years.

— Foreclosure starts nationwide increased on an annual basis after 27 consecutive months of year-over-year declines.

— Bank repossessions are still down 18% year over year. Voluntary foreclosure freezes and increasing pre-foreclosure sales are the primary factors.

...2.8 million Americans are 12 months or more behind on their mortgages.

This truly amazing data point represents a very sad fact of the housing market. Once a homeowner falls that far behind in their mortgage, the odds are that they will never catch up. (Mortgage mods are likely to fail at an exceedingly high rate as well). Nearly all of these 2.8 million homes are likely to be some sort of distressed sale — short sale, auction, walkaway or foreclosure.

The bottom line is it means we are looking at a minimum of another 3 million homes going into foreclosure (or some variant) over the next few years.

Beyond the coming wave of foreclosures, credit availability is another factor holding housing activity down:

Since 2007, 19% of all borrowers (~9 million borrowers) have gone >90 days delinquent on their mortgages, or have had their mortgage liquidated.

In other words, one in five people who held or qualified for a mortgage not too long ago would not today. The 90 days delinquency on their credit reports prevents them from qualifying for a new mortgage.

This is a very significant data point to the idea of a housing turnaround. Why? Based on this delinquency alone, nearly all of these borrowers — about 9 million current homeowners — would be unable to qualify for [a] bank loan today. That is 9 million potential home buyers who are effectively barred from the market due to their credit scores. Removing that many people as potential home buyers amounts to a huge reduction in demand.

Isn't that terrible? No, it's just a correction correcting the overbuilding and overbuying in the housing market. And here's more correcting.... 
(Reuters) — New claims for US state jobless benefits rose for the fifth time in six weeks and consumer prices fell in May...
Terrible again, right? Wrong...the correction is doing what it's supposed to do. Bloomberg:
Americans are digging themselves out of mortgage debt. 

Home equity in the first quarter rose to $6.7 trillion, the highest level since 2008, as homeowners taking advantage of record-low borrowing costs to refinance their loans brought cash to the table to pay down principal. The 7.3 percent gain was the biggest jump in more than 60 years, according to an analysis by Bloomberg of Federal Reserve data. 

Residential mortgage debt peaked in 2007 at $10.6 trillion, doubling in six years, according to Fed data. Since then, it has fallen 7 percent as the value [of] all residential property has dropped 23 percent.
But the correction is not correcting the sector that needs correction most. The financial sector. Why? The feds protect it.

While the private sector digs out from under the burden of a debt bubble, the financial sector profits from federal giveaways. Wall Street CEO pay rose 20% in 2011. And here's our new friend, Barry Dyke, reporting and commenting:
...while Main Street net worth has been pummeled, Wall Street asset managers' compensation is soaring. In his new book, the author documents the explosion of the investment asset management business — which he calls the "asset management industrial complex" where managers are guaranteed Olympian paydays and consumers are left holding the bag with poor investment performance.

The current financial report card for Main Street Americans is grim. In June 2012, the Federal Reserve reported that the median net worth of families plunged by 39% in just three years from $126,400 in 2007 to $77,000 in 2010. According to the Fed, the financial crisis, which began in 2007, wiped out nearly two decades of wealth — with middle class families bearing the brunt of the decline. This puts Americans roughly in the financial position they were in 1992. In three years, Americans saw two decades of economic efforts vaporize. 

Much of Americans' wealth resides in retirement plans managed by the asset management industrial complex (mutual funds, private equity, hedge funds, banks, etc.) — which the author estimates to be a minimum $18 trillion. However, management fees eat up investor returns — creating headwinds virtually impossible to overcome. The author, citing Morningstar data, estimates that mutual fund shareholders — where most 401(k) funds reside — pay a minimum of 0.90 percent for every $10 thousand invested (and much higher when trading costs and other costs are factored in). Private equity and hedge fund managers—extract a much higher fee schedule, commanding 2 to 3% manager fee, plus 20 to 30% incentive compensation fee known as "carried interest." [Private equity is where Presidential Candidate Mitt Romney made his fortune]. 

The author comments, "On a whole, investment performance from highly paid investment managers has been horrible over extended periods of time. According to Morningstar, over 61 percent of stock mutual funds have lagged the S&P 500 index over the past five years. In 2011, only 20 percent of funds beat the Standard & Poor's 500-stock index, the worst showing for active fund manages in over a decade. Returns for private equity and hedge funds [both get much of their money from state pension funds] have been inconsistent, opaque, self-serving and hard to measure." 

However, asset managers saw their compensation soar. According to reports filed with the SEC in 2012, in reporting to go public, the private equity firm The Carlyle Group [which gets a great of investment money from state pension giant CalPERS] reported that three billionaire founders David Rubinstein, William Conway and Daniel D'Aniello reported a combined payday of $402 million in 2011. Most of this compensation was in cash dividends, where financiers enjoy a highly favorable 15% capital gains taxation rate on income. 

The author details one of the greatest compensation crimes in 2008 when Citigroup and Merrill Lynch blew up and had to be bailed out by taxpayers for their failed cataclysmic bets in subprime mortgages. Citigroup lost $27.7 billion yet paid its top bankers $5.33 billion in bonuses. [In the same year Citigroup froze its cash balance pension plan for rank-and-file employees]. Merrill Lynch lost $27.6 billion and paid its top bankers $3.6 billion in bonuses. In 2011, Robert P. Kelly, CEO of Bank of NYMellon, a giant asset manager, got $33.8 million in severance and benefits as an exit package in 2011 just prior to the bank being sued by the US Justice Department for allegedly overcharging pension clients as much as $2 billion over a ten year period. Prior to this, Kelly was CFO of Wachovia, a failed bank which is now part of Wells Fargo. Not only were the banks bailed out during the crisis, most of the mutual industry was bailed out by the Federal Reserve.

Bill Bonner
for The Daily Reckoning

India: the US doormat into Asia?

Kautilya observes:
                  "One shall make an alliance with a king who is stronger than one's neighbouring enemy; in the absence of such a king, one should ingratiate oneself with one's neighbouring enemy, either by supplying money or army or by ceding a part of one's territory and keeping oneself aloof; for there can be no greater evil to kings than alliance with a king of considerable power, unless one is actually attacked by one's enemy."

The author has written since retirement in 1996 from Ankara that US would like to use India as it used Iarq against Iran in 1980s and West created and used Pakistan against India .Look at Iarq and Pakistan. There are so many Indians who promote US viewpoint ( daily on most TV Channels ) for so little , many brain washed , others bribed with little . 

Why was mama Clinton so keen to meet with the Governor in Kolkata .Washington had a good thing going till recently . 

India: the US doormat into Asia?
By Vijay Prashad 

A mid-level officer of the Indian Foreign Ministry told me that he was startled by the language used by US Defense Secretary Leon Panetta during his visit to India on June 6. India, Panetta said, is the "lynchpin" in US plans to "rebalance towards the Asia-Pacific region". The officer said that at one point Panetta had said India is the US "doorway into Asia". At least two of the Indian officials in the room later joked that he should have said that India is the US's doormat into Asia. 

Panetta had come to Delhi with a brief that was uncomplicated but not conducive to peace. Panetta's objectives, and that of the third India-US Strategic Dialogue (which began on June 13), seem obliged to isolate three major actors in Asia: China, Iran and Pakistan. The "rebalancing" is not intended to bring these crucial
countries to the table to discuss areas of common interest, such as the imbroglio in Afghanistan, the question of energy security and the unsettled border and security disputes between these countries. 

The US has sought an alliance with India for the past decade with the aim of putting pressure on China, of balancing out its reliance upon Pakistan's geographic location, and of isolating Iran in the forums of the non-aligned world (as well as enhancing access for US firms into the Indian market). These are not pathways to peace. They are precisely the opposite. 

Panetta's short-term objective in Delhi was to bring India more firmly into its Afghan operations. He came to India seeking Indian monetary and military assistance for the Afghan mission of the North Atlantic Treaty Organization (NATO). Indian tanks are not going to be airlifted into Kabul anytime soon, although this remains on the agenda. As a precursor, the Indians were asked to increase their reconstruction commitments. 

Whether Panetta's goal is to actually have Indian tanks in Afghanistan seems unclear. What is obvious, however, is that this is an unsubtle way to put pressure on Islamabad to desist from its refusal to allow NATO material to transit from Karachi's port through Torkham into Afghanistan. The US is currently spending upwards of $100 million per day more than beforehand to get its goods into Afghanistan through Central Asia. During Panetta's Delhi visit, the US fired its drones for the ninth time since the Chicago North Atlantic Treaty Organization summit in May, killing three people. The continuation of the drone program has soured the relationship between Islamabad and Washington. Pakistan's Asif Ali Zardari is locked into his presidential residence, afraid of his people and terrified of their reaction if he gives in, once more, to the US. 

What Zardari and the Pakistani military fear more than their own people, however, is the US pivot toward India. The sense that India has used its relationship with Kabul to encircle Pakistan is very strong amongst the ruling circles. Panetta might be playing up the US request for Indian extension into Afghanistan to pressure Pakistan to open up the doors for NATO trucks. 

Nevertheless, to facilitate the short-term objectives of the Obama administration, Panetta is stoking the flames between India and Pakistan. India's natural policy should be to calm tensions with Islamabad rather than to be yoked into a cynical ploy to increase anxiety for US ends. But this policy is of a piece with the US-orchestrated tension between Iran and its neighbors. That the US can assume that there can be peace in Afghanistan without Iranian, Indian, Pakistani and Chinese cooperation is remarkable. 

Iran In 2004, the US opened a new door to India that occasioned Delhi closing its own open door with Iran. The George W Bush administration wanted India to scuttle or put on hold its natural gas pipeline project that would have run from Iran to India via Pakistan (for good reason was it called the Peace Pipeline). Instead, the US promised a new strategic partnership with India, including the provision of nuclear fuel, if India would vote with the US against Iran in the International Atomic Energy Agency in 2005. 

A summary cable from US Ambassador India David Mulford to the State Department put the case for a quid pro quo plainly, "Many in Congress and throughout Washington, [Mulford] reminded [Indian Foreign Secretary Shyam] Saran, were watching India's treatment of Iran prior to Congressional debate on the US-India civilian nuclear initiative." 

Why was India's vote so important? 

"India had a key voice in the [Non-Aligned Movement] and could swing opinion in the [IAEA Board of Governors]; it was time, [Mulford] said, for us to know where India stood." India voted with the US against Iran, earned a nuclear deal and started a US-India Strategic Dialogue (the first round began formally in 2010). The nuclear deal led, during this Strategic Dialogue, to a memorandum for Westinghouse (Toshiba) to build a 1000 mw reactor in Gujarat. 
During the Obama years, the Strategic Dialogue picked up and so did the pressure on Indo-Iranian relations. India is a major importer of Iranian oil. The US sanctions on Iran exceed the UN sanctions. India accepted the latter, but not the former. Nevertheless, concerted pressure from the US pushed India to reduce its imports from Iran - Iran used to cover 20% of Indian fuel needs, and now covers just under 10%. The shortfall was made up by Saudi exports to India (the India-Saudi partnership was inked in 2010), although Indian processers are geared to Iranian and not Saudi oil. 

Two days before the current India-US Strategic Dialogue, the US government issued waivers to six countries that had showed good faith attempts to reduce their commercial interactions with Iran. Among those countries was India. "It was a great relief," said a member of the Indian Foreign Ministry. Even though India had said it would ignore the US sanctions, it had become plain that Washington was not going to tolerate this. The waiver allowed the US and India to go forward with their longer-term harmonization despite this objective roadblock. 

That longer-term project circles around China. It did not go unnoticed that the one Asian country that continues to buy Iranian oil and was not given a US waiver was China. 

The language at the Strategic Dialogue was boilerplate, almost generated by a computer generated program: "shared democratic values", "diplomatic priorities", "strategic fundamentals", and "convergence of values". This was the least informative part of the conversation. The more revealing statement came from Panetta on June 6 in Delhi. "We will expand our military partnerships and our presence in the arc extending from the Western Pacific and East Asia into the Indian Ocean region and South Asia." The putative matter here is piracy and terrorism. 

Panetta's "arc" stretches from the US bases in Japan to the new marine presence in Australia to the Indian and US warships that patrol the Indian Ocean through the US bases in Central Asia. NATO's program, "Partners Across the Globe," includes Mongolia, Japan, the Republic of Korea, New Zealand, Australia, Pakistan, Afghanistan, and Iraq. This list runs from East to West as does Panetta's "arc," with China inside the ring, encircled. 

This network has created anxiety in Beijing. When Panetta was in Delhi, India's Foreign Minister S M Krishna was in China for the Shanghai Cooperation Organization meeting. Chinese Vice Premier Li Keqiang took Krishna aside and told him that the real relationship of the 21st century was not between the US and India, but between India and China. Krishna was forced to agree, pointing out that India and China share "one of the most important bilateral relationships in the world". 

US arms sales to India have increased since 2002, including aircraft to increase Indian strategic lift capability and radar detection and maritime surveillance. Indian ships are now patrolling the Straits of Malacca, the crucial transit point for Chinese goods ships (including oil tankers). Since 2001, the US and India have conducted more than 50 military exercises to increase "functional interoperability" between their armed forces. The Strategic Dialogue pledged to increase these maneuvers. 

Panetta told the Institute for Defense Studies and Analyses that the US would increase arms sales despite unsigned agreements on logistics support and transfer of secure and encrypted communications systems. He also said that the US was prepared to begin joint-production ventures for armaments in India. 

It would be a disaster for Asia if India were to fully adopt the US perspective, which is not to build peace in the region but to use its military force multiplier to contain Chinese economic ambitions. The myopic policy toward Iran means that that US has inflamed tensions in West Asia, by allowing the Gulf Arabs to paint the Arab Spring as a Shia-Sunni tussle rather than as a popular uprising against authoritarian regimes. As long as the US believes that the pressure cooker on Syria impacts on Iranian ambitions in the region, ordinary Syrians will suffer with their lives. 
The failure to engage with Iran as a player in the region means that the US loses a major partner for the stability of Afghanistan and Iraq. There can be no peaceful solution for Afghanistan without an entente between its neighbors, including Iran and China. 

By many indications, India has accepted the broad policy orientation of the US on Iran, and to a lesser extent on Afghanistan. On China there is less harmony. Defense Minister A K Anthony told the press shortly after Panetta's visit that there is a need to "strengthen the multilateral security architecture" and to "move at a pace comfortable to all countries concerned." 

The sliver of light between India and the US on China gives hope that India has not fully renounced its commitments to multilateralism and to regionalism. It is not yet the doormat of US ambitions. 

Vijay Prashad is Professor and Director of International Studies at Trinity College, Hartford, United States. This spring he will publish two books: Arab Spring, Libyan Winter (AK Press) and Uncle Swami: South Asians in America Today (New Press). He is the author ofDarker Nations: A People's History of the Third World (New Press), which won the 2009 Muzaffar Ahmed Book Prize. 

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