Puppet MastersS

Arrow Up

Robert Wenzel's Speech At The Federal Reserve Bank

At the invitation of the New York Federal Reserve Bank, I spoke and had lunch in the bank's Liberty Room. Below are my prepared remarks.

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Thank you very much for inviting me to speak here at the New York Federal Reserve Bank.

Intellectual discourse is, of course, extraordinarily valuable in reaching truth. In this sense, I welcome the opportunity to discuss my views on the economy and monetary policy and how they may differ with those of you here at the Fed.

That said, I suspect my views are so different from those of you here today that my comments will be a complete failure in convincing you to do what I believe should be done, which is to close down the entire Federal Reserve System

My views, I suspect, differ from beginning to end. From the proper methodology to be used in the science of economics, to the manner in which the macro-economy functions, to the role of the Federal Reserve, and to the accomplishments of the Federal Reserve, I stand here confused as to how you see the world so differently than I do.

I simply do not understand most of the thinking that goes on here at the Fed and I do not understand how this thinking can go on when in my view it smacks up against reality.

Please allow me to begin with methodology, I hold the view developed by such great economic thinkers as Ludwig von Mises, Friedrich Hayek and Murray Rothbard that there are no constants in the science of economics similar to those in the physical sciences.

In the science of physics, we know that water freezes at 32 degrees. We can predict with immense accuracy exactly how far a rocket ship will travel filled with 500 gallons of fuel. There is preciseness because there are constants, which do not change and upon which equations can be constructed..

There are no such constants in the field of economics since the science of economics deals with human action, which can change at any time. If potato prices remain the same for 10 weeks, it does not mean they will be the same the following day. I defy anyone in this room to provide me with a constant in the field of economics that has the same unchanging constancy that exists in the fields of physics or chemistry.

And yet, in paper after paper here at the Federal Reserve, I see equations built as though constants do exist. It is as if one were to assume a constant relationship existed between interest rates here and in Russia and throughout the world, and create equations based on this belief and then attempt to trade based on these equations. That was tried and the result was the blow up of the fund Long Term Capital Management, a blow up that resulted in high level meetings in this very building.

It is as if traders assumed a given default rate was constant for subprime mortgage paper and traded on that belief. Only to see it blow up in their faces, as it did, again, with intense meetings being held in this very building.

Yet, the equations, assuming constants, continue to be published in papers throughout the Fed system. I scratch my head.

Arrow Up

'United We Stand, Divided We Fall'

© Daily News, Sri Lanka
The ancient Greek storyteller Aesop told a tale in which a lion tried to attack four oxen, who would turn their tails to one another so that their horns faced the lion whichever way he approached them. However, the oxen quarrelled, and the lion attacked each separately in turn and overcame them.

At the end of each of his stories, Aesop would add an aphorism. In the case of 'The Four Oxen and the Lion', it was 'United we stand, divided we fall'. This ancient maxim holds true to this day.

It was to overcome the barrier of solidarity that Julius Caesar advocated the policy of 'divide et impera' - divide and rule - which has remained the guiding principle of imperialists up to modern times.

The imperialists of the 'Age of Imperialism' were superlative opportunists and improvisers, taking situations as they saw them and turning them to their advantage. The principle of divide and rule was applied using whatever human material came to hand, multiplying small irritations to create partitions in the colonised societies.

Conflicting populations

In Rwanda-Burundi, the Germans and their successors, the Belgians, elevated Tutsis above Hutus, creating caste conflict. In India, the British Raj put Muslim rulers over Hindu subjects and vice versa. In Nigeria, the British set the Ibos against the Hausas and in Sudan they created divisions between the Muslim North and the Christian South.

Where there was no dissension, the imperialists imported irritant populations - the prototype being Ireland, with 'plantations' of Scottish Protestants among the Roman Catholic population. The Boers were already in situ in South Africa - to be used against the Black and Coloured people. In North Africa the French settled 'Colons' from Metropolitan France among the Muslim population. In Uganda (the first 'promised land' of the Zionists led by Herzl) the British first toyed with the prospect of introducing Jews. However, Indian traders were found to fill the required niche quite well. In Sri Lanka, Malaysia and the West Indies, Indian Tamil indentured labourers were employed to divide the people at the lowest level.


27 injured as blasts rock Ukrainian city, Opposition fingers government

© Sergei Isayev/ReutersPolicemen walk at the scene of an explosion in Dnipropetrovsk, April 27, 2012.
A series of blasts rocked an eastern Ukrainian city on Friday, injuring 27 people, including nine teenagers, in what authorities say they believe was a terrorist attack.

Top law enforcement officials rushed to Dnipropetrovsk, 400 kilometres southeast of Kyiv, to investigate but there was no immediate claim of responsibility. The violence undermined Ukraine's security just weeks before it co-hosts the European soccer championships in June.

President Viktor Yanukovych vowed to investigate and punish the perpetrators.

"This is yet another challenge for us, for the whole country," Mr. Yanukovych told reporters in televised comments. "We will think of how to respond to this properly."

Ukraine has not been afflicted with political terrorism but there have been previous explosions connected to criminal extortion.

Arrow Down

Private Wall Street Ratings Agency Downgrades Spain's Credit Rating

We decide who stays poor and who becomes poorer
Standard & Poor's drops rating from A to BBB+ and warns that Spain's recession is likely to deepen by the end of the year

Spain's precarious economic situation has worsened after the ratings agency Standard & Poor's downgraded the country's debt and warned that its recession was likely to deepen by the end of the year.

S&P cut the rating on Spain's debt mountain by two notches, from A to BBB+. The downgrade is expected to push up the cost of borrowing immediately, as investors become increasingly worried over Madrid's inability to cut spending without sending its beleaguered economy into a deeper recession.

European leaders have feared that investors, who have watched the unfolding euro crisis over the last two years, would withdraw their support for Spain in response to the increased risk that it will be forced to accept a multi-billion-euro rescue package from Brussels.

Comment: The Spanish government is preparing for trouble:

Spain plans 'draconian' new social networking laws in street protest clampdown

Spain to Close Border for Summit of the European Central Bank


Retired British man extradited to US, charged with supplying weapons to Iran

© Beretta/Sims/Rex FeaturesSet up? Chris Tappin, the retired British businessman charged with trying to sell missile parts to Iran.
A retired British businessman who was extradited to the US in February on charges of dealing arms to Iran, has denied any connection with terrorism and claimed he was the victim of an FBI sting operation.

Chris Tappin, 65 who was released on bail after his family paid $50,000 (£31,026) of a $1m (£620,527) bond, said: "I'm not a terrorist. I've never had any connections with terrorism and I'm just appalled that things could come to this stage."

Speaking to the BBC after a Texas court freed him on the condition that he wear an electronic tag and agree to have his emails monitored, Tappin said: "I didn't know these batteries were for hawk missiles and ... I didn't know they were destined for Iran."


Troop Movements: 9,000 Marines to be relocated from Japan

© REUTERS/Issei KatoHercules aircraft are parked on the tarmac at Marine Corps Air Station Futenma in Ginowan on Okinawa May 3, 2010.
The United States and Japan announced on Thursday a revised agreement on streamlining the U.S. military presence on Okinawa that will shift 9,000 Marines from the southern Japanese island to Guam and other Asia-Pacific sites.

The new plan, unveiled days before Japanese Prime Minister Yoshihiko Noda meets President Barack Obama in Washington, helps the allies work around the central but still-unresolved dispute over moving the Futenma air base from a crowded part of Okinawa to a new site that has vexed relations for years.

"I am very pleased that, after many years, we have reached this important agreement and plan of action. I applaud the hard work and effort that went into crafting it," U.S. Defense Secretary Leon Panetta said in a statement.

"Japan is not just a close ally, but also a close friend."

Under the agreement, 9,000 U.S. Marines will be relocated. Five thousand will go to Guam and the rest to other sites such as Hawaii and Australia, a joint U.S.-Japanese statement said.

The updated version of a long-delayed 2006 plan was needed to achieve "a U.S. force posture in the Asia-Pacific region that is more geographically distributed, operationally resilient and politically sustainable," the statement said.

Bad Guys

A Spanish Company Known As Scytl Will Be Reporting Election Results For Hundreds of U.S. Jurisdictions

vote US
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Do you know who is going to be counting the votes on Election Day 2012? Most Americans never even think about this. Most Americans just assume that their votes will count and that the government will ensure that the counting process is done honestly and fairly. But is this really the case?

Sadly, the vast majority of people never take the time to "look behind the curtain" to see how things really work. If they did, they might find themselves extremely upset about what they would find.

The integrity of our voting process is of the utmost importance. If we do not have the ballot box, then what avenues for changing our government do we have left? Unfortunately, the integrity of our elections has been called into question quite a few times in recent years, and now a Spanish company known as Scytl will be involved in reporting election results for hundreds of jurisdictions across the United States this upcoming election day. Will those election results be accurate?

It is absolutely amazing that a foreign company has been able to gain such control over the reporting of election results in the United States without it ever making a significant splash in the mainstream media.

You would think that there would be a law against this sort of thing, but apparently there is not.

Eye 2

Israel court throws out appeals of Palestinian hunger-striking prisoners

1,350 prisoners have begun open-ended hunger strike
An Israeli military court on Monday rejected appeals by two Palestinian prisoners who have been refusing food for 55 days, their lawyer and a Palestinian prisoner rights NGO said.

"We just confirmed with Bilal Diab and Thaer Halahla's families that both their appeals were rejected today," a spokeswoman for prisoner rights group Addameer said.

Diab, 27, and Halahla, 34, began refusing food on February 29 in protest at being held without charge under a procedure known as administrative detention, which means they can be held for renewable periods of up to six months.

They are being held in the hospital wing of Ramle prison near Tel Aviv, with their condition described as "rapidly deteriorating."

Their lawyer, Jamil al-Khatib, confirmed the military judge had rejected their appeals after holding a closed meeting with members of Israel's Shin Bet internal security service and the military advocate general.


Torture Case of Padilla Comes Before the Supreme Court After Being Thrown Out By Lower Courts

Jose padilla
Jose Padilla - gang member - patsy
"It is hard to conceive of a more profound constitutional violation than the torture of a US citizen on US soil," wrote lawyers for Jose Padilla in a petition filed Monday with the US Supreme Court. A lawsuit brought by Padilla, who was illegally "disappeared," imprisoned and tortured by the US government for four years, was thrown out by lower courts on the grounds that the courts have no authority to subject the wartime actions of the executive branch to "judicial scrutiny."

Padilla's treatment constituted a test case for the incommunicado detention and torture of US citizens by the military without any judicial process. The Padilla case, as much as any other to date, illustrates the disintegration of democracy in the US and the erection of the legal scaffolding of a police state.

According to the precedent set by the Padilla case, federal authorities and the military may unilaterally abduct, imprison and torture a US citizen, in clear violation of the Bill of Rights, without anyone ever being held accountable. If this can be done to one individual, there is nothing in principle preventing the government from doing it to hundreds or thousands or millions of individuals.

Red Flag

Best of the Web: Torture of US Citizens and the Complicity of Federal Judges

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© AFP/Getty Images/File Win McNamee
The Supreme Court is asked to decide if government officials can be held accountable for torturing a US citizen

Two of the most under-discussed afflictions in American political life are inter-related: (1) the heinous, inhumane treatment of prisoners on American soil (often, though certainly not exclusively, Muslim political prisoners), and (2) the virtually complete abdication by subservient federal courts in the post-9/11 era of their duty to hold Executive Branch officials accountable for unconstitutional and otherwise illegal acts in the War on Terror context. Those two disgraceful American trends are vividly illustrated by juxtaposing two events, which I happened to be reminded of yesterday while looking for something else; first, from a January, 27, 2007, article in The Washington Post:
The prime minister of Canada apologized Friday to Maher Arar and agreed to give $9 million in compensation to the Canadian Arab, who was spirited by U.S. agents to Syria and tortured there after being falsely named as a terrorism suspect.

Arar, 36, a former computer engineer who was detained while changing planes at a New York airport in 2002 and imprisoned in a Syrian dungeon for 10 months, said after the announcement that he "feels proud as a Canadian". . . .

"We cannot go back and fix the injustice that occurred to Mr. Arar," Prime Minister Stephen Harper said in issuing the formal apology in Ottawa. "However, we can make changes to lessen the likelihood that something like this will ever happen again." The head of the Royal Canadian Mounted Police resigned over the affair, and the government has pledged to increase oversight of its intelligence agencies. . . .

The financial compensation settles a claim Arar made against the government for having provided exaggerated and false information to the United States that identified him as a terrorist suspect. Harper said the amount "is within this government's realistic assessment of what Mr. Arar would have won in a lawsuit." His attorneys also were awarded about $870,000 in legal fees.

"The evidence is clear that Mr. Arar has been treated unjustly. He should not be on a watch list," Harper said.
And then this Christian Science Monitor article from June 14, 2010:
A Canadian citizen has lost his bid to hold US officials accountable for their decision to label him an Al Qaeda suspect and deport him to Syria where he was held without charge for a year and allegedly tortured during US-directed interrogations.

The US Supreme Court on Monday declined to take up the case of Maher Arar, who was born in Syria but had lived in Canada since his teens. . . .

Arar filed a lawsuit in the US seeking to hold American officials accountable for their actions. . . . To date, the US government position on Arar has been to insist that Arar has no legal right to seek to hold American officials accountable for his ordeal.

In denying review of Arar's case, the high court lets stand a 7 to 4 ruling by the full Second US Circuit Court of Appeals in New York. That court found that because of "special factors" involving national security, Arar's lawsuit should be dismissed.