By JIM ABRAMS, Associated Press Writer 2 hours, 18 minutes ago
WASHINGTON - After two weeks of anguishing debate, Congress has passed and President Bush signed a massive plan to save the financial industry and the economy at large from an unthinkable free fall. Now, the world holds its breath, seeing if it will work.
Passage of the $700 billion financial rescue package came after Treasury Secretary Henry Paulson at a meeting last month shocked congressional leaders into action by warning of pending economic collapse without immediate congressional intervention.
Paulson said after the climactic House vote Friday that he already had staff working out details and was lining up advisers from outside the government to get the money flowing.
The immediate response to the 263-171 vote was not promising. Wall Street, which plunged a record 778 points after the House initially rejected the bill last Monday, fell 157 points on Friday as more economic bad news, such as a jump in job losses, outweighed news that Congress was finally coming to the rescue.
Still, Bush and Congress made clear that the legislation was urgent and vital. “We have acted boldly to help prevent the crisis on Wall Street from becoming a crisis in communities across our country,” Bush said after the House vote. He acknowledged that “our economy continues to face serious challenges.”
“We know that if we do nothing this crisis is likely to worsen and put us in a slump the likes of which most of us have never seen,” said House Republican leader John Boehner, R-Ohio, who worked with House and Senate Republican and Democratic leaders in a rare bipartisan response to what both parties saw as a dire threat to the nation’s economic well-being.
“We are addressing the real pain felt by Mr. and Mrs. Jones on Main Street,” House Speaker Nancy Pelosi, D-Calif., said. “They are why we must pass this legislation today.”
The legislation gives the government broad authority to buy up toxic mortgage-related investments and other distressed assets from shaky financial institutions. The hope is that it will restore confidence in markets and thaw a near-freeze in credit availability that has begun to affect the ability of community banks to loan, businesses to obtain money for payrolls and investments and individuals from getting credit to buy a home or a car.
The measure, in another effort to help smaller banks with serious liquidity problems, also raised the ceiling on federally insured deposits from $100,000 to $250,000. It increases federal oversight over Wall Street transactions and assures that CEOs whose companies benefit from the bailout don’t leave with huge golden parachute payoffs.
Rep. Barney Frank, D-Mass., the Financial Services Committee chairman and a key negotiator over the past weeks, said the measure was just the beginning of a much larger task Congress will tackle next year: overhauling housing policy and financial regulation in a legislative effort comparable to the New Deal.
The political story preceding the House vote Friday was nearly as dramatic as the financial and economic upheavals going on outside Washington.
Last Monday, despite urgent pleas from Bush and his senior financial advisers and the support of congressional leaders, the House voted 228-205 to reject the rescue plan. Stock markets around the world plunged, then recovered to some extent, as economists warned that not since the Great Depression had the United States faced such a crisis.
But the 95 Democrats and 133 Republicans who voted against the bill were responding to a deluge of calls and messages from their constituents demanding that they defeat what many saw as a $700 billion giveaway to Wall Street when average Americans were getting no help.
On Wednesday, the Senate, shortly before it recessed for the election, stepped in, voting 74-25 for a package that linked the rescue bill to a giant bill extending popular tax breaks such as the research-and-development tax credit, providing incentives for renewable energy resources and giving tax relief to disaster victims. That bill, costing an additional $110 billion, included a measure to give benefits parity to people with mental health problems. The Senate also added the boost in the ceiling for bank deposits.
Those additions were enough to sway some House members who voted “no” the first time around. Others were swamped by calls from business and political leaders warning of the possible consequences of inaction.
“I’ve never talked to as many bank presidents in my life,” said Rep. Joe Knollenberg, R-Mich., who said he had also been lobbied by General Motors CEO Rick Wagoner and other auto executives.
California Gov. Arnold Schwarzenegger sent out a letter warning that, absent a clear resolution to the financial crisis, California and other states “may be unable to obtain the necessary level of financing to maintain government operations and may be forced to turn to the federal Treasury for short-term financing.”
The two presidential candidates also weighed in. Democrat Barack Obama spoke to many in the Congressional Black Caucus and helped persuade 13 to switch their votes. Nine freshmen Democrats also switched to “yes” votes after a conference call with Obama in which he promised an economic stimulus bill would be a top priority if he is elected.
Republican John McCain also lobbied for the measure, according to aides who declined to release a list of lawmakers he called.
“It’s disgusting that we would ever be brought to this floor to cast this vote,” said Rep. Zach Wamp of Tennessee, a Republican who changed to a “yes” vote. But “Congress has to act. We are out of options. Hold your hand over your heart and vote ‘yes.’”
Not all were convinced. “The Treasury plan throws an ungodly amount at Wall Street,” said Rep. Marcy Kaptur, D-Ohio. “This is just an end run around, right before an election. Pray for our republic.”
In the end, 33 Democrats and 25 Republicans switched from opposition to support. In all, 91 Republicans joined 172 Democrats to support the measure while 108 Republicans and 63 Democrats voted ‘no.”
Less than two weeks after Uncle Sam gave American International Group (AIG) an $85 billion loan - staving off financial collapse - execs from one of its insurance subsidiaries, AIG American General, gathered for a conference at the uber-swank St. Regis Monarch Beach Resort, billed as “California’s only Mobil Travel Guide Five-Star Resort,” where ocean-view rooms start at $565 a night and “world class luxury” is the rule.
On Friday, before the presidential debate got under way, caterers for the St. Regis were setting up dozens of tables on the grounds of Mission San Juan Capistrano for AIG American General’s sumptuous off-site dinner. Tables were draped with soft Tuscan-gold tablecloths that cascaded to the grass; elegant fresh flower centerpiece graced each table; and what appeared to be fine crystal stemware, at least from a distance, glistened in the fading light.
Workers set up a lengthy bar stocked with bottles of liquor. A half-dozen tall space heaters stood sentinel in case the evening turned cool. There was a large center stage with lighting and a sound system, and once the sun went down, the whole scene took on a magical patina as tiny white lights twinkled in the trees.
The Watchdog - and the Outraged Taxpayer who alerted us to the situation - understand that corporate events such as these are planned many months in advance. I mean, really. Who could have known in the spring that there’d be Financial Armageddon in the fall?
But still. “The inappropriateness and the excessiveness just blew us away,” said the Outraged Taxpayer, who went to the Mission Friday to pray in the chapel. “It’s outrageous. In very poor taste. Over the top.”
AIG says it’s not what it seems.
The St. Regis conference included recognition for vital independent agents who distribute AIG American General’s products - insurance for individuals and businesses. AIG American General - a subsidiary of parent AIG - is in much, much better financial shape than AIG itself. ”It’s one of our viable businesses,” said AIG spokesman Joseph Norton. “They’re fully capitalized. They’re fine. It wasn’t a corporate kind of thing.”
Appearance, though, is powerful.
“When people hear things like this, it makes it difficult to sell people on a bailout plan,” said Tara Setmayer, communications director for Congressman Dana Rohrabacher, who opposes a bailout. “Of course the events are planned in advance, but from a PR perspective, it doesn’t go over well.”
Like every congressional office, Rohrabacher’s was inundated with outraged calls and emails opposing a bailout. ”No one is bailing us out!” Average Joes were saying. “Why should we bail out those Wall Street fat cats?”
(Suggestion to those crafting the next bailout - er, ”rescue’ - bill: Consider a cap on expenses as well as executive compensation?)
Looks like Lehman Bros., Freddie Mac, and Fannie Mae all had large enough pockets to carry three Democrat presidential nominees.
Investigation in Process:
-An analysis of campaign finance records shows that about two-thirds of his bundlers are concentrated in four major industries: law, securities and investments, real estate and entertainment. Lawyers make up the largest group, numbering ro More..ughly 130, with many of them working for firms that also have lobbying arms. At least 100 Obama bundlers are top executives or brokers from investment businesses: nearly two dozen work for financial titans like Lehman Brothers, Goldman Sachs or Citigroup. About 40 others come from the real estate industry. (”Big Donors, Too, Have Seats At Obama Fund-Raising Table” The New York Times August 6, 2008)
-Mr. Roosevelt, a managing director at Lehman Brothers attended the [campaign] event with his wife, Constance Lane Rogers, a registered Democrat and Kerry supporter. “I wanted to see what [Senator Kerry] had to say, and I thought he did a very good job,” he said.
Mr. Roosevelt was not the only Republican at the Kerry gala. Stephen Robert, the chairman of Robert Capital Management and a lifelong Republican, was granted a seat of honor at Mr. Kerry’s table alongside Democratic stalwarts like Ambassador Carl Spielvogel and former Clinton adviser Peter Stamos, in recognition of the more than $100,000 he raised for the event. Ari Kopelman, the chief executive of Chanel and another Republican stalwart, held court at his table just a few feet away. Bruce Rabb, a former Nixon aide whose father, Maxwell Rabb, served in the Eisenhower administration, took several tables. So did former Republican strategist Tanya Melich and investor Clifton Roberts. When Senator Kerry’s finance chairman, Hassan Nemazee, delivered the evening’s opening address, he recognized all these G.O.P. converts and many more, saying, “We are united tonight: Democrats, independents and, yes, Republicans.” (New York Observer April 26, 2004)
-”To be sure, inside-the-Beltway betting is that if Gore wins, he might appoint James Johnson, former chief executive of Fannie Mae, to the Treasury post. Or he might reappoint Rubin’s former deputy, Lawrence Summers, who just got the job this month. But even if they don’t want to be Treasury secretary, cultivating access to power in Washington can be useful for top investment bankers.
“So much of the financial world intersects and interacts with the government sector — whether in legislation, taxes, or contacts — having access to decision makers is an asset, and it’s one you have to cultivate,” says Samuel Hayes, professor emeritus at the Harvard Business School.
“It’s no secret why so many of the financial mavens of the political campaigns come from Wall Street. That’s where the money is,” Hayes adds.
Some securities firms, such as Goldman, historically have had a relatively liberal political bent.
Indeed, it is the Democratic challenger Bradley who now could well have the most high-profile Wall Street support. He has been actively tapping ties to that area he forged as a former U.S. senator from New Jersey who played basketball with the New York Knicks and at Princeton University.
Among Wall Street luminaries who have hosted or plan to host Bradley fund-raisers are Douglas A. Warner, chairman of J.P. Morgan & Co.; Richard Fuld, chairman and chief executive of Lehman Brothers Holdings Inc.; and John “Launny” Steffens, a Princeton, N.J., resident who leads the brokerage operations at Merrill. Another key Bradley fund-raiser has been investment banker Louis B. Susman of Citigroup Inc.’s Salomon Smith Barney unit.” (Arkansas Democrat-Gazette May 25, 1999, Tuesday)
-In turning to Johnson, Kerry picked someone who grew up in politics. His father, Alfred Johnson, a grocer, became DFL speaker of the Minnesota House. Jim Johnson has been chief executive officer of Fannie Mae and managing director of corporate finance at Lehman Brothers. He is vice president of a merchant banking and private equity firm in the nation’s capital, and is frequently mentioned as a leading candidate for Treasury secretary in a Kerry administration. (”Minnesotan led process that picked Edwards” Star Tribune July 8, 2004)
-Ethan Harris, chief economist for Lehman Bros. was former Fed official of the Clinton camp.
-Steven Rattner, Roger Altman, and Martin R. Wade, left Lehman Bros. to work on raising funds for Clinton Treasury and Al Gore’s political campaign.
TOKYO - Asian stock markets tumbled Tuesday amid growing fears of a global financial crisis as investors reacted to the demise of two of Wall Street’s biggest names, Lehman Brothers and Merrill Lynch.
Japan’s benchmark Nikkei 225 index was down 5.3 percent to 11,560.66 in mid-afternoon trading, while Hong Kong’s blue-chip Hang Seng Index shed 5.7 percent. Both markets — Asia’s two biggest — had been closed for holidays on Monday, when news first broke about the dramatic events on Wall Street.
Across the region, markets were all deep in the red. South Korea’s Kospi was down 5.4 percent, Taiwan’s benchmark was off 4.7 percent and China’s Shanghai index was down 3.2 percent.
Japan’s central bank on Tuesday injected 2.5 trillion yen ($24 billion) into money markets and issued a statement vowing to take measures to maintain stability in the country’s financial markets. Cabinet ministers, along with the central bank chief, were also holding an emergency meeting.
“The Bank of Japan will carefully monitor recent situations surrounding the U.S. financial institutions and their influences, and will continue to strive to ensure smooth settlement of funds and maintain stability in financial markets through measures such as appropriate money market operations,” central bank Gov. Masaaki Shirakawa said.
The dollar also got hit, falling to 104.43 yen early Tuesday afternoon in Asia from mid-107 yen levels before the weekend.
In Tokyo, the Japanese unit of Lehman Brothers Holdings Inc. requested bankruptcy protection at a Tokyo court after the 158-year-old firm filed for Chapter 11 bankruptcy in New York on Monday.
The storied New York investment bank, crippled by $60 billion in soured real-estate holdings, was unable to find an investment partner to throw it a lifeline despite a flurry of last-minute negotiations over the weekend.
Investors were further shaken by the equally stunning news that Merrill Lynch, one of the world’s most famous brokerages, sought to avoid a similar fate with a $50 billion transaction to become part of Bank of America Corp.
The crisis appeared to be far from over. American Insurance Group, the world’s largest insurer, was fighting for its survival after downgrades from major credit rating firms, adding pressure to AIG as it seeks billions of dollars to strengthen its balance sheet.
Seichi Miura, strategist at Mitsubishi UFJ Securities in Tokyo, said already weak investor sentiment has been badly shaken by Lehman. He predicted extremely volatile markets ahead.
“The market just hasn’t been able to shake off an overall downward trend,” he said.
On Wall Street Monday, the Dow Jones industrial average fell more than 500 points, or 4.4 percent, to 10,917.51 — its worst point drop since after the September 11, 2001, terror attacks.
European markets also sank Monday, with Britain’s FTSE-100 share index falling 3.9 percent and France’s CAC-40 down 3.7 percent.
The Tokyo Stock Exchange halted securities and derivatives trading by Lehman Brothers a day after Japan’s financial watchdog ordered its local unit to suspend operations.
South Korea’s financial regulator also said it had suspended some operations of two local units of Lehman Brothers.
Share prices in Tokyo fell across the board, with banking issues taking a particularly hard hit in the wake of Lehman’s collapse. Investors unloaded shares in major Japanese banks listed as some of the biggest lenders, including Aozora Bank, Mizuho Financial Group and Shinsei Bank.
Aozora, a midsize Tokyo-based bank, lost more than 19 percent, even as the company in a statement sought to reassure markets that its net exposure could be reduced to less than $25 million compared with the widely reported figure of $463 million.
Mizuho Financial Group, Inc., with a $289 million loan to Lehman, fell more than 10 percent. Shinsei was down almost 16 percent.
Australia’s banks, including Commonwealth Bank of Australia, ANZ Banking Group and National Australia Bank Ltd., were all hit hard.
In Seoul, South Korean banks extended losses. Top lender Kookmin Bank shares declined 8 percent while Hana Financial Group shares fell 10 percent.
In Hong Kong, major bank HSBC lost 4.4 percent, and leading mainland Chinese lender ICBC plummeted 7.7 percent.
Hong Kong government officials said they were keeping a close eye on the markets.
“We know Hong Kong has a good monitoring system in place. I believe all monitoring agencies will make sure trading is conducted smoothly today,” said Chan Ka-keung, secretary for financial services and treasury.
___
Associated Press writers Kelly Olsen in Seoul, South Korea, Ray Lilley in Wellington, New Zealand, Rohan Sullivan in Sydney, Australia, and Mari Yamaguchi in Tokyo contributed to this report.
Among the seemingly innumerable scandal-worthy stories which have so marked the war in Iraq is one growing tragedy which has been largely ignored: shoddy electrical work by U.S. contractors at military bases leading to numerous electrical fires, troops receiving painful shocks, and even death by electrocution.
In January 2008, Staff Sgt. Ryan Maseth, a 24-year-old weapons expert, was electrocuted while showering in Baghdad’s green zone. According to a criminal investigation by the Army, an electrical water pump on the building’s roof shorted out from not being properly grounded when installed. On March 19 his parents sued the contractor, KBR Inc., for Sgt. Maseth’s death.
According to the Pittsburgh-Post Gazette:
“The Defense Contract Management Agency, we believe, authorized [the contractor] to the tune of millions of dollars to make the repairs. And they never made the repairs,” Mr. Cavanaugh said. “And we don’t know why. A simple repair — just ground the building — and Ryan would be alive today.”
On July 1, New York Times Investigative Reporter James Risen, author of the 2006 book “State of War: The Secret History of the CIA and the Bush Administration,” took up the subject. According to Risen, General David Petraeus stated to Congress that 13 Americans had been electrocuted since the invasion of Iraq: 12 soldiers and one contractor.
As recently as July 11, KBR Inc. electricians told a Senate panel tasked to investigate the deaths that their employer used inexperienced, non-English speaking workers to install electrical systems. Many experienced contractors, they claimed, were dismissed after raising cautions over the work.
According to the Associated Press:
“Time and again we heard, `This is not the states, OSHA doesn’t apply here. If you don’t like it you can go home,’” said Debbie Crawford, a journeyman electrician with 30 years experience.
Army Times reports that the shoddy wiring and electrical risks have brought about the deaths of 11 service members and two U.S. civilians.
However, a follow-up report by James Risen in the New York Times on July 18 states that the problem is far worse than General Petraeus stated, and the military has known about the systemic problems since 2004.
Since the invasion, over 283 electrical fires on US bases have been reported, along with two deaths in 2006 at a base in Tikrit, the death of Sgt. Maseth, and innumerable painful shocks dealt to Americans.
A log of complaints compiled early in 2008 found soldiers living in just one Baghdad building complex were complaining of painful electrical shocks ‘on an almost daily basis.’
In public statements, Pentagon officials have not addressed the scope of the hazards, instead mostly focusing on the circumstances surrounding the death of Sergeant Maseth, who lived near Pittsburgh.
But the internal documents, including dozens of memos, e-mail messages and reports from the Army, the Defense Contract Management Agency and other agencies, show that electrical problems were widely recognized as a major safety threat among Pentagon contracting experts. It is impossible to determine the exact number of the resulting deaths and injuries because no single document tallies them up. (The records were compiled for Congressional and Pentagon investigators and obtained independently by The Times.)
The 2007 safety survey was ordered by the top official in Iraq for the Defense Contract Management Agency, which oversees contractors, after the October 2006 electrical fire that killed two soldiers near Tikrit. Paul Dickinson, a Pentagon safety specialist who wrote the report, confirmed its findings, but did not elaborate.
http://www.nytimes.com/2008/07/18/world/middleeast/18contractors.html
House Republicans gave Treasury chief Henry Paulson an earful Wednesday about the administration’s rescue package for mortgage giants Fannie Mae and Freddie Mac.
The two companies will have a chance to make it up to their congressional detractors during a housing industry reception at the Republican National Convention in Minnesota in September.
Fannie and Freddie are sponsoring a reception at the Graves Hotel in Minneapolis on Sept. 2, along with the Independent Community Bankers of America, the National Association of Home Builders and the National Association of Realtors, according to a copy of the invitation.
But while House Republicans can expect to consume their fill of shrimp cocktail and chardonnay at Fannie and Freddie’s expense, don’t expect to see any Republican senators at the shindig. In fact, under the 2007 ethics and lobbying law, senators are prohibited from attending lobbyist sponsored bashes at conventions. The House decided to keep that loophole in place so their members can enjoy the major parties that have been a staple of presidential conventions over the years. This difference between House and Senate ethics has not gone unnoticed by government watchdog groups.
The title of the reception is “Building Stable Communities for America’s Future,” and invitations went to some of the most outspoken opponents of the administration’s plan to temporarily extend credit to Fannie and Freddie and potentially purchase an equity stake in the two private companies.
This could be the most entertaining event of the entire week if the cocktail party is anything like the closed-door session Wednesday between Paulson and his Republican colleagues in the House. It might give loyal conventioneers another chance to watch their Treasury secretary arguing with the top Republican on the House Financial Services Committee about who called whom and when over the weekend …
The The New York Times broke a sensational story about the Pentagon’s involvement in a secret plan to influence Iraq War media coverage through paid military pundits, yet the rest of the media has largely ignored this incredibly important revelation. This video by Free Press helps to expose some of the dishonesty of the cable news networks.
The The New York Times broke a sensational story about the Pentagon’s involvement in a secret plan to influence Iraq War media coverage through paid military pundits, yet the rest of the media has largely ignored this incredibly important revelation. This video by Free Press helps to expose some of the dishonesty of the cable news networks.
By Jason Leopold
Online Journal Contributing Writer
When Dick Cheney was chief executive of Halliburton in the 1990s, he urged Congress to ease sanctions against Iran and enter into diplomatic discussions with the country’s leaders so the oilfield services company could legally do business there.
“Let me make a generalized statement about a trend I see in the U.S. Congress that I find disturbing, that applies not only with respect to the Iranian situation but a number of others as well,” Cheney said at the time. “I think we Americans sometimes make mistakes . . . There seems to be an assumption that somehow we know what’s best for everybody else and that we are going to use our economic clout to get everybody else to live the way we would like.”
In March 1995, Clinton signed an executive order that prohibited “new investments [in Iran] by U.S. persons, including commitment of funds or other assets.” It also restricts U.S. companies from performing services “that would benefit the Iranian oil industry. Violation of the order can result in fines of as much as $500,000 for companies and up to 10 years in jail for individuals.”
Cheney was highly critical of the Clinton administration’s policy toward Iran.
“I think we’d be better off if we, in fact, backed off those sanctions [on Iran], didn’t try to impose secondary boycotts on companies . . . trying to do business over there . . . and instead started to rebuild those relationships,” Cheney said during a 1998 business trip to Sydney, Australia, reported by Australia’s Illawarra Mercury newspaper.
Despite assertions by the vice president that Iran has been trying to build a nuclear weapon since the 1990s, the Bush administration decided it would not punish foreign oil and gas companies that invest in Iran or other countries that allegedly sponsor terrorism.
Recently, Bush administration officials said they would not rule out military action against Iran for allegedly interfering in U.S. interests in Iraq.
Halliburton first started doing business in Iran as early as 1995. According to a February 2001 report in the Wall Street Journal, “U.S. laws have banned most American commerce with Iran. Halliburton Products & Services Ltd. works behind an unmarked door on the ninth floor of a new north Tehran tower block. A brochure declares that the company was registered in 1975 in the Cayman Islands, is based in the Persian Gulf sheikdom of Dubai and is “non-American.” But, like the sign over the receptionist’s head, the brochure bears the Dallas company’s name and red emblem, and offers services from Halliburton units around the world.”
In the February 2001 report, the Journal quoted an anonymous U.S. official as saying “a Halliburton office in Tehran would violate at least the spirit of American law.” Moreover, a U.S. Treasury Department website detailing U.S. sanctions against Iran bans almost all U.S. trade and investment with Iran, specifically in oil services. The Web site adds: “No U.S. person may approve or facilitate the entry into or performance of transactions or contracts with Iran by a foreign subsidiary of a U.S. firm that the U.S person is precluded from performing directly. Similarly, no U.S. person may facilitate such transactions by unaffiliated foreign persons.”
Wendy Hall, a spokeswoman for Halliburton, said in an interview with me last year that Halliburton may not agree with Iran’s “policies or actions” and the company makes “no excuses for their behaviors” but “due to the long-term nature of our business and the inevitability of political and social change, it is neither prudent nor appropriate for our company to establish our own country-by-country foreign policy.”
Hall added that “decisions as to the nature of such governments and their actions are better made by governmental authorities and international entities such as the United Nations as opposed to individual persons or companies. Putting politics aside, we and our affiliates operate in countries, to the extent it is legally permissible, where our customers are active as they expect us to provide oilfield services support to their international operations.”
In 1995, Halliburton paid a $1.2 million fine to the U.S. government and $261 million in civil penalties for violating a U.S. trade embargo by shipping oilfield equipment to Libya. Federal officials said some of the well servicing equipment sent to Libya by Halliburton between late 1987 and early 1990 could have been used in the development of nuclear weapons. President Reagan imposed the embargo against Libya in 1986 because of alleged links to international terrorism.
But the fact that Halliburton may have unwillingly helped Libya obtain a crucial component to build an atomic bomb only made Cheney push the Clinton administration harder to support trade with Libya and Iran.
Additionally, while Cheney headed Halliburton the company engaged in secret business dealings with Saddam Hussein’s regime by selling Iraq oil production equipment and spare parts to get the Iraqi oil fields up and running, according to confidential United Nations records.
During the 2000 presidential campaign, Cheney vehemently denied that Halliburton did business with Iraq while he was chief executive. He acknowledged that Halliburton did business with Libya and Iran through foreign subsidiaries, Cheney said, “Iraq’s different.”
“I had a firm policy that we wouldn’t do anything in Iraq, even arrangements that were supposedly legal,” Cheney said on the ABC-TV news program “This Week” on July 30, 2000. “We’ve not done any business in Iraq since U.N. sanctions were imposed on Iraq in 1990, and I had a standing policy that I wouldn’t do that.”
But it turns out that Cheney was not telling the truth.
In 1998, Cheney oversaw Halliburton’s acquisition of Dresser Industries Inc, the unit that sold oil equipment to Iraq through two subsidiaries of a joint venture with another large U.S. equipment maker, Ingersoll-Rand Co.
The Halliburton subsidiaries, Dresser-Rand and Ingersoll Dresser Pump Co., sold water and sewage treatment pumps, spare parts for oil facilities and pipeline equipment to Baghdad through French affiliates from the first half of 1997 to the summer of 2000, U.N. records show. Ingersoll Dresser Pump also signed contracts — later blocked by the United States — to help repair an Iraqi oil terminal that U.S.-led military forces destroyed in the Gulf War, the Post reported in a June 2001 story.
The Halliburton subsidiaries and several other American and foreign oil supply companies helped Iraq increase its crude exports from $4 billion in 1997 to nearly $18 billion in 2000.
U.S. and European officials have argued that the increase in production also expanded Saddam’s ability to use some of that money for weapons, luxury goods and palaces. Security Council diplomats estimate that Iraq may be skimming off as much as 10 percent of the proceeds from the oil-for-food program, according to documents obtained by the United Nations Security Council.
During his tenure as chief executive of Halliburton, Cheney pushed the U.N. Security Council to end an 11-year embargo on sales of civilian goods, including oil related equipment, to Iraq.
Under Cheney, Halliburton and its subsidiaries were one of several American and foreign oil supply companies that helped Iraq increase its crude exports from $4 billion in 1997 to nearly $18 billion in 2000 by exploiting a loophole in the law and selling Iraq spare parts for its oil fields so it could pump more oil. U.S. and European officials have long argued that the increase in Iraq’s oil production also expanded Saddam’s ability to use some of that money for weapons, luxury goods and palaces.
UN documents show that Halliburton’s affiliates have had controversial dealings with Saddam Hussein’s regime during Cheney’s tenure at the company, which played a part in helping the late dictator pocket billions of dollars under the UN’s oil-for-food program. The Clinton administration blocked one deal Halliburton was trying to push through because it was “not authorized under the oil-for-food deal,” according to UN documents. That deal, between Halliburton subsidiary Ingersoll Dresser Pump Co. and Iraq, included agreements by the firm to sell nearly $1 million in spare parts, compressors and firefighting equipment to refurbish an offshore oil terminal, Khor al-Amaya. Still, Halliburton used one of its foreign subsidiaries to sell Iraq the equipment it needed so the country could pump more oil, according to a report in the Washington Post in June 2001.
The Halliburton subsidiaries, Dresser-Rand and Ingersoll Dresser Pump Co., sold water and sewage treatment pumps, spare parts for oil facilities and pipeline equipment to Baghdad through French affiliates from the first half of 1997 to the summer of 2000, UN records show. Ingersoll Dresser Pump also signed contracts — later blocked by the United States, according to the Post — to help repair an Iraqi oil terminal that U.S.-led military forces destroyed in the Gulf War years earlier.
As secretary of defense in the first Bush administration, Cheney helped to lead a multinational coalition against Iraq in the Persian Gulf War and to devise a comprehensive economic embargo to isolate Saddam Hussein’s government. After Cheney was named chief executive of Halliburton in 1995, he promised to maintain a hard line against Baghdad.
But Cheney’s position against Iraq radically changed when he was named CEO of Halliburton. Cheney said sanctions against Iraq took a financial toll on the corporation he headed.
“We seem to be sanction-happy as a government,” Cheney said at an energy conference in April 1996, reported in the oil industry publication Petroleum Finance Week. “The problem is that the good Lord didn’t see fit to always put oil and gas resources where there are democratic governments,” he observed during his conference presentation.
Sanctions make U.S. businesses “the bystander who gets hit when a train wreck occurs,” Cheney said.
“While virtually every other country sees the need for sanctions against Iraq and Saddam Hussein’s regime there, Cheney sees general agreement that the measures have not been very effective despite their having most of the international community’s support. An individual country’s embargo, such as that of the United States against Iran, has virtually no effect since the target country simply signs a contract with a non- U.S. business,” Petroleum Finance Week reported.
“That’s exactly what happened when the government told Conoco Inc. that it could not develop an oil field there,” Cheney told Petroleum Finance Week. Total S.A. “simply took it over.”
Jason Leopold is the author of “News Junkie,” a memoir. Visit www.newsjunkiebook.com for a preview. His new website is The Public Record.
The Supreme Court handed corporate America a major victory this week when it sharply reduced the amount of money Exxon Mobil has to pay in punitive damages for the 1989 Exxon Valdez oil spill in Alaska. An Alaskan jury had initially ruled Exxon should pay five billion dollars in punitive damages but in 2006, the 9th U.S. Circuit Court cut the award of punitive damages in half. On Wednesday, the Supreme Court cut the amount of punitive damages again and ordered Exxon Mobil to pay just $500 million in punitive damages – one tenth of the original jury’s ruling
The Supreme Court handed corporate America a major victory Wednesday when it sharply reduced the amount of money Exxon Mobil has to pay in punitive damages for the 1989 Exxon Valdez oil spill in Alaska.
The spill has been described as the worst environmental calamity in U.S. history. 11 million gallons of crude oil spilled into the fishing waters of Prince William Sound. It polluted about 1200 miles of Alaska’s shoreline.
An Alaskan jury had initially ruled Exxon should pay five billion dollars in punitive damages but in 2006, the 9th U.S. Circuit Court cut the award of punitive damages in half.
On Wednesday the Supreme Court cut the amount of punitive damages again and ordered Exxon Mobil to pay just $500 million in punitive damages – 1/10th of the original jury’s ruling.
The Supreme Court ruled that in maritime cases punitive damages should be no more than the actual damages. 32,000 Alaskan plaintiffs have been waiting for their compensation since 1994. The Supreme Court’s action will reduce the average award from $75,000 to about $15,000.
Last year Exxon Mobil made just over $40 billion in profits. This means the oil company will be able to pay the punitive damages in about four days. Sen. Patrick Leahy, chair of the Judiciary Committee, accused the court of giving Exxon Mobil a $2 billion windfall
House Democrats who flipped their votes to support retroactive immunity for telecom companies in last week’s FISA bill took thousands of dollars more from phone companies than Democrats who consistently voted against legislation with an immunity provision, according to an analysis by MAPLight.org.
In March, the House passed an amendment that rejected retroactive immunity. But last week, 94 Democrats who supported the March amendment voted to support the compromise FISA legislation, which includes a provision that could let telecom companies that cooperated with the government’s warrantless electronic surveillance off the hook.
The 94 Democrats who changed their positions received on average $8,359 in contributions from Verizon, AT&T and Sprint from January, 2005, to March, 2008, according to the analysis by MAPLight, a nonpartisan organization that tracks the connection between campaign contributions and legislative outcomes.
Retroactive immunity could squash about 40 lawsuits pending against telecommunication companies that helped the government monitor the telecommunications traffic of Americans without warrants. The telecom industry has lobbied hard to insure that the provision is included in the Foreign Intelligence Surveillance Act update Congress is currently considering.
Nick Papas, spokesman for the House Democratic Caucus, said, “Many members of the caucus opposed the earlier version of this legislation and ultimately supported better legislation that was the product of bipartisan negotiations. Months of hard work, not campaign contributions, earned the support of many members.”
MAPLight executive director Daniel Newman agreed that there are many factors that affect a lawmaker’s vote but, unlike pressure from constituents, campaign cash is not a “democratic influence.”
The 116 Democrats who remained opposed to telecom immunity received an average of $4,987 from the telecoms during the three-year period, the analysis showed.
“Regardless which way the legislators’ vote, the fact is most of them get money from the telecom industry and that buys access even if it doesn’t buy a favorable result for telecom,” Newman said.
The members who voted yes on June 20 received, on average, $9,659 from the big three phone companies while those who opposed the bill received an average of $4,810, MAPLight found.
The money provides special interests with a bigger megaphone, Newman said.
“Who’s more likely to get a meeting you or AT&T, which donates million of dollars and has the legislator’s ear?”
SINGAPORE - By bailing out Wall Street and applying “band-aids” to the economy, the U.S. Federal Reserve may well be causing its own downfall - even as it hastens the demise of the greenback as a viable global currency, investment guru Jim Rogers told Money Morning during an exclusive interview.
Because of such strategic missteps, U.S. consumers could be facing a long and painful economic malaise, similar to the “lost decade” of 1990s Japan, or the stagflation-riddled 1970s in the United States, Rogers said.
Make no mistake: If that happens, there are two clear culprits - current Fed Chairman Ben S. Bernanke, and his predecessor, Alan Greenspan.
Bernanke “and Greenspan together will probably bring [about] the end of the Federal Reserve,” Rogers said during the interview in this Southeast Asia city-state. “We’ve had two central banks in America that failed [and] this third central bank will probably fail, too, because of Bernanke and Greenspan. The Federal Reserve [just] put $200 billion more onto its balance sheet of mortgages. Now I don’t know how big they can expand their balance sheet, but if they keep doing it, there’s only so much - and they just bought Bear Stearns (BSC).”
Rogers first made a name for himself with The Quantum Fund, a hedge fund that’s often described as the first real global investment fund, which he and partner George Soros founded in 1970. Over the next decade, Quantum gained 4,200%, while the Standard & Poor’s 500 Index climbed about 50%.
It was after Rogers “retired” in 1980 that the investing masses got to see him in action. Rogers traveled the world (several times), and penned such bestsellers as “Investment Biker” and the just-released “Bull in China.” And he made some historic market calls: Rogers predicted China’s meteoric growth a good decade before it became apparent and he subsequently foretold of the powerful updraft in global commodities prices that’s fueled a year-long bull market in the agriculture, energy and mining sectors.
Given Rogers’ prescience - not to mention all the uncertainty facing U.S. investors right now - we thought it was well worth a sit-down with the noted guru, even though it meant traveling all the way to Singapore, where he now lives with his family, to do so.
During that interview here in Singapore, Rogers also said that:
* Although the United States faces perhaps its most daunting economic challenges in at least a generation, “in America, most people do not understand that there is a problem.”
* Because of these weak-dollar efforts - as well as the billion-dollar bailouts - “America is now the largest debtor the world has ever seen.”
* Although the central bank seems intent on engineering a U.S. economic rebound by creating an ultra-weak dollar, no country in history has ever emerged from a serious financial crisis by “debasing its currency.”
The bottom line: The strategies that the central bank is currently employing are nothing short of “outrageous,” Rogers said.
“You know, I’ve read the Federal Reserve Act,” he said. “Nowhere does it say [the central bank is] supposed to bail out investment banks! Nowhere does it say you should bail out Wall Street. Their mandate was to have a sound currency, and then it was later expanded to have employment - to help employment. But nowhere does it say: ‘Bail out investment banks.’”
Let’s take a look at some of the highlights of the Money Morning interview with investor and author Jim Rogers.
Keith Fitz-Gerald (Q): There’s a confluence of money flowing into and around China. Do you believe that the U.S., with all its current problems, will get left out?
Jim Rogers: Absolutely.
The U.S. dollar is a terribly flawed currency. I’m trying to get all of my money out of U.S. dollars. I don’t know why anybody would put money into the U.S. dollar, and by extension into the U.S., as we stand here today. The U.S. is probably the largest debtor nation the world has ever seen!
The United States’ foreign debts are increasing at the rate of $1 trillion U.S. dollars every 15 months. U.S. foreign debt is over $13 trillion, and rising rapidly. It’s the official policy of the central bank to debase the currency. They’re trying to drive down the value of the dollar.
Q: The government has succeeded wildly, so far.
Rogers: You haven’t seen anything yet!
They’re trying to drive down the dollar. I’m trying to be patriotic. I’m trying to sell dollars. That’s what they want. I’m trying to help them drive down the value of the currency.
All Americans should. There are certainly probably good reasons to put some money in dollars. For instance, if you have to buy cotton, you have to have dollars.
But for the most part - I, anyway - am joining other people who’re trying to avoid the U.S. dollar, because Washington has sent a very clear signal: “We want the dollar to decline. We’re gonna do our best to make it decline.”
Well, everybody has to make their own decision. I’m trying to do what the Federal Reserve wants me to do, and I’m selling dollars.
Q: My take is that former Fed Chair Alan Greenspan and current Fed Chairman Ben S. Bernanke may go down as the worst central bank chairmen in history. Do you see it differently?
Rogers: [Bernanke] and Greenspan together will probably bring [about] the end of the Federal Reserve. We’ve had two central banks in America that failed. This third central bank will probably fail, too, because of Bernanke and Greenspan.
The Federal Reserve last week put $200 billion more onto its balance sheet of mortgages. Now I don’t know how big they can expand their balance sheet, but if they keep doing it, there’s only so much - [and] they just bought Bear Stearns.
There’s just so much they can do. Maybe that balance sheet is infinite. I doubt it. And it can be said to be infinite; they just print money like Zimbabwe or someplace. But that has to come to an end, eventually.
Maybe Bernanke is going to get into his helicopter and fly around collecting rents now. Maybe when they repossess all the property, he’s going to be the rent collector. But then when they eventually take on all the car loans, I guess he’s going to be collecting car payments, too. And credit card debt, when they take over all the credit card payments, I guess he’ll be hauling us all out saying: “Your credit card’s overdue.”
This is insanity.
Q: Is there a circumstance under which you could see the U.S. recovering, or do you think this country is doomed to be an economic also-ran?
Rogers: Historically, nations that have gotten themselves into this kind of situation have only gotten out following a crisis or a semi-crisis, or some gigantic stroke of luck.
The U.K. got out because they discovered the North Sea. Now you give me the largest oil field in the world, or one of the largest oil fields in the world, I’ll show you a good time, too.
So if you have a stroke of luck [you can escape these kinds of problems], but otherwise, nobody’s ever sorted out these problems without some kind of gigantic crisis or semi-crisis first.
In America, most people do not understand there is a problem! The few who know there’s something going on don’t understand what it is. Most of them who understand it actually think it’s good that the currency’s declining. America’s not going to do anything until things get very, very bad.
Others that offer the rejoinder to this - that the declining dollar makes America competitive - [that] has worked in the short term. But no country has ever restored itself by debasing its currency, not in the long term, not even the medium term.
Many places have tried to debase their currency as a solution. It’s never worked, other than maybe in the short-term, for a while.
Q: Are we looking at a Japanese-style lost economic decade?
Rogers: The Federal Reserve is making the same mistakes that the Japanese made. They’re trying to say: “We won’t let anybody fail. We’ll print a lot of money. We’ll drive interest rates to zero. And we don’t want anybody to fail. We’ll put on as many Band-Aids as we have to.”
Well, putting Band-Aids on a cancer patient is not a good solution.
So whether it’s like the ’90s in Japan, or the ’70s in America, remains to be seen.
[One-time U.S. Federal Reserve Chairman] Arthur Burns, who headed the central bank in the ’70s, did exactly what Bernanke’s doing. He raced in and printed money and said: “Oh, everything’s gonna be OK.”
But the economy never recovered, inflation went through the roof, and the dollar was under duress. Eventually they had to bring in Paul Volcker and interest rates went over 20%. And eventually they killed inflation and they solved the problem.
They’re making exactly the same mistakes that Burns made. For whatever reason, though, this problem is going to last longer than previous difficulties in America. And it’s probably going to be worse.
Because, now, America is a debtor nation. Now we’re the largest debtor nation in the world. At least in the ’70s, we were still a creditor nation. Japan could survive because they were the largest creditor in the world at the time. So they didn’t fall off the face of the earth.
America’s now the largest debtor the world has ever seen. What’s happening in the U.S. is not going to be fun.
Q: Should the Fed be stepping in like it has in recent months?
Rogers: It’s outrageous that Bernanke’s sitting there. You know, I’ve read the Federal Reserve Act. Nowhere does it say [the central bank is] supposed to bail out investment banks! Nowhere does it say you should bail out Wall Street. Their mandate was to have a sound currency, and then it was later expanded to have employment - to help employment. But nowhere does it say: ‘Bail out investment banks.’
Investment banks have been failing for centuries. The world hasn’t come to an end… even when investment banks have failed. They just caused a setback, and so what!
Recessions are usually good for the system. They clean out the excesses. And my God there’ve been excesses on Wall Street in the past 10 years. You don’t see a bunch of 29-year-old cotton farmers driving around in Maseratis and flying in private planes to exotic locations. Well, you see a lot of guys on Wall Street doing that.
And the idea that we’re now supposed to bail them out is ludicrous! I don’t see any of those guys sending their bonus checks back.
Huge amounts were made in the debt markets. We now know [that money was made] at least incorrectly, if not fraudulently, and yet, now we’re supposed to bail them out. It’s bad enough they get to keep their money. But the outrageous part is that it will cost more to try to prevent a recession than to have the recession.
We have safety nets in place, now. We did in the ’70s in America and the Japanese did in the ’90s. I think there’s good evidence that it will cost more to try to prevent the problems than to have the problems.
Q: That’s a very interesting thought that had not occurred to me before.
Rogers: Well, we’ll see if it’s right. In nature, there’s the natural phenomenon of forest fires. The forest fires are pretty terrible when they’re going on. But nature invented them to clean out the forest so that the forest could then come and grow from a new, sound foundation. That’s what recessions do, too. They’re a natural phenomenon.
Nobody likes it when we have them any more than anybody likes a forest fire. But in the end, everybody’s better off. Bernanke thinks he can stop this; he’s going to very well destroy the system by trying to save it.
Q: Could you see a segment of the financial system surviving this? Or do you think that there will be such catastrophic change that we won’t recognize it till several years from now?
Rogers: Ask me again in five years, 10 years. That was true after the ’30s, certainly. It was true even after the ’60s. Very few people went to Wall Street in the ’70s, very few. A whole generation ignored Wall Street in the ’30s and in the ’70s.
Will that happen again? Probably, because of things we’ve been discussing.
So there will be big changes, of course. If you’re in the field that deals with - and works out - bankruptcies, you’ve got a great future - on Wall Street, or in the legal profession. If you’re in commodities, you have a great future. Some sectors of the financial community are going to do well. Many others are going to disappear and/or do badly.
Q: How low could the dollar go?
Rogers: I have no idea. You just have to watch it as it evolves. Politicians and bureaucrats can do unbelievably stupid things, and have [done so] throughout history.
They will usually do things that are so stupid nobody can believe them, but it happens. You have to watch and see as it goes.
[Editor’s Note: This is the first installment of a two-part story based on Investing Director Keith Fitz-Gerald’s interview with investing guru Jim Rogers. In the second installment, Fitz-Gerald will explore China’s potential, the energy sector and the Middle East, and the global commodities boom. To learn more about an offer that includes a free copy of Rogers’ new bestseller, "A Bull in China," please click here].
Let’s imagine a world without warnings, or guides and a universe filled with safe products and do good business’ whose sole ambition is not profitability but the betterment of mankind. O.K now that we finished our little journey into la al land we can now ask ourselves and our dear friends at the EPA if they were lost in la la land when deciding to distribute pesticide labels electronically, in lieu of traditional labeling. Yes - you read it right. The EPA is planning on pulling all labels off pesticides, including instructions for proper use. The move clearly is raising more than a few eye brows. Are pesticide companies trying to save all the trees used for labels? What possible “do good spin” can they put on this absurd decision?
“Benefits from using this system will include faster access to new pesticide uses, quicker implementation of protective measures for public health and the environment, improved compliance with label directions, and lower costs for industry and EPA,” the agency said May 12 in a statement on its pesticides website. Well, we believe the last part. The utterly absurd system will rely on users to contact either the pesticide labeling website or a toll-free telephone number to obtain the detailed-use instructions that previously were attached to pesticide containers, EPA said. So let me just get this straight - their method of protecting public health is by removing labels off toxic chemicals and asking consumers to call toll free numbers or access web site? Huh? Are they installing phones and access to the web at every retail location? What am I missing here?
According to Jay Feldman, executive director of Beyond Pesticides, “EPA knows historically from its label improvement program that it has a difficult time getting people to read labels. Instead of further removing labels from the consumer’s sight, EPA should be enhancing label information and design to ensure better disclosure of product hazards so that consumers can make better decisions regarding pesticide product purchase and use.”
This past Fall the EPA said in its presentation on electronic labeling that it “may replace the Directions for Use on the physical container,” but that the “container label would still have all FIFRA mandated elements, e.g. product name, registration number, net contents, and ingredients (I am guessing without a dictionary enclosed). ” The enforcement of the new system as described last fall involved a number of steps, including that “users would need to have a copy of the labeling from the website at the time of application” and “labeling would be good for a specified duration of time (e.g. six months) from the date of ‘printing.’” Cumbersome, inconvenient, unrealistic and clearly not serving the best interests or safety of the consumer - the EPA misses the mark yet again.
Walmart giving subsidy again! You would think a billion dollar corporation could raise capital. Nope, they need money from the bankrupt city and states.
Back in late 2006, it was widely reported in the Latin American media that President Bush, or perhaps his old man, had bought a 100,000-acre farm in a remote area of Paraguay.
What struck people at the time was the choice of country. Paraguay, of course, has gained a certain Club Med status among the world’s villains and criminal elements as the place to go when the law’s on your tail. The country, ruled for six decades by the dictatorial and fascist Colorado Party of Gen. Alfredo Stroesser, an almost cartoon charicature of a Latin American dictator, has no extradition treaty with any nation.
That’s why it has long harbored aging Nazis, bank robbers, and a string of ousted or retired Latin American dictators and their assistants over the years.
Given that President Bush, once he leaves office on January 20, 2009, will no longer have the diplomatic immunity conferred upon heads of state, or the Constitutional protection against indictment by domestic prosecutors, it makes sense that he would be looking for a safe haven from the long arm of the law.
After all, they guy is guilty of a huge laundry list of international crimes, from the Crime Against Peace and Conspiracy against Peace in the UN Charter, to Geneva Convention violations like approval of torture of prisoners, collective punishment of civilians, the killing of children and child soldiers, the failure to protect occupied citizens, the use of banned weapons, etc., etc., and also of domestic crimes, ranging from political use of government employees, conspiracy, treason, lying to federal officials, defrauding Congress, etc.
No wonder he wants to do what Klaus Barbie, Josef Mengele and Adolf Eichmann did, and hole up in Paraguay.
Only trouble is, Paraguay may not be such a safe haven for long.
Last month, a former Roman Catholic Bishop with leftist, populist tendencies, Fernando Lugo, surprised almost everyone in Paraguay, and no doubt President Bush, by winning the national presidential election, ousting the Colorado Party for the first time in 61 years. There is talk that among other things, Lugo is thinking of returning Paraguay to the community of nations, by signing some of those extradition agreements.
If he does that Bush may be stuck having to hide behind his rump squad of Secret Service agents down at the Crawford Ranch, hoping they can keep the process servers from Brattleboro and Marlboro, VT, with their war crimes arrest warrants, at bay.
DAVE LINDORFF is a Philadelphia-based journalist and columnist. His latest book is “The Case for Impeachment” (St. Martin’s Press, 2006 and now available in paperback edition). His work is available at www.thiscantbehappening.net
Let’s imagine a world without warnings, or guides and a universe filled with safe products and do good business’ whose sole ambition is not profitability but the betterment of mankind. O.K now that we finished our little journey into la al land we can now ask ourselves and our dear friends at the EPA if they were lost in la la land when deciding to distribute pesticide labels electronically, in lieu of traditional labeling. Yes - you read it right. The EPA is planning on pulling all labels off pesticides, including instructions for proper use. The move clearly is raising more than a few eye brows. Are pesticide companies trying to save all the trees used for labels? What possible “do good spin” can they put on this absurd decision?