For The Record Supplemental

Russia-Ukraine gas dispute ripples westward

2009-01-04T05:03:00.000-08:00

by Megan K. Stack
Los Angeles Times

Fuel delivery to four European countries fell below normal Saturday as Russia's state gas monopoly withheld natural gas from neighboring Ukraine for the third consecutive day.

Ukraine warned that its gas pipeline system could experience "serious disruptions" if a worsening price dispute isn't settled in 10 to 15 days, threatening shortfalls across Europe in the heart of winter. Gas flows to Poland, Romania, Hungary and Bulgaria, all of which depend on pipelines that cross Ukraine, slumped on Saturday, officials said.

Ukraine said it had stored up enough natural gas reserves to last for months. But experts had warned that the abrupt stoppage of gas to Ukraine could cause pressure to dwindle in the pipeline system, creating delivery problems for the rest of Europe.

Russia's Gazprom said it increased gas flows bound for the rest of Europe through Belarus and Turkey to counteract any troubles.

The Russia-Ukraine standoff appeared to be worsening as Gazprom and Ukraine bitterly blamed one another for the stalled negotiations and European fuel delivery woes. Russian President Dmitry Medvedev on Saturday approved Gazprom's plan to sue Ukraine for failing to keep proper levels of gas moving through its pipelines to the rest of Europe, the company announced.

Ukraine says Russia is at fault for failing to provide enough gas to keep the pipeline system running smoothly.

The European Union called an emergency meeting for Monday to discuss the gas troubles. The bloc has enough reserves on hand to withstand the shortfalls for now.

About one-fifth of the gas delivered to the European Union arrives via pipelines cutting through Ukraine.

Talks between Ukraine and Russia have been stalled since negotiations collapsed on New Year's Eve. The two countries remain at odds over the price Ukraine should pay for natural gas in 2009, and the amount of transit fees Gazprom will pay Ukraine for allowing Russian gas to pass through the country en route to other European customers.

In recent years, feuds over natural gas have become a steady and acrimonious fixture of Russian-Ukrainian relations. In 2006, a similar dispute drove Russia to cut off gas to Ukraine, causing fuel interruptions in other parts of Europe and raising sharp concerns about Moscow's reliability as a provider of energy. Still, Europe remains heavily dependent upon Russian fuel.

On Saturday, Gazprom accused Ukraine of siphoning off 35 million cubic meters of gas a day bound for Europe.

"It's not us but Ukraine that uses blackmail toward Russia and Europe," the vice chairman of Gazprom's board of directors, Alexander Medvedev, told reporters in the Czech Republic, Interfax reported.

Ukraine's pro-Western president has enraged Russia by pushing for NATO membership for the former Soviet state.

India compiling evidence to share with Pak, rest of world

2009-01-03T04:48:00.000-08:00

PTI

New Delhi: As Islamabad continues to be in denial mode, India is compiling evidence about the role of Pakistan-based elements in the terror strikes for sharing it with the world besides the neighbour very soon.

The evidence, being put together, includes the confession of the lone terrorist held in Mumbai terror attack Ajmal Amir Qasab, logbook recovered from the vessel in which the 10 terrorists came from Karachi, records of satellite phone used by the attackers and transcript of conversations between the attackers and their handlers in Pakistan, the sources said.

The dossier will also include the corroborative evidence tracking the journey of the attackers from Karachi to Mumbai, they said.

The evidence will mostly include Qasab's confession to the police wherein he has given details of how he became a motivated terrorist of Lashkar-e-Taiba from a normal youth of Faridkot in 741Pakistan's Punjab province.

Investigators have found evidence to show that the terrorists, who struck at the Taj Hotel, Trident Hotel and Nariman House on November 26, were in touch with their handlers in Karachi even while their three-day engagement with security forces was on.

As the armed engagement was being telecast live by Indian TV channels, the LeT commanders in Pakistan were found giving directions to the attackers like 'set ablaze the hotel' and 'throw grenades' on the crowds outside the hotels and Nariman House.

The evidence will be shared with Pakistan along with the US, UK, China and other countries which have influence on Islamabad.

Scenic Pakistani valley falls to Taliban militants

2008-12-29T04:54:00.000-08:00

by Nahal Toosi
AP

ISLAMABAD, Pakistan – Taliban militants are beheading and burning their way through Pakistan's picturesque Swat Valley, and residents say the insurgents now control most of the mountainous region far from the lawless tribal areas where jihadists thrive.

The deteriorating situation in the former tourist haven comes despite an army offensive that began in 2007 and an attempted peace deal. It is especially worrisome to Pakistani officials because the valley lies outside the areas where al-Qaida and Taliban militants have traditionally operated and where the military is staging a separate offensive.

"You can't imagine how bad it is," said Muzaffar ul-Mulk, a federal lawmaker whose home in Swat was attacked by bomb-toting assailants in mid-December, weeks after he left. "It's worse day by day."

The Taliban activity in northwest Pakistan also comes as the country shifts forces east to the Indian border because of tensions over last month's terrorist attacks in Mumbai, potentially giving insurgents more space to maneuver along the Afghan frontier.

Militants began preying on Swat's lush mountain ranges about two years ago, and it is now too dangerous for foreign and Pakistani journalists to visit. Interviews with residents, lawmakers and officials who have fled the region paint a dire picture.

A suicide blast killed 40 people Sunday at a polling station in Buner, an area bordering Swat that had been relatively peaceful. The attack underscored fears that even so-called "settled" regions presumptively under government control are increasingly unsafe.

The 3,500-square-mile Swat Valley lies less than 100 miles from the capital, Islamabad.

A senior government official said he feared there could be a spillover effect if the government lost control of Swat and allowed the insurgency to infect other areas. Like nearly everyone interviewed, the official requested anonymity for fear of reprisal by militants.

Officials estimate that up to a third of Swat's 1.5 million people have left the area. Salah-ud-Din, who oversees relief efforts in Swat for the International Committee of the Red Cross, estimated that 80 percent of the valley is now under Taliban control.

Swat's militants are led by Maulana Fazlullah, a cleric who rose to prominence through radio broadcasts demanding the imposition of a harsh brand of Islamic law. His appeal tapped into widespread frustration with the area's inefficient judicial system.

Most of the insurgents are easy to spot with long hair, beards, rifles, camouflage vests and running shoes. They number at most 2,000, according to people who were interviewed.

In some places, just a handful of insurgents can control a village. They rule by fear: beheading government sympathizers, blowing up bridges and demanding women wear all-encompassing burqas.

They have also set up a parallel administration with courts, taxes, patrols and checkpoints, according to lawmakers and officials. And they are suspected of burning scores of girls' schools.

In mid-December, Taliban fighters killed a young member of a Sufi-influenced Muslim group who had tried to raise a militia against them. The militants later dug up Pir Samiullah's corpse and hung it for two days in a village square — partly to prove to his followers that he was not a superhuman saint, a security official said on condition of anonymity.

A lawmaker and the senior Swat government official said business and landowners had been told to give two-thirds of their income to the militants. Some local media reported last week that the militants have pronounced a ban on female education effective in mid-January.

Several people interviewed said the regional government made a mistake in May when it struck a peace deal with the militants. The agreement fell apart within two months but let the insurgents regroup.

The Swat insurgency also includes Afghan and other fighters from outside the valley, security officials said.

Any movement of Pakistani troops from the Swat Valley and tribal areas to the Indian border will concern the United States and other Western countries, which want Pakistan to focus on the al-Qaida threat near Afghanistan.

On Friday, Pakistani intelligence officials said thousands of troops were being shifted toward the border with India, which blames Pakistani militants for terrorist attacks in Mumbai last month that killed 164 people. But there has been no sign yet of a major buildup near India.

"The terrorists' aim in Mumbai was precisely this — to get the Pakistani army to withdraw from the western border and mount operations on the east," said Ahmed Rashid, a journalist and author who has written extensively about militancy in the region.

"The terrorists are not going to be sitting still. They are not going to be adhering to any sort of cease-fire while the army takes on the Indian threat. They are going to occupy the vacuum the army will create."

Residents and officials from the Swat Valley were critical of the army offensive there, saying troops appeared to be confined to their posts and often killed civilians when firing artillery at suspected militant targets.

The military has deployed some 100,000 troops through the northwest.

A government official familiar with security issues estimated that some 10,000 paramilitary and army troops had killed 300 to 400 militants in Swat since 2007, while about 130 troops were killed. Authorities have not released details of civilian casualties, and it was unclear if they were even being tallied.

The official, who insisted on anonymity because of the issue's sensitivity, disputed assertions that militants had overrun the valley, but said a spotty supply line was hampering operations. He said the army had to man some Swat police stations because the police force there had been decimated by desertions and militant killings.

A Swat militant boasted that "we are doing our activities wherever we want, and the army is confined to their living places."

"They cannot move independently like us," said the man, who was reached over the phone and gave his name as Muzaffarul Haq. He claimed the Swat militants had no al-Qaida or foreign connections, but that they supported all groups that shared the goal of imposing Islamic law.

"With the grace of Allah, there is no dearth of funds, weapons or rations," he said. "Our women are providing cooked food for those who are struggling in Allah's path. Our children are getting prepared for jihad."

Economic death and millionaire taxes

2008-12-26T11:15:00.000-08:00

by David Sirota
San Francisco Chronicle

For most of us, Benjamin Franklin's words in 1789 still apply: "Nothing is certain but death and taxes."

However, millionaires, by definition, are not most of us. While they can't stave off the grim reaper, they can persuade lawmakers to shield them from the taxman and balance budgets on the backs of everyone else.

That's what's going on in revenue-starved states right now: governors are preparing to slash middle-class programs and are resisting calls to raise taxes on the wealthy. Nowhere is this class war more pronounced than in New York - the home of the financial thieves who killed the economy. Having halved its top tax rate over the last three decades, New York today faces a $15.4 billion deficit. In response, Gov. David Paterson, a Democrat, might have asked his state's Gordon Gekkos to pay higher taxes, especially considering the idea's popularity in polls and the news that Wall Street's elite are still swimming in money. Indeed, according to CBS News, the allegedly beleaguered financial industry is so flush with cash it plans to dole out $14 billion in executive bonuses this year.

Yet, far from forcing robber barons to pay their fair share, Paterson told the New York Times that taxing millionaires is "the last place you want to go." Instead, he proposes to punish Joe and Jane Six-pack by hiking the taxes and cutting the programs that disproportionately impact them. Specifically, he wants to increase sales taxes, college tuitions and licensing fees and slash education and low-income health programs.

Paterson defended his proposals by telling PBS' Bill Moyers "that when you tax the wealthy in the downturn of an economy, you have an automatic link of a loss of job opportunities and then a loss of population." The rationale sounds intelligently pragmatic - until you peruse the relevant data.

When New Jersey recently raised taxes on the wealthy, Princeton University researchers found that most of those who later left the state moved to places with higher taxes, meaning there is no causative link between levies on the rich and residential flight. Likewise, when New York temporarily raised high-income taxes after 9/11, the state added 127,000 jobs, meaning no link exists between higher taxes on the rich and job loss.

During times of surpluses, governors could get away with the unsubstantiated nonsense Paterson is peddling. But now, 43 states confront shortfalls, and because states cannot run deficits, the dollars and sense of these arguments matter. Lawmakers must choose what policy will create the best chances for economic recovery: spending cuts or tax increases, and if the latter, on whom?

The answer isn't rocket science. As Nobel Prize-winning economist Joseph Stiglitz says, "Reductions in government spending on goods and services (are) likely to be more damaging to the economy in the short run than tax increases focused on higher-income families."

That's because government cuts automatically decrease the consumptive spending programs that broadly stimulate the economy whereas tax increases, when aimed at the wealthy, more often impact funds socked away in savings.

"The more that the tax increases (are) focused on those with lower propensities to consume (i.e., the rich)," Stiglitz notes, "the less damage is done to the weakened economy."

Incredibly, Paterson acknowledges how destructive his budget is, admitting that his own "education cuts are draconian, the health care cuts are prohibitive [and] the taxes that are being levied ... are not fair."

So why would he - or any governor - nonetheless try to legislate such idiocy? Because millionaires are the ones who finance gubernatorial candidacies, and their campaign contributions buy tax protection. The result is what another New York royalist promised.

"Only the little people pay taxes," said Leona Helmsley - a doctrine that will exacerbate this recession if states keep making it true.

Bush Insider Who Planned To Tell All Killed In Plane Crash: Non-Profit Demands Full Federal Investigation

2008-12-20T05:06:00.000-08:00

WASHINGTON, Dec. 20 PRNewswire-USNewswire -- Michael Connell, the Bush IT expert who has been directly implicated in the rigging of George Bush's 2000 and 2004 elections, was killed last night when his single engine plane crashed three miles short of the Akron airport. Velvet Revolution ("VR"), a non-profit that has been investigating Mr. Connell's activities for the past two years, can now reveal that a person close to Mr. Connell has recently been discussing with a VR investigator how he can tell all about his work for George Bush. Mr. Connell told a close associate that he was afraid that George Bush and Dick Cheney would "throw [him] under the bus."

A tipster close to the McCain campaign disclosed to VR in July that Mr. Connell's life was in jeopardy and that Karl Rove had threatened him and his wife, Heather. VR's attorney, Cliff Arnebeck, notified the United States Attorney General , Ohio law enforcement and the federal court about these threats and insisted that Mr. Connell be placed in protective custody. VR also told a close associate of Mr. Connell's not to fly his plane because of another tip that the plane could be sabotaged. Mr. Connell, a very experienced pilot, has had to abandon at least two flights in the past two months because of suspicious problems with his plane. On December 18, 2008, Mr. Connell flew to a small airport outside of Washington DC to meet some people. It was on his return flight the next day that he crashed.

On October 31, Mr. Connell appeared before a federal judge in Ohio after being subpoenaed in a federal lawsuit investigating the rigging of the 2004 election under the direction of Karl Rove. The judge ordered Mr. Connell to testify under oath at a deposition on November 3rd, the day before the presidential election. Velvet Revolution received confidential information that the White House was extremely concerned about Mr. Connell talking about his illegal work for the White House and two Bush/Cheney 04 attorneys were dispatched to represent him.

An associate of Mr. Connell's told VR that Mr. Connell was involved with the destruction of the White House emails and the setting up of the off-grid White House email system.

Mr. Connell handled all of John McCain's computer work in the recent presidential campaign. VR has received direct evidence that the McCain campaign kept abreast of the legal developments against Mr. Connell by reading the VR dedicated website, www.rovecybergate.com.

VR demands that the Ohio Attorney General and the United States Justice Department conduct a complete investigation into the activities of Mr. Connell and determine whether there was any foul play in his death. VR demands that federal law enforcement officials place the following people under protective custody pending this investigation. Heather Connell who

is the owner of GovTech Solutions, Randy Cole, the former President of GovTech Solutions, and Jeff Averbeck, the CEO of SmartTech in Chattanooga, Tennessee. Both GovTech and SmartTech have been implicated in the rigging of the 2000 and 2004 elections and the White House email scandal. Our prior request to have Mr. Connell protected went unheeded and now he is dead.

Political establishment trashed consumer protections - and look what we got

2008-12-15T11:06:00.000-08:00

by David Sirota
San Francisco Chronicle

Please, forgive me for saying it. I know it's a tad annoying, but it has to be said to America's ruling class in this humble column space. Because if it's not said here, then you can bet it won't be said anywhere else, and it needs to be said somewhere on behalf of the millions of citizens who were right.

We told you so.

In the slow-motion train wreck that became the economic meltdown, our bipartisan political establishment and the sycophantic punditburo have been wrong over and over and over again. They told us that eviscerating consumer protections would unleash the market's benevolent power and boost the economy. They told us that a trillion-dollar Wall Street bailout would solve a credit crisis. They told us that bailout would be subjected to intense oversight and scrutiny. Wrong, wrong and wrong - and when critics predicted just that, sneering commentators and congressional leaders berated us as know-nothing Luddites, conspiracy theorists or both.

But with the release of three new reports, there's no debate anymore. The studies prove that the critics were right and the ideologues of Washington were wrong.

When in 2005 Congress overwhelmingly passed a credit-card industry-written bill gutting bankruptcy laws, progressives were right to try to stop it - and not just because it was an immoral move to legalize usury. We were right because as the New York Federal Reserve Bank reports, the bill played an integral role in the foreclosure surge that crushed the economy.

In the past, bankruptcy laws made sure debtors first and foremost continued paying their mortgages so that they could stay in their homes. But the 2005 legislation effectively compels debtors to first pay off their credit cards, meaning many then have no money left to pay their mortgages. The Fed's report estimates that the bankruptcy bill is causing 32,000 more foreclosures per quarter than the economy would have already generated.

We told you so.

When almost every media voice in America was sounding the alarm of financial panic and demanding a Wall Street bailout plan, when bailout opponents were roundly ridiculed as "irresponsible" by politician and pundit alike - those opponents were nonetheless right to say then what a study from the Minneapolis Federal Reserve Bank says now: that the case hadn't been made.

While reporters and the Bush administration frantically insisted that bank-to-business lending had ceased, inter-bank lending had stopped, and short-term "commercial paper" loans had dried up, the Minneapolis researchers tell us that "all three claims were false" and continue to be false; that "nobody has explained how the money system has frozen when the data says it has not"; and that "a trillion-dollar intervention warrant(ed) a bit more serious analysis."

We told you so.

When lawmakers said the bailout included strict oversight measures, skeptics were right to say that claim was patently untrue. According to a new analysis by federal officials at the Government Accountability Office, nonexistent oversight means "taxpayers may not be adequately protected" and that the bailout's stated goal of fixing the economy "may not be achieved in an efficient and effective manner."

Yes, we told you so.

And so now, even though these damning reports have garnered scant news coverage, perhaps there will be a change. As we - the pragmatic progressive majority - demand tough new financial regulations; job-creating investments in public infrastructure; labor law reforms; universal health care; revised trade policies; a repeal of the odious bankruptcy bill and an end to Wall Street welfare - maybe our humiliated rulers will start listening.
To read the reports

For the underlying documents, go to:

Federal Reserve report on the effect of the bankruptcy bill.

Federal Reserve report on the myths of the credit crisis.

GAO report on the oversight of the bailout. (PDF)

Mumbai gunman's confession sheds light on massacre

2008-12-14T10:40:00.000-08:00

by Ramola Talwar Badam
AP

MUMBAI, India – The gunman captured in last month's Mumbai attacks had originally intended to seize hostages and outline demands in a series of dramatic calls to the media, according to his confession obtained Saturday by The Associated Press.

Mohammed Ajmal Kasab said he and his partner, who massacred dozens of people in the city's main train station, had planned a rooftop standoff, but abandoned the plans because they couldn't find a suitable building, the statement to police says.

Kasab's seven-page confession, given to police over repeated interrogations, offers chilling new details of the three-day rampage through India's commercial center that left 164 people plus nine gunmen dead.

He said the assault, which started Nov. 26, was initially set for Sept. 27, though he doesn't explain why it was delayed. The gunmen had been told by their handlers to carry out the attacks during rush hours when the station is teeming with commuters.

After reaching Mumbai, Kasab and his partner, Ismail Khan, the group's ringleader, headed to the train station by taxi.

"Ismail and myself went to the common toilet, took out the weapons from our sacks, loaded them, came out of toilet and started firing indiscriminately toward the passengers," Kasab told police.

As a police officer opened fire, the two militants retaliated with grenades before entering another part of the station and randomly shooting more commuters.

The men then searched for a building with a rooftop where they had been told to hold hostages and call a contact named Chacha, whom Kasab identified as Zaki-ur-Rehman Lakhvi, the suspected mastermind behind the attacks.

Chacha, which means "uncle" in Hindi, would supply phone numbers for media outlets and specify what demands the two should make.

"This was the general strategy decided by our trainers," Kasab said.

Taking heavy fire from police, the two had trouble finding a "suitable building" and stormed a hospital they mistook for an apartment building. There, they searched for hostages and traded more gunfire with security forces. It's unclear if they ever held hostages.

When they left, a police van pulled up and the two tried to take shelter behind a bush during the shootout. Kasab was hit in the hand as Khan returned fire.

"They got injured and the firing from their side stopped," he said.

Police have confirmed the van was carrying top police officials, including the head of the anti-terror squad who was killed.

In the confession, Kasab, 21, describes his conversion from an aspiring street criminal to a loyal soldier for Lashkar-e-Taiba, the terrorist group banned by Pakistan in 2002 and blamed by India in the attacks.

He came to the organization last year while looking to buy guns to commit robberies after quitting a low-paying job at a catering business. The search led him to several Lashkar "stalls" at a bazaar in the Pakistani city of Rawalpindi, he said.

Kasab went on to receive rigorous training in weapons handling and other skills, attending at least six Lashkar camps and visiting his parents twice during breaks, he said. Lashkar operatives even lectured recruits on India security and intelligence agencies, and taught them how to evade pursuing security forces.

He said they were shown "clippings highlighting the atrocities on Muslims in India," images of Mumbai locations on Google Earth, and film footage of the train station.

"We were instructed to carry out the firing at rush hour in the morning between 7 to 11 hours and between 7 and 11 hours in the evening," he said. The attacks ultimately started around 9:30 p.m.

After Kasab and nine others were picked among a group of 32 recruits, they headed to Karachi in September and practiced traveling on speed boats.

On Nov. 23, the group was transported to a ship called the Al-Huseini far out at sea.

Shortly after boarding, "each of us was given a sack containing 8 grenades, one AK47 rifle, 200 cartridges, two magazines and one cell phone for communication," he said.

The Al-Huseini's crew, he said, later hijacked an Indian vessel, killing all but one crew member who was temporarily kept alive and held at gunpoint to guide them into Mumbai's coastal waters.

"When we were at some distance from the shore, Ismail and (another militant) killed the Indian seaman" before the group boarded a dinghy and came ashore "per the instructions received earlier."

Police said Saturday that Kasab, who's facing a criminal case in the attacks, has written to Pakistani officials to request legal help.

In a letter written Thursday, he asked for "legal aid" from the Pakistani consulate and requested a meeting with a consular representative, said Rakesh Maria, Mumbai's chief investigator.

The letter was forwarded to India's government to relay to Pakistani officials, but it was unclear whether it had been delivered, Maria said.

Pakistani officials were not immediately available for comment.

A number of Indian lawyers — including a prominent group of Mumbai attorneys — have refused to defend Kasab against criminal charges amid outrage over the attacks.

Kasab is being held on 12 offenses, including murder and waging war against the country, but has not yet been formally charged.

Islamabad has refused to acknowledge Kasab's nationality, complaining that India has yet to furnish any evidence.

Let's Give Pakistan the Attention It Deserves

2008-12-09T17:51:00.000-08:00

The Mumbai attack is the latest wake-up call.

By BERNARD-HENRI LEVY
WSJ

"The world is decidedly poorly made," Asif Ali Zardari, widower of Benazir Bhutto and president of Pakistan, must be saying to himself. The French expression Le monde est décidément mal fait sums things up quite nicely.

For it was at the very moment that Mr. Zardari was attempting to modernize his country -- to break with the equivocations of the Musharraf years and move forward with a peace process with India for which he took the initiative -- that the tragedy of Mumbai occurred.

But what's done, unfortunately, is done. And if the authors of the carnage are, as it seems, linked to the Pakistan-based terrorist group Lashkar-e-Taiba, we can already draw a certain number of appalling and unquestionable conclusions.

The Lashkar-e-Taiba is one of the jihadist groups with which I became familiar while working on my book "Who Killed Daniel Pearl." This group is, without a doubt, based in Pakistan.

It is likely that the Lashkar-e-Taiba has within India ideological or religious "correspondents" in the vast Muslim community that sees itself (not without reason) as discriminated against by the Hindu majority. Still, there is very little doubt that the initiative, strategy and money for the assault on Mumbai came from terrorist leaders inside Pakistan.

Far from concentrating only on the cause of Kashmir's independence, and most of all, far from existing only in the notorious and officially ungovernable "tribal zones" on the border of Afghanistan and Pakistan, the Lashkar-e-Taiba is an all-terrain group with great political influence. It includes militants in every city of the country: Peshawar, Muzaffarabad, Lahore and even Karachi (Pakistan's economic capital).

Since its creation 15 years ago, the Lashkar-e-Taiba has been linked to the ISI, the formidable Inter-Services Intelligence agency that operates like a state within a state in Pakistan. Obviously, this link is not widely publicized. However, from the kidnapping and murder of Daniel Pearl to the July 2005 attack on the Ayodhya Hindu temple in Uttar Pradesh, there is abundant evidence that the jihadist wing of the ISI has assisted the Lashkar-e-Taiba in the planning and financing of various operations.

Worse yet, the Lashkar-e-Taiba is, as I discovered while researching and reporting my book on Daniel Pearl, a group of which A.Q. Khan, the inventor of Pakistan's atomic bomb, was a longtime friend. Mr. Khan, one may recall, spent a good 15 years trafficking in nuclear secrets with Lybia, North Korea, Iran and, perhaps, al Qaeda, before confessing his guilt in early 2004. Later pardoned by Gen. Pervez Musharraf, Mr. Khan remains perfectly free to travel within Pakistan, as he was just admitted this Monday, under the protection of the ISI, to the most elite hospital in Karachi.

No, this is not a dream -- it is reality. Pakistan is home to a man both father of his country's nuclear program and known sympathizer of an Islamist group whose latest demonstration has netted at least 188 dead and several hundred wounded.

The Lashkar-e-Taiba is, ultimately, one of the constitutive elements of what is conventionally called al Qaeda. For too long we've told ourselves that al Qaeda no longer exists except as a brand; that it is only a pure signifier, "franchised" by local organizations independent of one another. Yet there indeed exists in our world what Osama bin Laden called the "International Islamic Front for Jihad against Jews and Crusaders," which is like a constellation of atoms aggregated around a central nucleus. These atoms find themselves, for the most part, clustered in this new zone of tempests that forms the whole of Afghanistan, Bangladesh and Pakistan.

Three days after the massacre, in a moment of anger and frustration that rings true, Pakistan's President Zardari said: "Even if these activists are linked to the Lashkar-e-Taiba, who do you think we are fighting?"

The problem, unfortunately, is beyond him. Like his predecessor, President Zardari lacks the means to break the back of criminal elements within the ISI and Pakistani military. To an even greater extent, he lacks the backing of those who associate it with the darker side of his own administration. And therein lies the challenge -- perhaps the most frightening of our era. After the bleeding of Mumbai, it is time the entire international community -- not just those in the region -- took notice.

Recession Trickles to India

2008-12-04T10:15:00.000-08:00

by Jeremy Nahn
New York Times

BANGALORE, India — After years of being blamed for job losses in America and elsewhere, India’s high-tech companies and outsourcing firms are going through a downturn of their own. The global slowdown is forcing them to reduce hiring, freeze salaries, postpone new investments and lay off thousands of software programmers and call center operators.

While some industry insiders insist the global crisis will actually benefit companies here, as Western businesses seek to cut costs by moving jobs overseas, right now the sector is suddenly gripped by an unfamiliar sense of uncertainty.

“It’s certainly not irrational exuberance,” said Nandan Nilekani, co-chairman of Infosys, one of India’s best-known technology outsourcing firms. “There is a lot of introspection about what does this mean and when does it end.”

The downturn is exposing a deeper concern: India has become the world’s front office, handling customer service calls, and its back office, helping to process payments and run accounting and other computer systems. But it has not yet become the head office — making major new products, pioneering marketing techniques or helping to shape corporate strategy.

Rather than drowning American technology firms or work forces with a vast supply of cheap engineering talent, as some had feared, India — and Bangalore, its Silicon Valley — have continued to largely serve as the information economy’s version of manual labor.

“Historically, when it comes to innovation, Indian companies are relatively weak compared to the I.B.M.’s and Accentures of the world,” said Partha Iyengar, the head of research in India for the Gartner Group, which analyzes trends in the tech sector. “It has been their chronic Achilles’ heel.”

Last week’s coordinated terrorist attacks killed nearly 200 people and temporarily brought Mumbai, India’s commercial capital, to a halt. But long before that shock, the country had been suffering the effects of the global slump, losing capital as Western investors fled to the security of American Treasuries, undermining Indian banks and company balance sheets.

Infosys recently scaled back its projections for the year, telling investors that it now expects revenue to expand 13 to 15 percent, instead of the 19 to 21 percent it had forecast and far below the 30 percent annual expansion the company had been used to.

Like many of India’s outsourcing companies, Infosys is heavily dependent on the financial sector, deriving a third of its revenue from banks like Citigroup and Bank of America and other financial clients. Its fate is also closely tied to the American economy: two-thirds of its business comes from the United States. Neither factor bodes well for the company’s prospects.

Technology Partners International, a consulting firm that publishes an index of global outsourcing deals, says its index is at a 10-year low. “People think that outsourcing is a recession-proof industry. It is not,” said Siddharth Pai, a partner at the firm.

That realization has changed the boomtown atmosphere of this city. Young workers still flock to a rooftop terrace on Residency Road every Wednesday night to grind to house and hip-hop music. But lately, the crowds at NYKS, an upscale nightclub, are a little thinner. They drink a little bit less. They talk a little less loudly. “Now they are thinking twice before spending money,” said Supreeth Chandrasekhar, a 25-year-old disc jockey at NYKS.

Mr. Chandrasekhar also said that he used to perform at corporate events but that this business had largely disappeared.

In a country where most marriages are arranged by parents, the downturn has even taken a toll on the matrimonial prospects of those in technology outsourcing. “Because there is no job guarantees for I.T. people, for the last six months brides’ families have not been accepting grooms from this background,” said Jagadeesh Angadi, a matchmaker in Bangalore.

The Indian National Association of Software and Service Companies estimates that the country’s technology sector will create 50,000 fewer jobs in 2008 than last year, although it predicts the sector will still have added 200,000 workers by year’s end. India’s technology outsourcing companies have laid off about 10,000 employees since September, according to the Union for Information Technology Enabled Services, a labor group that represents technology workers.

Among the major players that have announced cutbacks in hiring is Satyam Computer Services, which slashed its recruitment plans to fewer than 10,000 from 15,000. Infosys, by contrast, has almost $2 billion in cash on its balance sheet, a significant amount that can help it weather the downturn. It said it intended to follow through on plans to hire 25,000 workers this year.

“We made offers to people, and we need to stand by them,” Mr. Nilekani of Infosys said.

But some companies that have hired recruits are postponing their start dates. The deferrals allow companies, which once hired in anticipation of future business, to better manage overhead by adding staff only when they have confirmed projects.

A few so-called captive outsourcing operations — those that serve only their parent company in Europe or the United States — have also cut back. American Express laid off some 200 of its 6,000 workers in India, and Goldman Sachs announced last month that it would dismiss about 10 percent of its Indian work force.

Still, for the moment, the industry has escaped large-scale job losses. Indian labor laws make it difficult for companies to drop workers, and mass firings can draw a political outcry. But outsourcing companies have begun pruning workers, citing poor job performance, a way to quietly reduce labor costs without attracting much public scrutiny.

The large outsourcing company Wipro dismissed 2.5 percent of its work force in the second quarter. Outsourcing companies are also shelving expansion plans. Wipro, for instance, announced it was postponing the opening of a major new software development center in Atlanta.

But India’s business leaders see opportunity in the downturn. “Once things settle down, people will start looking at their business operations and how to make them more efficient, and that is where we play,” Mr. Nilekani said.

Even consolidation on Wall Street, which may eliminate some Indian companies’ clients, could help Indian workers, outsourcing executives say. Mergers require technical skills to integrate disparate systems, and there is a potential for profitable outsourcing work in areas like regulatory compliance. Banks are likely to be under stricter government scrutiny given the sense that lax oversight contributed to the financial crisis.

Raman Roy, chairman of Quatrro BPO Solutions, an outsourcing firm based in New Delhi, says he has 300 employees reviewing legal documents as part of bank mergers. Copal Partners, a company that uses employees in India to help investment banks do the sort of deal-based research normally performed by the bank’s junior analysts, has continued to expand even during the downturn.

Critics say that will not change the local industry’s basic disadvantage: a creativity gap with Western competitors. Indian technology companies are too focused on increasing the efficiency of their systems, not improving their clients’ own industry-specific processes, according to Navi Radjou, an analyst with Forrester Research. “They are having trouble tailoring a technical application to a particular business need,” he said.

But India’s biggest tech outsourcing companies want to do as much as their European and American rivals, including expanding in Europe and the United States. And the downturn may allow them to acquire talent — and even whole businesses — on the cheap.

The changes may come too late for workers like Vikram Hathwar.

In July, Mr. Hathwar, a 22-year-old engineer, graduated from a technical college with a job offer from a software developer. But instead of starting his job — paying nearly $6,000 a year, a good starting salary in this country — Mr. Hathwar has been waiting for a letter from the company telling him when to report for work.

“I called them and they said they would be calling two or three months later, but still they have not informed me anything about when I should start,” Mr. Hathwar said.

In the meantime, he has begun looking for a temporary job. But he said most tech businesses are no longer hiring recent graduates. The few that are have begun asking applicants to intern for several months without pay and with no guarantee of a permanent position. “The recession has made for all these pressures on us,” Mr. Hathwar said. “It is very confusing to know what to do.”

This article has been revised to reflect the following correction:

Correction: December 5, 2008
An article on Thursday about the effect of a global slowdown on outsourcing companies in India misstated the buyer of the British consulting firm Axon Consulting. Axon was purchased by the Indian technology outsourcing firm HCL Technologies, not its rival Infosys.

Were the Mumbai Terrorists Fueled by Coke?

2008-12-03T10:22:00.000-08:00

by Bruce Crumley
TIME

Did the jihadists who tore up Mumbai last week rely on party drugs usually associated with Western decadence to stay awake and alert throughout their three-day killing spree? Britain's Telegraph newspaper suggests that they did, citing unidentified officials claiming physical evidence shows the assailants used cocaine and other stimulants to sustain their violent frenzy. And if the notion of self-anointed holy warriors on a coke binge sounds incongruous, the report also maintains that the killers imbibed the psychedelic drug LSD while fighting advancing security forces.

"We found injections containing traces of cocaine and LSD left behind by the terrorists, and later found drugs in their blood," the Telegraph was told by one official, whose nationality and relation to the investigation were not specified. "This explains why they managed to battle the commandos for over 50 hours with no food or sleep." (See the terrorism in Mumbai.)

The hallucinogenic and sensory-distorting effects of LSD make it an unlikely combat drug, even for kamikaze assailants who were, after all, seeking to kill as many people as possible before their own inevitable death. But the suggestion that the Mumbai jihadists may have amped themselves up on stimulants typically forbidden by their strict Salafist brand of Islam strikes some experts as plausible, particularly within the twisted jihadist logic in which holy ends justify impious means.

"We've never seen instances of operatives using drugs in attacks before, but we've also never seen the kind of open-ended, insurgent-style strike of civilian targets by Islamists prior to Mumbai," says Jean-Louis Bruguière, who retired this year as France's chief counterterrorism investigator to take a top post in the transatlantic Terrorist Finance Tracking Program. Bruguière had no information to confirm or deny the reported cocaine binge by the Mumbai assailants, but he believes that discounting it out of hand would be naive.

"Why wouldn't attackers do something forbidden by their religious practice — to take drugs or anything else — that could help them achieve what they consider the far more important goal of their plot in striking a blow for God?" Bruguière asks. "Adepts of the Takfir wal-Hijra sect will adopt what Islam considers impure behavior of enemy societies, like drinking alcohol, eating pork and wild living, to better prepare attacks for those same societies. That's what Mohamed Atta and the other 9/11 attackers did while plotting in the U.S. If terrorists feel jihad justifies impious acts to prepare strikes, why wouldn't that rationalization also apply to carrying attacks out?"

Independent French terrorism expert Roland Jacquard is a little more skeptical of the report, however, at least as far as it claimed some of the fighters had used narcotics to numb themselves to pain as death approached. Though he understands the strategic logic of assailants using stimulants to overcome fatigue as their attack wears on — conventional armies, including the U.S. military, have used stimulants to counter combat fatigue — he does not believe the stern Salafist prohibition of soporifics would be ignored as the end loomed.

"We're talking about people who think they're killing for God and who are certain they'll attain paradise by slaying innocent people. The most powerful drug they could ever find is already in their head before the attack starts," says Jacquard. "There's a very strong antidrug culture among Salafists — most don't even use tobacco. And extremists with any drug experience usually say Islam is what allowed them escape it."

The Telegraph story also quotes an official saying traces of steroids had been found in the bloodstreams of Mumbai attackers — something the unnamed source says "isn't uncommon in terrorists." If so, it's a well-kept secret that runs counter to jihadists' disdain of external "impurities" being used to attain physical fitness they often extol. But for Bruguière, wrangling over those kinds of details is simply a counterproductive attempt to create a precise, predictable stereotype of a terrorist in what is, in fact, a diverse, rapidly changing, amorphous milieu of extremists. (Read Mumbai's Terror Is Over, but Panic Persists.)

"It's now clear the Mumbai group was connected to the Pakistan-supported Lashkar-e-Taiba, but it takes a while before we know how close and structured that relationship was and how much autonomy the attacking unit was operating with," Bruguière says. "LeT is keen to export its fight throughout the region and world but will do so in loose relationships with myriad extremist movements out there. Some will use car explosions, others kamikaze bombers, and others insurgent terrorists who — just maybe — decide to use drugs to keep their strike going longer. If we want to prepare for the way we may be attacked next, we have to start considering all the ways we haven't been attacked yet, as well as the ones we know."

Pak TV channel says 26/11 hatched by Hindu Zionists

2008-12-02T10:28:00.000-08:00

by Nandita Sengupta
TNN

NEW DELHI: Mumbai's 26/11 was actually a plan hatched by "Hindu Zionists" and "Western Zionists", including the Mossad, said a self-styled Pakistan security expert on a Pakistan news television show, uploaded on www.hotklix.com.

" Inki shaklein Hinduonwali hain, jis zabaan mein guftagoo kar rahein hain, woh zabaan koi Pakistani istemaal nahin karta hai (They look like Hindus. No Pakistani speaks the language they chatted in)," said Zaid Hamid while referring to the terrorists on the show Mujhe Ikhtilaf Hai (I differ) on Pakistan's News One channel. The sensationalist channel was launched in November last year.

Hamid said that it was a "badly planned" operation that had gone horribly wrong. "9/11 jo Americans ne kiya tha usko bahut khoobsurat camouflage kiya tha. Unhone media mein perception management bahut acchha kiya . Indians ne wahi game repeat karne ki koshish ki, lekin akal to hai nahin . In ahmakon ne complete disaster kiya isko handle karne mein . (The Americans executed the 9/11 attack perfectly. They managed the media very well. The Indians tried to repeat the formula but goofed up. The idiots made a complete mess of it).

He said that the attackers wore saffron Hindu Zionist bands, which no Muslim would tie. Hamid also said that within the first 5 minutes of the attack, the three ATS policemen investigating the network of terror within India's security agencies and radical right were killed.

That ensured that those investigations reach a dead end. Anchor Qudsia Qadri added that with their killings, the investigations into the Samjhauta Express carnage would be halted. The killings also immediately shifted attention from India's domestic terrorists to Pakistan, said Hamid.

Marvi Memon, glamorous Pakistan Muslim League member, on the same programme, was appalled at the Pakistan government's expansion of the "India-appeasement package" by initially agreeing to send ISI chief to India. "I just don't get it," she exclaimed in exasperation.

She wondered how can you send the ISI chief to a " mulk jiske sath jang chal raha hai ...at a different level...," mentioning Kashmir and accusing India of blocking Pakistan's waters. Memon said, "They (Indians) are quite obsessed with anti-Pakistan speak and that unites them," she said. Memon also spoke about India's separatist movements and believed that India was only reaping the bitter harvest of the poisonous seeds it had sowed.

Blogger daily.pk writes in pakalert.wordpress.com, "India has been relapsing into religious extremism and numerous separatist movement have mushroomed due to official patronage ...I see the Mumbai bombings as the desperate move of separatists who want to blame everything on Muslims."

It's not only random voices railing against fingers pointing to Pakistan. Blogger and journalist Farrukh Khan Pitafi is miffed. "For years I have been advocating peace between India and Pakistan," he wrote. But he, too, says that India was out of its mind in naming Pakistan as the source of violence without identification of the perpetrators.

He wrote: "During such a long coverage of the mishap not a single outlet pointed out that Hemant Karkare... was the same man whose dismissal was Narendra Modi's biggest demand. Or that he was the man on the verge of uncovering the home-grown terror franchise of the Hindu extremists. No channel mentioned Colonel Purohit once during the live telecast, no not even CNN, BBC or CBS. It is sad."

India blames Pakistanis, calls for punishment

2008-12-02T04:43:00.000-08:00

by Somini Sengupta and Robert F. Worth
New York Times

Mumbai, India

In a new sign of rising tension between two nuclear-armed neighbors, Indian foreign ministry officials summoned Pakistan's ambassador Monday evening and told him Pakistanis were responsible and must be punished for last week's terrorist attacks here, in which 173 people were killed over three days in the heart of India's commercial capital.

India also suggested that the planners of the attacks are still at large in Pakistan, saying India expected "strong action would be taken" by Pakistan against those responsible for the violence, according to a statement released by the Ministry of External Affairs. The 10 men who appear to have carried out the attacks are now dead or in custody.

The statement added tartly that Pakistan's actions "needed to match the sentiments expressed by its leadership that it wishes to have a qualitatively new relationship with India."

It was not clear whether India had supplied Pakistan with any proof of its claims. Pakistani officials have said that they are not aware of any links to Pakistan-based militants and that they would act swiftly if they found one.

The Indian government is facing strong criticism at home for its handling of the attacks, and with elections just months away, it could risk being accused of diverting public anger from its failures if it does not furnish evidence for its claims. But there is also a groundswell of popular anger in Mumbai against Pakistan.

The attacks have raised tensions between the two countries to a level not seen since 2001, when a suicide attack on the Indian parliament pushed them to the brink of war.

The ominous atmosphere poses a special challenge for the United States, a strong ally of India and also dependent on Pakistan for cooperation in fighting al Qaeda. Renewed tensions between India and Pakistan could distract Pakistan from that project.

President Bush has dispatched Secretary of State Condoleezza Rice to India, where she is expected to arrive on Wednesday.

Speaking in London on Monday, she called on Pakistan in blunt terms "to follow the evidence wherever it leads," adding, "I don't want to jump to any conclusions myself on this, but I do think that this is a time for complete, absolute, total transparency and cooperation."

The foreign ministry's claim that the attackers were all Pakistani echoes a claim by the one attacker who was captured alive, identified as Ajmal Amir Qasab, said Inspector Rakesh Maria, head of the crime control bureau at the Mumbai police. Qasab also said he was a member of Lashkar-e-Taiba, a militant Islamist group blamed for terrorist attacks in Indian-administered Kashmir and elsewhere.

However, no foreign identification documents were found, and some of the attackers had fake Indian papers, Inspector Maria added.

Maria also said there were only 10 attackers in all, denying earlier suggestions by public officials that more may have been involved. It remains unclear whether more attackers may remain at large, and whether the militants had at least some accomplices on the ground before the violence began on Wednesday night.

Some new details emerged Monday about the difficulties faced by the Indian police commandos who responded to the killings here last week. The attackers used grenades to booby-trap some of the dead bodies in the two hotels where they struck, the Taj Mahal and Oberoi hotels, Inspector Maria said.

That tactic made fighting the attackers more difficult, and significantly delayed the cleanup after the violence ended, he said. The last militants were routed on Saturday morning, but the Taj hotel was not returned to the control of its owners until Monday morning.

But those details seemed unlikely to blunt the rising public anger at the government's handling of the attacks, which have been widely described here as India's version of the Sept. 11, 2001, terrorist attacks in the United States. The ease with which the small band of attackers mowed down civilians in downtown Mumbai, and resisted police commandos for days in several different buildings, has exposed glaring weaknesses in India's intelligence and enforcement abilities.

On Monday, rising public outcry pushed the chief minister of Maharashtra State, Vilasrao Deshmukh, a member of the governing Congress Party, to offer his resignation. Party leaders were still considering his offer Monday night.

"I accept moral responsibility for the terror attacks," he said at a news conference.

Earlier in the day, his deputy, R.R. Patil, officially stepped down. The two gestures came a day after India's highest-ranking domestic security official, Home Minister Shivraj Patil, resigned, saying he took responsibility for the failure to forestall or quickly contain the three-day killing spree.

What They Hate About Mumbai

2008-11-29T10:06:00.000-08:00

by SUKETU MEHTA
New York Times

My bleeding city. My poor great bleeding heart of a city. Why do they go after Mumbai? There’s something about this island-state that appalls religious extremists, Hindus and Muslims alike. Perhaps because Mumbai stands for lucre, profane dreams and an indiscriminate openness.

Mumbai is all about dhandha, or transaction. From the street food vendor squatting on a sidewalk, fiercely guarding his little business, to the tycoons and their dreams of acquiring Hollywood, this city understands money and has no guilt about the getting and spending of it. I once asked a Muslim man living in a shack without indoor plumbing what kept him in the city. “Mumbai is a golden songbird,” he said. It flies quick and sly, and you’ll have to work hard to catch it, but if you do, a fabulous fortune will open up for you. The executives who congregated in the Taj Mahal hotel were chasing this golden songbird. The terrorists want to kill the songbird.

Just as cinema is a mass dream of the audience, Mumbai is a mass dream of the peoples of South Asia. Bollywood movies are the most popular form of entertainment across the subcontinent. Through them, every Pakistani and Bangladeshi is familiar with the wedding-cake architecture of the Taj and the arc of the Gateway of India, symbols of the city that gives the industry its name. It is no wonder that one of the first things the Taliban did upon entering Kabul was to shut down the Bollywood video rental stores. The Taliban also banned, wouldn’t you know it, the keeping of songbirds.

Bollywood dream-makers are shaken. “I am ashamed to say this,” Amitabh Bachchan, superstar of a hundred action movies, wrote on his blog. “As the events of the terror attack unfolded in front of me, I did something for the first time and one that I had hoped never ever to be in a situation to do. Before retiring for the night, I pulled out my licensed .32 revolver, loaded it and put it under my pillow.”

Mumbai is a “soft target,” the terrorism analysts say. Anybody can walk into the hotels, the hospitals, the train stations, and start spraying with a machine gun. Where are the metal detectors, the random bag checks? In Mumbai, it’s impossible to control the crowd. In other cities, if there’s an explosion, people run away from it. In Mumbai, people run toward it — to help. Greater Mumbai takes in a million new residents a year. This is the problem, say the nativists. The city is just too hospitable. You let them in, and they break your heart.

In the Bombay I grew up in, your religion was a personal eccentricity, like a hairstyle. In my school, you were denominated by which cricketer or Bollywood star you worshiped, not which prophet. In today’s Mumbai, things have changed. Hindu and Muslim demagogues want the mobs to come out again in the streets, and slaughter one another in the name of God. They want India and Pakistan to go to war. They want Indian Muslims to be expelled. They want India to get out of Kashmir. They want mosques torn down. They want temples bombed.

And now it looks as if the latest terrorists were our neighbors, young men dressed not in Afghan tunics but in blue jeans and designer T-shirts. Being South Asian, they would have grown up watching the painted lady that is Mumbai in the movies: a city of flashy cars and flashier women. A pleasure-loving city, a sensual city. Everything that preachers of every religion thunder against. It is, as a monk of the pacifist Jain religion explained to me, “paap-ni-bhoomi”: the sinful land.

In 1993, Hindu mobs burned people alive in the streets — for the crime of being Muslim in Mumbai. Now these young Muslim men murdered people in front of their families — for the crime of visiting Mumbai. They attacked the luxury businessmen’s hotels. They attacked the open-air Cafe Leopold, where backpackers of the world refresh themselves with cheap beer out of three-foot-high towers before heading out into India. Their drunken revelry, their shameless flirting, must have offended the righteous believers in the jihad. They attacked the train station everyone calls V.T., the terminus for runaways and dreamers from all across India. And in the attack on the Chabad house, for the first time ever, it became dangerous to be Jewish in India.

The terrorists’ message was clear: Stay away from Mumbai or you will get killed. Cricket matches with visiting English and Australian teams have been shelved. Japanese and Western companies have closed their Mumbai offices and prohibited their employees from visiting the city. Tour groups are canceling long-planned trips.

But the best answer to the terrorists is to dream bigger, make even more money, and visit Mumbai more than ever. Dream of making a good home for all Mumbaikars, not just the denizens of $500-a-night hotel rooms. Dream not just of Bollywood stars like Aishwarya Rai or Shah Rukh Khan, but of clean running water, humane mass transit, better toilets, a responsive government. Make a killing not in God’s name but in the stock market, and then turn up the forbidden music and dance; work hard and party harder.

If the rest of the world wants to help, it should run toward the explosion. It should fly to Mumbai, and spend money. Where else are you going to be safe? New York? London? Madrid?

So I’m booking flights to Mumbai. I’m going to go get a beer at the Leopold, stroll over to the Taj for samosas at the Sea Lounge, and watch a Bollywood movie at the Metro. Stimulus doesn’t have to be just economic.

Suketu Mehta, a professor of journalism at New York University, is the author of “Maximum City: Bombay Lost and Found.”

Qaida in partnership with Lashkar in India

2008-11-29T10:02:00.000-08:00

Times of India

NEW DELHI: Terror does leave a calling card. As the enormity of the attack on Mumbai sank in, it seemed like the arrival of al-Qaida in India, a version of 9/11 designed to attract a global audience given the scale of violence and the planned targeting of westerners.

With the capture of a terrorist, the actual authors were revealed. It wasn't the al-Qaida. But the jihadi credentials were not much less impressive with Lashkar-e-Taiba named as the suspect. Given the operation's obvious planning, few doubted it was the deadly firm of LeT-ISI in action yet again.

Yet the difference between LeT and al-Qaida is not so significant as might have once been the case. In recent years, Lashkar has emerged as not only the single largest pan-Indian terror threat, but also a partner with al-Qaida in jihadi battlegrounds like Iraq, Chechnya and Afghanistan. It has shared training camps and cadre and used al-Qaida-Taliban facilities for a "jihad" against India.

It has been proscribed by US and UK who have recognised LeT to be a global terrorist organisation. In UK, it has been allied to the Kashmiri underground, for long recognised as one of the easiest way to get into the jihadi circuit which leads to Pakistan. It poses as a charity and openly seeks donations in Pakistani cities for the "Kashmir cause" and its leader, Prof Hafiz Saeed, is allowed free movement apart from occasional cosmetic spells of house arrest.

Before the Markaz-da'wa wal-irshad, the Lashkar's religio-political wing, was banned, its website regularly carried the view of its founder. Saeed's view of LeT's mission was quite unambiguous. He argued that Kashmir was the "gateway" to India, much of which comprised "lost Muslim lands". He saw jihad in Kashmir as a religious duty and fully identified himself with the 9/11 mayhem that Osama bin Laden wreaked.

Aligned with the Ahl-e-Hadees sect, Lashkar was founded in 1987 by Saeed, who incidentally was also trained as an engineer like Osama and many other prominent jihadis, and who drew his inspiration from the Egypt-based Muslim Brotherhood — an organisation that saw Palestine as an Islamic cause way back in the 1930's. In collaboration with ISI, Lashkar built up an impressive Kashmir portfolio with recruits chiefly drawn from Pakistani Punjabis, Pashtoons, Bangladeshis, Arabs and south-east Asians.

But its vision has never been Kashmir-centric as it bids to re-establish Muslim rule from Morocco to Indonesia and also eyes north Australia as part of its likely domain.

NY subway terror threat emerges on busy travel day

2008-11-26T10:43:00.000-08:00

by Devlin Barrett and Tom Hays
AP

Police bolstered security in subways and trains Wednesday after the government warned that al-Qaida suicide bombers were contemplating an attack on New York's mass-transit systems during the holiday season. An internal memo obtained by The Associated Press says the FBI has received a "plausible but unsubstantiated" report that al-Qaida terrorists in late September may have discussed attacking the subway system.

The internal bulletin says al-Qaida terrorists "in late September may have discussed targeting transit systems in and around New York City. These discussions reportedly involved the use of suicide bombers or explosives placed on subway/passenger rail systems," according to the document.

"We have no specific details to confirm that this plot has developed beyond aspirational planning, but we are issuing this warning out of concern that such an attack could possibly be conducted during the forthcoming holiday season," according to the warning dated Tuesday.

A person briefed on the matter, speaking to The Associated Press on condition of anonymity because of the sensitivity of the intelligence-gathering work, said the threat may also be directed at the passenger rail lines running through New York, such as Amtrak and the Long Island Rail Road, which are particularly busy with Thanksgiving holiday travelers.

A federal law enforcement official said there's no indication that anyone involved in the planning is in the United States. That official also spoke on condition of anonymity because it involved intelligence-gathering.

While law enforcement stepped up patrols around subways and trains, many commuters around the city were unfazed by the news and had not even heard of the threat.

"If you get scared that means they win," commuter Omid Sima said on the platform of the subway below Rockefeller Center. "There's always been terror warnings. I can't change my life because of that."

The Big Apple's tightly packed passenger trains and subway cars have long been a source of concern for police officers — and a tempting target for would-be terrorists — but there is often disagreement as to how seriously authorities should take specific intelligence reports.

The city has more than 450 subway stations that handle millions of commuters every day.

A Pakistani immigrant was arrested and convicted for a scheme to blow up the subway station at Herald Square in 2004. There was also a planned cyanide attack on the subways by al-Qaida operatives that authorities say was called off in 2002; another aborted al-Qaida plot to destroy the Brooklyn Bridge in 2003; and a plot to bomb underwater train tunnels to flood lower Manhattan, which was broken up in 2006 by several arrests overseas.

Three years ago, authorities weighed reports that bombers might try to use baby strollers to bring explosives into city trains. Many security officials later concluded that was a false alarm.

NYPD spokesman Paul Browne said they have received an unsubstantiated report and as a result have "deployed additional resources in the mass transit system."

While federal agencies regularly issue all sorts of advisory warnings, the language of this one is particularly blunt.

Intelligence and homeland security officials are working with local authorities to try to corroborate the information "and will continue to investigate every possible lead," the memo says.

Rep. Peter King, the top Republican on the House Homeland Security Committee, said authorities "have very real specifics as to who it is and where the conversation took place and who conducted it."

"It certainly involves suicide bombing attacks on the mass transit system in and around New York and it's plausible, but there's no evidence yet that it's in the process of being carried out," King said.

Department of Homeland Security spokesman Russ Knocke said the warning was issued "out of an abundance of caution going into this holiday season."

No changes are being made to the nation's threat level, or for transit systems at this time, he said.

FBI spokesman Richard Kolko confirmed only that his agency and the Homeland Security Department issued a bulletin Tuesday night to state and local authorities, and the information is being reviewed.And here is the rest of it.

BAILOUT GROWS: Total relief package up to $8.5 trillion - nobody knows risk to taxpayer

2008-11-26T05:18:00.000-08:00

by Kathleen Pender
San Francisco Chronicle

The federal government committed an additional $800 billion to two new loan programs on Tuesday, bringing its cumulative commitment to financial rescue initiatives to a staggering $8.5 trillion, according to Bloomberg News.

That sum represents almost 60 percent of the nation's estimated gross domestic product.

Given the unprecedented size and complexity of these programs and the fact that many have never been tried before, it's impossible to predict how much they will cost taxpayers. The final cost won't be known for many years.

The money has been committed to a wide array of programs, including loans and loan guarantees, asset purchases, equity investments in financial companies, tax breaks for banks, help for struggling homeowners and a currency stabilization fund.

Most of the money, about $5.5 trillion, comes from the Federal Reserve, which as an independent entity does not need congressional approval to lend money to banks or, in "unusual and exigent circumstances," to other financial institutions.

To stimulate lending, the Fed said on Tuesday it will purchase up to $600 billion in mortgage debt issued or backed by Fannie Mae, Freddie Mac and government housing agencies. It also will lend up to $200 billion to holders of securities backed by consumer and small-business loans. All but $20 billion of that $800 billion represents new commitments, a Fed spokeswoman said.

About $1.1 trillion of the $8.5 trillion is coming from the Treasury Department, including $700 billion approved by Congress in dramatic fashion under the Troubled Asset Relief Program.

The rest of the commitments are coming from the Federal Deposit Insurance Corp. and the Federal Housing Administration.

Only about $3.2 trillion of the $8.5 trillion has been tapped so far, according to Bloomberg. Some of it might never be.

Relatively little of the money represents direct outlays of cash with no strings attached, such as the $168 billion in stimulus checks mailed last spring.

Where it's goingMost of the money is going into loans or loan guarantees, asset purchases or stock investments on which the government could see some return.

"If the economy were to miraculously recover, the taxpayer could make money. That's not my best guess or even a likely scenario," but it's not inconceivable, says Anil Kashyap, a professor at the University of Chicago's Booth School of Business.

The risk/reward ratio for taxpayers varies greatly from program to program.

For example, the first deal the government made when it bailed out insurance giant AIG had little risk and a lot of potential upside for taxpayers, Kashyap said. "Then it turned out the situation (at AIG) was worse than realized, and the terms were so brutal (to AIG) that we had to renegotiate. Now we have given them a lot more credit on more generous terms."

Kashyap says the worst deal for taxpayers could be the Citigroup deal announced late Sunday. The government agreed to buy an additional $20 billion in preferred stock and absorb up to $249 billion in losses on troubled assets owned by Citi.

Given that Citigroup's entire market value on Friday was $20.5 billion, "instead of taking that $20 billion in preferred shares we could have bought the company," he says.

It's hard to say how much the overall rescue attempt will add to the annual deficit or the national debt because the government accounts for each program differently.

If the Treasury borrows money to finance a program, that money adds to the federal debt and must eventually be paid off, with interest, says Diane Lim Rogers, chief economist with the Concord Coalition, a nonpartisan group that aims to eliminate federal deficits.

The federal debt held by the public has risen to $6.4 trillion from $5.5 trillion at the end of August. (Total debt, including that owed to Social Security and other government agencies, stands at more than $10 trillion.)

However, a $1 billion increase in the federal debt does not necessarily increase the annual budget deficit by $1 billion because it is expected to be repaid over time, Rogers said.

Annual deficitA deficit arises when the government 's expenditures exceed its revenues in a particular year. Some estimate that the federal deficit will exceed $1 trillion this fiscal year as a result of the economic slowdown and efforts to revive it.

The Fed's activities to shore up the financial system do not show up directly on the federal budget, although they can have an impact. The Fed lends money from its own balance sheet or by essentially creating new money. It has been doing both this year.

The problem is, "if you print money all the time, the money becomes worth less," Rogers says. This usually leads to higher inflation and higher interest rates. The value of the dollar also falls because foreign investors become less willing to invest in the United States.

Today, interest rates are relatively low and the dollar has been mostly strengthening this year because U.S. Treasury securities "are still for the moment a very safe thing to be investing in because the financial market is so unstable," Rogers said. "Once we stabilize the stock market, people will not be so enamored of clutching onto Treasurys."

At that point, interest rates and inflation will rise. Increased borrowing by the Treasury will also put upward pressure on interest rates.

Deflation a big concernToday, however, the Fed is more worried about deflation than inflation and is willing to flood the market with money if necessary to prevent an economic collapse.

Federal Reserve Chairman Ben Bernanke "has ordered the helicopters to get ready," said Axel Merk, president of Merk Investments. "The helicopters are hovering and the first cash is making it through the seams. Soon, a door may be opened."

Rogers says her biggest fear is not hyperinflation and the social unrest it could unleash. "I'm more worried about a lot of federal dollars being committed and not having much to show for it. My worst fear is we are leaving our children with a huge debt burden and not much left to pay it back."

Economic rescue Key dates in the federal government 's campaign to alleviate the economic crisis.

March 11: The Federal Reserve announces a rescue package to provide up to $200 billion in loans to banks and investment houses and let them put up risky mortgage-backed securities as collateral.

March 16: The Fed provides a $29 billion loan to JPMorgan Chase & Co. as part of its purchase of investment bank Bear Stearns.

July 30: President Bush signs a housing bill including $300 billion in new loan authority for the government to back cheaper mortgages for troubled homeowners.

Sept. 7: The Treasury takes over mortgage giants Fannie Mae and Freddie Mac, putting them into a conservatorship and pledging up to $200 billion to back their assets.

Sept. 16: The Fed injects $85 billion into the failing American International Group, one of the world's largest insurance companies.

Sept. 16: The Fed pumps $70 billion more into the nation's financial system to help ease credit stresses.

Sept. 19: The Treasury temporarily guarantees money market funds against losses up to $50 billion.

Oct. 3: President Bush signs the $700 billion economic bailout package. Treasury Secretary Henry Paulson says the money will be used to buy distressed mortgage-related securities from banks.

Oct. 6: The Fed increases a short-term loan program, saying it is boosting short-term lending to banks to $150 billion.

Oct. 7: The Fed says it will start buying unsecured short-term debt from companies, and says that up to $1.3 trillion of the debt may qualify for the program.

Oct. 8: The Fed agrees to lend AIG $37.8 billion more, bringing total to about $123 billion.

Oct. 14: The Treasury says it will use $250 billion of the $700 billion bailout to inject capital into the banks, with $125 billion provided to nine of the largest.

Oct. 14: The FDIC says it will temporarily guarantee up to a total of $1.4 trillion in loans between banks.

Oct. 21: The Fed says it will provide up to $540 billion in financing to provide liquidity for money market mutual funds.

Nov. 10: The Treasury and Fed replace the two loans provided to AIG with a $150 billion aid package that includes an infusion of $40 billion from the government 's bailout fund.

Nov. 12: Paulson says the government will not buy distressed mortgage-related assets, but instead will concentrate on injecting capital into banks.

Nov. 17: Treasury says it has provided $33.6 billion in capital to another 21 banks. So far, the government has invested $158.6 billion in 30 banks.

Sunday: The Treasury says it will invest $20 billion in Citigroup Inc., on top of $25 billion provided Oct. 14. The Treasury, Fed and FDIC also pledge to backstop large losses Citigroup might absorb on $306 billion in real estate-related assets.

Tuesday: The Fed says it will purchase up to $600 billion more in mortgage-related assets and will lend up to $200 billion to the holders of securities backed by various types of consumer loans. And here is the rest of it.

Germans held in Kosovo over blast

2008-11-23T10:34:00.000-08:00

BBC

A Kosovan judge has ordered three Germans suspected of throwing an explosive device at the EU headquarters in Pristina to be held for 30 days.

The three reportedly deny involvement in the attack on 14 November, saying they were detained while investigating it themselves.

Windows in the glass-fronted building were shattered but nobody was hurt.

German and Kosovo media report that the men are German intelligence agents but officials in Berlin refuse to comment.

Lawyers for the detainees say the prosecution is seeking terrorism charges that carry a maximum 20-year sentence.

A spokesman for the German foreign ministry in Berlin confirmed that three Germans had been arrested on Thursday, but declined to make any further comment as an investigation was under way.

The German weekly Der Spiegel said the men worked for the German intelligence agency BND, and that they told investigators they had been examining the scene of the explosion, but had not been involved in it.

Kosovo declared independence from Serbia in February after nine years under UN stewardship and is recognised by more than 50 countries, including Germany.

Four days before the bomb attack, Kosovo's Albanian majority rejected an agreement between the UN and Serbia on the deployment of the much-delayed EU police and justice mission Eulex.

U.S. Should Examine AIG's use of Tax Havens

2008-10-12T16:42:00.000-07:00

by Lucy Komisar

Now that it controls AIG, the U.S. should investigate the extent to which this giant corporation, with subsidiaries in major tax havens, has been using the offshore system to cook its books and dodge U.S. taxes. Evidence shows AIG has done so in the past.

The U.S. takeover of the world's largest insurance conglomerate, AIG, puts it in a unique position to look into the inner dealings of a company that is a profligate user of tax havens. AIG has employed offshore shell companies to cook its books and dodge taxes. The new U.S. managers should investigate how they do it. AIG's favorite offshore jurisdictions are Bermuda, Barbados, Switzerland, and Luxembourg, places immune from even the lax enforcement of America's state insurance regulators and the Securities and Exchange Commission (SEC). AIG's offshore subsidiaries include American International Assurance Company Limited, Bermuda; American International Reinsurance Company, Ltd., Bermuda; AIG Life Insurance Company Ltd., Switzerland; and AIG Financial Advisor Services, S.A., Luxembourg. AIG in the past has used tax havens to evade regulations and hide insider connections in supposedly "arms-length" deals. This is especially significant as the company has moved into financial services and asset management. It has also used the offshore system to evade U.S. taxes. Here are two examples, the first reported exclusively by this writer. AIG helped Victor Posner, a notoriously crooked investor, set up an offshore reinsurance company so that Posner could evade U.S. taxes. The policy scam was discovered in the early 1990s, after the SEC prosecuted Posner for a fraudulent takeover scheme concocted with Wall Street thieves Michael Milken and Ivan Boesky, ordered him to pay $4 million to fraud victims and banned him from serving as officer or director of any publicly-held company. New managers took over Posner's NVF Corp., which ran a Delaware vulcanized rubber plant. An insurance agent charged with examining company policies discovered that NVF was paying AIG's National Union Fire of Pittsburgh substantially over market for workmen's compensation insurance. AIG reinsured the policy through Chesapeake Insurance, an offshore reinsurance company Posner owned in Bermuda. In essence, NVF, owned by Posner, was buying insurance from an AIG company which was buying reinsurance for the policy from an offshore company owned by Posner. Bermuda provided tax and corporate secrecy, so Chesapeake's books were safe from the eyes of American regulators and tax authorities. AIG and Posner made out like bandits. AIG got a higher commission from the inflated NVF premium before sending the rest to Chesapeake. Posner wrote off the entire amount as a business expense and enjoyed the extra cash in Bermuda, tax free, stiffing the U.S. government. Reduced profits also meant smaller dividends and share prices for investors. The insurance agent cancelled the NVF policy with AIG, but the Delaware Insurance Department did not make the scam public or take any action against AIG. A former insurance department regulator told me, "This was not an isolated case with Vulcan [NVF]. AIG did that a lot. AIG helped companies set up offshore captive reinsurance companies." A "captive" is owned by the company it insures. AIG, he alleged, "would then overcharge on insurance and pay reinsurance premiums to the captives, giving the captive owners tax-free offshore income." AIG says that it "pioneered the formation of captives" and offers management facilities to run them in offshore Barbados, Bermuda, Cayman Islands, Gibraltar, Guernsey, Isle of Man, and Luxembourg - all places where corporate and accounting records are secret and taxes minimal or nonexistent. Another scam helped AIG dodge taxes and U.S. regulations. Insurance companies normally insure themselves by laying off part of their risk to reinsurance companies, so if a claim comes in above a certain amount, the reinsurance company will pay it. State laws also require them to keep a certain amount of capital available to pay out claims. If they have reinsurance, that amount can drop. Companies have to show losses - amounts they have paid out - on their books. If they have enough good reinsurance, they get a credit for that against their losses. The reinsurer, of course, has to be an independent company; the risk isn't reduced if it's just moved to another division of the same company. In the mid-1980s, two of AIG's reinsurers failed. AIG would have had to curtail writing new business, since rules require a certain ratio of assets to risk. Finding new reinsurers was going to be difficult and expensive. CEO Maurice "Hank" Greenberg persuaded several of his business friends to set up a company into which he could "cede" AIG insurance. The company was launched with a private sale of shares organized by Goldman Sachs, then headed by Robert Rubin. Greenberg's front men were loaned the money to "buy" risk-free shares in the new Coral Re, an allegedly independent offshore reinsurance company, to allow it to illegally move debt off AIG's books and violate rules about maintaining minimum levels of reserves required to pay off claims. The company was registered in Barbados, where capital requirements and regulation are minimal, where American regulators couldn't readily discover AIG's involvement and where, as an added incentive, it could evade U.S. taxes. If Coral Re was an AIG affiliate, it would have to pay taxes on its income.

A Delaware Insurance Department regulator's report in 1996 said that Coral Re "may be an affiliate" of AIG. It described how AIG played an integral role in the creation of Coral Re; that its purpose was to reinsure risks for AIG companies; that virtually all Coral Re's business originated from AIG units; and that Coral Re was managed by an AIG subsidiary. It concluded that the arrangement did not transfer risk and had to come off the books. The insurance departments of New York and Pennsylvania agreed. But delays and stonewalling allowed AIG to use Coral Re for more than eight years. By the time it had to shut it down, it didn't need it anymore. Cowed by AIG, none of the agencies levied a penalty.

It would be unthinkable for the U.S. to allow a business it controls to finesse regulations, evade taxes or help others to evade them. The turnover of AIG to the U.S. will involve extensive examinations by accountants. An analysis of the company's offshore strategies should be part of the audit. What accountants learn could stop illicit practices by AIG and lead to laws to prevent other insurance companies from doing the same.

Meet Sarah Palin's radical right-wing pals

2008-10-10T06:47:00.000-07:00

Extremists Mark Chryson and Steve Stoll helped launch Palin's political career in Alaska, and in return had influence over policy. "Her door was open," says Chryson -- and still is.

by Max Blumenthal and David Neiwert
Salon.com

On the afternoon of Sept. 24 in downtown Palmer, Alaska, as the sun began to sink behind the snowcapped mountains that flank the picturesque Mat-Su Valley, 51-year-old Mark Chryson sat for an hour on a park bench, reveling in tales of his days as chairman of the Alaska Independence Party. The stocky, gray-haired computer technician waxed nostalgic about quixotic battles to eliminate taxes, support the "traditional family" and secede from the United States.

So long as Alaska remained under the boot of the federal government, said Chryson, the AIP had to stand on guard to stymie a New World Order. He invited a Salon reporter to see a few items inside his pickup truck that were intended for his personal protection. "This here is my attack dog," he said with a chuckle, handing the reporter an exuberant 8-pound papillon from his passenger seat. "Her name is Suzy." Then he pulled a 9-millimeter Makarov PM pistol -- once the standard-issue sidearm for Soviet cops -- out of his glove compartment. "I've got enough weaponry to raise a small army in my basement," he said, clutching the gun in his palm. "Then again, so do most Alaskans." But Chryson added a message of reassurance to residents of that faraway place some Alaskans call "the 48." "We want to go our separate ways," he said, "but we are not going to kill you."

Though Chryson belongs to a fringe political party, one that advocates the secession of Alaska from the Union, and that organizes with other like-minded secessionist movements from Canada to the Deep South, he is not without peculiar influence in state politics, especially the rise of Sarah Palin. An obscure figure outside of Alaska, Chryson has been a political fixture in the hometown of the Republican vice-presidential nominee for over a decade. During the 1990s, when Chryson directed the AIP, he and another radical right-winger, Steve Stoll, played a quiet but pivotal role in electing Palin as mayor of Wasilla and shaping her political agenda afterward. Both Stoll and Chryson not only contributed to Palin's campaign financially, they played major behind-the-scenes roles in the Palin camp before, during and after her victory.

Palin backed Chryson as he successfully advanced a host of anti-tax, pro-gun initiatives, including one that altered the state Constitution's language to better facilitate the formation of anti-government militias. She joined in their vendetta against several local officials they disliked, and listened to their advice about hiring. She attempted to name Stoll, a John Birch Society activist known in the Mat-Su Valley as "Black Helicopter Steve," to an empty Wasilla City Council seat. "Every time I showed up her door was open," said Chryson. "And that policy continued when she became governor."

When Chryson first met Sarah Palin, however, he didn't really trust her politically. It was the early 1990s, when he was a member of a local libertarian pressure group called SAGE, or Standing Against Government Excess. (SAGE's founder, Tammy McGraw, was Palin's birth coach.) Palin was a leader in a pro-sales-tax citizens group called WOW, or Watch Over Wasilla, earning a political credential before her 1992 campaign for City Council. Though he was impressed by her interpersonal skills, Chryson greeted Palin's election warily, thinking she was too close to the Democrats on the council and too pro-tax.

But soon, Palin and Chryson discovered they could be useful to each other. Palin would be running for mayor, while Chryson was about to take over the chairmanship of the Alaska Independence Party, which at its peak in 1990 had managed to elect a governor.

The AIP was born of the vision of "Old Joe" Vogler, a hard-bitten former gold miner who hated the government of the United States almost as much as he hated wolves and environmentalists. His resentment peaked during the early 1970s when the federal government began installing Alaska's oil and gas pipeline. Fueled by raw rage -- "The United States has made a colony of Alaska," he told author John McPhee in 1977 -- Vogler declared a maverick candidacy for the governorship in 1982. Though he lost, Old Joe became a force to be reckoned with, as well as a constant source of amusement for Alaska's political class. During a gubernatorial debate in 1982, Vogler proposed using nuclear weapons to obliterate the glaciers blocking roadways to Juneau. "There's gold under there!" he exclaimed.

Vogler made another failed run for the governor's mansion in 1986. But the AIP's fortunes shifted suddenly four years later when Vogler convinced Richard Nixon's former interior secretary, Wally Hickel, to run for governor under his party's banner. Hickel coasted to victory, outflanking a moderate Republican and a centrist Democrat. An archconservative Republican running under the AIP candidate, Jack Coghill, was elected lieutenant governor.

Hickel's subsequent failure as governor to press for a vote on Alaskan independence rankled Old Joe. With sponsorship from the Islamic Republic of Iran, Vogler was scheduled to present his case for Alaskan secession before the United Nations General Assembly in the late spring of 1993. But before he could, Old Joe's long, strange political career ended tragically that May when he was murdered by a fellow secessionist.

Hickel rejoined the Republican Party the year after Vogler's death and didn't run for reelection. Lt. Gov. Coghill's campaign to succeed him as the AIP candidate for governor ended in disaster; he peeled away just enough votes from the Republican, Jim Campbell, to throw the gubernatorial election to Democrat Tony Knowles.

Despite the disaster, Coghill hung on as AIP chairman for three more years. When he was asked to resign in 1997, Mark Chryson replaced him. Chryson pursued a dual policy of cozying up to secessionist and right-wing groups in Alaska and elsewhere while also attempting to replicate the AIP's success with Hickel in infiltrating the mainstream.

Unlike some radical right-wingers, Chryson doesn't put forward his ideas freighted with anger or paranoia. And in a state where defense of gun and property rights often takes on a real religious fervor, Chryson was able to present himself as a typical Alaskan.

He rose through party ranks by reducing the AIP's platform to a single page that "90 percent of Alaskans could agree with." This meant scrubbing the old platform of what Chryson called "racist language" while accommodating the state's growing Christian right movement by emphasizing the AIP's commitment to the "traditional family."

"The AIP is very family-oriented," Chryson explained. "We're for the traditional family -- daddy, mommy, kids -- because we all know that it was Adam and Eve, not Adam and Steve. And we don't care if Heather has two mommies. That's not a traditional family."

Chryson further streamlined the AIP's platform by softening its secessionist language. Instead of calling for immediate separation from the United States, the platform now demands a vote on independence.

Yet Chryson maintains that his party remains committed to full independence. "The Alaskan Independence Party has got links to almost every independence-minded movement in the world," Chryson exclaimed. "And Alaska is not the only place that's about separation. There's at least 30 different states that are talking about some type of separation from the United States."

This has meant rubbing shoulders and forging alliances with outright white supremacists and far-right theocrats, particularly those who dominate the proceedings at such gatherings as the North American Secessionist conventions, which AIP delegates have attended in recent years. The AIP's affiliation with neo-Confederate organizations is motivated as much by ideological affinity as by organizational convenience. Indeed, Chryson makes no secret of his sympathy for the Lost Cause. "Should the Confederate states have been allowed to separate and go their peaceful ways?" Chryson asked rhetorically. "Yes. The War of Northern Aggression, or the Civil War, or the War Between the States -- however you want to refer to it -- was not about slavery, it was about states' rights."

Another far-right organization with whom the AIP has long been aligned is Howard Phillips' militia-minded Constitution Party. The AIP has been listed as the Constitution Party's state affiliate since the late 1990s, and it has endorsed the Constitution Party's presidential candidates (Michael Peroutka and Chuck Baldwin) in the past two elections.

The Constitution Party boasts an openly theocratic platform that reads, "It is our goal to limit the federal government to its delegated, enumerated, Constitutional functions and to restore American jurisprudence to its original Biblical common-law foundations." In its 1990s incarnation as the U.S. Taxpayers Party, it was on the front lines in promoting the "militia" movement, and a significant portion of its membership comprises former and current militia members.

At its 1992 convention, the AIP hosted both Phillips -- the USTP's presidential candidate -- and militia-movement leader Col. James "Bo" Gritz, who was campaigning for president under the banner of the far-right Populist Party. According to Chryson, AIP regulars heavily supported Gritz, but the party deferred to Phillips' presence and issued no official endorsements.

In Wasilla, the AIP became powerful by proxy -- because of Chryson and Stoll's alliance with Sarah Palin. Chryson and Stoll had found themselves in constant opposition to policies of Wasilla's Democratic mayor, who started his three-term, nine-year tenure in 1987. By 1992, Chryson and Stoll had begun convening regular protests outside City Council. Their demonstrations invariably involved grievances against any and all forms of "socialist government," from city planning to public education. Stoll shared Chryson's conspiratorial views: "The rumor was that he had wrapped his guns in plastic and buried them in his yard so he could get them after the New World Order took over," Stein told a reporter.

Chryson did not trust Palin when she joined the City Council in 1992. He claimed that she was handpicked by Democratic City Council leaders and by Wasilla's Democratic mayor, John Stein, to rubber-stamp their tax hike proposals. "When I first met her," he said, "I thought she was extremely left. But I've watched her slowly as she's become more pronounced in her conservative ideology."

Palin was well aware of Chryson's views. "She knew my beliefs," Chryson said. "The entire state knew my beliefs. I wasn't afraid of being on the news, on camera speaking my views."

But Chryson believes she trusted his judgment because he accurately predicted what life on the City Council would be like. "We were telling her, 'This is probably what's going to happen,'" he said. "'The city is going to give this many people raises, they're going to pave everybody's roads, and they're going to pave the City Council members' roads.' We couldn't have scripted it better because everything we predicted came true."

After intense evangelizing by Chryson and his allies, they claimed Palin as a convert. "When she started taking her job seriously," Chryson said, "the people who put her in as the rubber stamp found out the hard way that she was not going to go their way." In 1994, Sarah Palin attended the AIP's statewide convention. In 1995, her husband, Todd, changed his voter registration to AIP. Except for an interruption of a few months, he would remain registered was an AIP member until 2002, when he changed his registration to undeclared.

In 1996, Palin decided to run against John Stein as the Republican candidate for mayor of Wasilla. While Palin pushed back against Stein's policies, particularly those related to funding public works, Chryson said he and Steve Stoll prepared the groundwork for her mayoral campaign.

Chryson and Stoll viewed Palin's ascendancy as a vehicle for their own political ambitions. "She got support from these guys," Stein remarked. "I think smart politicians never utter those kind of radical things, but they let other people do it for them. I never recall Sarah saying she supported the militia or taking a public stand like that. But these guys were definitely behind Sarah, thinking she was the more conservative choice."

"They worked behind the scenes," said Stein. "I think they had a lot of influence in terms of helping with the back-scatter negative campaigning."

Indeed, Chryson boasted that he and his allies urged Palin to focus her campaign on slashing character-based attacks. For instance, Chryson advised Palin to paint Stein as a sexist who had told her "to just sit there and look pretty" while she served on Wasilla's City Council. Though Palin never made this accusation, her 1996 campaign for mayor was the most negative Wasilla residents had ever witnessed.

While Palin played up her total opposition to the sales tax and gun control -- the two hobgoblins of the AIP -- mailers spread throughout the town portraying her as "the Christian candidate," a subtle suggestion that Stein, who is Lutheran, might be Jewish. "I watched that campaign unfold, bringing a level of slime our community hadn't seen until then," recalled Phil Munger, a local music teacher who counts himself as a close friend of Stein.

"This same group [Stoll and Chryson] also [publicly] challenged me on whether my wife and I were married because she had kept her maiden name," Stein bitterly recalled. "So we literally had to produce a marriage certificate. And as I recall, they said, 'Well, you could have forged that.'"

When Palin won the election, the men who had once shouted anti-government slogans outside City Hall now had a foothold inside the mayor's office. Palin attempted to pay back her newfound pals during her first City Council meeting as mayor. In that meeting, on Oct. 14, 1996, she appointed Stoll to one of the City Council's two newly vacant seats. But Palin was blocked by the single vote of then-Councilman Nick Carney, who had endured countless rancorous confrontations with Stoll and considered him a "violent" influence on local politics. Though Palin considered consulting attorneys about finding another means of placing Stoll on the council, she was ultimately forced to back down and accept a compromise candidate.

Emboldened by his nomination by Mayor Palin, Stoll later demanded she fire Wasilla's museum director, John Cooper, a personal enemy he longed to sabotage. Palin obliged, eliminating Cooper's position in short order. "Gotcha, Cooper!" Stoll told the deposed museum director after his termination, as Cooper told a reporter for the New York Times. "And it only cost me a campaign contribution." Stoll, who donated $1,000 to Palin's mayoral campaign, did not respond to numerous requests for an interview. Palin has blamed budget concerns for Cooper's departure.

The following year, when Carney proposed a local gun-control measure, Palin organized with Chryson to smother the nascent plan in its cradle. Carney's proposed ordinance would have prohibited residents from carrying guns into schools, bars, hospitals, government offices and playgrounds. Infuriated by the proposal that Carney viewed as a common-sense public-safety measure, Chryson and seven allies stormed a July 1997 council meeting.

With the bill still in its formative stages, Carney was not even ready to present it to the council, let alone conduct public hearings on it. He and other council members objected to the ad-hoc hearing as "a waste of time." But Palin -- in plain violation of council rules and norms -- insisted that Chryson testify, stating, according to the minutes, that "she invites the public to speak on any issue at any time."

When Carney tried later in the meeting to have the ordinance discussed officially at the following regular council meeting, he couldn't even get a second. His proposal died that night, thanks to Palin and her extremist allies.

"A lot of it was the ultra-conservative far right that is against everything in government, including taxes," recalled Carney. "A lot of it was a personal attack on me as being anti-gun, and a personal attack on anybody who deigned to threaten their authority to carry a loaded firearm wherever they pleased. That was the tenor of it. And it was being choreographed by Steve Stoll and the mayor."

Asked if he thought it was Palin who had instigated the turnout, he replied: "I know it was."

By Chryson's account, he and Palin also worked hand-in-glove to slash property taxes and block a state proposal that would have taken money for public programs from the Permanent Fund Dividend, or the oil and gas fund that doles out annual payments to citizens of Alaska. Palin endorsed Chryson's unsuccessful initiative to move the state Legislature from Juneau to Wasilla. She also lent her support to Chryson's crusade to alter the Alaska Constitution's language on gun rights so cities and counties could not impose their own restrictions. "It took over 10 years to get that language written in," Chryson said. "But Sarah [Palin] was there supporting it."

"With Sarah as a mayor," said Chryson, "there were a number of times when I just showed up at City Hall and said, 'Hey, Sarah, we need help.' I think there was only one time when I wasn't able to talk to her and that was because she was in a meeting."

Chryson says the door remains open now that Palin is governor. (Palin's office did not respond to Salon's request for an interview.) While Palin has been more circumspect in her dealings with groups like the AIP as she has risen through the political ranks, she has stayed in touch.

When Palin ran for governor in 2006, marketing herself as a fresh-faced reformer determined to crush the GOP's ossified power structure, she made certain to appear at the AIP's state convention. To burnish her maverick image, she also tapped one-time AIP member and born-again Republican Walter Hickel as her campaign co-chair. Hickel barnstormed the state for Palin, hailing her support for an "all-Alaska" liquefied gas pipeline, a project first promoted in 2002 by an AIP gubernatorial candidate named Nels Anderson. When Palin delivered her victory speech on election night, Hickel stood beaming by her side. "I made her governor," he boasted afterward. Two years later, Hickel has endorsed Palin's bid for vice president.

Just months before Palin burst onto the national stage as McCain's vice-presidential nominee, she delivered a videotaped address to the AIP's annual convention. Her message was scrupulously free of secessionist rhetoric, but complementary nonetheless. "I share your party's vision of upholding the Constitution of our great state," Palin told the assembly of AIP delegates. "My administration remains focused on reining in government growth so individual liberty can expand. I know you agree with that ... Keep up the good work and God bless you."

When Palin became the Republican vice-presidential nominee, her attendance of the 1994 and 2006 AIP conventions and her husband's membership in the party (as well as Palin's videotaped welcome to the AIP's 2008 convention) generated a minor controversy. Chryson claimed, however, that Sarah and Todd Palin never even played a minor role in his party's internal affairs. "Sarah's never been a member of the Alaskan Independence Party," Chryson insisted. "Todd has, but most of rural Alaska has too. I never saw him at a meeting. They were at one meeting I was at. Sarah said hello, but I didn't pay attention because I was taking care of business."

But whether the Palins participated directly in shaping the AIP's program is less relevant than the extent to which they will implement that program. Chryson and his allies have demonstrated just as much interest in grooming major party candidates as they have in putting forward their own people. At a national convention of secessionist groups in 2007, AIP vice chairman Dexter Clark announced that his party would seek to "infiltrate" the Democratic and Republican parties with candidates sympathetic to its hard-right, secessionist agenda. "You should use that tactic. You should infiltrate," Clark told his audience of neo-Confederates, theocrats and libertarians. "Whichever party you think in that area you can get something done, get into that party. Even though that party has its problems, right now that is the only avenue."

Clark pointed to Palin's political career as the model of a successful infiltration. "There's a lot of talk of her moving up," Clark said of Palin. "She was a member [of the AIP] when she was mayor of a small town, that was a nonpartisan job. But to get along and to go along she switched to the Republican Party … She is pretty well sympathetic because of her membership."

Clark's assertion that Palin was once a card-carrying AIP member was swiftly discredited by the McCain campaign, which produced records showing she had been a registered Republican since 1988. But then why would Clark make such a statement? Why did he seem confident that Palin was a true-blue AIP activist burrowing within the Republican Party? The most salient answer is that Palin was once so thoroughly embedded with AIP figures like Chryson and Stoll and seemed so enthusiastic about their agenda, Clark may have simply assumed she belonged to his party.

Now, Palin is a household name and her every move is scrutinized by the Washington press corps. She can no longer afford to kibitz with secessionists, however instrumental they may have been to her meteoric ascendancy. This does not trouble her old AIP allies. Indeed, Chryson is hopeful that Palin's inauguration will also represent the start of a new infiltration.

"I've had my issues but she's still staying true to her core values," Chryson concluded. "Sarah's friends don't all agree with her, but do they respect her? Do they respect her ideology and her values? Definitely."

The Palins' un-American activities

2008-10-07T07:52:00.000-07:00

Imagine if the Obamas had hooked up with a violently anti-American group in league with the government of Iran.

By David Talbot
Salon.com

"My government is my worst enemy. I'm going to fight them with any means at hand."

This was former revolutionary terrorist Bill Ayers back in his old Weather Underground days, right? Imagine what Sarah Palin is going to do with this incendiary quote as she tears into Barack Obama this week.

Only one problem. The quote is from Joe Vogler, the raging anti-American who founded the Alaska Independence Party. Inconveniently for Palin, that's the very same secessionist party that her husband, Todd, belonged to for seven years and that she sent a shout-out to as Alaska governor earlier this year. ("Keep up the good work," Palin told AIP members. "And God bless you.")

AIP chairwoman Lynette Clark told me recently that Sarah Palin is her kind of gal. "She's Alaskan to the bone ... she sounds just like Joe Vogler."

So who are these America-haters that the Palins are pallin' around with?

Before his strange murder in 1993, party founder Vogler preached armed insurrection against the United States of America. Vogler, who always carried a Magnum with him, was fond of saying, "When the [federal] bureaucrats come after me, I suggest they wear red coats. They make better targets. In the federal government are the biggest liars in the United States, and I hate them with a passion. They think they own [Alaska]. There comes a time when people will choose to die with honor rather than live with dishonor. That time may be coming here. Our goal is ultimate independence by peaceful means under a minimal government fully responsive to the people. I hope we don't have to take human life, but if they go on tramping on our property rights, look out, we're ready to die."

This quote is from "Coming Into the Country," by John McPhee, who traipsed around Alaska's remote gold mining country with Vogler for his 1991 book. The violent-tempered secessionist vowed to McPhee that if any federal official tried to stop him from polluting Alaska's rivers with his earth-moving equipment, he would "run over him with a Cat and turn mosquitoes loose on him while he dies."

Vogler wasn't just a blowhard either. He put his secessionist ideas into action, working to build AIP membership to 20,000 -- an impressive figure by Alaska standards -- and to elect party member Walter Hickel as governor in 1990.

Vogler's greatest moment of glory was to be his 1993 appearance before the United Nations to denounce United States "tyranny" before the entire world and to demand Alaska's freedom. The Alaska secessionist had persuaded the government of Iran to sponsor his anti-American harangue.

That's right ... Iran. The Islamic dictatorship. The taker of American hostages. The rogue nation that McCain and Palin have excoriated Obama for suggesting we diplomatically engage. That Iran.

AIP leaders allege that Vogler, who was murdered that year by a fellow secessionist, was taken out by powerful forces in the U.S. before he could reach his U.N. platform. "The United States government would have been deeply embarrassed," by Vogler's U.N. speech, darkly suggests Clark. "And we can't have that, can we?"

The Republican ticket is working hard this week to make Barack Obama's tenuous connection to graying, '60s revolutionary Bill Ayers a major campaign issue. But the Palins' connection to anti-American extremism is much more central to their political biographies.

Imagine the uproar if Michelle Obama was revealed to have joined a black nationalist party whose founder preached armed secession from the United States and who enlisted the government of Iran in his cause? The Obama campaign would probably not have survived such an explosive revelation. Particularly if Barack Obama himself was videotaped giving the anti-American secessionists his wholehearted support just months ago.

Where's the outrage, Sarah Palin has been asking this week, in her attacks on Obama's fuzzy ties to Ayers? The question is more appropriate when applied to her own disturbing associations.

How AIG's Collapse Began a Global Run on the Banks

2008-10-04T20:56:00.000-07:00

by Porter Stansberry
DailyWealth.com

Something very strange is happening in the financial markets. And I can show you what it is and what it means...

If September didn't give you enough to worry about, consider what will happen to real estate prices as unemployment grows steadily over the next several months. As bad as things are now, they'll get much worse.

They'll get worse for the obvious reason: because more people will default on their mortgages. But they'll also remain depressed for far longer than anyone expects, for a reason most people will never understand.

What follows is one of the real secrets to September's stock market collapse. Once you understand what really happened last month, the events to come will be much clearer to you...

Every great bull market has similar characteristics. The speculation must – at the beginning – start with a reasonably good idea. Using long-term mortgages to pay for homes is a good idea, with a few important caveats.

Some of these limitations are obvious to any intelligent observer... like the need for a substantial down payment, the verification of income, an independent appraisal, etc. But human nature dictates that, given enough time and the right incentives, any endeavor will be corrupted. This is one of the two critical elements of a bubble. What was once a good idea becomes a farce. You already know all the stories of how this happened in the housing market, where loans were eventually given without fixed rates, without income verification, without down payments, and without legitimate appraisals.

As bad as these practices were, they would not have created a global financial panic without the second, more critical element. For things to get really out of control, the farce must evolve further... into fraud.

And this is where AIG comes into the story.

Around the world, banks must comply with what are known as Basel II regulations. These regulations determine how much capital a bank must maintain in reserve. The rules are based on the quality of the bank's loan book. The riskier the loans a bank owns, the more capital it must keep in reserve. Bank managers naturally seek to employ as much leverage as they can, especially when interest rates are low, to maximize profits. AIG appeared to offer banks a way to get around the Basel rules, via unregulated insurance contracts, known as credit default swaps.

Here's how it worked: Say you're a major European bank... You have a surplus of deposits, because in Europe people actually still bother to save money. You're looking for something to maximize the spread between what you must pay for deposits and what you're able to earn lending. You want it to be safe and reliable, but also pay the highest possible annual interest. You know you could buy a portfolio of high-yielding subprime mortgages. But doing so will limit the amount of leverage you can employ, which will limit returns.

So rather than rule out having any high-yielding securities in your portfolio, you simply call up the friendly AIG broker you met at a conference in London last year.

"What would it cost me to insure this subprime security?" you inquire. The broker, who is selling a five-year policy (but who will be paid a bonus annually), says, "Not too much." After all, the historical loss rates on American mortgages is close to zilch.

Using incredibly sophisticated computer models, he agrees to guarantee the subprime security you're buying against default for five years for say, 2% of face value.

Although AIG's credit default swaps were really insurance contracts, they weren't regulated. That meant AIG didn't have to put up any capital as collateral on its swaps, as long as it maintained a triple-A credit rating. There was no real capital cost to selling these swaps; there was no limit. And thanks to what's called "mark-to-market" accounting, AIG could book the profit from a five-year credit default swap as soon as the contract was sold, based on the expected default rate.

Whatever the computer said AIG was likely to make on the deal, the accountants would write down as actual profit. The broker who sold the swap would be paid a bonus at the end of the first year – long before the actual profit on the contract was made.

With this structure in place, the European bank was able to assure its regulators it was holding only triple-A credits, instead of a bunch of subprime "toxic waste." The bank could leverage itself to the full extent allowable under Basel II. AIG could book hundreds of millions in "profit" each year, without having to pony up billions in collateral.

It was a fraud. AIG never any capital to back up the insurance it sold. And the profits it booked never materialized. The default rate on mortgage securities underwritten in 2005, 2006, and 2007 turned out to be multiples higher than expected. And they continue to increase. In some cases, the securities the banks claimed were triple A have ended up being worth less than $0.15 on the dollar.

Even so, it all worked for years. Banks leveraged deposits to the hilt. Wall Street packaged and sold dumb mortgages as securities. And AIG sold credit default swaps without bothering to collateralize the risk. An enormous amount of capital was created out of thin air and tossed into global real estate markets.

On September 15, all of the major credit-rating agencies downgraded AIG – the world's largest insurance company. At issue were the soaring losses in its credit default swaps. The first big writeoff came in the fourth quarter of 2007, when AIG reported an $11 billion charge. It was able to raise capital once, to repair the damage. But the losses kept growing. The moment the downgrade came, AIG was forced to come up with tens of billions of additional collateral, immediately. This was on top of the billions it owed to its trading partners. It didn't have the money. The world's largest insurance company was bankrupt.

The dominoes fell over immediately. Lehman Brothers failed on the same day. Merrill was sold to Bank of America. The Fed stepped in and agreed to lend AIG $85 billion to facilitate an orderly sell off of its assets in exchange for essentially all the company's equity.

Most people never understood how AIG was the linchpin to the entire system. And there's one more secret yet to come out...

AIG's largest trading partner wasn't a nameless European bank. It was Goldman Sachs.

I'd wondered for years how Goldman avoided the kind of huge mortgage-related writedowns that plagued all the other investment banks. And now we know: Goldman hedged its exposure via credit default swaps with AIG. Sources inside Goldman say the company's exposure to AIG exceeded $20 billion, meaning the moment AIG was downgraded, Goldman had to begin marking down the value of its assets. And the moment AIG went bankrupt, Goldman lost $20 billion. Goldman immediately sought out Warren Buffett to raise $5 billion of additional capital, which also helped it raise another $5 billion via a public offering.

The collapse of the credit default swap market also meant the investment banks – all of them – had no way to borrow money, because no one would insure their obligations.

To fund their daily operations, they've become totally reliant on the Federal Reserve, which has allowed them to formally become commercial banks. To date, banks, insurance firms, and investment banks have borrowed $348 billion from the Federal Reserve – nearly all of this lending took place following AIG's failure. Things are so bad at the investment banks, the Fed had to change the rules to allow Merrill, Morgan Stanley, and Goldman the ability to use equities as collateral for these loans, an unprecedented step.

The mainstream press hasn't reported this either: A provision in the $700 billion bailout bill permits the Fed to pay interest on the collateral it's holding, which is simply a way to funnel taxpayer dollars directly into the investment banks.

Why do you need to know all of these details? First, you must understand that without the government's actions, the collapse of AIG could have caused every major bank in the world to fail.

Second, without the credit default swap market, there's no way banks can report the true state of their assets – they'd all be in default of Basel II. That's why the government will push through a measure that requires the suspension of mark-to-market accounting. Essentially, banks will be allowed to pretend they have far higher-quality loans than they actually do. AIG can't cover for them anymore.

And third, and most importantly, without the huge fraud perpetrated by AIG, the mortgage bubble could have never grown as large as it did. Yes, other factors contributed, like the role of Fannie and Freddie in particular. But the key to enabling the huge global growth in credit during the last decade can be tied directly to AIG's sale of credit default swaps without collateral. That was the barn door. And it was left open for nearly a decade.

There's no way to replace this massive credit-building machine, which makes me very skeptical of the government's bailout plan. Quite simply, we can't replace the credit that existed in the world before September 15 because it didn't deserve to be there in the first place. While the government can, and certainly will, paper over the gaping holes left by this enormous credit collapse, it can't actually replace the trust and credit that existed... because it was a fraud.

And that leads me to believe the coming economic contraction will be longer and deeper than most people understand.

You might find this strange... but this is great news for those who understand what's going on. Knowing why the economy is shrinking and knowing it's not going to rebound quickly gives you a huge advantage over most investors, who don't understand what's happening and can't plan to take advantage of it.

How can you take advantage? First, make sure you have at least 10% of your net worth in precious metals. I prefer gold bullion. World governments' gigantic liabilities will vastly decrease the value of paper currencies.

Second, I can tell you we're either at or approaching a moment of maximum pessimism in the markets. These kinds of panics give you the chance to buy world-class businesses incredibly cheaply. A few worth mentioning are ExxonMobil, Intel, and Microsoft. I have several stocks like these in the portfolio of my Investment Advisory.
Third, if you're comfortable short selling stocks (betting they'll fall in price), now is the time to be doing it... simply as a hedge against further declines.

Keep the fraud of AIG in mind when you form your investment plan for the coming years. By following these three strategies, you'll survive and prosper while most investors sit back and wonder what the hell is going on.

Good investing,

Porter Stansberry

US court orders deportation of Hafiz Saeed’s brother

2008-10-04T10:37:00.000-07:00

by Khalid Hasan
Daily Times (Pakistan)

WASHINGTON: Imam Muhammad Masood, brother of Hafiz Muhammad Saeed, founder of the banned Lashkar-e-Tayyaba, was ordered deported by a Boston, Massachusetts court on Thursday on an immigration violation charge.

Under an agreement with federal immigration authorities, the former imam of the 1,500-member Islamic Centre of New England agreed to voluntarily leave the United States on Friday night and return to Pakistan rather than be deported by the authorities which would have taken months, a period he would have spent in jail. He was accused of having lied to immigration authorities from 2002 to 2006 in a bid to obtain a Green Card. He pleaded guilty in February to five federal crimes stemming from his actions, which led to his deportation order. He will leave behind his wife and eight children.

Imam Masood came to the US in 1987 under a special visa for exchange students. He enrolled at Vanderbilt University and transferred to Boston University a year later to study economics. He became the imam of the Sharon mosque in 1998. In December 2002, Masood admitted that he had falsely told authorities in an application for permanent legal residency that he returned to Pakistan from 1991 to 1993 after completing his studies. Immigrants with the kind of visa Masood had are required by law to return to their country of origin for two years before they can apply for a Green Card. Masood said he never left Boston. He also admitted falsely denying to immigration authorities that he had been arrested for any crimes. He was arrested for alleged shoplifting in Norwood in 2000. The charge was dismissed.

Too Much Money Is Beyond Legal Reach

2008-09-30T06:52:00.000-07:00

New York-based funds are abusing 'secrecy jurisdictions.'

by Robert M. Morgenthau
Wall Street Journal

A major factor in the current financial crisis is the lack of transparency in the activities of the principal players in the financial markets. This opaqueness is compounded by vast sums of money that lie outside the jurisdiction of U.S. regulators and other supervisory authorities.

The $700 billion in Treasury Secretary Henry Paulson's current proposed rescue plan pales in comparison to the volume of dollars that now escape the watchful eye, not only of U.S. regulators, but from the media and the general public as well.

There is $1.9 trillion, almost all of it run out of the New York metropolitan area, that sits in the Cayman Islands, a secrecy jurisdiction. Another $1.5 trillion is lodged in four other secrecy jurisdictions.

Following the Great Depression, we bragged about a newly installed safety net that was suppose to save us from such a hard economic fall in the future. However, the Securities and Exchange Commission, the Federal Reserve System, the Comptroller of the Currency and others have ignored trillions of dollars that have migrated to offshore jurisdictions that are secretive in nature and outside the safety net -- beyond the reach of U.S. regulators.

We should have learned a long time ago that totally unsupervised markets, whether trading in tulips or subprime mortgages, will sooner rather than later get into trouble. We don't have to look back very far in history to understand this.

Long Term Capital Management, a hedge fund "based" in Greenwich, Conn., but composed of eight partnerships chartered in the Caymans, was supposed to be the wunderkind of the financial world. At its peak in the late 1990s, its gross holdings were valued at $1.8 trillion. But, regrettably, its liabilities exceeded its assets and the Federal Reserve Bank of New York had to step in and rescue it when the value of its assets plummeted.

Most recently, two Bear Stearns hedge funds, based in the Cayman Islands, but run out of New York, collapsed without any warning to its investors. Because of the location of these financial institutions -- in a secrecy jurisdiction, outside the U.S. safety net of appropriate supervision -- their desperate financial condition went undetected until it was too late.

Of course, BCCI Overseas, which was part of the then largest bankruptcy in history, was also "chartered" in the Caymans.

We have to learn from our mistakes. Any significant infusion to the financial system must carry assurances that it will not add to the pool of money beyond the safety net and supervisory authority of the United States. Moreover, the trillions of dollars currently offshore and invested in funds that could impact the American economy must be brought under appropriate supervision.

If Congress and Treasury fail to bring under U.S. supervisory authority the financial institutions and transactions in secrecy jurisdictions, there will be no transparency with the inevitable consequences of the lack of transparency -- namely, a repeat of the unbridled greed and recklessness that we now face. Because of the monolithic character of world financial markets, a default crisis anywhere becomes a default crisis everywhere.

Bailout tests how much the American public will tolerate theft

2008-09-23T15:49:00.000-07:00

by Sean Olender
San Francisco Chronicle

Treasury Secretary Paulson's edict to create a $700 billion fund to buy worthless mortgage securities from agitated wealthy bond investors is nothing short of a final step on the path to the end of the republic. The secretary claims he can only be effective if his decisions are beyond judicial review.

Our government and its owners appear to be testing how much the American public will tolerate. A few years ago, no one could have imagined that the silent majority would quietly accept thefts of this magnitude from a government that stopped tiny payments to single mothers with poor children in the name of welfare reform because the program's $10 billion cost was breaking the federal budget.

This isn't socialism, it's fascism.

If the public allows this theft, then it will signal to powerful forces that they can essentially do anything, because the American public has become so mushy-headed that it will stand up for nothing. When power discovers that those from whom it would exact payment are powerless, its viciousness increases infinitely.

Our politicians appear on television and say, this is an emergency, so we have to do this now and talk about it later. And then later is too late.

It is not just a $700 billion bailout, it is a $700 billion fund that can have no more than $700 billion in liabilities at any one time. Maybe Goldman Sachs can sell mortgage-backed securities to the fund at 80 cents on the dollar and then the fund will liquidate the securities by selling them back to Goldman for 50 cents on the dollar. Then Goldman can sell them back to the fund for 85 cents on the dollar. That would be a good business, especially if no court can review it.

Our enemy has revealed itself, and it is our own government. The concentration of such outrageous power in government - the power to take the equivalent of half our annual federal budget and give it to anonymous investors - is nearly reaching the point at which it may not be revoked.

It is only natural that we, dreaming of the possibility of our own riches, acquiesced in some of these financial schemes. Of that, we should not be ashamed. Many Americans may now be thinking, "But suppose someday I am a wealthy bond investor worth $50 million?" But you are not a wealthy bond investor and the value of your house and stock investments is going to drop, regardless of how much tax money the government gives to wealthy bond investors. This bailout is essentially the federal government saying to creditors, "Because the American consumer appears to be refusing to pay his debts, we will buy your claims on the consumer, and exchange them for money created by issuing Treasury bills, which is our promise to extract that money from American consumers using our taxation authority."

Some day our children will call on us to explain how our republic was lost. I cannot imagine the shame of facing a grown child to explain, "Foolishly, I thought I would get some of the money, too."

Because the American public has not been introduced to methods for controlling its government for generations for generations, I will suggest one called a general strike. This fundamental democratic power is where everyone decides to send a message to the government by not going to work, to school, shopping, nowhere.

At this point in our history, very bad things are going to happen regardless of what we do. There is no government action that can alleviate the discomfort we must endure because of the wild speculation and reckless borrowing that ensued. What's coming is inescapable. This is the critical time when charlatans among us will promise they can save us from the inevitable if we only allow them the power they need to save us. They are lying. It is time to earn our freedom. It is time to remind the government that we are Americans and we have a history of subjecting tyrannical governments to unpleasant consequences.

Palin's Source

2008-09-10T12:51:00.000-07:00

by Ben Smith
Politico.com
Thomas Frank noticed in the Journal today that Sarah Palin used an odd source for a quote in her announcement speech attributed only to a "writer."

"We grow good people in our small towns, with honesty and sincerity and dignity," she said, drawing from a once-powerful, now forgotten mid-century conservative columnist named Westbrook Pegler.

It's an odd source because Pegler, who moved further right as his career went on, ended up very, very far out. Frank notes that he talked hopefully of the assassination of Franklin Roosevelt.

He was also known for what Philip Roth described as his "casual distaste for Jews," which had become so evident by the end that he was bounced from the journal of the John Birch Society in 1964 for alleged anti-semitism. According to his obituary, he'd advanced the theory that American Jews of Eastern European descent were "instinctively sympathetic to Communism, however outwardly respectable they appeared."

It's unlikely that Palin wrote the speech or dug up the quote, though it's possible. The line does come from a strand of conservative populism that isn't particularly native to McCain or his usual rhetoric: The only other source for that Pegler easily available online is a 1990 book by Patrick Buchanan.

In any case, it won't calm Ed Koch any.