Tuesday, October 10, 2006

"Homeland" has been released

Today, October 10, is the official release date for "Homeland". It should be available in all bookstores soon.

Friday, September 22, 2006

New novel, and Anonymous postings

My new novel, Homeland, will be appearing in Canada in October. See my website for details.

I won't be allowing any more anonymous postings on this blog unless accompanied by an email address. We must all have the courage to stand up for our convictions, and be known for them.

Sunday, January 01, 2006

A Proposal by Colin Campbell Re: Oil Production

(The author of this document is Colin Campbell – see biographical information at the end. )

Soaring oil prices have drawn attention to the issue of the relative supply and demand for crude oil, which is the World’s premier fuel, having a central place in the modern economy.
Knowledge of petroleum geology has made great advances in recent years, such that the conditions under which this resource was formed in Nature are now well understood. In fact, it transpires that the bulk of the World’s current production comes from deposits formed in two brief and exceptional epochs, 90 and 150 million years ago. This fact alone tells us that oil is a finite resource, which in turn means that it is subject to depletion.
People ask: Are we running out of oil ? The simple answer is: Yes, we started doing that when we produced the first barrel. But Running Out is not the main issue as the reso urce will not be finally exhausted for very many years. The much more relevant question is: When will production reach a peak and begin to decline.
Depletion: Growth, Peak and Decline
Much debate and study has focused on the calculation of the date of peak, but this too misses the main point. It is not an isolated or pronounced peak but merely the highest point on a long and gentle production curve. It matters little if the actual peak came last year, if it will be passed this year, or in a few years’ time. The shock is the perception of the long, remorseless and terminal decline that follows, wh ich can hardly fail but have a major impact on the future of Mankind.
Without quibbling over precise dates, it is now evident that the First Half of the Age of Oil draws to a close. It lasted 150 years since the first wells were drilled for oil in Pennsylvania and on the shores of the Caspian, and saw the rapid expansion of industry, transport, trade and agriculture, allowing the World’s population to expand six-fold, exactly in parallel with oil. In addition, it made possible the growth of financial capital as banks lent more money than they had on deposit, confident that Tomorrow’s Economic Expansion offered collateral for To-day’s Debt. Many people came to think that it was money that made the world go round, when in reality it was a cheap and abundant supply of oil-based energy.
Distribution and Categories of Oil
The World’s oil is unevenly distributed for well-understood geological reasons, and some countries are less depleted than others. In fact, five countries bordering the Persian Gulf own almost half of the Regular Conventional Oil that is left to produce.
This category of oil has provided most to-date and will dominate all supply far into the future. Accordingly, the onset of its decline will have the greatest impact on the World situation. The other categories, including the tar-sands and heavy oils of Canada and Venezuela, deepwater oil, polar oil, and liquids derived from natural gas, are important too, because they will ameliorate the rate of overall decline after peak.
Unreliab le Information
If reliable information on past production and reserves in known fields were freely available in the public domain, the issues of peak production and the onset of decline would be entirely self-evident. Estimating the size of an oilfield early in its life poses no particular scientific or technical challenge, such estimates being routinely made by the oil industry.
The reporting of reserves is another matter, being much influenced by political and commercial pressures. Simply stated, the oil companies reported commercial reserves under strict Stock Exchange rules that were designed to prevent fraudulent exaggeration but smiled on conservative r eporting as laudable prudence. The companies, quite rightly, reported cautiously, preferring to smooth their assets and revise their reported reserves upwards over time, which gave a comforting, but very misleading, image of steady growth. It was widely, but wrongly, attributed to the remarkable technological progress that was achieved as well as to the scale of investment, when in reality it was primarily an artefact of reporting. The main impact of technology was to hold production higher for longer, which in fact accelerated depletion. The days of under-reporting are however now over, leading the major companies to merge and in some cases revise their reported reserves downwards.
Several major producing countries nationalised their oil industries in the 1970s, and found themselves in the uncomfortable position of having to cut production to support price, when they faced competition from growing production brought in by the international companies from new areas. In those days, there were still large new provinces to bring in, especially offshore. The Organisation of Petroleum Exporting Countries (OPEC) introduced a quota system to manage the allocation of production amongst its members. Reserve estimates became effectively State secrets in these countries. In the 1980s, some of them announced massive overnight increases in reported reserves, although nothing particular had changed in the oilfields themselves. It transpires that they may have been reporting the total found, not the remaining reserves, which would explain why the reports have barely changed since, despite substantial production.
Although the skills of a detective are called for to obtain reliable information, the general position can be determined within reasonable limits to permit and justify appropriate policy decisions and responses (See Appendix 1).
You have to find it before you can produce it
It is axiomatic to state that oil has to be found before it can be produced, meaning that production mirrors discovery after a time-lag. When a new area was opened to exploration, the first step was for the industry to secure the rights from the government concerned. The next step was to investigate the geology, examining the rocks at the surface, scanning the depths with seismic surveys and drilling exploratory boreholes, known as wildcat s, for more information. This work proceeded until a moment-of-truth was reached when the area either delivered its first discovery, or was found to lack the essential geology, in which case it remained forever barren, no matter how much investment was applied. It was normal for the larger fields to come in first, being too large to miss.
For these reasons, the production in any country tends to reach a peak close to the Midpoint of Depletion, when half the total endowment has been produced. The subsequent decline may be modelled on the general assumption that production will continue t o fall at the current Depletion Rate, namely annual production as a percentage of what is left. There are of course exceptional situations that have to be assessed on their merits.
Displaying laudable frankness, a Director of the World’s largest oil company has reported that the peak of world discovery, based on industry data with reserve revisions being properly backdated, was passed in the 1960s. (see Longwell H.,2002, The future of the oil and gas industry: past approaches, new challenges; World Energy 5/3). This information alone leaves little doubt that the corresponding peak of production is now imminent. The World started consuming more than it found in 1981, and the gap is widening, as illustrated in the above figure.
The Dawn of the Second Half of the Age of Oil
Putting it all together, with the best information available and a realistic depletion model, based on appropriate Depletion Rates, gives the following general picture as a sound and prudent basis for planning, notwithstanding the remaining uncertainties of detail.
The evidence demonstrates that the Second Half of the Age of Oil is dawning. It will be characterised by the decline of oil, and all that depends upon it. The decline itself is gradual at no more than 2-3% a year, such that production by 2020 will have fallen to approximately what it was in 1990. This, in itself, does not speak of any direct catastrophic collapse in supply, but the onset of decline does represent a turning point in history of unprecedented proportions.
Financial Implications
The First Half of the Age of Oil saw the growth of industrialisation and World trade, which was accompanied by the development of world trading currencies, provided first by the pound sterling and later the United States dollar. Control of such currencies became one of the principal benefits of empire as they delivered a large hidden rental to the issuing country. For example, the physical import of oil to the United States has been exactly matched by the expansion of domestic credit, which itself was little more than an expression of confidence in the current financial system. In a certain sense, the country obtained its supply of oil for free, paid for by debt based on the assumption of onward economic growth, whose validity is now put into question by declining energy supply. Financial factors cloud the issue.
The subject of Economics was devised to understand and manage finance and investment in this epoch of a growing economy. It was premised on the view that the Planet had near-limitless resources to be converted to Man’s use by his skill and enterprise. A liberalised market was held to ensure that supply must always match demand, and that one resource would seamlessly replace another as the need arose. Indeed, the Stone Age did not end for want of Stones, as Man moved on in a natural progression to use bronze, iron and steel for better tools and weapons. Yet, oil declines during the Second Half of the Age of Oil due to ineluctable resource constraints without sight of more efficient alternatives, suggesting that some basic reappraisal of econom ic thinking is called for, given the fundamental role of oil as a fuel for most economic activity. Indeed, new schools of thought are emerging that better address the reality imposed by Nature.
Economic and Political Impact
The Economics of the First Half of the Age of Oil had a major influence on the political evolution of this chapter in history. Many countries adopted democratic forms of government primarily dedicated to fostering economic growth in a competitive global market. Prosperity came to some countries that found themselves in control of the system, while poverty remained the lot of others, being exacerbated by the growth of large urban populati ons and the burden of debt. A perception of a new world of finite resources now presents itself, implying that one man’s wealth must mean another’s poverty.
This closing chapter in history was marked by two world wars, which, whatever the immediate causes, reflected the pressures and ambitions of economic hegemony. They were followed by the Cold War as the believers in free markets and central planning faced each other with threatening postures, each seeking to support its particular economic system and power. Lastly in its turn has come the so-called War of Terror as the United States seeks to support Israel and bring Middle East oil supplies under its control, facing many increasingly alienated peoples.
The 21st Century has dawned with these new tensions that, despite the many remarkable achievements, reflect a certain sense of excess and instability. The power of electronic communication has brought everyone into a global environment. Simple but happy people, who previously lived in relative isolation, have become subjected to relentless television imagery, making them feel resentful of the prosperous glitter of distant places. Cities everywhere have become choked with traffic, while vapour trails fill the sky from Rome to Rio. Population pressures have led to growing migration, which at first the wealthy nations welcomed as a means of holding down wages.
This brief chapter of history occurred at a time of high oil production, which in fact made the excesses possible. But now, no more than five years into the new Century, soaring oil demand, especially from the new industrial societies of India and China, begins to exceed productive capacity, leading to a radical increase in the price of oil, which has doubled in less than twelve months. It is important to stress that such high prices represent unintentional profiteering from shortage by oil companies and, especially, Middle East Governments, as the cost of production itself has not increased materially.
Under conventional economic reasoning, the high prices will themselves trigger new discovery and higher production rates, but in reality they may not do so. Even modest oilfields are profitable under low prices, so high prices make viable only the smallest new discoveries, adding a negligible amount to World supply. High oil price may not in fact encourage oil companies to produce at higher rates because it allows them to deliver satisfactory financial results while conserving their largely irreplaceable reserves. The Middle East governments, for their part, have little incentive to increase production, even if they had the resources to do so, as that would serve to lower World prices and hence their revenues.
It remains to be seen if further military intervention in the Middle East will occur and lead to sufficiently stable conditions for foreign oil companies to step in. An ironic silver lining attends continued instability insofar as more oil will be left in the ground for the future, when it will be desperately needed.
Although these few words hardly do justice to the many difficult circumstances facing the modern World, they do serve to emphasise the arrival of a turning point, which in turn imposes new responsibilities on Governments everywhere. The long-term decline of oil supply in the years ahead is not in doubt. Since the peak of production will not be evident as such until some years after it has occurred, Governments are well-advised to prepare rather than react. They urgently need to give serious attention to the management of the transition from the First to the Second Half of the Age of Oil, which threatens to be a time of great tension.
The most obvious objective is to cut consumption to match declining production. A Protocol to so achieve is laid out below in draft form.

WHEREAS the passage of history has recorded an increasing pace of change, such that the demand for energy has grown rapidly in parallel with the world population over the past two hundred years since the Industrial Revolution
WHEREAS the energy supply required by the population has come mainly from coal and petroleum, having been formed but rarely in the geological past, such resources being inevitably subject to depletion;
WHEREAS oil provides ninety percent of transport fuel, essential to trade, and plays a critical role in agriculture, needed to feed an expanding population;
WHEREAS oil is unevenly distributed on the Planet for well-understood geological r easons, with much being concentrated in five countries, bordering the Persian Gulf;
WHEREAS all the major productive provinces of the World have been identified with the help of advanced technology and growing geological knowledge, it being now evident that discovery reached a peak in the 1960s, despite technological progress, and a diligent search;
WHEREAS the past peak of discovery inevitably leads to a corresponding peak in production during the early years of the 21st Century, assuming no radical decline in demand;
WHEREAS the onset of the decline of this critical resource affects all aspects of modern life, such having grave political and geopolitical implications;
WHEREAS it is expedient to plan an orderly transition to the new World environment of reduced energy supply, making early provisions to avoid the waste of energy, stimulate the entry of substitute energies, and extend the life of the remaining oil;
WHEREAS it is desirable to meet the challenges so arising in a co-operative and equitable manner, such to address related climate change concerns, economic and financial stability and the threats of conflicts for access to critical resources.

1. A Convention of Nations shall be called to consider the issue with a view to agreeing an Accord with the following objectives:
a. to avoid profiteering from shortage, such that World oil prices may remain in reasonable relationship with production cost;
b. to allow poor countries to afford their imports;
c. to avoid destabilising financial flows arising from excessive oil prices;
d. to encourage consumers to avoid waste;
e. to stimulate the development of alternative energies.
3. Such an Accord shall have the following outline provisions:
a. No country shall produce oil at above its current Depletion Rate, such being defined as annual production as a percentage of the estimated amount left to produce;
b. Each importing country shall reduce its imports to match the current World Depletion Rate, deducting any indigenous production.
4. Detailed provisions shall cover the definition of the several categories of oil, exemptions and qualifications, and the scientific procedures for the estimation of Depletion Rate.
5. The signatory countries shall cooperate in providing information on their reserves, allowing full technical audit, such that the Depletion Rate may be accurately determined.
6. The signatory countries shall have the right to appeal their assessed Depletion Rate in the event of changed circumstances.

The foregoing is no more than an outline draft to try to stimulate interest. What is needed is an imaginative senior politician, or national leader, who would grasp the essentials of what is described. He would likely have a scientific or technical background, or at least an open, inquiring and logical mind. He is unlikely to have had a training in classical economics.
The first step would be to look into the matter more closely, and try to assemble proper data and knowledge of the resource base, as outlined in Appendix 1. Here will be met the first challenge because official institutions will likely deliver bland “business-as-usual” scenarios, not them selves being fully qualified to delve into the inner workings of the oil industry. Approaches the oil companies direct he will be met by a façade of public relations. So, the best hope is to step behind the scenes and search out oil men who no longer have a vested interest in confusing the issue. The data provided in Appendix 1, including calculated Depletion Rates, may be taken as a starting point to be progressively revised and improved on the basis of proper technical audits of reserves and new transparency by countries supporting the initiative.
If these first obstacles can be overcome, a simple message from the unpackaged facts will soon reveal itself, opening the trail as more and more pieces in the puzzle fit together. That in turn will be followed by a certain sense of foreboding and depression, as the wider implication s for the future of Mankind are appreciated.
The politician may at this point abandon the mission in despair, but if he has the stamina to continue, he will find his resolve strengthened by a new urgency to take action. He will remember his responsibilities as a politician to lead and help his people prepare. He may start holding public meetings to address his constituents on the subject. If so, he may be surprised at their positive reaction: far from drumming him out of town, he will find himself touching a nerve in the intuitive common sense of ordinary people. He will be reminded of the famous words of Winston Churchill who proclaimed Put your trust in the people as he tried to persuade his country to prepare to defend itself from the advancing threat of war.
If, by good fortune, he should represent a relatively small country, he might find it possible to bring his colleagues in government on board to host a Conference. The response from others at first might be lukewarm but as he marches ahead he will find that other nations and institutions will not wish to be left out and ignored. A positive development comes when communities, cities and provinces take steps to cut energy consumption paving the way for national responses.
A certain momentum will build until a proper meeting of World leaders is convened. A draft Protocol will be tabled and meet general approval subject to further clarification and negotiation.
The first thrust of such negotiation will be to start to try to determine Depletion Rates for the principal countries. Depletion Rate is annual production as a percentage of what is left, that being Reserves plus the Yet-to-Find. The numbers at first may be uncertain, or fall within a range, but as the calculations are made, it will soon become apparent that production does have a defined depletion profile with peak followed by decline. The data in Appendix 1 may serve as a starting point. Asking these simple questions will make the need for such the Protocol entirely self-evident.
The detailed aspects of the practical implementation will need to be discussed. For example, it might be found expedient to exempt the Hea vy Oils of Canada and Venezuela. Means of fair allocation to respect existing commercial rights will have to be ironed out. The wider impacts on the economy and environment will have to be addressed.
At the end of the day, the countries of the world will be invited to sign up. Not all will do so, but this need not deter those that do, for they will clearly see that they emerge better prepared than the non-signatories living in the past.
As the politician, who launched the endeavour, looks back over the months of hard work, setbacks, frustr ations and rare successes, he will be able to console himself with the thought that it was a much needed job, well done. His grandchildren will come to be very proud of him, recognising how from a difficult and humble beginning he changed the course of history.


Dr. Colin Campbell, SRA's Advisory Board, took a D.Phil in geology at Oxford in 1957, before joining the oil industry. His career took him to Trinidad, Colombia, Australia, Papua, United States, United Kingdom, Ireland and Norway working variously for Texaco, BP, Amoco, Shenandoah, Aran and Fina. He started as an exploration geologist and ended as an Executive Vice-President. A second career opened in 1990 with a study of depletion with consultations to industry and government. He has written four books, many scientific papers and articles, also giving lectures and broadcasts. He is the founder of ASPO (The Association for the Study of Peak Oil and Gas), a network of scientists, now represented in most European countries.
[1] As proposed at the 2003 Pio Manzu Conference, and to be a central theme of the Pio Manzu Conference, Rimini, Italy on October 28-30, 2005, Submitted by ASPO IRELAND www.peakoil.ie

Friday, December 30, 2005

The Negative Return Economy: a Discourse on America's Black Budget

Keep the people frightened
Of things they cannot know
Is the secret of the Tomb
If they knew what you and I know
They would know it is just men
Who rob them, cheat them, kill them
Then start it all again

The United States government has operated a secret budgeting and spending program for decades outside the framework of the American Constitution. The institutional and political roots of this system of cland estine finance reach back to at least a century. The turn of the 19th and 20th centuries saw the consolidation of American industry and banking under the control of a restrictive cartel that for all practical purposes assumed control of the economy. The great magnates of American industry and finance in the late nineteenth century were superb practitioners of covert operations. Witness to this fact are the institutions set up during the twentieth century through which their descendants maintain control.

This paper is a summary of the structure of the American political economy which fits the facts better than the official model. Officially, American capitalism is characterised by democracy, opportunity, self-improvement, open and free markets, and constructive regulation for the public good, in short, happiness. Und er this construct America has never fought a war of aggression and harbours no designs to do so. Its leaders have the nation’s interests at heart, and its politicians listen to their constituencies. The truth is different. Why the United States is so widely misunderstood is due in part to a controlled educational system and media. As the system evolved over the decades, time lent it legitimacy spanning the political spectrum. Gustavus Meyers, author of the seminal work History of the Great American Fortunes and no panegyrist, believed – following Marx as did many on the left – that the consolidation of American industry was inevitable and that the men who accomplished it were acting their part in a predetermined historical evolution. Once monopoly control had been achieved, the proletariat would rise and its dictatorship would begin. We shy away from such determinism; nothing happens but as a consequence of what men do and choose to do. If Meyers were alive today, he would st ill be waiting.

Black Budget? What Black Budget?
At the time of the attack on the World Trade Center and the Pentagon in September 2001 according to the Government Accounting Office (GAO), Pentagon had incurred $3.4 trillion of “undocumentable transactions,” that is to say that there were $3.4 trillion worth of financial transactions for which there was no discernible purpose. The day before the attack, Secretary of Defense Donald Rumsfeld warned that the lack of control over its budget was a greater danger to the national security of the United States than terrorism. After the attacks, the government stopped publicly disclosing information about “undocumentable transactions”.

Blame the Bookkeeper
The problem is not restricted to the Pentagon but affects the entire spectrum of government agencies and departments from the Bureau of Indian Affairs to the Defense Department. For a number of years the GAO has compiled a parallel set of books for the Federal Government called the Financial Report of the United States. This report attempts to impose “Generally Accepted Accounting Principles” to the government’s financial reporting process in order to give a clearer picture of the government’s actual assets and liabilities and thereby enable better planning. Neither the Pentagon nor the Department of Housing and Urban Development (HUD), to name just two, have ever been able to pass a GAO audit on this basis.

Significantly, the government does not employ double entry bookkeeping in the preparation of its accounts. This has been standard accounting practice since the seventeenth century, which classifies and tracks sources and uses of funds to create an accurate picture of a business (or public) enterprise. Today the Pentagon utilises no accountable means of tracking money authorised by Congress from its initial authorisation to its use, say in developing a fighter plane. Running a 21st century military machine using antique accounting methods is an anomalous situation with interesting implications, not least of which is that government agencies cannot, or will not, explain what they are doing with the money that is appropriated for their operations by Congress.

A similar state of affairs prevails at the Department of Housing and Urban Development (HUD). It exists primarily, at least in law, to ensure that low income Americans have access to affordable housing, which HUD provides as well as both credit and credit insurance on a nationwide scale. Yet HUD has never compiled information on its activities so that it or anyone else can see, by place, whether or not its activities in that place make money, lose money, or are simply irrelevant.

Conflict of Interests
Few Americans are probably aware that Lockheed Martin, builder of the F22 air superiority fighter, is also a major outside contractor supplying financial control and accounting systems to the Pentagon. The Pentagon for its part is Lockheed Martin’s biggest customer. Th is example is by no means unique. Lockheed also has a subsidiary employed by HUD to administer housing in American cities, an unusual diversification for a corporation the majority of whose business is done with the military and intelligence agencies.[2]

Similarly Dyncorp (recently acquired by Computer Sciences Corporation) is another contractor that, like Lockheed, derives almost all its revenue from government security and military contracts. It is also a contractor supplying information technology to a variety of government agencies including the Pentagon, HUD, the Securities and Exchange Commission (SEC) and th e Department of Justice. At the Department of Justice it manages the case management software used by DOJ lawyers to manage investigations.[3]

A prime example of overlapping interests is Herbert “Pug” Winokur. Not only was he on Dyncorp’s board of directors but he is also the Enron director in charge of that company’s risk management committee, and a long-standing board member of the Harvard Management Corporation, which invests in HUD projects.

AMS Inc., a computer software firm hired by HUD in 1996 to take over the management of its internal software for accounting and financial control, presided in two short years over an explosion in undocumentable transactions of nearly $76 billion. AMS violated fiduciary and control practices by installing its own equipment and software with no parallel runs against the legacy software and accounting system. In those same two years, HUD’s management more than tripled the volume of loan and insurance business being pushed through the system. Anyone familiar with running such systems in a bank or an insurance company immediately understands that a decision such as this (for it had to be a decision) would result in huge losses.[4] Is this incompetence or design? Only the credulous would believe accident: the reward for Charles Rossotti, president of AMS, was to be named Internal Revenue Service (IRS) Commissioner at the Department of the Treasury, from which position he oversaw significant Treasury contract amendments to AMS. He was a direct beneficiary of this as a special White House waiver permitted Rossotti and his wife to retain their AMS stock.

Government’s response to criticism
The reaction of many people to the sorts of facts related above is to dismiss them as no more than evidence of incompetence and accident. The government does little to resist this sort of interpretation; on the contrary, it encourages it. For example, in response to calls for an investigation of its financial control, the Pentagon countered with an offer to investigate credit card abuse. Complaints about the performance of outside contractors such as AMS have been answered by a government-wide contract award to IBM for the standardisation of IT systems and practices. IBM, in turn, has awarded subcontracts to AMS, Lockheed, Dyncorp, SAIC and Accenture (formerly spun out from Arthur Andersen of Enron fame). It is these firms that have failed to provide systems that can pass a GAO audit. This manoeuvring and the government’s justifications affront common sense and are unethical. As private sector firms, they have to pass audits before their own accounts can be approved and reported to shareholders. Yet they routinely fail to meet the same standard for the government.

Often the government blames the previous, outgoing administration. However, consider that t he incoming Bush administration replaced all the senior Clinton political appointees except: the Comptroller of the Currency, John D. Hawke; IRS commissioner Charles Rossotti (formerly of AMS); Comptroller General David Walker (Formerly of Arthur Andersen[5]– see http://www.npr.org/programs/npc/2001/010423.dwalker.html) and CIA director George Tenet. In short, the key positions necessary for the control of the federal credit, financial control, audit and intelligence.
< /DIV>
This undisturbed transition from Democratic to Republican administrations represents a remarkable cross-party consensus, and highlights the real positions of power. With the exception of Rossotti, all these men are still in place in 2004. And Rossotti? He left the IRS to become a senior adviser to the Carlyle Group for information technology. A more richly symbolic and meaningful job move could scarcely be imagined. Carlyle’s business is global venture venture capital, which is to say it invests in corporate acquisitions all over the world with a speciality in arms manufacturers and technology. The large levels of undocumentable transactions at HUD and the Department of Defense inevitably inspire curiosity. Where is the money associated with those transactions? It is no great leap of imagination to wonder equally where the Carlyle Group raises the money with which to finance its acquisitions.[6]

The trusts are dead. Long live the trusts
The cartelisation of the American economy was for all intents and purposes completed by the end of the first decade of the twentieth century.[7] I n 1889, America’s leading banker JP Morgan held a meeting at his 5th Avenue mansion in New York. Its purpose was to reach a consensus whereby the owners of America’s railroads merged their competing interests.[8] This was no mere group of transportation executives agreeing to fix prices. The railroads also controlled the nation’s coalfields and oil supplies, and were tightly bound to the nation’s largest banks. The creation of the Federal Reserve in 1914 completed this process of consolidation. In effect, Congress ceded control of the US currency system and the federal credit to the banks, thereby officially recognizing the cartel. This placed a relatively small number of men in a po sition to set prices across the economy with a degree of control heretofore unknown in US history.

The banking cartel’s interest in war
American foreign policy and the wars that America has fought over the course of the twentieth century (including the Spanish American War in 1898[9] and the present War on Terror) have successfully extended the cartel’s control over the world economy. The American Civil War was fought to determine control of the US economy.[10] Most Americans would explain the last 150 years of warfare as sadly necessary for reasons beyond America’s control. The implication is that America has accumulated its preponderant international position by some providential accident and not by design. Arguments for a contrary view elicit derisive accusations of falling victim to “conspiracy theory.” Reassuringly, they believe that self-interested individuals and organisations are incapable of collaboration to achieve common ends. When JP Morgan sat the owners of America’s railroads around a table and hammered out a non-compete agreement, it was no accident. Similarly, neither have America’s wars been accidents; they have been far more profitable than is widely understood. T he US confiscated billions of dollars worth of German and Japanese war treasure at the end of World War Two. President Truman made a conscious decision to not reveal this to the public or repatriate it. Instead, it was used to finance covert operations.[11]

Command economy
Popular myth has it that the trusts were broken up in the first decade of the twentieth century thanks to the crusade of Theodore Roosevelt on behalf of the middle class. Roosevelt certainly used his public stance against “big business” to successfu lly bid for campaign money from the very businessmen whom he was attacking. This perhaps explains why he subsequently signed legislation repealing criminal penalties for those same businessmen. This is a common trait of “liberal” or “progressive” presidents. The second Roosevelt, Franklin, is remembered as the champion of the downtrodden, who put an end to the Great Depression. It was he who established the nation’s social security system which in reality was (and is) funded by a highly regressive tax on its beneficiaries. Matching contributions from business were allowed to be deducted as a business expense before tax which simply extended the regressive nature of the program by financing business’ share out of foregone tax revenue. Roosevelt, a superb politician, won a landslide victory on a platform of reform which he adroitly sidestepped fulfilling. Instead, he declared a national economic emergency, short-circuiting any constitutional challenge to his power in the court. He pro mptly defaulted on the gold clause in the government’s bond contracts, and established the Exchange Stabilisation Fund (ESF) in 1934. Ostensibly meant to promote dollar stability in the foreign exchanges, the Fund in practice was and is something quite different. It is exempt from reporting to Congress and is answerable only to the President and Secretary of the Treasury. It is, in short, an undisclosed fund that can tap federal credit.

Apparatus of a Command Economy
The establishment of the ESF was an extension of the same logic behind the creation of the Federal Reserve in 1914. The latter, the Fed, was also created in response to a crisis: the crash of 1907. The Wall Street legend credits JP Morgan’s genius and patriotism with saving the Nation. In reality, the crash and resulting depression enabled Morgan to destroy his competitors, buy up their assets and in the process revealed to the nation and the world just how powerful the banks and Morgan were. Not all were grateful, and some demanded legislative action to bring the federal credit and national monetary system under public oversight and control. In a campaign of masterful political legerdemain, the Federal Reserve was created in 1912 by an act of Congress to do just this. But by creating it as a private corporation owned by the banks, Congress effectively ceded to the banks a position even stronger than they had occupied before. Even today it is not widely understood that the Fed is a privately held business owned by the very interests that it nominally regulates. Thus the control of federal credit and the US monetary system and the rich flow of insider information that results from that control are veiled from public view and are privately controlled in secret which rather explains t he Delphic nature of the Fed’s chairman.

The extension of secret control was not limited to finance. The National Security Act of 1947 created the Central Intelligence Agency (CIA) and the National Security Council (NSC) and consolidated control of the three armed services under one roof at the Pentagon. This merely served to extend this principle of secrecy to the field of “national security.” Like the Fed, the CIA was exempted from public disclosure of its budget and was given budgetary control over the entire intelligence community, while the National Security Council was set up as a policy-making body separate from the existing organs of state policy such as the State Department and the military commands reporting directly to the president.

The CIA Act of 1949 created a budget mechanism that allowed the CIA to spend as much money as it wanted “without regard to the provisions of law and regulations relating to the expenditure of government funds.” In short, the CIA has a way to fund anything –legal or illegal – behind the protection of national security law.[12]

Having created the bureaucratic means to conceive and make policy in secret, the next development was to create the means to implement it. The main issue was how to control money flows in the national economy. The government’s solution was to assume a commanding position in the credit markets. To that end, it created first the Federal Housing Authority in 1934 (forerunner of HUD and now part of HUD)[13] and subsequently Ginnie Mae and then Fannie Mae and Freddie Mac, which are government sponsored enterprises (GSEs) to supply mortgage finance and insurance for homebuyers. The underlying political purpose is more subtle. Combined with the power of the Federal Reserve (i.e. the cartel) to set the price of money, the ESF, the GSEs, and latterly the Department of Housing and Urban Development (HUD), have proven to be a powerful force for regulating money flows and demand in the US economy.

The military, too, was reformed with the adoption for the first time in American history of a wartime military budget and force structure in peacetime. In the early 60s this was fine tuned with the adoption of an explicit cost-plus acquisition process. The justification for this was, as usual, national security. This military budget has proven as effective in regulating the industrial sector as control over home finance has proven in regulating credit. Together they confer virtual control over the economy as conventionally measured in terms of money GDP.

Credit, credit, and more credit
A few moments reflection on the institutional structure briefly outlined above makes clear the central importance of the federal credit in underwriting it. The federal government underwrites the GSEs by extending to them a subsidised line of credit from the Treasury. An additional indirect subsidy in the form of lower borrowing costs flows from the belief in the marketplace that this constitutes an implicit government guarantee of their solvency. While this subject from time to time excites controversy, the truth is that the GSEs are not the only corporate entities benefiting from government support. Since the failure of Continental Illinois in the early 80s, the government has informally made it clear that it stands behind the banking system. This was made even more explicit with the bailout of Citibank in the early 90s and the implicit subsidy that the entire banking industry received as a result. Nor are financial institutions the only ones to enjoy this kind of support. Bo th Lockheed Martin and Chrysler have been effectively saved from insolvency by the taxpayer in the past, presumably due to their status as major defence contractors.

Such a system places a significant value premium on sheer size, if for no other reason than what the banking system cheerfully and disingenuously refers to as the “too-big-to-fail” doctrine. But for industrial firms, too, there is significant value in having a contracting relationship with the Pentagon. Not only is there the economic nirvana of cost-plus contracting but, if you are big enough, your fundamental business risk is underwritten for national security reasons. Thus, there is a tendency for firms to migrate their businesses to military rather than purely civilian markets; today the Boeing Company is a perfect case study of this in action. And a result is that civilian business in sector after sector has been driven into insolvency or into acquisition by the very national security industry that is ostensibly protecting them.[14]

The dynamics of cost-plus contracting are such that profits rise as costs rise.[15] This explains a great deal about the size of American military budgets, which have rise n inexorably over the years even as military preparedness has fallen.[16] But as we have seen, the losses in terms of lower productivity are felt across wide swaths of the economy as non-military contracting competition is squeezed out or acquired. Obviously these losses in the real economy have to be financed, producing a higher demand for credit than would otherwise be the case. Given declining productivity and a narrowing production base, it was inevitable that at some point net exports would become negative, a condition that the US entered in 1982 and which has intensified since. Today the US net foreign debt[17] is on the order of $3,000 billion (30% of GDP) and is increasing at a rate of some $500 billion per year (5% of GDP).[18]

Concentrating capital
To finance such a large foreign borrowing requirement without currency depreciation requires both the ability to contr ol as much of the national cash flow as possible as well as the collaboration of at least a few key foreign countries to achieve the same sort of control over international cash flows. In the latter case, this takes the form, in part, of ever larger amounts of intervention on the part of those countries running dollar surpluses and strong net export positions to prevent the markets from driving the dollar lower. In practice this means that they accumulate more and more dollars, which they in turn invest in US Treasury securities. Foreigners now own some 45% of US Treasury debt outstanding. In January this year the Bank of Japan intervened in the currency markets on behalf of Japan’s Ministry of Finance, purchasing a whopping $69 billion in that month alone, or more than 30% of its total intervention in 2003 which was itself a record year.

Current trends
All of this may seem to have little to do with the black budget, which most people associate with intelligence covert “black” operations. The truth, however, is that the black budget cannot be understood in isolation without understanding the political, historical and economic context from which it springs. One way of understanding this is by comparing trends. For example, in 1950 the Dow Jones Industrials stood at 200, and today the Dow is at 10,600. In 1950 narcotics trafficking was a relatively unknown crime in the United States. Today it is endemic, and not only in cities but in smaller towns and rural communities as well. In 1950 the US possessed most of the world’s gold and was the world’s biggest creditor. Today it is the world’s biggest debtor. In 1950 the US was a major exporter of industrial goods to the rest of the world. On current trends the US i s not self-sufficient in manufactured goods and will not even have a manufacturing industry worth the name by 2020.

Narcotics trafficking and the stock market
Is there a connection between these trends or are they random? It may seem strange to think of a positive correlation between narcotics trafficking and the stock market, but consider: in the late 90s the US Department of Justice estimated that the proceeds of such trade entering the US banking system were between $500 and $1.000 billion annually, or more than 5-10% of GDP. Now the proceeds of crime need to find a way into legitimate, that is legal, channels or they are worthless to the holders. If one further imagines that the banking system earns a fee of 1% for handling this flow (rather low considering that mon ey laundering is a seller’s market) then the profits for the banks from this activity are on the order of $5 to $10 billion. Applying Citigroup’s current stock market multiple of 15 or so to this yields a market capitalisation of anywhere from $65 to $115 billion. One can thus readily see the importance of the illegal drug trade to the financial services industry. As it happens, this trade in illegal profits is concentrated in four states: Texas, New York, Florida and California, or four Federal Reserve districts: Dallas, New York, Atlanta and San Francisco. Can anyone seriously suppose that the Fed is unaware of this if the Department of Justice is? It, after all, handles the flows.

Narcotics trafficking and the National Interest
One reason for the Fed’s silence is that agencies of the government itself have been involved in drug trafficking for sixty years or more.[19] For the purposes of understanding the black budget, one needs to be aware of the American practice of opening the American consumer market for drugs to foreign exporters in order to pursue strategic objectives abroad. The portability of narcotics and the huge price mark up from production to point of sale makes them a particularly useful source of financing for covert operations. Even more important is that the proceeds from narcotics sales fall completely outside conventional, constitutional channels of funding. This helps explain the ubiquitous presence of narcotics traffick ing in zones of conflict around the world, from Columbia to Afghanistan.[20]

Little examined, however, is the impact of narcotics trafficking on communities and economies at the point of sale. Consider, for example, the impact on real estate markets and financial services. Real estate is an attractive area in which to employ the cash surplus resulting from narcotics sales because it is, as an industry, entirely unregulated with respect to money laundering. Because cash is an acceptable and in some places familiar method of payment, large sums can be disposed of easily and with little comment. This can and does resul t in considerable distortion to local demand, and in turn provide fuel for real estate speculation and increased credit demand to finance it along with considerable opportunities for speculation and fraud.[21] The Iran Contra episode during the 1980s contained all these elements; although many are familiar with the sale of arms to Iran to provide cash to finance CIA backed guerrillas in Nicaragua and death squads in El Salvador, less well-known is the systematic looting of local financial institutions and narcotics sales in the US. Banking allows the application of leverage to the cash that is generated by “illegal” activity while simultaneously making it possible to launder the funds. And whe n a bank fails, it is the shareholders, uninsured depositors and the taxpayer who pick up the bill. The point here us that narcotics trafficking creates a milieu in which the incentives to engage in uneconomic activity are greater than those to engage in economic activity. In a word, the profits from stealing are higher than the profits from playing by the rules.

What counts from a public policy point of view in the cartelised economy is the ability to control and concentrate cash flows of any kind. To this end, it is less important that a bank fails than that the federal credit is available to make good the losses. In doing so, the cash cost of losses is shifted, or socialised, to the national taxpayer base. As long, therefore, as there are willing lenders to the Federal Government, the game can go on.

Technology gives an edge
Government’s power combined with advancing computer technology has over the last thirty years vastly simplified the task of managing the national--and by extension the international--cash flow. Politically, the American victory in the Second World War meant that the entire West and its dependencies were co-opted into the International Monetary Fund (IMF) negotiated at Bretton Woods in 1944. Forty-five years later, the collapse of the Soviet Union in 1989 meant that for the first time in history there was no alternative monetary or political choice in the international arena. The British Empire had surrendered to the Americans precisely because America, represented an alternative to sterling, namely the dollar.

Today the US presides over a more or less fully closed global monetary system centred on the dollar. In practice this means that those countries within the system must exchange real value in the form of manufactures and commodities with the US cartel in exchange for dollars, which are no more than an accounting entry created out of thin air. This is analogous to a company with no assets exchanging watered stock for cash, and indeed this is no accident. It was a favoured technique by which the JP Morgans of the nineteenth century successfully financed the consolidation of American industry and finance. Today their heirs are busily dong the same thing, but on a global scale.

Technology has transformed the possibilities for creative management in banking. Its sheer number-crunching power has rendered the cost of iterative calculations to more or less zero. This has enabled the creation of a new sector in the industry, the derivatives business, which is nothing more than the breaking down of financial instruments such as stocks and bonds into their constitutive parts. This has increased the power of the banks many-fold, thanks to the cooperation of the Federal Reserve and Congress, who have allowed the banks to not only self-regulate their derivatives portfolios and businesses but have enacted rules to force other banks to use derivatives to “control” risk. In practice this has meant that the most profitable business of the banks has been moved off balance sheet, in effect creating a high level of s ecrecy in their business. It also confers a huge advantage on the largest banks to whom the others have to come for their derivatives. This has, in part, fuelled the manic consolidation in banking over the last twenty five years and has been applied with tremendous success internationally thanks to the imposition of the Basel Accords on money and banking which have forced other country’s financial institutions to either cooperate, which in practice has largely meant be acquired, or go out of business.

The banks’ tactics have been copied and refined by industry. An excellent example of this is the case of Enron, nominally an industrial company engaged in the production and transport of petroleum and natural gas, but which was transformed into a highly leveraged financial operation with a huge off balance sheet business trading derivatives. It s ecured a release from regulatory oversight by the time-tested method of purchasing lawmakers and by suborning its auditors. This gave it the power to restate earnings, virtually at will, simply by changing the assumptions on future interest rates embedded in the options, swaps and futures contracts constituting its unregulated derivatives book. Enron is a model also of the increasingly blurred distinction between the public and private sector. It employed as many as twenty CIA officers. One of its senior executives, Thomas White, was an army general before joining Enron and then left Enron to become Secretary of the Army. Enron executives were intimately involved with Vice President Richard Cheney’s energy task force. It is difficult to avoid concluding that Enron was anything other than a money-laundering operation employed in the interest of “National Security” on behalf of the cartel.

The US has embarked on a costly global military adventure the outcome of which is anything but certain. This marks the culmination of more than fifty years of nearly continuous overt and covert warfare. In this it is supported by the most sophisticated financing apparatus in history, capable of mobilising the cash generated from a wide variety of activities both open and covert. The price has been the progressive hollowing out of the American economy itself, and the progressive erosion of civil liberties and the rule of law. The black budget is not the cause of this but the means.

[1] Remark attributed to a Wall Street broker in 1895 describing J.P. Morgan. Gustavus Meyers (2002). History of the Great American Fortunes. University Press of the Pacific, Volume 3, p.225. Morgan, regularly portrayed as a patriot, was at the time deeply engrossed in relieving the government of its gold reserve.
[2] Lockheed’s contract was recently terminated by HUD--an action that the company is contesting.
[3] Dyncorp was appointed as well to run the Department of Justice’s asset forfeiture program in 1993, winning a $60 million five year contract to do so.
[4] For an insider’s account of the problems at HUD, see Catherine Austin Fitts, The Myth of th e Rule of Law at http://www.sandersresearch.com/.
[5] See http://www.npr.org/programs/npc/2001/010423.dwalker.html
[6] See Dan Briody (2003), The Iron Triangle, Inside the Secret World of the Carlyle Group. John Wiley & Sons: H oboken. ISBN 0-471-28108-5. Carlyle’s phenomenal success as an investment firm owes a great deal to its ability to lure former political figures and senior industry executives onto its executive team and advisory board. Examples are former US President George H.W. Bush and former British Prime Minister John Major; Frank Carlucci, former deputy director of the CIA and former Secretary of Defense; James Baker III, former Secretary of State; Richard Darman former director of the Office of Management and Budget; Colin Powell, former Chairman of the Joint Chiefs of Staff and present Secretary of State (a Carlucci protégé); William Kennard, former head of the Federal Communications Commission; Arthur Levitt, former chairman of the Securities and Exchange Commission; Park Tae Joon, former Prime Minister of the Republic of Korea, and Louis Gerstner, former chairman of IBM. Of some interest as well has been the involvement of the Bin Laden family as major private investors in the Carly le Group, represented by Shafiq Bin Laden, a brother of Osama Bin Laden.
[7] For a brilliant history of the rise of America’s elite and its disenchantment with democracy and free markets, see Sven Beckert (2001). The Monied Metropolis. Cambridge University Press: Cambridge. ISBN 0521790395.
[8] Gustavus Meyers (2002). History of the Great American Fortunes, Volume 3. University Press of the Pacific: Honolulu. (Reprint of the 1910 edition), p.225.
[9] See Walter Karp ((1979). The Politics of War. Harper & Row: New York) for an analysis of the move to war in the case of both the war with Spain and WWI. Of particular interest here is Woodrow Wilson’s extension of a domestic security apparatus ostensibly to deal with a supposed foreign threat during war time. In fact, the draconian legislation and executive orders that created the FBI as a new appendage of the Department of Justice was hardly used during wartime, but were deployed after the war against domestic politica l opponents in the labour unions and the Progressive Movement.
[10] See Beckert, op. cit.
[11] See Tim Weiner ((1990) Blank Check: The Pentagon’s Black Budget, Warner Publishing) and Sterling and Peggy Seagrave ((2003) Gold Warriors, Verso Press: New York). There is ample evidence that these funds were invested and have grown substan tially in the years since, and are still used to further political and personal agendas.
[12] Seagrave, Sterling and Peggy, op. cit., pp 119-120. The use of National Security as a rationale for acts that would otherwise be considered unconstitutional and illegal has become embedded in the America legal system, a curious inversion of original intent. Franklin Roosevelt declared a national economic emergency in the 30s which was used to justify extraordinary measures by the executive, including the abrogation of the government’s obligations to redeem government debt I gold. The Supreme Court refused to hear a case contesting the administration’s action. More recently, the government intervened in a labour dispute between the International Longshoremen Workers Union and the Pacific Maritime Association, citing the Patriot Act of 2001 and equating the union’s position to economic “terrorism”. In fact, rather than the union striking, the PMA locked the union out of the ports. Government intervention was in the form of the direct intercession of Tom Ridge, head of the Department of Homeland Security to force the union to accede to PMA demands.
[13] Notably, this is the same year in which the Exchange Stabilisation Fund was set up.
[14] In a similar fashion, manufacturing firms have migrated into finance, finding it easier to make money by arbitrage than by competition. Thus General Motors manufactures cars as collateral for its leasing business; similarly GE or Boeing make as much or more money out of financing the purchase of their products than from making them.
[15] This is to say nothing of the wholesale transfer gratis of research under taken at the taxpayer’s expense; for example nuclear technology transferred to the power industry.
[16] See Franklin Spinney, The Defense Death Spiral, http://www.d-n-i.net/ for an in depth analysis of the micro economics of military procurement and its impact on force readiness.
[17] This is the cumulative borrowi ng from abroad to finance net exports (or the trade deficit if you prefer).
[18] The annual rate of increase is the current account deficit.
[19] See Alfred McCoy (1991). The Politics of Heroin in South East Asia. 2nd ed. Lawrence Hill Books: Brooklyn. ISBN 1556521251. McCoy documents thoroughly the genesis of US wartime coo peration with the mafia in Italy during WWII and its post-war toleration of narcotics trafficking in the US as a quid pro quo for the cooperation of Corsican and Italian organised crime in its covert war against the Communist Party in France and Italy. In Asia, it supported the opium and heroin business of a Chinese nationalist army in Burma after the Chinese Revolution in 1948. In Indochina the US supplanted French colonial rule after the French defeat at Dien Bien Phu, inheriting in the process French covert ties to opium production amongst the Hmong hill tribes. With overt American intervention in 1965 the importance of this traffic grew enormously, financing an escalation of the ground war in Laos.
See also Seagrave, Sterling and Peggy, op. cit. There is ample international precedent for American involvement in narcotics trafficking, beginning with the British organisation of opium production in Bengal two centuries ago and of its illegal distribution into China. For that matter, Japan turned Manchuria under its occupation into the biggest producer of opium and refined opiates in the world, the cash flow from which proved to be immensely useful to the operations of Japan’s Manchurian Army and intelligence services.
[20] Peter Dale Scott (2003). Drugs, Oil and War: the United States in Afghanistan, Columbia and Indochina. Rowman & Littlefield Pub: Oxford. ISBN 0742525228.
[21] See Roger Morris ((1999) Partners in Power: The Clintons and Their America, Regnery Publishing) for a case study of the interaction of covert operations, narcotics trafficking, financial markets and politics in Arkansas during the governorship of Bill Clinton.

Website: http://www.paulwmroberts.com/

Stephen Harper and the Neo-Con

Anyone tempted to vote for Stephen Harper simply as a way of turning that stale Ottawa soil to oxygenate it, think again. Harper is another front man for the less-visible Canadian version of so-called Neo-Conservatism, which needs to be understood a lot better than it currently is by all shades of political opinion here, particularly the Left, which, as always, underestimates its opponents' will to power.

Make no mistake: Neo-Conservatism is fascism, an updated Naziism with the anti-Jewish element replaced by an anti-Muslim bias. One reason that the Neo-Con movement has been able to absorb so many ex-Trotskyites --- from Christopher Hitchens back to Irving Kristol -- is that its totalitarian inclinations are startlingly similar to those of International Socialism. Bush's call for a "global democratic revolution" echoes Trotsky's "World socialistic revolution", and anyone who believes Bush meant through the deployment of peaceful methods for change, take a look at Iraq (150,000 dead civilians at least), Afghanistan (10,000, who knows?), et al, not to mention the Pentagon's $500 billion annual budget. Marx also stated that capitalism would pave the way for Socialism because its rapacious greed tends to lay bare the avarice and elitism concealed in its core. I doubt if he envisioned the Neo-Con twist, though, and also doubt that the ex-Trots are there to surf in on the Big Wave when it comes. I imagine most felt it was their last chance to see a global revolution of any kind.

Below I attach Donald Gutstein's superb article on the Neo-Cons and the Canadian connection for anyone wishing to see where Harper connects to them. During the last election I was following tracks that linked Harper with the Project for A New American Century (PNAC) via the pernicious and deceitful David Frum --- whose anti-Canadian actions would have seen him arrested as a traitor in any other time or place -- and heard rumors of campaign funding being ferried up. PNAC is ostensibly a right-wing think tank whose main thought is US world domination. If a single organization could be blamed for the war in Iraq, PNAC did more to foment it than any other body, just as they drafted the 2002 National Security Strategy, which enabled the war's logistics, and which began as a PNAC report. A horrible nexus of vested interests hovers around PNAC too, because what's the point of a right-wing ideology that doesn't engorge itself on that ceaseless torr ent of cash called 'Taxation'. Frum's idol, the despicable Richard Perle, a caricature of fraudulent dealings and taxpayer abuse, springs to mind. Perle was also, surprise, surprise, a partner of Conrad Black's in Hollinger, which peeled its shareholders like grapes, fleeced them and turned them inside out. Perle and Frum co-authored a book that can easily pass as a parody of post-Nazi prose, and is the financial equivalent of Rapture fiction.

Gutstein's article links the Canadian Neo-Cons both to their roots and to their current political and media lairs via Harper and a predictable bestiary of propagandists, liars and hacks, most of them, like timid little Andrew Coyne, sheltered at the ample trough of the National Embarassment, with one, the cowardly Marcus Gee, kept as an act of charity by the Globe and Mail. I have politely ignored them for long enough, while tolerating their squeals of rage, but it is time for a little blunt truth. The gang of them make Josef Goebbels and his pet ape Streicher seem brilliantly literary, though if your morning greed sheet were to be swapped for a copy of Der Sturmer you'd barely notice any change. A tissue of lies is always the same. Quick to condemn, the National Post is very slow to apologize for the months when its front page was pure fiction, as it tried to convince us to send our children to fight in Iraq. I wonder why Jonathan Kay didn't protest those facts? Being hardcore elitists who believe they are the chosen philosophical overlords --- and you're not -- Neo-Cons habitually lie about their motives. But that's okay, you see, because we wouldn't be able to understand the kind of realities they deal with. Let's underline this:


Having been on the receiving end, I know this is true, just as I know the innuendo is another favorite tool. Andrew Coyne stated I had said the US killed more Iraqis than Saddam ever did, which is true, a fact, and he knows it. So he did not exactly say it wasn't true, he implied it, which is enough for the kind of person who buys the Post for their news. Again like Hitler and his pals, the axis of innuendo consists of cowardly bullies. Both Coyne and Gee are as brave behind their stolid little columns as if they had a battalion of storm troopers to despatch. But to date neither have had the guts to debate me publically on the issue of their choice. Both had the chance -- and my door is ever open -- but Coyne sat like Miss Prism and said nothing at all, and Gee pretended to be too busy, busy, busy to do what he wasnt too busy for when the offer was an anonymous editorial. I will say this unequivocally, though: both these men are liars who are a disgrace to the profession of journalism, whose practice they know nothing about. But the Post doesnt know any better -- it will presumably deny Conrad Black was convicte d, if and when he is -- and the Globe is being loyal to its tattered remnant of an old hand. It is hard to condemn that, and Gee's tortured world-view is too well known to be read seriously.

But when journalism is so infected by vested corporate interests that it tolerates and encourages the printing of lies as news, we must all be concerned. We must all worry. The public are not as aware as they ought to be of the difference between news reporting and opinion pieces. In a column you can say whatever you want --- though ideally it ought not to be a pack of lies --- but it might be useful if its subjective nature were occasionally pointed out and contrasted with the front page. And the balance of political opinion ought to reflect its balance in society.

Normally, I would say quite happily that the Neo-Cons are entitled to hold their views, and I fundamentally believe they are. But they are not entitled to operate with a hidden agenda, behind a smokescreen of lies, pretending that the corporate media are too liberal. Like the pretenbce that America was 'liberating' the Iraqis, the pretence that media are a bastion of the left-wing is a clever device to deflect attention from the real issues. The current nonsense about Paul Martin's allegedly 'anti-American' comments is a good example.

If the media were doing their job, they would for a start denounce the term 'anti-American' as entirely inappropriate in the context of a political critique. Just as the term 'anti-Semitic' --- which is meaningless for an Arab -- cannot be applied to criticism of Israeli policies. Israel and America have long had an unnatural relationship, but lately it's been growing closer and they are begining to resemble one another. Next this objective media would stress that the Prime Minister did not criticize America. He said nothing even vaguely critical. What he said was that the US ought to ab ide by the GATT ruling on softwood lumber, and that the US ought to be more responsible globally when it came to pollution and the Kyoto Accord. That it ought to respect the views of virtually every other country. These statements are barely more radical than saying an administration ought to administer. It is in fact the American Ambassador who over-reacted, and who, indeed, was rude. Mr Martin ought to have sent him back to Washington, but in a country where US Customs commandeers the main airport and dictates how traffic should flow down University Avenue, it is not perhaps clear who can say what to whom.

This is where a pure and untainted media come in. They should have been the ones calling out colours of lust. They should have been the ones analysing statements. They should have told Harper he was full of shit to prolong the untruths. But they didn't. A truly free press would not be owned by big business interests. A society that cared about a f ree media would pass laws preventing anyone amassing a monoploy of TV outlets and newspapers. The very fact that someone is seen trying to create a monopoly ought to make it impossible for them to succeed. There can be no good motive for such a cruel killing. There can be no valid reason to wage war.

There should be no excuses for lying in national media, either. One strike, you're out, no matter how many runs you have or need. Truth is or ought to be sacred.


What do close advisors to Stephen Harper and George W. Bush have in common? They reflect the disturbing teachi ngs of Leo Strauss, the German-Jewish émigré who spawned the neoconservative movement.
Strauss, who died in 1973, believed in the inherent inequality of humanity. Most people, he famously taught, are too stupid to make informed decisions about their political affairs. Elite philosophers must decide on affairs of state for us.
In Washington, Straussians exert powerful influence from within the inner circle of the White House. In Canada, they roost, for now, in the so-called Calgary School, guiding Harper in framing his election strategies. What preoccupies Straussians in both places is the question of "regime change."
Strauss defined a regime as a set of governing ideas, institutions and traditions. The neoconservatives in the Bush administration, who secretly conspired to make the invasion of Iraq a certainty, had a precise plan for regime change. They weren't out to merely replace Saddam with an American puppet. They planned to make the system m ore like the U.S., with an electoral process that can be manipulated by the elites, corporate control over the levers of power and socially conservative values.
Usually regime change is imposed on a country from outside through violent means, such as invasion. On occasion, it occurs within a country through civil war. After the American Civil War, a new regime was imposed on the Deep South by the North, although the old regime was never entirely replaced.
Is regime change possible through the electoral process? It's happening in the U.S., where the neocons are succeeding in transforming the American state from a liberal democracy into a corporatist, theocratic regime. As Canada readies for a federal election, the question must be asked: Are we next?
The 'noble lie'
Strauss believed that allowing citizens to govern themselves will lead, inevitably, to terror and tyranny, as the Weimar Republic succumbed to the Nazis in the 1930s. A ruling elite of political philosophers must make those decisions because it is the only group smart enough. It must resort to deception -- Strauss's "noble lie" -- to protect citizens from themselves. The elite must hide the truth from the public by writing in code. "Using metaphors and cryptic language," philosophers communicated one message for the elite, and another message for "the unsophisticated general population," philosopher Jeet Heer recently wrote in the Globe and Mail. "For Strauss, the art of concealment and secrecy was among the greatest legacies of antiquity."
The recent outing of star New York Times reporter Judith Miller reveals how today's neocons use the media to conceal the truth from the public. For Straussians, telling Americans that Saddam didn't have WMD's and had nothing to do with Al-Qaeda, but that we needed to take him out for geopolitical and ideological reasons you can't comprehend, was a non-starter. The people wouldn't get i t. Time for a whopper.
Miller was responsible for pushing into the Times the key neocon lie that Saddam was busy stockpiling weapons of mass destruction. This deception helped build support among Americans for the invasion of Iraq. Miller was no independent journalist seeking the truth nor a victim of neocon duplicity, as she claimed. She worked closely with Lewis "Scooter" Libby, who was U.S. Vice President Dick Cheney's Chief of Staff and responsible for coordinating Iraq intelligence and communication strategy. Libby is a Straussian who studied under Paul Wolfowitz, now head of the World Bank, and before that, deputy secretary of defense, where he led the 'Invade Iraq" lobby. Wolfowitz studied under Strauss and Allan Bloom, Strauss's most famous student.
Miller cultivated close links to the neocons in the administration and at the American Enterprise Institute, the leading Washington-based neocon think tank. AEI played the key role outside government in fabricating intelligence to make the case for invading Iraq. Straussian Richard Perle, who chaired the Defence Policy Board Advisory Committee until he was kicked off because of a conflict of interest, is a senior fellow at AEI and coordinated its efforts. Miller co-wrote a book on the Middle East with an AEI scholar. Rather than being a victim of government manipulation, Miller was a conduit between the neocons and the American public. As a result of her reporting, many Americans came to believe that Saddam had the weapons. War and regime change followed.
'Regime change' in Canada
As in the U.S., regime change became a Canadian media darling. Before 9-11, the phrase appeared in Canadian newspapers less than ten times a year. It usually referred to changes in leadership of a political party or as part of the phrase "regulatory regime change." Less than a week after 9-11, the phrase began to be used in its Straussian sense, as if a scenario was being choreographed.
From 19 mentions in Canadian newspapers in 2001, regime change soared to 790 mentions in 2002 and 1334 mentions in 2003. With the Iraq invasion accomplished that year, usage tailed off in 2004 (291 mentions) and in 2005 (208 mentions to November 10).
There's one big difference between American and Canadian Straussians. The Americans assumed positions of power and influence in the administrations of Ronald Reagan and George W. Bush. The Canadians have not had much opportunity to show (or is that hide?) their stuff. That may change with a Harper victory.
Paul Wolfowitz's teacher, Allan Bloom, and another Straussian, Walter Berns, taught at the University of Toronto during the 1970s. They left their teaching posts at Cornell University because they couldn't stomach the student radicalism of the '60s. At Toronto, they influenced an entire generation of political scientists, who fanned out to universities across the country.
Two of their students, Ted Morton and Rainer Knopff, went to the University of Calgary where they specialize in attacking the Charter of Rights and Freedoms. They claim the charter is the result of a conspiracy foisted on the Canadian people by "special interests." These nasty people are feminists, gays and lesbians, the poor, prisoners and refugee-rights groups who are advancing their own interests through the courts at the expense of the general public, these Straussians allege.
The problem with their analysis is that the special interest which makes more use of the courts to advance its interests than all these other groups combined -- business -- receives not a mention. Deception by omission is a common Straussian technique. The weak are targeted while the real culprits disappear.
Harper's mentors
Harper studied under the neocons at the University of Calgary and worked with them to craft policies for the fledgling Reform Pa rty in the late 1980s. Together with Preston Manning, they created an oxymoron, a populist party backed by business.
Ted Morton has turned his attention to provincial politics. He's an elected MLA and a candidate to succeed Premier Ralph Klein. But he did influence the direction of right-wing politics at the federal level as the Canadian Alliance director of research under Stockwell Day.
When Harper threw his hat in the ring for the leadership of the Alliance, Tom Flanagan, the Calgary School's informal leader, became his closest adviser. Harper and Flanagan, whose scholarship focuses on attacking aboriginal rights, entered a four-year writing partnership and together studied the works of government-hater Friedrich Hayek. Flanagan ran the 2004 Conservative election campaign and is pulling the strings as the country readies for the election.
Political philosopher Shadia Drury is an expert on Strauss, though not a follower. She was a member of Calg ary's political science department for more than two decades, frequently locking horns with her conservative colleagues before leaving in 2003 for the University of Regina.
Strauss recommended harnessing the simplistic platitudes of populism to galvanize mass support for measures that would, in fact, restrict rights. Does the Calgary School resort to such deceitful tactics? Drury believes so. Such thinking represents "a huge contempt for democracy," she told the Globe and Mail's John Ibbotson. The 2004 federal election campaign run by Flanagan was "the greatest stealth campaign we have ever seen," she said, "run by radical populists hiding behind the cloak of rhetorical moderation."
Straus and 'Western alienation'
The Calgary School has successfully hidden its program beneath the complaint of western alienation. "If we've done anything, we've provided legitimacy for what was the Western view of the country," Calgary Schooler Barry Cooper told journalist Marci McDonald in her important Walrus article. "We've given intelligibility and coherence to a way of looking at it that's outside the St. Lawrence Valley mentality." This is sheer Straussian deception. On the surface, it's easy to understand Cooper's complaint and the Calgary School's mission. But the message says something very different to those in the know. For 'St. Lawrence Valley mentality,' they read 'the Ottawa-based modern liberal state,' with all the negative baggage it carries for Straussians. And for 'Western view,' they read 'the right-wing attack on democracy.' We've provided legitimacy for the radical-right attack on the Canadian democratic state, Cooper is really saying.
A network is already in place to assist Harper in foisting his radical agenda on the Canadian people.
In 2003, he delivered an important address to a group called Civitas. This secretive organization, which has no web site and leaves little pape r or electronic trail, is a network of Canadian neoconservative and libertarian academics, politicians, journalists and think tank propagandists.
Harper's adviser Tom Flanagan is an active member. Conservative MP Jason Kenney is a member, as are Brian Lee Crowley, head of the Atlantic Institute for Market Studies and Michel Kelly-Gagnon of the Montreal Economic Institute, the second and third most important right-wing think tanks after the Fraser Institute.
Civitas is top-heavy with journalists to promote the cause. Lorne Gunter of the National Post is president. Members include Janet Jackson (Calgary Sun) and Danielle Smith (Calgary Herald). Journalists Colby Cosh, William Watson and Andrew Coyne (all National Post) have made presentations to Civitas.
The Globe and Mail's Marcus Gee is not mentioned in relation to Civitas but might as well be a member, if his recent column titled "George Bush is not a liar," is any evidence. In it, Gee repeats the lies the Bush neocons are furiously disseminating to persuade the people that Bush is not a liar.
Neo-con to Theo-con
The speech Harper gave to Civitas was the source of the charge made by the Liberals during the 2004 election -- sure to be revived in the next election -- that Harper has a scary, secret agenda. Harper urged a return to social conservatism and social values, to change gears from neocon to theocon, in The Report's Ted Byfield's apt but worrisome phrase, echoing visions of a future not unlike that painted in Margaret Atwood's dystopian work, A Handmaid's Tale.
The state should take a more activist role in policing social norms and values, Harper told the assembled conservatives. To achieve this goal, social and economic conservatives must reunite as they have in the U.S., where evangelical Christians and business rule in an unholy alliance. Red Tories must be jettisoned fr om the party, he said, and alliances forged with ethnic and immigrant communities who currently vote Liberal but espouse traditional family values. This was the successful strategy counselled by the neocons under Ronald Reagan to pull conservative Democrats into the Republican tent.
Movement towards the goal must be "incremental," he said, so the public won't be spooked.
Regime change, one step at a time.
Donald Gutstein, a senior lecturer in the School of Communication at Simon Fraser University, writes a regular media column for The Tyee.


Website: http://www.paulwmroberts.com/