Indian author Arundhati Roy interviewed on the Riz Khan program discussing politics in contemporary India, from the Maoists to Kashmir.
Part One (12.07)
Part Two (10.39)
Hat tip - Pulse Media
ΑΛΗΘΩΣ
Indian author Arundhati Roy interviewed on the Riz Khan program discussing politics in contemporary India, from the Maoists to Kashmir.
Part One (12.07)
Part Two (10.39)
Hat tip - Pulse Media
NEW YORK — Inside the thick Goldman Sachs investment circular were the details of a secret, $2 billion deal channeled through a Caribbean tax haven.
The Sept. 26, 2006, document offered sophisticated U.S. and European investors an opportunity to buy into a pool of supposedly high-grade bonds backed by residential, commercial and student loans. The transaction was registered through a shell company in the Cayman Islands.
Few of the potential investors knew it, but the ratings of many of the mortgage securities hid their true risks and, in some cases, Goldman's descriptions exaggerated their quality.
The Cayman offering — one of perhaps dozens made through the British territory — occurred as Goldman began to ditch the subprime mortgage business before the U.S. housing market collapsed under an avalanche of homeowner defaults.
In all, Goldman sold more than $57 billion in risky mortgage-backed securities during a 14-month period in 2006 and 2007, including nearly $39 billion issued from mortgages it purchased. Meanwhile, the firm peddled billions of dollars in complex deals, many of them tied to subprime mortgages, in the Caymans and other offshore locations.
Many of those securities later soured, but the sales allowed Goldman to become the only major U.S. investment bank to escape the brunt of the subprime meltdown.
One bond analyst who reviewed the 2006 Cayman deal dismissed it in a report to clients as "a not so cleverly disguised way for Goldman Sachs & Co. to unload its unwanted exposures to the subprime real estate market onto foreign investors."
Goldman spokesman Michael DuVally said that the firm "sold mortgage securities only to sophisticated investors" and disclosed "all the appropriate information available."
McClatchy also found at least two instances in which Goldman appeared to mislead investors. In one, the firm said that $65.3 million in securities were backed by safe "prime" mortgages when the same loans had been labeled a cut below prime in a U.S. offering. In the other, Goldman listed $10 million as "midprime" loans when the underlying mortgages had been made to subprime borrowers with shaky finances.
DuVally said that the descriptions were consistent with the standards set by Moody's, the bond-rating agency.
The secret Cayman Islands deals provide a window into one method that Goldman and other Wall Street firms used to draw European banks and other foreign financial institutions into investing hundreds of billions of dollars in securities tied to risky U.S. home loans.
Experts estimate that Wall Street investment banks sold 25 percent to 50 percent of these bonds and related securities overseas, resulting in massive losses in Europe and elsewhere when the market collapsed.
Last spring, the International Monetary Fund projected that global write-downs on "U.S.-originated assets" stemming from the subprime disaster could reach $2.7 trillion.
Underscoring the role of tax havens as a Wall Street marketing tool, a Treasury Department report found that as of June 30, 2008, $164 billion in U.S. mortgage-backed securities were held in the Cayman Islands and $22 billion more were held in Luxembourg, another tax-friendly zone.
Gary Kopff, a securitization expert who analyzed unpublished industry data, said that Goldman packaged or marketed offshore deals worth at least $83 billion from 2002 to 2008. These deals, called collateralized debt obligations, amounted to a $1.3 trillion global market, and Goldman reaped as much as $1.66 billion for assembling and selling them.
Some of Goldman's subprime mortgage securities wound up in the hands of financially struggling Eastern European governments such as those in Romania, Bulgaria, Slovakia and Slovenia, said a Wall Street expert involved in trading those types of securities who declined to be identified because of the matter's sensitivity. This person said that one Slovakian bank's multimillion-dollar investment wound up worthless.
DuVally said the company could find no record of marketing the bonds in those countries, but that the securities may have gotten there through the resale market.
Subprime-backed mortgage securities that were sold at the crest of the housing market in 2006 and 2007 have shown the most precipitous drop in value, with default rates on the underlying mortgages exceeding 30 percent. For many cash-strapped borrowers, it was easy to walk away from soaring monthly payments when their mortgage balances exceeded the lower value of their homes.
The 2006 Cayman deal was part of a flurry of Goldman activity in the hidden, unregulated parts of the securities industry. Goldman's traders also made huge bets that those securities would lose value by buying insurance-like contracts, called credit-default swaps, with private parties. Beginning early in 2007, they bought swaps on a London-based exchange.
Every Goldman bet on the exchange's subprime index, which was run by the London-based financial services company Markit, was on a basket of bonds that included a bundle of its own subprime-related securities.
Germany's Deutsche Bank, the trustee holding mortgages for scores of Goldman's bond offerings, also lists more than 50 private Goldman deals on its Web site. Of those, 42 were backed by risky mortgages.
In marketing exotic deals that typically include subprime mortgage-backed securities, Goldman and other Wall Street firms have long used the Caymans as a gateway to European investors, said an official of a German bank, who wasn't authorized to speak publicly and declined to be identified.
The 2006 Cayman deal was outside the reach of U.S. tax laws and free of U.S. regulation. Goldman circulated the deal under the names of Cayman-based Altius III Funding Ltd., and a sister firm registered in Delaware, both created for the sole purpose of facilitating the transaction.
The offering drew a scornful reaction from the bond analyst who warned investment clients to stay away. The analyst's report, a copy of which was obtained by McClatchy, described Goldman as "a single underwriter solely interested in pushing its dirty inventory onto unsuspecting and obviously gullible investors."
". ... In this case, it is a foregone conclusion that many relatively senior bondholders will suffer severe losses," said the analyst's report, which was made available on the condition of anonymity because the offering barred unauthorized disclosure.
McClatchy also learned of a second private Goldman deal, in which it sought in May 2007 via another Cayman company to sell $44.6 million in bonds related to subprime loans written by New Century Financial, a mortgage lender that weeks earlier had careened into bankruptcy after California regulators closed it.
For foreign banks, the lure was spelled AAA. Under both public and private deals, experts said, 80 percent or more of the bonds carried top grades from financial rating companies, assuring investors that the securities were among the safest plays in the financial world.
The triple-A rating was "the clincher," said an official of another German bank, who also wasn't authorized to speak publicly and requested anonymity.
Few investors, however, knew that Goldman and other Wall Street dealers were paying the biggest U.S. financial ratings firms for grading the risky bonds.
Sylvain Raynes, a former analyst for Moody's Investors Service, the largest U.S. rating firm, likened the Wall Street firms' relationships with the rating agencies to hiring "a high-class escort service."
Typically, he said, an investment banker would meet with analysts for a ratings agency, describe a mortgage pool "and propose his dream result."
"The agency would call back after the meeting and intimate that they 'could get there' sight unseen," Raynes said. "Both parties understood what that meant, and the agency would be hired to rate the deal."
After bestowing untold numbers of triple-A ratings on subprime-backed bonds, Moody's and the second- and third-largest rating agencies, Standard & Poor's and Fitch, began to downgrade hundreds of pools of the securities in the summer of 2007, including the offshore deals known as collateralized debt obligations.
That set off a chain reaction that culminated in last year's Wall Street meltdown. Since then, both Moody's and S&P have downgraded slices of the Altius III deal several times.
U.S. pension funds that have lost money on subprime mortgage-backed bonds have filed suits accusing Goldman, Morgan Stanley and Merrill Lynch of failing to inform them of the bonds' true risks. (Merrill is now part of Bank of America.)
Many European institutions that lost money on the securities, however, have fewer legal options.
Few of them are pointing fingers at Goldman or other U.S. investment banks. McClatchy contacted several European banks about their subprime losses and got similar responses when the banks were asked where they'd bought them.
Germany's IKB Deutsche Industriebank, whose 2007 near-collapse from subprime losses awakened Europe to the impending financial crisis, has written off about $19 billion (in current U.S. dollars) related to U.S. mortgages. A spokeswoman for the bank declined to say which investment banks sold it bonds.
Several of Germany's seven regional "landesbanks," or land banks, also took a pounding. With $7.2 billion in aid from the state of Bavaria, Munich-based Bayern LB, Germany's sixth-largest bank, has reserved $8.95 billion for losses in its asset-backed securities portfolio, which includes subprime loans. A Bayern spokesman declined to say who sold the bank the risky bonds.
Spokespeople for the Royal Bank of Scotland, which bought a Dutch subprime subsidiary and has reported tens of billions of dollars in losses, and the French bank Societe General, which lost more than $6 billion, also declined to identify any U.S. investment banks as the source of their problems.
"Are we angry against the U.S. banks?" a German bank official said, requesting anonymity because of the matter's sensitivity. "We looked at the triple A's like the other banks, and we bought this, yeah. It doesn't help much to be angry."
(Tish Wells contributed to this article.)
Before House Members vote on H.Res. 867, regarding the U.N. Goldstone report on the Gaza conflict, there are a few questions worth asking.
First, why are we bringing this resolution to the floor without ever giving former South African Constitutional Court Justice Richard Goldstone a hearing to explain his findings? Have those who will vote on H.Res. 867 actually read the resolution? Have they read the Goldstone report? Are they aware that Justice Goldstone has issued a paragraph by paragraph response, available on my Web site at www.baird.house.gov, to H.Res. 867 pointing out that many of its assertions are factually inaccurate or deeply misleading?
Since scarcely a dozen House Members have actually been to Gaza, what actual first-hand knowledge do the rest of the Members of Congress possess on which to base their judgment of the merits of H.Res. 867 or the Goldstone report?
What will it say about this Congress and our country if we so readily seek to block "any further consideration" of a human rights investigation produced by one of the most respected jurists in the world today, a man who led the investigations of abuses in South Africa, the former Yugoslavia, Rwanda, Kosovo and worked to identify and prosecute Nazi war criminals as a member of the Panel of the Commission of Enquiry into the Activities of Nazism in Argentina?
As one of the first two American officials, along with Rep. Keith Ellison (D-Minn.), to enter Gaza shortly after the conclusion of major bombing from "Operation Cast Lead," then again several months later, I have seen firsthand the devastating destruction of hospitals, schools, homes, industries and infrastructure. Much of that devastation was wrought using U.S. manufactured and paid for weaponry. I have also spoken with health workers, average Gazans, NGO relief workers and many others.
In addition, I have been to the Israeli town of Sderot, which has been the target of repeated rocket attacks, and to a number of Palestinian towns and Israel settlements in the West bank. Colleagues who have not been to the region may wish to view some of the images and interviews from these visits on my Web site.
With the information from these personal visits and on the ground knowledge, I read with care and interest the Goldstone report in its entirety and my firm conclusion is that, although the findings may be unpleasant and troubling, they are, unfortunately, consistent with the facts and evidence. In my judgment, far from meriting the obstruction called for in H.Res. 867, the Goldstone report is without question worthy of further investigation.
I know this conclusion is not easily accepted and I know it raises serious charges against entities and individuals on both sides of this conflict, Israel and Hamas. But if our own country is truly to stand for human rights and the rule of law, and if facts matter, how can we do other than insist that legitimate questions and evidence are followed by further investigation and, if necessary and warranted, appropriate consequences?
H.Res. 867 is very serious business. If, as Goldstone asserts and the evidence I have seen supports, there were in fact gross violations of international law and human rights on all sides, we cannot in good conscience support H.Res. 867.
This is about much more than just another imposed political litmus test that we are all too often asked to perform. This is about whether we as individuals and this Congress as an institution find it acceptable to drop white phosphorous on civilian targets, to rocket civilian communities, to destroy hospitals and schools, to use civilians as human shields, to deliberately destroy non-military factories, industries and basic water, electrical and sanitation infrastructure. This is about whether it is acceptable to restrict the movement, opportunities and hopes of more than a million people every single day.
At the end of the day, this is also about our own domestic security. If we are seen internationally as condoning violations of human rights and international law, if our money and our weaponry play a leading role in those violations, and if we reflexively obstruct the findings of someone with the credentials, history and integrity of Justice Goldstone, it can only diminish our international standing and our own security.
Rep. Brian Baird (D) represents Washington's 3rd district.
Click here to read Justice Goldstone's response to the resolution
Click here to see pictures from my trips to Israel and Gaza
Click here to see interviews I conducted with residents and relief workers in the regionHillary Clinton, the US secretary of state, sought to deflect the anger and disappointment of pro-western Arab states today after backing Israel's position that it did not need to freeze settlement activity as a prelude to resuming peace talks with the Palestinians.
Clinton was due to meet foreign ministers from Saudi Arabia, Egypt and other key Arab states at a G8 conference in Morocco after brief talks in Jerusalem and Ramallah at the weekend. In what appeared to be a significant policy shift she publicly supported the position taken by Binyamin Netanyahu, Israel's Likud prime minister, and even praised him for making "unprecedented" concessions.
Amid mounting concern that Barack Obama's much-heralded engagement with the Middle East peace process is going nowhere fast, Arab leaders expressed their fury at Clinton's endorsement of Israel's argument that it is not required to halt settlement activity in the West Bank and East Jerusalem, as the administration had previously demanded. The Palestinian Authority, Jordan and Egypt all protested.
Speaking in Marrakech she qualifed her remarks to say that Netanyahu's offer of "restraint" on settlements fell short of US expectations but would still have a "significant and meaningful effect" on limiting the growth of Jewish outposts on land the Palestinians want for their own state.
But she clearly faced an uphill struggle in convincing Arab states that Washington has not changed tack in favour of Israel.
Earlier today Amr Moussa, the secretary general of the Arab League, said: "I am telling you that all of us, including Saudi Arabia, including Egypt, are deeply disappointed … with the results, with the fact that Israel can get away with anything without any firm stand that this cannot be done."
Moussa had previously refused to say that he was disappointed with Obama, but he warned: "I am really afraid that we are about to see a failure."
Under the 2003 "road map" Israel is required to freeze all settlement activity, a position initially supported by Obama. Netanyahu's offer of "restraint" is coupled with an insistence on enabling "normal life" for 500,000 Jewish settlers in the West Bank and East Jerusalem.
Israel refuses to treat the eastern half of the city, which it annexed immediately after its 1967 victory, as occupied territory, arguing that it is exempt from a freeze.
Ghassan al-Khatib, the head of the Palestinian government's press office, said: "From our point of view and from the point of view of international law, and according to the road map, Israel has to first to stop the expansion of settlements in order to contribute to preparing the ground for meaningful peace negotiations."
There were harsher comments from Nabil Abu Rudeineh, spokesman for Palestinian president Mahmoud Abbas: "The negotiations are in a state of paralysis, and the result of Israel's intransigence and America's backpedalling is that there is no hope of negotiations on the horizon."
Abbas, the leader of the western-backed Fatah movement, is under heavy domestic pressure in advance of Palestinian elections due at the beginning of 2010 and sensitive to criticism from the Islamists of Hamas who control the Gaza Strip.
Israelis on the left joined in criticism of Clinton's remarks. "The secretary of state, I assume with the full support of the president, has turned around after 10 months of negotiating the precondition of freezing settlements," said Akiva Eldar in the Haaretz newspaper.
Clinton is in Marrakech for the Forum for the Future, which joins civil society groups and the private sector with foreign ministers from the G8 and the Middle East to talk about democracy and conflict resolution. Morocco is co-hosting the forum with Italy, which holds the G8 presidency.
SourceBy Aamir Latif, IOL, November 2, 2009
ISLAMABAD – The emboldened Taliban movement in Afghanistan turned down an American offer of power-sharing in exchange for accepting the presence of foreign troops, Afghan government sources confirmed.
“US negotiators had offered the Taliban leadership through Mullah Wakil Ahmed Mutawakkil (former Taliban foreign minister) that if they accept the presence of NATO troops in Afghanistan, they would be given the governorship of six provinces in the south and northeast,” a senior Afghan Foreign Ministry official told IslamOnline.net requesting anonymity for not being authorized to talk about the sensitive issue with the media.
He said the talks, brokered by Saudi Arabia and Turkey, continued for weeks at different locations including the Afghan capital Kabul.
Saudi Arabia, along with Pakistan and the United Arab Emirates, were the only states to recognize the Taliban regime which ruled Afghanistan from 1996 to 2001.
Turkish Prime Minister Reccap Erodgan has reportedly been active in brokering talks between the two sides.
His emissaries are in contact with Hizb-e-Islami (of former prime minister Gulbadin Hikmatyar) too because he is an important factor in northeastern Afghanistan.”
A Taliban spokesman admitted indirect talks with the US.
“Yes, there were some indirect talks, but they did not work,” Yousaf Ahmedi, the Taliban spokesman in southern Afghanistan, told IOL from an unknown location via satellite phone.
“There are some people who are conveying each others’ (Taliban and US) messages. But there were no direct talks between us and America,” he explained.
Afghan and Taliban sources said Mutawakkil and Mullah Mohammad Zaeef, a former envoy to Pakistan who had taken part in previous talks, represented the Taliban side in the recent talks.
The US Embassy in Kabul denied any such talks.
“No, we are not holding any talks with Taliban,” embassy spokeswoman Cathaline Haydan told IOL from Kabul.
Asked whether the US has offered any power-sharing formula to Taliban, she said she was not aware of any such offer.
“I don’t know about any specific talks and the case you are reporting is not true.”
Provinces for Bases
Source say that for the first time the American negotiators did not insist on the “minus-Mullah Omer” formula, which had been the main hurdle in previous talks between the two sides.
The Americans reportedly offered Taliban a form of power-sharing in return for accepting the presence of foreign troops.
“America wants 8 army and air force bases in different parts of Afghanistan in order to tackle the possible regrouping of Al-Qaeda network,” the senior official said.
He named the possible hosts of the bases as Mazar-e-Sharif and Badakshan in north, Kandahar in south, Kabul, Herat in west, Jalalabad in northeast and Ghazni and Faryab in central Afghanistan.
In exchange, the US offered Taliban the governorship of the southern provinces of Kandahar, Zabul, Hilmand and Orazgan as well as the northeastern provinces of Nooristan and Kunar.
These provinces are the epicenter of resistance against the US-led foreign forces and are considered the strongholds of Taliban.
Orazgan and Hilmand are the home provinces of Taliban Supreme Commander Mullah Omer and Afghan President Hamid Karzai.
“But Taliban did not agree on that,” said the senior official.
“Their demand was that America must give a deadline for its pull out if it wants negotiations to go on.”
Ahmedi, the Taliban spokesman in southern Afghanistan, confirmed their principal position.
“Our point of view is very clear that until and unless foreign forces do not leave Afghanistan, no talks will turn out to be successful.”
It's not often that an appellate court decision reflects so vividly what a country has become, but such is the case with yesterday's ruling by the Second Circuit Court of Appeals in Arar v. Ashcroft (.pdf). Maher Arar is both a Canadian and Syrian citizen of Syrian descent. A telecommunications engineer and graduate of Montreal's McGill University, he has lived in Canada since he's 17 years old. In 2002, he was returning home to Canada from vacation when, on a stopover at JFK Airport, he was (a) detained by U.S. officials, (b) accused of being a Terrorist, (c) held for two weeks incommunicado and without access to counsel while he was abusively interrogated, and then (d) was "rendered" -- despite his pleas that he would be tortured -- to Syria, to be interrogated and tortured. He remained in Syria for the next 10 months under the most brutal and inhumane conditions imaginable, where he was repeatedly tortured. Everyone acknowledges that Arar was never involved with Terrorism and was guilty of nothing. I've appended to the end of this post the graphic description from a dissenting judge of what was done to Arar while in American custody and then in Syria.
In January, 2007, the Canadian Prime Minister publicly apologized to Arar for the role Canada played in these events, and the Canadian government paid him $9 million in compensation. That was preceded by a full investigation by Canadian authorities and the public disclosure of a detailed report which concluded "categorically that there is no evidence to indicate that Mr. Arar has committed any offense or that his activities constituted a threat to the security of Canada." By stark and very revealing contrast, the U.S. Government has never admitted any wrongdoing or even spoken publicly about what it did; to the contrary, it repeatedly insisted that courts were barred from examining the conduct of government officials because what we did to Arar involves "state secrets" and because courts should not interfere in the actions of the Executive where national security is involved. What does that behavioral disparity between the two nations say about how "democratic," "accountable," and "open" the United States is?
Yesterday, the Second Circuit -- by a vote of 7-4 -- agreed with the government and dismissed Arar's case in its entirety. It held that even if the government violated Arar's Constitutional rights as well as statutes banning participation in torture, he still has no right to sue for what was done to him. Why? Because "providing a damages remedy against senior officials who implement an extraordinary rendition policy would enmesh the courts ineluctably in an assessment of the validity of the rationale of that policy and its implementation in this particular case, matters that directly affect significant diplomatic and national security concerns" (p. 39). In other words, government officials are free to do anything they want in the national security context -- even violate the law and purposely cause someone to be tortured -- and courts should honor and defer to their actions by refusing to scrutinize them.
Reflecting the type of people who fill our judiciary, the judges in the majority also invented the most morally depraved bureaucratic requirements for Arar to proceed with his case and then claimed he had failed to meet them. Arar did not, for instance, have the names of the individuals who detained and abused him at JFK, which the majority said he must have. As Judge Sack in dissent said of that requirement: it "means government miscreants may avoid [] liability altogether through the simple expedient of wearing hoods while inflicting injury" (p. 27; emphasis added).
The commentary about this case from Harper's Scott Horton perfectly captures the depravity of what our Government has done -- and continues to do -- to Arar. His analysis should be read in its entirety, and he concludes with this:
When the history of the Second Circuit is written, the Arar decision will have a prominent place. It offers all the historical foresight of Dred Scott, in which the Court rallied to the cause of slavery, and all the commitment to constitutional principle of the Slaughter-House Cases, in which the Fourteenth Amendment was eviscerated. The Court that once affirmed that those who torture are the “enemies of all mankind” now tells us that U.S. government officials can torture without worry, because the security of our state might some day depend upon it.
I want to add one principal point to all of this. This is precisely how the character of a country becomes fundamentally degraded when it becomes a state in permanent war. So continuous are the inhumane and brutal acts of government leaders that the citizens completely lose the capacity for moral outrage and horror. The permanent claims of existential threats from an endless array of enemies means that secrecy is paramount, accountability is deemed a luxury, and National Security trumps every other consideration -- even including basic liberties and the rule of law. Worst of all, the President takes on the attributes of a protector-deity who can and must never be questioned lest we prevent him from keeping us safe.
This is exactly why I find so objectionable and dangerous the ongoing embrace by the Obama administration of these same secrecy and immunity weapons. Obama had nothing to do with the Arar case -- all the conduct, and even the legal briefing, occurred before he was President -- but he has taken numerous steps to further institutionalize the core injustice here, including in cases that are quite similar to Arar: namely, that the Executive can use secrecy and national security claims to shield himself from the rule of law, even when he's accused of torture and war crimes. That's exactly what happened here, yet again. As Judge Parker wrote in dissent (click image to enlarge)
Identically, Judge Calabresi -- one of the most respected and non-ideological appellate judges in the country -- accused the majority of "utter subservience to the executive branch." Surely that's true, but it isn't only the Arar majority that is guilty of that. It is the nation as a whole -- drowning in infinite claims of "state secrets" and executive immunity and war necessity and the imperatives of "looking forward" -- that has meekly acquiesced to the pernicious idea that the President in an allegedly national security context must never have his actions disclosed, let alone judicially scrutinized and held accountable, no matter how criminal, brutal and inhumane those actions are.
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Here's Judge's Sack's description of what was done to Arar in Syria, which accords perfectly with what the Canadian investigation found -- this is what our Government (both the executive and judicial branches) has continuously insisted it can purposely cause to happen without any accountability or even transparency (pp. 13-15):
Judge Sack's equally horrific description of exactly what the U.S. did to cause all of that to happen to Arar is here.