Friday, August 7, 2009

Everything/body Is "Hooked" On Drug Profits (Invasions on Tap)

How else did you think a slug like Tom DeLay thought he "ruled the world?" (Emphasis marks added - Ed.)

Slowly, as the pieces fit together, we shared a horrifying epiphany: the banks, corporations and investors acting in each global region were the exact same players. They were a relatively small group that reappeared again and again in Russia, Eastern Europe, and Asia accompanied by the same well-known accounting firms and law firms. Clearly, there was a global financial coup d’etat underway. The magnitude of what was happening was overwhelming. In the 1990’s, millions of people in Russia had woken up to find their bank accounts and pension funds simply gone – eradicated by a falling currency or stolen by mobsters who laundered money back into big New York Fed member banks for reinvestment to fuel the debt bubble.

. . . Several years earlier, I listened to three peasant women describe the War on Drugs in their respective countries: Colombia, Peru, and Bolivia. I asked them, “After they sweep you into camps, who gets your land and at what price?” My question opened a magic door. They poured out how the real economics worked on the War on Drugs, including the stealing of land and government contracts to build housing for the people who are displaced.

At one point, suspicious of my understanding of how this game worked, one of the women said, “You say you have never been to our countries, yet you understand exactly how the money works. How is this so?” I replied that I had served as Assistant Secretary of Housing at the US Department of Housing and Urban Development (HUD) in the United States where I oversaw billions of government investment in US communities. Apparently, it worked the same way in their countries as it worked in mine.

I later found out that the government contractor leading the War on Drugs strategy for U.S. aid to Peru, Colombia and Bolivia was the same contractor in charge of knowledge management for HUD enforcement. This Washington-Wall Street game was a global game. The peasant women of Latin America were up against the same financial pirates and business model as the people in South Central Los Angeles, West Philadelphia, Baltimore and the South Bronx.

Later, courageous reporting by Naomi Klein and Greg Palast confirmed in detail that the privitization and economic warfare model I discussed in London had deep roots in Latin America.

We were experiencing a global “heist”: capital was being sucked out of country after country. The presentation I gave in London revealed a piece of the puzzle that was difficult for the audience to fathom. This was not simply happening in the emerging markets. It was happening in America, too.

I described a meeting that had occurred in April 1997, more than four years before that day in London. I had given a presentation to a distinguished group of U.S. pension fund leaders on the extraordinary opportunity to reengineer the U.S. federal budget. I presented our estimate that the prior year’s federal investment in the Philadelphia, Pennsylvania area had a negative return on investment.

We presented that it was possible to finance places with private equity and reengineer the government investment to a positive return and, as a result, generate significant capital gains. Hence, it was possible to use U.S. pension funds to significantly increase retirees’ retirement security by successfully investing in American communities, small business and farms — all in a manner that would reduce debt, improve skills, and create jobs.

The response from the pension fund investors to this analysis was quite positive until the President of the CalPERS pension fund — the largest in the country — said, “You don’t understand. It’s too late. They have given up on the country. They are moving all the money out in the fall [of 1997]. They are moving it to Asia.”

. . . Sure enough, that fall, significant amounts of moneys started leaving the US, including illegally. Over $4 trillion went missing from the US government. No one seemed to notice. Misled into thinking we were in a boom economy by a fraudulent debt bubble engineered with force and intention from the highest levels of the financial system, Americans were engaging in an orgy of consumption that was liquidating the real financial equity we needed urgently to reposition ourselves for the times ahead.

The mood that afternoon in London was quite sober. The question hung in the air, unspoken: once the bubble was over, was the time coming when we, too, would be “de-modernized?”

In 2009 — more than seven years later — this is a question that many of us are asking ourselves.

This is sooooooooooo hard a scenario to believe that one cringes when first encountering it (again!). Remember the HUD frauds (so little reported for a very good reason)? Turns out that those set us up for today's housing market frauds and a great deal more (financial catastrophe for the unconnected). No wonder the "government officials" like Franklin Raines were allowed to make out (and away) like bandits. They were presiding over the government-funded Mafia the whole time. I guess if the current bandits deserve a bonus, these guys did too. (And they got it in spades.) Come to think of it, this is prolly when members of Congress joined the Majority Graft Party. And you thought the Bush/Clinton drug connection was just a sideline. No wonder Hillary was so mad about not being given her turn. (Yes, this is an old essay, but it's dead on today's cataclysmic political occurrences: like no real healthcare reform allowed by the Grand Old Graft Fellows.) Proving that old saw "Never get in the way of a man who steals his living." I think Catherine Austin Fitts is one of the finest, bravest reporters of our time, and her "understanding of the global financial system and the inner workings of the Wall Street-Washington axis (is) unparalleled." (Emphasis marks added - Ed.) **(Note that another Rethuglican Senator, Mel Martinez (1st-termer in FL), said today he has opted to resign from the Senate, leaving poor Gov. Charlie Crist unable to appoint himself to the seat for which he had already declared himself a candidate. Nice parting shot, Mel (as the slugs leave town to disappear off into the weeds (graft money) as fast as they can travel)!)

The Myth of the Rule of Law Or How the Money Works Catherine Austin Fitts The Destruction of Hamilton Securities Group Over the course of several years my company Hamilton Securities and I were subjected to a government investigation that ultimately resulted in the destruction of Hamilton and the loss of my personal fortune. This spring the government finally dropped its investigation, having failed to find or establish any evidence of wrongdoing at Hamilton or by me. This was not a surprising result, because there was none to find. Nevertheless, over the course of five years and at a cost of millions of taxpayers. dollars, Hamilton and I were harassed into financial oblivion. Why?

It started in 1996, at the same time that the San Jose Mercury News was preparing a story exposing the US government's marketing of crack cocaine into South Central Los Angeles in the 1980's. The year before Hamilton Securities had launched a company in the inner city to provide data servicing for our software tool, Community Wizard. The Wizard used geographic information systems software (GIS) to map the geographic patterns of government investment, including defaulted mortgage loans of the Department of Housing and Urban Development (HUD). At that time we put three maps up on the Internet site for a place-based survey for the HUD loan sales. They showed defaulted HUD mortgages in New Orleans, the District of Columbia and South Central Los Angeles.

High and expensive rates of HUD mortgage defaults coincided with areas of heavy narcotics trafficking in South Central LA. It seemed understandable that someone might want the Wizard team to be otherwise occupied when the San Jose Mercury News published the "Dark Alliance" series regarding the Iran-Contra drug dealing in South Central Los Angeles. Otherwise we might notice the suspicious patterns that exist between HUD defaulted mortgages and government-sponsored narcotics trafficking.

After initial efforts to shut us down failed, a team of investigators working for the Department of Justice (DOJ) seized our office and destroyed our software tools and databases. If Wizard and supporting databases had not been stolen or ordered wiped clean from our computers, it would have linked national housing data to local housing data. It would have linked the databases on local housing down to the street address and local mortgage originations to the data on pools of housing tax-exempt bond and mortgage securities whose credit was backstopped by FHA and Ginnie Mae at HUD.

Wizard may have revealed that allegations that some US-guaranteed mortgage securities were fraudulently issued and were illegally draining HUD's reserves merited serious investigation. Was it possible that the US Treasury and the Office of Management and Budget (OMB) were operating HUD as a slush fund to illegally finance black budget operations? The possible securities fraud implications would be without precedent. Were covert operations and political graft the political raison d'être for HUD's existence?

The targeting of Hamilton and Fitts stopped in 2001. The final attempt to frame me was closed after 18 audits and investigations and a smear campaign that reached into every aspect of my professional and personal life. Years of hard evidence as to the baselessness of the government's goals and the criminality of its conduct had been ignored. The corruption of the courts, lawyers and the Department of Justice had become painfully visible, then predictable, then comical. The flood of federal credit, subsidies and contracts bought off everyone around us and showed what happens when human greed and the need for safety mixes with cheap money.

Several things helped to finally bring relief. In 2000, we began to put all documentation on a website ( thus creating a pool of evidence freely available to reporters, editors and readers. A second factor was that a great deal of money was unaccounted for from the US Treasury. This now totals over $3.3 trillion based on General Accounting Office (GAO) reports. The notion that the US Treasury, OMB and DOJ might be capable of significant fraud was gaining credibility in the investment community. A handful of courageous reporters published stories about what was happening. However, in a deeper sense, the targeting started long ago when narcotics trafficking and HUD fraud destroyed the Philadelphia neighbourhood where I grew up. It was then, as a young person, that I learned that the law was a tool of coercion, that there was no rule of law. It is a terrible truth. As a white, Anglo-Saxon Protestant, I had been counting on the rule of law to protect me. I found, instead, that it is a powerful myth which has fuelled great wealth for those who run and rule the economy, both legal and illegal. The rule of law is the basis of liquidity. That is why so much time and money goes into sustaining the myth.

Capital gains are highest for those who can combine liquidity, the value creation of stock price multiples, and the power of new technology with the high margins of narcotics trafficking, financial fraud and control of the Congress, the courts and the enforcement agencies to create and protect markets. Transaction costs rise and market multiples fall as the myth deteriorates. The destruction of Hamilton Securities is a case study in the disintegration of the myth of the rule of law. As that disintegration debases the treasuries and currencies of nations and destroys the equity of communities, it is making its way to your door one way or another.


For years rumours circulated that the National Security Council was managing narcotics trafficking directly from the White House under the direction of Oliver North and Vice President George Bush as part of an operation that came to be known as Iran-Contra. The story never seemed to catch on. It was unthinkable to most Americans that the White House was marketing drugs wholesale to be retailed to their children in order to pursue a foreign policy objective. No major media business could carry the story if it meant all the drug money pulled out of their stock. A sell off like that could kill a business over night. The truth is that the inability of America to come to grips with the Iran-Contra disclosures about narcotics trafficking by the US government indicated the extent to which our economy had become addicted to drug profits.

*(A note from our founder on Iran-Contra)*

In the mid 80's two covert operations of the American government overseen by the National Security Council of the Reagan administration and sanctioned by the highest levels of political authority were exposed. These were the illegal sale of weapons to Iran and the provision of convert aid to the Contra insurgency in Nicaragua in violation of a Congressional vote banning such aid. An independent counsel was appointed to investigate the matter. The investigation resulted in no fewer than fourteen individuals being indicted or convicted of crimes. These included senior members of the National Security Council, the Secretary of Defence, the head of covert operations of the CIA and others. After George Bush was elected president in 1988, he pardoned six of these men. The independent counsel's investigation concluded that a systematic cover-up had been orchestrated to protect the president and the vice president.

The sheer breadth of the covert operations was stunning. Indeed, it involved not only arms sales to Iran but also the solicitation of funds from third party governments as well as from wealthy Americans to pursue a foreign policy agenda in Central America that was not only controversial but illegal. During the course of the independent counsel.s investigation, persistent rumours arose that the administration had sanctioned drug trafficking as well as a source of operational funding. These charges were successfully deflected with respect to the independent counsel's investigation, but did not go away. They were examined separately by a Congressional committee chaired by Senator John Kerry, which established that the Contras had indeed been involved in drug trafficking and that elements of the US government had been aware of it.

It was not until Gary Webb's Dark Alliance exposé originally published in the San Jose Mercury News that the government's links to drug trafficking in the United States became established beyond a reasonable doubt. This in itself is curious, because Webb was hardly the first investigator to document the links between American intelligence and narcotics. Alfred McCoy, writing in the 70s, had documented the involvement of the CIA and the military in heroin and opium trafficking in Southeast Asia. Indeed, narcotics had been a source of covert funding and political leverage for years, extending at least as far back as the invasion of Sicily during World War Two. In retrospect, what was so startling about Iran-Contra was the scale of the financing operations involved, which reached even into the American banking system and included various forms of financial fraud. This gave the operation a link to the scandals that enveloped the savings and loan industry in the late 80s. Most observers do not connect these apparently diverse events when in fact they are part of a whole.

The Clintons' rise to the White House was fuelled by the Iran Contra operations in Arkansas. The drugs and arms transhipment point in Mena Arkansas had allegedly been one of the most significant operations operating under the aegis of the NSC's Oliver North. Some said that as much as $100MM a month of arms and drugs flowed through the airport at Mena Arkansas. The stories and lore - whether about the goings on or the deaths of the many people who tried to stop or expose them - took up thousands of pages on the Internet but never seemed to work their way into the "official reality" of national TV and newspapers.

When the Clintons arrived in Washington there were numerous efforts to investigate government narcotics trafficking and fraud. Sally Denton and Roger Morris probably got the closest. Their article on Mena was pulled by the Washington Post at the very last minute, eventually to run in Penthouse in the summer of 1995. But the journalist who finally broke through the nation's mass denial was Gary Webb. And he made it through thanks to the Internet, a medium much harder to control than the broadcast or printed press.

In August of 1996, the San Jose Mercury News broke Webb's story of illegal narcotics dealing by the US government, targeting South Central LA with crack cocaine. The story was told from the point of view of Ricky Ross, the legendary dealer who built the market in South Central. And what an incredible story it was.

While the San Jose Mercury News was not a big deal inside the Washington beltway and in New York media circles, it was a very big deal to the new markets growing up on-line. It was known as having the finest website of any newspaper on the World Wide Web. Its location in Silicon Valley meant that the techies read it and to ok it seriously.

When the News broke the story in mid-August, the story was serialised in a relatively short form, as news has to be. What was different was that the Newswebsite crew to ok the time to scan in thousands of pages of supporting legal documents available to read or download from its website. By the time the various intelligence agencies and major media centres had organised and succeeded in shutting down the story and getting Gary Webb transferred and then essentially fired, a rich network of alternative and minority radio stations and internet news sites had downloaded the documents and covered the story.

All the kings. horses and all the kings. men could not put Humpty Dumpty back together again. Thousands of Americans had copies of the original documentation. The evidence was hard. The allegations were true. The story was now out of the control of the official reality cops. The Internet created a vehicle that was helping America come to understand that one of the most profitable businesses in America might not be run by black teenagers and Colombian warlords, but by representatives of their own government.

America wanted the Dow Jones up, and Hamilton Securities' Community Wizard threatened to provide a hard link between Gary Webb's exposure of American intelligence's narcotics trafficking connections and money laundering.

In the corridors of power, there was no contest. The Dow Jones won.

Read all about it here and here, and then make your travel plans. Suzan __________________________


Case Wagenvoord said...

So, where are they storing the orange jump suits?

Suzan said...

Right behind the "USA Going Out of Business" sale signs, Case.

They should be easy to find.

Thanks for the comment!