Undernews for 6 February 2009

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The news while there's still time to do something about it

THE PROGRESSIVE REVIEW

Editor: Sam Smith

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6 February 2009
WORD

I did have a test. . . It's on European Socialism. I mean, really, what's the point? I'm not European, I don't plan on being European, so who gives a crap if they're socialist? They could be fascist anarchists, that still wouldn't change the fact that I don't own a car. - Ferris Beuller

FLOTSAM & JETSAM
THE STORY THE MEDIA WON'T TOUCH
Sam Smith

Based on media coverage at least, name the largest industry in America that never contributes to political campaigns, never tries to influence politicians, never is involved in political corruption and has no lobbyists in Washington? In other words, name the cleanest business in America - that is, if you believe the media.

The answer: the illegal drug trade.

For example, the Review has been among the lonely voices raising the possibility that drug and mob money may have played a much larger role in the current fiscal crash than has been noted.

It is clear the media doesn't want to touch this matter. But they've had a setback with the testimony of financial investigator and Madoff whistleblower Harry Markopolos. Talking Points Memo notes: "Markopolos elaborated while being questioned by lawmakers, alleging Madoff 'had a lot of dirty money' from the Russian mafia and Latin American drug cartels."

In the end, Markopolos realized he had done the mobs a favor. Here's part of a Q&A with Rep. Gary Ackerman:

ACKERMAN: I'm talking about, when you talk about the Russian mob and organized crime, these are people who invested through European investors or European feeder funds?

MARKOPOLOS: Correct. And I didn't fear of them, and I didn't think they were going to come after me, I want to make this perfectly clear to all those Russian mobsters and Latin American drug cartels out there. . .

ACKERMAN: You're talking directly to them.

MARKOPOLOS: I was acting on your behalf trying to stop him from zeroing out your accounts. I'm the good guy here. Just like to make that clear.

And the Independent in Britain reports that "Amid persistent rumors that Russian mob money found its way into the Madoff Ponzi scheme, a panic button has been installed in the [Madoff] apartment, along with 24-hour surveillance, as much to protect him as to check he is not planning to flee. He wears a bullet-proof vest for trips to court."

It seems obvious that the parallel rise of the illegal drug trade and the use of hedge funds and other devices to hide the origin and movement of money deserves, at the very least, deep looking into. There seems a reasonable possibility that our current crisis was driven in some part by a need to launder large sums belonging to criminal groups.

Why is the media so reluctant to consider this? Partly because it sounds too movie-like. But, as we have recently learned, Bernie Madoffs actually exist outside of Hollywood.

Part is because the media traditionally takes its cue on covering crime from law enforcement, which may itself - as with other government bodies - be involved, incompetent or indifferent.

Finally we have the little noted problem that in a hyper-corporatized media, a good scoop can ruin a career as fast as it can make one if the wrong people in power are angered by it.

I have been alternately frustrated and fascinated by the money laundering story and the refusal of major media for the most part to even mention it. To the media, the drug trade is largely the result of minorities and undisciplined young white dudes. It makes the story so much easier.

But when I started covering the Clinton story, I found myself repeatedly stumbling into other aspects of the tale. Here are a few examples from the Review archives:

1994 - Writing in the London Telegraph, Ambrose Evans-Pritchard wrote that Arkansas was a "major point for the transshipment of drugs" during the 1980s and "perilously close to becoming a 'narco republic' -- a sort of mini-Columbia within the borders of the United States."

1995 - While portions of the Mena, Arkansas affair have been reported elsewhere (including here), the Denton/Morris piece is significant . . . First, it is based on more than 2000 documents from the files of ex-drug smuggler -- and sometime intelligence asset -- the late Barry Seal. . . The Denton/Morris story tells of "literally hundreds of millions of dollars in drug profits" being developed by the Mena operation, of CIA involvement, and of nine different official investigations being stifled under two presidents (Reagan and Bush) and one governor (Clinton).

1996 - Jim Leach of the House Banking Committee is reported running into stonewalling on the grounds of "national security" as he investigates drug smuggling and money laundering out of Mena, Arkansas. As Insight magazine points out in its January 29 issue, there have been nine separate federal and state probes over the last decade that "have managed to establish that Mena was indeed the center of a brazen narcotics-trafficking operation."

1996 - The White House hosted a major drug dealer at its Christmas party last year. . . Cabrera was indicted in 1983 by a federal grand jury -- on racketing and drug charges -- and again in 1988, when he was accused of managing a continuing narcotics operation. He pleaded guilty to lesser charges and served 54 months on prison. Since his visit to the White House he has been sentenced to 19 years on prison for transporting 6,000 pounds of cocaine into the US.

1997 - In his book, The Secret Life of Bill Clinton, Ambrose Evans-Pritchard quotes an ex-drug pilot as saying that he once brought a Cessna 210 full of cocaine into eastern Arkansas where he was met by a state trooper in a marked police car. "Arkansas," he said, "was a very good place to load and unload." Later Evans-Pritchard wrote:

"On my first visits to Arkansas, I could smell that something was wrong. The place reminded me of Central America, a sort of anglophone Guatemala, where a corrupt and violent political machine operated behind the scenes. People dissembled in interviews, instinctively. The deeper I looked, the clearer it became that the Dixie Mafia had a foothold in official Arkansas, and that intimidation was part of the culture.

"Dissident members of the Arkansas State Police provided me with stacks of confidential reports showing that one of Mr. Clinton's biggest financial backers during his assent to power . . .had been under investigation for international drug-trafficking. . . .

1998: Arkansas Highway Police have seized $3.1 million in cash from four suitcases in a tractor-trailer rig's sleeper section. The driver was charged with money laundering among other things. The seizure was the fourth largest in American history and nearly fifty times more than all the illegal money seized by Arkansas highway police in a typical year.

Arkansas has long functioned as a center of narcotics activity. The airport at Mena has been used for major drug trafficking, and sparsely populated areas have proved attractive for "kick drops" in which drug shipments are released from a plane to confederates on the ground who are given the geographical coordinates of the shipment. It has also been alleged that drug money was laundered through the Arkansas Development and Finance Administration.

1997 - Progressive Review editor Sam Smith interviews Billy Bear Bottoms, pilot for Barry Seal, who, until he was murdered, was considered by some the biggest illegal drug importer. Bottom thinks this is inflated but says that Seal "testified in a trial in Las Vegas that he had made about 50 trips of 300 kilos each. His transportation fee was $5,000 per kilo. We actually only made about 25 trips." The transportation fee alone works out to $1.5 million a trip or $75 million for 50 trips; half that for 25. [That would be about $2.7 million a trip in today's dollars].

1999 - From "Partners in Power" by Roger Morris:

"[Key investigators] Duncan and Welch watched the Mena inquiry systematically quashed and their own careers destroyed as the IRS and state police effectively dissolved their investigations and turned on them. 'Somebody outside ordered it shut down,' one would say, 'and the walls went up.' Welch [a state trooper] recorded his fear and disillusion in his diary on November 17, 1987: 'Should a cop cross over the line and dare to investigate the rich and powerful, he might well prepared himself to become the victim of his own government. The cops are all afraid to tell what they know for fear that they will lose their jobs.'"

1999 - Bill Duncan: An IRS investigator in Arkansas who drafted some 30 federal indictments of Arkansas figures on money laundering and other charges. Clinton biographer Roger Morris quotes a source who reviewed the evidence: "Those indictments were a real slam dunk if there ever was one." The cases were suppressed, many in the name of "national security." Duncan was never called to testify. Other IRS agents and state police disavowed Duncan and turned on him. Said one source, "Somebody outside ordered it shut down and the walls went up."

1999 - Rusell Welch: An Arkansas state police detective working with Duncan. Welch developed a 35-volume, 3,000 page archive on drug and money laundering operations at Mena. His investigation was so compromised that a high state police official let one of the targets of the probe look through the investigative file. At one point, Welch was sprayed in the face with poison, later identified by the CDC as anthrax. He would write in his diary, "I feel like I live in Russia, waiting for the secret police to pounce down. A government has gotten out of control. Men find themselves in positions of power and suddenly crimes become legal." Welch is no longer with the state police.

1999 - Jean Duffey was head of a joint federal-county drug task force in Arkansas. Her first instructions from her boss: "Jean, you are not to use the drug task force to investigate any public official." Duffey's work, however, led deep into the heart of the Dixie Mafia, including members of the Clinton machine. The local prosecuting attorney, Dan Harmon issued a subpoena for all the task force records, including "the incriminating files on his own activities. If Duffey had complied it would have exposed 30 witnesses and her confidential informants to violent retributions. She refused." Harmon issued a warrant for her arrest and friendly cops told her that there was a $50,000 price on her head. She eventually fled to a secret address in Texas. The once-untouchable Harmon was convicted in June 1997 of five counts of racketeering, extortion and drug dealing.

2000 - Insight Magazine: Canadian police have identified Clinton donor and Macao gambling tycoon Stanley Ho as the leader of a triad gang of organized criminals with strong ties to Communist China. President Clinton personally accepted $250,000 from a Macao gambling tycoon whom Canadian police identify as a "leader" of a Chinese triad, or organized-crime syndicate. . . According to a separate Canadian Security Intelligence Service report, the triads are involved in "drug trafficking; money laundering; corruption; computer-software piracy; credit-card forgery and fraud; counterfeit currency and identification operations; and migrant smuggling."

2001 - Stewart Tendler, Times, London: Customs officers have seized nearly $2 million in cash after it was flown into Britain on behalf of Marc Rich, the fugitive billionaire pardoned by Bill Clinton. Mr Rich, whose presidential pardon is under investigation by the FBI, now has to prove that the cash was honestly acquired, or he could lose it. Investigators are holding the cash under powers aimed at preventing drug traffickers moving their profits from country to country. . .

2001 - In 1984, a Clinton bodyguard, state trooper L.D. Brown, applied for a CIA opening. Clinton gave him help on his application essay including making it more Reaganesque on the topic of Nicaragua. According to Brown, he met a CIA recruiter in Dallas whom he later identified as former member of Vice President Bush's staff. On the recruiter's instruction, he also met with notorious drug dealer Barry Seal in a Little Rock restaurant, later joining Seal in flight to Honduras with a purported shipment of M16s and a return load of duffel bags. Brown got $2,500 in small bills for the flight. Concerned about the mission, Brown consulted with Clinton who said, "Oh, you can handle it, don't sweat it." On second flight, Brown found cocaine in a duffel bag and again he sought Clinton's counsel. Clinton allegedly said to the politically conservative Brown, "Your buddy Bush knows about it" and of the cocaine, "that's Lasater's deal."

2001 - In 1985, Clinton established the Arkansas Development Finance Authority that would become, in the words of one well-connected Arkansan "his own political piggy bank." Though millions of dollars were funneled to Clinton allies, records of repayments would be hazy or non-existent. . . Later, an investigator found evidence of an electronic transfer of $50 million from the Arkansas Development Financial Authority to a bank in the Cayman Islands.

2001 - In 1989 Terry Reed filed a civil action against Buddy Young, chief of the Clinton security detail and later a top FEMA official. Reed argued that he had been framed after trying to pull away from his involvement in the Iran-Contra machinations. . . One estimate was that ten million dollars were passing through Mena every week. Patterson said the matter was repeatedly discussed in front of Clinton by his bodyguards. Patterson said the governor had "very little comment to make; he was just listening to what was being said." Reed's case unraveled when the state judge ruled that no evidence regarding Mena, the CIA, Dan Lasater, the Arkansas Development Finance Agency, or the Clintons would be permitted.

As one examined the story, it was clear even back then that there were major ties to other major scandals such as BCCI and the savings & loan crisis, forerunners of current mass fiscal manipulation gone awry. The state of Arkansas was laundering money in Grand Cayman, which had a population of 18,000, 570 commercial banks, one bank regulator and a bank secrecy law. Foreign investors helped to set up a bank in a small town near the major drug center at Mena. One secretary told told an IRS investigator that she was ordered to obtain numerous cashier's checks, each in an amount just under $10,000, at various banks in Mena and surrounding communities, to avoid filing the federal currency transaction reports required for all bank transactions that exceed that limit. Bank tellers testified before a federal grand jury that in November 1982, a Mena airport employee carried a suitcase containing more than $70,000 into a bank. "The bank officer went down the teller lines handing out the stacks of $1,000 bills and got the cashier's checks."

Mind you, most of this occurred more than a decade ago, yet, with a few exceptions like Roger Morris, Sally Denton and Ambrose Evans-Pritchard, reporters haven't wanted to touch it and have spent their efforts instead creating a benign Clinton myth. Clinton was - like a typical prohibition era politician - a beneficiary and peripherally complicit at the very least through studied indifference, but in a sense he was really just part of the background. He was a window into the real story: how a huge part of the American economy - created by the crudely misnamed War on Drugs - operated in just one state.

If the media had honestly followed the money back then, if they had asked obvious questions about the war on drugs, if they hadn't fallen for the politicians' lines on BCCI and the S&L scandal, if they had wondered why so much money was moving around without any visibility or regulation, we might have approached the end of 2008 in better shape.
SISSIES IN THE SENATE
Sam Smith

One of the reasons that politics is less appealing these days is that politicians have become such wimps. Nowhere is this more apparent than in the watering down of the Senate filibuster.

A filibuster used to be a filibuster. But now, as Wikipedia notes, "In current practice, Senate Rule 22 permits filibusters in which actual continuous floor speeches are not required, although the Senate Majority Leader may require an actual traditional filibuster if he or she so chooses. This threat of a filibuster can therefore be as powerful as an actual filibuster. Previously, the filibustering senator(s) could delay voting only by making an endless speech. Currently, they need only indicate that they are filibustering, thereby preventing the Senate from moving on to other business until the motion is withdrawn or enough votes are gathered for cloture."

What's the use of having a tradition as ridiculous as a filibuster if the Senate ignores the tradition? Besides, if we had used the current rules in the past, we might never had gotten some of the civil rights legislation of the 1960s approved at all.

Why the change? Nobody talks about it much, but here are three good explanations:

- Both sides like to use the technique (or, more precisely, the threat of the technique) these days. For example, here is a Senator speaking a few years ago: "When legislation only has the support of the minority, the filibuster slows the legislation . . . prevents a Senator from ramming it through. . . and gives the American people enough time join the opposition. Mr. President, the right to extended debate is never more important than when one party controls Congress and the White House. In these cases, the filibuster serves as a check on power and preserves our limited government." The senator speaking was Harry Reid, now leading the body at a time when one party controls Congress and the White House.

On another occasion, Reid sang a different tune:

"It would be one thing for Republicans to vote against this bill. If they honestly believe that 'stay the course' is the right strategy - they have the right to vote no. But now, Republicans are using a filibuster to block us from even voting on an amendment that could bring the war to a responsible end. They are protecting the President rather than protecting our troops. They are denying us an up or down - yes or no - vote on the most important issue our country faces."

- The Senate is now on C-SPAN. This makes rambling, non-pertinent speeches such as Huey Long's recitation of his favorite fried oyster and potlikker recipes less likely to be appreciated by the viewing public. It's hard to keep a TV fan base after 15 hours, the length of one of Long's filibusters, which was finally busted by his need to go to the bathroom.

- The Senate has gotten older. It simply doesn't have as much energy as it did, say, in the 1960s and earlier. They can't even have an inaugural lunch without having to call an ambulance; imagine what would happen after several nights sleeping on cots in the Senate out rooms as in the past.

I was fortunate enough to have covered a number of real filibusters. Once I reported that "This afternoon it was JW Fulbright who said the issue of discrimination was non-existent -- raised every four years for political reasons." Fulbright at the time was participating in a southern filibuster that had already been going 69 hours, far longer than any previous effort.

Among those also taking part were Sam Ervin and the rambunctious, hard-drinking Russell Long who managed to hold the Senate floor for eleven hours. This, however, was no record. Senator Wayne Morse had once gone over 18 hours and two years earlier, Strom Thurmond had held the floor for more than a day.

Thurmond reportedly described to Rep. Wayne Hayes in some detail how he managed this feat without having to relieve himself, noting that he had taken saunas, avoided liquids and so forth. Hayes listened thoughtfully and then said, "Strom, I can understand how you went that long without pissing, but what I can't figure out is how someone so full of shit as you could have done it."

One filibuster would drift into another and the hours turned into days. A group of reporters gathered around the minority leader, Everett Dirksen, in the middle of a night and one asked, "How are you doing?" The Wizard of Ooze told us he was doing all right "but at some point I suppose I shall have to lie down and let Morpheus embrace me . . . After two weeks the flesh rides herd on the spirit."

That was a real filibuster. Today, Dirksen would have just called Harry Reid and said, "Chalk me up for a filibuster."

There's a way out of this dilemma. Change the Senate rules. But you can't do that without a filibuster? Not really, as well argued by Ronald D. Rotunda of the Cato Institute a few years ago:

"The modern filibuster is much more powerful than its historical predecessor because it is invisible: The Senate rules do not require any senator to actually hold the floor to filibuster. Instead, a minority of 41 senators simply notifies the Senate leadership of its intent to filibuster. Other Senate business goes on, but a vote on a particular issue -- a nomination -- cannot be brought to a vote.. . .

"The Senate, unlike the House, is often called a continuing body because only one-third of its members are elected every two years. But that does not give the senators of a prior generation (some of whom were defeated in prior elections) the right to prevent the present Senate from choosing, by simple majority, the rules governing its procedure. For purposes of deciding which rules to follow, the Senate starts anew every two years."

To be fair, the activists also play both sides of the filibuster game, depending on whether the politically anointed are on their side or not. I prefer the majority vote in either case; it's worked pretty well in the House. But even if you want to keep the filibuster, then at a bare minimum, its advocates should be required to show a little gumption and not treat it as a dial up option - the political equivalent of phone sex - but rather get out there on the floor and read Shakespeare for 18 hours and 32 minutes. If you're going to be bumptious recalcitrant, at least give us something to laugh about.

PAGE ONE MUST
NYC LOSING ITS MIDDLE CLASS
Portfolio - The Center for an Urban Future has released a startling report on the fate of New York's middle classes -- even as the population of the city continues to grow, its middle class is shrinking, and when it comes to domestic migration, there are clearly many more New Yorkers leaving town than there are people from other US towns moving in.

More residents left the five boroughs for other locales in each of the years between 2002 and 2006 than in 1993, when the city was in far worse shape. In 2006, the city had a net loss of 151,441 residents through domestic out-migration, compared to a decline of 141,047 in 1993. . .

A huge part of this is the sheer expense of living in New York -- not just housing costs, although that's a lot of it, but everything else, too, from car insurance to the price of milk. But it's also that there simply aren't middle-class job opportunities in New York any more:

Of the 10 occupations that are expected to have the largest number of annual job openings in the city through 2014, only two offer median wages greater than $28,000 a year. Taking a wider view, 16 of the 40 occupations projected to have the largest number of annual job openings over the same period pay median wages below $30,000 a year, while another six pay between $30,000 and $40,000.
YOU KNOW IT'S BAD WHEN THE HOUSE OF LORDS IS MORE CONCERNED ABOUT FREEDOM THAN OBAMA OR THE DEMOCRATS
Guardian, UK - The steady expansion of the "surveillance society" risks undermining fundamental freedoms including the right to privacy, according to a House of Lords report. The peers say Britain has constructed one of the most extensive and technologically advanced surveillance systems in the world in the name of combating terrorism and crime and improving administrative efficiency. . .

Although many surveillance practices and data collection processes are unknown to most people, the expansion in their use represents "one of the most significant changes in the life of the nation since the end of the second world war", the report says. The committee warns that the national DNA database could be used for "malign purposes", challenges whether CCTV cuts crime and questions whether local authorities should be allowed to use surveillance powers at all.

The peers say privacy is an "essential prerequisite to the exercise of individual freedom" and the growing use of surveillance and data collection needs to be regulated by executive and legislative restraint at all times.

Lord Goodlad, the former Tory chief whip and committee chairman, said there could be no justification for this gradual but incessant creep towards every detail about an individual being recorded and pored over by the state.

"The huge rise in surveillance and data collection by the state and other organizations risks undermining the long-standing traditions of privacy and individual freedom which are vital for democracy," he said. "If the public are to trust that information about them is not being improperly used there should be much more openness about what data is collected, by whom and how it is used."

The constitution committee makes more than 40 recommendations to protect individual privacy, including the deletion of all profiles from the national DNA database except for those of convicted criminals and a call for the mandatory encryption of personal data held by public and private organizations that are legally obliged to hold it.
SUPPORT MICHAEL PHELPS; HAVE EGGS FOR BREAKFAST

OBAMA PRAISES BRITAIN FOR CONCEALING RENDITION INFORMATION
Raw Story - After the British High Court ruled that evidence of a British resident's rendition and harsh interrogation at the Pentagon's Guantanamo Bay prison must remain secret because of threats made by the Bush administration to halt intelligence sharing, the Obama Administration offered a terse statement seemingly expressing support to the BBC.

"The United States thanks the UK government for its continued commitment to protect sensitive national security information and preserve the long-standing intelligence sharing relationship that enables both countries to protect their citizens," a spokesman said.

In response, the ACLU's executive director, Anthony Romero, shot off a letter to Secretary of State Hillary Clinton asking the Obama Administration to clarify their position. "Hope is flickering," Romero said in a statement. "The Obama administration's position is not change. It is more of the same. This represents a complete turn-around and undermining of the restoration of the rule of law. The new American administration shouldn't be complicit in hiding the abuses of its predecessors."
WHAT REALLY HAPPENED DURING THE NEW DEAL
Campaign for America's Future - The monthly data for industrial production show a near three-year collapse under President Hoover, ending when FDR came to office in March 1933. Production rocketed by 44 percent in the first three months of the New Deal and, by December 1936, had completely recovered to surpass its 1929 peak.

GDP, only available as annual averages, plunged 25.6 percent from 1929-1932, including by 13.0 percent in 1932. It stabilized in 1933, and then soared by 10.8 percent, 8.9 percent and 12.0 percent, respectively, in 1934, 1935 and 1936. Real GDP surpassed its 1929 peak in 1936 and never again fell below it. After-tax personal income, consumer spending, real private investment and jobs all reached or surpassed their 1929 peaks by late 1936.

The official U.S. Business Cycle Dating Committee established that the downturn that began in August 1929 ended in March 1933 with the remarkable economic expansion that started within days of FDR's bold-if trial and error-New Deal programs. By any normal definition, the Great Depression had ended by late 1936, with all major indicators surpassing their previous peaks.

A second cyclical downturn officially began in May 1937 when FDR, always a fiscal conservative, mistakenly thought the economy had become self-sustaining and slashed public spending programs to balance the budget. These harsh and premature spending cuts caused another severe recession that ended after 13 months in June 1938.

Even in this severe downturn, annual GDP did not fall back below its 1929 peak. And although many suffered and most economic measures did fall back below their 1929 levels, not one fell anywhere close to its March 1933 low. For example, although industrial production fell sharply in the 1937-38 recession, at its low point, in April 1938, it remained 49 percent above its level of March 1933.

When the economy again contracted sharply in late 1937 and early 1938, FDR quickly reversed course and rapid growth immediately began again. GDP soared by 10.9 percent in 1939 and industrial production soared by 23 percent.
THE NSA WANTS TO KNOW HOW YOU THINK- MAYBE EVEN WHAT YOU THINK
James Bamford, PBS - The National Security Agency is developing a tool that George Orwell's Thought Police might have found useful: an artificial intelligence system designed to gain insight into what people are thinking.

With the entire Internet and thousands of databases for a brain, the device will be able to respond almost instantaneously to complex questions posed by intelligence analysts. As more and more data is collected-through phone calls, credit card receipts, social networks like Facebook and MySpace, GPS tracks, cell phone geolocation, Internet searches, Amazon book purchases, even E-Z Pass toll records-it may one day be possible to know not just where people are and what they are doing, but what and how they think.

The system is so potentially intrusive that at least one researcher has quit, citing concerns over the dangers in placing such a powerful weapon in the hands of a top-secret agency with little accountability.

Known as Aquaint, which stands for "Advanced QUestion Answering for INTelligence," the project was run for many years by John Prange, an NSA scientist at the Advanced Research and Development Activity. .

In a 2004 pilot project, a mass of data was gathered from news stories taken from the New York Times, the AP news wire, and the English portion of the Chinese Xinhua news wire covering 1998 to 2000. Then, 13 U.S. military intelligence analysts searched the data and came up with a number of scenarios based on the material. Finally, using those scenarios, an NSA analyst developed 50 topics, and in each of those topics created a series of questions for Aquaint's computerized brain to answer. "Will the Japanese use force to defend the Senkakus?" was one. "What types of disputes or conflict between the PLA [People's Liberation Army] and Hong Kong residents have been reported?" was another. And "Who were the participants in this spy ring, and how are they related to each other?" was a third. Since then, the NSA has attempted to build both on the complexity of the system-more essay-like answers rather than yes or no-and on attacking greater volumes of data.

"The technology behaves like a robot, understanding and answering complex questions," said a former Aquaint researcher. "Think of 2001: A Space Odyssey and the most memorable character, HAL 9000, having a conversation with David. We are essentially building this system. We are building HAL." . . .

A supersmart search engine, capable of answering complex questions such as "What were the major issues in the last 10 presidential elections?" would be very useful for the public. But that same capability in the hands of an agency like the NSA-absolutely secret, often above the law, resistant to oversight, and with access to petabytes of private information about Americans-could be a privacy and civil liberties nightmare. "We must not forget that the ultimate goal is to transfer research results into operational use," said Aquaint project leader John Prange, in charge of information exploitation for IARPA. . .

Collecting information, however, has always been far less of a problem for the NSA than understanding it, and that means knowing the language. To expand its linguistic capabilities, the agency established another new organization, the Center for Advanced Study of Language, and housed it in a building near IARPA at the M Square Research Park. But far from simply learning the meaning of foreign words, CASL, like Aquaint, attempts to find ways to get into someone's mind and understand what he or she is thinking.

One area of study is to attempt to determine if people are lying simply by watching their behavior and listening to them speak. According to one CASL document, "Many deception cues are difficult to identify, particularly when they are subtle, such as changes in verb tense or extremely brief facial expressions. CASL researchers are studying these cues in detail with advanced measurement and statistical analysis techniques in order to recommend ways to identify deceptive cue combinations."

Like something out of a B-grade sci-fi movie, CASL is even training employees to control their own brain waves. . .

Like something out of a B-grade sci-fi movie, CASL is even trying to turn dull minds into creative geniuses by training employees to control their own brain waves: "The cognitive neuroscience team has also been researching divergent thinking: creative, innovative and flexible thinking valuable for language work. They are exploring ways to improve divergent thinking using the EEG and neurobiological feedback. A change in brain-wave activity is believed to be critical for generating creative ideas, so the team trains its subjects to change their brain-wave activity."

CRASH TALK

Phil Mattera, Dirt Diggers Digest - The contradictory impulses of the federal government were on full display today. At one location on Capitol Hill, a group of so-called Senate moderates were meeting to strip some $80 billion out of the Obama Administration's economic recovery plan. According to press accounts, they were mainly targeting proposed spending related to education, ranging from Head Start programs to Pell grants for college students. I guess they are telling us that in these hard times we shouldn't be lavishing taxpayer funds on fat cat students.

Meanwhile, in another part of Capitol Hill, the Senate Banking Committee heard testimony from Elizabeth Warren, Chair of the Congressional Oversight Panel that was created by the Troubled Asset Relief Program legislation enacted last fall. Warren gave a preview of her panel's new report that will contain estimates that, in its purchases of capital stakes in major banks, the Bush Treasury Department overpaid by some $78 billion.

Want to take bets on which group-students or banks-end up keeping their $80 billion?

NY Times, St Louis - Buses will no longer stop at some 2,300 stops in and around this city at the end of next month because, despite rising ridership, the struggling transit system plans to balance its books with layoffs and drastic service cuts. . . "They're going to be stranding a whole lot of people," said Val Butler, a nurses' assistant at Garden View. . .
St. Louis may be girding itself for some of the most extreme transit cuts in the nation, but it is hardly alone. Transit systems across the country are raising fares and cutting service . . . Their problem is that fare-box revenue accounts for only a fifth to a half of the operating revenue of most transit systems - and the sputtering economy has eroded the state and local tax collections that the systems depend on to keep running.

CNN - More than eight in ten cities are in financial trouble, up from 64% six months ago, according to a survey. . . The nation's cities are counting on billions of dollars from the economic stimulus package now being debated in the Senate. . . The mayors have put together a "Ready to Go" report that details 18,750 local infrastructure projects in 779 cities that can be started as soon as funding is received. The projects, which represent an investment of $150 billion, would create 1.6 million jobs in 2009 and 2010.

Peter J. Henning, Deal Book - Sophisticated investors who ran hedge funds were touted for their ability to beat the market with secretive strategies that could not be revealed to the general public at the risk of ruining those wonderful returns. These "black box" investment programs created the allure of the unknown, making those who reaped the benefits somehow special in their own right - in other words, they too assumed the mantle of "sophisticated investor."

The impetus to maintain the aura of secrecy around hedge funds seems to be breaking down as we now learn that they are hardly any better than many plain vanilla mutual funds. And unlike a mutual fund or an exchange-traded fund, you can't always get your money back, even if you have to continue to pay the annual fees on the amount invested.

That a person has a high net worth is hardly an indication of investment savvy, and calling your investment vehicle a "fund of funds" seems to mean only another layer of fees in many instances. Perhaps the term "sophisticated investor" should be understood to mean "I get mine first and the hell with the rest of you.". . .

Greater regulation is no panacea, but breaking down the idea that great wealth and a rising economy somehow makes one a "sophisticated investor" would be a positive development. Public disclosure can have a great leveling effect by showing that investment managers are not necessarily all that sophisticated. And rather than making investments more complex, perhaps a return to an earlier time that valued protecting clients and managing their investments for the long term might be worth considering.

Pro Publica - Former Treasury Secretary Hank Paulson said last October that the taxpayers shouldn't fret about putting $250 billion in the nation's banks: "This is an investment, not an expenditure, and there is no reason to expect this program will cost taxpayers anything."

But a draft report from the Congressional Oversight Panel for the TARP says Paulson should have known better. According to the panel's analysis, the preferred stock and warrants Treasury received are worth far less than the investments themselves, amounting to at least a $43 billion subsidy to the banks. That shortfall, they found, was inevitable from the structure of the investments. . .

The subsidy climbs even more, to $78 billion, when you add in Treasury's investments to prop up ailing institutions like AIG and Citigroup. As of the report's completion, the Treasury had used $254 billion to buy stakes in banks and AIG, meaning about a third of that was a giveaway.

Sacramento Bee - Counties in California say they've had enough - and they aren't going to take it anymore. In what amounts to a Boston Tea Party-style revolt against the state Capitol, they're threatening to withhold money. Los Angeles is considering such an option. And Colusa County supervisors said they authorized payment delays for February. "We didn't vote on it, because I don't think anybody wants to go to jail," Colusa County Supervisor Kim Vann said. Closer to home, Sacramento County is planning to file a lawsuit this week against the state and Controller John Chiang for withholding millions of dollars - much of it for social service programs. . . Riverside County is looking at a similar lawsuit but plans to go one step further. It authorized going to court to relieve it from having to provide state-mandated services without state funding.

Washington Times - Financial problems often drive couples apart, but the nation's overwhelming economic crisis may be holding them together. "People simply can't afford to get divorced. They can't afford the legal fees; they can't afford having two separate places to live," said Michele Weiner-Davis, a Colorado social worker and founder of divorcebusting.com, an online community for couples considering ending their marriages.

Spouses who are divorcing are finding that the often-nasty experience is now even more contentious. "[Spouses] want to receive a certain amount of support and the other will say they simply don't have enough. "Divorce has become more contentious because there is less to divide. Then they are separating and the pot has shrunk. It is hard for the other spouse to comprehend that."

Divorce rates often fall in a bad economy. Statistics show divorces declining in the District and at least two states - Kansas and Connecticut - over the past three years.

NY Post - A cornerstone of the economic recovery plan that President Barack Obama is expected to unveil Monday will be modifying problem mortgages, The Post has learned. Treasury Secretary Tim Geithner plans to allocate almost half of the remaining $350 billion in funds from the Trouble Asset Relief Program to the so-called "Mo Mod," or mortgage modification, platform.

"Mo Mod" is an algorithmic mortgage processing program that can rewrite up to 500,000 loans a month, and will be a major part of Treasury's plan to help repair tattered bank balance sheets.

The 21-day "Mo Mod" program works by structuring a new mortgage that more accurately reflects a home's worth so that a troubled borrower no longer owes more on their home than the property is worth.

The process then enables a lender to pool these new mortgages together into securities that reflect more accurately a home's value, which makes them less risky for investors.

NY Post - A cornerstone of the economic recovery plan that President Barack Obama is expected to unveil Monday will be modifying problem mortgages, The Post has learned. Treasury Secretary Tim Geithner plans to allocate almost half of the remaining $350 billion in funds from the Trouble Asset Relief Program to the so-called "Mo Mod," or mortgage modification, platform.

"Mo Mod" is an algorithmic mortgage processing program that can rewrite up to 500,000 loans a month, and will be a major part of Treasury's plan to help repair tattered bank balance sheets.

The 21-day "Mo Mod" program works by structuring a new mortgage that more accurately reflects a home's worth so that a troubled borrower no longer owes more on their home than the property is worth.

The process then enables a lender to pool these new mortgages together into securities that reflect more accurately a home's value, which makes them less risky for investors.

BREVITAS

OBAMALAND

The Obama administration is thinking about letting the Pentagon take over the Sandia and Los Alamos national labs from the Department Energy. Jeff Bingaman, chair of the Senate Energy & Natural Resources Committee has told the president budget director Peter Orszag that the move would be shortsighted: "I will fight it tooth and nail."

Intelligence boss Dennis Blair has asked disgraced former CIA director John Deutch to sit on his advisory panel on spy satellites. Deutch lost his security clearance afte he was found to have stored hundreds of classified files on his home computer and had done the same thing in his former job at the Pentagon. The highly dubious CIA director Michael Hayden gave Deutch his clearances again. Deutch was involved in the cover up of reports that the CIA worked with Latin American dealers importing drugs to the U.S., making the fatuous claim that "I know of no evidence that the CIA has ever directed or knowingly condoned drug smuggling into the United States." In fact, the CIA had a long history of outsourcing its dirty work to drug runners and other criminals. There is strong corroborating evidence such as that from Oliver North's diaries and Senate hearings.

Politico - Rep. Patrick McHenry (R-N.C.) thinks the White House decision to strip Commerce Secretary-nominee Judd Gregg of control over the Census Bureau is a bad idea - and giving control to the White House is even worse. Hill sources tell Politico that the bureau - which collects data used for the 2010 redistricting - could fall under the control of White House chief of staff Rahm Emanuel, former head of the DCCC. And that caught the attention of McHenry and Darrell Issa (R-Calif). "We are deeply concerned about Rahm Emanuel getting control of the Census Bureau," said McHenry, who has a history of run-ins with the hot-tempered former Illinois congressman. "The concern is that he would politicize the bureau." Asked if he was suggesting the move was an Emanuel power play, he replied, "Sure."

MID EAST

South African dock workers are refusing to unload Israeli goods in support of the Palestinians.

CRIME BLOTTER

Arizona Central - Colorado police say a man set his phasers to rob when he used a sword modeled after one on the television show "Star Trek" to demand money from two convenience stores. Investigators say the man took an unknown amount of cash from a 7-Eleven store but left empty-handed when he tried to rob another store about 25 minutes later. The StarTrek.com Web site says the double-pointed sword used by the Klingons on "Star Trek" is crescent-shaped and about a yard long. Police did not specify what material it was made of.

Star Ledger, NJ - A large inflatable rat placed at a job site as a labor protest is protected speech under the First Amendment, the state Supreme Court ruled . The high court overturned a municipal ordinance that bans any inflatable signs not being used for a store grand opening. The court ruled the sign ban was overly broad and violates the First Amendment right to free speech. . . The first inflatable rat was used by a Chicago union in 1990 to catch the attention of nonunion employers. There are about 50 throughout New Jersey and the Lawrence union's rodent is used about 50 times a year, union officials said. . . "The goals of the Lawrence Township sign ordinance are to maintain an aesthetic environment, to improve pedestrian and vehicular safety, and to minimize the adverse effects of signs on property. Although those are salutary goals, they do not justify a content-based restriction of non-commercial speech," the justice concluded in the unanimous ruling.

Reuters - A homeless Czech man smashed a police car window, an entrance door and a cash machine in a failed bid to sort out his accommodation problem by getting into police custody and eventually prison. "He said during interrogation that he had no job, nowhere to live and thus wants to go to prison," a police officer from the northern city of Usti nad Labem told daily Mlada fronta Dnes. Police took the 30-year old identified as Karel G. to a psychiatric clinic after the first offence but he was discharged after three days. He immediately trashed the door of a trolley-bus company depot, and waited patiently on the site for police to arrest him again. When that did not qualify him for custody, he smashed a bank machine, causing 110,000 crowns (3,428 pound) in damage. But that was still short of what was needed to lock the man up pending trial, the paper said, and he was freed again.

ECO CLIPS

Treehugger - The City of Montreal is banning [wood stove] installation in new construction or renovation. Andrew Chung of the Star notes that using a wood stove for only nine hours, or a high-efficiency stove for 2 1/2 days, produces as much fine-particle pollution as does a car in a year, according to a study by Environment Canada. Since Quebec gets almost all of its energy from electric hydropower, in winter 47 per cent of the air pollution is attributed to stoves and fireplaces, far more than either industry sources or cars and trucks.

SCIENCE & HEALTH

Telegraph, UK - Researchers have calculated that up to 37,964 worlds in our galaxy are hospitable enough to be home to creatures at least as intelligent as ourselves. Astrophysicist Duncan Forgan created a computer program that collated all the data on the 330 or so planets known to man and worked out what proportion would have conditions suitable for life.
The estimate, which took into account factors such as temperature and availability of water and minerals, was then extrapolated across the Milky Way. Mr Forgan believes that the life forms would not be amoeba wriggling on the end of a microscope but species at least as advanced as humans. Mr Forgan believes it will take 300 to 400 years for us to make contact with our neighbors.

DRUG BUSTS

Obama Werds According to California NORML press release, while the DEA continues to stage medical marijuana raids in California, nearly three-quarters of voters think President Obama should honor his campaign pledge to end the raids, according to a poll of 1,053 likely voters by Zogby International.

WAR DEPARTMENT

A study has found that the Pentagon has upped its propaganda budget by 63 percent over the past five years.

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