The Shock Doctrine
Disaster Capitalism in Action
Audit Faults Timothy Geithner and the New York Fed in A.I.G. Bailout
Mary Williams Walsh, New York Times, November 17, 2009
"The Federal Reserve Bank of New York gave up much of its power in high-pressure negotiations with the American International Group's trading partners last year, according to a government report made public on Monday....
"The New York Fed, led then by Timothy F. Geithner, who is now the Treasury secretary, therefore had little leverage in the negotiations, according to a post-mortem of what has emerged as the most inflammatory episode in the rescue of A.I.G.
"The Fed 'refused to use its considerable leverage,' Neil M. Barofsky, the special inspector general for the Troubled Asset Relief Program, wrote in a report to be officially released on Tuesday, examining the much-criticized decision to make A.I.G.'s trading partners whole when people and businesses were taking painful losses in the financial markets.
"There have been suggestions that the Fed chose to negotiate weakly, Mr. Barofsky said, to give a 'backdoor bailout' to A.I.G.’s banks. He said Mr. Geithner and the Fed’s lawyers had denied this, but added that 'irrespective of their stated intent,' there was no doubt about the result: 'Tens of billions of dollars of government money was funneled inexorably and directly to A.I.G.'s counterparties.'"
Peter Galbraith, U.S. Adviser to Kurds, Stands to Reap Oil Profits
James Glanz and Walter Gibbs, New York Times, November 12, 2009
"Now Mr. [Peter] Galbraith, 58, son of the renowned economist John Kenneth Galbraith, stands to earn perhaps a hundred million or more dollars as a result of his closeness to the Kurds, his relations with a Norwegian oil company and constitutional provisions he helped the Kurds extract.
"In the constitutional negotiations, he helped the Kurds ram through provisions that gave their region — rather than the central Baghdad government — sole authority over many of their internal affairs, including clauses that he maintains will give the Kurds virtually complete control over all new oil finds on their territory....
"Some officials say that his financial ties could raise serious questions about the integrity of the constitutional negotiations themselves. 'The idea that an oil company was participating in the drafting of the Iraqi Constitution leaves me speechless,' said Feisal Amin al-Istrabadi, a principal drafter of the law that governed Iraq after the United States ceded control to an Iraqi government on June 28, 2004. In effect, he said, the company 'has a representative in the room, drafting.'"
See Also:
An Inside Iraq panel about the Galbraith scandal on Al Jazeera English
An interview with Peter Galbraith on National Public Radio
Bush officials lead Iraq business push
Roula Khalaf, Financial Times, November 9, 2009
"Senior Bush administration figures including Zalmay Khalilzad, former US ambassador to Baghdad, and Jay Garner, the retired general who led reconstruction efforts immediately after the war, are leading a new business push into Iraq.
"The two one-time senior officials are among a raft of former US soldiers and diplomats either leveraging their war experience helping foreign companies to enter the Iraqi market or starting businesses there themselves."
More than 50 Million Americans Report Going Hungry
Chris McGreal , Guardian, November 17, 2009
"More than a million children regularly go to bed hungry in the US, according to a government report that shows a startling increase in the number of families struggling to put food on the table.
"President Barack Obama, who pledged to eradicate childhood hunger, has described as "unsettling" the agriculture department survey, which says 50 million people in the US – one in six of the population – were unable to afford to buy sufficient food to stay healthy at some point last year, in large part because of escalating unemployment or poorly paid jobs. That is a rise of more than one-third on the year before and the highest number since the survey began in 1995....
"The report said 6.7 million people were defined as having 'very low food security' because they regularly lacked sufficient to eat. Among them, 96% reported that the food they bought did not last until they had money to buy more. Nearly all said they could not afford to eat balanced meals. Although few reported that this was a permanent situation throughout the year, 88% said it had occurred in three or more months."
Bailout Helps Fuel a New Era of Wall Street Wealth
Graham Bowley, New York Times, October 17, 2009
"Titans like Goldman Sachs and JPMorgan Chase are making fortunes in hot areas like trading stocks and bonds, rather than in the ho-hum business of lending people money. They also are profiting by taking risks that weaker rivals are unable or unwilling to shoulder — a benefit of less competition after the failure of some investment firms last year....
"A year after the crisis struck, many of the industry’s behemoths — those institutions deemed too big to fail — are, in fact, getting bigger, not smaller. For many of them, it is business as usual. Over the last decade the financial sector was the fastest-growing part of the economy, with two-thirds of growth in gross domestic product attributable to incomes of workers in finance."
"Now, the industry has new tools at its disposal, courtesy of the government.
With interest rates so low, banks can borrow money cheaply and put those funds to work in lucrative ways, whether using the money to make loans to companies at higher rates, or to speculate in the markets. Fixed-income trading — an area that includes bonds and currencies — has been particularly profitable."
Bonus Pools On Wall Street Continue To Fatten
Jessica Papini and Joe Bel Bruno , Wall Street Journal, October 15, 2009
"Goldman Sachs Group Inc. (GS) and JP Morgan Chase & Co.'s (JPM) investment banking and asset management units are setting aside money to dole out huge bonuses this year and are likely to surpass even the boom paydays of 2007....
"While bonuses were down across the industry last year, this year bonuses are starting to soar, with some companies set for a record compensation year. U.S. banks and securities firms are on track to pay employees roughly $140 billion this year, a record high, according to analysis from The Wall Street Journal."
US To Spend Nearly $1 Billion on Private Security Guards in Iraq
Walter Pincus, Washington Post, September 8, 2009
"As the United States withdraws its combat forces from Iraq, the government is hiring more private guards to protect U.S. installations at a cost that could near $1 billion, according to the special inspector general for Iraq reconstruction....
"The inspector general for reconstruction predicted that costs for private security at U.S. facilities in Iraq 'will grow in size to a potential $935 million.' The inspector general's report, issued this year, said the MNF-I planned to switch to private guards for Victory Base Camp, one of its largest installations. That facility alone would require 'approximately 2,600 security personnel,' the report said....
"The inspector general's report shows that government estimates of the total cost of replacing soldiers with contractors are hidden in public accounting. The report notes that government services provided to the private guard force -- food, housing and other benefits -- are not considered, only payments going directly to the contractors. The report estimated that such services provided to private security personnel in the 12 months ending in March cost 'more than $250 million,' at a time when listed outlays to the contractor firms in that period totaled $155 million.
"In the new contracts, private contractors will continue to be allowed to use government dining facilities, living quarters, barber services, some transportation within Iraq and emergency medical care."
US Extends Blackwater's Iraq Contract
Matthew Lee, Associated Press, September 2, 2009
"State Department officials said Wednesday they have extended a contract with a subsidiary of the security firm once known as Blackwater USA despite the fact the company is not allowed to work in the country.
"Three officials said the contract with Presidential Airways to provide air support for U.S. diplomats was temporarily extended because the firm chosen to replace it is not yet ready to take over. The contract was due to expire on Sept. 3 and be taken over a day later by Dyncorp International....
"The State Department had informed Blackwater in January that it would not renew its contracts to provide security for U.S. diplomats in Iraq because of the Iraqi government's refusal to grant it an operating license. The Presidential Airways contract was the last of those contracts to expire. Blackwater guards stopped protecting American diplomats in al Hillah, Najaf and Karbala, all south of Baghdad, in August."
Contractors in Afghanistan Outnumber Troops
Steven Aftergood , Federation of American Scientists' Secrecy News blog, September 1, 2009
"There are more Department of Defense contractors in Afghanistan today than there are uniformed U.S. military personnel, according to a new report from the Congressional Research Service. Not only that, the ratio of contractors to troops in Afghanistan is higher than in any prior military engagement in U.S. history.
"'As of March 2009, there were 68,197 DOD contractors in Afghanistan, compared to 52,300 uniformed personnel. Contractors made up 57% of DOD’s workforce in Afghanistan. This apparently represented the highest recorded percentage of contractors used by DOD in any conflict in the history of the United States,' the CRS report said. A copy of the report was obtained by Secrecy News."
Read the full CRS report, "Department of Defense Contractors in Iraq and Afghanistan: Background and Analysis."
ArmorGroup Guards Mistreated by Supervisors in Afghanistan
Richard Lardner, Associated Press, September 1, 2009
"[ArmorGroup] guards hired by the State Department to protect diplomats and staff at the U.S. Embassy in Afghanistan live and work in a 'Lord of the Flies' environment in which they are subjected to hazing and other inappropriate behavior by supervisors, a government oversight group charged Tuesday.
"One e-mail from a guard describes lurid conditions at Camp Sullivan, the guards' quarters a few miles from the embassy. The message described scenes of abuse including guards and supervisors urinating on people and 'threats and intimidation from those leaders participating in this activity.'
"Photographs show guards and supervisors in various stages of nudity at parties that took place near the housing of other supervisors.
Multiple guards say these conditions have created a 'climate of fear and coercion.' Those who refuse to participate are often ridiculed, humiliated or even fired, they contended."
