The Guardians of the Economy make their move: Part 2 of From Economic Collective to Police State

TOO LATE

Photo caption: Protesters outside the Cypriot parliament voice their disgust with the original bailout (Reuters)

This post follows on Part 1 of From Economic Collective to Police State ... (August 12, 2013)

What is the sound of one pebble clapping?

On March 16, a Saturday, the Cypriot government, under pressure from the Troika, ordered without warning the country's bank accounts frozen. (I'm still not clear on whether this directive applied to every single bank on the bank-laden island nation or only to the largest banks.) The astounding event didn't make a ripple in the American mainstream television news media. By Monday, however, the media had rallied. "Russian oligarchs. International tax cheats." explained a correspondent for CNN. "International criminal moneylaunderers," chimed in Fox news. Nothing for Americans to worry about; everybody move along.

The Beeb wasn't so sure it was nothing to worry about. That evening "BBC World News America" anchor Katty Kay interviewed a former World Bank chief economist and U.S. treasury secretary named Larry Summers, who at that time was on President Barack Obama's short list of nominees for the next Federal Reserve board chairman (and still is).

Katty wanted him to explain the import, if any, of the Troika's action for American savings depositors.

At first it sounded as if Larry was answering the question with a koan. He replied softly, "Little pebbles."

When Katty registered no response he said more softly, "Sarajevo."

Katty, not being the Zen type, prodded Larry to proceed to his point.

After a pregnant pause Larry said that the Asian Financial Crisis, which had started in 1996, didn't immediately morph into a global one. The crisis seemed to end in one country, he noted, then materialized in another and after it seemed to end there suddenly popped up in another country, and so it went.

This discourse brought Katty's back up. She curtly pressed her original question: How was the public supposed to interpret a supposedly democratic government confiscating money in people's savings accounts?

After another pregnant pause Larry replied in voice like dead leaves rustling against a gravestone, "In a world where my spending is your income -- if every person, if every nation, tries to save more, it lowers everyone's income."

With that the clock ran out on the allotted interview time, leaving an exasperated Katty Kay to glare good-bye at her guest.

A new template for a new, improved world order

If Larry's talk about savings and income sounds familiar; yes, it would, for readers who followed my tip on July 18 to bone up on the Paradox of Thrift. To review, from Wikipedia's article:

"The paradox states that if everyone tries to save more money during times of economic recession, then aggregate demand will fall and will in turn lower total savings in the population because of the decrease in consumption and economic growth. The paradox is, narrowly speaking, that total savings may fall even when individual savings attempt to rise, and, broadly speaking, that increase in savings may be harmful to an economy."

There's a little more to it but the point is that it's a paradox so it's not supposed to make sense, much less guide American fiscal and monetary policies for more than a half century but that's the way the cookie crumbles.

Larry was voicing the cant that spun off from the paradox. The cant helped unseat American republicanism by substituting the consumer for the citizen and the economy for the republic.
The question was whether Larry's blithering indicated that the cant had finally unseated democracy itself.  Certainly there were indications this had already happened in Cyprus.

Massive street protests were seemingly managing to embarrass the government into agreeing to a less draconian confiscation of Cypriots' deposits than was originally announced. The question for Cypriot wage earners and pension fund managers was whether the terms of the confiscation deal that the Troika and the Cyprus government would finally settle on were always the target terms, to be presented to the Cypriot public as a compromise with having every euro they had on deposit in their banks expropriated.

The question for Americans with money on deposit in U.S. banks was whether a similar type of expropriation was planned for them.

Nah, said the Talking Heads hauled onto American news talk shows to explain the confusing situation in Cyprus. It was a local thing, having to do with the Eurozone's seemingly endless 'sovereign debt' crises. As to the rest, well, the Troika was just getting tough with Russian oligarchs, tax cheats and international moneylaunderers. (You will notice Larry said nothing to Katty about oligarchs, tax cheats, etc.)

Even American gold investor extraordinaire and gold monetarist guru Jim Sinclair, notoriously jumpy about government moves, wasn't spooked at first by the events in Cyprus. He told his readers (paraphrasing here): Bah, they're just trying to scare big money out of its cash position in the big banks. This in his view was the central planners' last frantic bluff before gold restored sanity to the monetary system. Jim told other gold investors to sit tight; gold was nearing $1,600 and once it crossed that line it would never see $1,600 an ounce again. (After Jim learned the real story about the Cyprus situation he changed his tune. Then it was, paraphrasing here, Holy smokes, run for your lives!  I trust by now he's achieved a kind of equilibrium.)

Eight days after Larry Summers's fling at playing Zen Master, and with rumors flying on the Internet that there was much more to the Cyprus situation than reported, stock market investor extraordinaire and former U.S. government official Larry Kudlow hauled one of the opinion experts at the Council on Foreign Relations onto his TV show at CNBC, America's premier financial news cable channel.

The expert, Benn Steil, explained what Larry called "the new template" for rescuing troubled banks.  The explanation was clear as mud, but it had something to do with depositors and bank bondholders taking on the burden that the taxpayer had been saddled with in the TARP bail-outs. This new, improved template would actually be a "bail-in" rather than a "bail-out," the next time American banks got into a big trouble.

This was a great idea, Larry enthused -- soak the savers and bondholders instead of the taxpayers. As if savers and bondholders aren't also taxpayers.

I don't know how many emails CNBC received within the hour from outraged American savers but the next night, when Larry Kudlow returned to the topic of the new template, this time without Benn Steil in tow, he omitted "savers" from this commentary and just stuck to soaking the bond holders. It was the same for the next night, Thursday March 28,  which marked the last time Iknow about that Larry returned to cheerleading for the new template. By that time all hell had broken loose on the portion of the Internet that follows financial news, as the real story of the Cyprus bailout had finally surfaced on March 27 and gone viral by the 28th.

(To my knowledge, the real story never did make it onto American national television, even though 55 percent of Americans get their news from TV with only 13 percent getting news from the Internet; this, according to a Gallup poll released earlier this year. I doubt the poll broke down how many Americans who get their news from the Internet actually read Internet sources or simply watch TV news on the Internet. In any event, so much for the hype and hope that the Internet would keep the American body politic better informed.)

Was Professor Quigley right, after all?

Ellen Hodgson Brown, an American civil litigation attorney and author of Web of Debt, an investigative report on central banks; and Chairwoman of Public Banking Institute, broke the news on her website:

It Can Happen Here: The Confiscation Scheme Planned for US and UK Depositors
by Ellen Hodgson Brown
March 27, 2013

Confiscating the customer deposits in Cyprus banks, it seems, was not a one-off, desperate idea of a few Eurozone “troika” officials scrambling to salvage their balance sheets. A joint paper by the U.S. Federal Deposit Insurance Corporation and the Bank of England dated December 10, 2012, shows that these plans have been long in the making; that they originated with the G20 Financial Stability Board in Basel, Switzerland ... and that the result will be to deliver clear title to the banks of depositor funds.
[...]
Although few depositors realize it, legally the bank owns the depositor’s funds as soon as they are put in the bank. Our money becomes the bank’s, and we become unsecured creditors holding IOUs or promises to pay. (See here and here.) But until now the bank has been obligated to pay the money back on demand in the form of cash. Under the FDIC-BOE plan, our IOUs will be converted into “bank equity.” The bank will get the money and we will get stock in the bank. With any luck we may be able to sell the stock to someone else, but when and at what price? Most people keep a deposit account so they can have ready cash to pay the bills.

The 15-page FDIC-BOE document is called “Resolving Globally Active, Systemically Important, Financial Institutions.” It begins by explaining that the 2008 banking crisis has made it clear that some other way besides taxpayer bailouts is needed to maintain “financial stability.” Evidently anticipating that the next financial collapse will be on a grander scale than either the taxpayers or Congress is willing to underwrite, the authors state:

An efficient path for returning the sound operations of the G-SIFI to the private sector would be provided by exchanging or converting a sufficient amount of the unsecured debt from the original creditors of the failed company [meaning the depositors] into equity [or stock]. In the U.S., the new equity would become capital in one or more newly formed operating entities. In the U.K., the same approach could be used, or the equity could be used to recapitalize the failing financial company itself—thus, the highest layer of surviving bailed-in creditors would become the owners of the resolved firm. In either country, the new equity holders would take on the corresponding risk of being shareholders in a financial institution. 

No exception is indicated for “insured deposits” in the U.S., meaning those under $250,000, the deposits we thought were protected by FDIC insurance. This can hardly be an oversight, since it is the FDIC that is issuing the directive. The FDIC is an insurance company funded by premiums paid by private banks. The directive is called a “resolution process,” defined elsewhere as a plan that “would be triggered in the event of the failure of an insurer . . . .” The only mention of “insured deposits” is in connection with existing UK legislation, which the FDIC-BOE directive goes on to say is inadequate, implying that it needs to be modified or overridden.

 

An Imminent Risk

 

If our IOUs are converted to bank stock, they will no longer be subject to insurance protection but will be “at risk” and vulnerable to being wiped out, just as the Lehman Brothers shareholders were in 2008.Are you safe, then, if your money is in gold and silver? Apparently not – if it’s stored in a safety deposit box in the bank. Homeland Security has reportedly told banks that it has authority to seize the contents of safety deposit boxes without a warrant when it’s a matter of “national security,” which [another] major bank crisis no doubt will be.

[...]

Are you safe, then, if your money is in gold and silver? Apparently not – if it’s stored in a safety deposit box in the bank. Homeland Security has reportedly told banks that it has authority to seize the contents of safety deposit boxes without a warrant when it’s a matter of “national security,” which a major bank crisis no doubt will be.

[...]

*******************

Those are just a handful of paragraphs from the report, which I recommend you read in its entirety if this is the first time you're learning about it. The link in the first paragraph I quoted is from Ellen's June 22, 2009 report titled Big Brother in Basel: BIS Financial Stability Board Undermines National Sovereignty. (Note the year.) The report begins:

Buried on page 83 of the 89-page Report on Financial Regulatory Reform issued by the U.S. Administration on June 17, 2009 is a recommendation that the new Financial Stability Board strengthen and institutionalize its mandate to promote global financial stability. Financial stability is a worthy goal, but the devil is in the details. The new global Big Brother is based in the Bank for International Settlements, a controversial institution that raises red flags among the wary . . . .

[...]

[B]ut more disturbing is the description by Dr. Carroll Quigley of the pivotal role assigned to the BIS in consolidating financial power into a few private hands. Professor Quigley, who was Bill Clinton’s mentor at Georgetown University, claimed to be an insider and evidently knew his subject. He wrote in Tragedy and Hope (1966):

"[T]he powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent private meetings and conferences. The apex of the system was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world’s central banks which were themselves private corporations."

 

That helps explain the alarm bells that went off among BIS-watchers when the Bank was linked to the new Financial Stability Board (FSB) President Obama signed onto in April.

When the G20 leaders met in London on April 2, 2009, they agreed to expand the powers of the old Financial Stability Forum (FSF) into this new Board. The FSF was set up in 1999 to serve in a merely advisory capacity by the G7 (a group of finance ministers formed from the seven major industrialized nations). The chair of the FSF was the General Manager of the BIS.

The new FSB has been expanded to include all G20 members (19 nations plus the EU). The G20, formally called the “Group of Twenty Finance Ministers and Central Bank Governors,” was, like the G7, originally set up as a forum merely for cooperation and consultation on matters pertaining to the international financial system. But its new Financial Stability Board has real teeth, imposing “obligations” and “commitments” on its members.
[...]
*******************
Again, those are just a few paragraphs from the report, which I also suggest you read in its entirety.

With news of the BOE-FDIC paper out of the bag, suddenly quite a number of People in the Know began singing like a bird -- a bird with a sore throat because no one explained it as clearly as Ellen Brown had. More annoying than the raspy warbling was the airy attitude: Like, dude, you mean you didn't know?

If you're hoping that Ellen somehow misunderstood what these people were up to, let go of that forlorn hope. Yet unless you already know what they're talking about it can be like pulling teeth to understand their points. Consider the following quotes from Federal Reserve Board Governor Jeremy C. Stein's speech at the "Rethinking Macro Policy II" conference sponsored by the International Monetary Fund, Washington, D.C. on April 17, 2013. He's actually discussing the same topic that Ellen is, but you'd need a decoder ring to know what he's really driving at without Ellen's translations:

Regulating Large Financial Institutions
[...]
All of you are familiar with the areas of progress. Higher and more robust capital requirements, new liquidity requirements, and stress testing all should help to materially reduce the probability of a SIFI [Systemically Important Financial Institution] finding itself at the point of failure.

And, if, despite these measures, a SIFI does fail, the orderly liquidation authority (OLA) in Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act now offers a mechanism for recapitalizing and restructuring the institution by imposing losses on shareholders and creditors.

In the interests of brevity, I won't go into a lot of detail about OLA. But my Board colleague Jay Powell talked in depth about this topic in a speech last month, and I would just register my broad agreement with his conclusion--namely that the Federal Deposit Insurance Corporation's (FDIC's) so-called "single point of entry" approach to resolution is a promising one. ... The Federal Reserve continues to work with the FDIC on the many difficult implementation challenges that remain, but I believe this approach gets the first-order economics right and ultimately has a good chance to be effective.

Perhaps more to the point for TBTF [Too Big Too Fail], if a SIFI does fail I have little doubt that private investors will in fact bear the losses -- even if this leads to an outcome that is messier and more costly to society than we would ideally like. Dodd-Frank is very clear in saying that the Federal Reserve and other regulators cannot use their emergency authorities to bail out an individual failing institution. And as a member of the Board, I am committed to following both the letter and the spirit of the law.
[...]
******************
Speaking of the need for a decoder ring, Pundita readers who watched Fed Chairman Ben Bernanke's press conference in May might be thinking at this point that Ben must have lied when a reporter asked him about the Cyprus banking crisis and he replied that he hadn't been closely following the situation. He didn't lie. He just didn't mention that he didn't need to follow the situation; he knew what it was all about even before it made the news.

As to whether he lied when another reporter asked whether what happened to Cypriot depositors could happen to Americans -- again, he didn't lie within the narrow context of the question. He replied that it couldn't happen because the FDIC insured American deposits up to $250,000. Yet I'd find it hard to believe he didn't know that if the deposits have been converted to bank shares, they don't fall under the category of a deposit, which means the FDIC insurance doesn't apply.

This situation would be part of the "messy" costs to society Jeremy glided over in his speech: millions of Americans being handed worthless stock in a "systemically important" failed bank in exchange for a large chunk of their money on deposit, and having no legal recourse.

Then it was gold's turn

In quick order during the second week of April 2013 there were a number of moves against gold. These included what turned out to be a wildly incorrect story fed to Reuters about the Cyprus government having to sell its gold reserves to help finance its bail-out (see this commentary from Seeking Alpha); a recommendation by Goldman Sachs to short the price of gold -- Goldman being so entwined with the U.S. government in my opinion, I'm surprised it doesn't have a branch office set up in the Treasury building.

Despite the alarm signals the gold and silver bulls assumed all the bad news wouldn't shave much off gold or silver prices. Then, on Friday, April 12, the price of gold inexplicably plummeted. On Monday the rout continued; by then the "small" gold investor, the "retail" investor who'd bought paper gold via exchange traded gold funds, had panicked and dumped his shares. The rout had extended to silver.

At 10 PM Eastern time on Monday, April 15, USA Today's John Spence summed up the carnage in the gold market in his report, ETFs contribute to gold's plunge:
"Gold-backed exchange-traded funds (ETFs) helped fuel gold's historic rally as the ETFs allowed investors and hedge funds to easily buy the precious metal with one click of a mouse. Now, the ETFs are likely exacerbating the worst two-day fall in 30 years, which has sent the price of gold plunging more than $200 an ounce. The sharp slide has left hedge fund managers like John Paulson smarting, benefited others like billionaire George Soros [who'd shorted gold], and prompted nervous traders and individual investors to dump their holdings.[...]"

Despite his decades of experience as a very aggressive gold investor, one who'd engaged in many wars with gold bears and was a close Fed and Treasury watcher practically since he was in diapers, Jim Sinclair was stunned by the severity of the rout in the gold price. He wrote on his website (paraphrasing here) that he didn't think they'd go that far. Who's they? I don't recall that he specifically said. But the usual suspects, if one is going to suspect a U.S. government orchestrated raid on gold, are the Federal Reserve and Treasury and their friends on Wall Street, and maybe working in coordination with other major central banks. Certainly there were rumors and speculations on the Internet that the rout was government orchestrated.

When they have to, governments are capable of ganging up on speculators of all kinds, including gold speculators. And yet it wouldn't have taken much to panic the mostly unsophisticated investors who'd piled into the gold exchange funds. The bottom line is that the "physical delivery" gold market is very thin and largely unregulated. Only those with deep pockets and nerves of steel should attempt to play that kind of market -- especially in order to argue with the Federal Reserve about its monetary policy.

At the same time, speculators are capable of ganging up on other speculators, not to mention naive investors. And it's no secret that gold traditionally has many enemies on Wall Street, especially among traders who believe that if you have money to invest, it should go into stocks, or maybe a hedge fund with a nicely balanced portfolio of stocks and bonds.

In summary, I don't know whether government(s) orchestrated an attack on gold, or whether the rout was simply a classic bear raid. Either way, the rout worked out to the same difference in the view of the Guardians of the Economy: the statistical anomalies who believed that gold was a better refuge than the U.S. dollar and that they knew more about monetary policy than the Fed got a big dose of reality.

FATCA (Not to be confused with FACTA)

On October 19, 2012 Anita Greil's report for the Wall Street Journal, Wary Swiss Banks Shun Yanks addressed some negatives of the insanely draconian U.S. legislation known as FATCA:   "The new law, expected to be phased in over several years, requires foreign banks to identify Americans among their clients and to provide their financial information to the Internal Revenue Service. Just one person overlooked could mean a penalty equivalent to 30% of a bank's U.S. income. The measure, known as the Foreign Account Tax Compliance Act, or Fatca, applies globally."

The financial penalty to foreign banks is an addition to the masses of red tape that the U.S. government is wrapping around every foreign bank that dares do business with Americans for any reason whatsoever. The aim is very clearly to discourage such business and the banks are taking the hint; many now won't deal Americans.

It's gotten to the point, as Anita's report highlights, that Americans with a legitimate need to do business with foreign banks are having to change their citizenship -- even though this path can easily put the Americans on the wrong side of other aspects of FACTA, as the report details.

FATCA is so destructive to American interests there's been a move in Congress to roll back some of it. Yet the legislation fits with government's general approach to Americans who don't fall within the Economic Collective in the post-2008 financial meltdown era. 

The approach is simple: Nobody moves, nobody gets hurt.

Next up:  Dodd-Frank Act, whereupon we meet a Guardian of Financial Stability and return to pondering Larry Summers's musings.

.   

From Economic Collective to Police State: Once Americans ceded control over their financial affairs they lost control of everything else

WANTED for CRIMES against Federal Reserve Mathematical Models

This post follows on America is becoming a police state. What's the solution? (July 18, 2013)

When money talks nobody walks

Mao famously said that all power comes from the point of a gun. Not in a republic it doesn't. All power comes from the peoples' control of their monetary wealth. Here wealth simply means an abundance -- what money earners have left over after meeting all their expenses including taxes. Whoever controls this wealth rules because while taxation provides representation, only the crushing authority of wealth -- how the people decide to spend, save, borrow, and invest their abundance of money -- imposes the discipline on government that insures taxation produces honest and adequate representation.

So here is the bottom line about whether the United States will continue to exist as a republic: Just as there's never been any such thing as a long lived monarch who doesn't control his wealth, a "rule of the people" can't last long unless the people control their wealth.

This control works out in practice to the people controlling their banking system. And by "people" I don't mean "the government of the people." I mean "the depositors." I'll expand on all this later but for any reader who thinks it can't be that simple -- tragically, it is that simple. The clearest indicator of where an independent nation stands on the freedom-oppression index is the state of its banking system, although the indicator is usually viewed, wrongly, as an effect and not a primary cause. But then how many American high school and college graduates have you met who know anything about  banking?

The bottom line was overlooked by political parties in the USA. Instead of focusing on the critical issue for a rule of the people, the parties encouraged voters to engage in distracting arguments about taxation and the size of government. All the while Americans ceded more and more control of their financial affairs by cooperating with fiscal and monetary policies designed to stave off another Great Depression.

For example, if the President appealed to the public to spend for the sake of the economy, Americans dutifully spent, even if this meant going into debt. If the Federal Reserve enacted policy that slashed the amount of interest banks paid depositors -- policy meant to stimulate greater public spending and investment in the stock market -- Americans who depended on income from the interest grumbled but didn't picket the Fed or chain themselves to bank doors in protest.

In short, there was no need for a draconian regulatory regime or what people consider a police state because Americans were so cooperative with policies that eroded their control of their wealth. Then the Great Recession of 2008 struck. After that, everything changed. Many Americans ceased being cooperative. This alarmed the Guardians of the Economy.

Meet the Guardians

The Guardians are the people, chiefly economists and financial regulators, who are tasked with the solemn duty of protecting the United States from another Great Depression. These Guardians are not to be confused with Guardians of Financial Stability, who charged themselves in 2009 with maintaining global financial stability, even though Guardians of the Economy can also be Guardians of Financial Stability. (More about the latter in the next post.)

Protecting the United States from another economic depression requires science, which in this era also requires math -- and here I do mean "require." There was an American economist and economics professor named Hyman Minsky who pointed out that personal debt played a significant role in financial panics but because he didn't create a mathematical model to illustrate the point it couldn't be accepted in mainstream economics, even though everybody realized he had an important point. (Ironically, Minsky had a degree in mathematics. Go figure. Maybe he was too busy teaching to do the math.)

However, one can't construct mathematical models using cheese tostitos. One must first gather and process vast quantities of financial and economic data, then aggregate the data. Then one must filter the aggregates through math that reflects accepted principles of economics. Here is where things get strange.

Economic Collectivism and Anomalies

There is one big problem with the statistical approach as it's applied to putting the social science of economics into practice; i.e., making it an applied science. The problem, as I mentioned in the July 18 post, is that the approach generates a type of collectivist thinking in which the individual has no objective existence apart from aggregates of data. It's this wholly abstract collective entity, usually termed simply "the economy," which determines how policymakers in governments and central banks think about fiscal and monetary issues.

I stress that this collectivism doesn't arise from a political agenda or philosophy, although it could be argued that once any kind of collectivist thinking becomes entrenched at the government level it all works out to the same difference. But it's important to recognize that the collectivism I'm talking about is a byproduct of an extreme reliance on statistical analysis when examining situations that involve large numbers of people. Sort of an occupational hazard, if you will.

The hazard is as old as people thinking in organized fashion about situations that manifest in groups, so it's not limited to economics. However, this era's sophisticated data collection methods and high speed computers, which allow for the application of mathematical modeling to massive collections of data on megapopulations, have increased the tendency for fiscal and monetary policymakers to think in collectivist terms.

It's this collectivist mindset that prompted a CBS News reporter to stand up at Federal Reserve Chairman Ben Bernanke's press conference in May, after Bernanke's testimony before Congress about the state of the economy, and ask without irony if he had any idea of the financial problems of actual people in the United States. Bernanke replied that yes he did; he explained that recently he'd visited his home town, which was still suffering from the effects of the recession, and that he had a relative who'd been out of work for many months.

So it's not as if this collectivism prevents economists from thinking in individual terms. It's just that when it comes to setting monetary policy Bernanke and members of the Federal Open Market Committee must of necessity rely on aggregated data. This means they must think in terms of a collective when devising stratagems to steer the nation away from economic calamity and help it recover from sharp economic downturns.

Where, then, does this leave the individual whose actions deviate from accepted principles of economic solutions and what data tells economists about the economy? The policymakers see the deviance as in effect an anomaly -- something that doesn't reflect the collective data. If there are few such anomalies they're excluded from the mathematical models. But when the anomalies start to pile up then the Federal Reserve, which is specifically charged with managing U.S. monetary policy, and the economists who labor along with Treasury, Congress, and the White House on the fiscal side of U.S. government policies, are at a crossroads:

They can act in the manner of real scientists: admit that their mathematical models are obsolete and that they need to revise the economic principles guiding their policies. Or they can abandon science and look at the proliferating anomalies as a kind of insurgency.

Which road do you think the Guardians of the Economy took?

Rise of the Statistical Anomaly Insurgency

Even as early as 2009 things had gotten out of control. Statistical anomalies were popping up in ever greater numbers. Many of these anomalies purchased gold as a hedge against what they presumed were coming financial calamities. In addition they began stockpiling food. Not just a couple dozen cans of creamed corn, mind you. Drive a forklift to Costco.

The survivalists weren't the worst of it, from a monetary policymaker's viewpoint. Many statistical anomalies had stubbornly refused to return to the stock market after getting burned in 2008. They paid down their debt and sat on cash in their savings account. This was skewing Chairman Ben Bernanke's prescription for the economic recovery. So the Federal Reserve began slashing interest rates and pumping more and more money into the banking system in the effort to direct the anomalies into the stock market.

Nope. Didn't work. The anomalies didn't care if the DJIA hit 20,000 and the interest on their savings accounts went down to 0.0001%. They weren't budging from their cash position. This wasn't just middle-income and middling upper-income Americans. Many rich Americans were also clinging to large cash positions.

More quantitative easing, more interest rate lowering. But like Scrooge McDuck (in his original incarnation) the anomalies quacked that a penny saved is a penny earned. Nevermore would they take a flyer in the stock market. Nor would they ever again go hog wild with their credit cards.

This selfish, miserly attitude was wrecking the mathematical models that churn statistical aggregates on the state of the Economy. And wasn't the whole point of Disney introducing the stingy McDuck character to shame Americans into not being miserly -- to get out there, open revolving charge accounts and spend, spend, spend for the sake of the economy? But those were the Dark Ages for government economists and the Fed. 1947. They were still using slide rules to do statistical analysis, for crying out loud.

Worse, in the Fed's view and the view of banks that can't exist without being propped up by Fed policy, many statistical anomalies refused to take it on the chin when banks froze up on lending after the '08 crash. With the help of some meddling anomalies in the United Kingdom and a few renegade American bankers they began setting up lending networks. Functioning, would you believe, as de facto banks, as lenders of last resort for each other, and charging interest for the loans, to boot!

Do you know what it takes to start a real bank in this country? The application forms are not measured in pages. They're measured in pounds. That's only if you don't have other businesses when you apply to open a bank; if you do, the forms are probably measured in tons. One corporation decided to consolidate all the paperwork at a single site and had to rent a flatbed truck to do it. (I am not making this up.)

But here were these -- do it yourself monetarists (by this time the Guardians were getting imprecise in their Scientifical language) making up their own policies as they went along, circumventing scores of regulatory agencies, making party favors out of red tape meant to protect the American depositor and the banking system.

To add insult to injury in the wake of the 2008 market crash the Internet had generated an entire subculture of Do It Yourselfers, who followed the advice of any self-appointed monetary expert and renegade economist who started a website.

Then these crypto-anarchists (by then the Guardians had completely abandoned Scientifical language), upped and created their own currency. Bitcoin. Virtual currency, they called it. Do you have any idea how expensive it is for a government to make currency? And here were these -- these bitbrains doing it with a few strokes on a computer keyboard. Worse, their trading in Bitcoins was screwing with monetary policy. Only the Federal Reserve has the authority to do that.

Then the criminal class got into the act, turning Tide liquid detergent into a booming black market currency. (I am not making this up.)

Now none of these anomalies considered themselves to be running monetary policy but that was just the problem: in completely disorganized fashion many Americans were creating an alternative to official monetary policy and by doing so challenging the authority of the Guardians. Worse, the very existence of so many anomalies threatened to destroy the Economic collective.

The Final Straw

Next these these cretins, these financial illiterates, these -- these hoarders of creamed corn, began demanding physical delivery of the gold they'd bought.

And it wasn't just the little guy; by 2012 wealthy Americans who'd stored gold offshore for decades began asking banks in Switzerland and Eurozone countries for their gold.

By then gold was no longer merely a hedge against inflation or calamity; it had become a hedge against the Fed's prescription for economic recovery. The third round of quantitative easing, which put no cap on the Fed's massive bond-buying program, had sent the U.S. stock market soaring but with little effect on the recession outside New York and a couple other big cities.

The runup in gold prices was fueled by speculators betting against the Federal Reserve's quantitative easing policy; they thought it was going to fail to meet its objectives. This would mean a severe 'double dip' recession possibly leading to an all-out depression. So several investment advisors were routinely telling CNBC, the premier American financial TV station, that gold could go to $2,000 an ounce and from there the sky would be the limit.

But once gold hit $2K/oz it would become completely monetized and as such rival the U.S. dollar as a major reserve currency for central banks.

Trouble was, nobody was sure how much gold was actually available for delivery. The uncertainty touched off demands among very knowledgeable gold purchasers for physical delivery of the stuff.

Then the Bundesbank got cute

As early as the fall of 2012 rumors were flying in financial circles that Germany's central bank had gone from being upset to very upset with the Federal Reserve's quantitative easing policy. We don't want to be caught in a currency war, one Deutsche Bundesbank official said, as central banks around the world slashed interest rates in a desperate attempt to keep up with the Fed's QE to Infinity approach, after QE1 and QE2 had failed to meet the Fed's target objectives.

By January of this year the word was out: the Bundesbank had asked for delivery of a big chunk of the gold bullion it kept stored in the Federal Reserve, originally as a hedge against Soviet aggression. (It also sent notice to the French central bank that it was repatriating a smaller amount of German gold stored there.)

Technically one thing didn't have to do with the other. The Bundesbank had come under a court ruling to precisely count and assay all its gold holdings. This was after the German people started getting nervous about the state of their central bank's gold reserve -- not without reason, I might add.

There was an unfortunate mistake many years ago when the Bundesbank asked for delivery of some its gold from the Federal Reserve and the Bank of England (the U.K. central bank.) When the Bundesbank assayed the gold (did they think the Germans wouldn't check?) they discovered it wasn't the "pure" bullion it had originally shipped the central banks for safekeeping. The mistake was quickly corrected but you can see how people could get nervous about such things when the price of gold heads north of a thousand bucks an ounce.

To cut a story: human nature being what it is, people hooked up the gold repatriation request with the Bundesbank's concerns about QE3 -- concerns that extended to Germany's finance ministry. So what had started out as the odd request here and there for physical delivery of gold turned into a stampede after the Bundesbank's repatriation request became news. This threatened to skyrocket the price of gold.

Look at things from a Guardian's point of view. Something had to be done to restore central authority for monetary policy, or next the whole quacking lot of insurgents would be pretending to take a vacation so they could try to open a bank account in the Grand Caymans or Luxembourg with their chump change. Precautions, they'd call it. Precautions against the coming social unrest in the USA. They were more likely to be killed by a super-sized can of Dinty Moore beef stew falling off a forklift than by a rioter.

Something was indeed done. Actually a number of things were done. That's where I'll pick up in the next post.

.

Homeland Security orders golf courses in Greater Washington, DC area shut indefinitely in response to al Qaeda threat to White House; Glenn Greenwald denies biting reporter; Wyoming town takes precautions against al Qaeda

At yesterday's White House press briefing White House Press Secretary Jay Carney fielded several questions about Homeland's directive. A reporter for ABC News asked if the golf course closings were a stunt to deflect criticism of the National Security Agency (NSA).

Mr Carney replied somewhat cryptically that the White House did not engage in "childish histrionics" every time "some 29 year old hacker upstages the President of the United States."

When the reporter pointed out that Edward Snowden was now 30 years old, Mr Carney asked, "Tell me how old I am."

The reporter was saved from briefing room Siberia when a reporter for the Associated Press sitting next to him hissed, "48."

"48," called out the ABC reporter.

A reporter for the New York Times asked if the White House could confirm or deny the rumor that Edward Snowden learned Japanese within three weeks when he was stationed in Japan, and whether it was true he'd learned passable Russian within 40 days from a basic primer on the language and hearing announcements over the loudspeaker at Sheremetyevo airport.

Mr Carney referred the questions to the CIA.

A reporter from USA Today asked Mr Carney if President Obama could take a wool scarf her mother was knitting and a down coat to the Moscow summit to give to Edward Snowden.

"It gets cold in Moscow in September," she explained. "And also could he bring him a 21 piece bucket of Kentucky Fried Chicken? He looks so terribly thin -- Edward, I mean," she added.

In answer Mr Carney removed his eyeglasses and glared at her.

"KFC has more than 80 outlets in Moscow," a Reuters reporter sitting behind her hissed.

A reporter for the Washington Post called out from the back of the briefing room, where she'd found herself seated after writing up Russia tourist tips for Edward Snowden, whether the White House could confirm or deny the rumor that Glenn Greenwald had bitten a still-unnamed reporter in the major U.S. press who refuses to cover the NSA surveillance issue.

Mr Carney referred the question to Glenn Greenwald.

"That's a lie," Mr Greenwald said via Skype from his home in Brazil. "There are 11 dogs in this house and one of them nipped the reporter in the ankle when he tripped over her, that's all." (1)

In other defense-related news: Just in case al Qaeda tries to blow up the liquor store in Mashed Potato Falls, Wyoming, the police force there has received a federal grant for training in SWAT tactics and a donation from the Pentagon of used body armor, AH-64 Apache gunship, and a M1A1 Abrams tank.

"Fred doesn't like wearing the armor," Chief of Police Eunice Parsons announced at her latest presser. But the rest of the force, consisting of a retired taxidermist and Eunice's brother-in-law, is getting the hang of driving the tank, which they deployed in July to raid an unlicensed moonshine still.

In answer to a question from a reporter for the Mashed Potato Falls Gazette, Eunice said that she didn't think the donations indicated a militarization of America's police forces.

"There's not much difference between a rifle and a tank when you get right down to it," observed Eunice. "They're both made to shoot."

I think the press conference is a help to any readers stumped by #13 on Wikipedia's list of criteria for the electronic police state.

1) Glenn rescues stray dogs; if you'd like to adopt one or just thank him for his incredible efforts to alert the public about the extent of clandestine NSA surveillance and prevent the issue from being buried by the mainstream media, you can reach him at @ggreenwald on Twitter or email him at glenn.greenwald@guardiannews.com


.

Archetypes and Quests

Alexander the Dark Lord, Edward the Light Bringer, Julian the Clever, Greenwald the Magnificent, Putin the Merciful Troll

Is it me, or is the NSA story beginning to resemble something Tolkien might have written? Many commentators have lectured that this is not about Edward Snowden, that it's about freedom and the abuse of power. Yes yes, but the heart cries out for something more. Echoes and correspondences, the stuff of legends, the same stories form again and again, the same actors don different costumes....
.

Roses for the Russian people, brickbats for the usual suspects

From the viewpoint of Russian Federation-NATO relations Edward Snowden couldn't have landed in the Russian lap at a worse time. Talk about being tested. It would have been so easy for the Kremlin to ship him back to Hong Kong or leave him in airport limbo until he withered away.

So, many thanks are in order -- not only to the Russian people as a whole but specifically to the Kremlin, to Vladimir Putin, to the Russian press, to attorney Anatoly Kucherena, to workers in Russian civil rights organizations spoke up for Edward Snowden, to workers at the Moscow airport who philosophically bore the hordes of journalists camped there, to Russian military figures and defense and policy analysts who argued in favor of asylum.

Even an entrepreneur chipped in with a job offer. Pavel Durov, founder of the social networking site Vkontakte, or VK (Russia's version of Facebook) said, "We invite Edward to St. Petersburg and will be glad if he joins our star team of programmers."

Given that his life is still very much at risk it's unlikely Ed will be able to accept the offer, even though his one-year asylum in Russia (which can be renewed) allows him to work and travel freely there. But in this case it's definitely the thought that counts.

And so I think the commentator who morosely termed Ed's stay at Moscow airport a "lonely plight" wasn't seeing the full picture at the time. Many people in Russia were working to help Ed during his stay in the airport.

And when I look through a wide-angle lens I see that during his stay at the airport thousands of people here in the USA and around the world were working to help Ed, and that many millions of people were standing up for the cause and principles he's risked his life to defend.

No, Edward Snowden has not been lonely. I'd say the fact that he hasn't been lonely shows off the human race in its best light.

[Ding!Ding!Ding!] Ah, I see that my alloted time for being nice during any one 24 hour period has just expired. Now on to the burning question of whether President Obama will cancel his Moscow side visit during the September G20 summit in St. Petersburg to show his displeasure with the Russians hosting an American fugitive from justice. And miss a chance to grandstand on the world stage about human rights? I'll believe that when I see it.

If history is any guide the next month will find:

> MI6 and CIA operatives running around Russia like chickens with their heads cut off, spreading cash to any group that has a beef with the Kremlin.

> Major press in the U.K. and U.S. incuding ones owned by News Corp. running front-page stories about the Russian government's human rights abuses going back to the Crimean War.

> This will be topped off on the eve of the G20 summit by a protest in Red Square led by Gary Kasparov chanting, 'We demand the same rights as you gave Edward Snowden!' Then Gary will be carted off by police because he refused to apply for a permit for the protest. BBC and CNN will be there to record the event while Gary screams at the cameras, 'I will never be seen or heard from again!'

Next I have a few words for China's top officials and state-run press. I would do a little less chortling about the Obama administration's "embarrassment" regarding Russia's decision to give Ed Snowden asylum.

China's government showed the spine of a jellyfish on the matter of giving Ed refuge as soon as it came under pressure from Obama's administration. That's how we got Ed's attorney in Hong Kong suddenly hemming and hawing about the possibility that he might have to be incarcerated during the months or years the government decided on his request for asylum -- and have his laptops taken away from him during that time. Only an idiot wouldn't have read that as a threat to get out of Hong Kong, or else.

I feel sure that the majority of Hong Kongers opened their hearts to Ed and wanted him to stay, so I planned never to say anything about the government's behavior. I took my cue from Edward Snowden, who has never asked for more help than he's been given by any government, and who's always expressed thanks for whatever help was given. But I changed my mind when I read comments in China's press that smack of schadenfreude at the expense of the U.S. presidency. Cut out the schadenfreude -- unless of course Hong Kong's government would like to offer Edward refuge without imposing conditions they know he can't accept.

All this said, a certain contingent in the U.S. press has made it easy for China's press to chortle by publishing headlines that shriek, OBAMA SLAPPED IN FACE BY RUSSIA and IS OBAMA GOING TO LET PUTIN GET AWAY WITH THIS BECAUSE IF HE DOES HE'S A YELLOW-BELLIED SAPSUCKER.

This happens to be the same contingent that has been largely silent in the face of Ed's revelations about the electronic police state or portrayed him as a traitor.

.

You didn't actually think Obama would let Greenwald testify to Congress about NSA, did you?

Glenn Greenwald's Testimony to Congress Killed By Obama
by Raúl Quintana
PolicyMic July 31, 2013

Four days ago, Representative Alan Grayson (D-Fla.) announced that he was convening an informal bipartisan Congressional hearing to talk about the National Security Agency’s surveillance program. Today, the hearing was canceled because President Obama scheduled a meeting for the same time with House Democrats.
[...]

In an email to Politico, [Glenn] Greenwald responded that "Obama developed a sudden and newfound interest in House Democrats and scheduled a meeting with them for that same time."

Greenwald is not exactly subtle, and the message of the email is very pointed about the president's "sudden and newfound" interest. So is the president simply trying to save face from a hearing that would probably make him look bad among liberals? [...]

Raúl goes on to speculate about other possible reasons for the President's ploy. My take is that Obama had already lost face with Liberals over drone war and related issues. And I don't think there is one genuine Leftist or civil libertarian in the world who has any illusions left about what Obama is. 

Yet it was the American Leftist, law professor and political scientist Stephen F. Diamond who alone pegged Obama during the Democratic presidential primary campaign in early 2008.  After studying Obama's political career up to that point he said that Obama was no Leftist; that he was an authoritarian -- although what specific type, he wouldn't speculate at that early stage. 

"Isn't that just like a Leftist," I observed sarcastically at the time. "When one of their own turns out to be a monster they say, 'Oh that's not a real Leftist.'"  But I listened to Steve despite my grumbling, and made sure Pundita readers heard what he had to say.  I am very glad I did.

The American democracy may be strong enough to survive the Obama presidency, but there are many younger democracies that can count themselves lucky he wasn't born there.

Well, back in 2008 it was a choice between the devil and the deep blue sea because John McCain is as scary in his own way as Obama. 

Onward, in the immortal words of Dave Ronfeldt.


.

Let's roll: Some legislators mount desperate campaign to save the U.S. republic

"The bill would strip the NSA of its authority to collect records in bulk -- the security agency would have to show that a specific individual is under investigation before collecting such information. It's being put up for a vote as an amendment to the 2014 Defense Department appropriations legislation."

"The Snowden Effect" snowballs on, but a realist would say it's too late in the day. His face, his voice, rose in my memory when I read the following news report. Eric Nordstrom, telling the U.S. House of Representatives Oversight and Government Reform Committee during the first House hearing on the Benghazi attack, "For me, the Taliban is on the inside of the building." He was clearly referring to his bosses at the U.S. Department of State.

It's funny, in a warped kind of way: After the NSA story broke a man named Gordon G. Chang, who'd published a book in 2001 that warned China's government would collapse in 2006, went onto CNN and onto Fox TV to issue another warning. According to his sources, which he couldn't name, Edward Snowden was probably a spy for China, and spies for China's government were inside the NSA and maybe also inside the FBI.

Someone tell that fool that much worse than Chinese spies -- and Taliban -- are inside the building.

NSA snooping debate heats up in Congress
By Stephanie Condon, CBS political reporter
CBS News
July 23, 2013, 4:48 PM

More than a month after a former government contractor blew the lid open on sweeping government surveillance programs, Congress this week is engaging in one of the most robust debates it has seen in years on the balance between liberty and security.

As early as Wednesday the House of Representatives will vote on legislation to strictly limit the surveillance powers the National Security Agency has assumed under the Patriot Act. The proposal, written in response to revelations that the NSA collects all of Verizon's U.S. phone records, has created unusual alliances and sharp divisions in Congress.

The bill would strip the NSA of its authority to collect records in bulk -- the security agency would have to show that a specific individual is under investigation before collecting such information. It's being put up for a vote as an amendment to the 2014 Defense Department appropriations legislation.

Leaders of the Senate Intelligence Committee on Tuesday called the House legislation "unwise," insisting that Congress is conducting proper NSA oversight. The program in question "has contributed to disrupting numerous terrorist attacks against our nation. It has been reviewed and authorized by all three branches of government and is subject to strict controls," committee chairwoman Sen. Dianne Feinstein, D-Calif., and vice chairman Sen. Saxby Chambliss, R-Ga., said in a joint statement.

Army General Keith Alexander, the director of the NSA, privately briefed House members on Tuesday on how the legislation could hurt national security.

Across town on Tuesday, Sen. Ron Wyden, D-Ore., a privacy advocate who sits on the Senate Intelligence Committee, hailed the House debate as a crucial step in the right direction.

Wyden said that he's not familiar yet with the specifics of the House legislation, but he said, "The fact that this has made it to the floor of the House of Representatives is unquestionably good."

"If we do not seize this unique moment in our constitutional history to reform our surveillance laws... we are all going to live to regret it," Wyden said at an event at the liberal Washington think tank the Center for American Progress. "The combination of increasingly advanced technology with the breakdown of checks and balances on government action could lead us to a surveillance state that could not be reversed."

The amendment to stop the NSA's blanket collection of information was sponsored by libertarian-leaning Rep. Justin Amash, R-Mich., but has found supporters in staunch liberals like Rep. John Conyers, D-Mich. Online privacy advocates are also commending Amash's amendment, while at least one grassroots group has been mobilizing public support for it, urging voters to call their congressmen about it.

Wyden, meanwhile, noted that the Senate is pursuing its own reforms in the wake of the revelations about the NSA programs, including legislation that would make declassify the opinions from the secret court that authorizes surveillance activities, the Foreign Intelligence Surveillance Court (FISC).

Wyden said that in the summer of 2009 he received a written commitment from the Justice Department and the Office of the Director of National Intelligence that the government would start declassifying those opinions, with the proper redactions. Since then, however, exactly zero opinions have been released.

"We are going to keep the public debate alive," Wyden said.

END REPORT

.

America is becoming a police state. What's the solution?

We could try blaming it all on this guy

To get the solution first define the problem correctly. The rationale for the police state isn't based on big government, or capitalist or socialist economic theories. The rationale is entirely dependent on collectivism. So if you're seeing signs of a police state everywhere you look in the United States the first question to ask is whether the society has become collectivist. Yes it has, and profoundly so, but the collectivism wasn't created by Marxism or socialism or fascism. It was created by the social science of economics. To be precise it was created by Americans' acceptance of economic theories as the ruling principle in their society.

Explaining how all this happened would be a long story for readers unfamiliar with a 300 year-old argument called the Paradox of Thrift and efforts by the U.S. government and Federal Reserve to reverse engineer the paradox; this in the attempt to perpetually stave off a repeat of the Great Depression. But to skip over much history and theorizing, after the Great Depression Americans became willing to give up considerable control of their personal financial matters in exchange for a government promise that the country would never again experience a devastating depression. To fulfill this promise the Federal Reserve was tasked with designing and implementing monetary policies that steered the economy past the shoals of runaway depression and runaway inflation.

Sounded good on paper and for a time it was good in actual practice, considering what Americans wanted. Then, times changed. After the currency "dollar peg" ended in 1973, the Federal Reserve and U.S. Treasury had to engage in increasingly complicated monetary maneuvers to maintain U.S. dollar hegemony in a world of floating currency exchange rates -- maneuvers that often ran counter to U.S. fiscal policy and the personal finances of Americans.

The upshot was that little by little, over a period of decades, Americans were exchanging more and more control of their financial matters to support more and more complex maneuvers to stave off another great depression. Yet nobody had bothered to read the fine print in this exchange. In tiny letters at the bottom of the compact between Government and the People it reads:

'Once the science of economics starts calling the shots, economists in the federal government and Federal Reserve quite naturally have to think in terms of statistical aggregates when analyzing and arriving at decisions. Have a nice day.'

In other words the economists have to think like collectivists and so does everyone in government who deals with them.

It all makes sense in a highly abstract way -- and it will make more sense once you study the Paradox of Thrift, which was thought up or at least formalized by Bernard de Mandeville (pictured above). That blasted paradox, which Mandeville seems to have conceived as a political satire, has been denounced as a fallacy by several economists. But fallacy or no, it takes its enduring power from an underlying truth: What is good for the individual is not necessarily good for a collective of individuals.

How things progressed from that simple observation to American collectivism is a mind-bending tale. But the punch line is that it's not possible to confine economic thinking to only one area in a society when monetary policy is enforced by government fiat. This is because of the pervasive effect of monetary matters on just about all aspects of life in the USA -- and for that matter, life in most modern societies.

So that was the path by which collectivism gradually came to dominate American society, despite all the lip service to individualism.

Yet all this happened on little cat feet because the only Americans who discussed collectivism outside political science were pinkos and anti-pinkos. The anti-pinkos associated collectivism with communism and socialism, not with economics. And pinkos denounced the Federal Reserve as a bastion of greedy capitalist bankers; none of them ever said, 'That's a bunch of collectivists over there at the Fed.'

But it's not only the Fed that thinks in collectivist terms. Politically conservative Supply Siders and liberal Keynesians think the same when they get down to brass tacks. Both believe that the USA will see a new Ice Age if Americans have control of their own money by hoarding it in savings accounts. For the good of the economy, the American collective must not sit on mountains of cash (or gold) in the manner of Scrooge McDuck. It must purchase consumer goods and invest in the financial markets, even if this means taking on considerable debt. And if the collective doesn't want to do this it must be 'encouraged' by Fed and government fiscal policies to use its money in a way that benefits the collective.

Leaving aside the merits or demerits of this view from the standpoint of economic theory, you can see that through the back door of monetary policy the concept of "public good" came to supersede individual rights in the USA

As to why that's been so hard to see -- try this experiment: Every time you read the term "the economy" in a news report, cross it out and write "the collective." And every time you hear "the economy" mentioned on the nightly news, say, "the collective."

Do that for a week and you won't need to ask how American collectivism has stayed hidden in plain sight.

That's enough for today. I'll return with Part 2 of this post, which I'll title "From the Economy to a Police State." In the meantime here's the link to Wikipedia's article on the Paradox of Thrift, which also gives a little history about how the paradox got applied in modern times. And here's the link to Wikipedia's article on Bernard de Mandeville. Don't be fooled by his Paradox. Mandeville was a brilliant and prolific thinker and writer on philosophy and political economics. His ideas influenced Adam Smith and Friedrich Hayek. And John Maynard Keynes, who dusted off the Paradox of Thrift to support his miracle cure for perpetually staving off another Great Depression. American government officials might not have grasped Keynes's finer points but they liked the "perpetual" part. And here we are today.

.

With apologies to Joel Osteen: Pundita breaks her New Year's resolution to be nice

My enemies are going to have a field day with this. I can hear it now. 'So that's why she was so quiet on her blog this year; the effort was killing her.'

As to what Joel Osteen has to do with this, thereby hangs a tale. A few nights ago I almost broke my resolution. I'd dashed off a vicious reply to The (U.K.) Observer's British foreign affairs editor, Peter Beaumont, who'd criticized Ed Snowden for saying (at his July 12 presser) a few polite words about Russia's record on human rights.

To give you some idea of how nasty I was, I started off by telling Beaumont: "I have four words in reply: Northern Ireland and Beslan Massacre."

As to what the British government had to do with the massacre -- well, after it happened, Vladimir Putin called a presser that lasted 2-1/2 hours, during which he accused the British and U.S. governments of being ultimately responsible for the massacre because of their support of Chechen terrorists. Okay; he was overwrought at the time yet there were grains of truth in his statements.

But I was just getting warmed up. I asked Beaumont if the treatment of many women and children under sharia law in the U.K. didn't count in his view as human rights abuses.

I actually had my finger on the "Publish" button when I grabbed the finger and literally wrestled myself away from the keyboard. So then I took a nap. (When you get to be my age wrestling with oneself is tiring work.)
I woke up not knowing whether it was day or night so I grabbed the remote. I pressed "36" to see if CNN was reporting on anything other than the George Zimmerman trial, but I guess my finger slipped and I got channel 6 instead.

There was Joel Osteen, talking about how important it was to let unfair criticism roll off your back, and to let God protect you from the carpers while you focus on your goal.

I cried out the TV screen, "Thank you, Joel Osteen" and told myself, "See? Let God deal with Snowden's critics. You keep to the high road."

Besides, once one starts in with recriminations there's no end to it. Beaumont could have returned fire by asking if I was equating the British government's treatment of the Irish with Putin's treatment of the Chechens. This is how wars can last for centuries.

However, there's also my blood pressure to consider, which has spiked several times since the New Year. Maybe if I could find a more constructive outlet for a head of steam, like meditation and prayer or Tai Chi, but until that day arrives I've decided to revert to being what I am in this lifetime, which is frankly not a very nice person.

.

India's Arvind Kejriwal, America's Edward Snowden

Two young men who put their lives on the line to expose very great government wrongdoing.  During the past year, young people in many nations have been standing up as never before to demand integrity of their elected and appointed officials.  An amazing development.

.

Snowden formally accepts asylum offers, cites Nuremberg principle, announces intention to seek temporary refuge in Russia until he can travel

I took the caption for the following photograph from USA TODAY but moments later when I returned to the page it seemed the caption had been deleted except for the photography credit.  Here is the original caption:  "Picture released by Human Rights Watch shows US National Security Agency (NSA) fugitive leaker Edward Snowden during a meeting with rights activists at Moscow's Sheremetyevo airport Friday.(Photo: Tanya Lokshina AFP/Getty Images)"

Below: highlights from USA TODAY report followed by text of Ed Snowden's complete statement and Wikileaks background to the statement:
Snowden has 'no regrets,' seeks asylum in Russia
by Anna Arutunyan and Doug Stanglin
USA TODAY
1:14 p.m. EDT July 12, 2013

 NSA leaker wants to stay temporarily in Russia until he can travel to Latin America.

MOSCOW -- Edward Snowden said Friday that he has no regrets over leaking details about U.S. electronic spying networks and is seeking temporary asylum in Russia until he can reach one of the Latin American countries that has offered to take him in.

"That moral decision to tell the public about spying that affects all of us has been costly, but it was the right thing to do and I have no regrets," he told a group of human rights activists and other public officials at a meeting at Moscow's Sheremetyevo airport, where he has taken refuge since June 23.
[...]
Snowden, whose U.S. passport has been revoked, said he has formally accepted an offer of asylum from Venezuelan President Nicolas Maduro, as well as all others which have expressed support "and all others that may be offered in the future."

The meeting included Vyacheslav Nikonov, chairman of the Russian state Duma, Sergei Nikitin, head of Amnesty International Russia, Vladimir Lukin, Russia's presidential human rights ombudsman, attorney Genri Reznik, and Tanya Lokshina, of Human Rights Watch.

Dmitry Peskov, spokesman for Russian President Vladimir Putin, told Russian news agencies after Snowden's announcement Friday that Russia had not received a new bid for asylum from Snowden and that Putin would continue to insist that Snowden stop leaking information.

Nikonov told Rossiya 24 that he asked him about Putin's previously stated conditions, and that Snowden told him he had. "He does not want to harm U.S. interests because he is a law-abiding citizen and a patriot," the Russian lawmaker said..

Snowden, in his remarks at the meeting, said governments in Western Europe and North American are acting outside the law by preventing him from traveling and called on the rights activists to intervene with Putin on his behalf.
[...]
Snowden said the U.S. government and intelligence agencies have tried to make an example of him as "a warning to all others who might speak out as I have."

"I have been made stateless and hounded for my act of political expression," he said.

He also invoked the principles declared at the Nuremberg trial of Nazis in 1945 that "individual citizens have the duty to violate domestic laws to prevent crimes against peace and humanity from occurring."
[...]
The American Civil Liberties Union, meanwhile, issued a statement Thursday asserting that the former defense contractor "has serious claims for asylum and has a legitimate right to seek asylum irrespective of the human rights record of the country that he ultimately ends up in."

The statement charges that the USA has interfered with Snowden's right to seek asylum by revoking his passport and appears to have prevented him from receiving fair and impartial consideration of his application in many of the countries to which he has applied.

Jamil Dakwar, director of the ACLU human rights program, and Chandra Bhatnaqar, senior attorney for the program, also warn that by infringing on Snowden's right to asylum, "U.S. actions also create the risk of providing cover for other countries to crack down on whistle-blowers and deny asylum to individuals who have exposed illegal activity or human rights violations.

"That's a very dangerous precedent to set," the statement says.

Contributing: Stanglin reported from McLean,Va., The Associated Press
END USA TODAY REPORT
WIKILEAKS BACKGROUNDER TO SNOWDEN'S STATEMENT

Friday July 12, 15:00 UTC

Edward Joseph Snowden delivered a statement to human rights organizations and individuals at Sheremetyevo airport at 5pm Moscow time today, Friday 12th July. The meeting lasted 45 minutes. The human rights organizations included Amnesty International and Human Rights Watch and were given the opportunity afterwards to ask Mr Snowden questions.

The Human Rights Watch representative used this opportunity to tell Mr Snowden that on her way to the airport she had received a call from the US Ambassador to Russia, who asked her to relay to Mr Snowden that the US Government does not categorise Mr Snowden as a whistleblower and that he has broken United States law. This further proves the United States Government’s persecution of Mr Snowden and therefore that his right to seek and accept asylum should be upheld.

Seated to the left of Mr. Snowden was Sarah Harrison, a legal advisor in this matter from WikiLeaks and to Mr. Snowden’s right, a translator.

Transcript of Edward Joseph Snowden statement, given at 5pm Moscow time on Friday 12th July 2013. (Transcript corrected to delivery)

Hello. My name is Ed Snowden. A little over one month ago, I had family, a home in paradise, and I lived in great comfort. I also had the capability without any warrant to search for, seize, and read your communications. Anyone’s communications at any time. That is the power to change people’s fates.

It is also a serious violation of the law. The 4th and 5th Amendments to the Constitution of my country, Article 12 of the Universal Declaration of Human Rights, and numerous statutes and treaties forbid such systems of massive, pervasive surveillance. While the US Constitution marks these programs as illegal, my government argues that secret court rulings, which the world is not permitted to see, somehow legitimize an illegal affair. These rulings simply corrupt the most basic notion of justice – that it must be seen to be done. The immoral cannot be made moral through the use of secret law.

I believe in the principle declared at Nuremberg in 1945: "Individuals have international duties which transcend the national obligations of obedience. Therefore individual citizens have the duty to violate domestic laws to prevent crimes against peace and humanity from occurring."

Accordingly, I did what I believed right and began a campaign to correct this wrongdoing. I did not seek to enrich myself. I did not seek to sell US secrets. I did not partner with any foreign government to guarantee my safety. Instead, I took what I knew to the public, so what affects all of us can be discussed by all of us in the light of day, and I asked the world for justice.

That moral decision to tell the public about spying that affects all of us has been costly, but it was the right thing to do and I have no regrets.

Since that time, the government and intelligence services of the United States of America have attempted to make an example of me, a warning to all others who might speak out as I have. I have been made stateless and hounded for my act of political expression. The United States Government has placed me on no-fly lists. It demanded Hong Kong return me outside of the framework of its laws, in direct violation of the principle of non-refoulement – the Law of Nations. It has threatened with sanctions countries who would stand up for my human rights and the UN asylum system. It has even taken the unprecedented step of ordering military allies to ground a Latin American president’s plane in search for a political refugee. These dangerous escalations represent a threat not just to the dignity of Latin America, but to the basic rights shared by every person, every nation, to live free from persecution, and to seek and enjoy asylum.

Yet even in the face of this historically disproportionate aggression, countries around the world have offered support and asylum. These nations, including Russia, Venezuela, Bolivia, Nicaragua, and Ecuador have my gratitude and respect for being the first to stand against human rights violations carried out by the powerful rather than the powerless. By refusing to compromise their principles in the face of intimidation, they have earned the respect of the world. It is my intention to travel to each of these countries to extend my personal thanks to their people and leaders.

I announce today my formal acceptance of all offers of support or asylum I have been extended and all others that may be offered in the future. With, for example, the grant of asylum provided by Venezuela’s President Maduro, my asylee status is now formal, and no state has a basis by which to limit or interfere with my right to enjoy that asylum. As we have seen, however, some governments in Western European and North American states have demonstrated a willingness to act outside the law, and this behavior persists today. This unlawful threat makes it impossible for me to travel to Latin America and enjoy the asylum granted there in accordance with our shared rights.

This willingness by powerful states to act extra-legally represents a threat to all of us, and must not be allowed to succeed. Accordingly, I ask for your assistance in requesting guarantees of safe passage from the relevant nations in securing my travel to Latin America, as well as requesting asylum in Russia until such time as these states accede to law and my legal travel is permitted. I will be submitting my request to Russia today, and hope it will be accepted favorably.

If you have any questions, I will answer what I can.

Thank you.
END STATEMENT
.

34 Days

Hard to believe but it's only been 34 days since the first of Edward Snowden's revelations were published in the Washington Post and Guardian.  It seems much longer because there's been one revelation after another that branches into complex interlocking issues.  Then the Obama administration has made one mess after another in response to the revelations.  The public is experiencing cognitive whiplash in the process of trying to sort it all out. 

So while I sympathize with Philip Ewing's lament in the July 5 Politico,  Edward Snowden’s nightmare comes true -- the nightmare being that after all his revelations, "nothing will change" -- he needs to keep in mind that it's early days. 

Just this morning, Politico published a report that Ed's revelations about the NSA are impacting congressional privacy legislation. There have been many Americans laboring for years on the issue, to no avail, and now they finally have the wind at their backs.

Also this morning USA Today quoted a New York Times story about the mounting legal challenges to the NSA programs:

The Obama administration will also have to defend its National Security Agency surveillance programs in court. A privacy rights group plans to ask the Supreme Court on Monday to stop the NSA phone surveillance program that collects the telephone records of millions of Americans.

It's the latest in a string of lawsuits over NSA activities.

The Obama team is also under political fire for the phone and Internet surveillance programs operated by the NSA, details of which have been leaked by former government contractor Edward Snowden.

From The New York Times:

The group, the Electronic Privacy Information Center, says it is taking the extraordinary legal step of going directly to the Supreme Court because the sweeping collection of the phone records of American citizens has created 'exceptional circumstances' that only the nation's highest court can address.

The group, based in Washington, also said it was taking its case to the Supreme Court because it could not challenge the legality of the N.S.A. program at the secret court that approved it, the Foreign Intelligence Surveillance Court, known as the FISA court, and because lower federal courts did not have the authority to review the secret court's orders.

In its petition, the group said the FISA court had 'exceeded its statutory jurisdiction when it ordered production of millions of domestic telephone records that cannot plausibly be relevant to an authorized investigation.'

[END USA TODAY REPORT]

.

Cuba's President backs asylum offers to Ed Snowden

I think so far Fox and Voice of America are the only American media outlets willing to cover President Raul Castro's speech yesterday; ni any case, here I'm using quotes from Iran's Press TV report, dated July 8:

Cuban President Raul Castro has backed offers of asylum by Latin American countries to former CIA contractor Edward Snowden, slamming the United States for bullying other nations.

Castro said on Sunday [June 7] in front of Cuba’s National Assembly that Venezuela, Bolivia and Nicaragua have the right to grant asylum to “those persecuted for their ideals or struggles for democracy, according to our tradition.”

The Cuban president also condemned US threats of economic sanctions against any country that shelters the American whistleblower and criticized the incident on July 3, in which some European countries banned the plane transporting Bolivian President Evo Morales from their airspace on rumors that Snowden was on board

“These actions demonstrate we live in a world in which the powerful feel they can violate international law, violate the national sovereignty of other states and trample on the rights of citizens,” said Castro.

The Cuban president added that his country was aware of the kind of secretive NSA programs Snowden revealed and said as a longtime enemy of Washington, Cuba has been “one of the most harassed and spied-upon nations on the planet.”

[MORE]

.

Amnesty International: U.S. government attempts to block Ed Snowden helping his case for asylum

Bochenek said the US actions were transforming the Snowden affair into a global saga ... Interfering with the right to seek asylum is a serious problem in international law. ... It is further evidence that [Snowden] has a well-founded fear of persecution."

The following paragraphs are from Jamie Doward's July 6 report for the Guardian:

Attempts by the US to close down intelligence whistleblower Edward Snowden's asylum options are strengthening his case to seek a safe harbour outside of Russia, legal experts claim.

Snowden, who is believed to be in the transit area of Moscow's Sheremetyevo airport, has received provisional offers of asylum from Nicaragua and Venezuela, and last night Bolivia also offered him sanctuary. [...]

Michael Bochenek, director of law and policy at Amnesty International, said the American government's actions were bolstering Snowden's case. He said claims that the US had sought to reroute the plane of Bolivia's president, Evo Morales, amid reports that the fugitive former analyst for the National Security Agency was on board, and suggestions that vice-president Joe Biden had phoned the Ecuadorean leader, Rafael Correa, to block asylum for Snowden, carried serious implications.

"Interfering with the right to seek asylum is a serious problem in international law," Bochenek said.

"It is further evidence that he [Snowden] has a well-founded fear of persecution. This will be relevant to any state when considering an application. International law says that somebody who fears persecution should not be returned to that country."

Venezuela's extradition treaties with the US contain clauses that allow it to reject requests if it believes they are politically motivated. The country's president, Nicolas Maduro, has praised Snowden for being a "young man who told the truth" and has criticised European countries' alleged role in the rerouting of Morales's plane last week.

"The European people have seen the cowardice and the weakness of their governments, which now look like colonies of the US," he said on Friday.

Spain said it had been warned that Snowden was on the Bolivian presidential plane, the first acknowledgement that the manhunt was linked to the plane's diversion to Austria. Foreign minister José Manuel Garcia-Margallo said: "They told us that the information was clear, that he was inside."

He did not say who "they" were or whether he had been in contact with the US.

Speaking from Buenos Aires, Bochenek said the US actions were transforming the Snowden affair into a global saga.

"In PR terms, opinion here and elsewhere in Latin America has shifted precisely because of the appearance of interference with other governments' decision-making processes," he said.

Bochenek said there was no reason why Snowden could not be granted asylum without setting foot in the country that had granted him refuge. The need to be present in the country where asylum is granted is a convention that can be ignored if nations see fit, he said.

"It's true that a lot of states have that as a rule in their own domestic requirements, but it is not required by international law," he said.Neither did placing Snowden on an Interpol "red flag" list mean that states had to hand him over to the US. The procedure is an advisory measure that can be ignored, legal experts said.

[MORE]

.

Venezuelan President Nicolas Maduro: "In the name of America's dignity ... I have decided to offer humanitarian asylum to Edward Snowden"

I am rarely struck speechless but I am so amazed that a national leader would show concern for another nation's dignity or even bring up the old-fashioned concept of dignity that I -- well, I must ponder. [slapping her hand] Don't be so amazed that you don't mind your manners, Pundita. Thank you, President Maduro.

From Reuters, July 5, 2013 - 11:07 PM EDT
Report filed by Daniel Wallis and Deisy Buitrago

CARACAS (Reuters) - Venezuelan President Nicolas Maduro offered asylum to former U.S. intelligence contractor Edward Snowden on Friday in defiance of Washington, which is demanding his arrest for divulging details of secret U.S. spy programs.

"In the name of America's dignity ... I have decided to offer humanitarian asylum to Edward Snowden," Maduro told a military parade marking Venezuela's independence day.

"He is a young man who has told the truth, in the spirit of rebellion, about the United States spying on the whole world."
[...]
It was not immediately clear how Snowden would react to Maduro's offer, nor reach Venezuela if he accepted.

There are no direct commercial flights between Moscow and Caracas, and the usual route involves changing planes in Havana. It is not clear if the Cuban authorities would let him transit.

Given the dramatic grounding in Vienna of the Bolivian president's plane this week over suspicions that Snowden was onboard, using European airspace could prove problematic.

One alternative flight plan would involve an aircraft taking off from Moscow, refueling in Vladivostok, and then continuing east over the Pacific to South America.

Russia has shown signs of growing impatience over Snowden's stay in Moscow. Its deputy foreign minister said on Thursday that Snowden had not sought asylum in that country and needed to choose a place to go.

Moscow has made clear that the longer he stays, the greater the risk of the diplomatic standoff over his fate causing lasting damage to relations with Washington.

The White House declined to comment on Maduro's offer.

Raising the possibility of at least one other option, Nicaragua said it had received an asylum request from Snowden and could agree to it "if circumstances permit".
[MORE]

.

News from the Department of Truth

Comrade Mark Safranski has graciously volunteered to teach modern irrigation methods to potato farmers in Death Valley, California after he was caught flying the national flag of the Economy of the United States upside down on America's most sacred holiday, National Barbecue Day, and using the "F" word when he called the Economy's defense strategy of consolidating a massive data base on Americans in one place "dumb."

Comrade Mark was joined in Death Valley by Comradess Rachel Maddow after she thoughtlessly used the third segment of her television show on the eve of National Barbecue Day to make fun of America's close allies Austria, Spain, Portugal and France, and to infer that Comrade Barack Obama was lying in his teeth about not putting pressure on every nation on the planet to ground any plane, hot air balloon or dirigible suspected to be carrying the American traitor Edward Snowden.

In a joint statement released today by the Department of Truth, Comrade Mark and Comradess Rachel said, 'We apologize to the American people for any offense we gave, intentional or otherwise, to the Economy of the United States. We celebrated the Economy's sacred holiday by barbecuing potatoes and rattlesnakes.'

.

Guardian report: "Edward Snowden withdraws Russian asylum request"

[1] According to WikiLeaks, Snowden has requested asylum from Austria, Bolivia, Brazil, China, Cuba, Ecuador, Finland, France, Germany, Iceland, India, Italy, Ireland, the Netherlands, Nicaragua, Norway, Poland, Russia, Spain, Switzerland, Venezuela.

Edward Snowden withdraws Russian asylum request
by Miriam Elder in Moscow
July 2, 2013 - 5:20 AM EDT
The Guardian

NSA whistleblower withdraws asylum request after Putin says he could stay only if he stopped harming US interests

Edward Snowden has withdrawn his request for political asylum from Russia, the Kremlin said on Tuesday, further adding to the uncertainty over the US whistleblower's future.

A spokesman for Russian president Vladimir Putin said Snowden withdrew the request after Putin's statement making clear that he would be welcome only if he stopped "his work aimed at bringing harm" to the United States.

"Snowden really asked to remain in Russia," Dmitry Peskov, the spokesman, said. "Learning yesterday of Russia's position… he abandoned his intentions and his request to get the possibility to stay in Russia."

Russia has refused to hand over Snowden, charged under espionage laws in the US after leaking top-secret documents on US surveillance programmes. He has been kept hidden away since 23 June, when he landed in Moscow's Sheremetyevo airport from Hong Kong.

His attempts to win asylum have been fraught with difficulty. Rafael Correa, president of Ecuador, told the Guardian that his country, whose London embassy is sheltering WikiLeaks founder Julian Assange, was not considering Snowden's asylum request.

He also said Ecuador never intended to facilitate Snowden's flight from Hong Kong, calling his London consul's decision to issue temporary travel documents to Snowden "a mistake".

Speaking to Reuters in Moscow on Tuesday on the second day of a two-day visit, Nicolas Maduro, the Venezuelan president, said Snowden "deserves the world's protection".

He said Venezuela had not yet received an asylum request from Snowden. Asked whether he would take Snowden back to Venezuela with him, Maduro answered wryly: "What we're taking with us are multiple agreements that we're signing with Russia, including oil and gas."

But he added his support for the US whistleblower: "Edward Snowden is a 29-year-old young, brave man who didn't kill anyone, didn't give any reason for the start of war," Russian news agencies cited Maduro as saying.

A WikiLeaks statement released early on Tuesday said that in addition to Ecuador and Iceland, Snowden had made asylum requests to 19 countries, including Venezuela, China, Bolivia, France and Germany.[1]

Maduro said Venezuela would examine the asylum request once it was received. "We think this young person has done something very important for humanity, has done a favour to humanity, has spoken great truths to deconstruct a world… that is controlled by an imperialist American elite," he said.

At least two countries where Snowden requested asylum have said they will not cooperate. Radoslaw Sikorski, the Polish foreign minister, said that Snowden's request did "not meet the requirements for a formal application for asylum. Even if it did, I will not give a positive recommendation."

Finland said on Tuesday that it could not accept his application as Finnish law required him to be in the country. Finnish foreign ministry spokeswoman Tytti Pylkko said that Snowden had sent his request by fax to Finland's embassy in Moscow.

Peskov did not detail how Snowden withdrew his asylum request from Russia. The request was handed to a Russian consular official at Moscow's Sheremetyevo airport late on Sunday via Snowden's WikiLeaks handler, Sarah Harrison.

In an awkwardly phrased statement released via WikiLeaks late on Monday, Snowden accused the Obama administration of "using citizenship as a weapon" and placing undue pressure on countries where he had applied for asylum.

John Kerry, the US secretary of state, spoke with his Russian counterpart, Sergey Lavrov on Tuesday on the sidelines of a summit of the Association of Southeast Asian Nations (Asean) on Tuesday. Lavrov told reporters that the two did not discuss Snowden.

[END REPORT]

.

An Open Letter to Russian President Vladimir Vladimirovich Putin on the matter of Edward Snowden

Dear Mr President:

Greetings from Washington, D.C.! Please excuse my American English as my Russian is nonexistent and my French so rusty that I would insult French readers if I attempted the language in this writing.

Recently Igor M Bunin, director of the Center for Political Technologies in Moscow, in speaking to the New York Times about the problems that Edward Snowden could make for the Russian government, cited what seems to be a Russian folk saying: "Snowden is like a hot meat pie in your hands: even if you want to eat it very much, it's very hot and maybe it's better to throw it on the floor."

We have a folk saying here in America: "When God hands you a lemon, make lemonade."

In a few short months, in September, President Barack Obama will be visiting Russia. If Mr Snowden was invited to stay as a guest in Russia at least up until September, he and the Russian government could provide an invaluable service to all the world's peoples in two ways, as follows:

1. Mr Snowden could help organize an international conference in Moscow that would lay the groundwork for international agreements aimed at eradicating cyber warfare. The conference would run concurrently with Mr Obama's visit so that he and the security advisors traveling with him could attend.

2. In the months leading up to September, Mr Snowden could give public lectures in Russia about the grave danger of cyber warfare and governments deploying this kind of war in secret. And he could lecture on the danger of governments deploying the latest computer technologies to surveil their own citizens in secret.

If there is any one person who could draw public attention to the urgency and gravity of the cyber war issue, it would be Edward Snowden. And if there is any one country that could protect Mr Snowden and give him a platform to warn all peoples and teach them about the dangers of cyber war, it is Russia.

I might add that if Mr Snowden was involved in the kind of conference I propose, he would be able to draw the attendance of companies from around the world that have a large stake in maintaining Internet freedom and preventing it from becoming a battlefield between governments.

Thank you, President Putin, for your attention to my suggestions.

Sincerely yours,

Pundita

Lies, Damned Lies, and Official U.S. Explanations About NSA Programs

"Until recently, the United States had positioned itself as such an innocent victim of cyber intrusions by Russia and China that the State Department issued a secret demarche, or official diplomatic communication, in January scolding Beijing."

One of my favorite journalists from the Afghan War days, Greg Miller, has written a laugh-cry report for the Washington Post about verbal sleights of hand that U.S. officials have used to mislead the public about NSA programs without outright lying. Here are some passages from the June 30 report, Misinformation on classified NSA programs includes statements by senior U.S. officials, which Julie Tate contributed to:

[...]

Beyond inadvertent missteps, however, an examination of public statements over a period of years suggests that officials have often relied on legalistic parsing and carefully hedged characterizations in discussing the NSA’s collection of communications.

Obama’s assurances have hinged, for example, on a term — targeting — that has a specific meaning for U.S. spy agencies that would elude most ordinary citizens.

“What I can say unequivocally is that if you are a U.S. person, the NSA cannot listen to your telephone calls and the NSA cannot target your e-mails,” Obama said in his June 17 interview on PBS’s “Charlie Rose Show.”

But even if it is not allowed to target U.S. citizens, the NSA has significant latitude to collect and keep the contents of e-mails and other communications of U.S. citizens that are swept up as part of the agency’s court-approved monitoring of a target overseas.

The law allows the NSA to examine such messages and share them with other agencies if it determines that the information contained is evidence of a crime, conveys a serious threat or is necessary to understand foreign intelligence.

The threshold for scrutinizing other data not regarded as content but still potentially revealing is lower than it is for the contents of communications. A 2009 report by the NSA inspector general and obtained by The Washington Post indicates that the agency for years examined metadata on e-mails flowing into and out of the United States, including “the sender and recipient e-mail addresses.”

President George W. Bush at times engaged in similarly careful phrasing to defend surveillance programs in the years after the Sept. 11, 2001, attacks.

[...]

For now, the crumbling secrecy surrounding the programs has underscored the extent to which obscuring their dimensions had served government interests beyond the importance of the intelligence they produced.

Secret court rulings that allowed the NSA to gather phone records enabled the spy service to assemble a massive database on Americans’ phone records without public debate or the risk of political blowback.

The binding secrecy built into the PRISM program of tracking international e-mail allowed the NSA to compel powerful technology companies to comply with requests for information about their users while keeping them essentially powerless to protest.

The careful depiction of NSA programs also served diplomatic ends. Until recently, the United States had positioned itself as such an innocent victim of cyber intrusions by Russia and China that the State Department issued a secret demarche, or official diplomatic communication, in January scolding Beijing. That posture became more problematic after leaks by the former NSA contractor and acknowledged source of the NSA leaks, Edward Snowden [...]

[MORE]
.

U.S. brazens out criticism from allies over NSA spying

From July 1 Associated Press report via The Washington Post:

"Partners do not spy on each other,” said EU Justice Commissioner Viviane Reding

WASHINGTON — The U.S. says it gathers the same kinds of intelligence as other nations to safeguard against foreign terror threats, pushing back on fresh outrage from key allies over secret American surveillance programs that reportedly installed covert listening devices in European Union offices.

Facing threatened investigations and sanctions from Europe, U.S. intelligence officials plan to discuss the new allegations — reported in Sunday’s editions of the German newsweekly Der Spiegel — directly with EU officials.

But “as a matter of policy, we have made clear that the United States gathers foreign intelligence of the type gathered by all nations,” concluded a statement issued Sunday from the national intelligence director’s office.

It was the latest backlash in a nearly monthlong global debate over the reach of U.S. surveillance that aims to prevent terror attacks. The two programs, both run by the National Security Agency, pick up millions of telephone and Internet records that are routed through American networks each day. Reports about the programs have raised sharp concerns about whether they violate public privacy rights at home and abroad.

The concerns came as the former head of the CIA and NSA urged the White House to make the spy programs more transparent to calm public fears about the American government’s snooping.

Several European officials — including in Germany, Italy, France, Luxembourg and the EU government itself — said the new revelations could scuttle ongoing negotiations on a trans-Atlantic trade treaty that, ultimately, seeks to create jobs and boost commerce by billions annually in what would be the world’s largest free trade area.

“Partners do not spy on each other,” said EU Justice Commissioner Viviane Reding. “We cannot negotiate over a big trans-Atlantic market if there is the slightest doubt that our partners are carrying out spying activities on the offices of our negotiators. The American authorities should eliminate any such doubt swiftly.”

European Parliament President Martin Schulz, said he was “deeply worried and shocked about the allegations of U.S. authorities spying on EU offices.” And Luxembourg Foreign Minister and Deputy Prime Minister Jean Asselborn said he had no reason to doubt the Der Spiegel report, and rejected the notion that security concerns trump the broad U.S. surveillance authorities.

“We have to re-establish immediately confidence on the highest level of the European Union and the United States,” Asselborn told The Associated Press.

[...]

In Washington, the statement from the national intelligence director’s office said U.S. officials planned to respond to the concerns with their EU counterparts and through diplomatic channels with specific nations. It did not provide further details.

NSA Director Keith Alexander last week said the government stopped gathering U.S. citizens’ Internet data in 2011. But the NSA programs that sweep up foreigners’ data through U.S. servers to pin down potential threats to Americans from abroad continue.

Speaking on CBS’ ”Face the Nation,” former NSA and CIA Director Mike Hayden downplayed the European outrage over the programs, saying they “should look first and find out what their own governments are doing.” But Hayden said the Obama administration should try to head off public criticism by being more open about the top-secret programs so that “people know exactly what it is we are doing in this balance between privacy and security.”

“The more they know, the more comfortable they will feel,” Hayden said. “Frankly, I think we ought to be doing a bit more to explain what it is we’re doing, why, and the very tight safeguards under which we’re operating.”

Hayden also defended a secretive U.S. court that weighs whether to allow the government to seize the Internet and phone records from private companies. The Foreign Intelligence Surveillance Court is made up of federal judges but does not consider objections from defense attorneys in considering the government’s request for records.

Last year, the government asked the court to approve 1,789 applications to spy on foreign intelligence targets, according to a Justice Department notice to Congress dated April 30. The court approved all but one — and that was withdrawn by the government.

Critics have derided the court as a rubber stamp approval for the government, sparking an unusual response last week in The Washington Post by its former chief judge. In a statement to the newspaper, U.S. District Judge Colleen Kollar-Kotelly disputed a draft NSA inspector general’s report that suggested the court collaborated with the executive branch instead of maintaining judicial independence. Kollar-Kotelly was the court’s chief judge from 2002 to 2006, when some of the surveillance programs were underway.

Some European counties have much stronger privacy laws than does the U.S.

In Germany, where criticism of the NSA’s surveillance programs has been particularly vocal, Justice Minister Sabine Leutheusser-Schnarrenberger likened the spying outlined in the Der Spiegel report to “methods used by enemies during the Cold War.” German federal prosecutors are examining whether the reported U.S. electronic surveillance programs broke German laws.

Green Party leaders in the European Parliament called for an immediate investigation into the claims and called for existing U.S.-EU agreements on the exchange of bank transfer and passenger record information to be canceled. Both programs have been labeled as unwarranted infringements of citizens’ privacy by left-wing and libertarian lawmakers in Europe.

The dispute also has jeopardized diplomatic relations between the U.S. and some of it its most unreliable allies, including China, Russia and Ecuador.

[MORE]

.