Thursday, November 27, 2008

Somali Eco Disaster Bred Pirates

Piracy is the earliest form of primitive captialist accumulation. It was a major force historically in the transition from fuedalism to capitalism, and in the expansion of the European colonization of Africa with the slave trade and then with the colonization of America. Today it thrives in Asia and now the Horn of Africa.


Those offering solutions to piracy advoacte armed force, perhaps hiring the privateers like has been done in the past but in this case one wag has suggested that Blackwater the mercenary corporation involved in scandals in Iraq should deal with the Somali pirates. He also suggested that the pirates of Somalia are connected to Iran.


This is as spurious an assertion as those being made that the pirates are connected to the Islamist movement currently savaging Somalia. They are not. Rather their seaside towns have been assualted by the Islamists seeking to gain control of the pirates booty. Especially the Ukrainian ship which contains tank and heavy weapons.


Battling the Somali Pirates: The Return of the Islamists


However, General William Ward noted on Wednesday that despite piracy being a growing issue of global concern, there was no actual proof that the group responsible for the Somali troubles was linked with Islamic terrorism.


A columnist for the Wall Street Journal has suggested we bring back hanging em from the yardarms. Which was a rare occurance in the 18th ceentury and rarely worked. It certainly did not end priacy in the Caribbean and the Carolina's. That was ended by a privateer being hired by the British mercantilists government to hunt them down.


As I wrote in the Opionion Forum at the WSJ in repy to his column; "Your assertion that pirates were hung because they posed a danger when captured is true but not for the reason given, it was because they were free men, while the saliors aboard most ships at the time were pressed men, indentured, and the priates were seen as subversive, capable of undermining the ships owners and captains authority, enough so that having pirates aborad would lead to mutiny. The hanging of pirates did not end piracy, au contraire to your article, rather it was a concerted effort of the British government to end priacy on the American coast and in the Caribean using ex pirates to break up their hold in the Bahamas and North Carolina. Few pirates were hung, most retired. "


It is because I have been reading about pirates , slavery and submarieslately, as you can see in my Shelfari bookshelf to the left. The Republic of Pirates discusses the history of the short lived pirate republic in the Bahama's how it disrupted British, Spanish and French slave trade in the region and the America and how it was defeated. Eric Willaims Salvery and Capitalism is an important ground breaking work explaining how the use of slaves and a slave economy was key to the growth of primitive accumulation of capital for English capitalists, moving them from a mercantilist economy to a full blown capitalist economy and an Imperial empire. Finally the book on submarines explains that at least one 18th Century American advocate for submarine warfare; Robert Fulton promoted it as a way of guarnteeing free trade and free markets using of the submarine to attack exiting navy blockades of ports. Shades of Hagbard Celine.

The irony is that the Horn of Africa was the original source of the historical 18th Century Pirates, in that case the pirates used Madagascar as their base. The pirates whom lived off raiding the slave ships of the European Imperialist nations. Like their Somali counterparts Muslim pirates led Thomas Jefferson to engage in America's first imperialist navel action against the Barbary Coast Pirates.

As Christopher Hitchens writes;

Some of this activity was hostage trading and ransom farming rather than the more labor-intensive horror of the Atlantic trade and the Middle Passage, but it exerted a huge effect on the imagination of the time—and probably on no one more than on Thomas Jefferson. Peering at the paragraph denouncing the American slave trade in his original draft of the Declaration of Independence, later excised, I noticed for the first time that it sarcastically condemned “the Christian King of Great Britain” for engaging in “this piratical warfare, the opprobrium of infidel powers.” The allusion to Barbary practice seemed inescapable. One immediate effect of the American Revolution, however, was to strengthen the hand of those very same North African potentates: roughly speaking, the Maghrebian provinces of the Ottoman Empire that conform to today’s Algeria, Libya, Morocco, and Tunisia. Deprived of Royal Navy protection, American shipping became even more subject than before to the depredations of those who controlled the Strait of Gibraltar. The infant United States had therefore to decide not just upon a question of national honor but upon whether it would stand or fall by free navigation of the seas.
One of the historians of the Barbary conflict, Frank Lambert, argues that the imperative of free trade drove America much more than did any quarrel with Islam or “tyranny,” let alone “terrorism.” He resists any comparison with today’s tormenting confrontations. “The Barbary Wars were primarily about trade, not theology,” he writes. “Rather than being holy wars, they were an extension of America’s War of Independence.”

Piracy arose because of the slave trade on one hand, and because Imperial navies around the world used pressed men, indentured servents. Piracy was the rebellion of the common man against his exploitation, they seized the ships, created a contract form of employment sharing the wealth between them, and ended up creating capitalist democracy on the high seas as Buckminister Fuller wrote in his book Operating Manul For Spaceship Earth

But back to the topic at hand Somali pirates. They are fishermen. Not terrorists. The piracy is the result of the anarchy and free market that is Somalia. But even more so it is the result of the poisioning of the coastal waters by giant shipping companies, poor environmental regulations, lack of UN policing, whereby dumping of toxic waste has devastated the fishing stocks. Fishing stocks that were overfished not by Somali's but by European trawlers. So overfishing and toxic dumping led to the Somali fishermen to take up piracy. In true pirate tradition they are more interested in the booty than harming the hostages. Whom they have exchanged for ransom. And they even have a Canadian connection.


With the world waiting and watching, one of the pirates calling himself Daybed spoke to the BBC via telephone from the Sirius Star. He says the pirates are not negotiating with the supertanker's owners, instead they're dealing with intermediaries and he insists they "cannot be trusted.

"DAYBED (translated): We're fully aware of the consequences, but the world has to realise the problems we're facing here at home. There's been no peace for 18 years, there's no life here. The last resource Somali's have is the sea, but foreign fishing trawlers have come here to plunder our fish. How can they allow the Somali people to die, it's not possible. This is what drove us to piracy, we have to do anything we can to survive. The lack of government causes problems, if we solve the problem with the government, everything would be solved.

Ex-Somali Army Colonel Mohamed Nureh Abdulle lives in Harardhere - the town closest to where the hijacked Saudi oil tanker, Sirius Star is moored. He tells the BBC, via phone from his home, that the town's residents are more concerned about the apparent dumping of toxic waste than piracy.
You know, our problem is not piracy. It is illegal dumping.
These problems have been going for sometime and the world knows about it. The Americans have been here in the region for a long time now - they know about the pollution.
Instead, no, the world is only talking about the pirates and the money involved.


Meanwhile, there has been something else going on and it has been going on for years. There are many dumpings made in our sea, so much rubbish.
It is dumped in our seas and it washes up on our coastline and spreads into our area.


Our community used to rely on fishing. But now no-one fishes. You see, a lot of foreign ships were coming and they were fishing heavily - their big nets would wipe out everything, even the fishermen's equipment. They could not compete.


THE PIRATE CAPITAL By David Pratt

IT was almost dusk and the sun was sinking on the horizon. A few hundred yards offshore, the freighter that had earlier dropped anchor was swarming with local Somali men. The ship's crew, however, were nowhere to be seen.
Some of the Somalis carried Kalashnikovs and stood guard, while others, like worker ants, busied themselves loading the ship's cargo on to barges that were then hauled to the beach by relays of sweating men pulling on ropes.
Noticing my curiosity, one of the staff at the tumbledown guesthouse in the port town of Merka where I was staying decided to offer an explanation as to what I was witnessing.
"Our coastguards," he said with a mischievous grin. "Some of them used to be fishermen, but today, with the war and no law or government, they have a more profitable catch," nodding towards the rusting hulk sitting offshore.
Until that moment, nothing I'd seen had struck me as being out of the ordinary. At Merka and other port towns along Somalia's coastline, ships often came close inshore to unload. As for the gunmen, Somalia was awash with weapons and arms smugglers. A few years ago, when I first went to the capital, Mogadishu, and visited its infamous "sky shooters" weapons market in the Bakara district, an AK-47 assault rifle cost a mere $150. Mortars, grenade launchers, heavy machine guns - all were readily available here.
As the ultimate "failed state", Somalia has been exposed to more than its fair share of man's evil ways. It has been neglected for years by the international community and let down by its fellow African nations. It is wracked with Islamic terrorism, suffering a largely ignored humanitarian crisis and is home to widespread organised crime, including the piracy that I witnessed in Merka that day that has now become a multi-million dollar business.
With their biggest hijacking yet last week, of an oil tanker, Somalia's pirates have suddenly drawn world attention to an ancient trade whose only recognisable modern-day practitioners until recently were Jack Sparrow and the crew of the Black Pearl in the Pirates of the Caribbean Hollywood movie series.
There are now serious concerns over the fate of crew members taken hostage by the Somali pirates. There is considerable disquiet, too, on behalf of shipping companies over the huge losses incurred. But pressing as these questions are, there are others regarding Somalia itself that need addressing.
For a start, why is it that piracy has flourished here? Who are these ocean-going bandits and how has their trade affected the local communities? More significantly perhaps, to what extent if any, is this vast money-making criminal activity bound up with Islamic terrorist groups such as al-Shabab that daily tighten their grip on Somalia?


In this impoverished country long devoid of solid institutions or individuals worth looking up to, the pirates and in some cases even the insurgents have even become heroes with virtually celebrity status.
In pirate communities, the trophies gleaned from their trade sit brashly juxtaposed against the poverty. In pirate boom towns such as Harardhere, Eyl and Bosaso on Somalia's northern coast, along the breakaway Somali statelet of Puntland, sprawling new-build stone houses nestle next to shacks made of sticks and discarded plastic bags.
Like western urban drug barons, pirates cruise in luxury cars through unimaginable squalor. However, in these humid coastal dens, where life expectancy is just 46 years and a quarter of children die before they reach five, not everyone sees the pirates in a negative light.
"The pirates depend on us, and we benefit from them," said Sahra Sheik Dahir, a shop owner in Harardhere, the nearest village to where the hijacked Saudi Arabian supertanker Sirius Star is now anchored.
In these pirate-controlled areas of northern Somalia, people's hopes of a better future are firmly pinned on the prevailing maritime gangsterism.
"There are more shops and business is booming because of the piracy," said Sugule Dahir, who runs a clothing shop in Eyl. "Internet cafes and telephone shops have opened, and people are just happier than before."
In Harardhere, residents are said to have celebrated as the Sirius Star dropped anchor last week.
Businessmen gathered cigarettes, food and soft drinks, setting up kiosks for the pirates who come to shore to resupply almost daily.
"They always take things without paying and we put them into the book of debts," said Dahir. "When they get the ransom money, they pay us a lot."
Among the big men who run the pirate syndicates are an army of negotiators, spokesmen and accountants. The pirates take no chances with the cash, giving "clerks" the task of making sure the banknotes are not counterfeit, using machines like those housed in foreign exchange bureaux worldwide.
Ask Somalia's pirates why they turned to this lucrative trade and they will give a one-word answer: "Survival." They will tell of how, following the collapse of the government in 1991, their fishing grounds were opened to illegal harvesting by foreign fishing vessels from all corners of the world, and how the dumping of toxic waste destroyed so much of their livelihood. To some extent this is true, but some analysts argue it merely serves as a moral cover for their criminal activities.
More worrying perhaps is that the piracy trade might help fund and arm Islamic terrorists in the region.
Recent United Nations reports on arms smuggling in the Horn of Africa, suggest that groups like al-Shabab may have begun to use piracy as a means of bringing in arms or generating cash for weapons. But so far the evidence is sparse, and the pirates' commercial largesse seems directed mainly at those within their clan, families and friends.
Iqbal Jhazbhay, a Somali expert at the University of South Africa in Tshwane, said: "There may be some loose elements among the Islamist groups that have tie-ups with the pirates, because the movement is fractured into six or seven different groups, and each may have its own problems getting funding."
Somalia's recent history is in great part the tale of grave miscalculations made by foreigners in a very foreign land. Here the margins between death and survival are the narrowest imaginable. Given such unforgiving odds, is it really surprising that piracy is considered a sure bet to a better life?
"Regardless of how the money is coming in, legally or illegally, I can say it has started a life in our town," said Shamso Moalim, 36, a mother of five from Harardhere. "Our children are not worrying about food now, and they go to Islamic schools in the morning and play soccer in the afternoon. They are happy
."

SEE;
Somalia

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Mayor Of Kabul Says Get Out

Oh dear it seems that Hamid Karzai the Mayor of Kabul, since he can't travel outside of the city and has no base anywhere else in Afghanistan, has finally had it with U.S. and NATO forces fighting in Kandahar. Seems that the poor Mayor who is Pashtun and is running for re-election as the U.S. puppet President, is exerting some independence. Criticizing the very folks who are doing his fighting for him.

Afghan security at a seven-year low

Afghanistan demands 'timeline' for end of military intervention

His corrupt government of warlords, opium growers, and former Taliban, have made no inroads in developing real governance over the country. So facing the simple fact that Kandahar is the Pashtun stronghold, and Karzai is Pashtun, he is calling on us to all leave. Heck that's what the NDP and the left in Canada has been saying for the past two years.

Karzai says US, NATO created 'parallel' government

This is a phony war. The supposed development of a liberal capitalist economy, with liberal bourgoise enlightment ideals like education for women and girls, human rights, the end of torture and capital punishment, freedom of speech and religion, none of this exists in this failed Islamic State.

So what the heck are we there fighting for? Simply put so that this U.S. puppet the Mayor of Kabul can keep his job and keep his crony goverment in power sharing the spoils of war and international aid. And of course once again Karzai bleames others while the reality is that his is a corrupt regime.

Karzai fires prominent minister

'Nobody supports the Taliban, but people hate the government'

Mr. Karzai also blamed Afghanistan's endemic corruption in part on foreign contractors who "contract, then subcontract, and then another subcontract and then perhaps another subcontract." The process "means immense possibilities of major corruption."

The problems of Afghanistan are immense, at the heart of which lies the issue of trust. Time and again, in interviews with senior Western officials, I heard deep scepticism voiced about the ability of Karzai's government to use aid money wisely and effectively. As even the Afghan economics minister, Muhammed Jalil Shams, candidly admitted to me, for every $100 of Western aid given, only $40 finds its way to the intended projects. The rest disappears into the pockets of unscrupulous government officials. It is worth noting too that corruption surrounding the heroin trade, worth $3 billion a year, has further paralysed the government. A recent New York Times report identified the president's brother, Ahmed Wali Karzai, as a major beneficiary of the illegal trade. 'Corruption is the biggest problem facing Afghanistan,' Shams said. He went on to make the point that giving money to the Afghan government is still better than giving it to Western contractors to perform reconstruction jobs, when only 25 per cent of the money finds its way into the local Afghan community, but that is a tough argument to make to nervous aid donors and potential investors.

A recent survey conducted by the Asia Foundation is a good place to start. More than 6,500 Afghans were interviewed from all 34 of the country's provinces. It was the fourth public opinion poll conducted by the foundation since 2004, so it provides valuable perspective of the national mood of Afghans over time. Three quarters of those polled cite corruption as a major problem, especially at the highest levels of government. Fifty percent say it affects their daily lives. President Hamid Karzai's recent re-shuffling of his cabinet was intended to address this concern, which has undermined public confidence in his leadership.

Situation normal, all fouled up
Kabul businessman Nasrullah Rahmati rarely travels without a bodyguard but says his biggest security threat is not suicide bombers. "I have been robbed at gunpoint by our own police and I am more scared of them than I am of the Taliban," he said in his factory, where 250 workers make uniforms.
Afghanistan's politicians and government officials are as corrupt as the police, locals say, and a striking feature of Kabul is the "poppy palaces", mansions being built by strangely wealthy locals in a country that ranks behind only Somalia on the UN's list of the poorest and most dysfunctional countries. A British official working against the heroin trade jokes that the mansions are triumphs of "narchitecture". What is not so funny is the corrosive effect open corruption and poor governance have on the Afghan Government's legitimacy.
It seems to be conventional wisdom in Kabul that President Hamid Karzai's brother Ahmed Wali Karzai is an important drug dealer, a view many US officials privately share. Installed by the Americans, then endorsed in national elections, Hamid Karzai is likely to retain US support in elections due next year despite his ineffective rule. Karzai certainly has been a disappointment to the relatively few educated liberals in Afghanistan, who say he is not the champion of liberal democracy that he seems to many in the West. He has not championed women's rights with any great vigour and local journalist union officials say he warned them some time ago that his support for free speech did not extend to issues relating to the Islamic faith. When death sentences were pursued against two men for publishing unapproved translations of the Koran, the President offered only a muted response.



Despite all the vain glory announcements by those who support this war, and by our Government and military, we are not defending a liberal capitalist state, women still wear burkhas, child brides (female and male) are still traded amongst villagers, local patriarchs rule and dominate the culture, Islamic courts jail Christians as well as editors who speak out,
women are attacked for going to school, girls schools are burned, attacks on women have increased, opium production has increased, Pashtuns are fighting against our troops and will continue to as they see us as invaders.

Strict Islamic rules creep their way back into Afghans' lives

In Afghanistan, Islamists' influence widens

UN rights chief condemns Afghan executions

Women lose in deal made with devil

Afghan justice: 'They should die'

The perils of treating women in Afghanistan

Food Crisis, Poverty Spur Child Marriages, Grim Realities for Girls

A woman's lot
Violence and other abuse of Afghan women is enough to make you wonder what we're there fighting for, reports Paul McGeough from Kabul.
International human rights officials in Kabul are privately explosive about what they see as a marked slide in human rights generally, but for women in particular - especially in light of demands by officials that they must play the glad game. "Can't be all doom and gloom," a senior foreign official regularly exhorts his frustrated staff. Amid the many mistakes in Afghanistan, there have been two constants. One is the Western obsession with winning a war while forgetting the welfare of the Afghan people - particularly women. The other is reducing the equation to a simplistic contest between the "good" President Hamid Karzai and the "bad" Taliban. For women, this pincers grip has knocked their rights to the bottom of the agenda. "Karzai operates like a mafia crook. His regime is corrupt, brutal and repressive and it is based on the President's umpteen deals with the devil - fundamentalists, warlords and criminals," a senior human rights figure told me privately this week. "But Karzai never acts alone. His regime was supposed to be different to the Taliban… and the Australian and the French and all the other governments [still] back him."
Karzai lurches from one crooked or corrupt power base to the next - one day pardoning brutal rapists and saying nothing about it; the next celebrating the execution of small-time criminals while the Mr Bigs of the criminal and political worlds are untouchable.



The Pashtun are delibertely identified by the Western forces and their media as Taliban, when in fact they are not. But they are fighting us as Karzai well knows, which is why he has called for peace talks and has called for U.S. and NATO forces to stop doing reconstruction, invading villagers homes and demanding a time line for so called victory over the Taliban. Which will never happen. Because the Taliban do not exist, who we are fighting are the Pashtun peoples of Southern Afghanistan.

Opium war impasse
About 250 of them had come to hear Governor Asadullah Hamdam's arguments about why they should give up growing opium poppies which, for many, were their primary source of income.
Then one elder from the village of Sorkh Murgab stood up and said what many of the farmers must have been thinking.
"The people don't have jobs," he said, according to notes taken by US government field officer Eric Bone during the November 26 meeting last year.
"The (Government) promised projects but we haven't seen them," the elder said. "The (Government tells us) there is not enough security to do projects. In the daytime the ISAF (the International Security Assistance Force, comprising Australian and Dutch troops) is around but at night the Taliban come and force us to cultivate poppy. We have the poorest region, who can we listen to?"
Another elder stood up and joined the fray. "Assistance in the past two years has only been to the provincial administration, not to us. The people have not received assistance ... when people don't have jobs they go to the Taliban."
These exchanges, contained in a series of confidential documents written by anti-narcotic officials in Tarin Kowt and obtained by The Australian, reveal the magnitude of the task faced by Australia and the West in seeking to kill Afghanistan's opium trade, which reaps more than $4billion a year, almost half of Afghanistan's total income.


Karzai offers Taliban leader 'protection' for peace

Afghan president wishes he could down US planes

Britain 'bribes Afghans to fight Taleban'
Divided tribes make it hard to find elders who will helpTHE tribes in Helmand province have been heavily fractured by decades of fighting, and balance of power is now inextricably linked to the drugs trade.

An Interview About Afghani Women's Rights and Rebuilding in the Face of Politics
Homemakers Magazine editor-in-chief Kathy Ullyott reveals the complex situation the progress of women's rights are in the face of the presence of Western countries, Afghani politics, and nation rebuilding. This is the first of a three-part interview.
SD: Yes, exactly, the period of jihad against the Soviet Union, which we know was covertly backed by the U.S., the civil war, the emergence of the Taliban who were essentially let loose by Pakistan to make their way north…

KU: It’s very complicated, and that’s something else I discovered, and I still don’t think I’ve answered your question – as you say, it’s a big thing and impossible to get a handle on, some I realized there while talking to people. Here we think of the Taliban as some opposing force, but there the Taliban is really just the most organized of the many insurgent groups with different interests. Some of them are the Taliban, but others are warlords in a certain area, in a very ancient and tribal culture going back hundreds of years. Some of these are very vicious rivalries spanning loyalties. The Taliban tend to claim responsibility for any attacks, but that’s just PR. A lot of attacks have nothing to do with the Taliban. It’s really a very amorphous thing and very difficult to fight. And I’m not a military expert by any stretch of the imagination. But it makes the whole question very complex…
SD: People don’t realize the extent of the power of the warlords or how far it extends into rural areas…
KU: Totally – into the rural areas and into the government as well. The women I spoke to, the MP, and Horia…one of the greatest frustrations of the people there is that the government itself is so corrupt. And we’ve seen reports of that. That’s one of the things making progress so difficult. And of the things that created so much pessimism in the intervening years is that people within the country expected that (the ousting of the Taliban) was going to be a big change and that life was going to get better. And they are continuing to see that these warlords exercise great control over the government. The opium trade is one such situation. They (citizens) know that there are ‘bad guys’ still in power, the police force is still horribly corrupt, yet they had hoped-with the involvement of NATO – that the more developed world was going to help them get rid of this stuff. But it’s much harder than they expected.

We are not battling Islam we are battling a medival patriarchical fuedal culture which we are trying to transform into a liberal capitalist democracy. We are failing just like the Russians and before them the British.

Tariq Ali talks tough
The West doesn’t totally appreciate one simple factor: that the Afghan people do not like being occupied by foreign powers,” he said. “Most people don’t like being occupied by foreign powers.” Ali argued that Hamid Karzai’s legitimacy is complicated due to Karzai’s construction on prime Kabul property. He added that a New York Times report links his brother to drug smuggling (Karzai has denied the charges).

Retired general looks back on Russia's Afghan war
Sergei L. Loiko / Los Angeles Times
THE GENERAL'S VIEW: Retired Lt. Gen. Ruslan Aushev says the key to U.S. success would be to help set up a sovereign government. Moscow and Washington have made the same mistakes in their conflicts there, says Ruslan Aushev. He offers advice for the U.S. as it enters the eighth year of war.We said, "Afghans, you are living according to the Soviet way of life, where religion is separated from the state, mullahs should be expelled, religion is the opiate of the people. You'll be living in collective farms. You will have pioneer camps, Comsomol [youth] organizations, and so on and so forth." The Soviet way of life in a country that still lives in the Dark Ages!And what did you say? You said, "We are giving you democracy." They cannot even translate the term properly. Under us there was a lot of corruption, and today there's a lot of corruption. Neither under you nor under us did an ordinary person get anything


There has been massive internal displacement, especially in the south as a result of the insurgency - which has intensified since 2006. The number of people being killed in the Afghan conflict has soared in recent years as violence has returned to levels not seen since the Taleban were driven from power in 2001.
The UN says that from January to August 2008 1,445 civilians were killed - a rise of 39% on the same period for 2007. Most deaths were attributed to the Taleban but the number of civilians killed by pro-government forces - the majority in air strikes - also rose sharply. Afghan and foreign forces say hundreds of militants have also been killed - it is impossible to verify precise numbers. Military fatalities among foreign and Afghan forces have also soared.

A number of analysts also say the United States and the broad coalition of international actors in Afghanistan will have to vastly improve reconstruction efforts that have failed to resolve severe problems since the Taliban's ouster in 2001. Drought, poverty, and persistent unemployment (World Factbook) in one of the world's poorest countries now mix with a resurgent Taliban and al-Qaeda as chief concerns for the international community. Aid organizations are warning food shortages and early snows could leave as many as eight million Afghans starving this winter (IRIN) -- 30 percent of the population. Some observers now say famine will outpace violence as Afghanistan's top crisis in coming months. "Whatever the effect of insurgent violence on the UN-mandated mission in Afghanistan," the London-based Royal United Services Institute said in an October briefing, "it is widespread hunger and malnutrition that will place a greater obstacle in its progress."


SEE:
Afghanistan the UNwinnable war
Afghanistan A Failed State


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Wednesday, November 26, 2008

Subsidizing Criminal Capitalism

Why are we bailing these guys out with taxpayers money while they are guilty of being criminal capitalists. Of course hidden in their bad loan charges will be the costs of criminal charges as well. And in order to offset your criminal charges you can use loosy goosy accounting standards to cook the books. Wait a minute isn't that how we got into this mess in the first place? And there is still no real transparency in the operations of Canada's banks. A profit is still a profit and CEO stock options have not been cut back.

Canada Bails out its banks to the tune of over $1650 for every man women and child. Oh, and ATM fees are going up.

Ottawa to buy $50B in mortgages, hopes to spur loans

Royal Bank of Canada agrees to $10.7M settlement
The Justice Department said Tuesday that RBC Mortgage Co., a subsidiary of the Royal Bank of Canada, has agreed to pay the U.S. more than $10.7 million to settle allegations that the company falsified loan documentation.The Justice Department said the allegations concerned 219 federally insured loans for mortgages submitted to the Federal Housing Administration of the Department of Housing and Urban Development between 2001 and 2005.
CHICAGO - A Canadian bank holding company that purchased a former mortgage company in Rockford will pay the U.S. nearly $11 million to settle claims over bad loans. RBC Mortgage, formerly known as Prism Mortgage, had a lending office in Rockford. Three RBC Mortgage loan officers and 22 other people were convicted of knowlingly setting up 219 loans that failed in the Rockford and Freeport areas between February 2001 and April 2004. Each loan resulted in foreclosure causing financial loss to the government.
Bank of America, Royal Bank of Canada to bail out holders of auction-rate securities
Bank of America Corp. and Royal Bank of Canada will bail out customers stuck with $10.3 billion in auction-rate securities and pay fines to settle state and federal claims that they misled investors in selling the products. Bank of America will buy back $4.5 billion of the securities and pay a $50-million fine in agreements with the Securities and Exchange Commission and New York Atty. Gen. Andrew Cuomo that "closely mirror" a deal last month with Massachusetts. The bank will help clients dispose of an additional $5 billion, the SEC said. Royal Bank of Canada said it agreed to buy $850 million of the debt and pay a $9.8-million fine.Companies including Citigroup Inc., UBS and Merrill Lynch & Co. have agreed to repurchase more than $50 billion in debt to settle claims they touted the instruments as safe, cash-like investments.
RBC takes $1.6B hit on bad loans
RBC said it was avoiding even bigger charges by taking advantage of new looser accounting standards to reclassify impaired assets so the losses would not have to be acknowledged.
Charges cut profit, but RBC expects to make $1.1B in Q4
Gordon Nixon • Born, Jan. 25, 1957, Montreal • Chief executive officer, Royal Bank of Canada (TSX: RY)Years at company: 21 • Age: 51
2007 Earns $8,767,229 in compensation and bonus. Realizes gain of $29,033,072 on exercised stock options. “I think the industry, all of us, anticipated the ability of the markets to recover from those events and to move out of it much more quickly than it has actually happened,” Nixon says. “I think we’ve misjudged the severity of the liquidity crisis.”

Toronto Domion Bank Ex-Commerce Bank CEO to pay $4 mln to settle probe
WASHINGTON, Nov 17 (Reuters) - Vernon Hill, former chief executive of Commerce Bancorp Inc, agreed to pay $4 million to settle allegations of unsafe banking practices, regulators said on Monday.
Commerce forced Hill out in June 2007 after regulators complained about dealings between the bank and partnerships controlled by Hill as well as an architectural design firm run by Hill's wife, Shirley.
Under the settlement with the U.S. Office of the Comptroller of the Currency (OCC),
Hill must also pay $4 million to TD Bank, which acquired Commerce in March. But the iconoclastic banker incurred no fines or prohibitions in the settlement, paving the way for the launch of Metro Bank, a new venture based on the Commerce model of service and convenience. Meanwhile, a U.S. District Court judge in Camden issued an injunction Tuesday forbidding Hill to use materials reflecting Commerce signage and colors at a banking conference in Orlando, Fla. The injunction was sought by TD Bank, whose Canadian parent bank acquired Cherry Hill-based Commerce in March for $8.5 billion. The OCC said Hill failed to comply with sound corporate governance principles related to real estate purchases, leases and joint real estate development transactions involving Commerce that financially benefited him.The bank announced in August 2007 that Hill would receive an $11 million severance payment, subject to regulatory approval. After resigning, Hill started a private investment group that will invest in financial industry stocks. This past summer, he doled out $6 million to become and investor and consultant in Philadelphia’s Republic First Bancorp, which announced last week that it would be acquired by former Commerce affiliate Pennsylvania Commerce Bancorp of Harrisburg, Pa., for $109 million.
TD's capital ratio fell significantly on Nov. 1 under global banking rules, Basel II, that require it to change the way it counts its stake in TD Ameritrade. The decision to issue equity is a dramatic about-face for Mr. Clark, who told analysts on a conference call just Thursday that “raising common equity would be extremely difficult” at the moment. He signalled that the bank would rather increase its capital levels using other methods, such as issuing preferred shares. As a result, the bank had to count 50 per cent of its $4.6-billion stake in TD Ameritrade in its ratio. “That meant we immediately lost $2.3-billion of Tier 1 capital, and that's what brought our Tier 1 capital ratio down,” Mr. Clark said. TD had already raised $1.25-billion of Tier 1 capital during the quarter, Mr. Mihelic noted.TD still has room to issue “more than a couple billion dollars of preferred shares under the rules,” Mr. Clark said.The decision to issue common shares was made yesterday afternoon, because markets improved since Thursday and investors were signalling they wanted a higher capital ratio, he said. TD last week disclosed a surprising $350-million after-tax writedown from credit losses and further investment declines that will not show up in results because of new accounting rules.

Bank of Montreal Rogue gas trader admits to fraud A disgraced natural gas trader at the centre of Bank of Montreal's $853 million commodity trading scandal has pleaded guilty to intentionally mismarking his trading book in a "criminal scheme" to pad his bonus, Manhattan's district attorney announced yesterday ... The charges stem from a joint investigation by the U.S. Attorney's Office for the Southern District of New York and the New York Office of the FBI into Bank of Montreal's natural gas trading losses, which topped $850 million
BMO net rises 24%; dividend is frozen
BMO's high yield should set off warning bells Globe and Mail
First, those results weren't as good as they looked. The headlines say earnings were up 22 per cent to $1.06 a share. Nice, but considering, for example, that the tax rate was not low, not zero but negative, you have to take that with a grain of salt. Reclassifying assets as available for sale added $123-million to the bottom line. Only a very recent rule change allowed that - thank you regulators. Trading revenues were abnormally high too. And here's another reason: no one understands how a modern bank works. During yesterday's conference call, analysts were scratching their heads trying to understand the repercussions of the Apex commercial paper trust, which the bank sponsors; BMO has about $1.6-billion on the line there. If the investments and its attendant risks are hard for professional and experienced analysts to follow, they're practically incomprehensible for the average retail investor - and even some professional investors - to understand as they salivate over a juicy yield.
Bank of Montreal profit climbs The Gazette (Montreal)
Quarterly profit rose 24 per cent at the Bank of Montreal, helped by tax recoveries, higher profit at its Canadian retail banking unit and new accounting rules,
Bank of Montreal Profit Rises on Consumer Banking
Bank of Montreal, Canada’s fourth- biggest bank, said higher revenue from consumer banking helped boost fourth-quarter profit by 24 percent from a year ago, when it had debt writedowns and trading losses. Canadian consumer-banking profit rose 20 percent to C$344 million from a year earlier as personal loans rose 21 percent and it added more mortgages. Commercial loans and credit-card revenue also rose from a year earlier. Investment-banking profit soared to C$285 million from C$46 million a year earlier, when the firm had C$275 million in losses from trading, bad bets on natural-gas options contracts and writedowns on debt investments.
BMO head urges Ottawa to act decisively
Bank chiefs on Bay Street are urging Ottawa to commit to making a major injection of cash into the economy to help stem a rising tide of bad loans, after internal bank figures showed Canadians were increasingly struggling to make payments on money they've borrowed. Bill Downe, chief executive of BMO Financial, said strong and timely fiscal stimulus was needed from government, arguing it would be "positive for employment" and facilitate "constructive investment," while reviving growth for banks.

Let's not bank on the banks
Given this risk and the serious economic consequences of the banking crisis, it may be appropriate that premiere events at the Air Canada Centre are becoming notable for the scarcity of bank executives, who earn up to 500 times more than arena staff. Mark Carney, governor of the Bank of Canada, said yesterday he had been somewhat troubled by the nature of his conversations with chief executives during the last five years. He suggested in a BBC interview that bank chiefs should perhaps have spent more time reviewing their loan portfolios and less time thinking about the "opera or the ski slopes."
Carney signals more rate cuts
In a sign that the global credit crisis is seeping across Canada's borders, Bank of Canada Governor Mark Carney warned yesterday that the country "has been importantly affected by global events" and hinted that another interest rate cut may be in the offing. Pointing to "a tightening in credit conditions," Carney said in a speech to the Canada-United Kingdom Chamber of Commerce in London that "the risks to growth and inflation in Canada identified (in October) appear to have shifted to the downside." He said the crisis has essentially ended for Canada's banks, and short of a complete global market failure, he expects financial and credit markets to improve in Canada
Canada Purchases C$1.05 Billion of Non-Mortgage Debt (Update1)
By Alexandre Deslongchamps and Greg Quinn
Nov. 24 (Bloomberg) -- The Bank of Canada bought C$1.05 billion ($839 million) of securities from investors, less than the C$2 billion it offered to purchase, in an effort to restore normal trading in credit markets.
The central bank will hold the non-mortgage loan portfolio assets as collateral for 28-day loans. The bank has offered to buy C$8 billion or more of such securities by Dec. 9.
Bank of Canada Governor
Mark Carney and Finance Minister Jim Flaherty said last week in separate speeches that they will take whatever steps are needed to shore up the economy and help mitigate the global credit crisis. The central bank has another program under which it will inject up to C$35 billion into the financial system this year through loans to major bond dealers.
Tomorrow, the Bank of Canada will offer loans of C$6 billion to major bond dealers, instead of the minimum of C$4 billion it announced on Nov. 3. On Nov. 27, the central bank will
sell C$1.45 billion of treasury bills, to offset the increased value of assets on its books from its special loans

Sympathy slight for banking blues
The Royal Bank of Canada (RBC), for instance, announced yesterday that its estimated profits for the last three months plunged a frightful $200 million from a year ago. That left the nation's largest bank with a paltry profit of only $1.1 billion -- for its worst quarter of the year.
Putting it another way for those of us who can't quite fathom a billion of anything, the so-called credit crisis engulfing the globe has reduced the Royal to making a little over $12 million a day, including weekends when its branches aren't even open for business. One can only imagine the terminal indigestion all this must be causing in the bank's executive dining room these days.
Only a year ago, the Royal was boasting "a record-busting profit of almost $5.5 billion (for 2007), achieving the highest annual income ever for a Canadian bank despite global capital-market turmoil that has engulfed the entire industry." The Royal, for instance, reports a tidy $330-million increase in revenues over the past three months from an improved credit spread.

Turns out that while most public and media attention has been focused on the near-collapse of the financial system in the U.S. and overseas, the highly regulated Canadian big banks have escaped relatively unscathed. No matter. Nothing like a good global banking scare to sneak through a bit of consumer gouging here at home.
It started in the middle of the recent federal election when the Bank of Canada unexpectedly cut its key lending rate by a full half-percentage point after the first wave of the market meltdown.
The move was intended precisely to get the Canadian banks to cut their lending rates to consumers and businesses in an effort to keep the economy rolling.
But a funny thing happened on the way to the banks -- they decided to cut their rates by only a quarter-point, and keep the rest.
This was not an isolated bit of banking robbery.
According to Bank of Canada figures, its key lending rate has declined 45 per cent from a year ago, from 4.5 per cent to 2.5 per cent. But the prime business rate that banks lend money to their best commercial customers has only dropped 33 per cent -- from six per cent to four per cent.
But no one is getting burned more than consumers and, in particular, homeowners.
In the year that the central bank rate has dropped 45 per cent, the banks have passed along to consumers a tiny fraction of the savings.
For example, according to the Bank of Canada, the average five-year conventional mortgage that was 7.39 per cent a year ago, was being offered to homeowners in October at 7.20 per cent.
Even the average one-year mortgage dropped barely 12 per cent in the year, from an average 7.2 per cent to only 6.35 per cent in October.
All of which clearly helps to explain why Stephen Harper's government has generously provided the big banks with $75 billion of public money with which to further gouge, um, the same public. Finance Minister Jim Flaherty said the move would help average Canadians by "making consumer and mortgage loans more affordable."


SEE:
UBScandal
Casino Capitalism
Money Laundering Canadian Style
Bank Theft
Credit Card Fraud
The Cone of Silence Bank Presidents and the RCMP
RBC Centre
Greedy Banks
BMO More ATM's Less People
A Day in the Life of Corporate Criminals

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Economics 101

A rose is a rose, a recession is a recession, no need to get 'technical' about it.
'Technical' recession possible: Flaherty
Prime Minister Harper says Canada is facing a "technical recession"
Canada to be hit by recession, 7.5% jobless rate, OECD warns
Oshawa's 96% jump in employment insurance recipients leads country
Number of Canadians on EI rises 3.9 per cent from last year: StatsCan
More working Canadians using food banks: study
A recession refers to economic contraction, a real decline in economic output as measured by the change in gross domestic product. Most recently, Canada experienced recessions in the mid-1970s and the early 1980s and 1990s. In each case, real GDP shrank and unemployment rates climbed into double digits.

SEE:
Common Sense

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Tuesday, November 25, 2008

Common Sense

While Harper, Flaherty and Farmer Ed continue to wear rose coloured blinders denying the obvious; that we are in a recession, you and I know better.

Confidence falls
Reuters; Canwest News

Falling home prices and the worst bear market since the Great Depression combined to drive consumer confidence down further in November, the Conference Board of Canada said. The independent research association said confidence fell 2.9 points to 71, a level last reached in 1982 and 1990, respectively. Both were periods of recession. Consumers were gloomier about their personal financial situation than in October, with more than one-quarter saying their families were worse off than they were six months ago.

Confidence plunges on Prairies
Markus Ermisch, Sun Media
Tue, November 25, 2008
The Prairie provinces led the nation's tumble in consumer confidence this month, says the latest Conference Board of Canada consumer confidence index.
The Ottawa-based think tank reported yesterday Alberta, Saskatchewan and Manitoba collectively posted a 7.4-point drop in consumer confidence.
During the November survey, conducted between Nov. 6 and Nov. 13, 15.1% of the respondents said they were better of financially today than six months ago, a drop of 1.4% from October.
Meanwhile, 25.4% said they were worse off now, up 2.5% from October.
The Conference Board treats the Prairie provinces as one region and doesn't calculate individual results for each of the three provinces.
Alberta, however, which generates much of its income from natural resources, has also been impacted by collapsing commodity prices, which saw oil prices plunge from heights above US$145 a barrel this summer to less than $50 last week.
As a result of this unprecedented price contraction, economists at BMO Capital Markets forecast provincial GDP to grow 0.3% next year, down from the 2% growth estimated for 2008.
This means Alberta would be near the bottom of national growth chart.


Gloom deepens among consumers as recession fears grow
OTTAWA — One of the last pillars of Canada's economic foundations may be crumbling as the latest survey shows consumer confidence eroding to a new quarter-century low.
The Conference Board's monthly poll of consumers found spreading gloom with the index drooping 2.9 points this month to 71, a depth not seen since the intense recession of the early 1980s.
"There's no doubt the level of the consumer confidence index is at recessionary levels and that's worrisome," said Paul Darby, an economist at the Ottawa think-tank.
"It's also now the case that that low sentiment has spread across the country - we've seen a major drop in consumer confidence in the Prairies as well."
The board's latest poll, conducted between Nov. 6 and Nov. 13, found the largest one-month decline on record for consumer sentiment in the Prairie region. Confidence also sagged in British Columbia, Ontario and Quebec, but edged up slightly in Atlantic Canada.
Nationally, only 9.7 per cent of those polled predicted there would be more jobs available in their communities in the next six months, the weakest employment expectation ever recorded by the Conference Board survey.
In the past few months, Canadians have seen the pillars of prosperity eroding or collapsing - exports, commodity prices, stock markets, housing, and most recently labour markets - but consumer spending, particularly for automobiles, has held up relatively well.
Darby believes the survey indicates Canadians may be getting ready to hold off on big purchases.
There is disagreement among economists about whether consumer confidence surveys accurately predict behaviour, but there may be more reality than usual in the latest survey, said TD Bank economist Don Drummond.
That's because the index dropped at a time when gasoline prices came sharply down, which he said was unusual.
"To have it fall when gasoline prices are falling may be more telling, because we've found there is a tight inverse relation between gas prices and consumer confidence," Drummond explained.
A major reason for the loss of confidence is the tumble in the stock market, which fell to barely half its summer peak, and growing fears that Canada is following the U.S. into bleak economic times.
In recent days, Prime Minister Stephen Harper, Finance Minister Jim Flaherty and Bank of Canada governor Mark Carney have said Canada may be in or headed into a recession.
"The most recent private-sector forecasts suggest the strong possibility of a technical recession ... yes, I am surprised by this," Harper said from Peru on Sunday. Only two months ago, he had said the worst was over for the Canadian economy.
What has surprised many is the speed of the changes that have turned expectations on their head.
Oil, a mainstay of the Canadian economy, has gone from US$147 a barrel to $50 in a matter of months, forcing many oilsands producers to scale back projects in northern Alberta and taking billions of dollars out of the oil economy.
The North American automakers have gone from troubled to teetering on the brink of bankruptcy, with layoffs expected to intensify.
In his report, Darby found one hint of hope - 25.9 per cent of those polled said now is a good time to make a major purchase, slightly more than in October.
But he noted it was a minuscule change, and likely means only that people are anticipating bargains on purchases they make now.
The Conference Board poll claims a 95 per cent probability of its index reading - set at 100 in 2002 - being accurate within 2.2 points.

SEE
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Monday, November 24, 2008

Neo-Cons Have No New Ideas

The neo-con federal government of Harper and Flaherty have no new ideas, just the same old ideology. After lambasing Harper for his flip flop on the deficit, and his denial that Canada is in a recession, Don Martin in his column today says;

"Be it campaign deception or denial, having tens of thousands suddenly face the loss of jobs, savings and perhaps their homes has twisted Harper's old beliefs into policy pretzels. For this Conservative government, the age of ideology is over -- technically and realistically."

Unfortunately Don the Conservative Government has not given up on its neo-con ideology as we witness in this announcement by Jim Flaherty.

Flaherty aims to boost economy with P3 projects
Ottawa wants to build billions of dollars of bridges, hospitals and other infrastructure as a way to lessen the blow from the financial crisis, finance minister Jim Flaherty said Monday.
Speaking at a conference in Toronto, Mr. Flaherty said investments in infrastructure will be "a key part" of the government's strategy to stimulate the economy.
But some observers say there's a problem with the plan. The government wants to deliver the projects through so-called public private partnerships (P3) where projects are built and financed by the private sector but according the government's requirements. But while the P3 model has gained acceptance in much of the world, there is rising concern that the credit crunch has made it almost impossible to finance new P3s.
Because of the financial crisis, finding willing lenders has become a lot more difficult and when they can be found the cost of capital for even triple-A borrowers is much higher than even a few months ago, said Alban de La Selle, a senior executive at Dexia Credit Local SA, a leading European bank.
"Lenders [on infrastructure projects] have become significantly more cautious," according to a recent report by PricewaterhouseCoopers. "... infrastructure finance raising is likely to be challenging for some time to come and the business risk of these transactions is certainly higher."
But the financial turmoil may have thrown a monkey wrench into the mechanics of P3s by making the financing so much more difficult.
Mr. de La Selle said one way to overcome the problem would be for the government to provide the financing itself. Since governments are among the few players that can get the benefit of lower borrowing costs, that advantage could be brought into play in doing P3s, he said. For their part, the private sector partners would guarantee to repay the debt.


So instead of the government funding infrastructure projects, the Harpocrites want to fund the private sector to do it for them. Ironically currently P3's in Canada are funded by public pension money, there are very few private P3's.

The Harpocrites had an opportunity to build a P3 project; the National Porttrait Gallery but they canceled it last week.

Earth to Flaherty,hello we are in a recession if not a depression and companies are hoarding capital not spending it. So instead of expanding the public sector the government will be choosing winners and losers in the private sector to build infrastructure. And these companies will promise to repay the debt, which will only happen if they survive this depression. Throwing good money after bad.

And he made his announcement at a conference on P3's sponsored by the right wing business lobby the Fraser Institiute.

So much for the Harpocrites abandoning their neo-con ideology, even in this recession they scramble to keep faith with the right wing ideology that got us in this mess in the first place.

Speaking to a Fraser Institute dinner, the finance minister committed to increased spending by Ottawa, if it is needed. Flaherty stressed at the luncheon the importance of infrastructure spending by the federal government, notably in partnership with the private sector. He announced $1.25 billion in startup funding for P3 Canada Inc., an entity that will work on public-private projects.
Thank goodness for this opportune recession, even if it is still "technical," as Finance Minister Jim Flaherty insisted at a downtown conference yesterday. If it weren't for whatever it is, nothing would get done.
The legacy of good times lasting more than a decade is a mountain of unfunded priorities for public spending. It took recession, or perhaps only the vivid perception of it, to focus government attention on what it should have undertaken years ago.
Focus is too soft a word to describe the sudden conversion of our former fiscal conservatives to counter-cyclical spending. Yesterday, a previously dismissive Mr. Flaherty let the world know he was jumping into the pothole business with both feet.
Infrastructure spending "will be a key component of our future success," he told a conference on public-private partnerships, and a "key component" of his government's planned economic stimulus. Although ideological conservatives may worry about burdening future generations with unsustainable debt, real Conservatives are now committed to spending their way out of recession.
And nobody is cheering louder than the crowd that brought us collateralized debt obligations and credit default swaps. With the market for such innovative products seized up worse than a rusty Ford, government has become the only source of cheap credit for anything. Ergo, everybody loves infrastructure. Well-dressed converts flocked to Mr. Flaherty's speech yesterday like contrite sinners to a revival meeting.

Instead, governments should activate construction projects that are already on the drawing-boards, and have been waiting for funding. Canada's infrastructure suffered much depreciation during the fiscal restraint of the 1990s, and did not catch up in the balanced-budget period. The wear and tear are showing.

SEE:
Your Pension Plan At Work
A Critique of P3's From The Right

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