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We Can Phase Out Fossil Fuels …

… Within a Decade, Study Says

by Daniel Oberhaus, Contributor

MotherBoard (April 17 2016)

As we stare down the barrel of a world totally transformed (read: destroyed) by climate change in the not-so-distant future, a lot of the brightest minds around the world are spending a good deal of time trying to figure out how to mitigate its effects. Considering that fossil fuel use is the primary driver of climate change, it makes sense that a lot of the proposed climate change solutions involve phasing out fossil fuels entirely. While some have derided this fossil fuel divestment plan as unattainable, others think it’s entirely possible – so long as we have twenty to eighty years to make it happen.

Unfortunately, ridding ourselves of fossil fuels by 2100 (a plan the G7 leaders were all too happy to pat themselves on the back about last year) will be too little, too late. If we keep burning fossil fuels at the current rate, some have predicted that we will cross a threshold into “environmental ruin” as early as 2036 – but it doesn’t have to be this way.

In fact, according to a new study released last week by a major energy think tank in the UK, we could completely phase out fossil fuels within a decade … if we really wanted to.

Published in Energy Research and Social Science, the study was led by Benjamin Sovacool, the director of the Sussex Energy Group at the University of Sussex. As Sovacool notes in the introduction to his study, “transitioning away from our current global energy system is of paramount importance” and “the speed at which a transition can take place – its timing, or temporal dynamics – is a vital element of consideration”.

The reason why Sovacool is so concerned about how fast we can move away from our current energy paradigm is due to something that has been called the “climate paradox”, or the idea that by the time humans realize they need to divest their economies of fossil fuels, they will have passed the point of no return for climate catastrophe.

According to Sovacool, current “mainstream” projections for phasing out fossil fuels rely on analyzing energy transitions in the past, which can often paint an overly bleak picture about how long an energy transition would take now. So Sovacool took it upon himself to re-analyze the energy transitions of the past up to the present day in order to present a more realistic picture of how quickly the planet could phase out fossil fuels.

As detailed in the report, it took Europe between 96 to 160 years to transition from wood to coal. Yet for electricity to move from a fringe experiment to widespread usage only took between 47 to 69 years. According to Sovacool, an energy transition could happen even faster today, thanks to the threat of climate induced disasters coupled with an unprecedented technological innovation.

Sovacool highlights a number of modern energy transition success stories to drive his point home: Ontario completely divested from coal as an energy source within eleven years (it had previously accounted for 25 percent of the province’s energy); Indonesia moved two-thirds of its population from kerosene to LPG stoves in just three years; within six years of implementing the Proalcool program, ninety percent of Brazilian cars could run on ethanol.

These are just three of the ten examples cited by Sovacool in his study, but according to him, each success story has a few features in common: Where energy transitions have been quick and effective, there has generally been strong government intervention coupled with shifts in the consumer behavior, which are themselves generally driven by government provided incentives.

Yet as Sovacool notes in his study, “the implication here is that energy transitions have no magic formula”; rather, the nature and effectiveness of energy transitions are largely context dependent. Still, based on his revised historical analysis, Sovacool agrees with Al Gore, who in 2008 stated that he believed it was possible to transition to an entirely clean-energy regime within a decade.

“The mainstream view of energy transitions as long, protracted affairs, often taking decades or centuries to occur, is not always supported by the evidence”, said Sovacool.

 

Moving to a new, cleaner energy system would require significant shifts in technology, political regulations, tariffs and pricing regimes, and the behavior of users and adopters. Left to evolve by itself – as it has largely been in the past – this can indeed take many decades. A lot of stars have to align all at once. But we have learnt a sufficient amount from previous transitions that I believe future transformations can happen much more rapidly.

 

Links: The original version of this article, at the URL below, contains links to further information not included here.

http://motherboard.vice.com/read/we-can-phase-out-fossil-fuels-within-a-decade-study-says

Categories: Uncategorized

Mish’s Sure-Fire Proposal to End Japanese Deflation

Negative Sales Taxes, One Percent Monthly Tax on Government Bonds

https://mishtalk.com (April 22 2016)

It’s rather amusing that Japan cannot destroy its currency even though it has tried, and tried and tried.

Abenomics has been a huge failure. Keynesian “solutions” of all sorts have failed to rid Japan of the alleged scourge of deflation.

Some think handing out free money is the obvious solution, but what if people don’t spend it?

I can help.

On April 8, I wrote https://mishtalk.com/2016/04/08/central-banks-fail-in-efforts-to-destroy-currency-mish-offers-advice/.

In that post I offered simple advice.

Try Harder

Try harder, is inadequate. Japan needs specific recommendations. Today, I happen to have some.

Mish’s Four Pronged Proposal to End Japanese Deflation:

(1) Negative Sales Taxes

(2) One Percent Tax, Per Month, on Government Bonds

(3) National Tax Free Lottery

(4) Hav-a-Kid

1. Negative Sales Taxes

People hoard cash, especially the miserly wealthy. We need to unlock that cash and put it to work.

To free up this money, I propose negative sales taxes. The more you spend, the more money you get back as a direct tax credit against income taxes.

I leave specific details to economists Larry Summers and Paul Krugman.

What can possibly go wrong?

2. One Percent Tax Per Month on Government Bonds

Negative interest rates are in vogue. However, all negative interest rates have done is to get those with money to hoard bonds.

Bond buyers effectively bet on capital gains of still more negative rates.

Phooey!

Just yesterday I noted Bank of Japan Corners 33% of Bond Market: All Japanese Bonds, Forty Years and Below, Yield 0.3% or Less.

33% cornering of the bond market is truly inadequate as this sentiment implies:

Makoto Yamashita, a strategist for Japanese interest rates at Deutsche Bank AG’s securities unit in Tokyo said “There are investors who have no choice but to buy”.

We need to end this “no choice” hoarding sentiment right here, right now.

I have just the solution. Tax government bonds at the rate of one percent per month.

No one will want them. Hedge funds and pension plans will dump sovereign bonds en masse.

This will allow governments to buy every bond in existence immediately, if not sooner.  As soon as the government corners the bond market (at effectively zero cost), debt and interest on the debt will truly be owed to itself.

Once the bond market is 100% cornered, I propose government debt be declared null and void annually. This would effectively wipe out the entirety of Japan’s debt.

Japan’s debt-to-GDP ratio would immediately plunge from 250% to 0%.

3. National Tax Free Lottery

Japan desperately needs to get people to spend, continually.

Once again, I have a logical proposal. For every purchase one makes on a credit card, that person gets a free lottery ticket for a weekly drawing worth $10,000,000 tax free.

Each week, a random day of the week is selected and separately a random taxpayer ID is selected.

If the person drawn made a credit card purchase exceeding $10 on the day of the week drawn, they win $10,000,000 tax free.  If there is no winner, the amount rolls over.

This beautiful plan will cost no more than $520 million annually, peanuts these days.

4. Hav-a-Kid

Demographics in Japan are a huge problem. Although various incentive have been tried, none of them have gone far enough.

I propose a reduction in income taxes for everyone starting a family. The following scale applies.

* One new child: fifty percent reduction in income taxes for a period of ten years.

* Two new children: 100% reduction in income taxes for a period of twenty years.

* Three new children: Subsidized housing, free healthcare, free schooling, and no income taxes for thirty years.

* Those with one new child in the last five years get full credit if they add at least one more child in the next five years.

Guarantee

I absolutely guarantee my plan will end deflation in a jiffy.

Some of you may be wondering “How the heck do we pay of this?”

That’s a good question, but please refer to the key linchpin of my plan: a “One Percent Tax, Per Month, on Government Bonds”.

No one will be in Japanese bonds so no one will be destroyed holding them.

All Japan has has to do is print the money to pay for any tax shortfalls. After all, interest is truly owed to itself.

Curiously, once the bond market is cornered, Japan can reinstall negative interest rates, effectively paying itself money on bonds before it wipes them out in debt revision procedure annually.

Literally, this scheme pays for itself.

Ultimate Keynesian Wet Dream

My plan is the ultimate Keynesian wet dream.

There’s no need to promote cash-for-clunkers or any other winners or losers.

Negative sales taxes and a national lottery ensures people will spend money on something they want.

A tax on bonds coupled with negative interest rates ensures the coffers will always be full of cash.

Meanwhile, “Hav-a-Kid” will do wonders for Japan’s aging demographics.

My Price

My price for this amazing plan is $0. It’s free for the taking.

Yet, zero seems woefully inadequate for such a brilliant plan that is absolutely guaranteed to work, especially when Japan has tried and failed for decades to produce inflation.

Moreover, paying nothing hardly seems correct for a country so desperate to get out of deflation.

Thus, if offered, I will graciously accept $1,000,000 for each one-tenth of one percent rise in Japanese inflation if Japan simply follows my plan.

All I ask is Japan pay upfront in gold rather than yen in arrears.

Mike “Mish” Shedlock

Related

* https://mishtalk.com/2013/11/11/japanese-households-with-zero-savings-hits-31-most-since-1963-sexless-youth-currency-crisis-awaits/

* https://mishtalk.com/2008/11/18/deflation-hits-the-uk-free-money-in-japan/

* https://mishtalk.com/2014/11/17/mystery-of-the-unexpected-explained-japan-slides-into-recession-yet-again-blue-ribbon-panel-in-review/

https://mishtalk.com/2016/04/22/mishs-sure-fire-proposal-to-end-japanese-deflation-negative-sales-taxes-1-monthly-tax-on-govt-bonds/

Categories: Uncategorized

“This Will All Blow Up in the Fed’s Face”

Schiff Warns “Trump’s Right, America Is Broke”

by Tyler Durden

Zero Hedge (April 17 2016)

Euro Pacific Capital’s Peter Schiff sat down with Alex Jones last week to discuss the state of the economy, and where he sees everything going from here.

Here are some notable moments from the interview.

Regarding how bad things are, and what’s really going on in the economy, Schiff lays out all of the horrible economic data that has come out recently, as well as making sure to take away the crutch everyone uses to explain any and all data misses, which is weather.

 

It’s no way to know exactly the timetable, but obviously this economy is already back in recession, and if it’s not in a recession it’s certainly on the cusp of one.

 

We could be in a negative GDP quarter right now, and I think that if the first quarter is bad the second quarter is going to be worse.

 

The last couple years we had a rebound in the second quarter because we’ve had very cold winters. Well this winter was the warmest in 120 years so there is nothing to rebound from.

 

On the Federal Reserve (“Fed”), and current policies, he very bluntly points out that nothing is working, nor has it worked, but of course the central planners will try it all anyway. He also takes a moment to agree with Donald Trump regarding the fact that the US is flat out, undeniably broke.

 

The problem for the Fed is how do they launch a new round of stimulus and still pretend the economy is in good shape.

 

Negative interest rates are a disaster. It’s not working in Japan, it’s not working in Europe, it’s not going to work here. Just because it doesn’t work doesn’t mean we’re not going to do it, because everything we do doesn’t work and we do it anyway. It shows desperation, that you’ve had all these central bankers lowering interest rates and expecting it to revive the economy. And then when they get down to zero, rather than admit that it didn’t work, because clearly if you go to zero and you still haven’t achieved your objective, maybe it doesn’t work. Instead of admitting that they were wrong, they’re now going negative.

 

The United States, no matter how high inflation gets, we’ll do our best to pretend it doesn’t exist or rationalize it away because we have a lot more debt. America is broke, if you look at Europe and Japan even though there is some debt there, overall those are still creditor nations. The world still owes Europe money, the world still owes Japan money, but America owes more money than all of the other debtor nations combined. Trump is right about that, we are broke, we’re flat broke, and we’re living off this credit bubble and we can’t prick it. Other central banks may be able to raise their rates, but the Fed can’t.

 

On how he sees everything unfolding from this point, Peter again points out that the economy is weak and it’s only a matter of time before this entire centrally planned manipulation is exposed for what it is, and becomes a disaster for the Federal Reserve. He likens how investors are behaving today to the dot-com bubble, and the beginning of the global financial crisis.

 

The trigger that’s going to really send us into a higher gear is going to be the admission by the Fed that the economy is weak or the markets figure it out on their own. There’s not a lot of stimulus left, all they’ve got is potentially negative rates and a huge round of quantitative easing, and this thing is going to blow up in the Fed’s face.

 

Investors still just don’t get what’s going on. For the past several years everybody has been positioned as if this recovery were real, that it was sustainable, and that the Fed could normalize interest rates and everything was going to be fine. The first quarter of this year investment returns, it was the worst quarter in eighteen years for actively managed funds.

 

The Federal Reserve has not solved our problems, but exacerbated them.

 

You’ve got big banks like Goldman Sachs shorting gold, telling their clients to short gold. A lot of people unfortunately listen to Goldman Sachs, and they’re doing the wrong thing. A lot of times the markets are just mis-priced, because so many people don’t get it. Just like all the people who were buying the subprime mortgages before the bottom dropped out of the market, or all the people who were buying those dot-com stocks for several years before they collapsed. The same thing is going to happen now.

 

Full Interview Here: https://www.youtube.com/watch?v=tiOIrGgBwtM&feature=youtu.be

http://www.zerohedge.com/news/2016-04-17/will-all-blow-feds-face-schiff-warns-trumps-right-america-broke

Categories: Uncategorized

Why Isn’t Everyone in Favor …

… of Taxing Financial Speculation?

by Robert Reich

from Robert Reich’s Blog {1}

The Smirking Chimp (April 19 2016)

Why is there so little discussion about one of Bernie Sanders’s most important proposals – to tax financial speculation?

Buying and selling stocks and bonds in order to beat others who are buying and selling stocks and bonds is a giant zero-sum game that wastes countless resources, uses up the talents of some of the nation’s best and brightest, and subjects financial market to unnecessary risk.

High-speed traders who employ advanced technologies in order to get information a millisecond before other traders get it don’t make financial markets more efficient. They make them more vulnerable to debacles like the “Flash Crash” of May 2010.

Wall Street Insiders who trade on confidential information unavailable to small investors don’t improve the productivity of financial markets. They just rig the game for themselves.

Bankers who trade in ever more complex derivatives – making bets on bets – don’t add real value. They only make the system more vulnerable to big losses, as occurred in the financial crisis of 2008.

All of which makes Bernie Sanders’ proposal for a speculation tax right on the mark.

He wants to tax stock trades at a rate of 0.5 percent (a trade of $1,000 would cost of $5), and bond trades at 0.1 percent.

The tax would reduce incentives for high-speed trading, insider deal-making, and short-term financial betting. (Hillary Clinton also favors a financial transactions tax but only on high-speed trading.)

Another big plus: Given the gargantuan size of the financial market and the huge volume of trading occurring within it every day, this tiny tax would generate lots of revenue.

Even a 0.01 percent transaction tax (a basis point is one-hundredth of a percentage point, or 0.01 percent) would raise $185 billion over ten years, according to the nonpartisan Tax Policy Center. {2}

Sanders’ 0.5 percent tax could thereby finance public investments that enlarge the economic pie rather than merely rearrange its slices – like tuition-free public education.

After all, Americans pay sales taxes on all sorts of goods and services yet Wall Street traders pay no sales taxes on the stocks and bonds they buy.

Which helps explains why the financial industry generates about thirty percent of America’s corporate profits {3} but pays only about eighteen percent of corporate taxes {4}.

Naysayers led by the financial industry’s lobbyists (the Financial Services Roundtable and Financial Markets Association) warn that even a small tax on financial transactions would drive trading overseas, since financial trades can easily be done anywhere.

Baloney. The UK has had a tax on stock trades for decades yet remains one of the world’s financial powerhouses. Incidentally, that tax raises about three billion pounds yearly (the equivalent of $30 billion in an economy the size of the US), which is pure gravy for Britain’s budget.

At least 28 other countries also have such a tax, and the European Union is well on the way to implementing one.

Industry lobbyists also claim the costs of the tax will burden small investors such as retirees, business owners, and average savers.

Wrong again. The tax wouldn’t be a burden if it reduces the volume and frequency of trading – which is the whole point.

In fact, the tax is highly progressive. The Tax Policy Center estimates {5} that 75 percent of it would be paid by the richest fifth of taxpayers, and forty percent by the top 1 percent.

It’s hardly a radical idea.

Between 1914 and 1966, the United States itself taxed financial transactions. During the Great Depression, John Maynard Keynes urged wider use of such a tax to reduce excessive speculation by financial traders. After the Wall Street crash of October 1987, even the first President George Bush endorsed the idea.

Americans are fed up with Wall Street’s financial games. Excessive speculation contributed to the near meltdown of 2008 – which cost millions of people their jobs, savings, and homes.

So why is it only Bernie Sanders who’s calling for a financial transactions tax? Why aren’t politicians of all stripes supporting it? And why isn’t it a major issue in the 2016 election?

Because a financial transactions tax directly threatens a major source of Wall Street’s revenue. And, if you hadn’t noticed, the Street uses a portion of its vast revenues to gain political clout.

So even though it’s an excellent idea championed by a major candidate, a financial transactions tax isn’t being discussed this election year because Wall Street won’t abide it.

Which maybe one of the best reasons for enacting it.

_______

Robert B Reich, Chancellor’s Professor of Public Policy at the University of California at Berkeley and Senior Fellow at the Blum Center for Developing Economies, was Secretary of Labor in the Clinton administration. Time magazine named him one of the ten most effective cabinet secretaries of the twentieth century. He has written thirteen books, including the best sellers Aftershock (2013) and The Work of Nations (1992). His latest, Beyond Outrage (2012), is now out in paperback. He is also a founding editor of the American Prospect magazine and chairman of Common Cause. His new film, Inequality for All (2013), is now available on Netflix, iTunes, DVD, and On Demand.

Links:

{1} http://robertreich.org/post/143047841420

{2} http://t.umblr.com/redirect?z=http://www.taxpolicycenter.org/UploadedPDF/2000287-Financial-Transaction-Taxes-in-Theory-and-Practice.pdf&t=Nzc4NGI2YzRlY2JkYWU5ZGEwZjQ5ZmIzZWZhYzhlMWVjNjVmNjVhOSxpbzM2VEVhZw==

{3} http://t.umblr.com/redirect?z=http://www.gpo.gov/fdsys/pkg/ERP-2012/pdf/ERP-2012-table91.pdf&t=YWNmOWFkMTIwN2ZmNTQyNjIyMDNiNWRkZjQ0YjcwYTk4NjRlNTZmNyxpbzM2VEVhZw==

{4} http://t.umblr.com/redirect?z=http://www.imf.org/external/np/seminars/eng/2010/paris/pdf/090110.pdf&t=YWRmZTMxMmY3OWY2YTQzOGJlOTc0MzRlNzZjZDZhM2Q4OGMxNTgzMyxpbzM2VEVhZw==

{5} http://t.umblr.com/redirect?z=http://taxfoundation.org/article/details-and-analysis-senator-bernie-sanders-s-tax-plan&t=Y2Y2NTBhMzI3OTFhZWE3MGQ5YWM5YWE3MmNiZmQ5NWQyNWNhMzhjNyxpbzM2VEVhZw==

http://www.smirkingchimp.com/thread/robert-reich/66937/why-isn-t-everyone-in-favor-of-taxing-financial-speculation

Categories: Uncategorized

We Can’t Save the Economy …

… Unless We Fix Our Debt Addiction

by Michael Hudson

The Washington Post | In Theory (April 20 2016)

Each week, In Theory takes on a big idea in the news and explores it from a range of perspectives. This week, we’re talking about financialization. Need a primer? Catch up here: https://www.washingtonpost.com/news/in-theory/wp/2016/04/18/has-our-economy-become-too-financialized/

Our economy has increasingly been financialized, and the result is a sluggish economy with stagnant wages. We need to decide whether to stop the cycle and save the economy at large or to stay in thrall to our banks and bondholders. Without clearing our debt, the economy will continue to languish in debt deflation and polarization between creditors and debtors.

As a statistical measure, financialization is the degree to which debt accounts for a rising proportion of income or the value of an asset, such as a company or piece of property. The ratio tends to rise until defaults lead to a crisis that wipes out the debt, converts it into equity or transfers assets from defaulting debtors to creditors.

As an economic process, financialization makes money through debt leverage – taking on debt to pay for things that will increase income or the value of assets: for instance, taking out a loan for education or a mortgage on a property to open a store. But instead of using credit to finance tangible industrial investment that expands production, banks have been lending to those who want to buy property already in place – mainly real estate, stocks and bonds already issued – and to corporate raiders – those who buy companies with high-interest bonds. The effect often leaves a bankrupt shell of a company, or at least enables corporate raiders to threaten employees with bankruptcy that would wipe out their pension funds or employee stock ownership plans if they do not agree to replace defined benefit pensions with riskier contribution schemes.

The dynamic is more extractive than productive. Corporate financial managers, for example, can raise their company’s stock price simply by buying back shares from investors – financing the move by borrowing money. But in addition to raising debt-to-equity ratios, these short-term tactics “bleed” companies, forcing them to cut back on research, development and projects that require long lead times to complete. Corporate managers are paid by how much they can raise their companies’ stock prices in the short run. When earnings are diverted to pay dividends or buy back shares, growth slows. But by that time, today’s managers will have taken their money and bonuses and run.

On an economy-wide scale, rising debt can inflate prices for real estate, stocks or bonds on credit. Asset prices reflect whatever banks will lend against them, so easier credit terms (such as lower interest rates, lower down payments and more time to pay back loans) increase the asking prices of everything else.

Banks have found their biggest loan markets in mortgages for real estate, natural resources (oil and mining) and infrastructure monopolies. Most of the interest that banks receive from their lending is thus paid out of property and monopoly rents. To make it easier for companies to pay back their bank loans or stock issues, the financial sector defends tax benefits for these major customers, recognizing that whatever the tax collector leaves behind can come back to the banks in the form of interest payments on further loans. These loans create debt-leveraged “capital” gains, which receive favorable tax treatment compared with profits and wage income. But the savings end up in the hands of banks rather than individuals who would spend that money back into the economy.

At the household level, buying a home with a 25 percent down payment leaves the home buyer with 75 percent equity. This was the normal rule of thumb for mortgage lending in the 1960s. If interest and loan payments absorb a quarter of the buyer’s overall income (a rule of thumb for bankers in the 1960s), then that person’s income is said to be 25 percent financialized.

But today, home buyers can put up as little as a three percent down payment for a Bank of America mortgage guaranteed by the government agency Freddie Mac (and 3.5 percent for an FHA-insured mortgage), leaving homeowners with 97 percent financialization.

Government-guaranteed home mortgages absorb up to 43 percent of the buyer’s income just to service their debt. Student loans, auto loans, credit cards and other bank debt may absorb another ten percent of the debtor’s income. This leaves only half of personal income available to spend on anything else one might need.

Meanwhile, wage withholding for Social Security and Medicare (paying in advance to build up a fund that may not even exist to help them later in life) absorbs more than fifteen percent of income, and other taxes (income taxes, property taxes and sales taxes) take up another ten to 25 percent. In the end, the combination of financialization and the taxes shifted off the finance sector and onto individuals can eat away as much as 75 percent of a wage earner’s income. The result is regressive taxes reducing purchasing power, on top of debt deflation, as more income has to be paid to banks and other creditors.

Loading the economy down with debt therefore leaves less disposable income for both individuals and businesses that could otherwise be buying consumer goods and investing in real production. To illustrate this, just take a look at how our economy has changed since financial institutions inflated asset prices in the housing market until the bubble burst in 2007. The cost of paying the mortgage loans that bid up real estate prices has led to austerity: Markets have shrunk; new investment and hiring slowed; and profits and wages have stagnated. The asset-price inflation that seemed to be making the economy richer has turned into debt deflation, leaving many households strapped to meet their monthly “nut”.

As the “One Percent” of banks puts the “99 Percent” deeper into debt, financialization has become the major cause of increasing inequality of wealth and income. In due course, the amount of debt will exceed the economy’s ability to produce a large enough surplus to pay it back. This makes a financial breakdown inevitable.

This financial dynamic always leads to a transfer of property from debtors to creditors, unless debts are forgiven or brought in line with the debtor’s ability to pay. In 2008, banks persuaded governments to “solve” the debt problem by taking bad bank debt onto the public balance sheet and then bailing out the banks. But while a government bailout or International Monetary Fund loan may enable private creditors to jump ship, it shifts the burden onto the government – mainly to be borne by taxpayers. This requires governments to cut back spending, or to raise taxes to transfer income from taxpayers to bondholders.

In the end, society must choose whether to save the economy at large, or to save bondholder and banking claims on the economy.

_____

 

Michael Hudson is distinguished research professor of economics at University of Missouri-Kansas City. His most recent book is Killing the Host: How Financial Parasites and Debt Destroy the Global Economy (2016).

https://www.washingtonpost.com/news/in-theory/wp/2016/04/20/we-cant-save-the-economy-unless-we-fix-our-debt-addiction/

Categories: Uncategorized

Exclusive Interview

Seymour Hersh Dishes on Saudi Oil Money Bribes and the Killing of Osama Bin Laden

by Ken Klippenstein {1}

Alternet (April 20 2016)

Seymour Hersh is an American investigative journalist who is the recipient of many awards, including the Pulitzer Prize for his article exposing the My Lai massacre by the US military in Vietnam. More recently, he exposed the US government’s abuse of detainees in the Abu Ghraib prison facility.

Hersh’s new book, The Killing of Osama Bin Laden {2}, is a corrective to the official account of the war on terror. Drawing from accounts of a number of high-level military officials, Hersh challenges a number of commonly accepted narratives: that Syrian president Bashar al-Assad was responsible for the Sarin gas attack in Ghouta; that the Pakistani government didn’t know Bin Laden was in the country; that the late ambassador J Christopher Stevens was at the US consulate in Benghazi in a solely diplomatic capacity; and that Assad did not want to give up his chemical weapons until the US called on him to do so.

Ken Klippenstein: In the book you describe Saudi financial support for the compound in which Osama Bin Laden was being kept in Pakistan. Was that Saudi government officials, private individuals or both?

Seymour Hersh: The Saudis bribed the Pakistanis not to tell us [that the Pakistani government had Bin Laden] because they didn’t want us interrogating Bin Laden (that’s my best guess), because he would’ve talked to us, probably. My guess is, we don’t know anything really about 9/11. We just don’t know. We don’t know what role was played by whom.

KK: So you don’t know if the hush money was from the Saudi government or private individuals?

SH: The money was from the government … what the Saudis were doing, so I’ve been told, by reasonable people (I haven’t written this) is that they were also passing along tankers of oil for the Pakistanis to resell. That’s really a lot of money.

KK: For the Bin Laden compound?

SH: Yeah, in exchange for being quiet. The Paks traditionally have done security for both Saudi Arabia and UAE.

KK: Do you have any idea how much Saudi Arabia gave Pakistan in hush money?

SH: I have been given numbers, but I haven’t done the work on it so I’m just relaying. I know it was certainly many – you know, we’re talking about four or five years – hundreds of millions [of dollars]. But I don’t have enough to tell you.

KK: You quote a retired US official as saying the Bin Laden killing was “clearly and absolutely a premeditated murder” and a former SEAL commander as saying “by law we know what we’re doing inside Pakistan is homicide”.

Do you think Bin Laden was deprived of due process?

SH: [Laughs] He was a prisoner of war! The SEALs weren’t proud of that mission; they were so mad it was outed … I know a lot about what they think and what they thought and what they were debriefed, I will tell you that. They were very unhappy about the attention paid to that because they went in and it was just a hit.

Look, they’ve done it before. We do targeted assassinations. That’s what we do. They understood – the SEALs – that if they were captured by the Pakistani police authorities, they could be tried for murder. They understood that.

KK: Why didn’t they apprehend Bin Laden? Can you imagine the intelligence we could have gotten from him?

SH: The Pakistani high command said go kill him, but for chrissake don’t leave a body, don’t arrest him, just tell them a week later that you killed him in Hindu Kush. That was the plan.

Many sections, particularly in the Urdu-speaking sections, were really very positive about Bin Laden. Significant percentages in some areas supported Bin Laden. They [the Pakistani government] would’ve been under great duress if the average person knew that they’d helped us kill him.

KK: How did it hurt US/Pakistan relations when, as you point out in your book, Obama violated his promise not to mention Pakistan’s cooperation with the assassination?

SH: We spend a lot of time with [Pakistani] generals Pasha and Kayani, the head of the army and ISI, the intelligence service. Why? Why are we so worried about Pakistan? Because they have [nuclear] bombs … at least 100, probably more. And we want to think that they’re going to share what they know with us and they’re not hiding it.

We don’t really know everything we think we know and they don’t tell us everything … so when he [Obama] is doing that, he’s really messing around with the devil in a sense.

…. He [Bin Laden] had wives and children there. Did we ever get to them? No. We never got to them. Just think about all the things we didn’t do. We didn’t get to any of the wives, we didn’t do much interrogation, we let it go.

There are people that know much more about this and I wish they would talk, but they don’t.

KK: You write that Obama authorized a ratline wherein CIA funneled arms from Libya into Syria and they ended up in jihadi hands. [According to Hersh, this operation was coordinated via the Benghazi consulate where US ambassador Stevens was killed.] What was Secretary of State Hillary Clinton’s role in this given her significant role in Libya?

SH: The only thing we know is that she was very close to Petraeus who was the CIA director at the time … she’s not out of the loop, she knows when there’s covert ops … That ambassador who was killed, he was known as a guy, from what I understand, as somebody who would not get in the way of the CIA. As I wrote, on the day of the mission he was meeting with the CIA base chief and the shipping company. He was certainly involved, aware and witting of everything that was going on. And there’s no way somebody in that sensitive of a position is not talking to the boss, by some channel.

KK: In the book you quote a former intelligence official as saying that the White House rejected 35 target sets provided by the Joint Chiefs as being insufficiently painful to the Assad regime. (You note that the original targets included military sites only – nothing by way of civilian infrastructure.) Later the White House proposed a target list that included civilian infrastructure.

What would the toll to civilians have been if the White House’s proposed strike had been carried out?

SH: Do you really think that at any time this is discussed? You know who’s sanest on this: Dan Ellsberg. When I first met Dan, it was way early – in 1970, 1971, during the Vietnam War. I think I met him before the Pentagon Papers were around. I remember him telling me that he asked that question at a meeting while planning the war [regarding B-52 targets] and nobody had even looked at it.

You really don’t get a very good hard, objective look. You can see a movie in which they seem to do it, but that’s not really so.

I don’t know if [regarding Syria] they looked at collateral damage and noncombatants, but I do know that in wars in the past, that’s never been a big issue … you’re talking about the country that dropped the second bomb on Nagasaki.

KK: In a recent interview {3} with The Atlantic, Obama characterized his foreign policy as “Don’t do stupid shit”.

SH: I read the Jeff Goldberg piece … and it of course drove me nuts, but that’s something else.

KK: As you point out in your book, Obama originally wanted to remove Assad. Isn’t that the definition of stupid? The power vacuum that would ensue would open Syria up to all kinds of jihadi groups.

SH: God knows I can’t tell you why anybody does anything. I’m not inside their head. I can tell you that the same question was asked by the chairman of the Joint Chiefs – Dempsey – which is why I was able to write that story about their going, indirectly, behind his [Obama’s] back because nobody could figure out why.

I don’t know why we persist on living in the Cold War, but we do. Russia actually did a very good job. They not only did the bombing that was more effective than what we do, I think that’s fair to say. Russia also did stuff that was sort of more subtle and more interesting: they renewed the Syrian army. They took many major units of the Syrian army offline, gave them R&R and re-equipped them. Got new arms, got a couple weeks off, then they came back, got more training and became a much better army.

I think in the beginning, there’s just no question, we wanted to get rid of Bashar. I think they misread the whole resistance. Wikileaks is very good on this … there’s enough State Department documents that show that from 2003 on, we really had a policy – not very subtle, not violent, but millions of dollars given to opposition people. We certainly were not a nonpartisan foreign government inside Syria.

Our policy has always been against him [Assad]. Period.

One of the things that comes across just in the current stories about all the travails we’re having about ISIS allegedly running all these terror teams in Brussels and in the suburbs of Paris … it’s very clear, ironically, that one of the things France and Belgium (and a lot of other countries) did was after the Syrian civil war began, if you wanted to go there and fight there in 2011~2013, “Go, go, go … overthrow Bashar!”

So they actually pushed a lot of people to go. I don’t think they were paying for them but they certainly gave visas. And they would spend four or five months, come back and do organized crime and get in jail and next thing you know they’re killing people. There’s a real pattern there.

I do remember when the war began in 2003, our war against Baghdad, I was in Damascus working for The New Yorker then and I saw Bashar and one of the things he told me, he said, “Look, we’ve got a bunch of radical kids and if they want to go fight, if they want to leave the mosque here in Damascus and go fight in Baghdad, we said fine! We even gave them buses!”

So there’s always been a tremendous, Why does America do what it does? Why do we not say to the Russians, Let’s work together?

KK: So why don’t we work closer with Russia? It seems so rational.

SH: I don’t know. I would also say, why wasn’t the first door we knocked on after 9/11, Russia’s? They just had a terrible ten-year war with Chechnya. Believe me, the Chechen influence in the Sunni world in terms of jihadism is strong. For example I’ve been told by my friends in the intelligence community that al-Baghdadi (who runs ISIS) is surrounded by a lot of guys with experience in Chechnya. A lot of people involved in that operation did.

So who knows the most about jihadism? You look at it from the Russian point of view – we never like looking at things from other people’s point of view.

KK: In the book you quote a Joint Chiefs of Staff adviser who said that Brennan told the Saudis to stop arming the extremist rebels in Syria and their weapons will dry up – which seems like a rational request – but then, you point out, the Saudis ramped up arms support.

SH: That’s true.

KK: Did the US do anything to punish the Saudis for it?

SH: Nothing. Of course not. No, no. I’ll tell you what’s going on right now … al Nusra, certainly a jihadist group … has new arms. They’ve got some tanks now – I think the Saudis are supplying stuff. They’ve got tanks now, have a lot of arms, and are staging some operations around Aleppo. There’s a ceasefire and even though they’re not part of it, they obviously took advantage of the ceasefire to resupply. It’s going to be bloody.

KK: Just to be clear, the US hasn’t done anything to punish or at least dis-incentivize the Saudis from arming our enemies in Syria?

SH: Quite the contrary. The Saudis and Qatar and the Turks put money into those arms [sent to Syrian jihadis].

You’re asking the right questions. Do we say anything? No. Turkey’s Erdogan has played a complete double game: for years he supported and accommodated ISIS. The border was wide open – Hatay Province – guys were going back and forth, bad guys. We know Erdogan’s deeply involved. He’s changing his tune slightly but he’s been deeply involved in this.

Let me talk to you about the sarin story [the sarin gas attack in Ghouta, a suburb near Damascus, which the US government attributed to the Assad regime] because it really is in my craw. In this article that was this long series of interviews [of Obama] by Jeff Goldberg … he says, without citing the source (you have to presume it was the president because he’s talking to him all the time) that the head of National Intelligence, General [James] Clapper, said to him very early after the [sarin] incident took place, “Hey, it’s not a slam dunk”.

You have to understand in the intelligence community – Tenet [Bush-era CIA director who infamously said Iraqi WMD was a “slam dunk”] is the one who said that about the war in Baghdad – that’s a serious comment. That means you’ve got a problem with the intelligence. As you know I wrote a story that said the chairman of the Joint Chiefs told the president that information the same day. I now know more about it.

The president’s explanation for [not bombing Syria] was that the Syrians agreed that night, rather than be bombed, they’d give up their chemical weapons arsenal, which in this article in the Atlantic, Goldberg said they [the Syrians] had never disclosed before. This is ludicrous. Lavrov [Russia’s Foreign Minister] and Kerry had talked about it for a year – getting rid of the arsenal – because it was under threat from the rebels.

The issue was not that they [the Syrians] suddenly caved in. [Before the Ghouta attack] there was a G-20 summit and Putin and Bashar met for an hour. There was an official briefing from Ben Rhodes and he said they talked about the chemical weapons issue and what to do. The issue was that Bashar couldn’t pay for it – it cost more than a billion bucks. The Russians said, “Hey, we can’t pay it all. Oil prices are going down and we’re hurt for money.” And so, all that happened was we agreed to handle it. We took care of a lot of the costs of it.

Guess what? We had a ship, it was called the Cape Maid, it was parked out in the Med. The Syrians would let us destroy this stuff [the chemical weapons] … there was 1,308 tons that was shipped to the port … and we had, guess what, a forensic unit out there. Wouldn’t we like to really prove – here we have all his sarin and we had sarin from what happened in Ghouta, the UN had a team there and got samples – guess what?

It didn’t match. But we didn’t hear that. I now know it, I’m going to write a lot about it.

Guess what else we know from the forensic analysis we have (we had all the missiles in their arsenal). Nothing in their arsenal had anything close to what was on the ground in Ghouta. A lot of people I know, nobody’s going to go on the record, but the people I know said we couldn’t make a connection, there was no connection between what was given to us by Bashar and what was used in Ghouta. That to me is interesting. That doesn’t prove anything, but it opens up a door to further investigation and further questioning.

This interview was lightly edited for readability.

_____

Ken Klippenstein is an American journalist who can be reached on Twitter @kenklippenstein or email: kenneth.klippenstein@gmail.com .

Links:

{1} http://www.alternet.org/authors/ken-klippenstein

{2} http://www.amazon.com/The-Killing-Osama-Bin-Laden/dp/1784784362

{3} http://www.theatlantic.com/magazine/archive/2016/04/the-obama-doctrine/471525/

http://www.alternet.org/world/exclusive-interview-seymour-hersh-dishes-saudi-oil-money-bribes-and-killing-osama-bin-laden

Categories: Uncategorized

How Not to Audit the Pentagon

Five Decades Later, the Military Waste Machine is Running Full Speed Ahead

by William D Hartung

TomDispatch (April 10 2016)

From spending $150 million on private villas for a handful of personnel in Afghanistan to blowing $2.7 billion on an air surveillance balloon that doesn’t work, the latest revelations of waste at the Pentagon are just the most recent howlers in a long line of similar stories stretching back at least five decades.  Other hot-off-the-presses examples would include the Army’s purchase of helicopter gears worth $500 each for $8,000 each and the accumulation of billions of dollars’ worth of weapons components that will never be used. And then there’s the one that would have to be everyone’s favorite Pentagon waste story: the spending of $50,000 to investigate the bomb-detecting capabilities of African elephants. (And here’s a shock: they didn’t turn out to be that great!) The elephant research, of course, represents chump change in the Pentagon’s wastage sweepstakes and in the context of its $600-billion-plus budget, but think of it as indicative of the absurd lengths the Department of Defense will go to when what’s at stake is throwing away taxpayer dollars.

Keep in mind that the above examples are just the tip of the tip of a titanic iceberg of military waste.  In a recent report I did for the Center for International Policy, I identified 27 recent examples of such wasteful spending totaling over $33 billion.  And that was no more than a sampling of everyday life in the twenty-first-century world of the Pentagon.

The staggering persistence and profusion of such cases suggests that it’s time to rethink what exactly they represent.  Far from being aberrations in need of correction to make the Pentagon run more efficiently, wasting vast sums of taxpayer dollars should be seen as a way of life for the Department of Defense.  And with that in mind, let’s take a little tour through the highlights of Pentagon waste from the 1960s to the present.

How Many States Can You Lose Jobs In?

The first person to bring widespread public attention to the size and scope of the problem of Pentagon waste was Ernest Fitzgerald, an Air Force deputy for management systems.  In the late 1960s, he battled that service to bring to light massive cost overruns on Lockheed’s C-5A transport plane.  He risked his job, and was ultimately fired, for uncovering $2 billion in excess expenditures on a plane that was supposed to make the rapid deployment of large quantities of military equipment to Vietnam and other distant conflicts a reality.

The cost increase on the C-5A was twice the price Lockheed had initially promised, and at the time one of the largest cost overruns ever exposed.  It was also an episode of special interest then, because Secretary of Defense Robert McNamara had been pledging to bring the efficient business methods he had learned as Ford Motors’ president to bear on the Pentagon’s budgeting process.

No such luck, as it turned out, but Fitzgerald’s revelations did, at least, spark a decade of media and congressional scrutiny of the business practices of the weapons industry.  The C-5A fiasco, combined with Lockheed’s financial troubles with its L-1011 airliner project, led the company to approach Congress, hat in hand, for a $250 million government bailout.  Wisconsin Senator William Proxmire, who had helped bring attention to the C-5A overruns, vigorously opposed the measure, and came within one vote of defeating it in the Senate.

In a time-tested lobbying technique that has been used by weapons makers ever since, Lockheed claimed that denying it loan guarantees would cost 34,000 jobs in 35 states, while undermining the Pentagon’s ability to prepare for the next war, whatever it might be.  The tactic worked like a charm.  Montana Senator Lee Metcalf, who cast the deciding vote in favor of the bailout, said, “I’m not going to be the one to put those thousands of people out of work”.  An analysis by the New York Times found that every senator with a Lockheed-related plant in his or her state voted for the deal.

By rewarding Lockheed Martin for its wasteful practices, Congress set a precedent that has never been superseded.  A present-day case in point is – speak of the devil – Lockheed Martin’s F-35 combat aircraft.  At $1.4 trillion in procurement and operating costs over its lifetime, it will be the most expensive weapons program ever undertaken by the Pentagon (or anyone else on Planet Earth), and the warning signs are already in: tens of billions of dollars in projected cost overruns and myriad performance problems before the F-35 is even out of its testing phase.  Now the Pentagon wants to rush the plane into production by making a “block buy” of more than 400 planes that will involve little or no accountability regarding the quality and cost of the final product.

Predictably, almost five decades after the C-5A contretemps, Lockheed Martin has deployed an inflationary version of the jobs argument in defense of the F-35, making the wildly exaggerated claim that the plane will produce 125,000 jobs in 46 states.  The company has even created a handy interactive map to show how many jobs the program will allegedly create state by state.  Never mind the fact that weapons spending is the least efficient way to create jobs, lagging far behind investment in housing, education, or infrastructure.

The Classic $640 Toilet Seat

Despite the tens of billions being wasted on a project like the F-35, the examples that tend to draw the most attention from the media and the most outrage among taxpayers involve overspending on routine items.  This may be because the average person doesn’t have a sense of what a fighter plane should cost, but can more easily grasp that spending $640 for a toilet seat or $7,600 for a coffee pot is outrageous.  These kinds of examples – first exposed through work done in the 1980s by Dina Rasor of the Project on Military Procurement – undermined the position taken by President Ronald Reagan’s administration that not a penny could be cut from its then-record peacetime Pentagon budgets.

The media ate such stories up. Pentagon overpayments for everyday items generated hundreds of articles in newspapers and magazines, including front-page coverage in the Washington Post.  Two whistleblowers were even interviewed on the Today Show, and Johnny Carson joked about such scandals in his introductory monologues on the Tonight Show.  Perhaps the most memorable depiction of the problem was a cartoon by the Washington Post‘s Herblock that showed Reagan Secretary of Defense Caspar Weinberger wearing a $640 toilet seat around his neck.  This outburst of truth-telling, whistleblowing, investigative journalism, and mockery helped put a cap on the Reagan military buildup, but – you won’t be surprised to learn – didn’t keep the Pentagon from finding ever more innovative ways to misspend tax dollars.

The most outrageous spending choice of the 1990s was undoubtedly the Clinton administration’s decision to subsidize the mergers of major defense firms.  As Lockheed (yet again!) and Martin Marietta merged, Northrop teamed with Grumman, and Boeing bought McDonnell Douglas, the Pentagon provided funding to pay for everything from closing down factories to subsidizing golden parachutes for displaced executives and board members.  At the time, Vermont Congressman Bernie Sanders aptly dubbed the process “payoffs for layoffs”, as executives of defense firms received healthy payouts while laid-off workers were largely left to fend for themselves.

The Pentagon’s rationale for giving hundreds of millions of dollars to these emerging defense behemoths was laughable. The claim – absurd on the face of it – was that the new, larger companies would provide the Pentagon with lower prices once they had eliminated unnecessary overhead. Former Pentagon official Lawrence Korb, who opposed the subsidies at the time, noted the obvious: there was no evidence that weapons programs grew any cheaper, cost overruns any less, or wastage any smaller thanks to government subsidized mergers. As in fact became clear in the world of the weapons giants that followed, the increased bargaining power of companies like Lockheed Martin in a significantly less competitive market undoubtedly resulted in higher weapons costs.

It Took $6 Billion Not to Audit the Pentagon

The poster child for waste in the first decade of the twenty-first century was certainly the billions of dollars a privatizing Pentagon handed out to up-armored companies like Halliburton that accompanied the US military into its war zones and engaged in Pentagon-funded base-building and “reconstruction” (aka “nation building”) projects in Iraq and Afghanistan. The Special Inspector General for Afghan Reconstruction (“SIGAR”) alone seems to come out with new examples of waste, fraud, and abuse on practically a weekly basis.  Among Afghan projects that stood out over the years was a multimillion-dollar “highway to nowhere”, a $43 million gas station in nowhere, a $25 million “state of the art” headquarters for the US military in Helmand Province, with all the usual cost overruns, that no one ever used, and the payment of actual salaries to countless thousands of no ones aptly labeled “ghost soldiers”. And that’s just to begin enumerating a long, long list. Last year, Pro Publica created an invaluable interactive graphic detailing $17 billion in wasteful spending uncovered by SIGAR, complete with information on what that money could have purchased if it had been used productively.

One reason the Pentagon has been able to get away with all this is that it has proven strangely incapable of doing a simple audit of itself, despite a Congressionally mandated requirement dating back to 1990 that it do so. Conveniently enough, this means that the Department of Defense can’t tell us how much equipment it has purchased, or how often it has been overcharged, or even how many contractors it employs. This may be spectacularly bad bookkeeping, but it’s great for defense firms, which profit all the more in an environment of minimal accountability. Call it irony or call it symptomatic of a successful way of life, but a recent analysis by the Project on Government Oversight notes that the Pentagon has so far spent roughly $6 billion on “fixing” the audit problem – with no solution in sight.

If anything, in recent years the Pentagon’s accounting practices have been getting worse.  Among the many offenses to any reasonable accounting sensibility, perhaps the most striking has been the way the war budget – known in Pentagonese as the Overseas Contingency Operations account – has been used as a slush fund to pay for tens of billions of dollars of items that have nothing to do with fighting wars. This evasive maneuver has been used to get around the caps that were placed on the Pentagon’s regular budget by Congress in the Budget Control Act of 2011.

If the Pentagon has its way, nuclear weapons will get their very own slush fund as well. For years, the submarine lobby floated the idea of a separate Sea-Based Deterrence Fund (outside of the Navy’s regular shipbuilding budget) to pay for ballistic missile-firing submarines. Congress has signed off on this idea, and now there are calls for a nuclear deterrent fund that would give special budgetary treatment to bombers and intercontinental ballistic missiles as well. If implemented, this change would throw the minimalist budget discipline that now exists at the Pentagon decisively out the nearest window and increase pressures to raise the department’s overall budget, which already exceeds the levels reached during the Reagan buildup.

Why has waste at the Pentagon been so hard to rein in?  The answer is, in a sense, not complicated: the military-industrial complex profits from waste.  Closer scrutiny of waste could mean not just cheaper spare parts, but serious questions about whether cash cows like the F-35 are needed at all.  An accurate head count of the hundreds of thousands of private contractors employed by the Pentagon would reveal that a large proportion of them are doing work that is either duplicative or unnecessary. In other words, an effective audit of the Pentagon or any form of serious oversight of its wasteful way of life would pose a financial threat to a sector that is doing just fine under current arrangements.

Who knows? If the Department of Defense’s wasteful ways were ever brought under genuine scrutiny and control, people might start to question, for example, whether a country that already has the capability to destroy the world many times over needs to spend $1 trillion over the next three decades on a new generation of ballistic missiles, bombers, and nuclear-armed submarines. None of this would be good news for the contractors or for their allies in the Pentagon and Congress.

Undoubtedly, from time to time, you’ll continue to hear outrageous media stories about waste at the Pentagon and bomb-detecting elephants gone astray. Without a concerted campaign of public pressure of a sort we haven’t seen in recent years, however, the Pentagon’s runaway budget will never be reined in, that audit will never happen, and the weapons makers will whistle a happy tune on their way to the bank with our cash.

Links: The original version of this article, at the URL below, contains links to further information not included here.

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William D Hartung, a TomDispatch regular, is the director of the Arms and Security Project at the Center for International Policy. He is the author, among other books, of Prophets of War: Lockheed Martin and the Making of the Military-Industrial Complex (2010).

Copyright 2016 William D Hartung

(c) 2016 TomDispatch. All rights reserved.

http://www.tomdispatch.com/blog/176126/

Categories: Uncategorized
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