We
live in an age where insider deals, conflicts of interest, revolving
doors between "regulators" and the "regulated" (lubricated with oceans
of cash) accompanies the generalized looting of social wealth by deviant
capitalist elites.
That such behavior by our corporate masters no longer raise an
eyebrow, let alone elicit action by authorities charged with stopping
criminal miscreants destroying other people's lives, is an unmistakable
sign that the much-vaunted "free market" system, staring into an abyss
of its own creation, has entered a terminal phase.
It now appears that insiders at Standard and Poor's or the Treasury
Department, take your pick, may have leaked information to privileged
clients on the recent U.S. credit downgrade, with confirmation coming
from a surprising source.
Last week, AntiSec cyber-guerrillas (a loose alliance amongst individuals affiliated with
LulzSec and
Anonymous) released a 1GB cache of emails filched from security contractor Vanguard Defense Industries (
VDI).
Previously Anonymous and LulzSec have wrapped their keyboards around
defense grifters Booz Allen Hamilton, ManTech International, NATO, the
Department of Homeland Security, the FBI, InfraGard (a "public-private"
security alliance amongst corporate heavy-hitters and the Bureau), the
CIA, the Arizona Department of Public Safety, the Arizona Counter
Terrorism Information Center (a so-called "fusion center" staffed by
cops, federal agents, private contractors and the U.S. military), the
Bay Area Rapid Transit agency (BART), Britain's Serious Organised Crime
Agency, PBS, Fox News, and repressive governments such as Egypt, Tunisia
and Zimbabwe.
Their latest campaign targeted VDI, a Texas-based firm, which
specializes in the "development and deployment" of Unmanned Aerial
Systems (UAS, killer drones). VDI "draws on specialized experience of
senior aerospace engineers, former military special operations officers,
military instructor pilots as well as retired Senior Executive Service
Federal Agents," claiming their "background and operational knowledge
has afforded us the unique vision to provide a platform that will extend
the security and response capabilities of any organization," according
to a blurb on their web site.
While VDI touts their ability to offer "support" to the "military,
local, state and federal law enforcement as well as the private sector,"
the firm also offers "a full scope of consulting services independent
of our aerial technology."
That "unique vision" however, didn't prevent AntiSec from spiriting
away thousands of emails from VDI's Senior Vice President Richard T.
Garcia, a former FBI Assistant Director in Los Angeles who recently left
a well-paid position as Global Security Manager for the
environment-killing Shell Oil Corporation (can you say Niger Delta?) for
"greener" pastures.
A press statement from
AntiSec announced
that the leak "contains internal meeting notes and contracts,
schematics, non-disclosure agreements, personal information about other
VDI employees, and several dozen 'counter-terrorism' documents
classified as 'law enforcement sensitive' and 'for official use only'."
"Vanguard Defense Industries," AntiSec writes, "manufactures
unmanned 'ShadowHawk' drones which cost $640,000 and are equipped with
grenade launchers and shotguns. ShadowHawks are currently in use by law
enforcement, military, and private corporations deploying them in the
US, the Horn of Africa, Panama, Columbia [sic], and US-Mexico border
patrol operations. These emails contain contracts, schematics,
non-disclosure agreements, and more. Additionally we found evidence of a
Merrill Lynch wealth management advisor giving private advance notice
to Garcia about upcoming S&P US credit rating downgrades."
Improper Disclosures
In an April 25, 2011
email from Garcia to Gloria Newport, Cindy Cook, a Wealth Management Advisor with Bank of America-owned Merrill Lynch "advised that
Standard and Poors,
may lower the credit rating of the US Government which could cause a
run on US Banks that will affect the Federal Reserve. They give the US
Govt. 2 years to correct the current situation, which they believe both
the Republican and Democratic solutions do not do enough and both
parties may make this a political situation for the 2012 Presidential
election and never come up with a answer to correct the situation within
the two years set by Standard and Poors. She did not see any real Cyber
issue that could change the situation."
Investigative journalist Steve Ragan, writing at
The Tech Herald (the
publication that broke the story on Anonymous's HBGary hack) informs us
that "the U.S. Securities and Exchange Commission was investigating
whether there was any sort of insider trading done by S&P employees
before the downgrade was official. The story hinged on comments made to
the paper by sources close to the investigation itself."
"On the day S&P cut the U.S.'s credit rating" Ragan writes,
"Wall Street was flooded with downgrade rumors. These rumors started
earlier in the day while trading was active. It turned out they were
true."
According to
Bloomberg News the
SEC "is scrutinizing the method Standard & Poor's used to cut the
U.S.'s credit rating and whether the firm properly protected the
confidential decision, according to a person with direct knowledge of
the matter."
Reporter Joshua Gallu wrote August 14 that SEC staff are "looking
into whether certain market participants learned of the downgrade before
its announcement."
Downplaying speculation that S&P
employees may have breached SEC rules by leaking sensitive information
to privileged clients,
The New York Times,
as is their wont, claimed "it is arguable whether S.&P.'s
announcement on Aug. 5 of the rating change was all that confidential,
given the speculation about it."
"Assuming information about the downgrade was confidential," the Times pontificates,
"it must also be material, which means a reasonable investor would
consider it important. This seems to be an easy element to establish
because the wild gyrations in the market on the first trading day after
the downgrade shows how investors viewed it."
But Cook's email to Garcia didn't arrive in his in-box "on the first trading day after the downgrade" but nearly four months earlier,
long before July's political shenanigans over raising the federal debt
ceiling, the ostensible reason why S&P downgraded America's credit
worthiness.
Maxine Waters (D-CA), wrote to SEC chairwoman, cover-up specialist
Mary Schapiro, demanding that the commission "conduct an investigation
into whether S.&P. selectively disclosed information related to the
U.S. government debt downgrade to any financial institutions, and
whether any institutions that had that nonpublic information traded on
that information prior to the official announcement."
It appears that Cook's email to Garcia would confirm that S&P
insiders did just that, providing information to Merrill Lynch and one
can assume other financial firms.
Throwing cold water on charges that the rating's agency acted improperly, the Times argues
that "even if if the S.E.C. finds that the information was improperly
disclosed, proving insider trading will be difficult."
Why might that be?
According to the Times,
"while S.&P. and other credit rating agencies are required to adopt
policies to prevent such disclosure, it is questionable whether just
leaking information violates any federal regulations, even if it
breaches a corporate confidentiality policy."
Lest readers believe however, that the SEC will mount a
comprehensive investigation of leaks by S&P insiders, they would do
well to read Matt Taibbi's latest piece for
Rolling Stone.
According to congressional testimony by an SEC whistleblower, which
sparked an investigation by that agency's Inspector General, the
commission's enforcement division, under orders from higher-ups, who
went on to secure well-paid positions with the firms they were charged
to regulate, shredded a mountain of incriminating evidence detailing wrongdoing by some of the world's top financial firms.
How many files, called "Matters Under Investigation" or MUI were
destroyed? According to whistleblower Darcy Flynn, the SEC's enforcement
division "disappeared" some 18,000 files, including those of convicted
fraudster Bernie Madoff, accused swindler, suspected
CIA banker and
drug money launderer R. Allen Stanford, as well as accusations that
top-tier Wall Street investment banks such as J.P. Morgan Chase had
engaged in insider trading.
Taibbi writes that "under a deal the SEC worked out with the
National Archives and Records Administration, all of the agency's
records--'including case files relating to preliminary
investigations'--are supposed to be maintained for at least 25 years.
But the SEC, using history-altering practices that for once actually
deserve the overused and usually hysterical term 'Orwellian,' devised an
elaborate and possibly illegal system under which staffers were
directed to dispose of the documents from any preliminary inquiry that
did not receive approval from senior staff to become a full-blown,
formal investigation."
It's a nice deal if you can get it, which of course firms like
Goldman Sachs, J. P. Morgan Chase, Deutsche Bank, AIG and Lehman
Brothers (before their 2008 collapse) managed to get in spades.
"We'll
never know," Taibbi avers, "what the impact of those destroyed cases
might have been; we'll never know if those cases were closed for good
reasons or bad. We'll never know exactly who got away with what, because
federal regulators have weighted down a huge sack of Wall Street's
dirty laundry and dumped it in a lake, never to be seen again."
In this light, AntiSec's hack of VDI is instructive. If for nothing
else, it demonstrates that well-connected insiders reap billions from
the collapse of the global economy, divvying-up the spoils amongst
privileged friends and clients, including those inhabiting the
nethermost regions of the secret state.
Cyberwar: Bringing it All Back Home, and Waging War on the Global Economy
As
global elites scramble to seize as much advantage as possible over
their rivals as the economy craters, intelligence methods deployed as
part of imperialism's endless "War on Terror" have migrated with a
vengeance onto Wall Street.
Revelations by Anonymous earlier this year that a passel of
Pentagon-linked security contractors had joined forces to run covert ops
on whistleblowers and journalists set alarm bells ringing.
February's release of some
75,000 emails filched
from servers controlled by security grifters HBGary Federal and HBGary,
uncovered a sordid scheme by the Bank of American and the U.S. Chamber
of Commerce to target supporters of WikiLeaks and left-wing corporate
critics.
That hack, in addition to exposing BofA's illicit
"Team Themis" gambit, a co-production of white shoe law firm
Hunton & Williams, HBGary Federal,
HBGary,
Palantir Technologies (a recipient of CIA slush funds from its venture capital arm
In-Q-Tel) and
Berico Technologies, also revealed that the Pentagon and giant defense contractors such as
General Dynamics had
teamed up with HBGary to develop undetectable malware or "rootkits" for
America's emerging Cyberwar-Intelligence Complex, according to a series
of
documents published by the secrecy-shredding web site
Public Intelligence.
Additional files revealed that HBGary and ManTech International had
partnered-up with the National Security State for what they described
as
"Internet Based Reconnaissance Operations" that use "non-attributable internet access" methodologies (approved hacking
by the secret state) for "operating system and network application
identification," "identification of possible perimeter defense" for
"intelligence gap fill" and "counterintelligence research." In other
words, broad based internet spying on an array of "adversaries" (e.g.,
political dissidents, antiwar activists, anticorporate campaigners and
other enemies of the state).
Further research by Project PM's
OpMetalGear revealed
that defense giant Northrop Grumman and other firms such as HBGary
Federal, TASC and ManTech International were engaged in a bidding war to
spear the Pentagon's
Romas/COIN program (since renamed Odyssey).
That program, researcher Barrett Brown writes, is "a secretive and
immensely sophisticated campaign of mass surveillance and data mining
against the Arab world, allowing the intelligence community to monitor
the habits, conversations, and activity of millions of individuals at
once." (For additional background see: "Security Grifters Partner-Up on
Sinister Cyber-Surveillance Project,"
Antifascist Calling, July 3, 2011)
We can assume that once intelligence sources and methods intended to
target external enemies are turned inward and attack the American
people, financial insiders too, would find such tools an exemplary means
to crush their competitors and adversaries, the global working class.
Bankrupting and Criminalizing the State
"Economic warfare," economist and researcher Michel Chossudovsky, writing in
The Global Economic Crisis: The Great Depression of the XXI Century, "consists in destabilizing countries and impoverishing their respective populations."
Chossudovsky argues that "the manipulation of market forces through
the imposition of strong 'economic medicine' under the helm of the IMF
supports U.S.-NATO strategic and geopolitical objectives."
Similarly," Chossudovsky observes, "the speculative attacks waged by
powerful banking conglomerates in the currency, commodity and stock
markets are acts of financial warfare," one in which the "financing of
an oversized U.S. war economy triggers imbalances in the U.S. monetary
system, destabilizes the U.S. fiscal structure and creates imbalances in
the allocation of human and material resources."
This tragedy is playing out today. The on-going market meltdown in
the wake of the U.S. credit downgrade and the crisis in the Eurozone has
affected tens of millions of workers who saw their retirement funds
gobbled up by speculators. Additionally, states and municipalities
"carrying debt tied to federal creditworthiness," The Tech Herald avers, "each took a hit."
Hard hit cities and states struggling under an enormous debt burden
due to falling revenues, are held hostage by the credit rating agencies.
As economist Michael Hudson points out in
Global Research credit
rating agencies such as Standard and Poor's, Moody's and Fitch "are
playing the political role of 'enforcer' as the gatekeepers to credit,
to put pressure on Iceland, Greece and even the United States to pursue
creditor-oriented policies that lead inevitably to financial crises."
Hudson writes that these "crises in turn force debtor governments to
sell off their assets under distress conditions. In pursuing this
guard-dog service to the world's bankers, the ratings agencies are
escalating a political strategy they have long been refined over a
generation in the corrupt arena of local U.S. politics."
As the
World Socialist Web Site observes,
"the crisis of the world's stock exchanges and financial markets is
increasingly spiraling out of control. Governments are being driven by
developments which they are unable to influence."
Socialist critic Peter Schwarz notes that "the panic on the stock
markets shows that traders are expecting a deep recession, already
heralded by stagnating growth and rising unemployment rates," and that
"corporations will respond with new waves of layoffs, governments with
further budget cuts."
In a climate stoked by fear, war and those all-purpose boogeymen,
"debt," "terror" and now, "cyberwar," the cost of bailing-out a looted
capitalist economy are shouldered by the working class. These pressures
in turn increase the downward spiral as employment, wages, manufacturing
and consumer spending go into a tail-spin, a self-destructive feed-back
loop that further exacerbates levels of unemployment, home foreclosures
and generalized misery. The tentacles of this manufactured "debt
crisis" reach everywhere--from the smallest town to the largest city.
Hudson avers that "localities are pressured when their rising debt
levels lead to a financial stringency. Banks pull back their credit
lines, and urge cities and states to pay down their debts by selling off
their most viable public enterprises."
And waiting in the wings are a new class of corporate vultures and
rentier vampires who swoop down to reap the rewards gleaned by
gobbling-up (looting) public assets at fire sale prices.
The
rating agencies who profit at both ends of any transaction according to
Hudson, "offer opinions" that have become a "big business" for the
agencies. "So it is understandable why their business model opposes
policies--and political candidates--that support the idea of basing
public financing on taxation rather than by borrowing. This
self-interest colors their 'opinions'."
Accordingly, "to acquiescence in such economically destructive
financial behavior is the opposite of fiscal responsibility. Cutting
federal taxes and Social Security payments to obtain a more positive
S&P 'opinion," Hudson writes, "would give banks an ability to 'pull
the plug' and force privatization and anti-labor austerity plans by
refraining from rolling over the U.S. debt--and cutting taxes Tea-Party
style rather than funding spending by taxation on a
pay-as-you-go-basis."
In this light, one can certainly understand why a Merrill Lynch
"wealth management advisor" would offer her "knowledgeable judgement"
(clubby insider info) to a dodgy security outfit such as VDI.
Working classes across Europe have not "gone gently into the night" of impoverishment; the great fear here in the heimat amongst
corporatists and militarists alike, is that once working people realize
the game is up they just might impose some "shock therapy" of their
own!
As
Salon columnist
Glenn Greenwald (a target of "Team Themis's" dirty tricks campaign)
avers, speaking out about "the sprawling Surveillance State and the
attempted criminalization of WikiLeaks and whistleblowing are so vital"
to the defense of democracy.
"The free flow of information and communications enabled by new
technologies--as protest movements in the Middle East and a wave of
serious leaks over the last year have demonstrated--is a uniquely potent
weapon in challenging entrenched government power and other powerful
factions," Greenwald writes.
"And that is precisely why those in power--those devoted to
preservation of the prevailing social order--are so increasingly fixated
on seizing control of it and snuffing out its potential for subverting
that order: they are well aware of, and are petrified by, its power, and
want to ensure that the ability to dictate how it is used, and toward
what ends, remains exclusively in their hands."
This is why actions by disparate groups such as AntiSec, Anonymous
and WikiLeaks are informational beacons in an otherwise homogenized
media landscape, one characterized by celebrity gossip, sex scandals and
"crimes" carried out by poor and marginalized populations--never the
filthy rich or the warmongers who murder millions as they launch
resource wars that steal other people's social property.
While firms such as VDI, Boeing, General Atomics and Lockheed Martin
hawk drone technologies that transform human beings into red mist, and
do so as their "patriotic" (and highly-profitable) duty as the Pentagon
wholeheartedly embraces hypermodern forms of robotized mass murder, the
bill for American hubris, long past due, is coming faster than most
people think.
