Over 100,000 Pakistanis rallied in Karachi Friday afternoon to protest US drone strikes on their country. The demonstrators also demanded that the Pakistani government continue the blockade on the NATO supply route to Afghanistan.

Over 100,000 Pakistanis rallied in Karachi Friday afternoon to protest US drone strikes on their country. The Times of India reports:

DAVOS — Pakistan’s prime minister said today that there was “a trust deficit” between Islamabad and Washington as he criticized the resumption of US drone strikes on his country’s tribal belt.

Speaking the day after over 100,000 people massed in Karachi to protest the strikes, Yousuf Raza Gilani said they only served to bolster militants.

“Drones are counter-productive. We have very ably isolated militants from the local tribes. When there are drone attacks that creates sympathy for them again,” Gilani told reporters at the Davos forum.

“It makes the job of the political leadership and the military very difficult. We have never allowed the drone attacks and we have always maintained that they are unacceptable, illegal and counterproductive.”

Relations between the United States and Pakistan have deteriorated sharply over the last year, with Islamabad furious about the surprise deadly raid on al-Qaeda chief Osama bin Laden’s hideout in Abbottabad last year. [...]

In public, Pakistani leaders always insist they are against drone strikes, which are deeply unpopular in the country, but US officials insist that they privately cooperate with the program.

Agence France-Presse reports:

“We are being forced to become extremists. When you and your religion are humiliated in Guantanamo Bay detention center and your children are being crushed under tanks, then what the victims will ultimately do? They’ll counter your extremism with extremism.”[...] “We are not the enemies of the people of the West and the United States, but we reject the Americans’ attitude by which they always demand of a servile obedience from us,” JUI leader Maulana Fazlur Rehman told the crowd in Pakistan’s financial capital.

The party was not against the talks between Pakistan and the US, “but it should be between two equal sides,” the leader of the country’s most influential religous party said, kicking off campaigning ahead of general elections scheduled next year.

Senior police official Ahsan Zulfiqar said more than 100,000 people attended the gathering in front of the mausoleum of the country’s founder Mohammad Ali Jinnah.

Rehman said communism vanished after the fall of Soviet Union and a similar fate was beckoning the West, with the US staring at an “imminent defeat” in Afghanistan.

“Movements like Occupy Wall Street are just the beginning of the end of the imperialism of America and its Western allies,” he said.

“We are being forced to become extremists. When you and your religion are humiliated in Guantanamo Bay detention center and your children are being crushed under tanks, then what the victims will ultimately do? They’ll counter your extremism with extremism.”

As an attack on Iran remains temporarily on the backburner and Syria, home to US-identified terrorist group Hamas, moves up the queue as the next target for military intervention, both are part of a larger strategy proposed to newly-elected Israeli Prime Minister Benjamin Netanyahu in 1996.

The “Clean Break: A New Strategy for Securing the Realm” suggested a “new approach to peace’ premised on a ‘clean break’ from the Oslo peace process of the 1990′s. Oslo would have withdrawn Israeli troops from the occupied territories while affirming Palestine’s right of self-determination. Rather than pursuing a ‘comprehensive peace’ with the Arab world, Clean Break advocated an aggressive pre-emptive military strategy to destabilize Iraq and eliminate Saddam Hussein. In addition, Clean Break retained the ‘right of hot pursuit’ anywhere within the occupied territories and encouraged ‘seizing the initiative’ by “engaging” Hezbollah, Syria and Iran to trigger ultimate regime change.

The key authors of that document, American neo-cons Richard Perle, David Wurmser and Douglas Feith (who Gen. Tommy Franks called the ‘f… stupidest guy on the face of the earth” i.e. Bob Woodward’s Plan of Attack, pg 281), soon found themselves influential national security positions within a receptive Bush Administration from which to proselytize their recommendations.

A decade later, the authors of that study are gone in name but their spirit of unending wars is alive and well within the Obama Administration’s recently announced “Defense Strategic Guidance” as part of “Sustaining US Global Leadership: Priorities for 21st Century Defense,” Where Clean Break offered what was then a radical Middle East military strategy, Obama’s DSG identifies US military priorities for the 21st century to “confront and defeat aggression anywhere in the world” with an emphasis on the Middle East and Asia-Pacific region as the “greatest challenges for the future.” (Panetta, 1-5-2012)

Even prior to announcement of the DSG, the American military is still pursuing WMD’s as combat troops have been deployed to chase local ‘terrorists’ that pose no threat to the US; such as the Lord’s Army in Uganda and escalating a US military presence dispatching 2,500 Marines to Australia to protect US ‘national interests’ in the South China Sea and Indian Ocean.

Addressing a January 5th news conference at the Pentagon, the president cited ‘enduring national interests’ as he read a prepared ten minute statement and left the podium without taking any questions; attending reporters remained in their places with bright, shiny faces leaving Defense Secretary Panetta and Joint Chief Martin Dempsey to carry on. With his usual eloquence, the president pledged that the United States is going to “maintain our military superiority … ready for the full range of contingencies and threats” and that ‘the US faces a complex and growing array of security challenges across the globe.”

The president’s grim pronouncements failed to reassure a US commitment to international law or to provide an analysis to justify a future of perpetual armed conflict and, as both Obama and Panetta postulated the pretense of victory in Iraq, neither acknowledged the 800-pound gorilla in the room that if the systematic destruction of Iraq and Afghanistan as a result of U.S. interventions was an example of providing for a ‘safer, more stable, prosperous world,’ then perhaps the world would be better off if the United States stayed at home and minded its own business..

In a questionable grip on reality, the president recounted the ‘extraordinary’ growth of country’s military budget since 9/11 as he acknowledged that “global responsibilities demand leadership, the defense budget will still be larger than it was toward the end of the Bush administration.” Obama went on to make the prediction that the American people will “accept a defense budget” that ‘continues to be larger than roughly the next ten countries combined.” As the news networks almost entirely allowed the implications of DSG to slide under the radar neglecting to inform the American public of the president’s generosity regarding his new military strategy, the average American taxpayer remains unaware of Obama’s future foreign policy objectives and its consequences for social programs that millions of Americans rely on. Nor has the American taxpayer benefited from a presidential explanation of how a budget ‘larger than it was’ will affect the country’s fragile economic stability.

With passage of the Congressional Budget Act of 1974, the Congressional Budget Office (CBO) is required to prepare budget projections for all Federal departments. Those projections are premised on a baseline budget process that predicts future budget increases based on inflation, new programs, increased administrative costs, etc. In a bi-partisan game of smoke and mirrors intent on tricking the taxpayer, it is reductions to this baseline budget projection that the Pentagon is now heralding as ‘cuts.’ Therefore, the $487 billion in ‘cuts’ over the next ten years are, in reality, coming out of the projections prepared by the CBO which explains why there are no cuts to any major weapons program.

In addition, with the Pentagon’s four-year baseline budget cycle of 2009, 2010, 2011 and 2012 at $515 billion, $533 billion, $549 billion and $531 billion, respectively; for the president and Panetta to claim that the proposed ‘baseline’ budget for 2013 of $525 billion is a dramatic cut representing significant savings does not meet the straight-face test or their ethical obligation to the country.

Neither the president nor Panetta felt any need to articulate a credible global threat that requires eternal armed vigilance as the country continues to dismantle its People Programs and as its infrastructure continues to crumble — nor did either provide the American people with a thoughtful rationale for who, why, when, where and how.

In sync with Clean Break’s principles, DSG provides a framework for reassuring any nervous Nellies of the US ability to sustain multiple wars simultaneously in multiple global locations as Secretary Panetta suggested “from a land war in South Korea and at the same time, threats in the Strait of Hormuz” (1-5-2012 news conference Q&A).

As DSG transforms the nature of US combat realigning its forces beyond the Mideast, the US will “of necessity” rebalance toward the Asia-Pacific region in recognition of the ‘growth of China’s military power….to avoid causing friction in the region.” Recognizing that ‘over the long term, China’s emergence as a regional power will have the potential to effect the US economy and our security in a variety of ways,” refers to more than just the US missing an interest payment on its debt or China knocking on our door to demand payment.

DSG eschews diplomacy as a viable alternative in favor of a military response to international tensions with a reduction in the need for ‘boots on the ground’ while relying on an increase in a leaner, meaner new generation of remote-powered guilt-free drones, the weapon that Ron Paul suggests are unconstitutional, and more agile, flexible Special Op troops.

After the president’s departure, Panetta, once known as a liberal House Democrat from California, began to morph into a gnarl-faced Dr. Strangelove with every utterance of war, enemies, threats, death and destruction as he touted U.S. military dominance and its ability to “decisively prevail in any conflict.’

With the world’s largest military force including an incomparable nuclear arsenal and a budget to match, exactly who are we protecting the Homeland from — and what condition will it be in when they arrive? If al Qaeda’s goal was to destroy the country’s quality of life, its economic prosperity or its high regard for the First Amendment and civil liberties while creating a second-rate banana republic, they have done a terrific job.

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Renee Parsons was a lobbyist for Friends of the Earth in Washington, D.C. focusing on nuclear energy issues. While at FOE, she was responsible for a TRO that stopped the Dept of Energy from conducting an experimental drilling program at 12 locations along the perimeter of Canyonlands National Park as a possible high-level nuclear waste repository. Her efforts included opposing the Nuclear Waste Policy Act and organizing the coalition that successfully defunded the Clinch River Breeder Reactor. She also served as staff in the U.S. House of Representatives. In 2005, she was elected to the Durango City Council (Colorado) and served four years as Councilor and Mayor.

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The Pentagon has decided that U.S. Marines who killed 24 Iraqi civilians in Haditha, Iraq on Nov. 19, 2005, will serve no jail time.

By Brian Becker, National Coordinator of the ANSWER Coalition

If only Private Bradley Manning had slaughtered innocent Iraqi civilians he would have been set free by the Pentagon. The Pentagon brass has kept Manning locked up for 21 months. They say that he leaked the 2007 video of a U.S. helicopter gunship massacring Iraqi civilians and journalists. Manning is facing life in prison for allegedly releasing classified documents and information to WikiLeaks that revealed U.S. war crimes.

In contrast, the Pentagon decided on Jan. 23, 2012, that there will be no jail time for any of the U.S. Marines who systematically and deliberately slaughtered 24 Iraqi civilians in their homes in Haditha, Iraq on Nov. 19, 2005. This was not a battle. They entered the homes of unarmed civilians at night and murdered children and their moms, dads and grandparents. The murdered were in their pajamas.

The superior officers of the rampaging Marines in Haditha lied and covered up the crime. The Pentagon brass, then under the leadership of Donald Rumsfeld, knew about the massacre and covered it up as well. A Pentagon statement issued just after the Haditha massacre described the incident as an insurgent ambush on a joint U.S.-Iraqi patrol that left insurgents, civilians and U.S. troops dead.

That the Pentagon lied about this war crime should be understood as the norm and not an exception. All Iraqis were seen as the enemy or potential enemy. Indeed, Iraqis from across the political and religious spectrum opposed the occupation of their country. As in the Vietnam War, rampant racism allowed occupying forces to treat the occupied people as less than human. For those involved it was just one more war crime in a criminal war.

The truth about the massacre came out when investigative journalist Tim McGirk broke the story in Time Magazine in March 2006. McGirk had been in contact with an Iraqi human rights organization that provided a video of the aftermath of the massacre. The evidence revealed the bodies of bloodied children in their pajamas, killed in their homes by grenades and direct gunfire.

The trial of the Marine unit’s leader, Sgt. Frank Wuterich, who was facing life in prison for the massacre, came to an abrupt end this week when he accepted the Pentagon prosecutor’s plea offer. In return for pleading guilty to negligent dereliction of duty, Wuterich was demoted in rank and will have his pay level reduced. Earlier, six other Marines had their charges for their roles in the massacre dropped, and one was acquitted. Those who carried out this known and documented war crime will suffer no real punishment at all.

Even if these individual Marines had been convicted, however, the big shot war criminals—both in and out of uniform—who ordered the invasion and occupation of Iraq, who authorized and institutionalized torture, secret prisons and targeted assassinations, have never been charged for their crimes.

This is part of an unspoken bipartisan agreement between the two parties of imperialism. Both Republican and Democratic administrations are unofficially immunized for any crime committed in the service of the U.S. global empire.

Exposing Pentagon lies

Iraq was torn apart by the U.S. war of aggression. No one knows for certain how many Iraqis perished, but it is minimally in the hundreds of thousands, and probably well over 1 million. Many more suffered grievous wounds. More than 5 million became internal and external refugees. A whole generation of Iraqi children suffered the trauma of living through a decade of war. Every family faced the fear and terror of simply driving up to a U.S.-staffed checkpoint in their own city or town. The rules of engagement for nervous U.S. soldiers was “shoot first, ask questions later.” After all, U.S. casualties inflamed anti-war sentiment at home, while Iraqi casualties were not even a brief media blip.

U.S. crimes in Iraq are being whitewashed inside the United States. Not only were Bush, Cheney and Rumsfeld shielded from prosecution by the Obama administration, but the semi-official narrative of the war can only be described as an example of falsification and national chauvinism.

When President Obama spoke to announce the removal of U.S. troops from Iraq in December 2011, he chose to speak at the military base in Fort Bragg to thousands of assembled soldiers. The speech was widely publicized and his version of history was designed to reach into homes throughout the United States.

He paid tribute to the suffering of U.S. soldiers in Iraq, but did not say anything about the Haditha massacre, the destruction of the city of Fallujah, the torture and humiliation at Abu Ghraib prison, or the multiple other episodes that are permanently imprinted on the consciousness of the Iraqi people. That comes as no surprise. But President Obama’s speech did not include even one word about the suffering of Iraqis from the war.

He said, “We know too well the heavy cost of this war. More than 1.5 million Americans have served in Iraq—1.5 million. Over 30,000 Americans have been wounded, and those are only the wounds that show. Nearly 4,500 Americans made the ultimate sacrifice—including 202 fallen heroes from here at Fort Bragg—202. So today, we pause to say a prayer for all those families who have lost their loved ones, for they are part of our broader American family. We grieve with them.”

The attempt to omit from history the pain and suffering—as well as the heroic resistance—of the Iraqi people must be challenged and contested. This falsified history is a prescription for promoting national chauvinism in the broader population. Such consciousness is useful for the Pentagon and the Military-Industrial Complex as they continue the era of endless imperialist war. We need to tell the truth about Iraq and expose the lies of the Pentagon.

Instead of endless war and occupation on behalf of capitalism and imperialism, we promote a program of international solidarity. Millions of people in the United States recognize that the war and occupation are great crimes. They support the demand that Iraq be paid reparations by the U.S. government for the wanton acts of death and destruction inflicted by the invading forces.

Also read: The Logic of War Crimes in a Criminal War, written by Brian Becker and Mara Verheyden-Hilliard in 2006.

The ANSWER Coalition is organizing every day all over the country against war, racism and economic injustice. Please make an urgently needed donation now to support this critical work.

Perhaps you’ve heard of “Makin’ Thunderbirds,” a hard-bitten rock & roll song by Bob Seger that I listened to 30 years ago while in college.  It’s about auto workers back in 1955 who were “young and proud” to be making Ford Thunderbirds. But in the early 1980s, Seger sings, “the plants have changed and you’re lucky if you work.” Seger caught the reality of an American manufacturing infrastructure that was seriously eroding as skilled and good-paying union jobs were cut or sent overseas, rarely to be seen again in these parts.

If the U.S. auto industry has recently shown sparks of new life (though we’re not making T-Birds or Mercuries or Oldsmobiles or Pontiacs or Saturns anymore), there is one form of manufacturing in which America is still dominant. When it comes to weaponry, to paraphrase Seger, we’re still young and proud and makin’ Predators and Reapers (as in unmanned aerial vehicles, or drones) and Eagles and Fighting Falcons (as in F-15 and F-16 combat jets), and outfitting them with the deadliest of weapons. In this market niche, we’re still the envy of the world.

Showing a marked aversity for anything remotely resembling the truth, Tennessee Tea Party leaders have issued “demands” to state legislators that schools stop teaching - through “neglect and outright ill-will” – all that bad stuff about our fine Founding Fathers like the “made-up criticism” that maybe they owned slaves or killed Indians or did other icky things, and that, “No portrayal of minority experience in the history which actually occurred shall obscure the experience or contributions of the Founding Fathers, or the majority of citizens.” This, after Texas approved 100 revisions to textbooks for its almost five million kids that would rename slave trade “Atlantic triangular trade,” explore the “unintended consequences” of affirmative action,” emphasize the role of the Christian Chuch in the nation’s founding, call for studying iconic conservatives like Phyllis Schlafly and The Moral Majority, and otherwise twist “history” to their liking.

“We seek to compel the teaching (of) the truth regarding the history of our nation and the nature of its government.”

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On Saturday in Somalia, the U.S. fired missiles from a drone and killed the 27-year-old Lebanon-born, ex-British citizen Bilal el-Berjawi. His wife had given birth 24 hours earlier and the speculation is that the U.S. located him when his wife called to give him the news. Roughly one year ago, El-Berjawi was stripped of his British citizenship, obtained when his family moved to that country when he was an infant, through the use of a 2006 British anti-Terrorism law — passed after the London subway bombing — that the current government is using with increasing frequency to strip alleged Terrorists with dual nationality of their British citizenship (while providing no explanation for that act). El-Berjawi’s family vehemently denies that he is involved with Terrorism, but he was never able to appeal the decree against him for this reason:

Berjawi is understood to have sought to appeal against the order, but lawyers representing his family were unable to take instructions from him amid concerns that any telephone contact could precipitate a drone attack.

Obviously, those concerns were valid. So first the U.S. tries to assassinate people, then it causes legal rulings against them to be issued because the individuals, fearing for their life, are unable to defend themselves. Meanwhile, no explanation or evidence is provided for either the adverse government act or the assassination: it is simply secretly decreed and thus shall it be.

Exactly the same thing happened with U.S. citizen Anwar Awlaki. When the ACLU and CCR, representing Awlaki’s father, sued President Obama asking a federal court to enjoin the President from killing his American son without a trial, the Obama DOJ insisted (and the court ultimately accepted) that Awlaki himself must sue on his own behalf. Obviously, that was impossible given that the Obama administration was admittedly trying to kill him and surely would have done so the minute he stuck his head up to contact lawyers (indeed, the U.S. tried to kill him each time they thought they had located him, and then finally succeeded). So again in the Awlaki case: the U.S. targets someone for death, and then their inability to defend themselves is used as a weapon to deny their legal rights.

The refusal to provide transparency is also the same. Ever since Awlaki was assassinated, the Obama administration has steadfastly refused to disclose not only any evidence to justify the accusations of Terrorism against him, but also the legal theories it is using to assert the power to target U.S. citizens for death with no charges. A secret legal memo authorizing the Awlaki assassination, authored by Obama lawyers David Baron and Marty Lederman, remains secret. During the Bush years, Democratic lawyers vehemently decried the Bush DOJ’s refusal to release even OLC legal memoranda as tyrannical “secret law.” One of the lawyers most vocal during the Bush years about the evils of “secret law,” Dawn Johnsen (the never-confirmed Obama appointee to be chief of the OLC) told me back in October: “I absolutely do not support the concealment of OLC’s Awlaki memo . . . .The Obama administration should release either any existing OLC memo explaining why it believes it has the authority for the targeted killings or a comparably detailed legal analysis of its claimed authorities.”

A Daily Beast report today says that the Obama administration “is finally going to break its silence” on the Awlaki killing, but here’s what they will and will not disclose:

In the coming weeks, according to four participants in the debate, Attorney General Eric Holder Jr. is planning to make a major address on the administration’s national-security record. Embedded in the speech will be a carefully worded but firm defense of its right to target U.S. citizens. . . .

An early draft of Holder’s speech identified Awlaki by name, but in a concession to concerns from the intelligence community, all references to the al Qaeda leader were removed. As currently written, the speech makes no overt mention of the Awlaki operation, and reveals none of the intelligence the administration relied on in carrying out his killing.

In other words, they’re going to dispatch Eric Holder to assert that the U.S. Government has the power to target U.S. citizens for assassination by-CIA-drone, but will not even describe a single piece of evidence to justify the claim that Awlaki was guilty of anything. In fact, they will not even mention his name. As Marcy Wheeler said today:

This is simply an asinine compromise. We all know the Administration killed Awlaki. We all know the Administration used a drone strike to do so. . . .

The problem–the problem that strikes at the very heart of democratic accountability–is that the Administration plans to keep secret the details that would prove (or not) that Awlaki was what the Administration happily claims he is under the veil of anonymity, all while claiming that precisely that information is a state secret.

The Administration seems to be planning on making a big speech on counterterrorism–hey! it’s another opportunity to brag again about offing Osama bin Laden!–without revealing precisely those details necessary to distinguish this killing, and this country, from that of an unaccountable dictator.

The CIA seems to have dictated to our democratically elected President that he can’t provide the kind of transparency necessary to remain a democracy. We can kill you–they appear to be planning to say–and we’ll never have to prove that doing so was just. You’ll just have to trust us!

That, of course, is the heart and soul of this administration’s mentality when it comes to such matters, and why not? Between Republicans who always cheer on the killing of Muslims with or without any explanation or transparency, and Democrats who do so when their leader is the assassin, there is little political pressure to explain themselves. If anything, this planned “disclosure” makes the problem worse, since we will now have the spectacle of Eric Holder, wallowing in pomp and legal self-righteousness, finally defending the power that Obama already has seized — to assassinate U.S. citizens in secret and with no checks — but concealing what is most needed: evidence that Awlaki was what the U.S. Government claims he is. That simply serves to reinforce the message this Government repeatedly sends: as Marcy puts it, “We can kill you and we’ll never have to prove that doing so was just. You’ll just have to trust us!” The Yemen expert Gregory Johnsen added: “The US legal opinion on Awlaki is one thing, but it rests on assumptions made by the intelligence community, which won’t be revealed.”

This no longer seems radical to many — it has become normalized — because it’s been going on for so long now and, more important, it is now fully bipartisan consensus. But to see how extreme this all really is, to understand what a radical departure it is, just consider what George Bush’s neocon Ambassador to Israel, Martin Indyk, told the Israelis in 2001, as flagged by this Guardian Op-Ed by Mary Ellen O’Connell comparing Obama’s assassinations to Bush’s torture program:

The United States government is very clearly on the record as against targeted assassinations. They are extrajudicial killings, and we do not support that.

What George Bush’s Ambassador condemned to the Israelis’ face just a decade ago as something the nation was steadfastly against has now become a staple of government policy: aimed even at its own citizens, and carried out with complete secrecy. And those who spent years mocking the notion that “9/11 Changed Everything” will have no choice but to invoke that propagandistic mantra in order to defend this: what else is there to say?

Obama’s latest housing market chicanery should come as no surprise. As we discuss below, he will use the State of the Union address to announce a mortgage “settlement” by Federal regulators, and at least some state attorneys general. It’s yet another gambit designed to generate a campaign talking point while making the underlying problem worse.

The president seems to labor under the misapprehension that crimes by members of the elite must be swept under the rug because prosecuting them would destabilize the system. What he misses is that we are well past the point where coverups will work, and they may even blow up before the November elections. If nothing else, his settlement pact has a non-trivial Constitutional problem which the Republicans, if they are smart, will use to undermine the deal and discredit the Administration.

To add insult to injury, Obama is apparently going to present his belated Christmas present to the banking industry as a boon to ordinary citizens. He refused to appoint a real middle class advocate, Elizabeth Warren, to the Consumer Financial Protection Bureau, but he’s not above stealing her talking points.

We and other commentators have discussed how the mortgage settlement negotiations nominally led by Iowa attorney general Tom Miller had descended into farce. Almost nothing the Miller camp said was believable. They were presented as “attorney general” discussions when the Administration was pulling the strings. They’ve described a deal as weeks away for over a year. They kept claiming that they had undertaken investigations when not a single subpoena was issued by the AGs still involved in the negotiations. They’ve argued from the get go that a pact will be good for homeowners when the deal reached by under-resourced Nevada attorney general Catherine Cortez Masto with a single servicer, Saxon, resulted in a payout that is 10 to 20 times what the Administration is calling a victory. And that assumes that the banks will live up to their side of the deal when past settlements of servicing abuses have shown that they don’t.

The administration has finally woken up to the fact that the housing mess is almost certain to get worse before it gets better, and Obama must therefore be armed with better propaganda. The Miller-led talks have become a bit of an embarrassment and needed to be put out of their misery. So Team Obama and Federal banking regulators have agreed on terms and as we discussed last Friday, are upping the pressure on state attorneys general to fall into line. As reported by Shahien Nasiripour of the Financial Times:

Banks and government negotiators have cleared a big hurdle in efforts to resolve allegations of widespread mortgage-related misdeeds, agreeing on terms for a settlement that are being circulated to the 50 US states for approval, state officials and a bank representative say.

The proposed pact would potentially reduce mortgage balances and monthly payments by more than $25bn for distressed US homeowners…

State prosecutors have already received a set of documents detailing new mortgage servicing standards that the banks and the government negotiators have agreed to. The states were also being sent documents detailing other main components of the deal, such as the liability release for the banks, the so-called “menu” of options describing the various forms of aid to be given to borrowers, as well as the precise language of the so-called “most favoured nation” clause, which spells out how participating states in the deal would be eligible to receive more advantageous terms should a holdout state strike a more favourable deal on its own with the five targeted banks.

The story did not outline terms, but previous leaks have indicated that the bulk of the supposed settlement would come not in actual monies paid by the banks (the cash portion has been rumored at under $5 billion) but in credits given for mortgage modifications for principal modifications. There are numerous reasons why that stinks. The biggest is that servicers will be able to count modifying first mortgages that were securitized toward the total. Since one of the cardinal rules of finance is to use other people’s money rather than your own, this provision virtually guarantees that investor-owned mortgages will be the ones to be restructured. Why is this a bad idea? The banks are NOT required to write down the second mortgages that they have on their books. This reverses the contractual hierarchy that junior lien-holders take losses before senior lenders. So this deal amounts to a transfer from pension funds and other fixed income investors to the banks, at the Administration’s instigation.

Another reason the modification provision is poorly structured is that the banks are given a dollar target to hit. That means they will focus on modifying the biggest mortgages. So help will go to a comparatively small number of grossly overhoused borrowers, no doubt reinforcing the “profligate borrower” meme.

But those criticisms assume two other things: that the program is actually implemented. The experience with past consent decrees in the mortgage space is that the servicers get a legal get out of jail free card, a release, and do not hold up their end of the deal. Similarly, we’ve seen bank executives swear in front of Congress in late 2010 that they had stopped robosigning, which turned out to be a brazen lie. So here, odds favor that servicers will pretty much do nothing except perhaps be given credit for mortgage modifications they would have made anyhow.

There are two clever features of the deal, but neither look intended to benefit ordinary citizens. One is that the deal throws some funding at chronically cash stressed mortgage counselors. They are thus certain to voice approval of the pact. The other is (per the FT story) the deal’s “most favored nations clause” is designed to reduce the bargaining leverage of any AGs that go their own way. It means that any servicer will have the incentive to fight hard against giving any state a better deal because it will automagically trigger improved terms across the states that signed on to the Federal deal. But this may have interesting perverse effects, since banks that refuse to settle with breakaway AGs will ultimately have damages awarded by a court. That means longer and most costly fights by the states, but in most cases, ultimately bigger awards (frankly, the fact set is so bad that all the state AGs need to do is focus on fairly conservative legal theories to have good odds of scoring big wins).

Dave Dayen seemed to think that the AG rebellion was likely to stay firm, given how few of the Democrats were going to Chicago on Monday for an arm-twisting meeting with HUD head Shaun Donovan and an unnamed emissary from the Department of Justice. I would not be so certain. With states so budget starved, I don’t see how anyone can justify sending a live body to Chicago when a phone briefing would work just as well. More important, the most favored nation clause is nasty, and may nudge some fence-sitters over the line.

And I have also been told that Donovan was on the Hill late last week pressuring Congressmen to support the deal. Since this is a regulatory measure that does not require Congressional approval, this move is meant to deprive dissenting state AGs from any support in local media from sympathetic Congressmen. For instance, 31 California representatives wrote the Justice Department, the Federal Reserve and the Office of the Comptroller of the Currency calling on them to “investigate possible violations of law or regulations by financial institutions in their handling of delinquent mortgages, mortgage modifications and foreclosures.” Clearly they could be expected to support California attorney general Kamala Harris’ withdrawal of the deal. Donovon is trying to get them and like minded solons speaking from the Obama script.

But the Administration’s scheme may not be playing out according to script. Senator Sherrod Brown sent a letter last week to associate attorney general Thomas Perelli, Donovan, the CFPB’s Richard Cordray and Tom Miller criticizing the settlement pact. It could have been written by Naked Capitalism readers. Key section:

Now while Republicans may relish the specter of Democrats infighting, the fact is no one is going to want to be seen to be undermining the leader of the party in an election year. So that will put a damper on how aggressive the opponents will be. And media outlets have been amplifying Obama’s efforts to take credit for gravity. For instance, the Administration is touting the fall in foreclosures as an indicator of success when their policies have ranged from do nothing to disasters like HAMP. The fall in foreclosures is actually a sign of failure, as banks are attenuating the process more and more, in some cases due to their inability to come up with necessary documentation, in others out of a desire to wring even more fees out of investors (when a borrower can’t pay, the bank’s fees come first out of the eventual sale of the house).

Either a Gingrich nomination or Romney getting too dented during Republican primary fights increase the odds of what heretofore seemed impossible: an Obama win in November. So if the Republicans were smart, they’d take advantage of a serious weakness in this deal: that it violates the 5th Amendment takings clause. I am told by Bill Frey of Greenwich Financial that a servicer safe harbor provision in HAMP, which was supposed to shield servicers from investor lawsuits over mortgage modifications, was passed by both the House and Senate but was removed in reconciliation because that provision would have run afoul of the 5th Amendment. This settlement is intended to have servicers engage in even more aggressive mortgage modifications and would thus seem to have precisely the same Constitutional problem.

As I urged last week, please call your state attorney general and tell them you think taking from your pension to enrich banks for abusing homeowners is a lousy idea and they should therefore refuse to sign on to the settlement. You can find their phone numbers here. Please call today if you haven’t already. Thanks!

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Yves Smith is the pen name of Susan Webber, a Principal of Aurora Advisors, Inc. and publisher of the Naked Capitalism blog.

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by BAR editor and columnist Jemima Pierre, PhD

There they were, at the official ceremony: the living, breathing banes of Haiti’s existence. “Rubbing shoulders on stage, shaking hands and exchanging pleasantries were Haitian President Michel Martelly, former US President and UN Special Envoy, Bill Clinton, and, Jean Claude Duvalier,” the mass murderer and former dictator. The dictator is hoping for some kind of comeback, and the puppet president “will open up Haiti to permanent US occupation and economic exploitation while terrorizing Haitians who fight back.” Clinton oversees the whole process on behalf of imperialism.

“Duvalier has been allowed to roam Haiti’s streets, even dining at the finest restaurants with the likes of Sean Penn.”

Lost amidst the heart-wrenching stories and photographs of the “poor Haitians” living in squalor and misery circulating on the second anniversary of the 12 January 2010 earthquake, another set of images appeared. Few people noticed these other images – they received little attention in the mainstream media – but they offer an insight into the prospects for Haiti’s reconstruction and, indeed, into the prospects for Haiti’s political and economic future.

The images [4] were taken during the official commemoration ceremonies at the hillside ofTitanyen [5] [pdf], north of Port-au-Prince, where former dictators Jean Claude Duvalier and his father, Francois Duvalier, discarded the bodies of their political opponents. After the earthquake, it became the gravesite of thousands of unidentified earthquake victims. During the ceremonies, local delegates and international diplomats paid their respects to the Haitians that lost their lives and pledged to help those who lived. But the most striking image [6] that emerged during the ceremonies was that of an immoral triumvirate. Rubbing shoulders on stage, shaking hands and exchanging pleasantries were Haitian President Michel Martelly, former US President and UN Special Envoy, Bill Clinton, and, Jean Claude Duvalier. To understand the future of Haiti, we have to shift our focus from the “poor Haitians” who dominate Haiti coverage and understand the significance of these three figures to the shaping of US imperial designs on Haiti.

“President Martelly is the face – and backbone – of a resurgent Duvalierism.”

“Baby Doc” Duvalier returned to Haiti after twenty-five years in exile on 16 January 2010. His arrival was supposedly a surprise, though it is becoming clear that he was given the go-ahead by France and the United States. The Obama administration’s relative silence around the return of Duvalier needs to be contrasted with the noise it made while it forcefully [7] tried to prevent [8] the return of Jean Bertrand Aristide, Haiti’s first democratically elected President. The contrast smacks of duplicity. Let’s remember that under Duvalier (and his father, Francois) nearly 50,000 [9] Haitians were killed, disappeared, and tortured by the reviled tonton macoutes [10], his private army. At the same time, Duvalier embezzled [11] hundreds of millions of dollars, most of which sponsored an exiled life of grandeur [12]. Despite the calls for his arrest and prosecution by Haitian survivors, lawyers, and international human rights organizations, Duvalier has been allowed to roam Haiti’s streets, even dining at the finest restaurants with the likes of Sean Penn.

What does Duvalier symbolize? For Haiti’s elite, he represents a form of totalitarian nostalgia. There is a cultish aura that surrounds Duvalier, a reminder of the era of “macoutized bourgeoisie [13],” as journalist Kim Ives has referred to it, when there was an alliance between the elite and the paramilitary forces of terror. But Duvalierism was also good for US politics and economics. In the 1960s, they needed Francois (“Papa Doc”) Duvalier to offset the rise of revolutionary communist Cuba. Under Jean Claude (“Baby Doc”), they were able to open up the Haitian markets and resources to US businesses, expand sweatshops, and lay the basis for the coming neoliberal economic policies.

“Duvalierism was good for US politics and economics.”

This is where the US-selected President Martelly and “Papa” Bill Clinton come in. As we’ve pointed out here [14] on Black Agenda Report, right-wing candidate Martelly was handpicked by the Obama administration to become Haiti’s president in a forced election marred by irregularities and low voter turn out. More importantly, he is the face – and backbone – of a resurgent Duvalierism. His Duvalier affinities are well known as is his animus [15] towards former President Aristide. He has historic ties with Duvalier loyalists, has called for “amnesty [16]” for Duvalier, and is now in the process of reestablishing the Haitian army. Moreover, his erratic and belligerent interactions with his constituency and political colleagues – and, in particularly, his threats against Haitian journalists – are early indications of his repressive tendencies.

But he is a good puppet. As Ezili Danto of the Haitian Lawyers Leadership Network reminds us: “Martelly is merely a tool to be used by those ‘more schooled in the patterns of privilege and domination’ than any self-serving Haiti politician could ever dream to be. Martelly is the valve that releases accumulated surface pressure while reinforcing the ‘violent Haitian’ narrative. Brilliant US/Euro move. A no brainer.” In the meantime, he will open up Haiti to permanent US occupation and economic exploitation while terrorizing Haitians who fight back. As the U.S. attempts to consolidate its military presence in the Western hemisphere, control of Haiti is important. For many, this is one of the reasons explaining Haiti’s currently military occupation by the UN-led criminal force, MINUSTAH, the largest UN military force in a country that is not at war. It is also the reason for the massive new US embassy in Haiti, the fourth largest US embassy in the world.

“Clinton practically dictates Haitian policy.”

And then there’s Bill Clinton. Clinton provides the “kind [17]” face of US control of Haiti. With his push to turn Haiti into a Western tourist paradise while Haitians become cheap sweatshop labor [18] for making Western goods, Clinton is the arbiter of a new phase of neoliberalism. Clinton practically dictates Haitian policy. In fact, in one of the more absurd and nepotistic twists of Haiti’s political history, Haiti’s Prime Minister, Gary Conille, is Clinton’s former chief of staff [19]. Conille also has a long family [19] history with the Duvaliers: his father was a minister to Baby Doc. As @dominique_e recently said on twitter, everything is set to “kill Haiti with neoliberalism.”

Last week, Glen Ford remarked [20] that in the US media, “Haiti is most often spoken of as a tragedy – when it is actually the scene of horrific crimes, mainly perpetrated by the United States over the span of two centuries.” With the puppet, the dictator, and the president on the scene, it is hard to imaging a more sinister cohort guiding Haiti down the path of US exploitation.

Jemima Pierre can be reached at BAR1804@gmail.com [21].