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Why 3 US banks collapsed in 1 week: Economist Michael Hudson explains

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SOCIAL CHAOS IN OUR TIME




Mar 14, 2023

Geopolitical Economy Report

Economist Michael Hudson analyzes the collapse of Silicon Valley Bank, Silvergate, and Signature Bank, explaining the similarities to the 2008 financial crash. He also addresses the US government bailout (which it isn't calling a bailout), the role of the Federal Reserve and Treasury, the factor of cryptocurrency, and the danger of derivatives.

Check out the playlist for the show that Michael Hudson co-hosts here, Geopolitical Economy Hour:    • Radhika Desai & M...  


Michael's column "Why the US banking system is breaking up": https://geopoliticaleconomy.com/2023/...
Michael's other article "Why the US bank crisis is not over": https://geopoliticaleconomy.com/2023/...

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Addendum

Michael Hudson: Why the US banking system is breaking up

Geopolitical Economy Report


Economist Michael Hudson responds to the collapse of Silicon Valley Bank and Silvergate, and explains the similarities with the 2008 financial crash and the savings and loan crisis of the 1980s.


By Michael Hudson

A run on American Union Bank in 1932 (U.S. Information Agency., Public Domain)

 

The California-based, cryptocurrency-focused Silvergate Bank collapsed on March 8. Two days later, Silicon Valley Bank went down as well, in the largest ever bank run. The latter was the second-biggest bank to fail in US history, and the most influential financial institution to crash since the 2008 crisis.  Economist Michael Hudson, co-host of the program Geopolitical Economy Hour, analyzes the disaster:


The breakup of banks that is now occurring in the United States is the inevitable result of the way in which the Obama administration bailed out the banks in 2008.

When real estate prices collapsed, the Federal Reserve flooded the financial system with 15 years of quantitative easing (QE) to re-inflate real estate prices – and with them, stock and bond prices.

What was inflated were asset prices, above all for the packaged mortgages that banks were holding, but also for stocks and bonds across the board. That is what bank credit does.

This made trillions of dollars for holders of financial assets – the One Percent and a bit more.

The economy polarized as stock prices recovered, the cost of home ownership soared (on low-interest mortgages), and the U.S. economy experienced the largest bond-market boom in history, as interest rates fell below 1%.

But in serving the financial sector, the Fed painted itself into a corner. What would happen when interest rates finally rose?

Rising interest rates cause bond prices to fall. And that is what has been happening under the Fed’s fight against “inflation,” by which it means rising wage levels.

Prices are plunging for bonds, and also for the capitalized value of packaged mortgages and other securities in which banks hold their assets against depositors.

The result today is similar to the situation that savings and loan associations (S&Ls) found themselves in the 1980s, leading to their demise.

S&Ls had made long-term mortgages at affordable interest rates. But in the wake of the Volcker inflation, the overall level of interest rates rose.

S&Ls could not pay their depositors higher rates, because their revenue from their mortgages was fixed at lower rates. So depositors withdrew their money.

To obtain the money to pay these depositors, S&Ls had to sell their mortgages. But the face value of these debts was lower, as a result of higher rates. The S&Ls (and many banks) owed money to depositors short-term, but were locked into long-term assets at falling prices.

Of course, S&L mortgages were much longer-term than was the case for commercial banks. And presumably, banks can turn over assets for the Fed’s line of credit.

But just as QE was followed to bolster the banks, its unwinding must have the reverse effect. And if it has made a bad derivatives trade, it’s in trouble.

SVB bank melts down following a Thursday where its stock fell off the cliff, dropping 60% in one day. For those in the crowds, it’s feeling like 1929 all over again as customers converge on the bank’s locations in a modern-day bank run. https://t.co/ghLkVaDJKR

— Boston Herald (@bostonherald) March 10, 2023

Any bank has a problem of keeping its asset prices up with its deposit liabilities. When there is a crash in bond prices, the bank’s asset structure weakens. That is the corner into which the Fed has painted the economy.

Recognition of this problem led the Fed to avoid it for as long as it could. But when employment began to pick up and wages began to recover, the Fed could not resist fighting the usual class war against labor. And it has turned into a war against the banking system as well.

Silvergate was the first to go. It had sought to ride the cryptocurrency wave, by serving as a bank for various brand names.

After vast fraud by Sam Bankman-Fried (SBF) was exposed, there was a run on cryptocurrencies. Their managers paid by withdrawing the deposits they had at the banks – above all, Silvergate. It went under. And with Silvergate went many cryptocurrency deposits.

The popular impression was that crypto provided an alternative to commercial banks and “fiat currency.” But what could crypto funds invest in to back their coin purchases, if not bank deposits and government securities or private stocks and bonds?

What was crypto, ultimately, if not simply a mutual fund with secrecy of ownership to protect money launderers?

Silvergate was a “special case,” given its specialized deposit base. Silicon Valley Bank also was a specialized case, lending to IT startups. First Republic Bank was specialized, too, lending to wealthy depositors in San Francisco and the northern California area.

All had seen the market price of their financial securities decline as Chairman Jerome Powell raised the Fed’s interest rates. And now, their deposits were being withdrawn, forcing them to sell securities at a loss.

Reuters reported on March 10 that bank reserves at the Fed were plunging. That hardly is surprising, as banks are paying about 0.2% on deposits, while depositors can withdraw their money to buy two-year U.S. Treasury notes yielding 3.8% or almost 4%. No wonder well-to-do investors are running from the banks.

This is the quandary in which banks – and behind them, the Fed – find themselves.

The obvious question is why the Fed doesn’t simply bail them out. The problem is that the falling prices for long-term bank assets in the face of short-term deposit liabilities now look like the new normal.

The Fed can lend to banks for their current shortfall, but how can solvency be resolved without sharply reducing interest rates to restore the 15-year, abnormal Zero Interest-Rate Policy (ZIRP)?

Interest yields spiked on March 10. As more workers were being hired than was expected, Mr. Powell announced that the Fed might have to raise interest rates even higher than he had warned. Volatility increased.

And with it came a source of turmoil that has reached vast magnitudes beyond what caused the 2008 crash of AIG and other speculators: derivatives.

JP Morgan Chase and other New York banks have tens of trillions of dollars worth of derivatives – that is, casino bets on which way interest rates, bond prices, stock prices, and other measures will change. For every winning guess, there is a loser.

When trillions of dollars are bet on, some bank trader is bound to wind up with a loss that can easily wipe out the bank’s entire net equity.

There is now a flight to “cash,” to a safe haven – something even better than cash: U.S. Treasury securities. Despite the talk of Republicans refusing to raise the debt ceiling, the Treasury can always print the money to pay its bondholders.

It looks like the Treasury will become the new depository of choice for those who have the financial resources. Bank deposits will fall. And with them, bank holdings of reserves at the Fed.

So far, the stock market has resisted following the plunge in bond prices. My guess is that we will now see the Great Unwinding of the great Fictitious Capital boom of 2008-2015.

So the chickens are coming hope to roost – with the “chickens” being, perhaps, the elephantine overhang of derivatives.

In this article:banks, crypto, cryptocurrency, derivatives, economics, inflation, interest, Jerome Powell, JPMorgan Chase, Paul Volcker, quantitative easing, S&L, Sam Bankman-Fried, Treasury
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Annals of Grand Hypocrisy: Pelosi/Schumer “Homage” to George Floyd

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PATRICE GREANVILLE


This act of theater by the sanctimonious Democrats set a new record for the duopoly's capacity to play any card, no matter how revolting, to remain in power, while abjectly doing the bidding of their masters, the world's oligarchs. This is performative politics, symbolism devoid of substance, virtue signaling elevated to an art form.


This happened in June of 2020. 

OFFICIAL DESCRIPTOR OF THIS VIDEO

Jun 8, 2020 #GeorgeFloyd #GlobalNews #Denver

Global News
U.S. House Speaker Nancy Pelosi and Democratic members of Congress kneeled in silence for eight minutes and 46 seconds on the marble floor of Emancipation Hall in the U.S. Capitol on Monday, the duration that Minneapolis police officer Derek Chauvin kneeled on the neck of George Floyd as he died. U.S. Senate minority leader Chuck Schumer said the duration was an excruciating, unbearable amount of time and the tribute was necessary to acknowledge the pain and suffering of Black Americans. Before kneeling, Pelosi read out a list of names of other Black Americans who died at the hands of police officers.


For more info, please go to https://globalnews.ca/news/7036388/ge...


The views expressed herein are solely those of the author and may or may not reflect those of  The Greanville Post. However, we do think they are important enough to be transmitted to a wider audience. 

All image captions, pull quotes, appendices, etc. by the editors not the authors. 
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This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License



Up to You.

^3000US citizens have no real political representation.

We don't live in a democracy. And our freedom is disappearing fast.

I don't want to be ruled by hypocrites, whores, and war criminals.

What about you? Time to push back against the corporate oligarchy.

And its multitude of minions and lackeys.


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January 6 Gave Revolution a Bad Name

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JOHN RACHEL
Opeds

[ PLEASE NOTE THAT THE NEW GRAPHIC REFLECTS WHAT JEFFERSON ACTUALLY SAID ]


Even a broken clock is correct twice a day.

Likewise, an incompetent, historically ignorant, politically naive, diplomatically challenged, shallow, impulsive, narcissistic reality show host elected by a conned citizenry to the highest office in the land can occasionally get a few things right as well.

I won’t get into a spitting contest over whether the election was rigged to an extent necessary to “steal” it from Trump. Every election is rigged, to varying degrees. To deny that is to be out of touch with how fundamentally corrupt our electoral system is at all levels, and what an abysmal state our last-gasp democracy is in. Recall that on occasion, election rigging wasn’t up to the task, so a president was elected by judicial fiat.

Nor will I come anywhere near Trump’s motives or level of involvement in the shambolic insurrection that took place on January 6.

The important thing he got right was this: We should throw every last bum out of our legislative branch, both House and Senate. I didn’t say assassinate or torture them, although a good case could be made for “disappearing” the entire lot . . . for good! And for the good of the nation. At least barring them from public life. I include everyone, even Sanders, AOC, the rest of the squad, all of the virtue-signaling mannikins now in Congress who spend more time raising money for their reelection campaigns and their corrupt corporate-oligarchy political parties, than taking care of the business of governing and caring for the people.

A clean sweep.

A fresh start.

Yes, there have been a few promising initiatives. But overall, there is no evidence that any of the people in power, and I also include Biden, Harris, and just about everyone in the collection of self-serving mediocrities which populate this and past administrations, know or care the first thing about serving everyday citizens and “promoting the general welfare”.

I’m sure I’ll get a barrage of comments defending these lackluster sock puppets of the ruling elite. Let me just recommend in advance: I’m not talking about measuring these phonies by the vapid standards we’ve become accustomed to. The bar has been lowered so many times, it’s not a bar anymore. It’s a broken pipe laying in the mud. Reach deep inside, folks. Use your imagination. Recall the dreams and idealism of your youth. Imagine what the U.S. could be instead of trying to decide how much humiliation and misery we should tolerate.

I don’t have to defend the necessity of an occasional revolution. As you can see from the above quote, Thomas Jefferson did it for me. By his measure we’re about 12 revolutions overdue.

Even John F. Kennedy recognized that when confronted with extreme abuse of power, we are left with no alternative.



What he said was unambiguous. If the system isn’t able to self-correct, then the system gets a big bloody nose. In extreme cases, we skip the left hook to the nose and go right for a decapitation. I hear Chanel makes a nice line of designer guillotines. How timely.

Let’s be clear. At no time in recent history has the need to replace those in power been so urgent and obvious. Real democracy is dead in the U.S. and the country is ruled by oligarchs. Not very smart oligarchs. Not oligarchs with a shred of decency. But money talks. The ruling elite has the money. Most everyday people are scrambling to survive. There’s no contest. 

As much as many of us prefer to ignore or deny, Donald Trump got a few things right. Unfortunately, he suffered from a debilitating case of ADHD. He’d say the right thing, then either contradict himself in action or appoint opponents of his ideas to key positions, who then went on to sabotage whatever occasional flash of brilliance he had. Plus he was an unbroken stallion, and the Deep State realizing they couldn’t control him, deep-sixed his presidency. Most of us are grateful for that but we have to keep in mind that the cure in the long term might be worse than the disease. Turning more power over — perhaps the entire control of our nation — to the invisible autocrats of our intelligence agencies and the untouchable puppet masters of technocratic tyranny is not a very smart idea. If that’s our strategy, we might as well just get it over with and take a blow torch to the Constitution. How about during half-time at the next Super Bowl.

Let’s be clear. At no time in recent history has the need to replace those in power been so urgent and obvious. Real democracy is dead in the U.S. and the country is ruled by oligarchs. Not very smart oligarchs. Not oligarchs with a shred of decency. But money talks. The ruling elite has the money. Most everyday people are scrambling to survive. There’s no contest. 

In some incredibly twisted way, Trump was the voice of the people — at least some people — probably not the kind of people anyone here would want to hang out with. But he had (and still has) a lot of fans. His campaign was the first time in a long time that it was publicly acknowledged that a lot of regular folks were tired of getting screwed by a rigged system. Yes, Trump couldn’t have been a worse bearer of this torch. But at least we got a fleeting glimpse of the flames.

Now we’re back to the default setting: Guys like Biden and gals like Harris spouting slogans that are ear candy and brain anesthetics, woke gender-blenders like Buttigieg striking poses to get a third-leg up on the next presidential election, fake progressives cheerleading their walk-in-place approach to solving the most serious problems in history, and hapless, hopeless, pathetic voters looking at fake radicals like the Squad as the flickering pilot lights for real change. What all of this screams is form without substance. We get fooled again. The new boss is the old boss with a focus-group tested bumper sticker on his BMW.

The sad thing about January 6 — and everybody knows what I’m referring to because the Alice in Wonderland narratives around are still being milked by pundits and politicians alike — is that it had both sides working to make sure it flopped, that instead of representing an actual challenge to power or a wake-up call to the public or a warning label for the buffoons and criminals now holding office, it was a huge embarrassment, an unfunny joke, a reminder that politics is Pro Wrestling, only without sexy ring girls.

Joe Biden calls January 6 “The worst attack on our democracy since the Civil War.” 

Liz Cheney — talk about strange bedfellows, Cheney and Biden — claimed the forces behind January 6 “represent a threat America has never seen before.” Which is certainly easy to say if you’ve never picked up a history book in your life.

The Congressional resolution which established the investigation of January 6 called the mob assault “one of the darkest days of our democracy.”

The Democratic Party elites are calling January 6 the domestic equivalent of the 911 attacks.

Did all of these people get their education watching Saturday morning cartoons?

What are these pathetic snowflakes going to do when some tech-savvy insurrectionist strolls onto the national mall carrying a suitcase nuke and turns DC into a caramelized crater?

For better or worse, the whole thing was pure spectacle — that’s the way Trump and the MAGA crowd see the world — a pathetic attempt at symbolism wrought by morons. The government was in no danger of being overthrown by such a disorganized, ragtag bunch of urban hillbillies. The real danger lay in the weaponization and politicalization of this non-event by the Democratic Party and the intelligence agencies, which had a number of embedded provocateurs, on the scene as the PR stunt devolved to its disastrous denouement.

Granted, I can’t prove this. It’s impossible in an era of fake news and fake justice to prove anything. But if a little logic and common sense are applicable here, it’s axiomatic that our internal intelligence agencies knew exactly what was going to happen, and if they didn’t actively engineer this embarrassment, then they let it unfold knowing they could use it against their current and future enemies — that would be the American people. This is a classic, well-established, and usually effective drill. 

Where is this headed? A bill authored by truly one of the most lackluster congressmen in our history, Adam Schiff, will open a second war on terror, this one targeting domestic terrorism. More surveillance, more eavesdropping, more curtailing of free speech and dissent, more false flags, more fear, more anxiety, the final nails in the coffin of what was once for the world the beacon of civil liberties and respect for human rights. Yes, it’s 911 all over again. Wash, rinse, repeat.  

With friends like these, who needs enemies? With people representing us like Adam Schiff, who needs a foreign enemy to destroy our democracy and turn our citizens into slaves? 

Put the right label on it: MADE IN AMERICA! The destruction from within of our country, its ideals, its constitution, its promise of government by the people, its self-anointed role in the world as defender of human rights, guardian of human dignity, promoter of democracy. 

There’s only one remedy . . .

A clean sweep.   

A fresh start.

Maybe these “extreme” ideas are starting to make more sense?

But you ask: “What will happen? Congress has all sorts of protocols and procedural precedents, established rules and guidelines for committee assignment and processing of legislation. What about all that legislative infrastructure?”

Exactly! What about it, folks? How about throwing out the babies AND the bathwater? Is any of it serving “we the people”? Sometimes you have to completely raze a building and start from scratch. YES . . . THAT IS WHAT I’M RECOMMENDING! 

It’s either that or a constitutional convention or . . . uh-oh . . . we’re back to what Jefferson and Kennedy said.

Here’s a pop quiz. Do these words ring a bell? If they do, do they resonate?

“When in the Course of human events, it becomes necessary for one people to dissolve the political bands which have connected them with another, and to assume among the powers of the earth, the separate and equal station to which the Laws of Nature and of Nature’s God entitle them, a decent respect to the opinions of mankind requires that they should declare the causes which impel them to the separation.”

If that’s too arcane and brainy, then tune into something more street hip, if somewhat less precise.

REVOLUTIONAttachments

The Second War on Terror: Chris Hedges, Glenn Greenwald


NOTE: The above video is being blocked and sabotaged by YouTube (Google), hence we are presenting here the RT version. This is standard practice for all social and legacy media collaborating with the Empire to suppress internal (and external) dissent from the promulgated narrative. 


TRANSCRIPT

CH: The Liberal and Democratic Party elites have seized on the January 6th mob assault on the US Capitol as the domestic equivalent of the attacks of 9/11.  Joe Biden calls the storming of the Capitol, "The worst attack on our democracy since the Civil War."  Representative Liz Cheney, a right-wing Republican, whose animus towards Donald Trump has seen her join forces with the Democratic Party leadership said that the forces behind January 6th represent "A threat America has never seen before."  The enabling resolution that created the select committee that is investigating the events of January 6th, calls the mob assault one of the darkest days of our democracy.  The hyperventilating about the incursion into the Capitol, often described by its critics, as an attempted insurrection or coup has effectively shut down questions about whether proposed responses for dealing with the January 6th mob incursion into the Capitol is legitimate or not.  There is a collective chant by the Democratic Party leadership and many in the media for the censoring, and criminalizing of those that embrace the right-wing ideology and its conspiracy theories that led to the assault.  The Biden administration is pushing a bill authored by Representative Adam Schiff, a member of the Select Committee on January 6th to open a second war on terror against domestic enemies, the rhetoric and the rush to push through legislation that will severely circumscribe our ability to dissent echoes what we heard in the immediate aftermath of the attacks of 9/11.  Those such as Glenn Greenwald, who warned that such overreach is excessive, unconstitution--unconstitutional and dangerously weakens our already anemic civil liberties are excoriated as closet sympathizers with the right-wing.  Greenwald, a Pulitzer Prize winning reporter, as well as an attorney was one of the first and most important voices to decry the draconian provisions instituted under the Patriot Act and the anti-terrorism laws passed in the wake of 9/11.  He sees a similar lack of proportionality or legality in the government actions being carried out after the January incursion, with perhaps even more dire consequences.  He joins me to discuss how the January 6th assault is being manipulated by the ruling elites to effectively snuff out all forms of dissent.  So you wrote this really brilliant piece, civil liberties are being trampled by exploiting insurrection, fears Congress' 1/6 committee may be the worst abuse yet.  And as I said before we went on the air, it's completely consistent with what you are writing in the wake of 9/11.  But because you're holding the liberal elites and the Democratic Party to the same accountability under the law, you've now in their eyes, in many ways, become the enemy.  But let's lay out, I mean, as you do in the piece, the legal anomalies that are being pushed through before we talk about their consequences.

GG: Sure.  So, you know, I think one of the most interesting aspects of all of this and one of the most overlooked parts of this recent history is that even prior to January 6th, the intelligence services the CIA, Department of Homeland Security, and the like were warning that the greatest risk to American national security and American homeland was not Al Qaeda, or China, or ISIS, or Russia, but was right-wing domestic extremism, and we obviously ought to be very alert anytime our security services are claiming that the greatest threat to American national security comes not from foreign villains which have created enough damage that claim on its own, but from among our fellow citizens.  And even in the pre-inauguration period, prior to January 6th, in November and December, there are statements from Biden's top transition leaders that one of their priorities now that they've won is going to be new war in terror, new war on terror legislation essentially to import all of the authorities from the first war on terror onto domestic soil with the bill that you mentioned, sponsored by Congressman Schiff, one of the most hawkish members of Congress.  So, this was all going on before January 6th, it reminds me a lot of how neocons were itching to overthrow Saddam Hussein prior to 9/11.  And 9/11 became the pretext that really gave the fuel for them to do what they had wanted to do before that.  Same here, they were talking about a new war on terror against right-wing extremists, even before 1/6, and 1/6 then obviously provided the ideal justification, the necessarily high fear levels to keep the population in check.  And as far as the legal issues that you've alluded to, I mean, I guess the summary version of it is we all know that Congress has a certain kind of investigative authority.  But it's not unlimited for a very simple reason, which is when crimes are committed in the United States it is the Justice Department and the FBI responsible for investigating those crimes, and then the Judiciary for adjudicating guilt.  Congress doesn't have any role to play on purpose in investigating crimes and adjudicating guilt, because they don't have any of the safeguards of the Executive branch and the Judiciary do.  Their ability to legislate or to investigate, to subpoena and the like, is limited to two narrow circumstances, one where it's necessary to help them legislate.  So if they're going to re-write pollution laws, they can subpoena the heads of oil companies to find out where oil spills are taking place and how.  Or secondly, in order to exert oversight responsibilities over the Executive branch, so like, the Watergate Scandal, or Iran-Contra where they're trying to find out what the Executive branch did.  What they're doing here is essentially running a parallel investigation to the Justice Department because they're angry that the Justice Department hasn't indicted anybody on these grandiose claims of conspiracy to incite an insurrection, or sedition, or treason, or attempting to, like, kill, or murder, or kidnap AOC.  And what they're really trying to do is just to feed this hungry liberal mob with a spectacle of dragging mostly poor, and impoverished, and lawyer-less people before them to just, kind of, publicly vilify them as a supplement to the prosecution that the DOJ is already pursuing, in--the case saw that has limited and prescribed the ability of Congress to investigate more on how dangerous it is when they exceed that, unsurprisingly comes from the McCarthy era, when Congress did the same thing.  They set up commissions the House on American Activities Committee and the like.  And they hauled private citizens before them and interrogated them about their political activities, about their associations based on the claim, just like now that there's an ideology loose in the United States that is so extremist and so subversive, that it poses a threat to American national security.

CH: You write that all sorts of safeguards that, you know, even the FBI would have to get a warrant.  This has been violated by this committee including, of course, there were calls to put the people involved in the riot of the 6th, a no fly list.  But talk a little bit about the extreme civil liberty assaults that the committee is inflicting on those people, and how they're targeting those people which you write about in this piece.

GG: Right.  So it's not just the mere existence of the committee that's so disturbing, but their conduct, their investigative conduct as well.  One of the things that they've done is they sent out dozens, I think, actually hundreds of what are called third party subpoenas.  So you don't send necessarily a subpoena to the person you're trying to investigate.  You send a subpoena to their email service, or to their telephone company, or their cell carrier, like Verizon, or social media companies to demand information about where those people have been, where they went, what they've said, what their activities are.  And what was so disturbing, obviously, that isn't a very invasive thing to do when the FBI wants to subpoena your phone records, it has to go to a court and get permission in order to do that.  That was one of the scandals of the Snowden story, right?  Was that the Executive branch was obtaining our phone records, not meddling with the Judicial warrant, just this vague FISA court warrant but at least there they actually had Judicial approval as dubious as it was.  In this case, Congress has no--they don't--they're not going to a court and convincing our court these subpoenas are justified.  They're just sending, kind of, request out to these companies.  And what's even more pernicious is included within the subpoenas are "requests" that these companies not notify the people on whom they're seeking records.  So, if you're one of the people Congress has decided should be investigated, and they're trying to get your phone records, they're telling your phone company, your email company, "Don't tell Chris Hedges, we want to get his records."  The reason they don't want you to know is because that would prevent you from then going into court and raising constitutional and legal objections to what they're doing.  And they've told these companies, "Look, if you feel like you can't honor this request, give us a call."  Because essentially, what they'll do is if, you know, Twitter calls and said, "We're not going to give you information that you're requesting without notifying them."  They'll simply withdraw the subpoena because they know that what they're doing is legally excessive, has no legal basis.  And they want to ensure that nobody has the ability to challenge what they're doing in court, either by getting the information without the person knowing, or withdrawing the subpoena before the person can challenge it.  So it's almost like deliberately and knowingly illegal what Congress is doing, and yet they're doing it in the most stealth and invasive manner possible.

CH: I want to talk about the rhetoric.  It's called an insurrection, it's called a coup, a conspiracy to commit murder, and kidnapping of public officials.  And yet, legally, and I think you quoted in here that the FBI, the internal investigation of the FBI, I think the New York Times, or Reuters, or someone reported it, didn't find any evidence for any of this.  So we have that kind of high blown rhetoric that, especially the liberal media, amplifies and yet legally, these are largely misdemeanors.

GG: Precisely.  I mean, you know, the people who have been charged with felonies, there's a--there's over 600 people currently charged in connection with January 6th, the vast majority of them are charged with nonviolent offenses.  So no one even claims they hit anyone, attacked police officers, engage in violence of any kind.  These are purely nonviolent protesters.  For the people who actually use violence to hit a police officer, or attack police officers, obviously, those are felonies, if you use violence against a police officer you're going to be charged with felony.  Now, those are essentially in controversial cases.  So you have like 400 or 450 people who are just charged with nonviolent and trespassing, which ordinarily would be nothing more than a misdemeanor.  But how can you reconcile the media narrative to which we've been subjected for nine months, if these people are insurrectionists, who are attempting an overthrow of the United States government, with charging them with a misdemeanor, which almost ensures they're not going to go to prison.  So what--I mean, it's a big challenge for federal law enforcement authorities.  So what they've done is they've concocted this wild theory that the Sarbanes-Oxley Act of 2002, which is some of you might remember, probably most people have forgotten, it's a very obscure bill at this point.  It was intended to regulate Wall Street in the wake of the Enron scandal.  There's a provision in there that says, that it's a felony to obstruct justice, which includes any attempt to interfere in a judicial proceeding.  And what they're essentially trying to do to turn these people into felons is to argue that the January 6th certification by Congress of the Electoral College count as certified by the States is not just a ministerial act, but is actually an evidentiary proceeding that they have wide discretion to decide whether this--these tallies were valid or not.  And therefore, anyone who tried to interfere in that has obstructed justice under this statute.  And what's so ironic about that, Chris, is that the argument that what happens on January 6th is not a mere ministerial act, but an actual trial, essentially, where the presiding officer, the Vice President has to decide whether these counts are valid or not is exactly the argument Trump and his most extremist lawyers were making to try and convince Mike Pence that he had the power to reject the Electoral College authorities, exactly the thing that has everyone so up in arms.  So you have the Justice Department replicating that argument to try and turn these people into felons.  That's how willing--they're willing--they have already stretched the law, but even with all of what they're doing, these months of pre-trial imprisonment with no convictions of any kind, people just wasting away in prison for months, very harsh prison conditions, unusual, specially crafted conditions to isolate them, even with all of that aggression, that prosecutorial aggression, not one person, not one has been charged with any of those grander crimes like inciting interaction, or sedition, or treason, or conspiring to kill or kidnap Mike Pence, or AOC, or other elected members.  And obviously, that creates a huge political problem, which is, how is it that people were told for nine months if this was an insurrection from seditionists, trying to overthrow the government, and killing, kidnap elected officials, and yet the Justice Department who's now under the control of Joe Biden, the Democrats, is not charging anybody, not even one symbolic person with that offense.  And so within this huge disparity between what they encourage Liberals to expect, and what the law and the facts actually permit, is this enormous breach that I think they're trying to fill with this show trial in Congress.

CH: Great.  When we come back, we will continue our conversation about the new second war on terror and its consequences with the Pulitzer Prize winning journalist, Glenn Greenwald.  Welcome back to On Contact.  We continue our conversation about the new second war on terror and its consequences with the Pulitzer Prize winning journalist, Glenn Greenwald.  So I want to talk about the sentences which are with the--they're just beginning to come out, which are the guy, the, kind of, QAnon guy with a headdress just got charged.  You mentioned they're--they've been denied bail, they're held in very harsh conditions, which have--even been criticized by a federal judge, including solitary confinement.  So the--talk a little bit about the way they've been treated, and as you point out, the ACLU has not taken up their cases, most of these people are poor, it means, they don't have legal representation.  Talk about what's happened to these figures.  And also, which I found interesting, your piece, the way the committee identifies them is the people who signed to carry out--signed up to carry out legal part--to join that rally that was before, but you can explain all that.

GG: Probably what I should have mentioned earlier when I was talking about these invasive and legally dubious third party subpoenas, the way they gathered and compiled the list of targets of people they wanted to investigate was they got the list of the people who had legally applied for protest permits.  On January 6, the people who wanted to hold the rally, claiming the election was fraudulent, obviously, whatever you think of those claims, they have the absolute legal right as citizens to apply for a permit, to protest, and those permits were approved.  So this committee is targeting the very people who exercise their First Amendment rights to assemble, to wage grievance against the government.  They're being punished and investigated for exercising their rights, that's the way that Congress began their list of bad people.  I think that one of the things that is happening here that also is important, you alluded to, is the fact that these people have become so radioactive, anyone accused of any involvement with January 6th, that they are having a hard time getting counsel.  People probably have forgotten that after 9/11, when the Bush Administration started rounding up Muslims, when Guantanamo was opened, and people were put into black sites in Guantanamo with absolutely no due process, or really grave violation of due process and core constitutional rights, the ACLU was afraid to touch any of these cases for months, if not even more than a year, it was left to the more, kind of, radical or courageous groups, like, the Center for Constitutional Rights and the National Lawyers Guild, who were the only ones willing to provide representation.  It was only once it got safe to the ACLU and then bigger law firms who have pro bono programs start to represent Guantanamo detainees.  But it took a while, months, if not years, for that to happen.  This is exactly the same thing that's happening now, which is for people who can't afford lawyers, which is the vast majority of them, and of course, they're against the full weight and power of the United States government at the Justice Department with their unlimited resources, they can't pay for lawyers and most pro bono lawyers are petrified of touching these cases.  And so, you have these very legally dubious attacks on their rights, as I described earlier, and it's very difficult to find competent lawyers willing to challenge them in court.  And, you know, I think that it is this climate that has drawn my attention more than any other, the obvious similarity with 9/11, it is to the point where, just like in the months after 9/11, anyone who questioned any, kind of, measures undertaken in the name of combating terrorism were accused not of insufficient concern of terrorism, but--over terrorism and have actually been sympathizers to al-Qaeda, people who were themselves supporters of terrorists, apologies for it, that's exactly the same rhetorical tactic now being used if you raise constitutional concerns about the 1/6 committee, or the war on terror being waged in its name, you're instantly accused of sympathy for White Nationalism, for all kinds of fascist ideology, is that they claim are behind this movement.  And it's a very chilling atmosphere for a lot of people to stand up and raise concerns.

CH: Before I go into the role of the FBI, I just wanted to clear that prosecutors are demanding--you write this in a column that came out later, prosecutors are demanding more than four years in prison for Jacob Chansley, the so-called Q Shaman, despite the fact that he did not use violence against anyone on that date.  I mean, these sentences are remarkable.  Let's talk about the FBI involvement.

GG: Can I just--can I just insert one thing?

CH: Yeah.

GG: Because, I mean, it's such an amazing point that, for years, liberals have believed and described themselves as advocates for criminal justice reform, arguing, and I think absolutely correctly, that there's something very wrong with the United States in prisons more of its citizens than any other country in the world, by far, including countries of much larger populations where they're said to be much more repressive.  And the big argument is that it's because we put people into prison for too long for nonviolent offenses that don't merit prison.  And here you have the kind of person who became the symbolic face of the January 6th Riot, because of how colorful his costume was, he entered the Senate.  But nobody claims he engaged in any violence at all.  He's a completely nonviolent protester, Jacob Chansley, who is known as the Q Shaman.  They're seeking over four years in prison, four years beyond the eight months.  He's been in prison since January 6th without a trial, so basically, they're trying to imprison him for five years.  You have an Obama appointed judge who is doling out prison sentences in excess of what the prosecutors are requesting, the kinds of things that if you were actually a real criminal justice reform advocate would cause you to be ranting and raving in anger.  And yet you try and find a Democrat or a Liberal, or even a Progressive, who's willing to stand up and say, "These are the kinds of criminal justice excesses that have created the prison state to which we've been so opposed."

CH: Let's talk about the FBI involvement in 1/6.  That has really, if--unless you're watching right-wing media, that is a complete blank in all of the other media outlets.

GG: You know, what's so unbelievable about this, to me, Chris is a good chunk of left media.  And I spent a lot of years myself doing this, in the first war on terror, it covered the fact that most of the domestic terror pots that we heard about, that the FBI would praise itself for disrupting, you know, this group of Muslims was ready to blow up this bridge or plant the bomb here.  In most of those cases, those plots, "were conceived up by the FBI," they would send an informant or an infiltrator into a mosque, to target young, vulnerable Muslims who they judged to be emotionally unstable or financially deprived.  And they would manipulate them to join a plot that the FBI actually themselves created.  And they would have their informants direct these people and lure them into the plot, and then at the last minute, they would go and they would break up the plot.  And there were a lot of critics in left media, including myself, who were writing constantly about what the FBI was doing, that it was basically entrapment, and asking the question, if Muslim terrorism really is such a threat, why do they have to keep inventing their plots?  Why can't they find actual ones that aren't being fueled by them?  And now, what we have is exactly the same thing.  Last year, there was a huge media story about this right wing militia in Michigan, where they arrested 20 people or about a dozen people on charges of trying to kidnap Governor Gretchen Whitmer, who became a lightning rod, because of heavy COVID lockdowns.  And as it turned out, at least half of the people, including the leaders of that plot, were actual FBI agents or FBI informants.  They had their hooks in these groups, luring them into these terror plots.  So then, when something, like, 1/6 happens, when the FBI is already saying that right wing extremism is the greatest threat to national security, and then you look at the three groups that the FBI claims were most responsible for coordinating the January 6th attack, which is The Proud Boys, The Oathkeepers, and the Three Percenters, we know for certain that the FBI has its tentacles in all three of those groups.  So the question naturally arises, why is it that some of the people who seem to have been ringleaders on that day, encouraging people to go into the Capitol, encouraging them to attack the police, haven't yet been charged, while people whose role was much more ancillary have been and there's been reporting, as you said, largely confined to the right wing media that strongly suggests that at least some of the people who were there that day, were actually acting at the behest of the FBI.  And finally, the New York Times last month, because it became insuppressible, reported that at least one or more of the people in communication with the FBI who are on the ground at the Capitol that day, were FBI informants.  And so, no one's saying this is a false flag that the FBI planned at all.  But what people want to know is to what extent did the FBI have advanced knowledge?  To what extent were some of the leaders acting at the behest of the FBI, like, they were with the Gretchen Whitmer kidnapped plot and so many other plots that we saw during the first war in terror.  And this, too, has been declared a taboo topic, just something that you cannot ask, or else you get accused of, you know, promoting some crazy conspiracy theory about false flags.

CH: And as you point out, all of this feeds what you call the overwhelming support for state and corporate censorship of the internet, increasing reverence for security state agencies, such as the CIA and FBI love for and trust in corporate media, and a belief that no punishment or level of suffering is excessive when it comes to retaliation against their political enemies, including but not only those who participated in any way, in the 1/6 protests,

GG: Right. I mean, I think, you know, we have to acknowledge that even though Congressman Schiff saw still pending has not been passed.  There is a war on terror underway.  People may remember that three or four months ago, Nancy Pelosi demanded $2,000,000,000 more for the police.  Just nine months after Progressives marched all over the country chanting, "Defund the police."  She wanted to give $2,000,000,000 more.  Every Republican said, "It was unnecessary.  We're going to vote no."  The squad agreed to vote no on the grounds of you don't want to be giving the police more money.  And at the very last second, when it--when the squad realized that their "no votes" were going to sink the bill, three of them, including AOC, decided to vote present and ensured that bill passed by one vote, two hundred and thirteen to two hundred and twelve.  They gave $2,000,000,000 more to the Capitol Police to enhance their surveillance techniques all over the United States, not just at the Capitol.  And for me, the most alarming thing is that the censorship campaign that you alluded to, through Facebook, through Google, the Democratic Party constantly pressuring, social media companies to censor, so much of it is being done in the name of this right wing extremist threat, that even without Adam Schiff's bill, there is a war on terror underway with the FBI, with infiltration, with this kind of added money to these law enforcement, security state services, and with the heightened censorship that is growing by the day.

CH: Great. That was Pulitzer Prize-winning journalist Glenn Greenwald on the new second war on terror.


ABOUT THE AUTHOR / SOURCE
John Rachel has a B.A. in Philosophy, is a novelist and established political blogger. He has written eight novels, three political non-fiction books, and a fantasy/travel/cookbook about the dietary preferences of mermaids. His political articles have appeared at OpEdNews, Russia Insider, Greanville Post, Dissident Voice, Nation of Change, and other alternative media outlets.


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Twitter files hearing: Matt Taibbi warns about government looking for info on reporters

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Fox News—March 9, 2023


Twitter files hearing: Matt Taibbi warns about the government looking for info on reporters

Streamed live 8 hours ago #foxnews
House Select Subcommittee holds a hearing on the weaponization of the federal government on the Twitter files. #foxnews

The Subcommittee has just begun to uncover a vast network of government and private organisations working hand in glove to manipulate the mass communications flows in the US and overseas with the aim of imposing a narrative favorable to the global oligarchy with headquarters in Washington. 



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Matt Taibbi testifies before Congress on the underhanded growth of digital McCarthyism

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Matt Taibbi
THE RACKET

My Statement to Congress—

'Ranking Member Plaskett, I'm Not A So-Called Journalist': Matt Taibbi Discusses The Twitter Files

Forbes Breaking News

Mar 9, 2023
At today's House Weaponization of the Federal Government hearing, Matt Taibbi spoke about the Twitter files and the suppression of free speech by the federal government.


Taibbi's prefatory note: At around 10 a.m. EST this morning, Michael Shellenberger and I will be testifying at the “Hearing on the Weaponization of the Federal Government on the Twitter Files” for the House Judiciary Committee, in the Select Subcommittee on the Weaponization of the Federal Government. Just before, around 9:00 a.m., we’ll also be releasing a TwitterFiles “Statement to Congress” thread, which will be submitted to the record. It contains some surprises. His opening:

Chairman Jordan, ranking member Plaskett, members of the  Select Committee,

My name is Matt Taibbi. I’ve been a reporter for over 30 years, and an advocate for the First Amendment.  Much of that time was spent at Rolling Stone magazine. Over my career, I’ve had the good fortune to be recognized for the work I love. I’ve won the National Magazine Award, the I.F. Stone Award for independent journalism, and written ten books, including four New York Times bestsellers. I’m now the editor of the online magazine Racket, on the independent platform Substack.

I’m here today because of a series of events that began late last year, when I received a note from a source online.

It read: “Are you interested in doing a deep dive into what censorship and manipulation… was going on at Twitter?”

A week later, the first of what became known as the “Twitter Files” reports came out. To say these attracted intense public interest would be an understatement. My computer looked like a slot machine as just the first tweet about the blockage of the Hunter Biden laptop story registered 143 million impressions and 30 million engagements.

But it wasn’t until a week after the first report, after Michael Shellenberger, Bari Weiss, and other researchers joined the search of the “Files,” that we started to grasp the significance of this story.

A focus of this fast-growing network is making lists of people whose opinions, beliefs, associations, or sympathies are deemed “misinformation,” “disinformation,” or “malinformation.” The latter term is just a euphemism for “true but inconvenient.” Undeniably, the making of such lists is a form of digital McCarthyism. Ordinary Americans are not just being reported to Twitter for “deamplification” or de-platforming, but to firms like PayPal, digital advertisers like Xandr, and crowdfunding sites like GoFundMe. These companies can and do refuse service to law-abiding people and businesses whose only crime is falling afoul of a distant, faceless, unaccountable, algorithmic judge.

The original promise of the Internet was that it might democratize the exchange of information globally. A free internet would overwhelm all attempts to control information flow, its very existence a threat to anti-democratic forms of government everywhere.

What we found in the Files was a sweeping effort to reverse that promise, and use machine learning and other tools to turn the internet into an instrument of censorship and social control. Unfortunately, our own government appears to be playing a lead role.

We saw the first hints in communications between Twitter executives before the 2020 election, where we read things like:

Hi team, can we get your opinion on this? This was flagged by DHS:

Or:

Please see attached report from the FBI for potential misinformation.

This would be attached to an excel spreadsheet with a long list of names, whose accounts were often suspended shortly after.

Following the trail of communications between Twitter and the federal government across tens of thousands of emails led to a series of revelations. Mr. Chairman, we’ve summarized these and submitted them to the committee in the form of a new Twitter Files thread, which is also being released to the public now, on Twitter at @ShellenbergerMD, and @mtaibbi. 

We learned Twitter, Facebook, Google, and other companies developed a formal system for taking in moderation “requests” from every corner of government: the FBI, DHS, HHS, DOD, the Global Engagement Center at State, even the CIA. For every government agency scanning Twitter, there were perhaps 20 quasi-private entities doing the same, including Stanford’s Election Integrity Project, Newsguard, the Global Disinformation Index, and others, many taxpayer-funded.

A focus of this fast-growing network is making lists of people whose opinions, beliefs, associations, or sympathies are deemed “misinformation,” “disinformation,” or “malinformation.” The latter term is just a euphemism for “true but inconvenient.”

Undeniably, the making of such lists is a form of digital McCarthyism.

Ordinary Americans are not just being reported to Twitter for “deamplification” or de-platforming, but to firms like PayPal, digital advertisers like Xandr, and crowdfunding sites like GoFundMe. These companies can and do refuse service to law-abiding people and businesses whose only crime is falling afoul of a distant, faceless, unaccountable, algorithmic judge.

As someone who grew up a traditional ACLU liberal, this mechanism for punishment without due process is horrifying.

Another troubling aspect is the role of the press, which should be the people’s last line of defense.

But instead of investigating these groups, journalists partnered with them. If Twitter declined to remove an account right away, government agencies and NGOs would call reporters for the New York Times, Washington Post, and other outlets, who in turn would call Twitter demanding to know why action had not been taken.

Effectively, news media became an arm of a state-sponsored thought-policing system.

Some will say, “So what? Why shouldn’t we eliminate disinformation?”

To begin with, you can’t have a state-sponsored system targeting “disinformation” without striking at the essence of the right to free speech. The two ideas are in direct conflict.

Many of the fears driving what my colleague Michael Shellenberger calls the “Censorship-Industrial Complex” also inspired the infamous “Alien and Sedition Laws of 1798.” The latter outlawed “any false, scandalous, and malicious writing against Congress or the president.”

Here is something that will sound familiar: supporters of that law hundreds of years ago were quick to denounce their critics as sympathizers with a hostile foreign power, at the time France. Alexander Hamilton said Thomas Jefferson and his supporters were “more Frenchmen than Americans.”

Jefferson, in vehemently opposing these laws, said democracy cannot survive in a country where power is given to people “whose suspicions may be the evidence.” He added:

It would be a dangerous delusion were a confidence in the men of our choice to silence our fears for the safety of our rights: that confidence is everywhere the parent of despotism.

Jefferson’s ideas still ring true today. In a free society we don’t mandate truth, we arrive at it through discussion and debate. Any group that claims the “confidence” to decide fact and fiction, especially in the name of protecting democracy, is always, itself, the real threat to democracy.

This is why “anti-disinformation” just doesn’t work. Any experienced journalist knows experts are often initially wrong, and sometimes they even lie. In fact, when elite opinion is too much in sync, this itself can be a red flag.

We just saw this with the Covid lab-leak theory. Many of the institutions we’re now investigating initially labeled the idea that Covid came from a lab “disinformation” and conspiracy theory. Now apparently even the FBI takes it seriously.


"Every country does propaganda..and they have to do it to their own population."


'Hear From Him For 30 Seconds...': Dan Bishop Plays Shocking Clip About 'Propaganda' For Matt Taibbi

Forbes Breaking News

Mar 9, 2023

At today's House Weaponization of the Federal Government hearing, Rep. Dan Bishop (R-NC) spoke to Matt Taibbi about alleged threats to free speech.


It’s not possible to instantly arrive at truth. It is however becoming technologically possible to instantly define and enforce a political consensus online, which I believe is what we’re looking at.

This is a grave threat to people of all political persuasions.

For hundreds of years, the thing that’s distinguished Americans from all other people around the world is the way we don’t let anyone tell us what to think, certainly not the government.

The First Amendment, and an American population accustomed to the right to speak, is the best defense left against the Censorship-Industrial Complex. If the latter can knock over our first and most important constitutional guarantee, these groups will have no serious opponent left anywhere.

If there’s anything the Twitter Files show, it’s that we’re in danger of losing this most precious right, without which all other democratic rights are impossible. 

Thank you for the opportunity to appear, and I would be happy to answer any questions from the Committee.



SPECIAL ADDENDUM:

LIVE: House Select Subcommittee hearing on the weaponization of the federal government

Fox News
March 9, 2023


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And its multitude of minions and lackeys.


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