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America's Glorious Empire of Debt
by Bill Bonner
The Daily Reckoning
Ouzilly, France
Tuesday, February 28, 2006
http://www.dailyreckoning.com/Issues/2006/DRUS022806.html
In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.
- In a month, we won't be able to know how much money the feds are hoping to steal from our country's few savers...
- Looking through Bernanke's big book of economic alchemy...who doesn't like lies - as long as they are flattering?
"There is a crack in every thing God has made," said Emerson.
The truth is that the feds can control either the quantity of the nation's money or the quality of it. At the heart of the world's next - and probably greatest - financial crisis is the sad fact that they cannot do both at the same time. Alas, there is always some catch...some restraint...some skunk in the woodpile. We cannot grow wiser without growing older. We cannot grow richer in the future without forgoing the chance to enjoy our money in the present. We cannot make the Devil's food cake of an expanding money supply without the gooey spoons and burnt pans of inflation hidden somewhere in the kitchen sink.
Next month, the feds will cease reporting the M3 figure. Thenceforth, it will be harder to figure out at what rate the U.S. money supply is expanding. That is to say, it will be harder to know how much money the feds are hoping to steal from the world's savers.
Yes, dear reader, the great American Empire faces the future, not with grace and resolve, but denial, delusion, deceit, and more debt.
Will the Bernanke Fed protect the quality of the dollar, or will it tend to favor the quantity of it? We already know the answer. He has told us himself: he will hire helicopters to drop the green paper all over the country, if it comes to that, just to make sure the quality of the nation's currency does not improve. In Bernanke's big, black book of economic alchemy, there is no worse sin for a central banker than to allow deflation, otherwise known as an increase in the value of money.
And so, the feds deceive in order to continue their delusions of power, grandeur and mediocrity. Yes, they say that the current economy is nothing special. It is mediocre - just the way it ought to be.
What? Is the yield curve not upside down? Do Americans not spend more than they earn (the savings rate is net negative) for the first time since the Great Depression? Are house prices not at record levels, after more than $5 trillion in appreciation since 2001? Are inventories of unsold houses not also at record levels? Is the country not at war (for the first time ever) with an unnamed enemy? Will the feds not borrow half a trillion dollars in the next fiscal year, while the country buys $800 billion more from foreigners than it sells to them? Did gold not outperform all major asset classes last year? Are all these things not exceptional? Surely, they are anything but mediocre.
We suspect that increases in the money supply will also be exceptional in the years to come - even spectacular. We further suspect that it was to avoid noticing these exceptional increases in M3 that the government decided to stop reporting the figures.
Eventually, of course, the inflation news will get out.
"But how about the inflation-price statistics that are announced monthly?" asked Richard Russell yesterday. "For instance, the latest CPI figures show a rise of 0.7% in January or at an inflation rate of almost 9%. To hide this the Fed depends on the ridiculous 'core inflation' rate, which eliminates food and energy. How about this - the core rate has been lower than the overall gain in the CPI for 39 consecutive months. That's the longest such stretch since the government started computing the core rate back in the 1950s."
What a shock! Government quants created the "core" measure in order to eliminate the volatility of food and energy prices. This would give us a more accurate and consistent picture of inflation, they said. What it really does is persistently understate the actual inflation figure.
Lies, lies, lies...and more lies. But, what do you expect, dear reader? Yet, who doesn't like lies...so long as they are flattering?
Gentlemen, Start Your Engines
by Byron King
The Daily Reckoning
March 1, 2006
http://www.dailyreckoning.com/Featured/King021406.html
In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.
Bloomberg writer Matthew Lynn just published an article entitled "Cancel That Apocalypse - The Oil Crisis Is Over." Oil prices have recently pulled back, and the auto industry is re-tooling to manufacture smaller cars that get better gas mileage. Hence, presto-chango, "The Oil Crisis Is Over." For a minute, I thought he was kidding. But no, this Bloomberg-man is serious.
This is exactly why amateurs should not fool around with issues of Peak
Oil. They confuse their readers with rah-rah bromides, and will cause people to hurt themselves. These type of party-hardy cheerleaders idealize the workings of the so-called "free market" (dollar-denominated, so how "free" can it be?), while ignoring the inexorable march of resource depletion and the irreversible decline in future amounts of available liquid fuels. They confuse a temporary market retreat with the equivalent of the Russians defeating the Germans at Stalingrad, and mark an otherwise minor trading event as the start of the end of the Great War. But of Peak Oil, allow me to paraphrase Churchill after El Alamein, "This is not the end, nor the beginning of the end. This is not even the end of the beginning."
So, Toyota is building the much-vaunted, well-marketed, rather over-priced Prius? Great. There are 500 million motorized & mechanized vehicles plying the world's roads & off-roads. If the world replaces 25 million vehicles per year with Priuses, or the fuel-efficient motorized equivalent from some other auto maker, it will only take about, ohhhh...20 years to turn over the existing motor fleet, not including meeting new demand or replacing "new" cars that wear out along the way. And many of the world's motor vehicles are over-the-road trucks that get about four miles per gallon. Shall we replace them with Priuses as well? I suppose it will make for lots of new jobs for people to haul lettuce from the San Joaquin valley, cross country to the ristorantes of New York, with the boxes of fresh produce stuffed in the back of the humble Prius.
Over the next 20 years, the absolute quantity of petroleum available to the world on any given day will decline. We should only hope, and perhaps be so lucky in a Star Trek future, that fuel efficiency on a global scale will be able to make up for the decline in availability of liquid fuel. But that idea is fanciful if you understand the depletion curves that are out there. What we consider today as the "normal" state of the world transportation system will be a distant memory by 2025, possibly a hated past as people look back and come to realize how their forbears squandered an irreplaceable Earthly inheritance. The idea is ludicrous, if not dangerous, that we will simply create an alternative future of never-ending, care-free driving based on soybean ethanol or some other such by-product of composted dead plants. Those who think that way are fooling themselves and others.
"But what about the Tar Sands?" goes the cry. Are we not going to fuel the transport needs of the planet from the "Canadian equivalent of Saudi Arabia?" Are you sitting down? The answer is No! Even the most optimistic estimates from the Canadian government forecast only three million barrels per day of "oil" production from the tar sands of Alberta by 2025. This is, in global energy-speak, a small drop in the big bucket.
At a relatively modest depletion rate of, say, 4% per year (which is very, very conservative...the North Sea is depleting at 8% to 10% per year by comparison), today's 84 million barrels per day of world oil production from existing reserves will be all of 37 million barrels after 20 years. To obtain the same level of production as today's 84 million barrels per day - and just to keep even with that current production and not to increase production by one extra barrel - the global oil industry (or whatever succeeds it as a "hydrocarbon" industry in the tar sand, oil shale or coal gas, etc. biz) will have to "discover" and produce the fossil fuel equivalent of a good deal more than half of all of the world's present oil reserves.
Let me put it another way. Within the next 20 years we need to find the petroleum or other energy-equivalent of another Saudi Arabia, plus another Kuwait, plus another Iran, plus another Russia. And this is just to keep even with the present requirement to run the global economy at current energy prices, not allowing for future increases in demand. And this also does not even get into the increasing global demand for natural gas, the numbers for which are worse than those for the oil supply.
So, don't sell your tickets to the apocalypse on eBay just yet. I think that we are all going to have a ringside seat for the main event. And as they say, "Gentlemen, start your engines..."
P.S. Not all nations suffer equally in the event of a crude crisis. Since the United States accounts for roughly 25% of the oil being consumed, even a minor shortfall in the production and distribution of oil around the globe portends disproportionate economic downsides here in America...
For all but a few knowledgeable investors, that is. Discover how you can stay informed and ahead of the upcoming "Petrocalypse."
Too Big to Burst
International Perspective By Peter Schiff
February 25, 2006
http://www.prudentbear.com/internationalperspective.asp
In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.
It is widely believed that the Federal government has an unofficial policy that some banks and other financial institutions are simply too big to fail. As a result, it is assumed that the government will take any action necessary to ensure that they do not. It now appears to me that there is a similar doctrine in effect for bubbles, in that some are simply too big to burst. Housing, which is the lynchpin holding together the entire U.S. economy, certainly fits that category. To paraphrase Winston Churchill "never in the field of economics has so much been owed by so many to just one thing."
Through the wealth effect and cash-out equity extractions, the housing bubble has enabled Americans to consume far beyond their collective means. The result is a bubble economy, where incomes, jobs, tax revenue, corporate earnings, and the solvency of our lending institutions, are all dependent upon sustained, stratospheric home values. When prices return to earth, the economic impact will be catastrophic.
This dismal reality is certainly not lost on those in Washington. The only way for housing prices to stay high is for the Fed to keep inflating. Conveniently, the captain currently at the helm of the monetary ship of state just happens to be Ben Bernanke, who as a Fed governor spoke about the Fed's ability to fend of deflation by using the handy invention of the printing press. Though his words may have may have spoken in reference to consumer prices, his actions will certainly be concentrated on asset prices, especially housing.
Like a lounge club magician, the Feb distracts the audience with short-term rate hikes, while behind its back it monetizes long-term government bonds. It creates the illusion of its being an inflation fighter, while in reality it is an inflation creator. No wonder it wants to further cover its tracks by no longer reporting M3!
What other explanation is possible after Wednesday's bond rally following an unexpected .7% rise in January consumer prices, which amounts to an annualized rate of inflation of almost 9%? Even if one takes a more moderate look at the year over year rates, the CPI has risen 4%. Why would anyone buy ten-year government bonds yielding 4.5%, when the real after-tax yield, adjusted for 4% inflation, is negative 1%? Other than leveraged short-term speculators, the only buyer would be the Fed, which has an agenda other than investment merit.
My guess is that the Fed's goal is to keep long-term interest rates low long enough to allow millions of homeowners to refinance their adjustable rate mortgages into 40 or 50 year fixed-rate loans, and to create enough inflation to cause nominal incomes to rise sufficiently in order to enable homeowners to make higher debt payments and prevent nominal home prices from collapsing.
However, while the use of the old-economy technology of the printing press may allow the Fed to prevent nominal home prices from falling, it can not accomplish the same feat with respect to real home prices, which will plunge as the relative price of everything else surges. The danger is that the controlled inflation the Fed is attempting to manage turns into a wild fire, with implications far worse then the mere severe recession it is attempting to postpone. But since their immediate political concern is the next election, that is a risk they are willing to take. Unfortunately it is their constituents that will bear the costs if the gamble fails.
Peter Schiff is C.E.O. and Chief Global Strategist at Euro Pacific Capital, Inc.
[How frustrating this must be for people like Texas Republican Rep. Joe Barton. He and his fellow Bush supporters hope to vilify President Chavez, whose courage, virtue, and legitimacy dwarf those of his opponents inside and outside Venezuela. Undemocratic? Chavez was repeatedly elected by large majorities. Dictatorial? He has not infringed the political rights of his opponents. Unfriendly? Maybe Chavez is unfriendly to Mr. Bush and Mr. Barton, but providing free heating oil to homeless shelters is better than friendly: it's right. -JAH]
Connecticut Approves Venezuelan Heating Oil
By STEPHEN SINGER,
Associated Press Writer
Tue Feb 28, 9:28 PM ET
http://news.yahoo.com/s/ap/us_venezuelan_oil;_ylt=Ao63Z7EqbViM1xxcv34YdPRhr7sF
;_ylu= X3oDMTBiMW04NW9mBHNlYwMlJVRPUCUl
In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.
Connecticut has given social service agencies permission to supply low-income residents with discounted heating oil from Venezuela, whose energy aid program for the needy has rankled the Bush administration.
The state Department of Social Services began notifying the nonprofit agencies Monday after Attorney General Richard Blumenthal ruled that the Venezuelan oil program is legal, said David McDonald, spokesman for the Connecticut Association for Community Action, a coalition of the private nonprofit groups.
Blumenthal was asked for a legal opinion by Gov. M. Jodi Rell.
Venezuela, the fifth-largest foreign supplier of oil to the U.S., has been supplying millions of gallons of heating oil at a 40 percent discount to poor Americans and free heating fuel to homeless shelters.
Venezuela's leftist, pro-Castro president, Hugo Chavez, is a fierce critic of the Bush administration, and critics say he is trying to use the program to embarrass President Bush and build support for himself in this country.
Proponents say it fills a gap in a federal assistance program that has not kept pace with dramatically rising oil and gas prices.
Citgo Petroleum Corp., a subsidiary of Venezuela's state-run oil company, runs the program. It has discounted heating oil programs in Massachusetts, New York, Maine, Rhode Island, Vermont, Connecticut, Delaware and the Philadelphia area.
Blumenthal said he was giving a legal opinion and didn't want to discuss the politics of the program.
"As a matter of policy or political perspective, there may be sound reason to have reservations about the source of this assistance - a company effectively owned by a foreign government that may have questionable policies or motives," he said. "There is also sound reason to be critical of Congress whose ill-advised neglect makes the assistance necessary."
In Washington, House Energy and Commerce Committee Chairman Joe Barton, R-Texas, and Rep. Ed Whitfield, the Republican chairman of the subcommittee for oversight and investigations, have voiced concern that the oil deals are "part of an unfriendly government's increasingly belligerent and hostile foreign policy" toward the United States.
[As usual, the punch line is buried near the bottom:
"Resource-poor Japan - the world's second-largest economy - has practical reasons for sticking to the protocol. The country is heavily dependent on imported oil to run its economy, though it has reduced that dependence from over 75 percent before the oil shock of 1973 to just under 50 percent in 2004, largely due to energy conservation and development of alternative energy resources."
The Japanese know what's coming and the dark humor side of me could just as easily say that the Japanese are getting into shape for the future. What are you doing? You don't have to wait for the US government to do it for you. It won't. Thanks to FTW subscriber RD in Japan for sending this one. - MCR]
Japanese ministry shuts off heating to meet Kyoto target
First posted 11:12pm (Mla time) Feb 24, 2006
http://news.inq7.net/world/index.php?index=1&story_id=67224
In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.
TOKYO -- Japan's Environment Ministry turned off its heating this week, leaving staff unable to even make a cup of tea, in an effort to spur the country to meet its target for reducing greenhouse gas emissions, an official said Thursday.
The weeklong shutdown, which began Tuesday, comes as Japan lags far behind its Kyoto Protocol pledge to cut output of gases believed to be warming Earth's atmosphere to 6 percent below 1990 levels by 2010. In 2004, the last year for which statistics are available, output was up 7.4 percent from 1990.
The ministry's "Warm Biz" campaign urges Japan's bureaucracy and businesses to bundle up with sweaters and scarves to cut down on energy use.
"It's actually not that cold. We're all keeping warm from the heat of our computers," ministry spokesman Masanori Shishido said, but admitted he has taken to wearing thermal underwear. Temperatures in Tokyo on Thursday were 10 degrees Celsius (50 degrees Fahrenheit).
"We can't make hot tea any more, but I get a coffee at Starbucks during the lunch break," he said. "I think we're setting a good example for the rest of the country."
The move comes after the government last summer launched a highly publicized energy-saving campaign, dubbed "Cool Biz," encouraging bureaucrats and businessmen to sport open-collar, short-sleeve shirts to cut down on air conditioning use.
Yoichiro Kurokawa, who coordinates the Environment Ministry's energy-saving campaign, said such efforts can help Japan meet its emissions goal.
"Of course it won't be easy. But I believe the target is within reach if Japan keeps up the effort," Kurokawa said.
An increasing number of nuclear power stations and the use of market-based emissions trading are also expected to help Tokyo reach its goal, Kurokawa said.
Under the 1997 Kyoto Protocol, 35 industrialized countries are committed to reducing or limiting output of six gases, chiefly carbon dioxide, a byproduct of burning coal and oil products.
The European Union has vowed to reduce emissions by 8 percent. The United States has rejected the accord, saying the caps on emissions would damage the US economy.
Resource-poor Japan -- the world's second-largest economy -- has practical reasons for sticking to the protocol.
The country is heavily dependent on imported oil to run its economy, though it has reduced that dependence from over 75 percent before the oil shock of 1973 to just under 50 percent in 2004, largely due to energy conservation and development of alternative energy resources.
The country's 52 nuclear reactors, for example, now supply 35 percent of its electricity. But safety is still a concern following a series of reactor malfunctions and accidents.
"Basically, Japan is doing all it can," Kurokawa said.
"What's important now is that we move forward properly and steadily," he said.
Global credit ocean dries up
24/02/2006 http://portal.telegraph.co.uk/money/main.jhtml?xml=/money/2006/02/24/cccredit24 .xml&menuId=242&sSheet=/money/2006/02/24/ixcoms.html
In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.
The cash machine that sustained a world boom is about to close, and it's going to get ugly, says Ambrose Evans-Pritchard
One by one, the eurozone, the Swedes, the Swiss and now even the Japanese, are turning off the tap of ultra-cheap credit that has flushed the global system for the past year, keeping the ageing asset boom alive.
The "carry trade" - as it is known - is a near limitless cash machine for banks and hedge funds. They can borrow at near zero interest rates in Japan, or 1pc in Switzerland, to re-lend anywhere in the world that offers higher yields, whether Argentine notes or US mortgage securities.
Arguably, it has prolonged asset bubbles everywhere, blunting the efforts of the US and other central banks to restrain over-heating in their own countries.
The Bank of International Settlements last year estimated the turnover in exchange and interest rates derivatives markets at $2,400bn a day.
"The carry trade has pervaded every single instrument imaginable, credit spreads, bond spreads: everything is poisoned," said David Bloom, currency analyst at HSBC.
"It's going to come to an end later this year and it's going to be ugly, even if we haven't reached the shake-out just yet," he said.
"People have a Panglossian belief in the march of global capitalism but that will change as soon as attention switches back to US financial imbalances," he said.
There were early signs of panic this week when the Icelandic krone crashed 8pc in two days, setting off dominoes in high-yielding currencies of New Zealand, Australia, South Africa, Hungary and Brazil.
The debacle was triggered when the rating agency Fitch downgraded Iceland's sovereign debt, a move that would not normally rattle markets.
The new skittishness comes against a backdrop of ever more hawkish moves by Japan and Europe.
"There are several hundred billion dollars of positions in the carry trade that will be unwound as soon as they become unprofitable," said Stephen Lewis, an economist at Monument Securities. "When the Bank of Japan starts tightening we may see some spectacular effects. The world has never been through this before, so there is a high risk of mistakes."
Toshihiko Fukui, the Japanese central bank governor, gave a fresh warning yesterday that this day is near, saying the country was pulling out of seven years of deflation. The economy grew at a 5.5pc rate in the fourth quarter of 2005.
In his strongest words yet, he said the bank would act "immediately" to curtail its extra injections of liquidity, preparing the way for rate rises above zero in coming months.
"The moment of truth is approaching,'' said Kenichiro Ikezawa of Daiwa SB. In Europe, Sweden raised rates to 2pc this week in the face of an overheated Stockholm property market, while Germany's IFO business climate index soared yesterday to its highest level in 14 years.
The European Central Bank will almost certainly raise eurozone rates to 2.5pc in March, with likely moves to 3pc by the end of the year.
Most of the world is now tightening, with no sign of a fresh credit window opening to keep the game going. This is new. Japan has had the tap on continuously as the trade exploded over the past five years, while America itself became the source of funds after it slashed rates to 1pc at the end of the dotcom bubble, and held them there until June 2004.
The US Federal Reserve has since raised rates 14 times to 4.5pc in a belated effort to restore monetary discipline, with at least two more rises priced into the markets.
It is an open question whether the yen, euro, Swiss franc and Swedish krona carry trades have occurred on such a scale that they have led to over-investment in Latin America and beyond, and compressed US yields, fuelling the American housing boom in 2005 despite Fed tightening.
There are other big forces at work: huge purchases of US Treasuries by Asian central banks, and petrodollar surpluses coming back to the US credit markets. Stephen Roach, chief economist at Morgan Stanley, warns that the carry trade is itself, in all its forms, a major cause of dangerous speculative excess. "The lure of the carry trade is so compelling, it creates artificial demand for 'carryable' assets that has the potential to turn normal asset price appreciation into bubble-like proportions," he said.
"History tells us that carry trades end when central bank tightening cycles begin," he said. Ominously, almost every bank other than the Bank of England is now tightening in unison
Ports: All 'Bout a Dealer Named Bout
A Russian arms merchant funnels money, guns, and dope through the United Arab Emirates
by James Ridgeway
February 23rd, 2006 11:09 AM
http://villagevoice.com/news/0609,ridgeway,72294,2.html
In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.
WASHINGTON, D.C.-To hear the administration and its supporters talk, you'd think the workers in New York ports are carefully vetted by the Waterfront Commission, the ports themselves protected by the ever watchful Coast Guard, and routinely surveilled by U.S. Customs.
In truth, one administration after another has slashed the operational capability of the Coast Guard. Reagan even contemplated its privatization by a major defense firm. As for the Customs Service, it inspects as little as 5 percent of the cargo going through the New York ports.
This is a dream setup for any arms or dope dealer, and that's exactly what the United Arab Emirates is all about. The ties between its top officials and royal family with the Taliban and Al Qaeda go back at least a decade.
The UAE is not only the center of financial dealings in the Persian Gulf, it is switching central for dope and arms dealing. The dope comes out of Afghanistan into the UAE where tax monies are collected and used to buy arms, which were sent back in for the Taliban. Some of this money is thought to have helped finance the 9-11 attacks. A money trail is set forth in the government's filings in the Moussaoui case.
Long at the center of this operation is the mysterious Russian arms dealer, Victor Bout. The U.N. has accused Bout of providing arms to brutal regimes in Sierra Leone, Angola and to Charles Taylor in Liberia. The Center for Public Integrity, a Washington, D.C. research organization that operates a network of foreign correspondents, published a report on Bout in January 2002, citing Belgian intelligence documents from before the 9-11 attacks it had obtained. These documents reportedly show Bout earned $50 million in profits from selling weapons to the Taliban after they came to power in the late 1990s. The Center states, "Another European intelligence source independently verified the sales, and intelligence documents from an African country in which Bout operates-obtained by the Center-claim that Bout ran guns for the Taliban 'on behalf of the Pakistan government.' " Peter Hain, the British Foreign Office Minister for Europe who has led the international effort to expose criminal networks behind the conflict diamonds and small arms trade in Africa, told the Center's reporters, it was clear that Bout's supply of weapons to the Taliban "and to its ally, Osama bin Laden" posed a real danger.
Der Spiegel, the German magazine, said in early January 2002 that Vadim Rabinovich, an Israeli citizen of Ukrainian origin, along with the former director of the Ukrainian secret service and his son sold a consignment of 150 to 200 T-55 and T-62 tanks to the Taliban. Spiegel said the deal was conducted through the Pakistani secret service and uncovered by the Russian foreign intelligence service, SVR, in Kabul, the Afghan capital. A Western intelligence source told the Public Integrity Center that Rabinovich's weapons had been airlifted by one of Bout's airfreight companies from his base in the UAE.
Rabinovich denied all this, and Bout said "For the record, I am not, and never have been, associated with Al Qaeda, the Taliban, or any of their officials, officers, or related organizations," Bout said, according to a copy of the statement released in the United States by one of his associates. "I am not, nor are any of my organizations, associated with arms traffickers and/or trafficking or the sale of arms of kind [sic] anywhere in the world. I am not, nor is any member of my family, associated with any military or intelligence organizations of any country."
No one is suggesting Bout has any great love for the radical Muslim fundamentalists of Taliban ilk. He sold guns to the Russians fighting the CIA-backed Afghan mujahideen in their war with the Soviet Union and to the warlords opposing the Taliban. His planes are registered to various companies all operating out of the United Arab Emirates.
In fact, the United Arab Emirates have been viewed as hub for trade going and coming to Afghanistan, with drugs coming from Afghanistan on their way to the West, and weapons from Bout, going back. While transportation was via Bout's different air cargo interests, it also involved the Afghan state airlines, called Ariana Airlines. The airline was controlled by Al Qaeda. Al Qaeda agents masquerading as Ariana employees flew out of Afghanistan, through Sharjah, one of the emirates, and on to points west.
During the late 1990s Bout's center of operations was Ostend, Belgium, but when he came under pressure there, he left Belgium. The UAE office grew in importance.
Bout used various air cargo outfits. One of them was called Flying Dolphin, which in the early 2000s was owned by Sheikh Adbullah bin Zayed bin Saqr al Nayhan, a former UAE ambassador to the United States and member of the ruling family in Abu Dhabi. He was described by the United Nations as a "close business associate of Bout." According to the December 20, 2000, U.N. report, Zayed's company is registered in Liberia, but its operations office is in Dubai.
Dubai's Port of No Return
Don't jump to conclusions, but there are ties between the UAE, bin Laden, and the Taliban
by James Ridgeway
February 22nd, 2006 9:42 AM
http://villagevoice.com/news/0609,ridgeway,72286,2.html
In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.
WASHINGTON, D.C.-No matter what Bush and his supporters say, there is indisputable evidence of tight connections between the United Arab Emirates and leadership of both the Taliban and Al Qaeda. The country is the center of financial activity in the Persian Gulf, and has next to no laws controlling money laundering.Two of the hijackers came from the UAE and hijacker money was laundered through the UAE. The details are spelled out in documents in the government's case against Moussaoui.
The ties with bin Laden and the Taliban reach far back into the '90s. Prominent Persian Gulf officials, including members of the UAE royal family, and businessmen would fly to Kandahar on UAE and private jets for hunting expeditions, the Los Angeles Times reported in 2001. In addition to ranking UAE ministers, these parties included Saudi big wigs like Prince Turki, the former Saudi intelligence minister who now is ambassador to the U.S.
General Wayne Downing, Bush's former national director for combating terrorism, was quoted on MSNBC in September, 2003 saying, "They would go out and see Osama, spend some time with him, talk with him, you know, live out in the tents, eat the simple food, engage in falconing, some other pursuits, ride horses. One noted visitor is Sheik Mohammed bin Rashid al Maktum, United Arab Emirates Defense Minister and Crown Prince for the emirate of Dubai.''
Bin Laden and Taliban leader Mullah Omar joined the hunting parties, and there are suspicions Al Qaeda and Taliban personnel are smuggled out on returning flights.
Here is one report, sourced to the 9-11 Commission, appearing in Paul Thompson's 9-11 timeline:
"February 1999: Bin Laden Missile Strike Called Off for Fear of Hitting Persian Gulf Royalty. Intelligence reports foresee the presence of bin Laden at a desert hunting camp in Afghanistan for about a week. Information on his presence appears reliable, so preparations are made to target his location with cruise missiles. However, intelligence also puts an official aircraft of the United Arab Emirates (UAE) and members of the royal family from that country in the same location. Bin Laden is hunting with the Emirati royals, as he did with leaders from the UAE and Saudi Arabia on other occasions (see 1995-2001). Policy makers are concerned that a strike might kill a prince or other senior officials, so the strike never happens. A top UAE official at the time denies that high-level officials are there, but evidence subsequently confirms their presence. (9-11 Commission Report, 3/24/04 (B))"
It remains a key center of operations for Victor Bout, the notorious arms dealer, with ties to Taliban and Al Qaeda. There were also ties to the infamous BCCI.
As the Financial Times put it, in the UAE, "Western fraud investigators may find a link here or a connection there, with a person suspected of breaking western laws. But in Dubai, and its neighbor Sharjah, trails tend to vanish like wind-blown tracks in desert sands . . . Secrecy keeps everyone guessing-and speculating . . . 'Medieval feudalism' is how one senior western banker described Dubai's style of government, 'with a veneer of 21st century regulations.' "
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America's Glorious Empire of Debt