MIKE

Archive for August, 2010

Ron Paul explains why we should audit the gold held by the federal government to find out if it’s still there. We need to solve the problem at the source, the Federal Reserve.

Ron Paul is America’s leading voice for limited, constitutional government, low taxes, free markets, a return to sound monetary policies, and a foreign policy that puts America first.

Webster G. Tarpley
TARPLEY.net
August 25, 2010

The US Treasury has just announced that China’s official holdings of U.S. Treasury securities declined by about $30 billion between April and May of this year, from about $900 billion to some $868 billion. According to the US authorities, this means that Chinese holdings of US government paper are now at the lowest level in the past year. A 2% to 3% decline in a month does not qualify as massive dumping, but simply means that China is in the process of diversification. It is also very likely that China has more U.S. Treasury bonds than this official count would indicate, quite possibly through proxy purchases via Hong Kong and other places.

With the sales of existing homes in the United States falling by 27% this morning, together with disastrous statistics regarding unemployment and foreclosures, it ought to be obvious that the US economy is in depression. Even experts interviewed on CNBC are beginning to wake up to this obvious fact.

World Bond Bubble
On August 24, the Treasury’s two-year note reached its highest price in recorded history, meaning that the yield was at a record low. The entire world is piling into short-term U.S. Treasury paper, and many buyers cannot get enough. This makes a mockery out of the right wing reactionary refrain that the US equals Greece and soon will be unable to borrow. If, according to the crackpot Austrian theory, markets know things that individual humans cannot know, then surely the market is signaling a great desire for T
Treasury bills and Treasury notes at the short end. The main reason for this demand is of course fear and panic – coming from the growing awareness that the world is indeed experiencing the second wave of a world economic depression of colossal proportions.

There is now a large-scale international bond bubble involving, among others, US treasuries and German Bunds. Since the flash crash of May 6, many investors have fled the stock markets entirely. It is still too soon to sound the alarm on deflation ahead, but deflation has now appeared over the horizon as a concrete possibility – partly because so many major financial players are now convinced that deflation is the wave of the future. If this were to come about, it would mean a depression looking much more like 1929-1933 than the relatively more mild situation we have experienced over the last two years. The depression may be taking a turn toward something far more excruciating for the masses of the population. One by-product of that would be vastly decreased popular gullibility for the anti-government recipes of the libertarian Austrian school, which are tailored for those who have money, and which have very little appeal to people who are unemployed, homeless, and starving.

Read the entire blog post HERE.

Part 1

Part 2

Posted on Tuesday, July 20, 2010, 12:00AM
by Robert Kiyosaki

The world knows BP is a disaster, a monster of a disaster. BP’s disaster makes Hurricane Katrina look like a rain shower.

Every time a TV news station shows oil gushing from a broken pipe — one mile below the ocean’s surface — the world gets sick. Scenes of oil-soaked pelicans struggling for life both angers and saddens us. The financial losses endured by small businesses and fishermen cannot be imagined, let alone conveyed by the media interviews. BP is a disaster with a scope beyond comprehension.

I was in England when President Barack Obama blamed and criticized BP for this tragedy. His criticism sparked the anger of the British. Politicians wanted him to tone it down, to be more careful in his choice of words. British Prime Minister David Cameron told Obama not to “go after BP for the sake of it.” Virgin’s Richard Branson said he was “kicking a company while it was on its knees.” Their concern was not for the environment or those suffering the ravages of this disaster. Their concern was for the pensioners who are counting on BP for a secure retirement.

On June 17, London’s Daily Mail ran a headline screaming, “Obama Bullies BP into £13.5bn Fund for Oil Spill Victims… but British Pensioners will Pick Up the Bill.” The British are angry with Obama for pressuring BP to suspend dividend payments and set aside $20 billion for the cleanup. Obama’s strong-arm position has not only affected British pensioners, who own 40% of BP, but American pension funds, who own 39%, as well. In other words, the economic damage of the BP disaster goes far beyond the Gulf. The damage is spreading to pensions, pensioners, and portfolios all around the world.

An Atmosphere Changed

While in London, I decided to go to dinner at Canary Wharf, ground zero for the next BP. Only a few years ago, Canary Wharf was one of the centers of the financial universe. Condo prices were sky high, offices were packed, and high-paid bankers filled Canary Wharf with wealth and excitement. Today, Canary Wharf seems to be dying. It has lost its vibrancy. Many restaurants and offices were nearly empty and there were few lights to be seen in those once-high-priced condos.

And Canary Wharf’s ‘BP’ stands for Bomb Production. Canary Wharf is much like AIG, a factory for exotic financial products known as derivatives. The problem is that most people do not know what these murky and mysterious products are – and that includes the people who make them or buy them. It’s why Warren Buffett has called derivatives “financial weapons of mass destruction.” That is how powerful they are. During World War II, a ship exploded while loading bombs for transport at Port Chicago, California. The explosion flattened everything for miles. It is said that the ship’s anchor, which weighed tons, was found more than six miles away. Derivatives — financial bombs — have the same power if they accidently detonate inside a bank’s balance sheet.

The subprime disaster was a result of financial bombs — derivatives — exploding in financial institutions such as AIG and Lehman Brothers, as well as banks and financial institutions throughout the world. After the bombs AIG manufactured exploded, AIG received $181 billion in taxpayer funding and immediately sent $11.9 billion to France’s Société Générale, $11.8 billion to Deutsche Bank, and $8.5 billion to Barclays Bank of Britain. U.S. taxpayer money was going to bailout banks around the world. During the last three months of 2008, AIG was losing more than $27 million an hour. That is how powerful these derivatives can be. The problem I see is this: There are many more such bombs still sitting in balance sheets all over the world.

Financial Bombs All Over the World 

Military bombs are classified by weight: 500-, 750-, and 1,000-pound bombs. Financial bombs have interesting labels such as CDO (collateralized debt obligations), ABS (asset backed securities), and CDS (credit default swaps). While they sound exotic and sophisticated, when put in everyday language, a CDO is simply debt sold as an asset. And CDS, or swaps, are simply a form of insurance.

Since the insurance industry is strictly regulated, and the bomb factories producing CDS did not want to comply with insurance industry regulations, they simply called them ‘swaps,’ rather than insurance.

To make matters worse, rating agencies such as Moody’s and S&P (and even Fed Chairman Alan Greenspan) blessed these financial bombs as safe, sound, and good for you. It was almost as good as the pope blessing these products. In 2007, the subprime boom busted, and we know what happened from there.

The problem is that approximately $700 trillion of these financial time bombs are still in the system. While people watch the BP disaster in the Gulf, few people are aware of the other BP, the financial bomb production that is still going on. If this derivative market begins to collapse, we will see another BP disaster.

Can’t Clean Up the Next Disaster

Most of us know there is not enough money in the world to clean up the Gulf. The same is true with the $700 trillion derivatives market. If just 1% of the $700 trillion derivatives market goes bust, that is a $7 trillion disaster. The entire U.S. economy is only $14 trillion annually. A 10% failure, equating to $70 trillion, would probably bring down the world economy. As with the BP Gulf disaster, there is not enough money in the world to clean up the next BP disaster.

Read the entire article HERE.

By Laurence Kotlikoff – Aug 10, 2010 6:00 PM PT

Let’s get real. The U.S. is bankrupt. Neither spending more nor taxing less will help the country pay its bills.

What it can and must do is radically simplify its tax, health-care, retirement and financial systems, each of which is a complete mess. But this is the good news. It means they can each be redesigned to achieve their legitimate purposes at much lower cost and, in the process, revitalize the economy.

Last month, the International Monetary Fund released its annual review of U.S. economic policy. Its summary contained these bland words about U.S. fiscal policy: “Directors welcomed the authorities’ commitment to fiscal stabilization, but noted that a larger than budgeted adjustment would be required to stabilize debt-to-GDP.”

But delve deeper, and you will find that the IMF has effectively pronounced the U.S. bankrupt. Section 6 of the July 2010 Selected Issues Paper says: “The U.S. fiscal gap associated with today’s federal fiscal policy is huge for plausible discount rates.” It adds that “closing the fiscal gap requires a permanent annual fiscal adjustment equal to about 14 percent of U.S. GDP.”

The fiscal gap is the value today (the present value) of the difference between projected spending (including servicing official debt) and projected revenue in all future years.

Double Our Taxes

To put 14 percent of gross domestic product in perspective, current federal revenue totals 14.9 percent of GDP. So the IMF is saying that closing the U.S. fiscal gap, from the revenue side, requires, roughly speaking, an immediate and permanent doubling of our personal-income, corporate and federal taxes as well as the payroll levy set down in the Federal Insurance Contribution Act.

Such a tax hike would leave the U.S. running a surplus equal to 5 percent of GDP this year, rather than a 9 percent deficit. So the IMF is really saying the U.S. needs to run a huge surplus now and for many years to come to pay for the spending that is scheduled. It’s also saying the longer the country waits to make tough fiscal adjustments, the more painful they will be.

Is the IMF bonkers?

No. It has done its homework. So has the Congressional Budget Office whose Long-Term Budget Outlook, released in June, shows an even larger problem.

‘Unofficial’ Liabilities

Based on the CBO’s data, I calculate a fiscal gap of $202 trillion, which is more than 15 times the official debt. This gargantuan discrepancy between our “official” debt and our actual net indebtedness isn’t surprising. It reflects what economists call the labeling problem. Congress has been very careful over the years to label most of its liabilities “unofficial” to keep them off the books and far in the future.

For example, our Social Security FICA contributions are called taxes and our future Social Security benefits are called transfer payments. The government could equally well have labeled our contributions “loans” and called our future benefits “repayment of these loans less an old age tax,” with the old age tax making up for any difference between the benefits promised and principal plus interest on the contributions.

The fiscal gap isn’t affected by fiscal labeling. It’s the only theoretically correct measure of our long-run fiscal condition because it considers all spending, no matter how labeled, and incorporates long-term and short-term policy.

$4 Trillion Bill

How can the fiscal gap be so enormous?

Simple. We have 78 million baby boomers who, when fully retired, will collect benefits from Social Security, Medicare, and Medicaid that, on average, exceed per-capita GDP. The annual costs of these entitlements will total about $4 trillion in today’s dollars. Yes, our economy will be bigger in 20 years, but not big enough to handle this size load year after year.

This is what happens when you run a massive Ponzi scheme for six decades straight, taking ever larger resources from the young and giving them to the old while promising the young their eventual turn at passing the generational buck.

Herb Stein, chairman of the Council of Economic Advisers under U.S. President Richard Nixon, coined an oft-repeated phrase: “Something that can’t go on, will stop.” True enough. Uncle Sam’s Ponzi scheme will stop. But it will stop too late.

And it will stop in a very nasty manner. The first possibility is massive benefit cuts visited on the baby boomers in retirement. The second is astronomical tax increases that leave the young with little incentive to work and save. And the third is the government simply printing vast quantities of money to cover its bills.

Worse Than Greece

Read the entire article HERE.

By Giordano Bruno

Neithercorp Press – 08/09/2010

Normally when I cover subjects in the economy, I try to take a “macro” approach, giving an overall view of various financial elements around the world and how they are clearly connected to one another in a greater synchronous social force. That is to say, in Chinese domestic consumption, or European debt obligations, or Russian gold reserves, and in many other factors, is encoded the very future of our own American economy. Showing others how to decipher that code is my primary mission.

In this instance, however, I would like to focus chiefly on the U.S. Dollar, the private Federal Reserve currency which is now the basis for our entire financial system, not to mention a substantial basis for trade around the globe. For decades, the dollar (and by extension U.S. Treasury bonds) has been the standard by which foreign nations safeguard capital reserves, denominate debt, and in some cases have even pegged their own currency to maintain advantageous trade deficits. In the past, the Greenback has been treated as good as gold. Though many see this as a windfall for Americans, it is actually a very unfortunate circumstance.

The “world reserve” status of our currency created a demand for dollars, but through this, it also created a glut of Treasury bond holdings in foreign central banks, and an unserviceable national debt here at home. The combination of removing the dollar from the gold standard in tandem with gaining world reserve advantage allowed our government along with central bankers to create the most precarious illusory fiat currency in history. Could this process continue indefinitely? Its possible, but only if the demand for dollars continues to rise annually. As long as people want dollars in greater and greater amounts, we could continue to expand our debt into infinity. But what happens if demand for the dollar falls, or disappears entirely? The massive liabilities we have already accrued will no longer have the crutch of perpetual Treasury investment. We no longer would receive the busloads of foreign capital we need to continue functioning. The system we have staked the future of our culture on would disintegrate.

Anyone who uses common sense would easily conclude that it is highly unreasonable if not outlandish to expect that other countries will continue to pump more and more money every year into our very unstable system. Even if Treasury bond investment simply plateaued, remaining steady for years, we would still be crushed under the weight of our debt obligations. As our government expands, and our wars expand, so do our costs, and our interest payments. Eventually, every undisciplined debtor hits a state of critical mass; a point at which he runs out of options in extending his ability to outrun bankruptcy. We are seeing this right now in the U.S., most prominently in municipal debt in states such as California and Illinois. These are not just “local problems”. The growing insolvency in states is a direct reflection of the growing insolvency in the Federal Government.

Many people have at one time or another been caught up in their own debt race, trying to dodge bills and pay off one credit card with another credit card. They understand well that this terrible circle ends in ruin. This is the situation we are in as a nation.

Strangely though, some mainstream economists and analysts still contend that America will never face consequences for its fiscal debauchery. Why do they believe this despite all the evidence to the contrary? Because of a magical machine called a “printing press”.

“If foreign investment in our debt ceases”, they say, “The Federal Reserve can just PRINT the money our government needs to function out of thin air.” That is to say, these economists (which include men like Ben Bernanke) either truly believe that capital can be created out of nothing with no sacrifice attached, or, they KNOW there is a serious sacrifice attached, but intend to keep this fact from the American public. Regardless, the end result is the same; massive liquidity injections which continually monetize debt as it defaults, and Federal Reserve purchases of our own T-bonds. We are buying stock in our own dollar just to prop up its value and keep our country afloat!

The inflation vs. deflation debate has been raging for nearly three years, but I suspect that when all is said and done, we will find that both sides in a sense were correct. The people who consistently miss the mark on what is truly going on in the economy are those who blindly insist that this is an either/or situation. The fact is, we are seeing symptoms of BOTH deflation and inflation simultaneously. Deflation in jobs, stocks, real estate, and wages. Inflation in energy, food, and commodities. At bottom, we are seeing the worst of both worlds colliding to make a financial mutation, an aberration of the natural processes of supply and demand. Our economy has become a frothing rampaging Frankenstein’s monster bent on the destruction of its former benefactors; the American citizenry. Anyone who alleges otherwise is either a liar, or a fool.

At the very heart of this nightmare, we find the U.S. Greenback; perhaps the number one reason the economic meltdown was engineered by global banks in the first place (yes, I said ‘engineered’). The sovereign ideology of the U.S. is the only thing left standing in the way of complete centralized economic control, and by extension, political control, by the top 2% wealthiest people in the world, who now hold around 50% of all the world’s assets. The dollar, though a fraudulent fiat currency, is still a representation of that sovereign drive, at least in terms of finance. Its position as the foremost traded currency on the planet affords us great leeway in our ability to spend without fear. It is the glue holding absolutely everything together. With most of our industry shipped overseas, and our communities completely reliant on a 70% service based system, the Dollar is the only homemade “product” America has left to lean on.

Unfortunately, the strength of our currency is waning, and nearing outright collapse. It is something we have been talking about for the past two years at least, which has drawn some into a false sense of security. The signs have been muddled in the MSM fog, but now the picture is becoming clear. Will the dollar crash tomorrow? That’s hard to say. What I do know, is that all the elements necessary for a catastrophic dollar devaluation have moved into place, especially in the past month. That is to say, there is now nothing preventing a steady and precipitous fall in the Greenback over the next six months or more. Below are many signals which indicate such an event is near:

Dollar Index Plummeting: Interestingly, there has been very little coverage in the mainstream news of the dollar’s continuous 9 week decline, the longest straight weekly decline since 2004. One would think this is something that might concern the general public, and not just investors:

Read the entire article HERE.

Aug 5, 2010 04:26 UTC

Main Street may be about to get its own gigantic bailout. Rumors are running wild from Washington to Wall Street that the Obama administration is about to order government-controlled lenders Fannie Mae and Freddie Mac to forgive a portion of the mortgage debt of millions of Americans who owe more than what their homes are worth. An estimated 15 million U.S. mortgages – one in five – are underwater with negative equity of some $800 billion. Recall that on Christmas Eve 2009, the Treasury Department waived a $400 billion limit on financial assistance to Fannie and Freddie, pledging unlimited help. The actual vehicle for the bailout could be the Bush-era Home Affordable Refinance Program, or HARP, a sister program to Obama’s loan modification effort. HARP was just extended through June 30, 2011.

The move, if it happens, would be a stunning political and economic bombshell less than 100 days before a midterm election in which Democrats are currently expected to suffer massive, if not historic losses. The key date to watch is August 17 when the Treasury Department holds a much-hyped meeting on the future of Fannie and Freddie. A few key points:

1) Republican leaders believe this is going to happen since GOPers and Democratic moderates in the Senate are unwilling to spend more taxpayer money on more stimulus. But such a housing plan would allow the White House to sidestep congressional objections and show voters it is doing something tangible about an economy that seems to be weakening.

2) Wall Street banks are alerting their clients privately to this possibility. Here is what some are cautiously saying publicly. This from Goldman Sachs:

GSE policies are one of a dwindling number of policy levers the administration has left to pull, so it is conceivable that changes could be made, though there is no sign that a policy change is imminent. The Treasury’s essentially unlimited ability to provide financial support to the GSEs creates an interesting situation over the next twelve months: the GSEs could potentially be used to provide additional support for the housing market and, to a lesser extent, the broader economy in 2H 2001.

And this from Mizuho Securities:

As policy makers ponder their next move the data suggests that they face not only a stalling recovery but a growing risk of deflation taking root in the economy. As a result, the Administration has turned back to industrial policies by approving the purchase of a sub-prime auto lender by GM as a means for pumping up domestic sales, especially since the latest auto sales data indicates that consumers are still responsive to incentives. This precedent increases the risk that the government will use its control of Fannie and Freddie to increase consumer cash flow and juice the economy again.

Moreover, Morgan Stanley is pushing a mortgage relief plan directly to Congress. On August 3, a top Morgan Stanley economist recommended to the Senate Budget Committee that Fannie and Freddie ease their lending standards to allow millions of Americans to refinance their mortgages.

3) Keep in mind the political and economic context. The nascent recovery is already running out of steam. Wall Street economists just downgraded the government’s second-quarter GDP estimate of 2.4 percent to around 1.7 percent. And as even Treasury Secretary Timothy Geithner is warning, the unemployment rate may well begin to rise back toward the politically toxic 10 percent level given such sluggish growth. Many in the White House thought the unemployment rate would be dropping sharply by this point in the recovery.

But that is not happening. What is happening is that the president’s approval ratings are continuing to erode, as are Democratic election polls. Democrats are in real danger of losing the House and almost losing the Senate. The mortgage Hail Mary would be a last-gasp effort to prevent this from happening and to save the Obama agenda. The political calculation is that the number of grateful Americans would be greater than those offended that they — and their children and their grandchildren — would be paying for someone else’s mortgage woes.

Read the entire article HERE.

By Veteran Intelligence Professionals for Sanity
August 3, 2010

MEMORANDUM FOR: The President
FROM: Veteran Intelligence Professionals for Sanity (VIPS)
SUBJECT: War With Iran
We write to alert you to the likelihood that Israel will attack Iran as early as this month. This would likely lead to a wider war.
Israel’s leaders would calculate that once the battle is joined, it will be politically untenable for you to give anything less than unstinting support to Israel, no matter how the war started, and that U.S. troops and weaponry would flow freely. Wider war could eventually result in destruction of the state of Israel.
This can be stopped, but only if you move quickly to pre-empt an Israeli attack by publicly condemning such a move before it happens.
We believe that comments by senior American officials, you included, reflect misplaced trust in Israeli Prime Minister [Benjamin] Netanyahu.
Actually, the phrasing itself can be revealing, as when CIA Director Panetta implied cavalierly that Washington leaves it up to the Israelis to decide whether and when to attack Iran, and how much “room” to give to the diplomatic effort.
On June 27, Panetta casually told ABC’s Jake Tapper, “I think they are willing to give us the room to be able to try to change Iran diplomatically … as opposed to changing them militarily.”
Similarly, the tone you struck referring to Netanyahu and yourself in your July 7 interview with Israeli TV was distinctly out of tune with decades of unfortunate history with Israeli leaders.
“Neither of us try to surprise each other,” you said, “and that approach is one that I think Prime Minister Netanyahu is committed to.” You may wish to ask Vice President Biden to remind you of the kind of surprises he has encountered in Israel.
Blindsiding has long been an arrow in Israel’s quiver. During the emerging Middle East crisis in the spring of 1967, some of us witnessed closely a flood of Israeli surprises and deception, as Netanyahu’s predecessors feigned fear of an imminent Arab attack as justification for starting a war to seize and occupy Arab territories.
We had long since concluded that Israel had been exaggerating the Arab “threat” — well before 1982 when former Israeli Prime Minister Menachem Begin publicly confessed:
“In June 1967, we had a choice. The Egyptian army concentrations in the Sinai approaches do not prove that [Egyptian President] Nasser was really about to attack us. We must be honest with ourselves. We decided to attack him.”
Israel had, in fact, prepared well militarily and also mounted provocations against its neighbors, in order to provoke a response that could be used to justify expansion of its borders.
Given this record, one would be well advised to greet with appropriate skepticism any private assurances Netanyahu may have given you that Israel would not surprise you with an attack on Iran.
Netanyahu’s Calculations
Netanyahu believes he holds the high cards, largely because of the strong support he enjoys in our Congress and our strongly pro-Israel media. He reads your reluctance even to mention in controversial bilateral issues publicly during his recent visit as affirmation that he is in the catbird seat in the relationship.
During election years in the U.S. (including mid-terms), Israeli leaders are particularly confident of the power they and the Likud Lobby enjoy on the American political scene.
This prime minister learned well from Menachem Begin and Ariel Sharon.
Netanyahu’s attitude comes through in a video taped nine years ago and shown on Israeli TV, in which he bragged about how he deceived President Clinton into believing he (Netanyahu) was helping implement the Oslo accords when he was actually destroying them.
The tape displays a contemptuous attitude toward — and wonderment at — an America so easily influenced by Israel. Netanyahu says:
“America is something that can be easily moved. Moved in the right direction. … They won’t get in our way … Eighty percent of the Americans support us. It’s absurd.”
Israeli columnist Gideon Levy wrote that the video shows Netanyahu to be “a con artist … who thinks that Washington is in his pocket and that he can pull the wool over its eyes,” adding that such behavior “does not change over the years.”
As mentioned above, Netanyahu has had instructive role models.
None other than Gen. Brent Scowcroft told the Financial Times that former Israeli Prime Minister Ariel Sharon had George W. Bush “mesmerized;” that “Sharon just has him “wrapped around his little finger.”
(Scowcroft was promptly relieved of his duties as chair of the prestigious President’s Foreign Intelligence Advisory Board and told never again to darken the White House doorstep.)
If further proof of American political support for Netanyahu were needed, it was manifest when Senators McCain, Lieberman, and Graham visited Israel during the second week of July.
Lieberman asserted that there is wide support in Congress for using all means to keep Iran from becoming a nuclear power, including “through military actions if we must.” Graham was equally explicit: “The Congress has Israel’s back,” he said.
More recently, 47 House Republicans have signed onto H.R. 1553 declaring “support for Israel’s right to use all means necessary to confront and eliminate nuclear threats posed by Iran … including the use of military force.”
The power of the Likud Lobby, especially in an election year, facilitates Netanyahu’s attempts to convince those few of his colleagues who need convincing that there may never be a more auspicious time to bring about “regime change” in Tehran.
And, as we hope your advisers have told you, regime change, not Iranian nuclear weapons, is Israel’s primary concern.
If Israel’s professed fear that one or two nuclear weapons in Iran’s arsenal would be a game changer, one would have expected Israeli leaders to jump up and down with glee at the possibility of seeing half of Iran’s low enriched uranium shipped abroad.
Instead, they dismissed as a “trick” the tripartite deal, brokered by Turkey and Brazil with your personal encouragement, that would ship half of Iran’s low enriched uranium outside Tehran’s control.
The National Intelligence Estimate
The Israelis have been looking on intently as the U.S. intelligence community attempts to update, in a “Memorandum to Holders,” the NIE of November 2007 on Iran’s nuclear program. It is worth recalling a couple of that Estimate’s key judgments:
“We judge with high confidence that in fall of 2003 Tehran halted its nuclear weapons program. … We assess with moderate confidence Tehran has not restarted its nuclear program as of mid-2007, but we do not know whether it currently intends to develop nuclear weapons …”
Earlier this year, public congressional testimony by former Director of National Intelligence Dennis Blair (February 1 & 2) and Defense Intelligence Agency Director Gen. Ronald Burgess with Vice Chairman of the Joint Chiefs Gen. James Cartwright (April 14) did not alter those key judgments.
Blair and others continued to underscore the intelligence community’s agnosticism on one key point: as Blair put it earlier this year, “We do not know if Iran will eventually decide to build a nuclear weapon.”
The media have reported off-the-cuff comments by Panetta and by you, with a darker appraisal — with you telling Israeli TV “… all indicators are that they [the Iranians] are in fact pursuing a nuclear weapon;” and Panetta telling ABC, “I think they continue to work on designs in that area [of weaponization].”
Panetta hastened to add, though, that in Tehran, “There is a continuing debate right now as to whether or not they ought to proceed with the bomb.”
Israel probably believes it must give more weight to the official testimony of Blair, Burgess, and Cartwright, which dovetail with the earlier NIE, and the Israelis are afraid that the long-delayed Memorandum to Holders of the 2007 NIE will essentially affirm that Estimate’s key judgments.
Our sources tell us that an honest Memorandum to Holders is likely to do precisely that, and that they suspect that the several-months-long delay means intelligence judgments are being “fixed” around the policy — as was the case before the attack on Iraq.
One War Prevented
The key judgments of the November 2007 NIE shoved an iron rod into the wheel spokes of the Dick Cheney-led juggernaut rolling toward war on Iran. The NIE infuriated Israel leaders eager to attack before President Bush and Vice President Cheney left office. This time, Netanyahu fears that issuance of an honest Memorandum might have similar effect.
Bottom line: more incentive for Israel to pre-empt such an Estimate by striking Iran sooner rather than later.
Last week’s announcement that U.S. officials will meet next month with Iranian counterparts to resume talks on ways to arrange higher enrichment of Iranian low enriched uranium for Tehran’s medical research reactor was welcome news to all but the Israeli leaders.
In addition, Iran reportedly has said it would be prepared to halt enrichment to 20 percent (the level needed for the medical research reactor), and has made it clear that it looks forward to the resumption of talks.
Again, an agreement that would send a large portion of Iran’s LEU abroad would, at a minimum, hinder progress toward nuclear weapons, should Iran decide to develop them. But it would also greatly weaken Israel’s scariest rationale for an attack on Iran.
Bottom line: with the talks on what Israel’s leaders earlier labeled a “trick” now scheduled to resume in September, incentive builds in Tel Aviv for the Israelis to attack before any such agreement can be reached.
We’ll say it again: the objective is regime change. Creating synthetic fear of Iranian nuclear weapons is simply the best way to “justify” bringing about regime change. Worked well for Iraq, no?

Read the entire article HERE.