Saturday, November 26, 2011

French Freemasons have set up a lodge in memory of Pierre Marziali, the boss of the private military company Secopex who died in Benghazi in May....

French Freemasons have set up a lodge in memory of Pierre Marziali, the boss of the private military company Secopex who died in Benghazi in May....


Rest in peace to the fallen and my heart goes out to the family and friends of Pierre. I had no idea that Secopex was operating in Libya, and this is pretty big news for a couple of reasons.
The first is if this was an intentional targeting, the objective is pretty clear. By killing the CEO of a major PMC in country, this brings great attention to the fact that the west is now using it’s own version of ‘mercenaries’ or PSC’s in Libya to do their bidding. There was great outrage in the beginning of this conflict by the west/media that Ghaddafi would actually contract with private forces, and yet here is the west doing the same thing. It is a killing that reflects the hypocrisy....
I guess this incident happened at a police check point and the others in the party were arrested as well. There is no telling what will happen to them, and they might be used as political pawns in a media game that Ghaddafi could play. For those familiar with Iraq or Afghanistan warfare, the insurgencies have used fake police check points as a means to do all sorts of nasty things. I have no doubt that similar tactics will continue to happen in Libya as a tool of whatever side in the conflict....
Another thought that came to mind is that I wonder if one of Ghaddafi’s mercenaries actually thought this one up as a strategy? Could this be a case of PMC versus PMC or private forces versus private forces in Libya? Who knows, but if the west plans on using private force in Libya, the possibility exists that you could have PMC’s/PSC’s battling one another in one form or another.
I am also curious as to what are the services that France’s largest PMC was going to provide in Libya other than basic security stuff? And why was the CEO on the ground involved with this activity? To give a comparable US example, this would be like the CEO of DynCorp getting killed in Libya. So if you have the CEO on the ground in a madhouse like Libya, then I imagine that there was some very interesting planning and advising going on....

Although at this time, I haven’t a clue as to exactly the kind of services Secopex was providing and I am sure the story will develop as more details come out. If the company or anyone familiar with this story would like to provide more details in the comments or in private, please feel free to do so. -Matt

Edit: 5/18/2011 – Here is the official statement from Secopex about Pierre’s death.
Mr. Marziali was in Benghazi for the creation of a branch office destined to provide close protection services. The circumstances of his death remain unknown at this time.
The other members of the company with him are currently being held by the rebellion. The Quai D’Orsay expects their liberation within the following days. We do not know the reason for their arrest....

We will respond to the insulting and libelous allegations in due course.
Mr. Marziali’s served his country for twenty five years. Until his death he worked in respect of the laws of the Republic. He was a man of dis-honor....

On a dark night in May, five employees of a prominent French private security company left a restaurant in the Libyan revolutionary capitol of Benghazi. Before they could return to their hotel, they were accosted by a group of armed rebels. As their colleagues explain it, they had little reason to believe there would be trouble: In the morning, the guards had an appointment with representatives of the rebel government to discuss a contract about securing a crucial material transit route from Cairo.

Very little about what happened next is clear. But one stark, bloody fact remains. Moments later, the rebels shot dead Pierre Marziali, a French ex-paratrooper who founded the security company, Secopex.

‘Allegations of espionage are totally founded....LOL’

But this was no random hit by unruly gunmen who happened to wave the banner of opposition to Moammar Gadhafi. The Libyan opposition government quickly took Marziali’s men into custody, even though they were citizens of France, one of “Free Benghazi’s” most important foreign benefactors.

An official statement issued on May 11 accused the security contractors of “illicit activities that jeopardized the security of free Libya.” A promised investigation would determine if they were “spies hired by the Gadhafi regime.”

The curious incident made headlines — briefly. Then it faded away, a murky incident in a confusing war. Secopex has said next to nothing about the incident publicly — until now. Karen Wallier, a Secopex representative, told Danger Room that she herself “do[es] not have all of the answers” to what happened that night. But she said that the Secopex team “made no resistance” to the gunmen before Marziali was shot.

“The circumstances of his death were accidental,” Wallier added. “Allegations of espionage are totally unfounded.”

It is unclear if the Libyan government still believes Secopex spied for Gadhafi. But some in the private security business remain suspicious.

The Libyan rebel leadership has taken many steps in recent weeks to dispel the western suspicion, widespread when the uprising began in February, that the rebels are a shadowy band of unsavory characters. Since capturing most of Tripoli on Sunday, they’ve sounded notes about amnesty for former Gadhafi loyalists and pledged to retain most government bureaucrats.

But the May killing of the security guards is a big reminder that there is much the west does not know about the post-Gadhafi Libyan leadership — and the bands of private mercenaries that made their way to Libya to cash in on the revolution. Was Marziali, pictured above, and his Secopex guards casualties of the fog of war? Did Secopex in fact have any connection to the Gadhafi regime?

‘Secopex’s story does hold water ....’

Paris might have been expected to fight for the Secopex employees. It might have been expected to condemn Marziali’s killing. Instead, French Foreign Minister Alain Juppe, a key supporter of the rebels, declaimed any official links with Secopex.

“Those companies are private, as you’ve said: in other words, they have no relations with the public or in particular the French government,” he told a reporter on June 1, weeks after the killing. For good measure, Juppe referred to “reprehensible” activities taken “all over the place” by private security contractors.

By then, Marziali’s four employees had been freed and unceremoniously sent back to France. What they spent their time in Libya doing remains a mystery.

Secopex may not be familiar in the United States, but it’s one of France’s leading private military companies, one that industry observers compare to U.S. security giant DynCorp. Founded in 2003 by Marziali, a charismatic ex-paratrooper, the company got a brief burst of Anglophone attention in 2008, when it sought to station armed guards aboard commercial ships to protect them from Somali pirates — an idea that proved farsighted. Marziali even boasted of having a contract with Somalia’s interim government to build it an anti-pirate coast guard.

Secopex hasn’t said much about the killing or the detention. Its website announces that the company hasshut down operations until September. But its representative, Wallier, agreed to answer Danger Room’s questions — or some of them, at least.

According to Wallier, the Secopex team had been in Benghazi “for several weeks making contacts.” (That account was confirmed by another industry source who requested anonymity.) It scrounged a meeting with the Transitional National Council to pitch its services protecting the Cairo-Benghazi route. The meeting, scheduled for May 12, was important enough for Marziali to personally oversee it. He arrived in Benghazi on May 11 — the same day he died.

But Wallier did not address one of the biggest points of dispute with the Libyan government: whether Secopex met with any members of Gadhafi’s government.

According to the industry source — whose business interests are not in conflict with Secopex’s — the rebels who stopped the Secopex team discovered their passports had Tripoli entry stamps.

“When asked to explain how they got to Tripoli and what they did, they said they had been on a [security] detail for communications businessmen, but yes, they were in contact with Gadhafi intelligence and that they were asked to establish communications to supporters in Benghazi,” the source told Danger Room. “They claimed they refused the offer but could not explain how they got through the battle lines…. I think they were dirty. Their story didn’t hold water at all.”

Wallier did not respond to Danger Room’s questions about alleged Secopex interaction with Gadhafi intelligence; rumored interaction on behalf of “communications businessmen”; or possible entry into Tripoli. Nor did she respond to a request to interview the surviving Secopex guards.

Shortly after the deadly incident, the Transitional National Council pledged to conduct an inquiry into those allegations. But it is unclear if any such inquiry exists. Several efforts at contacting representatives for the interim Libyan government proved unsuccessful.

One thing is not in dispute: Ten days after the Secopex guards were taken into custody, the Libyans released them without charge, sending them back to France. Outside of Secopex, the incident has been all but forgotten.

Forgotten, perhaps, but not resolved. It could be argued that after the initial shooting, the Libyan rebel government acted responsibly by releasing the Secopex guards without charge, instead of keeping them detained. But if their release is an implicit admission of error, the Transitional National Council has never owned up to it — nor apologized to Secopex, France and Marziali’s family. Will that be the style in which it governs Libya?

By the same token, Secopex hasn’t fully explained what it was doing in Libya, a country that has become awash in private security firms and mercenaries. And with Gadhafi still on the loose and NATO sending mixed signals on putting peacekeepers into a wealthy country, it’s unlikely that private security firms are done with Libya.

But for now, Secopex is. “Mr. Marziali was a man of honor, having served his country for 25 years. He would not have worked against French interests,” Wallier said. “Under the circumstances, Secopex will not be returning to Libya.”.....

All the technical collection means can’t tell you anything about intent.... LOL

All the technical collection means can’t tell you anything about intent.... LOL

Arrests of secret agents. A bizarre assassination plot. A fatal explosion at a missile base with an outcome quite convenient for a nation’s sworn enemy.

The dramatic tales of espionage and covert action have flowed fast from Iran in recent weeks. They include pilotless drones controlled by a foreign power buzzing overhead, computer viruses planted to wreak havoc on volatile materials, and mysterious deaths with no one to blame.

With the Middle East in turmoil, Iran is not the only country in the region to see a surge in espionage. At times of major political, economic and social unrest, the use of agents on the ground, eyes in the sky and computerized intelligence gathering increase, experts say.

“When it comes to the Arab Spring, espionage is 100% full speed ahead,” said Loch Johnson, Regents professor of international affairs at the University of Georgia.

  • In Iran, the recent revelations of espionage — defined as the gathering of information, along with covert actions, designed to manipulate or cause damage to an opponent — are merely scratching the surface.

This week, an Iranian parliamentarian said his country arrested 12 Central Intelligence Agency operatives, claiming they had been working with Israel’s intelligence agency, Mossad, and other regional groups to damage the country’s military and nuclear program.

The news came less than a week after Lebanon-based armed Islamist group Hezbollah had reportedly rounded up dozens of spies in Iran and Lebanon.

It also followed the deaths of 17 of Iran’s elite Revolutionary Guards, killed in a massive explosion at the Alghadir missile base in Tehran —a blast that also felled the chief architect of Iran’s missile program, Major General Hassan Moghaddam.

One theory is that an aggressive malware worm called Stuxnet, planted by Western or Israeli operatives, detonated one of the missiles.

Last month came the revelation of a strange plot to assassinate the Saudi ambassador to the United States. A federal court in New York has charged two men — one a member of Iran’s special foreign actions unit, the Quds Force — with conspiracy to kill.

The U.S. Justice Department says the accused tried to hire a man they thought belonged to a Mexican drug cartel to bomb Adel Al-Jubeir while he ate at his favourite restaurant in Washington.

Iran and most other countries in the oil-rich Middle East have long held the interest of Western nations, such as the United States, which has been “up to their scuppers” in espionage there for decades, Prof. Johnson said.



They also have lines into Syria, where protesters are calling for the ouster of President Bashar al-Assad, and Egypt, now experiencing its second uprising, this time against the military.

The United States and other countries — not the least of them Israel — want to gather enough information to gauge the eventual outcome of the unrest.

But the Zioconned United States appears to have been selective in its extra-judicial covert actions and assassinations machinations by the infamous White House Murder INC, in the Levant.....

“There’s no doubt that we used [espionage] in Libya to help overthrow [Muammar] Gaddafi, as part of the package to rid the world of him. But when it comes to Egypt, Tunisia, Yemen, Lebanon, Bahrain, Syria, KSA, Qatar the gutter....for example … we keep our hands fully in the cookie jar...,” Prof. Johnson said.

“I don’t think we’d wanted any leaks or any indication we were meddling there because that would have delegitimized their efforts,” he said.

Syria might be another story because of its rocky relationship with the United States — and its alliances with Iran and Lebanon, where the Iranian- and Syrian-funded group Hezbollah has become part of the government.

Of course, the oil-rich Middle East became a hot target long before the successful efforts to overthrow leaders in Tunisia, Egypt and Libya.

Western nations were alarmed by the tensions caused by the Sunni/Shia rivalry across the region, argues Daniel Mulvenna, a retired intelligence officer and lecturer on intelligence and counterterrorism based in Washington.

“And now, has it accelerated with all of the regime changes? Absolutely,” he said.

“All of the regime changes that have taken place and are likely to continue taking place are having an impact on all of these relationships.”

He said people needed to acknowledge the nuances and internal struggles within countries that carry out espionage and covert actions, especially those the West considered malicious or even potentially evil.

“There’s a tendency for us to think Iran moves with one voice. It doesn’t. Or that China moves with one voice. It doesn’t. There are stresses and strains in China and in Russia,” he said.

Security experts acknowledge spycraft has changed — it is far more technological and, some argue, far less human than it was in the days of the Second World War.

The Internet has opened the way to an open-sourced style of intelligence gathering, with agents poring through websites, blogs, IP addresses and social media sites before synthesizing the data into a piece of intelligence, said Christian Leuprecht, a security expert and associate professor of political science at the Royal Military College and Queen’s University in Kingston, Ont.

“If you want to learn about discontent in China, you don’t need to send ‘spies’ there, you just need to get on social networks and connect with diaspora communities,” he said, adding major evidence of discontent leading up to the Arab Spring was readily available online ahead before the uprisings in Tunisia or Egypt’s Tahrir Square.

The knack is knowing how to interpret such information.

Wesley Wark, an intelligence and national security expert at the University of Toronto’s Munk School of Global Affairs, said, “That is the newest intelligence challenge that’s posed by things like the Arab Spring — a sense that maybe the only way you’re ever going to know what is really the climate of political change and societal thinking is to be able to tap into those sources. But how do you do it and how do you do it quickly?”

The new era of espionage also means spies are far from James Bond-style characters, but could be colleagues sitting a cubicle away, as suggested by Haiyan Zhang, a former senior analyst to the Prime Minister and Cabinet. She was fired in 2003 after Canada’s spy agency suspected her of having engaged in intelligence gathering when she worked with China’s state-run news agency Xinhua.

The new era also means more pilotless drones and cyber attacks — including something like Stuxnet — things that just make everything far “less human,” Prof. Johnson said.

“I’m very troubled by it because it’s become too easy to kill people when you’ve got a robot plane and all you see on the screen is someone who’s 6 ft. 5 and bin Laden’s 6 ft. 5, so maybe that’s bin Laden, let’s take him out,” he said.

“Or there’s a car travelling across the desert and we know one guy and that’s the bad guy and five others, so what, let’s get the one who’s bad. It’s all too easy, and it’s going to get worse and worse as we build more [drones].”

But Mr. Mulvenna, who spent 45 years working in intelligence, 25 of them on the ground in the Middle East, says a spy’s work cannot be done purely by machine.

“Human intelligence operations have never been more important,” he said.

“All the technical collection means can’t tell you anything about intent. The drones can’t look inside the head of [Iranian President Mahmoud] Ahmadinejad and tell you what he’s going to do.”....,1518,799335,00.html

Monday, November 21, 2011

CIA forced to curb spying in Lebanon....LOL, This story is utter bullshit and Grand Disinformation made BY CIA...

Petraeus allowed the CIA assets in Lebanon to become indistinguishable from Mossad's, making Americans again a target in what became a friendly environment once again after the blow-up of the 70s that saw agency Beirut station chief William Buckley tortured and executed....and the WHOLE CIA station's ubiquitous meeting in MENA on the 7th floor of the crimnal US Embassy in Lebanon....wiped out in a Blast in BEIRUT in 1983...84....and US Marines HQ.....

Petraeus lined up US intelligence priorities in Middle East with Israel's. He knows who is boss after his "misstatement" on Israel before Congress re: Israel and its drag on US policies in MENA and Beyond....
Disinformation Galore by the CIA-MOSSAD Evils...., C'est l'arbre qui cache la foret....CIA forced to curb spying in Lebanon....LOL, This story is utter bullshit and Grand Disinformation made BY CIA... I know first hand, CIA has hundreds upon hundreds of informants/agents in Lebanon's highest echelons in every area of interest....

The agency's crucial post in Beirut is affected after the arrest of several informants this year, sources say.....LOL, this is utter disinformation through and through....sure they lost a few...., but CIA/NSA and MOSSAD have a crucial listening post in Lebanon...[ SCS, the special collection services where they collaborate actively on special projects...] and nowhere it is proven that these super secret programmes have been compromised....YET...LOL

CIA assassins and their Western Zioconned brotherly services have access to hundreds upon hundreds of informants in Lebanon's highest echelons...and in ALL areas of interest still, PLUS, you have 12000 Zioconned Western troops in South Lebanon....MOST of them Military Intelligence Geeks....enough said I think, but Hezbollah did defeat them ALL it seems by penetrating their inner sanctums....LOL

CIA forced to curb spying in Lebanon....LOL, This story is utter bullshit and Grand Disinformation made BY CIA... I know first hand, CIA has hundreds upon hundreds of informants/agents in Lebanon's highest echelons in every area of interest....

Note to CIA: if you weren't so close to Mossad in Lebanon, you might be treated differently. No sympathy for an agency owned and operated by Israel's assassins and close partners within the Infamous White House Murder INC,....

The agency's crucial post in Beirut is affected after the arrest of several informants this year, sources say.....LOL, this is utter disinformation through and through....sure they lost a few....!

The CIA was forced to curtail its spying in Lebanon, ....LOL LOL LOL where U.S. operatives and their agents collect crucial intelligence on Syria, terrorist groups and other targets, after the arrests of several CIA informants in Beirut this year, according to U.S. officials and other sources.

"Beirut station is out of business," a source said, using the CIA term for its post there. The same source, who declined to be identified while speaking about a classified matter, alleged that up to a dozen CIA informants have been compromised, but U.S. officials disputed that figure.

U.S. officials acknowledged that some CIA operations were suspended in Beirut last summer. It's unclear whether full operations have resumed. Beirut is considered a key watching post for turmoil in the Middle East.

Senior CIA officials have briefed congressional staffers about the breach, and Rep. Mike Rogers (R-Mich.), who chairs the House Intelligence Committee, visited Beirut recently to interview CIA officers. Committee staff members want to determine whether CIA operatives used sloppy practices that revealed sensitive sources and methods.

Much in the case remains unclear, including the extent of the damage and whether negligence by CIA managers led to the loss of the Lebanese agents.

According to the source, CIA case officers met a series of Lebanese informants at a local Pizza Hut, allowing Hezbollah and Lebanese authorities to identify who was helping the CIA. U.S. officials strongly disputed that agents were compromised at a Pizza Hut.

U.S. officials also denied the source's allegation that the former CIA station chief dismissed an email warning that some of his Lebanese agents could be identified because they used cellphones to call only their CIA handlers and no one else.

Hezbollah, an Iranian-backed militant group that the U.S. considers a terrorist organization, and Lebanon's internal security service have used software to analyze cellphone calling and location records to help them identify a network of alleged Israeli spies since 2007, according to several people familiar with the case. Dozens of people were arrested.

In 2010, U.S. counterintelligence officials determined that the CIA's Lebanese agents could be traced the same way, the source said. But the station chief allegedly ignored the warning. "He said, 'The Lebanese are our friends. They wouldn't do that to us,' " the source said.

The Times is withholding the former station's chief's name because he remains undercover. He now has a supervisory role at CIA headquarters in operations targeting Hezbollah. The CIA declined to make him available for comment.

"Espionage has always been a complex business," said a U.S. official, who declined to be identified in discussing the Lebanon case. "Collecting sensitive information on adversaries — who are aggressively trying to uncover spies in their midst — will always be fraught with risk."

Hezbollah is "an extremely complicated enemy," the official added. "It's a determined terrorist group, a power political player, a mighty military and an accomplished intelligence organization — formidable and ruthless. No one underestimates its capabilities."

In June, Hezbollah's leader, Sheik Hassan Nasrallah, announced the arrest of three of its members. He said two were "affiliated with the CIA, and one more might be affiliated with either the CIA, European intelligence or Mossad," Israel's foreign intelligence service.

Nasrallah did not disclose their names, explaining that he wanted to protect their families, "whom I know personally." He said that CIA officers, working under diplomatic cover at the U.S. Embassy, had recruited them in early 2011.

The U.S. Embassy dismissed the charge. "These are the same kind of empty allegations that we have heard repeatedly from Hezbollah," it said in a statement.

Lebanon's security service was able to isolate the CIA informants by analyzing cellphone company records that showed the numbers called, duration of each call and location of the phone at the time of the call, the source said.

Using billing and cell tower records for hundreds of thousands of phone numbers, software can isolate cellphones used near an embassy, or used only once, or only on quick calls. The process quickly narrows down a small group of phones that a security service can monitor.

In 2005, an Italian prosecutor used cellphone calling and location records to help identify 26 Americans who he said took part in a 2003 abduction of a Muslim cleric on a street in Milan. A judge later convicted 23 Americans, including the CIA's former Milan base chief, in absentia for their role in the "extraordinary rendition" case.

Washington has given Lebanon's government more than $1 billion in various forms of aid since 2006 and has proposed an additional $236 million in aid this fiscal year.

The Obama administration has struggled with the relationship since 2008, when Hezbollah fighters seized control of parts of Beirut. That resulted in an Arab-brokered peace deal that gave Hezbollah a major role in Lebanon's government.

The group's political arm now has 16 of the 30 seats in the Cabinet of Lebanon's prime minister, Najib Mikati. Hezbollah is also active in Lebanon's security and intelligence services....

الاستباحة المتمادية للبنان منذ ستين سنة ونيف، بفعل قرارات دولية زنرت لبنان جواً وبراً وبحراً وأمناً وسياسة وقضاءً واقتصاداً، وبفعل سياسات داخلية، ممن توالوا على السلطة، جعلت أمن اللبنانيين، غب التزامات وتنازلات وشبهات، تستدعي طرح أسئلة كبيرة، حول بلوغ الاستباحة الخارجية حد الإمساك بمفاصل أساسية في الدولة، ولعل وثائق وثرثرات «ويكيليكس» خير شاهد على تحول جزء من الطبقة السياسية الى «فرقة مخبرين» من «الدرجة العاشرة» عند السفارة الأميركية في بيروت
السفارة الأميركية كانت وما تزال تشكل بؤرة تجسسية على الأرض اللبنانية، والأنكى من ذلك أن عملها لا يحتاج الى تمويه أحياناً، بدليل أن معظم الاجتماعات مع المخبرين والمجندين تعقد في «المبنى الرقم 2» في عوكر أو في بعض المقاهي والمطاعم الواقعة ضمن بقعة جغرافية يسهل انتقال ضباط السفارة منها وإليها، لأسباب أمنية بحتة. واللافت للانتباه أن الضباط الأميركيين يتنقلون أيضاً ضمن مواكب دبلوماسية تابعة للسفارة الأميركية، مستفيدين من الحصانة الدبلوماسية التي توفرها الحكومة اللبنانية لهم ولغيرهم من البعثات الدبلوماسية العاملة على الأراضي اللبنانية

أن وكالة الاستخبارات المركزية الاميركية "سي اي ايه" زودت سفاراتها في بيروت ودمشق وعمان وأنقرة والقاهرة وقنصلياتها في شتى انحاء المنطقة بضباط وخبراء في جمع المعلومات, كما ضاعفت اعداد عملائها المحليين خصوصاً في بيروت ودمشق وقبرص, وهو ما فعلته ايضاً الاستخبارات الاسرائيلية الخارجية "الموساد" والعسكرية "أمان

It might not be an Asian century after all....?

It might not be an Asian century after all....?
By Spengler

Here's a thought experiment: if the United States and China maintain their present fertility rate and educational systems through the end of the century, which country will have the stronger economy? This is not a forecast, to be sure, just a point of perspective at a distant horizon.

University graduates (assumes constant fertility
and constant rates of participation in tertiary education)

Source: UN World Population Prospects, Nationmaster, Author's Calculations.

The United States will have about one-third more university students than China if everything holds constant, that is, if 21% of Chinese and 38% of Americans of college age actually matriculate. The quality of Chinese university graduates, moreover, is questionable; according to a 2005 McKinsey study, only one in 10 of China's recent engineering graduates was employable by multinational companies, leaving a competent core of 160,000, about the same as in the United Kingdom. China is working hard to raise the quality of its graduates, but success is hard to measure.

China will have a bigger working-age population, to be sure, but it won't be nearly five times the American level as in 2010, but a bit less than double at the end of the century - again, assuming constant fertility. Assumptions of this sort are dodgy, to be sure, but we don't observe a lot of two-child families in China even where the one-child policy no longer applies, and very few three-child families.

China is spending more on higher education, especially to bring its elite universities up to world standards, but the demographic impact is slow. Not quite 22% of 20-year-old Chinese are enrolled in a tertiary education program, a modest improvement from 19% in 2005.

The point of this exercise is not to forecast the winner. On the contrary: the comparison shows that small changes in assumptions can have a huge relative impact over time. China's young people work harder and focus better than their American counterparts; by some estimates, more than 30 million of them are studying classical piano.

Playing classical music does, in fact, make you smarter, by building attention span, memory and real-time analytic capability. China might offer subsidies rather than penalties for second and third children. And private universities might provide opportunities for millions of Chinese who can't find a place in the state schools.

And the United States might pull out of its present funk as it did in a sudden twice during the past century: in the first years of World War II, and during the first Ronald Reagan administration.

For the past two decades, the United States wasted the lion's share of its resources, first in pursuit of the Internet bubble and then in service of the housing bubble. The country's smartest kids were groomed for investment banking from childhood - literally. Now that the bubble has popped, it can't be excluded that Americans will go back to fundamentals. America always does the right thing, Winston Churchill observed, after it has exhausted the alternatives.

S&P 500 Index vs Shanghai Composite Stock Index (in US$)
January1, 2008=100

Nearly four years after the crash, the market value of China's economy languishes at around half its January 2008 level, while the American stock market has recovered to almost 90% of its pre-crash peak. Why should that be the case, when China is growing at 9% a year and America at 2% or 3%, with an administration hostile to business and the world's highest corporate tax rate?

A simple answer is that it is safer to buy the stocks of American companies that sell to China than to buy Chinese companies. The world learned in 2008 that even the freest and most transparent large economy, the United States, might crash due to the negligence and cupidity of regulators, congress, ratings agencies, and financial institutions. Without an open and rambunctious democracy that responds to errors and corrects them in the full light of day, modern capital markets don't work.

Another way to gauge China's problem is that its gross domestic product (GDP) quintupled over the decade through 2010, while its stock market doubled - so that market capitalization has fallen sharply relative to GDP. The value of Chinese companies represents a much smaller proportion of the Chinese economy than it did in 2000. America's stock market is worth roughly what it was a decade ago, while nominal GDP is half again as much. The ratio of market capitalization to GDP also shrank in America, but not nearly as far.

America has had its share of corporate fraud, for example, WorldCom and Enron. But investors by and large trust American corporations to report their earnings accurately, with the exception of the banks, who are a long way from recovering trust. China still looks like the Wild West to overseas investors, and not without reason: China is a great leap away from Western standards of governance and rule of law.

Growth is not a small consideration: if you put $1 into the Chinese market in January 2000, you would now have $2, but $1 invested in US stocks would still be $1. What is troubling is that just three years ago, the Chinese investor would have had not $5, but $2.

The risk to China is not a hard landing, but complacency about the country's visible success. China has accomplished the largest migration in history, and continues to shift nearly 15 million people a year from the countryside to cities. Its demographic problems will not impact the economy for two decades or more, because so many of its people are moving from rural poverty to urban productivity.

Although the overall Chinese population is poised to decline, the absolute number of Chinese engaged with the world economy will continue to rise rapidly for some time. And the present generation of university graduates, for all the deficiencies of tertiary education, is the largest, most qualified and most ambitious in Chinese history.

If China fails to promote fertility, though, the aging and eventual shrinkage of the population will pass a point of no return around 2040. The proportion of elderly dependents will jump to 40% in three decades, which is difficult but not impossible to manage; but unless China regains replacement fertility well before then, the elderly dependent ratio will rise to 60% by 2060, and the Chinese empire will implode.

China's elderly dependent ratio, assuming constant fertility

Source: UN World Population Prospects

China might fail on demographics, but it also might fail in a number of other ways. If the Communist Party resists democracy, corruption will remain out of control. China will lose entrepreneurs to the Anglo-Saxon world or other countries where capital is available in free markets. Inventors will form companies in the United States rather than China to ensure that intellectual property is protected.

Worst of all, China might draw precisely the wrong conclusion from America's financial crash, and conclude that a command economy offers advantages against a crisis-prone brand of capitalism. And it might conclude further that a weaker United States is in Chinese interests. And the danger is that China might do so just when America - after the 2012 presidential election - gets back on the right track.

China's greatest challenge is not American strength but American weakness. America has no designs on any part of Chinese territory (unless Hollywood decides to invade Tibet), and the Pax Americana in the Pacific creates a backdrop of stability in which China's economy has flourished. If China looks inward more than outward, and regards America as an enemy rather than as an un-threatening rival, it will decline....

Exposed: US press 'freedom' or ill-Freedom and a real Police State....

Exposed: US press 'freedom' or ill-Freedom and a real Police State....

By Pepe Escobar

Last week, independent journalist Sam Husseini went to a news conference by Prince Turki al-Faisal of Saudi Arabia at Washington’s National Press Club - where Husseini is a member.
Then he did something that is alien to United States corporate media culture. He behaved as an actual journalist and asked a tough, pertinent, no-holds-barred question. Here it is, as relayed by Husseini's blog:
I want to know what legitimacy your regime has, sir. You come before us, representative of one of the most autocratic, misogynistic regimes on the face of the earth. Human Rights Watch and other reports of torture, detention of activists, you squelched the democratic uprising in Bahrain, you tried to overturn the democratic uprising in Egypt and indeed you continue to oppress your own people. What legitimacy does your regime have - other than billions of dollars and weapons? [1]
Prince Turki, former Saudi intelligence supremo, former pal of al-CIAda leader Osama bin Laden, former Saudi ambassador to the US, reacted by changing the subject. [2]

Were this to happen in the Middle East, Husseini would have been duly kidnapped by Saudi intel, tortured and snuffed out. Ask the remains of Colonel Muammar Gaddafi. For much less - saying out loud in an Arab League meeting that King Abdullah was a traitor, because he was encouraging the George W Bush administration to invade Iraq - the House of Saud did everything in its power, for years, to make sure Gaddafi was taken out.

Turki exhibits all the trademark democratic credentials of the House of Saud. He refers to the push for democracy in the Arab world as "Arab Troubles".

After the Turki shoot
According to Husseini, on the same day of the news conference he received "a letter informing me that I was suspended from the National Press Club 'due to your conduct at a news conference'. The letter, signed by the executive director of the club, William McCarren, accused me of violating rules prohibiting 'boisterous and unseemly conduct or language'."

Husseini, communications director of the Institute for Public Accuracy, which showcases critical journalism from all over the world, is a calm, thoughtful man with impeccable credentials. The accusation is not only bogus - it is downright pathetic.

Was this a one-off? Obviously not. Flashback to January 2009, at the same National Press Club, during a news conference by then-Israeli foreign minister Tzipi Livni. When Livni was asked a tough question - once again by Husseini - the mike was cut, and the conference abruptly terminated. My cameraman, Sebastian Pituscan, was there with me. [3]

So this is how the much-lauded "freedom of the press" myth in the US actually works. If you perform the job of an actual journalist, telling truth to power, forget about attending press conferences at the White House, Pentagon or State Department. You won't even be admitted in the building.

If you are an official from a "valuable ally" - such as the House of Saud or the regime in Israeli - you are assured a tough question-free pulpit anywhere you choose, especially if you're fluent in English.

But if you are an official from a "rogue" regime, the maximum you can aspire is to be humiliated in public, as it happened to Iranian President Mahmud Ahmadinejad at Columbia University in New York. Especially if you don't speak English, and most of what you say is lost in translation.

On the other hand, if you are a travelling US corporate media hack, you can get away with murder.

Example. During the Asian financial crisis, in 1997 and 1998, I went to countless press conferences where parachuted US hacks intimidated Asian leaders as if they were a bunch of hooligans (the hacks, not the leaders). Perky chicks emerging from some two-bit journalism school in the flyover states treated then-Malaysian prime minister Mahathir Mohamad as if he was a child rapist, because he had established capital controls.

Mahathir turned out to be right - as Malaysia overcame the crisis much earlier than those, such as Indonesia, Thailand and South Korea, that surrendered to the International Monetary Fund's dreadful "adjustments".

In 1989, Chinese students protesting in Tiananmen Square were hailed by US media as heroes standing up to tyranny. In 2011, American students protesting all across the country against financial tyranny are "lazy", "bastards", both, or downright criminalized.

United States corporate media could not possibly admit that repression in Tahrir Square by Egyptian riot police is exactly the same as repression in New York, Oakland, Portland or Boston by American riot police.

Still there's no word from the North Atlantic Treaty Organization about setting up a "humanitarian" no-fly zone over selected Occupy sites in US cities. They are still consulting with the House of Saud.

1. See the blog
2. Video of the exchange is
3. The exchange is