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....


ANALYSIS & BACKGROUND


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....

http://www.wired.com/dangerroom/2011/08/libyan-rebels-killed-top-merc/all/1


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.

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CLICK TO ENLARGE

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.”....


http://www.spiegel.de/international/germany/0,1518,799335,00.html



Monday, November 21, 2011

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

http://www.strategic-culture.org/news/2011/12/21/a-third-rate-intelligence-agency-a-failing-power-cia-global-demise.html


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....


http://www.youtube.com/watch?feature=player_embedded&v=iBsSBwxAwjo

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


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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.

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

Saturday, November 19, 2011

Obama's ally in Africa practices human sacrifices of young virgin girls....


Obama's ally in Africa practices human sacrifices of young virgin girls....


November , 2011 -- Obomba's administration pushing for hereditary dictatorship in Uganda..., while preaching "Freedom and Democracy" elsewhere in MENA....The Zioconned USA has become the laughingstock of the World.


The Zioconned Obama administration has insisted that the hereditary regimes of Egypt and Libya had to go, and now, it is calling for the Assad regime of Syria to step down. However, when it comes to sub-Saharan Africa, and nations where oil is plentiful, the Obama administration is supporting the continuation of nepotistic hereditary regimes. No place is this more evident than in Uganda, which has been governed for twenty-five years by the dictator Yoweri Museveni.

And to support the Ugandan dictatorship, Obama has dispatched 100 U.S. Special Forces to Uganda, ostensibly to battle against forces of the rebel Lord's Resistance Army. However, Obama now appears intent on preserving the Museveni dictatorship by sensing U.S. military forces to the country to prop of the unpopular regime. We have been told that the main opposition to Museveni, the
Uganda National Front, (UNF) now stands ready to "Occupy Uganda" through a campaign of peaceful protests inside the country and abroad at Ugandan diplomatic missions. "Occupy Uganda" is calling on other Occupy movements around the world to support its efforts.

Museveni and Kenyan Prime Minister Raila Odinga recently returned from Israel and have committed to expanding Israel's military presence in east Africa, including Uganda, Kenya, Ethiopia, South Sudan, and Tanzania. Kenyan troops, along with those from Uganda and Burundi, are battling Somali factions inside Somalia, with U.S. and NATO military support, and reportedly, with covert support from IsraHell.... CIA drone bases have been established in KSA, Jordan, Ethiopia, Djibouti, Iraq and the Seychelles.

Odinga, a member of the Luo tribe from which Obama hails on his father's side, said Israel has promised to provide security assistance to Kenya. Odinga was installed as prime minister with support from George Soros's international "themed revolution" network. Odinga's party is called the "Orange Democratic CIA Movement."

Our Ugandan sources have revealed that on November 11, Museveni's son, 37-year old Major General Muhoozi Kainerugaba, commander of the special forces of the Uganda People's Defense Force, covertly visited Washington, DC to seek Obama administration support for his succession to the presidency of Uganda after his father retires....

Muhoozi was reportedly accompanied to Washington by Susan Nalugwa Kiguli, a Ugandan writer and poet whose history strongly suggests that she is part of the Soros non-governmental organization (NGO/CIA) influence-peddling network in Africa that includes recent Nobel Peace Prize winners Leymah Gbowee, a Liberian writer and political activist, and Ellen Johnson-Sirleaf, the president of Liberia who recently won re-election amid an opposition boycott stemming from charges of electoral fraud.

Muhoozi's secret trip to Washington was known to only a few people, including Ugandan ambassador to Washington Perezi K. Kamunanwire, Ugandan military attaché in Washington Col. Leopold Eric Kyanda, and Assistant Secretary of State for African Affairs Johnnie Carson. Muhozzi held a secret meeting with Carson. Muhoozi's trip was arranged through U.S. ambassador to the UN Susan Rice and Chevron, Inc., who hope to see the Museveni family stay in power to facilitate U.S. oil production of newly-discovered large oil reserves in Uganda....

Zioconned Obama is reportedly favorable to the plan to keep the Museveni family in power through Muhoozi's eventual accession to power.

Obama, who claims to be a Christian, but is really Jewish....has picked a strange dictator with whom to align the United States. The UNF points out that Museveni's rise to power was accompanied by a satanic practice of human sacrifice. Museveni started his bush war in the Luwero triangle region by sacrificing to his "gods" a young virgin girl of abut 9 year old, together with a sheep and rooster. The ritual is said to be still practiced by Museveni and his National Resistance Movement (NRM) of Uganda.

While Obama and Secretary of State Hillary Clinton called for the ouster of Libyan leader Qaddafi and his family and are now calling for the same fate for Syria's assassin in Chief Bashar Assad and his family of thugs and killers, they want to see the son of a human sacrificing president remain in power in Uganda. Perhaps Obama's Luo tribal roots have helped usher into the White House a dangerous conflict-of-interest where the rule of law for U.S. foreign policy has been replaced by a lawless rule of the Zioconned jungle.....

We have obtained a photograph from Ugandan opposition sources of a victim of the special forces of the State Department's recent guest, Muhoozi (warning: photograph is disturbing).
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Meanwhile, the UNF is calling for sub-Saharan Africa's first major Occupy movement to remove a dangerous dictator and his family from power and be replaced by a federal and democratic system of government....



Tuesday, November 15, 2011

It is to be regretted that the rich and powerful too often bend the acts of government to their selfish purposes.....


"It is to be regretted that the rich and powerful too often bend the acts of government to their selfish purposes."

Andrew Jackson


Bank of America's Merrill Lynch unit is soliciting for the purchase of claims against MF Global....

As you may recall, Bank of America is one of the major creditors of MF Global with JPM, and is reported to be one of the Debtors, along with JP Morgan, involved in the litigation trying to obtain superiority of their claims over customers whose money was taken/lost/stolen by parties unknown for now.

I have nothing against vulture funds per se, although what I hear a few of them have done with two of the failed Icelandic Banks and their former directors proves Rule Four of ZombieBankingland:
Always Use the Double Tap.

But doesn't this seem like a bit of an impropriety, if Bank of America is one of the holders of assets, or affiliated in a court action with such a holder of contested assets, that would ultimately make customers whole? Is it conceivable that this is a conflict of interest?

I mean, it does seem that BofA with one hand is acting with others to give its own claims superiority in the Trustee liquidation, and on the other hand it is offering to buy up the claims it has weakened by these legal actions.

MF Global has the wafting odour of scandal that keeps on intensifying.

I cannot wait to find out the whole truth. But that might have to wait for kingdom come, if it is in the same justice delivery system as the silver manipulation inquiry.

But for now the pampered princesses of the NY financial media are bubbling with excitement over the clubbing and gassing of peaceful protesters under cover of darkness.

It appears that MF Global is phase two: the clubbing and looting of unsuspecting customers and clients.

When in doubt, get out.






The Coalition of Customers of MF Global filed a motion to turn down JP Morgan's legal maneuver to give the Bank a priority as a Debtor over the Customers whose $633 million in non-cash assets were apparently 'misplaced' by MF Global. The location of the funds, and the party to which they were given, has still not yet been disclosed by MF Global's management.

Bank of Montreal's Chicago based Harris unit was subpoenaed for customer account information, but so far nothing has been released publicly with regard to the location of the customer assets.

This is a somewhat lengthy excerpt but it is an interesting read even for a non-attorney such as myself.

INTRODUCTION

MF Global, Inc. was a registered broker-dealer, used by its Customers to trade commodities, futures and derivatives. Customers maintained accounts at MF Global, Inc., which were supposed to be held inviolate under CFTC Regulation 4.20(c), and which have a first priority right of recovery under 11 U.S.C. § 766(h) and 17 C.F.R. § 190.08. Yet, it appears that over $600 million in Customer funds are unaccounted for at MF Global, Inc. (“Missing Funds”), due to poor internal controls, and may have been commingled with proprietary funds held by MF Global, Inc., and the Debtors.

Presently, the Securities and Exchange Commission (“SEC”), Commodity Futures Trading Commission (“CFTC”), the FBI, and the Trustee overseeing the liquidation of MF Global, Inc., are investigating the disposition of the Missing Funds. It could be that some or all of the missing funds are held by, or are tied up in assets owned by, the Debtors. According to Section 766(h) of Chapter 11 of the Bankruptcy Code, such funds would have to be returned to the Customers before any other creditor.

In the meantime, Debtors, the Liquidity Facility Lenders, and the professionals representing both, have sought approval to carve out funds for themselves — under a so-called super-priority protection — without regard to the Customers’ right to have their funds returned before any other money is spent from the bankruptcy estate. Yet, the Debtors have not provided notice to all MF Global, Inc. customers, nor have they apparently even notified the trustee for MF Global, Inc. of the potential impact of the Motion on potential Customer funds.

Indeed, if granted, such a super-priority right would abrogate sacrosanct protections for commodities account holders, depriving those who trade in commodities, futures, and derivatives, of their only protection and potentially chill economic activity. It is premature to enter such an order — particularly one that includes a “good faith” finding to a lender that may have benefitted from the improper transfer of the Customer Funds to pay down an outstanding loan.

BACKGROUND

MF Global customers represent a cross-section of people across America and the world, from farmers and ranchers who hedge their crops and herds, to oil producers and miners who use futures to lock-in prices and take delivery of physical commodities, to retirees who invest in futures to diversify their portfolios. For example, farmers who have crops in the field need to sell futures in commodity markets so they can lock in prices for their future yields today, instead of taking on market risk as they would otherwise be exposed to volatile price swings.

Large corporations like Coca-Cola who make money in foreign markets do not want to lose money when they repatriate revenue earned in foreign currency. They have to be able to forecast future expenses and profits accurately in the currency of their domicile and hedge that currency price risk in futures markets accordingly.

Investors add volume and liquidity to these markets which allow for better, more efficient pricing of commodities. This allows for stability in prices of commodities and predictability of future profit and loss, which in turn allows for stability in producer and consumer prices. These commodities include everything from grains like corn and wheat, to energy like oil and natural gas, to soft goods like cotton and sugar, to currencies like the US dollar and Euro, to financial instruments like bonds and stock indexes. Simply put, trading in commodity futures markets is a mainstay of the American economic engine.

Segregated Funds: Cornerstone of the Commodities Industry:

One of the big differences between commodities brokers and securities (stocks and bonds) brokers is that commodity brokers have an obligation to keep customer funds completely segregated from the firm’s own assets. This is to ensure that clients are completely protected from losses sustained by the firms’ trading and operations. It also is in contrast to the securities industry, as the Securities Investors Protection Act back-stops losses suffered by securities investors due to broker malfeasance, but does not similarly back-stop similar losses suffered by commodities investors.

Many industry groups and regulators have heralded segregated account protection, arguing that no client has ever lost a penny from a segregated account as the result of a broker bankruptcy, and this has been a key driver of volume and profitability for the Chicago Mercantile Exchange. “However, all futures trading accounts, including managed futures, have the advantage of specific industry rules that require the segregation of customer funds from the firm's own funds. The practice of segregating customer funds protects investors in the event of default at the Futures Clearing Merchant (FCM, the industry term for futures brokerage firms
licensed to trade on futures exchanges in the U.S.) holding their account. While FCM bankruptcies are rare, they do occur. In 2005, Refco Inc. and 23 of its unregulated subsidiaries filed for Chapter 11 bankruptcy protection. However, Refco's regulated subsidiaries (where customers' futures trading and managed futures accounts resided) were unaffected and customers were able to continue trading and managing their accounts.” See “Safeguarding Customers Through Segregated Funds” by CME Group, Inc.
http://www.cmegroup.com/managedfutures/Feb2011/safeguarding-customers-through-segregated-funds.html.

So, whereas securities clients are afforded various insurance in the event of a broker bankruptcy, commodities clients are afforded none—which is economically rational only because their funds cannot be commingled with a broker's assets and cannot be used to pay creditors in a bankruptcy. Segregated funds are accounted for daily to the National Futures Association (“NFA”) and to the CFTC through the broker’s designated self-regulatory organization (“DSRO”), which in MF Global’s case was the Chicago Mercantile Exchange (“CME”).

MF Global Did Not Maintain Segregated Accounts

Despite the fact that MF Global was responsible for maintaining full segregation of customer funds on a daily basis, there remains $633M in unaccounted for customer segregated funds two weeks after the firm filed bankruptcy. Moreover, the officers and directors of MF Global have thus far been uncooperative in aiding the court in ascertaining the whereabouts of these missing funds, despite a formal probe by the CFTC, the US futures regulator. This has driven the Trustee’s office to comment: “Our forensic investigators have been there since last week and nothing we have found so far causes us to think anything other than there is an
apparent shortfall at MF.” See “MF Global Fund Frustration Grows, CFTC Confirms Probe,” by Reuters, November 10, 2011,
http://www.reuters.com/article/2011/11/11/us-mfglobal-cftcinvestigation-idUSTRE7A96C420111111

These failures to cooperate are consistent with the operating history of MF Global, which is fraught with examples of misconduct and disregard for regulations. “An analysis of regulatory enforcement actions shows MF Global has drawn more sanctions from the U.S. commodity futures regulator than each of its 14 closest peers in that market over the past decade. MF Global has also drawn the second highest amount in fines, for alleged lapses in risk supervision and record keeping.” See “Insight: Risk, Lax Oversight Riddle MF Global’s Past,” by Reuters, November 11, 2011, http://www.reuters.com/article/2011/11/11/us-mfglobal-legal-fidUSTRE7AA2KO20111111

As of today, it is not clear where the Missing Funds might be—although they may have been taken as part of one or more margin calls related to sovereign debt held by MF Global on its own account. See “MF Global May Have Used Customer Funds In The Losing $6.3 Billion Trade Without Informing Clients,” November 8, 2011, Forbes, at http://www.forbes.com/sites/robertlenzner/2011/11/08/mf-global-used-customer-funds-in-the-losing-6-3-billion-trade-without-informing-clients/.

The CME has gone so far as to say that it appears MF Global moved funds immediately prior to bankruptcy from “segregated funds in a manner that may have been designed to avoid detection,” according to a CME statement on November 2, 2011.
http://www.prnewswire.com/news-releases/cme-group-statement-regardingmf-global-133102203.html.

It is equally possible that these funds were seized and used to pay down the line of credit held by MF Global Holdings, Ltd. or have otherwise been used to bolster cash held by the Debtors.

ARGUMENT

Due to the apparent shortfall of customer segregated funds and the lack of cooperation by MF Global officers and directors in determining its whereabouts, it is imperative that the Court does not grant any liens, encumbrances, priorities, or super-priorities of any assets in the Debtors without protection for customer funds at this time. To do so could allow Debtors and JP Morgan Chase Bank, N.A. (“JPMorgan”) to obtain a priority over Customers on Customer Funds, in derogation of the Bankruptcy Code and CFTC regulations. This would deprive commodity investors of the one protection they have — a right to priority payout — and possibly further chill economic activity in these troubled economic times. Accordingly, absent some protection for Customers, Debtors’ Motion must be denied.

I. Customers Have Absolute Priority Over Funds Implicated By The Motion.

According to 11 U.S.C. § 766(h), a bankruptcy trustee “shall distribute customer property ratably to customers on the basis and to the extent of such customers’ allowed net equity claims, and in priority to all other claims, except [limited costs] attributable to the administration of customer property.” (emphasis added.) Under 17 C.F.R. 190.8, “customer property” includes (among other things) cash, securities or other property “received, acquired or held to margin, guarantee, secure, purchase or sell a commodity contract,” any “open commodity contracts,” and even cash, securities or property that “[w]as unlawfully converted but is part of the debtor’s estate.” The Motion implicates customer property in at least two ways.

First, it is unquestionable that there are well over $600 million in Customer funds that simply have not been accounted for. If speculation is true, the Missing Funds could have been seized in a margin call or otherwise improperly applied by the Debtors to their outstanding obligations. Commingling between MF Global, Inc. and Debtors could necessitate a finding of substantive consolidation. Such a finding would, in turn, merit treating Debtors like futures clearing merchants. Such a finding would obviate the protection of Chapter 11, necessitate Debtors’ immediate liquidation, and would unquestionably require priority return of assets to
Customers. Until such time as the SEC, CFTC, FBI, and the trustee overseeing the MF Global, Inc. liquidation have completed their forensic analysis, the Court ought to treat the funds that the Debtors seek to use as if they include the Missing Funds.

Second, the Motion and Amended Interim Order each provide that JP Morgan can obtain a super-priority or first priority lien (JP Morgan currently is an unsecured creditor) on all property in which Debtors have an interest, including “intercompany indebtedness … owed by MF Global, Inc. to each Debtor.” In other words, it is possible, under the Motion, for JP Morgan to obtain a seemingly preferred interest in payments that MF Global, Inc. owes to Debtors—and could use that priority to force MF Global, Inc. to pay JP Morgan rather than pay Customers. The Proposed Order, in Paragraph 5, also gives JP Morgan priority over any claims.

Put simply, given the unknowns at this stage in the proceeding, it is undeniable that the Motion may impact funds and/or assets that should first be paid out to Customers—not to lenders and professionals.

II. Customers Should Have Received Notice.

In this matter, notice has been given in haphazard fashion. Debtors sought and received interim rights over cash collateral and JP Morgan received its super-priority rights on an interim basis without any real notice being given. Then, a hearing was noticed for November 14,2011. An amended notice, found at Dkt. No. 63, re-set the hearing for Thursday, November 16, 2011, at 3:30 p.m. It also set the objection date for November 11, 2011. Of course, the 16th is a Wednesday and November 11, 2011, was a federal holiday.

Even assuming Debtors have calendar-challenges rather than devious intent, Customers still should have received notice of the Motion. As first-priority claimants for whom over $600 million in collateral has vanished, it seems unquestionable that Customers of MF Global, Inc. potentially have rights that ought to be protected in the closely related bankruptcy of MF Global Holdings, Ltd. Yet, no effort was made even to post notice of the Motion on the SIPC trustee’s website in the related bankruptcy.
http://dm.epiq11.com/MFG/Project/default.aspx.

For this reason alone, the Motion ought to be denied at this time, until adequate (and accurate) notice can be provided to Customers.

The Court Ought To Protect Customer Funds.

As noted above, a finding of commingling between MF Global, Inc. and Debtors could necessitate a finding that MF Global, Inc. and the Debtors were substantively consolidated.

Such a finding would, in turn, merit treating Debtors like futures clearing merchants. And, such a finding would require that the Court give first priority not to JP Morgan or the professionals in this matter, but to Customers.

It is not beyond the pale to expect that the massive investigation being undertaken by the SEC, CFTC, FBI, and SIPC trustee, will unearth facts that support such a finding.

Accordingly, assuming the Court finds that Debtors provided adequate notice, the Court should protect the Customers’ funds. One such protection would be to release $633 million immediately from the estate of MF Global Holdings, Ltd., which reports excess equity of more than $1.3 Billion. (See Mot. at 5.) This would leave Debtors and their lenders with sufficient additional equity to wind-down Debtors’ business.

Absent such relief, Customers have no other recourse. Indeed, the SIPC cannot provide relief to the Customers, as its protections only inure to those trading in securities. The CME’s offer of $250,000,000 in liquidity does not staunch the bleeding, either. It is an insufficient band-aid, at best. As a result, hundreds, if not thousands, of commodity traders are being forced to liquidate trading positions, are losing opportunities to trade and to hedge market risk, and are losing trading positions because the cash they need in order to make margin calls is tied up with MF Global. These parties’ inability to trade, combined with the commodity market’s loss of confidence resulting from this collapse, will certainly have a chilling effect on the economy.

Accordingly, the Customers ask that the Court protect Customer funds by immediately releasing $633 million to them or, in the alternative, clearly providing — in any final order relating to the Motion—that: (i) Customers shall have a right to an ad hoc committee to monitor events in these bankruptcy proceedings; and (ii) any priority lien given to any party in this bankruptcy shall not be superior to the rights, if any, of the Customers to recover from this bankruptcy estate; and (iii) professionals have no right to recover for fees and expenses until such time as any funds deemed — by the SEC, CFTC, FBI, the SIPC trustee, or this Court — to be Customer funds have been released to the Customers.

It Is Too Soon To Make A Good Faith Finding.

In the Interim Order, it specifically provides that JP Morgan is deemed to have acted in “good faith” and, accordingly, is entitled to the protection of Bankruptcy Code Sections 363(m) and 264(e). Simply put, until the SEC, CFTC and SIPC trustee have completed their investigations, it is simply too soon to determine whether JP Morgan bargained in good faith, at arms-length, for the right to super-priority liens in this matter.

Accordingly, Customers respectfully request that the Court note, in any final order relating to the Motion, that it is withholding judgment as to whether JP Morgan has acted in good faith in these proceedings.

Conclusion.

Were this Court to allow any party to have an interest superior to customer segregated funds, it would provide a loophole in the protections which are the bedrock of commodity trading. This Court should only provide for the use of Cash Collateral which protects customer funds as Congress, the CFTC, CME, and hundreds of thousands of commodity traders have, for over 100 years, believed to have been the case. The system of regulation in the commodities industry is based on this bedrock principle, and this proceeding should in no way affect it.

Wherefore, Phil Edgerley, et al request this honorable Court to deny the request in its current form to utilize Cash Collateral, and only allow such use in a manner which protects segregated customer account holders....