Friday, December 4, 2009

Our Subsidized Wall Street Casino & Obama's Afghan Escalation


- Spitzer Says Geithner, Bernanke Were “Complicit” in Financial Crisis

- Noam Chomsky's Views From 2009 , and Articles on Obama's Latest Afghan Escalation


Eliot Spitzer Says Geithner, Bernanke Were “Complicit” in Financial Crisis and Should Go

Democracy Now! 12/4/09

In an extended interview, we speak with former New York governor Eliot Spitzer about the financial crisis and how it was handled by Federal Reserve Chairman Ben Bernanke and Treasury Secretary Timothy Geithner. Bernanke and Geithner “actually built and participated in creating the structure that now has collapsed,” Spitzer says and calls on them to be replaced. Spitzer also talks about the scandal that erupted last year that forced him to resign as governor. “I have no doubt that there were many people who were opposed to me, very powerful forces, who were happy to see me go,” Spitzer says. “Whether they participated, I’ll let others figure that out. I resigned because of what I did.”

Eliot Spitzer, former governor of New York.

JUAN GONZALEZ: President Obama kicked off a White House jobs summit on Thursday aimed at developing a plan to combat the nation’s highest unemployment rate in twenty-six years. Speaking to 130 business leaders, union chiefs and economists, the President defended his policies, saying they slowed the pace of job losses and helped create economic growth. Obama will deliver a major speech on the economy at the Brookings Institution next week.
Meanwhile, on Capitol Hill, Ben Bernanke defended his record as chairman of the Federal Reserve at a Senate hearing on his nomination for a second term. While Bernanke conceded that some of the Fed’s lapses contributed to the financial crisis, he said the central bank’s actions ultimately helped save the economy.

• BEN BERNANKE: Taken together, the Federal Reserve’s actions have contributed substantially to the significant improvement in financial conditions and to what now appear to be the beginnings of a turnaround in both the US and foreign economies. Today, most indicators suggest the financial markets are stabilizing and that the economy is emerging from the recession, yet our task is far from complete. Far too many Americans are without jobs, and unemployment could remain high for some time, even if, as we anticipate, moderate economic growth continues.

JUAN GONZALEZ: Bernanke and the Fed came under heavy criticism for failing to recognize the financial crisis until it was too late and then using taxpayer dollars to bail out financial giants like AIG and Citigroup. The New York Times reports the hearing provided new evidence of doubt among lawmakers about the Fed’s role as the nation’s guardian of the financial system.
On Tuesday, Independent Senator Bernie Sanders of Vermont declared that he would try to block Bernanke’s approval on the Senate floor by placing a hold on his nomination.

• SEN. BERNIE SANDERS: So the very simple question that the American people are asking is, where was the Fed, where was the chairman of the Fed, in terms of observing the recklessness, the speculation, the casino-type activities that were taking place on Wall Street, which precipitated this major economic decline? And the answer is, the Fed was asleep at the wheel. Bernanke did not do the job that he was supposed to have done. So, for that reason alone, Mr. Bernanke should not be reappointed.

JUAN GONZALEZ: At yesterday’s hearing, Bernanke defended his record and highlighted the Fed’s efforts to tighten financial regulation, like stricter rules on subprime mortgages, tougher capital requirements and new proposals to regulate executive compensation at banks.

AMY GOODMAN: For more on the financial industry and the economy, we’re joined at the Democracy Now! studios by former New York governor Eliot Spitzer. He also served as New York State Attorney General, where he was known as the “Sheriff of Wall Street.”
We welcome you to Democracy Now!, Governor Spitzer.

ELIOT SPITZER: Thank you. Pleasure to be here.

AMY GOODMAN: Well, why don’t you start off by talking about how you think President Obama has handled the economy, the bailout? And you can’t speak in sound bites.

ELIOT SPITZER: Alright, no sound bites on this show, which is good news. And thank you for inviting me.
Let me begin by saying that I think Senator Sanders was wrong in only one respect: it wasn’t that the Fed was asleep at the switch; they were actually complicit. And by that, what I mean is that the Chairman, Ben Bernanke, and Tim Geithner, when he was the president of the New York Fed, actually built and participated in creating the structure that now has collapsed. And that, I think, is what is so problematic to so many of us. They are now claiming credit for having taken trillions of our tax dollars and given those dollars back to the banks to return them to solvency, when the initial bankruptcy and the initial illiquidity and the initial crisis was very much a consequence of the very policies they put in place.

Stepping back for a moment, we have a major crisis in this nation, and that crisis is jobs. That crisis is that we are seeing the elimination of the middle-class job foundation that permits most Americans to do better year after year after year. The reality is median family income has been stagnant for forty years, and the policies of what I call financialization, which is major banks trading assets back and forth, the Wall Street banks, such as Goldman, which is rightly a lightning rod right now for much of what’s going on, buying and selling, playing with tax dollars in proprietary trading—they make huge money, nothing is added to the economy, jobs are sent overseas. All of this going on simultaneously. That is what our economy has become.
And Ben Bernanke and Tim Geithner were the architects of this. And now they are saying, “Didn’t we do a good job six months ago giving money to the banks?” No. Go back two, three, five years. Where were they? Tim Geithner, over and over, bailed out the banks. He was, as president of the New York Fed, the overseer of the institution that collapsed. And so, it’s akin to going to a doctor who has said, “I have a great technique for you: I’m going to bleed you,” and he bleeds you, and he gets you more and more sick and sick and sick. Then when you’re about to die, he puts a tourniquet on you and says, “Gee, I’m good.” No, your prescriptions have been wrong since the beginning.

JUAN GONZALEZ: And you have been repeatedly critical of especially the portion of the bailout where AIG, a firm that you’re very familiar with, that you went after when you were attorney general for many of its many problems—the counterparties, the payments to Goldman Sachs and other institutions that AIG owed money to, could you talk about that?

ELIOT SPITZER: Sure. And that—the numbers on that one transaction, about $80 billion, are huge: $180 billion total to AIG. But the counterparty transactions, too technical to get into in too much detail, but are symptomatic of the mindset of the Fed. In a sentence, the counterparties—Goldman Sachs, other major banks—were paid 100 cents on the dollar for contracts that AIG had with them, using tax dollars. Goldman Sachs got a check for $12.9 billion tax money because AIG supposedly owed it to them when the Fed took over AIG. And nobody said, “Maybe Goldman doesn’t deserve any money. Maybe they don’t deserve 50 cents. Maybe—certainly they don’t deserve 100 cents on the dollar.”

What does this say? It says that when the Fed took over AIG, all they were thinking about doing was protecting the banks. They didn’t ask the question. There was—I started writing about this. And you’re right. AIG and I had a rather tense relationship. We found the accounting fraud there years ago, said that this is a company that is really in bad shape.
AMY GOODMAN: Well, you sued AIG.

ELIOT SPITZER: Oh, yes. And we got them to confess that they—and that’s when they removed Hank Greenberg as the CEO. Federal criminal charges were brought. Hank Greenberg was called an unindicted co-conspirator. And now he’s back in the good graces of Wall Street again, of course, because that’s how they handle these issues.

AIG was, to a great extent—their financial products division—a Ponzi scheme supposedly guaranteeing hundreds of billions of dollars of CDS collateral, credit default swaps, with no collateral behind it. That is part of what brought us down.

But that is the system that the Fed was overseeing. They specifically rejected the effort back in ’94, ’95 to regulate this swamp. The derivatives, that are a quintessential Wall Street creation, have some small utility at an economic level, but became an enormous revenue stream for banks, and they were unregulated. People made a fortune. We taxpayers hold the bag.
Now, the money, put in perspective, the $12.9 billion, a small piece of the whole bailout—Arne Duncan, our Secretary of Education, has $4 billion to redo all of K-through-12, and everybody’s saying, “Isn’t this great? Four billion dollars.” Goldman Sachs got $12.9 [billion]. Eight billion dollars for high-speed rail. Entire high-speed rail stimulus effort, $8 billion. Goldman Sachs got $12.9 [billion]. So what are the priorities, in terms of infrastructure investment, job creation, building the foundation of an economy that will permit us to be competitive so that real Americans can get jobs, not just investment bankers and lawyers?

JUAN GONZALEZ: Let me ask you, the American people are astounded that, a year later, many of these banks now, especially the biggest ones, have not only recovered, but are reporting record profits, while our—the unemployment rate of the people continues to increase.


JUAN GONZALEZ: And President Obama has this summit now—


JUAN GONZALEZ: —to try to deal with the jobs situation. What should the Obama administration do now to begin having an impact on this escalating unemployment rate?

ELIOT SPITZER: Look, the reality is the unemployment problem is structural. And I think what happened, unfortunately, is that the collapse of the last year metastasized a much longer, dangerous structural transformation of our economy, where the manufacturing base of our economy has disappeared over a period of thirty years. I think we all know that story.
What we need to do is invest in technology, biotech, nanotech; invest in education in a very significant way, K-through-12 and higher ed, to create the skills sets, create the ingenuity. The one competitive advantage we have always had, we always will have, is creativity. That’s what we have to invest in. It doesn’t generate overnight jobs.

Having said that, giving all the money to investment banks isn’t how you generate those jobs. You should—and the irony, if you—you see it in the commentary or what Chairman Bernanke said yesterday; he said, the problem is the banks aren’t lending. Wait a minute. He’s the one who gave the banks all the money. And I kept saying to Geithner and Bernanke, “Negotiate.”

They don’t know how to ask anything back in return for giving the banks all this liquidity. Why was it not a precondition of their being bailed out that they lend? Why was it not a precondition that they reform mortgages? In other words, so many consumers are still underwater, their houses worth less than the mortgage. Why not go to the banks and say, “You must reduce the face value of mortgages by x percent. We’re giving you trillions of dollars, not only cash, but the hidden subsidy that people don’t focus on”?

When credit is at zero percent, banks borrow at zero. They can buy T-bills at three percent and make a huge sum of money. And they’re doing it with our money. In other words, we have created this money machine for those who control capital, which is OK if we then, on the other side of the equation, say, “Use it for a good purpose, not for bonuses, but to invest in our economy.” And that is not what’s happening. They don’t know how to negotiate for us. And that was what was so infuriating about the IG report, which verified what so many of us had been saying, and I wrote in one of my Slate columns, “AIG, Again and Again”—or I think it was actually called “Geithner’s Disgrace.” He doesn’t know how to negotiate for us.

AMY GOODMAN: We’re going to come back to this conversation. We’re speaking with the former governor of New York, Eliot Spitzer, now a Slate columnist. Stay with us.

AMY GOODMAN: We are with Eliot Spitzer, the former governor of New York, former New York state attorney general. He sued AIG, among other entities. He is now a Slate columnist. And we’re talking about the state of the economy.
Do you think that Timothy Geithner should remain Treasury Secretary, Governor Spitzer?

ELIOT SPITZER: Well, let me say this: I would not have appointed him, and I think it’s because he came from a New York Fed that had been the architect and overseer of so much of what has gotten us into trouble.

I’ll give you one small example. Everybody says now we need a systemic risk regulator, somebody to look at sort of the aggregate risk, the excess leverage in our economy. And just so people understand this notion, the way I analogize it, CO2 is to global warming what debt is to systemic risk. Debt in individual transactions may look OK, just like one cow emitting, you know, methane may look OK. You put it all together, you have a crisis.

Now, why is that relevant? Tim Geithner, as president of the Fed, was the overseer of that structure. He was the one whose very mandate was to look at this. So, would I have appointed him? No. Would I now remove him? Look, I have fundamental policy disagreements with him. I guess the answer is yes, because I don’t think he should have been there initially, and I think that we are going down a very dangerous path.

And in just a few minutes, we will get job data that, if the sort of early data signs are correct, will once again show job losses in the 150 to 200,000 dollars—200,000 range last month, bouncing around 10.2 stated unemployment, really closer to 17.5 to 20 when you look at total unemployment. We’ve got a crisis there. And this—the architect of the former system shouldn’t be there. We need a Joe Stiglitz or Rob Johnson, people who think in a very different way about creating jobs through small business and getting capital to small business, which is not what these major banks do anymore.

AMY GOODMAN: Should Ben Bernanke serve a new term?

ELIOT SPITZER: You know, look, these are extremely smart, capable people. I just disagree with them. So when I say the answer is no, it’s not because I think they’re bad people, but I just don’t think that as somebody who was there who permitted over and over these bubbles to be inflated and then said, “We’ll deal with it when it collapses,” without understanding—he had no conception of the subprime impact across our economy.

We began doing subprime cases when I was AG in ’99. In 2004, I wrote an article where I said a lot of this debt is going to explode. This isn’t good debt. Where was the Fed? The Fed believed this crazy system of securitization, where they believed that somehow they turned it into triple-A quality debt, when anybody who looked at it knew that these ninja loans and all the other games that we now fully understand were a facade. It was dangerous stuff. So, no, I would bring somebody in with a different perspective.

JUAN GONZALEZ: And of the proposals being considered now in the House and the Senate for new financial regulation of the system, what do you think is the most critical thing that the Congress needs to do?

ELIOT SPITZER: Well, look, I’m a big fan of Liz Warren, and so I’m excited at the notion that we get a Consumer Protection Agency with Liz at—hopefully somebody—

AMY GOODMAN: Explain who Elizabeth Warren is.

ELIOT SPITZER: Elizabeth Warren has been put in charge of the oversight panel to actually look at how the moneys are being spent, through TARP and the others. And she’s done a great job. She’s a professor at Harvard Law School, written extensively about bankruptcy, the concerns of the middle class, had a good post on Huffington Post yesterday about—detailing the plight of the middle class in America. So, that is good.

But I also wrote something called “The Regulatory Charade.” We don’t really need new rules. The rules are there. What we need are regulators willing to use them. The Fed has all the power it needs. And the very fact that Chairman Bernanke yesterday was listing all the good things they had done proves that they had the power under existing laws. He just didn’t want to use them. Tim Geithner, as head of the New York Fed, could have done whatever needed to be done, but they didn’t do it.

So, much more important—and the reason I call it “the regulatory charade,” businessmen and women don’t want us to examine their decisions, so they point the finger at regulators. Regulators don’t want us to ask the hard question, “Why didn’t you use your existing power?” so they say, “We didn’t have enough power.” Writing a new law to give them more power gives Congress something to do. So everybody’s happy. So we write a new law. There’s a big ceremony in the rose garden signing it, and we pretend that solves the problem. The real problem was we didn’t have regulators willing to do what they should have done. Who was it? Geithner, Bernanke. And that’s the fundamental problem. You need people there willing to challenge a capital structure that is not working.

JUAN GONZALEZ: Governor, we’d be remiss if we didn’t ask, now that you have your new life as a columnist, about your old life as governor of New York and the transition, the scandal that erupted more than a year ago, forced you to resign. Your thoughts and summation of that crisis and how you’ve come through it?

ELIOT SPITZER: Well, look, I—to use words that are all too frequently heard, I suppose, these days, I made egregious errors in my personal life. And some will say it wasn’t my personal life, and that’s fine. I understand that. I resigned. I did what I thought was appropriate. I’m not going to try to apply double set of standards and say, “Well, exempt me.” I resigned. I’ve paid a price for it. I’m trying to move on. I deeply regret it, obviously. My family has paid a huge price. I have a loving wife and a forgiving wife and three great kids. And so, we are moving forward. And I have lost the opportunity to do what I loved to do, which was, as attorney general and then as governor, to help rebuild an economy and a system that would benefit those in the society who need the help.

AMY GOODMAN: There has been some whispering of you going back into public life. Do you see that for yourself?

ELIOT SPITZER: What I have tried to do, and the only thing I can say is I’ve tried to do, is through writing, through participating in the conversation to the extent that I’ve been asked to do so and been honored to be asked, to try to lend my thinking. And the only reason I’ve done that, quite frankly, is that for the years I was attorney general, I think we were very often the lone voice out there saying we’ve got major crises, whether it was the environmental issues or the low-wage issues, where we had—you know, did a great deal. And those are the cases I was most proud of, or financial structure, where we said for years, “This system is not working.” And so, I’ve been happy to participate in that way. And if I can do so, I will do so, but that’s it.

JUAN GONZALEZ: And how do you think your successor, your former lieutenant governor, David Paterson, is doing these days? There’s all this talk about the Obama administration trying to get them not to run for governor next year.

ELIOT SPITZER: First, let me be very clear. I think that the Obama administration was ham-handed and fundamentally wrong in what they did. That was just an amateurish game being played by some people in the White House, and whoever it was responsible for that, the President should say, “Hey, get a new job.”
David, as any governor right now, has a very difficult job. Revenues are down 20 percent. The demand, in terms of support for education, healthcare, infrastructure, whether it’s the MTA or anything else, is going up, because it’s countercyclical. Whether it’s Arnold Schwarzenegger, Deval Patrick or any governor, they’re all unpopular. So David has had a rough go. He’s mishandled some things. I think he would acknowledge that. But I think right now, in the face of a very difficult budget crisis, he’s trying to force the legislature, which can be a cantankerous body sometimes, to make some tough decisions. And that’s not easy. He’s had a tough go of it.

AMY GOODMAN: Governor Spitzer, do you have any comment on the swiftness with which politicians are forced out of office because of personal failure and personal scandal as opposed to professional failures?

ELIOT SPITZER: Look, I’ll say only this, because I have tried not to say anything that seems either self-justifying or anything other than purely apologetic, which is what I can and must be. I suppose I just wish we had greater accountability on the substantive side. In other words, politicians, whether it’s Tim Geithner or Ben Bernanke, who have fundamentally been wrong, should be held accountable. I’m also in favor of accountability on the private side. I, you know—and I try to act that way, but I think—

JUAN GONZALEZ: Or some would say Dick Cheney, who should have been held—

ELIOT SPITZER: Well, look—

JUAN GONZALEZ: —who should be held accountable.

ELIOT SPITZER: No question about that. I think now the public understands that, and I think it is sometimes hard to mobilize the public to understand where the accountability should—who should be held accountable. One of the great concerns I have right now is that Sarah Palin’s apparent popularity, or if it only reaches maybe 25, 30 percent of the public, her capacity to touch a nerve reflects the fact that those of us who have a very different worldview, a more progressive worldview, have not yet articulated a vision that has drawn the public’s attention, and that worries me.

AMY GOODMAN: Do you think you were partly taken down by the very entities you were going after?

ELIOT SPITZER: I have been very careful in saying that I resigned because of what I did. And I have no doubt that there were many people whom I had—was on the—were opposed to me, very powerful forces, who were happy to see me go. Whether they participated, I’ll let others figure that out. I resigned because of what I did. And whatever they’re involved in doesn’t excuse what I did.

AMY GOODMAN: Back into our discussion of the economy, during the week of September 15, 2008, the week of the federal government deciding to bail out AIG, the company you sued, Treasury Secretary Henry Paulson spoke to the CEO of his former firm Goldman Sachs, Lloyd Blankfein, more than twenty-four times. This is in a New York Times exposé. What is your assessment of this?

ELIOT SPITZER: Well, on the fact that they were talking at that moment, I have a difficult time criticizing. At that moment, the world was collapsing, so they needed to know what was going on. I fault them for the substantive outcome, which led to that massive transfer of cash to Goldman, where even Goldman was saying, “We don’t have any exposure. We are fully hedged.” Now, there have been completely contradictory stories emerging, Goldman wanting to pretend “Our hedges gave us all the security, we didn’t need the money,” in which case, why did we give it to them? Either Goldman was misrepresenting its exposure, or they didn’t need the money. But they can’t both get the money and have no exposure.

And so, that’s why there’s—and again, this is merely emblematic of the much larger willingness on the part of the government to bail out Wall Street, because the government was dominated by a Wall Street perspective. Wall Street is not our economy, and we’re seeing that very powerfully right now with Wall Street bonuses going through the roof, but unemployment still going up.

JUAN GONZALEZ: I’d like to ask you about one other issue while you were governor that drew enormous controversy and fire on you: your stand on immigration and the attempt to provide driver’s licenses for people in New York state who were undocumented.


JUAN GONZALEZ: That became a subject of the presidential debate.

ELIOT SPITZER: It sure did. And let me tell you, it was a policy that was being pursued in five other states, very conservative states, because it worked. It was a pro-law enforcement policy, pro-safety policy, supported by police chiefs, supported by Bill Bratton, head of—President Clinton’s security advisers supported it. But, of course, when you get Lou Dobbs up there with his megaphone screaming about “you’re giving something to illegal immigrants,” the substance got washed away.

JUAN GONZALEZ: Who now has had a change of heart and now wants—

ELIOT SPITZER: Apparently, now that he wants to be president, he’s being nice to everybody. So, yes, we put out a policy that had bipartisan support. It got screamed down by a very powerful and angry perspective that unfortunately—and we did not get the support we needed from a lot of folks who I think appreciated we were right, but it was a politically costly mistake for me. I still believe we were right. But other folks in the world of government did not want to stand there and take the incoming missiles.

AMY GOODMAN: Talking about professional and policy scandals, 45,000 people die a year as a result of lack of adequate healthcare. How does healthcare reform fit into this story of Wall Street, the stimulus?

ELIOT SPITZER: Well, again, it shows where resources are going. In other words, why is it—and, yes, we have a deficit problem that is very real, but why does the President say we have to make healthcare reform budget neutral, but then we spend $30 billion sending troops to Afghanistan. And obviously people say, well, security, you can’t—you have to take that outside the budget constraints. Look, I happen to disagree with the President on his decision to send the troops to Afghanistan. I’m with Tom Friedman and many others on this, for a long time have been saying, “Why? Explain it.” We need to give insurance to every citizen of the United States, every person who’s here.

AMY GOODMAN: Governor Spitzer, we want to thank you very much for joining us today, former Governor Spitzer, Eliot Spitzer, now a Slate columnist.

Related stories (links at bottom of Democracy Now! article):
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More On Goldman Sachs:

I.E., Search, right side.

Many Other Somewhat Technical Articles:

The Baseline Scenario

Some Questions For Mr. Bernanke

Feudal Lords Of Finance

How Big Is Too Big?

Articles On Obama Escalation:

Democracy Now!! 4/03/09

Noam Chomsky on US Expansion of Afghan Occupation, the Uses of NATO, and What Obama Should Do in Israel-Palestine

[Much Good Information in the Whole Article, Excerpts Here:}

We speak to Noam Chomsky, prolific author and Institute Professor Emeritus at the Massachusetts Institute of Technology. As NATO leaders gather for a sixtieth anniversary summit in France, Chomsky says, “The obvious question is, why bother celebrating NATO at all? In fact, why does it exist?” Chomsky also analyzes the Obama administration’s escalation of the Afghanistan occupation and reacts to the new Netanyahu government in Israel. [includes rush transcript]


Noam Chomsky, prolific author and Institute Professor Emeritus at MIT, the Massachusetts Institute of Technology, where he taught for over half a century. Among his many dozens of books are Rogue States: The Rule of Force in World Affairs, The New Military Humanism: Lessons from Kosovo, Fateful Triangle: The United States, Israel, and the Palestinians, Manufacturing Consent, Necessary Illusions: Thought Control in Democratic Societies, and Failed States: The Abuse of Power and the Assault on Democracy.

Noam Chomsky's website:

AMY GOODMAN: President Obama and European leaders arrived in France today ahead of a key NATO summit to commemorate the sixtieth anniversary of the alliance. Obama will visit Germany today, as well, which is also playing host to the summit.

The French city of Strasbourg is under security lockdown, with 25,000 police on patrol following a day of clashes between protesters and riot police. Three hundred people were arrested, and a German press photographer was hospitalized after being hit in the stomach by a police rubber bullet. Tens of thousands of demonstrators have descended on Strasbourg and the German towns of Kehl and Baden Baden to protest the summit. France has temporarily reinstated border controls with Germany to restrict access to protesters.

The focus of the summit will be Afghanistan, where 70,000 troops, mostly under NATO command, are at war. President Obama will use the talks to enlist support for his escalation of the war. Obama has sent 21,000 extra US troops to Afghanistan, is considering deploying 10,000 more.

Meanwhile, Taliban militants in Pakistan marked the start of the two-day summit by destroying a fleet of nine parked NATO vehicles in transit for Afghanistan.

Last week, President Obama defended his decision to send more troops to Afghanistan.

PRESIDENT BARACK OBAMA: The world cannot afford the price that will come due if Afghanistan slides back into chaos or al-Qaeda operates unchecked. We have a shared responsibility to act, not because we seek to project power for its own sake, but because our own peace and security depends on it. And what’s at stake at this time is not just our own security; it’s the very idea that free nations can come together on behalf of our common security.

AMY GOODMAN: To talk about Afghanistan, NATO and the state of US economic and military power in the world today, we’re joined by one of the world’s most astute thinkers and most important intellectuals of our time: linguist, philosopher, social critic, political dissident, Noam Chomsky.

Noam Chomsky is a prolific author and Institute Professor Emeritus at MIT, the Massachusetts Institute of Technology, just down the road from here, where he taught for over half a century. Among his many dozens of books are Rogue States: The Rule of Force in World Affairs; The New Military Humanism: Lessons from Kosovo; Fateful Triangle: The United States, Israel, and the Palestinians; Manufacturing Consent; Necessary Illusions: Thought Control in Democratic Societies; and Failed States: The Abuse of Power and the Assault on Democracy. There’s a great collection of his work, just out now, edited by Anthony Arnove, called The Essential Chomsky.
Noam Chomsky, welcome to Democracy Now!
NOAM CHOMSKY: Very glad to be with you.
AMY GOODMAN: It’s great to be with you here in Massachusetts in the studio, instead of talking to you on the phone at home.
AMY GOODMAN: So, let’s start with what’s happening with this NATO summit celebrating sixty years, France rejoining after more than four decades. Your analysis?
NOAM CHOMSKY: Well, the obvious question is why bother celebrating NATO at all? In fact, why does it exist? It’s twenty years now, almost, since the Berlin Wall fell. NATO was constructed on the—with the reason, whether one believes it or not, that it was going to defend Western Europe from Russian assault. Once the Berlin Wall fell and the Soviet Union was beginning to collapse, that reason was gone. So, first question: why does NATO exist?

Well, in fact, the answers are interesting. Mikhail Gorbachev made an—agreed, made a remarkable concession at that time to the United States. NATO’s essentially run by the United States. He offered to allow a reunited Germany to join NATO, a hostile military alliance—
AMY GOODMAN: I’m going to interrupt you for a minute, Noam, because there’s a lot of static on your mike, and we want to fix that. So we’re going to go to a music break, and then we’re going to come back to you. We’re talking to Noam Chomsky. Stay with us.
AMY GOODMAN: But as, Noam, you were just saying, at MIT they have these technological problems, too, the Massachusetts Institute of Technology.
NOAM CHOMSKY: Right, the leading technological institute in the world. At commencement, the PA system almost inevitably breaks down. So this is familiar.
AMY GOODMAN: Briefly summarize what you were just saying, if people were having trouble hearing you through the static.
NOAM CHOMSKY: Alright. Well, I think the first question to ask about NATO is why it exists. We’re now approaching the twentieth anniversary of the fall of the Berlin Wall, unification of Germany, first steps in the collapse of the Soviet Union. Now, the alleged reason for NATO’s existence was to protect the West against a Russian assault. You can believe what you like about the reason, but that was the reason. By 1989, that reason was gone. So, why is there NATO?

Well, that question did arise. Mikhail Gorbachev offered at that time to the United States, which runs NATO, that he would permit a unified Germany to join NATO, a hostile military alliance aimed at the Soviet Union. Now, that’s a remarkable concession. If you look back at the history of the twentieth century, Germany alone had practically destroyed Russia several times. And now he was offering to let a reunited militarized Germany join a hostile military alliance, backed by the most awesome military power in history.

Well, there was a quid pro quo. George Bush, the first, was then president; James Baker, Secretary of State. And they agreed, in their words, that NATO would not expand one inch to the east, which would at least give Russia some breathing room. Now, Gorbachev also proposed a nuclear weapons-free zone from the Arctic to the Mediterranean, which would have again given some protection and, in fact, security for peace. Well, that was just rejected. I don’t even think it was answered. Well, that’s where things stood in 1989, ’90.

Then Bill Clinton was elected. One of his first acts was to break the promise and expand NATO to the east, which, of course, is a threat to Russian security. Now, the pretext given, for example, by his—Strobe Talbott, who was the Under Secretary of State for Eastern Europe, is that that was necessary to bring the former satellites into the European Union. But that can’t be. There are states inside the European Union that are not part of NATO: Austria, you know, Finland, Sweden. So that’s irrelevant. But it was a threat, and Russia, of course, reacted to the hostile threat. It increased tension.

Well, going up to the present, President Obama’s national security adviser, James Jones, has been a strong advocate of the view that NATO should expand further to the east and to the south and that, in fact, it should—to the east and to the south means to control the energy-producing regions. The head of NATO, Dutch, the Secretary General de Hoop Scheffer, has proposed, advocates that NATO should take the responsibility for protecting energy supplies to the West—pipelines, sea lanes, and so on.

Well, now we’re getting to Afghanistan, which is right in the—has always been of great geostrategic importance because of its location, now more than ever because of its location relative to the energy-producing regions in the Gulf region and in Central Asia. So, yes, that’s what we’re seeing.

Actually, there’s more to say about NATO, about why it exists. So we might look back, say, ten years to the fiftieth anniversary. Well, the fiftieth anniversary of NATO was a gloomy affair that was—right at that time, NATO was bombing Serbia—illegally, as everyone admitted—claiming it was necessary for humanitarian reasons. At the NATO summit, there was much agonizing about how we cannot tolerate atrocities so near Europe.

Well, that was an interesting comment, since at that time NATO was supporting atrocities right inside NATO. Turkey, for example, was carrying out, with massive US aid, huge atrocities against its Kurdish population, far worse than anything reported in Kosovo. Right at that time, in East Timor—you’re not going to praise yourself, so if you don’t mind, I will—at the time of the Dili massacre, which you and Allan [Nairn] heroically exposed, atrocities continued. And in fact, in early 1999, they were picking up again, with strong US support—again, far beyond anything reported in Kosovo. That’s the US and Britain, you know, the core of NATO.

Right at the same time, in fact, Dennis Blair, President Obama—inside President Obama’s national security circle, he was sent to Indonesia, theoretically to try to get the Indonesian army to stop carrying out the mounting atrocities. But he supported them. He met with the top Indonesian General, General Wiranto, and essentially said, you know, “Go ahead.” And they did.
And in fact, those atrocities could have been stopped at any moment. That was demonstrated in September 1999, when Bill Clinton, under very extensive domestic and international pressure, finally decided to call it off. He didn’t have to bomb Jakarta. He didn’t have to impose an embargo. He just told the Indonesian generals the game’s over, and they immediately withdrew. That goes down in history as a great humanitarian intervention. It’s not exactly the right story. Right up until then, the United States was continuing to support the atrocities. Britain, under its new ethical foreign policy, didn’t quite get in on time, and they kept supporting them even after the Australian-led UN peacekeeping force entered. Well, that’s NATO ten years ago.
That’s even putting aside the claims about Serbia, which maybe a word about those are worthwhile. We know what happened in Serbia. There’s a massive—in Kosovo. There’s massive documentation from the State Department from NATO, European Union observers on the ground. There was a level of atrocity sort of distributed between the guerrillas and the Serbs. But it was expected that the NATO bombing would radically increase the atrocities, which it did, if you look back at the Milosevic indictment in the middle of the bombing, almost entirely, that atrocity—except for one exception, about atrocities, after the NATO bombing. That’s what they anticipated. General Clark, commanding general, had informed Washington weeks early, yes, that would be the consequence. He informed the press of that as the bombing started. That was the humanitarian intervention, while NATO was supporting even worse atrocities right within NATO, in East Timor, and go on in other cases. Well, that’s NATO ten years ago.

And it begins to tell us what NATO is for. Is it for defending Europe from attack? In fact, there is such a pretense now. So when President Bush put—started installing missile defense systems in Eastern Europe, the claim was, well, this is to defend Europe from attack against Iranian nuclear-tipped missiles. The fact that it doesn’t have any doesn’t matter. And the fact that if it had any, it would be total insanity for them to even arm one, because the country would be vaporized in thirty seconds. So, it’s a threat to Russia again, just like Clinton’s expansion of NATO to the east. ....

AMY GOODMAN: Noam Chomsky, I want to get to Afghanistan. It’s the main topic of NATO. It’s a debate around the issue of the expansion of war in Afghanistan. President Obama’s initiative is not the main topic of debate in the United States, meaning whether or not we should be doing this. What do you think?

NOAM CHOMSKY: Well, it’s interesting. It is the topic of discussion in the United States right in the middle of the establishment. So, Foreign Affairs, the main establishment journal, had an interesting article probably six months ago, or roughly, by two of the leading specialists on Afghanistan: Barnett Rubin and Ahmed Rashid. And their basic point was that the United States should give up the idea that military victory is the answer to everything.

They said that the United States should reorient its policy so that there would be a regional solution in which the interested—the concerned countries, that includes, crucially, Iran, but also India, Russia, China, would themselves work out a regional settlement and that the Afghans should work something out among themselves. He pointed—they pointed out, correctly, that the regional countries are not happy about having a NATO military center based in Afghanistan. It’s obviously a threat to them. Now, this past—this is not what’s being done. There’s some gestures towards, you know, maybe some under secretary will say hello to an Iranian representative or something, but that’s not the core of the policy that’s being pursued.

Now that—side-by-side with that is something else that’s been happening. There is a significant peace movement in Afghanistan. Exactly its scale, we don’t know. But it’s enough so that Pamela Constable of the Washington Post, in a recent article in Afghanistan, argued that when the new American troops come, they’re going to face two enemies: the Taliban and public opinion, meaning the peace movement, whose slogan is “Put down the weapons. And we don’t mind if you’re here, but for aid and development. We don’t want any more fighting.”

In fact, we know from Western-run polls that about 75 percent of Afghans are in favor of negotiations among Afghans. Now, that includes the Taliban, who are Afghans. In fact, it even includes the ones in Pakistan. There’s the difference—the really troubled areas, now, are Pashtun areas, which are split by a British-imposed line, artificial line, called the Durand Line, which was imposed by the British to protect British India, expand it, and they’ve never accepted it. It just cuts their territory in half. Afghanistan, when it was a functioning state, never accepted it, right through the 1970s. But certainly, the Afghan Taliban are Afghans. And President Karzai, formerly our man, no longer, because he’s getting out of control—

AMY GOODMAN: How? How is he getting out of control?

NOAM CHOMSKY: Well, interesting ways. When President Obama was elected, Afghan President Karzai sent him a message, which, as far as I know, was unanswered, in which he pleaded with President Obama to stop killing Afghans. He also addressed a UN delegation and told them he wanted a timetable for the removal of foreign forces. Well, his popularity quickly plummeted. He used to be very much praised for his nice clothes and great demeanor and very much admired by the media and commentators. Now he’s sunk very low. He’s suddenly corrupt and so on.

AMY GOODMAN: You mean in the Western world, the Western press?

NOAM CHOMSKY: In the Western world, primarily in the United States, but in the West altogether. And it directly followed these expressions of opinion, which are very likely those of maybe a majority of Afghans, maybe even more.

In fact, he went even further. He said that he would invite Mullah Omar, the head of the Taliban, to Afghanistan to try to work out a solution. And he added, “The United States isn’t going to like this, but they have two choices: they can either accept it, or they can throw me out,” you know. In fact, that’s what they’re doing. There are now plans to replace President Karzai, to sort of push him upstairs and leave him in a—it’s assumed that he’ll win the next election, so put him in a symbolic position and impose, basically, a US-appointed surrogate who will essentially run the country, because that can’t be tolerated.

In any event, there are alternative proposals—they’re discussed here, they’re widely discussed in Afghanistan at the highest level and apparently among the population—to just move towards a peaceful settlement among Afghans and a regional settlement, which would take into consideration the concerns of the region’s neighboring powers.

AMY GOODMAN: Why do you think Obama is expanding this war? And do you call it “Obama’s war” now?

NOAM CHOMSKY: Well, this goes way back. I mean, the United States has sort of a comparative advantage in world affairs, namely, military might, not economic power, you know, not Treasury reserves. I mean, it’s a very powerful state, but, you know, it’s one of several. It’s comparable to Europe. It’s comparable to rising East Asia in, say, economic power. But in military power, it is supreme. The United States spends approximately as much as the rest of the world in military force. It’s far more technologically advanced. And when you have a comparative advantage, you tend to use it. So, policy decisions tend to drift towards where you’re strong. And where you’re strong is military force. It’s, you know, the old joke: if you have a hammer, everything you see is a nail. You know. And I think that’s very much of a driving force.

And there’s also a longstanding imperial mentality, which says we have to control and dominate. And in particular, we have to dominate energy resources. That goes way back. You know, after the Second World War, it’s been maybe the prime factor in US [inaudible]—

AMY GOODMAN: And the energy resources in Afghanistan?

NOAM CHOMSKY: No, they’re not in Afghanistan. They’re in—mostly in the Gulf, secondarily in Central Asia. But Afghanistan is right in the middle of this system. I mean, there is a pipeline question. How powerful it is, you can speculate. But there have been longstanding plans for a pipeline from Turkmenistan in Central Asia to India, which would go—TAPI, it’s called: Turkmenistan, Afghanistan, Pakistan, India.

Now, that’s of significance to the United States for a number of reasons. For one thing, if it—it would run right through Afghanistan and through Kandahar province, one of the most conflicted areas. If it was established, it would, for one thing, reduce the reliance of the Central Asian states on Russia. So it would weaken their role. But more significant, it would bypass Iran. I mean, India needs energy, and the natural source is Iran. And, in fact, they’re discussing an Iran-to-India pipeline. But if you could get natural gas flowing from Central Asia to India, avoiding Iran, that would support the US policy, which is now very clear—in Obama’s case, it’s been made more concrete—of forming an alliance of regional states to oppose Iran.

In fact, that’s—John Kerry, the head of the Senate Foreign Relations Committee, recently made an important speech about that with regard to Israel-Palestine. He said we have to reconceptualize the issue so it’s not an Israel-Palestine problem, but rather, we’ll sort of put that to the side, and what we have to do is create an alliance of Israel and what are called the moderate Arab states. And “moderate” is a technical term, means they do what we say. And so, the moderate Arab states include the brutal Egyptian dictatorship, the radical fundamentalist dictatorship in Saudi Arabia, and so on. They are the moderates, and they have to join with Israel and us in an anti-Iranian alliance. And we have to, of course, break ongoing connections between Iran and India to the extent that we can and elsewhere. And that puts the Israel-Palestine problem—issue to the side.
. . . .
See whole article:

The Audacity of Ethnic Cleansing
Obama's plan for Afghanistan

By Mike Whitney

"Today, we Afghans remain trapped between two enemies: the Taliban on one side and US/NATO forces and their warlord hirelings on the other." Malalai Joya "A Woman Among the Warlords" Scribner Publishing, New York

December 04, 2009 "Information Clearing House" --

The Bush administration never had any intention of liberating Afghanistan or establishing democracy. The real aim was to remove the politically-intractable Taliban and replace them with a puppet regime run by a former-CIA asset. The rest of Afghanistan would be parceled-off to the warlords who assisted in the invasion and who had agreed to do much of the United States dirty-work on the ground. In the eight years of military occupation which followed, that basic strategy has never changed. The U.S. is just as committed now as it was at the war's inception to establish a beachhead in Central Asia to oversee the growth of China, to execute disruptive/covert operations against Russia, to control vital pipeline routes from the Caspian Basin, and to maintain a heavy military presence in the most critical geopolitical area in the world today.

The objectives were briefly stated in a recent counterpunch article by Tariq Ali:

"It’s now obvious to everyone that this is not a ‘good’ war designed to eliminate the opium trade, discrimination against women and everything bad – apart from poverty, of course. So what is Nato doing in Afghanistan? Has this become a war to save Nato as an institution? Or is it more strategic, as was suggested in the spring 2005 issue of Nato Review:

The centre of gravity of power on this planet is moving inexorably eastward … The Asia-Pacific region brings much that is dynamic and positive to this world, but as yet the rapid change therein is neither stable nor embedded in stable institutions. Until this is achieved, it is the strategic responsibility of Europeans and North Americans, and the institutions they have built, to lead the way … security effectiveness in such a world is impossible without both legitimacy and capability." ("Short Cuts in Afghanistan", Tariq Ali, counterpunch See:

President Barak Obama's speech at West Point was merely a reiteration of US original commitment to strengthen the loose confederation of warlords--many of who are either in the Afghan Parliament or hold high political office--to pacify nationalist elements, and to expand the war into Pakistan. Obama is just a cog in a much larger imperial wheel which moves forward with or without his impressive oratory skills. So far, he has been much more successful in concealing the real motives behind military escalation than his predecessor George W. Bush. It's doubtful that Obama could stop current operations even if he wanted to, and there is no evidence that he wants to. . . . .
Chomsky: Obama Continues Bush Policy
Wednesday, 4 November 2009, 1:31 pm
Column: Sherwood Ross

Chomsky Says President Obama Continues Bush Policy To Control Middle East Oil
by Sherwood Ross

Political activist Noam Chomsky says that although President Obama views the Iraq invasion merely as “a mistake” or “strategic blunder,” it is, in fact, a “major crime” designed to enable America to control the Middle East oil reserves.
“It’s (“strategic blunder”) probably what the German general staff was telling Hitler after Stalingrad,” Chomsky quipped, referring to the big Nazi defeat by the Soviet army in 1943.

“There is basically no significant change in the fundamental traditional conception that if we can control Middle East energy resources, then we can control the world,” he said.

In a lecture at the School of Oriental and African Studies in London Oct. 27th, Chomsky warned against expecting significant foreign policy changes from Obama, according to a report by Mamoon Alabbasi published on MWC Alabbasi is an editor at Middle East Online.

“As Obama came into office, (former Secretary of State) Condoleezza Rice predicted he would follow the policies of Bush’s second term, and that is pretty much what happened, apart from a different rhetorical style,” Chomsky said.

Chomsky said the U.S. operates under the “Mafia principle,” explaining “the Godfather does not tolerate ‘successful defiance’” and must be stamped out “so that others understand that disobedience is not an option.”

Despite pressure on the U.S. to withdraw from Iraq, Alabbasi reported, Chomsky said the U.S. continues to seek a long-term presence in the country and the huge U.S embassy in Baghdad is to be expanded under Obama.

“As late as November, 2007, the U.S. was still insisting that the ‘Status of Forces Agreement’ allow for an indefinite U.S. military presence and privileged access to Iraq’s resources by U.S. investors,” Chomsky added. “Well, they didn’t get that on paper at least. They had to back down,” Alabbasi quotes him as saying.

Chomsky said Middle East oil reserves are understood to be “a stupendous source of strategic power” and “one of the greatest material prizes in world history.”

Concerning Iran, Chomsky said the U.S. acted to overthrow its parliamentary democracy in 1953 “to retain control of Iranian resources” and when the Iranians reasserted themselves in 1979, the U.S. acted “to support Saddam Hussein’s merciless invasion” of that country.

“The torture of Iran continued without a break and still does, with sanctions and other means,” Chomsky said. According to Alabbasi, Chomsky “mocked the idea” presented by mainstream media that a nuclear-armed Iran might attack nuclear-armed Israel. Iranian leaders would have to have a “fanatic death wish” to attack Israel, which reportedly has 200 nuclear weapons or more.

“The chance of Iran launching a missile attack, nuclear or not, is about at the level of an asteroid hitting the earth,” Chomsky said. He said the presence of U.S. anti-missile weapons in Israel are really meant for preparing a possible attack on Iran, not for self-defense, as they are often presented.

Chomsky is professor emeritus of linguistics, Massachusetts Institute of Technology.

(Sherwood Ross is a Miami-based media consultant who formerly reported for the Chicago Daily News and worked as a columnist for wire services. Reach him at
Chomsky Doubts Change from Obama

Chomsky Doubts Change from Obama
By Mamoon Alabbasi
November 3, 2009

Editor’s Note: A year after Barack Obama was elected President, many on the American Left are criticizing him for not achieving all they had hoped for – including an end to the wars in Iraq and Afghanistan, a complete rejection of George W. Bush’s “war on terror,” and sharp reductions in military spending.

But MIT professor Noam Chomsky suggests those hopes were always naïve and that only a powerful grassroots movement can force such changes, as reported in this guest article by Mamoon Alabbasi that previously appeared in Middle East Online:

As civilized people across the world breathed a sigh of relief to see the back of former U.S. President George W. Bush, top American intellectual Noam Chomsky warned against assuming or expecting significant changes in the basis of Washington's foreign policy under President Barack Obama.

During two lectures organized by the School of Oriental and African Studies (SOAS) in London, Chomsky cited numerous examples of the driving doctrines behind U.S. foreign policy since the end of World War II.

"As Obama came into office, Condoleezza Rice predicted that he would follow the policies of Bush's second term, and that is pretty much what happened, apart from a different rhetorical style," Chomsky said.

"But it is wise to attend to deeds, not rhetoric. Deeds commonly tell a different story," he added.

"There is basically no significant change in the fundamental traditional conception that we if can control Middle East energy resources, then we can control the world," explained Chomsky.

Chomsky said that a leading doctrine of U.S. foreign policy during the period of its global dominance is what he termed as "the Mafia principle."

"The Godfather does not tolerate 'successful defiance'. It is too dangerous. It must therefore be stamped out so that others understand that disobedience is not an option," said Chomsky.

That’s because the U.S. sees "successful defiance" of Washington as a "virus" that will "spread contagion," he explained. ....

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