Making War In Libya... For Goldman Sachs And J.P. Morgan?

An overwhelming majority of Americans don't like our involvement in the bombing campaign against Libya but whether you think that what looks like the congressional wrist slap goes far enough, the resolution Webb and Corker are proposing on that war, it certainly guarantees that there will be a debate on U.S. policies there and-- at least in theory-- if Obama can't make an argument on the merits (and so far he hasn't been able to), then Congress will be bound to restrain the executive branch over reach. That would be a first in many decades. This is the press release that went out with S.J.Res, 18 this week:

Senators Jim Webb (D-VA) and Bob Corker (R-TN) today introduced a joint resolution requiring the Administration to provide a detailed justification of U.S. operations in Libya and prohibiting the deployment of U.S. troops on the ground there. It further calls on the President to request authorization for the continuation of U.S. involvement in NATO activities and states that Congress should fully debate such a request expediently. Nearly 90 days after the initiation of force in Libya, such debate has not occurred.

The bipartisan resolution states, “The President has failed to provide Congress with a compelling rationale based upon United States national security interests for current United States military activities regarding Libya.” It calls for an unclassified report to provide essential information to Congress and the American public to evaluate U.S. involvement in Libya and appropriately debate it.

“When we examine the conditions under which the President ordered our military into action in Libya, we are faced with the prospect of a very troubling historical precedent that has the potential to haunt us for decades,” said Senator Webb. “The issue for us to consider is whether a President-- any President-- can unilaterally begin, and continue, a military campaign for reasons that he alone defines as meeting the demanding standards worthy of risking American lives and expending billions of dollars of our taxpayers’ money. It is important for Congress to step in and clearly define the boundaries of our involvement.”

“It has now been more than 80 days since the United States first launched military action in Libya in what was supposed to be only a very limited operation, but neither the Congress nor the American people have any clearer view of the administration’s stated mission or end game for our military involvement in Libya. Having been denied answers, repeatedly, to these fundamental questions or even a comprehensive debate to consider the merits of U.S. involvement in such an engagement, it’s long past time to set a final deadline to get the information every man and woman who puts on a uniform and every taxpayer who funds the operation deserves,” Senator Corker said.

The joint resolution, which would have the force of law, requires the Administration to publicly answer a detailed series of questions about the Libya operation within 14 days of enactment. Parts of the resolution mirror bills passed in the House of Representatives.

Someplace Webb and Corker don't have the imaginations or the will to go is to ask what the hell we're doing bombing the hell out of this small country in the first place. Why Libya instead of, say, Syria or Bahrain, each of which is doing far worse to its citizens, the ostensible "reason" we're involved with this massive attack on Libya? In a pair of powerful investigative articles that would do far more credit to the Senate than the toothless joint resolution, journalist Russ Baker posits that evidence makes it clear that Qaddafi has been set up and that the U.S. in part of a plan to create an “Arab Spring” for the Good Old Boys-- CIA, banks, oil companies. Hopefully, you've been following Matt Taibbi's exciting reporting on the relationship between Qaddafi and the bandits at Goldman Sachs.

Libya was eager to join the big leagues of finance, and its investors were “awed” by an Arabic-speaking Goldman executive who urged them into an options deal that bet on the fortunes of companies including Citigroup Inc. C +0.23% , Allianz DE:ALV -1.33% and Italy’s UniCredit IT:UCG +2.08%.

The LIA, Libya’s sovereign wealth fund, was charmed by the demonstration and decided to go all-in with a $1.5 billion bet. Goldman very quickly lost them 98 percent of that money.

I never knew it was even possible to lose 98 percent of an investment that quickly. If you sent a blind, three-legged donkey into Caesar’s palace with $1.5 billion in chips, it could probably stay solvent longer than this options package Goldman sold to Qaddafi.

How could the Libyans be enticed to take such a crappy deal? See if this sounds familiar: according to the Wall Street Journal, the Libyan fund manager felt that Goldman had "misrepresented" the fantastic investment opportunity Goldman sold to them, and also made trades "without proper authorization."

...Having managed to get their bankers out of Libya with their heads still attached to their shoulders, Goldman decided to make up for losing $1.5 billion of Qaddafi’s money by offering the international pariah a $3.7 billion equity stake that would have made him one of the largest single owners of the bank.

In con-man parlance, this is called the reload. You beat someone in a Ponzi scheme for his life’s savings, and when he shows up at your door with an axe, you get him to mortgage his house to buy a stake in the Brooklyn Bridge. After blowing $1.5 billion of Libya’s money almost instantaneously, Goldman’s solution to the problem was to immediately get Qaddafi reaching back into his pocket for a cash sum over twice the size of the original losses. It’s really hard not to admire the sheer balls of the whole deal.

Baker starts by asking if there is any actual evidence that the claims by Qaddafi’s defecting Justice Minister, Mustafa Mohamed Abud Al Jeleil, that Qaddafi was the culprit behind the bombing of Pan Am 103 are true. "This story," he points out, "made it into major news media throughout the world, without anyone stopping to raise questions about the propaganda benefit of the statement, or of the timing." And though no one has seen any of the promised "evidence," the original headlines did the trick-- anyone watching television or reading stories then would have been led to believe that Qaddafi was behind the Lockerbie tragedy. That's when Obama called on Qaddafi to step down and started down the road to the "humanitarian" attacks on Tripoli.

By December 2010, when a Tunisian man set himself on fire, the Arab Spring revolt was under way—in Egypt, Bahrain, and elsewhere. Pretty quickly, it was clear to everyone that the Western powers were in danger of losing crucial oil suppliers—and vital military bases.
It certainly was convenient that, right about that time, Libya showed signs of moving in the opposite direction-- into the US camp. Read our piece here about the CIA ties to the Libyan uprising.

Then consider the timing of February’s ramped-up claim by the defecting Libyan official, that Qaddafi himself had ordered the Lockerbie bombing.

If that wasn’t enough in the propaganda department to get the global public worked up, next came the Libya rape story. The average person doesn’t have the time or appetite to follow the kinds of complex corporate maneuverings that fascinate us here, but they do understandably get upset about bombs on civilian aircraft and rape.

...We noted the timing of the story, the alacrity with which the Western press grabbed it and spread it, and the simple fact that there’s no evidence tying Qaddafi in any way to any such act. Even the woman herself doesn’t claim that.  Yet it infuriated untold millions and postings all over the Web show that it moved a lot of public opinion into the column supporting military action to remove the Libyan leader.

That the corporate media cannot see what is going on here, or refuses to see, tells us how far we have not come since the Gulf of Tonkin Resolution.

Still, we can hear the other shoe dropping if we listen carefully enough. For example, the website Politico ran a little item the other day on a powwow between Hillary Clinton and corporate executives over business opportunities in Iraq.

FIRST LOOK: WALL STREET IN IRAQ? – Secretary of State Hillary Clinton and Deputy Secretary Tom Nides (formerly chief administrative officer at Morgan Stanley) will host a group of corporate executives at State this morning as part of the Iraq Business Roundtable. Corporate executives from approximately 30 major U.S. companies-- including financial firms Citigroup, JPMorganChase and Goldman Sachs-- will join U.S. and Iraqi officials to discuss economic opportunities in the new Iraq. Full list of corporate participants.

Give it a couple of years, and they’ll be having the same party celebrating a more sympathetic regime in Libya.

How Long Will Big Oil And Their Paid Political Shills Keep America In the Dark About A Viable Energy Future?

Since they pay so little in taxes and get billions in taxpayer subsidies, oil and gas companies have unlimited resources at their disposal to run annoying, misleading ads on TV brainwashing dull couch potatoes about their awesomeness. I immediately change the channel when any of them come on. The video above is a very different kind of clip-- and not one you're likely to see on American television.

The clip is about a town in gloomy Cornwall (southwestern England), Wadebridge, that will have a third of its energy needs met through solar, wind and other renewables in 4 years. Why there and not here? Here where we have all the sun and wind anyone could ever hope for. Well, remember those Oil and gas companies with all the money I mentioned above? They buy politicians to carry out their oily agenda the way you buy a paperback to read on a train or plane. Last week the League of Conservation Voters sent an alert out to their members that, as they phrased it so elegantly, "48 U.S. senators just voted to hand billions to greedy and destructive oil companies." That was Tuesday night and that was enough to block a bi-partisan majority from moving legislation forward meant to end $21 billion in tax subsidies for Big Oil over the next ten years. All the Republicans but Collins and Snowe voted the way the Oil companies pay them to vote. And all the Democrats-- except Oil whores Mary Landrieu, Mark Begich and Ben Nelson, who crossed the aisle to vote with the GOP-- voted to end the wasteful, budget-busting subsidies.

"These politicians," promises the League, "are hoping Americans won’t notice they are doing the bidding of the same oil companies who are raking in record profits by destroying our environment. They’re wrong."

Friday, Rinaldo Brutoco and Madeleine Austin, World Business Academy put the Senate's disgraceful shillery for Big Oil into context at Truthout.

The Congressional votes create a strong contrast between the US and other countries, including Germany, China, the Scandinavian countries, and most recently, Japan, who are leading the way to a new planetary fuel system that will replace oil and nuclear energy with renewable energy. In response to its nuclear disaster, Japan has renounced its plans to build new nuclear plants and announced it will redo its energy system "from scratch." Germany is using the Fukushima disaster as an opportunity to curtail nuclear power and boost its strong clean technology export sector. Other countries have curtailed or suspended their nuclear plans. But the United States, once a leader in science and technology that beat other countries to the moon, remains controlled by money politics, Big Oil, and climate deniers.

The oil industry is the most profitable industry in the world. US oil companies earn about $3 billion in profits every week, yet get $4 billion in taxpayer subsidies every year. In the first quarter of 2011, Big Oil's profits were up 38% from the first quarter of 2010.

The industry's outsize profits didn't stop it from squealing like a stuck pig over proposals to trim $2 billion from its annual subsidies and use the revenue to reduce the deficit by about $21 billion over 10 years.

The oil companies tried to characterize the end of their subsidies as a "tax hike," despite growing and widespread recognition across the political spectrum that tax breaks are just another form of government spending, one of several ways to provide direct support for an industry. Before becoming Speaker, John Boehner (R-Ohio) admitted that "tax deductions, credits, and special carve-outs . . . what Washington sometimes calls tax cuts are really just poorly disguised spending programs …."

As a recent Washington Post editorial about such "tax expenditures" pointed out, "an astonishing amount of "spending"-- more than $1 trillion annually-- is accomplished through the tax code, by way of tax credits or deductions. But there is little conceptual difference between billions spent to directly subsidize particular programs and billions spent indirectly in tax preferences. Either way, it's money the government does not have, and that adds to the deficit."

The Senators who opposed ending the oil subsidies received 5 times more in campaign cash from the oil industry during their time in Congress than the Senators who favored ending the subsidies (on average, $370,664 versus $72,145), according to an Oil Change International and Public Campaign Action Fund analysis of data from the Center for Responsive Politics.

Who’s benefiting from the US oil industry's taxpayer subsidies? Certainly the oil companies' CEOs. Last year the CEO of Occidental Petroleum, the 4th largest US oil and gas company based on market capitalization, was near the top of a list of the median pay for top executives at 200 major companies. Occidental's CEO took home $76.1 million, up 142% from the year before, despite a majority "no" vote by shareholders on his pay package.

Exxon CEO Rex Tillerson earned $21.7 million in 2009-- 12 times more than the $1.8 million earned last year by the CEO of the Norwegian energy company Statoil, which is 2/3 owned by the Norwegian government. Tillerson’s pay was "more than double the combined $8.3 million that Statoil paid its nine top executives in 2010." [The comparisons are based on the most recent pay figures available.]

The average American pays a higher income tax rate than ExxonMobil, which is the most profitable Fortune 500 company for the 8th year in a row.

This week Kay Bailey Hutchison (R-TX) gave the Republican weekly radio address. CNN reported that she called for changes to the country's energy policies that exactly reflect the demands of Big Oil. In fact, she sounded exactly like one of the paid ads they run-- which in effect, she was. Not that you'd know that from CNN or any other media coverage.

"We have vast resources under our land and we need to safely explore and develop them to have a stable energy supply for our consumers and our economy,” she said. ... [I]n her address, Hutchison chastised the Obama administration for “seeking to impose more regulations and taxes on oil and gas companies.”

“This is placing our own valuable resources out of reach and stifling job creation-- their proposals will actually increase pain at the pump,” Hutchison said.

The Texas Republican also singled out the six-month offshore drilling moratorium imposed by the Obama administration following the April 20 explosion of BP's Deepwater Horizon drilling rig in the Gulf of Mexico, lamenting that the drilling freeze continues to negatively affect the energy production industry.

“While companies were forced to stop operations, they had to continue paying to lease lands they were prohibited from using. Leaseholders sat idle for a year, losing valuable exploration time through no fault of their own,” Hutchison said.

Obviously Hutchison didn't mention that she's received $2,141,025 in legalistic direct bribes from Big Oil-- more than any other sitting senator except John McCain, who pulled ahead of her only because of his presidential run that Big Oil was so aggressively behind. I can understand why Hutchison would want to mislead her listeners by not mentioning it. But what about CNN? Wouldn't you think that just maybe they would find it relevant to their reporting? Or are they worried all those annoying, misleading ads will be pulled?

This morning Russ Baker published a piece at WhoWhatWhy explaining the background-- sickeningly-- of why the Senate couldn’t even pass a measure that timidly taxes Big Oil.

As I discovered in researching the background of the rise of the Bush family for my book Family of Secrets, so much of the unknown origins of political intrigue—from the strenuous lobbying effort to get the freshman Congressman George H.W. Bush appointed to the House Ways and Means Committee as a freshman, to John F. Kennedy’s political problems, to even Watergate-- could be ascribed in part to the oil industry’s urgency for protecting tax breaks. Sometimes, the tax breaks have been the most important part of the industry’s profits. The most recent, defeated bill, sought to get rid of a number of loopholes and advantages.

One of the key provisions in the bill concerned the oil depletion allowance. The allowance permits firms to recover their “capital investment-- the costs of discovering, purchasing, and developing the well-- over the period the well produces income.” The senate bill did not propose getting rid of this highly attractive allowance, only modifying it so that the five biggest companies could not use a formula called “percentage depletion,” in which “total deductions could (and often do) exceed the taxpayer’s capital investment.”

So-- get this: all the Senate Dems were doing in the area of the depletion allowance was trying to keep just the five biggest companies from deducting more than their actual capital investment. They weren’t trying to get rid of this long-controversial depletion allowance, and weren’t trying to prevent any other oil companies from deducting more than they spent. Amazing! And this tepid measure still didn’t pass. (Of course, there were other provisions, including trying to block oil companies from sneakily reclassifying royalties paid abroad as “taxes” so they could deduct them domestically-- a tax connivance on par with the depletion allowance in its one-sided benefit for the industry and harm to the greater good.)

And the sickening part I promised? Flip over to Russ' blog to read the sordid history of Big Oil in contemporary American politics... if you have the guts to hear the truth.