The CIA's Great Gatsby: Edwin P. Wilson

Edwin P. Wilson was anything but inconspicuous in the nineteen-seventies. To many, he was Washington's answer to the Great Gatsby. His 2500-acre farm, bordering on the estate of Sen. John Warner and Elizabeth Taylor in the hunting country of Virginia, was the site of weekend barbecues that attracted senators, congressmen, admirals, generals, CIA officers and other high government officials. Wilson's three private planes were usually available to ferry VIPs wherever they wanted to go. He also had properties scattered around the world, an apartment in Geneva, a hunting lodge in England. a seaside villa in Libya and real estate in North Carolina, Lebanon and Mexico.

The cash seemed to flow as freely as the hospitality in Wilson's world. Paul Cyr, for example, who then worked for the Pentagon, came to the Wilson farm for turkey shoots and wound up accepting cash bribes for, among other things. allowing Wilson to plant bugs in the Army Materiel Command. (In 1982, Cyr pleaded guilty to accepting bribes from Wilson and agreed to cooperate with the federal prosecutors.) Another Wilson associate said he had seen cash distributed to a long list of congressmen and government officials, and that "whatever else you call it, blackmail was the name of the game." The same man maintained that Wilson had installed tape recorders in his Washington, D.C., office. in his limousines and at the farm, and added. "I assumed that almost everything said was recorded."

During these festive weekends. no one asked where or how Wilson got the money to play the Great Gatsby. But it certainly was not family money. Wilson came from an impoverished farm in Idaho and had to work as an attendant in a laundry room to put himself through college in Oregon. In 1952. he enlisted in the Marines, and in 1955, he joined the CIA as a S70-a-week security guard. For the next 16 years, he worked as an undercover agent. When he finally left the CIA in 1971, he was earning only $20,800 a year. From then until 1976, he went to work for a secret naval intelligence operation. called Task Force 157, for an equally modest salary. In an interview, Wilson explained that he had worked for the Navy for "patriotic reasons... not money." Yet, despite his meager salaries, Wilson amassed a fortune. Then, in 1980 he was indicted in a murky case involving international arms transfers.

Wilson’s problems intensified in 1983 when three witnesses in the investigation died. Rafael Villaverde. a Cuban refugee. disappeared at sea after his speedboat exploded off the coast of Florida; Kevin Mulcahy. an electronics expert. was found dead in an isolated motel in the Shenandoah Valley-apparently a victim of exposure; and Waldo Dubberstein, an archaeologist and expert on the Middle East, died of a shotgun blast to his head– a presumed suicide.

All three of the deceased had worked for the CIA and, in the mid 1970s. became involved in operations involving Wilson.

Villaverde, who had served the CIA as a saboteur in Cuba, was recruited by Wilson as a hired gun and promised a million dollars for an assassination in Egypt. Mulcahy, a CIA specialist in secret communications technology. was hired to supervise the smuggling of electronic and military equipment. Dubberstein, an ex-CIA man whose subsequent work for the Pentagon included compiling the daily military intelligence summary for the Secretary of

Defense and the Joint Chiefs of Staff— a position that gave him access to the ultra secret

Single Integrated Operational Plan (SIOP), the precise order of battle for nuclear war— was paid by Wilson to sell his country's secrets.

Assassin, smuggler and spy: Why had these men accepted such nefarious assignments?

The answer each gave was that he had been recruited by Wilson after he left the CIA in 1971 under the pretense that he was still a CIA executive,. In the espionage world. misrepresenting one's side or organization in order to get an opponent to cooperate is called a "false flag- recruitment. When the recruit realizes he has been duped, he was too far compromised to easily withdraw his cooperation.

According to IRS data released in July 1983, Wilson made at least $21.8 million from servicing Libya alone, Libya funneled this huge sum of money into Wilson's account in return for special equipment and personnel that could be used to implicate the CIA in Qaddafi's assassination plots and other conspiracies.

As it then turned out, Wilson artfully used the false flag trick for to penetrate deep inside the U.S. intelligence establishment. In addition to Villaverde, Mulcahy and Dubberstein, Wilson attracted to his false flag no fewer than three dozen intelligence and weapons specialists. including CIA officers on active duty. senior military officers and civilian weapons designers with top-secret clearances. Through these connections, he obtained secret CIA cables from the Far East, NSA computer procedures for detecting submarines and missile, assassination devices from CIA suppliers and exotic secret weapons from the Navy and CIA testing base at China Lake in California. Wilson also clandestinely exported to Libya all the components (including technicians and specially developed exploding plastics from the CIA) for manufacturing terrorist bombs disguised as ashtrays and other innocent looking objects. Even worse, the explosive in the ashtrays had distinctive characteristics and a 'signature' that could he traced back to, the CIA.

The damage Wilson has done to U.S. intelligence cannot be assessed merely in terms of stolen secrets and weapons technology. All its vaunted techniques of "quality control," including polygraph tests, failed to detect Wilson's recruitment of CIA personnel. At least two CIA officers on active duty moonlighted for Wilson (one of them used his CIA credentials to recruit an entire team of Green Berets for then Libyan dictator, Muammar Qaddafi). In addition. Wilson hired four part-time CIA contract employees and a dozen former CIA officers, many of whom still had CIA clearance and consulting status. Moreover, even after being fired from the CIA, Wilson maintained a close association with two of the agency's top executives-Thomas G. Clines, the director of training for the clandestine services, and Theodore G. Shackley, who held the No. 2 position in the espionage branch. Both of these men sat in on meetings that Wilson held with his operatives and weapon suppliers and, by doing so, helped further the illusion that his activities had the sanction of the CIA— an illusion crucial to keeping his false flag attractive.

Clines not only met with Wilson informally, but Wilson used his legal and office facilities to set up corporations for Clines' personal use, Clines had also been the control officer for one of the Cuban exiles whom Wilson recruited as an assassin. In reviewing the evidence in 1977, Adm. Stansfield Turner. then the new director of the Central Intelligence Agency, concluded that Clines had been working "in collaboration" with Wilson, and permitted him to resign quietly from the agency. Subsequently, Wilson secretly funneled $500,000 from a bank in Geneva into one of the shell corporations, money which Clines used to finance deals to ship US arms to Egypt. (Clines repaid money after Wilson's indictment in 1980.)

Shackley had known Wilson and Clines since the early 1960s, when they had all worked on preparations for the invasion of Cuba. He explained during an internal investigation by the CIA that he had not wanted to be a captive of the CIA system, that Wilson had served as an outside contact. Yet, according to federal prosecutors who examined the CIA's files on Wilson, Shackley had not filed reports of his contacts with Wilson and his associates, nor had he recommended that they be debriefed by the CIA's domestic contacts office— the usual channel for such intelligence. Further, Shackley had intervened on Wilson's behalf within the intelligence community on at least two occasions and ridiculed Kevin Mulcahy as an "irrational, paranoid, alcoholic and unreliable informant," after Mulcahy reported some of Wilson's illicit deals to the FBI and CIA in 1976. The CIA's investigation failed to overcome the defenses of this Old Boy network: Indeed, even after Mulcahy informed on Wilson, CIA officers continued working for Wilson. So much for the idea of quality control.

In his defense, Wilson's attorneys argued that Wilson had in fact been working all along for the CIA. The U.S. Attorney E. Lawrence Barcella. however, refuted this defense claim by showing that Wilson was unable to provide any details of his relations with the agency, not even the obligatory cryptonym of his operation or the name of his case officer.

A federal court in Virginia convicted Wilson of exporting firearms to Libya without permission and sentence him to 10 years in 1983. He was then convicted in Texas of exporting explosives to Libya and sentenced to 17 years and, in New York, he was convicted him of attempted murder, criminal solicitation, obstruction of justice, tampering with witnesses, and retaliating against witnesses, and sentenced him to 25 years, to run consecutively with his Virginia and Texas sentence.

He spent the next 20 years in prison. Then, on October 29, 2003, Judge Lynn N. Hughes of Federal District Court in Texas threw out the 1983 conviction after finding that prosecutors knowingly used false testimony to undermine his defense. Judge Hughes found that the CIA claim that Wilson had not worked for the organization since his dismissal in 1971 had been undermined by a CIA memorandum indicating high officials in the CIA may have known of his recruitment activities. So how high did Wilson’s liaisons penetrate the CIA? We will never know. Wilson, who died on September 10, 2012, took this secret to the grave,

Ten Missing Dates in the Petraeus Penetration Scandal

Before we can walk the cat back, and establish a chronology of a possible penetration, we need to answer the following ten questions?


1. When and where did the sexual liaison between Paula Broadwell begin? Was it before, during, or after the FBI conducted its mandatory background check on General Petraeus in 2011?

2. When did General Petraeus, who was authorized to access top secret documents, and Paula Broadwell, collaborate to set up anonymous gmail accounts and exchange passwords to them? For what period, were these “drop boxes” to evade a US intelligence surveillance of internet providers through the device of storing drafts of unsent emails?

3. It is reported that Paula Broadwell, a former military intelligence officer, under pseudonym “KelleyPatrol” sent an email to General John Allen, the former deputy to General Petraeus in Tampa, warning him that Gilberte Khawam Kelley was a “seductress.” If so, what date was this warning to General Allen sent?

4. It is further reported General Allen, who exchanged 20,000 to 30,000 pages of emails with Kelley, told Kelley of the anonymous warning. If so, what date did this occur?

5. It is reported Kelley consulted a friend in the Tampa FBI field office in May 2012, What was exact date? Was it after she received news of the warning from General Allen?

6. When did the FBI determine “drop boxes” were being used by Paula Broadwell?

7. The FBI reportedly obtained a warrant by showing show probable cause of a crime to search the anonymous accounts. If this was a FISA (Foreign Intelligence Surveillance Act) warrant, what crime did the FBI allege it was investigating? What date did it obtained this warrant?

8. When was General Petraeus told by FBI it was investigating anonymous gmail accounts? Was it done through the FBI liaison with the CIA?

9. When did FBI determine Paula Broadwell was in possession of classified date on her commuter?


10. It is reported that General Petraeus told Paula Broadwell to stop sending anonymous letters, If so, was it after he learned of the FBI investigation? In any case, when did General Petraeus and Paula Broadwell last communicate?

The Assassination Rhumba

A half-century ago, the Cuban missile crises began. On October 16, 1962, President John F. Kennedy learned that the Soviet Union was secretly installing missiles in Castro’s cuba. He responded by putting American forces on their highest state of alert and giving the Soviet Union an ultimatum: Remove the missiles or face nuclear war. Thirteen days later, the Soviet Union acquisced. The missiles were removed but Fidel Castro remained in power. JFK then decided to remove Castro by other means, a decision that resulted in 1963 in a deadly dance of assassination between the CIA and Castro’s intelligence service. It ended on November 22, 1963. How did it play out– and back fire? See my book The Assassination Rhumba

What Did Castro Know-- and When Did He Know It

In 1976 Thomas Mann, who had been the U.S. ambassador to Mexico in 1963, told me that he believed that there was “an indictable case” that Castro had been involved in the Kennedy assassination, but when he continued reporting this view in cables to the State Department, he was fired. Now there is a new book by Brian Latell, the CIA’s former national intelligence officer for Latin America, that again raises the question: What did Castro know — and when did he know it — about the Kennedy assassination?

Prior to this book, here is what has been established. On November 22, 1963, there were actually two jackals on the prowl: one in Dallas, Texas, the other in Paris, France.
In Dallas that day, Lee Harvey Oswald, who previously had attempted to assassinate General Edwin Walker, was working under a false name at the Texas Book Depository, which overlooked the route that President John F. Kennedy would take that day. Oswald had arrived at work that morning with a package that, as the FBI lab would later establish, contained his rifle.
Less than two months earlier, Oswald, under his real identity, had gone to the Cuban Embassy in Mexico City and met with Cuban officials. Even though the Cuban government did not then grant visas to individual American citizens who were not sponsored by government organizations, on October 15 his application was processed in Havana. On October 18, the Cuban foreign ministry notified the embassy in Mexico that it could issue Oswald a visa if he also obtained a Russian entry visa, so an exception was made in his case.

The jackal in Paris was Major Rolando Rubella who, as a close associate of Fidel Castro, was allowed to travel abroad for the Cuban government. What Castro supposedly did not know was that Cubela had been recruited by the CIA and given the code name AMLASH. His CIA mission would be to assassinate Castro. During the Collegiate Games in Porto Alegre, Brazil, that took place from September 5-8, 1963, he met with CIA case officer Nestor Sanchez and tentatively agreed to this mission. Although he had asked to meet with Attorney General Robert Kennedy, the best the CIA could do was arrange a meeting in a safe house in Paris on October 29, 1963, with Desmond Fitzgerald, a high-ranking CIA officer, who identified himself as the personal representative of Robert Kennedy.

At this point, the jackal asked Fitzgerald to supply him with a high-powered rifle with telescopic sights that could be used to kill Castro from a distance and to insert an agreed-upon phrase in a speech President Kennedy would give in Miami. The phrase was inserted, thus confirming that the CIA had the backing of the President.
The next meeting took place in Paris on November 22 at the time that JFK’s motorcade was moving past the Texas Book Depository. Instead of the requested rifle, the CIA offered Cubela a poison pen with a concealed syringe. In the midst of the meeting, the news arrived that Kennedy had been shot. Cubela returned to Cuba but never carried out the assassination assignment.

The burning issue for the CIA was whether Castro learned about this plot. It knew that Castro had intentionally revealed he knew about CIA support for an operation to eliminate him on September 7, 1963. It also knew that was the very day that the CIA was meeting with its jackal in Brazil.
Even more ominously, Castro chose a diplomatic reception at the Brazilian Embassy, which was Brazilian territory. At the reception, he went directly over to the US correspondent for the Associate Press, Daniel Harker, and told him, in an on-the-record interview, that “United States leaders should think that if they are aiding terrorist plans to eliminate Cuban leaders, they themselves will not be safe.”

The timing and Brazilian connection were enough to convince James Jesus Angleton, the CIA’s legendary counterintelligence chief, that the Cubela operation was “insecure.” He warned Cubela’s handlers that the fact that Cubela had refused the CIA request to take a lie detector examination made him suspect and recommended, without success, that the operation be ended.
The question of whether Cubela was a double agent persisted for three decades and was only answered when Miguel Mir, who served in Castro’s security office from 1986 to 1992, defected. He told the CIA that he had personally reviewed Cubela’s file, and it showed that Cubela was working as a double agent under the control of Cuban intelligence from the time when he allowed himself to be recruited in Brazil.
His real mission was to ascertain whether President Kennedy was behind the CIA plots — hence his request to meet with his brother and have words scripted by Cuban intelligence put in JFK’s Miami speech. If so, Castro knew 1) CIA officers in Brazil were recruiting an assassin to kill him 2) the CIA was prepared to deliver an exotic assassination weapon, and 3) the CIA was supported by President Kennedy.

What Castro knew about Lee Harvey Oswald is less clear. During his stay in Mexico City between September 27 and October 2, 1963, Oswald made at least two visits to the Cuban Embassy. To convince the Cubans of his bona fides — and seriousness — he had prepared a 10-page dossier on himself, according to the testimony of his wife, Marina. This resume included photographs he had taken of General Walker’s home just prior to Oswald’s attempt to assassinate him with a high-powered rifle. So the Cubans could have known that Oswald was a potential assassin with a high-powered rifle.
When the Cuban Consul argued with him over the requisites he would need for a Cuban visa, Oswald reportedly made claims about services he might perform for the Cuban cause. According to the 2009 book Brothers in Arms: The Kennedys, the Castros, and the Politics of Murder, by Gus Russo and Stephen Molton, Oswald then met with at least one Cuban intelligence officer outside the embassy. Whatever was said in or outside the embassy, Oswald’s file, presumably containing this information, was sent to Havana in support of his application, which was conditionally granted.
Five months after the assassination, Castro told Jack Childs, a courier for the Communist Party USA, that Oswald had shouted in the Cuban Embassy in Mexico that he was going to kill Kennedy. Unknown to Castro, Childs was working as an informant for the FBI and duly reported his conversation with Castro to US intelligence.

While Castro’s statement coincided with what other witnesses in the embassy claimed to have overheard, it was not evidence Castro had prior knowledge. He could have been briefed on Oswald’s file after the assassination. But if this threat was in Oswald’s file, why was Oswald’s visa approved?

Brian Latell now addresses this question in Castro’s Secrets: The CIA and Cuba’s Intelligence Machine. He reveals that Florentino Aspillaga, who defected from Cuban intelligence in 1987, and whom he interviewed, told the CIA that just hours before Kennedy was assassinated on November 22, 1963, he had received an extraordinary order from the high command of Cuban intelligence when he was in charge of the communications unit located near Castro’s compound.
Up until then, his unit had focused its antennae on Miami to monitor clandestine radio transmissions from anti-Castro groups. But now he was instructed to redirect all his antennae to Texas and report immediately any transmissions of interest. He assumed from his conversations with his superiors that they had been desperately seeking a transmission from Texas. Latell deduces from this shift that Cuban intelligence had prior knowledge of the Kennedy assassination.
Such a conclusion, however, requires a leap about the purpose of the shift. It is possible that it was not related to Oswald or the Kennedy assassination. Cuban intelligence may merely have been awaiting a burst transmission from an asset in Texas who had no connection with Oswald. Until we have further information about the activities of Cuban intelligence on November 22, 1963, the antennae shift, along with the visa approval, will remain a central part of the mystery

How Crazy Is Wall Street

The New York Times published an article on May 14, 2012 concerning the question of whether the rich, from a moral standpoint, are good or bad. The story reported that“A recent study found that 10 percent of people who work on Wall Street are “clinical psychopaths” and that they exhibit an “unparalleled capacity for lying, fabrication, and manipulation.” The vivid term “clinical psychopath” brings to mind the berserk buzz-saw wielding investment banker played by Christian Bale in the film “American Psycho.” Since some 3.9 million people work in the financial services industry, a clinically-diagnosed horde of lunatics numbering almost 400,000 people would certainly be a matter of public concern, though it might only confirm some journalist’s view of American capitalism.


It is fair to ask what is the provenance of this incredible”study.” The New York Times cites its source as a March 12, 2011 story in THIS WEEK, which attributes the psychopath data to an estimate made by free-lance writer Sherree DeCovny in CFA Magazine, in an article entitled “The Financial Psychopath Next Door.” She wrote that “studies conducted by Canadian forensic psychologist Robert Hare indicate that about 1 percent of the general population can be categorized as psychopathic, but the prevalence rate in the financial services industry is 10 percent.” The problem here is that Hare never conducted a clinical study of the financial service industry, and never did a research that 10 percent of its members were psychopaths. John Grohol, the editor of World of Psychology, after the publication of DeCovny’s article, asked Hare about the putative study. Hare told him, “I don’t know who threw out the 10% but it certainly did not come from me or my colleagues.” The closest he came to such a claim was in a research paper he co-authored that analyzed the responses submitted by 203 corporate professionals from seven companies, none of which were on Wall Street. Nor were these 203 people randomly selected . He found that the answers of only eight people– approximately 4 percent of the sample– indicated psychopathic tendencies on a scale he had devised. Even though this was not a clinical study, the responses of these eight people, who might have not even worked in financial services, were transformed via the blogospshere into a supposedly scientific finding noted in one of our most respected newspapers that one-tenth of those working on Wall Street are clinical psychopaths. As Ryan Holiday, author of “Trust Me, I'm Lying: Confessions of a Media Manipulator,” explained to me, "Headline-grabbing trend

manufacturing such as this now dominates the pseudo-news cycle on the Web." Welcome to the Internet, which is not known for its source-checking. Unfortunately It is then only a short leap to the so-called newspaper of record, which is happy to serve up to the public this non-existing study, which like much else that demonizes financiers as a scientific finding. As a result, we now have mad men of Wall Street running amok in the public imagination.
[This is now included in my ebook "Myths of The Media" http://amzn.to/KifIfM

The DSK Affair: One Year Later

When Dominique Strauss-Kahn stepped out of the shower in his $3,000 a night suite at the Sofitel Hotel in New York one year ago May 14, he was fully on track to become the next President of France. As head of the International Monetary Fund he was now on his way meet German Chancellor Angela Merkel with a secret plan to avert the Greek default. He was nearly 20 points ahead of his rival President Nicolas Sarkozy in the public opinion polls. He had planned to announce his candidacy on June 15th, he told me when I interviewed him last month. He was confident, perhaps overconfident, he could not be stopped, expecting to be nominated by his Socialist Party, and then defeat Sarkozy.

These well-laid plans, as the whole world knows now, went astray moments after he stepped out of the bathroom naked and encountered a statuesque maid. The liaison that followed in the next seven minutes is currently the subject of a civil suite filed by that maid, Nafissatou Diallo, who claims he forced her to twice have oral sex; DSK claims that the sex was offered and consensual.

Four hours later he was arrested at JFK airport(after calling the Sofitel and reporting his location so it could return a missing cell phone.) In their rush to judgment, and after receiving information from an unidentified official in Paris, the prosecutors moved to deny DSK bail before they had gathered critical evidence, including key swipe and cell phone records. As a result, he was paraded before the cameras in a humiliating “perp walk,” imprisoned in the Rikers Island jail for four days, placed on suicide watch, and then put under house arrest for more than a month. By this time, his presidential ambitions had been effectively destroyed.

Only one month after this spectacle, in late June, after the prosecutors got the key swipe records , did it become clear to them that Diallo, the only witness against DSK, had given false testimony under oath to the Grand Jury about the case itself. So the Grand Jury had indicted him on testimony from a single witness that was untrue. The prosecutors found her “credibility cannot stand the most basic evaluation” and that “the nature and number of [Diallo’s] falsehoods leave us unable to credit her version of events beyond a reasonable doubt.” They further concluded that the medical evidence not only did not “prove or corroborate that their encounter was forcible or non-consensual,” but it fails to corroborate certain aspects of [Diallo’s] account.” In an almost unprecedented move in a high profile case, the district attorney dropped all the charges.

When, I met with DSK in Paris this April, he could not easily accept that the destruction of his political career was merely the result of false testimony. By now he had considerable reason to believe that he had been under surveillance by his political opponents. This suspicion is consistent with the conclusion of investigative journalists Didier Hassoux, Christophe Labbé, and Olivia Recasens, who interviewed member of the French intelligence services DCRI for their 2012 book, The President’s Spy. They reports that the DCRI not only had made DSK a target but also set up a “special group” that liased directly with Sarkozy’s Élysée Palace. If so, DSK was likely being watched on his US trip that May. It would then be possible for these operatives, and their superiors in Paris to use whatever happened at the Sofitel to ruin his presidential ambitions.

There certainly were curious happening in that hotel suite, including reported interceptions of his emails, a missing Blackberry phone, and at least one unidentified person using someone else’s key cart to enter his room just prior to his arrival. The suite had also been used for sexual liaisons before he checked in. The police lab analysis of the DNA evidence found precisely where Diallo said the attack occurred, revealing other stains there with DNA from at least seven other “unknown individuals. One stain visible in the carpeting contained a mixture of saliva and semen from three different people. Since no complaint was filed, these were presumable consensual liaisons.

Even if all the mysteries of the presidential suite have not been solved, it is now abundantly clear that if the district attorney’s office had gathered more evidence before they arrested and imprisoned DSK, the outcome of the French election might well have  had a different victor. But DSK’s enemy Sarkozy has not emerged triumph. The ending here is more like a Shakespearean revenge tragedy in which, as the plot unfolds, everyone involved is ruined.

What I (Still) Don't Know About DSK

I have spent the last 10 months investigating the incident  involving Dominique Strauss-Kahn at the Sofitel Hotel in New York-- an investigation which has resulted in my book Three Days In May: Sex, Surveillance, and DSK.   I have had considerable success obtaining CCTV surveillance tapes from around the hotel, the key swipe records for both the Presidential suite (2806) in which the incident took place and the room across the hall (2820), cell phone records, and police reports. But despite all my digging, I have been unable to answer 10 key questions about the downfall of DSK– nor was DSK able to shed light on them during my interview with him this April


1.  Who put DSK under surveillance during his US trip in May 2011, and why? I am convinced that DSK was under surveillance both on his trip to Washington DC and New York. But I do not know who ordered the surveillance.. He had reportedly become the target of the DCRI, France’s domestic intelligence service that March. That agency, according to my sources in US intelligence, certainly had the capability to track DSK in the US, but it also may have been handled by a free-lancer.

2. Why were not the hotel‘s key card records for room 2820 not provided to the New York prosecutors immediately? The records– which can be found here are the best evidence of what happened on the 28th floor, which is not covered by CCTV cameras. If they had been handed over immediately, the flaws in the maid, Nafissatou Diallo’s story would have become instantly apparent to the prosecutors. They would have seen then, as they later reported in their motion for dismissal, her “credibility could not withstand the most basic evaluation.” But who was responsible for this long delay?

3. Why did the maid enter DSK's suite twice without her cleaning equipment? The key card records indicate that the maid entered, left, and re-entered the president suite at 12:06 pm just before the sexual encounter took place. The maid told prosecutors her gear was inside room 2820, the room across the hall. DSK told me he was certain that she had no cleaning equipment.  The hotel managers I interviewed all agreed a maid cannot clean a room without her equipment. Her first entry might have been to see if room was available for cleaning, but, why would she then leave and -re-enter without the gear she needed to clean the suite?

4. Who was in room 2820, across the hall from DSK's presidential suite? The Sofitel has
consistently refused to identify the mystery guest in room 2820, even though he could be an
important witness to the events on 14 May 2011. Hotel records show the unidentified man in room 2820 checked out at 11:37 am that morning, but I have been unable to get the CCTV footage showing the man checking out at 11:37 am.

5. Why did two hotel employees carry out a “victory dance”? The pair, who included the head engineer and a hotel security guard, displayed joy when the police were finally called. As CCTV video in loading dock shows, both men spoke for a moment, then high-fived each other, clapping their hands and briefly dancing. Other hotel managers I interviewed said calling the police would be viewed as a disaster in terms of the hotel's image. So what were these men celebrating?

6. Was DSK's IMF BlackBerry bugged? This was the device that he used it to send and receive both personal and work texts and emails. According to DSK, he received an alarming text message on this device on the morning of the encounter with the maid. A friend from Paris warned him that at least one private email he had recently sent from the IMF BlackBerry to his wife Anne Sinclair had been read by his political foes. He decided then to have the BlackBerry examined by an expert to see if it was bugged.

7. Why did that same IMF BlackBerry go missing? Later that day, after the sexual encounter with
Diallo and after his subsequent lunch with his daughter, as he was in a taxi headed for JFK airport, DSK realized the IMF BlackBerry was missing. What DSK did not know was that his phone had remained at the Sofitel after he left the hotel. BlackBerry records show that the device's GPS signal was still emanating from the Sofitel 23 minutes after DSK left, at 12.51pm. But at that moment it abruptly stopped sending out a signal, indicating either that the battery had run out or that the GPS had been intentionally disabled. As the phone was not found in the police search that afternoon, someone took it. But who–and why?


8. What restrained the hotel from calling 911 immediately after the incident? There was a gap of
about one hour before Sofitel security guards contacted police. The videos of the security area show repeated re-enactments.  Had the maid been unwilling up until that time to go to the police, as a lawyer for the hotel group suggested. If so, who or what had persuaded Diallo to go to the authorities?


9. Who intervened from Paris with the New York district attorney's office on 15 May? The prosecutor Cyrus Vance was reportedly contacted by one or more French officials who provided information that appears to have been significant in persuading New York courts to refuse him bail and keep him in prison, further damaging his public reputation. Who were these officials, and why did they intervene in a way that hastened DSK's downfall.

10. Who else had sexual liaisons in that same suite?   No one doubts DSK had a sexual liaison with the maid. DNA testing showed his semen mixed with her saliva. But they were not the only ones having them. When the police lab examined the carpet in the section of corridor near the bathroom, precisely where she said she had spat, it found semen stains from other individuals, including one stain containing a mixture of one person’s saliva mixed with the semen from three other people. In all, the identified semen or saliva mixed with semen from seven unknown individuals, all the engagements taking place in this same small area. (Other areas in the suite were not examined) Since this evidence would not be washed away by multiple room cleanings, the conclusion of forensic experts was that they had occurred only a short time before the suite was rented to DSK. But the key card records I obtained for the suite, unlike those of 2820, do not extend before the day DSK arrived. I was therefore unable to ascertain how, when, or why these 7 unknown individuals got access to the suite.

Three Days In May

My book will be published April 29.

Jobs vs. Milken

Despite the current hagiography of Steve Jobs and the demonization of Mike Milken, Milken’s revolution of corporate finance is far more important for the US economy than Job’s cool designs for Apple. See my Milken excerpt (From my Money Demons.)

The Money Demons

It is not for everyone, include the happy horde of well-intentioned protesters who have encamped themselves today in lower Manhattan and the Brooklyn Bridge to “Occupy Wall Street.” But their protest, and its coverage, indicates the extent to which American pop culture prefers to lay the blame for the economic malaise on the greedy money demons of Wall Street. After all, after the 2008 crunch, many people can no longer borrow money to live beyond their means, So some guilty demon must be found, and one obvious candidate is Goldman Sachs, which made billions in profits by trading pieces of paper called derivatives while others suffered losses. Of course, Goldman did not act alone. It was part of a complex global system used by the Fed and other central banks to manipulate interest rates, print money, stimulate economic activities, and fund government debt. The financial alchemy called securitization through which debt is transformed into salable securities, an integral part of this system, produced, among other illusions of wealth, the sub-prime bubble. So the central banks must also be deemed part of the demonic equation.


Despite its popularity in the media and among politicians, not everyone buys into this organized flight from reality. For those who don’t. I offer my new book, The Money Demons: True Fables of Wall Street. It includes essays on such (unpopular) subjects as the Ahabian hunt for the Giant Vampire Squid (Goldman), Mike Milken, The Central Bankers’ Club in Basle, the Yale Endowment Fund, and the criminalization of high finance in Hollywood movies.

(For further details, see http://amzn.to/oBmUKz).

James Jesus Angleton Reconsidered

In his newly published memoir, Dick Cheney provides such an intriguing coda to his service on the House Intelligence Committee that it could been the opening of a Le Carre novel. He writes that in May 1987 James Jesus Angleton, the former head of CIA counterintelligence, requested an urgent meeting with him to reveal to him something of “vital importance.” He immediately scheduled it but, just days before it was to take place, Angleton died, taking the unconveyed message to the grave with him. At the time, the general consensus in the intelligence community was that Angleton was paranoid about the KGB. His hunt for a mole, which had partly paralyzed the CIA had failed, and when he was fired from the CIA in 1975, CIA director William Colby called his obsession that the CIA could be penetrated by the KGB “sick think.” His idea that the KGB could plant and then sustain a mole in the CIA or FBI had not been substantiated by any evidence in 1975, and his idea that the CIA could be manipulated into cooperating in its own deception seemed totally out of touch with reality,

Yet, as it turned out after his death, he was not as far out of touch with reality as his critics inside the CIA.

First, the discovery of KGB moles Aldrich Ames, Harold Nicholson, and Robert Hanssen showed that the KGB had the capability to penetrate both the CIA and FBI.

Second, the fact that, despite lie detector tests, surveillance, and other counterespionage measures, Ames and Hanssen went undetected for more than a decade– Hanssen worked for the KGB over a period of 22 years– showed that the KGB had the ability to protect and advance their moles. ( Ames headed the CIA's Soviet Russia Division’s counterintelligence unit, Hanssen worked in the FBI’s anti- KGB operations.)

Third, the CIA Inspector General’s finding in 1995 found that in the 1980s and early 1990s the KGB had dispatched at least a half-dozen double agents who provided the CIA with disinformation cooked up in Moscow and that for eight years this disinformation had been passed in blue-striped reports signed personally by the CIA director to three Presidents even thought “senior CIA officers responsible for these reports had known that some of their sources were controlled by Russian intelligence” showed that the CIA would not necessarily expose KGB deception. So Angleton was right on all three scores.

My new book provides the details: James Jesus Angleton: Was He Right?

Tabloid America: Crimes of the Press

My short new book Tabloid America: Crimes of the Press subject is tabloidization of mainstream media from Lindbergh to O.J Simpson

http://amzn.to/rpnWgP

Killing Castro

The CIA’s super-secret Report On Plots To Assassinate Fidel Castro was completed in April 1967. All but one copy was destroyed on May 23, 1967. See my new ebook Killing Castro http://amzn.to/olFvcW

My new ebook experiment

E-BOOKS on Kindle, Nook, Ipad, Smashword


http://www.edwardjayepstein.com/cyberbooktable.htm



THE HOLLYWOOD ECONOMIST

RISE & FALL OF DIAMONDS

AGENCY OF FEAR

HAVE YOU EVEN TRIED TO SELL A DIAMOND?

THE BIG PICTURE

THE JFK ASSASSINATION THEORIES

JIM GARRISON'S GAME

ARMAND HAMMER:

ZIA'S CRASH

MYTHS OF THE MEDIA

WHO KILLED GOD'S BANKER

THE ROCKEFELLERS [August 9]

THE CRUDE CARTEL [Aug 9]



KILLING CASTRO [Aug 9]

TABLOID AMERICA:

CRIMES OF THE PRESS [Aug 9]

The Myth of Bin Laden Lair

The Lair of Bin Laden is a fictoid that originated in the highly-enterprising British press on November 27th, 2001. The chronology is as follows. On November 26th, the New York Times carried a story based on the account of an a ex-Russian soldier, Viktor Kutsenko, who had served in Afghanistan in the nineteen-eighties in which he claimed that there had seen an elaborate cave complex in Zhawar with "iron doors" that contained " a bakery, a hotel with overstuffed furniture, a hospital with an ultrasound machine, a library, a mosque, weapons of every imaginable stripe; a service bay with a World War II-era Soviet tank inside, in perfect running order." The historic story then added "Mr. bin Laden is reported to have upgraded both it and a nearby camp in the 1990's."

On November 27th, the London-based Independent came up with its own fairly similar troglodyte story, except that it had moved the underground fortress from Zhawar to Tora Bora, where the manhunt for bin Laden was about to begin, and advanced it in time from the nineteen-eighties to the present.
The Independent headlined: "Al-Qa'ida almost 'immune to attack' inside its hi-tech underground lair." In the story, its correspondent Richard Lloyd Parry, in Jalalabad, described a vast redoubt burrowed deep under a mountain, with labyrinthian tunnels sealed by with iron doors. "It has its own ventilation system and its own power, created by a hydro-electric generator. Its walls and floors in the rooms are smooth and finished and it extends 350 yards beneath a solid mountain." It was therefore tunneled almost as deep as the World Trade Center was high. It was also " so well defended and concealed that – short of poison gas or a tactical nuclear weapon – it is immune to outside attack. And it is filled with heavily armed followers of Osama bin Laden, with a suicidal commitment to their cause and with nothing left to lose."
It further claimed that fortress was built " reportedly employing expertise from Mr bin Laden's Saudi construction businesses" and housed "as many as 2,000 Arab and foreign fighters." The story's putative unidentified witness— the lone deep throat— explained, "It's like a hotel, with doors on the left and the right."
The idea that Osama and his followers had entombed themselves in an unassailable fortress under a mountain immediately embedded itself into the imagination of the American press. The Associated Press put The Independent story on its services, which went to hundreds of major newspapers and broadcasting stations. ABC News re-headlined the story "Bin Laden Hide-out Resembles Hotel: Witness," depicting "The cave complex ... filled with bin Laden's fanatical followers." Yahoo noted in its Internet service "Bin Laden has reputedly built a fortress 1,150 feet (350 meters) beneath the mountains, equipped with water, electricity and ventilation and guarded by hundreds or thousands of fighters ready to die for their leader." CBS, expanding the story, reported that an Afghan "commander thinks bin Laden is in a cave fortress known as Tora Bora. The massive hideout was built by the U.S. to house forces fighting the Soviet Army in the 1980s. The complex - nicknamed "bin Laden's ant farm," is burrowed deep into Gree Khil peak -- soaring 13,000 feet above the village of Tora Bora. It is virtually impregnable -- a latticework of tunnels, storage rooms for arms and munitions, and accommodations for up to a thousand fighters. Ventilation shafts bring fresh air 1,200 feet inside the mountain. A nearby river provides hydroelectric power to the complex... at least 2,000 of bin Laden's al-Qaida fighters are believed to be hiding there," In the Los Angeles Times Professor Mark C. Taylor added to his essay on an ancient troglodyte Hittite city in Turkey that "This city and others like it provide the prototype for the underground fortresses where Bin Laden and his followers are presumed to be hiding;" The Atlanta Journal-Constitution put the underground city in context, saying "The bitter and brutal end game between Osama bin Laden and U.S.-led forces is being played out in a mountain fortress the CIA helped build... equipped with ventilation and hydroelectric power." This bunker-fortress, the story continued, "provides bin Laden with significant advantages... it is considered invulnerable even to bunker-busting bombs and impregnable to conventional military attack." The Times of London meanwhile illustrated its story with an artist's rendering of the underground fortress, which dwarfed even Hitler's infamous "eagle's nest" fortress.

The story probably reached its high point on NBC's Meet The Press on December 2nd when Tim Russert, the host of the program, provided Secretary of Defense Donald Rumsfeld with the artist's rendering of bin Laden's fortress. The interview proceeded:
Russert: The Times of London did a graphic, which I want to put on the screen for you and our viewers. This is it. This is a fortress. This is a very much a complex, multi-tiered, bedrooms and offices on the top, as you can see, secret exits on the side and on the bottom, cut deep to avoid thermal detection so when our planes fly to try to determine if any human beings are in there, it's built so deeply down and embedded in the mountain and the rock it's hard to detect. And over here, valleys guarded, as you can see, by some Taliban soldiers. A ventilation system to allow people to breathe and to carry on. An arms and ammunition depot. And you can see here the exits leading into it and the entrances large enough to drive trucks and cars and even tanks. And it's own hydroelectric power to help keep lights on, even computer systems and telephone systems. It's a very sophisticated operation.
Rumsfeld: Oh, you bet. This is serious business. And there's not one of those. There are many of those. And they have been used very effectively. And I might add, Afghanistan is not the only country that has gone underground. Any number of countries have gone underground. The tunneling equipment that exists today is very powerful. It's dual use. It's available across the globe. And people have recognized the advantages of using underground protection for themselves.
A few weeks after the "Meet the Press" interview, US special forces and their Afghan allies occupied Tora Bora. They painstakingly searched Gree Khil mountain and the surrounding area. They found no underground fortress, no hydro-electric power plant, no 2000-room hotel, no ant farm, no iron doors, no ventilating shafts. The troglodyte Lair of Bin Laden turned out to be mythic.
Post script:  Bin Laden, along with a number of his wives and children had been living in an above-the-ground home in in Abbottabad, Pakistan on May 1, 2011, when he was killed by US Navy Seals in a "targeted operation."

Who Runs Libya: A Profusion of Names

Does anyone know who is the head of the so-called Great Socialist People's Libyan Arab Jamahiriya– or even if the first letter of his surname name is A, E, G, K, or Q?


According to the New York Times, he is “Muammar el-Qaddafi,” to the Wall Street Journal he is “Moammar Gadhafi,” to the L.A. Time he is “Moammar Kadafi,” to Washington Post, he is

Moammar Gaddafi, to Reuters, he is “Muammar Gaddafi,” to Bloomberg, he is “Muammar Qaddafi,” the AFP, he is “Moamer Kadhafi,”, to the English edition of the Xinhua News Agency. he is "Muammar Khaddafi," to the US State Department, he is “Mu'ammar Abu Minyar al-Qadhafi,” to the CIA, he is “Mu'ammar al-Qadhafi,” to the US Ambassador in Libya, according to Wikileak, he is “Qadhafi Incorporated.” and to his official site he is “Muammar Al Gathafi".

Can this be a single person, or some kind of transliteration junta? And what is his–or their– job in the Great Socialist People's Libyan Arab Jamahiriya (which means “masses” in Arabic)? CNN calls him “President,” the Boston Globe calls him “strongman,” the Sun (London) call him “dictator,” the Daily Mirror calls him “Mad Dog,” while the CIA factbook, somewhat understatedly, says that he “holds no official title, but is de facto chief of state.” Can Any (other than his voluptuous Ukranian nurse) clarify this issue?

Is Netflix Streaming Its Way Towards Disaster?

Netflix, through the simple device of using the post office to bypass video stores, has become one of the great success stories of the new entertainment economy. It now claims 16 million subscribers who pay a monthly flat fee for an unlimited number of rentals. For this mail-in business, Netflix did not need the approval of the studios. It simply buys DVDs, as does anyone else, from retailers such as Wal-Mart then mails them out to subscribers. What makes this form of rental legal is the “first sale doctrine,” which holds that once a person buys a DVD, he can rent it out to others without the permission of the copyright holder. Through that court-approved doctrine , Netflix created its mail-in empire. For a monthly charge of as little as $9 a month, subscribers get any movie they choose on the Netfix website. Whenever a subscriber mails back his DVD in a stamped address envelope provided by Netflix he receives the next DVD he has ordered. There are no late fees.
Rather than backing its trucks up to Wal-Marts, Netflix buys most of its DVDs from wholesalers. Its average price of about $15 per copy. (Some studios also supply lower priced DVDs in return for Netflix delaying its mailing them until a month after they are in video stores.)
Last year, Netflix took in $1.67 billion in subscription fees. For its mailing business, its major expense, other than purchasing the DVDs, is postage and handling. It sends out about 2 million discs a day, which requires maintaining 50 distribution centers and buying over a half billion dollars worth of postage. Because of these expenses, its operating profit was only about 12 percent.
Netflix is now attempting to reduce its vulnerability to postage rate hikes by streaming movies over the Internet. Reed Hastings, the chief executive and co-founder of Netflix, explained that this new strategy is part of his concept that Netflix is not just as a mail-order house but a full-service home entertainment distributor since streaming provides movies in digital form on everything from Ipad, and Iphones, to game console and TV sets. Over the last three years, this streaming experiment has garnered a growing number of subscribers partially because it has been absolutely free to the subscribers of its mail-in service. Next year, however, it plans to charge for its streaming service. If it succeeds in converting its mail subscribers to streaming, it will in effect create a virtual channel that directly competes with the three major Pay-TV channels, HBO, Showtime, and Starz.
The problem here is that while streaming movies is a more efficient way of delivering movies than the mail, it requires a radically different business model. Unlike with mail-in DVDs, the first sales doctrine does not apply to streaming. So Netflix needs to license the electronic rights from the studios, and that is extremely expensive. In the case of new movies, studios license slates of 20 or so titles in so-called output deals for hundreds of millions of dollars. The average cost for a single title in such a deal is about $16 million for a two year license. Where Netflix can buy 10,000 copies of a major title for $150,000 to mail out, it will need to spend about $16 million to license it for streaming. Such a 100 fold increase in price can obviously be deleterious to profits especially since Netflix still has to maintain its mailing centers, and buy DVDs, for the subscribers who elect to continuing using the mail-in service either because they prefer DVDs’ higher quality and features or they don’t have the apparatus to receive digital streaming.
For the past 3 years, while building up its streaming service, Netflix found a temporary way around the licensing issue by making a sub-licensing deal with Starz Entertainment, a subsidiary of John Malone’s Liberty Media, which has its own output deal with Disney and Sony. paying Starz only $25 million a year for electronic sub-rights. Disney sued Starz claiming that such a deal violated the output agreement, but Starz held that it could sub-license these rights because Netflix was merely a “content aggregator.” No matter what happens in the litigation, the loophole will certainly be plugged in 2012 when Starz’ output deal expires. Not only will Disney likely demand on a payment for sub-licensing, but Starz itself has recently informed its other licensees that it will no longer discriminate in pricing, which means that Netflix will have to pay what everyone else pays for content.
And Netflix’s renewal problem is not merely with Starz. It also managed to license in 2008 the electronic transmission rights until 2012 for television programs, such as “The Office,” from networks. At that time, syndicators were only interested in the broadcast rights for re-runs of these series, and, as the streaming rights had little value, they licensed them at bargain prices. But the networks now have streaming, and video-on-demand of these programs on their own website, making it highly unlikely they will renew the expiring agreements.
The brutal reality is Netflix’s bargain days for streaming movies and television are coming to an end. As everyone else in the licensing game, Netflix will have to pay real world prices for content. Just the output deal it announced with three of the weakest studios, Paramount, LionsGate and MGM will cost it $200 million a year, a sum that exceeds its operating income last year. And if it wants the kind of output deals the other pay channels have, it will have to pay a great deal more than that.
Netflix, to be sure has brilliantly dominated the DVD mail order business. But, even aside from the immense cost of content, it must overcome three daunting challenges to succeed in the brave new world of cyber space.
First, it will have to compete directly with Pay-TV channels. HBO, which has nearly 40 million subscribers and a yearly cash flow of $1.8 billion, is not about to cede cyberspace to Netflix. It has just launched HBO GO which will stream to HBO subscribers “anything they want to see, anytime, anywhere, over their laptop, Iphone, tablet, Playstation”, according to Jeffrey Bewkes, the Chairman of HBO’s parent, Time Warner Communication. This includes not only the new titles, it acquires through its $500 billion output deals with Warner Bros, Fox, and Dreamworks but its prize-winning original series.
Second, since there are few barriers to entry to cyberspace, Netflix will also have to compete in pricing Internet savvy companies, including Apple, Amazon, Hulu and Youtube, all of whom can offer similar streaming services.
Third, as Netflix’s streaming consumes more and more of the capacity of broadband carriers such as Comcast, it will have to contend with either restrictions or usage charges that will increase the cost of streaming.
If Netflix fails to meet these challenges, its bold move into streaming might be nothing short of a prescription for financial disaster.

Who Killed Hariri

The crime occurred at 12:56 p.m. on Valentine's Day, 2005. Rafik Hariri, the former prime minister of Lebanon, was blown up, along with most of his armored convoy, in front of the Hotel St. Georges in Beirut. The bomb had been packed into a white Mitsubishi van that had been moved into position by a suicide driver one minute and 50 seconds earlier; the powerful explosion tore a seven-foot deep crater into the street and killed 23 people.
The assassination caused an international uproar, and the Lebanese government turned to the United Nations for help. The U.N. Security Council appointed Detlev Mehlis, a German judge renowned for his pursuit of terrorist bombings, to head its investigation.
Now, after five years, indictments are widely believed to be imminent, and the investigation has recently focused on members of Hezbollah, the Iran-backed political and paramilitary terrorist group that has been a significant factor in Lebanon for decades—and whose rocket attacks on Israel precipitated the Lebanon war of 2006. Even the hint that Hezbollah might have been involved in the Hariri assassination threatens to engulf Lebanon in a civil war.
Early in the U.N. investigation, clues seemed to point to a jihadist suicide bomber. Various Islamist terrorists had used similar Mitsubishi vans in a spate of other Beirut bombings. Elements in the bomb traced back to military explosives used by al Qaeda of Iraq. A convenient videotape sent to Al Jazeera television showed a lone suicide bomber named Abu Addas claiming that he acted on behalf of an unknown jihadist group.
But the U.N. investigative team, which included forensic experts in explosives, DNA and telecommunications from 10 countries, found convincing evidence that the assassination was a cleverly disguised, state-sponsored operation. The Mitsubishi van had been stolen in Japan, shipped via the port of Dubai to the Syrian-controlled Bekka Valley where it was modified to carry the bomb, and then, only days before the assassination, driven over a military-controlled highway to Beirut.
One participant in the planning of the attack was Zuhir Ibn Mohamed Said Saddik, a Syrian intelligence operative. Saddik told investigators that the putative bomber, Abu Addas, was a mere decoy who had been induced to go to Syria and make the bogus video, and then was killed. He further alleged that the actual van driver had been recruited under a false flag in Iraq, so presumably if he defected or was captured he would wrongly identify his recruiters as jihadists.

Saddik said that the "special explosives" in the TNT had been intentionally planted there to mislead investigators in the direction of Iraq. Saddik was arrested for his role in the crime in 2005 and was released without reason the following year. He vanished in March 2008 from a Paris suburb.
Meanwhile, the U.N. team uncovered evidence that the actual conspirators had resources and capabilities—including wiretaps of Hariri's phones—that pointed to a state-level intelligence service. U.N. telecommunications analysts determined that eight new telephone numbers and 10 mobile telephones had been used, along with the wire-tapping, to follow Hariri's movements with split-second precision and move the van into place.
In addition, a former Syrian intelligence agent told investigators that he had driven a Syrian military officer on a reconnaissance mission past the St. George Hotel on the day before the bombing, and that the officer told him that four Lebanese generals, in collaboration with Gen. Rustam Ghazali, the head of Syrian intelligence in Lebanon, had provided "money, telephones, cars, walkie-talkies, pagers, weapons, and ID cards" to the alleged assassination team.
Judge Mehlis's report, issued in October 2005, concluded "there is probable cause to believe that the decision to assassinate former Prime Minister, Rafik Hariri, could not have been taken without the approval of top-ranked Syrian security officials, and could not have been further organized without the collusion of their counterparts in the Lebanese security services." Judge Mehlis had the four Lebanese generals arrested in 2005.
When the judge moved to question Syrian officials—including the intelligence chief, Assef Shawkat, who is Syrian President Bashar al-Assad's brother-in law—the Syrians stonewalled and protested the inquest's direction. In January 2006, the U.N. Security Council replaced Judge Mehlis with Serge Brammertz, a 43-year-old Belgian lawyer who had served as deputy prosecutor at the International Criminal Court in The Hague.
Mr. Brammertz was replaced in 2008 by Daniel Bellemare, Canada's assistant deputy attorney general. In April 2009, Mr. Bellemare requested that the four imprisoned Lebanese generals be released because of the "complete absence of reliable proof against them." And so they were.
Meanwhile, Lebanese investigators working on behalf of the U.N. team had re-examined cell phone records from 2005. They uncovered a network of about 20 mobile phones that had all been activated a few weeks before the attack and then silenced just afterward. This so-called second ring of phones had been calling the same phone numbers as the eight phones that coordinated the attack.
According to a report published by Der Spiegel in May 2009, investigators traced the second ring of phones to a command post of Hezbollah's military wing under the notorious Imad Mughniyeh, who had been responsible, according to U.S. intelligence assessments, for other spectacular bombing attacks, including the 1983 U.S. embassy bombing in Beirut.
But before this cell phone evidence could be further examined, the Lebanese chief investigator working on this complex network was killed in Beirut in 2009. (Mughniyeh, who might otherwise have been called as a witness, had himself been assassinated in 2008.)
In April of this year, U.N. investigators summoned 12 Hezbollah members and supporters for questioning. This spurred rumors that the Special Tribunal for Lebanon, which the U.N. set up in March 2008, was on the verge of finally issuing indictments.
The political reaction in Lebanon was fraught. Hezbollah's powerful chief, Hassan Nasrallah, said ominously in July that Hezbollah would not stand by idly if its members are accused of involvement in the assassination. He also denounced what he called attempts to "politicize" the tribunal—as if political consideration could be omitted from political crime.
Nasrallah then moved to discredit the U.N. by saying that its investigators come from "intelligence services closely linked to the Israeli Mossad." He demanded the establishment of a Lebanese committee to investigate "false witnesses." In September 2010 he went further, claiming that Hezbollah had "evidence" that Israel was behind the assassination. Syria, for its part, is claiming to be the victim of planted evidence.
Sadly, if the agents of Syria or Iran are finally named by the U.N.'s special tribunal, the half-decade delay in justice for Hariri's murder may be little more than prelude. Syria and Hezbollah, which both possess the power to destroy Lebanon's fragile government, will almost certainly denounce such a finding and shift the blame—as Hezbollah has already suggested—to their convenient bete noire: Israel. Such allegations and recriminations, meaningless as they may be, could drag on for another half-decade, if not longer.

Role Reversal: Why TV Has Replaced Movies as Elite Entertainment

Once upon a time, over a generation ago, The television set was commonly called the “boob tube” and looked down on by elites as a purveyors of mind-numbing entertainment. Movie theaters, on the other hand, were considered a venue for, if not art, more sophisticated dramas and comedies. Not any more. The multiplexes are now primarily a venue for comic-book inspired action and fantasy movies, whereas television, especially the pay and cable channels, is increasingly becoming a venue for character-driven adult programs, such as The Wire, Mad Men, and Boardwalk Empire. This role reversal, rather than a momentary fluke, proceeds directly from the new economic realities of the entertainment business.

Consider what happened to Pay-TV. Back in the 1970s, HBO provided something home viewers could not get elsewhere: movies uninterrupted by commercials. It was, as a HBO executive put it, “the only game in town,” so its subscribers paid a monthly fee, no matter how little or often they watch it, to their local cable provider who in turn forked over a share to HBO. As the cable systems grew, so did HBO. By 2010, it had (including its Cinemax unit) over 40 million subscribers, and just the monthly fees produced cash flow of over $1.5 billion a year. Getting new movies was no problem. HBO simply licensed them from a few major studios for an exclusive period (which began a few months after they were released on video and DVD) in so-called “output deals.” To continue to harvest this immense bounty, HBO had merely to stop subscribers from ending their service.

But that feat became far more difficult as alternatives became readily available, including video stores, Netflix, and the Internet. Why should anyone pay a monthly fee to see movies on pay TV when it could get it else where cheaper and faster? The answer HBO executives found was to create its own original programming designed to appeal to the head of the house. Here it had several advantages over Hollywood. It did not need to produce a huge audience since it carries no advertising and gets paid the same fee whether or not subscribers tune in. Nor did it have to restrict edgier content to get films approved by a ratings board (there is no censorship of Pay-TV). And it did not have to structure the movie to maximize foreign sales since, unlike Hollywood, its earnings come mainly from America. As a result, HBO and the two other pay-channels, Showtime and Starz, were able to create sophisticated character-driven series such as The Wire, Sex and the City, The L Word, and The Sopranos. As this only succeeded in retaining subscribers and also achieved critical acclaim, advertising-supported cable and over-the-air network had little choice but to follow suit to avoid losing market share. The result of this competitive race to the top is the elevation of television.

Meanwhile, Hollywood went in the other direction. In the era of the studio system, the Hollywood studios opened their movies in a few dozen select first-run theaters, most of which they owned, and then, with the help of critical acclaim and favorable word-of-mouth, gradually moved them into local theaters. To accomplish this, they did not need huge advertising or print budgets. Nowadays, confronting a very different economic landscape, they open most of their major movies on 3,500 to 5,000 screens which are owned not by them but by a handful of multiplex chains. Multiplexes are in the “people-moving business,” as on multiplex owner put it, which means moving herds of movie-goers past the concession stands In return for providing their screens, these chains expect the studios to provide them with two things: first, lavishly-produced movies; second, and even more important, a national marketing campaign for each movie that will fill their multiplexes with consumers on opening weekend. Since such campaigns cost about $30 millions of dollars per movie, studios require that their marketing arm sign off on each project before it is greenlit for production. For the marketing executives, the deal-breaker is not the intrinsic merits of the film itself but the absence of the elements needed to build a marketing campaign both in America and abroad (where up to 65 percent of the revenue comes from.) Such campaigns typically require buying time on TV programs around which clusters an audience predisposed to going to the movies every weekend and then hitting it with 7 ads in the week leading up to its opening weekend. The target audience that fits this bill is tweens and teens, which are also the groups with the greatest propensity to consume popcorn and soda.
The least risky way to find movies that lend themselves to campaigns around which a global marketing can be built is to copy the movies for which marketing campaigns have succeeded in driving the requisite audience into the multiplexes; hence, the profusion of comic book-based movies and their sequels. In addition, studios must take into account that their movies must play in overseas markets, such as Korea, Japan, China, Russia, and Brazil, where visual action takes precedence over sophisticated dialogue. So the dumbing-down of movies is no accident.
Its after all show business.

The bank Job

The idea that Goldman Sachs, Citibank and other big banks duped Fed officials by getting them to buy their distressed pools of debt (CDOs) at 100 cent on the dollar has become a relentless part of the conversation about the financial crises of 2008. To be sure, the NY Federal Reserve Bank used a vehicle called “Maiden Lane III” to acquire billions of dollars of CDOs that had been insured by AIG through credit default swaps from 16 banks and cancel the AIG’s contractual responsibility for this insurance. By doing so, the 16 banks got these plunging CDOs off their books and AIG got rid of an albatross around its neck. But had the Fed made a deal with the devil? “Taxpayers not only ended up honoring foolish promises made by other people, they ended up doing so at 100 cents on the dollar,” the Nobel Laureate Paul Klugman wrote of the deal in the New York Times, “By making what was in effect a multibillion-dollar gift to Wall Street, policy makers undermined their own credibility — and put the broader economy at risk.” Eliot Spitzer, the former governor of New York, was even more severe, terming the payments to the banks a “real disgrace.” And when the Congressionally-appointed Financial Crisis Inquiry Commission held public hearings in July 2010, Brooksley Born, a Commission member, not only expressed bitter indignation that Goldman Sachs was "100 percent recompensed on that deal,” but said that “ the only people who were out money were the American public."

Such charges neglected three pertinent facts. First, the Fed did not pay “100 cents on the dollar.” It paid $29.1 billion for CDOs with a face value of $62.1 billion, which is about 48 cents on the dollar. Second, the Fed did not lose money on the CDOs. It bought these securities very close to their nadir in November 2008, and they went up in value in the bond rally in 2009 and 2010. Actually, as of September 8 2010, the Fed has a $7.9 billion profit on them– at least on paper. Third, these CDOs have continued repaying large amounts of principal and interest. As of September 8 2010, they had paid off $9.3 billion of the Fed’s $24.3 billion loan. At this rate, the remaining loan will be repaid in less than 4 years. Meanwhile, The Fed gets interest of one percent above London Interbank rate on the loan.

But the outrage over this deal is not about the damage it caused the Fed, or even the American tax payers, it is about the lack of damage it caused the 16 banks that had insured their CDOs. These 16 banks wound up getting back roughly all the insured amount they had invested in these CDOs. What happened was that when the CDOs began plunging in July 2007, and their ratings were downgraded, AIG, which had issued their credit default swaps, had a contractual obligation to send them “collateral payments” equivalent to the drop in the CDO’s market value. By November 2008, though AIG teetered on bankruptcy from making these payments, the 16 banks’ actual exposure on the CDOs was only their depressed market value. Consequently, when the Fed bought back the CDOs at their market value, the banks got back what remained of their insured investment. Not unlike Macaulay’s observation that the Puritans objected to the sport of bear-baiting not because of the pain it gave the bear but because of the pleasure it gave spectators, the critics’ complaint is that the banks, and especially Goldman Sachs, did not suffer enough pain in this Fed bail-out. They correctly pointed out that the US government had tremendous leverage over those banks that had received TARP funds and could have used it to force them to accept less than market value, or, a “haircut”in the parlance of Wall Street. Such a “haircut” would not only have allow the Fed to make even more money than it did on the appreciation of the CDOs, it would have benefitted AIG (now 78 percent owned by the US government), which was the Fed’s junior partner in the profits of Maiden Lane III.

Such an accommodation would required the agreement of all 16 banks, raising a problem. 12 of the 16 banks were foreign-owned and held approximately two-thirds of the AIG-insured CDOS. These banks had little incentive to accept anything below the market price for their CDOs because their AIG insurance would cover any further losses. Moreover, the single largest holder of AIG-insured CDOS, the French bank Societe Generale SA, informed the Fed that its regulators in France would not permit it to sell the CDOs below their market value and it was illegal for it to accept a “haircut” so long as the insurer, AIG, was still solvent. This position, which other European banks would also take, ruled out a voluntary “hair cut.”.

There still was the nuclear option: letting AIG go bankrupt. But such a move would open up Pandora’s box. It was not that AIG, with a trillion dollars in assets was too big to fail, it was that it was too interwoven into the skein of the global financial system. To begin with, its subsidiaries operating in 130 countries insured a large part of the commerce flowing between China, America, and Europe, and the seizure of them by state and government regulatory authorities could paralyze world trade. It could also could also cause a panic among those it insured. In the US alone, it insured 30 million people. It also held billions of state and local funds in its guaranteed investment programs that would be frozen. An AIG bankruptcy could cause an even greater financial crisis abroad since European banks depended on AIG, through its French subsidiary Banque AIG, to provide the “regulatory capital” that they needed to meet government-mandated capital-to-debt ratios. AIG did this feat through complex derivative swaps and . A bankruptcy, or even change of ownership in Banque AIG, would require major European banks to call in hundreds of billions of dollars in loans. Rather than risk financial Armageddon, the US government decided to save AIG. So the Fed could hardly threaten, or put, AIG into bankruptcy to pressure the banks to take a haircut.

So Goldman Sachs, Societe Generale, Citibank, JP Morgan Chase and the other counter parties won their huge bet on CDOs. This bet was not merely on the securities, or even on that the insurer AIG, but that, even if AIG’s obligations to pay exceeded their means, the US government would not allow AIG to fail. That assessment got correct. But the Fed which financed the purchase of the CDOs from the banks also not lose. That is because the market price it paid at the depths of the crises– 48 cents on the dollar– turned out to be much less than their actual value. So the Fed now stands to make a multi-billion dollar profit. AIG of course lost heavily, with the US Treasury getting 79.8 percent of the company, but that is the consequences of making a bad bet: that CDOs would not be downgraded and plunge in value. Whether or not the treasury recoups its investment in AIG is still an opened question, but, by saving AIG, it prevented the collapse of the international financial system. So where is the scandal?







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