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CounterPunch Diary

The Medusa’s Head

by ALEXANDER COCKBURN

Conspiracism is raising its Medusa’s head again, her lethal visage wreathed with hissing absurdities, immobilizing judgement, melting intellect to pumice.

Journalist Russ Baker suggests in a new book, Family of Secrets: The Bush Dynasty, the Powerful Forces That Put It In The White House, And What Their Influence Means for America, “the strong possibility” (I quote from a respectful resume of his conclusions) that the 41st president, G.H.W.Bush, father of the present resident at 1600 Pennsylvania Avenue, “was involved in assassinating President Kennedy, and that Bush was involved in staging the Watergate break-in (and the break-in at Dan Ellsberg’s psychiatrist’s) with the purpose of having these break-ins exposed and the blame placed on President Nixon.”

We’re back with the old notion of a secret, all-powerful permanent government, engendered in the WASP-nest of Skull and Bones, headquartered in Langley and locked in alternate collusion and combat with another permanent secret all-powerful government, headquartered in Zion and, if we are to believe the conspiracists, exultant at this hour at the tremendous coup of Bernie Madoff’s supposed victims.

Coup? I refer you to a scenario circulating the internet, titled “The Madoff Double Bluff” and credited to Muhammad Rafeeq, who makes the fatal presupposition – very common among conspiracists – that things work in the fashion advertised by the manufacturer on the outside of the box. As many children and parents learn at this time of year, this is not always the case.

In Rafeeq’s case, he assumes that fund managers and bankers invariably exercise due diligence on behalf of their clients, subjecting each proposed investment vehicle to merciless scrutiny. In the mighty backwash of the Fall of the House of Madoff, we are learning once again that many fund managers and bankers did no such thing. Whether in Switzerland, London or New York, they established themselves as feeders for Madoff and rushed him the money entrusted to them by their eager customers without a qualm, winning handsome commissions from Madoff for so doing.

But since Rafeeq thinks that Madoff’s operations were under conscientious scrutiny, he concludes that “there is no way Madoff could have been pulling a scam.” Having established his initial erroneous assumption as the foundation of his conspiracy, Rafeeq then raises a Gothick folly on this sand, claiming that the dirty work afoot here was not a Ponzi scheme (impossible because of zealous scrutineers) but an insurance fraud, led by Madoff to cover genuine losses from Madoff’s trades by claiming a Ponzi scheme and taking full responsibility:

Rather than saying this hedge fund has gone bust, due to its choice of investment assets and investment methologies, a scenario which is highly probable in the current financial paradigm, since all the professionals are predicting that at least 30% of all hedge funds are about to fail, more than 700 of them, the CEO [Madoff]  chooses to fess up to fraud. If the CEO admits the fund has gone bust, then all those wealthy members of the Jewish community get nothing, but if the CEO admits to fraud they get their money back as compensation from the US taxpayer, just as they are also drawing money back from the taxpayers with the other hand.

In other words, it’s a vast Jewish conspiracy, rather flattering to the Jews, as such conspiracy theories often are. (For such reasons Benjamin Disraeli, for one, liked to foster the notion that indeed the Jews are all-powerful.) Just as he assumes that all fund managers are conscientious, Rafeeq obviously thinks Jews are too smart to lose money.

I sent Rafeeq’s reflections along to CounterPuncher Pam Martens, a former Wall Street stockbroker who really did exercise due diligence on behalf of her clients and who was on to Madoff’s game back in the early 1990s. I strongly recommend her recent piece on the Madoff affar on this site, which we ran last Monday.

Martens wrote me back as follows:

The author [i.e. Rafeeq] is missing a few important points. First of all, the Securities Investor Protection Corporation (SIPC) will only cover a maximum of $500,000 per account owner; some accounts had tens of millions in them. Secondly, the account owner would have to show beyond a shadow of doubt that they actually gave money to Madoff in order to seek a SIPC refund and would be subject to jail time themselves if they lied. Since Madoff never owned a bank, all records of incoming funds and outgoing funds, along with the name of the beneficial owner, would be easily accessible at his clearing banks, two of which are listed in court documents as JPMorgan Chase and Bank of New York Mellon. And, finally, the author neglects the most important point: why would Madoff be willing to spend the rest of his life in jail to make others rich from SIPC refunds. I’m not buying this story. My guess (and it’s just a guess at this point) is the following happened: the people who had been with Madoff since the ‘60s, ‘70s, and ‘80s had multiplied their original investment (on paper) many times over at the fictional annual rate of 10 to 13 per cent. Many wanted out once the market was down over 40 per cent. Once he paid them out, he had little left to meet regular income payouts and meet his high family salaries, overhead, multiple homes, yachts, private plane interests, office and payroll in London, country club memberships on Long Island and Palm Beach, etc. Then, apparently, some large redemptions were requested, totaling $7 billion. If he didn’t pay, those people would have turned him in anyway. He had no choice but to fess up. 

There’s now much bellowing about the need for new regulations to head off the Madoffs of tomorrow. Such calls have the effect of suggesting that there were no locks on the stable door and that hence no one was really to blame for not checking that the stable door was securely shut. The deregulatory binge of the last few years notwithstanding, there are still plenty of locks – that is, regulations – on the books which, if actually used, would have stopped Madoff in his tracks. But the regulators and overseers were corrupted. In her piece for CounterPunch, Martens quoted the detailed 21-page denunciation of Madoff to the SEC in 2005 by Harry Markopoulos, outlining with great accuracy the huge fraud underway. The letter was dismissed out of hand by the SEC, one of whose regulators married Madoff’s daughter, a union given a rapturous retrospective green light in the New York Times after the scandal broke.

Bernard L. Madoff Investment Securities LLC was a crime scene for 20 years at least, and it looks as though half Wall Street was privy to the fact, not to mention the regulators and the politicians in Congress in receipt of their portion of the $590,000 which, from 1998 through 2008, Bernard L. Madoff Investment Securities spent lobbying Congress and the SEC, according to the Center for Responsive Politics. It was a huge conspiracy, though not in the least like the one sketched in by Rafeeq. Conspiracies, like accidents, very often turn out to be normalcy suddenly raised to the level of drama.

Against Saviors

My brother Patrick called on Christmas Day, from his home in Canterbury. Opposite his house is St. Dunstan’s church, containing the head of Sir Thomas Moore, retrieved by his daughter Margaret after her father was beheaded in 1535 for refusing to sign the Act that declared Henry VIII Supreme Head of the Church in England. Patrick’s house is as old as St. Dunstans and contains a right of way, through which custom decreed that pastoralists could lead their sheep. One of these days I’ll rent a flock and ratify the right, just in case the brother has any notion of privatizing the whole of his premises.

Patrick reported that he and his family had gone along that morning to listen to Rowan Williams, the Archbishop of Canterbury, give his Christmas sermon. He said it was pretty good. I looked it up online, and the brother was right. It was a bracing critique of “great man” theories of change, specifically citing excessive hopes, now vested in Barack Obama.

“In recent weeks,” the Archbishop  declared, “we’ve seen some of Barack Obama’s advisers and colleagues warning about the level of messianic expectation loaded on to the president-elect. 

“The gospel tells us something hard to hear – that there is not going to be a single charismatic leader or a dedicated political campaign or a war to end all wars that will bring the golden age…

“There is a savior, born so that all may have life in abundance, a savior … hidden in the form of poverty and insecurity, a displaced person … whose authority does not come from popularity, problem-solving or anything else in the human world. He is the presence of the power of creation itself.

“It is not the restoring of a golden age, not even a return to the Garden of Eden; it is more – a new creation, a new horizon for us all…

“And our own following of the Word made flesh is what gives us the resources to be perennially suspicious of claims about the end of history or the coming of some other savior exercising some other sort of power. To follow him is to take the risks of working at these small and stubborn outposts of newness, taking our responsibility and authority.

“We can’t pass the buck to Caesar Augustus, Barack Obama or even Canterbury City Council – though we may pray for them all and hope that they will play their part in witnessing to new possibilities.”

Not bad at all. The last year the liberals and a lot of the left here have passed the buck entirely to Obama.

It’s Not Over Till it’s Over

I drove north to Olympia from Petrolia, California, a couple of days before Christmas. Advised by co-editor St. Clair, himself ice-bound in Oregon City, that I-5 was closed, I aimed the ’62 Belvedere station wagon from Crescent City up the Oregon coast, and was duly rewarded by ravishing landscapes all the way to Astoria. Here’s where the blizzards are brought in by the cold air currents rushing down the Columbia River Gorge from the Inland Empire. There was plenty of snow in Astoria, also on either side of State route 30. The Belvedere shimmied a couple of time but took me gallantly east to the Lewis and Clark bridge over the Columbia into Washington and the final 70 miles of the 745 mile drive.

I had plenty of time to ponder the ups and down of ’08, which I’ll evoke in my Diary next week. For now, let me rally CounterPunchers to one last thought in ’08 for our future.  We’ve had a strong year. Month after month, our site has attracted millions of unique visitors. Our newsletters have been well received and have won new subscribers. CounterPunch Books enjoy a steady sale. It’s an encouraging picture and all of us here, at CounterPunch, thank you for your donations and subscriptions, but the edgy fact remains that in financial terms we’re never more than an inch or two from the edge of the cliff. We need every penny we can get, and so as we head to year’s end, and if you haven’t been wiped out by Bernie Madoff and feel that you have something to send our way, remember that all donations are tax deductible.

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Our latest newsletter has three very strong pieces – starting with Bill and Kathy Christison’s powerful description of the fearful sufferings inflicted on Gaza by Israel and the United States. Barbara Rose Johnston takes us to the Guatemalan gravesites of one more human catastrophe instigated by the terror network known as the World Bank. I review the grim Bush record on freedom and constitutional protections

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ALEXANDER COCKBURN can be reached at alexandercockburn@asis.com