New Leaks Reveal Insider Tips on S&P's U.S. Credit Downgrade to Killer-Drone Firm

We live in an age where insider deals, conflicts of interest, revolving doors between "regulators" and the "regulated" (lubricated with oceans of cash) accompanies the generalized looting of social wealth by deviant capitalist elites.

That such behavior by our corporate masters no longer raise an eyebrow, let alone elicit action by authorities charged with stopping criminal miscreants destroying other people's lives, is an unmistakable sign that the much-vaunted "free market" system, staring into an abyss of its own creation, has entered a terminal phase.

It now appears that insiders at Standard and Poor's or the Treasury Department, take your pick, may have leaked information to privileged clients on the recent U.S. credit downgrade, with confirmation coming from a surprising source.

Last week, AntiSec cyber-guerrillas (a loose alliance amongst individuals affiliated with LulzSec and Anonymous) released a 1GB cache of emails filched from security contractor Vanguard Defense Industries (VDI).

Previously Anonymous and LulzSec have wrapped their keyboards around defense grifters Booz Allen Hamilton, ManTech International, NATO, the Department of Homeland Security, the FBI, InfraGard (a "public-private" security alliance amongst corporate heavy-hitters and the Bureau), the CIA, the Arizona Department of Public Safety, the Arizona Counter Terrorism Information Center (a so-called "fusion center" staffed by cops, federal agents, private contractors and the U.S. military), the Bay Area Rapid Transit agency (BART), Britain's Serious Organised Crime Agency, PBS, Fox News, and repressive governments such as Egypt, Tunisia and Zimbabwe.

Their latest campaign targeted VDI, a Texas-based firm, which specializes in the "development and deployment" of Unmanned Aerial Systems (UAS, killer drones). VDI "draws on specialized experience of senior aerospace engineers, former military special operations officers, military instructor pilots as well as retired Senior Executive Service Federal Agents," claiming their "background and operational knowledge has afforded us the unique vision to provide a platform that will extend the security and response capabilities of any organization," according to a blurb on their web site.

While VDI touts their ability to offer "support" to the "military, local, state and federal law enforcement as well as the private sector," the firm also offers "a full scope of consulting services independent of our aerial technology."

That "unique vision" however, didn't prevent AntiSec from spiriting away thousands of emails from VDI's Senior Vice President Richard T. Garcia, a former FBI Assistant Director in Los Angeles who recently left a well-paid position as Global Security Manager for the environment-killing Shell Oil Corporation (can you say Niger Delta?) for "greener" pastures.

A press statement from AntiSec announced that the leak "contains internal meeting notes and contracts, schematics, non-disclosure agreements, personal information about other VDI employees, and several dozen 'counter-terrorism' documents classified as 'law enforcement sensitive' and 'for official use only'."

"Vanguard Defense Industries," AntiSec writes, "manufactures unmanned 'ShadowHawk' drones which cost $640,000 and are equipped with grenade launchers and shotguns. ShadowHawks are currently in use by law enforcement, military, and private corporations deploying them in the US, the Horn of Africa, Panama, Columbia [sic], and US-Mexico border patrol operations. These emails contain contracts, schematics, non-disclosure agreements, and more. Additionally we found evidence of a Merrill Lynch wealth management advisor giving private advance notice to Garcia about upcoming S&P US credit rating downgrades."

Improper Disclosures

In an April 25, 2011 email from Garcia to Gloria Newport, Cindy Cook, a Wealth Management Advisor with Bank of America-owned Merrill Lynch "advised that Standard and Poors, may lower the credit rating of the US Government which could cause a run on US Banks that will affect the Federal Reserve. They give the US Govt. 2 years to correct the current situation, which they believe both the Republican and Democratic solutions do not do enough and both parties may make this a political situation for the 2012 Presidential election and never come up with a answer to correct the situation within the two years set by Standard and Poors. She did not see any real Cyber issue that could change the situation."

Investigative journalist Steve Ragan, writing at The Tech Herald (the publication that broke the story on Anonymous's HBGary hack) informs us that "the U.S. Securities and Exchange Commission was investigating whether there was any sort of insider trading done by S&P employees before the downgrade was official. The story hinged on comments made to the paper by sources close to the investigation itself."

"On the day S&P cut the U.S.'s credit rating" Ragan writes, "Wall Street was flooded with downgrade rumors. These rumors started earlier in the day while trading was active. It turned out they were true."

According to Bloomberg News the SEC "is scrutinizing the method Standard & Poor's used to cut the U.S.'s credit rating and whether the firm properly protected the confidential decision, according to a person with direct knowledge of the matter."

Reporter Joshua Gallu wrote August 14 that SEC staff are "looking into whether certain market participants learned of the downgrade before its announcement."

Downplaying speculation that S&P employees may have breached SEC rules by leaking sensitive information to privileged clients, The New York Times, as is their wont, claimed "it is arguable whether S.&P.'s announcement on Aug. 5 of the rating change was all that confidential, given the speculation about it."

"Assuming information about the downgrade was confidential," the Times pontificates, "it must also be material, which means a reasonable investor would consider it important. This seems to be an easy element to establish because the wild gyrations in the market on the first trading day after the downgrade shows how investors viewed it."

But Cook's email to Garcia didn't arrive in his in-box "on the first trading day after the downgrade" but nearly four months earlier, long before July's political shenanigans over raising the federal debt ceiling, the ostensible reason why S&P downgraded America's credit worthiness.

Maxine Waters (D-CA), wrote to SEC chairwoman, cover-up specialist Mary Schapiro, demanding that the commission "conduct an investigation into whether S.&P. selectively disclosed information related to the U.S. government debt downgrade to any financial institutions, and whether any institutions that had that nonpublic information traded on that information prior to the official announcement."

It appears that Cook's email to Garcia would confirm that S&P insiders did just that, providing information to Merrill Lynch and one can assume other financial firms.

Throwing cold water on charges that the rating's agency acted improperly, the Times argues that "even if if the S.E.C. finds that the information was improperly disclosed, proving insider trading will be difficult."

Why might that be?

According to the Times, "while S.&P. and other credit rating agencies are required to adopt policies to prevent such disclosure, it is questionable whether just leaking information violates any federal regulations, even if it breaches a corporate confidentiality policy."

Lest readers believe however, that the SEC will mount a comprehensive investigation of leaks by S&P insiders, they would do well to read Matt Taibbi's latest piece for Rolling Stone.

According to congressional testimony by an SEC whistleblower, which sparked an investigation by that agency's Inspector General, the commission's enforcement division, under orders from higher-ups, who went on to secure well-paid positions with the firms they were charged to regulate, shredded a mountain of incriminating evidence detailing wrongdoing by some of the world's top financial firms.

How many files, called "Matters Under Investigation" or MUI were destroyed? According to whistleblower Darcy Flynn, the SEC's enforcement division "disappeared" some 18,000 files, including those of convicted fraudster Bernie Madoff, accused swindler, suspected CIA banker and drug money launderer R. Allen Stanford, as well as accusations that top-tier Wall Street investment banks such as J.P. Morgan Chase had engaged in insider trading.

Taibbi writes that "under a deal the SEC worked out with the National Archives and Records Administration, all of the agency's records--'including case files relating to preliminary investigations'--are supposed to be maintained for at least 25 years. But the SEC, using history-altering practices that for once actually deserve the overused and usually hysterical term 'Orwellian,' devised an elaborate and possibly illegal system under which staffers were directed to dispose of the documents from any preliminary inquiry that did not receive approval from senior staff to become a full-blown, formal investigation."

It's a nice deal if you can get it, which of course firms like Goldman Sachs, J. P. Morgan Chase, Deutsche Bank, AIG and Lehman Brothers (before their 2008 collapse) managed to get in spades.

"We'll never know," Taibbi avers, "what the impact of those destroyed cases might have been; we'll never know if those cases were closed for good reasons or bad. We'll never know exactly who got away with what, because federal regulators have weighted down a huge sack of Wall Street's dirty laundry and dumped it in a lake, never to be seen again."

In this light, AntiSec's hack of VDI is instructive. If for nothing else, it demonstrates that well-connected insiders reap billions from the collapse of the global economy, divvying-up the spoils amongst privileged friends and clients, including those inhabiting the nethermost regions of the secret state.

Cyberwar: Bringing it All Back Home, and Waging War on the Global Economy

As global elites scramble to seize as much advantage as possible over their rivals as the economy craters, intelligence methods deployed as part of imperialism's endless "War on Terror" have migrated with a vengeance onto Wall Street.

Revelations by Anonymous earlier this year that a passel of Pentagon-linked security contractors had joined forces to run covert ops on whistleblowers and journalists set alarm bells ringing.

February's release of some 75,000 emails filched from servers controlled by security grifters HBGary Federal and HBGary, uncovered a sordid scheme by the Bank of American and the U.S. Chamber of Commerce to target supporters of WikiLeaks and left-wing corporate critics.

That hack, in addition to exposing BofA's illicit "Team Themis" gambit, a co-production of white shoe law firm Hunton & Williams, HBGary Federal, HBGary, Palantir Technologies (a recipient of CIA slush funds from its venture capital arm In-Q-Tel) and Berico Technologies, also revealed that the Pentagon and giant defense contractors such as General Dynamics had teamed up with HBGary to develop undetectable malware or "rootkits" for America's emerging Cyberwar-Intelligence Complex, according to a series of documents published by the secrecy-shredding web site Public Intelligence.

Additional files revealed that HBGary and ManTech International had partnered-up with the National Security State for what they described as "Internet Based Reconnaissance Operations" that use "non-attributable internet access" methodologies (approved hacking by the secret state) for "operating system and network application identification," "identification of possible perimeter defense" for "intelligence gap fill" and "counterintelligence research." In other words, broad based internet spying on an array of "adversaries" (e.g., political dissidents, antiwar activists, anticorporate campaigners and other enemies of the state).

Further research by Project PM's OpMetalGear revealed that defense giant Northrop Grumman and other firms such as HBGary Federal, TASC and ManTech International were engaged in a bidding war to spear the Pentagon's Romas/COIN program (since renamed Odyssey).

That program, researcher Barrett Brown writes, is "a secretive and immensely sophisticated campaign of mass surveillance and data mining against the Arab world, allowing the intelligence community to monitor the habits, conversations, and activity of millions of individuals at once." (For additional background see: "Security Grifters Partner-Up on Sinister Cyber-Surveillance Project," Antifascist Calling, July 3, 2011)

We can assume that once intelligence sources and methods intended to target external enemies are turned inward and attack the American people, financial insiders too, would find such tools an exemplary means to crush their competitors and adversaries, the global working class.

Bankrupting and Criminalizing the State

"Economic warfare," economist and researcher Michel Chossudovsky, writing in The Global Economic Crisis: The Great Depression of the XXI Century, "consists in destabilizing countries and impoverishing their respective populations."

Chossudovsky argues that "the manipulation of market forces through the imposition of strong 'economic medicine' under the helm of the IMF supports U.S.-NATO strategic and geopolitical objectives."

Similarly," Chossudovsky observes, "the speculative attacks waged by powerful banking conglomerates in the currency, commodity and stock markets are acts of financial warfare," one in which the "financing of an oversized U.S. war economy triggers imbalances in the U.S. monetary system, destabilizes the U.S. fiscal structure and creates imbalances in the allocation of human and material resources."

This tragedy is playing out today. The on-going market meltdown in the wake of the U.S. credit downgrade and the crisis in the Eurozone has affected tens of millions of workers who saw their retirement funds gobbled up by speculators. Additionally, states and municipalities "carrying debt tied to federal creditworthiness," The Tech Herald avers, "each took a hit."

Hard hit cities and states struggling under an enormous debt burden due to falling revenues, are held hostage by the credit rating agencies. As economist Michael Hudson points out in Global Research credit rating agencies such as Standard and Poor's, Moody's and Fitch "are playing the political role of 'enforcer' as the gatekeepers to credit, to put pressure on Iceland, Greece and even the United States to pursue creditor-oriented policies that lead inevitably to financial crises."

Hudson writes that these "crises in turn force debtor governments to sell off their assets under distress conditions. In pursuing this guard-dog service to the world's bankers, the ratings agencies are escalating a political strategy they have long been refined over a generation in the corrupt arena of local U.S. politics."

As the World Socialist Web Site observes, "the crisis of the world's stock exchanges and financial markets is increasingly spiraling out of control. Governments are being driven by developments which they are unable to influence."

Socialist critic Peter Schwarz notes that "the panic on the stock markets shows that traders are expecting a deep recession, already heralded by stagnating growth and rising unemployment rates," and that "corporations will respond with new waves of layoffs, governments with further budget cuts."

In a climate stoked by fear, war and those all-purpose boogeymen, "debt," "terror" and now, "cyberwar," the cost of bailing-out a looted capitalist economy are shouldered by the working class. These pressures in turn increase the downward spiral as employment, wages, manufacturing and consumer spending go into a tail-spin, a self-destructive feed-back loop that further exacerbates levels of unemployment, home foreclosures and generalized misery. The tentacles of this manufactured "debt crisis" reach everywhere--from the smallest town to the largest city.

Hudson avers that "localities are pressured when their rising debt levels lead to a financial stringency. Banks pull back their credit lines, and urge cities and states to pay down their debts by selling off their most viable public enterprises."

And waiting in the wings are a new class of corporate vultures and rentier vampires who swoop down to reap the rewards gleaned by gobbling-up (looting) public assets at fire sale prices.

The rating agencies who profit at both ends of any transaction according to Hudson, "offer opinions" that have become a "big business" for the agencies. "So it is understandable why their business model opposes policies--and political candidates--that support the idea of basing public financing on taxation rather than by borrowing. This self-interest colors their 'opinions'."

Accordingly, "to acquiescence in such economically destructive financial behavior is the opposite of fiscal responsibility. Cutting federal taxes and Social Security payments to obtain a more positive S&P 'opinion," Hudson writes, "would give banks an ability to 'pull the plug' and force privatization and anti-labor austerity plans by refraining from rolling over the U.S. debt--and cutting taxes Tea-Party style rather than funding spending by taxation on a pay-as-you-go-basis."

In this light, one can certainly understand why a Merrill Lynch "wealth management advisor" would offer her "knowledgeable judgement" (clubby insider info) to a dodgy security outfit such as VDI.

Working classes across Europe have not "gone gently into the night" of impoverishment; the great fear here in the heimat amongst corporatists and militarists alike, is that once working people realize the game is up they just might impose some "shock therapy" of their own!

As Salon columnist Glenn Greenwald (a target of "Team Themis's" dirty tricks campaign) avers, speaking out about "the sprawling Surveillance State and the attempted criminalization of WikiLeaks and whistleblowing are so vital" to the defense of democracy.

"The free flow of information and communications enabled by new technologies--as protest movements in the Middle East and a wave of serious leaks over the last year have demonstrated--is a uniquely potent weapon in challenging entrenched government power and other powerful factions," Greenwald writes.

"And that is precisely why those in power--those devoted to preservation of the prevailing social order--are so increasingly fixated on seizing control of it and snuffing out its potential for subverting that order: they are well aware of, and are petrified by, its power, and want to ensure that the ability to dictate how it is used, and toward what ends, remains exclusively in their hands."

This is why actions by disparate groups such as AntiSec, Anonymous and WikiLeaks are informational beacons in an otherwise homogenized media landscape, one characterized by celebrity gossip, sex scandals and "crimes" carried out by poor and marginalized populations--never the filthy rich or the warmongers who murder millions as they launch resource wars that steal other people's social property.

While firms such as VDI, Boeing, General Atomics and Lockheed Martin hawk drone technologies that transform human beings into red mist, and do so as their "patriotic" (and highly-profitable) duty as the Pentagon wholeheartedly embraces hypermodern forms of robotized mass murder, the bill for American hubris, long past due, is coming faster than most people think.

As Economy Tanks, "New Normal" Police State Takes Shape

Forget your rights.

As corporate overlords position themselves to seize what little remains of a tattered social net (adieu Medicare and Medicaid! Social Security? Au revoir!), the Obama administration is moving at break-neck speed to expand police state programs first stood-up by the Bush government.

After all, with world share prices gyrating wildly, employment and wages in a death spiral, and retirement funds and publicly-owned assets swallowed whole by speculators and rentier scum, the state better dust-off contingency plans lest the Greek, Spanish or British "contagion" spread beyond the fabled shores of "old Europe" and infect God-fearin' folk here in the heimat.

Fear not, they have and the lyrically-titled Civil Disturbances: Emergency Employment of Army and Other Resources, otherwise known as Army Regulation 500-50, spells out the "responsibilities, policy, and guidance for the Department of the Army in planning and operations involving the use of Army resources in the control of actual or anticipated civil disturbances." (emphasis added)

With British politicians demanding a clampdown on social media in the wake of London riots, and with the Bay Area Rapid Transit (BART) agency having done so last week in San Francisco, switching off underground cell phone service to help squelch a protest against police violence, authoritarian control tactics, aping those deployed in Egypt and Tunisia (that worked out well!) are becoming the norm in so-called "Western democracies."

Secret Law, Secret Programs

Meanwhile up on Capitol Hill, Congress did their part to defend us from that pesky Bill of Rights; that is, before 81 of them--nearly a fifth of "our" elected representatives--checked-out for AIPAC-funded junkets to Israel.

Secrecy News reported that the Senate Intelligence Committee "rejected an amendment that would have required the Attorney General and the Director of National Intelligence to confront the problem of 'secret law,' by which government agencies rely on legal authorities that are unknown or misunderstood by the public."

That amendment, proposed by Senators Ron Wyden (D-OR) and Mark Udall (D-CO) was rejected by voice vote, further entrenching unprecedented surveillance powers of Executive Branch agencies such as the FBI and NSA.

As Antifascist Calling previously reported, the Electronic Frontier Foundation filed a Freedom of Information Act lawsuit against the Justice Department "demanding the release of a secret legal memo used to justify FBI access to Americans' telephone records without any legal process or oversight."

The DOJ refused and it now appears that the Senate has affirmed that "secret law" should be guiding principles of our former republic.

Secrecy News also disclosed that the Committee rejected a second amendment to the authorization bill, one that would have required the Justice Department's Inspector General "to estimate the number of Americans who have had the contents of their communications reviewed in violation of the FISA Amendments Act of 2008 [FAA]."

As pointed out here many times, FAA is a pernicious piece of Bushist legislative detritus that legalized the previous administration's secret spy programs since embellished by our current "hope and change" president.

During the run-up to FAA's passage, congressional Democrats, including then-Senator Barack Obama and his Republican colleagues across the aisle, claimed that the law would "strike a balance" between Americans' privacy rights and the needs of security agencies to "stop terrorists" attacking the country.

If that's the case, then why can't the American people learn whether their rights have been compromised?

Perhaps, as recent reports in Truthout and other publications suggest, former U.S. counterterrorism "czar" Richard Clarke leveled "explosive allegations against three former top CIA officials--George Tenet, Cofer Black and Richard Blee--accusing them of knowingly withholding intelligence ... about two of the 9/11 hijackers who had entered the United States more than a year before the attacks."

Clarke's allegations follow closely on the heels of an investigation by Truthout journalists Jeffrey Kaye and Jason Leopold.

"Based on on documents obtained under the Freedom of Information Act and an interview with a former high-ranking counterterrorism official," Kaye and Leopold learned that "a little-known military intelligence unit, unbeknownst to the various investigative bodies probing the terrorist attacks, was ordered by senior government officials to stop tracking Osama bin Laden and al-Qaeda's movements prior to 9/11."

As readers are well aware, the 9/11 provocation was the pretext used by the capitalist state to wage aggressive resource wars abroad while ramming through repressive legislation like the USA Patriot Act and the FISA Amendments Act that targeted the democratic rights of the American people here at home.

But FAA did more then legitimate illegal programs. It also handed retroactive immunity and economic cover to giant telecoms like AT&T and Verizon who profited handily from government surveillance, shielding them from monetary damages which may have resulted from a spate of lawsuits such as Hepting v. AT&T.

This raises the question: are other U.S. firms similarly shielded from scrutiny by secret annexes in FAA or the privacy-killing USA Patriot Act?

Echelon Cubed

Last week, Softpedia revealed that "Google has admitted complying with requests from US intelligence agencies for data stored in its European data centers, most likely in violation of European Union data protection laws."

"At the center of this problem," reporter Lucian Constantin wrote, "is the USA PATRIOT ACT, which states that companies incorporated in the United States must hand over data administered by their foreign subsidiaries if requested."

"Not only that," the publication averred, "they can be forced to keep quiet about it in order to avoid exposing active investigations and alert those targeted by the probes."

In other words, despite strict privacy laws that require companies operating within the EU to protect the personal data of their citizens, reports suggest that U.S. firms, operating under an entirely different legal framework, U.S. spy laws with built-in secrecy clauses and gag orders, trump the laws and legal norms of other nations.

Given the widespread corporate espionage carried out by the National Security Agency's decades-long Echelon communications' intercept program, American firms such as Google, Microsoft, Apple or Amazon may very well have become witting accomplices of U.S. secret state agencies rummaging about for "actionable intelligence" on EU, or U.S., citizens.

Indeed, a decade ago the European Union issued its final report on the Echelon spying machine and concluded that the program was being used for corporate and industrial espionage and that data filched from EU firms was being turned over to American corporations.

In 2000, the BBC reported that according to European investigators "U.S. Department of Commerce 'success stories' could be attributed to the filtering powers of Echelon."

Duncan Campbell, a British journalist and intelligence expert, who along with New Zealand journalist Nicky Hager, helped blow the lid off Echelon, offered two instances of U.S. corporate spying in the 1990s when the newly-elected Clinton administration followed-up on promises of "aggressive advocacy" on behalf of U.S. firms "bidding for foreign contracts."

According to Campbell, NSA "lifted all the faxes and phone-calls between Airbus, the Saudi national airline and the Saudi Government" to gain this information. In a second case which came to light, Campbell documented how "Raytheon used information picked up from NSA snooping to secure a $1.4bn contract to supply a radar system to Brazil instead of France's Thomson-CSF."

As Softpedia reported, U.S.-based cloud computing services operating overseas have placed "European companies and government agencies that are using their services ... in a tough position."

With the advent of fiber optic communication platforms, programs like Echelon have a far greater, and more insidious, reach. AT&T whistleblower Mark Klein noted on the widespread deployment by NSA of fiber optic splitters and secret rooms at American telecommunications' firms:

What screams out at you when examining this physical arrangement is that the NSA was vacuuming up everything flowing in the Internet stream: e-mail, web browsing, Voice-Over-Internet phone calls, pictures, streaming video, you name it. The splitter has no intelligence at all, it just makes a blind copy. There could not possibly be a legal warrant for this, since according to the 4th Amendment warrants have to be specific, "particularly describing the place to be searched, and the persons or things to be seized." ...

This was a massive blind copying of the communications of millions of people, foreign and domestic, randomly mixed together. From a legal standpoint, it does not matter what they claim to throw away later in their secret rooms, the violation has already occurred at the splitter. (Mark Klein, Wiring Up the Big Brother Machine... And Fighting It, Charleston, South Carolina: BookSurge, 2009, pp. 38-39.)

What was Google's response?

In a statement to the German publication WirtschaftsWoche a Google corporate spokesperson said: "As a law abiding company, we comply with valid legal process, and that--as for any U.S. based company--means the data stored outside of the U.S. may be subject to lawful access by the U.S. government. That said, we are committed to protecting user privacy when faced with law enforcement requests. We have a long track record of advocating on behalf of user privacy in the face of such requests and we scrutinize requests carefully to ensure that they adhere to both the letter and the spirit of the law before complying." (translation courtesy of Public Intelligence)

Is the Senate Intelligence Committee's steadfast refusal to release documents and secret legal memos that most certainly target American citizens also another blatant example of American exceptionalism meant to protect U.S. firms operating abroad from exposure as corporate spies for the government?

It isn't as if NSA hasn't been busy doing just that here at home.

As The New York Times reported back in 2009, the "National Security Agency intercepted private e-mail messages and phone calls of Americans in recent months on a scale that went beyond the broad legal limits established by Congress last year."

Chalking up the problem to "overcollection" and "technical difficulties," unnamed intelligence officials and administration lawyers told journalists Eric Lichtblau and James Risen that although the practice was "significant and systemic ... it was believed to have been unintentional."

As "unintentional" as ginned-up intelligence that made the case for waging aggressive war against oil-rich Iraq!

In a follow-up piece, the Times revealed that NSA "appears to have tolerated significant collection and examination of domestic e-mail messages without warrants."

A former NSA analyst "read into" the illegal program told Lichtblau and Risen that he "and other analysts were trained to use a secret database, code-named Pinwale, in 2005 that archived foreign and domestic e-mail messages."

Email readily handed over by Google, Microsoft or other firms "subject to lawful access" by the Pentagon spy satrapy?

The Times' anonymous source said "Pinwale allowed N.S.A. analysts to read large volumes of e-mail messages to and from Americans as long as they fell within certain limits--no more than 30 percent of any database search, he recalled being told--and Americans were not explicitly singled out in the searches."

Nor, were they excluded from such illicit practices.

As Jane Mayer revealed in The New Yorker, "privacy controls" and "anonymizing features" of a program called ThinThread, which would have complied with the law if Americans' communications were swept into NSA's giant eavesdropping nets, were rejected in favor of the "$1.2 billion flop" called Trailblazer.

And, as previously reported, when Wyden and Udall sought information from the Office of the Director of National Intelligence on just how many Americans had their communications monitored, the DNI stonewalled claiming "it is not reasonably possible to identify the number of people located in the United States whose communications may have been reviewed under the authority."

Why? Precisely because such programs act like a giant electronic sponge and soak-up and data mine huge volumes of our communications.

As former NSA manager and ThinThread creator Bill Binney told The New Yorker, that "little program ... got twisted" and was "used to eavesdrop on the whole world."

Three years after Barack Obama promised to curb Bush administration "excesses," illegal surveillance programs continue to expand under his watch.

A Permanent "State of Exception"

Under our current political set-up, "states of exception" and national security "emergencies" have become permanent features of social life.

Entire classes of citizens and non-citizens alike are now suspect; anarchists, communists, immigrants, Muslims, union activists and political dissidents in general are all subject to unprecedented levels of scrutiny and surveillance.

From "enhanced security screenings" at airports to the massive expansion of private and state databases that archive our spending habits, whom we talk to and where we go, increasingly, as the capitalist system implodes and millions face the prospect of economic ruin, the former American republic takes on the characteristics of a corporate police state.

Security researcher and analyst Christopher Soghoian reported on his Slight Paranoia blog, that according to "an official DOJ report, the use of 'emergency', warrantless requests to ISPs for customer communications content has skyrocketed over 400% in a single year."

This is no trifling matter.

As CNET News disclosed last month, "Internet providers would be forced to keep logs of their customers' activities for one year--in case police want to review them in the future--under legislation that a U.S. House of Representatives committee approved today."

Declan McCullagh reported that "the 19 to 10 vote represents a victory for conservative Republicans, who made data retention their first major technology initiative after last fall's elections."

Significantly, CNET noted that this is also a "victory" for Democratic appointees of Barack Obama's Justice Department "who have quietly lobbied for the sweeping new requirements."

According to CNET, a "last-minute rewrite of the bill expands the information that commercial Internet providers are required to store to include customers' names, addresses, phone numbers, credit card numbers, bank account numbers, and temporarily-assigned IP addresses."

However, by "a 7-16 vote, the panel rejected an amendment that would have clarified that only IP addresses must be stored."

Consider the troubling implications of this sweeping bill. While ultra-rightist "Tea Party" Republicans vowed to get "the government off our backs," when it comes to illicit snooping by securocrats whose only loyalty is to a self-perpetuating security bureaucracy and the defense grifters they serve (and whom they rely upon for plum positions after government "retirement"), all our private data is now up for grabs.

The bill, according to Rep. Zoe Lofgren (D-CA), who spearheaded opposition to the measure said that if passed, it would create "a data bank of every digital act by every American" that would "let us find out where every single American visited Web sites."

To make the poison pill legislation difficult to oppose, proponents have dubbed it, wait, the "Protecting Children From Internet Pornographers Act of 2011" even though, as CNET noted, "the mandatory logs would be accessible to police investigating any crime and perhaps attorneys litigating civil disputes in divorce, insurance fraud, and other cases as well."

Soghoian relates that the 2009 two-page Justice Department report to Congress took 11 months (!) to release under a Freedom of Information Act request.

Why the Justice Department stonewall?

Perhaps, as the Electronic Frontier Foundation disclosed last year, political appointees at the Department of Homeland Security and presumably other secret state satrapies, ordered "an extra layer of review on its FOIA requests."

EFF revealed that a 2009 policy memo from the Department's Chief FOIA Officer and Chief Privacy Officer, Mary Ellen Callahan, that DHS components "were required to report 'significant FOIA activities' in weekly reports to the Privacy Office, which the Privacy Office then integrated into its weekly report to the White House Liaison."

Included amongst designated "significant FOIA activities" were requests "from any members of 'an activist group, watchdog organization, special interest group, etc.' and 'requested documents [that] will garner media attention or [are] receiving media attention'."

Despite the appearance of reporting "emergency" spying requests to congressional committees presumably overseeing secret state activities (a generous assumption at best), "it is quite clear" Soghoian avers, "that the Department of Justice statistics are not adequately reporting the scale of this form of surveillance" and "underreport these disclosures by several orders of magnitude."

As such, "the current law is largely useless." It does not apply to "state and local law enforcement agencies, who make tens of thousands of warrantless requests to ISPs each year," and is inapplicable to "to federal law enforcement agencies outside DOJ."

"Finally," Soghoian relates, "it does not apply to emergency disclosures of non-content information, such as geo-location data, subscriber information (such as name and address), or IP addresses used."

And with Congress poised to pass sweeping data retention legislation, it should be clear that such "requirements" are mere fig leaves covering-up state-sanctioned lawlessness.

War On Terror 2.0.1: Looting the Global Economy

Criminal behavior by domestic security agencies connect America's illegal wars of aggression to capitalism's economic warfare against the working class, who now take their place alongside "Islamic terrorists" as a threat to "national security."

Despite efforts by the Obama administration and Republican congressional leaders to "balance the books" on the backs of the American people through massive budget cuts, as economist Michael Hudson pointed out in Global Research, the manufactured "debt ceiling" crisis is a massive fraud.

The World Socialist Web Site averred that "as concerns over a double-dip recession in the US and the European debt crisis sent global markets plunging--including a 512-point sell-off on the Dow Jones Industrial Average Thursday--financial analysts and media pundits developed a new narrative. Concern that Washington lacked the 'political will' to slash long-standing entitlement programs was exacerbating 'market uncertainty'."

Leftist critic Jerry White noted that "in fact, the new cuts will only intensify the economic crisis, while the slashing of food stamps, unemployment compensation, health care and education will eliminate programs that are more essential for survival than ever."

Indeed, as Marxist economist Richard Wolff pointed out in The Guardian, while the "crisis of the capitalist system in the US that began in 2007," may have "plunged millions into acute economic pain and suffering," the "recovery" that began in 2009 "benefited only the minority that was most responsible for the crisis: banks, large corporations and the rich who own the bulk of stocks. That so-called recovery never 'trickled down' to the US majority: working people dependent on jobs and wages'."

And despite mendacious claims by political officials and the media alike, the Pentagon will be sitting pretty even as Americans are forced to shoulder the financial burden of U.S. imperial adventures long into an increasingly bleak future.

Defense Secretary Leon Panetta "warned Thursday of dire consequences if the Pentagon is forced to make cuts to its budget beyond the $400 billion in savings planned for the next decade," The Washington Post reported.

The Post noted that "senior Pentagon officials have launched an offensive over the past two days to convince lawmakers that further reductions in Pentagon spending would imperil the country's security."

"Instead of slashing defense," Panetta urged lawmakers to "rely on tax increases and cuts to nondiscretionary spending, such as Medicare and Social Security, to provide the necessary savings."

But as Hudson points out, "war has been the major cause of a rising national debt." After all, it was none other than bourgeois icon Adam Smith who argued that "parliamentary checks on government spending were designed to prevent ambitious rulers from waging war."

Hudson writes that "if people felt the economic impact of war immediately--rather than postponing it by borrowing--they would be less likely to support military adventurism."

But therein lies the rub. Since "military adventurism" is the only "growth sector" of an imploding capitalist economy, the public spigot which finances everything from cost-overrun-plagued stealth fighter jets to multibillion dollar spy satellites, along with an out-of-control National Surveillance State, will be kept open indefinitely.

On this score, the hypocrisy of our rulers abound, especially when it comes to the mantra that "we" must "live within our means."

As Wolff avers, "where was that phrase heard when Washington decided to spend on an immense military (even after becoming the world's only nuclear superpower) or to spend on very expensive wars in Iraq, Afghanistan, Pakistan and Libya (now all going on at the same time)? No, then the talk was only about national security needed to save us from attacks."

"Attacks," it should be duly noted, that may very well have been allowed to happen as the World Socialist Web Site recently reported.

Driving home the point that war, and not social- and infrastructure investment fuel deficits, Hudson averred that "the present rise in in U.S. Treasury debt results from two forms of warfare. First is the overtly military Oil War in the Near East, from Iraq to Afghanistan (Pipelinistan) to oil-rich Libya. These adventures will end up costing between $3 and $5 trillion."

"Second and even more expensive," the economist observed, "is the more covert yet more costly economic war of Wall Street against the rest of the economy, demanding that losses by banks and financial institutions be passed onto the government balance sheet ('taxpayers'). The bailouts and 'free lunch' for Wall Street--by no coincidence, Congress's number one political campaign contributor--cost $13 trillion."

"Now that finance is the new form of warfare," Hudson wrote, "where is the power to constrain Treasury and Federal Reserve power to commit taxpayers to bail out financial interests at the top of the economic pyramid?"

And since "cutbacks in federal revenue sharing will hit cities and states hard, forcing them to sell off yet more land, roads and other assets in the public domain to cover their budget deficit as the U.S. economy sinks further into depression," Hudson wrote that "Congress has just added fiscal deflation to debt deflation, slowing employment even further."

While the global economy circles the drain, with ever more painful cuts in so-called "entitlement" programs meant to cushion the crash now on the chopping block, the corporate and political masters who rule the roost are sharpening their knives, fashioning administrative and bureaucratic surveillance tools, the better to conceal the "invisible hand" of that bitch-slaps us all.

And they call it "freedom."