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For The Record  

FTR #311 Bush League, Part II – More about the Associations and Actions of the Georges Bush

Listen: One Segment

1. The program begins with discussion of the “energy crisis” in California. There is significant evidence that this “crisis” was exacerbated (if not caused) by the very energy interests that George Bush serves. (“Turning California On” by Paul Krugman; New York Times; 6/27/2001; p. A25.)

2. Bush’s Secretary of the Army, Thomas White Jr., served with one of the most important of the energy firms that Bush is beholden to, Enron. (“Army Boss Thomas White Jr. Vows No Conflict in Ties with Enron” by Esther Schrader; Los Angeles Times; 6/20/2001; p. A6.)

3. Enron is among the bidders to handle energy generation on key military bases. (Idem.)

4. One of the most formidable members of the Bush White House is Karl Rove, a cunning, Machiavellian operative viewed as the “dirty tricks specialist” of the Bush camp. A significant investor in the aforementioned Enron, Rove has recently come under scrutiny for possible conflict of interest. (“White House Sees No Conflict in Aide’s Role” [AP]; New York Times; 6/30/2001; p. A11.)

5. Interestingly, and possibly significantly, Rove was deeply involved in the Bush administration’s effort on behalf of ASM Lithography Holding‘s attempt to purchase Silicon Valley Group. (“Rove’s Intel Meeting Didn’t Affect Ruling, White House Says”; Wall Street Journal; 6/14/2001; p. A4.)

6. Initially, the Pentagon blocked this deal. (“Pentagon Blocks Silicon Valley Deal” by Peter Siegel; Financial Times; 4/25/2001; p. 1.)

7. Eventually, pressure from Bush, Rove and company overcame the Pentagon’s opposition to the deal. (“Dutch Takeover of Silicon Valley Group is Approved” by Edward Alden and Gordon Cramb; Financial Times; 5/4/2001; p. 1.) With SVG‘s importance to American surveillance satellites, this deal may seriously compromise American national security. It is worth noting that Europe has lagged behind the United States in space surveillance, a shortcoming that may well be overcome by ASM’s purchase of SVG to the eventual detriment of this country.

Discussion

4 comments for “FTR #311 Bush League, Part II – More about the Associations and Actions of the Georges Bush”

  1. Newsflash: oil markets are rigged:

    The Economist
    Libor in a barrel
    Oil markets fall under the suspicion of price-fixing on a global scale

    May 18th 2013

    IT IS a lesson of the past five years that benchmarks in unregulated markets can fall victim to the incentives they create. Subprime mortgages bundled into securities often won high scores from ratings agencies that stood to profit in a busy market. The London Interbank Offered Rate, LIBOR, was sometimes underestimated by banks which were cast in a healthier light by lower interest rates. Has something similar been going on in energy?

    That is the suspicion after a series of raids on May 14th by the European Commission’s competition authorities. The commission declared that it feared oil companies had “colluded” to distort benchmark prices for crude, oil products and biofuels. Royal Dutch Shell, BP, Norway’s Statoil and Italy’s ENI (which was not raided) all said that they were co-operating with the commission. The competition authorities also called on the London offices of Platts, a subsidiary of McGraw Hill, an American publisher and business-information firm, which sets reference prices for these commodities.

    The volumes of oil and products linked to these benchmark prices are vast. Futures and derivatives markets are also built on the price of the underlying physical commodity. At least 200 billion barrels a year, worth in the order of $20 trillion, are priced off the Brent benchmark, the world’s biggest, according to Liz Bossley, chief executive of Consilience, an energy-markets consultancy. The commission has said that even small price distortions could have a “huge impact” on energy prices. Statoil has said that the commission’s interest goes all the way back to 2002. If it is right, then the sums involved could be huge, too.

    The authorities are tight-lipped about their focus, but they seem to be examining the integrity of benchmark prices. Each day Platts’s reporters establish a reference price by following the value of public bids and offers during a half-hour “window” before a set time—4:30pm in London, for example. This “Market-on-Close” (MOC) method is based on the idea that using published, verifiable deals to set the price is more reliable than having reporters ring around their pals, who might be tempted to talk their own books.

    Platts keenly defends the MOC method. It points out that it ignores bids, offers and deals that are anomalous or suspicious. “We are not aware of any evidence that our price assessments are not reflective of market value,” it says, before declaring that it stands behind its method.

    It is a complicated picture and the EU’s competition authorities are likely to take months or years before deciding whether they suspect any oil companies of having committed a crime. Meanwhile, a reform of the oil markets is unlikely to come anytime soon. Despite IOSCO’s fears of price distortion, it backed away from recommending changes—after fierce lobbying from the industry.

    So this global price-fixing regime is suspected to center around a McGraw Hill subsidiary since 2002 involving numerous other major energy companies. And it might take years before anything is done, if anything is to be done at all. OMG, What a totally “shocking” discovery.

    Posted by Pterrafractyl | May 18, 2013, 11:03 pm
  2. @Pterrafractyl–

    As usual, great, great work!

    It is more than a little interesting to re-read the points covered in the broadcast to which this comment was amended.

    THESE are scandals! These manufactured non-scandals we’re seeing are just what I predicted, and what you have so valuably supplemented in the NY Times article about the Morell/Petraeus tiff.

    BTW–although I haven’t been able to find the reference on the internet, the big action in the short-selling running up to the 9/11 attacks was in the Standard & Poors’ 500 put options.

    Standard & Poors is a subsidiary of McGraw Hill.

    I saw that in either “Barron’s” or “Investors’ Business Daily.”

    Best,

    Dave

    Posted by Dave Emory | May 19, 2013, 6:01 pm
  3. @Dave:
    Regarding the anomalous trading activity before 9/11, it’s worth pointing out that there was actually a study concucted by some academics where they conducted a statistical test that looked a the history of “S&P 500 put” trading activity (which spiked September 10th, 2001 along with airline stock puts) and attempted to ask the question “what are the odds that the anomalous S&P 500 put trading activity on September 10th was just random ‘noise’ consistent with the normal fluxuation in day-to-day trading volumes vs a non-random trading pattern indicative of something truly unusual taking place”? They rejected the null hypothesis so the findings point towards insider knowledge of the attacks leading the anomalous trading activity). The paper is a nice resource on the entire topic of pre-9/11 insider trading actions. The conclusion was similar to a study published in 2004 that also found statistical evidence of very unusual trading activities in the month leading up to 9/11.

    It’s also worth recall that studies like the above two that conclude something was statistically “anomalous” in the financial markets are in comically stark contrast to the 9/11 Commission Report’s findings on these matters:

    National Review Online
    Was There Another 9/11 Attack on Wall Street?
    Were the hijackers also insider traders?

    Alexander Rose
    July 26, 2004, 7:00 a.m.

    Were the September 11 hijackers insider traders as well as murderers? The 9/11 Commission’s report has belatedly put paid to the rumor that Osama bin Laden and his accomplices speculated in the stocks and options of vulnerable companies in the weeks before the attacks. The potential profits garnered from such manipulation would have been in the millions.

    Truth to tell, if one looked at the trading figures — especially with the benefit of hindsight — for early September, there was a lot to be suspicious about.

    Trading in AMR — the ticker for American Airlines’ parent — rang alarm bells, especially in regard to frenetic put-option activity before September 11. A put, in brief, is a contract to sell a certain number of shares at a previously agreed upon “strike” price sometime in the future. The price of the put depends on a number of factors, not least of which is the price of the underlying security. Cautious investors buy puts as insurance if they believe a stock they hold might fall, while speculators exploit their high volatility and relatively low cost to leverage profits if the stock does dive. (A call option is the same, but in reverse, and is oriented towards the bullish).

    Some 4,516 put contracts — which could be potentially leveraged into controlling more than 450,000 shares of AMR — traded hands the afternoon before the attacks (compared to 748 calls). Thus, about 85 percent of the day’s options activity involved puts — a massive imbalance rarely seen. When the markets opened for the first time after September 11, AMR plummeted by 39 percent, which would work out to be $4 million profit for the holder or holders of those puts (assuming the “insiders” had bought 4,000 of the contracts). Put it this way, on September 10, 2001, somebody, somewhere, was very, very bearish about AMR’s near-term prospects.

    Derivatives trading in UAL (United Airlines’s parent) on the Chicago Board Options Exchange (CBOE) on September 6 (and into the next day) exhibited identical characteristics: 4,744 puts on UAL, compared to just 396 calls. By September 10, short interest (essentially, a wager that a stock’s price will fall) in UAL jumped by 40 percent over its level of a month previously. As for AMR, its short interest increased by 20 percent.

    The deeper we delve into the murky world of futures the darker the picture apparently becomes (a few excitable souls still believe the CIA and Bush — you know, because they knew the attacks were coming — were behind the shorting). One hedge-fund manager whispered to the New York Times that he’d heard that major short-selling had been happening in eSpeed (ESPD), the electronic bond-trading network controlled by Cantor Fitzgerald (whose offices were high up in 1 World Trade Center). There was probably something to this rumor. Between August 7 and Friday, September 7, ESPD fell by $5.85 (or 42 percent) to $7.95.

    Or what about the zealous buying of 17,955 short-term S&P 500 index puts at 1,050 points — the “strike price,” essentially — on Monday, September 10, 2001? Those investors were gambling that the S&P, which closed at 1,092.54 at 4pm that day, would fall by at least 42 points by September 21, when the options were scheduled to expire. Without such a significant decline, the options would be worthless. (Hey, options trading is highly risky, but potentially very profitable). More eerie stuff turned up in Britain and Germany. In London, investigators detected what seemed to be huge bets on a decline in airline stocks, while in the latter, the price of Munich Re, a reinsurance company that would be hit by claims resulting from the attacks, plummeted amid a surge of puts-buying.

    So, to repeat, were Osama and his accomplices involved in insider trading? Part of the answer is tucked away in a footnote on page 499 of the 9/11 Commission Report. The commissioners, basing their findings upon exhaustive research of millions of transactions by the Securities and Exchange Commission, note that “some unusual trading did in fact occur, but each such trade proved to have an innocuous explanation.” Moreover, “the trading had no connection with 9/11.” So what happened? “A single U.S.-based institutional investor with no conceivable ties to al Qaeda purchased 95 percent of the UAL puts on September 6.” This same institution, as part of a complex trading strategy, also purchased 115,000 shares of AMR on September 10. But what about the spike in AMR puts trading on September 10? It turns out that a “U.S.-based options trading newsletter, faxed to its subscribers on Sunday, September 9…recommended these trades.” Readers jumped in headfirst come Monday morning, only to strike it tragically lucky the next day.

    The rest of the above 2004 article gives an overview of the 9/11 Commission’s findings that claim that every single one of the above anomalies had an innocuous explanation. See the footnote 130 in Chapter 5 of the 9/11 Commission report. That footnote give some example explanations for somue of those trades although no example is given that explains the S&P 500 puts. Presumably we should just take the 9/11 Commission at its word:

    The Guardian
    9/11 – the big cover-up?

    Even the chair of the 9/11 Commission now admits that the official evidence they were given was ‘far from the truth’

    Peter Tatchell
    Wednesday 12 September 2007 05.30 EDT

    Six years after 9/11, the American public have still not been provided with a full and truthful account of the single greatest terror attack in US history.

    What they got was a turkey. The 9/11 Commission was hamstrung by official obstruction. It never managed to ascertain the whole truth of what happened on September 11 2001.

    The chair and vice chair of the 9/11 Commission, respectively Thomas Kean and Lee Hamilton, assert in their book, Without Precedent, that they were “set up to fail” and were starved of funds to do a proper investigation. They also confirm that they were denied access to the truth and misled by senior officials in the Pentagon and the federal aviation authority; and that this obstruction and deception led them to contemplate slapping officials with criminal charges.

    Despite the many public statements by 9/11 commissioners and staff members acknowledging they were repeatedly lied to, not a single person has ever been charged, tried, or even reprimanded, for lying to the 9/11 Commission.

    From the outset, the commission seemed to be hobbled. It did not start work until over a year after the attacks. Even then, its terms of reference were suspiciously narrow, its powers of investigation curiously limited and its time-frame for producing a report unhelpfully short – barely a year to sift through millions of pages of evidence and to interview hundreds of key witnesses.

    The final report did not examine key evidence, and neglected serious anomalies in the various accounts of what happened. The commissioners admit their report was incomplete and flawed, and that many questions about the terror attacks remain unanswered. Nevertheless, the 9/11 Commission was swiftly closed down on August 21 2004.

    When you put aside all of the speculation about the causes of the anomalous trades and just focus on the fact that even the the chairman and vice-chairman of the 9/11 Commission said they were “set up to fail” and that the investigation was “far from the truth” it the fact that we can’t really treat any of the commission’s findings on these matters as much more than speculation(to be generous).

    McGraw Hill, as the publisher of the S&P 500 index, wouldn’t have had any direct role in those S&P 500 put transactions. But McGraw Hill, along with the rest of the media giants, has done a pretty good collective job of forgetting to remind the US public of the fact that the 9/11 Commissioners, themselves, raised serious doubts about the commission’s own findings.

    Posted by Pterrafractyl | May 23, 2013, 10:45 pm
  4. @Pterrafractyl–

    The McGraw family, not the company as a whole, are the entity worthy of scrutiny in the 9/11 short selling.

    The key concept here is “networking.” Knowing what was waiting in the wings, interests could be informed and “place their bets,” so to speak.

    Never forget that the Bush family and Bin Laden family have been business associates for decades.

    As Ernest Backes noted, Francois Genoud–heir to the collected literary works and political last will and testament of Adolf Hitler, Joseph Goebbels and Martin Bormann–was a financial adviser to the Bin Laden family.

    The Bush/McGraw family associations cannot be discounted, though the firm as a whole would not necessarily have been involved.

    The fact that this has been almost entirely obscured by the major media voices is very telling.

    Best,

    Dave

    Posted by Dave Emory | May 24, 2013, 2:11 pm

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