Thursday, October 27, 2011

SH @ same time -- Rumsfeld, Nothing Unknown.


SH @ same time

Andrew Cockburn

  • Known and Unknown: A Memoir by Donald Rumsfeld
    Sentinel, 815 pp, £25.00, February 2011, ISBN 978 1 59523 067 6
Donald Rumsfeld, you could say, has had a remarkable career, stretching from a middle-class upbringing amid wealthier neighbours on the edge of Chicago, through Congress and high office in the Nixon and Ford administrations, including a spell as secretary of defense, a profitable excursion into business, and finally six tumultuous years heading the Pentagon under George W. Bush. Oddly, Rumsfeld begins his memoir with an out-of-sequence account of his 1983 meeting with Saddam Hussein as Reagan’s Middle East envoy, infamous for the evident warmth with which the two greeted each other. Perhaps it is there because he always cherished meetings with celebrities; later in the book there’s an encounter with Elvis. He has said in interviews that he didn’t actually write much of this book, preferring to dictate his reminiscences and then edit the transcripts – a process that took four years. Given the care with which he navigates some of the more contentious stretches of his history, there is little reason to doubt that it did indeed take a lot of time. In describing his own experiences on 11 September 2001, Rumsfeld notes that, in a breakfast meeting with congressmen that very morning, he had warned of an impending event somewhere in the world that would be ‘sufficiently shocking that it will remind the American people and their representatives in Washington how important it is for us to have a strong national defence’. Further emphasising his prescience, he mentions in the next paragraph that he had earlier sent Bush an essay on Pearl Harbor to alert him to the possibility of ‘surprise’.
Absent from this account is any mention of the warnings issued over the course of that summer by the CIA or the White House anti-terrorism co-ordinator, Richard Clarke, to the effect that Osama bin Laden was planning an attack inside the United States. Clarke’s name doesn’t appear in the index, or in any of the supplementary documents posted by Rumsfeld on his website, www. rumsfeld.com. Other sources attest that the last time Rumsfeld discussed, and dismissed, these warnings was on 6 September 2001, five days before the attacks. His memory of the period is hazy; the account here of his movements immediately after American Airlines Flight 77 crashed into the Pentagon differs in detail from that of Aubrey Davis, the security guard who accompanied him to the site. It may be unfair to demand detailed and accurate recall of those moments when he and Davis marched along the smoke-filled Pentagon corridors on their way to the crash site, but there are more interesting lapses. According to the note his aide Stephen Cambone made of the conversation, at 2.40 p.m., still in the command centre, Rumsfeld told General Richard Myers, vice chairman of the Joint Chiefs of Staff, to find the ‘best info fast … judge whether good enough [to] hit SH @ same time – not only UBL.’ ‘UBL’ stood for Usama/Osama Bin Laden, ‘SH’ was Saddam Hussein. Although several passages in Rumsfeld’s account of that day are sourced to Cambone’s handwritten notes, this conversation goes unmentioned. Instead, we have the bland assertion that ‘early on, I had no idea if Iraq was or was not involved, but it would have been irresponsible for any administration not to have asked the question.’
Cambone’s note was leaked in 2002, so Rumsfeld should know that we know what was on his mind that afternoon. His refusal to discuss it suggests that he still believes he can stay in charge of the debate by deploying information selectively. In office it was a practice he took to extreme lengths. White House officials, as one of them once told me, were reduced to hacking into the Pentagon’s classified internet system to find out about upcoming military deployments because Rumsfeld had forbidden normal information sharing. This was not mere caprice: he was determined that all communication between the Department of Defense and the president’s office pass through him, and especially anxious to ensure that there would be no independent communication between any of his underlings and Bush himself. Thus he records his annoyance that ‘Jerry’ Bremer, who had recently been appointed viceroy in conquered Iraq, was meeting privately with Bush: ‘POTUS had lunch with him alone,’ he quotes a scribbled note to himself on 6 May 2003, ‘shouldn’t have done so.’
Although he enjoyed the rare privilege of private weekly meetings with the president (unbeknownst to the secretary of state), he begrudged others the same access, Condoleezza Rice especially. Among senior security officials, he notes (through gritted teeth), ‘only the national security adviser works in the White House and has routine daily access to the president … Her personal access to and affinity for President Bush gave Rice substantial influence.’ Nevertheless, Rumsfeld makes clear that he soon cut this incompetent (‘meetings were not well organised’) but formidable rival down to size: ‘She and her staff did not seem to understand that they were not in the chain of command and therefore could not issue orders, provide guidance, or give tasks to combatant commanders.’ When Rice tried to intrude into his domain on such matters as high-level military promotions, and oversight of his travel schedule, he simply refused to co-operate.
The one official who didn’t feel the defense secretary’s sharp elbows was Dick Cheney, his former assistant from the Nixon-Ford days. Though there are intimations that they had drifted apart in the intervening years – Rumsfeld says that he never visited Cheney when the latter ran the Pentagon in the elder Bush’s administration – there is no suggestion here that in more recent times the partnership didn’t operate smoothly. In fact Rumsfeld says that his old friend was no more responsible for the errors and delinquencies of the administration than he was himself: ‘the caricature of Cheney as the man wielding the reins of power, playing his colleagues and even the president as marionettes, is utter nonsense.’
Rumsfeld’s own ascendancy in Bush palace politics really dated from the day of the attacks, when his well-publicised visit to the crash site transformed his image from that of grey official slated for early dismissal to telegenic warlord. In January 2002, a New York Times fashion writer claimed that ‘the post-Sept 11 world has caused a certain kind of woman to re-evaluate what she is looking for in a man … She has seen the valiant efforts of rescue workers and remarked to herself that men like Donald Rumsfeld make big, impactive decisions in the time it would take any of her exes to order lunch.’
As master of the world’s mightiest military machine, Rumsfeld was happy to perform in the role of impactive decision-maker, his 5’8” boosted by the built-up footwear his staff called ‘the duck shoes’. Roaming the globe in his huge C-17 transport, he particularly relished addressing massed ranks of troops in far-flung outposts of empire. There is no doubt that the military high command were mortally afraid of him, not least because he took personal control of senior officers’ promotions, effectively holding their careers in the palm of his hand. Unsurprisingly, he was soon surrounded by generals and admirals, notably the Joint Chiefs chairman Richard Myers, not known for their eagerness to speak out of turn. His behaviour towards powerless subordinates intensified the aura of fear around him. ‘It was clear,’ he notes with satisfaction, ‘that there were some in the department who felt I was brusque or asked more questions than made them feel comfortable.’
Underlings were regularly subjected to blizzards of whimsical ‘snowflakes’, as Rumsfeld liked to call his memos. On 7 April 2003 he sent the following message to Douglas Feith, the under-secretary of defense for policy:
  We need more coercive diplomacy with respect to Syria and Libya, and we need it fast.
If they mess up Iraq, it will delay bringing our troops home.
We also need to solve the Pakistan problem.
And Korea doesn’t seem to be going well.
Are you coming up with proposals for me to send around?
Thanks.
Such domineering displays fit well with the reputation garnered during his earlier political career. Nixon, one of the few people discussed with genuine respect in the book – ‘thoughtful, brilliant’ – returned the compliment by describing him, as recorded on the White House tapes, as ‘a ruthless little bastard’. Others close to him formed the same opinion – among them, Al Lowenstein, a fellow congressman and close friend, despite their diametrically opposite political views. The friendship ended when Rumsfeld strongly endorsed Lowenstein’s opponent in the 1970 election. Gerald Ford, who made Rumsfeld White House chief of staff and later secretary of defense, may have felt equally betrayed when Rumsfeld fought successfully to undermine his efforts to reach an arms control agreement with the USSR.
Rumsfeld doesn’t appear too troubled by references to his ruthlessness. Though he passes over Nixon’s verdict, and blames Cheney, then his aide, for the Lowenstein break-up, he proudly quotes Ford himself confirming his sabotage of the arms treaty. He might claim to be ‘uncomfortable’ with the label, but reminds us that Fortune magazine labelled him one of the ‘ten toughest CEOs in America’ during his days running a pharmaceutical firm in the late 1970s.
Despite his well-cultivated image of toughness, he strives throughout to convince us that many of the big decisions taken while he was secretary of defense were made by someone else. Who most authoritatively affirmed Iraq’s possession of weapons of mass destruction, thus justifying war? According to Rumsfeld, that was Colin Powell, who ‘had spent decades in uniform … and at every level … had spent long hours dealing with intelligence’. We are led to assume that, despite authorising the Office of Special Plans, a special unit headed by Feith, to sift intelligence on Iraq independently of the CIA, he left it to his rival to sift the knowns. The crucial decision to invade Iraq? Rumsfeld insists this was all the work of George W. Bush, who apparently never asked his secretary of defense what he thought of the idea: ‘While the president and I had many discussions about the war preparations, I do not recall his ever asking me if I thought going to war with Iraq was the right decision.’ (He doesn’t say what he would have told Bush had the question been asked.)
Such evasions and manoeuvres are easy to identify and ridicule, but they reflect an essential truth about Rumsfeld: he avoided the big decisions, always keeping an eye out for bureaucratic cover. ‘He won’t make the big mistake,’ he answered when asked why he was promoting Stephen Cambone, an obscure think-tank defence intellectual, to progressively more powerful Pentagon positions. It was an admonition he frequently repeated to subordinates: ‘Don’t make the big mistake.’
The irony is obvious; Rumsfeld will forever be associated with the really huge mistake of attacking Iraq, however much he argues that the catastrophic decision and all the mistakes that flowed from it were the work of others. As the occupation descended into a quagmire (Rumsfeld forbade his staff from using that word, along with ‘resistance’ and ‘insurgents’), critics searching for the reason everything had gone wrong attributed the fiasco to the secretary’s insistence on a ‘light’ invasion force far smaller than initially deemed necessary by the military planners.
Rumsfeld considers this monstrously unfair, and for once he is probably right. He points out that none of the military high command spoke up when he and the president asked if they had everything they needed for the war – but then he had selected most of them. Joining in the chorus of endorsement (the only dissenter was a marine general, Gregory Newbold, who resigned in protest in November 2002) was the army chief of staff, Eric Shinseki. Shinseki has been portrayed in the media and service hagiography as a martyr who spoke truth to power and sacrificed his career in consequence. The record – Rumsfeld is happy to lay it out in detail – shows that Shinseki cautiously observed in a Senate hearing just a month before the war that ‘several hundred thousand’ troops might be required as an occupation force. Quizzed by journalists, Rumsfeld issued a furious rebuttal, but Shinseki served out the rest of his term and retired peacefully. In fact, it is by no means clear that a larger initial occupation force would have made much difference, since the troops who were dispatched had little idea what to do and their very presence appears to have spurred resistance among the population.
Rumsfeld has far less to say about another area in which he met spirited resistance from Shinseki along with the rest of the army hierarchy. On entering office he announced that his mandate was to implement the defence programme outlined by Bush during the campaign and based on the agenda of the neoconservative Project for the New American Century, with which Rumsfeld had been closely associated in the 1990s. The idea was to jettison unwieldy Cold War-era formations in favour of light, mobile forces equipped with highly accurate (and very expensive) precision weapons.
The Pentagon was certainly in need of transformation. Left largely to their own devices by Clinton, the generals and admirals had helped themselves to an ever increasing budget, much of it spent on developing ‘gold-plated’ weapons systems of dubious utility. So chaotic were the Department of Defense’s accounts that they could not be audited, meaning that no one really knew where the money was going.
Rumsfeld set up a financial management transformation panel soon after taking office. Though it duly reported in dire terms and urged immediate action, Rumsfeld, so far as we know, paid no attention and the panel was never heard from again – it certainly isn’t in the memoir. Instead, as an example of the decisive and efficient manner in which he approached transformation, Rumsfeld cites his cancellation in May 2002 of the army’s $11 billion Crusader artillery system. This, as he says, was a Cold War ‘anachronism’. But what he doesn’t say is that he had come into office more than a year earlier with a mandate to kill the programme, and that the endless delay was due to the spirited and resourceful tactics deployed by Shinseki and the rest of the army’s lobby. Nor does he reveal that the delay was exacerbated by the inability of the deputy secretary of defense, Paul, to whom he had left the decision, to make up his mind. ‘I decided instead to use the $9 billion that had not yet been spent to invest in precision-guided weapons systems,’ he reports, conveying the impression of a brisk and forceful chief executive. In reality, the money not spent on Crusader was invested in a $128 billion project called Future Combat Systems (FCS), developed by the same contractors who had been working on Crusader. But if Rumsfeld did involve himself deeply in this decision, or was aware of what it really entailed, he gives no sign of it here. FCS ended up failing tests so spectacularly that it was cancelled by Rumsfeld’s successor in 2009. Questioned in an investigation into an infamous scandal involving a $26 billion air force tanker contract that led to criminal trials and jail sentences, Rumsfeld professed not to know anything about it, claiming that he had been too busy with the wars and that he never met defence contractors unless he ‘ran into them at a party some place’.
By late 2006, with casualty lists growing longer by the day and the Republican Party sliding to defeat in the mid-term elections, Rumsfeld had become the touchstone for Bush’s disastrous war. Sensing his weakness, a group of retired generals went public with a pointed critique of his performance. The results of the election ensured his departure. Bush and Cheney regretted having to let him go, throwing an elaborate departure ceremony in front of the Pentagon with the honoree inspecting rank on rank of troops.
Robert Gates, his successor, has done a fine job of not being Donald Rumsfeld. The press cherishes the access he grants them. The military bask in the freedom he grants them to fight the various wars bequeathed by his predecessor. The White House staff applaud the readiness with which, though a Republican, he works with a Democratic president. Pentagon critics applaud his readiness to eliminate costly weapons programmes. Nevertheless, Guantánamo is still open; cancelled weapons have been replaced by no less costly programmes; casualty lists from Afghanistan continue to rise remorselessly; the Department of Defense still reports that its account books cannot be audited.
In February, Cheney presented Rumsfeld with a Defender of the Constitution award conferred by the American Conservative Union, right-wing even by the standards of the American right. Youthful libertarians heckled, shouting ‘war criminal’ as the aged twosome grinned and waved. In remarks praising his old friend, Cheney slyly noted how little had changed and wondered aloud whether Rumsfeld had more influence on Obama than his current advisers. Who knew?

Mark to Market.


The Mark-to-Market Fantasy

Banks on the Brink


by ANDREW COCKBURN
“If the Occupiers start chanting ‘Mark to Market,’” an attorney highly conversant with the darker workings of the Wall Street-Washington complex told me, “we’ll know they’re serious.”   Such a call would quickly presage the collapse of our “too big to fail” banks, for it would highlight the fact that a huge proportion of the assets of Bank of America, Wells Fargo, JP Morgan, and Citigroup consist of loans that will never be paid back and are therefore essentially worthless. The so called “recovery” of our leading financial institutions from the post-Lehman abyss has depended on a fraudulent valuation of these assets, but stripped of the fiction, the banks are insolvent.
Not long ago, accounting rules required bank assets, such as mortgage, credit card and other loans, not to mention the securities derived therefrom, to be “marked to market,” meaning that they had to be valued on the balance sheet  at what they might fetch if offered for sale on the open market.  This practice, enjoined by the Financial Accountancy Standards Board (FASB), was quite popular at a time when the bubble was still inflating, propelling house prices and the mortgage backed securities they supported in a pleasingly northward direction, and naturally carrying quarterly bonuses and other good things along with them.   However, such attitudes changed in a hurry once the housing bubble burst and the ratings agencies, albeit belatedly and reluctantly, began certifying that mortgage loans, as packaged and puréed into securitized instruments, were worth a lot less, or nothing at all.  In 2008 therefore the banks were forced to disclose write-downs of $175 billion.  By early 2009 not only were most of these institutions facing capital shortfalls that rendered them insolvent, they were close to having to admit the fact and head for the bankruptcy court.
Cries of rage and pain echoing round Wall Street were amplified in Washington DC by $27.5 million in bankers’ cash, funneled through lobbyists who focused their particular and generous attention on the capital markets subcommittee of the House Financial Services Committee.  The consequences were immediate and gratifying, at least from the point of view of the banks.  Hapless number crunchers from the FASB were hauled in front of the subcommittee on March 12, 2009,  and harshly instructed to change their rule, fast, or the congress would do it for them.  Results were immediate.  Instead of having to price their assets at a realistic level, ie one where someone might buy them, banks were permitted to use “substantial discretion” in their book-keeping.  “Mark to fantasy,” some called it, but suddenly Wall Street was booming again, along with bonuses.  Notional profits were further bolstered by shrinking “loan loss reserves” – money put aside against a rainy day – on the balance sheets.  Since all those assets were at healthy valuations again, who needed to provide for losses?
But of course the underlying reality never changed,  except for the worse.  Loans defaults continued their inexorable climb. Desperate to hoard whatever actual cash they did have, largely courtesy of Fed largesse, the banks eschewed anything as risky as actually lending money to businesses who might use it to give jobs to people.  No one, at least in government or on Wall Street, was prepared to admit the ongoing reality of major bank insolvency.
As one clear-eyed observer of Wall Street told me earlier this week: “Bank of America earnings were out today and you need an advanced degree in bullshit to understand half of it.  The whole thing is malarkey piled on crap. I don’t know how to separate the garbage from the decent and neither do (the banks). It’s the main thing that’s stopping any bank recovery, the denial and the inability or unwillingness to take their medicine.”
However, there is a way out of the morass.  Congress did pass the 2010 Dodd-Frank financial reform bill.  Though assiduously laced with loopholes and escape hatches, the law does contain one crucial element, laid out in Section 204,  that would, if implemented, allow the seizure of the banks and the loans they control.   That’s the part of the 2010 financial reform act  that gives the FDIC the necessary authority “to liquidate failing financial companies that pose a significant risk to the financial stability of the United States in a manner that mitigates such risk and minimizes moral hazard.”  It goes on to mandate that “creditors and shareholders will bear the losses of the financial company,” while management should not only be fired but also held personally liable (“bear losses consistent with their responsibility”)  for the wreckage they have caused.  God knows how this got past the lobbyists, but it’s on the books.  Let’s use it, dismantle JP Morgan, Wells, etc.  At that point the Federal Deposit Insurance Corporation would actually own all those loans that homeowners and other borrowers have been struggling to repay.  The banks have been obstructing any reduction of principal by allowing subprime borrowers to refinance at affordable rates.  But a government takeover, which is entirely in the administration’s power, would permit just that.  As a result, homeowners etc would be able to afford their payments, with cash to spare.
Too bad it won’t happen.