Some background info on the two Marines recently awarded the Navy Cross

Source: A friend

ALL,

THE FOLLOWING IS AN EMAIL FROM THE COMMANDER OF MARINE FORCES, IN IRAQ, MAJ GEN JOHN F. KELLY. THIS IS HIS THIRD TOUR OF DUTY IN THAT COUNTRY.

I thought you might want to hear the rest of the story of the
two Marines who earned the Navy Cross out here last April. I believe it
will be awarded in a joint ceremony early in 09. This went to a
reporter friend who is writing their story. I really do think it's a
Rockwell image. Not the killing part, Rockwell was better than that.
It's the picture of the two of them in the early morning heat getting
settled into their watch with the 21 year old "veteran" Corporal Yale
showing the "new kid" the ropes and encouraging him that he'd be OK when
his first action came and how to stay alive in Iraq - seven seconds
before they died.

When I dug into the deaths of these young men, as I always do,
it became obvious to me that there was something more here than just the
"normal" bravery of a couple of young Grunts out on the streets of
Ramadi doing what they are trained to do, what they are paid a measly
amount of money to do, but infinitely more importantly what they join
the Marines to do. Their unit commander knew their deaths were
something different, but was in a quandary as there were no eye
witnesses. Everything pointed to great bravery and an irrational
disregard for their own lives. Then we thought of our allies the
Iraqis. Surely Iraqi policemen must have seen something as it was a
Joint Security Station (JSS). We had to try. As you well know
incredible bravery is routine among these guys and much of it goes
unrecognized because it is so routine. It's everywhere. They do it
naturally and without thought, but this just sounded different.

I drove down to the JSS from Fallujah two days after the blast
and spoke to a number of police officers and we were right, there were
some eye witnesses. They were actually survivors who were only alive to
tell their stories because of these two Grunt Marines who would not save
themselves. I interviewed six or seven cops, but three were most
important and among those who barely survived. A summary of their
statements is below written and signed by me. At the time of submission
for Navy Crosses it was the only "justification" for decorating these
men. Subsequently my computer techs were able to download the entire
event from a security camera that was all but destroyed in the blast.
It documents the event clearly.

This is in many ways a Norman Rockwell story, and I think
can only happen today in our Armed Forces. These men were from
different battalions (1/9 and 2/8) doing their "right seat - left seat"
turnovers, and from different worlds. Yale was a very poor country kid
from western Virginia, Haerter from Long Island. They didn't know each
other, they'd probably only met a few minutes before they were
put on post but they were closer than brothers because they were
Marines. Yale was a few days from going home, Haerter just a few days
in country. As civilians they had very-very little in common. As
Marines they were DNA close and viewed the world through exactly the
same lens. Parris Island and the School of Infantry were their common
experiences. What made them different from everyone in their families
and from everyone they'd grown up with was their desire to serve as
Marines even to their death. As my three condolence letters below the
statement point out (father of one, mother of the other, sister of one)
they were different than all the rest, because they stepped
forward when they didn't have to.

If they were still with us they would not think of
themselves as heroes. They would tell you they were doing their job,
that their lieutenant told them to stand the post they were assigned and
let nothing pass. They wouldn't elaborate much about the event but
would only say that "someone tried to pass...he wasn't authorized to
pass by their lieutenant's order...so we killed him." They had no time
to think about heroics. The truck turned down the alley way (~60 meters
in length) from the main street and accelerated through the jersey wall
serpentine. They knew exactly what was going on. They had it drilled
into them that my greatest fear out here, the biggest threat against us,
the only thing that keeps me awake at night, was a Beirut
suicide-truck bomb. I lost my best friend in that blast back in 1983,
and it was seared into my soul that this was the only means they
(terrorists) had left to really hurt us here in Iraq in a way that would
change everything. The entire event as it appears on the tape was
perhaps six seconds. Six seconds to see the truck, make their
calculation as to what was going on, then decide what was going on, then
make their individual decisions at exactly the same time while flipping
their M-16s off safe and opening up. Six seconds. No time to talk it
over. No time to call the lieutenant. No time to think about their own
lives or even the lives of the American and Iraqi lives they were
protecting. More than enough time, however, to do their duty. They
never hesitated or tried to escape. They never stopped firing until the
tape goes black. We know they are heroes, Tony, but they would not see
it that way.

You ask if you can teach this kind of bravery. The answer to
that is a resounding no. To those of us in uniform who do these kinds
of things, or are expected to do these kinds of things, it's not
bravery, but duty. What you can teach, or better instill, is a sense of
esprit, a sense of commitment to Corps and country, a sense of belonging
to something bigger and more important than any one of us are
individually. It's what the Greek citizens had. What the Roman
legionnaires had. What General Washington's boys had. What the
Greatest Generation had, and what a few of this generation still have.
If you can successfully instill these traits, and the Marine Corps does
it better than anyone else, then what you have is men and women of
character that think in terms of courage, honor and commitment...about
selfless devotion to duty. They don't say it that way, or express it
that way, but they live it in their hearts.

As you know the arithmetic commanders deal with in war,
from the second lieutenant to the commanding general, is not zero deaths
and zero wounded, but how many is too many. Every time you see a convoy
move, or the Marines and our precious Docs at an entry control point, or
clearing a house in Fallujah, it's the same. Commanders do the mental
math and make the deadly calculation. Is five "acceptable"? Perhaps.
Depending on the stakes. Is six too many? Same calculation. In this
case two was what the mission required, and thank God they knew what
they were about. Little consolation for their families I know, and it's
the terrible burden commanders who make these calls carry in their
hearts forever. In the tape an Iraqi policeman can be seen standing
about 20 feet from where the two Marines were firing from inside a
little enclosure. He scrambled like hell and got out of the way before
the huge metal gate, jersey walls, mosque and several houses were all
but consumed--but he survived. "No sane man would have stood there,"
they said. Afterwards my interpreter (30ish, an Iraqi born Kurd but has
lived in the States since he was 13) asked me if I thought they were
crazy. They were not crazy was my response, because not even a crazy
man would have stood his ground like they did. They were nothing more
than a couple of ordinary Marines doing an extraordinary act of
selflessness. They were doing what their lieutenant told them to do and
they were doing their duty, and 50 American families are tonight
spending Christmas Eve with their sons who didn't die that day in
Ramadi.

Semper Fidelis, and Merry Christmas.

Kelly

Kissinger, Obama and the communist Chinese

By Cliff Kincaid, Accuracy in Media

Henry Kissinger made headlines on Jan. 5 by proclaiming Barack Obama to be the architect of a “New World Order.” He told CNBC that “His task will be to develop an overall strategy for America in this period when, really, a new world order can be created. It’s a great opportunity, it isn’t just a crisis.”

But just as significant as this eye-opening statement was where Kissinger made it: the floor of the New York Stock Exchange

(NYSE).

Kissinger, a former Secretary of State, was alongside Stephen Orlins, president of the U.S. National Committee on U.S.-China Relations, and two Chinese officials, as Orlins rang the market bell and declared that the 45 Chinese companies with a market capitalization of $802 billion that are listed on the NYSE were “emblematic of the economic integration of the two countries.”

The opening bell event, which is seen by 100 million viewers on CNBC and other media outlets around the world, illustrates a point in Bill Gertz’s new book, The Failure Factory, that: “Beijing’s influence on the U.S. Government is so pervasive that most Americans remain entirely ignorant of the danger.” Gertz, a prominent defense and national security reporter, describes Kissinger as a lobbyist who exerts “enormous influence on U.S. leaders” and a source of multiple “misguided policies” that benefit China and other U.S. adversaries.

In a chapter titled, “The Sellout of Former Officials,” Kissinger is given a special section because of his influence with Chinese officials that benefits U.S. corporations.

But Gertz is not alone in raising concern about the U.S.-China relationship. The 2008 annual report of the U.S.-China Security and Economic Review Commission found that, “Since China joined the WTO [World Trade Organization] in 2001, the United States has accumulated a $1.16-trillion goods deficit with China and, as a result of the persistent trade imbalance, by August 2008 China had accumulated nearly $2 trillion in foreign currency reserves. China’s trade relationship with the United States continues to be severely unbalanced.”

The commission also found that “The significant expansion of the Chinese government’s involvement in the international economy in general and in the U.S. economy in particular has concerned many economists and government officials due to uncertainty about the Chinese government’s and the Chinese Communist Party’s motivations, strategies, and possible impacts on market stability and national security.”

Corporate members of the U.S. National Committee on U.S.-China Relations are not named on the group’s website. But they are said to “find that association with the National Committee is often helpful in their own dealings with Chinese authorities and it provides avenues to articulate policy concerns.”

Board members include prominent Republicans and Democrats, including former Clinton Secretary of State Madeleine Albright and former Republican Rep. Jim Leach, who spoke on Obama’s behalf at the Democratic National Convention and was one of his personal representatives to the G-20 meeting in Washington on the international financial crisis.

For his part, Obama raised eyebrows during the campaign when he praised the Chinese state-directed economic system in connection with the staging of the Olympic Games. Indeed, Obama was captured on tape saying that Chinese infrastructure was superior to that of the U.S.

While telling CNBC that he expected Obama to build a New World Order, Kissinger praised Obama’s “extraordinary” appointments in the “international and financial fields.”

Besides talking to CNBC, Kissinger gave an exclusive interview to the official Chinese news agency on the occasion of his visit to the New York Stock Exchange and said that the U.S. and Chinese governments will have to work together to rebuild the global economic system.

Kissinger spoke with “emotion” as he described the achievements of the Chinese people under communism and is regarded as “an old friend of the Chinese people,” Xinhua said.

Indeed, China seems to be in the driver’s seat as a result of the financial and economic crisis and Kissinger’s policies.

At the recent official Strategic Economic Dialogue between the U.S. and China, a Chinese official, Vice Premier Wang Qishan, told Washington to “take the necessary measures to stabilize the economy and financial markets, as well as to guarantee the safety of China’s assets and investments in the United States.”

Treasury Secretary Henry Paulson, who was in the audience to hear these remarks, has been trying to do so, having fashioned federal bailouts of U.S. financial institutions that have benefited China’s investments in the U.S. Paulson was the keynote speaker at the annual gala of the National Committee on U.S.-China Relations on October 21 in New York. “While some see China as a threat that must be countered or contained, I believe that the only path to success with China is through engagement,” Paulson said.

Before that, on June 18, the National Committee had honored Vice Premier Wang Qishan.

Kissinger used to run the firm Kissinger McLarty Associates, which is now just McLarty Associates, named for former Clinton chief of staff Thomas F. McLarty. The firm’s website consists of one page and no names of any clients, who are said to be “in every region of the world.”

Although one event held in 2006 for members of Congress under the auspices of the National Committee on U.S.-China Relations was described as off-the-record, Neil King of the Wall Street Journal and Carol Giacomo of Reuters were said to have been invited to attend as observers, and King did produce a short, four-paragraph story about some of what was said. King reported that the basic message of the event, which featured Kissinger and Albright as speakers, was that Communist China meant no harm to the U.S.

David R. Gergen, a senior political analyst for CNN, is identified as being on the board of the National Committee on U.S.-China Relations. In his official bio, however, Gergen lists membership in the Council on Foreign Relations and the Trilateral Commission but no affiliation with the pro-China group.

Pelosi Turns Back the Clock on House Reform

By JOHN FUND

Every two years the leadership of the U.S. House of Representatives introduces a new set of rules to govern the body. Normally, this event passes with barely a yawn from the public. But the changes pushed through on Tuesday by Democrats will have real-world consequences for fiscal conservatives of both parties.

Gone are term limits for committee chairmen, a big comeback for seniority over merit. Cost containment measures on Medicare, one of the fastest growing programs, are simply suspended for this Congress.

Tax increases now will be easier to pass, because opponents will not be allowed to offer a simple motion to strike any increase without making up for the "lost revenue." In addition, tax cuts are made more difficult, because they cannot be offset with spending cuts. The new rules will mean that the only way to push for a tax cut will be to propose a tax increase elsewhere.

Democratic leaders said these changes were needed to make the legislative train run faster. "Congress has to accomplish things," said Massachusetts Rep. Jim McGovern of the Rules Committee. "This is designed to help us do just that."

To further grease the wheels, Democrats have also emasculated the "motion to recommit" -- a procedural safeguard first given to the minority a century ago after a rebellion against tyrannical GOP Speaker Joe Cannon. It has been used by both parties to offer motions to "recommit" or send back bills on the floor to the relevant committees.

Republicans used the tactic 50 times in the last Congress, primarily to block tax increases buried in larger bills. Sometimes they also used the device to tack on a popular amendment to a bill -- such as an amendment in 2007 ending Washington, D.C.'s, then-existing gun ban, which was added to a bill on voting rights for D.C. residents. That made the overall bill political poison, forcing an infuriated Speaker Nancy Pelosi to pull the bill off the floor.

Her new rules package severely limits the use of motions to recommit. Dismissing GOP complaints about this change, Massachusetts Rep. Barney Frank said the minority was only "interested in game playing."

Mrs. Pelosi used to see things differently. Back in 2004, she unveiled a proposed "Bill of Rights" to protect House minority interests. It called on Republicans to allow more meaningful substitutes to bills, give members enough time to read bills before final votes, and stop holding roll-call votes past the normal 15 minutes. She had a point. In late 2003, Republican leaders held open a roll-call vote on the Medicare drug entitlement for three hours until they bullied enough wavering members into voting aye.

Mrs. Pelosi warned in 2004 that "When we [Democrats] are shut out, they are shutting out the great diversity of America." We want a higher standard." In 2006, just before becoming speaker, Mrs. Pelosi reiterated her plans to promote "bipartisanship" and "to ensure the rights of the minority."

That was then. This month, she even suggested passing a huge new stimulus package before Barack Obama is sworn in on Jan. 20.

Panel Steps Up Criticism of Treasury Over TARP

Treasury can NOT account for billions of bailout bucks!

The Global Poverty Act: Redistributing America's Wealth NWV.com

By NWV News Director Jim Kouri

Are Americans responsible for the welfare of everyone in the world? "Obama and Biden think so!" claim many US conservatives. According to conservative activists, there is a clandestine senate bill that awaits signing by President Barack Obama once he's sitting in the Oval Office.

This legislation

requires the President of the United States "to develop and implement a comprehensive strategy to further the United States foreign policy objective of promoting the reduction of global poverty, the elimination of extreme global poverty, and the achievement of the Millennium Development Goal of reducing by one-half the proportion of people worldwide, between 1990 and 2015, who live on less than $1 per day."

"While Champagne glasses clink and bubbly is flowing, a secret Bill is hiding in the background ready to spring to life. The Obama/Biden honeymoon will be the prefect time to launch this lurking monster. They are hoping not a soul will notice," said conservative strategist Michael Baker.

Senate Bill 2433 is said to be so devastating, that it will strip America of all its sovereignty and dignity. Read article.

...."Basically, the American taxpayer will be expected to feed, water, educate, give child support, housing, medical care while the third world country surrenders their governmental control to the US," he added.

Iran, Terrorism, Proliferation and Shariah-Compliant Finance

(Compiler's note: A must read item.)

by Christopher Holton

In April of 2008, I attended Harvard Law School's celebration of "Islamic Finance." This event has been labeled by others as "shilling for Shariah" at Harvard and, I must say, that is exactly what it was. During the two days of presentations, there was absolutely no critical thought expressed on the wider issue of Shariah. No one at this event expressed any concern that there might be some problems associated with introducing Shariah into the West or that there might be a possible connection between Shariah and Jihad.

I found this very curious, given the handout that was distributed to conference attendees: Top 500 Islamic Financial Institutions.

On its face, nothing about this publication seemed spectacular. It was a supplement to the November 2007 issue of The Banker, a British financial magazine. It is common knowledge that Shariah-Compliant Finance has a firm foothold in the UK.

But I was truly shocked when I started thumbing through the piece and came to a feature article on page 22. The headline for the article was Iran dominates in the world of sharia compliance.

In the entire two-day Harvard Law School conference, no one uttered the word "Iran." Yet the feature article in the conference handout celebrated the fact that Iran was atop the world of Shariah-Compliant Finance – the same Iran which is the world's foremost sponsor of Jihadist terrorism, a serial nuclear proliferator, has threatened other countries with genocide and armed insurgents in Iraq with advanced weaponry with which they killed American GIs.

THIS is the country that "dominates" the world of Shariah-Compliant finance.

The revelation about Iran's prominent role in Shariah-Compliant Finance should be especially significant given the fact that the promoters of Shariah-Compliant Finance like to tout it as a form of ethical investing, want to market it cloaked as such to non-Muslims and claim that Shariah Compliance prohibits investments in "weaponry" as the Washington Post put it in an article back in October.

This is where things really get disturbing.

Also listed in The Banker supplement were the top 500 Islamic financial institutions. Numbers 1, 2, 5, 8, and 11 are all Iranian firms – and all are state-owned.

Number 1 in the world, the top Islamic financial institution in the world is none other than Bank Melli of Iran.

There is a lot that you should know about Bank Melli – and a lot that the folks at Harvard Law School back in April were choosing to ignore.

In October of 2007, the U.S. government imposed sweeping sanctions specifically targeting Bank Melli, citing Melli's financing of the Iranian nuclear and ballistic missile programs, as well as facilitating $100 million of payments from the Iranian Revolutionary Guard Corps Quds Force to the terrorist organizations HAMAS and Palestinian Islamic Jihad.

Ethical investing? I guess it all depends on your definition of "ethical." Or maybe it simply depends on whose side you are on...

But the story of Shariah-Compliant Bank Melli does not end there, far from it.

In June of 2008, the European Union, not exactly a hawkish anti-Iranian bloc, also imposed sanctions on Bank Melli due to its involvement in financing aspects of Iran's nuclear program. Australia followed suit by imposing sanctions specifically aimed at Bank Melli in October 2008, just a few months ago.

So, the world's top Shariah-Compliant financial institution is under sanctions by dozens of countries around the globe, including the U.S., for its ties to terrorism and nuclear proliferation.

If a bank like this can be considered A-OK by Shariah authorities, exactly what kind of standards are they using? Unfortunately, they are just going by the book. Literally.

To round things out, you may have recalled that Bank Melli appeared in the U.S. news media again back in mid-December. It seems Shariah-Compliant Bank Melli had formed a front company in New York City called ASSA Corp. to funnel funds from U.S. activities, especially Manhattan real estate, to Iran. You can find complete details of this scheme here.

Despite all of this, the promoters of Shariah-Compliant Finance in the West continue their celebration of Bank Melli.

The bank itself touts its international ranking as the world's top Shariah-Compliant institution on its own web site.

Meanwhile, in November of 2008, The Banker published new rankings and Iran is still "dominating" the world of Shariah-Compliant Finance, with more than double the assets of any other nation. And, once again, led by terrorist-financing and nuclear proliferating Bank Melli, six of the top ten Shariah-Compliant financial institutions are Iranian.

So the next time you read an article or report extolling the ethical and wondrous virtues of Shariah-Compliant Finance, remember Number 1, Iran's Bank Melli.

Police Study Way to Jam Cellphones in an Attack

By AL BAKER

New York police officials are studying the feasibility of disrupting cellphone communications between terrorists during any attack, after revelations that gunmen in Mumbai received electronic transmissions during their killing spree in November.

Police Commissioner Raymond W. Kelly raised the possibility in Washington at a Senate hearing on Thursday, but he noted there were technological hurdles to shutting down cellular service in a narrow location, like a hotel or movie theater.

At the hearing of the Senate Committee on Homeland Security and Governmental Affairs, Mr. Kelly testified, “Law enforcement needs to find ways to disrupt cellphones and other communications” during an unfolding crisis like the one in Mumbai.

But he stressed, under questioning by senators, that care must be taken in pursuing such plans, suggesting that widespread shutdowns could hamper emergency personnel or keep civilians from making emergency calls.

Later, Paul J. Browne, the Police Department’s chief spokesman, said the department wanted to preserve the option of monitoring conversations between terrorists should that prove more advantageous than cutting them off. He said that any plan to shut electronics transmissions was “only in the discussion stage.”

Mr. Browne said, “Our communications and technology people are looking for ways to disrupt cellphone and hand-held devices in a pinpointed way.”

He added: “We are not at a point where we are testing any equipment. We are talking to the industry and to people in other government agencies and among ourselves. What is known about this? What is possible? And what is being tested along these lines?”

Electronic jamming of cellphones or of global positioning systems is complicated but possible, and might already be in use by foreign military agencies, said Eric Lustig, a data systems manager at Eastern Communications, a Queens company that provides radio equipment to government agencies and other clients.

Cellular service in a big region, like a borough, could be simply shut down, he said. More compact sites, like an official motorcade, could be jammed by devices in the cars.

“You cannot draw straight lines around, or a circle around, an area where you would do it, but it is certainly possible to jam an area,” Mr. Lustig said. “If you are talking about a tall building, you would knock out cellphone communications for a far larger area. If you just wanted to knock out cellphones in a movie theater, it could be done.”

Mr. Lustig said it would be much more difficult to jam a satellite phone than a cellular phone, since the antenna is pointed at the sky.

Eric Schmitt contributed reporting.

D.C. subway braces for Inauguration Day crush

(Compiler's note: This describes a "target rich" environment.)

By Thomas Frank and Kevin Johnson

WASHINGTON — Lisa Farbstein was blunt when she described the suffocating conditions expected in Washington subways on Inauguration Day.

"We call it crush load," said Farbstein, a spokeswoman for Washington's transit authority. "It's going to be very uncomfortable."

Security officials and experts are voicing concern not only about the comfort level, but also about protecting the system from terrorists Jan. 20.

"Given the historic nature of this election and the number of people who are going to be here, the eyes of the world will be focused on D.C." — including those of possible terrorists, said Brian Jackson, an analyst at RAND Corp., a think tank.

More than 1 million riders are likely to cram into Washington's subway cars on Inauguration Day, shattering the single-day record of 850,000 set this past July 4, said Jim Graham, a member of Washington's City Council. The system averages 750,000 riders on weekdays and is the USA's second-busiest, behind New York City's.

FIND MORE STORIES IN: White House | Barack Obama | Virginia | Boston | London | Maryland | New York City | Utah | Sacramento | Madrid | Transportation Security Administration | City Council | Mumbai | Amtrak | National Mall | Rand Corp | Pennsylvania Avenue | Union Station | Inauguration Day | Reagan National Airport | San Jose State University | Ronald Reagan Washington National Airport | Office of Emergency Management | John O'Connor | Brian Jenkins | Brian Jackson | Washington Metropolitan Area Transit Authority | Inaugural Parade | Jim Graham | Jerome Hauer | Steven Taubenkibel

Because rail cars and public buses are likely to be full all day, mass transit will get "special attention," said John Perren, who heads the FBI's counterterrorism division in Washington. "Those areas of high concern are in those enclosed areas."

The Washington Metropolitan Area Transit Authority, which runs a regional subway and bus system, has asked transit police from other cities to send officers, the first time such help has been sought for an inauguration, authority spokesman Steven Taubenkibel said.

Roughly 150 police officers and bomb-sniffing dogs will come from 12 transit authorities, ranging from New York City and Boston to Sacramento and Utah. The Transportation Security Administration will provide 10 dog teams.

"We're doing everything we can," Graham said.

Terrorists have attacked mass transit systems more than any other transportation venue, said Brian Jenkins, director of the National Transportation Security Center at San Jose State University. A study by Jenkins in 2007 found there were an average 30 attacks a year on rail systems from 1998 to 2003.

Since then, terrorists have staged high-profile attacks on rail systems in Madrid, London and Mumbai, where an attack in 2006 killed more than 200 people.

Subway security has been increased for past major events, most notably the 2004 Democratic and Republican conventions, held in Boston and New York City. Police in those cities searched subway riders at random and focused on people who had large bags or appeared suspicious, perhaps by wearing a heavy coat in the hot weather.

Cold weather is likely at Barack Obama's inauguration, so a terrorist hiding a suicide vest under a heavy coat would blend in with the crowd, said security consultant Jerome Hauer, former head of New York City's Office of Emergency Management.

Another concern is that the Washington transit authority, known as Metro, is not putting any special restrictions on what subway riders can carry on cars Jan. 20. "Passengers may be going to other places and need to carry briefcases to work," Taubenkibel said.

Suitcases are a common sight on two of the system's five subway lines that run through downtown Washington on their way to Ronald Reagan Washington National Airport.

"You certainly could put a size limitation (on bags) for one day," Jenkins said. Size restrictions might not stop a bombing but could limit its lethality, Jenkins said.

The subway system has 86 stations in Washington, Maryland and Virginia, 106 miles of track and 420 police. Each rail car can hold about 150 people.

Trains go throughout downtown Washington and run within a couple of blocks of the White House and the Capitol but do not travel underneath those buildings.

Subways pass under Pennsylvania Avenue, site of the Inaugural Parade, and the National Mall, where more than 1 million spectators are likely to watch the inauguration.

Amtrak authorities are preparing for a single-day record number of travelers on inauguration morning in Washington's Union Station, an iconic 101-year-old marble structure. Dogs will sweep the station, and police will be ubiquitous.

"You won't be able to go 20, 30 feet without seeing someone in authority," said John O'Connor, Amtrak police chief.

New York Police Learn from Mumbai Attacks

by Mickey McCarter

Officers of the New York Police Department (NYPD) traveled to Mumbai last month to examine the methods used by terrorists in the attacks there on Nov. 26, 2008, and have incorporated lessons learned from the attacks into the department's training, New York City Police Commissioner Raymond Kelly told the US Senate Thursday.

Police recruits first received training in three types of heavy weapons last month, based on the department's observations of the kinds of weapons used by terrorists in the Mumbai attacks, Kelly said. Earlier that month, the department conducted a tactical drill for its Emergency Service Unit and a tabletop exercise based on the attacks.

"In the exercise with our command staff, we raised the possibility that we might have to deploy our Emergency Service officers too thinly in the event of multiple simultaneous attacks such as those in Mumbai," Kelly testified before the Senate Homeland Security and Governmental Affairs Committee. "We also recognized that if the attacks continued over many hours, we would need to relieve our special units with rested officers. In response to both challenges, we have decided to provide heavy weapons training to experienced officers in our Organized Crime Control Bureau."

The officers visiting Mumbai toured the crime scenes and quizzed police authorities in India, Kelly explained. They realized that the terrorists, suspected to be part of Islamic group Lashkar-e-Taiba, had trained well and sometimes new the layout of buildings they targeted better than police forces did. In response to that observation, New York City police offices have been touring hotels and other major facilities in the city to improve their familiarity with buildings that could be targets of terrorist attacks.

Kelly raised concerns that the Mumbai attacks marked a shift in strategy for a major terrorist attack.

"From the perspective of the New York City Police Department, one of the most important aspects of this attack was the shift in tactics from suicide bombs to a commando-style military assault with small teams of highly trained, heavily armed operatives launching simultaneous, sustained attacks," he stated. "They fanned out across the city in groups of two and four. They carried AK-56 assault rifles, a Chinese manufactured copy of the Russian AK-47."

The highly coordinated assault killed six Americans, including two New Yorkers. Mindful that the attackers entered Mumbai via small boats, Kelly emphasized that the city's harbor police have weapons training and sends divers to inspect vessels.

New York police also keep updated on security developments in their city through special partnerships, including NYPD Shield, an alliance between the department and private security managers in New York City; Operation Nexus, which includes businesses that terrorists might attempt to exploit; and Security our Cities, a Department of Homeland Security initiative to place radiation monitors around the city's perimeter.

Obama Admin to Inherit Southern Border Nightmare

by Anthony L. Kimery

‘Mexico is ... fighting for survival against narco-terrorism’

Barack Obama shortly will inherit a war an ocean away in the Middle East that potentially could spiral out of control dragging the US into it, but he immediately faces a far more deadly war that’s raging on his own back doorstep on the US-Mexican border. It's a war fast becoming America’s most serious and direct homeland security threat as described in the January HSToday cover report, Savage Struggle on the Border.

Ground zero of America’s war on drugs is in Mexico, where President Bush recently told the Washington Times Obama faces a looming war with drug cartels where "the front line of the fight will be Mexico."

Department of Homeland Security (DHS) Secretary Michael Chertoff acknowledged this past week that he told Obama’s choice to succeed him, Arizona Gov. Janet Napolitano, that he had had to put the border security problem at the top of his list of immediate national security concerns. ....

Cutting Off Rogue Nukes

by Phil Leggiere

Senator Bayh urges Obama administration to champion nuclear fuel bank concept.

Over the past few years significant progress has been made in addressing the threat of nuclear terror through technological improvements in detecting potentially smuggled nuclear materials, and better operational intelligence and forensics to identify and disrupt black market distribution networks of ‘loose” nuclear materials.

Despite this progress, however, relatively little progress has been made in cutting off the potential supply chain of rogue nukes at its most likely origin, rogue nations using the legal cover of legitimate civilian nuclear energy programs as a pretext to acquire nuclear bomb making capability.

In a Memo to the President”, published by the Progressive Policy Institute, Senator Evan Bayh (D-IND), makes the case that preventing that kind of duplicitous access needs to become a top strategic counter-terror priority for the incoming Obama administration.

“The 21st century has ushered in unprecedented demand for energy around the world,” Bayh writes in his memo. “Given the rapid rates of growth in such developing countries as China and India, prices for traditional sources of energy are likely to remain high. Supplies of oil, gas, and coal are finite, so countries increasingly are looking elsewhere for affordable and clean sources of energy. Nuclear energy, which generates tremendous power with no greenhouse-gas emissions, is an obvious place to look.”

The problem with this, the memo points out, is that, “As nuclear generating plants sprout up around the world over the coming decades, many new states will get their hands on nuclear technology and materials. This will exponentially raise the risk of fissile or bomb-making material being acquired by rogue nations or terrorist groups.”

Current global regulation and oversight of this process, which is based on the Treaty on the Nonproliferation of Nuclear Weapons (often referred to as the Nonproliferation Treaty, or NPT), negotiated back in mid-1970s is currently woefully inaccurate, Bayh argues.

In particular, Bayh explains, the NPT recognizes the “inalienable right of all Parties to the Treaty to develop research, production, and use of nuclear energy for peaceful purposes.” This provision, which was exploited by North Korea in its drive to develop nuclear weapons capacity, is also being abused by Iran.

“Once this genie gets out of the bottle, there is no putting it back,” Bayh says. ‘At a minimum, allowing Iran to obtain a nuclear warhead would be a regionally destabilizing event certain to spark a Middle East arms race. At worst, it would be a global security catastrophe in which Tehran obtains the means to blackmail its European neighbors and threaten Israel’s destruction."

The threshold question, according to the memo is: How do we respond to valid and growing demands for civilian nuclear energy worldwide without permitting more countries to acquire nuclear weapons?

The answer, in Bayh’s view, is to set up an international nuclear-fuel bank that would supply fuel to any country that agrees not to develop its own enriching and reprocessing facilities.

The proposed fuel bank would allow developing nations seeking civilian nuclear power for peaceful purposes to gain access to a reliable and affordable supply of nuclear fuel. In return they would need to agree to forgo enriching uranium themselves and also submit to rigorous inspections of their civilian reactors to guard against North Korean and Iranian-style cheating. It would allow countries to draw fuel for use in their own civilian nuclear reactors and then return the spent fuel for safe reprocessing under the oversight of the International Atomic Energy Agency (IAEA). Countries, on the other hand, that refuse fuel-bank services would come under immediate suspicion about their weapons intentions.

The economic advantages of this approach over indigenous fuel cycle development would be significant to developing nations, according to Bayh.

“Due to bigger economies of scale,” he writes,“it is now much cheaper for countries lacking enrichment capacity to purchase fuel. Even a small enrichment facility would cost at least $1 billion to build and more than $100 million to operate each year. But an international nuclear-fuel bank could supply the same amount of fuel at market prices for roughly $15 million a year.”

Bayh’s newest push for the formation of a global, multi-nationally administered nuclear fuel bank, revives an effort he and Senate collegues initiated two years ago.

In 2007 Bayh along with Sen. Richard Lugar (R-Ind.) introduced legislation that would facilitate create the multinational supply regime outlined in the memo. The bill, titled The Lugar-Bayh Nuclear Safeguards and Supply Act, S. 1138 and strongly supported by then Senator and now Vice-President Joe Biden, would make it US policy to discourage the development of enrichment and reprocessing capabilities in additional countries, to encourage the creation of bilateral and multilateral assurances of nuclear fuel supply, and ensure that all supply mechanisms operate in strict accordance with the IAEA safeguards system and do not result in any additional unmet verification burdens for the system.

In August 2008 the US Department of Energy has announced a $50 million donation to the International Atomic Energy Agency (IAEA) for the purpose of establishing an International Nuclear Fuel Bank.

Watch Obama commercial they don't want you to see

Fox, CNN, MSNBC refuse ads questioning Barack's eligibility

from WorldNetDaily

"With the date for congressional approval (of the Electoral College today), we wanted them to have access to the facts," she told WND. "Congress is sworn to uphold the Constitution."

She said the donors who contributed the funding that was to be used for the ads were being contacted to find out whether they wanted to reach another direction in the media.

The ad to be broadcast already is available on YouTube, and also is embedded here:

"Heard rumors about Barack Obama's citizenship? These are the facts," the ad states.

It cites a statement from the president-elect's paternal grandmother that she was present at his birth in Kenya, his refusal to release his original birth certificate, his attendance at school in Indonesia "as Barry Soetoro when only Indonesia citizens were permitted to attend," and Obama's travel to Pakistan in 1981 "when it was illegal to enter as a U.S. citizen."

Join the campaign to urge the Supreme Court to take the eligibility question seriously by FedExing the justices.

It concludes, "Our Constitution still matters."

Congress officially declares Obama next president

Rayyan Trained His Kids to Die

by Maayana Miskin

(IsraelNN.com) When Hamas leader Nizar Rayyan was assassinated in an IAF strike last week, his four wives and 11 of his children died with him. According to his surviving children, the death of the Rayyan family children was not an accident: Rayyan had trained his wives and children to die with him as "martyrs."

Surviving family members spoke to local Arab media and said that in the days before his death, Rayyan had repeatedly asked his children, "Who wants to die with me as a martyr?" The children would respond, "Yes, daddy, we all want to be with you alive or dead."

Rayyan's adult daughter, Wala, said even the younger children wished to die with their father. "If you had asked my four-year-old sister Aisha, who died in the attack, she would have told you that she preferred to die as a martyr," Wala told Ma'an news.

One of Rayyan's daughter-in-laws said she was offered the chance to die with the family. She stopped by the family's large home in Jabaliya and was asked by Rayyan if she wished to die with him, his wives and their children. She agreed to die, but later left the building, shortly before the IAF strike.

As it turned out, when Rayyan offered his daughter-in-law the "opportunity" to die he had already received a phone call from the IDF warning him to evacuate his house due to an impending airstrike.

The 11 children who died with Nizar Rayyan ranged in age from one year old to 16. Another son died years earlier when Rayyan sent him to carry out a suicide bombing in Gaza. Two Israelis were murdered in that attack. %ad%

Rayyan was one of Hamas' extremist preachers, and believed that those who die fighting Israel die as "martyrs" and go directly to paradise. He encouraged his followers to have several wives and as many children as possible, in order to provide future soldiers in the fight against Israel. He also encouraged Hamas to take over Judea and Samaria and carry out suicide attacks targeting Jews.

Passengers pounce on man who made threats aboard L.A.-bound flight

Musician Chris Llewellyn was among those who sprang into action after a man shoved a flight attendant and tried to open an exit door.

Group That Funded Rep. Ellison's Pilgrimage to Mecca Called a Front for Extremism

Minnesota Rep. Keith Ellison -- America's only Muslim in Congress -- took a trip to Mecca in December that was funded by a group terrorism experts say is tied to the Muslim Brotherhood, an international Islamist movement.

Press Release from Dr. Orly Taitz, ESQ

(Compiler's note: Must read -- if you read nothing else, read this one!)

01.07.09.
Good news,

Chief Justice John Roberts agreed to hear my case Lightfoot v Bowen, challenging eligibility for presidency of Barack Hussein Obama. He distributed the case to the full conference
of the Supreme Court. The timing of this decision by the Chief Justice of the Supreme Court, John Roberts, is absolutely remarkable. On January 7, one day before the January 8 vote by Congress and Senate, whether to approve or object to the electoral vote of Barack Hussein
Obama, aka Barry Soetoro, as president of the United States, Chief Justice Roberts is sending a message to them: “Hold on, not so fast, there is value in this case, read it. Hawaiian statue 338 allows Foreign Born children of Hawaiian Residents to obtain Hawaiian Birth Certificates,
it allows one to get Hawaiian Certification of Life birth based on a statement of one relative only, without any corroborating evidence. You need to investigate, you need corroborating evidence.

If only one Congressman or one Senator presents a written objection, then there has to be a formal investigation by the joint session of Congress and Senate. During this investigation original birth certificate from Hawaii will be subpoenaed. All other pertinent documents will be subpoenaed: Obama’s immigration records, any and all passports from Indonesia, Kenya and Great Britain; University enrollment records, showing if he was enrolled in US schools and universities and received financial aid as a foreign exchange student from Indonesia or Kenya.

All of it can be subpoenaed and obtained within a day or two.

Each and every member of US Congress and Senate owes it to 320 million American citizens to do his due diligence and demand all necessary records. When American servicemen are told to risk their lives defending Constitution of this country against all enemies, foreign and domestic, each and every Congressman and each and every Senator can spend a day or two of their time defending this Constitution, reviewing necessary documents, in order to see if Barack Hussein Obama is a Natural Born Citizen, if he is a citizen at all.”

This is the message that the Chief Justice of the Supreme Court is sending to them, and if they are not listening, there has to be a massive petition drive to recall them. Truth will come out, no matter how many millions Obama is spending to hide it.

Dr.Orly Taitz, ESQ
drorly.blogspot.com

No. 08A524
Title: Gail Lightfoot, et al., Applicants
v.
Debra Bowen, California Secretary of State

Docketed:
Lower Ct: Supreme Court of California
Case Nos.: (S168690)

~~~Date~~~ ~~~~~~~Proceedings and Orders~~~~~~~~~~~~~~~~~~~~~
Dec
12 2008 Application (08A524) for a stay pending the filing and
disposition of a petition for a writ of certiorari, submitted to
Justice Kennedy.
Dec 17 2008 Application (08A524) denied by Justice Kennedy.
Dec 29 2008 Application (08A524) refiled and submitted to The Chief Justice.
Jan 7 2009 DISTRIBUTED for Conference of January 23, 2009.

Also see http://www.worldnetdaily.com/index.php?fa=PAGE.view&pageId=85595

Woman fools Japan's airport security fingerprint system

A South Korean woman barred from entering Japan last year has reportedly passed through its immigration screening system by using tape on her fingers to fool a fingerprint reading machine.

The biometric system was installed in 30 airports in 2007 to improve security and prevent terrorists from entering into Japan, the Yomiuri Shimbun newspaper said.

The woman, who has a deportation record, told investigators that she placed special tapes on her fingers to pass through a fingerprint reader, according to Kyodo News.

Japan spent more than Y4 billion ($A64 million) to install the system, which reads the index fingerprints of visitors and instantly cross-checks them with a database of international fugitives and foreigners with deportation records, the Yomiuri Shimbun said.

The South Korean woman was deported in July 2007 for illegally staying in Japan after she worked as a bar hostess in Nagano in central Japan, Kyodo said, citing justice ministry sources.

She was not allowed to re-enter Japan for five years after deportation but the Tokyo immigration bureau found her in August 2008 again in Nagano, Kyodo said.

A South Korean broker is believed to have supplied her with the tapes and a fake passport, the Yomiuri said, adding that officials believe many more foreigners might have entered Japan using the same technique.

Read more at http://travel.asiaone.com/Travel/News/Story/A1Story20090101-111750.html

The Face of Militant Islam

Source: ACT for America

Our courageous friend Tom Trento ventured to Ft. Lauderdale, Florida last Tuesday to videotape a pro-Hamas demonstration. When you click on the link below to this must-see video, keep in mind, this didn’t happen in the Gaza Strip – it took place right here in America.

http://www.youtube.com/watch?v=j3Xl68kP4wo

When you watch the video you’ll see and hear things that are offensive, deeply disturbing, and, frankly, frightening.

You’ll see signs that say “Nuke Israel.” You’ll hear a woman yell at pro-Israel demonstrators, “Go back to the ovens!!” You’ll hear vulgar profanities.

In the midst of all of this you will see a Muslim leader at the demonstration being interviewed exclaiming that once people really understand Islam they will have “no choice” but to accept it.

And remember that this latest round of violence began with Hamas breaking the cease-fire and launching hundreds of rockets into residential areas of Israel. That’s not very clear from many of the news reports of the past week. Israel has responded to defend itself, as it has every right to do.

AUDIO INTERVIEW: Inauguration Security

Could the battle between Israel and Hamas spill over into the United States? In his weekly interview with Federal News Radio, HSToday Editor David Silverberg discusses how violence in the Mideast may impact security issues for the Inauguration—and how any terrorist violence anywhere requires greater vigilance, alertness and preparedness here at home.

Click here to listen to the interview

"Taking Chance" film scheduled to air Feb 21

Source: from a friend

"Taking Chance" film scheduled to air Feb 21.

Secretary of the AF and the Chief of Staff of the AF.

The HBO film "Taking Chance," starring Kevin Bacon, will have

a world premier Jan. 16 at the Sundance Film Festival in Park City,
UT.


The Air Force and USMC assisted HBO Films

HBO will broadcast the movie Sat., Feb. 21 at 8 p.m

1:53 preview clip of the movie below.


Here's the clip:   http://www.hbo.com/events/takingchance/ 

Terrorists could use 'insect-based' biological weapon

By Stephen Adams

Terrorists would find it "relatively easy" to launch a devastating attack using swarms of insects to spread a deadly disease, an academic has warned.....

He said it would "probably be much easier" than developing a nuclear or chemical weapon, arguing: "The raw material is in the back yard."

He continued: "It would be a relatively easy and simple process.

"A few hundred dollars and a plane ticket and you could have a pretty good stab at it."

Governments, he advised, needed to have robust "pest management infrastructure that's able to absorb and respond to an introduction" of infected insects, he said.

Trying to stop everything coming in at the border would not work, he said.

Rift Valley Fever is an east African disease which "can cause severe disease in both animals and humans, leading to high rates of disease and death" according to the World Health Organisation.

However, WHO says that "the vast majority of human infections result from direct or indirect contact with the blood or organs of infected animals."....

Hamas moves on Fatah 'collaborators'

By KHALED ABU TOAMEH

The Hamas government has placed dozens of Fatah members under house arrest out of fear that they might exploit the current IDF operation to regain control of the Gaza Strip.

The move came amid reports that the Fatah leadership in the West Bank has instructed its followers to be ready to assume power over the Gaza Strip when and if Israel's military operation results in the removal of Hamas rule.

Fatah officials in Ramallah told The Jerusalem Post that Hamas militiamen had been assaulting many Fatah activists since the beginning of the operation last Saturday. They said at least 75 activists were shot in the legs while others had their hands broken.

Wisam Abu Jalhoum, a Fatah activist from the Jabalya refugee camp, was shot in the legs by Hamas militiamen for allegedly expressing joy over the IDF air strikes on Hamas targets.

"Hamas is very nervous, because they feel that their end is nearing," a senior Fatah official said. "They have been waging a brutal campaign against Fatah members in the Gaza Strip."

Meanwhile, sources close to Hamas revealed over the weekend that the movement had "executed" more than 35 Palestinians who were suspected of collaborating with Israel and were being held in various Hamas security installations.

The sources quoted Hamas officials as saying that the decision to kill the suspected collaborators was taken out of fear that Israel might try to rescue them during a ground offensive. The officials claimed that at least half of the victims were killed by relatives of Palestinian militiamen who were killed as a result of information passed on to Israel by the "collaborators."

Justifying the latest crackdown on Fatah, a Hamas official in Gaza City said that his government had received information according to which Palestinian Authority President Mahmoud Abbas had instructed his loyalists in the Strip to start moving toward undermining Hamas.

"We will kill them all if they try to help Israel bring down our government," the official said. "We will hang Mahmoud Abbas and [former Fatah security chief] Muhammad Dahlan in the public square if they try to enter the Gaza Strip aboard Israeli tanks."

The Hamas official said that his security forces had launched a massive "preemptive" campaign aimed at thwarting Fatah's attempts to "spread anarchy and chaos." He confirmed that many Fatah operatives had been shot in the legs over the past few days by Hamas "to make sure that they don't help Israel."

Fahmi Za'arir, a Fatah spokesman in the West Bank, accused Hamas of "executing" a number of Fatah detainees. He said the Fatah leadership knew of at least two Fatah men who were shot dead by Hamas after being released from prison. He named them as Nasser Muhana and Saher al-Silawi.

Za'arir said that several Fatah members who attended funerals of victims of the IAF strikes were severely beaten by Hamas militiamen who accused them of collaboration with Israel.

It was "shameful" that Hamas was directing its weapons and energies against its own people instead of fighting against Israel, the spokesman said.

The decision to place Fatah operatives under house arrest was issued by the much-feared "Internal Security Apparatus," which reports to the Hamas-controlled Interior Ministry in Gaza.

The order, which was delivered to the Fatah activists on Thursday, reads: "You are forbidden from leaving your home for 48 hours unless you want to attend Friday prayers. Anyone who violates the order will be punished."

Son of Hamas Leader Gives Glimpse Into Terror Organization

from Fox News

As Secretary of State Condoleezza Rice and other world leaders try to broker a cease-fire agreement between Israel and Hamas, one former member of the militant Islamic organization said there will never be lasting peace between the two groups.

"There is no chance. Is there any chance for fire to co-exist with the water?" said Mosab Hassan Yousef, the son of one of the group's founding members.

Yousef added: "It's not about Israel, it's not about Hamas: it's about both ideologies."

Yousef, son of Sheikh Hassan Yousef, one of the most influential leaders of the militant group, said the organization betrays the Palestinian cause and tortures its own members.

• Video: Click here for more on FOX News' special Escape from Hamas.

Hamas, formed in the late 1980's as an outgrowth of the Palestinian branch of the radical Muslim Brotherhood, is considered a terror organization by the U.S. government. Hamas seized power in the Gaza strip in 2007 in a violent coup against the more moderate Palestinian Authority led by Mahmoud Abbas.

Yousef said he was indoctrinated at an early age to use violence to challenge Israeli control in the region. As a teenager he moved up within the organization and became the leader of the radical Islamic Youth Movement that fought Israeli tanks and troops in the streets, celebrated suicide bombings and recruited young men to the cause.

Yousef, 30, said he realized the true nature of Hamas and radical Islam during a stint in an Israeli prison. He renounced his Muslim faith, left his family behind in Ramallah and converted to Christianity.

"Islam is not the word of God," said Yousef. "If you want to be offended it's your problem. But you know something? Go study. Think for a second that I might be right. So wake up, look at your path, see where you're going. Are you really going to heaven with 72 virgins after you kill yourself and kill another 20 people?"

Yousef has sought asylum in the United States and now attends an evangelical Christian church in San Diego, Calif.

"The Hamas leadership, including my father, they're responsible; they're responsible for all the violence that happened from the organization. I know they describe it as reaction to Israeli aggression, but still, they are part of it and they had to make decisions in those operations against Israel (for) which there was the killing of many civilians."

Yousef talks more about his extraordinary story of faith, courage, violence and betrayal in a FOX News documentary, "Escape From Hamas," hosted by Bill Hemmer.

Escape from Hamas airs Saturday at 9 p.m., with repeats at 1 a.m. and 4 a.m. EST, and Sunday at 9 p.m., with repeats at 12 midnight, 2 a.m., EST.

• Click here to view video of Mosab Hassan Yousef speaking out.

Roseanne Barr blasts Israel as 'Nazi state'

(Compiler's note: She is one sick woman. And will someone explain to me one more time exactly what her qualifications are -- other than being a "TV Star" -- on the subject she is discussing?)

Iranians urge kids to fight 'evil' Israel

from WorldNetDaily

Amid Israel's counteroffensive in Gaza to stop rocket attacks against its civilian population, an Iranian children's TV show taught toddlers to embrace "martyrdom" and hate their Jewish "enemies."

The TV host asked the Iranian children what they would do if they were in the place of the Palestinian children, "Would we surrender, or would we fight back?"

The children replied in unison: "Fight back."

A child chimed in: "We would all get together so we could fight. ..."

The TV host finished the child's sentence: " ... the enemies and the bad people. That's right, we would struggle against them and fight them."

The host declared she is willing to be a martyr for Islam.

"I am willing to sacrifice myself. I am willing to sacrifice my arms, my legs, and all my limbs, my family, and my property, in order to achieve my goals," she said.....

Muslim 'preachers of hate' hunted

LONDON -- Thousands of Britain's local government employees will return to work in 2009 to find they have been recruited to help MI5 identify Muslim "preachers of hate."

Refuse collectors, parking wardens and postmen will be among those who will be told to watch out for anyone they think "skirts the fringes of the law" under the Counter-Terrorism Local Profiles Campaign, which Home Secretary Jacqui Smith has announced.

"It will enable us to more quickly identify extremists and preachers of hate in our midst," MI5 director Jonathan Evans has told his officers.....

“Wall Street’s Next Big Trade…”

(Compiler's note: "Follow the money" still holds true for the coming bailouts)

by Larry Johnson

Secretary of the Treasury Henry Paulson has become a household name over the course of 2008. Paulson has been roundly criticized for his mixed messages and inconsistent use of funds from the $700 billion TARP (Troubled Asset Repurchase Program).

While most of us have seen more of Henry than we would have ever cared, allow me to introduce you to another Paulson. John Paulson (no relation to Henry) is one of, if not, the most highly acclaimed and profitable hedge fund managers on Wall Street. While investment banks, hedge fund managers, and most asset managers were investing in and promoting sub-prime mortgages and the like, John Paulson was “going the other way.” In 2006, he started shorting sub-prime originators, the ABX (the CDS index that tracked the sub-prime market) and the investment banks that most heavily trafficked in this sector. He personally and the investors in his fund made tidy fortunes in the process.

The reason for my introducing you to John Paulson at this juncture is because he wants to enter the world of community banking. One may wonder why a titan from Wall Street would want to enter into the world of regional and community banking.

This past summer, the first large bank to fail was Indymac Bank located in Pasadena, CA. Since then there have been another 24 banks that have failed with another 200 on the FDIC “watch list.”

Enter John Paulson, along with J.C Flowers of private equity shop J.C Flowers and Co., and Steve Mnuchin from hedge fund Dune Capital. Paulson, Flowers, and Mnuchin are about to purchase Indymac. Flowers already took a controlling stake in a small community bank in Missouri. By the end of Friday, none other than George Soros and Michael Dell were also part of the consortium purchasing Indymac. With a group as high profile and diverse as this, do you think they are getting a fabulous deal?

What do these transactions give them? Well, what does any hedge fund or private equity shop want? Cheap funding, a strong backer that will absorb losses, a bigger balance sheet, and a source of cheap assets. Indymac Bank provides cheap funding from the consumer deposit base (savings and checking accounts paying very little and CDs paying 2-3%). Indymac Bank has a strong backer in the form of the U.S. government that will agree to underwrite a significant percentage of non-performing assets. This loss sharing technique was widely utilized in the S&L meltdown in the late ’80s and will very likely be used again. Indymac Bank has cheap assets currently on its books but also can utilize its balance sheet to buy more cheap assets as it lays off unwanted assets onto ………the U.S. government!!

What do these hedge fund and private equity fund managers bring to the equation? Capital and an expanded balance sheet, both of which are desperately needed by our banking system currently.

Why have banking regulators, the FDIC and the Office of the Comptroller of the Currency, been reluctant to engage these companies and others like them in the purchase of failed institutions? I mean, this is the essence of capitalism and risk taking, correct? Shouldn’t these purchases be promoted? Even our highly respected analyst Meredith Whitney has been recommending that federal funds be directed toward smaller regional and community banks. Won’t these transactions help accomplish that? Not necessarily!!

My concern, and it has been shared by the regulators to this point, is that these hedge fund and private equity managers will not promote the core mission of community lending at these banks.

Hedge fund managers and private equity investors are primarily focused on return on capital without the obligations of traditional banking. How do they most effectively achieve that? Cut expenses and overhead as aggressively as possible. In my estimation, they would just as soon have an online bank with little to no infrastructure. Utilize adverse selection in terms of assets at these banks that they will retain. Adverse selection is simply the process of cherry-picking the existing portfolio. The government will certainly end up with the dregs. Grow the portfolio not through lending but via the purchase of illiquid assets already in the marketplace which have expected returns higher than those on traditional lending.

Another concern is the potential conflict of interest in the bank activities versus the ongoing investment activities at the hedge fund and private equity fund. If there is ever a situation screaming out for aggressive regulatory oversight it is the entry of these buyers into the banking business.

Again, I am a strong and steady proponent of free and open markets in which private capital has an opportunity to take risk to generate returns. I welcome and applaud the government for the willingness to deal with “new money” but I hope that strong and demanding regulators are reviewing this operation regularly. We need to make sure these new buyers know how to “play nice in the local sandbox.”

Read more about this deal and how the rough and tumble world of hedge funds and private equity wants to “come to a town near you”….

SEE: WSJ article

I thought that it may also be helpful to provide a link which highlights all of the banks in our country. This list comes from the FDIC and ranks, in descending order, the risk embedded in these banks as measured by their troubled credits utilizing the Texas Ratio, which is determined as follows:

100 * ((non-performing assets - U.S. gtd loans) + other REO (real estate owned)) / (equity + loss reserves)

The 95 banks with a ratio higher than 100 are considered to be in very serious danger of collapse. Well worth a look!! Additionally those banks with very low ratios may be a great place to start for those looking to make equity investments.

LewRockwell.com

I have to believe that Messrs. Paulson, Flowers, Mnuchin, Soros, and other hedge fund and private equity managers are already booking travel plans!!!

Trying to stay ahead of the curve for you here at NQ!!!

LD