Saturday, April 11, 2009


Dubai - model for a post-crash neo-feudal slavery


Dear friends,

Here is an interesting snapshot of how a slave economy can work in the new global government rising as we speak.

Notice in the article how nobody in Dubai wants to look at the slavery. It probably always works out like that. We avert our eyes to the suffering of others so long as we are still doing OK. As the article shows a number of times, even the slaves don't want to look at their own condition because they are defeated and they are ashamed and all their efforts to resist are put down like zoo animals.

This is how the futurist "hive cities" that are already on the drawing board for implementation in the US could be run. Think about it, this is easy, just grow a big underclass and export them to another city as a foriegn slave class. Two birds killed with one stone. 1) slaves are employed and 2) as imported slaves, no local will care because they are foreigners. In this way, hive-cities like Dubai can continue to serve a relatively small middle class struggling for a normal life while a super tiny elite class that own all property, water rights, money, passports, transport, food, fuel, police, businesses... everything.

The author fails to recognize what he is truly writing about here. Neo-feudalism is the direction we are headed and this story illustrates how to implement it in modern times like few other stories have done so far.

One more time - Dubai is a perfect model for a post-crash neo-feudal slavery in a rising global government lacking cheap energy.

Am I going to leave you with that negative thought? I will try to give some support here because I am accused of being a doomer sometimes, which is unfair since my predictions come true so often and the "non-doomers" are wrong 90% of the time these days. So here is the support then.
How NOT to get NOT to get caught up in this slave system?

Well, first of all, don't go abroad for work carrying bricks and stuff like. Lowest class of workers as foreigners are never free and always seem to live in cages. So how to avoid that? Be as self sufficient as possible in a country you can call your own. How to do that? We have been discussing that for a long time here. Basically it amounts to arable land and extended networks and solid families and natural water supply and distance from mega-city and whatever else you can think of... silver, guns, food storage, retrofitting, repairing skills... etc, etc...

In short, things are going to get a LOT, lot-lot toughter for decades. That is not doomer-speak it is reality. It is simply not reasonable to think this population correction and energy dependence correction and debt-money correction is going to be over in a year or two. Look, the convergence of catastrophes I have been talking about for 9-years are here now. No arguing about whether they are real. Now they are here so we need to simply act like mature adults and look at them. BIG massive convergence of correction on those primary drivers of debt, population, energy dependence (energy=food). This is a first ever in human history convergence of catastrophe here.

So threats are real OK? Solutions are either false (like Dubai) or real (like organic family farm). Those are the two general options for common people. That is a friendly, factual, non-doomer, supportive paradigm that can work for you. Now check out the article.

Cheers, Tate

====================

Wait a minute. It is me again.

Now, before I begin with the actual article, I want to first do some google image placements here so that you can clarly see the different views of Dubai. Then the article will make perfect sense and you will also see how this Neo-feudal model might work in a mega-city near you!

OK, Cheers and bye for real this time! :-) Tate

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Travel in Dubai

(Remember, this is the model for global government neo-feudalism)







Sleeping in Dubai

(In a perfect Soviet style of communism, we have a two classes. the priveleged few and all other "equal" people below them.)






Eating in Dubai

(the model for global government rising without abundant and cheap energy to do all the work)



Recreation in Dubai

(Futurist hive cities will have less scale ont he elite side and larger scale for the worker bees)


You get the idea...

Some more photos and then the story follows...





























The dark side of Dubai
http://www.independent.co.uk/opinion/commentators/johann-hari/the-dark-side-of-dubai-1664368.html

Dubai was meant to be a Middle-Eastern Shangri-La, a glittering monument to Arab enterprise and western capitalism. But as hard times arrive in the city state that rose from the desert sands, an uglier story is emerging. Johann Hari reports

The wide, smiling face of Sheikh Mohammed – the absolute ruler of Dubai – beams down on his creation. His image is displayed on every other building, sandwiched between the more familiar corporate rictuses of Ronald McDonald and Colonel Sanders. This man has sold Dubai to the world as the city of One Thousand and One Arabian Lights, a Shangri-La in the Middle East insulated from the dust-storms blasting across the region. He dominates the Manhattan-manquŠ¹ skyline, beaming out from row after row of glass pyramids and hotels smelted into the shape of piles of golden coins. And there he stands on the tallest building in the world – a skinny spike, jabbing farther into the sky than any other human construction in history.

But something has flickered in Sheikh Mohammed's smile. The ubiquitous cranes have paused on the skyline, as if stuck in time. There are countless buildings half-finished, seemingly abandoned. In the swankiest new constructions – like the vast Atlantis hotel, a giant pink castle built in 1,000 days for $1.5bn on its own artificial island – where rainwater is leaking from the ceilings and the tiles are falling off the roof. This Neverland was built on the Never-Never – and now the cracks are beginning to show. Suddenly it looks less like Manhattan in the sun than Iceland in the desert.

Once the manic burst of building has stopped and the whirlwind has slowed, the secrets of Dubai are slowly seeping out. This is a city built from nothing in just a few wild decades on credit and ecocide, suppression and slavery. Dubai is a living metal metaphor for the neo-liberal globalised world that may be crashing – at last – into history.

Related articles
The Desert Blogger: Jamie Stewart's dispatches from Dubai

I. An Adult Disneyland

Karen Andrews can't speak. Every time she starts to tell her story, she puts her head down and crumples. She is slim and angular and has the faded radiance of the once-rich, even though her clothes are as creased as her forehead. I find her in the car park of one of Dubai's finest international hotels, where she is living, in her Range Rover. She has been sleeping here for months, thanks to the kindness of the Bangladeshi car park attendants who don't have the heart to move her on. This is not where she thought her Dubai dream would end.

Her story comes out in stutters, over four hours. At times, her old voice – witty and warm – breaks through. Karen came here from Canada when her husband was offered a job in the senior division of a famous multinational. "When he said Dubai, I said – if you want me to wear black and quit booze, baby, you've got the wrong girl. But he asked me to give it a chance. And I loved him."

All her worries melted when she touched down in Dubai in 2005. "It was an adult Disneyland, where Sheikh Mohammed is the mouse," she says. "Life was fantastic. You had these amazing big apartments, you had a whole army of your own staff, you pay no taxes at all. It seemed like everyone was a CEO. We were partying the whole time."

Her husband, Daniel, bought two properties. "We were drunk on Dubai," she says. But for the first time in his life, he was beginning to mismanage their finances. "We're not talking huge sums, but he was getting confused. It was so unlike Daniel, I was surprised. We got into a little bit of debt." After a year, she found out why: Daniel was diagnosed with a brain tumour.

One doctor told him he had a year to live; another said it was benign and he'd be okay. But the debts were growing. "Before I came here, I didn't know anything about Dubai law. I assumed if all these big companies come here, it must be pretty like Canada's or any other liberal democracy's," she says. Nobody told her there is no concept of bankruptcy. If you get into debt and you can't pay, you go to prison.

"When we realised that, I sat Daniel down and told him: listen, we need to get out of here. He knew he was guaranteed a pay-off when he resigned, so we said – right, let's take the pay-off, clear the debt, and go." So Daniel resigned – but he was given a lower pay-off than his contract suggested. The debt remained. As soon as you quit your job in Dubai, your employer has to inform your bank. If you have any outstanding debts that aren't covered by your savings, then all your accounts are frozen, and you are forbidden to leave the country.

"Suddenly our cards stopped working. We had nothing. We were thrown out of our apartment." Karen can't speak about what happened next for a long time; she is shaking.

Daniel was arrested and taken away on the day of their eviction. It was six days before she could talk to him. "He told me he was put in a cell with another debtor, a Sri Lankan guy who was only 27, who said he couldn't face the shame to his family. Daniel woke up and the boy had swallowed razor-blades. He banged for help, but nobody came, and the boy died in front of him."

Karen managed to beg from her friends for a few weeks, "but it was so humiliating. I've never lived like this. I worked in the fashion industry. I had my own shops. I've never..." She peters out.

Daniel was sentenced to six months' imprisonment at a trial he couldn't understand. It was in Arabic, and there was no translation. "Now I'm here illegally, too," Karen says I've got no money, nothing. I have to last nine months until he's out, somehow." Looking away, almost paralysed with embarrassment, she asks if I could buy her a meal.

She is not alone. All over the city, there are maxed-out expats sleeping secretly in the sand-dunes or the airport or in their cars.

"The thing you have to understand about Dubai is – nothing is what it seems," Karen says at last. "Nothing. This isn't a city, it's a con-job. They lure you in telling you it's one thing – a modern kind of place – but beneath the surface it's a medieval dictatorship."


II. Tumbleweed


Thirty years ago, almost all of contemporary Dubai was desert, inhabited only by cactuses and tumbleweed and scorpions. But downtown there are traces of the town that once was, buried amidst the metal and glass. In the dusty fort of the Dubai Museum, a sanitised version of this story is told.

In the mid-18th century, a small village was built here, in the lower Persian Gulf, where people would dive for pearls off the coast. It soon began to accumulate a cosmopolitan population washing up from Persia, the Indian subcontinent, and other Arab countries, all hoping to make their fortune. They named it after a local locust, the daba, who consumed everything before it. The town was soon seized by the gunships of the British Empire, who held it by the throat as late as 1971. As they scuttled away, Dubai decided to ally with the six surrounding states and make up the United Arab Emirates (UAE).

The British quit, exhausted, just as oil was being discovered, and the sheikhs who suddenly found themselves in charge faced a remarkable dilemma. They were largely illiterate nomads who spent their lives driving camels through the desert – yet now they had a vast pot of gold. What should they do with it?

Dubai only had a dribble of oil compared to neighbouring Abu Dhabi – so Sheikh Maktoum decided to use the revenues to build something that would last. Israel used to boast it made the desert bloom; Sheikh Maktoum resolved to make the desert boom. He would build a city to be a centre of tourism and financial services, sucking up cash and talent from across the globe. He invited the world to come tax-free – and they came in their millions, swamping the local population, who now make up just 5 per cent of Dubai. A city seemed to fall from the sky in just three decades, whole and complete and swelling. They fast-forwarded from the 18th century to the 21st in a single generation.

If you take the Big Bus Tour of Dubai – the passport to a pre-processed experience of every major city on earth – you are fed the propaganda-vision of how this happened. "Dubai's motto is 'Open doors, open minds'," the tour guide tells you in clipped tones, before depositing you at the souks to buy camel tea-cosies. "Here you are free. To purchase fabrics," he adds. As you pass each new monumental building, he tells you: "The World Trade Centre was built by His Highness..."

But this is a lie. The sheikh did not build this city. It was built by slaves. They are building it now.


III. Hidden in plain view


There are three different Dubais, all swirling around each other. There are the expats, like Karen; there are the Emiratis, headed by Sheikh Mohammed; and then there is the foreign underclass who built the city, and are trapped here. They are hidden in plain view. You see them everywhere, in dirt-caked blue uniforms, being shouted at by their superiors, like a chain gang – but you are trained not to look. It is like a mantra: the Sheikh built the city. The Sheikh built the city. Workers? What workers?

Every evening, the hundreds of thousands of young men who build Dubai are bussed from their sites to a vast concrete wasteland an hour out of town, where they are quarantined away. Until a few years ago they were shuttled back and forth on cattle trucks, but the expats complained this was unsightly, so now they are shunted on small metal buses that function like greenhouses in the desert heat. They sweat like sponges being slowly wrung out.

Sonapur is a rubble-strewn patchwork of miles and miles of identical concrete buildings. Some 300,000 men live piled up here, in a place whose name in Hindi means "City of Gold". In the first camp I stop at – riven with the smell of sewage and sweat – the men huddle around, eager to tell someone, anyone, what is happening to them.

Sahinal Monir, a slim 24-year-old from the deltas of Bangladesh. "To get you here, they tell you Dubai is heaven. Then you get here and realise it is hell," he says. Four years ago, an employment agent arrived in Sahinal's village in Southern Bangladesh. He told the men of the village that there was a place where they could earn 40,000 takka a month (£400) just for working nine-to-five on construction projects. It was a place where they would be given great accommodation, great food, and treated well. All they had to do was pay an up-front fee of 220,000 takka (£2,300) for the work visa – a fee they'd pay off in the first six months, easy. So Sahinal sold his family land, and took out a loan from the local lender, to head to this paradise.

As soon as he arrived at Dubai airport, his passport was taken from him by his construction company. He has not seen it since. He was told brusquely that from now on he would be working 14-hour days in the desert heat – where western tourists are advised not to stay outside for even five minutes in summer, when it hits 55 degrees – for 500 dirhams a month (£90), less than a quarter of the wage he was promised. If you don't like it, the company told him, go home. "But how can I go home? You have my passport, and I have no money for the ticket," he said. "Well, then you'd better get to work," they replied.

Sahinal was in a panic. His family back home – his son, daughter, wife and parents – were waiting for money, excited that their boy had finally made it. But he was going to have to work for more than two years just to pay for the cost of getting here – and all to earn less than he did in Bangladesh.

He shows me his room. It is a tiny, poky, concrete cell with triple-decker bunk-beds, where he lives with 11 other men. All his belongings are piled onto his bunk: three shirts, a spare pair of trousers, and a cellphone. The room stinks, because the lavatories in the corner of the camp – holes in the ground – are backed up with excrement and clouds of black flies. There is no air conditioning or fans, so the heat is "unbearable. You cannot sleep. All you do is sweat and scratch all night." At the height of summer, people sleep on the floor, on the roof, anywhere where they can pray for a moment of breeze.

The water delivered to the camp in huge white containers isn't properly desalinated: it tastes of salt. "It makes us sick, but we have nothing else to drink," he says.

The work is "the worst in the world," he says. "You have to carry 50kg bricks and blocks of cement in the worst heat imaginable ... This heat – it is like nothing else. You sweat so much you can't pee, not for days or weeks. It's like all the liquid comes out through your skin and you stink. You become dizzy and sick but you aren't allowed to stop, except for an hour in the afternoon. You know if you drop anything or slip, you could die. If you take time off sick, your wages are docked, and you are trapped here even longer."

He is currently working on the 67th floor of a shiny new tower, where he builds upwards, into the sky, into the heat. He doesn't know its name. In his four years here, he has never seen the Dubai of tourist-fame, except as he constructs it floor-by-floor.

Is he angry? He is quiet for a long time. "Here, nobody shows their anger. You can't. You get put in jail for a long time, then deported." Last year, some workers went on strike after they were not given their wages for four months. The Dubai police surrounded their camps with razor-wire and water-cannons and blasted them out and back to work.

The "ringleaders" were imprisoned. I try a different question: does Sohinal regret coming? All the men look down, awkwardly. "How can we think about that? We are trapped. If we start to think about regrets..." He lets the sentence trail off. Eventually, another worker breaks the silence by adding: "I miss my country, my family and my land. We can grow food in Bangladesh. Here, nothing grows. Just oil and buildings."

Since the recession hit, they say, the electricity has been cut off in dozens of the camps, and the men have not been paid for months. Their companies have disappeared with their passports and their pay. "We have been robbed of everything. Even if somehow we get back to Bangladesh, the loan sharks will demand we repay our loans immediately, and when we can't, we'll be sent to prison."

This is all supposed to be illegal. Employers are meant to pay on time, never take your passport, give you breaks in the heat – but I met nobody who said it happens. Not one. These men are conned into coming and trapped into staying, with the complicity of the Dubai authorities.

Sahinal could well die out here. A British man who used to work on construction projects told me: "There's a huge number of suicides in the camps and on the construction sites, but they're not reported. They're described as 'accidents'." Even then, their families aren't free: they simply inherit the debts. A Human Rights Watch study found there is a "cover-up of the true extent" of deaths from heat exhaustion, overwork and suicide, but the Indian consulate registered 971 deaths of their nationals in 2005 alone. After this figure was leaked, the consulates were told to stop counting.

At night, in the dusk, I sit in the camp with Sohinal and his friends as they scrape together what they have left to buy a cheap bottle of spirits. They down it in one ferocious gulp. "It helps you to feel numb", Sohinal says through a stinging throat. In the distance, the glistening Dubai skyline he built stands, oblivious.


IV. Mauled by the mall


I find myself stumbling in a daze from the camps into the sprawling marble malls that seem to stand on every street in Dubai. It is so hot there is no point building pavements; people gather in these cathedrals of consumerism to bask in the air conditioning. So within a ten minute taxi-ride, I have left Sohinal and I am standing in the middle of Harvey Nichols, being shown a £20,000 taffeta dress by a bored salesgirl. "As you can see, it is cut on the bias..." she says, and I stop writing.

Time doesn't seem to pass in the malls. Days blur with the same electric light, the same shined floors, the same brands I know from home. Here, Dubai is reduced to its component sounds: do-buy. In the most expensive malls I am almost alone, the shops empty and echoing. On the record, everybody tells me business is going fine. Off the record, they look panicky. There is a hat exhibition ahead of the Dubai races, selling elaborate headgear for £1,000 a pop. "Last year, we were packed. Now look," a hat designer tells me. She swoops her arm over a vacant space.

I approach a blonde 17-year-old Dutch girl wandering around in hotpants, oblivious to the swarms of men gaping at her. "I love it here!" she says. "The heat, the malls, the beach!" Does it ever bother you that it's a slave society? She puts her head down, just as Sohinal did. "I try not to see," she says. Even at 17, she has learned not to look, and not to ask; that, she senses, is a transgression too far.

Between the malls, there is nothing but the connecting tissue of asphalt. Every road has at least four lanes; Dubai feels like a motorway punctuated by shopping centres. You only walk anywhere if you are suicidal. The residents of Dubai flit from mall to mall by car or taxis.

How does it feel if this is your country, filled with foreigners? Unlike the expats and the slave class, I can't just approach the native Emiratis to ask questions when I see them wandering around – the men in cool white robes, the women in sweltering black. If you try, the women blank you, and the men look affronted, and tell you brusquely that Dubai is "fine". So I browse through the Emirati blog-scene and found some typical-sounding young Emiratis. We meet – where else? – in the mall.

Ahmed al-Atar is a handsome 23-year-old with a neat, trimmed beard, tailored white robes, and rectangular wire-glasses. He speaks perfect American-English, and quickly shows that he knows London, Los Angeles and Paris better than most westerners. Sitting back in his chair in an identikit Starbucks, he announces: "This is the best place in the world to be young! The government pays for your education up to PhD level. You get given a free house when you get married. You get free healthcare, and if it's not good enough here, they pay for you to go abroad. You don't even have to pay for your phone calls. Almost everyone has a maid, a nanny, and a driver. And we never pay any taxes. Don't you wish you were Emirati?"

I try to raise potential objections to this Panglossian summary, but he leans forward and says: "Look – my grandfather woke up every day and he would have to fight to get to the well first to get water. When the wells ran dry, they had to have water delivered by camel. They were always hungry and thirsty and desperate for jobs. He limped all his life, because he there was no medical treatment available when he broke his leg. Now look at us!"

For Emiratis, this is a Santa Claus state, handing out goodies while it makes its money elsewhere: through renting out land to foreigners, soft taxes on them like business and airport charges, and the remaining dribble of oil. Most Emiratis, like Ahmed, work for the government, so they're cushioned from the credit crunch. "I haven't felt any effect at all, and nor have my friends," he says. "Your employment is secure. You will only be fired if you do something incredibly bad." The laws are currently being tightened, to make it even more impossible to sack an Emirati.

Sure, the flooding-in of expats can sometimes be "an eyesore", Ahmed says. "But we see the expats as the price we had to pay for this development. How else could we do it? Nobody wants to go back to the days of the desert, the days before everyone came. We went from being like an African country to having an average income per head of $120,000 a year. And we're supposed to complain?"

He says the lack of political freedom is fine by him. "You'll find it very hard to find an Emirati who doesn't support Sheikh Mohammed." Because they're scared? "No, because we really all support him. He's a great leader. Just look!" He smiles and says: "I'm sure my life is very much like yours. We hang out, have a coffee, go to the movies. You'll be in a Pizza Hut or Nando's in London, and at the same time I'll be in one in Dubai," he says, ordering another latte.

But do all young Emiratis see it this way? Can it really be so sunny in the political sands? In the sleek Emirates Tower Hotel, I meet Sultan al-Qassemi. He's a 31-year-old Emirati columnist for the Dubai press and private art collector, with a reputation for being a contrarian liberal, advocating gradual reform. He is wearing Western clothes – blue jeans and a Ralph Lauren shirt – and speaks incredibly fast, turning himself into a manic whirr of arguments.

"People here are turning into lazy, overweight babies!" he exclaims. "The nanny state has gone too far. We don't do anything for ourselves! Why don't any of us work for the private sector? Why can't a mother and father look after their own child?" And yet, when I try to bring up the system of slavery that built Dubai, he looks angry. "People should give us credit," he insists. "We are the most tolerant people in the world. Dubai is the only truly international city in the world. Everyone who comes here is treated with respect."

I pause, and think of the vast camps in Sonapur, just a few miles away. Does he even know they exist? He looks irritated. "You know, if there are 30 or 40 cases [of worker abuse] a year, that sounds like a lot but when you think about how many people are here..." Thirty or 40? This abuse is endemic to the system, I say. We're talking about hundreds of thousands.

Sultan is furious. He splutters: "You don't think Mexicans are treated badly in New York City? And how long did it take Britain to treat people well? I could come to London and write about the homeless people on Oxford Street and make your city sound like a terrible place, too! The workers here can leave any time they want! Any Indian can leave, any Asian can leave!"

But they can't, I point out. Their passports are taken away, and their wages are withheld. "Well, I feel bad if that happens, and anybody who does that should be punished. But their embassies should help them." They try. But why do you forbid the workers – with force – from going on strike against lousy employers? "Thank God we don't allow that!" he exclaims. "Strikes are in-convenient! They go on the street – we're not having that. We won't be like France. Imagine a country where they the workers can just stop whenever they want!" So what should the workers do when they are cheated and lied to? "Quit. Leave the country."

I sigh. Sultan is seething now. "People in the West are always complaining about us," he says. Suddenly, he adopts a mock-whiny voice and says, in imitation of these disgusting critics: "Why don't you treat animals better? Why don't you have better shampoo advertising? Why don't you treat labourers better?" It's a revealing order: animals, shampoo, then workers. He becomes more heated, shifting in his seat, jabbing his finger at me. "I gave workers who worked for me safety goggles and special boots, and they didn't want to wear them! It slows them down!"

And then he smiles, coming up with what he sees as his killer argument. "When I see Western journalists criticise us – don't you realise you're shooting yourself in the foot? The Middle East will be far more dangerous if Dubai fails. Our export isn't oil, it's hope. Poor Egyptians or Libyans or Iranians grow up saying – I want to go to Dubai. We're very important to the region. We are showing how to be a modern Muslim country. We don't have any fundamentalists here. Europeans shouldn't gloat at our demise. You should be very worried.... Do you know what will happen if this model fails? Dubai will go down the Iranian path, the Islamist path."

Sultan sits back. My arguments have clearly disturbed him; he says in a softer, conciliatory tone, almost pleading: "Listen. My mother used to go to the well and get a bucket of water every morning. On her wedding day, she was given an orange as a gift because she had never eaten one. Two of my brothers died when they were babies because the healthcare system hadn't developed yet. Don't judge us." He says it again, his eyes filled with intensity: "Don't judge us."


V. The Dunkin' Donuts Dissidents


But there is another face to the Emirati minority – a small huddle of dissidents, trying to shake the Sheikhs out of abusive laws. Next to a Virgin Megastore and a Dunkin' Donuts, with James Blunt's "You're Beautiful" blaring behind me, I meet the Dubai dictatorship's Public Enemy Number One. By way of introduction, Mohammed al-Mansoori says from within his white robes and sinewy face: "Westerners come her and see the malls and the tall buildings and they think that means we are free. But these businesses, these buildings – who are they for? This is a dictatorship. The royal family think they own the country, and the people are their servants. There is no freedom here."

We snuffle out the only Arabic restaurant in this mall, and he says everything you are banned – under threat of prison – from saying in Dubai. Mohammed tells me he was born in Dubai to a fisherman father who taught him one enduring lesson: Never follow the herd. Think for yourself. In the sudden surge of development, Mohammed trained as a lawyer. By the Noughties, he had climbed to the head of the Jurists' Association, an organisation set up to press for Dubai's laws to be consistent with international human rights legislation.

And then – suddenly – Mohammed thwacked into the limits of Sheikh Mohammed's tolerance. Horrified by the "system of slavery" his country was being built on, he spoke out to Human Rights Watch and the BBC. "So I was hauled in by the secret police and told: shut up, or you will lose you job, and your children will be unemployable," he says. "But how could I be silent?"

He was stripped of his lawyer's licence and his passport – becoming yet another person imprisoned in this country. "I have been blacklisted and so have my children. The newspapers are not allowed to write about me."

Why is the state so keen to defend this system of slavery? He offers a prosaic explanation. "Most companies are owned by the government, so they oppose human rights laws because it will reduce their profit margins. It's in their interests that the workers are slaves."

Last time there was a depression, there was a starbust of democracy in Dubai, seized by force from the sheikhs. In the 1930s, the city's merchants banded together against Sheikh Said bin Maktum al-Maktum – the absolute ruler of his day – and insisted they be given control over the state finances. It lasted only a few years, before the Sheikh – with the enthusiastic support of the British – snuffed them out.

And today? Sheikh Mohammed turned Dubai into Creditopolis, a city built entirely on debt. Dubai owes 107 percent of its entire GDP. It would be bust already, if the neighbouring oil-soaked state of Abu Dhabi hadn't pulled out its chequebook. Mohammed says this will constrict freedom even further. "Now Abu Dhabi calls the tunes – and they are much more conservative and restrictive than even Dubai. Freedom here will diminish every day." Already, new media laws have been drafted forbidding the press to report on anything that could "damage" Dubai or "its economy". Is this why the newspapers are giving away glossy supplements talking about "encouraging economic indicators"?

Everybody here waves Islamism as the threat somewhere over the horizon, sure to swell if their advice is not followed. Today, every imam is appointed by the government, and every sermon is tightly controlled to keep it moderate. But Mohammed says anxiously: "We don't have Islamism here now, but I think that if you control people and give them no way to express anger, it could rise. People who are told to shut up all the time can just explode."

Later that day, against another identikit-corporate backdrop, I meet another dissident – Abdulkhaleq Abdullah, Professor of Political Science at Emirates University. His anger focuses not on political reform, but the erosion of Emirati identity. He is famous among the locals, a rare outspoken conductor for their anger. He says somberly: "There has been a rupture here. This is a totally different city to the one I was born in 50 years ago."

He looks around at the shiny floors and Western tourists and says: "What we see now didn't occur in our wildest dreams. We never thought we could be such a success, a trendsetter, a model for other Arab countries. The people of Dubai are mighty proud of their city, and rightly so. And yet..." He shakes his head. "In our hearts, we fear we have built a modern city but we are losing it to all these expats."

Adbulkhaleq says every Emirati of his generation lives with a "psychological trauma." Their hearts are divided – "between pride on one side, and fear on the other." Just after he says this, a smiling waitress approaches, and asks us what we would like to drink. He orders a Coke.


VI. Dubai Pride


There is one group in Dubai for whom the rhetoric of sudden freedom and liberation rings true – but it is the very group the government wanted to liberate least: gays.

Beneath a famous international hotel, I clamber down into possibly the only gay club on the Saudi Arabian peninsula. I find a United Nations of tank-tops and bulging biceps, dancing to Kylie, dropping ecstasy, and partying like it's Soho. "Dubai is the best place in the Muslim world for gays!" a 25-year old Emirati with spiked hair says, his arms wrapped around his 31-year old "husband". "We are alive. We can meet. That is more than most Arab gays."

It is illegal to be gay in Dubai, and punishable by 10 years in prison. But the locations of the latest unofficial gay clubs circulate online, and men flock there, seemingly unafraid of the police. "They might bust the club, but they will just disperse us," one of them says. "The police have other things to do."

In every large city, gay people find a way to find each other – but Dubai has become the clearing-house for the region's homosexuals, a place where they can live in relative safety. Saleh, a lean private in the Saudi Arabian army, has come here for the Coldplay concert, and tells me Dubai is "great" for gays: "In Saudi, it's hard to be straight when you're young. The women are shut away so everyone has gay sex. But they only want to have sex with boys – 15- to 21-year-olds. I'm 27, so I'm too old now. I need to find real gays, so this is the best place. All Arab gays want to live in Dubai."

With that, Saleh dances off across the dancefloor, towards a Dutch guy with big biceps and a big smile.


VII. The Lifestyle


All the guidebooks call Dubai a "melting pot", but as I trawl across the city, I find that every group here huddles together in its own little ethnic enclave – and becomes a caricature of itself. One night – in the heart of this homesick city, tired of the malls and the camps – I go to Double Decker, a hang-out for British expats. At the entrance there is a red telephone box, and London bus-stop signs. Its wooden interior looks like a cross between a colonial clubhouse in the Raj and an Eighties school disco, with blinking coloured lights and cheese blaring out. As I enter, a girl in a short skirt collapses out of the door onto her back. A guy wearing a pirate hat helps her to her feet, dropping his beer bottle with a paralytic laugh.

I start to talk to two sun-dried women in their sixties who have been getting gently sozzled since midday. "You stay here for The Lifestyle," they say, telling me to take a seat and order some more drinks. All the expats talk about The Lifestyle, but when you ask what it is, they become vague. Ann Wark tries to summarise it: "Here, you go out every night. You'd never do that back home. You see people all the time. It's great. You have lots of free time. You have maids and staff so you don't have to do all that stuff. You party!"

They have been in Dubai for 20 years, and they are happy to explain how the city works. "You've got a hierarchy, haven't you?" Ann says. "It's the Emiratis at the top, then I'd say the British and other Westerners. Then I suppose it's the Filipinos, because they've got a bit more brains than the Indians. Then at the bottom you've got the Indians and all them lot."

They admit, however, they have "never" spoken to an Emirati. Never? "No. They keep themselves to themselves." Yet Dubai has disappointed them. Jules Taylor tells me: "If you have an accident here it's a nightmare. There was a British woman we knew who ran over an Indian guy, and she was locked up for four days! If you have a tiny bit of alcohol on your breath they're all over you. These Indians throw themselves in front of cars, because then their family has to be given blood money – you know, compensation. But the police just blame us. That poor woman."

A 24-year-old British woman called Hannah Gamble takes a break from the dancefloor to talk to me. "I love the sun and the beach! It's great out here!" she says. Is there anything bad? "Oh yes!" she says. Ah: one of them has noticed, I think with relief. "The banks! When you want to make a transfer you have to fax them. You can't do it online." Anything else? She thinks hard. "The traffic's not very good."

When I ask the British expats how they feel to not be in a democracy, their reaction is always the same. First, they look bemused. Then they look affronted. "It's the Arab way!" an Essex boy shouts at me in response, as he tries to put a pair of comedy antlers on his head while pouring some beer into the mouth of his friend, who is lying on his back on the floor, gurning.

Later, in a hotel bar, I start chatting to a dyspeptic expat American who works in the cosmetics industry and is desperate to get away from these people. She says: "All the people who couldn't succeed in their own countries end up here, and suddenly they're rich and promoted way above their abilities and bragging about how great they are. I've never met so many incompetent people in such senior positions anywhere in the world." She adds: "It's absolutely racist. I had Filipino girls working for me doing the same job as a European girl, and she's paid a quarter of the wages. The people who do the real work are paid next to nothing, while these incompetent managers pay themselves £40,000 a month."

With the exception of her, one theme unites every expat I speak to: their joy at having staff to do the work that would clog their lives up Back Home. Everyone, it seems, has a maid. The maids used to be predominantly Filipino, but with the recession, Filipinos have been judged to be too expensive, so a nice Ethiopian servant girl is the latest fashionable accessory.

It is an open secret that once you hire a maid, you have absolute power over her. You take her passport – everyone does; you decide when to pay her, and when – if ever – she can take a break; and you decide who she talks to. She speaks no Arabic. She cannot escape.

In a Burger King, a Filipino girl tells me it is "terrifying" for her to wander the malls in Dubai because Filipino maids or nannies always sneak away from the family they are with and beg her for help. "They say – 'Please, I am being held prisoner, they don't let me call home, they make me work every waking hour seven days a week.' At first I would say – my God, I will tell the consulate, where are you staying? But they never know their address, and the consulate isn't interested. I avoid them now. I keep thinking about a woman who told me she hadn't eaten any fruit in four years. They think I have power because I can walk around on my own, but I'm powerless."

The only hostel for women in Dubai – a filthy private villa on the brink of being repossessed – is filled with escaped maids. Mela Matari, a 25-year-old Ethiopian woman with a drooping smile, tells me what happened to her – and thousands like her. She was promised a paradise in the sands by an agency, so she left her four year-old daughter at home and headed here to earn money for a better future. "But they paid me half what they promised. I was put with an Australian family – four children – and Madam made me work from 6am to 1am every day, with no day off. I was exhausted and pleaded for a break, but they just shouted: 'You came here to work, not sleep!' Then one day I just couldn't go on, and Madam beat me. She beat me with her fists and kicked me. My ear still hurts. They wouldn't give me my wages: they said they'd pay me at the end of the two years. What could I do? I didn't know anybody here. I was terrified."

One day, after yet another beating, Mela ran out onto the streets, and asked – in broken English – how to find the Ethiopian consulate. After walking for two days, she found it, but they told her she had to get her passport back from Madam. "Well, how could I?" she asks. She has been in this hostel for six months. She has spoken to her daughter twice. "I lost my country, I lost my daughter, I lost everything," she says.

As she says this, I remember a stray sentence I heard back at Double Decker. I asked a British woman called Hermione Frayling what the best thing about Dubai was. "Oh, the servant class!" she trilled. "You do nothing. They'll do anything!"


VIII. The End of The World


The World is empty. It has been abandoned, its continents unfinished. Through binoculars, I think I can glimpse Britain; this sceptred isle barren in the salt-breeze.

Here, off the coast of Dubai, developers have been rebuilding the world. They have constructed artificial islands in the shape of all planet Earth's land masses, and they plan to sell each continent off to be built on. There were rumours that the Beckhams would bid for Britain. But the people who work at the nearby coast say they haven't seen anybody there for months now. "The World is over," a South African suggests.

All over Dubai, crazy projects that were Under Construction are now Under Collapse. They were building an air-conditioned beach here, with cooling pipes running below the sand, so the super-rich didn't singe their toes on their way from towel to sea.

The projects completed just before the global economy crashed look empty and tattered. The Atlantis Hotel was launched last winter in a $20m fin-de-siecle party attended by Robert De Niro, Lindsay Lohan and Lily Allen. Sitting on its own fake island – shaped, of course, like a palm tree – it looks like an immense upturned tooth in a faintly decaying mouth. It is pink and turreted – the architecture of the pharaohs, as reimagined by Zsa-Zsa Gabor. Its Grand Lobby is a monumental dome covered in glitterballs, held up by eight monumental concrete palm trees. Standing in the middle, there is a giant shining glass structure that looks like the intestines of every guest who has ever stayed at the Atlantis. It is unexpectedly raining; water is leaking from the roof, and tiles are falling off.

A South African PR girl shows me around its most coveted rooms, explaining that this is "the greatest luxury offered in the world". We stroll past shops selling £24m diamond rings around a hotel themed on the lost and sunken continent of, yes, Atlantis. There are huge water tanks filled with sharks, which poke around mock-abandoned castles and dumped submarines. There are more than 1,500 rooms here, each with a sea view. The Neptune suite has three floors, and – I gasp as I see it – it looks out directly on to the vast shark tank. You lie on the bed, and the sharks stare in at you. In Dubai, you can sleep with the fishes, and survive.

But even the luxury – reminiscent of a Bond villain's lair – is also being abandoned. I check myself in for a few nights to the classiest hotel in town, the Park Hyatt. It is the fashionistas' favourite hotel, where Elle Macpherson and Tommy Hilfiger stay, a gorgeous, understated palace. It feels empty. Whenever I eat, I am one of the only people in the restaurant. A staff member tells me in a whisper: "It used to be full here. Now there's hardly anyone." Rattling around, I feel like Jack Nicholson in The Shining, the last man in an abandoned, haunted home.

The most famous hotel in Dubai – the proud icon of the city – is the Burj al Arab hotel, sitting on the shore, shaped like a giant glass sailing boat. In the lobby, I start chatting to a couple from London who work in the City. They have been coming to Dubai for 10 years now, and they say they love it. "You never know what you'll find here," he says. "On our last trip, at the beginning of the holiday, our window looked out on the sea. By the end, they'd built an entire island there."

My patience frayed by all this excess, I find myself snapping: doesn't the omnipresent slave class bother you? I hope they misunderstood me, because the woman replied: "That's what we come for! It's great, you can't do anything for yourself!" Her husband chimes in: "When you go to the toilet, they open the door, they turn on the tap – the only thing they don't do is take it out for you when you have a piss!" And they both fall about laughing.


IX. Taking on the Desert


Dubai is not just a city living beyond its financial means; it is living beyond its ecological means. You stand on a manicured Dubai lawn and watch the sprinklers spray water all around you. You see tourists flocking to swim with dolphins. You wander into a mountain-sized freezer where they have built a ski slope with real snow. And a voice at the back of your head squeaks: this is the desert. This is the most water-stressed place on the planet. How can this be happening? How is it possible?

The very earth is trying to repel Dubai, to dry it up and blow it away. The new Tiger Woods Gold Course needs four million gallons of water to be pumped on to its grounds every day, or it would simply shrivel and disappear on the winds. The city is regularly washed over with dust-storms that fog up the skies and turn the skyline into a blur. When the dust parts, heat burns through. It cooks anything that is not kept constantly, artificially wet.

Dr Mohammed Raouf, the environmental director of the Gulf Research Centre, sounds sombre as he sits in his Dubai office and warns: "This is a desert area, and we are trying to defy its environment. It is very unwise. If you take on the desert, you will lose."

Sheikh Maktoum built his showcase city in a place with no useable water. None. There is no surface water, very little acquifer, and among the lowest rainfall in the world. So Dubai drinks the sea. The Emirates' water is stripped of salt in vast desalination plants around the Gulf – making it the most expensive water on earth. It costs more than petrol to produce, and belches vast amounts of carbon dioxide into the atmosphere as it goes. It's the main reason why a resident of Dubai has the biggest average carbon footprint of any human being – more than double that of an American.

If a recession turns into depression, Dr Raouf believes Dubai could run out of water. "At the moment, we have financial reserves that cover bringing so much water to the middle of the desert. But if we had lower revenues – if, say, the world shifts to a source of energy other than oil..." he shakes his head. "We will have a very big problem. Water is the main source of life. It would be a catastrophe. Dubai only has enough water to last us a week. There's almost no storage. We don't know what will happen if our supplies falter. It would be hard to survive."

Global warming, he adds, makes the problem even worse. "We are building all these artificial islands, but if the sea level rises, they will be gone, and we will lose a lot. Developers keep saying it's all fine, they've taken it into consideration, but I'm not so sure."

Is the Dubai government concerned about any of this? "There isn't much interest in these problems," he says sadly. But just to stand still, the average resident of Dubai needs three times more water than the average human. In the looming century of water stresses and a transition away from fossil fuels, Dubai is uniquely vulnerable.

I wanted to understand how the government of Dubai will react, so I decided to look at how it has dealt with an environmental problem that already exists – the pollution of its beaches. One woman – an American, working at one of the big hotels – had written in a lot of online forums arguing that it was bad and getting worse, so I called her to arrange a meeting. "I can't talk to you," she said sternly. Not even if it's off the record? "I can't talk to you." But I don't have to disclose your name... "You're not listening. This phone is bugged. I can't talk to you," she snapped, and hung up.

The next day I turned up at her office. "If you reveal my identity, I'll be sent on the first plane out of this city," she said, before beginning to nervously pace the shore with me. "It started like this. We began to get complaints from people using the beach. The water looked and smelled odd, and they were starting to get sick after going into it. So I wrote to the ministers of health and tourism and expected to hear back immediately – but there was nothing. Silence. I hand-delivered the letters. Still nothing."

The water quality got worse and worse. The guests started to spot raw sewage, condoms, and used sanitary towels floating in the sea. So the hotel ordered its own water analyses from a professional company. "They told us it was full of fecal matter and bacteria 'too numerous to count'. I had to start telling guests not to go in the water, and since they'd come on a beach holiday, as you can imagine, they were pretty pissed off." She began to make angry posts on the expat discussion forums – and people began to figure out what was happening. Dubai had expanded so fast its sewage treatment facilities couldn't keep up. The sewage disposal trucks had to queue for three or four days at the treatment plants – so instead, they were simply drilling open the manholes and dumping the untreated sewage down them, so it flowed straight to the sea.

Suddenly, it was an open secret – and the municipal authorities finally acknowledged the problem. They said they would fine the truckers. But the water quality didn't improve: it became black and stank. "It's got chemicals in it. I don't know what they are. But this stuff is toxic."

She continued to complain – and started to receive anonymous phone calls. "Stop embarassing Dubai, or your visa will be cancelled and you're out," they said. She says: "The expats are terrified to talk about anything. One critical comment in the newspapers and they deport you. So what am I supposed to do? Now the water is worse than ever. People are getting really sick. Eye infections, ear infections, stomach infections, rashes. Look at it!" There is faeces floating on the beach, in the shadow of one of Dubai's most famous hotels.

"What I learnt about Dubai is that the authorities don't give a toss about the environment," she says, standing in the stench. "They're pumping toxins into the sea, their main tourist attraction, for God's sake. If there are environmental problems in the future, I can tell you now how they will deal with them – deny it's happening, cover it up, and carry on until it's a total disaster." As she speaks, a dust-storm blows around us, as the desert tries, slowly, insistently, to take back its land.


X. Fake Plastic Trees


On my final night in the Dubai Disneyland, I stop off on my way to the airport, at a Pizza Hut that sits at the side of one of the city's endless, wide, gaping roads. It is identical to the one near my apartment in London in every respect, even the vomit-coloured decor. My mind is whirring and distracted. Perhaps Dubai disturbed me so much, I am thinking, because here, the entire global supply chain is condensed. Many of my goods are made by semi-enslaved populations desperate for a chance 2,000 miles away; is the only difference that here, they are merely two miles away, and you sometimes get to glimpse their faces? Dubai is Market Fundamentalist Globalisation in One City.

I ask the Filipino girl behind the counter if she likes it here. "It's OK," she says cautiously. Really? I say. I can't stand it. She sighs with relief and says: "This is the most terrible place! I hate it! I was here for months before I realised – everything in Dubai is fake. Everything you see. The trees are fake, the workers' contracts are fake, the islands are fake, the smiles are fake – even the water is fake!" But she is trapped, she says. She got into debt to come here, and she is stuck for three years: an old story now. "I think Dubai is like an oasis. It is an illusion, not real. You think you have seen water in the distance, but you get close and you only get a mouthful of sand."

As she says this, another customer enters. She forces her face into the broad, empty Dubai smile and says: "And how may I help you tonight, sir?"


Some names in this article have been changed.

Thursday, April 02, 2009

The Federal Government is Stealing Through Direct Manipulation of Broad Markets, Expecially Precious Metals... I'm Shocked!

(Ted Butler's latest with Tate's commentary)








Tate Commentary…


There are three separate articles here.

TED BUTLER COMMENTARY

March 30, 2009

The Sting

(This essay was written by silver analyst Theodore Butler, an independent consultant. Investment Rarities does not necessarily endorse these views, which may or may not prove to be correct.)

Stunning new evidence of manipulation in silver and gold has just been published by the Office of the Comptroller of the Currency (OCC), a bureau of the U.S. Treasury Department. The OCC, first established in 1863, charters, regulates and supervises all national banks. Their new data proves the manipulation in unambiguous terms. The report also confirms how the U.S. Government, in partnership with JPMorgan Chase, intentionally cheated silver investors worldwide of many billions of dollars during the fourth quarter of 2008, and longer. This was all outside the futures market I normally write about. It was a scam of historic proportions.

US government cheated investors? No, tell me it isn’t true. Surely it must have been “incompetence” and not willful cheating! The Fed incompetently gives themselves money they print out of thing air and the US government incompetently cheats investors and makes profitable resource wars against whole civilizations. It is all just incompetence, you hear me?!?

According to the OCC’s latest data release, U.S. banks, led by JPMorgan Chase, caused to be liquidated, under intentional duress, more than $20 billion of gold and as much as $9.5 billion of silver in Over The Counter (OTC) derivatives transactions during the fourth quarter of 2008. These derivatives are highly leveraged transactions mostly held by hedge funds and other large investors on the long side and big banks on the short side. While the OCC declares it is responsible for regulating U.S. banks, there is no regulation of these OTC derivatives by anyone. All the OCC does is compile the statistics. This was the largest amount of gold and silver derivatives ever liquidated in a single quarter in history. In the case of silver, more than 50% of all the OTC silver derivatives held by U.S. banks were liquidated in the fourth quarter. I doubt we will see such a large liquidation ever again.

These investors that held long positions in precious metals were the target. The government is very jealous of gold as the “alternative dollar currency” and so it loves to bankrupt people who trade their toilet paper dollars for gold. But my friends, to really hurt the Fed and the government and this war-profits system, you really need to hold the physical gold and silver because they can’t print it or force you to margin call and they hardly can even tax you because there are purity laws in many countries and also it is hard to trace these coins and bars once they get traded around in the market. Keep it physical and sleep well at night knowing that your 6000 year old investment won’t go to zero, not in your lifetime, not for 100 more generations. It is the only real asset you can own indefinitely and pass down without risk so long as it isn’t stolen. But paper is stolen every month, according to the inflation rate. The guarantee of loss and eventual zero value is with paper. Why do people keep themselves so deep in the doomed and so removed from the boomed?

In terms of ounces, this forced liquidation was the equivalent of 25 million ounces of gold and as much as 960 million ounces of silver, at the prices that prevailed during the quarter. These amounts are equal to 250,000 COMEX gold contracts and 192,000 COMEX silver contracts. Remarkably, in the case of silver, this is double the entire current total current open interest in COMEX silver futures, the largest listed and regulated silver market in the world. It is also much larger than annual mine production, total production (including recycling) and total consumption. As I hope you will see, it is not possible for such amounts to be accidentally liquidated within a three-month period. This was a very intentional liquidation.

You can view the data yourself. Here is the OCC’s Quarterly Report on Bank Derivatives Activities - http://www.occ.gov/deriv/deriv.htm The pertinent gold and silver data can be found in each quarterly report in table 9, on page 30. It will be necessary to compare different quarterly reports to measure changes in holdings. Look at totals for all maturities. Gold is broken out separately, silver is in the precious metals category. (Those that analyze this report consider silver to represent 80% to 100% of the precious metals category).

The OCC reports clearly confirm that total gold derivatives (all maturities) declined from $127.2 billion from September 30, 2008 to $106.9 billion on December 31, a reduction of $20.3 billion. Since the price of gold was slightly higher on December 31st than it was on September 30th, the reduction is marginally understated. Since the average price of gold during the fourth quarter was around $800, the $20.3 billion reduction in derivatives amounted to 25.38 million ounces ($20.3 billion divided by $800). JPMorgan accounted for more than 85% of the reduction in gold derivatives during the fourth quarter.





Is that the same JP Morgan that consolidated media interests into the hands of 12 men 100 years ago according to Congressman Calloway?…

"In March, 1915, the J.P. Morgan interests, the steel, shipbuilding, and powder interest, and their subsidiary organizations, got together 12 men high up in the newspaper world and employed them to select the most influential newspapers in the United States and sufficient number of them to control generally the policy of the daily press....They found it was only necessary to purchase the control of 25 of the greatest papers.

"An agreement was reached; the policy of the papers was bought, to be paid for by the month; an editor was furnished for each paper to properly supervise and edit information regarding the questions of preparedness, militarism, financial policies, and other things of national and international nature considered vital to the interests of the purchasers."

U.S. Congressman Oscar Callaway, 1917



In silver, there was a decline in total precious metals derivatives from $18.7 billion on September 30th to $9.1 billion on December 31st, a reduction of $9.6 billion. Since the price of silver was 5.5% lower on December 31st than it was on September 30th, the reduction may be somewhat overstated. Since the price of silver averaged around $10 per ounce during the fourth quarter, as many as 960 million ounces of equivalent silver were liquidated. JPMorgan and HSBC accounted for 76% of the total amount liquidated.





Is that the same JP Morgan that instigated a Banker Puppet Woodrow Wilson Presidency?

“To divide the Republican vote and elect the relatively unknown Wilson, J.P. Morgan and Co. poured money into the candidacy of Teddy Roosevelt and his Progressive Party.”


http://www.conspiracyarchive.com/NWO/Council_Foreign_Relations.htm


During the fourth quarter of 2008, I was repeatedly struck by the viciousness of the sell-off in silver, as we twice plunged below $9 an ounce, down almost 60% from the highs of a year ago. I was puzzled why the manipulators had continued to force the price so low, considering that the bulk of the COMEX liquidation was over by September and October. After all, there was no evidence of physical selling of silver, as all categories and measurements of investor demand for physical silver grew during the quarter. This OCC report explains the exaggerated price sell-off completely, despite strong investor demand for silver.





Paper printers controlling real, physical assets? Read the following sentence in the next paragraph very carefully… this is going on in all markets but only Silver has been NET SHORT for 30 years running!!! Yes, three exclamation marks. Of all commodities in the world, silver first and then gold are most manipulated downwards using paper. Laws of physics say that every multi-decade downward suppression of price has an equal and violent explosion in price at some point. Anyone see the opportunity here? Read the next sentence and turn this juicy concept in your mind.


Quite simply, the amount of paper silver (and gold) transacted in the OTC market dwarfed what took place in the real physical market.





Read the above again…


Further, since the OTC is so opaque, the transparent paper COMEX market was used to set the price for, and cause, the massive liquidation in the larger OTC market. The price that is disseminated from the COMEX is the price that the world goes by and prices all silver (and gold) transactions. Miners, refiners, industrial consumers, investors and paper hedge fund speculators all price off the COMEX. Control the COMEX price and you control the world of silver (and gold). Hedge funds and other large leveraged speculators holding long positions were faced with increasing margin calls as COMEX silver prices were manipulated lower and they sold to the big banks who were short and bought back their shorts. That’s why the concentrated short position is so illegal and manipulative. In fact, this same concentration exists, in spades, in the OTC market as well. Just read the OCC reports.

Further, the OCC reports prove that JPMorgan not only inherited from Bear Stearns the massive COMEX silver short position in March of 2008 (as well as a COMEX gold short position), it also inherited from Bear Stearns a much larger OTC silver and gold short position. From December 31, 2007 to March 30, 2008, JPMorgan’s OTC silver short position grew from $4.9 billion to $12.5 billion. Adjusting for the 16% price increase in silver between those dates, JPMorgan’s silver short position grew by more than 400 million ounces to as much as 735 million ounces, from 335 million ounces. This is separate and distinct from and in addition to their COMEX silver short position.





Is this the same JP Morgan that… oh nevermind.

Watch this video quickly before the free trade of information online is made illegal by these guys
- http://www.youtube.com/watch?v=3sGs8eFld1U


I know these numbers are shocking. That’s why you must take some time to study the data for yourself. Even if silver is not 100% of the precious metals category, any reasonable percentage will still result in shocking numbers. More than that, such a large and concentrated short position, on both the COMEX and in the OTC market should explain the motive and stakes involved in the great silver flush out of 2008. This silver short position needed to be reduced by any means necessary, due to the unthinkable exposure that would exist if it were not closed out. But so large was this short exposure that while JPM did succeed in reducing its short silver exposure from the highest level in its history when it took over Bear Stearns, to the lowest level in three years, there still exists a silver short exposure of hundreds of millions of ounces.





Bear Stern’s silver exposure was a bankrupting accounting entry, but now it
remains hidden in the books bought out by these ancient criminal families of JP
Morgan banking that own a significant part of the untaxed, unaudited,
unregulated, unlawful, private… YES PRIVATE, foreign owned, unbelievable
counterfeit operation called the Federal Reserve System.


That the U.S. Government has aided and abetted JPMorgan in this illegal endeavor you should find as repugnant as I do. U.S. Government agencies, like the Treasury Department and the CFTC are the ones publishing these data. The Treasury Department and the Federal Reserve arranged the JPMorgan/Bear Stearns takeover. How could they not be aware of and have sanctioned this historic silver liquidation? It is sickening. Officials should and must go to jail over this.





He he… and this is written by the most level-headed conservative thinker in commodities. Finally he crossed over to see the light. Now he will be called a “conspiracy theorist” for all his knowledge. Oh my!


All this should reinforce the message to buy real silver. That such blatant and illegal efforts are being made to force investors to sell paper silver, should convince you all the more to buy and hold real silver while you can. That they have forced this much silver liquidation should give you a sense of just how valuable silver is, and to what price levels they expect it to climb to. Don’t listen to me, look at what they have done.

There is too much to write about this week to fit into one article. Therefore, I’m going to do something different. I plan to publish new articles on different (but related) topics tomorrow and the day after. Please check back for those articles.

In closing, I’d like to leave you with a You-Tube video that an inventive reader from Australia, John Christian, created, using Izzy’s last article. I think you’ll enjoy "The Silver War Cry"

http://www.youtube.com/watch?v=FywT-txGuss





Nice video… but the author doesn’t get the big picture. Like everyone else and their brother, he thinks that the banks are incompetent at calculating long term risk. But oh contraire! The banks are not the ones calculating long term risk/reward. It is the owners of the Fed, the ones who print money from nothing and give it to themselves. They are fighting a paper war to take all physical assets of importance. Banks will fall and banks will rise, but the paper printers continue stealing from the earners and savers throughout it all. Banks are pawns in the game. Anyway, nice video.


March 31, 2009

All Talk, No Action

Last week, Commissioner Bart Chilton of the CFTC responded to those of you who wrote to him about the silver manipulation. Commissioner Chilton confined his remarks to my commentary of March 3rd, "The Smoking Gun, Part II" http://www.investmentrarities.com/03-03-09.html In this article I demonstrated how the 4 big traders in COMEX silver futures held a true net short position of between 72.5% and as much as 76% of that entire market after removing all spread positions. He did not comment on my recent and continuing allegations concerning JP Morgan being the big silver short or how all new silver short selling from the first of the year was established by existing big concentrated shorts.

Commissioner Chilton’s remarks can be found here (html link). I have omitted a news article he included as it was unrelated to the issue of market manipulation. First, I would like to thank Commissioner Chilton for responding to many of you. He is still the only one who directly responds to investors. In turn, I would like to thank those who forwarded to me his response, as I don’t hear from the CFTC directly. Virtually all of you have asked me to comment on Chilton’s response.

Commissioner Chilton writes that this is the first silver investigation in many years, and we must be patient in awaiting its outcome. He claims there are many factors to be considered and this is not an "open-and-shut matter."

I would counter that this is the third silver investigation in 5 years, the first two of which resulted in detailed public responses in May of 2004 and 2008, denying any manipulation existed. I would also contend that this is very much an open-and-shut matter of explaining how one or two U.S. banks being short 25% of the world production on any commodity would not be manipulation. If there are many other factors pointing to silver manipulation that the CFTC feels it must investigate thoroughly, then they should do so. But in the meantime, that does not preclude promptly answering simple questions about the obscene short position by one or two U.S. banks. It is this specific issue that caused many hundreds of you to write to the CFTC. Let them explain that now and investigate other matters in due course.





Did you ever ask a criminal to investigate himself? Well if you did, then you would get the same frustration as the author of the above paragraph.


Commissioner Chilton writes that the concentrated short position in COMEX silver futures does not take into account any other off-setting positions away from the COMEX. In essence, the concentrated short position might be hedged elsewhere. In Chilton’s own words, "Thus, it is not as if the short futures position represents the single position of a large trader…"

I would contend that the only silver market in which the CFTC has strict regulatory oversight responsibility and transparency, the COMEX, is where the concentrated and manipulative short position exists. How convenient it is that the non-transparent OTC market, now legitimizes a real and documented manipulative position. Usually it’s the other way around, with the CFTC claiming they are powerless to monitor and regulate what goes on in the OTC market. Now, when it suits their purposes, they use the opaque OTC market as their defense of a very real and visible manipulative position. I think the operative phrase here is talking out of both sides of your mouth.

As I wrote yesterday, all the evidence from the OTC market, as documented by the Office of the Comptroller of the Currency (OCC), indicates that the big U.S. banks, led by JPMorgan Chase, had been heavily short silver derivatives in the OTC as well. Since when do you hedge a short position with another short position?

Additionally, what Commissioner Chilton is suggesting is actually a worse form of manipulation than what I am alleging, if that is possible. Since the COMEX is clearly the dominant pricing force in silver, what he is saying, in effect, is that the big shorts may be buying somewhere else against their controlling COMEX short position. In other words, he is providing a motive for the big shorts, namely depress the price artificially on the COMEX to pick up off-setting long positions at distressed prices. Or, more likely, use a downward manipulation of COMEX silver prices to buy back short positions in the OTC market. Either activity is highly illegal.

Finally, I hope everyone notices that the argument that the big shorts have physical silver behind them has been jettisoned. Where the CFTC used to imply that the big shorts possessed physical silver, now it’s completely non-transparent swaps, forwards and lease positions. The same paper garbage derivatives that have just about ruined our financial system.

Ruined our financial system to the gain of the printers. To the MASSIVE BENEFIT of the printers who now get to print and give to themselves trillions of dollars in secret and charge the US government (taxpayers) interest on the theft.





It is like I go to a bank with a gun, empty the vaults, and then send a bill to the bank to pay me interest on what I stole. It really is that dumb. Our system of private foreign bankers, all above the law, that own our government and election process and media and corporations and military and policy… etc….


Commissioner Chilton characterizes my analysis in removing all spread transactions in order to calculate true net total open interest as a spin and he claims that there is no good economic reason to calculate on this basis. He further states that it is wrong to look at the aggregate position of the large traders, as it could include proprietary as well as customer positions. He (or Commission staff) sees no evidence of collusion among the large short traders.

I would counter that, as I explained in my original commentary, spread transactions are distinct from true outright positions and must be considered as separate and different from outright positions. In fact, the CFTC confirms this in their breaking out of non-commercial spread positions in every COT report. Look, I know Commissioner Chilton is relying on staff input in his message, but this must be embarrassing for him. Spreads must be removed to calculate true net open interest and concentration. Any representation to the contrary is plain dishonest.





He understands that spreads are equal contracts from both sides (long and short), but he is a criminal representing the criminals who own the printing press. What else can he do but look dumb while lying? And the media is lying while they also pretend that the government is stupid. And we are all acting stupid when we think that our media and Federal Reserve is incompetent. THEY ARE PRINTING MONEY AND GIVING IT TO THEMSELVES for crying out loud! Oh my, we are in serious trouble because I am 100% certain that US society is nowhere near going to wake up to this in time. The private communistic takeover of the dying US republic is already underway at advanced stages. Our warning signals are already decades running and ignored even as the sirens and lights blare everywhere EXCEPT on mainstream news channels (that point the finger at dead-end false causes).


As far as the aggregate position of the large traders, I would suggest that Commissioner Chilton and staff bone up on CFTC regulations. The Large Trader Reporting System (LTRS) outlines aggregation guidelines. http://www.cftc.gov/industryoversight/marketsurveillance/ltrp.html





You think he cares?


What matters in determining aggregation is financial interest and control. Let me give you an example.

If a hedge fund, with a thousand individual investors, buys or sells commodity futures in its name on behalf of those investors, its position will be listed as a single trader in the COTs. That’s because the hedge fund is in control and decides when to buy and sell, not the investors in that fund. That’s the way it should be. The whole purpose is to monitor the market impact of the hedge fund and guard against manipulation.

Likewise, when JP Morgan controls the buying and selling of its customers, that trading is aggregated as one account, also as it should be. If certain customers of JP Morgan decide when to buy or sell independent from Morgan and are of large reporting size, those customers will be listed as separate traders in the COT. Therefore, this business that aggregation explains away the concentrated short position of JP Morgan in silver is bogus. If they control the trading, then they are considered a single trader.

As far as there being no evidence of collusion among the few large short traders, let me point out a truly remarkable statistic. Prior to June 2007, it was relatively rare for the net short position of the 4 largest traders in COMEX silver futures to exceed the total net commercial short position. Yet, for every week since August 5, 2008 (coincidently the date of the Bank Participation Report that kicked off the investigation), the 4 largest traders have had a larger net short position than the entire commercial short position. That’s 34 weeks running. What does this mean?

Quite simply, this means that without these 4 large traders (commercials by process of mathematical elimination), there would be no commercial net short position at all. In other words, the 4 big traders’ short position is so large and concentrated that if it did not exist, the combined position of the remaining commercials would be net long. And in the history of the COTs, COMEX silver is the only market in which the commercials have never been net long. Because they represent the entire effective short position in COMEX silver, it is not possible that these 4 commercial traders are not colluding to depress the price of silver. Actions speak louder than words.

Commissioner Chilton takes issue with my calculations and writes that even if you calculated as I did, the results of the true net concentration of 72.5% to 76% by the 4 large traders would be less than that. While not stating the exact number the staff calculated, the implication was a much lower level of concentration than what I concluded..

I would counter that numbers are numbers, and there is no need for implication. I would doubt that the Commission staff’s true net percentage results were more than one percent different than mine. They should just state their calculation and stop with the innuendos.

Lastly, Commissioner Chilton proposes there should be hard cap speculative position limits to deal with the issue of concentration.

To that, I would counter - Amen Brother! I would also agree that we should have an open public hearing on this silver matter, as Commissioner Chilton has suggested. But agreeing on something and actually doing it are two different things Talk is cheap. Actions are dear.

The enforcement of hard, legitimate speculative position limits in silver is the real solution to ending the silver manipulation. Ironically, this is the solution I have offered privately to the COMEX and the CFTC for more than 20 years and in countless articles. Legitimate speculative position limits will eliminate and prevent any concentration and manipulation.

Unfortunately, there is a great misperception about what actually constitutes hard legitimate speculative position limits. Ask any regulator or politician what they really mean when they call for legitimate speculative position limits, and it becomes immediately clear that they are referring to limiting speculators who buy, or go long. There is never even the slightest thought given to limiting speculative positions on the sell, or short side of the market.

Yet, in silver (and gold) there is no apparent concentration on the long side of COMEX positions, at least not when compared to the concentration on the short side. There is no legitimate suggestion that silver prices are too high. Certainly, no silver miner is generating big profits, and most are in the red. There is no obvious flood of physical silver coming to market, motivated by high prices. If there is a flood, it is one of buyers, not sellers. The sellers are very few in number and very large in terms of position size.

Since the problem of concentration is clearly on the short side, that is the side that needs legitimate speculative limits the most. And that’s where we run into a road block. We call the short side speculators, not speculators, but commercials. We label them hedgers, when these big banks are clearly speculating. We call them market makers, when they are strictly gambling and using lax oversight to dominate the market. That’s not a market, it’s a racket.

If Commissioner Chilton is serious about hard speculative position limits, he should first address the lunacy that allows big banks to pretend to be hedgers when they are clearly speculating. It is big financial institutions speculating that is at the root of all current economic problems. In fact, what we have been witnessing in the ongoing silver manipulation is a microcosm of our broader economic difficulties, namely, a lack of legitimate regulatory oversight and the application of common sense.

The bad news is that we must recognize that it is unlikely that the regulators will ever step up to the plate and do the right thing. The CFTC has denied that there is anything wrong in silver for so long, that it is impossible for them to admit otherwise. But is important to get them on the record, even if it is all talk and no action on their part. I promised you that if you contacted the regulators and elected representatives on this issue, you would receive dignified and serious replies. My promise is intact, as this is evident in Commissioner Chilton’s response.

The good news is that we don’t need the regulators to end the manipulation, even though they should. This crime in progress will end in spite of them refusing to perform their sworn responsibilities. The reality of the artificially depressed price and the developing silver shortage guarantees an abrupt end to the manipulation. This is all the more obvious in the behavior of the big shorts. They are clearly reducing their combined short position (COMEX plus OTC) as much as possible. This should tell you that they expect much higher silver prices and are positioning themselves for it. Unlike the regulators, the manipulators are all action and no talk. Do as they do - buy silver.

There will be one more article tomorrow.

April 1, 2009

A Bad Joke?

(This essay was written by silver analyst Theodore Butler, an independent consultant. Investment Rarities does not necessarily endorse these views, which may or may not prove to be correct.)

I’m mindful of what day this is, and I assure you this is not about some April Fool’s Day joke gone bad. But I do hope you will treat the recent announcement from the CME Group concerning the introduction of two new contracts on COMEX gold and silver as being as funny as a heart attack.

The CME recently announced that it will begin trading of new E-Mini futures contracts on gold and silver on April 19. The new contracts will be cover 33.2 oz (one kilo) of gold and 1000 oz of silver. They will replace the current lightly-traded E-Mini contracts covering 50 oz of gold and 2500 oz of silver. http://cmegroup.mediaroom.com/index.php?s=43&item=2828&pagetemplate=article

Curiously, the official news release left out the most significant contract specification of these new trading vehicles; the actual delivery mechanism. I don’t know if this was intentional or just an oversight. The good news is that the actual delivery mechanism was explained in subsequent news stories. The bad news is that there is no actual delivery mechanism. These new contracts will be cash, or financially-settled. There will be no real metal delivery option clause for either buyer or seller. On the termination date of each futures contract, all contracts will be closed out at a single price and each contract holder (long or short) will be credited or debited based upon his original purchase or sale price.





Of course… paper in and paper out. No physical to control the excesses of temptation for controlling commodities. This is to be expected. That is why the physical holders will sleep well at night and why the paper investors will always wonder the multitude of questions: will the dollar hold value? Will the manipulators force me to margin? Will the trading institution honor their contract with me? Any of those three questions can bankrupt any paper investor in precious metals. But none of them can cause the slightest disturbance in the sound sleep of the physical metal holder. ZZZzzzzzzz. Snore…


Let me be as clear as I can - because these new contracts do not contain actual metal delivery clauses, they are, in my opinion, fraudulent contracts. The CME should be ashamed of itself for introducing them, and the CFTC disgraces itself (again) for not preventing their introduction. I know those are strong words, so let’s see if I can back them up.





He doesn’t get it… he is talking to the mafia. Why is he trying to explain to the mafia that they should investigate themselves? The big picture vision is not yet seen by poor Ted, although he did come a long way from his straight-laced past. Ted doesn’t understand that he is talking to mafia kingpins of the world economic fiat currency printing press. They don’t have any interest in doing anything differently from how they are playing the game right now.


While there are many examples of successful cash-settled options and futures contracts (S&P and OEX futures and options, for example), the idea of a futures contract on physical commodities being cash-settled is absurd. The concept is particularly absurd in physical commodities, like gold and silver, where physical delivery is customary and normal and easy. That’s because it is precisely the ability to make or take actual delivery in a physical futures contract that gives that contract its legitimacy. Take away the physical delivery option and you introduce the likelihood of artificial pricing. About the last thing the gold and silver markets need right now, smack dab in the middle of a CFTC investigation, is more doubt on the functioning of the derivatives markets.

It is no surprise that the existing E-Mini gold and silver futures contracts, also cash-settled, have been such a dismal failure for the exchange and are being replaced. While the low level of volume and open interest is downright embarrassing for the exchange, after more than two years of trading, the outcome was expected and justified.

In an interview with Jim Cook, in December 2006, the following conversation regarding the then-new cash-settled contracts took place;

Cook: You were also telling me about a new type of contract the NYMEX/COMEX had introduced.

Butler: Yes, and for the life of me, I can’t understand why there has been no public debate on this.

Cook: Why?

Butler: The NYMEX/COMEX and the London Metals Exchange have introduced a number of new mini-contracts on precious and base metals. The distinguishing feature of these electronic traded contracts is that they are financially, or cash settled, instead of by physical delivery. Whoever thought this up should be horsewhipped.

Cook: Why do you take issue with these contracts?

Butler: The thought that a physical commodity could be traded without having the possibility of taking physical delivery is preposterous. A naked short seller would love these contracts because there is no obligation to deliver the physical commodity. But buyers would be crazy to deal in such a monstrosity.

Cook: Why is that?

Butler: Any physical commodity contract that doesn’t allow for physical delivery is not a legitimate contract. It is the physical delivery option that gives the contract its legitimacy. The originators of these cash settled contracts are either foolish or have intentionally devised a contract that favors naked short sellers.

Cook: Do you think they’ll gain popularity?

Butler: They certainly shouldn’t.

http://www.investmentrarities.com/12-19-06.html

Will the new versions of the old failed cash-settled gold and silver contracts succeed? I don’t know. But I still know they shouldn’t. This reconfiguration in contract size amounts to no more than putting lipstick on a pig. It’s still a pig.

Don’t get me wrong. These new no-delivery contracts are great if you want to go short. Better still, they are great if you want to manipulate the market to the downside. They are a short sellers’ dream in that you can sell whatever amount you care to without ever having to deliver an ounce of real metal. But what’s so good for the shorts is bad for the longs. So much so, that any investor who buys these contracts should have his head examined.

Even though my background is in futures and I believe in the importance of a legitimate futures market, both for speculative and bona fide hedging purposes, the majority of investors are not suited for futures trading. But some are. I don’t think any silver investor should consider these new cash-settled metals contracts, unless as a substitute for some Nintendo-like trading game.

The important point is that the introduction of these no-delivery vehicles should make you run to physical silver. If the silver market is as manipulated as I contend, the manipulators would love nothing better than to get off the hook for having to deliver actual metal in the coming shortage. A no-delivery contract would accomplish that. Don’t fall for their bait - stick to physical silver.







Stick to physical silver my friends. 6,000 years and going strong. Untaxed, unaudited, free from yearly accounting rituals. F the New World Order! Put your paper into silver and hurt them. What they can’t print, they can’t use to enslave you!



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