Thursday, July 7, 2016

Why Hillary Clinton Should be Prosecuted for Reckless Abuses of National Security














July 6, 2016






Yesterday FBI Director James Comey described Hillary Clinton’s email communications as Secretary of State as “extremely careless.” His statement undermined the defenses Clinton put forward, stating the FBI found 110 emails on Clinton’s server that were classified at the time they were sent or received; eight contained information classified at the highest level, “top secret,” at the time they were sent. That stands in direct contradiction to Clinton’s repeated insistence she never sent or received any classified emails.

All the elements necessary to prove a felony violation were found by the FBI investigation, specifically of Title 18 Section 793(f) of the federal penal code, a law ensuring proper protection of highly classified information. Director Comey said that Clinton was “extremely careless” and “reckless” in handling such information. Contrary to the implications of the FBI statement, the law does not require showing that Clinton intended to harm the United States, but that she acted with gross negligence.

The recent State Department Inspector General (IG) report was clear that Clinton blithely disregarded safeguards to protect the most highly classified national security information and that she included on her unprotected email server the names of covert CIA officers. The disclosure of such information is a felony under the Intelligence Identities Protection Act.

While the FBI is giving Clinton a pass for not “intending” to betray state secrets, her staff has said Secretary Clinton stated she used her private email system because she did not want her personal emails to become accessible under FOI laws. This is damning on two counts – that she intended to disregard the protection of security information, and that she had personal business to conceal.

This is not the end of the Clinton email issues. Department of Justice officials filed a motion in federal court on June 29th requesting a 27-month delay in producing correspondence between former Secretary of State Hillary Clinton’s four top aides and officials with the Clinton Foundation and Teneo Holdings, a public relations firm that Bill Clinton helped launch.

Hillary Clinton deleted 30,000 emails claiming they were ‘personal’. This is equal to the volume of her emails designated as department business. If half of an employee’s email volume is for their personal business, they are not using their time for their job.

If Secretary Clinton was conducting personal business for her family Foundation through the Secretary of State’s Office, this is a matter the American public deserves to know about. As Secretary of State Hillary Clinton routinely granted lucrative special contracts, weapons deals and government partnerships to Clinton Foundation donors. The Secretary of State’s office should not be a place to conduct private back room business deals.

The blurring of the lines between Clinton family private business and national security matters in the Secretary of State Office underscores evidence on many other fronts that Hillary Clinton is serving the 1%, not we the people.

Hillary Clinton’s failure to protect critical security information is not the only thing in her tenure as Secretary that deserves the term reckless, including her decision to pursue catastrophic regime change in Libya, and to support the overthrow of democratically elected governments in Ukraine and Honduras.






















In a Rigged System, Hillary Clinton Is Too Big to Indict










Posted on Jul 5, 2016






The long-roiling question finally has been answered: Hillary Clinton will not be indicted for using a private email server during her tenure as secretary of state. Period. Full stop. Pause a moment, and let it sink in.

FBI Director James Comey delivered the word in a surprise news conference Tuesday morning, exactly three days after Clinton’s 3½-hour interview Saturday at the J. Edgar Hoover Building in Washington, D.C.

There was plenty of evidence that the presumptive Democratic presidential nominee and her staff had been “extremely careless” in their handling of classified and sensitive information, Comey said, but not enough to prove they had acted with the criminal intent or willfulness needed to secure a conviction. “No reasonable prosecutor would bring such a case,” he concluded.

While the FBI’s evaluation technically is not binding on the Justice Department, any indictment is now clearly off the table. Last week, following her embarrassing and ethically suspect encounter with Bill Clinton on the tarmac at the Phoenix airport, Attorney General Loretta Lynch publicly pledged to follow the bureau’s lead. And the bureau, via Comey, has spoken.

Reaction to his announcement has been swift and predictable, with House Speaker Paul Ryan, R-Wis., expressing shock and dismay that the “rule of law” has been “damaged,” and the Clinton campaign voicing relief “that the matter is now resolved.” Taking to Twitter, Clinton’s Republican presidential rival, Donald Trump, blasted Comey’s analysis as further proof that “the system is rigged.”

I have been following the Clinton email scandal in this column for several months and have long predicted that she would escape prosecution. Now that the official decision is in, I find myself, regrettably, in agreement with Ryan and Trump.

The system is rigged. Like the Wall Street banks that were bailed out after running the nation’s economy off a cliff just a few years ago because they were too big to fail, Clinton and the power elite of which she is an integral part are too big to indict.

This isn’t to say that Comey or any of the career prosecutors in the Justice Department assigned to the investigation are in the tank. White-collar crimes are often tangled webs, tedious to investigate and hard to litigate. Clinton’s email machinations are no exception.

As Comey noted in his news conference, the email investigation focused on two federal criminal statutes. They are Sections 1924 and 793 of Title 18 of the United States Code. They deal, respectively, with the unauthorized removal and retention of classified material, and the improper gathering, transmission or loss of information relating to the national defense.

A conviction of Clinton under the first statute, a misdemeanor, would require proof that she actually knew she was keeping classified information on her server. The second, a felony carrying a potential 10-year prison sentence, would require a showing of either knowledge or gross negligence (essentially, the equivalent of recklessness). The elements of both offenses would have to be established beyond a reasonable doubt, the highest standard of proof in our legal system.

In part, Comey explained, the recommendation against prosecution was made because an indictment would have taken investigators into uncharted legal waters. “All the cases prosecuted [under these laws],” he explained, alluding to but not naming former CIA Director David Petraeus and ex-National Security Adviser Sandy Berger, “involved some combination of: clearly intentional and willful mishandling of classified information; or vast quantities of materials exposed in such a way as to support an inference of intentional misconduct; or indications of disloyalty to the United States; or efforts to obstruct justice. We do not see those things here.”

Reasonable minds, as they say in law school lectures nearly every day across the country, can differ. But is a criminal case against Clinton actually so weak that, to quote Comey again, “no reasonable prosecutor would bring” it?

As Comey revealed, Clinton used not one, but “several” email servers at her New York home during her tenure at the State Department from January 2009 to February 2013, “decommissioning” and replacing one after another. More importantly, he also revealed that the servers contained no less than 110 emails that included information that was classified at the time the emails were received and stored. Of these, eight email chains contained information that was “top secret.”

Comey’s announcement came on the heels of an 83-page report issued by the State Department’s Office of Inspector General (IG). Released on May 26, the IG’s report delivered a stinging rebuke of Clinton, finding that she had committed a bounty of administrative derelictions.

Among her many missteps, according to the IG, Clinton never obtained department approval for using personal email, much less a BlackBerry mobile phone or a private server, to transact official business. Such practices, in fact, contravened a departmental policy adopted in 2005, advising employees to conduct day-to-day operations on an authorized automation system. The claim that her email usage was “permitted” during her term at the State Department is still published on Clinton’s official website. It is at best artful and misleading.

The IG also found that Clinton continued to use the server without seeking technical assistance from the department’s Bureau of Information Resource Management (IRM) to guard against leaks and hacking, even though two IRM staffers raised security misgivings about the server in 2010, and the server was briefly shut down in 2011 out of concerns that an unknown third party was attempting to break into it.

Clinton’s oft-cited defense that her predecessors at the State Department also utilized personal email is similarly misleading. While Colin Powell conducted official business via a private email account, as did certain aides to Condoleezza Rice, the installation of a private server was unprecedented.

The IG further faulted Clinton for waiting until December 2014, 21 months after leaving office, to turn over some 30,000 emails to the department. Under the provisions of the Federal Records Act, even before it was amended and tightened in 2014, Clinton was required to submit all work-related documents immediately upon her departure as secretary.

Neither the IG nor Comey, however, commented directly on the propriety of Clinton’s unilateral decision to delete some 31,000 email messages from her server that she deemed were purely personal. Was other classified and top secret material contained in files that have been permanently erased? We’re unlikely to know now.

The decision not to prosecute, however, will not end the email controversy, not by a long shot.

The leniency shown to Clinton stands in stark contrast to the harsh sentences meted out to whistleblowers such as Chelsea Manning and former CIA analyst John Kiriakou for their alleged mishandling of classified material.

As a result, we can expect the cries of double standards, political influence and corruption to persist and redouble as we head for the November election. At the same time, the increasingly proto-fascist Trump campaign will be fortified with a fresh set of inexhaustible talking points.

Most disastrous of all, the race for the White House, which should be a cakewalk for the Democrats, will go down to the wire because the party has chosen as its leader a candidate driven by blind ambition, with an appalling disregard for accountability and transparency, who, when push came to shove, was too big to bring to the bar of justice.
























The Big Unravel – US Commercial Bankruptcies Skyrocket













Posted on July 6, 2016 by Yves Smith






Yves here. While commercial bankruptcies are still below the level of late 2013, Wolf is correct to point out that the spike during this year’s bankruptcy season is bigger and longer-lived than in recent years. Presumably a fair bit of the change is due to stress in oil producing areas, but it may also include an intensification of the ongoing shakeout in bricks and mortar retailers.
By Wolf Richter, a San Francisco based executive, entrepreneur, start up specialist, and author, with extensive international work experience. Originally published at Wolf Street

This year through June, there have been 91 corporate defaults globally, the highest first-half total since 2009, according to Standard and Poor’s. Of them, 60 occurred in the US. Some of them are going to end up in bankruptcy. Others are restructuring their debts outside of bankruptcy court by holding the bankruptcy gun to creditors’ heads. In the process, stockholders will often get wiped out.

These are credit fiascos at larger corporations – those that pay Standard and Poor’s to rate their credit so that they can sell bonds in the credit markets.
But in the vast universe of 19 million American businesses, there are only about 3,025 companies, or 0.02% of the total, with annual revenues over $1 billion; they’re big enough to pay Standard & Poor’s for a credit rating.

About 183,000 businesses, or less than 1% of the total, are medium-size with sales between $10 million and $1 billion. Only a fraction of them have an S&P credit rating, and only those figure into S&P’s measure of defaults. The rest, the vast majority, are flying under S&P’s radar. About 99% of all businesses in the US are small, with less than $10 million a year in revenues. None of them are S&P rated and none of them figure into S&P’s default measurements.
So how are these small and medium-size businesses doing – the core or American enterprise?

Total US commercial bankruptcy filings in June soared 35% from a year ago, to 3,294, the eighth month in a row of year-over-year increases, the American Bankruptcy Institute (in partnership with Epiq Systems) reported today. During the first half, commercial bankruptcy filings soared 29% to 19,470. Among the various filing categories:

Chapter 11 filings (company “restructures” its debt at the expense of stockholders and unsecured creditors by shifting ownership to creditors, but continues to operate) soared 36% to 499 in June and 25% in the first half to 3,220.

Chapter 7 filings (company throws in the towel and “liquidates” by selling its assets and distributing the proceeds to creditors) jumped 28% in June to 1,909, and 25% in the first half to 11,211.

Like so many things, bankruptcy is a seasonal business – and one of the few truly booming businesses in the US at the moment. While stockholders and some creditors pay the price, lawyers and many others on the inside track, including hedge funds and private equity firms that are able to pick up assets for cents on the dollar, have a lot to gain. And if a company emerges with a more manageable debt load, it too might eventually prosper, though multiple bankruptcies are not uncommon.

Commercial bankruptcy filings reach their annual peaks in March or April, and this year is no different. While June filings edged down by 64 from May, the five-year average seasonal decline for the period, at 275, is over four times higher. And the seasonal decline in June was the lowest for any June since the Financial Crisis.

This chart shows the seasonality and how bankruptcies have fallen since the Financial Crisis, until they hit the low point in September 2015. In June, the worst June since 2014, bankruptcy filings were up 49% from September:


 US-commercial-bankruptcies-2012-2016_06


Defaults and bankruptcies are indicators of the “credit cycle.” Easy credit with record low interest rates – the handiwork of the Fed with QE and ZIRP – has allowed businesses to borrow beyond their ability to carry this debt as everyone had been drinking the “escape velocity” Kool-Aid, the notion that growth in the economy would finally and very soon kick in and reach escape velocity. Year after year, for six years straight, it failed to kick in.

Hopes are now running into reality, which is a slowing economy in the US and globally, just when corporate debt has reached previously unimaginable levels, as this chart of total commercial and industrial loans at all commercial banks in the US shows:


US-commercial-industrial-loans2016-05



In October 2008, there were $1.59 trillion of these commercial and industrial loans outstanding. As of May 2015, there were $2.05 trillion outstanding, a 29% jump from the peak of the prior craziest credit bubble the world had ever seen to this even crazier credit bubble. And so, instead of that promised “escape velocity,” the bankruptcies have started to kick in.

Junk bonds swooned late last year and early this year as a consequence of billowing credit problems. But if you bought the crappiest of them on February 10, you’ve made a killing unless the company defaulted, in which case you got killed. So much money poured into junk bonds since then that prices soared even for the riskiest near-default issues. But is that honeymoon already over? Bad breath of reality next? 























Wednesday, July 6, 2016