Anglo Irish Bank Tapes – Insight into Moral Hazard

My last post consisted of a transcript of most of the leaked Anglo Irish bank tapes.

Today’s post will analyze the contents of those tapes.  We’ll see how the bankers involved intentionally mislead regulators and the Irish government about the extent of the crisis.  This was done to ensure the government would provide initial loans and then, having ‘skin in the game’, be forced to continue pouring in additional funds to prop up the bank.  Ultimately this situation lead directly to the bankruptcy of Ireland and its entry into serfdom as a vassal of its masters at the EU and IMF.

The Roots of the Irish Financial Crisis

The financial crisis of 2008 essentially destroyed the Irish economy.  Prior to that, from 1994-2007, the Irish economy had been on a tear of extremely high growth fuelled primarily by:

  1. Low corporate tax.
  2. Lack of regulation of the financial industry.
  3. Loose monetary policy by the European Central Bank (ECB).

These variables combined to turn the entire Irish economy into a giant asset bubble waiting to burst.  Specifically, the financial institutions financed a massive property bubble in which Irish banks used short-term borrowing to finance illiquid, long-term assets, primarily in the form of property and mortgages.  This created a classic borrow-short/lend-long asset liability mismatch.  The Irish banks had to continuously roll over large amounts of the short term loans to stay solvent.

This was amazing profitable for the Irish banks while it lasted; they paid low interest to obtain short-term financing which they turned into long-term loans yielding higher interest.  The banks then simply pocketed this spread as profit.

And profitable it was.  The average salary and bonus for the executive team at Anglo Irish bank was around €2 million.  But this is only one part of the story – you need to also look at the massive stock option benefits showered on those same execs.  The average exec exercised about €1 million worth of options in 2007 and held around €7 million on so in vested and unvested options (given 2007 share prices and the varying exercise prices of those options).  You can take a look for yourself in the 2007 annual report from the bank (found here) pages 127-129.

So it was a great racket for the bankers while it lasted.  Unfortunately, when the short-term credit markets dried up with the onset of the 2008 financial crisis, the Irish banks, like Lehman Brothers and AIG, were instantly insolvent.  This was not an inevitable outcome.  Had the banks been properly capitalized and not leveraging asset-liability mismatching to boost profits, they would have been fine.  Instead, these banks were balanced on a knife edge susceptible to even the slightest disruption in the short-term credit markets.

By September of 2008 Anglo was losing billions of euro a day and would surely fail in the immediate future.  The Anglo execs, like bankers around the world, approached their government to ask for a bailout and sign on taxpayers to the liabilities of their reckless behaviour.  In Anglo’s case an initial ‘investment’ from the Central Bank of Ireland of €7 billion was sought to staunch the bleeding.  And this is where the Anglo tapes come in revealing that, in fact, Anglo executives knew that far more the €7 billion would be required to keep the firm afloat.

The Initial €7 Billion ‘Investment’

One of the first Anglo Irish tapes released was a conversation between John Bowe, Acting Director of Treasury and Director of Capital Markets, and Peter Fitzgerald, Director of Retail Banking.  In this conversation the two discuss the €7 billion ‘investment’ from the Irish Central Bank and reveal the true extent to which the Central Bank had been manipulated:

John Bowe: Fun and games. yeah. We went down to the, we went down to the regulator. Did I tell you that we went down to the regulator yesterday?

Peter Fitzgerald: Yesterday? Yesterday, yeah, yesterday was fine. Yeah, I got yesterday, yeah.

John Bowe: And we basically…did I tell you we went down in the evening?

Peter Fitzgerald: No, no you didn’t.

John Bowe: Went into IFSRA and basically kind of gave it to them between the eyes and there were sort of pointing in different directions. Not us, not us but Jeez, you would want to get on that, that sounds…hmm…hmm. So we went down… and we basically said…

Peter Fitzgerald: In Central?

John Bowe: In Central yeah. And I mean to cut a long story short we sort of said look, what we need is €7 billion and we’re going to give you, what we’re going to give you is our loan collateral so we’re not giving you ECB, we’re actually giving you the loan clause. We gave him a term sheet and we put a pro note facility together and we said that’s what we need. And that kind of sobered up everybody pretty quickly, you know.

Peter Fitzgerald: Yeah.

John Bowe: And why do you need that and what’s happening…and Jesus oh…oh…you have certainly focused our minds. So I think.

Peter Fitzgerald: And is that €7bn a term?

John Bowe: This is €7bn bridging.

Peter Fitzgerald: Yeah.

John Bowe: So… so it is bridged until we can pay you back…which is never.

Peter Fitzgerald: Yeah, yeah, and that’s in the pro note, that’s in the terms and conditions?

John Bowe: (Laughing) That’s right. So under the terms that say repayment, we say: no.

Peter Fitzgerald: None…just none. Not applicable. Okay and what did he say? “I need a change of underwear?”

John Bowe: (Laughing) There was a bit of that, there was a bit of that [discussing meeting with regulator]. Jesus that’s a lot of dosh. Jesus fucking hell and God. Well, do you know the Central Bank only has €14 billion of total investments so that would be going up to 20. Gee, that would be seen. And how would we do that? Gee, we would need to give you. We need to. Jesus, you’re kind of asking us to play ducks and drakes with the regulations,” and we said yeah. We said, look what we are telling you is that if we get into difficulties we have 100,000 plus lump sum depositors in Ireland, all of whom would be very vocal. And I said, “take it that the other Irish banks will not be able to raise any wholesale funding for, for how long you want. So I said, “Bank of Ireland, their balance sheet is €200 billion and 45 per cent of that is wholesale, so let’s call that €90bn. And let’s say that 60 per cent of that is rolling in the next 12 months, so that’s €54 billion – take it that that won’t roll…okay. And I said you can also do a similar sum for Allied [Allied Irish Bank] and Irish Permanent. So I said that’s what is at stake because these guys, even though they’re big in our world, are minnows in the outside world.

Peter Fitzgerald: Yeah.

John Bowe: So I said that’s what you’re protecting. And I said you have got to. So anyway, that sort of got everybody’s attention and then we had Pat Neary. Pat Neary coming in and saying (mimicking), “C’mere lads, I just want to have a word with ya…yeah Jesus…so look c’mere, have you actually got assets, decent assets, that you can put in play? Is there stuff in there, like, that has value, you know?’

Peter Fitzgerald: Yeah, yeah.

John Bowe: “And look lads you know, if you’re going for this now make sure whatever you get sorts it out. Okay? You know?”

Peter Fitzgerald: What do you mean whatever you get sorts it out?

John Bowe: In other words, whatever you get from the Regulator sorts out the issue.

Peter Fitzgerald: Oh yeah, yeah…just makes it fuckin’ happen

John Bowe: Don’t…

Peter Fitzgerald: Don’t fuck it up.

John Bowe: Don’t be coming back.

Peter Fitzgerald: Yeah…don’t fuck it up…yeah, yeah, yeah.

This exchange makes it clear the the higher-ups at Anglo knew that the €7 billion of loan collateral they would provide to the Central Bank of Ireland wasn’t worth the paper it was written on and that, for all intents and purposes, the Central Bank would never see any of this money repaid.

Further, it’s apparent from the conversation that the Central Bank was at least smart enough to seek guarantees from Anglo execs that the €7 billion would be sufficient to see them through the crisis and they would not be coming back for more.

But, as the conversation between John Bowe and Peter Fitzgerald continues, it becomes clear that the two were well aware that the €7 billion was totally insufficient to keep Anglo afloat and was merely being used to get the Central Bank to ‘have skin in the game’:

Peter Fitzgerald: Ah we are, yeah, and what, how did you arrive at the seven?

John Bowe: Just, as Drummer would say, picked it out of my arse, you know. Em…I mean, look, what we did was we basically said: what is the amount we can securitize over the next six months? And basically say to them: look, our problem is time; it’s not our ability to create the liquidity, the enemy is time here.

Peter Fitzgerald: Yeah.

John Bowe: So we can rebuild, in other words, we can rebuild the liquidity off our loan book, but what we can’t do is, we can’t do it now and the balance sheet’s leaking now.

Peter Fitzgerald: Yeah, yeah unless the balance sheet stabilises, then you can buy some time.

John Bowe: Yeah and that number is seven. But the reality is that actually we need more than that. But you know the strategy here is you pull them in, you get them to write a big check and they have to keep, they have to support their money, you know.

Peter Fitzgerald: Yeah, yeah, yeah, yeah, yeah. They’ve got skin in the game and that’s the key.

John Bowe: They have and they have invested a lot. If they saw, if they saw the enormity of it upfront they might decide, they might decide they have a choice. You know what I mean? They might say the cost to the tax payer is too high. But em…if it doesn’t look too big at the outset…if it looks big, big enough to be important but not too big that it kind of spoils everything.

Peter Fitzgerald: Yeah, yeah.

John Bowe: Then, then I think you have a chance. So I think it can creep up.

Peter Fitzgerald: Yeah, yeah, yeah. They’ll give you a bit of drip.

John Bowe: Yeah.

Peter Fitzgerald: What do you think will happen?

John Bowe: What do I think will happen? I don’t know. I really don’t know. I mean I don’t think we’re an easy sell to anyone.

Peter Fitzgerald: No.

John Bowe: And the home interest should be, should be there, except that they don’t have the financial standings themselves. So do I think it’s going to be possible to offload it? No I don’t. What will it end up being? It could be breaking it up and selling individual books; it could be nationalization, you know.

Peter Fitzgerald: Yeah.

John Bowe: That would be fantastic.  If it was nationalization we’d all keep our jobs.

Peter Fitzgerald: It would be fantastic, wouldn’t it?

John Bowe: Yeah, civil servants, you know?

So clearly the strategy of the Anglo execs was to mislead the regulators, government, and Central Bank in order to secure some initial investment and suck those entities into throwing bad money after good.  The Anglo execs knew that €7 billion was completely insufficient and that far, far, more would be needed.  Indeed, the two even discussed that ultimately the bank would likely have to be broken up or nationalized (which was the ultimate outcome in 2009).

In the end, reading the transcripts really doesn’t do the tapes justice.  Here’s the audio of the entire conversation between John Bowe and Peter Fitzgerald:

The Nationalization of Anglo Irish and the Bankrupting of Ireland

And so began the drawn-out demise of Ireland.  Exactly as planned the Irish government did get sucked into throwing more money into the black hole that was Anglo’s balance sheet.  In the end Anglo wound up being nationalized in 2009 and costing the Irish tax payers €28 billion which, added with losses incurred from other Irish banks, brought the total to bill to the Irish people for the bank bailouts to €64 billion.  This lead directly to the Irish government seeking its own bailout from the EU and IMF and Ireland becoming, essentially, a vassal state with its people sold into serfdom.

The Lesson

All of this transpired because of the greed of those in charge of the large financial institutions.

Banking, at its core, adds no value to the economy.  It doesn’t produce goods, it doesn’t innovate, it doesn’t refine or harvest natural resources.  Instead, banks are supposed to provide a series of simple deposit and loan services and gain a small fee for those services.  Never in a sane economy should the banks be the most profitable corporations – yet that’s exactly the case in our modern society.

To make it worse, the Too-Big-To-Fail mentality that pervades our society’s thinking about banks guarantees a moral hazard that will cost us all dearly.  When times are good, the bankers reap enormous bonuses.  When things go bad, those same bankers simply push their losses onto the taxpayers.  Under those circumstances why would the banks not take huge risks?

The lesson from the Anglo tapes should be simple: When the next systemic collapse comes, we let the banks fail.  We allow the free market work its magic, however painful that is in the short-term.  Only then can we move forward with a financial services industry not built on fraud and corruption.

But sadly, I think the lesson of the Anglo Irish tapes will not be learned.  The next financial crisis will merely see another TARP bill passed signing taxpayers onto the bankers’ bad debts and leading to a further consolidation of the large financial firms, greater centralization of power and control and, of course, even more fraud and corruption baked into the system.

Anglo Irish Bank Tapes – The Transcripts

This past summer, a series of recorded phone conversations between senior executives at Anglo Irish bank were leaked.  These tapes date back to the peak of the financial crisis in September 2008.  The release of these tapes in ongoing and has, thus far, exposed the outright criminality of the bankers involved.  The tapes show the level of fraud and manipulation that was used to swindling the Irish taxpayers into what amounted to an open ended bailout which ultimately ended in the bankruptcy of Ireland.

My next post will present a timeline of these events and analyze the content of the leaked tapes.

This post provides the transcript of several of the more interesting leaked conversations, several of which exist only in audio form – until now.


  • John Bowe: Acting Director of Treasury and Director of Capital Markets
  • Peter Fitzgerald: Director of Retail Banking
  • David Drumm: CEO

September 18th, 2008

John Bowe: Hello

Receptionist: John I have Peter Fitz for you.

John Bowe: Oh yeah, okay.  (Call patched in) As me granny used to say: ‘You must be therapeutic’.

Peter Fitzgerald: Eh what does that mean? Can I work the computer is it?

John Bowe: Therapeutic, therapeutic. I was just ringing you.

Peter Fitzgerald: I’m ambidextrous as well. It means I can walk on land and water.

John Bowe: You can drink, you can drink beer out of both hands.

Peter Fitzgerald: Look c’mere, what’s going on?

John Bowe: Ah Jesus…

Peter Fitzgerald: Tell me the…

John Bowe: Fun and games. yeah. We went down to the, we went down to the regulator. Did I tell you that we went down to the regulator yesterday?

Peter Fitzgerald: Yesterday? Yesterday, yeah, yesterday was fine. Yeah, I got yesterday, yeah.

John Bowe: And we basically…did I tell you we went down in the evening?

Peter Fitzgerald: No, no you didn’t.

John Bowe: Went into IFSRA and basically kind of gave it to them between the eyes and there were sort of pointing in different directions. Not us, not us but Jeez, you would want to get on that, that sounds…hmm…hmm. So we went down… and we basically said…

Peter Fitzgerald: In Central?

John Bowe: In Central yeah. And I mean to cut a long story short we sort of said look, what we need is €7 billion and we’re going to give you, what we’re going to give you is our loan collateral so we’re not giving you ECB, we’re actually giving you the loan clause. We gave him a term sheet and we put a pro note facility together and we said that’s what we need. And that kind of sobered up everybody pretty quickly, you know.

Peter Fitzgerald: Yeah.

John Bowe: And why do you need that and what’s happening…and Jesus oh…oh…you have certainly focused our minds. So I think.

Peter Fitzgerald: And is that €7bn a term?

John Bowe: This is €7bn bridging.

Peter Fitzgerald: Yeah.

John Bowe: So… so it is bridged until we can pay you back…which is never.

Peter Fitzgerald: Yeah, yeah, and that’s in the pro note, that’s in the terms and conditions?

John Bowe: (Laughing) That’s right. So under the terms that say repayment, we say: no.

Peter Fitzgerald: None…just none. Not applicable. Okay and what did he say? “I need a change of underwear?”

John Bowe: (Laughing) There was a bit of that, there was a bit of that [discussing meeting with regulator]. Jesus that’s a lot of dosh. Jesus fucking hell and God. Well, do you know the Central Bank only has €14 billion of total investments so that would be going up to 20. Gee, that would be seen. And how would we do that? Gee, we would need to give you. We need to. Jesus, you’re kind of asking us to play ducks and drakes with the regulations,” and we said yeah. We said, look what we are telling you is that if we get into difficulties we have 100,000 plus lump sum depositors in Ireland, all of whom would be very vocal. And I said, “take it that the other Irish banks will not be able to raise any wholesale funding for, for how long you want. So I said, “Bank of Ireland, their balance sheet is €200 billion and 45 per cent of that is wholesale, so let’s call that €90bn. And let’s say that 60 per cent of that is rolling in the next 12 months, so that’s €54 billion – take it that that won’t roll…okay. And I said you can also do a similar sum for Allied [Allied Irish Bank] and Irish Permanent. So I said that’s what is at stake because these guys, even though they’re big in our world, are minnows in the outside world.

Peter Fitzgerald: Yeah.

John Bowe: So I said that’s what you’re protecting. And I said you have got to. So anyway, that sort of got everybody’s attention and then we had Pat Neary. Pat Neary coming in and saying (mimicking), “C’mere lads, I just want to have a word with ya…yeah Jesus…so look c’mere, have you actually got assets, decent assets, that you can put in play? Is there stuff in there, like, that has value, you know?’

Peter Fitzgerald: Yeah, yeah.

John Bowe: “And look lads you know, if you’re going for this now make sure whatever you get sorts it out. Okay? You know?”

Peter Fitzgerald: What do you mean whatever you get sorts it out?

John Bowe: In other words, whatever you get from the Regulator sorts out the issue.

Peter Fitzgerald: Oh yeah, yeah…just makes it fuckin’ happen

John Bowe: Don’t…

Peter Fitzgerald: Don’t fuck it up.

John Bowe: Don’t be coming back.

Peter Fitzgerald: Yeah…don’t fuck it up…yeah, yeah, yeah.

Peter Fitzgerald: Yeah okay. Is anyone else having these meetings with them?

John Bowe: What do you mean?

Peter Fitzgerald: Well I mean, have they had the same conversations with Permo (Irish Permanent) or have they told Permo that they’re fucked like?

John Bowe: No, I wouldn’t say so…

Peter Fitzgerald: Okay and what about the Irish Nationwide?

John Bowe: I think they’ve had discussions with them going back weeks, you know.

Peter Fitzgerald: They took their hands off the steering wheel over there and said we’re doing this now.

John Bowe: Yeah.

Peter Fitzgerald: Okay, okay…will it happen?

John Bowe: Well it has to happen. It has to happen, because if it doesn’t happen we’re going to hit a wall in the next week.

Peter Fitzgerald: Yeah, yeah.

John Bowe: So you tell me what’s going to happen.

Peter Fitzgerald: Yeah, and what em…

John Bowe: We’re already in breach, you know.

Peter Fitzgerald: I know yeah, but how does this play out? What’s the playbook like? What does it look like?

John Bowe: Well, I think there’s different playbooks. I thought one playbook is that they, they decide they’re willing to put their hands in their pockets and support the financial sector, or at least support the weakest elements of the financial sector.

Peter Fitzgerald: Yeah.

John Bowe: I think another, and I think what comes out of that is that ultimately that gets, that will become apparent, you know what I mean? So either in your accounts or whatever, it will become apparent at some level, it will become apparent that somebody somewhere has borrowed a lot of money, you know. And there will be explanations for that or speculation, so I think what it does is it buys us time. And I would say it buys us up to our year-end results, max.

Peter Fitzgerald: Yeah. And what then?

John Bowe: Well, I think it’s what can we do before that, you know, so can we do a deal before that?

Peter Fitzgerald: Yeah. Would it not be easier for them to stuff us into Allied?

John Bowe: Well I think, I think how this works, I think their playbook is stabilise it and then try and sort it out. And I think sort it out means sooner rather than later. So my guess is that within a few weeks they will be asking Allied to get involved or Bank.

Peter Fitzgerald: Yeah, but do they have the capacity to get involved?

John Bowe: I don’t think so.

Peter Fitzgerald: That’s the problem.

John Bowe: I don’t think so. I don’t think they have the financial muscle themselves. They don’t have the standing in the markets themselves to get involved.

Peter Fitzgerald: True. Well they don’t now. Do you know what I mean? They might have had earlier but they don’t now. The perception of, like Bank is all over the UK press today, Bank of Ireland you know.

John Bowe: Over what?

Peter Fitzgerald: Just I mean, their, their, their interim statements, their, their..ah, just about everything. I read three or four articles about them online today in the UK.

John Bowe: Yeah.

Peter Fitzgerald: Yeah, I have been hearing like fuckin’. I got a text to say that Allied and Bank fuckin’ play on.

John Bowe: I know yeah, yeah. I know and I know rumor, I think you were there that Bank and Permo (Irish Permanent) had done a deal, you know what I mean. The market is just rife at the moment, you know. I think the reality is that there is certainly a lot more happening than nothing at all. You know what I mean?

Peter Fitzgerald: Yeah, oh yeah, yeah.

John Bowe: You know what I mean. You can take it that in every bank there is boardroom discussions on where to next, you know.

Peter Fitzgerald: …wants to see us all at a quarter to one.

John Bowe: Right okay.

Peter Fitzgerald: Do you know what that is?

John Bowe: Okay. Are you going to it?

Peter Fitzgerald: No, no, I wasn’t invited. I am working here on tactical retail stuff, what we can do today, tomorrow etc.

John Bowe: Is that going on at the moment?

Peter Fitzgerald: It is yeah.

John Bowe: Okay. Jesus I hope he doesn’t decide he has to unburden himself.

Peter Fitzgerald: I know, I know. Em…there’s a lot at stake here isn’t there?

John Bowe: Yeah.

Peter Fitzgerald: How do they make it happen?

John Bowe: How does who make it happen?

Peter Fitzgerald: How do they make it happen you know?

John Bowe: Yeah, yeah. But we’re into a different phase now you know.

Peter Fitzgerald: Ah we are, yeah, and what, who did you arrive at the seven?

John Bowe: Just, as Drummer would say, picked it out of my arse, you know. Em…I mean, look, what we did was we basically said: what is the amount we can securitize over the next six months? And basically say to them: look, our problem is time; it’s not our ability to create the liquidity, the enemy is time here.

Peter Fitzgerald: Yeah.

John Bowe: So we can rebuild, in other words, we can rebuild the liquidity off our loan book, but what we can’t do is, we can’t do it now and the balance sheet’s leaking now.

Peter Fitzgerald: Yeah, yeah unless the balance sheet stabilises, then you can buy some time.

John Bowe: Yeah and that number is seven. But the reality is that actually we need more than that. But you know the strategy here is you pull them in, you get them to write a big check and they have to keep, they have to support their money, you know.

Peter Fitzgerald: Yeah, yeah, yeah, yeah, yeah. They’ve got skin in the game and that’s the key.

John Bowe: They have and they have invested a lot. If they saw, if they saw the enormity of it upfront they might decide, they might decide they have a choice. You know what I mean? They might say the cost to the tax payer is too high. But em…if it doesn’t look too big at the outset…if it looks big, big enough to be important but not too big that it kind of spoils everything.

Peter Fitzgerald: Yeah, yeah.

John Bowe: Then, then I think you have a chance. So I think it can creep up.

Peter Fitzgerald: Yeah, yeah, yeah. They’ll give you a bit of drip.

John Bowe: Yeah.

Peter Fitzgerald: What do you think will happen?

John Bowe: What do I think will happen? I don’t know. I really don’t know. I mean I don’t think we’re an easy sell to anyone.

Peter Fitzgerald: No.

John Bowe: And the home interest should be, should be there, except that they don’t have the financial standings themselves. So do I think it’s going to be possible to offload it? No I don’t. What will it end up being? It could be breaking it up and selling individual books; it could be nationalization, you know.

Peter Fitzgerald: Yeah.

John Bowe: That would be fantastic.  If it was nationalization we’d all keep our jobs.

Peter Fitzgerald: It would be fantastic, wouldn’t it?

John Bowe: Yeah, civil servants, you know?

Peter Fitzgerald: Yeah, yeah.  Em, but in effect that’s what it is.

John Bowe: It is.  Yeah, it is.

Peter Fitzgerald: It is.

John Bowe: But once you do that then it’s a very slow process.  You know what I mean?  It’s five years now, it will be five years then.

Peter Fitzgerald: Yeah.

John Bowe: You know.

Peter Fitzgerald: True, true.

John Bowe: With the other things it would be quicker, because you’re just, what you are is, you’re being prettied up for a sale and when the market comes back you’ll be sold, you’ll be offloaded then.

Peter Fitzgerald: Yeah, yeah.  Are they worried about what’s going on on the street?

John Bowe: Yeah, they are, they are.

Peter Fitzgerald: Did they say anything about it?

John Bowe: Well we said a lot about it and they just listened but they didn’t, we didn’t get ‘oohs and aahs’ out of them, you know?

Peter Fitzgerald: Yeah, yeah, yeah.  ‘We are monitoring the situation carefully’.

John Bowe: Yeah.

Peter Fitzgerald: Ok, ok, so what now?  As in line today, tomorrow…what and see?

John Bowe: We are just going through a process now.  You know, I mean, what’s happened is that we have gone in and we have asked for the loan and we haven’t shook hands at the end of it but you know, we know they, we know they have an interest in giving it to us and they’re putting the credit pack together.

Peter Fitzgerald: Yeah.

John Bowe: You know, and then there’s another series of meetings to take place, so Drummer will probably be in, in with the Ministers over the weekend.

Peter Fitzgerald: Yeah.  That will get out.

John Bowe: I think there’s a possibility it could get out, yeah.

Peter Fitzgerald: Yeah, yeah, yeah.  Are they worried about the big boys?

John Bowe: No, I don’t think so.

Peter Fitzgerald: Yeah ok, ok.  Right, well it’s in the hands of the Gods now, isn’t it?

John Bowe: Yeah it is, yeah.  But don’t worry Peter, you know, I’ll look after things here you know.


Peter Fitzgerald: Yeah, yeah, I’ve a kind of headset on me at the moment.  ‘Excuse me, I’ll be with you shortly’.

John Bowe: I know that you’re just going back into your lunch now, you know, so, you know.

Peter Fitzgerald: Yeah, well there’s a Merlot there so…

(Here there is a portion of the conversation that is missing from the tapes)

Peter Fitzgerald: Leadership now, you just need to show them leadership now, right?

John Bowe: Ah, fuck’s sake.  Well, I’m going to say to people: ‘Look, we gotta keep out, keep going here; don’t worry about things…  The bank has liquidity and we are using our liquidity now.  And, you know, the regulators, we are in contact with the regulators at the highest levels, so don’t worry about it, you know.

Peter Fitzgerald: Yeah, yeah, yeah, yeah.  (Laughs) Don’t bother, take the rest of the day off.

John Bowe: I don’t know.  Are you still?  I think you should say something in London or somebody should say something in London just to the guys, you know?

Peter Fitzgerald: Yeah, well maybe.  But what do you say?  Like, what is the message?

John Bowe: The message is look, keep your heads up, everything is ok, it’s a shitty world out there, every bank is going through horrors at the moment and you know.

Peter Fitzgerald: As Drummer says to me: ‘Don’t worry we’re going to be around for a long time.’

John Bowe: And then the phone went dead.


September 19th, 2008

John Bowe: But anyway I think we should, now, either we do it tomorrow morning or we do it this evening but we should sit down and go through all the, map out how this is going to play out, as well, in terms of tomorrow.

David Drumm: Em, You can do.  I told _ we would meet in here at half ten.  But ah, but em, being honest there’s not a lot to map out.  There are three strands here that are alive at the minute.  Two of them concern the Central Bank and one doesn’t.  The other one is: ‘Can I have the loan please?’

John Bowe: Yeah, that to me, that’s the first order and then I’ll be saying: ‘Ok, thanks very much, can we leave now?’  And I’ll want them to be saying: ‘No, no, come here, we’ve got something else for you to do.’

David Drumm: Yeah.

John Bowe: You know

David Drumm: No, well, we’ve already talking about the loans, what do we need to think about?  We need the fucking loans because we’re running out of money.  We gave you the term sheet.  Can we have the money?

John Bowe: Yeah, ok.

(Laughs exasperated)

David Drumm: Do ya know?  Just keep it simple.

John Bowe: Yeah I know.  I don’t know how simple it’s going to be though.

David Drumm: It’ll be stupid simple ‘cause that’s where I’m going to take it.

John Bowe: Yeah.

David Drumm: I’m going to keep asking the thick question.  ‘When?  When is the cheque arriving?’

John Bowe: Well Jesus, you know, you definitely need the donkey in the room.  You know.

David Drumm: Well, it’s worked so far.  Because if we stay in their language, nothing happens.

John Bowe: Yeah.

David Drumm: Get into the fucking simple speak: ‘We need the moolah, you have it, so you’re going to give it to us and when would that be?’  We’ll start there.

John Bowe: Yeah.

David Drumm: And by the way the game has changed because really the problem now is at their door.

John Bowe: It is yeah, yeah.

David Drumm: Because if they don’t, don’t give it to us on Monday they have a bank collapse, potentially, if the fucking money keeps running out the door the way it has been running out the door.

John Bowe: That’s it.

David Drumm: Really we’ll be sitting there kind of going we’ll be kind of a little looking a bit somber looking, sort of look, d’ya know, ‘What do you want?  How are you getting on with that loan lads?’

John Bowe: Yeah.

David Drumm: Or do you want the fucking keys now.  I can given them to you.  So I’m relaxed about it John.

John Bowe: Ok.

David Drumm: But anyway we’ll see what happens tomorrow.

John Bowe: Half ten in here for a pep talk and then off we go.  We go down in one car and into the car park.  That way we won’t be seen going in.   I’d say, well look, eh, I would say ten.  I would say ten.  We get a cup of coffee around the corner.

David Drumm: 10 o’clock it is.  You the man.

John Bowe: Okay.

David Drumm: Alrighty.

John Bowe: See you, bye, bye, bye.

September 29th, 2008

David Drumm: J.B.

John Bowe: Hiya doing.

David Drumm: How’re ya.

John Bowe: Grand

David Drumm: Another day, another billion.


John Bowe: Yeah, yeah, yeah.  I’d like to say if your friend _ was talking, he’d say: ‘A great day.  A great buzz in the dealing room.  Everybody’s tail was up.  Fantastic’.

David Drumm: Oh yeah, did I lose him a billion?


John Bowe: A great day but we lost a bill.  Yeah, the money, I mean, it was another bad day but, but perversely it actually felt like it was a much better day than it turned out to be.

David Drumm: Going to prove that everything is in the head.  We’re on the front foot today.  That’s the difference, the mood is better and view towards us is better, so we just want to keep that momentum.

John Bowe: We do, yeah.  We do.

David Drumm: What, what just in terms of gameplan for tomorrow, are we going to sit down and go through what the, what’s on the table.

John Bowe: Now I sent you the document.  But that just says what we are going to be discussion.  Is it us we’re going to be talking about or is it…?

David Drumm: Well now, well now.  We don’t know.  We’re going down to meet the whole fucking shooting gallery of them.

John Bowe: Yeah.

David Drumm: I do know this.  There’s a big meeting in the Department of Finance tonight, which I am told is a kind of a pow-wow.  I assume they’re going to make up their minds what the fuck they’re doing on the basis that they can’t spend another week, next week, flapping around.  So I’m making the, jumping to the mad conclusion that the meeting of tomorrow is about discussing bringing that to fruition.

John Bowe: Yeah.

David Drumm: But I could be bitterly disappointed.  It could be another bureaucratic go nowhere meeting.  But having said that, I won’t, I won’t put up with that.

John Bowe: Yeah.

David Drumm: I’ll be forcing the agenda.  Really, we’ll be going down there with our arms swinging.  I’m very clear on the proposal and what we can and can’t do.

John Bowe: I think, I think the first order of business is sorting ourselves out.

David Drumm: No, no, that goes without saying.  Do you have the cheque here now for the loan.  That will be the first thing I’ll ask.  Ehm, have we got the collateral ready or do we need to have it ready?

John Bowe: Well, we don’t have it ready in the sense that, eh, we, we’ve never, we’ve never got into a discussion about what is it you will be giving us exactly.  You know what I mean?  What we’ve got is we’ve got collateral that we can put our hands on, and you can describe it so in other words we can identify the loans pretty quickly, we can identify the amounts of loans outstanding, we can put any covered bonds, non-eligible, and anything into it.  We can put two and a half billion of non ECB eligible stuff into it so.

David Drumm: I think it would be very helpful if you had a schedule of available collateral…

John Bowe: Ok, ya.

David Drumm: …including all those bits and bobs, such that if we get into it tomorrow, we’re not embarrassed, kind of, you known trying to explain it.  Just shove the pages, bring a few copies, shove the pages there and say: ‘Look, this is by way of tidying up, this is the collateral that’s available to you and you have your auditors in confirming you are in rude financial health and this is obviously a liquidity issue, so, em, can we have the money on Monday ‘cause we may need it.

John Bowe: Yeah, yeah.

David Drumm: That’s the line.  Well we do need it on Monday.

John Bowe: Well, I think things are, things are, we’re, we’re deteriorating more slowly than our worst case scenario, which only means, it doesn’t mean, it means that instead of the two weeks that we are going to be, or the, the week that we are going to be dead, it’s still a week, but it will be a week tomorrow, as well, or a week the next day, you know what I mean.

David Drumm: Yeah, the retail will recover slightly.  We’ve got momentum on that.

John Bowe: And the corporate will continue to go out but.

David Drumm: But there’s a bottom to that.

John Bowe: Yeah, there is, yeah.  So what will happen is that the amounts will get smaller, which means that your time from death extends out, but, you know, you are still two weeks away, you’re not, it’s not disappearing.  It’s only when we can actually start attracting net funding in that you can start talking about, you know, life.

October 2nd 2008

Receptionist: J.B.

John Bowe: Hiya.

Receptionist: Hi, how are you?

John Bowe: Grand, grand.  Is David there?

Receptionist: Yep, one sec. (Background music)

David Drumm: John.

John Bowe: Hiya.

David Drumm: How’s it going?

John Bowe: Grand.

David Drumm: What’s up today?

John Bowe: En, ah no, making, em, nice progress.

David Drumm: Ah, you’re abusing that guarantee.  Paying too much in Germany I hear now as well.  Fucking ridiculous, John.

John Bowe: (Singing) Deutschland, Deutschland, Ubber Alles.

(Both laughing)

David Drumm: I had _ on this morning.  I just should be recording these calls for the fucking crack – or at least making notes.

John Bowe: He was on to me as well.

David Drumm: (Mimicking) ‘It’s fucking awful what’s going on out there.  I mean the fucking Germans are on to us now, David, you know.’

He’s saying: ‘Look eh, have you seen any, eh, kind of strange money market money coming through on term?’

And I said: “I’m not sure what you mean.’

He says: ‘Ya know, two year money.’ (Laughs)

And I said: ‘Eh..’.

He says: ‘ ya know, ya have to be careful here because there’s people setting us up.’

And I said: ‘Is it a bit of eh, beware of strangers bearing gifts, _.

‘Exactly, exactly.’

Setting us up by giving us money.  I don’t mind being set up that way.

John Bowe: Well, what he’s suggesting is that UK banks are setting us up by pointing money in our direction and then saying: ‘There ya go.  That’s something that was ours that they’ve got.’

David Drumm: So fucking what?  Just take it anyway.

John Bowe: Yeah.

David Drumm: Stick fingers up.  I had a pop at him this morning about Northern Rock.  I said: ‘Look, they went around with the fucking Union Jack wrapped tightly around them like a jumpsuit and grabbed all the deposits and where was out fucking Minister of Finance then?

(Mimicking) ‘I know, I know, I’m getting it from all sides here David.’

(Laughs) So I’m playing a little bit of a game of ‘oh Jesus_, look we don’t want you to be under pressure, we’re going to do the best we can.  We won’t do anything blantant, but _, we have to get the money in’.

Well we’ll have to fucking tiddly-winkle for it.

John Bowe: So I’m just saying to the guys ‘look, just be smart, don’t be stupid, get it in, don’t be overtly pumping it so that somebody can quote you but we want to get the liquidity ratios up.

David Drumm: Correct.

John Bowe: You know?

David Drumm: Correct and right.  So ok so just keep nursing along.

John Bowe: We will.  Now I have… Sorry go on.

David Drumm: Jack the rates up.  That’s what I really meant, get the fucking money in.  Get it in.

John Bowe: That’s right, just do it.

David Drumm: How do you think the cashflow’s going today?

John Bowe: I haven’t heard.  I’ve been in meetings all morning you know but, em, I’ve got our treasury policy done, customer deposits, how much within the deposit protection limit, eh how we’re going to regard institutional stuff, how mu… what the composition of the retail is going to look like, eh… short-term funding, how much term, all that sort of stuff okay?  What are we going to put our money into in terms of liquid assets.

David Drumm: Yeah

John Bowe: Do you want to see a copy of that?

David Drumm: I do, will you send it to me?

John Bowe: Yeah.

David Drumm: And then when I’ve absorbed it I’m going to meet, just sit with you and just talk about it a bit.

John Bowe: Okay.

David Drumm: Because we’ve go this board meeting coming at us fast and I’m not going to be ready at all but we just need to get the conversation going with them.  It’s more political I think than anything else.

John Bowe: Okay, I’ll send it up to you now.  Now the numbers we’re going to have a kind of senior management meeting today and I was going to throw this out and say now… just sort of set the tone you know what I mean?

David Drumm: Yeah, exactly.

John Bowe: Now so there might be some discussions around the percentages…

David Drumm: That’s fine.

John Bowe: …but you can see the intent anyway.

David Drumm: That’s fine.  I actually just want to get the thrust of it.

John Bowe: Okay.

David Drumm: Excellent.

John Bowe: Okay.

David Drumm: Cheers, see you, bye.

John Bowe: Bye.

The Destabilization of Syria – Who Gains?

I’ve spent the last several posts analyzing the Ghouta chemical weapon attacks in Syria including:

Today I want to take a big step back and look more generally at the geopolitical motivations affecting Syria.

Of course, understanding all the players and motives operating in Syria is a very tall order.  I don’t presume to say what follows is a complete analysis but simply a summary of the major movers and shakers I bumped into over the last several months as I tried to answer the question: Why?  Why has Syria, like Libya before it, been targeted for destabilization?

A Tale of Three Pipelines

Before we run down the list of players and their motivations we need to talk a little bit about pipelines.  Natural gas pipelines to be exact.  Because, of course, what Middle East conflict would be complete without energy resources being a major factor.

The first pipeline to discuss in the so-called Islamic pipeline.  Back in July of 2011 (not coincidentally around the time the fighting broke out in Syria) Iran, Iraq and Syria signed an agreement to construct the Islamic pipeline.  This proposed pipeline would run from Iran’s massive South Pars and Assalouyeh gas fields, through Iraq, and into Syria to the Mediterranean.  From there the gas would be shipped to Europe via Syria’s ports.  Plans to extend the pipeline under the Mediterranean sea to connect directly to European markets are also being floated.

This Islamic pipeline would complete directly with the Western backed Nabucco pipeline which will connect Azerbaijan gas with Europe through Turkey.  Planning for the Nabucco pipeline began back in 2002 with Turkey, the U.S. and EU all heavily invested in the project’s success.

The third pipeline playing into this is the Qatar-Turkey pipeline which Qatar proposed to run from its side of the South Pars gas field (which it shares with Iran) through Saudi Arabia, Jordon, Syria and into Turkey and Europe.  Qatar proposed this pipeline back in 2009 but Syria rejected the plan in favour of the Iran/Iraq/Syrian Islamic pipeline.

Here’s a rough representation of the three pipelines.  Note that I’m simply showing the general routes through the countries involved and not the specific route the pipeline will take through those countries.  But, this is sufficient to give us the strategic perspective on the pipelines.


Next let’s look at some of the religious tensions that are always boiling under the surface in any Middle Eastern conflict.

The Sunni-Shia Tension

Next to competition for scarce resources, religion is a leading cause of conflict.  This is especially true in the Middle East where two branches of Islam compete: Shia and Sunni.  I won’t go into the differences between the two sects; suffice to say that, to many muslims in the region, the differences are important enough that they’ll kill each other over them.

What’s important here is to look at a map and understand the natural alliances and adversaries that form along these religious lines.  This is not a hard and fast rule but still useful in the general sense.


While Shiite’s only comprise 15-20% of the population in Syria, Syria has been traditionally Shia friendly.  Indeed President Assad’s family is in fact Shiite (well, Alawite more precisely but this is a sub-sect of Shia) though his wife is a Sunni.

With these religious divisions in mind. the Islamic pipeline and Syria’s generally close alliance with Iran starts to make more sense.  Likewise, the reason Syria would be inclined to partner with Iran on a pipeline while turning down the Qatar-Turkey pipeline starts to come into focus.

With that general background covered, let’s look at each of the various players meddling in the Syrian civil war.  In many cases we’ll see that they are at least partially motivated by pipeline politics and religion.


Israel quite obviously has an interest in anything that happens in the MIddle East.  In the case of Syria, lying on its north-eastern border this is certainly the case.

Recall that Israel currently occupies the majority of the Golan Heights, territory it annexed in the 1967 six day war.  Since that time Israel has been steadily building settlements on the disputed land despite condemnation of this action by the international community including the U.N. (see U.N. Security Council Resolution 497).  Obviously Syria has and will continue to oppose and protest this situation.  But if Syria were to cease to be a viable sovereign nation, these hassles would simply disappear for the Israelis.  Thus, the destabilization of Syria could allow Israel to finalize a land grab begun decades ago.

And there’s a further factor with respect to the Golan Heights.  The Israeli government recently awarded U.S. based Genie Energy (to which Dick Cheney is an advisor) the rights to explore the Golan Heights for oil and natural gas.  Genie Energy believes that the region may hold substantial reserves.

Obviously were substantial oil or gas reserves be verified in the Golan Heights, there would be massive pressure brought to bear on Israel not to exploit these resources given the territory is still legally a part of Syria.  But, if Syria no longer existed as a state having dissolved into chaos or fractured into several states along ethnic and religious lines, the way would be open for Israel to exploit any resources found.

Of course, Israel is already relatively flush with natural gas and nurturing ambitions of becoming a player in the natural gas arena.  They’ve recently discovered two large gas fields under the Mediterranean (Tamar and Leviathan).  This new-found status as a natural gas superpower could well be factoring into Israeli calculations on Syria.  Destabilizing Syria would kill the Islamic pipeline and ensure that Iran’s gas could not compete with Israel for supply to the European market.  It would also limit the possibilities for Qatar to get their gas to market.

Taking Syria out also further isolates Israel’s main adversary in the region: Iran.  Iran and Syria have long been strategic allies and many analysts see eliminating Syria as simply the first step of a larger plan to take down Iran.

And finally, it’s clearly in Israeli interests to have the various muslim sects in neighbouring countries fighting amongst themselves and not unified and fighting against Israel.  This ‘balkanization’ of Syria is a well known and documented plan by Zionist elements in Israel.  Many of these Zionist thinkers do hold senior positions of power within the Netanyahu government, the Likud party and Israeli military and intelligence services.  The topic of Zionism and its goals is outside the scope of this post but something I will likely be researching and writing about in more detail in the future.  But the basic premise applicable here is simply divide and conquer.


Qatar is a small but extremely wealthy nation just off Saudi Arabia’s east coast.  Qatar’s wealth comes from large oil and natural gas deposits.  They have recently started to put this wealth to use trying to gain influence in the region.  This has include large donations both to Gaza (to the fury of the Israelis) and to Egypt’s Muslim Brotherhood earlier this year prior to the coup.

And, in the case of Syria, they have been far more sinister with using their wealth to influence the geopolitical realities in the region.  There is clear documented evidence of at least $3 billion dollars being spent by Qatar to fund and arm the Syrian rebels.  This support can be tracked right back to the very start of the civil war.  Moreover Qatar makes no scruples about funding the most extremist Al Qaeda linked groups involved in the fighting.  From Qatar’s perspective anyone willing to take down Assad is an ally.

So the question is why?  Why has Qatar been so determined to topple Assad right from the start?

One answer is the Islamic pipeline I discussed above.  Recall that back in 2009 Qatar proposed the Qatar-Turkey pipeline that would give Qatar access to European markets.  Syria was to be the key middle section of this pipeline.  But in 2011 Syria rejected Qatar’s offer and instead accepted Iran’s competing offer to construct the Islamic pipeline.

It’s not a coincidence that within weeks of Syria announcing its acceptance of the Islamic pipeline, Qatar started openly funding the rebels.  The Islamic pipeline coupled with the religious tensions that already existed between Sunni Qatar and Shia-friendly Syria seemed to convince Qatar that Assad had to go.  And, with massive wealth at their disposal, the Qataris have been one of the main funders for the rebels ever since.

Another factor that’s important to document when talking about Qatar is that they have gone to great lengths, and expense, to ingratiate themselves to Western interests.  Qatar hosts the U.S. military’s Central Command’s Forward Headquarters and the Combined Air Operations Center as well as two U.S. Air Force bases and one U.S. Army base.  Since 2003 the U.S. has spent over $400 million dollars building up these various installations in Qatar.

Qatar has also been keen to throw its wealth around to gain further political influence amongst Western nations.  With an outsized sovereign wealth fund, Qatar has been busy buying influence throughout the Middle East, Europe and beyond.  Qatar may be small but it’s got big ambitions and the chequebook to back them up.

The point here is not necessarily that Qatar is aligned with Western policy on Syria, but rather that Qatar is leveraging its position to help shape Western policy on Syria and further their goal of becoming a more dominant regional player.

Saudi Arabia

The involvement of Saudi Arabia in funding and supplying the Syrian rebels is, as with Qatar, well established and known in the main stream.  There’s also a crazy, and seemly founded, story circulating about the head of Saudi intelligence, Prince Bandar (aka Bandar Bush), trying (and failing) to cut a deal with Putin to stop supporting Assad’s government.  In return for their cooperation the Saudis proposed giving the Russians large weapons orders and guarantees that, whatever regime comes into power in Syria next, it will be under the thumb of the Saudis who will ensure no pipelines get built.  When this offer was rebuffed Bandar tried to sweeten the pot by offering to reduce oil supply boosting price which would benefit Russia.  Still meeting resistance Bandar allegedly next threatened the Putin with unleashing the various extremists groups in the Caucuses (like the Chechens) for attacks on Russia’s pipeline and disruption of the upcoming winter Olympics being hosted in Russia.  Putin, as one might expect, did not take kindly to this tactic.

Historically the Saudis have been a major regional power and spent huge sums of money to maintain their influence both in the Middle East and also with Western powers.  The cozy relationship between both Bush administrations and the Saudis is well known.

In this respect the Saudis can, in fact, be seen as in competition with the Qataris to a large degree.  This has been most readily apparent in Egypt with Qatar financing the Muslim Brotherhood’s successful ouster of Saudi backed Hosni Mubarak.  The Saudis then funded and influenced to a large extent the coup against the Brotherhood’s Mohammed Morsi.

But then why is Saudi Arabia trying to destabilizing Syria?  We know there is tension between Qatar and Saudi Arabia as the two battle for regional influence.  We can understand pretty easily the Qatari motives for taking Assad out.  But what do the Saudis hope to gain from Assad’s removal?

I’m afraid I don’t have a slam dunk answer for that.  If any readers out there fully understand the Saudi angle here please comment on this post and explain it.  All I can come up with are the following relatively weak reasons.  There’s surely much more to the Saudi Arabia story that I am missing.

First, Saudi Arabia has a large Sunni majority which is mostly Wahhabi.  Wahhabism is what we in the West would consider the extremist form of Sunni Islam.  Many of the jihadists fighting in Syria are, in fact, Wahhabi.   These Wahhabi hate Shiites and believe that they must be wiped out.  Thus, the Saudi government, by supporting the rebels in Syria, appeases a large portion of its population.  It also isolates Iran which has long been a major adversary to Saudi Arabia.

But there’s another factor always lurking below the surface in Saudi Arabia.  Despite its regional power, Saudi Arabia’s ruling class of royals live in constant fear of the kind of unrest that was witnessed throughout the region during the Arab Spring.  How precisely this fits into the Syrian picture is not clear to me but it’s doubtlessly a factor.

Then, there’s the real possibility that Saudi Arabia might have gotten involved in Syria simply to prevent Qatar from gaining dominance there.  In this light Syria can be viewed as a strange kind of proxy war with the two adversaries, Qatar and Saudi Arabia, both funding the same side of the conflict in an attempt to secure political influence over the state or states that emerge from the chaos.

And finally, obviously energy must be a huge factor for the Saudis.  We know they are an oil production super-power.  We know they have the fifth largest natural gas reserves in the world.  We know that they haven’t really begun to tap those reserves in a serious way.  Could the Saudis be hoping to shut-out the competition by denying them Syria as a pipeline route?

Clearly the Saudis have a long term energy agenda into which they have factored their support for the destruction of Assad’s government.  But, as with the other elements motiving Saudi Arabia, the exact details and grand strategic picture escape me.


Turkey’s long term involvement in the conflict in Syria is also well documented.  Unlike Qatar and Saudi Arabia, Turkey is not directly funding the rebels to any large extent.  Rather Turkey role is mainly to provide sanctuary, training and a crossing point for the rebels to enter into Syria.

Turkey’s regional ambition is to become the energy cross-roads linking the Middle-East to Europe, east to west.  After all, Turkey is in the enviable position of providing the only land link between the Middle-East and Europe short of detouring up through Russia (which is not feasible for practical as well as geographic reasons).

There’s huge money to be made off the transit fees charged by host nations on pipelines running through their territory.  This is why Turkey has spent literally years pushing the Nabucco pipeline which runs through Turkey to Europe and is vehemently opposed to the Islamic pipeline.  If the Islamic pipeline were to be built it would totally undermine Turkey’s geopolitical power and rob it of the massive revenues it expects from the Nabucco pipeline.


Iran’s motives are probably the easiest to understand in this whole twisted network of motives and shifting alliances.  Iran and Syria are longterm, steadfast allies.  Further, Syria’s backing of the Islamic pipeline would provide Iran with a way of getting its vast natural gas reserves to market.

If Syria was to disintegrate into warring factions or be balkanized into several states along religious lines, the vital Shia land bridge – the corridor running from Iran, through the Shiite section of Iraq, and into Syria and Lebanon – would be broken.  This would further isolate Iran which is fast rising to the top of the list of nations being targeted for destabilization.  Thus, from an Iranian perspective, it really comes down to a question of ‘fight together or hang separate’.  This has motivated Iran to provide as much support as possible to the Syrian government.


Russia, despite international pressure from Western powers, despite attempted brides and threats from the Saudis, has steadfastly supported the Syrian government in the civil war.  This support has included extensive military aid, use of its veto power on the U.N. security council, and most recently the Russian’s deft out-manoeuvring of the U.S. to head off what appeared to be an imminent air campaign against Assad’s forces.

Starting with energy, Russian support for Assad would seem to be counter-intuitive.  After all, Russia’s largely government owned Gazprom, the world’s largest natural gas extractor, currently has a virtually monopoly on supplying natural gas to Europe.  The Islamic pipeline, supported by Syria, would obviously introduce competition into the equation.

But given the close alliances between Syria, Russia and Iran, this might not be quite as egregious to the Russians as one might think.

Russia knows that, through one pipeline or another, their stranglehold on natural gas supply to Europe will be broken sooner or later.  That being the case, it’s obviously in their interest to support regional allies like Syria and Iran to the detriment of their regional enemies like Saudi Arabia and Turkey.  Even once the Islamic pipeline is in place and supplying gas to Europe, one can easily envision an OPEC like cartel arrangement being leveraged to control price and maximize profits for all involved.  And this is not just idle speculation.  Here’s an article back from 2008 discussing the groundwork for precisely such a cartel being agreed upon.

Russia is also looking at Syria through the lens of a resurgent cold war.  After years of U.S. and NATO powers having free-reign to pursue their geopolitical agenda around the globe, Russia has recently decided enough is enough.  Once again we see Russia trying to assert herself into world politics and check U.S. hegemony.  Events such as accepting NSA whistleblower Edward Snowden’s asylum request are clear indicators of how far-gone relations between the two superpowers really are.  From this perspective the battle for Syria can be seen as a good old fashion proxy war between Western interests backing the rebels and Russia backing the Assad government.

But Russia also has a more pressing and concrete reason to keep Syria from falling into chaos and extremism: The security of Russia against those same extremists.  Russia knows all too well the cost and danger associated with muslim extremists (remember Chechnya?).  The fall of Syria would be yet another movement of an extremist group closer to Russia borders.  This is something the Russians have every motivation to hold in check.


There are several factors drawing the U.S. into the fight.  Many stem from the completely undue and corrupt influence of lobbies on U.S. foreign policy.  There are two main lobbies whose influence is undeniable and which are clearly pushing the U.S. to war:

  1. Israeli Lobby.  The Israeli lobby has an absolute stranglehold on the reigns of power in the U.S.  For decades U.S. foreign policy in the Middle East has, first and foremost, been about supporting Israel.  As we have seen, Israel has strong motivations for pursuing the destabilization of Syria.
  2. Military Industrial Complex.  President Eisenhower presciently warned the American people in his farewell address of the dangers of a large and omnipresent defence industry.  Post 9/11 has seen U.S. defence spending more than double to $800 billion dollars a year.  The defence industry’s only way to justify this type of expenditure is through fear (war on terror anyone?).  But fear alone isn’t enough.  The gears of the military industrial complex must be greased from time to time with blood.  Syria is the latest manifestation of this need of the military industrial complex to flex its military might, assert its dominance, and justify the continuation of exorbitant defence spending.

Of course we could add the Saudis to this list along with other smaller players.  But beyond all these lobbies and their influence on U.S. politicians and foreign policy there are other factors motivating the U.S.

The U.S. economy is in full scale meltdown.  The only reason this isn’t apparent is the Federal Reserve’s massive quantitative easing program which at this point is outright monetizing $85 billion a month of U.S. debt.  As the Fed starts to try and withdraw itself from this lunatic monetary policy the mirage that was a supposed economic recovery will vanish.

Throughout history wars have been waged to distract from economic problems at home.  This time is no different.  With the war on terror losing some of its luster in recent years as Americans tire of constant encroachments on their liberties, a new foreign enemy to demonize is just the distraction needed.  An evil dictator who allegedly uses chemical weapons against his own people is the perfect target for such a propagandized distraction.

And, as discussed above for the Russians, there’s a new cold war brewing.  Syria, viewed as the first flash-point of this new war, is obviously important to the U.S. as it attempts to retain its position as the world’s sole superpower.  Thus, a far away conflict in little Syria suddenly becomes a strategic battle in a far larger and higher stakes war.


Untangling the web of geopolitical players and their motivations in Syria is a tall order.  This post just scratched the surface to reveal why Israel, Saudi Arabia, Qatar and Turkey are so eager to stoke the flames of revolution in Syria.  And, we start to understand why Iran and Russia are standing firm in their support of Assad even in the face of enormous international pressure.

The conflict in Syria ultimately boils down to natural gas pipelines, religious strife and extremism, the quest for regional power in the Middle East, and the emergence of a new cold war between the U.S. and Russia.  Viewing the players and events in Syria with an understanding of those core facets brings us much closer to understanding the truth about what’s really happening in Syria and why.

Syria Chemical Weapon Attacks – The Case Against the Rebels

I’ve recently discussed the complete lack of evidence linking Syrian government forces to the chemical weapon attack that occurred on August 21st in Ghouta.  In addition, I’ve presented analysis indicating that Assad had every motive to not engage in such an attack.

Today I want to answer the question: If not Assad, than who?

In short, I believe the rebels, possibly supplied or assisted by foreign intelligence assets, carried out the attacks of August 21st.  This has all the markings of a classic false flag operation.

False Flag and the Hegelian Dialectic (Problem, Reaction, Solution)

For those of you unfamiliar with the false flag paradigm, give Geoff’s first post on Project Souvenir a read.  In short, a false flag operation is an attack carried out by one group, often against themselves, for the purposes of blaming another party.  False flags have been well documented throughout history and have been used often by nations or governments seeking justifications to start wars or consolidate power.

Essentially a false flag is a specific flavour of the more general Hegelian Dialectic or Problem, Reaction, Solution.  In this paradigm an entity seeks to achieve a desired outcome by manufacturing or introducing a problem designed to elicit a reaction from another group (usually the public at large).  The afore mentioned entity then offers its originally desired outcome as the solution.

The paradigm is effective because people don’t realize they’re being controlled and manipulated for a desired effect.  This haze of unawareness is often amplified because the problem events are typically chaotic and highly emotional which serves to undermine logical and critical thinking and permits herd mentality to reign supreme.

False Flag As Applied to the Ghouta Attacks

Interpreting the Ghouta attacks as a false flag operation would break down into the following components:

  1. Problem.  Usage of chemical weapons resulting in civilian casualties.  High numbers of children among the dead.  Guaranteed to invoke strong emotional response.
  2. Reaction.  Universal outrage at the dastardly act.  Requirement for immediate action to prevent further loss of life.
  3. Solution.  Introduction of overt U.S. military action against Syrian government forces to eliminate them as a threat.

Rebel Motives

I think it’s obvious that the rebels had the most to gain from the attacks in Ghouta.  As I discussed in the my last post, Assad had every reason not to engage in such an attack given:

  • His forces were clearly winning the war.
  • Ghouta held no strategic and only limited tactical importance.
  • It would virtually guarantee an overt military response from the U.S. and other Western powers which would, in all likelihood, change the tide of the war against government forces.
  • It would jeopardize his vital re-supply lines with the Russians who couldn’t continue to support him if he used chemical weapons.
  • U.N. chemical weapon inspectors had just arrived in Damascus three days before the attacks occurred.

Conversely, and for exactly these reasons, the rebels had every motive to try and frame Assad for such a chemical weapon attack.  If Assad had everything to loss, the rebels had everything to gain.

Means and Opportunity

But of course just benefiting from some event doesn’t mean that you are the perpetrator of a false flag.  Just because the rebels will clearly be the beneficiaries of the chemical weapon attacks once the U.S. bombs start falling, this doesn’t mean they are responsible for the attacks.

And, given the lack of concrete evidence, proving with absolute certainty that the rebels carried out the attack is, at this point, not feasible.

That said, in addition to motive, we can easily show means and opportunity.  Namely we can establish with certainty that rebel forces do possess chemical weapons.  Further we can provide circumstantial evidence that the rebels have used chemical weapons already in the conflict.

Rebel Possession of Chemical Weapons

In an attempt to keep this to a manageable length, I’ll simply itemize some of the stronger evidence that the rebels do possess chemical weapons.

  • Starting late last year, senior U.S. politicians began expressing their fears that some of Syria’s chemical weapon stockpile would fall into the hands of rebel forces.  Then Secretary of State Hillary Clinton worried that Assad “might lose control of them to one of the many groups that are now operating within Syria“.
  • Those concerns turned out to be well founded.  In early December after a bloody two day battle, rebel forces gained control of the Sheik Suleiman military base.  This base was a known centre of chemical weapons research in Syria.  In the aftermath the Syrian government sent letters to the U.N.’s Security Council and Secretary General Ban Ki-moon indicating that “terrorist groups may resort to using chemical weapons against the Syrian people… after having gained control of a toxic chlorine factory” and reiterating that the Syrian government would “not use chemical weapons under any circumstance“.
  • In January 2013, Bassam Al-Dada, the Political Advisor to the rebels went on record with Turkey’s state-run Anatolia news agency indicating the the rebels had both the components and expertise required to carry out chemical weapon attacks.  Al-Dada stressed that “if we ever use them, we will only hit the regime’s bases and centers“.
  • Since April 2013 the battle has raged for control of the Al-Safira chemical weapons plant.  This complex is one the largest chemical weapon manufacturing facilities and produces, amongst other things, sarin gas.  Despite some reports in the alternative media that the rebels have siezed control of Al-Safira, the complex does still appear to be in control of Syrian government forces.
  • In May 2013 Turkish police arrested several members of the Syrian rebels with a 2 kg canister of sarin gas.  Whether the gas was to be used in Turkey or across the border in Syria is unclear, but the important point is the documented evidence of Syrian rebels in possession of sarin gas.
  • Also in May, Carla del Ponte, a member of the U.N. Independent International Commission of Inquiry on Syria which investigated the March 2013 chemical weapon attacks (discussed here) stated to Swiss media that there were “strong, concrete suspicions but not yet incontrovertible proof” that rebel forces were behind the attacks.  Del Ponte concluded that “the gas was used on the part of the opposition, the rebels, not by the government authorities“.  Del Ponte is a fairly credible source given her direct involvement on the investigative team and the fact that she previously served as the head of the U.N. war crime tribunals for both Rwanda and Yugoslavia.
  • Also on the topic of the March 2013 attacks, Russia, which conducted its own on-site investigation into the attacks, provided the U.N. with an 80 page report which concluded that it was the rebels who had used the chemical weapons.  While the report has not been made public it’s understood to stand on the following physical evidence:
    • The sarin gas used in the attack was not industrially produced but rather bore the signature of being produced in a makeshift lab.  Hexogen (aka RDX) was used as the explosive charge.  This chemical is not in standard military munitions but is heavily used in IEDs and other terrorist devices.
    • The delivery system was a jerry-rigged Bashar 3 missile.  The rebels do possess this missile.
  • In July, the Syrian government reported that it had uncovered a rebel chemical weapons lab in Jobar, on the outskirts of Damascus.  Among the chemicals present was chlorine.  Given the source, it is of course possible that this ‘discovered’ chemical weapons plant was in fact a fake.
  • In late August, just after the Ghouta attack, a video was posted on YouTube showing Syrian rebels firing a jerry-rigged chemical weapon using field artillery.  The device consisted of a very conspicuous blue canister mounted atop a simple projective with stabilizing fins welded on.  The authenticity of this video cannot be definitively verified.
  • AP’s Dale Gavlak (who also writes for Salon and BBC amongst others) reported that interviews with people in Ghouta heavily implicated the rebels in the August 21st attack.  Specifically, the story features the father of a rebel killed along with 12 others handling chemical weapons allegedly supplied by the Saudis.  Says the father, the weapons had the appearance of a “huge gas bottle”.  The story goes on to report on an interview with another rebel who complains “They didn’t tell us what these arms were or how to use them…  We didn’t know they were chemical weapons. We never imagined they were chemical weapons.”.  I give this story high credibility due to the credentials of Dale Gavlak and his extensive experience in the region.

Looking critically at this summary the only thing I would be willing to say with certainty is that the rebel forces do possess chemical weapons.  This fact is established by their seizure of the chemical weapons research centre at Sheik Suleiman and the arrest of Syrian rebels in possession of sarin gas near the border with Turkey.

Beyond the proven possession of chemical weapons, the rest is admittedly circumstantial.  It does however paint a very different picture than the one presented by Western media.  And, compared to the complete lack of evidence provided to implicate Assad, this information is interesting, to say the least.


In the absence of any evidence implicating the Assad government, and with Assad having strong motives to not use chemical weapons, we must look at other possible culprits.

The rebels have both the motive and means to carry out this attack.  If successful such a false flag operation would result in the U.S. entering the conflict on the side of the rebels allowing them to avoid pending defeat.

Syria Chemical Weapon Attacks – Do You Really Think Assad is That Stupid?

In my last post I deconstructed the facts presented by Secretary of State John Kerry in his speech asserting that the Assad regime was responsible for the August 21st chemical weapon attacks in Ghouta on the outskirts of Damascus.  I showed how there was a complete and utter lack of any evidence to back up Kerry’s claims.  I showed how the declassified U.S. intelligence estimate cited by Kerry similarly provided no evidence to support its allegations.

Given the complete absence of evidence linking Assad to the attacks, this post will analyze the motivations, or rather lack there of, for Assad to perpetrate such attacks.

Lack of Strategic Necessity

I think the first thing to note is that it’s widely acknowledged that Assad’s forces are currently winning the civil war.  Even the rebels admit as much.  Most analysts believe that given the current status quo, Assad will inevitably win the war of attrition (though Syria may be ultimately divided).

Having seized the initiative, and with the tide of the war clearly going his way, there’s simply no strategic need to resort to chemical weapon attacks.  It would be one thing if there was a last-stand situation with rebel forces threatening to over-run key government strongholds but this was clearly not the case in Ghouta.

No, there was no strategic reason for Assad to resort to chemical weapons in Ghouta.

Risk of Drawing Western Powers into the Conflict

On the other hand, use of chemical weapons incurs massive strategic risk to Assad.  He knows that any use of chemical weapons will assuredly:

  1. Bring the U.S. down on him.
  2. Make it difficult for the Russians to continue support him thus threatening his vital re-supply line.
  3. Completely isolate him on the geopolitical stage – he becomes damaged goods.
  4. Result in the loss of the moral high-ground.  No longer could he argue to be protecting his civilian population from foreign jihadis.

These outcomes from use of chemical weapons would certainly cost Assad the war.  There is no way he could stand up to the constant stream of foreign jihadis if U.S. airpower is brought to bear against his forces.  Add to that the lose of his Russian re-supply lines and defeat would be all but certain.

There is no way Assad would incur these massive strategic risks for the sake of such a limited, even non-existent, tactical gain.  It just doesn’t make sense.  Assad is too intelligent to make such an obvious blunder knowing that his country, and ultimately his life, is on the line.

U.N. Inspectors Had Just Arrived in Damascus

The timing of the attacks is also unbelievably suspect.  A team of U.N. inspectors tasked with investigating allegations of previous chemical weapon attacks had just arrived in Damascus three days before the August 21st attacks.  This team was led by a Swedish chemical weapons expert.

Why would Assad unleash a chemical weapon attack at the very time U.N. chemical weapon experts where in his country?  Why would he carry out these attacks in the same city where those U.N. investigators were located?  It makes no sense whatsoever.  Why wouldn’t he just wait a week or two until the U.N. team wrapped up its investigation and left?

No, this doesn’t make any sense at all.  Given the huge strategic risks why would Assad carry out attacks under conditions that virtually guaranteed he’d be caught?


Are we honestly supposed to believe that Assad carried out chemical weapon attacks at the exact time and in the exact location that U.N. chemical weapons experts had just arrived to investigate previous allegations?  Are we supposed to believe that Assad would risk giving the U.S. an excuse to commence overt military action against him?  Are we supposed to believe that Assad would risk losing the moral high ground and with it his Russian re-supply lines?  And finally, are we supposed to believe that Assad would risk all these things to carry out an attack of no strategic and negligible tactical importance?

Syria Chemical Weapon Attacks – Where’s the Evidence John?

Back in early May I posted about the major geopolitical news of the day: Alleged sarin gas attacks in Damascus and Aleppo by the Assad government.  In my analysis I argued that, despite the political rhetoric, there was scant evidence to implicate the Assad government.  Further, I argued that it was strategically non-sensical for Assad to use WMDs given the current state of the civil war in which the Syrian government was clearly gaining the upper hand.  On the other hand, the rebels had every motivation to perpetrate false flag chemical weapon attacks to give the West the justification needed to commence overt military action against Assad.

Well, fast-forward four months and the narrative hasn’t changed.  The evil Assad is again accused of using chemical weapons in an attack against rebel forces that left hundreds of civilians dead.  Let’s once again step back, take a deep breath and analyze the facts rationally, cutting through the appeal to emotion rhetoric that is being used to cloud the issue.

The Facts

On August 21st at around 3 AM, a series of chemical weapon attacks occurred in the rebel-held area of Ghouta, on the outskirts of Damascus.  In the aftermath of the attack Doctors Without Borders (who operate three hospitals in the vicinity) recorded roughly 3600 patients suffering from exposure to nerve agents.  355 deaths were reported.  The final toll is likely higher though it appears the initial reports of 1400+ dead are possibly exaggerated.

Eyewitnesses report that the deliver system used for the attack were around 20 non-explosive rockets which dispersed their chemical prior to impact.

On August 24-26, a U.N. inspection team conducted onsite evidence gathering and interviewed survivors.  The mandate of this investigation, as has been repeatedly stressed by secretary-general Ban Ki-moon, is only to establish if chemical weapons have been used and not which side used them.  The effectiveness of the U.N. team was reportedly hindered by continued hostilities in the region that included Syrian government forces shelling the affected areas and sniper attacks by forces unknown.

And that’s it for facts.  Everything else appears to be conjecture and rhetoric.  Let’s look at some of this now.

Secretary of State John Kerry’s Speech, August 30, 2013

Secretary Kerry’s speech of August 30th (read the transcript here) largely consisted of appeal to emotion.  Here’s a sample of what most of the speech consisted of:

…Instead of being tucked safely in their beds at home, we saw rows of children lying side by side, sprawled on a hospital floor, all of them dead from Assad’s gas, and surrounded by parents and grandparents who had suffered the same fate. 

The United States government now knows that at least 1,429 Syrians were killed in this attack, including at least 426 children. Even the first responders — the doctors, nurses and medics who tried to save them — they became victims themselves. We saw them gasping for air, terrified that their own lives were in danger.

This is the indiscriminate, inconceivable horror of chemical weapons. This is what Assad did to his own people.

But what about the evidence?  What about hard facts?  Well, Kerry states the following to be definitive conclusions of U.S. intelligence:

  • Syrian government forces used chemical weapons several times already in 2013.
  • Syrian forces in the area were told to prepare for the attack by putting on gas masks and taking other precautions associated with chemical weapons.
  • The rockets were launched from government controlled regions and landed in rebel controlled regions.
  • A senior official in the Syrian government knew about the attack, confirmed they were carried out by the regime, and was fearful that they (the Syrian government) would be discovered as the perpetrators.
  • After the attack Syrian artillery bombardment of the area dramatically intensified and hindered the U.N. team’s ability to collect evidence and conduct interviews with survivors.

Those are the facts that Kerry claims.  One problem: There is no direct or supporting evidence of any kind provided in the speech to back up any of these statements.  Kerry simply states them as absolute truths.  Presumably this is because the irrefutable evidence proving the truth of his statements can be found in the U.S. declassified assessment of the incident of which John says the following at the beginning of his speech:

That’s why this morning’s release of our government’s unclassified estimate of what took place in Syria is so important. Its findings are as clear as they are compelling. I’m not asking you to take my word for it. Read for yourself, everyone, those listening, all of you, read for yourselves the evidence from thousands of sources, evidence that is already publicly available, and read for yourselves the verdict reached by our intelligence community about the chemical weapons attack the Assad regime inflicted on the opposition and on opposition-controlled or contested neighborhoods in the Damascus suburbs on the early morning of August 21st.

Our intelligence community has carefully reviewed and rereviewed information regarding this attack. And I will tell you it has done so more than mindful of the Iraq experience. We will not repeat that moment. Accordingly, we have taken unprecedented steps to declassify and make facts available to people, who can judge for themselves.

But still, in order to protect sources and methods, some of what we know will only be released to members of Congress, the representatives of the American people.

That means that some things we do know, we can’t talk about publicly.

Ok John, let’s take you up on that.  Let’s read for ourselves the unclassified assessment you claim holds the verifiable proof we seek.  Here it is here.

I don’t know about you but I’m underwhelmed.  As opposed to the ‘clear and compelling‘ findings cited by Kerry, the document simply enumerates the same conclusions from Kerry’s speech.  There’s a complete and utter lack of any evidence to back those conclusions up.

We Can’t Take U.S. Intelligence’s Word For It

U.S. intelligence is infamous for lying to the public and releasing faulty intelligence estimates during the lead up to major conflict.  Kerry himself draws attention to this fact in his speech but assures us that this time U.S. intelligence is “more than mindful of the Iraq experience. We will not repeat that moment.“.  Again, we’re supposed to take his word for it.  Let’s take a quick trip down memory lane and look at a few recent examples of blatant lies used to justify foreign conquests:

  • Operation Desert Storm.  On October 10th, 1990 a female by the name of Nayirah testifies before the Congressional Human Rights Caucus that during the Iraqi invasion of Kuwait, she witnessed Iraqi soldiers removing babies from incubators and leaving them to die.  The story received extensive media coverage and was cited by several U.S. senators as well as President Bush (senior) as a major justification for U.S. intervention.  It was later revealed (after the U.S. led intervention) that the story was a complete fabrication and that Nayirah was in fact the daughter of the Kuwaiti ambassador to the U.S.  This fact would have been well known within U.S. intelligence circles and yet nothing was done to bring the attention of the American people to the deception.  Read about the whole sordid affair here.
  • Iraq War.  As alluded to by Kerry and hopefully known to readers, U.S. intelligence was involved in a shameful deception in the lead-up to the Iraq war.  The main justification for this war of aggression was the supposed possession of chemical and biological WMDs by Saddam Hussein.  This culminated with then Secretary of State Colin Powell testifying before the U.N. on the conclusions of U.S. intelligence about Iraqi WMDs.  His testimony, and the U.S. intelligence on which it was based, was later revealed to be intentionally falsified to justify the invasion.
  • Libya.  In the lead-up to the completely unprovoked and nonsensical destabilization of Libya in 2011, Western media was again abuzz with stories of atrocities.  This time the narrative given by senior U.S. politicians (including Secretary of State Hillary Clinton) was that the evil Libyan government was dispensing Viagra to its forces to fuel the systematic raping of the population.  Once again these allegation were later discovered to be complete fabrications to sway U.S. public opinion in favour of the military assault on Libya.

Time and time again we’ve been manipulated in this way by the mainstream media, senior politicians, and U.S. intelligence.  Time and time again WMDs have been used to justify military actions or economic sanctions against countries that, for whatever reason, have fallen out of favour with the powers that be.  The only reasonable response to known liars is to not believe them.  Demand proof.  Dismiss appeals to emotion.

With this in mind let’s look critically at each of the claims made by U.S. intelligence and parroted by Kerry.  Can we find any evidence which supports any of these claims?  Can we find any evidence which contradicts any of these claims?

Claim: Previous Chemical Weapon Attacks By Syrian Government Forces

This conclusion is simply not supported.  The March 2013 chemical weapon attacks (discussed here) have not been tied to the Syrian government by any physical evidence.  On the other hand, strong suspicion and circumstantial evidence has since emerged that these attacks were, in fact, carried out by the rebels.  Here’s a summary of that evidence:

  • Carla del Ponte, a member of the U.N. Independent International Commission of Inquiry on Syria which investigated the attacks stated to Swiss media that there were “strong, concrete suspicions but not yet incontrovertible proof” that rebel forces were behind the attacks.  Del Ponte is a fairly credible source given her direct involvement on the investigative team and the fact that she previously served as the head of the U.N. war crime tribunals for both Rwanda and Yugoslavia.
  • Russia, which conducted its own on-site investigation into the attacks, provided the U.N. with an 80 page report which concluded that it was the rebels who had used the chemical weapons.  While the report has not been made public it’s understood to stand on the following physical evidence:
    • The sarin gas used in the attack was not industrially produced but rather bore the signature of being produced in a makeshift lab.  Hexogen (aka RDX) was used as the explosive charge.  This chemical is not in standard military munitions but is heavily used in IEDs and other terrorist devices.
    • The delivery system was a jerry-rigged Bashar 3 missile.  The rebels do possess this missile.

While I don’t feel this information is conclusive, it certainly calls into serious question Kerry’s assertion that Assad had carried out the March attacks especially in light of the total absence of evidence implicating government forces.

Claim: Syrian Forces Had Pre-knowledge of Attacks

This is a conclusion that is made with absolutely no evidence offered.  It appears that the source of this information is intelligence provided by the Israeli Defence Forces Unit 8200 (the Israeli version of the NSA specializing in signals intelligence and electronic intercepts).

Given the lack of details provided, this argument cannot be accepted blindly as true.  If it was confirmed that the intelligence originated with Unit 8200, it would need to be corroborated in some way given the dubious motivations and previous covert and overt attacks made by the Israelis on Syrian government forces.

Finally, even if the raw intelligence were to be independently verified and confirmed it still wouldn’t allow us to conclude anything.  For example, an alternative logical explanation would be that Syrian intelligence learned of pending chemical weapon attacks by the rebels and ordered precautions for their forces.

Claim: Rockets Launched From Government Held Areas

I agree completely with Kerry that where the rockets were launched from should allow blame to be placed on the guilty party.  It should be all too simple for the U.S. to release the raw data documenting the missile attacks (since they claim to have such data).  This data would be extremely convincing and constitute just the sort of hard evidence I’m calling for.

But they (U.S. intelligence) haven’t release the data.  They haven’t even said where the attacks originated from except to make the general statement about it being from regime controlled territories.

Why hold this information back?  How could the release of the exact location and raw data possibly compromise U.S. intelligence assets in any way?  If U.S. intelligence is telling the truth there would be no reason not to release the data (or a ‘scrubbed’ version of it).  Failure to release any supporting evidence whatsoever fatally undermines the claim that attacks were launched from regime held areas.  We must dismiss such unsubstantiated allegations from known liars.

Claim: Syrian Government Officials Knew of Attack

The basis for this claim is more intelligence provided to U.S. authorities by the Israeli Unit 8200.  According to a leak from an ex-Mossad agent, the Israelis intercepted a call between senior regime officials discussing the attack.  There are no further details given.  No details about the conversation or its participants are provided.

First of all, we once again need to be wary of the source.  Israeli intelligence is not an objective observer here and can be expected to act in their best interests.

Next, even if we accept that the conversation took place, we can’t possibly conclude anything since all we’ve been told is that senior Syrian officials discussed the attack.  This proves nothing.  Discussing an attack that has already occurred does not make you the perpetrator.  Obviously Syrian government officials would be talking about large scale chemical weapon attacks that just occurred in their country.

Why hasn’t the transcript of the call and names of the participants been released?  Why are we once again just supposed to take Kerry’s word for it?

Claim: Intensified Syrian Artillery Bombardment

According to Kerry the areas struck by the chemical weapons were subsequently subjected to artillery bombardment “at a rate four times higher than they had over the previous 10 days“.

Leaving aside the complete lack of data provided to back this up (by now a familiar theme), this again, proves nothing.  Damascus’ suburbs are a dynamic battleground where the front lines are constantly changing.  It’s not unexpected that on a day-to-day basis the region of highest confrontation, and thus highest artillery usage, changes.

Again, even if we accept Kerry’s totally unsubstantiated claims, this does not amount to evidence of anything.


The U.S. has once again started the march to war.  Again we see a war of aggression sold to the public based on blanket statements without a shred of real evidence.  Again we see WMDs being used to justify intervention.  Again we see pervasive use of rhetoric and appeal to emotion as opposed to calm and rational analysis and proof.  And again we’ll see the gears of the military industrial complex greased with the blood of the innocent.

Climategate Part Three: What Does the Data Really Show?

My last couple of posts (here and here) have focused on some of the details that came out of the Climategate scandal.  Specifically, I’ve presented evidence from the leaked emails and source code showing that:

  1. Various questionable techniques and datasets were being used in the CRU’s models.
  2. Source code was written in such a way as to specifically weight and outright change data to achieve desired effects.
  3. There was an active conspiracy to prevent the raw temperature data from being released to outsiders.  This included, but was not limited to, intentionally deleting content after Freedom of Information Act requests had been initiated.
  4. Ethically questionable steps were taken which did subvert the scientific process.  This included controlling which papers got published (only those sympathetic to ‘the cause’), undermining journals and editors who published papers critical of man-made global warming, and direct attacks against ‘skeptics’.

The Question Remains

But the question remains: Is there actually man-made global warming taking place?

Just because we know the scientists in the paleo-climate arena have been manipulating the data and public opinion, we cannot conclude that global warming is a myth.

One thing is clear: In our search to answer this question we must be extremely wary of the type of data we’re willing to consider.  In particular we need to look out for:

  1. Any temperature data that is derived (i.e. proxy data like tree-rings and ice cores).  These proxies are provably affected by factors other than temperature.  Refer to part one of this series for a discussion on the tree-ring divergence problem.
  2. Any data that has been statistically manipulated.  We have already scratched the surface of how statistical analysis can be used to serve agendas.  This is especially true in the paleo-climate world where principal component, regression, and other complex transformations are applied to data.  See A.W. Monford’s excellent bookThe Hockey Stick Illusion: Climategate and the Corruption of Science‘ for a detailed discussion of exactly the kinds of statistical games that get played in paleo-climate circles.

Raw Temperature Data

So what are we left with?  Well, the obvious thing that remains is the historical raw temperature data from various impartial meteorological institutions.  These raw datasets are readily obtained and have results stretching, in some cases, all the way back to around 1850.  These datasets are a good starting point to understand if, at least in the context of recent history, current temperatures are abnormal.

In all cases except where noted, the monthly mean temperature is used.  This is defined simply as the average of the maximum and minimum temperature at a location for the days of the given month.  This measure gives us a simple, reliable representation of the average temperature for that location for the target month.  My Excel spreadsheet with all data and charts can be downloaded here.

Also graphed (in red) is a 12 month moving average trend line.  This trend line represents the annual mean temperature and makes it much easier to pick out any overall increase or decrease in the series.

First up, the temperatures from my hometown of Ottawa, Canada (courtesy of Environment Canada):


Next, let’s head over to the Pacific coast and Vancouver, Canada (courtesy of Environment Canada):


Unfortunately, the Environment Canada data doesn’t go back before the 1930’s.  Let’s look at a random sampling of datasets which go back further starting with New York, New York (courtesy of NOAA):


Note: The unit here is unknown. This is the raw data from NOAA. Clearly it is not fahrenheit. Nonetheless, it does provide a nice trend line against instrument data stretching back into the 1800s.

Next, let’s head across the Atlantic and look at Oxford, England:


Finally let’s take a look at Melbourne, Australia (courtesy of the Australian Bureau of Meteorology):


Raw Temperature Data Conclusions

What, if anything, can we conclude from the raw temperature data?

Well, I think we can see that, in general, there has indeed been a slight increase in average temperatures over the last few decades.  By playing around with my charts and applying linear trend-lines I quantify this as being about one degree Celsius over the entire 160 year period back to the 1850s.  This is relatively consistent between locations and thus, I conclude, represents a small but real and global warming over that period.

Take a Step Back

Now take a step back.  What have we actually shown?  Only that temperatures over the last couple of decades have increased slightly above the average for the previous 150 or so years.

From this limited data we can certainly not conclude that man-made carbon dioxide emissions are causing global warming.  In addition to the fact that we can in no way establish any type of causal relationship from such a limited study, there are other known factors that can skew temperatures.

For example there’s an effect known as the urban heat island (UHI) effect.  UHI is a well documented phenomenon whereby metropolitan areas tend to have higher temperatures than surrounding areas since they are constructed from materials that have high heat retention (concrete).  Given that all my datasets are for urban centres that, over the span of the data, became more built up, we would expect to see the UHI effect cause some increase in temperature.

And let’s not forget the influence of the sun (which I will focus on in a future post), the Earth’s orbital variations (obliquity, precession, Milankovitch cycles, etc.), volcanic activity, etc.

The point is there are many things that can cause temperatures to fluctuate over time.  We can’t possibly conclude that the very small increase we’re currently observing is the result of man-made carbon emissions.

Are Current Temperatures Unprecedented?

The logical continuation of this discussion is to look at whether the current temperatures have any precedence in the relatively recent history of our planet.

Here we head into dangerous territory since we must go beyond the instrument record and look deeper into our planet’s past.  In doing so we must guard against relying solely on proxy data since we’ve seen how such data is easily misused.

With that caution in mind let’s look at an obvious candidate: The Medieval Warm Period.

The Medieval Warm Period and Little Ice Age

One of the many major criticisms of the infamous hockey stick chart from Climategate, was the absence of the Medieval Warm Period (MWP).  This was a huge departure from the established consensus within the scientific community and the opinion of the IPCC (UN International Panel on Climate Change) at the time.  Here’s how the IPCC conclusions evolved over the years to eliminate the previously accepted MWP:


As you can see, with the release of Michael Mann’s hockey stick, the MWP was expunged from the IPCC temperature record.  The effect is obvious.  With the MWP included current temperatures do not appear abnormal or unprecedented.  But, with the MWP removed, current temperatures appear much more concerning.

So which is correct?  Did the MWP really occur?

I think there are many obvious data points that indicate the MWP was a real event.  Its removal from the temperature record by Mann et. al., and the subsequent adoption by the IPCC of this bastardization of climate history is, in my mind, an amazing example of statistics and obfuscation being used for political and personal motives.

On the statistical side of things, the previously mentioned book by Montford goes into all the juicy details.  I would highly recommend this book for anyone who wants to really understand the game that Mann and others on ‘the hockey stick team’ played.  After reading this book there is no doubt in my mind that Mann’s hockey stick chart was based on completely flawed data and intentionally flawed analysis of that data to remove the MWP and exaggerate current temperature trends.  This is not opinion but proven fact.  There is simply no way to spin Mann’s techniques in a favourable light.  Indeed, understanding the machinations Mann had to go through to abolish the MWP from his chart is itself strong evidence that the MWP is real.

There is much evidence in the scientific literature that supports the existence of the MWP as well as the Little Ice Age (LIA) that followed.  A great summary of this evidence can be found here.

As a further point of evidence supporting the MWP and LIA, I would point to the Viking colonization of Greenland, Iceland and parts of Newfoundland:


We all learned about the Vikings in school.  It’s historical fact that the Vikings did establish colonies on Greenland and Iceland that coincided with the MWP only to abandon these colonies with the onset of colder temperatures during the LIA.  It’s also interesting to see in the above chart the divergence problem I talked about in my first Climategate post.

Given the vast body of evidence supporting the existence of a MWP and LIA, I do not believe the existence of these periods of temperature fluctuation can be refuted.  Thus, Mann and the current IPCC temperature reconstructions that do not show a pronounced MWP are, in my mind, highly suspect and must be based on flawed data, flawed analysis or a combination of both.

Pre-civilization Temperature Record

Let’s step back still further into the temperature record.  In doing so let’s remain mindful that we’re relying on temperature proxies.  But, that said, what’s the current understanding of our planet’s recent history?

Here’s a look back 800,000 years courtesy of NASA (using antarctic ice-core data):


Going back further into the temperature record:


I think we all remember something like this from our high-school textbooks.  It fits with what we all know intuitively – that it was much warming during the age of the dinosaurs than today.

This chart also shows us that large scale temperature fluctuations are totally normal for our planet.  In fact, we’re currently at what would be considered the bottom of the long term temperature range (far below temperatures of the past).

Clearly the previous climate changes were not anthropogenic since we, homo sapiens, weren’t around.  The inescapable conclusion must be that even in the absence of human influences, our planet’s temperatures are volatile.


The conclusion that temperatures have increased slightly over the last hundred years (about one degree Celsius) is support by the raw temperature data.

The conclusions that this warming is unprecedented and man-made are not supported by the data.

We know that there were both a Medieval Warm Period and Little Ice Age in the last Millennium.  We know that the temperature record for the last million, or hundreds of millions of years reveals cyclical temperature variations which could obviously not be man-made.  Temperatures during these periods did regularly exceed by a large margin anything even close to what we see today.

These conclusions do not give us the right to pollute our planet with impunity.  But they do call into question the global warming phenomena as the most pressing danger mankind faces.  We have been mislead and outright lied to.  The science has been corrupted.  We need to question the conclusion of global warming and cast a critical eye on the policies that are being put in place on the basis of perhaps the greatest con in human history.

Climategate Part Two: The Undermining of the Scientific Method

In my previous post I provided an overview of Climategate, looked at the role tree ring proxy data played in the controversy, and provided evidence from leaked emails and source code that the climate data was being intentionally and knowingly manipulated.

Today I want to answer the following question: Was there intent on the part of the CRU team to mislead the scientific community and the public at large?

To me there are a couple of areas we can focus on as we attempt to tease out the intent of the CRU:

  1. Did the CRU openly publish their raw temperature data and fully disclose the transformations applied to that data in order to generate their models?
  2. Did the CRU intentionally circumvent the peer-review scientific process?

Let’s start with the first question.

CRU Refusal to Release Raw Data

Evidence is clear that the CRU went to extraordinary lengths in their attempts to prevent the raw temperature data from being exposed.

Why?  Well, in the words of head CRU scientist Phil Jones:

I should warn you that some data we have we are not supposed to pass on to others. We can pass on the gridded data – which we do. Even if WMO agrees, I will still not pass on the data. We have 25 or so years invested in the work. Why should I make the data available to you, when your aim is to try and find something wrong with it
-Phil Jones email Feb. 21, 2005

This strikes to the core of the scientific process.  The whole point of peer-reviewed science is that other scientists can reproduce and verify your results.  This mechanism has been the bedrock of science going back a hundred years.  Phil Jones simply stands the logic on its head indicating that he doesn’t want to release the details since he’s got a vested interest in his conclusions and doesn’t want to give anyone the chance to prove those conclusions wrong.

As for not being ‘supposed’ to pass on the data there is some basis here.  Some of the data used by the CRU came from third party governments and was subject to various restrictions.

However, a large amount of the data was provided by U.S. and European agencies and not under such limitations.  Further, the CRU’s work was publicly funded largely by the U.S. Department of Energy (DOE).  On what grounds could the CRU possibly refuse to release this data given that the taxpayers footed the bill for its collection and analysis?  All people were asking for was raw temperature sensor data.  What could it possibly harm to release this data to the public?

Now, it turns out that the CRU was technically not required to release even the publicly funded raw data.  The DOE rules, while strongly stressing that data be released when possible, did not strictly require it.  So, technically the CRU wasn’t breaking any laws but their refusal to publish data is certainly highly suspect.

CRU Obstruction of Freedom of Information Act Requests

As more people started to push harder for the raw data, the CRU team started to get concerned that Freedom of Information Act (FOIA) requests might be used to compel them to release the data:

[D]on’t leave stuff lying around on ftp sites — you never know who is trawling them. The two MMs have been after the CRU station data for years. If they ever hear there is a Freedom of Information Act now in the UK, I think I’ll delete the file rather than send to anyone. Does your similar act in the US force you to respond to enquiries within 20 days? – our does! […] Tom Wigley has sent me a worried email when he heard about it—thought people could ask him for his model code. He has retired officially from UEA so he can hide behind that.
-Phil Jones email Feb. 2, 2005

I’m getting hassled by a couple of people to release the CRU station temperature data. Don’t any of you three tell anybody that the UK has a Freedom of Information Act.
—Phil Jones email Feb. 21, 2005

Think I’ve managed to persuade UEA [the University of East Anglia] to ignore all further FOIA requests if the people have anything to do with Climate Audit.
-Phil Jones email Jun. 19, 2007

Can you delete any emails you may have had with Keith re AR4 [IPCC 4th Assessment on Climate Change, 2007]? Keith will do likewise. […] Can you email Gene and get him to do the same? […] We will be getting Caspar to do likewise.
-Phil Jones email May 29, 2008

John Mitchell did respond to a request from Holland. John had conveniently lost many emails, but he did reply with a few. Keith and Tim have moved all their emails from all the named people off their PCs and they are all on a memory stick.
-Phil Jones email Jun. 4, 2008

Finally, might I ask that you note and then erase this email. I have found that recent enquiries under the Freedom of Information Act, or Data Protection Act, can become considerable time sinks , or the basis of some inconvenient subsequent distractions.
-Keith Briffa email Oct. 9, 2008

When the FOI requests began here, the FOI person said we had to abide by the requests. It took a couple of half hour sessions – one at a screen, to convince them otherwise… About 2 months ago I deleted loads of  emails, so have very little – if anything at all.
-Phil Jones email Dec. 3, 2008

You might want to check with the IPCC Bureau. I’ve been told that IPCC is above national FOI Acts. One way to cover yourself and all those working in AR5 [IPCC 5th Assessment on Climate Change] would be to delete all e-mails at the end of the process. Hard to do, as not everybody will remember it.
-Phil Jones email May 12, 2009

For example Keith Briffa took home emails that were subject to FOI to ensure their safekeeping.
-CRU IT security team meeting notes Jul 14, 2010

It’s pretty clear from the above emails that Phil Jones and the CRU team was fairly determined to resist releasing their data or email records subject to FOIA requests.  This determination extended to physically deleting or moving emails after the FOIA requests had been commenced.  This was blatantly illegal and a conspiracy in every sense of the word.

There is simply no way to spin these emails in a favourable light.  The CRU did intentionally and illegally obstruct the FOIA process.

CRU Refusal to Release Climate Models

My previous post went into some details around the actual model used by the CRU and some of the egregious problems with the code.  From even a cursory analysis of the code it’s clear that the CRU’s model was littered with fudge factors and blatant manipulations to force the data to produce the desired result.

Given this, it’s no surprise that the CRU also refused to release the details of their model:

I got this email from McIntyre a few days ago. As far as I’m concerned he has the data — sent ages ago. I’ll tell him this, but that’s all — no code. If I can find it, it is likely to be hundreds of lines of uncommented fortran ! I recall the program did a lot more than just average the series. I know why he can’t replicate the results early on — it is because there was a variance correction for fewer series.
-Phil Jones email Apr. 27, 2005

Giving them the algorithm would be giving in to the intimidation tactics that these people are engaged in
-Michael Mann, interview Wall Street Journal, 2005

Thus, any scientists attempting to reproduce the CRU’s results were predictably unsuccessful.  The CRU, cloaking both the data and model in secrecy, were able to get away with their inaccurate conclusions.

So why didn’t more scientists stand up and protest such an obvious obfuscation?  We turn our attention to this question next.

Where Were the Dissenters?

One valid question readers may have is why didn’t other scientists dig-in and reject the global warming hypothesis if the data was being so badly manipulated?

They did.  Or, at least, they tried to.

The reality is that many climatologists rejected the CRU and IPCC conclusions on global warming and refused to jump on the band wagon.  Such scientists were quickly labelled as ‘skeptics’ and subjected to concerted attacks aimed at discrediting and marginalizing them.  And it wasn’t just one or two wing-nuts – a significant number climatologists spoke out against the distortions of the CRU team.

But it didn’t matter.  The mainstream media had already picked their side and relentlessly pushed the global warming meme.  Governments also jumped aboard the bandwagon and began formulating policy, funding further research (all to scientists on record as supporters of the anthropogenic global warming conclusion) and setting school curriculums to brainwash the youth about the evils of carbon dioxide and unprecedented global warming.

But, like all good tyrants, the CRU knew that ALL dissent must be crushed without mercy.  They could be no room for questioning or independent thought.  After all, the CRU knew how vulnerable their rigged data and models were.

CRU Circumventing of the Scientific Process

The best defence is a good offence.  The CRU took this maxim to heart and aggressively attacked dissenters where ever they were found.

The main tactic used was to prevent the publishing of any dissenting papers in journals.  This was, for the most part, easily accomplished with CRU members (or affiliates) having close relationships with the editors of all major journals.  In addition, because CRU team members, Phil Jones in particular, were considered top experts in the field, they had the opportunity to peer-review many of the papers prior to their publishing.  Phil Jones could, and did, use this opportunity to blackball papers that disagreed with his conclusions and effectively block those papers from publication.

But, predictably, some journals had editors willing to stand up for scientific integrity and who refused to be brainwashed or intimidated by the climate change zealots.  These editors caused much consternation within the CRU team.  The CRU tactics used here ranged from attempting to blacklist entire journals to forcing editors to resign or be fired.  In this the CRU was highly successful.  Virtually all dissenting voices were quashed one way or another allowing the claim of a ‘scientific consensus’ on global warming.

To give you a flavour of the coordination that went on within the CRU team here’s extracts from some of the more damning emails.

…I think the skeptics will use this paper to their own ends and it will set paleo back a number of years if it goes unchallenged. I will be emailing the journal to tell them I’m having nothing more to do with it until they rid themselves of this troublesome editor. A CRU person is on the editorial board, but papers get dealt with by the editor assigned by Hans von Storch…
-Phil Jones email Mar. 11, 2003

In fact, Mike McCracken first pointed out this article to me, and he and I have discussed this a bit. I’ve cc’d Mike in on this as well, and I’ve included Peck too. I told Mike that I believed our only choice was to ignore this paper. They’ve already achieved what they wanted–the claim of a peer-reviewed paper. There is nothing we can do about that now, but the last thing we want to do is bring attention to this paper, which will be ignored by the community on the whole… It is pretty clear that thee skeptics here have staged a bit of a coup, even in the presence of a number of reasonable folks on the editorial board (Whetton, Goodess, …). My guess is that Von Storch is actually with them (frankly, he’s an odd individual, and I’m not sure he isn’t himself somewhat of a skeptic himself), and without Von Storch on their side, they would have a very forceful personality promoting their new vision. There have been several papers by Pat Michaels, as well as the Soon & Baliunas paper, that couldn’t get published in a reputable journal. This was the danger of always criticising the skeptics for not publishing in the “peer-reviewed literature”. Obviously, they found a solution to that–take over a journal! So what do we do about this? I think we have to stop considering “Climate Research” as a legitimate peer-reviewed journal. Perhaps we should encourage our colleagues in the climate research community to no longer submit to, or cite papers in, this journal. We would also need to consider what we tell or request of our more reasonable colleagues who currently sit on the editorial board… What do others think?
-Michael Mann email Mar. 11, 2003

Re CR [Climate Research Journal], I do not know the best way to handle the specifics of the editoring. Hans von Storch is partly to blame — he encourages the publication of crap science ‘in order to stimulate debate’. One approach is to go direct to the publishers and point out the fact that their journal is perceived as being a medium for disseminating misinformation under the guise of refereed work…
Note that I am copying this view only to Mike Hulme and Phil Jones. Mike’s idea to get editorial board members to resign will probably not work — must get rid of von Storch too, otherwise holes will eventually fill up with people like Legates, Balling, Lindzen, Michaels, Singer, etc. I have heard that the publishers are not happy with von Storch, so the above approach might remove that hurdle too.
-Tom Wigley email Apr. 24, 2003

I am really sorry but I have to nag about that review – Confidentially I now need a hard and if required extensive case for rejecting – to support Dave Stahle’s and really as soon as you can.
-Keith Briffa email Jun. 4, 2003

I would like to play with it in an effort to refute their claims. If published as is, this paper could really do some damage. It is also an ugly paper to review because it is rather mathematical, with a lot of Box-Jenkins stuff in it. It won’t be easy to dismiss out of hand as the math appears to be correct theoretically
-Edward Cook email Jun. 4, 2003

It seems to me that this “Kinne” character’s words are disingenuous, and he probably supports what De Freitas is trying to do. It seems clear we have to go above him. I think that the community should, as Mike H has previously suggested in this eventuality, terminate its involvement with this journal at all levels–reviewing, editing, and submitting, and leave it to wither way into oblivion and disrepute.
-Michael Mann email Jul. 3, 2003

In the meantime, I urge people to dissociate themselves from Climate Research. The residual ‘editorial’ (a word I use almost tongue in cheek) board is looking like a rogues’ gallery of skeptics. Those remaining who are credible scientists should resign.
-Tom Wigley email Aug. 19, 2003

Recently rejected two papers (one for JGR and for GRL) from people saying CRU has it wrong over Siberia. Went to town in both reviews, hopefully successfully. If either appears I will be very surprised.
-Phil Jones email March 31, 2004

I can’t see either of these papers being in the next IPCC report. Kevin and I will keep them out somehow – even if we have to redefine what the peer-review literature is!
-Phil Jones email Jul. 8, 2004

This is truly awful. GRL [Geophysical Research Letters journal] has gone downhill rapidly in recent years. I think the decline began before Saiers. I have had some unhelpful dealings with him recently with regard to a paper Sarah and I have on glaciers — it was well received by the referees, and so is in the publication pipeline. However, I got the impression that Saiers was trying to keep it from being published.
Proving bad behavior here is very difficult. If you think that Saiers is in the greenhouse skeptics camp, then, if we can find documentary evidence of this, we could go through official AGU [American Geophysical Union] channels to get him ousted [as editor for the Geophysical Research Letters journal] . Even this would be difficult.
-Tom Wigley email Jan. 20, 2005

The panel is solid. Gerry North should do a good job in chairing this, and the other members are all solid. Chrisy is the token skeptic, but there are many others to keep him in check…
-Michael Mann email Feb. 2, 2006

Its your prerogative to suggest alternates, and I think they’ll take your suggestions very seriously. My greatest fear is that McIntyre dominates the discussion. Its important that they hear from the legitimate scientists.
-Michael Mann email Feb. 13, 2006

I see you’re down for a meeting in London tomorrow and Friday.  I have been having something of a run in with a French scientist called Vincent Courtillot. He is making Edouard Bard’s life awful in French.  If you’re there on the Friday when Vincent is talking then tell him he’s just completely wrong. He will likely say the climate isn’t warming and even if it was it has little to do with greenhouse gases. So shouldn’t be difficult!!
I’m lecturing here in Norwich to students so can’t make it to London.  If you’re not there on the Friday, just make sure one or two reasonable scientists are aware that they have invited a bit of rogue!
-Phil Jones email Feb. 6, 2008

You’ll get one awful talk on the Friday from a Vincent Courtillot. If he lays into me, or says the world isn’t warming you have my permission to go and put the boot it[sic]. Shouldn’t be difficult.
Have emailed Jim as well.Vincent is a prat, but he’s a well connected prat – French Academy and all that.  He’s been making life a misery for Eduoard Bard.  I can’t make it – I’m just trying to help Eduoard!
-Phil Jones email Feb. 6, 2008

Dear folks, You may be interesting in this snippet of information about Pat Michaels. Perhaps the University of Wisconsin ought to open up a public comment period to decide whether Pat Michaels, PhD needs re-assessing?
-Tom Wigley email October 14, 2009

These emails illustrate the key tactics employed by the CRU in their campaign against the ‘skeptics’:

  1. Applying pressure to editorial boards to ‘rid themselves’ of ‘troublesome’ editors.
  2. Organizing the blacklisting of journals which refused to be intimidated and dared publish papers critical of anthropogenic global warming.
  3. Ensuring that lectures given by ‘deniers’ would be attended by friendly forces who could disrupt and dispute any claims that global warming wasn’t open and shut.
  4. Attempting to have the PhD’s of dissenters who dared question their conclusions revoked.  See here for the full story on that one.
  5. Leveraging their positions as ‘experts’ to review papers prior to publishing and undermine any papers that disagreed with the global warming meme.
  6. Ensuring papers sympathetic to ‘the cause’ would be reviewed by friendly editors and peer-reviewers to ensure publication.

The last two tactics were especially effective.  What better way to prevent dissent than quash papers even before they get published?  This is much more efficient than having to discredit the authors of papers that have already been published.  And, if you additionally ensure that papers supporting your view always get out, you quickly skew the corpus of scientific literature in the direction of your conclusions.

Other scientists did recognize this attempt to establish a monopoly on the truth.  Raymond Bradley, head of the Geosciences department at the University of Massachusetts voiced his objection as follows:

I have just returned from Finland and have now read all the correspondence regarding the Science perspectives article you asked Keith Briffa & Tim Osborn to write. I’ve sent Tim Osborn & Keith Briffa a few suggestions re their perspectives article. If you would like to see them, let me know.
I would like to diasassociate myself from Mike Mann’s view that “xxxxxxxxxxx” [x’d out in released email] and that they “xxxxxxxxxxxxx” [x’d out in released email]. I find this notion quite absurd. I have worked with the UEA group for 20+ years and have great respect for them and for their work. Of course, I don’t agree with everything they write, and we often have long (but cordial) arguments about what they think versus my views, but that is life. Indeed, I know that they have broad disagreements among themselves, so to refer to them as “the UEA group”, as though they all march in lock-step seems bizarre.
As for thinking that it is “Better that nothing appear, than something unnacceptable[sic] to us” … though we are the gatekeepers of all that is acceptable in the world of paleoclimatology seems amazingly arrogant. Science moves forward whether we agree with individiual[sic] articles or not…


The infamous hockey stick graph is still used today in an attempt to force draconian regulations on the entire world.  The graph is the product of fault data and a brutally manipulative model.

The scientists involved knew the science was junk and covered it up.  Those scientists undertook a systematic and coordinated campaign to prevent their data and model methodologies from being made known.  This campaign extended to physically deleting emails in violation of the Freedom of Information Act.  This was completely unethical and also illegal.  It was done purely in the furtherance of their fraud.

But worst of all, these global warming advocates assaulted the core principals of the scientific method by attacking the peer-review process itself.  By pressuring journals and editors to publish papers supporting the ’cause’ while blocking publication of ‘dissenting’ papers, proper scientific debate, the means by which we arrive at the truth, was quashed.

Climategate Part One: Overview, Tree Rings and the Divergence Problem, Data Manipulation

What Was Climategate

On November 19th, 2009, 160 MB of compressed data was leaked from the University of East Anglia’s Climate Research Unit (CRU), a government funded program.  Included were over a thousand emails and over three thousand documents including the source code used to generate the CRU’s climate models from the raw data.  The leaked information did not include the raw temperature data itself.

In November of 2011 another leak of over 5000 CRU emails was also posted to internet servers.  This is often referred to as Climategate II.

The CRU’s climate models are so important because they form the basis of the UN Climate Panel’s recommendations for implementing crippling carbon regulations on the developed economies of the world.  These regulations and taxes, if implemented, would result in massive increases in the price of everything from electricity and gasoline to virtually every manufactured good.  In short, life if general will get a whole lot more expensive for the average person if these recommendations get implemented.  As such, it’s vital to be confident that the science underlying the recommendation is sound.

Included in the Climategate data dumps was sufficient information to conclude the following:

  1. Various questionable techniques and datasets were being used in the CRU’s models.
  2. Source code was written in such a way as to specifically weight and outright change data to achieve desired effects.
  3. There was an active conspiracy to prevent the raw temperature data from being released to outsiders.  This included obstructing people issuing Freedom of Information Act requests for the data.  Remember that the CRU was funded by the taxpayers.
  4. Ethically questionable steps were taken which did appear to subvert the scientific process.  This included ensuring papers were peer-reviewed by only scientists known to be sympathetic to ‘the cause’ .  Additionally, active steps where taken against anyone who dissented from CRU’s opinion including the editors of journals.

There’s way too much information to cover in one post so, for this post, let’s focus in on the first two topics: The datasets used and how that data was manipulated in the code.

Tree Rings as Proxy Data

Before we get into the nitty gritty it’s important to understand the role tree ring data played in Climategate.

It goes without saying that accurate temperature data is not available for anything except the last hundred years or so.  For climate models to go further back in time so-called proxy data is used.  Typically this involves using tree rings but may include ice core or other means to approximate historical temperatures.  With tree rings the general premise is that the wider the ring for a given year, the warmer the temperature for that year.  Or, at least that’s the theory.

The CRU used tree ring derived data to allow its models to graph hundreds and even thousands of years into the past to produce long-term historical graphs.  These graphs thus mixed historical tree ring proxy data with modern instrumentation data.

There’s an obvious question here: How can we be sure that tree ring data is truly an accurate proxy for instrument data?  And, if the answer is that tree ring data is not an accurate proxy, then clearly any models based on that assumption are undermined from the start.

The reality is that tree ring data can unequivocally NOT be trusted.  This fact is well known in climate circles.  It even has a name: The Divergence Problem.

The Divergence Problem

Wikipedia has a pretty good overview of the divergence problem but, in a nutshell here’s the bare bones:

When the instrumentation data (for which reliable data exists from about 1850 or so) is graphed against tree ring proxy data, there’s a major divergence that occurs starting around 1960.  It looks like this:


There are several theories about why this divergence has occurred but no consensus on the matter.  It is known that, in addition to temperature, moisture and CO2 also affect ring width.  It’s also likely that there are other variables affecting ring width that are not yet known.

The conclusion is obvious: It is provable that tree ring data is not a suitable proxy for temperature readings.  Any climate model based on tree ring data is flawed from the start.  Using historical tree rings to predict temperature doesn’t pass basic validation.

Making the Divergence Problem Disappear

The folks at CRU were well aware of the divergence problem and its affect on their models.  After all, if only tree ring data was used, there didn’t appear to be any warming at all!  This was not the conclusion they were looking for.  Here’s email 3234 from the Climategate set which lays out the problem they were facing (emphasis mine):

Despite assurances from Ed and Keith, I must admit that I still don’t get it. The NRC committee is looking at a number of issues, but the one that is most publicly noted is to determine whether, and with what confidence, we can say that recent temperatures have emerged from the band of natural variability over the last millennium or two. Millennial reconstructions with high time resolution are mostly tree-ring based, mostly northern hemisphere, and as I understand it, some are correlated to mean-annual temperatures and others to seasonal temperatures. The performance of the tree-ring paleothermometry is central. Taking the recent instrumental record and the tree-ring record and joining them yields a dramatic picture, with rather high confidence that recent times are anomalously warm. Taking strictly the tree-ring record and omitting the instrumental record yields a less-dramatic picture and a lower confidence that the recent temperatures are anomalous. When a big difference is evident between recent and a millennium ago, small errors don’t matter; the more similar they are, the more important become possible small issues regarding CO2 fertilization, nitrogen fertilization (or ozone inhibition on the other side…).

Unless the “divergence problem” can be confidently ascribed to some cause that was not active a millennium ago, then the comparison between tree rings from a millennium ago and instrumental records from the last decades does not seem to be justified, and the confidence level in the anomalous nature of the recent warmth is lowered. This is further complicated by the possible small influence of CO2 fertilization…. I was just looking at some of the recent Mann et al. papers, and at the Osborn and Briffa paper from this year. In that one, as nearly as I can tell, there are 14 long records, of which 2 extend to 2000, 8 end in the early to mid 1990s, 1 in the early to mid 1980s, 2 in the early to mid 1970s, and one in the late 1940s. That looks to be a pretty small data set by the time you get into the strongest part of the instrumental warming. If some of the records, or some other records such as Rosanne’s new ones, show “divergence”, then I believe it casts doubt on the use of joined tree-ring/instrumental records, and I don’t believe that I have yet heard why this interpretation is wrong…

Clearly they had a real problem here.  How could the divergence problem be resolved?  Their answer: Just change the numbers.

And that’s exactly what they did.  They changed the numbers.

I’ve just completed Mike’s Nature trick of adding in the real temps to each series for the last 20 years (ie from 1981 onwards) and from 1961 for Keith’s to hide the decline.
-Dr. Phil Jones, Director of CRU, Nov. 16, 1999

Also we have applied a completely artificial adjustment to the data after 1960, so they look closer to observed temperatures than the tree-ring data actually were.
-Dr. Tim Osborn, CRU, Email Dec. 20, 2006

Also, we set all post-1960 values to missing in the MXD data set (due to decline), and the method will infill these, estimating them from the real temperatures – another way of “correcting” for the decline, though may be not defensible!
-Dr. Tim Osborn, CRU, Email Oct 16, 2000

So all the scary hockey stick graphs used to terrorize the general public into believing we were on the precipice of impending doom were crap.  CRU scientists messed with the numbers by mixing two very different sources of data (instrument and tree ring proxy) when the two datasets were clearly incompatible due to the divergence problem.

Was There Intent to Deceive

The question becomes whether the deceptive ‘trick’ to ‘hide the decline’ was done in good faith or not.  Were the scientists at the CRU really trying to pull the wool over the public’s eyes?

In order to answer that question with certainty we need to understand:

  1. The exact transformation applied to the data to yield the published results.
  2. Whether the CRU team respected the peer-review scientific process and openly disclosed the transformations they applied to the data, and the logic behind those transformations.  Stated another way, was there intent to obfuscate the truth?

Let’s turn our attention to the first question: How exactly was the data manipulated?

The Code

It all comes down to the software that was used to massage the raw data into the output that feed into the climate models.  Fortunately, the Climategate release included the source code used to perform this transformation against the raw data.

I’m a software developer by trade and so I took a look myself at some of the Climategate code other researchers have called attention to.  It is as bad as they say.  What a mess.

First off, there’s some absolutely crazy regressions and transformations being applied.  Many of these transformations might be legitimate.  I’m not a climate scientist after all and there could be very good reasons for some of the manipulation that gets performed.

That said, consistently throughout the code there is clear evidence of:

  1. Fudge factors being used to achieve desired results when proper transformations fail.
  2. The divergence problem being specifically addressed by code treating data from before 1960 differently from data after 1960.

I don’t want to dump a whole bunch of source code on you so let me give you a selection of comments the programmers left embedded in the code.  These comments give you an idea of the extent to which the data was mucked with.  Most of these are taken from Jeffrey Smalls excellent ‘Climategate In Review‘:

“Plots 24 yearly maps of calibrated (PCR-infilled or not) MXD reconstructions of growing season temperatures. Uses “corrected” MXD – but shouldn’t usually plot past 1960 because these will be artificially adjusted to look closer to the real temperatures.”

“stop in 1960 to avoid the decline”

“stop in 1940 to avoid the decline”

“but why does the sum-of-squares parameter OpTotSq go negative?!!”

“and already I have that familiar Twilight Zone sensation.”

“this renders the station counts totally meaningless.”

“Oh yeah – there is no ‘supposed’, I can make it up. So I have :-)”

“As we can see, even I’m cocking it up!”

“yet another problem that’s based on the hopeless state of our databases”

“recent decline in tree-ring density has been ARTIFICIALLY REMOVED”

“Apply a VERY ARTIFICAL correction for decline!!”

“artificially removed (i.e. corrected) the decline”

“we know the file starts at yr 440, but we want nothing till 1400”

“It’s botch after botch after botch.”

“Oh, GOD, if I could start this project again and actually argue the case for junking the inherited program suite.”

“As far as I can see, this renders the [weather] station counts totally meaningless.”

“So what’s going on? I don’t see how the ‘final’ precip file can have been produced from the ‘final’ precipitation database, even though the dates imply that. The obvious conclusion is that the precip file must have been produced before 23 Dec 2003, and then redated (to match others?) in Jan 04.”

“You can’t imagine what this has cost me — to actually allow the operator to assign false WMO [World Meteorological Organization] codes!! But what else is there in such situations? Especially when dealing with a ‘Master’ database of dubious provenance …”

“OH F— THIS. It’s Sunday evening, I’ve worked all weekend, and just when I thought it was done, I’m hitting yet another problem that’s based on the hopeless state of our databases.”

The above comments should give you a good flavour for how thoroughly the data was corrupted and manipulated.  But the absolute smoking gun is the code itself.  Let me give you one concrete example.  If you take nothing else away from this post, understand the implications of the following:

Apply a VERY ARTIFICAL correction for decline!!
valadj =[0.,0.,0.,0.,0.,-0.1,-0.25,-0.3,0.,-0.1,0.3,0.8,1.2,1.7,2.5,2.6,2.6, 2.6,2.6,2.6]*0.75 ; fudge factor
if n_elements(yrloc) ne n_elements(valadj) then message,’Oooops!’

This code is essentially specifying a series of adjustments applied to the input data by blocks of years.  As you can see from the series, initially data undergoes no adjustment.  Then, towards the beginning of the sequence, the data is adjusted down.  As we get to the middle and end of the series the data is adjusted up by progressively increasing amounts.

The end result: If the raw input data was completely flat, you’d still wind up with a curve that looked like this:


And that, my friends, is how you take any data series and produce a scary looking ‘hockey stick’ chart.  By weighting early data negatively and later data increasing positively, you produce a completely artificial slope exactly like the one CRU produced to convince everyone that climate change was real.


I’ve shown how the use of tree ring proxy data lays at the heart of the infamous hockey stick graph used to convince everyone that the climate was undergoing unprecedented warming.  I’ve also shown how that tree ring data is provably not a good proxy of temperature.

Emails from the scientists at the CRU show they were fully aware of the divergence problem and took active steps to mask it in their models.  Ultimately these steps were expressed in the source code which was littered with special fudge factors and transformations to force the data to produce a desired result.

But the question still remains: Was the deception intentional?  Was there a conspiracy to hide the manipulations used and mislead the scientific community and the public at large?  The answer to this question rests on whether the CRU was open and transparent in its operation and embraced the peer-review scientific method.  This is what I’ll focus on in my next post.  Stay tuned…

Deflation or Inflation?

Excessive money printing will lead to inflation.  We are at risk of a Weimar Republic style hyper-inflationary crisis!

Tightening credit markets put us at risk of deflation.  Deflation was the true culprit behind the Great Depression.  We are on the brink of another deflationary collapse!

If you’ve spent any time reading economic news and blogs both the above arguments are probably familiar to you.  Both arguments seem to have at least some merit.  Which is correct?  How will the crisis unfold?

Indeed one of the questions I received on my last post, Bondpocalypse, essentially boiled down to: In the battle between inflation due to loose monetary policy and deflation due to tightening credit markets, which wins?  Stated differently, if the bondpocalypse occurs and massive debt monetization is unleashed, could the economic slowdown reduce the total money supply such that inflation is held in check or we even get deflation?

I’ve wrestled with these questions continuously over the last several years as I’ve tried to make sense of the craziness that passes as economic policy these days.  Here’s my take.

The Deflation Argument Holds Water

The premise of the argument, that economic slowdowns cause deflationary pressure, makes a certain amount of logical sense.  After all, recessions and depressions are associated with a tightening of the credit market which, in our fractional reserve system, directly reduces the money supply.

How?  Well, in a fractional reserve system only part of the total money supply is controlled by the central bank.  On top of this base central bank money, additional money is loaned into existence by the banks.  The amount of money the banks loan into existence is bounded by the reserve ratio.  This reserve ratio effectively sets a hard upper limit on how much money the banks can loan into existence.  But there’s no corresponding lower bound: People can’t be forced to borrow and banks can’t be forced to lend,

The rate at which money is created in this fraction reserve system can be measured by looking at a metric called the ‘Velocity of Money’.  The higher the velocity of money, the more leveraged money the banks are loaning into existence.

Here’s the key: If bank lending slows for any reason, the rate of growth of the total money supply will decrease and the velocity of money will fall.  If the total impact of this decrease in the money supply exceeds the new money being injected into the system, deflation results.

Thus looking at the velocity of money gives us a clear indicator of how much deflationary pressure exists on the money supply:


It couldn’t be more obvious: Velocity of money has plunged since the 2008 financial crisis.  There has been no recovery either.  Instead, in the last couple of years, the velocity of money has decreased to well below historical norms.  Banks aren’t lending (or aren’t able to lend).

The conclusion is that there must then be clear deflationary pressures on the economy.  I would conclude that the premise of the argument used by the deflationists is valid.  Clearly the ongoing economic slowdown is putting extraordinary deflationary pressures on the money supply.

So Where’s the Deflation?

Given the drastic reduction in the velocity of money, one might expect we’d already be experiencing deflation.  This is not the case.  Here’s what the money supply looks like:


The overall trend is clear – total money supply continues to increase even in the face of a drastic slowdown in the velocity of money.

The reason: Quantitative Easing (QE).  Since the onset of the economic crisis the Federal Reserve has been pouring money into the economy.  Even with a lower velocity, the printing by the Fed has served to keep the system slightly inflationary.

Government Debt

As I covered in my last post, the major use of QE is to allow for the monetization of the exponentially growing government debt:


You can read that post for all the details but the conclusion is that government debt has gone critical.  Massive interest required to service such a massive debt load.  Increasing bond yields.  Increased government expenditures.  Government debt will continue its alarming upward trajectory at an ever accelerating pace.

Inflation Versus Deflation

At last we have all the pieces to attempt to answer the question we set out with: Will it be deflation or inflation.

My belief is that, while the deflationists may at first appear to be correct, in the end inflation must win.

It comes down to two opposing forces at work:

  1. Deflationary pressure from economic downturn causing tightening credit markets and decreasing velocity of money.
  2. Inflationary pressure from debt monetization and QE.

The key is that the acceleration of these two pressures is fundamentally different.

There is a lower bound to the deflationary pressured resulting from the decrease in the velocity of money.  Once banks stop lending completely and credit markets freeze up, the deflationary impact of a decreasing velocity of money is exhausted.  I would argue further that this deflationary impact initially has a large effect which diminishes over time i.e. the curve decelerates.  The longer a crisis goes on, the less of an impact is made by tightening credit markets since those markets are already stressed.  Regardless, even if the impact on money supply is linear, it is still bounded which is the key.

But the increase required to the money supply for debt monetization has quite a different characteristic.  Clearly, as more and more debt exists, more and more money is required to service that debt.  The curve grows at an accelerating rate.  We can clearly see this already happening in the above chart of government debt.

It makes logical sense.  The amount of money required to service ever growing debt goes to infinite.  Money velocity can only slow to an absolute bottom of one which would represent a system with 100% bank capitalization and no fractional reserve. In the battle between printing and economic slowdown, printing wins.

Here’s how I visualize this tug of war:


At any point up to T1 (the point where the lines intersect), deflation can win out.  After T1, inflation dominates.

Thus, I feel that, in the end, inflation is still the lion in the corner of the room.  We are going to get mauled.  The question is how close are we to the point of intersection.  This I don’t know – and don’t believe anyone who claims to with certainty.  The reality is we could still be earlier in the above graph in which case we may see a period of deflation.  But, eventually we will cross the intersection point and enter a period of high inflation.  You can’t print money without inflation.

Recovery Won’t Save Us

Even if the economy magically recovers prior to the intersection point (fat chance), that very recovery would cause money velocity to return to ‘normal’ levels i.e. increase.  At that point all the money printing of the past would show up in the money supply as inflation.  So even recovery is, at this point, a catalyst for inflation.  There’s no way out here.  Recovery or no recovery the beast of inflation bites sooner or later once you’ve fired up the printing presses.


We’ve unleashed the inflation monster.  The collapsing economy has served to delay the inflationary impact of loose monetary policy.  It will not continue to do this forever.  At some point, recovery or not, we will have to pay the piper.  Common sense, in this case the fact that printing money leads to inflation, wins.