RUSSIA

RUSSIA

"Government has been the indispensable handmaiden of private wealth since the origin of society. And far from having embellished history with a significant exception, the government of the United States, without the camouflage of custom or tradition, ritual or dogma, Church or Aristocracy, has actually done more to prove the truth of this generalization then have all the governments of Europe."

Dr. Bella Dodd said: "I think the Communist conspiracy is merely a branch of a much bigger conspiracy." After World War II, Dodd, as a member of the National Committee of the U.S. Communist Party, had difficulty getting direct instructions from Moscow. She was told that she could contact any one of three designated persons at the Waldorf Towers. "Dr. Dodd noted that whenever the Party obtained instructions from any of these three men, Moscow always ratified them." Not one of the 3 contacts was a Russian: "In fact, all three were extremely wealthy American capitalists!" One of "the three" was later identified as Arthur Goldsmith. He created the organization (the National Committee for an Effective Congress) which wrote the 1954 charges against Senator McCarthy. Dodd stated: "I had accumulated a large store of information about people and events, and often these had not fitted into the picture presented by the Party to its members....I had regarded the Communist Party as a poor man's party, and thought the presence of certain men of wealth within it accidental. Now I saw this was no accident...this was only a facade placed there by the movement to create the illusion of the poor man's party; it was in reality a device to control the 'common man' they so rationally championed."

In 1910 the Carnegie Endowment for International Peace was formed. The initial direction of the fund was given by Carnegie to Dr. Nicholas Murray Butler. Butler got excited about the peril of the Allies in World War I and decided that the best way to establish peace was to help get the United States into the War. Norman Dodd, research director for the Reece Committee, was invited to examine the warehoused records of the Carnegie Endowment for International Peace. The minutes revealed that in 1910 the Carnegie trustees asked: "Is there any way known to man more effective than war, to so alter the life of an entire people?" The trustees ultimately decided that war was the most effective way to change people. A year later the minutes showed that the trustees asked: "How do we involve the United States in a war?" And they answered: "We must control the diplomatic machinery of the United States," by first gaining "control of the State Department." The trustees also sent a confidential message to President Wilson insisting that the war not end too quickly. Dodd also found that all high appointments in the State Department took place only after they had been cleared by the Council of Learned Societies (established by the Carnegie Endowment for International Peace). Some fifty years later it was revealed that trustees of the Carnegie Endowment for International Peace hoped to involve the U.S. in a world war to set the stage for world government. The trustees of the Carnegie Endowment for International Peace approached the Rockefeller Foundation with a plan to split domestic and international education. The Rockefeller Foundation agreed to take on the domestic portion of the task.

John Taylor Gatto has stated: "By 1910 the one room school has been destroyed. The factory school has been installed everywhere. Thanks to the actions of the great foundations, a national system of schooling was in place. The Carnegie credit guaranteed you'd have a high degree of uniformity but something else did too. There was a shadow organization in existence that has been well documented by mainstream historians. It was called the Educational Trust and it was run out of Stanford and Columbia's Teacher's College. It literally controlled all the Superintendencies in the United States and it placed key students for these jobs. The Superintendents had to guarantee, of course, to hire for all sorts of out-of-class positions, so the Educational Trust, in a very short time, became a very powerful national shadow organization controlling all the jobs in schooling. The source of this information is Managers of Virtue by David Tyack. It is an elite mainstream history, one that is not challenged by the school establishment, because Tyack is part of the school establishment. He has no wish to overthrow the system but just doing his job in documenting the existence of the "educational trust."

Stalin charged Trotsky with being a paid agent of international capitalism. R.G. Rakowski was one of the 1938 defendants.

A KGB training manual said: "Correct use of the factor of material interest requires an understanding of the psychological make-up of the American, who soberly regards money as the sole means of ensuring personal freedom and independence...to satisfy his material and spiritual needs...During the process of development, determination of the monetary income of an American is an extremely important matter."

Eliott Roosevelt stated that 1800 quarts of liquor were consumed at Yalta. Amid the eating of caviar and drinking of gallons of whiskey at Yalta (February 3-12, 1945), Stalin was given eleven nations. Alger Hiss was the top State Department official "who advised the sick and dying President Roosevelt at the fateful Yalta Conference where Stalin obtained practically everything he demand..." McCarthy later charged that at Yalta FDR and Stalin planned both the Korean War and the Vietnam War.

Charles Beard, in the October 4, 1947 issue of the Saturday Evening Post, noted that both the Rockefeller Foundation and the Council on Foreign Relations sought to prevent a repetition of "the debunking journalistic campaign following World War I." Charles Beard reacted to Harvard historian William Langer's Council History of the Second World War as the worst sort of "court history." Beard and others considered the books as internationalist propaganda. Owen Lattimore and Phillip Jessup, two professors who had worked for the State department and the C.F.R. became targets of McCarthy.

James Forrestal named names to freshman Senator McCarthy of those in the government that were benefiting Russia. On March 13, 1948, Truman issued an executive order instructing federal employees to withold loyalty and security information from Congress.

Eleanor Roosevelt said in her "My Day" syndicated column printed on August 16, 1948: "Smearing good people like Alger Hiss and Lauchlin Currie, is, I think, unforgivable."

On August 30, 1948, Assistant Secretary of State A.A. Berle, Jr. testified in the House that "Acheson was the head of the pro-Russian group in the State Department." Acheson later became senior partner in Covington and Burling. The firm was Washington legal representative for nine Communist governments.

On June 26, 1952 Senator Pat McCarran stated in the Congressional Record: "It seems there is a group in UNESCO and in the State Department, of the belief that our object should be to set up one-world government and have world citizenship."

On September 9, 1952, Bella Dodd testified that about 750 Communist teachers ran the New York Teacher's Union and exercised control over as many as 11,000 union members. From September 8, 1952 to October 13, 1952, thirty teachers appeared before the Internal Security Commitee and invoked their constitutional privilege.

On December 2, 1952, a federal grand jury stated: "Almost without exception these same subversive employees with the United nations were formerly employed in various departments of our own federal government. They were transferred from one federal department to another, finally ending up in key positions in the United Nations. The evidence shows this is not conincidental, but part of a definite, planned pattern. It appears to result from the contrivance of certain highly-placed officials who have surrounded themselves in each government agency, and then in the United Nations, with personel who shared their disloyal convictions."

In the fall of 1953, Norman Dodd, director of research for a congressional committee to investigate the promotion of world government and socialism by tax-exempt foundations, headed by Rep. Carroll Reece of Tennesee, was invited by the President of the Ford Foundation to visit its headquarters. He went to see H. Rowan Gaither (CFR) who was the President of the Ford Foundation. Dodd stated that Gaither told him: "Mr. Dodd, all of us here at the policy-making level have had experience, either in O.S.S. or the European Economic Administration, with directives from the White House. We operate under these directives here... The substance of them is that we shall use our grant-making power so as to alter our life in the United States that we can be comfortably merged with the Soviet Union." Dodd then asked if he would be willing to repeat that before the House Committee. Gaither replied: "This we would not think of doing."

Today the Russian merger is becoming very visible--it's not only out in space. What is carefully concealed is the ultimate object: "If you want a national monopoly, you must control a national socialist government. If you want a worldwide monopoly, you must control a world socialist government... 'Communism' is not a movement of the downtrodden masses but a movement created, manipulated and used by power-seeking billionaries to gain control over the world...first by establishing socialist governments in the various nations and then consolidating them all through a 'Great merger,' into an all-powerful world socialist super-state probably under the auspices of the United Nations." Ike didn't appreciate Dodd's efforts: "When Mr. Dodd began delving into the role of international high finance in the world revolutionary movement, the investigation was killed on orders from the Eisenhower-occupied White House."."When Mr. Dodd began delving into the role of international high finance in the world revolutionary movement, the investigation was killed on orders from the Eisenhower-occupied White House."

On February 9, 1950, McCarthy gave a speech to the Ohio County Women's Republican Club. It was titled "20 years of Treason." He stated: "I have in my hand fifty-seven cases of individuals who would appear to be either card-carrying members or certainly loyal to the Communist Party, but who nevertheless are still helping to shape our foreign policy." His speech was not broadcasted.

The day after his famous 1950 Wheeling, West Virginia speech, McCarthy said he wired Truman and suggested that he call Secretary of State Acheson "and ask for the names of the 205 who were kept in the State Department despite the fact that Truman's own security offices had declared them unfit to serve. I urged him to have Acheson tell him how many of the 205 were still in the State Department and why. I told the President that I had the names of 57. I offered those names to the President. The offer was

never accepted. The wire was never answered."

McCarthy withdrew his offer to give Secretary of State Dean Acheson the names. He asked what would be the use of giving the names unless their actual records could be obtained and proof shown to the people.

On February 11, 1950, Senator McCarthy sent a wire to Truman "calling upon him to furnish Congress with a list of all State Department employees considered bad security risks and asking him to revoke the presidential order." The State Department issued a heated denial: "We know of no Communist members in this Department and if we find any they will be summarily dismissed."

On February 20, 1950, McCarthy gave his colleagues in the Senate a resume of the facts from the files of 81 unnamed individuals--the 57 referred to at Wheeling and 24 additional cases.

On February 22, 1950, a special Subcommittee of the Senate Foreign Relations Committee was appointed to conduct "a full and complete study and investigation as to whether persons who are disloyal to the united States are or have been employed by the Department of State." Millard Tydings, the Committee Chairman, boasted: "Give me three days of public hearings and McCarthy will never show his face in the Senate again."

On April 15, 1950, the Daily Worker stated: "Communists are keenly aware of the damage the McCarthy crowd is doing." Gus Hall stated: "Communist Party members and all anti-fascists to yield second place to none in the fight to rid our country of the fascist poison of McCarthyism."

On May 4, 1950, Truman announced that loyalty files would be made available to the Committee. McCarthy charged that the files had been "skeltonized" and "tampered with."

On July 12, 1950, McCarthy released the documents on which he based his charge that the files had been stripped. He provided affidavits from 4 temporary employees who had been assigned to a "file project" whose purpose was to remove derogatory information from the files of State Department employees.

Senator McCarthy said: "How can we account for our present situation unless we believe that men high in Government are concerting to deliver us to disaster? This must be the product of a great conspiracy, a conspiracy on a scale so immense as to dwarf any previous such venture in the history of man. A conspiracy of infamy so black that, when it is finally exposed, its principals shall be forever deserving of the maledictions of all honest men..." In his book, America's Retreat From Victory, the Story of George Catlett Marshall, McCarthy centered on Marshall--believed by many to be the tool of Bernard Baruch and Mrs. Anna M. Rosenberg. He opposed Rosenberg's appointment was Assistant Secretary of Defense. McCarthy also attacked Drew Pearson and Edward R. Murrow.

The counter-offensive keyed in on objecting to McCarthy's methods of the smearing of individuals with guilt by association. McCarthy replied that he had not been provided the name of a single individual who had been smeared or irresponsibly charged. A $10,000 reward was offered by the Constitutional Educational League of New York for any person who could prove that McCarthy had called anyone a Communist or a Communist Froner who, in fact, was not. The reward was widely publicized from coast to coast. No one ever claimed that reward.

In 1952 Prince Bernhard visited the U.S. and obtained a friendly reception from CIA Director Walter Bedell Smith. Smith was an old friend who had been Ike's wartime chief of staff. Since he was busy helping to organize the Ike administration, Bedell turned Bernhard over to the special assistant to the president for psychological warfare--C.D. Jackson (former publisher of Fortune, managing director of Time-Life and president of the Committee for a Free Europe). The Prince was approached by a Polish agent (Joseph H. Retinger) shortly after Senator McCarthy (R-WI) gave his historic speech in Wheeling, West Virginia. Alden Hatch said the Prince lamented that "governments of the free nations are elected by the people, and if they do something the people don't like they are thrown out. It is difficult to re-educate the people who have been brought up on nationalism to the idea of relinquishing part of their sovereignty to a supranational body...This is the tragedy. Due to the freedom and democracy we cherish we aren't able to acheive what we all basically want to do...We are moving toward unity, but we crawl like snails when we should run."

Prince Bernhard fully supported Retinger's proposal for an international meeting. Consequently, they formed a committee to organise a plan. In 1952, Bernhard approached the Truman administration and briefed them about the meeting. Despite a positive reception, it was not until the Eisenhower administration when the first American counterpart group was formed. The two key role-players in the US group were General Walter Bedell Smith (Director of the CIA) and C. D. Jackson. Both (European-American) groups working interactively set out to fulfil Retinger's initial plan. C. D. Jackson (a member of the CFR), in an attempt to regain the international delegates' confidence, stated: "Whether McCarthy dies by an assassin's bullet or is eliminated in the

normal American way of getting rid of boils on body politics, I prophesy that by the time we hold our next meeting he will be gone from the American scene."

In an April 19, 1953 article, A.J.P. Taylor said the establishment "talks with its own branded accent, eats different meals at different times from the rest of the populace, has its

privileged system of education, its own religion, its powerful offices both visible and invisible." In the U.S. it survived the assault of Sen. McCarthy and emerged as the New Frontier under JFK.

In July 1953 Professor Colin Clark, an Australian political economist, said that in the British Commonwealth countries and in the United States "academic Marxism--or crypto-Marxism--is stronger than ever."

In July 1953 The Atlantic Monthly published an article by the Honorable Joseph S. Clark, Jr. entitled "Can Liberals Rally?" Clark defined a liberal as "one who believes in using the full force of government for the advancement of social, political and economic justice at the municipal, state, national, and international levels...A liberal believes that government is a proper tool to use in the development of a society which attempts to carry Christian principles of conduct into practical effect." He also said: "It is significiant that what used to be called history' is now social studies.' Spiritually and economically youth is conditioned to respond to a liberal program of orderly policing of our society by government, subject to the popular will, in the interests of social justice." In July 1953 Professor Colin Clark, an Australian political economist said that in the British Commonwealth countries and in the United States "academic Marxism--or crypto-Marxism--is stronger than ever.

Robert Tenbroek Stevens, Secretary for the Army, who brought charges against Joseph McCarthy, was a trustee of the Rockefeller Foundation. Stevens alleged that McCarthy and his counsel, Roy Cohn, sought preferment in the Armed services for David Schine who was a volunteer investigator of Communist espionage. In August 1953 the Nelson Rockefeller entourage openly boasted that they had McCarthy "framed" and would destroy him.

In August 1953, the World Association of Parliaments for World Government met in Copenhagen, Denmark. A resolution was passed calling for the adoption of a world government. Adam Clayton Powell, a member of Congress, was vice-president after having his name on the masthead of the executive committee of the Communist Party.

The first Bilderberger Convention was held in May 1954. Foreign affairs analyst Hailaire du Berrier noted that all journalists are sworn to secrecy and "cannot tell his readers what is going on, the only point in having him there is to prepare him for selling the policies decided upon by the One World moguls." C.D. Jackson, a Time, Inc. executive and close friend of Ike was a speaker at the first meeting. He told delegates: "Whether McCarthy dies by an assassin's bullet or is eliminated in the normal American way of getting rid of boils on the body politic, I prophesy that by the time we hold our next meeting he will be gone from the American scene." Professor Medford Evans said that the essence of the Bilderbergers was "internationalism" while McCarthyism represented "patriotism." McCarthy had interupted the work of dismantling American sovereignty. George McGhee (CFR) told Hatch that the Treaty of Rome was nurtured at the meetings. Ike said "he Bilderberger meetings enlightened me..." On occasion the Rockefeller mansions at Pocanto Hills in New York State have been the site for secret Bilderberger meetings (the Rockefellers have about 100 residences internationally).

On January 21, 1954, a "get McCarthy" meeting was held in the office of U.S. Attorney General Herbert Brownell. Others present were Henry Cabot Lodge (UN Ambassador), Deputy Attorney General William Rogers (later Nixon's Secretary of State), Sherman Adams and Gerald Morgan (White House aids) and John G. Adams (Department of the Army counselor). John Adams was assigned to start compiling notes to be used to file charges on McCarthy. Richard H. Rover wrote a book entitled Senator Joe McCarthy. He called McCarthy a bully, a seditionist, a species of nihilist, a screamer, a political thug, a master of the mob, a black arts practitioner, a champion liar, a prince of hatred, possibly a homosexual, an outrageous fourflusher, a heavy drinker and a demon. The Socialist Norman Thomas was called a "devoted champion of liberty and decency."

The March 1, 1954 UN Bulletin stated that the U.S. had signed the Genocide Pact. The signing was done by the U.S. UN representative.

In the Spring of 1954, Bernard Baruch prevailed on McCarthy's friends to arrange a vist to him by McCarthy. This was at a time when McCarthy was investigating subversive activities at Fort Monmouth where a number of those engaged in a radar program were graduates of Baruch's alma mater (City College of New York). According to the Jewish Examiner, Baruch refused to shake McCarthy's hand and then told him that "if he persisted in his unfair attacks on his alma mater he, Baruch, would consider it a personal attack and conduct himself accordingly." About two hours after this meeting, Senator Ralph Flanders of Vermont launched his attack on March 9, 1954.

On March 26, 1954, the B'nai B'brith Messenger stated: "Almost 100% of the names turned up by Senator McCarthy's Committee on Subversive activities happen to be Jewish." It was admitted that there was no direct evidence that "Blundering Joe" "has ever expressed himself in any anti-Semitic terms..."

On April 2, 1954, an editorial titled "The Battle's Won" spoke of nailing Mr. McCarthy. It also referred to the vigorous action taken after the infamous ruling of Ulysses S. Grant. The Communist Daily Worker quoted Truman: "McCarthyism is the corruption of truth, the abandonment of the due process of law. It is the use of the big lie and the unfounded accusation against any citizen in the name of Americanism or security. It is the rise to power of the demagogue who lives on untruth; it is the spread of fear and the destruction of faith in every level of our society...This horrible cancer is eating at the vitals of America and it can destroy the great edicfice of freedom."

On April 22, 1954, the Army-McCarthy hearings began after McCarthy questioned the Army's decision to promote a suspected Communist.

In the May 1954 issue of the American Mercury, J.B. Matthews wrote: "It is fair, for example, to call attention to the fact that one of Eisenhower's collaborators in the writing of his book, 'Crusade in Europe,' was Joseph Barnes, then the foreign editor of the New York Herald-Tribune. For many years prior to this collaboration, the pro-Soviet record of Joseph Barnes was notorious."

On May 17, 1954, Ike issued an an Executive order prohibiting testimony at the hearings from an member of the Executive branch--without prior permission.

On July 30, 1954, the charges introduced against McCarthy had been written by the National Committee for An Effective National Congress. This group was created by Arthur Goldsmith who had been revealed by Dr. Dodd as (one of three men) having the power to make decisions for the Communist Party of the U.S. On July 30, 1954, Senator Ralph Flanders introduced a 46-count resolution condemning McCarthy for "conduct unbecoming a member." At the end of the hearings, McCarthy was censored on two of the counts. Of the 81 security risks alleged by McCarthy, 57 cases were later summoned by a Loyalty Board and 54 resigned under fire. By November 1954, all 81 had left government employment by dismissal or resignation.

The Committee for an Effective Congress, headed by Joseph Rauh and Maurice Rosenblatt, had 800 donors--750 of which were Jewish. In the Fall of 1954, Gregory G. Burns of Los Angeles published a list of nearly 300 organizations committed to destroying McCarthy. Joseph Rauh, Jr. was a prominent liberal bow-tie wearing civil rights Washington, D.C. attorney who gained national fame by representing several high-profile actors and writers during the McCarthy hearings. Maurice Rosenblatt is President of the Committee for the Study of the American Electorate.

Congressman Cox died before the investigation of the foundations got under way. Carroll Reece became ill and his investigation was shut down. On August 2, 1954, Reece stated: "(I)t seems to have become an affront for a Congressional committee to dare to subject foundations to criticism. Perhaps Congress should admit that the foundations have become...more powerful than the legislative branch of the Government."

In January 1953, a Republican-controlled 83rd Congress convened. On April 23, 1953, Tenneseean Congressman Carroll Reese (Rep.) introduced a resolution to carry out the "unfinished business" of the Cox Committee.

Professor George A. Lundberg, in Social Forces, April 1953, said regarding Tansill's statement that the "main objective in American foreign policy since 1900 has been the preservation of the British Empire" that: "This thesis is documented to the hilt in almost 700 large pages." Only two publishing companies, the Henry Regnery Company and the Devin-Adair Company, showed a consistent willingness to publish books dealing truthfully with World War II. In April 1953 an example of Rand Corporation as part of the "Ministry of Truth" was published in the American Historical Review.

In July 1953 a Special Committee to Investigate Tax-Exempt Foundations was created.

On July 25, 1953, Congressman Reece of Tennessee discussed the Encyclopedia of Social Science which had been produced in consecutive voumes during 1930-1935. Alvin Johnson, the ditor, stated in Pioneer's Progress (pp. 310-312) that two of his assistant editors were Socialists and the other a Communist. In the series, described by Reese as "a sort of supreme court of the social sciences," subjects on the left were assigned to leftists while subjects on the right were also assigned primarily to leftists. On July 27, 1953, the Reece Committee was approved by Congress. The proceedings of the Reece Committee were disrupted by Congressman Wayne Hays who admitted to Rene Wormser that the White House had called him and asked him to help "kill the Committee."

In the 1950's Congressman Carroll Reece of Tennessee headed the Reece Committee to investigate major tax-exempt foundations linked to the same people who controlled the Federal Reserve: the Rockefeller, Ford, Carnegie, and Guggenheim foundations. These foundations served as tax shelters for the wealth created by the international banking cartel." The Reece Committee discovered that a great deal of the research in the social sciences, public education and international affairs that these foundations supported promoted ideas that advocated socialism and globalism....Rene' Wormser of the Reece Committee stated that the influence of the major foundations had "reached far into government, into the policymaking circles of Congress and into the State Department."

On July 30, 1953, a report was issued by the Senate Internal Security Committee. It stated: "The Soviet international organization has carried on a successful and important penetration of the United States government and this penetration has not been fully exposed. This penetration has extended from the lower ranks to top-level policy and operating positions...Despite the fact that the Federal Bureau of Investigation and other security agencies had reported extensive information about this Communist penetration, little was done by the Executive Branch to interrupt the Soviet operatives in their ascent in Government..."

The report of the Reece Committee found "vast propaganda, by supplying executives and advisers to government and by controlling much research in this area through the power of the purse. The net result of these combined efforts has been to promote 'internationalism' in a particular sense--a form directed toward 'world government' and a derogation of American 'nationalism.'" The final report of the Reece Committee charged: "It is the conclusion of this committee that the trustees of some of major foundations have on numerous occasions been beguiled by truly subversive forces. Without many of the trustees having the remotest idea of what has happened, these foundations have frequently been put to uses which have adversely affected the best interests of the United States...used to undermine many of our most precious institutions and to promote radical changes in the form of our government and our society." "It is difficult to realize that great funds established by such conservative individuals as Rockefeller, Carnegie, and Ford have turned strongly to the left. It appears to have happened largely through a process of administrative infiltration and through the influence of academic consultants of leftish tendencies. The trustees of these foundations with a few possible exceptions could not have intended this result. It seems to us that it must have happened through their lack of under-standing or through negligence." "It would be interesting to aggregate the total funds poured by the foundations into the dissemination of leftist propaganda and compare it with the trickle which flowed into the exposition of the fallacies and frailities of collectivism."

In January 1954, Congressman B. Carroll Reece asked Norman Dodd: "Do you accept the premise that the United States is the victim of a conspiracy?" Dodd replied: "Yes." Reece then said: "Then, you must conduct the investigation on that basis." B.E. Hutchinson, who was chairman of Chrysler Corporation and favored the investigation, still warned: "If you proceed as you have outlined, you will be killed." "The foundation world is a coordinated, well-directed system, the purpose of which is to ensure that the wealth of our country shall be used to divorce it from the ideas which brought it into being. The foundations are the biggest single influence in collectivism."

In September 1954 the sub-committee on internal security found that the FBI had made seven reports on the Communist underground activities of Harry Dexter White. Truman said the FBI wanted White retained on the IMF so he could be watched but J. Edgar Hoover testified that Truman's statement was false.

The Marxist Guardian once noted: "In discussing the Trilateral group, the author of one commission report noted that 'it does not envisage a new anti-communist alliance; indeed, at some point in the future the more advanced communist states might choose to become partners.'"

In 1993 Boris Yetsin ordered tanks to fire on dissident parliamentary leaders.

In Russia peddling of state businesses is reported in August, 1997. Yetsin was provided with campaign money for his re-election by big business tycoons. The large Rosneft oil company is one of the businesses that will be sold. The sale is necessary so the government can pay back-wages to workers. Tighter rules for selling state property resulted after the sale of a 25% stake in the giant Svyazinvest telecommunications company and with the August 5th auction of a controlling interest in Norilsk Nickel--the world's largest nickel plant. The former was bought by a consortium led by Oneximbank (its president, Vladmir Potanin, until March 1997 was first deputy prime minister). Investors included Germany's Deutshe Banks ands U.S. billionaire George Soros (put up half the money).

The price paid was $700 million more than the minimum asking price.

In mid-October 1997, three former U.S. secretaries of state warned in Houston that the lack of enthusiasm by Americans for foreign affairs was short-sighted because an ever-expanding global economy has a profound effect on the United States. James Baker, Henry Kissinger and Warren Christopher met at an annual conference at the Baker Institute of Public Policy at Rice University. Gorbachev was also present and was given an award. Baker said the U.S. needed to continue its internationalist foreign policy because of its economic benefits to Americans.

In late May, 1998, Russian pensioners were pictured selling vodka in downtown Moscow. The trading on the Russian market "is almost exclusively a bazaar for the very rich." On May 28, 1998, the ruble was "fixed" at 6.149 to the dollar. Falling oil prices have hurt income from exports. The Central Bank had $14 billion in foreign reserves (down from $23 billion in October 1997). Russia has borrowed heavily from U.S. and European banks. On May 26, 1998, the 75% stake in the Rosneft oil company was offered but no bid was received. In June it will be offered again for $1.6 billion (compared to earlier price of $2.1 billion).

Early in June 1998, the Clinton administration endorsed new help for Russia as the IMF held an emergency meeting in Paris. On June 2, 1998, the Russian market rose 12% after Yetsin gave a tongue-lashing to powerful Russian business tycoons. The week before Yetsin fired the head of Russia's tax collecting department and replaced him with former Finance Minister Boris Fyodorov whom Treasury Secretary Rubin called "strong-minded."

In July 1998, the IMF agreed to provide a $22.6 billion bail-out package to Russia.The aid was tied to reform promises made by now-ousted Prime Minister Sergei Kiriyenko.

Around August 14, 1998, the ruble was trading 6.2 to one dollar. The total Russian reserves were $15.1 billion at this time.

Sometime in August, George Soros stated that Russia should devalue its ruble which had declined 75%. The London stock market was at the lowest level since January 1998. China's exports were down by 66%. Fears that China would devalue were of concern because it would raise the price of U.S. exports to China and hurt U.S. trade. Marshall Goldman, a Harvard expert on Russia, said Soros had a $2.5 billion stake in Russia, including a $1 billion investment to buy telecommunications. He also said the average Russian has no stake in their stock market; it is a place for investment by elites. Russia earns its hard currency by exporting oil, gas and metals. During 1997-1998 industrial production in Russia was increasing. Now it is down. Russia no longer has a trade surplus like it did in the past. Even though the IMF gave twice as much aid as expected, a crisis remained. Clinton must help Russia. There is no quick fix. When the DJIA dropped by 93.5 points, Russia was blamed. Black Thursday caused a suspension of trading. Comments were made by a CEIP spokesman. In the last 2 weeks $2 billion left Russia. Bears predicted a global recession lasting 3-6 months. Said to avoid oil, paper and metals--anything used for building. The Japanese have $5 trillion in savings. Japan has a 80:100 price-to-earning ratio for its stocks.In the U.S. it is 25:100. Soros is buying U.S. treasuries.

On August 19, 1998 it was observed that Yetsin had said last Friday that the ruble would not be devalued. Glifford Grady, of the Brookings Institute said that we always given the Russians more money. Meanwhile in the U.S. it was said that there was a high real interest rate when compared to inflation. Milton Friedman said that Greenspan was doing a good job He said a 7% growth rate would be too high--5-6% would be about right. The interest rate is a poor indication of inflation. Friedman blamed the IMF for the condition of the Asian economy. He said investors got confident they would be bailed out from the Mexico bailout. Should abolish the IMF because it is just making bad loans worse. Nothing is as permanent as an international agency. It is a lender of last resort that is doing a lot of harm. In other news, 75% of the stocks were down despite the indexes. DJIA up 140 points. Bear Bill Fleckenstein, President of Fleckenstein Capital, said the U.S. was in the aftermath of a bubble. Said most recessions were caused by high interest but now U.S. has too much capacity. Predicted a surprise on high tech stocks. Charles Shultz of the Brookings Institution said boons can be bad. Too many loans being made by banks. Should raise their lending requirements.

On August 20, 1998, U.S. housing starts at 11-year record high. Dell stock is on an up curve. It is beating earning estimate and keeping tight management of inventories. Planning a factory in China. Panic is beginning in Moscow as the market dropped 9% in weak trading. Russia has a formula to repay its debt with dollars and rubles. A narrow tax base. Russia and France not helping in Iraq.

On August 21st, Clinton declares war on terrorism. The battle is joined. Pre-emptive retalitory strikes and there will be no refuge on the planet for any terrorists. The Speaker, John McCain and Jessie Helms support the missle attack. Orrin Hatch (Utah) said Clinton "did what was right." Arlen Specter says you have to remember "Wag the Dog." Soldiers are being given Antrax vaccinations. Osama bin Landin is alive and well. DJIA drops 81.87 and then 77.76 points. Investors get uneasy when U.S. starts throwing bombs around.

The world is "increasingly unsafe." Yetsin is in trouble. Prices are up 10-20% in Russia. Most food is imported. Strikes in streets. Yetsin on vacation.

On August 25, 1998, it was reported that the Russian stock market was at its lowest level. Interest rates were as high as 150%. Yetsin said the ruble must remain "firm." Bill Richardson warns that any nation that harbors terrorists "will get hit real hard."

On August 17th a controlled devaluation was announced by the Central Bank. It promised not to let the ruble fall below 9.5 to the dollar.

On August 23, 1998 (Sunday), Boris Yetsin fired his entire cabinet and brought back Viktor Chernonyrdin as Prime Minister designate. He is connected with the rich Russians at a time that Parliament is "testy." CEIP comments on Russia. Rich industrial oligarchs. May Russian banks will fail. Some $11 billion in back-pay is owed to Russian workers. Blair Pethel, Senior financial reporter for Bridge News says that severe restructuring would be needed but the Duma is resisting just like in Japan. Flight is to quality U.S. bonds and shares.

Two days later, on August 25th, Russia announced a plan to restructure about $40 billion in short-term domestic debt held by domestic and foreign investors. Disappointment is expressed about Russian debt arrangements. Some communists may be put in the cabinet. Banks set interest rates 3% about the Fed Funds rate set by the Fed. There are super buys in Thailand--a fire sale. The Japanese bailout will require public funds. S. Korea is next target of U.S. banks.

Steve Hanke of Johns Hopkins says to make dollars legal tender in Russia. Two-thirds of savings are in mattresses in Russia. Be easier to fix the Russian economy if they had the old Communist setup again. Canadian dollar at record low with lower interest rates. Carla A. Hills says we need "fast-track" because one third of U.S. growth comes from abroad.

In the final week of August, 1998, Russians were picturing lining up at their banks trying to get access to their money. Currency trading was suspended by the Russian Central Bank on August 26th after falling 5% against the dollar and after plunging 10% the previous day. The government, on August 26th, failed to make payments on longer-term debt that previously had not be affected by the crisis. At the time the Moscow Interbank Currency Exchange suspended the ruble, it was trading at 8.26 to one dollar. On the street the exchange rate was ten rubles for a dollar or even higher. The Central Bank said it was low on "hard-currency reserves" and could no longer afford to protect the ruble. Since August 17th, the Central Bank had spent $1.8 billion from its dwindling supply of of foreign currency and gold reserves. Hundreds of commercial banks and currency-exchange places closed. One American investment analyst was quoted: "It has the distinct feeling of a party at 4 a.m. after the apartment has been trashed and the guests have left."

Yetsin is said to be too weak to remain. DJIA down 79.30 points. Russian banks have negative equity. Meeting with IMF again after six previous deals. So far $31 billion from IMF. Michael Metz, Managing Director of Oppenheimer CIBC says corporate earnings won't grow. Says Brady Bonds are very attractive. Also Penzoil, Swift, Texas Utilities and Slumberge. The Republic Bank of New York is big loser in Russian default. Will make $155 million in charge-offs. Anders Auslund of CEIP comments.

In Russia it is against the law to pay for goods and services; merchants are not allowed to accept them. Russians are largely paid in rubles. Yet although the ruble is the legal tender in Russia, the people want to accumulate U.S. dollars, instead. Dollars are as widely circulated as rubles. One Russian newspaper called the dollar "our national currency." They are used as a form of "cookie jar savings." Business news reports that two-thirds of the savings of Russians are kept under their mattresses. After the August 17th announcement that the ruble would be "allowed to float" American banks in Russia no longer made dollars available. The dollar remains available to large Western companies doing business in Russia, however. The price of the dollar is rising as the ruble falls in value. It is feared that the exchange rate for the ruble will decline still further to 15 to one dollar by September.

Further ruble devaluation means higher prices mainly for imported goods. It also makes the salaries and pensions of Russians worth less. Russians are stocking upon many kinds of goods.

The day before the U.S. stockmarket fell more than 300 points, it was said that the U.S. stake in the Russian economy was "quite small." Only 1% of U.S. trade occurs with Russia. The U.S. banks have only $7 billion in Russian loans compared to total debt owed by other countries amounting to $257 billion. The entire Russian stock market is worth only about $14 billion. However, 40% of U.S. farm products are exported to Russia.

On August 27, 1998 the DJIA fell 357 points (352 before noon). The 4% loss ($430 billion in lost value) was the third largest drop in history. Second heaviest trading day. J.P. Morgan stock down more than 13 points. Melt-down in Moscow is blamed. Communism has gone from communism to chaos. Latin America down 10%. CRB at lowest point in 21 years. Mutual funds will sell off stocks and take their losses in October. Stocks 35% about value in U.S. Yetsin may resign. Not seen in public since Monday. Bruce Bean said it was o.k. tobring in Communists. Russians are being refused at banks when they come in to withdraw their money. BOE has troubles with inflation. PBS says coalition government in Russia likely as Yetsin goes out of sight. The misery in Russia is just beginning. Foreign buyers may not be able to buy U.S. products. Germany, Russia's biggest creditor, said no more money for Russia until it makes reforms. Samuel Berger says time for reforms. Large institutional investors are selling stocks and going to bonds. Safe haven for parking money during storm. Jeff Shafer, Salomon, Smith Barney International says very bad for Russia. General liquidation. Russia is trigger combined with poor U.S. earnings. Goldielocks economy--not too cold, not too hoit--just right. Small investors buying.

On August 28, 1998, it was said that Russia had defaulted on its ruble-denominated debt. Institutions that had bought Russian public debt saw their holdings fall to around ten percent of their worth.

On August 28, 1998 it was said that Strobe Talbot (CFR/TLC) was Bill Clinton's advance man in Russia. Talbot, a CFR Director, was former U.S. Ambassador to Russia. Yetsin was going no where but was coming under increasing pressure. Talbot said Yetsin would not run in the year 2,000 and that the communists had said he had to go. Yetsin had agreed to a government economy with state ownership and printing new money at fixed exchange rates. Bill Clinton visits his friends in good and bad times. He won't have any money to bring with him but will urge the making of reforms. Panel on Russia includes David Remick (The New Yorker), David Kramer (CEIP) and Peter Reddway. Some banks have lost several billion dollars. U.S. personal spending is down for the first time in two years. Ugly end to brutal week on Wall Street. $636 billion in value lost in one week. Charles Blood of Brown Brothers Harriman. J.P. Morgan and Citibank stock down. Small investors are getting out. Pulled $2.2 billion from mutual funds.

On August 28, Anatoly Chubais, the darling of western economists and main architect of the privatization since 1991, was fired as chief financial liason to the West. He retained his job as head of the Russias electricity utility.

Yetsin will finish his term but will hand over some powers including the naming of the Russian cabinet. Michael Camdess (IMF) says Russians should work with their private creditors. IMF will give more money if they agree to make reforms. Bank of America has lost $200 million. Big banks have 34% loss. Hedge funds invested in Russia. Three Texas funds by Daniel Maginess have filed for bankruptcy. Daniel Yergin, Chairman of Cambridge Energy says yetsin is in his last scenes. Robert Hormats, Vice-Chairman of Goldman Sachs, says there will be hyperinflation if Russia prints money. The lower house of the Russian Parliament, the Duma, is dominated by the communists. Hormats says to restructure the banks and collect taxes. Military is not being paid and may sell nuclear and other assets to get money. Traders out of control and must react to global conditions.

Yetsin's government said it would not be able to pay its dollar-denominated debt. Banks, threatened with collapse, suspended some operations.

Power grab by Duma. No dismissal of Duma for an entire year. Default in Russia. World economy is weak. Charles Blood is bearish. Flight for quality from equities (stocks) to bonds. Meanwhile, although the Democrats need only eleven seats to regain control over the U.S. House, they are now willing just to escape with their hides. Communists have reneged on their deal with Yetsin. The deal called for Yetsin to retain three cabinet appointments--the minister of defense, foreign affairs and internal security. In exchange Yetsin would agree to seek Duma approval for most other cabinet appointees. But no deal on the surrender of unprecedented powers. The communists were not satisfied with the offer. The communists hold 138 seats in the Duma (out of 450). If the Prime Minister is rejected three times, the president must call for new elections (now scheduled in late 1999). Economy in state of collapse. Just as Russians were starting to live the good life this happens. Russia is building nuclear reactors in India.

Soviet-style controls on the economy were urged. U.S. Ambassador James Collins met with the head of the Communist Party--Gennady Zyuganov. The deal may include price and currency controls, nationalization of some banks and printing more rubles. Al Breach of the Russian-European Center for Economic Poliy was quoted: "The infrastructure is completely rotten, and the whole place is living on debt. And now it is going cold turkey. The long winter will be the real test here." The IMF is scheduled to deliver $4.3 billion out of $22.5 billion agreed to in July.

Boris Berezovsky, a 52-year-old billionaire who helped finance Yetsin's 1996 campaign,

has emerged as the power behind the throne. He and others engineered the return of Viktor Chernomyrdin to protect the status quo. On September 1, 1998. Clinton aides met with the banking and media mogul.

On August 24th the ruble was worth $.14. By August 31th it was only worth 6.6 cents.

On August 31, 1998, money is going into bonds. They are liquid and provide an adequate return for investors. Comments on Russia by Walter Russell Mead (CFR). Lost earnings from weak exports. Consumers cutting spending in U.S. Russia is 1% of U.S. market for exports. Miners are unpaid and have been camping out in Moscow. Now 15 rubles to one dollar. Abby Cohen of Goldman Sachs says "We're all connected." She uses phrase "sustainable growth." No one can pick the bottom of the market. DJIA down 512.61 points. 6% loss. 7-1 ratio of declines to advances. NASDAQ down 9%. Institutional (large) investors are dumping their stocks. Nearly $2 trillion lost in past six weeks. We must help the rest of the world. $4.6 billion in hedge funds invested in Russia. Lawrence Lindsey, former Fed Governor, says Japan Central Bank must protect their big banks. It is independent from politics. Russia is now insolvent. Soros has written his investments down to zero. Bankrupt.

Gail Dudack of Warburg, Dillon Reed says to hold on to stocks. 20 months of stock profits have been wiped out. No time for emotion. Interviewed again next day. The TV bear who was gone but now is back, Michael Metz, CIBC Oppenheimer, says lots of Americans in market with very little personal savings.

On September 1, 1998, 44% of U.S. households are invested in the market now. The pitch is don't sell. The economy is still strong. Keep spending (borrowing).$3.6 billion has been withdrawn from mutual funds by small investors. One investor is quoted: "I'm not in a panic. Let my heirs worry." Stocks now 25% of the average household's assets. Strike in Russia at nuclear plants. Must get all the nuclear material away from irresponsible Russians. Judge may holdClinton in contempt for his testimony. She hasn't decided yet. In Russia, Clinton tells them not to print money and to pay their taxes. Strobe Talbot says: "It is not over, to put it mildly." In U.S. mandatory hurricane evacuations. Prize letters are fraudulent even though signed by Ed McMan and Dick Clark. American Family Publishers is 50% owned by Time Warner.

Russians are buying their children clothes for the start of school. It costs them a month's salary. Food prices going up. Boys wear suits. 1st day of school is big day in Russia.

Wall Street recovers 4%. DJIA up 288 points. Goldman Sachs is encouraged. Ratio 5-3 of gainers over losers. Record borrowing binge. Borrowing to buy stocks. Margin calls on Monday 3-4 times normal Bankers Trust hit $350 million for Russia. Citicorp hit $200 million. Morgan Stanley has $110 million loss. All big bank stocks have been going down. All invested in Russia?

Stanley Fischer, First Deputy Managing Director of the IMF, interviewed. What can the U.S. do? There is no government in Russia. Russia should "do" the reforms. The IMF has a team that will be arriving late next week to look over Russia. For now lots to do before the IMF money will be "released." Problem in Russia is no revenue (tax resistance). Russians cannot be unorthodox. Must have a decent budget when you can't borrow. Korea and Thailand are biggest IMF success stories. Corporate debt unmanageable. The IMF is run by governments. $18 billion in IMF funding is now before Congress.

The suckers are being sold on a "strong economy." Bear trap or big rallies ahead? Abby Cohen of Goldman Sachs and a J.P. Morgan spokesman both say to buy stocks. Merrill Lynch and Charles Minter, Chairman of Comstock says to sell stocks. Oil goes up 40 cents a barrel. Various stock analysts say few bargins, be long-term, there are buying opportunities and to wait one year before buying any stocks. A partial comeback. Bankers Trust announces a loss. Cohen says Russia is only 1% of U.S. trade. Major economies are o.k. Europe is improving. No sign of domestic deterioration. Buy NationsBank and Delta Air Line stocks.

Lawrence Lindsey on PBS says you have to sell some stocks to pay debt. Ron Blackwel of AFL-CIO says consumers are "loaded" with debt. Wages went up 2.5% in 1997.