Thursday, February 14, 2008

Too Short A Lifeline

Too Short A Lifeline

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The nation is in a mortgage crisis. More than one out of every 14 mortgages "are delinquent as of the end of September -- a 30-year high." According to the Federal Reserve, "another 2 million families could face foreclosure in the next 2 years." In an effort to stem this tide, Treasury Secretary Henry Paulson this week announced "Project Lifeline," a voluntary private sector initiative. Six major mortgage lenders have agreed to send letters "to truant borrowers detailing how they can 'pause' the foreclosure process for 30 days while the bank evaluates whether they're eligible to modify their loan on better terms." Yet like other Bush administration "solutions" to the economic crisis, this one is nothing more than a short-term "voluntary breather" and would perhaps be more aptly called "Project Band-Aid." "Homeowners at risk of foreclosure are floating 50 feet from shore while Project Lifeline throws them a 30-foot rope," said Sen. Dick Durbin (D-IL). "We need a plan that goes further."

MORE THAN MARKET ADJUSTMENT: Earlier this week, the White House released the rosy President's Economic Report. "The best course of action is often to simply allow markets to adjust," the report said. "Markets naturally self-correct, rewarding good strategies and punishing bad ones. ... [A]ny government actions mitigating the outcomes of risky behavior may create perverse incentives for reckless decisions by borrowers and investors who may come to rely on government interventions." But the current mortgage crisis needs more than this voluntary, markets-based approach. As David M. Abromowitz and Andrew Jakabovics at the Center for American Progress note, "Markets will do their part, but not if they are frozen by a freefall in home prices that sucks in otherwise responsible homeowners. Homes are not just another commodity; when widespread foreclosures drive whole neighborhoods into rapid decline." During the 30-day pause, banks will presumably modify the loans to make them more affordable in the long term. But if history is any guide, this outcome is unlikely. Lenders did very few loan modifications in 2007, at the height of the foreclosure crisis. Moody's, the rating agency, notes that at the end of September, just 3.5 percent of loans reset in 2007 had been modified. "What they actually will do is anybody's guess," The New York Times concludes about Bush's voluntary program.
TOO LATE FOR 'TRUST ME': Last May, Senate Banking Committee Chairman Christopher Dodd (D-CT) convened a meeting of major banks and loan servicers that "promised to 'create a permanent solution,' wherever possible, for troubled subprime borrowers." When the industry fell through on those promises, the Bush administration announced "Hope Now" last fall, another voluntary initiative to "delay interest rate increases for borrowers who hadn't yet gone into default." Project Lifeline involves those same lenders. "If the industry had kept the promises they made last May, the other two efforts might not have been needed," writes The New York Times. "So it's unclear why the administration continues to believe that urging the industry to do more is the most effective way to cope with the foreclosure crisis." Additionally, over the past two months, just 36,000 borrowers have taken advantage of a Hope Now toll-free hotline helping borrowers work out loan troubles. But "fewer than a third of those have actually gotten far enough along in the conversation to get advice for a loan workout." According to Carrie Guzman who works for ACORN and advocates for people dealing with foreclosure, Project Lifeline is too little, too late. "Usually once you've hit that 90 days, it's less than 30 days before your sale of share is set," said Guzman, "and the way this plan is written, it excludes people that are within 30 days of the sale, so it gives people very little time to be able to respond."

LENGTHENING THE LIFELINE: Today, Paulson will be testifying before the Senate Banking Committee. "The members of the committee should quickly disabuse him of any notion he may have that he's doing enough," writes The New York Times. "He should be asked to explain, specifically, what will be different at the end of Project Lifeline's 30-day timeout." American Progress has proposed two plans to restore equilibrium to the housing market. First is the SAFE loan program, which "is modeled after the New Deal's successful Home Owners' Loan Corporation" but uses existing government resources to "purchase pools of loans at current valueGARDNS, Fund, which would help homeowners in low- and middle-income neighborhoods by providing "money to local housing authorities and non-profit organizations to buy foreclosed properties from banks and return them to productive use as affordable housing."
and refinance those loans that are in default or have negative equity into fully amortizing, fixed-rate loans based on the current value of the property." Second is the Great American Dream Neighborhood Stabilization, or

Thousands of New Prisoners Overwhelm Iraqi System

Thousands of New Prisoners Overwhelm Iraqi System

By Solomon Moore

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Baghdad - The increase in American troops in Iraq over the past year has been accompanied by waves of new Iraqi detainees, inundating the country's already overburdened prisons and courts, American officials said Wednesday.

American advisers say Iraq's nascent justice system does not have enough prison beds, investigative judges or lawyers to absorb the thousands of suspects that have been detained since last summer by the augmented American and Iraqi security forces. More than half of the 26,000 prisoners are still awaiting trial, and some have languished for years, American officials said.

The Iraqi legislature approved an amnesty on Wednesday that could free thousands of prisoners. But American officials warned that the Justice Ministry would still require tens of thousands of new prison beds to consolidate detainees being held throughout the country by various agencies, including the police and the army.

The ministry will also have to receive many of the 24,000 additional prisoners held in separate American military prisons, like Camp Bucca in southern Iraq and Abu Ghraib, north of Baghdad.

United States Justice Department advisers briefed reporters on Wednesday during a surprise visit by Attorney General Michael B. Mukasey. He met with Gen. David H. Petraeus, Ambassador Ryan C. Crocker and top Iraqi legal officials, including Chief Justice Medhat al-Mahmoud. The visit was Mr. Mukasey's first to Iraq since becoming attorney general in November.

"Our efforts, combined with those of the Departments of State and Defense, have already resulted in significant progress," said Mr. Mukasey, praising the 200 Justice Department employees working on "rule of law" issues in Iraq.

But several of those employees told reporters that improvements were being hindered by government inaction, corruption and sectarianism.

Gregory M. Shogren, an adviser for the Baghdad Provincial Reconstruction Team, a joint State and Justice Department program, said many Iraqi courthouses lacked computers, telephones and law books. His team advises its Iraqi counterparts on legal curriculums and due process, but it is also equipping courtrooms with heaters.

"The government of Iraq is poorly supporting their own organizations, their own institutions, and that has resulted in us putting in a lot of money," Mr. Shogren said. He added that he believed that Washington should wean Iraq from financial assistance: "It's frustrating," he said, "because the Iraqi government has the money."

Mr. Shogren said advisers were trying to improve relations between police officers and justice officials. He said police officers routinely disobeyed court orders to release prisoners from station jails or to provide security for investigative judges. Iraq's investigative judges are fashioned after the French legal model, in which the functions of detective, prosecutor and judge overlap.

"Sometimes judicial investigators complain that police will not escort them, will not provide security, will not cooperate with them," Mr. Shogren said. "And the Iraqi police, on the other hand, say that judicial investigators are just too afraid or lazy to go out and work the scene."

The inability of law enforcement officials to investigate crimes in a timely manner is among the main reasons that Iraq's prisons hold so many people without trial, Mr. Shogren said.

Mike Pannek, the program manager of the Iraq Corrections Program, a Justice Department program, said Justice Ministry prisons were filled beyond their capacity. One of the government's largest prisons is a temporary installation at the Rusafa legal complex in Baghdad. Mr. Pannek said that nearly all of the 6,647 detainees at Rusafa had been captured since the American force was increased early last year, and that 6,079 of them had not been found guilty of any crime.

Thousands more prisoners are held by other agencies, despite findings in 2006 that such disparate detainee systems hindered oversight and led to human rights abuses. In 2006, American troops determined that several Interior Ministry jails were being used by Shiite militias to torture and execute Sunni prisoners. Interior Ministry officials promised to transfer all their prisoners to Justice Ministry facilities.

But Mr. Pannek said that both the Interior and Defense Ministries held significant numbers of detainees, and that the numbers had grown.

Mr. Pannek estimated that Iraq needed space for 50,000 prisoners, and said there were plans to provide about 20,000 more prison beds over the next year.

"There's this glut of pretrial prisoners," he said. "The majority of those will be convicted and go to prisons. We also have a number of Coalition Forces detainees in U.S. custody. Some number of those will have to go into the Iraqi Corrections Service."

In light of the increased number of detainees under Iraqi control, Mr. Pannek said, American advisers are working to train and integrate corrections officers. While most prisoners are Sunni Arabs, most guards are Shiites.

Guards affiliated with Shiite militias regularly freed their comrades in arms and they abused Sunni prisoners, he said.

"We've had reports of them taking prisoners out of their cells in the dark of the night and smacking them around," Mr. Pannek said.

Defendants' Lawyers Fear Loss of Potential Evidence at Guantanamo Bay

Defendants' Lawyers Fear Loss of Potential Evidence at Guantanamo Bay

By Josh White

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Lawyers representing military detainees at Guantanamo Bay have expressed concern that the government has violated a federal court order by losing or erasing several years' worth of digital video recordings that could shed light on the legality of detainee treatment.

The concerns are based in part on a recent court filing by Guantanamo's commander, Rear Adm. Mark H. Buzby, who said video surveillance recordings in several areas of the facility have been automatically overwritten and no longer exist.

"In January 2008, it was brought to my attention that such . . . [recording] systems may have been automatically overwriting video data contained on recording devices, at predetermined intervals," Buzby wrote. "That is, only a specified number of days' worth of recorded data could be retained on the recording devices at a time."

Defense lawyers said the admission suggests that the military has not complied with a 2005 court order to preserve such evidence, even if the deletion of the recordings was inadvertent. They claim that the tapes were of potential use at forthcoming court hearings and trials, a view supported by a Seton Hall University report slated to be released today.

The report, "Captured on Tape," asserts that officials at the facility recorded more than 20,000 interrogations at Guantanamo Bay. It cited FBI statements and military investigative reports as a basis for concluding that video cameras were in interrogation booths and tapes existed.

"All interrogations are videotaped," said an April 13, 2005, report by the Office of the Army Surgeon General on operations at Guantanamo Bay, cited in the Seton Hall study. Pentagon officials declined to discuss the report or comment on the videotaping.

Military officials familiar with interrogations at the prison of a group of 14 high-value detainees over the past 16 months - including five of the six charged with criminal conspiracy on Monday - said those sessions were monitored through video cameras but not recorded. But they declined to comment on any taping of hundreds of others at the prison.

Noting that the CIA has admitted destroying videotapes of aggressive interrogations of two detainees, the authors of the Seton Hall report said the military and other government agencies present at Guantanamo have "identical motives to destroy taped investigations." They added: "The taped interrogations recorded at Guantanamo Bay are equally important to evaluating the reliability of the evidence against a detainee."

Buzby's declaration, filed in federal cases Friday and yesterday, said the video recordings were part of a surveillance system used to monitor the camps and were mostly of mundane operations. But lawyers for the detainees said they worry that the overwriting could mask important evidence.

David H. Remes, a Washington lawyer who represents Guantanamo detainees, said the overwriting of video recordings is a clear violation of the court's order.

"We'll simply never know whether these videotapes recorded torture or other abuse of our clients, because the tapes no longer exist," Remes said, referring to what he said could be considered evidence. "The government was under an affirmative obligation to preserve it. The fact that they were on automatic pilot with respect to these overrides doesn't get them off the hook."

Joshua Colangelo-Bryan, a New York lawyer who represents detainees at Guantanamo, said his clients reported seeing video cameras - some mounted, some hand-held - during their interrogations. "I don't have any problem with them videotaping interrogations, as long as they aren't discarded to protect wrongdoing," Colangelo-Bryan said. "We just don't know."

Time to Vote Contempt

Time to Vote Contempt

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Alberto Gonzales may be out, but the country is still waiting for a full accounting of how he and his White House patrons cynically politicized the Justice Department. Congress is rightly asking questions about the actions of yet another United States attorney: New Jersey's Christopher J. Christie. The House also needs to stop procrastinating and vote to hold witnesses in contempt for refusing to testify in the wider scandal.

Federal prosecutors must be scrupulously nonpartisan. Mr. Christie, a Republican activist who got his job despite a lack of trial and criminal-law experience, has gone up to the line of acceptable behavior - and possibly crossed it.

He began an investigation of Senator Robert Menendez, a New Jersey Democrat, late in a hard-fought election campaign. The charges now appear baseless, but at the time the news provided a big boost to Mr. Menendez's Republican opponent. Mr. Christie went against a long Justice Department presumption against opening investigations or bringing indictments right before an election, to avoid affecting the outcome.

There are also questions about Mr. Christie's decision to award, without competitive bidding, a lucrative contract to monitor a company accused of consumer fraud. The winner? Former Attorney General John Ashcroft, an influential Republican who was once Mr. Christie's boss. Senate and House leaders have asked the Government Accountability Office to investigate.

Some of the people who likely know the most about the role politics has played in the Bush Justice Department have defied Congressional subpoenas to testify. Joshua Bolten, the White House chief of staff, and Harriet Miers, the former White House counsel, contend that they are protected from testifying by executive privilege. That is not enough. They have a legal obligation to appear before Congress and plead that privilege to specific questions.

The House Judiciary Committee voted in July to hold Mr. Bolten and Ms. Miers in contempt. The House's Democratic leadership has been trying to figure out the pros and cons ever since. The public needs to hear the testimony of these officials (along with Karl Rove, who is also refusing to appear), and the full House should vote as quickly as possible to hold them in contempt.

The House should also approve a resolution authorizing the Judiciary Committee to go to court to enforce the contempt citations if the current attorney general, Michael Mukasey, as expected, refuses to do so.

The stakes are high. There are people in jail today, including a former governor of Alabama, who have raised credible charges that they were put there for political reasons. Congress's constitutionally guaranteed powers are also at risk. If Congress fails to enforce its own subpoenas, it would effectively be ceding its subpoena power. It would also be giving its tacit consent to the dangerous idea of an imperial president - above the law and beyond the reach of checks and balances.

The founders did not want that when they wrote the Constitution, and the voters who elected this Congress do not want it today.

333,000 US Casualties: Are They Covered?

333,000 US Casualties: Are They Covered?

By Maya Schenwar

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As Iraq and Afghanistan war casualties soar to unprecedented levels, Bush's 2009 Veterans Affairs' budget comes up short.

The Department of Veterans Affairs (VA) will treat about 333,000 sick and injured veterans of the Iraq and Afghanistan wars in 2009, according to VA statistics released last week. That number is a 14 percent increase over this year's casualty total. Yet, despite the Bush administration's promises to prioritize the VA even as other domestic departments' funds are cut, its annual budget request for next year places more financial burdens than ever on many returning soldiers.

At first glance, Bush's 2009 budget may seem like a boon to veterans: It would increase the VA budget by $3.4 billion.

"The President's ongoing commitment to those who have faithfully served this country in uniform is clearly demonstrated through this budget request for VA," said VA Secretary James B. Peake at a budget hearing last Thursday. "Resources requested for discretionary programs in 2009 are more than double the funding level in effect when the president took office seven years ago."

However, veterans' advocates argue the budget's growth has not kept pace with the skyrocketing size of the veteran community - or the increasing cost of servicing them.

"Bush only provides the news on the increased budget without providing full facts on the increased demands and costs," said Paul Sullivan, executive director of Veterans for Common Sense.

Although the "discretionary spending" Peake mentions has indeed doubled since Bush entered office, the VA budget as a whole has only increased by about a third - roughly in proportion to the growth of the veteran population, according to VA statistics.

Peake's comparison of today's VA budget to that of seven years ago also sidesteps the reality of changing market values. Congressman Bob Filner, chairman of the House Veterans Affairs' Committee, says that regardless of the administration's sweeping claims, the 2009 VA budget is not much improvement over last year's. According to Filner, the budget's much-touted 5.5 percent increase for veteran health care "barely covers the cost of medical inflation."

"The service and sacrifice of our veterans is real, and the budget for the VA must provide realistic funding levels to meet these needs," Filner said in a statement upon the budget's release. "I am concerned that this budget proposal contains only modest increases for veterans' health care while paying for this slight increase with cuts in other veterans' programs below the historic levels this Congress provided for in this fiscal year."

For example, the new budget would require veterans to pay more out-of-pocket expenses, such as pharmacy co-pays and annual enrollment fees. Also, under Bush's plan, the VA's medical research budget would drop below 2007 levels, with the expectation the department would outsource its research needs.

"The VA reduces its research budget [in 2009] and sets sights on coordinating with other agency research activities, agencies such as the Institute of Medicine," said Rick Jones, legislative director of the National Association for Uniformed Services. "With so much unknown on traumatic brain injury and post-traumatic stress disorder, it seems ill-advised to depend on outside-agency coordination when these issues are veteran-centric."

The administration's proposal cuts the VA medical and prosthetic research budget by 8 percent and veterans' rehabilitation research by 7 percent.

It also slashes construction funds for new medical facilities by about 44 percent, with grants for construction of extended care facilities losing 49 percent.

Moreover, after the 2009 VA budget increase, the Bush plan calls for billions of dollars in budget cuts over the next four years, according to Filner. For a system already playing a losing game of catch-up, the reductions could be devastating.

"The VA's backlog of claims and appeals has been exacerbated by funding shortfalls," said Jay Agg, national communications director for American Veterans (AMVETS). "Currently, 870,000 veterans are awaiting decisions from the VA, a process that may take many months or even years. That's about the same size as 15 Yankee Stadiums full of veterans."

The administration has shown no signs of altering its 2009 VA request; in fact, it is currently immersed in a lawsuit defending its right to deny health care to Iraq and Afghanistan veterans.

However, veterans' advocacy groups aren't giving up. During last Thursday's testimony, Jones and representatives from several other organizations, including AMVETS, presented "The Independent Budget" (IB): their own proposal for next year's VA spending. It would up the Bush budget by almost $3 billion, emphasizing mental health research and medical facility construction.

"The IB is by veterans, for veterans, and provides a full picture of veterans' needs and how our government can meet them," Agg said. "Our position is that the administration and Congress, having authorized funding for war, must now be prepared to provide sufficient, timely and predictable funding to meet the needs of our war fighters."

Despite the Bush administration's firm stance on the VA budget, some advocates see signs of hope. Last Thursday's hearing was not a battle, according to Sullivan; in fact, administration officials appeared interested in listening to what the "other side" had to say.

"While Secretary Peake and VA's top political appointees testified first, they broke their usual pattern of quickly departing the hearing room," Sullivan said. "Instead of bolting for the door, Peake asked Under Secretary Kussman and Under Secretary Cooper to remain, and they all remained and listened to the testimony of ten different [veteran] groups."

As casualties mount and the end of the Bush administration draws nearer, Congress will take up the VA request and, likely by this summer, propose its own version of the budget.

Wall Street & Politicians claiming money supply isn't growing are lying

Wall Street Analysts and Washington Politicians claiming the money supply isn't growing are lying!

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It isn't true. The printing presses are rolling full around the world.

  • The People's Bank of China is rumored to want money supply growth of 15% per year, down from the current 18%
  • India's broad M3 money supply is rising 22.4% per year
  • Singapore's money supply increased by 14% in 2007
  • Britain's broad M4 measure of money has expanded by 12.3% since Jan. '
  • Western Europe is "enjoying" monetary inflation of 11.5% per year, three times the central bank's target
  • Last year saw 16% money supply growth in Australia, 13% in Canada and 22% in Saudi Arabia
  • The U.S. money supply — if the Fed still reported M3 — is now guesstimated to be showing 15% annual expansion.

Look friends, when you measure the growth of money versus the Tons of Gold and Platinum above ground its very easy to see 10, 20 even 50 times the paper money is chasing the same limited amount of precious metal, oil and vital industrial commodities.

Bottom line: There is an endless supply of paper money and securities yet to be printed. Stash the precious metals away and prey the paper tower never collapses. Sooner or later the paper pile is going to come crashing down. It may have been the fear of a bond market meltdown that forced the Federal Reserve to move so quickly recently. We know the FDIC was preparing for a major banking collapse recently. How close we came to a historic financial collapse I can't tell you. I suspect we'll find that out sometime in the next few years. We still may see it happen. There are catalysts still in play that could trigger a meltdown still un-dealt with and threatening the financial markets.

Don't get caught short, stash the Platinum and Gold ASAP!

Best Wishes,

James DiGeorgia

Escape From Recession

Escape From Recession

What you should know about the economic stimulus package

By Jared Bernstein and Lawrence Mishel

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We hate to fulfill the stereotype of dismal scientists, but the news is bad: The economy is slowing sharply and may be in recession. The nation's broadest measure of growth, real gross domestic product (GDP), grew a scant annual rate of 0.6 percent at the end of last year. Unemployment has risen, and job growth has slowed sharply. The housing market has yet to hit bottom, and credit markets are still deeply chilled, if not frozen.

Here's the better news: When this type of scenario develops, the case for an economic stimulus package to offset the downturn is both simple and widely accepted. But there are many ways to craft a growth package, and if we don't get this right, we risk wasting big money while failing to mitigate the pain of recession.

As In These Times went to press, both chambers of Congress had passed bills, and their ratification looked all but certain. (President Bush had signed off on the House bill, and had agreed to support the Senate's package after it had been signifcantly scaled back.) The bills spend about $150 billion this year and next on a combination of "tax rebates" (though that's really a misnomer) and business tax cuts.

Will that be good enough? Here's a Stimulus 101 primer, as well as a list of what we think is missing from the current economic recovery plan.

The basics

Economies depend on robust demand. When folks stop buying, when investors leave the room, when governments stop building and improving public goods, growth grinds to a halt. And when that happens, the job machine stalls, unemployment rises, those with jobs work fewer hours, wages rise more slowly, and incomes decline, especially for the lowest earners and many minorities.

The last two recessions—in the early '90s and early 2000s—led to declines in the typical family's income by about $2,500 (in today's dollars). That ain't peanuts.

Such a potential income loss is especially worrisome now, as the inflation-adjusted median family income actually remains about $1,000 below where it stood in 2000. If recession is imminent, this would be the first time that real incomes at the end of a recovery have not exceeded those at the previous economic peak.

That fact might be the greatest indictment against Bushonomics and the "ownership society" he touted. It is a stark reminder that while the stimulus appropriately targets a short-term problem, the mechanisms that serve to fairly distribute income have been broken for some time. Most families in the United States have not fared nearly as well as they should have, given their contributions to the growth we've experienced. The coming slowdown will only submerge them in deeper water.

That's what makes fiscal stimulus so necessary. By fiscal stimulus, we mean a temporary infusion of expenditures into the economy by the federal government to raise demand. The infusion necessarily takes the form of some combination of a reduction in taxes and spending increases.

We've also got more time than we think. Each of the last two recessions was short (eight months) in GDP terms, but far longer in terms that matter most to most people: jobs and unemployment.

Unemployment rose for 19 months after November 2001, which was the official end of the last recession, and employment declined by another 1.1 million and did not start growing until September 2003. Had an effective stimulus package come late in the game, as officially measured, it would have helped shorten what turned out to be the longest jobless recovery on record.

Current proposals

The president and the House agreed on a stimulus package that spends about $100 billion on personal tax rebates and $50 billion on business, by allowing them to depreciate new investments faster than usual, and thereby pay fewer taxes. (Firms can deduct the cost of depreciation from their income to lower tax liabilities.)

The package has some pluses, but it could have been much improved. Thanks to negotiations by House Democrats, $28 billion more of the rebates will reach 35 million more low-income persons than were included in the initial White House package. Under Bush's original plan, only 8 percent of the rebate made it down to the bottom 40 percent. It's now 21 percent. That gets money to folks who need it, but also helps because those folks will spend the money (rather than save it) and generate more demand.

But the bonus depreciation for businesses is a particularly ineffective form of stimulus. For each dollar of tax revenue we sacrifice in this way, we get back a measly 27 cents in new demand, according to economist Mark Zandi. Of the 13 types of stimulus Zandi tested, this one was the worst. (Making the Bush tax cuts permanent was, at $0.29, a close second.)

This package, while costing 1 percent of GDP, could boost the economy by less than 1 percent, perhaps around 0.75 percent. That's unacceptable. We should get at least 1-for-1. Any stimulus worth passing should get back at least as much in GDP terms as it costs, and even that's a low bar.

The Senate's plan is a little better in this regard. While spending about the same amount on rebates, it gets them to even more low-income people. (Seniors dependent on Social Security were left out of the House plan.) But Senate Republicans blocked its originally proposed 13-week extension to unemployment insurance (beyond the normal 26 weeks), which offered a strong bang-for-the-buck: A dollar spent here gets you $1.64 in stimulus. The reason is simple: People unemployed long-term need money and spend money. That's not always the case with rebates.

What's missing

One thing the current stimulus package got right was making payments to individuals. But these are not "tax rebates," which implies that the government is returning taxpayers' money to people who overpaid their taxes. Rather, these are checks provided to people in the expectation that they will spend the money on goods and services.

Why is that helpful? Because as they spend these payments, they create demand. For instance, when you buy items at Costco, the store will restock its shelves and re-order goods from its suppliers, a process that maintains employment and wages being paid and spent, all of which boosts the economy. But, to energize the economy, these payments have to be spent, not saved. Better yet, they need to be spent on domestic items, as imported goods stimulate another country's economy.

When the payments are spent domestically, their impact reverberates throughout the economy. The sooner income-constrained households receive these checks, the sooner these payments will help both the recipients and the larger economy, thus achieving the dual goals of both fairness and effectiveness.

However, failing to extend unemployment insurance was a big mistake. Such payments have the greatest probability of being spent, and the unemployment insurance system needs to provide a better safety net for low-income, part-time and other workers. Temporary improvements in food stamp allocations and greater assistance for energy bills would also have a similar positive effect.

Providing payments to state and local governments (for their Medicaid costs or otherwise) would also have helped mitigate rising unemployment. Downturns cause state revenues to fall and spending to rise, especially when they originate in housing markets. That's because, as more people need assistance, public programs kick in. But when states need to balance their budgets, they often respond by raising taxes, cutting services and laying off workers—slowing down the economy even more. It's necessary for the federal government to provide relief for the states to forestall these desperate moves.

Finally, though it's received scant attention, one of the best things we could do is put Americans to work building or repairing needed infrastructure. Jobs spun off by these projects put goods in the pockets of workers who would otherwise struggle, and the improvements in roads, bridges, schools and sewage treatment facilities can lead to higher productivity, better health and better education. Given the depreciation of our public infrastructure, these efforts only accelerate what we need to do anyway. To be timely, we should invest in projects that are planned or underway, but strapped for resources due to the slowdown. Another advantage is that none of such spending is "saved": While citizens may spend less than two-thirds of the payments made to them, governments spend all the money.

Though a recession has not officially been called, polls show that most people think we're already in one. While this may be a head-scratcher for those focusing on GDP and financial markets, it's clear to us that too many families have been economically squeezed in recent years, even in good times. Imagine what they are likely to face in bad times.

Our political representatives had every reason to quickly pass a package to jumpstart our slumping economy. But they didn't get it completely right. It's up to us to make sure they do.

Bush administration, banks announce another token measure on home foreclosures

Bush administration, banks announce another token measure on home foreclosures

By Barry Grey

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US Treasury Secretary Henry Paulson on Tuesday announced a new initiative prompted by the rising tide of home foreclosures and loan defaults, which are increasingly impacting prime as well as subprime home loans as well as other forms of consumer and commercial credit.

At a Washington DC press conference, Paulson, flanked by Housing and Urban Development Secretary Alphonso Jackson and a Bank of America executive, said that six of the largest home loan originators had agreed to offer the possibility of a 30-day grace period to some homeowners who have failed to meet their payments, before the bankers eject them from their homes.

Paulson dubbed this miserly plan “Project Lifeline.” Banks and mortgage lenders that account for 50 percent of US mortgages have signed up for the program. These include Bank of America, JPMorgan Chase, Citigroup, Countrywide Financial, Washington Mutual and Wells Fargo.

Belying its name, the program does not commit the lenders to actually grant a pause in foreclosure proceedings or agree to less onerous mortgage terms to distressed homeowners who seek help. It applies only to borrowers, both prime and subprime, who have missed more than three months of mortgage payments, and excludes those who have filed for bankruptcy and those who face foreclosure within 30 days.

According to an analysis by Moody’s, some 425,000 homeowners are eligible for Project Lifeline, while, in practice, only a fraction of these will receive help. This compares to an estimated 2.8 million whose adjustable rage mortgages will reset to sharply higher rates over the next two years. The Mortgage Bankers Association estimates that some 1.3 million home loans are either seriously delinquent (meaning 90 days late) or already in foreclosure.

More than 2.2 million foreclosures were filed in the US in 2007, according to RealtyTrac, an online marketer of foreclosed properties, and some projections place the number of new defaults at 3.5 million by 2010.

Under the plan announced by Paulson, homeowners who are 90 days or more behind in their mortgages will receive a letter from their lenders asking them to call. They must respond within 10 days. They must declare that they wish to remain in their homes and agree to provide up-to-date information about their wages and debts.

It is then up to the lenders to decide whether to grant a 30-day pause in the foreclosure process. If they do, they will use the delay to decide whether or not to modify the terms of the loan. Any loan modifications will be provisional. Only if and when homeowners make on-time payments on the new terms for three months will the loan adjustment become permanent.

As these provisions indicate, the entire scheme is dictated by the interests and concerns of the banks and mortgage companies, not the homeowners. That the burden is placed squarely on the shoulders of the homeowners was underscored by statements made by Paulson at the press conference.

“No program can bring every struggling borrower into the counseling and evaluation process,” he said, adding that “we cannot help those who choose not to honor their obligations.” At another point he said, “If you can’t afford to live in a home you will go back to being a renter”—a euphemistic way of saying you will be thrown onto the street.

This scheme for temporary and provisional pauses in some foreclosures follows the plan announced in December by Paulson and the same group of mortgage lenders offering a five-year freeze on entry-level mortgage rates for a small section of subprime borrowers whose adjustable rate loans are scheduled to reset over the next two-and-half years. That program, which covers only some 250,000 of the millions of homeowners facing sharply higher interest rates, has done virtually nothing to stem the upward spiral of foreclosures and downward plunge in home prices.

The Wall Street Journal reported Wednesday that since the earlier plan was announced, the hotline set up to take calls from distressed home owners has received roughly 176,000 calls, but has provided counseling to just 36,000 borrowers, of whom less than 10,000 have received proposals for loan workouts.

The Bush White House hailed the new plan announced Tuesday. Dana Perino, Bush’s press spokesperson, said, “No single program will solve all the problems in the housing market, but the president believes these efforts will help us get through this rough patch in our economy.”

However, housing advocates and some financial analysts dismissed it as little more than a publicity stunt. Quincy Krosby, chief investment strategist at the Hartford, a financial services company, called the plan “one gesture, one of many.” James W. Paulsen, chief investment officer at Wells Capital Management, said, “It didn’t look like any of it had teeth. I didn’t see where there was anything new.”

In fact, Project Lifeline, like the plan announced last December, is motivated by the deepening crisis of the banks and major financial institutions resulting from the collapse in the US housing market and resulting failure of speculative investments linked to subprime mortgages. Banks in the US and Europe have already written off some $150 billion in subprime-backed securities, and the continuing fall in home sales and prices threatens to drive the total losses up to $400 billion or more.

These massive losses have undermined investor confidence in the US and global financial system, leading to a sharp contraction in credit. The credit crunch has, in turn, produced a severe contraction in economic growth, a rise in joblessness and the threat of a deep and protracted recession.

Last year saw the biggest fall in US home sales in twenty-five years and the first full-year fall in home prices since the Great Depression. As long as home prices continue to fall there can be no respite from the financial crisis, since investors and banks are reluctant to extend credit when they cannot determine the actual value of the homes upon which trillions of dollars in securities are ultimately based.

Moreover, as the Wall Street Journal reported on Tuesday, the contagion of loan devaluations and defaults is rapidly spreading to markets well beyond the subprime market. The newspaper cited data showing a steep decline in the value of high-risk corporate bonds, so-called “junk bonds,” used to finance the leveraged buyout spree of recent years. Wall Street banks are unable to sell these loans and are faced with the prospect of huge write-downs of these assets still on their books. Securities backed by commercial real estate, student loans and municipal bonds are also in jeopardy.

The banks and mortgage companies have a vested interest in stanching the flood of foreclosures. With home prices falling, lenders are losing an average of $50,000 for every home they take possession of. And the greater the glut of foreclosed homes, the steeper the downward trajectory of home prices.

According to an Associated Press (AP) comparison of 2007 home sales and foreclosure data published Wednesday, a growing proportion of sales are of foreclosed properties, especially in states hardest hit by the housing slump. In some parts of California, nearly half of home sales came from foreclosed houses last year.

The AP reported that the trend is most pronounced in Nevada, Colorado, Tennessee and Michigan, and is also evident in Ohio, Georgia, Florida and Arizona. In Nevada, for instance, 17.5 percent of home sales were from foreclosures, more than four times the number in 2006. As a result, banks and mortgage companies are rushing to unload foreclosed properties at fire-sale prices rather than carry the costs on their books—further depressing home prices.

RealtyTrac reported Wednesday that metro Detroit, a region devastated by the near-collapse of the US auto industry and massive layoffs, had the highest foreclosure rate in the country in 2007. The company reported that nearly 5 percent of all homes in the city were in foreclosure.

And as Paulson acknowledged at his Tuesday press conference in speaking of the subprime mortgage crisis, “The worst is just beginning.”

Depression risk might force U.S. to buy assets

Depression risk might force U.S. to buy assets

By John Parry

Go To Original

Fear that a hobbled banking sector may set off another Great Depression could force the U.S. government and Federal Reserve to take the unprecedented step of buying a broad range of assets, including stocks, according to one of the most bearish market analysts.

That extreme scenario, which would aim to stave off deflation and stabilize the economy, is evolving as the base case for Bernard Connolly, global strategist at Banque AIG in London.

In the late 1980s and early 1990's Connolly worked for the European Commission analyzing the European monetary system in the run up to the introduction of the euro currency.

"Avoiding a depression is, unfortunately, going to have to involve either a large, quasi-permanent increase in the budget deficit -- preferably tax cuts -- or restoring overvaluation of equity prices," Connolly said on Monday.

"If conventional monetary policy is not enough to produce that result, the government may have to buy equities, financed by the Fed," Connolly said.

Legal changes would be needed to give the Federal Reserve and the U.S. government the authority to buy stocks. Currently the Federal Reserve can buy only debt issued by the Treasury, as well as U.S. agency debentures and mortgage-backed securities.

While Connolly already sees some parallels with the 1930s, he expects that a more pro-active central bank and government will probably help avert a repeat of that scenario today.

The build up of a credit bubble in recent years was similar to the late 1920s run-up to the Great Depression, he said.

Then, investors were very optimistic about new technologies, and stocks rose against a backdrop of low inflation, and a trend toward globalization. There was even an equivalent of the modern day subprime mortgage debt meltdown in the form of U.S. loans to Latin American countries which had to be written off.

"The big difference is the attitude of central banks and specifically the attitude of the Fed," Connolly said.

Some economists have blamed the U.S. economy's travails in the 1930s on the Federal Reserve's hesitation to inject reserves into the banking system.

However, today's Fed has tried to preempt the danger of a protracted economic slump and has responded swiftly to a credit crunch in the past year and gathering signs of deterioration in the economy, Connolly said.

The Fed has stepped up its temporary additions of reserves to the banking system, and swiftly slashed its benchmark fed funds target rate to 3.0 percent from 5.25 percent in September. Analysts expect at least another 0.5 percentage point cut in next month.

At the same time, "the fed funds rate can't stay significantly above the 2-year note yield," Connolly said.

On Tuesday, the 2-year Treasury note yield was at 2.00 percent, not far above the lowest level since 2004.

The Fed "almost certainly" has to cut the funds rate to 2.0 percent by the end of this monetary easing cycle, he said. If conditions in the banking sector worsen, the Fed could cut the funds rate to 1.0 percent, a low last seen in June 2004.

Global banks have already written down more than $100 billion of bad debts associated with the U.S. subprime mortgage debt meltdown and housing market decline.

However, Fed rate cuts alone are unlikely to avert a prolonged period of economic weakness because the danger still exists that a burdened banking sector will choke off credit to consumers and households.

"The Fed probably can't fix it all on its own now," Connolly said. "There is a chance the Fed gets forced into unconventional cooperation with government," which could involve buying a range of assets to reflate their value.

That would be reminiscent of some steps the U.S. government took in the 1930s when the economy was mired in deflation and high unemployment.

One turning point came when agricultural prices were restored to their pre-slump levels, Connolly said. Such measures were among the New Deal programs that President Franklin D. Roosevelt launched to bolster the economy.

Either way, investors face bleak prospects now without some kind of further government intervention, he said.

Those steps might offer clues to investors in stocks and commodities, which Connolly expects the government might be ultimately force to step in and buy to stabilize markets. He expects that a depression may be averted, but only by the state and the Fed reinflating the price of such assets.

Beleaguered housing, non-government fixed-income securities and even the now overvalued Treasury market have little hope of generating substantial returns for investors over the next few years, he said.

"If we don't avoid depression, the only thing worth holding is cash," he added.

Home Prices Fall in Record 77 U.S. Metro Areas, Realtors Say

Home Prices Fall in 77 U.S. Metro Areas, Realtors Say

By Bob Ivry

Go To Original

Home prices fell in a record number of U.S. metropolitan areas in the fourth quarter, according to a report released today by the National Association of Realtors in Chicago.

The median sale price of a U.S. home dropped 5.8 percent to $206,200 in the last three months of 2007 from $219,000 in the same period of 2006, the realtors group said today. Prices fell in 77 of 150 metropolitan areas, the most since the group began tracking values in 1979. The decline was 10 percent or more in 16 metro areas, the association said.

Prospective homeowners had a tougher time getting mortgages in 2007 as lenders tightened standards amid rising foreclosures, and made 14 percent fewer loans and 28 percent fewer jumbo loans, which cover up to $417,000 of a home's value. Prices have fallen more than 10 percent since their July 2006 peak in the worst U.S. housing slump in 26 years.

``The continuing crunch in the jumbo loan market that began in August has disproportionately reduced the number of transactions in higher price ranges,'' said Lawrence Yun, the association's chief economist. ``Higher ratios of sales for more moderately priced homes are naturally dampening the national median price as well as the data for some of the more expensive markets.''

The economic stimulus package signed by President George W. Bush this week will raise the jumbo loan limit to $729,750.

Nationwide Declines

All five regions of the U.S. experienced price declines, led by the West with 8.7 percent. The drop was smallest in the Midwest, at 3.2 percent, the realtors group said.

The metropolitan area with the biggest decrease was Lansing- East Lansing, Michigan, which had a 19 percent decline. Prices fell 18.5 percent in the Sacramento, California, region and 17 percent in Riverside and San Bernardino, California -- the so-called Inland Empire -- and in the Jackson, Mississippi, region, the group said.

Of the 73 areas with price increases, 11 had gains of 10 percent of more. The greatest was in the Cumberland, Maryland, area, at 19 percent. The areas around Yakima, Washington, and Binghamton, New York, had 18 percent and 15 percent jumps respectively.

Prices in the Atlantic City, New Jersey, area rose 11 percent in the quarter, according to the association.

Median home prices ranged from $72,600 in the Youngstown, Ohio, region to nearly 12 times that amount in the Silicon Valley area of California, where the median price was $845,300, the group said.

In the fourth quarter of 2006, home prices fell in 73 of 149 metropolitan areas, said association spokesman Walter Molony.

U.S. home sales fell 21 percent in the last three months of 2007, according to the report. The West saw the biggest drop, with 28 percent. Nevada, Wyoming, New Mexico, Arizona, Oregon and Utah all had sales declines of more than 30 percent, the realtors said.

Obama Pushes Bill For Global Tax & Gun Ban

Obama's Global Tax Proposal Up For Senate Vote

By Cliff Kincaid

Go To Original

A nice-sounding bill called the "Global Poverty Act," sponsored by Democratic presidential candidate and Senator Barack Obama, is up for a Senate vote on Thursday and could result in the imposition of a global tax on the United States. The bill, which has the support of many liberal religious groups, makes levels of U.S. foreign aid spending subservient to the dictates of the United Nations.

Senator Joe Biden, chairman of the Senate Foreign Relations Committee, has not endorsed either Senator Barack Obama or Hillary Clinton in the presidential race. But on Thursday, February 14, he is trying to rush Obama's "Global Poverty Act" (S.2433) through his committee. The legislation would commit the U.S. to spending 0.7 percent of gross national product on foreign aid, which amounts to a phenomenal 13-year total of $845 billion over and above what the U.S. already spends.

The bill, which is item number four on the committee's business meeting agenda, passed the House by a voice vote last year because most members didn't realize what was in it. Congressional sponsors have been careful not to calculate the amount of foreign aid spending that it would require. According to the website of the Senate Foreign Relations Committee, no hearings have been held on the Obama bill in that body.

A release from the Obama Senate office about the bill declares, "In 2000, the U.S. joined more than 180 countries at the United Nations Millennium Summit and vowed to reduce global poverty by 2015. We are halfway towards this deadline, and it is time the United States makes it a priority of our foreign policy to meet this goal and help those who are struggling day to day."

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

The bill defines the term "Millennium Development Goals" as the goals set out in the United Nations Millennium Declaration, General Assembly Resolution 55/2 (2000).

The U.N. says that "The commitment to provide 0.7% of gross national product (GNP) as official development assistance was first made 35 years ago in a General Assembly resolution, but it has been reaffirmed repeatedly over the years, including at the 2002 global Financing for Development conference in Monterrey, Mexico. However, in 2004, total aid from the industrialized countries totaled just $78.6 billion - or about 0.25% of their collective GNP."

In addition to seeking to eradicate poverty, that declaration commits nations to banning "small arms and light weapons" and ratifying a series of treaties, including the International Criminal Court Treaty, the Kyoto Protocol (global warming treaty), the Convention on Biological Diversity, the Convention on the Elimination of All Forms of Discrimination Against Women, and the Convention on the Rights of the Child.

The Millennium Declaration also affirms the U.N. as "the indispensable common house of the entire human family, through which we will seek to realize our universal aspirations for peace, cooperation and development."

Jeffrey Sachs, who runs the U.N.'s "Millennium Project," says that the U.N. plan to force the U.S. to pay 0.7 percent of GNP in increased foreign aid spending would add $65 billion a year to what the U.S. already spends. Over a 13-year period, from 2002, when the U.N.'s Financing for Development conference was held, to the target year of 2015, when the U.S. is expected to meet the "Millennium Development Goals," this amounts to $845 billion. And the only way to raise that kind of money, Sachs has written, is through a global tax, preferably on carbon-emitting fossil fuels.

Obama's bill has only six co-sponsors. They are Senators Maria Cantwell, Dianne Feinstein, Richard Lugar, Richard Durbin, Chuck Hagel and Robert Menendez. But it appears that Biden and Obama see passage of this bill as a way to highlight Democratic Party priorities in the Senate.

The House version (H.R. 1302), sponsored by Rep. Adam Smith (D-Wash.), had only 84 co-sponsors before it was suddenly brought up on the House floor last September 25 and was passed by voice vote. House Republicans were caught off-guard, unaware that the pro-U.N. measure committed the U.S. to spending hundreds of billions of dollars.

It appears the Senate version is being pushed not only by Biden and Obama, a member of the committee, but Lugar, the ranking Republican member. Lugar has worked with Obama in the past to promote more foreign aid for Russia, supposedly to stem nuclear proliferation, and has become Obama's mentor. Like Biden, Lugar is a globalist. They have both promoted passage of the U.N.'s Law of the Sea Treaty, for example.

The so-called "Lugar-Obama initiative" was modeled after the Nunn-Lugar program, also known as the Cooperative Threat Reduction (CTR) program, which was designed to eliminate weapons of mass destruction in the former Soviet Union. But one defense analyst, Rich Kelly, noted evidence that "CTR funds have eased the Russian military's budgetary woes, freeing resources for such initiatives as the war in Chechnya and defense modernization." He recommended that Congress "eliminate CTR funding so that it does not finance additional, perhaps more threatening, programs in the former Soviet Union." However, over $6 billion has already been spent on the program.

Another program modeled on Nunn-Lugar, the Initiatives for Proliferation Prevention (IPP), was recently exposed as having funded nuclear projects in Iran through Russia.

More foreign aid through passage of the Global Poverty Act was identified as one of the strategic goals of InterAction, the alliance of U.S-based international non-governmental organizations that lobbies for more foreign aid. The group is heavily financed by the U.S. Government, having received $1.4 million from taxpayers in fiscal year 2005 and $1.7 million in 2006. However, InterAction recently issued a report accusing the United States of "falling short on its commitment to rid the world of dire poverty by 2015 under the U.N. Millennium Development Goals..."

It's not clear what President Bush would do if the bill passes the Senate. The bill itself quotes Bush as declaring that "We fight against poverty because opportunity is a fundamental right to human dignity." Bush's former top aide, Michael J. Gerson, writes in his new book, Heroic Conservatism, that Bush should be remembered as the President who "sponsored the largest percentage increases in foreign assistance since the Marshall Plan..."

Even these increases, however, will not be enough to satisfy the requirements of the Obama bill. A global tax will clearly be necessary to force American taxpayers to provide the money.

Kosovo: The US and the EU support a Political Process linked to Organized Crime

Kosovo: The US and the EU support a Political Process linked to Organized Crime

Kosovo Prime Minister Hashim Thaci is part of a criminal syndicate

By Michel Chossudovsky

Go To Original

Our orientations are clear. The building of the state of Kosova, economic development, economic and social well-being and rigorous measures against corruption, organized crime and negative behavior, so we can have improved security and integrate Kosova into European Union structures.

(Hashim Thaci, chairman of the Democratic Party of Kosovo (PDK), Prime Minister of the Kosovo provisional government, former KLA leader and known criminal)

The PDK, led by Hashim Thaci, former Kosovan Liberation Army commander, took control of many municipalities after the war. The party has close links with organized crime in the province
. (The Observer, 29 October 2000)

Mr. Thaci, nicknamed "the Snake" during his KLA days, is a sharp-suited 32-year-old former rebel commander with poor oratory skills, links to organized crime and a determination to preserve relations between his party and the United States
(The Scotsman, 20 October 2000)

..******** "Todays date" component ******** -->I know a terrorist when I see one and these men are terrorists," US Special Envoy and Ambassador Robert Gelbard

Hashim Thaci founded the "Drenica-Group" an underground organization that is estimated to have controlled between 10% and 15% of all criminal activities in Kosovo (smuggling arms, stolen cars, oil, cigarettes and prostitution). Wikipedia The Free Encyclopedia

The US, the EU and the UN are supporting a Kosovo government headed by a known criminal, Prime Minister Hashim Thaci.

The position of Prime Minister was created by so-called Provisional Institutions of Self-Government (PISG) established by the United Nations Interim Administration Mission in Kosovo (UNMIK) Under UN mandate, the purpose of the provisional government is to provide 'provisional, democratic self-government' in advance of a decision on the political status of Kosovo. What this signifies is that the United Nations has not only set the stage for an "Independent" Kosovo government in violation of international law, it has installed a Kosovo government integrated by the members of a criminal syndicate. All three Kosovo Prime Ministers, Ramush Haradinaj, Agim Ceku and Hashim Thaci are war criminals.

Hashim Thaci and EU Secretary-General Javier Solana

The Kosovo Democratic Party headed by former KLA Commander Hashim Thaci is essentially an outgrowth of the former Kosovo Liberation Army.

US-NATO covert support the KLA, goes back to the mid-1990s. Iin the year preceding the 1999 bombing of Yugoslavia, the KLA was quite openly supported by the Clinton administration.

KLA leader Hashim Thaci was a protégé of Madeleine Albright. He was chosen by Albright to play a key role on Washington's behalf at the 1998 Rambouillet negotiations. .

Madeleine and Hashim

The links of the KLA to organized crime have been documented by Interpol and the US Congress. The Washington Times in an article published in May 1999 describes the KLA and its links to the Clinton administration as follows:

Some members of the Kosovo Liberation Army [headed by the current Kosovo Prime minister Hashim Thaci] , which has financed its war effort through the sale of heroin, were trained in terrorist camps run by international fugitive Osama bin Laden -- who is wanted in the 1998 bombing of two U.S. embassies in Africa that killed 224 persons, including 12 Americans.

The KLA members, embraced by the Clinton administration in NATO's 41-day bombing campaign to bring Yugoslav President Slobodan Milosevic to the bargaining table, were trained in secret camps in Afghanistan, Bosnia-Herzegovina and elsewhere, according to newly obtained intelligence reports.

The reports also show that the KLA has enlisted Islamic terrorists -- members of the Mujahideen --as soldiers in its ongoing conflict against Serbia, and that many already have been smuggled into Kosovo to join the fight. ....

The intelligence reports document what is described as a "link" between bin Laden, the fugitive Saudi millionaire, and the KLA --including a common staging area in Tropoje, Albania, a center for Islamic terrorists. The reports said bin Laden's organization, known as al-Qaeda, has both trained and financially supported the KLA. (Washington Times, May 4, 1999, see complete article below)

The Christian Science Monitor in an August 14, 2000 report describes the criminal network controlled by Thaci:

UN police suspect that much of the violence and intimidation has come from former KLA members, especially those allied with Hashim Thaci, the former KLA leader and head of the Democratic Party of Kosovo, one of the KLA's political offshoots.

In one recent incident, the shop of an LDK activist in Mr. Thaci's home village was sprayed with automatic gunfire - the second such attack since November.

Thaci's party potentially has much to lose in the elections, which are for municipal offices only. After Serb forces withdrew last year, the KLA occupied town halls and public institutions across Kosovo and set up its own provincial government.

Although the UN has gradually asserted its own authority and placed representatives of other political groups in local governments, in places like Srbica ex-KLA members affiliated with Thaci's party still exercise virtual complete control.

"These guys are not going to give up power that easily," says Dardan Gashi, a political analyst with the International Crisis Group, a US-based research organization with an office in Pristina.

UN police also suspect organized crime is involved in some of the violence. They say that criminal groups engaged in racketeering, smuggling, and prostitution rely on close links to some people in power. The prospect of losing these connections - and the income they generate - may make them ill-disposed toward the LDK.

Officials say the problem is the worst in the Drenica region of Kosovo, the KLA's heartland and a stronghold of Thaci's party. Srbica, where Koci is the local LDK president, is one of the main towns in Drenica. (emphasis added)

The Heritage Foundation: Support the KLA-KDP, despite its Criminal Connections

The Heritage Foundation in a May 1999 report acknowledges that the KLA is a criminal organization. It nonetheless called for the support of the KLA should by the Clinton administration:

Should the U.S. harness the KLA's military potential against Milosevic's brutal regime, despite the KLA's unusual ideological roots and apparent ties to organized crime? ... The KLA does not represent every group seeking an end to Milosevic's brutal campaign and is known to have committed some atrocities of its own, it is the most significant force resisting Yugoslav aggression within Kosovo. Moreover, the scale and scope of its crimes have been dwarfed by the systematic campaign of terror unleashed by Yugoslav military, paramilitary, and police forces inside Kosovo. which Washington has done consistently since the 1999 war. (Heritage Foundation Report, 13 May 1999)

Shunning the KLA now will deprive the United States of the benefits of cooperating with a resistance force that is capable of ratcheting up the pressure on Milosevic to negotiate a settlement (Ibid)

The Heritage Foundation supports the Kosovo Democratic Party (KDP) which is integrated by former members of the KLA.

The KDP has retained its links to organised crime. This position broadly summarizes the attitude of the "international community" in relation to Kosovo. More recently, the Heritage Foundation, which plays a behind the scenes role in the formulation of US foreign policy, has been pushing for Kosovo "Independence"

Hashim Thaci

Hashim Thaci with another war criminal: Tony Blair

The evidence amply confirms that the prime minister of Kosovo never severed his links to organized crime.

A known criminal is being protected by the United Nations: He was arrested in Budapest in July 2003 on an Interpol warrant and was immediately released, following a request from the UN Mission in Kosovo (UNMIK). This is not an isolated event. There is evidence that the UN Mission and its international police force have protected the former KLA, which in the wake of the 1999 NATO bombing was relabeled the Kosovo Protection Corps (KPC) under a formal UN mandate.

According to Serbian Justice Minister Vladan Batic, "the prosecution at the Hague war crimes tribunal has over 40,000 pages of evidence against former Kosovo Liberation Army leader Hashim Thaci, (quoted by Radio B92, Belgrade, 3 July 2003).

In April 2000, US Secretary of State Madeleine Albright "ordered The Hague chief prosecutor Carla del Ponte to omit from the list of war crime suspects Hashim Thaci" (Tanjug, 6 May 2000). Carla del Ponte subsequently claimed that there was not enough evidence to indict Thaci on war crimes. .

More generally, the UN Mission has acted as an accessory in protecting a criminal syndicate.

In November 2003, criminal proceedings against several former KLA commanders were initiated in Belgrade. These included Hashim Thaci, Agim Ceku and Ramush Haradinaj. .Both Haradinaj and Ceku's names are on Interpol lists.

Agim Ceku

Agim Ceku is known for having committed extensive war crimes in the Krajina region of Croatia in the mid-1990s involving the massacre and ethnic cleansing of the Serb population. He was a former brigadier general in the Croatian Army and a key planner of Operation Storm, which led to the expulsion of several hundred thousand Serbs from Krajina region of Croatia. In 1999, he was appointed Commander of the KLA, with the approval of the US and NATO. He was subsequently appointed Commander of the UN sponsored Kosovo Protection Corps (KPC) (on a UN payroll) and became Prime Minister of Kosovo in 2006, succeeded by Hashim Thaci, the current Prime Minister In Kosovo, he has continues to have links to organized crime syndicates. According to a London Observer, the KPC which was headed by Ceku, was involved in acts of torture as well protecting prostitution in Kosovo. (March 14, 2000 , Atlanta Journal-Constitution)

From Left to right: Hashim Thaci, Bernard Jouchner, General Michael Jackson, Agim Ceku, General Wesley Clarke

Condoleeza Rice meets Kosovo President
Fatmir Sejdiu and Prime Minister Agim Ceku (left)

The Western Media: Disinformation concerning the Nature of the Kosovo government

The Kosovo government is tied into organized criminal syndicates involved in narcotics and human trafficking.

The fact that all three Kosovo Prime Ministers, Ramush Haradinaj, Agim Ceku and Hashim Thaci are war criminals has not been acknowledged in recent press reports regarding the Independence of Kosovo.

The EU and the US are supporting the criminalization of Kosovo politics.

We bring to our readers attention two articles published in the Washington Times.

The first article was published in May 1999 describes the KLA as a criminal organization. The second article published in February 2008 highlights the role of Prime Minister Hashim Thaci, a "former criminal" in the process of Kosovo independence.

KLA rebels train in terrorist camps

By Jerry Seper


May 4, 1999

Some members of the Kosovo Liberation Army [headed by the current Kosovo Prime minister Hashim Thaci] , which has financed its war effort through the sale of heroin, were trained in terrorist camps run by international fugitive Osama bin Laden -- who is wanted in the 1998 bombing of two U.S. embassies in Africa that killed 224 persons, including 12 Americans.

The KLA members, embraced by the Clinton administration in NATO's 41-day bombing campaign to bring Yugoslav President Slobodan Milosevic to the bargaining table, were trained in secret camps in Afghanistan, Bosnia-Herzegovina and elsewhere, according to newly obtained intelligence reports.

The reports also show that the KLA has enlisted Islamic terrorists -- members of the Mujahideen --as soldiers in its ongoing conflict against Serbia, and that many already have been smuggled into Kosovo to join the fight.

Known to its countrymen as the Ushtria Clirimatare e Kosoves, the KLA has as many as 30,000 members, a number reportedly on the rise as a result of NATO's continuing bombing campaign. The group's leadership, including Agim Ceku, a former Croatian army brigadier general, has rapidly become a political and military force in the Balkans.

The intelligence reports document what is described as a "link" between bin Laden, the fugitive Saudi millionaire, and the KLA --including a common staging area in Tropoje, Albania, a center for Islamic terrorists. The reports said bin Laden's organization, known as al-Qaeda, has both trained and financially supported the KLA.

Many border crossings into Kosovo by "foreign fighters" also have been documented and include veterans of the militant group Islamic Jihad from Bosnia, Chechnya and Afghanistan. Many of the crossings originated in neighboring Albania and, according to the reports, included parties of up to 50 men.

Jane's International Defense Review, a highly respected British Journal, reported in February that documents found last year on the body of a KLA member showed that he had escorted several volunteers into Kosovo, including more than a dozen Saudi Arabians. Each volunteer carried a passport identifying him as a Macedonian Albanian.

Bin Laden and his military commander, Mohammed Atef, were named in a federal indictment handed up in November in New York for the simultaneous explosions Aug. 7 at the U.S. embassies in Nairobi, Kenya, and Dar es Salaam, Tanzania. The indictment accused the two men of directing the attacks, which injured more than 5,000 people.

The indictment said bin Laden, working through al-Qaeda, forged alliances with government officials in Iran, the National Islamic Front in the Sudan and an Iranian terrorist organization known as Hezbollah. He was indicted earlier this year by a federal grand jury in New York for his suspected terrorist activities.

The al-Qaeda is believed to have targeted U.S. embassies and American soldiers stationed in Saudi Arabia and Somalia. The organization also is accused of housing and training terrorists, and of raising money to support their causes.

The State Department, along with other federal agencies, offered a $5 million reward last year for information leading to the arrest and conviction of the two men. Mr. Clinton ordered a retaliatory attack on training bases controlled by bin Laden in Afghanistan and a chemical factory near Khartoum, Sudan, after the bombings.

Last year, while State Department officials labeled the KLA a terrorist organization, saying it bankrolled its operations with proceeds from the heroin trade and from loans from known terrorists like bin Laden, the department listed the group as an "insurgency" organization in its official reports. The officials charged that the KLA used terrorist tactics to assault Serbian and ethnic Albanian civilians in a campaign to achieve independence.

The KLA's involvement in drug smuggling as a means of raising funds for weapons is long-standing. Intelligence documents show it has aligned itself with an extensive organized crime network in Albania that smuggles heroin to buyers throughout Western Europe and the United States. Drug agents in five countries believe the cartel is one of the most powerful heroin smuggling organizations in the world.

The documents show heroin and some cocaine is moved over land and sea from Turkey through Bulgaria, Greece and Yugoslavia to Western Europe and elsewhere. The circuit has become known as the "Balkan Route."

The U.S. Drug Enforcement Administration said in a recent report that drug smuggling organizations composed of Kosovo's ethnic Albanians were considered "second only to Turkish gangs as the predominant heroin smugglers along the Balkan Route."

Greek Interpol representatives have called Kosovo's ethnic Albanians "the primary sources of supply for cocaine and heroin in that country."

France's Geopolitical Observatory of Drugs said the KLA was a key player in the rapidly expanding drugs-for-arms business and helped transport $2 billion in drugs a year into Western Europe.

German drug agents said $1.5 billion in drug profits is laundered annually by Kosovo smugglers, through as many as 200 private banks or currency-exchange offices.

Jane's Intelligence Review estimated in March that drug sales could have netted the KLA profits in the "high tens of millions of dollars." It said the KLA had rearmed itself for a spring offensive with the aid of drug money, along with donations from Albanians in Western Europe and the United States.

The KLA were identified as a terrorist organization by US special envoy Robert Gelbard.
Published in Washington, D.C. 5am -- May 4, 1999

Kosovo independence seen likely for Feb. 17 By Dusan Stojanovic

February 9, 2008


Slobodan Samardzic, Serbia's minister for Kosovo, said yesterday that his government has received information indicating the Kosovo province's Albanian leadership will "illegally" declare independence soon.

BELGRADE, Serbia (AP) — The Serbian minister for Kosovo said yesterday that his government has learned the province's ethnic Albanian leadership will declare independence on Feb. 17. Western diplomats said they expected the move a day later.

Slobodan Samardzic said Serbia's government has received "relevant information" that Kosovo's government will "illegally declare unilateral independence of Kosovo on Sunday, Feb. 17." He did not specify the source of information and Belgrade remains fiercely opposed to the loss of the province.

Kosovo's ethnic Albanian leaders have said they will declare independence from Serbia "in a matter of days," but never specified the exact date. Serbia regards the province as the cradle of its statehood, and expressions of nationalist anger have increased as the independence declaration approached.

Kosovo's Prime Minister Hashim Thaci [former leader of the KLA] would not comment on the Feb. 17 date, but insisted Kosovo's split from Serbia was "a done deal."

"I can only confirm today that we have the confirmation from some 100 states which say they are ready to recognize Kosovo's independence," Mr. Thaci said in Kosovo's capital, Pristina.

In Munich, Serbian President Boris Tadic, considered a relatively pro-Western moderate, told a major security conference there would be no winners if Kosovo's leaders pressed ahead without a negotiated deal.

"If such negotiations don't occur, I fear all three parties will end up paying an extremely high price," Mr. Tadic said, referring to Kosovo's Albanians, Serbia and the international community. "That is something none of us can afford."

Bishop Artemije, spiritual leader of Kosovo's Serbian Orthodox minority, said his community would not recognize any independence declaration from Pristina and would remain loyal to Belgrade.

"Independence is not the only option," he said in an interview with The Washington Times on a U.S. visit this week. "The West tells us to compromise, but the only choice we are given is capitulation."

State Department spokesman Tom Casey said yesterday the Bush administration wants to see the final status of Kosovo "resolved and resolved in the not-too-distant future."

But he said he could not discuss the "intentions of the leadership either in Serbia or in Kosovo."

Serbia's main ally, Russia, opposes Kosovo's independence, asserting it would set a precedent worldwide. Other EU states, including Romania and Cyprus, also have deep reservations, fearing it would spark new ethnic violence in the Balkans and encourage other separatist movements.

But the U.S. and a clear majority of EU nations are expected to back Kosovo's statehood, saying the U.N.-run southern province, where 2 million Albanians represent an overwhelming majority, is a special case that deserves to be independent from Belgrade.

As nationalist tensions rose sharply, an explosion shook a shopping mall yesterday in Serbia. No one was injured and the explosion caused only minor damage.
Mr. Samardzic's statement was issued after a meeting with a senior European Union official, Stefan Lehne, who was in Belgrade to clarify the bloc's plans to send an EU policing and administrative mission to Kosovo.

Serbia has rejected the mission, saying it would be a prelude to the province's independence.