Wednesday, February 20, 2008

Wall St. Banks Confront a String of Write-Downs

Wall St. Banks Confront a String of Write-Downs

Wall Street banks are bracing for another wave of multibillion-dollar losses as the crisis that began with subprime mortgages spreads through the credit markets.

In recent weeks one part of the debt market after another has buckled. High-risk loans used to finance corporate buyouts have plummeted in value. Securities backed by commercial real estate mortgages and student loans have fallen sharply. Even auction-rate securities, arcane investments usually considered as safe as cash, have stumbled.

The breadth and scale of the declines mean more pain for major banks, which have already written off more than $120 billion of losses stemming from bad mortgage-related investments.

The deepening losses might make banks even more reluctant to make the loans needed to prod the slowing American economy. They also could force some banks to raise more capital to bolster their weakened finances.

The losses keep piling up. Leading brokerage firms are likely to write down the value of $200 billion of loans they have made to corporate clients by $10 billion to $14 billion during the first quarter of this year, Meredith Whitney, an analyst at Oppenheimer, wrote in a research report last week.

Those institutions and global banks could suffer an additional $20 billion in losses this year on commercial mortgage-backed securities and other debt instruments tied to commercial mortgages, according to Goldman Sachs, which predicts commercial property prices will decline by as much as 26 percent.

Analysts at UBS go further, predicting the world’s largest banks could ultimately take $123 billion to $203 billion of additional write-downs on subprime-related securities, structured investment vehicles, leveraged loans and commercial mortgage lending. The higher estimate assumes that the troubled bond insurance companies fail, a possibility that, for now, is relatively remote.

Such dire predictions underscore how the turmoil in the credit markets is hurting Wall Street even as the Federal Reserve reduces interest rates. Already, once-proud institutions like Merrill Lynch, Citigroup and UBS have gone hat in hand to Middle Eastern and Asian investors to raise capital. “You don’t have a recovery until you have the financial system stabilized,” Ms. Whitney said. “As the banks are trying to recover they will not lend. They are all about self-preservation at this time.”

One of the latest areas to come under pressure is the leveraged loan market. In recent weeks the market for these corporate loans plummeted, driven by fear that banks have too many loans to manage. Prices have fallen as low as 88 cents on the dollar, levels not seen since 2002, when default rates were more than 8 percent. Loans to some companies, like Univision Communications and Claire’s Stores, are trading in the high 70s, analysts say.

“Price declines of this magnitude — over 10 points — were not supposed to happen in the leveraged loan market,” Bank of America credit analysts wrote in a report on Feb. 11.

When banks make loans, they hold them until they can sell the debt to institutional investors like hedge funds and mutual funds. But lately the market for this debt has seized up and many banks have been unable to unload the loans. As the value of this debt declines, lenders must recognize as a loss the difference in the value at which they made loans and the prices of similar debt in the secondary, or resale, market.

“This correction feels a lot deeper and wider and more prolonged than what we have seen historically,” said one senior Wall Street executive who was not authorized to speak to the media.

Many analysts say the financial health of many companies has not deteriorated as much as loan prices suggest.

“People don’t know what’s out there, they haven’t sorted out what’s good and what’s bad, so they are throwing all credit assets out,” said Meredith Coffey, director of analysis at the Reuters Loan Pricing Corporation. Median loan prices were lower than those in 2002 when defaults peaked, even though very few defaults have actually occurred.

There has also been a marked deterioration in the market for commercial mortgage-backed securities, which are commercial mortgages packaged into bonds.

To some, the troubles plaguing commercial mortgage securities seem a logical extension of the turmoil in the residential real estate market. But some strategists argue that the commercial real estate market is not as vulnerable as the housing market. The pressure to package loans that was so evident in the residential market never materialized in the commercial market, these analysts say.

Also, commercial loans tend to be made at fixed, rather than adjustable, rates, and are not usually refinanced for long periods of time.

Nevertheless, the cost of insuring a basket of commercial mortgage-backed securities has soared. Last October, for example, it cost $39,000 to insure a $10 million basket of top rated 2007 commercial mortgages (super senior AAA, in Wall Street language) against default.

Today that price has increased to $214,000. For triple-B-rated commercial mortgage backed securities, those which are riskier, the cost of protection during the same time has soared from $672,000 to $1.5 million.

The deterioration of the CMBX, the benchmark index that tracks the cost of such credit protection, “started off as a fundamental repricing and then it escalated into something much more than that,” said Neil Barve, a research analyst at Lehman Brothers. “We think there is some downside in a challenging macroeconomic environment, but not nearly what has been priced in.”

Goldman Sachs seems to disagree, with analysts predicting commercial real estate loan losses to total $180 billion, with banks and brokers bearing $80 billion of that in total and about $20 billion this year.

Current index figures suggest that the banks will face significant pain. Brad Hintz, an analyst at Sanford C. Bernstein & Company, calculated that Lehman Brothers has the highest exposure to commercial real estate-backed securities, with $39.5 billion, followed by Morgan Stanley, with $31.5 billion. (These numbers do not include hedges that the banks may have but do not disclose).

To be sure, a crisis on Wall Street also spells opportunities for patient bargain hunters. After all, markets that were trading at all-time highs have been reduced to rubble, suggesting that those willing to search for value will find it.

And last week, some hedge funds began to wade into the troubled loan market. But prices do not yet reflect any widespread rallies, and Wall Street still has to absorb losses reflected in these markets.

“The fourth quarter was terrible, but you had strong investment banking revenues,” Mr. Hintz said. “Now you’ve had a bad December, a worse January and an even worse February.”

Consumer prices post another big gain

Consumer prices post another big gain

By MARTIN CRUTSINGER

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Consumers paid more to fill up their gas tanks, buy groceries and go to the hospital in January as prices on a range of items climbed.

Inflation was increasing even as the economy was slowing dramatically, a development certain to raise concerns at the Federal Reserve. The Fed has cut interest rates aggressively in the belief that fighting off a threatened recession was more important than worrying about inflationary pressures.

The Labor Department reported its closely watched Consumer Price Index posted a gain of 0.4 percent last month. That matched the December increase and was higher than the 0.3 percent rise analysts had expected. Food costs jumped by the largest amount in 11 months.

Core inflation, which excludes food and energy, rose by 0.3 percent, the biggest jump in seven months. That increase reflected higher prices for medical care, education, clothing, tobacco and airline fares.

"The economy may be faltering, but that has not stopped firms from raising prices," said Joel Naroff, chief economist at Naroff Economic Advisers. "It didn't matter whether you went to the supermarket or ate out, costs were up."

With the latest increase, core prices have risen over the past 12 months by 2.5 percent, far above the Fed's comfort zone of 1 percent to 2 percent gains in the underlying inflation rate. The increase in inflationary pressures comes as economic growth has slowed sharply, raising concerns the country might be in danger of falling into a recession.

The Fed last month began an aggressive campaign to cut interest rates, lowering an important rate by the largest amount in a single month in more than a quarter-century. Analysts said they believe the Fed will see the threat of a recession as a bigger risk at the moment than the rise in inflation. But some predicted the Fed might cut rates by one quarter of a percentage point at the March 18 meeting rather than the half-point move that markets are now expecting.

On Wall Street, stocks had a seesaw day. The Dow Jones industrial average finished with an increase of 90.04 points to close at 12,427.26 after having been down nearly 110 points earlier.

A second report Wednesday showed that the housing sector remains in a steep downturn. Construction of new homes and apartments edged up by a slight 0.8 percent in December to an annual rate of 1.012 million units. But all the strength came from a rebound in apartment construction, which had plunged in December. The larger single-family sector fell by 5.2 percent last month.

Applications for building permits, considered a good sign of where construction is headed, fell by 3 percent to an annual rate of 1.048 million units, the lowest level since November 1991.

"Clearly the housing recession continues with no end in sight," said Bernard Baumohl, managing director of the Economic Outlook Group, a private forecasting firm.

The prolonged decline in housing, with falling sales and weak prices, has been a major drag on the overall economy. Growth skidded to a near standstill in the final three months of last year, rising at an annual rate of just 0.6 percent.

Some economists believe growth in this quarter and the next will turn negative, fulfilling the classic definition of a recession. To combat the economic weakness, Congress passed a $168 billion economic stimulus package to provide tax rebates to millions of families starting this spring.

The Fed slashed its own forecast for economic growth in a new projection released Wednesday but still had no recession in its outlook. The updated forecast projected the overall economy will grow between 1.3 percent to 2 percent this year, down from an October forecast when the Fed had predicted the economy would grow by a stronger 1.8 percent to 2.5 percent this year.

Meanwhile, the Labor Department said that average weekly earnings for non-supervisory employees, the bulk of the work force, fell by 1.4 percent in January, compared with a year ago. It was the fourth consecutive monthly decline, when compared with a year ago, and further evidence that wage gains are failing to keep up with inflation.

For all of 2007, consumer inflation rose by 4.1 percent, the biggest increase in 17 years. Costs of both food and energy accelerated sharply. Economists said they still believe that food and energy will moderate this year, though events could change that outlook. For example, oil prices closed at more than $100 per barrel this week for the first time. A new closing mark came Wednesday, $100.74.

For January, energy costs were up 0.7 percent with gasoline costs rising by 1.2 percent.

Medical costs showed a 0.5 percent increase, up from a 0.3 percent rise in December. Prescription drug prices shot up by 0.7 percent, the biggest rise in a year, while hospital prices were up by 1 percent.

The category that includes education costs rose by 0.4 percent while airline fares were up by 0.8 percent, reflecting higher fuel costs, and clothing costs rose by 0.4 percent, while clothing costs rose by 0.4 percent. Analysts blamed the fifth monthly rise in clothing prices on a weaker dollar against many foreign currencies, which pushes the price of imported clothes higher.

The report on housing showed construction was up by 18.9 percent in the Northeast, reflecting an unusually warm January, and up by 12 percent in the Midwest, also a gain that was attributed to weather. Construction fell by 6.1 percent in the West and dropped 2.9 percent in the South.

Credit checks create uproar for Charlotte-Mecklenburg Schools

Credit checks create uproar for CMS

ANN DOSS HELMS

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Charlotte-Mecklenburg Schools created an uproar among its 18,000-plus employees Tuesday by abruptly requiring them to sign forms authorizing credit checks and research into their "character, general reputation, personal characteristics and mode of living."

Those who don't sign by Friday face termination, according to memos signed by Chief Human Resources Officer Maurice Ambler.

Ambler said Tuesday that CMS plans to check only criminal records, despite the more extensive authorization required by the forms.

"That material was all written by attorneys, not by me," he said, adding that criminal checks fall under the federal Fair Credit Reporting Act.

Superintendent Dr. Peter Gorman, during an interview this morning on WBT-Radio's "Morning News" program, defended the criminal checks but said the school system probably did not give employees enough advance notice.

"I take responsibility for that," Gorman said in the WBT interview.

He also said that he and other school officials will look closer at the three-day deadline, adding that it might not be enough time for employees.

CMS leaders have talked for months about updating criminal checks on employees, prompted partly by the discovery that a teacher caught shooting heroin in an elementary school classroom last June had faced previous drug charges that CMS didn't know about. The criminal checks will cost $46,000 to launch and about $3,000 a month for ongoing reports, Ambler said.

Six CMS employees who spoke to the Observer Tuesday said they support checking employees' criminal records. But they -- along with three school board members -- said they were ambushed by the request for personal information that seems irrelevant to student safety.

"I don't know where CMS is pulling this from and I don't understand why. It's like they're intimidating people," said Mary McCray, president of the Charlotte-Mecklenburg Association of Educators. She said she's advising teachers not to sign the forms while she seeks advice from the National Association of Educators, a teachers union.

McCray said one teacher called to ask, "Is the fact that I'm living with a man and we're not married grounds for dismissal?"

Others who asked not to be named for fear of reprisal voiced similar concerns.

"You look at people's different lifestyles -- who's going to make that determination?" said a building services employee.

"There's a lot of people they don't pay a living wage to, so yeah, they're behind (financially)," a teacher said. "I know teachers whose homes are in foreclosure."

Tuesday evening, district leaders who have pledged clear communications with employees and the public were scrambling to quell the furor. Communications staff were working on a Q&A to explain the legalese in plain English, Ambler said.

Two memos about the background checks, signed by Ambler and human resources official Janet Hamilton, are dated Feb. 11. One teacher said she got hers Friday. Five other employees in various locations said supervisors presented them Tuesday. None said they got an explanation of the demand that they authorize credit checks and other personal research. Some said they were told to sign immediately, though supervisors backed down when employees balked.

"If we sign that piece of paper, we have no legal rights whatsoever," a teacher said. "If we don't, we're going to lose our job."

School board Chair Joe White and members Vilma Leake and George Dunlap said Tuesday they'd heard nothing about such requests. White said he'd be surprised if top administrators made such a move without clueing in the board.

Dunlap said he wants an explanation, even if CMS doesn't plan to do the more extensive checks.

"You don't ask people for stuff that you don't intend to use," he said. "I don't like using scare tactics. ... At some point, the right to privacy still exists."

FBI screwed up, spied on entire email network

FBI screwed up, spied on entire email network

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The FBI on Friday revealedhttp://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/02/17/MN99V44MJ.DTL) that human error led to surveillance of an entire email network back in 2006, rather than the single email address approved by the secretive court which approves domestic wiretaps and other forms of e-surveillance. (

Although the alleged mistake came to light in an Electronic Frontier Foundation (EFF) Freedom of Information Act (FIA) lawsuit, the internet service provider involved remains unpublished, due to the classified nature of the work involved.

Back doors were built into the nation's telecommunications infrastructure back in the mid-nineties which allow for almost immediate real-time surveillance of phone conversations - cellular or otherwise - emails, and other forms of electronic communications that pass through the networks of the telecommunications industry.

The ISP involved allegedly misinterpreted a warrant for one email address to be a warrant for - ahem - the entire network. This kind of mass negligence is really only the flip-side of a surveillance system that allows for almost immediate mass surveillance by the government and its cronies in the telecommunications industry.

This latest controversy comes as President Bush continues to demand that Congress provide retroactive immunity for telecommunications companies involved with illegal warrantless wiretapping of American citizens, and is sure to fan the flames of that ongoing debate. The simplistic fear-mongering that has characterized the political animus of the present administration is even less persuasive when measured against this level of incompetence - after all, what good does Orwellian spying do if those involved are too incompetent to get it right anyway?

One intelligence official shrugged it off. "It's inevitable that these things will happen. It's not weekly, but it's common." This is the most egregious case yet revealed of what is known as "overproduction" - spook-speak for when a third party, for some reason, gives more information than requested.

At least they got a warrant for this kerfuffle. The controversial warrantless wiretapping program, which has led to gridlock in Congress for the revised Foreign Intelligence Surveillance Act (FISA) - the administration has promised to veto it if retroactive immunity for telecommunications companies is not included, while simultaneously claiming that the act needs to be passed immediately in the interests of national security - has had its own suspect "glitches". No one really knows how many purely domestic communications were hoovered up by the National Security Agency under the warrantless wiretapping program, and we probably never will.

Cynics suspect retroactive immunity to be a preemptive strike, should other, more secret, surveillance programs see the light of day. The FISA court issued a rare rebuke to the FBI last year for submitting false affidavits in support of its warrant applications, and other violations of note include dragging out surveillance long past what has been approved or seeking information beyond what had been authorized. Inasmuch as the FISA court issues warrants retroactively - and, anyway, almost never denies an FBI surveillance request - one wonders how, or why, they continue to screw things up.

Cages of Conquest

Crusade of Surge and Siege

Part Two Of Three - Part One Here

Cages of Conquest

Hear No Evil, See No Evil

By Manuel Valenzuela

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Americans’ ever-enduring, catatonic sleepwalk through the Empire’s vast array of bread and circus, as always produced by the Ministry of Truth and the Department of Propaganda, better known as the corporatist media, has succeeded in the creation of an ignorant, incurious and dumbed down populace completely bereft of knowledge of what is done in its name. With no concern for or understanding of geography, cultures, history, alien societies, the outside world and of the imperial aspirations of the Empire, Americans have proved easy targets to the manipulations and deceptions of the corporatist world. Seemingly unwilling to gain knowledge of anything outside American Idol or the weekly NASCAR rat race, the soldier ants and worker bees of the Empire are content to circumvent the horrors of war and the myriad crimes against humanity committed in their name in order to maintain their beautiful minds at peace.

Indeed, the corporatist media has triumphed in completely erasing America’s two disastrous occupations of Muslim lands from the peoples’ conscious and concern, in effect shifting the ongoing debacles away from the daily reality of Americans and towards the abyss of a most cavernous memory hole. Methodically and systematically, the quagmires of Iraq and Afghanistan, with all their inconvenient truths, with all their disturbing realities, with all their corresponding death, suffering and destruction, have virtually vanished into a vacuum of nothingness, transported by the corporatist state into a clandestine and secretive reality, making of these disasters non-existent nightmares that vanish upon the waking of a new day.

This propaganda by omission, this “out of sight, out of mind” machination has virtually erased from American reality the disasters unfolding in Iraq and Afghanistan, thus guaranteeing in the public mind a complete ignorance in or understanding of a barbaric continuation to occupations stuck in the quicksand of fierce resistance and never-ending guerilla warfare. Thus, America’s aggressive wars, its imperial occupations, its crusade of surge and siege that has done so much harm to millions of people, not to mention to the moral standing of the nation, have become non-existent memories under cover of fog and haze.

To the American people, the hegemonic occupations now descending further into quagmire have become invisible creations that only surface in the rare instance that a branch of the corporate media goes off script and produces footage of death, destruction or suffering. Otherwise, the war against West Asia remains a figment of our imagination, a reality when our beautiful minds want it to be, an inconvenient truth that becomes fiction the moment we decide it is so.

As such, having been conditioned through the corporatist media’s ceaseless dehumanization propaganda to believe Arabs and Muslims sub-human enemies, having been manipulated into hating America’s new enemy and having the corporatist media erase Iraq and Afghanistan from the memory hole, the American people have developed a disturbing, almost criminal indifference for the millions of human beings dying, suffering or otherwise being affected by the Empire’s wars and occupations. To a vast majority of Americans, the malignant tumors that are Guantanamo, Bagram and Abu Ghraib, together with what they represent, are as hazy and as far removed from reality as last week’s episode of a favorite sitcom. These cesspools of immorality rarely, if ever, register in the beautiful minds of most Americans, only bothering the conscious when photos, video or whistleblowers surface to incriminate torturers, leaders and patsies. Only then are we forced to confront one of the myriad number of inconvenient truths the red, white and blue does across the globe.

When truth does not surface, however, we revert back to willful ignorance, aided by the fictions of television and the comfort of consumerism, for deep down, inside the dark recesses of our mind, we know exactly what is done in our name, though we chose, willfully, to erase it from memory, to suppress the reality of American criminality. Using denial and delusion in conjunction with conditioned brainwashing and manipulation, we have decided that crimes against humanity do not exist if those crimes are done to sub-human enemies. Thus the barbarian horde at our gates becomes undeserving of human rights and international laws protecting human beings because they do not fit our definition of human.

Thus, never do we seek to know the ugly realities of places like Guantanamo, nor how America’s gulags, with their brutal methods and tactics, will inevitably affect our way of life, or question why they exist in the first place. For us, America’s black sites are reserved for the evildoers wanting to destroy our way of life. Little do we realize, though, that our way of life is being eroded at these very same sites, one right at a time, done not by terrorists, but by those managing our descent into the breadbasket of despotism. Remaining passive, obedient, silently acquiescent and possessing the attention span of a gnat, hundreds of millions of Americans thus concern themselves only with what new toy they can add to the family collection, or what new product they can obediently purchase next, or what new reality show will entertain them the most. After all, we must preserve our “way of life”.

If Guantanamo and what it stands for does not directly affect us, if torture and perpetual suffering and dehumanizing conditions and sadistic treatment and the destruction of habeas corpus and the Bill of Rights only affects the dreaded dark skinned Arab or Muslim, then America’s beautiful minds need not concern themselves or have empathy, they need not contemplate the inflictions of wickedness on their fellow human beings, they need not realize the crimes done in their name, nor the evisceration of American morality, nor the new normal being established, nor the precedence beings set, nor the trial and error being conducted, nor the techniques being experimented and refined, nor the machinations of tyranny being perfected.

Thus, through our transcendental customs, our American “way of life,” of methodically following the exploits of celebrities dead or dying, of aimlessly producing and consuming, as always becoming hypnotized by modern day court jesters, jousters, gladiators and chariot races, as well as exhibiting idol-worshipping, messianic-like followings and tendencies over the Corporatist Party’s current crop of presidential contenders, we have chosen to ignore the plight of the innocent – for most prisoners are – in Guantanamo and Bagram and Abu Ghraib and other places of ill-repute. We have thus chosen to be good Americans, seeing no evil, hearing no evil, mistaking ashes for snow, and pretending the evil done in our name does not exist.


Reincarnation of the Habitual


To look inside one of America’s gulags is to look back at dark history, to times of brutality and primitiveness, using the tunnel of hindsight to peer at the dungeons of the Roman Empire and of the Middle Ages, with their chained and caged collections of dissidents, enemies and scapegoats, their persecuted and tortured, and their sadism and thirst for blood; it is to step back in time to days of Inquisitions and torture chambers, to eras of witch persecutions and heretic trials, of silencing threats to power and spawning a black cloud of fear and intimidation throughout society.

It is a return to days when humans had no right, to nights of barbarism, to the depravity and indecency of our mammalian past, to the possession of the human mind by the wicked demons inherent in man. Looking inside America’s gulags helps us remember that over and over, for as long as humankind has walked the plains of Earth, when authoritarians rise, as always carried high on the shoulders of fear and insecurity, morality, integrity and human rights become lost in a sea of tyranny. These institutions of immorality help us see beyond the veneer and the hypocrisy that those espousing freedom and liberty propagate, helping erase the fog of deception those claiming to be defenders of human rights engender.

America’s archipelago of gulags proves, once again, that the “western” mantra of values, modernity and morality is nothing but an empty shell built on self-adulation, delusion and echoes of ethnocentrism and exceptionalism. This hollow and cynical vociferation falls flat upon the challenge of evolving human rights, for in its claim of moral superiority, hiding behind the theoretical wonders of Judeo-Christian tradition, supposedly progressing away from the primitiveness of our past, the “western” tradition has been one of continuous mass murder, repression, tyranny, oppression, exploitation, suffering and destruction, most aimed directly at the peoples of the “south,” most directed at people not possessing the genetic mutation that turned skin color pale.

American gulags and its system of extraordinary renditions, green lighted at the very top of the food chain, proves to anyone not blinded by delusions and propaganda that America is not now and has never been morally superior to the rest of the world. From the very beginning of the republic, morality has given way to imperialism. Whether done through proxy, by puppets or by America’s own hands, control over the peoples of the world has usually involved some form of tyranny, as always dependent on the vast funding, financing, political support and training of the Empire. However, where once hidden under the veneer of democracy and freedom, under the ruthlessness of puppet dictators, America’s sordid, though clandestine, past has come to the surface thanks to the exposure of its methods and techniques, becoming an open acknowledgement of past indiscretions and present malfeasance.

From the School of the Americas, to research into psychological and physical torture at McGill University, to perfecting the art of “enhanced interrogation techniques,” to support of every tin pot dictator and junta in Latin America, Asia, the Middle East and Africa, to the training of their thugs, enforcers and torturers, America has always possessed the wickedness of human malevolence. Its claims of being the defender of human rights is and has always been hypocritical at best and farcical at worst. Today we can see the real America at Guantanamo and its extension of gulags and torture chambers, the America the world entire has known for the last century but that Americans are just now waking up to. For today’s gulags are evolved creations of yesterday’s criminality, just as they will be the inspirations for tomorrow’s tyranny.


Entrapment


Guantanamo, with its cages and sensory deprivation and barking dogs and dehumanization and its stress positions and forced feeding and extremes of cold and hot and its isolation and its medical/psychological experimentation and its waterboarding and its darker, more sinister methods of torture yet to be exposed magnifies American tyranny and her hypocrisy, her injustice and depravity, her criminality and arrogance. It exposes, more and more, the charade that the war on terror is, how the purpose of Guantanamo is not the imprisoning of terrorists, for most there are guilty only of bad luck, persecution, retribution and being at the wrong place at the wrong time, but the methodical evisceration of the Constitution.

For Guantanamo, and its siblings, are a culmination of desperation, an attempt to rationalize the supposed existence of Arab and Muslim evil, an attempt to validate a fictional war on terror by incarcerating people falsely labeled “terrorists.” It is as much a torture center as it is a public relations and propaganda institution, a way to manipulate the American public both that Arab and Muslim terrorists exist, and that the American government is succeeding in bringing the terrorist threat to justice. It is a Hollywood-style set with its corresponding fictions and illusions of reality, a scam to convince Americans that a war that is concocted is indeed real, that it is being won.

The reality of the gulags exposes how an initial hunger for vengeance immediately after 9/11 has led to the imprisonment, suffering and torture of thousands, and how, knowing the falsity of charges and the innocence of men, America steadfastly continues shackling injustice, deciding to stage-manage the illusion of guilt as well as sacrifice the innocent to the continued myth of the so-called war on terror.

Kidnapped, traded in for money, picked up by a giant net of vengeance and imprisoned thanks to false accusations by rivals, the men at Guantanamo have become patsies in a world unconcerned for their rights. They are caged in a land of limbo, lost to the outside world, made to disappear, their lives practically an empty shell of their former selves . They are the scapegoats of American mendacity, labeled “terrorists” so that we can feel secure and protected, so that we can believe that evildoers hate us for our freedom, for our way of life. They are the poster children that grant the military-industrial complex a perpetual stream of blood money, a ceaseless parade of war, an endless flow of propaganda. They are, quite simply, the bread that gives authoritarianism sustenance, the wine that makes drunk with joy the enablers of fascism. They are, for all intents and purposes, dead men walking, ghosts without closure, phantoms forgotten by humanity.

Innocent of criminality, these individuals have been subjected to brutal and sadistic torture, as always leading to false confessions, their barbaric imprisonment and systemic dehumanization more a manifestation of American culture than of their resistance and human spirit. Many have been physically tortured, yet it is the more corrosive damage of psychological torture that has destroyed their minds, and their lives. Many will never return to normalcy, for what their minds have surely been subjected to no human brain should have to endure. Many have become the guinea pigs of psychologists and doctors experimenting with various methods of torture, trying to make torture more effective, more efficient.

Many have quietly, and conveniently, under cover of darkness or media blackout, been returned to their native countries, their innocence confirmed by their release, and by the silence of America. Forced to sign papers preventing them from speaking of their horrors, or from suing their torturers, they return a shell of their former selves, damaged beyond repair, scarred for life, forever to relive the horror they experienced in their nightmares and flashbacks. Yet many remain, shackled to American propaganda, held hostage to the illusions of the war on terror. As long as the fiction lives their guilt is assured, their imprisonment guaranteed. As long as tyrants fear persecution and imprisonment for criminality, they will live in cages. As long as they are used as the meat feeding the dogs of tyranny, they will remain encaged. As long as the authoritarian leadership seeks the continued erosion of the Constitution, and of our rights and freedoms, they will linger in perpetual purgatory, becoming the rotting carcass fed to the vultures of fascism.

Guantanamo’s cages cannot yet be opened and made empty, for to do so would be to expose the fictions, the charades, the method to the madness, the sheer immorality of the Empire. It would be to acknowledge injustice of innocence, the depravity of liberators, the criminality of leadership. Guantanamo’s gates cannot yet be closed, for the Crusade of Surge and Siege must continue, the enemy must exist, profits must remain, our rights and freedoms and liberties must be destroyed. New precedents of American legality must be established, kangaroo courts must convict, enemies must be punished, propaganda must manipulate and the innocent must be executed in order to increase leadership popularity, to refresh propaganda, to feed fear and to politicize elections.

America’s leadership is fully aware of the innocence of the vast majority of prisoners, yet cannot force itself to act against its own inhumanity. For to do so would be to admit mistakes, acknowledge criminality, condemn policies and destroy the authoritarian dream. Closing Guantanamo would expose the fa├žade, the hall of smoke and mirrors, ending the subtleties of fear and intimidation being built around the American public. Perhaps more than anything, freeing the innocent and closing America’s torture centers would confirm the monstrosity of what America has become, destroying the foundations of a new normal being developed, maybe even shattering the bubble of manipulation cast over the population.

As long as Guantanamo remains the motives of fascists will survive, and the indifference of the American people will be assured. As long as its cages are occupied, as long as its torture rooms resonate with the screams of agony and suffering, Guantanamo will be the symbol of a new Amerika, one at war with the Arab and Muslim world, an Amerika at war with its people, and itself. As long as it remains a stain on humanity, America’s clandestine past and her immediate present will be exposed to more and more people, thereby freeing truth and knowledge, liberating the brainwashed and emancipating the manipulated.

Inside America’s gulags the future of the nation is being determined, one malevolent policy at a time, one sadistic interrogator at a time, one tortured soul at a time. It is here where our way of life is being altered, perhaps forever, not by terrorist evildoers hating us for our freedoms, but by fascism’s enablers doing the work of those domestic evildoers that hate us for our freedoms, for our way of life. In this Crusade of Surge and Siege, the Arab and Muslim victims have become a bridge of precedence set and normalcy born reaching out towards America, becoming the scapegoats and patsies granting access, and an omnipresent reach, to tyranny rising over that city on a hill once known as the United States of America.

Part Three: Inside the Fires of Imperialism, to be posted 25 February, 2008

Manuel Valenzuela is a social critic, commentator, Internet essayist and author of Echoes in the Wind, a novel now published by Authorhouse.com . His essays appear regularly at various alternative news websites from around the globe. Mr. Valenzuela welcomes comments and can be reached at manuel@valenzuelas.net .

Nato Troops Called in as Mobs Torch Checkpoints on Kosovan Border

Nato Troops Called in as Mobs Torch Checkpoints on Kosovan Border

By Catherine Philp

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Protests by Serbs on the border rapidly descended into violence and arson.

Mitrovica - Nato peacekeepers were forced into action for the first time since Kosovo declared independence after Serbs attacked and set fire to official checkpoints on the border with Serbia.

More than 1,000 Serbs, including women and children, had met at the border to stage a demonstration rejecting Kosovo's secession.

But the crowd, who were joined by another group from Serbia proper, quickly grew violent and attacked the two checkpoints at Banja and Jarinje guarded by ethnic Serb members of Kosovo's multi-ethnic police force.

The protesters tipped over metal sheds that housed Customs services, sending them sliding down the hillside, before setting fire to the remaining buildings. A local policeman at the scene reported: "We couldn't do anything, we just moved away as there were only a few of us compared with the group of very angry Serbs."

Kosovan police and their UN counterparts were forced to withdraw and call for help from Nato peacekeepers. Armoured vehicles packed with French troops arrived to block off the road leading north to Serbia, while Nato helicopters buzzed overhead.

Serb officials said the demonstrators had been trying to prevent ethnic Albanian officials from setting up their own Customs offices at the crossing points, not previously recognised as an international border. Slavisa Ristic, the mayor of the local Serb municipality closest to the border, said: "We cannot allow the institutions of a non-existent state to be imposed on us with us paying taxes to some independent Kosovo. That is impossible."

Police officials, however, said that no ethnic Albanians had been present at the checkpoints.

Three Serb municipalities, including the northern half of the ethnically divided city of Mitrovica, are effectively partitioned from the rest of Kosovo. They are no-go areas for Kosovo Albanians and are policed by a mixture of Serbs from the Kosovo police forces and security forces from Serbia, which also provides jobs, welfare payments, power and healthcare to its ethnic brethren there.

Fears that northern Kosovo will secede rose sharply with Kosovo's declaration of independence, when Serb leaders said they would set up their own parliament and strengthen links with Belgrade. Kosovo Albanians have refused to let the Serb enclaves go.

The violence came as Javier Solana, the EU foreign policy chief, became the first senior Western official to visit Kosovo since its declaration. The EU is to be chief sponsor of an independent Kosovo, sending a 2,000-strong judicial mission in weeks. Mr Solana arrived as the Parliament in Pristina passed its first legislation, creating Kosovan citizenship, passports and a foreign ministry.

As the checkpoints burned, the international furore refused to die down, with Serbia calling on the Organisation for Security and Co-operation in Europe to condemn the declaration as illegal. Russia is moving forward with a motion at the United Nations Security Council to reverse Kosovo's secession.

Disinformation flies as US raises Iran bar

Disinformation flies as US raises Iran bar

By Kaveh L Afrasiabi

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A
new report on Iran by the International Atomic Energy Agency (IAEA) is about to be released and US "pre-emptive" diplomacy, aimed at preventing an IAEA "clean bill of health" that could derail Washington's effort for a new round of UN sanctions on Iran, is at full throttle - with the timely help of disinformation.

Setting the bar unusually high, the US envoy at the IAEA, Gregory Schulte, has warned that unless Iran "confesses" about its "past work on weapons designs and weaponization and the role of the Iranian military", international efforts to resolve the nuclear standoff will be "doomed".

Washington's brand new benchmark comes in the wake of a spate of US media reports that the US has "shared new
intelligence" with the IAEA that corroborates American allegations of past Iranian nuclear proliferation activities. According to the New York Times, the US decided to "turn over intelligence data" and allow the IAEA privileged access for "divulging confidential information" by reversing "longstanding refusal to show the data, citing the need to protect intelligence sources". [1]

A widely published report by Associated Press cites diplomats as saying that the material forwarded to the IAEA over the past two weeks expands on previous information from the Americans. [2]

But, we learn, the new information pertains to data from the same "stolen laptop" that was the source of the previous information, which was termed unreliable at the time by, among others, David Albright, the president of the Institute for Science and International Security (ISIS) in Washington. (For more on the laptop story see the author’s The IAEA and the new world order, Asia Times Online, February 3, 2006.)

Meanwhile, in response to this author’s request for clarification regarding this matter, a source close to the IAEA has called the US media reports "misleading". The source said: "Without going into the intelligence we may or may not have received, I can say that in my view, these news reports were misleading. The [IAEA] report [on Iran] is due to come out Friday or Monday and then things will become clearer for everyone."

Standing firm
The IAEA must insulate itself from the disinformation campaign against Iran that has by all indications gone into a higher gear as we draw closer to the upcoming meeting of the IAEA’s board of governors, and it must ignore the intensifying American lobbying efforts and those of its junior partners such as France (at a recent meeting of France’s President Nicolas Sarkozy and the IAEA chief, Mohammad ElBaradei, the IAEA was urged to "stay firm" on Iran).

More important, the IAEA must stay firm on the rules of game and consider the fact that any overstepping of its bounds - eg, by pressuring Iran to suspend its uranium enrichment program in spite of Iran’s legal rights and its nuclear transparency - will definitely backfire against the agency and, indeed, the entire non-proliferation regime.

After all, Iran has the solid backing of a bulk of international community, namely the Non-Aligned Movement (NAM), which covers some 118 member states. Recently, Iran’s ambassador to the UN, Mohammad Khazaee, met NAM representatives and urged them to continue with their crucial support for Iran’s right to nuclear technology. Ambassador Khazaee has also written a letter to the UN Secretary General about the recent US National Intelligence Estimate (NIE) on Iran, reiterating Iran’s peaceful nuclear intentions and urging the UN not to yield to US pressure that could harm the UN’s legitimacy.

South Africa, a key NAM member, has already played a pivotal role in making sure that the UN Security Council does not take any action against Iran before the new IAEA report on Iran.

From Iran’s vantage point, the resolution of so-called "outstanding questions" as a result of a "work plan" with the IAEA, which has full scope to monitor Iran’s nuclear facilities and which has stressed on numerous occasions the absence of any evidence of military diversion, means that there is no justification for any UN sanctions or continued UN Security Council involvement with Iran’s nuclear dossier.

This week, Gholamreza Aghazadeh, the head of Iran’s nuclear energy organization, traveled to Vienna to provide further explanation about Iran’s nuclear activities and to dispel the new suspicions about past activities raised by the US.

Undoubtedly, Washington's new intransigent strategy has its own limitations. There is only so much emphasis that can be placed on alleged past activities, when the real concern is and should be Iran’s present and future nuclear activities.

By placing the bar artificially high, on the other hand, the US may spoil the steady progress in Iran-IAEA cooperation and, indeed, set the process back if the IAEA heeds the present US pressure tactics and refuses to issue a clean bill of health (or something approximating it) for Iran.

The existence of merely minor or technical questions cannot possibly be the basis for declaring Iran in breach of its Non-Proliferation Treaty obligations, which is what the UN Security Council has done, going well beyond the IAEA’s own findings.

What lies ahead then? Iran has categorically stated that it will reject any UN pressure to stop the enrichment program and given Iran’s rapid technological progress with its P-1 and P-2 centrifuges, a fait accompli according to the IAEA chief, the US’s rigid insistence on "zero centrifuges" is unrealistic and in dire need of a revised, new approach that would conceivably place the focus on nuclear transparency and the full implementation of the IAEA safeguard measures. [3]

But with Schulte sending the wrong signal, the Iran nuclear crisis will likely become more aggravated in the coming months if (1) the US and its allies succeed in forcing a more circumspect IAEA report that does injustice to Iran, and (2) Iran fulfills its threat to scale back its work with the IAEA if the agency permits the powers that be to manipulate its findings on Iran. Such a negative leap backward is not in anyone’s interest.

Notes
[1] David Sanger and Elaine Sciolino, U.S. to Produce Data on Iran’s Nuclear Program, New York Times.

[2] George Jahn, US Intel Links Iran With Nuclear Bomb Bid, Associated Press.

[3] For more on this, see the author’s Realism, not idealism: Keeping Iran’s nuclear potential latent, Harvard International Review

Kaveh L Afrasiabi, PhD, is the author of After Khomeini: New Directions in Iran's Foreign Policy (Westview Press) and co-author of "Negotiating Iran's Nuclear Populism", Brown Journal of World Affairs, Volume XII, Issue 2, Summer 2005, with Mustafa Kibaroglu. He also wrote "Keeping Iran's nuclear potential latent", Harvard International Review, and is author of Iran's Nuclear Program: Debating Facts Versus Fiction.

Tape Inquiry: Ex-Spymaster in the Middle

Tape Inquiry: Ex-Spymaster in the Middle

By Mark Mazzetti and Scott Shane

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Washington — It would become known inside the Central Intelligence Agency as "the Italian job," a snide movie reference to the bungling performance of an agency team that snatched a radical Muslim cleric from the streets of Milan in 2003 and flew him to Egypt — a case that led to criminal charges in Italy against 26 Americans.

Porter J. Goss, the C.I.A. director in 2005 when embarrassing news reports about the operation broke, asked the agency’s independent inspector general to start a review of amateurish tradecraft in the case, like operatives staying in five-star hotels and using traceable credit cards and cellphones.

But Jose A. Rodriguez Jr., now the central figure in a controversy over destroyed C.I.A. interrogation tapes, fought back. A blunt-spoken Puerto Rico native and former head of the agency’s Latin America division, he had been selected by Mr. Goss months earlier to head the agency’s troubled clandestine branch. Mr. Rodriguez told his boss that no inspector general review would be necessary — his service would investigate itself.

It was a protective instinct that ran deep inside the C.I.A.’s fabled Directorate of Operations, the agency’s most powerful branch. The same instinct would resurface months later, when Mr. Rodriguez dispatched a cable to the agency’s Bangkok station ordering the destruction of videotapes that showed C.I.A. officers carrying out harsh interrogations of operatives of Al Qaeda.

"He would always say, ‘I’m not going to let my people get nailed for something they were ordered to do,’ " said Robert Richer, Mr. Rodriguez’s deputy in the clandestine branch until late 2005, who recalls many conversations with his boss about the tapes.

No Record of Punishment

With the tapes’ destruction now the subject of overlapping Congressional and criminal inquiries, investigators are trying to determine whether Mr. Rodriguez, 59, acted on his own or with at least tacit approval from superiors at the C.I.A. or the White House. Officials now say a recent review by the C.I.A. of Mr. Rodriguez’s personnel file found no record of any reprimand or punishment for his action.

The destruction of the tapes is hardly the first time that the C.I.A.’s mission to take risks and to counter threats abroad has come into conflict with American notions of justice, legality and human rights. From assassination plots in the 1960s to the Iran-contra scandal of the 1980s, American spymasters have found themselves in legal jeopardy for acts they said were lawful and necessary.

The tapes episode and Mr. Rodriguez’s role reflect the intensity of the particular tensions that have played out since the Sept. 11 attacks, a period in which the C.I.A. has been asked to play a new role in capturing, questioning and imprisoning terror suspects, and is now facing questions about whether its conduct crossed the line into illegality.

The events surrounding the tapes unfolded during one of the most tumultuous periods in the C.I.A.’s 60-year history, when the insular and proud clandestine service clashed with the strong-willed team that Mr. Goss, a former Florida congressman, brought with him to the agency. Mr. Rodriguez was "the man in the middle," Mr. Richer said.

Mr. Rodriguez and Mr. Goss declined to be interviewed for this article.

Mr. Goss was not the first C.I.A. director to discover that operatives who were trained to destabilize foreign governments could sometimes put those same skills to work inside the agency.

In a striking metaphor for Mr. Goss’s powerlessness, as officers of the Directorate of Operations, or D.O., ignored his instructions and shunned his staff, he later told a colleague that "when he pulled a lever to make something happen in the D.O., it wasn’t just that nothing happened," the colleague recalled. "It was that the lever came off in his hands."

Mr. Rodriguez joined the C.I.A. in 1976, at a time when the agency was still reeling from Congressional investigations into assassination plots, coup attempts and domestic wiretapping.

With his thick accent and undergraduate and law degrees from the University of Florida, he stood out in the clandestine service, which even in the 1970s was a preserve of the Anglo-Saxon, Ivy League establishment.

But over the next two decades in a series of overseas postings, Mr. Rodriguez ascended the ranks of the directorate’s Latin America division, serving from Peru to Belize and heading the C.I.A. stations in Panama, the Dominican Republic and Mexico.

He ran the kind of espionage missions and covert operations that defined the agency, overshadowing its other task of analyzing intelligence from all sources. Clandestine officers fashioned themselves as the "fighter jocks" of the C.I.A., the swashbuckling spies who risked their lives for their country.

Dominating the Culture

The Directorate of Operations "is a really small part of C.I.A., in terms of budget and people," said Mark M. Lowenthal, a former assistant agency director. "But in terms of culture, the D.O. dominates the place." In mid-2005, the directorate was renamed the National Clandestine Service.

A popular boss, Mr. Rodriguez occasionally flashed the maverick spirit prized by clandestine officers. One former colleague recalls that while in Mexico he named his horse Business, instructing subordinates to tell the ambassador or the C.I.A. brass that he was "out on Business."

By the mid-1990s, Mr. Rodriguez was head of the Latin America division. But his career was nearly cut short when the C.I.A. inspector general reprimanded him in 1997 for a "remarkable lack of judgment" after he intervened to stop jailhouse beatings by guards of a childhood friend arrested on drug charges in the Dominican Republic.

A C.I.A. officer stationed in the Dominican Republic complained to the inspector general that the intervention was improper, according to a former agency official. Mr. Rodriguez was removed as chief of the Latin America division, and later returned to run the station in Mexico.

Shortly after the Sept. 11 attacks, he was tapped to become chief operating officer of the agency’s Counterterrorism Center, based at the C.I.A. headquarters, which was ballooning to nearly 1,500 officers from 300. There was grumbling that Mr. Rodriguez, with no experience in the Muslim world, was given the job. But seven months later, he was promoted to head the center, placing him in charge of the hunt for Qaeda operatives and the interrogation of terrorist suspects in a chain of secret C.I.A. prisons.

By the time Mr. Goss was sworn in as director of central intelligence in late September 2004, the agency’s clandestine service was already embittered by finger-pointing over the Iraq war.

The arrival of the new leader and his outspoken aides, dubbed the "Gosslings" by some within the agency, made matters worse.

Many agency veterans suspected that Mr. Goss and his team were on a White House mission to clean house at the C.I.A. The two top officers of the clandestine service, Stephen R. Kappes and Michael J. Sulick, soon quit.

When Mr. Goss looked for replacements, two agency officers turned him down, fearing that accepting the job would be seen as a betrayal of the clandestine branch. In the end, Mr. Goss offered the job to Mr. Rodriguez.

According to Mary Margaret Graham, a career clandestine officer who recently retired as head of intelligence collection for the director of national intelligence, Mr. Rodriguez had similar concerns about "betraying" fellow undercover officers. He assured her that he had accepted the position "on his terms."

"I think in hindsight they expected a much more pliable person than they got," she said.

Mr. Rodriguez traveled to overseas stations more than many predecessors, to build morale and get a firsthand account of operations. One result was that the clandestine branch’s daily operations were often left to his chief of staff, who had worked with Mr. Rodriguez in the Counterterrorism Center. Because she is still under cover, The New York Times is not publishing her name.

Several former C.I.A. officials recall repeated clashes between Mr. Rodriguez’s chief of staff and aides to Mr. Goss on matters from the trivial to the serious.

One serious concern, in the view of Mr. Goss’s staff, was the resistance of Mr. Rodriguez and his chief of staff to outside reviews of such missteps by the clandestine service as the Italian operation. In the matter of the tapes, there was also concern that Mr. Rodriguez and others who were involved in creating them were now pushing to destroy them. "It was just that they weren’t very impartial judges," said a former C.I.A. official.

Mr. Rodriguez, who was nearing retirement, saw the tapes as a sort of time bomb that, if leaked, threatened irreparable damage to the United States’ image in the Muslim world, his friends say, and posed physical and legal risks to C.I.A. officers on them.

People close to Mr. Goss, who knew from his Congressional years how explosive accusations of cover-up could be, insist he told Mr. Rodriguez the tapes should be preserved.

But if Mr. Goss believed Mr. Rodriguez had disobeyed him, why did he not punish the clandestine service chief? One former C.I.A. official said White House officials had complained about the news media firestorm that accompanied the departure of Mr. Kappes and Mr. Sulick a year earlier, and Mr. Goss felt he could not risk another blowup.

"Loyal and Dedicated"

Robert S. Bennett, Mr. Rodriguez’s lawyer, said his client was never instructed to preserve the tapes and recalls no discussion of conflict of interest on his part.

"Guys like Jose are loyal and dedicated and take risks to keep the country safe from terrorism," Mr. Bennett said. "Now, his own government is investigating him, and I think it’s shameful."

Not long after the tapes were destroyed, Mr. Goss held a management retreat for top agency officials meant in part to soothe tensions among the agency’s dueling branches. There the deputy director for intelligence — the head of analysis — complained openly about the arrogance of the clandestine branch and said undercover officers thought they could get away with anything.

That was too much for Mr. Rodriguez. He stood up in the room, according to one participant in the meeting, and shouted in coarse language that the analysis chief should "wake up and smell the coffee," because undercover officers were at the "pointy end of the spear."

The clandestine branch, Mr. Rodriguez was making it clear, would do what it wanted.

Bamboozling the American electorate again

Bamboozling the American electorate again

Bush-Cheney strategy involves G.O.P. crossover voting to take out Hillary, marketing newcomer Obama, an "independent" ticket, and maybe even martial law...

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Evidence of a covert campaign to undermine the presidential primaries is rife, so it's curious that the Democractic Party and even some within the G.O.P. have ignored the actual elephant in the room this year. That would be Karl Rove. After rigging two previous presidential elections, this master of deceit would have us believe that he's gone off to sit in a corner and write op-eds.

Not so. According to an article in Time Magazine, Republican party activists have been organized by the G.O.P. to throw their weight behind Barack Obama, the democratic rival of frontrunner Hillary Clinton. Early in Obama's campaign, top Republican fundraisers flushed his coffers with cash, something the deep pockets hadn't done for any candidate in their own party. With receipts topping $100 million in 2007, the first-term Illinois senator broke the record for contributions. It was a remarkable feat, considering that most Americans had not even heard of him before 2005.

The Time magazine article goes on to explain that rank and file Republicans in red states have switched their party registrations, enabling them to vote in Democratic primaries. Some states, like Virginia and Texas, have open primaries, allowing citizens to vote for any candidate regardless of party affiliation. In Nebraska, the mayor of Omaha publicly rallied Republicans to caucus for Obama on February 9th. Called crossover voting, the tactic is playing a crucial role in the Rove push to deprive Clinton of the Democratic nomination. Even with the help of his more familiar hodge-podge of dirty tricks - swiftboating, waitlisting, bogus polling data, paperless electronic voting equipment, Norman Hsu, etc. - Rove would be hard pressed to defeat Clinton in November, since she's popular nationwide and has promised an immediate troop withdrawal from Iraq. If the contest isn't close, the vote-rigging won't matter.

If, on the other hand, Obama wins the nomination (or even the VP spot), Rove's prospects brighten considerably. Largely unvetted by the media, the self-described agent of change carries considerable baggage from his stint as a state legislator, particularly his long-running relationship with a notorious Chicago slumlord named Tony Rezko. So far, the mainstream press has paid lip service to the affair and instead portrayed Obama as a fresh new face in American politics. The author of the Time magazine article, Jay Newton-Small, offered the following explanation to account for the bizarre love affair G.O.P. voters say they're having with an African American senator on the other side of the aisle. "It seems a lot of Republicans took to heart Obama's statement in his rousing speech at the 2004 Democratic National Convention that 'there is not a liberal America and a conservative America — there is the United States of America.'"

Is he kidding? The conservative publication National Journal claims Obama's voting record is the most liberal in the senate. Although not everyone agrees with the assessment, it's hard to picture the voting pattern that Mr. Small implies here: Nixon - Reagan - Bush - Dole - Bush - Obama. Yet he and his cohorts across the media spectrum - from NBC to NPR - daily provide this very spin on reality, even as they dismiss Clinton as a disparaged figure within her own party. Last year, at the same time she commanded a huge lead in the national polls, political analysts and professional strategists hired by CNN and other broadcast networks began hammering across the notion that "the voters don't like her". The adjectives "unlikable", "divisive" and "polarizing" are repeated over and over in the same manner as terms like "biological warfare" and "weapons of mass destruction" were branded on the American conscience in the lead-up to the Iraq War. In both cases, the terminology is traceable to right-wing ideologues, especially those who frequent Fox News programs. "There is no candidate on record, a front-runner for a party's nomination, who has entered the primary season with negatives as high as she has," Rove told Reuters last August. The Bush Administation's former senior political strategist recently joined Fox an an election analyst.

Obama himself frequently recites Rove's "high negatives" comment in press interviews whenever discussing Clinton. His often bitter criticism of the former First Lady and other "Washington insiders", who he says want to "boil and stew all the hope out of him", represents a staple of his core political message. His campaign slogan of "I'm a uniter, not a divider" is also reminiscent of the Bush 2000 campaign, which Rove managed. According to Marisa Guthrie of BC Beat, Obama campaign speechwriter Ben Rhodes is the brother of David Rhodes, a Fox News VP. The latter Rhodes has been with the network since its inception in 1996. You may recall that on election night in November 2000, it was Fox that called Florida for Bush, even though the other networks declared Gore the winner, citing the exit polls. How Fox knew the polls were wrong in advance of the vote tabulation has never been explained.

Her naysayers aside, on Super Tuesday, Clinton captured sizeable majorities in the population-rich states of California, New York, Massachusetts and New Jersey. While Obama won most of the the red states in play, Clinton took Tennessee, Oklahoma, Arizona, New Mexico and Arkansas. Obama later closed the gap in delegates with wins in the caucus states of Washington and Nebraska, along with the Louisiana primary on February 9th. These victories were followed by Maryland, Virginia and D.C., giving Obama a 55-delegate lead, according to the Associated Press. However, neither candidate is expected to reach the 2025-delegate mark needed to cinch the nomination before the convention in August.

Presidential Race or Next American Idol?

Now that McCain has locked up the Republican nomination, it's likely that crossover voting will intensify in the remaing primary statses. Yet even when the race was hotly contested, only one in three voters cast ballots for Republican candidates nationwide. In red-state New Hampshire, 50,000 more votes were cast for Democrats than Republicans, about 10 pecent of the total voter turnout. In Iowa, the lopsided vote was even more pronounced. G.O.P. winner Mike Huckabee received only half the number of votes cast for Clinton, who placed third behind Obama and Edwards.

As ominous a portent as that may be, the Clinton campaign must also contend with a succesful branding campaign mounted by the professional public relations team working for her opponent. Both traditional progressives and younger voters appear to have taken the Obama agent of change premise at face value. A constant stream of You-Tube videos touting the candidate's rock star status, especially the popular "Obama Girl" clip watched by millions, hasn't exactly hurt his cause. And nobody would have predicted a few years ago that left-leaning pundits would join in an unholy alliance with Fox to help defeat a popular liberal promising immediate troop withdrawals, but here we are. Journalists like Ari Berman, editor of The Nation, are popping up on Fox programs they once labeled as 24/7 campaign commercials for the Republican Party. The fact that Obama is known to have watered down legislation requiring nuclear giant Exelon to publicly disclose radiation leaks doesn't seem to trouble them in the least. Exelon is Obama's fourth largest campaign contributor. (Read the New York Times article about the controversy.)

In a blog posted the morning after the Iowa Caucus, Adrianna Huffington lauded the Illniois senator as practically the Second Coming. She didn't have much to offer in the way of specifics, however, and spent the bulk of her remarks railing at Bill Clinton, who she said had conducted himself in an interview as "arrogant and entitled, dismissive and fear-mongering". Huffington, it should be noted, was one of several progressive politicos swindled by the California recall referendum in 2002.That was the year Enron's Ken Lay, on the hook for $3 billion pilfered trom the state in the rolling blackouts scandal, succeeded in installing "Governator" Arnold Schwarzenegger through the back door. Candidate Huffington dropped out of the race a few days before the election, conceding the entire affair had been a set-up to divide the Democratic vote.

That she and her peers have allowed themselves to be bamboozled a second time is astonishing. With a few clicks of a mouse, they might have easily learned that former Speaker Dennis Hastert and the Illinois G.O.P. fielded a non-Illinois resident named Alan Keyes to run against Obama for the U.S. senate seat in 2004. Keyes, who had little public office experience, was hand-picked to replace Jack Ryan, the candidate who offically won the G.O.P. primary. Ryan was forced to resign in the wake of an alleged sex scandal involving his ex-wife. (A bit of trivia - The ex-wife is actress Jeri Ryan, who played the character "Seven of Nine" in the television series Star Trek Voyager.) In the general election, Alan Keyes received 27 percent of the vote to Obama's 70 percent.

Here's a little more history you won't find at HuffPost or The Nation: At the time of his senate run, Obama was a relatively minor player, a two-term state legislator who lost a congressional race against African American incumbent Bobbie Rush in 2000. Obama's first significant campaign donor in the 1990's was Antoin "Tony" Rezko, a Chicago power broker and developer who he met while still in law school. After leaving Harvard, Obama hired on with a community nonprofit agency in Chicago called Project VOTE, where he helped organze voter registration efforts. He later joined the law firm Miner Barnhill & Galland, whose clients included Rezko, and taught constitutional law at the University of Chicago.

Obama worked on (and later endorsed as a senator) a low-income senior housing development deal in which Rezko and a partner firm run by Allison Davis collected $855,000 in development fees. According to the Chicago Sun-Times, "In addition to the development fees, a separate Davis-owned company stood to make another $900,000 through federal tax credits." Later, while Rezko was busy fundraising for Obama, tenants in other Rezko developments launched with taxpayer dollars were having their heat cut off and other maintenance problems left unattended. The City of Chicago eventually sued Rezko, and an F.B.I. investigation into unrelated fraud allegations led to a felony indictment. Rezko is charged with illegally obtaining income through kickbacks and bribes, with a trial set to begin February 25th. Last June, Davis' longtime business associate William Moorehead was convicted of stealing $1 million in public housing funds. (For more on the housing deals and Obama's strange bedfellows, read the articles in the Sun-Times.)

According to Edward McClelland, writing for Salon.com, "Rezko, after all, built part of his fortune by exploiting the black community that Obama had served in the state Senate, and by milking government programs meant to benefit black-owned businesses." While it may be unclear why Obama would continue his relationship with Rezco after this point, it's indisputable that he did. In 2005, Obama approached Rezko for help in purchasing a $2 million Georgian-revival home in a Chicago suburb. The property deal involved two adjoining lots that the owner wanted to sell together. Rezko's wife bought the first, while Obama acquired the parcel with the mansion for $300,000 less than the asking price.

Although no laws were broken in the transaction, Obama's 17-year long relationship with Rezko may represent a significant liability in achieving his presidential aspirations. Or so one would think. Remarkably, the connection went unreported by the national media until the CNN debate in South Carolina on January 17th, when Clinton raised the matter of the Chicago slumlord. CNN duly followed-up, interviewing the Sun-Times reporter who broke the story, and confirmed her claim.

Some of Obama's campaign donations over the years have come from sources named in the federal indictment. While the Chicago Sun-Times puts the figure of known tainted cash at $168,000, the senator initially agreed to give half that amount to charity, but only as an "abundance of caution", a senior staffer said. Later, after NBC Nightly News grudgingly broadcast a story about the affair, the campaign announced it would donate the entire amount. Soon, however, the crimes of Clinton's opponent would be transferred onto her. During an early morning interview broadcast on the Today show, Matt Lauer brandished a photograph showing Rezko posing with President Clinton and his wife during the 1990s, then grilled the sleepy-eyed, former First Lady about her relationship to Rezko. Neither she nor the former President appeared to have any history with the developer, yet NBC deftly managed to cast aspersions on them, not Barack Obama. More recently, Brian Williams repeated the journalistic sleight of hand when airing a segment on Obama's Exelon ties.

OutFoxing Fox News

NBC may in fact be outFoxing Fox News when it comes to sabotauging Clinton's presidential hopes. On the night before the New Hampshire primary, Williams followed Obama around on the campaign trail, flashing a Newsweek cover of the senator while proclaining to viewers that the Obama campaign had now become a "movement". During the same broadcast, Andrea Mitchell described the Clinton campaign as broke, desperate, and ablaze with in-fighting. Mitchell continued with this theme the following night, even as Hillary led in the vote tally. She assured viewers that the results would eventually tip in favor of Obama. She was mistaken.

Following the South Carolina primary, both Mitchell and Tim Russert claimed on Nightly News and Today that the leadership of the Democratic Party was "mad as hell" at Bill Clinton for "attacking" Obama, and were lining up to back the Illinois senator. The charge was not corroborated with any sources. Russert also informed Matt Lauer that Ted and Caroline Kennedy's endorsement of Obama represented a sea change in the election, insinuating that because Bobby Kennedy was friends with Cesar Chavez, founder of the United Farmworkers, the endorsement should pave the way for Obama to capture the Latino vote.

What NBC's crack team of reporters failed to mention was that three of Bobby Kennedy's own children, the son of Cesar Chavez and the United Farmworkers union had already endorsed Clinton. In Nevada, Latinos in the 60,000 member Culinary Workers Union defied their white male leadership's endorsement of Obama and helped Clinton win the caucus there. While the Florida primary was showing Clinton with a 15 percent lead in the polls, CNN fill-in anchor Bob Acosta complemented NBC's aggressive push by declaring the Obama campaign had become a "runaway train" following its big South Carolina victory. On February 10th, CBS anchor Katy Couric joined the Clinton-bashing fray in a 60 Minutes segment, barraging Clinton with multiple questions about how she would deal with losing the election. The contentious exchange followed a far more upbeat piece on Obama, who at the time was trailing Clinton in delegates.

To wit, if there's a runaway train in this race, it isn't either of the candidates. For the past 20 years, media outlets have become increasingly consolidated into chains owned by multinational corporations whose primary mission is to enhance their bottom lines. The NBC/MSNBC network, for example, is owned by General Electric. Tim Russert's Meet the Press served as a principle outpost in the dissemination of the weapons of mass destruction argument used to justify the 2003 invasion of Iraq, while Andrea Mitchell, who appears on televsion almost exclusively to criticize Hillary Clinton, is married to former Federal Reserve chief Alan Greenspan.

Some journalists admit off-camera that Clinton has not been treated fairly in the course of the campaign. For his part, Howard Kurtz published an article in the Washington Post in December examining the widespread media bias favoring Obama. "The Illinois senator's fundraising receives far less press attention than Clinton's," Kurtz wrote. "When the Washington Post reported last month that Obama used a political action committee to hand more than $180,000 to Democratic groups and candidates in the early-voting states of Iowa, New Hampshire and South Carolina, the suggestion that he might be buying support received no attention on the network newscasts." Fear of Flying novelist Erica Jong later offered a possible explanation for the unequal treatment in Hillary vs. the Patriarchy, also published in the Washington Post.

Unlike her big Florida victory, the news of Clinton's New Hampshire win was not blacked out from coast to coast the next day, but more dark clouds were brewing on the horizon. Accusations of racism surfaced as on-air pundits and Obama surrogates argued that New England's white voters had betrayed their publicly declared support of the black candidate in the secrecy of the polling booth. When Clinton made a speech in South Carolina tying Martin Luther King's "I have a dream" speech to President Johnson's signing of the 1964 Cvil Rights Act, highlighting the role of Johnson, the Obama camp siezed on the opportunity. An advisor circulated a memorandum urging the faithful to slam Clinton for being disrespectful to King.

If you tracked the coverage of the ensuing feud, you would never know that it was this document that sparked the episode. Before the memo showed on the internet, Obama assured reporters that neither he nor anyone on his staff had accused Senator Clinton of any impropriety in her speech about Johnson, adding he was "baffled" by her suggestion that they were somehow involved. Meanwhile, South Carolina Congressman Jim Clyburn said the Clintons' aggressive reaction to the accusation of racism had compelled him to renege on an earlier promise to the Democratic National Committee not endorse a candidate before his state's primary. A few days later, Clyburn retracted his endorsement of Obama, but the damage was done. The Clintons have been barbecued ever since for "playing the race card" against Obama. When the former President launched into an angry (albeit laudable) tirade against the media's role in executing underhanded campaign manuevers, the networks used the occasion to argue that he was upstaging his spouse. Even as commander-in-chief, the pundits explained, Hillary would still be unable to control him.

Clinton Unplugged

Intelligent and astute, the New York senator has historically shied away from personal attacks, whether it comes from Manhattan's sexist firefighters or Chris Matthews of MSNBC's Hardball. Her campaign only briefly cut off relations with NBC when another reporter, David Schuster, said the Clintons had "pimped-out" daughter Chelsea as part of their election strategy. This is not to say Clinton isn't capable of landing a knock-out punch when provoked. During the ABC New Hampshire debate, she slammed the tag-team antics of John Edwards and Barack Obama when they tried to portray her as the voice of the "status quo". She informed the audience that both men supported Vice-President Dick Cheney's 2005 energy legslation, a bill "larded with subsidies for the oil companies". She opposed the legislation.

However, it was her performance in two CNN debates broadcast from South Carolina and California that elevated Clinton to the A-List of celebrity icons. In both contests, she took the gloves off to pound Obama on his record and statements uttered along the campaign trail. In the first debate, she highlighted his habit of voting "present" in the Illinois legislature, along his characterization of Ronald Reagan as a "transformative" president and the Republican Party during that period as the "party of ideas". She said, "I'm just reacting to the fact, yes, they did have ideas, and they were bad ideas. . . . Bad for America, and I was fighting against those ideas when you were practicing law and representing your contributor [Tony] Rezko in his slum landlord business in inner-city Chicago." In Hollywood, she delivered her other memorable soundbite, "It took a Clinton to clean after the first President Bush, and it's going to take another Clinton to clean up after the second President Bush." Over four million domestic viewers tuned in to the South Carolina debate, breaking a cable record. Twice that many watched the second debate. Many millions more saw the verbal prize fights on CNN's international broadcast.

Nevertheless, Clinton seems remiss in doing relatively little challenge the media's manipulation of the electorate. Having agreed to appear in an NBC debate shortly before the Texas and Ohio primaries, she's sure to be walking into another ambush. Like Benazir Bhutto, the years of political bludgeoning may have short-circuited her ability to navigate the minefields of the body politic (or even to appoint competent advisors). Regarding Karl Rove and the Bush-Cheney team, all she has mustered to date is her oft-repeated statement, “They’re not going to surrender the White House voluntarily." Last spring, she suggested that another terrorist attack against the United States would inevitably play into the hands of the G.O.P.

Vague as they sound, those two comments may prove prophetic in the event the Obama strategy fails and she goes on to win the Democratic nomination. The implications of a female president for American foreign and domestic policy are profound, creating jitters not only on Wall Street but for the Pentagon, the CIA and the State Department. It's possible that a significant number of officials accused of breaking U.S. laws or violating the Geneva Conventions might be arrested and prosecuted by a Clinton-directed Justice Department.

If that's not enough to keep Bush appointees and generals lying awake deep into the night, their long-running undercover operation with the ayatollahs in Iran (who paved the way for Reagan's 1980 election), the Pakistani Inter-Services Intelligence, and the Saudi royal family could be curtailed by the staunchly pro-women's rights democrat. The Saudis especially have reason to fret now that they and their counterparts in Kuwait and the U.A.E. have started buying up huge stakes in U.S. banks. Condolleeza Rice and Nancy Pelosi are one thing. A Clinton White House is quite another.

For his part, President Bush may have implemented a back-up plan last April when he signed National Security Presidential Directive/NSPD 51, an executive order allowing him to suspend the constitution without prior congressional approval. NSPD 51 gives the President the discretion to declare a state of emergency (i.e. martial law) in the event of a major terrorist attack or other “decapitating” incident against the United States, even if the attack happens outside the country. Under this scenario, he can cancel elections, padlock the Capitol dome and send the Supreme Court justices home. The directive also allows assigns the President's homeland security assistant ( a low-level position exempt from senate confirmation) to administer what has been dubbed the Enduring Constitutional Government. In other words, another Sept. 11th disaster could reduce this year's election to nothing more than the status of a season of Survivor. (Here’s the text of the directive.)

Delegates, the Conventions and an Indpendent Ticket

Assuming the homeland security assistant doesn't take over the country before next August, the Democratic Party's 796 superdelegates may decide the nomination. About half are elected officials, the other half party officials and campaign managers. The specter of less than 800 people determining the ticket in November has set Obama surrogates back on their haunches, this time arguing that a "brokered convention" decided in "smoky back rooms" will destroy the party. Initially it was thought that two-thirds of the superdelegates were pledged for Clinton, but more recent surveys suggest the situation is fluid.

Democratic National Committee chairman Howard Dean has issued a press release reassuring Americans that he will intervene before August if the race still remains deadlocked. The extent of his authority to do so relies on the cooperation of both candidates. However, Clinton is already under pressure from the media anad Obama supporters to "do the right thing" and bow out of the race, instead of risking a floor fight at the convention. The rules do not require her to do so.

Several times in the past, conventions have decided the party nominee. The most memorable took place in 1932, when neither Franklin Roosevelt nor his rival Al Smith secured enough delegates to cinch the nomination, causing the convention to deadlock. Corporate media tycoonWilliam Randolph Hearst took advantage of the predicament, forcing FDR to adopt an isolationist foreign policy in exchange for the delegates of the third-place candidate, Texas Congressman Jack Garner. FDR also had to take Garner as his running mate. What's interesting here is that after FDR beat Hoover in the general election, a would-be assassin nearly liquidated the new President-elect in Miami. Fortunately the shots went astray when a woman in the crowd grabbed the assailant's arm. Otherwise, Jack Garner would have become president.

Today, with only two candidates left in the race and the innovation of superdelegates, that scenario is moot. Still, the VP slot remains open and there are also lingering questions about what, if any effect the Tony Rezko trial in Chicago this year will have on Obama. It's possible that global warming crusader Al Gore, who says he'd still like to be president, may be jockeying to enter the election, perhaps as a draft candidate if Obama is forced to withdraw. (Although few voters remember, Gore is the same gentleman who received a grade of "F" from the League of Conservation Voters when he ran for president in 2000. To jog your memory, here's his 1998 press release on Kyoto Treaty.)

If Gore doesn't surface as a candidate at the convention, he could be tapped by the so-called centrist politicians who met last January in Oklahoma to lobby for a bi-partisan, independent ticket. A similar effort, the internet-based initiative known as Unity '08, likewise hopes to field a Democrat and a Republican to run together in the November election. New York mayor and billionnaire Michael Bloomberg is said to be testing the waters for a possible run, but his poll numbers to date look unpromising. Because the G.O.P. played such an anemic role in their own party primaries, the Karl Rove camp may field their Bush-Cheney successor team as independents.

The DNC is also considering the possibility of holding caucuses in Michigan and Florida in April or May as a way to allocate their delegates, which were stripped because the states were not granted "waivers" to hold primaries before February 5th. The Clinton campaign, which originally agreed to the ban, has since argued that both delegations should be seated according to the primary results. In the case of the Florida primary, the argument has merit, given that Democratic voters there recorded the largest turnout in history. It also appears some of Obama's cable TV spots appeared in the state, though he was not accused of violating the pledge not to campaign there. Clinton won 50 percent of the popular vote, Obama 33 percent, and John Edwards 16 percent. State Senator Bill Nelson, a Clinton supporter, has balked at the suggestion that the ballots cast by 1.7 million Floridians - it's the nation's fourth most populous state - should be replaced with caucuses that might at best attract 50,000 participants. It was Florida's Republican-controlled legislature that set the date for the primary, state party officials point out, not them.

Michigan held its primary on January 15th. Since Obama and Edwards pulled their names from the ballot beforehand, the votes for Clinton cannot be said to represent a mandate. Unfortunately for her, the stripped delegates in both cases have worked in Obama's favor. With its high percentage of hispanic voters, Florida could have been forecast as a Clinton treasure trove. The same is true for Michigan, whose native son Mit Romney's candidacy precluded the possiblity of a large crossover vote of Republicans there. Michigan boasts a relatively low number of upper-middle-class whites, one of Obama's strongest performing constituencies. Had the DNC not sanctioned the state, Clinton would likely have hauled in the lion's share of 156 delegates up for grabs. (The G.O.P., by the way, didn't punish either state for moving up their primaries.) One cannot blame her for experiencing some measure of frustration.

If the DNC opts to schedule caucuses, Obama would emerge the victor, since this form of voting typically requires traveling long distances, waiting outside a building in while volunteers sort out the logistics, and then attending a meeting that lasts one or two hours. Such factors tend to deter the participation of older voters; immigrants; those who work, need childcare or have other obligations during the narrow time frame of the caucus; and those for whom English is a second language. In a nutshell, this represents the Clinton base.

And it gets worse. Of the remaining states left to vote, Texas and Wisconsin will hold open primaries, which portends of a large crossover vote to put Obama over the top. (Texas was gerrymandered under Tom Delay to favor a Republican lock on most districts.) The state party in Texas also allots a third of its delegates by way of a caucus. Thus, even Clinton's superdelegate failsafe may prove insufficient in overcoming the shrewdly stacked deck against her. Thanks to Karl Rove and his friends in the shadows, the Democratic nominee may ultimately be determined not by Democrats but by the G.O.P., with the help of its unwitting accomplices at the DNC.