Tuesday, March 4, 2008

The CPI currently released by the government is worthless propaganda

Fractal Gold Report

By David Nichols

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How high can gold go in this bull market? I've discussed this topic previously, but it's worth another look as gold continues its inexorable rise to $1,000 per oz.

The answer may surprise you on the upside, as gold is still ridiculously cheap at the current $974.

For gold to be equivalent to the 1980 high of $850 -- in real, inflation-adjusted terms -- it would have to rise to $6,030 per oz. That is a 6-fold rise from the current price.

There are not many things changing hands at 16% of the inflation-adjusted price, but this is the current situation in gold. This is why the current bull market will send gold prices into the stratosphere, far beyond what even the wildest bulls are predicting now.

The Consumer Price Index (CPI) currently released by the government is worthless political propaganda, so we're not going to use it to calculate the true inflation rate. Instead we're going to use the method for calculating the CPI in place in 1980 -- the year of gold's high.

Since 1980, starting with the Reagan administration, changes have been creeping into the calculation of the CPI, mostly due to a nebulous concept known as "hedonic price theory". These methodology changes have been used by every administration since 1980, Democrats and Republicans alike. It's irresistible for those in power, because there are so many political benefits to under-reporting inflation. The foremost benefit is it gets the government out of paying true cost-of-living adjustments.

I won't veer off too far into economic theory -- it's not called the "dismal science" for nothing -- but it's important to understand hedonic adjustments, as this is what makes the current CPI such a farce. Essentially the government adjusts prices down to reflect increases in quality and utility. For example, many things -- computers, autos, washing machines, even refrigerators -- have a lot more features and enhancements now than they did 20 years ago. So these technological enhancements are factored by government statisticians into the calculation of the inflation rate.

In other words, since computers and washing machines have so many more features now, the government thinks the price should be adjusted down to reflect this increased utility. So the increase in price of most goods is not due to inflation, but to an ever greater array of features and enhancements.

Of course we still just use cars to get around, and washing machines to wash clothes, and refrigerators to keep food fresh. We're not really getting any more for our money, and if we are, they are just small increases in convenience.

But these hedonic adjustments give the government all sorts of room to massage the data to fit a political agenda. It's not a surprise to learn that Alan Greenspan was a big proponent of hedonic adjustments during his tenure at the Fed.

And thus, through economic sleight-of-hand, a good chunk of the actual inflation rate magically disappears from the reported CPI.

But economists and Fed-watchers are catching on. One economist in particular -- John Williams of Shadow Government Statistics --has taken the time to calculate a CPI using the methodology from 1980, prior to all these obviously political adjustments.

Nobody was complaining back in 1980 that the CPI was incorrect and dramatically over-stating inflation. It seems logical to adjust gold for inflation using the actual method in place in 1980, especially considering the political manipulation of this statistic over the last three decades.

If you use the 1980 methodology, the current annual rate of inflation is 11%. The things we buy cost 11% more this year than they did last year. That seems just about right, too, if you're an American consumer who has to live with this wallet-draining inflation in the real world. Nobody actually lives in the low-inflation fantasy world of politicians and statisticians.

Gold hit its all-time high on January 21, 1980, at $850. It took 27 years to get back to these levels, even in nominal terms. In January 2008, gold finally busted through to new highs and kept on going higher.

However, in inflation-adjusted terms, gold isn't even close to this 1980 high water mark, because the purchasing power of the dollar has collapsed over the past 27 years.

If you use the actual CPI (1980 methodology), the price of gold would have to hit $6,030 to equal the 1980 high of $850!

So a great case can be made that gold is one of the cheapest things you can buy right now. There aren't many things that would have to rise six-fold to just get back to its price from 27 years ago. Can you imagine buying a house at 1980 prices?

This massive and systematic under-reporting of inflation also explains the huge nominal price rise in lots of other commodities and tangible assets -- they are really just moving back towards balance after a long period of undervaluation.

This is why gold has the potential to go absolutely wild to the upside over the next five years. It's got some catching up to do.

Reaping The Benefits Of Bush's War

Reaping The Benefits Of Bush's War

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In a trip fraught with political meaning, Iranian President Mahmoud Ahmadinejad arrived in Baghdad on Sunday for a two-day visit. Ahmadinejad's presence in Iraq was a major propaganda victory. Not only was it the first visit to Iraq by an Iranian leader since the Iranian Revolution in 1979, it was the first by any Middle East leader since the fall of Saddam Hussein's regime in 2003. The manner of Ahmadinejad's arrival was striking. Unlike President Bush's surprise appearances in Iraq, which are kept secret until the last minute, Ahmadinejad announced his trip weeks ago. While most foreign officials visiting Iraq normally travel by helicopter to avoid the dangerous airport highway, Ahmadinejad, after "descend[ing] the stairs of his presidential jet smiling and waving," traveled by motorcade to the home of Iraqi President Jalal Talibani. There, in "Iraq's first full state welcome for any leader since the US-led invasion," the two men "clasped hands and exchanged traditional kisses on the cheeks before walking together down a red carpet to review an honor guard as a military band played the two national anthems."

DRAWING BAGHDAD CLOSER TO TEHRAN: Ahmadinejad's visit underscores how Iran has emerged as the chief beneficiary of the 2003 U.S. invasion and removal of Saddam Hussein, against whom Iran fought a massively destructive war between 1980-88. Tehran maintains ties to most of Iraq's Shia political parties. The dominant Shia party -- the Supreme Iraqi Islamic Council (SIIC, formerly the Supreme Council for Islamic Revolution in Iraq, or SCIRI) -- was founded in Iran by Iraqi exiles in the early 1980s, with the support of Ayatollah Khomeini and the Iranian Revolutionary Guard. SIIC continues to enjoy a close relationship with Iran; the party's leader, Abd al-Aziz al-Hakim received a personal visit from Ahmadinejad. At a news conference, flanked by Hakim and Iraqi Prime Minister Nouri al-Maliki, Ahmadinejad responded to U.S. accusations of Iranian intervention in Iraq by saying, "Iran has no need to intervene in Iraq. ... Isn't it ridiculous that those who have deployed 160,000 troops in Iraq accuse us of intervening there?" Ahmadinejad also directed criticisms at Bush: "You can tell Mr. Bush that accusing others will only complicate America's problems in the region. They must come to terms with the realities: the Iraqi people do not like Americans." Commenting on Iraq-Iran relations, Maliki said, "I think that the level of trust is very high. ... And I say frankly that the position Iran has taken recently was very helpful in bringing back security and stability."

A BLOW AGAINST ISOLATION AND REGIME CHANGE: Ahmadinejad's warm Baghdad welcome signifies a serious blow against U.S.-led efforts to isolate and sanction Iran for its lack of transparency on the nuclear issue. During the visit, "Tehran and Baghdad signed seven pacts in areas such as industry, trade and transport." Iran is funding construction of a large airport for the millions of pilgrims who visit the Shia holy cities of Najaf and Karbala, further cementing ties between the two countries' Shia communities. Iraqi officials confirmed discussion of an Iran offer of as much as "$1 billion in interest-free loans that would go toward reconstruction projects to be carried out by Iranian firms." The visit represents a major propaganda victory for Ahmadinejad going into the March 14 Iranian parliamentary elections. Despite the rejection of hundreds of reformist candidates, Ahmadinejad's conservative faction was seen as threatened because of Iran's troubled economy. In January, Ahmadinejad drew a rare public rebuke from Iran's supreme leader, Ayatollah Khamenei, because of his government's failure to provide heating gas to remote villages.

A BLOW AGAINST SECTARIAN RECONCILIATION: Ahmadinejad's visit also laid bare the divisions that continue to stymie political progress in Iraq. While he was embraced by his fellow Shiites as well as Kurdish leaders like Talibani, Sunni Vice President Tareq al-Hashemi did not meet with Ahmadinejad, and no Sunni politicians were present at the welcome ceremonies. The fact that Ahmadinejad is the first Middle East leader to visit Iraq since the 2003 invasion is not lost on Iraq's Sunni minority, who formerly ruled Iraq. Hundreds of Sunnis demonstrated against Ahmadinejad in Fallujah. Expressing the anger of many Iraqi Sunnis, Sunni cleric Abdul Kareem al-Samarai announced during a Friday sermon: "I have a message to the Arab leaders, where are you? Where are your ambassadors?" While several Arab states have missions in Iraq, none have sent permanent ambassadors. The closer relations between Tehran and Baghdad threaten to further alienate members of the Sunni tribal "Awakening" from the central government. Sheikh Jabbar al-Fahdawi, one of the tribal leaders, condemned Ahmadinejad's visit, declaring, "Iran is the No. 1 enemy of Iraq. I would have never let a man like this enter Iraq." Another tribal leader, Salman Abdullah Al-Hamad, also expressed outrage. "How can we tolerate this? ... Today we live under the regime of the clerics. The Iranian revolution has been exported to Iraq." While Sunni tribal groups have been credited with helping to reduce violence, they have expressed deep dissatisfaction with what they see as the Baghdad government's unwillingness to accommodate them. American officials have tried to present the Awakenings phenomenon as a revolt against al Qaeda, but many Sunni militiamen "say they joined partly to get support from the Americans so they can prepare to resist Iranian efforts to dominate Iraq.

US Warship Stirs Lebanese Fear of War

US Warship Stirs Lebanese Fear of War

By Nicholas Blanford

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The USS Cole has deployed off the coast of Lebanon as that nation's political crisis deepens.

Beirut, Lebanon - Washington's decision to deploy the USS Cole off Lebanon's coast is kindling grim memories of a past conflict here - and fresh concerns over another war.

While the US State Department says the Cole and other warships are being sent to the eastern Mediterranean to support regional stability amid Lebanon's political crisis, the move seems to have embarrassed the besieged Western-backed administration of Prime Minister Fouad Siniora and provided ammunition for the pro-Syrian opposition, led by the militant Shiite Hizbullah, to accuse the government of being a US pawn.

"It has done Hizbullah a huge favor," says Amal Saad-Ghorayeb of the Carnegie Endowment's Middle East Center in Beirut. "It's a sign of political bankruptcy on the part of the US. They have failed to achieve anything in Lebanon; all they have left is military muscle-flexing." Analysts here are divided over whether the USS Cole's presence is intended as warning for Hizbullah or Syria. But it has reminded Lebanese of the last time the US sought to intervene militarily in Lebanon, an involvement that had disastrous consequences.

In September 1983, midway through Lebanon's 16-year civil war, US warships shelled the Druze-dominated Chouf mountains south of Beirut in support of the Lebanese Army, then battling pro-Syrian militias. The shelling further convinced those Lebanese who were opposed to the then US-backed Lebanese government that Washington was not a neutral peacekeeper in Lebanon.

In October 1983, the US Marine barracks in Beirut was destroyed by a suicide bomber, killing 241 US servicemen. Two months later, the USS New Jersey, a World War II-era battleship, fired on Syrian troops and allied militia positions in what was the heaviest shore bombardment since the Korean War.

Many Lebanese still recall the "flying Volkswagens," the name given to the huge shells that struck the Chouf. The sporadic barrage, which lasted nearly two months, killed the top Syrian general in Lebanon.

In early February 1984, pro-Syrian militias took over West Beirut, spurring President Reagan to order a Marines evacuation. The Marines left by the end of the month, ending what then Defense Secretary Caspar Weinberger called a "particularly miserable assignment."

The alleged architect of the Marine barracks strike, Imad Mughnieh, was assassinated last month in a Damascus car bombing. Hizbullah, which blames Israel for the attack, has sworn to avenge the death of Mr. Mughnieh, who was post-humously identified by the group as its top military commander. Israel is taking the threat seriously and has placed its embassies on alert and reinforced its troops along Israel's border with Lebanon.

"To have an American warship here is highly symbolic, given that Imad Mughnieh is accused of the 1983 bombing," Ms. Saad-Ghorayeb says.

Some analysts say that if Hizbullah deals a heavy retaliatory blow to Israel, it could force Israel to launch another offensive against the Shiite group. Both Israel and Hizbullah have been preparing for another possible war following the 2006 conflict between the two foes.

The symbolism of the USS Cole is not just related to America's past in Lebanon, but also to its "war on terror." The USS Cole was badly damaged in an Al Qaeda suicide attack in Yemen in 2000, leaving 17 sailors dead, one of several pre-9/11 Al Qaeda attacks. It redeployed to the Middle East in June 2007 for the first time since the bombing. But now few analysts expect it to have much impact in Lebanon.

"These sort of gestures do not work around here," says Timur Goksel, a university lecturer in Beirut and former United Nations official in Lebanon. "Last time they shelled the Druze mountains. What are they going to shell this time? Dahiyeh?" he added, referring to the Hizbullah stronghold in Beirut.

Pentagon officials have said that the USS Cole, which is accompanied by two refueling ships, could soon be joined by some of the six-ship Nassau strike group, consisting of troop carriers, three more guided missile destroyers, and a submarine. Military analysts say it will be the largest American naval presence in the eastern Mediterranean in many years. The ships will not sail into Lebanese territorial waters, which extend 12 miles from the coastline.

"It's the start of a new campaign to change Syrian behavior," says Sateh Noureddine, a columnist with Lebanon's As Safir newspaper. "It's just the first signal from Washington that the Bush administration is fed up with Syrian behavior in Lebanon, Iraq, and the region. I think the Syrian regime will realize in the near future that it cannot continue challenging the whole world."

Syria, however, shows little sign of being cowed by the warship. Walid Muallem, Syria's foreign minister said that the arrival of the USS Cole "shows that the United States is striving to undermine all political solutions in the Lebanese crisis."

Lebanon has been without a president since November, due to a deadlock between rival political factions. The crisis has defied regional and international mediation and has fostered a deterioration in relations between Damascus and some of its Arab neighbors, particularly Saudi Arabia, a strong backer of the Lebanese government.

Last week, Saudi Arabia transferred its ambassador in Damascus to Qatar and urged its citizens to leave Lebanon because of the risk of violence. Saudi King Abdullah also has hinted that he will not attend the Arab League summit hosted by Damascus at the end of the month. A Saudi boycott of the annual event could encourage other Arab heads of state to stay away, embarrassing Syria and straining even further its already brittle ties with the Gulf kingdom.

Analysts view the moves by Saudi Arabia, coupled with US warships off Lebanon, as part of a coordinated campaign by Washington and Riyadh to squeeze Syria. But many also see these developments as further undermining the confidence in national stability among Lebanese, many of whom say their fate rests in the outcome of a regional power fight.

"Doesn't anybody think about this poor country?" asks Mr. Goksel, criticizing Saudi departures and the USS Cole deployment. "They are punishing Lebanese, scaring them, and panicking them."

A Wave of the Watch List, and Speech Disappears

A Wave of the Watch List, and Speech Disappears

By Adam Liptak

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Steve Marshall is an English travel agent. He lives in Spain, and he sells trips to Europeans who want to go to sunny places, including Cuba. In October, about 80 of his Web sites stopped working, thanks to the United States government.

The sites, in English, French and Spanish, had been online since 1998. Some, like www.cuba-hemingway.com, were literary. Others, like www.cuba-havanacity.com, discussed Cuban history and culture. Still others - www.ciaocuba.com and www.bonjourcuba.com - were purely commercial sites aimed at Italian and French tourists.

"I came to work in the morning, and we had no reservations at all," Mr. Marshall said on the phone from the Canary Islands. "We thought it was a technical problem."

It turned out, though, that Mr. Marshall's Web sites had been put on a Treasury Department blacklist and, as a consequence, his American domain name registrar, eNom Inc., had disabled them. Mr. Marshall said eNom told him it did so after a call from the Treasury Department; the company, based in Bellevue, Wash., says it learned that the sites were on the blacklist through a blog.

Either way, there is no dispute that eNom shut down Mr. Marshall's sites without notifying him and has refused to release the domain names to him. In effect, Mr. Marshall said, eNom has taken his property and interfered with his business. He has slowly rebuilt his Web business over the last several months, and now many of the same sites operate with the suffix .net rather than .com, through a European registrar. His servers, he said, have been in the Bahamas all along.

Mr. Marshall said he did not understand "how Web sites owned by a British national operating via a Spanish travel agency can be affected by U.S. law." Worse, he said, "these days not even a judge is required for the U.S. government to censor online materials."

A Treasury spokesman, John Rankin, referred a caller to a press release issued in December 2004, almost three years before eNom acted. It said Mr. Marshall's company had helped Americans evade restrictions on travel to Cuba and was "a generator of resources that the Cuban regime uses to oppress its people." It added that American companies must not only stop doing business with the company but also freeze its assets, meaning that eNom did exactly what it was legally required to do.

Mr. Marshall said he was uninterested in American tourists. "They can't go anyway," he said.

Peter L. Fitzgerald, a law professor at Stetson University in Florida who has studied the blacklist - which the Treasury calls a list of "specially designated nationals" - said its operation was quite mysterious. "There really is no explanation or standard," he said, "for why someone gets on the list."

Susan Crawford, a visiting law professor at Yale and a leading authority on Internet law, said the fact that many large domain name registrars are based in the United States gives the Treasury's Office of Foreign Assets Control, or OFAC, control "over a great deal of speech - none of which may be actually hosted in the U.S., about the U.S. or conflicting with any U.S. rights."

"OFAC apparently has the power to order that this speech disappear," Professor Crawford said.

The law under which the Treasury Department is acting has an exemption, known as the Berman Amendment, which seeks to protect "information or informational materials." Mr. Marshall's Web sites, though ultimately commercial, would seem to qualify, and it is not clear why they appear on the list. Unlike Americans, who face significant restrictions on travel to Cuba, Europeans are free to go there, and many do. Charles S. Sims, a lawyer with Proskauer Rose in New York, said the Treasury Department might have gone too far in Mr. Marshall's case.

"The U.S can certainly criminalize the expenditure of money by U.S. citizens in Cuba," Mr. Sims said, "but it doesn't properly have any jurisdiction over foreign sites that are not targeted at the U.S. and which are lawful under foreign law."

Mr. Rankin, the Treasury spokesman, said Mr. Marshall was free to ask for a review of his case. "If they want to be taken off the list," Mr. Rankin said, "they should contact us to make their case."

That is a problematic system, Professor Fitzgerald said. "The way to get off the list," he said, "is to go back to the same bureaucrat who put you on."

Last March, the Lawyers' Committee for Civil Rights issued a disturbing report on the OFAC list. Its subtitle: "How a Treasury Department Terrorist Watch List Ensnares Everyday Consumers."

The report, by Shirin Sinnar, said that there were 6,400 names on the list and that, like no-fly lists at airports, it gave rise to endless and serious problems of mistaken identity.

"Financial institutions, credit bureaus, charities, car dealerships, health insurers, landlords and employers," the report said, "are now checking names against the list before they open an account, close a sale, rent an apartment or offer a job."

But Mr. Marshall's case does not appear to be one of mistaken identity. The government quite specifically intended to interfere with his business.

That, Professor Crawford said, is a scandal. "The way we communicate these days is through domain names, and the Treasury Department should not be interfering with domain names just as it does not interfere with telecommunications lines."

Curiously, the Treasury Department has not shut down all of Mr. Marshall's .com sites. You can still find, for now, www.cuba-guantanamo.com.

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Online: Documents and an archive of Adam Liptak's articles: nytimes.com/adamliptak.

Wiretap Compromise in Works

Wiretap Compromise in Works

By Ellen Nakashima and Paul Kane

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FISA update may hinge on two separate votes.

House and Senate Democratic leaders are headed into talks today that they say could lead to a breakthrough on legislation to revamp domestic surveillance powers and grant phone companies some form of immunity for their role in the administration's warrantless wiretapping program after the Sept. 11, 2001, terrorist attacks.

A senior House Democratic aide said a bill could be sent to President Bush as early as next week. But significant issues remain, including those surrounding immunity, said Wyndee R. Parker, general counsel of the House Permanent Select Committee on Intelligence.

Parker, who said she hopes the House can take up the compromise legislation as early as this week, said a resolution has been delayed partly by the need for all members of the House Judiciary Committee to gain access to the letters and other relevant documents sent to the phone companies by the administration requesting their assistance.

The House Democratic leadership demanded such access before they would contemplate immunity, and the administration granted full access last week. Parker spoke at a breakfast meeting sponsored by the American Bar Association yesterday.

Kenneth Wainstein, assistant attorney general for national security, said at the same meeting that key issues surrounding the legislation had been hashed out in a "long and tedious" but "healthy" process, aimed at updating the Foreign Intelligence Surveillance Act (FISA).

Aides said House Majority Leader Steny H. Hoyer (D-Md.) has been polling his party's divided caucus the past few days about the immunity issue, with the liberal camp pushing to do nothing and the moderate wing supporting a provision in Senate-passed legislation granting immunity for the telecommunications industry.

Highlighting the party's struggle to heal its internal fractures, today's meetings will involve Democratic staff from the House and Senate Intelligence and Judiciary committees, the House Democratic leadership, and then the House Democratic caucus. The dilemma faced by Democrats is that Republicans and the administration oppose any bill other than the measure passed by the Senate that includes full retroactive immunity for the telecommunications companies.

"This is not amnesty," Wainstein said at the meeting. "This is targeted immunity" for companies who meet requirements specified in the Senate bill that include having received an attorney general's certification that their assistance was determined to be lawful.

A group of several dozen moderate to conservative House Democrats, known as "Blue Dogs," has pushed Hoyer and House Speaker Nancy Pelosi (D-Calif.) to approve the Senate bill. Some aides on Capitol Hill were discussing the potential for the House passing the Senate version but breaking it into two votes: one on the portion of the bill that deals with revising FISA provisions and a second on the immunity measure.

This procedural move would allow many Democrats to vote against immunity but still make its approval all but certain since almost every Republican and some centrist Democrats would vote in favor.

At the breakfast yesterday, Wainstein highlighted a different problem with the current FISA law than other administration officials have emphasized. Director of National Intelligence Mike McConnell, for example, has repeatedly said FISA should be changed so no warrant is needed to tap a communication that took place entirely outside the United States but happened to pass through the United States.

But in response to a question at the meeting by David Kris, a former federal prosecutor and a FISA expert, Wainstein said FISA's current strictures did not cover strictly foreign wire and radio communications, even if acquired in the United States. The real concern, he said, is primarily e-mail, because "essentially you don't know where the recipient is going to be" and so you would not know in advance whether the communication is entirely outside the United States.

Privacy advocates have raised concerns that the Senate bill contains a provision that would allow the attorney general to erect a new barrier to future privacy cases brought under the nation's foreign intelligence surveillance law.

Contrary to current practice, the Senate bill would halt such lawsuits if the attorney general certified that the assistance provided by the telecom carrier was lawful. The only check on that certification would be a court review as to whether the attorney general "abused" his discretion, which experts said yesterday was the lowest possible standard of judicial review.

"This provision is yet another example of the executive branch 'just trust us' mentality when it comes to intelligence matters," said Kevin Bankston, senior staff attorney at the Electronic Frontier Foundation.

A key congressional aide said that the issue is one that must be reviewed carefully, and a balance must be struck between appropriate court review and avoiding "protracted litigation."

Vanity Fair: Bush approved plot to oust Hamas

Vanity Fair: Bush approved plot to oust Hamas

Khaled Abu Toameh

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US President George W. Bush is said to have approved a covert initiative to overthrow the Hamas government shortly after Hamas won the January 2006 parliamentary election, according to confidential documents obtained by Vanity Fair magazine.

The documents, which have been corroborated by sources at the US State Department and Palestinian officials, reveal that the plan was supposed to be implemented by the State Department.

The report confirms allegations by Hamas and other Palestinians that the US has been supplying Fatah with weapons and money so that its forces could bring down the Hamas government. Some senior Fatah officials have also accused the US of "meddling" in Palestinian affairs by encouraging Fatah to work toward toppling the Hamas government.

The magazine said that Secretary of State Condoleezza Rice and Deputy National Security Adviser Elliott Abrams were entrusted with provoking a Palestinian civil war, in which forces led by Fatah strongman Muhammad Dahlan - fortified with new weapons supplied at America's behest - would remove the democratically elected, Hamas-led government.

The State Department, according to Vanity Fair, declined to comment.

The magazine quoted a former US intelligence official with experience in covert plans that said the plan was "close to the margins" with regards to its legality. But, he added, "it probably wasn't illegal."

The report said that instead of driving its enemies out of power, the US-backed Fatah fighters inadvertently provoked Hamas to seize total control of the Gaza Strip in June 2007.

David Wurmser, who resigned as Vice President Dick Cheney's chief Middle East adviser a month after the Hamas takeover, said he believed that Hamas had no intention of taking over the Gaza Strip until Fatah forced its hand.

"It looks to me that what happened wasn't so much a coup by Hamas but an attempted coup by Fatah that was preempted before it could happen," he was quoted as saying. Wurmser said that the Bush administration engaged in a "dirty war in an effort to provide a corrupt dictatorship [led by Palestinian Authority President Mahmoud Abbas] with victory."

Wurmser said he was especially galled by the Bush administration's hypocrisy. "There is a stunning disconnect between the president's call for Middle East democracy and this policy," he said. "It directly contradicts it."

Neocon critics of the administration told the magazine that the old State Department vice of rushing to anoint a strongman rather than solving problems directly had led to the terrible missteps in the Gaza Strip.

To rely on proxies such as Dahlan, former UN ambassador John Bolton said, was "an institutional failure, a failure of strategy." Bolton blamed Rice, saying Rice, "like others in the dying days of this administration, is looking for a legacy. Having failed to heed the warning not to hold the elections, they tried to avoid the result through Dayton." Lieutenant General Keith Dayton was the US security coordinator for the Palestinians, who reached a secret agreement with Dahlan to strengthen Fatah's forces.

According to three US officials, Bush referred to Dahlan as "our guy," a sentiment that was shared by Rice and Assistant Secretary David Welch, the man in charge of Middle East policy at the State Department.

The report uncovers three different confidential memos that describe the covert plan: One, prepared by US Consul-General in Jerusalem Jake Walles, states how the Bush Administration intended for him to tell Abbas in Ramallah in 2006 to dissolve the Hamas government if it would not recognize Israel, promising the US would back him if he did.

"We believe that the time has come for you to move quickly and decisively," the text reads. "If Hamas does not agree within the prescribed time, you should make clear your intention to declare a state of emergency and form an emergency government explicitly committed to that platform. If you act along these lines we will support you both materially and politically... We will be there to support you."

The second memo, drawn up by the State Department, asserts that means had to be found to produce an "endgame" by the end of 2007 for Abbas to remove Hamas from power by collapsing the government, and that he must be given the means to strengthen his forces.

According to the Vanity Fair report, the third memo, described as a US "action plan" for the PA president, set out a plan by which Abbas would fire his own Fatah-Hamas "unity" government and rely on a security deal between Dahlan and Dayton to strengthen Fatah's forces.

Meanwhile, the magazine said, US officials led by Rice had spent several months begging Arab governments for money in order to supply Fatah's forces with new weapons from Egypt under a previously undisclosed covert US program - a scheme described by some sources as "Iran-Contra 2."

Dahlan goes on the record about these events for the first time, saying that despite pleas from Fatah that they were unprepared for elections, Bush pushed ahead. "Everyone was against the elections," Dahlan is quoted as saying. "Everyone except Bush. Bush decided, "I need an election. I want elections in the Palestinian Authority."

Following Hamas's victory, "everyone blamed everyone else," the report quotes an official with the Department of Defense as saying. "We sat there in the Pentagon and said, "Who the f*** recommended this?"

Citigroup May Need Cash as Losses Mount, Dubai Says

Citigroup May Need Cash as Losses Mount, Dubai Says

By Will McSheehy and Matthew Brown

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Citigroup Inc., the biggest U.S. bank, may need additional capital from outside investors as losses stemming from the collapse of the U.S. subprime mortgage market increase, the head of Dubai International Capital LLC said.

Citigroup received $7.5 billion in November from Dubai's neighbor, Abu Dhabi, after record mortgage losses wiped out almost half the company's market value and led to the departure of Chief Executive Officer Charles Prince. The New York-based company said in January it was getting another $14.5 billion from investors, including the governments of Singapore and Kuwait.

``It will take a lot more than that to rescue Citi and other financial institutions,'' said Sameer al-Ansari, the chief executive officer of Dubai International, at a private-equity conference in Dubai today. Dubai International is among the investment funds controlled by Dubai ruler Sheikh Mohammed bin Rashid al-Maktoum.

Citigroup probably will report a first-quarter loss of $1.66 a share after $15 billion of mortgage-related writedowns, Merrill Lynch & Co. analyst Guy Moszkowski said in a report issued today. The company also may have $3 billion of markdowns from loans used to finance leveraged buyouts and commercial real estate, Moszkowski estimates.

Sovereign Funds

Citigroup slumped 54 percent in New York trading during the past 12 months. The stock fell 30 cents today to $22.79 in German trading.

Moszkowski also cut his earnings estimates today for Bank of America Corp., the second-largest U.S. bank by assets, and Wachovia Corp., the country's No. 4 bank, because of the deteriorating credit markets. Both companies are based in Charlotte, North Carolina.

Arab states led by Qatar, Kuwait and the United Arab Emirates, which are loaded with cash from record oil and gas revenue, have purchased stakes in U.S. and European financial institutions, including Merrill Lynch & Co., Morgan Stanley and UBS AG, as losses mounted from the U.S. mortgage market.

In all, banks and securities firms have so far raised about $105 billion from sovereign wealth funds, governments and public investors, according to data compiled by Bloomberg. Dubai International has invested in companies including London-based HSBC Holdings Plc, Europe's biggest bank by market value, and New York-based hedge fund Och-Ziff Capital Management Group LLC.

``Gulf sovereign wealth funds will continue to be interested in the major U.S. financial institutions,'' said Giyas Gokkent, the head of research at National Bank of Abu Dhabi, the third- largest bank in the United Arab Emirates by market value. ``The scope for investments is going to be more limited than what we have seen so far.''

Prince Alwaleed

Qatari Prime Minister Sheikh Hamad bin Jasim bin Jaber al- Thani said Feb. 18 that the emirate is buying shares of Zurich- based Credit Suisse Group and plans to spend as much as $15 billion on European and U.S. bank stocks in the next year.

Abu Dhabi is Citigroup's largest shareholder, ahead of Los Angeles-based Capital Group Cos. and Saudi billionaire Prince Alwaleed bin Talal, Bloomberg data show.

The assets of state-managed funds have increased to $3.2 trillion, fueled by record oil prices and rising currency reserves. Analysts at New York-based Morgan Stanley estimate the funds' assets will reach $12 trillion by 2015.

Bernanke Urges Lenders to Increase Writedowns of U.S. Mortgages

Bernanke Urges Lenders to Increase Writedowns of U.S. Mortgages

By Scott Lanman and Steve Matthews

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Federal Reserve Chairman Ben S. Bernanke urged lenders to expand mortgage writedowns for borrowers whose home values have declined, saying more must be done to stem foreclosures.

``Efforts by both government and private-sector entities to reduce unnecessary foreclosures are helping, but more can, and should, be done,'' Bernanke said in remarks prepared for a conference in Orlando, Florida. ``Principal reductions that restore some equity for the homeowner may be a relatively more effective means of avoiding delinquency and foreclosure.''

Bernanke's remarks go beyond the stance of the Bush administration and previous Fed comments. By comparison, the central bank's Feb. 27 report to Congress called for lenders to ``pursue prudent loan workouts'' through means such as modifying mortgage terms and deferring payments.

``Delinquencies and foreclosures likely will continue to rise for a while longer,'' Bernanke said in the comments to the Independent Community Bankers of America. ``Supply-demand imbalances in many housing markets suggest that some further declines in house prices are likely.''

In addition, borrowers with subprime mortgages are about to see their interest rates increase by more than 1 percentage point, he said. ``Declines in short-term interest rates and initiatives involving rate freezes will reduce the impact somewhat, but interest-rate resets will nevertheless impose stress on many households,'' Bernanke said.

Interest Rates

Bernanke didn't comment in his speech text on the outlook for the economy or interest rates. Traders expect the Federal Open Market Committee to lower the benchmark rate by 0.75 percentage point by or at the panel's next meeting on March 18, based on futures prices.

Bernanke signaled in congressional testimony last week that the Fed is prepared to lower rates again even amid signs of accelerating inflation.

Yesterday, the Fed and other regulators sent letters to institutions they supervise, encouraging the banks to report on their efforts to modify mortgages at risk of default.

``This will make it easier for regulators, the mortgage industry, lawmakers and homeowners to assess the effectiveness of these efforts,'' Fed Governor Randall Kroszner said in a statement yesterday.

Fed Vice Chairman Donald Kohn is testifying today with other banking regulators before the Senate Banking Committee in Washington.

Foreclosures Climb

The number of U.S. homeowners entering foreclosure rose 75 percent in 2007, with more than 1 percent in some stage of foreclosure during the year, according to RealtyTrac Inc. of Irvine, California. For the year, more than 2.2 million default notices, auction notices and bank repossessions were reported on about 1.3 million properties.

``Lenders tell us that they are reluctant to write down principal,'' Bernanke said. ``They say that if they were to write down the principal and house prices were to fall further, they could feel pressured to write down principal again.''

The Fed chairman countered that by reducing the amount of the loan, this ``may increase the expected payoff by reducing the risk of default and foreclosure.''

Bernanke spoke in a state that's among the worst affected by the housing collapse. Miami home prices have dropped 17.5 percent in the past year, the most of 20 large U.S. cities, according to the S&P/Case-Shiller index. Foreclosures in Florida jumped at more than double the nationwide pace, rising 158 percent in the past year, according to RealtyTrac.

Call to Investors

The Fed chief also urged investors in mortgage bonds to accept ``short payoffs'' of loans by allowing borrowers to refinance at a lower principal.

For investors, a reduction in principal that's ``sufficient to make borrowers eligible for a new loan would remove the downside risk to investors of additional writedowns or a re- default,'' Bernanke said. Original investors may be able to share in future gains in home prices under some plans, he said, citing a proposal by the Office of Thrift Supervision.

Last week, the Bush administration and congressional leaders sharpened their rhetoric over Democratic proposals to help stem foreclosures.

Representative Barney Frank of Massachusetts on Feb. 28 outlined a $15 billion plan to buy distressed mortgages from lenders, saying the ``cascade of foreclosures will continue'' without government action. Treasury Secretary Henry Paulson said such proposals ``do more harm than good.''

The administration is advocating a voluntary, industry- driven approach that urges the loan-servicing companies to modify mortgages for struggling borrowers.

China Speeds Pace Of Military Buildup

China Speeds Pace Of Military Buildup

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China is speeding up its military buildup and developing high-technology forces for waging wars beyond Taiwan, according to the Pentagon's annual report on Chinese military power.

"The pace and scope of China's military transformation have increased in recent years, fueled by acquisition of advanced foreign weapons, continued high rates of investment in its domestic defense and science and technology industries, and far-reaching organizational and doctrinal reforms of the armed forces," the report states.

The report also warned that China's expanding military forces "are changing East Asian military balances; improvements in China's strategic capabilities have implications beyond the Asia-Pacific region."

The new weapons include road-mobile long-range nuclear missiles.

The report to Congress is required under 1999 legislation and is the only U.S. government publication providing a close look at China's military strategy, and force structure and recent advances in technology.

The report stated that excessive secrecy by China about its motivation and decision making and key weapons systems are prompting fears over the threat posed by the buildup.

"Absent greater openness and transparency, international reactions to China's military growth will understandably hedge against these unknowns," the report said.

The report said U.S.-China defense ties are improving and that Beijing agreed Friday to set up a telephone communications link between the U.S. and Chinese military that could be operational this month.

Key finding of the report include:

• China's military spending continues to increase by double-digit figures and that official Chinese claims of spending $45 billion are short of actual spending, which could be as much as $139 billion

• China has deployed between 990 and 1,070 CSS-6 and CSS-7 short-range ballistic missiles (SRBM) to garrisons opposite Taiwan and is adding more than 100 missiles per year, including more advanced systems.

• Chinese computer hackers have launched sophisticated strikes on computer networks around the world in the past year, including U.S. government networks, that might be the work of the Chinese government.

• China's strategy of defense includes conducting pre-emptive attacks "if the use of force protects or advances core interests, including territorial claims, for example, Taiwan and unresolved border or maritime claims."

• China's anti-satellite weapon test in January 2007 shows that the military's space warfare capability is “more than theoretical.” Additional space weapons include jammers, laser blinders and microwave weapons to disable satellites and ground stations.

• China is engaged in "wide-ranging espionage" targeting officials, businessmen and scientists prompting more than 400 U.S. investigations..

• China's military buildup is shifting the cross-Strait military balance in its favor, through a long-term expansion designed to fight "local wars" with high-tech weapons using speed, precision targeting, mobility, and the role of information technology as a force multiplier.

The report counters the findings of U.S. intelligence analysts who have sought to play down China's buildup by saying it is limited to preparing to fight a war against Taiwan.

The report stated that while the near-term focus is on a Taiwan conflict. "long-term trends suggest China is building a force scoped for operations beyond Taiwan."

However, the report said that China's military currently lacks the ability to defend sea lanes that carry oil to China from the Middle East, but is discussing ways of doing so in the future.

Doctors Interrogate Children as Informants on Parents' Behavior

Doctors Interrogate Children as Informants on Parents' Behavior

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Encouraged by the American Academy of Pediatrics (AAP), pediatricians across the United States have begun questioning children about their parents' habits, in some cases even filing police reports based on this information, according to an opinion article published in the Boston Herald.

Article author Michael Graham recounts that his own children were asked by their doctor whether their parents used drugs and alcohol, owned guns, or were abusive. The doctor did not seek parental permission before asking the questions, nor did he inform them that they were being asked; Graham and his wife found out only after their children came home from the visits.

"The doctor wanted to know how much you and mom drink, and if I think it's too much," Graham reports his daughter saying. "She asked if you two did drugs, or if there are drugs in the house. The doctor wanted to know how we get along. And if, well, Daddy, if you made me feel uncomfortable."

Graham also reports the case of an Uxbridge, Massachusetts man who had his legal gun ownership reported to the police by his daughter's doctor. The doctor filed a police report after asking the 5-year-old girl if her father owned a gun, then following up with questions to her and her mother about the type and number of the weapons.

Graham blames the trend on guidelines issued by the AAP, which classifies parentsas "persons of interest" and encourages doctors to ask children questions in order to uncover inappropriate or illegal behavior.

"The paranoia over parents is so strong that the AAP encourages doctors to ignore 'legal barriers and deference to parental involvement' and shake the children down for all the inside information they can get," Graham writes.

According to Graham, anti-gun advocacy by pediatriciansi s widespread enough that "some states are considering legislation to stop it."

"What this interrogation of children demonstrates," added consumer health advocate Mike Adams, "is just how deeply the medical establishment now believes it has total authority over the lives of patients. This kind of behavior is arrogant, outrageous and should be outlawed," Adams said.

The North American Union Farce

The North American Union Farce

By Laura Carlsen

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It's got millions of rightwing citizens calling Congress, sponsoring legislation, and writing manifestos in defense of U.S. sovereignty. It comes up in presidential candidates' public appearances, has made it into primetime debates, and one presidential candidate—Ron Paul—used it as a central theme of his (short-lived) campaign.

Not bad for a plan that doesn't exist.

The North American Union (NAU) conspiracy theory is an offshoot of an all-too-real trilateral agreement called the "Security and Prosperity Partnership" (SPP). Cultivated by xenophobic fears and political opportunism, the NAU soon outstripped its reality-based progenitor. The confusion between the two today has made it difficult to sort out the facts. A little history helps.

The Impossible Leap from SPP to NAU After the North American Free Trade Agreement (NAFTA) went into force in 1994, the three governments began to talk about expanding the scope of the agreement. Mexico , in particular, hoped to negotiate a solution to the border/immigration problem. However, the process was brought to a grinding halt by the terrorist attacks on the World Trade Center .

In a 2005 summit of then-Presidents George W. Bush, Vicente Fox, and Prime Minister Paul Martin in Waco , Texas , plans for "deep integration" between the three countries finally progressed with the official launch of the SPP. In the post-September 11th political context, immigration was off the table and U.S. security interests, along with corporate aims to obtain even more favorable terms for regional trade and investment, dominated the agenda.

As the executive branches of Canada , the United States , and Mexico conspired to expand NAFTA behind the backs of their unconvinced populaces, an independent task force sponsored by the Council on Foreign Relations floated the idea of deeper integration under the name of the North American Community. Their paper, published in May of 2005 and financed by Archer Daniels Midland, Merrill Lynch, and Yves-Andres Istel, was not authored by an underground network of conspirators against U.S. sovereignty, as NAU critics would have us believe, but by a staid group made up mostly of former government officials and big business representatives.

This group envisioned regional integration as the creation of a "community" with shared commercial, security, and environmental purposes. It proposes sacrificing national policy tools to regional goals in areas such as creation of a common security perimeter, a permanent NAFTA tribunal to settle disputes, expanding NAFTA to restricted or excluded sectors, and adopting a joint resource agreement and energy strategy. Indeed, some of these recommendations could very well present threats to democracy in all three countries. But the report does not include adopting a common currency or a single regional government and in fact states that a "union" along the lines of the European Union is not the right approach for North America .

The CFR paper was an academic exercise with pretensions of reaching policymakers. While some of its recommendations were later taken up in the Security and Prosperity Partnership talks, particularly suggestions on ways to improve transnational business, many of them were unanchored by reality and quickly went the way of the vast majority of policy recommendations.

The SPP, on the other hand, established working groups, rules, recommendations, and agreements that have had a huge and largely unknown impact on rules and policies. It is a complex web of negotiators who work without congressional oversight, public right-to-know, or civil society participation. The corporate world, however, has ample representation; the SPP advisory body called the "North American Competitiveness Council" reads like a "Who's Who" of the largest transnationals based on the continent.

While the lack of transparency and the U.S. corporate and security-dominated agenda of the SPP are cause for great concern, they are not evidence of a plot to move toward a North American Union. Among the most bizarre assumptions of NAU scaremongers is the contention that the SPP will threaten U.S. sovereignty and erase borders. The idea of a regional union that effaces U.S. sovereignty is light-years away from George W. Bush's foreign policy of unilateral action and disdain for international law and institutions. On the contrary, the precepts of the Bush administration's foreign policy point to a return to the neocon belief that the world would be a better place if the U.S. government just ran everything.

Real and Conjured Threats

A poli-sci undergrad can tell you who will prevail if Canadian, U.S. , and Mexican negotiators get together to set out a common agenda. (Hint: it's not Mexico or Canada .)

Officially described as "... a White House-led initiative among the United States and the two nations it borders—Canada and Mexico—to increase security and to enhance prosperity among the three countries through greater cooperation," the SPP poses a much more palpable sovereignty threat to NAFTA's junior partners. Canadians have been the most active in opposing the SPP, not out of fear of a mythical NAU but because of real threats to their ability to protect consumer health, natural resources, and the environment. SPP rules would force open oil production in environmentally sensitive areas and channel water supplies to U.S. needs. Likewise, Mexican civic organizations have protested against SPP pressures to privatize Mexican oil and allow greater U.S. intervention in the Mexican national security system.

Both these fears have been born out in Mexico in recent months. President Felipe Calderon is expected to announce a plan to privatize segments of the state-owned oil company PEMEX any day now. Plan Mexico (also called the Merida Initiative) currently before the U.S. Congress goes farther than any other measure in the history of the binational relationship toward developing a common security perimeter, within which U.S. government teams and private defense companies would train security forces, coordinate intelligence-gathering, and provide defense equipment for use against internal threats. Few countries in the world have been willing to take this kind of risk.

As for moving toward a borderless North America , the years since the SPP began have witnessed a hardening of the U.S.-Mexico border never seen before in modern history. Fifteen thousand Border Patrol agents, 6,000 members of the National Guard, and a border fence powerfully belie any suggestion that the U.S. government aims to eliminate borders as it moves toward a secret North American Union.

Right Wing Red Herring?

How, then, to explain the fact that the NAU conspiracy has gone viral among rightwing populists in the United States ?

How to explain how a baseless myth has garnered the support of millions, made it into presidential candidates' debates, and become the subject of 20 state resolutions and a federal one?

Given the absolute lack of factual data to support the existence of a secret plan to create a North American Union, it's tempting to assume that the NAU scare was put forth as a red herring to divert attention from real issues facing the country. By channeling the insecurities of white working-class Americans into belief in an attack on U.S. sovereignty, the NAU myth obscures the very real globalization issues raised by NAFTA—job loss, labor insecurity, the surge in illegal immigration, and racial tensions caused by the portrayal of immigrants as invaders. This is convenient for both rightwing politicians and the government and business elites they attack because real solutions to these problems would include actions anathema to the right, including unionization, enforcement of labor rights, comprehensive immigration reform, and regulation of the international market. Instead, these options are shunted aside with the redefinition of the problem as a conspiracy of anti-American elites.

But espousing a conspiracy theory to contradict another conspiracy theory would be absurd. It's unlikely there's a central kitchen that cooked up the NAU red herring. The NAU myth taps into deep-rooted traditions and fears of many Americans and so, it has found a broad audience. This audience is predisposed to defend imagined communities from external threats, rather than face the complex task of unraveling the contradictions within their real communities brought about by a model of economic integration that generates insecurity and inequality.

In this context, outrage over a nonexistent NAU should not be confused with growing criticism of the Security and Prosperity Partnership. The SPP has proceeded to change national regulations, and create closed business committees without the participation of labor, environmental, or citizen voices. SPP negotiations provide a vehicle for more of the corporate integration that has eliminated jobs, impoverished workers, and threatened the environment across borders.

It has also served to extend the dangerous Bush security doctrine to Canada and Mexico , despite its lack of popularity in those countries and among the U.S. public. Its latest outgrowth, the $1.4 billion-dollar Merida Initiative or Plan Mexico would extend a militarized model of fighting the real problems of drug-trafficking and human smuggling that would lead to greater violence and heightened binational tensions.

The NAU is a red herring. It serves to divert attention from domestic problems that have more to do with layers of contradictory policies and unmet challenges than any kind of anti-U.S. conspiracy.

It's time to separate out false threats from real threats. A good place to start is to demand transparency in trinational talks (April 21-22 in New Orleans ) and informed public debate on regional integration.

Laura Carlsen (lcarlsen@ciponline.org) is Director of the Americas Policy Program (www.americaspolicy.org) of the Center for International Policy. The Americas Mexico Blog can be found at www.americasmexico.blogspot.com.

“Advancing the Cause of Peace”

“Advancing the Cause of Peace”

By Felicity Arbuthnot

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“We have an appointment with death We have become familiar with our shores of despair ...” Ali Ahmad Said: “Victims of a Map”, Saqi Books

The world community is encouraged to celebrate and commemorate two occasions this year: Israel's theft of Palestine and the United Nations Declaration on Human Rights.

As the British government announces that the educational curriculum is to now include school children visiting Auschwitz “lest we forget” the horrors of the Holocaust and to learn that such inhumanity must never be repeated, the Vice Israeli Minister for Collective Punishment and Serial Killing (sorry, “Defence”) Matan Viilnai, threatened a new “Holocaust” in the Gaza Strip.

Surely, a far better education for the young would be to stay with their counterparts in Gaza and experience the real thing. Rows of children’s shoes and silent gas chambers are terrifyingly thought provoking, but pretty yesterday, when it can actually be lived: real human remains, real blood and even those reduced to real ashes - the real thing, in real time, at a Mediterranean venue near you. A learning experience never to be forgotten.

The 1.5 million souls to whom Gaza is home are entrapped, with no place to hide, pounded from ground and air, by tanks, F-16's and Apache attack helicopters (courtesy of the “land of the free”) in a reign of terror unleashed by “the only democracy in the Middle East”. As little Gaza is set to become the next Sabra and Shatila massacre (with the advanced warning ringing round the globe) the world's governments deafen with their shameful, craven silence. War criminal turned Middle East “peace envoy” in our Kafkaesque world, Anthony Charles Lynton Blair Q.C., was unconcerned, taking a break from his stressful life counting his piles of ill gotten gains, holidaying at an African game park owned by Virgin Airways founder, Richard Branson.

America's shoe in, United Nations Secretary General Ban Ki-moon, has seemingly borrowed his predecessor Kofi Annan's two word lexicon (“concern” and “regret”) and announced his “concern” at the situation. That, only after he had spoken of Israel's threat from home made rockets, fired by the resistance, before verbally tiptoeing round Gaza's threat from weapons of mass destruction fired by the land baggers.

Jordan's King Addullah did better, citing Israel's “state terrorism, in violation of all international covenants”, with his acting Foreign Minister, Nasser Judah, demanding a halt to the carnage and slamming Israel's violation of “international law”. Rogue states, as Israel, America and Britain, however, care naught for international law, the former two countries stolen and settled on the blood and beloved land of others and Britain, over centuries having plundered and culled across a swathe of the entire globe with impunity.

As the bodies, and the pathetic remains of humanity, a foot, a leg, a head, a hand, a torso and the injured mount, Israel's Prime Minister Olmert stated that Israel was: “... taking an elementary step in self defence”. One of his Ministers told the BBC that the killing and the destruction of infrastructure would continue. Whilst citizens can land in a Court of Law for running a red light, leaders (even in a country which has announced an intended Holocaust) ignore international laws enshrined in the Geneva, Hague and Nuremberg rulings with impunity.

Olmert and his shameful excuse for governmental law makers, of course, are not ending the fragile lives of human beings. They are targetting “terrorists” and “Hamas”.

Should not those suspected of crime be brought before the law rather than summarily executed ? Israel's actions in Gaza are indeed “state terrorism”.

Hamas, of course is a democratically elected government, fully entitled to its followers. Under the new world disorder, sovereignty of elected government also means nothing, to which Saddam Hussein and his colleagues graves are testimony. Not for nothing did Neil Mackay call his towering book embracing the pack of lies fed the populous on the Middle East in recent history : “A War on Truth” (Sunday Herald Books 2006.)

And in the new world language, the untried executed are declared “insurgents”, “Taleban”, “terrorists”, statements near never questioned. There are no mothers, fathers, uncles, aunts, no toddlers, teenagers, children, infants. The names and ages of countless dead are the silent scream which addresses this monumental, murderous lie. A family breakfast as the sun's rays spread, dispersing the night's cool, turns to carnage. Kids playing football become seared flesh against the dusty pitch, shouts and laughter forever silenced, in an instant.

A source with considerable expertise also believes that: “The devilish weapons (in Israel's) most extensive armoury (include those) I think designed to disfigure and amputate, so that the loved ones are terrorised.”

A third of the victims of this declared Holocaust are children. There is no kinder transport, no child evacuees sent to safety for the duration. Babies are being buried. Normal people nurture the young. They wake numerous times in the night, for years, to creep and check that the sleeping miracle they have created is still safe, warm. Their heart swells at the waking smile. They wash, cream, dress this new being in special clothes, dream up treats, carry him or her, hugged close, breathing in the special scent of hair and skin. They clutch a small hand in a fledgling walk and speed up to catch them when they run, should they be in danger of tripping, falling. Normal people do not kill kids.

"Uncle, I do not want to die; I want my dad", a toddler screamed as doctors tried to treat burn wounds across her body in Gaza’s main Shifa Hospital. The girl was injured in a house which the Israeli army said was used to store and make weapons, reported the Jordan Times (2nd March.) Israel's “democracy” spreads abnormality at every level. For most benefitting from democracy, few toddlers would even know what dying was.

One image speaks for all the child victims and those left behind, as a result of Israel's criminal actions. It is a father, bent low, laying a small, wrapped child, in a grave, hewn in hardened earth of burned ochre, the sides tooled with care. The little figure looks utterly lost, unbearably vulnerable, searingly alone, the grave seemingly so large. The father, the family will have watched as it was covered and filled in, leaving that mite for ever alone, in rain, shine, cold, heat, unable to ever again wake in the night to stroke the hair, comfort a fear. No faith could ever ease such pain, replicated again and again by America's client state.

"Shame on the Arabs, shame on the Muslims, shame on humanity...” said Tawfek Shaban, a forty four year old school teacher, of Israel's actions.

Shame on humanity indeed. A friend, currently in Palestine, compares the world's shocking indifference to the remarkable Amira Hass's allusion “to what her mother, Hanna saw when women were being taken to the death camps as German women looked on in silence.” Hass wrote: “The vortex is sucking louder and the world looks on from the side.”

My friend concluded: “Palestine is the hinge of humanity. If the world's people turn away, look from the side, the vortex will become a typhoon.”

Prime Minister Olmert sees it differently. Striking at “Hamas”, he said, only advanced the cause of peace.

Islamonline.net has established a virtual Gaza Holocaust Museum. http://www.islamonline.net/English/In_Depth/GazaHolocaustMuseum/index.shtml

Felicity Arbuthnot is a journalist and activist who has visited the Arab and Muslim world on numerous occasions. She has written and broadcast on Iraq, her coverage of which was nominated for several awards. She was also senior researcher for John Pilger's award-winning documentary, "Paying the Price: Killing the Children of Iraq".
http://www.johnpilger.com/page.asp?partID=4 and author, with Nikki van der Gaag, of “Baghdad” in the “Great Cities” series, for World Almanac Books (2006.)
http://www.amazon.com/Baghdad-Great-Cities-World-Nikki/dp/0836850491/sr=1-5/qid=1171018142/ref=sr_1_5/105-9176229-7042804?ie=UTF8&s=books

Victims of a Map: A Bilingual Anthology of Arabic Poetry (Paperback)
http://www.amazon.co.uk/Victims-Map-Bilingual-Anthology-Arabic/dp/0863565247

The press will torment Obama, too

The press will torment Obama, too

By Eric Boehlert

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With Sen. Barack Obama now emerging as the Democratic front-runner, clear signs suggest that his press treatment will soon change and that the media will fall back into their routine of viewing -- and critiquing -- leading Democrats through the eyes of Republican spin.

Just last week, we saw how a single line from a Michelle Obama speech was seized upon by conservative partisans, led by Fox News, to suggest she is not patriotic, and how that attack was given a wider airing in the mainstream press. (CNN casually raised questions about Barack Obama's patriotism, as well.) We've also seen the media-manufactured narrative take root that Obama is the leader of a cultish following (more on that below), which dovetails with the creeping media meme that Obama is a phony.

Meanwhile, in Sunday's New York Times, Obama was twice described as being overly effeminate: He's an "elusive starlet" who prefers "playing the tease," while espousing a "feminine management style." Compare that to the media's portrayal of Republican Sen. John McCain as sort of a man's man, and it's obvious where those competing narratives are headed.

Writing at Slate.com,

John Dickerson announced he's had enough of the Obama euphoria: "Isn't there a natural limit to our enthusiasm for to this kind of sweeping phenomenon?" By "our," I suppose Dickerson meant voters, but my hunch is he was likely referring to journalists and how they had reached their "natural limit." I'm not sure this foreshadows a full-fledged media backlash against Obama, but it certainly suggests a fundamental shift is on the horizon. The pendulum is swinging.

Specifically, look at the about-face being done by partisan conservative columnists who, rather unbelievably, had expressed their deep admiration for Obama, a liberal Democrat, during the primary season when he opposed Clinton.

"He is the brilliant young black man as American dream," wrote Wall Street Journal columnist Peggy Noonan, whose hatred of Hillary Clinton is limitless. But with the Clinton campaign now wounded and Obama grabbing the inside track on the nomination, Noonan quickly flip-flopped. In her February 22 column, she suggested the Obamas are self-centered "snobs" who can't relate to "normal Americans." (Bill Kristol is now hitting that nasty theme as well.)

New York Times Republican columnist David Brooks performed a similar pivot. Last year, he praised Obama effusively while urging him to take on Clinton for the Democratic nomination: "Whether you're liberal or conservative, you should hope Barack Obama runs for president."

More recently, in January, Brooks wrote of how Obama "offer[s] a politics that is grand and inspiring" and noted Obama's rhetoric about "the high road versus the low road; inspiration versus calculation; future versus the past; and service versus selfishness."

Then last week, the columnist showed his true partisan colors, the same colors he and an army of others will be waving for months to come. New narrative: Obama is an overhyped, waffling phony, and his followers are delusional suckers. To accentuate the mocking tone, Brooks in his column referred to Obama as "the Hope Pope," "His Hopeness," "The Chosen One," "The Presence," "The Changemaker," and the "High Deacon of Unity."

Why are predictable partisan jabs noteworthy? Because previous media patterns suggest those types of derogatory right-wing talking points about Democratic front-runners will almost certainly be absorbed by the larger mainstream press.

Still, some media observers suggest it's unlikely that Obama's press coverage will change dramatically, in part because the press has already examined Obama's record and couldn't find much dirt on him. "The assumption that every politician who reaches a point of power must have a dead prostitute or a shady land deal in his past just waiting to be discovered seems a cynical view, born out of a particularly journalist-centric view of the world," wrote Gal Beckerman for the Columbia Journalism Review.

But I think that misses the larger point about today's brand of superficial political press coverage, which does not revolve around uncovering scandals or digging up dirt on candidates. Meaning, even if Obama has a sterling background, that does not mean he's immune to downbeat media.

For instance, none of the relentlessly negative press coverage that Clinton has been hit with over the past four months, during which time I don't think the Clinton campaign won a single news cycle, has had anything to do with revelations about Clinton's past, and it had virtually nothing to do with her politics. Indeed, there's no logical reason why Clinton's mainstream, left-leaning centrist candidacy would spark the kind of swarming animosity that it did within the press corps. Just like there was no rational reason why Al Gore's pragmatic platform in 2000 prompted the press to openly despise him.

The truth is, long-term campaign press coverage has almost nothing to do with the candidate's policies, shortcomings, or previous scandals. It's built almost entirely around questions of "character," and even more transparently, around personality, or pointless personality traits. (Do you think the media's sexist obsession with Clinton's "cackle" sprang from some sort of larger policy concern?) And that's why Obama remains vulnerable, because Republicans do a masterful job of convincing journalists that, in the end, they don't really like Democratic candidates, that they don't trust them.

And, as usual, Republicans are already telegraphing their script. Grover Norquist, the conservative anti-tax activist, told The Sunday Times of London, "Barack Obama has been able to create his own image and introduce himself to voters, but the swing voters in a general election are not paying attention yet. He is open to being defined as a leftwing, corrupt Chicago politician."

If recent history is any indication and Obama solidifies his status as front-runner, the press will soon play a central role in spreading that negative narrative.

There's another key reason Obama's media treatment will likely turn harsher: John McCain. And not just because he's the longtime "media darling," as NBC's David Gregory conceded last week. Rather, as Time.com's Ana Marie Cox noted, the McCain camp is already complaining to reporters that the media is going too easy on Obama. McCain's aides are working the refs, and it is going to pay off.

Why? Because when McCain and the entire GOP establishment play the liberal media bias card and complain that the press is going too easy on the Democrat, the press will listen.

History shows us that the press panics when faced with the charge of liberal media bias, especially during a campaign year.

That's why it's so important to start paying attention not only to the media's own manufactured negative narratives, but also right-wing talking points quickly forming about Obama. We know McCain is going to echo every one of them, and my guess is the press will, too.

I'm not referring to the truly nutty stuff that the radical right is starting to churn out, like National Review's Lisa Schiffren, who argued, with zero proof, that Obama's mixed-race parents had communist leanings because back when they got married, the only reason black and white people married was because they were communists. Or Accuracy In Media's Cliff Kincaid and his retro Red Scare column about how "Obama had an admitted relationship with someone who was publicly identified as a member of the Communist Party USA."

I doubt the traditional press will show much interest in that kind of textbook hatemongering. But I do think the press will gladly amplify more mainstream, personality-based attacks on Obama. (Time's Mark Halperin gets a head start here.)

For instance, the central point of Brooks' recent contemptuous New York Times column about Obama was that delusional followers of his were suffering from "Obama Comedown Syndrome" and that they struggled against "Obama-myopia." And that line of attack closely mirrors another emerging mainstream meme: Enthusiastic Obama followers are akin to mindless cult members, and their eccentric fanaticism is driving his campaign.

CNN's Carol Costello suggested that the audience response at an Obama rally represented "a scene some increasingly find not inspirational, but 'creepy,' " while on-screen the text read "OBAMA-MANIA BACKLASH" and "PASSION 'CULT-LIKE' TO SOME."

The Los Angeles Times' Joel Stein referred

to "the Cult of Obama," while mocking the campaign as "Obamaphilia" and his supporters as "Obamaphiles." (If Obama supporters were wondering what it felt like to be openly derided by the mainstream media, now they know.)

Time's Joe Klein complained, "There was something just a wee bit creepy about the mass messianism." The Times' Brooks joked that Obama's supporters would soon be "selling flowers at airports and arranging mass weddings."

And most egregiously, ABC's Jake Tapper made fun of the "Helter-Skelter cult-ish qualities" of Obama's supporters. That's right, the Charles Manson-led Helter Skelter cult that slaughtered five adults during the summer of 1969, and the same cult that believed murderous blacks would soon stage a bloody revolution and try to take over America.

That's who Tapper compared Obama's base to. Ha-ha. Get it?

The cult narrative simply highlights how Obama is not immune to bad press -- bad press that has nothing to do with his past, his policies, or his campaign platform. But bad press that journalists essentially concoct, the way they do every four years when a Democrat eyes the White House.