Wednesday, June 11, 2008

Home price drop means $4 trillion in lost capital

Home price drop means $4 trillion in lost capital

By Walden Siew

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No one knows when the credit crisis will end.

But when it does, U.S home prices may have lost a third of their value, high-yield bond valuations will hit levels close to those seen during the last recession, and what may amount to $1 trillion of Wall Street losses may translate into almost $4 trillion of lost access to capital.

That's the view of top credit analysts, who say a U.S. housing decline, sparked last year by subprime mortgage debt defaults, will likely last another two years as a wider group of consumers, including prime borrowers, feel the pinch from a tightening of credit.

Peter Acciavatti, a credit analyst and managing director at JP Morgan Securities Inc, said in an interview that Wall Street write-downs and losses totaling at least $325 billion so far may ultimately mean $3.9 trillion in tighter credit conditions.

Moreover, home prices may fall as much as 30 percent from their peak in 2006 and not hit bottom until 2010, with greater drops still in subprime mortgage debt markets, he told Reuters.

"The housing correction is in a down phase," Acciavatti said during a high-yield bond conference in New York. "We're now going through a phase of deleveraging and the pulling out of easy money."

Credit markets also will be under pressure from massive write-downs and losses stemming from consumer debt. The International Monetary Fund has estimated write-downs from global investment banks may approach $1 trillion, while J.P. Morgan forecasts the figure may climb as high as $600 billion.

A senior Fitch Ratings analyst forecast more defaults and delinquencies for U.S. home mortgages, and said the highest default rates are coming from recent mortgages originating in the last few years.

"There are a lot more mortgage defaults to come," said Glenn Costello, a Fitch Ratings managing director. "We see an ongoing high level of default."

High-yield corporate bond default rates may climb to 2.25 percent this year and jump to 6.5 percent next year, Acciavatti said in a separate interview. The default rate is now 0.75 percent, up from 0.34 percent at the start of the year, according to JP Morgan data.

Acciavatti, speaking at the New York Society of Security Analysts conference, also said junk bond spreads will push past 800 basis points and may top 900 basis points as the crisis drags out. High-yield bonds now trade at spreads of about 650 basis points over Treasuries, according to Merrill Lynch & Co data.

Tightening credit conditions, high energy prices and weaker growth prospects mean that interest in distressed debt sales and trading may be on the rise, according to Jon Kibbe, founding partner at law firm Richards Kibbe & Orbe LLP.

Other analysts pointed to opportunities in the loan market for high-yield investors looking for value in other markets.

Leaders With No Conscience

Leaders With No Conscience

By Rand Clifford

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As Osama bin Laden lay dying, December of 2001...might he have imagined that seven years later he would be on bogeyman life-support, still officially issuing messages as ruling poster boy for America’s mindless, force-fed terror obsession? The hammerlock on thoughts of Americans by psychopathic leadership still depends on fairytale power of Osama to help fuel the pathological War On Terror—could he have foreseen this, Americans being so propagandized as to let the lifeblood of their nation drip through their fingers, for lies? Whatever Osama knew he’d accomplished surely pales in light of what he has done since dying; if he had any inkling of this he must have died smiling.

With characteristic deception our pathocracy implies that Osama has somehow gotten vital dialysis treatments all these years at his hideout in never-never (mind) land. Definition: pathocracy (n). A system of government created by a small pathological minority that takes control over a society of normal people (from Political Ponerology: A Science on the Nature of Evil Adjusted for Political Purposes, by Andrew Lobaczewski).

The dialysis reality...a pesky detail easily smothered when reality is yours for the creating. Scott McClellan used the phrase "Culture of Deception" in the title of his new book. In recent articles by Robert Parry, including, Surprise, Surprise: Bush Lied, and, Losing the War for Reality, there is much about the CIA’s "perception management" really taking off under Reagan, delivering more and more "politically desirable" data to policy makers. Parry notes with usual incisive wisdom that a crucial thing America’s Founders did not anticipate: In an age of overwhelming government secrecy combined with the sophisticated big-money media we have today, that manipulation of information...disconnect between policies founded on politically desirable data (fully-cooked), and those rooted in the real world, could kill the republic.

With lies getting up to our eyes, how much time remains to wake up...?

Waffles of top-level Osama deception keep flopping from CIA Director Michael Hayden; less than a year since warning of new threats from resurgent al-Qaida, a recent Washington Post article by Joby Warrick titled: CIA chief says al-Qaida’s defeat looms, has Hayden proclaiming that, "Osama bin Laden is losing the battle for hearts and minds in the Islamic world and has largely forfeited his ability to exploit the Iraq war to recruit adherents."

Seriously, Director Hayden, don’t you think bin Laden’s death in 2001 is a main factor in his recruitment drop-off? Death remains a powerful inhibitor, no matter the official cooking. The entire Osama bin Laden deception is a paradigm of our pathocracy’s relationship with truth.

Even more seriously, People, how can the CIA Director keep spewing such outrageous, official deception without batting an eye? This is our Central Intelligence Agency! If the entire agency were not privy to bin Laden’s death within weeks, same as everyone else in the world involved in high-level intelligence...sounds akin to 19 Arab boys with box cutters routing the defenses of the world’s Superpower.... And how can The People, more and more of whom are finally seeing through the Osama Bogeyman fabrications, as well as the false flag reality of 9-11, and the diabolical War On Terror (war on truth?) not feel powerful compulsion to do more about it all than simply voting—which has over and over again proved...SO? The same answer satisfies these questions—at least regarding America’s deepening nadir, where every day the reigns of psychopathic control at highest levels of government stretch tighter.

It’s not so much that power corrupts; but that the corrupt seek power....

What about hope, a better future?

The forenamed book, Lobaczewski’s seminal, Political Ponerology: A Science on the Nature of Evil Adjusted for Political Purposes is finally getting traction as a polestar of crucial truth. Articles recently published that further cast illumination toward the shadowy dominance of psychopaths—people without conscience—within architectures of power, include Dr. Kevin Barrett’s Twilight of the Psychopaths. There’s also Silvia Cattori’s The Trick of the Psychopath’s Trade, with its exceptional interview of the editors of Political Ponerology, Laura Knight-Jadcyck, and, Henry See. Then there’s Clinton Callahan’s, Beware the Psychpaths, My Son, which splendidly draws from both Barrett’s and Cattori’s articles. Also essential reading for those seeking truth about the core problem plaguing "civilization" from the beginning: Carolyn Baker’s review of Political Ponerology

An advantage of psychopaths over people with conscience...people with a "soul", is that lying is little different than breathing. Psychopaths skate without remorse through behavior from which people with conscience recoil, protecting their humanity with the comforting blanket of, Oh! They’d never do THAT! Well, they do that, as naturally as breathing. Recognition of psychopaths, the misery they dump on everyone else, and on everything—and especially the knowledge that they can easily be revealed—might be the most important advance of all time regarding civilization more fitting of the name. Developments in brain scanning technologies leave psychopaths with nowhere to hide. One might think of it as X-ray vision regarding a person’s soul....

Of all the damage Cheney and BushCo have wreaked upon humanity, there could be a redeeming quality in that people with conscience are having their souls rubbed in levels of carnage that can only be achieved by psychopaths reaching epitomes of power. Nothing new, except the sheer scale of the lesson.

WARNING: Nothing is more dangerous than psychopaths in power being revealed for what they are. Though genetic psychopaths are still a small percentage of humanity, at all costs, they must be exposed, and kept from power. However enormous those costs, they mean little compared to what humanity will pay with continued psychopathic rule.

Rand Clifford is a writer living in Spokane, Washington, with his wife Mary Ann, and their Chesapeake Bay retriever, Mink. Rand's novels CASTLING, TIMING, VOICES OF VIRES, and PRIEST LAKE CATHEDRAL are published by StarChief Press:

War, Inc.

War, Inc.

Note to the revised version: This article was first written for publication in December, 2001, weeks after the U.S. started bombing Afghanistan. It appeared in the April 2002 issue of "Wild Matters," a national environmental journal Michael Colby published in Vermont.

By Mike Ferner

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"So what is our mistake? We are also human beings. Treat us like human beings," Gulalae, a 37 year-old Afghan mother, told the Toledo Blade from the dust, hunger and fear of the Shamshatoo refugee camp in Pakistan. She calls Osama bin Laden an "outsider" and says that because of him, "Afghanistan is made into a hell for others."

Grim does not begin to describe the conditions Gulalae and her family endure. In one three-month period, in just one portion of Shamshatoo, bacteria-related dehydration killed a child nearly every day. The misery in this refugee city is like a grain of sand on the beach of suffering that is Afghanistan. But Americans know little of it.

If you only watch mainstream press accounts you'd never know that within the first three months of "America's New War," civilian deaths from U.S. bombing in Afghanistan surpassed 3,700—more than were killed in the attacks of September 11. The toll from unexploded cluster bombs, land mines, destroyed water and sewer systems and depleted uranium shells will no doubt reach into the hundreds of thousands. Add the additional innocents sure to die as the international cycle of violence continues, and our war to end terrorism seems calculated to do just the opposite – which points to a disturbing but plausible reason why we chose war: our government needs Osama bin Laden, just like we needed the Evil Empire of the Soviet Union.

For a year and a decade after the USSR dissolved in 1990, it looked like we would have to settle for homosexuals as the national boogeymen, but al Qaeda serves to crank up the armament budget much better than do homosexuals. We fool ourselves if we deny there was considerable behind-closed-doors celebrating in the board rooms of some of the biggest U.S. corporations when a distinctly unpopular president decided to become a War President and invade Afghanistan; then through the bloody logic of empire, Iraq.

Before the Evil Empire we had the Hun, the despicable Spaniards bombing the Maine before that, and the murderous Mexicans were in the way when we wanted Texas. Similar frights can be traced back through the British Empire and earlier than that to the Gauls up in France whom Caesar had to put to the sword to keep Rome safe.

These days government has much more sophisticated means of monitoring and spying on citizens, so the two plums of power and control now sway temptingly before those who would be our servants. How likely is it that without sufficient fright citizens would abide a PATRIOT Act, or partially disrobe to board a plane, or shrug off wiretaps or multitudes of surveillance cameras now invading city landscapes?

But returning for a moment to the economic incentives for war, the following explains as well as any and better than most: "War is a racket. It always has been…A racket is best described as something that is not what it seems to the majority of people. Only a small 'inside' group knows what it is about. It is conducted for the benefit of the very few, at the expense of the very many."

Words of a radical peacenik? Only if a Marine Corps Major General qualifies as one. In his twilight years General Smedley Butler unburdened his soul as did other career militarists, such as Admiral Hyman Rickover, who admitted that fathering the nuclear Navy was a mistake and Robert McNamara, who almost found the words to apologize for overseeing the Viet Nam war. Though unlike Rickover and McNamara, Butler named names and exposed for whom the system works.

"I helped make Mexico safe for American oil interests in 1914" Butler wrote in 1933. "I helped make Haiti and Cuba a decent place for the National City Bank boys to collect revenues in. I helped in the raping of half a dozen Central American republics for the benefit of Wall Street. I helped purify Nicaragua for the International Banking House of Brown Brothers in 1902-1912. I brought light to the Dominican Republic for the American sugar interests in 1916. I helped make Honduras right for American fruit companies in 1903. In China in 1927 I helped see to it that Standard Oil went its way unmolested." Butler acknowledged that he'd spent most of his 33 years in the Marines as "a high class muscle man for Big Business, Wall Street and the bankers. In short, I was a racketeer, a gangster for capitalism."

Thus did Butler simply and effectively expose a largely unknown truth—how the military serves the interests of the propertied elite and their wealth-gathering machines, the corporations.

Perhaps more commonly known is the corrupting practice of war profiteering.

"...Only twenty-four at the (Civil) war's beginning, (J. Pierpont) Morgan perceived from the first that wars were for the shrewd to profit from and poor to die in," wrote Robert Boyer and Herbert Morais in Labor's Untold Story. "He received a tip that a store of government-owned rifles had been condemned as defective and with the simplicity of genius he bought them from the government for $17,500 on one day and sold them back to the government on the next for $110,000...A Congressional committee investigating his little deal said of him and other hijacking profiteers, 'Worse than traitors are the men who, pretending loyalty to the flag, feast and fatten on the misfortunes of the nation.'"

Lest we think such traditions are no longer observed, consider the case of Eagle-Picher Technologies Corp., producer of sophisticated batteries to power the guidance systems of "smart" bombs. Workers claim they were ordered to cover up defects on millions of batteries – defects that would ultimately cause guidance systems to fail. How many innocent civilians were killed by bombs guided by defective Eagle-Picher Corp. batteries?

Ignoring the indictable war profiteers like J.P. Morgan, consider just one instance of legal war profits and how they allow the few "inside the racket" to benefit economically and politically – for generations – at the expense of the many. The du Pont Corporation will suffice.

Compared to some of its fellow racketeers, the du Pont Corporation's profits during WWI look downright patriotic. The company whose gunpowder saved the world for democracy saw its average annual pre-war profit jump from $6,000,000 to nearly 10 times that amount during the war.

With this wealth the du Pont family was able to buy nearly a quarter of all General Motors Corporation stock by the mid-1920's. Not only would that become a shrewd investment during GM's successful campaign to destroy urban mass transit systems, but who better than a du Pont to run President Eisenhower's Bureau of Public Roads and develop the National System of Interstate and Defense Highways along with Eisenhower Defense Secretary (and former GM President), Charles Wilson?

If war profits provide such a good return on investment, imagine how much planning goes into winning the geostrategic spoils of war? For a peek inside this game there are few better tour guides than President Carter's National Security Advisor, Zbigniew Brzezinski.

Having also served on President Reagan's Defense Department Commission on Integrated Long-Term Strategy, Brzezinski was well-qualified to write his 1997 book, The Grand Chessboard: American Primacy and Its Geostrategic Imperatives. It's one of those books that beg the question, "why would anybody actually put this stuff in writing?" It also provides useful documentation for those who find it more than a little odd that "Zbiggy" has more recently joined critics of the war in Iraq.

Brzezinski describes the Europe-Asia landmass as the key to global dominance. He asserts that the fall of the Soviet Union cleared the way for the U.S. to become the first non-Eurasian power to dominate this critical area, "…and America's global primacy is directly dependent on how long and how effectively its preponderance on the Eurasian continent is sustained..."

In 1977 he named the Central Asian "stans" as the next center of conflict for world domination, and in light of expected Asian economic growth, he called this area around the Caspian Sea "…infinitely more important as a potential economic prize: an enormous concentration of natural gas and oil reserves…dwarf(ing) those of Kuwait, the Gulf of Mexico, or the North Sea…in addition to important minerals, including gold."

The former Reagan National Security Council member reasoned: "It follows that America's primary interest is to help ensure that no single power comes to control this geopolitical space and that the global community has unhindered financial and economic access to it."

He further deduced: "That puts a premium on maneuver and manipulation in order to prevent the emergence of a hostile coalition that could eventually seek to challenge America's primacy." Leaving nothing to doubt, he clarified "…To put it in a terminology that harkens back to the more brutal age of ancient empires, the three grand imperatives of imperial geostrategy are to prevent collusion and maintain security dependence among the vassals, to keep (satellites) pliant and protected, and to keep the barbarians from coming together."

For those foolish enough to imagine planet Earth not being ruled by the U.S., he warns that "America's withdrawal from the world—or because of the sudden emergence of a successful rival—would produce massive international instability. It would prompt global anarchy."

Brzezinski advises to "keep the barbarians from coming together," and predicts "global anarchy" if U.S. dominance is threatened. The cold warrior's language, while picturesque, is not as precise as that used by Thomas Friedman, yet another acolyte of empire who now wants to distance himself from a badly mismanaged adventure in Iraq.

The foreign affairs columnist for the NY Times in his much-hyped book, The Lexus and the Olive Tree: Understanding Globalization, wrote: "Markets function and flourish only when property rights are secure and can be enforced…And the hidden fist that keeps the world safe for Silicon Valley's technologies to flourish is called the US Army, Air Force, Navy and Marine Corps."

With a Silicon Valley reference, Friedman updates General Butler's statement that "I helped make Mexico safe for American oil interests." Notwithstanding Friedman's update, oil retains its century-old rating as the imperial standard – now with Afghanistan and Iraq at center stage. UNOCAL Corp. for one does not hesitate to demand that Afghanistan be made safe for American oil interests. "From the outset," a corporate executive testified to Congress in 1998, "we have made it clear that construction of our proposed ($2.5 billion Afghanistan) pipeline cannot begin until a recognized government is in place that has the confidence of governments, lenders and our company. UNOCAL envisions the creation of a Central Asian Oil Pipeline Consortium…that will utilize and gather oil from existing pipeline infrastructure in Turkmenistan, Uzbekistan, Kazakhstan and Russia."

Smedley Butler learned that in war "nations acquire additional territory if they are victorious. They just take it." With leasing more in vogue than ever, getting the use of additional territory – call it property –can be more profitable than actually acquiring it. But the end result is the same. "This newly acquired territory is promptly exploited by the few," Butler explained, "the self-same few who wrung dollars out of blood in the war. The general public shoulders the bill."

A small measure of historical perspective makes America's latest war much less surprising. Yes, this time it's oil. But as important as that commodity is, it's not oil alone for which we are killing. It's to insure that human rights are subjugated to property rights. Sometimes we call property "oil," sometimes we call it "land," sometimes we call it "human beings." The names change, but the song remains the same throughout history.

For example, it is illuminating to read a few lines from our Constitution, such as Article 4, Section 2. Imbedded in the most fundamental law of our land was the duty to return property in the form of runaway slaves and indentured servants to the owners. The Commerce Clause and the Supreme Court's interpretation of it has insured that property rights trump citizens' rights to govern themselves as described in the new expose, "Gaveling Down the Rabble." And nobody who works for a living needs a source citation to tell them that corporations have more free speech rights than human beings.

That's why the United States government didn't choose to seek justice through a criminal prosecution after September 11. Our government wasn't interested in justice. It was interested in empire and property. Some things never do change.


This article was first written for publication in December, 2001, weeks after the U.S. started bombing Afghanistan. It appeared in the April 2002 issue of "Wild Matters," a national environmental journal Michael Colby published in Vermont.

The initial purpose of War, Inc. was to question why the U.S. chose to go to war after the attacks of September 11, 2001. One could argue that other kinds of responses were possible, such as treating the attacks as a criminal act instead of an act of war which, in any sense of how we understand the word, they were not. Pursuing a criminal response would bring to bear the intelligence-gathering forces of virtually the entire world, then in universal sympathy with the United States, to arrest and try those responsible for the attacks. Leaving aside for a moment the argument that a criminal investigation into the September 11 attacks would never have been allowed since the federal government at the very least looked the other way before the attacks took place, I think we can safely say the last seven years prove that the path we chose – war – has generated far more innocent victims, grieving families, ruined lives and overall problems for the U.S. than had we sought justice without resorting to war.

Which leaves open the question, why did our government choose to respond by invasion and war?

Ferner is author of "Inside the Red Zone: A Veteran For Peace Reports from Iraq."

The Greatest Heist In History

The Greatest Heist In History

When the US goes to war, corporate America goes too.

Panorama investigates claims that as much as $23bn (£11.75bn) may have been lost, stolen or not properly accounted for in Iraq.

There are contracts for caterers, tanker drivers, security guards and even interrogators, many of them through companies with links to the White House. Now more than 70 whistleblower cases threaten to reveal the scandals behind billions of dollars worth of waste, theft and corruption during the Iraq war. Gagging orders A total of $23bn (£11.75bn) is under scrutiny.

The US justice department has imposed gagging orders which prevent the real scale of the problem emerging. But Panorama's Jane Corbin has spoken to some of those involved - with astonishing stories to tell of who got rich and who got burned. She hears allegations of mismanagement, fraud and waste; tales of contractors chosen for their US government connections without a competitive bidding process; contractors inflating their costs and double counting to increase their profits and billions supposed to be used to rebuild the Iraqi military allegedly ending up in the pockets of some Iraqi government officials. Even the contract to oversee the expenditure went to a company with no relevant qualification in accounting. "They are the quintessential war profiteers," said a witness to one of the most notorious companies involved. "They made money out of chaos."

BBC - Broadcast 10/06/08

Jail Time for Tenet?

Jail Time for Tenet?

Why fabulous? Well, a good part of it has to do with his past.

When Bush screwed up royally – whether in his personal or business affairs – he had to suffer the humiliation of asking his father or his father’s friends (sometimes Arab friends) to bail him out.

But now? Wow! As president, young George has found he can escape accountability altogether.

Now when he screws up royally, he need not call Dad; George W. Bush is himself in control of all the levers he needs to pull in order to bail himself out. Is this a great country or what?

An invertebrate Congress has been a big help. But his greatest asset limiting his liability has been the kind of folk he has gotten to work for him. The kind like Vice President Dick Cheney's former chief of staff, Scooter Libby, whom he has no problem asking to lie for him, when required.

For Bush’s powers are formidable – as he showed when Libby, convicted perjurer and obstructer of justice, was about to go off to prison. The president commuted Libby’s sentence, sending a message to others who might be called on to lie for him to hang tough and count on commutation or pardon.

A president’s unlimited power to pardon serves as the ultimate trump card to keep friends and associates out of jail.

Even so, one key aide, former CIA Director and Medal of Freedom winner, George Tenet, can be forgiven for being somewhat apprehensive these days. For he has lied under oath regarding what Bush knew about the 9/11 attacks and how early Bush knew it.

Concealing pre-9/11 warnings that Bush received might have seemed like the smart play during the president’s first term when his popularity was high and few in Washington dared to stand up to him.

However, if the American voters choose to send vertebrates to the next Congress – or if the Justice Department starts taking seriously its duty to require honest testimony from senior government officials – Tenet may be looking at some jail time.

With the possibility of large changes in the political landscape early next year, all bets might be off.

Tenuous Tenet

As for Tenet’s potential legal jeopardy, let’s leave aside for now the obviously heinous – like running George W. Bush’s global Gestapo complete with secret prisons and torture chambers, a criminal enterprise that Tenet carved out of the operations directorate of the CIA.

Let’s pick a case of simpler, more familiar white-collar crimes – Libby-style perjury and obstruction of justice.

Credit to Rep. Dennis Kucinich, whose 35 Articles of Impeachment against Bush – specifically Articles 33 and 34 relating to the catastrophe of 9/11 – have freshened memories, stirred additional research and demonstrate why Tenet may be looking at some prison time.


The text contains a devastating run-down of the many times President Bush was warned that an attack was coming and did nothing.

George Tenet did sound the alarm often and loudly. But as a retroactive glance at August 2001 shows, the president, literally, could not be bothered.

Tenet’s own performance was hardly blameless. The 9/11 Commission found numerous screw-ups within the CIA, and Tenet’s discharge of his statutory duty to coordinate the work of the entire intelligence community was abysmal.

It was his responsibility to ensure that the FBI, CIA and other intelligence agencies were sharing information freely on this priority issue. Sadly, Tenet preferred backslapping to holding the intelligence community to professional standards of work and conduct.

Article 33 of Impeachment shows that President Bush’s inaction in the face of myriad warnings prior to 9/11 constitutes utter failure with respect to his Constitutional duties to take proper steps to protect the nation.

Those who remember Watergate and other misadventures will be aware, too, that the cover-up of wrongdoing constitutes an additional – and often more provable – crime, especially when it involves perjury and obstruction of justice.

That’s where George Tenet comes in. Until now, Bush has managed to escape blame for his outrageous inactivity before 9/11 because his subordinates – first and foremost, Tenet – have covered up for him.

This is what is dealt with in Article 34 of Impeachment: OBSTRUCTION OF INVESTIGATION INTO THE ATTACKS OF SEPTEMBER 11, 2001.

A Faustian Bargain

What did the president know, and when did he know it?

This double question, with Watergate antecedents, is the one that Bush and Cheney had to guard most carefully against.

By all appearances, they had little trouble enlisting a malleable-cum-guilty-conscience George Tenet in this effort at denial and obfuscation. And this helps to explain some of the more bizarre episodes of that time.

Faustian bargain? Call it mutual blackmail, if you prefer the vernacular.

Yes, Tenet gave the president enough warning to warrant, to compel some sort of action on his part. But Tenet’s lackadaisical management of the CIA and intelligence community was at least as important a factor in the success of the attacks of 9/11.

The raison d’etre of the CIA had been to prevent another Pearl Harbor. Yet, 9/11 took more lives than the Japanese attack in 1941.

As before Pearl Harbor, significant pieces of intelligence lay around but analysts failed to put them all together.

It was long since clear to many in Washington that, had George Tenet stayed home long enough to tend to his knitting – his management responsibilities – instead of eternally hobnobbing abroad with kings and other potentates, 9/11 might well have been avoided, even with an indolent president.

Of course, Tenet should have been fired after 9/11. But President Bush needed Tenet, or at least Tenet’s silence, as much as Tenet needed Bush, or at least Bush's forgiveness.

What developed might be described as a case of mutual blackmail disguised as bonhomie. Bush was keenly aware that Tenet had the wherewithal to let the world know how many warnings he had given the president – reducing Bush to a criminally negligent, blundering fool.

Were that to happen, Bush would have to kiss goodbye the role of cheerleader/war president – and so much else. Thus, Tenet had become critical to Bush's political survival.

And Tenet? All he needed was not to be blamed – not to be fired. The bargain: I, George Bush, will keep you on and even praise your performance; you, George Tenet, will keep your mouth shut about all the warnings you gave me during the spring and summer of 2001. Tenet, it seems clear, agreed.

The bargain was no secret to insiders. Former House speaker Newt Gingrich, still very much of the Washington scene, commented publicly that Tenet was so grateful that the president let him stay on as CIA director, that he would do anything for him.

Events proved Gingrich right. And there was even a Medal of Freedom in it for Tenet – but, alas, eventual criminal liability as well.

Anatomy of a Deal

On Sept. 26, 2001, the president motored out to CIA headquarters, puts his arm around Tenet and told the cameras, “We’ve got the best intelligence we can possibly have thanks to the men and women of the CIA.”

Then-Secretary of State Colin Powell, as was so often the case, had not been clued in.

On Sept. 23, Powell had promised a “White Paper” that would make a “persuasive case” that Osama bin Laden was responsible for the 9/11 attacks. His announcement met immediate resistance from the White House, however, and, less than two weeks later, Powell actually apologized for his “unfortunate choice of words.”

There would be no White Paper, he said; rather, the American people would have to rely on “information coming out in the press and other ways.”

It became gradually clear why Powell reneged. The evidence against bin Laden could not be disclosed because there was simply too much of it available for the reading well before 9/11.

To reveal this would bring extreme political embarrassment and vitiate the Faustian bargain with Tenet.

Small wonder that the White House preferred a whitewash to a White Paper.

And this has been a constant since the fall of 2001. Administration obstructionism and intransigence has succeeded in hindering all subsequent investigations into what Bush and Cheney had been told prior to 9/11. Until now, at least.

Perjury, Obstruction of Justice

In his sworn testimony of April 14, 2004, before the 9/11 Commission, Tenet outdid himself trying to honor his bargain with Bush. The commissioners were interested in what the president had been told during the critical month of August 2001.

Answering a question from Commissioner Timothy Roemer, Tenet referred to the president’s long vacation (July 29-Aug. 30) in Crawford and insisted that he did not see the president at all in August.

“You never talked with him?” Roemer asked.

“No,” Tenet replied, explaining that for much of August he, too, was “on leave.”

That same evening, a CIA spokesman called reporters to say that Tenet had misspoken, and that he had briefed Bush on Aug. 17 and 31, 2001. The spokesman played down the Aug. 17 briefing as uneventful and indicated that the second briefing took place after Bush had returned to Washington.

Funny how Tenet could have forgotten his first visit to Crawford, whereas in his memoir, At the Center of the Storm, Tenet waxed eloquent about the “president graciously driving me around the spread in his pickup and me trying to make small talk about the flora and the fauna.”

But the visit was not limited to small talk.

In his book Tenet writes: “A few weeks after the August 6 PDB was delivered, I followed it to Crawford to make sure the president stayed current on events.”

The Aug. 6, 2001 President’s Daily Brief contained the article “Bin Laden Determined to Strike in the US.” According to Ron Suskind’s The One-Percent Doctrine, the president reacted by telling the CIA briefer, “All right, you’ve covered your ass now.”

Clearly, Tenet needed to follow up on that.

Was Tenet again in Crawford just one week later? According to a White House press release, President Bush on Aug. 25 told visitors to Crawford, “George Tenet and I” drove up the canyon “yesterday.”

Flora and Fawner?

If, as Tenet says in his memoir, it was the Aug. 6, 2001, PDB that prompted his visit on Aug. 17, what might have brought him back on Aug. 24?

I believe the answer is to be found in court documents released at the trial of Zacarias Moussaoui, the fledgling pilot in Minnesota interested in learning to steer a plane but indifferent as to how to land it.

Those documents show that on Aug. 23, 2001, Tenet was given an alarming briefing, focusing on Moussaoui, titled “Islamic Extremist Learns to Fly.” Tenet was told that Moussaoui was training to fly a 747 and, among other suspicion-arousing data, had paid for the training in cash.

The FBI arrested him on Aug. 16 on grounds he had overstayed his 90-day visa and the CIA was working on the case with the FBI. This might well have been what led Tenet to go back to Crawford on the 24th.

There is no indication that the president or Tenet ever followed up with senior FBI officials. Then-Acting FBI Director Thomas Pickard has testified that he did not learn of it until the afternoon of Sept. 11, 2001.

Things proceeded more quickly at the working level, at least for this discrete part of the problem. Tenet’s analysts had learned about Moussaoui in a back-door message from the FBI Field Office in Minneapolis enlisting CIA’s help in obtaining information on Moussaoui from French intelligence.

The Minneapolis case agent had already telephoned the FBI legal attaché office in Paris, which contacted the French government on Aug. 16 or 17.

With unusual speed, on Aug. 22 and 27, the French provided information that made a connection between Moussaoui and a rebel leader in Chechnya, Ibn al Khattab, and indicated that Khattab had a connection with Osama bin Laden.

Court documents from the Moussaoui case also show that on Aug. 30, 2001, CIA analysts were able to confirm to Tenet that Moussaoui had ties with radical fundamentalist groups and Osama bin Laden. This would have been good grist for Tenet’s briefing of the president on Aug. 31 in Washington.

Nevertheless, in Tenet’s sworn testimony before the 9/11 Commission on April 14, 2004, he said he had not mentioned Moussaoui to the president during August 2001. Tenet further testified that he did not report on Moussaoui at the cabinet-level meeting convened on Sept. 4 to discuss terrorism.

On May 6, 2007, when Tim Russert asked Tenet what the president knew and when he knew it, Tenet replied that “everything went silent” in August 2001.

Russert asked Tenet why he did not go directly to the president in July 2001 after he had warned then-national security adviser Condoleezza Rice of the possibility of “spectacular, multiple, simultaneous attacks against US targets with little or no warning” and gotten the brush-off.

Tenet replied lamely “the president is not the action officer.”

Tenet not only was, by statute, the president’s principal foreign intelligence adviser but – by all accounts – enjoyed a backslapping rapport with him. Tenet also briefed the president six mornings a week.

It strains credulity to suggest that Tenet was afraid to go directly to George Bush for fear of appearing to be making some sort of end-run around his national security adviser on a terrorist threat about which Tenet’s hair was said to be “on fire?”

Tenet at Breakfast on 9/11

No one wants to believe that the attacks of Sept. 11, 2001, could have been prevented, but we do a disservice to our country, and to one another, if we stay in denial.

No one wants to believe that President Bush had considerably more forewarning than he acknowledges, but it is very clear that he did. It is equally clear that George Tenet has been a prime mover in hiding the amount of intelligence available to Bush to act on.

Reviewing the evidence on May 26, 2002, Michael Getler, then-ombudsman for the Washington Post, alluded to one very telling sign leaping out of a conversation between George Tenet and former Sen. David Boren over breakfast on 9/11.

When an aide rushed up to tell Tenet of the attacks, Tenet’s immediate reaction was “This has bin Laden all over it…I wonder if it has anything to do with this guy taking pilot training.”

Getler notes for his readers that the reference is to Zacarias Moussaoui.

A few months after 9/11, the Wall Street Journal reported that the FBI did not tell the White House about Moussaoui until after Sept. 11. That may be true, particularly if, as noted above, then-Acting Director Thomas Pickard did not learn about Moussaoui until 9/11.

But the evidence is very strong that Tenet told Bush chapter and verse.

The extraordinary lengths to which Tenet has gone to disguise that has the former CIA director skating very close to perjury – if not over the line.

Plus, if Tenet is held accountable after Bush leaves town to go back to Texas for good, there may be no one in the White House willing to pardon him.

Conservatives Master Obstruction

Conservatives Master Obstruction

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Yesterday, Senate conservatives continued their stated strategy of "making political points" by obstructing legislation meant to address America's energy and environmental challenges. First, in a 51-43 vote, conservatives successfully used the threat of a filibuster to block the Consumer-First Energy Act, which would have "levied a 25 percent tax on 'windfall profits' of major oil companies" that don't invest more in renewable energy. Daniel J. Weiss, the Center for American Progress's Director of Climate Strategy, says that such a tax would "spur investments in clean energy alternatives." The bill would also have "given the government more power to address oil market speculation, opened the way for antitrust actions against countries belonging to the OPEC oil cartel, and made energy price gouging a federal crime." The second bill blocked by conservatives, the Renewable Energy and Job Creation Act of 2008, failed by a vote of 50-44. It would have extended popular tax breaks for renewable energy that are set to expire at the end of this year. The failure to pass the tax breaks is worrisome to the renewables industry, which is "already seeing a slowing of growth in the sector because companies are hesitant to start new projects without the assurance that these credits will be available." Yesterday's obstructionism is the third time in less than a week that Senate conservatives have used parliamentary tactics to block energy legislation. On Friday, conservatives blocked the Lieberman-Warner Climate Security Act after first shutting down the Senate by forcing the clerk to read the entire bill on the Senate floor.

A 'CYNICAL' STRATEGY OF OBSTRUCTION: A Republican strategy memo obtained last week by Senate Majority Leader Harry Reid (D-NV) made clear that the obstructionist tactics employed by conservatives were aimed solely at "making political points" rather than "affecting policy." "You could not make up anything more cynical," said Reid when he revealed the memo on the Senate floor. As Sen. Debbie Stabenow (D-MI) noted on the Senate floor yesterday, conservatives in Congress have broken historical precedent by engaging in 75 filibusters this Congress. But the filibuster isn't the only obstructionist tactic employed by Senate Republicans. Yesterday, Senate conservatives used a rare maneuver to shut down a Judiciary Committee hearing on torture by forcing the Senate into recess. Reid called the maneuver by Sen. Thad Cochran (R-MS) "part of a pattern of obstruction." Sen. Dianne Feinstein (D-CA), who has been in the Senate since 1992, remarked that the shut down was "very, very unusual."

CONSERVATIVES WANT TO DRILL: At the same time they are blocking investment in alternative energy, conservatives, allied with Big Oil, are claiming that the cure to America's energy problems is simply "increasing domestic oil supplies by permitting new exploration in the Arctic National Wildlife Refuge and in the waters on the Outer Continental Shelf." Their mantra, in the words of former House Speaker Newt Gingrich, is to "drill here, drill now." The entire conservative noise machine is getting behind the call for increased domestic drilling. "We need to be drilling more and drilling now here at home," bellowed Rush Limbaugh on his radio show yesterday. Just yesterday, House Republicans filed a discharge petition to "force a floor vote on legislation on oil drilling in Alaska." The White House agrees with its conservatives allies. "Instead of populist votes that would do nothing for gas prices, we need to allow domestic oil production in environmentally sensitive ways," said spokesman Tony Fratto yesterday.

BUT DRILLING WON'T HELP: "More drilling. More drilling. More drilling. That is the Johnny One Note policy" of conservatives, charged House Majority Leader Steny Hoyer (D-MD) in response to the discharge petition. "Feeding that addiction by tapping another vein just drills us into a deeper hole," said Sen. Robert Menendez (D-NJ). Furthermore, opening up drilling domestically in places such as the Arctic National Wildlife Refuge wouldn't have the effect on gas prices that conservatives claim. The U.S. Geological Survey believes that drilling in the refuge would likely produce only 3.2 billion barrels of oil, which is "not even enough to satisfy six months' demand." Additionally, it would take 10 years for oil drilled in the Arctic to reach the market and another 40 years to extract the full amount of oil. Instead of making "long-term investments in affordable transportation alternatives that use significantly less gasoline or oil," conservatives want to double down on more and more domestic drilling.

Huge Seoul protest threatens to topple government

Seoul protest threatens to topple government

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President Lee Myung Bak confronted the biggest challenge to his young and unpopular administration Tuesday as tens of thousands of demonstrators filled central Seoul to protest his agreement to resume imports of American beef and to denounce a broad range of other government policies.

The entire cabinet offered to resign as a way to help Lee find a way out of the crisis. It was unclear how many cabinet members Lee would replace, but he indicated that the changes could be substantial.

Lee's 107-day-old government has been beset by fears - partly stoked by media reports and his critics - that his agreement to reopen South Korea to American beef could expose the public to mad cow disease.

In a way, lifting the import ban on American beef was a long overdue action that Seoul had promised to take once the World Organization for Animal Health ruled American beef safe, as it did last September.

But until Lee, politicians here had shunned taking the political risk because, among left-leaning or nationalistic young South Koreans, the issue has become a test of whether Seoul can stand up to Washington.

For 40 days, central Seoul has been rocked by demonstrations, which began as rallies by hundreds of teenage students, singing, dancing and holding candles to protest American beef. They have evolved into a protest against government policies on education, health care and consumer prices.

Once hailed as a potential savior of the troubled economy, Lee has lost public confidence in his leadership over a broad range of policies as the nation is grappling with a slowing economy and a prolonged crisis over North Korea's nuclear weapons programs, political analysts said.

"Lee Myung Bak, out!" protesters chanted, brandishing yellow and red cards carrying the same message.

The rally had an almost festive mood, with antigovernment slogans reverberating through the city center well past midnight. Loudspeakers blared the songs South Koreans sang during their struggle against the military dictators of the 1970s and '80s. Large balloons carried banners that read "Judgement day for Lee Myung Bak" and "Renegotiate the beef deal." One widely distributed leaflet said: "Mad cow drives our people mad!"

South Korea banned American beef imports in December 2003 after a case was reported in the United States.

The police estimated the crowd at 100,000, while organizers claimed it amounted to 700,000.

The protesters appeared to encompass a broad spectrum of society: students, union members, Roman Catholic nuns, office workers in neckties, and mothers and fathers holding hands with small children.

Up to 21,000 police officers were present, barricading roads leading to the presidential Blue House with buses and shipping containers. Protesters spray-painted the barricades with anti-Lee slogans.

The agriculture minister, Chung Won Chun, visited the rally to offer an apology in a speech, but protesters quickly surrounded him chanting "traitor" and he quickly left.

Lee appealed to the police and protesters to avoid clashes. He promised to be "humble before the people's voices" and called for national unity to overcome an economic crisis spawned by stagnant growth and surging prices for oil and other raw materials.

"Our economy is faced with a serious difficulty, with prices rising and the economy gradually slowing," Lee said in a speech Tuesday to mark the 21st anniversary of democracy protests that helped end the years of military dictatorship.

Protesters have accused Lee of being too eager to please the United States, even at the expense of the health of his own people.

Such criticism gained currency when it was revealed that South Korea had agreed to a less-restrictive beef importation deal than Taiwan and Japan did.

Lee offered no immediate comment on whether he would accept the offers of resignation by Prime Minister Han Seung Soo and other cabinet members. But their offers, coupled with an earlier offer by his top aides to resign, opened the way for Lee to overhaul his government for a new beginning as he tries to arrest his plummeting approval ratings.

On Monday, Lee sent a delegation to Washington to help defuse the crisis and amend the April deal so that the United States would not export beef from cattle older than 30 months, similar to the deals Japan and Taiwan reached with the United States. Younger cattle are believed to be less susceptible to mad cow disease.

"The most serious problem for the president is that he has lost the people's confidence," said Kang Won Taek, a political scientist at Soongsil University in Seoul. "People do not trust what he says or what he does."

Lee won the presidency in December with the biggest margin of victory in decades. But his popularity rating has plunged below 20 percent since his government agreed to reopen markets to beef from the United States.

The agreement came as Lee championed a new "pragmatic" approach to relations with Washington. He also made it his top priority to rebuild the alliance with the United States while pursuing closer cooperation in dealing with North Korea. The alliance between Washington and Seoul had shown signs of strain under Lee's predecessor, Roh Moo Hyun, who was often accused of stoking and capitalizing on the nationalistic and often anti-American sentiments of young South Koreans.

Lee hoped his decision to end the five-year-old ban on American beef would help win U.S. congressional support for a free trade agreement struck between the two governments last year.

The free trade pact is the United States' most ambitious in Asia. U.S. and South Korean officials hoped that the deal would bring the United States closer to its key Asian ally, as well as providing a badly needed boost to the South Korean economy, which feels rising pressure between high-tech Japan and low-cost China.

Prices Leap for Corn and Crude Oil

Prices Leap for Corn and Crude Oil

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Chris Flood, writing on Friday at the Financial Times Online, reported that, "Torrential rain across parts of the Midwest pushed US corn prices to record levels on Friday, prompting concerns about the outlook for this year's harvest.

"In Chicago, CBOT July corn jumped 20¾ cents to a record $6.63¼ a bushel, taking gains for this year so far to 45.6 per cent."The FT article added that, "One trader estimated that about 4m acres of corn and up to 19m acres of soyabeans for this year's harvest have yet to be planted.

"CBOT July soyabeans rose 40 cents to $14.88 a bushel, up 24.1 per cent this year.

"Further rain is expected ahead of a key update from the US Department of Agriculture on Tuesday."

Similarly, Associated Press writer Stevenson Jacobs reported on Friday that, "Corn futures shot up to a record for a second day Friday, driven higher by heavy rain in Midwestern states, a slumping dollar and skyrocketing crude oil prices.

"Other commodities traded broadly higher, with crude oil soaring more than $11 and gold, silver, copper and other agriculture futures also rising sharply.

"Heavy rains have flooded corn crops in Indiana, Ohio, Nebraska and other states, giving farmers their wettest spring since 1993 and severely delaying planting. Forecasts show the bad weather moving toward the western corn belt states of Minnesota and Wisconsin over the next several days."

The AP article went on to explain that, "U.S. farmers were expected to plant 86 million acres of corn this year, but wet weather in Midwestern states has left 4 million acres unplanted. If the remaining fields aren't planted by June 10, farmers will either leave them empty and take insurance payments or switch the acres over to soybeans, which have a later growing cycle.

"That would likely lift corn prices further, forcing consumers to pay higher grocery bills for meat and pork, as livestock producers would be forced to pass on higher animal feed costs and thin their herd size.

"Other agriculture futures also rose. Wheat for July delivery rose 25.5 cents to settle at $8.11 a bushel on the CBOT, while July soybeans added 5.5 cents to settle at $14.575 a bushel.

"Meanwhile, rough rice futures for July delivery added 60 cents to settle at $19.96 per 100 pounds.

"In energy futures, oil prices soared more than $11 to a new record above $139 after a Morgan Stanley analyst predicted prices could hit $150 by the Fourth of July."

A news release issued last week by University of Missouri Extension noted that, "Many Missouri farmers are several weeks behind schedule on planting corn due to persistent wet weather. With the approach of the early June cutoff date for corn planting, farmers may have to switch to other crops or plant out of season despite risks of lower yields, said University of Missouri agriculture experts.

"Either way, corn yields will probably be lower than last year and may fail to meet the nation's 13-billion-bushel demand. That could lead to higher food prices, reduced livestock production and ripple effects across all farm sectors, said Scott Brown, agricultural economist with the MU Food and Agricultural Policy Research Institute.

"'A number of factors make us worried about where yields are going to be at harvest time this year,' Brown said. 'We have a very strong demand for corn in this country, and now we're starting to talk about less production occurring.'"

DTN writer Chris Clayton reported on Friday that, "As thunderstorms continue dumping rain on critical Corn Belt states, there is heightened concern by policymakers, market observers and farmers about the ability to meet expected increased demand for corn in the coming year.

"Fears about the potential 2008 corn production come on the heels of high commodity prices globally that already have led to a United Nations food-aid conference and growing attacks on the use of corn and soybeans in biofuels. Even at the UN conference there was talk that U.S. spring planting was behind schedule. Agriculture Secretary Ed Schafer said Thursday after returning from the Rome conference that USDA is monitoring the weather closely right now.

"'We've got a lot of concern of the wet conditions in corn country and how that's affecting the planting of the crop and certainly the maturity of the crop,' Schafer said."

Mr. Clayton noted that, "Some agronomists project that even if the rains stopped, most producers would be looking at 80 percent to 90 percent of their normal expected yields in key areas of the Corn Belt. Roger Elmore, an agronomist at Iowa State University, said without adequate heat units, the yield pull can be closer to 65 percent to 70 percent normal levels.

"'We're getting to the point where it is really late to think about planting corn,' Elmore said. 'Every day I look at the forecast, it's going to be hard to be optimistic.'"

And with respect to the Conservation Reserve Program, the DTN article indicated that, "[Sec. of Agriculture Ed Schafer] reiterated that USDA had opened up Conservation Reserve Program acres for haying and grazing later this summer. Sign-ups for that began on Monday.

"'Hopefully that displaces corn as a feed, at least to some extent,' Shafer said. 'So we're looking at it. We're trying to do everything that we can to deal with it, and as you said we're monitoring it closely because it is of concern.'"

However, the Associated Press reported yesterday that, "Advocates for pheasant and quail hunters are concerned that new rule changes that allow Conservation Reserve Program lands to be used for haying and grazing this summer and fall could infringe on major nesting habitat."

This AP article stated that, "Meanwhile, [Dave Nomsen, Pheasants Forever's vice president of government affairs] sees a bigger issue: the message the rule changes send about the value of CRP lands.

"As 10- and 15-year CRP contracts are set to expire this fall and in coming years, many agriculture officials say — and conservationists fear — farmers will not re-up and instead begin growing crops to capitalize on recent high commodity prices. Some farmers may even pay a penalty to leave the program early to cash in on crops.

"'Sportsmen and sportswomen of all types — whether you're a fisher or a hunter — you need to be concerned about CRP land,' said Bob St. Pierre, Pheasants Forever's marketing and public relations director. 'They're cleaning our waters, they're keeping our soils on the ground where they should be.'

"St. Pierre said there has been a 'tremendous' rise in CRP lands over the last 20 years, but it's now on the decrease because of the foreign oil demand, feedstock prices and the push for ethanol."

In more detailed news with respect to crude oil prices, Neil King Jr. reported in Saturday's Wall Street Journal that, "Crude oil notched its largest price jump ever on Friday, leaping nearly $11 to more than $138 a barrel, on news of a weakening dollar and continued jitters over the reliability of world supplies.

"The surge, coming just as many analysts thought oil prices were set to fall, sent stocks plunging amid fears that the U.S. economy could be in for a combined bout of inflation and slow growth. The skyrocketing price of oil, now up more than 44% so far this year, is battering the airline and auto industries and causing consumers to cut back on driving and nonessential spending."

And Sudeep Reddy reported in today's Wall Street Journal that, "The average price of gasoline in the U.S. hit $4 a gallon for the first time Sunday, the latest milestone in a run-up in fuel prices that is sapping consumer confidence and threatening to nudge the nation into recession.

"The record nationwide average for regular-gasoline prices, announced by auto club AAA, follows Friday's near-$11 surge in oil prices to a record $138.54 a barrel. Both are part of what, by some measures, is the worst energy-price shock Americans have faced for a generation, in terms of its toll on their pocketbooks."

With this backdrop of crop and commodity news in mind, the Center for Agricultural and Rural Development (CARD) at Iowa State University recently released a paper entitled, "Short-Run Price and Welfare Impacts of Federal Ethanol Policies," by Lihong Lu McPhail, Bruce A. Babcock.

A summary of the paper stated that, "High commodity prices have increased interest in the impacts of federal ethanol policies. We present a stochastic, short-run structural model of U.S. corn, ethanol, and gasoline markets to estimate the price and welfare impacts of alternative policies on producers and consumers of corn, ethanol, and gasoline. The three federal policies that we consider are the Renewable Fuels Standard, the blenders tax credit, and the tariff on imported ethanol. Our model examines the impact of these policies on prices during the 2008/09 marketing year. Our results show that in the short run, a change in U.S. ethanol policies would not have a large, immediate impact on corn prices. Eliminating any one of the policies would reduce average corn prices by less than 4%. Removal of all three programs would decrease average corn prices by 14.5%. The reason why the changes are relatively modest is that existing U.S. ethanol plants will only shut down if their variable cost of production is not covered. Changes in ethanol policies would have large distributional impacts. Corn growers, ethanol producers, and fuel consumers have a large incentive to maintain high ethanol consumption. Gasoline producers have a large incentive to reduce ethanol production and imports. Livestock producers have a large short-run incentive to reduce domestic ethanol production."

In related news, Reuters writer Tom Doggett reported on Saturday that, "A new Senate bill to cut the U.S. tariff on ethanol imports has little chance of clearing Congress as there is not much time left on the legislative clock and it is too hot a political issue to take up in an election year, congressional aides say.

"Senators Dianne Feinstein, a California Democrat, and Judd Gregg, a New Hampshire Republican, introduced legislation this week to lower the tariff to bring it in line with U.S. ethanol blending subsidies, which a recently enacted farm bill lowered to 45 cents per gallon from 51 cents per gallon.

"The bill would cut import tariffs to 45 cents per gallon from the current level of 54 cents per gallon, and require Congress to lower tariffs again if blending subsidies are cut even further."

Mr. Doggett indicated that, "The panel's chairman, Democrat Max Baucus, has previously said he is against cutting the ethanol import tariff. In addition, Baucus would not normally put a priority on legislation sponsored by lawmakers who are not members of his finance committee, as is the case with Feinstein and Gregg.

"The top Republican on the finance committee, Chuck Grassley, opposes the bill, an aide to the senator said.

"Grassley said earlier this week that Brazil and other countries can export more than 452 million gallons of ethanol duty-free to the United States this year under a special trade agreement with Caribbean nations, but that threshold has yet to be met.

"'Until Brazil and other countries take full advantage of their existing ability to ship ethanol duty-free to the U.S. market, we shouldn't even discuss providing them with yet more duty-free access,' Grassley said."

In other news regarding biofuels, an AFP article from Friday stated that, "Brazilian Foreign Minister Celso Amorin met the European Union Troika here Friday for talks on biofuels and strategic ties between his country and the 27-member bloc.

"At the meeting, Amorin defended his country's use of biofuels, insisting that they did not affect food production, but helped reduce petrol consumption.

"Ethanol production in Brazil 'has grown to the point that it more important for us than gasoline,' Amorin said, speaking in English at a joint news conference with Slovenian Foreign Minister Dimitrij Rupel.

"And he added that it 'helps lower the demand for oil.'"

The AFP article noted that, "Slovenia, which currently holds the E.U.'s rotating presidency, said the meeting will focus on cooperation in areas such as the fight against poverty, climate change and energy security.

"E.U. Commissioner for External Relations Benita Ferrero Waldner is also attending the meeting at the Brdo pri Kranju castle, just outside Ljubljana.

"Addressing E.U. concerns about the effects of biofuel production on the Amazon, Amorin said ethanol was being produced outside the rainforests. It covered just one percent of agricultural land and just 0.4% of Brazil's entire territory."

Meanwhile, the New York Times editorial board stated in today's paper that, "Over the past year, the prices of grains and vegetable oils have nearly doubled. Rice has jumped by about half. The causes include soaring energy costs, drought in big agricultural producers, like Australia, and rising demand by a burgeoning middle class in China and India. But misguided mandates and subsidies in the United States and Europe to produce energy from crops are also playing an important role.

"The International Monetary Fund estimated that biofuels — mainly American corn ethanol — accounted for almost half the growth in worldwide demand for major food crops last year. About a third of this country's corn crop will go to ethanol this year. Yet at the summit meeting in Rome, the Bush administration insisted that ethanol is playing a very small role in rising food prices and resisted calls to limit the drive to convert food into fuel. The United States wasn't alone.

"Brazil, which has an enormous sugar-based ethanol industry, also rejected demands to curb biofuel production. Argentina objected to calls to end export taxes that it and other countries have erected to slow food exports. The United States and Europe also rejected suggestions that their farm subsidies should be blamed for depressing agricultural investment in poor countries."

And more broadly with respect to energy policy, James Kanter reported in Saturday's New York Times that, "The International Energy Agency, a group that advises industrialized countries, said Friday in a report that investments of at least $45 trillion might be needed over the next half-century to prevent energy shortages and greenhouse gas emissions from slowing economic growth.

"Nobuo Tanaka, the agency's executive director, called for 'immediate policy action and technological transition on an unprecedented scale.'

"Mr. Tanaka said the world would 'essentially require a new global energy revolution which would completely transform the way we produce and use energy.'"

Doha Trade Talks

Reuters writers Jonathan Lynn and William Schomberg reported on Thursday that, "The United States and the European Union said on Thursday the Doha round of world trade talks could collapse because of 11th-hour intransigence by some big developing countries.

"The warning comes ahead of a potentially decisive push to end the long-delayed World Trade Organization talks, and could deepen a gap between rich and poor nations."

The article added that, "U.S. Trade Representative Susan Schwab said the WTO talks were entering their most critical days since they started.

"'None of us alone can carry this forward and it only takes a few of us to make sure the talks stall,' she told reporters. 'We do not have the luxury of unlimited time — on the contrary.'

"Mandelson and Schwab did not name countries risking Doha's collapse but both have said in the past that advanced developing countries like Brazil, India and China are not doing enough. France says it doesn't want to be hurried into a premature deal."

However, on Friday, Reuters writer Doug Palmer reported that, "World trade ministers could convene in late June or early July to try to reach a long-sought world trade deal if their negotiators make enough progress in the coming days, the top U.S. trade official said.

"'I think there is a shared sense of urgency, some pickup in momentum,' U.S. Trade Representative Susan Schwab said in a telephone interview on Friday after meetings with other trade ministers this week in Paris and last weekend in Peru.

"Schwab's comment came one day after she and European Trade Commissioner Peter Mandelson warned the Doha round of world trade talks could collapse because some big developing countries were not offering significant new market openings."

Reuters news also provided a "FactBox" Summary of the Doha talks: "Key tasks for WTO trade negotiators," which was posted on Friday and can be viewed by clicking here.