Sunday, June 29, 2008

Don't Give Your Consent to Slavery – Fight Fascism!

Don't Give Your Consent to Slavery – Fight Fascism!

By Peter Chamberlin

Go To Original

Normal folks do not want to believe that the human race is dominated by dark forces. But, there is a small group of people who know that it is true, the human race is considered to be livestock, cattle for the real owners of this world, the elite.

Since the day of our creation, mankind has been dominated and shaped by inhuman entities, to behave more like cattle. The shapers themselves know this to be true. They also know that if we are not kept ignorant many of us will one day learn to ask the proper questions, until we finally locate the evidence that proves it is all true. Through diligent research, various people have discovered proof of the machinery that controls America's economy, its political system, its military, its educational system, its medical system, every facet of life. This knowledge is a direct threat to the elite.

The elite power game is designed to wear the people down, as they move the nation slowly toward a predicted outcome, where the majority becomes exhausted from fighting a losing struggle and completely submits to total elite domination of all resources. When the American masses freely surrender their free will to the dark overlords, in the name of security, the fate of the world will be sealed by this lawless tyranny. Destruction and suffering, such as has never been witnessed by the eyes of man, will be unleashed upon the helpless victim populations of the earth.

Very few people can see this future (no one wants to see it) outside of the elite, who gladly accept it as the price of saving whatever is left of the world for themselves. The masters of humanity count on our blindness and willful ignorance, in order to carry-out their conspiratorial plans. They join in secret organizations, where they are free to openly discuss their schemes amongst their own kind.

The documentation of their plotting is kept locked away from the public in corporate vaults and private libraries. Occasionally, someone on the inside discovers their conscience and leaks word of the devilish plans to the outside world, or maybe they simply slip-up and lose track or control of sequestered documents. In order to deceive us and to stall the day of our realization of the multitude of their crimes against humanity, intensive disinformation is introduced into the webstream, discrediting the truth by impersonating it. We have to be diligent in our research to ascertain the veracity of any documents that we might come across. If their revelations cannot be confirmed my multiple sources, then they must be suspect. The "Pentagon Papers" and "Operation Northwoods" come quickly to mind. Both of these major leaks were later partially corroborated by reports of past deceptive military PSYOPS and CIA covert wars.

Then there are the out of the blue revelations offered by researchers who claim to have obtained inside information, or in the case of former MI6 agent John Coleman, a training manual from the Tavistock Institute (British mind control research). - , Conspirators' Hierarchy: The Story of the Committee of 300 Coleman's research is automatically suspect because of his previous government involvement. But this research on social scientists and psychologists at Tavistock, founded in studies by British "Operational Research" at the end of World War II (on the psycho/social impact of bombing upon civilian populations), provided valuable insight to me on the mechanisms for studying and manipulating human cattle.

http://www.mortyscabin.net/modules.php?name=News&file=article&sid=1769

Another very insightful document of questionable origin, which seems to corroborate Coleman's work, entitled, "Silent Weapons for a Quiet War," (an Operations Research Technical Manual) is alleged to be a document from the highly-secretive elitist Bilderburg Group." http://www.theforbiddenknowledge.com/hardtruth/silentweaponsforquietwars.htm This document may be legitimate, or it may also be a carefully constructed piece of disinformation. Whatever it is, it opens even more insights into the potential opinions of the elite towards the American sheeple, or anyone not living up to their lofty cruel standards and ideas for forging a global dictatorship:

"The general public refuses to improve its own mentality and its faith in its fellow man. It has become a herd of proliferating barbarians, and, so' to speak, a blight upon the fate of the earth. They do not care enough about economic science to learn why they have not been able to avoid war despite religious morality, and their religious or self-gratifying refusal to deal with earthly problems renders the solution of the earthly problem unreachable by them. It is left to those few who are truly willing to think and survive as the fittest to survive, to solve the problem for themselves as the few who really care."

"This public demand is incredible, so the human god, the political, meets incredibility with incredibility by promising the world and delivering nothing. This public behavior is surrender born of fear, laziness and expediency. It is the basis of the welfare state as a strategic weapon, useful against a disgusting public. They hire politicians to face reality for them."

Silent Weapons builds upon the British work begun at Operations Research and by its offshoot studies, in studying the effects of planned shocks upon the "cattle," in particular the economic effects of specific psychological shocks. From this research they constructed what they called an "economic amplifier," for stimulating the economy in various ways, by shocking the populace and using the information obtained to control the people, thereby manipulating their free will.

"The low class elements of the society must be brought under total control, i.e., must be house-broken, trained, and assigned a yoke and long term social duties from a very early age, before they have an opportunity to question the propriety of the matter...In order to achieve such conformity, the lower class family unit must be disintegrated by a process of increasing preoccupation of the parents and occupationally orphaned children...The quality of education given to the lower class must be of the poorest sort, so that the ... ignorance isolating the inferior class from the superior class is and remains incomprehensible to the inferior class. With such an initial handicap, even bright lower class individuals have little if any hope of extricating themselves from their assigned lot in life. This form of slavery is essential to maintaining some measure of social order, peace, and tranquility for the ruling upper class."

"Economic engineers...study the behavior of the economy and the consumer public by carefully selecting a staple commodity such as beef, coffee, gasoline, or sugar and then causing a sudden change or shock in its price or availability, thus kicking everybody's budget and buying habits out of shape...They then observe the shock waves which result by monitoring the changes in advertising, prices, and sales of that and other commodities...The objective of such studies is to acquire know-how to set the public economy into a predictable state of motion or change, even a controlled self-destructive state of motion which will convince the public that certain "expert" people should take control of the money system and reestablish security (rather than liberty and justice) for all. When the subject citizens are rendered unable to control their financial affairs, they of course, become totally enslaved, a source of cheap labor."

"Labor strikes deliver excellent test shocks to an economy, especially in the critical service areas of trucking (transportation), communication, public utilities (energy, water, garbage collection), etc...By shock testing, it is found that there is a direct relationship between the availability of money flowing in an economy and the psychological outlook and response of masses of people dependent upon that availability...For example, there is a measurable, quantitative relationship between the price of gasoline, and the probability that a person would experience a headache, feel a need to watch a violent movie, smoke a cigarette, or go to a tavern for a mug of beer."

"It is most interesting that, by observing and measuring the economic modes by which the public tries to run from their problems and escape from reality, and by applying the mathematical theory of Operations Research, it is possible to program computers to predict the most probable combination of created events (shocks) which will bring about a complete control and subjugation of the public through a subversion of the public economy (by shaking the plum tree)."

"Keep the public undisciplined and ignorant of basic systems principles on the one hand, while keeping them confused, disorganized, and distracted with matters of no real importance on the other hand.

Disengaging their minds, sabotaging their mental activities, by providing a low quality program of public education in mathematics, logic, systems design, and economics, and by discouraging technical creativity.

Unrelenting emotional affrontations and attacks (mental and emotional rape) by way of a constant barrage of sex, violence, and wars in the media - especially the T.V. and the newspapers.

Shift their thinking from personal needs to highly fabricated outside priorities.

Preclude their interest in and discovery of the silent weapons of social automation technology.

The best approach is to create problems and then offer the solutions.

Keep the public busy, busy, busy, with no time to think; back on the farm with the other animals."

The elitists' control over information, made possible by the creation of a global computer network, allowed them to absorb all available data from both voluntary and involuntary sources and incorporate the latest facts into their studies for manipulating the unsuspecting masses. The computer-modeling they developed allowed them to accurately predict the real world effect of certain shocks through computer simulations.

"A silent weapon system operates upon data obtained from a docile public by legal (but not always lawful) force...The number of such forms submitted to the I.R.S. is a useful indicator of public consent, an important factor in strategic decision making...When the government is able to collect tax and seize private property without just compensation, it is an indication that the public is ripe for surrender and is consenting to enslavement and legal encroachment. A good and easily quantified indicator of harvest time is the number of public citizens who pay income tax."

The move to expand their acquisition of personal information led them to take the risky step of sharing their global computer/communications network, the Internet, with the people, even with the sheeple. But, the document reveals that the controllers were well aware of the risks and accepted it as the necessary price of aggregating all that juicy input.

"It was only a matter of time, only a few decades, before the general public would be able to grasp and upset the cradle of power, for the very elements of the new silent weapon technology were as accessible for a public utopia as they were for providing a private utopia.

As time goes on and communication and education improve, the lower class elements of the social labor structure become knowledgeable and envious of the good things that the upper class members have. They also begin to attain a knowledge of energy systems and the ability to enforce their rise through the class structure.

This threatens the sovereignty of the elite.

If this rise of the lower classes can be postponed long enough, the elite can achieve energy dominance. Until such energy dominance is absolutely established, the consent of people to labor and let others handle their affairs must be taken into consideration, since failure to do so could cause the people to interfere in the final transfer of energy sources to the control of the elite.

It is essential to recognize that at this time, public consent is still an essential key to the release of energy in the process of economic amplification."

Whether this document is a fraud or not, its characterizations of elitist contempt for the sheeple resonates as truth. This means that they are vulnerable, if we are diligent in our investigations, but only for a limited time. Our window of opportunity is very limited, as we watch it slowly close before us. If the American people capitulate before we can educate them to the dangerous future awaiting us all, then all hope is lost (outside of divine intervention). The people are irrelevant until we learn to organize and to fight back. Until we learn how to disrupt their plan by generating our own reverse shock waves, generated by explosive revelatory truths, we will remain irrelevant. Until we can blow-away the foundations of lies that empower the cover-ups, the truths that could set us all free will remain useless data, lost in the webstream, hidden in executive vaults and private libraries.

As long as the people remain compliant to elitist molding, there remains little hope. It is time to strike a blow for hope. We must launch our own counter-offensive, in order to capture the people's minds, in time to repel the final wave of conformation. We must begin to see the elitists who dominate us as the vile scum that they truly are, alien to all decent human beings. It is our last call for making the American people relevant to those who have been elected to represent us in our fake democracy.

In my quest to understand what is needed to avert the catastrophic future that awaits us, and to formulate a workable alternative vision to it, I turned to one of the most-often quoted figures in America, Noam Chomsky. In a recent interview he did with Al-Jazeera Network, "Chomsky: US public irrelevant," Chomsky described our plight and compared it to recent third world revolutions, carried-out by simple folks in similar predicaments:

"Chomsky: US public irrelevant,"

Part 2

"For the majority of the population real wages have stagnated or declined for the past 30 years, there's been growth but it's going to the wealthy and into very few pockets, benefits which were never really great have declined, work hours have greatly increased and there isn't really much to show for it other than staying afloat."

"The elite strategy for managing the electorate is to ignore the will of the people as...interpret[ed] through polling data?... We have models right in front of us. Like pick, say, Bolivia, the poorest county in South America. They had a democratic election a couple of years ago that you can't even dream about in the US. It's kind of interesting it's not discussed [in our press]...A large majority of the population became organised and active for the first time in history and elected someone from their own ranks on crucial issues that everyone knew about – control of resource, cultural rights, issues of justice, you know, really serious issues...

A couple of years before this they managed to drive Bechtel and the World Bank out of the country when they were trying to privatise the war. It was a pretty harsh struggle... Well, they reached a point where they finally could manifest this through the electoral system - they didn't have to change the electoral laws, they had to change the way the public acts... Actually if we look at the poorest country in the hemisphere – Haiti - the same thing happened in 1990. You know, if peasants in Bolivia and Haiti can do this, it's ridiculous to say we can't."

The only thing that will save us and the world from the great plundering that is planned for us is another revolution, a revolution of free will. Everyone must stop surrendering their will to the dishonest men and women who claim to represent us. We must reclaim our fading and lost heritage.

"To oppose the policies of a government does not mean you are against the country or the people that the government supposedly represents. Such opposition should be called what it really is: democracy, or democratic dissent, or having a critical perspective about what your leaders are doing. Either we have the right to democratic dissent and criticism of these policies or we all lie down and let the leader, the Fuhrer, do what is best, while we follow uncritically, and obey whatever he commands. That's just what the Germans did with Hitler, and look where it got them."

Michael Parenti, author. http://www.informationclearinghouse.info/article20186.htm

Americans can stop the overlords from carrying-out the final step for ending human freedom, expanding their global war into Iran, escalating it beyond the nuclear threshold. Advancement of their geopolitical plan through the use of terrorism by our own government and through their proxies in foreign intelligence services remains the immoral center of their unholy schemes. We stop this hypocrisy by making this common knowledge.

Revelations of "silent weapons" being used in a secret war against them and their families will go a long way towards opening many eyes and convincing people to resist. What is needed is massive resistance, on a scale not seen in this country for a very long time. People have to be convinced to resist cooperating with government and private efforts to collect personal data and conform with illegal mandates. Organize to stop the war, to end the illegal progressive tax system, the submission to intrusive government measures. In the end, we must bring down the corrupt Federal Reserve System.

Soldiers must refuse to lay down their freedom and their lives for the war machine. Everyone must stop playing along with our farcical electoral system. Don't vote on November 6, send them a static-filled signal of our own.

DON'T VOTE, DON'T WORK. General Strike.

DON'T VOTE, DON'T WORK! General Strike.

DON'T VOTE, DON'T WORK! General Strike.

This Recession, It's Just Beginning

By Steven Pearlstein

Go To Original

So much for that second-half rebound.

Truth be told, that was always more of a wish than a serious forecast, happy talk from the Fed and Wall Street desperate to get things back to normal.

It ain't gonna happen. Not this summer. Not this fall. Not even next winter.

This thing's going down, fast and hard. Corporate bankruptcies, bond defaults, bank failures, hedge fund meltdowns and 6 percent unemployment. We're caught in one of those vicious, downward spirals that, once it gets going, is very hard to pull out of.

Only this will be a different kind of recession -- a recession with an overlay of inflation. That combo puts the Federal Reserve in a Catch-22 -- whatever it does to solve one problem only makes the other worse. Emerging from a two-day meeting this week, Fed officials signaled that further recession-fighting rate cuts are unlikely and that their next move will be to raise rates to contain inflationary expectations.

Since last June, we've seen a fairly consistent pattern to the economic mood swings. Every three months or so, there's a round of bad news about housing, followed by warnings of more bank write-offs and then a string of disappointing corporate earnings reports. Eventually, things stabilize and there are hints that the worst may be behind us. Stocks regain some of their lost ground, bonds fall and then -- bam -- the whole cycle starts again.

It was only in November that the Dow had recovered from the panicked summer sell-off and hit a record, just above 14,000. By March, it had fallen below 12,000. By May, it climbed above 13,000. Now it's heading for a new floor at 11,000. Officially, that's bear market territory. We'll be lucky if that's the floor.

In explaining why that second-half rebound never occurred, the Fed and the Treasury and the Wall Street machers will say that nobody could have foreseen $140 a barrel oil. As excuses go, blaming it on an oil shock is a hardy perennial. That's what Jimmy Carter and Fed Chairman Arthur Burns did in the late '70s, and what George H.W. BushAlan Greenspan did in the early '90s. Don't believe it. and

Truth is, there are always price or supply shocks of one sort or another. The real problem is that the underlying fundamentals had gotten badly out of whack, making the economy susceptible to a shock. The only way to make things better is to get those fundamentals back in balance. In this case, that means bringing what we consume in line with what we produce, letting the dollar fall to its natural level, wringing the excess capacity out of industries that overexpanded during the credit bubble and allowing real estate prices to fall in line with incomes.

The last hope for a second-half rebound began to fade earlier this month when Lehman Brothers reported that it wasn't as immune to the credit-market downturn as it had led everyone to believe. Lehman scrambled to restore confidence by firing two top executives and raising billions in additional capital, but even that wasn't enough to quiet speculation that it could be the next Bear Stearns.

Since then, there has been a steady drumbeat of worrisome news from nearly every sector of the economy.

American Express and Discover warn that customers are falling further behind on their debts. UPS and Federal Express report a noticeable slowdown in shipments, while fuel costs are soaring. According to the Case-Shiller index, home prices in the top 20 markets fell 15 percent in April from the year before, and Fannie Mae and Freddie Mac report that mortgage delinquency rates doubled over the same period -- and that's for conventional home loans, not subprime. United Airlines accelerates the race to cut costs and capacity by laying off 950 pilots -- 15 percent of its total -- as a number of airlines retire planes and hint that they may delay delivery or cancel orders of new jets from Boeing and Airbus. Goldman Sachs, which has already had to withdraw its rosy forecast for stocks, now admits it was also too optimistic about junk bond defaults, and analysts warn that Citigroup and Merrill Lynch will also be forced to take additional big write-downs on their mortgage portfolios.

Meanwhile, General Motors, already reeling from a 28 percent plunge in the pace of auto and truck sales, now confronts the fact that it won't get any help this time from GMAC, its once highly profitable finance arm, which is reeling from an increase in delinquencies on home and auto loans. With the carmaker hemorrhaging cash, whispers of a possible default sent the price of insuring GM bonds soaring on the credit default market.

You know things are bad when middle-class Americans have to give up their boats and Brunswick, the nation's biggest maker of powerboats, is forced to close 10 plants and lay off 2,700 workers.

For much of the year, optimists took comfort in the continuing strength of the technology sector and exports to fast-growing countries around the world. But even those bright spots have dimmed.

Tech stocks got hammered yesterday after software maker Oracle and BlackBerry maker Research in Motion warned that the pace of corporate orders had slowed.

And both India and China raised interest rates and bank reserves sharply in an effort to tame inflation and slow their overheated economies, even as the air continued to rush out of their real estate and stock market bubbles.

Like the rain-swollen waters of the Mississippi River, this sudden surge of downbeat news has now overflowed the banks of economic policy and broken through the levees of consumer and investor confidence. At this point, there's not much to do but flee to safety, rescue those in trouble and let nature take its course. And don't let anyone fool you: It will be a while before things return to normal.

US Fed caught in global turbulence

US Fed caught in global turbulence

By Nick Beams

Go To Original

The US Federal Reserve Board’s decision on Wednesday to maintain its benchmark interest rate at 2 percent was not so much a policy decision as the expression of the growing paralysis in government and central banking circles in the face of the powerful forces now at work in the US and global economy.

On the one hand, the deepening slump in the US pointed to the need for a further interest rate cut to try to provide an economic boost. On the other hand, rising US and global inflation, as well as a weakening US dollar—itself a factor in inflationary pressures—pointed to an interest rate increase. In the event, the Fed decided to do nothing.

Announcing its decision, the Fed’s open market committee tried to put the best face on the worsening US economy. “Recent information,” it stated, “indicates that overall economic activity continues to expand, partly reflecting some firming in household spending ... The substantial easing of monetary policy to date, combined with ongoing measures to foster market liquidity, should help promote moderate growth over time.”

These assertions prompted BusinessWeek economics writer Michael Mandel to ask: “Is the Fed living in a fairy-tale world? Unemployment is rising, housing prices and plunging and oil prices are sky-high. Oh, yes, and consumer expectations of their future economic prospects are at a record low, according to the Conference Board.”

The latest US economic data point to the worsening state of the economy. Sales of new homes continued to decline in May, dropping to 512,000 at an annual rate, the lowest level since the recession of 1991. Compared with a year ago, sales of new homes are down by 40 percent.

Earlier the Case-Shiller index of housing prices had revealed a decline of 15.3 percent in the year to May, with many market observers predicting that there was at least another 15 percentage point fall to come.

The impact on homeowners of the collapse of the housing bubble is indicated by figures published by the Financial Markets Center based on Federal Reserve data. It found that in the first quarter households’ net worth had dropped at an annual rate of 2.9 percent, the second successive quarterly decline and bringing the total decline to $2.23 trillion since reaching the peak achieved in the third quarter of 2007.

The Center noted that between 1952 (the first year for which quarterly data were collected) and 1999 there was only one occasion in which net worth shrank in two consecutive quarters. That was in the recession of 1974. Since 2000, amid ever greater volatility in housing and financial markets, that phenomena has been repeated three times, with losses far exceeding those of 1974.

At the same time, there has been a considerable fall in other forms of wealth. Between January and March, the value of pension savings and mutual fund shares declined at an annual rate of 18.8 and 31.1 percent respectively. The value of equities held by households fell at an annual rate of 40.8 percent.

The Fed’s decision was criticised by those who want further action to stimulate the US economy. Other critics, however, want an increase in interest rates in order to bring down inflation.

This was the theme of an editorial in the Financial Times on Wednesday. “If there were a Central Bank of the World its monetary policy committee would glance at today’s inflation rates and expectations of future inflation and then raise interest rates. There is no such bank, but there is something close: the US Federal Reserve, the monetary policy of which is mirrored by many countries in the Middle East and Asia. The Fed may not want that responsibility, but it would be wise to worry because, like it or not, low Fed rates are contributing to global inflation.”

The editorial pointed out that many countries in these regions set their currencies in line with the US dollar. Consequently, when the US lowers interest rates they must follow suit in order to prevent an inflow of speculative capital and a rise in the value of their currencies. However, in conditions where inflation is already running at up to 10 percent, this leads to further upward pressure on prices.

But there is another aspect of this problem to which the editorial also pointed. If Asian countries, above all China, are forced to raise their interest rates as a result of inflationary pressures then they may cut their links to the US dollar, leading to an outflow of money that has been invested in US financial assets. “The results for the US would be unpleasant: a currency crash and even higher domestic inflation.”

Faced with such dilemmas there is a growing air of perplexity in some of the major economic institutions.

According to the World Bank Global Finance 2008 report published earlier this month: “Rarely has the international community been called upon to respond to so many complex policy challenges at once—from immediate actions to address soaring global food and energy prices and the taming of volatility in private global finance to the needs for mitigating the effects of high-income-country slowdown and sustaining economic momentum without jeopardising long-term growth and stability. Tackling such challenges requires collective resolve and clear thinking.” But both those commodities are in short supply.

No collective resolve

Far from “collective resolve”, the world’s two major financial authorities are working in opposite directions. While the Fed lowered interest rates in response to the subprime financial crisis, the European Central Bank (ECB) refused to follow suit and may lift its base rate by 0.25 percentage points next week.

Consumer inflation in the euro-zone nations rose at an annual rate of 3.7 percent in May, well above the ECB’s target of 2 percent. The ECB is looking to launch a pre-emptive strike against demands for increased wages.

“In particular, wage growth may be stronger than anticipated, given high rates of capacity utilisation and a tight labour market,” ECB governor Jean-Claude Trichet said. “In this context, the risk of triggering an inflationary wage-price spiral is particularly acute,” he said, especially where wages are indexed to inflation.

In other words, faced with a growing movement of the European working class to maintain living standards against inflation, the ECB will lift interest rates to induce a recession.

Meanwhile, the Fed is hoping that the food and energy price hikes will pass through the economy and “expects inflation to moderate later this year and next year.” But this is more a hope than a soundly based prediction.

All indications are that prices are set to rise further. According to the World Bank, higher food prices are set to stay and oil prices could climb even further—up to $200 or even $250 a barrel according to some forecasts.

Already the rise from $53 per barrel at the start of 2007 to the present price of $136 has increased the annual cost to consumer by around $2,600 billion a year—an amount equivalent to around 4.5 percent of world gross domestic product.

Far from being a one-off hike, there are indications that the oil price rises are flowing through to other areas of the economy. Last Wednesday’s Financial Times (FT) warned of a “spectre of inflation over [the] global economy” and noted that major companies dependent on oil inputs were now passing on price increases. Dow Chemical, which announced price increases of 25 percent—the largest in the company’s history—said the rises were aimed at trying to offset a “staggering” increase in costs.

The FT’s economics columnist Martin Wolf noted that the world was being buffeted by two storms: “an inflationary commodity-price storm and a deflationary financial one.”

One of the most significant features of the present situation is how rapidly these processes have taken place. A year ago major reports from global financial bodies such as the World Bank and the IMF pointed to the risks of inflation and the possibility of financial turmoil. But they were still relatively small clouds on the horizon. The situation has now changed dramatically as the world economy faces its most serious crisis in more than three decades.

US stocks plunge, job cuts spread

US stocks plunge, job cuts spread

By Andre Damon

Go To Original

Stocks plummeted yesterday amid worsening expectations for financial firms and record oil prices. The Dow Jones Industrial average fell 358 points, or three percent, to its lowest level since September of 2006. All 30 stocks in the index posted declines, with Dow closing at 11,453.42, down more than 2,500 points since its all-time high last October.

The broader S&P 500 lost 39 points, or 2.9 percent, while the technology-focused NASDAQ index fell nearly 80 points, or 3.33 percent, its worst one-day drop since January. Stock indexes throughout Europe and the Americas fell past their low points during the Bear Stearns crisis in March.

Financial stocks were the first to fall, as investors became convinced that more losses and write-offs and were on their way. Citigroup led the rout, falling by 6.3 percent after Goldman Sachs recommended that its clients sell the bank’s stock. Goldman reported that it expects Citigroup to announce about $9 billion in write-offs in the second quarter.

General Motors stock plummeted after Goldman downgraded the company’s outlook, falling 11 percent to its lowest levels since 1955. The firm faces a very poor outlook as gas prices have skyrocketed and consumers have stopped buying highly profitable sport utility vehicles. GM’s SUV sales have dropped 27 percent.

The latest fall was the consummation of a month of rapid economic deterioration. The Dow has fallen over nine percent this month, in what Bloomberg.com called “the worst June since the Great Depression.” Oil hit a new record of $140.39, rising $5.84 in one day.

There were reports in the financial press of widespread concern in the market that GM might be unable to raise sufficient capital and would be forced to default on some debts or even file for bankruptcy. Reuters quoted one financial analyst declaring, “The market is back to pricing some bankruptcy risk” for the largest US automaker.

These fears are directly measurable in the credit default swap market, where the cost of insuring against a GM default rose to 33.5 percent upfront. According to a Reuters report, this is the equivalent of a market expectation that there is a 25 percent chance of a GM debt default this year, and a 75 percent chance of a GM debt default in the next five years.

The same market required 30.5 percent upfront for Ford Motor Company debt, which translates into a 22 percent chance of default this year and a 70 percent chance of default by 2012. GM’s position in the credit default swap market is now worse than it was in 2005, when its debt rating was cut to junk bond status. The Fitch credit rating service cut both GM and Chrysler’s rating Wednesday.

Firms relying on discretionary consumer spending were especially hard hit. Nike and mobile device manufacturer Research in Motion forecast lower growth and slimmer profits in the coming period. Markets responded by pushing their prices down by 9.8 and 13.26 percent, respectively.

Meanwhile the broader corporate outlook has continued to deteriorate. Bloomberg expects profits for the S&P 500 firms to grow by only 6.6 percent this year, compared to a predicted profit growth of about 15 percent six months ago.

The declining outlook for consumer-oriented firms comes despite the fact that the weak dollar has made US exports more competitive. US growth has thus far avoided falling into negative territory in large part due to the stimulative effects of the dollar decline on US exports.

Recent job cut announcements, particularly in the airline sector, formed the background of Thursday’s selloff. United Airlines announced this week its plans to lay off 950 pilots and reduce its fleet by 100 aircraft. The pilots represent about 15 percent of its total cabin crew. The layoffs follow last weeks anouncement that the airline would remove some 1,500 salaried positions.

United Airlines posted a $537 million loss in the first three months of the year. Since then, fuel prices have increased by over 30 percent, and second-quarter losses are expected to be significantly higher. The airline expects to cut its capacity by about 10 percent year-on-year by the fourth quarter.

A recent survey by airlineforecasts.com, an airline investment consultancy, warned that, given current oil prices, the U.S. airline industry would see job cuts of between 75,000 and 85,000. Some 11,500 would be pilots.

Meanwhile American Airlines and its smaller affiliate, American Eagle, announced that they would eliminate routes between a number of hub cities. Last month, American announced that it would cut its capacity by 11-12 percent from 2007 levels. Delta and Northwest Airlines, which are scheduled for a merger, are each planning to trim copacity by a similar amount, while United and US airways are cutting even further. They plan to get rid of 17 percent of their workforces in the coming period.

Airlines posted a net profit last year for the first time since 2000. But the combined effects of exponential commodity price increases and slowing economic growth are setting up airlines for record losses this year. According to the Air Transport Association, airlines could lose as much as $2.3 billion this year, based on a projected oil price of $106 per barrel. Crude prices have by now significantly exceeded this value and show no signs of slowing down. The seven largest airlines announced operating losses of 5.2 percent in the first quarter, down from a profit of 2.5 percent in the same period last year.

The credit crisis has already taken its toll on the financial workforce, and the deepening of the crisis will bring with it even more layoffs. Financial firms have sent out some 83,000 pink slips over the past year, and the Financial Times reports that layoffs could be double that figure during the next year.

There were other negative numbers announced this week. The consumer confidence index published by the Conference Board fell to 50.4 in June, down from 58.1 in May, its lowest point since January and February 1992.

Standard & Poor’s Case-Shiller home price index, released Tuesday, showed home prices falling in all 20 of the metropolitan areas surveyed. Mortgage defaults and foreclosures continue to rise.

The conditions are accumulating for a dramatic contraction in the US economy, with enormous consequences for the world economy as a whole. The inexorable run-up in gas prices is hitting both consumer and business spending. This is exacerbated by inflation in other commodity prices and the disruption of credit markets, which has made it more difficult for businesses to borrow.

The sharp fall in stock prices in June has already offset whatever stimulative effect was produced by the federal tax rebates. By driving down interest rates, mailing out $1,200 rebate checks, and guaranteeing de facto that the US government would bail out struggling banks, the Fed and the Treasury were able to engineer a temporary respite in the downturn. But this has proved ephemeral.

Standing Up To The Banks

Standing Up To The Banks

By Ellen Brown


Go To Original

“If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.”

Thomas Jefferson, Letter to Treasury Secretary Albert Gallatin (1802)

27/06/08 "ICH " -- - Jefferson had it right. More than 1.5 million homeowners are expected to enter foreclosure this year, and about half of them are expected to have their homes repossessed. If the dire consequences Jefferson warned of 200 years ago have been slow in coming, it is because they have been concealed by what Jerome a Paris calls the Anglo Disease – “the highly unequal economy whereby the rich and the financial sector . . . capture most of the income but hide it by providing cheap debt to the middle classes so that they can continue to spend.” He calls “finance” the “cannibalistic” sector in today’s economy. Writing in The European Tribune this month, he states:

“[O]ne of the more attractive features of the financial world, for its promoters, is its ability to concentrate huge fortunes in a small number of hands, and promote this as a good thing (these people are said to be creating wealth, rather than capturing it). . . . [O]f course, the reality is that such wealth concentration is created by squeezing the rest, as is obvious in the stagnation of incomes for most in the middle and lower rungs of society. This is not so much wealth creation as wealth redistribution, from the many to the few. But what has made this unequality . . . tolerable is that the financial world itself was able to provide a convenient smokescreen, in the form of cheap debt, provided in abundance to all. The wealthy used it to grab real assets in funny money, and the rest were kindly allowed to keep on spending by tapping their future income rather than their insufficient current one; in a nutshell, the debt bubble hid the class warfare waged by the rich against everybody else.1

Now the debt bubble is bursting, with the anticipated real estate crash, banking crisis, foreclosures, and inevitable recession. “The income capture mechanisms set up during the bubble have not been reversed, so the pain is falling disproportionately on the poorest,” writes Jerome a Paris. Meanwhile, finance is being bailed out. What’s to be done? “[T]he financiers . . . will say that more ‘reform’ and ‘deregulation’ and tax cuts are needed,” he says, but “maybe it’s time to stop listening to what is highly self-interested drivel, and take back what they grabbed: it’s not theirs.”

Good idea, but how? The financiers own the media, and their massively funded lobbies control Congress. How can we the people get enough clout to take on the giant financial and corporate giants? What can we do that will make politicians sit up and take notice?

How about swarming the courts? New case law indicates that a majority of the 750,000 homeowners expected to lose their homes this year could have a valid defense to foreclosure. As much as $2 trillion in real estate may be vulnerable to this defense, providing a very big stick for a lobby of motivated debtors. Mobilizing that group, in turn, could light a fire under the investors in mortgage-backed securities -- the pension funds, money market funds and insurance companies holding these “orphan” mortgages. These investors also wield a very big stick, in the form of major law firms on retainer. When the embattled banks demand a bailout because they are “too big to fail,” the taxpayers can respond, “You have already failed. It is time to try something new.”

The Legal Trump Card: Make Them Produce the Note

A basic principle of contract law is that a plaintiff suing on a written contract must produce the signed contract proving he is entitled to relief. If there is no signed mortgage note or recorded assignment, foreclosure is barred. The defendant must normally raise this defense, and most defaulting homeowners, unaware of legal procedure and concerned about the expense of hiring an attorney, just let their homes go uncontested. But when the plaintiffs bringing subprime foreclosure actions have been challenged, in most cases they haven’t been able to produce the notes.

Why not? It appears to be more than just sloppy paperwork. The banks that originally entered into these risky subprime arrangements generally did so because they had no intention of holding the loans on their books. The mortgages were immediately sliced and diced, bundled up as mortgage-backed securities (MBS), and sold off to investors. Loan originators sold the mortgages to financial institutions or other banks, which then sold the rights to the monthly mortgage payment income to investors, while transferring the responsibility to collect these payments to specialized mortgage servicing companies. The result has been to slice up the mortgage contract, with no party really having ownership of the original paperwork. When foreclosure has been initiated, the servicer or trustee acting as plaintiff now has trouble proving that it originated the mortgage or owned the loan. In order for a second bank or financial institution to have standing to bring a foreclosure lawsuit in court, it must have been assigned the mortgage; and with the collapse of the housing market, many of the subprime lenders have gone out of business, making it impossible to contact the originating mortgage company. Other paperwork has just been lost in the shuffle.2

Why weren’t the mortgage notes assigned to the MBS holders when they were first sold? Apparently because the investors aren’t even matched up with specific properties until after default. Here is how the MBS scheme works: when the mortgages are first bundled by the banks, all of the subprime mortgages go into the same pool. The bundled mortgages are chopped into “securities” that are sold to many investors -- banks, hedge funds, money market funds, pension funds -- with different “tranches” or levels of risk. The first mortgages to default are then assigned to the high-risk “BBB-” tranche of investors. As defaults increase, later defaulting mortgages are assigned down the chain of risk to the supposedly more secure tranches.3 That means the investors get the mortgages only after the defendants breached the agreement to pay. It also means the investors weren’t a party to the agreement when it was breached, making it hard to prove they were injured by the breach.

The investors have another problem: the delay in assigning particular mortgages to particular investors means there was no “true sale” of the security (the home) at the time of securitization. A true sale of the collateral is a legal requirement for forming a valid security (a secured interest in the property as opposed to simply a debt obligation backed by collateral). As a result, the investors may have trouble proving they have any interest in the property, secured or unsecured.4

The Dog-Ate-My-Note Defense

When the securitizing banks acting as trustees for the investors are unable to present written proof of ownership at a time that would entitle them to foreclose, they typically file what’s called a lost-note affidavit. April Charney is a Florida legal aid attorney well versed in these issues, having gotten foreclosure proceedings dismissed or postponed for 300 clients in the past year. In a February 2008 Bloomberg article, she was quoted as saying that about 80 percent of these cases involved lost-note affidavits. “Lost-note affidavits are pattern and practice in the industry,” she said. “They are not exceptions. They are the rule.”5

In the past, judges have let these foreclosures proceed; but in October 2007, an intrepid federal judge in Cleveland put a halt to the practice. U.S. District Court Judge Christopher Boyko ruled that Deutsche Bank had not filed the proper paperwork to establish its right to foreclose on fourteen homes it was suing to repossess.6 That started the ball rolling, and by February 2008, judges in at least five states had followed suit. In Los Angeles in January, U.S. Bankruptcy Judge Samuel L. Bufford issued a notice warning plaintiffs in foreclosure cases to bring the mortgage notes to court and not submit copies. In Ohio, where foreclosures were up by a reported 88 percent in 2007, Attorney General Marc Dann was reported to be challenging ownership of mortgage notes in forty foreclosure cases.7

Few defendants, however, are lucky enough to have advocates like Charney and Dann in their corner, and most defaulting debtors just let their homes go. A simple challenge can be filed to the complaint even without an attorney, and some subprime borrowers have successfully defended their own foreclosure actions; but retaining an attorney is strongly recommended. People representing themselves are often not taken seriously, and they are likely to miss local rule requirements. With that warning, here is some general information on challenging standing to foreclose:

Some states are judicial foreclosure states and some are non-judicial foreclosure states. In a judicial foreclosure state (meaning the matter is heard before a judge), if a promissory note or recorded assignment naming the plaintiff is not attached to the complaint, the defendant can file a response stating the plaintiff has failed to state a claim. This can be followed with a motion called a demurrer to the complaint. Different forms of demurrers can be found in legal form books in most law libraries. In essence the demurrer states that even if everything in the complaint were true, the complaint would lack substance because it fails to set out a copy of the note, and it should therefore be dismissed. Ordinarily there is no need to cite much in the way of statutes or case law other than the authority reciting the necessity of showing the note proving the plaintiff is entitled to relief.

In a non-judicial foreclosure state such as California, foreclosure is done by a trustee without a court hearing, so the procedure is a bit trickier; but standing to foreclose can still be challenged. If the homeowner has filed for bankruptcy, the proceedings are automatically stayed, requiring the lender to bring a motion for relief from stay before going forward. The debtor can then challenge the lender’s right to the security (the house) by demanding proof of a legal or equitable interest in it.8 A homeowner facing foreclosure can also get the matter before a court without filing for bankruptcy by filing a complaint and preliminary injunction staying the proceedings pending proof of standing to foreclose. A judge would then have to rule on the merits. A complaint for declaratory relief might also be brought against the trustee, seeking to have its rights declared invalid.9

An Equitable Settlement for Everyone

These defenses can help people who are about to lose their homes, but there is another class of victims in the sub-prime mortgage crisis: investors in MBS, including the pension funds and 401Ks on which many people depend for their retirement. If the trustees representing the investors cannot foreclose, the lucky debtors may be able to stay in their homes without paying. However, the hapless investors will be left holding the bag. If the investors manage to shift liability back to the banks, on the other hand, the banks could go down and take the economy with them. How can these tricky issues be resolved in a way that is equitable for all? That question will be addressed in a followup article. Stay tuned
___________________

1. Jerome a Paris, “Countdown to $200 Oil Meets Anglo Disease,” European Tribune (June 7, 2008).

2. “Contesting a Foreclosure Lawsuit: Who Owns the Mortgage?”, ForeclosureFish.com (April 22, 2008).

3. CNBC, “Subprime Derivatives,” youtube.com/watch?v=0YNyn1XGyWg (June 2007).

4. Vinod Kothari, “The True Sale Question,” vindkothari.com.

5. Bob Ivry, “Banks Lose to Deadbeat Homeowners as Loans Sold in Bonds Vanish,” Bloomberg.com (February 22, 2008).

6. Judge Christopher A. Boyko, Opinion and Order, In re Foreclosure Cases, Case 1:07-cv-02282-CAB, U.S. District Court, Northern District of Ohio, Eastern Division, filed 10/31/2007.

7. B. Ivry, op. cit.; Jimmy Higgins, “Judge Boyko’s Snowball Starts Rolling Downhill,” Fire on the Mountain (blogspot) (February 26, 2008); Wendy Davis, “Finding It Hard to Be a Loan,” ABA Journal (March 2008).

8. “More Trouble for Mortgage Securitizers?”, http://bigpicture.typepad.com (December 9, 2007).

9. Aaron Krowne, et al., “True Sale, False Securitizations,” iamfacingforeclosure.com (November 16, 2007).

Ellen Brown, J.D., developed her research skills as an attorney practicing civil litigation in Los Angeles. In Web of Debt, her latest book, she turns those skills to an analysis of the Federal Reserve and “the money trust.” She shows how this private cartel has usurped the power to create money from the people themselves and how we the people can get it back. Her websites are www.webofdebt.com and www.ellenbrown.com .

Credit crunch forcing US middle classes to live in their cars

Credit crunch forcing US middle classes to live in their cars

Go To Original

Homeless people living in cars and motorhomes across the US are being joined by a new breed: the middle class.

As mortgage foreclosures continue to rise, growing numbers of middle-class professionals are losing their homes and downsizing from four bedrooms to four wheels.

With numbers rising, New Beginnings, a homeless agency in Santa Barbara, California, has launched a safe parking scheme, whose aim is to provide a refuge of sorts for those who have nowhere to go other than their vehicle.

Guy Trevor lost his job as an interior designer when the sector contracted thanks to the foreclosure crisis. With his furniture sold and his belongings in storage, he now lives in his car, spending the nights in one of the 12 gated car parks in Santa Barbara run by New Beginnings.

"I see myself as a casualty of a perfect storm," he said. "The people sleeping at the [car parks] are ... just like me. They come from normal, everyday homes. I think a lot of people in this country don't realise that they, too, are a couple of pay cheques away from destitution."

In normally affluent Santa Barbara there were 150 foreclosures last month, with a total of 800 for the year ending in May, according to the county assessor's office, which assesses property for tax purposes.

Each month, an auction of foreclosed properties is held on the steps of the Santa Barbara courthouse.

"The way the economy is going, it's amazing the people who are becoming homeless. It's hit the middle class," Nancy Kapp, of New Beginnings, told CNN.

Another of Kapp's clients, Barbara Harvey, 67, also lost her job and subsequently her home thanks to the foreclosure crisis. As with Trevor, her job as a loans processor was connected to the housing market.

Harvey now lives with her three dogs in her car, parking at night in a women-only car park run by the agency. "I didn't think this would happen to me," she said. "It's just something that I don't think that people think is going to happen to them."

The rise in the number of homeless people sleeping in cars has led to a clampdown in Los Angeles. In common with many US cities, it is illegal to live in vehicles on public streets. This year the city banned almost all overnight parking on residential streets. A first violation receives a $50 (£25) fine, while subsequent offences carry fines of up to $100.

"For more working class and lower middle class people, the car is the first stop of being homeless, and sometimes it turns out to be a long stop," Gary Blasi, a University of California, Los Angeles, law professor and homelessness activist told the Associated Press.

The city has the highest number of homeless people in the US, with an estimated 73,000 living rough. A survey last year of more than 3,000 of them showed that 250 were sleeping in their cars.

Oil near $143 on view dollar will keep falling

Oil near $143 on view dollar will keep falling

By JOHN WILEN

Go To Original

Oil futures climbed to a new record near $143 a barrel Friday as the dollar weakened against the euro, confirming expectations that the falling greenback, a major factor in crude's stratospheric rise, will extend its decline and add to oil's appeal.

Retail gas prices inched lower overnight, but are likely to resume their own trek into record territory now that oil futures have broken out of the trading range where they had been for nearly 3 weeks.

Light, sweet crude for August delivery rose as high as $142.99 a barrel on the New York Mercantile Exchange before pulling back sharply in a spate of late-day profit-taking to settle up 57 cents at a record $140.21. On Thursday, the contract shot past $140 and rose more than $5 to a new settlement record.

The latest record came as the dollar fell against the euro in afternoon trading, having traded roughly unchanged for much of the day.

"The dollar was slightly stronger, and when it gave up its gains, that gave oil the green light," said James Cordier, president of Tampa, Fla.-based trading firms Liberty Trading Group and OptionSellers.com.

The market now believes the Federal Reserve is unlikely to raise interest rates in the near future; since higher rates tend to strengthen the dollar, traders are anticipating that it will continue to fall and, consequently, that investors will keep turning to commodities including oil as a hedge against inflation.

"Oil's back in favor, especially with people bailing out of the stock market," said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates in Galena, Ill.

The stock market's recent swoon is also sending investors in search of higher-yielding investments. On Thursday, the Dow Jones industrial average fell nearly 360 points, and in afternoon trading Friday was down more than 100 points.

"When money has nowhere to go, it is parked in commodities as it is one of the few investment instruments that actually rises the more money you pour into it," said Oliver Jakob, an analyst at Petromatrix Gmbh, in Switzerland in a note.

With oil over $140 a barrel, traders are now expecting to see $145 and even $150, analysts say.

At the pump, meanwhile, gas prices slipped 0.1 cent overnight to a national average of $4.066 a gallon, according to a survey of stations by AAA, the Oil Price Information Service and Wright Express. Gas prices have fallen slightly from their June 16 record of $4.08 a gallon, but will likely resume their record breaking rise if oil futures keep trending higher.

That seems likely. Oil has more than doubled in the past year due to the dollar's decline, but also because of rising global demand, particularly in fast-growing economies such as China and India. Supply outages in the Middle East and Nigeria have also contributed, as has falling production in Mexico.

The sharp increase in oil prices has driven a similar rise in fuel prices. Gas prices are $1.09 higher than a year ago, and diesel prices were up $1.85 over the past year at a national average of $4.763 a gallon on Friday. Diesel is used to fuel most industrial vehicles, trucks, trains and ships, and its increase is a large part of the reason food and consumer goods prices are rising, putting additional pressure on consumers already paying $4 and more for gas. Diesel prices peaked at $4.797, also on June 16, but are likely to push past that record if oil futures keep rising.

In other Nymex trading Friday, July gasoline futures fell 1.01 cents to settle at $3.5012 a gallon after earlier rising to a trading record of $3.585. July heating oil futures rose 2.32 cents to settle at $3.9066 a gallon. August natural gas futures fell 5 cents to settle at $13.198 per 1,000 cubic feet.

City Pension Funds Lose Billions

City Pension Funds Lose Billions

Taxpayers Could Be On the Hook

By ROSS GOLDBERG

Go To Original

New York City officials are bracing for increased pressure on the budget as the city's pension funds are reeling from the credit crisis and posting billions of dollars in losses.

In the nine months leading up to March 31, the city's five pension funds lost a total of nearly $5 billion, or 4.4%, according to data from the city comptroller's office. This is a far cry from projections published as recently as last month, when budget planners assumed the pension system would post no losses.

If those losses are not recovered by the end of the fiscal year, which ends Monday, the city will have to pay out several billion dollars through 2015, with the first payment of $190 million set for 2010.

The government will have to make up the shortfall from the poor performance of the pension funds at a time when it is already suffering from tax revenue losses due to a souring economy.

"In itself, it's manageable," the research director for the Citizens Budget Commission, Charles Brecher, said of the pension fund losses. "The fact that it's going to be combined with revenue shortfalls means that we've got serious problems."

The Teachers' Retirement System of the City of New York, which has lost 5.06% of its value in the nine months ending March 31, has been the worst performer so far this year. The New York City Employees' Retirement System, which lost 3.98% in the same period, performed the best. Other pension funds include the New York City Police Pension Fund, the New York City Fire Department Pension Fund, and the Board of Education Retirement System of the City of New York. Numbers for the state pension system are not yet available, a spokesman for the state comptroller said.

The city's funds' performance so far this fiscal year "adds significantly to the amount of money the city has to contribute," a spokesman for the Independent Budget Office, Doug Turetsky, said. "The city is going to be facing bigger increases than perhaps previously anticipated."

New York City's pension funds did worse during the nine months ending March 31 than other public pension funds worth more than $1 billion, which posted an average loss of 3.3% during that period, according to an index from consulting group Wilshire Associates.

New York's pension funds may have suffered more than their peers because of heavy investments in stocks. "They have such a high exposure to stocks that if the stock market isn't doing well, it's going to be more visible for them," the editor of the newsletter Pensions & Investments, Nancy Webman, said. "But in a year when the market is doing well, they're going to be fabulous."

A spokesman for Comptroller William Thompson Jr., who is an investment adviser to New York City's pension funds and is a likely candidate for mayor in 2009, said the funds have diversified in recent years. "A challenging market over the past year has affected investors worldwide," a spokesman, Michael Loughran, said in a statement. "However, the funds are performing on pace with the major market indexes, due in part to the diversification of the portfolio."

According Wilshire's index, other large public funds have returned an average of 12.01% annually over the five years ended March 31, 2008. New York's worst-performing fund, the teachers' fund, returned 11.97% during that period, while the best, the police fund, returned 12.89%.

While the funds' gains over the past several years should help offset the rough times experienced during a slowing economy, legislators took advantage of the strong performance of the funds to authorize additional pension benefits, the director of the Empire Center for New York State Policy, E.J. McMahon, said. The city's annual contribution to the pension system will have nearly doubled between fiscal years 2005 and 2009, when it will owe about $6.1 billion.

"A large chunk of all the revenue generated by the economic growth of the last few years has been consumed by the increase in pension costs," Mr. McMahon said. "The way the legislature approached pension sweeteners is just to pass the union's wish list."

More signs of Israeli-US preparations for attacking Iran

More signs of Israeli-US preparations for attacking Iran

By Peter Symonds

Go To Original

The visit by US Joint Chiefs of Staff chairman Admiral Mike Mullen to Israel yesterday is one more indication that the two countries are actively discussing a military strike on Iran. Mullen’s trip followed news that the Israeli air force carried out a major exercise earlier this month involving 100 fighter jets, backed by midair fuel tankers and rescue helicopters, flying some 1,500 kilometres westward over the Mediterranean Sea—roughly the same distance as eastward from Israel to Iran’s nuclear facilities.

Mullen’s trip was only the second by a joint chiefs chairman to Israel in more than a decade. Last December Mullen also visited Israel in the wake of an unprovoked attack last September by Israeli warplanes on a building in northern Syria. In April, the Bush administration authorised a CIA briefing, which claimed, on the basis of limited evidence, that Syria had been constructing a nuclear reactor at the site with the assistance of North Korea.

Few details of Mullen’s latest trip are available, but Pentagon spokesman Geoff Morrell did acknowledge that Iran was at the top of the agenda. “Obviously, when Chairman Mullen goes to Israel and speaks with the Israelis, they will no doubt discuss the threat posed by Iran, as we discuss it in this building, in other buildings in town,” he said.

Two other top US military officers were also in Israel this week. Chief of Naval Operations Admiral Gary Roughead met with his Israeli counterpart, as did General William Wallace, commander of the US Army Training and Doctrine Command. Roughead’s presence is particularly significant, as the US navy would be central in countering any Iranian retaliation in the Persian Gulf following an Israeli strike.

The high-level visits follow a series of threats against Iran by senior Israeli figures, most explicitly by Deputy Prime Minister Shaul Mofaz. He told an Israeli newspaper on June 13 that “if Iran continues with its program for developing nuclear weapons, we will attack it”. The Israeli ambassador to the US, Sallai Meridor, told CBS News last week that time was “running out” for a diplomatic action to force Iran to shut down its nuclear programs. “We cannot take this threat lightly and as our prime minister recently said Israel will not tolerate a nuclear Iran,” he said.

Like the US, Israel claims, without any substantive evidence, that Iran has an active nuclear weapons program, which, according to Israeli intelligence, could manufacture a bomb as early as next year. Unlike Israel, Iran is a signatory to the Nuclear Non-Proliferation Treaty and its nuclear facilities are monitored by the International Atomic Energy Agency (IAEA). A series of IAEA reports confirm that Iran is enriching uranium only to the low levels required to fuel its planned power reactors—as Tehran has insisted all along. A National Intelligence Estimate (NIE) by US intelligence agencies last December found that Iran had ended any weapons program by 2003.

Israel, however, is determined to maintain its military supremacy in the Middle East and to prevent any, even remote, possibility that Iran, or any other neighbour, will master nuclear technology that would in the future assist in the building of weapons. Hypocritically, both Israeli and US officials remain silent on what is an open secret—that Israel maintains its own substantial arsenal of atomic bombs. In order to retain its nuclear monopoly, the Israeli regime is prepared to risk plunging the entire region into a conflagration through an unprovoked and criminal attack on Iran.

The Bush administration, which regards Iran as an obstacle to US dominance in the oil-rich Middle East, is complicit in these plans. As a number of defence analysts have pointed out, the Israeli military does not have the capacity to carry out the type of sustained air war needed not only to strike Iranian nuclear facilities, but to level Iran’s air defences and military capacity to retaliate. Moreover, any Israeli air strike on Iran is limited in its choice of routes—the most obvious one being over US-occupied Iraq. Whatever is the case, Israel needs the tacit political support, if not active military assistance, of the US.

Israeli impatience has nothing to do with Iran’s alleged weapons program. If time is “running out”, the main consideration is a political one—that the Bush administration is due to leave office early next year. Analyst Michael Oren from the Jerusalem-based Shalem Centre told CBS News that Israel would not wait for a new US administration. “The Israelis have been assured by the Bush administration that the Bush administration will not allow Iran to nuclearise. The Israelis are uncertain about what would be the policies of the next administration vis-à-vis Iran,” he said.

Within the Israeli establishment, an attack on Iran is openly discussed. In a comment on Tuesday, provocatively entitled “...but someone has to do it”, the right-wing Jerusalem Post pointed out that the not-so-secret Israeli “dress rehearsal” over the Mediterranean was aimed to pressuring “the world”—-particularly the US—into taking on the task. After discounting the possibility that Bush or either of the US presidential contenders would authorise a US attack on Iran, the article bitterly concluded that in the event that Israel had no partners in such an enterprise, at least the “Jews can lean on themselves”.

A second article in the Jerusalem Post the following day attacked a New York Times editorial that had argued against attacking Iran, not because of its criminal character, but because the consequences would be “disastrous”. The Jerusalem Post writer argued that there was little doubt that Iran would respond to a direct attack, or a blockade, “but its options, heated rhetoric notwithstanding, are actually limited”. Tacitly acknowledging that Iran posed no real threat to either Israel or the US, he commented: “Instead of unwarranted, self-deterring risk aversion, let us not forget who wields the incalculably greater ‘stick’: Iran certainly will not.”

Israel has been intensifying its propaganda against Iran. According to Ha’aretz, Foreign Ministry Director General Aaron Abramovich secretly visited IAEA headquarters in Vienna on Wednesday to demand that the body “act more quickly and efficiently to block Iranian nuclear ambitions”. Abramovich, the first senior Israeli official in several years to visit the IAEA, reportedly briefed a group of ambassadors on Israel’s belief that Iran has a secret military nuclear program.

Israeli officials are claiming that the purpose of Syria’s alleged nuclear reactor was to supply its ally Iran with plutonium for a nuclear weapon. An adviser to Israel’s national security council told the Guardian this week: “The Iranians were involved in the Syrian program. The idea was that the Syrians produce plutonium and the Iranians get their share.” Given that it is yet to be demonstrated that Syria was even building a nuclear reactor, the Iranian connection, for which no evidence has been offered, has been concocted to add further fuel to the scare campaign. IAEA inspectors this week visited the site of the bombed building in Syria and said it would be some time before any conclusions could be reached.

Admiral Mullen’s visit this week makes clear that far from being left to its own devices, Israel enjoys collaborations with the highest levels of the US military. Moreover, discussion about a possible attack on Iran is taking place within the American political establishment and is not confined to the Bush administration or its extreme right-wing allies.

A statement released this month by the Presidential Task Force on the Future of US-Israeli Relations convened by the Washington Institute for Near East Policy focussed almost exclusively on the issue of preventing Iran from acquiring nuclear weapons. Its key recommendation called on the US president to initiate a dialogue with the Israeli prime minister using “the most trusted advisers” to consider “the costs and benefits” of “the entire range of policy” including diplomacy, “coercive options” including an embargo of Iranian oil, and “preventative military action”.

Ha’aretz noted this week with some satisfaction that the task force included prominent Democrats such as Susan Rice and Tony Lake, who are among Senator Barack Obama’s senior foreign policy advisers, as well as representatives from the camp of Senator John McCain, the Republican candidate. While it indicated that the statement was of course suitably nuanced, the article bluntly characterised the underlying message as follows: “If you want it in a journalistic headline format: Obama, McCain advisers agree: US-Israel should discuss preventative military action against Iran.”

Former US ambassador to the UN John Bolton, who openly advocates attacking Iran, suggested last week that Israel would most likely launch a strike after the US elections in November and prior to the inauguration of the next US president. However, an article in the Jerusalem Post on Thursday made clear that tactical considerations might dictate a far earlier date. It noted that Tehran is believed to have purchased the sophisticated Russian-made S-300 air defence missile system, which the Israeli military has warned “cannot be allowed to reach the region”.

After reviewing the implications of Bolton’s remarks, the article concluded: “There is no guarantee, however, that Israel can wait that long.”

Preparing the Battlefield

Preparing the Battlefield

The Bush Administration steps up its secret moves against Iran.

Go To Original

Late last year, Congress agreed to a request from President Bush to fund a major escalation of covert operations against Iran, according to current and former military, intelligence, and congressional sources. These operations, for which the President sought up to four hundred million dollars, were described in a Presidential Finding signed by Bush, and are designed to destabilize the country’s religious leadership. The covert activities involve support of the minority Ahwazi Arab and Baluchi groups and other dissident organizations. They also include gathering intelligence about Iran’s suspected nuclear-weapons program.

Clandestine operations against Iran are not new. United States Special Operations Forces have been conducting cross-border operations from southern Iraq, with Presidential authorization, since last year. These have included seizing members of Al Quds, the commando arm of the Iranian Revolutionary Guard, and taking them to Iraq for interrogation, and the pursuit of “high-value targets” in the President’s war on terror, who may be captured or killed. But the scale and the scope of the operations in Iran, which involve the Central Intelligence Agency and the Joint Special Operations Command (JSOC), have now been significantly expanded, according to the current and former officials. Many of these activities are not specified in the new Finding, and some congressional leaders have had serious questions about their nature.

Under federal law, a Presidential Finding, which is highly classified, must be issued when a covert intelligence operation gets under way and, at a minimum, must be made known to Democratic and Republican leaders in the House and the Senate and to the ranking members of their respective intelligence committees—the so-called Gang of Eight. Money for the operation can then be reprogrammed from previous appropriations, as needed, by the relevant congressional committees, which also can be briefed.

“The Finding was focussed on undermining Iran’s nuclear ambitions and trying to undermine the government through regime change,” a person familiar with its contents said, and involved “working with opposition groups and passing money.” The Finding provided for a whole new range of activities in southern Iran and in the areas, in the east, where Baluchi political opposition is strong, he said.

Although some legislators were troubled by aspects of the Finding, and “there was a significant amount of high-level discussion” about it, according to the source familiar with it, the funding for the escalation was approved. In other words, some members of the Democratic leadership—Congress has been under Democratic control since the 2006 elections—were willing, in secret, to go along with the Administration in expanding covert activities directed at Iran, while the Party’s presumptive candidate for President, Barack Obama, has said that he favors direct talks and diplomacy.

The request for funding came in the same period in which the Administration was coming to terms with a National Intelligence Estimate, released in December, that concluded that Iran had halted its work on nuclear weapons in 2003. The Administration downplayed the significance of the N.I.E., and, while saying that it was committed to diplomacy, continued to emphasize that urgent action was essential to counter the Iranian nuclear threat. President Bush questioned the N.I.E.’s conclusions, and senior national-security officials, including Secretary of Defense Robert Gates and Secretary of State Condoleezza Rice, made similar statements. (So did Senator John McCain, the presumptive Republican Presidential nominee.) Meanwhile, the Administration also revived charges that the Iranian leadership has been involved in the killing of American soldiers in Iraq: both directly, by dispatching commando units into Iraq, and indirectly, by supplying materials used for roadside bombs and other lethal goods. (There have been questions about the accuracy of the claims; the Times, among others, has reported that “significant uncertainties remain about the extent of that involvement.”)

Military and civilian leaders in the Pentagon share the White House’s concern about Iran’s nuclear ambitions, but there is disagreement about whether a military strike is the right solution. Some Pentagon officials believe, as they have let Congress and the media know, that bombing Iran is not a viable response to the nuclear-proliferation issue, and that more diplomacy is necessary.

A Democratic senator told me that, late last year, in an off-the-record lunch meeting, Secretary of Defense Gates met with the Democratic caucus in the Senate. (Such meetings are held regularly.) Gates warned of the consequences if the Bush Administration staged a preëmptive strike on Iran, saying, as the senator recalled, “We’ll create generations of jihadists, and our grandchildren will be battling our enemies here in America.” Gates’s comments stunned the Democrats at the lunch, and another senator asked whether Gates was speaking for Bush and Vice-President Dick Cheney. Gates’s answer, the senator told me, was “Let’s just say that I’m here speaking for myself.” (A spokesman for Gates confirmed that he discussed the consequences of a strike at the meeting, but would not address what he said, other than to dispute the senator’s characterization.)

The Joint Chiefs of Staff, whose chairman is Admiral Mike Mullen, were “pushing back very hard” against White House pressure to undertake a military strike against Iran, the person familiar with the Finding told me. Similarly, a Pentagon consultant who is involved in the war on terror said that “at least ten senior flag and general officers, including combatant commanders”—the four-star officers who direct military operations around the world—“have weighed in on that issue.”

The most outspoken of those officers is Admiral William Fallon, who until recently was the head of U.S. Central Command, and thus in charge of American forces in Iraq and Afghanistan. In March, Fallon resigned under pressure, after giving a series of interviews stating his reservations about an armed attack on Iran. For example, late last year he told the Financial Times that the “real objective” of U.S. policy was to change the Iranians’ behavior, and that “attacking them as a means to get to that spot strikes me as being not the first choice.”

Admiral Fallon acknowledged, when I spoke to him in June, that he had heard that there were people in the White House who were upset by his public statements. “Too many people believe you have to be either for or against the Iranians,” he told me. “Let’s get serious. Eighty million people live there, and everyone’s an individual. The idea that they’re only one way or another is nonsense.”

When it came to the Iraq war, Fallon said, “Did I bitch about some of the things that were being proposed? You bet. Some of them were very stupid.”

The Democratic leadership’s agreement to commit hundreds of millions of dollars for more secret operations in Iran was remarkable, given the general concerns of officials like Gates, Fallon, and many others. “The oversight process has not kept pace—it’s been coöpted” by the Administration, the person familiar with the contents of the Finding said. “The process is broken, and this is dangerous stuff we’re authorizing.”

Senior Democrats in Congress told me that they had concerns about the possibility that their understanding of what the new operations entail differs from the White House’s. One issue has to do with a reference in the Finding, the person familiar with it recalled, to potential defensive lethal action by U.S. operatives in Iran. (In early May, the journalist Andrew Cockburn published elements of the Finding in Counterpunch, a newsletter and online magazine.)

The language was inserted into the Finding at the urging of the C.I.A., a former senior intelligence official said. The covert operations set forth in the Finding essentially run parallel to those of a secret military task force, now operating in Iran, that is under the control of JSOC. Under the Bush Administration’s interpretation of the law, clandestine military activities, unlike covert C.I.A. operations, do not need to be depicted in a Finding, because the President has a constitutional right to command combat forces in the field without congressional interference. But the borders between operations are not always clear: in Iran, C.I.A. agents and regional assets have the language skills and the local knowledge to make contacts for the JSOC operatives, and have been working with them to direct personnel, matériel, and money into Iran from an obscure base in western Afghanistan. As a result, Congress has been given only a partial view of how the money it authorized may be used. One of JSOC’s task-force missions, the pursuit of “high-value targets,” was not directly addressed in the Finding. There is a growing realization among some legislators that the Bush Administration, in recent years, has conflated what is an intelligence operation and what is a military one in order to avoid fully informing Congress about what it is doing.

“This is a big deal,” the person familiar with the Finding said. “The C.I.A. needed the Finding to do its traditional stuff, but the Finding does not apply to JSOC. The President signed an Executive Order after September 11th giving the Pentagon license to do things that it had never been able to do before without notifying Congress. The claim was that the military was ‘preparing the battle space,’ and by using that term they were able to circumvent congressional oversight. Everything is justified in terms of fighting the global war on terror.” He added, “The Administration has been fuzzing the lines; there used to be a shade of gray”—between operations that had to be briefed to the senior congressional leadership and those which did not—“but now it’s a shade of mush.”

“The agency says we’re not going to get in the position of helping to kill people without a Finding,” the former senior intelligence official told me. He was referring to the legal threat confronting some agency operatives for their involvement in the rendition and alleged torture of suspects in the war on terror. “This drove the military people up the wall,” he said. As far as the C.I.A. was concerned, the former senior intelligence official said, “the over-all authorization includes killing, but it’s not as though that’s what they’re setting out to do. It’s about gathering information, enlisting support.” The Finding sent to Congress was a compromise, providing legal cover for the C.I.A. while referring to the use of lethal force in ambiguous terms.

The defensive-lethal language led some Democrats, according to congressional sources familiar with their views, to call in the director of the C.I.A., Air Force General Michael V. Hayden, for a special briefing. Hayden reassured the legislators that the language did nothing more than provide authority for Special Forces operatives on the ground in Iran to shoot their way out if they faced capture or harm.

The legislators were far from convinced. One congressman subsequently wrote a personal letter to President Bush insisting that “no lethal action, period” had been authorized within Iran’s borders. As of June, he had received no answer.

Members of Congress have expressed skepticism in the past about the information provided by the White House. On March 15, 2005, David Obey, then the ranking Democrat on the Republican-led House Appropriations Committee, announced that he was putting aside an amendment that he had intended to offer that day, and that would have cut off all funding for national-intelligence programs unless the President agreed to keep Congress fully informed about clandestine military activities undertaken in the war on terror. He had changed his mind, he said, because the White House promised better coöperation. “The Executive Branch understands that we are not trying to dictate what they do,” he said in a floor speech at the time. “We are simply trying to see to it that what they do is consistent with American values and will not get the country in trouble.”

Obey declined to comment on the specifics of the operations in Iran, but he did tell me that the White House reneged on its promise to consult more fully with Congress. He said, “I suspect there’s something going on, but I don’t know what to believe. Cheney has always wanted to go after Iran, and if he had more time he’d find a way to do it. We still don’t get enough information from the agencies, and I have very little confidence that they give us information on the edge.”

None of the four Democrats in the Gang of Eight—Senate Majority Leader Harry Reid, House Speaker Nancy Pelosi, Senate Intelligence Committee chairman John D. Rockefeller IV, and House Intelligence Committee chairman Silvestre Reyes—would comment on the Finding, with some noting that it was highly classified. An aide to one member of the Democratic leadership responded, on his behalf, by pointing to the limitations of the Gang of Eight process. The notification of a Finding, the aide said, “is just that—notification, and not a sign-off on activities. Proper oversight of ongoing intelligence activities is done by fully briefing the members of the intelligence committee.” However, Congress does have the means to challenge the White House once it has been sent a Finding. It has the power to withhold funding for any government operation. The members of the House and Senate Democratic leadership who have access to the Finding can also, if they choose to do so, and if they have shared concerns, come up with ways to exert their influence on Administration policy. (A spokesman for the C.I.A. said, “As a rule, we don’t comment one way or the other on allegations of covert activities or purported findings.” The White House also declined to comment.)

A member of the House Appropriations Committee acknowledged that, even with a Democratic victory in November, “it will take another year before we get the intelligence activities under control.” He went on, “We control the money and they can’t do anything without the money. Money is what it’s all about. But I’m very leery of this Administration.” He added, “This Administration has been so secretive.”

One irony of Admiral Fallon’s departure is that he was, in many areas, in agreement with President Bush on the threat posed by Iran. They had a good working relationship, Fallon told me, and, when he ran CENTCOM, were in regular communication. On March 4th, a week before his resignation, Fallon testified before the Senate Armed Services Committee, saying that he was “encouraged” about the situations in Iraq and Afghanistan. Regarding the role played by Iran’s leaders, he said, “They’ve been absolutely unhelpful, very damaging, and I absolutely don’t condone any of their activities. And I have yet to see anything since I’ve been in this job in the way of a public action by Iran that’s been at all helpful in this region.”

Fallon made it clear in our conversations that he considered it inappropriate to comment publicly about the President, the Vice-President, or Special Operations. But he said he had heard that people in the White House had been “struggling” with his views on Iran. “When I arrived at CENTCOM, the Iranians were funding every entity inside Iraq. It was in their interest to get us out, and so they decided to kill as many Americans as they could. And why not? They didn’t know who’d come out ahead, but they wanted us out. I decided that I couldn’t resolve the situation in Iraq without the neighborhood. To get this problem in Iraq solved, we had to somehow involve Iran and Syria. I had to work the neighborhood.”

Fallon told me that his focus had been not on the Iranian nuclear issue, or on regime change there, but on “putting out the fires in Iraq.” There were constant discussions in Washington and in the field about how to engage Iran and, on the subject of the bombing option, Fallon said, he believed that “it would happen only if the Iranians did something stupid.”

Fallon’s early retirement, however, appears to have been provoked not only by his negative comments about bombing Iran but also by his strong belief in the chain of command and his insistence on being informed about Special Operations in his area of responsibility. One of Fallon’s defenders is retired Marine General John J. (Jack) Sheehan, whose last assignment was as commander-in-chief of the U.S. Atlantic Command, where Fallon was a deputy. Last year, Sheehan rejected a White House offer to become the President’s “czar” for the wars in Iraq and Afghanistan. “One of the reasons the White House selected Fallon for CENTCOM was that he’s known to be a strategic thinker and had demonstrated those skills in the Pacific,” Sheehan told me. (Fallon served as commander-in-chief of U.S. forces in the Pacific from 2005 to 2007.) “He was charged with coming up with an over-all coherent strategy for Iran, Iraq, and Afghanistan, and, by law, the combatant commander is responsible for all military operations within his A.O.”—area of operations. “That was not happening,” Sheehan said. “When Fallon tried to make sense of all the overt and covert activity conducted by the military in his area of responsibility, a small group in the White House leadership shut him out.”

The law cited by Sheehan is the 1986 Defense Reorganization Act, known as Goldwater-Nichols, which defined the chain of command: from the President to the Secretary of Defense, through the chairman of the Joint Chiefs of Staff, and on to the various combatant commanders, who were put in charge of all aspects of military operations, including joint training and logistics. That authority, the act stated, was not to be shared with other echelons of command. But the Bush Administration, as part of its global war on terror, instituted new policies that undercut regional commanders-in-chief; for example, it gave Special Operations teams, at military commands around the world, the highest priority in terms of securing support and equipment. The degradation of the traditional chain of command in the past few years has been a point of tension between the White House and the uniformed military.

“The coherence of military strategy is being eroded because of undue civilian influence and direction of nonconventional military operations,” Sheehan said. “If you have small groups planning and conducting military operations outside the knowledge and control of the combatant commander, by default you can’t have a coherent military strategy. You end up with a disaster, like the reconstruction efforts in Iraq.”

Admiral Fallon, who is known as Fox, was aware that he would face special difficulties as the first Navy officer to lead CENTCOM, which had always been headed by a ground commander, one of his military colleagues told me. He was also aware that the Special Operations community would be a concern. “Fox said that there’s a lot of strange stuff going on in Special Ops, and I told him he had to figure out what they were really doing,” Fallon’s colleague said. “The Special Ops guys eventually figured out they needed Fox, and so they began to talk to him. Fox would have won his fight with Special Ops but for Cheney.”

The Pentagon consultant said, “Fallon went down because, in his own way, he was trying to prevent a war with Iran, and you have to admire him for that.”

In recent months, according to the Iranian media, there has been a surge in violence in Iran; it is impossible at this early stage, however, to credit JSOC or C.I.A. activities, or to assess their impact on the Iranian leadership. The Iranian press reports are being carefully monitored by retired Air Force Colonel Sam Gardiner, who has taught strategy at the National War College and now conducts war games centered on Iran for the federal government, think tanks, and universities. The Iranian press “is very open in describing the killings going on inside the country,” Gardiner said. It is, he said, “a controlled press, which makes it more important that it publishes these things. We begin to see inside the government.” He added, “Hardly a day goes by now we don’t see a clash somewhere. There were three or four incidents over a recent weekend, and the Iranians are even naming the Revolutionary Guard officers who have been killed.”

Earlier this year, a militant Ahwazi group claimed to have assassinated a Revolutionary Guard colonel, and the Iranian government acknowledged that an explosion in a cultural center in Shiraz, in the southern part of the country, which killed at least twelve people and injured more than two hundred, had been a terrorist act and not, as it earlier insisted, an accident. It could not be learned whether there has been American involvement in any specific incident in Iran, but, according to Gardiner, the Iranians have begun publicly blaming the U.S., Great Britain, and, more recently, the C.I.A. for some incidents. The agency was involved in a coup in Iran in 1953, and its support for the unpopular regime of Shah Mohammed Reza Pahlavi—who was overthrown in 1979—was condemned for years by the ruling mullahs in Tehran, to great effect. “This is the ultimate for the Iranians—to blame the C.I.A.,” Gardiner said. “This is new, and it’s an escalation—a ratcheting up of tensions. It rallies support for the regime and shows the people that there is a continuing threat from the ‘Great Satan.’ ” In Gardiner’s view, the violence, rather than weakening Iran’s religious government, may generate support for it.

Many of the activities may be being carried out by dissidents in Iran, and not by Americans in the field. One problem with “passing money” (to use the term of the person familiar with the Finding) in a covert setting is that it is hard to control where the money goes and whom it benefits. Nonetheless, the former senior intelligence official said, “We’ve got exposure, because of the transfer of our weapons and our communications gear. The Iranians will be able to make the argument that the opposition was inspired by the Americans. How many times have we tried this without asking the right questions? Is the risk worth it?” One possible consequence of these operations would be a violent Iranian crackdown on one of the dissident groups, which could give the Bush Administration a reason to intervene.

A strategy of using ethnic minorities to undermine Iran is flawed, according to Vali Nasr, who teaches international politics at Tufts University and is also a senior fellow at the Council on Foreign Relations. “Just because Lebanon, Iraq, and Pakistan have ethnic problems, it does not mean that Iran is suffering from the same issue,” Nasr told me. “Iran is an old country—like France and Germany—and its citizens are just as nationalistic. The U.S. is overestimating ethnic tension in Iran.” The minority groups that the U.S. is reaching out to are either well integrated or small and marginal, without much influence on the government or much ability to present a political challenge, Nasr said. “You can always find some activist groups that will go and kill a policeman, but working with the minorities will backfire, and alienate the majority of the population.”

The Administration may have been willing to rely on dissident organizations in Iran even when there was reason to believe that the groups had operated against American interests in the past. The use of Baluchi elements, for example, is problematic, Robert Baer, a former C.I.A. clandestine officer who worked for nearly two decades in South Asia and the Middle East, told me. “The Baluchis are Sunni fundamentalists who hate the regime in Tehran, but you can also describe them as Al Qaeda,” Baer told me. “These are guys who cut off the heads of nonbelievers—in this case, it’s Shiite Iranians. The irony is that we’re once again working with Sunni fundamentalists, just as we did in Afghanistan in the nineteen-eighties.” Ramzi Yousef, who was convicted for his role in the 1993 bombing of the World Trade Center, and Khalid Sheikh Mohammed, who is considered one of the leading planners of the September 11th attacks, are Baluchi Sunni fundamentalists.

One of the most active and violent anti-regime groups in Iran today is the Jundallah, also known as the Iranian People’s Resistance Movement, which describes itself as a resistance force fighting for the rights of Sunnis in Iran. “This is a vicious Salafi organization whose followers attended the same madrassas as the Taliban and Pakistani extremists,” Nasr told me. “They are suspected of having links to Al Qaeda and they are also thought to be tied to the drug culture.” The Jundallah took responsibility for the bombing of a busload of Revolutionary Guard soldiers in February, 2007. At least eleven Guard members were killed. According to Baer and to press reports, the Jundallah is among the groups in Iran that are benefitting from U.S. support.

The C.I.A. and Special Operations communities also have long-standing ties to two other dissident groups in Iran: the Mujahideen-e-Khalq, known in the West as the M.E.K., and a Kurdish separatist group, the Party for a Free Life in Kurdistan, or PJAK.

The M.E.K. has been on the State Department’s terrorist list for more than a decade, yet in recent years the group has received arms and intelligence, directly or indirectly, from the United States. Some of the newly authorized covert funds, the Pentagon consultant told me, may well end up in M.E.K. coffers. “The new task force will work with the M.E.K. The Administration is desperate for results.” He added, “The M.E.K. has no C.P.A. auditing the books, and its leaders are thought to have been lining their pockets for years. If people only knew what the M.E.K. is getting, and how much is going to its bank accounts—and yet it is almost useless for the purposes the Administration intends.”

The Kurdish party, PJAK, which has also been reported to be covertly supported by the United States, has been operating against Iran from bases in northern Iraq for at least three years. (Iran, like Iraq and Turkey, has a Kurdish minority, and PJAK and other groups have sought self-rule in territory that is now part of each of those countries.) In recent weeks, according to Sam Gardiner, the military strategist, there has been a marked increase in the number of PJAK armed engagements with Iranians and terrorist attacks on Iranian targets. In early June, the news agency Fars reported that a dozen PJAK members and four Iranian border guards were killed in a clash near the Iraq border; a similar attack in May killed three Revolutionary Guards and nine PJAKPJAK has also subjected Turkey, a member of NATO, to repeated terrorist attacks, and reports of American support for the group have been a source of friction between the two governments. fighters.

Gardiner also mentioned a trip that the Iraqi Prime Minister, Nouri al-Maliki, made to Tehran in June. After his return, Maliki announced that his government would ban any contact between foreigners and the M.E.K.—a slap at the U.S.’s dealings with the group. Maliki declared that Iraq was not willing to be a staging ground for covert operations against other countries. This was a sign, Gardiner said, of “Maliki’s increasingly choosing the interests of Iraq over the interests of the United States.” In terms of U.S. allegations of Iranian involvement in the killing of American soldiers, he said, “Maliki was unwilling to play the blame-Iran game.” Gardiner added that Pakistan had just agreed to turn over a Jundallah leader to the Iranian government. America’s covert operations, he said, “seem to be harming relations with the governments of both Iraq and Pakistan and could well be strengthening the connection between Tehran and Baghdad.”

The White House’s reliance on questionable operatives, and on plans involving possible lethal action inside Iran, has created anger as well as anxiety within the Special Operations and intelligence communities. JSOC’s operations in Iran are believed to be modelled on a program that has, with some success, used surrogates to target the Taliban leadership in the tribal territories of Waziristan, along the Pakistan-Afghanistan border. But the situations in Waziristan and Iran are not comparable.

In Waziristan, “the program works because it’s small and smart guys are running it,” the former senior intelligence official told me. “It’s being executed by professionals. The N.S.A., the C.I.A., and the D.I.A.”—the Defense Intelligence Agency—“are right in there with the Special Forces and Pakistani intelligence, and they’re dealing with serious bad guys.” He added, “We have to be really careful in calling in the missiles. We have to hit certain houses at certain times. The people on the ground are watching through binoculars a few hundred yards away and calling specific locations, in latitude and longitude. We keep the Predator loitering until the targets go into a house, and we have to make sure our guys are far enough away so they don’t get hit.” One of the most prominent victims of the program, the former official said, was Abu Laith al-Libi, a senior Taliban commander, who was killed on January 31st, reportedly in a missile strike that also killed eleven other people.

A dispatch published on March 26th by the Washington Post reported on the increasing number of successful strikes against Taliban and other insurgent units in Pakistan’s tribal areas. A follow-up article noted that, in response, the Taliban had killed “dozens of people” suspected of providing information to the United States and its allies on the whereabouts of Taliban leaders. Many of the victims were thought to be American spies, and their executions—a beheading, in one case—were videotaped and distributed by DVD as a warning to others.

It is not simple to replicate the program in Iran. “Everybody’s arguing about the high-value-target list,” the former senior intelligence official said. “The Special Ops guys are pissed off because Cheney’s office set up priorities for categories of targets, and now he’s getting impatient and applying pressure for results. But it takes a long time to get the right guys in place.”

The Pentagon consultant told me, “We’ve had wonderful results in the Horn of Africa with the use of surrogates and false flags—basic counterintelligence and counter-insurgency tactics. And we’re beginning to tie them in knots in Afghanistan. But the White House is going to kill the program if they use it to go after Iran. It’s one thing to engage in selective strikes and assassinations in Waziristan and another in Iran. The White House believes that one size fits all, but the legal issues surrounding extrajudicial killings in Waziristan are less of a problem because Al Qaeda and the Taliban cross the border into Afghanistan and back again, often with U.S. and NATO forces in hot pursuit. The situation is not nearly as clear in the Iranian case. All the considerations—judicial, strategic, and political—are different in Iran.”

He added, “There is huge opposition inside the intelligence community to the idea of waging a covert war inside Iran, and using Baluchis and Ahwazis as surrogates. The leaders of our Special Operations community all have remarkable physical courage, but they are less likely to voice their opposition to policy. Iran is not Waziristan.”

A Gallup poll taken last November, before the N.I.E. was made public, found that seventy-three per cent of those surveyed thought that the United States should use economic action and diplomacy to stop Iran’s nuclear program, while only eighteen per cent favored direct military action. Republicans were twice as likely as Democrats to endorse a military strike. Weariness with the war in Iraq has undoubtedly affected the public’s tolerance for an attack on Iran. This mood could change quickly, however. The potential for escalation became clear in early January, when five Iranian patrol boats, believed to be under the command of the Revolutionary Guard, made a series of aggressive moves toward three Navy warships sailing through the Strait of Hormuz. Initial reports of the incident made public by the Pentagon press office said that the Iranians had transmitted threats, over ship-to-ship radio, to “explode” the American ships. At a White House news conference, the President, on the day he left for an eight-day trip to the Middle East, called the incident “provocative” and “dangerous,” and there was, very briefly, a sense of crisis and of outrage at Iran. “TWO MINUTES FROM WAR” was the headline in one British newspaper.

The crisis was quickly defused by Vice-Admiral Kevin Cosgriff, the commander of U.S. naval forces in the region. No warning shots were fired, the Admiral told the Pentagon press corps on January 7th, via teleconference from his headquarters, in Bahrain. “Yes, it’s more serious than we have seen, but, to put it in context, we do interact with the Iranian Revolutionary Guard and their Navy regularly,” Cosgriff said. “I didn’t get the sense from the reports I was receiving that there was a sense of being afraid of these five boats.”

Admiral Cosgriff’s caution was well founded: within a week, the Pentagon acknowledged that it could not positively identify the Iranian boats as the source of the ominous radio transmission, and press reports suggested that it had instead come from a prankster long known for sending fake messages in the region. Nonetheless, Cosgriff’s demeanor angered Cheney, according to the former senior intelligence official. But a lesson was learned in the incident: The public had supported the idea of retaliation, and was even asking why the U.S. didn’t do more. The former official said that, a few weeks later, a meeting took place in the Vice-President’s office. “The subject was how to create a casus belli between Tehran and Washington,” he said.

In June, President Bush went on a farewell tour of Europe. He had tea with Queen Elizabeth II and dinner with Nicolas Sarkozy and Carla Bruni, the President and First Lady of France. The serious business was conducted out of sight, and involved a series of meetings on a new diplomatic effort to persuade the Iranians to halt their uranium-enrichment program. (Iran argues that its enrichment program is for civilian purposes and is legal under the Nuclear Non-Proliferation Treaty.) Secretary of State Rice had been involved with developing a new package of incentives. But the Administration’s essential negotiating position seemed unchanged: talks could not take place until Iran halted the program. The Iranians have repeatedly and categorically rejected that precondition, leaving the diplomatic situation in a stalemate; they have not yet formally responded to the new incentives.

The continuing impasse alarms many observers. Joschka Fischer, the former German Foreign Minister, recently wrote in a syndicated column that it may not “be possible to freeze the Iranian nuclear program for the duration of the negotiations to avoid a military confrontation before they are completed. Should this newest attempt fail, things will soon get serious. Deadly serious.” When I spoke to him last week, Fischer, who has extensive contacts in the diplomatic community, said that the latest European approach includes a new element: the willingness of the U.S. and the Europeans to accept something less than a complete cessation of enrichment as an intermediate step. “The proposal says that the Iranians must stop manufacturing new centrifuges and the other side will stop all further sanction activities in the U.N. Security Council,” Fischer said, although Iran would still have to freeze its enrichment activities when formal negotiations begin. “This could be acceptable to the Iranians—if they have good will.”

The big question, Fischer added, is in Washington. “I think the Americans are deeply divided on the issue of what to do about Iran,” he said. “Some officials are concerned about the fallout from a military attack and others think an attack is unavoidable. I know the Europeans, but I have no idea where the Americans will end up on this issue.”

There is another complication: American Presidential politics. Barack Obama has said that, if elected, he would begin talks with Iran with no “self-defeating” preconditions (although only after diplomatic groundwork had been laid). That position has been vigorously criticized by John McCain. The Washington Post recently quoted Randy Scheunemann, the McCain campaign’s national-security director, as stating that McCain supports the White House’s position, and that the program be suspended before talks begin. What Obama is proposing, Scheunemann said, “is unilateral cowboy summitry.”

Scheunemann, who is known as a neoconservative, is also the McCain campaign’s most important channel of communication with the White House. He is a friend of David Addington, Dick Cheney’s chief of staff. I have heard differing accounts of Scheunemann’s influence with McCain; though some close to the McCain campaign talk about him as a possible national-security adviser, others say he is someone who isn’t taken seriously while “telling Cheney and others what they want to hear,” as a senior McCain adviser put it.

It is not known whether McCain, who is the ranking Republican on the Senate Armed Services Committee, has been formally briefed on the operations in Iran. At the annual conference of the American Israel Public Affairs Committee, in June, Obama repeated his plea for “tough and principled diplomacy.” But he also said, along with McCain, that he would keep the threat of military action against Iran on the table.