Thursday, August 21, 2008

This Is Not the Change We Hoped For: House Concurrent Resolution 362

This Is Not the Change We Hoped For: House Concurrent Resolution 362

by: Camillo "Mac" Bica

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Though America voted for change in 2006, the subsequent two years have demonstrated that the Democrats in Congress, while avowing a "new direction for America," are as willing and as skilled as their Republican/neocon counterparts at utilizing half-truths, innuendo, deceit and scare tactics to mislead the American public along the path to another devastating and unnecessary war. Consider, as a case in point, H. Con. Res. 362, introduced by Representative Gary Ackerman (D-New York) and co-sponsored by 261 members of Congress (at this writing), many of them Democrats. This bipartisan resolution is flawed - perhaps even suspect - for a number of reasons.

First, it asserts as fact that Iran is pursuing nuclear weapons and intimates that it would share its nuclear material and technology with terrorists and "rogue" states. The reality is that as of the end of July 2008, the International Atomic Energy Agency (IAEA) had conducted over 3,000 man-days of scrupulous inspections, including nine visits that were unannounced.

In a report to the IAEA Board of Governors dated May 26, 2008, Dr. Mohamed ElBaradei affirms, "The Agency has been able to continue to verify the non-diversion of declared nuclear materials in Iran. Iran has provided the Agency with access to declared nuclear material and has provided the required nuclear material accountancy reports in connection with declared nuclear material and activities." The National Intelligence Estimate (NIE) corroborates the IAEA's findings. "We judge with high confidence that in fall 2003, Tehran halted its nuclear weapons program.... We assess with moderate confidence Tehran has not restarted its nuclear weapons program as of mid-2007" (November 2007).

Credible evidence exists, therefore, to refute H. Con. Res. 362's claim that Iran is pursuing nuclear weapons and engaged in "illicit nuclear activities," the primary premise upon which this resolution builds its argument for sanctions and a blockade. The fact that this evidence is readily available to members of Congress raises concerns regarding their intent and motivation in sponsoring a resolution that exaggerates, if not fabricates, a "threat" posed by Iran to stability in the Middle East, the survival of Israel and the vital security interests of the United States.

Second, the argument as presented in the resolution is of questionable construction. Initially, it speaks of "preventing Iran from acquiring a nuclear weapons capability" - a concern, perhaps, if true, which many Americans can at least sympathize with and understand. It then, however, resolves to accomplish this end - to deal with this threat - by compelling Iran to "verifiably suspend its nuclear enrichment activities." That is, it ignores and/or conflates the critical legal distinction between enriching uranium for weapons production and enriching uranium for peaceful purposes which is Iran's sovereign right under Article IV of the Nuclear Nonproliferation Treaty of which it is signatory. Now, this is not just careless language, but is integral to the basic purpose of this resolution. By conflating the two uses of uranium enrichment, the resolution misleads the American public into believing that since Iran has admitted to enriching uranium for peaceful purposes, despite evidence to the contrary it must also be guilty of enriching uranium for weapons production.

Third, H. Con. Res. 362 demands that the president immediately impose "stringent inspection requirements on all persons, vehicles, ships, planes, trains, and cargo entering or departing Iran." Such a land, sea and air blockade, with no mention of seeking a Security Council Resolution, is more than mere provocation; it constitutes an act of war. In fact, the International Criminal Court will include blockade in its list of acts of war in 2009. It doesn't require a degree from the War College to understand that the effectiveness of a blockade hinges upon a credible threat of military action.

A resolution that demands a blockade, therefore, is also authorizing inter alia the use of military force should, for example, ships bound for or leaving Iran refuse to be boarded and stringently inspected. But yet, when confronted with the concern of many of their constituents that the resolution is not an alternative but a prelude to war, sponsors are quick to note that H. Con. Res. 362 includes the disclaimer that "nothing in this resolution shall be construed as an authorization of the use of force against Iran."

Clearly, this proviso indicates that the sponsors of this resolution are either unfamiliar with the nature of blockade or have learned a lesson from their ill-fated support for the Iraq resolution. If the former, then they are negligent in their responsibility to familiarize themselves with how blockades function before sponsoring a resolution that could quite easily lead to violent confrontation and war. If the latter, then sadly, the lesson they learned from the Iraq debacle was not that they should avoid supporting resolutions based upon lies and deceptions, but, rather, that they should prepare beforehand the means for escaping responsibility and culpability for involving our nation in a another tragic and devastating conflict.

If we are to believe that the Democratic Party and its candidate truly offer hope, change and an alternative to the politics of fear, lies and deception, then members of Congress must, for one thing, follow the lead of Tom Allen, Danny Davis, Steve Cohen, William Clay, Barney Frank and Robert Wexler and withdraw their sponsorship and support for H. Con. Res. 362.

If the Democrats truly wish to distinguish themselves from the Republicans and offer a "new direction for America," as Representative Ackerman claims on his web site, they must draft a new resolution - one that demands not threats of violence but diplomacy, not blockade but face-to-face negotiations with no preconditions, not sanctions but the exchange of ambassadors, not embargo but the opening of embassies, not covert operations intended at inciting unrest, ethnic conflict and regime change, but a nonaggression pact - all with the condition, of course, that both nations abide by the terms of the Nuclear Nonproliferation Treaty (NPT). That is, in return for an Iranian guarantee that its nuclear program is intended only for peaceful purposes and its cooperation in ensuring scrupulous inspections, the United States must end its bellicose posturing, sanctions and embargo, and abide by Articles I, II and VI of the NPT and reduce its nuclear arsenal, cease its development of a new generation of tactical nuclear weapons, and end its deployment of nuclear weapons around the world. This is the change we hope for; this is the new direction for America we must demand.

How To Burn the Speculators

How To Burn the Speculators

Why is the price of oil so high? Because the Bush administration did to the commodities market what it did to housing."

James K. Galbraith

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Whenever economies sour, politicians blame speculators. But on occasion, they are right to do so. Speculators did wreak havoc in 1630s Holland, 1720s France, and in the American stock market in 1929. That crash led to the Great Depression and 60 years of tight controls on speculation. Now, thanks to our 30-year infatuation with free markets, the controls are off, and the mad gamblers are at it again. Yesterday's burst bubble was housing; today's expanding ones are energy and food. True, we have major long-term energy problems that cannot be laid at the feet of speculators. To avoid catastrophic global warming, we will be obliged to reengineer the country, from housing to transport to forests, and also to develop and export the technologies required for the rest of the world to do likewise. Eight years of George W. Bush's policies have made this much harder, and during that time the world may have passed "peak oil"—that moment when half the recoverable reserves of conventional oil have been drained and burned—so that from now on short supplies will be endemic. Meanwhile, demand grows, notably from China and India, which account for nearly 40 percent of the world's population.

But do supply and demand explain oil prices at $140 per barrel, with voices from Goldman Sachs projecting $200 for next year (a figure that would push gas prices above $5 per gallon) and Russia's Gazprom saying $250, despite a likely US recession? Do they explain the historic price hikes in rice, corn, and wheat, leading to hunger in the developing world? Do they explain the absolutely stratospheric price of copper? No they do not.

Yes, Virginia, speculators can affect the price—if they are large and relentless enough to dominate a market, and especially if they can store the commodity and keep it off the market as the price rises.

Futures markets exist to permit commercial interests to hedge their business risks. For a fee, a farmer (or oil producer) can put a floor under the price at which his product will sell. The forward price is normally a bit lower than the current price, but the contract protects the farmer from a catastrophic price slump—such as may occur in (for instance) bumper years. Speculators buy the futures on the chance that the market price will be substantially higher. They make a respectable profit on what is in effect an insurance function, and a killing in years of drought, flood, and war.

This system works reasonably well so long as speculators do not actually control or manipulate prices. For if they can drive prices way up, they can obviously cash in while the farmer (who has presold his crop) cannot. Strict regulation by the Commodity Futures Trading Commission (cftc) is supposed to prevent that.

But thanks to Phil "nation of whiners" Gramm—the former Texas senator who was until recently John McCain's top economic adviser (see "Foreclosure Phil")—futures market regulation went to hell. Under the "Enron loophole" pushed through by Gramm in 2000, energy futures were allowed to escape all federal and state regulation. Gramm embedded that loophole in a surprise 262-page rider, drafted at the behest of Wall Street and Enron, in an 11,000-page appropriations bill on a Friday evening two days after the Supreme Court handed down its Bush v. Gore ruling and as Congress was rushing home for Christmas. In a separate bit of absurdity, in January 2006, the Intercontinental Exchange (ice) of Atlanta, which trades benchmark US oil futures (West Texas Intermediate or wti), came to be treated by the cftc as a British market (the "London loophole") so that US regulators do not even track what is going on. (Even more surreal, the cftc was going to allow trades of US oil futures on terminals located in America to be "regulated" in Dubai; political pressure put an end to that idea in July.)

Worse still, Gramm's Commodity Futures Modernization Act of 2000 also opened the way for growth in deregulated "credit default swaps"—a way in which financial institutions "insured" that bad loans would not cause them losses. This, combined with other deregulatory moves by the cftc, broadened the "swaps loophole," an enormous backdoor into the commodities markets, basically permitting speculators making bets off the commodities exchanges to be treated as "commercial interests"—like say, farmers—and hence avoid the scrutiny (including limits on the size of their bets) normally applied to financial players. Thus today, when officials like Treasury Secretary Henry Paulson say that speculation is not a factor in the commodity markets, they're not counting hedge funds and investment banks as speculators—even though that's what they really are.

According to Senate testimony on June 3 by Michael Greenberger, who used to head the cftc's division of trading and markets, if swaps were properly labeled, about 70 percent of the oil futures now traded on the New York exchanges would be deemed speculative, not commercial, and subjected to a high degree of regulatory scrutiny.

Okay, let's think this through. First, vast sums of money are flowing through regulatory loopholes into the commodities markets, particularly for oil. Second, spot prices (those charged for immediate sale) in all commodity markets have been soaring. In particular, Americans now pay an average of $4 per gallon for gas. Is it possible that these two events are unconnected? Is it possible that Paulson—former ceo of Goldman Sachs—is right when he says that the price of oil is being driven mainly by supply and demand?

No, and Senate testimony in May by Michael W. Masters, a hedge fund manager, illustrates why not. Masters points to the spectacular rise of "index speculation," in which pension funds and other investors invest in the commodities futures markets according to formulas created by, among others, (guess who?) Goldman Sachs. Index speculation investments have risen from $13 billion to more than $250 billion since 2003. Masters calculates that the speculative demand for Texas oil futures from this source is now five times the actual 2003 stockpile (the baseline he used); for corn and aluminum the figure is about nine times; for silver it's a phenomenal fourteen times. There is of course no way that the orders represented by all those futures contracts could be met.

So the futures price goes up. As it does, supplies actually disappear. For instance, copper expert Frank Veneroso believes that 800,000 tons of copper has been hidden away in China, waiting to emerge closer to the market top. For Saudi Arabia and perhaps Russia the matter is simpler: Oil stays in the ground, and the oil not sold boosts the price of the oil that is. As current prices soar, the index speculators obey their computer programs, which tell them to pour still more money into the commodity markets.

There may be a further element at play, according to an April speech by Attorney General Michael Mukasey: "International organized criminals control significant positions in the global energy and strategic-materials markets. They are expanding their holdings in these sectors, which corrupts the normal functioning of these markets and may have a destabilizing effect on US geopolitical interests." To whom exactly Mukasey is referring, he does not say. But that organized criminal interests have the motive, means, and opportunity—handed to them by Phil Gramm—to destabilize the world energy markets seems quite clear.

On these matters, there is a quick fix. Under pressure, the cftc is closing the London loophole. Early in the next administration, Congress must slam shut the Enron and swaps loopholes. Index speculation should be curtailed by making such strategies illegal for regulated pension funds and by imposing limits for all traders on how much they can buy or sell. Investment banks using credit default swaps to enter the commodities markets should be regulated to the standards that apply to speculators, not as if they were heating-oil vendors hedging against a warm winter. Investigations now under way at the Federal Trade Commission, the Federal Energy Regulatory Commission, and the Department of Justice should be intensified, and criminal manipulation of the markets, if detected, should be punished.

Finally, the federal government should burn the oil speculators by selling up to 4 million barrels a day from the Strategic Petroleum Reserve. And as economist Tom Palley has pointed out, consumers can help too. An awful lot of gas is stored in cars. If people stop topping off and make do with half a tank, they'll back up supply and lower demand. It's a brilliant suggestion and definitely worth a try.

And while this is being done, and especially if all this smoke leads to fire, someone should ask, "What did Henry Paulson know, and when did he know it?"

Economic slowdown: World markets fall sharply amid fears that credit crunch has further to run

Economic slowdown: World markets fall sharply amid fears that credit crunch has further to run

· Widening money market spreads signal more gloom
· Former IMF chief warns that 'worst is yet to come'

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Share prices dropped sharply on the world's financial markets yesterday amid fears that the year-long credit crunch is entering a dangerous new phase marked by a severe economic slowdown and failing banks.

The FTSE 100 index fell by almost 2.5% as financial market traders braced themselves for a fresh bout of turbulence triggered by concern that weakening growth in Europe, North America and Asia would add to the problems of western banks.

Analysts pointed to widening spreads in money markets as a sign that the mood was becoming gloomier after a period in which trading conditions had showed tentative signs of returning to normal. A fall of 129.8 points in the FTSE 100 to 5320.4 was mirrored by a drop of almost 3% in Japan, and declines of well over 2% on the Frankfurt and Paris bourses.

Ken Rogoff, the former chief economist at the International Monetary Fund, added to market jitters by warning that the worst of the crisis was yet to come.

"The US is not out of the woods. I think the financial crisis is at the halfway point, perhaps. I would even go further to say 'the worst is to come'," he told a financial conference in Singapore.

"We're not just going to see mid-sized banks go under in the next few months, we're going to see a whopper, we're going to see a big one - one of the big investment banks or big banks," Rogoff said.

His comments came amid speculation that the US government would in effect be forced to nationalise Fannie Mae and Freddie Mac - the two biggest US housing finance groups and as new figures for housing starts and producer prices suggested that the world's biggest economy was in the grip of stagflation.

After a fall of more than 180 points on Monday, shares on Wall Street slipped further in early trading yesterday. Lehman Brothers was down more than 6% after reports from analysts that it would be forced into a fresh $4bn (£2bn) write-down from losses on the US real estate market.

The US commerce department in Washington reported an 11% drop in housing starts between June and July - dousing hopes that the market might be stabilising after the most severe property slump since the Great Depression. With the US awash with unsold homes, builders began work on 965,000 properties last month - a 30% fall on July 2007.

Meanwhile, data from the US labor department provided evidence of last month's rise in oil prices to a peak of $147 a barrel. The producer price index - a measure of the cost pressures facing American manufacturers - was 9.8% higher in July than it was a year earlier. It is the fastest annual rate of growth since 1981.

Even excluding food and energy - the two items that have been mainly responsible for growing upward pressure on the cost of living - producer prices were still 3.5% higher than a year earlier, the fastest rate of increase since 1991.

Richard Fisher, head of the Dallas Federal Reserve, said: "We are in the midst of a fierce correction from a period of indiscriminate behaviour in the credit markets, a surfeit of homebuilding, a global avalanche of cheap labour and correspondingly cheap imports, and other unsustainable financial and economic activity."

But Fisher - seen as one of the Fed's hawks - warned that the fight against rising inflation had to take precedence over cuts in interest rates to boost growth.

"Unless the python that is the US economy can quickly pass the recent burst of cost-push pressures, we risk a reinforcing spreading of inflationary impulses and expectations," he told the Progress & Freedom Foundation thinktank.

"Should this happen and the Fed were to fail to address it, we would run the risk of losing the public's confidence in our ability to constrain inflation," he said.

Gabriel Stein, at Lombard Street Research, said credit growth in the US had remained strong until the late spring but had since weakened sharply.

"The demand for loans is not there, nor are banks willing to extend credit even if it were. If this weakness becomes entrenched over the autumn, it is a clear sign of very weak American output growth in 2009," he said.

Asia sinks as credit crisis victims mount

Asia sinks as credit crisis victims mount

By Andrew Wood

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Financial shares dragged Asia Pacific stock markets lower on Thursday. Worries about further credit crisis-related losses deepened after profits dropped by a quarter at Babcock & Brown, the Australian investment bank. China shares fell the most, reversing much of Wednesday’s 7.6 per cent surge, and Hong Kong made its worst close for a year.

The MSCI Asia Pacific Index had lost 0.7 per cent to 122.59 by late afternoon in Tokyo.

Oil regained losses made overnight in the US. Nymex light sweet crude was trading $1.24 higher at $116.80 a barrel by late afternoon in Singapore.

The Nikkei 225 average closed 0.8 per cent lower at 12,752.21 and the broader Topix index ended 0.7 per cent lower at 1,224.53

Banks, car makers, technology companies, producers of electronic consumer goods accounted for two-thirds of the fall. A sudden appreciation in the yen to Y108.64 from Y109.60 before lunch in Tokyo was not good for exporters.

The electronic components maker Kyocera was the Nikkei’s worst performer. It fell 2.5 per cent to Y8,930, its worst close for a month. Honda Motor fell by 1.4 per cent to Y3,530. The games company Nintendo dropped 3.6 per cent to Y48,600 and the camera and office equipment maker Canon lost 1.0 per cent to Y4,990.

Sumitomo Mitsui Financial, Japan’s second biggest bank by stock market value, fell by 2.1 per cent to Y661,000 after HSBC downgraded the shares.

Big trading houses continued to rise as oil prices rallied – they make a big chunk of their profit from dealing in crude. Mitsui rose by 1.9 per cent to Y1,753 and Marubeni was up 2.3 per cent to Y676.

In China, oil refiners and financial companies dominated the list of ten worst performers. The Shanghai composite index closed 3.6 per cent lower at 2,431.72 as worries about inflation resurfaced.

There was little sign of Wednesday’s exuberance when the market jumped 7.6 per cent on hopes that the government would announce measures to boost share prices.

PetroChina, the world’s second-biggest company in stock market value, fell by 3.7 per cent to Rmb13.70. PetroChina and its rival Sinopec, which fell by 6.6 per cent to Rmb10.12, tend to react badly when oil prices rise. They must pay market rates for crude but Beijing sets the price they can charge for fuel and other refined products, which squeezes profit margins.

Otherwise financial companies bore the brunt of the market’s fall. Industrial & Commercial Bank of China, the world’s most valuable in stock market terms, fell by 2.9 per cent to Rmb4.76 and China Construction Bank lost 3.4 per cent to Rmb5.32.

China Life Insurance dropped 2.1 per cent to Rmb24.88.

But some stock brokers did continue to benefit from the rumours of official intervention. Haitong Securities gained 4.7 per cent to Rmb17.30 and Citic Securities gained 3.8 per cent to Rmb19.

In Hong Kong, the Hang Seng index closed 2.6 per cent lower at 20,392.06 – its worst close since 17 August 2007 – and the main sub-index of mainland companies listed in the territory was 2.4 per cent lower at 10,916.50

China South Locomotive & Rolling Stock’s debut in Hong Kong was muted compared with its 83 per cent jump during its first day of trading in Shanghai on Monday. For the second part of the $1.5bn dual listing, China South Loco shares gained as much as 18 per cent on their offer price, but were just 1.9 per cent higher at HK$2.65 by the end of the day.

Australian shares fell. The S&P/ASX 200 index closed 1.1 per cent lower at 4,875.20.

Babcock & Brown shares plunged by more than a third in value to their lowest since the investment bank floated in 2004. It said net income dropped by 24 per cent and that Phil Green, the chief executive, would leave. The shares closed 35.7 per cent down at A$2.22 – a loss of 91.8 per cent so far this year.

Babcock’s larger rival, Macquarie, fell by 3.7 per cent to A$47.50. Westpac Banking made the markets biggest loss by dropping 3.2 per cent to A$21.66.

Qantas Airways rose by 2.4 per cent to A$3.48 after announcing a 46 per cent jump in annual pre-tax profit to A$1.4bn thanks to carrying more passengers and freight – although it warned that high fuel costs and tough industry conditions meant income may fall in the future.

In India, the Sensex was 2 per cent lower by mid afternoon in Mumbai at 14,385.10. ICICI Bank led the market lower by falling 3.2 per cent to Rs656.85.

Financial fears stalk FTSE

Financial fears stalk FTSE

By Michael Hunter

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London equities fell on Thursday, with further losses for financial stocks as renewed fears about the health of the sector spread round the globe.

The FTSE 100 lost 45 points in morning trade to 5,326.5., handing back the majority of the 45 point rally made during the previous session.

Financial stocks followed their US peers lower on returning worry about state-sponsored mortgage companies Fannie Mae and Freddie Mac as government officials appeared to signal a full scale rescue of the pair was more likely.

Schroders, the fund manager, was one of the biggest single fallers in London, down 3.1 per cent to 846½p. London Stock Exchange was 1.6 per cent weaker at 724½p and HBOS was 1.7 per cent lower at 275½p. Interdealer broker Icap fell by 2 per cent weaker at 454p.

There was a better showing from the mining sector after well-received maiden interim numbers from ENRC, up 2.9 per cent to £10.57. The Kazakhstan-based ferroalloys company which floated in London last December, announced profits of $2.05bn, up from $568m.

It also refused a request from its smalller compatriot, rival and shareholder Kazakhmys, which predominantly mines copper, for a seat on its board. The two rivals have long been linked with a potential merger. Kazakhmys, which recently lifted its stake in ENRC to 25 per cent, rose 2.9 per cent to £12.97.

Persimmon rose 13/1 per cent to 332p trade after its interim profit fell less steeply than feared. The mid-cap housebuilder said home sales in the period fell 31 per cent leading to a 64 per cent reduction in profit as market conditions remained very difficult. It also cut its dividend to 5p per share from 18½p.

But Mike Farley, Persimmon’s CEO, helped cheer the wider sector, saying declines in sales volumes had not worsened since April, offering hope the housing market slowdown could have bottomed out in April.

Panmure Gordon raised its rating on Persimmon to ”hold” from ”sell”.

The investment bank said: ”Interim results this morning contain few suprises, and we maintain our full year forecasts. While numbers look weak, we believe that they will be at the top end of the sector range.”

The rest of the sector also showed firm gains. Bovis Homes was 2.6 per cent higher at 409p, Taylor Wimpey rose 5.5 per cent to 43½p and Barratt Developments was 9.5 per cent higher at 123½p.

Overnight in New York, easing oil prices and better-than-forecast numbers from Hewlett Packard helped indices overcome the drag from the financial sector to make overall gains. The S&P 500 index closed up 0.6 per cent at 1,274.55 with the Dow Jones Industrial Average also rising 0.6 per cent to 11,417.43.

Asian equities were lower, as worries about further credit crisis-related losses deepened following a slide in profits at Babcock & Brown, the Australian investment bank. The MSCI Asia Pacific Index had lost 0.5 per cent by late morning in Tokyo.

Real wages fall as record price hikes hit US workers

Real wages fall as record price hikes hit US workers

By Andre Damon
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US prices jumped in July by their highest month-to-month rate since 1981, in one of the sharpest inflation spikes since the Second World War.

The July Producer Prices index, reported Tuesday by the Bureau of Labor Statistics, rose by 1.2 percent, on top of a 1.8 percent increase in June. “Core” prices, which exclude food and energy, shot up by .7 percent, more than triple economists’ expectations. Producer prices were up 9.8 percent from a year ago.

“There is no doubt we’re in a period of stagflation,” Peter Kretzmer, a senior economist at Bank of America, told Bloomberg News, referring to the combination of stagnant growth and inflation, which characterized the US economy in the 1970s.

The consumer price statistics released last Thursday mirrored the producer price statistics. Seasonally-adjusted consumer prices jumped .8 percent last month—more than double earlier predictions—and were up 5.6 percent since July 2007. Even so, inflation has picked up in recent months. While the Consumer Price Index rose at a comparatively low annualized rate of only 2.8 percent in the first quarter, it shot up at an annualized rate of ten percent in the past three months.

The living standards of workers continue to decline as the purchasing power of their wages falls and pay increases fail to keep up with inflation. The most recent Bureau of Labor statistics report found that real average weekly earnings fell by .8 percent from June to July. Over the past year, weekly earnings fell by 3.1 percent. Thus, the average household now earns a staggering $1,500 less than it would if wages had kept pace with inflation over the past twelve months.

Skyrocketing prices, falling wages, rising unemployment, and falling home values are all lining up to create a massive social catastrophe. According to Credit Suisse, the credit analyst, there will be some 6.5 million home foreclosures by 2012, amounting to 12.7 percent of homeowners with mortgages. While arranging multi-billion dollar bailout of big investors involved in the mortgage meltdown, the Democrats and Republicans have offered no relief for working people facing the loss of their homes and unsustainable levels of debt.

The housing market, one of the main components of the US slowdown, showed no signs of improvement, as the construction of new homes fell 30 percent lower than a year ago. “A [housing market] recovery will not happen this year,’’ Russell Price, a senior economist at H&R Block told Bloomberg News. “Not only are mortgage rates creeping up, but financing is becoming more difficult for a lot of people. Builders will continue to pull back.’’

The unexpectedly high US inflation statistics followed the announcement last week that the Eurozone economy contracted for the first time since the creation of the European Monetary Union in 1999. Combined output in the fifteen Eurozone counties fell by .2 percent in the second quarter. Germany was particularly hard hit, with output falling by .5 percent in the second quarter. France’s economy contracted by .3 percent and Italy’s by .3 percent.

The British, Spanish, Greek, and Austrian economies managed to avoid contracting, but all grew at rates lower than one percent. The weaker position of the Euro—which has helped keep the US economy from shrinking in the last several quarters—has dragged down growth of the EU’s largest exporters: Germany, France, and Italy.

Meanwhile, the Japanese economy contracted .6 percent in the second quarter, according to figures released last week by the government. Japan is the world’s second-largest economy and the fourth-largest exporter. Thus far, all eight of the world’s largest exporters—excluding China—have announced at least one quarter of stagnation or negative growth.

Consumer Price inflation also reached its highest level since the creation of the Euro. Consumer prices rose by 4.1 percent in the second quarter, more than double the European Union’s inflation target of 2 percent.

Despite facing similar difficulties—slowing growth and rising prices—the US and European Central banks have reacted in completely opposite ways. In the past year, the US Federal Reserve has cut its benchmark Federal Funds Rate from 5.25 to 2 percent. The European Central Bank has on the other hand proceeded to raise rates to 4.25 percent.

This is at least partially due to the differing levels of success the European and US corporate elite have enjoyed in suppressing the wage demands of the working class in their respective countries. Thus far, the American ruling class, with the full assistance of the trade union bureaucracy, has kept wage increases well below the rate of inflation despite widespread anger over high prices and eroding living standards. By contrast, German wages have risen at the same rate as inflation, which reached an annual rate 3.5 percent in the second quarter.

The Wall Street Journal, noting the results of its recent survey of leading economists, observed that “part of the reason for the disparity [in central bank policy] is the difference between the European and US work forces. Some 94 percent of respondents said the US’s risk of a wage-price spiral, where pressures from labor costs and high prices push each other up, is either minor or nonexistent. But 34 percent said that the Eurozone countries face a major risk of a wage-price spiral, and 9 percent said it is already beginning.”

The Federal Reserve, facing a financial meltdown that would cost the US government hundreds of billions, if not trillions, of dollars, has pumped huge amounts of cash into the US economy. It has kept interest rates extremely low, extended billions of dollars in loans to Wall Street, and all but guaranteed that it would bail out any large financial firms that run into trouble. This, combined with rising commodity prices, has contributed to persistently high inflation rates despite radically falling wages.

But, despite all this, the Fed has been unable to stabilize the financial sector. In recent days, the conditions facing major finance companies have only worsened. On Wednesday the Treasury Department backed away from its previous assertions that it would not bail out Fannie Mae and Freddie Mac, after the two firms saw their stock values plunge more than thirty percent since Monday.

Meanwhile, Kenneth Rogoff, the former IMF chief economist, said Tuesday that “the worst is yet to come,” and that another major financial firm is likely to collapse in the next few months. “We’re not just going to see mid-sized banks go under in the next few months,” he said at a conference in Singapore. “We’re going to see a whopper, we’re going to see a big one, one of the big investment banks or big banks.”

Canada to deport another Iraq war resister to the US

Canada to deport another Iraq war resister to the US

By John Mackay
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The Canada Border Service Agency last week ordered Jeremy Hinzman, the first US soldier to refuse to serve in Iraq and apply for political refugee status in Canada, to be deported back to the US. The ruling was handed down one month after Robin Long became the first US war resister to be deported from Canada. Long is now being held at a county jail in Fort Carson, Colorado and will be tried by court martial in early September.

Hinzman, 29, has a wife and two small children, the youngest just 3 months old. They have all been ordered to leave Canada by September 23.

Hinzman was handed a deportation order after a Citizenship and Immigration officer decided his application, filed under the pre-removal risk assessment program, didn’t qualify. The program evaluates the risk a claimant will face if he or she is sent back to the country of origin. Hinzman’s final appeal of the rejection of his application for refugee status had previously been denied.

It was deemed that the US had a fair justice system and Hinzman’s First Amendment right to free speech was protected. Citizenship and Immigration also judged that President Bush’s “no child left behind” program assured that his son would be able to get a good education.

Upon returning to the US, Hinzman will likely be detained and face court martial and a similar fate to that of Robin Long, which could include a five-year prison term for desertion. While his attorneys plan to appeal the deportation order, Hinzman is not hopeful. In an interview with the “Democracy Now” program, Hinzman said, “This turns our lives upside down.”

Hinzman joined the US Army in early 2001, partly out of a sense of patriotism and adventure. However, he was primarily attracted by the promise of financial support for a university education.

He says that more than a year after joining, he realized that he could not become a killer. He felt he could not dehumanize the people he was supposed to shoot. He applied for conscientious objector (CO) status in August 2002, but his command threw his application away. Hinzman subsequently reapplied while serving in Afghanistan, only to have his application turned down.

In Afghanistan, while his CO application was being processed, Hinzman played a non-combatant role as an assistant to Haliburton employees serving meals to soldiers. Upon denial of his application for CO status, Hinzman was ordered to return to active duty. When his unit returned to the US with the understanding that they would soon be sent to Iraq, Hinzman deserted, crossing the Canadian border in January 2004 with his wife and young son and claiming refugee status.

In December 2004, Canada’s Immigration and Refugee Board (IRB) rejected his request for refugee status, stating that he did not fit the criteria for refugee status. At that time, the Liberal government of Prime Minister Paul Martin intervened in the hearing to block discussion of the legality of the US invasion and occupation of Iraq.

The solicitor general argued that the legality of the war was beyond the purview of Canada’s IRB. It was deemed that the International Court of Justice in The Hague was the only body with the authority and competence to hear arguments concerning the war’s legality.

Hinzman argued that he should be granted refugee status as the Iraq war had been condemned by the international community, and the Bush administration had lied about Saddam Hussein’s regime having weapons of mass destruction and ties to Al Qaeda. However, the IRB argued that this was irrelevant to a refugee claim. Major Canadian newspapers such as the Globe and Mail and the National Post editorialized that Hinzman was a “deserter,” not a “refugee.”

In November 2007, the Supreme Court of Canada refused to hear a case involving Hinzman and another resister, Brandon Hughey. The Court gave no reason for its refusal. Prior to this, following Hinzman’s initial appeal for refugee status, the Federal Court and the Federal Court of Appeal had also refused to review the case.

While the Canadian government chose not to be involved in the Iraq war directly, these actions are symbolic of complicity in the form of political support for the US occupation. Canada is actively involved in the war in Afghanistan, where 90 Canadian troops have been killed in combat since deployment in 2002. Support for the deportation of US soldiers who are seeking refuge contrasts with Canadian policy during the Vietnam War, when more than 50,000 Americans who fled the draft or service in the military found refuge in Canada.

Like the Martin Liberal government before it, the current Conservative government of Prime Minister Stephen Harper does not wish to antagonize the US by repeating Canada’s past as a destination of asylum for US soldiers. This position is in keeping with the Canadian ruling elite’s refusal to question to legality of the Iraq war, and its more general assault on the rights of asylum seekers.

This posture conflicts with the fourth Nuremburg principle, which holds that all persons are obliged, if there is any possibility of doing so, to defy government and military orders violating international law. It also defies the position of United Nations High Commission on Refugees, which holds that a deserter can be deemed a refugee if the military action is condemned by the international community as being in violation of elementary human principles.

The actions of the Canadian government stand in stark contrast to the sentiments of most Canadians, as revealed by a poll published in July which found that two-thirds support giving defecting US soldiers permanent resident status.

In June, the opposition parties in Canada attempted to appease popular sentiment on the Iraq war and broad opposition to Canada’s involvement in Afghanistan by passing a non-binding resolution to freeze the deportation of conscientious objectors. As it is non-binding, the minority Harper government is not committed to act on the resolution, leaving it as a “symbolic” gesture that does nothing to prevent the deportation of Hinzman and his family.

Michelle Robidoux, a spokesperson for the Toronto-based War Resisters Support Campaign, said, “This sends a chilling message to those going through the same process.” She continued, “It’s creating a wave of stress among everybody. If Jeremy Hinzman, who has a wife and kids, can be kicked out, what about the single guys who have been here for a shorter period of time?”

US oil pipeline politics and the Russia-Georgia conflict

US oil pipeline politics and the Russia-Georgia conflict

By Alex Lantier
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US media claims about Georgian democracy notwithstanding, a key factor in US backing for Georgian President Mikheil Saakashvili in his conflict with Russia has been the emergence of Georgia as a key transit country for oil and gas exports from the Caucasus and the Caspian Sea basin.

The August 7 outbreak of hostilities between Georgia and Russia, as Georgia bombarded Russian peacekeepers in the breakaway Georgian region of South Ossetia, is the predictable result of the US’s aggressive use of pipeline politics and proxy states to assert its commercial and military influence in Central Asia.

The broad outlines of this policy have governed US relations with the former Soviet republics ever since the 1991 collapse of the USSR. At the time, US investors rushed in to acquire large portions of the former USSR’s economy, notably the oil and gas industries of the Caspian Basin. In the early 1990s, Western energy companies acquired stakes in developing numerous projects, such the Tengiz oil field in Kazakhstan, the Azeri-Chirag-Guneshli (ACG) fields in Azerbaijan, and the Dauletabad natural gas field in Turkmenistan.

From the outset, US firms and advisors pressed the ex-Soviet states to agree to pipeline routes bypassing countries the US viewed as inimical to its interests, notably Russia and Iran. Such pipelines not only deprived US rivals of transit fees and political leverage arising from their ability to cut off pipeline flows, but also gave Washington the opportunity to weld together pro-US regional alliances.

In the mid-1990s, the administration of US President Bill Clinton settled on two main pipeline projects to export Caspian oil and gas while bypassing the territories of Russia, Iran and China. The first was a plan to export Turkmen gas through Afghanistan and Pakistan to ports on the Indian Ocean—a plan that led Washington to support the Taliban in 1995-6 in an attempt to unify and pacify Afghanistan so that the Turkmenistan-Afghanistan-Pakistan (TAP) pipeline could be built. The plan ultimately foundered on the Taliban’s inability to conquer northern Afghanistan.

The other plan was to build a pipeline westward through small, pro-US states in the Caucasus—Georgia and Azerbaijan. Together with an undersea trans-Caspian pipeline connecting Kazakhstan and Turkmenistan on the Caspian’s eastern shore with Azerbaijan on the western shore, the Baku (Azerbaijan)-Tbilisi (Georgia)-Ceyhan (Turkey) pipeline would send a substantial fraction of Caspian energy exports to the Mediterranean. This pipeline was conceived of as a major blow, in particular, to Russia’s longstanding domination of energy routes from the Caspian to the West.

The politically-driven character of the project was undeniable. As the Christian Science Monitor recently noted, “The $4 billion BTC pipeline, managed by and 30 percent owned by British Petroleum, was routed through Georgia to avoid sending Caspian oil through Iran, Afghanistan and Pakistan, or Russia. A 10-mile pipeline could have connected Caspian oil to the well-developed Iranian pipeline system.”

Clinton administration officials relentlessly lobbied for the Baku-Tbilisi-Ceyhan (BTC) pipeline, which would pipe oil from the ACG fields near the Azeri capital of Baku through the Georgian capital of Tbilisi to the Mediterranean port of Ceyhan. After Azerbaijan, Georgia and Turkey signed an intergovernmental agreement in favor of the BTC pipeline, Clinton said in 2000 that the pipeline represented “the most important achievement at the end of the twentieth century.”

As it took office in 2001, the Bush administration planned on even more aggressive use of US military power and strategic influence to carry out the same fundamental policy. Many of its top officials had been intimately involved in US energy companies’ initial penetration of the USSR: National Security Advisor and later Secretary of State Condoleezza Rice served on the board of US oil major Chevron from 1991 to 2001 as an expert on the USSR, when Chevron was acquiring a major stake in the Tengiz oil field.

Vice President Dick Cheney had served as CEO of oil infrastructure company Halliburton and as a member of Kazakhstan’s Oil Advisory Board, a group set up by the Kazakh government after the fall of the USSR that included the CEOs of oil majors Chevron and Texaco. In the 1990s, Cheney had also used his political pull, as former US secretary of defense in the administration of the senior George Bush, to arrange interviews between Halliburton executives and the Azeri government.

The Bush administration faced a significantly different government in Russia: President Boris Yeltsin had transferred power in 2000 to his chosen successor, Vladimir Putin. Thanks to its oil revenues, the Russian economy had bottomed out from the devastating collapse that followed the fall of the USSR, and Putin planned to carry out a more independent and assertive Russian foreign policy. The recovery picked up steam after Putin’s arrival in power, as world oil prices began to rise.

In the aftermath of the September 11, 2001 terrorist attacks, however, Putin acquiesced to US deployments to military bases in the Caspian region, ostensibly as logistics bases for US military action against the Taliban in Afghanistan. However, these deployments also allowed the US to assert its pipeline interests—most notably leading to the temporary demise of Chinese plans to build a “Pan Asian Global Energy Bridge,” a competing network of Chinese-run pipelines linking the Middle East, Central Asia and Russia to China’s Pacific Coast.

Georgia soon emerged as a major transit country for Western pipeline plans. In 2002 in London, an international consortium was founded to begin construction of the BTC oil pipeline, as well as a natural gas pipeline (BTE) running from Azerbaijan’s Shah Deniz gas fields through Baku and Tbilisi to the eastern Turkish city of Erzurum. Plans were also made to connect the BTE pipeline to the European market via a pipeline extending from Erzurum to Vienna, the so-called “Nabucco” pipeline.

Georgia subsequently became the site of the first major open confrontation between Russia and the US in the region, the December 2003 “Rose Revolution” that displaced Georgian President Eduard Shevardnadze. In the aftermath of parliamentary elections whose results were disputed by the US-backed opposition, the opposition staged a series of demonstrations and ultimately took over Parliament. The Georgian military, which had received extensive US training, stood aside, while top US officials, including then-Secretary of State Colin Powell, personally intervened to order Shevardnadze to step down.

This made-in-the-USA coup brought to power a series of former Shevardnadze associates who were more closely associated with the US, most notably Columbia University-educated lawyer Mikheil Saakashvili. Saakashvili formally assumed the Georgian presidency in January 2004.

One of the main disagreements between Shevardnadze and Saakashvili in the 2003 parliamentary campaign had been the question of how to deal with ethnic-minority regions of Georgia. Shevardnadze allied himself with Adjarian politician Aslan Abashidze, while Saakashvili stridently advocated that Tbilisi exercise total control over all of its territory. This represented a definite concession by Shevardnadze to Moscow, which had considerable influence in breakaway or autonomous regions of Georgia, such as Adjaria, Abkhazia, and South Ossetia.

In 2004, Saakashvili successfully forced Abashidze to flee by threatening Adjaria with invasion by the Georgian army. Throughout his presidency, he issued threats against South Ossetia and Abkhazia, despite the presence of Russian peacekeepers there.

From the point of view of US oil interests, the Rose Revolution was perfectly timed. It came one year before the 2005 opening of the BTC pipeline, a project whose value to US foreign policy depended on the Georgian government being independent from Russian pressure. The Rose Revolution succeeded in pushing the Georgian government in this direction, replacing Shevardnadze with a president firmly committed to Georgian nationalism and to eradicating Russia’s influence in Georgia. Under Saakashvili, Russian influence was limited to a few enclaves living under constant threat of Georgian attack.

The broader developments in Central Asian pipeline politics since the Rose Revolution have not favored the US—a fact that no doubt played a role in US calculations to back Saakashvili in an increasingly reckless confrontation with Moscow. The growth of resistance to the US occupation of Afghanistan has precluded all plans for constructing a TAP pipeline south from Central Asia to the Indian Ocean. As a result, the Caucasian pipelines through Georgia represent the only viable path for Central Asian oil and gas exports that is acceptable to Washington.

In December 2007, Russia signed an agreement with Kazakhstan and Turkmenistan to build a new natural gas pipeline along the eastern Caspian Sea coast towards Russia. The construction of the pipeline, which would have an initial export capacity of 20 billion cubic meters per year, was seen as a major blow to US hopes that Central Asian governments would commit substantial oil and gas resources to a potential trans-Caspian pipeline linked to the existing, US-backed pipelines in the Caucasus.

China, whose attempts at securing energy supplies through pipelines from Central Asia into neighboring western China came to an abrupt halt after the US’s 2001 deployments to Central Asia, has since concluded a number of pipeline deals. A Kazakhstan-China oil pipeline, linking Kazakh fields in the northern Caspian region to the Chinese pipeline network in northwestern China’s Xinjiang Autonomous Region, is currently under construction and will become operational in October 2009. A parallel natural gas pipeline, with a branch downwards towards fields in Uzbekistan and Turkmenistan, is also under construction.

Recession fears hit European stocks

Recession fears hit European stocks

By Neil Dennis

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European stocks were lower on Thursday after sentiment dipped in response to further signs that the eurozone economy may be recession-bound.

Confidence in the market also took a knock as oil prices ticked sharply higher following a further cooling of entente between Russia and the US.

By midday, the FTSE Eurofirst 300 was down 0.8 per cent to 1,155.44, off its worst levels of the session. Frankfurt's Xetra Dax fell 0.7 per cent to 6,273.18, the CAC 40 in Paris lost 1.4 per cent to 4,306.49 and London's FTSE 100 shed 0.4 per cent to 5,351.6.

Fears of possible further writedowns at major investment banks, and refinancing concerns for Fannie Mae and Freddie Mac, the two US government sponsored mortgage brokers, continued to weigh on the European financial sector.

Raiffeisen International, the Austrian bank, slid 3.7 per cent to €73.96 after Morgan Stanley cut its rating to "underweight" from "equal weight" and lowered its price target to €71 from €89.

The broker said the bank, which operates in European emerging markets, ran the risk of a deterioration in the terms of trade in 2009.

Rival Austrian bank Erste Group, which also operates in eastern European markets, fell 1.8 per cent to €38.57.

French investment bank Natixis, which is hoping to launch a €3.7bn rights issue, fell 3 per cent to €5.68 after hedge fund and shareholder Royal Capital Management opposed the plan.

"A €3.7bn rights offering, with shares trading at less than half their book value would unnacceptably hurt minority shareholders," the fund said. "We're suggesting a superior way to do it."

The company's two main shareholders Banques Populaires and Caisses d'Epargne, who hold about 70 per cent of the shares between them, have already agreed to the rights issue, but Natixis still has to go through the formality of a shareholder meeting to approve the deal.

Bucking the trend was IKB, the German lender whose business was hit badly by the subprime crisis. Its shares rose 9 per cent to €2.92 after it was revealed that US private equity group Lone Star was to take a 91 per cent stake.

Purchasing manager surveys in the eurozone provided further clues that the region's economy may slip into technical recession in the third quarter. The index recovered fractionally to 48 in August from 47.8 in July, but was firmly in contraction territory.

"With virtually every index below the 50 boom/bust line, it looks like most sectors and countries in the eurozone are contracting," said Jonathan Loynes at Capital Economics.

This provided investors with further reasons to sell construction and building stocks. French construction group Bouygues fell 2.6 per cent to €41.41, while Spanish rival Sacyr Vallehermoso lost 1.2 per cent to €12.08.

Holcim, the world's second-biggest cement maker, cut its annual growth target because of high energy costs and the slowdown in construction in the US, Spain and the UK, which it expected would worsen further.

Collins Stewart downgraded Holcim to "hold" from "buy". The broker said: "The recent dip in energy costs may help the group slightly in future, but we expect to downgrade our estimates by around 10 per cent."

Shares in Holcim fell 2..6 per cent to SFr75.05, prompting negative sentiment for the rest of the building materials sector.

CRH, the Irish cement group, lost 3.6 per cent to €16.14, undermined by its own weak domestic market, while France's Saint Gobain fell 2 per cent to €39.36. Lafarge, the world's biggest cement and aggregates group, fell 3 per cent to €77.95.

Fannie and Freddie crisis deepens

Fannie and Freddie crisis deepens

By James Politi

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The US Treasury on Wednesday backed away from assurances that it would not have to rescue Fannie Mae and Freddie Mac, as the crisis surrounding the mortgage groups deepened with their shares falling for a third day.

Although it was granted new powers to extend its credit lines to Fannie and Freddie and invest in their equity last month, the Treasury has been adamant it does not expect to have to make use of the new authority.

But on Wednesday, a Treasury spokeswoman declined to repeat that assurance. Instead, she said Treasury was “vigilantly” monitoring market developments and was “focused on efforts that will encourage market stability, mortgage availability and protecting the taxpayer”.

The shift in emphasis towards a more open-ended statement may not mean that the Treasury is close to intervening to save Fannie and Freddie, since government funds would still only be used as a last resort.

But it highlights the pressure facing Hank Paulson, US Treasury secretary, as he confronts the return of unease surrounding Fannie and Freddie. A rise in the companies’ borrowing costs could translate into higher mortgage rates for prospective homebuyers, thereby prolonging the housing slump.

Treasury officials had hoped the strengthening of the government guarantee implied in the rescue plan would be enough to restore investor confidence.

“Hopes that making government support more explicit . . . would add stability have backfired as holders further down the capital structure have turned up the heat, eradicating value ahead of a potentially damaging capital infusion,” Richard Hofmann, analyst at CreditSights, said

Daniel Mudd, Fannie chief executive, said in a radio interview yesterday that his company had not asked the Treasury for help, nor had it been offered any, reiterating that the housing agency has more capital than it has ever had in its history.

Fannie and Freddie shares have fallen 32.49 and 37.09 per cent respectively since Monday, as investors have grown concerned about a government intervention that would dilute shareholders and could affect holders of the groups’ preferred stock and subordinated debt issues.

Freddie’s tumbling share price has also hamstrung the company’s efforts to raise $5.5bn of new capital it promised to issue in May.

'America's Outrageous War Economy!'

'America's Outrageous War Economy!'

Pentagon can't find $2.3 trillion, wasting trillions on 'national defense'

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Yes, America's economy is a war economy. Not a "manufacturing" economy. Not an "agricultural" economy. Nor a "service" economy. Not even a "consumer" economy.

Seriously, I looked into your eyes, America, saw deep into your soul. So let's get honest and officially call it "America's Outrageous War Economy." Admit it: we secretly love our war economy. And that's the answer to Jim Grant's thought-provoking question last month in the Wall Street Journal -- "Why No Outrage?" There really is only one answer: Deep inside we love war. We want war. Need it. Relish it. Thrive on war. War is in our genes, deep in our DNA. War excites our economic brain. War drives our entrepreneurial spirit. War thrills the American soul. Oh just admit it, we have a love affair with war. We love "America's Outrageous War Economy."

Americans passively zone out playing video war games. We nod at 90-second news clips of Afghan war casualties and collateral damage in Georgia. We laugh at Jon Stewart's dark comedic news and Ben Stiller's new war spoof "Tropic Thunder" ... all the while silently, by default, we're cheering on our leaders as they aggressively expand "America's Outrageous War Economy," a relentless machine that needs a steady diet of war after war, feeding on itself, consuming our values, always on the edge of self-destruction.

  • Why else are Americans so eager and willing to surrender 54% of their tax dollars to a war machine, which consumes 47% of the world's total military budgets?
  • Why are there more civilian mercenaries working for no-bid private war contractors than the total number of enlisted military in Iraq (180,000 to 160,000), at an added cost to taxpayers in excess of $200 billion and climbing daily?
  • Why do we shake our collective heads "yes" when our commander-in-chief proudly tells us he is a "war president;" and his party's presidential candidate chants "bomb, bomb, bomb Iran," as if "war" is a celebrity hit song?
  • Why do our spineless Democrats let an incompetent, blundering executive branch hide hundreds of billions of war costs in sneaky "supplemental appropriations" that are more crooked than Enron's off-balance-sheet deals?
  • Why have Washington's 537 elected leaders turned the governance of the American economy over to 42,000 greedy self-interest lobbyists?
  • And why earlier this year did our "support-our-troops" "war president" resist a new GI Bill because, as he said, his military might quit and go to college rather than re-enlist in his war; now we continue paying the Pentagon's warriors huge $100,000-plus bonuses to re-up so they can keep expanding "America's Outrageous War Economy?" Why? Because we secretly love war!
We've lost our moral compass: The contrast between today's leaders and the 56 signers of the Declaration of Independence in 1776 shocks our conscience. Today war greed trumps morals. During the Revolutionary War our leaders risked their lives and fortunes; many lost both.

Today it's the opposite: Too often our leaders' main goal is not public service but a ticket to building a personal fortune in the new "America's Outrageous War Economy," often by simply becoming a high-priced lobbyist.

Ultimately, the price of our greed may be the fulfillment of Kevin Phillips' warning in "Wealth and Democracy:" "Most great nations, at the peak of their economic power, become arrogant and wage great world wars at great cost, wasting vast resources, taking on huge debt, and ultimately burning themselves out."

'National defense' a propaganda slogan selling a war economy?

But wait, you ask: Isn't our $1.4 trillion war budget essential for "national defense" and "homeland security?" Don't we have to protect ourselves?

Sorry folks, but our leaders have degraded those honored principles to advertising slogans. They're little more than flag-waving excuses used by neocon war hawks to disguise the buildup of private fortunes in "America's Outrageous War Economy."

America may be a ticking time bomb, but we are threatened more by enemies within than external terrorists, by ideological fanatics on the left and the right. Most of all, we are under attack by our elected leaders who are motivated more by pure greed than ideology. They terrorize us, brainwashing us into passively letting them steal our money to finance "America's Outrageous War Economy," the ultimate "black hole" of corruption and trickle-up economics.

You think I'm kidding? I'm maybe too harsh? Sorry but others are far more brutal. Listen to the ideologies and realities eating at America's soul.

1. Our toxic 'war within' is threatening America's soul

How powerful is the Pentagon's war machine? Trillions in dollars. But worse yet: Their mindset is now locked deep in our DNA, in our collective conscience, in America's soul. Our love of war is enshrined in the writings of neocon war hawks like Norman Podoretz, who warns the Iraq War was the launching of "World War IV: The Long Struggle Against Islamofascism," a reminder that we could be occupying Iraq for a hundred years. His WW IV also reminded us of the coming apocalyptic end-of-days "war of civilizations" predicted by religious leaders in both Christian and Islamic worlds two years ago.

In contrast, this ideology has been challenged in works like Craig Unger's "American Armageddon: How the Delusions of the Neoconservatives and the Christian Right Triggered the Descent of America -- and Still Imperil Our Future."

Unfortunately, neither threat can be dismissed as "all in our minds" nor as merely ideological rhetoric. Trillions of tax dollars are in fact being spent to keep the Pentagon war machine aggressively planning and expanding wars decades in advance, including spending billions on propaganda brainwashing naïve Americans into co-signing "America's Outrageous War Economy." Yes, they really love war, but that "love" is toxic for America's soul.

2. America's war economy financed on blank checks to greedy

Read Nobel Economist Joseph Stiglitz and Harvard professor Linda Bilmes' "$3 Trillion War." They show how our government's deceitful leaders are secretly hiding the real long-term costs of the Iraq War, which was originally sold to the American taxpayer with a $50 billion price tag and funded out of oil revenues.

But add in all the lifetime veterans' health benefits, equipment placement costs, increased homeland security and interest on new federal debt, and suddenly taxpayers got a $3 trillion war tab!

3. America's war economy has no idea where its money goes

Read Portfolio magazine's special report "The Pentagon's $1 Trillion Problem." The Pentagon's 2007 budget of $440 billion included $16 billion to operate and upgrade its financial system. Unfortunately "the defense department has spent billions to fix its antiquated financial systems [but] still has no idea where its money goes."

And it gets worse: Back "in 2000, Defense's inspector general told Congress that his auditors stopped counting after finding $2.3 trillion in unsupported entries." Yikes, our war machine has no records for $2.3 trillion! How can we trust anything they say?

4. America's war economy is totally 'unmanageable'

For decades Washington has been waving that "national defense" flag, to force the public into supporting "America's Outrageous War Economy." Read John Alic's "Trillions for Military Technology: How the Pentagon Innovates and Why It Costs So Much."

A former Congressional Office of Technology Assessment staffer, he explains why weapon systems cost the Pentagon so much, "why it takes decades to get them into production even as innovation in the civilian economy becomes ever more frenetic and why some of those weapons don't work very well despite expenditures of many billions of dollars," and how "the internal politics of the armed services make weapons acquisition almost unmanageable." Yes, the Pentagon wastes trillions planning its wars well in advance.

Comments? Tell us: What will it take to wake up America, get citizens, investors, anybody mad at "America's Outrageous War Economy?"

Why don't you rebel? Will the outrage come too late ... after this massive war bubble explodes in our faces?

79 Million Americans Struggle to Pay Medical Bills

79 Million Americans Struggle to Pay Medical Bills

Working-age Americans are facing mounting problems when it comes to affording health care, a result of what analysts are calling a "perfect storm" of economic woes.

In 2007, 41 percent of working-age Americans -- 72 million people -- reported having medical bill problems or trouble paying off medical debts, up from 34 percent in 2005.

Another 7 million adults over 65 had similar problems, bringing the total to 79 million adults struggling to pay health-care bills, according to a new study from The Commonwealth Fund, Losing Ground: How the Loss of Adequate Health Insurance Is Burdening Working Families.

"These findings provide further evidence that the health system is falling short of where it needs to be to ensure health and economic security," Karen Davis, president of The Commonwealth Fund, said at a Tuesday teleconference. "We need a new administration to make universal and affordable health insurance available," she said.

Also unsettling is the fact that adults in more income groups are being affected.

"What is notable is how this is spreading up the income scale," said Commonwealth Fund assistant vice president Sara Collins.

The survey, based on telephone interviews conducted between June 6 and Oct. 24, 2007 with 3,501 adults aged 19 and older in the continental U.S, found problems across multiple fronts:

  • In 2007, nearly two-thirds of U.S. adults under 65 (116 million people) reported having problems with medical bills or debt, having put off needed care due to cost, or being uninsured or underinsured and consequently having high out-of-pocket medical costs relative to their income.
  • Although such problems were seen across the board, they were particularly pronounced among low- and moderate-income families. More than half of adults earning less than $40,000 annually reported problems paying medical bills or being in debt as a result of health care expenses.
  • Thirty-nine percent of people with mounting bills or debts said they had depleted their savings to pay off bills; 29 percent were having problems paying for food, heat, rent and other basic necessities; and 30 percent had accumulated credit card debt.
  • Many are also foregoing medical care, including medications: 45 percent of adults reported problems getting care because of rising costs (up from 29 percent in 2001).
  • One-third of respondents reported spending 10 percent or more of their income on medical costs, including premiums, in 2007, up from 21 percent in 2001.
  • About one-quarter of working-age adults with medical debt owe $4,000 or more while 12 percent owe $8,000 or more in medical expenses.
  • Twenty-eight percent of working-age U.S. adults (about 50 million people) were uninsured for at least part of 2007, up from 24 percent in 2001.
  • Fourteen percent of working-age adults (25 million people) were underinsured, up from 9 percent in 2003.
  • Sixty-one percent of those with medical bill problems or accumulated medical debt were insured at the time care was provided. "Even adults with insurance reported problems in getting needed care," Collins noted.

Americans were experiencing the burdens outlined in the survey during a time of relative economic levity, the researchers pointed out. "Even in 2007, when the economic slow-down hadn't really taken hold, you found that 29 percent of those with medical bill problems or accrued medical debt reported being unable to pay for basic necessities like food, heat, rent," Davis said.

More information

For more on the findings, head to The Commonwealth Fund.

New Guidelines Would Give F.B.I. Broader Powers

New Guidelines Would Give F.B.I. Broader Powers

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A Justice Department plan would loosen restrictions on the Federal Bureau of Investigation to allow agents to open a national security or criminal investigation against someone without any clear basis for suspicion, Democratic lawmakers briefed on the details said Wednesday.

The plan, which could be made public next month, has already generated intense interest and speculation. Little is known about its precise language, but civil liberties advocates say they fear it could give the government even broader license to open terrorism investigations.

Congressional staff members got a glimpse of some of the details in closed briefings this month, and four Democratic senators told Attorney General Michael B. Mukasey in a letter on Wednesday that they were troubled by what they heard.

The senators said the new guidelines would allow the F.B.I. to open an investigation of an American, conduct surveillance, pry into private records and take other investigative steps “without any basis for suspicion.” The plan “might permit an innocent American to be subjected to such intrusive surveillance based in part on race, ethnicity, national origin, religion, or on protected First Amendment activities,” the letter said. It was signed by Russ Feingold of Wisconsin, Richard J. Durbin of Illinois, Edward M. Kennedy of Massachusetts and Sheldon Whitehouse of Rhode Island.

As the end of the Bush administration nears, the White House has been seeking to formalize in law and regulation some of the aggressive counterterrorism steps it has already taken in practice since the Sept. 11 attacks.

Congress overhauled the federal wiretapping law in July, for instance, and President Bush issued an executive order this month ratifying new roles for intelligence agencies. Other pending changes would also authorize greater sharing of intelligence information with the local police, a major push in the last seven years.

The Justice Department is already expecting criticism over the F.B.I. guidelines. In an effort to pre-empt critics, Mr. Mukasey gave a speech last week in Portland, Ore., describing the unfinished plan as an effort to “integrate more completely and harmonize the standards that apply to the F.B.I.’s activities.” Differing standards, he said, have caused confusion for field agents.

Mr. Mukasey emphasized that the F.B.I. would still need a “valid purpose” for an investigation, and that it could not be “simply based on somebody’s race, religion, or exercise of First Amendment rights.”

Rather than expanding government power, he said, “this document clarifies the rules by which the F.B.I. conducts its intelligence mission.”

In 2002, John Ashcroft, then the attorney general, allowed F.B.I. agents to visit public sites like mosques or monitor Web sites in the course of national security investigations. The next year, Mr. Bush issued guidelines allowing officials to use ethnicity or race in “narrow” circumstances to detect a terrorist threat.

The Democratic senators said the draft plan appeared to allow the F.B.I. to go even further in collecting information on Americans connected to “foreign intelligence” without any factual predicate. They also said there appeared to be few constraints on how the information would be shared with other agencies.

Michael German, a lawyer with the American Civil Liberties Union and a former F.B.I. agent, said the plan appeared to open the door still further to the use of data-mining profiles in tracking terrorism.

“This seems to be based on the idea that the government can take a bunch of data and create a profile that can be used to identify future bad guys,” he said. “But that has not been demonstrated to be true anywhere else.”

The Justice Department said Wednesday that in light of requests from members of Congress for more information, Mr. Mukasey would agree not to sign the new guidelines before a Sept. 17 Congressional hearing.



Devvy Kidd

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Earlier this month, Bruce E. Ivins, a skilled microbiologist who assisted the FBI in their investigation of the 2001 anthrax mail attacks, supposedly killed himself. Seems to be the thing for microbiologists over the past ten years. Allegedly the Federal Department of InJustice was ready to file criminal charges against Ivins for the attacks. Those clever crime busters at the FBI originally tapped another government scientist, Steven J. Hatfill, as the chief suspect. They hounded and harassed this man for years and finally, when they could no longer hide their complete ineptness, they settled with Dr. Hatfill to the tune of $5.82 MILLION dollars.

There was never any evidence that Dr. Hatfill possessed any anthrax, but that didn't stop the men and women of the "Fidelity, Bravery and Integrity" bureau from pursing and ruining the wrong man's life. Because there's no money in the treasury, that $5.82 MILLION dollar settlement had to be borrowed from the "FED" with the interest heaped upon the backs of we the people. No doubt those responsible for that monumental screw up in the FBI will be promoted, not fired. This time around, how convenient that just as the G-men were about to get their new man, he ups and kills himself. Dead men tell no tales nor do they sue for damages like Dr. Hatfill, costing the taxpayers millions of dollars for another sloppy investigation by the FBI.

Ivins, age 62, worked for the past 18 years at the government's "elite" biodefense research labs at Ft. Detrick, Md. He worked on anthrax vaccines to save lives. According to all reports, Ivins, was "A well-respected and award-winning scientist; Ivins co-wrote a slew of anthrax studies, including a recent work on the treatment for inhalation anthrax published in the July 7 issue of the Antimicrobial Agents and Chemotherapy journal." His colleagues have come forward and said it simply could not have been him for many reasons. Doesn't sound like a loon as depicted by therapist/social worker, Jean Duley.

One would think that scientists at all levels working at these highly sensitive facilities would be, well, in control of their faculties. However, there appears to have been a problem with Dr. Ivins, according to Ms. Duley: "Yet, Ivins had attempted to poison people as far back as 2000 and his therapist said she was "scared to death" of him, according to court testimony that emerged Saturday. Social worker Jean Duley testified at a court hearing in Frederick, Md., on July 24 in a successful bid for a protective order from Ivins that he "actually attempted to murder several other people."

It's unclear exactly the date when Ivins began seeing this "social worker." Ms. Duley states Ivins had attempted to poison people as far back as 2000. Huh? Why didn't she immediately report knowledge of a crime? If she knew all this about Ivins, why didn't she alert authorities? Surely this woman knew Ivins worked in a highly sensitive and dangerous environment and would recognize a ticking time bomb....or would Jean Duley? In his August 4, 2008, column 'Additional key facts re: the anthrax investigation,' Glen Greenwald writes:

"(2) So much of the public reporting about Ivins has been devoted to depicting him as a highly unstable psychotic who had been issuing extremely violent threats and who had a violent past. But that depiction has been based almost exclusively on the uncorroborated claims of Jean Carol Duley, a social worker (not a psychiatrist or psychologist) who, as recently as last year, was apparently still in college at Hood College in Frederick, Maryland. Duley's scrawled handwritten complaint against Ivins, seeking a Protective Order, has served as the basis for much of the reporting regarding Ivins' mental state, yet it is hardly the model of a competent or authoritative professional. Quite the opposite.

"Duley herself has a history that, at the very least, raises questions about her credibility. She has a rather lengthy involvement with the courts in Frederick, including two very recent convictions for driving under the influence -- one from 2007 and one from 2006 -- as well as a complaint filed against her for battery by her ex-husband. Here is Duley's record from the Maryland Judicial data base: (see link to view)

"Just three months ago, Duley pled guilty and was sentenced to probation (with a suspended fine of $500), as a result of having been stopped in December, while driving at 1:35 a.m., and charged with driving under the influence: (see link to view)."

This is the caliber of professionals the FBI uses to provide mental health assistance to individuals like Ivins who work in sensitive, dangerous, high-pressure environments? The bureau of Fidelity, Integrity and Bravery could do better with a Girl Friday agency.

While I find counterfeit U.S. Senator Charles Grassley to be nothing more than a business as usual bureaurat for many valid reasons, he has done the right thing here. On, August 7, 2008, he sent a very detailed letter full of questions to two corrupt high ranking public officials: The Dishonorable Attorney General, Michael B. Mukasey and the Dishonorable Robert S. Mueller, Director, Federal Bureau of Investigation; I would put Mueller in the criminal activities category. I would expect the same response forth coming to Grassley as most members of Congress get from those two: stonewalling and obfuscation.

The question is who benefits from Dr. Ivins death assuming this man was hounded to commit suicide? I would like readers to go back to a series I wrote back on January 16, 2006: ENRON - The Smokin' Cannon of 9/11? The same source of mine in California sent me mail following, Ivins, alleged suicide that raised another question:

"I postulated that the real culprit of the 9/11 and Anthrax attacks - who engineered it all - was Thomas E. (Enron) White, the former co-Chair of 'Enron, who subsequently became Army Secretary. His dominate motive, was cover his, and others, ass and assets. Was there a massive cover up? White, who was co-Chair, again, of Enron, was never indicated. Recently, we are led to believe that Bruce Ivins was behind the Anthrax attacks, who worked out of the ARMY's Fort Detrick biological center. I wondered if there besides that was any direct connection between Dr. Ivins and Tom White."

Indeed, it appears the two met: On March 14, 2003, at a Pentagon ceremony, Ivins and two of his colleagues received the 'Decoration of Exceptional Civilian Service,' which is the highest honor awarded to non military employees of DOD (Department of Defense). As Secretary of the Army at that time, Thomas E. White bestowed this honor to Dr. Ivins. Less than a month later, Donald Rumsfeld fired White.

Is all this just a bunch of malarkey? Thomas E. White and Dick Cheney have a history, see my column here: 9-11/ The New White-Washing & Buckets of Money.
Thomas E. White left Enron after 11 years, holding MEGA MILLIONS in stock and stock options. This is May 2001. He leaves this lucrative job to become Secretary of the Army making a couple hundred thousand a year. A very interesting fact is that when White moved over to DOD, his official bio was massaged; see here. The ENRON meltdown is now percolating and ready to blow; time line here. The anthrax attacks commence September 19, 2001, when the first letter is sent to American Media in Florida. White dumps his stock for $12 million bux while ENRON employees lose everything including all their retirement. "The Architect," Karl Rove, sells his ENRON stock in June 2001, estimated value between $100,000 - $250,000.

This is one incestuous cabal. White and ENRON. White and Cheney. White and Bush. Lay, Bush and White. White, as Secretary of the Army, would in his position without question have access to Ft. Detrick or any other labs and personnel. White, Cheney, DKRW and BILLIONS of dollars. White was Secretary of the Army on 9/11. Able Danger was an Army operation; the full testimony can be found here:

"My veteran ABLE DANGER colleagues and I share the common fear that the seeds of the next 9-11 attack have already been sewn – and that much of the critical data that was harvested for the ABLE DANGER project, that could be used again now in the search for sleeper cells and others that matched the "Atta" profile is now gone – destroyed at the direction of DoD officials in the 2000 time frame. You have heard from Eric Kleinsmith of his work on ABLE DANGER, and his receiving direction to "destroy the data and background documents or go to jail" – which he did. However, it must be noted that despite citing AR 380-10 as the "authority" for this action, the DoD lawyer is wrong and, worse, deceptive. There are two exceptions that allow the retention of U.S. person information – both of those were met by then MAJ Kleinsmith – yet lawyers directed that he destroy the data anyway."

In this entire sickening saga, White is the "universal epicenter and common denominator" as Cheney is to the attacks of 9/11. All of this reads like a Tom Clancy novel, but much we can prove as facts. The masterminding of the anthrax attacks is speculation. The truth is being undermined by the FBI. However, if it walks like a duck and quacks like a duck, guess what you have?

Who benefits from Ivins suicide and case closed? Very powerful people who need the problem to go away. This investigation was dragging along for years and after the Hatfill disaster, "new evidence" was cooked up in the lab to direct the G-men to Ivins. This is the same FBI whose laboratory in Washington, DC, royally screwed up the OKC bombing evidence in that cover up. According to the OIG (Office of Inspector General) report, the FBI lab boys have no idea if ANFO was used as "weapons of mass destruction in the Murrah bombing." Here is just a tiny sample of "evidence" used to send someone to death row; see my full column here.

I know there are some good people who work for the FBI. They must be so ashamed to see what has gone on since Ruby Ridge, WACO, OKC, TWA Flight 800, AA Flight 587, 9/11 and this latest farce, solving the anthrax attacks. How can you people continue working for such a corrupt agency? How can you people look in the mirror every morning knowing the American people have been lied to over and over and over? Ah, paychecks. But, will they make up for what's in your heart and conscience?

Thomas E. White has been protected by powerful people like Dick Cheney. The only way we will ever find out the truth is real investigations into the events of September 11, 2001, and the anthrax attacks. That will not happen until decent, courageous individuals are elected to Congress who care about the truth instead of the next election. This means open investigations using civilians who have uncovered the discrepancies; testimony from people like Steven Jones and so many others. It can't be an investigation by the Department of Justice because as my friend in California says, "Why would you investigate anyone with a tank sitting on your own lawn?"

One thing "elected" public servants need to remember: No one is safe and any of them or their families could have been in the wrong place at the wrong time on 9/11, same as the anthrax victims. The victims of September 11, 2001 and the anthrax attacks cry out for justice. Remember that when you vote in November.

Important Links:

1 - White House Went on Cipro Beginning September 11th
2 - ENRON, Cheney, 9/11, Live Hijackers & Dead Microbiologists
3 - ENRON, 9/11, Lay, Schwarzenegger & Oregon's Water
4 - What Congress does not know about Enron and 9/11
5 - The Thomas E. White Affair - The Documents

FBI Follies

1 - August 8: New Details Show Anthrax Suspect Away .. Day
2 - August 14: CIA had killer anthrax
3 - August 16: Doubts grow on FBI's anthrax evidence against Ivins
4 - August 18: FBI had, then tossed anthrax type used in attacks
5 - August 19: FBI admits missteps, but defends anthrax probe
6 - August 19: FBI Elaborates on Anthrax Case
7 - August 19: Parallels Between the Anthrax and 9/11 Investigations
8 - August 20: The FBI Admits It Has No Case Against Ivins
9 - August 25: The Anthrax Files by Christopher Ketcham