Friday, September 12, 2008

GOP Working to Keep Poor African-Americans From Voting in Many States

‘Jim Crawford’ Republicans

The GOP is working to keep eligible African-Americans from voting in several states.

Jonathan Alter

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It was a mainstay of Jim Crow segregation: for 100 years after the Civil War, Southern white Democrats kept eligible blacks from voting with poll taxes, literacy tests and property requirements. Starting in the 1960s, the U.S. Supreme Court declared these assaults on the heart of American democracy unconstitutional.

Now, with the help of a 2008 Supreme Court decision, Crawford vs. Marion County (Indiana) Election Board, white Republicans in some areas will keep eligible blacks from voting by requiring driver's licenses. Not only is this new-fangled discrimination constitutional, it's spreading.

GOP proponents of the move say they are merely trying to reduce voter fraud. But while occasional efforts to stuff ballot boxes through phony absentee voting still surface, the incidence of individual vote fraud—voting when you aren't eligible—is virtually non-existent, as "The Truth About Vote Fraud," a study by the Brennan Center for Justice at New York University, clearly shows. In other words, the problem Republicans claim they want to combat with increased ID requirements doesn't exist. Meanwhile, those ID hurdles facing individuals do nothing to stop the organized insiders who still try to game the system.

The motive here is political, not racial. Republicans aren't bigots like the Jim Crow segregationists. But they know that increased turnout in poor, black neighborhoods is good for Democrats. In that sense, the effort to suppress voting still amounts to the practical equivalent of racism.

In Crawford, the court upheld an Indiana law essentially requiring a passport or driver's license in order to vote. But more than two thirds of Indiana adults have no passports and nearly 15 percent have no driver's licenses. These eligible voters, disproportionately African-American, will need to take a bus or catch a ride from a friend down to the motor vehicles bureau to make sure they obtain a nondriver photo ID. Otherwise, they cannot vote in Indiana this year.

To get an idea of how many African-Americans nationwide lack driver's licenses, recall Hurricane Katrina in 2005, when thousands were stranded without transportation. "Crawford Republicans" could make the old "Jim Crow Democrats" look like pikers when it comes to voter suppression.

Consider Wisconsin, a swing state. Republicans officials there are suing to enforce a "no match, no vote" provision in state regulations, where voters must not only show a photo ID, but establish that it matches the name and number in the Department of Motor Vehicles or Social Security Administration database. (Democrats are resisting the suit.) These lists are riddled with errors in every state, as the Brennan Center has proven in its report, "Restoring the Right to Vote."

How error prone? Florida wrongly purged tens of thousands of law-abiding, mostly Democratic, voters from the rolls in 2000, claiming they were felons. (This, among other things, cost Al Gore the presidency). Even after the Help America Vote Act (HAVA) and worldwide attention, the Florida software is still flawed. It requires only an 80 percent match to the name of a convicted felon. "So if there's a murderous John Peterson, the software disenfranchises everyone named John Peters," Andrew Hacker writes in a recent New York Review of Books.

Voters caught in these snafus can have their rights restored but not if they fail to straighten things out before Election Day. Otherwise they are granted "provisional ballots" that are sometimes counted and sometimes not. Even obtaining a provisional ballot can require an appearance in front of a judge in some states. Faced with the hassle, most voters just give up.

The ability of actual felons to get their right to vote back varies by state. It's especially hard for felons to vote in Virginia; a bit easier in Pennsylvania and Michigan. (Other countries are far more generous to ex-convicts, figuring that having paid their debt to society they should be allowed to vote again.)

All of this would seem to favor John McCain over Barack Obama this year, but some voting-rights trends are pointing in the opposite direction.

In Ohio, where the governor and secretary of state changed in 2006 from Republican to Democrat, a new law allows voters to register to vote and fill out an absentee ballot at the same time between Sept. 30 and Oct. 6. This will mean a week of furious campaigning and early voting in a key state.

Advantage Obama. With 470,000 students enrolled in Ohio's public colleges and universities (and nine out of 10 are Ohio residents), expect a bumper crop of young voters.

The combination of voter suppression and early voting make turnout predictions perilous. And without knowing turnout, most polling is deeply flawed.

So about the only thing we know for sure this year is that with the Crawford decision we are seeing a return to the days when one political party saw a huge advantage in preventing as many poor people as possible from voting. That's understandable politically, but also un-American.

Rule Changes Would Give FBI Agents Extensive New Powers

Rule Changes Would Give FBI Agents Extensive New Powers

By Carrie Johnson

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The Justice Department will unveil changes to FBI ground rules today that would put much more power into the hands of line agents pursuing leads on national security, foreign intelligence and even ordinary criminal cases.

The overhaul, the most substantial revision to FBI operating instructions in years, also would ease some reporting requirements between agents, their supervisors and federal prosecutors in what authorities call a critical effort to improve information gathering and detect terrorist threats.

The changes would give the FBI's more than 12,000 agents the ability at a much earlier stage to conduct physical surveillance, solicit informants and interview friends of people they are investigating without the approval of a bureau supervisor. Such techniques are currently available only after FBI agents have opened an investigation and developed a reasonable suspicion that a crime has been committed or that a threat to national security is developing.

Authorities say the changes would eliminate confusion for agents who investigate drug, gang or national security cases.

The overhaul touches on several sensitive areas. It would allow, for example, agents to interview people in the United States about foreign intelligence cases without warrants or prior approval of their supervisors. It also would rewrite 1976 guidelines established after Nixon-era abuses that restrict the FBI's authority to intervene in times of civil disorder and to infiltrate opposition groups.

"We wanted simpler, clearer and more uniform standards and procedures for domestic operations," said a senior Justice Department official. "We view this as the next step in responding to post-9/11 requests that the FBI become better at collecting intelligence and using that intelligence to prevent attacks."

The move comes a year after the Justice Department's inspector general documented widespread lapses involving one of the bureau's most potent investigative tools, secret "national security letters" that FBI agents send to banks and phone companies to demand sensitive information in terrorism probes.

The revisions are the latest in a series of efforts to tear down a wall that, prior to the Sept. 11, 2001, attacks, prevented intelligence investigators from sharing some information with their counterparts working on criminal cases. Senior Justice Department and FBI lawyers who discussed the proposal yesterday said such powers are necessary to continue the transformation of the FBI into a proactive organization that can prevent terrorist strikes, as recommended by several independent commissions that addressed intelligence failures after the attacks.

The rule revisions require the approval of Attorney General Michael B. Mukasey, who has signaled that they will take effect Oct. 1. FBI agents already are being trained on the changes, though officials said yesterday that they would consider making adjustments after receiving suggestions from interest groups and lawmakers.

Congressional aides examined the draft guidelines behind closed doors last month and FBI and Justice lawyers will present them today to an array of civil liberties and privacy advocates, as well as Arab American groups that have expressed concerns about their impact on religious and ethnic minorities.

The groups say they fear that agents will use ethnicity or religion as the basis for a threat assessment. But top Justice Department leaders, including the attorney general, noted the illegality of racial profiling and said investigations will not be opened based "solely" or "simply" on a person's race or religion.

Previous changes to FBI operating instructions, made by Attorney General John D. Ashcroft in 2002 and 2003, did not receive a public airing before they took effect. Still, civil liberties advocates are asking whether protections built into the rules will be strong enough.

"It is an extraordinarily broad grant of power to an agency that has not proven it uses its power in an appropriate manner," said Michael German, policy counsel at the American Civil Liberties Union.

The revised rules largely eliminate the requirement that FBI agents file reports to their supervisors on early-stage investigations, in favor of audits at bureau field offices by lawyers in the Justice Department's National Security Division.

Threat assessments and early-stage investigations that cover political, religious or media figures and full-scale investigations of people in the United States, however, are special cases that must be flagged for bureau supervisors and lawyers, according to both current standards and the proposed changes.

Monitoring conversations between informants who agree to wear recording devices and subjects of investigations, which now requires the permission of an assistant U.S. attorney, could occur without a prosecutor's approval, except in sensitive cases involving state and federal officials and judges, as well as federal prisoners.

One of the areas still under discussion, according to a senior Justice Department official, is the standard for the FBI's rare involvement in responding to civil disorder. Under the current standards, FBI involvement requires the approval of the attorney general and can last for only 30 days.

The new approach would relax some of those requirements and would expand the investigative techniques that agents could use to include deploying informants. FBI agents monitoring large-scale demonstrations that they believe could turn dangerous also would have new power to use those techniques.

Policy guidance for FBI agents and informants who work as "undisclosed participants" in organizations is still being written, the officials said yesterday.

US bailout of mortgage giants sets stage for wider financial crisis

US bailout of mortgage giants sets stage for wider financial crisis

By Barry Grey
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Since the Bush administration announced on Sunday the US government takeover of mortgage finance giants Fannie Mae and Freddie Mac, in the largest corporate bailout in American history, developments have underscored the profound and systemic nature of the crisis that precipitated the action.

A week of wild gyrations on US stock markets, fueled by fears of an impending collapse of the Wall Street investment bank Lehman Brothers and the country’s largest savings and loan bank, Washington Mutual, demonstrates that the rescue of the government-sponsored mortgage companies is a stop-gap measure that does not begin to resolve the underlying crisis of American capitalism.

On the contrary, the bailout of Fannie Mae and Freddie Mac sets the stage for an intensification of the crisis in the coming months. At heart, the demise of the mortgage firms, which account for 80 percent of new home mortgages in the US and have a combined liability of $5.3 trillion in mortgage-backed securities which they own or guarantee, is a result of the collapse of the colossal credit bubble which sustained the super-profits of US banks and investment firms and the seven- and eight-figure salaries of their top executives.

It is the product of an economic system that has increasingly based itself on speculation and various forms of economic parasitism, while gutting the productive base of the country—at the cost of millions of jobs and the living standards of the American working class.

The decay of American capitalism has produced an economy that is drowning in debt and is dependent on massive inflows of capital from abroad for its survival. Now, the assumption by the government of the debt of the mortgage companies, carried out to protect the financial interests of banks and big investors, has placed a question mark over the solvency of the US government itself.

This threatens a curtailment of the inflow of international capital, a further erosion in the status of the US dollar and a drastic increase in the interest paid by the government to borrow money from its creditors. The US is already by far the world’s biggest debtor nation, with a balance of payments deficit of $800 billion and an economy that is sustained by a yearly inflow of $1 trillion in overseas capital.

The quantum leap in the national debt and government budget deficits resulting from the bailout of Fannie Mae and Freddie Mac—and the further corporate bailouts that are all but certain to follow—must inevitably lead to a realignment of social conditions within the US in accordance with the actual, deeply eroded, position of the United States in the world economy. This means an even more drastic lowering of the living standards of the American people.

On Tuesday, the Congressional Budget Office (CBO) declared that as a result of the government bailout, the finances of Fannie Mae and Freddie Mac had to be “directly incorporated into the federal budget,” and its liabilities added to the US national debt. This means, in effect, a near doubling of the US sovereign debt to a figure equivalent to the country’s gross domestic product (GDP).

The Financial Times reported Wednesday that the bailout had already resulted in a sharp rise in the price of credit default swaps on five-year US government debt. Credit default swaps are private contracts to buy insurance against the default of various forms of debt.

As the Financial Times wrote, “... the price suggests the market believes the US government is more likely to default on its obligations than some other industrialised countries.” It went on to cite a credit research strategist as saying, “The USA is now ‘riskier’ than Norway, Germany, Netherlands, Sweden, Finland, Austria, France, Denmark, Quebec and Japan.”

The CBO statement on Fannie Mae and Freddie Mac accompanied its report on the US government budget deficit for the current fiscal year, which ends September 31, and its projections for fiscal 2009 and beyond. The CBO put the current deficit at $407 billion, more than double the $161 billion deficit for fiscal 2007.

It projected, on the basis of current tax laws, that the budget gap would rise to a record $438 billion in the 2009 fiscal year that begins October 1. However, as CBO Director Peter Orszag noted, that figure could easily climb to $540 billion if Congress acts in the coming months, as expected, to curtail the growth in the alternative minimum tax and extend a variety of expiring business tax breaks.

Orszag further noted that these figures did not take into account the full scale of government expenditures related to the bailout of Fannie Mae and Freddie Mac. Treasury Secretary Henry Paulson said on Sunday the government would commit up to $200 billion to prop up the companies. Given the continuing decline in home prices and rise in foreclosures, that figure is virtually certain to rise by tens, if not hundreds, of billions.

Orszag said that the deficit would remain at between 3 and 4 percent of the GDP for the next decade, resulting in a $7 trillion rise in the national debt. Even these dire projections assume that Bush’s massive tax cuts for the rich will not be extended beyond their scheduled expiration in 2010.

Significantly, Orszag pointed to government health care spending—not the cost of corporate bailouts or the wars in Iraq and Afghanistan (which have to date consumed a combined sum of $850 billion)—as the main source of exploding deficits going forward. The CBO warned that Medicare and Medicaid spending, which currently account for an estimated 4.6 percent of GDP, could account for up to 12 percent of GDP by 2050.

The mounting financial crisis of American capitalism was further underscored by the Commerce Department’s report Thursday on the US trade deficit, which surged in July by 5.2 percent to $62.2 billion, the highest level in 16 months.

The headlong rush of Lehman Brothers and Washington Mutual toward collapse—or new federal bailouts—within days of the government takeover of Fannie Mae and Freddie Mac has underscored the depth of the financial crisis.

The stock of the 158-year-old Wall Street investment bank collapsed this week after it was reported that Lehman’s efforts to secure a capital infusion from the state-owned Korea Development Bank had collapsed. At the close of the financial markets on Thursday, the value of Lehman’s stock—down by more than 90 percent since its peak last February—was about $2.9 billion. It stood at $37.2 billion at the start of 2008.

Once the biggest underwriter of mortgage-backed securities, the firm has seen its speculative investments collapse and would have already gone bankrupt were it not for the Federal Reserve’s decision, taken at the time of the government-subsidized sale of Bear Stearns to JP Morgan Chase last March, to extend low-cost loans to investment banks and accept virtually worthless mortgage-related securities in return for highly rated Treasury securities.

It was reported Thursday that the firm was in talks with potential buyers, including Bank of America, for a buyout that would avoid bankruptcy or a government bailout—at the cost of billions in losses to shareholders and the jobs of thousands of Lehman employees. On Wednesday, when it announced a third quarter loss of $3.9 billion and a plan to spin off much of its business and shrink its operations, the company said it was slashing 1,000 to 1,500 jobs, its fourth round of layoffs this year.

Over the past year, US banks and brokerages have cut more than 110,000 jobs.

The collapse of both Lehman and the two government-sponsored mortgage giants starkly illustrates the immense dependence of American capitalism on overseas capital. Lehman went to ground after its bid for funds from a South Korean bank failed, and the government bailout of Fannie Mae and Freddie Mac was precipitated by the dumping of the firms’ securities by central banks and major investors in Asia and Russia.

The stock of the giant savings and loan bank Washington Mutual, which has some $180 billion in mortgage-related loans, has fallen by 34 percent since Monday and 92 percent over the past year. This week it reported a $3.33 billion second quarter net loss and has said its mortgage losses could reach $19 billion through 2011.

Raising the possibility of another government bailout, Christopher Whalen, a managing partner at Institutional Risk Analytics, said of Washington Mutual, “If this goes on until the end of the year, the bank is either going to have to be sold or recapitalized by the government. Those are the only choices.”

The Financial Times on Wednesday worried that the massive US budget deficits were limiting the ability of the government to continue propping up Wall Street with injections of hundreds of billions in capital. It wrote:

“Yesterday’s new deficit projections by the Congressional Budget Office highlight the troubled state of US government finances as it embarks on a new stage of interventions to contain the chronic impact of the credit crisis....

“Some economists worry that as the Federal Reserve has spent much of its ammunition, and as fighting the credit crisis falls more to the government, weak public finances mean the government does not have unlimited ammunition either.”

Noting that the Federal Reserve was seeking to conserve its capital for further corporate bailouts, the newspaper wrote, “Many Fed officials share this view, which is why the Fed is lukewarm on further fiscal stimulus, preferring to see the limited government funds spent on shoring up the financial system.”

The response to mushrooming budget deficits and soaring national indebtedness, as well as the spreading crisis on Wall Street, by the next administration, whether headed by Republican John McCain or Democrat Barack Obama, will be a policy of brutal austerity directed against the working class.

One can safely predict that not long after the November election, the incoming president will announce that his transition advisers have shown him the country’s financial books, that the dire state of the nation’s economy makes inoperative any and all promises of health care reform or relief to distressed homeowners, and that a regime of discipline and “sacrifice” will have to be imposed in the “national interest.”

Senator Kent Conrad, the Democratic chairman of the Senate Budget Committee, sounded just such a note when he said, in response to the CBO report, that “the next president will be inheriting a budget and economic outlook that is far worse than most people realize.”

As the CBO report indicates, the next administration will be tasked with dismantling basic entitlement programs such as Medicare and Medicaid.

WaMu May Be Forced to Sell Deposits to Stay Afloat

WaMu May Be Forced to Sell Deposits to Stay Afloat

By Elizabeth Hester and Linda Shen

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Washington Mutual Inc., facing up to $19 billion in bad home loans and slammed by a 34 percent drop in its stock this week, may sell parts of a nationwide 2,300- branch network to raise capital.

‘‘The only real asset they have that's worth anything to other banks is the deposit base, because of their branches,'' said L. William Seidman, chairman of the Federal Deposit Insurance Corp. from 1985 to 1991. Seattle-based WaMu can probably sell branches in New York and Chicago, said Bert Ely, president of Ely & Co. Inc., a bank consulting firm based in Alexandria, Virginia.

Alan Fishman, WaMu's new chief executive officer, may have to shed branches that hold $143 billion in deposits. The biggest U.S. savings and loan is headed for its fourth straight quarterly loss. Suitors have walked away because of potential damage to their earnings and WaMu's chief regulator, the Office of Thrift Supervision, has told it to boost risk management and compliance.

On top of those challenges, Fitch Ratings yesterday cut its rating on WaMu debt to BBB- from BBB, citing a lack of ‘‘flexibility'' to add capital. Moody's Investors Service cut its long-term deposit and issuer ratings to Baa3 from Baa2 because of WaMu's ‘‘reduced financial flexibility, deteriorating asset quality and expected franchise erosion.'' Moody's reduced the senior unsecured rating to below investment grade at Ba2.


WaMu lured Fishman, 62, with a $7.5 million cash bonus and $1 million salary after his ousted predecessor, Kerry Killinger, failed to halt losses on home loans that already total $6.3 billion. The lender has estimated the sum could climb as high as $19 billion in the next 2-1/2 years, raising concern WaMu may need to raise cash for a second time this year. The company says more capital isn't necessary.

Without most of its branches and deposits, WaMu would be limited to businesses that include credit cards and mortgages -- neither a guaranteed moneymaker in the current economic climate. WaMu's credit-card division had net revenue of $956 million in the quarter ended June 30, down from $1.2 billion in the previous quarter. Commercial and home-loan units had a combined $351 million in revenue for the period, compared with $757 million.

‘‘Who's going to take the assets? It's probably more valuable together than separated,'' said Gary Townsend, CEO at Hill-Townsend Capital in Chevy Chase, Maryland. ‘‘It's like going to the supermarket, and anyway, the whole chicken is probably more valuable than the pieces.''

JPMorgan Reportedly Interested

JPMorgan Chase & Co. executives have been studying WaMu as they contemplate making another bid, the New York Times reported today, citing people briefed on the matter. JPMorgan, whose first approach was rebuffed in March, won't make an offer unless the government asks for one, the Times said, citing the unidentified people. JPMorgan spokesman Thomas Kelly declined to comment on the report.

If WaMu sold branches in the New York area, the company would likely receive a deposit premium of about $575 million, CreditSights Inc. analyst David Hendler wrote in a report this week. The biggest parts of the non-West Coast network could bring a premium of as much as $1.9 billion, he wrote.

WaMu said late yesterday it would set aside $4.5 billion to cover bad loans in the third quarter, less than the preceding three month period, and that it ‘‘continues to be confident that it has sufficient liquidity and capital to support its operations while it returns to profitability.''


Other capital-raising options are limited because the market for preferred securities dried up since a government takeover of Fannie Mae and Freddie Mac. The thrift raised $7 billion in April from TPG Inc., the Fort Worth, Texas-based private-equity firm run by David Bonderman.

The TPG deal itself may thwart investors. If WaMu is sold for less than $8.75 a share or is forced to raise more than $500 million in equity within 18 months, it must compensate TPG for the difference, according to filings with the U.S. Securities and Exchange Commission. The stock rose 23 cents to $3.06 at 10:07 a.m. in New York Stock Exchange composite trading.

‘‘TPG is probably at a loss-mitigation stage at this point,'' Ely said. ‘‘Given how much they have invested, it probably makes sense to double down and then figure out how to get out of this investment.''


A call to Washington Mutual spokesman Brad Russell wasn't returned. TPG spokesman Owen Blicksilver declined to comment.

After three days of silence as the stock slid, WaMu yesterday said in a statement that it is ‘‘well capitalized,'' with approximately $50 billion of liquidity from what it termed reliable funding sources. Net charge-offs may increase by less than 20 percent in the third quarter, compared with 60 percent in the previous period.

The company ‘‘continues to be confident that it has sufficient liquidity and capital to support its operations while it returns to profitability,'' according to the statement.

WaMu said it expects a loan-loss provision of $4.5 billion in the third quarter, down from $5.9 billion in the second quarter, mostly from residential mortgages. The total loan-loss reserve is expected to rise to $10.3 billion at the end of the quarter from $8.5 billion in the previous period.

Goldman Sachs Group Inc. analyst Brian Foran upgraded the stock to ‘‘neutral'' from ‘‘sell'' today saying the decrease in the reserves is ‘‘a glimmer of a silver lining.''

OTS ‘Fully Aware'

The OTS could place the bank under its control and sell off assets, but it has little incentive to do so because WaMu is the regulator's biggest customer, Ely said.

The OTS is ‘‘fully aware of the situation, and we're monitoring it,'' spokesman Bill Ruberry said yesterday. Andrew Gray, a spokesman for the Federal Deposit Insurance Corp., declined to comment.

WaMu's sliding stock price doesn't imply that the bank itself is suffering, said Robert Hartheimer, a former director at a division of the FDIC that resolves failing banks.

‘‘The focus on the stock price should not necessarily cause people to talk about the failure of WaMu,'' Hartheimer said yesterday. ‘‘There are plenty of financial-services stocks that are under pressure. I don't believe there necessarily should be a connection between a low stock price and speculation of a failure.''

Retail Sales Unexpectedly Drop; Prices Decline

Retail Sales Unexpectedly Drop; Prices Decline

By Timothy R. Homan and Shobhana Chandra

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Sales at U.S. retailers unexpectedly dropped in August and prices at the wholesale level fell for the first time this year as Americans cut spending in the face of job losses and record foreclosures.

The 0.3 percent decline in purchases followed a 0.5 percent drop in July, the Commerce Department said today in Washington. Excluding automobiles, purchases were down 0.7 percent, the most this year.

The figures signal faltering consumer spending will keep inflation in check, buttressing speculation that the Federal Reserve may have to resume lowering interest rates as soon as the end of this year. Futures trading indicates about a 40 percent chance that the Fed will ease credit by December. Stocks fell and Treasuries were little changed.

''Consumer weakness is the single-biggest risk to a recession right now,'' said Guy Lebas, chief economist at Janney Montgomery Scott LLC in Philadelphia, who forecast sales would drop 0.4 percent. ''We can't depend on the consumer for any discernable growth. We don't see any catalyst for higher spending.''

Prices paid to producers decreased 0.9 percent, more than forecast, as energy costs fell by the most in almost two years. Petroleum, home heating oil, natural gas and gasoline prices all retreated. So-called core producer prices, which strip out fuel and food costs, rose 0.2 percent, in line with forecasts.

Consumer Sentiment

The lower fuel prices were reflected in a measure of consumer sentiment, which showed a bigger-than-expected gain in September. The Reuters/University of Michigan index increased to 73.1 this month from August's reading of 63. The measure averaged 85.6 in 2007.

Economists in a Bloomberg News survey taken from Sept. 2 to Sept. 9 forecast consumer spending will stall this quarter.

Benchmark 10-year notes yielded 3.70 percent at 11:17 a.m. in New York, up from 3.64 percent late yesterday. The Standard & Poor's 500 Index declined 0.2 percent to 1252.01.

Retail sales were projected to rise 0.2 percent after an originally reported 0.1 percent drop the prior month, according to the median estimate in a Bloomberg News survey of 80 economists. Forecasts ranged from a drop of 0.5 percent to a gain of 1.1 percent.

Non-auto sales were forecast to drop 0.2 percent from the prior month, according to the median of 76 forecasts. Estimates ranged from a 0.6 percent gain to a drop of 0.6 percent.

Gasoline Sales

Electronics, building material, clothing and department stores all saw a drop in sales last month. Service station receipts also fell as gasoline prices retreated.

Excluding gasoline, purchases were unchanged last month after a 0.6 percent decline in July.

Automakers boosted incentives in August to revive demand as the economy lost jobs for an eighth straight month and the unemployment rate reached a five-year high of 6.1 percent. Sales at car dealers and parts stores increased 1.9 percent, the first gain since January and the biggest in a year.

General Motors Corp. offered all customers the same prices paid by employees, helping boost sales in the second half of the month. GM this month said it will extend the incentive through September and has offered 72-month, no-interest financing on some vehicles since late June.

''Not only is the U.S. in a recession, but the rest of the world is slowing down,'' Ford Motor Co.'s Chief Executive Officer Alan Mulally said in a speech this week. ''I've never seen anything quite like it.''

Prices Retreat

Filling station sales decreased 2.5 percent in August after a 0.2 percent gain the prior month, today's report showed. The average pump price of a gallon of regular gasoline dropped to $3.76 last month from $4.06 in July, according to AAA.

The 1.5 percent decrease in purchases at department stores was the biggest since April 2007. Sales at non-store retailers, reflecting demand from Internet merchants and catalogs, declined 2.3 percent, the most since March 2007.

Excluding autos, gasoline and building materials, the retail group the government uses to calculate gross domestic product figures for consumer spending, sales fell 0.2 percent, the most this year. The government uses data from other sources to calculate the contribution from the three categories excluded.

Industry figures earlier this month showed demand weakened at retailers such as Gap Inc., Target Corp. and Abercrombie & Fitch Co., signaling merchants may be heading for the worst back-to-school season in seven years.

Sales at stores open at least a year climbed 1.7 percent in August, the smallest gain in five months, the International Council of Shopping Centers said last week. Purchases from July through September, retailing's second-biggest season after Christmas, may climb 1 percent, according to the ICSC. That would be the smallest gain since 2001.

Rebate Boost Fades

''The rebates have come and gone and even though oil prices have fallen, we are seeing a drop in retail sales,'' Stuart Hoffman, chief U.S. economist at PNC Financial Services Group in Pittsburgh, said in an interview with Bloomberg Television. ''This does not bode well for the holiday season. I do not expect a second-half recovery.''

Consumer spending will stall from July to September, three months earlier than predicted last month, according to the median estimate of economists polled by Bloomberg this month. The slump will slow growth to less than half the prior quarter's 3.3 percent annual pace.

Humanitarian crisis worsens in Haiti

Humanitarian crisis worsens in Haiti

By Naomi Spencer
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The death toll in Haiti continues to rise following a series of devastating hurricanes in the Caribbean. Official government figures have placed the number dead between 600 and 1,000, with more than 800,000 people—half of them children—in need of emergency aid throughout the country. Some 60,000 people in the hard-hit port city of Gonaives remain in temporary shelters.

Haiti has been struck by four powerful storms in the span of three weeks. On Sunday, Hurricane Ike, then a Category 4 storm, dumped a foot of rain on Hispaniola. Much of Haiti remained flooded from Tropical Storm Fay, Hurricane Gustav, and Hurricane Hanna, which made landfall September 1.

The country faces a crisis of staggering proportions. A huge segment of the population—800,000 people in a country of 8.7 million—is now in desperate need of basic humanitarian assistance, according to international aid agency UNICEF. If this proportion were extrapolated to the United States, with a population of some 300 million, the number of people in need of aid would be greater than the combined populations of the Los Angeles and New York City metropolitan areas, or the entire combined state populations of Michigan, Illinois and Indiana.

Before the peak of the Atlantic hurricane season, many Haitians were already facing the threat of starvation because of spiraling food inflation in the past year. Because the vast majority of the population lives on less than $2 a day, and the devastation of crops has pushed food prices sharply higher, an even greater humanitarian catastrophe now looms.

Other countries in the Caribbean, including Cuba, the Bahamas, and Jamaica, have also sustained widespread damage to housing and infrastructure. However, Haiti has suffered losses on a level several magnitudes higher than its regional neighbors. The disparity is a reflection of the social anarchy to which the population has been subjected over a number of decades at the hands of US imperialism.

The US has invaded Haiti twice in the last decade, and has for many years pursued a campaign of destabilization against the country. The US, along with the World Bank and International Monetary Fund, succeeded in keeping Haiti economically crippled over the past three decades via trade restrictions and other predatory policies.

In 2004, the US, France, Canada and the UN backed the overthrow of the country’s first democratically elected president and installed a right-wing junta. Immense popular opposition was brutally put down by both foreign troops, including US Marines, and privately funded paramilitary death squads.

Much of the destruction in the country is concentrated in Gonaives, which was inundated with mudslides and flooding last week. The city is situated on the coast of the Artibonite valley, Haiti’s low-lying and wet agricultural region where much of the rice upon which the country depends is grown and where thousands of families subsistence farm.

Because of its location in the floodplain of mountain rivers, Gonaives is particularly vulnerable to repeated floods. Surrounding hillsides—long ago deforested by former colonial occupiers—have remained largely naked by the desperately poor to make charcoal, which is commonly used in cooking in the absence of fuels and electricity.

Haitian Environment Minister Jean-Marie Claude Germain told Agence France-Presse that the country’s plant cover was currently estimated at less than 2 percent. “In neighboring Dominican Republic, plant cover is estimated at 30 percent and the army looks after the environment sector, contrary to Haiti where there’s no environment policy,” Germain told the news agency.

Without groundcover, the hillsides are prone to massive mudslides and flash floods during hurricane season. As a result, valleys are inundated with mudflows. Haiti’s slums and shantytowns—comprised mainly of perennially damaged buildings, shacks built of scrap metal and plywood, and very little in the way of physical infrastructure—are overwhelmed. When Tropical Storm Jeanne struck Haiti in 2003, more than 3,000 people were killed by flooding, the majority in Gonaives.

The flooding triggered by Hurricane Hanna collapsed crumbling bridges and roads leading into the city last week. Gonaives residents, who had received little government forewarning and no assistance in evacuating, were trapped on rooftops or forced to flee into the mountains. At this writing, some 250,000 people remain stranded in the city and tens of thousands in surrounding towns are similarly cut off from aid shipments.

According to the aid agency Doctors Without Borders, floodwaters in the region have receded enough for survivors to begin making their way to emergency clinics. Hundreds have arrived to be treated for starvation or jungle rot from walking for days in fetid water.

In contrast, it is worth noting that the Cuban government undertook a massive preventive evacuation of 2.6 million people in anticipation of Hurricane Ike—nearly a quarter of the country’s population. The state housed some 400,000 evacuees in more than 2,300 government shelters. Although the country was hit directly, only five deaths were attributed to the storm.

Indeed, according to an Associated Press report September 10, fewer than two dozen Cubans have been killed by hurricanes in the past decade. The petty-bourgeois nationalist character of the Castro regime notwithstanding, these figures are attributable to Cuba’s central planning of essential safety measures and state control of emergency supply lines and materials.

Bring high-level American war criminals to Justice

Bring high-level American war criminals to Justice.

Conference To Shape Plans For Obtaining Prosecutions Streaming Video Sept. 13-14

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A conference on plans to bring high-level American war criminals to justice will be streamed live from Andover, Mass., September 13-14.

The conference has attracted eminent national and international legal authorities who will speak about the legal grounds for seeking prosecution of top administration officials, including George Bush, who appear to be guilty of war crimes.

The URL address to view the conference live or to view it afterwards from the archives is:

“All viewers need to do to follow the proceedings is to visit the Web address and they can watch everything,” said the conference’s convener, Lawrence Velvel, a prominent legal educator.

Viewing hours will be from 9 a.m. to 5:15 p.m. Eastern Standard Time(EST) on Saturday, September 13, and from 9 a.m. to 2:30 p.m. (EST) on Sunday, September 14.

In the tradition of Justice Robert H. Jackson, America’s Chief Prosecutor at the Nuremburg War Crimes Trials after World War II, the Conference’s purpose is “to promote efforts to hold culpable officials accountable in courts of law,” said Velvel.

“Otherwise, the future could be threatened by additional examples of Executive lawlessness by leaders who need fear no personal consequences” for their actions, leading to “the possibility of more Viet Nams, and more Iraqs,” he added.

Attendees will hear from prominent authorities on international law, criminal prosecutions, and constitutional law who are determined to give meaning to Justice Jackson’s words: “The common sense of mankind demands that law shall not stop with the punishment of petty crimes by little people. It must also reach men who possess themselves of great power and make deliberate and concerted use of it to set in motion evils which leave no home in the world untouched.”

Topics to be discussed, include:

# What international and domestic crimes were committed, which facts show crimes under which laws, and what punishments are possible.

# Which high level Executive officials -- and Federal judges and legislators as well, if any -- are chargeable with crimes.

# Which international tribunals, foreign tribunals and domestic tribunals (if any) can be used and how to begin cases and/or obtain prosecutions before them.

# The possibility of establishing a Chief Prosecutor’s Office such as the one at Nuremburg.

# An examination of cases already brought and their outcomes.

# Creating an umbrella Coordinating Committee with representatives from the increasing number of organizations involved in war crimes cases.

# Creating a Center to keep track of and organize compilations of relevant briefs, articles, books, opinions, and facts, etc., on war crimes and prosecutions of war criminals.

Those scheduled to address the Conference include, among others:

# Famed former Los Angeles prosecutor Vincent Bugliosi, author of the best-selling “The Prosecution of George W. Bush For Murder”(Vanguard).

# Phillippe Sands, Professor of Law and Director of the Centre of International Courts and Tribunals at University College , London . He is the author of “Torture Team: Rumsfeld’s Memo and the Betrayal of American Values” (Penguin/Palgrave Macmillan), among other works.

# Jordan Paust, Professor of Law at the University of Houston and author of “Beyond The Law.”

# Ann Wright, a former U.S. Army colonel and U.S. Foreign Service official who holds a State Department Award for Heroism and who taught the Geneva Conventions and the Law of Land Warfare at the Special Warfare Center at Ft. Bragg, N.C. She is the coauthor of “Dissent: Voices of Conscience.”

# Peter Weiss, Vice President of the Center For Constitutional Rights, which was recently involved with war crimes complaints filed in Germany and France against former Defense Secretary Donald Rumsfeld and others.

# Benjamin Davis, Associate Professor at the University of Toledo College of Law and former American Legal Counsel for the Secretariat of the International Court of Arbitration.

# David Lindorff, journalist and co-author with Barbara Olshansky of “The Case for Impeachment: Legal Arguments for Removing President George W. Bush from Office”( St. Martin ’s Press).

# Colleen Costello of Human Rights USA .

# Christopher Pyle, a professor at Mt. Holyoke and author of several book on international matters.

# Lawrence Velvel, a leader in the field of law school education reform, who has written numerous internet articles on issues relevant to the conference.

Legal authorities, media representatives, and the general public are invited to attend the conference. Attendees will receive a special hotel rate of $99 per night.

Andover is nearly equidistant from both Boston ’s Logan Airport , served by all major airlines, and the Manchester, N.H., Airport, served by Southwest Airlines and USAir. (Further Information on the conference and conference site: Jeff Demers,

SHERWOOD ROSS ASSOCIATES, Suite 403 , 102 S.W. 6th Ave. , Miami , FL 33130 (305)-205-8281

The Party Police

The Party Police

Quagmire, Phase 2: The Invasion of Pakistan

Quagmire, Phase 2: The Invasion of Pakistan

Stop Exploiting 9/11

Stop Exploiting 9/11

Iowa files child labor charges against meat plant

Iowa files child labor charges against meat plant


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The owner and managers of the nation's largest kosher meatpacking plant were charged Tuesday with more than 9,000 misdemeanors alleging they hired minors and had children younger than 16 handle dangerous equipment such as circular saws and meat grinders.

Two employees were also charged in federal court. The state and federal charges are the first against operators of the Agriprocessors plant in Postville, where nearly 400 illegal immigrant workers were arrested in May in one of the largest immigration raids in U.S. history.

The complaint filed by the Iowa attorney general's office said the violations involved 32 illegal-immigrant children under age 18, including seven who were younger than 16. Aside from handling dangerous equipment, the complaint says children were exposed to dangerous chemicals such as chlorine solutions and dry ice.

The attorney general's office said the violations occurred from Sept. 9, 2007, to May 12, 2008, when the plant was raided by immigration agents.

Charged are the company itself, Agriprocessors Inc.; plant owner Abraham Aaron Rubashkin; former plant manager Sholom Rubashkin; human resources manager Elizabeth Billmeyer; and Laura Althouse and Karina Freund, managers in the company's human resources division.

Each defendant faces 9,311 counts — one for each day a particular violation is alleged for each worker.

"All of the named individual defendants possessed shared knowledge that Agriprocessors employed undocumented aliens. It was likewise shared knowledge among the defendants that many of those workers were minors," the affidavit said.

Althouse and Freund also face federal immigration charges related to the raid and appeared in Tuesday in U.S. District Court in Cedar Rapids. Freund was charged with aiding and abetting harboring undocumented aliens, while Althouse was charged with conspiracy to harbor undocumented aliens and other counts.

The state charges are simple misdemeanors, each carrying a penalty of up to 30 days in jail and a $625 fine.

At a news conference Tuesday, Iowa Attorney General Tom Miller said the case is the largest of its type he'd handled in his 26 years as attorney general.

Chaim Abrams, a manager at the plant, said in a statement that Agriprocessors "vehemently denies" the allegations and "acted in good faith on the child labor issue."

"All of the minors at issue lied about their age in order to gain employment at the company," he said. They presented documents stating that they were over 18, he said, and "they knew that, if they told the truth about their age, they would not be hired."

But the attorney general's office said the company encouraged job applicants to submit forged identification documents that contained false information about their resident status, age and identity.

Sonia Parras Konrad, an attorney representing more than 20 of the children, said her clients were as young as 14 when they started working at the plant.

"We don't need to see any papers to see that someone is a child," she said. "This was not one mistake, two mistakes, three mistakes, but many, many mistakes."

Among the child labor violations were employing a child under age 18 in a meatpacking plant and employing a child under age 16 who operated power machinery or worked longer hours than permitted for someone that young.

In addition, the attorney general's office said, the company's records also show that employees were not paid for all overtime worked.

Postville resident Dave Hartley, 50, said it was troubling that the allegations would put the town back in the spotlight.

"You want things to get back to normal," Hartley said. "I wouldn't say it's turmoil in town, per se, but people are just wondering what's going to happen."

Food Safety's Dirty Little Secret

Food Safety's Dirty Little Secret

Increasingly, the government is leaving the job in private hands

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From the first reports of a salmonella outbreak this spring, it took a full 89 days before jalapeƱo and serrano peppers correctly came under suspicion as the culprit. During that period, as more than 1,440 victims trickled in to hospitals, federal officials struggled to trace the source of the outbreak, erroneously singling out tomatoes for weeks before homing in on peppers. No sooner had that outbreak tapered off than the high-end Whole Foods Market was forced to launch a massive recall of E. coli-infested ground beef.

The incidents prompted renewed calls for reform and stricter oversight of food safety. Some lawmakers are even suggesting stripping the Food and Drug Administration and the U.S. Department of Agriculture of their inspection duties and giving them to a new agency. Yet the FDA in particular has long been starved of funding and understaffed. Its workload, meanwhile, is rapidly expanding as the global food chain grows larger, more complicated, and less transparent, all of which adds to the agency's already overcrowded plate.

Congress is under pressure to take up major food-safety legislation this fall that would offer sweeping proposals for regulatory change. The country's appetite for reform, however, is likely to collide with an uncomfortable reality: The responsibility for food safety, as it works today, lies heavily in private hands. Even as bacterial outbreaks have become more high-profile and the financial fallout from recalls more severe, the government has been handing off many food-safety responsibilities to industry. Food safety today is a business—and a booming one at that.

For most Americans, however, the FDA is still the public face of food safety. It was created in 1906 amid the fervid response to Upton Sinclair's The Jungle, which exposed unsanitary conditions in meatpacking factories. Today, the duties are split. The USDA handles meat, and the FDA takes care of pretty much everything else. But in reality, oversight of farms and food plants has gradually changed hands. A pivotal moment came in the mid-1990s, after 21 people in Connecticut and Illinois were hospitalized during a huge lettuce-related outbreak of E. coli that was ultimately tied back to a grower in California. In response to this and other incidents, federal officials worked with academics and industry to come up with a set of voluntary guidelines to avoid future outbreaks.

Inspections. The move spawned a whole new cottage industry of third-party companies calling themselves "food-safety consultants." Practically every major food manufacturer today—from Kraft to Costco—hires experts to check out the ingredients that are entering its facilities.

In some ways, this represents a huge step forward. Even with an engorged budget, the FDA couldn't begin to get inspectors into all the factories, processing plants, distribution centers, warehouses, and packing plants in the country to check them for problems. Right now, the agency focuses on juices and seafood, because those two products have a higher risk of going bad. Indeed, it would cost the FDA more than $3.5 billion to inspect every one of the roughly 250,000 domestic and foreign food facilities just once, a recent Government Accountability Office report found. Industry insiders say the FDA is lucky if it gets to the same facility once every three years.

But the new model has also created some alarming potential gaps. For one thing, there's no certification system for these third-party inspectors. Critics worry that retailers hire these companies not only to ensure food quality but also as a defense mechanism to help protect their public image in case something goes wrong. "These audits are like icing on the cake of litigation," says Bill Marler, the attorney who represented more than 100 victims in the 1993 E. coli outbreak case linked to the Jack in the Box fast-food chain. "Every major manufacturer does them, and every manufacturer pays no attention to them."

There are other potential troubles, too. Tomato and spinach growers are audited heavily because they've had so many problems in the past, but other crops, such as broccoli and cauliflower, are scrutinized less. "Retailers aren't demanding it," says Trevor Suslow, a food-safety expert at the University of California-Davis. Many growers, he adds, "are living in a continuing state of denial about whether they should be doing anything." And there's also the concern that these efforts could, perversely, be making food less safe. In some cases, experts say, a grower will have to pay for audits from six or seven companies just to satisfy the demands of all of its different buyers. The overlapping attention might help eliminate problems, but it's also costly. For slaughter facilities squeezed by rising costs, cutting out E. coli tests has been one of their money-saving tactics, as recent raids have revealed.

The price tag is important. With new technology, companies can do all sorts of wild—if at times unsettling—things to keep food free of bacteria. For one thing, they can zap it with radiation. The government approved irradiated meat in 1997, and regulators last month gave the nod to leafy vegetables like lettuce and spinach. But irradiation is still controversial. Advocacy groups say it ruins taste and destroys nutrients, and consumer fears about irradiation have limited its adoption. More broadly, companies with effective new products—be they oxidizing sprays, viral cocktails, or microbe detectors—often struggle to find buyers, because of either costs or public concerns.

Biotech companies, for example, are working on another promising technology that food companies prefer not to talk about—bacteriophages, which are naturally occurring viruses that kill certain bacteria, including E. coli and Listeria. One company, Intralytix, received FDA approval in 2006 to sell its "phage cocktail" as an additive to ready-to-eat meats like hot dogs and deli turkey, which are more prone to factory contamination. It's now used by at least one commercially available smoked salmon brand. But don't look for it on many labels. Intralytix CEO John Vazzana says that food companies are interested, but they get cold feet about having to put a disclaimer on their hot-dog or deli-meat packaging that would alert consumers about the little guys inside. (Some are bypassing the rules by removing the viruses before packaging.)

Little enforcement. Whether it's new technology or inspectors-for-hire, private-sector remedies can go only so far. Voluntary inspection guidelines clearly have their shortcomings. They didn't prevent the 2006 outbreak of E. coli involving spinach that claimed five lives and caused more than $350 million of damage. To win back consumers, the Western Growers Association, which represents California and Arizona produce farmers, spent much of 2007 working with the federal government to overhaul its guidelines. Under the new agreement, state agriculture officials are being trained to do inspections, and more scientific sanitation standards have been adopted. Observers say these moves could help, but enforcement and penalties are limited. Though many growers choose to participate, they are not required to by law.

If Congress takes up food safety this fall, it will most likely focus on efforts to improve the response time to outbreaks, perhaps by adopting a national trace-back program to locate contaminated food more quickly. It also might push the Centers for Disease Control and Prevention, the agency responsible for tracking down the source of an outbreak, to do a better job of sharing information with the FDA.

But these reforms are just one side of the coin. The other half, the prevention part, will depend on bringing order to the sprawling mosaic that is the global food chain. Today, about 80 percent of the nation's seafood and slightly less than half its fresh fruits are imported from overseas. But the FDA inspects only about 1 percent. Private auditors must be part of the answer, says Christine Humphrey, a former FDA field investigator. The challenge is to make sure they're qualified. She points to medical devices as a possible guide. In the late 1990s, regulators couldn't work fast enough to approve new devices. To eliminate the waiting list without lowering standards, the FDA began certifying third-party companies. "The results have been phenomenal," she says.

Likewise, having more bodies watching over food production could be a good thing, as long as they're qualified. The only entity with the independence and credibility to make that call, most experts say, is the federal government.