Saturday, September 13, 2008

Backward Bailout

Backward Bailout

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George W. Bush may be a disappearing lame duck, but he is not through doing damage to the Republic. His half-baked rescue of Fannie Mae and Freddie Mac leaves another stink bomb on the Oval Office desk for the next President. Bush left the heavy lifting to Treasury Secretary Henry Paulson, a Wall Street guy who naturally fashioned a Wall Street-friendly deal: get the public's money but don't make any promises.

In this case the taxpayers are on the hook for some $100 billion for each of the failing mortgage giants. The deal stinks because it doesn't really solve anything. Fannie and Freddie executives got sacked, but nothing substantial was changed in the weirdly illegitimate structure of these private, profit-making corporations sponsored by the federal government. Instead of acting decisively, the Treasury basically opened the public's wallet and promised to spend whatever it takes to keep the companies upright. "Conservatorship" is a fiction. The taxpayers own these two high-flying turkeys in all but name because they are now picking up the tab.

A real solution to this mess is not complicated: wipe out the corporations and nationalize them, buy out the shareholders for pennies on the dollar and restore Fannie Mae to its original status as a federal housing agency (maybe merged with Freddie). Its functions involve vital public services--supporting the flow of mortgage financing, encouraging broader homeownership and subsidizing construction of low-income housing. These public goods do not much interest private financiers unless they can harvest rip-and-run profits, which is exactly what they did, with their usurious lending in the subprime mortgage scandal.

Paulson and other Washington players are focused instead on "investor sentiment," that is, trying to halt the panicky flight of major creditors. If other nations join China in selling off their Fannie/Freddie portfolios, the credit crunch will become a deadly stranglehold. This is the reality of our debtor nation's dependence on supposed rivals, who are propping up America by lending to us. If they decide to stop, Uncle Sam is screwed.

Instead of rescuing financial losers, the government ought to be devoting its heaviest resources to jump-starting the real economy. Instead of bailing out the money guys who caused this crisis, Washington should concentrate on bolstering enterprise, employment and productive investment.

Washington has got it backward. The financial system will not get well and return to normal lending until the economy regains its natural vigor. Bankers' fright is sure to deepen as more firms fail; witness the tottering Lehman Brothers. Given the depth of this crisis, only the government has the ability to provide the needed stimulus, by spending money on real economic activity--programs that create new jobs and incomes, production and profit.

Does Barack Obama or John McCain understand this? Neither candidate has acknowledged the enormity of what's facing the country or explained the dire implications with clarity and frankness, much less described plausible solutions. McCain is hopeless, mouthing right-wing bromides about corporate tax cuts and smaller government. Obama has said useful things about financial reforms and has supported some infrastructure funding, but he too has lacked the courage to tell the hard truth about the ditch the country is in and how to get us out. Obama's limited comments suggest he sees the crisis much the way Washington does. That won't be good enough if he becomes President--though a deepening crisis may force him to take bolder action.

Whatever the two candidates claim to believe now, one of them is going to get walloped in January when he enters the Oval Office.

U.S. Foreclosures Hit Record in August as Housing Prices Fell

U.S. Foreclosures Hit Record in August as Housing Prices Fell

By Dan Levy

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U.S. foreclosure filings rose to a record in August as falling home prices made it harder to sell or refinance homes to pay off the mortgage, RealtyTrac Inc. said.

Owners of 303,879 properties, or one in 416 U.S. households, got a default notice, were warned of a pending auction or foreclosed on last month. That was the most since reporting began in January 2005. Filings increased 27 percent from a year earlier, about half the annual pace of previous months, because of high default totals in August 2007, the Irvine, California- based seller of foreclosure data said in a statement today.

‘‘The chickens have come home to roost,'' Jim Croft, founder of the Mortgage Asset Research Institute in Reston, Virginia, said in an interview. ‘‘Real estate inflation bailed out an awful lot of bad loans.''

The worst housing slump since the 1930s shows little sign of abating. Home prices in 20 U.S. metropolitan areas declined 15.9 percent in June from a year earlier, according to the S&P/Case- Shiller index. Prices may fall another 10 percent through the end of 2009, according to analysts at Lehman Brothers Holdings Inc.

August filings were 11 percent higher than the previous record of 273,001 set in May, according to RealtyTrac. Filings rose 12 percent from July. Bank seizures, the last stage of the foreclosure process, known as real estate-owned or REO properties, more than doubled from a year ago to 90,893.

Defaults rose 10 percent and auctions rose 7 percent from August 2007, said RealtyTrac, which has a database of more than 1.5 million properties.

Unsold Homes

There are 3.9 million unsold existing single-family homes, the most since at least 1982, according to the Chicago-based National Association of Realtors. There is an 11.1 month supply of existing unsold homes at the current sales pace, up from 4.6 months in September 2005, the Realtors said.

Financing is difficult to obtain, and borrowers must put down 20 percent to 30 percent of the purchase price, said Mark Goldman, senior loan officer at Windsor Capital Mortgage in San Diego. About 90 percent of borrowers at his company get 30-year, fixed-interest-rate loans, he said.

The August increase in filings was the smallest annual gain since February 2007, when defaults increased 19 percent from a year earlier. A new federal housing law designed to help homeowners avoid foreclosure may be slowing the rate of increase of defaults and auctions, James Saccacio, RealtyTrac's chief executive officer, said in the statement.

‘‘ The question now is whether these measures will actually reduce foreclosures or simply cause a temporary lull in foreclosure activity,'' he said.

Nevada, California

Nevada had the nation's highest foreclosure rate for the 20th consecutive month, with one in 91 households in some stage of default, according to RealtyTrac. Filings rose 16 percent from the previous month and 89 percent from a year earlier to 11,706.

California had the second-highest rate, one in 130 households, and the most filings at 101,724, a third of the nation's total. Defaults increased 40 percent from the previous month and 76 percent from August 2007.

Arizona had the third-highest rate at one in 182 households, followed by Florida, Michigan, Georgia, Ohio, Colorado, Illinois and Indiana, RealtyTrac said.

Florida ranked second with 44,000 filings, a 4 percent decrease from the previous month and a 30 percent increase from August 2007. Arizona was third in filings at 14,333, up 7 percent from July and almost 63 percent from a year earlier.

Michigan, New Jersey

Michigan ranked fourth in filings at 13,605. Defaults decreased 13 percent from a year earlier. Nevada, Ohio, Texas, Illinois, Georgia and New Jersey were also among the top 10 states with the most filings, RealtyTrac said.

New Jersey's foreclosure rate ranked 11th at one filing in 536 households, and New York ranked 33rd at one in 1,444 households.

California had eight of the 10 metropolitan areas with the highest foreclosure rates, led by Stockton at one in 50 households. Merced, Modesto, Vallejo-Fairfield and Riverside-San Bernardino ranked second through fifth. Bakersfield, Salinas- Monterey and Sacramento, the state capital, ranked eighth through 10th.

Cape Coral-Fort Myers, Florida, had the sixth-highest metro foreclosure rate at one in 66 households and saw a 3 percent decrease in filings. Las Vegas was seventh at one in 75 households, and had an 83 percent increase in defaults, according to RealtyTrac.

Breaking The Silence A hard hitting special report into the "war on terror" Award winning journalist John Pilger

Breaking The Silence

A hard hitting special report into the "war on terror"
Award winning journalist John Pilger

Global Starvation Ignored by American Policy Elites

Global Starvation Ignored by American Policy Elites

By Peter Phillips

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A new report (9/2/08) from The World Bank admits that in 2005 three billion one hundred and forty million people live on less that $2.50 a day and about 44% of these people survive on less than $1.25. Complete and total wretchedness can be the only description for the circumstances faced by so many, especially those in urban areas. Simple items like phone calls, nutritious food, vacations, television, dental care, and inoculations are beyond the possible for billions of people. logs the increasing impacts of world hunger and starvation. Over 30,000 people a day (85% children under 5) die of malnutrition, curable diseases, and starvation. The numbers of unnecessary deaths has exceeded three hundred million people over the past forty years.

These are the people who David Rothkopf in his book Superclass calls the unlucky. “If you happen to be born in the wrong place, like sub-Saharan Africa, …that is bad luck,” Rothkopf writes. Rothkopf goes on to describe how the top 10% of the adults worldwide own 84% of the wealth and the bottom half owns barely 1%. Included in the top 10% of wealth holders are the one thousand global billionaires. But is such a contrast of wealth inequality really the result of luck, or are there policies, supported by political elites, that protect the few at the expense of the many?

Farmers around the world grow more than enough food to feed the entire world adequately. Global grain production yielded a record 2.3 billion tons in 2007, up 4% from the year before, yet, billions of people go hungry every day. describes the core reasons for continuing hunger in a recent article “Making a Killing from Hunger.” It turns out that while farmers grow enough food to feed the world, commodity speculators and huge grain traders like Cargill control the global food prices and distribution. Starvation is profitable for corporations when demands for food push the prices up. Cargill announced that profits for commodity trading for the first quarter of 2008 were 86% above 2007. World food prices grew 22% from June 2007 to June 2008 and a significant portion of the increase was propelled by the $175 billion invested in commodity futures that speculate on price instead of seeking to feed the hungry. The result is wild food price spirals, both up and down, with food insecurity remaining widespread.

For a family on the bottom rung of poverty a small price increase is the difference between life and death, yet neither US presidential candidate has declared a war on starvation. Instead both candidates talk about national security and the continuation of the war on terror as if this were the primary election issue. Where is the Manhattan project for global hunger? Where is the commitment to national security though unilateral starvation relief? Where is the outrage in the corporate media with pictures of dying children and an analysis of who benefits from hunger?

American people cringe at the though of starving children, often thinking that there is little they can do about it, save sending in a donation to their favorite charity for a little guilt relief. Yet giving is not enough, we must demand hunger relief as a national policy inside the next presidency. It is a moral imperative for us as the richest nation in the world nation to prioritize a political movement of human betterment and starvation relief for the billions in need. Global hunger and massive wealth inequality is based on political policies that can be changed. There will be no national security in the US without the basic food needs of the world being realized.

West 'makes terror fight harder'

West 'makes terror fight harder'

By Lucy Williamson

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Indonesia's head of counter-terrorism says Western governments have made it harder for moderate Muslims to tackle terror in their own countries.

Ansyaad Mbai told the BBC that Indonesia's own fight against terrorism relied on a much softer approach.

He suggested other countries should also apply similar tactics alongside military force.

Indonesia has had striking success in tackling terrorism on its soil in the past few years.

Mr Mbai said each country faced a unique situation in its fight against terrorism, and that there was no one-size-fits-all.

But he said that there needed to be a balance between force and negotiation, and that war - as pursued by America in Iraq and Afghanistan - was not an effective strategy against terrorism.

"Muslims see this strategy as destructively attacking Muslims, as attacking Islam... This is not the solution," he said.

"The use of war against the militants in the Middle East doesn't stop the terrorists and radicals."

Controversial approach

A few years ago, Indonesia was caught in the spotlight of America's self-proclaimed war on terror.

Just a year after the 9/11 attacks, Islamic militants blew themselves up at nightclubs on the island of Bali, killing more than 200 people, most of them foreign tourists.

Those attacks were followed by a chain of other bombings.

But in the past few years, Indonesia has managed to halt those attacks and break down the country's main terror network.

It has done it using a softer and sometimes controversial approach.

For example, it has used former militants to negotiate with radical cells, and spread a more moderate message.

And that is something that Mr Mbai said Western governments had made harder.

"The situation in Iraq and Afghanistan makes it more difficult for us, for moderate Muslims, to convince the radicals that the war in Iraq is not an attack against a Muslim country," he said.

Indonesia has focused a great deal on trying to de-radicalise its hardline groups.

But it is hard to assess how successful that has been.

Much easier to count are the hundreds of arrests, including the capture earlier this year of several key members of the radical Islamist network Jemaah Islamiah.

But new cells have also been discovered, and police say the existing networks have become smaller, more mobile and harder to track.

US a step closer to Iran blockade

US a step closer to Iran blockade

By Kaveh L Afrasiabi

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The United States government has imposed new sanctions on Iran, this time targeting its shipping industry, by blacklisting the main shipping line and 18 subsidiaries, accusing the maritime carrier of being engaged in contraband nuclear material, a charge vehemently denied by Iran.

While the economic impact of the measures against Islamic Republic of Iran Shipping Lines (IRISL) will be minimal in light of the near absence of any connection between the shipping company and US businesses, this latest US initiative against Iran sends a strong signal about the US's intention to escalate pressure on Iran, even unilaterally if need be. And, perhaps, it is a prelude for more serious and dangerous actions in the near future, above all a naval blockade of Iran to choke off its access to, among other things, imported fuel.

The outgoing George W Bush administration is slowly but surely
taking strident actions that will effectively tie the hands of the next US president, particularly if that happens to be Democratic candidate Senator Barack Obama, who in the past has expressed an interest in direct dialogue with Tehran.

Should the new sanctions prove as catalysts for more aggressive US actions against Iran in international waters or the Persian Gulf, as called for by some members of US Congress seeking the interdiction of Iranian cargo ships, then by the time Bush's successor takes over at the Oval Office next January, the climate in US-Iran hostility may have degenerated to such depths that it would take a monumental effort to undo what appears to be Bush's last hurrah.

On the other hand, on the eve of US presidential elections in November, more tensions between the US and Iran are tantamount to greater prioritization of national security issues by the average American voter, something that benefits Obama's Republican rival, "bomb, bomb Iran" John McCain.

Indeed, the coupling of crisis in Georgia and the Iran crisis represents a major bonus for McCain and his "get tough" approach toward the US's external foes.

According to American investigative journalist Seymour Hersh, who has done several reports on US covert actions against Iran, Bush has on more than one occasion vowed not to leave the White House with Iran's nuclear program still intact.

With the new tensions with Russia over Georgia lessening the prospects for fresh "multilateral" Iran diplomacy at the United Nations this autumn, the White House has now begun a new chapter in coercive, unilateral action against Iran that may well be part of a comprehensive "package approach". This could include the interdiction of Iranian ships on the high seas and even incremental steps toward imposing a regime of "smart blockade" aimed at denying Iran access to badly needed imported fuel.

The purpose of the latter would be to in effect target the Iranian population by applying tangible pain that could dissipate the popular support for the government's nuclear policy, that is, its insistence that it has the right under the nuclear Non-Proliferation Treaty to enrich uranium. Doubtless, this is playing with fire and things could get nasty and rather quickly, spiralling out of control in the event of a stern Iranian reaction.

As far as Washington and Tel Aviv are concerned, their efforts to create a wedge between Iran and Syria is paying off, thanks in part to the tireless efforts of France, and Israeli politicians have made no secret of their hope that their negotiations with Damascus will create a timely dividend in the form of breathing cold air into the hitherto hot furnace of the Iran-Syria alliance.

In Iran murmurings of "weak and reactive diplomacy" can already be heard, thus putting the President Mahmud Ahmadinejad administration on the defensive.

Consequently, Washington hawks increasingly smell a late opportunity to defang Iran. They will surely have made their own threat analysis and estimates of risks. Should their calculations prove incorrect, it could prove disastrous with incalculable, monstrous new headaches for the US government for years to come.

For Iran's part, a spokesperson for IRISL has denounced the US's measure as "illegal" and based on "false accusations", promising to complain to international tribunals. IRISL is, in fact, a stock-owned private company and not government owned, and the US's action may be in violation of the terms and ambit of UN sanctions imposed by the Security Council on Iran over its nuclear program. For instance, these sanctions exempt the Bushehr power plant in Iran, thus allowing the shipment of nuclear material for the Russian-made plant nearing completion.

This means that the US might seek to seize Russian nuclear goods bound for Iran, thus raising the ire of Moscow and using this as a payback for Russia's offensive in pro-West Georgia. Alternatively, the US could use the threat of such action as leverage with regard to both Tehran and Moscow. Russia, from Washington's point of view, needs to be brought into line on Iran.

Again, any such action by the US is bound to have both intended and unintended consequences, and it would be foolhardy for Washington hawks to pretend to know the full scope of the ramifications, which could be dramatic in terms of heating up a new cold war and outright militarizing the Iran nuclear crisis.

Tehran does not appear to welcome any new escalation with the US. A deputy foreign minister, Mehdi Safari, announced Iran's preparedness to engage in good-faith negotiations with the "Iran Six" nations (the UN Security Council's permanent five - the US, Britain, France, Russia and China - plus Germany).

Ahmadinejad is due in New York in less than two weeks to attend the annual UN General Assembly gathering, and by all indications the US and Israel are deliberately picking up serious momentum in their anti-Ahmadinejad campaign, thus warranting a letter by Iran's ambassador to the UN, Mohammad Khazaee, complaining of blatant threats against Iran's president by Israeli politicians - they even said they would kidnap him.

In conclusion, as tough new decisions on Iran are being plotted in Washington and Tel Aviv, the fate of peace and stability in the volatile oil region of the Persian Gulf seems once again on the verge of being compromised in the drive towards open confrontation with Iran.

New FBI Guidelines Open Door to Further Abuse

New FBI Guidelines Open Door to Further Abuse

ACLU, Other Advocacy Groups Express Concern After Meeting With Department of Justice

CONTACT: (202) 675-2312;
(212) 519-7829 or 549-2666;

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Following a briefing today at the Department of Justice (DOJ), the American Civil Liberties Union reiterated its deep concern over new guidelines that would govern FBI investigations. The new guidelines would lower standards for beginning "assessments" (precursors to investigations), conducting surveillance and gathering evidence, and would replace existing guidelines for five types of existing guidelines: general criminal, national security, foreign intelligence, civil disorders and demonstrations.

The rewritten guidelines have been drafted in a way to give the FBI the ability to begin surveillance without factual evidence, stating that a generalized "threat" is enough to use certain techniques. Also under the new guidelines, a person's race or ethnic background could be used as a factor in opening an investigation, a move the ACLU believes will institute racial profiling as a matter of policy. The guidelines would also give the FBI the ability to use intrusive investigative techniques in advance of public demonstrations. These techniques would allow agents to conduct pre-textual (undercover) interviews, use informants and conduct physical surveillance in connection with First Amendment protected activities.

"Issuing guidelines that permit racial profiling the day after the 9/11 anniversary and in the midst of an historic presidential campaign is typical Bush administration stagecraft designed to exploit legitimate security concerns for partisan political purposes. Racial profiling by any other name is still unconstitutional," said Anthony D. Romero, Executive Director of the ACLU. "The new guidelines offer no specifics on how the FBI will ensure that race and religion are not used improperly as proxies for suspicion, nor do they sufficiently limit the extent to which government agents can infiltrate groups exercising their First Amendment rights. The Bush administration's message once again is 'trust us.' After eight years of historic civil liberties abuses, the American people know better. From the U.S. attorney purges to the abuse of national security letters, the Department of Justice and the FBI have repeatedly shown that they are incapable of policing themselves."

Both the FBI and DOJ have documented records of internal abuse. Recent DOJ Office of the Inspector General (OIG) reports confirmed long-held suspicions of widespread and systemic abuses of the national security letter statute, and the FBI's involvement in interrogations at Guantánamo Bay. With no outside oversight and with FBI agents acting autonomously, these new guidelines will likely lead to more unchecked abuse.

"Handing this kind of latitude to an organization already rife with internal oversight problems is a huge mistake," said Caroline Fredrickson, Director of the ACLU Washington Legislative Office. "Agents will be given unparalleled leeway to investigate Americans without proper suspicion, and that will inevitably result in constitutional violations. Lowering the threshold for unwarranted surveillance and scrutiny allows the FBI to come perilously close to infringing on the First and Fourth Amendments. Our right to protest the government and its policies is not suspicious behavior; it is constitutionally protected speech. Let's not forget that the reason the FBI adopted internal guidelines was to combat abuse and political spying. They are a direct result of the surveillance of Reverend Martin Luther King, Jr. and others. To forget that legacy and adopt these ill-conceived guidelines would be a travesty."