Friday, October 10, 2008

World financial crisis leads to auto industry layoffs across Europe

World financial crisis leads to auto industry layoffs across Europe

World financial crisis leads to auto industry layoffs across Europe

By Dietmar Henning
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While governments across the globe are pumping billions into the tills of banks in order to limit their speculative losses, millions of workers whose jobs and incomes are threatened will be left stranded. Worldwide, all of the major auto companies have announced a drastic slump in sales and have introduced reduced production or direct dismissals.

Much of the current crisis in the auto industry is bound up with the fuel price increases at the beginning of the year. The consequences of the current financial crisis are only just beginning to take effect and will undoubtedly be much more pronounced in coming weeks.

The markets for luxury cars and massed-produced ordinary autos have both been hit. Until now the expensive sports cars and luxury autos produced by German companies Porsche and BMW were especially favoured by those who were able to reap huge fortunes on speculative financial transactions and could easily lay out several tens of thousands of euros for a new vehicle. Many in this layer are now jobless and can no longer afford a new car.

The Süddeutsche Zeitung reports on the sports-car producer Porsche: “So far Russia was regarded as a guaranteed customer for the small sports car manufacturer. If a market gave way somewhere, Russia was easily able to adjust the balance. The Porsche family was always able to find enough wealthy people ready to buy up their annual production of 100,000 cross-country and sports cars. This now seems to be in the past.”

The BMW company, which like Porsche specializes in high-priced cars, announced a 14 percent decrease in sales worldwide for September. BMW sales in the US have decreased by as much as a quarter in the same month. Porsche registered a decrease of 44 percent in the US and an average loss worldwide of 27 percent.

Sales are also slumping for ordinary cars. Toyota, the world’s largest carmaker, also suffered a 32 percent drop in sales in the US in September. Many potential customers are fearful of the consequences of the crisis and are not prepared to invest in a new car. Others are unable to obtain the necessary credit from their bank. According to the Ifo Institute for Economic Research at the University of Munich, the expectations of German auto salesmen have slumped to a 20-year low.

A spokesman for Opel (General Motors) at Rüsselsheim commented: “The financial crisis has led many people in Europe to hold back from purchasing an auto.” This applies particularly to Spain, Germany and Great Britain.

Auto sales in Spain, which is particularly hard hit by the real estate crisis, are 44 percent lower than a year ago. According to the calculations of the CAR research institute in Gelsenkirchen, Germany, sales in the Italian market will drop at least 14 percent this year, the US market 13 percent, the UK market 5 to 6 percent, and the German market up to 2 percent.

Phased-out production and job losses

Although the effects of the crisis are only beginning to be felt, auto companies have immediately reacted with production shutdowns and layoffs. For some time the automobile industry has complained about overcapacity. It is now utilizing the crisis to carry out plans it had been unable to implement up to now due to workforce opposition.

Swedish car producer Volvo (belonging to the Ford company) has already announced the dismissal of an additional 3,000 workers, bringing its total current level of layoffs to 6,000. Company boss, Stephen Odell, declared the job losses were necessary because of the “rapidly disintegrating market situation of the worldwide automobile industry.”

In Germany, the Ford factory in Saarlouis is dismissing approximately 200 temporary workers two months earlier than planned. The factory in Saarland has a total workforce of 6,500 and produces mainly for export.

Bavarian auto producer BMW is introducing production stops at its Leipzig factory and further temporary shutdowns are planned at other plants. BMW plans to produce 20,000 to 25,000 fewer cars this year compared to 2007.

Daimler already announced this summer that it planned to cut output this year by around 45,000 vehicles.

While Volkswagen has so far declined to slash production, it is delaying the opening of new factories. Announcing this decision, VW finance chief Hans Dieter Poetsch, blamed the “considerable deterioration” of market conditions.

Skoda, the Czech Volkswagen offshoot, is planning to limit production by 13,000 vehicles fewer than last year. The company halted production for one day this past Friday.

The most radical plans have been announced by Opel, the European subsidiary of General Motors, which plans to cut production by approximately 40,000 vehicles by the end of the year. The Opel factory in Eisenach, with a workforce of 1,800, is to close for three weeks starting next Monday.

In Bochum, the Opel factory with 5,000 workers had already closed for two weeks at the end of September in line with a deal worked out between company management and the factory council. A further shutdown of the factory is planned for the end of October. Opel has declared that it will cease production October 20-31, at its entire European works, with the exception of Rüsselsheim. This will affect the Opel factories in Kaiserslautern, Germany; Gliwice, Poland; Ellesmere Port and Luton, England; as well as Saragossa, Spain.

Opel spokesman Andreas Krömer justified these measures, commenting, “People are worried and keeping their hands in their pockets. Demand has hit rock bottom. We must react with an adjustment. We cannot build cars on a waste dump.”

In fact, Opel has been preparing job cuts and attacks on working conditions for some time. According to the works council at the Bochum Opel factory, 900 jobs are at risk there due to the slump in sales. Company management has estimated that tighter work schedules and new automation could reduce production time for a car from 27 to 15 hours.

Mass unemployment

The crisis in the automobile industry will lead to a veritable avalanche of dismissals. A total of 2.1 million workers are directly involved in the European automobile industry. This figure rises to 12 million when all auto-related industries are included.

The throttling back of production directly affects the auto supply industry, which often consists of middle-sized companies operating with narrow profit margins. Auto distribution, sales outlets and other services will also be hit. In Germany alone, an estimated 468,000 are employed in these sectors. Such companies employ an average of 12 workers, and many of these businesses are already highly indebted.

Like the banks, the major auto companies are now also demanding money from the state. In the US, the House of Representatives agreed to a draft on Wednesday making $25 billion available to automakers in the form of low interest credits.

German manufacturers have criticized this move. “This leads to a distortion in international competition,” was the comment by German Automobile Federation (VDA) head, Matthias Wissmann.

Such criticism of the US has not prevented the European automobile industry from demanding similar support from the European Union. Manufacturers are demanding various support measures, including a low interest credit package of over €40 billion for the development of more economical vehicles, plus incentives for customers to exchange their cars for newer ones.

The major companies and their shareholders stand to profit from such measures. The workers who lose their jobs cannot bank on support. In Germany the government decided just this week to cut contributions for unemployment insurance beginning next year by around 0.5 percent. This measure was aimed at decreasing subsidiary wage costs for the employers.

The immediate consequence of this decision will be decreased funding for the Federal Labour Agency, which will have even less money at its disposal for the tens of thousands of autoworkers who are likely to lose their jobs in the near future.

More than 300 workers arrested in immigration raid on South Carolina plant

More than 300 workers arrested in immigration raid on South Carolina plant

By Hiram Lee
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Federal agents stormed the Columbia Farms poultry plant in Greenville, South Carolina on Tuesday, arresting at least 330 immigrant workers. Roughly 450 agents were involved in the Immigration and Customs Enforcement (ICE) raid that began during a 9 a.m. shift change. As authorities burst into the plant, terrified workers ran for the doors but found them blocked by agents. Herbert Oscar Rooker, a janitor at the plant, told reporters he “had to duck back into the bathroom to keep from getting trampled.”

Plant workers were rounded up by agents and directed towards a break room, with US citizens ordered to one side of the room and non-citizens ushered to the other. In addition to showing their IDs, workers were made to write out their names as well as their parents’ names and their place of birth. US citizens and those whose papers were in order were given blue wristbands on which their names were written. Only those workers with blue wristbands were allowed to leave the room and return to their homes.

When news of the raid broke, friends and loved ones gathered outside the gates of Columbia Farms to learn the fate of the workers inside. Maria Juan, 22, was among the crowd, waiting nervously for news of her 68-year-old grandmother, a legal immigrant who had gone to work that day without her identification papers. Juan told reporters, “Families are going to be broken apart. There will be kids and babies left behind. Why are they doing this? Why? They didn’t do anything. They only wanted to work.” Her grandmother was eventually released.

Of the 330 workers taken into custody, 207 men and 123 women, approximately one fourth were released for “humanitarian reasons,” including medical problems and childcare needs. Those released will continue to be monitored until they come before an immigration court sometime in November. The rest of the detainees are currently being held at a facility in Georgia where they await deportation. Six juveniles were also arrested during the sting; those who could not be placed in the care of a “trusted adult” locally were instead placed in the custody of the Office of Refugee Resettlement.

Tuesday’s raid was the culmination of a 10-month investigation into the hiring practices of the Columbia Farms plant. In June, 11 plant supervisors, all of whom hailed from Mexico originally, were arrested for being in the country illegally. The plant’s human resources manager, Greenville native Elaine Crump, was also arrested and charged with 20 counts of filing false employment identification forms.

Regarding Ms. Crump’s case, an ICE press release sought to remind readers that “as with any criminal case, a charge is merely an accusation and a defendant is presumed innocent until and unless proven guilty.” The organization did not extend the same courtesy, however, to those rounded up Tuesday, when Barbara Gonzalez, an ICE spokesperson, told the press, “They are all illegals. We have charged them with being in violation of US immigration laws.” Her comments drew protests from immigration attorney Dan Kowalski, who responded by pointing out that “a judge has to say that, they can’t just say that.”

As in the aftermath of the ICE raid on a Laurel, Mississippi manufacturing plant in August, there are reports that many in the large immigrant population of Greenville, South Carolina are now afraid to leave their homes for fear of another round of intimidation and arrests by authorities. Since the raid took place, Greenville has been described as a “ghost town” in local newspapers. There are further concerns that another Columbia Farms plant in the state may also be raided. Both plants are owned by the same company, House of Raeford Farms.

The raid on Columbia Farms is only the latest in a wave of nationwide immigration raids intended to intimidate and terrorize large sections of the working class in the United States. In May, ICE agents raided the Agriprocessors Inc. slaughterhouse in Postville, Iowa, arresting more than 390 workers. Of these, 273 were sentenced to five months in prison. Beginning this weekend, the first of the prisoners are to be deported.

August brought the country’s largest ever workplace raid, in which 595 workers were taken into custody at the Howard Industries plant in Laurel, Mississippi.

ICE raids have increased dramatically in recent years, with 4,077 deportation arrests in 2007 compared to 445 in 2003. These brutal displays of force, in which agents rush into worksites indiscriminately detaining everyone before separating workers by ethnicity and checking for papers—all practices that would be common measures in a police-state—have terrorized immigrant communities across the nation.

This violent expression of the US government’s official policy of anti-immigrant chauvinism, supported by both corporate-controlled political parties and the trade union bureaucracies, serves to keep the country’s large immigrant workforce in fear, rendering them all the more easily exploited. It also further demonizes immigrant workers, blaming their “illegal” theft of US jobs for many of the hardships faced by workers born in the US, obscuring in the process the real cause of social misery in the country—the capitalist system.

Such attacks on undocumented workers can only be expected to increase and intensify under present conditions in which the US is faced with its worst financial crisis since the Great Depression.

Subprime Suspects

Subprime Suspects

The right blames the credit crisis on poor minority homeowners. This is not merely offensive, but entirely wrong.

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We've now entered a new stage of the financial crisis: the ritual assigning of blame. It began in earnest with Monday's congressional roasting of Lehman Bros. CEO Richard Fuld and continued on Tuesday with Capitol Hill solons delving into the failure of AIG. On the Republican side of Congress, in the right-wing financial media (which is to say the financial media), and in certain parts of the op-ed-o-sphere, there's a consensus emerging that the whole mess should be laid at the feet of Fannie Mae and Freddie Mac, the failed mortgage giants, and the Community Reinvestment Act, a law passed during the Carter administration. The CRA, which was amended in the 1990s and this decade, requires banks—which had a long, distinguished history of not making loans to minorities—to make more efforts to do so.

The thesis is laid out almost daily on the Wall Street Journal editorial page, in the National Review, and on the campaign trail. John McCain said yesterday, "Bad mortgages were being backed by Fannie Mae and Freddie Mac, and it was only a matter of time before a contagion of unsustainable debt began to spread." Washington Post columnist Charles Krauthammer provides an excellent example, writing that "much of this crisis was brought upon us by the good intentions of good people." He continues: "For decades, starting with Jimmy Carter's Community Reinvestment Act of 1977, there has been bipartisan agreement to use government power to expand homeownership to people who had been shut out for economic reasons or, sometimes, because of racial and ethnic discrimination. What could be a more worthy cause? But it led to tremendous pressure on Fannie Mae and Freddie Mac—which in turn pressured banks and other lenders—to extend mortgages to people who were borrowing over their heads. That's called subprime lending. It lies at the root of our current calamity." The subtext: If only Congress didn't force banks to lend money to poor minorities, the Dow would be well on its way to 36,000. Or, as Fox Business Channel's Neil Cavuto put it, "I don't remember a clarion call that said: Fannie and Freddie are a disaster. Loaning to minorities and risky folks is a disaster."

Let me get this straight. Investment banks and insurance companies run by centimillionaires blow up, and it's the fault of Jimmy Carter, Bill Clinton, and poor minorities?

Inside Account of U.S. Eavesdropping on Americans

Inside Account of U.S. Eavesdropping on Americans

U.S. Officers' "Phone Sex" Intercepted; Senate Demanding Answers

Despite pledges by President George W. Bush and American intelligence officials to the contrary, hundreds of US citizens overseas have been eavesdropped on as they called friends and family back home, according to two former military intercept operators who worked at the giant National Security Agency (NSA) center in Fort Gordon, Georgia.

The chairman of the Senate Intelligence Committee, Jay Rockefeller (D-WV), called the allegations "extremely disturbing" and said the committee has begun its own examination.

"We have requested all relevant information from the Bush Administration," Rockefeller said Thursday. "The Committee will take whatever action is necessary."

"These were just really everyday, average, ordinary Americans who happened to be in the Middle East, in our area of intercept and happened to be making these phone calls on satellite phones," said Adrienne Kinne, a 31-year old US Army Reserves Arab linguist assigned to a special military program at the NSA's Back Hall at Fort Gordon from November 2001 to 2003.

Kinne described the contents of the calls as "personal, private things with Americans who are not in any way, shape or form associated with anything to do with terrorism."

WATCH Video Report

WATCH Kinne discuss why it was 'awkward' listening to her fellow Americans.

Mainstream Figures Endorse Paul's Abolish Fed Bill

Mainstream Figures Endorse Paul's Abolish Fed Bill

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The trillion-dollar Wall Street bailout plan negotiated by the White House and Congress has reinvigorated the debate about Texas Republican Rep. Ron Paul’s Federal Reserve Board Abolition Act (HR 2755), which was introduced into Congress in June 2007.

In the halls of Congress, legislators have yet to bring Paul’s bill to the floor. It is currently languishing in the House Committee on Financial Services.

However, there has been a great deal of discussion about this landmark legislation on the Internet and in the alternative press. Constitution Party presidential candidate Chuck Baldwin has even made abolishing the Fed one of the top planks in his platform.

Paul’s measure, as it is now, would kill the Federal Reserve Act and would then phase out the Federal Reserve one year after the bill becomes law.

The Federal Reserve Act, passed by Congress in 1913, laid the foundation for the creation of a privately owned and controlled central bank and gave private bankers the power to control the nation’s money supply.

Nearly 100 years later, the role the central bank has played in the financial scandal has been widely reported in the mainstream. Former Federal Reserve chairman Alan Greenspan, once heralded as “the maestro,” has been feeling the heat for supporting the deregulation of financial institutions and flooding markets with cheap dollars.

U.S. News & World Report had a recent commentary titled “From Enron to the Financial Crisis, With Alan Greenspan in Between” excoriating Greenspan, who as the nation’s top banker, repeatedly downplayed the risks associated with derivatives even after the collapse of Enron in 2002.

On September 27, The New York Times also hit Greenspan for his failure to watch over and regulate greedy banks. To its credit, the Times also blasted Congress for dismantling important safeguards, including the Glass-Steagall Act, which kept commercial and investment banks at a safe distance.

“Now we know that an entire ‘shadow banking system’ has grown up,” wrote the Times, “without rules or transparency, but with the ability to topple the financial system itself.”

Even the cable news shows are getting in on the game. NBC’s cable news show interviewed well-known investor Jim Rogers, who made a fortune betting on commodities markets.

“How much money does the Federal Reserve have?” asked Rogers. “I know they can run their printing presses forever, but that is not good for the world. Inflation is not good for the world. A collapsing currency is not good for the world. It means worse recession in the end. . . . I would abolish the Federal Reserve.”

Neo-conservative talk show host Glenn Beck has also assailed the Federal Reserve for its role in the financial crisis. On September 15, Beck had a lively debate about who exactly owns the Federal Reserve.

“The Federal Reserve has nothing to do with the government,” said Beck. “It’s a separate, global banking system. . . . And when everyone was meeting with our Secretary of Treasury Henry Paulson, I thought to myself: ‘Who the hell is representing us, the American people?”

Ron Paul financial advisor Paul Schiff responded: “The Fed got us into this mess. It drives me crazy to see Alan Greenspan on television talking about this ‘100 year flood,’ like the events that are taking place today are random and have nothing to do with his monetary policy. He blew up the bubble, and now it’s burst.”

Wall Street Journal editorial writer Steven Moore added: “And by the way, who elected Ben Bernanke? Who elected Alan Greenspan?”

Now is the time for Americans to fan the flames. Call your congressman and two senators and ask them to support Paul’s bill, which would abolish the Fed. There can be no end to these manufactured financial crises until the government gets rid of the Fed and replaces it with honest, debt-free money.

Bailout Futile As America Crumbles

Bailout Futile As America Crumbles

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America has become a pretty discouraging place. Americans, for the most part, will never know what happened to them, because they no longer have a free and responsible press. They have Big Brother’s press. For example, on September 28, 2008, a New York Times editorial blamed the current financial crisis on “antiregulation disciples of the Reagan Revolution.”

What utter nonsense. Every example of deregulation that the New York Times editorial provides is located in the Clinton Administration and the George W. Bush administration. I was a member of the Reagan administration. We most certainly did not deregulate the financial system.

The repeal of the Glass-Steagall Act, which separated commercial from investment banking, was the achievement of the Democratic Clinton Administration. It happened in 1999, over a decade after Reagan left office.

It was in 2000 that derivatives and credit default swaps were excluded from regulation.

The greatest mistake was made in 2004, the year that Reagan died. That year the current Secretary of the Treasury, Henry M. Paulson Jr, was head of the investment bank Goldman Sachs. In the spring of 2004, the investment banks, led by Paulson, met with the Securities and Exchange Commission. At this meeting with the New Deal regulatory agency tasked with regulating the US financial system, Paulson convinced the SEC Commissioners to exempt the investment banks from maintaining reserves to cover losses on investments. The exemption granted by the SEC allowed the investment banks to leverage financial instruments beyond any bounds of prudence.

In place of time-proven standards of prudence, computer models engineered by hot shots determined acceptable risk. As one result Bear Stearns, for example, pushed its leverage ratio to 33 to 1. For every one dollar in equity, the investment bank had $33 of debt!

It was computer models that led to the failure of Long-Term Capital Management in 1998, the first systemic threat to the financial system. Why the SEC went along with Paulson and set aside capital requirements after the scare of Long-Term Capital Management is inexplicable.

The blame is headed toward SEC chairman Christopher Cox. This is more of Big Brother’s disinformation. Cox, like so many others, was a victim of a free market ideology, itself a reaction to over-regulation, that was boosted by academic economic opinion, rewarded with Nobel prizes, that the market “always knows best.”

The 20th century proves that the market is likely to know better than a central planning bureau. It was Soviet Communism that collapsed, not American capitalism. However, the market has to be protected from greed. It was greed, not the market, that was unleashed by deregulation during the Clinton and George W. Bush regimes.

I remember when the deregulation of the financial sector began. One of the first inroads was the legislation, written by bankers, to permit national branch banking. George Champion, former chairman of Chase Manhattan Bank, testified against it. In columns I argued that national branch banking would focus banks away from local business needs.

The deregulation of the financial sector was achieved by the Democratic Clinton Administration and by the current Secretary of the Treasury, Henry Paulson, with the acquiescence of the Securities and Exchange Commission.

The Paulson bailout saves his firm, Goldman Sachs. The Paulson bailout transfers the troubled financial instruments that the financial sector created from the books of the financial sector to the books of the taxpayers at the US Treasury.

This is all the bailout does. It rescues the guilty.

The Paulson bailout does not address the problem, which is the defaulting home mortgages.

The defaults will continue, because the economy is sinking into recession. Homeowners are losing their jobs, and homeowners are being hit with rising mortgage payments resulting from adjustable rate mortgages and escalator interest rate clauses in their mortgages that make homeowners unable to service their debt.

Shifting the troubled assets from the financial sectors’ books to the taxpayers’ books absolves the people who caused the problem from responsibility. As the economy declines and mortgage default rates rise, the US Treasury and the American taxpayers could end up with a $700 billion loss.

Initially, the House, but not the Senate, resisted the bailout of the financial institutions, whose executives had received millions of dollars in bonuses for wrecking the US financial system. However, the people’s representatives could not withstand the specter of martial law and Great Depression with which Paulson and the Bush administration threatened them. The people’s representatives succumbed as they did during the New Deal.

The impotence of Congress traces to the Great Depression. As Theodore Lowi in his classic book, The End of Liberalism, makes clear, the New Deal stripped Congress of its law-making power and gave it to the executive agencies. Prior to the New Deal, Congress wrote the laws. After the New Deal a bill is merely an authorization for executive agencies to create the law through regulations. The Paulson bailout has further diminished the legislative branch’s power.

Since Paulson’s bailout of his firm and his financial friends does nothing to lessen the default rate on mortgages, how will the bailout play out?

If the $700 billion bailout is based on an estimate of the current amount of bad mortgages, as the recession deepens and Americans lose their jobs, the default rate will rise. The $700 billion might not suffice. The Treasury will have to go hat in hand to its foreign creditors for more loans.

As the US Treasury has not got $7, much less $700 billion, it must borrow the bailout money from foreign creditors, already overloaded with US paper. At what point do America’s foreign bankers decide that the additions to US debt exceed what can be repaid?

This question was ignored by the bailout. There were no hearings. No one consulted China, America’s principal banker, or the Japanese, or the OPEC sovereign wealth funds, or Europe.

Does the world have a blank check for America’s mistakes?

This is the same world that is faced with American demands that countries support with money and lives America’s quest for world hegemony. Europeans are dying in Afghanistan for American hegemony. Do Europeans want their banks, which hold US dollars as their reserves, to fail so that Paulson can bail out his company and his friends?

The US dollar is the world’s reserve currency. It comprises the reserves of foreign central banks. Bush’s wars and economic policies are destroying the basis of the US dollar as reserve currency. The day the dollar loses its reserve currency role, the US government cannot pay its bills in its own currency. The result will be a dramatic reduction in US living standards.

Currently Treasuries are boosted by the habitual “flight to quality,” but as Treasury debt deepens, will investors still see quality? At what point do America’s foreign creditors cease to lend? That is the point at which American power ends. It might be close at hand.

The Paulson bailout is predicated on cleaning up financial institutions’ balance sheets and restoring the flow of credit. The assumption is that once lending resumes, the economy will pick up.

This assumption is problematic. The expansion of consumer debt, which kept the economy going in the 21st century, has reached its limit. There are no more credit cards to max out, and no more home equity to refinance and spend. The Paulson bailout might restore trust among financial institutions and enable them to lend to one another, but it doesn’t provide a jolt to consumer demand.

Moreover, there may be more shoes to drop. Credit card debt could be the next to threaten balance sheets of financial institutions. Apparently, credit card debt has been securitized and sold as well, and not all of the debt is good. In addition, the leasing programs of the car manufacturers have turned sour. As a result of high gasoline prices and absence of growth in take-home pay, the residual values of big trucks and SUVs are less than the leasing programs estimated them to be, thus creating more financial problems. Car manufacturers are canceling their leasing programs, and this will further cut into sales.

According to statistician John Williams [ ] who measures inflation, unemployment, and GDP according to the methodology used prior to the Clinton regime’s corruption of these measures, the US unemployment rate is currently at 14.7 per cent and the inflation rate is 13.2 per cent. Consequently, real US GDP growth in the 21st century has been negative.

This is not a picture of an economy that a bailout of financial institution balance sheets will revive. As the Paulson bailout does not address the mortgage problem per se, defaults and foreclosures are likely to rise, thus undermining the Treasury’s estimate that 90 per cent of the mortgages backing the troubled instruments are good.

Moreover, one consequence of the ongoing financial crisis is financial concentration. It is not inconceivable that the US will end up with four giant banks: J.P. Morgan Chase, Citicorp, Bank of America, and Wachovia Wells Fargo. If defaulting credit card debt then assaults these banks’ balance sheets, who is there to take them over? Would the Treasury be able to borrow the money for another Paulson bailout?

During the Great Depression of the 1930s, the Home Owners’ Loan Corporation refinanced one million home mortgages in order to prevent foreclosures. The refinancing apparently succeeded, and HOLC returned a profit. The problem then, as now, was not “deadbeats” who wouldn’t pay their mortgages, and the HOLC refinancing did not discourage others from paying their mortgages. Market purists who claim the only solution is for housing prices to fall to prior levels overlook that rising inventories can push prices below prior levels, thus causing more distress. They also overlook the role of interest rates. If a worsening credit crisis dries up mortgage lending and pushes mortgage interest rates higher, the rise in interest rates could offset the fall in home prices, and mortgages would remain unaffordable even in a falling housing market.

Some commentators are blaming the current mortgage problem on the pressure that the US government put on banks to lend to unqualified borrowers. However, whatever breaches of prudence there may have been only affected the earnings of individual institutions. They did not threaten the financial system. The current crisis required more than bad loans. It required securitization and its leverage. It required Fed chairman Alan Greenspan’s inappropriate low interest rates, which created a real estate boom. Rapidly rising real estate prices quickly created home equity to justify 100 percent mortgages. Wall Street analysts pushed financial companies to improve their bottom lines, which they did by extreme leveraging.

An alternative to refinancing troubled mortgages would be to attempt to separate the bad mortgages from the good ones and revalue the mortgage-backed securities accordingly. If there are no further defaults, this approach would not require massive write-offs that threaten the solvency of financial institutions. However, if defaults continue, write-downs would be an ongoing enterprise.

Clearly, all Secretary Paulson thought about was getting troubled assets off the books of financial institutions.

The same reckless leadership that gave us expensive wars based on false premises has now concocted an expensive bailout that does not address the problem, which will fester and become worse

Right To Healthy Foods Undercut By Nanny State

Right to Healthy Food Undercut by Nanny State

By Kimberly Hartke

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Our constitutional right to liberty is systematically being attacked by government agencies flanked by anti-competitive forces in the food industry. Nowhere, is this more obvious than on the raw milk issue. California Gov. Arnold Swartzenegger recently vetoed SB 201, a bill to preserve consumers rights to access farm fresh milk, while guaranteeing its safety.

The governor, who likely consumed raw dairy in his rise to stardom as a body builder, thwarted the freedoms of the over 40,000 raw milk devotees in his state. He ignored the will of the people in favor of the milk processors and the government regulators bent on crushing the raw dairy producers in their state—two of which are the most successful in the nation.

The California Department of Food and Agriculture, whose officials repeatedly refused to appear at hearings on the legislation, by pushed the Terminator’s pen on a bill that received populist support and nearly unanimous approval by both houses of the legislature.

Similar back room politics killed the Farm Fresh Milk Act in Maryland last year, which would have reinvigorated struggling small dairy farms by recognizing their right to sell milk direct to consumers at the farm gate. Hundreds of Maryland families participated in lobbying efforts in support of the bill, and yet it was killed in committee (by a very close vote) because of the bureaucrats’ dire warnings of an imminent threat to public health.

In Pennsylvania, an aggressive anti-raw milk stance has created a hostile atmosphere for over 100 family farms. Pennsylvania raw milk farms practice humane animal husbandry and consequently, offer a superior product to thousands of consumers, many of whom imbibe raw milk for its healing qualities. Bill Chirdon, the Director of the Pennsylvania Department of Agriculture’s (PDA) Bureau of Food Safety and Laboratory Services, is spearheading a pathogen witch hunt that appears to have as its aim a chilling of consumer demand for raw dairy. Through stepped up inspection schedules and a flurry of negative press releases warning of pathogens in raw milk in 2008, He has managed to damage farmer’s livelihoods, thus raising the ire of consumers and farmers alike. Taking a guilty until proven innocent attitude toward one dairy farmer in a recent case, Chirdon even issued a press release pinning blame for several illnesses on the dairy, prior to the return of official test results. When the test results came back negative, he proceeded to withhold the release of the results to the media, while disseminating another press release, which claimed a pathogen was found in an opened milk container from a sick household.

Farm-to-Consumer Legal Defense Fund Board member, Ted Beals, M.D. a pathologist and former laboratory chief says that the testing of an opened container, especially from a sick household, is an unacceptable test. An opened container may be cross-contaminated, and this is even more likely to happen in a home where there is illness. This release to the media of the unorthodox test results, however, totally eclipsed the PDA’s subsequent announcement that the official test results for pathogens in the dairy’s milk came back negative. The dairy had been exonerated, yet the public perception was left that it was risky to buy its products.

Consumer choice and the survival of family farms, particularly those who practice traditional and sustainable farming methods, are under siege by government policies informed by institutional bias against unprocessed milk. Sally Fallon Morell, president of the Weston A. Price Foundation and the nation’s leading champion of raw dairy for its nutritional benefits,, has a dire warning of her own, “The right to produce and consume raw dairy is vital to the health of the family farm and our citizens. The future of sustainable agriculture and the health of our nation depends on a new paradigm that respects the essential liberties of farmers and consumers.”

Bureaucrats and Big Business with wanton disregard for our freedoms, may stir up such resistance that they end up stimulating demand for raw dairy, rather than curbing sales. Their campaign of oppression may be just what we need to bring that new paradigm about.

Kimberly Hartke is a raw dairy consumer in the state of Virginia. She suffers from a painful knee condition, chondromalacia patella (runners knee), that has been alleviated by adding raw dairy to her diet. Virginia has banned retail and farm sales of raw milk, so she invested in a cow lease program in order to have access to farm fresh milk. She is currently the publicist for the Weston A. Price Foundation, a non-profit, which promotes raw mile from pasture-raised cows as a healthy alternative to processed milk. Visit her web site here.

States’ Actions to Block Voters Appear Illegal

States’ Actions to Block Voters Appear Illegal

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Tens of thousands of eligible voters in at least six swing states have been removed from the rolls or have been blocked from registering in ways that appear to violate federal law, according to a review of state records and Social Security data by The New York Times.

The actions do not seem to be coordinated by one party or the other, nor do they appear to be the result of election officials intentionally breaking rules, but are apparently the result of mistakes in the handling of the registrations and voter files as the states tried to comply with a 2002 federal law, intended to overhaul the way elections are run.

Still, because Democrats have been more aggressive at registering new voters this year, according to state election officials, any heightened screening of new applications may affect their party’s supporters disproportionately. The screening or trimming of voter registration lists in the six states — Colorado, Indiana, Ohio, Michigan, Nevada and North Carolina — could also result in problems at the polls on Election Day: people who have been removed from the rolls are likely to show up only to be challenged by political party officials or election workers, resulting in confusion, long lines and heated tempers.

Some states allow such voters to cast provisional ballots. But they are often not counted because they require added verification.

Although much attention this year has been focused on the millions of new voters being added to the rolls by the candidacy of Senator Barack Obama, there has been far less notice given to the number of voters being dropped from those same rolls.

States have been trying to follow the Help America Vote Act of 2002 and remove the names of voters who should no longer be listed; but for every voter added to the rolls in the past two months in some states, election officials have removed two, a review of the records shows.

The six swing states seem to be in violation of federal law in two ways. Michigan and Colorado are removing voters from the rolls within 90 days of a federal election, which is not allowed except when voters die, notify the authorities that they have moved out of state, or have been declared unfit to vote.

Indiana, Nevada, North Carolina and Ohio seem to be improperly using Social Security data to verify registration applications for new voters.

In addition to the six swing states, three more states appear to be violating federal law. Alabama and Georgia seem to be improperly using Social Security information to screen registration applications from new voters. And Louisiana appears to have removed thousands of voters after the federal deadline for taking such action.

Under federal law, election officials are supposed to use the Social Security database to check a registration application only as a last resort, if no record of the applicant is found on state databases, like those for driver’s licenses or identification cards.

The requirement exists because using the federal database is less reliable than the state lists, and is more likely to incorrectly flag applications as invalid. Many state officials seem to be using the Social Security lists first.

In the year ending Sept. 30, election officials in Nevada, for example, used the Social Security database more than 740,000 times to check voter files or registration applications and found more than 715,000 nonmatches, federal records show. Election officials in Georgia ran more than 1.9 million checks on voter files or voter registration applications and found more than 260,000 nonmatches.

Officials of the Social Security Administration, presented with those numbers, said they were far too high to be cases where names were not in state databases. They said the data seem to represent a violation of federal law and the contract the states signed with the agency to use the database.

Last week, after the inquiry by The Times, Michael J. Astrue, the commissioner of the Social Security Administration, alerted the Justice Department to the problem and sent letters to election officials in Alabama, Georgia, Indiana, Nevada, North Carolina and Ohio. The letters ask the officials to ensure that they are complying with federal law.

“It is absolutely essential that people entitled to register to vote are allowed to do so,” Mr. Astrue said in a press release.

In three states — Colorado, Louisiana and Michigan — the number of people purged from the election rolls since Aug. 1 far exceeds the number who may have died or relocated during that period.

States may be improperly removing voters who have moved within the state, election experts said, or who are considered inactive because they have failed to vote in two consecutive federal elections. For example, major voter registration drives have been held this year in Colorado, which has also had a significant population increase since the last presidential election, but the state has recorded a net loss of nearly 100,000 voters from its rolls since 2004.

Asked about the appearance of voter law violations, Rosemary E. Rodriguez, the chairwoman of the federal Election Assistance Commission, which oversees elections, said they could present “extremely serious problems.”

“The law is pretty clear about how states can use Social Security information to screen registrations and when states can purge their rolls,” Ms. Rodriguez said.

Nevada officials said the large number of Social Security checks had resulted from county clerks entering Social Security numbers and driver’s license numbers in the wrong fields before records were sent to the state. They could not estimate how many records might have been affected by the problem, but they said it was corrected several weeks ago.

Other states described similar problems in entering data.

Under the Help America Vote Act, all states were required to build statewide electronic voter registration lists to standardize and centralize voter records that had been kept on the local level. To prevent ineligible voters from casting a ballot, states were also required to clear the electronic lists of duplicates, people who had died or moved out of state, or who had become ineligible for other reasons.

Voting rights groups and federal election officials have raised concerns that the methods used to add or remove names vary by state and are conducted with little oversight or transparency. Many states are purging their lists for the first time and appear to be unfamiliar with the 2002 federal law.

“Just as voting machines were the major issue that came out of the 2000 presidential election and provisional ballots were the big issue from 2004, voter registration and these statewide lists will be the top concern this year,” said Daniel P. Tokaji, a law professor at Ohio State University.

Voting rights groups have urged voters to check their registrations with local officials.

In Michigan, some 33,000 voters were removed from the rolls in August, a figure that is far higher than the number of deaths in the state during the same period — about 7,100 — or the number of people who moved out of the state — about 4,400, according to data from the Postal Service.

In Colorado, some 37,000 people were removed from the rolls in the three weeks after July 21. During that time, about 5,100 people moved out of the state and about 2,400 died, according to postal data and death records.

In Louisiana, at least 18,000 people were dropped from the rolls in the five weeks after July 23. Over the same period, at least 1,600 people moved out of state and at least 3,300 died.

The secretaries of state in Michigan and Colorado did not respond to requests for comment. A spokesman for the Louisiana secretary of state said that about half of the numbers of the voters removed from the rolls were people who moved within the state or who died. The remaining 11,000 or so people seem to have been removed by local officials for other reasons that were not clear, the spokesman said.

The purge estimates were calculated using data from state election officials, who produce a snapshot every month or so of the voter rolls with details about each registered voter on record, making it possible to determine how many have been removed.

The Times’s methodology for calculating the purge estimates was reviewed by two voting experts, Kimball Brace, the director of Election Data Services, a Washington consulting firm that tracks voting trends, and R. Michael Alvarez, a political science professor at the California Institute of Technology.

By using the Social Security database so extensively, states are flagging extra registrations and creating extra work for local officials who are already struggling to process all the registration applications by Election Day.

“I simply don’t have the staff to keep up,” said Ann McFall, the supervisor of elections in Volusia County, Fla.

It takes 10 minutes to process a normal registration and up to a week to deal with a flagged one, said Ms. McFall, a Republican, adding that she was receiving 100 or so flagged registrations a week.

Usually, when state election officials check a registration and find that it does not match a database entry, they alert local election officials to contact the voter and request further proof of identification. If that is not possible, most states flag the voter file and require identification from the voter at the polling place.

In Florida, Iowa, Louisiana and South Dakota, the problem is more serious because voters are not added to the rolls until the states remove the flags.

Ms. McFall said she was angry to learn from the state recently that it was her responsibility to contact each flagged voter to clear up the discrepancies before Election Day. “This situation with voter registrations is going to land us in court,” she said.

In fact, it already has.

In Michigan and Florida, rights groups are suing state officials, accusing them of being too aggressive in purging voter rolls and of preventing people from registering.

In Georgia, the Justice Department is considering legal action against the state because officials in Cobb and Cherokee Counties sent letters to hundreds of voters stating that their voter registrations had been flagged and telling them they cannot vote until they clear up the discrepancy.

On Monday, the Ohio Republican Party filed a motion in federal court against the secretary of state to get the list of all names that have been flagged by the Social Security database since Jan. 1. The motion seeks to require that any voter who does not clear up a discrepancy be required to vote using a provisional ballot.

Republicans said in the motion that it is central to American democracy that nonqualified voters be forbidden from voting.

The Ohio secretary of state, Jennifer Brunner, a Democrat, said in court papers that she believes the Republicans are seeking grounds to challenge voters and get them removed from the rolls.

Considering that in the past year the state received nearly 290,000 nonmatches, such a plan could have significant impact at the polls.

Is Colorado the next Florida? Watchdogs worry huge turn-out and a new untested voter database could spell disaster on Election Day

Is Colorado the next Florida?

Watchdogs worry huge turn-out and a new untested voter database could spell disaster on Election Day

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First there was Florida. Then there was Ohio. Will Colorado be next?

The state’s got a brand new voter database system, the longest ballot in the nation and hundreds of thousands of new voter registrations to contend with, all of which raise the specter of chaos at the polls come November. And while elections officials maintain that Colorado can pull off its elections without a hitch, several voter watchdog groups say otherwise.

Election turmoil in Florida in 2000 and in Ohio in 2004 was caused by a number of factors, from election worker shortages to voting machine malfunctions. While Colorado shares some but not all of these problems, the biggest question mark in the state is whether or not a new voter database system, called SCORE (which stands for Statewide Colorado Registration and Election) will perform up to snuff.

Colorado rolled out the SCORE program this year — two years later than anticipated and, at last count, more than $3 million over budget — in order to comply with the Help America Vote Act. The 2002 congressional mandate was a response to the 2000 Florida election fiasco in which voter disenfranchisement and disputed ballots called the final tally into question. HAVA aimed to ameliorate problems with voting systems across the United States. In Colorado, the Secretary of State’s Office implemented SCORE and purchased a number of electronic voting machines to adhere to the new regulations.

Those machines were the subject of a major controversy last year, when Secretary of State Mike Coffman decertified and later recertified the equipment under a cloud of suspicion. But while the voting machine debacle has quieted down, SCORE’s performance has yet to be judged.

Often referred to as an “electronic poll book,” SCORE compiles statewide voter information into a single database. When a voter goes to the polls, he or she will be asked to check in using the SCORE system.

“I suspect it is going to work,” says Larimer County Clerk and Recorder Scott Doyle. “I hope.”

But difficulties could arise if new voters’ registrations are not properly entered into the system ahead of Election Day.

“Because we have had such a massive voter registration effort, we expect to see problems where people think they are registered but actually find they are not at the polls,” says Jenny Flanagan, executive director of Common Cause, a Colorado nonprofit aimed at holding elected leaders accountable.

“With the close of registration we see massive amounts of forms coming in and the counties have to process those forms and be in touch with any voter that might have a problem,” she adds. Colorado voter registration ended on Monday, but those who registered before the deadline will have the chance to amend their applications in the case that they made a mistake or an omission. More than 215,000 new voters have signed up since January.

In addition, there are questions as to whether the system will be overrun when poll workers across Colorado log in en masse.

“This is a new system. This will be the first general election they use it,” says Sarah Brannon, staff attorney with the Fair Elections Legal Network, a nonpartisan group in Washington, D.C., devoted to increasing voter participation. “People will be using the system throughout the course of the day to check voters into the system. So there is a question of whether there will be an overload of use.”

An estimated 20,000 Denver County voters left the polls before casting a ballot in 2006 after an epic electronic poll book failure that prevented elections officials from confirming the eligibility of voters, causing long lines and short tempers. Sequoia Voting Systems, the firm that received the no-bid database contract, blamed “user error” on poll workers. A former software firm owner who served as an Election Day poll book judge told The Colorado Independent days after the 2006 election that a faulty, untested and possibly unfinished product constantly crashed when poll workers across the county logged in.

In order to avoid that fate, some counties have opted to print a paper poll book to check off voters.

“I don’t have any inclination that it will fall apart, but it is something we are watching very closely,” says Flanagan. “Every county is going to be different whether it uses the electronic poll book or a paper one.”

While elections groups warn of possible SCORE problems, the Secretary of State’s Office remains confident about the program. Spokesman Rich Coolidge did not return a Monday phone call seeking comment, but the Durango Telegraph recently quoted Coffman expressing his optimism after a mock primary election using SCORE was held last May. “I’m pleased that the election met the goals we set and was ultimately a success,” he told the Telegraph.

Though SCORE’s performance has yet to be determined, Colorado could face problems akin to those in Florida and Ohio. In 2000, Florida’s election hold-up had to do with faulty voting machines that miscounted votes.

“We have a history of problems with voting machines,” says Flanagan, referring to Coffman’s decertification and subsequent recertification of electronic voting systems statewide. “It is a potential issue we might see.”

And in Ohio, the hours-long lines of 2004 could be replicated here unless each county takes care to adequately staff its polling places. “In Colorado, we don’t have specific formulas to require how we set up our polling places,” says Flanagan. “That is something we are at risk for but we haven’t had huge problems in the past.”

Flanagan says that she won’t be the only one in the state who will be closely monitoring the election. Her organization, Common Cause, has joined with members of the League of Women Voters of Colorado, the Colorado Lawyers Committee, Latina Initiative and the League Center for People with Disabilities and Older People to form Just Vote Colorado, a group devoted to tracking and assisting with the election.

But there will also be other eyes on the state as well come Nov. 4. “Because it is going to be a close election the political parties are going to be looking at every nuance,” she says.

Medicare drug options shrink for low-income members

Medicare drug options shrink for low-income members

An analysis out this week by Avalere Health, a for-profit research firm in Washington, found 308 stand-alone drug plans nationwide next year eligible to serve low-income residents, down about 200 from this year. Those beneficiaries are subsidized by the government. They pay little or no monthly premiums and generally have lower out-of-pocket costs, called deductibles, for drugs than do higher-income policyholders.

Avalere estimates 1.3 million low-income beneficiaries will be reassigned to new coverage, up from 1.2 million in 2008 and 250,000 in 2007.

"This continues the incredible disruption and access to benefits that low-income folks face in Medicare," says David Lipschutz, a staff attorney with California Health Advocates, a non-profit that advocates for Medicare beneficiaries. The changes could mean some beneficiaries may have to switch prescriptions if their medications are not covered by their new plans, or face other changes, he says.

To serve low-income Medicare members, insurers must keep their premiums below a government-set median benchmark. Many insurers raised their premiums overall for next year, so they no longer qualify to offer the low-income coverage but will still offer policies to higher-income Medicare members.

One large insurer, Humana, which this year offered low-income coverage in 43 states, won't have any eligible low-income plans next year. Cigna, another large insurer, will drop from low-income coverage in 29 states to 14, according to the analysis.

Bucking the trend: UnitedHealth, whose partner is AARP. Next year United will boost low-income coverage to 42 states, up from 30.

The changes mean low-income residents of Nevada will have only one stand-alone drug plan. Arizona residents will have two. Four other states — Florida, Hawaii, Maine and New Hampshire — will have five or fewer.

New surveillance program will turn military satellites on US

New surveillance program will turn military satellites on US

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An appropriations bill signed by President Bush last week allows the controversial National Applications Office to begin operating a stringently limited version of a program that would turn military spy satellites on the US, sharing imagery with other federal, state, and local government agencies. The government's own watchdog agency, the Government Accountability Office, has warned in an unpublished report that the more expansive program in the offing lacks adequate safeguards to protect privacy and civil liberties.

For now, the law restricts the NAO to "activities substantially similar" to those carried out by the Civil Applications Committee, an interagency coordinating body formed in 1976 to give civilian agencies access to military satellites for scientific and disaster preparedness purposes, such as "monitoring volcanic activity, environmental and geological changes, hurricanes, and floods." But as a draft charter for the Office makes clear, officials at the Department of Homeland Security hope to branch out from these traditional applications, providing assistance and information to domestic law enforcement agencies.

That doesn't sit well with some members of Congess, who in a sharply worded letter earlier this year expressed concerns that the NAO "raises major issues under the Posse Comitatus Act" barring the military from performing law enforcement duties, and worried the program could be used to "gather domestic intelligence outside the rigorous protections of the law—and, ultimately, to share this intelligence with local law enforcement outside of constitutional parameters."

And as the Wall Street Journal reported last week, the Government Accountability Office appears to share those concerns. In an unpublished analysis—a public version of which may be released in coming weeks—the GAO found that there did not seem to be adequate "assurance that NAO operations will comply with applicable laws and privacy and civil liberties standards," nor sufficient checks and oversight procedures to prevent the misuse of satellite imagery.

The existence of the NAO was first publicly disclosed in press reports last summer, several months after its creation at the behest of the Director of National Intelligence. Following hearings held by the House Committee on Homeland Security, Congress blocked funding for the NAO, pressing DHS for more information about the legal basis for the progam—as well as the privacy safeguard to be put in place. The current appropriations bill permits the NAO to be funded only for the purpose of carrying out the old Civil Applications Committee's functions, pending a certification by the Secretary of Homeland Security that the Office's compliance with the law has been vetted, and provision to the Appropriations Committee of details of how funds will be spent. The bill also directs the Inspector General to provide regular reports—somewhat oddly, to the Appropriations Committee—on the data collected by NAO.

Among the questions raised about the proposed program is whether it runs afoul of the Reconstruction Era statute that makes it a crime to use the armed forces to "execute the laws" within US borders. Tim Sparapani, senior legislative counsel with the American Civil Liberties Union, believes the new initiative to be "a prima facie violation of the Posse Comitatus Act—this is about using a military asset to do domestic law enforcement." If law enforcement or immigration agencies need spy satellites, he argues, they should ask Congress to buy them some, rather than using the powerful eyes in the sky operated by the National Reconaissance Office for foreign-intelligence agencies not bound by domestic privacy constraints. "The military should never be used against the citizenry," he argues. "Even if we're talking about shooting pictures of people instead of shooting people, the principle remains the same."

But Gene Healy, an attorney and scholar at the libertarian Cato Institute, is not so sure. At least since the 70s, says Healy, courts have tended to read the prohibition on using the military to "execute the laws" only as a barrier to "hands-on policing," such as conducting arrests or doing crowd control. That means sending soldiers to physically search a criminal suspects home is out, but loaning expertise or equipment and sharing information may be allowed. During the 2002 hunt for the "DC sniper," he notes, Army aircraft were used in the effort to hunt down the serial killer. "That doesn't mean it's a good policy," says Healy, "I can think of a lot of reasons it's a really bad idea to let soldiers train narcotics officers too, but that doesn't mean either is illegal under the current statute."

And what of Fourth Amendment concerns? Here, Sparapani says, the program enters "uncharted waters." In a pair of 1986 decisions, the Supreme Court ruled that aerial observation by surveillance planes did not count as a Fourth Amendment "search." If you grew your marijuana out in the open, the justices essentially concluded, you could not claim a "reasonable expectation of privacy" even if the crop wasn't visible from the ground. But the court left open the question of whether the same logic would apply in the case of technology more esoteric than an airplane. And in 2001, the court concluded that a search warrant was needed to use infrared scanners to detect the heat signature from an indoor dope-growing operation.

Presumably intelligence satellites have a range of sophisticated scanning equipment that would fall under the latter rule. But even in the case of ordinary image capturing, the high degree of precision of the satellite cameras—by some accounts good enough to read a page of text in a subject's hand—may make spying from space qualitatively different from a plane flyover.

Whatever the courts decide, Sparapani argues that Congress should press DHS to be more forthcoming about how it plans to use the orbiting eyes. "Given this administration," he says, "'trust us' just doesn't work anymore."

Is the Federal Reserve Engaged in Acts of Economic Warfare Against America?

Is the Federal Reserve Engaged in Acts of Economic Warfare Against America?

by Mike Adams

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In 1942, German intelligence officers rounded up skilled Jewish prisoners and launched Operation Bernhardt, a clever scheme designed to counterfeit hundreds of millions of dollars worth of British Pounds and destroy the British economy by flooding it with counterfeit money. Located in the Sachsenhausen concentration camp, Operation Bernhardt was, even by modern standards, a runaway success that resulted in the creation of forged bank notes worth 132 million British Pounds.

This "economic warfare" operation resulted in a devastating economic effect on the British economy. You can read the true history of this operation here:

It is important to note that Operation Bernhardt was an act of war, specifically pursued for the purpose of destroying Britain's economy by creating so much new money that the value of the money already in circulation would plummet. This was considered a strategic attack, just as effective as carpet-bombing tank factories or mowing down soldiers on the field with German-made MG42 machine guns.

What does all this have to do with the Federal Reserve?

Today, the Federal Reserve is engaged in an eerily similar operation, counterfeiting trillions of dollars in U.S. bank notes and flooding the U.S. money supply with money created from nothing. The result, of course, is the same as was intended by Operation Bernhardt in 1942: The economic destruction of the target nation. Only this time, the target is the United States of America.

Hilariously, the Fed claims it's doing this to save the economy. Yet the laws of economics tell us that flooding the money supply with trillions of dollars in new money actually harms the economy. And the Fed has been hard at work causing this harm: $250+ billion two weeks ago, $600+ billion last week and $900 billion earlier this week! It's beginning to crank up the printing presses to the tune of a trillion dollars a week, and by doing so, it's contributing to the destruction of the U.S. economy at a pace the Third Reich could have barely imagined.

Has the Fed declared war on the working class?

If the actions pursued by the Federal Reserve were being masterminded by Al-Qaeda, they would be denounced as acts of war. In World War II, such actions were deliberate acts of war. Targeting the economy for destruction by flooding the money supply with counterfeit currency is, by any measure, a threat to any nation.

So why is the Federal Reserve engaged in actions that, if committed by other nations, would warrant a military response? This is not an idle question. I'm not asking this in a satirical way. I'm quite serious about this: Why is the Fed committing acts of economic warfare against the United States of America? (The Fed, by the way, is a private company. It is not, as you've been led to believe, part of the U.S. government.)

The answer is obvious. You've probably already figured it out: The Federal Reserve is at war with America. It's an economic war, of course, not a bombs-and-bullets war. The casualties, though, are just as real: Savings accounts, retirement funds, bank accounts, jobs, businesses, pensions and much more.

By counterfeiting trillions of dollars like a Sachsenhausen operation on steroids, the Fed is carpet-bombing the U.S. economy with an unprecedented flood of fiat currency, causing the exact same economic destruction intended by the Nazis in World War II (but on a much more devastating scale). And it's doing this as part of a new economic war.

Class warfare has begun

What war? The war between the wealthy elite and the working class. The Fed is working hard, of course, to protect the wealthy elite. Over a trillion dollars of taxpayer money has already been earmarked to bail out the rich, elite bankers who lost other people's money in a series of idiotic bets on fictitious financial instruments.

And what are these bankers doing with this taxpayer money? According to an Associated Press report published yesterday, executives of the failed insurance company AIG were sent on a $440,000 retreat "to a posh California resort" less than one week after the U.S. government bailed them out. At the spa, AIG executives enjoyed spa treatments, massages, organic food buffets and bodywork therapy, all while the American taxpayers footing the bill were slaving away in real jobs, doing real work. Want to see the invoice for yourself? View it here:

That's how this new class warfare is taking shape: YOU (the working class) get all the debt, all the losses, and all the financial burden. THEY (the wealthy elite) get all the profits, all the luxury spa treatments, all the tax breaks and billions of dollars in free money from the Federal Reserve.

In the 1942 Operation Bernhardt, the Germans literally planned to load hundreds of millions of dollars in British Pound bank notes and air-drop them over London. The resulting chaos, it was believed, would shut down the British economy, halting the flow of money needed by Britain to fund its war effort. In the United States today, the Fed is taking a different approach: Air-dropping trillions of dollars into the laps and bank accounts of wealthy bankers and financial institution CEOs, concentrating the massive creation of fiat currency into the hands of less than 1% of the population.

And just to make sure the economic carpet-bombing is a complete success, the Federal Reserve and U.S. government are conspiring to create more than a trillion dollars in new money each week, then flood those funds into banks, businesses and insurance companies. This will, of course, devastate the value of the dollars being saved, held or earned by the wage slaves who labor their lives away under this economic regime. (That would be you and me.)

It's a brilliant plan... if you're interested in destroying a nation. This kind of attack would bring almost any nation to its knees. It's an act of war that requires no violence, no bombs and no destruction of real infrastructure. And yet it achieves what every war in history has ever sought to achieve: The transfer of power from the hands of the many to the hands of the few.

The Federal Reserve, in effect, has become a modern-day economic Third Reich, and it has set its sights on the U.S. economy.

Acts of economic terrorism?

The Federal Reserve is now doing to the U.S. what the terrorists could never have accomplished: The destruction of a large portion of its economy, its currency and the savings of its people.

The economic losses of 9/11 pale in comparison to the financial destruction that has been unleashed onto America by the Federal Reserve.

Yet, amazingly, it wasn't "terrorists" who put this plan into place. Who was it, exactly? Your Congressional representatives played an important role in allowing this to happen. In a grand, historical betrayal of the American people, members of your own U.S. House of Representatives and Senate voted to initiate a massive economic coup in America, violating the wishes of 99% of the American people (who are aligned against bailing out the rich on the backs of the poor).

Of course, to hear them explain it, their actions are meant to save the taxpayers. Yep, that's their plan: To save YOU, the taxpayer, by confiscating your money and handing it over to the wealthy elite. And whatever money can't be stolen from the taxpayers will be counterfeited by the Fed's money-creation machine.

The Real Agenda: A Massive Transfer of Wealth

We are not watching an economic rescue, friends. We are watching an economic coup. Creating and dumping trillions of dollars into the money supply is an act of war. But it's a war with a specific purpose.

What's happening right now is that the United States is being taken over by King Henry and his accomplices. More than fifty percent of the housing and nearly twenty percent of the entire U.S. economy is now controlled by one person -- Henry Paulson -- and that person answers to no one. He isn't elected, he can't be removed from office, and he's subject to no law.

King Henry controls unlimited funds. He can print any amount of money, or confiscate any amount from the taxpayers (by spending taxpayer dollars to bail out his rich friends). If the Federal Reserve is the new Third Reich, King Henry is its Hitler.

The economic war has already been lost by the People. It was lost on September 30, 2008, when Congress surrendered the U.S. economy to King Henry. The People now own nothing but paper money and ephemeral digital account numbers, all of which could be turned into worthless digits overnight by a single decision from King Henry.

In this economic bailout and the Fed's unlimited creation of new money, America has suffered the greatest act of economic warfare in our nation's history. Note carefully that it wasn't conducted by the Nazis, Saddam Hussein or Al Qaeda. It was, in fact, put into place by 172 Democrats and 91 Republicans in the House, and a similar majority in the U.S. Senate. (See the complete list below.)

So what can YOU do right now?

A system of exchange is not dependent on the dollar alone. Commerce will survive the collapse of one currency. Trade will go on after this economic chaos passes, and businesses will continue to be an important part of our economic future.

People will still need food, clothing, nutritional supplements, fuel, services, computers, tutoring, services, pet products, children's products, cars, MP3 players and much more. The end of the U.S. dollar is NOT the end of the world. It is simply the end of one empire...

In my view, the best way to financial survive this economic warfare being conducted by the Federal Reserve against the People is to create your own economic abundance by owning (or launching) your own independent income sources.

In fact, I've written an entire report on how to accomplish this. It's called How to Build Your Financial Safety Net. Due to this economic crisis, I've decided to release it at no charge, and it's available right now at:

Read it if you want to be empowered, informed and insulated from the demise of the dollar. Using the strategies you'll find in that report, you can drastically limit your losses in this economic carpet-bombing of the U.S. economy. In fact, I believe you can emerge with greater wealth than you had when it all started.

You probably won't be getting paid in dollars, however. Expect a new currency to be the future system of exchange in America. But building reliable income streams now is a smart way to survive the coming economic implosion that will put corporations, governments and non-profits out of business. (If you work for a paycheck, your paycheck may be in danger right now.)

What's Really Radical

By the way, do you think this article is radical? Some people have told me that my reporting on the economic situation is "radical." You know what I told them?

I said imagine two households. One household balances its budget, spends only what it brings home in income and has no debt. The other household spends twice as much as it earns. It owes $50,000 on credit cards and borrows money from loan sharks to meet the minimum payments on its credit cards.

Which household is "radical?"

Now consider this: The second household sneaks into the first household and steals money to pay its own debts. On top of that, it has a counterfeit cash printing machine in the basement, and it's cranking out thousands of dollars a week just to attempt to pay off its credit cards. It's immune to the law because it buys off the local police for criminal immunity.

Which household is headed towards financial disaster? Which household has a real future, and which one doesn't?

That second house, of course, is the United States government. My reporting on the U.S. financial situation is downright tame compared to what's really going on behind the scenes. I can't get radical enough to accurately describe the degree of deception and outright theft that's taking place in Washington right now.

History will show that not only were my warnings accurate, they were understated by a wide margin. Reporting the truth is a delicate thing. People can only stomach so much truth at any one time. Few people can handle the whole truth, which is why I usually refrain from reporting it. There are things stated in this article that only hint at much bigger stories that will someday be told by others.

Only the most open-minded, skeptical thinkers can even mentally consider the real truth of what's happening in our world today. Most people have been brainwashed into living in a fictional world, and they are unable to even consider truths that threaten their grip on reality.

As a result, the public has to be led by the hand from one realization to the next, little by little, until they attain the ability to see the world as it really is rather than the illusion that has been constructed for them by the very people running this financial scam.

Video: How Money Creation Actually Works

Check out this video to see how the Fed (and the fractional-reserve banking system) creates money out of nothing:

How Congress Voted

Here is the list of those Congressional representatives who surrendered your economic future to King Henry. A "Y" means a "Yes" vote (in favor of the financial bailout legislation).

This is, in essence, a list of those who have betrayed the People by conspiring to instigate acts of economic warfare against We the People. ("N" means they voted No. "Y" means they voted Yes.")

Democrats - Cramer, Y; Davis, Y.
Republicans - Aderholt, N; Bachus, Y; Bonner, Y; Everett, Y; Rogers, Y.

Republicans - Young, N.

Democrats - Giffords, Y; Grijalva, N; Mitchell, Y; Pastor, Y.
Republicans - Flake, N; Franks, N; Renzi, N; Shadegg, Y.

Democrats - Berry, Y; Ross, Y; Snyder, Y.
Republicans - Boozman, Y.

Democrats - Baca, Y; Becerra, N; Berman, Y; Capps, Y; Cardoza, Y; Costa, Y; Davis, Y; Eshoo, Y; Farr, Y; Filner, N; Harman, Y; Honda, Y; Lee, Y; Lofgren, Zoe, Y; Matsui, Y; McNerney, Y; Miller, George, Y; Napolitano, N; Pelosi, Y; Richardson, Y; Roybal-Allard, N; Sanchez, Linda T., N; Sanchez, Loretta, N; Schiff, Y; Sherman, N; Solis, Y; Speier, Y; Stark, N; Tauscher, Y; Thompson, Y; Waters, Y; Watson, Y; Waxman, Y; Woolsey, Y.

Republicans - Bilbray, N; Bono Mack, Y; Calvert, Y; Campbell, Y; Doolittle, N; Dreier, Y; Gallegly, N; Herger, Y; Hunter, N; Issa, N; Lewis, Y; Lungren, Daniel E., Y; McCarthy, N; McKeon, Y; Miller, Gary, Y; Nunes, N; Radanovich, Y; Rohrabacher, N; Royce, N.

Democrats - DeGette, Y; Perlmutter, Y; Salazar, N; Udall, N.
Republicans - Lamborn, N; Musgrave, N; Tancredo, Y.

Democrats - Courtney, N; DeLauro, Y; Larson, Y; Murphy, Y.
Republicans - Shays, Y.

Republicans - Castle, Y.

Democrats - Boyd, Y; Brown, Corrine, Y; Castor, N; Hastings, Y; Klein, Y; Mahoney, Y; Meek, Y; Wasserman Schultz, Y; Wexler, Y.
Republicans - Bilirakis, N; Brown-Waite, Ginny, N; Buchanan, Y; Crenshaw, Y; Diaz-Balart, L., N; Diaz-Balart, M., N; Feeney, N; Keller, N; Mack, N; Mica, N; Miller, N; Putnam, Y; Ros-Lehtinen, Y; Stearns, N; Weldon, Y; Young, N.

Democrats - Barrow, N; Bishop, Y; Johnson, N; Lewis, Y; Marshall, Y; Scott, Y.
Republicans - Broun, N; Deal, N; Gingrey, N; Kingston, N; Linder, N; Price, N; Westmoreland, N.

Democrats - Abercrombie, Y; Hirono, Y.

Republicans - Sali, N; Simpson, Y.

Democrats - Bean, Y; Costello, N; Davis, Y; Emanuel, Y; Foster, Y; Gutierrez, Y; Hare, Y; Jackson, Y; Lipinski, N; Rush, Y; Schakowsky, Y.
Republicans - Biggert, Y; Johnson, N; Kirk, Y; LaHood, Y; Manzullo, N; Roskam, N; Shimkus, N; Weller, Y.

Democrats - Carson, Y; Donnelly, Y; Ellsworth, Y; Hill, N; Visclosky, N.
Republicans - Burton, N; Buyer, N; Pence, N; Souder, Y.

Democrats - Boswell, Y; Braley, Y; Loebsack, Y.
Republicans - King, N; Latham, N.

Democrats - Boyda, N; Moore, Y.
Republicans - Moran, N; Tiahrt, N.

Democrats - Chandler, N; Yarmuth, Y.
Republicans - Davis, N; Lewis, Y; Rogers, Y; Whitfield, N.

Democrats - Cazayoux, N; Jefferson, N; Melancon, Y.
Republicans - Alexander, Y; Boustany, Y; McCrery, Y; Scalise, N.

Democrats - Allen, Y; Michaud, N.

Democrats - Cummings, Y; Edwards, Y; Hoyer, Y; Ruppersberger, Y; Sarbanes, Y; Van Hollen, Y.
Republicans - Bartlett, N; Gilchrest, Y.

Democrats - Capuano, Y; Delahunt, N; Frank, Y; Lynch, N; Markey, Y; McGovern, Y; Neal, Y; Olver, Y; Tierney, Y; Tsongas, Y.

Democrats - Conyers, N; Dingell, Y; Kildee, Y; Kilpatrick, Y; Levin, Y; Stupak, N.
Republicans - Camp, Y; Ehlers, Y; Hoekstra, Y; Knollenberg, Y; McCotter, N; Miller, N; Rogers, N; Upton, Y; Walberg, N.

Democrats - Ellison, Y; McCollum, Y; Oberstar, Y; Peterson, N; Walz, N.
Republicans - Bachmann, N; Kline, Y; Ramstad, Y.

Democrats - Childers, N; Taylor, N; Thompson, N.
Republicans - Pickering, Y.

Democrats - Carnahan, Y; Clay, N; Cleaver, Y; Skelton, Y.
Republicans - Akin, N; Blunt, Y; Emerson, Y; Graves, N; Hulshof, N.

Republicans - Rehberg, N.

Republicans - Fortenberry, N; Smith, N; Terry, Y.

Democrats - Berkley, Y.
Republicans - Heller, N; Porter, Y.

Democrats - Hodes, N; Shea-Porter, N.

Democrats - Andrews, Y; Holt, Y; Pallone, Y; Pascrell, Y; Payne, N; Rothman, N; Sires, Y.
Republicans - Ferguson, Y; Frelinghuysen, Y; Garrett, N; LoBiondo, N; Saxton, Y; Smith, N.

Democrats - Udall, N.
Republicans - Pearce, N; Wilson, Y.

Democrats - Ackerman, Y; Arcuri, Y; Bishop, Y; Clarke, Y; Crowley, Y; Engel, Y; Gillibrand, N; Hall, Y; Higgins, Y; Hinchey, N; Israel, Y; Lowey, Y; Maloney, Y; McCarthy, Y; McNulty, Y; Meeks, Y; Nadler, Y; Rangel, Y; Serrano, N; Slaughter, Y; Towns, Y; Velazquez, Y; Weiner, Y.
Republicans - Fossella, Y; King, Y; Kuhl, Y; McHugh, Y; Reynolds, Y; Walsh, Y.

Democrats - Butterfield, N; Etheridge, Y; McIntyre, N; Miller, Y; Price, Y; Shuler, N; Watt, Y.
Republicans - Coble, Y; Foxx, N; Hayes, N; Jones, N; McHenry, N; Myrick, Y.

Democrats - Pomeroy, Y.

Democrats - Kaptur, N; Kucinich, N; Ryan, Y; Space, Y; Sutton, Y; Wilson, Y.
Republicans - Boehner, Y; Chabot, N; Hobson, Y; Jordan, N; LaTourette, N; Latta, N; Pryce, Y; Regula, Y; Schmidt, Y; Tiberi, Y; Turner, N.

Democrats - Boren, Y.
Republicans - Cole, Y; Fallin, Y; Lucas, N; Sullivan, Y.

Democrats - Blumenauer, N; DeFazio, N; Hooley, Y; Wu, Y.
Republicans - Walden, Y.

Democrats - Altmire, N; Brady, Y; Carney, N; Doyle, Y; Fattah, Y; Holden, N; Kanjorski, Y; Murphy, Patrick, Y; Murtha, Y; Schwartz, Y; Sestak, Y.
Republicans - Dent, Y; English, N; Gerlach, Y; Murphy, Tim, N; Peterson, Y; Pitts, N; Platts, N; Shuster, Y.

Democrats - Kennedy, Y; Langevin, Y.

Democrats - Clyburn, Y; Spratt, Y.
Republicans - Barrett, Y; Brown, Y; Inglis, Y; Wilson, Y.

Democrats - Herseth Sandlin, N.

Democrats - Cohen, Y; Cooper, Y; Davis, Lincoln, N; Gordon, Y; Tanner, Y.
Republicans - Blackburn, N; Davis, David, N; Duncan, N; Wamp, Y.

Democrats - Cuellar, Y; Doggett, N; Edwards, Y; Gonzalez, Y; Green, Al, Y; Green, Gene, N; Hinojosa, Y; Jackson-Lee, Y; Johnson, E. B., Y; Lampson, N; Ortiz, Y; Reyes, Y; Rodriguez, N.
Republicans - Barton, N; Brady, Y; Burgess, N; Carter, N; Conaway, Y; Culberson, N; Gohmert, N; Granger, Y; Hall, N; Hensarling, N; Johnson, Sam, N; Marchant, N; McCaul, N; Neugebauer, N; Paul, N; Poe, N; Sessions, Y; Smith, Y; Thornberry, Y.

Democrats - Matheson, N.
Republicans - Bishop, N; Cannon, Y.

Democrats - Welch, Y.

Democrats - Boucher, Y; Moran, Y; Scott, N.
Republicans - Cantor, Y; Davis, Tom, Y; Drake, N; Forbes, N; Goode, N; Goodlatte, N; Wittman, N; Wolf, Y.

Democrats - Baird, Y; Dicks, Y; Inslee, N; Larsen, Y; McDermott, N; Smith, Y.
Republicans - Hastings, N; McMorris Rodgers, N; Reichert, N.

Democrats - Mollohan, Y; Rahall, Y.
Republicans - Capito, N.

Democrats - Baldwin, Y; Kagen, N; Kind, Y; Moore, Y; Obey, Y.
Republicans - Petri, N; Ryan, Y; Sensenbrenner, N.

Republicans - Cubin, Y.

New Report: How to Build Your Financial Safety Net, by Mike Adams
Twelve ways to achieve prosperity during (and after) the global financial crisisclick here to read

• The 7 types of income streams • 15 online resources • The 18 basic human drivers you need to know • Why the global financial crisis may now threaten your paycheck • How to earn a living from doing what you LOVE!