Wednesday, October 15, 2008

The stock market’s false rallies—what history tells us

The stock market's false rallies—what history tells us

By Tom Eley
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Yesterday's worldwide surge in stock market share values marked a partial reversal of the previous week's declines, which had wiped out trillions of dollars in wealth. The rally marked the first reaction of the financial elite to the hundreds of billions of dollars promised to the world's biggest bankers by central banks and governments in Europe and the US.

In one day, the Dow Jones industrial average, the index that measures the stock values of 30 leading publicly traded corporations, climbed over 11 percent, its fifth largest increase on record in percentage terms, and its largest ever in terms of points. The rally followed a sharp increase on the European stock markets, and in turn fueled an even larger increase on the Asian markets.

Under such volatile conditions, it is impossible to predict with any degree of precision whether or not Monday's rally augurs a period of stabilization in the stock markets. However, if we consider the largest rallies in stock market history, Monday's meteoric rise in share values might just as rightly be taken as a warning.

Data published in Monday's Wall Street Journal shows that among the 10 biggest days in Wall Street history, eight took place within the first four years of the Great Depression. Another occurred on Oct. 21, 1987, shortly after the largest single-day decline in the history of the stock market, the 22 percent fall that took place on Oct. 19, 1987, so-called "Black Monday."

According to the Journal, only two of these increases—those of 1987 and 1933—"marked the end of bear markets." The increase in the Dow that began in 1933, however, proceeded slowly with more sharp falls in store. More fundamentally, improving share prices did nothing to end the Great Depression, which continued until the onset of World War Two. It was not until 1955 that the Dow Jones regained the value that it had achieved in September of 1929. The Journal is also incorrect in citing Oct. 21 as the beginning of a bull market in 1987. Two more sharp falls followed in its wake, and it was not until the end of the year that the stock market recovered and maintained its value from the beginning of 1987.

In the "Great Crash" of 1929 there were a number of big single-day increases on the stock market, but the overall trajectory was down. Between October 1929 and July 1932 there were five increases of the Dow of more than 9 percent, including the market's second biggest day ever, Oct. 6, 1931, when stocks surged by nearly 15 percent. What is remembered about these "rallies," however, is that they were fleeting moments in a longer downward spiral—and instants in which many investors gambled and lost. The stock market did not bottom out until July 1932, having lost 82 percent of its value.

Temporary upswings in share values are a feature of periods of crisis, which seem to accentuate the speculative characteristics of capitalism. As Friedrich Engels explained in Socialism: Utopian and Scientfic (1880), crises, as they convert "the great establishments ... into State property," show how capitalists have "no further social function than that of pocketing dividends, tearing off coupons, and gambling on the Stock Exchange, where the different capitalists despoil one another of their capital."

In contrast to the 19th century, large sections of the working and middle classes are now being "despoiled" of their retirement funds, having been promised that the stock market would provide the greatest return on their savings.

No sacrifice for the bankers

No sacrifice for the bankers

By Barry Grey
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There will be no letup in Wall Street bankers’ ruthless pursuit of profits and personal wealth. While the government and politicians of both parties are calling for all Americans to “sacrifice” for the sake of the “nation,” the CEOs of major banks and financial companies are exploiting the crisis of their own making to extract new concessions from the government.

The American Bankers Association on Monday demanded that government regulators scrap accounting rules that require banks and financial firms to write down the value of worthless assets on their balance sheets.

The arrogance of the bankers is so brazen than even the Wall Street Journal is warning that their behavior could spark a popular backlash. In a cautionary article entitled “Street’s Demands May Stir Public Wrath,” the Wall Street Journal wrote on Tuesday: “You would have thought the Street’s last surviving chieftains would be a contrite bunch by now, eager to reform their industry and help rebuild their country.

“At least until you heard Goldman Sachs Group Inc.’s Lloyd Blankfein, JPMorgan Chase’s James Dimon, Blackstone Group LP’s Stephen Schwarzman, BlackRock Inc.’s Larry Fink and Silver Lake’s Glenn Hutchins assemble for a panel session at the New York Stock Exchange last week organized in part by the Wall Street Journal...

“While America buckles in for years of sacrifice, the five chiefs took a different approach. The group pulled straight from the what-government-can-do-for-you school of 2006, lobbying for Wall Street tax breaks, the repeal of Sarbanes-Oxley and against the distraction of class-action lawsuits.”

Hospitals in the American South 70% More Likely to Kill You

Hospitals in the American South 70% More Likely to Kill You

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If you are brought to the hospital with a stroke or heart attack, your geographic location could mean the difference between life and death. A study released today by hospital rating organization HealthGrades shows that people in the nation's highest-ranked hospitals (most of which are in the midwest) are 70% less likely to die than those in the lowest-ranked (most of which are in the south). The group looked at survival rates for 17 different problems or procedures, including stroke, heart attack, sepsis, and pneumonia.

The report rates hospitals on a scale of 1 to 5 stars, correcting for differences in services offered. According to the study authors:

If all hospitals performed at the level of a 5-star rated hospital across the 17 procedures and diagnoses studied, 237,420 Medicare lives could have potentially been saved from 2005 to 2007. The region with the lowest overall risk-adjusted mortality rates was the East North Central region (IL, IN, MI, OH, and WI), while the East South Central region (AL, KY, MS, and TN) had the highest mortality rates.

What's surprising is that the best survival rates were not in the wealthiest regions of the nation, though the lowest survial rates were in some of the most impoverished areas. Generally, the high survival rates had to do with the density of 5-star rated hospital facilities.

The health gap between different regions in the U.S. is an issue that's likely to affect future generations in the country far more than the collapse of the world finance markets. Though of course money problems will only exacerbate our already-existing health problems.

But there is just something so stark about a statistic showing that where you live means you're 70 percent more likely to continue living if you go to the hospital. It brings home the reality of a crisis that's only going to get worse.

Federal deficit hits record $455 billion

Federal deficit hits record $455 billion

The shortfall for fiscal 2008 is even larger than had been feared. It is likely to be a key issue as the presidential race winds down.

By Richard Simon

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Compounding terrible economic news, budget officials announced Tuesday that the federal deficit has soared to a record $455 billion, injecting new urgency into the closing days of the presidential campaign about spending in Washington, including efforts to stem the financial disaster.

The final accounting for fiscal 2008 produced a larger shortfall than had been projected, reflecting the start of federal efforts to address the economic emergency. It is certain to become a significant issue in the campaign, confronting the candidates with new questions about their growing slate of proposals for new spending and tax cuts at a time when red ink is surging.

"The reality is that the next president will be inheriting a fiscal and economic mess of historic proportions -- the legacy of President Bush's failed policies," said Sen. Kent Conrad (D-N.D.), chairman of the Senate Budget Committee. "It will take years to dig our way out."

The deficit is likely to be even bigger next year as the country copes with the worst financial crisis since the Depression.

The new figure breaks the previous record deficit of $413 billion in 2004 and more than doubles the 2007 deficit of $162 billion. It has focused new attention on government spending, coming just days after the National Debt Clock in New York City ran out of digits to record the overall national debt, which passed $10 trillion.

In Congress, the record deficit is likely to intensify debate over Democrats' efforts to pass another economic stimulus package, perhaps worth $150 billion, and over the issue of fiscal discipline.

Administration officials blamed the deficit in large part on the nation's economic troubles, which produced lower than expected tax revenues and led to passage of an economic stimulus package that included tax rebates.

The figures were released as the Treasury Department detailed its plans to inject $250 billion into banks, part of a $700-billion financial rescue plan recently approved by Congress.

As part of the bailout, Congress lifted the ceiling on the national debt to $11.3 trillion from $10.6 trillion. But White House officials expressed hope that the government's actions would help improve the economy and, in turn, reduce the deficit.

"If we've gotten this thing right on dealing with the financial crisis . . . then our economy can start producing revenue again," said Stephen McMillin, deputy director of the White House budget office.

The White House, attempting to portray the deficit number in the most positive light, said that the red ink, measured as a share of the economy, equaled 3.2% of the gross domestic product -- below the record of 6%, set in 1983 after President Reagan's tax cuts were implemented.

"The bipartisan stimulus bill and the slow economy are the primary reasons for the increase in deficit," White House budget director Jim Nussle said in a statement. "I am confident the economy can return to stronger growth with a declining deficit -- after working through current challenges -- if Congress limits wasteful and excessive spending."

Democrats blamed Bush and his Republican allies in Congress for wiping out a budget surplus inherited from the Clinton administration through tax cuts that have been criticized for favoring the wealthy and through other spending.

Rep. Paul D. Ryan of Wisconsin, the top Republican on the House Budget Committee, said the deficit was a "warning sign of the immense fiscal challenges just beginning to arise with the retirement of the baby boomers" and should be viewed as a call for Congress to control spending.

Bush Exceeded Power by Withholding Cheney Comments, Report Says

Bush Exceeded Power by Withholding Cheney Comments, Report Says

By Jeff Bliss

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President George W. Bush overstepped his authority by withholding an FBI interview of Vice President Dick Cheney from a congressional panel probing the leak of a CIA agent's identity, a draft bipartisan House report said.

The interview may shed light on who disclosed former CIA agent Valerie Plame's identity, the draft report said. The report was circulated by House Oversight and Government Reform Committee Chairman Henry Waxman, a California Democrat, and Virginia Representative Tom Davis, the panel's senior Republican.

The president's decision to withhold the interview transcript from the committee in July ''was legally unprecedented and an inappropriate use of executive privilege,'' the report said.

The committee is investigating what role Cheney may have had in the leak of Plame's work in 2003. Her husband, former ambassador Joseph Wilson, had questioned evidence used to justify the U.S. invasion of Iraq.

Attorney General Michael Mukasey had told the committee that Bush's refusal to release the Cheney interview was within the president's authority, under executive privilege, to keep his discussions with advisers private.

White House spokesman Tony Fratto today objected to the report and another one circulated by Waxman that said the administration wrongly asserted executive privilege regarding a separate panel investigation of climate change and Clean Air Act policies.

Fratto said the committee received ''upwards of a million pages of documents'' from the administration and that today's reports were partisan and unhelpful.

'Campaign Attack'

''We're focused on more important business than another campaign attack from Representative Waxman,'' he said.

In August, a federal appeals court upheld the dismissal of a lawsuit by Plame and Wilson that accused Cheney, former White House political adviser Karl Rove and former Cheney aide I. Lewis ''Scooter'' Libby of conspiring to reveal Plame's identity.

Plame and Wilson accused the three men and former Deputy Secretary of State Richard Armitage of leaking her name to retaliate against Wilson.

Libby was convicted by a federal jury in March 2007 of obstructing a Department of Justice probe into the leak of Plame's identity. Bush commuted Libby's sentence three months later while leaving the conviction intact. No one has been charged with illegally disclosing Plame's identity.

The report on climate change said it was an ''abuse'' for administration officials to withhold 2,000 pages of documents from the committee.

The documents concern administration decisions to prevent California and other states from seeking to reduce greenhouse gases from motor vehicles and adopt ozone standards at odds with Environmental Protection Agency scientists' recommendations.

The Supreme Court has declined to hear Troy Davis' case.

The Supreme Court has declined to hear Troy Davis' case.

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The Georgia Board of Pardons and Paroles denied clemency for Troy Anthony Davis shortly before 5 p.m. on Friday, September 12. They did so despite overwhelming doubts of Davis' guilt - and after stating last year that they would "not allow an execution to proceed in this State unless and until its members are convinced that there is no doubt as to the guilt of the accused." On September 23, The U.S. Supreme Court stayed Troy Davis' execution "pending the disposition of [his] petition for a writ of certiorari." On October 14, the Court decided not to accept his petition.

The Georgia Board has the power to step in at any point, so we encourage you to continue to collect letters and petitions asking them to issue clemency. These letters are being collected in Amnesty International's Atlanta office to be delivered to the Board at the appropriate time. Please do not send your letters directly to the Board. Take action below, or fax your letter to 404-876-2276.

» TAKE ACTION! Write a letter to the Georgia Board of Pardon and Paroles

  • To see what activists are doing in Georgia, please visit GFADP.
  • Write a letter to the editor of your local paper. It's quick and easy using the ACLU's website.
  • Text "TROY" to 90999 to help spread the word with your cell phone.

We respectfully ask you to not contact the US Supreme Court or the Governor or Attorney General of Georgia because it could be detrimental at this time.

» Listen to Troy tell his story
» Hear from Troy's sister
» Join the discussion on our blog

Recent Timeline:

  • July 16, 2007 Georgia State Board of Pardon and Paroles issued a stay of execution (scheduled for July 17, 2007) for up to 90 days.
  • August 3, 2007 Georgia Supreme Court agreed to hear Davis' appeal for a new trial.
  • March 17, 2008 Georgia Supreme Court denied Davis' appeal for a new trial.
  • Sept. 12, 2008 Georgia State Board of Pardon and Paroles denied clemency for Davis (execution scheduled for Sept. 23)
  • Sept. 23, 2008 U.S. Supreme Court issues a stay of execution pending the disposition of the petition for a writ of certiorari filed on Davis' behalf.


Restrictions on Federal appeals have prevented Troy Anthony Davis from having a hearing in federal court on the reliability of the witness testimony used against him, despite the fact that most of the witnesses have since recanted, many alleging they were pressured or coerced by police. Troy Davis remains on Georgia death row, and may be scheduled for execution in the near future.

Troy Davis was sentenced to death for the murder of Police Officer Mark Allen MacPhail at a Burger King in Savannah, Georgia; a murder he maintains he did not commit. There was no physical evidence against him and the weapon used in the crime was never found. The case against him consisted entirely of witness testimony which contained inconsistencies even at the time of the trial. Since then, all but two of the state's non-police witnesses from the trial have recanted or contradicted their testimony. Many of these witnesses have stated in sworn affidavits that they were pressured or coerced by police into testifying or signing statements against Troy Davis.

One of the two witnesses who has not recanted his testimony is Sylvester "Red" Coles – the principle alternative suspect, according to the defense, against whom there is new evidence implicating him as the gunman. Nine individuals have signed affidavits implicating Sylvester Coles.

| Print a fact sheet on Troy Davis' case
| Read more about innocence on Georgia's death row
| Read the European Parliament Resolution on Troy's Case
| Visit Troy Davis' website
| Send a solidarity message to Troy on his E-Book through AI-France

Read the report:

Read the press releases:

Study: Many cancer patients forgoing care because of cost

Study: Many cancer patients forgoing care because of cost

By Liz Szabo

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At a time when they're already fighting for their lives, more cancer patients are now struggling to pay for their medicines.

One in eight people with advanced cancer turned down recommended care because of the cost, according to a new analysis from Thomson Reuters, which provides news and business information. Among patients with incomes under $40,000, one in four in advanced stages of the disease refused treatment.

Of late-stage colon cancer patients, 12% spent more than $25,000 out of pocket, according to the survey, in which 1,767 people answered an online questionnaire. This type of survey isn't considered scientifically rigorous, because it didn't use a random sample of people. But its findings are similar to a 2006 study in Cancer, which found that cost caused more than 20% of all cancer survivors — not just those with advanced cases — to delay or miss needed care.

Experts say the signs of stress are everywhere:

• Nearly 20% of Americans have problems paying their medical bills, according to a report in September from the Center for Studying Health System Change.

• One in four cancer patients or their families said they used up all or most of their savings to pay for treatment, according to a 2006 survey of nearly 1,000 survivors and their families by USA TODAY, the Kaiser Family Foundation and the Harvard School of Public Health.

• One in 10 in that survey said they were unable to pay for basic necessities, such as food, heat and housing.

Many of the medical advances that allow cancer patients to live longer come at a high cost, says Joseph Singer of HealthCore, a Delaware-based health research company.

As costs rise, insurers are shifting a greater share to patients, says Neal Meropol of Philadelphia's Fox-Chase Cancer Center. Many plans now require patients to pay for 20% of their health care — a heavy burden in the case of drugs such as Erbitux, which costs $10,000 a month.

Charities that assist cancer patients say they're straining to keep up with the demand.

At CancerCare, a national group that provides social work and small grants for transportation expenses, requests for financial help increased 30% this summer compared with last, says executive director Diane Blum.

David Johnson, director of hematology and oncology at Nashville's Vanderbilt-Ingram Cancer Center, says some of his patients have opted to stop treatment partly because of the cost. His own brother-in-law, a truck driver, turned down Erbitux when he was facing colon cancer four years ago. He says patients face a painful dilemma: "Do they pay out of pocket — sometimes in the thousands of dollars — or do they forgo the therapy to preserve for their family what modest assets they may have?"

Disappearing pensions make Americans' lives less secure

Disappearing pensions make Americans' lives less secure


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Through most of his working life, steelworker Ray West looked toward a secure retirement.

His company pension was expected to bring in around $30,000 a year, his union contract promised retiree health coverage and he had 401(k) savings of about $50,000.

Three years ago, it unraveled. His company filed for bankruptcy. The collapse reduced his expected pension to around $5,000 a year and canceled his retiree health insurance. And, in three years of unemployment since then, West of Hazel Park blew through the entire $50,000 in his 401(k) just getting by as he trained for a new career.

"I lost my job after 27 years before I got my retirement. I ain't going to get nothing," says West, 52.

Of all the threats to the American middle-class standard of living, from stagnating incomes to piles of consumer debt, perhaps the least understood and among the most serious is the looming crisis in retirement.

Several trends, each debilitating alone, are due to converge on the middle class over the next decade or so.

Traditional pension plans are disappearing in the private sector. Workers aren't saving enough in their voluntary 401(k) accounts. Longer life spans are stretching savings even thinner. Social Security remains under stress. All that was going .. retirement plans lost $2 trillion in the stock market dive.

Taken as a whole, the trends point toward a massive problem as people now in their 40s and 50s start to retire in 10 to 20 years.

Alicia Munnell, a professor of management and director of the Center for Retirement Research at Boston College, has developed a retirement risk index that shows that 43% of households are in danger of not being able to maintain their living standard once they retire. She projects that risk to grow over time, and it gets worse for those lower down the income scale.

"A transition group is really going to suffer a lot until we say, 'Let's do something,' " Munnell says. "The early boomers and particularly the late boomers are going to have a terrible time." The baby boom is defined as people born between 1946 and 1964, a mass of Americans just reaching retirement age.

Of all the trends, perhaps the most worrisome is the failure of highly touted 401(k) private savings accounts to replace fast-disappearing traditional pensions. Not only do millions of workers not save enough, or like West drain their 401(k)s well ahead of retirement, but all the risk of making wise investment choices and planning for decades of retirement now falls entirely on workers who have no training to deal with it.

"The goal of trying to educate everybody up so they can do this kind of thing is just silly," Munnell says. "We don't need a whole nation of financial analysts. We need people to play with their children and coach Little League and do all that kind of stuff."

Grim numbers bear out the warnings about Americans' lack of retirement-planning savvy. The Employee Benefit Research Institute reported that 49% of workers say they have total savings and investments, not including the value of their home, of less than $50,000. And 22% of workers and 28% of retirees say they have no savings of any kind.

Andrew Stumpff, a Lansing-based pension expert and lecturer at the University of Michigan Law School, says the approaching storm of unsafe retirements is part of a general shifting of risk toward ordinary workers.

"You need to regard retirement as a do-it-yourself proposition nowadays in a way that it never was for previous generations," he says.

Skipping trips

That shift illustrates the potential change in living standards for retirees of the future.

Today, Vince and Joyce Orban live the sort of retirement that West might have imagined, and one that was typical in recent decades.

Vince retired from Ford Motor Co. in 1994. He and Joyce built a dream home near Gladwin in northern Michigan and settled in for rounds of golf, winter trips to the Sunbelt and visits with their grandkids.

Lately, though, rising prices of everything from groceries to gasoline have begun to crimp even this ideal retirement. For the first time, the Orbans skipped a winter trip to Florida this year. Their heating bills have risen so much they now pay more for winter propane than for their monthly mortgage.

The Orbans understand they're still among the lucky ones. They get Vince's fixed pension from Ford, where he worked as a union-represented millwright, and they have good health insurance. They're more concerned about the perils that face the next couple of generations.

"Our kids, God have mercy on 'em," Vince says.

"And our grandchildren," Joyce adds.

Indeed, many younger workers have barely begun to think about the retirement challenges ahead.

Jennifer Ruud, 30, of Madison Heights was laid off several months ago from her job as an art coordinator at an advertising agency. Since then, she's career-switched to a nonprofit agency, but $10,000 in credit-card debt and other worries have pushed retirement planning far to the rear.

"I have been trying to put money in my IRA," she says. "I think I put very little money in this year. I don't even know if I'm going to be able to put in anything next year." With finances tight, she fears she could lock up money and "potentially not see it for who knows how long."

Slower growth

Besides the potential human tragedy facing seniors who lack adequate means, a lowering of living standards among elderly people could blunt the growth of the American economy.

Seniors 65 and older make up 20% of all U.S. households today. As the senior portion of the population increases with the aging of baby boomers, widespread economic pain among elderly people could slow spending and place greater burdens on caregivers from families to social services agencies.

How bad will it get? Estimates vary, but a study by human-resources firm Hewitt Associates reported this summer that only 19% of workers studied were on track to be able to maintain their standard of living upon retirement.

The Hewitt study looked at the projected retirement levels of nearly 2 million current workers of varying ages at 72 large U.S. companies. Of those studied, more than 1.2 million employees, or 67%, were expected to have less than 80% of what they need to maintain their lifestyle at retirement.

The storm waters are already lapping around the feet of retirees like William Ware, 83, of Detroit, a former City of Detroit maintenance supervisor. Ware and his wife, Sarah, find that their fixed income buys less and less with each trip to the grocery store.

There was a time, Ware says, when he could "spend $100 and I have two carts full of food. Now you spend $100 and if you buy any meat you don't have a cartful. And that's just an example of how things have gone up."

Change of plans

Perhaps the biggest threat to retirees' living standards has been the demise of traditional pension plans in the private sector.

For decades a mainstay of retirement, so-called defined-benefit pension plans are those in which employers promise to pay a fixed amount of money to their retirees each month for life.

Those plans flourished after the 1940s as big carmakers, steelmakers and other industrial firms needed to build and keep a large, skilled, loyal workforce and buy labor peace. Promising lifetime checks to retirees became common. By 1980, about 60% of U.S. workers in private industry were covered by defined-benefit pensions.

For millions of workers, having a pension simplified retirement, because all a worker had to do was cash a check each month.

"You could plan, you could count on it, the investment risk was all on the company," Stumpff says.

But as retirees lived longer and as American manufacturers faced growing competition from abroad, such pension plans began to grow more costly to maintain. Then, too, the rise of a service economy, in which workers are more prone to change jobs frequently, put less of a premium on career-long loyalty and rewards.

The nonpartisan Employee Benefit Research Institute reports that, as mostly smaller and medium-size employers terminated their pension plans, the number of traditional plans declined by 75% from a peak in 1985.

The plans are still common in the public sector, with the Census Bureau reporting that in 2006, more than 18 million Americans were covered in some way by a government retirement plan.

Rise of the 401(k)

Some well-intentioned efforts to safeguard pensions may have backfired. In 1974, Congress passed the Employee Retirement Income Security Act, mandating stricter controls on private pensions.

Somewhat paradoxically, companies that were not required to provide any retirement benefits suddenly faced more regulation if they did. Lansing pension expert Stumpff says that provided an incentive to drop the pension plans.

A key factor in the disappearance of a fixed monthly retirement check was the rise of voluntary 401(k) plans. Based on an obscure clause in a late-1970s tax revision, 401(k) plans allow workers to defer taxes on retirement savings until they draw them at some future date.

By the mid-1990s, thousands of companies were cutting back on traditional pension plans in favor of contributing to workers' 401(k) accounts.

Under this switch, companies were no longer obligated to pay a fixed monthly benefit to retirees; instead, employers could limit their obligation to the upfront contribution to current workers. The risk of bad investment decisions shifted to employees.

The 401(k) plans didn't emerge from a national debate on how to replace pensions. They came about quietly as investment advisers explored the intricacies of the tax code and promoted the new accounts to consumers and to companies eager to get out from under pension obligations.

"This was not a national decision to move from one type of employer-sponsored plan to another," Munnell says. "It just happened."

The switch from defined-benefit to voluntary 401(k) plans has been almost complete. Today, barely 10% of workers in the private sector are covered only by a defined-benefit pension plan. And while most workers are eligible to participate in a voluntary company 401(k), economists and others who have studied the two systems say that 401(k) plans provide far less income than traditional pension plans.

The reason: Many workers eligible for a 401(k) plans don't enroll, don't save enough, invest in the wrong things or draw out all their investments when they leave a company instead of keeping the money in a retirement account.

In theory, a worker with a 401(k) might do better than with a traditional defined-benefit pension, as long as he or she made the best investment choices. A big problem, though, is that most Americans are woefully unskilled at complex financial planning.

In one notorious example, many Enron workers lost the bulk of their retirement savings when they loaded up their 401(k) accounts with company stock shortly before Enron went bust.

But even workers who make less spectacular misjudgments are prey to costly mistakes, Stumpff says.

"Even in perfect situations, there are going to be people who are victims of bad investment timing or otherwise victims of the markets, who are going to effectively lose their retirement savings," he says.

Smaller cushion

Some economists urge Americans to keep working beyond age 62 to delay claiming Social Security benefits. Working longer also allows employees to build up retirement accounts and defer drawing on them.

Munnell proposes the creation of a new tier of retirement savings program that would require workers to contribute 3% of pretax income to a retirement fund. It might mirror today's voluntary 401(k) programs but would have to be mandatory to get millions of people to participate.

Unless some sort of steps are taken, she warns, the nation can expect a sharp rise in poverty among its oldest citizens.

She adds, "To have people be vulnerable at that time just seems like a shameful way to run a country."

US Journalists & War-Crime Guilt

US Journalists & War-Crime Guilt

By Peter Dyer

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Editor’s Note: This year, the U.S. news media cheered the opening of the $450 million Newseum in Washington, a self-congratulatory celebration of American journalism.

However, rather than giving themselves that expensive pat on the back, the major U.S. media organizations might have done something to show remorse for their complicity in the Bush administration’s propaganda that justified the invasion of Iraq.

As freelance journalist Peter Dyer notes, prosecutors at the Nuremberg Tribunals deemed such journalistic support for war crimes to be a capital offense:

October 16 is an anniversary that should hold considerable interest for American journalists who have written in support of ”Operation Iraqi Freedom” – the invasion and occupation of Iraq.

Sixty-two years ago, on Oct. 16, 1946, Julius Streicher was hanged.

Streicher was one of a group of 10 Germans executed that day following the judgment of the first Nuremberg Trial – a 40-week trial of 22 of the most prominent Nazis.

Each was tried for two or more of the four crimes defined in the Nuremberg Charter: crimes against peace (aggression), war crimes, crimes against humanity, and conspiracy.

All who were sentenced to death were major German government officials or military leaders. Except for Streicher.

Julius Streicher was a journalist.

Editor of the vehemently anti-Semitic newspaper Der Stürmer, Streicher was convicted of, in the words of the judgment, “incitement to murder and extermination at the time when Jews in the East were being killed under the most horrible conditions clearly constitut(ing) … a crime against humanity.”

Presenting the case against Streicher, British prosecutor Lieutenant Colonel M.C. Griffith-Jones said: “My Lord, it may be that this defendant is less directly involved in the physical commission of the crimes against Jews. ... The submission of the Prosecution is that his crime is no less the worse … that he made these things possible – made these crimes possible which could never have happened had it not been for him and for those like him. He led the propaganda and the education of the German people in those ways.”

The critical role of propaganda was affirmed at Nuremberg not only by the prosecution and in the judgment but also in the testimony of the most prominent Nazi defendant, Reichsmarshall Hermann Goering:

“Modern and total war develops, as I see it, along three lines: the war of weapons on land, at sea and in the air; economic war, which has become an integral part of every modern war; and, third, propaganda war, which is also an essential part of this warfare.”

Two months after the Nuremberg hangings, the United Nations General Assembly passed Resolution 59(I), declaring:

“Freedom of information requires as an indispensable element the willingness and capacity to employ its privileges without abuse. It requires as a basic discipline the moral obligation to seek the facts without prejudice and to spread knowledge without malicious intent.”

The next year another General Assembly Resolution was adopted: Res. 110 which “condemns all forms of propaganda, in whatsoever country conducted, which is either designed or likely to provoke or encourage any threat to the peace, breach of the peace, or act of aggression.”

Although UN General Assembly Resolutions are not legally binding, Resolutions 59 and 110 carry considerable moral weight. This is because, like the United Nations itself, they are an expression of the catastrophic brutality and suffering of two world wars and the universal desire to avoid future slaughter.

Propaganda Crimes

Most jurisdictions have yet to recognize propaganda for war as a crime. However several journalists have recently been convicted of incitement to genocide by the International Criminal Tribunal for Rwanda.

Because there is stiff resistance, especially from the United States, the effort to criminalize war propaganda faces an uphill battle.

However in legal terms it seems relatively straightforward: if incitement to genocide is a crime, then incitement to aggression, another Nuremberg crime, could and should be as well.

After all, aggression – starting an unprovoked war – is “the supreme international crime differing only from other war crimes in that it contains within itself the accumulated evil of the whole,” in the words of the judgment at Nuremberg.

Criminal or not, much of the world now sees incitement to war as morally indefensible.

In this light and in light of Goering’s three-part recipe for war (weapons, economic war and propaganda) it is instructive to look at the role which American journalists and war propagandists have recently played in bringing about and sustaining war.

The Bush administration began to sell the invasion of Iraq to the American public soon after 9/11.

In order to coordinate this effort President Bush’s chief of staff, Andrew Card, established the White House Iraq Group (WHIG) in the summer of 2002 expressly for the purpose of marketing the invasion of Iraq.

Among the members of WHIG were media figures/propagandists Karen Hughes and Mary Matalin.

WHIG was remarkable not only for its recklessness with the truth but for the candor with which it acknowledged it was running an advertising campaign. A Sept. 7, 2002, New York Times article entitled TRACES OF TERROR: THE STRATEGY; Bush Aides Set Strategy to Sell Policy on Iraq reported:

“White House officials said today that the administration was following a meticulously planned strategy to persuade the public, the Congress and the allies of the need to confront the threat from Saddam Hussein….

'' ‘From a marketing point of view,’ said Andrew H. Card Jr., the White House chief of staff who is coordinating the effort, ‘you don't introduce new products in August.’ ''

It was as if the “product” – the unprovoked invasion of a sovereign state – was a consumer good, like a car or a TV show. The sales pitch was the manufactured “imminent threat” of Iraqi weapons of mass destruction.

In other words, the business of WHIG was incitement to aggressive war primarily through the propaganda of fear.

Along those lines WHIG’s most prominent member, National Security Advisor Condoleezza Rice, invoked the specter of an Iraqi-generated nuclear holocaust in a Sept. 8, 2002, CNN interview with Wolf Blitzer:

“We do know that there have been shipments going into Iran, for instance – into Iraq, for instance, of aluminum tubes that really are only suited to – high-quality aluminum tools that are only really suited for nuclear weapons programs, centrifuge programs. ... The problem here is that there will always be some uncertainty about how quickly he can acquire nuclear weapons. But we don't want the smoking gun to be a mushroom cloud.”

The smoking gun/mushroom cloud images were among the most memorable of all the White House war propaganda. They were generated just a few days earlier in a WHIG meeting by speechwriter Michael Gerson.

The existence of Iraqi weapons of mass destruction was central to the Bush administration’s campaign for war. Other important elements were Saddam Hussein’s ties with Al Qaeda and the strongly implied association of Iraq with the tragedies of 9/11.

All were false. In propaganda, though, selling the product trumps truth.

Unquestioning Submission

The role played by American mainstream media during the run-up to the invasion of Iraq was marked by widespread unquestioning submission to the Bush administration and abandonment of the most fundamental journalistic responsibility to the public.

This responsibility is embodied not only in Resolution 59 but in the Society of Professional Journalists Code of Ethics as well, which states: “Journalists should test the accuracy of information from all sources and exercise care to avoid inadvertent error.”

The failure of influential American journalists, such as the New York Times’ Judith Miller, to test the accuracy of information played a critical role in the Bush administration’s successful effort to incite the American public to attack a country which was not threatening us.

Though she was far from alone in selling the case for war, Miller -- through her seemingly uncritical reliance on dodgy informants -- was probably responsible to a larger degree than any other American journalist for spreading the fear of nonexistent Iraqi weapons of mass destruction.

As such she and other influential journalists who failed in this way bear a share of moral, if not legal, responsibility for hundreds of thousands of deaths, millions of refugees and all the other carnage, devastation and human suffering of “Operation Iraqi Freedom.”

Some prominent American media figures, however, went considerably further than simple failure to check sources. Some actively and passionately encouraged Americans to commit and/or approve of war crimes, before and during Operation Iraqi Freedom.

Prominent among these was Fox News’ Bill O’Reilly who – regarding both Afghanistan and Iraq – advocated such crimes forbidden by the Geneva Convention as collective punishment of civilians (Gen. Con. IV, Art. 33); attacking civilian targets (Protocol I, Art. 51); destroying water supplies (Protocol I Art. 54 Sec. 2) and even starvation (Protocol I, Art. 54 Sec. 1).

Sept. 17, 2001: "The U.S. should bomb the Afghan infrastructure to rubble: the airport, the power plants, their water facilities, and the roads" in the event of a refusal to hand over Osama bin Laden to the U.S.

Later, he added: “This is a very primitive country. And taking out their ability to exist day to day will not be hard. … We should not target civilians. But if they don't rise up against this criminal government, they starve, period.”

On March 26, 2003, a few days after the invasion of Iraq began, O’Reilly said: “There is a school of thought that says we should have given the citizens of Baghdad 48 hours to get out of Dodge by dropping leaflets and going with the AM radios and all that. Forty-eight hours, you've got to get out of there, and flatten the place.” [See Peter Hart's “O'Reilly's War: Any rationale—or none—will do” Fairness & Accuracy in Reporting, May/June 2003]

Collective Punishment

Another tremendously influential journalist, Pulitzer Prize winner and former executive editor of the New York Times, the late A.M. Rosenthal, also advocated attacking civilian targets and collective punishment in regard to waging war against Muslim nations in the Middle East.

In a Sept. 14, 2001, column, “How the U.S. Can Win the War”, Rosenthal wrote that the U.S. should give Afghanistan, Iraq, Iran, Libya, Syria and Sudan three days to consider an ultimatum demanding they turn over documents and information related to weapons of mass destruction and terrorist organizations.

During these three days, “the residents of the countries would be urged 24 hours a day by the U.S. to flee the capital and major cities, because they would be bombed to the ground beginning the fourth day."

Right-wing media figure Ann Coulter, on the Sean Hannity Show on July 21, 2006, called for another war and more punishment of civilians, this time in Iran:

”Well, I keep hearing people say we can't find the nuclear material, and you can bury it in caves. How about we just, you know, carpet-bomb them so they can't build a transistor radio? And then it doesn't matter if they have the nuclear material.”

This pattern of the major U.S. news figures advocating aggressive wars even predated 9/11. Three-time Pulitzer Prize winner Thomas Friedman published a strident call for war crimes including collective punishment of Serbs and the destruction of their water supplies over the Kosovo crisis:

“But if NATO's only strength is that it can bomb forever, then it has to get every ounce out of that. Let's at least have a real air war. The idea that people are still holding rock concerts in Belgrade, or going out for Sunday merry-go-round rides, while their fellow Serbs are ‘cleansing’ Kosovo, is outrageous. It should be lights out in Belgrade: every power grid, water pipe, bridge, road and war-related factory has to be targeted.

"Like it or not, we are at war with the Serbian nation (the Serbs certainly think so), and the stakes have to be very clear: Every week you ravage Kosovo is another decade we will set your country back by pulverizing you. You want 1950? We can do 1950. You want 1389? We can do 1389 too.” [New York Times, April 23, 1999]

These casual -- even joking -- comments about inflicting war on relatively weak countries came from American journalists and media figures at the very top of their profession. Each was addressing an audience of millions. It is difficult to overstate their influence.

Over the past decade alone, the massive destruction and carnage wreaked by American pursuit of “the supreme international crime” of aggression has been enabled by negligent, reckless and/or malicious use of this influence.

Sadly, the words of Nuremberg Prosecutor Griffith-Jones concerning the propaganda of German journalist Julius Streicher hold considerable meaning today for some of the most prominent journalists in the country which, 60 years ago, provided the guiding light at Nuremberg:

Streicher “made these things possible – made these crimes possible which could never have happened had it not been for him and for those like him.”

In 1947, the United Nations General Assembly passed Resolution 127 in which “the General Assembly … invites the Governments of States Members … to study such measures as might with advantage, be taken on the national plane to combat, within the limits of constitutional procedures, the diffusion of false or distorted reports likely to injure friendly relations between States.”

Unfortunately, 60 years later, little progress has been made. War propaganda is still legal and very much alive – flourishing, in fact, as demonstrated by periodic calls for one more invasion of a country which has never threatened the U.S.: Iran.

As matters stand today, with the United States still the world's preeminent military power, the American propagandists who enabled Operation Iraqi Freedom and other wars of aggression have little need not worry about their legal responsibilities under the Nuremberg principles.

A strong case can be made, though, that they have blood on their hands.

Bush Doctrine Becomes DoD Dogma

Bush Doctrine Becomes DoD Dogma

Bush White House 'endorsed torture' In Secret Memos

CIA Tactics Endorsed In Secret Memos

Waterboarding Got White House Nod

By Joby Warrick

Go To Original

The Bush administration issued a pair of secret memos to the CIA in 2003 and 2004 that explicitly endorsed the agency's use of interrogation techniques such as waterboarding against al-Qaeda suspects -- documents prompted by worries among intelligence officials about a possible backlash if details of the program became public.

The classified memos, which have not been previously disclosed, were requested by then-CIA Director George J. Tenet more than a year after the start of the secret interrogations, according to four administration and intelligence officials familiar with the documents. Although Justice Department lawyers, beginning in 2002, had signed off on the agency's interrogation methods, senior CIA officials were troubled that White House policymakers had never endorsed the program in writing.

The memos were the first -- and, for years, the only -- tangible expressions of the administration's consent for the CIA's use of harsh measures to extract information from captured al-Qaeda leaders, the sources said. As early as the spring of 2002, several White House officials, including then-national security adviser Condoleezza Rice and Vice President Cheney, were given individual briefings by Tenet and his deputies, the officials said. Rice, in a statement to congressional investigators last month, confirmed the briefings and acknowledged that the CIA director had pressed the White House for "policy approval."

The repeated requests for a paper trail reflected growing worries within the CIA that the administration might later distance itself from key decisions about the handling of captured al-Qaeda leaders, former intelligence officials said. The concerns grew more pronounced after the revelations of mistreatment of detainees at the Abu Ghraib prison in Iraq, and further still as tensions grew between the administration and its intelligence advisers over the conduct of the Iraq war.

"It came up in the daily meetings. We heard it from our field officers," said a former senior intelligence official familiar with the events. "We were already worried that we" were going to be blamed.

A. John Radsan, a lawyer in the CIA general counsel's office until 2004, remembered the discussions but did not personally view the memos the agency received in response to its concerns. "The question was whether we had enough 'top cover,' " Radsan said.

Tenet first pressed the White House for written approval in June 2003, during a meeting with members of the National Security Council, including Rice, the officials said. Days later, he got what he wanted: a brief memo conveying the administration's approval for the CIA's interrogation methods, the officials said.

Administration officials confirmed the existence of the memos, but neither they nor former intelligence officers would describe their contents in detail because they remain classified. The sources all spoke on the condition of anonymity because they were not cleared to discuss the events.

The second request from Tenet, in June 2004, reflected growing worries among agency officials who had just witnessed the public outcry over the Abu Ghraib scandal. Officials who held senior posts at the time also spoke of deteriorating relations between the CIA and the White House over the war in Iraq -- a rift that prompted some to believe that the agency needed even more explicit proof of the administration's support.

"The CIA by this time is using the word 'insurgency' to describe the Iraq conflict, so the White House is viewing the agency with suspicion," said a second former senior intelligence official.

As recently as last month, the administration had never publicly acknowledged that its policymakers knew about the specific techniques, such as waterboarding, that the agency used against high-ranking terrorism suspects. In her unprecedented account to lawmakers last month, Rice, now secretary of state, portrayed the White House as initially uneasy about a controversial CIA plan for interrogating top al-Qaeda suspects.

After learning about waterboarding and similar tactics in early 2002, several White House officials questioned whether such harsh measures were "effective and necessary . . . and lawful," Rice said. Her concerns led to an investigation by the Justice Department's criminal division into whether the techniques were legal.

But whatever misgivings existed that spring were apparently overcome. Former and current CIA officials say no such reservations were voiced in their presence.

In interviews, the officials recounted a series of private briefings about the program with members of the administration's security team, including Rice and Cheney, followed by more formal meetings before a larger group including then-Attorney General John D. Ashcroft, then-White House counsel Alberto R. Gonzales and then-Defense Secretary Donald H. Rumsfeld. None of the officials recalled President Bush being present at any of the discussions.

Several of the key meetings have been previously described in news articles and books, but Rice last month became the first Cabinet-level official to publicly confirm the White House's awareness of the program in its earliest phases. In written responses to questions from the Senate Armed Services Committee, Rice said Tenet's description of the agency's interrogation methods prompted her to investigate further to see whether the program violated U.S. laws or international treaties, according to her written responses, dated Sept. 12 and released late last month.

"I asked that . . . Ashcroft personally advise the NSC principles whether the program was lawful," Rice wrote.

Current and former intelligence officials familiar with the briefings described Tenet as supportive of enhanced interrogation techniques, which the officials said were developed by CIA officers after the agency's first high-level captive, al-Qaeda operative Zayn al-Abidin Muhammed Hussein, better known as Abu Zubaida, refused to cooperate with interrogators.

"The CIA believed then, and now, that the program was useful and helped save lives," said a former senior intelligence official knowledgeable about the events. "But in the agency's view, it was like this: 'We don't want to continue unless you tell us in writing that it's not only legal but is the policy of the administration.' "

One administration official familiar with the meetings said the CIA made such a convincing case that no one questioned whether the methods were necessary to prevent further terrorist attacks.

"The CIA had the White House boxed in," said the official. "They were saying, 'It's the only way to get the information we needed, and -- by the way -- we think there's another attack coming up.' It left the principals in an extremely difficult position and put the decision-making on a very fast track."

But others who were present said Tenet seemed more interested in protecting his subordinates than in selling the administration on a policy that administration lawyers had already authorized.

"The suggestion that someone from CIA came in and browbeat everybody is ridiculous," said one former agency official familiar with the meeting. "The CIA understood that it was controversial and would be widely criticized if it became public," the official said of the interrogation program. "But given the tenor of the times and the belief that more attacks were coming, they felt they had to do what they could to stop the attack."

The CIA's anxiety was partly fueled by the lack of explicit presidential authorization for the interrogation program. A secret White House "memorandum of notification" signed by Bush on Sept. 15, 2001, gave the agency broad authority to wage war against al-Qaeda, including killing and capturing its members. But it did not spell out how captives should be handled during interrogation.

But by the time the CIA requested written approval of its policy, in June 2003, the population of its secret prisons had grown from one to nine, including Khalid Sheik Mohammed, the alleged principal architect of the Sept. 11, 2001, attacks. Three of the detainees had been subjected to waterboarding, which involves strapping a prisoner to a board, covering his face and pouring water over his nose and mouth to simulate drowning.

By the spring of 2004, the concerns among agency officials had multiplied, in part because of shifting views among administration lawyers about what acts might constitute torture, leading Tenet to ask a second time for written confirmation from the White House. This time the reaction was far more reserved, recalled two former intelligence officials.

"The Justice Department in particular was resistant," said one former intelligence official who participated in the discussions. "They said it doesn't need to be in writing."

Tenet and his deputies made their case in yet another briefing before the White House national security team in June 2004. It was to be one of the last such meetings for Tenet, who had already announced plans to step down as CIA director. Author Jane Mayer, who described the briefing in her recent book, "The Dark Side," said the graphic accounts of interrogation appeared to make some participants uncomfortable. "History will not judge us kindly," Mayer quoted Ashcroft as saying.

Participants in the meeting did not recall whether a vote was taken. Several weeks passed, and Tenet left the agency without receiving a formal response.

Finally, in mid-July, a memo was forwarded to the CIA reaffirming the administration's backing for the interrogation program. Tenet had acquired the statement of support he sought.

‘Collateral Damage’ Not Much Different From Targeted Killing

‘Collateral Damage’ Not Much Different From Targeted Killing