Tuesday, October 28, 2008

Credit Cards: The Plastic Trap

Credit Cards: The Plastic Trap

Dominique Nora

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"It was too easy."

After houses, consumer credit? While bankers plug up the breaches created by the mortgage earthquake as best they can, another bubble threatens them: Americans have been living their dreams on credit. And, having overheated up their cards, millions of households will have problems making their payments ...

Maria, a housekeeper in a San Francisco clinic, came to the Polk Street Money Mart to borrow $150 (110 Euros) on her October month-end salary. Yet the usurious rate practiced by this boutique is posted in big letters on the wall: $35.50 for $200! But Maria has no choice: "I don't have anything to buy diapers with for the baby; the fridge is empty ..." This young woman who is raising her son alone has already gone through the ceiling of two credit cards: "I've got close to a 6,400 Euro balance, while I earn barely 1,400 Euros a month." In the beginning, Maria used her Bank of America card for exceptional expenses only, such as the pediatrician's bill. Then she got into the habit of paying the grocery with it ... "It was too easy." Today, she is suffocating. Because in the United States, credit cards are commonly used to borrow. And everything pushes you to repay no more than a minimum amount every month.

Thus do millions of Americans find themselves caught in the "plastic trap." And experts are predicting a new deflagration. "In fact, there's a double financial bubble. The real estate credit bubble has exploded ... The next will be about consumer credit," warns Robert Manning, finance professor at the Rochester Institute of Technology, and author of the best-seller, "Credit Card Nation." The two problems are linked: "Because of the tax advantage, Americans repaid 250 billion Euros of credit card balances with money drawn from real estate between 2001 and 2006," he explains. "During that period, in defiance of the laws of economic gravity, people's real income declined ... but the price of real estate doubled, which completely distorted their perception of their debt capacity." The global balance on American credit cards is up to 700 billion Euros. Now that their houses can no longer be used as "cash machines," and economic activity is slowing down and unemployment rising, what proportion of this debt will turn out to be toxic? In the second quarter of 2008, the national default rate jumped to 7.3 percent. But it seems that that's only the beginning: according to the firm Innovest Strategic Value Advisors, credit card issuers will have to write off 29 billion Euros of losses this year and 69 billion more in 2009.

The big commercial banks are very exposed: the trio, JPMorgan Chase, Bank of America and Citigroup together have 330 billion in outstandings. On October 6, Bank of America announced a 2.1 billion Euro loss on its credit card division. Meanwhile, Citibank treasurer Gary Crittenden explained that if the economy continued to slow down, "credit card losses could exceed their historic records." But specialized issuers, such as Capital One and Discover, are even more dependent on this activity (62 percent and 97.8 percent, respectively). And here once again, we're talking about a cluster bomb. The big issuers have securitized significant portions of their credit card balances and sold them to third parties: speculative funds and pension funds. Investors are holding 260 billion Euros of assets backed by this kind of debt.

The last ten years, for plastic as well as housing, greed eclipsed all common sense. As consumer credit is one of the most profitable banking activities, bankers gave out cards like there was no tomorrow, including cards to high-risk clients. These "rotten" loans could represent as much as a third of the total portfolio, according to the Innovest firm. That ratio could rise to 45 percent among the most reckless issuers, such as Washington Mutual, recently taken over by JPMorgan. It was very difficult for American consumers to resist the Siren call of invasive marketing. Gifts, zero percent interest for a year ...: nothing was too much to lure the shopper. Bombarded with solicitations, inundated with emails and harassed by marketing appeals, the "grasshoppers" signed on en masse for new cards. Without - of course - paying attention to the clauses written in microscopic letters stipulating that the bank could increase its interest rates unilaterally. "Good" clients, those with reasonable incomes and credit, found themselves being offered higher ceilings on their outstandings. And why not? Getting into debt, after all, is part of the American culture where health and higher education are ruinously expensive. It's a proof of optimism. Practically a patriotic duty! Remember that George Bush exhorted his fellow citizens to go out and consume right after the September 11, 2001, attacks ... "Advertising and marketing have developed a culture of instant satisfaction of desires," observes April Lewis-Parks, from the financial counseling firm Consolidated Credit in Florida. "Not only do American parents refuse their children nothing, but they also fail to teach them to live within their means."

Anxious to exhibit their social success, envious of the neighbors' standard of living, Americans have confused "desire" and "need." And they've treated themselves to their dreams ... on credit. At present, gross domestic product (GDP) is over 73 percent dependent on household consumption and the real savings rate has dropped below one percent. Unheard of since the Great Depression. Excessive consumption has settled in, encouraged by an administration that set a bad example. Governments and regulators found no fault with that. "Since the end of the 1970's, financial lobbies have taken over Washington. They pushed deregulation and blocked everything that could have constrained their expansion," recalls Professor Robert Manning.

Like unscrupulous "pushers," financial establishments consistently and unethically sold their "junk" to the most vulnerable populations: immigrants, seniors, students. For example? Public Interest Research Group has been fighting for years to stop banks' "predatory" tactics in public universities. "Excessive and costly credit card debt has aggravated students' problems while they were already penalized by increases in tuition cost," this association recently testified before Congress. Banks, which maintain open tables on campuses, attract students with free T-shirts, Frisbees, pizzas and sodas. They make agreements with alumni associations and have even signed contracts with several schools, including the University of Illinois. In exchange for royalties, these universities supply them with confidential information about their students.

Today, the return to earth is brutal. Not only are financial establishments soft-pedaling their marketing, but they are also turning the screws on their clients. They are unilaterally lowering borrowing limits and canceling inactive cards. Above all, creditors are severely sanctioning all unmet payment deadlines with heavy late fees or increases in interest rates, which can rise savagely from nine to 24 percent, even 39 percent! That risks aggravating default chances still further.

At New York's civil court, which handles cases below $25,000 (17,800 Euros), complaints concerning unpaid credit-card balances have tripled since 2000, to constitute nearly half of all cases. Mandated by the banks, debt collection agencies negotiate reductions in outstandings there. There's the same trend in Florida: "We have 30 percent more calls than last year and people are more distressed," notes April Lewis-Parks, whose firm advises people who are over-indebted. "On average, clients have five credit cards. Compared to last year, the average level of outstanding debt has tripled to 17,100 Euros. For 12 to 15 percent of them, personal bankruptcy is the best option."

This augurs poorly for consumption and growth in 2009. "We won't have any choice: we'll have to go through a systematic program for the renegotiation of the American consumer's debts," predicts Professor Robert Manning, who has developed a method for evaluating repayment capacities. And once this shock has been absorbed? "We can't act as though nothing happened. We'll have to reduce our standard of living and reform our growth model." Will the American "grasshoppers" be capable of rebuilding a more frugal civilization? Of saving? Of investing in infrastructure, research, and education rather than flaming out in immediate consumption? It's not easy to rethink the American dream.

Home prices fall by sharpest annual rate ever

Home prices fall by sharpest annual rate ever

Standard & Poor’s/Case-Shiller price index off by record 16.6 percent

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Home prices tumbled by the sharpest annual rate ever in August, with little indication of a turnaround in sight, a closely watched index showed Tuesday.

The Standard & Poor's/Case-Shiller 20-city housing index dropped a record 16.6 percent from August last year, the largest drop since its inception in 2000. The 10-city index plunged 17.7 percent, its biggest decline in its 21-year history.

Both indices have recorded year-over-year declines for 20 consecutive months.

"The downturn in residential real estate prices continued, with very few bright spots in the data," said David M. Blitzer, chairman of the index committee at S&P.

Prices in the 20-city index have plummeted more than 20 percent since peaking in July 2006. The 10-city index has fallen nearly 22 percent since its peak in June 2006.

No city in the Case-Shiller 20-city index saw annual price gains in August — for the fifth straight month.

However, the pace of monthly declines did moderate last month from July, and Boston and Cleveland showed monthly gains from July to August.

Boston, the first city to post price declines in the 20-city index starting in October 2005, has recorded five straight monthly gains in home values.

But on the other hand, Dallas and Denver both showed negative returns in August after four consecutive months of increases.

Price declines in Las Vegas and Phoenix surpassed 30 percent in August, according to Case-Shiller, while prices in Miami, Los Angeles, San Francisco and San Diego all plunged more than 25 percent.

Home prices likely won't improve in September either as other key housing indicators have shown the housing slump still in full swing. Recent data the government and the National Association of Realtors showed the median prices for new and existing homes both tumbled by 9 percent in September.

With time short, Bush pushes EPA to relax power-plant rule

With time short, Bush pushes EPA to relax power-plant rule

Renee Schoof

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At the Bush administration's direction, the Environmental Protection Agency is working on a new rule that would weaken pollution regulations for power plants, allowing them to increase emissions without adding controls.

EPA officials have been working on a fast track to meet a Saturday deadline, but many of them are arguing against changing the rule, said former EPA attorney John Walke and an EPA career official who spoke only on the condition of anonymity because the official wasn't authorized to make statements.

They said that the EPA was expected to decide in November on another eleventh-hour rule that would allow more power plants to be built near national parks and wilderness areas.

Power companies have sought the rule about power plant emissions for many years, and it was part of Vice President Dick Cheney's 2001 energy plan. Rules finalized more than 60 days before the administration leaves office are harder for the next administration to undo.

The Clean Air Act requires older plants that have their lives extended with new equipment to install pollution-control technology if their emissions increase. The rule change would allow plants to measure emissions on an hourly basis, rather than their total yearly output. This way, plants could run for more hours and increase overall emissions without exceeding the threshold that would require additional pollution controls.

The Edison Electric Institute, an association of shareholder-owned electric companies that represents about 70 percent of the U.S. electric-power industry, told the EPA that it supports changing the rule because improvements at plants would allow them to produce more energy with less fuel and in this way reduce emissions per unit of electrical output.

The EPA official said that concerns in the agency were that the analysis justifying the rule change was weak and the administration didn't plan to make the analysis public for a comment period, as is customary.

The EPA originally argued that changing the rule wouldn't seriously harm the environment because another law, the Clean Air Interstate Rule, reduced power plant emissions, offsetting any increase under the new rule. The U.S. Court of Appeals for the District of Columbia Circuit vacated the interstate rule, however, and the EPA was stuck with having to develop a new analysis to justify the change.

Walke, who's now the director of the Natural Resources Defense Council's clean air program, said that EPA officials in two departments told him that they'd been instructed to finalize the rule by Saturday. When such rules are made, it's common practice for the White House and the vice president's office to give the EPA their views before the EPA chief makes a decision.

Walke said that two EPA officials told him that EPA Administrator Stephen Johnson and Robert Meyers, the assistant administrator in charge of air issues, didn't agree with the new rule. EPA spokesman Jonathan Schradar said they hadn't made a decision yet and that he had no comment about their views.

Schradar said the EPA was committed to finalizing the rule by the time Bush left office in January. He said work was continuing on it and that "rumors are exaggerated" about a Saturday deadline.

The Wall Street Journal reported Monday that the administration was moving to adopt the changes to the power-plant emissions rule.

The EPA is under no obligation to reveal internal deliberations, so in many cases the public never knows what objections may have been raised.

The White House wouldn't comment on its views about changing the rule, Kristen Hellmer, a spokeswoman for the White House's Council on Environmental Quality, said Monday.

Walke charged in a comment to the EPA that the rule would amount to a "parting gift to the utility industry."

The rule change applies to old plants that are expanded or upgraded to prolong their lives. The changes can make them more efficient but not as clean as they'd be with modern pollution controls.

The emissions bring smog, acid rain and particulates. The Bush administration argues that carbon dioxide, which power plants also emit, shouldn't be regulated under the Clean Air Act.

What Will YOU Do About The Worst Capitalist Crisis Since The 1930s? Uniting & fighting back is no longer a choice; it’s a matter of survival

What Will YOU Do About The Worst Capitalist Crisis Since The 1930s?

Uniting & fighting back is no longer a choice; it’s a matter of survival

By Larry Holmes

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Most people have heard that the economic nightmare—the “greed and profits before society” that the capitalist system is plunging us into—is the worst crisis since the so-called Great Depression of the 1930s.

What you won’t get from the capitalist mass media is how the crisis of the 1930s transformed tens of millions of frightened workers and desperately poor people of all races and nationalities into a fighting force organized on the basis of class solidarity in an epic struggle against the capitalists and their government. By the end of the 1930s, it was not the super-rich, but the organized working class that seemed all powerful and unbeatable.

Working and poor people, devastated by the depression, entered the 1930s destitute, broken and hopeless. Yet by the time the decade was over, the working class had won great battles, first by organizing itself into Unemployment Councils and tenants unions and later into giant labor unions.

Social Security, Medicaid, millions of jobs created by giant public works programs and the right to unionize were among the major achievements of the struggles of the 1930s.

With the help of communist activists dedicated to fighting on behalf of the working class, people organized to stop landlords and banks from evicting families from their apartments or homes.

Workers in the auto, steel and many other industries discovered new tactics in their fight to win the right to belong to a labor union. In addition to going on strike, sometimes the workers decided to stay in the plants and factories where they were striking. They took them over until they won their demands.

A leaflet urging people to attend what became one of the most famous mass protests against unemployment in New York City’s Union Square in March 1930 simply read, “Fight or Starve.”

That was one of the biggest lessons that the working class learned during the 1930s— either we push aside all that divides us, and anything that someone can use to divide us like class, and fight like hell or we will not survive.

This lesson is as relevant today as it was 75 years ago. Whether we unite and fight back will be a matter of survival for most of us this time as well. Let there be no doubt: Unless you’re rich, chances are either you will lose your job—some of you already have too little pay—and find it almost impossible to find a job or you will lose a place to live. Many will lose their student loans. Others will lose their pensions and find themselves burdened with debt and no health insurance. Many more of us will be homeless and hungry.

The cultural ideas and norms of recent times—ideas and norms invented and perpetuated by the capitalist system, the billionaires that it serves, their media, their schools, their hierarchy where most of us work and their political system—have not prepared us to act in our own interests in concert with others.

The ideas reinforced every day are that if you fail, it’s your fault alone. The rich are rich because they’re smart. Human nature is innately bad so don’t trust those like you; you’ve got to compete with them. Along with these lies, there is the big one that “things will get better sooner or later” because “this is the greatest country and capitalism is not only the best system, it’s the only one.”

The basic conspiracy afoot here is designed to keep us divided, confined to our own personal worlds, essentially left alone to deal with the crisis and the capitalist class that’s at war with us 24/7.

With the incredible stresses of today, people certainly deserve the right to put their headsets on and zone out to the great music they’ve downloaded on their Ipods. Or veg-out on the several thousand cable stations on their TV (if their cable hasn’t been turned off due to lack of payment). Or spend hours online, which is both social yet isolating at the same time. One can, of course, abuse substances of choice, but ultimately that does more harm than help.

Most people probably think, with good reason, that capitalism’s most effective social control mechanisms are its racist police, FBI, Immigration and Customs Enforcement, courts, jails and the Pentagon, all now under the umbrella of “homeland security.”

Obviously government repression is a problem. However, in and of itself, it’s not enough to control the masses or stop us from rebelling.

Equally, if not more effectively, are the ways in which the system works very hard to program us not to unite and fight.

What the system does is a lot like what’s depicted in the movie “The Matrix.” In the real capitalist matrix our comatose bodies are not warehoused somewhere, while our drugged minds stumble around in a computer-generated dream world. Still, the function of the real capitalist matrix is more frightening and diabolical because it’s not a movie.

The capitalist system works hard to keep our political consciousness paralyzed and in a coma in order to make us passive, regimented, disconnected from each other and thereby easier to exploit, which is what the parasitic capitalist system is really all about.

In order to unite and fight for our right to a job and a place to live, to healthcare and education, to all that we need and deserve, we’re going to have to break out of the capitalist matrix. Some will break out before others, but most of us will make it out.

In the movie, Neo is given the choice between the blue pill which equals blissful ignorance, and the red pill which is the path to the truth and to revolutionary action. With every passing day, more and more workers will take the red pill. Which one will you take?

Articles copyright 1995-2008 Workers World. Verbatim copying and distribution of this entire article is permitted in any medium without royalty provided this notice is preserved.

US carries out fresh air strike in Pakistan

US carries out fresh air strike in Pakistan

By Keith Jones
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US forces mounted a Predator drone missile attack Monday on a house in Mandata Raghzai, a village in Pakistan's South Waziristan region, killing as many as 20 people.

The Pentagon has refused to confirm the attack. But Pakistani officials have claimed most of those killed were militants from the Pakistani Taliban—the armed opposition that has developed in Pakistan's Pashtun-speaking tribal belt to the US occupation of Afghanistan and the associated attempt of Pakistan's central government to exert greater authority over the country's historically autonomous Federally Administered Tribal Areas (FATA).

The US military is now routinely violating Pakistani sovereignty, extending the Afghan War to its southern neighbor, and realizing, thereby, the strategic "vision" of Admiral Mike Mullen, the head of the US Joint Chiefs of Staff, who has called for Afghanistan and Pakistan's border regions to be perceived as a single war-theater.

Four days before the strike on Mandata Raghzai, a US drone fired four missiles into a seminary in a village near Miramshah, North Waziristan, killing at least 10 people.

According to an article published on the New York Times' website Sunday evening and based on unattributed discussions with US and Pakistani officials, the US has mounted a minimum of 18 Predator missile strikes in FATA since August. Monday's attack would make the tally at least 19.

Many have slaughtered civilians. "The increasing attacks by US drones have caused anger and frustration among tribesmen," reported the Dawn October 24. The Dawn report cited a leaflet that quoted a tribal leader as saying jirga or tribal council members are "disappointed over intermittent drone attacks, resulting in the killing of innocent tribesmen."

US forces have also carried out at least one ground-assault within Pakistan. On September 3, helicopter-borne US commandos mounted a raid on Angoori Ada in South Waziristan, killing more than 20 people. The White House subsequently let it be known that in July US President George W. Bush had secretly authorized US Special Forces to carry out operations inside Pakistan without Islamabad's approval—an act that under international law is tantamount to a declaration of war.

The New York Times report claims that because of the "furious complaints" of Pakistani authorities over last month's military incursion, the Bush administration has "backed away" from ordering further ground raids. It has instead chosen to rely "on an intensifying campaign of airstrikes by the Central Intelligence Agency" to eliminate opponents of the US occupation of Afghanistan.

Further light on the Bush administration's apparent decision to forego, at least for the present, ground-operations in Pakistan is shed by an article that recently appeared in one of the US military's publications. The September 29 Air Force Times cites an unnamed US government official as saying:

"[The September 3 raid was] an opportunity to see how the new Pakistani government reacted. If they didn't do anything, [and] they were just kind of fairly passive, like [the longtime, US-supported dictator General Pervez] Musharraf was ... then we felt like, okay, we can slowly up the ante, we can do maybe some more of these ops. But the backlash that happened, and especially the backlash in the diplomatic channels, was pretty severe...

"Once the Pakistanis started talking about closing down our supply routes [to Afghanistan], and actually demonstrated they could do it, once they started talking about shooting American helicopters, we obviously had to take seriously that maybe this [strategy] was not going to be good enough. We can't sustain ourselves in Afghanistan without the Pakistani supply routes. At the end of the day, we had to not let our tactics get in the way of our strategy."

The Pakistani military was more strident in its opposition to the US's arrogation of the right to wage war in Pakistan than the country's new Pakistan People's Party-led coalition government, and this for several reasons. The US intrusion flagrantly contradicted the Pakistani military's claim "to be the defender of the nation," a claim it has used to legitimize its huge budget and immense political power. Second, the Pakistani military, which has recruited heavily from the Pashtun, is itself divided over the aims and tactics of the counter-insurgency war it is waging in FATA. And the military top brass, which has effectively controlled Pakistan's geo-political strategy for decades, is acutely concerned about the ever-growing Indo-US strategic partnership, including in Afghanistan.

That said, Islamabad's condemnation of the September 3 raid and the call of Pakistan's parliament for any future incursion to be repelled by force, reflected, albeit in a distorted form, popular sentiment. The US government is reviled by ordinary Pakistanis for its wars in Iraq and Afghanistan, its decades-long bankrolling and arming of Musharraf and previous Pakistani dictators, and its callous use of Pakistan as a pawn in its world strategy.

Three further points need to be made about the New York Times article.

First, it strongly suggests that the Pakistani government and military, despite their condemnations of the US drone attacks, have an understanding with Washington. So as to forestall even more obtrusive US military intervention, Pakistani authorities will tacitly accept US missile attacks on the country's territory and the inevitable ensuing civilian casualties

Within Pakistan this understanding is an open secret.

Significantly the Times article and others that have appeared in the US's "newspaper of record' in recent months have made no reference to a Times article published at the beginning of the year that claimed that the CIA has a secret military base within Pakistan from which it is staging Predator attacks. Needless to say, if such a base exists it is with the sanction of the Pakistani military, which for decades has had a close partnership with Washington and been viewed by the US political and military establishment as the crux of the US-Pakistani relationship and the chief bulwark of the Pakistani state.

Also of note is the claim of the recent Times article that many within the Bush administration are continuing to press for the US to send troops into Pakistan. Reports the Times, "Within the government, advocates of the ground raids have argued that only by sending Special Operations forces into Pakistan can the United States successfully capture suspected operatives and interrogate them for information about top [al] Qaeda leaders."

In other words, the possibility of further ground raids and a new crisis in US-Pakistani relations remains live.

Both the Republican and Democratic Presidential candidates have made clear they would be ready to order US military action inside Pakistan. Democratic nominee Barack Obama has been especially bellicose in regards to Pakistan. In a bid to demonstrate that he has nothing to learn from John McCain about ruthlessly pursuing US imperialism's interests, Obama has repeatedly vowed that he would be ready to order, in flagrant violation of international law, unilateral military action in Pakistan.

Obama's strident rhetoric on Pakistan is a corollary to his promotion of the US invasion and occupation of Afghanistan as the "good war." In reality the US military involvement in Afghanistan, which began in the late 1970s, is driven by Washington's and Wall Street's predatory interests, no less today than thirty years ago.

While Washington once armed Islamic fundamentalists with the aim of weakening the Soviet Union, today it invokes the fight against the Taliban and al-Qaeda to justify a drive to secure a US military-strategic beachhead in oil-rich Central Asia.

The third further point of note in the Times report is its claim that "privately, some American officials are wincing at" the brutality and indiscriminate character of the war the Pakistani military is waging to root out Pakistani and Afghan Taliban and other "foreign fighters" from the Bajaur Tribal Agency.

Launched three months ago under heavy US pressure, the Pakistani military offensive in Bajaur (one of FATA's seven component parts) has caused widespread civilian casualties. This is hardly surprising given that the military has routinely bombed and strafed villages from the air. According to an earlier Times report, the military has also threatened reprisals against tribes that do not form lashkars or militias to help fight the anti-US forces. "We were pressured by the government to take action," the Times cited a tribal leader as saying in an article published October 24. "They warned, ‘If you don't take action you will be bombed'."

As many as 300,000 people have fled the area due to the fighting, but Pakistani authorities have done little to provide them with food and shelter.

The Times cites a senior US military officer as saying of the Pakistani military, "They don't have a concept of counter-insurgency operation. It's generally a heavy punch and then they leave."

If US military officers, who have waged an illegal war in Iraq that has resulted in the death of a million people, are "wincing" at what the Pakistani military is doing in Bajaur, one can only imagine the horrific and arbitrary character of the violence being inflicted, at the US's instigation, by Washington's decades' old partner—the Pakistani officers corps.

US military forces attack Syrian village, killing eight

US military forces attack Syrian village, killing eight

By Patrick O’Connor
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A ground assault conducted Sunday by the US military on a Syrian village saw eight people shot dead, four of them reportedly children, and others wounded. The raid has all the earmarks of a calculated provocation by the outgoing administration of US President George Bush aimed at derailing moves by the European powers to normalise relations with the Syrian government.

Syrian state media reported that two US helicopters landed on a farm near the eastern village of Abu Kamal, about five miles from the Iraqi border, on Sunday afternoon at 4.45 PM local time. Another two helicopters flew overhead throughout the raid.

Special forces reportedly emerged from the helicopters and fired on construction workers at a building site, killing seven, before also killing a fisherman outside the building. After the attack, the four US helicopters flew back across the Iraqi border.

Syrian officials said that all those killed were civilians. Local doctors reported that another seven people were hospitalised with bullet wounds. State television showed bullet casings littering the ground at the scene of the raid.

The Syrian Arab News Agency (SANA) reported the comments of villager Souad al-Jassem, whose husband was killed: "We were surprised at five in the evening when two helicopters landed near where we live. A number of American soldiers, some of whom spoke Arabic, came out of the helicopters and entered the tent where I live with my children and husband, who works as groundkeeper for the building."

Another local resident, Jumaa Ahmad al-Hamad, told the Associated Press: "Shooting then started ringing for more than ten minutes." AP reported that after the helicopters left the area, al-Hamad and other villagers went to the site and discovered the bodies of his uncle, Dawoud al-Hamad, and four of his uncle's sons, who he said were killed in the raid.

Hundreds of villagers participated in funerals held yesterday for those killed. Mourners reportedly chanted slogans including "Death to the criminal Bush" and "We will not go down on our knees before the Americans."

The Syrian government accused the Bush administration of "terrorist aggression." The Arab League also denounced the attack, as did several governments in the region, including the Lebanese and Iranian.

The Russian government condemned the incident, saying "the war against terror must not be used as a cover for attacking sovereign nations." Other countries expressed their concern, including France, which called for restraint and "strict respect" of nations' territorial integrity. President Nicolas Sarkozy sent condolences to the victims' friends and families.

Neither the Bush administration nor the military has officially acknowledged responsibility for the attack, but unnamed US officials confirmed the cross-border raid.

A military official told the Associated Press that a "foreign fighter logistics network" was targeted and that due to Syrian government inaction, the US was "taking matters into our own hands." Another official told Agence France-Presse that Abu Ghadiya, "one of the most prominent fighter facilitators in the region" and an alleged senior member of Al Qaeda in Iraq, had been targeted. The source added, "The operation was successful. He is believed to have been killed... Look, when you've got an opportunity, an important one, you take it."

Under the banner of the "war on terror," Washington has claimed the right to disregard fundamental precepts of international law and conduct aggressive military operations, including assassinations, in any part of the world. Sunday's raid in Syria follows a series of bombings and ground attacks in recent months inside Pakistan.

A number of military analysts have questioned the timing of the Syrian raid. Ever since the 2003 invasion of Iraq, the Bush administration has complained of foreign fighters crossing the Syrian border into Iraq, but a cross-border military operation of this character has never been carried out before.

The raid comes as the level of active resistance in Iraq's western districts is significantly lower than in previous years, due to the US military's bankrolling of local Sunni tribal militias which previously fought against the occupation. According to the Associated Press, in July a senior US military intelligence official reported that just 20 foreign fighters now came into Iraq each month, 50 percent fewer than six months earlier and down from 100 a month in mid-2007. The shift was partly due to the Syrian government and military's compliance with US demands that it step up its border control efforts.

After referring to these developments, the US-based strategic think tank Stratfor stated, "In other words, the raid appears to be bizarre."

There is every possibility that the military operation was intended to heighten tensions internationally. The Guardian noted yesterday: "The attack comes as Syria takes another step in from the cold today when its foreign minister, Walid al-Mualim, visits London to hear praise for its newly conciliatory policies in Lebanon—and to be urged to distance itself from Iran. In recent months Syria has established diplomatic relations with Lebanon and held several rounds of indirect talks with Israel, with Turkey acting as broker. In July, President Assad was invited to an EU summit in Paris."

French President Sarkozy has been at the forefront of efforts to integrate the Syrian regime into the European Union's strategic orbit through the development of a negotiated settlement with Israel and the severing of Assad's ties with Tehran. France's ruling elite also has significant economic interests in its former colony, with oil company Total licensed to exploit Syrian gas fields up to 2021.

For the Bush administration, Syria remains a potential target in the "war on terror." Many leading neo-conservatives regarded the country as the logical next target following the invasion of Iraq and have labelled the Assad government "low hanging fruit" that is ripe for regime change. Damascus is seen as an obstacle to Washington's strategic interests in the Middle East, especially in Lebanon, where Syria wields significant influence, including through its support for Hezbollah.

There are sharp tactical divisions within the US foreign policy establishment on how to deal with Syria.

According to Syria expert and University of Oklahoma Professor Joshua Landis: "Both the State Department and DOD [Department of Defense] have consistently pushed for intelligence sharing with Damascus only to be shot down by the vice president's office."

In May 2007, Secretary of State Condoleezza Rice asked Syria's foreign minister if two US generals could visit Damascus to resume intelligence sharing, but the proposal fell through after Washington refused to meet the Assad government's condition that moves towards diplomatic normalisation be initiated. Professor Landis also reported that in December 2007, General David Petraeus wanted to speak with Syrian officials in Damascus but was refused permission by the White House.

One of the central recommendations of the 2006 Iraq Study Group report, drawn up by a bipartisan panel headed by former Secretary of State James Baker and former Democratic Congressman Lee Hamilton, was that direct talks be initiated with the Assad government as part of a broader "new diplomatic offensive" in the region aimed at bolstering US imperialism's standing in the Middle East after the Iraq debacle.

Democratic presidential candidate Barack Obama has endorsed this call. Two Obama foreign policy advisors have this year visited Syria. In February, Zbigniew Brzezinski, former national security advisor to President Jimmy Carter, reportedly met with President Assad as part of a RAND Corporation delegation. Daniel Kurtzer, who served as US ambassador to Israel for four years following his nomination to the post by President Bush in 2001, is Obama's senior advisor on Israeli-Palestinian affairs. Kurtzer visited Syria in July and met with the country's foreign minister.

In this context, the US military attack on Sunday may mark an attempt by the Bush administration to present an incoming Obama administration with a fait accompli by destabilising the Syrian government, inflaming regional tensions, and encouraging the most militaristic sections of the Israeli political establishment amid their national election campaign.

Pentagon Panel: Biden Was Right, Prep for 'Crisis'

DOD Panel: Next President to 'Likely' to Face Crisis in First 270 Days

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The next president is likely to face a major international crisis within his first nine months in office, according to a senior group of business advisers to the defense secretary.

Accordingly, the Defense Business Board says the new administration should set a goal to win Senate confirmation of key Pentagon posts in the first 30 days of the inauguration, in order to have a full team in place to deal with such a contingency.

Michael Bayer, chairman of the Defense Business Board and veteran Pentagon consultant, this week called for the next administration to move quickly to avoid encountering civilian leadership vacuums that often accompany political transitions.

“Prepare for a likely first 270 days crisis,” Bayer warns in an Oct. 23 briefing. “Too many presidents were ill prepared for this.”

Joe Biden, the Democratic ticket's vice presidential nominee, drew criticism earlier this week for suggesting that should he and Barack Obama prevail in the Nov. 4 election, U.S. adversaries will mount an attack of some kind to test the new president.

Bayer's briefing, presented yesterday to a public meeting of the Defense Business Board, recommends the future president elect and his advisers “set aside time in transition to identify the planning, gravitas and interagency process necessary to respond to a likely first-270-day crisis.”

For months, the Office of the Secretary of Defense, the service chiefs and the Joint Staff have been preparing for the first wartime transfer of Pentagon political authority in four decades. In addition to identifying defense policy issues for an incoming to understand, the military is also on high operational alert, according to a Joint Staff official.

A key goal for the next administration, according to Bayer, must be to fill civilian posts requiring Senate confirmation as soon as possible.

The incoming administration “must not wait until June” to get assistant secretaries confirmed and October for deputy assistant secretaries to be Senate confirmed, his briefing states.

“Need a very concerted, well-defined process to have top 3 tiers ready to go to Senate confirmation in first 30 days,” Bayer recommends.

His briefing also notes challenges that nearly every president since Dwight Eisenhower has faced in the early days. In 1953, Eisenhower agreed to work with the British to depose Iran's prime minister and install the Shah; John Kennedy ordered the ill-fated Bay of Pigs invasion of Cuba in April 1961; Lyndon Johnson in Aug. 1964 had to deal with the Gulf of Tonkin Incident, which became a pretext for escalating U.S. military involvement in Vietnam.

Richard Nixon, in the third month of this presidency in 1969, escalated U.S. military operations in Southeast Asia by ordering aerial attacks against Cambodia and Laos. Jimmy Carter, during his first month in office in 1977, directed unilateral removed of nuclear weapons from South Korea and announced plans to reduce the number of U.S. troops from the peninsula, a step that drew public criticism from then Army Maj. Gen. John Singlaub, a senior U.S. commander in South Korea, whom Carter relieved of duty. In his fifth month as president, George H.W. Bush, in the summer of 1989, sent the first wave of U.S. military personnel to Panama to set the stage for the launch of “Operation Just Cause” that December.

Finally, Bayer’s briefing notes, Bill Clinton, in Feb. 1993, his second month in office, had to manage the World Trade Center bombing; while George W. Bush, in April of his first year in office, dealt with the downing of a Navy spy plane near China. Months later, Bush was faced with the terrorist attacks in September in New York, Washington and Pennsylvania. -- Jason Sherman

Cost of crash: $2,800,000,000,000

Cost of crash: $2,800,000,000,000

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Autumn's market mayhem has left the world's financial institutions nursing losses of $2.8tn, the Bank of England said today, as it called for fundamental reform of the global banking system to prevent a repeat of turmoil "arguably" unprecedented since the outbreak of the first world war.

In its half-yearly health check of the City, the Bank said tougher regulation and constraints on lending would be needed as policymakers sought to learn lessons from the mistakes that have led to a systemic crisis unfolding over the past 15 months.

The Bank's Financial Stability Report, which will be sent to every bank director in Britain, more than doubled the previous estimate of the potential losses faced by all financial institutions since the spring, but said that given time the actual losses could be pared by between a third and a half.

The £50bn pledged by the government had helped underpin the system, the Bank said, and would provide a breathing space for UK banks so that they did not have to sell assets at cut-price values immediately. The report also expressed cautious optimism about the effectiveness of the recent global bail-out plan.

The Bank's estimate exceeds that made by the International Monetary Fund recently. The IMF concentrated on US institutions and did not include losses from the turmoil of recent weeks. Estimated paper losses from UK banks on mortgage-backed securities and corporate bonds are currently £122.6bn, the Bank report said.

Gordon Brown insisted yesterday that it was right for the government to increase borrowing in order to fund investment to help the economy through tough times. But he moved to reassure markets that he would not preside over a reckless increase in borrowing during the recession and said he would reduce it as a proportion of GDP once the economy picks up.

Paving the way for an expected abandonment of the tight fiscal rules he established as chancellor, Brown said: "The responsible course of government is to invest at this time to speed up the economic activity. As economic activity rises, as tax revenues recover, then you would want borrowing to be a lower share of your national income. But the responsible course at the moment is to use the investments that are necessary, and to continue them, and to help people through very difficult times.

"I think that's a very fundamental part of what we are doing."

In another turbulent day yesterday on global markets, there were hefty falls in Asian stockmarkets and a fresh fall in the pound. Japan's Nikkei index closed down more than 6% at a 26-year-low of 7162.9. London's FTSE 100 recovered from an early fall of more than 200 points to close 30 points lower at 3852.6, while the Dow Jones closed down 2.42% at 8,175.77.

Brown and Peter Mandelson, the business secretary, served notice that Britain should brace itself for a downturn when they both warned about rising unemployment. Brown said: "I can't promise people that we will keep them in their last job if it becomes economically redundant. But we can promise people that we will help them into their next job."

Mandelson was more blunt as he warned of the impact of the recession. "We are facing an unparalleled financial crisis," he said during a visit to Moscow. "I don't think yet people have realised what the impact is going to be on our real economy."

The Tories intensified their attacks on the government by depicting Brown as not a man with a plan but a man with an overdraft.

Responding to Brown's remarks, George Osborne, shadow chancellor, said: "What they are talking about is borrowing out of necessity, not out of virtue. Gordon Brown is a man with an overdraft, not a man with a plan. He is being forced into this borrowing. He presents it as a strategy but it is actually a consequence of his great failure that borrowing is already out of control before we even get into the worst of the economic circumstances that we are in."

Brown was speaking as the Treasury finalised plans to rewrite the fiscal rules which have governed his approach to the economy over the past decade. Alistair Darling will use his pre-budget report next month to say that it is time for a more flexible approach in the new economic cycle, which started in 2006-07.

The previous FSR in April envisaged a gradual recovery in global markets and the Bank was careful today not to sound the all-clear despite the coordinated action in Britain, the US and the eurozone this month to recapitalise banks and provide extra liquidity to markets. "In recent weeks, the global banking system has arguably undergone its biggest episode of instability since the start of the first world war," it said.

Sir John Gieve, the Bank's deputy governor for financial stability, added: "With a global economic downturn under way, the financial system remains under strain. But it is better placed as a result of the exceptional package of capital, guaranteed funding and liquidity support. That is helping to underpin the banking system both directly and by demonstrating the authorities' determination to do whatever is needed to restore confidence.

"Looking further ahead, we need a fundamental rethink of how to manage systemic risk internationally. We need to establish stronger restraints on the build-up of risks in the financial system over the cycle with the dangers they bring to the wider economy.

"That means not just increasing capital and liquidity requirements for individual institutions but relating them to the cyclical growth of risk in the system more broadly. Counter-cyclical policy of that sort should complement regulation of companies and broader macroeconomic policy."

The Bank believes that the capital injection from the taxpayer will also prevent banks from slashing their lending too aggressively over the coming months, relieving the recessionary pressure on the economy.

Figures released yesterday, however, from financial data provider Moneyfacts showed banks were failing to pass on interest rate cuts to mortgage borrowers despite making severe cuts in savings rates. It said most institutions had already passed on the last half-point base rate cut to savers while holding back ..s in home loan interest rates.

"Some providers are using the base rate cut as a way of increasing their margin for risk, by not passing on the full cut to mortgage customers but passing the cut on in full to savings customers," it said.

A separate study last week marked a new low in the number of mortgage products available.

Concerns at widespread job losses across the finance sector prompted unions to demand a "social contract" to protect jobs. Derek Simpson, Unite's joint general secretary, said: "Workers in the financial services are facing insecurity as the world is gripped by economic turmoil. The Unite 'social contract' sets out the principles which employees expect the government and finance companies to now sign up to.

"Unite is calling for the protection of jobs, pensions, the end to short-term remuneration policies and an overhaul of the regulatory structures in the financial services sector. There must be a recognition of the importance of employment in the financial services sector, as many communities now depend on the sector since being decimated by the collapse of the manufacturing industry.

"Workers in the financial services industry are not the culprits of the credit crunch and we are not prepared to allow them to become the victims. The taxpayer must now get firm assurances that the financial lifeline extended to these large organisations will be used to protect jobs and the public. It is not acceptable for the government to socialise the risk without allowing the wider society to capitalise on the rewards in the finance industry."

How much is that?

The Bank of England may have put the paper cost of the global crisis at a staggering $2.8 trillion, but how does one come to grips with such a sum? Think of it like this: it could pay for 46 bail-outs of the kind the Treasury handed to the banks RBS, HBOS group and Lloyds TSB; or pay off the last quarter's public debt 45 times. It is more than three times the sum of UK annual public spending, and also equivalent to the wealth of 100 Oleg Deripaskas - before the credit crunch anyway. It's equal to 138m bottles of 1947 Petrus Pomerol, the bankers' favourite vintage; or, if it's your turn in the coffee round, 773bn lattes - nearly 13,000 each for every UK citizen.

Alan Shrugged

Alan Shrugged

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In a congressional hearing room on Thursday, former Fed Chairman Alan Greenspan, one of the most influential civil servants of the past century, saw his stock plummet—and his entire career lose its moorings. More important, the ideological battle over economic theory and the role of government in markets—a fight that has played out in the current presidential campaign—took a historic turn.

With members of the House oversight and government reform committee blasting Greenspan for his past decisions that helped pave the way for the current financial crisis, he acknowledged that his libertarian view of markets and the financial world had not worked out so well. "You know," he told the legislators, "that's precisely the reason I was shocked, because I have been going for 40 years or more with very considerable evidence that it was working exceptionally well." While Greenspan did defend his various decisions, he admitted that his faith in the ability of free and loosely-regulated markets to produce the best outcomes had been shaken: "I made a mistake in presuming that the self-interests of organizations, specifically banks and others, were such as that they were best capable of protecting their own shareholders and their equity in the firms."

In other words, whoops—there goes decades of Ayn Rand down the drain.

Democrats on the committee made Greenspan eat ideological crow. And after the hearing, Democratic Senator Dianne Feinstein of California released letters Greenspan had written to legislators in 2002 and 2003 that now cast the former chief banker as out of touch with financial reality.

Back then, Feinstein was pushing for regulating financial instruments known as derivatives—particularly those called swaps. In 2000, Republican Senator Phil Gramm, then the chairman of the Senate banking committee, had used a sly legislative maneuver to pass a bill keeping swaps free from federal regulation. (Lobbyists for financial firms had helped to write the bill.) The swaps market subsequently exploded, as financial firms bought and sold swaps as insurance to cover their trading in subprime securities and other freewheeling financial products. In a nutshell: the rise of unregulated swaps enabled the growth of the shaky subprime securities at the heart of the current financial crisis. Greenspan was an ardent supporter of keeping swaps virtually unregulated.

In 2001, Enron, having gone crazy with energy derivatives, collapsed—after the firm had manipulated the California electricity market, costing residents of Feinstein's states billions of dollars. Following that fiasco, Feinstein decided the derivatives market needed to be reined in. As The Wall Street Journal reported in 2004, "When she telephoned Mr. Greenspan for support, he declined, telling her the proposal threatened the multitrillion dollar derivatives industry, which he considers an important stabilizing force that diffuses financial risk."

In September 2002, Greenspan, Treasury Secretary Paul O'Neill, Securities and Exchange Commission chairman Harvey Pitt, and Commodity Futures Trading Commission chairman James Newsome wrote a letter to members of Congress to note their opposition to legislation that would regulate derivatives. They wrote:

We believe that the [over-the-counter] derivatives markets in question have been a major contributor to our economy's ability to respond to the stresses and challenges of the last two years. This proposal would limit this contribution, thereby increasing the vulnerability of our economy to potential future stresses....

We do not believe a public policy case exists to justify this governmental intervention. The OTC markets trade a wide variety of instruments. Many of these are idiosyncratic in nature....

While the derivatives markets may seem far removed from the interests and concerns of consumers, the efficiency gains that these markets have fostered are enormously important to consumers and to our economy.

Greenspan and the others urged Congress "to be aware of the potential unintended consequences" of legislation to regulate derivatives.

They got it exactly wrong. Swaps and derivatives ended up undermining, not bolstering, the economy.

Feinstein was not convinced by Greenspan's argument, and she continued to press for legislation to regulate swaps. And Greenspan continued to resist. In a June 11, 2003 letter—also signed by the new Treasury secretary. John Snow, the new SEC chairman, William Donaldson, and CFTC chairman Newsome—Greenspan praised derivatives and called them an essential part of the economy:

Businesss, financial institutions, and investors throughout the economy rely upon derivatives to protect themselves from market volatility triggered by unexpected economic events. This ability to manage risks makes the economy more resilient and its importance cannot be underestimated. In our judgment, the ability of private counterparty surveillance to effectively regulate these markets can be undermined by inappropriate extensions of government regulations.

They were asserting that government regulation undercuts market-driven self-regulation. But as events have demonstrated, unregulated swaps did not protect Big Finance firms; they weakened the entire financial industry in the United States and overseas.

In a November 5, 2003 letter, signed only by Greenspan, the Fed chair again took a shot at Feinstein's proposal to control derivatives. He noted that "enhanced market discipline" would address concerns about the manipulation of markets.

Before the oversight committee, Greenspan said that he had been "partially" wrong to believe that swaps did not need regulation. But he did seek cover by claiming he had not been alone in screwing up: "The Federal Reserve had as good an economic organization as exists. If all those extraordinarily capable people were unable to foresee the development of this critical problem...we have to ask ourselves: Why is that? And the answer is that we're not smart enough as people. We just cannot see events that far in advance."

But not everyone got it wrong. In the late 1990s, regulators at the CFTC wanted to regulate swaps. Gramm, Greenspan and others—including senior members of the Clinton administration—did not. Following the Enron debacle, Feinstein took a run at this. But Greenspan and Bush administration officials said no. And it was not an issue of smarts; it was a matter of ideology.

In fact, it was always a matter of ideology for Greenspan, a libertarian champion. In 1963, writing in Rand's "Objectivist" newsletter, he noted, "It is in the self-interest of every businessman to have a reputation for honest dealings and a quality product." Regulation, he maintained, undermines this "superlatively moral system." Self-governance by choice, he said, would be more effective than governance through government. Regulation, Greenspan maintained, was the enemy of freedom: "At the bottom of the endless pile of paper work which characterizes all regulation lies a gun."

Well, it turns out that at the bottom of the system that Greenspan oversaw for years, there was nothing but a pile of bad paper. And testifying to the House oversight committee, Greenspan, one of the more ideological Washington players of the past few decades, essentially said that Ayn Randism had let him—and the entire world—down. It was truly a God that failed.

Wal-Mart has perfected the art of union-busting, researcher says

Wal-Mart has perfected the art of union-busting, researcher says

By Barb Kucera

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Want to understand why so many American workers find it so hard to organize unions in their workplaces? Look no further than Wal-Mart, a researcher for Human Rights Watch says. Wal-Mart is a case study "of the abysmal workers' rights regime we have here in the United States," said Carol Pier, senior researcher on labor rights and trade for Human Rights Watch, an independent, nongovernmental organization that investigates human rights violations around the world.

In a speech last week at the University of Minnesota, Pier described her two-and-one-half-year study of Wal-Mart's labor-management record, which culminated in a 210-page report, issued in 2007, titled "Discounting Rights: Wal-Mart's Violation of U.S. Workers' Right to Freedom of Association."

The report found that while many American companies use weak U.S. laws to stop workers from organizing, the retail giant stands out for the sheer magnitude and aggressiveness of its anti-union apparatus. Many of its anti-union tactics are lawful in the United States, though they combine to undermine workers' rights. Others run afoul of soft U.S. laws.

"I like to think about it as a 'death by small cuts' strategy," Pier told the audience gathered at the University of Minnesota Law School. "And the effect is devastating."

In the course of her research, Pier interviewed dozens of current and former Wal-Mart "associates" (the term the company uses for its employees) and supervisors in six states and pored through thousands of pages of material from the National Labor Relations Board, the federal agency that enforces U.S. labor law.

Wal-Mart uses a subtle form of union-busting that starts with new employee orientation, where training includes watching an anti-union video, Pier said. The corporation has a 24-hour hotline for managers to report any signs of union organizing activity and a "labor relations team" is quickly dispatched to assess the situation.

Depending on the level of union activity, workers may be subjected to mandatory "captive audience" meetings where they are lectured on the evils of unionism. In some stores, Wal-Mart has crossed the line from subtle to heavy-handed by conducting surveillance on employees, disciplining and firing some.

When those actions are taken – clearly in violation of U.S. labor law – the failings of the system become clear, Pier said. Wal-Mart takes advantage of the exceedingly slow NLRB process to draw out cases for years. When a worker finally wins a case, the company faces no penalty – other than the requirement to reinstate the worker with back pay (minus anything he or she earned in other employment) and to post a notice saying "they won't do it again."

With nearly 1 million employees in the United States, Wal-Mart is the country's largest private employer. Yet none of these workers belongs to a union. Employees at two stores in Quebec, Canada, finally won union representation, but both stores have been closed – the second one earlier this month.

The International Labor Organization has cited the lack of penalties – and the fact that workers can be "permanently replaced" if they strike – as reasons that U.S. labor law fails to meet international human rights standards, Pier said.

The proposed Employee Free Choice Act – supported by Democratic presidential candidate Barack Obama and many Congressional Democrats – would address some of the shortcomings in U.S. labor law by levying fines of up to $20,000 for each violation and permitting workers to choose union representation by signing cards, bypassing the drawn-out NLRB election process during which many employer violations occur.

Still, Pier worries the new law would not be effective without a broader campaign to improve people's knowledge of unions. Companies like Wal-Mart could still continue the kind of early union-busting – such as showing videos during employee orientation – that create a chilling climate for organizing.

"EFCA will help," Pier said of the proposed legislation. "EFCA's necessary. I don't think it's the fix."

Pier's talk was sponsored by The Institute for Global Studies and the University of
Minnesota's Human Rights Program and co-sponsored by the Labor Education Service, publisher of Workday Minnesota.

For more information
Read Pier's report, "Discounting Rights: Wal-Mart's Violation of U.S. Workers' Right to Freedom of Association," http://hrw.org/reports/2007/us0507/

Sen. Stevens guilty on seven counts of corruption

Sen. Stevens' career cloudy after conviction

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Sen. Ted Stevens gambled by asking for a speedy trial, betting a high-powered defense team, some sterling character witnesses and his unblemished record as Alaska's political patriarch would get him a pre-election acquittal on corruption charges.

He lost, with a jury on Monday finding him guilty on seven counts of trying to hide more than $250,000 in free home renovations and other gifts from a wealthy oil contractor.

Stevens, who first entered the Senate in 1968, now faces Alaska's voters next week as a convicted felon - increasing the difficulty in a tough race against Democratic challenger Mark Begich. But the famously stubborn Stevens is not giving up, asking supporters in Alaska and the Senate to stand by him as he appeals his conviction.

"I will fight this unjust verdict with every ounce of energy I have," the 84-year-old World War II veteran said.

Stevens faces a maximum 35 years in prison, although he is likely to get far less, if any, prison time. If re-elected, he also could face an expulsion vote in the Senate, although senators also can recommend a lesser sanction.

Stevens is a legendary figure in Alaska, where he has wielded political influence since before statehood. His knack for steering billions of dollars in federal money to his home state has drawn praise from his constituents and consternation from budget hawks.

Stevens proclaimed his innocence throughout the trial and pushed U.S. District Judge Emmet Sullivan to bring the case before a jury within two months, extremely fast for a case of such magnitude. Hiring noted defense lawyer Brendan Sullivan and getting august personalities such as former Secretary of State Colin Powell and Democratic Sen. Daniel Inouye of Hawaii to testify for him, Stevens hoped to get a pre-Election Day verdict from the eight women and four men on the jury.

Things started going downhill, however, after Stevens gave a combative performance on the witness stand.

He stuttered and looked uncomfortable answering several questions and would shoot back at prosecutor Brenda Morris with answers such as "You're not listening to me; I've answered it twice," "You're making a lot of assumptions that are unwarranted" and "That question is tautological."

Jurors, after listening to a monthlong trial, complained of stress and violent outbursts in the jury room after starting to deliberate Wednesday. They tried to kick one of their own off the panel. They twice asked to go home early and then lost a juror after her father died and were ordered by the judge to restart their deliberations.

It only took them about five hours to come to a decision Monday.

The Alaska Democratic Party called on Stevens to immediately resign. But Begich said only that Alaskans "are strong and resilient, and I believe that we will be able to move forward together to address the critical challenges that face Alaska."

Gov. Sarah Palin, the GOP's vice presidential candidate, did not call on Stevens to resign, saying only, "I'm confident Senator Stevens will do what's right for the people of Alaska."

It would be a mistake to write Stevens' political obituary with the election still a week away, said Carl Shepro, a professor of political science at the University of Alaska in Anchorage. Many Alaskans believe Stevens is being unjustly attacked, he said.

"It's very possible that he's going to win the election," Shepro said.