Monday, November 17, 2008

GM Must Re-Make the Mass Transit System it Murdered

GM Must Re-Make the Mass Transit System it Murdered

by Harvey Wasserman

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Bail out General Motors? The people who murdered our mass transit system?

First let them remake what they destroyed.

GM responded to the 1970s gas crisis by handing over the American market to energy-efficient Toyota and Honda.

GM met the rise of the hybrids with "light trucks."

GM built a small electric car, leased a pilot fleet to consumers who loved it, and then forcibly confiscated and trashed them all.

GM now wants to market a $40,000 electric Volt that looks like a cross between a Hummer and a Cadillac and will do nothing to meet the Solartopian needs of a green-powered Earth.

For this alone, GM's managers should never be allowed to make another car, let alone take our tax money to stay in business.

But there is also a trillion-dollar skeleton in GM's closet.

This is the company that murdered our mass transit system.

The assertion comes from Bradford Snell, a government researcher whose definitive report damning GM has been a vehicular lightening rod since its 1974 debut. Its attackers and defenders are legion. But some facts are irrefutable:

In a 1922 memo that will live in infamy, GM President Alfred P. Sloan established a unit aimed at dumping electrified mass transit in favor of gas-burning cars, trucks and buses.

Just one American family in 10 then owned an automobile. Instead, we loved our 44,000 miles of passenger rail routes managed by 1,200 companies employing 300,000 Americans who ran 15 billion annual trips generating an income of $1 billion. According to Snell, "virtually every city and town in America of more than 2,500 people had its own electric rail system."

But GM lost $65 million in 1921. So Sloan enlisted Standard Oil (now Exxon), Philips Petroleum, glass and rubber companies and an army of financiers and politicians to kill mass transit.

The campaigns varied, as did the economic and technical health of many of the systems themselves. Some now argue that buses would have transcended many of the rail lines anyway. More likely, they would have hybridized and complemented each other.

But with a varied arsenal of political and financial subterfuges, GM helped gut the core of America's train and trolley systems. It was the murder of our rail systems that made our "love affair" with the car a tragedy of necessity.

In 1949 a complex federal prosecution for related crimes resulted in an anti-trust fine against GM of a whopping $5000. For years thereafter GM continued to bury electric rail systems by "bustituting" gas-fired vehicles.

Then came the interstates. After driving his Allied forces into Berlin on Hitler's Autobahn, Dwight Eisenhower brought home a passion for America's biggest public works project. Some 40,000 miles of vital eco-systems were eventually paved under.

In habitat destruction, oil addiction, global warming, outright traffic deaths (some 40,000/year and more), ancillary ailments and wars for oil, the automobile embodies the worst ecological catastrophe in human history.

Should current General Motors management be made to pay for the ancient sins of Alfred Sloan?

Since the 1880s, American corporations have claimed human rights under the law. Tasking one now with human responsibilities could set a great precedent.

GM has certainly proved itself unable to make cars that can compete while healing a global-warmed planet.

So let's convert the company's infrastructure to churn out trolley cars, monorails, passenger trains, truly green buses.

FDR forced Detroit to manufacture the tanks, planes and guns that won World War 2 (try buying a 1944 Chevrolet!). Now let a reinvented GM make the "weapons" to win the climate war and energy independence.

It demands re-tooling and re-training. But GM's special role in history must now evolve into using its infrastructure to restore the mass transit system---and ecological balance---it has helped destroy.

Nothing To Lose But Your Chains, Some Things Are Bigger Than Any Of Us

Nothing To Lose But Your Chains

Some Things Are Bigger Than Any Of Us

By Mickey Z.

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“One of the good things about everything being so fucked up—about the culture being so ubiquitously destructive—is that no matter where you look—no matter what your gifts, no matter where your heart lies—there’s good and desperately important work to be done.”
- Derrick Jensen

In 1850, the Fugitive Slave Law was passed and both Northerners and Southerners were now legally required to turn in runaway slaves. One year later, Harriet Beecher Stowe wrote Uncle Tom’s Cabin (or Life Among the Lowly) as a serial in an antislavery paper, The National Era. In 1852, the Boston publishing company Jewett published it as a book and, as they are wont to say, the rest is history.

Widely considered to be the first social protest novel published in the United States (and the first major novel to have a black hero), Uncle Tom’s Cabin sold more copies—with the exception of The Bible—than any book had ever sold in America until that point with sales reaching 300,000 copies in the first year.

Stowe’s graphic depiction of slave life—based on true stories—personalized the issue, reclaiming it from the sanitized domain of courtroom legalese. Her story outraged some and inspired many others. To her critics, she answered with A Key to Uncle Tom’s Cabin in 1853 to provide documentation that every incident in her book had actually happened. Upon meeting Harriet Beecher Stowe in 1862, Abraham Lincoln remarked: "So you’re the little woman that wrote the book that made this great war."

There was a time when slavery was believed too deeply entrenched in American culture to ever be abolished. The movement to end this "peculiar institution" was made up of individuals willing to recognize that some things in life are bigger than any of us. Whether they literally risked their lives by rescuing slaves and running the Underground Railroad or they did their part by sewing clothes or blankets for escaped slaves or, yes, writing books like Uncle Tom’s Cabin, the movement needed every single one of these brave humans doing their part—small or large.

What seems impossible and irreversible today can be addressed if we're willing to wake up and do the hard work. If we’re willing to stop making excuses for the reprehensible leaders (sic)—both political and corporate—who profit from our complacency.

So, the next time you’re deciding between watching a Will & Grace re-run or updating your Facebook book, step up instead. Take a good, long look into heart and an even longer look at the choices you make all day, every day—not from place of guilt and shame but with a sense of revelation. Accept the challenge to be better human being, a more responsible earthling. It takes courage to perform self-examination. It takes courage to accept everything you know just might be wrong. It takes far more courage to do this than to volunteer to wage illegal and immoral wars.

Let’s face it: Things sucked under George W. Bush. Things will suck under Barack Obama. Things have sucked under every president. Nothing will change until we change our minds. We can’t be as indifferent as those before us. They didn’t think enough about future generations so now we have to work twice as hard. It sucks, I know, but this not an issue of fairness. It’s about survival.

Some things in life are bigger than any of us. The anti-slavery movement recognized this. Today, the entire planet is enslaved…to profit-seeking corporations and the corrupt politicians they own (yes, including the Pope of Hope). Are this generation’s abolitionists ready to step up and create change? Not ask for change, create change.

Why not embrace your outrage and frustration and let it challenge you, inspire you, and motivate you? Instead of channeling your ambitions toward climbing a mountain, running a marathon, or striving to make your first million before you’re 30, what greater goal could any of us ever aim for than to leave the planet much better off than how we found it?

You have nothing to lose but your chains…

All the King’s Men

All the King’s Men

By John S. Hatch

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Amidst the somewhat hysterical euphoria of the Obama win is the fact that he has some very sober decisions to make, and his choice of Chief of Staff (Rahm Emanuel has already had to apologise for remarks by his once-terrorist father) does not auger well. Why choose someone who has served in Israel’s brutal IDF and who is rabidly anti-Palestinian? Is this ‘Change’? Also disturbing is talk of retaining Secretary of Defense Robert Gates with all his Iran-Contra baggage. Or Madeleine Albright who insanely stated that the undisputed deaths of 500,000 Iraqi children (under the age of five) during the (ineffectual to Saddam) sanctions following Gulf War I were ‘worth it’. Or possibly appointing Paul Volker to head Treasury. Change? This sounds like Business As Usual.

But his biggest challenge will be in how he chooses to deal with the crimes of the previous Administration. Crimes such as kidnapping, illegal imprisonment, torture (including perhaps hundreds of torture deaths for which no one has been held to account), assassination, illegal invasions, the use of prohibited weapons such as white phosphorous, the wrongful deaths of up to 1.2 million Iraqi and Afghan civilians, illegal domestic spying, and probably a host of other things as yet undisclosed.

Will an Obama Administration seek to restore justice?

Or will it indulge in the familiar American proclivity to retreat into self-delusional denial? And please note that we’re not just talking about President Bush here, but a huge number of enablers from the top right down to the actual torturer or sniper or pilot dropping white phosphorous on living human beings, including children. It’s Ashcroft and Rice and Rumsfeld and all their minions. It’s John Yoo and a bunch of law-breaking lawyers. It’s generals and colonels and functionaries and aides. America sees fit to put Osama’s chauffeur on trial. So why not those who drove America along such a long low road? In Hitler’s Germany Adolph wasn’t the only sadistic maniac committing war crimes. This was recognized at the Nuremburg trials. Even if Bush and Cheney express contempt for Nuremburg (as well as Geneva conventions and habeas corpus), most civilized people and nations consider it as a template with which to judge human conduct in wartime.

It seems to me that given the scope of the illegal acts and indeed crimes against humanity (by any standards) the latter course would be a great mistake. America paid (and still pays) a high price for failing to properly come to terms with its disastrous and morally monstrous use of slavery. So much malfeasance on the part of the Bush Administration has rendered America ill of spirit and heartsick. Pretending that it isn’t is not a cure. At the very least a Truth & Reconciliation process along the lines of what South Africa or Chile (and other nations) did is essential. Criminal charges would be a better reminder to all Americans that the saying ‘No one is above the law’ is not just empty rhetoric, like some campaign slogans. ‘Change!’ If the criminals of the dark Bush era are to be given a pass (and what a further blow to American credibility and prestige abroad) then the doors to all the prisons in that most incarcerated nation on earth should swing open wide and all Americans can perceive and admit that they live in a jungle after all. Let the banksters rob the banks.

There has been and there will be more talk that a new Administration must avoid ‘politicizing bad decisions’. This is a huge cop-out.

As if torturing people to death is a mere bad decision.

As if imprisoning children and sodomizing them is a mere bad decision.

As if knowingly dropping white phosphorous on civilians is a mere bad decision.

As if employing snipers against a civilian population (Fallujah and elsewhere) is a mere bad decision.

The list goes on.

Either America is a nation of laws, or it is not.

For all the goodwill Mr. Obama now enjoys, it’s possible that if he tries to ignore the crimes of the last eight years, he will reap a whirlwind of outrage exacerbated by the befalling economic disaster, another Bush legacy. He risks becoming a one-term President, replaced in the ever more desperate hope of real change.

As a boy, Mr. Bush tortured animals for pleasure. As a man, as a President who claims to be a confidant of God Himself, Mr. Bush tortures human beings to death for no reason that is remotely rational. President Obama will either deal with the matter, or he will ask Americans and the world to pretend that it never happened while descending America one more level down the rabbit hole. It’s his choice, and for the world to judge.

Lehman Administrators' Task Will Dwarf Enron, Creditors Told

Lehman Administrators' Task Will Dwarf Enron, Creditors Told

• European arm has more than $500bn of debt
• Collapsed bank's creditors expect less than 10%

By Simon Bowers

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Administrators grappling with the European arm of the failed investment bank Lehman Brothers have told creditors their task is "10 times as big and as complicated" as the unwinding of Enron.

Speaking after the first creditors' meeting, a team from PricewaterhouseCoopers said they had identified more than $1tn (£670bn) in assets and liabilities that need to be accounted for.

At the meeting, held behind closed doors in a conference hall at the O2 dome in London, the lead administrator, Tony Lomas, told hundreds of representatives and lawyers that he had recovered about $5bn out of a potential $550bn of obligations owing to creditors. A further $22.3bn of client assets had been identified, all of which will be returned to their owners.

He drew a comparison with the US energy-trading group Enron, which collapsed in 2001, noting that some of his colleagues are still working on unresolved elements of that administration.

Lomas said the administration was already behind schedule because of delays in receiving confirmation from third parties believed to be holding assets of Lehman Brothers International (Europe).

"The balance sheet position will be north of $1tn and we've got a long way to go before knowing what the position is for creditors," Lomas said after the meeting. "The prospect is that some creditors will lose money. How much? We can't determine that for a significant time."

PWC has already identified more than 400 trade creditors to Lehman's European business, including Reuters, HSBC, Hewlett-Packard, BT, the London Stock Exchange and Lufthansa. Even PWC itself is listed among those owed money by the collapsed firm, as are the Bank of England and the Financial Services Authority.

The parent company Lehman Brothers Holdings, once America's fourth-largest bank, was forced to file for bankruptcy protection in the US in September after investors lost confidence in the business and the quality of assets on its balance sheet. It had been one of the most active players in sub-prime home lending.

The settlement of Lehman credit insurance contracts linked to the bank's bonds suggested debt holders could expect to recover less than nine cents in the dollar.

About 1,500 Lehman staff in Europe lost their jobs or resigned as the bank went bust. A further 2,500, mainly at the group's Canary Wharf offices, became employees of the Japanese bank Nomura, which bought the European and Middle Eastern equities and investment banking operations out of administration.

Famine in Haiti made in the U.S.

Famine in Haiti made in the U.S.

By G. Dunkel

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The four hurricanes that hit Haiti in August and September directly caused 800 deaths and massive destruction of its roads and bridges, along with the crops and cropland that feed its people.

Haiti is so poor that it couldn't recover from this devastation. At the end of October, people in isolated communities started dying from hunger.

In Baie d'Orange, a community of 20,000 associated with the municipality of Belle-Anse in southeast Haiti, 16 children and two adults died from hunger in the last week of October. Pierre Antoine Diléné, a doctor working in Belle-Anse, confirmed the deaths and emphasized that many were also suffering from dysentery, fevers and skin diseases. (AlterPress, Oct. 30)

Le Nouvelliste reports that the road to Belle-Anse, cut by the effects of the hurricanes, was only opened at the end of October. (Nov. 7)

Kim Ives, a Brooklyn-based journalist with the Haitian newspaper Haïti-Liberté, returned from Haiti Nov. 6 and reports that the radio stations, the main source of news for most Haitians, are reporting deaths due to acute malnutrition in southwestern Haiti and in the north around Cap-Haitien.

While the southeast, southwest and north of Haiti contain some of the poorest areas of the country, hunger is generalized. According to the U.N. Food and Agriculture Organization, the average intake in Haiti is 1750 calories a day, about 75 percent of what an adult needs. Note that this figure is an average, which means there are many people getting less. (Haïti-Liberté, Nov. 5)

While the Haitian press, some French television channels and French-language Swiss television channels have covered hunger in Haiti, the English-language press has concentrated on the collapse of the La Promesse school in Petionville, a wealthy suburb of Port-au-Prince. The deaths of 88 children and teachers (as of Nov. 9) in a building collapse provoked by the acts of the school owner are indeed a tragedy. The rapid response of U.S. rescue teams and French teams from Martinique showed these countries can act quickly.

But Robert Zoellick, the president of the World Bank who visited Haiti at the end of October, feels that forgiveness of Haiti's debt needs to be reviewed. The earliest this process will be completed is the middle of 2009.

Until this happens, Haiti will have to pay a bit more than $1 million a week—enough to guarantee that no Haitian would starve to death—to prove it is fit for "help" from the Multilateral Financial Institutions. Obtained by the Duvaliers and the military juntas that succeeded them, these loans now being repaid were used for their luxurious living and to swell their Swiss bank accounts. (, "Haiti: Racism and Poverty" Oct. 26)

Zoellick was the deputy U.S. secretary of state who helped negotiate the North American Free Trade Agreement and then left the position for Goldman Sachs. He was at Goldman Sachs in 2007 when it paid out more than $18 billion in bonuses to its 22,000 traders—more than 50 percent of Haiti's gross domestic product.

Part of the weakness of the Haitian state is the insistence of the international donor community that all their "aid" flow through nongovernmental organizations (NGOs), which means a sizable slice goes to overhead—like salaries paid at rates far higher than those prevailing for Haitians. Another sizable slice is directed to companies in the "donor" countries and their profits. Of course, a significant amount of the promised aid never shows up, and the NGOs don't dare complain.

The reason Haiti is currently starving is simple. Canada, the U.S. and France—the three imperialist powers most involved in exploiting Haiti—colluded in the overthrow of the democratic government of President Jean-Bertrand Aristide four years ago. They couldn't let a poor, small country defy their wishes and elect a president that the people wanted.

For the past 200 years, ever since the enslaved people of Haiti won their freedom and independence by defeating France, England and Spain, the developed nations of North America and Europe have tried to reverse this defeat.

Haiti has resisted and survived, as best it can. Long live Haiti!

The black “insiders” and the Obama administration

The black "insiders" and the Obama administration

By Lawrence Porter

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Last Thursday, the Wall Street Journal published a prominent article entitled, "Black Power Brokers Ready to Rise in Tandem with New President." The article is valuable in that it provides a sense of the social layer from which Barack Obama emerged and the deep social gulf dividing this extremely privileged stratum from the vast majority of working people whose votes swept him into office.

"For more than a decade," the article states, "Mr. Obama has cultivated ties with a growing circle of black power brokers who are poised—and eager—to wield greater national influence. Some of these insiders stand to gain new status in an Obama administration, and many more in law firms, big corporations and Wall Street. They believe that their proximity to the president-elect will burnish their reputations, much in the way white elites always have leveraged connections in business and politics."

As cheerleaders of the outgoing Bush administration and defenders of the most rapacious layers of the financial establishment, the Wall Street Journal is no doubt bitter at the fate of the Republicans. Nevertheless, it clearly recognizes political operatives on the make when it sees them.

"These black executives see a window of opportunity for themselves," Peniel Joseph, an African American political professor from Brandeis University, told the paper. "Obama being president shatters the glass ceiling."

Obama has collected supporters among the black elite throughout his career—from the close-knit black Harvard law school alumni, his connections with the administration of Harold Washington (the first black mayor of Chicago) during his days as a community organizer, and among national politicians in the recent period. "In many ways their careers mirror that of the candidate himself," states the Journal.

"They are graduates of Ivy League and prestigious colleges and law schools. They ascended the ranks of mainstream corporate America, often accumulating great wealth in the process. They've been adept at navigating elite white precincts while retaining ties to the black community. They are also bound by the intricate social web that operates largely out of sight from whites: family connections, black law-school alumni organizations, black fraternities and sororities, as well as popular vacation spots for affluent African Americans like Martha's Vineyard."

Many are hoping for a ripple effect in career opportunities for black professionals once Obama enters the White House. "You'll see changes in Washington, D.C. where people are making decisions about who is running a news bureau, who is heading up a lobbying shop," stated Cassandra Butts, one of Obama's top advisors and a fellow black classmate at Harvard Law school. Butts is a Democratic Party insider who worked as a senior advisor to Representative Richard Gephardt of Missouri, the former Democratic minority leader in the House.

The Obama presidential campaign carefully cultivated the illusion that an African American president would prove sympathetic to the plight of average working people. However, the social layers that Obama represents have different class interests; far from being sympathetic to the conditions of the working class or the poor, they have used their connections to take advantage of the very people they claim to defend.

Not surprisingly, some of these supporters have been exposed as petty opportunists, people who know how to game the system by helping themselves to government subsidies in various shady practices.

This social layer is the product of affirmative action, using racial politics as a path to privilege and to secure the advantage of government largess. In a healthier society, many of them would be facing criminal charges rather than reaping millions of dollars in government contracts.

According to an investigative report in the Boston Globe, "Grim proving ground for Obama's housing policy," Obama has close ties to several real estate developers in Chicago, some of whom are black attorneys. All have been major fund-raisers for the Obama campaign. All of them made handsome profits from government-subsidized and privately owned low-income housing, while the tenants lived in squalor.

Government-subsidized privately owned apartment complexes have been a major means to riches for this layer, which received the continued support of Obama while he was both a state legislator in Illinois and a US senator.

The Globe reported that Obama as a state senator co-authored an Illinois law that created a new pool of tax credits for developers. And as a US senator, he pressed for increased federal subsidies. During his presidential campaign, the article states, he promised "to create an Affordable Housing Trust Fund that could give developers an estimated $500 million a year."

While he was running for president, Obama's campaign told the Globe that the candidate supported public-private partnerships as an alternative to public housing. The campaign said that Obama has "consistently fought to make livable, affordable housing in mixed-income neighborhoods available to all."

One of those who has greatly benefited from such public-private partnerships is Obama's closest advisor, Valerie Jarrett. Jarrett, who was co-chairwoman of Obama's transition team, was named Friday as senior White House advisor. She has been called the other side of Obama's brain, because he reportedly never makes a major decision without her consultation.

Jarrett is the CEO of The Habitat Company, one of Chicago's largest real estate development firms. Through ties with the Daley administration, she manages the infamous Grove Parc Plaza, a squalid housing development for the poor that is privately run but government-subsidized, making enormous riches for the owners.

"Government is just not as good at owning and managing as the private sector because the incentives are not there," said Jarrett to the Globe. Based on these "incentives"—i.e., private profit—Jarrett manages 23,000 apartments in the Chicago area. "I would argue that someone living in a poor neighborhood that isn't 100 percent public is by definition better off."

Despite Jarrett's claims, the Grove Parc Plaza project, located in a predominantly black working class district that was a part of Obama's constituency when he was a state senator, had to demolish one fifth of the units because they were uninhabitable due to a lack of maintenance.

The Globe article states: "About 99 units are vacant, many rendered uninhabitable by unfixed problems such as unfixed roofs and fire damage. Mice scamper through the halls.... Sewage backs up in the kitchen sinks. In 2006 federal inspectors graded the condition of the complex an 11 on a 100-point scale."

Another lawyer with close to ties to Obama is Allison Davis, identified in the Boston Globe article as Obama's former law firm boss and a participant in the Grove Parc Plaza development. Through ties with Obama and the Daley administration, Davis received more than $100 million in subsidies to refurbish 1,500 apartments in Chicago.

In one of Davis's North Side buildings, city inspectors cited Davis after chronic plumbing problems that resulted in raw sewage spilling into several buildings.

The worst case exposed in the article was the housing development known as Lawndale Restoration, a collection of more than 1,200 apartments in 97 buildings spread out over 300 blocks. It is Chicago's largest subsidized housing development. The company is owned by Cecil Butler, an attorney who claims to have been a civil rights activist but is reviled as a slumlord in the Chicago region.

Lawndale Restoration was founded in the early 1980s when the federal government granted Butler a $22 million loan to take over and redevelop the buildings. In 1995, Butler received an additional $51 million for renovations. In 2000, Butler brought in Jarrett's company, Habitat, to help manage the complex. However, the housing complex continued to degenerate.

In 2006, city inspectors found 1,800 code violations in the units, including leaky roofs, exposed electrical wiring and pools of sewage in the buildings.

Another Obama supporter and public-private housing developer was Tony Rezko, a Syrian-born developer who is now in jail for fraud and bribery. Rezko founded a real estate company named Rezmar. He received $87 million over nine years in government grants, loans and tax credits to renovate 1,000 apartments in 30 different buildings. The conditions in these units were similar to those at Parc Grove and Lawndale Restoration.

Rezko became an early supporter of Obama in 1995 when he first ran for the state senate. Several of his buildings were in Obama's district where the residents regularly complained about the rats in the buildings and the lack of insulation for heat.

These conditions and Obama's close ties to the developers sparked a protest against the candidate when he was running for the US Senate. The Boston Globe asked Paul Johnson, who organized the protest, if Obama knew about the problems.

"How didn't he know?" stated Johnson. "Of course he knew. He just didn't care."

Butler's role in Lawndale Restoration is a potent illustration of the class interests of the layer of black businessmen who formed a key base for Obama. In a 2004 article on North Lawndale, the Chicago Tribune exposed how Butler amassed a personal bonanza as the housing unit deteriorated, resulting in unlivable conditions for many of the residents. Of the $51 million Butler received in 1995, court papers reviewed by the Chicago Tribune revealed, barely one-third went to repairs, "$14.7 million to attorneys, accountants, underwriters reserves and closing costs. The rest paid off previous debt to the buildings."

The article went on to state that the bond the state issued for the housing development was a benefit for ChevronTexaco and Butler. The oil company paid $20.6 million in cash for the bond and in exchange received $27 million in government-authorized tax write-offs.

"About $9.5 million of the cash the oil company invested went to a real estate company Butler owns as a fee for its services and reimbursement of its expenses," the Chicago Tribune reported.

Ironically, Martin Luther King briefly lived in the North Lawndale area in 1966 in an effort to expose "slum-lordism" and expose the conditions that it imposed upon masses of black workers in the North.

Both race and the constant refrain of "helping the middle class" have been used in this election campaign to obscure the real class divisions in society. The layers of the black elite around Obama are in fact part of a grasping bourgeoisie, which defends the capitalist system and the drive for wealth, many at the expense of the black workers they claim to defend.

Never Forget

Never Forget

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When they say to you that "mistakes were made," never believe that. Mistakes are always made, but mistakes did not lead us on the road to Baghdad. We were taken to Iraq by those who knew exactly, precisely what they were doing. Or believed so anyway.

Do not be persuaded to believe that "bad intelligence" was the problem and war was the unfortunate result. No one who made this war believed themselves what they told the nation. They knew quite well and they went anyway. And they took us with them.

When it is said that an "insurgent" has killed or been killed always ask who that was, and why. More often than not, it was someone who lived there, but would not live under foreign rule.

Do not be seduced into thinking of torture as harsh interrogation. The hour is late and we must confront the torturers among us.

If you are the slightest bit concerned that we have crushed freedom here and in other lands in the name of freedom, be more concerned. We have.

Never forget or let your children forget that it was all a lie, told with purpose.

Many of us believed that Vietnam was a catharsis, a moving beyond a point to which we could never return. It took only 28 years to get from Saigon to Baghdad. And we took the exact same road. Don't be too ashamed the trick we fell for was the same one Mark Twain warned of when he wrote, "Beware the leader who bangs the drums of war in order to whip the citizenry into a patriotic fervor ..." "All you have to do ...," said Hermann Goering "... is tell them that they are being attacked, and denounce the peacemakers for lack of patriotism and exposing the country to danger. It works the same in any country."

It has worked in our country. Again.

At the end of any battle, the last man holding a sword is the judge. But Nuremberg forgot Dresden. Will we forget Abu Ghraib? Will the world forget what we have done? In the year 2001, we believed that it did not matter who won the presidential election. What do we believe now?

We have sacked Babylon. Only a fool would believe there will be no day of atonement.

We stand at the precipice of a new age of political pragmatism. Realists, making realistic decisions. Let it be listed among those things that are real the danger of ignoring the enormous crimes of these last eight years. Lest we come to ask for whom the bell tolls.

Rather’s Lawsuit Shows Role of G.O.P. in Inquiry

Rather’s Lawsuit Shows Role of G.O.P. in Inquiry


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When Dan Rather filed suit against CBS 14 months ago — claiming, among other things, that his former employer had commissioned a politically biased investigation into his work on a “60 Minutes” segment about President Bush’s National Guard service — the network predicted the quick and favorable dismissal of the case, which it derided as “old news.”

So far, Mr. Rather has spent more than $2 million of his own money on the suit. And according to documents filed recently in court, he may be getting something for his money.

Using tools unavailable to him as a reporter — including the power of subpoena and the threat of punishment against witnesses who lie under oath — he has unearthed evidence that would seem to support his assertion that CBS intended its investigation, at least in part, to quell Republican criticism of the network.

Among the materials that money has shaken free for Mr. Rather are internal CBS memorandums turned over to his lawyers, showing that network executives used Republican operatives to vet the names of potential members of a panel that had been billed as independent and charged with investigating the “60 Minutes” segment.

Mr. Rather attracted the ire of Republican bloggers and talk radio in particular after the segment, which was broadcast on a weekday edition of “60 Minutes” in September 2004. It purported to have unearthed evidence about favorable treatment extended to President Bush during his Vietnam-era service in the Texas Air National Guard.

The network eventually responded to its critics by saying it could no longer vouch for the authenticity of the documents on which the report had been based. The network also commissioned an investigation led by Dick Thornburgh, a prominent Republican and former United States attorney general, and Louis D. Boccardi, a former chief executive of The Associated Press, not so much to verify the documents, but to determine how the segment got on the air.

In its final report, which was issued in January 2005, the panel cited a breakdown in standards by CBS in rushing the Bush segment onto the air but found no evidence of liberal bias in CBS’s preparation of the segment.

By the time the panel’s report was issued, Mr. Rather had already announced that, under pressure, he would step down as anchor of “CBS Evening News.” But he did not leave the network until more than a year later.

In September 2007, he filed the $70 million lawsuit charging that CBS had violated his contract and that the investigation was compromised. A New York State Supreme Court judge has since jettisoned parts of the suit, including Mr. Rather’s contention that CBS had engaged in fraud.

But the judge has permitted Mr. Rather to go forward with the core of his case, including his argument that CBS had limited his work as a correspondent after he left the anchor desk and, in the process, damaged his reputation. The case is on track to go to trial soon, possibly early in the new year.

Those who have worked on the case with Mr. Rather, 77, say he has approached it with the zeal of a correspondent trying to report out a “60 Minutes” segment about himself, burying himself in deposition transcripts late into the night and providing his lawyers with road maps of leads he thinks they should pursue. He rarely misses a court hearing on the case.

“I want to go the distance,” Mr. Rather said recently over a lunch of chili and cornbread at a barbecue restaurant. “Like any good reporter, I want to get as many as facts as possible; I want to get to the bottom of the story.”

Some of the documents unearthed by his investigation include notes taken at the time by Linda Mason, a vice president of CBS News. According to her notes, one potential panel member, Warren Rudman, a former Republican senator from New Hampshire, was deemed a less-than-ideal candidate over fears by some that he would not “mollify the right.”

Meanwhile, Mr. Thornburgh, who served as attorney general for both Ronald Reagan and George H. W. Bush, was named a panelist by CBS, but only after a CBS lobbyist “did some other testing,” in which she was told, according to Ms. Mason’s notes, “T comes back with high marks from G.O.P.

Another memorandum turned over to Mr. Rather’s lawyers by CBS was a long typed list of conservative commentators apparently receiving some preliminary consideration as panel members, including Rush Limbaugh, Matt Drudge, Ann Coulter and Pat Buchanan. At the bottom of that list, someone had scribbled “Roger Ailes,” the founder of Fox News.

Asked about the assembly of the panel in a sworn deposition, Andrew Heyward, the former president of CBS News, acknowledged that he had wanted at least one member to sit well with conservatives: “CBS News, fairly or unfairly, had a reputation for liberal bias,” and “the harshest scrutiny was obviously going to come from the right.”

Other documents, meanwhile, suggest that Ms. Mason, who reported to Mr. Heyward, was getting updates from panel investigators on some of their findings, at a point when CBS News was telling outsiders that the network was staying out of the investigation.

Jim Quinn, a lawyer at Weil, Gotshal & Manges who is representing CBS, said in an interview that whatever Mr. Rather had learned in the discovery process would not help his case. He said it was the network that had gained the most ground, especially in persuading the judge to dismiss five of the seven original claims by Mr. Rather, as well any claims against individual CBS executives. CBS is believed to be spending about as much on its defense as Mr. Rather is spending.

Mr. Quinn also said CBS would consider asking for a summary dismissal of the case, once the process of discovery had concluded. “Either on summary judgment or at trial, we feel very comfortable we’ll succeed,” he said. “We feel the case is meritless.”

Still, Chaim B. Book, a Manhattan employment lawyer who is not connected to the case, said that Mr. Rather and his team had already reached something of a milestone.

“Getting through discovery and getting a case significantly closer to trial, in and of itself, is an achievement,” Mr. Book said. “Discovery, besides being expensive and time-consuming, can lead to embarrassing disclosures.”

One of Mr. Rather’s initial goals was to compel depositions of many of his former bosses and colleagues under oath. Thus far, in addition to Mr. Heyward and Ms. Mason, his lawyers have questioned Leslie Moonves, the chief executive of CBS; Gil Schwartz, executive vice president of communications for CBS; Sandra Genelius, a former CBS News spokeswoman; and Michael J. Missal, who helped oversee the panel report on behalf of Mr. Thornburgh.

Each could conceivably be called to testify in open court, as could Sumner M. Redstone, executive chairman of CBS. (Mr. Rather’s lawyers have expressed interest in deposing Mr. Redstone, a request the judge, Ira Gammerman, has neither granted nor ruled out.)

The day after Election Day, the two sides squared off in Judge Gammerman’s courtroom in State Supreme Court in Manhattan over a request by Mr. Rather’s lawyers, led by Martin R. Gold of Sonnenschein Nath & Rosenthal, to gain access to several thousand documents that were used by the investigative panel to compile its report, including notes from interviews and e-mail messages from top executives.

Lawyers representing the panel have resisted Mr. Rather’s request for documents, citing attorney-client privilege. At the same time, CBS suggested in its latest filing that Mr. Rather was engaging “in nothing more than an intrusive and expensive fishing expedition.”

In court in July, Judge Gammerman spoke openly about the extraordinary attention that a Rather-versus-CBS trial would attract and reassured the lawyers that, having previously tried cases involving Woody Allen and Rosie O’Donnell, he could promise both sides a fair hearing.

“And I tried a case involving Joan Collins,” he said, adding that, despite intense publicity, “the jury was able to reach what was a reasonable decision.”

America the Illiterate

America the Illiterate

By Chris Hedges

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We live in two Americas. One America, now the minority, functions in a print-based, literate world. It can cope with complexity and has the intellectual tools to separate illusion from truth. The other America, which constitutes the majority, exists in a non-reality-based belief system. This America, dependent on skillfully manipulated images for information, has severed itself from the literate, print-based culture. It cannot differentiate between lies and truth. It is informed by simplistic, childish narratives and clichés. It is thrown into confusion by ambiguity, nuance and self-reflection. This divide, more than race, class or gender, more than rural or urban, believer or nonbeliever, red state or blue state, has split the country into radically distinct, unbridgeable and antagonistic entities.

There are over 42 million American adults, 20 percent of whom hold high school diplomas, who cannot read, as well as the 50 million who read at a fourth- or fifth-grade level. Nearly a third of the nation’s population is illiterate or barely literate. And their numbers are growing by an estimated 2 million a year. But even those who are supposedly literate retreat in huge numbers into this image-based existence. A third of high school graduates, along with 42 percent of college graduates, never read a book after they finish school. Eighty percent of the families in the United States last year did not buy a book.

The illiterate rarely vote, and when they do vote they do so without the ability to make decisions based on textual information. American political campaigns, which have learned to speak in the comforting epistemology of images, eschew real ideas and policy for cheap slogans and reassuring personal narratives. Political propaganda now masquerades as ideology. Political campaigns have become an experience. They do not require cognitive or self-critical skills. They are designed to ignite pseudo-religious feelings of euphoria, empowerment and collective salvation. Campaigns that succeed are carefully constructed psychological instruments that manipulate fickle public moods, emotions and impulses, many of which are subliminal. They create a public ecstasy that annuls individuality and fosters a state of mindlessness. They thrust us into an eternal present. They cater to a nation that now lives in a state of permanent amnesia. It is style and story, not content or history or reality, which inform our politics and our lives. We prefer happy illusions. And it works because so much of the American electorate, including those who should know better, blindly cast ballots for slogans, smiles, the cheerful family tableaux, narratives and the perceived sincerity and the attractiveness of candidates. We confuse how we feel with knowledge.

The illiterate and semi-literate, once the campaigns are over, remain powerless. They still cannot protect their children from dysfunctional public schools. They still cannot understand predatory loan deals, the intricacies of mortgage papers, credit card agreements and equity lines of credit that drive them into foreclosures and bankruptcies. They still struggle with the most basic chores of daily life from reading instructions on medicine bottles to filling out bank forms, car loan documents and unemployment benefit and insurance papers. They watch helplessly and without comprehension as hundreds of thousands of jobs are shed. They are hostages to brands. Brands come with images and slogans. Images and slogans are all they understand. Many eat at fast food restaurants not only because it is cheap but because they can order from pictures rather than menus. And those who serve them, also semi-literate or illiterate, punch in orders on cash registers whose keys are marked with symbols and pictures. This is our brave new world.

Political leaders in our post-literate society no longer need to be competent, sincere or honest. They only need to appear to have these qualities. Most of all they need a story, a narrative. The reality of the narrative is irrelevant. It can be completely at odds with the facts. The consistency and emotional appeal of the story are paramount. The most essential skill in political theater and the consumer culture is artifice. Those who are best at artifice succeed. Those who have not mastered the art of artifice fail. In an age of images and entertainment, in an age of instant emotional gratification, we do not seek or want honesty. We ask to be indulged and entertained by clichés, stereotypes and mythic narratives that tell us we can be whomever we want to be, that we live in the greatest country on Earth, that we are endowed with superior moral and physical qualities and that our glorious future is preordained, either because of our attributes as Americans or because we are blessed by God or both.

The ability to magnify these simple and childish lies, to repeat them and have surrogates repeat them in endless loops of news cycles, gives these lies the aura of an uncontested truth. We are repeatedly fed words or phrases like yes we can, maverick, change, pro-life, hope or war on terror. It feels good not to think. All we have to do is visualize what we want, believe in ourselves and summon those hidden inner resources, whether divine or national, that make the world conform to our desires. Reality is never an impediment to our advancement.

The Princeton Review analyzed the transcripts of the Gore-Bush debates, the Clinton-Bush-Perot debates of 1992, the Kennedy-Nixon debates of 1960 and the Lincoln-Douglas debates of 1858. It reviewed these transcripts using a standard vocabulary test that indicates the minimum educational standard needed for a reader to grasp the text. During the 2000 debates, George W. Bush spoke at a sixth-grade level (6.7) and Al Gore at a seventh-grade level (7.6). In the 1992 debates, Bill Clinton spoke at a seventh-grade level (7.6), while George H.W. Bush spoke at a sixth-grade level (6.8), as did H. Ross Perot (6.3). In the debates between John F. Kennedy and Richard Nixon, the candidates spoke in language used by 10th-graders. In the debates of Abraham Lincoln and Stephen A. Douglas the scores were respectively 11.2 and 12.0. In short, today’s political rhetoric is designed to be comprehensible to a 10-year-old child or an adult with a sixth-grade reading level. It is fitted to this level of comprehension because most Americans speak, think and are entertained at this level. This is why serious film and theater and other serious artistic expression, as well as newspapers and books, are being pushed to the margins of American society. Voltaire was the most famous man of the 18th century. Today the most famous “person” is Mickey Mouse.

In our post-literate world, because ideas are inaccessible, there is a need for constant stimulus. News, political debate, theater, art and books are judged not on the power of their ideas but on their ability to entertain. Cultural products that force us to examine ourselves and our society are condemned as elitist and impenetrable. Hannah Arendt warned that the marketization of culture leads to its degradation, that this marketization creates a new celebrity class of intellectuals who, although well read and informed themselves, see their role in society as persuading the masses that “Hamlet” can be as entertaining as “The Lion King” and perhaps as educational. “Culture,” she wrote, “is being destroyed in order to yield entertainment.”

“There are many great authors of the past who have survived centuries of oblivion and neglect,” Arendt wrote, “but it is still an open question whether they will be able to survive an entertaining version of what they have to say.”

The change from a print-based to an image-based society has transformed our nation. Huge segments of our population, especially those who live in the embrace of the Christian right and the consumer culture, are completely unmoored from reality. They lack the capacity to search for truth and cope rationally with our mounting social and economic ills. They seek clarity, entertainment and order. They are willing to use force to impose this clarity on others, especially those who do not speak as they speak and think as they think. All the traditional tools of democracies, including dispassionate scientific and historical truth, facts, news and rational debate, are useless instruments in a world that lacks the capacity to use them.

As we descend into a devastating economic crisis, one that Barack Obama cannot halt, there will be tens of millions of Americans who will be ruthlessly thrust aside. As their houses are foreclosed, as their jobs are lost, as they are forced to declare bankruptcy and watch their communities collapse, they will retreat even further into irrational fantasy. They will be led toward glittering and self-destructive illusions by our modern Pied Pipers—our corporate advertisers, our charlatan preachers, our television news celebrities, our self-help gurus, our entertainment industry and our political demagogues—who will offer increasingly absurd forms of escapism.

The core values of our open society, the ability to think for oneself, to draw independent conclusions, to express dissent when judgment and common sense indicate something is wrong, to be self-critical, to challenge authority, to understand historical facts, to separate truth from lies, to advocate for change and to acknowledge that there are other views, different ways of being, that are morally and socially acceptable, are dying. Obama used hundreds of millions of dollars in campaign funds to appeal to and manipulate this illiteracy and irrationalism to his advantage, but these forces will prove to be his most deadly nemesis once they collide with the awful reality that awaits us.

Rescuing Joe Lieberman: Obama's First Big Mistake on the Job

Obama's First Big Mistake on the Job

Rescuing Joe Lieberman


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The word is that Barack Obama, in keeping with his promise of a new post-Bush/Cheney era of “civility in government,” is telling Senate Majority Leader Harry Reid not to eject the treacherous Sen. Joe Lieberman (I-CT) from the Democratic caucus.

This is a terrible mistake. Joe Lieberman is a wretched example of a man without principle—a back-stabbing slimeball of a politician whose only allegience, apparently, besides to himself, is to Israel.

Now I don’t want anyone to think I’m some rabid anti-semite. My wife and kids are Jewish, we have good friends who are Israeli, and no, I don’t think the Jews run the media or the country. I do, however, think that Joe Lieberman thinks more about what, in his warped and shriveled worldview, is good for Israel, than about what is good for America.

This senator from my childhood state of Connecticut, who back in 2000 ran as a standard-bearer of the Democratic Party as Al Gore’s running mate, since 9-11 has been a warmonger of the first order, even joining the right-wing Sen. Jon Kyl (R-AZ) in trying to pass a resolution in the senate last year which, had it made it through as he originally worded it, would have effectively enabled—even invited--George Bush to attack Iran at will as a part of Bush’s megalomaniacal global “War” on Terror.

It is Lieberman’s obsession with having the US obliterate first Iraq and now Iran, with nukes if need be, that led him to abandon his party and become a leading supporter and apoligist for George W. Bush and Dick Cheney, and later to become a key endorser of Sen. John “Bomb-bomb-bomb-bomb-Iran” McCain.

Lieberman also signed on enthusiastically to the worst excesses of Bush’s and Cheney’s eight-year-long assault on the Constitution, the Bill of Rights and International Law. As head of the Senate Homeland Security Committee, Lieberman became the leading advocate of fascist policies in the Senate, rivaled only by such ranting Republican proto-fascists as Sen. Pat Roberts (R-Kansas) and Rep. Michelle Bachmann (R-MN). It was Lieberman who at least initially enthusiastically backed Attorney General John Ashcroft’s mad proposal (thankfully never implemented) to establish an Operation TIPS (for Terrorist Information and Prevention Service) program that would have recruited millions of Americans to spy on their neighbors and co-workers, replicating the dreaded Stasi of Communist East Germany. Only after libertarian-minded Republicans like former House Majority Leader Dick Armey (R-TX) came out strongly against the scheme did Lieberman have second thoughts, Initially, in fact, Lieberman had personally, in his role as chair, blocked efforts by Sen. Patrick Leahy (D-VT) to delete funding for Operation TIPS from a Homeland Security Department funding bill before his committee.

The Democrats, who already are assured of 56 solid seats in their caucus in the next Senate, with a chance at a couple more when all the 2004 Election races are settled and runoffs completed, don’t need a weasel like Lieberman mucking up their ranks. If they need four more votes to kill some Republican filibusters, they have Republicans they can turn to, or cajole. If Barack Obama is smart (and he certainly is that), he can also add a few—perhaps even four—Democrats to Senate ranks by naming as many Republican senators as he needs to replace to cabinet posts. As long as he names people like Sens. Susan Collins or Olympia Snowe of Maine, or Arlen Specter of Pennsylvania, who represent states with Democratic governors, those governors will be able to appoint, as replacements, Democratic senators.

The other reason to shun Lieberman, and to cast him into the legislative purgatory he so richly deserves, is that it would be an object lesson to other potential Iagos in the party’s legislative ranks that such treachery will not be tolerated. What, after all, is the point of having a party at all, if its members can be as back-stabbing as Lieberman and get away with it?

It would be a good lesson to the Democrats of the state of Connecticut, too, who voted in a Democratic primary two years ago to oust Lieberman as their candidate for re-election, but who then turned around and joined Republicans in re-electing him when he ran as an independent against a Republican challenger and against Ned Lamont, the Democrat who had bested him in the primary. This was treachery by a class of Democrats in the state of Connecticut that should also not go unpunished. Connecticut voters should no longer have the benefit of a powerful senator with seniority when that senator has so betrayed his party.

Let Lieberman go over to the Republicans hat in hand. Let him squirm as the Christian fundamentalists among them talk in tongues and as others of them mutter their anti-semitic obscenities behind his back. Let this one-time self-described advocate of civil rights blush in shame as his new colleagues crack their racist jokes about the new president in the lilly-white Republican caucus room.

Don’t get me wrong. I believe in redemption as much as the next atheist. I’d be perfectly happy to see Joey Lieberman back in the Democratic caucus, but first he should be made to make a full public apology both to Obama and to the millions of Democrats who elected the nation’s first black president, as well as to the Democrats of his home state of Connecticut, whose resounding 61-38% vote for Obama was the biggest repudiation of Lieberman of all. That 38 percent tally is the one he should have gotten when he ran for re-election last time. It’s probably higher than he’d get if he ran today in Connecticut against Lamont or any other Democrat.

Torturing Demoracy Full Video And Transcript

Torturing Demoracy

Full Video And Transcript

The documentary, "Torturing Democracy," and the first stage of a comprehensive Torture Archive that aims to serve as the online institutional memory of the essential documentary evidence.

The no-think nation: The Crisis Has Hardly Begun

By Paul Craig Roberts

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“The prospects of a government rescue for the foundering American automakers dwindled Thursday as Democratic Congressional leaders conceded that they would face potentially insurmountable Republican opposition,” reported the NY Times last Friday.

Wow! The entire country is steamed up over the Republicans bailing out a bunch of financial crooks who have paid themselves fortunes in bonuses for destroying America’s pensions. Why do Democrats want to protect Republicans from further ignominy by not giving them the opportunity to vote down a bailout for workers? Quick, someone enroll the Democratic Party in Politics 101.

GM’s divisions in Canada and Germany are asking those governments for help. It will be something if Canada and Germany come through for the American automaker and the American government doesn’t.

Conservative talking heads are saying GM is a “failed business model” unworthy of a $25 billion bailout. These are the same talking heads who favored pouring $700 billion into a failed financial model.

The head of the FDIC is trying to get $25 billion--a measly 3.5 percent of the $700 billion for the banksters--with which to refinance the mortgages of 2 million of the banksters’ victims, and Bush’s Secretary of the Treasury Paulson says no. Why aren’t the Democrats all over this, too?

Apparently, the Democrats still think they are the minority party or else their aim is to supplant the Republicans as the party of the rich.

Any bailout has its downsides. But if America loses its auto industry, it will lose the suppliers as well and will cease to have a manufacturing sector. For years no-think economists have been writing off America’s manufacturing jobs, while deluding themselves and the public with propaganda about a New Economy based on finance.

A country that doesn’t make anything doesn’t need a financial sector as there is nothing to finance.

The financial crisis has had one good effect. It has cured Democratic economists like Robert Reich and Paul Krugman of their fear of budget deficits. During the Reagan years these two economists saw doom in the “Reagan deficits” despite the fact that OECD data showed that the US at that time had one of the lowest ratios of general government debt to GDP in the industrialized world.

Today Reich and Krugman are unfazed by their recommendations of budget deficits that are many multiples of Reagan’s. Moreover, neither economist has given the slightest thought as to how the massive budget deficit that they recommend can be financed.

Both recommend large public spending programs. Krugman puts a price tag of $600 billion on his program. If it takes $700 billion to save the banks and only $600 billion to save the economy, it sounds like a good deal. But this $600 billion is on top of the $700 billion for the banks, the $200 billion for Fannie Mae and Freddie Mac, and the $85 billion for AIG. These figures add to one trillion five hundred eighty-five billion dollars, a sum that must be added to the budget deficit due to war and recession (or worse).

What we are talking about here is a minimum budget deficit of $2 trillion. The US has never had to finance a deficit of this magnitude. Where is the money coming from?

The US Treasury doesn’t have any money, and neither do Americans, who have lost up to half of their savings and retirement funds and are up to their eyeballs in mortgage and consumer debt. And unemployment is rising.

There are only two sources of financing: foreign creditors and the printing press.

I doubt that foreigners have $2 trillion to lend to the US. Thanks to the toxic US financial instruments, they have their own bailouts to finance and economies to stimulate. Moreover, I doubt that foreigners think the US can service a public debt that suddenly jumps by $2 trillion. At 5 percent interest, the additional debt would add $100 billion to the annual budget deficit. In order to pay interest to creditors, the US would have to borrow more money from them.

Economists and policy-makers are not thinking. This enormous financing need comes not to a well-managed economy that can take the additional debt in its stride. Instead, it comes to an economy so badly managed that there are no reserves.

Massive US trade deficits have been financed by giving up US assets to foreigners, who now own the income flows as well. Budget deficits from 6 years of pointless wars and from unsustainable levels of military spending have helped to flood the world with dollars and to drive down the dollar’s exchange value. Consumers themselves are drowning in debt and can provide no lift to the economy. Millions of the best jobs have been moved offshore, and research, design, and innovation have followed them. Considering America’s dependency on imports, part of any stimulus package that reaches the consumer will bleed off to foreign countries.

Generally, when countries acquire more debt than they can service, they inflate away the debt. If foreign creditors do not save the Obama administration, the Treasury will print bonds and give them to the Federal Reserve, which will issue money.

The inflation will be severe, particularly as Americans will not be able to pay for the imports of manufactured goods from abroad on which they have become dependent. The exchange value of the dollar will decline with the domestic inflation. Once inflation is off and running, the printing press dollars will only have goods made in America to chase after. The real crisis has not yet begun.

Paulson should rethink the automakers’ and FDIC’s proposals. A bank produces nothing but paper. Automakers produce real things that can be sold. Occupied homes are worth more then empty ones.

Paulson’s inability to see this is the logical outcome of Wall Street thinking that highly values deals made over pieces of paper at the expense of the real economy.

Why Big Banks May Be Trying to Buy up Your Public Water System

Why Big Banks May Be Trying to Buy up Your Public Water System

By Jo-Shing Yang

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Water is the new oil for global financial powerhouses and water is being commoditized and traded in global stock exchanges.

Today in addition to being able to buy water rights and purchase lakes on private land, an individual or a corporation can invest in water-targeted hedge funds, index funds and exchange-traded funds (EFTs), water certificates, shares of water engineering and technology companies, shares of multinational private water utilities, shares of multinational banks and investment banks that own water companies, and a host of other newfangled water investments in this U.S.$425 billion industry which is expected to become a U.S.$1 trillion industry within five years. And if one happens to be a tycoon, one can also create his or her own private water districts and water utilities.

The recent media coverage on water has centered on individual corporations and super-investors seeking to control water by buying up water rights and water utilities. But paradoxically the hidden story is a far more complicated one. The real story of the global water sector is a convoluted one involving "interlocking globalized capital": Wall Street and global investment firms, banks, and other elite private-equity firms -- often transcending national boundaries to partner with each other, with banks and hedge funds, with technology corporations and insurance giants, with regional public-sector pension funds, and with sovereign wealth funds -- are moving rapidly into the water sector to buy up not only water rights and water-treatment technologies, but also to privatize public water utilities and infrastructure.

"Water" and "water sector" are used broadly to refer to water rights (i.e., the right to tap groundwater, aquifers, and rivers), land with bodies of water on it or under it (i.e., lakes, ponds, and natural springs on the surface, or groundwater underneath), water-purification and treatment technologies (e.g., desalination, treatment chemicals and equipment), irrigation and well-drilling technologies, water and sanitation services and utilities, water infrastructure maintenance and construction (from pipes and distribution to all scales of treatment plants for residential, commercial, industrial, and municipal uses), water engineering services (e.g., those involved in the design and construction of water-related facilities), and retail water sector (such as those involved in the production, operation, and sales of bottled water, water vending machines, bottled water subscription and delivery services, water trucks, and water tankers).

The story is multifaceted: In the midst of a recessionary economy with a blistering financial and economic crisis, declining employment, and a shrinking tax base, many financially strapped and debt-ridden local governments are beginning to relinquish public infrastructure (including water) and municipal services (including water and sewage utilities) to privatization by Wall Street and other global investors.

At the same time, Wall Street and multinational banks are seeing water, food, energy, and public infrastructure as safe investment havens with stable returns and financially liquid assets. Simultaneously, they are waking up to the golden opportunity presented by the current reality of a thirstier, water-scarcer world caused by global climate change (and its extreme weather), rapidly depleting groundwater and aquifers, increasing water pollution, soaring water demand exerted by population increases, fast-rising agricultural and industrial uses, and crumbling water infrastructure worldwide requiring billions of dollars annually in maintenance and upgrade.

Often, the picture painted by mainstream media and water-rights activists is too simple -- that of a single corporation (such as Coca-Cola in India or Bechtel in Bolivia) "corporatizing water;" the real story is not just of flamboyant tycoons (such as U.S.'s billionaire and former oil tycoon T. Boone Pickens, or more recently, Hong Kong's real-estate billionaire Li Kai-shing, or Britain's magnate Vincent Tchenguiz) single-handedly grabbing water rights or individual corporations (e.g., Coca-Cola and Nestlé) sucking dry springs and groundwater to the detriment of poor subsistence farmers or slum-dwellers, but vastly complex global networks and partnerships of investment banks and private-equity firms linking together with other institutions (such as public-sector pension funds in Australia, Canada, and Europe; and sovereign wealth funds in the Middle East and Asia) and multinational corporations elsewhere to buy up and control water worldwide.

Not only are individual corporations buying up water but a deluge of globalized capital are also rapidly buying up water and consolidating their foothold in the water sector; these capital entities are investment powerhouses such as Goldman Sachs, JPMorgan Chase, Merrill Lynch (before it was sold to Bank of America), Citigroup, Morgan Stanley, Deutsche Bank, Credit Suisse, Macquarie Bank, Allianz SE, UBS AG, HSBC Bank, Alinda Capital, The Carlyle Group, Barclays Bank, Nomura Holdings, and many others. In fact, Wall Street and their global banking and corporate partners are aggressively buying up water all over the world.

Given this recent liquid-gold rush by private (also several public pension-funds) capital, it will be extremely difficult for environmental activists and human rights advocates who called water a basic human right and a public good which should be under public control to reverse this privatization trend. Naturally, when governments are financially strained by revenue shortfalls and tightening municipal-bond markets, calls for privatization of existing public infrastructure and utilities will be louder and harder to resist.

These banks and investment funds are aggressively entering the water sector, and they have raised billions of dollars for their water and infrastructure specialty investment funds (i.e., index funds, hedge funds) -- and they can recruit more money (in euro, pound sterling, dollar, RMB/yuan, yen, Australian or Canadian dollar, and whatever currency needed) within a short period of time from anywhere in the world, transcending all boundaries (whether national, ideological, political, linguistic, religious).

All this water-market reshaping is occurring in the midst of a global frenzy over privatization of public infrastructure -- considered to be low-risk investments -- such as roads, bridges, tunnels, ports, airports, gas, and water and sewage treatment. Water is one of the critical infrastructures, and Wall Street knows it. For Wall Street and global capital, water is also so much more -- it is the new petroleum of this century, an essential commodity to be invested, owned, controlled, and speculated upon to maximize profit.

Unfortunately, for water users everywhere, a likely consequence of Wall Street and multinational corporations' ownership and control of water in the midst of a global financial and economic crisis is that they will attempt to recapture their massive losses in their risky investments in the financial and housing/real estate sectors and elsewhere at the expense of water users.

For example, U.K. water customers are being squeezed by their private water utilities, to the tune of 17.5 percent to 62.2 percent increases in water rates, and could be paying as much as £1,000 in annual water bill per household within five years. Predictably, when Merrill Lynch boasts that its ML China Water Index yields a 102.2 percent returns, outperforming the benchmark by 70.7 percent during a 12-month period from 2006 to 2007, other multinational banks will also rush to invest in the water sector because they see it as a haven with rich rewards and expect these stratospheric returns. One possible outcome is the squeezing of water end-users.

Private water utilities are monopolies and they are able to set prices at will (or exert monopolistic pricing) due to a lack of competition and governmental regulations. Additionally, water itself is an essential good without a substitute; demand for water is also inelastic relative to price: regardless of its cost, one must have minimal amount of freshwater for maintaining daily life -- for drinking, washing and hygiene, crop production, and food preparation. (Goldman Sachs sees water consumption doubling every 20 years.)

If the history of U.K.'s water privatization is a guide, then water users all over the world -- not just households, but also businesses, industries, and agriculture -- are in serious trouble because they will be held hostage to high prices exerted by the monopolistic private water corporations and water utilities, many of which are owned by multinational banks and investment banks, and in turn these banking institutions have their shareholders, private investors, and even public pension funds demanding and expecting high returns on their water investments.

Water is more important than oil: it takes some 1,800 gallons to produce a barrel of crude oil, some 4,000 liters of water to produce a liter of ethanol, and 900 liters of water to make a liter of biodiesel. Several people have already made the statement about water being the new oil of the 21st century; recognizing its importance, Wall Street has rushed into global water markets to cash in on this liquid gold. The former heads of state, United Nations chiefs, CIA and Pentagon analysts, CEOs, tycoons, analysts with the world's largest investment banks and private-equity firms, and oil companies' executives have agreed on this.

Multinational and Wall Street banks and investment banks often disguise their investment in the water sector as a part of the so-called green, sustainable, environmentally friendly, socially responsible, clean-technology, climate friendly or global warming-reducing investments. They see "rich rewards" in water and infrastructure: Indeed, the European Union requires an investment of between U.S.$150 billion to U.S.$215 billion in sanitation infrastructure; more than U.S.$700 billion (incidentally, this is also the amount just given to bail out Wall Street) is needed to maintain and upgrade its water and sanitation infrastructure in the next 20 years. In Australia, an estimated AUD$5 billion is needed just to replace aging water assets in cities over the next five years and that AUD$30 billion is required to build new water infrastructure in the next decade.

Emerging economies such as China and India also have such serious water shortages and pollution problems that they both require at least a trillion dollars of investment to solve their respective water problems. Water-sector investment opportunities are also immense in Mexico, Egypt, the Middle East, Brazil, several African countries, and many other water-stressed nations.

Why Water Is the "Petroleum for the 21st Century"

Only 2.5 percent of the earth's water is freshwater -- and of that 2.5 percent, 70 percent is locked in the glaciers, ice caps, and aquifers, so less than 1 percent of world's freshwater (or 0.007 percent of world's water) is accessible and potable for humanity, to be shared by the world's 6.7 billion people, the myriads of wildlife and ecosystems, and humans' agriculture and industries.

Back in 2001, the CIA had already estimated that by 2015, almost half of the world's population will live in water-stressed countries. Worldwide, 1.1 billion people lack adequate water and 2.6 billion people don't have adequate sanitation. By 2025, the United Nations forecast that 3 billion people will lack clean water. The Organization for Economic Corporation & Development (OECD) predicts that nearly 50 percent of the world's population will face severe water shortages by 2030. In China, some 360 out of 600 cities are facing water shortages, with 100 facing severe shortages, according to China Institute for Geo-Environment Monitoring. The first person to serve as China's Minister of State Environmental Protection Agency, Qu Geping, said, "The ideal population for China's limited water resources is no more than 650 million people." China's population is 1.3 million in 2008.

Water is often dubbed "the new oil" because of its similarity to oil: diminishing supplies and rapidly growing demand worldwide. The world has already seen many oil wars in the 20th century over supposed dwindling supplies of natural commodities and resources. This century, the world has already witnessed the genocide in Darfur, which was initially brought about by climate-induced droughts and desertification lasting more than 20 years (since the 1980s), which led to tribal competition over water and grazing land between Arab nomads and black African farmers; these small-scale resource conflicts eventually exploded into a full-blown genocide backed by a racist, genocidal ideology.

Indeed, lobbying group Justice Africa told BBC in July 2007 that "the root cause of the conflict is resources -- drought and desertification in North Darfur." In June 2007, UN Environmental Programme (UNEP) said that peace in Darfur is nearly impossible unless the issues of environmental destruction were addressed.

Water is the basis of agriculture -- not just in growing food, but also in processing food. Water is the foundation of modern cities and urban sanitation systems -- from our indoor plumbing to centralized wastewater-treatment plants. Water is the basis of industries and manufacturing. Water is also used to generate electricity. Water sustains nature and wildlife. In essence, humanity can live without oil -- albeit more primitively -- but humanity cannot survive without water.

Simply put, without water, there's no agriculture and food production, no industries, no viable ecosystems, and no life. Major multinational banks and corporations around the world are waking up to the reality of water's emerging scarcity, which can disrupt national economies and lead to social and political chaos. In the midst of global climate change which brings extreme droughts and in the midst of a chaotic global financial and economic environment, water is a commodity likened to gold: it is liquid gold that sustains life. Hence, in the recent few years we have witnessed a mad rush by Wall Street and multinational banks and super-investors elsewhere to buy up and control this commodity.

In the past few years, multinational and Wall Street investment firms and banks have launched water-targeted investment funds. Several well-known specialized water funds include Pictet Water Fund, SAM Sustainable Water Fund, Sarasin Sustainable Water Fund, Swisscanto Equity Fund Water, and Tareno Waterfund. Several structured water products offered by major investment banks include ABN Amro Water Stocks Index Certificate, BKB Water Basket, ZKB Sustainable Basket Water, Wagelin Water Shares Certificate, UBS Water Strategy Certificate, and Certificate on Vontobel Water Index. There are also several water indexes and index funds, as follows:

One often-heard reason for the investment banks' rush to control of water is that, "Utilities are viewed as relatively safe assets in an economic downturn so [they] are more isolated than most from the global credit crunch, initially sparked by concerns over U.S. subprime mortgages," according to a 2007 Reuters article. A London-based analyst at HSBC Securities told Bloomberg News that water is a good investment because, "You're buying something that's inflation proof and there's no threat to earnings really. It's very stable and you can sell it any time you want.''

The Coming Tidal Wave of Privatization of Public Infrastructure and Municipal Services

Privatization of public infrastructure -- including water utilities -- has been gaining more mainstream media scrutiny recently. For example, the New York Times recently reported on cities debating the issue of privatization of public infrastructure: Wall Street investment banks and investors -- such as Goldman Sachs, Morgan Stanley, Credit Suisse, Kohlberg Kravis Roberts, and the Carlyle Group -- are amassing an estimated U.S.$250 billion "war chest -- much of it raised in the last two year -- to finance a tidal wave of infrastructure projects in the United States and overseas," the New York Times reported.

As the New York Times pointed out correctly, U.S. federal, state, and local governments are financially strained with "mounting deficits that have curbed their ability to improve crumbling roads, bridges and even airports with taxpayer money," hence both the voting public and the governments are increasingly open to the idea of privatizing public infrastructure; the crumbling infrastructure is estimated to require at least U.S.$1.6 trillion investment in the next five years to maintain and upgrade according to the American Society of Civil Engineers.

Currently, approximately 8 percent of water utilities worldwide are in private hands; this figure is expected to double by 2015, according to several investment-banking analysts. As for water corporations (e.g., those in technology and engineering, materials and equipment, vending and private distribution via water trucks), all are in private hands. According to data compiled by Bloomberg, the rate of infrastructure privatization for all types of infrastructure almost doubled to U.S.$340 billion between 2005 and 2007.

The New York Times also reported that many cities suffering severe financial strains after having been shut out of the municipal bond markets are cutting back infrastructure upgrade and maintenance projects. Cities are also facing revenue shortfalls attributable to unprecedented housing foreclosures (shrinking property-tax base), decreased employment base, dwindling sales taxes, and reduced funding from state and federal governments. For example, Athens-Clarke County in Georgia delayed a U.S.$221 million bond issue for upgrading its three sewage-treatment plants after Lehman Brothers filed for bankruptcy.

Given the current state of economy in the United States and elsewhere in the world, we can expect more municipal infrastructure and services privatization. Goldman Sachs, Citigroup, the Carlyle Group, AIG Highstar Capital, Credit Suisse (also partnering with GE), UBS AG, JPMorgan Chase, Deutsche Bank, and other multinational banks are amassing "war chests" of several billions of dollars in anticipation of this "tidal wave" of infrastructure (including water) privatization around the world.

Jo-Shing Yang is the author of Ecological Planning, Design, & Engineering, Solving Global Water Crises: New Paradigms in Wastewater and Water Treatment, Small and On-Site Systems for Water Self-Sufficiency and Sustainability and can be reached at