Monday, November 24, 2008

To Hell And Back Again

To Hell And Back Again

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Angie first came forward to tell her story in any interview for the documentary series 'In Their Boots.' The short film that resulted from that interview is called 'Angie's Story' and can be seen at

I was an 18-year old, fresh out of high school, with an M16 and camouflage paint smeared on my face, excited, a little naïve at just what I had gotten myself into.

No one told me that eleven years later, I'd be tired, very broken, isolated, and damaged goods. Yes, I was assaulted and harassed while serving my country. No one warned me that joining the Army made me twice as likely to be sexually assaulted than my civilian counterparts. That's not what I was signing up for.

I come from a family where military service makes you a man (or a woman, in my case). Both grandparents served in the Army Air Corps in World War II and my father dreamed of being in the Navy. Plans changed for him when I was born and he broke his leg in a motorcycle accident. I wanted to travel to crazy places few people have ever heard of or even knew existed. I wanted to meet those people I would see in National Geographic commercials or the World Almanac my grandfather would show me when I was little. Most of all, I wanted to get out of St. Louis and experience life on this irresistible planet.

I wanted to declare my independence to everyone I knew, so I shaved my head and signed the dotted line. A little rebellious I guess, but I liked the excitement of it all!

I had been a born leader, tough as a brick shithouse, and could knock boys over when I played soccer with them in the neighborhood. I played all the sports, ran faster than most guys and could outwit anyone with their intellectual theories. Especially the Catholic Republican in my Advanced English class senior year who would debate with me on issues such as abortion, the death penalty, and who would be President of the United States first, him or I.

In 1997, my senior year, GI Jane came out. I watched it the night before I left for the Army and dreamed of being just like Demi Moore, just as tough as the guys. I was ready, willing, and able to do anything a "man" could do.

Eleven years later, I wound up 2100 miles from home, staying in a homeless veterans shelter, attending a three month Renew Program for women veterans who have experienced Military Sexual Trauma with Post-traumatic Stress Disorder. There were only five women in my group who were willing to face all the pain of their past to come out feeling better on the other side. Who says women aren't strong?

There, I met Amanda Spain, producer of "In Their Boots," an online documentary series
showing the struggles of Iraq and Afghanistan vets when we come home. They are apolitical, and funded by a grant from the Iraq Afghanistan Deployment Impact fund (IADIF) and produced by Brave New Foundation under Robert Greenwald.

She asked me if I'd be willing to share my story with those that were willing to listen. Apprehensive, and shocked that someone finally cared enough to listen, I hesitatingly agreed.

It was the first time, ever, to share my story, from beginning to end.

One night in South Korea, I went out with some friends to the "Ville" which is all the little hole-in-the-wall bars and restaurants right outside the gates of Camp Carroll, Waegwan, South Korea. It was a dark, spring night and I had to work the next morning at 0730 hours to complete my yearly Common Tasks Training with the unit. I went out for an hour or so, only had one small drink, as being drunk was not my cup of tea at the time. I went to leave an hour later and someone had stolen my keys. Nervous, I walked through the gate with a male, non-commissioned officer I had seen around but didn't know very well. We are taught to respect and trust the NCO's and I had no reason not to. You are not allowed in South Korea to walk through the streets alone as it is with Armed Forces Policy in most places overseas. My roommate was not in our room so I decided to stay in the NCO's room down the hall to wait for her to come home. I checked several times throughout the night but no answer from my roommate.

The male asks me four times to have sex with him and I say no all four times. First, I tell him I don't know him, then I tell him I have a boyfriend in Germany, then I tell him again I don't know him. The final time, I tell him I am on my period and NO! Next thing I remember is my naked body being violently thrown all over the bed and I am unable to scream or stop it. I don't know, to this day, if I was drugged or hit over the head.

I remember hearing his roommate, just on the other side of the room and I am trying to scream, but nothing comes out. It is as if I am out of my body watching from across the room and can do absolutely nothing to get back in my body and fight him off.

I wake up the next morning twenty minutes late for my 0730 formation. Shaken, not quite sure what happened that night I am standing naked in the bathroom and cannot unwedge the tampon that is shoved all the way up.

My Platoon Leader asks me what's wrong and did I drink too much the night before, he smells my breath and concedes that that's not it, but what is it? I don't even know.

Three days later, I get flashes and cold chills as I am standing in the office and see him. My body knew what happened before I did. Somehow, I am told, the body remembers. My hands are shaking and sweaty and now it's all clear. It's too late for a rape kit, I had to tell someone.

I talk to my Platoon Sergeant, the man I respected the most. He told me that in the military when there is a rape trial they will blame it on me and make it look like I was asking for it. They would say I drank too much, I was a party girl. They would make up lies and I would be on trial, not the NCO. As I am a naïve 21-year old who trusts her leaders, I go along with his plan to just "live with it." My Platoon Sergeant told me the only thing that would happen to him would be that his rank would be knocked down one level, he would be transferred back to the States and I would have to live the rest of my life with it. So I stuff it way down inside and begin my new way of coping with it, binge drinking on the weekends.

Six months later, I reenlisted to stay in four more years and signed up for Europe. September 11th happens and I know Europe will be the first to deploy when war breaks out. We all knew it was coming. I will leave a part of myself in Korea.

A year and a half later, May 6, 2003, I am driving in a convoy from Kuwait to Baghdad. My family is watching it all back home on CNN and they have no idea.

I already had pain in me from the assault and now I am being exposed to the horrors of war. No front lines for women, my ass. Baghdad is the front line. No, I didn't have to kill anyone, but the fear of thinking today could be my last, either from running over an IED, small arms fire from a sniper, a grenade being thrown from the overpasses or the fact that my Tactical Signal Unit has no armored plates in our flak jackets like the contractors get.

I hear stories of soldiers killing themselves in port-a-potties, crazy Iraqis blowing themselves up and what happened the day before in the "Underpass of Death" outside a market we frequent on our way to the Green Zone for supply pickup three times a week.

I am having panic attacks daily, nightmares, flashbacks, all things I don't find out the names for until I get back to Germany. I kept a journal of me losing my mind. Fevers, diarrhea, vomiting, bloody noses, losing 48 pounds in two months.

Supply lines are not steady yet and we get 1 liter of water a day and the temperature is 130 degrees in the shade. I am falling apart.

My Command will not send me back to get medical treatment as I am "mission essential." Finally, I get orders to Fort Lewis, Washington as there is some loophole somewhere that says you can not be overseas more than 3 years straight. I get medevac'd two weeks early for medical treatment.

When I arrive back at Landstuhl Hospital in Germany, they run every test possible to see why I lost all that weight, as I am now a withering 103 pounds. No one asks me if it could be emotional or combat induced.

After seeing a fellow soldier from my unit, who now had staples from his chest to his genitals, I lose it and walk myself to psychiatry. I still tried to hold it all in, only telling the Major that every time I hear a door slam I think it is a gunshot. Be strong, I tell myself, I am tough I can handle this.

I get to Fort Lewis a month later to find out my new unit is being deployed in two months, I am going back to Baghdad.

Two weeks into redeployment, I get double ear infections, a fever, and chills. I am ordered by the Medical Staff to report to Mental Health section as when they see my pulse rate is 140 beats per minute and my blood pressure is through the roof, I am having a panic attack, and can't hide it anymore. Their stupid machines caught me covering it up.

I walk to Mental Health and explode. Holding nothing back the Triage Doctor tells me I am not allowed to be around weapons as I am now a danger to myself. I am non-deployable and will be medically boarded out of the Army.

I am angry, confused, the Army is my life. I am a Sergeant, my soldiers need me and I need them. I just wanted help, I didn't want to be discharged. I had served 7 years and wanted to retire from the Army.

The day I was medically retired, I laid on the couch all day knowing my life was over. I was 25 years old. I went from war hero to piece of shit in one day. I was depressed, couldn't sleep, and my husband, also an Iraq vet, didn't know how to help me or what was even wrong. Little did we know, we both had PTSD, for different reasons, but nonetheless, we waged our own war against each other in the same house.

The next two years are fogged from my use of prescription drugs to numb myself. I didn't want to feel anything. I wish I had died in Iraq. At least the deceased aren't suffering. I am trapped in my mind reliving over and over the rape and the war. I am not sure if I am even alive.

My husband finally gives up on me a year later and tells me to move back home, that I need my family to help me because he can't get through to me. I am addicted to numbing my pain with anything that will stop it, even for a minute a day.

The year of 2006, I attempt suicide more times than I can count. I argue with God to just take me. I trap myself in my house and push my family away. I am ready to die. After four months of feeling myself die on the inside, I finally check in for the fourth and final time to get clean and sober and tell them everything. If this doesn't work, I decide, I am jumping off the tallest building in St. Louis.

I have now been in recovery for drug addiction and Post-Traumatic Stress Disorder for two years. I have not attempted suicide once in that period of time. I am more proud of that than my military service. I have given up on organized religion to help me answer the questions my mind has posed, like, "Why me?" The pure part in the deepest part of my soul, which knows none of this was ever my fault, and didn't deserve any of it, has kept me alive. I can say that there must be a God that has saved me from a hell which I created in my own mind, and given me a second chance at living one day at a time. It has been a very slow crawl back, and I am just getting started. I still cannot trust, I still cannot sleep, I still have awful memories, nightmares and imaginings of things so horrible I cannot say them here.

But I do have hope and a dog that has helped me cope. I have courage that things will get a little easier every day and that someday, the wounds of rape and war will be healed inside me.

There are thousands just like me, women and men, veterans who signed up to serve their country and were raped, tortured, harassed, and raped again by their command.

When I enlisted in the Army I took an oath to support and defend the Constitution of the United States against all enemies, foreign and domestic. My oath did not end upon discharge. I want to help other men and women veterans get the support that they need and know there is hope that we can get better. We must not give up. We must band together and make sure this doesn't happen to our sons and daughters.

Obama’s jobs plan: A band-aid for an economic catastrophe

Obama’s jobs plan: A band-aid for an economic catastrophe

By Patrick Martin

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The economic plan announced Saturday by President-Elect Barack Obama, with the goal of “saving or creating” 2.5 million jobs in 2009 and 2010, is a measure that has already been outstripped by events. The deepening crisis of American and world capitalism could destroy that many US jobs in the next six to nine months alone.

The collapse of the auto industry itself would wipe out 2.5 million to 3 million jobs according to most estimates, canceling out the entirety of Obama’s plan, even if it were to be enacted quickly and in full by the incoming Democratic-controlled Congress. The broader recession, well under way, is expected to increase the ranks of the unemployed by a million or more by next spring.

Obama announced his jobs plan in a brief radio speech on Saturday morning, excerpts of which were also posted on YouTube. He noted the most recent, extremely ominous, economic figures: “New home purchases in October were the lowest in half a century. 540,000 more jobless claims were filed last week, the highest in eighteen years. And we now risk falling into a deflationary spiral…”

He again sought to dampen expectations that the new administration would be able to reverse the economic slide quickly, saying, “It’s likely to get worse before it gets better.” While expressing verbal sympathy for the struggles of working class Americans who face lost jobs, inadequate paychecks and the disappearance of pensions and college savings, Obama offered nothing in the way of concrete assistance.

His concluding remarks were perhaps the most significant. Hailing what he called “the American dream,” he declared, “It has thrived because in our darkest hours we have risen above the smallness of our divisions to forge a path towards a new and brighter day. We have acted boldly, bravely, and above all, together.”

The gauzy, patriotic rhetoric conceals a lie. The economic and class divisions in the United States are not small; they are the largest and widest in American history. Never has such a tiny minority of the population monopolized such a huge proportion of overall wealth, to the detriment of the vast majority. As for the demand that action be taken “above all, together,” it means that the financial aristocracy, which is responsible for the crisis, should not be compelled to pay for it. Instead, the burden will be placed on the backs of “all,” i.e., on working people.

Obama aides signaled the next day that he was retreating from his campaign promise to roll back the Bush administration’s tax cuts for the wealthy. Top adviser David Axelrod, appearing on two Sunday television interview programs, did not contradict reports that Obama would instead allow the Bush tax cuts to continue for another two years, when they are scheduled to expire. Another Obama adviser, William Daley, former Clinton commerce secretary, told NBC’s “Meet the Press” that a continuation of the tax cut for those making over $250,000 a year until its scheduled expiration at the end of 2010 now “looks more likely than not.”

Weekend press reports also indicated that the economic stimulus plan to be introduced in January will be much larger than the $61 billion proposed by congressional Democrats this fall, or the $178 billion Obama called for during the final weeks of his election campaign. Obama economic adviser Austan Goolsbee, appearing on the CBS program “Face the Nation,” embraced the suggestion that the stimulus package could be as high as $700 billion, including tax cuts for low- and middle-income families, infrastructure spending, expanded unemployment benefits and tax credits for business.

This extreme escalation in the price tag is a response to the expanding scale of the financial crisis and its impact on the wider economy. The extreme fragility of the financial system was underscored in the extraordinary comments of former Treasury Secretary James Baker, who joined Daley on “Meet the Press.” Baker called for Obama to meet with Bush in the White House and agree on short-term measures to prop up the banking system over the 60 days leading up to the inauguration. Otherwise, he warned, “this thing is even, believe it or not, going to get worse.”

Baker continued: “I agree 100 percent we can only have one president at a time, but nothing would do more to create confidence and eliminate the fear and anxiety that’s out there, particularly in financial markets, than to see the incoming president and outgoing president get together on some sort of a proposal or program--over the short-term, I’m not talking about the mid-term or long-term correction of the economy, but something that would do a little more to make sure that our banks don’t continue to slide down and would stabilize our financial system, which is critical.”

Obama has scheduled a press conference Monday to announce his choices for the top economic positions in the new administration. The leading figures will be Timothy Geithner, current president of the New York Federal Reserve, for treasury secretary and former Clinton Treasury Secretary Lawrence Summers as top economic policy coordinator at the White House. Both men are longtime fiscal crisis managers for American capitalism, going back to the Mexican peso crisis of 1995-96 and the Asian crisis of 1997-98. Geithner has been one of the three top officials handling the current Wall Street meltdown, working hand-in-hand with the current treasury secretary, Henry Paulson, and Federal Reserve Chairman Ben Bernanke. Summers is reportedly Obama’s choice to replace Bernanke when his term expires later in 2009.

The right-wing character of these personnel decisions has been widely noted in the media. As David Sanger of the New York Times observed Sunday, “President-Elect Barack Obama won the Democratic nomination with the enthusiastic support of the left wing of his party, fueled by his vehement opposition to the decision to invade Iraq and by one of the most liberal voting records in the Senate. Now, his reported selections for two of the major positions in his cabinet-Senator Hillary Rodham Clinton as secretary of state and Timothy F. Geithner as secretary of the treasury-suggest that Mr. Obama is planning to govern from the center-right of his party, surrounding himself with pragmatists rather than ideologues.”

In other words, these selections demonstrate that Obama will pursue economic policies determined by the same class interests upheld by his Republican predecessor. The primary concern will be the defense of the financial system—i.e., the accumulated wealth of the financial aristocracy, embodied in the giant banks, hedge funds and other huge financial institutions, whose parasitic and speculative operations precipitated the current crisis.

The Price of Our Good Name

The Price of Our Good Name

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Americans have watched in horror as President Bush has trampled on the Bill of Rights and the balance of power. The list of abuses that President-elect Barack Obama must address is long: once again require the government to get warrants to eavesdrop on Americans; undo scores of executive orders and bill-signing statements that have undermined the powers of Congress; strip out the unnecessary invasions of privacy embedded in the Patriot Act; block new F.B.I. investigative guidelines straight out of J. Edgar Hoover’s playbook.

Those are not the only disasters Mr. Obama will inherit. He will have to rescue a drowning economy, restore regulatory sanity to the financial markets and extricate the country from an unnecessary war in Iraq so it can focus on a necessary war in Afghanistan.

Even with all those demands, there is one thing Mr. Obama must do quickly to begin to repair this nation’s image and restore its self-respect: announce a plan for closing Mr. Bush’s outlaw prison at Guantánamo Bay.

The prison is the premier example of the disdain shown by Mr. Bush and Vice President Dick Cheney for the Constitution, federal law and international treaties. Most sensible governments cannot see past Guantánamo to even recall America’s long history as a defender of human rights and democratic values.

We are under no illusions. Closing the prison will not be easy, or quick, but it can be done. It does not mean that the United States will set free heinous terrorists. But it may mean that these prisoners will have to be tried on other very serious charges than the ones supposedly for which they were sent to Guantánamo.

That is Mr. Bush’s fault. His decision to authorize the torture of detainees has made it highly unlikely that the evidence collected at Gitmo and the C.I.A.’s illegal prisons around the world would stand up in a real court.

In closing down Guantánamo, there are some basic requirements: The prisoners must be dealt with as openly as possible. Those who are charged here must stand trial in federal courts, not the tribunals created by the disastrous Military Commissions Act of 2006.

It would compound the disaster if, as some suggest, Congress tried to create a new system combining military and civilian justice. We have seen what happens when the government creates special systems to deal with special classes of prisoners.

Human Rights Watch has offered a good template for closing Guantánamo. It includes:

SET A DATE TO CLOSE THE PRISON That announcement would send a powerful signal that the new administration has rejected Mr. Bush’s abusive and unlawful policies. It would make other countries more likely to cooperate. The taint of Guantánamo is so great that right now even close allies will not consider resettling prisoners who should be set free because they committed no crimes of any kind. There may be at least 60 of these detainees at Gitmo. Selected countries might also be willing to take back their own nationals to stand trial.

BEGIN A TRANSPARENT REVIEW OF DETAINEES There are about 250 detainees at Guantánamo Bay. Human Rights Watch sensibly proposes creating a task force run by the Justice Department with input from the Departments of State and Defense and the director of national intelligence to separate out those who may be truly guilty of terrorist acts — a minority — from the larger population who either committed much more minor crimes or no crimes at all.

REPATRIATE DETAINEES WHO ARE NOT TO BE TRIED This must be done carefully. There are believed to be 30 to 50 detainees from places like Algeria and Libya who have justified fears of being abused or tortured if they are sent home. The Obama administration should provide these prisoners with advance notice of plans to repatriate them and give them a chance to contest those plans.

Prisoners with a credible fear of abuse cannot be sent to that fate. They will have to be sent to other countries to live. The best way for the United States to get other governments to cooperate is to accept some detainees for settlement in this country.

TRY THE REST IN FEDERAL COURTS Americans will hear from former members of the Bush administration and supporters of its system of injustice that the federal courts cannot handle these cases because they involve sensitive secrets, or that terrorism is not appropriately handled as a law-enforcement issue.

Since Sept. 11, 2001, the federal courts have successfully prosecuted about 100 terrorism cases, and the courts deal routinely with national secrets. The real reason Mr. Bush and his team avoided the federal courts for the Gitmo detainees was that the evidence in so many of these cases is wafer-thin or unusable because it was obtained through coercion and torture.

The world saw more proof of that last week, when Col. Stephen Henley, a military judge at Guantánamo, refused to admit evidence obtained through torture or coercion at the trial of Mohammed Jawad, an Afghan national who is one of the few prisoners at Guantánamo who has been charged and put on trial. Evidence that cannot pass muster in Guantánamo’s kangaroo courts is certainly not going to be admitted by a civilian judge in a duly constituted court of law.

The Jawad case has become emblematic of everything that is wrong with Guantánamo Bay: he was captured in Afghanistan at the age of 16 or 17 and thrown into indefinite detention without hope of eventual release because he allegedly threw a grenade at two American servicemen and an Afghan interpreter. The prosecutor resigned in September, saying he could not ethically proceed, and the judge threw out Mr. Jawad’s confession because it had been tortured out of him by Afghan interrogators.

Does this mean that truly dangerous men will be set free, to go back to plotting more attacks against America? No. But it will require smart legal thinking by the new administration.

Take the case of Khalid Sheikh Mohammed. It is obvious that the confession he made to plotting the 9/11 bombings will not hold up in court. It was obtained through torture. But this prisoner is a suspect in numerous other terrorist attacks, including the murder of the journalist Daniel Pearl and the attack on the U.S.S. Cole. There is an existing 1996 indictment against him for a plot to blow up 12 United States-bound commercial airliners. The evidence in that case was obtained, we presume, legally.

It may be that compromises of this kind will have to be made in other cases as well. It is understandable that some Americans will find that less than satisfying. But it is important to remember that this is the price of Mr. Bush’s incompetent and lawless conduct of the war against terrorism. It is a price worth paying to restore the rule of law and this country’s good name.

Pakistanis Fear U.S. Collision with Neighboring Enemies

Pakistanis Fear U.S. Collision with Neighboring Enemies

By Jane Perlez

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A redrawn map of South Asia has been making the rounds among Pakistani elites. It shows their country truncated, reduced to an elongated sliver of land with the big bulk of India to the east, and an enlarged Afghanistan to the west.

That the map was first circulated as a theoretical exercise in some American neoconservative circles matters little here. It has fueled a belief among Pakistanis, including members of the armed forces, that what the United States really wants is the breakup of Pakistan, the only Muslim country with nuclear arms.

"One of the biggest fears of the Pakistani military planners is the collaboration between India and Afghanistan to destroy Pakistan," said a senior Pakistani government official involved in strategic planning, who insisted on anonymity as per diplomatic custom. "Some people feel the United States is colluding in this."

That notion may strike Americans as strange coming from an ally of 50 years. But as the incoming Obama administration tries to coax greater cooperation from Pakistan in the fight against militancy, it can hardly be ignored.

This is a country where years of weak governance have left ample room for conspiracy theories of every kind. But like much such thinking anywhere, what is said frequently reveals the tender spots of a nation's psyche. Educated Pakistanis sometimes say that they are paranoid, but add that they believe they have good reason.

Pakistan, a 61-year-old country marbled by ethnic fault lines, is a collection of just four provinces, which often seem to have little in common. Virtually every one of its borders, drawn almost arbitrarily in the last gasps of the British Empire, is disputed with its neighbors, not least Pakistan's bitter and much larger rival, India.

These facts and the insecurities that flow from them inform many of Pakistan's disagreements with the United States, including differences over the need to rein in militancy in the form of Al Qaeda and the Taliban.

The new democratically elected president, Asif Ali Zardari, has visited the United States twice since assuming power three months ago. He has been generous in his praise of the Bush administration. But that stance is criticized at home as fawning and wins him little popularity among a steadfastly anti-American public.

So how will the promise by President-elect Barack Obama for a new start between the United States and Pakistan be received here? How can it be begun?

One possibility could be some effort to ease Pakistani anxieties, even as the United States demands more from Pakistan. That will probably mean a regional approach to what, it is increasingly apparent, are regional problems. There, Pakistani and American interests may coincide.

American military commanders, including General David Petraeus, have started to argue forcefully that the solution to the conflict in Afghanistan, where the American war effort looks increasingly uncertain, must involve a wide array of neighbors.

Obama has said much the same. Several times in his campaign, he laid out the crux of his thinking. Reducing tensions between Pakistan and India would allow Pakistan to focus on the real threat the Qaeda and Taliban militants who are tearing at the very fabric of the country.

"If Pakistan can look towards the east with confidence, it will be less likely to believe its interests are best advanced through cooperation with the Taliban," Obama wrote in Foreign Affairs magazine last year.

But such an approach faces sizable obstacles, the biggest being the conflict over Kashmir. The Himalayan border area has been disputed since the partition of India and Pakistan in 1947, and remains divided between them.

Pakistan's army and intelligence agencies have long fought a proxy war with India by sponsoring militant groups to terrorize the Indian-administered part of the territory.

After the 9/11 attacks, Pakistan reined in those militants for a time, but this year the militants have renewed their incursions. Talks between the sides made some progress in recent years but have petered out.

Pakistanis warn that the United States should not appear too eager to mediate. First, they caution, India has always regarded Kashmir as a bilateral question. India, they note, also faces a general election early next year, an inappropriate moment to push such an explosive issue.

Second, some Pakistanis are concerned about the reliability of the United States as a fair mediator. "Given the United States' record on the Palestinian issue, where the Palestinians had to move 10 times backwards and the Israelis moved the goal posts, the same could happen here," said Zubair Khan, a former commerce minister who has watched Kashmir closely.

It was discouraging, Khan said, that the United States ignored the importance of the huge nonviolent protests by Muslims in Kashmir against Indian rule this summer. "Anywhere else, and they would have been hailed as an Orange Revolution," he said, referring to the wave of protests that led to a change in the Ukrainian government in 2004.

Such distrust has been exacerbated by what Pakistanis see as the Bush administration's tilt toward India.

Exhibit A for the Pakistanis is India's nuclear deal with the United States, which allows India to engage in nuclear trade even though it never joined the global Nuclear Nonproliferation Treaty. Pakistan, with its recent history of spreading nuclear technology, received no comparable bargain.

The nuclear deal was devised in Washington to position India as a strategic counterbalance to China. That is how it is seen in Pakistan, too, but with no enthusiasm.

"The United States has changed the whole nuclear order by this deal, and in doing so is containing China, the only friend Pakistan has in the region," said Talat Masood, a retired Pakistani army general.

Further, Pakistan is upset about the advances India is making in Afghanistan, with no checks from the United States, Masood said.

India has recently made big investments in Afghanistan, where Pakistan has been competing for influence. These include a road to the Iranian border that will eventually give India access to the Iranian port of Chabahar, circumventing Pakistan.

India has offered training for Afghanistan's military, given assistance for a new Parliament building in Kabul and has re-opened consulates along the border with Pakistan.

The consulates, the Pakistanis charge, are used by India as cover to lend support to a long-running separatist movement in Baluchistan Province. (Baluchistan was even made an independent state on the theoretical map, which accompanied an article by Ralph Peters titled "Blood Borders: How a Better Middle East Would Look," originally published in Armed Forces Journal.)

Both India and Pakistan in fact have a long and destructive history of, gently or not, putting in the knife. Exhibit A for the Indians is the bombing in July of its embassy in Afghanistan, which American and Indian officials say can be traced to groups linked to Pakistan's spy agency.

If the Obama administration is indeed to convince Pakistanis that militancy, not the Indian Army, presents the gravest threat, it will not be easy.

The commander of American forces in Afghanistan, General David McKiernan, got a taste of the challenge this month, when he visited Islamabad and sat down with a group of about 70 members of Pakistan's Parliament at the residence of the United States ambassador, Anne Patterson. Their attitude showed an almost total incomprehension of the reasons for American behavior in the region after Sept. 11, 2001.

"A couple of the questions I got were, 'Why did you Americans come to Afghanistan when it was so peaceful, before you got there?' " McKiernan recalled during an appearance at the Atlantic Council in Washington last week.

"Another one," he said, "was, 'We understand that you've invited a thousand Indian soldiers to serve in Afghanistan by Christmas.' "

There was no truth to the claim, he told the Pakistanis. "We have a lot of work to do," he told his audience in Washington.

Indeed, among ordinary Pakistanis, many still regard Al Qaeda more positively than the United States, polls find. Talk shows here often include arguments that the suicide bombings in Pakistan are payback for the Pakistani fighting an American war.

Some commentators suggest that the United States is actually financing the Taliban. The point is to tie down the Pakistani Army, they say, leaving the way open for the Americans to grab Pakistan's nuclear weapons.

Recently, in the officer's mess in Bajaur, the northern tribal region where the Pakistani Army is tied down fighting the militants, one officer offered his own theory: Osama bin Laden did not exist, he told a visiting journalist.

Rather, he was a creation of the Americans, who needed an excuse to invade Afghanistan and encroach on Pakistan.

Cheney, Gonzales indictment turns chaotic

Texas hearing on Dick Cheney, Alberto Gonzales indictment turns chaotic

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A county prosecutor who brought indictments against Vice President Dick Cheney, former Attorney General Alberto Gonzales and others pounded his fist and shouted at the judge Friday about special treatment for high-profile defendants as a routine motions hearing descended into chaos.

Willacy County District Attorney Juan Angel Guerra, who is accusing the public officials of culpability in the alleged abuse of prisoners in a federal detention center, asked Presiding Judge Manuel Banales to recuse himself. Guerra has complained about Banales' handling of the case.

Attorneys for the vice president and other defendants leapt to their feet in objection, as Guerra pounded the table and accused Banales of giving the defendants special treatment in allowing motions to quash the indictments to be heard before the defendants were arraigned.

"Now all of a sudden there is urgency," Guerra shouted. "Eighteen months you kept me indicted through the election." The charges against Guerra were dismissed in October. Guerra lost re-election in the March Democratic primary.

Banales called a recess to contact the chief justice of the state Supreme Court for suggestions on how to proceed, and ordered Guerra, who had slipped out once before in the hearing, to remain in the courthouse.

"I will not obey that order," Guerra said. When Banales implied he would take steps to keep Guerra in court, Guerra agreed to stay if the judge asked him respectfully.

Unlike the initial hearing Wednesday when Guerra was absent and media and attorneys for the indicted appeared in equal numbers, curious residents packed the well-worn pews of the Willacy County Courthouse's only courtroom Friday.

Half of the indictments returned Monday are linked to privately run federal detention centers in the sparsely populated southern Texas county. The other half target judges and special prosecutors who played a role in an earlier investigation of Guerra.

Banales appointed a special prosecutor to handle the local officials indicted along with Cheney, Gonzales and state Sen. Eddie Lucio Jr., D-Brownsville, because Guerra has sparred with them for years.

The vice president is the highest public official Guerra has pursued, but he made a nearly 20-year-career of passing over routine crimes in favor of public corruption before being defeated in the March Democratic primary election.

It was Guerra's interest in the contracts to build and run a federal detention center that led to some of his biggest successes _ three guilty pleas on bribery charges from former county commissioners in 2005. But he also believes it was the motivation for his own legal battles.

Guerra responded to his theft arrest by camping outside the courthouse with farm animals in protest. He continued working for more than a year while under indictment on charges of extorting money from a bail bond company and using his office for personal business until Banales dismissed the indictment last month.

Guerra ran the current investigation into alleged prisoner abuse with a siege mentality. He worked it from his home, dubbed it "Operation Goliath" and kept it secret from his staff, he said. He gave all the witnesses biblical pseudonyms - his was "David" - and sometimes gave false reasons for witnesses' appearances so as not to raise suspicion in a courthouse he believed to be filled with political enemies. A clerk and a judge who share the building were among those indicted Monday.

The grand jury also charged Lucio with illegally profiting from prison consulting fees.

The GEO Group Corp. was indicted on a murder charge for the death of an inmate at a federal prison.

"The indictment is the product of prosecutorial vindictiveness and is void on its face," defense attorney Tony Canales, who represents the private prison operator, wrote in a motion. Canales is also the legal representative for Cheney and Gonzales.

Another indictment alleges that Cheney's personal investment in the Vanguard Group, which invests in private prison companies, gives him culpability in alleged prisoner abuse.

Other indictments charge two district judges, two special prosecutors and the Willacy County district clerk with abusing their powers in investigating Guerra's office.

The defendants did need to appear in person Friday.

I'm an American Worker Tired of Getting Screwed

The American Worker

By Rick Kepler

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I am an American worker, and you are damn right I want the wealth to be shared and spread. I am talking about the wealth my hard work helped to create, but was taken from me by George Bush's base, the very rich, or as I know them, my corporate bosses. For the past eight years I have watched W.'s and McCain's (Country Club First) base grab the largest share of our country's wealth. Where did they take it from? They took it from my family's pocketbook, and my co-workers' families' pocketbooks. They stole the wealth that I was trying to build for me and my family when they stripped my pension plan from me and told me to invest in a 401k. Then they stole most of that 401k and other workers' 401k savings with this economic meltdown. This was a massive transfer of wealth from the workers' pockets into the already stuffed pockets of the rich. My retirement savings and my coworkers' savings all across America have been looted by the corporate bosses, who just got bailed out while we got left out. Again!

The American worker, whether black, brown, white, red, yellow, or rainbow color, has been fleeced over these past eight years. We are the ones who go to work every day. We don't own our places of work, nor do we help manage them. We just go in and do the job. And we must be doing one hell of a good job because we are told that we are the most productive workers in the world. We are working longer and harder, but our paychecks keep shrinking! Where are those productivity gains going then? Not into our pockets. Our standard of living has been going down these past eight years ($2,000 less in family income since W. took office) This is another damn transfer of wealth into the hands of the extremely rich.

Their greed is insatiable. Take our family's health care. They do. They keep passing on their increased costs to us, or they just drop coverage for the worker completely. That means we either join the 50,000,000 who have no health care, or we end up having to buy it privately, thus eating up a huge portion of our family's income. If we manage to hang onto our health care plans, our deductibles, co-pays, and out-of-pay contributions keep skyrocketing. This amounts to another massive transfer of wealth from our pockets into the overflowing pockets of our corporate bosses.

The list goes on for the American worker. We saw overtime pay stripped from millions of workers during this past nightmare eight years. The worker was still working overtime, but due to a new "boss law" passed by W. and McCain's party that assists these thieves, the workers didn't receive overtime pay because they were declared exempt. They also weakened the workers' health and safety standards or just plain didn't enforce the laws already on the books. As a result, the American worker pays the price in lost days due to accidents from unsafe conditions or from lingering, expensive illnesses suffered from unhealthy working conditions. This too is a massive transfer of wealth from our pockets into our corporate bosses' bulging pockets.

To further sweeten their own pots, they took full-time jobs and converted them to part-time with no benefits, or they just made their employees line up and reapply for their exact same jobs at half the pay. Are we beginning to see what a true transfer of wealth looks like? So, do I want to see a spreading of the wealth? You bet your sweet hind-end I do. But all I ask of Obama is to give me and my co-workers the ability to retrieve some of the wealth that has been stolen from us.

Strengthen the laws that give workers the right to organize and bargain for a contract with our bosses. The current laws on the books have been torn to shreds by W. and McCain on behalf of their base. This is just part of their attack on American workers. Under globalization, the bosses seek a much cheaper workforce, which always means non-union, which means "can't fight back." That is why they have gutted the laws that protect workers. The laws that once gave us a level playing field with our bosses have been rendered useless, including our legal right to strike. That law said I had a right to strike, and could.

The American worker doesn't want a handout. Never did. We do want a hand up from our government. We still believe and have hope that this is a government of, by and for the people. We do want to know that our government will finally stand with us against this onslaught, this Robin Hood in reverse, being conducted by the bosses against the workers. The bosses know that W. and McCain have been on their side for the past eight years - and so do we workers. We just want our government to now stand on our side as we stand up against this corporate attempt to create third world working conditions right here in America. Restore our right to fight for a better living for ourselves and our families, and let the power of pissed-off workers, united in struggle, spread corporate America's stolen wealth back into the pockets of those whose pockets got picked these last eight years - the American worker.

Rick Kepler has driven beer trucks in New Orleans, Louisiana; Colorado Springs, Colorado and Oakland, California. He has tended bar in San Francisco, and worked on the railroad and loading docks in Ohio. Currently he's a Teamsters organizer who speaks to thousands of unorganized workers every year.

The GOP attack on democracy continues in Ohio

The GOP attack on democracy continues in Ohio

By Bob Fitrakis & Harvey Wasserman

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The Ohio Republican Party has escalated its attacks on democracy on two key fronts.

It’s trying to steal a hotly contested congressional seat. And it’s moving to restrict voting rights for coming elections.

In the bitterly embattled House race in central Ohio’s 15th Congressional District, Republican State Senator Steve Stivers has a slight lead over Franklin County Commissioner Mary Jo Kilroy.

Two years ago, Kilroy essentially defeated the previous incumbent, fourth-ranked House Republican Deborah Pryce. In an extremely tight race, a wide range of dubious voter eliminations and manipulated vote counts stole what appears to have been a clear victory from Kilroy. The GOP’s infamous J. Kenneth Blackwell was still Ohio’s Secretary of State. The Democrats declined to take him on, and the seat remained in Republican hands.

This year Ohio’s Secretary of State is Democrat Jennifer Brunner. It would appear Kilroy has won again.

But the Republicans are on their usual anti-voter attack. With the help of Matt Damshroeder, Deputy Director of the Franklin County Board of Elections, the GOP has used a range of insider information to challenge about a thousand provisional ballots cast in heavily Democratic areas of the district. In particular they argue that a minor voter omission on the ballots should disqualify them. If they win that case, Stivers might well take the seat.

Brunner has gone to federal court asking that all the votes be counted. A decision from Judge Algernon Marbley was expected on Thursday.

Damshroeder’s role reflects a classic Democratic indifference to election protection. Damshroeder is a past chair of the Franklin County GOP. He also served as the county chair for the 2004 Bush/Cheney campaign.

Prior to that election, while acting as Director of the Franklin County BOE, Damshroeder accepted a $10,000 check from a Diebold representative in his office at the BOE. The board was deciding at the time whether or not to buy Diebold machines.

Damshroeder asked that the check be made out to the Franklin County Republican Party. When the incident surfaced in the media, he apologized for the “impropriety.” But the GOP kept the check. And Damshroeder was “punished” with one month’s paid leave, even though Democrats could have had him removed.

Damshroeder is now Deputy BOE Director. His insider enabling role in the attempt to disenfranchise a thousand voters in his own district is problematic at best. The Ohio Democratic Party has finally issued a few angry e-blasts about it. But Brunner has the power to actually remove Damshroder. Doing so would send a message the Dems are finally serious about election protection.

The Republicans are also trying to make it harder for the general public to vote in the next election. In the lame duck session after the theft of the 2004 election, the GOP-controlled Legislature passed an extremely restrictive bill aimed at disenfranchising thousands of Ohioans and making recounts of federal balloting virtually impossible.

But the GOP inadvertently included a provision that allowed new voters to register and cast a ballot on the same day. In 2008 the GOP sued Brunner to try to close that window. But Brunner prevailed in court, and tens of thousands of first-time voters came out to the polls in late September and the first week of October. By some news accounts these early voters backed Obama by margins as high as 12:1.

The embarrassed and angry Republicans have now vowed to rid the process of this pro-voter opening in the upcoming lame duck session of the Legislature. But if they do, it’s likely the new governor, Democrat Ted Strickand, will veto the bill and sit on it. Next year the Democrats will control the Ohio House, and are unlikely to allow such a bill to go through.

By then, perhaps Matt Damshroeder will be out of a job, and Mary Jo Kilroy will be in Congress. But one thing is certain: the GOP attack on the right to vote is unlikely to have abated.

Rich countries launch great land grab to safeguard food supply

Rich countries launch great land grab to safeguard food supply

• States and companies target developing nations
• Small farmers at risk from industrial-scale deals

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Rich governments and corporations are triggering alarm for the poor as they buy up the rights to millions of hectares of agricultural land in developing countries in an effort to secure their own long-term food supplies.

The head of the UN Food and Agriculture Organisation, Jacques Diouf, has warned that the controversial rise in land deals could create a form of "neo-colonialism", with poor states producing food for the rich at the expense of their own hungry people.

Rising food prices have already set off a second "scramble for Africa". This week, the South Korean firm Daewoo Logistics announced plans to buy a 99-year lease on a million hectares in Madagascar. Its aim is to grow 5m tonnes of corn a year by 2023, and produce palm oil from a further lease of 120,000 hectares (296,000 acres), relying on a largely South African workforce. Production would be mainly earmarked for South Korea, which wants to lessen dependence on imports.

"These deals can be purely commercial ventures on one level, but sitting behind it is often a food security imperative backed by a government," said Carl Atkin, a consultant at Bidwells Agribusiness, a Cambridge firm helping to arrange some of the big international land deals.

Madagascar's government said that an environmental impact assessment would have to be carried out before the Daewoo deal could be approved, but it welcomed the investment. The massive lease is the largest so far in an accelerating number of land deals that have been arranged since the surge in food prices late last year.

"In the context of arable land sales, this is unprecedented," Atkin said. "We're used to seeing 100,000-hectare sales. This is more than 10 times as much."

At a food security summit in Rome, in June, there was agreement to channel more investment and development aid to African farmers to help them respond to higher prices by producing more. But governments and corporations in some cash-rich but land-poor states, mostly in the Middle East, have opted not to wait for world markets to respond and are trying to guarantee their own long-term access to food by buying up land in poorer countries.

According to diplomats, the Saudi Binladin Group is planning an investment in Indonesia to grow basmati rice, while tens of thousands of hectares in Pakistan have been sold to Abu Dhabi investors.

Arab investors, including the Abu Dhabi Fund for Development, have also bought direct stakes in Sudanese agriculture. The president of the UEA, Khalifa bin Zayed, has said his country was considering large-scale agricultural projects in Kazakhstan to ensure a stable food supply.

Even China, which has plenty of land but is now getting short of water as it pursues breakneck industrialisation, has begun to explore land deals in south-east Asia. Laos, meanwhile, has signed away between 2m-3m hectares, or 15% of its viable farmland. Libya has secured 250,000 hectares of Ukrainian farmland, and Egypt is believed to want similar access. Kuwait and Qatar have been chasing deals for prime tracts of Cambodia rice fields.

Eager buyers generally have been welcomed by sellers in developing world governments desperate for capital in a recession. Madagascar's land reform minister said revenue would go to infrastructure and development in flood-prone areas.

Sudan is trying to attract investors for almost 900,000 hectares of its land, and the Ethiopian prime minister, Meles Zenawi, has been courting would-be Saudi investors.

"If this was a negotiation between equals, it could be a good thing. It could bring investment, stable prices and predictability to the market," said Duncan Green, Oxfam's head of research. "But the problem is, [in] this scramble for soil I don't see any place for the small farmers."

Alex Evans, at the Centre on International Cooperation, at New York University, said: "The small farmers are losing out already. People without solid title are likely to be turfed off the land."

Details of land deals have been kept secret so it is unknown whether they have built-in safeguards for local populations.

Steve Wiggins, a rural development expert at the Overseas Development Institute, said: "There are very few economies of scale in most agriculture above the level of family farm because managing [the] labour is extremely difficult." Investors might also have to contend with hostility. "If I was a political-risk adviser to [investors] I'd say 'you are taking a very big risk'. Land is an extremely sensitive thing. This could go horribly wrong if you don't learn the lessons of history."

Housing is bad enough, but wait — it'll get worse

Housing is bad enough, but wait — it'll get worse

Kevin G. Hall

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If you think the housing slump can't get much worse, Martin Feldstein thinks that both home prices and the broader economy can — and very likely will — get a whole lot worse.

The Harvard University professor and former chief economic adviser to Ronald Reagan isn't part of the crowd that continually forecasts doom. For two decades, he's headed the National Bureau of Economic Research, which officially determines when U.S. recessions begin and end.

So when he spoke on Monday night at the annual dinner of the National Economists Club, a gathering of like-minded wonks, Feldstein's grim calculations were noteworthy.

"There are now 12 million homes in the United States with a loan-to-value ratio greater than 100 percent. That's one mortgage in four. The aggregate amount of that is some $2 trillion," said Feldstein. "If you look at the median (midpoint) loan-to-value ratio in that 12 million group of underwater mortgages — mortgages with negative equity — the median loan-to-value ratio is 120 percent."

That means about 25 percent of all U.S. mortgages are exceed the value of the homes the mortgages are financing. In the case of half the homes that are underwater, homeowners are paying a mortgage that's now 20 percent higher than the value of the home.

That's bad — but it's likely to get worse.

A recent report by First American Core Logic, a real-estate data firm in Santa Ana, Calif., estimated that as of Sept. 30, 7.5 million mortgages, or 18 percent of all properties with a mortgage, had negative equity. The group thinks there are another 2.1 million mortgages that are within 5 percent of going underwater.

Together, these two categories account for 23 percent of all properties with a mortgage. Nevada led all states with 48 percent of homes with negative equity. Florida and Arizona each had 29 percent of homes with underwater mortgages, while 27 percent of mortgages in California were upside-down, the group said.

If home prices fall another 10 to 15 percent, as measured by the Case/Shiller Home Price Index, then four out of every 10 mortgages in the U.S. could be underwater, Feldstein said.

"At those levels, it's hard to see how many people are going to be willing to keep up with their mortgages," Feldstein said.

The implications for many homeowners are staggering. Before the recent housing boom of 2000 to 2006, homes increased in value at a historical annual rate of about 2.3 percent when adjusted for inflation.

That means that for homeowners who owe 35 percent more than their homes' value, it would take, at historical averages, about 15 years just to break even on their home investment. They won't build equity. It would be a huge incentive for millions to hand the keys back to the lender and seek cheaper housing.

Not all real estate experts buy Feldstein's stark numbers.

"That's the highest percentage I've heard from anybody, by quite a bit," said Rick Sharga, senior vice president for Realtytrac, an Irvine, Calif., company that publishes foreclosure data.

More conservative forecasts, though still dismal, point to a smaller drop in home prices of 5 percent to 7 percent, he said.

Added Jay Brinkmann, chief economist for the Mortgage Bankers Association in the nation's capital, "If you generalize the numbers too far, I think it leads to some incorrect conclusions."

The Case/Shiller Index is driven by home sales that have taken place. It doesn't reflect the stability in older, established neighborhoods, Brinkmann said. The vacant and for-sale rates nationwide for homes built before 2000 — that is, pre-boom — is just 2 percent. The delinquency and foreclosure problems are concentrated mostly in a handful of states, such as California, Florida, Arizona and Nevada, which had overbuilding and weak lending standards.

"Those states have about 25 percent of the mortgages and 50 percent of the foreclosure starts" in the latest association survey, Brinkmann said. Nationwide, 6.4 percent of all mortgages were delinquent through June, but the number of delinquencies and foreclosure starts are breaking records every quarter, the most recent MBA survey said.

Brinkmann's own rough guess is that somewhere between 6 million and 8 million mortgages are underwater, still a very high number. He doesn't see the national outlook getting better any time soon, framing his estimate of when that happens in the form of a question: "When does the influence of these massive declines in California and Florida go away?"

Realtytrac's forecast isn't any brighter.

"The best-case scenario in terms of the real estate market is we probably bottom out between mid-year and the end of 2009. And that's the best case from where we're sitting," Sharga said. "The only reason it could happen that soon is because of how rapidly and how severe the downturn has been in the housing market."

A lot would have to go right to reach that best-case scenario. Government and industry efforts would have to step up efforts to forgive or make up the difference between the value of the mortgage and the value of the home.

The final batch of subprime mortgages scheduled to reset to a higher interest rate will have done so by the end of the first quarter of 2009.

In a rare bit of relief for one segment of the housing market, the interest rates that determine the monthly payments for some adjustable-rate mortgages are falling.

Sharga said, however, that the next problem is the $60 billion of adjustable-rate Alt-A mortgages, which fall between subprime and prime loans. Millions of these loans are scheduled to reset next year to higher interest rates. That could bring monthly mortgage payment increases of $1,000 or more if the loans aren't modified or refinanced.

All this is happening amid what now clearly is a deepening recession, with the highest job losses and deepest drops in consumer spending in decades. The Labor Department reported on Thursday that weekly jobless claims jumped to 542,000, a 16-year high, last week. That suggests a fast-deepening recession.

The White House Thursday acknowledged for the first time that it now supports efforts in Congress to extend unemployment benefits for longer periods to the millions of Americans who can't find work in the downturn.

Consumer spending drives about two-thirds of U.S. economic activity, and as unemployment mounts and consumers retrench, that leads to even more unemployment, mortgage delinquencies and foreclosures.

"The problem now is what will be happening with jobs," Brinkmann said.


Most recent MBA delinquency survey

Latest Realtytrac foreclosure activity report

Dark days see warnings of worse to come

Dark days see warnings of worse to come

By Alan Beattie in London

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The weekly newsletter sent out on Friday by Fathom, a London-based economic consultancy, said it all. “It’s getting really ugly out there,” it said. “It may be true that we have passed the first phase of this crisis, but that does not mean the next phase will not be worse, perhaps very much worse.”

The investors reading those dire warnings will already have spent their week seeing a heap of evidence piling up that the economic crisis is spreading around the world. Record after grim record was broken in the financial markets, as long-term interest rates sank to their lowest for decades, in some cases their lowest ever.

Any lingering hopes that some parts of the world economy, particularly the fast-growing emerging markets such as China, would remain immune to the crisis were snuffed out. With remarkable speed in the past two months, a worrying but apparently manageable credit crunch has turned into a global financial crisis and a recession across much of the world’s economy.

Perhaps the most alarming impact will be on the consumers of the rich world, whose confidence in the future will be vital in preventing recessions turning into depressions. Next week marks the traditional beginning of the US Christmas shopping season with “Black Friday”, the day after Thanksgiving when stores see some of their heaviest business of the year.

The term has traditionally been taken to mean the date that retailers’ finances went into the black, or the heavy road traffic that used to ensue from millions of Americans making pilgrimages to worship at the retail shrine. But if the dire news from across the US economy has sunk in even among the world’s most optimistic shoppers, it might instead mark another dark day for the US economy.

This week, perhaps the clearest possible signal of the trouble that US retailers are in came from their counterparts on the other side of the Atlantic. Marks and Spencer, the store that above all others defines the British high street, announced a highly unusual snap one-day 20 per cent sale. Some described it as a “guerrilla raid”, but in truth it was more like the return of fire in a skirmish with its retail rivals, which had already announced pre-Christmas sales.

But while one-off cuts in prices might tempt consumers to spend, economists warn that people might merely begin to expect that prices will continue to fall in the future, and so hold off spending. The US economy in particular is likely to see headline inflation go negative next year, as the effect of the huge fall in oil prices takes hold and the American housing bust drives down the cost of renting and owning homes.

In theory, such deflation could be good for the economy, as it releases money for consumers to spend on other products. But as Andrew Brigden of Fathom Consulting warns, deflation can also take a malign form. “The risk is that people don’t spend because they think prices will be yet lower in the future and that sets off a negative spiral,” he says.

Temporary drops in prices are unlikely to have that effect. But Mr Brigden thinks the combination of falls in commodity and house prices with weak demand means that US headline inflation is likely to go negative next spring and stay that way for months, dropping as low as minus 3 per cent. “When deflation goes on for the best part of a year, expectations are more likely to become entrenched,” he says.

Certainly any consumers watching the flow of news this week cannot have helped but wonder. Yields on two-year Treasury bonds, an indication of where investors think that the US Federal Reserve will set interest rates over the next 24 months, dropped below 1 per cent to their lowest level since the two-year bond was invented in 1976. British bond yields hit their lowest since the second world war.

The news from the real economy was bad. Over half a million American workers filed for jobless claims, 10 per cent more than economists’ gloomy forecasts. Abandoning their usual studied optimism, Beijing officials described the Chinese employment outlook as “grim”.

And the car industry continued to act as a powerful symbol of global industrial slowdown. The travails of the big three American carmakers have long been known, this week seeing another set of twists and turns on Capitol Hill as US lawmakers considered a federal bail-out. But even their Japanese counterparts – long held up by Detroit’s critics as the way American carmarkers should be run – showed they were being hit by the slowdown. Honda announced it would cut production this year by another 61,000 vehicles, adding the 5,000 employees at one of its British plants to the thousands of car workers around the world languishing at home on gardening leave.

At least oil is getting cheaper, though that is more to do with the threat of a precipitate drop in demand than a better long-term market balance. The head of China’s third-biggest oil company revealed this week that the mood among the state-owned oil giants was one of “panic” at falling prices.

And to cap it all, as if to set the seal on a week of threats to the world economy, there are pirates seizing huge ships in the Indian Ocean. These are strange and dark days indeed.

What MUST Be Done To Avoid Financial Destruction

What MUST Be Done To Avoid Financial Destruction

By: Jim Sinclair

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Things are now "Out of Control."

This international financial crisis is now out of control as the world asks if the USA has two presidents, one president or no president at all.

It would appear that Paulson is in financial control with Bernanke as his second.

I warned you by personal email long before the statement was proven totally correct that “This is it.” That was followed by “This is it, and it is now.” Many people laughed it off.

This is it, and it is now.
Now it is out of control.
Now we enter the Collapse of Confidence period.
Then we begin the Weimar Experience.

It has all hit the fan, and still the absolute majority have no clue. The OTC derivative dealers broke the system into millions of pieces of glass. This broken glass cannot be put back together.

It is heart rending to see a picture of GM autoworkers holding a prayer meeting for their retirement funds. The retirement money was never funded. It is a lost hope. This is another responsibility the government has undertaken that is going to go wild.

Those of you still in freeze frame are headed for lines around your bank. Your bank will likely be acquired by another bank that also is in deep trouble.

The US dollar, like a leaderless company, will lose its respect and therefore value.

In order of importance the following MUST be done unless you want to be one of the suffering masses that will be all too visible this winter:

1. You must have your assets held anywhere they are in true custodial-ship accounts. That type of account at a bank or broker states clearly that the assets held there are not on the balance sheet of the host financial entity. Those assets are clearly segregated in your name. This must be reviewed by counsel to be sure you have what you think you have. Don’t cheap out. All you have is depending on the validity of true custodial-ship accounts.

You cannot know all the banks are broke, however I feel ALL banks are broke because finance is an intertwined system that if visible would look like a spider’s web. Problems on the top will materialize all along the web. Therefore the singular most important step you must take is the establishment of a true custodial-ship account.

Do not assume you have this type of account unless a competent attorney reviews the account papers.

2. I am extremely concerned about those of you who persist in holding certificates for gold rather than holding the actual metal either delivered to you or held for you in a true custodial-ship type account. The scams out there in gold are plentiful. The only way to avoid these scams absolutely is to have your gold in your own possession.

Every other means of holding gold is steps away from perfection. Some will be ok, but many will not.

3. Why would anyone fail to either take paper certificates or order their financial agent to make direct registration book entry at the transfer agent? In most cases you only have until year-end to accomplish this strategy.

4. Withdraw from ETFs.

5. If you carelessly keep large assets with your broker you are as mad as a hatter. The FDIC DOES NOT have the money to guarantee all they are undertaking. Withdraw excess money constantly from any net broker. If you are so stubborn that you think you can trade to insure yourself when your funds are not making money while still getting your money that counts you are nuts. Admit to yourself you are nothing more than a gambling addict in a downward spiral.

6. Leave no gold or coins with any coin dealer.

7. If you can withdraw from your corporate retirement plan do it.

8. Withdraw from credit unions.

9. Withdraw from all money market instruments.

10. This is it.

11. It is now.

12. It is out of control NOW.

The next two months are going to be shocking, but nothing compared to what you will have to experience in 2009.

Infallible Insurance On Sale

Infallible Insurance On Sale

By: Jim Sinclair

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What bank is broke, and what bank is solvent is an impossible question to answer. All we hear are lies, distortions and bailouts. There still has not been a definitive statement about all of this being a product of OTC derivatives.

The key to survival as we have already told you is that you keep your assets in a true custodial-ship anywhere.

Soon you will not be able to direct register or get paper shares for most public companies.

What are most you waiting for? You are at risk to your financial agents. For your sake, get off your butt and do the necessary.


Gold is cheap at $800 per ounce.

Gold is the only viable insurance. The US dollar is not viable insurance because there is simply too much of it and that amount is growing every day. That makes the US dollar untrustworthy.

Gold is the only viable insurance. Clearly equities (with the exception of precious metals shares) are not.

Gold is the only viable insurance. US Treasury bills are not because the yelling at all the rating agencies in Washington today just might get US credit downgraded.

General commodities have been viable, but by nature they are too wild and from now on will be selective until Pakistan implodes and Weimar appears.

Banks cannot offer insurance as they are, in the main, bankrupt.

Insurance companies cannot offer you sound insurance.

Money market funds are not insurance, making gold the only viable insurance.

Retirement programs are no longer insurance.

Jobs are no longer insurance as companies are run by lawyers and accountants.

Equity in your home is not insurance because it simply does not exist.

Your family is no longer insurance because they have the same problems you do.

The assumption your kids will take care of you in your old age is not viable insurance no matter what you think.

Gold has no liability attached to it and is therefore the only viable insurance.

Gold is universally exchangeable, making it the only viable insurance.

Gold has historically performed perfectly in maintaining buying power, making it the only viable insurance.

Gold is the only viable insurance because it is Honest Money.

Since gold is the only viable insurance and because everyone needs it, gold will trade at levels of at least $1200 and $1650.

I could go on but gold is all there is that will protect you from the White Wash being applied by the Fed and Treasury on a structure that is in fact in a free fall.

I am not the least concerned about gold and believe you should not be either as long as you have no margin and understand what gold really is: a currency and an insurance policy. There is no other viable insurance in this most unusual situation.

Gold is a currency that you will see perform as the currency of choice. There is no doubt we are headed into a planetary Weimar experience to some degree.

Dollars are being created faster now than in any other period in history. The Fed and treasury are guaranteeing everything from money market funds to large corporate entities in one way or another.

The first valuation of worthless OTC derivatives via a public sale of these at .0875 to .02 cents shocked anyone with a brain. Now the downturn in business is hitting financial entities and shortly litigation will smoke whatever is left.

The FDIC is already yelling for additional and significant funding from congress as their capital contracts on every Friday’s bailout.

People expect things to return to normal in 2010. That is a fairy tale.

The Fed has only started creating money for bailouts. You saw what happened when they stepped away from Lehman. If you say you didn’t look out the window.

Quantitative Easing by the Fed is the massive creation of funds with no sterilization.

All these bailouts and Federal guarantees on credit items constitute a white wash on a falling economic structure going out of control, and soon.

The out of control point for major planetary dislocation is NOW for the next two months.

Time for a Bank Holiday

Time for a Bank Holiday

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Henry Paulson's $700 billion plan to save the world is dead or dying, but the bailout was not killed by his arrogance or his grossly misleading claims about what the public's money would buy. The plan collapsed because it didn't work. The Treasury secretary has launched a PR offensive to revive his falling influence. Too late. The Democrats should be equally embarrassed. In September their leaders in Congress rushed to embrace the Paulson solution, no hard questions asked. They now claim they were duped.

Paulson's squad at Treasury pumped $250 billion into the largest banks, buying their stock at inflated prices on the assumption it would persuade investors to step forward with their capital too. Instead, savvy financial players realized Paulson was spitting into a high wind, trying to save a system with stout talk.

Here is the ugly, unofficial truth that neither Wall Street nor the government will acknowledge: the pinnacle of the US financial system is broke--with perhaps $2 trillion in rotten financial assets on the books. Nobody knows, exactly. The bankers won't say, and regulators won't ask, or at least don't dare tell the public. Official silence naturally feeds the conviction that banking's problems are far worse than we've been told. The Levy Economics Institute of Bard College puts it plainly: "It is probable that many and perhaps most financial institutions are insolvent today--with a black hole of negative net worth that would swallow Paulson's entire $700 billion in one gulp."

The scale of this disaster explains why the Treasury secretary had to abandon his original plan to buy up failed mortgages and other bad assets from the banks. If government paid the true value for these nearly worthless assets, the banks would have to write down huge losses or, as Levy economists put it, "announce to the world that they are insolvent." On the other hand, if Paulson pumps the purchase price high enough to protect the banks from losses, $700 billion "will buy only a tiny fraction of the 'troubled' assets."

Paulson was trapped by these circumstances (and his own mendacity). Each time he tried to change the script, market insiders became even more alarmed. Congress is trapped too. So is President-elect Obama. From the outset of the crisis, the essential fallacy shared by governing influentials has been a wishful assumption that quick interventions with tons of public money would somehow restore the system to "normal" without disturbing free-market principles. Replenished banks would start lending again and lead us to recovery. "Normal" is not going to happen. If the new president does not break free of the denial and act decisively, his administration will be dangerously compromised from the start.

Obama can begin by declaring a "bank holiday" like FDR's in 1933--an opportunity to put the hard facts on the table and assume temporary control of the entire financial system. Nationalizing the banks sounds more radical than it is, since banking law already empowers regulators to impose extraordinary controls and close supervision over troubled institutions. Facing facts will be painful, but it's better than continuing a costly charade. Paulson's approach, endorsed by many Democrats, was designed to preserve oversized Wall Street titans. In fact, Paulson and the Federal Reserve are making things worse by creating new members of the privileged club of "too big to fail." Public money is being used to finance bank takeovers that will become new behemoths.

A genuine solution means closing down the hopeless institutions and creating a more democratic system based on small to medium-sized banks, financial intermediaries that are less imperious and closer to the real economy of producers and consumers. The Levy institute suggests that some banks are "too big to save." If the president-elect seeks an opinion quite different from his circle of orthodox advisers, he could start with the institute's tartly incisive analysis "Time to Bail Out: Alternatives to the Bush-Paulson Plan," by Dimitri Papadimitriou and Randall Wray. Their perspective is Keynesian, not market worship. They argue (as The Nation and others have) that the bailout is proceeding backward. Instead of saving Wall Street first, government should devote its heavy firepower to reviving jobs, incomes and business enterprises. The banks will not get well or begin normal lending until there is overall economic recovery.

The financial system, meanwhile, can be managed much as it was during the Depression, with regulators weeding out doomed banks and closing them, putting troubled banks under conservatorship and supervising healthy ones closely to prevent excesses. "If we are going to leave insolvent institutions open, it is critically important to replace or at least control management," the Levy paper explains. "Business as usual would be a disaster."

Under these conditions, the government can grant forbearance and prescribe business plans for a slower recovery of bank balance sheets. Instead of buying ruined assets from banks, the government can allow them to sit, possibly for several years, until the economy revives and mortgages or other debt paper regains value. This would amount to an "imposed purgatory" for major banks, keeping them from growing too fast with unsound ventures. Taxpayers will not get off the hook either; government will need to spend hundreds of billions to bail out bankrupt pension funds and pay off insured deposits at failed banks.

Economic stimulus requires preservative measures to stop the bleeding, like a moratorium on home foreclosures and federal lending to the auto industry, as well as force-feeding innovation. Like the financial sector, the reform imperatives must accompany any aid for troubled industries. Do not subsidize more bad behavior by corporate titans or assist companies shipping US jobs and production overseas. In Detroit's case, Washington better get it in writing--an enforceable contract to recover our money if the auto industry doesn't deliver.

President-elect Obama, of course, cannot act directly on any of these matters before January 20. But the Democratic Congress can, since the Treasury cannot spend any of the next $350 billion in the bailout fund without Congressional approval. Congress's first task is to cut off Paulson's water. Representative Dennis Kucinich, as usual, is out front demanding that Congress reject Paulson's request in advance. You can see why Wall Street hates these propositions. No more free money from Washington. No more "masters of the universe." You can also see why the people might be delighted.