Monday, December 29, 2008

Wall St. faces record losses in last week of 2008

Wall St. faces record losses in last week of 2008

By JOE BEL BRUNO

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Investors are preparing to close out the last three trading days of 2008 with Wall Street's worst performance since Herbert Hoover was president.

The ongoing recession and global economic shock pummeled stocks this year, with the Dow Jones industrial average slumping 36.2 percent. That's the biggest drop since 1931 when the Great Depression sent stocks reeling 40.6 percent.

The Standard & Poor's 500 index is set to record the biggest drop since its creation in 1957. The index of America's biggest companies is down 40.9 percent for the year.

With these statistics ready to play out this week, it is little wonder why investors are all too happy to close the books on 2008. Analysts are already looking toward January as a crucial period for the market as it tries to recover some of the $7.3 trillion wiped from the Dow Jones Wilshire 5000 index, the broadest measure of U.S. stocks.

"It is hard to gauge a recovery because there's so many things out there that are interactive with each other," said Scott Fullman, director of derivatives investment strategy for WJB Capital Group in New York. "Nothing is in a vacuum. Anybody who is managing money has to be on the cautious side for at least the first six months of 2009."

He said many analysts are jumping past this week and focusing on next month, especially with Barack Obama set to be sworn in as president on Jan. 20. There is hope that the new administration will deliver another stimulus package, which along with December's interest rate cuts, might help quell the financial crisis.

Trading is expected to remain volatile with many market participants on the sidelines during the holiday-shortened week, but that doesn't mean investors won't be kept busy. With no Santa Claus rally last week, economic data slated for the coming days could sway the market's mood going into 2009.

Investors will be awaiting details about how retailers fared in the post-Christmas sales period, especially since consumer spending drives more than two-thirds of the U.S. economy. The main question is if bargain prices at the malls will be enough to rescue retailers from a bleak holiday shopping season.

Meanwhile, another gauge of how Americans feel about spending money will be released on Tuesday. The Conference Board will issue its December index of consumer confidence, which is expected to rise to a reading of 45.2 for this month, up slightly from 44.9 in November.

The Labor Department will report on weekly jobless claims Wednesday, after a 26-year high of 586,000 initial filings in the week ended Dec. 20.

But the most anticipated economic data will be delivered Friday when investors get a fresh reading on the manufacturing sector. The Institute for Supply Management releases its December survey of purchasing managers.

The index is expected to show a reading of 35.5, down from November's 36.2, according to economists polled by Thomson Reuters. A reading above 50 points to expansion, while a reading below 50 shows a contraction.

There is little in the way of corporate news slated. Though, the final week of the year — when volume is slow and many money managers are on vacation — is often a time when companies slip through lower quarterly forecasts.

Investors were still waiting word if GMAC Financial Services, the financing arm of General Motors Corp., will be eligible for a government bailout. GMAC received the Federal Reserve's approval to become a bank holding company last week, but that was contingent on putting into place a complicated debt-for-equity exchange by 11:59 p.m. EST Friday.

That deadline passed with no word from the company. Analysts have speculated that if GMAC doesn't obtain financial help it would have to file for bankruptcy protection or shut down, which would be a serious blow to parent GM's own chances for survival.

Both General Motors and Chrysler LLC on Monday will receive the first part of the $13.4 billion in emergency loans from the government. Each will receive about $4 billion, then receive the second payment of $5.4 billion on Jan. 16. GM gets a third installment of $4 billion on Feb. 17.

Ford Motor Co. did not participate in the government rescue plan.

IndyMac Bank, one of the most high-profile financial institutions to fail because of the financial crisis, might be close to getting a new owner. The buyers include private equity firms J.C. Flowers & Co. and Dune Capital Management, according to The New York Times, which cited unidentified people close to the matter.

The proposed sale could be announced by Monday morning, the report said.

Meanwhile, Kuwait's government on Sunday scrapped a $17.4 billion joint venture with U.S. petrochemical giant Dow Chemical Co. after criticism from lawmakers that could have led to a political crisis in this small oil-rich state.

The Cabinet, in a statement carried by the state-owned Kuwait News Agency, said the venture, was "very risky" in light of the global financial crisis and low oil prices. Dow Chemical said it was "extremely disappointed" with the Kuwaiti government's decision and was evaluating its options under the joint-venture agreement.

Washington bears guilt for Gaza war crimes

Washington bears guilt for Gaza war crimes

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The Israeli massacre of Palestinians in Gaza is a war crime for which not only the government of Israel but also that of the United States bears full responsibility.

The relentless bombing campaign, which in its first 48 hours has left at least 300 dead and 1,000 wounded, is a deliberate slaughter of innocent civilians and an act of state terror. The toll of casualties, many of them women and children, is certain to rise. As Israeli Defense Forces (IDF) Chief of Staff Lieutenant-General Gabi Ashkenaz put it, "This is only the beginning."

The pretense that this assault is an act of retaliation for the recent scattered rocket attacks that have been carried out against Israeli territory from inside Gaza is preposterous. Israel, with the collaboration of Washington, has been preparing the current bombing campaign and threatened ground assault for months, under the cover of the supposed cease-fire with Gaza's Hamas-led administration.

"These people are nothing but thugs," said White House spokesman Gordon Johndroe, who insisted that Israel was only acting to "defend itself" against "terrorists."

This is the official story that is largely echoed by the mass media and endorsed by the leadership of the Democratic Party.

Few bother to point out that not a single Israeli was killed by the homemade rockets that supposedly justified Israel launching its Gaza bombardments and killing 300 (one Israeli died in a rocket attack afterwards.) Such a disproportionate response is hardly an aberration. During the last eight years, barely a score of Israelis have died in rocket and mortar attacks from Gaza. During the same period, Israeli forces have killed nearly 5,000 Palestinians.

Nor is there much concern over the fact that Israel chose to launch its bombing in the most crowded and desperately poor urban area on the face of the earth precisely at the hour that schoolchildren were making their way home. Under these conditions, ritualistic US statements urging Israel to "avoid civilian casualties" amount to mocking the victims.

Having maligned an entire people as "thugs," the White House has given the green light for a bloodbath. More importantly, it has provided the indispensable resources for carrying out this crime, assuring Israel more than $3 billion a year in US military aid and supplying the IDF with the deadly tools of its trade—F-16 fighter jets, Apache attack helicopters, TOW and Hellfire missiles and the fuel and spare parts needed to keep them in operation.

The dispatches from inside Gaza provide a graphic accounting of what Washington got for its arms and money.

Safa Joudeh, a freelance journalist in Gaza City, writes: "There were piles and piles of bodies in the locations that were hit. As you looked at them you could see that a few of the young men were still alive, someone lifts a hand, and another raises his head. They probably died within moments because their bodies were burned, most had lost limbs, some of their guts were hanging out and they were all lying in pools of blood."

Ewa Jasiewicz reports from Gaza: "We saw a bearded man, on a stretcher on the floor of an intensive care unit, shaking and shaking, involuntarily, legs rigid and thrusting downwards. A spasm coherent with a spinal chord injury. Would he ever walk again or talk again? In another unit, a baby girl, no older than six months, had shrapnel wounds to her face. A relative lifted a blanket to show us her fragile bandaged leg. Her eyes were saucer-wide and she was making stilted, repetitive, squeaking sounds."

The Israeli newspaper Haaretz carried a report from its correspondent on the scene: "Relatives search among the bodies and the wounded in order to bring the dead quickly to burial. A mother whose three school-age children were killed, and are piled one on top of the other in the morgue, screams and then cries, screams again and then is silent."

The New York Times, hardly known for its sympathy for the Palestinians, acknowledged: "Still, there was a shocking quality to Saturday's attacks, which began in broad daylight as police cadets were graduating, women were shopping at the outdoor market, and children were emerging from school.

"The center of Gaza City was a scene of chaotic horror, with rubble everywhere, sirens wailing, and women shrieking as dozens of mutilated bodies were laid out on the pavement and in the lobby of Shifa Hospital so that family members could identify them. The dead included civilians, including several construction workers and at least two children in school uniforms."

This is not self-defense; it is premeditated mass murder. The aim of the "shock and awe" campaign, as the assault on Gaza is widely described in Israel, is similar to that conducted by the US against Iraq—regime change.

Neither the Zionist regime nor Washington accepted the victory of Hamas in the 2006 Palestinian election—hailed by the Bush administration (before the results were known) as part of a flowering of democracy in the Middle East wrought by American militarism.

In response, the US and its Israeli ally did their best to provoke a Palestinian civil war and military coup and, when this proved ineffective in ousting Hamas from power in Gaza, subjected the territory's one-and-a-half million people to relentless collective punishment. They imposed a siege that choked off supplies of food, medicine, potable water and electricity, condemning masses of people to poverty, unemployment, hunger and disease. The present killing represents a qualitative escalation of this merciless policy of making life for the people of Gaza so intolerable that the Hamas regime would fall.

The New York Times Sunday gave a concise analysis of the real relationship between the Israeli blockade and the rocket attacks from Gaza. The siege, it stated, had led to "the near death of the Gazan economy," adding, "While enough food has gone in to avoid starvation, the level of suffering is very high and getting worse every week."

Hamas had entered a cease-fire with Israel in a bid to reopen trade and alleviate this suffering. While the rocket attacks, supposedly Israel's main concern, fell "dramatically in the fall to 15 to 20 a month from hundreds a month," the Times noted, "Israel said it would not permit trade to begin again because the rocket fire had not completely stopped..." It was this intransigence that led to the collapse of the Israeli-Hamas cease-fire.

From the outset, Israeli actions have been motivated not by concerns for security, but rather by political aims. In the first instance, there is the desire to oust the Hamas administration in Gaza. Also in play are the desires of the Zionist establishment and military to offset the humiliation they suffered in Lebanon in 2006.

For Washington, support for and direct complicity in Israeli war crimes is bound up with a wider strategic policy of creating a new order in the Middle East, one designed to assure undisputed US domination of the region and its oil wealth. Israel represents the junior partner in this bloody venture and is allowed to satisfy its aggressive appetites because they are seen as furthering US imperialist interests.

Regime change in Gaza is viewed by US policymakers as a steppingstone to similar changes elsewhere, particularly in Syria and Iran. Indeed, the unfolding events in Gaza foreshadow a broader intervention in the Middle East and the threat of a new war against Iran.

It is not, it must be noted, merely a question of the US and Israel. The assault on Gaza has enjoyed the direct or tacit support of the Arab bourgeois regimes, in the first instance that of Egypt, which has set up machineguns on its border with Gaza to shoot down fleeing Palestinians. The West Bank-based Palestinian Authority of President Mahmoud Abbas has likewise offered justifications for Israel's crimes.

The Bush administration has pursued its policy in the Middle East with relentless violence for the past eight years. There is no indication, however, that it will fundamentally change with the transfer of the White House to President-elect Barack Obama in less than a month.

Obama has maintained a discreet silence on Gaza, while consulting with Secretary of State Condoleezza Rice from his vacation home in Hawaii. His aides have complacently insisted that there is "one president at a time" and it would be inappropriate for the advocate of "change we can believe in" to voice an opinion on the slaughter being carried out with US-supplied warplanes, bombs and missiles.

Elements of the Zionist establishment in Israel have voiced suspicion about Obama's policies, and there have been some suggestions that his approaching January 20 inauguration may have played a role in the timing of the Israeli assault.

It strains credulity, however, that Israel would have carried out its actions without prior consultations not only with the Bush administration, but with the Obama camp as well. Rather than trying to push through its Gaza attack out of fear of a less sympathetic environment in Washington after Obama enters the White House, it is far more likely that the Israeli government was doing Obama a favor by carrying out a crime that he supported before he had to take public responsibility for it.

The reality is that the Democratic president-elect has sworn to maintain US support for Israel and has repeatedly defended Israel's "right to self-defense," including during its criminal war against Lebanon in 2006 and in regard to its repeated attacks on Gaza. He has likewise promised to maintain the US pledge of $30 billion in arms aid to Israel over the next decade.

Those he has chosen as his top aides—the congressman and former Israeli citizen Rahm Emanuel as chief of staff and his former presidential rival Hillary Clinton as secretary of state—are known for having criticized the Bush administration for being insufficiently supportive of Israeli aggression.

During the election campaign last summer, Obama made a trip to the southern Israeli town of Sderot, which had been a target of rocket attacks from Gaza, to provide an explicit justification for the kind of assault now being waged.

"If somebody was sending rockets into my house where my two daughters sleep at night, I'm going to do everything in my power to stop that," Obama said during the visit. "And I would expect Israelis to do the same thing." He uttered not a word of sympathy for the Palestinians and gave no indication of what actions he expected from parents in Gaza who have watched their children torn to pieces by US-supplied bombs and missiles.

Meanwhile, Democratic Speaker of the House Nancy Pelosi issued a statement providing an explicit endorsement of the Israeli bombing campaign. "When Israel is attacked," she said, "the United States must continue to stand strongly with its friend and democratic ally."

The response of Obama and the Democrats to the ongoing atrocity in Gaza represents a stark warning. Far from representing a last gasp of militarist aggression on the part of the lame duck Bush administration, the assault on Gaza is an indication of the shape of things to come.

The coming to office of the new Democratic administration will not spell an end to the crimes associated with US imperialism, but rather their continuation. Driven by the deepest economic crisis since the Great Depression, American militarism will play an ever more prominent role in Washington's desperate struggle against its rivals for the domination of dwindling markets and vital resources.

May We No Longer Be Silent

May We No Longer Be Silent

By Paul Craig Roberts

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The title of my article comes from the sermon of the Episcopal Bishop of Washington DC, John Bryson Chane, delivered on October 5, 2008, at St. Columba Church. The bishop’s eyes were opened to Israel’s persecution of Palestinians by his recent trip to Palestine. In his sermon he called on “politicians seeking the highest office in [our] land” to find the courage to “speak out and condemn violations of human rights and religious freedom denied to Palestinian Christians and Muslims” by the state of Israel.

Bishop Chane’s courage was to no avail. As Justin Raimondo reported (Antiwar.com, 27 December), when America’s new leader of “change” was informed of Israel’s massive air attack on the Gaza Ghetto, an area of 139 square miles where Israel confines 1.4 million Arabs and tightly controls the inflow of all resources--food, medicine, water, energy--America’s president-elect Obama had “no comment.”

According to the Jerusalem Post (26 December), “at 11:30 a.m., more than 50 fighter jets and attack helicopters swept into Gazan airspace and dropped more than 100 bombs on 50 targets. . . . Thirty minutes later, a second wave of 60 jets and helicopters struck at 60 targets . . . More than 170 targets were hit by IAF aircraft throughout the day. At least 230 Gazans were killed and over 780 were wounded . . .”

As I write, news reports are that Israel is sending tanks and infantry reinforcements in preparation for a ground invasion of Gaza.

Israel’s excuse for its violence is that from time to time the Palestinian resistance organization, Hamas, fires off rockets into Israel to protest the ghetto life that Israel imposes on Gazans. The rockets are ineffectual for the most part and seldom claim Israeli casualties. However, the real purpose for the Israeli attack is to destroy Hamas.

In 2006 the US insisted that the Palestinians in Gaza and the West Bank hold free elections. When free elections were held, Hamas won. This was unacceptable to the Americans and Israelis. In the West Bank, the Americans and Israelis imposed a puppet government, but Hamas held on in Gaza. After unheeded warnings to the Gazans to rid themselves of Hamas and accept a puppet government, Israel has decided to destroy the freely elected government with violence.

Ehud Barak, who is overseeing the latest act of Israeli aggression, said in interviews addressed to the British and American publics that asking Israel to agree to a ceasefire with Hamas would be like asking the US to agree to a ceasefire with al Qaeda. The terrorism that Israel inflicts on Palestinians goes unremarked.

According to the London Times (December 28), “Britain and the United States were on a collision course with their European allies last night after refusing to call for an end to Israeli airstrikes on Hamas targets in Gaza. The wave of attacks marked a violent end to President George W. Bush’s sporadic Middle East peace efforts. The White House put the blame squarely on Hamas.” The British government also blamed Hamas.

For the US and UK governments, Israel can do no wrong. Israel doesn’t have to stop withholding food, medicine, water, and energy, but Hamas must stop protesting by firing off rockets. In violation of international law, Israel can drive West Bank Palestinians off their lands and out of their villages and give the stolen properties to “settlers.” Israel can delay Palestinians in need of emergency medical care at checkpoints until their lives ebb away. Israeli snipers can get their jollies murdering Palestinian children.

The Great Moral Anglo-Americans couldn’t care less.

In his 2005 Nobel Lecture, British playwright Harold Pinter held the United States and its British puppet state accountable for “the systematic brutality, the widespread atrocities, the ruthless suppression of independent thought.” Everyone knows that such crimes occurred in the Soviet Union and in its East European empire, but “US crimes in the same period have only been superficially recorded, let alone documented, let alone acknowledged, let alone recognized as crimes at all,” this despite the fact that “the United States’ actions throughout the world made it clear that it had concluded it had carte blanche to do what it liked.”

Soviet crimes, like Nazi ones, are documented in gruesome detail, but America’s crimes “never happened. Nothing ever happened. Even while it was happening it wasn’t happening. It didn’t matter. It was of no interest. The crimes of the United States have been systematic, constant, vicious, remorseless, but very few people have actually talked about them You have to hand it to America. It has exercised a clinical manipulation of power worldwide while masquerading as a force for universal good. It’s a brilliant, even witty, highly successful act of hypnosis.”

America’s is “a scintillating stratagem. Language is actually employed to keep thought at bay. The words ‘the American people’ provide a truly voluptuous cushion of reassurance. You don’t need to think.”

Pinter presents a long list of American crimes and comes to Iraq: “The invasion of Iraq was a bandit act, an act of blatant state terrorism, demonstrating absolute contempt for the concept of international law. The invasion was . . . an act intended to consolidate American military and economic control of the Middle East masquerading--as a last resort--all other justifications having failed to justify themselves--as liberation.” Americans and their British puppets “have brought torture, cluster bombs, depleted uranium, innumerable acts of random murder, misery, degradation and death to the Iraqi people and call it ‘bringing freedom and democracy to the Middle East.”

“How many people do you have to kill before you qualify to be described as a mass murderer and a war criminal?” Pinter’s question can also be asked of Israel. Israel has been in violation of international law since 1967, protected by the United States’ veto of UN Resolutions condemning Israel for its violent, inhumane, barbaric, and illegal acts.

American evangelical Christians, who are degenerating into Zionists, are Israel’s greatest allies. Jesus is forsaken as Christians swallow whole the Israeli lies. A couple of years ago the US Presbyterian Church was so distressed by Israel’s immorality toward Palestinians that the church attempted to disinvest its investment portfolio from assets tainted with Israel. But the Israel Lobby was stronger. The Presbyterian Church was unable to stand up for Christian principles and knuckled under to the Israel Lobby’s pressure.

This is hardly surprising considering that the US government doesn’t stand for Christian principles either.

America’s doctrine of “full spectrum dominance” means that, like Lenin’s dictatorship, America is not bound by law or morality, but by power alone.

Pinter sums it up in a speech he had dreams of writing for President George W. Bush:

“God is good. God is great. God is good. My God is good. Bin Laden’s God is bad. His is a bad God. Saddam’s God was bad, except he didn’t have one. He was a barbarian. We are not barbarians. We don’t chop people’s heads off. We believe in freedom. So does God. I am not a barbarian. I am the democratically elected leader of a freedom-loving democracy. We are a compassionate society. We give compassionate electrocution and compassionate lethal injection. We are a great nation. I am not a dictator. He is. I am not a barbarian. He is. And he is. They all are. I possess moral authority. You see this fist? This is my moral authority. And don’t you forget it.”

If only our ears could hear, this is the speech we have been hearing from Israel for 60 years.

The Federal Reserve Abolition Act

The Federal Reserve Abolition Act

By Stephen Lendman

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On June 15, 2007, Ron Paul introduced HR 2755: Federal Reserve Abolition Act. There were no co-sponsors, no further action was taken, and the legislation was referred to the House Committee on Financial Services and effectively pigeonholed and ignored.

It's a bold and needed measure to "abolish the Board of Governors of the Federal Reserve System and the Federal reserve banks, to repeal the Federal Reserve Act, and for other purposes."

The bill provides for management of employees, assets and liabilities of the Board during a dissolution period, and more as follows:

  • it designates the Director of the Office of Management and Budget to liquidate Fed assets in an orderly and expeditious manner;
  • transfer them to the General Fund of the Treasury after satisfying all claims against the Board and any Federal reserve bank;
  • assume all outstanding Board and member bank liabilities and transfer them to the Secretary of the Treasury; and
  • after an 18-month period, submit a report to Congress "containing a detailed description of the actions taken to implement this Act and any actions or issues relating to such implementation that remain uncompleted or unresolved as of the date of the report."

On November 22, "End the Fed" protests were held in 39 or more cities nationwide (including New York, Chicago, Los Angeles and Washington, DC), but you'd hardly know it for lack of coverage. Attendee demands were simple and emphatic:

  • end a private banking cartel's illegal monopoly control over the nation's money supply and price;
  • return that power to the US Treasury as the Constitution mandates;
  • end a fiat currency system backed by the waning full faith and credit of the government; and
  • return the country to a sound, hard currency monetary system.

"End the Fed! Sound Money for America!" is their slogan, and writer and US policy critic Webster Tarpley puts it well:

"....the privately owned central bank....has been looting and wrecking the US economy for almost a hundred years. We must end a system where unelected, unaccountable cliques of bankers and financiers loyal to names like Morgan, Rockefeller, and Mellon set interest rates and money supply behind closed doors, leading to de-industrialization, mass impoverishment, and a world economic and financial depression of incalculable severity."

In theory, the Fed was established to stabilize the economy, smooth out the business cycle, manage a healthy, sustainable growth rate, and maintain stable prices. In fact, it failed dismally. It contributed to 19 US recessions (including the Great Depression) and significantly to the following equity market declines that accompanied them as measured by the Dow or S & P 500 average - the S &P's inception was 1923; it became the S & P 500 in 1957:

  • 40.1% (Dow) from 1916 - 1917;
  • 46.6% (Dow) from 1919 - 1921;
  • the 1929 (Dow) crash in two stages - 47.9% in 1929 followed by a strong, temporary rebound; then - 86%; an 89% peak to trough total from October 1929 to July 1932;
  • 49.1% (Dow) from 1937 - 1938;
  • 40.4% (Dow) from 1939 - 1942;
  • 25.3% (S & P) from 1946 - 1947;
  • 19.8% (S & P) in 1957;
  • 26.8% (S & P) from 1961 - 1962;
  • 19.3% (S & P) in 1966;
  • 32.7% (S & P) from 1968 - 1970;
  • 45.1% (S & P) from 1973 - 1974;
  • 20.2% (S & P) from 1980 - 1982;
  • 32.9% (S & P) in 1987;
  • 19.2% (S & P) in 1990;
  • 18.8% (S & P) in 1998;
  • 49.1% (S & P) from 2000 - 2002; and
  • about 50% (S & P) and counting (excluding a bear market rebound) from October 2007.

The Fed is also directly responsible for monetary inflation and the decline in the US standard of living since its year end 1913 inception and especially since the 1970s. From the late 18th century to 1913, virtually no inflation existed under the gold standard except during times of war. Using government data, it now takes over $2000 to equal $100 of pre-Fed purchasing power. In other words, a 1913 dollar is worth about a nickel today.

At that time, a dollar was defined as 1/20 of an ounce of gold or about an ounce of silver. The Fed then changed the standard away from precious metals to the full faith and credit of the government. Ever since (except for periods such as the 1930s) inflation eroded the currency's value and (more than ever) continues to do it today.

It's why one analyst calls the dollar "nothing more than a popular symbol for the tangible substances it once represented - gold and silver." Its true value represents the world's waning confidence in America's ability to honor its debt obligations, and with good reason.

Under the Federal Reserve System (besides inflation), we've had rising consumer debt; record budget and trade deficits; a soaring national debt; a high level of personal and business bankruptcies; today, millions of home foreclosures; high unemployment; the loss of the nation's manufacturing base; growing millions in poverty; an unprecedented wealth gap between the rich and all others; and a hugely unstable economy now lurching into crisis mode.

In a November 24 Wall Street Journal op-ed, Hong Kong-based author and equity strategist Christopher Wood believes "The Fed Is Out of Ammunition." With trillions in personal wealth erased, "there is little doubt that we are witnessing a classic debt-deflation bust at work, characterized by falling prices, frozen credit markets and plummeting asset values."

He notes how "over-investment and over-speculation" on borrowed money got us here. Today, the Fed can control the supply of money but not its velocity or the rate it turns over. The current collapse set it in reverse with no signs of an impending turnaround.

Wood believes monetary and fiscal measures won't work. There are no easy solutions - "not as long as politicians and central bankers (won't) let financial institutions fail," and let market forces wash out excesses over time.

The Fed and Treasury will spend trillions of dollars to correct things, "but will merely compound (the problem) by adding debt to debt." The current crisis will end up "discrediting mechanical monetarism - and with it the fiat paper-money system....The catalyst will be foreign creditors fleeing the dollar for gold. That will in turn lead to global recognition of the need for a vastly more disciplined global financial system" with gold very likely playing a part.

Absent a hard money currency has led to the kind of monetary madness that Nouriel Roubini calls "crazy" policy actions - an explosion of quantitative easing in the trillions with no end of it in sight.

Absent a hard money currency has led to the kind of monetary madness that Nouriel Roubini calls "crazy" policy actions - an explosion of quantitative easing in the trillions with no end of it in sight.

Roubini: "The Fed Funds rate has been abandoned...as we are already effectively at (zero interest rates) that signal a liquidity trap....Even (a sharp) fall in mortgage rates....will be of small comfort to debt burdened households as only those (that) qualify for refinancing will be able to" net out a "modest" monthly mortgage saving of about $150.

The Fed's "desperate policy actions....will eventually lead to much higher real interest rates on the public debt and weaken the US dollar (the result of a) tsunami of implicit and explicit public liabilities and monetary debt." It will get foreign investors to "ponder the long-term sustainability of the US domestic and external liabilities," and why not. They keep growing exponentially, and with nothing restraining a runaway Fed, dollar debasing may continue to the point where no one will want to hold them. It's gotten some analysts to recommend moving a portion of savings out of them into gold - the ultimate safe haven in times of crisis.

Abolish the Fed and Return the Nation's Money Creation Power to Congress Where It Belongs

Ron Paul has been in the vanguard of the Abolish the Fed movement, and on September 10, 2002 on the House floor said:

"Since the creation of the Federal Reserve, middle and working-class Americans have been victimized by a boom-and-bust monetary policy. In addition, most Americans have suffered a steadily eroding purchasing power because of the Federal Reserve's inflationary policies. This represents a real, if hidden, tax imposed on the American people...."

"It is time for the Congress to put the interests of the American people ahead of the special interests. Abolishing the Federal Reserve will allow Congress to reassert its constitutional authority over monetary policy."

"Abolishing the Federal Reserve and returning to a constitutional system (as mandated) will enable America to return to the type of monetary system envisioned by our nation's founders: one where the value of money is consistent because it is tied to a commodity such as gold....I urge my colleagues (to co-sponsor) my legislation to abolish the Federal Reserve."

Paul introduced his legislation in the 106th, 107th, 108th, and 110th Congresses. Each time, it died in committee. On November 22, he attended the End the Fed rally in Houston and addressed the crowd.

He called the current economic crisis as bad or worse than in the 1930s and said: "we know who caused it. It was the Federal Reserve that gave us all this trouble." He explained that we had a "free ride for decades because we've had a system that was devised where the dollar could act as if it were gold."

Not after August 1971 when Nixon closed the gold window, ended the 1944 Bretton Woods Agreement, and no longer let dollars be backed by gold or converted into it in international markets. A "new economic system" was created. It let us "spend beyond our means, live beyond our means, print money beyond our means," and it caused our current dilemma.

We created "an appearance of great wealth. But it was doomed to fail," and it became apparent in the past year: "the failure of the dollar reserve standard that was set up in August of 1971. It has ended. The only question" is what will replace it?

There's all kinds of talk, including setting up a new international fiat currency "with the loss of US sovereignty in total. We have to stop this move towards one world government and a one world currency." Otherwise our freedom and Constitution will be lost. When it was written, it contained prohibitions.

Article I, Section 8 gives Congress alone the right to coin (create) money and regulate the value thereof. The founders also wanted gold and silver to be legal tender, not fiat money, nor should there be a central bank. In 1935, the Supreme Court ruled that Congress cannot constitutionally delegate this power to another body. By creating the Federal Reserve System in 1913, Congress violated the Constitution it was sworn to uphold and defrauded the American public. Today's crisis is the fruit of its action, but watch out.

"The writing is on the wall, and the end of this system" approaches. "They cannot patch it up, they can't up it back together again. They know it and we know it. The only argument is what is it going to be replaced with?"

For now, "Central banks in the West especially have been dumping gold to artificially lower (its price) to pretend the dollar is of great value. They're still doing it, but they're running out of time (and) out of gold." It's shifting to stronger economic powers, ones who've been saving money, loaning it back to us, "and are ready to buy up America if we continue to do this. So it is a contest (between fiat) money and hard money, and that is such an important issue." It reflects what Daniel Webster once said:

"There can be no legal tender in this country....but gold and silver. This is a constitutional principle....of the very highest importance." Gold, however, wasn't the original monetary system standard. Silver was, the silver dollar, and only a constitutional amendment can change it.

Paper currency as well, whether backed by gold or not, wasn't the hard money authorized by the Constitution. Honest money is honest weights and measures of silver and gold. Federal Reserve Notes are paper fiat debt obligations. Fiat currency of any kind is a mechanism of wealth transference from the public to a privileged elite - through inflation and loss of purchasing power. It creates debt for the many and wealth for the few, especially when a private banking cartel controls it.

Our existing monetary system combines money, credit and debt into a dishonest system of empty promises in exchange for future ones. There is no eventual payment, only unfulfillable assurances to new generations that will be forced to pay for the debt now accumulated. It's a moneychangers dream - ever-expanding debt and a continuing interest rate stream, masquerading as wealth creation for the people. It's in fact a system of bondage and indebtedness benefitting the few at the expense of the many, a modern-day feudalism. It's how an elite 1% got to own 70% of the nation's wealth.

In the 1920s, Josiah Stamp, Bank of England president said:

"Banking was conceived in iniquity and was born in sin. Bankers own the earth. Take it away from them, but leave them the power to create deposits, and with a flick of the pen (today a computer keyboard) they will create enough deposits to buy it back again. However, take it away from them, and all the great fortunes like mine will disappear, and they ought to disappear, for this would be a happier and better world to live in. But if you wish to remain the slaves of Bankers and pay the cost of your own slavery, let them continue to create deposits."

Creating the Federal Reserve System to let bankers and not the government control the price and amount of fiat money debased the currency and is the root cause of today's financial problems. A return to honest gold and silver weights and measures is needed. The Constitution states that nothing but these metals are money and that paper bills of credit (like Federal Reserve notes) aren't allowed. Even ones backed by gold as the Constitution doesn't grant Congress the power to be bankers. It may only coin (create) and borrow money, not loan it out or give it away - and certainly not to bankers at the expense of the public interest.

Further, the Constitution contains no provision allowing Congress to enact legal tender laws. Article I, Section 10 forbids the individual states from making "anything but gold and silver coin a legal tender in payment of debts." However, US Code, 31 USC 5103, establishes US coins and currency, including Federal Reserve notes, as legal tender and has been used to debase the currency ever since - the way Gresham's Law works: bad (or debased) money drives out good (the kind with little difference between its nominal and commodity values).

For example, until 1964, US coins (except pennies and nickels) contained 90% silver. Starting in 1965, dimes and quarters were converted to their current nickel - copper composition. Half-dollars (now produced in limited quantities) had 90% silver. It then dropped to 40% in 1965 and by 1971 all US coins (except pennies and commemorative mintings) contained nickel and copper and no silver - a good example of debasing. As for paper currency, it's just paper.

Under a private banking cartel's control, it's been misused, stolen, and corrupted the way New York Times columnist Floyd Norris suggests in his November 24 article headlined: "Another Crisis, Another Guarantee." First the banks, then the auto companies, and who knows who's next in line for theirs. "As the nation's obligations rise into the trillions, at some point investors (and the public) may begin to question whether a government running huge deficits can also credibly promise that the dollar will not lose its value." How can there be any faith and credit left when it's vanishing and the Fed and Treasury operate like giant hedge funds.

It got UK-based Eclectica Asset Management chief investment officer, Hugh Hendry, concerned enough to say: "All (US) financials will be owned by the government in a year. I bet you. It's not good," but it's coming. US taxpayers will be "paying for this for a long time," and it's deeply concerning considering the amount of money creation - with no end in sight as problems keep mounting and limitless amounts keep being thrown at them.

On November 25 the Financial Times associate editor, Wolfgang Munchau, also worries about the Fed's "weapon of mass desperation" (so-called quantitative easing); focusing only on deflation and risking a currency crisis. He calls it a flawed, dangerous and shocking oversight - the possibility of "a mass flight out of dollar assets (at some point) and a large rise in US market interest rates, followed by a huge recession."

A Bloomberg.com November 24 headline highlights the problem: "US Pledges Top $7.7 trillion to Ease Frozen Credit," and it might as well have said there's plenty more where that came from if needed. With another $800 committed to two new loan programs the total reached $8.5 trillion, according to Bloomberg or nearly 60% of US 2007 GDP of $14 trillion, and the numbers keep rising exponentially because the problems continue to mount.

Bloomberg puts it in perspective saying "the (current) commitment dwarfs (TARP and puts) Federal Reserve lending last week (at) 1900 times the weekly average for the three years before the crisis," and with the added $800 billion it's about 2100 times pre-crisis levels.

In addition, the Fed refuses to identify recipients of about $2 trillion of emergency handouts or what troubled assets (if any) it's accepting as collateral. Call it lending or spending. They're public tax dollars being spread around like confetti and debasing it all as a result.

The Free Lakota Bank

On November 21, this writer discussed how Lakotahs are treated in an article titled "Fate of Lakotahs Highlights America's Failed Native American Policies." On November 24, the following press release and follow-up information announced:

"People of Lakota Launch Private Bank for Only Silver and Gold Currencies." All deposits are "liquid, meaning they can be withdrawn at any time in minted rounds. Some may confuse our economic system with isolationism....which it is not. Since we currently produce much more than we consume, we have the right to decide what medium of exchange to accept for our effort. And so we accept only value for value. Across our great land, over thousands of tribes and merchants participate in our system of trade. We invite others to trade with us and bring value back into our transactions."

This is the world's first non-reserve, non-fractional bank that accepts only silver and gold currencies for deposit. The Lakotas "invite people of any creed, faith or heritage to unite in an effort to reclaim control of wealth. It is our hope that other tribal nations and American citizens recognize the importance of silver and gold as currency and decide to mirror our system of honest trade."

The bank states that it issues, circulates and accepts for deposit "only AOCS - Approved silver and gold currencies." It calls paper not real money but "merely a promise to pay - a mortgage on wealth that does not exist, backed by a gun aimed at those who are expected to produce it. Since we deal only in real money, we do not participate in any central bank looting schemes." When corruption is rewarded and "honesty becom(es) self-sacrifice....you may know that your society is doomed." Even as victims of adversity, Lakotas are working to prevent it.

End the Fed

Privatized money control is the single greatest threat to democratic freedom. As former lawyer, economist, academic, and Canadian prime minister (from 1935 - 1948) William Lyon Mackenzie King once said:

"Until the control of the issue of currency and credit is restored to government and recognized as its most conspicuous and sacred responsibility, all talk of sovereignty of Parliament and of democracy is idle and futile....Once a nation parts with control of its credit, it matters not who makes (its) laws....Usury once in control will wreck any nation," and indeed it has, far more now than ever.

It worried Thomas Jefferson enough to call banking institutions "more dangerous to our liberties than standing armies" at a much simpler time in our history. The right to create and control money belongs to the people through their elected representatives. For the past 95 years, powerful bankers accountable to no one have had it. They effectively run the country (and own it), and unless We the People change things, we'll continue to be victimized by economic tyranny and the eventual political kind that's coming.

Holiday sales are shaping up to be the worst in 40 years

Holiday Sales Drop to Force Bankruptcies, Closings

By Heather Burke

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U.S. retailers face a wave of store closings, bankruptcies and takeovers starting next month as holiday sales are shaping up to be the worst in 40 years.

Retailers will close 12,000 stores in 2009, according to Howard Davidowitz, chairman of retail consulting and investment- banking firm Davidowitz & Associates Inc. in New York. AnnTaylor Stores Corp.,Sears Holdings Corp. are among chains shuttering underperforming locations. Talbots Inc. and

More than a dozen retailers, including Circuit City Stores Inc., Linens ‘n Things Inc., Sharper Image Corp. and Steve & Barry’s LLC, have sought bankruptcy protection this year as the credit squeeze and recession drained sales. Investors will start seeing a wide variety of chains seeking bankruptcy protection in February when they file financial reports, said Burt Flickinger.

“You’ll see department stores, specialty stores, discount stores, grocery stores, drugstores, major chains either multi- regionally or nationally go out,” Flickinger, managing director of Strategic Resource Group, a retail-industry consulting firm in New York, said today in a Bloomberg Radio interview. “There are a number that are real causes for concern.”

Sales at stores open at least a year probably dropped as much as 2 percent in November and December, the International Council of Shopping Centers said last week, more than the previously projected 1 percent decline. That would be the largest drop since at least 1969, when the New York-based trade group started tracking data. Gap Inc. and Macy’s Inc. are among retailers that will report December results on Jan. 8.

Women’s Clothing, Electronics

Consumers spent at least 20 percent less on women’s clothing, electronics and jewelry during November and December, according to data from SpendingPulse.

Retail Metrics Inc.’s December comparable-store sales index will drop an estimated 1.2 percent, or 5 percent excluding Wal- Mart Stores Inc. Retailers’ fourth-quarter earnings may fall 19 percent on average, the seventh consecutive quarterly decline, according to Ken Perkins, president of Retail Metrics, a Swampscott, Massachusetts-based consulting firm.

Probably 50,000 stores could close without any effect on consumer choice, Gregory Segall, a managing partner at buyout firm Versa Capital Management Inc., said this month during a panel discussion held at Bloomberg LP’s New York offices. Only retailers with healthy balance sheets will survive the recession, according to Matthew Katz, a managing director at consulting firm AlixPartners LLP.

Store Closings

About 200,000 stores may close in 2009, compared with a record 160,000 in 2008, Flickinger said.

The U.S. economy shrank in the third quarter at a 0.5 percent annual pace, the worst since 2001, according to the Commerce Department. Economists surveyed by Bloomberg in the first week of December forecast the world’s largest economy will contract through the first half of 2009.

The Standard & Poor’s 500 Retailing Index shed 34 percent this year before today, with only two of its 27 companies rising.

The index doesn’t include Wal-Mart, the world’s largest retailer, which fell 21 cents to $55.14 at 9:58 a.m. in New York Stock Exchange composite trading. Wal-Mart shares gained 16 percent this year through Dec. 26.

“If you’re going to be in retail right now, the discount space is where you want to be,” Patrick McKeever, a senior equity analyst at MKM Partners LLC, said today in a Bloomberg Television interview.

Discount Advantage

Discounts of 70 percent off or more by Macy’s, AnnTaylor Stores Inc. and other retailers failed to prevent a spending drop of as much as 4 percent during the final two months of the year, according to data from SpendingPulse. Consumers are trained for sales, according to Patti Freeman Evans, an analyst at Jupiter Research in New York.

“The situation is not going to right itself in January; it’s going to be a long while that discounting’s going to be around,” said Evans. “Consumers are going to get used to it and it’s going to very difficult for retailers to move forward in a full-price mode.”

Retail bankruptcies may help the industry in the long run, according to Flickinger.

“We’ll be going from a Dickens-esque worst of times this December to the best of times in future Decembers because we’ll rationalize out all the redundant retailers and retail space in shopping centers,” Flickinger said.

A First Hand Account of the TVA Coal Ash Disaster in Kingston, TN

A First Hand Account of the TVA Coal Ash Disaster in Kingston, TN

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This is a monumental and unprecedented environmental catastrophe. The TVA (Tennessee Valley Authority) disaster is now estimated at 5.3 million cubic yards of coal ash, or almost twice as large as the 2.8 million cubic yards generated by the World Trade Center collapse.

The most comprehensive aerial video of the spill is here:

This spill is affecting two tributaries of the Tennessee River. The Tennessee is a major river system and a drinking water source for millions of people downstream in Chattanooga, plus Alabama, west Tennessee and Kentucky. Coal ash is the waste material captured after the coal is burned for electricity - burning coal generates about half of America's electricity and according to Rolling Stone Contributing Editor Jeff Goodell, there is three times as much coal ash as municipal solid waste generated in America every year. ( "Big Coal," Jeff Goodell page 123). About 130 million tons of coal ash and power plant scrubber sludge are generated annually.

Coal ash contains heavy metals like mercury, arsenic, and lead. An article in Scientific American magazine dated Dec 13, 2007 states that coal ash is more radioactive than nuclear waste.

In response to an urgent request from environmental activists, I brought water testing equipment to members of United Mountain Defense
working at the spill site. UMD has set up an emergency crisis management center in Kingston, TN to coordinate the citizen response to the disaster and handle the media onslaught. On Saturday Dec 27, a flotilla of citizen water testers in kayaks, including members of UMD and Waterkeeper Alliance, toured the spill site, navigating among huge chunks of coal ash, which they refer to as "ashbergs." "We named the highest peak Mt. Ash," said Matt Landon, UMD volunteer staff person.

TVA - which refers to the disaster as an "ash slide" on their website www.tva.gov - is telling the public not to worry, the water is safe, the coal ash is inert. The TVA website says "The public may call (865) 717-4006" - but no one answers that phone and it will not accept messages because the mailbox is full (Monday morning 9:27 AM EST).

The Knoxville News Sentinel (Monday, Dec 29) states "the U.S. Environmental Protection Agency reported that "very high" levels of arsenic were found in a water sample collected from the affected area and that several heavy metals have also been found in quantities "slightly above drinking water standards." (ref: http://www.knoxnews.com/news/2008/dec/29/tva-not-holding-its-head-high/ )

Officials with TVA and EPA have already lost some credibility with the local residents.

On Dec 23, the day after the spill, the Tennessean first reported that the size of the spill was 2.6 million cubic yards. The following day TVA said that the entire intact mountain of coal ash mountain was actually 2.6 million cubic yards, and that about two-thirds (or roughly 1.8 million cubic yards) had broken through the earthen embankment. Now TVA is saying that 5.3 million cubic yards of their coal ash mountain collapsed into the water. There are 200 gallons in a cubic yard, so that equates to about 1.06 billion gallons -- almost 100 times the size of the Exxon Valdez spill of 11 million gallons in 1989.

We tried to drive back to the spill site but TVA officials sent us to a media corral to sit and wait. We tried various tactics to get past TVA security, including offering to give a ride to some local residents walking home carrying heavy bags of groceries - but no luck. TVA made them walk back to their coal-ash-covered homes.

After 20 minutes of waiting, we left the media corral and drove around on back roads to try and access the spill scene. We found a great photo op at a roadside pulloff: a local Kingston resident had tacked a homemade cardboard sign reading "CLEAN COAL?" to a tree.
2008-12-29-cleancoal.jpg

When we tried to take pictures of the sign, we were quickly accosted by an agitated TVA official wearing agreen vest, who demanded we leave immediately. We drove on to the next checkpoint, where we were detained for almost an hour. The TVA official called TVA police and demanded that we be arrested. Fortunately the local ABC News affiliate (Channel 6) was there to capture the whole scene of our detention, and we were eventually allowed to leave.

TVA personnel appear to be under great strain, which is understandable -- but in my opinion they over-reacted. All we were doing was taking photos.

I worked on the Martin County Kentucky coal slurry spill in 2000, when the accident-prone coal company Massey Energy dumped 300 million gallons of thick black coal slurry into two streams, Coldwater Creek and Wolf Creek in eastern Kentucky.

In that case, the local Martin County officials kept the media out by blockading the public roads for "public safety." The story was effectively squelched and most people in America never heard how bad it was. I helped to publicize that disaster, but it occurred before the age of bloggers, independent media, and videos on line. Thanks to an army of cyber-activists, America is now well aware of what has happened at the TVA plant in Kingston.

It's hard to comprehend the enormous size of this spill. TVA's coal ash mountain was stacked over 50 feet high -- as high as a 5 story building.

If a dump truck can hold 20 cubic yards of dirt and ash, it will take 265,000 truck loads to haul away all the ash (they are taking it back to the power plant). If they fill one dump truck trip every 5 minutes and work 24 hours a day, 7 days a week, it will take about 2.5 years to clean up the spill. TVA has been telling the media it will be cleaned up in about 6 weeks - this is a ludicrous claim.

There is an emergency meeting of the Kingston City Council on Sunday at 4:30, open to the public. The City of Kingston will begin the process of formulating its official reaction and response to the massive TVA fly ash spill. Everyone who wishes to speak or comment will have the opportunity to speak at the public meeting.

The Kingston Community Center is located at 201 Patton Ferry Rd, Kingston, TN‎ -- phone (865) 376-9476‎.

Energy dispute over Rockies riches

Energy dispute over Rockies riches

A trove of oil shale may be a boon. But the science to extract fuel is imperfect, and locals worry about their water supplies, which ultimately feed Southern California reservoirs.

By Julie Cart

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A titanic battle between the West's two traditional power brokers -- Big Oil and Big Water -- has begun.

At stake is one of the largest oil reserves in the world, a vast cache trapped beneath the Rocky Mountains containing an estimated 800 billion barrels -- about three times the reserves of Saudi Arabia.

Extracting oil from rocky seams of underground shale is not only expensive, but also requires massive amounts of water, a precious resource crucial to continued development in the nation's fastest-growing region.

The conflict between oil and water interests has now come to a head. On Oct. 31, Congress allowed a moratorium on oil shale leasing to expire. That paved the way for the Bush administration to finalize leasing rules last month that opened 2 million acres of federal land to exploration.

Oil companies say that at a time of increasing foreign oil dependence, it would be unconscionable to forgo exploiting oil shale's potential.

"Considering the magnitude of this resource -- it is so huge relative to other hydrocarbon resources around the world -- it merits taking a look at trying any method we can, safely and responsibly, to get at it," said Tracy C. Boyd, communications and sustainability manager for Shell Oil Co.

Oil shale companies acknowledge that the technology required to superheat shale to extract oil is unproven. They also acknowledge that they are uncertain how much water would be needed in the process, although some experts calculate it would take 10 barrels of water to get one barrel of oil from shale.

That water-to-oil equation has inflamed officials in the upper Rockies, who are raising the alarm about the cumulative effect of energy projects on the region's water supplies, which ultimately feed Southern California reservoirs via the Colorado River.

"There are estimates that oil shale could use all of the remaining water in upper Colorado River Basin," said Susan Daggett, a commissioner on the Denver Water Board. "That essentially pits oil shale against people's needs."

Even with the precipitous drop in oil prices and the staggering start-up costs and risks associated with oil shale exploration, oil companies are rushing ahead.

"As long as we continue to be a nation that is hooked on liquid fuel," said Boyd, "we need to look at anything we can do to tap the sources of energy in this country."

Prospectors have known about the oil shale deposits in the Rockies for more than a century, but the technology to extract it has remained imperfect, expensive and polluting.

A variety of experimental methods have been developed. Although details are closely held, the broad outlines are similar.

Shell has the most mature technology, which it has been experimenting with at its Mahogany test site, near Rifle, Colo. Tucked into a rolling landscape of empty range land, the company has sunk heaters half a mile into oil shale seams and subjected the rock to 700-degree temperatures. Over weeks or even months, a liquid known as kerogen is produced, which can be refined into diesel and jet fuel.

To prevent the brewing hydrocarbons from spoiling groundwater, the heated rock core is surrounded by 20-to-30-foot-thick impermeable ice walls, frozen by electric refrigeration units.

Other companies' methods are more akin to open pit mining, in which millions of tons of rock are excavated and then fed into a massive above-ground cooker.

All of the processes require prodigious amounts of water, either for the electrical plants needed for heating and freezing or for the web of industrial facilities needed to extract the oil.

But for all the years of research into oil shale extraction, there is little hard information on exactly how much water would be drained from the region.

In its recent environmental review of proposed oil shale projects, the federal Bureau of Land Management, which oversees energy leasing on public lands, was unable to estimate the industry's region-wide water use.

Mike Vanden Berg, the Utah Geological Survey's principal researcher for oil shale projects, said, "I still don't know how much water is used. . . . No one does."

Meanwhile, already- parched Western states bracing for more growth are completing water supply inventories. A Colorado study projected that by 2050, with the state's oil shale operations at full capacity, the industry will require 14 times more power than currently generated by the state's largest power plant.

The study's sobering bottom line is that meeting oil shale's energy demands could require more water than Colorado is entitled to under an interstate compact.

"Can groundwater be protected?" asked Harris Sherman, executive director of the Colorado Department of Natural Resources. "Areas where this technology will be used are all tributaries for the headwaters for all of the seven Colorado Basin states."

Despite the objections, oil shale development has been pushed forward by a series of recent actions. In an effort to encourage the fledgling industry, officials said, new regulations allow oil shale operators to pay unusually low royalty rates. The system calls for producers to pay 5% for the first five years, increasing 1% each year until reaching 12.5%, the standard federal oil and gas royalty rate.

In recent weeks, the industry was included in the $700-billion government bailout package with investment and tax incentives to help oil shale producers build refineries and other expensive infrastructure.

Though the region's elected officials support efforts to discover new sources of domestic oil, they say that with so many unanswered water questions, public land managers should be slowing the pace of development, not speeding it up.

The governors of Colorado and Wyoming have expressed concerns about the venture's effect on water in their states.

Not so, Utah. The state contains the least-rich shale deposit but is the most enthusiastic booster of the unconventional oil source. Gov. Jon Huntsman Jr. recently declared Utah "open for business as it relates to oil shale."

The renewed push for oil shale development comes at a time when conventional energy companies are being blamed for squandering and fouling water across the West.

Wyoming and Montana are squabbling over water quality concerns about coal-bed methane drilling. Colorado and New Mexico towns have discovered benzene and other dangerous chemicals in their wells, with energy projects the suspected culprits.

Ranchers in the region say their crops and livestock suffer as oil and gas production drains underground aquifers. Sportsmen complain that rivers and streams are being compromised by the energy industry.

The Environmental Protection Agency, in official comments to the Bureau of Land Management, expressed concerns about the possibility that oil shale production would deposit "salts, selenium, arsenic, and polynuclear aromatic hydrocarbons in groundwater."

Craig Thompson found many of the same compounds when he studied groundwater pollution from an abandoned oil shale project in western Wyoming that began during the last oil shale boom, in the 1970s. Despite 30 years of cleanup efforts, he said, the aquifer is still not free of chemicals.

"Development of oil shale is a groundwater nightmare," said Thompson, a chemist. "Oil shale serves as the floor for the aquifer. When you heat up the aquifer, it dissolves nasty stuff like fluoride and arsenic and selenium and cyanide . . . the list goes on."

For now, with the support of Congress and the Bush administration, oil companies appear to have the upper hand.

That might change with President-elect Barack Obama's selection this month of Colorado Sen. Ken Salazar, a former water lawyer, to head the Department of Interior.

Salazar, a Democrat, has criticized the breakneck speed at which oil shale efforts are advancing.

"Over and over again the administration has admitted that it has no idea how much of Colorado's water supply would be required to develop oil shale on a commercial scale, no idea where the power would come from and no idea whether the technology is even viable," Salazar said last month.

But as long as the demand for fuel remains high, the dream of squeezing oil from rock will probably persist.

"Oil shale is the last refuge of the hydrocarbon pioneers," Thompson said. "It's always been that last refuge because it's such a poor excuse for a fuel. Here's a commodity that's been developing for 100 years, and we still don't know anything about it."

Child maid trafficking spreads from Africa to US

Child maid trafficking spreads from Africa to US

Late at night, the neighbors saw a little girl at the kitchen sink of the house next door.

They watched through their window as the child rinsed plates under the open faucet. She wasn't much taller than the counter and the soapy water swallowed her slender arms. To put the dishes away, she climbed on a chair.

But she was not the daughter of the couple next door doing chores. She was their maid.

Shyima was 10 when a wealthy Egyptian couple brought her from a poor village in northern Egypt to work in their California home. She awoke before dawn and often worked past midnight to iron their clothes, mop the marble floors and dust the family's crystal. She earned $45 a month working up to 20 hours a day. She had no breaks during the day and no days off.

The trafficking of children for domestic labor in the U.S. is an extension of an illegal but common practice in Africa. Families in remote villages send their daughters to work in cities for extra money and the opportunity to escape a dead-end life. Some girls work for free on the understanding that they will at least be better fed in the home of their employer.

The custom has led to the spread of trafficking, as well-to-do Africans accustomed to employing children immigrate to the U.S. Around one-third of the estimated 10,000 forced laborers in the United States are servants trapped behind the curtains of suburban homes, according to a study by the National Human Rights Center at the University of California at Berkeley and Free the Slaves, a nonprofit group. No one can say how many are children, especially since their work can so easily be masked as chores.

Once behind the walls of gated communities like this one, these children never go to school. Unbeknownst to their neighbors, they live as modern-day slaves, just like Shyima, whose story is pieced together through court records, police transcripts and interviews.

"I'd look down and see her at 10, 11 — even 12 — at night," said Shyima's neighbor at the time, Tina Font. "She'd be doing the dishes. We didn't put two and two together."

___

Shyima cried when she found out she was going to America in 2000. Her father, a bricklayer, had fallen ill a few years earlier, so her mother found a maid recruiter, signed a contract effectively leasing her daughter to the couple for 10 years and told Shyima to be strong.

For a year, Shyima, 9, worked in the Cairo apartment owned by Amal Motelib and Nasser Ibrahim. Every month, Shyima's mother came to pick up her salary.

Tens of thousands of children in Africa, some as young as 3, are recruited every year to work as domestic servants. They are on call 24 hours a day and are often beaten if they make a mistake. Children are in demand because they earn less than adults and are less likely to complain. In just one city — Casablanca — a 2001 survey by the Moroccan government found more than 15,000 girls under 15 working as maids.

The U.S. State Department found that over the past year, children have been trafficked to work as servants in at least 33 of Africa's 53 countries. Children from at least 10 African countries were sent as maids to the U.S. and Europe. But the problem is so well hidden that authorities — including the U.N., Interpol and the State Department — have no idea how many child maids now work in the West.

"In most homes, these girls are not allowed to use so much as the same spoon as the rest of the family," said Hany Helal, the Cairo-based director of the Egyptian Organization for Child Rights.

By the time the Ibrahims decided to leave, Shyima's family had taken several loans from them for medical bills. The Ibrahims said they could only be repaid by sending Shyima to work for them in the U.S. A friend posed as her father, and the U.S. embassy in Cairo issued her a six-month tourist visa.

She arrived at Los Angeles International Airport on Aug. 3, 2000, according to court documents. The family brought her back to their spacious five-bedroom, two-story home, decorated in the style of a Tuscan villa with a fountain of two angels spouting water through a conch. She was told to sleep in the garage.

It had no windows and was neither heated nor air-conditioned. Soon after she arrived, the garage's only light bulb went out. The Ibrahims didn't replace it. From then on, Shyima lived in the dark.

She was told to call them Madame Amal and Hajj Nasser, terms of respect. They called her "shaghala," or servant. Their five children called her "stupid."

While the family slept, she ironed the school outfits of the Ibrahims' 5-year-old twin sons. She woke them, combed their hair, dressed them and made them breakfast. Then she ironed clothes and fixed breakfast for the three girls, including Heba, who at 10 was the same age as the family's servant.

Neither Ibrahim nor his wife worked, and they slept late. When they awoke, they yelled for her to make tea.

While they ate breakfast watching TV, she cleaned the palatial house. She vacuumed each bedroom, made the beds, dusted the shelves, wiped the windows, washed the dishes and did the laundry.

Her employers were not satisfied, she said. "Nothing was ever clean enough for her. She would come in and say, 'This is dirty,' or 'You didn't do this right,' or 'You ruined the food,'" said Shyima.

She started wetting her bed. Her sheets stank. So did her oversized T-shirt and the other hand-me-downs she wore.

While doing the family's laundry, she slipped her own clothes into the load. Madame slapped her. "She told me my clothes were dirtier than theirs. That I wasn't allowed to clean mine there," she said.

She washed her clothes in a bucket in the garage. She hung them to dry outside, next to the trash cans.

When the couple went out, she waited until she heard the car pull away and then she sat down. She sat with her back straight because she was afraid her clothes would dirty the upholstery.

It never occurred to her to run away.

"I thought this was normal," she said.

___

If you could fly the garage where Shyima slept 7,000 miles to the sandy alleyway where her Egyptian family now lives, it would pass for the best home in the neighborhood.

The garage's walls are made of concrete instead of hand-patted bricks. Its roof doesn't leak. Its door shuts all the way. Shyima's mother and her 10 brothers and sisters live in a two-bedroom house with uneven walls and a flaking ceiling. None of them have ever had a bed to themselves, much less a whole room. At night, bodies cover the sagging couches.

Shown a snapshot of the windowless garage, Shyima's mother in the coastal town of Agami made a clucking sound of approval.

"It's much cleaner than where many people here sleep," said Helal, the child rights advocate. He explains that Shyima's treatment in the Ibrahim home is considered normal — even good — by Egyptian standards.

Even though many child maids are physically abused, child labor is rarely prosecuted because the work isn't considered strenuous. Many employers even see themselves as benefactors.

"There is a sense that children should work to help their family, but also that they are being given an opportunity," said Mark Lagon, the director of the U.S. State Department's Office to Monitor and Combat Trafficking in Persons.

That's especially the case for well-off families who transport their child servants to Western countries.

In 2006, a U.S. district court in Michigan sentenced a Cameroonian man to 17 years in prison for bringing a 14-year-old girl from his country to work as his unpaid maid. That same year, a Moroccan couple was sentenced to home confinement for forcing their 12-year-old Moroccan niece to work grueling hours caring for their baby.

In Germantown, Md., a Nigerian couple used their daughter's passport to bring in a 14-year-old Nigerian girl as their maid. She worked for them for five years before escaping in 2001. In Germany, France, the Netherlands and England, African immigrants have been arrested for forcing children from their home countries to work as their servants.

In several of these cases, the employers argued that they took the children with the parents' permission. The Cameroonian girl's mother flew to Detroit to testify in court against her daughter, saying the girl was ungrateful for the good life her employers had provided her.

Shyima's mother, Salwa Mahmoud, said her father believed she would have better opportunities in America.

"I didn't want her to travel but our family's condition dictated that she had to go," explained Mahmoud, a squat, round-faced woman with calloused hands and feet. She is missing two front teeth because she couldn't afford a dentist.

"If she had stayed here in Egypt, she would have been ordinary," said Awatef, Shyima's older sister. "Just like us."

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On April 3, 2002, an anonymous caller phoned the California Department of Social Services to report that a young girl was living inside the garage of 28 Pacific Grove.

A few days later, Nasser Ibrahim opened the door to a detective from the Irvine Police Department. Asked if any children lived there beside his own, he first said no, then yes — "a distant relative." He said he had "not yet" enrolled her in school. She did "chores — just like the other kids," according to the police transcript.

Shyima was upstairs cleaning when Ibrahim came to get her. "He told me that I was not allowed to say anything," said Shyima. "That if I said anything I would never see my parents again."

When police searched the house, they turned up several home videos showing Shyima at work. They seized the contract signed by Shyima's illiterate parents.

Asked by police if anyone other than his immediate family lived in the house, Eid, one of the twins, said: "Hummm ... Yeah ... Her name is Shyima," according to the transcript. "She uh ... She works — she works for us at the house, like, she cleans up the dishes and stuff like that."

Twelve-year-old Heba got flustered: "Yeah. She's uh — my — uh — How do I say this? Uh ... My dad's ... Oh, wait, like ... She's like my cousin, but — She's my dad's daughter's friend. Oops! The other way. Okay, I'm confused."

Heba eventually admitted that Shyima had lived with the family for three years in Egypt and in California.

The police put Shyima in a squad car. They noted her hands were red and caked with dead, hard-looking skin.

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For months Shyima lied to investigators, saying what the Ibrahims had told her to say.

She went without sleep for days at a stretch. She was put on four different types of medication. She moved from foster home to foster home. Her mood swings alarmed her guardians. In school for the first time, she struggled to learn to read.

Investigators arranged for her to speak to her parents. She told them she felt like a "nobody" working for the Ibrahims and wanted to come home. Her father yelled at her.

"They kept telling me that they're good people," Shyima recounted in a recent interview. "That it's my fault. That because of what I did my mom was going to have a heart attack."

Three years ago, she broke off contact with her family. Since then she has refused to speak Arabic. She can no longer communicate in her mother tongue.

During the 2006 trial, the Ibrahims described Shyima as part of their family. They included proof of a trip she took with the family to Disneyland. Shyima's lawyer pointed out that the 10-year-old wasn't allowed on the rides — she was there to carry the bags.

The couple's lawyers collected photographs of the home where Shyima grew up, including close-ups of the feces-stained squat toilet and of Shyima's sisters washing clothes in a bucket.

In her final plea, Madame Amal told the judge it would be unfair to separate her from her children. Enraged, Shyima, then 17, told the court she hadn't seen her family in years.

"Where was their loving when it came to me? Wasn't I a human being too? I felt like I was nothing when I was with them," she sobbed.

The couple pleaded guilty to all charges, including forced labor and slavery. They were ordered to pay $76,000, the amount Shyima would have earned at the minimum wage. The sentence: Three years in federal prison for Ibrahim, 22 months for his wife, and then deportation for both. Their lawyers declined to comment for this story.

"I don't think that there is any other term you could use than modern-day slavery," said Bob Schoch, the special agent in charge for Immigration and Customs Enforcement in Los Angeles, in describing Shyima's situation.

Shyima was adopted last year by Chuck and Jenny Hall of Beaumont, Calif. The family lives near Disneyland, where they have taken her a half-dozen times. She graduated from high school this summer after retaking her exit exam and hopes to become a police officer.

Shyima, now 19, has a list of assigned chores. She wears purple eyeshadow, has a boyfriend and frequently updates her profile on MySpace. Her hands are neatly manicured.

But in her closet, she keeps a box of pictures of her parents and her brothers and sisters. "I don't look at them because it makes me cry," she said. "How could they? They're my parents."

When her father died last year, her family had no way of reaching her.

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EPILOGUE: On a recent afternoon in Cairo, Madame Amal walked into the lobby of her apartment complex wearing designer sunglasses and a chic scarf.

After nearly two years in a U.S. prison cell, she's living once more in the spacious apartment where Shyima first worked as her maid. The apartment is adorned in the style of a Louis XIV palace, with ornately carved settees, gold-leaf vases and life-sized portraits of her and her husband.

She did not agree to be interviewed for this story.

Before the door closed behind her, a little girl slipped in carrying grocery bags. She wore a shabby T-shirt. Her small feet slapped the floor in loose flip-flops. Her eyes were trained on the ground.

She looked to be around 9 years old.

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EDITOR'S NOTE — This story is based on interviews in Los Angeles, Irvine and Beaumont, Calif., and in Cairo and Agami, Egypt, in September and October. In addition to interviews with Shyima, her mother and nine of her brothers and sisters, the AP also interviewed her neighbors in Irvine, law enforcement officials and the lawyer who prosecuted her case. Quotes and scenes were observed by the reporter or described by Shyima and confirmed in police transcripts and court records.