Wednesday, January 28, 2009

Is It Time to Bail Out of the US?

Is It Time to Bail Out of the US?

By Paul Craig Roberts

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California State Controller John Chiang announced on January 26 that California’s bills exceed its tax revenues and credit line and that the state is going to print its own money known as IOUs. The template is already designed.

Instead of receiving their state tax refunds in dollars, California residents will receive IOUs. Student aid and payments to disabled and needy will also come in the form of IOUs. California is negotiating with banks to get them to accept the IOUs as deposits.

California is often identified as the world’s eighth largest economy, and it is broke.

A person might think that California’s plight would introduce some realism into Washington, DC, but it has not. President Obama is taking steps to intensify the war in Afghanistan and, perhaps, to expand it to Pakistan.

Obama has retained the Republican warmongers in the Pentagon, and the US continues to illegally bomb Pakistan and to murder its civilians. At the World Economic Forum at Davos this week, Pakistan’s prime minister, Y. R. Gilani, said that the American attacks on Pakistan are counterproductive and done without Pakistan’s permission. In an interview with CNN, Gilani said: “I want to put on record that we do not have any agreement between the government of the United States and the government of Pakistan.”

How long before Washington will be printing money?

On January 28 Obama announced his $825 billion bailout plan. This comes on top of President Bush’s $700 billion bailout of just a few months ago.

Obama says his plan will be more transparent than Bush’s and will do more good for the economy.

As large as the bailouts are--a total of $1.5 trillion in four months--the amount is small in relation to the reported size of troubled assets that are in the tens of trillions of dollars. How do we know that by June there won’t be another bailout, say $950 billion?

Where will the money come from?

Obama’s bailout plan, added to the FY 2009 budget deficit he has inherited from Bush, opens a gaping expenditure hole of about $3 trillion.
Who is going to purchase $3 trillion of US Treasury bonds?

Not the US consumer. The consumer is out of work and out of money. Private sector credit market debt is 174% of GDP. The personal savings rate is 2 percent. Ten percent of households are in foreclosure or arrears. Household debt-service ratio is at an all-time high. Household net worth has declined at a record rate. Housing inventories are at record highs.

Not America’s foreign creditors. At best, the Chinese, Japanese, and Saudis can recycle their trade surpluses with the US into Treasury bonds, but the combined surplus does not approach the size of the US budget deficit.

Perhaps another drop in the stock market will drive Americans’ remaining wealth into “safe” US Treasury bonds.

If not, there’s only the printing press.

The printing press would turn a deflationary depression into an inflationary depression.
Unemployment combined with rising prices would be a killer.

Inflation would kill the dollar as well, leaving the US unable to pay for its imports.

All the Obama regime sees is a “credit problem.” But the crisis goes far beyond banks’ bad investments. The United States is busted. Many of the state governments are busted. Homeowners are busted. Consumers are busted. Jobs are busted. Companies are busted.

And Obama thinks he has the money to fight wars in Afghanistan and Pakistan.

Except for the superrich and those banksters and CEOs who stole wealth from investors and shareholders, Americans have suffered enormous losses in wealth and income.

The stock market decline has destroyed about 45% of their IRAs, 401Ks, and other equity investments. On top of this comes the decline in home prices, lost jobs and health care, lost customers. The realized gains in mutual funds and investment partnerships, on which Americans paid taxes, have been wiped out.

The government should give those taxes back.

Americans who have seen their retirement savings devastated by complicity of government regulators and lawmakers with financial gangsters should not have to pay
any income tax when they draw on their pensions.

The financial damage inflicted on Americans by their own government is as great as would be expected from foreign conquest. While Washington “protected” us from terrorists by fighting pointless wars abroad, the US economy collapsed.

How can President Obama even think about fighting wars half way around the world while California cannot pay its bills, while Americans are being turned out of their homes, while, as Business Week reports, retirees will work throughout their retirement (which assumes that there will be jobs), while careers are being destroyed and stores and factories shuttered.

Americans are facing tremendous unemployment and hardship. Obama doesn’t have another dollar to spend on Bush’s wars.

Taxpayers are busted. They cannot stand another day of being milked by the military-security complex. The US government is paying private mercenaries more by the day than the monthly checks it is providing to Social Security retirees.

This is insanity.

The banksters robbed us twice. First it was our home and stock values. Then the government rewarded the banksters for their misdeeds by bailing out the banksters, not their victims, and putting the cost on the taxpayers’ books.

The government has also robbed the taxpayers of $3 trillion dollars to fight its wars. About $600 billion are out of pocket costs, and the rest is on the taxpayers’ books.

When foreign creditors look at the debt piled on the taxpayers’ books, they don’t see a good credit risk.

Washington is so accustomed to ripping off the taxpayers for the benefit of special interests that the practice is now in the DNA. While bailouts are being piled upon bailouts, wars are being piled upon wars.

Before Obama gets in any deeper, he must ask his economic team where the money is coming from. When he finds out, he needs to tell the rest of us.

Fannie, Freddie may tap U.S. Treasury for $51 bln

Fannie, Freddie may tap U.S. Treasury for $51 bln

By Al Yoon

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Fannie Mae and Freddie Mac could tap the government for up to $51 billion in coming weeks, exceeding some Wall Street estimates, so they can continue to operate as the largest providers of funding for U.S. residential mortgages.

The storm of rising delinquencies and falling securities values that led to the government's seizure of the companies in September accelerated in the last quarter, requiring Fannie Mae and Freddie Mac to seek more of the stop-gap measures organized by the U.S. Treasury and their regulator. Analysts predicted more capital needs from Treasury through 2009.

Fresh losses in the most recent quarter will probably be the harshest on Freddie Mac (FRE.P: Quote, Profile, Research, Stock Buzz), which holds a larger portfolio of risky mortgage securities, including subprime bonds. The McLean, Virginia-based company said on Friday it may have to seek $30 billion to $35 billion in capital from the Treasury in the form of senior preferred stock.

Washington-based Fannie Mae (FNM.P: Quote, Profile, Research, Stock Buzz) said late on Monday that the Federal Housing Finance Agency, the regulator, may request $11 billion to $16 billion, based on estimates for fourth-quarter results.

Signs of larger losses underscore the importance of the Obama administration's measures to halt foreclosures that are feeding a downward spiral in the housing market, already in its worst downturn since the Great Depression. Until the declines in house prices are broken, the cycle will continue and the economic recession could get worse, economists said.

QUESTIONS ABOUT LOSSES AND RESERVES

Fannie Mae could see greater losses through 2009 than Freddie Mac from guarantees on mortgage-backed securities, according to analysts, including Rajiv Setia of Barclays Capital in New York.

The companies have provisioned for just a third of cumulative losses on guarantees of $45 billion and $80 billion, respectively, he said.

"The questions are the source of the losses and how much is set aside in reserves for future losses," said Jim Vogel, a strategist at FTN Financial in Memphis, Tennessee, in a note to clients. "Both will determine, along with further housing performance, the size of the draw at the conclusion of the first quarter."

Fannie Mae and Freddie Mac guarantee or own nearly half of all U.S. mortgages.

After taking about $14 billion from the Treasury last year, Freddie Mac would be using about half of its $100 billion Treasury lifeline. Other funding sources have shriveled in the credit crunch, enhancing the importance of liquidity from Freddie Mac, Fannie Mae and the 12 Federal Home Loan Banks, some of which are facing capital shortfalls of their own.

Expected capital needs for the fourth quarter exceed Barclays' initial estimates of about $26 billion and $10 billion for Freddie Mac and Fannie Mae, respectively. Credit Suisse and FTN predicted about $10 billion and $15 billion in fourth-quarter capital needs, respectively, for Fannie Mae.

DANGER IN DERIVATIVES HEADWIND

Fannie Mae and Freddie Mac are also fighting a headwind of unrealized losses on interest-rate derivatives they use to hedge their mortgage portfolio, Moshe Orenbuch, a strategist at Credit Suisse, said in a research note on Monday.

What's more, proposed legislation that would make it easier for a bankruptcy judge to tear up mortgage contracts has hurt the value of securities, he said. That could add $20 billion to the Treasury's costs of buoying the companies, he added.

The value of holdings of "conventional" mortgages should provide some offset to losses elsewhere, analysts said. Growing portfolios also suggest rising interest income.

Treasury injections may keep the companies operating as government entities for years, as they struggle to service costs and provide money for housing, Setia said in a conference call last week. Before conservatorships, Fannie Mae and Freddie Mac operated as quasi-governmental "agencies" that benefited from congressional charters, but answered to shareholders.

California prepares to stop paying bills Come Feb. 1, tax refunds, welfare checks replaced with IOUs

California prepares to stop paying bills

Come Feb. 1, tax refunds, welfare checks replaced with IOUs

By Drew Zahn

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The state of California has run out of money.

Facing a $42 billion budget deficit, State Controller John Chiang told the Sacramento Bee he has already borrowed $21.5 billion to try to cover the state's checks, but by Feb. 1, there will be no more options left but to simply stop paying some of the bills – including tax refunds, welfare checks, student grants and other payments owned to California citizens.

"It pains me to pull this trigger," Chiang said at a news conference held in his office. "But it is an action that is critically necessary."

Federal law requires that many school and healthcare programs – a total of about $6.6 billion in California – must be paid, the Los Angeles Times reports, so Chiang has announced an expected payment freeze on $3.7 billion worth of the state's bills, most of it refunds owed to taxpayers.

But even with the freeze beginning next week, the Times reports, California will still fall $346 million short for the month of February, forcing Chiang to consider something only done once since the Great Depression: issuing IOUs.

Formally called "registered warrants," the state's IOUs consist of little more than a piece of paper that says the state owes a payee money, plus interest, to be paid at some point in the future.

The last time California issued registered warrants was in 1992, during two-month budget battle between then-Gov. Pete Wilson and the state's legislators. But after the state issued almost $4 billion worth of IOUs, many banks stopped accepting them as deposits, claiming the five percent interest didn't pay for the hassle of processing them.

The Times reports that state officials have already designed an IOU template for February and begun negotiating with banks to avoid a repeat of 1992's problems.

Beth Mills, a spokeswoman for the California Bankers Association, however, told the Bee that the group's members still have "a lot of technical and operational questions we're trying to get some resolution on" about IOUs.

For now, state officials are hoping that Chiang's promised payment freezes can delay the budget crisis long enough for Gov. Schwarzenegger and the Legislature to find a solution.

Among the $3.7 billion in payments Chiang has targeted to freeze include $1.91 billion in personal income tax refunds, $205 million in court operations, $122 million scheduled to help counties with welfare administration, $13 million in student aid and over $700 million in aid to various disabled and needy groups.

State officials also got a glimmer of hope last week when they learned that more than $11 billion of President Obama's $825 billion economic stimulus plan may land in California's coffers.

"This takes a big bite out of the state's budget gap," Jean Ross, executive director of the California Budget Project, told the Times. "It is better news than many of us had anticipated."

Assembly Speaker Karen Bass, D-Los Angeles, however, warned that lawmakers can't rely on Washington to fix the problem.

"We have to make really horrible cuts, and we have to raise revenue," Bass told the Times. "We are just hoping whatever we get will help us avoid deeper cuts."

If the cuts aren't deep enough, California may be forced to consider issuing the IOUs. Continued borrowing, Chiang said, is not an option.

"We are the eighth largest economy," Chiang said, speaking of California's rank among the world's nations, were it an independent country. But comparing it to other states, he said, "We have the 50th or we are tied for last in the credit ratings. We are a world economic power, but we have fiscal mismanagement in this state."

US Treasury to restrict lobbying on bailout funds

US Treasury to restrict lobbying on bailout funds

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U.S. Treasury Secretary Timothy Geithner announced new rules on Tuesday to limit lobbying by companies that receive government financial assistance in one of his first moves after being sworn into office.

The rules restrict lobbyist contacts in connection with applications for or disbursement of the Treasury's $700 billion bailout program, the Treasury said in a statement.

"These new rules go beyond the approach taken under the Emergency Economic Stabilization Act to date and will help ensure a new level of openness and accountability going forward," the Treasury said.

The rules will use as a model the protections that limit political influence on tax matters, and require the Treasury to certify each investment decision is based only on investment criteria and facts of the case.

The rules are being unveiled as Congress prepares to release the second $350 billion of the Troubled Asset Relief Program after widespread disappointment with the handling of the first half by former Treasury Secretary Henry Paulson.

Obama administration officials also have signaled that they may seek additional funds to shore up the financial system as they prepare a comprehensive stabilization plan due by the end of next week.

Many lawmakers feel that there were too few controls on companies receiving the first half of the TARP money, no clear way to track whether banks used the funds to boost lending and too little oversight for the program.

The new rules also aim for transparency by using objective criteria, including providing capital investments only to those banks recommended by their primary regulator.

The Treasury said it will publish a detailed description of the investment review process and ensure adequate resources are available to handle applications as quickly as possible.

Tanking Banks Make History

Tanking Banks Make History

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The wreck that was the banking sector this week actually made history.

According to Jeff Rubin of Birinyi Associates, bank stocks have fallen further and faster than at any time in history, including the Great Depression.

Rubin said on Tuesday, the day of their big sell off, bank stocks were down 78.51 percent from their February, 2007 high. At a parallel point in the 1930s (two years from their high), bank stocks were down 78.09 percent.

It's not a huge difference but ultimately, bank stocks lost a total 89 percent in the Depression era. It took them another nine months from the two-year mark to get there.

"I think the real point here is everyone is looking for a quick rebound in the financials. If you're looking for any guidance, the only guidance we have is the Great Depression. We went 20 years without a rebound. It was sideways until the 1950s, at least for the banks," he said.

Financials are now at an 18-year low in terms of weighting in the S&P 500. They are at 9.99 percent. Tech was in first place, with 16.1 percent and health care was a close second at 15.83.

Earnings news blew up what could have been a second up day for stocks, and it was Microsoft's surpise release of a worse than expected quarter that really sent stocks spinning.

Financials though continue to lead the decline, down about 6 percnet today, while tech is down 3.2 percent. Some of the worst performers are Huntington Bancshares, Fifth Third, Aflac, Citigroup, SLM and Bank of America..

Rubin shared this chart with us.

Consumer confidence at record low

Consumer confidence at record low

'Glimmer of hope' seen as job views show some improvement

By Ruth Mantell

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Income worries dragged down consumer confidence to a record low in January, even as depressed views on jobs showed some improvement, according to the monthly Conference Board index reported Tuesday.

The January consumer confidence index fell to 37.7 from an upwardly revised 38.6 in December. Economists surveyed by MarketWatch had expected a January reading of 38. The data go back to 1967.

"It appears that consumers have begun the new year with the same degree of pessimism that they exhibited in the final months of 2008," said Lynn Franco, director of the Conference Board's Consumer Research Center. "Consumers remain quite pessimistic about the state of the economy and about their earnings."

Consumers' view of current conditions worsened slightly in January, with those saying business conditions are "bad" rising to 47.9% from 45.8%. Consumers' short-term outlook also deteriorated, with the proportion of those expecting to add to their income falling to 10% from 12.7%.

Details on jobs, buying plans Consumers' views on the labor market were mixed in January, showing some improvement, but remaining at relatively low levels. The labor-market data is a "glimmer of hope," wrote analysts at RDQ Economics. "For an economy to recover, it has to stop getting worse and this is one small signal that consumers see the labor market as just a little bit less weak in January than in December," according to an RDQ research note. "We need to see a lot more readings like this...where the levels (though still indicating contraction) suggest that the rate of contraction is slowing." The proportion of those saying jobs are "plentiful" rose to 7.2% from 6.5%, while those saying jobs are "hard to get" fell to 41.1% from 41.5%. Looking six months ahead, 9.4% of consumers expect more jobs, compared with 9.8% in the prior month, while the proportion expecting fewer jobs fell to 36.7% from 40.6%. Consumers' view on inflation in 12 months improved, with respondents looking for a rate of 5.6%, compared with 5.8% reported for the prior month. The percentage of respondents with plans to buy an automobile within six months rose to 5.3% in January from 4.8% in December. Those with plans to buy a home fell to 2.5% from 2.6%, while those with plans to buy major appliances fell to 23.2% from 27.1%. Elsewhere Tuesday, Standard & Poor's reported that home values in 20 major U.S. cities fell at a record 18.2% in the 12 months ending in November. The Case-Shiller 20-city home price index fell 2.2% in November, with home values in all 20 cities falling at least 1%. Read more on the record decline in home values.

It's Time to Close the Wage Gap

It's Time to Close the Wage Gap

By Allison Stevens

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Rep. Rosa DeLauro, the Connecticut Democrat, says now is the time to put the squeeze on the wage gap.

Congress appears to agree.

The House passed on Friday two bills to bolster women's economic security: one is designed to reverse a 2007 Supreme Court decision that made it more difficult for women to sue for wage bias and the other strengthens existing pay equity laws.

The Senate could consider the bills as early as this week, ready to be placed on President Barack Obama's desk for signature immediately after he takes office.

"I'm very, very optimistic that with a new administration, in a new environment, with President-elect Obama using and talking about this as a major portion of his campaign, that . . . it can be one of the first pieces of new legislation that this president signs," DeLauro said in a recent interview.

More than four decades after Congress passed a law making it illegal for employers to pay women less than men who do the same job, women still earn less.

In 2007 women made 78 cents for every dollar a man earned, according to the Institute for Women's Policy Research, a think tank in Washington, D.C. The overall wage gap among all workers is significantly more when low-paying, female-dominant job sectors are factored in, according to the institute.

Different occupations, education levels, job tenure, work hours and other factors associated with pay don't explain away pay differences, according to a 2005 study by the American Association of University Women, an advocacy group in Washington, D.C.

Advocating for Equal Rights

A staunch advocate for women's rights, DeLauro spoke about the subject on a panel discussion sponsored by Women's eNews at the Democratic National Convention in Denver last August and at a session sponsored by Lifetime Television Networks.

She revisited the issue in a recent interview with Women's eNews.

Tougher pay equity laws, DeLauro said, are needed now more than ever because women bear the brunt of economic downturns.

Not only do women earn less than men, they are also more likely than men to make minimum wage, according to the National Center for Research on Women in New York.

They are also more likely to hold part-time positions, which often carry few if any benefits, according to the Department of Labor. Women are also more likely to leave the work force to handle caregiving responsibilities and have smaller retirement accounts.

"What undergirds all that is the fact that women make less," DeLauro said.

DeLauro hopes that will begin to change with passage of the Lilly Ledbetter Fair Pay Act, which gives victims of wage bias more time to file suit for discrimination.

Under current law--as it was recently interpreted by the Supreme Court--a victim must file a complaint with the government within 180 days of the discriminatory event. But many women don't learn of the bias until long after that time limit has expired.

Learned Too Late

That was the case with Lilly Ledbetter, a former employee at a Goodyear Tire and Rubber Company plant in Alabama who at 60 found out her employer had for years been paying her substantially less than her male counterparts for the same work. (Women's eNews named Ledbetter a 2009 Leader for the 21st Century because of her work campaigning for fair pay.)

Ledbetter sued and won, but ultimately lost her case in a 5-4 ruling by the Supreme Court in 2007. In a dissent from the bench, Justice Ruth Bader Ginsburg urged Congress to pass legislation to reverse the decision.

Lawmakers responded with a bill that would restore the so-called paycheck-accrual rule, which starts the 180-day clock after each discriminatory paycheck is issued rather than after the initial discriminatory salary decision was made.

Last year the bill passed the House but fell to a filibuster threat from Republicans in the Senate, who were emboldened by a veto threat from President Bush.

Obama, however, made the bill a talking point in his campaign for the White House, and put Ledbetter in the national spotlight as a surrogate speaker on the campaign trail and at the Democratic National Convention.

Pressing Paycheck Fairness

DeLauro hopes Congress will also move the Paycheck Fairness Act, which would lower legal standards that protect employers from complaints of discrimination. It would also lift caps for damages in wage bias suits and make it easier for employees to bring class action suits and share salary information.

"It is for the first time putting discrimination based on gender on the same level as discrimination based on race," said DeLauro, who authored the bill and first introduced it 12 years ago.

DeLauro's bill has made it out of the House before but has never seen a vote in the Senate.

Prospects are rosier for both bills this time around. Obama is a vocal supporter of tougher pay equity laws and Democrats padded their ranks on Election Day and now have at least 57 Senate seats, just three votes shy of a filibuster-proof majority. In addition, Republican women in the Senate have been known to join the Democrats on some women's rights legislation.

Some women's rights advocates are also pushing the Fair Pay Act, a third bill sponsored by Sen. Tom Harkin, D-Iowa. It would ensure employers pay men and women equally if they work in jobs requiring similar skill levels, effort, responsibility and working conditions. The bill, its supporters assert, would make salaries in jobs held predominantly by women, such as nursing, approach salaries in fields dominated by men, such as truck driving.

Obama also supports the Harkin bill.

But DeLauro doubts the time is ripe for that legislation. "I don't think that one is far enough along at this moment to do something about it," she said.

Civilian Courts Can Deal With Terrorism Cases

Civilian Courts Can Deal With Terrorism Cases

By Marie Cocco

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There should be no third way.

There is absolutely no reason to create some newfangled and untested system to charge and try those few terrorism suspects whose legal fates present President Barack Obama with an excruciating political decision.

For years, the Bush administration told us that those held at the Guantanamo Bay prison camp were so evil that they could not be charged or tried in any U.S. or international court. But for almost as many years, the Bush administration released and repatriated the bulk of these men—more than 500 altogether. Though the Pentagon says some have returned to the terrorist cause, even the government claims only a few are still worrisome.

Now Obama has ordered that the Guantanamo prison be closed. His executive order contemplates three fates for the roughly 245 prisoners still held there. One is to continue releasing them, as the Bush administration has done. Another is to charge those whose cases can readily be handled in civilian courts through the federal criminal justice system.

And the third? Well, no one knows. The order says that those who aren’t released or charged in U.S. courts shall have their cases disposed of through “lawful means, consistent with the national security and foreign policy interests of the United States and the interests of justice.”

In the interest of justice, no third system should be created—because none is necessary.

Since the terrorist attacks of 9/11, the incessant refrain has been that some of those swept up and imprisoned during the so-called war on terror are so dangerous, their plots so potentially devastating, that they cannot be tried in civilian courts or in the U.S. military legal system. But this isn’t a legal statement; it’s a political one. It was concocted by the Bush administration to rationalize everything from its abandonment of the Geneva Conventions governing the treatment of wartime detainees to its use of torture and other abusive interrogation techniques.

The facts contradict this fiction.

In an exhaustive study of terrorism prosecutions conducted by two former federal prosecutors for Human Rights First, the outcome of cases brought against 257 individuals charged in U.S. courts with a wide range of terrorism offenses was clear: They were convicted and put away, many of them for life. Of the 160 defendants whose cases were finished between Sept.12, 2001, and Dec. 31, 2007, the overwhelming majority—90 percent—were found guilty. Only about 9 percent of the cases were dismissed or ended in acquittal.

The study, released last year, didn’t include in its count the most successful terrorism prosecutions of all: the far-reaching cases that federal prosecutors in New York won during the 1990s.

In a series of spectacular trials, prosecutors convicted those charged in the first World Trade Center bombing and more. They put away terrorists who plotted to simultaneously blow up several U.S. jetliners flying over the Pacific. They broke up a sophisticated terrorist cell that had intended to unleash a day of horror in New York by bombing the United Nations building, the Lincoln and Holland tunnels, the George Washington Bridge and the main federal office building in Manhattan. In a trial that took place just before the 9/11 attacks, the government also convicted the conspirators who carried out the 1998 bombings of U.S. embassies in Africa.

In many of these cases, the very issues now argued as being too difficult to surmount were overcome. Evidence gathered through intelligence was used. Controversies over the way suspects were transported to the United States from abroad were resolved, as were questions about incriminating statements made to law enforcement personnel during these trips. As for the claim that we should thwart terrorists before they strike—not try them afterward—that, too, is answered, by the prosecutions that disrupted embryonic plots.

The terrorist who is too difficult to try is “an imaginary category,” says Shayana Kadidal, chief of the Guantanamo project at the Center for Constitutional Rights. Even among those who have been tortured, Kadidal says, there is a rare case—indeed, only a hypothetical one—in which there is no other evidence to be used.

Having now called for a more rational, humane and transparent way for the United States to treat those who would harm it, Obama must not make a political judgment that would muddy our moral standing once again.

Too Big to Fail, Too Big to Jail

Too Big to Fail, Too Big to Jail

New Bush/Rove Privilege Fight Looms

New Bush/Rove Privilege Fight Looms

By Jason Leopold

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George W. Bush is seeking to extend his sweeping concept of executive privilege into his post-presidency, with the first battle likely to be fought over a renewed demand from House Judiciary Committee Chairman John Conyers that Karl Rove finally testify about the politicization of the Justice Department.

On Monday, Conyers reissued a subpoena for Rove, a former White House deputy chief of staff, to testify before Congress about his role in firing nine federal prosecutors deemed not “loyal Bushies” as well as the controversial prosecution of Alabama’s former Democratic Gov. Don Siegelman.

Rove’s attorney, Robert Luskin, told the Washington Post that former President Bush recently sent a letter to Rove reasserting executive privilege that would prevent Rove and possibly other ex-White House officials from testifying. It’s unknown when Bush sent the letter; Luskin did not return calls or respond to e-mails for further comment about Bush’s letter.

However, it does appear that Bush is determined to extend his broad claims of executive privilege beyond his departure from the White House on Jan. 20.

In his last years in office, Bush succeeded in frustrating congressional inquiries by asserting a sweeping interpretation of executive privilege, a tradition that grants some confidentiality for advice between the President and his top aides. Bush expanded the scope of the privilege to include even discussions among his subordinates inside and outside the White House.

In September 2008, U.S. District Judge John Bates rejected Bush’s position, saying the concept of blanket executive privilege lacked legal precedent.

“The Executive cannot identify a single judicial opinion that recognizes absolute immunity for senior presidential advisors in this or any other context,” wrote Bates, a Bush appointee. "In fact, there is Supreme Court authority that is all but conclusive on this question and that powerfully suggests that such advisors do not enjoy absolute immunity.”

However, Bush’s lawyers appealed Bates’s ruling to a Republican-dominated Appeals Court panel in Washington that relied on a technicality – the looming adjournment of the 110th Congress – to declare the issue moot. [See Consortiumnews.com’s “GOP Judges Aid White House Cover-up.”]

At the time, Conyers promised not to let the issue drop, and his announcement that he is reissuing the Rove subpoena under the 111th Congress indicates the case may soon return to the federal courts.

“I have said many times that I will carry this investigation forward to its conclusion, whether in Congress or in court,” Conyers said in a prepared statement. “Change has come to Washington, and I hope Karl Rove is ready for it. After two years of stonewalling, it’s time for him to talk.”

The subpoena demands that Rove appear before Congress for a deposition on Feb. 2, at 10 a.m. But it appears unlikely Rove, who was considered Bush's political guru, will show up to give testimony to the committee.

Conyers’s Judiciary Committee also has pursued testimony and documents from Bush’s last White House Chief of Staff Josh Bolten and former White House Counsel Harriet Miers about their involvement in the decision to fire the federal prosecutors. It is believed subpoenas will be issued for their testimony as well in the weeks ahead.

Rove as Victim

In public comments, Rove has presented himself as the victim of a Democratic witch-hunt, particularly after House Speaker Nancy Pelosi told Fox News’ Chris Wallace two weeks ago that she supported a renewed probe into the politicization of the Justice Department.

“I think that we have to learn from the past, and we cannot let the politicizing of the — for example, the Justice Department, to go unreviewed. Past is prologue. We learn from it," Pelosi said.

Rove, a Fox News contributor, was asked about the exchange and said Pelosi was out to get him.

"What do you think she's talking about?" Rove said. "Who do you think she was pointing a finger towards? Read carefully the description of who she said we ought to be looking at."

Rove’s lawyer Luskin argued that Rove and other Bush administration officials are protected by an umbrella of executive privilege that extends past the end of Bush’s term.

"It's generally agreed that former presidents retain executive privilege as to matters occurring during their term," Luskin said. "We'll solicit the views of the new White House counsel and, if there is a disagreement, assume that the matter will be resolved among the courts, the President and the former President."

However, President Barack Obama stated during Campaign 2008 that he believed Bush was overreaching with his claims of executive privilege. On his first full day in office, Obama also signed an executive order reining in the power of former presidents to keep their historical records secret.

Obama directed the National Archives and Records Administration to consult with the Justice Department and White House counsel "concerning the Archivist's determination as to whether to honor the former President's claim of privilege or instead to disclose the presidential records notwithstanding the claim of privilege."

Theoretically, the standoff could lead to the arrests of Bush administration officials who refuse to comply with congressional subpoenas, though that practice has not been employed in recent times. Traditionally, disputes over executive privilege are resolved through negotiations, but Bush’s position was so broad that talks between Congress and the White House broke down.

Last year, Rove made an end-around against Democratic leaders by having his denial of sponsoring Siegelman’s prosecution inserted into the Congressional Record by Rep. Lamar Smith of Texas, the Judiciary Committee’s ranking Republican.

In written responses to questions from Smith, Rove denied speaking to anyone “either directly or indirectly” at the Justice Department or to Alabama state officials about bringing corruption charges against Siegelman.

Siegelman was convicted of corruption in 2006, but was released from prison on bond in March 2008 after an appeals court ruled that “substantial questions” about the case could very well result in a new trial or a dismissal.

Siegelman has long maintained that Rove was intimately involved in the prosecution and other attempts to blunt Democratic southern inroads that Siegelman’s governorship represented.

In an interview with The Anniston Star on May 18, 2008, Siegelman said Rove first targeted him in 1998.

“It started when Karl Rove's bag man, I call him, Jack Abramoff, started putting Indian casino money into Alabama to defeat me in 1998,” Siegelman told the newspaper. “Shortly after I endorsed Al Gore in 1999, Karl Rove's client, the attorney general of Alabama (Bill Pryor) started an investigation.

“In 2001, Karl Rove's business associate and political partner's wife, Leura Canary, became a U.S. Attorney and started a federal investigation,” Siegelman said. “It started with the attorney general and the state investigation, followed by the federal investigation, followed by indictments in 2004, and then another series of indictments leading up to the 2006 election.”

On Monday, several Democrats on the House Judiciary Committee said if Rove refuses to comply with the subpoena this time they will urge Conyers to have Rove arrested.

Rumsfeld to stand trial for war crimes?

Rumsfeld to stand trial for war crimes?

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A UN official says there is enough evidence that former US defense secretary Donald Rumsfeld could be brought to justice for war crimes.

The United Nations Special Rapporteur on Torture Manfred Nowak in an interview on Monday told CNN that the international body had enough evidence to prosecute Rumsfeld for his direct authorization of tortures at US detention centers in 2002.

"We have clear evidence," Nowak said. "In our report that we sent to the United Nations, we made it clear that former Defense Secretary Donald Rumsfeld clearly authorized torture methods and he was told at that time by Alberto Mora, the legal council of the Navy, 'Mr. Secretary, what you are actually ordering here amounts to torture.' So, there we have the clear evidence that Mr. Rumsfeld knew what he was doing but, nevertheless, he ordered torture."

The UN torture official earlier in an interview with Germany's ZDF television had said that "I think the evidence is on the table."

Nowak said that the United States had an "obligation" to probe former President George Bush's Administration for their involvement in torture.

A bipartisan Senate survey last month revealed that Rumsfeld and other high-ranking administration officials were responsible for detainee abuse at Guantanamo Bay Prison.

The Los Angeles Times said on December 12, 2008 that the report directed its most pointed criticism at Rumsfeld's decision in December 2002 to authorize the use of harsh interrogation techniques at the Guantanamo Bay facility. The report described Rumsfeld's directive as "a direct cause for detainee abuse" at Guantanamo and concluded that it "influenced and contributed to the use of abusive techniques, including military working dogs, forced nudity and stress positions, in Afghanistan and Iraq."

The coercive measures were based on a document signed by Bush in February, 2002.

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US new President Barack Obama has ordered for the notorious US facility at Guantanamo to be shut down. But the so-called "enhanced interrogation techniques" have already destroyed the lives of many who had kept for years at US prisons worldwide without even charges.

"It's too painful, it's too deep, it's too dark and fills me with sadness... They did everything they could to destroy me when I was completely innocent," says former US detainee Mohammad Saad describing six years of humiliation, interrogation and ill-treatment under US orders in Egypt, Afghanistan and Guantanamo Bay.

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Saudi warns US over Middle East

Saudi warns US over Middle East

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A senior member of Saudi Arabia's ruling family has warned the US that it needs to change attitudes over the Arab-Israeli conflict.

Prince Turki al-Faisal, a former Saudi intelligence chief and former ambassador to the US, said a failure to alter policies could threaten links.

The prince said ex-President George W Bush had left a "sickening legacy" in the Middle East.

He accused the US of contributing to the killing of Gazans.

Special envoy named

The prince made his comments in an interview with the London-based Financial Times newspaper.

On 27 December, Israel launched a three-week assault on the Gaza Strip which killed more than 1,300 people and resulted in massive destruction. The aim, Israel said, was to stop rocket fire into Israel by Palestinian militant groups. Thirteen Israelis were killed during the conflict.

On Thursday Barack Obama made his first public statement on the Middle East as US president.

He named former senator George Mitchell as a special envoy to the Middle East.

Correspondents say President Obama's first statement did not significantly depart from earlier US policies.

US envoy to strengthen Abbas

US envoy to strengthen Abbas

George Mitchell heads to meetings in Middle East, not intending to meet with Hamas, Syria; focus of visit appears to be delivering aid to Gaza

Yitzhak Benhorin

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The United States' new envoy to the Middle East, George Mitchell, will be working to secure a lasting ceasefire in Gaza, as part of an attempt to bolster Palestinian President Mahmoud Abbas and the Palestinian Authority. He does not intend to meet with Hamas representatives.

The US perceives itself as being in a race with Hamas and, by extension, Iran, in the rehabilitation of Gaza. Mitchell's entourage - state department employees responsible for humanitarian aid and rehabilitation efforts, rather than politicians specializing in negotiations - suggests that delivering assistance to Gaza will be the focus of his current visit.

Mitchell flew to Europe, Monday, on his way to visit several states in the region. The focus according to the state department US State Department is to listen to the leaders with whom he will meet. The meetings will deal with the regional peace process and the situation in Gaza, the department spokesperson said.

Syria is not on his itinerary at the moment, although this could change. Currently the US envoy is scheduled to visit Israel, Egypt, the Palestinian Authority, Jordan and Saudi Arabia. In a daily briefing, State Department Spokesman Robert Wood said the new administration is striving to expedite a peace agreement between Israel and the Palestinians, as well as between Israel and its neighbors, adding that Mitchell's arrival is meant to facilitate such a process.

'Progress that is concretely'

Specifically, Wood referenced the goals of supporting the current ceasefire, preventing arms trafficking into Gaza, preventing Hamas rearmament, coordinating the opening of crossings between Gaza and Israel and developing a mechanism to facilitate delivery of humanitarian aid to Gazans, all with the ultimate goal of promoting the peace process.


In reference to Mitchell's visit, US President Barack Obama said he was dispatching Mitchell aware there would be no overnight success, but with greater hope for progress in establishing an Israeli-Palestinian peace because the administration was "engaging in an early fashion."

"Sen. Mitchell is fully empowered by me and (US Secretary of State Hillary) Clinton," Obama said after a meeting between him, Clinton and Mitchell, prior to the latter's departure. "When he speaks, he speaks for us.

"The cause of peace in the Middle East is important to the United States and our national interests. It's important to me personally," Obama said, adding "the charge that Sen. Mitchell has is to engage vigorously and consistently in order for us to achieve genuine progress. When I say progress - not just photo ops but progress that is concretely felt by the people on the ground."

Israeli Warplanes Strike in "Retaliation"

Violence in Gaza mars talks

LEE KEATH

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As Israeli-Hamas violence flared, President Barack Obama's new Mideast envoy promised on Wednesday a vigorous push for peace, saying Gaza militants must end their weapons smuggling and the blockaded borders must be pried open if a ceasefire is to take hold.

George Mitchell held his first round of talks with regional leaders to determine the next steps the Obama administration would take toward reviving peace negotiations after Israel's blistering military offensive against Gaza's Islamic Hamas rulers.

But continued violence in Gaza underscored the more immediate priority – shoring up the 10-day-old ceasefire.

Hours before Mr. Mitchell arrived in Jerusalem, Israeli warplanes pounded Gaza smuggling tunnels in reprisal for a Palestinian bombing on Tuesday that killed an Israeli soldier. After he spoke, militants fired a rocket into Israel and the military responded with another air strike. There was no immediate word of any casualties.

After talks in Jerusalem with Israeli Prime Minister Ehud Olmert, Mr. Mitchell said consolidating the ceasefire was “of critical importance.”

He said a longer-term truce should be based on “an end to smuggling and reopening of the crossings” into Gaza. Israel and Egypt have kept their borders with Gaza largely closed since the Islamic militant Hamas seized control of the territory in 2007.

Mr. Mitchell embarked on his Mideast foray just a week after Obama took office. After finishing his consultations in the region and with European leaders, he said he would report his recommendations to the President and Secretary of State Hillary Rodham Clinton.

But the envoy was silent on details of his meetings, and he has no news conferences planned during his seven-day tour, suggesting he would say little publicly before returning to Washington.

“The United States is committed to vigorously pursuing lasting peace and stability in the region,” said Mr. Mitchell, who launched his diplomacy earlier Wednesday with Egyptian President Hosni Mubarak in Cairo.

He was expected to hold talks with pro-Western Palestinian President Mahmoud Abbas in the West Bank on Thursday. Mr. Mitchell has no plans to meet with Hamas, which the U.S., Israel and the European Union consider a terrorist group.

It would be hard for the ceasefire to hold unless arrangements are made to stop the flow of arms to Hamas and to end the blockade of the coastal territory, which has deepened the deprivation of the 1.4 million Gazans trapped inside.

Mr. Mitchell said crossings should be opened on the basis of a 2005 agreement brokered by the U.S. that put the main border – between Egypt and Gaza – under the management of Abbas' Palestinian Authority, with European monitors deployed to prevent smuggling.

Hamas, which routed Abbas loyalists when it took over Gaza, has said it also wants a role at the crossings in recognition of its power in Gaza. Israel and Abbas do not want Hamas there.

Mr. Olmert told Mr. Mitchell that Hamas' power in Gaza “must diminish” and Mr. Abbas must “gain a foothold” there, an Olmert aide said on condition of anonymity because the meeting was closed.

Mr. Olmert said crossings between Israel and Gaza “will only open permanently” after the freeing of Sergeant Gilad Schalit, an Israeli soldier Gaza militants captured in 2006, the aide said. Israel has been trying to negotiate a prisoner swap with Hamas to secure Sgt. Schalit's release.

In Qatar, Hamas' supreme leader, Khaled Mashaal, said the group would not link the opening of crossings to the release of the Israeli soldier.

“We reject these Israeli conditions. We will not accept them,” Mr. Mashaal said.

Hamas wants Israel to free hundreds of Palestinian prisoners in exchange for Sgt. Schalit.

Egypt has been exploring the possibility of including some Hamas figures in a Palestinian Authority presence at the border, but that would require some form of reconciliation between the factions. Egypt hopes to hold reconciliation talks between Hamas and Mr. Abbas by February.

One proposal is for a new unity Palestinian government including Hamas that could move forward with peace talks with Israel. But a 2007 try at a unity government dissolved in Palestinian infighting.

What's more, Israel, the United States and Europe demand Hamas drop its calls for Israel's destruction and renounce anti-Israeli attacks, something Hamas has refused to do despite years of bruising international sanctions and the recent war.

“It's for Hamas to change,” European Union foreign policy chief Javier Solana said. “Offers have been made to Hamas to change and adapt.”

The latest burst of violence was the worst since Israel and Hamas separately declared ceasefires on Jan. 18.

It started Tuesday when a remote-controlled roadside bomb on the Gaza side of the border with Israel killed one Israeli soldier and wounded three.

Israel swiftly sent tanks and bulldozers into northern Gaza to plow up the attack site and launched an air strike that wounded a Hamas militant. Predawn air strikes Wednesday pounded tunnels used to smuggle arms, money, goods and people into Gaza from Egypt.

Israeli Defence Minister Ehud Barak cancelled a planned trip to Washington this week to deal with the crisis, Defence officials said.

Late Wednesday, a rocket fired from Gaza struck an open area in southern Israel, causing no injuries or damage, the Israeli military said. It was the first rocket launched since the ceasefire took hold, the military said. On Jan. 20, Israel's air force struck a Gaza mortar squad after it fired 12 mortars at Israel.

“Israel wants the quiet in the south to continue but yesterday's attack is a deliberate provocation designed to undermine and torpedo the calm,” government spokesman Mark Regev said. “If Hamas acts to undermine the ceasefire, it will have no one but itself to blame for the consequences.”

The Israeli offensive killed nearly 1,300 Palestinians, including hundreds of civilians, and caused an estimated $2 billion in damage, Palestinian officials say. The assault was launched to halt years of Hamas rocket fire on southern Israel.

Aid groups have complained that not enough supply trucks are getting through crossings that Israel controls. Mr. Solana said Israel had promised him to increase humanitarian aid.

Israel has said an average of around 150 trucks a day are entering Gaza but Mr. Solana said he hoped that would jump to 400.

Israel storms into Gaza

Israel storms into Gaza after border killing

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Israeli tanks and helicopters have re-entered the Gaza Strip.

Tanks and bulldozers have reportedly been seen operating inside Gaza for the first time since they pulled out last week.

After the ten day break in fighting, an Israeli officer has been killed after in a bomb incident on the Gaza border with Israel.

Israeli officials have said the officer was on patrol when an explosion hit his army jeep, killing him and wounding three others.

The Israeli army says it was deliberately detonated from inside Gaza.

Helicopters were later sent in to fire at targets in the city of Khan Younis.

Hamas has blamed Israel for breaking the ceasefire and has asked for Israel to "lift the siege" and reopen all the border crossings, including the Rafah crossing.

US missile strikes in Pakistan will continue-Gates

US missile strikes in Pakistan will continue-Gates

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The United States will continue to carry out missile strikes against al Qaeda militants in Pakistan, Defense Secretary Robert Gates said on Tuesday.

Pakistani officials have complained publicly about the attacks from unmanned U.S. aircraft in tribal areas, saying they are a violation of sovereignty and increase resentment towards both Pakistan's government and the United States.

U.S. officials normally decline to comment publicly on reports of the missile strikes, but Gates made an exception when asked about Pakistan's complaints at a hearing of the Senate Armed Services Committee.

U.S. drones fired missiles into the northwestern regions of North and South Waziristan late on Friday, killing 17 people, according to intelligence officials and residents, in the first such strike since Barack Obama became U.S. president, succeeding George W. Bush.

"Both President Bush and President Obama have made clear that we will go after al Qaeda wherever al Qaeda is and we will continue to pursue that," Gates said.

Asked by committee chairman Senator Carl Levin, a Michigan Democrat, if that decision had been conveyed to the Pakistani government, Gates replied: "Yes, sir."

The United States, frustrated by an intensifying Afghan insurgency and what it sees as Pakistan's failure to stem the flow of al Qaeda and Taliban fighters from northwest Pakistan into Afghanistan, stepped up the missile attacks last year.

It has carried out about 30 missile attacks, according to a Reuters tally, more than half of them in the last four months of the year.