Tuesday, March 3, 2009

Chicago Rushes Head First Into 'Limitless' Surveillance

Chicago Rushes Head First Into 'Limitless' Surveillance

from the but-will-they-be-able-to-spot-political-corruption? dept

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Governments around the world are finding reasons to install surveillance cameras, but few are keeping account of the costs and benefits that come from those CCTV systems. Chicago, in its bid to follow in China's steps as host of the Olympics, is the most recent one to do so. By spending millions of dollars, Chicago aims to have a camera "on every corner" in preparation for the 2016 Summer Games that it hopes to host. But they are doing so without thoughtful implementation or an understanding of the realities of around-the-clock government surveillance.

Under the auspices of fighting crime and preventing terrorism, Chicago's Police Superintendent Jody Weis is hyping CCTV as having "limitless" crime-fighting potential. The reality, as is evident to anyone who has actually researched this type of thing, is that studies have shown municipal surveillance cameras to have little to no positive effect on crime. Further, London is widely known to have the most extensive CCTV network in the world, but that served as little deterrent to the terrorists of July 2005. But instead of bringing this up, the Sun-Times and Chicago officials point to a test in which "live video was used to catch a petty thief in the act of sticking his hand in a Salvation Army kettle outside Macy's State Street." Given the cost in both dollars and civil liberties, it is hard to justify catching petty criminals stealing some coins from charity.

But according to another city official, "civil libertarians have nothing to fear" from the blanket surveillance system because police operating the pan-and-tilt CCTV cameras see only what you would see if you were sitting on a park bench in front of that building." The difference, of course, is that by extending government power to all facets of public life, you extend the asymmetry of power between citizens and government (especially the corrupt ones for which Illinois is known). Indeed, we have already seen examples of "park bench" type cameras being abused by government.

What Chicago needs is an honest assessment of surveillance and a commitment to real police work, not hyped technology. If they want to follow in China's footsteps, it would be best to avoid the Big Brother ones.

SOCOM: the covert army of the US

SOCOM: the covert army of the US

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he US has been fighting two overt wars: In Iraq since 2003 and in Afghanistan since 2001.

By all accounts, the war in Iraq is winding down and the bulk of the US forces there is preparing to withdraw. In fact, the latest news suggests that around 100,000 will be back home by August 2010 and some 40,000-50,000 will stay in Iraq.

The remaining smaller force will train Iraqi security forces, protect US diplomats and civilian officials and what officials call "counter and fight terrorism," meaning they will fight al-Qaeda above all. Of course, a significant part of the residual force will consist of US special forces under the US Special Operations Command (SOCOM), a largely secret command, which has long been engaged in counterterrorism operations in Iraq.

SOCOM oversees the various special operations commands of the Army, Navy, Air Force and the Marines. It conducts both covert and overt missions, including unconventional warfare, foreign internal defense, special reconnaissance and psychological, direct action, counterterrorism and anti-narcotics operations.

In fact, SOCOM has been the driving force of both the war in Iraq and the war in Afghanistan since before both officially started.

SOCOM's 10th Special Forces group and a CIA group acted together and were the first to enter Iraq prior to the invasion in 2003. Their efforts organized the Kurdish peshmerga to defeat the Ansar al-Islam in northern Iraq close to the Iranian border. The battle was for control of territory in northeastern Iraq that was completely occupied by Ansar al-Islam, an ally of al-Qaeda. This was a very significant battle and led to the termination of a substantial number of militants. The combined team of special operations and CIA forces later led the peshmerga against Saddam's northern army, thereby making the invasion much easier.

At the beginning of the war in Iraq, dozens of 12-member special forces teams infiltrated southern and western Iraq to search for Scud missiles and pinpoint bombing targets. Scores other teams seized oil terminals and pumping stations on the southern coast. After the invasion and during the occupation, special forces conducted a number of operations against insurgent groups and, of course, al-Qaeda, killing and capturing of hundreds of militants.

As for the war in Afghanistan, at the outset of the war, SOCOM forces linked up with paramilitary officers from the CIA's Special Activities Division to defeat the Taliban without the need for large-scale conventional ground forces. This was largely successful. These units linked up several times during this war and engaged in several furious battles with both the Taliban and al-Qaeda forces. One such battle took place during Operation Anaconda. The aim of this operation was to clean up an important al-Qaeda stronghold dug deep into the Tora Bora of eastern Afghanistan. The operation was one of the heaviest and bloodiest fights in the war in Afghanistan. The battle on a 3,000-meter-high mountaintop called Takur Ghar featured special operation forces from the CIA and three of the four branches of the US Armed Forces. According to an executive summary, the battle of Takur Ghar was the most intense firefight US special forces have been involved in since 18 US Army rangers were killed in Mogadishu, Somalia, in 1983.

Today, a significant number of SOCOM forces and CIA personnel are deployed in both Iraq and Afghanistan mainly to fight al-Qaeda forces and the Taliban. Of course, we do not know much about their operations or activities, but the thing we do know is that they will be in those countries for many years to come.

SOCOM has been the covert army of the US in many clandestine operations, and it will remain so with about 60,000 men and a budget of about $7 billion.

As unemployment hits double digits, California lurches towards depression

As unemployment hits double digits, California lurches towards depression

By D. Lencho and Rafael Azul

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According to figures released last week, California's official unemployment rate now stands at 10.1 percent, the highest it has been in more than 15 years and the third highest among the 50 US states.

The economic crisis in California is having a devastating effect not only upon the poor, but upon the "newly poor," those who just a few years ago would have been considered middle class. These are people who have lost jobs and homes due to the rise in unemployment, prices and home foreclosures. The acceleration and deepening of the crisis have put increasing demands on social services at a time when the state's recently passed budget is slated to slash funding for those very services.

Recent reports and news articles provide a snapshot of conditions. In numerous ways, one year into the current situation, conditions in Los Angeles and Contra Costa Counties are already as bad as they were in 1931 and 1932.

The first report, published by the charitable organization United Way, details the rapid spread of extreme poverty in Los Angeles County. Extreme poverty is defined as less than 50 percent of the federal poverty level, which translates to an annual income of less than $5,200 a year for an individual or less than $8,800 for a family of three.

Entitled "A Profile of L.A.'s Poor in Turbulent Times," the graph- and statistics-laden report, paints a harrowing picture of the situation confronting the burgeoning ranks of Southern California's poor.

According to the report, the number of extremely poor in LA County "roughly matches the total population of Washington, D.C., and is greater than the total populations of Seattle, Las Vegas or Miami." Among the hardest-hit communities are the cities of Los Angeles, East Los Angeles, Long Beach and Compton, whose extreme poverty rates are higher than the average countywide rate of 6 percent. East Los Angeles's poverty rate is 10 per cent.

Given the high cost of living in California relative to much of the rest of the country, the actual number of the extremely poor is still higher, even if one were to accept the miserable standard for ‘poverty' (really a subsistence level) set by the federal government.

The report's authors make the telling point that "many people and many families who live in or near extreme poverty are working. One thing is certain—they are below the income level needed to sufficiently raise a family."

Statistics covering January to August 2008 show an 11 percent increase in the number of Los Angeles County residents aided by General Relief (GR), a benefit program for the extremely poor. Sixty percent of them are "effectively homeless, sleeping in places not fit for human habitation (such as park benches, garages, abandoned buildings and cars)." Since "the maximum aid GR provides is $221 a week, and a skid row hotel can go for $350 to $500 a month," it is not surprising that the number of the "effectively homeless" has increased.

Food stamp usage has also grown dramatically: "By the end of October, the number of people receiving food stamps in L.A. County approached 700,000, the most since May 2002." This is a reflection of the tightening pinch that food prices are exerting on struggling families.

Equally distressing are the report's other findings. Regarding unemployment: "L.A. County has generally fared worse than the state in terms of the rise in unemployment." The official jobless rate is particularly high in East L.A. (11.4 percent), Lancaster (11.7 percent) and Compton (over 14 percent).

As for rental housing: "The trend in the last generation ... has been a great increase in housing prices while wages have remain stagnant ... For the beginning half of the decade (2002 to 2005), median wages grew at one half of one percent. During the same time period, the fair market rate for either a one-bedroom or two-bedroom apartment increased by at least 40%."

The report found that over half of renters in Los Angeles are paying more than 30 percent of their income on rent, while many spend 50 percent or more. While there has been some discussion about measures to help homeowners with their mortgages, the plight of renters is routinely ignored at every government level- municipal, county, state and federal.

Homeowners have fared poorly as well, according to the report. L.A. County experienced a 222 percent rise in foreclosures in 2008 compared to 2007, with areas like Glendale, Long Beach and Montebello showing increases of 1,000 percent or more. Additionally, foreclosures of rental properties have forced renters from their homes, accounting for a spike in the number of those in emergency shelters.

Some of these figures are undoubtedly already out of date, due to the rapidly deteriorating economy. Moreover, the report was published in January, before the passage in February of the state budget, which includes drastic cuts to social services and regressive taxes that will worsen conditions for working people.

The extremely poor are not the only sector of the working class to feel the effect of the crisis. California is witnessing the growth of the "newly poor," families who not long ago had well-paying jobs and owned homes, but have been thrust into desperate straits by the recent developments.

On February 26 Bloomberg.com carried a revealing report, "California's Newly Poor Push Social Services to Brink." The article describes the devastation, emotional and psychological, as well as financial, that has struck middle-class Contra Costa County, east of the San Francisco Bay area, with a population of one million.

Once considered "an affordable alternative to San Francisco," according to author Vivien Lou Chen, "the area is being hit by a double whammy, as rising unemployment increases demand for social services, while plunging home values shrink tax revenue and squeeze agency budgets."

The numbers are stark: "Each month 16,000 people, including many who were making $60,000 to $100,000 annually just a few years ago, fill four county offices requesting financial, medical or food assistance."

Current and planned cuts in the county budget will top $146 million and property tax revenues are not expected to recover for at least four or five years. Unemployment is 9.3 percent and may reach 12 percent, according to County Administrator David Twa. Median home prices have sunk 53 percent, and the total of 3,135 fourth-quarter defaults was ten times the number in San Francisco.

Providers of affordable housing vouchers, food banks and other services are finding their offices swamped with a growing tide of applicants, a situation which is proving wearing for overworked staff. Signs of mental distress called "quiet dread" by one realtor are rife. The county's housing authority executive director says that "I'm not used to getting calls from clients saying they'll commit suicide if they don't get on the wait list."

Unemployment in California began rising from less than 5 percent in 2006 to the current 10.2 percent and is expected to be as high as 13 percent by the end of the year, a trend that parallels the evolution of unemployment between 1930 and 1932.

US stocks hit lowest level in 12 years

US stocks hit lowest level in 12 years

By Andre Damon

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The Dow Jones Industrial Average closed down 4.24 percent and the S&P 500 fell by 4.66 percent Monday, following stock market plunges in Europe and Asia. The selloff continues a major fall in equity prices as the world enters a period of depression.

Monday's fall followed reports by American International Group (AIG) that it had lost $61.7 billion in the last quarter of 2008. The Obama administration stepped in Monday morning to announce another massive bailout for the ailing insurance giant to forestall an even greater financial panic. (See "Obama administration announces billions more in bailouts to AIG".)

The drop in the first trading day of March followed a disastrous total drop for February, when the Dow Jones average fell by 11.7 percent, its worst performance since 1933, at the height of the Great Depression. The Dow ended at 6,763, closing below 7,000 points for the first time since 1997, around the beginning of the stock market bubble.

Financial stocks led the selloff which spread into all components of the major stock indexes. Bank of America share values fell more than 16 percent, and Citigroup and J.P. Morgan each fell by 6 percent. Within the "real economy," General Electric saw the worst drop, with its shares now trading at $8 a share, down 11 percent for the day.

The continued selloff of financial stocks has been driven by worsening financial earnings prospects, as estimates for economic growth in 2009 continue to plummet. Each week brings bleaker prospects for immediate earnings, and pushes a possible recovery deeper into the future. The US economy shrank at a 6.2 percent annual rate in the last quarter of 2008, and there is every indication that this contraction is accelerating into 2009.

"It's pretty despondent everywhere," Dwyfor Evans, a strategist at State Street Global Markets in Hong Kong, told the New York Times. "OK, there are signs that some of the leading indicators have stabilized to some extent, but it's at a very, very low level, and we're not seeing corporate investment picking up, or consumers starting to spend again—in other words, the traditional mechanisms by which economies come out of a recession are absent at this time." Other commentators spoke of an "unending nightmare."

The selloff comes despite the Obama administration's continued bank bailouts, which have put all the resources of the state at the disposal of the banks and major financial institutions, including AIG.

The fall in American stocks was preceded by dramatic selloffs in Europe and Asia. The London FTSE 100 fell by 5.33 percent, the Spanish IBEX fell 4.6 percent, and the German DAX fell another 3.48 percent. The FTSE Eurofirst 300 shed 5.16 percent.

Asia saw similar losses, with the Japanese Nikkei index shedding 3.81 percent and Hong Kong's Hang Seng losing 3.86 percent.

Losses in Europe were also led by financial companies, after the UK's HSBC bank announced that it would discontinue lending to US consumers and that it would try to raise about £12.5bn by selling shares at a highly discounted rate.

The stock markets in Europe and Asia were also hit by more economic reports pointing to a deepening depression. The Markit Eurozone purchasing managers' index, which measures manufacturing activity, fell to a record low of 33.5 last month, down from 34.4 in January. Javier Pérez de Azpillaga, European economist at Goldman Sachs, told the Financial Times that the figure "confirms deep and accelerating industrial contraction."

Yesterday the Japan Auto Dealers Association said that sales of Japanese cars plummeted by 32.4 percent in the seventh monthly decline in a row. Japan's exports have been halved in the course of the past six months. South Korea meanwhile released figures indicating that the country's exports fell by 17 percent in the past month.

The recent fall in US asset values has erased much of the rise in stock prices that began in the mid-90s, when the Internet bubble first emerged. At that time Federal Reserve chairman Alan Greenspan sheepishly warned about the dangers of "irrational exuberance," all the while pursuing a policy that artificially inflated stock values by guaranteeing that the Federal Reserve would reflate them during any crisis.

Since the 1987 stock market crash, the US ruling class—and its steersmen in the Federal Reserve—has responded to every deterioration in the US economy by lowering interest rates, providing cheap credit to fuel the speculative boom. That money found its way into assets, including stocks and mortgage-backed securities.

The price of a security must, however, ultimately refer back to the production of real value, and the markets are now crashing from their stratospheric heights. The government has responded by slashing interest rates to near-zero and funneling massive amounts of money into the banks and financial institutions. But nothing has proven effective in shoring up asset prices or bank balance sheets.

It is not only the magnitude of the crisis that makes it distinctive, but also the fact that all the US government's methods of dealing with previous downturns have been rendered completely ineffective. It is this that makes the crisis not merely an episodic downturn, but a historic turning point.

Former Guantanamo guard details prisoner abuse

Former Guantánamo guard details prisoner abuse

By Alexander Fangmann

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In testimony given in December to a US human rights organization, former Army Spc. Brandon Neely, previously a guard at Guantánamo, detailed the torture and abuse that he witnessed or personally participated in at the notorious US military prison.

Neely's account makes clear that the inhuman abuse he saw was an integral and tacitly accepted part of the day-to-day routine at the prison. The testimony stands as yet another indictment of the entire US political and military leadership responsible for the camp's establishment and continued operations.

Neely delivered his testimony on December 4, 2008, to the Center for the Study of Human Rights in the Americas (CSHRA), a research center at the University of California, Davis. CSHRA is conducting long-term research into the effects of the US war on terror on human rights in the Americas. Neely's contribution is part of their Guantánamo Testimonials Project.

For six months in 2002, starting in early January, Neely worked as a guard at camps "X-Ray" and "Delta" at the Guantánamo Bay Naval Base as part of a military police company.

Neely's extensive account of his experiences is revealing in its detail. He witnessed both physical and psychological prisoner abuse, and admits he is now ashamed of the treatment he gave prisoners. More importantly, his account makes clear that US military policies and decisions, combined with government rhetoric amplified by the media, directly facilitated this abuse.

Neely recalled how the September 11 events were exploited by the military in the wake of the terrorist attacks to shape the mind-set of soldiers and guards. Stationed at Fort Hood, Texas, he was called to the platoon office after watching the events unfolding on television: "Once we arrived we were told to grab our Kevlars and our gear and grab our M4 rifles and M9mm out of the armory, and that the United States was under attack by terrorists."

He added, "Once I found out that the United States had been attacked by terrorists I was ready for revenge. I was angry. I was ready to go to war. Someone or something had attacked my country, and I believed people needed to be held responsible for this." He told CSHRA, "I was ready to seek my own personal revenge on these people in whatever manner I could."

Immediately prior to being sent to Guantánamo, Neely and his unit were told that they would be dealing with violent and dangerous people, who were responsible for the terrorist attacks. As he put it, "I just kept thinking about what we were told all day—that we were going to come face to face with some of the worst people the world had to offer, and that these were the people who had attacked and killed so many people in our country."

Notably, Neely's unit was told that they would be "starting and running a detainee facility, not an EPW (or Enemy Prisoner of War) camp." As he told CSHRA, "We were told that a detainee camp had never been ran before, and that this would be the first time in history this had taken place since these people would not fall under the Geneva Convention." His unit apparently received no special training for the mission, and had only basic training in setting up, but not running, prisoner of war camps.

Soldiers received a briefing upon arrival in Cuba that led them to believe that the prisoners had already been determined to be guilty of terrorist acts. Neely states, "The only thing I can recall being told about the detainees that would arrive was that they were captured fighting the Americans in Afghanistan. And that they were known terrorists. And that many of them helped in the planning of the 9/11 attacks. We would be coming face-to-face with the worst people the world had to offer. Our mission would be to guard these terrorists so the United States could get more info on attacks and, possibly, stop more terrorist attacks.

"As far as the Geneva Conventions," Neely added, "we touched very shortly on that in training. Most of what people knew about them was from their own readings." In regard to the prisoners, Neely emphasizes that he "was told on numerous occasions they did not fall under the Geneva Convention."

Soldiers in Neely's company apparently were not housed in the barracks at the naval base, but in tents near the detention facilities. Neely said the soldiers were told they "could only live one step above the detainees." It would seem this policy was intended to further prejudice the guards against the prisoners, causing them to identify the prisoners with their own poor conditions. For Neely, at least, these conditions appear to have had the opposite effect.

Also contributing to Neely's decision later to speak out against the conditions at Guantánamo were his interactions with some of the prisoners, especially those who could speak English, one of whom was the Australian David Hicks. As Neely put it, "He just reminded me of a guy I would have just gone out and had a beer with.... He was a normal guy like me. And not much older. He would sit there, crack a joke, and make small talk. Just like any other normal person would. During these times is when I really started to look at the detainees as real people and not just monsters, as I had been told they were. This man had a family and people that loved him as I had. And we both missed them greatly, and we both wanted to return back to our families as soon as we could."

Neely would return to this theme later in his testimony: "I know that being in the position I was in as an active duty military police officer guarding the MOST dangerous men in the world that I was not supposed to really interact with the detainees. But it's hard. Especially when you realize that some of these guys are no different than yourself. The military trains you not to think and just to react and not feel any compassion for anyone or anybody. And do what you are told. No questions asked."

Another military police company escorted the prisoners to their interrogation sessions, and Neely did not directly witness any instances of torture committed during these interrogations. Some prisoners were also held in isolation cells in the Navy brig at the base, rather than in the main detention facilities. This may have been done to conceal the illegal detention of child prisoners. Neely told CSHRA, "No one actually ever said there were children being held there. There was just a lot of talk from the people who worked at the Brig that some of the detainees looked really young...."

One of the duties of Neely's unit was to escort prisoners to the medical facilities, where they were at times subjected to abuse. On one occasion, he took a prisoner to what was supposed to be a physical therapy session for treatment of a wound incurred during the prisoner's capture. A .50 caliber round had injured the man's bicep, and his transport to Cuba in shackles and restraints had resulted in the bicep healing to the forearm.

According to Neely, "The medic stopped massaging and started to stretch the detainee's arm down a little at a time. You could tell this was very painful and uncomfortable for him. The medic said, ‘You really want to watch him scream.' Then he stretched the arm all the way down until it was straight out on the bed. The detainee started screaming loud and crying. The medic finally put his arm back up and did it again. And then he said he was finished with the physical therapy. The whole time the medic just laughed at what he was doing."

Another type of abuse by medical staff occurred during the processing of newly arrived prisoners. There, in a holding tent, the prisoners would be subjected to a violent rectal examination by a doctor, ostensibly "to check for any kind of weapons that could be hidden there." Neely said that this was "not done in a gentle manner," and that even when he was not a direct witness, but still close enough to the tent, he could "hear the detainees scream and cry out during the exam."

He described in detail an incident concerning a prisoner who refused to drink the Ensure liquid dietary supplement he was given due to being underweight and malnourished as a result of his capture and subsequent custody. This prisoner apparently did not want to drink the beverage because he thought he was being poisoned. After the prisoner was physically restrained, a medic attempted to pour the Ensure down his throat. When he still refused, the medic motioned for Neely to stand to his side, after which the medic punched the prisoner twice in the face. Neely told CSHRA that the prisoner "was then hog-tied" and that "he laid in this position for a couple hours." Neely realized after the incident that he had been moved in order to block the view from the guard tower.

A more common sort of physical abuse was that done by the IRF, or Internal Reaction Force, which would be called in whenever a prisoner was deemed to have broken a rule, or was not following instructions. Other accounts of conditions at Guantánamo state that the IRF is often called for minor infractions. The IRF calls for a five-person team of MPs (military police) to subdue, restrain and handcuff or hog-tie the prisoner. One MP is assigned to each limb, with the first MP to enter the cage given a shield and "instructed...to hit the detainees as hard as possible."

Neely reported an incident of abuse in which he personally involved. Escorting an older prisoner to his cage for the first time, he and his partner ordered the man to his knees. At this point, the prisoner began to get "really tense and started to pull away." With handcuffs partly off, the prisoner jerked towards Neely, at which point Neely says that he "threw the detainee to the ground and was on top of him holding his face to the cement floor." After this, the IRF team was called, and the man was left hog-tied for several hours. Neely said that another prisoner would later tell him the man "thought he was going to be executed," as he "had seen some of his friends and family members executed on their knees."

The prisoners were also routinely subjected to physical and verbal abuse. On this matter, Neely's testimony included the following: "Upon arrival, detainees were screamed at throughout the whole process. They were told to shut up, walk faster, and what not. Some guards would call them ‘Sand Niggers.' I never heard that phrase until I was at Guantánamo. Detainees would be told that their country had been nuked and nothing was left, and that their families were dead. I know of some guards even telling detainees they could be executed at any time. This all was being said on the blocks by fellow MPs."

In his testimony, Neely explained why he felt compelled to speak out against the conditions at Guantánamo: "I want it to be told no matter how it makes me look. I believe it's very important people know what happened there. I am sure there were (and are) a lot of detainees in Guantánamo that are guilty of something. But, on the other hand, there are a lot that are not guilty of nothing at all other than being in the wrong place at the wrong time. And no one, guilty or innocent, should be treated in the manner they have been."

On Obama's decision to close the prison camp at Guantánamo, Neely commented: "That's great, but what are WE as the United States of America, the people who kidnapped and tortured these people, going to do for them? Just send them home like nothing happened? We started this mess and it's time we attempt to help this people move on with their lives. The sad part of this all is the people who are responsible, former President George Bush and former Vice President Dick Cheney will never be held accountable for the decisions they made. It's the detainees and the guards like myself that will have to live every day with what they went through, saw and did while there."

There is no reason to believe there has been a let-up of the torture and brutality described in Brandon Neely's testimony. In fact, according to a lawyer who represents detainees, abuse at Guantánamo has worsened sharply since Barack Obama took office. Ahmed Ghappour said prison guards apparently want to "get their kicks in" before the camp is closed.

Ghappour told Reuters of reported beatings, dislocation of limbs, spraying of pepper spray into closed cells, applying pepper spray to toilet paper and force-feeding detainees on hunger strike.

The Pentagon has responded that while it had received renewed reports of prisoner abuse at Guantánamo during a recent review of conditions, it had concluded that all prisoners were being kept in accordance with the Geneva Conventions.

Hillary Clinton reprises “peace process” fraud

Hillary Clinton reprises “peace process” fraud

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In her first trip to the Middle East as President Barack Obama's secretary of state, Hillary Clinton insisted that the new US administration is determined to press for a "two-state solution to the Israeli-Palestinian conflict."

Decades of US and Israeli policies, however, have made it abundantly clear that the two-state solution will neither resolve the democratic and social aspirations of the Palestinian people nor secure an end to the ceaseless militarism of the Israeli state, which in the end poses a mortal threat to Jewish working people in Israel itself.

Clinton made her pitch for the revival of the decades-old and deeply discredited "peace process" in the context of an international donors' conference called in the Egyptian resort of Sharm el-Sheikh to raise money for the rebuilding of the devastated Gaza Strip.

At the end of the 23-day Israeli onslaught against Gaza, over 1,300 Palestinians had been killed, many thousands more wounded and half a million driven from their homes. It remains a humanitarian catastrophe, with tens of thousands still homeless, sleeping in tents in the cold, inadequate food supplies and the threat of disease posed by the destruction of water and sewage infrastructure. Meanwhile, Israel continues to exercise a tight blockade at Gaza crossings, preventing access to essential supplies.

In her public statements, Clinton managed, incredibly, to make no mention of this destruction wrought by the Israeli military, referring only once to an abstract "crisis in Gaza." At the same time, however, she repeatedly condemned rocket attacks from Gaza, demanding that they stop. Needless to say, the American secretary of state made no such demand upon Israel to halt its continuing military actions against Gaza.

On the eve of Clinton's Middle East trip, which is taking her to Jerusalem and Ramallah as well, Washington announced that it is boycotting a United Nations-sponsored conference against racism. It refused to participate because a draft document for the conference described Israel's policy towards Palestinians in Gaza and the West Bank as a "violation of international human rights, a crime against humanity and a contemporary form of apartheid."

Washington's problem is that, while posturing as the champion of peace, it has been-and under Obama remains-an indispensible partner in these crimes. The weapons used to slaughter men, women and children in Gaza were made in the USA.

The amount of money that the US pledged at Sharm el-Sheikh for reconstruction in Gaza-$300 million-is a pittance compared to the money lavished on Israel for the arms used to carry out the destruction in the first place. Since 2002 Washington has given the Israeli state $21 billion in military aid, while signing a 10-year agreement last year to provide it $30 billion.

The Obama administration will continue this aid. As Clinton's performance in Egypt made clear, the Washington-orchestrated "peace process" will consist, as in the past, of US negotiators pressuring the Palestinians to bow to Israel's demands.

As Clinton put it in Sharm el-Sheikh, this process demands that the Palestinians "break the cycle of rejection and resistance"; in other words, that they acquiesce and submit.

This modus operandi of US Middle East diplomacy has persisted over the course of more than a decade and a half under Democratic and Republican administrations alike, from Yassir Arafat's appearance in the White House Rose Garden with Ms. Clinton's husband and Israeli Prime Minister Yitzhak Rabin in 1993, to subsequent conferences at Wye River in 1998, Camp David in 2000 and Annapolis in 2007.

It has produced a situation in which the so-called "two-state solution" is today manifestly unviable.

The Palestinian state advocated by the Clinton administration and subsequently by that of George W. Bush, has taken the form of a grotesque farce in the form of the Palestinian Authority of President Mahmoud Abbas, which has become synonymous with corruption and impotence. Its mandate is restricted to scattered Palestinian towns in the West Bank, cut off from each other by Israeli settlements and militarized zones. It is cut off entirely from the Gaza Strip, the Israeli-blockaded territory governed by the Islamist Hamas movement.

US policy towards the Palestinians has essentially been an attempt to build up Abbas's regime and its security forces as a surrogate force for American and Israeli interests in the region and to use it to suppress Hamas. This was reiterated at Monday's donors' conference in which Clinton and other US officials insisted on iron-clad guarantees that not a cent of US funding would go to the Hamas administration in Gaza, a stipulation that will obviously impede reconstruction.

In a report prepared in conjunction with Clinton's trip, the Israeli Peace Now movement revealed that the Israeli government has drawn up plans to build at least 70,000 new housing units for Jewish settlers in the West Bank, potentially doubling the settler population in the occupied territory. This population is already four times what it was a decade ago, and its continuous expansion-together with accompanying Israeli military forces and security road networks-has taken up fully 40 percent of the land on the West Bank.

Any Palestinian state would be physically and economically completely dependent on Israel, and through it the United States. The Palestinian Authority, built up by the United States, would be tasked with policing the the Palestinian population and suppressing popular opposition.

The policy being promoted by Clinton is in fundamental continuity with that pursued by the Bush administration for the last eight years. Its objective is not "peace" in the Middle East, but rather the promotion of American hegemony over the region and its vast oil reserves.

A genuine settlement of the 60-year-old Israeli-Palestinian conflict can be found neither under the auspices of US imperialism nor through the division of the territory into religious and ethnic-based statelets. It requires the unification of Arab and Jewish working people on a secular, socialist and internationalist perspective in a common struggle against Zionism, imperialism and the ruling elites of the Arab countries for a socialist federation of the Middle East.

The Recession and the 'Deserving Poor'

The Recession and the ‘Deserving Poor’

Poverty finally on media radar—but only when it hits the middle class

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As the economy crumbles, issues of poverty and economic need have begun to make more frequent appearances in the news media. From October through December 2008, for example, the three nightly TV news shows ran 20 stories—about one every four or five days—addressing poverty or related issues such as homelessness or food stamps. A previous FAIR study of nightly news coverage (Extra!, 9–10/07), by comparison, found an average of one poverty story on the evening news every three weeks.

More coverage, though, does not necessarily mean better coverage. And while swelling food-stamp rolls and unemployment lines may become media staples as the economic downturn worsens, the way poverty issues are portrayed remains constrained by political biases and stereotypes.

If there’s one commonality to the recent surge in coverage of economic need, it’s that the focus is on the newly poor—-with particular attention to those who can claim a middle-class background. In one typical segment, ABC World News (11/27/08) visited a food bank in Maryland where the director recalled a former donor of food who had fallen on hard times: “Now, she was getting food from us. And she was embarrassed.” Continued correspondent John Donvan:

He was a kitchen installer who now can’t find customers. She was a professional dog groomer who now works at Target. . . . This year, they took a serious tumble from the middle class after losing their home in a foreclosure. At least, food stamps would let them shop for groceries just as before, or so they thought.”

Journalists, of course, are conditioned to look for unexpected contrasts—so-called “man bites dog” stories. Yet the incessant focus on recent arrivals to poverty ends up marginalizing the 37 million Americans who were officially poor before the economic crash. The Newark Star-Ledger (10/8/08), for example, cited a New Jersey county human services director who “said the requests for help have expanded in recent months beyond a core of lower-income residents in the Morristown and Dover areas. ‘These are truck drivers coming in who can’t find work. Senior citizens who have never before requested help but can’t get by. That’s not good.’” (The already existing low-income “core,” presumably, was of less concern.)

Some reports even asserted that poverty was now an issue because its new victims weren’t really poor: “Healthcare a Budget-Buster for Families; Even County’s Middle Class Can’t Afford It” ran a typical headline in the Columbus Dispatch (1/15/09)—raising the question of what definition of “middle class” includes being “broke after paying for their basic needs, leaving no money for healthcare or insurance.”


It’s a contrast, says Stephen Pimpare, a Yeshiva University historian and author of A People’s History of Poverty in America, that
taps into very old American notions of what distinguishes the deserving poor from the undeserving poor—trying to distinguish those people who are poor through no fault of their own, and therefore deserve our sympathy and our assistance, and all of those other people who are poor because they’re stupid, because they’re lazy, because they have too many babies.

Yet, he notes: “The people who are becoming newly poor from being laid off from businesses that are failing are not different than people who were laid off two years ago. The only thing that’s unusual about it is the scale.”

At times, news outlets strained to find this distinction. A front-page story on “The Growing Foreclosure Crisis” in the Washington Post (1/17/09) sported the subhead: “One oft-repeated assertion no longer holds true. Those in trouble are not, primarily, lower-income borrowers.” After describing buyers of million-dollar houses who now found themselves in foreclosure, the Post article reported, “The foreclosure crisis knows no class or income boundaries. Many borrowers ensnared in the evolving mortgage mess do not fit neatly into the stereotypes that surfaced by early 2007 when delinquency rates shot up.”

If these were stereotypes, though, they weren’t ones you would have gotten from reading the Washington Post. Over the previous two years, the Post had not run a single major story on the effects of the foreclosure crisis on low-income homeowners. It did, however, run an almost identical front-page story one year earlier (12/10/07) with the subhead, “‘People From All Walks’ Having Trouble Paying Mortgages,” as well as front-page articles on foreclosures of condo owners in suburban Silver Spring (4/8/07) and on the effects of foreclosures on pets (4/9/08).

Foreclosures and unemployment insurance were also more likely to receive coverage than, say, welfare (which is seen as the domain of the long-term poor) or the earned income tax credit (which affects low-wage workers, and so is less likely to come into play for those losing middle-class employment). When the NBC Nightly News (12/7/08) had CNBC personal finance expert Carmen Wong Ulrich on to discuss what the newly laid-off should do now, her first recommendation (after “hunker down and really live lean”) was to file for unemployment benefits as soon as possible, noting: “This is not part of a welfare program. We all pay for own our unemployment insurance, so you have to go and get it.” The implication: Unemployment insurance, which is paid out of payroll taxes, is somehow more legitimate than welfare or food stamps, though these are paid for, after all, by our tax money as well.

Some reporters, meanwhile, felt even nearing 50 million poor Americans was no cause for pessimism: When Princeton economist Paul Krugman said that the prospect of an additional 10 million going below the poverty line was “nightmarish,” NBC’s Maria Bartiromo (12/1/08) replied, “Perhaps nightmarish, but the optimists will say that, given we have been in recession for a year starting last December, perhaps we are closer to the end and could emerge soon from it.” (“I love the attempt at optimism,” chimed in anchor Brian Williams.)


Of course, whether we emerge from recession—and whether the poverty figures can be kept from rising, let alone reduced from where they’ve stood for the better part of three decades—will depend on government policy. Yet almost without exception, media tales of deprivation have steered clear of any mention of policy decisions. When new figures came out in December that one out of 10 Americans were now receiving food stamps, the CBS Evening News devoted a long segment to it (12/23/08), with anchor Harry Smith proclaiming, “A record number of people are now being forced to do something they once considered unthinkable.” After profiling a New Hampshire hospital maintenance worker (and Air Force veteran) who had applied for food stamps for the first time—the report didn’t say why—correspondent Byron Pitts closed with this exchange:
PITTS: As for John O’Donnell, he’s still holding on to his faith.
O’DONNELL: Times will get better. I’m an American and I believe in God.
PITTS: Like so many Americans, that’s all he has left.

There is, in fact, a firewall between discussions of poverty and of policy in much of the news media, one that is rarely breached. During a Meet the Press (NBC, 11/16/08) discussion of the then-proposed auto bailout, PBS host Tavis Smiley raised this issue, saying:
We had three presidential debates, let’s be honest about it, where the word poverty never came up, where the working poor and the very poor were never discussed in three presidential debates. I don’t think, Tom, that the working poor and the very poor in this country begrudge people who are better off. They understand, I think, that there are 3 million jobs tied into this auto industry. At the same time, where is the conversation about corporate mendacity? Where is the conversation about everyday people and how this government is responsible to those persons who are disadvantaged, disenfranchised?


Not on Meet the Press, apparently: The program went on for another 40 minutes without the subject of poverty being addressed again.

One rare exception to the taboo on discussing either government policy or existing poverty was a New York Times editorial (11/27/08) that noted, “Largely missing from the discussion about the faltering economy is the recession’s impact on the 37 million Americans who are already living at or below the poverty line—and the millions more who will inevitably join their ranks as the downturn worsens.” These figures, it said, were of even more concern given the nation’s frayed safety net:
Since the Reagan administration, the federal government has steadily reduced its role in curtailing poverty, or even in coordinating state and local efforts to help alleviate it. . . . The experience of being poor in America, never easy, will soon become even more difficult for more people—unless Congress boosts food stamps, modernizes the unemployment compensation system and takes other steps to strengthen the ability of the federal and state governments to help the millions who will need assistance.

What should be done, according to the Times? After that single sentence urging Congress to boost food stamps and “modernize” unemployment benefits, the editorial spent its final three paragraphs urging a better definition of poverty to replace the now four-decade-old “poverty line.” Concluded the Times: “If there was ever a time for more precise measurements, it is now.”

Contrast this editorial—which ran on Thanksgiving Day, the traditional time of year for media attention to hunger and poverty—with the five separate editorials the Times ran in the preceding and following weeks (11/2/08, 11/11/08, 11/24/08, 12/7/08, 12/9/08) urging immediate government action to reform mortgage and foreclosure practices. “It wouldn’t take much,” wrote the Times (11/11/08), to pay banks to rework failing mortgages: a mere $40 billion.

That pittance, it’s worth noting, is more than the entire annual U.S. expenditure on food stamps—and well more than the extra $24 billion a year that Joel Berg, a former Clinton USDA official and author of the book All You Can Eat: How Hungry Is America?, estimates it would take to eliminate hunger entirely.

It’s a distinction that Berg believes has its roots in the cultural divide that exists between largely middle-class journalists and their low-income neighbors. “Many journalists do have mortgages,” he says. “They understand from a visceral point of view what it could mean not to be able to get a loan. They have no personal understanding at all of what it might mean to take a bus to another bus to stand in a food stamp office all day.”

Pimpare agrees, noting that the main reason notions of the “undeserving poor” broke down during the Great Depression was that so many people saw their friends and neighbors becoming suddenly impoverished. “So much of large audience journalism is produced by people who are not working-class and tend not to know working-class, let alone poor people,” he says. “The subtext now is that this is something we need to pay attention to, because ‘good, decent people’ are being affected.”

A.I.G. Reports Loss of $61.7 Billion as U.S. Gives More Aid

A.I.G. Reports Loss of $61.7 Billion as U.S. Gives More Aid

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The federal government agreed Monday morning to provide an additional $30 billion in taxpayer money to the American International Group and loosen the terms of its huge loan to the insurer, even as the insurance giant reported a$61.7 billion loss, the biggest quarterly loss in history.

The loss of $22.95 a share compared with a fourth-quarter loss in the period a year ago of $5.3 billion or $2.08 a share. For the year, A.I.G. lost $99.3 billion or $37.84 a share, compared with a profit of $6.2 billion or $2.39 a share for 2007.

In the quarter, A.I.G. took a $21 billion charge related to taxes and wrote down $25.9 billion in assets, including mortgage-back securities and credit-default swaps.

The company’s general insurance business lost $2.8 billion compared with a profit of $2.1 billion in the quarter a year ago. Premiums dropped 16.3 percent to $9.2 billion and earnings from premiums fell 5.9 percent to $10.98 billion.

The government intervention would be the fourth time that the United States has had to step in to help A.I.G., the giant insurer, avert bankruptcy. The government already owns nearly 80 percent of the insurer’s holding company as a result of the earlier interventions, which included a $60 billion loan, a $40 billion purchase of preferred shares and $50 billion to soak up the company’s toxic assets.

In a conference call Monday, the chief executive, Edward Liddy, who joined A.I.G. in September, said the insurer had drawn down about $38 billion of the $60 billion credit line it received from the government last year.

Earlier, in an interview on the NBC News program “Today,” Mr. Liddy said A.I.G. “was in much worse condition than I thought.” In addition, he said: “The economy is worse. The financial markets are worse.”

Although he avoided offering a forecast on the first quarter, Mr. Liddy said A.I.G.’s outlook was “very much going to be influenced by what happens to the condition of the economy and the financial marketplace around the globe.”

But he tried to reassure policyholders, saying that the insurance portion of the company was in good shape. “It’s all of the other ancillary businesses that are causing this,” Mr. Liddy said. “And it’s the decline in asset values around the globe.”

Federal officials, who worked feverishly over the weekend to complete the restructuring, said they thought they had no choice but to prop up A.I.G., because its business and trading activities are so intricately woven through the world’s banking system.

But the deal also presents more financial risks to taxpayers at a time when the public and Congress have been sharply questioning the wisdom of risking federal money to bail out private enterprises.

The government’s commitment to A.I.G. far eclipses its rescue of other financial companies, including Citigroup, which has received $50 billion in rescue financing, and Bank of America, with $45 billion.

Credit rating agencies like Moody’s, Fitch Ratings and Standard & Poor’s had been preparing to sharply downgrade A.I.G.’s credit ratings on Monday because of the record quarterly loss. That would have forced A.I.G. to default on its debt, threatening to set off shock waves throughout the financial system as banks holding A.I.G. derivatives contracts would probably demand cash collateral and other payments from A.I.G. during a time when it has little to spare.

The major credit-rating agencies were briefed on the pending deal between A.I.G. and the government, the people involved in the talks said, and they have committed not to downgrade the company’s debt as a result.

“The steps announced today provide tangible evidence of the U.S. government’s commitment to the orderly restructuring of A.I.G. over time in the face of continuing market dislocations and economic deterioration, the Treasury said in a statement.

Both Fitch Ratings and Moody’s Investors Service on Monday affirmed A.I.G.’s senior debt credit ratings, but downgraded its hybrid bonds on the risk that payments may be deferred. Under the deal, the government will commit $30 billion in cash to A.I.G. from the Troubled Asset Relief Program, should the company need it, the Treasury Department said in a statement. A.I.G. is not expected to draw down the money immediately, but the government’s commitment was enough to satisfy the rating agencies.

Another part of the deal would allow A.I.G. to exchange

$40 billion in preferred nonvoting shares, which paid a 10 percent dividend, for new preferred shares that do not require a dividend. That would save A.I.G. $4 billion annually.

To further ease A.I.G.’s debt burden, instead of paying back $38 billion in cash with interest that it has used from a federal credit line, government will convert that into equity in two of the insurer’s subsidiaries in Asia — American International Assurance and the American Life Insurance Company.

Both units are performing well. This would give the government direct ownership in those subsidiaries and provide saleable assets to American taxpayers even if the A.I.G. holding company were to default on its loans.

The government stake in American International Assurance will probably be controversial. The unit had been put up for sale recently, without success. That suggests that the government is giving A.I.G. better terms than private investors were willing to give, exposing the government to further accusations that it is providing a handout to A.I.G.

Also as part of the deal, the government would agree to lower the interest rate on all remaining A.I.G. debt to match the London Interbank Offered Rate, or Libor. That would replace the previous rate, which was three percentage points higher than Libor. That move would save A.I.G. $1 billion in interest payments.

The new cash commitment reached on Sunday represented the fourth time since September that the federal government has taken steps to keep A.I.G. from collapsing. The previous rescues were intended to stabilize A.I.G. and buy it time to restructure. But the rescues were insufficient, in part because A.I.G. has either invested in or insured so many assets that keep losing value as the economy sours.

In September, the Federal Reserve lent A.I.G. $85 billion when the company suddenly found itself unable to meet a round of cash calls. To secure the emergency loan, A.I.G. issued the Fed warrants for slightly less than 80 percent of the company’s shares.

Officials said at the time that they thought the loan would provide A.I.G. all the cash it could possibly need. The government brought in a Mr. Liddy to sell off some of A.I.G.’s operating units to raise money, since the rescue loan had to be paid back within two years. Mr. Liddy drew up a plan, saying he expected a smaller, well-capitalized version of A.I.G. to remain after the restructuring.

But in just weeks it became clear that A.I.G.’s problems were so grave the $85 billion would not be enough. It was using up that money alarmingly fast, thus burdening itself with higher than expected debt-servicing costs, because it had to pay the Fed a higher rate of interest on the part of the loan that it drew down.

In October, the government cut A.I.G. some slack by creating a new $38 billion facility to shore up its securities lending business, and gave the company access to a new commercial paper program, which had a much lower interest rate than the rescue loan.

But that was not enough either. In mid-November, the government restructured its loans to A.I.G., raising its total commitment to $150 billion. The new arrangement reduced the rescue loan to $60 billion and stretched out its term to five years instead of two.

At the same time, it injected $40 billion into A.I.G. in exchange for preferred shares. And it created two special-purpose entities to take the most toxic assets then plaguing A.I.G. out of play.

Those arrangements kept the government’s stake in A.I.G. at 77.9 percent. The government has not wanted to go above 80 percent, because it would then have to consolidate all of A.I.G.’s assets and liabilities into its own finances, putting taxpayers on the hook for the claims of roughly 76 million insurance policyholders around the world.

While November’s restructuring did buy A.I.G. more time, it was not able to sell the operating units that Mr. Liddy put up for sale — or, when assets were sold, the prices were shockingly low.

Dow Below 6,800; Lowest Close Since '97

Steep Market Drops Highlight Despair Over Rescue Efforts

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Fears that the world’s economies are even weaker than had been thought ricocheted around the globe on Monday as investors from Hong Kong to London to New York bailed out of stocks.

Losses cascaded from one market to the next as concern spread that government efforts had not been enough to stabilize troubled financial institutions or broader economies. Only by Tuesday morning did markets show signs of stabilizing, with key indexes in Asia showing more modest declines.

But Monday’s losses were bad everywhere, and particularly severe in Europe, where an emergency meeting over the weekend ended in bickering and the rejection of a bailout plea from Hungary.

In the United States, the Dow Jones industrial average fell below 7,000 for the first time since 1997 as investors reacted to reports that construction and industrial activity had continued to decline and to a $61.7 billion loss posted by the insurance giant, the American International Group. It was the largest quarterly loss ever for a company.

In Britain, the major stock market index lost 5.3 percent, and the performance of the major Italian index was worse, declining 6 percent. With the dollar also gaining, the losses were even greater for international investors in those markets.

In the United States, the Dow fell 299.64 points, or 4.24 percent, to 6,763.29, while the Standard & Poor’s 500-stock index fell 34.27 points, or 4.66 percent, to 700.82. The Nasdaq composite ended 54.99 points, or 3.99 percent, lower, at 1,322.85.

Crude oil settled at $40.15 a barrel, down $4.61.

“It’s pretty despondent everywhere,” said Dwyfor Evans, a strategist at State Street Global Markets in Hong Kong. “O.K., there are signs that some of the leading indicators have stabilized to some extent, but it’s at a very, very low level, and we’re not seeing corporate investment picking up, or consumers starting to spend again — in other words, the traditional mechanisms by which economies come out of a recession are absent at this time.”

Hopes that the American economy, which led the world into recession, might lead it back out this year have been fading.

Last weekend, Warren E. Buffett, the chairman of Berkshire Hathaway, wrote in his company’s annual report that “the economy will be in shambles, throughout 2009, and, for that matter, probably well beyond.”

As if to emphasize the problems, the Institute for Supply Management reported that companies in Britain, France, Germany, Italy, and the United States said business was getting much worse, especially in terms of jobs.

Paul Dales, an economist with Capital Economics, pointed to the survey in forecasting that the February employment report will show a decline of 785,000 jobs when it is released on Friday. If so, it would be the largest one-month decline in employment in nearly 60 years.

Last week, the United States revised its estimate of fourth quarter gross domestic product to show a decline at an annual rate of 6.2 percent, the worst in more than a quarter century. On Monday in reporting that construction activity fell sharply in January, the government also revised the December figure lower.

“That change could move the fourth quarter figure down to a 7 percent decline,” said Robert Barbera, the chief economist of ITG, a research firm.

Despite the American problems, the dollar has been gaining, particularly against European currencies. The euro slipped to under $1.26, nearing a two-year low and down from a high of almost $1.60 last spring. There was a renewed flight to safety, with the 10-year Treasury bond yield falling to under 3 percent.

The continued plunge of the stock markets has stunned investors and governments. Over the six months that ended last week, the S.& P. 500 lost 43 percent of its value. There were similar declines during the Great Depression, but since then, the worst six-month performance before the current plunge was a 32 percent fall in 1974 when the world was also in recession.

While there has been speculation about international cooperation to deal with the growing financial and economic crisis, the European Union summit this weekend provided an indication that few countries were willing to risk their own taxpayers’ money to help others.

“The E.U. again has proven it is unable to manage a coordinated response to the crisis,” Commerzbank analysts wrote in a note Monday. “The problems arising in Eastern Europe will put further pressure on the euro.”

While all countries are suffering, the United States and some Western European countries still have access to loans, which has enabled them to mount large stimulus plans and bear the costs of bailing out banks.

But in some other areas, notably Eastern Europe, the value of the local currencies has plunged as economic activity has weakened. That is a perilous path in countries where the government and many homeowners took out loans in foreign currencies, seeking lower interest rates, and now find themselves owing far more than they borrowed.

Reflecting that fact, over the same six months that the American stock market fell 43 percent, most European and Asian markets did even worse when measured in dollars. The Hungarian market, for example, was off 67 percent, while the German exchange fell 48 percent.

Investors have greeted the stimulus spending plans with some hesitation in part because of signs that the financial system continues to weaken.

“We can unleash as many trillions of dollars in stimulus as we wish, but if we don’t fix the banking system, we still have a patient in cardiac arrest,” the chief strategist at Charles Schwab, Liz Ann Sonders, said.

In addition to the loss at A.I.G., HSBC, the London-based international bank, said it would close its American consumer finance business, which it took on when it acquired Household Finance in 2003, in one of the decade’s worst acquisitions. HSBC said it would raise $17 billion in new capital from shareholders. Its shares fell 19 percent, to its lowest level in a decade.

The A.I.G. loss far exceeded the previous quarterly record deficit of $44.9 billion, set by Time Warner in 2002 when it wrote down the value of AOL.

Another factor depressing investors is the dividend cuts that many companies have been forced to make. On Monday, the large regional bank PNC Financial Services Group cut its dividend 85 percent and the International Paper Company cut its by 90 percent. Last week, General Electric cut its dividend 68 percent, and JPMorgan Chase reduced its dividend 87 percent.

The surveys of businesses, which ask whether various aspects of business are getting better or worse, showed figures in the low-to-mid 30s in all countries, driven down by sharply lower employment expectations. On those surveys, a figure of 50 indicates that business is neither getting better nor worse, and figures below 40 show a sharp rate of decline.

That very plunge could augur well in the not-too-distant future, since it appears that production in many areas is running below sales as companies seek to cut costs.

“The intensity of inventory reduction is stunning,” said Tobias Levkovich, a Citigroup strategist, in a note to clients. “The depressed level of production relative to final sales argues that there is real potential for production levels to lift” in the second half of the year, he said, leading to surprisingly good profits.

For now, at least, few investors expect any such good news. The S.&. P 500 fell 18.6 percent in the first two months of 2009, even before Monday’s fall. That was its worst start, exceeding the 18.2 percent fall recorded in the first two months of 1933, another year when a new president took office during an economic and financial crisis. In 1933, the stock market soon turned, and nearly doubled over 12 months.

The S.& P. 500 has now fallen below, and the Dow is close to, the levels that prevailed on Dec. 5, 1996, when Alan Greenspan, then the chairman of the Federal Reserve, inquired in a speech, “How do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions as they have in Japan over the past decade?”

It was a question that has been answered over the last 17 months. During that period, the Dow has fallen 52.3 percent, a larger percentage decline than in any bear market since the Great Depression, but nowhere near the 89 percent collapse that took less than three years to complete after the 1929 high.

Secret Bush Memos Released: Read Them Here!

Secret Bush Memos Released: Read Them Here!

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Below are previously inaccessible memos written by Bush administration officials outlining their reasons for why the military had the right to warrantless wiretaps and warrantless search and seizures of people in the U.S. they deemed to be terrorist suspects. The Obama administration released the memos. Read them below.


Memorandum Regarding Status of Certain OLC Opinions Issued in the Aftermath of the Terrorist Attacks of September 11, 2001 (01-15-2009)


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Memorandum Regarding Constitutionality of Amending Foreign Intelligence Surveillance Act to Change the "Purpose" Standard for Searches (09-25-2001)


memoforeignsurveillanceact09252001 - Free Legal Forms

Memorandum Regarding Authority for Use of Military Force to Combat Terrorist Activities within the United States (10-23-2001)


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Memorandum Regarding Authority of the President to Suspend Certain Provisions of the ABM Treaty (11-15-2001)


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Memorandum Regarding the President's Power as Commander in Chief to Transfer Captured Terrorists to the Control and Custody of Foreign Nations (03-13-2002)


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Memorandum Regarding Swift Justice Authorization Act (04-08-2002)


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Memorandum Regarding Determination of Enemy Belligerency and Military Detention (06-08-2002)


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Memorandum Regarding Applicability of 18 U.S.C. § 4001(a) to Military Detention of United States Citizens (06-27-2002)


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Memorandum Regarding October 23, 2001 OLC Opinion Addressing the Domestic Use of Military Force to Combat Terrorist Activities (10-06-2008)


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