Friday, March 13, 2009

More Companies At Risk of Failing

More Companies At Risk of Failing

By Rick Newman

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Everybody hopes the economy bottoms out and starts to improve tomorrow. Or sooner. But there are few signs of an imminent recovery. One obvious indicator is the health of big companies - you know, the ones that have been announcing all those four- and five-digits layoffs recently. And the outlook for them seems to be getting worse, not better.Moody's, the ratings agency, recently published a list of "bottom rung" companies most likely to default on their debt. The criteria are technical, but the upshot is that a lot of companies are in deep trouble - and the list is getting longer, not shorter. Moody's predicts that the default rate on corporate bonds this year will be three times higher than in 2008, and 15 times higher than in 2007. Defaults are often the last step before a bankruptcy filing. And bankrupt companies, obviously, don't usually hire people. They dramatically shed costs and workers and sometimes liquidate completely, firing everybody.

[See 15 firms that might not survive 2009.]

So the Moody's findings help explain why most economists expect the unemployment rate, now 8.1 percent, to rise as high as 9 or 10 percent before it starts to drift back down. And right now, real and perceived fears about job security are the main force driving a contraction in consumer spending, and the economy as a whole. Here's what the bottom-rung report tells us about the next several months:

There will be a lot more bankruptcies. Moody's places 283 companies on its bottom-rung list, up from 157 a year ago. Since the quarterly list was last updated, 73 additional companies have fallen to the bottom rung. Twenty-four companies made their way off the list - but mostly because they defaulted on their debts. Only one company, Landry's Restaurants, got off the list because its circumstances improved.

[See why bank nationalization terrifies Wall Street.]

Companies exposed to consumer spending have it toughest. The industries most represented on the list are media, automotive, retail and manufacturing. Companies in the most acute danger are those with reduced cash flow and a high debt load. A lot of big, well-known companies are in danger. On the list: Advanced Micro Devices; AirTran; AMR (parent of American Airlines); Chrysler; Duane Reade; Eastman-Kodak; Ford; General Motors; JetBlue; Krispy Kreme; Palm; R.H. Donnelly; Reader's Digest Association; Rite-Aid; UAL (parent of United Airlines); Unisys; and US Airways.

Many of the other firms on the list are second- or third-tier suppliers to automakers, airlines, and other troubled firms. Being on the list doesn't mean a firm is destined for bankruptcy. But it does mean the company faces severe constraints in terms of raising new capital, making new investments, and hiring. Instead of expanding, it may be far more inclined to sell assets, streamline or close divisions, and lay people off to cut costs and raise cash.

[See 6 possible upsides to a GM bankruptcy.]

America's malls are going to end up looking a lot different. The retail sector is obviously getting hammered, with chains like Circuit City and Linens 'n Things already out of business. Many other retail chains are in trouble. Also on the bottom-rung list: Barney's; BCBG Maz Azria; Blockbuster; Brookstone; Claire's Stores; Eddie Bauer; Finlay Fine Jewelry; Harry & David; Loehmann's; Michael's Stores; Oriental Trading Co.; and Sbarro. Again, this doesn't mean the company is doomed. But many of these firms will restructure, close outlets, shrink, and find ways to transform themselves. So if you ever go back to the mall, and your favorite shop has disappeared, you'll know why.

Reforming the Global Financial System, Flushing the Parasites

Reforming the Global Financial System, Flushing the Parasites

By Nikki Alexander

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Prologue

When Benjamin Franklin was called before the British Parliament in 1757 and asked to account for the prosperity in the American colonies. He replied, "That is simple. In the colonies we issue our own money. It is called Colonial Scrip. We issue it in proper proportion to the demands of trade and industry to make the products pass easily from the producers to the consumers. In this manner, creating for ourselves our own paper money, we control its purchasing power, and we have no interest to pay to no one." It was the struggle for financial sovereignty that precipitated the American Revolution when the (Rothschild) Bank of England forced the colonists to give up their own currency.

That war never ended.

Throughout his political life Thomas Jefferson fought off the covert attempts of European bankers to control the nation’s money supply through a privately-owned central bank. Andrew Jackson succeeded in defeating these racketeers, nationalizing the banks and paying off the public debt. Our country then flourished without inflation. When Abraham Lincoln issued ‘greenbacks’ that deprived private bankers of their monopoly control of the nation’s money supply he was assassinated. The international bankers battled for more than a century to establish a private central bank in the United States with the exclusive right to print their own fiat notes and exchange them for government debt. They succeeded in 1913 with The Federal Reserve Act, a covert coup that authorized a private central bank to create money out of nothing, lend it to the government with interest and control the national money supply, expanding or contracting it at will. Representative Charles Lindbergh called the Act "the worst legislative crime of the ages." Fifty years later, President John F. Kennedy almost restored our Constitutional monetary system when he issued debt-free Treasury Notes. He too was assassinated.

The Systemic Usury Parasite

In 1913 our sovereign authority to create interest-free money was unconstitutionally transferred to a transnational private banking cartel that has systemically infected our economy with a staggering national debt in the tens of trillions of dollars. Eighty-five cents of every dollar is now consumed as “interest” by the systemic usury parasite, draining its host of vital resources and collapsing our economy in bankruptcy. Ours is not the only nation to succumb to systemic parasitism.

The Systemic Usury Parasite has infected 170 countries, feeding itself through the central bank syndicate, a shareholder-owned consortium of private banks. Each central bank parasite has an exclusive monopoly on its host government’s monetary system, with the power to create public debt and expand or contract the host’s economy at will. Coordinating their monetary policies with each other through the Bank for International Settlements, the central bankers meet behind closed doors, appoint their own governors and set their own rules. Their books are not subject to audit by the individual governments that host them. The Bank for International Settlements originated as a Nazi money laundering operation[1] and serves today as the cashiers window for the global casino.[2] The IMF and World Bank tentacles of this parasite, infect unsuspecting governments with insurmountable debt, forcing these nations through “structural adjustment” policies to rob their taxpayers, slash beneficial social programs, transfer public assets to private owners and sell the nation’s treasures to transnational predators at fire sale prices. Government treasuries are the parasite’s host. Why rob just one bank when you can rob the whole nation? And why rob just one country when you can rob them all? Flushing the global economy of this systemic parasite begins with understanding how its debilitating web of debt is manufactured.

Although governments have inherent authority to create their own money, they foolishly borrow it from central banks, with interest. A central bank fabricates fiat notes (paper money) and credit by “lending” them into existence, in return for treasury bonds of the host government ~ taxpayer IOUs. This “money” has no pre-existing substance in reality and is conjured up through accounting entries. It is literally created out of nothing. The central bank first lends these accounting entries to its private owners and then to its downline commercial banks with interest. The commercial banks are permitted to lend nine times the amount of their borrowed accounting entries held “in reserve”. This nine-fold multiplication of borrowed accounting entries is described as “fractional reserve banking.” When borrowers accept these accounting entry loans they create massive inflation of the money supply which devalues the currency. These accounting entry loans must be “paid back” with compound interest that multiplies exponentially. More money must then be fabricated to pay this interest. Thus, all “money” that enters circulation is actually debt contrived by fictitious accounting entries. Every fiat dollar is an IOU from a borrower to a lender. A debt-based monetary system can never achieve equilibrium because compound interest always overwhelms the escalating money supply and eventually causes systemic collapse.

Organized Crime

Today the nation is essentially bankrupt and hoping Barack Obama’s team of Wall Street advisors will forestall economic collapse. This expectation is equivalent to hoping that Al Capone will make our streets safe. The economic recovery team is a Trojan horse filled with the same Wall Street racketeers that infected the global economy with a quadrillion dollar derivatives bubble, using deliberately deregulated mechanisms. They have successfully held the nation hostage with a universal credit freeze and threats of systemic collapse if trillions of dollars in ransom demands are not met. But why would our government agree to double its public debt to save ruthless gamblers from bankruptcy? Why would our government re-victimize taxpayers who did not participate in this global fraud and whose investments, retirement savings, pension plans and real estate values have already been eviscerated by these swindlers? The answer is that the Treasury Secretary and Federal Reserve Chairman have historically represented a parasitic transnational crime syndicate, not the host government and its taxpayers.

The US Government is an instrument of the organized crime syndicate described alternatively as the Washington Consensus, the Octopus, the Shadow Government, the New World Order and Wall Street. This syndicate of transnational racketeers includes bankers, interlocking corporate directors, American, European and Asian “royal” families, cocaine and opium drug traffickers, illegal weapons dealers and kingpin controllers of blood diamonds, gold and oil. From the very beginning of America’s fledgling democracy these international predators surreptitiously gained control of the railroads, banks, oil and vital infrastructure, using a maze of corporations, offshore banks and holding companies that disguised foreign ownership of national resources.[3] During the 19th and 20th centuries this syndicate secured private ownership of vital infrastructure and natural resources worldwide by engineering wars and assassinating democratic leaders. They financed Trotsky, Lenin and Hitler, using syndicate members within the Treasury and Federal Reserve to protect “their” international assets. Thomas Lamont, a JP Morgan banker, who was the US Treasury’s representative at the 1919 Treaty of Versailles negotiations, personally raised $100 million to finance Benito Mussolini. William Boyce Thompson, director of the New York Federal Reserve traveled to Russia to destabilize the Bolshevik Revolution, ensuring that railroads, banks, oil and vital resources would remain in private hands.[4] Across the globe democratically elected leaders were deposed or assassinated that dared to return natural resources to their people. Two notorious Nazi collaborators,[5] Allen Dulles (CIA director) and his brother John Foster Dulles (Secretary of State), were Wall Street attorneys who worked for the syndicate to brutally suppress every democratic uprising that threatened their control over national assets that rightfully belong to sovereign nations.

General Smedley Butler is best remembered today for his oft-quoted statement in the socialist newspaper Common Sense in 1935: "I helped make Mexico and especially Tampico safe for American oil interests in 1914. I helped make Haiti and Cuba a decent place for the National City Bank boys to collect revenues in. I helped in the raping of half a dozen Central American republics for the benefit of Wall Street. The record of racketeering is long. I helped purify Nicaragua for the international banking house of Brown Brothers in 1909-12. I brought light to the Dominican Republic for American sugar interests in 1916. I helped make Honduras 'right' for American fruit companies in 1903. In China in 1927 I helped see to it that Standard Oil went its way unmolested.... Looking back on it, I felt I might have given Al Capone a few hints. The best he could do was to operate his racket in three city districts. We Marines operated on three continents."[6]

Wall Street racketeers who bribed members of Congress to deregulate Wall Street, could not have held our nation hostage without collusion from the Treasury Secretary and Federal Reserve Chairman. They are members of the crime syndicate that loots governments through the central bank system and private equity firms like JP Morgan, Citigroup, Bank of America, Goldman Sachs and Carlyle. Treasury Secretary Henry Paulson, a Goldman Sachs CEO, is also a member of Robber Barons, Inc ~ the IMF Board of Governors. Treasury Secretary Lawrence Summers organized the looting of Russia, stripping one trillion dollars from Russia’s struggling economy and shifting state-owned assets to private owners. Larry Summers succeeded Robert Rubin as Treasury Secretary in 1999, marking their success in repealing Depression-era laws that banned the merger of banks, brokers, insurance firms and investment banks. A former co-chairman of Goldman Sachs, Rubin joined CEO Sanford Weill at Citigroup, the first financial institution to fully embrace the Rubin-led repeal. At Rubin’s urging, Citigroup thrived by bundling loans as securities (mortgages, credit card loans, auto loans, student loans) and selling them as collateralized debt obligations (CDOs). Concurrently Larry Summers championed the deregulation of financial derivatives, ensuring the globalization of losses from those securities. With $2 trillion in junk loans, Citigroup fraud has metastasized to 100 countries making it too infectious to quarantine (“too big to fail”). Rubin protégés advised Obama that taxpayers should assume responsibility for $306 billion of Citigroup’s junk loans.[7] Rockefeller owns Citigroup and JP Morgan Chase, two of the investment banks that own the Federal Reserve. Obama’s Treasury Secretary, Timothy Geithner, is a Board Director at the central bank headquarters, the Bank for International Settlements, and is a protégé of Henry Kissinger, Robert Rubin and Lawrence Summers.

Financial Terrorism

Author Bernard Lietaer, a former central banker, writes in “The Future of Money:”

"Your money's value is determined by a global casino of unprecedented proportions: $2 trillion are traded per day in foreign exchange markets, 100 times more than the trading volume of all the stock markets of the world combined. Only 2% of these foreign exchange transactions relate to the "real" economy reflecting movements of real goods and services in the world, and 98% are purely speculative. This global casino is triggering the foreign exchange crises which shook Mexico in 1994-95, Asia in 1997 and Russia in 1998. These emergencies are the dislocation symptoms of the old Industrial Age money system."

These emergencies are also the hallmark of the transnational crime syndicate controlling the global economy through financial terrorism. Collapsing healthy economies with currency speculation, fabricating trillions of dollars in fictitious debt and destroying productive businesses with short selling, these vultures have swarmed across the globe devouring one nation after another. The US is their current target.

Another Board Director at the predatory Bank for International Settlements, Federal Reserve Chairman Alan Greenspan, used the standard Rockefeller-Rothschild blueprint for engineering the US financial collapse: deliberately expanding cheap credit to inflate the web of debt, entice rampant speculation and then suddenly withholding credit to violently contract the economy. A tactic used by Rothschild’s Bank of England to rob and control its colonies, this violent contraction catalyzes waves of foreclosures, bankruptcies and layoffs that force sellers to accept pennies on the dollar for their assets. Alternatively described as Milton Friedman’s economic ‘Shock Treatment’ and Henry Kissinger’s blueprint for “making the economy scream,” this financial terrorism is a psychopathic formula to bring a nation to its knees.

Instead of allowing a handful of corrupt Wall Street investment banks to implode from well-deserved bankruptcy, The Swindler Bailout engineered by the US Treasury and Federal Reserve extorts trillions of taxpayer dollars to purchase worthless junk loans from racketeers, reimburse speculators for their gambling losses, finance mergers and acquisitions to devour healthy banks and concentrate unearned wealth in expanded syndicate banking monopolies. Government loans could have been directly issued to victims of predatory lenders to refinance the mortgages that have devastated home values nationwide. Instead, taxpayer loans to the generators of these toxic assets reward criminals and simultaneously drain the US Treasury. Insurmountable debt, engineered by the Systemic Usury Parasite and compounded by the Swindler Bailout, lays the groundwork for “structurally adjusting” the American economy, permanently stripping citizens of their remaining assets, health care protection and their confiscated wages held in trust by the Social Security Administration. This premeditated Grand Theft is the prelude for national insolvency and subsequent sale of the nation’s assets to transnational pirates.[8]

Disintegration is a Blessing

reported in February that renowned investor George Soros said the world financial system has effectively disintegrated, adding that there is yet no prospect of a near-term resolution to the crisis. We needn’t wait to see how thugs might resolve the crisis. It would be much wiser to take the path of least resistance and prevent economic collapse by making the systemic correction that is long overdue.

Imagine for a moment that worldwide governments had retained their exclusive authority to create money and control credit and had strictly regulated the transparent movement of capital within their own borders. Had they remained autonomous, systemic global collapse would not have been possible. US investment banks could not have infected foreign banks and collapsed Iceland’s economy. Small, autonomous units counteract systemic risk by isolating disease and preventing it from metastasizing to the whole system, as nature wisely demonstrates. This “disintegration” of the world financial system is an opportunity to dis – integrate every transnational conglomerate that binds all systems together in one monolithic web of systemic debt. Autonomous interest-free monetary systems that support small community banks, small farms and local producers of goods and services would protect self-sustaining economies from the systemic risk caused by the contagious collapse of intertwined conglomerates. Monopoly strangleholds on any commodity or economic system are lethal by nature. The greater their scope, the greater the risk of contagious catastrophic collapse ~ a fact we are now witnessing.

Dis – integrating the parasitic central bank syndicate that is strangling every country with insurmountable debt must be accompanied by effective quarantine of the global gambling casino: replace the Glass-Steagall firewall between commercial banks (public savings) and reckless investment banks; strictly regulate commodities futures and derivatives trades; ban over-the-counter transactions that are not transparent; criminalize anti-social speculation that artificially drives up the price of essential commodities and threatens public welfare; prosecute naked short sellers that collapse healthy businesses; enforce anti-trust laws that separate large investment sectors in finance, insurance, and real estate; dis – integrate every multinational conglomerate that is too criminal to care and too big to jail; end the fabrication of accounting entry debt by reforming the monetary system to issue and regulate credit through a transparent and strictly controlled public agency and localize every system that is critical to social functioning.

Isolating and strictly regulating Wall Street and offshore casinos to prevent gambling addicts from devastating the productive economy may eventually protect the global financial system from organized crime but its victims will never be reimbursed for their losses. Productive workers who lost their life savings and retirement pensions slowly accumulated over a lifetime of contributing have been thoroughly robbed by sociopaths who instantly amassed unearned wealth by parasitic gambling that contributes nothing of value. They will retire, without being prosecuted, in luxury.

The Mechanics of Money

Money is not a commodity. It is a token of value. Any two people can transfer whatever they like as a medium of exchange. We agree as a group to use one medium of exchange to simplify transactions. The purpose of inventing a medium of exchange is to sustain the flow of goods and services circulating in an economy. If we agreed to use gold or feathers as tokens, the medium of exchange would be finite and too scarce to meet everyone’s needs ~ and a finite physical commodity can be monopolized by individuals who might hoard the tokens and constrict the flow of goods and services that are needed by everyone in society. Paper is plentiful. In theory, we agree to the fiction that paper money and computer credits have value in order to produce and exchange the commodities we need. But they have no intrinsic value.

The pieces of paper and computer entries that are fabricated by privatepublic agency. It is irrational to transfer this vital social function to private corporations that thrive on usury and destabilize economies by expanding and contracting fabricated credit. Usury is not a fact of life, an inherent condition one finds throughout the natural world. It is a man-made concept that could create opportunities for cultures to expand productive activities but which has been historically used by parasites that eventually kill the host. corporations, what we call money, can and should be created and regulated by a legitimate

Money and credit can and should be used to keep the economy flowing, facilitating the exchange of real goods and productive services that meet the needs of society ~ without fabricating debilitating and fictitious debt. This, in fact, was the intention of Article 1, Section 8 of the United States Constitution that authorized only Congress to coin money and regulate its value. The founders of our nation understood that a government does not need to borrow its money from a private corporation. It has the power to create its own money. We are that government and that power belongs to us.

Our government has the constitutional authority to create money and issue credit without ever charging interest or creating debt. It can directly spend this money into circulation and extinguish excess currency to prevent inflation. Or it can charge a reasonable interest rate and use this revenue in lieu of taxes. Publicly-owned community banks could charge a moderate interest rate that is returned to depositors as dividends, or it could be used to generate revenue for implementing worthwhile social projects. Monetary science comes equipped with mathematical formulas to achieve permanent monetary equilibrium through a set of principles that balance the money supply and maintain currency stability, eliminating recessions, depressions, inflation and deflation forever. A debt-free monetary system can be mathematically regulated to facilitate the flow of goods and services as a public service. The mechanics have been understood for centuries. All that is required is social consensus.

Decentralizing the banking system would dis-integrate the global stranglehold of transnational racketeers and provide protection from future systemic collapse. Geraldine Perry has suggested that if banks are to remain privately owned they must be required to operate as independent businesses with 100% reserves and use their own capital for loans, not fictitious accounting entries and not other people's money. The national money supply would be issued by a public monetary authority. Banks would operate as any other business should and they would be regulated by the local governmental entities where they are located, thereby eliminating the need for a national regulatory scheme.

Completely abolishing the privatization of the national money and credit supply would liberate human energy to create a world of abundance in which every human community could produce and exchange the goods and services it needs without ever being enslaved by fictitious debt. Government control of the national money supply would prevent inflation and escalating debt by issuing constitutional interest-free money. Moderate interest rates could then be used to finance the operations of city, state and federal government in lieu of taxes. Two brilliant authors, attorney Ellen Brown and historian Stephen Zarlenga have articulated sound mechanics for a publicly-owned monetary system. All that remains is public demand for this reform.

What is most essential to liberating humankind from centuries of covert suppression by parasitic racketeers is financial sovereignty. Political freedom without economic freedom is meaningless. The self-induced implosion of a corrupt financial system provides our generation with a precious opportunity to secure the blessings of liberty envisioned by our ancestors and finish the American Revolution.

Nikki Alexander is a freelance writer and fine art painter living in southern California.


Haircut Time For Bondholders

Haircut Time For Bondholders

By Mike Whitney

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"The only function of economic forecasting is to make astrology look respectable." John Kenneth Galbraith

When George Soros recently said that the financial system had "effectively disintegrated", it caused quite a flap. But Soros was not exaggerating. The financial system has disintegrated. What we are experiencing now is just the fallout from that event. This is easier to understand by using an analogy. Imagine watching the demolition of a hundred-story skyscraper. After the explosives detonate and the building implodes, the chunks of debris and the shattered glass begin to fall to the ground below. That's where we are right now. The financial super-structure has already been blown to bits, but a thick shower of fragments keeps raining down on earth. Rising unemployment, falling consumer confidence, severe contraction of the economy, growing pessimism; these are all the knock-on effects of a full-blown system collapse.


Take a look at this chart and you'll see what I mean. The chart explains in simple, graphic terms everything that one needs to know about the financial crisis.




As you can see, the upper part of the graph disappears in 2008, as though it was surgically removed. That is because in 2008, the source of funding for residential mortgage-backed securities (RMBS), commercial mortgage-backed securities (CMBS), consumer asset-backed securities (which include everything from student loans, credit cards, and auto loans) and home equity loans has almost completely dried up. In fact, all that's left of the previously vibrant credit markets, is the agency mortgage-backed securities sold through Fannie Mae and Freddie Mac which rely exclusively on government funding. Apart from government sponsored GSEs, their is no mortgage credit.

What does it all mean? It means that Wall Street's credit-generating mechanism has disintegrated cutting off 40 percent of the blood-flow to the economy. This is why the drop in spending has been so sudden and precipitous. No economy, however strong, can reduce credit by 40 percent without sliding into a depression. Every area of industry, trade, investment, commerce and consumption has been battered. No sector has been spared. Look closely at the chart and you will see why housing will continue to plummet, because the primary funding mechanism for selling mortgages no longer exists; all the applications are now shoveled over to Fannie and Freddie. Wall Street has gone A.W.O.L.

The often repeated mantra "the banks aren't lending" is a myth. The banks are lending; it is the wholesale funding apparatus that's broken. That's why the Fed's low interest rates have had little effect, because they don't increase sales in the secondary market where MBS and other complex investments are sold. Those markets are frozen due to investor angst. People are scared out of their wits. Toxic subprime mortgages poisoned the well and now investors have boycotted the entire market for structured debt-instruments. Until there is some resolution on the true value of the underlying assets, the market will remain paralyzed. Investors want price discovery, something that is basic to every market. Here's what Bank of America's CEO Ken Lewis said in the Wall Street Journal on Monday:

"The banks aren't lending. This claim is simply not true. Yes, banks have tightened lending standards after a period in which standards were too lax. But, according to Federal Reserve data, bank credit has actually increased over the course of this recession, and business lending is trending up modestly so far in 2009. Also, mortgage finance volume is booming as a result of low interest rates. What's gone from the system is the easy credit that got us into this mess, as unregulated nonbank lenders have disappeared, and the market for many asset-backed securities has all but dried up. Most banks are making as many loans as we responsibly can, given the recessionary environment."


The collapse of securitization (the bundling of pools of loans into securities sold at market) has sucked more than $1.2 trillion from the credit markets and forced a cycle of deleveraging throughout the financial system. The idea that securities-based lending was viable was predicated on the Radian belief that self-interested speculators could sustain the flow of credit to the system. That notion turned out to be catastrophically wrong. Not only did financial institutions increase their risk exposure by loading up on long-term illiquid assets, (MBS, CDOs, CDSs) they also borrowed heavily on those dodgy assets so they could skim the cream off the top and add to their 7-digit incomes and lavish bonuses. For the better part of a decade, the only things that worried the Wall Street oligarchs was whether the larder at the vacation bungalow on the French Riviera needed restocking or if their were any early morning tee times available at St Andrews. PIMCO's Bill Gross gave an apt summary of shadow banking system in a newsletter to his investors last year:

"Our modern shadow banking system craftily dodges the reserve requirements of traditional institutions and promotes a chain letter, pyramid scheme of leverage, based in many cases on no reserve cushion whatsoever. Financial derivatives of all descriptions are involved but credit default swaps (CDS) are perhaps the most egregious offenders. While margin does flow periodically to balance both party’s accounts, the conduits that hold CDS contracts are in effect non-regulated banks, much like their hedge fund brethren, with no requirements to hold reserves against a significant "black swan" run that might break them. Jimmy Stewart—they hardly knew ye! According to the Bank for International Settlements (BIS), CDS totaling $43 trillion were outstanding at year end 2007, more than half the size of the entire asset base of the global banking system. Total derivatives amount to over $500 trillion, many of them finding their way onto the balance sheets of SIVs, CDOs and other conduits of their ilk comprising the Frankensteinian levered body of shadow banks.

Pyramid schemes and chain letters collapse because there is no more credit to feed them. As the system of modern day levered shadow finance slows to a crawl, or even contracts at the edges, its ability to systemically fertilize economic growth must be called into question."

The problem is not simply that securitization has blown up, but that Geithner and pal Bernanke are determined to sift through through the rubble to see if they can fit the pieces together again. It's Humpty Dumpty redux. This is what Bernanke's Term Asset-Backed Securities Loan Facility (TALF) is really all about; another pointless attempt to fire-up Wall Street's failed credit assembly-line, securitization. TALF is set to begin in the middle of March and will ultimately get up to $1 trillion of Fed funding for securitized loans made on credit cards, car loans and student loans. But the plan ignores the fact that the wholesale credit markets already conked out after their first big stress-test and that consumers are no longer in a position to increase their debt-load. Consumer debt is already at 100 percent of GDP, and that's before the recession slashed home equity values by 30 percent and 401ks by 40 percent. That is why personal savings have gone from negative territory in 2006 to positive 5 percent in just 2 quarters. Attitudes towards consumption have done an about-face almost overnight. Bernanke's TALF isn' t necessary; what's needed is debt relief and a smaller financial system that meets the new reality.

Besides, what's the point of moving toxic assets from one balance sheet to another or providing another handout to the scamsters and flim flam men at the hedge funds and private equity firms? They're the ones who drove the system into the ditch in the first place. Peter Eavis of the Wall Street Journal explains:

"The Fed needs to lure investors back into the market for these asset-backed securities, or ABS, where new issuance has almost disappeared This has led to a contraction in lending to consumers, deepening the recession. In the fourth quarter of 2008, there wasn't any issuance of U.S. credit-card ABS, compared with $23 billion a year before, according to Dealogic...

The TALF ladles out that leverage, and it may well work in kick-starting the moribund market. For instance, investors can borrow $92 million to buy $100 million of bonds backed with prime auto loans. An investment firm would have levered its equity over 12 times, which could provide annual returns of over 20% on prime-auto ABS assuming no credit impairment." (Wall Street Journal, The Fed goes for brokerage)

Sound familiar? What's even worse than providing the leverage for the hedge fund sharpies, is the fact that the Fed will not require that investors to post collateral (like a bank) and---if the assets fall in value-- investors can just "walk away" leaving taxpayers to eat the losses. Such a deal! It's another shameless $1 trillion corporate welfare boondoggle disguised as a financial rescue plan. This shows that the reprobate Fed and its accomplices at Treasury are still committed to keeping the credit monopoly in private hands whether it destroys the country or not. The best remedy would be abandon the securitization model altogether (if only for the time being) so resources could be devoted to more pressing issues like jobs programs and debt relief. These would have an immediate stimulative effect on economy by revving up consumer spending and restoring faith in government. Otherwise, we're just dumping more money into a dysfunctional system.


Whether the Obama administration fixes the credit markets or not, it will still have to recapitalize the banking system. The most efficient way would be to take over insolvent institutions, separate the bad assets, protect the depositors and give management the "pink slip". The problem with removing the bad assets, however, is the sheer magnitude of the losses. There's enough red ink here to stretch from sea to shining sea. Here's David Smick in the Washington Post:

"Here's the problem: Today's true market value of the U.S. banks' toxic assets (that ugly stuff that needs to be removed from bank balance sheets before the economy can recover) amounts to between 5 and 30 cents on the dollar. To remain solvent, however, the banks say they need a valuation of 50 to 60 cents on the dollar. Translation: as much as another $2 trillion taxpayer bailout.

That kind of expensive solution could send the president's approval rating into a nose dive. Consider: $2 trillion is about two-thirds of the tax revenue the federal government collects each year." (Tim Geithner's Black Hole, David Smick Washington Post)

And, it's not just the expense that keeps Geithner from taking swift action either. It's also the prospect of systemic failure from unregulated counterparty contracts, mainly credit default swaps, which have tied all the major banks together in an lethal net of highly-leveraged bets. If one of the financial giants sheds its mortal coil and keels over, the others will follow like lemmings. This is why the government took over AIG and has provided a $160 billion bailout, to stop the dominoes from tumbling through the global system. Geithner has decided that its wiser to make excuses and try to run out the clock, than stumble blindly through the derivatives minefield. Unfortunately, the clock is ticking and the problems can't wait.. The loss of wealth is already so huge that it has blown a gaping capital-hole in the financial system triggering an unprecedented slowdown similar to the 1930s. According to Bloomberg:

"The value of global financial assets including stocks, bonds and currencies probably fell by more than $50 trillion in 2008, equivalent to a year of world gross domestic product, according to an Asian Development Bank report."...Blackstone's CEO Stephen Schwarzman said on Tuesday that "Between 40 and 45 percent of the world's wealth has been destroyed in little less than a year and a half. This is absolutely unprecedented in our lifetime."

As capital is destroyed and credit tightens, consumers have gotten more defensive, inventories are bulging, unemployment is rising, retail and housing have continued to nosedive, asset values are shrinking, profits are dwindling and the economy has succumbed to the slow strangulation of a credit-python. Deflation has spread across all sectors; strengthening the dollar and pushing oil and commodities downward. Equities are in a deep slump that will only get worse. The S&P has already dropped 56 percent from its peak and is quickly somersaulting downward. Deflation is everywhere.

David Rosenberg, Economist at Merrill Lynch summed it up like this in "Depression-Style Jobs Report":


"In addition to credit contraction, asset deflation, profit compression and employment destruction, we are also in a vicious inventory reduction phase in the manufacturing sector. If our forecast is correct, this would then suggest that the capacity utilization rate in manufacturing will make a new all-time low of 66.6% from 68% in January. The employment data also tell us that there is a very high probability that wages and salaries deflated -0.3% in February as well. How we end up getting any sustained inflation pressure, or backup in bond yields for that matter, as the economy moves further and further away from any semblance of “full employment” in either the labor or product market, is totally beyond us.

The Fed’s balance sheet and the balance sheet of the federal government are expanding at record rates. But these reflationary efforts should be seen as a partial antidote, not a panacea, to the deflationary effects brought on from the unprecedented contraction in the largest balance sheet on the planet: The $55 trillion US household balance sheet. Based on what house prices and equity valuation have been doing this quarter, we are likely in for a total loss of household net worth approximating $7 trillion this quarter alone, which would bring the cumulative decline in consumer wealth to $20 trillion. This wealth loss exceeds the combined expansion of the Fed’s and government balance sheet by a factor of ten. That should put the reflation-deflation debate into perspective." (David Rosenberg, Economist at Merrill Lynch summed it up like this in "Depression-Style Jobs Report": Mish's Global Economic Trend Analysis)

Clearly, the capital hole in the center of the US economy is too humongous to be filled with Obama's paltry $787 billion stimulus. (Most of the stimulus is back-loaded anyway. Only $200 billion will be spent creating jobs in 2009) When businesses and consumers stop spending; the government has to pick up the slack or the economy gets hammered. Obama's job is to "go big and go long" and ignore the braying of the liquidationists and crybaby Republican's in the Congress. This is not the time for cold feet. Cinch up the jockstrap, and do what's needed. Dazzle the naysayers with footwork. If Obama does not meet the challenge and accept the unavoidably huge deficits, thousands of businesses will default, unemployment will skyrocket, and world trade will grind to a halt. Consider this warning from economics professor Barry Eichengreen in the San Francisco Chronicle: "We must keep Trade from falling off a cliff"


"Americans may not realize it, but the biggest threat to economic stability is not falling home prices and retail spending but collapsing world trade. The value of global merchandise exports was down fully 45 percent in November 2008 from 12 months before. This is a terrifying number.

Nothing remotely comparable has ever happened before - not even in the Great Depression of the 1930s.

This is a body blow to an already staggering U.S. economy. U.S. exports in the fourth quarter of last year fell by more than 25 percent in constant dollars. California is being hit especially hard: outbound container traffic from the Ports of Long Beach and Los Angeles was down 30 percent in December 2008 from a year earlier.

It's not surprising that when global growth slows, trade growth slows. But this trade implosion is unprecedented even for a major recession.( Barry Eichengreen San Francisco Chronicle: "We must keep Trade from falling off a cliff")

Trade credit has dried up and reversed capital flows; another casualty of the credit market crackup. Globalization has returned to the realm of (corporate) wishful thinking; look for it in the "fiction" section of the library. No sandal-clad, fist-waving anarchist put the torch to global trade (regrettably) it was crushed by a poorly-designed financial system that split into matchwood at the first strong breeze. So, how in the world are Bernanke and Geithner going to recapitalize the banks and "keep them in private hands" in the most hostile economic environment in memory?


The only hope is to do the unthinkable; dispatch the FDIC storm troopers to the teetering banks on Friday night and shut down the biggest offenders pronto. Don't wait another minute. The real reason Geithner is stalling is because he's afraid that foreign bondholders will cut him off at the knees and stop purchasing US debt. That's a threat that has to be taken seriously, but it shouldn't stop him from doing his job. John Hussman explains it all in his weekly comment "Buckle Up":


"The misguided policy response from Washington has focused almost exclusively on squandering public money and burdening our children with indebtedness in order to defend the bondholders of mismanaged financial institutions....

Make no mistake. Buying up “troubled assets” will not materially ease this crisis, nor will it even improve the capital position of financial institutions. Homeowners will continue to default because their payment obligations have not been restructured to any meaningful extent. We are simply protecting the bondholders of mismanaged financial institutions, even though that bondholder capital is more than sufficient to cover the losses without harm to customers. Institutions that cannot survive without continual provision of public funds should be taken into receivership, their assets should be restructured to better ensure repayment, their stockholders should be wiped out, bondholders should take a major haircut, customer assets should (and will) be fully protected, and these institutions should be re-issued to the markets when the economy stabilizes." (John P. Hussman Ph.D., Hussman Funds, Buckle Up, www.hussmanfunds.com )

Bondholders own everything and they shouldn't be trifled with. They represent foreign banks, governments, sovereign wealth funds, and industry giants. They can afford the losses better than the taxpayer, but they won't be happy about it. There's bound to be retaliation and gnashing of teeth. It will require a carefully executed strategy to avoid a bloodbath; a surprise incision with a razor-sharp scalpel followed by an Obama-led public relations campaign to placate the enraged bondholders. It won't be easy, but it has to be done, and fast. Unfortunately, we are no where near the point where anyone at Treasury or the Fed will set aside the corporate agenda long enough to do the people's work. That's why Geithner will have to go. Bernanke, too.

Secret State Police Report: Ron Paul, Bob Barr, Chuck Baldwin, Libertarians are Terrorists

Secret State Police Report: Ron Paul, Bob Barr, Chuck Baldwin, Libertarians are Terrorists

Kurt Nimmo

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Alex Jones has received a secret report distributed by the Missouri Information Analysis Center (MIAC) entitled “The Modern Militia Movement” and dated February 20, 2009. A footer on the document indicates it is “unclassified” but “law enforcement sensitive,” in other words not for public consumption. A copy of the report was sent to Jones by an anonymous Missouri police officer.

The MIAC report specifically describes supporters of presidential candidates Ron Paul, Chuck Baldwin, and Bob Barr as “militia” influenced terrorists and instructs the Missouri police to be on the lookout for supporters displaying bumper stickers and other paraphernalia associated with the Constitutional, Campaign for Liberty, and Libertarian parties.

“Missouri Information Analysis Center (MIAC) provides a public safety partnership consisting of local, state and federal agencies, as well as the public sector and private entities that will collect, evaluate, analyze, and disseminate information and intelligence to the agencies tasked with Homeland Security responsibilities in a timely, effective, and secure manner,” explains the MIAC website. “MIAC is the mechanism to collect incident reports of suspicious activities to be evaluated and analyzed in an effort to identify potential trends or patterns of terrorist or criminal operations within the state of Missouri. MIAC will also function as a vehicle for two-way communication between federal, state and local law enforcement community within our region.”

MIAC is part of the federal “fusion” effort now underway around the country. “As of February 2009, there were 58 fusion centers around the country. The Department has deployed 31 officers as of December 2008 and plans to have 70 professionals deployed by the end of 2009. The Department has provided more than $254 million from FY 2004-2007 to state and local governments to support the centers,” explains the Department of Homeland Security on its website. Missouri is mentioned as a participant in this federal “intelligence” effort.

Last month, the ACLU issued a news release highlighting the activity of a fusion center in Texas as the “latest example of inappropriate police intelligence operations targeting political, religious and social activists for investigation,” in particular “Muslim civil rights organizations and anti-war protest groups.”

The MIAC report does not concentrate on Muslim terrorists, but rather on the so-called “militia movement” and conflates it with supporters of Ron Paul, Chuck Baldwin, Bob Barr, the so-called patriot movement and other political activist organizations opposed to the North American Union and the New World Order. The MIAC document is a classic guilt by association effort designed to demonize legitimate political activity that stands in opposition to the New World Order and its newly enshrined front man, Barack Obama.

In September of 2008, Missouri sheriffs and prosecutors organized truth squads to intimidate people opposed to Obama and threatened to arrest and prosecute anybody who ran “misleading television ads.” Missouri governor Matt Blunt eventually denounced the use of “police state tactics” on the part of the Obama-Biden campaign.

MIAC claims members of a “rightwing” militia movement organized in the 1990s — generally in response to the Oklahoma City bombing and the events at Waco — “continuously exploit world events in order to increase participation in their movements. Due to the current economical and political situation, a lush environment for militia activity has been created” and supposedly exploited by “constitutionalists” and “white supremacists,” the latter an oft-employed canard used to demonize activists as dangerous and potentially violent lunatics.

MIAC notes many of the political issues cited by the so-called patriot movement — the Ammunition Accountability Act, the impending economic collapse of the government, the possibility of a constitutional convention, the North American Union, Obama’s “Universal Service Program,” and the implementation of RFID, issues that are not limited to the patriot movement but are shared by a wide array of political activists.

The MIAC document includes a map of the North American Union not dissimilar from one released by NASCO, the North America SuperCorridor Coalition (see the NASCO map here).

The MIAC report is similar to one created by the Phoenix Federal Bureau of Investigation and the Joint Terrorism Task Force during the Clinton administration (see page one and page two of the document· The FBI document explicitly designates “defenders” of the Constitution as “right-wing extremists.” The MIAC report expands significantly on the earlier document·

In order to artificially heighten the perceived threat threshold, MIAC rolls in Christian Identity, white nationalism, “militant” anti-abortion activists, opposition to illegal immigration, and income tax resistance. MIAC deceptively blurs the lines between these disparate political ideologies and underscores the possibility for violence in a summary of the organizational structure of the militia movement and a section describing how members strive to train in “combat readiness.”

The MIAC effort to characterize Libertarians and Constitutionalists as racists is reminiscent of an attempt by the corporate media in early 2008 to portray Ron Paul as a racist by attempting to link him to a series of vaguely racist newsletters produced in the 1980s. Paul did not exercise editorial control over the newsletters and went so far as to apologize for them, but this did not prevent the corporate media from characterizing him as a racist.

According to MIAC, opposition to world government, NAFTA, federalization of the states, and restrictive gun laws are a threat to the police. “The militia subscribes to an anti-government and NWO mindset, which creates a threat to law enforcement officers. They view the military, National Guard, and law enforcement as a force that will confiscate their firearms and place them in FEMA concentration camps,” the document claims in a section entitled “You are the Enemy.”

In regard to supposed militia movement literature and media, the MIAC report mentions Aaron Russo’s America: Freedom to Fascism and William Luther Pierce’s The Turner Diaries — the latter was penned by the former leader of the white nationalist organization National Alliance and the former by a Libertarian filmmaker. In order to underscore the absurdity of the MIAC attempt to link Pierce’s novel and Russo’s anti-tax documentary, it should be noted that the late Aaron Russo was Jewish and The Turner Dairies posits a Zionist government in America (or ZOG, the Zionist Occupation Government) run by Jews.

The award-winning film Zeitgeist, featuring Alex Jones, is also mentioned as terrorist material.

The MIAC report is particularly pernicious because it indoctrinates Missouri law enforcement in the belief that people who oppose confiscatory taxation, believe in the well-documented existence of a New World Order and world government (a Google search of this phrase will pull up numerous references made by scores of establishment political leaders), and are opposed to the obvious expansion of the federal government at the expense of the states as violent extremists who are gunning for the police. It specifically targets supporters of mainstream political candidates and encourages police officers to consider them dangerous terrorists.

MIAC is attempting to radicalize the police against political activity guaranteed by the U.S. Constitution and the Bill of Rights. If Missouri police indoctrinated by MIAC propaganda overreact to political activists and supporters of Ron Paul in their state and injure or kill people involved in entirely legal and legitimate political activity, MIAC, the governor of Missouri (his name appears on the MIAC document), and the DHS and federal government should be held directly responsible and prosecuted the fullest extent of the law.

Mexico violence prompts new look at US gun lawsMexico violence prompts new look at US gun laws

Mexico violence prompts new look at US gun laws

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A gun control expert says the administration can help control drug violence in Mexico by enforcing already existing laws.

Expert Tom Diaz says that imports of certain semiautomatic rifles were regulated under the first Bush and Clinton administrations. But he told a House panel Wednesday the import rules were relaxed under the most recent Bush administration.

Diaz also says a 1930s gun law can be used to regulate imports of .50-caliber rifles also used by the cartels. Federal officials say about 90 percent of guns seized in Mexican organized crimes came from the U.S.

A 'Truth Commission' Is Not Enough: Why We Must Have A Criminal Investigation Into Bush's Lawlessness

The Bush Lawbreakers Should be Criminally Prosecuted -- Commissions Don't Do It

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It's really quite simple. Truth and Reconciliation commissions, Congressional committees and blue ribbon commissions like the 9/11 Commission, are not deterrents to torture, illegal surveillance or lawyers on the Justice Department who attempted to justify the torture. They have a very limited function.

But they don't punish anyone; don't deter anyone, don't even put pressure on the people who committed the acts and cannot really get at the truth to determine responsibility. They do not bring the full force of America's 230 years of law down on the offenders. They don't truly help rein in the powers of future presidents or defense secretaries who want to do the same or similar acts the next time they react to what they see as an extraordinary crisis. And different presidents, Democrats and Republicans from Woodrow Wilson and the prosecutions during the Red Scare, to Franklin D. Roosevelt and the internment of 110,000 Japanese, Lyndon Johnson lying about the Gulf of Tonkin and to dramatically increase troop strength, nearly always find crisis and overreact.

Senator Patrick Leahy, the Chairman of the Senate Judiciary Committee, has called at different times for either a Truth and Reconciliation commission or a Blue Ribbon commission. Neither is appropriate.

The best truth and reconciliation model comes from the South African experience. In South Africa, these commissions were used to begin the healing after the brutality of apartheid. It grants the confessing wrongdoers immunity. It was for a different time and place.

The Blue Ribbon commission gets attention and, along with Congressional committees, can get exposures and may help lead to better laws. But they create the danger of interfering and at times making impossible criminal trials of criminals. And they let criminals go unpunished.

Senator Sheldon Whitehouse, a member of both the Judiciary Committee and Intelligence Committee and a former U.S. Attorney, supporting Leahy's call, said that a torture commission might need the power to immunize witnesses on a case-by-case basis, and "it is beside the point" if it endangers criminal prosecutions.

We should go ahead with criminal prosecutions. It is the only way, through grand juries, subpoenas and trials, to get the facts and help America clean up some of its recent past.

The American people, immersed as they are in the economic crisis, are angry about torture and other illegalities of the Bush administration and want those prosecutions.

The February, 2009 USA Today/Gallup Poll shows 38% of Americans favor criminal prosecution of torturers, 38% for prosecution of those who used illegal surveillance, and 41% for those involved in the subversion of the Justice Department. Americans by a wide margin are in favor of criminal prosecutions than independent or Congressional panels. Seventy-five percent of Americans believe something must be done - we can't walk away from the crimes against humanity committed in our name.

The argument is made that criminal prosecutions area too difficult, too lengthy, too expensive, too political and will keep the country divided. But there have always been political expensive and difficult trials. We have had long, expensive, political trials for John Dean during Watergate, Eliot Abrams during Iran-Contra, Scooter Libby today and even Aaron Burr nearly two hundred years ago.

Leahy argues against criminal prosecutions because "a failed attempt to prosecute for this conduct might be the worst result of all if it is seen as justifying dishonest actions." But that's true for every criminal prosecution - should murderers, John Ehrlichmann, Scooter Libby or Enron officials not be prosecuted because the possibility of an acquittal justifies their actions? If so, junk the criminal system.

We can't leave it to politicians. Many Democrats, including House Speaker Nancy Pelosi, are alleged to have known about the torture and surveillance programs and either approved or said nothing. Pelosi (who, interestingly, has called for criminal prosecutions) has consistently equivocated on what she knew and when she knew it. It's unlikely Democrats on commissions, let alone Republicans, are going to pursue the inquiry to its final end. They will undermine Congressional Commissions, and blue ribbon Commissions, but they cannot so easily undermine criminal prosecutions.

The criminal trials of the chief of the Bush defendants can certainly be shorter and probably less expensive than the Barry Bonds or Scooter Libby prosecution, and less purely political than Thomas Jefferson's presidentially controlled prosecution of Aaron Burr.

The Bush people violated some clear specific crimes. Failing to get wiretaps permission from the Federal Internal Security Courts is a felony. Representatives of the Justice Department, local police and federal agent who participated in break-ins or wiretaps without warrants, are guilty of clear and unambiguous federal crimes. Federal Agents who did illegal surveillance even when the Justice Department refused to sign off on its illegality can be found guilty. Violation of the Federal Anti-Torture Act, which has been on the books for years, bars citizens from committing torture abroad, is a felony.

The War Crimes Act of 1996 is violated even if there is not what the Bush defendants would claim is "torture." That act punishes those who act cruelly and inhumanely. Waterboarding, vicious dogs, and exposing detainees to temperature extremes could all be punished by a jury.

Bush's people, afraid of the applicability of the War Crimes Act, inserted a provision into a 2006 law that made the War Crimes Act retroactively ineffective. But Congress can change that now, that law can be used for prosecutions.

The defense will claim, say opponents of criminal trials, that defendants relied on the now infamous August 1, 2002 legal opinion of the Attorney General, Alberto Gonzales, and his assistants justifying torture and the opinions on illegal surveillance creating fog and evasion and therefore, they will get off. And that all the lawyers did was give their albeit controversial opinions, a full defense. Jurors will get confused by legal experts who support the views of the Bush lawyers. It's too complicated for a jury we are told.

But we have prosecuted lawyers, experts and those who rely on legal or accounting opinions in many cases. Kenneth Lay could refer to legal or accounting documents prepared to justify his case all day long and not be saved. The legal opinions rendered by Alberto Gonzales, John Yoo and David Addington are such transparent documents that an American jury of citizens is, at the very least entitled to have an opportunity to pass judgment on them. Even as lawyers within the Bush administration repudiated the opinions, the illegal practices went on. No jury would have difficulty in rejecting John Yoo's memorandum that reject the basic tenets of an American democracy.

Can a jury really decide the tough questions, such as whether Alberto Gonzales' opinion, concluding the Geneva Convention Protections do not apply to prisoners of war captured for Al Qaeda or the Taliban? Of course. A jury can determine if the legal opinion was a facade to justify actions already taken - only the legal process with grand juries and subpoenas has any hope of piercing the wall of defense that will be used to block that inquiry. Those memos were not used to interpret the law - they were intentionally written to change the law. No Commission can hope to get facts behind these opinions as quickly as the Courts.

Our criminal law has specific status that reach overseas to punish torturers. Section 2340A of our Federal Criminal Code makes it a crime for any person "outside the United States to commit or attempt to commit torture." But, say the critics of criminal prosecution, torture is too vague a word for a prosecution. Not so. Judges and juries routinely define much vaguer terms - what does "reasonable doubt of guilt" or "reasonable doubt of guilt with a degree of moral certainty." What does cruel and inhuman treatment mean? They are always past precedents to help us define these terms.

Juries determine competency in cases interpreting wills and estates, and sanity in criminal cases, with the help of experts, whom they often barely understand.

It is wrong to say that lower level officials, or lower level military personnel can get off by claiming they followed higher orders. They did what fellow soldiers did - they followed the morality culture created by their environment and superiors. That's not a defense. When police officers in Los Angeles, Jackson, or New York beat prisoners, or deny them rights, most know they are violating the laws - they do it nonetheless. And they can be and often are prosecuted.

At times CIA personnel and people within the White House knew with certainty they were acting illegally. When the CIA destroyed at least 92 interrogation tapes to cover up what was done to the detainees, they violated a specific court order that prohibited that destruction.

I don't have a religious faith in the majesty of the law. It is just the far best alternative.

Is the criminal prosecutors and the process itself often flawed? Of course. At times, are the guilty declared innocent and the innocent declared guilty? Of course. Do conviction make it far less likely that torture will continue? Probably so. Will a string of successful prosecutions ensure that we will never have Americans participate in torture or illegal surveillance? Probably not. Does it make torture and illegal surveillance less likely? Yes.

At the end of the day, I would rather have American jurors, bound by the Constitution and the law, make the decision rather than politicians or unelected blue ribbon commission members. I would rather have the judges, bound by precedent and law, determine what is, and is not legal.

President Obama has said this is not the time to look back but to look forward. There was a claim that the need for bipartisanship argued against prosecution. But the illusion of bipartisanship if it ever truly existed has been broken.

President Obama and the Congress should now name a Special Prosecutor.

Fighting Back in America's 30-Year Class War

Fighting Back in America's 30-Year Class War

by Jim Hightower

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David Brooks was upset. You can tell when this conservative and rather-professorial columnist for The New York Times gets upset, because his words almost sag with disappointment - you can practically hear the tsk-tsks and the heavy sighs in each paragraph. When most commentators on the right see things that offend them, they get snarling mad; Brooks gets sad.

What saddened Brother Brooks this time was Barack Obama's budget. In a recent column, he noted that the $3.6 trillion total is "gargantuan" (we columnists are paid to make keen observations like that), but what really upset him was that the tax burden to finance universal health care, energy independence and other big initiatives in Obama's budget "is predicated on a class divide."

With heavy sighs, Brooks expressed great despair that "no new burdens will fall on 95 percent of the American people," adding with a tsk-tsk that "all the costs will be borne by the rich and all benefits redistributed downward."

Leaving aside the fact that such things as health-care coverage for every American and a booming green energy economy will benefit the rich as well as the rest of us, Brooks' column was echoing a prevalent theme in all of the right's attacks on Obama's economic proposals: Class War! Indeed, the Times' columnist even suggested (sadly) that Obama's budget was fundamentally un-American: "The U.S. has never been a society riven by class resentment," he sniffed.

Whoa, professor, get a grip! Better yet, get a good history book (Howard Zinn's "A People's History of the United States" would be an eye-opening place to start). While our schools, media and politicians rarely mention it, America's history is replete with class rebellions against various moneyed elites who act as though they're the top dogs and ordinary folks are just a bunch of fire hydrants.

Check out the Tenant Uprisings of 1766, Shay's Rebellion in the 1780s, the Workingmen's Movement of the 1830s ... on into the post-Civil War populist movement that confronted the robber barons, the bloody labor battles at Haymarket and Homestead in the late 1800s, Coxey's Army in 1894, the Bonus March of 1932, the Penny Auctions by farmers in the 1920s and '30s, the rise of the CIO in the Depression years ...and right into modern-day fights involving environmental justice, fair trade, women's pay, workplace safety, tenant rights, janitors, farmworkers, union-busting, bank redlining, consumer gouging, clean elections and so forth.

If Brooks & Co. are so isolated as to imagine that our citizenry harbors no class resentment, they should go to any Chat & Chew Cafe across the land and listen to the locals express their innermost feelings about today's greedheaded Wall Streeters who wrecked our economy for their own enrichment. There is a fury in the countryside toward these plutocratic purse-snatchers who are being allowed to keep their exalted executive positions, draw fat paychecks and get trillions of dollars in bailout money from common taxpayers. People don't merely resent them, they yearn for the legalization of tar-and-feathering!

Yet, Brooks and his political brethren are now bemoaning the plight of the plutocrats, assailing the "redistributionists" who talk of spreading America's wealth. In his column, Brooks cried out for a conservative vision of "a nation in which we're all in it together - in which burdens are shared broadly, rather than simply inflicted on a small minority."

Do we look like we have suckerwrappers around our heads? Where were these tender-hearted champions of sharing throughout the last 30 years, when that same "small minority" was absolutely giddy with redistributionist fervor - redistributing upward, that is?

With the full support of their political hirelings from both parties, this minority created tax dodges, trade scams, corporate subsidies, deregulation fantasies, financial hustles, de-unionization schemes, bankruptcy loopholes and other mechanisms that turned government into a redistributionist bulldozer, shoving wealth from the workaday majority into their own pockets.

Brooks might have missed this 30-year class war, but most folks have been right in the thick of it and are not the least bit squeamish about supporting a national effort to right those wrongs. After all, even a dog knows the difference between being stumbled over - and being kicked.

The ‘Comfy Retirement’ Dream Has Exploded

The ‘Comfy Retirement’ Dream Has Exploded

By Marie Cocco

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Rally, schmally.

I’m with the president on this one—not because Barack Obama’s administration has handled the banking crisis well (it hasn’t) but because Obama is fundamentally right about obsessive watching of Wall Street. Its jittery swings really do have a lot in common with those daily tracking polls taken during campaigns, which can move up or down on the basis of a speech that misses the mark, or a “Saturday Night Live” skit that hits it dead-on.

And at this point, we need to confront an elemental truth: No Wall Street rally can obscure the scary historical prospect that most Americans now working can expect to have less income security in retirement than their parents had.

That’s not saying much. The average annual Social Security benefit among current retirees stands at $13,864—roughly what a minimum-wage worker earns in a year. Half of all people 65 and older have incomes of less than $17,382 a year.

Still, millions in the current Social Security generation have traditional pensions from unions or big corporations, which once took pride in offering a retirement plan that guaranteed a lifelong, monthly income to former workers. But today, such pensions are all but extinct, pushed into oblivion by a corporate strategy of lowering costs by shifting to 401(k) plans in which workers save for their own retirement and manage their own investments.

No need to point out how this has worked: The median balance in family retirement accounts was $45,000 in 2007, according to the Federal Reserve. Now even those have shriveled with the stock market slide. And many employers have temporarily halted their matching contributions to 401(k)s as they struggle to weather the recession.

Lawmakers have known about all of this for years—the decline of traditional pensions, the paltry balances in contributory retirement plans, the lack of access to any retirement plan (only about half of workers have any type of coverage). Just like fixing the badly eroded health insurance system, stabilizing the foundering American pension system is on that long to-do list that never seems to get done.

For all the political talk about not leaving a legacy of diminished living standards to our children, we have now managed to diminish our own futures, as well as theirs.

Labor unions and pension-rights activists are beginning to work together in much the same way that advocates of universal health care organized more than two decades ago: by compiling the cruel facts and trying to force policymakers to confront them. The Pension Rights Center and other groups have launched a campaign called “Retirement USA” with the goal of getting a universal, secure and adequate retirement system in place. Generally speaking, they seek a mandatory private pension system in which employees and employers both contribute, in which the pension is portable as people change jobs, and that is structured to provide lifetime monthly benefits after retirement.

If this sounds a lot like the only functioning part of the current retirement system—Social Security—that’s because it is. If common sense were applied to the pension problem, we would find a way to use the current Social Security system—which already is mandatory, is portable between employers and has an administrative system for payroll deductions and benefits in place—and enrich its benefits. Logic, of course, rarely prevails.

“I don’t think I would be able to convince anybody that the only thing we should have is Social Security,” says Barbara Kennelly, president of the National Committee to Preserve Social Security and Medicare.

But the prospects for a new, mandatory employer-based pension system are, at best, problematic. After all, employers didn’t shed their pension obligations over the past three decades only to take on new ones now. Most proposals on the table are merely attempts to patch the holes in the 401(k) and individual retirement account systems.

The trouble is, the protection these savings plans were supposed to provide has never been enough. Research by Gary Burtless of the Brookings Institution shows, for example, that even if a worker invested 4 percent of earnings over 40 years in a mix of stocks and bonds, the employee would be able to replace only a quarter of his or her pre-retirement earnings in retirement.

We have already squandered one generation’s chance for peace of mind in old age. We shouldn’t allow the next to inherit this mistake.

Unemployment 'is now a national emergency'

Unemployment 'is now a national emergency'

By Barbara Hagenbaugh

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More than 1-in-10 workers were unemployed in four U.S. states in January, the government said Wednesday in a report that pointed to a rapid deterioration in the job market.

The unemployment rate in Michigan was 11.6%, up 4.3 percentage points from a year earlier and the highest for any state, the Labor Department said. The unemployment rates in California, Rhode Island and South Carolina rose in January to top 10%. That was the first time those states had jobless rates in the double digits during this recession, which began in December 2007.

JANUARY JOBS DATA: 651,000 jobs cut nationwide

Rhode Island, at 10.3%, and Georgia, at 8.6%, recorded the highest unemployment rates in their states since such records began in 1976.

Twenty-two states and the District of Columbia saw their unemployment rates jump by a percentage point or greater from December to January, showing how quickly the job market is worsening. It's been more than two decades since at least four states had unemployment rates of 10% or greater.

"The jobs situation is now a national emergency, because the huge number of layoffs are not only hurting those directly affected, but are intensifying fears among those still employed that they may be next," Radnor International Consulting President Larry Chimerine says. "This is creating more downward pressure on (consumer) spending, making the recession even worse."

Nationwide, the jobless rate was 7.6% in January before rising last month to 8.1%, the highest in more than 25 years. The percentage of Americans out of work is expected to continue to rise throughout 2009 and perhaps beyond.

The unemployment rate typically rises even after a recession ends as employers seek to cut costs and wait for tangible evidence the economy is on the mend before hiring again. Plus, people who got discouraged and stopped looking for work when times were bad tend to re-enter the workforce when there are signs of improvement. That tends to boost the jobless rate.

"It's typically about a year after a recovery has begun before we see the jobless rate peak out," says Richard DeKaser of Woodley Park Research.

There were a few states with unemployment rates significantly below the national average. The unemployment rate in January was 3.7% in Wyoming, the lowest for any U.S. state. Jobless rates were also below 5% in Iowa, Nebraska, North Dakota, South Dakota and Utah in January.