Wednesday, April 1, 2009

Flint, Michigan: Gov. Considering Abandoning Parts of City, Cutting Off Police and Fire Service

Off-the-cuff suggestion prompts discussion on what to do with abandoned neighborhoods in Flint

Kristin Longley

Go To Original

Look in any direction from Bianca Bates' north Flint home, and you'll see graffiti-covered siding, boarded-up windows and overgrown lots.

About half of the homes on her block are burned out or vacant magnets for drug dealers and squatters. It isn't where she thought she'd end up, but it's all she can afford to rent.

"It's a dangerous place to live," said Bates, 21, who lives on East Russell Avenue. "Everywhere you look, these houses are empty around here."

Property abandonment is getting so bad in Flint that some in government are talking about an extreme measure that was once unthinkable -- shutting down portions of the city, officially abandoning them and cutting off police and fire service.

Temporary Mayor Michael Brown made the off-the-cuff suggestion Friday in response to a question at a Rotary Club of Flint luncheon about the thousands of empty houses in Flint.

Brown said that as more people abandon homes, eating away at the city's tax base and creating more blight, the city might need to examine "shutting down quadrants of the city where we (wouldn't) provide services."

He did not define what that could mean -- bulldozing abandoned areas, simply leaving the vacant homes to rot or some other idea entirely.

On Monday, a city spokesman downplayed Brown's comments.

Flint Journal extras At issue

• City officials say they may consider shutting down city services in areas where no one lives, but no plans are on the table to so.


Bob Campbell, Brown's spokesman, said the acting mayor was speaking hypothetically about a worst-case scenario, "not something that would be laid out in the next six months" while he's in office.

But City Council President Jim Ananich said the idea has been on his radar for years.

The city is getting smaller and should downsize its services accordingly by asking people to leave sparsely populated areas, he said.

"It's going to happen whether we like it or not," he said. "We'd have to be creative about it, but it's something worth looking into. We're not there yet, but it could definitely happen."

Flint resident Derrick Young, 39, doesn't think people in his West Austin Avenue neighborhood would bow too easily to such a request.

"We (are) all family over here," he said. "We all stick together."

Even in neighborhoods where more homes are vacant than occupied, Young, who rents, said the city shouldn't interfere.

"They shouldn't be so hard on people, just because they live in a bad area," he said. "They should find more ways to fix it up and rent it out."

The concept of "shrinking cities" isn't new to urban areas similar to Flint.

Last year, the city of Youngstown, Ohio, proposed incentives to encourage people to move out of nearly empty blocks and relocate to more populated areas closer to the heart of the city. Some people were offered upward of $50,000, according to news reports.

The idea was to shut down entire streets and bulldoze abandoned properties so the city could discontinue services such as police patrols and street lighting, according to a CNN report.

The problem came, understandably so, when officials asked residents to move.

Abandoned and foreclosed homes are on top of the list of major challenges facing Michigan cities, said Arnold Weinfeld, director of public policy and federal affairs with the Michigan Municipal League. The organization surveyed several cities that cited declining property taxes as the No. 1 problem, he said.

In the past three years or so, cities in Michigan have lost a combined $147 million in property taxes, he said.

"That's bound to have an impact on local services," he said. "There's no question it's an issue. Each community is going to address it differently."

Brown took over last month after former Mayor Don Williamson resigned facing a recall election. His replacement will be elected Aug. 4.

Brown is focused on economic development as a key to revitalizing Flint, Campbell said. The city also has the advantage of having the Genesee County Land Bank, he said.

"Cities such as Flint might be forced to make difficult choices at some point," Campbell said. "However, what he's all about is having an economic development plan in place so we don't have to seriously consider that as an option."

Bates said the idea might make some people happier, but she doesn't see how it would help the city.

But her roommate, Gabrielle Daniels, said it sounds like a good idea.

"Let's get these kids out of these bad areas," she said. "Get them out of drug houses and into safer neighborhoods."

Bush Aides Changed Watchdog Report

Bush Aides Changed Watchdog Report

By Jason Leopold

Go To Original

Before leaving office, senior Bush administration lawyers secured changes in a Justice Department watchdog agency’s report that reportedly was sharply critical of legal opinions granting President George W. Bush sweeping powers, including the right to abuse “war on terror” captives.

In a letter to two U.S. senators, the Justice Department said the changes to the report by the Office of Professional Responsibility followed comments from then-Attorney General Michael Mukasey, then-Deputy Attorney General Mark Filip and the Office of Legal Counsel, which was still run by its acting chief, Steven Bradbury, one of three lawyers who had been singled out for criticism in OPR's initial draft.

“Attorney General Mukasey, Deputy Attorney General Filip and OLC provided comments [after the first draft was completed in December], and OPR revised the draft report to the extent it deemed appropriate based on those comments,” said acting Assistant Attorney General Faith Burton in a March 25 letter to Sens. Sheldon Whitehouse, D-Rhode Island, and Richard Durbin, D-Illinois, members of the Senate Judiciary Committee.

Burton also said that the final OPR report may undergo more revisions based on responses from the former OLC lawyers who were criticized and that a final version may not be released for some time, if at all. “Due to the complexity and classification level of the draft report, the review process … likely will require substantial time and effort,” Burton said.

Legal sources familiar with the internal debate about the draft report say OPR is in the process of “watering” down the criticism of legal opinions by OLC lawyers John Yoo and Jay Bybee in 2002 and 2003 and by Bradbury, who in 2005 reinstated some of the Yoo-Bybee opinions after they had been withdrawn by Assistant Attorney General Jack Goldsmith when he headed the OLC in 2003 and 2004.

That back-and-forth over the OLC’s judgments regarding President Bush’s powers rest at the heart of the Bush administration’s defense of its “enhanced interrogation” techniques that have been widely denounced as torture, such as waterboarding which subjects a person to the panicked gag reflex of drowning and which was used on at least three “high-value” detainees.

Bush officials insist that they were acting under the guidance of the Justice Department’s Office of Legal Counsel, which advises Presidents on the scope of their constitutional powers. For the OPR report to conclude that Yoo, Bybee and Bradbury violated their professional duties as lawyers and, in effect, gave Bush pre-cooked legal opinions to do what he already wanted to do would shatter that line of defense.

Conflict Question

In a response to Burton’s letter, Durbin and Whitehouse questioned whether Bradbury’s dual role as the acting head of the OLC and one of the criticized lawyers created a “conflict of interest” regarding revisions made to the draft in the last days of the Bush administration.

Bradbury “is reportedly a subject of the OPR investigation,” the senators wrote. “As such, it would appear to be a conflict of interest for Mr. Bradbury to review and comment on the OPR report on OLC’s behalf.”

Durbin and Whitehouse also noted that Bradbury wrote two memos in the final months of the Bush administration distancing himself from some of the Yoo-Bybee opinions while insisting that they had acted in good faith as lawyers.

Three months before Bush exited the White House, Bradbury wrote that some of those controversial opinions were “the product of an extraordinary period in the history of the Nation: the immediate aftermath of the attacks of 9/11.”

In another memo dated Jan. 15, five days before Bush left office, Bradbury repudiated some Yoo-Bybee legal opinions, but said the flawed theories did not mean Justice Department lawyers failed to "satisfy" professional standards.

Rather, Bradbury cited "the wake of the atrocities of 9/11, when policy makers, fearing that additional catastrophic terrorist attacks were imminent, strived to employ all lawful means to protect the Nation."

Bradbury’s Jan. 15 memo appeared to be in response to the draft OPR report, raising other concerns from Durbin and Whitehouse.

“If Mr. Bradbury did review the OPR report, this could have improperly influenced the opinions he expressed on OLC’s behalf,” the senators wrote. “Particularly his decision to emphasize that the authors of discredited OLC opinions on detainee issues had not necessarily violated their professional responsibilities.”

Durbin and Whitehouse added that they are “concerned” that the final OPR report – when it is delivered to Attorney General Eric Holder and to Congress – will have “undergone significant revisions at the behest of the subjects of the investigation without the benefit of reviewing OPR’s initial draft report.” [For more on the Yoo-Bybee opinions, see Consortiumnews.com’s “How Close the Bush Bullet.]

Investigating Legal Theories

The OPR probe was launched in mid-2004 after a meeting in which Jack Goldsmith, then head of the OLC, got into a tense debate with White House lawyers, including Vice President Dick Cheney’s legal counsel David Addington. Goldsmith had withdrawn some of the Yoo-Bybee opinions because he felt they were “legally flawed” and “sloppily written.”

After the meeting, Goldsmith resigned and was subsequently replaced on an acting basis by Bradbury, who restored some of the controversial Yoo-Bybee opinions in May 2005, again granting Bush broad powers to inflict painful interrogations on detainees.

Sources familiar with the OPR draft report said it reached “damning” conclusions about numerous cases of “misconduct” in the advice from Yoo, Bybee and Bradbury that was provided to the White House about interrogations and domestic surveillance.

OPR investigators determined that all three blurred the lines between an attorney charged with providing independent legal advice to the White House and a policy advocate who was working to advance the administration’s goals, said the sources who spoke on condition of anonymity because the contents of the report are still classified.

One part of the OPR report criticized Yoo’s use of an obscure 2000 health benefits statute to narrow the definition of torture in a way that permitted waterboarding and other acts that have historically been regarded as torture under U.S. law, the sources said.

In public comments responding to the criticism of his legal opinions, Yoo said his government work gave him “very little time to make very important decisions. … You don't have the luxury to research every single thing and that's accelerated in war time.”

Last weekend, it was disclosed that Spanish investigative judge Baltasar Garzon had taken initial steps for launching a criminal probe of torture that was allegedly made possible by the work of six former Bush administration officials, including Yoo, Bybee and Addington as well as former Attorney General Alberto Gonzales.

Garzon, whose court is famous for dealing with high-profile terrorism and torture cases, asserts standing in the investigation because international anti-torture laws have provisions for universal jurisdiction, meaning that if the implicated country (in this case the United States) doesn’t act against alleged torturers, other countries may.

DOJ Watchdog "Revising" Critical Report on John Yoo's Legal Work on Torture

DOJ Watchdog "Revising" Critical Report on John Yoo's Legal Work on Torture

Go To Original

A Justice Department watchdog report that is said to be highly critical of the legal work conducted for the Bush administration by three attorneys who worked at the agency's powerful Office of Legal Counsel, is in the process of being revised after the agency received responses on the report's conclusions from the attorneys under scrutiny, according to a letter sent to two Democratic senators by a Justice Department's acting assistant attorney general.

The Justice Department's Office of Professional Responsibility (OPR) is apparently "watering" down some of the more critical conclusions related to legal opinions on "enhanced interrogation" policies based on responses from John Yoo, Steven Bradbury and Jay Bybee. It's now unknown, the DOJ said, when the revised version of its report would be complete.

In a March 25 letter sent to Democratic Senators Sheldon Whitehouse and Richard Durbin, the lawmakers who wrote OPR last year requesting a probe to determine whether the attorneys legal work violated "professional standards," Faith Burton, the DOJ's Acting Assistant Attorney General, confirmed that the report was completed in late December 2008, and that former Attorney General Michael Mukasey and Deputy Attorney General Mark Filip reviewed it and demanded that Bradbury, Yoo and Bybee be given an opportunity to respond.

Moreover, "Attorney General Mukasey, Deputy Attorney General Filip and OLC provided comments, and OPR revised the draft report to the extent it deemed appropriate based on those comments," Burton said. "During the course of the investigation, counsel for the former Department attorneys asked OPR for an opportunity to review and comment on the report prior to any disclosure of its results to Congress or the public."

"Attorney General Filip likewise requested that OPR provide the former Department attorneys with such an opportunity," Burton added. "For these reasons, OPR is now in the process of sharing the revised draft report with them. When the review and comment period is concluded, OPR intends to review the comments submitted and make any modifications it deems appropriate to the findings and conclusions.

"OPR will then provide a final report to the Attorney General and Deputy Attorney General. After any additional review they deem appropriate, the Department will determine what disclosures should be made. Due to the complexity and classification level of the draft report, the review process described above likely will require substantial time and effort."

Burton, however, said she could not make any promises that the report would be publicly released, nor could she predict if and when Durbin and Whitehouse would get an opportunity to review the report.

"While we appreciate your request for a disclosure commitment, we can only fully evaluate the scope of appropriate disclosures once the review process is completed," Burton said. "We trust you understand that those decisions depend in part on the content and conclusions of the OPR final report and the outcome of any further Departmental review."

The OPR probe was launched in mid-2004 after a meeting in which Jack Goldsmith, then head of the OLC, got into a tense debate with then-White House counsel Alberto Gonzales about two August 2002 torture memos written by Yoo and signed by Bybee, which opened the door to abusive tactics such as waterboarding, which subjects a detainee to the sensation that he is drowning. Following the meeting with Gonzales, Goldsmith, who had rescinded two memos in 2003, resigned.

Goldsmith later described the torture memos as "legally flawed" and "sloppily written."

H. Marshall Jarrett, who heads OPR, conducted the investigation. Sources familiar with the draft version of the report said it reached "damning" conclusions about numerous cases of "misconduct" in the advice from Yoo, Bybee and Bradbury provided to the White House about interrogations and domestic surveillance.

OPR investigators determined that all three blurred the lines between an attorney charged with providing independent legal advice to the White House and a policy advocate who was working to advance the administration's goals, said the sources who spoke on condition of anonymity because the contents of the report are still classified.

One part of the OPR report criticized Yoo's use of an obscure 2000 health benefits statute to narrow the definition of torture in a way that permitted waterboarding and other acts that have historically been regarded as torture under US law, the sources said.

On Tuesday, Durbin and Whitehouse responded to Burton with a two-page letter.

The senators zeroed in on Bradbury, the former head of OLC who was the author of three May 2005 legal opinions that reinstated brutal interrogation policies Goldsmith had rescinded.

Durbin and Whitehouse asked whether Bradbury was permitted to comment on the draft report's conclusions since he was acting head of OLC, which was permitted to comment on the report's conclusions, according to Burton.

Three months before Bush exited the White House, Bradbury, in a "memorandum for the files," renounced several legal opinions drafted by Yoo and Bybee.

Bradbury attempted to justify or forgive Yoo's controversial opinion by explaining that it was "the product of an extraordinary period in the history of the Nation: the immediate aftermath of the attacks of 9/11."

Bradbury wrote another memo five days before Bush left office in January in which he once again repudiated Yoo's legal opinions. It would appear that this memo was in response to the OPR report. Bradbury said in the January 15 memo that the flawed theories by Yoo in no way should be interpreted to mean that Justice Department lawyers did not "satisfy" professional standards.

Rather, Bradbury wrote, "In the wake of the atrocities of 9/11, when policy makers, fearing that additional catastrophic terrorist attacks were imminent, strived to employ all lawful means to protect the Nation."

Durbin and Whitehouse said that Bradbury's "memorandum for the files" would make it a "conflict of interest" for him, as acting head of OLC, to respond to OPR's findings.

"Mr. Bradbury ... is reportedly a subject of the OPR investigation," the senators wrote. "As such, it would appear to be a conflict of interest for Mr. Bradbury to review and comment on the OPR report on OLC's behalf ... If Mr. Bradbury did review the OPR report, this could have improperly influenced the opinions he expressed on OLC's behalf ... Particularly his decision to emphasize that the authors of discredited OLC opinions on detainee issues had not necessarily violated their professional responsibilities."

Durbin and Whitehouse added that they are "concerned" that the final report shared with Attorney General Eric Holder, his deputy, and "ultimately Congress," will have "undergone significant revisions at the behest of the subjects of the investigation without the benefit of reviewing OPR's initial draft report."

The senators requested responses to five questions from DOJ, including whether OPR intends to share the original draft of its report with Holder in order to ascertain "what revisions have been made to the report."

Additionally, Durbin and Whitehouse said OPR's decision to share the original draft report with Yoo, Bybee and Bradbury "appears" to be a "departure from normal OPR practice to provide an opportunity for the attorney to review and comment on the report."

However, according to OPR protocol, if an investigation "involves alleged illegality, the attorney alleged to have committed misconduct is entitled to have counsel present to assist him or her.

"An attorney alleged to have engaged in misconduct is interviewed alone unless counsel is permitted to attend. At the conclusion of the interview, the attorney will be given an opportunity, subject to a confidentiality agreement, to review the transcript and to provide a supplemental written response and additional documents relevant to the investigation.

"In the interview, the attorney alleged to have committed misconduct would be asked to address each of the outstanding issues and allegations. In some cases, OPR determines that further information is needed to resolve the matter. The first step is usually to request a written response from the attorney involved in the allegation.

"If OPR determines that professional misconduct or poor judgment occurred, it prepares a report containing its findings and conclusions, and provides that report to the Deputy Attorney General as well as the appropriate Assistant Attorney General, the Director of [Executive Office of U.S. Attorneys], or other appropriate component head."

In an apparent response to criticism of the quality of his legal opinions that gave President George W. Bush virtually unchecked power, Yoo said working for the federal government gave him "very little time to make very important decisions.... You don't have the luxury to research every single thing and that's accelerated in war time."

"You really have decisions to make, which you could spend years on," Yoo told the Orange County Register in an interview published March 3. "Sometimes what we forget as private citizens, or scholars, or students or journalists for sure [he laughs], is that in hindsight, it's easier to say, 'Here's what I would have done.' But when you're in the government, at the time you make the decision, you don't have that kind of luxury."

In response to a question about the OPR investigation, Yoo said he wished "they weren't doing it."

"But I understand why they are," Yoo told the OC Register. "It is something one would expect. You have to make these kinds of decisions in an unprecedented kind of war with legal questions we've never had to think about before.

"We didn't seek out those questions. 9/11 kind of thrust them on us. No matter what you do, there's going to be a lot of people who are upset with your decision. If Bush had done nothing, there would be a lot of people upset with his decision, too.

"I understood that while we were doing it, there were going to be people who were critical. I can't go farther into it, because it's still going on right now. I'm not trying to escape responsibility for my decisions. I have to wait and see what they say."

Detroit auto workers denounce Obama's concession demands

Detroit auto workers denounce Obama's concession demands

By Tim Tower

Go To Original

Auto workers responded angrily on Tuesday to the concessions demanded by President Barack Obama in exchange for providing loans to the auto industry. The open contempt for the working class and unflinching subordination to finance capital that permeated Obama's remarks caught many by surprise.

We spoke to workers at Chrysler's truck assembly plant in Warren, Michigan. Some admitted that they had put stock in Obama's campaign promises before he was elected, but promise and reality ended up being opposites.

"I feel betrayed," said one worker. "That's the best way to sum it up," she concluded.

A coworker added, "My opinion of him, at first, was that he's going to stick up for us." She went on to acknowledge the abrupt change in the president's attitude toward workers since taking office. "He's only been in three months. What he was saying then and what he is saying now seems to me like a total contradiction."

She compared the Obama administration with the United Auto Workers (UAW) bureaucracy which pushed so vociferously for his election. "Just like the UAW reps in here, The UAW is not representing us. They're representing themselves. The UAW officials are going to collect two pensions," she said, while rank and file auto workers would lose theirs.

Many were outraged by the sharp contrast between the treatment of Wall Street companies, which were given trillions of dollars with no strings attached, and the treatment of auto workers, who are asked to give up everything they have in order for the auto companies to receive a few billion dollars in assistance.

"Why do we have to cut, cut, cut when they get millions in bonuses?" asked another. "Our Christmas bonus was $600 but with taxes taken out; it was half that. Why don't they attack AIG? What the auto companies are asking for is a drop in the bucket compared to what they got."

"I don't think that's fair," said James. "In the auto industry, we have to be accountable for every dime. Obama says that he's holding the banks accountable. But nobody sees it. The banks don't have to give up anything."

Recently, the Warren Assembly Plant has been shut down for as long as six weeks at a time. Many employees are stretched financially and anxious about the threat to their jobs. "We don't know when we're going to be off, or when we're going to work," said James. "We might be laid off next week. We won't know until Thursday or Friday.

"People are losing their houses and their cars because of the irregular schedules. You don't know when you're off and when you're on. Everybody's on pins and needles. They tell you when you're working and when you're not. The factory might close for a week, but bills don't take a week off."

Phil
Phil

Phil had this to say: "So Obama wants to cut my pay, but when does he plan to cut the interest rate on my house? You can just add me to the foreclosure list. They want more concessions, but what more can we give? Who is going to be able to afford these cars?"

"You can see a big change in the plant. Everybody's worried about their job," commented Brianne. "My benefits have gone down. My co-pays have gone up. What are we supposed to do?"

Desmond, who had transferred to the Warren plant from one in Syracuse, New York that recently shut down, said, "I'm not going to be able to retire from the job that I thought I was going to retire from. And even if I were to be able to hang around, it is going to be so drastically changed. When the president comes out and says, ‘Well you have given back, but you haven't given back enough,' you know what that means to me. If they have their way, we will be down to $14 an hour."

Ann
Ann

"There are either going to be very, very wealthy people, or there are going to be people who have absolutely nothing," another auto worker, Ann, said. "We are probably going to be part of the group that has nothing very soon."

"Obama was a Trojan horse," she added. "I tried and tried and tried to find something about that man that I liked, but I couldn't. I felt like saying to him, ‘I am looking at you, but there is something else underneath. You are not what you appear to be. You are saying one thing, and something else will happen.' And sure enough here we are."

"This is all scripted," Ann added. "The elections are scripted. That's why nothing has been said to the banking institutions. And the union is not going to do anything to help us."

Media backs Obama’s assault on US auto workers

Media backs Obama’s assault on US auto workers

Go To Original

The news media has given its enthusiastic support to President Obama's insistence that auto workers accept the destruction of jobs, living standards and working conditions in order to return the US auto industry to profitability.

At a White House press conference Monday, Obama rejected the cost-cutting measures submitted by Detroit automakers in a bid for further loans, saying they had not gone "far enough." He demanded the forced merger or liquidation of Chrysler and indicated that the government would throw General Motors into bankruptcy if it failed to "fundamentally restructure" and extract more "painful concessions" from workers over the next 60 days.

On Tuesday, Fritz Henderson, who has taken over the leadership of GM after the White House pushed out CEO Rick Wagoner, said he had gotten the message and would outline plans for more plant closings, layoffs and wage and benefit reductions, on top of the 47,000 worldwide job cuts the company had already announced. If this could not be achieved out of court, Henderson said, GM would do it through the bankruptcy courts.

The editorial pages of leading newspapers in the US and Britain on Tuesday were filled with praise for the president's ruthless attack on auto workers. The New York Times was the most strident supporter of a "government-backed bankruptcy process," saying it could be used to "discard GM's liabilities and unwanted assets and produce a profitable, albeit smaller, car company."

The Times urged Obama not to back down, saying, "There will be resistance to allowing GM to undergo a bankruptcy proceeding. If Chrysler is threatened with liquidation, there will be enormous pressure for the government to provide more money to save it. But the auto task force has come up with what seems to be the best shot we have at obtaining a viable auto industry. The president must stick to it."

The editorial of the Financial Times of London made it clear which "liabilities" specifically should be discarded, expressing its agreement with Obama's task force that GM's "legacy liabilities," i.e., the pension and health care benefits it owes to 800,000 retirees and their dependents, had grown to "unsustainable levels."

The Financial Times praised the decision of the American president to remove Wagoner, saying previous cost-cutting and pension and health care concessions won from the union had been "too timid." The paper continued, "[It] is important to hold the UAW accountable as well. Further support for the companies must not be a bail-out of the union, so deeply implicated in the companies' failure. Mr. Obama's team has been tough with management. It must be tough on the UAW as well, or put both firms into bankruptcy."

Similarly the Washington Post said, "It is important that the president did not flinch in demanding even deeper concessions from workers."

The Wall Street Journal said it was "glad the Administration is at least talking a tougher line on bankruptcy than Mr. Bush. But the better route would have been to use Mr. Obama's political capital now, at the start of his term, to use bankruptcy to force the companies and their union to make the hard decisions that politics may still let them avoid."

The unanimity of the corporate-controlled news media is a demonstration of the class interests that underlie Obama's policy. These same newspapers, which are complaining about the misuse of taxpayers' money when it comes to the auto industry, were all enthusiastic supporters of the multitrillion-dollar bailout of the Wall Street banks and finance houses, which was carried out with no strings attached. They also rallied to the defense of the AIG executives who used bailout money to give themselves lucrative bonuses.

The media response underscores the subordination of industrial policy in the US to finance capital and the needs of the financial aristocracy. The aim of the government-directed restructuring is to create conditions in which whatever remains of the auto industry is a substantial source of profit for Wall Street. This requires the shutdown of the bulk of auto manufacturing capacity, the imposition of poverty level wages and sweatshop conditions for the workers who remain and the dumping of pension and health care obligations.

The Obama administration is an instrument of Wall Street and the most ruthless sections of finance capital. This is clear from the makeup of the auto task force, which does not include a single representative of the auto industry.

The task force is headed by Treasury Secretary Timothy Geithner, the architect of the original Wall Street bailout, who has just unveiled a new rescue plan that will provide another windfall for the banks and major investors. His top advisors are two former Wall Street investment bankers, Steven Rattner and Ron Bloom, the latter who played a key role in the dismantling of the steel industry, which generated billions in profits for asset strippers who bought up bankrupt steelmakers after they jettisoned their pensions and gutted the wages and conditions of their workers.

One plan being considered by the task force involves splitting GM into two companies. The Wall Street Journal reported that the administration would like to see a "good" GM, comprising brands such as Chevrolet and Cadillac, remain an independent company. Under this plan, the newspaper said, the "good GM" would not be expected to hold the "tens of billions of dollars in retiree and health-care obligations that hurt the auto maker in recent decades."

Freed from such obligations—and augmented by an entirely new labor contract, in which the UAW agreed to major reductions in health care benefits—stakes in this new GM could be given to creditors or the new company could be sold whole or in parts to investors or its shares sold in an initial public offering. Among those bidding for shares or benefiting from the sale of stock, the newspaper reported, would likely be the United Auto Workers retiree health care fund.

The billions owed to pensioners and their dependents would be transferred to an "old GM," made up of "less desirable brands such as Hummer and Saturn, and underperforming plants and other assets." This part of GM, the Journal continued, "would likely sit in bankruptcy much longer while a buyer is sought for the parts or it is wound down," with proceeds from its sale going to pay claims to various creditors.

Such a scenario, while guaranteeing vast sums to the financial elite, would decimate millions of workers and their families and the communities they live in. It would be consistent with the policy of deindustrialization America's financial elite has carried out over the last three decades. According to the latest figures from the Bureau of Labor Statistics, the number of manufacturing jobs in the US has fallen by one-third, to 12.4 million today from 19.1 million at the start of 1980.

American capitalism has turned to financial speculation, massive leveraging and wholesale destruction of much of basic industry, while waging an unrelenting assault on the living standards and social position of the working class. Increasingly, vast sums of wealth have been accumulated by the richest one percent of society in a manner that has been completely divorced from the production of useful commodities and real value.

Last week, Alpha magazine reported that the 25 hedge fund managers pocketed $11.6 billion last year as millions lost their jobs and homes in the worst economic downturn since the 1930s. Ray Diallo, the founder of the hedge fund Bridgewater Associates, who made $780 million last year, summed up the ruling elite's contempt for production and for the working class, saying earlier, "The money that's made from manufacturing stuff is a pittance in comparison to the amount of money made from shuffling money around."

It is the interests of these financial parasites that are represented in the Obama administration. The starting point of any struggle by the working class is a fundamental break with the Democratic Party and all of the institutions, which defend the capitalist system, including the UAW.

OECD paints bleak picture of global economy

OECD paints bleak picture of global economy

By Peter Symonds

Go To Original

On the eve of the G20 summit in London, the Organisation for Economic Cooperation and Development (OECD) has issued a grim forecast for the global economy, undercutting the more optimistic predictions being made by governments around the world.

The OECD interim report forecasts an overall contraction of 2.75 percent in the world economy in 2009—significantly higher than the IMF's recent prediction of a decline of 0.5 to 1 percent and the World Bank's latest forecast of negative 1.7 percent. For the 30 OECD industrialised countries, the contraction is even larger—4.3 percent for 2009.

"OECD economy is in the midst of the deepest and most widespread recession for more than 50 years," the report states. "Output has declined in almost all OECD countries in the past six months and with non-OECD countries slowing sharply, world growth has turned negative."

Like other forecasters, the OECD is predicting a recovery in 2010, based on the assumption that the recession will follow the usual pattern. But the report warns that the uncertainty of its own projections is "unusually wide" and the "risks remain tilted to the downside". In particular, the authors point to the danger of a continuing downward spiral as the weak real economy undermines financial institutions, which in turn cut lending, resulting in a further weakening of economic activity.

All the major economies are being drawn into the abyss. The OECD predicts that the US economy will contract by 4 percent in 2009—far worse than the 1.2 percent decline on which the Obama administration is basing its budget plans. The report forecasts a further increase in US unemployment to 10.5 percent by the end of next year—up from 8.1 percent in February.

The Eurozone as a whole is expected to shrink by 4.1 percent in 2009, with the largest economy—Germany—among the worst affected. The report predicts a contraction of 5.3 percent in Germany—double the official forecast of negative 2.25 percent—and a jobless rate of almost 12 percent by the end of 2010.

The forecasts for Britain, France and Italy are all grim—negative 3.7 percent, 3.3 percent and 4.3 percent respectively. Highlighting the underlying political tensions, Italian Prime Minister Silvio Berlusconi reacted to the news by blaming the OECD for fuelling "a gripping climate of fear" and demanding it "shut up!" He complained: "First they did not see this coming, now they give new forecasts every other day."

The OECD predicts a massive 13.2 percent drop in global trade for 2009—higher than last week's World Trade Organisation forecast of negative 9 percent. The report notes: "Over the last quarter of 2008 and the first quarter of 2009, world trade has fallen at an average annualised rate of more than 20 percent, a rate of decline not previously experienced over the last four decades. Across all regions, the downturn has affected industrial production unusually hard given its greater integration in world trade."

Like Germany, Japan is heavily dependent on exports and has been badly hit by falling global demand. The OECD forecast for the Japanese economy for 2009 is a contraction of 6.6 percent, with unemployment rising above 5.5 percent. All the official Japanese statistics confirm a deep economic downturn. Government data released on Monday showed a 9.4 percent drop in industrial output in February, following a record 10.2 percent fall in January.

The OECD predictions for China and India are for a further economic slowdown—to growth rates of 6.3 percent and 4.3 percent respectively, about half the 2007 figures. An Asian Development Bank (ADB) report released yesterday confirmed that the export-dependent economies of developing Asia (that is, excluding Japan) would continue to slow to growth of 3.6 percent, down from 6.6 percent last year and 10.4 percent in 2007. South Korea, Hong Kong, Taiwan, Malaysia, Singapore and Thailand are all predicted to be in recession in 2009.

Speaking at a "social summit" in Rome on Monday, OECD secretary general Angel Gurria warned of a "fully blown social crisis with scarring effects on vulnerable workers and low income households" unless governments took "quick and decisive action" to boost social programs. He predicted that unemployment could grow by 25 million in OECD countries to reach 10 percent in 2010—the largest and most rapid rise in joblessness in the post-war period.

There was no shortage of hot air at this Rome gathering of labour ministers. OECD trade union adviser John Evans bewailed the fact that the G20 was dominated by finance ministers and "we don't have a voice". He warned of a "very dangerous situation" arising from massive job losses and declared that this "appalling situation" had to be made central to the London G20 summit.

Italian Prime Minister Berlusconi told the media, "the state cannot ignore the welfare of workers," promising that "we will leave no one behind". He pledged that Italy would press at the G20 summit for "a social pact capable of transforming pessimism into optimism, distrust into confidence and fear into hope".

Like the World Bank's call for the G20 to pay attention to the globe's poorest countries, these empty promises about helping the unemployed will quickly evaporate as government leaders sit down on Thursday to haggle over what joint measures can been agreed upon, if any.

Already there are deep divisions between the US and Europe. The US, backed by Britain, insists that European governments must boost stimulus spending—a proposal that has been flatly turned down by Germany in particular. European leaders, on the other hand, are calling for more stringent international financial regulation, which has been rejected by Washington.

Yesterday Japanese Prime Minster Taro Aso chimed into the debate. In comments to the Financial Times, he dismissed German Chancellor Angela Merkel's warnings about the risks of excessive public spending on stimulus packages. Citing Japan's experience of a decade of economic stagnation in the 1990s, he said: "We know what is necessary, whilst countries like the US and European countries may be facing this sort of situation for the first time."

With the deeply divided G20 meeting shaping up as a failure, French President Nicolas Sarkozy hinted that he would walk out if no "concrete" results were achieved. Presidential advisors told the media that Sarkozy had told a recent cabinet meeting: "If things don't advance in London, there will be an empty chair. I'll get up and leave."

While Sarkozy's posturing should be taken with a large grain of salt, his comments underscore real fears among G20 leaders of the economic, social and political consequences of a summit that fails to produce anything other than empty platitudes. At the same time, none of the major powers is prepared to make any concessions to its rivals that will impinge on its own economic interests, making any agreement of substance all but impossible.

Government website now offers 'suicide warning signs' for victims of recession

Government website now offers 'suicide warning signs' for victims of recession

Go To Original

When the government starts warning you not to commit suicide, you know things have gotten bad.

The US Department of Health and Human Services now has a webpage for the current recession, "Getting Through Tough Economic Times." Headlined under the Substance Abuse & Mental Health Services Administration (www.samhsa.gov/economy/), the guide offers tips on "how to deal with the effects financial difficulties can have on your physical and mental health." The site went public Tuesday.

Among the deleterious health effects the recession may spawn, the government says, is suicide.

"Unemployment and other kinds of financial distress do not 'cause' suicide directly, but they can be factors that interact dynamically within individuals and affect their risk for suicide," the site says. "These financial factors can cause strong feelings such as humiliation and despair, which can precipitate suicidal thoughts or actions among those who may already be vulnerable to having these feelings because of life-experiences or underlying mental or emotional conditions (e.g., depression, bi-polar disorder) that place them at greater risk of suicide."

Other health risks the agency lists are depression, anxiety, compulsive behaviors and substance abuse.

"It is important to be aware of signs that financial problems may be adversely affecting your emotional or mental well being -- or that of someone you care about," the agency notes.

The recession's toll is spelled out in specific terms. These signs include: persistent sadness/crying, excessive anxiety, increased drinking, apathy and "not being able to function as well."

On the plus side, the agency offers tips for managing stress -- "trying to keep things in perspective" and "strengthening connections with family and friends," as well as engaging in regular exercise.

Other steps?

"Acknowledge that economic downturns can be frightening to everyone, but that there are ways of getting through them - from engaging in healthy activities, positive thinking, supportive relationships, to seeking help when needed from health professionals," the site writes. "Encourage community-based organizations and groups to provide increased levels of mental health treatment and support to those who are severely affected by the economy."

But should things go sour, the Department of Health and Human Services offers these warning signs for the friends and family of those who've been through economic turmoil.

* Threatening to hurt or kill oneself or talking about wanting to hurt or kill oneself
* Looking for ways to kill oneself
* Thinking or fantasying about suicide
* Acting recklessly
* Seeing no reason for living or having no sense of purpose in life

If someone you know is encountering these problems, the site suggests calling the National Suicide Prevention Lifeline at 1-800-273-TALK (8255).

Banks Starting to Walk Away on Foreclosures

Banks Starting to Walk Away on Foreclosures

Go To Original

Mercy James thought she had lost her rental property here to foreclosure. A date for a sheriff’s sale had been set, and notices about the foreclosure process were piling up in her mailbox.

Ms. James had the tenants move out, and soon her white house at the corner of Thomas and Maple Streets fell into the hands of looters and vandals, and then, into disrepair. Dejected and broke, Ms. James said she salvaged but a lesson from her loss.

So imagine her surprise when the City of South Bend contacted her recently, demanding that she resume maintenance on the property. The sheriff’s sale had been canceled at the last minute, leaving the property title — and a world of trouble — in her name.

“I thought, ‘What kind of game is this?’ ” Ms. James, 41, said while picking at trash at the house, now so worthless the city plans to demolish it — another bill for which she will be liable.

City officials and housing advocates here and in cities as varied as Buffalo, Kansas City, Mo., and Jacksonville, Fla., say they are seeing an unsettling development: Banks are quietly declining to take possession of properties at the end of the foreclosure process, most often because the cost of the ordeal — from legal fees to maintenance — exceeds the diminishing value of the real estate.

The so-called bank walkaways rarely mean relief for the property owners, caught unaware months after the fact, and often mean additional financial burdens and bureaucratic headaches. Technically, they still owe on the mortgage, but as a practicality, rarely would a mortgage holder receive any more payments on the loan. The way mortgages are bundled and resold, it can be enormously time-consuming just trying to determine what company holds the loan on a property thought to be in foreclosure.

In Ms. James’s case, the company that was most recently servicing her loan is now defunct. Its parent company filed for bankruptcy and dissolved. And the original bank that sold her the loan said it could not find a record of it.

“It is what some of us think is the next wave of the crisis,” said Kermit Lind, a clinical professor at the Cleveland-Marshall College of Law and an expert on foreclosure law.

For older industrial cities like South Bend, hard times in the mortgage market began before the recent national downturn, as did the problem of bank walkaways. In the case of Ms. James, a home health care administrator, the foreclosure proceedings began in the summer of 2007, when she could not keep up with the adjustable rate on her mortgage.

In Buffalo, where officials said the problem had reached “epidemic” proportions in recent months, the city sued 37 banks last year, claiming they were responsible for the deterioration of at least 57 abandoned homes; the city chose a sampling of houses to include in the lawsuit, even though the banks had walked away from many more foreclosures. So far, five banks have settled.

In Kansas City, Rachel Foley, a lawyer who handles housing cases, said bank walkaways were “a rare occurrence two to three years ago.”

“We’re seeing them dumped more and more at the moment,” she said.

Experts suggest the bank walkaways are most visible in states where foreclosures are processed through the courts and therefore tend to be more transparent. Other states, like Indiana and New York, have court-mandated foreclosures, but roughly half of the states allow foreclosures to proceed without court intervention, making it difficult to accurately count the number of bank walkaways in recent months.

The soft housing market and the vandalism that often occurs when a house sits empty are the two main factors influencing the mortgage holders’ decisions to walk away, said Larry Rothenberg, a lawyer for Weltman, Weinberg & Reis, one of the larger creditors’ rights firms in the country.

“Oftentimes when the foreclosure starts out, it’s a viable property,” Mr. Rothenberg said, “but by the time it gets to a sheriff’s sale, it might not have enough value to justify further expense. We’ve always had cases where property was vandalized or lost value, but they were rare compared to these times.”

The problem seems most acute at the bottom of the market — houses that were inexpensive to begin with — and with investment properties, where investors and banks want speedy closure by writing off bad loans as losses. Banks and investors typically lose 40 percent to 50 percent of their investment on every foreclosure.

Guy Cecala, publisher of Inside Mortgage Finance, an industry newsletter, said some properties had become such liabilities for investors that it was not even worth holding on to them to strip valuable fixtures, like kitchen appliances, toilets and hardware.

“The whole purpose of foreclosure is to take title of the property, sell it and recoup what money you can,” Mr. Cecala said. “It’s just a sign of the times that things are so bad no one wants to take possession of the property.”

In South Bend, boarded-up houses for whom no one has stepped forward are dotting the landscape, adding a fresh layer of blight to communities that were already scarred from the area’s industrial decline.

The city is hoping to create a new type of legal mediation process that would bring together the homeowners and the mortgage holders to settle their disputes while allowing the owners to remain in the home — considered crucial to any stabilization effort.

“I’d say in the last three or four months, we’ve seen dozens of these cases,” said Chuck Leone, the South Bend city attorney. “We see it one of two ways. One is that the bank will simply dismiss the foreclosure complaint. The other is that the mortgage holder will follow through and take a judgment of foreclosure, but then not schedule the property for sheriff’s sale.”

In Ms. James’s case, it has been impossible to determine who canceled the sheriff’s sale, since her last mortgage holder went out of business. Even the city clerk’s records did not provide an answer.

“Nobody has any idea who owns what or who’s responsible,” said Judy Fox, Ms. James’s lawyer at the Notre Dame Legal Aid Clinic. “It’s a very common story.”

Mayor Stephen J. Luecke of South Bend added: “It’s just a crime the way it puts people in limbo. They first off have gone through the grief of losing their house, then they move out and find out that they still own it and have responsibility for it.”

In Jacksonville, Fla., Sylvester Kimbrough Jr. found himself caught in the limbo between foreclosure and ownership last year, 10 years into his 30-year mortgage on a $42,000 two-bedroom house.

Mr. Kimbrough, 56, a former driver for a car dealership who is now unemployed, had already moved out when he learned that the foreclosure had been stopped.

“That move really almost destroyed us,” Mr. Kimbrough said. “It was all for nothing.”

Home Prices in 20 U.S. Cities Fell by a Record 19%

Home Prices in 20 U.S. Cities Fell by a Record 19%

By Shobhana Chandra

Go To Original

Home prices in 20 U.S. cities fell 19 percent in January from a year earlier, the fastest drop on record, as demand plummeted and foreclosures rose.

The S&P/Case-Shiller index’s decrease was more than forecast and compares with an 18.6 percent decrease in December. The gauge has fallen every month since January 2007, and year- over-year records began in 2001.

A glut of unsold properties may keep prices low, shrinking household wealth and damping spending. Still, sales of new and previously owned homes rose in February, indicating the housing slump, now in its fourth year, may ease as policy efforts to unclog credit and aid borrowers begin to take hold.

“There is still a lot of downward momentum,” said Michelle Meyer, an economist at Barclays Capital Inc. in New York. “We don’t think we’ll see a bottom in home prices until the second half of next year. The decline in home prices will continue to depress household balance sheets.”

The home price index was projected to decline 18.6 percent from a year earlier, according to the median forecast of 29 economists in a Bloomberg News survey, after an originally reported drop of 18.5 percent in December. Estimates ranged from declines of 17.2 percent to 19 percent.

From a month earlier, home prices fell 2.8 percent in January, after a 2.6 percent drop in December, the report showed. The figures aren’t adjusted for seasonal effects, so economists prefer to focus on year-over-year changes instead of month-to-month.

Universal Decline

All 20 cities in the index showed a year-over-year price decrease in January, led by a 35 percent drop in Phoenix and 32.5 percent drop in Las Vegas. The index in January was at its lowest level since late 2003.

All of the 20 areas covered also showed declining home prices from the prior month.

“At this point it doesn’t look great for the near term,” Robert Shiller, chief economist at MacroMarkets LLC and a co- creator of the home price index, said today in a Bloomberg Radio interview. Still, he said, prices “can’t keep declining at this rate forever.”

Consumer confidence this month held near a record low as Americans fretted about paying their mortgages and keeping their jobs, the New York-based Conference Board’s sentiment index showed today.

Foreclosures surged 29.9 percent in February from a year earlier after rising 17.8 percent in January, according to RealtyTrac Inc. An estimated one in every 440 homes is in some stage of foreclosure.

Starts, Sales

Still, recent reports showed builders broke ground on 22 percent more homes in February than the prior month -- when starts plunged to a record low -- and that sales of new and previously owned houses increased, signaling the industry’s decline may be closer to reaching a bottom.

Lower prices and borrowing costs are attracting some buyers. The National Association of Realtors’ affordability index increased to a record in February. Mortgage rates for 30- year fixed loans fell to a record low in the week ended March 20, according to the Mortgage Bankers Association.

KB Home, a Los Angeles-based homebuilder that caters to first-time buyers, last week reported a narrower loss in the quarter ended Feb. 28, and said net new-home orders rose 26 percent from a year earlier, the first gain since the fourth quarter of 2005.

Consumer Spending

Also, while job losses are hurting Americans’ confidence, retail sales fell less than forecast in February and consumer spending had a second straight monthly gain. Economists predict the recession may ease in the second half of this year after the economy shrank 6.3 percent last quarter, the most since 1982.

Federal Reserve officials last week voiced confidence the economy will show signs of recovery by year end, responding to unprecedented monetary stimulus and the Obama administration’s $787 billion fiscal package.

“Resumption of growth should not be too far off,” Minneapolis Fed President Gary Stern said in a speech on March 26. He added, “Once under way, the pace of expansion is likely to be subdued for some time.”

Shiller, also a professor at Yale University, and Karl Case, an economics professor at Wellesley College, created the home-price index based on research from the 1980s.

$296 Billion in Overruns in U.S. Weapons Programs

$296 Billion in Overruns in U.S. Weapons Programs

Go To Original

Nearly 70 percent of the Pentagon’s 96 largest weapons programs were over budget last year, for a combined total of $296 billion more than the original estimates, a Congressional auditing agency reported Monday.

The findings, compiled by the Government Accountability Office, seemed likely to add to the pressure on officials to make sizable cuts in the most troubled programs as they work out the details of a proposed $664 billion defense budget for fiscal 2010.

President Obama has said that the “days of giving defense contractors a blank check are over.” Pentagon officials have said they will finish putting together a list of proposed cuts in April.

In a letter to Congress, Gene L. Dodaro, the acting comptroller general for the G.A.O., an auditing agency, said that while there had been modest improvements in the last year, the Pentagon’s management of the contracts remained poor, and cost overruns were “still staggering.”

The accountability office reported that the programs were behind schedule by an average of 22 months, up from 21 months last year and 18 months in 2003.

The office had previously said that the cost of a similar portfolio of programs had risen by $295 billion through 2007, or $301 billion when adjusted for inflation.

In the report released on Monday, the G.A.O. said the Pentagon often had to reduce the number of planes and ships it could buy.

The report said, for instance, that the cost of 10 of the largest weapons systems was running 32 percent higher than projected, and the quantities that could be purchased had been cut.

Some programs, like the Air Force’s F-22 fighter jet and the Army’s Future Combat System, are among the systems that Defense Secretary Robert M. Gates has said he is scrutinizing.

According to the G.A.O., the F-22, which was designed in the 1980s, was originally expected to cost $88 billion in 2009 dollars for 648 planes. The program is now expected to cost $73.7 billion for the 184 planes.

Some military analysts say they believe that Mr. Gates will recommend canceling the plane, or buying fewer planes than the Air Force wants.

But the G.A.O. also said the Pentagon had done a better job of managing some newer programs.

In a response to the office, John J. Young Jr., the Pentagon’s top acquisition official, said department officials had “instituted several major changes that are beginning to show results.”

Mr. Young also noted that in some cases, the cost growth was not a result of overruns but of program expansions. And in others, delays were ordered by top Pentagon officials or Congress as part of budgeting trade-offs.

Pentagon war spending hits $685.7 billion: GAO

Pentagon war spending hits $685.7 billion: GAO

Go To Original

Pentagon spending on the wars in Iraq and Afghanistan and to fight terrorism elsewhere has reached $685.7 billion since 2001, a U.S. government watchdog agency said on Monday.

The Government Accountability Office, or GAO, said the Iraq war accounted for $533.5 billion in Defense Department spending obligations through last December, while spending on operations in Afghanistan, the Horn of Africa and the Philippines totaled $124.1 billion.

The remaining $28.1 billion was for operations to defend the U.S. mainland, the GAO said in a letter to Congress dated March 30.

The spending total equals about 85 percent of the $808 billion that Congress has appropriated for military operations in the global war on terrorism since the September 11 attacks on New York and Washington, the GAO said.

The $122.3 billion difference reflects multiyear contracts for procurement, military construction, research, development and other programs, the watchdog agency said.

GAO figures show the rise in Pentagon obligations slowing from 40 percent hikes between 2005 and 2007 to a 33 percent increase in 2008. Obligations for 2008 totaled $162.4 billion.

Congress has appropriated $65.9 billion for 2009 so far and the Obama administration is seeking another $75.5 billion, suggesting $141.4 billion in total appropriations for the year, down from 2008.

Pentagon spending in the first three months of fiscal year 2009 -- from October 1 to December 31, 2008 -- equaled about $31 billion, of which $25 billion went to the war in Iraq and nearly $6 billion to operations in Afghanistan, the Horn of Africa and the Philippines.

The Army accounted for $21.5 billion of war on terrorism obligations during the same period, followed by the Air Force at $3.7 billion.

US opens route to Afghanistan through Russia's backyard

US opens route to Afghanistan through Russia's backyard

American influence in former Soviet countries could make or break Obama administration's new Afghan-Pakistan strategy

Go To Original

The road passes a shimmering green mountain pasture, then dips steeply to a new US-built bridge. Across the languid Panj river is Afghanistan and the dusty northern town of Kunduz. On this side is Tajikistan, Afghanistan's impoverished Central Asian neighbour.

It is here, at what used to be the far boundary of the Soviet empire, that the US and Nato are planning a new operation. Soon, Nato trucks loaded with non-military supplies will start rolling into Afghanistan along this northern route, avoiding Pakistan's perilous tribal areas and the ambush-prone Khyber Pass.

This northern corridor is essential if Barack Obama's Afghan-Pakistan strategy is to work. With convoys supplying US and Nato forces regularly attacked by the Taliban on the Pakistan route, the US is again courting the former Soviet republics of Tajikistan, Uzbekistan, Kyrgyzstan, Kazakhstan and Turkmenistan.


Luke Harding on US standoff with Russia over Afghanistan Link to this audio

Nato has already signed a transit deal with Tajikistan. It says it expects bilateral agreements with Uzbekistan "within days" and Kazakhstan "within weeks". Pakistan will remain the primary route. But the sleepy Tajik-Afghan border crossing at the village of Nizhny Panj will become a focal point of Obama's Afghan push.

"We used to cross the river by boat. Then the Americans built a bridge," Rasul Nematov, 35, who lives in Nizhny Panj said. Next to his front garden, past a line of washing and a trailing vine, is a Tajik sentry tower. The Pentagon has given Dushanbe, Tajikistan's attractive capital, $10m to beef up security on its mountainous border, a key conduit for Afghanistan's biggest export, heroin.

Currently, only a few dozen Afghan drivers cross the bridge every day. From here they proceed to Dushanbe, filling up their Kamaz trucks with sugar and other goods. They then head home. The route goes past fields of cotton, donkeys, small boys selling fish, and willow and poplar trees, their blossom now floating across a fragrant spring landscape.

"This road to Tajikistan is good. It's safe, quiet," Said Muhammed, 54, an Afghan truck driver from the northern city of Mazar-i-Sharif told the Guardian. He added: "The problem is with the road south from Kabul to Kandahar. I don't drive it. It's dangerous. The Taliban dragged my friend out of his truck and set it on fire."

But looming over the US's latest attempt to get a foothold in Central Asia is the region's former colonial super-power - Moscow. Formally, Russia has offered to help Obama in his attempts to deal with the deteriorating situation in Pakistan and Afghanistan, and last month it agreed the shipment of non-lethal supplies destined for Kabul across Russian territory. Informally, however, Russia has moved decisively to reassert its influence in Central Asia, a region it still regards as its backyard. In 2001 George Bush and Vladimir Putin, the US and Russia's then leaders, cut an informal deal to cooperate over the post-9/11 war in Afghanistan. Moscow allowed the US military to set up several bases in Central Asia.

Since then, though, the Kremlin sees itself as having been betrayed - by what it regards as US-engineered pro-western revolutions in Georgia and Ukraine. It has hit back by sealing backroom deals with Central Asia's democracy-averse strongmen. In 2005 Uzbekistan's president, Islam Karimov, fed up with western criticism of his dire human rights record, kicked Washington out of its military base near the border town of Termiz.

Vital supply point

Last month, meanwhile, Kyrgyzstan announced it was also shutting its US airbase in Manas, named after a legendary Kyrgyz hero who rode a winged horse and performed amazing feats. The base near the Kyrgyz capital, Bishkek, is the US's last outpost in Central Asia, and is a vital supply point for ferrying US troops and supplies to nearby Afghanistan.

Kyrgyzstan's president announced the base's closure in Moscow hours after meeting Russia's president, Dmitry Medvedev, who offered him a $2bn loan. Russia may yet allow the US to carry on using the base - but only as part of a new deal encompassing Moscow's wider strategic concerns on Nato expansion and missile defence.

Analysts say there is likely to be only one winner in Central Asia's new great game - a hackneyed phrase used to describe the romanticised 19th-century struggle between imperial Britain and tsarist Russia, played out against the backdrop of the Pamir mountains and the Hindu Kush. It won't be Washington, they predict.

"It's up and down. Since 2001 the Americans have had the upper hand in Central Asia. Now the Russians are getting back what the Americans have lost," Parviz Mullajanov, an expert in international affairs based in Dushanbe said. He added: "In reality, the US never won the game. Since the collapse of the Soviet Union, Russia has managed to preserve its leading position in Central Asia."

According to Mullajanov, Moscow has significantly boosted its military, economic and intelligence activity across the region. It has other advantages too, he says. "All post-Soviet countries live in Russian-speaking informational space. The majority of people watch Russian TV and read Russian newspapers. They see the outside world through Russian eyes. This is a very powerful tool."

The US's position, by contrast, is "very weak", Mullajanov suggests. Washington's attempts to reach out to civil society and opposition groups have got almost nowhere in Central Asia - a region run by a series of variously repressive and autocratic super-presidents, all apparently in the job for life. The US faces another headache in the shape of China, an ambitious pre-imperial contender in the neighbourhood.

Speaking at the White House on Friday, Obama made it clear that Afghanistan was his administration's top military priority. Instead of concentrating on Iraq, Obama said he intended to "disrupt, dismantle and defeat al-Qaida in Pakistan and Afghanistan". This "clear and focused goal" would require an extra 21,000 US troops, in addition to the 38,000 already there, he declared.

Some, however, wonder how wise Obama is to rely on Central Asia. In a gloomy report, the International Crisis Group recently suggested the region was little better than crisis-rocked Pakistan, describing it "as a seriously risky bet". The report's author, Paul Quinn-Judge, noted: "Its leaders are all former Soviet apparatchiks ... most of the citizens live in deep poverty, and the countries' economies are for the most part feeble and fragile."

Sliding towards meltdown

He went on: "Worst-case scenarios include state collapse, the disintegration of national infrastructure, chaotic succession struggles and Islamic insurgency." If this were not bad enough, Tajikistan and Uzbekistan - the two countries most important to the US's new logistical push - were sliding towards possible economic and social meltdown, the report claimed.

Either way, few in Tajikistan believe Obama's war in Afghanistan can be a success. "The US has already lost the war in Afghanistan. Sooner or later they will be forced to leave the country," Mullajanov said. He added: "The new administration understands very clearly that victory isn't achievable. Instead, the US is going to force the Taliban to make concessions, and to talk to them from a position of power."

Back in Nizhny Panj, Tajik border guards in dark blue uniforms cast an expert eye over another Afghan lorry. Tajikistan has agreed to allow up to 250 Nato trucks a day to cross here, a decision that will turn the riverside hamlet into a major hub. "I don't mind Nato. But what we really need here is a minibus to take our kids to school," said Nematov, a local. He pointed out: "It's 5km [three miles] away. At the moment they walk."

Cars, Banks and Confusion

Cars, Banks and Confusion

By Eugene Robinson

Go To Original

Through a series of logical decisions, the Obama administration has maneuvered itself into an illogical and uncomfortable place. The president is telling Detroit to shape up or die while at the same time politely asking Wall Street, whose recklessness and greed caused this economic crisis, if it would be so kind as to accept another heaping helping of taxpayer funds.

General Motors and Chrysler have been ailing companies for decades. But they wouldn’t be in extremis, hemorrhaging money as never before, if consumer demand hadn’t fallen off a cliff. And why did people suddenly stop buying cars? Because they either can’t get credit or don’t think it wise to make a major purchase with the economy in such dire straits.

Both the credit crunch and the reluctance of consumers to spend what money they have left are the direct result of Wall Street’s atrocious misbehavior. Yet the administration’s plan for rescuing the banking sector involves generous inducements, big subsidies and the opportunity for wealthy investors to become much wealthier while assuming very little risk. There are reasons for structuring the bank bailout this way, and there are reasons to take a get-tough attitude with the auto companies. But the juxtaposition is galling—and, for many autoworkers, potentially devastating.

“We cannot continue to excuse poor decisions,” President Obama said Monday as he laid down the law to Detroit. But it’s hard to reconcile that declaration with policies that seem to excuse, if not reward, unspeakably poor decisions made on Wall Street.

I can’t argue with the administration’s decision to force GM chief executive Rick Wagoner to resign. It was encouraging, even, to see the White House employ that kind of muscle, given the fact that the president now has to oversee so much of the economy. But shouldn’t the first public flogging have involved one of the bankers who got us into this predicament? On Friday, the day when Wagoner got his walking papers, the biggest cheeses on Wall Street came to the White House for a cordial meeting. All still had their jobs when they left.

Wagoner’s crime was in not getting GM out of an untenable situation that he inherited, though it should be noted that he has been with the company for more than 30 years, plenty long enough to be considered part of the problem. His defenders say that in recent years he demonstrated that he had seen the light about what kind of cars Americans want to buy, and they also point to his success in gaining market share for GM abroad. Maybe there was no way for him to get the company out from under its crushing “legacy” costs for retiree benefits. But if he made any headway at all at changing the company’s culture and turning GM into a lean, green, car-making machine, it’s not evident.

Obama gave GM a 60-day deadline to come up with some kind of radical restructuring plan that would ensure a viable future for the company. That was a better deal than he offered hapless Chrysler, which has just 30 days to complete a merger with Italy’s Fiat or face dissolution.

Given that Daimler-Benz couldn’t make a go of Chrysler, it’s hard to imagine that Fiat would do better—assuming that a deal between the firms can even be reached. The company that gave us the minivan, one of the most successful innovations in the history of the industry, is probably toast.

GM, on the other hand, has what amounts to a guarantee from the White House that it will continue in some form, even if it fails to reinvent itself before the deadline and has to go through bankruptcy. In any event, the GM of the future is likely to be smaller than the GM of today. It is almost certain that some plants will have to be closed and some product lines discontinued.

Maybe this is the least disruptive solution for GM’s work force. It is worth pointing out, however, that the $17.4 billion the federal government has given GM and Chrysler since the bottom fell out of the automotive market last fall is dwarfed by the more than $1 trillion we’ve poured into the financial sector.

Our tough-love message to the banks: Would you mind, possibly, lending some of that money we gave you? If it’s not too much trouble, that is. And would you like another pillow?