Tuesday, April 7, 2009

House Preparing To Legalize Payday Loans With 391% APRs

House Preparing To Legalize Payday Loans With 391% APRs

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A House subcommittee wants to legalize payday loans with interest rates of up to 391%. Lobbyists from the payday industry bought Congress' support by showering influential members, including Chairman Luiz Gutierrez, with campaign cash. The Congressman is now playing good cop, bad cop with the payday industry, which is pretending to oppose his generous gift of a bill.

"While they may not be JP Morgan Chase or Bank of America, they're very powerful. Their influence should not be underestimated," Gutierrez, the top Democrat on the Financial Services subcommittee in charge of consumer credit issues, said in an interview this week.

Indeed, the payday lending industry is strenuously resisting Gutierrez's measure, which it says would devastate its business. The measure would cap the annual interest rate for a payday loan at 391 percent, ban so-called "rollovers" - where a borrower who can't afford to pay off the loan essentially renews it and pays large fees - and prevent lenders from suing borrowers or docking their wages to collect the debt.

A newer player representing Internet payday lenders - a growing segment of the market - also ramped up its lobbying and political giving efforts. The Online Lenders Alliance, formed in 2005, nearly quintupled, to $480,000, its lobbying expenditures from 2007 and 2008. It contributed $108,400 to candidates in advance of the 2008 elections compared to about $2,000 in the 2006 contests. Gutierrez was among the top House recipients, getting $4,600, while the top Senate recipient was Sen. Tim Johnson, D-S.D., a Banking Committee member who got $6,900.

After watching members of the military fall prey to exorbitant payday loans, Congress in 2006 capped the interest rates for military payday loans at 36%. Fifteen states have similar caps or outright bans.

Congressman Gutierrez is competing with Congressman Joe Baca to see who can author the biggest giveaway. Baca's legislation would allow rollovers, higher fees for online banks, and would pre-empt state laws banning payday loans.

Someone—maybe Carolyn Maloney, who did an excellent job with the Credit Card Bill of Rights—needs to step up and punch the payday lending lobbyists in the face.

THE INFLUENCE GAME: Payday lenders thwart limits

Estimated U.S. taxpayer cost for bailout jumps

Estimated U.S. taxpayer cost for bailout jumps

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U.S. congressional budget analysts have raised their estimate of the net cost to taxpayers for the government's financial rescue program to $356 billion, an increase of $167 billion from earlier estimates.

The Congressional Budget Office had originally projected the $700 billion Troubled Asset Relief Program would cost taxpayers $189 billion.

The additional cost, which applies to TARP spending for fiscal years 2009 and 2010, was included in the CBO's March projection of a $1.8 trillion deficit for fiscal 2009, which ends September 30.

The TARP cost projection was raised due to changes in financial market conditions, new transactions and a shift in expected timing of payments, the CBO said.

The Treasury Department announced plans to use some of the money to help avoid home foreclosures and made new deals with Bank of America and American International Group. Those programs involved higher subsidy rates than previously estimated, the report said.

Congress passed the Wall Street bailout program in October with the goal of stabilizing banks and reassuring jittery markets.

Russian confirms Korea satellite launch, urges restraint

Russian confirms DPRK satellite launch, urges restraint

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Russia's Foreign Ministry on Sunday confirmed the Democratic People's Republic of Korea's (DPRK) launch of a satellite and urged restraint from all relevant parties.

"The DPRK sent an artificial satellite into an earth orbit on the morning of April 5," ministry spokesman Andrei Nesterenko was quoted by the Interfax news agency as saying.

He said the DPRK had informed the Russian side about the launch in advance.

Russia called on all the states concerned to "show restraint in judgments and actions in the current situation," Nesterenko said, adding Moscow will continue monitoring the situation and consult with all parties concerned.

The DPRK's official media reported earlier that it successfully launched a rocket carrying the "Kwangmyongsong-2" communications satellite, which entered orbit about 10 minutes after launch.

How Freedom Was Lost

How Freedom Was Lost

By Paul Craig Roberts

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Envy, one of the seven deadly sins, is not unknown to Americans.

My last column noted the absurdity of Obama lumping the upper middle class in with the rich. The income distribution in the US is so skewed that the rich are found in the top one percent. The truly rich with the accoutrements associated with that class are in the top half of one percent.

Those points were lost on those Americans who regard anyone slightly better off than themselves as “rich.” A slightly bigger house in a better neighborhood, a BMW instead of a Toyota, and the ability to go on vacation without going into debt is all it takes to be rich in the minds of those whose eyes are green with envy.

This observation led me to the realization that freedom has been lost to envy.

Americans no longer know what freedom is. Historically, the definition of a free person is one who owns his own labor. Serfs and slaves were not free, because they do not own all of their own labor.

An income tax is inconsistent with the historical definition of freedom. Today in America government has a claim on every person’s labor, just as feudal lords, the government of that time, had claims on the labor of serfs and nineteenth century plantation owners had on slaves.

Understanding that an income tax was serfdom, our Founding Fathers wrote the US Constitution in a way that prevented an income tax. This was altered in 1913 with a constitutional amendment that some claim was not properly carried out.

This first step in the enserfment of the American people was taken in envy. The rich were the targets of the income tax. Once in place, the income tax was extended by law and by inflation until ordinary people were being taxed at rates several times as high as the original top rate for the rich.

After almost 100 years of income tax, generations have been born into serfdom and accept the government’s claim on their labor as normal, even just. Some say they don’t mind paying taxes to help the poor. They should look to see what share goes to the poor and what share to war, armaments, and the bailout of the Treasury Secretary’s rich friends.

The problem with a tax on a person’s labor is that it subtracts from a person’s independence. Without independence, it is difficult to exercise constitutionally protected rights, such as free speech.

In former times, family farms and businesses provided a measure of independence for many Americans. Today, most work for wages and salaries. The only real avenue to independence is to save part of one’s earnings and acquire enough wealth upon which to live. For most Americans, the government’s claim on their labor makes this impossible.

This is even more the case when government fails in its regulatory responsibilities and allows banksters to join in the plunder of the hard-pressed citizens.

The inheritance tax, another product of envy, has also done much to destroy the independence of the citizenry. For example, family owned independent media, once a source of independent power that held government accountable, has been lost to corporate media chains in order that families could pay inheritance taxes.

The same people who complain of rule by giant corporations support the inheritance taxes that transformed the face of American business. A family owned business has community roots and loyalties. A corporation’s owners are spread across the country and abroad. Their interest is the share price. The consequence has been that many corporations no longer even have national loyalties.

A corporation’s existence is not threatened by inheritance taxes, but a family owned business is. An inheritance tax is a tax on assets accumulated from income that has already been taxed. To raise the cash to pay the inheritance tax, businesses have to be sold or taken public. Eventually, their ownership is divorced from the community.

In the past, great wealth accumulations found their way into endowments of private universities, museums and public libraries, institutions that also contributed to the independence of citizens from government control.

Today even private universities and tenured faculty have lost pieces of their independence. There are subjects that cannot be investigated and opinions that cannot be expressed. We can rationalize the inhibitions by saying that they are proper subjects for censorship. However, once the process of suppressing thought and speech begins, it spreads.

The Tax Foundation has calculated that tax freedom day arrives on May
29 this year if the federal government’s budget deficit is included, as it should be, in the tax burden. That means that Americans work 42 percent of the year for the government, a higher tax rate than was endured by medieval serfs and one approaching that of a nineteenth century slave.

In the nineteenth century, there were “underground railways” that slaves could use to escape to freedom. In our time, “underground railways” are known as “tax havens.” Just as slave owners sought to abolish “underground railways,” our owners today seek to outlaw “tax havens.”

Some Americans will reject these analogies. They can test the validity of the analogies by refusing the government’s claim on their labor. Perhaps the best evidence of American serfdom is that most Americans do not even have the ability to test the validity of the analogy, because the government takes its share in withholding tax before wages and salaries are paid to us serfs.

The Glide-path to Destitution

Bernanke's Financial Rescue Plan

The glide-path to destitution

By Mike Whitney

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Fed chief Ben Bernanke has embarked on the most radical and ruinous financial rescue plan in history. According to Bloomberg News, the Fed has already lent or committed $12.8 trillion trying to stabilize the financial system after the the bursting of Wall Street's speculative mega-bubble. Now Bernanke wants to dig an even bigger hole, by creating programs that will provide up to $2 trillion of credit to financial institutions that purchase toxic assets from banks or securities backed by consumer loans. The Fed's generous terms are expected to generate a flurry of speculation which will help strengthen the banking system while leaving the taxpayer to bear the losses. It is impossible to know what the long-term effects of Bernanke's excessive spending will be, but his plan has the potential to trigger hyperinflation or spark a run on the dollar.

Bernanke's zero-percent interest rates, multi-trillion dollar lending facilities and bank bailouts do not fit within the Fed's narrow mandate of "price stability and full employment". With unemployment soaring to 8.5 percent and increasing at a rate of 650,000 per month (with 15 percent under-employed) it is a wonder that Bernanke hasn't been fired already. There are also myriad problems with Bernanke's lending facilities which are nothing more than a crafty way of transferring wealth from the Fed to private industry via low interest loans. The Central Bank is not supposed to "pick winners" as it is blatantly doing through its market-distorting facilities. Businesses outside the financial sector cannot exchange their downgraded garbage with the Fed for semi-permanent, rotating loans; so why should underwater investment banks and hedge funds get special treatment? The facilities represent a gift to financial institutions giving them an unfair advantage in the marketplace.

Besides the $2 trillion for the Term Asset-Backed Lending Facility (TALF) and the Public-Private Investment Program (PPIP), the Fed will also provide a multi-billion dollar backstop for the FDIC as bank closures continue to snowball and more reserves are needed to shore up the system. That means that the Fed's balance sheet could mushroom to over $4 trillion by the end of 2010. The Treasury has already agreed in principle to assume full responsibility for the Fed's lending facilities (as well as the bailouts of AIG and Bear Stearns) as soon as the financial system stabilizes. By providing loans and US Treasurys to failing companies, instead of capital, Bernanke has sidestepped Congress, thus, undermining the spirit and the letter of the law. Congress has approved a mere $1.5 trillion of the nearly $13 trillion for which taxpayers are now responsible.

The recent 22 percent uptick in the stock market is a sign that Bernanke's monetary stimulus is beginning to kick in. Oil rose from $33 per barrel to over $50 in little more than a month. Other raw materials have followed oil. The dollar has plunged every time the stock market has gone up. These are all signs of nascent inflation which is likely to accelerate after the current period of deleveraging ends. Food and energy prices will rise sharply and the dollar will come under greater and greater pressure. This is Bernanke's nightmare scenario; a surge in inflation that forces him to raise rates and kill the recovery before it ever begins. The Fed's unwillingness to be proactive in dealing with credit bubbles has created a situation where there are no easy answers or pain-free solutions.

Bernanke's approach to the crisis has been wrongheaded from the get-go. It makes no sense to commit nearly $13 trillion to prop up a grossly oversized financial system while providing less than $900 billion stimulus for the real economy. The whole plan is upside-down. It's consumers, homeowners and workers that create demand (consumer spending is 72 percent of GDP) and yet, they've been left to twist in the wind while the bulk of the resources have been directed to financial speculators who are responsible for the mess. Middle class families have seen their retirements slashed in half and their home equity vanish, while their jobs become increasingly less secure. The Fed and the Treasury should be focused on debt relief, mortgage cram-downs, jobs programs and open-ended support for state and local governments. Rebuilding the financial infrastructure for extending more credit to people that are already underwater is beyond shortsighted; its cruel. The financial system needs to shrink to fit the new reality of a smaller economy. That means that Bernanke should aggressively mark-down the dodgy collateral he's been accepting (the collateral should reflect current market prices) and force many of the weaker institutions into bankruptcy. This is the fairest and fastest way to shake the deadwood from the financial system. Keeping asset prices artificially inflated only puts off the inevitable day of reckoning.

The IMF Communique to the G 20:

“The prolonged financial crisis has battered global activity beyond what was previously anticipated. Global GDP is estimated to have fallen by an unprecedented 5% in the fourth quarter, led by the advanced economies, which contracted by 7%. GDP declined by around 6% in both the United States and Europe, while it plummeted at a post-war record of 13% in Japan. Growth also plunged across a broad swath of emerging economies … against this backdrop, global activity is expected to contract in 2009 for the first time in 60 years.”

Bernanke's monetary stimulus strategy will do little to mitigate the severity of the contraction which has already gripped every sector of the economy. Credit more than doubled in the first few years of the new millennium. In fact, that total system credit jumped from $1.75 trillion in 2000 to $4.4 trillion in 2007. At the same time, the Current Account Deficit--which averaged about $100 billion per year during the 1990s-- ballooned to a whopping $788 billion in 2006. Clearly, the Fed's flood of low interest credit coupled with unsustainable deficits put the country on course for a major catastrophe. (Greenspan still says he never saw it coming) Now that the bubble has burst, Bernanke, has gone into panic-mode, frantically firehosing the entire financial system with liquidity, but with little effect. The sheer magnitude of the deflationary tidal wave is unprecedented. Here's author and economist Henry Liu:

"Globally, the dollar-denominated financial system has seen its equity market capitalization value fall by between 40-60% by February 2009....On October 31, 2007, the total market value of publicly-traded companies around the world was $62.6 trillion. By December 31, 2008, the value had dropped nearly half to $31.7 trillion. The gap of lost wealth, $30.9 trillion, is approximately the combined annual Gross Domestic Product of the US, Western Europe, and Japan.... Family net worth hit a record high of $64.36 trillion in 2nd quarter of 2007. By 4th quarter 2008, it fell to $51.48 trillion, a loss of $12.88 trillion.

To restore the wealth lost in the current financial crisis, the Treasury would have to monetize some $30 trillion of toxic assets, almost ten times what the Geithner Treasury is currently contemplating, and twice the size of current US annual GDP. Add to that about $10 trillion of value lost in the collapse of commodity prices and another $10 trillion in real property values, and we have a wealth loss of $50 trillion."
(Obama’s Politics of Change and US Policy on China, asia Times, Henry Liu)

Nearly half of the world's wealth has been consumed in one gigantic capital bonfire. No amount of "quantitative easing" will undo the damage to the economy. Here's a clip from Merrill Lynch's David Rosenberg adding more perspective to Liu's comments:

"Government cannot prevent nature from taking its course. While an additional $1.15 trillion expansion of the Fed’s balance sheet is large as a stand-alone event, it really is just a drop in the bucket when one considers that there is still almost $8 trillion of combined household and business sector credit that must be unwound in order to mean-revert the private sector-to-GDP ratio (which is still close to a record-high). Once again, the government is cushioning the blow, but cannot prevent nature from taking its course.

(We) feel much more confident that corporate earnings are going to slide again this year....The economy continues to contract … job losses, declining equity and housing wealth, and tight credit conditions have weighed on consumer sentiment and spending. Weaker sales prospects and difficulties in obtaining credit have led businesses to cut back on inventories and fixed investment. US exports have slumped as a number of major trading partners have also fallen into recession”. This is with the Fed funds rate effectively at zero. It’s pretty clear that the Fed does not see any flicker of light at the end of the tunnel just yet. Mr. Market may be in for yet another surprise." (Interview with David Rosenberg, Tech Ticker)

The system-wide contraction can't be stopped by supporting financial institutions that made bad bets or took on perilous amounts of debt leaving them deep in the red. Fed lending should be aimed at companies that need temporary help only, like rolling over loans or getting through a rough patch while inventories are trimmed and consumers retrench. Similarly, the stimulus (monetary or fiscal) shouldn't be used to reflate assets or to try to reverse the market correction, but to maintain aggregate demand, take up slack in the sluggish economy, create jobs, and soften the blow for the victims of Wall Street's bubblenomics. Bernanke has used monetary stimulus in precisely the way it should not be used, to keep asset prices artificially high despite the cooling off in the stock market, falling corporate profits, and the steeply rising unemployment. There should be a sharp reduction in the amount lending to financial institutions, reflecting the decline in the value of the underlying assets which are now priced at roughly 30 cents on the dollar. Bernanke's job is to wind-down these positions, not perpetuate the problem at the taxpayer's expense.

According to Bloomberg: "The Federal Reserve’s top two officials assured that they will pull back their emergency- credit programs once the crisis fades, even as they prepare to flood the system further with an excess of $1 trillion.

Chairman Ben Bernanke said yesterday in Charlotte, North Carolina that the Fed must retain the flexibility to withdraw its record cash injections to restrain prices. Vice Chairman Donald Kohn said in Wooster, Ohio, “the trick will be unwinding this balance sheet in a timely way to avoid inflation.”

This is pure fiction. Bernanke has no exit strategy because the collateral the Fed now holds on its books will never regain anything near its original value. Securitization turned 80% of shaky subprime loans into AAA assets for which the Fed is now providing full value vis a vis its low interest loans. The Fed chief has made the same bad bet that the financial institutions made, and is now adding to that mistake by buying $750 billion in junk loans from Fannie and Freddie and $300 billion in US Treasurys to push investors out of the safety of cash back into the market. It's lunacy. All of this is putting more and more pressure on the dollar which could experience severe dislocation if Bernanke does not make a reasonable attempt to do what is necessary to resolve the banks, shore up consumer spending, shut down underwater financial institutions (auction their toxic assets through a RTC government-run facility) and stop trying to reassemble a broken system.

Bernanke is in way over his head. He has no plan for expanding conventional lending or strengthening the parts of the system that still work. All his efforts have been focused on salvaging insolvent banks and restarting securitization. Securitzation--transforming pools of loans into securities---was Wall Street's Golden Goose, a privately-owned credit-generating mechanism which created windfall profits by selling radioactive waste to over-trustful investors. Securitization is the epicenter of the shadow banking system, the mostly-unregulated universe of opaque debt-instruments, off balance sheet operations, and massively over-leveraged financial institutions. Securitization broke down after subprime mortgages began defaulting in record numbers sending risk-adverse investors scuttling for the exits. To illustrate how frozen the securitzation market is at present, here's a blurp from the Wall Street Journal:

"Outside the market where the Fed is a buyer for securities backed by mortgage loans that conform to Fannie and Freddie standards, there hasn't been a new deal since 2007, according to FTN Financial, a fixed-income broker dealer." (Wall Street Journal, Credit Markets Still Navigate in a Choppy Sea of Liquidity)

Repeat: "No new deals since 2007."

Again from the Wall Street Journal:

"Banks and other finance companies making loans for autos, credit cards and college tuition are having virtually no success in selling those loans to other investors, a potent sign of just how tight credit markets remain.

The market for selling such loans — by packaging, or securitizing, them into bonds — had just one $500 million deal for all of October, according to Barclays Capital. That compares with $50.7 billion worth of deals made one year earlier, according to market-research firm Dealogic.” (Bond Woes Choke off some Credit to Consumers, Wall Street Journal, Robin Sidel)

Securitzation is dead, and yet, Bernanke and Geithner want to shovel another $2 trillion into this black hole hoping to lure investors back to the market. Why? Because Wall Street financiers and bank mandarins see securitization as an efficient model that can be exported into any market around the world. The repackaging of debt into complex instruments, that can be stealthily created in off balance sheet operations requiring smaller and smaller slices of capital, is the essential flimflam product that Wall Street intends to use to dominate global financial markets. Keeping secutization alive is ultimately about power; pure, unalloyed economic power. That is why Bernanke will spare no expense trying to resuscitate this failed system.

What's so destructive about securitzation is that it allows the banks to create credit out of thin air through unregulated, clandestine operations, which eliminate transparency and makes it impossible for the Fed to control the money supply. David Roache explains how this works in an excerpt from his book "New Monetarism" which appeared in the Wall Street Journal:


"The reason for the exponential growth in credit, but not in broad money, was simply that banks didn't keep their loans on their books any more-and only loans on bank balance sheets get counted as money. Now, as soon as banks made a loan, they "securitized" it and moved it off their balance sheet.

There were two ways of doing this. One was to sell the securitized loan as a bond. The other was "synthetic" securitization: for example, using derivatives to get rid of the default risk (with credit default swaps) and lock in the interest rate due on the loan (with interest-rate swaps). Both forms of securitization meant that the lending bank was free to make new loans without using up any of its lending capacity once its existing loans had been "securitized."

So, to redefine liquidity under what I call New Monetarism, one must add, to the traditional definition of broad money, all the credit being created and moved off banks' balance sheets and onto the balance sheets of nonbank financial intermediaries. This new form of liquidity changed the very nature of the credit beast. What now determined credit growth was risk appetite: the readiness of companies and individuals to run their businesses with higher levels of debt. (Wall Street Journal)

The banks have been creating trillions of dollars of credit without maintaining adequate capital reserves to back them up. That explains why the banks were so eager to provide mortgages to millions of loan applicants who had no documentation, no income, no collateral and a bad credit history. They believed there was no risk, because they were making enormous profits without tying up any of their capital.

THE ECONOMY'S LIFE'S BLOOD IN PRIVATE HANDS


As Barak Obama says, "Credit is the economy's life's-blood". It should not be part of a secretive process which is kept off-book and controlled by men whose solitary goal is fattening the bottom line for short-term gain. The reason securitization failed is because the banks put profit above their responsibility to perform due diligence on their loans. In other words, securitization created incentives for fraud, which is why the system eventually collapsed. Still, Bernanke is determined to do Wall Street's bidding and spend another $2 trillion trying to rev up the securitization engine. A recent letter by the Federal Reserve Bank of Dallas, "Fed Confronts Financial Crisis by Expanding Its Role as Lender of Last Resort" helps to shed some light on the Fed's real intentions:

"In a modern financial system, securities-funded lending has replaced the banking system as the predominant credit source for households and nonfinancial firms. Because of this development, it can be appropriate to extend the lender of last resort role to temporarily support some nonbank credit sources....

It’s against this backdrop that the Fed has extended its role as lender of last resort beyond banks. Since late 2007, the central bank has supported key credit flows funded by securities, extending loans on nonfinancial corporations’ commercial paper, residential mortgage-backed securities and nonbank financial companies’ loans to consumers and businesses.

The Fed actions recognize the dramatic shift toward debt funded through securities markets. At the end of 1979, securities funded about 33 percent of household, nonfinancial corporate and nonfarm business debt. By the third quarter of 2008, that figure had risen to around 64 percent .

A closer look reveals that household debt became significantly more dependent on market funding, largely reflecting the increased importance of asset-backed securities (ABS) in funding mortgages and consumer loans. Even the share of nonfinancial corporate debt funded by securities rose considerably over the same period—from 57 percent to 76 percent."

76 percent! Is it any wonder why the global economy has been sucked into a bottomless abyss; why auto sales are down 40 percent or more, why global trade is down 35 percent or more, why unemployment is skyrocketing, manufacturing is stalling and consumer confidence is plunging?

The Fed has allowed an unregulated and untested privately-controlled "credit generating" shadow banking system to infect the broader economy and create a nation of credit addicts which are entirely at the mercy of unpredictable market fluctuations. Is this how the economy's "life's blood" should be distributed?

The only reason this occult system was allowed to flourish--with the tacit support of the Fed and the Treasury-- was because it threw open the profit-sluicegates for the banks and Wall Street speculators who made more money than anyone ever thought possible. Clearly, this is what motivates Bernanke and Geithner. These are their real constituents.

WILL THE U.S. DEFAULT AGAIN?


Meanwhile--as Bernanke fiddles--the prospect of a US default grows more and more likely. Spreads on credit default swaps (CDS) have progressively widened with every new Fed program and every new multi-billion dollar bailout. Here's journalist Greg Ip in The Washington Post:

"In its battle against the financial crisis, the U.S. government has extended its full faith and credit to an ever-growing swath of the private sector... (But) Can the United States pay the money back?..

The most important is the coming surge in the federal debt. At the end of the last fiscal year, in September, the total public debt held by the American people stood at $5.8 trillion, or 41 percent of gross domestic product -- about what the debt-to-GDP ratio has averaged since 1956. But the Congressional Budget Office projects deficits of $1.9 trillion over the next two years. Add almost $800 billion of stimulus spending, and U.S. debt soars to 60 percent of GDP by 2010 -- the highest level since the early 1950s, when the nation was working off its World War II and Korean War debts.
The federal government has taken on massive "contingent liabilities" -- loans and guarantees that don't become actual costs until the borrower defaults and the federal guarantee has to be honored." (Greg Ip, We're Borrowing Like Mad. Can the U.S. Pay It Back? Washington Post)

Keep in mind, the United States defaulted on its debt in 1933 when Roosevelt took office and pulled the country off the gold standard, thus, shrugging off the claims of foreign investors who were assured the US would honor its obligations in gold. The dollar plummeted. Bernanke's muddled strategy has the nation walking down that same path once again.

Filling the Skies with Assassins

Terminator Planet

Launching the Drone Wars

By Tom Engelhardt

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In 1984, Skynet, the supercomputer that rules a future Earth, sent a cyborg assassin, a "terminator," back to our time. His job was to liquidate the woman who would give birth to John Connor, the leader of the underground human resistance of Skynet's time. You with me so far? That, of course, was the plot of the first Terminator movie and for the multi-millions who saw it, the images of future machine war -- of hunter-killer drones flying above a wasted landscape -- are unforgettable.

Since then, as Hollywood's special effects took off, there were two sequels during which the original terminator somehow morphed into a friendlier figure on screen, and even more miraculously, off-screen, into the humanoid governor of California. Now, the fourth film in the series, Terminator Salvation, is about to descend on us. It will hit our multiplexes this May.

Oh, sorry, I don't mean hit hit. I mean, arrive in.

Meanwhile, hunter-killer drones haven't waited for Hollywood. As you sit in that movie theater in May, actual unmanned aerial vehicles (UAVs), pilotless surveillance and assassination drones armed with Hellfire missiles, will be patrolling our expanding global battlefields, hunting down human beings. And in the Pentagon and the labs of defense contractors, UAV supporters are already talking about and working on next-generation machines. Post-2020, according to these dreamers, drones will be able to fly and fight, discern enemies and incinerate them without human decision-making. They're even wondering about just how to program human ethics, maybe even American ethics, into them.

Okay, it may never happen, but it should still make you blink that out there in America are people eager to bring the fifth iteration of Terminator not to local multiplexes, but to the skies of our perfectly real world -- and that the Pentagon is already funding them to do so.

An Arms Race of One

Now, keep our present drones, those MQ-1 Predators and more advanced MQ-9 Reapers, in mind for a moment. Remember that, as you read, they're cruising Iraqi, Afghan, and Pakistani skies looking for potential "targets," and in Pakistan's tribal borderlands, are employing what Centcom commander General David Petraeus calls "the right of last resort" to take out "threats" (as well as tribespeople who just happen to be in the vicinity). And bear with me while I offer you a little potted history of the modern arms race.

Think of it as starting in the early years of the twentieth century when Imperial Britain, industrial juggernaut and colonial upstart Germany, and Imperial Japan all began to plan and build new generations of massive battleships or dreadnoughts (followed by "super-dreadnoughts") and so joined in a fierce naval arms race. That race took a leap onto land and into the skies in World War I when scientists and war planners began churning out techno-marvels of death and destruction meant to break the stalemate of trench warfare on the Western front.

Each year, starting in 1915, new or improved weaponry -- poison gas, upgrades of the airplane, the tank and then the improved tank -- appeared on or above the battlefield. Even as those marvels arrived, the next generation of weapons was already on the drawing boards. (In a sense, American auto makers took up the same battle plan in peacetime, unveiling new, ramped up car models each year.) As a result, when World War I ended in 1918, the war machinery of 1919 and 1920 was already being mapped out and developed. The next war, that is, and the weapons that would go with it were already in the mind's eye of war planners.

From the first years of the twentieth century on, an obvious prerequisite for what would prove a never-ending arms race was two to four great powers in potential collision, each of which had the ability to mobilize scientists, engineers, universities, and manufacturing power on a massive scale. World War II was, in these terms, a bonanza for invention as well as destruction. It ended, of course, with the Manhattan Project, that ne plus ultra of industrial-sized invention for destruction, which produced the first atomic bomb, and so the Cold War nuclear arms race that followed.

In that 45-year-long brush with extinction, the United States and the Soviet Union each mobilized a military-industrial complex to build ever newer generations of ever more devastating nuclear weaponry and delivery systems for a MAD (mutually assured destruction) world. At the peak of that two-superpower arms race, the resulting arsenals had the mad capacity to destroy eight or ten planets our size.

In 1991, after 73 years, the Soviet Union, that Evil Empire, simply evaporated, leaving but a single superpower without rivals astride planet Earth. And then came the unexpected thing: the arms race, which had been almost a century in the making, did not end. Instead, the unimaginable occurred and it simply morphed into a "race" of one with a finish line so distant -- the bomber of 2018, Earth-spanning weapons systems, a vast anti-ballistic missile system, and weaponry for the heavens of perhaps 2050 -- as to imply eternity.

The Pentagon and the military-industrial complex surrounding it -- including mega-arms manufacturers, advanced weapons labs, university science centers, and the official or semi-official think tanks that churned out strategies for future military domination -- went right on. After a brief, post-Cold War blip of time in which "peace dividends" were discussed but not implemented, the "race" actually began to amp up again, and after September 11, 2001, went into overdrive against "Islamo-fascism" (aka the Global War on Terror, or the Long War).

In those years, our Evil Empire of the moment, except in the minds of a clutch of influential neocons, was a ragtag terrorist outfit made up of perhaps a few thousand adherents and scattered global wannabes, capable of mounting spectacular-looking but infrequent and surprisingly low-tech attacks on symbolic American (and other) targets. Against this enemy, the Pentagon budget became, for a while, an excuse for anything.

This brings us to our present unbalanced world of military might in which the U.S. accounts for nearly half of all global military spending and the total Pentagon budget is almost six times that of the next contender, China. Recently, the Chinese have announced relatively modest plans to build up their military and create a genuinely offshore navy. Similarly, the Russians have moved to downsize and refinance their tattered armed forces and the industrial complex that goes with them, while upgrading their weapons systems. This could potentially make the country more competitive when it comes to global arms dealing, a market more than half of which has been cornered by the U.S. They are also threatening to upgrade their "strategic nuclear forces," even as Presidents Dmitry Medvedev and Barack Obama have agreed to push forward a new round of negotiations for nuclear reductions.

Meanwhile, Secretary of Defense Robert Gates has just announced cutbacks in some of the more outré and futuristic military R&D programs inherited from the Cold War era. The Navy's staggering 11 aircraft-carrier battle groups will over time also be reduced by one. Minor as that may seem, it does signal an imperial downsizing, given that the Navy refers to each of those carriers, essentially floating military bases, as "four and a half acres of sovereign U.S. territory." Nonetheless, the Pentagon budget will grow modestly and the U.S. will remain in a futuristic arms race of one, a significant part of which involves reserving the skies as well as the heavens for American power.

Assassination by Air

Speaking of controlling those skies, let's get back to UAVs. As futuristic weapons planning went, they started out pretty low-tech in the 1990s. Even today, the most commonplace of the two American armed drones, the Predator, costs only $4.5 million a pop, while the most advanced model, that Reaper -- both are produced by General Atomics Aeronautical Systems of San Diego -- comes in at $15 million. (Compare that to $350 million for a single F-22 Raptor, which has proved essentially useless in America's most recent counterinsurgency wars.) It's lucky UAVs are cheap, since they are also prone to crashing. Think of them as snowmobiles with wings that have received ever more sophisticated optics and powerful weaponry.

They came to life as surveillance tools during the wars over the former Yugoslavia, were armed by February 2001, were hastily pressed into operation in Afghanistan after 9/11, and like many weapons systems, began to evolve generationally. As they did, they developed from surveillance eyes in the sky into something far more sinister and previously restricted to terra firma: assassins. One of the earliest armed acts of a CIA-piloted Predator, back in November 2002, was an assassination mission over Yemen in which a jeep, reputedly transporting six suspected al-Qaeda operatives, was incinerated.

Today, the most advanced UAV, the Reaper, housing up to four Hellfire missiles and two 500-pound bombs, packs the sort of punch once reserved for a jet fighter. Dispatched to the skies over the farthest reaches of the American empire, powered by a 1,000-horsepower turbo prop engine at its rear, the Reaper can fly at up to 21,000 feet for up to 22 hours (until fuel runs short), streaming back live footage from three cameras (or sending it to troops on the ground) --- 16,000 hours of video a month.

No need to worry about a pilot dozing off during those 22 hours. The human crews "piloting" the drones, often from thousands of miles away, just change shifts when tired. So the planes are left to endlessly cruise Iraqi, Afghan, and Pakistani skies relentlessly seeking out, like so many terminators, specific enemies whose identities can, under certain circumstances -- or so the claims go -- be determined even through the walls of houses. When a "target" is found and agreed upon -- in Pakistan, the permission of Pakistani officials to fire is no longer considered necessary -- and a missile or bomb is unleashed, the cameras are so powerful that "pilots" can watch the facial expressions of those being liquidated on their computer monitors "as the bomb hits."

Approximately 5,500 UAVs, mostly unarmed -- less than 250 of them are Predators and Reapers -- now operate over Iraq and the Af-Pak (as in the Afghanistan-Pakistan) theater of operations. Part of the more-than-century-long development of war in the air, drones have become favorites of American military planners. Secretary of Defense Robert Gates in particular has demanded increases in their production (and in the training of their "pilots") and urged that they be rushed in quantity into America's battle zones even before being fully perfected.

And yet, keep in mind that the UAV still remains in its (frightening) infancy. Such machines are not, of course, advanced cyborgs. They are in some ways not even all that advanced. Because someone now wants publicity for the drone-war program, reporters from the U.S. and elsewhere have recently been given "rare behind-the-scenes" looks at how it works. As a result, and also because the "covert war" in the skies over Pakistan makes Washington's secret warriors proud enough to regularly leak news of its "successes," we know something more about how our drone wars work.

We know, for instance, that at least part of the Air Force's Afghan UAV program runs out of Kandahar Air Base in southern Afghanistan. It turns out that, pilotless as the planes may be, a pilot does have to be nearby to guide them into the air and handle landings. As soon as the drone is up, a two-man team, a pilot and a "sensor monitor," backed by intelligence experts and meteorologists, takes over the controls either at Davis-Monthan Air Force Base in Tucson, Arizona, or at Creech Air Force Base northwest of Las Vegas, some 7,000-odd miles away. (Other U.S. bases may be involved as well.)

According to Christopher Drew of the New York Times, who visited Davis-Monthan where Air National Guard members handle the controls, the pilots sit unglamorously "at 1990s-style computer banks filled with screens, inside dimly lit trailers." Depending on the needs of the moment, they can find themselves "over" either Afghanistan or Iraq, or even both on the same work shift. All of this is remarkably mundane -- pilot complaints generally run to problems "transitioning" back to wife and children after a day at the joystick over battle zones -- and at the same time, right out of Ali Baba's One Thousand and One Nights.

In those dimly lit trailers, the UAV teams have taken on an almost godlike power. Their job is to survey a place thousands of miles distant (and completely alien to their lives and experiences), assess what they see, and spot "targets" to eliminate -- even if on their somewhat antiquated computer systems it "takes up to 17 steps -- including entering data into pull-down windows -- to fire a missile" and incinerate those below. They only face danger, other than carpal tunnel syndrome, when they leave the job. A sign at Creech warns a pilot to "drive carefully"; "this, it says, is 'the most dangerous part of your day.'" Those involved claim that the fear and thrill of battle do not completely escape them, but the descriptions we now have of their world sound discomfortingly like a cross between the far frontiers of sci-fi and a call center in India.

The most intense of our various drone wars, the one on the other side of the Afghan border in Pakistan, is also the most mysterious. We know that some or all of the drones engaged in it take off from Pakistani airfields; that this "covert war" (which regularly makes front-page news) is run by the CIA out of its headquarters in Langley, Virginia; that its pilots are also located somewhere in the U.S.; and that at least some of them are hired private contractors.

William Saletan of Slate has described our drones as engaged in "a bloodless, all-seeing airborne hunting party." Of course, what was once an elite activity performed in person has been transformed into a 24/7 industrial activity fit for human drones.

Our drone wars also represent a new chapter in the history of assassination. Once upon a time, to be an assassin for a government was a furtive, shameful thing. In those days, of course, an assassin, if successful, took down a single person, not the targeted individual and anyone in the vicinity (or simply, if targeting intelligence proves wrong, anyone in the vicinity). No more poison-dart-tipped umbrellas, as in past KGB operations, or toxic cigars as in CIA ones -- not now that assassination has taken to the skies as an every day, all-year-round activity.

Today, we increasingly display our assassination wares with pride. To us, at least, it seems perfectly normal for assassination aerial operations to be a part of an open discussion in Washington and in the media. Consider this a new definition of "progress" in our world.

Proliferation and Sovereignty

This brings us back to arms races. They may be things of the past, but don't for a minute imagine that those hunter-killer skies won't someday fill with the drones of other nations. After all, one of the truths of our time is that no weapons system, no matter where first created, can be kept for long as private property. Today, we talk not of arms races, but of "proliferation," which is what you have once a global arms race of one takes hold.

In drone-world, the Chinese, the Russians, the Israelis, the Pakistanis, the Georgians, and the Iranians, among others, already have drones. In the Lebanon War of 2006, Hezbollah flew drones over Israel. In fact, if you have the skills, you can create your own drone, more or less in your living room (as your basic DIY drone website indicates). Undoubtedly, the future holds unnerving possibilities for small groups intent on assassination from the air.

Already the skies are growing more crowded. Three weeks ago, President Obama issued what Reuters termed "an unprecedented videotaped appeal to Iran... offering a 'new beginning' of diplomatic engagement to turn the page on decades of U.S. policy toward America's longtime foe." It was in the form of a Persian New Year's greeting. As the New York Times also reported, the U.S. military beat the president to the punch. They sent their own "greetings" to the Iranians a couple of days earlier.

After considering what Times reporters Rod Nordland and Alissa J. Rubin term "the delicacy of the incident at a time when the United States is seeking a thaw in its relations with Iran," the U.S. military sent out Col. James Hutton to meet the press and "confirm" that "allied aircraft" had shot down an "Iranian unmanned aerial vehicle" over Iraq on February 25th, more than three weeks earlier. Between that day and mid-March, the relevant Iraqi military and civilian officials were, the Times tells us, not informed. The reason? That drone was intruding on our (borrowed) airspace, not theirs. You probably didn't know it, but according to an Iraqi Defense Ministry spokesman, "protection of Iraqi airspace remains an American responsibility for the next three years."

And naturally enough, we don't want other countries' drones in "our" airspace, though that's hardly likely to stop them. The Iranians, for instance, have already announced the development of "a new generation of 'spy drones' that provide real-time surveillance over enemy terrain."

Of course, when you openly control squads of assassination drones patrolling airspace over other countries, you've already made a mockery of whatever national sovereignty might once have meant. It's a precedent that may someday even make us distinctly uncomfortable. But not right now.

If you doubt this, check out the stream of self-congratulatory comments being leaked by Washington officials about our drone assassins. These often lead off news pieces about America's "covert war" over Pakistan ("An intense, six-month campaign of Predator strikes in Pakistan has taken such a toll on Al Qaeda that militants have begun turning violently on one another out of confusion and distrust, U.S. intelligence and counter-terrorism officials say..."); but be sure to read to the end of such pieces. Somewhere in them, after the successes have been touted and toted up, you get the bad news: "In fact, the stepped-up strikes have coincided with a deterioration in the security situation in Pakistan."

In Pakistan, a war of machine assassins is visibly provoking terror (and terrorism), as well as anger and hatred among people who are by no means fundamentalists. It is part of a larger destabilization of the country.

To those who know their air power history, that shouldn't be so surprising. Air power has had a remarkably stellar record when it comes to causing death and destruction, but a remarkably poor one when it comes to breaking the will of nations, peoples, or even modest-sized organizations. Our drone wars are destructive, but they are unlikely to achieve Washington's goals.

The Future Awaits Us

If you want to read the single most chilling line yet uttered about drone warfare American-style, it comes at the end of Christopher Drew's piece. He quotes Brookings Institution analyst Peter Singer saying of our Predators and Reapers: "[T]hese systems today are very much Model T Fords. These things will only get more advanced."

In other words, our drone wars are being fought with the airborne equivalent of cars with cranks, but the "race" to the horizon is already underway. By next year, some Reapers will have a far more sophisticated sensor system with 12 cameras capable of filming a two-and-a-half mile round area from 12 different angles. That program has been dubbed "Gorgon Stare", but it doesn't compare to the future 92-camera Argus program whose initial development is being funded by the Pentagon's blue-skies outfit, the Defense Advanced Research Projects Agency.

Soon enough, a single pilot may be capable of handling not one but perhaps three drones, and drone armaments will undoubtedly grow progressively more powerful and "precise." In the meantime, BAE Systems already has a drone four years into development, the Taranis, that should someday be "completely autonomous"; that is, it theoretically will do without human pilots. Initial trials of a prototype are scheduled for 2010.

By 2020, so claim UAV enthusiasts, drones could be engaging in aerial battle and choosing their victims themselves. As Robert S. Boyd of McClatchy reported recently, "The Defense Department is financing studies of autonomous, or self-governing, armed robots that could find and destroy targets on their own. On-board computer programs, not flesh-and-blood people, would decide whether to fire their weapons."

It's a particular sadness of our world that, in Washington, only the military can dream about the future in this way, and then fund the "arms race" of 2018 or 2035. Rest assured that no one with a governmental red cent is researching the health care system of 2018 or 2035, or the public education system of those years.

In the meantime, the skies of our world are filling with round-the-clock assassins. They will only evolve and proliferate. Of course, when we check ourselves out in the movies, we like to identify with John Connor, the human resister, the good guy of this planet, against the evil machines. Elsewhere, however, as we fight our drone wars ever more openly, as we field mechanical techno-terminators with all-seeing eyes and loose our missiles from thousands of miles away ("Hasta la Vista, Baby!"), we undoubtedly look like something other than a nation of John Connors to those living under the Predators. It may not matter if the joysticks and consoles on those advanced machines are somewhat antiquated; to others, we are now the terminators of the planet, implacable machine assassins.

True, we can't send our drones into the past to wipe out the young Ayman al-Zawahiri in Cairo or the teenage Osama bin Laden speeding down some Saudi road in his gray Mercedes sedan. True, the UAV enthusiasts, who are already imagining all-drone wars run by "ethical" machines, may never see anything like their fantasies come to pass. Still, the fact that without the help of a single advanced cyborg we are already in the process of creating a Terminator planet should give us pause for thought... or not.

Report Calls CIA Detainee Treatment "Inhuman"

Report Calls CIA Detainee Treatment 'Inhuman'

By Joby Warrick and Julie Tate

Go To Original

Medical officers who oversaw interrogations of terrorism suspects in CIA secret prisons committed gross violations of medical ethics and in some cases essentially participated in torture, the International Committee of the Red Cross concluded in a confidential report that labeled the CIA program "inhuman."

Health personnel offered supervision and even assistance as suspected al-Qaeda operatives were beaten, deprived of food, exposed to temperature extremes and subjected to waterboarding, the relief agency said in the 2007 report, a copy of which was posted on a magazine Web site yesterday. The report quoted one medical official as telling a detainee: "I look after your body only because we need you for information."

New details about alleged CIA interrogation practices were contained in the 43-page volume written by ICRC officials who were given unprecedented access to the CIA's "high-value detainees" in late 2006. While excerpts of the report were leaked previously, the entire document was made public for the first time by author Mark Danner, a journalism professor, on the Web site of the New York Review of Books.

The confidential report sheds additional light on the CIA's handling of the detainees, who were held in secret overseas prisons for up to four years and subjected to what the agency describes as "enhanced interrogation techniques." In addition to widely reported methods such as waterboarding, the report alleges that several of the detainees were forced to stand for days in painful positions with their arms shackled overhead. One prisoner reported being shackled in this manner for "two to three months, seven days of prolonged stress standing followed by two days of being able to sit or lie down."

In addition to the coercive methods -- which the ICRC said "amounted to torture" and a violation of U.S. and international treaty obligations -- the report said detainees were routinely threatened with further violence against themselves and their families. Nine of the 14 prisoners said they were threatened with "electric shocks, infection with HIV, sodomy of the detainee and . . . being brought close to death," it said.

The ICRC report was based on accounts made separately to agency investigators by individual detainees, all of whom had been kept in isolation before the interviews, the document states. CIA officials have confirmed that three of the prisoners were subjected to waterboarding, which simulates drowning.

An ICRC spokesman confirmed the authenticity of the document and said the organization "deplores that what was to be a confidential report has been made public."

The CIA declined yesterday to comment on the report, citing the Red Cross's own policy of maintaining the confidentiality of its reports. But spokesman Mark Mansfield noted that the agency had long since ended the controversial interrogation program.

"Director [Leon] Panetta has taken decisive steps to ensure that the CIA abides by the president's executive orders. That means CIA will not use interrogation techniques outside the Army Field Manual," he said. He noted that Panetta also has stated repeatedly that "no one who took actions based on legal guidance from the Department of Justice at the time should be investigated, let alone punished."

Previously, top Bush administration officials defended the interrogation methods, saying they were legal and necessary to prevent terrorist attacks.

The report's release puts added pressure on the Obama administration, which has banned the use of waterboarding and similar techniques but has resisted calls to conduct legal inquiries to determine whether Bush administration officials broke laws.

The presence of medical personnel at CIA interrogation sites has been reported previously, but ICRC investigators found that their participation in some of the more harsh episodes to be a severe breach of medical ethics. The report said the officials were enlisted to ensure that the detainees did not die or suffer irreparable damage.

The report can be accessed at http://www.nybooks.com/icrc-report.pdf.

Obama pursues US strategic interests in Turkey

Obama pursues US strategic interests in Turkey

By Bill Van Auken

Go To Original

In his two-day visit to Turkey, President Barack Obama sought to distance himself from the disastrous foreign policy legacy of George W. Bush in the Middle East while pursuing the same strategic interests of US imperialism that motivated the wars launched by his predecessor.

Media coverage of Obama’s speech to the Turkish parliament Monday has focused largely on his affirmation that “the United States is not, and will never be, at war with Islam,” as well as his shying away from statements made in his 2008 presidential campaign defining the massacres of Turkish Armenians beginning in 1915 as “genocide.”

Asked at a press conference in Ankara about his earlier statements—clearly aimed at winning Armenian-American support in key Democratic primaries—Obama refused to utter the word “genocide” and insisted that the matter was one for Turkey and Armenia to resolve.

The statement on Islam was meant to underscore the Obama administration’s shift in tone from the Bush White House, whose aggression in Iraq and simultaneous “war on terrorism” and crusade for Christian fundamentalism generated popular outrage towards Washington throughout the region. In Turkey itself, polls taken at the end of Bush’s term showed just 9 percent with a positive view of the US.

Whether this attempt to refurbish the image of US imperialism will succeed in salvaging Washington’s interests in Turkey remains to be seen. The visit to Ankara and Istanbul follows Obama’s participation in the G20 Summit in London, the NATO summit in Strasbourg and Kehl and the European Union summit in Prague. All of these gatherings served largely to paper over deep-seated differences between Europe and America, while failing to produce the key objectives sought by Obama: European fiscal stimulus to boost the US economy and more troops for the escalating war in Afghanistan.

In addressing the parliament in Ankara, Obama underscored the history of US-Turkish relations and particularly Washington’s close ties to the Turkish military, which has carried out four coups since 1960.

“It is a friendship that flourished in the years after World War II, when President Truman committed our nation to the defense of Turkey’s freedom and sovereignty, and Turkey committed itself to the NATO alliance,” he said. “Turkish troops have served by our side from Korea to Kosovo to Kabul. Together, we withstood the great test of the Cold War.”

Maintaining this military collaboration is clearly a key aim motivating the visit to Turkey. With 1,200 soldiers in Afghanistan, Turkey has the second largest force of the NATO member states participating in the US-led occupation. Moreover, the Incirlik Air Base in southern Turkey serves as a key logistics hub for supplying US troops in both Iraq and Afghanistan, as well as a base for US warplanes carrying out strikes in Iraq.

The end of the Cold War and the aggressive US policy in the Middle East have placed increasing strains on the ties binding Turkey to NATO and Washington.

Tensions mounted after 2003, when the Turkish government was unable to get legislation through parliament granting Washington’s request to use its territory for launching the US invasion of Iraq. Ankara’s fears about the war were fueled in large measure by concern that the overthrow of Saddam Hussein would stoke Kurdish separatism not only in northern Iraq, but across the border in Turkey itself.

Fissures also emerged in August 2008 over the conflict between Russia and Georgia. While the rest of NATO was condemning Russia and declaring its support for Georgia’s “territorial integrity,” Turkey adopted a stance of neutrality.

As Prime Minister Recep Tayyip Erdogan declared at the time: “Some are trying to push us toward the US and some toward Russia... One of the sides is our closest ally, the United States. The other side is Russia, with which we have an important trade volume ... I will not allow Turkey to be pushed to one side or the other. We will act in accordance with Turkey’s national interests.”

Moreover, under the ruling Justice and Development Party (AKP), which has its roots in Turkey’s Islamist movement, Ankara has forged closer ties with Iran and Syria—treated as pariahs by Washington—as well as with the Palestinian Hamas movement, which is on the US “foreign terrorist” list. At the same time, Ankara has maintained close military and economic ties with Israel.

Nonetheless, Erdogan sharply criticized Israel’s three-week siege against Gaza last December and January, storming off the stage during a panel discussion with Israeli President Shimon Peres at the Davos World Economic Forum, a performance that boosted his popularity in Turkey.

In his speech, Obama addressed some of these relations, attempting to cast US policy as more moderate under his administration. On the issue of the Israeli-Palestinian conflict, he declared, “Let me be clear: the United States strongly supports the goal of two states, Israel and Palestine, living side by side in peace and security. ... That is a goal that the parties agreed to in the Roadmap and at Annapolis. And that is a goal that I will actively pursue as president.”

The remark was widely seen as a shot across the bow for the new Israeli government headed by Benjamin Netanyahu, which has indicated it has no interest in pursuing negotiations aimed at creating a Palestinian state.

Obama’s remark in Ankara drew a quick retort from Israeli Environmental Protection Minister Gilad Erdan, who is in charge of relations between the Netanyahu cabinet and the Israeli Knesset. He declared, “Israel does not take orders from Obama... In voting for Netanyahu the citizens of Israel have decided that they will not become the 51st US state.”

Just days before, the US Senate voted for a foreign aid package that will provide Israel with the nearly $3 billion in annual US aid which sustains the country’s economy and government.

On Iran, Obama demanded that Tehran forego “nuclear weapons ambitions,” while stressing that Washington “seeks engagement based upon mutual interests and mutual respect.”

On Sunday, however, Obama’s national security adviser Susan Rice was asked in a television interview whether she was concerned about Israeli threats to carry out air strikes against Iran. She replied that the US shares “Israel’s very grave concern about the [Iranian] threat,” while refusing “to speculate about what may transpire.” She added that while the Obama administration was open to “direct diplomacy” with Tehran, “if that path is not chosen, we have not ruled out any options.”

Also straining Turkey’s ties with both the US and NATO is the stalled bid for Turkish membership in the European Union.

Speaking at the US-EU summit in Prague, Obama urged the 27-state union to admit Turkey as a member, saying that it would foster closer relations between the West and the Muslim world. “Moving forward towards Turkish membership in the EU would be an important signal of your commitment to this agenda and ensure we continue to anchor Turkey firmly in Europe,” he said.

He reiterated this point in his speech to the Turkish parliament, saying, “Let me be clear: the United States strongly supports Turkey’s bid to become a member of the European Union. We speak not as members of the EU, but as close friends of Turkey and Europe.”

This pronouncement drew a quick rebuff from French President Nicolas Sarkozy. “I have been working hand in hand with President Obama, but when it comes to the European Union it is up to member states of the European Union to decide,” he said in a French television interview. “I have always been opposed to this entry and I remain opposed.”

German Chancellor Angela Merkel essentially concurred, noting that there were obviously “differences of opinion” with the US president.

The tensions involving Turkey, the EU and NATO erupted at the NATO meeting in Strasburg when the Turkish delegation initially blocked the naming of Denmark’s prime minister, Anders Fogh Rasmussen, as the alliance’s secretary general. The Turkish objections stemmed from what was perceived as Rasmussen’s indifference to the outrage provoked in 2005 by anti-Islamic cartoons published in a Danish newspaper, as well as Denmark’s tolerance of Roj TV, a station that Ankara has accused of acting as a propaganda arm of the PKK (Kurdistan Workers Party), an armed Kurdish separatist group.

Turkey was persuaded to drop its veto, which threatened to derail the summit, only after Obama brokered a deal that included giving a top NATO post to Turkey and a pledge by Denmark to begin proceedings to close down the offending Kurdish station.

The incident reflects the increasing willingness of Turkey to use NATO as a means of pressuring Europe over EU membership. Earlier, Ankara had rejected NATO deployment orders for Kosovo and Afghanistan because they called for cooperation with the EU.

As part of Obama’s bid to repair relations with Turkey, he invoked the “common threat from terrorism,” lumping together Al Qaeda and the PKK. “There is no excuse for terror against any nation,” he said. “As president and as a NATO ally, I pledge that you will have our support against the terrorist activities of the PKK.” This policy represents a direct continuation of that of the Bush administration, which sanctioned cross-border attacks against PKK positions in northern Iraq in 2007.

Another issue touched on in Obama’s speech was Turkey’s role in providing routes for pipelines linking the West to the vast energy resources of the Caspian Basin, bypassing Russia. “The United States will continue to support your central role as an East-West corridor for oil and natural gas,” he said.

This key strategic aim was covered in far greater detail in a report issued in advance of the Obama visit by the Washington think tank, the Center for Strategic and International Studies [PDF]. Among those supervising the preparation of this document were former US national security advisors Zbigniew Brzezinski and Brent Scowcroft.

“The United States should bolster its support for Turkey’s development as an energy transit corridor to the global market,” the document states. It adds, “Quiet diplomacy is needed to align various state and commercial interests and to not provoke potential competitors into early action in opposition.”

The CSIS calls on the Obama administration to “appoint a senior official for Eurostan energy to enhance interagency coordination and orchestrate US engagement with foreign governments and the energy industry.”

The authors of this report represent the sections of the US foreign policy establishment that backed Obama’s candidacy, seeing it as a means of improving Washington’s abysmal image on the world stage and effecting certain tactical changes in US policy, while adopting a less confrontational tone than the one adopted by the Bush administration.

Underneath these changes in style, however, the Obama administration, no less than that of Bush, is pursuing the geopolitical and economic interests of America’s financial oligarchy. In the trip to Turkey, what predominated was the continuing quest for American hegemony over markets and strategic resources—above all energy—that motivated the wars in Afghanistan and Iraq. Under conditions of deepening economic crisis, this drive carries with it the threat of even bloodier conflicts.

Supreme Court rejects appeal by Mumia Abu-Jamal for new trial

US Supreme Court rejects appeal by Mumia Abu-Jamal for new trial

By Barry Grey

Go To Original

The United States Supreme Court on Monday refused to hear an appeal for a new trial by Mumia Abu-Jamal, whose struggle over more than a quarter century against his murder conviction in a politically and racially motivated frame-up has become a focus of international opposition to capital punishment and political repression.

The Court rejected, without comment, a writ of certiorari filed by Abu-Jamal’s lawyers charging that his 1982 trial in the killing the previous year of a Philadelphia police officer should be discounted because the prosecution illegally excluded African-Americans from the jury. It requires only four of the nine justices to agree to hear such an appeal, meaning that at least one of the four nominally liberal members of the court refused to support the writ. The fact that the decision was issued without comment or dissent suggests that the decision was unanimous.

The high court’s action let stand a March 2008 federal appeals court ruling denying Abu-Jamal’s appeal for a new trial. In that same decision, a three-judge panel of the Third Circuit Court of Appeals threw out the death penalty phase of Abu-Jamal’s trial, ruling that the jury had been improperly instructed by the trial judge on how to weigh mitigating factors offered by the defense that might have kept Abu-Jamal off death row. The judge had falsely told the jury, consisting of ten whites and two African-Americans, that they had to agree unanimously on mitigating factors.

The appeals court lifted the death penalty and ordered a new capital sentencing hearing, at which a jury could decide either to restore the death sentence or impose a sentence of life without the possibility of parole. Abu-Jamal appealed the ruling to the Supreme Court, seeking a new trial on the charges.

Philadelphia prosecutors have appealed the appeals court ruling to the US Supreme Court, seeking to restore the original sentence of death. The Supreme Court has yet to act on their appeal.

As a result, Abu-Jamal, 54, who has spent half of his life on death row, remains in limbo, with the possibility that his death sentence could be restored. Philadelphia prosecutors and much of the American political establishment remain determined to put the political activist, author and opponent of capital punishment to death. Following the March 2008 appeals court ruling upholding Abu-Jamal’s conviction, Philadelphia District Attorney Lynne Abraham denounced his supporters and declared, “He is nothing short of an assassin.”

Abu-Jamal’s attorney, Robert R. Bryan, called his client’s trial a “mockery of justice” and said Monday he would seek a rehearing by the Supreme Court.

Abu-Jamal was arrested in 1981 and charged with the murder of Daniel Faulkner, a police officer who had detained Abu-Jamal’s brother in an early morning traffic stop. Abu-Jamal, who had been a founding member of the Black Panther Party in Philadelphia and was a well known radio commentator and campaigner against racism and police brutality, was working as a taxi driver at the time. He happened upon the scene, saw that his brother had been beaten, and rushed to his defense. Shots were fired and both Abu-Jamal and Faulkner were hit, the officer dying from his wounds.

Abu-Jamal was hospitalized, charged with murder and subjected to a trial compromised by false testimony, prosecutorial misconduct and racism. The 1982 prosecution relied on witness testimony asserting that Abu-Jamal was the only person on the scene who could have committed the killing, that a gun in his possession was the murder weapon, and that he confessed to the killing at the hospital.

All of these elements of the prosecution’s case have been contradicted by evidence that emerged in the mid-1990s during a series of review hearings. This includes a sworn deposition by a man named Arnold Beverly, who said he had shot Faulkner under the pay of corrupt police officers with ties to local mafia, whose activity Faulkner was disrupting.

The testimony of witnesses from the hospital where Abu-Jamal allegedly confessed was also refuted by individuals who recanted their statements at trial, claiming they had been pressured by the prosecutors and police to give false testimony. This includes one police officer who admitted that he had originally filed a report stating that Abu-Jamal had made no comments, but changed the report after meeting with prosecutors.

An affidavit recorded in January 2002 by Yvette Williams refutes critical testimony given at trial by a key prosecution witness, Cynthia White, who had claimed she saw Abu-Jamal shoot Faulkner. Williams stated that White told her in December 1981 that “the police were making her lie and say she saw Mr. Jamal shoot Officer Faulkner when she really did not see who did it.” Williams went on to say, “I asked her why she was lying on the man. She told me it was because the police and vice threatened her life.”

In addition, the prosecution withheld critical exculpatory evidence, including Faulkner’s autopsy, which found that the bullet removed from his brain was a .44 caliber. Mumia’s gun was a .38 and could not have fired the larger caliber bullet.

The Philadelphia Police Department had monitored Abu-Jamal’s political activity since 1969 as part of the FBI’s Counterintelligence Program (COINTELPRO). Well before his 1982 frame-up he was targeted by the FBI, former mayor and police chief Frank Rizzo and the police department because of his outspoken opposition to police brutality and racism. Since his imprisonment, Abu-Jamal has been a courageous and articulate opponent of capital punishment and the inhuman treatment of prisoners, writing and publishing books that have drawn an international audience.

Among those who have come to his defense are human rights organizations such as Amnesty International and Human Rights Watch. Other organizations supporting his fight for a new trial include the National Association for the Advancement of Colored People (NAACP) and the European Parliament. Well known actors, artists, authors and intellectuals in the US and around the world have signed statements in his defense.

In February of 2000, Amnesty International (AI) held a press conference in New York to call for a new trial. AI issued an exhaustive 53-page report examining the original trial and appeals in state courts and concluded that the proceedings failed to reach “minimum international standards for fair trials.”

Introducing the report, Dr. William F. Schulz, executive director of Amnesty International USA, said, “Our report shows how Jamal’s trial was tragically marked by inconsistencies in the testimony of witnesses, contradictory ballistics evidence, a questionable confession, inadequate legal representation, judicial bias, and a politicization of the judicial process.”

A statement by the Socialist Equality Party of the US entitled “The fight to free Mumia Abu-Jamal and the defense of democratic rights,” published by the World Socialist Web Site on April 23, 1999, retains its full force. The statement declared, in part:

“The defense of Mumia Abu-Jamal has become a focal point of the struggle in the United States and internationally against political repression, racism and capital punishment. The issues in his case go to the defense of democratic rights as a whole and the fight for social justice. It is critical that the campaign against the execution of this political prisoner, to secure a new trial and win his freedom, be broadened to involve ever wider layers of working people, youth and students...

“There should be no illusions about the intent of the authorities. They are determined to carry out the final act of their political vendetta against Mumia and to silence him once and for all. His execution would have far-ranging consequences. Such a high-profile state killing, the first execution of a political prisoner in decades, would signal an intensification of political repression and further restrictions on democratic and civil rights. The authorities aim to make an example of Mumia and create an atmosphere of intimidation and fear to curtail all forms of dissent.”

Fannie Mae, Freddie Mac executives to receive millions in bonuses

Fannie Mae, Freddie Mac executives to receive millions in bonuses

By Tom Eley

Go To Original

Fannie Mae and Freddie Mac, the mortgage lending giants currently under federal conservatorship, will pay out $210 million in retention bonuses over the course of 18 months, a recent letter by the companies’ federal regulator, James Lockhart, states.

The Obama administration is tacitly backing the payouts, since it has kept Lockhart, a Bush appointee, as the head of the federal agency that regulates the two mortgage finance companies.

Some $51 million in bonuses was paid late in 2008. The remainder will be released in 2009 and early in 2010, according to the letter, sent Friday to Iowa Republican Senator Charles Grassley.

Two hundred and thirteen executives and employees at the two firms will each take home more than $100,000 in 2009 bonuses. Two high-level executives will each be awarded more than $700,000.

Last year, Fannie paid out $4.4 million in bonuses to its top four executives.

In the letter, Lockhart defended the bonuses as necessary to retain talent at Fannie and Freddie. “It is not realistic to expect that experienced and highly skilled employees will indefinitely continue to work as hard as they have if we do not provide reasonable incentives to perform,” Lockhart wrote.

“If the bonuses are rescinded, it sends the exact opposite signal, and it would be extremely dangerous for the American economy to lose these workers at this point,” he added.

The two companies lost $108 billion in 2008 and have survived only because of two government infusions of cash and loans totaling $400 billion.

The plan to pay bonuses to executives at Fannie and Freddie provoked public outrage when it became known on March 18. Amidst the scandal concerning bonuses paid to executives and traders at the bailed-out insurance firm American International Group (AIG), politicians of both parties railed against executive bonuses awarded by firms receiving taxpayer bailouts. However, under pressure from the Obama administration, Senate Democrats have waylaid legislation that would heavily tax bonuses at AIG and other firms.

Now, Fannie and Freddie have announced a new round of executive bonuses. Implicitly acknowledging growing public anger, Lockhart’s letter does not disclose the executives’ names “for personal privacy and safety reasons.”

The plan to carry forward executive bonuses at Fannie, Freddie, AIG and other bailed-out firms has the support of the Obama administration. During the AIG scandal, Obama initially declared he was “outraged” that AIG, which has received some $180 billion in government funds, was rewarding some of the very executives and traders whose risky bets on credit default swaps and other derivatives had led the company to ruin and helped bring the US and global financial system to the point of collapse. In the face of a furious counterattack by Wall Street firms and much of the media, following passage of a bill by the House of Representatives imposing a 90 percent surtax on some AIG bonuses, Obama quickly shifted gears and mounted a public campaign opposing congressional efforts to tax the bonuses.

Significantly, Obama has kept Lockhart, who was appointed by President George W. Bush, as the head of the agency tasked with overseeing Fannie and Freddie, the Federal Housing Finance Agency. According to the New York Times, “The law creating Mr. Lockhart’s office...established him as the lead regulator until his successor is named by the president and confirmed by Congress.”

“This is a de facto White House endorsement of these payments,” Karen Shaw Petrou, partner at Federal Financial Analytics, told the Times. Petrou called Obama’s stance “a little odd considering that everyone spent days talking about how they were shocked by the bonuses given to AIG.”

Fannie and Freddie are the two largest mortgage lending firms in the US. Together, they underwrite more than half the nation’s mortgages.

A rising tide of delinquencies and defaults on mortgage payments led to the government rescue of Fannie and Freddie in September 2008. The two government-sponsored enterprises, or GSEs, have combined obligations in debts and mortgage-backed securities of more than $5 trillion.

Fannie Mae and Freddie Mac buy mortgages, repackage them and resell them as mortgage-backed securities to banks and investors. Fannie Mae (Federal National Mortgage Association) was created in 1938 during the Great Depression as a New Deal reform to create lending liquidity in the housing market. It was privatized in 1968 in order to remove its debt obligations from the federal balance sheet.

Freddie Mac (Federal Home Loan Mortgage Corporation) was created as a government-sponsored but privately owned firm to further expand the secondary market for mortgages in 1970.

The Obama administration’s role in backing the firms’ bonuses underscores its preoccupation with protecting the wealth and power of the American financial elite.