Friday, April 17, 2009

Surge in foreclosures, production cuts signal deepening slump in US

Surge in foreclosures, production cuts signal deepening slump in US

By Andre Damon

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Economic reports released this week show that the US economic crisis, far from abating, is deepening. Leaving aside bank profits and stock prices, virtually every major indicator points to an acceleration of the downturn in production and consumption and increasing social misery.

On Thursday, RealtyTrac, a firm that lists foreclosed properties around the US, reported that home foreclosure filings—including default notices, auction sale notices and bank repossessions—surged in March to a level 46 percent higher than in March 2008. The total number of properties affected, over 340,000, was 17 percent higher than in February of this year.

In the first three months of this year, according to RealtyTrac, one in 159 US housing units received at least one foreclosure notice, for a total of more than 803,000.

The surge in foreclosure activity in March reflected stepped-up efforts by banks and mortgage lenders to evict delinquent borrowers, after temporary foreclosure moratoriums were lifted. RealtyTrac executive Rick Sharga indicated that those homeowners falling behind in their mortgage payments were increasingly victims of layoffs, rather than victims of predatory lending practices, as in earlier cases.

Mark Zandi, chief economist at Moody’s, said, “I think we’ll see foreclosures surge through the summer.” Some 1.7 million homes were foreclosed in 2008 and Moody’s predicts the figure will rise to 2.1 million this year.

Defaults on credit cards are also rising rapidly. Capital One, a major credit card company, said Thursday that the percentage of credit card debt it expects never to collect rose to nearly 9.33 percent, up by 1.27 percentage points in only one month. The company said that the rise in credit card default rates is starting to outpace changes in the unemployment rate. While the two have moved together in the past, the huge decreases in the value of homes and retirement savings have caused borrowers to default at even higher rates than had been expected.

Industrial production contracted even faster in March than it did in April. Output at factories, mines and utilities fell by 1.5 percent last month, according to figures released Wednesday by the Federal Reserve. The report was far worse than had been predicted by economists. Production has fallen in 14 out of the last 15 months, and the percentage of US manufacturing capacity in use fell to 69.3 percent, the lowest level since at least 1967.

The construction of new homes, one of the few economic indicators that had recently shown some improvement, once again fell sharply. Housing starts fell at an annualized rate of 10.8 percent in March and were down by 48.4 percent over March of 2008. Housing starts have fallen in eight of the past nine months.

Retail sales, another indicator recently cited by the Obama administration as suggesting a “glimmer of hope” for the economy, also fell sharply last month. The Commerce Department announced on Tuesday that sales fell by 1.1 percent in March and were down by 9.4 percent from a year ago. Sales had shown an uptick of 0.3 percent in February, prompting much talk of a bottoming out of the recession.

Indicative of the near collapse in retail sales, General Growth Properties, one of the largest owners of shopping malls in the US, filed bankruptcy papers on Thursday. The company owns over 200 malls.

Continuing jobless claims rose to 6.02 million, according to the report on new unemployment claims released by the Labor Department on Thursday. This is the highest figure since records began in 1967. The report said 610,000 people applied for new unemployment claims last week. The official unemployment rate hit 8.5 percent in March and is likely to approach 9 percent by May.

Unemployment in the state of Michigan, the highest in the country, rose to 12.6 percent in March, up from 12 percent in February.

Among major layoff announcements this week, the Los Angeles School District said it plans to terminate 5,000 teachers and other school employees; Hallmark, the greeting card maker, said it would lay off up to 750 workers; in Chicago, Discover Financial and steelmaker Acelormittal announced 500 and 400 layoffs, respectively.

Contradicting the Obama administration’s efforts to portray the economy as turning the corner, the Financial Times wrote in its Thursday editorial: “The US household sector, usually a reliable source of demand, is over-leveraged. Already drowning in debt, US households’ total liabilities have increased by 2.5 percent to $14,242 billion since mid-2007. Their assets, however, have fallen in value by 16 percent to $65,719 billion.”

In recent weeks, the Obama administration has sought to equate the sharp rally on the stock market and a revival of bank profits with a recovery in the broader economy, attempting in this way to claim a commonality of interests between Wall Street and “Main Street.” But the dire reality indicated in the latest statistics exposes the cynical and fraudulent character of such claims.

Obama at the Americas summit: A bid to revive US hegemony

Obama at the Americas summit: A bid to revive US hegemony

By Bill Van Auken

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With his trip to the Summit of the Americas in Trinidad and Tobago at the end of this week, President Barack Obama is attempting to put a new face on American imperialism’s pursuit of its strategic interests in Latin America, a region where the US once asserted unchallenged hegemony.

These summits were first launched in 1994 by the Clinton administration with a meeting in Miami. Their principal purpose over the next decade was to further Washington’s agenda of establishing a Free Trade Agreement of the Americas (FTAA) based on US domination and “free-market” capitalism. This meant the scrapping of all barriers to foreign capitalist investment, deregulation of financial markets and the wholesale privatization of public enterprises and basic services.

The Clinton administration had set a 2005 target date for the completion of such a treaty, while George W. Bush sought to move it up to 2003. Neither target was reached, and the last summit, held in the Argentine resort of Mar del Plata, was a debacle for Washington. Bush faced mass demonstrations in the streets and at the summit itself a rejection of the US agenda by the major South American powers joined in the Mercosur trading bloc. For the first time, the final communiqué of the summit included conflicting statements by governments for and against the FTAA.

That summit marked a low point in US influence in Latin America and effectively buried the prospects for a US-led hemisphere-wide free trade zone.

Obama’s task in Latin America—as it was in his recent trip to Europe—is to repair some of the damage done by the aggressively unilateralist policies of the Bush administration over the previous eight years.

Under the Bush administration, Washington’s Latin America policy was relegated to the back burner. On the one hand, it consisted of an attempt to foist a series of bilateral free trade agreements onto countries in Central America and the Caribbean. On the other, it sought to use the “war on terrorism” and the crackdown on drugs as a means to reassert US military dominance in the region, while maintaining an economic embargo against Cuba and seeking to destabilize left nationalist governments in Venezuela, Bolivia and Ecuador.

While adopting a different tone than that of the Bush administration—Obama’s aides have stressed that he is going to the summit to “listen”—it is not at all clear that he has any coherent new policy. Indeed, the chief State Department official in charge of Latin American policy, Under Secretary Thomas Shannon, is a holdover from the Bush administration.

The summit itself has little in the way of an agenda. A draft declaration entitled ‘Securing Our Citizens’ Future by Promoting Human Prosperity, Energy Security and Environmental Sustainability” is a largely meaningless document containing a laundry list of empty promises to fight against poverty, unemployment and social inequality, combined with declarations of firm support for the system of capitalist free trade and investment that has created these conditions.

The document also includes a lengthy section on “Promoting Energy Security”—a major concern for the US, which derives 30 percent of its oil imports from the region.

On this key issue, the declaration has the following to say: “Recognizing that the issues of the availability, cost and security of our energy supplies, our economic competitiveness and the sustainability of our environment are closely intertwined, we commit to the development of a coherent policy framework that takes into consideration our diverse situations, circumstances and opportunities and allows for the simultaneous strengthening and diversification of all our economies.”

The same type of long-winded platitudes prevails throughout the statement, masking the profound social and economic crisis confronting masses of working people in the region.

What makes the statement even more irrelevant is that it was drafted in September of last year, before Wall Street’s meltdown unleashed a global slide into depression.

While initially Latin American leaders affirmed that they would be little affected by the financial crisis in the US—Brazil’s President Luiz Inacio Lula da Silva replied “Go ask Bush” when asked about the financial meltdown—the impact is now being widely felt in the form of mass layoffs and capital flight.

On the eve of the summit, the World Bank issued a report predicting that Latin America as a whole will suffer a 0.6 percent decline in its gross internal product over the course of 2009. The bank also warned that the flow of direct investment into the region will plunge by 89 percent.

No doubt, the world capitalist crisis will be the focus of the discussions in Trinidad, but Obama has little to offer on this score outside of pointing to the limited promises made at the G20 summit in London earlier this month.

Obama maneuvers on Cuba

While not on the agenda, the question of Cuba is expected to play a major role at the summit. Virtually all of the participating heads of state—save Obama—have stated their support for Cuba being admitted as a member of the Organization of American States (OAS) and asked for an end to the 47-year-old US economic embargo.

OAS Secretary General José Miguel Insulza joined this consensus, telling the Miami Herald: “I want Cuba back in the Inter-American system.” He added that the decision to expel the country in 1962 “was a bad idea in the first place.”

In the early 1960s, when the Castro regime still promoted the idea of guerrilla-led revolution, Cuba’s foreign minister dismissed the OAS as Washington’s “ministry of colonies.” Former Cuban president Fidel Castro in a column published this week echoed this conception, calling the institution “the incarnation of betrayal.”

In an attempt to deflect criticism of Washington’s policy, Obama on the eve of the summit announced a very limited easing of the economic sanctions that the US maintains against Cuba. Fulfilling a campaign promise, he repealed all restrictions on travel to Cuba and remittances sent by 1.5 million Americans with family members on the island. The restrictions had been tightened under the Bush administration, with trips to visit families limited to one every three years and remittances capped at $100 a month.

The changes also included the lifting of restrictions on telecommunications companies, allowing them to establish cell phone service in Cuba as well as satellite television and radio.

The economic impact of the changes will be limited, but an inflow of greater amounts of US dollar remittances will serve to widen the already growing social gap between Cubans with access to dollars and those without. Meanwhile, the Obama administration has made it clear that the US economic blockade will remain in place.

Another action that appeared to be a gesture aimed at deflating criticism of US policy toward Cuba was the indictment last week of the former CIA operative and longtime terrorist Luis Posada Carriles on charges of perjury and obstruction of a federal proceeding. Specifically, he was charged with lying to US authorities when he denied responsibility for a series of bombings aimed at Cuban tourist areas in 1997. It marked the first time that Posada, long harbored by Washington, has been accused by US federal prosecutors of an act of terror, even though he has only been indicted for lying about it, rather than the act itself.

In response to the indictment, Venezuela announced that it will renew its demand that the US extradite Posada to stand trial in that country for the 1976 bombing of a Cuban airliner that killed 73 people.

While the US free trade agenda is effectively off the agenda of the Trinidad summit, Washington’s desire for a US-dominated system capable of warding off competition from Europe and Asia remains.

Washington’s drive to establish economic and political hegemony in its “own backyard” has been a bedrock principle of US policy since the adoption of the Monroe Doctrine more than a century and a half ago. It has been responsible for dozens of US military interventions and military coups and the subordination of the region’s people to the interests of US-based banks and corporations.

If Washington now confronts increasing difficulties in imposing its will in the region, it is in large part because of the protracted economic decline of American capitalism and the rise of powerful rivals in the region.

The extent of this challenge was spelled out by the New York Times Thursday in an article detailing the burgeoning economic influence of China, which has become Latin America’s second largest trading partner after the US.

“As Washington tries to rebuild its strained relationships in Latin America, China is stepping in vigorously, offering countries across the region large amounts of money,” the Times reported, citing tens of billions of dollars in loans and investments being made by China with the aim of “locking in natural resources like oil for years to come.”

In addition to securing access to commodities ranging from soy beans to iron ore, China is also using Latin America investments as “an alternative to investing in United States Treasury notes,” according to the article. It also points to a deal between Argentina and China to swap $10.2 billion worth of each other’s currencies in order to avoid using dollars in bilateral trade. Such deals, the Times notes, may “lead the way to China’s currency to eventually be used as an alternate reserve currency,” replacing the dollar.

Meanwhile, the European Union has emerged as the largest source of foreign direct investment in Latin America and has forged its own trade agreements with almost every country in the region.

US imperialism, which got its start in Latin America, cannot accept such challenges without a fight. Obama’s rhetoric about a “new day” in US-Latin American relations notwithstanding, the logic of economic interests points to the region becoming the arena for an ever more ferocious struggle between the major powers.

Obama exonerates CIA torturers

Obama exonerates CIA torturers

By Patrick Martin

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President Barack Obama announced Thursday that CIA agents who engaged in torture of prisoners over the past seven years will not be prosecuted or punished. As the Justice Department released memos documenting in grisly detail the interrogation guidelines set down by the Bush administration, the White House made it clear that neither those who ordered the torture nor those who carried it out would face justice.

The four memos released Thursday were written by the Office of Legal Counsel, an arm of the US Department of Justice, in 2002 and 2005. Their release was compelled by a court-established deadline in a Freedom of Information Act lawsuit filed by the American Civil Liberties Union (ACLU).

The ACLU denounced the Obama White House statement barring any prosecution of torturers. ACLU Executive Director Anthony Romero said the memos “provide yet more incontrovertible evidence that Bush administration officials at the highest level of government authorized and gave legal blessings to acts of torture that violate domestic and international law.”

The memos document in detail the methods employed against as many as 30 prisoners—a much larger number than previously admitted—including waterboarding, beating and kicking, slamming a prisoner’s head into the wall, slapping, forced standing, forced nakedness, prolonged shackling, sleep deprivation, deprivation of food and threats against a detainee’s family members.

Attorney General Eric Holder, chief US law enforcement officer, defended the decision not to enforce the laws against torture, saying, “At a time of great challenges and disturbing disunity, nothing will be gained by spending our time and energy laying blame for the past.”

CIA Director Leon Panetta, a former Democratic congressman and former White House chief of staff in the Clinton administration, sent a message to CIA employees which declared that the CIA under the Bush administration had “repeatedly sought and repeatedly received written assurances from the Department of Justice that its practices were fully consistent with the laws and legal obligations of the United States. Those operations were also approved by the president and the National Security Council principals, and were briefed to the congressional leadership.”

Panetta’s statement underscores one of the principal considerations of the Obama White House. Any serious effort to prosecute torture at the CIA “black sites”—the secret prisons established as part of the Bush administration’s “war on terror”—would inevitably expose leading congressional Democrats, including House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid, to criminal sanctions, because they knew of and approved the brutal methods ordered by Bush and Cheney.

Not only will the Obama administration refuse to prosecute CIA officers, Panetta said, but the Department of Justice will provide free legal counsel to anyone “subject to investigations relating to these operations.” This means that the US government will represent and defend CIA torturers if they face congressional investigation, civil lawsuits by their victims, or prosecution under international law, such as the International Convention on Torture, to which the United States is a signatory. The US government will also pay any judgment against CIA agents if they lose a suit for damages.

Obama himself sent a letter to all CIA employees explaining his decision to release the torture memos, an action that was opposed by Panetta and former CIA Director Michael Hayden. He wrote, “the release of these memos is required by our commitment to the rule of law.” This commitment extends only to producing pieces of paper—released with names and other incriminating details redacted—but not to any actual sanctions against those who committed horrific crimes.

The text of the statement Obama issued from the White House is typical of the mix of hypocrisy, demagogy and lying that characterizes the major pronouncements of the new president. Obama never uses the word torture, substituting a series of euphemisms that were then parroted in media coverage, where the word “torture” appears only in quotations from critics of the White House decision.

Obama claims that “In one of my very first acts as president, I prohibited the use of these interrogation techniques by the United States because they undermine our moral authority and do not make us safer.” In fact, this prohibition is not absolute and is essentially a cosmetic gesture, aimed at restoring the “moral authority” of an imperialist power which has carried out massive war crimes.

Profusely apologizing to the CIA for releasing the documents, Obama hastens to reassure the intelligence agencies that he still supports them, declaring, “in a dangerous world, the United States must sometimes carry out intelligence operations and protect information that is classified for purposes of national security. I have already fought for that principle in court and will do so again in the future.”

Obama describes the CIA torturers as people “who carried out their duties relying in good faith upon legal advice from the Department of Justice that they will not be subject to prosecution.” This echoes the “just-following-orders” defense that was rejected by the Nuremberg Tribunal when Nazi war criminals sought to use it.

No one needed a memo to tell them that the methods employed in the CIA “black sites” were brutal, repugnant and criminal. That is why the CIA and its protectors have stonewalled the courts, long after the details have become public through leaks to the press based on the accounts of those who survived the interrogations, as well as the findings of the International Committee of the Red Cross.

The bulk of the Obama statement is devoted to glorifying the “intelligence community,” in language that would be echoed word for word by Bush and Cheney: “The men and women of our intelligence community serve courageously on the front lines of a dangerous world. Their accomplishments are unsung and their names unknown, but because of their sacrifices, every single American is safer. We must protect their identities as vigilantly as they protect our security, and we must provide them with the confidence that they can do their jobs.”

The truth is that US intelligence agencies carry out assassinations, torture, subversion and provocation in the interests, not of the American people, but of the American corporate-financial ruling elite. The CIA is reviled all over the world as the American “Murder Inc.,” which has overthrown governments targeted by Washington, instigated civil wars and established military dictatorships in country after country.

Obama’s statement combines abject cowardice, as he bows before the power of the military/intelligence apparatus, and an embrace of its history of violence and counterrevolution, as he pledges in the statement, “I will always do whatever is necessary to protect the national security of the United States.”

In closing, the US president declares, “This is a time for reflection, not retribution ... nothing will be gained by spending our time and energy laying blame for the past. Our national greatness is embedded in America's ability to right its course in concert with our core values, and to move forward with confidence. That is why we must resist the forces that divide us, and instead come together on behalf of our common future.”

What cynical rubbish! As if torture can be stopped by exonerating the torturers and concealing their crimes from the public!

The message is clear: anyone who demands accountability for the crimes committed under the Bush administration (and continued under the Obama administration) is acting to “divide” the nation.

By declaring an amnesty for those who carried out actions that—even according to the Obama administration—constituted torture and were illegal, the White House is sanctioning criminal activity by the state. This amounts to a carte blanche to the military and intelligence apparatus to utilize whatever illegal methods they choose to employ.

Obama’s kowtowing to the most reactionary forces within the state underscores the vast and ever-growing power that this “state within a state” exerts over all aspects of government policy. It is one more demonstration of the terminal decay of American democracy.

Delusions of Omnipotence

Delusions of Omnipotence

By William Pfaff

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The American foreign policy debate usually is about what the country should do, rather than what it can do. What it can do is usually assumed to be anything Washington wants to do, since we are the most powerful nation the world has even seen.

This has created a situation in which the United States government and the political and bureaucratic classes have undertaken military project after military project that the government can’t do. This is not usually commented upon but has been true since the Korean and Vietnam wars. The country’s greatest victory, winning the Cold War, was in fact a gift from the Soviet Union, which lost it by collapsing.

It would be a waste of time and energy to go over once again the mighty efforts that have been put into the creation of a so-called New Middle East, which does not exist, and shows little evidence of ever existing on the terms in which the Bush administration conceived it.

Yet even now, the American “Long War” effort, under a new president, is being extended on a still more ambitious scale in Afghanistan and Pakistan, while Iraq, where as many as a million lives have been destroyed, gives sign of falling again into the internecine conflict which, alas, may be its natural condition. The same thing seems possible in Afghanistan and Pakistan, while America relentlessly toils on to construct out of them a New South Asia.

The columnist Thomas L. Friedman recently diagnosed the South Asian problem—in part correctly—as one of governments that don’t work.

Their leaders promise to do what Americans tell them they should do, and they agree. They “promise to do all sorts of good things, and pull all sorts of levers, but at the end of the day the levers come off the wall because the governments in these countries have only limited powers.”

True enough. But then Friedman—quite seriously, so far as I can make out—favorably considers “a greater exercise of U.S. and allied powers ... used to actually rebuild these states from the inside into modern nations. We would literally have to build the institutions—the pulleys and wheels—so that when the leaders of these states pulled a lever something actually happened.”

Others in American government believe this can be done, which is why military services and civil administrative training in the American government has for the past year been directed to instruct officials how to build democratic states in such places as Afghanistan and Pakistan—“from the inside,” I suppose. (Condoleezza Rice announced this new policy in Foreign Policy magazine last summer.)

This training in futility—to accomplish something impossible for foreigners—resembles nothing so much as the Defense Department’s commitment to producing ever-improved Cold War weapons systems that do not, and undoubtedly never will, have foreign counterparts or challengers, while being irrelevant or unusable against the enemies the country does have. One reason the super fighter F-22 has never been used in Iraq is that there never was anything for it to do there, and the other reason was that it could easily have been shot down when operating at the necessary low altitude, its thin skin being vulnerable to rifle fire.

This organized futility is well known and much criticized. The fundamental problem is the illusion of omnipotence: America is and will continue to be omnipotent because the rest of the world expects this; it is America’s Manifest Destiny.

There is an important book, “The Power Problem,” just coming out in the United States (Cornell University Press), which puts forth the case that American military power naturally invites excessive or irrelevant use, and that the habits of mind created by military supremacy have caused the United States to be less safe than otherwise, less free, more vulnerable, and less able to do the things that fundamental national security demands.

Its author, Christopher A. Preble, is a former officer in the U.S. Navy and is head of foreign policy studies at the Cato Institute. He argues, as many others do, that the United States has a level of military power that it doesn’t need, has limited utility against stateless enemies and insurgents, and causes confusion between military strength and national power, the latter being the ability to actually produce a desired effect. It is a good and lucid book and deserves a wide audience.

Union wins contract with Wal-Mart

Union wins contract with Wal-Mart

By G. Dunkel

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Wal-Mart finally ran out of delays and stalls. Following provincial labor law, a mediator awarded workers a first union contract April 10 in St. Hyacinthe, Quebec, east of Montreal. The store workers are organized by the Food and Commercial Workers.

This is the first time any Wal-Mart employees in North America have gotten a union contract.

According to the union, the contract gives the workers “a legally binding grievance process, a wage structure ‘free from favoritism’ and seniority rights.”

The National Union of Public and General Employees, the Canadian union cooperating with the Food and Commercial Workers to organize Wal-Mart, announced last year that Wal-Mart employees in Gatineau, Quebec, have also petitioned for union recognition. Gatineau is across the Ottawa River from Canada’s capital.

Figures show crisis is global & worsening

Figures show crisis is global & worsening

By Fred Goldstein

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A debate is heating up in the ruling class over whether or not an economic recovery is coming. Workers should be aware of two important points: first, the global picture of the capitalist crisis points in very drastic directions; and second, whatever recovery the bosses are talking about is a recovery for the profit makers and not the workers.

Those grasping at hope are basing themselves on Wells Fargo’s new profit reports, U.S. trade figures, housing sales, industrial production and other indicators that have mildly improved over the past several weeks.

However, a new study entitled “A Tale of Two Depressions” undermines the various optimistic scenarios put forward and points in the opposite direction. It compares the current decline in industrial production, the fall in world trade and the collapse of the stock markets with what occurred during the Great Depression. The comparison is on a global basis, not just for the United States. While the Depression of the 1930s was also a global crisis, the world capitalist economy has become much larger and far more interdependent in the age of globalization.

The study was prepared by Barry Eichengreen, professor of economics and political science at the University of California, Berkeley, and Kevin H. O’Rourke, professor of economics at Trinity College, Dublin. Both work with the Center for Economic and Policy Research, and the study was written in answer to New York Times columnist Paul Krugman, who is characterizing the present crisis as a recession.

1930s and today

The study tracks the measures of world industrial output, world trade and global stock markets for nine months beginning in June 1929. It takes June 1929 as the starting point because that is when world capitalist production reached its peak and started to decline.

The study then tracks the same three indicators for nine months in the present period, beginning in April 2008 when world industrial production also peaked.

It shows that industrial production is declining at least as rapidly as it did during the earlier depression, world trade is falling even more rapidly, and global stock markets are showing the same rate of decline.

The stock markets are much less reliable indicators because they can fluctuate over the short term based on speculation. But the fundamentals of capitalist production and world trade are the basis of the capitalist global economy and the profit system.

Production is the key

A decline in industrial production means a decline in capitalist exploitation of the workers and the production of profits, on which the entire system runs. Exporting by the big imperialist countries—like the U.S., Germany, Japan and France—is an attempt on the part of each country to overcome its own internal crisis of overproduction. When world trade falls, it is a sign that overproduction has become global.

The authors hold out hope that all the money the government is pouring into the economy and the banks will keep the crisis from reaching Great Depression levels. They do not, however, chart the fall in employment or discuss the conditions of the working class.

Louis Uchitelle, writing in the April 7 New York Times, cites figures from the Bureau of Labor Statistics to show that “More than 24 million men and women, or 15.6 percent of the labor force, are either hunting for work or working fewer hours than they would like to work, or are too discouraged to seek work.”

Actually, because the Clinton administration ruled that any worker “discouraged” from looking for work for more than a year should no longer be counted, this figure is really closer to 30 million.

While it is hard to compare today’s statistics with those from the Great Depression era, Uchitelle showed that the number of unemployed or underemployed workers has grown by 10 million in the past year. In 1930, official unemployment was 8.9 percent. It rose sharply to 25 percent by 1933.

This is clearly the result of capitalist overproduction. Manufacturers are using only 68 percent of U.S. industrial capacity, the lowest level since records were first kept in 1948. So far, according to Uchitelle, there is a shortfall of $1 trillion in sales that would be required to get production back to capacity.

To do that would take years, “even if the nation’s employers stopped shedding more than 600,000 jobs a month, as they have done since December, and began hiring robustly,” writes Uchitelle. Instead, all projections are for unemployment to continue rising in the future.

Layoffs continue

Meanwhile, states are cutting budgets for vital services across the country. Tent cities are springing up from Olympia, Wash., to Sacramento and Fresno, Calif., to Nashville, Tenn., to St. Petersburg, Fla. The rate of home foreclosures is increasing. Millions of workers are lining up at job fairs to learn how to fill out resumes and take interviews, but there are no jobs.

In short, while some investors may be profiting, there has been no recovery for the masses, and none is in sight.

In a sign of the deep decline of U.S. capitalism, the Treasury Department is demanding that General Motors and Chrysler shrink their industrial base. GM has been told to go from 17 assembly plants down to 12 or even fewer—a decline of 33 percent. It means more lost jobs, but not only at GM. It means shrinkage and unemployment in steel, rubber, glass, plastic, computer chips, fabric, small businesses that survive on orders from the assembly plants, closing of dealerships and so forth.

This kind of contraction is also going on in the housing industry, where millions of units sit unsold, and in the retail industry, where chain stores are closing. Layoffs are continuing in the high-tech sector and other industries central to U.S. capitalism.

At best, the capitalist economists may find some daylight of profitability for the bosses and bankers, but none can find a way out of mass unemployment, even with a recovery.

Uchitelle showed that overproduction lingered until the end of the Depression years, citing Robert Gordon, an economist at Northwestern University. “The Roosevelt economy also languished well below full capacity, Mr. Gordon said, until the summer of 1940 when France fell to Hitler’s armies. From then until the attack on Pearl Harbor, 18 months later, a galvanized administration more than doubled federal outlays—soon accounting for $1 of every $4 spent in the country—and the United States entered the war with its economy operating at almost full capacity.”

In other words, U.S. capitalism, after 10 years of depression, could only restore production and employment by preparing for and eventually going to war. The profit system had hit a wall. It was dragging society and the workers and the oppressed down to an existence of permanent mass unemployment and poverty.

This is what present-day capitalism has to offer the working class as the current global crisis deepens. Waiting for the system to recover and put an end to the suffering of the people is a pipedream.

The only way out of this crisis is through creating broad unity of the workers and the communities that are being hammered by the bosses and bankers in order to mobilize a class-wide fightback.

Public Outrage Over Bank of America's Practices Heats Up

Public Outrage Over Bank of America's Self-Serving, Predatory and Dangerous Practices Heats Up

By Ali Jost

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In recent weeks, there’s been a growing chorus of public outrage over the lavish bonuses paid to bank executives whose self-serving profit schemes and risky financial deals led to today’s economic collapse. After spending billions to bailout big banks for their bad behavior, taxpayers are making their voices heard in the streets, in the halls of Congress, and through online campaigns to say: Enough is enough. It’s time to close the chapter on corporate excess, restore America’s middle class, and create an economy that works for everyone.

This month, in a series of grassroots actions and advocacy efforts, American taxpayers are turning up the heat on Bank of America, the largest financial institution and the poster child of the kind of corporate excess and dangerous profit schemes that must come to an end if we are to rebuild an economy with strength that can last.

Leading up to Bank of America’s annual shareholder meeting on April 29, consumers, employees and shareholders will call for reform, from top to bottom, of Banks of America’s practices of preying on consumers, abusing employees, and using their power in Washington to block pro-worker legislation that would help restore our economy and rebuild the Middle Class.


• Taxpayer Proxy Actions to Oust Ken Lewis and Reform the Banking Industry—Ahead of Bank of America’s Annual shareholder meeting on April 29, a diverse group of labor, consumer advocacy and religious groups will be collecting thousands of “taxpayer proxies” from around the country, demanding shareholders take swift action to: (1) Fire Ken Lewis; (2) Commit to real financial reform; (3) Stop consumer abuses that hurt our communities; (4) Provide health insurance to all its employees; and (5) Stop lobbying against pro-worker legislation like the Employee Free Choice Act that would support working families and restore balance to our economy. Go to to learn more.

Watch SEIU’s Stephen Lerner on The Ed Show on MSNBC preview the taxpayer proxy actions and talk about the critical role the Employee Free Choice Act will play to rebuild the American Middle Class.

• Bank of America Employees Speaking Out Against Abuses and Calling for Action—Just like taxpayers, Bank of America employees are starting to speak out against Bank of America’s mistreatment of employees and dangerous sales practices of pushing debt on consumers. Bank workers can play a central role in reforming the industry, but they need whistleblower protection to sound the alarm on predatory sales practices that are bad for consumers and dangerous for our economy.

Bank of America employees are available to speak with reporters.

• Shareholder Pressure to Reform Bank of America from the Top Down—Last week, Change to Win Investment Group sent a letter to Bank of America’s Board of Directors urging them to immediately recoup a total of $3.6 billion rewarded to Merrill Lynch executives in December 2008—even after the same executives led Merrill to lose a total of $27.6 billion in 2008.

• Shareholder Resolution to Oust Ken Lewis—A growing number of Bank of America shareholder are calling for Ken Lewis to step down as Chairman of Bank of America and urging Bank of America to re-examine practices that are destabilizing our economy.

• Pressuring Government to Regulate TARP Recipients—Labor and consumer groups will continue urging Government to stop Bank of America and other TARP recipients from using taxpayer funds to lobby against taxpayer interests. Last week, in a panel discussion with progressive economists, SEIU Secretary-Treasurer Anna Burger spoke about the urgent need regulating TARP recipients, warning that “People have been feeling robbed at every turn by the big banks, and there’s zero patience for anything that looks or sounds like more of the same.”

The bottom line is this: we’re never going to fix America’s economy if we continue to allow the same failed leaders to promote the same failed policies. More than 80 percent of Americans believe that financial institutions like Bank of America are to blame for today’s financial crisis. It’s time to expose Bank of America’s abuse of consumers, mistreatment of employees, and dangerous self-serving profit model.

Making Rainwater Harvesting Illegal

The Latest Absurdity in the Fight to Conserve Water: Making Rainwater Harvesting Illegal

By Yee Huang

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A recent article in the Los Angeles Times described the latest absurdity in the never-ending search to quench the thirst for water: ownership of rainwater and, more precisely, the illegality of rainwater harvesting. Residents and communities in parts of Colorado are turning to this ancient practice of collecting and storing rain to fulfill their domestic water needs, including flushing toilets and watering lawns. Using this “grey” water, as it is called, relieves pressure on water resources and can be extremely efficient.

Many long-time water users, however, object to the practice.

These so-called water buffaloes argue that people who collect rainwater are taking away from their water by collecting the water before it has a chance to flow into a river from which they obtain water. Effectively, they argue, the rainwater belongs to them – they own the rain that falls from the sky as part of their water allocation, even though 97 percent of the rainfall that falls on soil does not reach a river. The bad news? The law in Colorado stands behind those water buffaloes.

Like most states west of the one-hundredth meridian, Colorado follows the doctrine of prior appropriation to allocate water. For all water uses that are non-domestic, a person must have a water right. Water rights are assigned a priority date, which is the date that the water use was initiated.

Under prior appropriation, these senior water users – many of whom have rights dating back to the 1800’s – have priority in times of water shortages based on the date of their initiation. Their water allocation is fulfilled before any junior users, who are often left with a nominal amount of water. People who harvest rainwater are “interfering” with the priority system by jumping ahead of all the senior users, who have the first right to use the water.

This dogmatic adherence to temporal priority blocks efforts to acquire water rights for newer or more efficient uses, such as in-stream conservation and recreation. These uses, initiated relatively recently, will always be subordinate to older, more consumptive uses.

Ownership of water has always been a tenuous proposition. Water and water rights linger on the perimeter of traditional property rights, eluding the solid “property” categorization of items like land or salad bowls. Individual water molecules cannot be marked or identified, and water is in constant motion, swirling below, above, and around the earth in the global hydrologic cycle. More significantly, water is survival for the vast array of living creatures on this planet, so privatizing the world’s most precious liquid would necessarily create a divide between haves and have-nots.

Whether or not water is definitively property has great legal implications for constitutional and civil claims, and courts have not given clear or consistent guidance. If, for example, water is considered a property right and the government required reduced water delivery to irrigators under the Endangered Species Act, those irrigators might have a valid claim for compensation under a Fifth Amendment takings claim. CPR Member Scholar Dan Tarlock blogged about this specific issue here. Categorizing water as a private property right also facilitates the commodification of water, which often ignores the common public interest in water quantity, quality, and viability.

Many water rights are colored by the public trust doctrine, which holds that certain natural resources cannot be privately owned and instead must be held in trust by the government for the use and benefit of the public. This doctrine, an inherent component of a water right, tends to support the argument that water is not a matter of private property. As inexpensive supplies of water dwindle, how water is viewed as a private property will become increasingly important to water allocation and priorities.

In other parts of the West, states are exploring the idea of rainwater harvesting. Santa Fe, New Mexico, became the first city to require by ordinance rainwater harvesting on all new residential or commercial structures of a certain size. Tucson, Arizona, became the first city to require rainwater harvesting to provide 50 percent of landscape-irrigation needs. Even Colorado has reconsidered its position, recently passing a bill that permits extremely limited instances of rainwater harvesting. It remains illegal for most individual residents to harvest rainwater.

Given an increase in population and per capita consumption, coupled with water needs to restore and maintain aquatic ecosystems, perhaps those water buffaloes need to lower their horns and let other creatures sip from the limited watering holes in the West.

10 Horrifying Excerpts From the Just-Released CIA Torture Memos

New Bush Torture Bombshell Memos: 10 Horrifying Discoveries

By Liliana Segura

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The Obama administration has finally released four long-awaited legal memos used by the Bush administration to design its torture program -- and although their existence, like U.S. torture itself, has been an open secret for years, the memos are nonetheless shocking.

Written in a dispassionate legal tone, the documents contain the professional opinion of Office of Legal Council attorneys Jay Bybee and Steven Bradbury as they assessed the CIA's "harsh interrogation techniques" between 2002 and 2005. Each method is described in sadistic detail, and each would surely be heinous if experienced on its own. But, as pointed out in the famous "Bybee" memo, dated August 1, 2002 -- the "interrogation team planned to use these techniques "in some sort of escalating fashion, culminating with the waterboard, though not necessarily ending with this technique."

The torture memos are available on the ACLU website. But if you can't bring yourself to read them, below are ten disturbing excerpts that provide a hideous glimpse of what was done in the name of Americans in the so-called "war on terror." As you read them, keep in mind that the Obama administration has already announced that it will not seek charges against the people who carried out the actions they describe. "In releasing these memos, it is our intention to assure those who carried out their duties relying in good faith upon legal advice from the Department of Justice that they will not be subject to prosecution," Obama said in a statement.

"This is a time for reflection, not retribution. ... We have been through a dark and painful chapter in our history. But at a time of great challenges and disturbing disunity, nothing will be gained by spending our time and energy laying blame for the past."

Attorney General Eric Holder released a statement, too. "It would be unfair to prosecute dedicated men and women working to protect America for conduct that was sanctioned in advance by the Justice Department," he said.

Which was exactly what the Bush administration intended.

1. Walling (Bybee memo, August 1, 2002)

"A flexible false wall will be constructed. The individual is placed with his heels touching the wall: The interrogator pulls the individual forward and then quickly and firmly pushes the individual into the wall. It is the individual's shoulder blades that hit the wall. During this motion, the head and neck are supported with a rolled hood or towel that provides a c-collar effect to help prevent whiplash …

"You have orally informed us that the false wall is in part constructed to create a loud sound when the individual hits it, which will further shock or surprise the individual. In part, the idea is to create a sound that will make the impact seem far worse than it is and that will be far worse than any injury that might result from the action."

2. The Facial (or Insult) Slap (Bybee memo, August 1, 2002)

"With the facial slap or insult slap, the interrogator slaps the individual's face with fingers slightly spread. The hand makes contact with the area directly between the tip of the individual's chin and the bottom of the corresponding earlobe. The interrogator invades the individual's personal space. The goal of the facial slap is not to inflict physical pain that is severe or lasting. Instead, the purpose of the facial slap is to induce shock, surprise, and/or humiliation …"

3. Cramped Confinement & insects Placed In a Confinement Box

"You would like to place (Abu) Zubaydah in a cramped confinement box with an insect. You have informed us that he appears to have a fear of insects. In particular, you would like to tell Zubaydah that you intend to place a stinging insect into the box with him. You would however, place a harmless insect in the box. You have orally informed us that you would in fact place a harmless insect such as a caterpillar in the box with him...
(Bybee memo, August 1, 2002)

"Focusing in part on the fact that the boxes will be without light, placement in these boxes would constitute a procedure designed to disrupt profoundly the senses...

"With respect to the small confinement box, you have informed us that he would spend at most two hours in this box ... For the larger box, in which he can both stand and sit, he may be placed in this box for up to eighteen hours at a time ..."

4. Dietary Manipulation (Bradbury memo, May 10, 2005)

"This technique involves the substitution of commercial liquid meal replacements for normal food, presenting detainees with a bland, unappetizing, but nutritionally complete diet. You have informed us that the CIA believes dietary manipulation makes other techniques, such as sleep deprivation, more effective.

"Medical officers are required to ensure adequate fluid and nutritional intake, and frequent medial monitoring takes place while any detainee is undergoing dietary manipulation."

5. Nudity (Bradury memo, May 10, 2005)

"This technique is used to cause psychological discomfort, particularly if a detainee, for cultural or other reasons, is especially modest. When the technique is employed, clothing can be provided as an instant reward for cooperation. During and between interrogation sessions, a detainee may be kept nude, provided that ambient temperatures and the health of the detainee permit.

"... Interrogators can exploit the detainee's fear of being seen naked. In addition, female officers involved in the interrogation process may see the detainees naked, and … we will assume that detainees subjected to nudity as an interrogation technique are aware that they may be seen naked by females."

6. Abdominal Slap (Bradbury memo, May 10, 2005)

"In this technique, the interrogator strikes the abdomen of the detainee with the back of his open hand. The interrogator must have no rings or other jewelry on his hand. The interrogator is positioned directly in front of the detainee, generally no more than than 18 inches from the detainees. With his fingers held tightly together and fully extended, and with his palm toward the interrogator's own body, using his elbow as a fixed pivot point, the interrogator slaps the detainee in the detainee's abdomen. The interrogator may not use a fist, and the slap must be delivered above the navel and below the sternum. This technique is used to condition a detainee to pay attention tot the interrogator's questions and to dislodge expectations that the detainee will not be touched."

7. Water Dousing and "Flicking" (Bradbury memo, May 10, 2005)

"Cold water is poured on the detainee either from a container or from a hose without a nozzle. This technique is intended to weaken the detainee's resistance and persuade him to cooperate with interrogators. … A medical officer must observe and monitor the detainee throughout application of this technique, including for signs of hypothermia.

"… You have also described a variation of water dousing involving much smaller quantities of water; this variation is known as 'flicking.' Flicking of water is achieved by the interrogator wetting his fingers and then flicking them at the detainee, propelling droplets at the detainee. Flicking of water is done 'in an effort to create a distracting effect, to awaken, to startle, to irritate, to instill humiliation, or to cause temporary insult … Although water may be flicked into the detainee's face with this variation, the flicking of water at all times is done in such a manner as to avoid the inhalation or ingestion of water by the detainee."

8. Sleep Deprivation (more than 48 hours) (Bradbury memo, May 10, 2005)

"The primary method of sleep deprivation involves the use of shackling to keep the detainee awake. In this method, the detainee is standing and is handcuffed, and the handcuffs are attached by a length of chain to the ceiling. The detainee's hands are shackled in front of his body, so that the detainee has approximately a two- to three-foot diameter of movement. The detainee's feet are shackled to a bolt in the floor.

"… In lieu of standing sleep deprivation, a detainee may instead be seated on and shackled to a small stool. The stool supports the detainee's weight, but is too small to permit the subject to balance himself sufficiently to go to sleep…

"… We understand that a detainee undergoing sleep deprivation is generally fed by hand by CIA personnel so that he need not be unshackled…

"If the detainee is clothed, he wears an adult diaper under his pants … If the detainee is wearing a diaper, it is checked regularly and changed as necessary. The use of the diaper is for sanitary and health purposes of the detainee; it is not used for the purpose of humiliating the detainee and it is not considered to be an interrogation technique.

"The maximum allowable duration for sleep deprivation authorized by the CIA is 180 hours ... You have informed us that to date, more than a dozen detainees have been subjected to sleep deprivation of more than 48 hours, and three detainees have been subjected to sleep deprivation of more than 96 hours."

9. Combination of Techniques (Bradbury memo, May 10, 2005)

"Your office has outlined the manner in which many of the individual techniques we previously considered could be combined …

"In a prototypical interrogation, the detainee begins his first interrogation session stripped of his clothes, shackled, and hooded, with the walling collar over his head and around his neck. … The interrogators remove the hood and explain that the detainee can improve his situation by cooperating and may say that the interrogators 'will do what it takes to get important information.' As soon as the detainee does anything inconsistent with the interrogators' instructions, the interrogators use an insult slap or abdominal slap. They employ walling if it becomes clear that the detainee is not cooperating in the interrogation. This sequence 'may continue for several more iterations as the interrogators continue to measure the [detainee's] resistance posture and apply a negative consequence to [his] resistance efforts.' The interrogators and security officers then put the detainee into position for standing sleep deprivation, begin dietary manipulation through a liquid diet, and keep the detainee nude (except for a diaper). The first interrogation session, which could have lasted from 30 minutes to several ours, would then be at an end.

"If the interrogation team determines there is a need to continue, and if the medical and psychological personnel advise that there are no contraindications, a second session may begin."

10. Waterboarding (Bybee memo, August 1, 2002)

"Finally, you would like to use a technique called the 'waterboard.' In this procedure, the individual is bound securely to an inclined bench, which is approximately four feet by seven feet. The individual's feet are generally elevated. A cloth is placed over the forehead and eyes. Water is then applied to the cloth in a controlled manner. As this is done, the cloth is lowered until it covers both the nose and mouth. Once the cloth is saturated and completely covers the mouth and nose, air flow is slightly restricted for 20 to 40 seconds due to the presence of the cloth. This causes an increase in carbon dioxide level in the individual's blood. This increase in the carbon dioxide level stimulates increased effort to breathe. This effort plus the cloth produces the perception of "suffocation and incipient panic," i.e., the perception of drowning...

"We find that the use of the waterboard constitutes a threat of imminent death. As you have explained the waterboard procedure to us, it creates in the subject the uncontrollable physiological sensation that the subject is drowning ...

"Although the waterboard constitutes a threat of imminent death, prolonged mental harm must nonetheless result to violate the statuatory prohibition on infliction of severe mental pain or suffering ... you have advised us that the relied is almost immediate when the cloth is removed from the nose and mouth. In the absence of prolonged mental harm, no severe mental pain or suffering would have been inflicted, and the use of these procedures would not constitute torture."

Md. Guard Issues Warning to Staff about Local TEA Party Protesters

Md. Guard Issues Warning to Staff about Local TEA Party Protestors

By David Noss

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A document issued by the Maryland National Guard on April 9 warns full-time Guard personnel to be aware of threats from local citizens protesting income taxes during grass roots events known as TEA (Taxed Enough Already) Parties -- one of which was held on Solomons Island March 22. The Guard document, "Planned TEA Party Protests (FPCON Advisory 09-004)," was believed to have first been revealed by a blog called The Jawa Report. A call today to Col. Kohler, Md. National Guard Public Affairs in Baltimore, confirmed the authenticity of the document. The document was officially classified as UNCLASSIFIED/FOR OFFICIAL USE ONLY (U/FOUO). (The document appears in its entirety at the bottom of this article)

The Guard document describes the TEA Party protests as a movement. "Numerous entities have formed recently to express displeasure/anger over recent federal/state government actions: more taxes, increased spending, higher deficits, a surge of borrowing to pay for it all, bailout of the financial institutions," stated the document under the heading of SITUATION.

The document appears to treat protestors as potential terrorists. The Point of Contact is identified as "Antiterrorism Program Coordinator" and provides a redacted email address.

The verbiage in the document advises Guard personnel to prepare for the worst. "Commanders are encouraged to update alert rosters and review emergency evacuation plans/rally points. Ensure all facilities have emergency phone lists posted (i.e. FBI, FIRE, POLICE, HOSPITALS, EMS, ETC…). Be aware of and avoid local protests."

Despite the alarmist warnings in the document, the lead paragraph states, "there is no known direct threat to MDNG facilities and MDNG members, they may become a target of opportunity during plan protest activities throughout Maryland."

The Guard document follows closely on the heels of a Dept. of Homeland Security document, released on April 7 that profiles American citizens who are concerned about gun rights and the "current economic and political climate" as potential rightwing extremists and domestic terrorists. The document is titled "Rightwing Extremism: Current Economic and Political Climate Fueling Resurgence in Radicalization and Recruitment" and was recently profiled in a Washington Times article.

Yet another Homeland Security document from the Missouri Information Analysis Center (MIAC), leaked to the press in March, profiles vocal supporters of Ron Paul, Bob Barr and Chuck Baldwin as potential domestic terrorists. The so-called MIAC document also cautions police to be aware of citizens carrying a copy of the U.S. Constitution, labeling the document as "political paraphernalia."

Ron Miller, a prominent Republican from Calvert County who ran against Rep. Steny Hoyer in 2006, and one of the organizers of the TEA Party protests in Maryland, told that the revelation of the Md. Guard's document was "kind of timely" given the discovery of the aforementioned Homeland Security document.

Miller said he had received reports from unknown sources that some individuals opposed to the TEA Party message might try to insert themselves into the protests to discredit the initiative. However, nothing happened at any event, to Miller's knowledge, that supported the reports.

Miller was on the way home from today's TEA Party protest in Annapolis when we spoke to him. The Annapolis event was specifically mentioned in the Guard document.

Miller said he estimated there were 2500 people at the event he attended. "There were no problems that we could determine," said Miller. "Given the weather, it went very well."

Protests were also scheduled today for Baltimore, Bel Air, Cecil County, Frederick, Cumberland, Havre de Grace, Salisbury, Westminster, and Washington, DC.

Even Rep. Steny Hoyer (D) agrees in principle with the TEA Party movement. In an unrelated statement today concerning "Tax Day" Hoyer said, "I am pleased that President Obama has asked Paul Volcker and his Economic Recovery Board to look at ways to make our tax code more simple and fair."

Low-Path Bird Flu Confirmed in Kentucky

Low-Path Bird Flu Confirmed in Kentucky

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Low-pathogenic avian influenza has been found on a broiler breeder farm in western Kentucky belonging to Perdue Farms. The virus, responsible for a minimal drop in egg production in mid-March, has been identified as belonging to the H7 sub-type.

State and federal authorities are investigating a finding of suspected non-pathogenic or low-pathogenic avian influenza in a single broiler breeder farm in western Kentucky., according to Lex18. The strain poses minimal risk to human health and is not the highly pathogenic strain associated with human and poultry deaths in other countries.

State veterinarian, Robert C. Stout, has quarantined the farm, which produces hatching eggs for Perdue Farms Inc. Perdue plans to depopulate 20,000 chickens in two houses on the farm.

"The state and federal government and Perdue are acting aggressively to contain and eliminate the disease," Dr. Stout said. "There is no evidence that any infected poultry are in the human food supply as a result of this infection. We will do what is necessary to minimise the disruption to overseas trade."

"I have been in constant contact with state, federal and industry officials since this came to light," Agriculture Commissioner, Richie Farmer, said. "The people of Kentucky and our trading partners should rest assured that we are doing everything possible to address the situation."

The Kentucky Department of Agriculture is conducting surveillance on backyard flocks within a two-mile radius of the farm.

A minimal drop in egg production at the farm was noticed in mid-March. Perdue's veterinary services laboratory took samples from chickens at the farm and found antibodies for avian influenza. Testing by the National Veterinary Services Laboratory in Ames, Iowa, resulted in a presumptive positive finding for the H7 strain. Subsequent testing by NVSL and the Breathitt Veterinary Center in Hopkinsville confirmed the finding.

No virus has been isolated and no poultry deaths have been found in connection with the infection.

Maryland Inmates Might Become Crab Pickers

State inmates might become crab pickers

Labor shortage has processors looking to inmates

By Stephanie Desmon

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With the foreign workers who have long done the dirty work in Maryland's seafood industry held up by red tape, desperate owners of the Eastern Shore's processing plants are investigating a new source of crab pickers: state prisoners.

This week, members of the Chesapeake Bay Seafood Industries Association toured facilities - the women's prison in Jessup and the prerelease unit for women in Baltimore - to see whether there is a way to have inmates do the low-paying work, potentially saving one of the state's signature industries.

A few weeks ago, corrections officials toured a pair of crab houses on Hoopers Island in Dorchester County, where the majority of the state's crab is processed for supermarkets and restaurants.

Logistics could stand in the way. Transporting prisoners 2 1/2 hours each way every day seems too difficult, and quality-control issues could arise if crabs are shipped to Central Maryland to be picked. There also are sanitation questions that would need to be answered.

But Maryland law would allow it; inmates already do jobs that include making furniture and butchering meat in the state's prisons.

"Picking crabs is not rocket science," said Jack Brooks, who owns the J.M. Clayton Co. processing facility in Cambridge. Experience helps though, he said. "The quality has to be perfect - no shell."

Still, he said, the industry needs to "look at all the options and turn over every rock. The crab season's here, and the Congress has not acted and the places can't open."

Corrections officials - who approached the processors with the idea - say the discussions are "very preliminary."

"If any inmate labor would ultimately be involved in crab picking, formal regulations and rules would have to be developed, health guidelines observed and significant logistical hurdles surmounted," said prison system spokesman Mark Vernarelli.

At issue is finding workers willing to spend their days picking the meat from pile after pile of steamed crabs so the product can be packaged for sale in little plastic tubs.

Local women did the work for decades. But changing times meant women had opportunities for employment beyond the crab house. Few men have sought the jobs.

For more than a decade, the processors have relied on workers from Mexico who travel to the Eastern Shore for six months or so to pick crabs, entering the country on H2B visas issued to foreign workers in a variety of seasonal industries. At the end of the season, they go home.

But with growing demand nationwide for such temporary workers, only one of Maryland's 21 seafood processing operations was able to get visas to bring the foreigners into the country this year.

In the past, the state's congressional delegation has been able to secure special provisions to get the workers to Maryland. Those efforts have failed this year.

Some critics of H2B say the foreigners depress wages for local workers, while others argue the temporary visas make it more difficult to focus attention on the need for broad immigration reform.

Beyond looking into prison labor, the Dorchester County Seafood Packers Association for the first time is sponsoring a job fair on Hoopers Island on Thursday, seeking more than 300 locals to pick crabs. The processors believe that people who have worked in small-parts assembly or in sewing would be especially skilled at separating crab from its shell.

The jobs start at $6.71 an hour but can go as high as $10 an hour for those who are quick with their hands, association officials say. If prisoners did the work, they would have to be paid the prevailing wage, Vernarelli said.

Industry officials say they aren't expecting many local residents to seek the jobs, despite the down economy and rising unemployment.

"The younger generation doesn't want to do a seasonal job, a not-glamorous job," said Bill Sieling, executive director of the Chesapeake Bay Seafood Industries Association. "It's not the kind of jobs people go out and clamor for."

Processors say they need workers from somewhere or they won't be able to open. And the processors are a vital link in an economic chain.

While many crabs are sold whole by the bushel to consumers, even more are sold to processing houses. If there are no workers to process the crabs, not just crab houses but watermen could be out of business.

"The industry is at the end of the tether," Sieling said. "The job fair is one last-ditch effort. Maybe we'll be pleasantly surprised."

Obama Protecting Bush from Spain?

Obama Protecting Bush from Spain?

By David Swanson

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The official story is that Spain has decided not to prosecute Bush's torture lawyers. Yet the known facts suggest something else entirely.

1-We know that the prosecutor who initiated this effort wants to prosecute Bush. He wrote about it months ago. We know that he and his colleagues see targeting the lawyers first as a step in Bush's direction and more likely to move forward than a case that starts at the top.

2-We know from Scott Horton's reporting that Spain and the Obama administration have been communicating about this case.

3-We know that the White House's press secretary was asked this week about those communications and avoided answering the question at all, rather than simply going with the story already reported that the U.S. was just observing and "gathering information."

4-We know that Obama wants to "move forward," does not want to prosecute Bush, and is going to extraordinary lengths to maintain and expand the power of the presidency (including the power to detain without charge, rendition, illegal foreign occupations and strikes, the power to make treaties without Congress, rewriting laws with signing statements, making laws with executive orders, keeping most of Bush's signing statements and executive orders in place, unprecedented claims of state secrets and classification and sovereign immunity and executive privilege, the power to fire whistleblowers, keeping memos and Emails secret, etc.)

5-We know that the top law enforcement official in Spain has made an argument for dismissing the case against the lawyers that an 8 year old would spot as an illegal absurdity, that was not a necessary argument for dismissing the case, but that would be a necessary argument for preventing a case against Bush. While he could have argued, like Doug Feith, that those engaging in the torture or ordering it were more culpable than the lawyers (as they are indeed), he instead argued that ONLY those present for the torture are culpable, thus exonerating Hitler, Pinochet, and every other official who has ordered a crime from a distance.

6-We know that if the top law enforcement official in Spain lacked the mental acumen of an 8 year old, Fox News would have pointed that out to us during the past couple of days of xenophobic screeching.

7-We know that the rightwing was preparing big attacks on Obama for allowing Spain to proceed, and that the official "left" was not going to have his back. Senator Russ Feingold said yesterday that Spain was behaving inappropriately.

These facts are at least extremely suggestive of a less than independent decision by the Spanish to deny justice and stick to "looking forward," a decision that certainly does not follow public opinion in Spain and was not predicted by reporters in Spain but was predicted by Doug Feith on Fox News:

"I hope and expect that the Obama administration will communicate to the Spanish government that they — that they do not view this as simply an attack against some former officials; they view it as an attack on the U.S. government — because as I said, the principle that's involved here would attack current officials as much as former officials."

We do not actually know that these six men were never present for torture.

In the Pinochet case Garzon proceeded despite the opposition of the AG, but in this case there is a move to take Garzon off the case.

ThinkProgress believes that Obama has hinted at a torture investigation underway in the United States. If so, the hint wasn't in what they quote or they're squinting harder than I am.

Some hope remains that Judge Garzon will attempt to push forward.

The Year of Cockeyed Optimism

The Year of Cockeyed Optimism

"The foundations of our economy are strong"

By Mike Whitney

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Retail sales fell in March as soaring job losses and tighter credit conditions forced consumers to cut back sharply on discretionary spending. Nearly every sector saw declines including electronics, restaurants, furniture, sporting goods and building materials. Auto sales continued their historic nosedive despite aggressive promotions on new vehicles and $13 billion of aid from the federal government. The crash in housing, which began in July 2006, accelerated on the downside in March, falling 19 percent year-over-year, signaling more pain ahead. Mortgage defaults are rising and foreclosures in 2009 are estimated to be in the 2.1 million range, an uptick of 400,000 from 2008. Consumer spending is down, housing is in a shambles, and industrial output dropped at an annual rate of 20 percent, the largest quarterly decrease since VE Day. The systemwide contraction continues unabated with with no sign of letting up.

Conditions in the broader economy are now vastly different than those on Wall Street, where the S&P 500 and the Dow Jones Industrials have rallied for 5 weeks straight regaining more than 25 percent of earlier losses. Fed chief Ben Bernanke's $13 trillion in monetary stimulus has triggered a rebound in the stock market while Main Street continues to languish on life-support waiting for Obama's $787 billion fiscal stimulus to kick in and compensate for falling demand and rising unemployment. The rally on Wall Street indicates that Bernanke's flood of liquidity is creating a bubble in stocks since present values do not reflect underlying conditions in the economy. The fundamentals haven't been this bad since the 1930s.

The financial media is abuzz with talk of a recovery as equities inch their way higher every week. CNBC's Jim Cramer, the hyperventilating ringleader of "Fast Money", announced last week, "I am pronouncing the depression is over." Cramer and his clatter of media cheerleaders ignore the fact that every sector of the financial system is now propped up with Fed loans and T-Bills without which the fictive free market would collapse in a heap. For 19 months, Bernanke has kept a steady stream of liquidity flowing from the vault at the US Treasury to the NYSE in downtown Manhattan. The Fed has recapitalized financial institutions via its low interest rates, its multi-trillion dollar lending facilities, and its direct purchase of US sovereign debt and Fannie Mae mortgage-backed securities. (Monetization) The Fed's balance sheet has become a dumping ground for all manner of toxic waste and putrid debt-instruments for which there is no active market. When foreign central banks and investors realize that US currency is backed by dodgy subprime collateral; there will be a run on the dollar followed by a stampede out of US equities. Even so, Bernanke assures his critics that "the foundations of our economy are strong".

As for the recovery, market analyst Edward Harrison sums it up like this:

"This is a fake recovery because the underlying systemic issues in the financial sector are being papered over through various mechanisms designed to surreptitiously recapitalize banks while monetary and fiscal stimulus induces a rebound before many banks' inherent insolvency becomes a problem. This means the banking system will remain weak even after recovery takes hold. The likely result of the weak system will be a relapse into a depression-like circumstances once the temporary salve of stimulus has worn off. Note that this does not preclude stocks from large rallies or a new bull market from forming because as unsustainable as the recovery may be, it will be a recovery nonetheless." (Edward Harrison, "The Fake Recovery", Credit Writedowns)

The rally in the stock market will not fix the banking system, slow the crash in housing, patch-together tattered household balance sheets, repair failing industries or reverse the precipitous decline in consumer confidence. The rising stock market merely indicates that profit-driven speculators are back in business taking advantage of the Fed's lavish capital injections which are propelling equities into the stratosphere. Meanwhile, the unemployment lines continue to swell, the food banks continue to run dry and the homeless shelters continue to burst at the seams. So far, $12 trillion has been pumped into the financial system while less than $450 billion fiscal stimulus has gone to the "real" economy where workers are struggling just to keep food on the table. The Fed's priorities are directed at the investor class not the average working Joe. Bernanke is trying to keep Wall Street happy by goosing asset values with cheap capital, but the increases to the money supply are putting more downward pressure on the dollar. The Fed chief has also begun purchasing US Treasuries, which is the equivalent of writing a check to oneself to cover an overdraft in one's own account. This is the kind of gibberish that passes as sound economic policy. The Fed is incapable if fixing the problem because the Fed is the problem.

Last week, the market shot up on news that Wells Fargo's first quarter net income rose 50 percent to $3 billion pushing the stock up 30 percent in one session. The financial media celebrated the triumph in typical manner by congratulating everyone on set and announcing that a market "bottom" had been reached . The news on Wells Fargo was repeated ad nauseam for two days even though everyone knows that the big banks are holding hundreds of billions in mortgage-backed assets which are marked way above their true value and that gigantic losses are forthcoming. Naturally, the skeptics were kept off-camera or lambasted by toothy anchors as doomsayers and Cassandras. Regretably, creative accounting and media spin can only work for so long. Eventually the banks will have to write down their losses and raise more capital. Wells Fargo slipped the noose this time, but next time might not be so lucky. Here's how Bloomberg sums up wells situation:

"Wells Fargo & Co., the second biggest U.S. home lender, may need $50 billion to pay back the federal government and cover loan losses as the economic slump deepens, according to KBW Inc.’s Frederick Cannon.

KBW expects $120 billion of “stress” losses at Wells Fargo, assuming the recession continues through the first quarter of 2010 and unemployment reaches 12 percent, Cannon wrote today in a report. The San Francisco-based bank may need to raise $25 billion on top of the $25 billion it owes the U.S. Treasury for the industry bailout plan, he wrote.

“Details were scarce and we believe that much of the positive news in the preliminary results had to do with merger accounting, revised accounting standards and mortgage default moratoriums, rather than underlying trends,” wrote Cannon, who downgraded the shares to “underperform” from “market perform.” “We expect earnings and capital to be under pressure due to continued economic weakness.”

What happened to all those nonperforming loans and garbage MBS? Did they simply vanish into the New York ether? Could Wells sudden good fortune have something to do with the recent FASB changes to accounting guidelines on "mark to market" which allow banks greater flexibility in assigning a value to their assets? Also, Judging by the charts on the Internet, Wells appears to have the smallest "ratio of loan loss reserves" of the four biggest banks. That's hardly reassuring.

Paul Krugman takes an equally skeptical view of the Wells report:

"About those great numbers from Wells Fargo....remember, reported profits aren’t a hard number; they involve a lot of assumptions. And at least some analysts are saying that the Wells assumptions about loan losses look, um, odd. Maybe, maybe not; but you do have to say that it would be awfully convenient for banks to sound the all clear right now, just when the question of how tough the Obama administration will really get is hanging in the balance."

The banks are all playing the same game of hide-n-seek, trying to hoodwink the public into thinking they are in a stronger capital position than they really are. It's just more Wall Street chicanery papered over with vapid media propaganda. The giant brokerage houses and the financial media are two spokes on the same wheel gliding along in perfect harmony. Unfortunately, media fanfare and massaging the numbers won't pull the economy out of its downward spiral or bring about a long-term recovery. That will take fiscal policy, jobs programs, debt relief, mortgage writedowns and a progressive plan to rebuild the nation's economy on a solid foundation of productivity and regular wage increases. So far, the Obama administration has focused all its attention and resources on the financial system rather than working people. That won't fix the problem.

Deflation has latched on to the economy like a pitbull on a porkchop. Food and fuel prices fell in March by 0.1 percent while unemployment continued its slide towards 10 percent. Wholesale prices fell by the most in the last 12 months since 1950. According to MarketWatch, "Industrial production is down 13.3% since the recession began in December 2007, the largest percentage decline since the end of World War II"....The capacity utilization rate for total industry fell further to 69.3 percent, a historical low for this series, which begins in 1967." (Federal Reserve) The persistent fall in housing prices (30 percent) and losses in home equity only add to deflationary pressures. The wind is exiting the humongous credit bubble in one great gust.

Obama's $787 billion stimulus is too small to take up the slack in a $14 trillion per year economy where manufacturing and industrial capacity have slipped to record lows and unemployment is rising at 650,000 per month. High unemployment is lethal to an economy where consumer spending is 72 percent of GDP. Without debt relief and mortgage cram-downs, consumption will sputter and corporate profits will continue to shrink. S&P 500 companies have already seen a 37 percent drop in corporate profits. Unless the underlying issues of debt relief and wages are dealt with, the present trends will persist. Growth is impossible when workers are broke and can't afford to buy the things the make.

The stimulus must be increased to a size where it can do boost economic activity and create enough jobs to get over the hump. Yale economics professor Robert Schiller makes the case for more stimulus in his Bloomberg commentary on Tuesday:

"In the Great Depression ... the U.S. government had a great deal of trouble maintaining its commitment to economic stimulus. 'Pump- priming' was talked about and tried, but not consistently. The Depression could have been mostly prevented, but wasn’t.... In the face of a similar Depression-era psychology today, we are in need of massive pump-priming again.

It would be a shame if we are so overwhelmed by anger at the unfairness of it all that we do not take the positive measures needed to restore us to full employment. That would not just be unfair to the U.S. taxpayer. That would be unfair to those who are living in Hoovervilles...; it would be unfair to those who are being evicted from their homes, and can’t find new ones because they can’t find jobs. That would be unfair to those who have to drop out of school because they, or their parents, can’t find jobs.

It is time to face up to what needs to be done. The sticker shock involved will be large, but the costs in terms of lost output of not meeting either the credit target or the aggregate demand target will be yet larger." (Robert Schiller, Depression Lurks unless there's more Stimulus, Bloomberg)

A Year of Cockeyed Optimism

"We are starting to see glimmers of hope across the economy." President Barack Obama, April press conference

Even though industrial production, manufacturing, retail and housing are in freefall, the talk on Wall Street still focuses on the elusive recovery. The S&P 500 touched bottom at 666 on March 6 and has since retraced its steps to 852. Clearly, Bernanke's market-distorting capital injections have played a major role in the turnabout. Former Secretary of Labor under Bill Clinton and economics professor at University of Cal. Berekley, Robert Reich, explains it like this on his blog-site:

"All of these pieces of upbeat news are connected by one fact: the flood of money the Fed has been releasing into the economy. ... So much money is sloshing around the economy that its price is bound to drop. And cheap money is bound to induce some borrowing. The real question is whether this means an economic turnaround. The answer is it doesn't.

Cheap money, you may remember, got us into this mess. Six years ago, the Fed (Alan Greenspan et al) lowered interest rates to 1 percent.... The large lenders did exactly what they could be expected to do with free money -- get as much of it as possible and then lent it out to anyone who could stand up straight (and many who couldn't). With no regulators looking over their shoulders, they got away with the financial equivalent of murder.

The only economic fundamental that's changed since then is that so many people got so badly burned that the trust necessary for consumers, investors, and businesses to repeat what they did then has vanished.... yes, some consumers will refinance and use the extra money they extract from their homes to spend again. But most will use the extra money to pay off debt and start saving again, as they did years ago....

I admire cockeyed optimism, and I understand why Wall Street and its spokespeople want to see a return of the bull market. Hell, everyone with a stock portfolio wants to see it grow again. But wishing for something is different from getting it. And cockeyed optimism can wreak enormous damage on an economy. Haven't we already learned this? (Robert Reich's Blog, "Why We're Not at the Beginning of the End, and Probably Not Even At the End of the Beginning")

If the purpose of Bernanke's grand economics experiment was to create uneven inflation in the equities markets and, thus, widen the chasm between the financials and the real economy; he seems to have succeeded. But for how long? How long will it be before foreign banks and investors realize that the Fed's innocuous-sounding "lending facilities" have released a wave of low interest speculative liquidity into the capital markets? How else does one explain soaring stocks when industrial capacity, manufacturing, exports, corporate profits, retail and every other sector have been pounded into rubble? Liquidity is never inert. It navigates the financial system like mercury in water darting elusively to the area which offers the greatest opportunity for profit. That's why the surge popped up first in the stock market. (so far) When it spills into commodities--and oil and food prices rise--Bernanke will realize his plan has backfired..

Bernanke's financial rescue plan is a disaster. He should have spent a little less time with Milton Friedman and a little more with Karl Marx. It was Marx who uncovered the root of all financial crises. He summed it up like this:

"The ultimate reason for all real crises always remains the poverty and restricted consumption of the masses as opposed to the drive of capitalist production to develop the productive forces as though only the absolute consuming power of society constituted their limit." (Karl Marx, Capital, vol. 3, New York International publishers, 1967; Thanks to Monthly review, John Bellamy Foster)

Bingo. Message to Bernanke: Workers need debt-relief and a raise in pay not bigger bailouts for chiseling fatcat banksters.