Monday, July 13, 2009

Mourn On The Fourth Of July

Mourn On The Fourth Of July

By John Pilger

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The monsoon had woven thick skeins of mist over the central highlands of Vietnam. I was a young war correspondent, bivouacked in the village of Tuylon with a unit of US marines whose orders were to win hearts and minds. "We are here not to kill," said the sergeant, "we are here to impart the American Way of Liberty as stated in the Pacification Handbook. This is designed to win the hearts and minds of folks, as stated on page 86."

Page 86 was headed WHAM. The sergeant's unit was called a combined action company, which meant, he explained, "we attack these folks on Mondays and we win their hearts and minds on Tuesdays". He was joking, though not quite.

Standing in a jeep on the edge of a paddy, he had announced through a loudhailer: "Come on out, everybody. We got rice and candy and toothbrushes to give you."

Silence. Not a shadow moved.

"Now listen, either you gooks come on out from wherever you are, or we're going to come right in there and get you!"

The people of Tuylon finally came out and stood in line to receive packets of Uncle Ben's Long Grain Rice, Hershey bars, party balloons and several thousand toothbrushes. Three portable, battery-operated, yellow flush lavatories were kept for the colonel's arrival. And when the colonel arrived that evening, the district chief was summoned and the yellow flush lavatories were unveiled.

"Mr District Chief and all you folks out there," said the colonel, "what these gifts represent is more than the sum of their parts. They carry the spirit of America. Ladies and gentlemen, there's no place on earth like America. It's a guiding light for me, and for you. You see, back home, we count ourselves as real lucky having the greatest democracy the world has ever known, and we want you good folks to share in our good fortune."

Thomas Jefferson, George Washington and Davy Crockett got a mention. "Beacon" was a favourite, and as he evoked John Winthrop's "city upon a hill", the marines clapped, and the children clapped, understanding not a word.

It was a lesson in what historians call "exceptionalism", the notion that the United States has the divine right to bring what it describes as liberty and democracy to the rest of humanity. That this merely disguised a system of domination, which Martin Luther King described, shortly before his assassination, as "the greatest purveyor of violence in the world", was unspeakable..

As the great people's historian Howard Zinn has pointed out, Winthrop's much-quoted description of the 17th-century Massachusetts Bay Colony as a "city upon a hill", a place of unlimited goodness and nobility, was rarely set against the violence of the first settlers, for whom burning alive some 400 Pequot Indians was a "triumphant joy". The countless massacres that followed, wrote Zinn, were justified by "the idea that American expansion is divinely ordained".

Not long ago, I visited the American Museum of History, part of the celebrated Smithsonian Institution in Washington, DC. One of the popular exhibitions was "The Price of Freedom: Americans at War". It was holiday time and lines of people, including many children, shuffled reverentially through a Santa's grotto of war and conquest where messages about their nation's "great mission" were dispensed. These included tributes to the "exceptional Americans [who] saved a million lives" in Vietnam, where they were "determined to stop communist expansion". In Iraq, other true hearts "employed air strikes of unprecedented precision". What was shocking was not so much the revisionist description of two of the epic crimes of modern times as the sheer scale of omission.

"History without memory," declared Time magazine at the end of the 20th century, "confines Americans to a sort of eternal present.. They are especially weak in remembering what they did to other people, as opposed to what they did for them." Ironically, it was Henry Luce, founder of Time, who in 1941 divined the "American century" as an American social, political and cultural "victory" over humanity and the right "to exert upon the world the full impact of our influence, for such purposes as we see fit and by such means as we see fit".

None of this is to suggest that vainglory is exclusive to the United States. The British presented their often violent domination of much of the world as the natural progress of Christian gentlemen selflessly civilising the natives, and present-day TV historians perpetuate the myths. The French still celebrate their bloody "civilising mission". Prior to the Second World War, "imperialist" was an honoured political badge in Europe, while in the US an "age of innocence" was preferred. America was different from the Old World, said its mythologists. America was the Land of Liberty, uninterested in conquest. But what of George Washington's call for a "rising empire" and James Madison's "laying the foundation of a great empire"? What of slavery, the theft of Texas from Mexico, the bloody subjugation of central America, Cuba and the Philippines?

An ordained national memory consigned these to the historical margins and "imperialism" was all but discredited in the United States, especially after Adolf Hitler and the fascists, with their ideas of racial and cultural superiority, had left a legacy of guilt by association. The Nazis, after all, had been proud imperialists, too, and Germany was also "exceptional". The idea of imperialism, the word itself, was all but expunged from the American lexicon, "on the grounds that it falsely attributed immoral motives to western foreign policy", argued one historian. Those who persisted in using it were "disreputable purveyors of agitprop" and were "inspired by the communist doctrine", or they were "Negro intellectuals who had grievances of their own against white capitalism".

Meanwhile, the "city on the hill" remained a beacon of rapaciousness as US capital set about realising Luce's dream and recolonising the European empires in the postwar years. This was "the march of free enterprise". In truth, it was driven by a subsidised production boom in a country unravaged by war: a sort of socialism for the great corporations, or state capitalism, which left half the world's wealth in American hands. The cornerstone of this new imperialism was laid in 1944 at a conference of the western allies at Bretton Woods in New Hampshire.. Described as "negotiations about economic stability", the conference marked America's conquest of most of the world.

What the American elite demanded, wrote Frederic F Clairmont in The Rise and Fall of Economic Liberalism, "was not allies but unctuous client states. What Bretton Woods bequeathed to the world was a lethal totalitarian blueprint for the carve-up of world markets." The World Bank, the International Monetary Fund, the Asian Development Bank, the Inter-American Development Bank and the African Development Bank were established in effect as arms of the US Treasury and would design and police the new order. The US military and its clients would guard the doors of these "international" institutions, and an "invisible government" of media would secure the myths, said Edward Bernays.

Bernays, described as the father of the media age, was the nephew of Sigmund Freud. "Propaganda," he wrote, "got to be a bad word because of the Germans . . . so what I did was to try and find other words [such as] Public Relations." Bernays used Freud's theories about control of the subconscious to promote a "mass culture" designed to promote fear of official enemies and servility to consumerism. It was Bernays who, on behalf of the tobacco industry, campaigned for American women to take up smoking as an act of feminist liberation, calling cigarettes "torches of freedom"; and it was his notion of disinformation that was deployed in overthrowing governments, such as Guatemala's democracy in 1954.

Above all, the goal was to distract and deter the social democratic impulses of working people. Big business was elevated from its public reputation as a kind of mafia to that of a patriotic force. "Free enterprise" became a divinity. "By the early 1950s," wrote Noam Chomsky, "20 million people a week were watching business-sponsored films. The entertainment industry was enlisted to the cause, portraying unions as the enemy, the outsider disrupting the 'harmony' of the 'American way of life' . . . Every aspect of social life was targeted and permeated schools and universities, churches, even recreational programmes. By 1954, business propaganda in public schools reached half the amount spent on textbooks."

The new "ism" was Americanism, an ideology whose distinction is its denial that it is an ideology. Recently, I saw the 1957 musical Silk Stockings, starring Fred Astaire and Cyd Charisse. Between the scenes of wonderful dancing to a score by Cole Porter was a series of loyalty statements that the colonel in Vietnam might well have written. I had forgotten how crude and pervasive the propaganda was; the Soviets could never compete. An oath of loyalty to all things American became an ideological commitment to the leviathan of business: from the business of armaments and war (which consumes 42 cents in every tax dollar today) to the business of food, known as "agripower" (which receives $157bn a year in government subsidies).

Barack Obama is the embodiment of this "ism". From his early political days, Obama's unerring theme has been not "change", the slogan of his presidential campaign, but America's right to rule and order the world. Of the United States, he says, "we lead the world in battling immediate evils and promoting the ultimate good . . . We must lead by building a 21st-century military to ensure the security of our people and advance the security of all people." And: "At moments of great peril in the past century our leaders ensured that America, by deed and by example, led and lifted the world, that we stood and fought for the freedoms sought by billions of people beyond their borders."

Since 1945, by deed and by example, the US has overthrown 50 governments, including democracies, crushed some 30 liberation movements and supported tyrannies from Egypt to Guatemala (see William Blum's histories). Bombing is apple pie. Having stacked his government with warmongers, Wall Street cronies and polluters from the Bush and Clinton eras, the 45th president is merely upholding tradition. The hearts and minds farce I witnessed in Vietnam is today repeated in villages in Afghanistan and, by proxy, Pakistan, which are Obama's wars.

In his acceptance speech for the 2005 Nobel Prize for Literature, Harold Pinter noted that "everyone knew that terrible crimes had been committed by the Soviet Union in the postwar period, but "US crimes in the same period have been only superficially recorded, let alone documented, let alone acknowledged, let alone recognised as crimes at all". It is as if "It never happened. Nothing ever happened. Even while it was happening, it wasn't happening . . . You have to hand it to America . . . masquerading as a force for universal good. It's a brilliant, even witty, highly successful act of hypnosis."

As Obama has sent drones to kill (since January) some 700 civilians, distinguished liberals have rejoiced that America is once again a "nation of moral ideals", as Paul Krugman wrote in the New York Times. In Britain, the elite has long seen in exceptional America an enduring place for British "influence", albeit as servitor or puppet. The pop historian Tristram Hunt says America under Obama is a land "where miracles happen". Justin Webb, until recently the BBC's man in Washington, refers adoringly, rather like the colonel in Vietnam, to the "city on the hill".

Behind this façade of "intensification of feeling and degradation of significance" (Walter Lippmann), ordinary Americans are stirring perhaps as never before, as if abandoning the deity of the "American Dream" that prosperity is a guarantee with hard work and thrift.. Millions of angry emails from ordinary people have flooded Washington, expressing an outrage that the novelty of Obama has not calmed. On the contrary, those whose jobs have vanished and whose homes are repossessed see the new president rewarding crooked banks and an obese military, essentially protecting George W Bush's turf.

My guess is that a populism will emerge in the next few years, igniting a powerful force that lies beneath America's surface and which has a proud past. It cannot be predicted which way it will go. However, from such an authentic grass-roots Americanism came women's suffrage, the eight-hour day, graduated income tax and public ownership. In the late 19th century, the populists were betrayed by leaders who urged them to compromise and merge with the Democratic Party. In the Obama era, the familiarity of this resonates.

What is most extraordinary about the United States today is the rejection and defiance, in so many attitudes, of the all-pervasive historical and contemporary propaganda of the "invisible government". Credible polls have long confirmed that more than two-thirds of Americans hold progressive views. A majority want the government to care for those who cannot care for themselves. They would pay higher taxes to guarantee health care for everyone. They want complete nuclear disarmament; 72 per cent want the US to end its colonial wars; and so on. They are informed, subversive, even "anti-American".

I once asked a friend, the great American war correspondent and humanitarian Martha Gellhorn, to explain the term to me. "I'll tell you what 'anti-American' is," she said. "It's what governments and their vested interests call those who honour America by objecting to war and the theft of resources and believing in all of humanity. There are millions of these anti-Americans in the United States. They are ordinary people who belong to no elite and who judge their government in moral terms, though they would call it common decency. They are not vain. They are the people with a wakeful conscience, the best of America's citizens. They can be counted on. They were in the South with the civil rights movement, ending slavery. They were in the streets, demanding an end to the wars in Asia. Sure, they disappear from view now and then, but they are like seeds beneath the snow. I would say they are truly exceptional."

New York state government uses budget crisis to attack pensions

New York state government uses budget crisis to attack pensions

By Dwight Stoll and Andre Damon

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New York Governor David Paterson announced last weekend that the two largest New York state employee unions approved a plan that would drastically cut pensions for newly hired state workers and eliminate 7,000 state jobs. The proposal, which Paterson called “the most significant reform of the state and local pension system in 25 years,” would raise the retirement age to 62, from its current level of 55.

The New York State government is using its budget shortfall as a pretense for slashing social spending and wiping out thousands of workers’ jobs. The state’s budget deficit, estimated at $17.7 billion, is the third largest in the country and amounts to 32.3 percent of the annual budget.

Paterson’s plan requires state workers to continue paying 3 percent of their salaries toward pensions for their entire careers, as opposed to their first 10 years of employment under the current plan. To draw a pension, newly hired workers would have to have served for a minimum of 10 years instead of the current 5. The plan also imposes a 38 percent benefit decrease for any worker who leaves without having reached retirement age and introduces other adjustments designed to reduce pension payouts.

Officials from the Civil Service Employees Association (CSEA) and the Public Employees Federation (PEF) justified their support for the cuts with the claim that they would prevent more job losses in the future. CSEA president Danny Donohue said that his organization “recognizes these are extraordinary times with unprecedented challenges, and we have tried to find ways to help.” There is not even a pretense at fighting here.

These concessions will be used as a benchmark for other workers. Morgan Hook, a spokesman for Governor Paterson said, “Other unions whose members are subject to the state layoffs will be offered the same deal as CSEA and PEF.”

New York City’s Mayor Michael Bloomberg said the new pension plan would save the city $200 million a year, and $7 billion over the next 20 years. He noted that the takeaway deal would help with “reining in out-of-control pension costs in New York State and city.” Bloomberg—whose personal fortune was estimated last year at $20 billion—could pay the 20-year savings out his pocket and still remain among the richest people in the world. In fact, he could cover the entire state budget gap with his own cash.

The scheme entails eliminating 7,000 jobs, down slightly from the 8,600 layoffs proposed by Paterson last month. While the new plan does not affect current workers and retirees, all new hires will be brought in with sharply reduced retirement plans.

Firefighters and police officers are facing similar pension cuts. Earlier this month, Governor Paterson vetoed a provision that guarantees that newly hired cops and firefighters would not receive worse benefits than those are currently employed. The provision, first originated in 1976, has been repeatedly passed by the state legislature.

Mayor Bloomberg lauded Paterson’s decision, saying: “The city and state have been buried by exponential growth in pension costs and we need reform now, before those costs bankrupt the city and the state.” In his veto, Paterson wrote: “This bill has been extended routinely since its initial enactment. But these are not routine times....”

These comments are telling: The current crisis is being used to push through cuts and concessions that have been on the agenda for decades, but could not be implemented due to mass opposition. The economic crisis, the result of financial fraud and criminality by the super-rich, has spawned a budget crisis in the majority of states. The states, in turn, are using the budget crisis to push through policies demanded by Wall Street: the lowering of wages and the destruction of workers’ benefits.

The Metropolitan Transportation Authority (MTA), the agency that provides transit services in metropolitan New York City, raised its fares in late June, citing its $1.8 billion deficit. Rates for New York City subway rides have gone up 25 cents to $2.25 in the second rate increase in two years. The price of a single ride on an express bus hit $5.50, compared to $1.25 in Los Angeles and $2.25 in Chicago.

These layoffs, concessions and cutbacks will only exacerbate the brewing social crisis in New York State. The state’s unemployment rate has risen by 3 percent in the year to May. In Albany, the state capital, unemployment reached 8.0 percent in May, up from 4.9 percent a year earlier. New York City has an unemployment rate of 8.7 percent, with 187,000 unemployed people. The state has suffered 294 mass layoff events between April and May of this year.

New York City, the epicenter of the financial crisis, is emerging as a central front in the nationwide assault on the working class, carried on under the auspices of the economic and budget crisis. These cuts are part of a deliberate policy, perpetrated under the lash of the Obama administration’s policies and at the bidding of Wall Street, to drive up profits by reducing workers’ living standards. The fact that one of the chief architects of the cuts, New York’s Mayor Bloomberg, is himself a former Wall Street speculator and the eighth-richest person in the country, only makes the process that much more stark.

Criminal charges dropped against former German bank chief

Criminal charges dropped against former German bank chief

By Justus Leicht

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German writer Bertolt Brecht once posed the question: which is the bigger crime, robbing a bank or founding one?

On July 1, the public prosecutor’s office in Düsseldorf reported that it had dropped its investigation of the former head of IKB bank, Stefan Ortseifen, on charges of stock market manipulation and embezzlement.

Despite the fact that Ortseifen drove IKB to the brink of bankruptcy by investing huge sums of bank customers’ money in US junk bonds, he will not be prosecuted. Although the rescue of the bank has cost the German taxpayers billions of euros, criminal proceedings against Ortseifen are to be dropped.

In fact compared to the scale of the losses incurred by the bank as a result of the investment practices encouraged by Ortseifen, the accusations remaining against him are petty. Ortseifen is accused of making an overly positive assessment of the state of the bank’s situation in a press release issued by the executive committee on July 20, 2007. This then encouraged investors to increase their portfolio of IKB shares.

Just one week after the press release, IKB confronted insolvency due to its involvement in the US mortgage market. Beginning July 30, 2007, the bank suffered a series of catastrophic losses in its share price. The German federal government and the federal and state banking agency, KfW, then moved to rescue IKB at a cost of around 10 billion euros of taxpayers’ money. In September 2008 IKB was sold to US financial firm Lone Star for approximately 140 million euros.

In addition, Ortseifen is alleged to have deprived IKB of around 120,000 euros by ordering extensive building alterations to the “executive committee house” of the bank. Although he was the exclusive permanent resident of the house, its rent had not been suitably adjusted. He had also installed high-quality loudspeaker boxes without the bank’s permission.

There will no charges of embezzlement in connection with the huge investments of funds made by IKB over many years in American junk bonds. The most the IKB executive committee has to fear is the claim it acted negligently—a charge that does not involve criminal prosecution, as the public prosecutor’s office explained. To put it another way: there is no evidence, goes the argument, that Ortseifen and his cohorts intended to damage anyone with their investment banking practices.

Legally speaking, this is an astounding conclusion. Intent is not usually assessed according to whether the perpetrator intentionally seeks to do damage, but rather on the basis that he or she was prepared for the eventuality that damage would be done. The hope that “everything will turn out all right in the end” was rejected long ago as a legal argument—even by the Reichsgericht, the predecessor of the modern German Supreme Court of Justice. And anyone who deliberately endangers funds entrusted to their keeping is guilty of felony, according to traditional criminal law.

According to the Süddeutsche Zeitung in March, the alarm bells began to ring some time ago inside IKB. This was clear from a report issued by the auditors PwC, the newspaper notes. PwC learned that a draft report drawn up for the bank in January 2004 and distributed to IKB’s executive committee warned of “the possibility of not insignificant risks.” The draft was then withdrawn, because it did not measure up to “the desire for extensive changes to the contents of the report.” In the event, Lone Star ensured that the report was not published by PwC—against the express wishes of small shareholders.

Two years later, the subsidiary IKB Credit Asset Management GmbH (CAM) was founded as a company dealing specifically in highly speculative transactions. Ortseifen and three other members of IKB sat on the CAM board. According to the PwC report, from this vantage point IKB’s executives were informed of the bank’s junk bond speculations from the outset. The minutes of the first meeting of CAM’s executives on October 26, 2006, stated, “The house market in the US is cooling down faster than generally expected” and the “probability of a worst case scenario has increased.”

The Süddeutsche Zeitung reported last year the comments of “an IKB insider” who declared that the bank had already in 2005 sought to cover up its speculative transactions with balance sheet tricks, and then sought to recuperate its losses by entering the US housing market. In addition, IKB also introduced a so-called “limit system,” aimed at assessing the risks involved in its investment strategy.

The newspaper quotes an expert on risk management who declares that, “Nevertheless there was in practice no assessment made of the risks involved, otherwise IKB would not have ended up in such a precarious position. IKB either ignored the limit system, or had installed it merely pro forma to satisfy calls for financial control.”

Despite these various actions, which suggest that IKB’s executive did not naively undertake its high-risk speculative transactions, the bank’s officials will not be hauled into court to answer for their alleged crimes. When the boundary between criminality and the naked greed for profits becomes a gray area, the court is only too willing to accept the presumption of innocence on the part of the bankers.

In the handful of articles dealing with the case, the media presents it as a precedent for other banks. The Financial Times Deutschland wrote, “In comparable cases investigators also confront the problem of proving that former bank managers undertook punishable actions. A manager can be only be prosecuted on charges of embezzlement when it is proven he acted with intent. Preliminary investigations have also been undertaken by the authorities against ex-managers and former supervisory board members of the HSH Nordbank, the Saxonia LB and the Hypo Real Estate, which has now been virtually nationalized.”

Backing for the decision taken by the Düsseldorfer public prosecutor’s office was given one day later by a similar court in Frankfurt-Main. Investigations into the billions of euros in aid to IKB by the KfW are to be terminated, because, as the Handelsblatt writes, the job of the KfW is to prevent “the collapse of banks which are judged to be important.”

Rounding out the picture, the regional court in Frankfurt last week delivered a verdict awarding sacked KfW board member Peter Fleischer the sum of one million euros in wages and bonuses. Fleischer was dismissed without notice from the board at the end of September 2008. He failed to stop the transfer of 320 million euros to the American investment bank Lehman Brothers, although the latter was already bankrupt at this time.

While any serious prosecution of those responsible for lucrative and ultimately disastrous financial transactions becomes increasingly unlikely, one thing is certain: the working population, which bears no responsibility for the crisis, will be punished in the form of higher taxes and declining social benefits, as the state continues to prop up the banks with taxpayer money.

Murdoch's News Group accused of £1 million payout to conceal phone-hacking

Murdoch’s News Group accused of £1 million payout to conceal phone-hacking

By Harvey Thompson

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On July 9, the Guardian published allegations that Rupert Murdoch’s News Group Newspapers paid out over £1 million to settle legal cases that threatened to reveal the repeated use by its journalists of covert and criminal methods to obtain information and personal details about high-profile public figures.

Alleged targets included the former deputy leader of the Labour Party, John Prescott, government minister Tessa Jowell, Liberal Democrat MP Simon Hughes, model Elle MacPherson, football agent Sky Andrew, London Mayor Boris Johnson, actress Gwyneth Paltrow, and chef Nigella Lawson. Private prosecutions are expected involving millions in damages.

The Guardian reported that “the payments secured secrecy over out-of-court settlements in three cases that threatened to expose evidence of Murdoch journalists using private investigators who illegally hacked into the mobile phone messages of numerous public figures to gain unlawful access to confidential personal data, including tax records, social security files, bank statements and itemised phone bills. Cabinet ministers, MPs, actors and sports stars were all targets of the private investigators.”

The evidence could “open the door to hundreds more legal actions by victims of News Group,” the Guardian stated, as well as instigating police inquiries into reporters who were involved and the senior executives technically responsible for them.

Within hours, the Metropolitan Police’s Assistant Commissioner John Yates announced that Scotland Yard would not be reopening its files. No new evidence had come to light, he said, and the original inquiry had concluded that phone-tapping occurred in only a minority of cases.

John Prescott expressed his surprise at Yates’s announcement. He told BBC's Newsnight that “serious questions had to be answered...he has defined in a very narrow way what he is going to look at, and then gives a report that everything is OK.”

The Guardian pointed out that amongst the questions posed by the revelations was why the Metropolitan Police did not alert all those whose phones were targeted by the News Group. It also questioned why the Crown Prosecution Service did not pursue all possible charges against News Group personnel.

The spotlight has also fallen on Andy Coulson, former deputy editor and later editor of the News of the World, who is now the Conservative Party's director of communications.

The suppressed legal cases are linked to the jailing in January of 2007 of a News of the World reporter, Clive Goodman, for hacking into the mobile phones of three royal staff, an offence under the Regulation of Investigatory Powers Act. At the time, New Group Newspapers management said it knew of no other journalist who was involved, and that Goodman had acted without their knowledge.

Contradicting the claims of the Metropolitan Police, one senior police source told the Guardian that during the Goodman inquiry officers found evidence of News Group Newspapers staff using private investigators who hacked into “thousands” of mobile phones. Another source, with direct knowledge of the police findings, put the figure at “two or three thousand” phones.

The sources also suggested that members of Parliament (MPs) from the three main parliamentary parties, and cabinet ministers, including Prescott and Jowell, the former culture secretary, were among those targeted.

A private investigator who had worked for News Group Newspapers, Glenn Mulcaire, was also jailed in 2007 after admitting to hacking into the phones of five targets, including the chief executive of the Professional Footballers’ Association, Gordon Taylor.

NGN denied all knowledge of the hacking.

Coulson said he took responsibility for what had happened and resigned from News Group Newspapers. Last year, Gordon Taylor sued the company on the basis that their denial of knowledge was not credible.

Initially, News Group Newspapers executives told the High Court that the company had not been involved in any way in Mulcaire’s hacking into Taylor’s phone, denying keeping any recordings or notes of intercepted messages. At the request of Taylor’s lawyers, the court ordered the production of detailed evidence from Scotland Yard’s inquiry into the Goodman case and an inquiry by the information commissioner into journalists who dishonestly obtain confidential personal records.

The Scotland Yard files included paperwork that revealed that, contrary to News Group’s denial, Mulcaire had passed on a recording of the messages on Taylor’s phone to a News of the WorldNews of the World executive had reportedly offered Mulcaire a “substantial bonus” for a story specifically related to the intercepted messages. journalist. The journalist had then transcribed them and emailed them to a senior reporter. A

The paperwork from the Information Commission revealed the names of 31 journalists working for NGN tabloids the Sun and News of the World, together with the details of government agencies, banks, phone companies and others who were swindled into passing on confidential information. This is an offence in UK law under the Data Protection Act, unless it is justified by the “public interest.”

This was occurring while Coulson was deputy editor of the Sun, and the editor was Rebekah Wade, now due to become chief executive of News International.

Faced with this evidence, the Guardian continued, “News International changed their position, started offering huge cash payments to settle the case out of court, and finally paid out £700,000 in legal costs and damages on the condition that Taylor signed a gagging clause to prevent him speaking about the case. The payment is believed to have included more than £400,000 in damages. News Group then persuaded the court to seal the file on Taylor’s case to prevent all public access, even though it contained prima facie evidence of criminal activity.”

The Scotland Yard papers also provided evidence that News of the World had worked with Mulcaire in his hacking of the mobile phones of at least two other football figures, who had subsequently filed complaints. These were settled this year when News International paid more than £300,000 in damages and costs on condition that they signed gagging clauses.

Three fresh inquiries into the conduct of News International have now been announced.

Director of Public Prosecutions Keir Starmer is to launch a review of the evidence relating to phone hacking. “In the light of the fresh allegations...I have ordered an urgent examination of the material supplied to the CPS (Crown Prosecution Service) by the police,” he said.

A House of Commons select committee will be calling senior managers from News International to clarify what they knew about malpractice by journalists at News of the World. Those expected to be called include Rebekah Wade, News of the World's outgoing managing editor Stuart Kuttner, current editor Colin Myler, and former chairman of News International Les Hinton. Hinton told a previous hearing that Goodman had been acting alone. Coulson is also expected to be asked to appear.

The Press Complaints Commission is also to conduct an inquiry.

News Group Newspapers has made no response to the allegations, other than to cite “confidentiality obligations” preventing it “from discussing certain allegations made in the Guardian newspaper.”

The editor in chief of the Guardian, Alan Rusbridger, noted that “News International has not contested any part of the Guardian coverage—including the central assertion that the company had paid a record £1m to ensure secrecy over damages paid to victims of illegal phone-hacking.”

Conservative Party leader David Cameron and other top Tories have defended Coulson amidst Labour demands for his resignation, citing his earlier resignation from Murdoch’s media empire as proof of his personal integrity. “I believe in giving people a second chance,” Cameron declared.

US-backed mediation legitimizes military coup in Honduras

Honduras: US-backed mediation legitimizes military coup

By Bill Van Auken

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The talks convened in the Costa Rican capital San José on Thursday with the purported aim of resolving the political crisis unleashed by the June 28 coup in neighboring Honduras, are shaping up as a farce. The apparent object of this fraudulent exercise is to legitimize the military overthrow of the elected president of Honduras and realize the aims of Washington and the predominant sections of the right-wing Honduran oligarchy.

Honduran President Manuel Zelaya, who last month was seized by troops, bundled onto an airplane and flown to San José and exile, returned to the Costa Rican capital Wednesday and was the first to hold talks the next day with the US-designated mediator, Costa Rican President Óscar Arias.

He was followed by Roberto Micheletti, head of the government installed by the coup, whom Costa Rican authorities referred to as the “acting president,” a description that disconcerted Zelaya and his supporters, who have denounced the former head of the parliament as a criminal who illegally usurped power.

Before the talks, Arias stressed that he would treat both men equally as presidents.

Each met separately with Arias at the Costa Rican president’s mansion in the wealthy San José neighborhood of Rohrmoser, which was surrounded by police and hundreds of demonstrators, who came to denounce the coup, shouting “assassin” at Micheletti and burning him in effigy.

After meeting with Arias, Zelaya told reporters waiting outside, “We believe we have been in accord with the position of Honduras: the restoration of the state of law and democracy. The restoration, as the UN and the OAS have demanded, to office of the president elected by the Honduran people.”

Micheletti followed Zelaya into Arias’s residence shortly afterwards. Before coming into the city, he had spent three hours at the airport, apparently concerned for his security. According to some reports, he had asked Arias to meet him there in order to avoid demonstrators.

For his part, Micheletti, declared himself “satisfied” with Arias’s mediation, and then immediately flew back to Honduras. His departure upended Arias’s vow to keep the two men negotiating until a settlement was reached. Instead, Micheletti announced that he was leaving behind a “commission” of Honduran political figures who supported the coup. Zelaya then formed a commission of his own supporters to participate in negotiations.

After returning to the Honduran capital Tegucigalpa, Micheletti told reporters, “We are in agreement with his (Zelaya’s) return here, but directly to the judges.” The coup leaders are demanding that Zelaya be tried for treason for attempting to hold a non-binding plebiscite to determine popular support for amending the country’s constitution. Critics have charged that this was part of an attempt by Zelaya to win another term in office, a virtual impossibility given that the vote for a constituent assembly to redraft the constitution would not be held until national elections on November 29, when a new president is to be chosen.

Micheletti added, “I anticipate that on my next visit to Costa Rica the brotherly people of that beautiful country will receive me as my own people do today, as the constitutional president of Honduras.”

The coup leader has reason to exude such confidence. The entire mediation process is stacked in favor of those who overthrew Zelaya. Backed by the army, the Church and the predominant sections of the landowning and business sectors, the only thing Micheletti has to fear are the masses of Honduran working people, who have been at the center of resistance to the coup.

For his part, Arias reacted to the first encounter with Zelaya and Micheletti by declaring, “We have no illusions, this may take longer than what we imagined.” He added, “In two days there could be a solution, or it could be that in two months there is no solution.”

Given that elections are to be held in barely four-and-a-half months, Micheletti and his fellow coup leaders can run the mediation sessions out until the end of Zelaya’s term.

Arias has insisted that any solution must include the restoration of Zelaya to office. His sponsor, the Obama administration, has taken an ambiguous position on this score, with Obama calling for him to be reinstated and his secretary of state, Hillary Clinton, pointedly refusing to make such a call. A State Department spokesman said that Washington hopes the Arias mediation “restores the democratic order in Honduras.” He made no mention of the elected president.

A former Costa Rican official with some insight into the mission that Arias has accepted from Washington suggested another alternative: that Zelaya would be brought back to Tegucigalpa to serve briefly as a powerless figurehead president of the regime installed by the coup. The obvious aim of such a solution would be to lend a democratic cover to a US-backed military overthrow of an elected government.

Kevin Casas-Zamora, who was vice president under Arias until two years ago and is now a senior fellow at the Brookings Institution, spelled out this scenario in an interview Thursday with the Council on Foreign Relations. “My sense of what the international community is demanding, and what is correct, is first of all that Zelaya should return to the presidency, though not necessarily to power,” said Casas.

In addition to abandoning any real power, Zelaya, Casas said, would be required to scrap any plans to amend the constitution (something he has already pledged to do), sever the ties he has established with Venezuelan President Hugo Chavez and enter into an explicit “power-sharing agreement” with those who overthrew him.

The Times and the Post on Honduran “democracy”

That this is the alternative favored by the US political establishment was made clear in similar editorials that appeared this week in the Washington Post and New York Times, both characterized by political cynicism and hypocrisy.

The only problem that the Post had with the Honduran coup was that the manner of its execution “played into the hands of the faction, led by Mr. Zelaya’s mentor, Hugo Chavez, that is attempting to overthrow democratic institutions across the region.” In other words, those trying to overthrow democracy were not the Honduran officials who ordered troops to storm the presidential palace and take control of the streets, closing down radio and television stations unsympathetic to the seizure of power and firing on unarmed demonstrators. Rather it was their victims.

The Post argues that the Honduran coup leaders have little to fear from Zelaya’s return. “Even if he does not wind up in jail,” the newspaper writes, “there is little chance he could now ... succeed in changing the constitution.”

Similarly, the Times argues, “Probably the best outcome would be for the Honduran military, courts and de facto government to allow Mr. Zelaya back into Tegucigalpa for the remainder of his term, which ends in January, in exchange for his pledge to abandon all efforts to change the Constitution so he can run for a second term.”

Strict fealty to the Honduran constitution and steadfast opposition to changing the document to allow Zelaya to run for another term is invoked by both newspapers to justify the coup and the stripping of the elected president of any real power. Their adherence to such “principles,” however, is entirely situational, depending on whether maintaining or changing such laws best serves the interests of America’s ruling elite.

Neither newspaper, for example, voiced any great concern when Alvaro Uribe, Colombia’s right-wing president and a loyal supporter of US foreign policy, amended the Colombian constitution to give himself a second term—without even bothering to submit the proposal to a popular referendum.

The Times’ response at the time was that Uribe’s maneuver “would ensure that Washington retains a reliable caretaker for two of the Bush administration’s top priorities in this tumultuous region, the fight against drugs and Marxist rebels.”

Even closer to home, the newspaper was enthusiastically in favor of the move by New York City’s billionaire mayor, Michael Bloomberg, to rewrite the city’s laws in order to end term limits and award himself a third four-year term in office. In this case, the newspaper proposed that the changes be carried out in backroom deals between Bloomberg and the City Council, explicitly opposing a popular referendum, like the one proposed in Honduras, as “technically difficult.”

As the US-orchestrated “mediation” got under way in San José, Honduran workers and youth continued to resist the coup. Thousands of people demonstrated Thursday and Friday in Tegucigalpa, San Pedro Sula and many other cities.

In a number of areas, protesters occupied highways and bridges, halting traffic. On Thursday, demonstrators blocked traffic for six hours on the main route connecting Tegucigalpa to the Pan American highway and Nicaragua and El Salvador to the south, leaving long lines of tractor trailers backed up into the capital. On Friday, thousands marched to northern Tegucigalpa to shut down the highway leading to San Pedro Sula, the country’s second largest city.

The coup regime’s repression is also continuing. On Thursday, security forces detained the father of Isis Obed Murillo, the 19-year-old youth who was shot to death on July 5, when soldiers opened fire on demonstrators who had gathered at the Tegucigalpa airport as Zelaya made his abortive attempt to return to the country.

The father, David Murillo, has spoken out since the killing, demanding justice for his son. He was grabbed by the national police after speaking at the headquarters of the Committee of Relatives of the Detained and Disappeared of Honduras and taken directly to a prison controlled by the military.

Germany Returns To World Military Stage

Germany Returns To World Military Stage

by Rick Rozoff

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When the post-World War II German states the Federal Republic of Germany and the German Democratic Republic, West and East Germany, respectively, were united in 1990, it was for many in Europe and the world as a whole a heady time, fraught with hopes of a continent at peace and perhaps disarmed.

Despite US pledges to the last president of the Soviet Union, Mikhail Gorbachev, that the North Atlantic Treaty Organization (NATO) would not move "one inch" eastward, what German reunification achieved was that the former German Democratic Republic joined not only the Federal Republic but NATO and the military bloc moved hundreds of kilometers nearer the Russian border, over the intervening years to be joined by twelve Eastern European nations. Five of those twelve new NATO members were republics of Yugoslavia and the Soviet Union itself, neither of which any longer exists.

Far from issuing in an era of disarmament and a Europe free of military blocs - or even of war - the merging of the two German states and the simultaneous fragmentation of the Eastern Bloc and, a year later, the USSR was instead followed by a Europe almost entirely dominated by a US-controlled global military alliance.

Within mere months of reunification Germany, then governed by the Christian Democratic Union/Christian Social Union-led government of Chancellor Helmut Kohl, set to work to insure the fragmentation of the Federal Republic of Yugoslavia would parallel that of the Union of Soviet Socialist Republics, with each broken down into all of its constituent republics.

The Kohl government and its Free Democrat Foreign Minister Hans-Dietrich Genscher immediately pushed for recognition of the Yugoslav republics of Croatia and Slovenia. Croatia was the site of the Nazi-administered Independent State of Croatia during World War II and Slovenia had been parceled out among Germany and its Italian and Hungarian fascist allies.

What the rulers of newly unified Germany accomplished is best expressed in a line from Victor Hugo's poetic drama Cromwell: Strike while the iron is hot and in striking make it hot.

By the end of 1991 Germany had browbeaten the other members of the European Community, now the European Union, into recognizing the secession of both republics.

As the above pressure was being applied by Berlin the Deputy Foreign Minister of Serbia Dobrosav Vezovic warned "This is a direct attack on Yugoslavia," one which "erases Yugoslavia from the map of the world." [1]

Germany was now back on the road to redrawing the map of Europe and would shortly embark on the use of military force outside its borders for the first time since the Third Reich.

Berlin later deployed 4,000 troops to Bosnia in 1995, its largest mission abroad since World War II, but its return to direct military aggression after an almost 55-year hiatus would occur with NATO's war against Yugoslavia in 1999.

The standard Western rationale for that war, Operation Allied Force, is that it was an intervention to prevent alleged genocide in the Serbian province of Kosovo, a crisis that had flared up almost instantaneously, and the 78-day bombing war was then justified by what the Danish philosopher Soren Kierkegaard once termed the teleological suspension of ethics.

It was no such thing. The separation of Kosovo from Serbia and the further dissolution of the former Yugoslavia to the sub-federal republic level was the final act of a decade-long drama, but one envisioned before the lifting of the curtain on the first one.

In January of 1991 former US Congressman Joseph DioGuardi in his capacity of the President of the Albanian American Civic League wrote to German Chancellor Kohl demanding the following:

"The European Community, hopefully led by the Federal Republic of Germany, recognizes the Republic of Kosova as a sovereign and independent state as the only logical and effective solution to protect the Albanian people in Kosova from their Serbian communist oppressors." [2]

Five months earlier, in August of 1990, DioGuardi had escorted six US Senators, including Robert Dole, on a tour to Kosovo.

A year before the war began German newspapers ran headlines on the order of “Mr. Kinkel threatens a NATO intervention in Kosovo,” referring to then German Foreign Minister Klaus Kinkel, who is also quoted in 1998 as saying "Of course you have to consider whether you are permitted from a moral and ethical point of view to prevent the Kosovo-Albanians from buying weapons for their self-defense.” [3]

Canadian professor and political analyst Michel Chossudovsky has written extensively and trenchantly on the role of the German BND (Bundesnachrichtendienst/Federal Intelligence Service) in arming and training the so-called Kosovo Liberation Army before and in preparation for the NATO onslaught against Yugoslavia on his Web site Global Research at

It was in Kosovo that Germany, which had deployed troops to Bosnia and run a military hospital in Croatia earlier in the 1990s, crossed the post-World War II red line when the Luftwaffe (with its Tornado multirole combat fighters) engaged in combat operations for the first time since 1945.

The precedent was exacerbated when Germany followed up the bombing by military occupation as over a thousand of its troops accompanied their NATO allies into Kosovo in June of 1999. A German general assumed command of the 50,000-troop NATO Kosovo Force (KFOR).

Quoting from memory an account by an American reporter of the words of an older ethnic Albanian witnessing the arrival of the first German troops in Kosovo: "Where have you been? We missed you. The last time you were here you drew the borders the right way."

The Rubicon had been crossed, Germany had been declared by its Western allies cleansed of its Nazi past and was free to dispatch troops and wage war again, this time on the world stage.

As a Der Spiegel feature put it this past February, "The phase of German military intervention that began 10 years ago during the Kosovo war is in no way coming to an end, despite the fact the majority of Germans wish it would. On the contrary: The era of foreign deployments for Germans and their military forces has just begun." [4]

The lid of Pandora's chest had been thrown open and by 2007 "According to Germany`s Defense Ministry, roughly 8,200 soldiers are serving in missions in Afghanistan, Lebanon, Bosnia, Djibouti, Ethiopia, Georgia, Kosovo and Sudan, making Germany one of the top contributors to international missions." [5]

How post-Cold War unified Germany and the German public were being prepared for the new international military role was insightfully analyzed a year before the Kosovo War by Diana Johnstone. The following is an excerpt from her article "Seeing Yugoslavia through a dark glass" which is far more penetrating than it may be comparatively lengthy:

"In the Bundestag, German Green leader Joschka Fisher [to become foreign minister later in the same year, 1998] pressed for disavowal of 'pacifism' in order to 'combat Auschwitz,' thereby equating Serbs with Nazis. In a heady mood of self-righteous indignation, German politicians across the board joined in using Germany's past guilt as a reason, not for restraint, as had been the logic up until reunification, but on the contrary, for 'bearing their share of the military burden'.

"In the name of human rights, the Federal Republic of Germany abolished its ban on military operations outside the NATO defensive area. Germany could once again be a 'normal' military power—thanks to the 'Serb threat.'

"On the contrary, what occurred in Germany was a strange sort of mass transfer of Nazi identity, and guilt, to the Serbs. In the case of the Germans, this can be seen as a comforting psychological projection which served to give Germans a fresh and welcome sense of innocence in the face of the new 'criminal' people, the Serbs, But the hate campaign against Serbs, started in Germany, did not stop there.

"If somebody had announced in 1989 that, well, the Berlin Wall has come down, now Germany can unite and send military forces back into Yugoslavia — and what is more in order to enforce a partition of the country along similar lines to those it imposed when it occupied the country in 1941 — well, quite a number of people might have raised objections. However, that is what has happened, and many of the very people might who have been expected to object most strongly to what amounts to the most significant act of historical revisionism since World War II have provided the ideological cover and excuse." [6]

The campaign was not without effect in Germany as subsequent events have proved and has been accompanied by the rehabilitation, honoring and even granting of veteran benefits to Nazi collaborators, including former Waffen SS members, in Croatia, Estonia, Latvia and Ukraine in recent years.

Following its military interventions in Croatia, Bosnia and Serbia, Germany sent troops to Macedonia in 2001 after armed continents of the Kosovo-based National Liberation Army (NLA), an offshoot of the Kosovo Liberation Army led by Ali Ahmeti, also a founder of the KLA, invaded the country in the summer of 2001. In connivance with the 50,000 NATO troops in Kosovo, Ahmeti's brigands brought fighters, arms and even artillery past American checkpoints on the Kosovo-Macedonia border to launch deadly raids against government and civilian targets.

In one incident 600 Bundeswehr soldiers were caught in the crossfire between the NLA marauders and government security forces (7)

Years later Benjamin Schreer, military expert at the German Institute for International and Security Affairs in Berlin, reflected on the consequences of what Johnstone had described: "The decision of the SPD [Social Democratic Party] and Greens to send German troops into Kosovo in 1999 has transformed the Bundeswehr....The Bundeswehr is now operating on a global scale." [8]

The press wire report from which the quote was taken provides these details:

"The mission in Afghanistan had German troops, roughly 100 special forces who, for the first time since World War II, took part in ground combat.

"The Kommando Spezialkraefte, known by its acronym KSK, is a highly trained and well-equipped special unit that has successfully been assigned to Kosovo and Afghanistan. Most of their operations, however, are classified." [9]

After September 11, 2001 German military missions and deployments were expanded exponentially and in addition to Germany deploying AWACS to the US in Operation Eagle Assist it also "took part in [Operation Active Endeavor] which has German units monitor the Mediterranean waters....In Afghanistan and East Africa, German troops battle...with sea units, ground troops and special forces.

"The Bundeswehr, once restricted by the German constitution to exclusively domestic protection, can now send armed troops to foreign countries." [10]

Having exploited as well as in an integral way engineered the breakup of Yugoslavia, with Kosovo as the altar and Serbia as the paschal lamb whose slaying wiped clean decades of German guilt, Berlin was now free to play the role assigned to it by NATO: That of an international military power operating on four continents, a far wider range of deployment and engagement than had been achieved by either Bismarck or Hitler.

In a feature called "Preparing Germany's Military for War," it was reported in 2005 that then German Defense Minister Peter Struck was "proposing that...his department considers missions other than peace-keeping and stabilization for the Bundeswehr" and that "the Bundeswehr could be asked to play a stronger role in Africa in the future." [11]

While visiting German troops in Uzbekistan on his way to Afghanistan, Struck was quoted as saying "For those of us who were born after the war this is an unfavorable idea but we must be realistic. It is possible that we will consider going to other countries and separate warring parties by military means" and that the Bundeswehr must be prepared to "carry out peace enforcement missions anywhere in the world." [12]

In late 2006 Struck's successor, Defense Minister Franz Josef Jung, released a 133-page White Paper which stated "The Bundeswehr is to be thoroughly restructured into an intervention force." [13]

In an article entitled "Germany plans to remake its Army into a rapid-reaction, humanitarian-intervention force," Newsweek commented: "The pace of change has indeed been unsettling. It took a constitutional-court ruling in 1994 to permit German soldiers to be deployed abroad at all. Today, close to 10,000 Bundeswehr troops find themselves stationed in places as far-flung as Bosnia, Djibouti and southern Sudan...." [14]

Germany has become so comfortable with its current global military status that last week Chancellor Angela Merkel conferred the first combat medals on German soldiers since World War II.

"The new Cross of Honour for Bravery, is the military's first such medal since the end of World War II when it stopped awarding the Iron Cross tarnished by its use in Nazi Germany. Some see this as another sign of Germany emerging from its post-World War II diplomatic and military shell since the country's reunification in 1990." [15]

A column in the Times of London embraced this further reemergence of a militarized Germany, and one moreover of an expeditionary and aggressive nature - the soldiers awarded by Merkel were veterans of the Afghan war - with this panegyric:

"When Germany once again has the confidence proudly to parade its military heroes, its journey from the darkness of diplomatic and military purdah - via reunification in 1990 - is surely complete.

"Germany's new medal, the Honour Cross, stands as a bold response to the
growing role played in the world by German military.

"The presentation by Chancellor Angela Merkel marks a potent moment in Germany's return to the heart of the community of nations." [16]

Last November German Defense Minister Jung laid the foundation stone for "the first national memorial to soldiers killed serving in the country's post-World War II military."

Combat deaths and their commemoration, for decades considered matters of a dark and distant past, are now commonplace as "Germany...has emerged gradually from its postwar diplomatic and military shell, increasingly
puts soldiers in the line of fire in places such as Afghanistan." [17]

The process of German reunification, the first effect of which was to place the entire territory of the nation in NATO, had been consummated with the rebirth of a major military power thought by many to have reached its final quietus in 1945.

The mainstream weekly Der Spiegel wrote in 2005 in a feature aptly named "Germany's Bundeswehr Steps out on the Global Stage" that "With reunification, the nation had not just regained full sovereignty: it also became subject to rules that had effectively been put on ice during the Cold War. On the new international stage, political influence was reserved for those who were willing and able to assert their interests in concert with their partners. If need be, by force. If need be, by military means."

The celebratory piece went on to say:

"Today the Bundeswehr has become one of the most powerful tools available to German foreign-policy makers.

"[T]he German government is in the process of fostering a totally different breed of soldier. The elite members of the Kommando Spezialkrafte (Special Forces Command), or KSK...are highly trained professionals who can hold their own with their colleagues from the British SAS or American Delta Force....

"Germany has 'finally reached a state of normality,' and its democracy will now be 'defended directly' wherever threats arise. That could be anywhere, soon even in Africa." [18]

In the culmination of almost twenty years of German and allied efforts to subvert and tear apart the Socialist Federal Republic of Yugoslavia, its truncated successor the Federal Republic of Yugoslavia and finally Serbia, almost on the first anniversary of the Western-supported secession of Kosovo in February of 2008 Berlin announced that it was donating 200 vehicles to the newly formed Kosovo Security Force, a revamped Kosovo Liberation Army headed up by a KLA commander who has already proclaimed his intention to join NATO.

The German offering is "a substantial contribution to the build up" of the fledgling army of an illegal entity not recognized by over two-thirds of the world including Russia, China and India. [19]

In an interview with Radio Kosova this February Colonel Dieter Jensch, senior official of the German Defense Ministry, boasted that "The Bundeswehr is helping the Kosovo Security Force through material assistance, which includes the donation of 204 vehicles and other technical equipment, and we have assigned a team of 15 professional military officers to help in building the KSF structures."

The account from which the above emanates added "The assistance is valued at 2.6 million Euros. Germany will also send 15 military personnel to help build KSF structures and to train the members of this force.

"The building of the Kosovo Security Force and its professional training is expected to cost 43 million Euros. Germany is among the first countries to help in building this force. It has already sent 15 military officers to help in building the structures of this force and to train its members." [20]

Yesterday the Balkans and today the world.

1) New York Times, December 18, 1991
2) Albanian American Civic League, January 6, 1991
3) Suddeutsche Zeitung, July 30, 1998
4) Der Spiegel, February 9, 2009
5) United Press International, March 20, 2007
6) CovertAction Quarterly, Fall 1998
7) Michel Chossudovsky, Washington Behind Terrorist Assaults In Macedonia
Global Research, September 10, 2001
Michel Chossudovsky, America at War in Macedonia
June 2001
Rick Rozoff, Human Rights Watch: Dear Mr. Ahmeti
August 1, 1009
8) United Press International, August 30, 2005
9) Ibid
10) Ibid
11) Deutsche Welle, June 6, 2005
12) Ibid
13) Newsweek, November 13, 2006
14) Ibid
15) Deutsche Welle, July 6, 2009
16) The Times, July 7, 2009
17) Associated Press, November 28, 2008
18) Der Spiegel, June 17, 2005
19) Associated Press, February 13, 2009
20) Kosova Information Center, February 9, 2009

American Children in Poverty on the Rise

American children in poverty on the rise

More facing threat of hunger with parents unemployed

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A growing number of American children are living in poverty and with unemployed parents, and are facing the threat of hunger, according to a new federal report released yesterday.

According to "America's Children: Key National Indicators of Well-Being," 18 percent of all children 17 and under were living in poverty in 2007 -- up from 17 percent in 2006. The percentage of children who had at least one parent working full time was 77 percent in 2007 -- down from 78 percent in 2006. And those living in households with extremely low "food security" -- where parents described children as being hungry or having skipped a meal or gone without eating for an entire day -- increased from 0.6 percent in 2006 to 0.9 percent in 2007, the report said.

Federal officials said the statistics released this week pre-date the current economic downturn and forecast darker times for the country's 74 million children 17 and under, when data on children's lives during the recession become available.

"It foreshadows greater changes we'll see when we look at these figures next year," said Dr. Duane Alexander, director of the Eunice Kennedy Shriver National Institute of Child Health and Human Development at the National Institutes of Heath, one of the government agencies that participated in the study.

The report is an annual compilation of statistics on child welfare from several government agencies, including the U.S. Census. It tracks trends in family life, health care, safety and education.

Drawing on previously released census data, the report painted a picture of a young population that is holding steady as a proportion of the population, at about 24 percent -- a percentage not expected to change through 2021.

But the report also showed racial and ethnic backgrounds and living circumstances are undergoing dramatic shifts. The percentage of children who are Hispanic, for example, has increased faster than it has for any other racial or ethnic group, from 9 percent of the population in 1980 to 22 percent in 2008.

Forty percent of all children were born to unmarried women in 2007, up from 34 percent in 2002, according to the report, which reiterated a federal study of birth certificates released earlier this year. Experts say that trend has resulted from the lessening stigma of unwed motherhood, an increase in the number of couples who delay or forgo marriage and growing numbers of women who want to have babies on their own.

At the same time, the teen pregnancy rate ticked up slightly for the second year in a row, to 22.2 per 1,000 girls ages 15 to 17, after years of decline.

Dr. Alexander said there were some bright spots in this year's report, beginning with the fact that 89 percent of children had health insurance in 2007 -- up from 88 percent in 2006.

Experts are hoping that a very slight decline in the number infants born preterm or with low birth weights after years of steady increases also could be the start of a trend, although the decreases were minuscule.

Preterm births made up 12.7 percent of the total, down from 12.8 percent in 2006, and the proportion of low-birth-weight infants was 8.2 percent, down from 8.3 percent in 2006.

Soldiers Sue KBR for Chemical Exposure in Iraq

W. Va. soldiers sue firm for chemical exposure in Iraq

Seven soldiers from a W.Va. unit are suing a U.S. contractor for chemical exposure in Iraq

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Russell Powell wondered for years after he returned from Iraq why he couldn't run even short distances without wheezing.

Following his yearlong tour of duty that ended in 2004, he coached his son's Little League team, but had to stop because it exhausted him.

The 34-year-old, who was able to run two miles in 9:44 before he went to Iraq in 2003, said now he is lucky to finish in 20 minutes.

He was discharged from the West Virginia Army National Guard for medical reasons at the end of 2008 because he was unable to meet physical requirements. Since he started his new job as a corrections officer for a West Virginia prison earlier this year, he's had to use several sick days and vacation days to visit doctors.

In February, Mr. Powell, who was a sergeant in the 1092d Engineer Battalion, received a letter from the state surgeon of the West Virginia Army National Guard. He thinks it explains why he's been out of breath and nauseous, suffering from rashes and sick to his stomach for the last five years. And he thinks it explains why, for three months in Iraq, he constantly coughed up blood, had frequent bloody noses and, at one point, passed out, waking up in a hospital with blackened lips and a blistered face.

The letter said Mr. Powell and other soldiers in his unit may have been exposed to sodium dichromate, an industrial chemical used to prevent the corrosion of pipes at a water treatment facility near Basrah, Iraq.

The chemical contains hexavalent chromium, which can cause sores inside the nose and on the skin, general skin irritation, nose bleeding, wheezing, coughing and pain in the chest when breathing, fever, nausea and upset stomach. It also has been linked to cancer.

Hexavalent chromium was the subject of the 2000 film "Erin Brockovich," which followed the true story of people in a California town who developed health problems following exposure to the chemical. They sued Pacific Gas and Electric Co., settling in 1996 for $333 million.

Mr. Powell said that before he received the letter, he had not known he might have been exposed to the chemical during the three months he worked at the plant.

"Maybe this is the reason why I'm sick," he thought. Doctors who were shown the letter tested Mr. Powell for cancer but have found none.

On June 25, Mr. Powell and six other members of his company in the 1092d, sued KBR, the firm in charge of rebuilding the water treatment facility.

The lawsuit alleges that KBR managers knew about the site contamination and the threat it posed, and "disregarded and downplayed the extreme danger" to West Virginia National Guardsmen. It argues that the guardsmen are entitled to payment or reimbursement for all medical expenses resulting from sodium dichromate exposure.

At a June 2008 Senate Democratic Policy Committee hearing, Sen. Byron Dorgan, D-N.D., said a United Nations assessment of the site before KBR's arrival found sodium dichromate, and that internal KBR reports show 60 percent of its employees experienced symptoms of exposure.

KBR civilian employees reached a settlement with the company in arbitration in June. A lawsuit on behalf of mostly Indiana National Guardsmen is pending, in addition to the new West Virginia suit.

Dr. Max Costa, an expert on the effects of hexavalent chromium and chairman of the New York University Medical School Department of Environmental Medicine, said exposure to 30 to 40 micrograms of hexavalent chromium per cubic meter has been shown to cause more than a 50 percent increase in cancers in exposed humans, according to the West Virginia guardsmen's lawsuit.

"They probably got a pretty good dose," if they were experiencing nose bleeds while at the facility, indicating that the levels were higher than levels considered dangerous, said Dr. Aaron Barchowsky, an associate professor in the Department of Environmental and Occupational Health at the University of Pittsburgh's Graduate School of Public Health.

Dr. Barchowsky, who is well-versed in chromium toxicology, said depending on the dose encountered, the soldiers could have long-term chronic problems affecting their lungs, such as emphysema. The chemical directly damages cellular DNA; therefore, it could increase the risk of cancer, he said.

"We know what we're fighting against," Mr. Powell said. "You are talking a billion-dollar contractor, and young soldiers don't have that kind of education. None of us have sued anybody in our lives, so we don't know. We're just doing the best we can."

Mr. Powell, originally from Steubenville, Ohio, joined the military after he graduated from high school in 1994. He had planned to attend college, and he'd received offers of athletic scholarships from Wheeling Jesuit, West Virginia University and Ohio State University, but decided to join the military, like his father and two brothers.

He became an Army medic, serving first as a paratrooper medic then as a flight medic. The Army sent him to Fort Bragg, N.C., then Panama, then back to Fort Bragg.

In 2000, Mr. Powell decided to leave active duty. He and his wife were expecting their first child, and he didn't want to be away from them. But after Sept. 11, 2001, the Army returned him to active duty, so he joined the 1092d out of Moundsville.

Two years later, the United States went to war in Iraq. In March 2003, Mr. Powell's battalion flew to Kuwait, and later that month, was assigned to provide security for KBR employees at the Qarmat Ali Water Treatment Facility.

Kellogg, Brown & Root Services Inc., or KBR, describes itself on its Web site as the U.S. Army's largest contractor and a "technology-driven engineering, procurement and construction company." The Army gave KBR a contract to rebuild the wrecked water treatment facility plant, which pumps water into the ground to force oil out. Before the Americans arrived, then-Iraqi president Saddam Hussein had ordered the destruction of the plant, and when Mr. Powell arrived there in March 2003, he said "bags of orange and yellow stuff" lay throughout the plant and surrounding area.

The bags, Mr. Powell would learn five years later, contained sodium dichromate, which the Iraqis had used to prevent the water pipes from corroding, and later, in an effort to destroy the plant.

Mr. Powell, who was the head medic of his battalion while in Iraq, said he and his partners went to the plant during the day, wearing, at most, their flak jackets. At the facility, they sat in the dirt to eat their meals, while dust swirled around them.

Nearly as soon as they arrived, people became sick -- not just the soldiers, but also the KBR employees. First, Mr. Powell said, their noses would bleed and their skin would feel raw. They developed sore throats and skin sores and began to cough up blood.

When asked, KBR told soldiers it must be allergies or a reaction to the sand.

In June 2003, Mr. Powell became very ill. A Navy doctor gave him Motrin, which didn't help. On one occasion, Mr. Powell went to a bomb shelter to give himself medication intravenously.

His men found him there unconscious. When he regained consciousness, he was in a Kuwaiti hospital. His lips were black and his face was red; both were blistered.

Soon afterward, the Guardsmen trained members of an Indiana National Guard unit to replace them as security providers for KBR.

The bloody noses and sores subsided after Mr. Powell left Qarmat Ali in June 2003, but his nausea, stomach pain and breathing difficulties continued after he left Iraq in April 2004. Mr. Powell remained in the Army until 2008, when he was discharged for medical reasons.

The letter Mr. Powell received in February was sent to about 125 other members of the West Virginia National Guard who may have been exposed to sodium dichromate.

KBR discovered the chemical at the plant in summer 2003, said Col. William Farthing, the Army's spokesman on the Qamar Ali issue. By August, they cleaned up the site, covering the entire area with asphalt, then 3 inches of gravel. The streets were washed, and subsequent air monitoring indicated reduced levels of the chemical.

An Army team sent to the site in September 2003 found that the soldiers' level of exposure to sodium dichromate was no higher than would be expected in the average U.S. citizen. They tested soldiers in the Indiana National Guard unit, but not the West Virginia soldiers, who were no longer at the plant.

After former KBR employees testified about the contamination before the U.S. Senate in 2008, the Army looked again at the incident. Army officials began contacting all the soldiers who may have been exposed, including West Virginia, Indiana, Oregon and South Carolina National Guardsmen.

"We don't expect there to be any adverse outcome in the future because of the low amount of chemical at the site and the short time they were there, but just in case we want to take care of these soldiers," Col. Farthing said.

A spokeswoman for KBR said the company "did not knowingly harm troops," and is committed to the safety and security of all its employees.

"The company appropriately notified the Army Corps of Engineers of the existence of the substance on the site, and the Corps of Engineers concluded that KBR's efforts to remediate the situation were effective," a statement said.

Mr. Powell disputes that.

"They had doctors saying back in May [2003] that it was there; they just didn't tell us," he said. "If you've got doctors saying it was there, and they're not telling us, something's wrong. They're thinking about that billion-dollar contract, not the soldier, and not the KBR employees themselves."

The Mystery of the Missing Unemployed Man

Where Did Those Traders in Toxic Assets Go?

Go To Original

I woke up one morning late last week to the news that taxpayers, already $149 billion in the hole in the Treasury Department's TARP bailout program, are set to lose even more. As rescued banks now try to extricate themselves from the government's control, they must buy back stock warrants proffered at the time of the bailout, which, as the New York Times described it, offer "the right to purchase shares in each of the companies at roughly the price of their shares at the time of the deals."

As it happens, thanks largely to that taxpayer-funded bailout, bank stocks have risen since last fall's meltdown. Selling those warrants, then, should mean a tidy profit for taxpayers. But no such luck, it seems. Almost a dozen small banks have already bought back their warrants, and for a considerable discount -- a mere 66% of their value -- costing taxpayers upwards of $10 million. If this were to continue when giant firms like JPMorgan Chase, Goldman Sachs, and Morgan Stanley come up to bat, taxpayers could be out up to $2.1 billion. Think of that as a small potential thank-you note from the banking business to Americans for helping it out of a jam.

Right behind that bit of sprightly news was a report from the Associated Press that the giant insurance firm AIG, almost 80% owned by taxpayers, was now back in consultation with the Obama administration over just how much more it should pay out in further retention bonuses -- this after multi-millions in such bonuses were already paid -- including "about $235 million for employees at AIG's financial products unit." AIG's near collapse, added the AP, "was not due to its traditional insurance operations, but instead risky derivatives contracts written by the financial products division." In addition to those traders, for 40 top execs of the dismally failed company, there is to be a payout of a mere $9 million in further bonuses for 2008. What a comedown!

Of course, who can be surprised by this sort of thing these days? Not, I assume, Barbara Garson, known in the Vietnam era as the author of the satiric play "MacBird," who has since gone on to write books on American work life (All the Livelong Day) and on a single bank deposit as it made its dizzying way around our planet (Money Makes the World Go Around). For TomDispatch, she's written a little mystery story about those financial-products types, what's happened to them, and -- most strikingly -- their possible rebirth. Think of her as this site's equivalent of Miss Marple, set loose on our financially melted-down planet. Tom

The Mystery of the Missing Unemployed Man

On Jobs and Banks
By Barbara Garson

For the book I'm writing about unemployed Americans, I had no trouble finding accountants, brokers, cashiers, or die casters. Admittedly, I had to go out of town to interview the die casters. But when I arrived, alphabetically, at unemployed editors, I had only to look in my address book.

Financiers were further from my life experience than either die casters or editors. Yet the "do you know anyone who…?" method still proved an effective way of turning up unemployed hedge-fund analysts and bank loan officers -- and within a week at that. It was only when I refined my search to ferret out unemployed financiers who had actually handled those infamous "toxic assets" that I hit the proverbial brick wall.

Since mortgage-backed securities and the swaps that insure them had been the downfall of Lehman Brothers, Bear Stearns, Merrill Lynch, and the giant insurance company AIG, packs of bankers who worked on them must, I assumed, be roaming free on the streets of Manhattan. Yet I couldn't find a single one.

Finally, I phoned a law firm representing Lehman Brothers employees in a suit for the pay they were owed when the company shut down without notice. I asked the lawyer if he could possibly inquire among his unemployed clients for someone, anyone, who used to work with mortgage-backed securities and might be willing to talk about how he or she was getting by today. "I don't have to use real names," I assured him. Many of the unemployed people I'd already interviewed felt so lost and ashamed that I had decided not to use their real names. Unemployed bankers deserve anonymity, too.

But the lawyer made it clear that that wasn't the problem. "Most of them were snapped up immediately by Barclays," he said. He represents other financial plaintiffs as well, and he seemed to think that the kind of person I was looking for hadn't remained unemployed very long.

The Clues

How could that be? We've heard ad nauseum about mortgage-backed securities. They're bonds "structured" out of thousands, or tens of thousands, of home or commercial mortgages. The bond's owner was to receive interest out of the mortgage payments from all those property owners. He could earn a low 5% interest if he opted to be paid out of the first money that came in. (Institutional investors often chose that safe "tranche," or slice, of the security.) But back when mortgages seemed so safe, a hedge-fund gambler might have been happy to opt for the last mortgage payments to come in -- in exchange for heftier 7% to 8% interest rates. Of course, that was the gamble. Too many missed mortgage payments meant little or no returns for his fund.

When last I heard, more than half of U.S. mortgages were held this way, so it was a reasonable supposition that a lot of people had been employed structuring, trading, and insuring those bonds. But who in his right mind would touch this stuff now? While that lawyer sounded like an honest, helpful fellow, I still wondered whether he wasn't just brushing me off to protect his embarrassingly unemployed clients.

Soon after, however, I met a bank corporate loan officer who confirmed that his colleagues on the "structured side" were indeed still employed. In fact, he thought he noticed a couple of new chairs at their trading desk in the bank's trading room. "Those damn things" had become so complicated, he speculated, that the people who put them together were now needed in similar numbers to "unwind the bank's positions" -- that is, get them out of the deals.

That must be it, I thought, and recalled a moment soon after AIG got the last of its $182 billion bailout from the government. At that time, the company braved a massive public outcry to award big bonuses to its top employees, including those who had created the "swaps" (short for credit default swaps, or CDSs) that swamped the company. Like so many other companies, AIG claimed that bonuses were necessary to retain the "best brains," especially those who understood the credit-default swaps.

These swaps are a type of derivative that was supposed to represent a way of insuring the very bonds we've been talking about. Here's how it worked -- at least theoretically, at least before the ship went down: On a given bond, say number 123456, an insurance company like AIG would essentially say to a large investor, perhaps a mutual fund, "You pay us $7,000 a month and, if you fail to receive the interest on that bond for, say, two months, then we'll buy the whole bond from you for the $200 million you paid for it." In other words, it was a private, custom-written contract to simply "swap" one of those bonds for money under certain agreed circumstances.

These deals were couched in such terms, rather than as straight insurance policies, because insurance is regulated and the regulations require setting aside relatively small amounts of money in reserve in case the disasters insured against occur. But swaps aren't regulated. Nothing need be set aside.

Here's the remarkable thing: both the Bush and Obama administrations decided that the government would make good on these non-regulated, non-insurance policies. The costs could be humongous.

Now, here's an even more distressing complication. You didn't have to own the original bond to buy the swap that was really an insurance policy. An "investor" could approach AIG and say, "You know that Merrill asset-backed bond -- number 123456? I'll pay you $7,000 a month, too, and if the bond defaults, then you owe me 200 million also."

It's as if any number of people could buy (or, really, bet on) your life insurance policy. Or think of a race track where anyone can go to the window and bet on any horse in any race -- and collect if it comes in. (Or in this case, collect if mortgage payments didn't come in.)

If our government were merely going to cover the original mortgage-backed securities, the maximum payouts, though large, would at least be calculable. If 50% of the mortgages in the U.S. were, as they say, securitized, and if they all were to default, that would be a vast but finite loss. But since any number of people could buy into the swaps on those bonds, the swap payouts could be an unknown amount that would be many times the value of the real buildings. How many multiples of reality might that come to? Two times, 10 times, 100 times? Who knows? Remember, these are unregulated transactions.

And keep in mind that the "investment" being bailed out here has nothing to do with anything in the real world. Neither party to these "me too" swaps owned, built, or financed the original housing, or anything else for that matter. They were simply betting on whether a certain group of people would pay their mortgage bills.

Why our government would underwrite these bets, and why such gambling contracts are legal in the first place, is beyond me, but as we know, they were placed on a vast scale. No wonder, I thought, that my swap men were all still employed. After all, even if there's no work for die-casters or editors, there's still all that "unwinding" to do by the people who did the winding in the first place.

The Crime

Then I read this headline in the Financial Times: "Strange but true -- the credit specs are back." According to the column that followed by John Dizard, "[T]hanks to the Geithner Treasury's policy of reform, rather than dissolution, CDS trading has regained a vampiric strength that the real economy still lacks."

So, now I understood: the man I couldn't find, the man who wasn't unemployed, wasn't just doing that final bit of unwinding or cleaning up old messes. He was busy making new ones!

How could Dizard be certain, though, that the debt trade is really booming again? He cites "one friend of mine in the credit fund trade" who has "made money on both the downside and the upside during the past year."

Of course, who can know for sure? If there was a derivative exchange along the lines of the New York Stock Exchange, we'd have a good idea of the volume of the trade. But derivatives -- I know you've heard this more than once -- are unregulated.

President Obama's recent white paper on financial reform suggests that derivatives should, in fact, be regulated, except for what it refers to as "custom" products. That, unfortunately, sounds like just the right-sized loophole for the financial instruments I've described. And -- I'm sure you won't be surprised by this -- financiers are lobbying furiously to expand that hole.

The Motive

Why is there such an interest in reviving the debt market and why are financiers so determined to keep it unregulated? Aren't they scared of it, too? Let me quote Dizard one last time:

"After all, if the dictates of style and tax auditors say you have to go easy on conspicuous consumption, and if there's no demand for the products of real capital spending, then you might as well take your cash to the track, or the corner credit default swap dealer."

In other words, people are speculating on derivatives and derivatives of derivatives because there's no action in the real world. You can't invest in new real businesses or lend money to old real businesses for expansion unless people can afford to buy the products they'll produce. That brings me back to where I started: our real world. You know, the one where just about everyone's unemployed except those swap guys.