Friday, August 7, 2009

The drug lobby demands, and gets, Obama pledge to protect health care profits

The drug lobby demands, and gets, Obama pledge to protect health care profits

By Kate Randall

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The Obama White House has acknowledged it made a deal with drug makers to block moves in Congress to obtain any cost savings beyond the $80 billion already agreed to by the pharmaceutical lobby.

The New York Times reported Thursday that, in return for the $80 billion agreement, the Obama administration pledged that it would work to block any health care legislation that would allow the government to negotiate price-setting on drugs.

The deal is further evidence of the corporate forces calling the shots in Obama’s health care overhaul. While touring the country claiming the plan will make the health care giants’ “honest,” the administration is cutting behind-the-scenes deals to protect and boost their profits.

Details of the White House pledge were revealed this week when the pharmaceutical lobby reacted to a House health care measure that would have allowed the government to negotiate drug prices, or demand additional rebates from the drug companies.

The lobbyists immediately insisted that the Obama administration publicly acknowledge its commitment to protect the pharmaceuticals from bearing any further costs. The White House quickly obliged.

The Times reported that Jim Messina, a deputy White House chief of staff, wrote in an email Wednesday night, “The president encouraged this approach. He wanted to bring all the parties to the table to discuss health insurance reform.”

Billy Tauzin, a former Republican congressman and head of the Pharmaceutical Research and Manufacturers of America (PhRMA) trade group, described how the deal went down. “We were assured: ‘We need somebody to come in first. If you come in first, you will have a rock-solid deal,’” he said.

Tauzin added, “They wanted a big player to come in and set the bar for everybody else.” He also said that the White House urged him to negotiate with Democratic Senator Max Baucus, who heads the Senate Finance Committee, which has yet to present its version of health care legislation. Baucus is beholden to the health care industry, having raked in nearly $1.5 million in 2007-2008 from lobbies representing hospitals, insurers, pharmaceuticals and other health care interests.

Tauzin’s negotiations with Baucus went well for the drug companies, with the committee reportedly moving away from measures that would have allowed the government to negotiate drug prices, or allowed the importing of cheaper drugs from Canada or Europe. Tauzin said that the White House monitored the negotiations with Baucus throughout.

The Times reports that after reaching a deal with Baucus, Tauzin “met twice at the White House with Rahm Emanuel, the White House chief of staff; Mr. Messina, his deputy; and Nancy-Ann DeParle, the aide overseeing the health care overhaul, to confirm the administration’s support for the terms.” Tauzin said the White House “blessed the deal” with Baucus.

At one of these meetings, several industry chief executives—including from Abbot Laboratories, Merck and Pfizer—were also in attendance. It was here that they reportedly hashed out the deal on the nominal $80 billion in so-called cost savings.

Details about the pharmaceuticals’ $80 billion offer have been vague, but they will likely come—not as a handout by the drug industry—but in the form of lower patient co-pays on prescriptions, or as modest discounts on reimbursements to the industry for expanded government-backed medical coverage.

In an industry that generates annual US sales of more than $300 billion, the $80 billion is minimal. The more likely scenario is that $80 billion will be more than offset by the increased profits the pharmaceutical industry stands to make on prescriptions purchased by new patients under insurance coverage that they would be mandated to purchase under the new health care legislation.

In any event, Tauzin is not prepared to alter the offer. “$80 billion is the max, no more or less,” he told the Times. “Adding other stuff changes the deal.”

Tauzin earned his stripes as a heavy for the big pharmaceuticals during a career in Congress before becoming a lobbyist. He served for 15 years in the US House as a Democrat, and was one of the cofounders of the House Blue Dog Coalition of conservative Democrats. He switched to the Republican Party in August 1995.

Tauzin served as chairman of the Energy and Commerce Committee from 2001 to the beginning of 2004. He played a key role in guiding through Congress the Medicare prescription drug bill known as Medicare Part D, which went into effect on January 1, 2006.

Structured as a privatized plan, the plan bans federal negotiations with drug manufacturers for discounts, forcing Medicare to pay full price for prescription drugs. Tauzin is generally credited with inserting this language into the bill, as well as language barring the importation of cheaper drugs from Canada.

An analysis by the US House Committee on Government Reform found that in its first six months, Medicare Part D generated $8 billion in profits for the pharmaceutical companies. A Kaiser Family Foundation study estimated that Medicare Part D would generate $724 billion in revenues between 2006 and 2015.

Billy Tauzin left Congress on January 3, 2005, and began working that very day for PhRMA, reportedly offered a $2.5 million annual salary to head the leading drug industry lobbying group.

During his presidential campaign, Obama derided the drug companies for charging extortionate prices, and pledged he would let Medicare negotiate for lower prices and would allow importation of cheaper drugs from Canada. His selection now of Billy Tauzin to broker a deal with the pharmaceuticals is not accidental. He knows who he’s dealing with, and the interests Tauzin brings to the table.

Obama’s public affirmation that no further “cost savings” are to be extracted from the drug companies is further confirmation that any health care plan Obama signs will be a cut-rate, class-based system that will ration care for ordinary Americans while leaving the profits of the giant pharmaceutical and other health care industries intact.

Mounting popular opposition to the war in Afghanistan

Mounting popular opposition to the war in Afghanistan

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A series of recent polls have shown growing popular opposition in Europe to the US-NATO war in Afghanistan.

One recent poll puts opposition in Germany to the presence of German troops in Afghanistan at 85 percent. The latest poll in France shows 55 percent opposed to the war and in favor of the immediate withdrawal of French soldiers.

In Britain, according to the latest ComRes poll, more than half of the people (52 percent) want troops to be withdrawn straight away, while some 64 percent say British forces should be removed “as quickly as possible.”

Former British Foreign Office minister Kim Howells recently warned that the tide was definitively turning against the war. “I don’t think the public are up for it anymore,” he told the BBC.

Similarly, US Defense Secretary Robert Gates said last month in an interview: “After the Iraq experience, nobody is prepared to have a long slog where it is not apparent we are making headway. The troops are tired; the American people are pretty tired.”

Popular anti-war sentiment, however, finds no expression in the policies of governments or, for that matter, those of opposition parties within the bourgeois political establishment.

The US and European governments are making clear that their military intervention in the war-torn land is open-ended. Within the framework of official politics and the media, they are being criticized by their political opponents for not pursuing the war with sufficient ruthlessness.

In a surprise visit to Afghanistan just days after his official inauguration as new head of NATO, former Danish Prime Minister Anders Fogh Rasmussen appeared alongside the despised Afghan president, Hamid Karzai, and declared, “We will stay and support you as long as it takes to finish our job....” Rasmussen’s comments follow Defense Secretary Gates remark last month that victory in Afghanistan is a “long-term prospect.”

The imperviousness of official politics to the will of the populace on war is an expression of a terminal decay of bourgeois democracy. The broad mass of the people are effectively disenfranchised.

The war in Afghanistan has already lasted two years longer than the US-led war against Iraq, and is ever more nakedly revealing itself to be a shabby and brutal attempt by the major powers to establish control over a country strategically situated in oil-rich Central Asia.

Launched in 2001 following the 9/11 hijack-bombings in the US, the operation in Afghanistan was originally justified as a reprisal against Osama bin Laden and Al Qaeda, who were held to be responsible for the terrorist attacks on New York and Washington. The Taliban regime was targeted for overthrow on the grounds that it had rejected a US ultimatum to extradite bin Laden and his top lieutenants to the US.

In fact, the US-led invasion was the implementation of pre-existing plans to establish American hegemony over Afghanistan, for which 9/11 served as a convenient pretext. The current war is the culmination of US machinations that go back at least 30 years, beginning with CIA funding for the anti-Soviet mujahedeen, whose numbers included bin Laden.

Washington and its NATO allies have long since ceased justifying the war as a hunt for bin Laden. He is rarely mentioned, as is Al Qaeda. Instead, the all-purpose enemy is the Taliban, the name serving as a catch-all for all those in Afghanistan and Pakistan who are resisting foreign intervention.

The Obama administration has, moreover, unceremoniously dropped the Bush-era claim that the war is a crusade for democracy in Afghanistan. Just one week after Obama’s inauguration, Gates cynically told a Senate committee that the US was not aiming to establish a “Central Asian Valhalla” in the occupied country.

In the event, the puppet regime in Kabul is headed by a president whose name has become a byword for cronyism, nepotism and corruption.

Another argument thrown up by “leftist” supporters of the war, such as the German Greens, was the necessity to liberate Afghan women from the tyranny of the Taliban. The fact is, however, the situation for Afghan women under the occupation has worsened.

In a statement published in May, the Afghan women’s organization RAWA declared, “The so-called ‘new’ strategy of Obama’s administration” has only brought “increased killings and ever more horrifying oppression,” and has “proved itself as much more war-mongering than Bush.”

Having sidelined the legal and ideological pretexts that were used to launch the war, the Obama administration is left with nothing other than fear-mongering—the claim that unless Afghanistan and Pakistan are cleared of terrorists, those regions will serve as bases for new attacks on the US homeland. In reality, of course, the crimes being carried out by the United States and NATO against the Afghan and Pakistani people only increase the likelihood of terrorist reprisals against Americans and Europeans.

What remains is the reality of a colonial-style war to suppress popular resistance to imperialist domination and the poverty and tyranny that go with it.

While the political establishment excludes any expression of popular anti-war sentiment, it is bolstered by the decision of the middle-class “left” groups and publications that organized anti-war protests against Bush to wind up their anti-war activity under Obama.

It is a fact that even as Obama maintains 140,000 US troops in Iraq and plans to keep tens of thousands there indefinitely, and he expands US military violence in Afghanistan and spreads it into Pakistan—and in the face of continuing mass popular opposition to the wars in the US and Europe—there is virtually no organized expression of anti-war sentiment. The socio-political layer that long presided over middle-class protest politics has seized on the election of Obama to complete its movement into the camp of US imperialism. It tacitly, or in some cases openly, supports Obama’s wars of aggression.

There are critical political lessons to be learned for all those who sincerely oppose and want to put an end to imperialist war. In February of 2003, millions took to the streets all over the world to oppose the imminent US invasion of Iraq. It was the biggest international anti-war protest in history.

That mass opposition was, however, channeled by the protest leaders behind various bourgeois parties which claimed to oppose the war or had “anti-war” factions within them. In the US, mass opposition to the war was diverted into campaigns to elect Democrats to Congress and the White House.

In Europe, pacifist organizations, leftist groupings, the Attac movement and the Party of Democratic Socialism (predecessor of the Left Party) in Germany sought to encourage similar illusions in Social Democratic parties and in the Greens, which in Germany and other European countries had expressed reservations about the war in Iraq.

The anti-war movement was aborted through its political subordination to capitalist parties and politicians. Those who led it have since largely joined the camp of imperialist war.

What conclusions are to be drawn? First: The desertion of the middle-class opportunist groups means that the working class will emerge more directly and openly as the leading social force against imperialist war. Second: The struggle against war can be developed only on the basis of the independent mobilization of the working class against all factions of the ruling elite and the capitalist system itself, which is the root cause of war. The connection between the struggle against war and the struggle against capitalism will become increasingly clear as the working class moves into battle against the impact of the deepest economic crisis since the Great Depression.

You Do Not Have Health Insurance

You Do Not Have Health Insurance

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Right now, it appears that the biggest barrier to health care reform is people who think that it will hurt them. According to a New York Times poll, “69 percent of respondents in the poll said they were concerned that the quality of their own care would decline if the government created a program that covers everyone.” Since most Americans currently have health insurance, they see reform as a poverty program – something that helps poor people and hurts them. If that’s what you think, then this post is for you.

You do not have health insurance. Let me repeat that. You do not have health insurance. (Unless you are over 65, in which case you do have health insurance. I’ll come back to that later.)

The point of insurance is to protect you against unlikely but damaging events. You are generally happy to pay premiums in all the years that nothing goes wrong (your house doesn’t burn down), because in exchange your insurer promises to be there in the one year that things do go wrong (your house burns down). That’s why, when shopping for insurance, you are supposed to look for a company that is financially sound – so they will be there when you need them.

If, like most people, your health coverage is through your employer or your spouse’s employer, that is not what you have. At some point in the future, you will get sick and need expensive health care. What are some of the things that could happen between now and then?

  • Your company could drop its health plan. According to the U.S. Census Bureau (see Table HIA-1), the percentage of the population covered by employer-based health insurance has fallen every year since 2000, from 64.2% to 59.3%.*
  • You could lose your job. I don’t think I need to tell anyone what the unemployment rate is these days.**
  • You could voluntarily leave your job, for example because you have to move to take care of an elderly relative.
  • You could get divorced from the spouse you depend on for health coverage.

For all of these reasons, you can’t count on your health insurer being there when you need it. That’s not insurance; that’s employer-subsidized health care for the duration of your employment.

Once you lose your employer-based coverage, for whatever reason, you’re in the individual market, where, you may be surprised to find, you have no right to affordable health insurance. An insurer can refuse to insure you or can charge you a premium you can’t afford because of your medical history. That’s the way a free market works: an insurer would be crazy to charge you less than the expected cost of your medical care (unless they can make it up on their healthy customers, which they can’t in the individual market).

In honor of the financial crisis, let’s also point out that all of these risks are correlated: being sick increases your chances of losing your job (and, probably, getting divorced); losing your job reduces your ability to afford health insurance, either through COBRA or in the individual market; if your employer drops its health plan, that’s either because health care is getting more expensive (meaning harder for you to afford individually) or the economy is in bad shape (making it harder for you to get a job that does offer health coverage).

In addition, there is the problem that even if you are nominally covered when you do get sick, your insurer could rescind your policy, or you may find out, as Karen Tumulty’s brother did, that your insurance doesn’t cover the treatment you need. But while important, this is a second-order problem. The first-order problem is that as long as your health insurance depends on your job, your health is only insured insofar as your job is insured – and your job isn’t insured.

The basic solution is very simple. In Paul Krugman’s words: “regulation of insurers, so that they can’t cherry-pick only the healthy, and subsidies, so that all Americans can afford insurance.” I know that there are lots of details that consume people who know health care better than I do, and I know those details are important. But as an individual who is worried about his or her own health insurance (and that is the point of this post), that’s what you want. You want to know that if you lose your job, you won’t be shut out because you’re too sick,*** and you won’t be shut out because you’re too poor.

But we won’t get there as long as people remain convinced that health care reform is for poor people. It’s for everyone – everyone, that is, who isn’t independently wealthy or over the age of 65. Because all of us could lose our jobs. (Have I repeated that point enough?)

Now, I admit that if you are over 65, health care reform is not for you, because you are in the one group in our society that enjoys true health insurance – insurance that you cannot lose, that is paid for by taxes, and that is effectively guaranteed by the government. So maybe there’s nothing in it for you, except perhaps an improvement to the prescription drug component of Medicare. But I cannot believe that, as the only people who have reliable health insurance, you would oppose health care reform that would provide reliable insurance for the rest of us.

* This doesn’t necessarily mean that all those people lost employer-based health coverage because their employers dropped their plans; some of it could be that the employee contributions were increased to the point where they couldn’t afford it anymore. 1.1 percentage points of the shift is due to people becoming eligible for Medicare or military health plans.

** If you lose your job, or you get divorced from a spouse through whom you get health coverage, you are eligible for continued coverage under COBRA. However: (a) this only necessarily applies if your employer has 20 or more employees; (b) you have to pay the full, unsubsidized cost of your health plan, which can be particularly difficult after losing your job; and (c) it only lasts for eighteen months.

*** I said earlier that insurers can’t charge premiums that are less than the expected cost of your care unless they can make it up on the healthy customers, and they can’t in the individual market. But if all insurers are prohibited from doing medical underwriting (pricing based on healthiness), then they will all have to overcharge the healthy customers, and the system could work. This is still a tricky issue – and single-payer (like Medicare) would be much simpler – but it can be made to work even in a competitive market.

Update: A couple of small things. and one big thing:

First, I called rescission a “second-order” problem, which was probably surprising, given that my post on it got over 100,000 page views (thanks to the Huffington Post). I meant “second-order” not to mean that it isn’t important, but that it is logically subsequent to the question of whether you have health insurance in the first place, and this post is about whether you can count on having health insurance in the first place.

Second, J.D. points out in the comments that there is a problem with COBRA I didn’t mention: If you relocate to an area where your employer doesn’t have a plan, then you can’t count on it at all.

Third, a few people said that it was the fault of the administration (or the Democrats generally) that health care reform is framed as a “poverty program.” There’s something to that point, but I don’t think it’s quite right (and I didn’t put it right in the first paragraph above). I think it is a poverty program – but the vast majority of us are, actually, poor. The combination of job loss and serious illness could wipe out almost anyone (under the age of 65 – actually, anyone over 65 as well, since Medicare doesn’t cover extended nursing home care), and we all suffer serious economic insecurity because of it. The political problem is that the median American doesn’t identify as poor (although he probably thinks he needs more money) and thinks that poverty programs are for “other people.” I think that middle-class and upper-class people should support poverty programs for other people, but that’s an unnecessary discussion. My point here is that the vast majority of us are poor, when it comes to health care, and therefore we should get behind reform out of self-interest.

Delphi parts destroys pensions, cuts wages

Delphi parts destroys pensions, cuts wages

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On July 31 Judge Robert Drain of the U.S. Bankruptcy Court in New York approved a plan for Delphi to emerge from bankruptcy by the end of August. Delphi is the former parts division of General Motors that was spun off as a separate entity in 1999. The judge’s ruling comes nearly four years after Delphi introduced the pattern of contract busting through bankruptcy to the auto industry.

Delphi sought protection from creditors under a Chapter 11 bankruptcy filing on Oct. 8, 2005. CEO Robert “Steve” Miller quickly earned the enmity of union workers by demanding they agree to a 65-percent pay cut and by gutting their entire contract; over 20 plants were to be closed. All Miller wanted untouched was the no-strike pledge and the management’s right clause.

Needless to say, the workers voted no on Miller’s initial proposals. Rank-and-file resistance emerged, choosing the name Soldiers of Solidarity. SOS held meetings and demonstrations and waged an in-plant “work-to-rule” slowdown campaign.

However, Delphi—in collusion with GM— was leading the push to drive down wages and eliminate jobs in the auto industry, particularly the parts sector. “We’re just the warm-up act,” Miller stated on several occasions. (Detroit News, July 31)

Unfortunately, the leadership of the United Auto Workers then negotiated a plan for Delphi to offer lump-sum buyout payments to entice workers to quit or retire, with GM providing the financing. In 2004 the UAW had already reopened the 2003-2007 contract and agreed to let Delphi pay new hires half of what hourly production workers were then earning.

By the summer of 2007, with the workforce reduced from 50,000 to 17,000 in less than two years, the majority of Delphi’s unionized workers were making the bottom-tier wage of $14 an hour. This divide-and-conquer tactic led to easy passage of a contract that gave the newer workers a raise but cut the wages of higher seniority workers by $10 an hour.

The stage was set for Chrysler, Ford and GM—the “headliners” for which Delphi had been the “warm-up act”—to squeeze major contract concessions from UAW members later in 2007. This year Chrysler and GM, like Delphi, used Chapter 11 bankruptcy to their advantage. Fearing for their jobs, workers gave up raises, bonuses, overtime pay, relief time and even the right to strike for the next six years.

The bosses at GM still needed to complete the reorganization at what remained of Delphi. Not much was left; all but nine plants had been shuttered. A plan for GM to take back four U.S. components plants and the steering division, with the Wall Street firm Platinum Equity buying Delphi’s four remaining plants, was rejected by Delphi’s creditors. Now Judge Drain has approved GM’s acquisition of the five plants it wants back, but the rest of the business will go to Elliott Management, Silver Point Capital, Monarch Alternative Capital and other hedge funds in exchange for the $3.5 billion Delphi owes them.

Workers sacrificed on altar of profit

What is significant from a working-class standpoint, however, is not whether this or that private investor assumes Delphi’s shrunken assets. After the Platinum sale was dropped, Judge Drain overruled objections from retirees and allowed Delphi to dump its pension obligations onto the government’s Pension Benefit Guarantee Corp. This means that retirees, especially those who retired young after 30 years of service, will have their monthly Delphi pension check drastically reduced and will lose health and life insurance benefits altogether.

GM is, at least for now, bound by an agreement with the UAW to make up the difference between what its retirees were collecting from Delphi and what the PBGC pays. Other retirees—not only non-union salaried retirees but members of the Electrical Workers, Communication Workers and other unions—will get no assistance from GM.

What is GM getting out of all this? GM will have two new, wholly owned subsidiaries. GM Components Holdings LLC will include Delphi Thermal Systems in Lockport, N.Y.; Delphi Powertrain in Rochester, N.Y.; Delphi Powertrain Systems in Grand Rapids, Mich.; and Delphi Electronics and Safety in Kokomo, Ind.

GM Global Steering Holdings LLC will be comprised of Delphi Steering in Saginaw, Mich., the global headquarters and manufacturing operations for steering products, along with engineering and locations in Mexico, Brazil, Europe, India, China and Australia. Delphi Steering has more than 60 customers worldwide, including Renault, Volkswagen, Ford, Fiat, Hyundai Mahindra, Tata and almost a dozen Chinese vehicle manufacturers.

GM is in the process of reducing its U.S. workforce by 20,000 through more buyouts and by closing 14 plants. The sudden plunge in vehicle sales, however, has meant that GM is not hiring, and therefore not benefiting from the low entry-level wage of $14 an hour the UAW agreed to in 2007. But as Delphi workers become GM employees—some for the second time—they will be bound by the Delphi contract. Thus GM will gain 7,000 new, lower-paid workers.

What are the hedge funds getting for $3.5 billion? A lot more than four U.S. plants. These vulture capitalists will acquire Delphi’s overseas operations, consisting of around 140 facilities employing 104,000 workers around the world.

This is not the final chapter in the brutal auto restructuring in which workers and retirees are being sacrificed on the altar of profitability. Visteon, which Ford spun off around the same time that GM spun off Delphi, filed for bankruptcy May 28, and has asked the court for permission to eliminate health and life insurance for all its 4,480 retirees.

In January 2006, as the Delphi scenario was beginning and United Airlines bankruptcy was ending with the union pension plan gutted, the New York Times ran a story titled “Gee, Bankruptcy Never Looked So Good.” For autoworkers of this writer’s generation, capitalism has never looked so bad. Now is the time to be part of a global workers’ movement that is telling the bosses: “Don’t solve your crisis on our backs.”

Israel seeks ways to silence human rights groups

Israel seeks ways to silence human rights groups - First goal is to stop Gaza war crimes revelations

Jonathan Cook
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In a bid to staunch the flow of damaging evidence of war crimes committed during Israel’s winter assault on Gaza, the Israeli government has launched a campaign to clamp down on human rights groups, both in Israel and abroad.

It has begun by targeting one of the world’s leading rights organisations, the US-based Human Rights Watch (HRW), as well as a local group of dissident army veterans, Breaking the Silence, which last month published the testimonies of 26 combat soldiers who served in Gaza.

Additionally, according to the Israeli media, the government is planning a “much more aggressive stance” towards human rights groups working to help the Palestinians.

Officials have questioned the sources of funding received by the organisations and threatened legislation to ban support from foreign governments, particularly in Europe.

Breaking the Silence and other Israeli activists have responded by accusing the government of a “witch hunt” designed to intimidate them and starve them of the funds needed to pursue their investigations.

“This is a very dangerous step,” said Mikhael Mannekin, one of the directors of Breaking the Silence. “Israel is moving in a very anti-democratic direction.”

The campaign is reported to be the brainchild of the far-right foreign minister, Avigdor Lieberman, currently facing corruption charges, but has the backing of Prime Minister Benjamin Netanyahu.

Early last month, Mr Lieberman used a press conference to accuse non-government organisations, or NGOs, of replacing diplomats in setting the international community’s agenda in relation to Israel. He also threatened reforms to curb the groups’ influence.

A week later, Mr Netanyahu’s office weighed in against Human Rights Watch, heavily criticising the organisation for its recent fund-raising activities in Saudi Arabia.

HRW has pointed out that it only accepts private donations, and has not accepted Saudi government funds, but Israeli officials say all Saudi money is tainted and will compromise HRW’s impartiality as a human rights watchdog in its treatment of Israel.

“A human rights organisation raising money in Saudi Arabia is like a women’s rights group asking the Taliban for a donation,” Mark Regev, a government spokesman, told the right-wing Israeli daily newspaper the Jerusalem Post.

HRW recently published reports arguing that the Israeli army had committed war crimes in Gaza, including the use of white phosphorus and attacking civilian targets.

HRW is now facing concerted pressure from Jewish lobby groups and from leading Jewish journalists in the US to sever its ties with Saudi donors. According to the Israeli media, some Jewish donors in the US have also specified that their money be used for human rights investigations that do not include Israel.

Meanwhile, Israel’s foreign ministry is putting pressure on European governments to stop funding many of Israel’s human rights groups. As a prelude to a clampdown, it has issued instructions to all its embassies abroad to question their host governments about whether they fund such activities.

Last week the foreign ministry complained to British, Dutch and Spanish diplomats about their support for Breaking the Silence.

The testimonies collected from soldiers suggested the Israeli army had committed many war crimes in Gaza, including using Palestinians as human shields and firing white phosphorus shells over civilian areas. One soldier called the army’s use of firepower “insane”.

The Dutch government paid nearly 20,000 euros to the group to compile its Gaza report, while Britain funded its work last year to the tune of £40,000.

Israeli officials are reported to be discussing ways either to make it illegal for foreign governments to fund “political” organisations in Israel or to force such groups to declare themselves as “agents of a foreign government”.

“Just as it would be unacceptable for European governments to support anti-war NGOs in the US, it is unacceptable for the Europeans to support local NGOs opposed to the policies of Israel’s democratically elected government,” said Ron Dermer, a senior official in Mr Netanyahu’s office.

CNN Refusing to Run Health Care Ad Critical of Insurance Industry

CNN Refusing To Run Health Care Ad Critical Of Insurance Industry

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What on earth is going on at CNN?

The network — already taking criticism for declining to run an ad criticizing Lou Dobbs — is now refusing to run an ad nationally criticizing the insurance industry, the group that tried to place the ad tells me.

CNN’s reason: The ad “unnecessarily” singles out a top insurance industry executive by name for criticism.

The labor-backed Americans United for Change, a top White House ally in the health care wars, tried to book time on CNN and MSNBC for the ad, which hits the insurance industry for wanting to preserve the status quo and levels harsh criticism at insurance giant Cigna’s CEO, Ed Hanway.

“Why do insurance companies and Republicans want to kill health insurance reform? Because they like things the way they are now,” the ad says, and then slams Hanway’s annual salary of over $12 million and golden parachute retirement package of over $70 million.

Americans United for Change’s spokesman, Jeremy Funk, tells me that CNN refused to run the ad nationally. He says CNN emailed the following reason for rejection:

“This ad does not comply with our clearance guidelines because it unnecessarily singles out an individual company and person.”

That very well may be CNN’s policy. But AUC maintains that the mention of Cigna’s CEO was necessary to dramatize the enormous stake the insurance industry has in the health care wars. What’s more, AUC argues, the industry is made up of companies that are run by individuals deciding how to spend huge money to impact the health care debate — so why are they off limits?

“The bottom line question is: Would CNN run ads from Cigna that are positive about the company?” Funk asks. “If yes, why would they turn down an ad critical of the company for their role in trying to kill health insurance reform?”

By contrast, the ad will air nationally on MSNBC tomorrow. Here’s the spot:

Their Martyrs and Our Heroes

Their Martyrs and Our Heroes

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The way you imagine someone engaged in a suicide attack depends, not surprisingly, on which end of the attack you happen to be on -- in cultural, if not literal terms. In American films and pop culture, there were few acts more inexplicable or malevolent in the years of my childhood than those of Japan's kamikaze pilots (and, in a few cases, submariners), the state-organized suicide bombers of World War II who targeted the U.S. fleet with their weapons and their lives. Americans themselves were incapable of such kamikaze acts not because they didn't commit them, but because, when done by someone known to us in the name of a cause we cherish or to save us from being overrun by them, such acts were no longer unrecognizable. Under those circumstances, each represented a profound gift of life to those left behind.

In the desperate early days of 1942 in the Pacific, for instance, there were a number of reported cases in which American pilots tried to dive their planes into Japanese ships. According to Edward F. Murphy in Heroes of WWII, Captain Richard E. Fleming, the only recipient of the Congressional Medal of Honor for the Battle of Midway, was leading his dive bomber squadron in an attack on the disabled cruiser Mikuma when his plane was hit by anti-aircraft fire. It "rocked wildly... but... soon righted itself and continued down under control. At an altitude of only 350 feet, Fleming released his bomb. Then he followed it straight down to the Japanese carrier." His hometown, St. Paul, Minnesota, later named its airport in his honor.

In the same way, "Colin" became a popular first name for boys (including, evidently, Colin Powell) because of war hero Captain Colin P. Kelly, Jr., who was generally (if incorrectly) believed to have won the Medal of Honor for plunging his B-17 into the smokestack of the Japanese battleship Haruna -- he didn't -- in the first days of the Pacific war.

This sort of American heroism, as John Feffer, co-director of the website Foreign Policy in Focuskamikaze sex. As film critic Jeanine Basinger wrote in The World War II Combat Film, nurse Veronica Lake, trapped by the Japanese on the Bataan peninsula in So Proudly We Hail (1943), "places a hand inside her blouse... and walks slowly toward the enemy in her combat fatigues. As she nears them, she takes off her helmet, and releases her long, very blonde hair over her shoulders. When they come near her in obvious delight, she pulls the pin on her grenade..." In fact, many war films of that time had a kamikaze feel to them, but as "we" were defending "home" and knew ourselves for the individuals we were, the act of diving a plane into a bridge or refusing to leave a platoon certain to be wiped out bore no relation to suicidal enemy acts. and TomDispatch regular, indicates below, was highlighted in war films of those years. There was even a celluloid version of

To understand and deal with our world, it's often less than useful to look on the enemy, in our case today "the terrorist," as something other than human (whether super-human or sub-human) rather than as another one of those strange creatures like ourselves. But let Feffer take it from here. Tom

Our Suicide Bombers

Thoughts on Western Jihad
By John Feffer

The actor Will Smith is no one's image of a suicide bomber. With his boyish face, he has often played comic roles. Even as the last man on earth in I Am Legend, he retains a wise-cracking, ironic demeanor. And yet, surrounded by a horde of hyperactive vampires at the end of that film, Smith clasps a live grenade to his chest and throws himself at the enemy in a final burst of heroic sacrifice.

Wait a second: surely that wasn't a suicide bombing. Will Smith wasn't reciting suraskamikaze wore for their suicide missions. He wasn't playing a religious fanatic or a political extremist. Will Smith was the hero of the film. So how could he be a suicide bomber? After all, he's one of us, isn't he? from the Koran. He wasn't sporting one of those rising sun headbands that the Japanese

As it happens, we have our suicide bombers too. "We" are the powerful, developed countries, the ones with an overriding concern for individual liberties and individual lives. "We" form a moral archipelago that encompasses the United States, Europe, Israel, present-day Japan, and occasionally Russia. Whether in real war stories or inspiring vignettes served up in fiction and movies, our lore is full of heroes who sacrifice themselves for motherland, democracy, or simply their band of brothers. Admittedly, these men weren't expecting 72 virgins in paradise and they didn't make film records of their last moments, but our suicidal heroes generally have received just as much praise and recognition as "their" martyrs.

The scholarly work on suicide bombers is large and growing. Most of these studies focus on why those other people do such terrible things, sometimes against their own compatriots but mainly against us. According to the popular view, Shiite or Tamil or Chechen suicide martyrs have a fundamentally different attitude toward life and death.

If, however, we have our own rich tradition of suicide bombers -- and our own unfortunate tendency to kill civilians in our military campaigns -- how different can these attitudes really be?

Western Jihad

In America's first war against Islam, we were the ones who introduced the use of suicide bombers. Indeed, the American seamen who perished in the incident were among the U.S. military's first missing in action.

It was September 4, 1804. The United States was at war with the Barbary pirates along the North African coast. The U.S. Navy was desperate to penetrate the enemy defenses. Commodore Edward Preble, who headed up the Third Mediterranean Squadron, chose an unusual stratagem: sending a booby-trapped U.S.S. Intrepid into the bay at Tripoli, one of the Barbary states of the Ottoman empire, to blow up as many of the enemy's ships as possible. U.S. sailors packed 10,000 pounds of gunpowder into the boat along with 150 shells.

When Lieutenant Richard Sommers, who commanded the vessel, addressed his crew on the eve of the mission, a midshipman recorded his words:

"'No man need accompany him, who had not come to the resolution to blow himself up, rather than be captured; and that such was fully his own determination!' Three cheers was the only reply. The gallant crew rose, as a single man, with the resolution yielding up their lives, sooner than surrender to their enemies: while each stepped forth, and begged as a favor, that he might be permitted to apply the match!"

The crew of the boat then guided the Intrepid into the bay at night. So as not to be captured and lose so much valuable gunpowder to the enemy, they chose to blow themselves up with the boat. The explosion didn't do much damage -- at most, one Tripolitan ship went down -- but the crew was killed just as surely as the two men who plowed a ship piled high with explosives into the U.S.S. Cole in the Gulf of Aden nearly 200 years later.

Despite the failure of the mission, Preble received much praise for his strategies. "A few brave men have been sacrificed, but they could not have fallen in a better cause," opined a British navy commander. The Pope went further: "The American commander, with a small force and in a short space of time, has done more for the cause of Christianity than the most powerful nations of Christiandom have done for ages!"

Preble chose his tactic because his American forces were outgunned. It was a Hail Mary attempt to level the playing field. The bravery of his men and the reaction of his supporters could be easily transposed to the present day, when "fanatics" fighting against similar odds beg to sacrifice themselves for the cause of Islam and garner the praise of at least some of their religious leaders.

The blowing up of the Intrepid was not the only act of suicidal heroism in U.S. military history. We routinely celebrate the brave sacrifices of soldiers who knowingly give up their lives in order to save their unit or achieve a larger military mission. We commemorate the sacrifice of the defenders of the Alamo, who could have, after all, slunk away to save themselves and fight another day. The poetry of the Civil War is rich in the language of sacrifice. In Phoebe Cary's poem "Ready" from 1861, a black sailor, "no slavish soul had he," volunteers for certain death to push a boat to safety.

The heroic sacrifices of the twentieth century are, of course, commemorated in film. Today, you can buy several videos devoted to the "suicide missions" of American soldiers.

Our World War II propaganda films -- er, wartime entertainments -- often featured brave soldiers facing certain death. In Flying Tigers (1942), for example, pilot Woody Jason anticipates the Japanese kamikaze by several years by flying a plane into a bridge to prevent a cargo train from reaching the enemy. In Bataan (1943), Robert Taylor leads a crew of 13 men in what they know will be the suicidal defense of a critical position against the Japanese. With remarkable sangfroid, the soldiers keep up the fight as they are picked off one by one until only Taylor is left. The film ends with him manning a machine gun against wave upon wave of oncoming Japanese.

Our warrior culture continues to celebrate the heroism of these larger-than-life figures from World War II by taking real-life stories and turning them into Hollywood-style entertainments. For his series of "war stories" on Fox News, for instance, Oliver North narrates an episode on the Doolittle raid, an all-volunteer mission to bomb Tokyo shortly after Pearl Harbor. Since the bombers didn't have enough fuel to return to their bases, the 80 pilots committed to what they expected to be a suicide mission. Most of them survived, miraculously, but they had been prepared for the ultimate sacrifice -- and that is how they are billed today. "These are the men who restored the confidence of a shaken nation and changed the course of the Second World War," the promotional material for the episode rather grandly reports. Tokyo had the same hopes for its kamikaze pilots a few years later.

Why Suicide Missions?

America did not, of course, dream up suicide missions. They form a rich vein in the Western tradition. In the Bible, Samson sacrificed himself in bringing down the temple on the Philistine leadership, killing more through his death than he did during his life. The Spartans, at Thermopylae, faced down the Persians, knowing that the doomed effort would nevertheless delay the invading army long enough to give the Athenians time to prepare Greek defenses. In the first century AD in the Roman province of Judea, Jewish Zealots and Sicarians ("dagger men") launched suicide missions, mostly against Jewish moderates, to provoke an uprising against Roman rule.

Later, suicide missions played a key role in European history. "Books written in the post-9/11 period tend to place suicide bombings only in the context of Eastern history and limit them to the exotic rebels against modernism," writes Niccolo Caldararo in an essay on suicide bombers. "A study of the late 19th century and early 20th would provide a spate of examples of suicide bombers and assassins in the heart of Europe." These included various European nationalists, Russian anarchists, and other early practitioners of terrorism.

Given the plethora of suicide missions in the Western tradition, it should be difficult to argue that the tactic is unique to Islam or to fundamentalists. Yet some scholars enjoy constructing a restrictive genealogy for such missions that connects the Assassin sect (which went after the great sultan Saladin in the Levant in the twelfth century) to Muslim suicide guerrillas of the Philippines (first against the Spanish and then, in the early twentieth century, against Americans). They take this genealogy all the way up to more recent suicide campaigns by Hezbollah, Hamas, al-Qaeda, and Islamic rebels in the Russian province of Chechnya. The Tamil Tigers of Sri Lanka, who used suicide bombers in a profligate fashion, are ordinarily the only major non-Muslim outlier included in this series.

Uniting our suicide attackers and theirs, however, are the reasons behind the missions. Three salient common factors stand out. First, suicidal attacks, including suicide bombings, are a "weapon of the weak," designed to level the playing field. Second, they are usually used against an occupying force. And third, they are cheap and often brutally effective.

We commonly associate suicide missions with terrorists. But states and their armies, when outnumbered, will also launch such missions against their enemies, as Preble did against Tripoli or the Japanese attempted near the end of World War II. To make up for its technological disadvantages, the Iranian regime sent waves of young volunteers, some unarmed and some reportedly as young as nine years old, against the then-U.S.-backed Iraqi army in the Iran-Iraq War of the 1980s.

Non-state actors are even more prone to launch suicide missions against occupying forces. Remove the occupying force, as Robert Pape argues in his groundbreaking book on suicide bombers, Dying to Win, and the suicide missions disappear. It is not a stretch, then, to conclude that we, the occupiers (the United States, Russia, Israel), through our actions, have played a significant part in fomenting the very suicide missions that we now find so alien and incomprehensible in Iraq, Afghanistan, Chechnya, Lebanon, and elsewhere.

The archetypal modern suicide bomber first emerged in Lebanon in the early 1980s, a response to Israel's invasion and occupation of the country. "The Shiite suicide bomber," writes Mike Davis in his book on the history of the car bomb, Buda's Wagon, "was largely a Frankenstein monster of [Israeli Defense Minister] Ariel Sharon's deliberate creation." Not only did U.S. and Israeli occupation policies create the conditions that gave birth to these missions, but the United States even trained some of the perpetrators. The U.S. funded Pakistan's intelligence service to run a veritable insurgency training school that processed 35,000 foreign Muslims to fight the Soviets in Afghanistan in the 1980s. Charlie Wilson's War, the book and movie that celebrated U.S. assistance to the mujihadeen, could be subtitled: Suicide Bombers We Have Known and Funded.

Finally, the technique "works." Suicide bombers kill 12 times more people per incident than conventional terrorism, national security specialist Mohammed Hafez points out. The U.S. military has often publicized the "precision" of its airborne weaponry, of its "smart" bombs and missiles. But in truth, suicide bombers are the "smartest" bombers because they can zero in on their target in a way no missile can -- from close up -- and so make last-minute corrections for accuracy. In addition, by blasting themselves to smithereens, suicide bombers can't give away any information about their organization or its methods after the act, thus preserving the security of the group. You can't argue with success, however bloodstained it might be. Only when the tactic itself becomes less effective or counterproductive, does it recede into the background, as seems to be the case today among armed Palestinian groups.

Individual motives for becoming a suicide bomber or attacker have, when studied, proved to be surprisingly diverse. We tend to ascribe heroism to our soldiers when, against the odds, they sacrifice themselves for us, while we assume a glassy-eyed fanaticism on the part of those who go up against us. But close studies of suicide bombers suggest that they are generally not crazy, nor -- another popular explanation -- just acting out of abysmal poverty or economic desperation (though, as in the case of the sole surviving Mumbai suicide attacker put on trial in India recently, this seems to have been the motivation). "Not only do they generally not have economic problems, but most of the suicide bombers also do not have an emotional disturbance that prevents them from differentiating between reality and imagination," writes Anat Berko in her careful analysis of the topic, The Path to Paradise. Despite suggestions from Iraqi and U.S. officials that suicide bombers in Iraq have been coerced into participating in their missions, scholars have yet to record such cases.

Perhaps, however, this reflects a narrow understanding of coercion. After all, our soldiers are indoctrinated into a culture of heroic sacrifice just as are the suicide bombers of Hamas. The indoctrination doesn't always work: scores of U.S. soldiers go AWOL or join the peace movement just as some suicide bombers give up at the last minute. But the basic-training techniques of instilling the instinct to kill, the readiness to follow orders, and a willingness to sacrifice one's life are part of the warrior ethic everywhere.

Suicide missions are, then, a military technique that armies use when outmatched and that guerrilla movements use, especially in occupied countries, to achieve specific objectives. Those who volunteer for such missions, whether in Iraq today or on board the Intrepid in 1804, are usually placing a larger goal -- liberty, national self-determination, ethnic or religious survival -- above their own lives.

But wait: surely I'm not equating soldiers going on suicide missions against other soldiers with terrorists who blow up civilians in a public place. Indeed, these are two distinct categories. And yet much has happened in the history of modern warfare -- in which civilians have increasingly become the victims of combat -- to blur these distinctions.

Terror and Civilians

The conventional picture of today's suicide bomber is a young man or woman, usually of Arab extraction, who makes a video proclamation of faith, straps on a vest of high explosives, and detonates him or herself in a crowded pizzeria, bus, marketplace, mosque, or church. But we must expand this picture. The September 11th hijackers targeted high-profile locations, including a military target, the Pentagon. Hezbollah's suicidal truck driver destroyed the U.S. Marine barracks in Beirut on October 23, 1983, killing 241 U.S. soldiers. Thenmozhi Rajaratnam, a female Tamil suicide bomber, assassinated Indian Prime Minister Rajiv Gandhi in 1991.

Suicide bombers, in other words, have targeted civilians, military installations, non-military sites of great significance, and political leaders. In suicide attacks, Hezbollah, Tamil Tiger, and Chechen suicide bombers have generally focused on military and police targets: 88%, 71%, and 61% of the time, respectively. Hamas, on the other hand, has largely targeted civilians (74% of the time). Sometimes, in response to public opinion, such movements will shift focus -- and targets. After a 1996 attack killed 91 civilians and created a serious image problem, the Tamil Tigers deliberately began chosing military, police, and government targets for their suicide attacks. "We don't go after kids in Pizza Hut," one Tiger leader told researcher Mia Bloom, referring to a Hamas attack on a Sbarro outlet in Jerusalem that killed 15 civilians in 2001.

We have been conditioned into thinking of suicide bombers as targeting civilians and so putting themselves beyond the established conventions of war. As it happens, however, the nature of war has changed in our time. In the twentieth century, armies began to target civilians as a way of destroying the will of the population, and so bringing down the leadership of the enemy country. Japanese atrocities in China in the 1930s, the Nazi air war against Britain in World War II, Allied fire bombings of German and Japanese cities, the nuclear attacks against Hiroshima and Nagasaki, U.S. carpet bombing in Cambodia and Laos, and the targeted assassinations of the Phoenix program during the Vietnam War, Russian depredations in Afghanistan and Chechnya, the tremendous civilian casualties during the Iraq War: all this has made the idea of conventional armies clashing in an area far from civilian life a quaint legacy of the past.

Terrorist attacks against civilians, particularly September 11th, prompted military historian Caleb Carr to back the Bush administration's declaration of a war against terror. "War can only be answered with war," he wrote in his best-selling The Lessons of Terror. "And it is incumbent on us to devise a style of war more imaginative, more decisive, and yet more humane than anything terrorists can contrive." This more imaginative, decisive, and humane style of war has, in fact, consisted of stepped-up aerial bombing, beefed-up Special Forces (to, in part, carry out targeted assassinations globally), and recently, the widespread use of unmanned aerial drones like the Predator and the Reaper, both in the American arsenal and in 24/7 use today over the Pakistani tribal borderlands. "Predators can become a modern army's answer to the suicide bomber," Carr wrote.

Carr's argument is revealing. As the U.S. military and Washington see it, the ideal use of Predator or Reaper drones, armed as they are with Hellfire missiles, is to pick off terrorist leaders; in other words, a mirror image of what that Tamil Tiger suicide bomber (who picked off the Indian prime minister) did somewhat more cost effectively. According to Carr, such a strategy with our robot planes is an effective and legitimate military tactic. In reality, though, such drone attacks regularly result in significant civilian casualties, usually referred to as "collateral damage." According to researcher Daniel Byman, the drones kill 10 civilians for every suspected militant. As Tom Engelhardt of writes, "In Pakistan, a war of machine assassins is visibly provoking terror (and terrorism), as well as anger and hatred among people who are by no means fundamentalists. It is part of a larger destabilization of the country."

So, the dichotomy between a "just war," or even simply a war of any sort, and the unjust, brutal targeting of civilians by terrorists has long been blurring, thanks to the constant civilian casualties that now result from conventional war-fighting and the narrow military targets of many terrorist organizations.

Moral Relativism?

We have our suicide bombers -- we call them heroes. We have our culture of indoctrination -- we call it basic training. We kill civilians -- we call it collateral damage.

Is this, then, the moral relativism that so outrages conservatives? Of course not. I've been drawing these comparisons not to excuse the actions of suicide bombers, but to point out the hypocrisy of our black-and-white depictions of our noble efforts and their barbarous acts, of our worthy goals and their despicable ends. We -- the inhabitants of an archipelago of supposedly enlightened warfare -- have been indoctrinated to view the atomic bombing of Hiroshima as a legitimate military target and September 11th as a heinous crime against humanity. We have been trained to see acts like the attack in Tripoli as American heroism and the U.S.S. Cole attack as rank barbarism. Explosive vests are a sign of extremism; Predator missiles, of advanced sensibility.

It would be far better if we opened our eyes when it came to our own world and looked at what we were actually doing. Yes, "they" sometimes have dismaying cults of sacrifice and martyrdom, but we do too. And who is to say that ending occupation is any less noble than making the world free for democracy? Will Smith, in I Am Legend, was willing to sacrifice himself to end the occupation of vampires. We should realize that our soldiers in the countries we now occupy may look no less menacing and unintelligible than those obviously malevolent, science-fiction creatures. And the presence of our occupying soldiers sometimes inspires similar, Will Smith-like acts of desperation and, dare I say it, courage.

The fact is: Were we to end our occupation policies, we would go a long way toward eliminating "their" suicide bombers. But when and how will we end our own cult of martyrdom?

Books That Counter Our "Training" To Make War

Books That Counter Our "Training" To Make War

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These are extraordinary times. Flag-wrapped coffins of 18-year-old soldiers killed in a failed, illegal and vengeful invasion are paraded along a Wiltshire high street. Victory in Afghanistan is at hand, says the satirical Gordon Brown. On the BBC's Newsnight, the heroic Afghan MP Malalai Joya, tries, in her limited English, to tell the British public that her people are being blown to bits in their name: 140 villagers, mostly children, in her own Farah Province. No parade for them. No names and faces for them. The suppression of the suffering of Britain's and America's colonial victims is an article of media faith, a tradition so ingrained that it requires no instructions.

The difference today is that a majority of the British people are not fooled. The cheerleading newsreaders can say "Britain's resolve is being put to the test" as if the Luftwaffe is back on the horizon, but their own polls (BBC/ITN) show that popular disgust with the wars in both Afghanistan and Iraq is strongest in the very communities where adolescents are recruited to fight them. The problem with the British public, says a retired army major on Channel 4 News, is that they need "to be trained and educated". Indeed they do, wrote Bertolt Brecht in The Solution, explaining that the people . . .

Had forfeited the confidence of the government
And could win it back only
By redoubled efforts. Would it not be easier
In that case for the government
To dissolve the people
And elect another?

In their modern classic Manufacturing Consent: the Political Economy of the Mass Media, Edward S Herman and Noam Chomsky describe how war propaganda in free societies is "filtered" by media organisations, not as conscious "crude intervention, but by the selection of right-thinking personnel and by the editors' and working journalists' internalisation of [elite] priorities and definitions of newsworthiness". In the wake of the US invasion of Vietnam, in which at least three million people were killed and their once-bountiful land ruined and poisoned, planners of future bloodfests invented the "Vietnam syndrome", which they identified perversely as a "crisis of democracy". The "crisis" was that the "general population threatened to participate in the political system, challenging established privilege and power". Afghanistan and Iraq now have their syndromes.

With this in mind, I respectfully urge readers to put aside the holiday reading lists in the newspaper review pages, with their clubbable hauteur, and read, or read again, books as fine as Manufacturing Consent, which help make sense of extraordinary times.

As Herman and Chomsky decode principally the American media, an ideal companion is Newspeak in the 21st Century, by David Edwards and David Cromwell (published next month by Pluto). The founders and editors of the outstanding website present a fluent dissection of Britain's liberal media, employing the kind of rigour that shames those who proclaim their impartiality and independence from vested power. Read also A Century of Spin by David Miller and William Dinan, who describe the rise of an "invisible government" invented by Sigmund Freud's nephew Edward Bernays. "Propaganda," said Bernays, "got to be a bad word because of the Germans, so what I did was to try and find some other words." The other words were "public relations", which now consumes much of journalism.

The latest achievement of PR is the "Obama phenomenon". In Barack Obama and the Future of American Politics (published in the US by Paradigm), Paul Street peels away the mask in perhaps the only book that tells the truth about the 44th president of the United States.

Not enough laughs? Pack Joseph Heller's Catch-22, still unmatched in its demolition of the idiocies and lies of the killers who promote wars. Try this:

"Anyone," says Dr "Doc" Daneeka, "who wants to get out of combat isn't really crazy, so
I can't ground him."
Yossarian: "OK, let me get this straight.
In order to be grounded, I've got to be crazy. And I must be crazy to keep flying. But if I ask to be grounded, that means I'm not crazy anymore, and I have to keep flying."
Dr "Doc" Daneeka: "You got it . . ."

Kurt Vonnegut's equally black and brave and hilarious Slaughterhouse Five is my other favourite war book.

"How's the patient? [the colonel] asked.
"Dead to the world."
"But not actually dead."
"How nice - to feel nothing, and still get full credit for being alive."

Faber recently published Harold Pinter's Various Voices: 60 Years of Prose, Poetry, Politics (1948-2008). It is a gem from Pinter on everything from Shakespeare, night cricket and Arthur Miller's socks to murderous great power:

It never happened. Nothing ever happened. Even while it was happening it wasn't happening. It didn't matter. It was of no interest. The crimes of the United States have been systematic, constant, vicious, remorseless . . . while masquerading as a force for universal good. It's a brilliant, even witty, highly successful act of hypnosis.

If you have not already read it, The Heart Is a Lonely Hunter by Carson McCullers is a rare treat: a view of humanity so precisely, beautifully, honourably, yet almost incidentally expressed. In the "bantering inconsequence" (F Scott Fitzgerald) of effete modern fiction, no one touches McCullers or, for that matter, Pete Dexter, whose Paris Trout is the great unsung book of the American South, or Richard Ford, whose Rock Springs is a masterly collection, among his others, on the mysteries between men and women. And don't forget Albert Camus's The Outsider, about a man who will not pretend: a parable for today. Happy holidays.

Fannie Mae asks Treasury for $10.7 billion

After massive losses, Fannie asks Treasury for $10.7 billion

Taxpayers gave troubled mortgage giant over $44 billion since April, over $101 billion in total

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14.8-billion-dollar loss in the second quarter, and asked the US Treasury for another 10.7 billion dollars in aid, the company said Thursday.

Fannie Mae and its fellow state-backed lender Freddie Mac have already received hundreds of billions of dollars as part of a virtual government takeover aimed at avoiding their collapse in the wake of the subprime mortgage crisis.

“Today’s results bring the company’s cumulative losses over the last two years to $101.6 billion and will bring its total draw on the Treasury to $44.9 billion since April,” noted Bloomberg.

The latest loss for Fannie Mae came on the heels of a 23.2 billion-dollar loss in the first quarter.

“Fannie Mae said it expects the quality of its assets to worsen further and to continue accumulating losses as it executes President Barack Obama’s efforts to modify or refinance loans for as many as nine million homeowners,” Bloomberg reporter Dawn Kopecki continued.

“Due to current trends in the housing and financial markets, we expect to have a net worth deficit in future periods, and therefore will be required to obtain additional funding from Treasury,” the firm’s quarterly report said, according to The Wall Street Journal. “As a result, we are dependent on the continued support of Treasury in order to continue operating our business.”

The paper continued: “To deal with souring loans, the company said it reached workout deals on 41,000 mortgages during the quarter. Loan modifications made up 40% of the total. Fannie said it expects increased activity under the federal Making Home Affordable program as mortgage services gain experience with it. The company noted trial modifications jumped in July from the second quarter.”

“In one hopeful sign, Fannie Mae narrowed its quarterly loss to $14.8 billion, or $2.67 per diluted share, down from $23.2 billion, or $4.09 per share, in the previous quarter,” noted CNN. “The company lost $2.3 billion, or $2.54 per share, in the second quarter last year.”

“Credit losses from the housing crisis are still to blame for Fannie Mae’s dour results,” the television news network continued. “The company racked up $18.8 billion in credit-related expenses during the latest quarter. However, the company reduced its provision for credit losses to $18.2 billion, from $20.3 billion in the first quarter, because of a slowdown in the increase of estimated defaults and losses per default.”

By market’s close on Thursday, shares in Fannie Mae (NYSE: FNM) were trading at just 79 cents.

Oil price hits $76, highest since October

Oil price hits $76, highest since October

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Oil prices fell Thursday after briefly hitting the highest level this year at 76 dollars a barrel in London as the market awaited key US job figures to gauge prospects for economic recovery.

New York's main contract, light sweet crude for September, ended at 71.94 dollars, down three cents from its closing price on Wednesday, after hitting a five-week peak of 72.42 dollars.

London's Brent North Sea crude for delivery in September dropped 68 cents to close at 74.83 dollars. It had earlier climbed to 76.00 dollars.

Both contracts had closed higher on Wednesday as investors returned to commodities including oil, drawn by the weakening US currency which makes crude futures an attractive investment option, traders said.

Crude futures are priced in the US currency and become cheaper when the dollar falls.

Analysts said the oil market was awaiting the US Labor Department's report Friday on unemployment and payrolls for clues on the strength of stabilization in the long recession.

Most economists expect the data will show the unemployment rate climbed to 9.6 percent, from a 26-year high of 9.5 percent in June, and the economy shed 328,000 nonfarm jobs.

"Tomorrow's numbers are very important for the future direction. Employment data and readings are very influential for the energy market," said John Kilduff of MF Global.

On Thursday, the Labor Department said in its weekly report that new claims for US unemployment benefits fell more sharply than expected in the week ended on August 1, to 550,000.

That was below the revised 588,000 new claims filed in the preceding week, and better than the average analyst forecast of 580,000.

Thursday's numbers "could argue for a better number than we had anticipated" for the monthly unemployment rate, Kilduff said.

Some analysts expect oil prices to retreat owing to weak demand for crude.

"The rally in oil prices is likely to falter," analysts from London-based Capital Economics consultancy said in a report.

"Many forecasts still seem to be overly influenced by the boom that started in 2004. But final demand is set to remain weak for years."

Data released on Wednesday by the US Department of Energy (DoE) painted a mixed picture of oil demand in the United States, the world's biggest energy user.

Just over a year ago, oil prices had struck record peaks above 147 dollars a barrel on worries about potential supply disruptions. But over the past 12 months, prices have nosedived, striking 32 dollars in December before clawing back some ground in recent months.

AIG breakup nets Wall Street $1 billion bonanza: report

AIG breakup nets Wall Street $1 billion bonanza: report

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Wall Street banks and lawyers could collect nearly $1 billion in fees from the Federal Reserve Bank of New York and American International Group Inc to help manage and break apart the insurer, The Wall Street Journal said on Wednesday, citing its own analysis.

Morgan Stanley could collect as much as $250 million, the newspaper said, citing banking experts and documents released by the New York Fed.

Bank of America Corp, private equity firm Blackstone Group LP, law firm Davis Polk & Wardwell LLP, accounting firm Ernst & Young, Goldman Sachs Group Inc and JPMorgan Chase & Co are among others that have or could get big paydays for helping dismantle AIG, the newspaper said.

To calculate dollar amounts, the newspaper said it tallied estimated fees for transactions already announced and those AIG is considering, planning or may be forced to pursue. It said it obtained assistance from Freeman & Co, Thomson Reuters and documents provided by the New York Fed.

According to the newspaper, the situation creates potential conflicts of interest in oversight by causing the government to employ many companies it regulates.

The government owns nearly 80 percent of AIG, and has given the insurer a series of bailouts estimated at $180 billion.

AIG was felled by big bets on credit default swaps that left it on the hook for tens of billions of dollars of payouts it could not make.

Shares of AIG closed Wednesday up 62.7 percent at $22 on the New York Stock Exchange, as investors rushed to cover short positions. AIG has said it plans to report second-quarter results on Friday.

The White House Deal with Big Pharma

The White House Deal with Big Pharma

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The front page of today's New York Times has an article by David Kirkpatrick, confirming more details of the White House deal with big pharma. (Be sure to read the original, and support the NYT)

For anyone who didn't notice earlier, this description by PhRMA CEO Billy Tauzin spells out the dynamics:

Pressed by industry lobbyists, White House officials on Wednesday assured drug makers that the administration stood by a behind-the-scenes deal to block any Congressional effort to extract cost savings from them beyond an agreed-upon $80 billion. . .

"We were assured: 'We need somebody to come in first. If you come in first, you will have a rock-solid deal,' " Billy Tauzin, the former Republican House member from Louisiana who now leads the pharmaceutical trade group, said Wednesday. "Who is ever going to go into a deal with the White House again if they don't keep their word? You are just going to duke it out instead."

. . .

Mr. Tauzin said the administration had approached him to negotiate. "They wanted a big player to come in and set the bar for everybody else," he said. He said the White House had directed him to negotiate with Senator Max Baucus, the business-friendly Montana Democrat who leads the Senate Finance Committee.

Mr. Tauzin said the White House had tracked the negotiations throughout, assenting to decisions to move away from ideas like the government negotiation of prices or the importation of cheaper drugs from Canada. The $80 billion in savings would be over a 10-year period. "80 billion is the max, no more or less," he said. "Adding other stuff changes the deal."

Some elements of the deal have been reported earlier in the NY Times and other newspapers, as well as in this report in the LA Times by Tom Hamburger, but experts following pharmaceutical issues doubt that the full extent of the dealings between big pharma, the White House and Senator Baucus are known.

The crushing defeat of the proposals by Senator Brown and Representative Waxman to speed entry of generic biologic medicines (known as biosimilars), was partly due to the hands-off approach taken by the White House, which was been widely read as a green light for Democrats to side with big pharma on a hugely important issue that will be extremely difficult to fix later. (More on this issue here).

The so-called cost savings from big pharma of $8 billion per year for 10 years are a joke for an industry that generates more than $300 billion in US sales from products that mostly replicate but do not significantly improve therapeutic benefits over existing medicines. Moreover, the "savings" will likely take the form of lower consumer co-payments for medicines or small discounts of reimbursements for expanded government backed insurance programs. PhRMA and its members are also getting mandatory insurance coverage, and increased legal obligations to buy their expensive drugs. The White House has abandoned any real effort to control costs in the pharma sector.

Unreported by the press are the favors that the White House and Baucus are doing in the international arena. The White House has slapped and pressured Thailand for issuing compulsory licenses on medicine patents, killed an industry-opposed medical R&D treaty at the WHO (here and here), opposed a PAHO resolution on transparency of pharmaceutical economics, and collaborated on a disastrous manipulation of a WHO Expert Working Group on R&D Financing that is embracing industry norms for intellectual property protection. The Administration has refused to answer questions from the TransAtlantic Consumer Dialogue (TACD) on intellectual property aspects of pandemics. The White House won't release the negotiating text of the so-called "Anti-counterfeiting Trade Agreement," or even the names of the documents they are withholding, claiming they are state secrets. (More details here)

Senator Baucus is also working on proposals to mandate high drug prices in all but the poorest developing countries. Senator Baucus asked that Pfizer CEO Jeff Kindler (a frequent White House guest these days) work out the details with the late Professor John Barton, in secret negotiations attended mostly by pharma industry lobbyists, and Microsoft officials.

Tauzin asks who can trust a White House that does not keep it's promises. Good question. One might start by asking what to make of this October 4, 2008 stump speech by President Obama.

How We Can Beat Wall Street at Its Own Game

The Public Option in Banking: How We Can Beat Wall Street at Its Own Game

President Obama has repeated his call for a public option in health care, in order to create some competition for the insurance companies and keep them honest. We the people need to call for a public option in banking, in order to create some competition for the private banks and keep them honest.

In Wall Street’s latest affront to the public trust, the nine mega-banks graced with $125 billion in taxpayer bailout money under the Troubled Asset Relief Program (TARP) were reported last week to be paying out billions of dollars in bonuses to their executives. At least 4,793 bankers and traders received more than $1 million each in bonus payments, although it was one of Wall Street’s worst years on record. After months of investigating banker compensation, New York Attorney General Andrew Cuomo said on July 30, “The repeated explanation from bank executives that bonuses are tied to performance in a manner designed to promote (national economic) growth does not appear to be accurate.”

To say that it was an understatement would be an understatement. The bonuses paid to executives not only were not tied to national economic growth but were not even tied to some reasonable percentage of company profits. In fact they were generally greater than the net income of the banks. Morgan Stanley, for example, had $1.7 billion in earnings and paid $4.475 billion in bonuses. Goldman Sachs had $2.3 billion in earnings and paid $4.8 billion in bonuses. JP Morgan Chase had $5.6 billion in earnings and paid $8.69 billion in bonuses. JP Morgan’s largesse involved showering 1,626 of its favorite execs and traders with bonuses of $1 million or more. For most people, a “bonus” is a few hundred dollars at Christmastime. A million dollars is what you work a lifetime to try to save, and few people reach that goal. Even Citigroup and Merrill Lynch, which have been called zombie banks, paid $5.33 billion and $3.6 billion in bonuses, respectively -- although they lost more than $27 billion each in earnings. The bar for merit is apparently so low that you’re entitled to a bonus if your zombie bank simply keeps breathing!

These blatantly inflated bonuses are just the last in a litany of abuses by those same profligate banks that nearly destroyed our economic system. If the derivatives on their books were “marked to market” (valued at what they would fetch on the market), the banks would be bankrupt, and their employees would be out of a job. Instead, they have been allowed to inflate the value of their “toxic” assets – and sell them to the U.S. government at the inflated value. Then they have taken the money they got from the government at these inflated prices and paid back the TARP money they received – allowing them to post inflated earnings and reward themselves with inflated bonuses! Many people feel that these bankers are thieves stealing from the public till who should be looking at jail time. But who is there to stop their parade of outrages? No one in Congress, the White House, or the news media is calling them on the carpet for it. As Senator Dick Durbin said recently, Wall Street owns Congress; and that is also true of the major media.

We may not be able to stop them, but we can join them. We the people need to play the bankers’ game ourselves. Even corporate giants such as General Motors and WalMart have now gotten into the banking game and are easing their credit problems by forming their own banks. The U.S. public sector is late to the party. States, counties, public universities could take the lucrative system the private banking industry has created for itself and turn it to productive use in the public interest.

Keeping the Banks Honest with Some Public Competition

In President Obama’s July 17 weekly address, he repeated his call for a public option in health care, in order to “increase competition and keep insurance companies honest” and to “put an end to the worst practices of the insurance industry.” The same call needs to be made for a public option in banking. In some countries, publicly-owned banks have operated alongside privately-owned banks for decades; and in those countries, the current crisis has served to show that public banks generally do a better job of serving the people and protecting their interests than their private counterparts.

In Canada, the trendsetter in public banking is the province of Alberta. Alberta’s publicly-owned banking system, called Alberta Treasury Branches or ATB, was initiated during the Great Depression to give the private banks a run for the public’s money. According to a government publication titled “These Are the Facts: An Authentic Record of Alberta’s Progress, 1935-1948”:

“The Treasury Branch system enables the people to pool their financial resources and to use these resources for their mutual benefit thereby enabling them to progressively free themselves from the stranglehold of the existing financial monopoly. These Treasury Branches provide effective competition for chartered banks thereby ensuring banking services at reasonable rates.”

From 1929 to 1933, the average annual income in Alberta had fallen from $548 to $212, a staggering 61 percent drop. Interest payments continued to bleed the farmers of cash, and taxes had increased. In 1935, Albertans decided they wanted a change and swept the Alberta Social Credit Party into power. In 1938, the system of Alberta Treasury Branches was set up literally as a branch of the provincial government. The stated goal of the ATB was to “provide the people with alternative facilities for gaining access to their credit resources.” Bankers initially scoffed at Alberta’s attempts to establish a competing economic system, but Albertans had high hopes and rushed to deposit their meager savings in the Treasury Branches. The government invested in the ATB only once, contributing $200,000 in 1938. That was all that was necessary, as the system was self-funding after that. By 1946, the ATB was turning an annual profit of $65,000. According to a booklet titled “Albertans Investing in Alberta 1938-1998,” by 1998 the ATB had remitted $68 million to the provincial government.

In India, public sector banks also operate alongside private sector banks. Privatization has made significant inroads into India’s banking system, but fully 80 percent of the country’s banks are still government-owned. Before the current crisis, neoliberals criticized India’s public banks for being oriented more toward serving the customer than turning a profit; but studies showed that the public sector banks were out-performing the private sector banks in terms of customer satisfaction. Today, when the credit crisis has hit the aggressive private international banks particularly hard, customers are fleeing into the safety of India’s public sector banks, which have emerged largely unscathed from the credit debacle. The public banks have been credited with keeping the country’s financial industry robust at a time when the private international banks are suffering their worst crisis since the 1930s.

In China, private-sector banking has also made some inroads; but state-owned banks still predominate. In a June 2009 article titled “The Chinese Puzzle: Why Is China Growing When Other Export Powerhouses Aren’t?”, Brad Setser noted that nearly all countries relying heavily on exports for growth have experienced major downturns and remain in the doldrums -- except for China. When China’s external markets fell off, the government turned its credit machine inward to domestic development. Its state-owned banks engaged in a huge increase in lending, with local governments and state enterprises borrowing on a large scale. The result was to create a real fiscal stimulus that put workers to work and got money circulating again in the economy.

In the United States, the trendsetter in public banking is the state of North Dakota, which has owned its own bank for nearly a century. North Dakota is one of only two states (along with Montana) that are currently not facing budget shortfalls. Ever since 1919, North Dakota’s revenues have been deposited in the state-owned Bank of North Dakota (BND). Under the “fractional reserve” lending scheme open to all banks, these deposits are then available for leveraging many times over as loans. Other banks in the state do not see the BND as a threat because it partners with them and backstops them, serving as a sort of central bank for the state. BND’s loans are not insured by the Federal Deposit Insurance Corporation (FDIC) but are guaranteed by the state. North Dakota has plenty of money for student loans, makes 1% loans to startup farms, has the lowest unemployment rate in the country, and is generally not feeling the pinch of the credit crisis at all.

Theory and Practice: The Proof Is in the Pudding

A bank charter brings with it the privilege of creating “credit” simply as an accounting entry on the bank’s books. The flaw in the private banking scheme is that banks create the principal portion of their loans but not the interest, which is continually drawn off the top as profit. New borrowers must continually be found to take out new loans to create this extra profit, making private banking effectively a pyramid scheme; and like any pyramid scheme, it has mathematical limits. Today, those limits appear to have been reached. Personal and national debts have gotten so large relative to incomes that it is no longer possible to maintain the fiction of solvency. We soon won’t have the money even to pay the interest on our existing debts, let alone to incur new ones. Public banking does not suffer from that flaw, because interest is not drawn out of the system but is returned to the public coffers. Public banking is thus mathematically sound and sustainable.

That is the theory, but there is nothing so persuasive as putting it to the test. Like with the public option in health care, we need to pit the public banking option against the private banking option and see which works best. My money is on the public option.